Low oil prices could lead to global fuel shortages in the future, the IEA has warned.

8c837f9f-5246-460c-8d68-fd8679db4d46The IEA said Tuesday that while low prices are good for consumers, they could eventually “trigger energy-security concerns.”The low prices are squeezing U.S. shale and other high cost producers. Many have been forced to slash investment budgets to cope with the new reality.The IEA said that spending on exploration and production has fallen 20% this year, and it warned against further cuts.

Now is not the time to relax. Quite the opposite: A period of low oil prices is the moment to reinforce our capacity to deal with future energy security threats,” said Fatih Birol, IEA executive director.

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The watchdog’s main scenario is for prices to gradually recover to around $80 a barrel by 2020, assuming a pick up in global economic growth and hence demand for oil.
But there is a serious risk that prices will stay around $50 a barrel until the end of the decade. If that happens, the IEA warned, the world will be forced to rely on a small number of Middle Eastern producers. Most other producers would find prices that low unsustainable, and would be priced out of the market.

SAFE HARBOR STATEMENTS:
Certain statements in this blog post may contain forward-looking information within the meaning of Rule 175 under the Securities Act of 1933 and Rule 3b-6 under the Securities Exchange Act of 1934, and are subject to the safe harbor created by those rules. All statements, other than statements of fact, included in this release and other potential future plans and objectives of the company, are forward-looking statements that involve risks and uncertainties. There can be no assurance that such statements will prove to be accurate and actual results and future events could differ materially from those anticipated in such statement.
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Drillers Unleash ‘Super-Size’ Natural Gas Output

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In spite of current low prices, the enormous amounts of natural gas contained in the U.S. subsoil make it very profitable to extract if modern drilling techniques are used.

Some energy companies taking advantage of these advances are extracting gas from the Haynesville Shale, which spans Louisiana and Texas. The gains come from extending horizontal drilling by thousands of feet.

Experts claim that if this trend continues, the era of low American gas prices could extend for decades into the future. The cost of natural gas is important because it increasingly powers the U.S. economy and its demand has risen at a 2.4% annual growth rate during the last decade.

The Haynesville field, which produces 8% of the nation’s natural gas, is the second largest in the United States after the Marcellus Shale. Moreover, it has the benefit of being located near several major pipelines and industrial facilities, thus, an increase in production would have a large impact on gas prices across the entire country.

Production of natural gas has gained relevance because:

  • Domestic natural gas is abundant and inexpensive, mainly due to the newer drilling and extraction techniques.
  • Gas now is used to generate about 30% of U.S. electricity and heat nearly half of all American homes.
  • Its cost is critical to the current administration’s aim to reduce carbon emissions in electricity generation.

Furthermore, the costs of extracting gas using hydraulic fracturing have fallen recently. Experts agree that inexpensive gas will have a profound impact on energy generation and the overall U.S. economy.

SAFE HARBOR STATEMENTS:
Certain statements in this blog post may contain forward-looking information within the meaning of Rule 175 under the Securities Act of 1933 and Rule 3b-6 under the Securities Exchange Act of 1934, and are subject to the safe harbor created by those rules. All statements, other than statements of fact, included in this release and other potential future plans and objectives of the company, are forward-looking statements that involve risks and uncertainties. There can be no assurance that such statements will prove to be accurate and actual results and future events could differ materially from those anticipated in such statement.

Oil to climb ‘substantially’ higher

Pumpjacks taken out of production temporarily stand idle at a Hess site while new wells are fracked near Williston, North Dakota November 12, 2014. REUTERS/Andrew Cullen

Pumpjacks taken out of production temporarily stand idle at a Hess site while new wells are fracked near Williston, North Dakota November 12, 2014. REUTERS/Andrew Cullen

World oil prices will rise “substantially” in the coming months after hitting the bottom of a months-long rout several weeks ago, with a supply squeeze looming as early as this summer, according to PIRA Energy’s Gary Ross.

