Oil set for worst week in 6 months as crude stockpiles surge

[Rasulis]

"Worst" as in worst for the oil industry, they might have to lay off employees if the price keeps dropping.

Irving-based Pioneer Natural Resources Co, one of the oil producers in the Permian Basin of West Texas and New Mexico, said this week it plans to lay off about 25 percent of its workforce to reduce costs and increase shareholder value. Pioneer said it would lay off 230 employees at its headquarters and in its Permian Basin offices, in addition to cutting another 300 workers in April.

On May 6, Product & Logistics Services, a subsidiary of Schlumberger Limited, laid of 124 employees in the Permian Basin area, according to records from the Texas Workforce Commission (TWC). The trucking company said it would be "closing employee-serviced operations out of Monahans, Texas, and surrounding areas." Monahans has been called "the center of the Permian Basin."

Investors are basically saying "Give us some returns on our investments."

[Bigbamboozal]

$1.53 a litre here..

[Ghostpanther]

That's not all fracking is breaking.

https://www.forbes.com/sites/jamesco.../#35f817ac6d68

This is true. It has bad side effects and I am thankful the part of Ohio I live in is not conducive for it.

[INVASMANIXOXOXO]

I feel like the US is kind of in the middle these days. I mean any kind of volatility is usually bad. Even though energy sector is very important to the US, we are also very big consumers of it and low oil prices have the potential to stimulate our airlines/transportation and by proxy our whole economy so it kind of evens out. This is probably a good boon to China and most of Europe that are reliant on import, but hurt other places like Russia, SA, Iran, Norway etc.

[Zan15]

[QUOTE=Jettisawn;51227197]That's not all fracking is breaking.

https://www.forbes.com/sites/jamesco.../#35f817ac6d68

M3? Really?

Would love to actually see the rate of something that actually causes damage.

3-3.9 there is hardly ever any damage
even 4-4.9 there is next to zero damage

I mean OK has not even had a 5+ in 3 years
only 5 4's in the last year

So basically all these earthquakes are 3-3.9's.

[Meldetia]

The fact that an earth quake used to be extremely rare to once or twice in decades to them happening at such an alarming rate isn't a good thing.

Not meant as a defense for fracking, but a lot of small earthquakes may not be a bad thing. If the fracking is causing increased pressure/tension that causes these earthquakes than yes this is bad. But if fracking is creating weak points that provide paths to release already existing pressure in many small earthquakes instead of fewer larger ones, overall this seems beneficial (as far as earthquakes go).

[Th3Scourge]

There are no taxes more regressive than taxes imposed on fuel and power. There is fuck all chance for poorer people to avoid paying these taxes, thus reducing their level of disposable income further. They get no subsidies or tax offsets as a result.

This is the left-wing utopia they wanted to build

[Vash The Stampede]

We do not want oil prices to go any lower. At the current price of $58.21 per barrel for WTI crude, most shale oil producers are producing at a loss already.

You don't but I do. I don't enjoy paying $3 per gallon. I liked it better at $1 per gallon.

Thank god for my electric car, i only use gas in my lawn mower.

I'm jealous of you. Right now I'd rather have a Nissan Leaf or Chevy Bolt over any gas powered car. These gas prices are awful.

[zenkai]

There are no taxes more regressive than taxes imposed on fuel and power. There is fuck all chance for poorer people to avoid paying these taxes, thus reducing their level of disposable income further. They get no subsidies or tax offsets as a result.

This is the left-wing utopia they wanted to build

I agree, back in 2006 when gas was up to $4 a gallon I really felt sorry for poor people. Also companies were passing on fuel prices onto my company, a fuel surcharge was added to our invoices. This means we had to charge higher prices for our products.

The fuel tax is also the spark that ignited the yellow vest movement.

[Rasulis]

You don't but I do. I don't enjoy paying $3 per gallon. I liked it better at $1 per gallon.


I'm jealous of you. Right now I'd rather have a Nissan Leaf or Chevy Bolt over any gas powered car. These gas prices are awful.

Don’t get me wrong. I would love to have those $1 per gallon days back.

However, the easy to get oil reserves are gone. At least in the continental US. We are more likely to run into the inflection point where oil become too expensive to extract long before we run out of oil reserves.

