Will the electric car industry doom the oil industry? The smart money says it's possible, according to this story in energypost:
"Fitch Ratings agency warns that if recent technology trends continue, we may see an 'investor death spiral' as first the smart money — and then everyone else’s — sells off oil company assets (bonds and stocks). That would in turn increase the industry’s costs for both debt and equity — while oil prices would be stuck at low levels as the world hits peak demand.
"This would affect industries whose stocks and bonds are cumulatively valued in the trillions of dollars. In particular, Fitch notes, 'an acceleration of the electrification of transport infrastructure would be resoundingly negative for the oil sector’s credit profile.'”
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There's been another land sale in Ohio's Utica Shale region, Columbus Business First reports:
"Ohio coal company Murray Energy Corp. has sold 5,900 acres in the state's Utica shale oil and gas play.
"Murray sold the land to an undisclosed buyer for $63.6 million. The acreage is in Belmont and Monroe counties, two of the most active natural-gas production counties in the state."
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Drilling for oil in the United States appears poised for a major comeback, reports fuelfix.com:
"If oil prices hold onto recent gains, drillers could pump billions back into U.S. oil fields next year, setting the stage for an industry comeback after two years of deep cutbacks.
"In North America, oil companies have signaled they may collectively hike oilfield spending 25 percent to $110 billion next year, the largest budget increase since at least 2000, according to investment bank Evercore ISI, which surveys the oil companies every year. That money would flow directly to the oil field service companies that make drilling equipment..."
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Parts of Ohio's Wayne National Forest can leased for oil and gas development, reports Energy In Depth:
"After four years of study, the federal Bureau of Land Management (BLM) has made a final decision to offer 40,000 acres of minerals located in Monroe, Noble, and Washington Counties in Ohio for competitive lease sale for oil and natural gas development under the surface of the Wayne National Forest (WNF) – with 1,600 acres being offered for auction December 13th.
"Last week, the agency released its long-awaited final Environmental Assessment (EA) announcing that it found 'no significant impact' to the environment that would result from its decision to move forward with these lease sales."
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Energy company Baker Hughes lost money for its third quarter largely because of its North America operations, oilprice.com reports:
"Oilfield services group Baker Hughes (NYSE:BHI) reported on Tuesday a lower-than-expected adjusted net loss for the third quarter, but said that its North American business will only slightly grow in the fourth quarter in a persisting tough pricing environment.
"The world’s third-largest oilfield services provider Baker Hughes was more bearish on its immediate-term North American business compared to competitors Schlumberger (NYSE:SLB) and Halliburton Company (NYSE:HAL), both of which signaled increased North American activity when they reported third-quarter figures last week."
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Bankruptcies in the U.S. energy field are shifting, fuelfix.com reports:
"Fewer and fewer oil exploration and production companies are declaring bankruptcy.
"But more oilfield service companies are.
" ... it’s been an especially tough few months for service companies. As crude prices began crashing in 2014, drillers started idling rigs. That led to fewer jobs for the companies that make their money helping producers pump oil and gas. Moreover, when producers did hire service companies, they often forced them to heavily discount their rates.To read more or comment...
The number of drilling rigs in the Utica Shale and Point Pleasant Shale areas of Ohio totaled 16 as of Oct. 22, the Ohio Division of Natural Resources reported Tuesday.
The number of permits for horizontal wells totalled 2,277. The number of horizontal wells drilled in the state totaled 1,834.
The Wall Street Journal notes that there are thousands of drilled but untapped oil and gas wells in the United States:
"U.S. oil and gas companies have drilled thousands of wells they have yet to tap, creating a ready reserve of fuel that could surge onto the market when energy prices recover.
"As producers report quarterly earnings during the next few weeks, a question looms: When will they start exploiting these “drilled but uncompleted” wells?
" ... Federal estimates show the number of such wells in the nation’s seven most prolific drilling regions stood at 5,069 in September, up from 3,768 in January 2014, before oil prices began falling."To read more or comment...
Chesapeake Energy, the Utica Shale's biggest driller, figured out how to get as much as 70 percent more production from a fracked well in Louisiana. The company calls it "propageddon".
From The American Interest web site:
"If there’s one defining characteristic of the American shale revolution, it’s innovation. While OPEC’s petrostates have been forced to sit idly by and endure low oil prices these past two years, U.S. frackers have tackled the bargain crude problem with relentless tenacity, constantly working to find new ways to extract more crude from shale formations for less money and in less time.
