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Demand for Sand Takes Off Thanks to Fracking

Frackers are expected to use nearly 95 billion pounds of sand this year. A sand mine in Garnavillo, Iowa. Stephen Mally for The Wall Street Journal Sand prices are rising and companies are racing to build new mines in South Dakota and other locations as demand intensifies for the silica crystals that energy companies use to frack oil and gas wells. Sand is a key ingredient in items from solar panels to smartphones, but in recent years billions of pounds of it have been poured down wells to help coax more fuel out of the ground. In hydraulic fracturing, sand is mixed in a slurry of water and chemicals, then pumped down a hole to crack open dense rocks so oil and gas can escape to the surface. Frackers are expected to use nearly 95 billion pounds of sand this year, up nearly 30% from 2013 and up 50% […]

Posted On : Published By : Tom Whipple
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Low Rates Have Helped Fund Drilling; Tighter Policy May Not Choke Off Boom

The oil patch has run up the mother of all tabs. So will rising interest rates choke off the shale boom? Between 2006 and 2012, U.S. exploration and production companies clocked almost $1 trillion in capital expenditure, far above operating cash flow of $670 billion, according to Raymond James. Companies have proven adept at filling that funding gap, not least by raising debt. The E&P sector in 2007 was carrying $28.84 of net debt per barrel of oil equivalent produced, according to data from IHS , roughly equal to operating cash flow. By last year, net debt per barrel had jumped 36% to more than $39, while cash flow was essentially flat. That should provide fuel for those who doubt the shale boom’s longevity, as rising debt levels choke off returns and the capacity to invest in new wells to keep production growth going. Moreover, as the Federal Reserve […]

Posted On : Published By : Tom Whipple
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Oil Sector's Cash Recovery Isn't Total Success

Europe’s major oil companies are starting to pay their own way. The sector has beaten the market so far this year in the hope that spending cuts and improving operations would mean companies could cover their investment and dividends from operating cash flow. Covering its out-goings should shore up investors’ faith in the sector’s ability to churn out healthy payouts to shareholders, after years where funds were shoveled into grandiose capital projects, depressing returns. Now the sector finally seems to be making progress. Visitors pass the Total corporate pavilion during the 21st World Petroleum Congress in Moscow on June 16. Total will struggle to hit its target of $10 billion in free cash flow for 2015. Bloomberg News Europe’s biggest oil and gas companies—Royal Dutch Shell, BP , Total , Eni and Statoil —generated nearly $32 billion of operating cash flow in the second quarter, notes Morgan Stanley, up […]

Posted On : Published By : Tom Whipple
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Oil Sector’s Cash Recovery Isn’t Total Success

Europe’s major oil companies are starting to pay their own way. The sector has beaten the market so far this year in the hope that spending cuts and improving operations would mean companies could cover their investment and dividends from operating cash flow. Covering its out-goings should shore up investors’ faith in the sector’s ability to churn out healthy payouts to shareholders, after years where funds were shoveled into grandiose capital projects, depressing returns. Now the sector finally seems to be making progress. Visitors pass the Total corporate pavilion during the 21st World Petroleum Congress in Moscow on June 16. Total will struggle to hit its target of $10 billion in free cash flow for 2015. Bloomberg News Europe’s biggest oil and gas companies—Royal Dutch Shell, BP , Total , Eni and Statoil —generated nearly $32 billion of operating cash flow in the second quarter, notes Morgan Stanley, up […]

Posted On : Published By : Tom Whipple
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Shale Energy Driving a Reassertive America

President Richard Nixon of the United States of America is probably the most infamous of all the American presidents to ever hold office. His involvement in the Watergate scandal and the Vietnam War are all that’s left of him in the memory of most Americans today. However in 1973, at the peak of the oil crisis, when national oil reserves were depleting and oil prices per barrel had increased by more than 300%, he made his famous address to the people in November, where he said “ Restating our overall objective. It can be summed up in one word that best characterizes this nation and its essential nature. That word is ‘ independence ’.” Today, nearly 40 years after the oil crisis crippled America, they are one step closer to Nixon’s ambitious plan of full energy independence. On July 31st, 2014; an oil tanker, the BW Zambesi , set […]

Posted On : Published By : ASPO-USA
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How the U.S. got mixed up in a fight over Kurdish oil — with a unified Iraq at stake

