Category: Shale Oil

OKLAHOMA CITY—Two moderate magnitude earthquakes shook northern Oklahoma on Saturday, including one near the major oil storage hub of Cushing. The strongest was a 4.5 magnitude quake recorded by the U.S. Geological Survey at 5:03 p.m. Saturday about one mile northwest of Cushing. It followed a 4.4 magnitude quake recorded at 4:20 a.m. about 18 miles southwest of Medford and about 100 miles northwest of Cushing. Crude oil stored in facilities near Cushing is used to settle futures contracts traded on the New York Mercantile Exchange. As of Oct. 2, 53 million barrels was in storage there, according to the U.S. Energy Information Administration. Bob Noltensmeyer, emergency manager for the city of Cushing, said he hadn’t received reports of significant damage although there were “shattered nerves.” “This one was pretty strong,” he said. “The whole house shook.” The U.S.G.S. also reported a 3.7 magnitude quake about 13 miles southwest […]

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US shale oil production is a prime example of mismatching metrics leading to odd conclusions. First you need to consider spud to initial production time of oil wells as the rigs do the drilling, but the production comes later, 2-4 months. This is much longer than EIA figures ( http://www.eia.gov/petroleum/drilling/pdf/dpr_methodology.pdf ) and unadjusted ones.. Hence rigs could go to 1 tomorrow and production not fall off for months. You also get something interesting if you model 50%+ declining wells with decent lead time from drilling to production, top happens later than one might intuitively think due to run off.. More wells are being drilled per pad and increased pressure is being put into the wells, drawing it out faster but reducing overall recoverable resource. This can be seen by correctly matched well productivity in areas like Bakken, which has fallen 10%+ Rig productivity was down during the boom as […]

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An earthquake with a magnitude of 4.5 struck near the U.S. crude oil hub of Cushing, Oklahoma on Saturday, just days after regulators imposed new rules meant to prevent temblors in the area and said more changes were possible. The Oklahoma Corporation Commission (OCC), which regulates the state’s oil and gas industry, ordered companies on Sept. 18 to shut or reduce usage of five saltwater disposal wells around the north-central Oklahoma city of Cushing. Saltwater, a normal byproduct of oil and gas work, is put into deep disposal wells that scientists say have contributed to a rash of small and medium-sized earthquakes in Oklahoma since 2009. At the time of its latest directive, the OCC said its "plan may be altered as more data is made available." On Sunday, some people on social media, fearing a quake could cause a fire or explosion in Cushing in the future, were […]

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North Dakota Gov. Jack Dalrymple says economy in shale-rich state depends on more than one single industry. File Photo by Ron Sachs/Pool BISMARCK, N.D., Oct. 9 (UPI) — North Dakota’s economy is thriving because of the emphasis on diversity that extends beyond the oil and gas sector, the state’s governor said. "North Dakota’s economic growth stems from nearly every business sector, with no single industry telling the whole story of our state’s progress," Gov. Jack Dalrymple said in a statement. North Dakota is the No. 2 oil producer in the United States, producing about 1.2 million barrels per day in July, the last full month for which data are available. That’s down about 1.6 percent from the all-time high reported in December. Dalrymple touted overall prospects in the state, however, by noting the state has created 123,000 new jobs since 2004, a 36.6 percent gain, and personal income has […]

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Weak cash flow and low oil prices leads to rating downgrade for Chesapeake Energy. Photo by Steve Oehlenschlager/Shutterstock NEW YORK, Oct. 6 (UPI) — The credit rating for U.S. shale player Chesapeake Energy was downgraded because of cash flow problems in the weak market, Moody’s said. Moody’s Investors Service downgraded the corporate rating for Chesapeake Energy Corp. by one notch to Ba2. Moody’s Senior Vice President Pete Speer said the downgrade came as a result of weak cash flow and the toll taken by lower natural gas and crude oil prices. "Chesapeake will have to execute on assets sales and other transactions to meaningfully reduce its debt levels to better align its capital structure with the current commodity price environment," he said in a statement. Energy consultant group IHS warned the depressed crude oil market could limit the borrowing options for North American exploration and production companies like Chesapeake. […]

