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Might the Bakken Boom Get Derailed?

Bakken crude oil production has many of the classic characteristics of an economic bubble. It looks likely that, as with every bubble before, it will end. Whether it ends catastrophically or just badly depends on how regulators act. Some of the primary features of a bubble include a very rapid market expansion based on an unrealistic assessment of underlying risk, lax regulation, and an overly optimistic belief in continued rapid growth. In hindsight, it should have been obvious that hundreds of billions of dollars of poorly hedged sub-prime loans that depended on ever-rising housing prices were a huge risk. When the sub-prime mortgage bubble burst, the entire financial system was so distressed that a government bailout was required to save it. On a smaller scale, the same might be said for shipping huge amounts of explosive shale oil in unsafe,  poorly insured tank […]

Posted On : Published By : Tom Whipple
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Eni Hits 25,000 BPD at Alaskan Oilfield

Eni Hits 25,000 BPD at Alaskan Oilfield 6/19/2014 URL: Italy’s Eni reported Thursday that it has achieved 25,000 barrels of oil per day at its Nikaitchuq field, offshore the North Slope of Alaska. The field, which is located under shallow water, holds reserves that are estimated at 200 million barrels of crude oil. The Nikaitchuq field is the first to be operated by Eni in the Arctic region, with production having started in January 2011. The development of Nikaitchuq has included the drilling of wells and the construction of facilities both on land and on an artificial island built by Eni in the Beaufort Sea. Eni said that the location’s extreme climate and environmental constraints required the application of its proprietary technologies and expertise to drill multilaterals, horizontal wells and to build one of the most-advanced production facilities in the North Slope. Nikaitchuq production is transported through the Trans-Alaska […]

Posted On : Published By : Tom Whipple
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Barrasso questions purpose of Senate Energy panel’s Keystone vote

As he announced his support for it, US Sen. John A. Barrasso (R-Wyo.) said the Energy and Natural Resources Committee’s vote on Chairwoman Mary L. Landrieu’s (D-La.) bill to bypass the White House and approve the Keystone XL crude oil pipeline “seems more like a cheerleading exercise than a meaningful effort to get Keystone built.” Barrasso said he thinks it’s unlikely Majority Leader Harry M. Reid (D-Nev.) would bring Landrieu’s bill to the floor despite the committee’s approving it by 12 to 10 votes, and Landrieu and Ranking Minority Member Lisa Murkowski’s (R-Alas.) statements they would press him to do so. “The undeniable fact is there is already a bill on the Senate Calendar which would approve the Keystone XL pipeline,” Barrasso said, noting that a similar measure by another member of the committee, John Hoeven (R-ND), has 55 Republican and Democratic cosponsors, and has been pending on […]

Posted On : Published By : Tom Whipple
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DOE releases report on water-energy nexus

The US Department of Energy (DOE) released a new report that frames an integrated challenge and opportunity space around the water-energy nexus for DOE and its partners and lays the foundation for future efforts. Present day water and energy systems are tightly intertwined. Water is used in all phases of energy production and electricity generation. Energy is required to extract, convey, and deliver water of appropriate quality for diverse human uses. Recent developments have focused national attention on these connections. A hybrid Sankey diagram shows the magnitude of energy and water flows on a national scale. The diagram illustrates that thermoelectric power generation both withdraws large quantities of water for cooling and dissipates tremendous quantities of primary energy due to inefficiencies in converting thermal energy to electricity (“withdrawn” water is diverted from a surface water or groundwater source). The intensity of water use and energy dissipated varies with generation […]

Posted On : Published By : Tom Whipple
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Technology 'knocks peak oil theory'

Advances in technology will continue to ensure that there are adequate reserves of oil and gas, as fears over supply recede, according to BP’s head of technology, David Eyton. Addressing the 21st World Petroleum Congress in Moscow, Eyton said that generally speaking the theory of peak oil has had its time. There may be other reasons for demand declines, but technology has enabled an increase in reserves. The industry has an excellent track record to increase production and replace reserves, enabled by a sustained high oil price and technology developments over the last 30 years, he said. The potential to enhance oil recovery from reservoirs is very significant, he said, adding that the average oil recovery rate from reserves in the world today is estimated about 35%. “You […]

