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U.S. Shale Oil Output Seen Growing Even as Prices Drop

Oil output is expected to grow in all major U.S. shale plays in November despite falling global prices as drillers become more efficient. Production per well was projected to increase in fields in North Dakota , Texas and Colorado , the Energy Information Administration said today in its Drilling Productivity Report . Brent futures fell to $85.04 a barrel on the ICE Futures Europe Exchange, the lowest settlement since Nov. 23, 2010. Only about 4 percent of U.S. shale oil production needs prices above $80 for drillers to break even, the International Energy Agency said today in its monthly oil market report. Producers are getting more oil per dollar spent drilling, driving costs down as much as $30 a barrel since 2012, Morgan Stanley (MS) analyst Adam Longson said in a report yesterday. “Prices aren’t low enough to put these projects at risk,” Matthew Jurecky, head of oil and […]

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Bakken Drillers Could Be Forced to Scale Back 2015 Efforts

ND Pump Jack | Click to Enlarge Bakken Shale oil producers are under pressure to scale back 2015 drilling plans due to falling oil prices, according to Bloomberg . On October 13th, Houston-based Plains Marketing L.P. listed Williston Basin sweet crude at $67.69, which is a ~$4 drop from last week’s price. Crude oil prices have been on the decline worldwide. Surging production from U.S. shale plays are one of the reasons behind the worldwide oil price drop. Other factors include a weakening global demand for oil and an increase in Libyan oil drilling over the summer, according to the Energy Information Administration (EIA) . North Dakota’s Department of Mineral Resources (DMR) Director Lynn Helms updated lawmakers on the status of oil & gas development in the state last week. Helms said two factors could negatively impact oil production – lower oil prices and new flaring regulations. Read more : Bakken Development Threats […]

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Crude price fall unlikely to hit shale production

Steeper drops in the price of oil are needed for US shale and other unconventional production to take a meaningful hit, the International Energy Agency said on Tuesday. Although an oil price slump since June has cast doubt on the sustainability of current high supply growth rates, the energy watchdog for wealthy nations said in its closely watched monthly report that a “close analysis of light, tight oil supply suggests that most of it remains profitable at $80 a barrel.” Swelling supplies and faltering economic growth have led to slide in the price of Brent crude – the international oil benchmark – to four-year highs. ICE November Brent, which has fallen more than 20 per cent since mid June, dipped 31 cents to $88.58 in early Tuesday trading. Oil from deepwater reserves, oil sands, and particularly from North American shale – or “light, tight oil” – plays are widely […]

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IEA says recent oil price fall casts doubt on sustainability of high supply

London (Platts)–14Oct2014/458 am EDT/858 GMT The International Energy Agency on Tuesday said the recent oil price decline is casting doubt on the sustainability of current high supply growth rates, but also said that most tight oil production in the US would still be profitable at a Brent oil price of $80/b. Brent crude futures have fallen by 20% since June, and this week fell below $88/b to near four-year lows. There have been suggestions that unconventional oil production in the US could cease to be economical if the price were to fall much lower, and a Saudi official recently suggested that the high cost of shale oil might put a floor under prices around $90/b. "Close analysis of light, tight oil supply suggests that most of it remains profitable at $80/b Brent," the IEA said in its latest monthly report. Article continues below… Request a free trial of: Oilgram […]

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IEA Chief: Oil Price Slump Yet To Hit US Shale Oil Production

LONDON, Oct 13 (Reuters) – The vast majority of shale oil in the United States is produced at costs far below the current price of crude, the head of the west’s energy watchdog said, which means U.S. projects can withstand the market slump squeezing other producers. Brent oil stands at around $88 per barrel, down more than 23 percent from the year’s peak above $115 in June, raising concern that some shale oil projects will become un-economic. However Maria van der Hoeven, executive director of the International Energy Agency said that only a tiny minority of shale oil production would be affected by the slump in prices to near-four-year lows. "Some 98 percent of crude oil and condensates from the United States have a breakeven price of below $80 and 82 percent had a breakeven price of $60 or lower," she told Reuters in an interview on the sidelines […]

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Bakken Shale Rig Count Decreases by Four to 193

