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137 comments on Oilwatch Monthly - August 2008
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137 comments on Oilwatch Monthly - August 2008
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thanks - that makes sense.
Though I understand that onshore wells are much easier to just turn on and off due to market weakness than the more complex (and costly) offshore projects. But, just like with nat gas, there is a rising floor on oil (barring short term hedge fund liquidations or rule changes on who can own futures contracts).
A more interesting question (pertaining to Goldmans comment) is what % of all production is in the neighborhood of the 'incremental barrel'? If KSA has 7 mbpd that costs $5 and 2.5mbpd that costs $105, at $115 they still make a great deal of money. Smart observers will note it is possible for them to LOSE money on their marginal barrel to appease a call for more production, while still making money on the dregs of the supergiants. An important question this - one I doubt many (any?) people have data on....
Hmm I'd be surprised if Saudi had much left thats producing at a 5 dollar a barrel cost. They have put in a lot of very advanced horizontal wells. I'd say that they probably are over 20 dollars a barrel on their cheapest wells. Not that we know for sure but just reading what they are doing seems to indicate that 5 is almost certainly to low and a reasonable guess is say 20-50 ?
I am a bit confused about how far wells cann be turned on and off. Some people say that technically (considering the oil flow?) wells cannot be (simply?) turned on and off.
On the other hand I've heard that some wells are mothballed for a possible later production. And what do swing producers do if not slowing or stopping the pumps?