The Oil and Gas Industry: A Recap of 2016 Events

To say the least, 2016 has been a tumultuous year for the Oil and Gas (O &G) industry. In truth, market events year have blasted O & G like the pressurized spray of hydraulic fracking drill rips through shale, sending investors, prices and predictive analyses on a whirling, white-rapid roller coaster of a route, eventually ending in a place altogether alien. Yes, the industry has moved on and if 2016 events are any indication, those invested in O & G should accustom themselves to quick, ambiguous shifts as modern energy practice continues its metamorphosis.   Any year this memorable begs a recap, so with the following list let’s examine 2016’s major oil and gas happenings, and brace ourselves for the moment when pressure strikes the market again.     Drilling costs took a dive – Costs of installing and operating wells have plummeted, with a significant number of companies reporting a 50% decrease in expenses involved in installing wells throughout 2016’s later months. This price dive owes itself to the industry tradition of consistently innovating new and efficient drilling and rig tech.       Expected ultimate recoveries climb – EURs, or predictions for net recoverable product in a given area, flew to new heights this year, subsequently dropping economic barriers for the startup of new drilling projects. Technical tweaks like advanced hydraulic fracking techniques and fine-tuned detection equipment have contributed to this, since workers can now more efficiently target large, concentrated pockets of oil.       Oil booms in the Permian Basin – The US Geological Survey estimates that around 20 billion barrels worth of oil flows...

Shifting Industry Trends Could Combat Oil and Gas Bust

It is hardly a secret that the oil and gas industry has been racked with struggles in recent years. Extensive supply and waning demand have borne a global price plummet which blindsided investors and left oil execs itching to seek out innovative and efficient ways to streamline production and heal financial hemorrhages. Andreas Kleinshimdt, in an article for Siemens, one of the world’s largest energy and engineering companies, states   “The low price of oil is both a challenge and an opportunity for the industry. Well-run oil and gas (O&G) companies that are strong today are likely to emerge even stronger after prices rebound. While the availability of oil fields and the associated equipment is always paramount for them, during a slump they have every reason to also focus on cost-effective production.” For O & G to optimally shrug off price drops and re-stimulate industrial growth, the industry must adapt to a changing landscape where resource scarcity is no longer an issue and advances in oil production methods mean a one-size-fits-all approach to operational procedure is no longer ideal. Creating a less centralized and more agile management structure could allow companies to mediate challenges rapidly and efficiently. A loose, informal, team-based management style would take advantage of individual expertise to quickly generate specific, objective-based operational prototypes and quickly respond to issues. Innovations in digital analytics and monitoring tools are another agent of optimization; digital tech could allow companies to act proactively to avoid profit pitfalls such as machinery breakdown and dwindling reservoirs. According to projections by Mckinsey and Company, applying digital technologies to the oil and gas sector could...

Pirates Posing a Threat to Oil and Gas

Pirates may seem like an issue of the past, but in some parts of the world, they’re still a very real threat to ships, especially those carrying valuable cargo like oil and gas. Because oil tankers are traditionally older, larger ships, they don’t have the speed like the smaller speedboats of the pirates do. They also don’t often carry weapons, whereas pirates will board ships with machetes and guns, then incapacitate the crew so they can have easy access to the oil. Not only does the piracy of tankers harm the oil and gas industry, it harms the lives of those who work on these ships and also the people and environment around where the ships travel. Recent news The biggest hotspot of pirate attacks against oil tankers occurs in the South China Sea. Many tankers travel in this area, shipping oil amongst the hundreds of islands. Due to the high density of waterways and islands, pirates have taken advantage of these conditions. Sophisticated organizations have been established and grown much longer, so they can plan elaborate attacks, often multiple times in a week, against oil tankers, taking millions of dollars over a few attacks. It’s possible that the pirates began as simple fishermen in the area who were driven by desperation to make some quick money. Unfortunately, highjacking these oil ships is incredibly lucrative, so a huge organized crime system has developed around it, pushing more and more people to turn to piracy in exchange for the rewards it offers. The South China Sea also isn’t the only location where oil tankers are targeted. In the waters around...

