...certain oil fields in places like Iraq and Saudi are still pulling oil up at a cost of about $10 per barrel.Oil production costs vary wildly from one region of the world to another -- even from one adjacent oil field to another adjacent oil field. Profits for some producers are much higher than for others. Let's look at some comparisons of production costs:
This $100 oil malarkey is a function of an explicit cartel (OPEC), dangerously unregulated commodity oil trading in global investment banks and the background noise of those who think oil will soon be extinct. _IrishExaminer
The first table comes from the USEIA.
EIA:
Costs for Producing Crude Oil and Natural Gas, 2007–2009
2009 Dollars per Barrel of Oil Equivalent1
2009 Dollars per Barrel of Oil Equivalent1
| Lifting Costs | Finding Costs | Total Upstream Costs | |
| United States – Average | $12.18 | $21.58 | $33.76 |
| On-shore | $12.73 | $18.65 | $31.38 |
| Off-shore | $10.09 | $41.51 | $51.60 |
| All Other Countries –Average | $9.95 | $15.13 | $25.08 |
| Canada | $12.69 | $12.07 | $24.76 |
| Africa | $10.31 | $35.01 | $45.32 |
| Middle East | $9.89 | $6.99 | $16.88 |
| Central & South America | $6.21 | $20.43 | $26.64 |
15,618 cubic feet of natural gas equivalent to one barrel.
Source: Tables 10, 11 and 12, Performance Profiles of Major Energy Producers, 2009.
Last reviewed: November 1, 2012
The next table comes from the IEA:
Oilfields Estimated Production /source Costs ($ 2008) Mideast/N.Africa oilfields 6 - 28 Other conventional oilfields 6 - 39 CO2 enhanced oil recovery 30 - 80 Deep/ultra-deep-water oilfields 32 - 65 Enhanced oil recovery 32 - 82 Arctic oilfields 32 - 100 Heavy oil/bitumen 32 - 68 Oil shales 52 - 113 Gas to liquids 38 - 113 Coal to liquids 60 - 113 Source: International Energy Agency World Energy Outlook 2008
Bakken oil & gas producer GEOI:
Net Oil and Gas Production, Average Price and Average Production Cost
The net quantities of oil and gas produced and sold by us for each of the three fiscal years ended December 31, the average sales price per unit sold and the average production cost per unit are presented below.
| Year Ended December 31, | |||||||||
| 2008 | 2007 | 2006 | |||||||
Oil Production (MBbls)
| 743 | 392 | 184 | ||||||
Gas Production (MMcf)
| 2,962 | 1,648 | 577 | ||||||
Total Production (MBOE)*
| 1,236 | 667 | 280 | ||||||
Average sales price (net of hedging):
| |||||||||
Oil per Bbl
| $ | 82.42 | $ | 67.20 | $ | 54.61 | |||
Gas per Mcf
| $ | 8.12 | $ | 6.19 | $ | 6.83 | |||
BOE
| $ | 68.96 | $ | 54.74 | $ | 49.92 | |||
Production cost per BOE**
| $ | 27.46 | $ | 23.67 | $ | 20.37 | |||
| * |
Barrels of oil equivalent have been calculated on the basis of six thousand cubic feet (Mcf) of natural gas equal to one barrel of oil equivalent (1 BOE).
|
This graphic is a big picture comparison of different regions and countries. Better technologies for tight oil, oil sands, and other unconventional oil production, are pushing production costs down -- while prices seem to be stuck on an undulating plateau.
Clearly the Persian Gulf countries are sitting in the best seats in terms of watching the oil money flow in. Russia is not doing too badly either -- if not for corruption in high places, stripping away oil profits for wasteful personal consumption by cronies.
The best North American oil producers are enjoying a profitable season, and are happy for it. Even if oil prices drop to $60 a barrel, many of the North American producers will be able to keep producing long enough to wait out the slump, and catch the ride back up.
The problem with the chart is to understand how 2007 US$ correlate with US$ 2013.
ReplyDeleteThis is needed to correlate the current costs with the current prices.
This economic crisis could reduce oil consumption enough to drive the price down to 2007's 60 US$. This would destabilize many oil producer countries, because without oil revenues they are not able to bribe their populations to stay submitted.
In particular, if oil revenues go down, Saudi Arabia will have political turmoils and Egypt will become a political nightmare because it will be totally unable to pay for food imports (it is already on the edge).
Good points.
ReplyDeleteThe value of the US$ is rapidly declining under Obama.
And as you say, the issue of fiscal breakeven is just as important to oil - dependent states as is the issue of production costs.
For this posting, I chose to focus exclusively on production costs in order to get a clearer picture of that issue in isolation.
But as you say, for governments which depend upon oil revenues to pacify their populations -- such as the OPEC states, Russia, etc. -- fiscal breakeven cannot be ignored.