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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.]

Opinion: Saudis Planning For A War Of Attrition In Europe With Russia’s Oil Industry

November 18, 2015

by Nick Cunningham of

Russia’s central bank recently warned about the growing financial risks to the Russian economy from Saudi Arabia encroaching upon its traditional export market for crude oil. Russia sends 70 percent of its oil to Europe, but Saudi Arabia has been making inroads in the European market amid the oil price downturn.

The result is a heavier discount for Russia’s crude oil, the so-called Urals blend. Bloomberg reported that the Urals typically lands in Rotterdam, a major European destination, at a discount to Brent of around $2 or less. But the discount has widened to $3.50 lately due to increased competition from Saudi Arabia. “Oil supplies to Europe from Saudi Arabia are probably adversely affecting Urals prices,” the Russian central bank warned in a recent report.

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Opinion: Political Climate Shifting Against The Oil And Gas Industry

November 10, 2015

by Nick Cunningham of

Oil and gas companies have had a tough time over the past year trying to weather the storm of falling oil prices. But the political and financial winds are moving in the wrong direction for the industry, raising more “above ground” problems at a time that they can ill-afford it.

Drilling oil and gas wells requires a lot of money. For companies that have seen their revenues vanish because of collapsing oil prices, access to credit is obviously critically important. But US financial regulators are growing concerned about a pile of energy debt that is deteriorating in quality. A report from the Federal Deposit Insurance Corporation, the Office of the Comptroller of the Currency and the Federal Reserve singled out the oil and gas sector when it concluded that credit risk was rising across the United States.

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Opinion: Oil Megaprojects Won’t Stay On The Shelf For Long

November 06, 2015

by Nick Cunningham of

One casualty of the oil price downturn could be the megaproject.

For years, as conventional oil reserves depleted and became increasingly hard to find, oil companies ventured into far-flung locales to find new sources of production. Extracting oil from these frontier areas required more advanced technology and a lot more capital: Ultra deepwater, Arctic offshore, heavy oil sands, and increasingly, the Lower Tertiary.

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Opinion: Stop Blaming OPEC For Low Prices

October 29, 2015

by Nick Cunningham of

We are a little more than a month away from OPEC’s next meeting, which will be held in Vienna on December 4, 2015.

OPEC altered the course of the oil markets last year when it decided to cast aside its traditional role of maintaining balance through production cuts. Instead it pursued a strategy of fighting for market share, contributing to an immediate rout in oil prices. WTI and Brent then went on to dive below $50 in the weeks following OPEC’s decision. OPEC is widely expected to continue its current strategy at its next meeting, and as such, no rebound in oil prices is expected, at least not because of the results of the group’s meeting in Vienna.

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Day Of Reckoning For US Shale Will Have To Wait

October 25, 2015

by Nick Cunningham of

October has been billed as a pivotal month in which indebted shale companies would see their credit lines cut, precipitating a faster consolidation in the industry that would sow the seeds of a rebound.

But banks appear to be taking a more lenient approach than expected. A new Jeffries report says that only $450 million in borrowing bases have been cut, across more than 20 companies. That amounts to just 2 percent of available credit lines, much lower than the 15 percent reduction expected by analysts. In other words, banks are allowing drillers to continue to borrow, which could delay the inevitable balancing needed in the market.

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Opinion: Oil Market Showdown—Can Russia Outlast The Saudis?

October 20, 2015

by Dalan McEndree for

Two men enter, one man leaves, two men enter, one man leaves, two men enter...

November 27, oil consuming countries will celebrate the first anniversary of the Saudi decision to let market forces determine prices. This decision set crude prices on a downward path. Subsequently, to defend market share, the Saudis increased production, which exacerbated market oversupply and further pressured prices.

While the sharp decline in crude prices has saved crude consuming nations hundreds of billions of dollars, the loss in revenues has caused crude exporting countries intense economic and financial pain. Their suffering has led some to call for a change in strategy to “balance” the market and boost prices. Venezuela, an OPEC member, has even proposed an emergency summit meeting.

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Argonne analysis shows greenhouse gas emissions similar for shale, conventional oil

October 16, 2015

Shale oil production generates greenhouse gas emissions at levels similar to conventional crude oil production, according to a pair of new studies released by the US Department of Energy’s Argonne National Laboratory.

