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Page added on February 14, 2018

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Clean Oil That Only Costs $20

Production

The United States is in the midst of an energy revolution.

Oil production has risen by 5 million barrels per day (bpd) since 2010, an increase of nearly 100 percent. New technology, particularly techniques in shale oil drilling, has opened up vast new opportunities for oil and gas companies.

The proof is in the numbers. In 2017, the United States averaged 9.3 million bpd. This year, the EIA predicts that U.S. oil and gas production will reach record levels, averaging 10.3 million barrels bpd to surpass the record reached in 1970 (9.6 million bpd).

In 2019, the EIA expects U.S. production to average 10.8 million bpd, which will allow the U.S. to rival Saudi Arabia and Russia as the world’s largest oil producer.

If there’s one big reason for the U.S. energy revolution, it’s that new technology has allowed American companies to beat the competition

Thanks to such innovation, a barrel of oil produced in the U.S. can cost as little as $20 to produce.

Not even OPEC could stop the host of American shale drillers, who persevered through a global production glut and historically low prices from 2015 to 2017, and who have now emerged victorious.

But the shale revolution is starting to reach its limits. With shale production likely to peak shortly after 2020, investors are looking for new, innovative technologies that will break new barriers to output.

Companies like Petroteq Energy Inc. are pioneering new approaches to energy extraction. While OPEC producers stick to the tried-and-true methods, American companies are exploring new horizons, watching production costs fall and profits shoot through the stratosphere.

A key area where advancements will be made is in oil sands, a sector most companies had left for dead. Thanks to Petroteq and other innovative firms, the technology to unlock clean, cheap oil sands could soon fuel the next chapter of the U.S. energy revolution.

Oil Sands: the Alternative Unconventional

Oil sands are deposits of bitumen, a thick and viscous substance that can be refined into petroleum products.

The potential trapped within oil sands deposits is staggering: the Canadian tar sands deposits in Alberta is estimated to contain 165.4 billion barrels.

In the United States, large deposits of oil sands bitumen remained untapped. In Utah, for instance, there are bitumen deposits totaling 30 billion barrels.

However, three things are holding back oil sands exploitation: cost, political opposition and environmental risk.

Producing from oil and tar sands had always been a costly enterprise. When prices fell in 2015, companies began divesting from their tar sands investments, cutting and running from oil that was now too expensive to produce.

In 2017, oil giant Royal Dutch Shell completed its divestment from the Canadian tar sands. After entering the unconventional drilling field several years before, Shell concluded that the cost to continue investment in Canadian tar sands was simply too high.

Other companies have done the same: investment in Alberta tar sands fields was dumped by Marathon Oil, Statoil and other companies.

Low prices and rising concerns over the “dirty” nature of tar sands production, which is believed to be one of the most carbon-heavy methods of energy production, fueled an exodus.

Oil sands gained a bad reputation as the dirtiest source of energy, which fueled a political backlash. News coverage of Canada’s oil industry has lately focused on how tar sands production is dirty, costly, destructive and ultimately non-economical. Opposition to new tar sands projects inside the U.S. has risen in recent years.

But that trend may be reversing. Despite divestment, bad press and lower-than-average prices, oil sands production will increase in 2018.

Unlocking Potential

Advances in oil sands technology, and efforts to make the process cleaner and cheaper, means that the sector could be poised for a turnaround.

Petroteq Energy is pioneering safe and clean methods for unlocking oil sands assets. The company has two patents on technical methods for extracting oil sands in a way that avoids producing waste materials.

The company produced 10,000 barrels from its production facility in Utah in 2015 using its brand-new technology, and now it’s upgrading a second facility in Utah to increase its production capacity.

The company’s goal, according to CEO Alex Blyumkin, is developing “sustainability.” Proprietary methods allows Petroteq to extract oil sands without producing excess waste. By utilizing blockchain technology, the company cuts down on production costs and allows oil sands production to be more streamlined.

Petroteq has already found interested partners in Mexico, where it has signed a lucrative deal with national energy company Pemex for its blockchain-based management platform.

Other companies are getting in on the action as well. By following Petroteq’s lead, unconventional drillers are taking a second look at oil sands production.

