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Can Bakken Break Even at $30?

Crude Plunges to Six Year Low Crude oil has fallen to a six year low in recent weeks, but even at the current price of around $43, analysts speculate the Bakken will remain strong. Related: Oil Plunges to Six Year Low West Texas Intermediate crude is now down more than 30% in just the last few months after a 50% rebound earlier this spring. Bloomberg reported this week that a lower profitability point from producers has allowed U.S. oil production to remain near a 40-year high. Bloomberg Analyst, William Foile said, “A single break-even price doesn’t actually exist. Rather, what the model indicates is that at a realized oil price of $29.42, half of wells will generate returns exceeding 10%. This price is considerably lower than the $70 breakeven estimated by industry watchers at the start of the oil price slump.” In McKenzie County, North Dakota, one estimate is […]

Posted On : Published By : Tom Whipple
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Shale-rich Colorado welcomes EPA methane proposals

Colorado Gov. John Hickenlooper says EPA proposals for methane emissions for the oil and gas industry model rules on the books for shale companies working in his state. File Photo by UPI/Mike Theiler DENVER, Aug. 19 (UPI) — The proposal to cut methane emissions from the oil and gas industry models Western state shale rules is already on the books, Colorado’s governor said. The U.S. Environmental Protection Agency called for the first-ever mandates regarding methane emissions generated by the oil and gas industry. Over the next decade, the industry would need to cut methane emissions by at least 40 percent from their 2012 levels. "We are underscoring our commitment to reducing the pollution fueling climate change and protecting public health while supporting responsible energy development, transparency and accountability," EPA Administrator Gina McCarthy said in a statement. The EPA described methane as the second-most prevalent greenhouse gas emitted from human […]

Posted On : Published By : Tom Whipple
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Rail fading from North Dakota oil transit

State data from North Dakota show rail transport of crude oil falling back after peaking in December 2014. Graph courtesy of the North Dakota Pipeline Authority BISMARCK, N.D., Aug. 18 (UPI) — New pipelines operating in North Dakota have pushed the volume of crude oil by rail lower during the first half of the year, a state official said. Rail broke away from pipelines as the main source of crude oil delivery in 2012. The boom in shale oil production from the so-called Williston basin, hosting the Bakken and Three Forks shale formations, had outpaced pipeline capacity, leaving companies with rail as the primary alternative transit option. After peaking in December 2014, when the state set its crude oil production record at 1.22 million barrels per day, transport by rail has been in a general decline and is now at parity with pipeline transport. Justin Kringstad, director of the […]

Posted On : Published By : Tom Whipple
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OPEC May Boost Oil Output to Record With Iran Back Amid Glut

(Bloomberg) — OPEC could potentially boost crude oil production to 33 million barrels a day, the most ever, after international sanctions are removed against Iran amid a global supply glut, according to the country’s OPEC representative. The global oil market is already in surplus by about 3 million barrels a day, with Saudi Arabia and Iraq responsible for OPEC’s oversupply in the past six months, Iran’s state-run Islamic Republic News Agency reported Sunday, citing Mehdi Asali. Iran can boost output by 500,000 barrels a day within one week after sanctions are lifted, Oil Minister Bijan Namdar Zanganeh said earlier this month. Crude has lost half its value in the past year as U.S. production jumped to the highest level in more than 40 years and Saudi Arabia had record output. Prices collapsed after the Organization of Petroleum Exporting Countries decided on Nov. 27 to maintain production rather than sacrifice […]

Posted On : Published By : Tom Whipple
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ND oil production numbers released today

“It could last two years”, Helms said. Officials believe the capacity exists to maintain production in North Dakota for another two full years even with the sustained lower prices. The industry, facing continued low crude oil prices, is finishing off previously drilled wells to get oil and some revenue flowing and to meet regulated completion timetables, state officials said Friday. Helms said the current number of active drilling rigs – 74 on Friday – and the inventory of wells that needs to be completed is sufficient to maintain production of 1.2 million barrels per day for 24 months. The state reached a milestone in June – passing the 10,000 mark for shale oil wells – but it comes amid rising uncertainty for the oil industry prompted by plummeting barrel prices that has caused the shutdown of numerous rigs in North Dakota. “Even though we have the low prices, there […]

