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Despite Glut of Oil, Energy Firms Struggle to Turn Off the Tap

Despite all their spending cutbacks and idle drilling rigs, American energy producers are finding it hard to turn off the taps that have helped lead to a global glut of oil. Rising crude production was a major theme in the past week as shale drillers reported their second-quarter earnings. Analysts say American oil pumpers need to cut their output by at least 500,000 barrels a day to stem the oversupply that has sent oil prices tumbling over the past 14 months to just under $45 a barrel. But monthly oil production rose steadily through March, peaking at a record 9.7 million barrels a day that month and just slightly less in April, before edging down to 9.5 million barrels in May, according to the latest federal data. “We need to cut a whole lot more,” said Jamie Webster, a senior director at IHS Energy, a consultancy. “This industry has […]

Posted On : Published By : Tom Whipple
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Explorers In Need of Cash Are Selling Oil Fields as Last Resort

Energy explorers reeling from the rout in oil prices are looking for liquidity in an obvious place: their rocks. (Bloomberg) — Energy explorers reeling from the rout in oil prices are looking for liquidity in an obvious place: their rocks. Having exhausted other ways to raise cash as a glut of global supply depresses prices, a slew of producers from Anadarko Petroleum Corp. to Comstock Resources Inc. announced more than $2.4 billion in asset sales last month, according to data compiled by Bloomberg. Selling oil and gas fields to pay off lenders and fund new drilling — often a wildcatter’s option of last resort — is surging after a six-month lull. There’s more to come — by one estimate, another $20 billion this year — as executives at Occidental Petroleum Corp., Whiting Petroleum Corp., Penn Virginia Corp., Exco Resources Inc., Chesapeake Energy Corp. and Ultra Petroleum Corp. have all […]

Posted On : Published By : Tom Whipple
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Can’t outrun peak oil

On the other hand, domestic oil production has taken a jump in recent years due to fracking, tar sands, deepwater drilling, etc., but oil and other fuels obtained from those sources are actually more expensive and take more energy to get than oil obtained from conventional wells. This is what’s called the EROEI ratio, which stands for “Energy Returned On Energy Invested.” According to data compiled by professor L. David Roper, in the early 20th century, the golden age of North American oil production, the equivalent of one barrel of oil invested yielded as many as 100-200 barrels produced. By 1970, the average EROEI ratio for crude oil had fallen to 30:1 (Saudi oil fields are still producing at this rate). Today, one barrel of oil invested typically gives only 15 barrels in return. New technologies, such as tar sands, have a barely 2:1 ration of energy return on […]

Posted On : Published By : ASPO-USA
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15 Things the World Is Running Out of

We live in an era of limited resources—peak oil, peak phosphorous, peak everything. With the world population at nearly 7.4 billion and people living increasingly energy-intensive lifestyles, there has never been a more pressing need to conserve natural resources and develop renewable energy sources. A recent report from James Hansen and 16 other leading climate experts found that the international target of limiting global temperatures to a 2°C rise this century will not be nearly enough to prevent catastrophic melting of ice sheets that would raise sea levels much higher and much faster than previously thought possible. To make matters even worse, as 2015 shapes up to be the hottest year on record , scientists warn the world is set to pass the 1°C point this year. The icing on the cake? We won’t even have wine, coffee, tequila or chocolate to cope with runaway climate change .

Posted On : Published By : ASPO-USA
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Oil trades close to multi-month lows, Brent below $50

A customer holds a nozzle to fill up his tank in a gasoline station in Nice December 5, 2014. Oil traded near multi-month lows on Thursday with Brent under $50 a barrel as excess supplies and the prospect of further dollar strength weighed on prices. Gasoline stocks in the United States rose more than expected last week, overriding the bullish picture from a larger-than-expected drop in crude stockpiles and pushing prices down to their lowest levels in months. "We’re talking about September crude runs now and that’s pretty much past summer," said Tony Nunan, a risk manager at Mitsubishi Corp. "The U.S. has (cheap) crude supply and can keep runs high but the rest of the world is not looking so good … We remain oversupplied and world-wide inventories are high." September Brent crude LCOc1 fell 21 cents to $49.38 a barrel by 0633 GMT after dropping to $49.02 […]

Posted On : Published By : Tom Whipple
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Oil bulls’ hope for quick price dip dimmed by 2020 crude under $70

