When, and where, oil is too cheap to be profitable

http://www.cnbc.com/id/102326971

If oil prices keep falling, at some point it's not profitable to pull it out of the ground. But we're not there yet, according to an analysis of production costs by an energy consulting firm.

In fact, even if the Brent price index falls another 20 percent from Friday's closing price—to $40 a barrel—just 1.6 percent of the world's oil supply would represent unprofitable production.

Energy consultant Wood Mackenzie analyzed production data from 2,222 oil fields around the world to see just how much further oil prices would have to fall to make them "cash negative"—costing more to operate than the oil is worth. That price can act like a brake on production, according to Wood Mackenzie analyst Robert Plummer.

Read MoreSpillover effect of cheap oil: Bankruptcy shock

"Once the oil price reaches these levels, producers have a sometimes complex decision to continue producing, losing money on every barrel produced, or to halt production, which will reduce supply," he said.

Ty Wright | Bloomberg | Getty Images

A derrick hand removes the the plastic caps off the threaded ends of pipe used in the drilling process in Knox County, Ohio.

Among the first to shut off the spigots would be U.S onshore production from the trickle of crude emanating from aging, so-called stripper wells. Wood Mackenzie estimates there's about a million barrels per day coming from a collection of older wells that produce only a few barrels a day. The cost of keeping them going varies between $20 and $50 a barrel. So if the price of crude drops below $40 a barrel, some producers may decide to stop pumping. 

"Operators may prefer to continue producing oil at a loss rather than stop production—especially for large projects such as oil sands and mature fields in the North Sea."-Robert Plummer, analyst, Wood Mackenzie

Below $40 a barrel, the next likely production slowdown would come from Canadian tar sands fields, which start to lose money when the Brent price hits the high $30 range. But turning the flow off and restarting it again is a complex process, involving injecting steam into the ground, which makes it costly to restart, according to Wood Mackenzie. On the other hand, fuel represents a major cost for oil sands production, so lower oil prices could help lower overall production costs.

Read MoreWhat makes Canada's oil sands worth the trouble

In the U.K., North Sea oil fields start to lose money below $50 a barrel, according to the analysis. But many of them are older fields reaching the end of their lives, so stopping production could mean slowing down for good. That decommissioning process can be expensive, so some companies may decide to operate at a small loss rather than spend the money to close down operations, the analysts noted.

Production costs also include government taxes and royalties, which could be reduced or suspended if those governments want to keeping production going. Some of the "heavy oil" projects in Latin America, including those in Venezuela and Colombia, become money losers at lower prices, which could spur those governments to offer some kind of royalty relief, the analysts said.

Overall, the analysis found, the impact of $40 oil on global production would be very small, based on data covering some 75 million barrels a day of production. At $50-a-barrel Brent, only 190,000 barrels a day is unprofitable, representing just 0.2 percent of global supply. Seventeen countries supply oil that is cash negative at $50, with the main contributors being the United Kingdom and the United States.

At $45 a barrel, only 400,000 barrels per day, or just 0.4 percent of global supply, are unprofitable. Half of that is from conventional onshore production in the U.S. And at $40 a barrel, just 1.5 million barrels per day represents unprofitable production, or just 1.6 percent of global supply. Most of that production comes from several oil sands projects in Canada.

Read MoreCramer: 'Get negative everything' oil

Even when a field becomes cash negative, it doesn't necessarily prompt producers to shut down right away, said Plummer.

"The first response is usually to store oil produced in the hope that the oil can be sold when the price recovers," he said. "Operators may prefer to continue producing oil at a loss rather than stop production, especially for large projects such as oil sands and mature fields in the North Sea."

John W. SchoenCNBC.com Economics Reporter

http://www.marketwatch.com/story/3-college-majors-most-and-least-likely-to-ask-for-a-raise-2015-01-07

3 college majors most — and least — likely to ask for a raise

By Catey Hill

Published: Jan 8, 2015 5:02 p.m. ET

 

 

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The English major will likely get the raises she seeks.

Getting regular raises, even tiny ones, could ultimately mean you earn an additional $1 million over the course of your career (no, that’s not a typo). But only 43% of American workers have ever asked for a raise, with some types of people being far less likely than others to do it, according to a survey of 31,000 people released Wednesday by PayScale.com — a fact that will likely cost them thousands of dollars over their lifetimes.

