From: "Geo." 

Gary, you obviously don't understand my assumptions. I'm simply assuming
that since the wells are a sunk cost   it's cheaper to turn on an
electric motor for a week then send a truck to pick up the oil than it is
to turn on the same electric pump and send a ship half way around the globe
to pick up the oil, process it at the coast and THEN send the SAME truck to
pick up the gas and bring it a thousand miles to Ohio.

the cost of the oil itself is unimportant, if you simply limit yourself to
the transportation costs you can see it makes no sense.

Geo.

"Gary Britt"  wrote in message
news:40cbefec$1{at}w3.nls.net...
> George your assumptions are way off on this one.
>
> First you are assuming a corporation would choose not to make additional
> profits when they could.  That just goes against what people and the
> corporations they run do.  Next its absolutely true that when oil was $10.00
> per barrel and less, that many of these kinds of wells cost more to operate
> than the oil they produced.  Its also true that at $10.00 per barrel and
> less that drilling for new oil in this country is usually too expensive to
> be worthwhile.  Not profitable.  As a person who consulted businesses in
> Texas for 18 years, I can tell you what was told to me, by many a small
> independent oil man, who would have gladly made a profit if they could.  In
> addition to confirming the above statements they also told me that the
> geological physics of oil well pumping worked in such a way that most times
> once you "turn off" a small well like the ones you are
discussing it is
> usually too expensive to impossible to get them flowing again.  Finally,
> many leases require that the lessee actually make production off of the
> lease that meets certain defined quantities per year.  Therefore, again your
> theory that an oil company would just gladly make lease payments without
> producing any oil for decades ignores what is the likely language in the
> leases themselves as well as the drain on current cash and profits such a
> wasteful strategy would be.
>
> Now if oil stayed at $40 to $50 per barrel for a couple of years, that would
> be enough to possibly convince lenders and big oil to invest in increasing
> domestic production, maybe even new drilling, etc.  Drilling is so expensive
> in this country the investments in up front cash are huge.  If such
> expenditures will only be profitable as long as oil is selling for $40.00
> per barrel, one has to be really convinced it isn't falling below $40.00 per
> barrel any time soon.  History over the past couple of decades teaches us
> that the odds are $40.00 per barrel oil isn't here to stay.  Maybe it will,
> but you aren't going to get bankers, investors, and big oil to bet millions
> on the fact that oil prices won't be $25.00 per barrel next year.
>
> Corporations are run by people.  People who are profit driven, profits drive
> share prices, are likely to be driven by profits this quarter versus next
> quarter.  You advance theories that have these people losing profits this
> quarter for some assumed potential profit years or decades away.  Just isn't
> how it works.
>
> Cheers,
>
> Gary
>
>
> "Geo."  wrote in message
news:40cbd2b6$1{at}w3.nls.net...
> > "John Cuccia"  wrote in message
> > news:1s6mc01ngthdkjn7oaoesv8o5lkpf629pe{at}4ax.com...
> >
> > > >Why do that, there are tons of Oil wells on dry ground in the US
> already
> > that
> > > >aren't being pumped at all.
> > >
> > > Where?
> >
> > All around ohio for one. About 20 years ago they started putting wells on
> farm
> > land, the oil company would lease mineral rights for 100 years in exchange
> for
> > a percentage based on how much oil was pumped. It averaged out around
> > $3000/month for a well so a lot of people let them do it, then a few years
> > later they started shutting the wells down and stopped making payments.
> The
> > claim was that oil got too cheap to make it profitable. They played a lot
> of
> > games to get out of making payments too, some oil companies went chapter
> 11,
> > some were split and sold, etc.
> >
> > My best guess was it was just a way to get ownership of the oil fields
> here so
> > nobody else could get them. But what I see all over around here are a
> bunch of
> > oil wells (small ones) that just sit there motionless day after day. At a
> guess
> > in my county  alone there are probably a couple hundred. State wide there
> must
> > be thousands. I haven't seen one pumping in years.
> >
> > Geo.
> >
> >
>
>

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