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[Due to the increasing size of the archives, each topic page now contains only the prior 365 days of content. Access to older stories is now solely through the Monthly Archive pages or the site search function.]

Today’s Stunted Oil Prices Could Cause Oil Price Shock In 2020

May 24, 2017

by Haley Zaremba for Oilprice.com

As oil prices remain unsteady and OPEC continues to make headlines every hour, the world is focused on oil’s immediate future. As Saudi Arabia announces plans to slash production and move their economy away from oil dependency, many industry insiders are predicting that the now over-saturated market will reach an equilibrium with higher commodity prices by 2018 and U.S. shale production will continue to grow along with global demand.

Robert Johnston, the CEO of one of the world’s biggest political risk consultancies, is unconvinced. In a speech made at the Association of International Petroleum Negotiators’ 2017 International Petroleum Summit, Johnston laid out his concerns for the future of oil.

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US Shale Is Immune To An Oil Price Crash In 2017

May 18, 2017

by Tsvetana Paraskova for Oilprice.com

Since OPEC announced the production cut deal at the end of November, industry analysts have been warning that rising production from producers outside the deal—U.S. shale in particular—is effectively capping the oil price gains from that agreement.

Four months after the OPEC/NOPEC deal took effect, oil prices dropped to the levels preceding the agreement, amid concerns over still stubbornly high inventories and rising U.S. output.

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Big Oil Betting On Electric Vehicles

May 03, 2017

by Jon LeSage for Oilprice.com

Speaking this week at the Bloomberg New Energy Finance conference in New York, Total SA’s chief energy economist, Joel Couse, forecasted that EVs will make up 15 to 30 percent of global new vehicle sales by 2030.

Oil demand for transportation fuel see its “demand will flatten out,” after 2030, Couse said. “Maybe even decline.

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Supply Crunch Or Oil Glut: Investment Banks Can’t Agree

April 15, 2017

by Tsvetana Paraskova for Oilprice.com

In recent years, U.S. shale has thrown in another unknown in the mix of factors driving the price of oil. This year, shale output forecasts combine with OPEC’s production cuts, geopolitical factors, and unexpected outages to further complicate supply/demand and oil price forecasts by Wall Street’s major investment banks.

The biggest banks remain bullish on oil prices, expecting moderate price gains by the end of the year, even after last month WTI prices dropped below $50 for a couple of weeks.

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EIA STEO projects higher US crude production, increases in travel and gasoline demand

April 11, 2017

In its latest Short-Term Energy Outlook (STEO), the US Energy Information Administration (EIA) projects that US crude oil production, which averaged an estimated 8.9 million barrels per day (b/d) in 2016, will average 9.2 million b/d in 2017 and 9.9 million b/d in 2018. That level is higher than originally forecast, exceeding the previous record level of 9.6 million barrels per day reached in 1970, said EIA Acting Administrator Howard Gruenspecht.

For summer 2017, EIA forecasts motor gasoline consumption to average 9.5 million barrels per day (b/d), up about 20,000 b/d (0.3%) compared with last summer, which was a record high. Highway travel is forecast to be 1.4% higher than the level last summer. The effect of the increase in highway travel is expected to be partially offset by a 1.2% increase in fleet-wide vehicle fuel efficiency.

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When Will Russia Run Out Of Oil?

April 06, 2017

by Viktor Katona for Oilprice.com

On a global level, 2015 and 2016 marked the lowest level of new conventional oil discoveries since 1952. In 2016, only 3.7 billion barrels of conventional oil were discovered, roughly 45 days of global crude consumption or 0.2 percent of global proved reserves. Globally, exploratory drilling fell by almost 20 percent in 2015 and fell even further in 2016. Russia’s exploration activities, which were hit not only by plummeting oil prices but also by a targeted sanctions regime, suffered a double blow during this period.

In 2015, only seven new hydrocarbon discoveries were made in Russia, three of them in the Baltic Sea. In 2016, oil and gas companies in Russia discovered 40 prospective fields, however, the 3P reserves of the largest among them, Rosneft’s Nertsetinskoye, amounted to 17.4 million tons. This stands in stark contrast with pre-sanction period achievements, for instance, 2014’s largest find, Pobeda, is believed to contain 130 million tons of oil and 0.5TCm of gas.

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Opinion: There Is No Such Thing As Peak Oil Demand

April 02, 2017

by Dwayne Purvis for Oilprice.com

Notwithstanding that oil demand has increased for over 150 years, it will eventually stop increasing. If oil demand were to reach an actual peak, then the top might be easier to predict. As it stands, the forecast models of demand are likely predicting peak demand far later than it will be.

The so-called balance of supply and demand has always been a moving target, a race to the top in which the two run neck and neck. Imbalances result from out-of-step growth rates and not from movements away from a stationary balance. Perversely, imbalances breed further imbalances as the supply and demand components are provoked in opposite directions but with different timing, magnitudes and inertias. Without sufficient damping, the market has often overcompensated.

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US State Department issues Presidential Permit to TransCanada for Keystone XL

March 24, 2017

The US Department of State has signed and issued a Presidential Permit to construct the Keystone XL Pipeline. The permit authorizes TransCanada to construct, to connect, to operate, and to maintain pipeline facilities at the US-Canadian border in Phillips County, Montana for the importation of crude oil.

In November 2016, then US Secretary of State John Kerry had rejected the controversial Keystone XL, citing combatting climate change as the critical factor. Kerry noted at that time that the arguments pro and con had been “overstated”. (Earlier post.) In January 2017, two days after newly inaugurated President Trump issued a Presidential Memorandum inviting TransCanada to “promptly re-submit its application to the Department of State for a Presidential permit for the construction and operation of the Keystone XL Pipeline,” the company did so.

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An OPEC Deal Extension Isn’t As Simple As It Sounds

March 23, 2017

by Tsvetana Paraskova for Oilprice.com

It’s been six months now that oil prices have been reacting to OPEC, first to the possibility of an agreement, and then to the production cut deal itself, forged by OPEC to rebalance the market. The deal—initially aired as “an agreement to agree on a deal” in September and signed at the end of November—will likely impact the market for at least the next six months.

The agreement clearly states that it is production that OPEC producers are vowing to cut, but Iraqi oil minister Jabbar al-Luaibi has recently claimed—rather emphatically—that it is exports, not production, that serve as the baseline for the cuts. And according to Iraq, the agreed-upon cuts have been all about exports all along.

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Is A Second OPEC Cut In The Cards?

March 08, 2017

by Tsvetana Paraskova for Oilprice.com

OPEC’s coordinated effort to curtail global supply has so far managed to put a floor under oil prices, which have been sitting modestly above US$50 since the deal was announced at the end of November last year. But resurgent U.S. shale has been capping the upside, and Brent has not breached US$58 per barrel. Analysts and experts are now mostly predicting that oil prices will remain below US$60 this year.

The supply-cut deal has so far resulted in a surprisingly high OPEC compliance of more than 90 percent, thanks to the cartel’s leader and biggest producer, Saudi Arabia, which has been cutting deeper than pledged. But the market has already priced in this high compliance, and although oil prices jump for a few hours on every report of ‘extraordinary efforts’ and reassurance that members will strive for ‘full conformity’, they are stuck in a narrow band, kept in check by U.S. shale and record high inventories in America.

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Oil Majors’ Costs Have Risen 66% Since 2011

March 03, 2017

by Nick Cunningham of Oilprice.com

The oil majors reported poor earnings for the fourth quarter of last year, but many oil executives struck an optimistic tone about the road ahead. Oil prices have stabilized and the cost cutting measures implemented over the past three years should allow companies to turn a profit even though crude trades for about half of what it did back in 2014.

The collapse of oil prices forced the majors to slash spending on exploration, cut employees, defer projects, and look for efficiencies. That allowed them to successfully lower their breakeven price for oil projects. However, some of that could be temporary, with oilfield services companies now demanding higher prices for equipment and drilling jobs, in some cases upping prices by as much as 20 percent. The result could be an uptick in the cost of producing oil for the first time in a few years. Rystad Energy estimated the average shale project could see costs rise by $1.60 per barrel, rising to $36.50.

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The Oil War Is Only Just Getting Started

February 03, 2017

The Oil War Is Only Just Getting Started

by Tsvetana Paraskova for Oilprice.com

It’s been a month now that investors and analysts have been closely watching two main drivers for oil prices: how OPEC is doing with the supply-cut deal, and how US shale is responding to fifty-plus-dollar oil with rebounding drilling activity. Those two main factors are largely neutralizing each other, and are putting a floor and a cap to a price range of between $50 and $60.

The US rig count has been rising, while OPEC seems unfazed by the resurgence in North American shale activity and is trying to convince the market (and itself) and prove that it would be mostly adhering to the promise to curtail supply in an effort to boost prices and bring markets back to balance. In the next couple of months, official production figures will point to who's winning this round of the oil wars.

