Can Fracking Survive at $50 a Barrel?

Every time we hear peak oil is just around the corner huge reserves are found. I created a thread a few weeks ago showing an article pointing out a HUGE fracking reserve found in the middle of Texas. So it seems like peak oil has been delayed again for another 20 years.

I read an article today talking about oil going below $50 today. I started to think, "Wow, that could be really disruptive if the price goes so low that fracking becomes unprofitable." So I started looking for some confirmation on what the price of oil has to be in order for fracking to be profitable:

Can Fracking Survive at $50 a Barrel?

Give the World is awash in oil I wonder if the OPEC nations are oversupplying to eliminate American fracking competition. I imagine the fracking companies are scrambling right now to make their operations more efficient. It will be really interest to see how low it goes to bankrupt the fracking industry. We may see $25 barrel oil by this time next year.

a reply to: dfnj2015

Funny, I saw TV news saying the exact opposite. The Saudis are mad at us over not supporting the war in Yemen. They want to restrict oil production and drive the price up.

Isn't fracking a normal tool for the oil-drilling industry anyway?

So there if there is no market for fracking, they will just lay down those tools and start drilling elsewhere?

If it drops below 50 a barrel they will just stop pumping until the price goes back up.

I seem to recall the 45 is the cut off line but I'm just going from memory.

a reply to: toms54

There's no question the Saudis want to do anything and everything to keep the price of oil as high as possible. I just wonder if they are dumping to get rid of the frackers.

When we were getting fracking into the UK for the first time, they told us it was worth doing if oil was $80 to $90 a barrel.

There's a lot of variables there though, I expect cost of extraction is much higher in the UK because we have lots of EU environmental protection laws that prevent the fracking companies from just wrecking the environments around where they drill and dumping poisons into the ground water.


But hey, there's a reason big oil donated money to make Brexit happen, bye bye EU environmental protections, hello cheaper fracking and polluted groundwater.

originally posted by: Painterz
When we were getting fracking into the UK for the first time, they told us it was worth doing if oil was $80 to $90 a barrel.

There's a lot of variables there though, I expect cost of extraction is much higher in the UK because we have lots of EU environmental protection laws that prevent the fracking companies from just wrecking the environments around where they drill and dumping poisons into the ground water.


But hey, there's a reason big oil donated money to make Brexit happen, bye bye EU environmental protections, hello cheaper fracking and polluted groundwater.

You quite obviously have no idea what fracking is, when it occurs or how it is done.

Do you ever get tired of highlighting your complete and total lack of knowledge on everything you comment on?

a reply to: dfnj2015


I read a report a few years ago from a guest on the Larry Kudlow Report that felt that since all the infrastructure was already in place what he was calling Fracking 2.0 could theoretically see oil prices in the $20s without issue. This is what is driving the Saudis to try and diversify away from oil as their costs are in the low teens to extract and a barrel price in the $20's cuts heavily into their margin.

originally posted by: Carcharadon

originally posted by: Painterz
When we were getting fracking into the UK for the first time, they told us it was worth doing if oil was $80 to $90 a barrel.

There's a lot of variables there though, I expect cost of extraction is much higher in the UK because we have lots of EU environmental protection laws that prevent the fracking companies from just wrecking the environments around where they drill and dumping poisons into the ground water.


But hey, there's a reason big oil donated money to make Brexit happen, bye bye EU environmental protections, hello cheaper fracking and polluted groundwater.

You quite obviously have no idea what fracking is, when it occurs or how it is done.

Do you ever get tired of highlighting your complete and total lack of knowledge on everything you comment on?

Since you seem to be an expert, and it's not public knowledge, what chemical mixtures are used for doing the fracking? Are the chemicals safe to drink?

originally posted by: toms54
a reply to: dfnj2015

Funny, I saw TV news saying the exact opposite. The Saudis are mad at us over not supporting the war in Yemen. They want to restrict oil production and drive the price up.

I'm surprise the US has not bombed the Yemens out of existence. Maybe the CIA is subverting the government.

originally posted by: dfnj2015

originally posted by: toms54
a reply to: dfnj2015

Funny, I saw TV news saying the exact opposite. The Saudis are mad at us over not supporting the war in Yemen. They want to restrict oil production and drive the price up.

I'm surprise the US has not bombed the Yemens out of existence. Maybe the CIA is subverting the government.

We've been bombing Yemen since at least 2009.

originally posted by: dfnj2015

originally posted by: Carcharadon

originally posted by: Painterz
When we were getting fracking into the UK for the first time, they told us it was worth doing if oil was $80 to $90 a barrel.

