Monthly Archives: December 2014

Slide in oil price continues with stock at record levels

December 30, 2014 1 Comments

 

A man takes a nosil at a gas station on Dec. 26, 2014 in Marseille, southeastern France. Oil prices have fallen about 50 per cent since June on mounting supplies due to increased production and lackluster global economic growth. (BORIS HORVAT/AFP/Getty Images)

Oil trades near lowest level since ’09 amid supply glut

Oil traded near the lowest level since 2009 amid speculation that U.S. crude inventories will stay at the highest for the time of year in at least three decades.

West Texas Intermediate fell as much as 1.7 per cent in New York before paring losses while Brent slid 1 per cent in London. U.S. stockpiles are projected to have climbed 900,000 barrels to 388.1 million barrels last week, the highest for the period in data going back to 1982, a Bloomberg News survey shows before a report tomorrow. U.S. oil drillers last week idled the most rigs since 2012, Baker Hughes Inc. said yesterday.

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Oil has slumped 46 per cent this year, set for the biggest annual decline since 2008, as the highest U.S. production in more than three decades contributed to a global surplus estimated by Qatar at 2 million barrels a day. Saudi Arabia, which is steering the Organization of Petroleum Exporting Countries to resist cutting output, has said it’s confident that prices will rebound as economic growth boosts demand.

“All this North American oil has really changed the tone of the market,” said Gene McGillian, a senior analyst at Tradition Energy in Stamford, Conn. “We have a global surplus of oil. The factors that have been weighing on the market for the past few months are still the dominant features.”

WTI for February delivery was down 8 cents at $53.53 (U.S.) at 12:05 p.m. on the New York Mercantile Exchange after earlier falling as far as $52.70, the lowest since May, 2009. The volume of all futures traded was about 40 per cent below the 100-day average for the time of day.

Libya, Dollar

Brent for February settlement fell 56 cents, or 1 per cent, to $57.32 a barrel on the London-based ICE Futures Europe exchange after reaching $56.74, also the lowest since May, 2009. Volume was 34 per cent below the 100-day average. The European benchmark crude traded at a premium of $3.79 to WTI on the ICE.

Prices briefly rebounded as Libyan production declined amid militant attacks and the dollar dropped, boosting the investment appeal of oil.

Libyan output has fallen below 300,000 barrels a day, the lowest since May, after militants shifted attacks to energy facilities including the country’s largest oil export terminal, according to Energy Aspects Ltd. estimates. The Bloomberg Dollar Spot Index slid as much as 0.5 per cent.

The market rebounded “on the ongoing concerns about Libya and the fact that the dollar is showing some signs of weakness,” said Phil Flynn, senior market analyst at the Price Futures Group in Chicago.

Crude Inventories

U.S. crude inventories have risen to almost 13 per cent above the five-year average level of 343.1 million barrels for this time of year, Energy Information Administration data showed. Supplies of gasoline and distillate, including diesel and heating oil, were expected to increase, according to the Bloomberg survey. The EIA, the Energy Department’s statistical, will release its weekly report tomorrow.

“Nowhere are signs of a rising crude glut more visible right now than in the U.S.,” David Wech, an analyst at consultants JBC Energy GmbH, said in a report.

U.S. domestic production expanded to 9.14 million barrels a day through Dec. 12, the most in weekly data that started in January 1983, according to the EIA.

The slide in oil prices has contributed to the steepest annual drop in the ruble since 1998, given crude is Russia’s main export earner. OPEC has so far resisted calls from cash- strapped Venezuela to act and stem the rout.

Flooding Market

U.S. production from fracking is flooding the market, Venezuela President Nicolas Maduro said in a speech broadcast on state television yesterday. The South American country had called for an output cut at OPEC’s Nov. 27 meeting in Vienna.

OPEC, which supplies about 40 per cent of the world’s oil, pumped 30.56 million barrels a day in November, according to data compiled by Bloomberg. That exceeded its collective target of 30 million for a sixth straight month.

U.S. production growth may slow next year as companies reduce spending and drilling, said James Williams, an economist at WTRG Economics, an energy research firm in London, Arkansas.

U.S. rigs targeting oil declined by 37 to 1,499 in the week ended Dec. 26, the lowest since April, Baker Hughes said on its website yesterday, extending the three-week decline to 76.

“By midyear we should see production growth slowing,” Williams said.

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What’s in a Word?: Fracking vs. Frac’ing

December 28, 2014 0 Comments

So which is it? Industry experts agree frac’ing is the correct word to use, however, the non-industry promoted “fracking” has come to refer to the entire gas extraction process. As Russell Gold, author of “The Boom: How Fracking Ignited the American

Energy Revolution and Changed the World” says, people who were opposed to frac’ing picked up the word “fracking” from popular culture in the early 2000’s. The "fracking" as a term of mockery was created by environmental activists and the media that make them play, which are opposed to the exploration and exploitation of oil wells.

The actual and appropriate term formally used in the industry is known as “frac’ing”. The debate and the difference on fracking and frac’ing is a reflection of the division that exists between the defenders of the exploitation of the deposits by hydraulic fracture and the opponents wanting to veto this way of extracting the crude and the gas.

The connoisseurs and pioneers of this method by the industry called frac’ing and environmentalists to prove their annoyance decided to add a k to the composition of the word.

Obviously, the word fracking is already in everyday use and is accepted by its popularity, but the correct between both depends on what position is assumed between defenders and detractors of this industrial and technological method.

Read more on frac’ing vs. fracking and the roots behind each here.

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Fracking Studies Continue to Ignore Monitoring and Regulation

December 13, 2014 0 Comments

As hydraulic fracturing (fracking, frac’ing) battles continue to heat up in the United States, numerous studies on the involved health and environmental concerns continue to be published. Unfortunately, these studies continue to assume that hydraulic fracturing is only possible as an unmonitored “loose cannon” of sorts, with no way to actually tell what the effects of frac’ing are or will be. As one recent article quotes, “the scientific community is only now beginning to understand the impacts of this industry on the environment and human populations. Hazards and risks have been identified, but many data gaps still persist.”

A gap does persist, but not for lack of available data. Technology such as Offset Frac Monitoring allows for real-time insight into the effects of a frac, including insight into potential groundwater contamination and well blowouts. Additionally, monitoring technology allows producers to highlight potential problems with a frac, and shut down a job before negative environmental (or health) effects become a concern.

As the shale gas development boom continues, fracking has been thrust into the media spotlight. Perhaps the concern should not be with what worst-case scenario effects are possible from unregulated fracking, but how hydraulic fracturing can be made safer and more efficient. Share your thoughts below.

Surface Solutions Inc.

 

Surface Solutions Inc. is an oil and gas optimization service provider in Alberta, with field locations throughout the province and in Saskatchewan. Contact us now to learn more about offset frac monitoring and our other optimization services.

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