Tag Archives: #hydraulicFracturing

Time To Cut Ethanol?

 Issue 107 – Ethanol Justification Illusionary?

Introduction…”The closest thing to earthy eternal life is a government program,” President Ronald Reagan.  Maybe ethanol and biofuel mandates are included in his statement.  Those who benefit from a government subsidy, often giving millions to political campaigns, and vocally defend it.  While those who are apposed are usually disorganized and busy with everyday life.

It was a noble cause…The Renewable Fuel Standard (“RFS” created in 2005 and expanded in 2007, by the Energy Independence and Security Act was passed and expanded.  The laws require refiners to blend increasing amounts of ethanol into gasoline and expected the private sector to produce a growing amount of “cellulosic” biofuels and “advanced” biofuels.

The promise then for biofuels were scary exaggertions, which now have become illusions.

The promises unfulfilled…The justification for this government give away, were told is that it would reduce pollution.  However, cars are already 95% cleaner than they were in 1970, so there is no real befit here.

America was deleting its petroleum reserves and the RFS would reduce oil imports from unfriendly nations.  But, horizontal drilling and hydraulic fracturing (“fracking”) has given the U.S. at least a century of new reserves.  Net imports of petroleum averaged 4.9 MMb/d, the equivalent of 25% of total U.S. petroleum consumption in 2016, up slightly from 24% in 2015, which was the lowest level since 1970.

Renewable fuels would prevent dangerous manmade climate change, we wer also told. Contrary to the hysteria, computer models and  Al Gore’s new movie, humanity and the planet are not experiencing unusual or unprecedented climate changes.  Inconvenient to Mr. Gore’s story, not a single category 3-5 hit U.S. mainland since October 2–5.  That’s a record 11 years and 10 months.

To get a far more complete, facutal, and honest climate science, see the Climate Hustle documentary instead.

To produce ethanol, the United States has devoted 40 million acres or 40% of its corn crop.  In addition it uses billions of gallons of water to irate corn fields, plus giant amounts of fertilizer, pesticides, and fossil fuels to its production.

In conclusion… the two big promises of RFS were the reduction of fossil fuel usage and reduction of pollution have not materialized by burning corn in our cars.  Autos that burn 95% cleaner and the increased petroleum production in part due the frackers have solved those problems.  Time to push the lobbyists aside to do what is best for America and repeal the Renewal Fuel Standards.

Sources: “Biofuel justifications are illusionary,” What’s Up With That, 30 July 2017; “Oil: Crude And Petroleum Products Explained.” US Energy Information Administration, 8 May 2017

 

U.S. Becoming World’s Largest Natural Gas Exporter

 Issue 104- LNG Ship Loading Sabine Pass

Introduction..The United State is already the world’s largest producer of natural gas.  The International Energy Agency (IEA) expects by 2022 U.S. will be the world’s largest exporter of natural gas.  The U.S.  is expected to produce 890 billion cubic meters (bcm,) more than a fifth of the global gas output.

The demand…Global natural gas demand is expected to grow 1.6% a year for the next five years, with consumption on track to hit almost 4,000 billion cubic meters by 2022.

“Also, the rising number of liquefied natural gas (LNG) consuming countries, from 15 to 30 this year, shows that LNG attracts many new customers especially in the emerging world,” said IEA Executive Director Fatih Birol said in a statement Thursday.

The supply…”The U.S. shale revolution shows no sign of running out of steam and its effects are now amplified by a second revolution of rising LNG supplies,” Birol.  Three major LNG terminals are under construction on Texas coast will double the number of U.S. ports currently in use.

What this means to us…This continued demand for natural gas will keep the drillers active in the Utica/Marcellus shale play where our newest projct is located.  The project cleans drilling mud and produced water benefiting from the increased LNG shipping capacity.  Send me an email at bill@billmoist.net for insider information.

Source: David Reid, “U.S. on course to become world’s largest exporter of natural gas: IEA,” CNBC, 13 Jul 2017

Texas Oil & Gas Expansion Cycle

Texas Oil & Gas Expansion

Introduction…Crude oil and natural gas drilling and development in Texas has embarked upon a new cycle of expansion, according to the latest Texas Petro Index (TPI), which improved to 160.4 in March to post its fourth straight monthly increase.

Expansion is here…Driving the TPI upward during first quarter 2017 were crude oil and natural gas prices, drilling activity, the number of drilling permits issued, and the value of statewide oil and gas production, which were all higher compared to year-ago levels. However, the TPI is only about half the value of the record TPI of 313.5 in November 2014, and it still has not caught up in some other economic arenas.

