Wednesday, February 25, 2015

Drilling Mud: A Multipurpose Tool in the Oil Patch

“Here’s something I’ll bet you haven’t thought about in the last few days: Drilling Mud.

Actually, it’s the simple things that we take for granted. Our $100 billion oil and gas shale revolution couldn’t exist…..without MUD. It’s the single component that lubricates, cools, cleans, balances and even communicates what’s going on down the hole, thousands of feet below the earth’s surface. And most people don’t realize how much it costs, either. It can reach upwards of $300 a barrel, and amount to 25-percent of the cost of a new oil and gas well.”

Continue listening to the Podcast here or you can visit to read the full transcript:

For more Podcasts filled with industry insider news discussing oil and gas investing visit our website:

Rig Counts Go Down, Production Goes Up. What’s Happening to Oil?

“Baker Hughes released more bad news for drilling companies recently, as it seems week after week large numbers of drilling rigs are being de-commissioned. Since the peak last September of 1,931 total rigs in the United States, nearly 600 fewer rigs are working now. That’s about one-third. Yet, with that many fewer rigs, crude oil production keeps going up. What’s going on?

One factor is efficiency. Trimming the fat, if you will. Many of those rigs were either less efficient equipment or were located in less-promising areas. There’s been a re-shuffling of sorts, where producers are totally concentrating on the most productive areas, where they can extract oil and gas at the most economical prices. The Permian Basin is a perfect example of that, where current production is likely to be profitable at these prices…”

Continue listening to the Podcast here or you can visit to read the full transcript:

Friday, February 13, 2015

OPEC Calls The Tune And U.S. Shale Producers Follow -- By Cutting Production

What happens when Saudi Arabia, the world’s swing producer of oil, rejects its traditional market-balancing role? The job falls to American shale oil producers, which, initial data show, appear to be assuming some of the usual Saudi role of cutting production. Data released today by the Austin energy analytics firm Drillinginfo show that some shale producers are reacting to the new economic reality, cutting back on drilling and new production in response to plummeting oil prices.

Notably, well drilling has dropped in North Dakota’s Bakken shale and Texas’ Permian Basin, and estimates of new oil production are falling in similar fashion. However, in the country’s most prolific, lower-cost shale acreage, production continues virtually unaffected. Full details are analyzed in our
Baker Institute paper. The American shale sector is now revealing itself as a nimble and price-responsive producer, performing exactly as Saudi oil minister Ali al-Naimi hoped it would when he told the world that high-cost oil producers should relinquish their share of the market to the low-cost crude produced by OPEC.

Since the 1970s, the Saudis have usually acted to balance markets and calm volatile prices by twisting a few valves and either raising or cutting production. On November 27, when the Saudis said “No” to expectations of cutting output,

Deloitte: Low Oil Prices Creating Need for More Efficient Operations

Upstream oil and gas companies will have to learn how to operate differently in order to weather the low oil price environment, Deloitte officials said Wednesday.

Unlike the downstream sector, which has been forced to operate efficiently because it doesn’t have the ebbs and flows that upstream does, costs on the exploration and production side have spiraled upwards, said Rick Carr, principal and leader of Deloitte LLP’s oil & gas operations and supply chain, at a media briefing in Houston.

The North America shale market is “still pretty embryonic”, with nobody really having cracked the nut of running a lean, efficient operation, said Carr. In the case of North America shale operations, prices for oilfield services have not been dictated by the actual cost of the service, but what people are willing to pay to get a well done. Companies have been willing to pay 30 to 50 percent more than what a material actually costs, said Carr.

With costs have spiraled out of control, price signals seen today indicate that the industry needs to reset its cost structures. Not only is a deflationary correction needed, but costs in the system truly need to be taken out.  

“There’s a strong school of thought that low oil prices will help the industry reset costs and bring costs down for North America shale,” said Carr. “This will open up shale plays worldwide.”

The move by some companies toward greater operational efficiency started a year and a half ago, when

Wednesday, February 11, 2015

The Energy Market Impacts of Low Oil Prices How Low How Long ?