The research, conducted by Argonne researchers in collaboration with Stanford University and the University of California, Davis, analyzed the Eagle Ford shale formation in Texas and the Bakken play mainly in North Dakota. Eagle Ford and Bakken are the second and third largest oil-producing shale formation regions in the United States, during the last three years. In 2014, Bakken and Eagle Ford together accounted for 54% of oil production and 19% of gas production among the top seven production regions. These are shale formations with low permeability and must be hydraulically fractured to produce oil and gas.

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Opinion: China To Continue Expanding Its Influence In The Oil And Gas Sector

October 14, 2015

by John Manfreda for

Since 2009, China has been taking a much more active role in its pursuit of international oil contracts. In 2009, for the first time, Saudi Arabia exported more of its oil to China than it did to the U.S. China also made large investments in Saudi Arabia’s oil refining industry as well. But China’s oil investments didn’t stop there; they also pursued oil producing Canadian assets in 2011-12.

When it comes to Chinese energy industry, there are three major state owned companies. One is called China National Offshore Oil Company (CNOOC), which is an oil and gas producer, another is called PetroChina, which is another oil producing company, and its third company is Sinopec, which is primarily a refining company.

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Opinion: Is Russia Plotting To Bring Down OPEC?

October 06, 2015

by Dalan McEndree for

President Putin’s recent moves in the Middle East—to shore up Bashar al-Assad’s regime in Syria through deployment of combat aircraft, equipment, and manpower and build-out of air-, naval-, and ground-force bases, and the agreement in the last week with Iran, Iraq, and Syria on intelligence and security cooperation—could contribute to Russian efforts to combat the myriad negative pressures on Russia’s vital energy industry.

Live by Energy…

Energy is the foundation of Russia, its economy, its government, and its political system. Putin has highlighted on various occasions the contribution Russia’s mineral wealth, in particular oil and natural gas, must make for Russia to be able to sustain economic growth, promote industrial development, catch up with the developed economies, and modernize Russia’s military and military industry.

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Opinion: This Is What Needs To Happen For Oil Prices To Stabilize

September 21, 2015

by Dan Doyle for

Dan Doyle is president of Reliance Well Services, a hydraulic fracturing company based in Pennsylvania.

On September 10th, the EIA reported a production decline in the Lower 48—essentially shale production—of 208,000 BOPD (barrels of oil per day). That is a staggeringly enormous number, approximately 10 percent of the estimated global over-supply. Additionally, it was a week-over-week number which makes it all the more impressive. Yet it received little attention through the week. Rather, Goldman Sachs was grabbing all the headlines with its $20 call on oil.

This week, I was looking for a possible correction in that number with a zero decline or possibly even a gain (remember, the EIA numbers are estimates). But instead we got another decline of 35,000 BOPD.

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Opinion: The Shale Delusion: Why The Party’s Over For US Tight Oil

September 18, 2015

by Art Berman for

The party is over for tight oil.

Despite brash statements by US producers and misleading analysis by Raymond James, low oil prices are killing tight oil companies. Reports this week from IEA and EIA paint a bleak picture for oil prices as the world production surplus continues.

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Opinion: The Default Next Move For Oil Is Downwards, And Here’s Why

September 09, 2015

by Martin Tillier of

As traders, investors and pundits, we all like to think that what we do is akin to a science. We believe that by working harder and being smarter we can give ourselves an edge, that enough research will reveal to us the next move, either a long term trend or an intraday blip on a chart, and that we can profit from that knowledge. Usually, especially over longer time spans, we are correct in that assumption. Sometimes, however, no amount of fundamental or technical analysis will help.

Over the last week or so we have seen some violent swings in the price of oil, swings that in many ways defy logic. At times like these we have to rely on the art, rather than science, of trading and reading markets. That is not to say that traders and investors at home should be simply making wild guesses, it is just that right now, the oil markets are trading on factors other than the fundamental influences that we are used to. It is hard to chart fear and panic.

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Opinion: OPEC Divorce And Self-Destruction Thanks To Saudi Oil Strategy?

