There has been increasing speculation over the last twenty-four hours that the oil price might start to rally upwards.“
What we are seeing now is improvement, suggesting a recovery within the longer term downtrend … I’m short-term bullish on Brent,” Roelof van den Akker, a chartist at ING Wholesale Banking, told CNBC earlier today. Van den Akker is predicting that the oil price could jump $20 / barrel in the near future.
He is not the only one who is thinking that the oil price is set to rebound. The Financial Times is reporting that hedge funds are also placing some of their “largest ever bets on a rally in oil prices”.
But the FT adds that this comes “just as evidence mounts that energy companies are hunkering down for a delayed recovery.”
Part of what this “hunkering down” might look like was outlined by one industry executive on Wednesday.
The executive, Rob Fulks, a marketing director at fracking company Weatherford, predicted that half of the 41 fracking companies operating in the U.S “will be dead or sold” by the end of this year due to slashed spending by oil companies caused by the oil price plunge.
Fulks, whose company is the fifth largest fracker in the US, was speaking at an industry conference in Houston on Wednesday. He predicted there could be as little as 20 fracking companies left by the year end, compared to the 41 there are currently and 61 there were at the beginning of last year.
The cuts are part of the $100 billion the industry has cut in spending globally after prices have plummeted.
He told the audience that “we see yards are locked up and the doors are closed”, adding “it’s not good for equipment to park anything, whether it’s an airplane, a frack pump or a car.”
As far as his own company is concerned, Fulks said that Weatherford was making “dramatic” cuts to expenditure.
Many in the industry, like Fulks, will be hoping that the hedge funds are right and that the oil price rebounds sooner rather than later.
But whether it happens before more fracking companies go bust or are taken over, remains to be seen.
Quake experts think fracking maps may predict future temblors
Experts creating models to gauge future activity
By Sean Cockerham, Tribune News Service Washington Bureau, April 23, 2015 10:02pm
Chad Devereaux works to clear up bricks that fell from three sides of his in-laws’ home in Sparks, Okla, after two earthquakes hit the area in less than 24 hours in 2011. A government report released Thursday found that a dozen areas in the United States have been shaken in recent years by small earthquakes triggered by oil and gas drilling, Photo: Associated Press File Photo / AP
WASHINGTON — As earthquakes triggered by oil and gas operations shake the heartland, the federal government is scrambling to predict how strong the quakes will get and where they’ll strike.
The U.S. Geological Survey released maps Thursday that show 17 areas in eight states with increased rates of manmade earthquakes, including places such as North Texas, southern Kansas and Oklahoma where earthquakes were rare before fracking sparked a U.S. drilling boom in recent years.
Seismologists are using the maps in an attempt to create models that can predict the future of such quakes.
“These earthquakes are occurring at a higher rate than ever before and pose a much greater risk to people living nearby,” said Mark Petersen, chief of the USGS national seismic hazard modeling project.
Studies show the earthquakes primarily are caused by the injection of drilling wastewater from oil and gas operations into disposal wells, said Bill Ellsworth, a seismologist with the USGS.
The fact there have been many small earthquakes “raises the likelihood of larger earthquakes,” Ellsworth said. While most of the quakes have been modest, a 5.7-magnitude earthquake near Prague, Oklahoma, in 2011 destroyed 14 homes and was felt as far away as Milwaukee.
The USGS is working on a model, to be released at the end of the year, that can predict the hazards a year in advance.
People who live in areas with manmade quakes can use the forecasting information to upgrade structures to be safer and in order to learn what they should do in case of an earthquake, he said.
“Many of these earthquakes are now occurring in areas where people have not been familiar with earthquakes in the past,” Ellsworth said. “So there’s just a lot of basic education that is worth doing.”
The USGS maps show the earthquakes are mostly in Oklahoma, Texas and Kansas, but also Colorado, Ohio, Arkansas, Alabama and New Mexico.
“What we’ve seen is very, very large volumes of wastewater being injected over many different areas in the midcontinent, Oklahoma principally but also Kansas, Texas and other states,” Ellsworth said.
Fracking produces large amounts of wastewater, which oil and gas companies often pump deep underground as an economical way to dispose of it without contaminating fresh water. That raises the pressure underground and can effectively lubricate fault lines, weakening them and causing earthquakes.
While there was some initial skepticism, it’s become increasingly accepted that oil and gas activities are behind the surge in American earthquakes since 2008. Southern Methodist University researchers said in a research paper this week that these activities were the most likely cause of a rash of earthquakes that hit an area northwest of Fort Worth, Texas, from November 2013 to January 2014.
Oklahoma was rocked with nearly 600 earthquakes big enough for people to easily feel last year.
