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Laurence

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I know nothing about oil fields under the sea.

But is pouring money into an industry that is losing its viability an option?

Presumably they are hoping to mothball some of the less productive fields 

But how can the industry compete with fields that are at ground level

I am not optimistic

We don't want posturing from either of the two governments, but as a tax payer one has to be concerned

 

 

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I know nothing about oil fields under the sea.

But is pouring money into an industry that is losing its viability an option?

Presumably they are hoping to mothball some of the less productive fields 

But how can the industry compete with fields that are at ground level

I am not optimistic

We don't want posturing from either of the two governments, but as a tax payer one has to be concerned

 

How do you mean........losing its viability?  

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Viability is profit one would think

Without profit no viability

That is what the governments of both colours I presume are looing at?

How to improve viability the obvious one is to reduce taxation

Which means a bigger burden for the tax payer to balance the books.

If I am wrong people with more knowledge of the oil industry will tell me.

But if the cost of producing the oil falls behind the price of imported oil

The spectre of a ghost town and moth balled oil fields cannot be far away.

 

One solution is to fix the price for oil at a price that is viable, and ban the import of oil.

I for one cannot see any government doing that

 

I get the distinct impression that OPEC are out to break the competition ,

by  undercutting the market.

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Not quite sure what you mean Laurence. Oil fields under the sea? If you mean offshore drilling/production facilities that drill through the seabed as opposed to land based drilling/production facilities. Barring the middle east and some areas of North America there are very few on land facilities. Most of the worlds oil comes from under the sea. Land based fracking and shale oil are a different kettle of fish and even more costly than offshore.

The industry is certainly not losing viability. They just need to cut some costs to continue making profit. Bear in mind that most of the worlds fuel and energy come from oil. Demand will always be there. Every few years the oil price drops and the media latch on to some sensationalism then it goes up again. As it will this time. The Italian energy company ENI predict that the price will rise and hit a peak of $200 in the next two years.

Not sure why you would be concerned as a tax payer either. The government may take less in oil revenues but they dont pay out to the industry. Britian sold its interests in oil profitibility when Maggie sold of Britoil and BP.

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Seems to me, when removing oil from where it currently languishes becomes unprofitable in the medium/long term for companies, then companies will abandon the unprofitable wells. Are they currently completely closing down and permanently abandoning wells which may, as technology advances, become viable again?

 

Like yourself, Laurence, I know nothing about oil fields under the sea.......or on-shore fracking, if it comes to that, but  as far as I can see, the drop in price of oil is not down to the amount of oil available to be removed, but down to the amount of oil being removed. The more oil on the market, the less it costs to purchase and vice versa.

 

It seems to me that the current situation is markets acting as markets do.....following supply and demand. As companies, like Governments, have to do forward planning re investments etc based on an assumption as to their future receipts, if they, as the Scottish Government did, pre September or so, assumed prices would continue to hover around the mid-level of prices being received at that time, then a drop in those receipts, if essential to forward planning, would, of necessity, bring in a requirement to reduce costs in order to remain viable.

 

From my reading, it looks as if much of the problem for company profits and investment levels and government taxation receipts is a mainly political one, influenced by a number of considerations....not the least of which is OPEC, which is refusing, at the moment, to reduce their output, because to do so would benefit countries they aren't overly keen on, like Iran and Russia, and would also encourage the expansion of fracking in the USA and UK etc, reducing their oil import requirements, and  the whole supply/demand thing has not been helped by the fact that the Iraq/Libya "troubles" haven't stopped their oil production as expected. 

 

The only unviable oil production at any time is that which costs more than the current barrel price of oil to produce...which is not the case with many of the OPEC countries, but is the case with many of the shale oil newcomers, in the USA in particular..so OPEC, or at least Saudi in OPEC, appear to be trying to push the high-cost producers out of the market (for the moment, at least), and reduce supply in that way....and with that supply gone, demand for what is left will then rise, as will the price.....and then the whole cycle starts again when the geopolitical climate requires it. "Free market" economics is only as free as they are allowed to be by those who control the markets, as we saw in the financial markets before the crash.

 

Theoretically, worst hit would be oil exporting countries who use their export income as current spending, while in countries which import most/all of their oil, reduced barrel prices should filter down to the consumer over the piece in reduced energy/fuel prices,reduced costs for companies paying energy/fuel costs for production and delivery, reduced cost of goods in the shops........and a boost to the economy.. Not holding my breath on that here, though.

 

To go even more O/T and opinionated......