Employment is increasing, but it still lags behind last year after the loss of well over 100,000 upstream jobs, said Ingham. An estimated 9,000 jobs have been added back since reaching the low point in September 2016.

Conclusion…”We still have a long way to go,” Ingham said, “but 2017 is going to be a year of recovery and expansion in the Texas statewide oil and gas exploration and production economy. “Activity levels will continue to expand, jobs will continue to be added, and the industry will support the broader state economy again, rather than acting as a drag on growth as it has for the prior two years.”

Source: “Oil and gas economy in Texas enters expansion cycle,” Oil & Gas Journal, 20 April 2017

Why Major Oil Company Goes Big On US Shale

 Apache Oil Co. Drilling Near Davis Mountains

Introduction…A major oil company does big on US shale drilling.  Here’s why.

Exxon goes big on U.S. shale. New ExxonMobil (NYSE: XOM) CEO Darren Woods gave his first presentation to investors this week, where he outlined a strategy to step up investment in U.S. shale.

Exxon will allocate a quarter of its 2017 budget to short-cycle shale projects. The move will help the oil major navigate an uncertain market, as cash can be returned to the company much quicker from shale drilling than it can from the major offshore projects that Exxon has long been accustomed to.

Still, Exxon will move forward aggressively on its large offshore discovery in Guyana, hoping to bring it online in the next few years.

Conclusion…It’s quicker positive cash flow that brings ExxonMobil to shale oil production.  Even a company this big wants a quicker return on its capital expenditures.

Oil Sold Out Of Asia Tanker Storage As Market Tightens

Oil Tankers Stationed Eastern Coast Of Singapore 

Introduction…Traders are selling oil held in tankers anchored off Malaysia, Singapore and Indonesia in a sign that the production cut led by OPEC is starting to have the desired effect of drawing down bloated inventories.

The Organization of the Petroleum Exporting Countries (OPEC) and other producers outside the group, including Russia, announced late last year that they would cut output by almost 1.8 million barrels per day (bpd) during the first half of 2017, looking to drain a glut that pulled down prices from over $100 per barrel in 2014 to around $56.50 currently LCOc1.

“OPEC’s strategy is targeting inventories – given the scale of the overhang, the market won’t rebalance in six months – we expect an extension into (the second half of 2017),” said Energy Aspects analyst Virendra Chauhan.

As OPEC’s cuts start to leave some demand unmet, a hefty 6.8 million barrels of crude has been taken out of tanker storage from Linggi, off Malaysia’s west coast, in February, shipping data in Thomson Reuters Eikon shows.

An additional 4.1 million barrels and another 1.2 million barrels have been taken out of storage on tankers in Singaporean and Indonesian waters, the data shows

In the short-term, the flood of crude from floating storage will add to supplies coming into Asia from as far away as the Americas and Europe.

In the longer-term, however, clearing oil out of inventories like tankers is part of OPEC’s goal to rebalance markets.

In conclusion…”Inventories will continue to decline driven by the combination of production cuts and the strong demand growth,” U.S. bank Goldman Sachs said this week in a note to clients, adding that it expected Brent prices to rise slightly in the second quarter, to $59 per barrel.

Source: Mark Tay | Singapore, “Oil sold out of tanker storage in Asia as merkt slowly tightens,” Retuers Commodities, 23 Feb 2017

Saudi Oil Minister To Face U.S. Rivals

 Western Midland Oil Rig

This week, Saudi Oil Minister Ali Al-Naimi will for the first time face the victims of his decision to keep oil pumps flowing despite a global glut: U.S. shale oil producers struggling to survive the worst price crash in years.

While soaring U.S. shale output brought on by the hydraulic fracturing revolution contributed to oversupply, many blame the 70-percent price collapse in the past 20 months primarily on Naimi, seen as the oil market’s most influential policymaker.

During his keynote on Tuesday at the annual IHS CERAWeek conference in Houston, Naimi will be addressing U.S. wildcatters and executives who are stuck in a zero sum game.

“OPEC, instead of cutting production, they increased production, and that’s the predicament we’re in right now,” Bill Thomas, chief executive of EOG Resources Inc (EOG.N), one of the largest U.S. shale oil producers, told an industry conference last week, referring to 2015.

It will be Naimi’s first public appearance in the United States since Saudi Arabia led the Organization of Petroleum Exporting Countries’ shock decision in November 2014 to keep heavily pumping oil even though mounting oversupply was already sending prices into free-fall.

This week, Saudi Oil Minister Ali Al-Naimi will for the first time face the victims of his decision to keep oil pumps flowing despite a global glut: U.S. shale oil producers struggling to survive the worst price crash in years.