There's a lot of variables there though, I expect cost of extraction is much higher in the UK because we have lots of EU environmental protection laws that prevent the fracking companies from just wrecking the environments around where they drill and dumping poisons into the ground water.


But hey, there's a reason big oil donated money to make Brexit happen, bye bye EU environmental protections, hello cheaper fracking and polluted groundwater.

You quite obviously have no idea what fracking is, when it occurs or how it is done.

Do you ever get tired of highlighting your complete and total lack of knowledge on everything you comment on?

Since you seem to be an expert, and it's not public knowledge, what chemical mixtures are used for doing the fracking? Are the chemicals safe to drink?

I do know about it. I probably know more about fracking and drilling for oil than everyone on this site combined.

Only in very rare cases does fracking chemicals end up in the water table. Or if companys defy the regulations.

Say you drill a 3000 meter hole. To begin with you drill surface hole which is done with a drill bit 3-4 times the size of the bit you will use for the main hole. Surface hole is drilled past the water table.

Now the water table can vary greatly. I've does surface holes that were 150 meters and I've done surface holes that were over a 1000. It all depends on the formations and where you are at. If close to mountains it will be deeper, if in low lying areas it will be shallower.

Now the purpose of Surface hole is explicitly to get past the water table. For this you use a drilling mud that is water based and contains sawdust and Bentonite.

Once you drill past the water table (anywhere from 20 to 50 meters past) you stop drilling, pull the pipe out of the hole. Once that is done you run casing that is slightly smaller than the hole you just drilled (which can be anywhere from 9 3/4 inches to 12 7/8ths or even bigger but that's the average where j am). Once you've run your casing down and touched bottom you then pump cement down the well. This has 2 reasons; ) it stabilizes the bottom of the casing string and seals it off.

Once that process is done you run your pipe in the hole(different, smaller pipe. Let's say 4 1/4 inch pipe) and resume drilling with a smaller bit.

Now, this time you drill to your TD(total depth), pull out the pipe, run casing and cement it off like the surface hole casing.

Now this is where the fracking will come in. During drilling operations you are constantly taking down hole samples from the cuttings that are brought to surface by the drilling fluids (most companys in Canada use Brine these days. ) at 5/10/15 meter intervals, the interval depends wholly on what the Geologist wants and the intervals can vary depending in what zones you are going through.

These samples will tell the Geologists and the Oil Company what depths contain Oil or Gas.

In this case with a hypothetical 3000 meter well we will go with 2275 meters and 2980 meters (a long with a 500 meter surface hole) for the depth of the oil/gas zone.

So a service rig will come in run and run tools downhill to the depths that the oil company required, in this case 2980 and 2275 respectively.

The tool they run down is a massive, heavy cylinder with a number of explosive charges in it. Once they get to the required depth they set it off and it blows holes through the casing and punches into the bedrock. This allows the oil/gas to seep or hopefully gush into the casing.

Service rig pulls their equpment out installs (or re-installs the pumpjack and closes it in so that pressure readings can be taken and the well can start producing.

At no point should any fracking chemicals or waste be anywhere within 1775 meters of the water table. And if that does happen it is horrible but that is something that lays at the feet of regulatory boards and the government.

There's absolutely nothing wrong with fracking and the impact on the water table is absolutely non-existent IF all the rules and procedures are followed and things are done properly.

As they are in Canada.

Having worked in the USA,Russia, Albania, Armenia, Saudi Arabia, Mexico and Oman I can safely say that Canada has by far, and it's not even close, the most environmentally conscious and responsible Oil industry in the world. Bar none. No on can even touch us on this.

Our safety regulations, environmental regulations and standards are light years ahead of everyone else. That's why people like me can get a job overseas pretty much at will. We are the best and everyone knows it.

If someone has a problem with fracking what they actually have a problem with is incompetent governments, greed companies and false information.

Done right it will have next to jo environmental impact.

Done wrong or cut corners and it can be hell.

Dont be mad at the fracking process be mad at the aholes that do it wrong.

They can barely cover the the extraction cost, let alone the transport: Canadian oil sands’s crude hovers below $20/bbl.

$50 ain’t nothing. Huge glut and more to come online. Hope you didn’t take the long position in any hydrocarbon securities.

Easy-peasy; Supply and Demand — Writing Was on the Wall 8 Months Ago

I thought we were coordinating with OPEC to keep oil low to put pressure on Russia?