- - - Updated - - -

Not meant as a defense for fracking, but a lot of small earthquakes may not be a bad thing. If the fracking is causing increased pressure/tension that causes these earthquakes than yes this is bad. But if fracking is creating weak points that provide paths to release already existing pressure in many small earthquakes instead of fewer larger ones, overall this seems beneficial (as far as earthquakes go).

That’s a rather simplistic way of looking at it. The majority, as in 99.9%, of seismic events in AL, CA and NV were M3 or lower. Most were microtremors that can’t be detected except with the most sophisticated array of sensors.

Oklahoma on average experienced 50 seismic events per year pre 2009. Most are not even detectable by human sensory perceptions. After 2009, it went up to over 1,000 per year, with 300 - 600 in the range of M2s and M3s which can be felt my people. In 2011, Oklahoma experienced two 4.8 and one 5.7 magnitude seismic events, followed by a 4.5 in 2013, three 4.7s in 2015, five 4.7 to 5.8 in 2016, and two 4.6s in 2018.

We are entering uncharted territory right now. The Dallas Airport Fault is a perfect example. Seven years after they stopped pumping wastewater, and they still experienced seismic events along the fault line. Although the frequency has diminished considerably, the magnitude of the events remain the same.

The question is what happens once you reactivate a fault that had been dormant for millions of years? Does it go back to being dormant once you stop injecting the lubricating fluid? Your typical petroleum geologists would say “yes.” They know who buttered their breads. Your structural and forensic geologists would reserve judgement until more studies can be performed.

[Vash The Stampede]

Don’t get me wrong. I would love to have those $1 per gallon days back.

However, the easy to get oil reserves are gone. At least in the continental US. We are more likely to run into the inflection point where oil become too expensive to extract long before we run out of oil reserves.

Why is it more expensive to pull oil out of the ground now?

That’s a rather simplistic way of looking at it. The majority, as in 99.9%, of seismic events in AL, CA and NV were M3 or lower. Most were microtremors that can’t be detected except with the most sophisticated array of sensors.

Oklahoma on average experienced 50 seismic events per year pre 2009. Most are not even detectable by human sensory perceptions. After 2009, it went up to over 1,000 per year, with 300 - 600 in the range of M2s and M3s which can be felt my people. In 2011, Oklahoma experienced two 4.8 and one 5.7 magnitude seismic events, followed by a 4.5 in 2013, three 4.7s in 2015, five 4.7 to 5.8 in 2016, and two 4.6s in 2018.

We are entering uncharted territory right now. The Dallas Airport Fault is a perfect example. Seven years after they stopped pumping wastewater, and they still experienced seismic events along the fault line. Although the frequency has diminished considerably, the magnitude of the events remain the same.

The question is what happens once you reactivate a fault that had been dormant for millions of years? Does it go back to being dormant once you stop injecting the lubricating fluid? Your typical petroleum geologists would say “yes.” They know who buttered their breads. Your structural and forensic geologists would reserve judgement until more studies can be performed.

I get that fracking can cause seismic events but wouldn't pulling oil out of the ground do the same thing? The reason why oil prices are so low is because natural gas prices are even lower. I'd love to convert my cars to electric but it's even cheaper to convert them to use natural gas, and the engine pollutes less and keeps the engine running clean. Natural gas is even displacing coal for electric production. Why would I otherwise think that this information about fracking is nothing more than propaganda produced by the oil industry?

[exochaft]

I get that fracking can cause seismic events but wouldn't pulling oil out of the ground do the same thing? The reason why oil prices are so low is because natural gas prices are even lower. I'd love to convert my cars to electric but it's even cheaper to convert them to use natural gas, and the engine pollutes less and keeps the engine running clean. Natural gas is even displacing coal for electric production. Why would I otherwise think that this information about fracking is nothing more than propaganda produced by the oil industry?

Well, I read the article, and beyond the headlines it explicitly goes into details concerning the subject matter. It makes a very big point (multiple times) that fracking doesn't cause earthquakes, however injected waste water into sites (which is done in fracking and other activities not related to fracking) can cause pressure changes that may cause earthquakes if they hit a fault. They also went to great lengths to mention that there are other sites where fracking is done much more than the highlighted regions that have experienced no increase in earthquakes. It's also mention that fracking and the injection of waste water almost never induces earthquakes. The irony is that the article almost takes the position of a different poster above, when it comments on how oil drilling is supposed to be the cause of a delay in the "Big One" on the San Andreas fault by inhibiting mobility and allowing pressure to build up, while this water injection process actually ends up relieving pressure.

