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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.]

Oil price tumbles after OPEC releases 2015 forecast

December 11, 2014

by Andy Tully of Oilprice.com

The demand for oil in 2015 will drop to its lowest level since 2002 because of an oversupply of crude and stagnant economies in China and Europe, according to OPEC’s latest forecast. And that’s just one of several sour estimates. OPEC’s monthly report said demand for the cartel’s oil will fall to 28.9 million barrels per day next year, 280,000 barrels lower than its previous forecast and the lowest in 12 years. Add to that a new report from the US government’s Energy Information Administration (EIA), which also cut its 2015 forecast for growth in global oil demand by 240,000 barrels per day, down to 880,000 barrels per day.

For 2014, the EIA expects demand will be about 960,000 barrels per day. And yet on Nov. 27, OPEC refused to lower its production levels below 30 million barrels a day, adding to the oil glut that started with the US boom in high-quality shale oil. As a result, the price of Brent crude has plunged more than 40 percent since June. Futures for US crude also are down dramatically.

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ExxonMobil: global GDP up ~140% by 2040, but energy demand ~35% due to efficiency; LDV energy demand to rise only slightly despite doubling parc

December 10, 2014

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As the world population increases by the estimated 30% from 2010 to 2040, ExxonMobil sees global GDP rising by about 140%, but energy demand by only about 35% due to greater efficiency. Click to enlarge.

Significant growth in the global middle class, expansion of emerging economies and an additional 2 billion people in the world will contribute to a 35% increase in energy demand by 2040, according to ExxonMobil’s latest Outlook for Energy report.

Even as demand increases, the world will continue to become more efficient in its energy use, according to the 2015 Outlook for Energy: A View to 2040. Without efficiency gains across economies worldwide, energy demand from 2010 to 2040 would be headed toward a 140% increase instead of the 35% forecast in the report.

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Commentary: Could falling oil prices spark a financial crisis?

December 05, 2014

by Nick Cunningham of Oilprice.com

The oil and gas boom in the United States was made possible by the extensive credit afforded to drillers. Not only has financing come from company shareholders and traditional banks, but hundreds of billions of dollars have also come from junk-bond investors looking for high returns. Junk-bond debt in energy has reached $210 billion, which is about 16 percent of the $1.3 trillion junk-bond market. That is a dramatic rise from just 4 percent that energy debt represented 10 years ago.

As is the nature of the junk-bond market, lots of money flowed to companies with much riskier drilling prospects than, say, the oil majors. Maybe drillers were venturing into an uncertain shale play; maybe they didn’t have a lot of cash on hand or were a small startup. Whatever the case may be, there is a reason that they couldn’t offer “investment grade” bonds. In order to tap the bond market, these companies had to pay a hefty interest rate.

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As excitement builds in the Montney Shale, companies seek more infrastructure

December 03, 2014

by James Stafford of Oilprice.com

What does it take to build up a new region for oil and gas development? Obviously, the resources have to be in place and economically recoverable. But it is not as easy as just sticking a drill into the ground and pumping out oil and gas.

Even with significant oil and gas reserves trapped in shale, a variety of factors need to come together to turn a given region into a significant producer. To begin with, there needs to be enough companies willing to take risks on major drilling projects. Next, there needs to be enough capital behind those companies to make projects viable. And once explorers find and prove commercial quantities of oil and gas, there needs to be infrastructure in place to move the energy to market.

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Follow the sand to the real fracking boom

November 26, 2014

by James Stafford of Oilprice.com

When it takes up to four million pounds of sand to frack a single well, it’s no wonder that demand is outpacing supply and frack sand producers are becoming the biggest behind-the-scenes beneficiaries of the American oil and gas boom. Demand is exploding for “frac sand”—a durable, high-purity quartz sand used to help produce petroleum fluids and prop up man-made fractures in shale rock formations through which oil and gas flows—turning this segment into the top driver of value in the shale revolution.

“One of the major players in Eagle Ford is saying they’re short 6 million tons of 100 mesh alone in 2014 and they don’t know where to get it. And that’s just one player,” Rasool Mohammad, President and CEO of Select Sands Corporation told Oilprice.com. Frack sand exponentially increases the return on investment for a well, and oil and gas companies are expected to use some 95 billion pounds of frack sand this year, up nearly 30% from 2013 and up 50% from forecasts made just last year.