It cost about thirty seven bucks a barrel to produce oil a few years ago when I researched it. Then the oil on paper is sold to speculators who jack up the price. They were going way overboard, ripping off the people in this country, buying for thirty four at the time and selling for over a hundred. Some law was passed to keep this in check, a lot of congressmen got rich this way because they could do inside trading before, they knew in advance when the big rush was on.

They can still produce oil at thirty seven, speculators just make less profit. The oil companies do not sell oil for less than their overall costs, they always got their price. That thirty something a barrel covers all the CEO's and big wheels salaries too. The CEO's and even the big stockholders of oil do invest in speculation though, they make money on that. The consumer gets raped.

Where I live, we have oil wells everywhere. You can always tell how much oil is going for based on whether they are pumping or not. Low prices mean that the electricity cost more to keep them operating than it takes in from pumping out the oil. They just switch them off and wait for the next rise in price which is always just around the corner. No harm and no foul, cost them nothing since the well already paid for itself several times over. Been going on since I have been around and they will again start making money again shortly.

a reply to: dfnj2015

The short answer is yes. fracking can be profitable down to about 36/bbl.

I am a mud engineer working on a rig right now as we speak.

Some rigs require 48/bbl to maintain operations, but what a lot of drilling companies do when prices dip down is continue to drill and then just cap the well and not actually pump anything out of them until prices rise a bit more.

I'm talking about west Texas right now... different areas have different requirements and this is also based on WTI prices not brent crude.

Jaden

a reply to: Carcharadon

Yeah, I'm a mud engineer, people are nucking futs if they think fracking is hazardous to the environment. The wells are sealed with cemented casing and the fracking happens WAY below the water table. There's practically zero chance that fracking will result in oil or other contaminants in the water table. Naturally occurring contamination is WAY more common than anything remotely from fracking.

I went back and finished reading your whole post.

You forgot to include that fracking does not occur in the vertical. A well (west texas) is drilled to anywhere from 5000 to 9000 ft and then it is diverted from the vertical and gradually angled until is is horizontal to the surface.

You'll drill surface which is drilled with fresh water based mud, then once you get past the water table, you'll switch to a brine based mud. They do this because there are natural salt formations that you'll pass through that fresh water would washout because the salt dissolves in the fresh water, so you use a saturated brine, or a partially saturated brine to avoid washout.

At both surface and intermediate, you set casing typically and cement it in place, sealing off the hole from the formation.

Then you drill the final hole, called production, that is maybe 6-8" and you run production casing. Then the fracking tool is sent down with has directional explosive charges which are designed to pierce the rock and allow the oil in the shale to seep back into the holes that were in the fracking casing. The shale in the rock prevents the oil from going anywhere outside of the formation.


Jaden

Imo, high oil prices will be a thing of the past probably within the next decade. As automobiles become more fuel efficient & more people transition to hybrid and electric vehicles, the price will come down to below @ 30 dollars a barrel. In recent news Saudi Arabia claimed they were slowing down production in order to increase oil prices. Its a catch 22 for the Saudis because with higher oil prices frackers make more profit. I'm guessing fracking companies have their tools in place to continue to extract oil until its not profitable for them. Even if its not profitable they can still get subsidies to continue extracting oil. I think the Saudis do whatever the U.S. tells them to do regarding oil. They'll keep oil prices manipulated as high as they can for as long as they can but imo the longterm trend is for oil prices to go lower.

The Federal Reserve is also in a catch 22. If the FRB continues to raise rates, stock markets/economies will collapse & if we stop raising rates and/or lowering them again, we will have more hyperinflation of the money supply, also known as Quantatative Easing. Its all good though, we have crypto currencies available, as well as, other means to help soak up all the additional dollars if need be to keep the food/goods at reasonable prices. Real estate is another issue related to interest rates & hyperinflation. With higher interest rates, the real estate market will crash too & with lower interest rates the prices of real estate will hyperinflate. The only solution I see to this is longer term mortgages. 20 & 30 year mortgages might be replaced with 50 & 100 year mortgages for anyone to be able to pretend they can afford real estate. Its a tight rope balancing act with multiple banker tools available in order to succeed. This is nothing new its been done for over 100 years since the founding of the Fedeal Reserve Bank. Irresponsible corporations/people will continue to be rewarded for their incompetence, while those who are responsible will continue to be punished. This is Fascist Socialism at its best.

This is one of my pet peeve conspiracy theories.I have no evidence,but I believe there is no such thing as peak oil.I think you just have to drill down farther,and I think the oil companies know that.Either way,if this gets proven or dis-proven,will turn out to be the big shake-up.my 2cents.