Gasoline drips off a nozzle during refueling at a gas station in Altadena, California March 24, 2012. As oil prices entered a second steep slide a few weeks ago, bullish traders and analysts had hoped for a repeat of the sharp but short dip that occurred early in the year – a speculative slide below $50 a barrel followed by a quick recovery. Some are now reconsidering that view, as long-term oil prices take the lead in the market’s latest dive, swaying sentiment toward a lengthier slump that would mean prolonged pain for big producers, from Exxon Mobil Corp ( XOM.N ) to Saudi Arabia. While immediate delivery benchmark global Brent crude oil futures at $50 a barrel are still about $4 higher than they were at their lowest point in January, prices for delivery in December 2020 LCOZ0 are nearly $8 lower than the start of this year, […]

Posted On : Published By : Tom Whipple
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With crude at $50, oil firms fear deeper crisis than in 1980s

A sign advertising gas prices is seen at a Chevron station in Los Angeles, California March 4, 2015. After slashing spending by $180 billion to deal with one of the worst industry downturns in decades, oil companies are still bleeding cash and slipping further into debt to maintain dividends to shareholders. Depressed crude prices – at below $50 a barrel Brent crude is half what it was a year ago – mean even more cuts are needed at new projects and existing operations. Companies trying to dispose of oilfields to raise cash could be forced to sell quickly and for less than they hoped. There is little sign that the oil price will come to the rescue as the Organization of the Petroleum Exporting Countries (OPEC) continues to pump hard into an oversupplied crude market in response to explosive growth in U.S. shale oil. Brent is expected to average […]

Posted On : Published By : Tom Whipple
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Natural Gas Gives Up Gains on Cooler Weather Forecasts

By Nicole Friedman NEW YORK–Natural gas prices gave up early gains Wednesday as weather forecasts turned cooler, limiting demand expectations. Natural gas use rises in summer when households and offices use more electricity to power air-conditioning units. Forecasts released Wednesday morning called for hotter weather in Texas and the Southern U.S. than previously expected, boosting prices. But closely watched midday updates to the forecast were less bullish, said Aaron Calder, analyst at Gelber & Associates in Houston. "Noon updates took some heat out of the forecasts," Mr. Calder said in a note. Futures for September delivery settled down 1.4 cents, or 0.5%, at $2.798 a million British thermal units on the New York Mercantile Exchange. Robust production has outweighed demand this summer, leaving natural-gas stockpiles at a surplus to the five-year average. Inventory data for the week ended July 31 is due Thursday, and analysts surveyed by The Wall […]

Posted On : Published By : Tom Whipple
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Pemex Cuts Back on Rigs as Oil Price Languishes

By Laurence Iliff MEXICO CITY–National oil company Petróleos Mexicanos is cutting back on drilling rigs to bring its costs more in line with languishing oil prices, much to the dismay of some rig leasers who didn’t anticipate Mexico’s sole petroleum producer would move so quickly and aggressively. Pemex is also renegotiating rates on rigs that it wants to keep under contract as the oil company slashes $4 billion from this year’s investment budget and prepares for more austerity next year, officials at the oil firm said. "The idea here was not to strangle or squeeze our suppliers, it is to get through a very hard time which we hope at some point is going to even out," said Pemex’s chief procurement officer Arturo Henríquez Autrey. He estimates the firm’s rig leases have fallen to 41 from 61, with shallow-water jack-up rigs cut the most. Pemex is spending about $1.8 […]

Posted On : Published By : Tom Whipple
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It’s Either Iran Nuclear Deal or ‘Some Sort of War,’ Obama Warns

WASHINGTON — President Obama took on critics of the nuclear deal between Iran and six world powers in an aggressive speech on Wednesday, saying they were the same people who created the “drumbeat of war” and played on public fears to push the United States into the Iraq war more than a decade ago. “Let’s not mince words: The choice we face is ultimately between diplomacy and some sort of war — maybe not tomorrow, maybe not three months from now, but soon,” Mr. Obama told about 200 people in a speech at American University. “How can we in good conscience justify war before we’ve tested a diplomatic agreement that achieves our objectives?” Mr. Obama, opening a new, more overtly political phase of his public campaign for the accord, portrayed the coming vote in Congress to approve or reject the deal as the most consequential foreign policy decision for […]

Posted On : Published By : Tom Whipple