Home » Posts tagged 'fracking' (Page 14)
Tag Archives: fracking
Why The Oil Price Collapse Is U.S. Shale’s Fault
Why The Oil Price Collapse Is U.S. Shale’s Fault
The present oil price collapse is because of over-production of expensive tight oil. The collapse occurred because of the inability of the world market to support the cost of the new expensive oil supply from shale, oil sands and deep water. Demand was progressively destroyed during the longest period of sustained high oil prices in history from 2010 through 2014.
Since the early 2000s, the price of oil was largely insensitive to the fundamentals of supply and demand as long as prices were less than about $90 per barrel. The chart below shows world liquids supply minus demand (relative supply surplus or deficit), and WTI oil price.
Figure 1. World liquids relative surplus or deficit (production minus consumption) and WTI crude oil price adjusted using the consumer price index (CPI) to real February 2015 U.S. dollars, 2003-2015. Source: EIA, U.S. Bureau of Labor Statistics, and Labyrinth Consulting Services, Inc.
(click to enlarge image)
In mid-2004 and mid-2005, the relative supply surplus was much greater than it has been during the 2014-2015 price collapse yet prices continued to rise. When oil traders perceive supply limits and rising prices, price below some critical threshold is not an issue. They are willing to carry the cost of storage and interest to hold the commodity in the future when it will be more valuable.
Related: Finally Some Good News For Oil Prices
In 2004, the relative supply surplus reached 1.9 million barrels per day and in 2005, it reached 4.1 million barrels per day. By contrast, the greatest supply surplus in the current oil price collapse was 1.7 million barrels per day in January 2015.
…click on the above link to read the rest of the article…
Who’s To Blame For The Oil Price Crash?
Who’s To Blame For The Oil Price Crash?
When we think of the recent drop in oil prices, the question is not only who started it, but who’s responsible for keeping the prices falling.
Probably no one would dispute that the price plunge began with the eager and copious production of oil from shale formations in the United States. From the American perspective, that was beneficial because it was bringing energy self-sufficiency to a country with the reputation as the world’s largest importer of oil.
Despite unproven concerns about hydraulic fracturing, or fracking, a common way to extract oil and gas from underground shale rock, the practice has proven extremely productive. And that’s the source of the oil glut that began driving down prices in late June 2014.
Related: Oil Rebound May Come Sooner Than Expected
Even one of fracking’s biggest supporters, legendary oil man T. Boone Pickens, blames the US shale boom for triggering the price slough that’s been hammering the energy industry. He’s doesn’t subscribe to the environmental concerns about fracking, but he says he can also recognize when his industry has latched on to too much of a good thing.
“I’ve fracked over a thousand wells,” Pickens, the chairman of BP Capital Management, said March 23 at a panel discussion in Monterey Calif. “I’ve never had a failure on one of them. … Texas, Oklahoma lead in fracking wells and it has been a great success for both those states.”
Yet Pickens thinks it’s time for US companies to take a break from their frantic production to allow oil prices to achieve some balance. In an interview with theFinancial Times published March 18, he said shale companies have “overproduced,” and that it’s up to them to rein in output to help restore oil prices to a more profitable level.
…click on the above link to read the rest of the article…
Health professionals call: ban fracking for five years
Health professionals call: ban fracking for five years
Medact, the organization of health professionals for a safer, fairer and better world, has called for a five year moratorium on fracking due to its serious hazards to public health, writes Paul Mobbs. Their new report is a powerful challenge to government policy that cannot be ignored.
The arguments against fracking on public health and ecological grounds are overwhelming. There are clear grounds for adopting the precautionary principle and prohibiting fracking.
Medact, the UK-based public health group concerned with the social and ecological determinants of health, have published their long-awaited report on the impacts of fracking upon public health.
First announced last year, following Public Health England’squestionable reportinto the impacts of shale gas, Medact’s review considers a number of existing reviews of the evidence of ‘fracking’ on public health.
Given the likely public health consequences of climate change, it also examines claim that shale gas might aid the transition towards a low carbon energy system.