Posted On : Published By : ASPO-USA
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Technology ‘knocks peak oil theory’

Advances in technology will continue to ensure that there are adequate reserves of oil and gas, as fears over supply recede, according to BP’s head of technology, David Eyton. Addressing the 21st World Petroleum Congress in Moscow, Eyton said that generally speaking the theory of peak oil has had its time. There may be other reasons for demand declines, but technology has enabled an increase in reserves. The industry has an excellent track record to increase production and replace reserves, enabled by a sustained high oil price and technology developments over the last 30 years, he said. The potential to enhance oil recovery from reservoirs is very significant, he said, adding that the average oil recovery rate from reserves in the world today is estimated about 35%. “You […]

Posted On : Published By : ASPO-USA
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North Dakota Hits the 1-Million b/d Mark

The State of North Dakota has surpassed the 1-million b/d oil mark according to the North Dakota Industrial Commission’s (NDIC) Department of Mineral Resources (DMR), thanks mostly to the Bakken Shale and Three Forks formation. The preliminary data, released in the monthly Director’s Cut  in June of 2014, revealed April oil production was 1,001,149 b/d. North Dakota is second only to Texas for oil production. It’s certain poor weather conditions at the end of 2013 and the beginning of this year prevented the production milestone from being hit sooner. According to North Dakota officials, in the month of February, there were 18 days with temperatures five or more degrees below normal. Four days were recorded where wind gusts were too high for completion work. Despite the poor weather, the state set a new record […]

Posted On : Published By : Tom Whipple
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Turmoil in Iraq is pushing up US gasoline prices

Violence in Iraq is pushing U.S. gasoline prices higher, depriving drivers of the usual price break between Memorial Day and July Fourth. The national average price of $3.67 per gallon is the highest price for this time of year since 2008, the year gasoline hit its all-time high. The good news is that gasoline is not likely to spike above $4 as it did 6 years ago. Or even cross $3.90, as in 2011 and 2012. "You are going to pay a little more than we thought you were going to pay," says Tom Kloza, chief oil analyst at the Oil Price Information Service and GasBuddy.com. "But you are not going to see any apocalyptic numbers." Gasoline prices typically fall in the weeks following Memorial Day, after supplies increase enough to fill up the cars of the nation’s vacationers as summer approaches. This year, drivers are paying more. The […]

Posted On : Published By : Tom Whipple
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Ethanol Tumbles as Report Shows Output at Record High

Ethanol declined to a six-week low after a government report showed production of the biofuel rose to a record. Futures fell after the Energy Information Administration said output rose 3 percent to 972,000 barrels a day last week, the most in four years of weekly data from the Energy Information Administration. Corn prices that have dropped 34 percent in the past year have helped reduce production costs for ethanol makers and allowed them to boost operations. One bushel of the grain makes at least 2.75 gallons of the renewable fuel. “People are looking to place gallons and get rid of supply that they may have laying around,” Mark Ruyack, a manager at StarFuels Inc., a Jupiter, Florida-based broker, said today in a telephone interview. Denatured ethanol for July delivery slumped 8.5 cents, or 4 percent, to settle at $2.057 a gallon on the Chicago Board of Trade, the lowest […]

Posted On : Published By : Tom Whipple
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First westbound natural gas flows begin on Rockies Express Pipeline

The Rockies Express Pipeline (REX) announced on Monday that it expects service to commence as soon as today for the first 0.25 billion cubic feet per day (Bcf/d) of capacity on its 0.60 Bcf/d Seneca Lateral pipeline in southeast Ohio. The 14.3-mile lateral will flow gas north from the MarkWest Seneca natural gas processing plant to the REX mainline, where a newly built compressor station will allow this gas to be delivered to points west in Ohio, Indiana, and Illinois . No new pipelines will be added to the mainline; the […]

Posted On : Published By : Tom Whipple