Category Archives: Shale oil

Exxon Will Remake Shale Or Shale Will Remake Exxon – Bloomberg Gadfly

From the moment it began, you could tell something was missing from Exxon Mobil Corp.’s first strategy presentation under its new CEO: Texan Rex Tillerson’s usual jab at New York City, where the event is held.His successor at the helm, Darren Woods, kept many other things the same. There was the usual emphasis on superior performance and the benefits of integration and a relatively humdrum Q&A session.For all the continuity, though, Woods signaled some big shifts in where this supertanker is going.First, although capital expenditure is set to increase this year, Exxon appears to have partly embraced the idea that big budget projections are taboo with investors these days, aiming to hold spending at around $25 billion a year through 2020. That’s up from 2016’s $19.3 billion — which was very low — but still notably below the $30 billion-plus levels of 2011 to 2014, which eroded Exxon’s return on capital and dimmed its reputation for discipline.

Source: Exxon Will Remake Shale Or Shale Will Remake Exxon – Bloomberg Gadfly

U.S. shale oil output set to rise in March by 80,000 bpd: EIA | Reuters

U.S. shale oil production is expected to rise in March by 80,000 barrels per day to 4.87 million bpd, data from the U.S. Energy Information Administration showed on Monday.Eagle Ford production is set to rise 14,000 bpd to 1.08 million bpd, while Permian production will rise by 70,000 bpd to 2.3 million bpd, the EIA said in its drilling productivity report.In the Bakken, production is forecasted to fall by 18,000 bpd to 976,000 bpd.

Source: U.S. shale oil output set to rise in March by 80,000 bpd: EIA | Reuters

Rocky Mountain crude production shipping by pipeline, rail

Rail and pipeline shipments of crude oil from the Rocky Mountain region (Petroleum Administration for Defense District 4) have steadily increased as regional crude oil production has increased. The recently released Petroleum Supply Monthly, which contains data for April 2015, shows that 122,000 barrels per day (b/d) of crude oil was moved by rail from PADD 4 to other regions of the country, representing 19% of total crude shipments from the region.

via Rocky Mountain crude production shipping by pipeline, rail – Drilling – Ohio.

Bakken’s daily production to remain above 1 million barrels

As oil prices continue to fluctuate and North Dakota’s rig count hovers in the 70-rig-range—down from the 190 mark one year ago—the amount of oil produced in the state per day remains at the 1.2 million barrels per day range. The ability of exploration and production companies linked to the Williston Basin to maintain production at 1.2 mbpd despite the major reduction in the state’s rig count due to low oil prices has been surprising to many, including, in small part, to Lynn Helms, director of the North Dakota department of mineral resources oil and gas division. According to Helms, industry has figured out how to manage its cash flow and capital investment while it deploys high efficiency drilling rigs. The money management strategy used with the basin’s best rigs will keep the state producing in the 1.2 million barrel per day range for at least the next two years. Operators can drill wells faster than ever before and do so with less investment into drilling rigs.

“I think people are hoping prices increase and we can go back to a growth mode,” Helms said during his monthly oil and gas industry update. “But, we are capable of sustaining production for a couple of years.”

Due to the production decline curve related to Williston Basin wells completed through a combination of horizontal drilling and hydraulic fracturing, new wells have to continuously be brought only every month for the state to keep its daily and monthly production totals consistent.

The current drilling rig fleet in the Williston Basin can drill a well from spud to total depth in two weeks, a major improvement over the 45-day average seen in 2013. Because the remaining rigs operating in North Dakota are so efficient, the comparison between the current rig total and that of the past when the rig count total was near 200, cannot be made, Helms said.

Rig efficiencies are only one reason why operators have been able to sustain the state’s daily production totals. Well costs are down roughly $1 million, pressure pumping service costs have decreased and individual well production has increased by 25 percent more than the previous year. Because of that combination of factors, several operators have been able to weather the low oil price environment.

In May 2014, roughly 24 wells reported for the month showed an initial production rate of 500 barrels per day or less. This year, zero wells have come in with an IP of under 500. The numbers reveal that exploration and production companies have retreated to the core of the Williston Basin where the best geology and production conditions exist. According to Helms, three wells have come in with IPs over 3,000 barrels per day. “The core area they are drilling in is far more productive,” Helms said.

Despite the 67 percent rig count drop from the previous year, there has only been a 48 percent drop in permitting applications for new wells to the DMR, Helms added. “Companies are still really optimistic about Bakken drilling. It is just a matter of when not if,” he said.

Many entities will ramp up completion and production efforts when West Texas Intermediate prices reach $65/b. When prices reach $70/b, drilling rig activity will pick up. “Companies are positioning themselves for that magic price point,” he said.

via The Bakken magazine – Bakken’s daily production to remain above 1 million barrels.

Busting The “Canadian Bakken” Myth | OilPrice.com

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.

via Busting The “Canadian Bakken” Myth | OilPrice.com.

