Iranian Oil Production -- Another Drop In The Bucket? -- Rigzone, January 23, 2016

From Rizone today:

The world is awash in crude and overwhelming dwindling consumer demand. And just this week, the Western world responded by unleashing half a million barrels every day of Iranian oil, threatening to crush dismal commodities prices to stupefying lows.

Or so many theories go.

But the energy sector in 2016 is in a different world than the one that existed in 2012, when those sanctions restricted Iran’s participation in the world market. Despite the vast volumes of hydrocarbons beneath Iran’s salty deserts, its production was weakening. Since that time, capital and technology have abandoned the country.

David Pursell, managing director and head of macro research at Tudor, Pickering Holt and Co. in Houston, said some estimates suggest Iran produced half of its fields years ago.

Resuscitating them would require an influx of expensive technology when cash is in short supply. “If Iran was on a decline before sanctions, and all of a sudden, it’s pulling the fields less hard, but also underinvesting in both capital and technology, we would argue there’s a chance that 500,000 barrels a day might be a stretch,” Pursell told Rigzone. “The market is worried, if not scared, that it could be more than half a million barrels a day.” 

Great article. Some good points. I agree completely. Based on the graphs / statistics presented earlier this week, I just don't see that big an impact in the near term -- except the psychological / emotional effect that the talk about Iranian oil will generate.

I also agree that there is likely to be no rush by oil companies to start pouring money into Iranian oil fields; they might start negotiating contracts for future drilling, but nothing quite so soon.

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Schlumberger

Reuters/Rigzone:

• no "significant" recovery in activity until 2017
• company may have trouble meeting current-quarter estimates by analysts
• will spend $10 billion on share buyback program
• will lay off another 10,000 employees in the fourth quarter
• total job cuts will reach 34,000; 26 percent of its workforce, since November, 2014

That date, November, 2014, is important. I put October, 2014, as the start of the current crude oil "depression."

The CEO said:

Although North American oil companies have scaled back spending, their output remains high as they steer drilling rigs to the most prolific shale spots and frack wells more intensely. Production in North America and outside of OPEC is resilient because oil companies, looking to maximize cash flow, are keeping "taps wide open," Kibsgaard said.

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CBR

ArgusMedia is reporting:

The former US regulatory chief who oversaw the kickoff of new tank car designs and other controversial safety rules said that railed crude movements have entered a permanent decline. Former Pipeline and Hazardous Materials Safety Administration (PHMSA) head Cynthia Quarterman told attendees of the Argus Americas Crude Summit today that safety concerns, coupled with a changed oil market and new infrastructure, promise to move crude back onto more traditional modes like pipelines.

"I would bet my money on crude by rail diminishing back into history over the next five years," Quarterman said.

Quarterman left the agency in October 2014 to take a position as a distinguished fellow at the Atlantic Council think tank. PHMSA released new design and retrofit standards for cars that carry crude and ethanol last May, and the omnibus transportation law passed late last year tweaked some of those regulations.

I don't think that should come as a surprise to anyone, that CBR will "diminish back into history over the next five years." Although I'm not quire sure what "diminish back into history" means -- perhaps "diminish back to more historical numbers."

Whatever.

I think most folks knew that CBR was a temporary thing, like man-camps -- a temporary solution to a temporary problem caused by the boom. It was amazing how fast they could lay track, build tank cars, etc., while waiting for pipeline to be laid. CBR was much like the short-lived Pony Express that served a certain purpose until more efficient means to move mail were found.