September 02, 2015

by Dalan McEndree for

“If you are the world’s leading energy economy, you produce energy, that’s what you do.”

“A government can stay irrational longer than it can stay solvent.”

“Even in the short term, you’re dead, if you commit suicide.”

The first quote modifies a GEICO commercial describing a free-range chicken (If you’re a free range chicken, you roam free, that’s what you do), the second, the famous John Maynard Keynes quote about markets (The market can stay irrational longer than you can stay solvent), the third, another famous Keynes quote (In the long run, we’re all dead).

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Opinion: Saudis Could Face An Open Revolt At Next OPEC Meeting

August 25, 2015

by Dalan McEndree for

OPEC next gathers December 4 in Vienna, just over a year since Saudi Oil Minister Ali Al-Naimi announced at the previous OPEC winter meeting the Saudi decision to let the oil market determine oil prices rather than to continue Saudi Arabia's role of guarantor of $100+/bbl oil.

Despite the intense financial and economic pain this decision has inflicted on Saudi Arabia, its fellow OPEC members, and other oil producers, the Saudis have given no indication they plan to alter course. In fact, Saudis have downplayed the impact of lower prices on their country, asserting that the kingdom has the financial wherewithal to withstand lower oil prices.

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Opinion: Saudi Oil Strategy: Brilliant Or Suicide?

August 13, 2015

by Dalan McEndree for

In the last quarter of 2014, in the face of possible oversupply, Saudi Arabia abandoned its traditional role as the global oil market’s swing producer and therefore it role as unofficial guarantor of existing ($100+ per barrel) prices.

In October, Saudi sources first prepared the market with statements that the country would be comfortable with oil prices as low as $80 per barrel for “a year or two.” At the November OPEC meeting, the Saudi oil minister, Ali Al-Naimi, publicly announced Saudi Arabia would allow market forces to set prices. He argued that rapidly growing production outside OPEC made the existing status quo unviable, and that lower prices in the short term would increase prices in the longer term through reduced investment and ultimately benefit all OPEC members.

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Opinion: The Saudi Oil Price War Is Backfiring

August 12, 2015

by Gaurav Agnihotri of

Saudi Arabia has long enjoyed the status of being the top crude oil exporter in the world. With record production of 10.564 million barrels per day in June 2015, Saudi Arabia has been one of the major driving forces behind the current oil price slump.

The Saudis have kept their production levels high since last year in order to drive other players (especially US shale drillers) out of business. Equally clear is the fact that this strategy of maintaining the glut and driving out rivals hasn’t worked so far.

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Opinion: Global Oil Supply More Fragile Than You Think

August 07, 2015

by Nick Cunningham of

Many oil companies had trimmed their budgets heading into 2015 to deal with lower oil prices. But the rebound in April and May to $60 per barrel from the mid-$40s suggested that the severe drop was merely temporary. But the collapse of prices in July—owing to the Iran nuclear deal, an ongoing production surplus, and economic and financial concerns in Greece and China—have darkened the mood. Now a prevailing sense that oil prices may stay lower for longer has hit the markets.

Oil futures for delivery in December 2020 are currently trading $8 lower than they were at the beginning of this year even while immediate spot prices are $4 higher today. In other words, oil traders are now feeling much gloomier about oil prices several years out than they were at the beginning of 2015.

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Opinion: Could WTI Trade At A Premium To Brent By Next Year?

August 06, 2015

by Nick Cunningham of

A flood of bearish news has pushed down oil prices to their lowest levels in months, with WTI nearing $45 per barrel and Brent flirting with sub-$50 territory. With a bear market back, there is pessimism throughout the oil markets. Goldman Sachs is even predicting oil stays at $50 through 2020, a profoundly grim view of the state of oil supplies.

On the other hand, the contraction in US shale is underway, so it is just a matter of time before the mismatch between supply and demand balances out.

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Saudis Expand Price War Downstream

July 28, 2015

by Gaurav Agnihotri for

The undisputed king of oil and gas is making some moves that could change the face of the global refining sector. In June 2015, Saudi Arabia pumped a record 10.564 million barrels a day, a record level. As if being the world’s biggest exporter of oil was not enough, the desert kingdom is now looking to conquer the refining sector as it has quickly become the fourth largest refiner in the world.

