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Strategies & Market Trends : Buy and Sell Signals, and Other Market Perspectives -- Ignore unavailable to you. Want to Upgrade?

To: 3bar who wrote (34589)	7/6/2012 12:49:32 PM
From: architect*	2 Recommendations Read Replies (1) \| Respond to of 220943

The threat to high oil prices are cars that run on compressed natural gas (CNG), or batteries, instead of gasoline. The world population is 7 billion and the US population is 313 million. The other 6.7 billion people will use more oil even if the US begins to use less or produce more. The US produced 5.5 mmbopd in 1950 and about 10 mmbopd in 1970. Today's 8.5 mmbopd is in the middle. The US consumes 19 mmbopd. The US needs to double oil production from its all time production peak in 1970 to become self-sufficent for oil. The slight increase in Bakken oil production from say 500k bopd to 1 mmbopd, has caused the wellhead sales price in the Bakken to decrease to $68 / bbl with Brent/Dubia/ Louisiana trading close to $100 / bbl. $68 / bbl is fairly close to the all-in break even costs on Bakken oil production. The US has 4.4% of the world population and consumers about 22% of the world oil. Per peron, the US consumers 10 times more oil than China, and 23 times more oil than India. The US standard of living is neutral to increasing slightly, with US GDP growth equal to US population growth. China GDP is growing at 8% and the rest of Asia about 6% growth in GDP. Any increase in the Asian or Middle East standard of living or population will require more cars in the future. The other 6.7 billion people, outside the US, will be the ones adding new cars and new drivers. United States Daily Oil Consumption – 19 million barrels United States Population – 313 million United States Barrels per Person Per Day - .06 China Daily Oil Consumption – 8.3 million barrels China Population – 1.33 billion China Barrels per Person Per Day - .006 India Daily Oil Consumption – 3.1 million barrels India Population – 1.18 billion India Barrels per Person Per Day - .0026 I was talking to a gentleman at a party who had turned $1 MM in 1980 ish into $200 MM today investing in oil stocks. He posed the same question anlayst are already predicting that in the next 50 years Bakken type shale oil production will increase from 1 mmbop to 6 mmbopd, and that bring the US failry close to oil self-sufficency if US oil demand declines or remains in the 20 mmbopd range over the next 50 years. The margin oil costs to produce oil are rising. The all-in break even costs on the deep water projects like the 1 billion Jubilee oil field in Angola are $68 / bbl, similar to the Bakken $68 /bbl break even. The Saudi Arabia is the only country that can flood the market with oil and upset supply and demand. History says the Saudi's support reasonable oil prices. Ghawar is estimated to produce over 5 million barrels of oil a day 6% of global production. Ghawar began production in 1950, and what happens to the world oil supply if oil production at Ghawar begins to decline, like Cantrell the giant oil field in Mexico where oil production declined from 3 mmbopd to 650k bopd a 68% decline, in the past three years. Ghawar and Cantrell are the two largest oil fields in the world that have been producing since the 1950's which is very old for an oil field. Bakken production from oil wells declines 65% in the first 12 months. In 1950 Ghawar was developed when oil prices were $1.50 / barrel and Cantrell developed when oil was $3 - $4 / bbl. I'd guess today's ultra deep, giant oil fields that Petrobras discovered in the Santos and Campos basin of Brazil will require $115 - $125 / barrel to break even. Early development costs are significantly over-budget on these Santos and Campos oil fields. Petrobras after discovering many billions of barrels of oil off-shore Brazil, is trading under $20, which is where the stock traded in 2006. The market doesn't believe, these ultra deep billion barrel oil fields, Brazil will be profitable anytime soon, even with $100 //bbl Brent/Dubia.