Average gas price $6.20/gal by end of Summer

[aja8888]

I know little about O&G but I assume the per bbl price is just one factor in whether it is economic to go after oil. If you have an idle pump jack with relatively low production capability that has been shut down, $70/bbl is probably a good price to turn it back on. If you're thinking about drilling, $70 might not be enough to take the chance. Other big factors that I've heard of: Ability to transfer oil (pipeline or truck or rail.) Quality of oil (tar sands to light-sweet.)

IOW It's complicated.

35+ years in oil & gas here. There are probably more idle pump jacks throughout the oil fields than running. When formations go dry, lots of wells sit unproductive. There are many reasons for letting existing well bores sit inactive, more so that I can discuss here. Don't be surprised if you see a not operating pump jack.

 

[Koolau]

35+ years in oil & gas here. There are probably more idle pump jacks throughout the oil fields than running. When formations go dry, lots of wells sit unproductive. There are many reasons for letting existing well bores sit inactive, more so that I can discuss here. Don't be surprised if you see a not operating pump jack.

Yes, I understand that. That come up (idle pump jacks) in Oil Shock 1 & 2 - and I'm an old guy - old enough to know and still (just barely) young enough to recall.

But there are also pump jacks that could pump some more oil, but it could cost more than it's worth at lower bbl price. IF the pump can still pump some oil, there is SOME price that would likely make it worth turning it on. YMMV

 

[googily]

Today I recieved an email reminding me to activate my Chase Freedom card's third quarter 5% bonus. The big one in the third quarter is gasoline.

So, 5% off April through June with the Discover card. The same 5% July through September with the Freedom card.

The best deal near me is still buying at Costco with the Costco 4% bonus. But, there are times I am not near a Costco, or I may not have time to wait in the lines. (Though they seem to be shortening quite a bit in the last two weeks.)

Also worth checking other credit cards to see if their Merchant Offers include any deals. I have some $10 off one time use deals from BP and Exxon that expire at the end of the month. (In addition to the rewards you can get for using their phone apps)

 

[aja8888]

But there are also pump jacks that could pump some more oil, but it could cost more than it's worth at lower bbl price. IF the pump can still pump some oil, there is SOME price that would likely make it worth turning it on. YMMV

With a producing well, it really depends on the oil/water cut to see if it's worth it at the well head. There is a cost associated with disposing of produced water. Say the water/oil cut is really bad, like 2%. Then getting rid (paying to) of 98 barrels of produced water at a nearby licensed disposal facility and selling 2 barrels of oil may not be profitable.

Also, some old fields may produce low quality crude oil (heavy, high sulfur, may contain lots of solids, etc) and that production may be shut in until better times.

Another factor is plugging and abandonment costs. To properly close a drilled well (natural gas or oil), the rods and pump need to be pulled, the well bore has to plugged and the casing cemented to the top of the well, and that can cost $50 - 100 K, depending on well bore configuration. What some operators do is wait until the field has no further value and P & A all the wells at the same time, saving some costs. So you may see wells sitting idle in that case.

 

[Koolau]

With a producing well, it really depends on the oil/water cut to see if it's worth it at the well head. There is a cost associated with disposing of produced water. Say the water/oil cut is really bad, like 2%. Then getting rid (paying to) of 98 barrels of produced water at a nearby licensed disposal facility and selling 2 barrels of oil may not be profitable.

Also, some old fields may produce low quality crude oil (heavy, high sulfur, may contain lots of solids, etc) and that production may be shut in until better times.

Another factor is plugging and abandonment costs. To properly close a drilled well (natural gas or oil), the rods and pump need to be pulled, the well bore has to plugged and the casing cemented to the top of the well, and that can cost $50 - 100 K, depending on well bore configuration. What some operators do is wait until the field has no further value and P & A all the wells at the same time, saving some costs. So you may see wells sitting idle in that case.

Thanks. I enjoy learning about the science, technology and business of oil. Oil is one of the most critical factors in our way of life.

 

[aja8888]

Thanks. I enjoy learning about the science, technology and business of oil. Oil is one of the most critical factors in our way of life.

One thing I forgot to mention about old oil fields is that once they start losing their ability to keep well bores full enough to pump continuously, the well tender (guy who keeps things going on a daily basis) will put well pump jacks on timers so that the wells stay "off" until a sufficient amount of oil collects at the bottom of the well bores. Then the timer kicks in and the well gets pumped until all the oil is topside in the storage tanks.

