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Is the US Tight Oil Market ‘Too Robust to Bust’?

The current crude oil price environment – in the vicinity of $100 per barrel (bbl) – comfortably exceeds the break-even economics of U.S. Light Tight Oil (LTO) production from the Bakken, Eagle Ford and other shale formations. But what proportion of LTO reserves would remain economic at, say, $75/bbl? According to Wood Mackenzie, the answer is a significant majority – at least 70 percent. "There is not much U.S. producers can do to influence global oil prices," Harold York, Wood Mackenzie’s principal downstream research analyst, said in a late-March communique from the consultancy. "Supply and demand fundamentals and non-market dynamics around the globe keep the price environment well above the break-even economics levels of several U.S. tight oil plays." "With Brent crude oil pricing in the late-2013 range of $108 per barrel of oil … in early 2014, almost all tight oil proven reserves are commercially viable, even if […]

Posted On : Published By : Tom Whipple
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Shale Gas Plagued By Unusual Methane Leaks

A Feb. 2013 scientific study found an unexpectedly high methane leakage rate in the well-fractured Utah basin. Photo of Utah gas field   credit According to a spate of recent scientific studies from the United States and Australia, the shale gas industry has generated another formidable challenge: methane and radon leakage three times greater than expected. In some cases the volume of seeping methane, a greenhouse gas that traps heat 25 times more effectively than carbon dioxide, is so high it challenges the notion that shale gas can be a bridge to a cleaner energy future, as promoted by the government of British Columbia and other shale gas jurisdictions. "If natural gas is to be a ‘bridge’ to a more sustainable energy future, it is a bridge that must be traversed carefully," warned one 2014 study published in Science. "Diligence will be required to ensure that leakage rates are […]

Posted On : Published By : Tom Whipple
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Estonia becomes IEA member

Estonia on Friday became the 29th member of the International Energy Agency, IEA Executive Director Maria van der Hoeven announced. "The country has made remarkable progress in transforming its energy sector, and there is every reason to expect that this successful process will continue and be reinforced through IEA membership," she said in a statement . To become a full member, Estonia was required to set aside enough oil stocks to satisfy the equivalent of 90 days worth of imports from 2013. Estonian Minister of Economic Affairs Urve Palo said accession is a milestone for the Baltic nation. Estonia, Van der Hoeven said, is welcomed to the IEA as a member country that prioritizes energy security and economic sustainability. The International Monetary Fund said in its latest assessment the Estonian economy was doing well, but there may be issues with high levels of unemployment in […]

Posted On : Published By : Tom Whipple
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Peak Oil: $ome Number$

[The] increased oil expenditure is drawing money away from the rest of the economy. Overall, were it not for the price increase [from the historical average of $25.00 per barrel], the US would have an extra $1.5 billion per day to spend in the broader economy, or $543 billion per year. Instead, all that money is being spent on expensive oil, which is distorting the economy. Is it any wonder oil-dependent economies are struggling to grow their economies? Could it be that expensive oil signifies the twilight of industrial growth, as we have known it…? At the current price of $105 …, the world spends $9.45 billion per day on oil, or $3.5 trillion per year. This is a difference of $7.2 billion every day, an extra cost to the global economy which is largely a result of crude oil having peaked. It lacks credibility to pronounce the death […]

Posted On : Published By : ASPO-USA
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Supply or demand? Peak oil with Richard Heinberg and James Hamilton

Our lead story: This week Stanford said that it would divest all of its investments in coal mining companies, becoming the wealthiest US university to pledge divestment from sectors of the fossil fuel industry. Erin gives you her take on the situation. For our interviews today, we look at peak oil theory with Richard Heinberg and James Hamilton. Heinberg argues that we have reached peak oil supply and that will have major economic consequences for our future prospects of economic growth. Hamilton on the other hand sees this as more of a demand issue. Take a look. Finally in today’s Big Deal, Edward Harrison and Erin take a look at the return of the subprime auto loan market. Is this another example of perverse incentives in the search for yield? Edward gives you his take.