The conclusion of the report, which is likely tobeget further vitriol from the UK’s pro-fracking lobby, is clear:
“On the basis of our existing knowledge, it would be both prudent and responsible to call for, at the very least, a five year moratorium on all activities related to shale gas development … “
Unlike ‘official’ bodies, Medact actually reviewed the evidence
The report reviews a number of existing studies from public health agencies, as well as a wide range of journal papers. For example:
…click on the above link to read the rest of the article…
Fracking Has No Business in Lancashire – Local Firms Protest
Fracking Has No Business in Lancashire – Local Firms Protest
Local small businesses seem to be throwing their weight behind the anti-fracking movement rather than the pro-fracking business lobby in Lancashire, finds Ben Lucas, MA Investigative Journalist student at City University.
There are currently more businesses in Lancashire that oppose rather than support fracking, according to available data.
The industry-funded North West Energy Task Force lists 349 businesses that support fracking in the area. But as Greenpeace revealed this week, only 149 businesses, or less than half listed (43 percent), are actually from Lancashire.
The North West Energy Task Force is a pro-fracking lobby group set up and largely financed by energy companies Cuadrilla and Centrica.
Notable supporters from outside the county include Derbyshire firm PR Marriot Drilling Group and a Liverpool-based events company, both of which have had contracts with Cuadrilla in the past.
Local Businesses
However, at the end of January this year, more than 200 businesses from Lancashire signed aletter asking the County Council to reject fracking.
Upon inspection, the letter, drafted by Frack Free Lancashire, shows that there are currently 203 businesses that reject fracking in Lancashire – over 50 more than those in favour of onshore shale oil and gas. This is excluding the signatures of many residents’ associations and the three trade union councils of North East Lancashire, Preston and South Ribble, and Blackburn.
…click on the above link to read the rest of the article…
Germany’s Merkel Comes Out as Basically a U.S. Agent
Germany’s Merkel Comes Out as Basically a U.S. Agent
On Wednesday, April 1st, German Chancellor Angela Merkel’s cabinet approved a measure to bring fracking (the patents for which are owned mainly by “large American companies, including Halliburton, Baker Hughes and Schlumberger”) into Germany. This is a prelude not only to U.S. President Obama’s secret Trans-Atlantic Trade & Investment Partnership (TTIP) pact with Europe to subordinate national laws and regulations to trans-national mega-corporate panels that will be dominated by U.S. firms and that will override the participating nations’ environmental and labor regulations and consumer protections (and harm European economies generally), but it is also a major step toward removing Europe from Russia’s energy-market, and bringing U.S. and European oil companies to dominate there instead.
German Economic News headlined on April 1st, “Precursor to TTIP: Federal Government brings Fracking to Germany,” and reported that:
The controversial shale gas extraction (fracking) process is coming to Germany: In order not to provoke excessively large protests at home, the federal government highlighted that fracking is initially allowed only for testing purposes. But in fact, the draft law of the Federal Environment and the Federal Ministry of Economics, approved today by the the Cabinet, also allows subsequent large-scale extraction of shale gas….
The American interest in a continuing conflict simmering in Ukraine also causes Europeans to fear that Russian gas could stop and thus drive Europe to give up our still considerable resistance against fracking. Some US politicians have personal interests, such as the US Vice President Biden, whose son works for a Ukrainian fracking company.
…click on the above link to read the rest of the article…
Calls For Immediate Shutdown Of Illegal California Injection Wells As Regulators Host ‘Aquifer Exemption Workshop’
Calls For Immediate Shutdown Of Illegal California Injection Wells As Regulators Host ‘Aquifer Exemption Workshop’
While California legislators are calling for immediate closure of the thousands of injection wells illegally dumping oil industry wastewater and enhanced oil recovery fluids into protected groundwater aquifers, regulators with the state’s Division of Oil, Gas and Geothermal Resources (DOGGR) were holding an “Aquifer Exemption Workshop” in Long Beach on Tuesday.
Just 23 out of the 2,500 wells DOGGR officials have acknowledged the agency improperly permitted to operate in aquifers that contain potentially drinkable water have so far been closed down — 11 were closed downlast July and 12 more were shut down earlier this month.