Question of Cost

What made shale drilling in the U.S. so successful was the question of cost. At a time when oil prices were plummeting, American drillers used new technology to radically cut costs and maintain competitiveness. By 2017, shale drillers had reduced cost by as much as 42 percent.

Today, the average cost of a barrel of fracked oil varies between $20 and $50. That might look like a lot compared to cheap oil from Saudi Arabia or Kuwait, where per-barrel costs can be as low as $10.

But that doesn’t take into account “social costs” that OPEC states have to consider. The plunge in oil prices after 2015 placed immense pressure on OPEC states, which all depend on oil exports to maintain fiscal equilibrium.

Middle Eastern oil producers have endured immense pressure, while Venezuela was thrown into political and economic chaos by the drop in prices.

Social costs, according to a study by the Oxford Institute for Energy Studies, will increase the cost of OPEC oil in the coming years. While U.S. shale drillers can operate profitably with prices at $50 per barrel, OPEC countries ideally want $70 or even $100 a barrel to sustain their economics. This gives U.S. producers a massive competitive edge.

Now, thanks to technological advances from Petroteq and other companies, oil sands could be as profitable and as cheap as shale.

Through cleaner methods and blockchain-based management, Petroteq can produce for as little as $20 a barrel.

Related: U.S. To Become Net Oil And Gas Exporter In 5 Years

Petroteq’s methods can be licensed anywhere, and could release the billions of barrels locked inside oil sands deposits all across the American West.

If its technology catches on, oil sands could be the next big play in the U.S. energy revolution, ensuring American oil dominance for years to come.

Honorable mentions:

Parsley Energy Inc (NYSE:PE): Parsley Energy is a major player in the Permian shale play. The company’s assets are primarily located in the Midland and Delaware basins. Specializing in acquisition, development and exploration of unconventional oil and natural gas reserves, Parsley Energy trades around a modest $23/share and has an impressive $7.2B market cap. The company’s management is second to none which will give investors confidence in moving forward.

Experts see U.S. oil production rise quickly as rigs are being added and Parsley is one of the companies that stands to benefit.

Kosmos Energy Ltd (NYSE:KOS): Kosmos is a company which focuses on oil and gas exploration, development, and production in emerging areas offshore West Africa. With assets in Ghana, Mauritania, and Senegal, the company already has a strong portfolio.

But the real draw for investors is the licenses it carries for potential exploration in Sao Tome and Principe, Suriname, Morocco, and Western Sahara. Moving forward, this is definitely a company to keep an eye on.

Seadrill Ltd (NYSE:SDRL) Seadrill is a company that offers services relating to everything offshore. As an offshore drilling contractor, Seadrill is a go-to for companies rushing to complete their deepwater projects. As offshore regains its popularity and new finds are ready to be developed, Seadrill has a wealth of resources to complete, maintain, and nurture these projects.

Seadrill’s share price has fallen sharply last year, but with new operations in the Middle East, Southeast Asia, Northern Europe, the United States, and South America, this oilfield services company is one to watch.

Diamond Offshore Drilling Inc (NYSE:DO) Diamond Offshore Drilling is a Houston-based oilfields services company with contracts in Gulf of Mexico, South America, Australia, Southeast Asia, Africa, the Middle East, and Europe, the company is well represented across the world.

Its fleet includes 24 offshore drilling rigs, 19 semisubmersible rigs, and one jack-up rig. With a large footprint in the industry and a number of assets, Diamond Offshore is a reputable and secure pick for investors, especially as offshore projects regain popularity.

Pioneer Natural Resources (NYSE:PXD): Pioneer Natural Resources is another oil and gas exploration and production company whose main operations are primarily located in the Permian Basin, Eagle Ford, West Panhandle, and the Raton field.

The company also owns interest in eight gas processing plants and nine treatment facilities. With a huge amount of prime real estate in South and West Texas, Pioneer has consistently shown that it is investing wisely which will surely pay off for shareholders.

Enbridge, Inc. (TSX:ENB): Enbridge is based in Canada’s oil sands capital Alberta, is an energy delivery company focusing on transportation, distribution, and generation of energy. Operating in the United States and Canada, Enbridge owns and operates the largest natural gas distribution network in Canada and the longest crude oil transportation system in the world.

As crude prices and production continue to rise, companies like Enbridge are crucial in getting the product to the consumer.

