Category: Shale Oil

Today we will take a look at both Whiting Petroleum (WLL) and Continental Resources (CLR) as far as their Bakken economics. Overall the numbers will show that, despite claims of low cash costs per MBOE ($16 or so for CLR) and high IRRs on $60 WTI, the facts say otherwise. In addition, the analysis will show how very high depletion rates combined with falling rig counts spells trouble for Bakken production growth despite better efficiencies per well. The analysis will be based on April presentations of both companies from which the graphs below are taken. I should note these economics are not much different from Eagle Ford, the second most prolific addition to US production growth in past years. Firstly one must understand that the easy money via QE from the Fed and zero interest rates allowed many shale players to burn free cash flow while showing operationally net […]

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ENLARGE In this file photo from Nov. 19, 2014, Scott Passmore, director of public works, checks on a solar powered seismic monitor that records earthquakes in the area around Reno, Texas. With real-time monitors, scientists have linked a swarm of small earthquakes west of Fort Worth, Texas, to nearby natural gas wells and wastewater injection. Photo: Associated Press New scientific findings released Tuesday linked earthquakes to the practice of injecting wastewater from oil and gas operations deep underground, adding to a growing consensus among researchers that energy development is probably causing seismic activity in Oklahoma, Texas and other parts of the U.S. The Oklahoma Geological Survey released a statement Tuesday saying that it now “considers it very likely” that most of the hundreds of earthquakes in the state’s center in recent years were “triggered by the injection of produced water in disposal wells.” Produced water is salty fluid that […]

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Statoil has let a major carbon dioxide supply and service agreement to Ferus LP of Denver to supply liquid CO 2 to be used in a test well to evaluate potential production uplift and partially replace water in a large multistage hydraulic fracturing operation in a horizontal oil well. In addition to supplying the CO 2 , Ferus will provide transportation, logistics, storage, and onsite supervision. The service agreement also includes the deployment of a membrane technology that separates the CO 2 from the produced gas to reduce flaring. Statoil and other oil companies are working to flaring to comply with a series of targets established by the state of North Dakota. Oil companies also can save money by capturing gas and using it to economically fuel their own operations instead of flaring it. This CO 2 stimulation test is one of several projects under Powering Collaboration –a collaboration […]

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A tax break in North Dakota will not unleash a new wave of shale crude supply, producers say. HOUSTON, April 20 (Reuters) – Conventional wisdom holds that come June a pending $5.3 billion tax break in the No. 2 U.S. oil producing state, combined with a modest uptick in oil prices, will unleash a tsunami of new shale crude supply so big that prices may slump again. Just one problem with that scenario: oil producers say this is not going to happen. The fear of a worsening supply glut, a recurring theme of many industry research reports and conferences over the past two months, is based on a view that U.S. shale producers have built up a heavy backlog of drilled but uncompleted wells (DUCs) that can be turned on quickly. The assumption is that oil firms will finish work on those wells, known as "ducks" in the industry […]

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(Bloomberg) — With OPEC ceding control for the first time since the 1980s, U.S. shale oil has been anointed the world’s new “swing producer” by everyone from ConocoPhillips and Goldman Sachs Group Inc. to former Fed Chairman Alan Greenspan. But can America’s oil really swing it? Producers cut billions in spending, idled half the country’s rigs and kept more than 3,000 wells off the market, and it still took five months for U.S. production to start dropping. Analysts and banks say a recovery in production will also prove slower and more difficult than it would be for a single producer like Saudi Arabia. “When you think of a swing producer, you think of OPEC and you think of spare capacity that can be turned on and off,” said Trisha Curtis, director of oil and gas research at Energy Policy Research Foundation Inc. “U.S. oil can respond, but the response […]

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Drilling wells but deferring completions may be a factor in oil price volatility in the next several years and potentially even delay the industry’s recovery, the CEO of ConocoPhillips said Monday. Even as signs are at hand that prices may be on the verge of rising, with estimated official oil production levels showing signs of flattening or slight declines, the industry has the potential to quickly bring back online large volumes of crude production, which could tamp down prices. "We’re in a bit of a more volatile world [because of] the ability of North America to respond to price signals both ways," Ryan Lance said during a news conference the opening of IHS CERAWeek in Houston. "If you get a price signal, you’ll see more supply come on," Lance said. "That certainly has the opportunity to exacerbate the problem depending on where demand is." Article continues below… Oilgram News […]

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Oil field services company Schlumberger says markets should remain tight for the foreseeable future. File Photo by UPI/Shutterstock/Calin Tatu. HOUSTON, April 17 (UPI) — Most of the decrease in the quarterly revenue for the first quarter of the year came from the "severe" decline in North America, Schlumberger said. The oil services company said it would cut another 11,000 from its workforce, bringing the total to 20,000 since trimming expenses earlier this year to offset lower oil prices. That represents about 15 percent of the company’s staff. "Schlumberger first-quarter revenue decreased 19 percent sequentially driven by the severe decline in North American land activity and associated pricing pressure," Chairman and Chief Executive Officer Pall Kibsgaard said in a statement. Baker Hughes last week reported 988 active rigs in the United States for the week ending April 10, down nearly 4 percent from the previous week and 46 percent lower […]

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Source: U.S. Energy Information Administration, based on data from various published studies Note: Click to enlarge. EIA is currently in the process of updating maps of major tight oil and shale gas plays , including the Eagle Ford and Marcellus plays, which will help to better characterize the geology of key areas of production in the United States. EIA’s most recent maps focus on shale and tight oil plays, and characterize plays based on geologic characteristics, including rock type and age. Understanding geologic history and processes helps exploration and production companies reduce the risk of drilling dry, nonproducing wells and better understand hydrocarbon resource potentials. Production of crude oil and natural gas occurs in two classes of rock: source rocks and reservoir rocks. Source rocks are sedimentary rocks in which hydrocarbons (organic chemical compounds of hydrogen and carbon) form. Reservoir rocks are both porous, meaning that there are open […]

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ENLARGE A gas flare burns near a crude oil facility outside Williston, N.D., earlier this year. Lower crude prices may be prompting American energy companies to cut their output. Photo: Daniel Acker/Bloomberg News The relentless increases in U.S. oil output appear to be coming to an end. Crude production remains robust, but new data and forecasts, including one Thursday from the Organization of the Petroleum Exporting Countries, suggest the U.S. is at—or very close to—an oil-output peak. Starting in 2008, drillers raised U.S. oil production from five million barrels a day to 9.3 million barrels a day as of December. The U.S. surge accounted for nearly all the growth in crude output globally, and it contributed to the glut that sent oil prices tumbling 50% last year. Now there are growing signs that lower crude prices are finally prompting American energy companies to cut back their crude output. North […]

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