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Iran negotiations, OPEC meeting loom for oil markets

November 21, 2014

by Nick Cunningham of Oilprice.com

As November draws to a close, there are two major events that could profoundly change the oil markets. With the clock ticking, the 5 permanent members of the UN Security Council plus Germany (P5 plus 1) are negotiating down to the wire with Iran over its nuclear program. The two sides have made substantial progress, but some difficult issues remain unresolved ahead of the November 24 deadline.

“We’re very keen to try to get to a deal, but not a deal at any price,” UK Foreign Secretary Philip Hammond said on November 17. “There will have to be very significant further movement by the Iranians if we’re going to be able to get to a deal.”

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IEA says oil supplies may not keep up with demand

November 15, 2014

by Nick Cunningham of Oilprice.com

Despite what appears to be a saturated oil market in 2014, oil producers around the world will struggle to meet rising demand over the next few decades. In its latest annual World Energy Outlook, the International Energy Agency (IEA) warned that the current period of oil abundance may be fleeting, and in fact, without heroic levels of production increases, oil markets will grow dangerously tight in the coming years.

Global oil demand is expected to increase by 37 percent by 2040, with a dominant proportion of that coming from developing countries—i.e. China and India. In fact, the IEA says that for every barrel of oil the industrialized world expects to eliminate from demand through efficiency or other ways of reducing demand, developing countries will burn through two additional barrels.

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With oil prices low, early signs of a pullback in drilling activity

November 14, 2014

by Nick Cunningham of Oilprice.com

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.

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Ecofys report concludes current European regulations underestimating GHG reductions

November 13, 2014

Substituting biofuels for marginal fossil-based liquid fuels results in the avoidance of significant GHG emissions that are not currently accounted for in the European Renewable Energy Directive (2009/28/EC), according to a new analysis by the consultancy Ecofys. The study was commissioned by the European Oilseed Alliance (EOA), the European Biodiesel Board (EBB) and the European Vegetable Oil and Proteinmeal Industry (FEDIOL).

The European RED and the Fuel Quality Directive (2009/30/EC) both assess the GHG benefits of biofuels by comparing the lifecycle emissions of biofuels to a “fossil comparator”. However, the Ecofys authors note, the current comparator does not reflect the increasing emissions of fossil fuels that are becoming more difficult to extract. In addition, they argue, biofuels should not just be compared to the average performance of gasoline or diesel but with the fossil fuels they most likely replace—i.e. those that are marginally “not produced”.

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The driving force behind the US oil boom

November 07, 2014

by James Stafford of Oilprice.com

The shale revolution’s sweet spot is oilfield services, the lower-risk backbone of the American oil and gas boom that pays off regardless of a play’s economics. Behind the stardom of the explorers and producers who have put themselves on the revolutionary shale map and absorb most of the risk are the service providers who make up a highly lucrative market segment.

The US land-based rig count rose 3% over the last quarter, reaching a two-year high of 1,870 active rigs. A major factor in this growth has been an uptick in horizontal drilling in the Permian Basin, Texas’ revived giant, where the rig count was up 21% year-on-year. And while oil prices slumped in October, drilling activity continues to rise, according to Baker Hughes, the third-largest oil services company. Baker Hughes’ rig count is up 3.8% in the fourth quarter of this year, compared to the third quarter.

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Opinion: The End Of An Era: Is The US Petrodollar Under Threat?

October 31, 2014

by Andrew Topf of Oilprice.com

Recent trade deals and high-level cooperation between Russia and China have set off alarm bells in the West as policymakers and oil and gas executives watch the balance of power in global energy markets shift to the East.

The reasons for the cozier relationship between the two giant powers are, of course, rooted in the Ukraine crisis and subsequent Western sanctions against Russia, combined with China’s need to secure long-term energy supplies. However, a consequence of closer economic ties between Russia and China could also mean the beginning of the end of dominance for the US dollar, and that could have a profound impact on energy markets.

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Low oil prices hurting some US shale operations; slumping oil prices putting pressure on drillers

October 23, 2014

by Nick Cunningham of Oilprice.com

The number of active rigs drilling for oil and gas fell by their most in two months, according to the latest data from oil services firm Baker Hughes. There were 19 oil rigs that were removed from operation as of Oct. 17, compared to the prior week. There are now 1,590 active oil rigs, the lowest level in six weeks.

“Unless there’s a significant reversal in oil prices, we’re going to see continued declines in the rig count, especially those drilling for oil,” James Williams, president of WTRG Economics, told Fuel Fix in an interview. “We could easily see the oil rig count down 100 by the end of the year, or more.” Baker Hughes CEO Martin Craighead predicted that US drilling companies could begin to seriously start removing rigs from operation if prices drop to around $75 per barrel. Some of the more expensive shale regions will not be profitable at current prices. For example, the pricey Tuscaloosa shale in Louisiana breaks even at about $92 per barrel. But that also reflects the high costs of starting up a nascent shale region.

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Topsøe researchers analyze hydrotreating catalyst at single-atom level; potential for more efficient catalysts for cleaner fuels

September 30, 2014

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Cover courtesy of S. Nygaard, Haldor Topsøe A/S. Click to enlarge.

Researchers from Haldor Topsøe A/S have analyzed an industrial-style MoS2-based hydrotreating catalyst at the single-atom level using electron microscopy. With this method, the sites of single cobalt atoms, which are responsible for promoting sulfur removal from oil distillates, are resolved. The study is published in the journal Angewandte Chemie.

Co-Mo-S is the active part in Haldor Topsøe’s series of TK catalysts; the cobalt serves as a promoter of the functional properties of the transition metal dichalcogenide (TMD) MoS2. The researchers obtained images—achieved following decades of attempts—disclosing detailed knowledge about the structure of the catalyst. The research could mean more efficient catalysts for oil refineries in the near future, promoting a cleaner environment and helping industry to deal with increasingly tight and more stringent environmental legislation.

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EIA projects world liquid fuels use to rise 38% by 2040, driven by growth in Asia and Middle East; transportation 92% of demand

September 10, 2014

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Liquid fuels production (OPEC crude and lease condensate, non-OPEC crude and lease condensate, and other) and consumption (by OECD and non-OECD regions) under three price cases in 2040. Dashed red line shows 2010 consumption of 87 MMbbl/d. Source: EIA. Click to enlarge.

World petroleum and other liquid fuels consumption will increase 38% by 2040, spurred by increased demand in the developing Asia and Middle East, according to the Reference Case projections in International Energy Outlook 2014 (IEO2014), released by the US Energy Information Administration (EIA). Those two regions combined will account for 85% of the total increase in liquid fuels used worldwide over that period, said EIA Administrator Adam Sieminski.

IEO2014 projections of future liquids balances include two broad categories: crude and lease condensate and other liquid fuels. Crude and lease condensate includes tight oil, shale oil, extra-heavy crude oil, field condensate, and bitumen (i.e., oil sands, either diluted or upgraded). Other liquids refer to natural gas plant liquids (NGPL), biofuels (including biomass-to-liquids [BTL]), gas-to-liquids (GTL), coal-to-liquids (CTL), kerogen (i.e., oil shale), and refinery gain.

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Soros signals Argentina’s shale is biggest place to be; doubles stake in YPF SA

September 04, 2014

by James Stafford of Oilprice.com

One of the world’s legendary investors is upping his bet on Argentina’s shale oil and gas industry in a show of confidence for shale production in South America’s largest unconventional prize—and a big boost for both supermajors and smaller players making big waves in the heart of new discovery areas.

George Soros has doubled his stake in YPF SA, the state-owned oil company in Argentina, which sits atop some of the world’s largest shale oil and gas resources, and is about to get even larger following a new discovery over the last couple of weeks of a second key shale play.

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DOE to award $9M to promote consensus on future fossil energy technologies

July 20, 2014

The US Department of Energy’s (DOE) Office of Fossil Energy will award $9 million over five years to organizations to assist it in building domestic and international consensus on future fossil energy technologies (DE-FOA-0001111). The Funding Opportunity Announcement (FOA) anticipates two awards being made: the first for $7 million in the area of Carbon Capture and Storage (CCS) and fossil-fuel-based Clean Energy Systems (CES); the second for $2 million in the area of international oil and natural gas.

One of the key missions of the Office of Fossil Energy is to “ensure the nation can continue to rely on traditional resources for clean, secure and affordable energy while enhancing environmental protection.” In pursuit of this, the Office provides outreach and education to many stakeholders, including the general public, in order to allow them to make educated choices about energy.

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DOE releases report on water-energy nexus

June 19, 2014

The US Department of Energy (DOE) released a new report that frames an integrated challenge and opportunity space around the water-energy nexus for DOE and its partners and lays the foundation for future efforts.

Present day water and energy systems are tightly intertwined. Water is used in all phases of energy production and electricity generation. Energy is required to extract, convey, and deliver water of appropriate quality for diverse human uses. Recent developments have focused national attention on these connections.

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EIA: China promoting both fuel efficiency and alternative-fuel vehicles to curb growing oil use

May 13, 2014

Consumption of gasoline in China grew from 0.9 million barrels per day (bbl/d) in 2003 to more than 2 million bbl/d in 2013, according to figures from the US Energy Information Administration (EIA). This continues a trend of significant growth in China’s transportation sector since the 1990s.