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BP Energy Outlook: 30% growth in global demand to 2035; fuel demand continues to rise, even with EVs & fuel efficiency

January 25, 2017

The 2017 edition of the BP Energy Outlook, published today, forecasts that global demand for energy will increase by around 30% between 2015 and 2035, an average growth of 1.3% per year. However, this growth in energy demand is significantly lower than the 3.4% per year rise expected in global GDP, reflecting improved energy efficiency driven by technology improvements and environmental concerns. The Outlook looks at long-term energy trends and develops projections for world energy markets over the next two decades.

While non-fossil fuels are expected to account for half of the growth in energy supplies over the next 20 years, the Outlook projects that oil and gas, together with coal, will remain the main source of energy powering the world economy, accounting for more than 75% of total energy supply in 2035, compared with 86% in 2015.

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US Shale Is Now Cash Flow Neutral

December 23, 2016

by Nick Cunningham of Oilprice.com

Oil prices are probably already high enough to spark a rebound in shale production.

The IEA says that in the third quarter of 2016, the US shale industry became cash flow neutral for the first time ever. That isn’t a typo. For years, the drilling boom was done with a lot of debt, and the revenus earned from steadily higher levels of output were not enough to cover the cost of drilling, even when oil prices traded above $100 per barrel in the go-go drilling days between 2011 and 2014. Even when US oil production hit a peak at 9.7 million barrels per day in the second quarter of 2015, the industry did not break even. Indeed, shale companies were coming off of one of their worst quarters in terms of cash flow in recent history.

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Not So Prolific: US Shale Faces A Reality Check

December 14, 2016

by James Stafford of Oilprice.com

The collapse of oil prices has forced the US shale industry to slash production costs. In order to improve the breakeven costs for the average shale well, the industry has deployed three general strategies: improving techniques and technology, such as drilling longer laterals or using more frac sand; focusing drilling on the sweet spots; and demanding lower prices from oilfield service companies. All three of those strategies led to a decline in the breakeven price for a shale wells.

But while the industry plays up the efficiency gains, highlighting enhanced technology and better management, merely focusing on the sweet spots has been “nearly twice as important as better technology in reducing well costs,” as The Post Carbon Institute (PCI) notes in a report published on Monday, 2016 Tight Oil Reality Check. This is a process known as “high-grading.” In fact, the so-called efficiency gains over the past two years are a lot less impressive once you dig into the causes.

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BP approves revamped $9B Mad Dog Phase 2 project in the deepwater Gulf of Mexico; down from original $20B cost

December 04, 2016

BP has sanctioned the $9-billion Mad Dog Phase 2 project in the United States, despite the current low oil price environment. Mad Dog Phase 2 will develop resources in the central area of the giant Mad Dog field through a subsea development linked to a new floating production platform with the capacity to produce up to 140,000 gross barrels of crude oil per day from up to 14 production wells. Oil production is expected to begin in late 2021.

In 2013, BP (operator, with 60.5% working interest) and co-owners, BHP Billiton (23.9%) and Union Oil Company of California, an affiliate of Chevron USA Inc (15.6%), decided to re-evaluate the Mad Dog Phase 2 project after an initial design—pegged at some $20 billion—proved too complex and costly. Since then, BP has worked with co-owners and contractors to simplify and standardize the platform’s design, reducing the overall project cost by about 60%. Today, the leaner $9-billion project, which also includes capacity for water injection, is projected to be profitable at or below current oil prices.

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Are The Saudis About To Reveal The Best Kept Secret In Oil?

November 20, 2016

by Nick Cunningham of Oilprice.com

One of the oil world’s longest and best kept secrets may finally be revealed. Saudi Arabia is preparing to unveil how much oil it holds, a closely guarded state secret that has been kept quiet for decades.

The decision to bring such important data to light comes as Saudi Aramco is preparing to partially privatize its assets, an IPO that could bring in some $100 billion. The IPO will be a monumental event, one that the Wall Street Journal says could offer Wall Street some of the largest fees in history.

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US offshore oil and gas leasing plan for 2017-2022 focuses on Gulf of Mexico, excludes Arctic

November 19, 2016

US Secretary of the Interior Sally Jewell and Bureau of Ocean Energy Management (BOEM) Director Abigail Hopper released the final plan to guide future energy development for the Nation’s Outer Continental Shelf (OCS) for 2017-2022. The Proposed Final Program offers 11 potential lease sales in four planning areas—10 sales in the portions of three Gulf of Mexico Program Areas that are not under moratorium and one sale off the coast of Alaska in the Cook Inlet Program Area.

The Beaufort and Chukchi Seas planning areas in the Arctic are not included in the Proposed Final Program. The Proposed Final Program makes available areas containing approximately 70% of the economically recoverable resources in the OCS.

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Oil and Gas Climate Initiative to invest $1B over 10 years in low-emissions tech

November 04, 2016

The Oil and Gas Climate Initiative (OGCI) will invest $1 billion over the next ten years to develop and to accelerate the commercial deployment of innovative low-emissions technologies.

Led by the heads of ten oil and gas companies that aim to lead the industry response to climate change, OGCI member companies—BP, CNPC, Eni, Pemex, Reliance Industries, Repsol, Royal Dutch Shell, Saudi Aramco, Statoil and Total—together represent one fifth of the world’s oil and gas production. The OGCI was established following discussions during the 2014 World Economic Forum Annual Meeting, and was officially launched at the UN Secretary General’s Climate Summit in New York in September 2014.

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US total petroleum demand up in September year-on-year; highest September gasoline deliveries on record

October 22, 2016

Total petroleum deliveries in September increased 1.0% from September 2015, but were down 2.6% from August to average 19.6 million barrels per day, according to figures from the American Petroleum Institute (API). These September deliveries were the highest deliveries for the month in nine years, since 2007.

For the third quarter of 2016, total petroleum deliveries, a measure of US petroleum demand, decreased by 0.1% from the same period last year. For year to date, total domestic petroleum deliveries remained flat compared to the same period last year.

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NREL and partners build pilot plant to co-process biomass streams with petroleum

October 14, 2016

The National Renewable Energy Laboratory (NREL), together with leading petroleum refining technologies supplier W.R. Grace, and leading pilot plant designer Zeton Inc., built a unique pilot-scale facility that can produce biomass-derived fuel intermediates with existing petroleum refinery infrastructure. This pilot plant, constructed in part with funding from the Bioenergy Technologies Office, combines biomass pyrolysis together with fluid catalytic cracking—one of the most important conversion processes used in petroleum refineries—to demonstrate the potential to co-process biomass-derived streams with petroleum, at an industrially-relevant pilot scale.

There are 110 domestic fluid catalytic cracking units currently operating in the United States. Using them to co-produce biofuel could enable production of more than 8 billion gallons of bio-derived fuels, without construction of separate biorefineries. This would significantly contribute to the Renewable Fuel Standard mandate set by the Energy Independence and Security Act of 2007 to produce 21 billion gallons of advanced renewable transportation fuels by 2022.

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Caelus confirms large-scale oil discovery on the North Slope of Alaska

October 08, 2016

Caelus Energy Alaska, LLC, a privately held independent exploration and production company, announced that its subsidiary, Caelus Energy Alaska Smith Bay LLC, has made a significant light oil discovery on its Smith Bay state leases on the North Slope of Alaska.

Based on two wells drilled in early 2016, as well as 126 square miles of existing 3D seismic, Caelus estimates the oil in place under the current leasehold to be 6 billion barrels. Furthermore, the Smith Bay fan complex may contain upwards of 10 billion barrels of oil in place when the adjoining acreage is included.

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Why Wall Street is throwing billions at the Permian

August 31, 2016

by Nick Cunningham of Oilprice.com

The collapse of oil prices has ground shale drilling to a halt, but the one region where drilling is still active, and even increasing, is in West Texas.

The Permian Basin is one of the last profitable areas to still drill with sub-$50 oil, and as other regions fall by the wayside, an increasing portion of drilling activity and spare investment dollars are flowing into the Permian. The rebound in the rig count in the U.S. is largely concentrated in the Permian. The West Texas shale basin has captured two-thirds of the 90 oil rigs that have been added since hitting a nadir in May.

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UTA study indicates air contamination near fracking sites result of operational inefficiencies, not inherent to the extraction process

August 27, 2016

A study led by chemists at the University of Texas at Arlington (UTA) indicates that highly variable contamination events registered in and around unconventional oil and gas developments are the result of operational inefficiencies and not inherent to the extraction process itself.

The study, published in Science of the Total Environment, found highly variable levels of ambient BTEX (benzene, toluene, ethyl benzene, and xylene compounds) in and around fracking gas drilling sites in the Eagle Ford shale region in South Texas. In situ air quality measurements using membrane inlet mobile mass spectrometry revealed ambient benzene and toluene concentrations as high as 1000 and 5000 parts-per-billion, respectively, originating from specific sub-processes on unconventional oil and gas well pad sites. BTEX compounds in high concentrations can be carcinogenic and have harmful effects on the nervous system.

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OPEC’s Output Freeze: What Has Changed Since Doha?

August 25, 2016

by Rakesh Upadhyay for Oilprice.com

It’s possible that OPEC is crying wolf with hints of an output freeze next month in Algiers; but it’s also possible that they are ramping up production to take the sting out of a freeze. This is a delicate balancing act that the Saudis need to play very carefully.

The official chatter is that the OPEC meeting in Algeria from September 26 to 28 could conclude with an agreement to freeze production by the member nations, with even Russia joining forces in a freeze that may prevent further oil price erosion. But everyone’s a bit gun-shy after the false hopes of the last round in Doha—even if a freeze at levels that existed then wouldn’t have meant much either—and it’s hard to blame them. The question is, how many times can the Saudis cry wolf without forever losing the ability to leverage this chatter to affect a rise in oil prices?

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Study quantifies impact of oil and gas emissions on Denver’s ozone problem

August 12, 2016

The first peer-reviewed study to directly quantify how emissions from oil and natural gas (O&NG) activities influence summertime tropospheric ozone (O3) pollution in the Colorado Front Range confirms that chemical vapors from oil and gas activities are a significant contributor to the region’s chronic ozone problem.

Summertime ozone pollution levels in the northern Front Range periodically spike above 70 parts per billion (ppb), which is considered unhealthy—on average, 17 ppb of that ozone is produced locally. The new research, published in an open-access paper in the Journal of Geophysical Research: Atmospheres, shows that oil and gas emissions contribute an average of 3 ppb of the locally produced ozone daily, and potentially more than that on high-ozone days.

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Lux: Total is leading example of oil supermajor expanding into solar plus storage and distributed generation

August 09, 2016

France-based Total is the first oil supermajor aggressively to enter new areas of business including solar plus storage and distributed generation, notes Lux Research in a new report: “Superpower Darwinism: What Big Oil Can and Cannot Do About Total’s Billion-Dollar Battery Move.”

Even though viable battery companies have become harder and more expensive to buy since Total’s $1-billion acquisition of Saft (earlier post), the oil supermajors—BP, Chevron, ConocoPhillips, Exxon Mobil, Royal Dutch Shell and Total—have cash piles ranging from $5 billion to $30 billion each, despite shrinking profits since 2012 and uncertainty about timing of the eventual recovery of oil prices.

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American Refining Group taking 1/3 stake in Amyris/Cosan Novvi JV; accelerating commercialization of renewable base oil and lubricants

July 19, 2016

American Refining Group (ARG) is taking a 33.3% stake in Novvi LLC, a joint venture of Amyris and Brazil-based Cosan S.A. formed in 2011 to produce renewable base oils and lubricants from Amyris’ Biofene—Amyris’s brand of a renewable, long-chain, branched hydrocarbon molecule called farnesene (trans-ß-farnesene). (Earlier post.) Both Amyris and Cosan will continue to hold share ownership stakes in Novvi, together with ARG.

Biofene is the basis for a wide range of products varying from specialty products such as cosmetics, perfumes, detergents and industrial lubricants, to transportation fuels such as diesel and jet fuel.

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Six refineries in $425M settlement with EPA and DOJ over emissions violations

The Department of Justice and the US Environmental Protection Agency (EPA) announced a $425-million settlement with subsidiaries of Tesoro Corp., and Par Hawaii Refining that resolves alleged Clean Air Act violations and protects public health by reducing air pollution at six refineries. Under the settlement, the two companies will spend about $403 million to install and operate pollution control equipment, and Tesoro will spend about $12 million to fund environmental projects in local communities previously impacted by pollution. Tesoro will also pay a $10.45 million civil penalty.