“Saudis have moved into the product business in a big way,” said Fereidun Fesharaki of FGE Energy. With Saudi Arabia's refined fuel contributing to the global supply glut, what will be its impact on the refining markets especially those in Asia?

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More Job Losses Coming To US Shale

July 22, 2015

By Gaurav Agnihotri for

With the recently concluded nuclear deal between Iran and the P5+1 countries, oil prices have already started heading downward on sentiments that Iran’s crude oil supply would further contribute to the already rising global supply glut. The economic crisis in Greece, OPEC’s high production levels and China’s market turmoil have created more pressure on oil prices, making a price rebound look highly unlikely in the near future.

So, with the prices of both Brent and WTI moving towards $50 per barrel, the short to medium-term outlook for oil remains mostly bearish. This is bad news for the U.S. shale sector which is already dealing with rising debt and the ever-increasing risk of default.

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MIT researchers advancing development of supercritical water upgrading of heavy crude; lower cost, energy use and CO2

July 18, 2015

Findings by MIT researchers could help advance the commercialization of supercritical water technology for the desulfurization and upgrading of high-sulfur crude oil into high-value, cleaner fuels such as gasoline without using hydrogen—a major change in refining technology that would reduce costs, energy use, and CO2 emissions.

Supercritical water upgrading (SCWU) of heavy oils has been of interest for years in industry and academia; SCWU reduces sulfur content and decreases average molecular weight or crude without rejecting carbon as coke products. However, despite the interest, many fundamental questions remain in the field: intrinsic reaction rates and mechanisms; the role of water; the need for catalysts; the importance of phase behavior and mixing. In 2009, MIT initiated a SCWU research program aimed at improving the understanding of the relevant physical, chemical, and catalytic phenomena.

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U Calgary study finds oil shale most energy intensive upgraded fuel followed by in-situ-produced bitumen from oil sands

July 10, 2015

A team at the University of Calgary (Canada) has compared the energy intensities and lifecycle GHG emissions of unconventional oils (oil sands and oil shale) alongside shale gas, coal, lignite, wood and conventional oil and gas. In a paper published in the ACS journal Environmental Science & Technology, they report that lignite is the most GHG intensive primary fuel followed by oil shale. Oil shale is the most energy intensive fuel among upgraded primary fossil fuel options followed by in-situ-produced bitumen from oil sands.

Based on future world energy demand projections, they estimate that if growth of unconventional heavy oil production continues unabated, the incremental GHG emissions that results from replacing conventional oil with heavy oil would amount to 4–21 Gt-CO2eq over four decades (2010 by 2050). Taking this further, they estimated that the warming associated with the use of heavy oil amounts to this level of emissions could lead to about 0.002−0.009 °C increase in earth surface temperature, based on mid-21st century carbon-climate response model estimates.

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Opinion: Expect A Wave Of Consolidation In The Oil Industry

June 24, 2015

by Leonard Brecken of

As stated previously, asset monetization by small E&P operators will start in earnest in the second half of this year out of cash flow necessity. Most, if not all, smaller market capitalization companies, public or private, are still free cash flow negative (operating cash flow less capital expenditure) and only a few of the larger ones are now, or will be, based on guidance. The point is, with volumes languishing (and probably poised to decline) tied to a flat oil futures price curve and with economics marginal at $60 per barrel, many E&P operators find themselves running through hedges in 2015 and still in need to finance their already reduced capital spending.

With Wall Street unwilling to lend anymore and prospects of fall credit line redeterminations looming, further reducing liquidity, it is likely small E&P operators will turn to either mature producing asset sales or, more likely, to undeveloped assets which require more capital spending. We are seeing this being factored into stock prices as we speak, as small cap E&P valuations have collapsed to 4-6 times the Enterprise Value/Earnings Before Interest, Taxes, Depreciation, and Amortization (EV/EBITDA) from 6-8X EV/EBITDA. This not only reflects solvency risk but also the natural course of bringing assets to a price more in line with their underlying sale value.

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Opinion: The Dark Side Of The Shale Bust

June 17, 2015

By Nick Cunningham of

The fallout of the collapse in oil prices has a lot of side effects apart from the decline of rig counts and oil flows. Oil production in North Dakota has exploded over the last five years, from negligible levels before 2010 to well over a million barrels per day, making North Dakota the second largest oil producing state in the country.

