The most glaring short-coming (obviously one can say this in hindsight), KLJ did all their studies based on three price-points for oil: $70/bbl; $85/bbl; and, $100/bbl. In hindsight, they needed to take this to $50/bbl which is very possible for the next two to three years. (It is very possible but very unlikely.) $50-oil won't shut down the Bakken but it changes the economic picture and the impact on North Dakota dramatically. In fact, the impact with $50 oil might be greater than if oil goes to $150 for the next five years. The contractor was lucky to complete this study by September, 2014, before the plunge in oil prices.$50 oil -- "very possible but very unlikely" -- written just before Saudi opened the taps in 2014. Wow, was I wrong -- I did not see Saudi Arabia making a trillion-dollar mistake. But the thesis holds true: it would have been a lot more valuable to look at the impact of $50 oil vs $70 oil, let's say. Someone suggested looking only at the "high end." Hindsight is 20/20 -- no one saw $50 oil coming. I wonder if they will repeat the study looking at the impact of $30 oil and $40 oil.
Saturday, April 29, 2017
Flashback: New "Featured Post" At The Sidebar At The Right -- April 29, 2017
Link here. Originally posted back in 2014. From the original post with regard to a study of the Bakken back in 2014: