Bakken Shale News

Fracking Companies Likely to Close

Industry Executive Predicts 50% Closure Rate in 2015
More Fracking Companies Likely to Cose

More Fracking Companies Likely to Cose

Will 50% of the fracking companies be gone by the end of the year?

This is precisely the opinion of Rob Fulks, pressure pumping marketing director at Weatherford International Plc, who spoke with Bloomberg at the annual IHS CERAWeek in Houston last week. Fulk predicts that of the 41 current companies that provide fracking services, only 2o will still be viable at year’s end.

At the start of 2014, there were 61 fracking service providers in the U.S. and those numbers have decreased as the demand for fracking has dropped off dramatically. Many firms are forced to leave wells unfinished because they are no longer economically viable. Another reason for the decline is the big mergers over the last few months, including Halliburton;s plan to buy Baker Hughes.

Related: Halliburton to Merge With Baker Hughes

Weatherford has had their own share of troubles, announcing plans this week to plans to cut 18% of its staff by the end of the second quarter. These actions are part of a spending cut designed to save the company $640 million this year.

According to Bloomberg, Fulks wouldn’t say whether Weatherford is want to acquire other fracking companies or their unused equipment. “We go by and we see yards are locked up and the doors are closed,” he said. “It’s not good for equipment to park anything, whether it’s an airplane, a frack pump or a car.”

Pipeline Safety Strengthened in North Dakota

Gov Dalrymple Provides $1.5 Million for New Research
Bakken pipeline threatened

Pipeline Construction

On Monday, Governor Jack Dalrymple took steps to strengthen the state’s regulatory oversight on crude pipelines by signing House Bill 1358.

This legislation provides $1.5 million for a study of pipeline technology and gives the state greater authority to regulate construction.

After a series for accidents involving leaks and accidents, Gov, Dalrymple sought help from the federal Pipeline and Hazardous Materials Safety Administration in order to help fund university research in pipeline safety.

Related: PHMSA Offers Pipeline Safety Grants

Gov. Dalrymple offered a statement, saying that “This legislation builds on our ongoing work to enhance pipeline safety in North Dakota. With this bill’s passage, North Dakota will require significantly more from pipeline builders and operators. At the same time, the state has significantly expanded its pipeline reclamation fund so that we can also resolve land and water restoration needs that are more than 30 years old.”

The issue of pipeline safety and environmental concerns have increased as more oil has been produced in the United States and producers must find ways to move the product. TransCanada Corporaiton has been working since 2008 to get approval to extend the Keystone, allowing another 800,000 barrels of petroleum to flow from the Bakken region to the Gulf Coast.

Related: Obama Issues Keystone Pipeline Veto

Read more at legis.nd.gov


Halliburton Lays off 10% of Workforce

Cuts in Light of Q1 Losses
Halliburton Reports 2015 Q1 Loss

Halliburton Reports 2015 Q1 Loss

This week, Halliburton announced first quarter losses of $643 million and acknowledged that they have cut 9,000 jobs over the past two quarters.

The Houston-based oil giant has been forced to scale back operations in light of plummeting energy prices. They confirmed on Monday that the number of layoffs represent approximately 10% of their workforce.

Related: Halliburton Closing Minot Facility

Acting CFO Christian Garcia said “We are continuing to take a hard look at our operations and additional actions will likely be required in the second quarter. We believe that the long-term prospects of the industry remain sound. We are excited about the pending Baker Hughes transaction, which will significantly enhance the growth potential of our organization”

In light of the $35 billion takeover of Baker Hughes, Halliburton is selling several business to secure the necessary regulatory clearance. Once the merger is approved by antitrust regulators, the new entity will surpass Texas-based Schlumberger as the world’s largest oil drilling company.

Related: Halliburton to Merge With Baker Hughes

Read more at halliburton.com

 


DOT Tells Oil Tankers to Slow Down

Emergency Order Restricts Speed to 40 MPH
Crude by Rail

Crude by Rail

The DOT’s Federal Railroad Administration issued an emergency order on Friday that establishes a maximum speed of 40 miles an hour for certain trains going through high threat urban areas.

Related: Bakken Crude by Rail Under Attack

Citing “gaps in the existing regulatory scheme”, the agency beefed up the 2014 voluntary agreement by making this speed limit a requirement for trains hauling crude oil and other flammable liquids. The emergency order defines affected trains as:

  1. 20 or more loaded tank cars in a continuous block or 35 loaded tank cars of class 3 flammable liquid
  2. AND at least one DOT-111 tank car loaded with class 3 flammable liquid
The emergency order states that “Speed is a factor that may contribute to the severity of a derailment or the derailment itself. Speed can affect the probability of an accident. A lower speed may allow for a brake application to stop a train before a collision, or allow a locomotive engineer to identify a safety problem and stop the train before an accident or derailment occurs.”