 

However, imo, the situation with oil only goes to illustrate that we really need to be looking much more seriously at greener, less finite, alternatives (short of covering the North of Scotland with onshore windfarms!). I'm not saying that as a "greenie", because I'm not at all convinced about global warming theories, but I have always felt, as I have watched greed for income, by individuals, businesses and Governments subsume pragmatism and commonsense, that those of us using and abusing the world's finite resources nowadays are being supremely selfish and short-sighted. I'd much prefer we used less of what cannot ever be replaced, so that my great great grandchildren can use some of it, if they have to by then, to live nearly as comfortably as we do.

 

Why do we appear to think that because we feel it is our inalienable right to be able to drive everywhere, slob about a comfortably warm house in t-shirts, and predicate our happiness/lifestyles on being able to buy many/most of the 6000 or so consumer goods produced from the finite oil we leech from the ground, because, currently, we can, rather than because we must........ it really doesn't matter that our great great grandchildren may be denied any opportunities to enjoy a small part of that lifestyle.......because we have widdled it all up against the wall of our entitlement to only have to consider our lives now, rather than those who will come behind us looking for a life in their turn?

 

I'd rather have less oil income, less pointless, unnecessary consumer goods etc and a (healthier) population which thinks first of getting on shank's pony rather than into a car to travel from the front door to the corner shop now.....so my descendents will have, available to them, if they need it, some of the finite hydrocarbon resources we are currently wasting on our high living to benefit the pockets of the oligarchies running the world. That's partly why I am for a blanket ban on fracking until it is absolutely essential, if it ever is....because we don't need the oil to live as we do now, but businesses need it to make profits now..as if they didn't already make enough.

Edited by Oddquine
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I'll reply to your first paragraph Oddquine and the answer is NO. Although the price has fallen there's still profit in well's that are flowing. The average single oil well in the North Sea, for example, probably produces around a thousand barrels a day. Most facilities will have at least 20 wells. Thats approx 20,000 barrels a day per facility. Thats a million dollars a day of income. Lifting costs are maybe half a million a day which makes gross profit of half million a day average per platform. There are around 20 producing oil platforms in UK waters of North Sea.

 

The problems come about with research and development costs. These costs are outlays that dont provide immediate returns so oil companies will put them on hold till the market improves. The un-developed fields wont disappear but sadly, in the interim, jobs will.

 

Yes I agree we need to do more to develop alternative energy sources and Scotland is leading the world on that at the moment but its very much a trial and error thing. A lot of trial and research needs to go into finding the most cost effective means of providing energy as well as a lot of money. What many Green minded people need to realise though is what I call the 'Greenpeace Effect'. That organisation sails around the world claiming to be protectors of the environment. To do so they burn vast quantities of fuel. They use ozone depleting refrigerants to store their supplies. Supplies that are provided in packaging that trequires oil for its manufacture. Wind turbine blades are made from polycarbonates the raw material of which is oil. The towers are steel which requires vast quantities of fossil energy to produce. I could go into it in more detail but I think you probably get the gist of it.

 

Scarlet, officially I'm retired so I can easily adjust to a life of leisure, like your good self. My current contract ends in September and, unless someone else comes along with an offer then thats what I'll do.

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Canada currently has only 3% of energy production in wind powered generators. 

 

This Government is concentrating their efforts on the tar sands in Alberta and trying to get the U S Government to approve the Keystone oil pipeline through their country to the southern coast. Obama is dead against it.

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I'll reply to your first paragraph Oddquine and the answer is NO. Although the price has fallen there's still profit in well's that are flowing. The average single oil well in the North Sea, for example, probably produces around a thousand barrels a day. Most facilities will have at least 20 wells. Thats approx 20,000 barrels a day per facility. Thats a million dollars a day of income. Lifting costs are maybe half a million a day which makes gross profit of half million a day average per platform. There are around 20 producing oil platforms in UK waters of North Sea.

 

The problems come about with research and development costs. These costs are outlays that dont provide immediate returns so oil companies will put them on hold till the market improves. The un-developed fields wont disappear but sadly, in the interim, jobs will.

 

Yes I agree we need to do more to develop alternative energy sources and Scotland is leading the world on that at the moment but its very much a trial and error thing. A lot of trial and research needs to go into finding the most cost effective means of providing energy as well as a lot of money. What many Green minded people need to realise though is what I call the 'Greenpeace Effect'. That organisation sails around the world claiming to be protectors of the environment. To do so they burn vast quantities of fuel. They use ozone depleting refrigerants to store their supplies. Supplies that are provided in packaging that trequires oil for its manufacture. Wind turbine blades are made from polycarbonates the raw material of which is oil. The towers are steel which requires vast quantities of fossil energy to produce. I could go into it in more detail but I think you probably get the gist of it.

