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Halliburton secures $500 million to fund drilling in old wells

A Halliburton facility sits behind a barbed wire fence on the outskirts of Williston, North Dakota January 23, 2015. Halliburton Co ( HAL.N ) said it had tapped BlackRock Inc ( BLK.N ) for $500 million to help fund drilling in existing shale wells, the first such move by a major oilfield services provider at a time when oil producers are shying away from drilling new wells. The world’s No.2 oilfield services provider, which is buying No.3 Baker Hughes Inc ( BHI.N ) to cope with a fall in demand, also reported a better-than-expected profit, helped by cost cuts. Market leader Schlumberger NV ( SLB.N ) and Baker Hughes have touted refracking, the practice of fracking existing wells, as means for oil producers to save money. Drilling normally accounts for about 40 percent of the cost of a new well. "Though a relatively small market today, we see significant […]

Posted On : Published By : Tom Whipple
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Cheap Oil Should Fuel Economy at Last

Pump jacks in North Dakota. Layoff announcements in the energy sector have fallen back lately. Lower oil prices have proven to be more of a bane than a boon for the U.S. economy. But that is about to change. When the price of crude started dropping sharply last fall, most economists reckoned it would be a good thing . Sure, U.S. oil production had boomed due to the shale revolution, but the country was (and is) still a net importer of petroleum products. So, the thinking went, the losses from lower investment and lost jobs in the shale basins would be more than offset by the extra money that got spent on American goods and services rather than foreign oil. Things haven’t actually worked out that way. Rather, the sharp decline in drilling activity has led to a drop in investment and a weakening in the jobs market that […]

Posted On : Published By : Tom Whipple
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Has U.S. oil production started to turn down?

The plunge in oil prices last year led many to say that a decline in U.S. oil production wouldn’t be far behind. This was because almost all the growth in U.S. production in recent years had come from high-cost tight oil deposits which could not be profitable at these new lower oil prices. These wells were also known to have production declines that averaged 40 percent per year. Overall U.S. production, however, confounded the conventional logic and continued to rise– until early June when it stalled and then dropped slightly . Anyone who understood that U.S. drillers in shale plays had large inventories of drilled, but not yet completed wells, knew that production would probably rise for some time into 2015– even as the number of rigs operating plummeted . Shale drillers who are in debt–and most of the independents are heavily in debt–simply must get some revenue out […]

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Alberta pipeline breach causes massive spill

China-subsidiary company apologizes, says cleanup underway for one of North America’s largest-ever oil spills on land Nexen Energy apologized Friday for an oil sands pipeline leak in the Canadian province of Alberta that is one of North America’s largest-ever oil-related spills on land, and said its cleanup crews were working around the clock. The pipeline leaked 31,500 barrels of emulsion — a mixture of bitumen, water and sand, the equivalent of 5 million liters of tar sands oil, or 1.3 million gallons. Nexen, a subsidiary of China’s CNOOC Ltd., said it is still trying to find the root cause of the leak in the new pipeline, which was installed last year. The company has found a visible breach about the size of a hand. The incident is another blow for the environmental record of the oil sands industry, already under fire from activists for its carbon-intensive production process. Ron […]

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Oil Drilling Retreat Resumes in U.S. After Two-Week Reprieve

Drillers sidelined rigs in U.S. oil fields for the first time in three weeks, resuming the steepest and most protracted decline in drilling on record. Rigs targeting oil in the U.S. decreased by 7 to 638, Baker Hughes Inc. said on its website Friday. They rose by five last week. Natural gas rigs rose by 1 to 218 and miscellaneous rigs were unchanged at 1, bringing the total down by 6 to 857. America’s oil drillers have sidelined more than half the country’s rigs since October as U.S. crude collapsed from its mid-2014 peak to less than $45 a barrel in March. After rebounding somewhat and staying near $60 for much of the second quarter, West Texas Intermediate has dropped 17 percent from June 23. The latest rig-count decline was more of a “normal churn” when operators look to get more bang for their buck by letting go of […]

