Category:

An Oklahoma of Oil at Risk as Debt Shackles U.S. Shale Drillers

Photographer: Brittany Sowacke/Bloomberg As much as 400,000 barrels a day of oil production is at risk as U.S. shale companies like Samson Resources Co. run out of money and are forced to slow drilling. Total debt for half of the companies in a Bloomberg index of more than 60 producers has risen to a level that represents 40 percent of their enterprise value. It’s a sign of distress that shows equity values falling in the face of oil’s crash, said Rob Thummel, a managing director and portfolio manager at Tortoise Capital Advisors LLC who helps manage $15.6 billion. The companies facing high debt loads, which include Encana Corp. and Chesapeake Energy Corp., produced 1.1 million barrels of oil a day in the second quarter of this year, according to data compiled by Bloomberg. If more companies file for bankruptcy as Samson did Wednesday, or embrace the kinds of draconian […]

Posted On : Published By : Tom Whipple
Category:

House Democrats Keep Door Open to Crude Exports, Seek Sweeteners

House Democrats said a measure to repeal decades-old U.S. restrictions on crude oil exports needs more environmental and consumer protections to win their backing. The Republican-led House Energy and Commerce Committee passed the measure by a 31-19 vote Thursday, sending the legislation to the full House of Representatives. Three Democrats joined 28 Republicans voting in favor. A floor vote could come as soon as the end of the month. The bill cleared the committee with one amendment, which would allow the U.S. president to reimpose export restrictions during a national emergency. “I frankly don’t see what’s in this for the average American,” Representative Frank Pallone of New Jersey, the panel’s Democratic leader, said before the vote. The bill “is a blunt object which broadly undermines 40 years of protections for national security, our economy, consumers and the environment.” U.S. exports of most crude oil were banned by Congress in […]

Posted On : Published By : Tom Whipple
Category:

Does Anyone Even Want to Buy Crude Oil From the U.S.?

Given current prices, does anyone even want to buy crude oil from the U.S.? After the House Energy and Commerce Committee voted to end a four-decade ban on most oil exports, crude in the U.S. remains more expensive than foreign supplies and domestic demand is robust. Supporters of expanded exports, including Exxon Mobil Corp. and ConocoPhillips, say ending the ban would ease a glut from the shale boom and lower global prices. Refiners opposed to the legislation say it could increase gasoline costs for U.S. consumers. Lifting the ban won’t lead to a big jump in shipments, at least in the short term, said John Auers, executive vice president at energy consultant Turner, Mason & Co. Light oil in Louisiana was more than $2 a barrel more expensive Wednesday than Brent, the international benchmark, making it unattractive for overseas refiners seeking to capitalize on the shale boom. Refineries in […]

Posted On : Published By : Tom Whipple
Category:

BHP adds voice to U.S. oil export debate

Both sides of the U.S. energy sector — upstream and downstream — continue debate over wisdom of repealing ban on crude oil exports. Photo by iofoto/Shutterstock WASHINGTON, Sept. 17 (UPI) — Australian energy giant BHP Billiton said the United States could send a strong message to allies and markets alike with a repeal of the ban on oil exports. Republican leaders in the U.S. House and Senate have moved legislation meant to end the ban placed on U.S. crude oil exports after Arab members of the Organization of Petroleum Exporting Countries in the 1970s blocked their exports to the United States in response to Washington’s support for Israel. Addressing the U.S. Chamber of Commerce in Washington, BHP Chief Executive Officer Andrew Mackenzie said a larger U.S. presence on the global energy market could have significant consequences . "The United States would send a strong signal with the repeal of […]

Posted On : Published By : Tom Whipple
Category:

Canadian gas exports to U.S. plummet

Canadian energy regulators reports gas exports to the United States are down dramatically. Photo by Heather Snow/Shutterstock CALGARY, Alberta, Sept. 17 (UPI) — Canadian natural gas exports to the United States for the seven years ending in 2014 are down significantly because of U.S. shale production, a regulator said. The National Energy Board said in a market snapshot natural gas exports are down dramatically. For the eastern United States, exports are down more than 65 percent for the seven years ending 2014. For the market in the U.S. Midwest, natural gas exports are down nearly 23 percent through 2014. "Rapid development of unconventional gas projects has increased U.S. natural gas production," the NEB said. "As a result, natural gas exports from Canada to the U.S. have been decreasing." NEB said pipeline revisions have shifted exports away from Midwest markets as well. Canada relies heavily on export revenue from oil […]