Given the urgency of the situation, it certainly does not look good that DOGGR made time to hold a workshop to outline “the data requirements and process for requesting an aquifer exemption under the Safe Drinking Water Act,” when it has given itself a two-year deadline to investigate the thousands more wells illegally operating in groundwater aquifers that should have been protected under the federal Safe Drinking Water Act all along.
Last Friday, state legislators sent Governor Jerry Brown a letter calling for the immediate closure of the wells, writing that “the decision to allow thousands of injection wells to continue pumping potentially hazardous fluids into protected aquifers is reckless.”
…click on the above link to read the rest of the article…
Goldilocks Is Dead
Goldilocks Is Dead
Five years ago I wrote an article for Reuters titled “Goldilocks and the Three Fuels.” In it, I discussed what I call the Goldilocks price zone for oil, natural gas, and coal, a zone in which prices are “just right”—high enough to reward producers but low enough to entice consumers. Ever since the start of the fossil fuel era, such a zone has existed. Sometimes price boundaries were transgressed on the upside, sometimes the downside, but it was always possible to revert to the zone.
But now, for oil, the Goldilocks zone has ceased to exist. This will have staggering consequences throughout the economy for the foreseeable future.
During the past dozen years, the Goldilocks zone for oil steadily migrated higher. As conventional crude reservoirs depleted and production rates leveled off, drillers had to spend proportionally more to develop the capacity to pump the next marginal barrel. Oil prices soared from $30 in 2003 to nearly $150 in 2008, collapsed during the economic crisis, then clawed their way back to roughly $100—a price that was maintained through mid-2014. But the economy did not do well with oil prices at elevated levels. Despite massive bailouts, stimulus spending, and low interest rates, the recovery following the 2008 crash was anemic.
However, at $100 a barrel, the oil price was high enough to incentivize fracking. Small, risk-friendly companies leased land and used expensive drilling techniques to free oil from rocks that geologists had previously described as too impermeable to bother with. This entailed a tenuous business model that required not only high oil prices but easy money as well, as low interest rates enabled producers to pile on enormous amounts of debt.
…click on the above link to read the rest of the article…
No Surprises: Obama’s Fracking Rules Upset Everyone
No Surprises: Obama’s Fracking Rules Upset Everyone
The Obama administration’s new rules on hydraulic fracturing, or fracking, are being denounced by the energy industry as impeding a US oil renaissance and by environmental groups who call them too weak to be effective.
The Interior Department and the Bureau of Land Management (BLM) drew up the rules for the technology used in extracting oil and gas from underground shale formations. Interior argues that they’re years overdue, and that they can be a guide for many states working to develop their own rules for the practice.
Fracking’s advantage is that it provides drillers with a new way to extract oil and gas that was previously inaccessible because it was locked deep underground in shale. It’s more expensive than conventional drilling, requiring injections of water mixed with chemicals to break up the rock.
Related: Three Reasons Why US Shale Isn’t Going Anywhere
Fracking could help the United States become the world’s largest producer of oil and gas, but it has also raised concerns that the chemicals – each drilling company has its own secret mix – could poison nearby groundwater supplies for both people and wildlife. As a result, states are struggling to develop their own rules to cover private and state-owned land, where most fracking is practiced.
The new federal rules will formally cover only federally owned land, where only about 10 percent of fracking occurs in the United States, according to the Interior Department. But it says it can help states address their own approach to fracking rules.
…click on the above link to read the rest of the article…
US Could Slash Global Warming Emissions By Curbing Fossil Fuels Extraction On Public Lands
US Could Slash Global Warming Emissions By Curbing Fossil Fuels Extraction On Public Lands
The U.S. Department of the Interior this week announced new fracking regulationsthat will serve as the only federal rules enforcing any kind of safety measures on the controversial drilling technique when they go into effect in a few months.
The rules only apply to oil and gas wells on public lands, however, and most fracking is done on private or state-owned land. The Obama Administration says it is hoping to set an example for states to follow when setting their own fracking standards, but if that’s the case, the federal government actually has plenty of opportunity to lead by example when it comes to reining in carbon emissions from fossil fuel development.