"The latest example of this comes to us courtesy of Chesapeake Energy, one of America’s biggest shale firms, which just found a way to massively increase production from its wells through the use of 'monster fracking.'"To read more or comment...
The number of drilling rigs working in the U.S. as of Oct. 21 rose by 14 from a week ago to 553, according to the latest Baker Hughes report. The number of rigs is down 234 from the same period in 2015.
To read the full report, go here.
The Heartland Institue weighs in on the recent report, "What If ... America's Energy Renaissance Never Happened?" that says Ohio's economy would have been devastated without money generated from fracking shale.
The Heartland report starts:
"The U.S. Chamber of Commerce’s (USCC) Institute for 21st Century Energy released a report in September 2016 titled What If … America’s Energy Renaissance Never Happened? The report paints a bleak picture, describing the fictional economic environment of a post-2009 Ohio that was never lucky enough to have benefited from the U.S. 'energy renaissance' in oil and natural gas extraction, which is mainly the result of technological advancements in hydraulic fracturing and horizontal drilling.
"According to the USCC report, Ohio would have lost $9.9 billion in state gross domestic product (GDP), $5.8 billion in labor income, and more than 114,000 jobs if this energy revolution never came to be. Of the total costs, $2 billion in lost GDP, $1.4 billion in labor income, and 21,500 jobs would come directly from the oil and gas industry’s extraction process; the remaining economic costs would be the result of substantially higher energy costs."To read more or comment...
The number of drilling rigs in the Utica Shale and Point Pleasant Shale areas of Ohio totaled 19 as of Oct. 8, down three from a week ago, the Ohio Division of Natural Resources reported.
The number of permits for horizontal wells totalled 2,266, up from 2,259 last week. The number of horizontal wells drilled in the state totaled 1,822, up from 1,807 a week ago.
The number of drilling rigs working in the U.S. as of Oct. 7 rose by two from a week ago to 524, according to the latest Baker Hughes report. The number of rigs is down 271 from the same period in 2015.
To read the full report, go here.
Chesapeake Energy Corp., the Utica Shale's largest driller, this week said it has completed major financial moves, including closing on a private placement of $1.25 billion in convertible senior notes. The financial deals make for a stronger company, Oklahoma City-based Chesapeake said in a press release:
"Chesapeake Energy Corporation (NYSE:CHK) today provided an update on the significant improvements in its capital structure following recent transactions. Today, the company closed a private placement of $1.25 billion of unsecured convertible senior notes, with a provisional call feature that will give Chesapeake an opportunity to convert the debt to equity in three years if the company's stock trades above 130% of the conversion price for a specified period. The company's cash on hand as of September 30, and pro forma for the convertible debt issuance, was approximately $1.0 billion with no borrowings on its revolving bank credit facility.
"Additionally, today the company closed privately negotiated purchase and exchange agreements under which the company exchanged approximately 110.3 million shares of its common stock for (i) 134,000 shares of 5.00% Cumulative Convertible Preferred Stock (Series 2005B), (ii) 606,271 shares of 5.75% Cumulative Convertible Preferred Stock and (iii) 553,007 shares of 5.75% Cumulative Convertible Preferred Stock (Series A). This amount of preferred stock represents approximately $1.2 billion of liquidation value, which was exchanged at a discount of over 40 percent. As a result of these exchange transactions, the company's common shares currently outstanding are approximately 886 million, before giving effect to future dilution from convertible securities.
"Chesapeake Chief Executive Officer Doug Lawler commented, 'Through the transactions that closed today, we have substantially improved our capital structure. The issuance of the new unsecured convertible notes, plus the significant reduction in our preferred stock at a deep discount, results in additional liquidity and less preferred equity and is accretive to our capital structure. With the cash proceeds from the convertible note offering, we have taken measures to provide excess liquidity to address the remaining maturities of our debt through 2018, before any incremental proceeds from the potential asset sales that we are currently working. These transactions represent major steps toward reaching our financial goals of $2-3 billion of debt reduction and growing production within free cash flow. We continue to make great progress in simplifying the balance sheet and reducing the overall cost of financing, and we remain intently focused on further reductions to our operating and capital cost structure.'"To read more or comment...