Posted On : Published By : Tom Whipple
Category:

US House committee passes crude oil export bill, but hurdles remain

The US House Energy and Commerce Committee on Thursday approved a bill to lift all restrictions on US crude oil exports by a 31-19 vote. While it could be voted on by the full House later this month, the bill’s path in the Senate remains unclear and it faces opposition from the White House, limiting the likelihood that an export policy change could become law before President Barack Obama leaves office in 2017. On Tuesday, White House spokesman Josh Earnest said the administration "wouldn’t support" the crude export bill because such a policy change should be made by the Department of Commerce. A Commerce spokesman said Wednesday that the agency was not working to change current export policy, which restricts US crude exports with some exceptions. The bill Thursday, H.R. 702, was approved by all committee Republicans, but just three Democrats: Representatives Gene Green of Texas, Tony Cardenas of […]

Posted On : Published By : Tom Whipple
Category:

Falling production is underpinning U.S. oil prices: Kemp

An oil pump jack can be seen in Cisco, Texas, August 23, 2015. U.S. crude oil production is falling sharply, helping put a floor beneath U.S. domestic crude prices and causing them to rise relative to the international marker Brent. In the face of lower prices, the U.S. oil boom has stalled and the industry is facing the sharpest setback in production for decades, excluding hurricane periods ( link.reuters.com/kyj65w ). According to the U.S. Energy Information Administration (EIA), U.S. crude and condensate output peaked at 9.612 million barrels per day (bpd) in April and had declined by 316,000 bpd by June. Production continued to rise in North Dakota (36,000 bpd) but in most other states and offshore areas output turned down ( link.reuters.com/vuj65w ). The largest declines were reported in Texas (129,000 bpd), the Gulf of Mexico (90,000 bpd), West Coast offshore (28,000), Alaska (27,000 bpd) and California (18,000 […]

Posted On : Published By : Tom Whipple
Category:

Is This The End Of The U.S Shale Gas Revolution

While everyone is watching the oil bust, there is another bust going on – one for natural gas. Before there was a boom in oil production in the United States, there was the “shale gas revolution.” That is where we all became familiar with terms like “fracking.” And the Marcellus, Haynesville, and Barnett Shales were famous long before the Bakken or Permian. The surge in natural gas production crashed prices, fueling a huge increase in activity in petrochemicals and causing a major switch from coal to natural gas in the electric power industry. Aside from a few brief moments (such as the winter of 2014), natural gas has mostly traded around $4 per million Btu (MMBtu) or lower since the financial crisis of 2008. (Click to enlarge) But unlike oil, the boom in shale gas did not stop with plummeting prices. U.S. natural gas production continued to climb. For […]

Posted On : Published By : Tom Whipple
Category:

World’s First Subsea Gas Compression Plant Now Online

Statoil ASA announced Thursday that the world’s first subsea gas compression plant is now online at the Åsgard field in the Norwegian Sea. The move is a step closer to Statoil’s goal of achieving a complete subsea processing plant (or "subsea factory" ). Statoil said that the recovery from the Midgard reservoir on Åsgard will increase from 67 percent to 87 percent, while recovery from the Mikkel reservoir will improve from 59 percent to 84 percent, as a result of the new facility. The overall effect will be to add some 306 million barrels of oil equivalent to the total output of Åsgard during the field’s life. Statoil began the $2.3-billion project in 2005 and an estimated 11 million man-hours have been spent on it from start to completion. The firm said that more than 40 new technologies have been developed and employed as part of the installation. Compression […]

Posted On : Published By : Tom Whipple
Category:

Robert Rapier: Peak Oil is a Function of Oil Price

The Origins of Peak Oil Awareness The scientific study of peak oil began in the 1950′s, when Shell geophysicist M. King Hubbert reported on the evolution of production rates in oil and gas fields. In a 1956 paper Hubbert suggested that oil production in a particular region would approximate a bell curve, increasing exponentially during the early stages of production before eventually slowing, reaching a peak when approximately half of a field had been extracted, and then going into terminal production decline. Hubbert applied his methodology to oil production for the Lower 48 US states and offshore areas. He estimated that the ultimate potential reserve of the Lower 48 US states and offshore areas was 150 billion barrels of oil. Based on that reserve estimate, the 6.6 million barrels per day (bpd) extraction rate in 1955, and the 52.5 billion barrels of oil that had been previously produced in […]

Posted On : Published By : Tom Whipple