Oil & Gas Boom 2014: Happy 65th, Hydraulic Fracturing

This week, many people within and outside of the oil and gas industry are celebrating the 65th birthday of hydraulic fracturing. We’ll join them, but this celebration is really technically coming two years late.

It is true that 65 years ago this week, Halliburton conducted the first commercially successful application of “Fracking”, as it has come to be known, in Stephens County, Oklahoma. But the process itself was actually invented and experimented with two years earlier by Stanolind Oil and Gas Company, in the Hugoton gas field in Kansas. While those experiments did not appreciably stimulate the wells to which the technique was applied, this was the real birth of hydraulic fracturing, and since that time, the process has been safely and effectively applied to well more than a million oil and gas wells in the United States alone.

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Source: David Blackmon (www.forbes.com)

Crude Exports Would Reduce US Gasoline Prices, RFF Paper Suggests

US crude oil exports would lead to more efficient use of the country’s refineries, resulting in more gasoline and lower prices, a Resources for the Future issue brief concluded.

“With the increased efficiency of Western Hemisphere refinery operations that would come from lifting the ban, US prices for refined products will be reduced—even if world oil prices increase,” it said.

Most US refineries are configured to process heavy grade of crude and cannot process light crudes from the Bakkenand other US tight oil plays, said Stephen P.A. Brown, a visiting fellow at RFF and director of the University of Nevada at Las Vegas’s Center for Business and Economic Research.

Brown and three others wrote the issue brief.

High levels of US light, sweet crude oil production, combined with a general ban on crude exports and transportation bottlenecks, have led to sharply lower prices for crude oil–but not products–in the Midwest because of processing configurations, they noted.

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Source: Nick Snow (www.ogj.com)

Why 2014 could be a Great Year for the Oil and Gas Industry

James C. West, lead oil services and drilling analyst at Barclays Capital, is seeing incredible growth ahead for oil production around the world. In this interview with The Energy Report, West explains how likely constitutional change in Mexico will spur momentous industry growth, along with new deepwater targets opening up in offshore China. Meanwhile, decent commodity prices and economic improvement in Eastern Europe are creating powerful oil price tailwinds. But the best news is closer to home, in North America. Find out which companies are positioned to thrive in the year ahead.

The Energy Report: James, welcome. What were the most significant takeaways for you from the Barclays Capital Conference in September?

James West: There were five major takeaways. Four of those were very positive. One was negative. The first was that the outlook for North America in 2014 has improved. We're getting some tailwinds from commodity prices, of course, but the oil companies that previously were gas companies have now arranged their drilling programs for 2014–2016 and are relaying that visibility to oil service companies that have been operating in North America in a fairly volatile environment for the last two years. Companies are much more optimistic on the outlook for 2014 in North America.

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Source: The Energy Report (www.oilprice.com)

MARKET WATCH: Brent crude oil for March drops slightly

The March ICE contract for Brent crude delivery fell 13¢ to close at $106.35/bbl in Jan. 20 trading on the London market while the New York Mercantile Exchange in New York was closed for the Martin Luther King Jr. holiday.

The Organizational of Petroleum Exporting Countries reported its basket of 12 benchmark crudes was $104.24/bbl on Jan. 20, which was up 19¢ from the previous trading session.

On Jan. 7, the US Energy Information Administration issued a monthly Short-Term Energy Outlook saying North Sea Brent crude oil spot price in December averaged near $110/bbl for the sixth consecutive month. The report was the first time EIA outlined its 2015 forecasts.

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Source: OGJ Editors (www.ogj.com)