Cenovus Energy (TSX:CVE): This is one of the most actively traded stocks on the TSX, and it’s taking a beating right now because of announcements that it will sell between $4 billion and $5 billion of assets and cut up to an additional $1 billion in costs over the next three years. The retirement announcement of CEO Brian Ferguson hasn’t helped share prices, either. But there is opportunity in this downtrend.

Canadian Natural Resources Ltd. (NYSE:CNQ, TSX:CNQ): Another big market mover for TSX oil and gas, this company is one of the big players in Canadian oil sands. Analysts expect strong Q4 earnings and a rising production. The company  is down quite a bit right now and represents a good buying opportunity.

Husky Energy Inc. (TSX:HSE): Husky, a major Canadian player has surprised analysts in Q3, and has been the oil sands ‘top pick’ among many analysts.

It’s now moving forward with pipeline repairs that led to a leak in Saskatchewan that hurt profits and reputation hard. But rising oil prices and a fair valuation make this Canadian oil company a company to keep on the radar.

By. James Stafford

NOT AN INVESTMENT ADVISOR. Oilprice.com is not registered or licensed by any governing body in any jurisdiction to give investing advice or provide investment recommendation. ALWAYS DO YOUR OWN RESEARCH and consult with a licensed investment professional before making an investment. This communication should not be used as a basis for making any investment.

RISK OF INVESTING. Investing is inherently risky. While a potential for rewards exists, by investing, you are putting yourself at risk. You must be aware of the risks and be willing to accept them in order to invest in any type of security. Don’t trade with money you can’t afford to lose. This is neither a solicitation nor an offer to Buy/Sell securities.

RISK OF BIAS. We often own shares in the companies we feature. For those reasons, please be aware that we are extremely biased in regards to the companies we write about and feature in our newsletter and on our website.

oilprice.com



22 Comments on "Clean Oil That Only Costs $20"

  1. Darrell Cloud on Wed, 14th Feb 2018 8:07 am 

    If this is true, the logic for the Middle Eastern resource wars is lost.

  2. Davy on Wed, 14th Feb 2018 8:18 am 

    Bogus story. Yes, like everything today the efficiency drive has done wonders but this does not change all the dynamics. Without a thriving economy that supports these expensive energy undertaking this efficiency is not possible. This is just another confusion of what price and real value is. This is the nature of society today and the reason we have the Ponzi bubbles and moral hazard of broad based corruption of traditionally accepted business, social, and technical metrics. There is a physics to real value. These is also a human element of wisdom. Wake me up when all these come together in real value to power a civilization like ours through the limits barrier. BTW, clean oil sands? Lol.

  3. dave thompson on Wed, 14th Feb 2018 8:21 am 

    This article sounds a little overly optimistic. It just might be a sales pitch of some sort, according to my Sherlock Holmes like abilities.

  4. forbin on Wed, 14th Feb 2018 9:35 am 

    so from the linking article ….

    “That said, Saudi Arabia made a mistake by trying to use its low costs to kill the shale revolution;

    it only made shale stronger.

    NOW WATCH: Terry Crews explains how intermittent fasting keeps him in shape

    SEE ALSO: American drinking water could soon get a lot dirtier » ”

    so fake , fake , true ?

    somehow connected ……..

    Forbin

  5. twocats on Wed, 14th Feb 2018 10:03 am 

    I’ve been kind of doing my own thing for the past few years – so the end of civilization was a take-it-or-leave-it situation. but this hubris is getting a tad annoying. the whole thing is imploding and exploding DLZ style in super-slow motion and yet every day there are a couple of these “end of oil scarcity articles” that are just so arrogant. this will almost feel as good as when the eagles beat the patriots.

  6. Mark on Wed, 14th Feb 2018 10:49 am 

    These kinds of articles are designed to get more “investors” to part with their money. Shale operations are bleeding red ink at current prices. How will they survive @ $20/bbl? Gov. “incentives”?

  7. drwater on Wed, 14th Feb 2018 11:23 am 

    Using solvent extraction for tar sands – that’s got to be something like 80 year old technology that never made sense. With their “blockchain for the oil industry” come-on, this looks like a total scam.