Fracking and Local Economies

  Despite having its roots in US energy production dating back to the early 1900s, fracking has long been looked at as an unconventional and perhaps temporary means of producing natural gas and oil within the United States. I’ve written in the past on TonyVanetik.com about how fracking was conceived and how the process actually plays out, disspelling some of the fears around the process of collecting oil and gas within the United States. For at least 65 years, it has been used in a commercial capacity, helping to reduce the United States’ dependence on foreign oils and spur on the surge in domestic energy production. While the process does present environmental concerns when done at enormously high volumes, fracking has allowed for tremendous increases in US energy, revolutionizing the energy industry as a whole. Fracking has reduced the cost of energy production hugely across the nation–the so called fracking revolution has caused gas prices to drop by about 47% according to Brookings. Fracking wells as a whole produced the good majority of US natural gas across the nation–two third according to the Energy Information Association. In short, the fracking boom has hugely influenced the US economy and energy production. Few people will debate the large-scale economic benefits of increasing nationwide fracking, environmental concerns aside. But how does fracking affect local economies? Even in scenarios in which the national economy is bouncing back or doing well at large, there are always struggling local economies. Without a booming populous or a bustling business center, some small cities and towns struggle to keep themselves afloat. Fracking, though, in areas in which...

Will the US Ever Achieve Energy Independence?

Depending largely on who you believe, where you’re getting your information and what you’d like to hear, the United States could be on the verge of turning completely energy independent in the near future. Or, on the other hand, it could not. It seems as though every week a new article pops up online either detailing why the US will be energy independent in the next few years, then later claiming it’s a bit further from that, then claiming it will never happen, then claiming that it may, in fact, happen. This is because, in the most straightforward of terms, no one really knows. The Case for Independence  I’ve touched on the potential for America’s energy independence briefly in the past on my blog here. The price volatility of oil has had an enormous impact on the state of the United States economy. The less we have to rely on foreign nations (primarily in the Middle East) for their oil production, the more stable our own economy can grow, further utilizing the energy sources domestically. Additionally, energy independence would theoretically solve issues regarding national security and the military. While 100 percent energy independence is quite the task, moving towards independence even short of the 100 percent metric is important nonetheless. “For the U.S. to have more options and be more independent, it reduces our national security vulnerability and makes more oil available to the rest of the world, which enhances geopolitical stability to the rest of the world,” said Mike Ming, Oklahoma Energy Secretary. With the oil and fracking booms that the United States has seen explode in recent...

Economy Woes, Oil Companies Go On Auction Blocks

Right now, the oil industry is enduring on of its weakest prolonged periods in recent memory. With the emergence of fracking and easier, cheaper extraction of natural gases throughout the United States, oil producers have their hands tied with how to handle the situation. With limited access to capital, many producers are being forced to sell assets or, in some cases, sell the business. The number of mergers and acquisitions is up hugely this year, far outpacing what we’ve expected to see in the past, though the bulk of this comes from the purchase of Canadian Oil for over $8...

How Tech is Changing Oil and Gas

No one in their right mind would dare say that technology hasn’t changed the way we’ve lived in recent years. Everything around us, from the homes we live in to the watches on our wrists, have been profoundly affected by technological advances. Even the cars we drive have found themselves with new pieces of tech both inside and out, changing everything from our navigation systems to the fuel efficiency of cars both large and compact. The fuel efficiency of our cars has been rising for years, according to the Washington Post, the cars we drive now are more fuel-efficient than they ever have been previously. Some have reached the point of not needing fuel at all, as electric vehicles have begun to become more and more common on the roads around us. And that could lead to an oil crisis, at least according to Bloomberg. With battery prices dropping seemingly every year, and new scientific advances leading to more advanced battery technology, electric vehicles (EVs) are primed to begin making the transition from high-end luxury purchase to something that just about everyone can afford, regardless of status. “By 2040, long-range electric cars will cost less than $22,000 (in today’s dollars), according to the projections. Thirty-five percent of new cars worldwide will have a plug,” says Bloomberg. Whether or not EVs actually cause the need for oil to drop enough to cause a crisis similar to the one we experience in 2014 is yet to be determined. It will largely depend on how low (or high) prices remain in the next few decades when electric vehicles insert their way into...

