Analysis by the father of American Geopolitics Dr. Daniel Fine, MIT.

Posts tagged ‘Utica Shale’

Column: The resource war and San Juan Basin oil by Dr. Daniel Fine


Special to The Daily Times

For the complete article use this link–> http://www.daily-times.com/election2014/ci_27283196/column-resource-war-and-san-juan-basin-oil

“Resource War and San Juan Basin oil Oil and gas companies in the Southwest, the Rocky Mountains and the Dakotas are revising or recalibrating their capital budgets for 2015 as the price per barrel of west Texas intermediate crude trades in the $50 range. Most companies are moving into a cycle downturn phase in defense against a world price decline mostly aimed at unconventional production (shale or light tight oil). The question is how much cost savings coupled with production declines is ahead? And how long will the Saudi Aramco market share impact last?

It is now clear that the San Juan Basin and the Four Corners will be significantly impacted. A loss of two and possible three rigs will contract the general economy. Job growth in oil and gas, which just four years ago seemed limitless, is at an end. The industry is cutting 2015 budgets while avoiding lay-offs or personnel downsizing. This will prove unworkable in the short-term.

San Juan Basin spending for 2015 could be 55 percent lower than this year. For a history of similar cycles in the San Juan Basin, “Gas: The Adventures into the History of one of the World’s Largest Gas Fields — The San Juan Basin of New Mexico” by Tom Dugan and Emery Arnold is recommended.

Oil plays in the basin must find efficiencies in drilling to well completion that were only theoretical before the price collapse in October. Optimism that this is probable as a response to price is misplaced. Cost reductions in oil production — drilling cost per well — were realized as company targets when oil was $100 per barrel. But there must be more efficiency as cost-savings now because the price has been reduced by half.

The duration of this low oil-price environment depends on how much light tight oil production declines. The Saudi Aramco market strategy, now under the leaking umbrella of OPEC, anticipates a cap on rising U.S. production and a contraction of at least 1.5 million barrels per day (estimate) to 7.7 million before a supply/demand balance is restored. This could take more than 18 months since Saudi Arabia has the second largest sovereign wealth fund in the world (Norway is first) in the first quarter of 2016 prices should rise as a demand pull adjusts supply.

Saudi Arabia and other low cost OPEC producers have lost market share in a world market that is oversupplied with crude oil. It is mainly American shale or unconventional oil production that has replaced imported oil which accounts for this and partly a slowdown of Chinese demand for oil and other imported commodities. With American oil production overtaking Saudi Arabian output early next year and with U.S. prohibitions against the export of crude oil established in 1975 under review, Saudi Arabia has acted against a threat to its national interest.”

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Oil, gas wells in northwestern NM show potential


By Kevin RobinsonAvila

Information from: Albuquerque Journal, http://www.abqjournal.com

FARMINGTON, N.M. (AP) — The oil and gas industry is getting excited about a potential boom in northwestern New Mexico.

Preliminary results from some of the 22 exploratory wells drilled in the Mancos shale formation in the San Juan Basin show commercial potential for production, according to industry executives who visited Farmington this week.

Ken McQueen of Oklahoma-based WPX Energy Inc. told the Albuquerque Journal (http://bit.ly/Yv3MkJ ) that two wells the company drilled in 2010 in a dry natural gas section of the Mancos have produced 2 billion cubic feet of gas so far. He described the area as an “attractive target” to pursue.

“These two wells are in the top 10 best wells drilled by WPX to date,” he said. “They’re quite extraordinary for us.”

Energy development companies were hopeful about the prospects for liquid natural gas and oil in other sections of the Mancos formation.

Mancos shale is sandwiched between soft sandstone layers in the San Juan Basin that producers have been exploiting for decades. Modern drilling techniques allow resources trapped inside the rock-hard shale to be tapped. Three dimensional imaging helps pinpoint oil and gas deposits, while hydraulic fracturing and horizontal drilling can access the deposits.

“I’m bullish on the Mancos,” said T. Greg Merrion, president of Merrion Oil and Gas Corp. in Farmington. His company is partnering with Denver-based Bill Barrett Corp. to drill exploratory oil wells in the area.

“We’ve already seen a number of wells drilled that are economic,” Merrion said. For more of the article go to–> http://washingtonexaminer.com/oil-gas-wells-in-northwestern-nm-show-potential/article/feed/2082202

I Spy Radio Show – Hear Energy Expert Dr. Daniel Fine on Speculation: Oil & Gas


What do money markets, antiques, gold, corn, wheat, and stocks in companies like Google or Apple have in common? They’re bought by speculators.

And yet speculators, especially in oil, have become the bogeyman of economics. On tomorrow’s I Spy Radio Show (11-noon, kykn.com), we talk with Dr. Daniel Fine about America’s energy resources and energy policy. What role dospeculators have in the price of oil?

To hear Dr. Fine on I spy Radio click on this link—–>

http://www.gripnw.com/Audio/iSpyShow_04142012_DrFine-AmericasEnergy.mp3


Guest & Links mentions on the show

  • Listen live on the radio, Saturdays 11-noon (Pacific time) via 1430-AM in the greater Salem Area (Corvallis to Tigard, Lyons to Grand Ronde)
  • Listen live from anywhere in the world via kykn.com (11-noon on Saturdays) via the “listen live” tab up top of web page
  • Download the show after it airs. Just go to the Current Show page. The download link becomes active shortly after noon each Saturday.
Video

Dr. Daniel Fine discusses North Carolina’s approach to shale gas and hydraulic fracturing


Renowned energy expert Dr Daniel lecturing at the John Locke Foundation

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