Occidental Bakken Acreage|Click to Enlarge The  Bakken-Three Forks rig count  decreased by four to 193 rigs running across our coverage area by the end of last week. The NDIC notes 190 rigs are active in North Dakota, but around 18 of those are in the process of moving in and rigging up. In recent Bakken news,  Occidental Petroleum  (NYSE: OXY) appears to be on the verge of divesting its acreage in the Williston Basin, according to a Bloomberg report, which cited “people with knowledge of the matter.” Currently, OXY has ~500,000 gross acres (~335,000 net) in the Williston Basin, and is working with investment bank Tudor Pickering Holt & Co. to sell the assets. Read more : Occidental’s Bakken Assets on the Table The U.S. rig count increased by eight to 1,930 rigs running by the end of last week. A total of 320 rigs were targeting natural gas (ten less than  the previous week) and 1,609 were […]

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We’re Sitting on 10 Billion Barrels of Oil! OK, Two

Fracking in the Eagle Ford shale formation, underlying an area of South and East Texas. Photographer: Eddie Seal/Bloomberg Related Lee Tillman, chief executive officer of Marathon Oil Corp., told investors last month that the company was sitting on the equivalent of 4.3 billion barrels in its U.S. shale acreage. That number was 5.5 times higher than the proved reserves Marathon reported to federal regulators. Such discrepancies are rife in the U.S. shale industry. Drillers use bigger forecasts to sell the hydraulic fracturing boom to investors and to persuade lawmakers to lift the 39-year-old ban on crude exports. Sixty-two of 73 U.S. shale drillers reported one estimate in mandatory filings with the Securities and Exchange Commission while citing higher potential figures to the public, according to data compiled by Bloomberg. Pioneer Natural Resources (PXD) Co.’s estimate was 13 times higher. Goodrich Petroleum Corp.’s was 19 times. For Rice Energy Inc., […]

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Bakken Development Threats on the Horizon?

Bakken Oil Workers | Click to Enlarge The Bakken is one of the most lucrative plays in the country, but there are some looming concerns for development. The good news is production growth is expected to continue. New York City, NY-based financial information services company Fitch Ratings , Inc. published its “Bakken Shale Report” this week, which found the play had the highest oil cut among U.S. shales at 85%. Oil production has been above 1-million b/d since April of 2014, according to the Department of Mineral Resources (DMR), and officials expect production to grow to 1.3-million b/d by 2015. Read more : North Dakota Hits Record Oil & Gas Production “The primary challenge for upstream companies has been to balance gains from increasing production and drilling efficiencies with strained takeaway capacity,” according to Fitch Ratings. The Fitch report found Bakken crude averaged ~$10 per barrel below West Texas Intermediate (WTI) in 2014, and rail […]

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Shale Boom Tested as Sub-$90 Oil Threatens U.S. Drillers

Oil from shale formations costs $50 to $100 a barrel to produce, compared with $10 to… Read More The U.S. shale boom is producing record amounts of new oil as demand weakens, pushing prices down toward levels that threaten to reduce future drilling. Domestic fields will add an unprecedented 1.1 million barrels a day of output this year and another 963,000 in 2015, raising production to the most since 1970, according to the U.S. Energy Information Administration. The Energy Department’s statistical arm forecasts consumption will shrink 0.2 percent to 18.9 million barrels a day this year, the lowest since 2012. More supply from hydraulic fracturing and horizontal drilling, and less demand, are contributing to the tumble in West Texas Intermediate crude. The U.S. benchmark is down 18 percent since June 20 and fell below $90 a barrel on Oct. 2 for the first time in 17 months. “If prices […]

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Analysts: Oxy Sale Of Bakken Assets Would Make Strategic Sense

Oct 7 (Reuters) – Any sale of Occidental Petroleum Corp’s roughly 330,000 acres in North Dakota’s oil-rich Bakken shale formation would make strategic sense for the company, which is likely eager to strike a deal, two analysts said on Tuesday. Oxy is looking to sell its Bakken holdings, which are largely undeveloped, for as much as $3 billion, according to a report from Bloomberg News. Even with the recent dip in crude oil prices, the divestment "makes sense to us, strategically," Raymond James analysts Pavel Molchanov and Kevin Smith said in a note to clients on Tuesday. "This is substantially undeveloped acreage, and Occidental has long cited it as a likely monetization candidate, so it’s been puzzling why the company kept it this long," the analysts said. Oxy is spending about $510 million this year on its North Dakota holdings, and any buyer would have to invest significant capital […]

Posted On : Published By : Tom Whipple