Posted On : Published By : ASPO-USA
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Americans Will Burn Less Oil 25 Years From Now

The most lasting change in the U.S. energy landscape may not be that we’re producing more oil — but that we’re using less. Demand for oil has fallen in recent years, as Americans drive less and buy more fuel-efficient cars. Daily consumption is down nearly 2 million barrels since 2005, a 9 percent decline. The drop is small in percentage terms, but it represents a remarkable shift, one that few people saw coming. For most of the post-World War II era, Americans burned more oil each year, a trend broken only briefly by the price shocks of the late 1970s. This time, the shift appears to be more lasting: In a new report released this week , the Energy Information Administration (EIA) said the U.S. will burn slightly less oil in 2040 than it did in 2010. Overall energy consumption per person is set to fall even more steeply, to […]

Posted On : Published By : Tom Whipple
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Peak Oil: $ome Number$

[The] increased oil expenditure is drawing money away from the rest of the economy. Overall, were it not for the price increase [from the historical average of $25.00 per barrel], the US would have an extra $1.5 billion per day to spend in the broader economy, or $543 billion per year. Instead, all that money is being spent on expensive oil, which is distorting the economy. Is it any wonder oil-dependent economies are struggling to grow their economies? Could it be that expensive oil signifies the twilight of industrial growth, as we have known it…? At the current price of $105 …, the world spends $9.45 billion per day on oil, or $3.5 trillion per year. This is a difference of $7.2 billion every day, an extra cost to the global economy which is largely a result of crude oil having peaked. It lacks credibility to pronounce the death […]

Posted On : Published By : Tom Whipple
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Why Oil Prices Haven’t Gone Crazy

Why Oil Prices Haven’t Gone Crazy By Matthew Philips Bloomberg Businessweek Illustration by 731 The oil markets have plenty of reasons to be spooked. In Libya, home to Africa’s largest reserves, production has fallen more than 80 percent since militias seized control of the country’s biggest ports last summer. Most of Iran’s oil remains trapped as well. Sanctions aimed at punishing Iran for its nuclear weapons program have crippled its crude exports by 1.5 million barrels a day. Nigeria is in the midst of its worst oil crisis in years: Rising violence, plus rampant sabotage and theft, have knocked out about 300,000 barrels of oil output a day. In Venezuela, which has the world’s largest oil reserves, production has remained unchanged after years of underinvestment. Political chaos and violence are keeping 3.5 million barrels of daily oil production off the market, according to estimates by Citigroup (C). With tensions […]

Posted On : Published By : Tom Whipple
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Oil Futures Edge Upwards

On the New York Mercantile Exchange light, sweet crude futures for delivery in June traded at $100.37 a barrel at 0517 GMT, up $0.11 in the Globex electronic session. June Brent crude on London’s ICE Futures exchange rose $0.01 to $108.05 a barrel. Pro-Russian separatists in eastern Ukraine on Thursday ignored Russian President ‘s call to postpone a referendum on secession scheduled for Sunday. Ukraine’s government also rejected Moscow’s demands to end its military offensive against separatists–setting the stage for further unrest. Despite the retreat in Brent prices from more than $110 there should be strong support for it in the recent trading range in the near term and the Ukraine crisis should help blunt any downward momentum, Eurasia Group director of global oil Greg Priddy said in a report. "The pace of the U.S. Federal Reserve’s tapering of asset purchases will be a major variable affecting oil market […]

Posted On : Published By : Tom Whipple
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Oil prices rise on renewed Ukraine worries

Benchmark U.S. crude for June delivery was up 51 cents at $100.76 a barrel at 0800 GMT in electronic trading on the New York Mercantile Exchange. The contract fell 51 cents Thursday to close at $100.26 a barrel. Brent crude, a benchmark for international varieties of oil, gained 76 cents to $108.80. Pro-Russian insurgents in eastern Ukraine are planning a referendum on independence over the weekend, in apparent defiance of a call by Russian President Vladimir Putin to put off the vote. Traders worry Russian crude exports could be interrupted if further instability in Ukraine results in stronger Western sanctions against Russia. – Heating oil added 2 cents to $2.94 a gallon

Posted On : Published By : Tom Whipple