Increasing oil demand is requiring increasing imports; since 2009, China has been importing more than half of its petroleum needs. To counter this trend triggered by China’s rapid motorization, the Chinese government is adopting a broad range of policies, including improvements in the fuel economy of new vehicles and the promotion of alternative-fuel vehicles, EIA notes.

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DOE issues request for information for Grand Challenges in Subsurface Engineering

May 11, 2014

The US Department of Energy (DOE) has issued a request for information for Grand Challenges in Subsurface Engineering (DE-FOA-0001135). The purpose of the RFI is to gather information from industry, academia, national laboratories, and other federal agency stakeholders on critical subsurface knowledge and/or technology gaps that, if filled, will enable significant improvements in the understanding of the character and behavior of the subsurface environment and improve the ability to access, predict, manipulate and monitor the subsurface. Responses to this RFI are due no later than 8:00 PM ET on 23 May 2014.

Background. Subsurface reservoirs account for more than 80% of US primary energy, and also offer potential for the storage of energy, CO2, and nuclear waste. Despite decades of development, DOE notes, current technologies do not allow full utilization of subsurface energy resources; for example, only ~10 to 40% of the oil and gas is recovered from shale and conventional reservoirs, respectively.

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DOE to award up to $35M for environmentally-prudent unconventional resource development

May 04, 2014

The US Department of Energy (DOE) has issued a funding opportunity announcement (DE-FOA-0001076) for projects in Fiscal Year 2014 (FY2014) that focus on improving the environmental performance of unconventional oil and natural gas (UOG)—i.e., shale gas, tight oil, and tight gas—resource development. DOE expects approximately $25-35 million to be available for new awards under the FOA.

While in-place, unconventional resources are substantial, recovery efficiencies are commonly low in these reservoirs. Current industry practice includes decreasing well and frac stage spacing to increase overall recovery. The objective of the new FOA is to address critical gaps of knowledge of the characterization, basic subsurface science, and completion/stimulation strategies of tight oil, tight gas, and shale gas resources to enable more efficient resource recovery from fewer and less environmentally impactful wells.

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LCA study finds carbon intensity of corn ethanol decreasing, gasoline rising; ethanol estimated 43-60% lower than oil by 2022

January 30, 2014

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Top: Weighted CI (g CO2 e/MJ) of petroleum fuels and corn ethanol consumed in the US over time. Bottom: Weighted CI of petroleum fuels consumed in the US and California over time. Click to enlarge.

The carbon intensity (CI) of corn ethanol—i.e., the greenhouse gas emissions produced via the production of a volume of the fuel—is declining, while the average CI of gasoline produced from petroleum sources is gradually increasing, according to a recent report prepared by Life Cycle Associates, LLC for the Renewable Fuels Association (RFA). Life Cycle Associates has completed numerous life cycle analysis studies, including those to establish fuel pathway carbon intensities (CI) for the California Low Carbon Fuel Standard (LCFS).

According to the study, the average corn ethanol reduced GHG emissions by 32% compared to average petroleum gasoline in 2012—including prospective emissions from indirect land use change (ILUC) for corn ethanol. When compared to fuel produced from unconventional petroleum sources such tight oil from fracking and oil sands, average corn ethanol reduces GHG emissions by 37% compared to the former and 40% to the latter.

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ExxonMobil Outlook: 35% growth in energy demand by 2040; hybrids to account for ~50% of new vehicle sales

December 15, 2013

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By 2040, hybrids are expected to account for about 35% of the global light-duty vehicle fleet, up from less than 1% in 2010. Hybrids are expected to account for about half of global new-car sales by 2040. Source: ExxonMobil. Click to enlarge.

Driven by increasing population, urbanization and rising living standards, the world will require some 35% more energy in 2040, according to ExxonMobil’s annual forecast report: Outlook for Energy: A View to 2040. Anticipated population growth will reach nearly 9 billion in 2040 from about 7 billion today, and the global economy is projected to double—at an annual growth rate of nearly 3%—largely in the developing world.

Demand for energy in non-OECD nations will grow by about two-thirds, accounting for essentially all of the increase in global energy use. ExxonMobil projects that meeting future energy demand will be supported by more efficient energy-saving practices and technologies; increased use of less-carbon-intensive fuels such as natural gas, nuclear and renewables; as well as the continued development of technology advances to develop new energy sources. Without the projected gains in efficiency, global energy demand could have risen by more than 100%.

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