It’s Getting Harder for Oil Companies to Make Money. Here’s Why.

[babylonsister]

It’s Getting Harder for Oil Companies to Make Money. Here’s Why.
Shell has pulled out of the Arctic. That's just the latest sign that Big Oil is in big trouble.


snip//

Start with the tumbling price of oil. Finding new sources of petroleum, especially when they're deep beneath the sea or buried in layers of shale, is extremely expensive, so energy companies need prices to stay reliably high. In 2014, Goldman Sachs cautioned investors that the largest new drilling projects needed to earn at least $90 per barrel to break even. The World Bank says one-third of current oil production and two-thirds of future reserves could be uneconomical even at $60 per barrel. In August, the price dipped below $40, the lowest in more than six years.

Over the past year, ExxonMobil and Chevron's earnings have slumped by more than 50 percent; their stock prices (as well as those of Shell, ConocoPhillips, and BP) dropped by as much as one-third in the first eight months of 2015. In July, Standard & Poor's downgraded Shell's credit rating, partly in response to the company's controversial efforts to drill in the Arctic and other pricey endeavors. On Monday, Shell announced that it would halt its Arctic exploration "for the foreseeable future." The company cited the project's enormous costs and "disappointing" outcome, as well as the "challenging and unpredictable federal regulatory environment in offshore Alaska."

Kepler Cheuvreux reports that the industry's expenditures on developing new oil sources have increased 120 percent since 2000, while supplies of crude have increased just 11 percent. Investing $100 billion in solar or wind power, the firm's analysts conclude, would produce far more energy in the long term than an equivalent investment in oil. "The rules of the game for upstream oil and gas companies have changed," says Lewis. "Every year they have to replace cheaper legacy barrels with more expensive barrels."

more...

http://www.motherjones.com/environment/2015/09/shell-arctic-oil-chevron-exxon-bp

[NCarolinawoman]

1. *

[philosslayer]

2. Best news I've read all day

n/t

[DefenseLawyer]

3. Never fear, another war can't be too far off

Then the gravy train will ride once more.

[babylonsister]

5. I guess that all depends on who gets elected. nt

[Thor_MN]

4. "It’s Getting Harder for Oil Companies to Make the Same Obscene Amounts of Money"

There, fixed the headline.

[babylonsister]

6. Whatever works. nt

[Thor_MN]

7. Hey, if you think they are losing money, you feel free to support them any way you choose. nt.

[babylonsister]

10. I do think they are losing money: wouldn't have posted this otherwise.

I support the loss.

[Thor_MN]

12. Whatever works nt.

[TexasBushwhacker]

8. Stupidly clinging to the past

When automobiles were invented and then became fairly commonplace, I'm sure that a fair number of buggy whip makers had to find a new line if work. If these oil companies would start seeing themselves as ENERGY companies, they could exist forever, or at least another 100 years. BP used to be developing a fair amount of solar energy and was even calling itself "Beyond Petroleum". But then oil went back up over $100 a barrel and it was just too easy to make money that way.

I heard on NPR today that O&G is pushing for the feds to let them export oil again, for the first time in 40 years.

[Hydra]

9. Dirty energy is already not cost effective

The fact that we're still doing it is a testament to the fact that we don't do what's smart or efficient as a society- we just subsidize the misadventures of the rich.

[GreatGazoo]

13. +1 the cost of burning oil must include the damage to the climate and the environment

Citibank estimated those costs at $44 trillion from now to 2060 (so House Repubs voted to block the EPA from considering future costs).

http://thinkprogress.org/climate/2015/09/27/3705860/social-cost-of-carbon-must-remain-uncalculated/

[rusty quoin]

11. I wish this happened sooner.

Renewables have been the way of the future for too long. Who was that guy on MSNBC telling us natural gas was the way to go because it was environmental. T. Boone Pickens? I never trusted the guy.

I've seen too much to believe a guy like him.