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CCNet 21/08/14

Refracking Ready To Rejuvenate Shale Revolution 

Amazing Shale Revolution To Bring Down World Food Prices 



 
 
Wells sunk as little as three years ago are being fracked again, the latest innovation in the technology-driven shale oil revolution. Thanks to the dual-deployment of horizontal well drilling and hydraulic fracturing, oil and gas firms have unlocked massive new reserves across the United States, completely transforming America’s energy fortunes in just a matter of years. It’s a common but very serious mistake to predict the future based on what holds true today. In this case, those who have predicted the demise of the shale revolution may soon be forced to eat their words. The pace of technological change is accelerating, redefining possibilities along the way. --Walter Russell Mead, The American Interest, 20 August 2014
 

 
  
 
 

History has taught us that nothing transforms a society or improves the quality of life more than man’s ability to effectively and efficiently harness and develop previously untapped sources of energy. The discovery of fire took us out of the stone-age, hydro-power, combustion, and coal power birthed the Industrial Revolution, our discovery and development of fossil fuels such as oil and gas catapulted us to the modern and technological age we are in today. The recent expansion of oil and gas production in Northern Mexico is expected to top $1 trillion in investment over 10 years and create over 2.5 million new jobs by 2025 creating a new energy paradigm for North America. By combining the United States, Canada, and Mexico, oil and gas production in North America will be bigger than OPEC. --Senator Juan “Chuy” Hinojosa, 
Bakken News, 20 August 2014



The “gale of shale” is hitting the US and the world with surplus energy. In 2000, shale was 2% of natural gas supply; in 2012, it was about 37%; and will be about 65% within the next two decades. The US is poised for shipping out shale gas in liquefied form as net exporter of energy. American motorists are consuming less gasoline, thereby limiting the blend of biofuels like ethanol. The “energy security” lobby of the US is no longer supportive of biofuels. With sufficiency and viability of shale gas, the future demand of ethanol will shrink, resulting into demand compression of corn, especially in the US, and its price will move southwards in the coming years. --Tejinder Narang, The Financial Express, 19 August 2014
 
 
 
 
 
Europe may be on the cusp of developing a shale natural gas sector that could mimic the expansion in the United States, analysis from Wood Mackenzie finds. Robert Clarke, director of research into the area for Wood Mackenzie, said U.S. shale gas production has evolved from operations in easy-to-reach and highly productive basins to what he’s describing as “unconventional 3.0″ — a phase characterized by a lessons-learned approach to areas once considered too difficult for commercial drilling. “Europe is one of the best areas outside of the United States for this to occur,” he said Wednesday in an e-mailed statement. --Daniel J. Graeber, UPI, 20 August 2014
 
 
 
 
 
The violence and cutthroat politics of the Middle East, combined with declining oil and gas production levels, has triggered a subtle but significant shift away from what has long been the center of the energy industry to other regions around the world. On top of that, the region’s production and share of the market is in decline. It all adds up to a subtle but significant shifting of the center of the oil and gas universe toward Africa, Asia, and North and South America. As the Reuters report says, “Advances in horizontal drilling, hydraulic fracturing, seismic surveying and deepwater drilling have opened a much broader global oil and gas resource base, giving exploration and production companies many more options.” --Claude Salhani, Oil Price, 20 August 2014
 
 
 
China is looking to the West – and especially to Texas – as it seeks to unlock its vast shale formations in hopes of launching an American-style energy revolution. Facing stubborn rock and high costs, Chinese oil companies are giving U.S. firms a bigger stake in exchange for the tools and technology of hydraulic fracturing, which helped turn American production around and gave the nation new status as an energy power. --Collin Eaton, Houston Chronicle, 16 August 2014
 
 
 
 
 
1) Refracking Ready To Rejuvenate Shale Revolution - The American Interest, 20 August 2014
 
2) Amazing Shale Revolution To Bring Down World Food Prices - The Financial Express, 19 August 2014
 