But the bust is leaving towns like Williston, North Dakota stretched extremely thin as it tries to deal with the aftermath. Williston is coping with $300 million in debt after having leveraged itself to buildup infrastructure to deal with the swelling of people and equipment heading for the oil patch. Roads, schools, housing, water-treatment plants and more all cost the city a lot of money, expected to be paid off with revenues from oil production that are suddenly not flowing into local and state coffers the way they once were.

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Opinion: Busting The “Canadian Bakken” Myth

June 12, 2015

by Andrew Topf of

The financial pages of Canadian newspapers have been full of headlines lately announcing the potential of two large shale oil fields in the Northwest Territories said to contain enough oil to rival the Bakken Formation of North Dakota and Montana.

The report by Canada’s National Energy Board (NEB) evaluated, for the first time, the volume of oil in place for the Canol and Bluefish shale formations, located in the territory’s Mackenzie Plain. It found the “thick and geographically extensive” Canol formation is expected to contain 145 billion barrels of oil, while the “much thinner” Bluefish shale contains 46 billion barrels.

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EPA draft assessment finds no widespread, systemic impacts to drinking water resources from fracking

June 05, 2015

The US Environmental Protection Agency (EPA) released a draft assessment on the potential impacts of hydraulic fracturing activities on drinking water resources in the United States. The assessment, done at the request of Congress, found that hydraulic fracturing activities in the US are carried out in a way that have not led to widespread, systemic impacts on drinking water resources.

The assessment followed the water used for hydraulic fracturing from water acquisition; chemical mixing at the well pad site; well injection of fracking fluids; the collection of hydraulic fracturing wastewater (including flowback and produced water); and wastewater treatment and disposal. The assessment also identified potential vulnerabilities in the water lifecycle—some of which are not unique to hydraulic fracturing—that could impact drinking water.

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Opinion: Are US Drillers Actually Making A Comeback?

May 20, 2015

by Nick Cunningham of>

Is US shale about to make a comeback? Oil prices have rebounded strongly since March. The benchmark WTI prices soared by more than 36 percent in two months, and Brent has jumped by more than 25 percent. There is a newfound bullishness in the oil markets—net long positions on Brent crude have hit multi-year highs in recent weeks on a belief that US supply is on its way down.

That was backed up by recent EIA data that predicts an 86,000 barrel-per-day contraction for June. The Eagle Ford (a loss of 47,000 barrels per day) and the Bakken (a loss of 31,000 barrels per day) are expected to lead the way in a downward adjustment.

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Canada targets cutting GHGs 30% below 2005 levels by 2030; new regulations for oil and gas, power, petrochemicals

May 15, 2015

Canada Environment Minister Leona Aglukkaq announced that Canada plans to reduce its greenhouse gas (GHG) emissions by 30% below 2005 levels by 2030. Canada formally submitted its target, referred to as an Intended Nationally Determined Contribution (INDC), to the United Nations Framework Convention on Climate Change. Canada will continue to take cooperative action with its continental trading partners, particularly the United States, in integrated sectors of the economy, including energy and transportation.

Minister Aglukkaq also announced the Government’s intention to develop new regulatory measures under its sector-by-sector approach that would build on actions already taken on two of Canada’s largest sector sources of GHG emissions: transportation and electricity. The new regulations include:

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Opinion: Saudi Arabia Continues To Turn Screws On US Shale

May 13, 2015

by James Stafford of

Saudi Arabia continues to ratchet up production, taking market share away from US shale producers. According to OPEC's latest monthly oil report, Saudi Arabia boosted its oil output to 10.31 million barrels per day in April, a slight increase over the previous month’s total of 10.29 million barrels. That was enough for the de facto OPEC leader to claim its highest oil production level in more than three decades.

Saudi Arabia has increased production by 700,000 barrels per day since the fourth quarter of 2014 in an effort maintain market share. The resulting crash in oil prices is forcing some production out of the market, and Saudi Arabia intends for the brunt of that to be borne by others.