Someone mentioned that earthquakes are rare earlier... they're not, they happen all the time, you just don't notice them. There were hundreds of earthquakes in the last 30 days in the US of the same magnitude as described in the article.

Anyways, we tend to have refinery shortages when it comes to gasoline, which is why hurricanes in the southern US can hit gas prices when refineries are out of commission. I've also heard a joke that if there's a car accident in front of a refinery, the gas price increases $0.10. And it's Memorial Day weekend, prices usually jump.

[Linkedblade]

I'm pretty terrified of prices going any higher. I cant afford $2 a litre for gas.

Jeez. I usually pay between $2-3/gallon. That's roughly $0,50-$0,75/liter.

[Zan15]

[QUOTE=Jettisawn;51227653]

The fact that an earth quake used to be extremely rare to once or twice in decades to them happening at such an alarming rate isn't a good thing.

Go figure smashes bedrock could lead to earthquakes.

Fracking is also fairly new and if these Earthquakes are the short them effect what about the long term? They often pump a lot of pollutants into the shell and cover it up thinking it'll stay safe. What happens when an Earthquakes causes some of those chemicals to seep into the undwater reseviors a lot of people in those areas rely on ?

well two points.

1 - accurate tracking of 3's and low 4's were really not in place the last time there was recorded swarms in the area in the 50's

2 - the storage is under the water table, so it would first have to defy gravity and have the earthquake only create a pressure tunnel heading up to seep into the water table.

There are many earthquake tracking maps out there. go to them. Look at the full map then just look at what causes damage 4.5+.
You can almost get a 3 from general construction if you try hard enough.

[Rasulis]

Why is it more expensive to pull oil out of the ground now?


I get that fracking can cause seismic events but wouldn't pulling oil out of the ground do the same thing? The reason why oil prices are so low is because natural gas prices are even lower. I'd love to convert my cars to electric but it's even cheaper to convert them to use natural gas, and the engine pollutes less and keeps the engine running clean. Natural gas is even displacing coal for electric production. Why would I otherwise think that this information about fracking is nothing more than propaganda produced by the oil industry?

The answer would require a bit of a primer in the difference between conventional vs. hydraulic fracking gas and oil extraction.

Conventional natural gas and oil deposits are found in permeable rocks, usually trapped below impermeable rock. These deposits can be extracted by drilling down through the impermeable rock into the permeable rock. The oil and gas, under pressure rises up a pipe to the surface.

But gas and oil are also trapped in the spaces within impermeable shale rock. Therefore, because shale is impermeable, simply drilling down to it is not enough to extract these deposits. Instead the process of hydraulic fracturing, known commonly as fracking, is used. The rock has to be fractured to get the gas or oil out.

Shale gas and oil fields in the US were discovered in 1821 but the first use of fracking was 120 years later in the 1940s and it was not until this century that the development accelerated and there are now several hundred thousand shale wells in the US.

In conventional fields, the gas and oil is found free in large areas. So the oil can be obtained by using a few wells and the wells can remain productive for decades. On the other hand, shale gas and oil are found in a large number of small pockets and a different technique is needed to get them to the surface.

Hydraulic fracturing involves drilling down vertically 2 km or more below the surface before gradually turning horizontal and continuing drilling for as much as another 3 km. This allows a single surface site to access many small pockets of gas and oil.

The gap between the lining of the borehole that has been drilled and the surrounding rock is then sealed up with concrete to provide a secure route for the extraction of the gas and oil. There are small perforations in the horizontal portion of the well pipe, through which a mixture of water, sand and additives is pumped at high pressure (over 600 time of the atmospheric pressure) to create cracks (micro-fractures) in the shale for up to a radius of 50 meters. This fracking fluid is called slickwater. The sand (or other solid materials) are called proppants and are added to prop open the fractures that form under pressure. They are deposited in the fractures to keep them from closing up thereby ensuring that gas and oil can continue to flow freely out of rock fractures even after pumping pressure is released.

Up to 10 million liters of fracking fluid are pumped into the borehole under these extremely high pressures. When the pressure is released, the oil and gas can escape. A well head is then installed to capture the released oil and gas. The drilling and fracking equipment is then taken away.

