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Has California’s Fracking Boom Already Gone Bust?
Has California’s Fracking Boom Already Gone Bust?
We accelerate down the runway — a tiny asphalt strip next to Taft Skydiving. Our little Piper Cherokee lifts off and as we ascend, I peer out the window.
Below us is California’s Kern County and more than a century of oil exploration — from the gushers of the 1800s to today’s less robust reality. It’s a spider web of dirt roads, drilling rigs, pump jacks, pipes and boilers.
At least I’m pretty sure that’s what’s below us. The air quality is so bad that the San Joaquin Valley we’re flying over looks like the blurred work of an impressionist painter. Our view is smudged by stubborn smog that’s refused to budge for days.
It’s a perfect metaphor for trying to understand the future of oil and gas production in California, which is why we’ve taken flight in the first place.
For years, the biggest talk in California’s energy industry has been about hydraulic fracturing (or fracking) and whether or not the method of pumping sand, chemicals and water at very high pressure to release trapped hydrocarbons will kick off a boom comparable to surging North Dakota.
There was a time, just a few years ago, that most news reports deemed a shale oil boom inevitable in California. But now, it’s not looking like such a sure thing after all.
…click on the above link to read the rest of the article…
More California Oil Industry Wastewater Injection Wells Shut Down Over Fears Of Groundwater Contamination
More California Oil Industry Wastewater Injection Wells Shut Down Over Fears Of Groundwater Contamination
The latest in the ongoing investigation into California regulators’ failure to protect residents from toxic oil industry waste streams has led to the closure of 12 more underground injection wells. The 12 wells that were shut downthis week are all in the Central Valley region, ground zero for oil production in the state.
California has roughly 50,000 underground injection wells. State officials are investigating just over 2,500 of them to determine whether or not they are injecting toxic chemical-laden oil industry wastewater into aquifers containing usable water (or at least potentially usable water) that should have been protected under the Safe Drinking Water Act.
A coalition of environmental, health and public advocacy groups filed a legal petition with Governor Jerry Brown last week in an attempt to force an emergency moratorium on fracking after it was discovered that flowback, a fluid that rises to the top of a fracked well, contains alarmingly high levels of toxic and carcinogenic chemicals.
Fracking flowback is an increasingly prevalent component of the oil industry wastewater that is being injected into the state’s aquifers, as fracking is now used in up to half of all new wells drilled in California.
Prompted by an inquiry by the federal Environmental Protection Agency in 2011, state officials shut down 11 wastewater injection wells last year over similar concerns that they were polluting badly needed sources of water in a time of prolonged drought. It was later confirmed that 9 of those wells were in fact pumping wastewater into protected aquifers—some 3 billion gallons of wastewater, by one estimate.
…click on the above link to read the rest of the article…
This Chart Shows the True Collapse of Fracking in the US
This Chart Shows the True Collapse of Fracking in the US
“People need to kinda settle in for a while.” That’s what Exxon Mobil CEO Rex Tillersonsaid about the low price of oil at the company’s investor conference. “I see a lot of supply out there.”
So Exxon is going to do its darnedest to add to this supply: 16 new production projects will start pumping oil and gas through 2017. Production will rise from 4 million barrels per day to 4.3 million. But it will spend less money to get there, largely because suppliers have had to cut their prices.
That’s the global oil story. In the US, a similar scenario is playing out. Drillers are laying some people off, not massive numbers yet. Like Exxon, they’re shoving big price cuts down the throats of their suppliers. They’re cutting back on drilling by idling the least efficient rigs in the least productive plays – and they’re not kidding about that.
In the latest week, they idled a 64 rigs drilling for oil, according to Baker Hughes, which publishes the data every Friday. Only 922 rigs were still active, down 42.7% from October, when they’d peaked. Within 21 weeks, they’ve taken out 687 rigs, the most terrific, vertigo-inducing oil-rig nose dive in the data series, and possibly in history:
As Exxon and other drillers are overeager to explain: just because we’re cutting capex, and just because the rig count plunges, doesn’t mean our production is going down. And it may not for a long time. Drillers, loaded up with debt, must have the cash flow from production to survive.
…click on the above link to read the rest of the article…
Peak Meaninglessness
Peak Meaninglessness
Last week’s discussion of externalities—costs of doing business that get dumped onto the economy, the community, or the environment, so that those doing the dumping can make a bigger profit—is, I’m glad to say, not the first time this issue has been raised recently. The long silence that closed around such things three decades ago is finally cracking; they’re being mentioned again, and not just by archdruids. One of my readers—tip of the archdruidical hat to Jay McInerney—noted an article in Grist a while back that pointed out the awkward fact that none of the twenty biggest industries in today’s world could break even, much less make a profit, if they had to pay for the damage they do to the environment.
