Category: Oil and Gas Industry

Uneven Negative Effects of Low Oil Prices

U.S. oil and gas rig counts dropped to their lowest level in over four years, falling by an additional 74 units for the week ending on January 16. The lower count provides fresh evidence that low oil prices are forcing drillers to pare back operations and slash spending. 

While that may soon begin to cut into actual production figures, a new Wood Mackenzie report finds a lot of nuance in the oil patch, painting a complex picture of what to expect in 2015. The report identifies several trends beyond the simple narrative that low prices will force a cutback in drilling. 

Is Russia’s South Stream Pipeline Out of Gas?

After seven years of planning, the South Stream pipeline that would carry gas from Russia to Europe via Bulgaria has been cancelled. After a long-running battle with the EU over the need for the pipeline and who would control it, Vladimir Putin announced that the project was over, in its planned form at least.

The Oil Market – What Would Minsky Do?

During the Great Financial Crisis, Hyman Minsky, was rediscovered.  Minsky’s insight was that long periods of steadily rising asset prices encourages financial engineering and leveraged bets that assume a continued rise in asset prices.  The so-called Minsky moment comes when the asset prices stop rising and even fall.  The virtuous cycle turns vicious. 

We are now all familiar with how that narrative played out in the housing markets in numerous countries.  The question we pose is whether similar forces are unfolding in the oil market.  

The Montney Shale is Heating Up in the Cold of Canada

What does it take to build up a new region for oil and gas development? Obviously, the resources have to be in place and economically recoverable. But it is not as easy as just sticking a drill into the ground and pumping out oil and gas. 

OPEC’s Existential Crisis

In the middle of November, the CEO of Vodafone Vittorio Colao warned of a “prisoner’s dilemma” in the efforts to offer bundled television and broadband services.  It makes sense for a company to seek unique content to differentiate it from others.  However, if all the providers try to secure exclusive content, it triggers an arms race of sorts as they all do the same thing or risk losing out.

The Demand Surge for ‘Frac Sand’

When it takes up to four million pounds of sand to frack a single well, it’s no wonder that demand is outpacing supply and frack sand producers are becoming the biggest behind-the-scenes beneficiaries of the American oil and gas boom.

Demand is exploding for “frac sand”–a durable, high-purity quartz sand used to help produce petroleum fluids and prop up man-made fractures in shale rock formations through which oil and gas flows—turning this segment into the top driver of value in the shale revolution.

Oil & Gas Industry Spending Finally Slowing

With oil prices low and showing no sign of an immediate rebound, the industry is beginning to pull back on spending. 

U.S. Oil Boom Driven in Part by Oilfield Services

The shale revolution’s sweet spot is oilfield services, the lower-risk backbone of the American oil and gas boom that pays off regardless of a play’s economics.

Behind the stardom of the explorers and producers who have put themselves on the revolutionary shale map and absorb most of the risk—are the service providers who make up a highly lucrative market segment.