The Energy Market Impacts of Low Oil Prices How Low How Long

Arthur Berman: Why Today's Shale Era Is The Retirement Party For Oil Production

Berman sees the recent US oil production boost from shale drilling as and short-lived and somewhat desperate; a kind of last hurrah before the lights get turned out.

Chevron Pulling Out of Poland / Permian Basin Still Prolific

“Chevron announced recently that it will pull its shale operations out of Poland, joining Exxon Mobile and Total (Toe-Tall), who have all recently done the same. Stating lower than expected reserves as the main reason, Chevron is also pulling the plug in the Ukraine and the Arctic.

During softer times like we’re in now, pullbacks of this nature are normal. Cash is king during slowdowns and smart operators will set their focus on safer bets. In Chevron’s case, they’re reducing their spending on new investments in drilling projects this year by 13-percent to $35 billion dollars, down from just over $40 billion dollars. That is still a vast amount of money Chevron will invest in new wells and projects around the globe. And that’s the point – the industry is only slowing down; it’s not by any means going away. The doomsday predictions that this will knock the U.S. oil industry down to nothing are JUST…PLAIN….WRONG. ”

Continue listening to the Podcast here or you can visit to read the full transcript:

Rig Counts Down as Investment in Oil and Gas Drilling Stalls

"The number of rigs drilling for oil and natural gas in the United States continues to drop, as oil prices remain under pressure from Saudi Arabia. In the past few weeks, nearly 150 rigs stopped working, or have “been laid down”, as the industry term implies.

One thing to consider is how many jobs each non-working rig affects. While the Industry doesn’t keep tabs specifically on how many staff is employed on each rig, there are some projections that provide clues. For each drilling rig, there are about 20 core people who keep things running, while the oil company employing the rig is investing in the drilling of the well.

However, it is estimated that another 50 people directly support the drilling efforts, although they are not on the pad-site. On top of that, about another 50 people indirectly support the rig’s operation. So bottom line, when a rig stops operating and is sent back to its owner, there are up to 130 people directly and indirectly affected."

Continue listening to the Podcast here or you can visit to read the full transcript:

For more Podcasts filled with industry insider news discussing oil and gas investing visit our website:

Texas lawmakers file bill to lift crude oil export ban

Crude oil could be exported if a bill filed by Rep. Joe Barton and others passes in Washington D.C. 
U.S. Rep. Joe Barton, R-Texas, led the introduction of a bill to remove the decades-old ban on U.S. crude oil exports. House Resolution 702 would remove the restrictions, freeing U.S. oil producers to ship their product to overseas markets. Much has changed since the export ban was put in place in the 1970s, mainly the ability to extract oil from shale using hydraulic fracking. With the current oversupply of oil and precipitous drop in crude oil prices, it's no surprise that Barton and other mostly Texas lawmakers are pushing to lift the ban again.

Seems like a no-brainer to jumpstart a suddenly sluggish energy industry, right? Not so fast. Much like the argument against increasing the export of natural gas, there's concern about a widespread export of crude oil derailing efforts to make the United States energy independent. Putting domestic crude oil on the international market hurts refineries and could put pressure on fuel prices.

Here are key parts of the bill:

Oil prices fall as US stockpiles hit record high

World oil prices fell heavily, with New York crude sliding below $49, as swelling US inventories added to the global supply glut. US benchmark West Texas Intermediate (WTI) for March delivery tumbled $1.22 to $48.80 a barrel compared with Tuesday's close. Brent North Sea crude for March dropped $1.70 to $54.73 a barrel in late afternoon London deals. "The latest inventories data has reminded investors that the supply glut is here to stay for the time being," said analyst Fawad Razaqzada at trading site

The US government's Department of Energy (DoE) reported that commercial crude reserves rose 4.9m barrels in the week ending February 6. Stockpiles were "at the highest level for this time of year in at least the last 80 years", the DoE added in a statement. Market expectations had been for a smaller gain of 3.6m barrels, according to analysts polled by Bloomberg News. "The 4.9m-barrel increase in weekly oil inventories was

Are the Saudis Scared to Cut Oil Production?