3) Oil Companies Turning Away From The Middle East - Oil Price, 20 August 2014
 
4) Texas Senator Hinojosa: US, Canada & Mexico To Be ‘Bigger Than OPEC’ - Bakken News, 20 August 2014
 
5) Europe 'One Of The Best Areas' To Learn From U.S. Shale Success - UPI, 20 August 2014
 
6) U.S. Takes A Crack At China’s Tough Shale - Houston Chronicle, 16 August 2014
 
 
 
 
1) Refracking Ready To Rejuvenate Shale Revolution
The American Interest, 20 August 2014
 
Walter Russell Mead
 
Wells sunk as little as three years ago are being fracked again, the latest innovation in the technology-driven shale oil revolution.
 
Thanks to the dual-deployment of horizontal well drilling and hydraulic fracturing, oil and gas firms have unlocked massive new reserves across the United States, completely transforming America’s energy fortunes in just a matter of years.
 
Critics, however, have pointed out that these new wells often give way to a rapid decline in output, arguing that the shale boom isn’t all it’s fracked up to be. The shale drilling industry is working to solve this problem, and one method, which involves tiny plastic balls added to the slurry pumped underground to break up shale rock, is allowing producers to “refrack” wells previously thought to be tapped out. Reuters reports:
 
Wells sunk as little as three years ago are being fracked again, the latest innovation in the technology-driven shale oil revolution. Hydraulic fracturing, which has upended global energy markets by lifting U.S. crude oil output to a 25-year high, has been troubled by quick declines in oil and gas output. [...]
 
Using minuscule plastic balls, known as diverting agents, pumped at high speeds with water into the old wells, most of which are three to five years old, [Canadian firm Encana Corp.] blocked some the older fractures, or cracks. “The thought is that the diverting agent will go to the cracks with the least amount of pressure,” bypassing cracks with higher pressure and boosting the pressure of the entire well so output climbs, [said David Martinez, Encana's senior manager for Haynesville development].
 
It’s a common but very serious mistake to predict the future based on what holds true today. In this case, those who have predicted the demise of the shale revolution may soon be forced to eat their words. The pace of technological change is accelerating, redefining possibilities along the way.
 
Full post
 
 
 
 
2) Amazing Shale Revolution To Bring Down World Food Prices
The Financial Express, 19 August 2014
 
Tejinder Narang
 
Diminishing ethanol demand will trigger a fall in corn prices and also lead to lower wheat & rice values.
 
The “gale of shale” is hitting the US and the world with surplus energy. In 2000, shale was 2% of natural gas supply; in 2012, it was about 37%; and will be about 65% within the next two decades. The US is poised for shipping out shale gas in liquefied form as net exporter of energy. According to some analysts, crude oil prices may be clipped by 30% (say, from $100 to $70 per barrel) in the foreseeable future. American motorists are consuming less gasoline, thereby limiting the blend of biofuels like ethanol. The “energy security” lobby of the US is no longer supportive of biofuels.
 
Ethanol is produced from corn in the US. (Brazil and India produce ethanol from sugarcane.) Apart from human consumption, corn is extensively consumed by livestock as animal feed. About 970 million tonnes of corn is produced worldwide—the largest single crop in the world. Wheat is around 700 million tonnes, rice is 470 million tonnes and soybean about 300 million tonnes.
 
The US’s maize output, the highest among all countries, is about 360 million tonnes. Out of this, 36% (130 million tonnes) of corn is consumed for ethanol. With sufficiency and viability of shale gas, the future demand of ethanol will shrink, resulting into demand compression of corn, especially in the US, and its price will move southwards in the coming years.
 
Full story
 
 
 
 
 
3) Oil Companies Turning Away From The Middle East
Oil Price, 20 August 2014
 
Claude Salhani
 
The violence and cutthroat politics of the Middle East, combined with declining oil and gas production levels, has triggered a subtle but significant shift away from what has long been the center of the energy industry to other regions around the world.
 
