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Refracking Is the New Fracking

The technique itself is nothing new. Oil crews across the world have been schooled on its simple principles for generations: Identify aging, low-output wells and hit them with a blast of sand and water to bolster the flow of crude. The idea originated somewhere in the plains of the American Midwest, back in the 1950s. But as today’s engineers start applying the procedure to the horizontal wells that went up during the fracking boom that swept across U.S. shale fields over the past decade, something more powerful, more financially rewarding is happening. The short life span of these wells, long thought to be perhaps the single biggest weakness of the shale industry, is being stretched out. Early evidence of the effects of restimulation suggests that the fields could actually contain enough reserves to last about 50 years, according to a calculation based on Wood Mackenzie Ltd and ITG Investment […]

Posted On : Published By : Tom Whipple
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There will be blood

WALL STREET loves a good scrap almost as much as the wildcatters who drill for oil do. No wonder that the fight over the finances of America’s shale-oil industry has turned nasty. In one corner are shortsellers, including David Einhorn, a hedge-fund manager whose scalps include Lehman Brothers. They argue that “fracking”—the business of blasting oil out of rocks using water, sand and chemicals—is a bottomless pit into which too much cash has been thrown. In the other corner are America’s oil pioneers, who say that shale can thrive even though the benchmark American oil price has dropped from over $100 a barrel last year to $57 today. The oilmen are backed by plenty of other investors who are still pumping money into shale firms: some $35 billion of equity and bonds has been raised since December. Related topics Both sides have a point. It makes sense to be […]

Posted On : Published By : Tom Whipple
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Oil Falters After Rig Count Grows

The amount of rigs drilling for oil in the U.S. rose for the first time in seven months, triggering a slump in crude oil prices to their lowest settlement in two months. U.S. oil producers added 12 rigs last week , breaking 29 straight weeks of cuts, in response to prices that have rebound to- and stayed at $60 a barrel since late April. That convinced producers to end months of massive cutbacks that started after the U.S. shale drilling boom flooded the market and sent prices crashing. But the increase in rigs is scaring investors and analysts who have warned that oil could be on the verge of another sharp fall. Production has kept making small gains even as drilling has declined and stockpiles have hit historic levels around the world. If rigs get back to work, that could keep the market flooded with oil, a concern that […]

Posted On : Published By : Tom Whipple
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Oil Rigs Rebounding at Sub-$60 Shows Shale Boom’s Resilience

Sudden rebound in U.S. oil rigs despite sub-$60 crude shows how resilience U.S. shale has become amid increasing competition. For the first time in almost seven months, America’s shale drillers put rigs in oil fields back to work, and they’re doing it at a lower price. The last time they added rigs, crude futures were trading near $70 a barrel. Today, even after a rebound, they’re under $60. And yet drilling rigs rose in almost every major oil basin in the country this week, raising the total by 12, according to field-services company Baker Hughes Inc. The sudden rebound in the U.S. oil rig count is a testament to how resilient U.S. shale has become as it battles against OPEC for market share. Spurred by last year’s collapse in prices, shale explorers have been able to bring down their breakeven costs by $15 to $20 a barrel, a Bloomberg […]

Posted On : Published By : Tom Whipple
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WPX Plans to Increase Bakken Activity

WPX Energy Rockies Asset Map | Click to Enlarge WPX Energy announced this week they plan to increase activity in their Williston operations during the second half of the year. Related: Shale Oil: Sky’s the Limit WPX currently has an inventory of 14 Williston wells awaiting completion and the company will resume completions in August, starting with a four-well pad. Since the fourth quarter of 2014, many companies pulled back oil rigs as crude prices declined. WPX will be the first to approve more rigs in the play since prices have stabilized. The company credits significant process improvements, structural changes to lower costs and successful discussions with key vendors as key to this decision to move forward. “The combination of cost reductions and higher EURs gives us the opportunity to generate returns in excess of 30 percent in today’s commodity price environment,” says Rick Muncrief, president and chief executive […]

Posted On : Published By : Tom Whipple
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BHI: US oil rig count rises for first time in 30 weeks