According to a new report by the Center for American Progress and The Wilderness Society, there is “a blind spot in U.S. efforts to address climate change.” Fossil fuel extraction on public lands, the source of almost 30% of U.S. energy production, is responsible for more than a fifth of total U.S. greenhouse gas emissions, the carbon equivalent of having 280 million more cars on the road. But the DOI “has no comprehensive plan to measure, monitor, and reduce the total volume of GHGemissions that result from the leasing and development of federal energy resources.”
…click on the above link to read the rest of the article…
Global Shale Revolution On Hold
Global Shale Revolution On Hold
Along with the rest of the energy world, we have been closely tracking rig counts (now down 40 percent from last fall) and other data to try to determine where the oil markets are heading. This week, the Energy Information Administration reported that production is finally set to decline in several key U.S. shale regions; a long-awaited development. The Eagle Ford, Bakken, and Niobrara shales are expected to see a combined 24,023 barrel-per-day decline in production in April, the first significant dip in output since oil prices collapsed last year. The monthly data may be a bit obscured by the fact that the Permian basin is expected to see production increases of 21,254 barrels per day. Overall, total U.S. production may stay flat. There is still a great deal of uncertainty about the next few months, but with declines beginning in the Eagle Ford and Bakken especially – two critical regions that drove the U.S. shale revolution – there appears to be light at the end of the tunnel for the oil glut.
The Federal Reserve caused a bit of a ripple in the oil markets this week when it appeared to slightly slow plans to raise interest rates later this year. The Fedlowered its estimate for the federal funds rate this year and next, an indication that it will not let its foot off of the gas pedal in terms of loose money. With low inflation and still room for labor markets to heal, the Fed sees no reason to pull back too quickly. Loose monetary conditions push up oil prices, so WTI and Brent rallied a bit this week on the news (after falling significantly). WTI closed out the week around $45 and Brent at $55 per barrel.
…click on the above link to read the rest of the article…
‘Frackademia’ Report Reveals Ties Between Government, Universities, and Shale Industry
‘Frackademia’ Report Reveals Ties Between Government, Universities, and Shale Industry
While the government has decided to provide tax breaks for the oil industry in the 2015 Government Budget, everyone else has been talking about divestment. Ben Lucas looks at the growing movement and new evidence published this week on the relationship between government, universities and fracking companies.
What started out as a grassroots campaigning tactic to lobby big institutions to stop backing non-renewable energy production, has this week gained large-scale mainstream support.
The Guardian’s “keep it in the ground” has now gathered a petition with over 60,000 signatures to ask the world’s largest charitable foundations to divest their endowments from fossil fuels. The UN has also come out in open support for the increasingly global movement.
And this week a report published by TalkFracking, a campaign group supported by Vivienne Westwood, on ‘Frackademia’ seeks to raise awareness about the influence of the fracking industry in university research departments.
A ‘Positive View of Fracking’
The investigation, carried out by Paul Mobbs, an environmental researcher, investigated the relationship between the fracking industry and academia. But it findings have done more than that, unravelling the extensive relationship and networks that exist between universities, the government, and the oil and gas industry.
The report contains a Freedom of Information (FOI) request that reveals how oil and gas companies were targeting scientists to provide a more positive view of fracking.
…click on the above link to read the rest of the article…
Investors Crushed as US Natural Gas Drillers Blow Up
Investors Crushed as US Natural Gas Drillers Blow Up
The Fed speaks, the dollar crashes. The dollar was ripe. The entire world had been bullish on it. Down nearly 3% against the euro, before recovering some. The biggest drop since March 2009. Everything else jumped. Stocks, Treasuries, gold, even oil.
West Texas Intermediate had been experiencing its biggest weekly plunge since January, trading at just above $42 a barrel, a new low in the current oil bust. When the Fed released its magic words, WTI soared to $45.34 a barrel before re-sagging some. Even natural gas rose 1.8%. Energy related bonds had been drowning in red ink; they too rose when oil roared higher. It was one heck of a party.
But it was too late for some players mired in the oil and gas bust where the series of Chapter 11 bankruptcy filings continues. Next in line was Quicksilver Resources.
