Monday, March 30, 2015

Oil glut continues as prices down; Bakken should be stabilized for safety

(Chart: Business Insider, Data: Baker Hughes)

Oil prices crashed, but US output is still rising. How long can that last?

Brad Plumer      March 27, 2015     Vox

.....When oil prices were soaring during the mid-2000s, energy companies found it highly profitable to use fracking, horizontal drilling, and other techniques to extract oil from shale formations in places like Texas and North Dakota. The result: a glut of oil and a major crash in global oil prices back in 2014.

What's surprising, though, is that US oil output has kept growing even though oil prices have fallen by half since last summer.....

.... Most of the oil wells drilled in the shale regions of North Dakota and Texas tend to produce a lot of crude very early on and then start declining sharply within a few years. (Output from a typical well in the Bakken declines by 65 percent after the first year.)*

So over time, oil producers will need to keep drilling new wells to maintain production. But it's costly to drill a new well, and low oil prices make this a less-attractive proposition at the margins. Companies like EOG Resources and Hess have already announced cuts to capital spending this year.....    more here

Critics press industry to make Bakken oil safer

    Duluth News Tribune

MOORHEAD, Minn. — North Dakota environmentalists want oil companies to reduce volatile gasses in Bakken crude. Regulators, however, say they’re taking a different tack that’s cheaper for the industry and still improves safety.

The gasses remain a flashpoint for producers, environmental and safety groups concerned about transporting the highly flammable Bakken crude. Oil train shipments from the Bakken have skyrocketed in recent years, heightening the worries.....

 ....“The bottom line profitability of the oil industry is trumping all the rest of us, our safety,” said Don Morrison with the North Dakota environmental group Dakota Resource Council.

Much of the light crude oil in Texas is stabilized before it’s shipped, he added. “To stabilize the oil so it is safer like they do in Texas, oil companies are going to have to spend some money. That is true. 

But isn’t that the cost of doing business?”....     more here

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