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Cam Hewell runs Premium Oilfield Technologies, a small company that makes equipment and spare parts for drilling rigs from North Dakota to Texas. Like his rivals, he is trying to withstand the worst oilfield downturn in six years, but they face a vexing obstacle: cannibals. In a bid to save cash, rig owners are cannibalizing parts such as motors and drill pipe from idled rigs to fix 800 active ones in the U.S. when stuff breaks. In good times, they would buy new equipment from companies like Hewell’s or industry leader National Oilwell Varco Inc when parts fail. Now, they just pick over any of about 1,100 rigs idled by the price crash. Cannibalization is so widespread in this downturn that services companies and others say even after oil prices recover it will take six months or more to see a significant rebound in drilling and production – a […]

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A year after oil sank into a bear market, the industry is still hunkering down for a long period of low prices, with Europe’s biggest producer seeing only the first glimpses of a recovery. In the last five months, U.S. production sank by 590,000 barrels a day, or more than 6 percent. The bad news: Drillers are cutting costs with a speed and brutality not seen in decades, enabling many to continue producing at a high level even as prices remain low. Goldman Sachs Group Inc. sees crude falling by another $10 a barrel as storage tanks fill up in the coming months. “I see the first mixed signs for recovery,” said Ben Van Beurden, Royal Dutch Shell Plc’s chief executive officer, speaking at the Oil & Money conference in London. Still, the company is planning for a long period of low prices, he said: “With U.S. shale oil […]

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After many years of prosperity, the tough time has come for the US shale industry. Dramatic US oil production decline is inevitable and many shale companies face bankruptcy. Their assets can end up to larger producers, reinforcing market concentration. US energy independence can only be saved by government intervention. US government will remove exports limitation and FED September rate hike suspension is related to the unsustainable debt levels US oil industry is keeping afloat. But that is simply not enough to prevent a collapse of the US oil industry. From our research we learn that cost per barrel declined slightly but decreasing production cost is not enough to compensate for lower oil price. US oil production already declined 400K barrels per day from its April peak. We estimate an other 2 to 3 Million barrels can be wiped out the coming year. A few months ago, when the oil […]

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Exploration-and-production companies, buffeted by low oil and gas commodity prices brought on by robust production from shale plays, are using a variety of strategies to survive the current industry downturn, speakers at an oil and gas conference said Monday in San Francisco. Representatives of upstream companies presenting at the Independent Petroleum Association of American Oil and Gas Investment Symposium said their firms are depending on a combination of belt-tightening efforts, hedging strategies and technology to deal with the economic doldrums. J. Russell Porter, president and CEO of Gastar Exploration, said his company is well-positioned to continue to thrive because it operations are diversified between two significant core assets — the Marcellus/Utica natural gas-centric play of Appalachia and the oilier play in the Midcontinent. Gastar’s acreage position in the Appalachian Basin is about 60,000 net acres in West Virginia and to a lesser extent Pennsylvania. Although the bulk of the […]

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North Dakota rig count down about 4 percent from the previous week, indicating continuing weakness in the energy sector. Photo by Lilac Mountain/Shutterstock BISMARCK, N.D., Oct. 5 (UPI) — North Dakota nearly erased recent gains in the number of rigs deployed in exploration and production in the shale-rich state, losing three from last week. State data show 68 rigs actively engaged in exploration and production as of Monday , down 4 percent from last week and 64 percent lower year-on-year. The shale-rich state bucked an industry trend last week by adding more rigs to it reserve basins. Rig counts serve as a barometer for the health of an energy sector in recession because of the low price of crude oil, down more than 50 percent from last year. Compared with other states , North Dakota is in the middle of the pack in terms of rig count variances. For […]

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