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Opinion: Oil Price War May Benefit both US Shale and Saudi Arabia

April 24, 2015

by Michael McDonald on

Even as financial commentators on CNBC are starting to come around to the idea of a bottom in oil prices, the key question for US oil producers remains one of timing. How long will the oil price slump last? Is this a relatively short term event like 2008, or a longer term slump like the one in the mid 1980’s?

After the oil price crash in 1985, it took almost twenty years for prices to revert to previous levels. If oil does not return to $100 a barrel until 2035, there will be a lot less shale companies around. Some market commentators have cited hedging as a potential source of safety for oil producers, but the truth is that given most firms’ individual levels of hedging and the price of oil today, the hedges are more of a Band-Aid over a gunshot wound than anything else.

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The Game-Changing Water Revolution: Interview with Stanley Weiner

April 15, 2015

by James Stafford for

Globally, water demand is threatening to dangerously outpace supply, while in the US, dry states such as Texas and California are suffering from shortages and the future forebodes more suffering. For the North American shale boom, the lack of water is suffocating. Amid this doom and gloom, a water revolution is emerging, led by energy industry figures who realized the endless potential of tapping into new water sources and processing them with advanced desalination technology that, for the first time ever, is economically feasible.

The water revolution is here, according to Stanley Weiner, CEO of STW Resources-a Texas-based company that has the exclusive North American license for Dutch-developed next-generation Salttech desalination technology. [Earlier post.] In an interview with James Stafford, Weiner discusses:

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Dept. of Interior proposes more stringent regulations for offshore oil and gas well equipment

April 14, 2015

Five years after the Deepwater Horizon disaster, the Department of the Interior has proposed new regulations that include more stringent design requirements and operational procedures for critical well control equipment used in offshore oil and gas operations.

The measures in the proposed rule, which will be open for public comments, are designed to improve equipment reliability, and build upon enhanced industry standards for blowout preventers and blowout prevention technologies as a major focus. The rule also includes reforms in well design, well control, casing, cementing, real-time well monitoring and subsea containment.

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Opinion: How Much Longer Can OPEC Hold Out?

April 10, 2015

by Gaurav Agnihotri for

OPEC (Organization of the Petroleum Exporting Countries) has been the most talked about international organization among investors, analysts and international political lobbies in the last few months.

When OPEC speaks, the world listens in rapt attention as it accounts for nearly 40% of the world’s total crude output. With its headquarters in Vienna, Austria, one of the mandates of 12-member OPEC is to “ensure the stabilization of oil markets in order to secure an efficient, economic and regular supply of petroleum to consumers, a steady income to producers, and a fair return on capital for those investing in the petroleum industry.” (Source:

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Opinion: Can Argentina Capitalize On Its Vast Shale Reserves?

April 01, 2015

by Alexis Arthur for

Argentina, once a regional energy leader, is now better known for financial busts and bombastic politicians than hydrocarbons prospects. Still, with a resource potential both vast and untapped, the nation has never been far from energy investors’ minds. The question today is just how much Argentina is willing to change and how this plays into a low oil price environment that is already negatively impacting investment elsewhere.

Argentina’s deliberate efforts to appease some of its international creditors, combined with an overhaul of the nation’s hydrocarbons framework have the potential to lure foreign investors back. The promise of a change of government—and potentially a more market-friendly approach—later this year should add to the country’s appeal.

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Wall Street Losing Millions From Bad Energy Loans

March 24, 2015

by Nick Cunningham of

Oil companies continue to get burned by low oil prices, but the pain is bleeding over into the financial industry. Major banks are suffering huge losses from both directly backing some struggling oil companies, but also from buying high-yield debt that is now going sour.

The Wall Street Journal reported that tens of millions of dollars have gone up in smoke on loans made to the energy industry by Citigroup, Goldman Sachs, and UBS. Loans issued to oil and gas companies have looked increasingly unappetizing, making it difficult for the banks to sell them on the market.

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BLM issues final rule for fracking on public lands; new rule on deepsea blowout preventers coming

March 22, 2015

The US Department of the Interior Bureau of Land Management (BLM) has released final rule covering hydraulic fracturing on public and American Indian lands. As of 30 June 2014, there were approximately 47,000 active oil and gas leases on public lands, and approximately 95,000 oil and gas wells. Of wells currently being drilled, more than 90% use hydraulic fracturing. This final rule will supplement the existing requirements, which will remain in place. The rule applies only to development on public and tribal lands—which represent about 25% of US unconventional oil and gas—and includes a process so that states and tribes may request variances from provisions for which they have an equal or more protective regulation in place.