The requirements go into effect immediately and carry potential penalties of $105,000 dollars for companies that don’t comply.

This order is one of many attempts by the DOT to address this huge issue of rail safety including two previous emergency orders in the last two years. The department has also proposed a more comprehensive series of regulations that are under review by the White House that includes a stronger tank car design and better train braking systems.

Read more at fra.dot.gov


Will Bakken Man Camps Disappear?

Low Crude Prices Claim More Victims
Budget Cuts Affect Man Camps

Budget Cuts Affect Man Camps

As low crude prices continue to ravage the industry, the latest victims may be the man camps throughout the Bakken. These camps that have housed thousands are slowly emptying, and some are folding for good.

Read about Bakken Housing, Lodging, Hotels, & Man Camps

Man camps provide temporary employee housing to oilfield workers and have been a prominent feature dotting the landscape since the oil boom brought an influx of people to the region. These camps often provide dining, laundry, and recreational facilities and were given as a perk when things were hopping. But with energy companies tightening their belts, providing housing for workers is quickly on the chopping block for some companies. Instead of offering these perks, some employers are asking workers to cover their own rent, clothing, and transportation.

Jeff Zarling, president of Williston (N.D.)-based Dawa Solutions Group told Bloomberg, “It was a necessity of recruiting. But today, what we’re seeing is companies want to get out of the housing business.”

Several companies have recently announced intentions to get out of the man camp business including Capital Lodge, one of the largest man camps in the Bakken that has plans to downsize and become a commercial hotel-style operation. Civeo Corp reported an 89% decline in their share price this year. The company slashed its workforce on Monday and said revenue could fall by a third.

Read more at bloomberg.com

 


Crude by Rail Facing Tougher Standards

NTSB Urging Stricter Controls for Bakken Carriers
NTSB Calls for Stricter Rail Standards

NTSB Calls for Stricter Rail Standards

The National Transportation Safety Board (NTSB) is urging tougher standards for oil tankers carrying Bakken crude.

Related: Bakken Crude by Rail Under Attack

In a 10 page letter to the Pipeline and Hazardous Materials Safety Administration (PHMSA), the NTSB outlined its findings from their study of recent train derailment accidents and concluded that the current fleet of DOT-111 tank cars rupture too quickly and result in spillage and ignition. The agency also found that performance of the industry’s enhanced CPC-1232 rail car is unsatisfactory.

Controversy over the safety of moving crude by rail has skyrocketed as several high-profile accidents have recently made headlines. This combined with a sharp increase in crude by rail since the start of the oil boom has many concerned.

Related: Crude by Rail Up 1700%

“We can’t wait a decade for safer rail cars,” said NTSB Chairman Christopher A. Hart. “Crude oil rail traffic is increasing exponentially. That is why this issue is on our Most Wanted List of Safety Improvements. The industry needs to make this issue a priority and expedite the safety enhancements, otherwise, we continue to put our communities at risk.”

Based on their study, the NTSB gave the following recommendations that would require:

  1. All new and existing tank cars used to transport all Class 3 flammable liquids be equipped with thermal protection systems that meet or exceed the thermal performance standards
  2. All new and existing tank cars used to transport all Class 3 flammable liquids be equipped with appropriately sized pressure relief devices that allow the release of pressure under fire conditions and that minimizes the likelihood of energetic thermal ruptures
  3. An aggressive, intermediate progress milestone schedule, such as a 20 percent yearly completion metric over a 5-year implementation period, for the replacement or retrofitting of legacy DOT-111 and CPC-1232 tank cars to appropriate tank car performance standards
  4. Establishment of a publicly available reporting mechanism that reports at least annually

Read more at ntsb.gov


Bakken Production Expected to Decline

EIA Predicts Decline of 23,000 Barrels Per Day
Bakken Production Will Decline in May

Bakken Production Will Decline in May

For the first time since the Energy Information Administration (EIA) began tracking drilling productivity, the agency reported on Monday that oil and gas production will decrease for the Bakken and other shale formations across the country.

Shale production has been a major player in boosting US output to more that 4 million bpd and has played a key role in the collapse of oil prices worldwide in 2014.

Production from the Bakken formation has increased 28% year-over-year despite declining rig counts across the area.

Related: Record Production for Bakken

The EIA estimates that the Bakken will experience a decline of 23,000 barrels of oil a day to 1.3 million in May. Natural gas will also decline by 21 million cubit feet per day.

Speaking with Bloomberg, Carl Larry, head of oil and gas for Frost & Sullivan LP  said, “We’re going off an inevitable cliff because of the shrinking rig counts. The question is how fast is the decline going to go. If it’s fast, if it’s steep, there could be a big jump in the market.”

Read more at eia.gov


PHMSA Offers Pipeline Safety Grants

Students and Faculty to Receive $2 Million for Innovations
Bakken pipeline threatened

Pipeline Construction

As oil pipeline safety concerns escalate across the country, the U.S. Department of Transportation’s Pipeline and Hazardous Materials Safety Administration (PHMSA) is ramping up its efforts to meet the growing demand for innovation.