A sudden 12-unit jump in oil-directed rigs during the abbreviated week ended July 2 represented their first rise since Dec. 5, 2014, and helped lift the overall US drilling rig count for a second consecutive week, according to data from Baker Hughes Inc. The overall count, up 3 units during the week to 862, has now gained 5 units over the past 2 weeks following 28 consecutive weeks of losses ( OGJ Online, June 26, 2015 ). The US is still down 1,012 units compared with this week a year ago. Following a surge in well permits 2 weeks ago and last week’s first rig count rise of the year, permits last week fell to their lowest level since the Christmas-New Year’s holiday, Raymond James & Associates Inc. noted this week in an energy update. Just 680 permits were issued, representing a 6-month low only a week after a […]

Posted On : Published By : Tom Whipple
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Oil drops on rising U.S. rig count

LONDON Oil prices fell on Friday as a rising U.S. rig count stoked fears of global oversupply and after Chinese regulators opened an investigation into suspected stock market manipulation. U.S. oil drilling increased this week for the first time after 29 weeks of declines, a sign U.S. oil production may start to increase more strongly again after a slowdown due to a period of low oil prices. Oil rigs increased by 12 to 640 following a slump that cut the number of active U.S. rigs from a peak of 1,609 in October to a nearly five-year low last week, energy services firm Baker Hughes Inc ( BHI.N ) said. "This is the first weekly increase in 30 weeks and is an indication that the slump in drilling activity has ended," said Carsten Fritsch, senior oil analyst at Commerzbank in Frankfurt. "Oil prices have retreated on that news," Fritsch told […]

Posted On : Published By : Tom Whipple
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BP’s chief economist sees U.S. shale weathering oil surplus

BRUSSELS Shale output in the United States will prove resilient to low oil prices likely to be prolonged by the prospect of half a million barrels per day of Iranian crude making its way back to the market, BP’s chief economist said on Tuesday. Talks in Vienna between world powers trying to end sanctions on Tehran in return for limits on Iran’s most sensitive nuclear activities could bring a significant increase in Iranian oil exports. BP’s Spencer Dale, however, told Reuters that it would probably take time for any easing of sanctions to filter through to oil markets if an Iran deal is agreed. His "hunch" was that the outcome of the talks would be closer to U.S. demands that restrictions should be eased after a period of monitoring rather than the rapid change sought by Iran. U.S. and European Union sanctions ban their companies from buying Iranian oil. […]

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North Dakota refinery completed

North Dakota leaders tout economic benefits of new oil refinery processing Bakken crude. Photo by Oskari Porkka/Shutterstock BISMARCK, N.D., June 30 (UPI) — The completion of a new refinery in North Dakota will help bring jobs to the state while ensuring U.S. energy security, Gov. Jack Dalrymple said. MDU Resources Group and Calumet Specialty Products Partners, which has headquarters in Indiana, announced the completion of the Dakota Prairie refinery, characterized by the state as the first environmentally friendly refinery build in the country in nearly 40 years. "The Dakota Prairie refinery is another example of the great progress we’re making in North Dakota to create good jobs, diversify our economy and to help meet the energy needs of our state and the nation," Dalrymple said in a statement. North Dakota’s economy is leading others in the nation and its unemployment rate has hovered below the national average rate of […]

Posted On : Published By : Tom Whipple
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North Dakota rig data suggests stability

Rate of the decline in rig activity in North Dakota shale basins appears to be showing, data suggests. File Photo by UPI/Shutterstock/ekina BISMARCK, N.D., June 29 (UPI) — The exploration and production side of the North Dakota energy sector may be leveling off as the number of deployed rigs holds steady, state data show. State government data show 76 rigs in active service as of Monday, one less than the number reported one week ago. Oil production in April, the last full month for which data are available, was down nearly 2 percent from the previous month to 1.17 million barrels per day. An all-time high of 1.2 million bpd was reached in December. The rig count in late April was around 84, which was more than 125 lower than the historic peak reached in 2012. Energy companies are spending less on exploration and production in a weak crude […]

Posted On : Published By : Tom Whipple