The Utica Shale's second largest driller, Oklahoma-based Gulfport Energy, is engaging in some major refinancing, Marcellus Drilling News says:
" ...Gulfport announced a program to swap out old debt for new debt–offering $650 million in 'senior notes' (we call them IOUs) in a program to repurchase other notes coming due in 2020.
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Pennsylvania has tightened rules and regulations for drilling in the Marcellus Shale, the Pittsburgh Post-Gazette's PowerSource site says:
"An array of stricter environmental regulations for Pennsylvania shale gas drilling will take effect on Saturday, opening a new phase of legal challenges to the rules after a punishing five-year effort to get them published.
"The Department of Environmental Protection’s new regulations update requirements for above-ground operations at oil and gas well sites for the first time since 2001 and reflect heightened scrutiny of the industry since Marcellus Shale gas drilling revolutionized natural gas production in Pennsylvania."
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Great Britain just gave the go-ahead to do some test fracking, the first work of its type allowed in five years, oilprice.com reports:
" ... the UK Department of Communities and Local Government upheld on Thursday an appeal by gas exploration company Cuadrilla Resources, allowing it to plan for exploratory horizontal fracking at a site in Lancashire in northwestern England.
The full story is here.To read more or comment...
A major discovery means the amount of oil that can be taken out of Alaska just increased by at least 2 billion barrels, oilprice.com reports:
"A small company just announced that it has made a 'world-class' oil discovery in Alaska, which could be the largest find in the state in years.
"Caelus Energy LLC, a small company backed by private equity, says that it has discovered oil on Alaska’s northern coast. The field could hold as much as 6 billion barrels of oil, with about 1.8 to 2.4 billion barrels considered to be recoverable. If that is the case, the discovery would instantly raise Alaska’s statewide recoverable oil reserve base by about 80 percent.
"But producing the oil will not be easy. Drilling must take place in the winter. To drill the field, the tentative plan would be to build manmade islands to drill through. Oil produced in the shallow water of Smith Bay will need to be moved somehow. Caelus will have to build an $800 million pipeline that travels 125 miles, connecting to an existing pipeline system in Prudhoe Bay."To read more or comment...
So, is the following another way of saying that U.S. shale won? A story at oilprice.com reports that the new OPEC production deal acknowledges a permanent shift in oil markets:
"OPEC appears to have finally given up the dream of crushing U.S. production and returning to a world in which the Cartel controlled the market.
"US producers may not be the lowest cost producers, but could well be the most flexible producers.
"OPEC’s actions did succeed in stalling new investment in future reserves development, but this hit both unconventional and conventional production in nearly equal measure."To read more or comment...
The number of drilling rigs in the Utica Shale and Point Pleasant Shale areas of Ohio totaled 22 as of Oct. 1, the Ohio Division of Natural Resources reported Tuesday.
The number of permits for horizontal wells totalled 2,259. The number of horizontal wells drilled in the state totaled 1,807.
There may be a heckuva lot more natural gas to tap in the Utica and Marcellus shales, a new Forbes story suggests:
"The Utica and Marcellus shale natural gas plays based respectively in Ohio and Pennsylvania have provided 85-90% of U.S. shale gas production growth since start of 2012. Their ongoing drilling efficiency is a key driver.
"In fact, increases in shale drilling efficiency have contributed to the breakdown of traditional methods that use rig counts to estimate oil and natural gas production. Frequently mentioned is how renewables continue to evolve, but so does the oil and gas industry.
"The shale business in particular continues to advance: rig mobility, multi-pad drilling, and other rapid evolutions mean more gas using less rigs and resources.To read more or comment...
Chesapeake Energy Corp,the Oklahoma-based firm is the No. 1 driller in Ohio.
Rig Count Interactive Map by Baker Hughes, an energy services company.
Shale Sheet Fracking, a Youngstown Vindicator blog.
The Ohio Environmental Council, a statewide eco-group based in Columbus.
Earthjustice, a national eco-group.
People's Oil and Gas Collaborative-Ohio, a grass-roots group in Northeast Ohio.
Concerned Citizens of Medina County, a grass-roots group.
No Frack Ohio, a Columbus-based grass-roots group.
Fracking: Gas Drilling's Environmental Threat by ProPublica, an online journalism site.
Pipeline, blog from Pittsburgh Post-Gazette on Marcellus shale drilling.
Allegheny Front, environmental public radio for Western Pennsylvania.