The “magic of price” has caused a rapid resurgence in global oil demand and triggered a surprisingly steep collapse in the number of U.S. drilling rigs that may be more difficult to reverse than many expect, Ross, a founder and executive chairman of influential consultants PIRA Energy Group, told Reuters in an interview.

“The balance is getting tighter and while we’ve accumulated quite a bit of inventory, and we may accumulate a bit more, the worst is pretty much over,” said Ross.

And Saudi Arabia’s spare production capacity has dwindled as the kingdom pumps oil at a record rate, leaving the global market facing a summer of higher demand and growing geopolitical risks with a spare supply cushion of as little as 700,000 barrels per day (bpd), or around 0.7 percent of the market.

“The world has been focused for the last six months on destroying supply,” Ross said on Monday. “Increasingly the mindset is going to change, they’ll have to start thinking about creating supply again, and that’s going to mean a lot higher prices than today. Substantially higher.”

To see a video of the interview: reut.rs/1DxWk93

PIRA, one of the first big energy consultancies to anticipate the tumble in oil prices last fall, is among others, including big commodity traders Gunvor and Vitol, in calling a bottom, despite U.S. crude stocks that have swollen to record levels more than 20 percent higher than last year.

Beyond calling the bottom, however, Ross is taking a more bullish view than some analysts who have warned of a prolonged lull or a new slump to as low as $20.

“Prices are way too low; they can’t last, especially with such small spare capacity,” he said.

SAFE HARBOR STATEMENTS:
Certain statements in this blog post may contain forward-looking information within the meaning of Rule 175 under the Securities Act of 1933 and Rule 3b-6 under the Securities Exchange Act of 1934, and are subject to the safe harbor created by those rules. All statements, other than statements of fact, included in this release and other potential future plans and objectives of the company, are forward-looking statements that involve risks and uncertainties. There can be no assurance that such statements will prove to be accurate and actual results and future events could differ materially from those anticipated in such statement.

 

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Amid Oil Downturn, Silver Lining for Shale Producers

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The slump in oil prices is more than a year old now, with bad news continuing for producers around the world, including those responsible for the shale revolution in the U.S.

Just look at second-quarter earnings, which largely show disappointing results again for oil companies and their shareholders.

But while there may be no end in sight for the industry’s dilemma, there may be a silver lining for producers, especially those using the downturn to hone drilling techniques, like hydraulic fracturing, to reinforce their output and profits later.

Among those who see such positive signs for drillers is Bill White, the chairman of Houston operations for Lazard, the global investment bank, and a former three-term mayor of the Texas metropolis.

“Most of the shale oil and gas is produced from a relatively small percentage of the shale wells and a fairly small percentage of the fracks in each well,” White said in an interview. “When the industry learns to drill more wells like the best wells and to make more fracks productive, you will see a vastly greater amount of oil and gas produced in the United States at the same total cost.”

White, while well known for his political experience in Houston, has spent much of his career in energy, including as an official in the Clinton administration and a chief executive of a company that built oil service businesses.

“This is a topic I discuss weekly and almost daily with senior executives of the service companies and the oil and gas industry,” White said. “There’s a lot of progress being made. In this sense, that is the next big chapter in the shale revolution.”

As an example, White cited the U.S. independent EOG Resources, which told investors in May that it could earn a higher return producing oil in Texas at $65 a barrel then than it did at $95 in 2012, thanks to new technology and other cost-saving measures.

“They’re producing more oil per dollar spent,” White said of EOG, which he noted is not one of Lazard’s clients.

Among the innovations coming down in cost is micro-seismic technology that interprets sound waves to more precisely guide the direction of drilling and the application of fracking, he said.

The energy research firm Wood Mackenzie offers a similar outlook in a new paper that draws a comparison with the lull in Gulf of Mexico drilling following the blowout of BP’s Macondo well in 2010 and a government moratorium on new wells.

“Operating practice and company psychology changed when players stopped running on a leasing treadmill and increased their focus on basin science,” Wood Mackenzie said.