While men and women are about equally likely to ask for a raise (44% vs. 42%, respectively), those who make less money are generally far less likely than their better-paid peers to have asked for a raise in their current field (and also less likely to get what they requested). Just 31% of those making between $10,000 and $20,000 a year have asked for a raise (and, of those that did, just 25% got the full amount) and only 37% of those making $20,000 to $30,000 asked (32% got the full amount). Meanwhile, more than half of people making $150,000 and up have asked for a raise, and, of those, 70% got what they asked for.

Industry and job type also play roles in how likely it is that you’ll get a raise. But perhaps more surprisingly, your college major (regardless of what job you’re now in) also seems to influence how likely it is that you’ll ask the boss for more dough. Here are the three types of college grads most — and least — likely to ask for a raise, according to PayScale.com.

Most likely to ask for a raise: English majors

Some of you may think of English majors as timid bookworms, but when it comes to money and careers, they’ve got guts. College grads who major in English language and literature/letters are the most likely of all college grads to ask for a raise (51% say they’ve done it in their current field). Katie Bardaro, the lead economist for PayScale.com, says this may have to do with the kinds of jobs these majors land. “People think English major and they think they must be a teacher,” she says. The reality is that many of these people end up in business and professional jobs — and people who work in these fields are more likely to ask for raises overall, she says.

What’s more, English majors often get the pay increases they ask for: 49% of those who asked for a raise got the amount they asked for (compared with 44% across all majors) and another 35% (vs. 31% on average) got something, though less than what they asked for.

Second most likely: Engineering technology

Those with engineering technology degrees — electrical and mechanical engineering and computer science, among them — are already very well-paid (engineering technology majors dominate lists of the top 10 majors by salary potential), but these folks aren’t afraid to ask for more. Half of those who graduated with engineering technology and related degrees have asked for a raise in their current field — and 49% of them got the amount they asked for. Bardaro says these professionals often know that their skills are in high demand, and thus aren’t afraid to ask for more money.

Third most likely: Visual and performing arts; business, management and marketing (tie)

Fully 46% of both visual- and performing-arts majors, as well as those majoring in business, management, marketing and related support fields, have asked for a raise — putting these groups in a tie for third on the list of majors demanding heftier paychecks. The business majors were slightly more likely to get the pay hike they asked for (47% say they did, compared with 45% of visual- and performing-arts majors), but those who pursued both sets of majors are more likely than average to have their salary demands met by their companies.

http://www.marketwatch.com/story/5-blue-collar-jobs-that-pay-100000-a-year-2015-01-08

5 blue collar jobs that pay $100,000 a year

By Quentin Fottrell

Published: Jan 8, 2015 4:42 p.m. ET

 

 

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You don’t need to wear a suit and tie to work to make six figures. Though it may require self-employment, the support of a labor union and, in some cases, not a small amount of risk to your safety, you can earn over $100,000 at a traditionally blue collar job.

“There are several occupations that have that potential,” says Carl Van Horn, professor of public policy and director of Rutgers John J. Heldrich Center for Workforce Development. “A lot of them are in the trades.” As third-level students leave college saddled with debt, others are looking for alternative ways to earn $100,000 or more a year. On Thursday, The Wall Street Journal interviewed a 24-year-old welder who earns $140,000 a year and attended Texas State Technical College in Waco, Texas.

Read: Why the Class of 2018 will be better off

Here are 5 other jobs with the potential to bring in a six-figure salary:

http://www.marketwatch.com/story/5-states-most-hurt-by-falling-oil-prices-2015-01-08

5 states most hurt by falling oil prices

By Catey Hill

Published: Jan 8, 2015 3:10 p.m. ET

Not everyone is cheering cheaper gas

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Oil prices are falling, and for many Americans that’s good news, as gas prices at the pump are down and likely will stay that way in the coming months (gasoline futures fell to nearly a six-year low on Wednesday). But for some — especially residents of certain states — the falling oil prices aren’t the best news.

A study released Wednesday by financial site MoneyRates.com , which ranked states based on their rates of oil production, oil consumption and the percentage of oil workers employed in each state’s workforce, found that some states will feel the falling-oil-price burden more heavily than others.

According to Richard Barrington, the senior financial analyst for MoneyRates, while robust oil production is usually good for a state, falling oil prices can hurt high-oil-production-states’ economic performance (not to mention impact the related job market), at the same time that it boosts the economic performance of states that produce little or no oil — in particular those that also consume a lot of it.

Here are the five states most hurt by falling oil prices, according to MoneyRates.com: