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The majority of drilling in the Bakken takes place in 4 counties...McKenzie, Mountrail, Dunn and Williams. The price to drill in these 4 counties have dropped over the years as they learn where and how to drill in this region. So it will have to drop pretty low for drilling to come to a complete halt. The outer fringes will possibly be affected if the prices stay low for a long term...but short term? Probably not. But if prices do drop really low, this is not just a Williston issue...if the prices drop too low...it will also affect Texas, Oklahoma, Colorado, Pennsylvania, etc... etc... it would not be just Williston or ND to hurt. But I don't think too much is going to happen either. I think North Dakota will come out just fine. The Saudi's are just trying to let the world know they still have some control. Obviously threatened a bit over the US oil production surge. They want to make money too and they won't cut prices for too long...probably just enough to show the world who they think is boss. But of course we are going to hear all of the "uh ohhhhhs" and the "i told you so's". But I'm not jumping on their bandwagon.
With oil prices plunging to 3 year lows, at some point, would oil drilling come to a complete halt in Williston?
If this happens would the city economy collapse?
"Helms said Burke, McLean and the combined area of Bowman and Slope counties are currently “not economic” to drill wells, with the breakeven price of $81, $73 and $75, respectively, potentially putting a few at risk."
This is from today's Fargo Forum. There is an impact being felt now, however, what Saudies are doing is curbing the growth, not collapsin the price. This is not a bad thing, it allows the state and cities to catch up a little with infrastructure.
Last edited by ElkHunter; 12-13-2014 at 09:41 PM..
Reason: No signatures
Here are some links to some articles as to why the Bakken (Williston, Watford City, Stanley and Tioga areas) and other Shales in the United States, will be just fine. If you want to compare to the rest of the world. Saudi Arabia will eventually come to their sense. They need oil to go back up in order to keep their own country afloat.
About a year ago they got the oil exec's together and asked a lot of tough questions. The toughest was, at what price point will you have to stop future exploration and development? They all come up with what their price point needed to be. They ranged from $2 a gallon, to $2.25 a gallon. So as long as gas stays over $2.25 a gallon, all major companies can maintain drilling, pumping, and exploration.
So no, I don't see a hault in the future. Also, gas is not sold based on cost to produce, its based on speculation. They will artificially keep the cost where they want and need it.
Elk hunter:
The cost of gasoline is only a consideration way downstream from the wellhead. Unless you are one of the integrated companies like ExxoMobil, BP, Shell, etc. the only consideration is the spot price of oil, condensate, other natural gas liquids and natuRal gas. The good news is that the Bakken is actually one of the only oil shales that is inherently economic in an environment without inflated commodity prices.
This dip in prices is mostly arbitrary and is based on the Saudis announcing that they do not intend to curtail production. When they say that, the futures market tanks even though we don't have any real idea about what the price SHOULD be. Drilling will slow down and may actually stop for a while if oil starts to test $70, but it isn't going to stay that low. Even if it drops catastrophically, it will just be a temporary setback for North Dakota that amounts to a great buying opportunity for people who are not overextended... Whether that means real estate, leasehold, production or whatever else.
Don't panic if it looks like the sky is falling... It really means that you have a great opportunity to buy stuff.
The cost of gasoline is only a consideration way downstream from the wellhead. Unless you are one of the integrated companies like ExxoMobil, BP, Shell, etc. the only consideration is the spot price of oil, condensate, other natural gas liquids and natuRal gas. The good news is that the Bakken is actually one of the only oil shales that is inherently economic in an environment without inflated commodity prices.
This dip in prices is mostly arbitrary and is based on the Saudis announcing that they do not intend to curtail production. When they say that, the futures market tanks even though we don't have any real idea about what the price SHOULD be. Drilling will slow down and may actually stop for a while if oil starts to test $70, but it isn't going to stay that low. Even if it drops catastrophically, it will just be a temporary setback for North Dakota that amounts to a great buying opportunity for people who are not overextended... Whether that means real estate, leasehold, production or whatever else.
Don't panic if it looks like the sky is falling... It really means that you have a great opportunity to buy stuff.
Explain it all you want, I was just passing on "Exactly" what was said in the conference. I know its way down the road, but that is what they said. :-)
Explain it all you want, I was just passing on "Exactly" what was said in the conference. I know its way down the road, but that is what they said. :-)
In retrospect, it occurs to me that they may have been talking about natural gas equivalent and as long as natural gas stays above $2.25/mcf... In which case, I can buy that.
In retrospect, it occurs to me that they may have been talking about natural gas equivalent and as long as natural gas stays above $2.25/mcf... In which case, I can buy that.
No, they were talking about the price of Unleaded Regular gasoline for your car. They were asked about the price of gasoline and how it effected drilling, and more importantly, exploration. All of them agreed that if they could keep the price from $2.00 to $2.25, per gallon, they could continue with current production, current drilling, and planned exploration. If the price, at the pump, dropped below that, then something had to be cut back. Simple as that. It was an interview on CBS by Charlie, whatever his name is. He does some good interviews and asks some tough questions. He wanted the bottom line on what the person, at the pump, should expect.
Oil price drops
Gas/Diesel price drops
Everyone buys an SUV
Everyone buys a bigger home
Oil creeps back up
Oil companies profit
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