Once offshore drilling resumed, the average size of discoveries was 30 percent larger, even as the number of discoveries fell by half, according to the analysis, which credits producers with using the slow-down to enhance the ways they vet prospects and design wells.

“Today’s tight oil wells are better producers than those drilled only a few years ago,” Wood Mackenzie said, referring to shale formations. “Expected ultimate recoveries have grown by over 10 percent each year with the application of better drilling technology, more robust modeling and experienced asset teams.”

With the “pencil-sharpening” exercises only increasing in the oil and gas sector, those improvements in ultimate recoveries will continue onshore as well as offshore, it added.

Said White: “If the last 10 years have been a shale revolution with a lot of excitement and celebration, then over the next 10 years we’ll be watching the revolutionaries pay greater attention to the critical task of deploying technologies that steadily lower the average cost of production.”

Refracturing presents an economic alternative to drilling new wells.

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Refracturing presents an economic alternative to drilling new wells.
There is, it seems, a constant refrain, in this post-oil-price-rout environment, about the survival of shale operators and, by extension, their suppliers. The immediate need is to cut costs across the board. Yet, even more important is the need to maintain—and even increase—production from existing assets. The decline curve in unconventional reservoirs is steep, a trend typically countered by the drilling and completion of new wells, which is both costly and time-consuming. At current oil and gas prices, in many cases, completing new wells does not provide the requisite Internal Rate of Return (IRR) to pass economic muster.

Enter refracturing. A few years after coming onstream, most horizontal shale wells produce at a fraction of their initial rates, leaving large volumes of unrecovered oil and gas in the rock. These bypassed reserves could be accessed through refracturing. While this is not a new technique, it is one that is being used more and more, because of the oil price decline. Vertical wells have been refractured since the mid-1990s, but with mixed results, earning it the nickname “pump and pray.” However, the industry’s understanding of fracturing and horizontal completions evolved during the shale boom to such an extent, that the techniques and technologies now available certainly can play a key role in the efficient application of refracturing in horizontal wells. In fact, according to conservative estimates as many as 75,000 wells in the U.S. could be candidates for a second wave of fracturing.

Refracturing provides a simpler, more logical and lower-cost alternative to drilling new wells. If output is declining in an oil or natural gas well, and fracturing the well provided sizeable production, then repeating the process, on the same well, should provide another boost to production and ultimate recovery. The likelihood of enhancing recovery is supported even further by the fact that many of the first- and second-generation unconventional wells were drilled with fewer stages, and with less proppant, than is commonplace today. With a higher density of perforation clusters and larger volumes of proppant used for refracturing, it is conceivable that these older wells would see a significant boost in production, at a much lower investment.

However, stimulating new rock by refracturing is not without its challenges, particularly for today’s long horizontal wells with multi-stage completions. Most refractures today are done without mechanical isolation, opening all stages and perforation clusters to fluid flow, thus posing several questions:

Which part, or parts, of the old well will benefit from refracturing?
Did the refracturing open new fractures, or just reopen existing, depleted fractures?
How can selected stages be isolated, and only those stages be refractured? What tools/techniques are available for mechanical isolation?
In the absence of mechanical isolation, are diverters working to isolate and move the refracturing down the well? Is the entire wellbore being restimulated or just portions of it?
How does the new stimulated rock volume (SRV) differ from the SRV achieved in the first stimulation? Does it really add to the original estimated ultimate recovery, or only provide a temporary boost in production?
These questions are fundamental to the decision to refracture. Refracturing opportunities range from remedial work—which fixes stages that were not completed properly or where proppant flowed back into the well—to enhancing recovery through the reenergizing of the fracture network, creating a new network for delivery of production-enhancing chemicals. In all cases, the success of the refracture will first need to be modeled, within the context of the specific project, and diagnosed, through the use of measurement techniques, such as microseismic monitoring. Successful implementation of just such refracturing programs will help us, as an industry, beat the decline.