The Kansas Corporation Commission, a state regulatory agency, has responded to the earthquakes there with new rules that limit how much saltwater drilling waste can be injected underground. Ellsworth said seismic researchers were watching Kansas closely to see whether the new rules reduced the quakes.
Wolves Shot From Choppers Shows Oil Harm Beyond Pollution
by Rebecca Penty, April 22, 2015 5:00 PM PDT
British Columbia killed 84 wolves in the hunt that ended this month. Alberta eliminated 53 this year, bringing its total killed through the program since 2005 to 1,033. Source: Universal Education/Universal Images Group via Getty Images
Here’s one aspect of Canada’s energy boom that isn’t being thwarted by the oil market crash: the wolf cull.
The expansion of oil-sands mines and drilling pads has brought the caribou pictured on Canada’s 25-cent coin to the brink of extinction in Alberta and British Columbia. To arrest the population decline, the two provinces are intensifying a hunt of the caribou’s main predator, the gray wolf. Conservation groups accuse the provinces of making wolves into scapegoats for man-made damage to caribou habitats.
The cull carried out in winter when the dark fur of the wolves is easier to spot against the snow has claimed more than 1,000 animals since 2005. Hunters shoot them with high-powered rifles from nimble two-seat helicopters that can hover close to a pack or lone wolf. In Alberta, some are poisoned with big chunks of bait laced with strychnine, leading to slow and painful deaths that may be preceded by seizures and hypothermia.
“It’s an unhappy necessity,” Stan Boutin, a University of Alberta biologist, said of the government-sponsored hunt. “We’ve let the development proceed so far already that now, trying to get industry out of an area, is just not going to happen.”
The energy industry has delivered a death blow to caribou by turning prime habitat into production sites and by introducing linear features on the landscape that give wolves easy paths to hunt caribou, such as roads, pipelines and lines of downed trees created by oil and gas exploration.
A drop in drilling after oil prices plunged can’t reverse the damage. More than C$350 billion ($285 billion) spent by Alberta’s oil-sands producers to build an industrial complex that’s visible from space have made the province’s boreal herds of woodland caribou the most endangered in the country. Their population is falling by about half every eight years, according to a 2013 study in the Canadian Journal of Zoology.
Caribou Ranges
Since 2005, Alberta has auctioned the rights to develop more than 25,000 square kilometers (9,652 square miles) of land in caribou ranges to energy companies, according to the Canadian Parks and Wilderness Society, an Ottawa-based charity. That’s equivalent to about three times New York’s metropolitan area.
“When the oil industry goes in there and cuts those lines and drills and puts in pipelines, it helps the wolves,” said Chad Lenz, a hunting guide with two decades of experience based in Red Deer, Alberta. Lenz has watched caribou herds shrink as the number of wolves soar. “There’s not a place in Alberta that hasn’t been affected by industry, especially the oil industry.”
Home to the world’s third-largest proven crude reserves, Alberta depends on levies from the energy industry to build new roads, schools and hospitals.
British Columbia
British Columbia joined Alberta in sponsoring a wolf hunt this year as its logging and energy industries too are putting populations of woodland caribou at risk. Canada’s westernmost province is trying to erase its debt with revenues from the energy industry, as companies including Royal Dutch Shell Plc consider multibillion-dollar gas export projects along the Pacific Coast.
The provinces are widening their wolf cull — a stop gap poised to extend for years — as companies such as Devon Energy Corp. join in testing other radical measures to revive the herds.
British Columbia killed 84 wolves in the hunt that ended this month. Alberta eliminated 53 this year, bringing its total killed through the program since 2005 to 1,033.
Conservation groups have petitioned for the end of a program they deem unethical without aggressive habitat recovery, while the provinces keep selling drilling rights on caribou ranges.
‘Scapegoating Wolves’
“We do not support the current wolf kill,” said Carolyn Campbell, a conservation specialist at the Alberta Wilderness Association, a Calgary-based advocacy group. “It’s an unethical way to scapegoat wolves.”
The provinces are only poised to kill more wolves, though, as they prepare plans to reverse the population decline for each caribou range ahead of a 2017 Canadian government deadline.
Alberta is expected to continue the cull in the first of its range plans to be released this year, which will serve as a model for handling of the other herds, said Duncan MacDonnell, a spokesman for Alberta’s Environment and Sustainable Resource Development department. British Columbia’s 2015 cull was just the first of a five-year program.
Killing wolves is saving caribou from extinction while governments and energy companies consider new approaches, said the University of Alberta’s Boutin.
Industry Efforts
The energy industry has worked to reduce its impact on caribou by adding gates on roads to block access and by returning disturbed land to a more natural state, said Chelsie Klassen, a spokeswoman for the Canadian Association of Petroleum Producers.
