OPEC, for some quiet moments..

[kommonsents]

Perhaps the well read, power posters on this board could share their views.  I would appreciate your views.

I'm seeing a confluence of events which could very soon lead to a perfect storm scenario limited to the USA IF Congress and the POTUS do not very quickly pass legislation to expand the right to export crude oil.  Some of these events are.

1.  US crude production is continuing to increase.

2.  Exporting of unprocessed or unrefined crude products is essentially banned in most cases, keeping most of the crude in the USA.

3.  Onshore storage capacity is about full.

4.  Many independents hedge their production 1-3 years out.  So that was done at much higher prices before the collapse and will take that long to unwind.  So at least that amount of volume will be producing no matter what the market price.

5. Much of the US production is light oil due to the advancement of shale drilling and horizontal wells.  However, US refineries were built to handle heavy crude which accounted for the majority of oil at that time.  So light crude  must compete for limited light crude refinery access if it can't be exported.

6.  Reportedly there are 3000 onshore wells that were drilled and cased, but not completed.  In most cases completing the well does not require a drilling rig to perforate and conduct up to ~30 separate frac treatments per well.  These wells may start off near 1000 BOPD and can be completed in ~a month.  Industry is continually advancing the performance of these wells so that initial rates are higher than e.g., 5 years ago, and decline rates are lower and recoveries are higher.  Nothing is stagnant in this business.  So projections or production capacity are easily under estimated by experts.

7.  Because of the longer field lives in deepwater (up to 50 years) these projects ignore these cycles and just keep moving forward as long as there is cash to invest.

One counter point is news of the US gov't buying 5 Mln BBls to refill the strategic petroleum reserve.  So that's ~1/2 day of US production.  No impact in my view.

Another counter point is that summer is approaching and consumption of fuel will pick up.  Strikes at oil refineries will end.  But reportedly these plants are already at the high end of their capacity.  So maybe not much more can be processed.

So in the very short term IF the Feds don't allow the crude oil to leave the country very soon, we could soon be drowning in it.  I can see domestic crude prices plummeting when there is no place to put it and a lack of customers to consume it.  And how will futures prices work?  IF there is no place to put these excess future deliveries and no one to sell it to, what will happen to those prices?  Could there be mass exodus and price collapse?  I.e., well under $30/bbl as is my current prediction since January?

The Feds say they are just now drafting legislation.  But what will POTUS do?  Part of me thinks his leftist thinking is to try and kill the domestic oil and gas industry, just as he helped do to the coal industry with his EPA executive orders helped of course by a slow steel industry (big met coal consumer) and lower cost competing, clean natural gas.  This would please many of his supporters and give him an opening to press harder for renewable energy.  The tradeoff here might collapse the economy but I don't think that concern would stop him as basded on his track record he seems to be heaviliy ideology driven to transform the nation into something else.

Would appreciate if you could keep your ODS garbage off this board. Thanks.

OK, I give up, what is ODS?  it really doesn't take much more effort to spell it out so we actually know exactly what you are talking about, that is unless you don't want us to know.  But, I really want to know what ODS is.

And what makes it garbage?  Is that because someone else wrote it?  Or because it is political in your opinion?  Please explain so we know what your point is.

Is this a political opinion?

Or are you just trying to make a PC statement unsuccessfully?  Really confused here.....

I really want to understand.