Oil & Gas : leave it in the ground?

cells

Percy1983 wrote: »

Leave it there until ine rest of the word runs outmillions tit will be worth something.

As far a electricity production goes, nuclear is the way forward.

In the past oil was as plentiful as coal and gas. Its price was thus cheap and before the 1990s a lot of it was burnt in power station.

This started to change as air traffic and vehicle ownership surged. For instance

China went from about 10 million air passengers in 1990 to an expected 400 million this year and this is expected to continue to grow towards 1 billion passengers a year.

Turkey went from 30 million to over 60 million just between the three years of 2009-2012 during a recession...

Even the UK went from 45m flights to 115m flights between 1990-2013


All this extra demand for liquid fuel from aviation and land vehicles means the price of oil is now considerably higher than the price of gas and coal.

this is unlikely to change anytime soon as aviation and land vehicle use is lilely to continue to go up rapidly.


what the world needs is computer driven cars and for boeig and airbus to develop and deploy LNG aircraft. Those two would bring oil back im line with cial and gas so the differential in price is not as unreasonably high. Neither comouter cars or LNG aircraft are on the near horizon but perhaps in 20-40 years time....perhaps tpp late for most of us

Jonbvn

I work in oil and gas and have noticed a few red herrings in the posts above.

Firstly, where did $40-$50/ barrel productions costs came from? This is 2 to 3 times higher than I have ever seen anywhere.

Secondly, once you start producing from a field it is not like turning your central heating on and off. Decisions need to be taken with a long term view to get the infrastrucure and personnel in place.

Aberdeen would likely be a small fishing village on the east coast of Scotland, where you could buy a crofters cottage for a £20k.

There are 300,000+ people engaged in jobs in the UK related to (directly and indirectly) O&G. Where would these people work instead?

UK O&G engineers are in demand all over the world. Their skills and income tax take would never have occured without the NS boom.

We differ massively geographically, demographically and economically from Switzerland. Sorry, but I do not wish to pay £7 for a pint at my local;)

cells

Jonbvn wrote: »

I work in oil and gas and have noticed a few red herrings in the posts above.

Firstly, where did $40-$50/ barrel productions costs came from? This is 2 to 3 times higher than I have ever seen anywhere.

Secondly, once you start producing from a field it is not like turning your central heating on and off. Decisions need to be taken with a long term view to get the infrastrucure and personnel in place.

Aberdeen would likely be a small fishing village on the east coast of Scotland, where you could buy a crofters cottage for a £20k.

There are 300,000+ people engaged in jobs in the UK related to (directly and indirectly) O&G. Where would these people work instead?

UK O&G engineers are in demand all over the world. Their skills and income tax take would never have occured without the NS boom.

We differ massively geographically, demographically and economically from Switzerland. Sorry, but I do not wish to pay £7 for a pint at my local;)

The idea is that without uk oil and gas we would need to spend £25-30B a year importing it. The result of that would be the pound is weaker and the result of that is that the uk would exports more services and goods and imports less (producing it domestically instead).

if it would hold in practise is anyones guess.

However France Germany and Japan are three of the world's largest 6 economies and none of them domestically produce much at all of gas coal or oil as a percentage of their primary energy needs. So it doesn't seem to be a necessity for wealthy nations to produce most their own fossil fuels.


I still think UK oil and gas has been a net benefit to the UK but not as huge as the ool industry would have you believe. BTW its unlikely uk oil and gas supports 300k plus net jobs in the UK. 300k jobs at the uk mean full time wage of £37k pa would equal £11.1B
uk oil and gas total revenue before taxes and royalties etc is less than £30B. Its virtually impossible the oil and gas industry spends 11B of its 30B of revenue on wages considering it is so highly taxed. So I would wager total jibs is below 300k not above. Perhaps less than even half of that

grizzly1911

Jonbvn wrote: »

There are 300,000+ people engaged in jobs in the UK related to (directly and indirectly) O&G. Where would these people work instead?

Ask the ex miners and steelworkers?

tberry6686

Jonbvn wrote: »

I work in oil and gas and have noticed a few red herrings in the posts above.

Firstly, where did $40-$50/ barrel productions costs came from? This is 2 to 3 times higher than I have ever seen anywhere.

Secondly, once you start producing from a field it is not like turning your central heating on and off. Decisions need to be taken with a long term view to get the infrastrucure and personnel in place.

$40 to $50 a barrel production costs in the UK north sea is relatively common (usually about $30 but is often higher).

the marginal cost of an existing fossil fuel site be it oil or gas is close to zero

It is like a nuclear plant. Quite expensive to build but the marginal cost is less than $10 per Mwh once built.

it is the reason why fossil fuels will be around for many decades even if nuclear or solar or whatever becomes cheaper. The coal gas and oil mines will just have to reduce prices below this new source of energy (of course investment into starting new fossil fuel sites will be cut back but the existing ones will still have 40-60 year lives)

Completely wrong with this. Wells have a limited lifespan for numerous reasons and have to have workovers or be redrilled, A cheap easy well will cost at least £2m to drill and I have been involved in at least one that cost 100x that (admittedly it was an exploration well). The usual cost of a well is between £10 and £20m which is part of the production cost. Workovers often cost £2m and again is part of the production cost.

The Bentley field in the UKNS is going to cost a minimum of £750m just to get into production, with current reserves of ~250MMboe that is £3 per barrel before actual running costs are even considered. Add in the running costs, exploration costs etc and the actual production costs will be between $40 and $50 per barrel.

The numbers are pretty similar for Gas as well.