Now of course the conventional wisdom these days interprets that statement to mean that it’s unfair to make those industries pay for the costs they impose on the rest of us—after all, they have a God-given right to profit at everyone else’s expense, right? That’s certainly the attitude of fracking firms in North Dakota, who recently proposed that they ought to be exempted from the state’s rules on dumping radioactive waste, because following the rules would cost them too much money. That the costs externalized by the fracking industry will sooner or later be paid by others, as radionuclides in fracking waste work their way up the food chain and start producing cancer clusters, is of course not something anyone in the industry or the media is interested in discussing.
…click on the above link to read the rest of the article…
Internal Documents Reveal Extensive Industry Influence Over EPA’s National Fracking Study
Internal Documents Reveal Extensive Industry Influence Over EPA’s National Fracking Study
In 2010, the Environmental Protection Agency (EPA) launched an ambitious and highly consequential study of the risks that hydraulic fracturing, or fracking, poses to American drinking water supplies.
“This is about using the best possible science to do what the American people expect the EPA to do – ensure that the health of their communities and families are protected,” Paul Anastas, Assistant Administrator for the agency’s Office of Research and Development, said in 2011.
But the EPA‘s study has been largely shaped and re-shaped by the very industry it is supposed to investigate, as energy company officials were allowed to edit planning documents, insisted on vetting agency contractors, and demanded to review federal scientist’s field notes, photographs and laboratory results prior to publication, according to a review by DeSmog of over 3,000 pages of previously undisclosed emails, confidential draft study plans and other internal documentsobtained through open records requests.
Company officials imposed demands so infeasible that the EPA ultimately dropped a key goal of the research, their plans to measure pollution levels before and after fracking at two new well sites, the documents show.
…click on the above link to read the rest of the article…
The Fracking Bust Exacts its Pound of Flesh
The Fracking Bust Exacts its Pound of Flesh
Breath-taking booms and obliterating busts have made the oil and gas business. Booms draw money, which begets more money, which allows for technologies to be invented or perfected, and it builds enthusiasm that turns into blind faith among investors, and they throw more money at it. The money gets drilled into the ground. The debt remains on the balance sheet. Production soars. Demand doesn’t keep up. Storage levels rise. The price begins to plunge. And all heck breaks loose.
The fracking bust didn’t start last summer when the price of oil began to skid. It started in October and has progressed with phenomenal rapidity. In the latest week, according to Baker Hughes, which publishes the data every Friday, drillers idled an additional 33 oil rigs. Only 986 rigs were still active, down 38.7% from October, when they’d peaked at 1,609. In a period of 20 weeks, drillers have cut the number of rigs drilling for oil by 623, the steepest, deepest rig-count nose dive in the data series:
The result should be lower oil production.
…click on the above link to read the rest of the article…
Bakken Decline Rates Worrying For Drillers
Bakken Decline Rates Worrying For Drillers
I have been supplied an Excel spreadsheet of all North Dakota wells back to 2006, thanks to Enno Peters and Dennis Coyne. I only used the data back to 2007 however. This is a wealth of information if we want to know how many wells came on line in a given month, we simply count them. We are given the monthly production data for each month. And since we have the monthly production data we can very easily figure the decline rate of each well, or any group of wells for any month or year.
A note on the data. The first month’s data was almost always for a partial month. Sometimes the well came on line near the first of the month and sometimes near the end of the month. To get around this problem I have started with the second month, which is the first full month, and used that month as the first month of all my data. All data and charts below include all North Dakota wells, not just the Bakken.
Production per well has gradually increased each year. 2014 was the highest first month production but also the highest decline rate. Note that on the first month 2014 production is 29 barrels per day above 2013 1st month and 131 barrels per day above 2008 1st month. But the 2014 10th month was 7 bpd below the 2013 10th month. And by the 2013 only 7 barrels per day separated the 2008 data and the 2013 data.
…click on the above link to read the rest of the article…
David Cameron’s New Definition of Fracking ‘Political Not Scientific’
David Cameron’s New Definition of Fracking ‘Political Not Scientific’
Last week, DeSmog UK revealed how David Cameron’s government snuck a new definition of fracking onto the statute books. Kyla Mandel investigates where this definition actually came from.
The definition of hydraulic fracturing adopted by theUK coalition government has all the hallmarks of industry influence, finds DeSmog UK.
The fracking definition was slipped into thecontroversial Infrastructure Act without a chance forMPs to vote on it. And it is almost identical to thatrecommended by the European Commission in January 2014.
However, both of these definitions are based solely on the volume of fluid used during fracking and are closely aligned with the shale gas industry’s specific definition of hydraulic fracturing.
‘Political Definition’
Antoine Simon, extractive industries campaigner at Friends of the Earth Europe, said: “Long story short, this is a political definition of fracking, but surely not a scientific one.”
