<Senate Foreign Relations Cmte: "The Hidden Cost of Oil" The Oil Drum Saturday Open Thread>

262 comments on From an Insider: Rig Prices, Rig Depth, and How to Get a Job

Comments can no longer be added to this story.

| Show without comments | PDF version

totoneila on March 31, 2006 - 2:59am Permalink | Subthread | Comments top
Good job Goose!

Your comments about steel pipe preferentially going to China before us sounds like China is trying to purposely outbid us for crucial materials-- using economic leverage to force us into massive energy shortages.

I hope that any oilrig workers are legally documented and federally approved, no matter where they work.  The dangers of drilling work requires full protection for the workers.

Bob Shaw in Phx,AZ  Are Humans Smarter than Yeast?

Comments can no longer be added to this story.
BOP on March 31, 2006 - 3:24am Permalink | Subthread | Parent | Comments top
China is trying to purposely outbid us for crucial materials-- using economic leverage to force us into massive energy shortages.



Funny how Americans argue for "free markets" yet when they get outbid in those same free markets then the outcome is due to a vast conspiracy.

Who do you think gave the Chinese all those US dollars they are now using to out bid you? It was the Walmart Shoppers Put 3 Televisions In Every Room So China Can Outbid Us on Drillstring Conspiracy or WSP3TIERSCCOUODC for short. Must be a terrorist organization.

Some to come to a quote shop near you:

I don't think anyone expected the Chinese to spend any of that money we have been shoveling in their direction for the last five years. This wanton and irresponsible action just goes to show that you cannot trust the Chinese with market freedoms. They do not understand how markets work.
Comments can no longer be added to this story.
totoneila on March 31, 2006 - 8:12am Permalink | Subthread | Parent | Comments top
Hello Bop,

We would need more clarification about the original quotes in Prof. Goose's posting: but it reads to me that the Chinese somehow got their orders preferentially moved ahead.  I am no legal expert, but that sure doesn't sound kosher to me.  How did you read the original quotes? Please restate in your own words.

I think you semantically misread my intent on Chinese economic leverage.  If you recall my earlier posts on Powerdown and biosolar habitats, I am all in favor of choking production in the US to shift funding from detritovores to biosolars, as long as careful controls are implemented.  If the Chinese, using economic leverage, legitimately outbid us for crucial materials, so be it.  When prices start to rise here in the US, the pioneering people will be ready to join Richard Rainwater in building biosolar habitats, the oil companies will still profit, and billions of dollars will finally start flowing into a proper Powerdown.  If the Hubbert decline is steep and ASPO's Depletion Protocols are going nowhere, then the US must assert it own version in the national interest to minimize future internal strife.

Bob Shaw in Phx,AZ Are Humans Smarter than Yeast?

Comments can no longer be added to this story.
Leanan on March 31, 2006 - 8:27am Permalink | Subthread | Parent | Comments top
The only reason they get their orders moved ahead is that they are better customers.  They pay more, and they order more.  Of course you're going to give preference to your best customers.
Comments can no longer be added to this story.
Oilrig medic on March 31, 2006 - 8:34am Permalink | Subthread | Parent | Comments top
I agree leanan, if the chinese want to pay higher prices sell it to them.  That being said if prices go up other comapnies will produce pipe.  I have not seen any shortage of drill pipe in the gulf and I just asked my company man if it is hard to get and he said "no why I can get as much as I want."  So is this chinese thing one company got burned on one deal or an industry thing?  I see racks in Mobile and Fourchon and Lafayette FULL of drill pipe.  If there was a shortage would all that pipe not be in use?
Comments can no longer be added to this story.
GeoPoet on March 31, 2006 - 10:55am Permalink | Subthread | Parent | Comments top
oilrig medic -

Drill pipe is the small volume end of oilfield tubulars. It is only replaced when it is completely worn out, and so has a relatively long life.

CASING and liner runs are the big dollar and volume items, as they are used in EVERY well and LEFT IN THE GROUND as part of the well construction process. Thus they are consumables, whereas drill pipe is reusable.

Comments can no longer be added to this story.
Leanan on March 31, 2006 - 1:46pm Permalink | Subthread | Parent | Comments top
FWIW, Rockdoc over at PO.com (I think he's a petroleum geologist) said shortages are afflicting the entire industry:

Middle East (Saudi, Qatar) are paying top dollar for pretty much anyone breathing to work in the oil/gas fields and on rigs

Tubulars are in high demand. Mill runs are now 7-8 months out

Rigs both offshore and onshore are in short supply, rig rates have nearly doubled in the last year. Most rigs are now on long term contracts.

Apparently the McDonalds in Fort McMurray had to close because the tar sands were employing pretty much everyone...they can't get burger flippers.