He does this by trial and error process util he get the on/off/on timing down right. So when you drive by an old oil field you may see some units pumping while other sit idle and in most cases, this is why.

 

[Chuckanut]

One thing I forgot to mention about old oil fields is that once they start losing their ability to keep well bores full enough to pump continuously, the well tender (guy who keeps things going on a daily basis) will put well pump jacks on timers so that the wells stay "off" until a sufficient amount of oil collects at the bottom of the well bores. Then the timer kicks in and the well gets pumped until all the oil is topside in the storage tanks.

He does this by trial and error process util he get the on/off/on timing down right. So when you drive by an old oil field you may see some units pumping while other sit idle and in most cases, this is why.

Well, doggonit aga8888! So we can't just flip a switch and get more oil out of an oil field. You are confusing us with facts. We can no longer pontificate - while living in blissful ignorance - on what should be done to produce more fossil fuel enerty. It sounds to me like you are a candidate for my list of Dangerous Radicals Who Infest This Site.

 

[aja8888]

Well, doggonit aga8888! So we can't just flip a switch and get more oil out of an oil field. You are confusing us with facts. We can no longer pontificate - while living in blissful ignorance - on what should be done to produce more fossil fuel enerty. It sounds to me like you are a candidate for my list of Dangerous Radicals Who Infest This Site.

Haha, and I am a DRWITS ........and what makes things even more mysterious is that there are wells without pump jacks can produce oil and gas also! But that's another story for the few here that are interested.

And some pump jacks can pump without electricity!

 

[NW-Bound]

Haha, and I am a DRWITS ........and what makes things even more mysterious is that there are wells without pump jacks can produce oil and gas also! But that's another story for the few here that are interested.

And some pump jacks can pump without electricity!

I dunno. I recall seeing some B&W movie clips, where crude oil came shooting out of the well that was being drilled, and coating the drill crew with black gunk. Maybe an exaggeration, but I thought it was based on some truth.

And now, they have to drill who knows how many miles to get it.

 

[aja8888]

Seeing we are talking about pump jacks.....

One of the oldest type of pump jacks can be found in California from the early days of drilling the Kern County field in Bakersfield, Ca (1920's or so). I actually found one of these still sitting on the well site (not producing) in the late 1980's. I did take a photo of it, but I can't find it now.

This pump jack was made out of wood, even the flywheel. And most likely driven by a once cylinder IC engine running on casing head gas.

On some wells, they hung a box of rocks in the counter-shaft as help to keep this pump jack running.Is he making any money on those?

 

[Koolau]

I dunno. I recall seeing some B&W movie clips, where crude oil came shooting out of the well that was being drilled, and coating the drill crew with black gunk. Maybe an exaggeration, but I thought it was based on some truth.

And now, they have to drill who knows how many miles to get it.

I'm sure aja8888 can explain it better, but I think drillers have learned how to prevent most of those blow outs (that waste a lot of oil and gas.) True you have to go deeper, but that doesn't mean the pressures aren't just as high as the old oil derricks you saw blowing out. YMMV

 

[aja8888]

I'm sure aja8888 can explain it better, but I think drillers have learned how to prevent most of those blow outs (that waste a lot of oil and gas.) True you have to go deeper, but that doesn't mean the pressures aren't just as high as the old oil derricks you saw blowing out. YMMV

Blowouts are caused by gas under pressure in the formation. When drilling a well, the bore pressure in monitored and watched carefully. They can set a plug in the bore to hold back any gasses until they set a wellhead over the cemented casing and control, output through valves in the wellhead. Also, most gas wells under high pressure are choked down.

It's very uncommon to have a well blowout. I have been to one such well that was a gas well in Alvin, Texas about 10 years ago that blew out after completion and wellhead installation. A valve failed and gas, water and solids were blowing out at 2,000 PSI a couple of hundred feet in the air. It took two days to get this stopped, but no fire was initiated.

 

[Out of Steam]

The best deal near me is still buying at Costco with the Costco 4% bonus. But, there are times I am not near a Costco, or I may not have time to wait in the lines. (Though they seem to be shortening quite a bit in the last two weeks.)