According to the EU Recommendation ‘high-volume hydraulic fracturing’ means: “injecting 1,000 m3 or more of water per fracturing stage or 10,000 m3 or more of water during the entire fracturing process into a well.”
…click on the above link to read the rest of the article…
As Oil Prices Collapse, North Dakota Considers Weakening Standards on Radioactive Drilling Waste
As Oil Prices Collapse, North Dakota Considers Weakening Standards on Radioactive Drilling Waste
As the collapse of oil prices threatens North Dakota’s shale drilling rush, state regulators are considering a move they say could save the oil industry millions of dollars: weakening the state’s laws on disposing of radioactive waste.
The move has been the subject of an intensive lobbying effort by drillers, who produce up to 75 tons per day of waste currently considered too hazardous to dispose of in the state.
For every truckload of that waste, drillers could save at least $10,000 in hauling costs, they argue. State regulators calculate that by raising the radioactive waste threshold ten-fold, the industry would shave off roughly $120 million in costs per year.
But many who live in the area say they fear the long-term consequences of loosened disposal rules combined with the state’s poor track record on preventing illegal dumping.
“We don’t want to have when this oil and coal is gone, to be nothing left here, a wasteland, and I’m afraid that’s what might happen,” farmer Gene Wirtz of Underwood, ND told KNX News, a local TV station. “Any amount of radiation beyond what you’re already getting is not a good thing.”
Environmental groups have also objected that the rule change would put private companies’ profits before public health.
…click on the above link to read the rest of the article…
Will US Shale Boom Continue Or Have A Hiatus?
Will US Shale Boom Continue Or Have A Hiatus?
The conventional wisdom recently has been that North America will keep producing shale oil for some time despite the higher costs associated with hydraulic fracturing and the 50 percent drop in oil prices over the past eight months.
The thing about conventional wisdom is that it tends to be challenged, sometimes successfully. And shale’s biggest producer in the United States, EOG Resources Inc., is saying the recent rapid growth in its own shale production will end this year. And this idea is supported by people with experience in oil.
Certainly, though, the logic behind the theory of continued shale production is solid: Oil prices will bottom out, then begin to rise to the point where crude from shale becomes profitable again despite the cost of fracking. The only question is whether OPEC would then accept US shale as a competitor and cut its own production to shore up prices.
Related: Is Oil Returning To $100 Or Dropping To $10?
A forecast issued Feb. 17 by BP was more specific. The BP Energy Outlook 2035expects US production will grow rapidly for the immediate future, then “flatten out.” Or, as BP’s chief economist, Spencer Dale, told The Wall Street Journal, “U.S. [shale] oil can’t continue to grow rapidly forever.” And OPEC will be ready to fill that vacuum.
…click on the above link to read the rest of the article…
Quakes in Gas Fields Ignored for Years, Dutch Agency Finds
Quakes in Gas Fields Ignored for Years, Dutch Agency Finds
Safety board’s report a relevant read for any fracking zone.
A report from the Dutch Safety Board has accused the oil and gas industry and Netherlands Ministry of Economic Affairs of willfully downplaying the risk of earthquakes caused by the rapid depletion of Europe’s largest gas field.
The board’s conclusions offer lessons for other regions coping with earthquakes caused by fluid injection and hydraulic fracturing.
Ever since the shale gas industry changed the seismic record of states and provinces like Oklahoma, Texas, Kansas and British Columbia, many industry lobbyists and regulators have been quick to deny and dismiss citizen’s concerns about the seismic hazards.
The Groningen field, which lies under a 900 square-kilometre area in the northern part of the Netherlands, has been drained by a consortium — Nederlandse Aardolie Maatschappij, or NAM — jointly owned by Exxon Mobil and Royal Dutch Shell since the 1960s.
The Dutch government, a minor petrostate, is highly dependent on revenues from gas extraction, pulling in an average of 12 billion Euros or US$16.3 billion a year.
According to anti-drilling group De Groniger Doem Beweging (The Groningen Ground Movement), approximately 60 per cent of the 60,000 homeowners in the Groningen region have recorded earthquake damage to their homes over the last decade. Many homes now remain unsellable in the industry-made earthquake zone.
…click on the above link to read the rest of the article…
Fracking Bust Deepens, Sets Records
Fracking Bust Deepens, Sets Records
The fracking bust that is following the phenomenal fracking boom is deepening relentlessly, week after week, and there is still no respite in sight.
Drilling activity peaked in October last year, when 1,606 rigs were drilling for oil, with a four-month lag behind oil prices. But by October it was clear that the oil-price plunge wasn’t a blip, and in November oil fell off the chart. It was then that the industry reacted with vertigo-inducing rapidity. And the number of rigs drilling for oil, which Baker Hughes publishes every Friday, began to plummet.