Comments can no longer be added to this story.
geewiz on March 31, 2006 - 8:18pm Permalink | Subthread | Parent | Comments top
Sounds like the illegal immigrants have a place to go! flipping burgers and etc.
Comments can no longer be added to this story.
Big Gav on April 2, 2006 - 8:19am Permalink | Subthread | Parent | Comments top
From:
http://thefraserdomain.typepad.com/energy/2006/04/peak_oil_a_shat.html

"As Fort McMurray's population has increased to 61,000, from 33,000 in 1996, housing has become in such short supply that the average mobile home now sells for $277,000 and people are renting couches for $500 a month

The crowding and labor shortages pushed Canadian Natural Resources to build a jet runway long enough to accommodate Boeing 737s to allow workers to commute to their giant new Horizon project. Shell Canada has built a giant pipeline to transport diluted oil sand bitumen hundreds of miles south to a new upgrading plant outside Edmonton. "

I don't think too many illegal burger flippers can afford to fly in / fly out - or pay $500 a month to sleep on a couch...

Comments can no longer be added to this story.
Leanan on April 2, 2006 - 11:06am Permalink | Subthread | Parent | Comments top
Holy Heisenberg.  A quarter of a million dollars for a mobile home?  And I thought real estate prices were bad here...
Comments can no longer be added to this story.
wkwillis on April 3, 2006 - 7:16am Permalink | Subthread | Parent | Comments top
Not quite. What happened is that the steel companies signed a deal at one price, the price moved up, and they defaulted on the deal.
That isn't legal. So, don't deal with the steel companies that aren't upholding their contracts.
Hey, Mexico may have done the same thing to the Koreans, for all I know. Maybe Mexico contracted to sell oil to Korea at 50$ a barrel, and then sold it to the Chinese for 60$ a barrel. Turnabout is fair play.
Comments can no longer be added to this story.
uncle toby on March 31, 2006 - 10:54am Permalink | Subthread | Parent | Comments top
Where I live in Pennsylvania is pretty much the nation's pipe and tube capital.  The tube mills here that produce commodity pipe are struggling due to Chinese dumping.  (The mills that do custom sizes are in good shape and are working flat out.)  In fact there were just major layoffs because of the Chinese imports.  I doubt there is a shortage of drilling pipe.

Interestingly, the U.S. International Trade Commission found the Chinese to be involved in illegal dumping and recommended tariffs.  However, Bush refused to sign off on the ITCs recommendation.  Layoffs have resulted and the largest mill's owners put its plants up for sale.  Guess who came in as new owners?  Carlyle Group.

There is outrage from both labor and management against Bush.  (The quote in the local paper--"What is the reason for the layoffs?  Bush, Bush, Bush.)  Of course, the widespread opinion here is the whole reason Bush didn't sign off on the ITC's recommendation was to set up a sweetheart deal for the Carlyle Group.

Comments can no longer be added to this story.
Descolada on March 31, 2006 - 11:33am Permalink | Subthread | Parent | Comments top
Excuse me here if I'm wrong, but isn't a more likely reason Bush isn't moving on this because he's already had he's steel tariff fiasco, which was ruled illegal by the WTC?
Comments can no longer be added to this story.
ab on March 31, 2006 - 4:18am Permalink | Subthread | Parent | Comments top
Wow, the Chinese are really out to get us, eh? Can you please keep these conspiracy theories to yourself?

Your comments about steel pipe preferentially going to China before us sounds like China is trying to purposely outbid us for crucial materials-- using economic leverage to force us into massive energy shortages.

Why would the Chinese even have an interest in causing a deliberate shortage of crucial materials such as steel pipes? If costs go up for oil companies in the US to secure adequate oil supplies, then crude oil prices go up. The US is not going to stop consuming oil just because it went up by 10 $ a barrel. Instead, it will cause a lot of pain in China and to the Chinese govt. Increasing gas shortages and the spectre of public unrest. Whatever the crude oil price is at the given point, the Americans pay that. And the Chinese too. The Chinese would rather see oil for 30 $ a barrel rather than 66.5 $. The Chinese consume a lot of oil too. The cost of higher crude negatively affects the Chinese by diverting money from economic projects to the middle east.

Comments can no longer be added to this story.
eric blair on March 31, 2006 - 7:58am Permalink | Subthread | Parent | Comments top
Wow, the Chinese are really out to get us, eh?

No more than the Americans have been 'out to get' others over the years.   Simple observation of "what works" to obtain resources w/o a gun barrel.

Can you please keep these conspiracy theories to yourself?

Why label it a conspiracy?   Simple economic arguments will do.   The Chinese have a pile of American dollars and are willing to spend 'em.  More willing than the Mexicans or the Americans.

BUT

So what if it IS a conspiracy?   How does that change the reality?  Or the shafting of the non-insider parcipatants?

Comments can no longer be added to this story.
The Swede on April 1, 2006 - 5:39am Permalink | Subthread | Parent | Comments top
Really Bob?

"Purposely outbid us for crucial materials", thats what I would call a market economy.

"Using economic leverage to force us into massive energy shortages", you think their doing this to hurt you? Why would they hurt their customers.

 

Comments can no longer be added to this story.
GreyZone on April 1, 2006 - 3:14pm Permalink | Subthread | Parent | Comments top
It's not deliberate. It's a predictable side effect of becoming a consumer economy driven by JIT manufacturing all tuned to quarterly bottom lines (aka pure greed unmoderated by any external moral system) above health, long term wealth, national security, the ecology, or even basic human decency.
Comments can no longer be added to this story.

262 comments on From an Insider: Rig Prices, Rig Depth, and How to Get a Job

Comments can no longer be added to this story.

| Show without comments | PDF version