  8. deadly on Wed, 14th Feb 2018 11:25 am 

    SDRL is 24.5 cents per share losing $1.16 per share.

    On the other hand there is SDLP, Seadrill Partners, has a share price of 3.38 USD with a 10 cent dividend. The eps is 2.36 USD.

    I don’t own either one, but if I did it would be the one that has positive earnings.

  9. Outcast_Searcher on Wed, 14th Feb 2018 11:46 am 

    SDRL is in bankruptcy proceedings.

    Citing EIA oil production is one thing. Suggesting bankrupt oil producers as investments (while claiming it’s not investment advice) is another.

    https://seekingalpha.com/article/4111489-seadrill-bankruptcy-history-tells-us-shareholders-will-get-nothing

  10. Boat on Wed, 14th Feb 2018 11:54 am 

    Exxon just pledged 6 billion to the Permian to increase output from 158 mbpd to 600 mbps by 2025.

  11. Cloggie on Wed, 14th Feb 2018 11:54 am 

    Egypt is planning the largest solar power plant in the world: 1.65 GW

    http://www.spiegel.de/wissenschaft/technik/aegypten-plant-groesstes-solarkraftwerk-der-welt-a-1191169.html

    Operational start: 2019.

    Egypt: hardly ever clouds, average influx 2600 kWk/m2/year

    1 liter gasoline is 10 kWh. That means that every year on every Egyptian square meter the thermal energy equivalent of 260 liter = 26 cm gasoline is dropped, over the entire country, sized 1 million km2, that is twice Spain or twice the area you need to replace ALL global energy consumption to date from all sources, if you ignore storage for a moment.

    Egypt has the crucial advantage that it is located near power-hungry and overpopulated Europe, that has little spare space for huge solar plants, and could become a major consumer of cheaply produced Egyptian electricity with some of it converted into H2, CH4, CH3OH or NH3, for storage purposes (power2gas).

    Egypt has ambitious plans to rapidly expand its renewable energy base, currently at 10% electricity. Should become 20% in 2022 and 37% in 2035.

    The giant solar power station that should begin to produce in 2019 is a German-Egyptian cooperation and could be precisely what Egypt needs, slowly taking over from Saudi-Arabia and taking advantage of the current prevailing global sentiment to get rid of fossil fuel.

  12. MASTERMIND on Wed, 14th Feb 2018 12:13 pm 

    City of London financiers contemplate “imminent” 2018 US stock market crash of up to “50%”

    Coming dramatic decline of US stock prices would trigger global recession, finds grim forecast to be explored at roundtable hosted by British financial services think-tank

    The warning of a forty to fifty percent drop points to the prospect of a global financial crash worse than the 2008 banking collapse.

    https://medium.com/insurge-intelligence/city-of-london-financiers-contemplate-imminent-2018-us-stock-market-crash-of-up-to-fifty-ed217752428

  13. MASTERMIND on Wed, 14th Feb 2018 12:14 pm 

    Clogg

    Solar panels wont work above 90 degrees..That is what Qatar just found out recently! Funny the solar industry sales people don’t ever mention that though! LOL Like I said before, solar and wind are scams!

  14. Cloggie on Wed, 14th Feb 2018 1:12 pm 

    Links?

    You seriously think German engineers, the one who put you on the moon, are going to set up the largest solar power station in the world, knowing that similar projects in the Gulf failed?

    Asking the question is answering it.

    Btw, it was a wonderful day today and I harvested 5 kwh, in februari.

  15. rockman on Wed, 14th Feb 2018 2:00 pm 

    IMHO just one more promoter hyping his approach. We’ve gone over it many times before: confusing (often intentional IMO) finding costs with production (aka lifting cost) costs. Finding costs: the monies spent putting together new prospects, drill exploration and development wells (including the dry holes). Finding costs can easily run 5X to 10X the production/lifting cost.

    And one last time…hopefully: there is no $X that makes any play (shale, Deep Water, international, Permian Basin, etc. economic to develop. An Eagle Ford Shale well might be justified economically to drill at $25/bbl and another location just 3,000′ away might not be drilled with oil at $80/bbl. More important the price of oil doesn’t isn’t as much as a determining factor at the revenue stream, especially in the first 4 or 5 years. It’s the revenue stream that determines the ROR. Two wells might recover 300,000 bo but even at the same oil price one delivers an acceptable 12% ROR and the other a 4% ROR. Not a money loser of course but not considered a very successful well and would not likely drilled if that were the pre-drill economic analysis.

