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Early signs of a pullback in US oil drilling

Austin Mitchell walks away from an oil derrick outside of Williston, N.D. Lower oil prices, while good for the broader US economy, are a threat to what has been a surprising and dramatic surge in oil production in the US, and to drilling communities that have come to depend on oil money. Gregory Bull/AP/File View Caption With oil prices low and showing no sign of an immediate rebound, the industry is beginning to pull back on spending. Oil prices have dropped around  30 percent  since summer highs, raising fears among producers across the globe. Yet, many oil majors are relatively diversified, with large holdings downstream. For example, ExxonMobil and Chevron have been insulated in the third quarter because of their large holdings in refining. Steep declines in oil prices may hurt their production sectors, but with lower priced oil as an input, big oil’s refining assets become more profitable. […]

Posted On : Published By : Tom Whipple
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US Oil Consumption and the US Tight Oil Boom

4708 Votes In part 1 of a series of articles on the impact of US tight (shale) oil we examine the impact on US oil consumption. Fig 1: US crude oil production with tight oil from Texas and North Dakota Data from:   http://www.eia.gov/dnav/pet/pet_crd_crpdn_adc_mbbl_a.htm In 2013, an additional 2.3 mb/d of tight oil was produced from wells in Texas (1.5 mb/d) and North Dakota (0.8 mb/d). Note that these data are preliminary estimates. Fig 2: Data from the Texas Rail Road Commission in barrels/day Graph from:   http://peakoilbarrel.com/texas-rrc-oil-gas-report-august-data/ The blue straight line is from the EIA  http://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=MCRFPTX2&f=M The other lines present the monthly  updates of the Texas RRC. We see it takes almost 2 years until numbers stabilize.  Around 1.1 mb/d is from conventional oil. Let’s have a look at US consumption by fuel: Fig 2: US annual petroleum consumption 1963-2014E Data from:   http://www.eia.gov/dnav/pet/pet_cons_psup_dc_nus_mbblpd_a.htm This graph shows: consumption growth […]

Posted On : Published By : Tom Whipple
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U.S. Shale Boom Masks Threats to World Oil Supply, IEA Says

The U.S. shale boom masks threats to global oil supply including Middle East turmoil, conflict in Ukraine and the difficulty of unconventional oil production beyond North America , the International Energy Agency said. “The global energy system is in danger of falling short of the hopes and expectations placed upon it,” the IEA said in its annual World Energy Outlook today. “The short-term picture of a well-supplied oil market should not disguise the challenges that lie ahead as reliance grows on a relatively small number of producers.” Global oil consumption will rise to 104 million barrels a day in 2040 from 90 million barrels a day in 2013, driven by demand for transport fuel and petrochemicals in developing countries , the report said. To meet that growth and replace exhausted fields will require about $900 billion a year in investment by the 2030s as oil companies develop fields from […]

Posted On : Published By : Tom Whipple
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Hess Increases Bakken Production Guidance Through 2020

Hess Corp. Bakken Spacing Pilot Hess Corp., one of the top five Bakken producers, appears to be undeterred by lower oil prices, announcing plans to increase its five year production forecast this week. After a successful Bakken downspacing pilot program in 2014, Hess told investors it would increase its net peak production guidance in the play to ~175,000 boe/d by 2020. The increase means the company would add an additional 1,000 well locations to a total of more than 4,000. “Even at current prices, or below, there’s still many areas for attractive investment in the Bakken,” said CEO John Hess the company’s annual investor day on Monday. Hess told investors that he believes prices will rebound, and also pointed to drilling efficiency gains made in the Bakken that reduce the cost of drilling a Bakken well. Hess’ Tioga Gas Plant Expansion Project Paying Off At the beginning of the year, poor weather conditions delayed […]

Posted On : Published By : Tom Whipple
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WTI price no deterrent in U.S. shale basins

West Texas Intermediate prices are still low, though energy reports show oil production should still increase in U.S. shale basins. ekina/Shutterstock NEW YORK, Nov. 11 (UPI) — The benchmark for U.S. crude oil prices was treading water in early Tuesday trading, one day after a report showed few signs of a slowdown in the shale boom. West Texas Intermediate for December delivery was still struggling to break the $80 per barrel mark in early trading Tuesday, though prices were relatively stable at $77.44 per barrel. Long-term traded contracts show WTI moving closer to the $78 mark through mid 2015. Crude oil is in a bear market, shedding about 20 percent of the price per barrel since June. Several energy companies and industry groups have cut their long-term investment forecasts because of the slump in oil prices. Market observers have said the downward trend is part of an effort by […]

