Category Archives: Production Operations

The Break Even Cost For Shale Oil

Posted on December 2, 2016 by | Leave a comment

Some more recent data and an excellent explanation of why the break even cost for shale oil is a moving target. Especially useful is the description of the horizontal drilling technique.

This explains why US shale oil production did not go down like the Saudis thought it would when recently (2015) they tried to pump more oil to capture market share from the US and others as world prices fell. It turned out to be hard to drive out shale oil producers.

151019tesfrackingdemo

screenshot-www-forbes-com-2016-12-02-11-02-03  What is the break even cost for shale oil? That depends on a number of factors, and it is a moving target.

Source: The Break Even Cost For Shale Oil

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Posted in Investing, Production Operations, Supply Chains

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Terminals in Ports of L.A., Long Beach move container chassis fee to September 1

Posted on August 10, 2016 by | Comments Off on Terminals in Ports of L.A., Long Beach move container chassis fee to September 1

Again the container chassis issue creates controversy.  Leasing companies created a ‘pool of pools’ in the LA/Long Beach area but are not paying port operators for services and storage performed on or by the port operators.  The $5 fee on a loaded chassis (whether the container is empty or not) is supposed to cover this work.

It’s another example of how hard it is to get a pool to work well.  Normal ways of compensating participants are not usually fair to all parties; nor do they usually act to keep the pool together.  But here the issue is simply that the pool is skimming profits by benefiting from free work by a non-participant; or we could look at the terminals as a dummy participant that contributes no chassis but pays anyway.

We have a talk on a related aspect at the IAME 2016 annual conference in Hamburg later this month.

LONG BEACH, Calif.–The West Coast MTO Agreement (WCMTOA) has extended the implementation date of a new tariff rule for chassis services by one month.

Source: Terminals in Ports of L.A., Long Beach move chassis rule to September 1 – Canadian Shipper

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Posted in Logistics, Ports, Production Operations, Supply Chains, Trucking

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STB rolls out proposed reciprocal switching regulations

Posted on July 29, 2016 by | Leave a comment

The proposed new regulations are opposed by the AAR as we might expect. Rules have not been updated since 1985. The finding is a small modification. Rails who want switching from another line need only show it is in the interest of lowering overall costs, not that the other line is behaving monopolistically.

Something must be done to loosen up the switching rules.  Rails argue that it would be costly and prevent them from making large capital investments. But when you consider that since the 1880’s rails have benefited from free land …

I agree with the last paragraph in the article:  this rule should keep the lawyers busy!

www.logisticsmgmt.com 2016-07-29 09-49-14  New regulations focused around reciprocal switching were proposed by the Department of Transportation’s Surface Transportation Board (STB) yesterday.

Source: STB rolls out proposed reciprocal switching regulations

Thanks to author Jeff Berman for the article!

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Posted in Production Operations, Rail, Supply Chains

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