Oilfield Layoffs

[HoLeChit]

I left United Engines Manufacturing feb 15th, felt a layoff coming down the pipeline, started at the local John Deere dealership doing what I love again, being a technician. The 18th or 19th of feb my shop at UE laid off over 60% of the shop. The week before, my girlfriends dad had to lay off 75% of his Halliburton shop. He was pretty upset about it. Tough times.

On a brighter note, my roommate is a warehouse manager of some sort with a small, very fast growing food distribution warehouse in north OKC. They're always looking for people, and if you need something, it will at least keep you afloat for a while. Hit me up if you want some info on it.

 

[CHenry]

Talked to a buddy who is a directional driller. He's still working, says they got 2 wells, one near Kingfisher and one near Deer Creek. Hes a little worried though.

 

[Hobbes]

The U.S. has so much crude that it is running out of places to put it, and that could drive oil and gasoline prices even lower in the coming months.

For the past eight weeks, the United States has been producing and importing an average of 1.1 million more barrels of oil every day than it is consuming. That extra crude is flowing into storage tanks, especially at the country's main trading hub in Cushing, Oklahoma, pushing U.S. supplies to their highest point in at least 80 years, according to the Energy Department.

If this keeps up, storage tanks could approach their operational limits, known in the industry as "tank tops," by mid-April and send the price of crude — and probably gasoline, too — plummeting.

The supply growth may even be speeding up. U.S. crude supplies rose 10.3 million barrels last week, the government said Wednesday, the largest weekly increase since October 2002.

"The fact of the matter is we are running out of storage capacity in the U.S.," Ed Morse, head of commodities research at Citibank, said at a recent symposium at the Council on Foreign Relations in New York.

Morse has suggested oil could fall all the way to $20 a barrel from the current $50. At that rock-bottom price, oil companies, faced with mounting losses, would stop pumping oil until the glut eased. Gasoline prices would fall along with crude, though lower refinery production, because of seasonal factors and unexpected outages, could prevent a sharp decline.

The national average price of gasoline is $2.44 a gallon. That's $1.02 cheaper than last year at this time, but up 37 cents over the past month.

Other analysts agree that crude is poised to fall sharply — if not all the way to $20 — because it continues to flood into storage for a number of reasons:

— U.S. oil production continues to rise. Companies are cutting back on new drilling, but that won't reduce supplies until later this year.

— The new oil being produced is light, sweet crude, which is a type many U.S. refineries are not designed to process. Oil companies can't just get rid of it by sending it abroad, because crude exports are restricted by federal law.

— Foreign oil continues to flow into the U.S., both because of economic weakness in other countries and to feed refineries designed to process heavy, sour crude.

— This is the slowest time of year for gasoline demand, so refiners typically reduce or stop production to perform maintenance. As refiners process less crude, supplies build up.

— Oil investors are making money buying and storing oil because of the difference between the current price of oil and the price for delivery in far-off months. An investor can buy oil at $50 today and enter into a contract to sell it for $59 in December, locking in a profit even after paying for storage during those months.

The delivery point for most of the oil traded in the U.S. is Cushing, a city of about 8,000 people halfway between Oklahoma City and Tulsa at an intersection of several pipelines. The city is dotted with tanks that can, in theory, hold 85 million barrels of oil, according to the Energy Department, though some of those tanks are used for blending or feeding pipelines, not for storing oil.

The market data provider Genscape, which flies helicopters equipped with infrared cameras and other technology over Cushing twice a week to measure storage levels, estimates Cushing is two-thirds full.

Hillary Stevenson, who manages storage, pipeline and refinery monitoring for Genscape, says Cushing could be full by mid-April. Supplies are increasing at "the highest rate we have ever seen at Cushing," she says.

Full tanks — or super-low prices — are not a sure thing. New storage is under construction at Cushing, and there are large storage terminals near Houston, in St. James, Louisiana, and elsewhere around the country that will probably begin to take in more oil as prices fall far enough to cover the cost of transporting the oil.

Also, drillers are quickly cutting back because oil prices have plummeted from $107 a barrel in June. And demand is showing signs of rising.

Despite the enormous increase in crude stocks reported Wednesday, inventories of gasoline did not rise and diesel fuel inventories have fallen slightly over the past two weeks. That leads some to conclude that demand for crude could soon pick up, easing the surplus somewhat.

But many analysts believe oil prices will fall through the spring, before summer drivers start to relieve the glut.

http://news.yahoo.com/us-running-room-store-oil-171025359.html;_ylt=A0LEViqc__hUsUQAOE0lnIlQ


About the part I bolded, analysts talking about that on CNBC this week.
Investors buying oil today and storing it to sell at higher prices later.
The only hitch is if enough "investors" pursue the same strategy at the same time then storage capacity is exceeded and it could initiate a precipitous fall in prices that ends up wiping the investor out.

 

[Wheel Gun]

After a few weeks of growth, WTI has fallen again for a week. Currently, it's down to a miserable $43.83. Grrrrrr.

 

[Oklahomabassin]

The guys above me passed the word down, that the rig would be stacked after this hole is completed.

 

[retrieverman]

My youngest son has been selling bits in NW OK and SW KS, and all the rigs he called on got stacked. He started a new job on Monday doing the same thing in east TX, but he's not happy with his new situation and hoping things will pick back up in NW OK by the fall. I've told him over and over to just be happy he still has a job.

 

[Defnestor]

Hopefully the coming wars with Russia and Iran will kick prices up again.

 

[dieseltech09]

I just loaned out 9 of my mechanics to our yard up in Caton OH. They will be on 14 and 7 rotations. I don't think any of them wanted to go but it's better than the other option. We have enough work to keep our last two Oklahoma frac crews busy for the next 6 weeks but after that it might get bad.

 

[30BulletHoles]

Well add me to the list. Just shut our yard down today.

 

[owu1bag5]

Sorry to hear that.

I have a feeling it is going to get even worse. Some of my buddies at Schlumberger said that the El Reno yard might shut down all Frac operations out of that yard. That's a lot of hands looking for work if that happens.