The Department will also propose a rule in the coming weeks that raises the bar on blowout preventers for offshore wells and well control measures based on technological progress advanced by industry, said Secretary of the Interior Sally Jewell during her remarks at the Center for Strategic and International Studies (CSIS) several days prior to the release of the fracking rule. Other reforms will also include important measures to target where oil and gas leasing occurs and protect sensitive areas that are too special to drill.

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Texas: From Shale Boom to Water Revolution

March 18, 2015

by James Stafford of

Texas is famous the world over for two things on a massive scale: oil and droughts. Now the slick but dry state is becoming famous for water: that precious element that both resolves the drought problem and also makes it possible to pump more oil out of the ground.

Not only does Texas have the Permian Basin and the Eagle Ford shale, but it also has the Gulf of Mexico and its massive oil deposits and endless gallons of seawater that are now economically treatable thanks to next generation water processing technology.

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Opinion: Consumers winning with low oil prices, for now

March 13, 2015

by Thomas Miller for

Lest we be too quick to forget whence we came, America is now 9-months into lower gasoline prices, which started their swoon the week of June 30, 2015 from a lofty national average just under $3.70, tumbling almost every subsequent week before bottoming and bouncing from $2.02 the end of January, according to

It is estimated that for every penny gas goes down, consumers collectively save $1 billion. Therefore, the 2014/2015 drop has accounted for at least $50 billion in your pocket and mine. Well, maybe a little less than that in each of our pockets, but the national average is about $500 bucks per family. The question begs then, has that money shown up in other parts of the economy?

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Opinion: Everyone Is Guessing When It Comes To Oil Prices

March 11, 2015

by Nick Cunningham of

Predicting and diagnosing the trajectory of oil prices has become something of a cottage industry in the past year. But along with all of the excess crude flowing from the oil patch, there is also an abundance of market indicators that while important, tend to produce a lot of noise that makes any accurate estimate nearly impossible.

First there is the oil price itself. The crash began last summer, and accelerated in November. Since then, predictions for oil prices for 2015 have been all over the map— from Citigroup’s $20 per barrel, to T. Boone Pickens’ prediction of a return to $100 per barrel. OPEC’s Secretary-General even said prices could shoot up to $200 in the coming years as a result of overly drastic cutbacks and a failure to invest in new production. With those estimates at the extremes, most analysts think prices will continue to seesaw within a rough band of $40 to $70 for the rest of the year. Still that is quite a large range, highlighting the fact that everyone is merely guessing.

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Opinion: Here’s what will send oil prices back up again

March 05, 2015

by Martin Tillier of

Oil’s rapid decline since August of last year has been dramatic. To listen to some commentators you would also think it is unprecedented and irreversible. Those claiming that oil will continue to fall from here and remain low for evermore, however, are flying in the face of both history and common sense. The question we should be asking ourselves is not if oil prices will recover, but when they will.

From June of 2014 until now, the price of a barrel of West Texas Intermediate (WTI) crude oil has fallen approximately 57 percent. As the chart below shows, there have been drops of a similar percentage five times in the last 30 years. The rate of recovery has been different each time, but recovery has come. In addition, since 1999 the chart shows a consistent pattern of higher lows. In other words, oil is a volatile market, but prices are in a long term upward trend.

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Opinion: Why oil prices must go up

February 19, 2015

by Nick Cunningham for

It may be difficult to look beyond the current pricing environment for oil, but the depletion of low-cost reserves and the increasing inability to find major new discoveries ensures a future of expensive oil.

While analyzing the short-term trajectory of oil prices is certainly important, it obscures the fact that over the long-term, oil exploration companies may struggle to bring new sources of supply online. Ed Crooks over at the FT persuasively summarizes the predicament. Crooks says that 2014 is shaping up to be the worst year in the last six decades in terms of new oil discoveries (based on preliminary data).

