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Oil & Gas Sector

  • 1.  Oil & Gas Sector

    Posted 04-21-2020 09:12
    What will be the future of oil & gas sector. Today the oil price traded in negative. So what are your views on future of oil.

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    Hitesh Ramchandani
    Assistant Professor
    R.N.G. Patel Institute of Technology, Surat
    Surat
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  • 2.  RE: Oil & Gas Sector

    Posted 04-22-2020 05:11
    Crude oil from the oil fields generally have buffer storage in the oil fields, pipe line systems, sea or rail or road oil tankers. The Coronavirus effect has resulted in closing down industries and all other oil consumers. Some crude oil producers and agents have caused gluts of oil which they must get rid of. They will pay consumers to buy the crude oil until the market balances again. Some clever consumers will make profits for a short while. After the Coronavirus problem is sorted out the crude oil market will start balancing and the crude oil world will come back to normal.  Whatever that is.

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    Louis Mielke
    Chemical engineer
    Johannesburg
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  • 3.  RE: Oil & Gas Sector

    Posted 04-23-2020 02:26
    Brent crude fell to $22.58 a barrel in March, its lowest level since November 2002. Oil prices have fallen by more than half during in March as companies have
    cut back or closed production.

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    KOTTI KUMAR
    Head Plant Operations
    INDO GERMAN PETROCHEMICALS LIMITED
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  • 4.  RE: Oil & Gas Sector

    Posted 04-26-2020 10:09

    The problem isn't in production, at least not for West Texas Intermediate.  It's storage capacity.  Storage is running out and last week, the price for the end of the May contracts was -$38 or worse per barrel.  Lots of rigs in West Texas have been taken out of service.  The drop in demand for oil because of COVID-19 and the disagreement between Russia and Saudi Arabia has contributed to the issue too.  More than 2 dozen oil tankers are sitting off the coast of California being used for storage.  It's prertty grim out here in the Permian Basin right now!

     

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      Betsy Blair
    Director
    Quality Assurance - Europe, Asia, Africa
    Phone: +1.785.341.1218
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    COVID-19 Resources for Business Continuation






  • 5.  RE: Oil & Gas Sector

    Posted 04-28-2020 09:04
    I respectfully disagree with Ms. Blair.  It is EXACTLY about production.  Not storage.  And particularly production of US extremely light crude oil (crude with an API gravity of 40 and higher).

    Firstly, world crude storage capacity has grown with more countries adding strategic reserves similar to US SPR.  World wide crude storage capacity stands at about 6.7 billion barrels, about 67 days of storage for the globe, up about 30% from 2009 levels.  As of January, this storage was about 70% full.  US non-SPR storage has grown by at least 30% since the surge in light tight oil production.

    Secondly, refining capacity globally and particularly along the US Gulf Coast is not configured to process large quantities of 40+ API gravity crude oil, the exact type coming out of the west Texas/SE New Mexico Permian and Delaware basins.  Since the 1990's until the last 5-6 years, the average gravity of global crude supply was going down, getting heavier.  More and more of the supply tilting toward the globe's largest pools of oil in western Canada and Latin America ranging 8-20 API gravity.  Refinery investments focused on heavy crude processing with Cokers proliferating especially along the US Gulf Coast.  Since about 2010, the average gravity of global crude supply has been climbing, too slowly to notice at first resulting in continued investment in Coking and other heavy crude processing capacity globally.  This due to a perfect storm of lower investment in heavy oil production, increased investment in US light tight oil production.

    Thirdly, the US is exporting nearly half of the 40+ API gravity crude, much of it to China and other Far East refiners, resulting in about a $5/barrel lower value for our crude oil.  US refineries lack capacity to process more domestically and continue to import 6-7 million barrels per day of African, Middle East, Mexican, other South American crude oil.

    Production needs to be curtailed, sooner rather than later.  Adding more crude to storage merely "kicks to can down the road", perpetuates low crude prices, particularly in the US, for longer.  Demand for refined products has dropped at least 30% globally.  Refineries have yet to drop processing of that much crude oil resulting in a glut of refined product storage.  Production of crude oil still exceeds processing.  This is strictly a commodities business, price will dictate supply/demand behaviors.  The best place to store crude oil today:  in the ground before touching it.

    Regards, Suzanne Roat, PhD, P.E.
    LinkeIn Profile

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    Suzanne Roat PE
    Associate Professor
    Clemson University
    Clemson SC
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  • 6.  RE: Oil & Gas Sector

    Posted 04-28-2020 00:14
    Here is a link to a resource on the future of the industry: https://www.bloomberg.com/opinion/articles/2020-04-07/what-will-the-world-look-like-after-covid-19-watch-oil-markets

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    Christine Grant
    Associate Dean and Professor
    Raleigh NC
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  • 7.  RE: Oil & Gas Sector

    Posted 04-29-2020 22:03
    There is a recent news about oil and storage mentioning the following:

    "Prices have collapsed and storage is nearly full. The only option for many producers is to shut in their wells."

    Check the following link: