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British shale oil sector gaining momentum

British energy industry reviews what’s thought to be a significant deposit of oil in shale beds in the country. Photo by David Gaylor/Shutterstock LONDON, Aug. 26 (UPI) — At least 10 billion barrels of potential oil in place is thought to lie in the Horse Hill shale license area in the south of the country, a British group said. U.K. Oil and Gas Ltd. said an independent assessment from oil services company Schlumberger found a mean 10.9 billion barrels of oil in pace in a 55 square-mile area of the Horse Hill basin . U.K. Oil and Gas Chairman Stephen Sanderson said the independent analysis predicts "significant" oil volumes and gives further support for development plans. The company early this year said the reserves at Horse Hill are in shale beds that are fractured naturally, meaning extraction may be carried out using conventional techniques. The discovery at Horse Hill […]

Posted On : Published By : Tom Whipple
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For Oil Producers Cash Is King, and That’s Why They Just Can’t Stop Drilling

Investors sent a surprising message to U.S. shale producers as crude fell almost 20 percent in August: keep calm and drill on. While most oil stocks have fallen sharply this month, the least affected by the slump share one thing in common: they don’t plan to slow down, even though a glut of supply is forcing prices down. Cimarex Energy Co. jumped more than 8 percent in two days after executives said Aug. 5 that their rig count would more than double next year. Pioneer Natural Resources Co. rallied for three days when it disclosed a similar increase. Shareholders continue to favor growth over returns, helping explain why companies that form the engine of U.S. oil — the frackers behind the boom — aren’t slowing down enough to rebalance the market. U.S. production has remained high, frustrating OPEC’s strategy of maintaining market share and enlarging a glut that has […]

Posted On : Published By : Tom Whipple
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Oil Investors Betting on Payout Cuts Ignore Years of History

Shares of the largest oil companies have slumped so low it suggests investors expect the crash in crude prices to force cuts in dividends. History tells a different story. Oil’s collapse has driven the annual dividend yield at Royal Dutch Shell Plc to at least a 20-year high of 7.7 percent this week, compared with 4.4 percent for the benchmark FTSE 100 Index. The yield — the annual return divided by the share price — is also at a two-decade high at Exxon Mobil Corp. and Chevron Corp. “The market is telling us that investors think the dividend payouts may not be sustainable with oil at this level,” said Ahmed Ben Salem, a Paris-based analyst with Oddo & Cie. “History suggests otherwise. Oil companies are very attached to their dividend policy and if they were to cut it they’d lose a lot of investors.” Shell, Europe’s biggest oil company, […]

Posted On : Published By : Tom Whipple
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Jean Laherrere’s Bakken Update

The rest of North Dakota, less the Bakken, is just about finished. With this chart Jean puts North Dakota production right at the peak. Being a self confessed techno-optimist of sorts I’ll bite but before I do, here are some news stories that will support some of the arguments I will be putting forward The target was unveiled by ACT chief minister Andrew Barr at the ACT Labor Party conference on Saturday. The ACT already had a 90 per cent renewable energy target by 2020, but decided to go the “whole hog” by 2025 to show leadership in the climate and clean energy debate that has been lacking at the federal level. “Canberra can and should be a beacon for everyone who realises the world must act decisively now to stave off a future of catastrophic climate change,” Barr told the conference on Saturday. The ACT is able to […]

Posted On : Published By : Tom Whipple
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Bakken Oil Production Up Slightly

Bakken Production North Dakota saw increased production in July after slipping for two months. In April, the EIA predicted that production had peaked across the U.S. at 9.7 million barrels per day, the highest level since 1971. This proved to be true as production fell in May by 50,000 barrels per day and in June, Bakken shale month-over-month crude oil production dipped 1.3%. This week, Bentek Energy reported a slight increase in oil production for North Dakota in July, saying that the Bakken formation follows closely behind the Eagle Ford Basin in terms of efficiency gains and internal rates of return. Drill times in the Bakken dropped from about 15 days per well in late 2014 to about 13 days per well during the second quarter of this year. Bentek analyst, Sami Yahya, explained “Substantial cost savings protocols alongside reduced drill times have kept internal rates of return in […]

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WoodMac: ‘Decade-long’ global gasoline surplus possible for refiners

