you cannot restart a well with a mouse-click and because not all wells are profitable all the time.
Oil and natural gas companies own fields or the rights to fields.
That is normally all they own. They outsource everything else. They outsource oil exploration to oil exploration companies and they outsource field operations to oil service companies.
When you drill a well, it takes about 5-7 years production running flat out 100% 24/7 to recoup the costs of drilling the well, which isn't the only cost.
The oil service company drills the well, operates the well, connects the feeder lines into the subsidiary and main oil pipelines, installs and maintains all the pumps and all the related machinery.
When you pump oil out of the ground, you pump water back into the well. If you're California, Texas, Louisiana or a Middle Eastern country you'll pump salt-water back into the well.
Why? To maintain static pressure for pumping and to protect and preserve the geologic structure.
A 40 square mile sink hole in Texas or anywhere else is not cool and it's even less cool if your home is within that 40 square miles.
At some point, and this usually 10 to 20 years later, water starts impacting your costs and the text-book case for this is Illinois Intermediate.
That field is in southern Illinois and they've been draining it since the 1840s. A barrel of Illinois Intermediate is 25% oil and 75% water.
If it costs you $25/barrel, then you need 4 barrels to give you 1 barrel of oil and 3 barrels of water, which is contaminated and has a value $0, so you just send that to your reclamation plant and pump it back into the field.
But, here's the thing, you just spent $100 to pump 4 barrels of oil and you only got 1 barrel to sell, so unless oil prices are $100/barrel, you just lost a butt-load of money.
So, the last time Illinois Intermediate was pumping was way back when oil was $120/barrel.
Fraking has a relatively higher cost, so oil has to sell for at least $60/barrel just to break even, but that's very simplistic.
OPEC does not now nor have they ever set oil prices. Oil prices are determined by benchmark oils.
West Texas Intermediate (WTI)) is both a global benchmark oil and regional benchmark oil (for the North/South American Region.)
What does that mean?
It means all oils are price against the benchmark.
High quality oils sell for higher than the benchmark and that would be nearly all OPEC oils.
Low quality useless garbage oils like crappy Canadian Tar Sands sell for less.
June 25, 2021 had WTI at $72 and change per barrel and the best of the 5 crappy Canadian Tar Sands only sold for $60/barrel.
If you used crappy Canadian Tar Sands for gasoline, then expect to pay $11-$15/gallon every day all the time for the rest of your lives.
You only get 3-5 gallons of gasoline out of a 42-gallon barrel of Canadian Tar Sands. By comparison, Illinois Intermediate is 13 gallons, WTI is 19 gallons, Saudi Light is 26 Gallons and Murban is 29 gallons.
Because of Covid 19, you had slack Demand for oils and natural gas, so production came to a crawl.
Since no one knew when any positive change would come, oil service companies shut down oil and natural gas wells.
Oil service crews worked 8-12/hours per day for 6-10 days to cap the oil wells, blow out the feeder lines, and drain the coolants and fluids from the machinery to set it up for long-term storage.
I don't know much about natural gas wells, except that you have to blow the feeder lines even for short-term shut-down unlike oil wells where you can just camp the well and leave the oil in the feeder lines if you're gonna be shut down for a few weeks or a month or two.
Which brings us to this:
Forty-six exploration and production companies and 61 oil-field service companies filed for Chapter 11 bankruptcy last year, according to Haynes and Boone, a Dallas law firm tracking bankruptcies. The 107 oil and gas bankruptcies in 2020 were the most since 142 bankruptcies were filed during the last oil bust in 2016.
https://www.ogv.energy/news-item/ove...nkrupt-in-2020
You have a serious freaking shortage of oil service companies and oil service crews.
The Saudis just own the fields. They don't actually make them go.
10s of 1,000s of oil and natural gas wells were shut down around the world and it wasn't done with a mouse-click. It took 6-8 months to shut those wells down. Now you gotta restart them, and you ain't even got enough workers to do that.
Remember, when you're in bankruptcy, you ain't running the show because you have a court-appointed receiver running the show for you, so it ain't like you can go hire 100 people just because you wanna.
It's gonna take another 6-12 months get enough wells back on-line to make a difference