Posted On : Published By : Tom Whipple
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The Divergence Of Rig Count, Oil Price And Production Explained

Summary Since June, oil prices have plummeted 30% on concerns of a worldwide supply glut. Paradoxically, during this same period, the oil rig count has climbed by 74 rigs or 7%. This article analyzes this relationship between rig count and oil price to predict in which direction the rig count will move next. It also analyzes the relationship between oil production and rig count to complete the circuit and determine the evolution of oil supply in response to a change in oil price. Finally, I use this data to pinpoint a 3-month period during which I expect both domestic oil production and rig count to fall which will maximize bullish prospects for oil. My trading strategy based on this analysis is discussed in detail. Since June 24th, crude oil prices have plummeted 31%, as fears of a global storage surplus, weakening Chinese demand, and a strong U.S. dollar have […]

Posted On : Published By : Tom Whipple
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June oil production ties record peak

Oil production in June matched its record peak from last year. Oil production in June rose to its highest levels since its record peak late last year, North Dakota regulators said Friday, adding that the current level of production could be maintained for about two years. Preliminary June numbers from the North Dakota Department of Mineral Resources had production at 1,211,178 barrels per day. This was an increase of more than 8,500 daily barrels from the final May tally of 1,202,615 barrels per day. The active rig count in the state was at 74 on Friday. Lynn Helms, director of the Department of Mineral Resources, said production has maintained due to operators primarily drilling in the most productive parts of the oil patch and increasing efficiencies with staff and equipment. Well completions by hydraulic fracturing increased from a final May count of 116 to a preliminary total of 149 […]

Posted On : Published By : ASPO-USA
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What is the price of oil telling us?

Market fundamentalists tell us that prices convey information. Yet, while our barbers and hairdressers might be able to give us an extended account of why their prices have changed in the last few years, commodities such as oil– which reached a six-year low last week –stand mute. To fill that silence, many people are only too eager to speak for oil. And, they have been speaking volumes. So much information in that one price! First, as prices fell last year when OPEC refused to cut its oil production in the face of slowing world demand, the industry kept saying that it could continue to produce from American tight oil fields at around $80 a barrel and be profitable . Then, as prices fell further, the industry and its consultants assured everyone that while growth in tight oil production would slow, it would still be profitable for the vast majority […]

Posted On : Published By : Tom Whipple
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Population and climate instability will lead to severe food shortages by 2050

The food industry has become much more efficient in the last few decades as a result of globalization, but also a lot more vulnerable to shocks. Climate change will lead not only to increased temperatures, but the extreme weather it causes in North, South America and Asia are likely to also lead to global food shortages. Severe production shocks, with the food shortages, price spikes and market volatility that come with are likely to become three times as usual than today, according to a joint report by a US-British task force. These are likely to occur every 30 years by 2040. The Task force on Extreme Weather and Global Food System Resilience estimated that due to a rise in the world population from 7.3 billion to 9 billion in 2050, food production will need to increase by more than 60 percent and climate-linked market disruptions could lead to civil […]

Posted On : Published By : Tom Whipple
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Why an Oil Glut May Lead to a New World of Energy

The plunge of global oil prices began in June 2014, when benchmark Brent crude was selling at $114 per barrel. It hit bottom at $46 this January, a near-collapse widely viewed as a major but temporary calamity for the energy industry. Such low prices were expected to force many high-cost operators, especially American shale oil producers, out of the market, while stoking fresh demand and so pushing those numbers back up again. When Brent rose to $66 per barrel this May, many oil industry executives breathed a sigh of relief. The worst was over. The price had “reached a bottom” and it “doesn’t look like it is going back,” a senior Saudi official observed at the time. Skip ahead three months and that springtime of optimism has evaporated. Major producers continue to pump out record levels of crude and world demand remains essentially flat. The result: a global oil […]

Posted On : Published By : Tom Whipple