Millions of Barrels of Oil Are About to Vanish – Bloomberg Business

Millions of barrels of untapped oil that U.S. shale drillers discovered during the boom years are about to disappear from their inventories.

Six years ago, the industry pushed the Securities and Exchange Commission to make it easier for companies to claim proved reserves for wells that wouldn’t be drilled for years. Some prospects considered sure-things when crude was $95 a barrel are money losers at today’s $60. When crude crashed in 2008, 44 U.S. companies wiped 630 million barrels from their books.

Now the stakes are higher. Of all the proved reserves of oil and natural gas liquids found by the 44 companies since 2008, more than half — 5.4 billion barrels out of the 9.7 billion — is attributed to wells that don’t exist yet, according to data compiled by Bloomberg.

“We’re going to see a lot of proved undeveloped reserves get vaporized,” said Ed Hirs, a managing director at Houston-based Hillhouse Resources LLC, an independent energy company, who also teaches energy economics at the University of Houston. “It could easily be 10 or 20 years before some of these wells get drilled if prices stay at these levels.”

via Millions of Barrels of Oil Are About to Vanish – Bloomberg Business.

New Houston energy company launches with $500M investment – HBJ

A newly formed Houston energy company is getting a $500 million boost from private equity in order to crank up oil and gas exploration and production activities.

New York-based Warburg Pincus LLC is funding the new Independence Resources Management LLC, or IRM, startup that will focus on the Anadarko Basin in Texas and Oklahoma, as well as the Rockies.

IRM describes itself as focused on unconventional shale plays and more with large amounts of hydrocarbons and low recovery factors.

via Warburg Pincus funds launch of new Houston energy company Independence Resources Management – Houston Business Journal.

BHP set to slash capex on shale | BDlive

BHP Billiton may be forced to slash its planned $4bn spending this year on US shale wells and book writedowns on its shale assets as it battles plunging prices for its biggest earners iron ore, oil and copper.

The mining giant, which has cut capital spending for the past two years, needed further savings to have enough cash to meet a promise not to reduce its dividend, analysts and investors said, with some tipping it could slice its US onshore drilling budget in half.

The spending cuts could come as soon as tomorrow, when BHP will release its December quarter operational review.

US onshore drilling, the biggest single item in BHP’s capital budget, is seen as the easiest target after a 41% plunge in oil prices, 16% drop in iron ore prices and 12% drop in copper prices over the past three months.

Other candidates for cuts in its $14.2bn capital and exploration spending plan could be its longer-dated projects such as the Canadian Jansen potash project and Australian Olympic Dam copper expansion study.

“When you are pushed up against the wall you have to make some difficult decisions, so all those things are possibilities,” said Richard Knights, an analyst at London-based investment bank Liberum.

“Commodity prices are falling very quickly, very sharply.

Shale drilling is much easier to shut than conventional oil and gas wells as individual wells are smaller, making it a logical target for cuts. It is not expected to cut spending on its conventional wells in the Gulf of Mexico.

Writedowns on the shale assets, which BHP acquired in 2011 for $17bn when gas prices were much higher, were also inevitable, analysts and investors said, based on a much weaker outlook for forward prices.

via BHP set to slash capex on shale | Mining | BDlive.

Russian oil output hits post-Soviet high – IBT

Russia’s oil output has reached a post-Soviet high after it averaged 10.58 million barrels of oil per day in 2014.Oil output rose by 0.7% in the year, according to data from the Energy Ministry. The increase in production was bolstered for the most part by small producers, many of which are private companies, and which collectively increased output by 11% to just over one million barrels of oil per day.Oil and gas production account for about half of Russian’s budget, and  make up around two thirds of the country’s overall exports. Russia’s state-run oil giant Rosneft produces more oil than Opec members Iraq or Iran. However Rosneft saw its output fall 0.7%, amid problems at its West Siberian oilfields.The price of crude oil has slid dramatically in latter half of 2014 – a corollary of increased shale exploration in the US, which became an exporter again for the first time in decades.Crude oil reached a daily closing price of $110.53 on September 6, 2013, and fell to a current level of $53.64 as of December 30, 2014.

via Russian oil output hits post-Soviet high.

Oil-field lodging company slashes jobs, curbs spending – FuelFix

Oil-field lodgings company Civeo Corp. said it has slashed its workforce in the United States by 45 percent and in Canada by 30 percent as it prepares for weaker occupancy rates at its oil-field camps next year.The Houston-based company had more than 4,000 employees when it spun off from oil field services firm Oil States International in June.The announcement is the latest oil-field services layoffs in reaction to falling oil prices and anticipated oil-company budget cuts. Houston-based Hercules Offshore said it would reduce its headcount by 324 and oil field giant Halliburton said it would cut 1,000 jobs across multiple regions in the Eastern Hemisphere.Civeo also is cutting its spending plans for 2015 to $75 million to $85 million, down from its budget this year of $260 million to $280 million, as it anticipates lower demand for lodging services. It said it may be required to record impairment charges on its assets.

via Fuel Fix » Oil-field lodging company slashes jobs, curbs spending.