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Arctic oil on life support

February 03, 2015

by Nick Cunningham for

Oil companies have eyed the Arctic for years. With an estimated 90 billion barrels of oil lying north of the Arctic Circle, the circumpolar north is arguably the last corner of the globe that is still almost entirely unexplored.

As drilling technology advances, conventional oil reserves become harder to find, and climate change contributes to melting sea ice, the Arctic has moved up on the list of priorities in oil company board rooms. That had companies moving north: Royal Dutch Shell off the coast of Alaska; Statoil in the Norwegian Arctic; and ExxonMobil in conjunction with Russia’s Rosneft in the Russian far north.

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Chevron, BP and ConocoPhillips partner to explore 24 leases in Paleogene trend in deepwater Gulf of Mexico

January 29, 2015

Chevron Corporation’s subsidiary, Chevron USA will now work with BP Exploration and Production Inc. (BP) and ConocoPhillips Company (COP) to explore and to appraise jointly-held offshore leases in the emerging Paleogene trend in the deepwater Gulf of Mexico.

The transaction encompasses BP’s recent Tiber and Gila discoveries, and the Gibson exploratory prospect. Chevron has acquired an interest in Tiber and Gila from BP. Chevron, BP and ConocoPhillips already held interests in the Gibson prospect. The scope of the collaboration between Chevron, BP and ConocoPhillips includes further exploration and appraisal of these leases as well as evaluating the potential of a centralized production facility, which would provide improved capital efficiency, similar to Chevron’s Jack/St. Malo project.

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Obama Administration recommends designating most of Arctic National Wildlife Refuge as Wilderness

January 26, 2015

On Sunday, the US Fish and Wildlife Service (FWS) released its revised proposed comprehensive conservation plan and final environmental impact statement (EIS) for the 19.64-million acre Arctic National Wildlife Refuge.

The FWS’ preferred alternative recommends an additional 12.28 million acres—including the Coastal Plain—for designation as “Wilderness”. (“Wilderness” (with a capital “W”) refers to designated Wilderness areas, with accompanying restrictions.) The FWS also recommends four rivers—the Atigun, Hulahula, Kongakut, and Marsh Fork Canning—for inclusion into the National Wild and Scenic Rivers System. Currently, more than 7 million acres of the refuge are managed as Wilderness. However, more than 60% of the refuge—including the Coastal Plain—does not carry that designation. Implementation of the preferred alternative would change that.

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Rice, Minnesota scientists use predictive modeling to identify optimized zeolites to aid ethanol, petroleum production

January 23, 2015

Scientists at Rice University and the University of Minnesota have identified, through a large-scale, multi-step computational screening process, promising zeolite structures for two energy-related applications: the purification of ​ethanol from fermentation broths and the hydroisomerization of alkanes with 18–30 carbon atoms encountered in petroleum refining.

The results, presented in a paper published in Nature Communications, demonstrate that predictive modeling of synthetic zeolites—a technique pioneered by Rice bioengineer Michael Deem—and data-driven science can be applied to solve some of the most challenging problems facing industries that require efficient ways to separate or catalyze materials.

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Opinion: Crushing the US energy export dream

January 22, 2015

by Arthur E. Berman for

Exporting crude oil and natural gas from the United States are among the dumbest energy ideas of all time. Exporting gas is dumb. Exporting oil is dumber.

The US imports almost half of the crude oil that we use. We import 7.5 million barrels per day. The chart below shows the EIA prediction that production will slowly fall and imports will rise (AEO 2014) after 2016. This means that the US will never be self-sufficient in oil. Not even close.

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Oil price collapse hurting some more than others

January 21, 2015

by Nick Cunningham of

US oil and gas rig counts dropped to their lowest level in over four years, falling by an additional 74 units for the week ending on January 16. The lower count provides fresh evidence that low oil prices are forcing drillers to pare back operations and slash spending.

While that may soon begin to cut into actual production figures, a new Wood Mackenzie report finds a lot of nuance in the oil patch, painting a complex picture of what to expect in 2015. The report identifies several trends beyond the simple narrative that low prices will force a cutback in drilling.

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Oil price tumbles after OPEC releases 2015 forecast

December 11, 2014

by Andy Tully of

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

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

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

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

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 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

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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