The global oil product market could experience a surplus of gasoline supply as early as 2017, according to the latest long-term oil product market forecast from Wood Mackenzie Ltd . The research and consultancy firm explains that the surplus, combined with a deficit of middle distillate and fuel oil, would put significant pressure on refiners by the end of the decade. Refiners currently benefit from low oil prices, unplanned refinery outages, and slower-than-expected ramp-up of new facilities, collectively helping keep oil product markets tight. And refiners are struggling to meet gasoline demand growth of 420,000 b/d. However, WoodMac cautions that oil demand growth will eventually slow in the long-term due to increasing efficiency and alternative fuel sources. The firm expects margins to fall by 2019 to the minimum sustainable level for some refiners and identifies key market indicators that could see gasoline cracks bottom out at low levels last […]

Posted On : Published By : Tom Whipple
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Moody’s Cuts Credit Rating of Canadian Oil Sands

The rating action targeting the largest owner of Canada’s giant Syncrude oil-sands mining consortium comes amid a swoon in oil prices below $40 a barrel, which has eroded profit margins in the energy industry and made it more difficult for highly-levered oil producers to service their debt loads. Moody’s lowered its creditworthiness assessment of Canadian Oil Sands’ senior unsecured debt to Baa 3 from Baa 2 and kept its “negative” outlook for the Calgary-based company. Baa 3 is Moody’s lowest rung of investment-grade credit and just above the speculative, or junk, grade. “Moody’s expects negative free cash flow [at Canadian Oil Sands] of about 125 million Canadian dollars ($94 million) from June 30, 2015, to September 30, 2016, to be largely debt funded,” it said. The ratings action was prompted by the recent tumble in crude prices to more than six-year lows and Canadian Oil Sands’ deteriorating balance sheet. […]

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Oil Explorers Boost U.S. Drilling Even as Price Slumps

Drillers added rigs in U.S. oilfields for the seventh time in the past eight weeks as declining crude prices fail to hold back activity. Rigs targeting oil in the U.S. rose by 2 to 674 this week, the highest since the last week of April, Baker Hughes Inc. said on its website Friday. Drilling equipment added in the Williston Basin of North Dakota and other shale plays more than offset a declining count in areas like Texas’ Eagle Ford and Permian formations. The crude being pumped out of shale rock in the U.S. has helped create a global glut that pushed prices in New York below $40 a barrel for the first time in more than six years on Friday. At such low prices, the recent drilling increase may be short-lived, and the rig count remains almost 60 percent lower than in October. “We hit bottom, we bounced off […]

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Pressure Mounts to Retire Older Fleet as Rig Oversupply Persists

With no signs of a turnaround in global rig demand, drilling contractors are under increasing pressure to retire older rigs. Operators worldwide have succumbed to the prolonged weakness in oil prices by curtailing drilling activities. An oversupply of rigs in an already slow drilling market combined with the addition of newbuilds to the global fleet, are key factors nudging drilling contractors towards retiring their older fleet. Pressure Mounts to Retire Older Rigs According to Rigzone’s RigLogix database , worldwide utilization of rigs, comprising drill barge, drillship, inland barge, jackup, platform rig, semisubmersible, submersible and tender rig, stood at 65.4 percent August 2015, down 12.6 percent from August 2014’s 78 percent as rig demand fell due to oil prices trading around half the level they were in the corresponding period. Transocean Ltd., a major industry player, disclosed in a May 19 presentation that the “rig market is temporarily oversupplied, including […]

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Nostalgic for the Financial Crisis? Only in the Oil Business

America’s suffering shale patch is about the only place in the U.S. where there’s nostalgia for the dark days of the financial crisis. While the global economy started to unravel in 2008, it was also the beginning of the biggest oil boom in U.S. history. Domestic production, which had been steadily declining since the bust of 1986, began to climb in 2009. OPEC cut output to an average of 28.5 million barrels a day that year, putting a floor under prices. And at the heart of the shale revolution, states like North Dakota, Texas and Oklahoma enjoyed lower rates of unemployment than the rest of the U.S. Sure, crude plummeted to $32 a barrel in December 2008, but it didn’t stay there for there for long. Analysts described it as a V-shaped bust, and by May the following year oil was back above $65. Plenty of people counted on […]

Posted On : Published By : Tom Whipple