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

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 go to $80 or lower, which I think is possible, then we are going to see a reduction […]

Posted On : Published By : Tom Whipple
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Occidental’s Bakken Assets on the Table

Occidental Bakken Acreage|Click to Enlarge 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. The company is in the process of restructuring, and could draw as much as $3-billion from the sale of its Williston Basin assets, according to Bloomberg’s sources. In October of last year, OXY announced it would pursue “stategic alternatives” for the trade or sale of select midcontinent assets. In 2012, OXY’s net Bakken production was 14 Mboe/d, and in the first half of last year, it was 17 Mboe/d. Proved reserves at the end of 2012 were 87 Mmboe. OXY has increased its focus on production from fields in the Permian Basin […]

Posted On : Published By : Tom Whipple
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Chevron Sells 30% In Canadian Shale Assets For $1.5B

Chevron says it would sell a 30% stake in its Duvernay shale properties in Canada to Kuwait Foreign Petroleum Exploration Co. for $1.5 billion. Oct 6 (Reuters) – Chevron Corp said it would sell a 30 percent stake in its Duvernay shale properties in Canada to Kuwait Foreign Petroleum Exploration Co for $1.5 billion. Chevron’s Canadian subsidiary has exploration leases for about 330,000 net acres (1,335 square km) in the Duvernay shale formation. The area is located about 124 miles (200 km) northwest of Edmonton, Alberta. The deal also creates a partnership for appraisal and development of liquids-rich shale resources in the Kaybob area of the Duvernay, Chevron said. Chevron Canada will remain the operator and will hold a 70 percent interest in the partnership following the deal close, expected in November. The deal price includes a portion of Chevron Canada’s share of future capital costs for the joint […]

Posted On : Published By : Tom Whipple
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Fracking-Sand Producer FMSA Holdings IPO Prices Below Expectations

It’s the billion-dollar deal that wasn’t. FMSA Holdings Inc. sold far fewer shares than planned late Thursday and priced them far below the expectations for the producer of sand used in oil and gas exploration and production. More Reading The company, which is owned by private-equity firm American Securities LLC, intended to sell 44.5 million shares for between $21 and $24 a share, according to regulatory filings. At the high end of the range, the deal would have been worth $1.07 billion . Instead the Chesterland, Ohio, company sold 25 million shares for $16 apiece. The downsized deal raised $400 million. A spokeswoman for FMSA said the company chose to reduce the offering given “challenging market conditions.” In Thursday trading, U.S. oil prices fell below $90 a barrel for the first time in 17 months before recovering to end slightly above $91. Futures have been tumbling for months on […]

Posted On : Published By : Tom Whipple
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Gazprom Neft targets Siberian shale

Russian oil company Gazprom Neft taps into shale deposits in Western Siberia. UPI/Gary C. Caskey MOSCOW, Oct. 2 (UPI) — A subsidiary of Russian oil company Gazprom Neft said Thursday it embarked on a new stage of assessing the shale oil potential in Western Siberia. Subsidiary Gazpromneft-Khantos started drilling into a shale oil well in the Krasnoleninsky field in the Bazhenov complex of Western Siberia. The company said it employed hydraulic fracturing at the site in order to improve oil extraction. "The Bazhenov formation is an example of our work with non-traditional deposits, which is an area the company is focused on developing," Gazprom Neft Chief Executive Officer Vadim Yakovlev said in a statement. The company offered no estimate of the shale oil potential other than to say "commercial oil flows" have been achieved already at some of the wells in the region. In December, Russian energy company Rosneft, […]

Posted On : Published By : Tom Whipple
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Baker Hughes to reveal fracking components

Baker Hughes disclosing fracking fluid chemicals. UPI/Kevin Dietsch HOUSTON, Oct. 1 (UPI) — Oil services company Baker Hughes said Wednesday it implemented its policy of fully disclosing the chemicals it uses in hydraulic fracturing. "The policy we are implementing today is consistent with our belief that we are partners in solving industry challenges, and that we have a responsibility to provide the public with the information they want and deserve," Baker Hughes Chief Strategy Officer Derek Mathieson said in a statement. Energy companies have been reluctant to disclose all of the chemicals used during hydraulic fracturing . The drilling practice, known also as fracking, involves the injection of large volumes of water mixed with abrasives and trace amounts of chemicals to coax oil and natural gas out of shale formations. The company in March started the implementation process needed to reveal fracking fluid ingredients . The disclosure is at […]

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Exxon fracking report responds to shareholders

NEW YORK (AP) — Exxon Mobil is explaining how it is working to manage the risks of hydraulic fracturing in a report issued in response to pressure from a corporate responsibility group, the New York City Comptroller, and other shareholders. The report acknowledges that drilling wells and producing oil and gas from shale formations and other so-called unconventional sources do carry risks. The report also goes into detail about the benefits of unconventional oil and gas production and how it compares favorably to many other types of energy production and generation. The activists, including the group As You Sow and New York City Comptroller Scott Stringer, agreed earlier this year to withdraw a shareholder resolution requesting greater disclosure of risks after Exxon agreed to reveal more about how it manages those risks.

Posted On : Published By : Tom Whipple
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New Eagle Ford wells continue to show higher production

Source: U.S. Energy Information Administration, based on Drillinginfo Increased drilling and improved drilling efficiency have led to significant crude oil production increases in the Eagle Ford region in southern Texas. These increases have occurred despite the region’s relatively high well decline rates. However, by offsetting the natural declines through the use of new recovery techniques, further production increases are possible. Horizontal drilling combined with an increasing number of hydraulic fracturing stages in tight formations like the Eagle Ford typically enhance initial production rates when compared to past results. These higher initial production rates are often accompanied by initially larger decline rates, before gradually leveling off to a consistent level of decline for the remaining years of the well life. While initial production rates have steadily increased since 2009, first-year decline rates in the Eagle Ford have fluctuated between 60% and 70%. Most notably, decline rates over the second year […]

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Encana becomes major Permian shale player

Canadian energy company Encana becomes major Permian shale player with acquisition of Texas rival. UPI/Gary C. Caskey CALGARY, Alberta, Sept. 29 (UPI) — Canadian energy company Encana Corp. said Monday it acquired Texas rival Athlon Energy to become one of the largest oil players in the Permian shale basin. "This transformative acquisition further accelerates our strategy and provides us with a prime position in what is widely acknowledged as one of North America’s top oil plays," Encana President and Chief Executive Officer Doug Suttles said in a statement. Ecanana paid cash for the acquisition, giving the Canadian company control over 140,000 net acres in the Permian shale basin in Texas. Permian production increased 58 percent from 2007 to reach 1.35 million bpd last year, which represents 18 percent of total U.S. crude oil production. In a July brief, the U.S. Energy Information Administration said the Permian basin has exceeded […]

Posted On : Published By : Tom Whipple