I also noticed the shorter gas lines at Costco when I was there this week Having taken two long-distance driving trips in the past six weeks, it was also my impression that traffic is slightly lower than in recent summers.

While US gasoline and diesel demand is about as inelastic as it is possible for a product to be, leisure driving does have a slight sensitivity to price.

 

[Midpack]

Blowouts are caused by gas under pressure in the formation. When drilling a well, the bore pressure in monitored and watched carefully. They can set a plug in the bore to hold back any gasses until they set a wellhead over the cemented casing and control, output through valves in the wellhead. Also, most gas wells under high pressure are choked down.

It's very uncommon to have a well blowout. I have been to one such well that was a gas well in Alvin, Texas about 10 years ago that blew out after completion and wellhead installation. A valve failed and gas, water and solids were blowing out at 2,000 PSI a couple of hundred feet in the air. It took two days to get this stopped, but no fire was initiated.

Thanks for your insights, a lot of interesting considerations I hadn’t thought about (no surprise).

And I do echo the statement earlier re: how consumers are “outraged” when prices go up (and margins are good) for any industry but they don’t care at all when demand reduces prices and margins are so low many companies go under or reduce employment and capacity at considerable expense. Ignorance is bliss…

 

[NW-Bound]

I also noticed the shorter gas lines at Costco when I was there this week Having taken two long-distance driving trips in the past six weeks, it was also my impression that traffic is slightly lower than in recent summers.

While US gasoline and diesel demand is about as inelastic as it is possible for a product to be, leisure driving does have a slight sensitivity to price.

It takes a while for the high cost of gasoline to soak in. People do not change their habit overnight due to inertia.

Plus, they have been cooped up due to Covid, and want to do some summer travel. When that desire is satisfied, they will stay home.

 

[Koolau]

It takes a while for the high cost of gasoline to soak in. People do not change their habit overnight due to inertia.

Plus, they have been cooped up due to Covid, and want to do some summer travel. When that desire is satisfied, they will stay home.

What surprises me personally is that, even though I can afford the higher prices, I make decisions based on the high prices. I drive less and even try to car pool when there is opportunity to do so. I guess it's now in the DNA or maybe it's just cheap-old-man syndrome. YMMV

 

[NW-Bound]

I guess it's now in the DNA or maybe it's just cheap-old-man syndrome...

I think that in your case, it's both.

 

[Koolau]

I think that in your case, it's both.

Guilty as charged!

 

[NW-Bound]

How are you going to get that Vette that you covet, if you are not willing to BTD?

 

[Koolau]

How are you going to get that Vette that you covet, if you are not willing to BTD?

Easy answer? I guess I'm NOT. (At least, that's what DW tells me.)

 

[almost there]

Regular is down to $6.20 today. (lowest price station in town) 1st time in weeks.

 

[Koolau]

Regular is down to $6.20 today. (lowest price station in town) 1st time in weeks.

Yeah, our local stations just dropped below $5 the last couple of days. DW thought we should go buy and I suggested the trend is "down" so let's wait. (Man! I hope I'm right, or I'll be hearing about it for a while!) YMMV

 

[almost there]

Yeah, our local stations just dropped below $5 the last couple of days. DW thought we should go buy and I suggested the trend is "down" so let's wait. (Man! I hope I'm right, or I'll be hearing about it for a while!) YMMV

Pretty wild, we have refineries 60 miles from home in SoCal, and its $1.20 cheaper when shipped (actual ship) to an Island.

 

[Koolau]

Pretty wild, we have refineries 60 miles from home in SoCal, and its $1.20 cheaper when shipped (actual ship) to an Island.

Oppps! Sorry. I'm in the heartland now! When I left the Islands, it was closer to $5.50.

 

[Midpack]

Pretty wild, we have refineries 60 miles from home in SoCal, and its $1.20 cheaper when shipped (actual ship) to an Island.

Most likely state/county/city gas taxes as you undoubtedly know.

Last year, the gas tax in California increased by 51.1 cents on July 1. An analysis by Stillwater Associates last year found that Golden Staters were paying around $1.18 cents per gallon in taxes and fees, KTLA reported.

https://news.yahoo.com/los-angeles-gas-tax-holiday-074126574.html
https://taxfoundation.org/state-gas-tax-rates-2021/

Gas prices are down $0.10-0.16 per gallon here. Drove by $4.439/gal at a BP station yesterday.