 

Scarlet, officially I'm retired so I can easily adjust to a life of leisure, like your good self. My current contract ends in September and, unless someone else comes along with an offer then thats what I'll do.

 

I suppose the jobs which go in the interim, while oil prices are low may be lost forever, particularly if R&D comes up with new technology which requires less bodies on the ground. That would be a pity, particularly, with the increasing retirement age, as it will mean fewer jobs for new entrants to the industry.

 

Can't disagree with the detrimental environmental effects of people who think they are protecting the environment. I have never quite understood why those protecting the environment don't go back to basics......like setting out to protect the whales on the same kind of sailing ships our ancestors used to catch them on. It would be much more sensible, as well, to have the regular meetings our Governments have to decide on the latest cutbacks in carbon usage via tele-conferencing than by all congregating in some far off corner of the world, employing innumerable planes for the two way journeys. We're not good at thinking logically, are we........but hey, our lords and masters must have their jollies, mustn't they?

 

When I moved up to Caithness, we put up a grid-connected windmill, just a 2.5KW one, and I realised how stupid the idea was re "being green" when I saw the size of the hole dug to accommodate the amount of concrete required to anchor just that relatively small one to the ground. If we had to consider the carbon cost of production, transport and installation, as well as the monetary cost of purchase, then it would have taken much longer to pay for itself, if it has yet. Not far from where I lived in Lybster, there is an onshore rig, slant drilling under the sea, and I always wondered how much the flaring added to "global warming".  That one rig is obtrusive enough sitting on the cliff......the thought of many of them, or fracking installations, for no other reason that I can see except to make profit for oil companies and taxes for Governments makes me as angry as I am already over the prospect of renewing Trident. 

 

If you believe in the whole global warming theories, which don't convince me so far, tbh, why is there no consideration made as to the carbon cost of many of the methods used to "cut" carbon usage.  If it was really the problem many scientists and Governments appear to believe, why are they not cutting air travel, especially for government officials on jollies, cutting the use of big government cars, cutting back/stopping the production of cars with big petrol/diesel engines, expanding public travel options, taxing petrol/diesel to a level which drives personal transport off the roads except for absolutely essential usage, reducing the plethora of similar carbon-based goods which all do much the same thing but look a wee bit different....how much choice over every darn little thing do we need?

 

We are happy to nanny-state the obese, the smoker, the alcoholic and the drug-addict...why not those addicted to travelling in a carbon-costly way and having a choice between mostly unnecessary carbon-costly consumer goods?  Until we change our ways, by choice or force of law, if "Global Warming" is the problem they say it will be, if we continue as we are doing, then we are doomed...or at least our descendents are.....but then that's just fine by us, because we won't be around to see it happen.

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Now you enunciate why I was reluctant to recommend coming back to this planet in any future re-incarnation.

Why don't people learn ? - because we are human, we like expensive toys, we need to feel significant  and when it affects us or our pocket we tend to see things differently.

 

I've said it before and confirm it now. This planet is on it's way down to  disaster and it's just a matter of time.

 

While you are at it, why do we elect MP's whom we know, as sure as guns are guns,  will, for the most part, never stand up in the Commons to speak, especially if it's a statement which opposes anything their bosses in the party say about it?  It's a very well-paid sinecure , nothing else and his commitment is not to realty help anyone other than himself. The salary and benefits is closer to $150,000 Canadian per annum rather than $120,000 (smile)  so why would he change ?

 

When you ask them direct questions they try to take as long as they can to reply and the replies are invariably negative and self serving. The current MP we have here in my city is weak as they come, says to us, the public, he is not going to run again but immediately sends in his renewal papers because he wants another 5 years in the game to increase his pension. Replies to

emails only when he is under duress or when he  thinks the crisis he is asked to comment upon is well-nigh over and breaks promises etc. If you are lucky to see him on the benches in Parliament he looks sad and frequently about to fall asleep.

He is a perfect follower who votes when P M Harper dictates it. But he does not appear to have a passion for representing with zeal the interests of the constituents who elected him instead of his bureaucratic bosses who use him mercilessly.

This is the kind of Government we have become used to, always hoping that it will change. We have an election coming up in October of this year. But will we dump them all? I doubt it since the average person does not like change with uncertainty.

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