A wide range of compounds, additives, is also added to the water which serves a variety of purposes, from acid to dissolve minerals and initiate fissures, biocide to limit the growth of bacteria to preventing corrosion of the well casing, surfactant and friction reducing additives to allow fracturing fluids to be pumped along the pipe very rapidly, scale inhibiter, buffer to keep the pH of the fluid constant, cross linkers to keep viscosity constant under different temperature, gelling agents to keep the sand in suspension, and oxygen scavengers and other stabilizers to prevent corrosion of metal pipes. The make up of a fracturing fluid varies to meet the specific needs of each area - geology, chemical make up, source of water quality, etc.

The flowback liquid contains water and contaminants, including the additives, but also radioactive material and heavy metals, hydrocarbons and other toxins. In the United States the most common methods of disposal is by injecting the liquid into deep underground wells.

Unlike conventional oil wells which can maintain the same production level for decades, hydraulic fracturing wells, because they only access a smaller volume of gas and oil, production level usually starts to drop within months. Also, because shale gas and oil exist in discreet pockets, more wells are required to fully extract the products. Spacing between wells can be tricky. Spacing the wells too close risk reduced production level as wells develop parent-child relationship. Spacing them too far apart and they risk leaving oil and gas deposits untapped. The other factor to consider is that because fracking wells start to lose their production level within months, to maintain production level, oil companies have to keep on drilling new wells which add to the cost.

There are still billions of barrels on untapped oil reserves in the US. However, because of either location or geology, extracting them is unprofitable at the current price level. California Monterey Shale is a good example.

In 2011, the U.S. Energy Information Administration (EIA) estimated that the Monterey Shale could hold up to 23.9 billion barrels of oil. More than Texas Eagle Ford and North Dakota Bakken Shales combined. However, Monterey Shale is more geologically complex than other shale formations. Unlike heavily fracked shale deposits in North Dakota and Texas, which are relatively even and layered like a cake, Monterey Shale has been folded, jumbled, broken and shattered by seismic activity, with the oil found at deeper strata. Which means it can't be as easily exploited by horizontal drilling. Realistically, at the current technology level, only around 960 million barrels are recoverable.

Israel is another good example. The country has been dreaming about having its own oil reserve since its conception. They did finally find large reserve of gas and oil in Israel, and the oil market crashed from over $100 per barrel to $20 per barrel. Even at the current price level, it is not profitable for them to extract those reserves. The same with offshore drilling. At the current oil price, any new offshore drilling won’t be profitable for at least 30 or 40 years. Hence, even large companies like Exxon and Chevron have not done any new offshore drilling. The most expensive gas and oil extraction would be arctic drilling. With the exception of the Russian, no country in the world is making money drilling in the Arctic. The only reason it is profitable for the Russian is because of the weakness of the Ruble.

So yes. Fracking costs three times more than conventional gas and oil extraction.

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The irony is that the article almost takes the position of a different poster above, when it comments on how oil drilling is supposed to be the cause of a delay in the "Big One" on the San Andreas fault by inhibiting mobility and allowing pressure to build up, while this water injection process actually ends up relieving pressure.

All I can say is that I have been in charge of over 20 fault investigations and 6 fault rupture studies in 3 states, and I would never make a statement like that in one of my reports. At least not one with my signature and stamp.

[Itori]

Its slowly dropping here, was 2.49$ last week, down to 2.39$ im not complaining xD

[Celista]

The price for gas at the pumps is still relatively high. $ 2.99 PG here for med. grade.

Yes, very interesting that we're flooded with gas but we're still paying a lot at the pump, isn't it.

[Nymfomania]

You don't but I do. I don't enjoy paying $3 per gallon. I liked it better at $1 per gallon.


I'm jealous of you. Right now I'd rather have a Nissan Leaf or Chevy Bolt over any gas powered car. These gas prices are awful.

Its really nice. Hardly any maint, no stopping at the gas pump, standing in the cold or heat. Just pull in plug it in. I really felt put out driving my gf car, loud ass thing and really felt put out having to fill it with gas. Almost told her to go do it her self.

[Rasulis]

Yes, very interesting that we're flooded with gas but we're still paying a lot at the pump, isn't it.

Surprisingly, at current price, the shale oil companies are still not making money. Based on their quarterly report, between 2012 and mid-2018, the top sixty shale companies in the U.S. lost a combined $9 billion every quarter. According to WSJ, in the first quarter of 2018, only five shale companies produced positive free cash flow. The best performing oil company stocks are those without any stakes in shale oil.