Quaker

Natural Gas Picks and Pans

This is from the guy who six months ago couldn't find any reason for the run up in oil prices.

Oil Set To Fall While Gas Continues To Hang On With The Cold

I don't disagree but keep in mind, price is a powerful motivator. I try to stay focused on the ball. I never was a big believer in peak oil. Actually, I'm at a loss as to what's actually peaking. Oil is a catch all term for sludge of varying viscosities. For every barrel of light sweet there are three barrels of crap waiting for a price rise.

When I worked in SA, I personally shut in hundreds og thousands of bpd of heavy crude. It was heavy, but it flowed. I ran flowmeters on it. But at $24 nobody wanted it.

Oil supply is, and always will be, an engineering problem. Unfortunately most US petroleum engineers are either working for greenpeace, dead or in retirement communities.

Oil Set To Fall While Gas Continues To Hang On With The Cold

I'm not quite sure what point you're trying to make here. US oil inventories were very low when oil was plentiful and cheap. This is the way inventories work. Do shoe stores buy 3X more shoes than they can sell and then watch as their profitability collapses? Even shoe salesman aren't that dumb.

US oil production has fallen almost 50mm barrels per month since 2000. Refined products imports have exploded. OBVIOUSLY inventory is going up. The stuff comes in on tankers, it doesn't flow in from West Texas in pipes. At 668mm barrels, the US strategic reserve amounts to about 37 days of what comes through the strait of Hormuz. Whippy dinkle.

Since 1/1/06, Saudi Oil production has fallen almost 1mm barrels. At the same time they've doubled the number of rigs drilling Safaniyah field. Since Safaniyah was COMPLETED in 1985, having 15 rigs drilling and one in work over is a curious happenstance. Since, at it's "mecca" Shedgum had 270 wells and now there are plans to drill 420 this year, all while SA orders new rigs from Rowan and Ensco and cuts production 1mm bpd, we're stuck with another bizarre canundrum.

Meanwhile, Pemex has 42 jackups!!!!!! drilling Canterell and production dropped 500,000 bpd in one year!!! All this as jackups scoot out of the GOM faster than you'd leave an Ashley Simpson concert because they can make 3X the moolah in the persian Gulf.

Hmmmm. What's an investor to do.