REFRACTURING CHALLENGES
The Barnett, Eagle Ford, Haynesville and Bakken are among the oldest of the shale plays, with large inventories of wells that have been on production for several years. Pilot refracturing programs have been underway in these plays; with operators becoming more adept at identifying high-quality refracturing candidate wells, and applying smart operating practices to enable successful refracturing. It is expected that wells in these plays will benefit the most from refracturing, since the oldest wells present opportunities to apply knowledge that came later in a play’s life, such as cluster spacing, impact of fluid type and proppant volumes. While refracturing, generally, results in increased production, one question remains unanswered: Is the refracturing creating new fractures, or is it reactivating old depleted fractures?

Microseismic data from original frac and subsequent refracturing.
Fig. 1. Microseismic data from original frac and subsequent refracturing.
To gain an understanding of where new rock is being stimulated, we need to look at an example, where surface microseismic data have been acquired during the original frac, as well as when the well was refractured, after several years of production. The two time-lapse data sets (Fig. 1) are very consistent, with similar spatial bias and uncertainty in the event positioning, allowing for direct, accurate comparison of the microseismic data from the two acquisitions.

The microseismic data acquired during the refracture determine several trends that correlate with the original microseismic data, suggesting re-activation of depleted fractures. Microseismic activity is also apparent in regions that did not demonstrate any such activity during the original frac, indicating the creation of new fractures. The results also indicate that, generally, the refracture azimuth is the same as the original frac, with limited evidence of fracture re-orientation during the refracturing. While studies suggest a possibility of fracture re-orientation during refracturing, it is typically a function of the time elapsed between the original fracturing and the refracture. It has also been observed that the longer the duration between the original fracture and refracture, the lower the possibility of fracture re-orientation. This is an important consideration when selecting candidates for refracturing. Changes in stress orientation can significantly alter the results and success of the refracture.

The case study represented in Fig. 1 had the advantage of the original hydraulic fracturing results to compare against. Hence, in addition to understanding the spatial and temporal distribution of the overall refracturing program, the microseismic information and associated completion evaluation provided real-time information about the portions of the program that contributed to the stimulation of new drainage areas. In most cases, however, microseismic technology was not used in the initial fracture stimulation for time-lapse determination, so those data are not available. Microseismic events that relate to stimulating new rock during a refracturing program can be differentiated by integrating the results with treatment pressure analysis, particularly net pressure and initial shut-in pressure (ISIP).

ISIP and microseismic events during the refracturing.
Fig. 2. ISIP and microseismic events during the refracturing.
Figure 2 shows a plot of the ISIP and microseismic events during the refracture. The x-axis shows the stage number during the refracture. The primary vertical axis on the left shows the ISIP computed for every stage. The solid red line shows the ISIP recorded during the original frac job, representing the virgin rock stress. The secondary vertical axis, on the right, shows the cumulative microseismic event count.

It takes several pumping cycles (stages) before we see any significant microseismic activity, Fig. 2. For these initial stages, the recorded ISIP is less than the ISIP recorded during the original frac. This indicates that the fluid and proppant volumes being pumped are working to overcome the depletion caused by production. Once the ISIP reaches or exceeds the ISIP of new rock, a significant increase in microseismic activity is apparent. Microseismic events recorded beyond this point most likely belong to new fractures being created. The information above is used to create a map of the depleted zones, using the location of microseismic events recorded while the ISIP is less than that of new rock.

To validate this observation, MicroSeismic, Inc. conducted a geomechanical analysis of the refracture, utilizing Istasca’s FLAC3D geotechnical modeling code. A geomechanical model was created to model a hydraulically fractured well with depleted fractures. An implicit discrete fracture network was described in the volume, based on regional knowledge and microseismic observations from nearby wells.

Geomechanical properties and rock failure criteria were established from offset well logs, the world stress map, microseismic focal mechanisms, DFIT and ISIP.

A refracture schedule ran for 50 hr, while pumping at a rate

SUMMARY
Based on early success stories, as well as the sheer number of wells that would benefit from refracturing, it is expected that shale well refracturing activity in North America will increase steadily as companies optimize the process. There are, of course, risk factors that need to be taken into account, especially when refracturing older wells that may have completions that have been compromised over time. Also, not every well will respond to refracturing. Understanding the performance, and the critical factors that will ensure success, is key.