    We’ve discussed it many times: using generalization is often easier especially for those not very knowledgeable of the technical aspects of the petroleum business. But as often as no it provides an unrealistic sense of the actual dynamic.

  16. Anonymouse1 on Wed, 14th Feb 2018 2:59 pm 

    So, what you are asserting today, cloggen-tard, is that the Apollo program engineers, the German ones anyhow, are all working in the solar power industry these days? And in Egypt no less. How does that work cloggen-zimmer? You’d think most of them have died of old age by now. Or be well, you know, retired.

    That there, is boat-level retarded.

    Btw, clogged-commode, one harvests plants, crops, organic things, not solar power. Solar systems are said to COLLECT sunlight, not ‘harvest’ it.

    Maybe the hebrew word for ‘harvest’ sounded like it made sense in that context, so that is why you went with it. (It doesn’t).

  17. deadly on Wed, 14th Feb 2018 3:02 pm 

    The only reason I cited Seadrill is because Seadrill is an equity mentioned in the featured story or article, not because I am furtively pushing the stock by saying it is not worthy of any investment strategy.

    The sum of its parts are worth more than its whole.

    If I lose my life to an accident and my healthy heart is donated to a recipient who needs a heart transplant, my heart is worth more than my filthy worthless hide ready for the morgue, just the way it should be.

    Of course, if you didn’t read the shill story to invest in any of the mentioned equities in the oil story, you missed the point.

    All I did was give fair warning, maybe subjunctively, maybe most got the message.

  18. Cloggie on Wed, 14th Feb 2018 3:42 pm 

    So, what you are asserting today, cloggen-tard, is that the Apollo program engineers, the German ones anyhow, are all working in the solar power industry these days?

    I was talking about German engineers in general, you fool, but reading abilities were never a real strength of yours, eh.

    https://www.huffingtonpost.com/2011/05/07/detroit-illiteracy-nearly-half-education_n_858307.html

    Now apparently Toronto is next to be infested with retards. Lowering standards where ever you go.

    Btw, clogged-commode, one harvests plants, crops, organic things, not solar power. Solar systems are said to COLLECT sunlight, not ‘harvest’ it.

    Why don’t you lecture those at the Financial Times. I am sure that can’t wait to get lectured by some dummy like you:

    https://www.ft.com/content/f175ba48-d96e-11e7-a039-c64b1c09b482

    Chile learns to harvest its formidable solar power opportunities

    And now off to the race track and work on your sprint skills.

  19. Boat on Wed, 14th Feb 2018 4:46 pm 

    What the clog ment to say is solar in Egypt would not be going up if it were not the cheapest btu.
    You know why wind is growing fast in the wind corridor of the US? Cheapest btu. Why? Good wind. Why is wind not going up very fast in the other 36 states? Wind is not as good and is not the cheapest btu.
    A further indication of how this works. Wind turbines will become bigger and the tech will improve enough that in 2-3 years 11 more states will be added to the wind good list. That still leaves 25 states where wind is not feasible.
    Solar in areas that get over 90 degrees? Happening all over the world.

  20. Anonymouse1 on Wed, 14th Feb 2018 5:32 pm 

    No you weren’t dummy, any germans that happened to work on the apollo program (in amerika) in 1960, have no connection whatsoever to solar panels in 2018, in Egypt, or anywhere else for that matter. But you are well known for drawing false equivalencies whenever it strikes your fancy. That dumbass sock, Mushmind, might swallow horeshit like that whole, but that’s also to be expected.

    Feature, not a bug, with you.

  21. Plantagenet on Wed, 14th Feb 2018 5:45 pm 

    There is no such thing as clean oil. The combustion of oil results in the creation of CO2, a pollutant and a greenhouse gas that causes global warming.

    Cheers!

  22. dooma on Sat, 17th Feb 2018 12:33 am 

    THANK YOU PLANT for pointing out that this article clings to the BAU model and further destroys THE (NOT OUR) fragile ecosystems and therefore the planet.

    Gentlemen, start your SUV’s

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