<Letter to Garnaut: Implications of Oil Production Decline The Oil Drum Some Lessons from Bailout Month>
<DrumBeat: September 30, 2008 DrumBeat DrumBeat: October 2, 2008>

246 comments on DrumBeat: October 1, 2008

Comments can no longer be added to this story.

Show without comments | PDF version

Darwinian on October 1, 2008 - 9:17am Permalink | Subthread | Comments top

As of September 30th, 742,266 barrels of oil per day were still off line in the Gulf of Mexico. That is only one half of one percent less than was off line four days earlier. 746,459 bp/d was off line on September 26th.

The natural gas story is a little different. As of September 30th, 3,384 MMCF per day was off line. That is 13.4 percent less than was off line just four days earlier. 3,909 MMCF was off line on September 26th.

http://mms.gov/ Click on “Hurricane Gustav/Hurricane Ike…” under “News Briefs”.

MMS has recalculated the number of manned platforms in the Gulf of Mexico since 23 manned platforms have been confirmed destroyed from Hurricane Ike. The new figure of 694 manned platforms was used to calculate today’s percentage of manned platforms evacuated….

From the operators’ reports, it is estimated that approximately 57.1 % of the oil production in the Gulf is shut-in.

Ron Patterson

Comments can no longer be added to this story.
elwoodelmore on October 1, 2008 - 9:27am Permalink | Subthread | Parent | Comments top

i think there is a related update, but i couldnt find it on the mms site:

http://www.rigzone.com/news/article.asp?a_id=67312

"...As of September 29, 2008, 52 of the 3,800 offshore oil and gas production platforms have been confirmed as destroyed. Initial estimates are that the 52 destroyed production platforms produced a total of 13,300 barrels of oil per day and 90 million cubic feet of gas per day."

by the mms definition, a platform can be anything from a single well to thunderhorse.

Comments can no longer be added to this story.
Geckolizard on October 1, 2008 - 10:11am Permalink | Subthread | Parent | Comments top

As of September 30th, 742,266 barrels of oil per day were still off line in the Gulf of Mexico. That is only one half of one percent less than was off line four days earlier. 746,459 bp/d was off line on September 26th.

Maybe they need to be loaned some money to do repairs to their infrastructure... Oops, that darned credit crunch is kicking in...

But, on a more serious note, if there is a long term credit crunch, how does this impact producer's ability to get financing for new projects and for maintenance of existing ones? I mean, look at it this way- if it takes $300 Million of investment to get at $2 Billion of oil, and no one can loan $300 Million, then it ain't gonna happen.

Comments can no longer be added to this story.
Darwinian on October 1, 2008 - 10:27am Permalink | Subthread | Parent | Comments top

Naw, it ain't likely to happen. Big Oil, by and large, does not borrow money for drilling or repairs. Their problem is what to do with all the cash they are generating. What you describe is a problem that most small business' have. They operate on a line of credit and if that line of credit disappears they disappear also. But this does not apply to Big Oil.

Ron Patterson

Comments can no longer be added to this story.
shargash on October 1, 2008 - 11:31am Permalink | Subthread | Parent | Comments top

this does not apply to Big Oil

What about independent refiners like Valero?

Comments can no longer be added to this story.
Earthbound Misfit on October 1, 2008 - 1:28pm Permalink | Subthread | Parent | Comments top

And what about oil field service companies?

Comments can no longer be added to this story.
Darwinian on October 1, 2008 - 2:09pm Permalink | Subthread | Parent | Comments top

Obviously I am not privy to the books of refineries or oil field service companies but I doubt very seriously that they depend on a short term line of credit to keep operating. This is largely a small business method of operation. Very large companies, when they need money, usually issue corporate bonds to raise cash.

Comments can no longer be added to this story.
Gail the Actuary on October 1, 2008 - 5:37pm Permalink | Subthread | Parent | Comments top

I think shortage of credit is likely to have a fairly big impact on oil and gas operations.

The way companies are run now, independent contractors do almost everything. I observed this when I visited the BP operation in Wamsutter; TOD posters have confirmed the same thing. Also, the supply chain for gasoline is getting more and more broken up, as oil majors spin off gas stations and parts of the chain that aren't making enough money. It is the small, but necessary, pieces of the supply chain that are going to have credit problems.

When I talked to Red Cavaney, President and CEO of the American Petroleum Institute, last Friday, he was quite concerned about the impact of current credit problems on oil and gas companies. (See 57:54). In his words, "Our economy runs on credit." He was quite concerned that there would be a "big impact" on the oil and gas industry if the credit problem continued for a "couple more weeks".

Comments can no longer be added to this story.
karlof1 on October 2, 2008 - 1:30am Permalink | Subthread | Parent | Comments top

Actually, large corporations are more likely to have established lines of credit negotiated with some well entrenched financial company(ies), with multiple lines of credit being the norm. For example, Matt Simmons's bank likely has numerous lines of credit servicing a universe of petroleum companies engaged in different facets of that industry.

What just happened with Big Auto is their inability to continue accessing their established lines of credit, which caused them to go begging to Uncle Sam, who gave them $25 Billion. Such lines of credit can be risky as they expose the debtor company to potential margin calls and/or repo action.

Comments can no longer be added to this story.
Wharf Rat on October 2, 2008 - 3:10am Permalink | Subthread | Parent | Comments top

A delay in getting money from a line of credit means Santa Rosa-based ThermaSource must postpone plans to buy drilling rigs it needs to consummate several pending deals.The geothermal drilling company, which applied for a line of credit last month, thought it would have the money in November. But bankers are now saying it could take until January, giving them extra time to scrutinize the company's books and make sure it can repay the loan.

While ThermaSource is still confident the funding will come through, the delay means it must postpone plans to buy drilling rigs it needs to consummate several pending deals, said Louis Capuano, the company's president.
http://www1.pressdemocrat.com/article/20081001/NEWS/810010389

Comments can no longer be added to this story.
celticoil on October 2, 2008 - 8:19am Permalink | Subthread | Parent | Comments top

Maybe we could burn their cash for heat. Wonder how many BTUs are in a bundle of 100s?

Comments can no longer be added to this story.
Ben on October 1, 2008 - 9:00pm Permalink | Subthread | Parent | Comments top

Today, it bumped up a trifle to 58.8% shut-in.

Comments can no longer be added to this story.

246 comments on DrumBeat: October 1, 2008

Comments can no longer be added to this story.

Show without comments | PDF version