CALGARY, North Texas – Significant improvements in well completion strategies and other improvements in oil extraction technologies together have created a surge in global oil production, resulting in record production in the United States and many other oil producing countries.
Combine this step change in production with either flat or reduced oil demand (thanks to economic uncertainties throughout Europe – with the once strong Germany currently on the brink of a recession), and ladies and gentlemen, we have $80/barrel oil – down from $110/barrel only a few months ago. The director of the Canadian Oil Producers Association of Alberta, Dr. Daryl Daryl, had a hard time sugar-coating the depressed oil price forecasts that are wreaking havoc on 2015 capital budgets across the industry.
Well, what I can say? This really sucks. It’s economics 101 – supply is considerably out-pacing demand, and the price is falling faster than Paris Hilton’s shorts at a frat party. You don’t need to be a rocket surgeon to figure that one out.
And why? WHY?!?! Because oil companies and their busy beaver engineers can’t stop improving extraction technologies, and with the US of A wanting to become energy independent and a net exporter of oil by yesteryear. Yeah, bang-up job, America, that’s how you rebuild an economy.
It looks like as an industry we shot our left foot some years ago with gas prices, and now we’re prepping to shoot ourselves in the right foot.
While we’re at it, why don’t we just convert all of the vehicles in North America to wind power to help appease the environmental types? – Dr. Daryl Daryl
Well, it turns out that the oil industry is actually not its worst enemy after all, but rather the major environmental organizations, but in a way that not even the most misguided energy analyst would predict.
A report leaked to 2P News late last night from an unnamed source has exposed a twisted web of industry deceit that will make analysts’ heads spin around faster than a rotary table on a double-time Duvernay drilling rig. The report states that the chief executives of some of the world’s largest environmental outfits, including Green Peace, the Pembina Cardium Institute, Friends of the Earth, and Big Oil Can Kill My Ass, used company resources to fund the R&D projects from which the new completion and extraction technologies were borne.
The environmental organizations masterminded this oil price collapse all along, it would seem, as described by Houston-based Harder & Johnson energy analysts.
In general, the oil and gas industry perceives environmental outfits as the poor kid on the block who can’t really afford to do anything meaningful, yet they are always around just causing trouble for the kids who are trying to get stuff done. Yet, they are the ones behind one of the largest oil price slumps since the 2008 global recession. Imagine that? I have to give those granola-eating sandal-sportin’ hippies far more credit in the future. With those tactics, they could make a great career in the oil business or Canadian politics. Ooooh, yeeaaaaahhh! – Peter Northrod, Principal at Harder & Johnson
When asked if he plans to curtail his organization’s production in order to drive up oil prices, the President of OPEC was quoted as saying, “Curtail production? Are you kidding me? Over here in Saudi Arabia, we are quite okay with $80/barrel oil. To be quite honest, it will force us to start optimizing our operations, yet we will continue to make money hand over fist. If the West has a problem with this, then they can, how do you say?… go to hell.”