While soaring U.S. shale output brought on by the hydraulic fracturing revolution contributed to oversupply, many blame the 70-percent price collapse in the past 20 months primarily on Naimi, seen as the oil market’s most influential policymaker.

During his keynote on Tuesday at the annual IHS CERAWeek conference in Houston, Naimi will be addressing U.S. wildcatters and executives who are stuck in a zero sum game.
“OPEC, instead of cutting production, they increased production, and that’s the predicament we’re in right now,” Bill Thomas, chief executive of EOG Resources Inc (EOG.N), one of the largest U.S. shale oil producers, told an industry conference last week, referring to 2015.

It will be Naimi’s first public appearance in the United States since Saudi Arabia led the Organization of Petroleum Exporting Countries’ shock decision in November 2014 to keep heavily pumping oil even though mounting oversupply was already sending prices into free-fall.

Naimi has said this was not an attempt to target any specific countries or companies, merely an effort to protect the kingdom’s market share against fast-growing, higher-cost producers.

It just so happens that U.S. shale was the biggest new oil frontier in the world, with much higher costs than cheap Saudi crude that can be produced for a few dollars a barrel.

“I’d just like to hear it from him,” said Alex Mills, president of the Texas Alliance of Energy Producers. “I think it should be something of concern to our leaders in Texas and in Washington,” if in fact his aim is to push aside U.S. shale producers, Mills said.

Last week’s surprise agreement by Saudi Arabia, Qatar, Russia and Venezuela to freeze oil output at January levels – near record highs – did not offer much solace and the global benchmark Brent crude LCOc1 ended the week lower at $33 a barrel and U.S. crude futures CLc1 ended unchanged at just below $30. <O/R>

Prices fell sharply on Tuesday after Iran, the main hurdle to any production control in its zeal to recapture market share lost to sanctions, welcomed the plan without commitment. Iraq was also non-committal.

Many U.S. industry executives understand that all is fair in love, war and the oil market, but “the Saudis have probably overplayed their hand,” said Bruce Vincent, former president of Houston-based shale oil producer Swift Energy (SFYWQ.PK), which filed for bankruptcy late last year.

It just so happens that U.S. shale was the biggest new oil frontier in the world, with much higher costs than cheap Saudi crude that can be produced for a few dollars a barrel.

“I’d just like to hear it from him,” said Alex Mills, president of the Texas Alliance of Energy Producers. “I think it should be something of concern to our leaders in Texas and in Washington,” if in fact his aim is to push aside U.S. shale producers, Mills said.

Last week’s surprise agreement by Saudi Arabia, Qatar, Russia and Venezuela to freeze oil output at January levels – near record highs – did not offer much solace and the global benchmark Brent crude LCOc1 ended the week lower at $33 a barrel and U.S. crude futures CLc1 ended unchanged at just below $30.

Prices fell sharply on Tuesday after Iran, the main hurdle to any production control in its zeal to recapture market share lost to sanctions, welcomed the plan without commitment. Iraq was also non-committal.

Many U.S. industry executives understand that all is fair in love, war and the oil market, but “the Saudis have probably overplayed their hand,” said Bruce Vincent, former president of Houston-based shale oil producer Swift Energy (SFYWQ.PK), which filed for bankruptcy late last year.

Summary…While Naimi has said this was not an attempt to target any specific countries there was much discussion in both Russia and OPEC of the rise of the U.S. shale producers.  It is not too difficult to believe they would be happier if the shale producers gave up thier market share.

West Texas Oil Production More Stable Than Saudi Arabia?

PumpingRigWTexas Pumping Rig In West Texas

Introduction…Oil production increasing in west Texas Permian Basin,  the largest U.S. shale-oil region, as the  Bakken and Eagle Ford are experiencing production declines.

West Texas two-lane county roads are congested with trucks as energy companies are searching for deals even though the oil markets are in the worst condition of decades.

On October 26, 2015 we reported (http://oilandgasinsider.com/?p=449) a Chinese investment holding company signed a letter of intent to purchase West Texas oil fields in Howard and Borden Counties for $1.3 billion.

Companies like Exxon Mobile, Corp. to Anadarko Petroleum Corp. have also searched for assets in this region the size of Syria.  Exxon purchased 48,000 acres in two deals in August and is reportedly looking for additional acquisitions.

“We’re already seeing companies targeting the Permian,” said Alen Gilmer, chief executive officer of Austin-based Drilling Info.  “If you were to look for the most stable area today to do anything, it’s going to be there.  Today you might even argue it’s more stable than Saudia Arabia.”

In summary…Oil production in the Permian is forecasted by the  EIA to rise 0.6% in December to 2.02 million barrels a day evan as drillers idled 59 percent of rigs.  The rival shale fields, the Bakken and Eagle Ford, have fallen 12 percent and 25 per cent respectively.

Source: “Oil Producers Hungary for Deals Drool Over West Texas Tiramisu,” BloombergBusiness by Dan Wethe, November 15, 2015.

The Water Contamination By Fracking Myth

YaleStudy

The Myth Has Been Disproved

Yale researchers have confirmed that hydraulic fracturing – also known as “fracking” – does not contaminate drinking water.

The process of extracting natural gas from deep underground wells using water has been given a bad reputation when it comes to the impact it has on water resources but Yale researchers recently disproved this myth in a new study that confirms a previous report by the Environmental Protection Agency (EPA) conducted earlier this year.

After analyzing 64 samples of groundwater collected from private residences in northeastern Pennsylvania, researchers determined that groundwater contamination was more closely related to surface toxins seeping down into the water than from fracking operations seeping upwards. Their findings were recently published in the journal Proceedings of the National Academy of Science.

Researchers from Duke University also recently gave people a reason to trust fracking companies. In a study published in Environmental Science & Technology Letters, scientists explained that hydraulic fracturing accounts for less than one percent of water used nationwide for industrial purposes. This suggested that the natural gas extraction processes are far less water-intensive than we previously thought.

It’s hoped that these studies will help people better understand the safety of fracking.

In conclusion, underground drinking water contamination myth has been disproved by the Yale researchers which confirmed a previous report by the Environmental Protection Agency.

The Russians Are Coming, The Russians Are Coming

Screen Shot 2015-03-19 at 3.50.00 PM

Introduction…Well, not all of the Russians are comping to Texas. But, one Russian billionaire, Roman Abramovich, who just invested $15 million in new fracking technology is here.  So, why would Abramovich invest in technology after Vladimir Putin, President of Russia, denounced it publicly?

Previous Anti-Frackers?...When the anti-fracking campaign started to heat up late last year in Denton, Texas—the heart of the shale revolution—conspiracy theories were spread within the pro-fracking community that the Russians were behind the whole thing. <!–There’s more!–>The logic was that the American shale revolution threatened Russia’s market share.  In a recent press conference Putin became visibly angry when the question of Fracking was asked as to its impact on Russia.

Clean Plasma Fracking Technology… Roman Abramovich has invested $15 million in Houston-based Propell Technologies Group, Inc. (OTC:PROP) and its new fracking technology from wholly owned subsidiary Novas Energy. Significantly, this new enhanced oil recovery (EOR) technology enables ‘clean’ hydraulic micro/nano fracturing of oil reservoirs—that is, without water, without polluting chemicals and without earthquakes.

According to Propell, the Plasma Pulse patented downhole tool creates a controlled plasma arc within a vertical well, generating a tremendous amount of heat for a fraction of a second. The subsequent high-speed hydraulic impulse wave emitted is strong enough to remove any clogged sedimentation from the perforation zone without damaging steel. The series of impulse waves/vibrations also penetrate deep into the reservoir causing nano fractures in the matrix which increase reservoir permeability for up to a year per treatment.

It may or may not be a coincidence that Propell’s Plasma Pulse Technology is licensed from Novas Energy, a venture capital-backed Russian energy technology company.

There is also another Russian element to this: PPT has been very successfully employed in Russian injector wells. This is perhaps the most significant aspect to consider. Russia does not have draconian fracking regulations pressuring companies to use environmentally friendly technology. Instead, they are using PPT to improve enhanced oil recovery (EOR) and reduce production costs.

Where Is Abramovich Going With This Investment?… This will not merely be a $15 million investment,” said one source close to the deal. “You have to read between the lines here. Abramovich doesn’t do anything small. He’ll get the infrastructure in place and then look to acquire a significant position in the US oil sector at today’s fire sale prices. We’ll probably be looking at hundreds of millions in investment at the end of the day.”

I n Conclusion...What an irony that a Russian billionaire is investing in clean Fracking technology that started in Texas?  We have already seen Chinese money move into Texas oil patch.  This very well could mean we will see more Russian money coming to Texas.

P.S.  While the Putin was apposed to U.S. Fracking, it could be another Russian who helps remove the environmental concerns over Fracking.
Sources: “Roman Abramovich Invests $15M In New US Fracking Technology,” OilPrice.com by By James Stafford, February 24, 2015