The settlement, a consent decree lodged in US District Court for the Western District of Texas, includes provisions that resolves ongoing Clean Air Act violations at refineries in Kenai, Alaska; Martinez, California; Kapolei, Hawaii; Mandan, North Dakota; Salt Lake City, Utah; and Anacortes, Washington. Of the $10.45-million civil penalty that Tesoro will pay, the United States will receive $8,050,000, and co-plaintiffs including the states of Alaska and Hawaii, and the Northwest Clean Air Agency will share $2.4 million. Under the settlement, all six refineries must implement specific provisions to reduce flaring and enhance leak detection and repair:

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Oil Industry Faces Huge Worker Shortage

July 13, 2016

by Nick Cunningham of Oilprice.com

The rig count has rebounded from the lows seen in late May, a small indication that oil companies in the US could begin drilling anew. Shale drilling is a short-cycle prospect, requiring only a few weeks to drill and bring a well online. Because of this, the collective US shale industry has been likened to the new “swing producer”: low oil prices force quick cutbacks but higher prices trigger new supplies. In essence, shale could balance the market in the way OPEC used to.

While that notion was always a bit simplistic, one reason that US shale production won’t necessarily spring into action in short order is because the people and equipment that were sidelined over the past two years can’t come back at a moment’s notice.

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Morgan Stanley Warns That Rising Rig Count Could Undo The Oil Rally

July 09, 2016

by Irina Slav for Oilprice.com

In an industry where anything could happen, surprises—often unwelcome—are hard to come by. Oil is exactly such an industry at the moment. No one is sure where oil is heading, near-tem forecasts range from $20 to $80 per barrel by the end of the year, and there are just too many wild cards on the scene.

So, in a sense, the news that shale producers are launching more drilling rigs is not really news at all. It was expected, the companies themselves said they are ready to start ramping-up production as soon as prices reach some more reasonable level. What’s new, perhaps, is Morgan Stanley’s warning that production from the new wells being drilled could prompt a reversal of forecasts that U.S. crude production is falling and will continue to fall.

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Department of Interior issues final regulations for drilling on Arctic OCS

July 08, 2016

The US Department of the Interior has issued final regulations governing future exploratory drilling activities on the US Arctic Outer Continental Shelf (OCS). The Arctic-specific regulations focus solely on OCS exploratory drilling operations from floating vessels within the US Beaufort and Chukchi Seas.

These rules require oil companies to ensure proper internal controls and planning for oil spill prevention, containment and responses—all issues identified by previous Interior reports regarding Shell’s 2012 exploration activities in the Arctic. The regulations codify and further develop current Arctic-specific operational standards to ensure that operators take the necessary steps to plan through all phases of OCS exploration in the Arctic, including mobilization, maritime transport and emergency response, and the conduct of safe drilling operations while in theater.

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Neos and Lockheed Martin to develop enhanced next-gen airborne gravity gradiometer to advance ability to find oil, gas & minerals

July 06, 2016

In partnership with Lockheed Martin, Neos Inc. will develop a new generation sensor to be used to find oil, gas and minerals beneath the earth’s surface from the air. The new Full Tensor Gradiometry (FTG) Plus technology has 20 times the sensitivity and 10 times greater bandwidth than current gravity gradiometers, according to Neos.

Gravity gradiometers have been commercially used for more than 20 years and militarily longer than that. The technology is based on the principle that earth’s gravity field varies with location, local topography and sub-surface geologic features. Measuring the gravity variation caused by items beneath the earth’s surface can help identify unique underground and undersea geologic structures. The new airborne FTG Plus sensor is so advanced it could find a 10-meter tall hill buried one kilometer below the earth’s surface.

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Increase in US rig count will not cap oil prices

June 23, 2016

by David Yager for Oilprice.com

The impact of rising oil prices on North American light tight oil (LTO) production is said to be a “Catch 22”, the title of Joseph Heller’s popular 1961 novel set in WWII. The premise was you could get out of the army if you were crazy but you weren’t crazy to try to get out of the army. So this avenue to escape the war didn’t work for the book’s main character John Yossarian.

Too many analysts continue to believe drilling and service has the same problem with rising oil prices. With WTI back above $50 a barrel—at least briefly last week—North American LTO developers are putting rigs, service equipment and personnel back to work. The so-called “fraclog” or “DUC” inventory (wells drilled but uncompleted) is being reduced. While this is good it is also thought by some to be temporary.

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3 Years Of Painful Cuts Sets Oil Markets Up For Serious Supply Crunch

June 01, 2016

by Nick Cunningham of Oilprice.com

Total global oil production could decline for the next several years in a row as scarce new sources of supply come online.

According to data from Rystad Energy, overall global oil output will fall this year as natural depletion overwhelms all new sources of supply. But the deficit will only widen in the years ahead due to the dramatic scaling back in spending on new exploration and development.

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