The oil tanker SCF Byrranga, which was renamed the United Kalavrvta in March, is seen near the Isle of Arran, Scotland. The tanker is currently off the coast of Texas, carrying $100 million worth of Kurdish crude oil. (Tom Duncan/Reuters) Sixty miles off the coast of Texas sits a crude-oil tanker fully loaded with years of antagonism between the Kurdish region of Iraq and the central government in Baghdad. The United Kalavrvta, a tanker the length of three football fields, is carrying about 1 million barrels of crude oil from the Kurdish region of Iraq. It set sail for Galveston, but it never got there. The central government of Iraq, despite recent military setbacks, dispatched its American lawyers to do battle in the federal court in southern Texas, where a judge ruled that the tanker’s cargo, worth about $100 million, should be seized if it came within Texas state waters. […]

Posted On : Published By : Tom Whipple
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Bakken fuels North Dakota’s oil production growth

The Bakken counties total exceeds the North Dakota state total because the Bakken counties include crude oil production from some counties in eastern Montana. North Dakota production is for the entire state, not just counties in the Bakken Region. North Dakota crude oil production surpassed 1.0 million barrels per day (bbl/d) in April and May (the latest data available). This record is the result of increasing crude oil production from the Williston Basin’s Bakken and Three Forks formations in North Dakota and eastern Montana. Although Bakken oil production initially began in the 1950s at Antelope Field in North Dakota, large-scale production growth did not begin until after the discovery of the Parshall Field in 2007. Since then, advances in drilling methods and technology, a better understanding of the geology of the Bakken, higher crude oil prices, […]

Posted On : Published By : Tom Whipple
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Shale gas: ‘The dotcom bubble of our times’

Public opinion has been divided very starkly indeed by the government’s invitation to energy companies to apply for licences to develop shale gas across a broad swathe of the United Kingdom. On the one hand, many environmental and conservation groups are bitterly opposed to shale development. Ranged against them are those within and beyond the energy industry who believe that the exploitation of shale gas can prove not only vital but hugely positive for the British economy. Rather oddly, hardly anyone seems to have asked the one question which is surely fundamental: does shale development make economic sense? My conclusion is that it does not. That Britain needs new energy sources is surely beyond dispute. Between 2003 and 2013, domestic production of oil and gas slumped by 62pc and 65pc respectively, while coal output decreased by 55pc. Despite sharp increases in […]

Posted On : Published By : Tom Whipple
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Bakken Shale Gas Flaring Highlights Global Problem

High rates of natural gas flaring in the Bakken shale formation are symptomatic of infrastructure limitations that prevent this gas from reaching a market. Although various technical options could reduce flaring from high-output well sites, none matches the benefits of developing large-scale outlets for the gas. The Wall St. Journal recently reported on the high rate at which excess natural gas from wells in North Dakota’s Bakken shale formation is burned off, or “flared.”  The Journal cited state data indicating 10.3 billion cubic feet (BCF) of gas were flared there during April 2014. That represented 30% of total gas production in the state for the month. North Dakota’s governor attributed the high volume of gas flared in his state to the great speed at which the Bakken shale has been developed, outpacing gas recovery efforts. Oil output ramped up from 200,000 barrels per day five years ago to just over […]

Posted On : Published By : Tom Whipple
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Ukraine’s army positioning to move on rebels in Donetsk

A pro-Russian separatist guards a checkpoint near the Ukrainian village of Rozsypne in the Donetsk region Monday. The Ukrainian government appeared to be readying an assault on Donetsk, which is held by separatists. (Sergei Karpukhin/Reuters) KIEV, Ukraine — The Ukrainian military on Monday appeared to be readying a long-awaited major assault on the rebel stronghold of Donetsk, warning civilians to leave as troops tightened their ring around the city amid heavy fighting. Extra evacuation corridors were set up for cars bearing white flags, said Andriy Lysenko, a military spokesman. The Donetsk city government posted the corridor routes on its Web page and noted: “As practice shows, such messages are distributed before the start of active combat operations.” Lysenko also announced that troops had taken the town of Yasynuvata, home to a key railway control center between Donetsk and Luhansk. The military has almost encircled the two large cities, where […]

Posted On : Published By : Tom Whipple