Among many bold promises made on the presidential campaign trail, Donald Trump pledged to unleash an “energy revolution” that would release vast riches from America’s shale oil reserves. It is doubtful that he expected Saudi Arabia to do the job for him. Yet, since the Saudi-led Opec cartel agreed to cut oil production in November, the US shale industry has been boosted to levels not seen since 2014. “The shale boom is back,” Norbert Ruecker, head of commodities research at Julius Baer, said. “Over the coming one and a half to two years, we’re probably going to be back at the previous high levels of production.” The first US shale boom, which lasted from 2012 to 2014, took advantage of oil prices that hovered around the $100 mark. By the end of 2014, however, oil had plunged below $50, and a year later, was close to $25. The p rice collapse was orchestrated by Opec. Its 13 members pumped and pumped to create an oil glut that pushed down prices, knowing this would make it uneconomical to extract oil from shale. However, the price fell too far, and Opec members suffered. In November, they and 11 other nations including Russia agreed to cut production for the first time in eight years. The oil price has since held around $50, despite concerns that Opec members would not adhere to their promises. When oil prices fell after the end of the first US shale boom, oilfield service companies were forced to increase the effectiveness of fracking to decrease the cost of extraction. They found that the most effective way of doing so was to pump more fluid and sand down the pipes at higher pressure, using increasingly powerful fracking pumps such as those made by Weir, the British engineering company. Frackers are expected to use 50 per cent more sand this year than they did in 2014. Several companies are experimenting with microwaves to re lease oil from shale. In theory, a blast from a high-intensity microwave beam would liquefy oil trapped in shale rock, allowing it seep into a pipe before it is drawn to the surface. The technique, if proven, would do away with the waste associated with using a liquid and sand mixture.
Times 20th March 2017 read more »
The US shale industry has become a hydra-headed monster. Before Opec and Russia have contained one threat, fresh dangers keeps popping up in new and expanding zones. This war of attrition in the crude markets is lasting far longer and biting deeper than the energy exporting states ever imagined. It profoundly alters the geo-strategic contours of energy, and the global balance of power. Saudi Arabia has conceded that the 1.8m barrels per day (b/d) production cut agreed by Opec and a Russia-led bloc will almost certainly have to be extended when it expires in June. Stunned veterans fear that the global glut could drag on through 2017 and into a fourth year. New technology is reviving old US fields already written off as largely exhausted, and in the latest twist the impetus is spreading to ‘super-basins’ in Latin America that threaten to replicate the US success story in short order
Telegraph 19th March 2017 read more »