In the latest reporting week reported Friday, drillers idled an additional 34 oil rigs. Now only 1,019 rigs are still drilling for oil, down 590 rigs from the October peak, a 37% plunge in 19 weeks. The steepest rig-count plunge in the data series.
But drillers have to service their mountain of debt with which the fracking boom was funded. They can’t afford to cut production. To stay alive, they cut operating cost and capital expenditures, and they’re laying people off. But they focus their remaining resources on the most productive plays, using the most efficient technologies, with a single-minded focus on raising production while spending less.
The hope is that this strategy will get them through the oil bust if it doesn’t last too long. But because everyone is thinking in those terms, US production overall continues to rise – it averaged an estimated 9.2 million barrels per day in January.
…click on the above link to read the rest of the article…
USGS Confirms Oklahoma Quakes Are Due To Fracking
USGS Confirms Oklahoma Quakes Are Due To Fracking
The debate about the cause of the exponential rise in the frequency of earthquakes in Oklahoma has really heated up in the last year, but as KFOR4 reports, The United States Geological Survey (USGS) appears to have put any doubt firmly to rest. In a strongly-worded press release, the USGS states, “…Large areas of the United States that used to experience few or no earthquakes have, in recent years, experienced a remarkable increase in earthquake activity.. This rise in seismic activity, especially in the central United States, is not the result of natural processes... Instead, the increased seismicity is due to fluid injection associated with new technologies that enable the extraction of oil and gas from previously unproductive reservoirs.” For some, that could end the debate; but Kim Hatfield, with the Oklahoma Independent Petroleum Association, is not so sure, “I don’t think it’s particularly helpful because basically, it says we’ve come to a conclusion, but we don’t have the science to back it up.”
Full USGS Statement: Coping with Earthquakes Induced by Fluid Injection
A paper published today in Science provides a case for increasing transparency and data collection to enable strategies for mitigating the effects of human-induced earthquakes caused by wastewater injection associated with oil and gas production in the United States. The paper is the result of a series of workshops led by scientists at the U.S. Geological Survey in collaboration with the University of Colorado, Oklahoma Geological Survey and Lawrence Berkeley National Laboratory, suggests that it is possible to reduce the hazard of induced seismicity through management of injection activities.
…click on the above link to read the rest of the article…
How Can Cameron Stop Fracking Causing Earthquakes? Easy. Change the Definition of Fracking.
How Can Cameron Stop Fracking Causing Earthquakes? Easy. Change the Definition of Fracking.
David Cameron’s government has snuck a new definition of fracking onto the statute books – allowing hydraulic fracturing for shale gas to take place outside the new regulatory regime.
Cuadrilla’s exploratory fracking, which caused two earthquakes in 2011 at Preese Hall in Lancashire, would not be classified as hydraulic fracturing under the new official definition set out in the controversialInfrastructure Act.
Doug Parr, chief scientist at Greenpeace UK said: “The shift in fracking definition illustrates again how desperate Government is to get fracking moving despite the problems and opposition.”
DeSmog UK is the first to report on how the government appears to have rendered its own regulation of fracking useless, as the late changes made to the Infastructure Bill have gone unnoticed.
Under the new Infrastructure Act, shale gas exploration and extraction must involve more than a total 10,000 cubic metres of fluid in order to be defined as hydraulic fracturing.
Last-Minute Addition
Parr added: “Having failed to win the argument at public level and with major oil companies saying it will be no big deal, Government is left conjuring up new definitions to help steamroller unwanted, risky and irresponsible fossil fuel exploitation onto the British countryside.”
…click on the above link to read the rest of the article…
The Chilling Thing Devon Energy Just Said About the US Oil Glut
The Chilling Thing Devon Energy Just Said About the US Oil Glut
The oil-price plunge hit the industry when it was drunk on its own exuberance and awash in money. At the time, over-indebted junk-rated drillers had no trouble borrowing even more to drill more, efficiently or not. Dreadful IPOs flew off the shelf. Misbegotten spin-offs made Wall Street a ton of money. But in July, everything started to go awry. By October, it was clear that the oil-price plunge wasn’t a blip. By November, oil was in free fall.
Soaring production in the US, reaching 9.2 million barrels per day in January, and lackluster demand have caused US inventories to balloon. The “oil glut” was born.
So the industry adjusted by announcing waves of layoffs, whittling down operating costs, renegotiating prices with suppliers, and slashing capital expenditures. The number of rigs actively drilling for oil – a weekly gauge that indicates what’s going on in the oil field – has plummeted by 553 rigs, or 34%, since the peak in October. Never before has it plummeted this fast this far [The Fracking Bust Hits Home].
The crashing rig count was supposed to curtail production, and lower production would bring supply and demand into balance and allow the price of oil to recover. But the opposite is happening. And Devon Energy Corp. just told us why.
…click on the above link to read the rest of the article…