Texas Now Produces More Natural Gas Than All of OPEC !

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Everything is bigger in Texas, especially natural gas production. The Lone Star State alone produces more natural gas than every country in the world, except Russia, and that includes every member state of OPEC.

The American Petroleum Institute has released a graphic showing that Texas produces 18.81 billion cubic feet of natural gas per day, well above any member of OPEC. The graphic is meant to show how hydraulic fracturing and horizontal drilling into shale formations has made the U.S. the world’s liquid fuels producer.

“This is what energy security looks like, Thanks to innovations in hydraulic fracturing and horizontal drilling, Texas  now outpaces all OPEC nations in natural gas production.” Tracee Bentley,  Petroleum Council,

Individual U.S. states now produce so much natural gas, they outrank whole countries when it comes to daily production. Iran, the largest OPEC gas producer, only produces 15.43 billion cubic feet of natural gas per day. Qatar, OPEC’s number two gas producer, produces 15.09 billion barrels per day.

Louisiana and Pennsylvania also rank among the world’s top 15 natural gas producers. Louisiana produces more gas major producing countries like the Netherlands and Indonesia, while Pennsylvania beats out Mexico and the United Arab Emirates.

READ FULL ARTICLE HERE

Aschere Energy is Currently drilling in “a World Class Producing Region” , Click here to receive information on our Latest Project.

SAFE HARBOR STATEMENTS:
Certain statements in this blog post may contain forward-looking information within the meaning of Rule 175 under the Securities Act of 1933 and Rule 3b-6 under the Securities Exchange Act of 1934, and are subject to the safe harbor created by those rules. All statements, other than statements of fact, included in this release and other potential future plans and objectives of the company, are forward-looking statements that involve risks and uncertainties. There can be no assurance that such statements will prove to be accurate and actual results and future events could differ materially from those anticipated in such statement.

MEMORIAL DAY TRAVEL MORE AFFORDABLE THANKS TO U.S. ENERGY RENAISSANCE !

Memorial Day travelers and the businesses that cater to them are reaping the benefits of increased U.S. oil and natural gas production, said API Chief Economist John Felmy.

“As we head into the Memorial Day weekend, motorists are getting some welcome relief at the pump,” said Felmy on a press conference call today. “Thanks to hydraulic fracturing and horizontal drilling, the U.S. is experiencing a renaissance in domestic oil and natural gas production. The benefits for U.S. consumers – as well as manufacturers, the travel and tourism industry and frankly our entire economy – are hard to overstate.”

The national average price of gasoline is about $1 per gallon less than it was at this time last year, according to AAA.

“Government policymakers should not take these things for granted,In order to maintain a robust supply of domestic oil, it is essential that the industry be allowed to explore for and develop new resources.” – John Felmy

“That means companies must be able to lease acreage and obtain permits in a timely fashion. It also means the federal and state governments should avoid punitive tax regimes that would cause energy companies to look elsewhere for the best opportunities.
“Geopolitical turmoil that takes foreign oil supplies offline can be difficult to predict or control, but the U.S. will always have control over how much energy we produce here at home. With the right policies, our energy renaissance can endure for decades and help even more families afford to take a vacation on Memorial Day weekend.”

API represents all segments of America’s oil and natural gas industry. Its more than 625 members produce, process, and distribute most of the nation’s energy. The industry also supports 9.8 million U.S. jobs and 8 percent of the U.S. economy.

SAFE HARBOR STATEMENTS:
Certain statements in this blog post may contain forward-looking information within the meaning of Rule 175 under the Securities Act of 1933 and Rule 3b-6 under the Securities Exchange Act of 1934, and are subject to the safe harbor created by those rules. All statements, other than statements of fact, included in this release and other potential future plans and objectives of the company, are forward-looking statements that involve risks and uncertainties. There can be no assurance that such statements will prove to be accurate and actual results and future events could differ materially from those anticipated in such statement.