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Worst may be over for oil market, Schlumberger says

Oil services company Schlumberger said it’s still struggling, but the worst of the downturn in the crude oil market may be over. File Photo by Gary C. Caskey/UPI HOUSTON, July 17 (UPI) — Oil services company Schlumberger said it would be spending less on exploration and production in North America, but the sector may be recovering. Lower crude oil prices means energy companies are forced to cut spending on exploration and production to endure. Weatherford, the No. 4 oil field services company in the world, in April followed its peers Halliburton, Baker Hughes and Schlumberger in trimming its payroll during a weak crude oil market. Schlumberger Chairman and Chief Executive Officer Paal Kibsgaard said second quarter revenues dropped 12 percent because of what he described as a "dramatic" decline in North American exploration and production . "Exploration and production investment in North America is now expected to fall by […]

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API sees strong U.S. energy sector

American Petroleum Institute said its data show a recovery emerging in the domestic energy market despite a depressed crude oil market. File Photo by UPI/Shutterstock/ekina WASHINGTON, July 17 (UPI) — Data published by the American Petroleum Institute show the U.S. energy sector is thriving, with consumption and production on the rise. API reported gasoline demand in particular was on the rise, with deliveries from refineries increasing 2.6 percent during the second quarter compared to last year for the highest level for any month since August 2007. "Demand for and production of oil and refined products grew almost across the board over the last year," API Chief Economist John Felmy said in a statement. "Notably, gasoline demand last month reached the highest level since the summer of 2007." Motor club AAA said U.S. consumers are reaping the economic impacts of lower gasoline prices during an era when crude oil markets […]

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U.S. Oil Rig Count Falls to 638 After Two-Week Upturn

By Angela Chen The U.S. oil-rig count fell by seven to 638 this week, reversing the brief upturn of the past two weeks, according to the latest report from Baker Hughes Inc. Last week had been the second straight week of increases after 29 weeks of declines. The number of U.S. oil-drilling rigs, which is a proxy for activity in the oil industry, had fallen sharply since oil prices headed south last year. Oil prices fell nearly 60% from June 2014 to a six-year low in March, as soaring production from the U.S. and other countries overwhelmed global demand. There are about 60% fewer rigs working since a peak of 1,609 in October, though the pace of declines has slowed considerably recently. In late May, several U.S. shale-oil companies said they were ready to bring rigs back into service, setting up the first big test of their ability to […]

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US Atlantic Coast gasoline imports slide as European arbitrage window closes

A bounty of supplies in the US Atlantic Coast gasoline market and a recent surge in European gasoline values shut an arbitrage window for shipments from Europe this week, sources say. Atlantic Coast gasoline stocks totaled 62.1 million barrels in the week that ended July 10, up 1.6 million barrels week on week and 1.5 million barrels higher than a year ago, according to US Energy Information Administration data. Meanwhile, imports of gasoline into the region, which have been strong all year and peaked at 797,000 b/d in the week that ended July 3, are starting to fall. Imports fell to 634,000 b/d in the week that ended July 10, a total which remains strong by historical standards — imports averaged 514,000 b/d in 2014 — and reflects an average of two cargoes a day. And looking forward, market observers expect import levels to slip yet further. Data from […]

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The Mighty Bakken Bites Back

Defying the trend in declining rig counts, daily volumes in the Bakken are climbing higher to the point of a record for gas production at an all-time high of 1.63 billion cubic feet per day (bcfd) in May. Well completions also increased from 102 to an early count of 114, which coincided with previous estimates by Wood Mackenzie Ltd. Jonathan Garrett, WoodMac’s principal Bakken analyst, said the most interesting data point was the fact that despite oil bring priced in the $50 per barrel range and that the rig count is down by 60 percent, production is still increasing at the Bakken in both oil and gas. Operators have achieved this with three primary approaches: drilling only in the acreage’s sweet spot—this means no testing around the perimeter; rig efficiency with high horsepower; and better completion rates, Garrett said. What’s more, during the second half of the year, operators […]

Posted On : Published By : Tom Whipple