What Affects Gas Prices?

According to the Los Angeles Times, there are approximately 253 million cars and trucks motoring down highways, coasting through scenic country roads, and experiencing the frustration of stop and go city traffic across the United States. Recent census data indicates there are about 242 million adults in the United States right now, meaning there are about 1.05 cars per adult in the US. That means, if you’re reading this, there’s a good chance you drive fairly regularly, and a good chance that you, like so many others, monitor gas prices.   Most people seem to keep a fairly cursory watch over world happenings when it comes to things like the price of crude oil. Few people who live outside of the world of economics, government or politics keep close tabs on OPEC or oil reserves and limits. What many do follow, quite stringently in fact, is the price of gasoline around them.   Current prices, just about $2.12 per gallon nationally, is the lowest prices have fallen in inflation-adjusted dollars since about 2002. While state to state prices differ greatly–from about $2.734 per gallon in Hawaii to $1.821 in South Carolina–the national average remains at one of the lowest prices we’ve seen in decades.   So who or what is to blame (or thank, perhaps) for low gas prices around the country? Many people look solely at the price of crude oil per barrel when determining the price of gasoline, though this doesn’t paint an entirely accurate picture. Oil is currently hovering around $42-$45 a barrel, though that’s not the only determiner for the prices of gasoline in America....

Carbon Emissions and Climate Change

  For a long, long time, it was the one thing on the mind of almost everyone across the country–and the world–almost endlessly. It spawned feature-length documentaries, endless scientific studies and debate after debate. The hole in the ozone was the paramount concern of environmentalists everywhere for years. And now the concern has seemingly disappeared as the hole is headed in a better direction thanks to huge action on the part of nations all over the world. Now, how will action taken to combat climate change affect the Earth?   The so called fracking boom in the United States has slowed as oil prices have dropped. In February of this year, it was reported that the number of natural gas rigs in the US has been dropping steadily for quite some time now. It’s been well-established by studies and backed by President Obama that natural gas has a smaller negative impact on our environment than oil and coal. So when the fracking boom reached its height, murmurs of the US’s energy independence began to grow louder. Talks of the relationship between less foreign dependence and lower carbon emissions have been abound, spurring headlines speaking to the possibility of imminent US energy independence.   But recent studies have indicated that mitigating climate change may not be quite as simple as gaining energy independence from other countries.   The study, published on June 7th from the Universiteit van Amsterdam is titled in fairly conclusive language, “Pursuing energy independence will hardly mitigate climate change.” According to Bob van der Zwaan, who is cited in the study, “This study refutes the idea that...

How Fracking is Revolutionizing US Energy

A hot-button subject during presidential debates not only this primary season, but during every US election year in the last few centuries has been our dependance on foreign oil. This is, of course, because of the ever-fluctuating price of oil from Middle-East members of OPEC and our dependance as a nation on oil as an energy source. Now hydraulic fracturing or “fracking” is taking the front seat as a debated subject and a means of self sufficiency for US energy. By 1989, the United State’s dependence on foreign oil was at 47. By 2006, oil imports peaked at 60 percent. Since then, however, the United States has begun to slowly but surely wriggle free from the clutches of its dependance on foreign oil as a means of energy, capped off by President Obama’s pushes to “free ourselves from foreign oil” in 2012. Currently, our dependance on foreign oils continues to drop since its peak in the mid 2000s. Partially to thank for this is fracking. Hydraulic fracturing may be the answer to the United States becoming completely energy self-sufficient in the next few decades. The process is fairly straightforward and has been refined and improved over time, eventually rising to the point of being the most efficient means of collecting natural gas in existence. To start the process, a large drill bores its way into the earth over a natural gas deposit. From there, a pressurized liquid is injected into the rock, fracturing it and allowing the natural gas contained within it to be released. Though the process started with mostly vertical drilling processes, recent exploration of horizontal drilling...