The overall geopolitical situation in the Middle East has been deteriorating since the first major war between Arabs and Israelis in 1948. Conflicts are becoming more violent, weapons used are deadlier, and the number of casualties keeps rising. The two most recent conflicts in the region –the war in Gaza between Palestinians and Israelis — claimed the lives of some 2,000 Palestinians and about 60 Israeli soldiers. The incredible slaughterhouse that is a mixture of civil war, religious conflict and social economic conflagration taking place today in Syria and Iraq bears witness to the frightening level of mounting violence every time a conflict resumes in the troubled region.
 
Despite the fact that the Arabian Gulf region still has the greatest concentration of oil and gas fields anywhere in the world — oil and gas that is easy to harvest and therefore inexpensive to extract and bring to market, giving oil companies a wider profit — the price of war and never-ending conflict has begun giving oil majors serious pause. The cost of doing business in a war zone also requires expenditures that in other areas would not normally exist, such as security for personnel and equipment.
 
Taken together, the challenges of doing business in the Middle East is forcing companies to weigh the advantage of easily mineable resources against the disadvantage of working in conflicted areas.
 
On top of that, the region’s production and share of the market is in decline, according to a Reuters report published in Arab News.
 
In 2013, according to the BP Statistical Review of World Energy, countries in the Gulf and Arab Peninsula East “accounted for almost 33 percent of global oil production and 17 percent of gas output.” But those numbers represent a three-year flat line after years of increases.
 
Middle East oil and gas producers are also increasingly worried about the decline in oil reserves worldwide of production from their areas. It was 48 percent in 2013 — a significant drop from 2005, when it was 56 percent. In 1993, it was 64 percent.
In the 20-year period between 1993 and 2013, oil and natural gas reserves originating from the Middle Eastern counted for just 1 percent, compared to 4.2 percent from the rest of the world.
 
Overall production by the Arab oil powerhouses has been slowing in recent years, including in Saudi Arabia and the UAE, considered to be the cornerstones of the Arabian Gulf.
 
It all adds up to a subtle but significant shifting of the center of the oil and gas universe toward Africa, Asia, and North and South America.
 
Central Asia — especially Kazakhstan, Azerbaijan — also seem to be well positioned to attract new business. Additionally, there have been huge recent discoveries off the coast of Southern Africa, as well as off the coast of West Africa and Latin America.
 
As the Reuters report says, “Advances in horizontal drilling, hydraulic fracturing, seismic surveying and deepwater drilling have opened a much broader global oil and gas resource base, giving exploration and production companies many more options.”
 
Full story
 
 
 
 
 
4) Texas Senator Hinojosa: US, Canada & Mexico To Be ‘Bigger Than OPEC’
Bakken News, 20 August 2014
 
Senator Juan “Chuy” Hinojosa
 
History has taught us that nothing transforms a society or improves the quality of life more than man’s ability to effectively and efficiently harness and develop previously untapped sources of energy.
 
The discovery of fire took us out of the stone-age, hydro-power, combustion, and coal power birthed the Industrial Revolution, our discovery and development of fossil fuels such as oil and gas catapulted us to the modern and technological age we are in today.
 
Just last week, Mexico cleared its final legislative hurdle ending 76 years of state monopoly and approved rules outlining the framework under which foreign companies will invest and drill for oil and natural gas in Mexico.
 
The recent expansion of oil and gas production in Northern Mexico is expected to top $1 trillion in investment over 10 years and create over 2.5 million new jobs by 2025 creating a new energy paradigm for North America. By combining the United States, Canada, and Mexico, oil and gas production in North America will be bigger than OPEC.
 
A new energy renaissance is coming to the Rio Grande Valley in South Texas. No region stands to gain more from Mexico’s energy reforms than South Texas. With the Eagle Ford Shale to the north and the Burgos Basin, also known as the Eagle Ford Shale south of the border, the Rio Grande Valley is at the epicenter of this energy revolution happening in Texas and Mexico.
 
