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Shale Drillers Pump More Oil From Each Well as Rigs Mean Less

Workers prepare drilling pipe on a deep sea crude oil platform in the waters off Veracruz, Mexico. Shale producers in the U.S. have learned to do more with less. Last year’s price crash forced drillers to cut budgets, reducing the number of rigs in U.S. oil fields by 59 percent from the peak. Crude production, though, has fallen only about 5 percent. Part of the reason for that is a spurt of innovation driven by desperation. Rig productivity increased last month in all shale oil plays, the Energy Information Administration said in a report Monday, as companies drill more wells in less time. Wells being drilled this month will be able to pump about 389,000 barrels a day of new production, down 39 percent from last November, a much shallower drop than the overall rig count, according to Austin, Texas-based Drilling Info Inc. “The amount of producibility per rig […]

Posted On : Published By : Tom Whipple
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Coal’s Answer to Decade-Low Prices Is Even Lower Prices

Coking coal is testing one of the basics of Econ 101: that low prices are the cure for low prices. The global metallurgical coal benchmark for the fourth quarter settled last week at $89 a metric ton, down 4.3 percent from the previous period to the lowest level since March 2005, according to Doyle Trading Consultants, a Grand Junction, Colorado-based industry analyst. Even so, at least three-fifths of the material that moves by sea, some 180 million metric tons of the steelmaking component, are generating a return amid a glut as the crude oil rout and a weaker Australian dollar lower costs for the world’s largest met coal exporter, Bloomberg Intelligence data show. “The prices have to get low enough to where the Australians can’t even tolerate them,” said Jim Thompson, director of coal for IHS Inc. in Knoxville, Tennessee. “Then maybe we can get around to solving the […]

Posted On : Published By : Tom Whipple
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Oil Patch Braces for Financial Reckoning

Magnum Hunter CEO Gary Evans says the company is selling a pipeline to raise cash. U.S. energy companies have defied financial gravity for more than a year, borrowing and spending billions of dollars to pump oil, even as crude prices plummeted. Until now. The oil patch is expected to finally face a financial reckoning, experts say, with carnage occurring as early as this month. One trigger: Smaller drillers are bracing for cuts to their credit lines in October as banks re-evaluate how much energy companies’ oil and gas properties are worth. But with oil trading below $45 a barrel, bigger oil outfits are struggling to stay profitable, too. Jim Flores, vice chairman of Freeport-McMoRan Inc., FCX -2.11 % which pumps oil in the Gulf of Mexico, explained the industry’s conundrum this way: “It’s raining and it’s going to rain for a long time. We’re all going to get wet. […]

Posted On : Published By : Tom Whipple
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Gasoline Leads Oil Prices Lower

The price of crude oil fell Monday amid an ongoing production glut. NEW YORK—Gasoline futures slid to an eight-month low Monday on concerns that the end of the busy summer-driving season could lead to a glut of the motor fuel. Oil prices also fell on fresh indications that the war for customers in the global crude market hasn’t abated. Gasoline prices settled down 6.56 cents, or 4.8%, at $1.3043 a gallon, the lowest settlement since Jan. 15. Gasoline prices surged 46% in the first half of the year, as relatively low prices sparked a surge in demand globally. U.S. driving hit a record, and refineries around the world ran at unusually high rates to churn out enough gasoline to meet consumption. But gasoline demand typically declines in September, as consumers stop taking trips after the busy summer-driving season. Gasoline prices have erased their spring gains and are now down […]

Posted On : Published By : Tom Whipple
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To Understand The Oil Story, You Need To Understand Exports

Despite the attention-grabbing economic volatility that is grabbing headlines, it’s important to keep our eye on the energy story firmly in focus. This is especially true as the headlines we regularly read about Peak Oil being dead " are "manifestly false" according to this week’s podcast guest, petroleum geologist Jeffrey Brown. As concerning as the fact that global oil production has plateaued over the past decade, despite trillions invested in trying to goose it higher, are Brown’s forecasting model for oil exports. His Export Land Model shows how rising internal consumption can swing (and has swung) countries from major exporters to permanent importers within a dizzyingly short period of time: The crucial issue to understand about what has happened after 2005 is that we’ve had a very large increase in global gas production and natural gas liquids, but a much slower increase in crude plus condensate. So, what I […]

Posted On : Published By : Tom Whipple
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Brent oil prices dip on weaker China data

Oil pumps are seen at a MAX oil station in Yangon April 21, 2014. Brent crude oil fell on Monday as weaker-than-expected Chinese data weighed on markets, adding to concerns that declining global demand would exacerbate a surplus of crude. Traders also waited to see whether the U.S. central bank raises interest rates for the first time in nearly a decade later this week. Should interest rates rise, analysts expect oil to fall as a stronger dollar would undermine demand from importing countries. Oil prices have fallen almost 60 percent since June 2014 on the largest global surplus in modern times and concerns about a slowing Chinese economy. Growth in China’s investment and factory output missed forecasts in August. A recent run of weak data from the world’s second-largest economy has raised the chances that third-quarter economic growth may dip below 7 percent for the first time since the […]

Posted On : Published By : Tom Whipple
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Oil Slips in Asian Trade, Fed Meeting in Focus This Week

By Eric Yep Crude-oil futures trimmed early gains to move lower in Asian trade Monday as markets grappled with continued oversupply, weakening demand and intraday losses in Chinese equity markets. Investors are bracing for more volatility and possibly lower oil prices in coming weeks. Goldman Sachs Group Inc. said last week that U.S. oil prices could fall to as low as $20 a barrel to clear out a global supply glut. On the New York Mercantile Exchange, light, sweet crude futures for delivery in October traded at $44.51 a barrel at 0352 GMT, down $0.12 in the Globex electronic session. October Brent crude on London’s ICE Futures exchange fell $0.32 to $47.82 a barrel. Both WTI and Brent crude futures lost around 3% last week, and have fallen for 9 of the past 11 weeks. The U.S. Federal Open Market Committee meeting on Sept. 16-17 is expected to be […]

Posted On : Published By : Tom Whipple
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Oil Prices to Fall to $20 Per Barrel?

resilience.org Peak oil is soooooo last decade . Goldman Sachs is suggesting that the price of oil could fall as low as $20 per barrel during the next few years. (Grain of salt warning: Keep in mind that back during the last peak oil craze in 2008, Goldman was predicting $200 per barrel oil .) A drop to $20 per barrel would mean that in real dollars the price of oil would be back to its lowest ever 1999 price. So why might crude prices drop to $20 per barrel? Two reasons. First, vast new supplies of petroleum have been accessed by fracking and horizontal drilling. Fracked oil is now swing production that can come quickly online whenever prices to start to rise. And second, oil states like Russia, Nigeria, Venezuela, Iran, and Saudi Arabia must keep pumping even at low prices in order to generate the cash they […]

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OPEC Is About to Get Even Bigger

There’s been a lot of debate as to whether OPEC’s decision to protect its market share would work. Some thought that the policy shift from protecting price to protecting market share would eventually lead to a breakup of the organization, as weaker members would revolt or bolt. That, however, doesn’t appear to be the case, as its membership is poised to actually grow in December when it welcomes Indonesia back as a member. What Indonesia brings to the table Indonesia is poised to rejoin the oil group after a seven-year hiatus. It originally left due to a slide in its oil output, as it couldn’t overcome the declining production from legacy fields. In fact, its current daily output of 870,000 barrels is just half of what it was in its peak in the late 1970s. Further, that oil output isn’t even enough to meet its own internal demand, which […]

Posted On : Published By : Tom Whipple
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Iran Could Become Major Supplier of Natural Gas to EU

European Climate Action and Energy Commissioner Miguel Arias Cañete on Aug. 20. BRUSSELS—Iran could become a major supplier of natural gas to the European Union by the end of the next decade, according to new estimates from the bloc’s executive following the nuclear deal reached with Tehran this summer. The European Commission now believes that the bloc could import between 25 billion and 35 billion cubic meters of gas a year from Iran by 2030, according to a European official and a representative of a European energy company. That would put future gas supplies from Iran on a similar level to current imports from North Africa and help reduce the bloc’s dependence on shipments from Russia. Russia currently ships around 130 BCM a year to the EU. Western governments and energy companies have been positioning themselves to once again tap Iran’s rich oil and gas reserves since the prospects […]

Posted On : Published By : Tom Whipple