Related:ND Defines Stricter Rules for Pipeline Construction

In addition to hiring more that 100 new safety inspectors this year, the PHMSA will also be awarding $2 million in grants for students and faculty to research pipeline safety solutions. These grants designed to expose new engineers and scientists to the technical side of the energy transportation sector.

“We’re not simply offering grants through the CAAP; we’re demonstrating to engineering and technical students that their disciplines are in demand in the energy pipeline sector,” said PHMSA Acting Administrator Timothy Butters. “PHMSA provides safety oversight for the country’s 2.6-million-mile pipeline network, and we need out-of-the-box thinkers.”

Grant proposals will be evaluated on scientific merit, quality, management plans, work tasks, budgets and schedules. The PHMSA is specifically seeking projects that address technical gaps in the following areas:

  • Preventing and Mitigating Pipeline Corrosion
  • Developing Locatable Plastic Pipelines
  • Developing Inspection Tools to Quantify Pipe Strength and Toughness
U.S. Senator for North Dakota John Hoeven, commented“As we work towards building a comprehensive ‘all-of-the-above’ energy plan for our country, it’s important to ensure that we build the right kind of infrastructure to support our energy needs, now and into the future,” Hoeven said. “We must ensure that our infrastructure is reliable, safe and efficient, and this grant will enable universities to do the innovative research that will do just that.” 

The debate around the safety of cruse pipelines has heated up since the shale oil boom in 2008. Most recently, President Obama delayed the Keystone pipeline when he vetoed bill saying he wants to hold off a final decision until further environmental reviews are complete.

Related: Obama Issues Keystone Pipeline Veto

Read more at phmsa.dot.gov


ConocoPhillips Reveals Plan to Stay Flexible

Company Will Focus on Bakken Shale
ConocoPhillips New Plan

ConocoPhillips Capital Spending | click to enlarge

ConocoPhillips announced yesterday the company’s strategic plans through 2017 that are designed to increase flexibility and returns while reducing costs.

Related: ConocoPhillips Reports Q4 Losses

In what the ConocoPhillips calls their “disciplined approach for the new world” the company will shift capital allocations to unconventional shale plays because of the low supply costs and flexibility for growth. The long range plans set out in a recent company presentation include:

  • Spending 50% more over the next three years
  • Focusing on the Eagle Ford, Bakken and Permian basins
  • Capital spending will stay at $11.5B/year through 2017 but shift from long-term, expensive projects into relatively cheap and immediate shale wells
  • Boosting production by 6.3% to 1.7M bbl/day by 2017.
  • Cost reduction programs to source $1B of reductions in 2016 compared to 2014
Ryan Lance, chairman and chief executive officer noted “The energy landscape has changed dramatically as a result of the recent decline in commodity prices, but we responded quickly to position the company as a core energy holding in a lower, more volatile price environment.”

ConocoPhillips’ strategy for the Bakken includes tapping into the highest value part of the play, increasing drilling and completion efficiencies and optimizing field development through pilot programs for the following:

  • Testing fluids, proppant loading and cluster spacing
  • 2 pilots in execution testing Middle Three Forks well placement
  • 5 pilots underway testing tighter spacing

Read more at conocophillips.com


Bakken Crude by Rail Under Attack

Lawsuit Threatens the Flow of Oil Across Tribal Lands
Crude by Rail

Crude by Rail

On Tuesday, the Swinomish Indian Tribal Community filed a lawsuit in federal court against BNSF Railway to restrict the movement of crude oil by rail through their reservation. They are seeking a permanent injunction that requires the company to live up to a 1991 agreement to limit the number of trains on its land to two per day.

The Tribal Community is located in Washington State, but the train tracks that run across its land bring crude from the Bakken region of North Dakota. Many believe that this oil is more dangerous.

Related: Is Bakken Oil More Flammable?

“Experiences across the country have now shown us all the dangers of Bakken Crude,” Swinomish Indian Tribal Community Chairman Brian Cladoosby said in a statement. “It’s unacceptable for BNSF to put our people and our way of life at risk without regard to the agreement we established in good faith,” he said.

Recent reports have crude by rail transport up 1700% over the last five years and accidents at a near-tenfold rise since 2008. With oil production currently at all time highs many fear that the number of accidents will increase and add to recent incidents:

  • 3/8/15:Train carrying crude oil derails in northern Ontario more
  • 3//7/15 Train carrying crude oil derails in Canada more
  • 3/6/15: Oil train carrying Bakken crude explodes in Illinois more
  • 2/14/15 Train carrying crude oil derails in Canada more
  • 2/17/15: WV derailment carries Bakken crude in more

Related: Bakken Oil Safety

 

photo: © Kolyvanov | The Railway Tanks Photo


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