We have already seen how the Eagle Ford Shale has begun to transform South Texas and the Coastal Bend regions. We are seeing tens of thousands of new jobs created, higher wages being paid, billions of dollars in investments in the region and increased traffic and expansion at Port Corpus Christi due to the Eagle Ford Shale boom. In 2013 alone, Texas produced over $110 billion worth of oil and gas.
 
If Texas were its own nation, it would be the 7th largest oil and gas producer in the world. The indirect growth and benefits are also visible. Every time I drive down U.S. 281 and Highway 35 in South Texas, I notice new hotels, restaurants, shopping centers, and pipeline and welding companies, just to name a few.
 
The creation of wealth and prosperity are on full display. Families have more money at the end of the month. Entrepreneurs are finding success with new start-up businesses. County coffers are filling up. The Rainy Day Fund is bringing in more money from increased oil and gas activity allowing us to invest more in our state infrastructure.
 
Now imagine the full picture. If this is what we are seeing from just the Eagle Ford Shale to the north, imagine the growth and prosperity we will see when development is in full swing south of the border. All across the state, country, and the world, people are taking note of this energy revolution in South Texas.
 
Full post
 
 
 
5) Europe 'One Of The Best Areas' To Learn From U.S. Shale Success
UPI, 20 August 2014
 
Daniel J. Graeber
 
Europe may be on the cusp of developing a shale natural gas sector that could mimic the expansion in the United States, analysis from Wood Mackenzie finds.
 
Developments in hydraulic fracturing, or fracking, and horizontal drilling have led to exponential increases in U.S. natural gas production since at least 2005. Geological complexities have presented obstacles to a replication of the phenomenon outside the United States.
 
Robert Clarke, director of research into the area for Wood Mackenzie, said U.S. shale gas production has evolved from operations in easy-to-reach and highly productive basins to what he’s describing as “unconventional 3.0″ — a phase characterized by a lessons-learned approach to areas once considered too difficult for commercial drilling.
 
“Europe is one of the best areas outside of the United States for this to occur,” he said Wednesday in an e-mailed statement.
 
His report says countries outside the United States — notably Mexico, Russia, Poland, Ukraine and the United Kingdom — could capitalize on this potential with the right equipment in place.
 
Full story
 
 
 
 
6) U.S. Takes A Crack At China’s Tough Shale
Houston Chronicle, 16 August 2014
 
Collin Eaton
 
China is looking to the West – and especially to Texas – as it seeks to unlock its vast shale formations in hopes of launching an American-style energy revolution.

 

 
Facing stubborn rock and high costs, Chinese oil companies are giving U.S. firms a bigger stake in exchange for the tools and technology of hydraulic fracturing, which helped turn American production around and gave the nation new status as an energy power.
 
Many of those tools are made in Texas, or nearby.
 
They include cocktails of sand, water and chemicals, and the high-pressure pumps that blast those payloads underground to fracture shale formations and release oil and gas.
 
While hydraulic fracturing has engendered environmental opposition and even some local bans in the United States, the Chinese government is eager to reduce the country’s thick air pollution. It hopes the nation’s shale might provide enough cleaner-burning natural gas to replace coal in power plants.
 
Through a series of new joint ventures, Halliburton, FTS International and others with major operations in Texas are exporting the technological breakthroughs in U.S. hydraulic fracturing, including pressure pumps that use less water and multiwell drilling from platforms called pads that can cut down on an operator’s footprint.
 
The advances, the companies say, could speed up China’s sluggish quest to redo the U.S. energy gusher, tapping resources in Chinese locations ranging from a remote desert to a city larger than Houston.
 
Making inroads in China’s rising shale gas industry also could prop up the Texas oil field services firms in the Eastern Hemisphere’s sturdy drilling market, where they’re already servicing the state-owned oil giants in Saudi Arabia and other Middle Eastern states.
 
Full story
 
 
 
 
 
 
 
 
 
 

 
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