With the global oil market currently oversupplied to the tune of an estimated 2 million barrels per day, oil producer group Opec has struggled to formulate an effective strategy aside from “let the market sort it out.” For decades Opec played a price-setting role by increasing production to boost supply when prices were deemed too high. And the producers throttled output back to constrain supply and thus add price support during periods of oil price decline.

But things are different now. At a basic level, the current supply of oil exceeds demand by such a wide margin – due in large part to the US oil production boom – that Opec producers would need to drastically cut their output in order to balance the market. Additionally, de facto Opec leader Saudi Arabia would be forced to do most of the heavy lifting because they maintain the greatest spare production capacity in the group, meaning they can quickly ramp production up and down. It is widely believed Saudi Arabia has the ability to produce over 12 million b/d.

Macroeconomic Insights - The New Oil Order: Making Sense of an Industry's Transformation

The shale revolution in the United States has dramatically altered the global energy landscape.

Three members of Global Investment Research at Goldman Sachs – Jeff Currie, global head of Commodities Research; Dominic Wilson, chief markets economist; and Michele Della Vigna, co-head of European Equity Research – discuss how the falling price of oil affects countries, corporates and consumers.

Monday, February 2, 2015

African perspective on Oil price plummet

Oil has been making financial headlines recently as it plummets. Joining Tshepo Modiba to look at the declining oil price and in particular it’s impact across Africa is Brian Dlamini from Afriwise Consult.

Decline in the oil price saves China and India $100 BILLION!

Martin Murenbeeld of Dundee Capital Markets sits down with Vanessa Collette to talk gold, oil and how it all ties together.

Join us at an upcoming event!

Sunday, February 1, 2015

The Gulf Intelligence UAE Energy Forum 2015: “Impact of Low Oil Price on...

The Outlook for Gas in a Lower Oil Price Reality?
'What Effect will the Lower Oil Price have on the Rise of Gas? and what may be Potential Impacts on Gas Import and Export Strategies, with a Focus on the Middle East and Asia?'

Musabbeh Al-Kaabi, CEO, Mubadala Petroleum
Narendra Taneja, President, World Energy Policy Summit, India
Dr. Aldo Flores-Quiroga, Secretary General, International Energy Forum
John Roper, Head of Middle East, E.ON Global Commodities SE

Saturday, January 31, 2015

Oil Magnate T. Boone Pickens: Get Rid of OPEC

T. Boone Pickens, chairman and chief executive officer of BP Capital LLC, talks about U.S. energy policy, the results of the midterm elections, the Keystone XL pipeline project and the outlook for oil and natural-gas prices. Pickens speaks with Matt Miller and Stephanie Ruhle on Bloomberg Television's "Market Makers." (Source: Bloomberg)

Friday, January 30, 2015

CRUDE AWAKENING: Deloitte on Crude Oil Price Slump

INSIGHTFUL ARTICLE BY DELOITTE: What has caused the sudden fall in oil price? What effect will this have on the industry? Who will be the winners and who will be the losers? This article by Deloitte examines the impact plummeting crude oil price will have on company finances.
Here are some excerpts:
The collapse of crude oil prices in the second half of 2014 caught many by surprise. The price of Brent crude fell more than 50 per cent from $115 per barrel (bbl) in June to below $50/bbl by early January in 2015 and shows no sign of reaching the bottom just yet.
The last fall of this magnitude was during the financial crisis: in July 2008 prices were approaching $150/bbl, but had plummeted to below $50/bbl by the end of the year.
Why has this happened? Because supply growth…
Can shale survive in a lower-price environment?...
The impact of falling oil prices on oil company finances
The oil price collapse has given rise to

Opec's new strategy: Abandoning short-term market management and defendi...