After spending about C$200 million annually for 12 years to help revive the caribou and watching populations continue to fall, companies are finally seeing small successes, said Amit Saxena, senior biodiversity and land specialist at Devon.
Wolves tracked with collars are being deterred from areas where companies have replanted trees, Saxena said. At its Jackfish oil-sands project, Devon is monitoring a fenced patch of land to see if it can keep out wolves and bears attracted by bait. Until the lessons can be successfully applied to wider swaths of land, the wolf cull will have to continue, he said.
“Sustainability of caribou herds and oil and gas activity can go hand in hand on the landscape,” Saxena said. “If we can manage that predation level that is too excessive in some areas, then caribou can recover on an industrial, active working landscape.”
Habitat Recovery
The human impact can’t all be reversed for herds that each require about 30,000 square kilometers of mostly undisturbed land to thrive, Boutin said. The biologist advocates building pens for pregnant and newborn caribou and larger fenced-off areas for certain entire herds.
“Habitat recovery will be part of the toolbox but it will never be useful on its own,” Boutin said. If provincial governments don’t pursue radical ideas such as maternity pens, fences and predator control, “then they’re going to be wasting everybody’s time.”
Outlook for Oil Prices ‘Only Getting Murkier,’ Energy Agency Says
By Stanley Reed, April 15, 2015Royal Dutch Shell is expecting prices to recover much of their recent drop over the next few years. It projects prices to hit $90 a barrel in 2018. Chris Ratcliffe / Bloomberg
LONDON — The outlook for oil prices is still uncertain after the sharp fall that began last summer, the International Energy Agency said on Wednesday.
Given the price collapse, “one might be hoping for more clarity on supply and demand,” the agency acknowledged in its monthly Oil Market Report, which was released on Wednesday. “Yet in some ways, the outlook is only getting murkier.”
Oil prices, which have fallen about 50 percent since June, rose after the report and a separate United States government report that said that American crude stockpiles had risen less than expected.
The international benchmark, Brent crude, was up about 3 percent on Wednesday, to $60.35, while its American counterpart jumped more than 5 percent to about $55.97.
The agency’s report reflects a broad debate inside and outside the oil industry about where prices might eventually settle.
Citigroup, for one, expects prices to continue falling in the coming months, as output remains high, supply is building up and investors who had helped prop up prices begin to sell.
“While prices have held relatively firm, there are significant signs of weakness ahead,” Citigroup said in a note to clients on Tuesday.
Royal Dutch Shell, the oil giant that announced an almost $70 billion takeover of the British oil and gas producer BG Group last week, is expecting prices to recover much of their recent drop over the next few years. It projects prices to hit $90 a barrel in 2018.
As the International Energy Agency noted, competing forces are still playing out in the market, making the direction difficult to discern. Low prices have stimulated higher-than-expected demand for oil products in China, India and even Europe, which has been plagued by lethargic economic growth, the agency said. But whether that increased consumption is a “temporary aberration” remains to be seen, it added.
There is much uncertainty, for instance, over future crude demand from China, which on Wednesday reported economic growth of 7 percent, the weakest rate since early 2009.
Supply is also hard to gauge. While there are signs that low prices are beginning to have an impact on the production of oil from shale rock, overall oil output in the United States is expected to grow this year, the agency said.
In addition, the Organization of the Petroleum Exporting Countries is showing no signs of backing away from the policy, backed by Saudi Arabia, of holding onto market share regardless of falling prices. OPEC production rose almost 900,000 barrels a day in March from a month earlier, the agency said, as Saudi Arabia increased production to more than 10 million barrels per day.
Among the uncertainties in the market is the potential effect on oil supplies of a proposed nuclear accord with Iran, a major producer, the agency said. International sanctions have sharply reduced the country’s sales of oil, and an accord is expected to ease, or lift, those sanctions.
While it would take time for Iran to organize the enormous investment that would be required to sustainably bolster its production capacity, the agency said that the country might be able to make short-term changes to increase output and exports relatively quickly.
For instance, the agency said, Iran has 30 million barrels of oil stored on tankers, which could quickly feed an increase in exports. The agency also estimated that Iranian oil fields could ramp up production to as much as 3.6 million barrels a day, a 29 percent increase, within months of sanctions being lifted.
Specialists have been working at some of those sites, and “some of Iran’s core fields,” which were run down, may already have been revived, the agency said.
Under the pressure of sanctions, both Iranian production and exports have been curbed. Exports are down about 50 percent since 2012, to an average of around 1.1. million barrels a day, though they rose to 1.3 million barrels a day in March on high demand from China.
There has been increasing speculation over the last twenty-four hours that the oil price might start to rally upwards.“
You must be logged in to post a comment.