Posted On : Published By : Tom Whipple
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Saudi Arabia is trying to sabotage America’s shale oil boom

4708 Votes Saudi Arabia is trying to sabotage America’s shale oil boom We’ve been here before. By “here,” I mean Saudi Arabia throwing its weight around in the global oil markets and triggering what we can only call a kind of reverse oil shock as a result. The consequences were particularly visible last Tuesday, when Saudi Arabia slashed the price at which it is willing to export crude oil to the United States, even as it boosted prices to buyers in Europe and Asia. That sent the benchmark U.S. crude oil price — West Texas Intermediate — skittering down to $76.45 a barrel, a level not reached in three years. Welcome back to the geopolitics of oil. If you thought that crude oil prices were set simply by what is happening to the global economy — the forces of supply and demand, and the answers to pressing questions such […]

Posted On : Published By : Tom Whipple
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Halcon Resources Slashes Drilling Rigs on Oil Price

Nov 10 (Reuters) – Oil and gas producer Halcon Resources Corp said on Monday it is cutting nearly half the rigs it originally planned to operate next year due to the more than 25 percent slide in crude oil prices. Shares of Halcon, which operates in the Bakken in North Dakota and the Eagle Ford in Texas, fell nearly 10 percent to $2.94 after the close of regular trading. "In response to lower oil prices, the company expects to operate six rigs in 2015, five rigs less than originally planned," the Houston company said in its third quarter earnings release. Companies have so far had a varied response to the slide in oil prices. Earlier on Monday, Bakken operator Hess Corp boosted its five-year oil and gas production forecast, underscoring its optimism about oil prices. Crude has fallen sharply in recent weeks, hit by slowing global demand and growing […]

Posted On : Published By : Tom Whipple
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Hess Boosts Production Forecast, Sees Oil Price Rebound

URL: http://www.rigzone.com/news/oil_gas/a/135833/Hess_Boosts_Production_Forecast_Sees_Oil_Price_Rebound Nov 10 (Reuters) – Oil and gas producer Hess Corp boosted its five-year production forecast on Monday, citing strength in output from North Dakota’s Bakken shale formation and the Utica shale in Ohio. The bullish forecast, though, is based on crude oil prices much higher than current levels, an ambitious target that implies strong confidence that prices will rebound from recent steep falls. "Our company is uniquely positioned with our resilient portfolio of high quality assets and strong balance sheet to provide low risk production growth and generate free cash flow under various price scenarios," Chief Executive John Hess said in a statement. The company expects its production to grow 6 to 10 percent each year through 2018, an uptick from its previous forecast of 5 to 8 percent growth. The new estimates are based on Brent oil prices around $90 to $100 per barrel, far above […]

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Continental Resources CEO ordered to pay $995 million in divorce

(Reuters) – Continental Resources ( CLR.N ) Chief Executive Officer Harold Hamm has been ordered to pay nearly $1 billion to his ex-wife in one of the largest-ever U.S. divorce judgments, according to a court filing on Monday. In an 80-page ruling following a more than nine-week divorce trial that ended last month, Oklahoma Special Judge Howard Haralson ruled that oil magnate Hamm should pay his ex-wife a total of $995.5 million. Although the award could make Sue Ann Hamm, 58, one of the 100 wealthiest women in the United States, according to Forbes’ rankings, it is far smaller than the amount her lawyers sought and does not require Harold Hamm to sell shares of Continental. He holds 68 percent of the firm’s shares. During the trial, Sue Ann Hamm’s lawyers had asked Haralson to split a marital estate they estimated to be worth at least $17 billion, tied […]

Posted On : Published By : Tom Whipple
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What We Can Learn from Fracking Bans Winning and Losing at the Polls

Resilience Published on Resilience (http://www.resilience.org) "Nation Divided on Fracking" by Faces of Fracking, CC BY-NC-ND 4.0 Whether or not a ban on fracking is favored by the American people is still up for debate after reviewing this year’s election season. The races were evenly split across the nation: four won fracking bans, four lost. But there is one thing that has emerged clear as crystal: grassroots groups are claiming victories in the face of millions of powerful industry money stacked against them. Let’s look at the numbers. Residents looking to ban fracking in Denton, TX – the birthplace of fracking — were outspent 10 to 1, but garnered 58% of the vote. In San Benito, CA those opposed to fracking and other intensive oil production methods were outspent 13 to 1 but claimed 57% of votes. Mendocino, CA and Athens, OH tipped the scales with 67% and 78%, respectively, […]

Posted On : Published By : Tom Whipple