Join Samira Kawar, Argus Middle East Editor, and Francis Osborne, Head of Forecasting - Consulting, as they discuss:

The reasons behind Opec's decision to maintain its 30mn b/d output ceiling despite a mounting supply glut
Saudi Arabia's role in developing Opec's new strategy of defending market share rather than defending price
Saudi Arabia's bid to drive shale oil producers and producers of expensive reserves off the market
Differences within Opec regarding the new policy of defending market share and allowing the market to find a new price floor
The future of Opec and whether or not it can survive
The challenges that oil producers face as a result of lower oil prices
The question of whether or not Saudi Arabia's promotion of a new strategy that centres on defending market share was politically motivated

The Gulf Intelligence UAE Energy Forum 2015 “Outlook for Oil Prices 2015...

The 6th Gulf Intelligence UAE Energy Forum 2015

Interactive Survey: "Outlook for Oil Prices 2015"

Christof H. Rühl, Global Head of Research, Abu Dhabi Investment Authority
Sean Evers, Managing Partner, Gulf intelligence

Prince Alwaleed: We'll Never See Oil at $100-Plus Again

Kingdom of Saudi Arabia’s Prince Alwaleed Bin Talal discusses the expectations for the reign of King Salman, Saudi Arabia’s new ruler. He speaks with Erik Schatzker on “Market Makers.”

Why Fracking & Tar Sands are Doomed: Low-Cost Oil and Pollution

Here is a brief primer on the real implications of the decline of oil prices and environmental degradation on the unconventional petroleum industry (fracking, tar sands and deep-water drilling). Oil has been relatively inexpensive, energy intensive, portable, relatively safe, convertible to myriad uses – an incredibly useful substance, especially in regard to transportation. In the US, and globally, oil powers virtually all movement of people and goods, and is the source of many products. It appears to many people to be essential.

Oil comes in at least these categories:

· Conventional oil: vertically drilled wells on land or shallow continental shelf. Conventional oil, worldwide, is past its peak of production (it peaked in 2005-8 per the International Energy Agency), and oil production is declining at an average rate of 5.8% per year (Whall and Nelson. Investec. “Global oil supply: the decline rate problem” 2/2014, page 11).

· Unconventional oil comes from oil-laden shale, requiring vertical and horizontal drilling, and also requiring hydraulic fracturing, or “fracking”. It is more expensive to produce than conventional oil. Unconventional oil appears to be in a state

Oil boomtown on the brink?

CNNMoney visits the Bakken oil play in North Dakota to see how low oil prices are affecting the industry and the towns.

Recriminations fly as North Sea oil industry struggles

The fall in oil prices is causing angst in the UK oil industry, which emerged in the 1970s as a response to the Middle East’s lock on production but is now plagued by high costs, high tax and infrastructure problems. Lobby group Oil and Gas UK warned this month that 20% of the country’s oil production could be shut in this year, or nearly 200,000 b/d of capacity, as the price collapse of the last few months compounds pre-existing problems.

But the UK Treasury accused the organization of doing down its own industry, suggesting it risked undermining investor confidence. In response to the price collapse, the government has started to row back from a 12 percentage point tax hike that it introduced in 2011 to howls of outrage from the industry. However, it resists claims that the hike may have contributed to the North Sea’s decline and maintains there is life in the industry yet.

The Treasury has said it is moving forward with plans to simplify the country’s labyrinthine system of upstream taxation by introducing

US Spillover effect: Oil price crash bankrupting 'small oil'

Sherri McDaniel is already feeling the sting of the drop in crude oil prices from more than $115 per barrel in June to less than $50 in early January. She is president of ATEK Access Technologies, a small Minneapolis firm that owns TankScan, a wireless monitoring system that keeps track of fluid levels in oil tanks. Oil companies that use the system are starting to postpone orders, as they take a cautious approach to spending.

"In the oil fields, they are starting to pull back pretty heavily," McDaniel said. "They are literally taking tanks and laying them down on their sides." As a result, she explained, "we have a number of big orders that are temporarily on hold."

ATEK Access Technologies is one of many small and midsize firms that are already feeling the effects of lower oil prices. The causes of the decline are complicated, but they are an outgrowth of the domestic shale oil boom and a decision by OPEC, the cartel of oil-producing countries, not to rein in its own oil production in response. The result has been a price war.