It had focused on producing natural gas. Natural gas was where the fracking boom got started. Fracking has a special characteristic. After a well is fracked, it produces a terrific surge of hydrocarbons during first few months, and particularly on the first day. Many drillers used the first-day production numbers, which some of them enhanced in various ways, in their investor materials. Investors drooled and threw more money at these companies that then drilled this money into the ground.
…click on the above link to read the rest of the article…
The US Oil Bust Just Got Worse
The US Oil Bust Just Got Worse
The price of Oil did today what it has been doing for a while: it waits for a trigger and plunges. As I’m writing this, West Texas Intermediate is down 4.4%, trading at $44.99 a barrel, less than a measly buck away from this oil bust’s January low. It’s down over 20% from the peak of the most recent sucker rally.
US oil drillers have been responding by slashing capital expenditures, including drilling, in a deceptively brutal manner. In the latest week, drillers idled 56 rigs that were classified as drilling for oil, according to Baker Hughes. Only 866 rigs were still active, down 46.2% from October, when they’d peaked at 1,609. In the 22 weeks since, drillers have taken out 743 rigs, the most dizzying cliff dive in the data series, and probably in history:
You’d think this sort of plunge in drilling activity would curtail production. Eventually it might. But for now, the industry has focused on efficiencies, improved drilling technologies, and the most productive plays. Drillers are trying to raise production but with less money so that they can meet their debt payments. Thousands of wells have been drilled recently but haven’t been completed and aren’t yet producing. This is the “fracklog,” a phenomenon that has been dogging natural gas for years.
…click on the above link to read the rest of the article…
Fracking Firm IGas Refuses Further Investigation into Possible Site Contamination
Fracking Firm IGas Refuses Further Investigation into Possible Site Contamination
An environmental expert has been stopped by fracking firm IGas and landowners Peel Holdings from further investigating possible chemical contamination at the company’s Barton Moss drilling plant, the Manchester Magistrates Court heard recently.
Dr Aiden Foley of EGG Consultants presented a report to the court showing “dangerously high” levels of contamination near the perimeter fence of the test drilling site in Eccles, Salford.
However, even though Foley’s report claims that the pollution was unlikely to have come from the drilling process and was probably from the equipment involved, he remains unable to obtain further evidence for his investigation.
Regardless of the pollutant’s origins, it is important that access is granted, as the contamination could spread to the wider local environment, the judge heard on 6 March.
Difficult Dilemma
But in an interesting turn of fate, IGas’s ban on entering the site could also result in many anti-fracking activists having cases against them dropped.
Foley was commissioned by Robert Lizar Solicitors to carry out his investigation in a wider effort to help defend some 60 anti-fracking protesters they are representing.
If Foley continues to be blocked from the site, the lawyer representing the protesters charged with aggravated trespass, argues that their cases should be thrown out as they would not be getting a fair trial.
…click on the above link to read the rest of the article…
Greenpeace Calls on Information Commissioner to Repair ‘Transparency Travesty’ and Publish Full Fracking Report
Greenpeace Calls on Information Commissioner to Repair ‘Transparency Travesty’ and Publish Full Fracking Report
Greenpeace has appealed to the UK’s transparency watchdog over the government’s repeated refusal to publish an unredacted version of its Shale Gas Rural Economy Impacts report.
The environmental NGO has asked the Information Commissioner’s Office to force the Department for Environment, Food and Rural Affairs (Defra) to release the report in full.
An unredacted version should be released before Lancashire authorities vote on whether or not to grant fracking firm Cuadrilla planning permission for two sites in the area, argues Greenpeace.
Greenpeace says councillors should have access to all the available evidence when making a decision “which is likely to have significant repercussions for communities in Lancashire and beyond.” The appeal follows similar calls from Lancashire County Council, which voted unanimously for Defra to publish a full version of the report.
Government Cherry-Picking
Louise Hutchins, a Greenpeace UK energy campaigner, said: “Authorities in Lancashire and elsewhere in the country are about to make crucial decisions on whether to allow this controversial industry in their area. They should be given access to all the available evidence, not have it cherry-picked for them by the government.”
…click on the above link to read the rest of the article…
