Best of the Week
Most Popular
1. US Housing Market Real Estate Crash The Next Shoe To Drop – Part II - Chris_Vermeulen
2.The Coronavirus Greatest Economic Depression in History? - Nadeem_Walayat
3.US Real Estate Housing Market Crash Is The Next Shoe To Drop - Chris_Vermeulen
4.Coronavirus Stock Market Trend Implications and AI Mega-trend Stocks Buying Levels - Nadeem_Walayat
5. Are Coronavirus Death Statistics Exaggerated? Worse than Seasonal Flu or Not?- Nadeem_Walayat
6.Coronavirus Stock Market Trend Implications, Global Recession and AI Stocks Buying Levels - Nadeem_Walayat
7.US Fourth Turning Accelerating Towards Debt Climax - James_Quinn
8.Dow Stock Market Trend Analysis and Forecast - Nadeem_Walayat
9.Britain's FAKE Coronavirus Death Statistics Exposed - Nadeem_Walayat
10.Commodity Markets Crash Catastrophe Charts - Rambus_Chartology
Last 7 days
Will Fed‘s Cap On Interest Rates Trigger Gold’s Rally? - 30th May
Is Stock Market Setting Up for a Blow-Off Top? - 29th May 20
Strong Signs In The Mobile Gaming Market - 29th May 20
Last Clap for NHS and Carers, Sheffield UK - 29th May 20
The AI Mega-trend Stocks Investing - When to Sell? - 28th May 20
Trump vs. Biden: What’s at Stake for Precious Metals Investors? - 28th May 20
Stocks: What to Make of the Day-Trading Frenzy - 28th May 20
Why You’ll Never Get Another Stimulus Check - 28th May 20
Implications for Gold – 2007-9 Great Recession vs. 2020 Coronavirus Crisis - 28th May 20
Ray Dalio Suggests USA Is Entering A Period Of Economic Decline And New World Order - 28th May 20
Europe’s Coronavirus Pandemic Dilemma - 28th May 20
I Can't Pay My Payday Loans What Will Happen - 28th May 20
Predictive Modeling Suggests US Stock Markets 12% Over Valued - 27th May 20
Why Stocks Bear Market Rallies Are So Tricky - 27th May 20
Precious Metals Hit Resistance - 27th May 20
Crude Oil Cuts Get Another Saudi Boost as Oil Demand Begins to Show Signs of Life - 27th May 20
Where the Markets are heading after COVID-19? - 27th May 20
Silver Springboards Higher – What’s Next? - 26th May 20
Stock Market Key Resistance Breakout Is Where the Rubber Meets the Road - 26th May 20
5 Ways To Amp Up Your CFD Trading Today - 26th May 20
The Anatomy of a Gold Stock Bull Market - 26th May 20
Stock Market Critical Price Level Could Soon Prompt A Big Move - 25th May 20
Will Powell Decouple Gold from the Stock Market? - 25th May 20
How Muslims Celebrated EID in Lockdown Britain 2020 - UK - 25th May 20
Stock Market Topping Behavior - 24th May 20
Fed Action Accelerates Boom-Bust Cycle; Not A Virus Crisis - 23rd May 20
Gold Silver Miners and Stocks (after a quick drop) Ready to Explode - 23rd May 20
3 Ways to Prepare Financially for Retirement - 23rd May 20
4 Essential Car Trade-In Tips To Get The Best Value - 23rd May 20
Budgie Heaven at Bird Land - 23rd May 20
China’s ‘Two Sessions’ herald Rebound of Economy - 22nd May 20
Signs Of Long Term Devaluation US Real Estate - 22nd May 20
Reading the Tea Leaves of Gold’s Upcoming Move - 22nd May 20
Gold, Silver, Mining Stocks Teeter On The Brink Of A Breakout - 21st May 20
Another Bank Bailout Under Cover of a Virus - 21st May 20
Do No Credit Check Loans Online Instant Approval Options Actually Exist? - 21st May 20
An Eye-Opening Perspective: Emerging Markets and Epidemics - 21st May 20
US Housing Market Covid-19 Crisis - 21st May 20
The Coronavirus Just Hit the “Fast-Forward” Button on These Three Industries - 21st May 20
AMD Zen 3 Ryzen 9 4950x Intel Destroying 24 core 48 thread Processor? - 21st May 20
Dow Stock Market Trend Analysis and Forecast - 20th May 20
The Credit Markets Gave Their Nod to the S&P 500 Upswing - 20th May 20
Where to get proper HGH treatment in USA - 20th May 20
Silver Is Ensured A Prosperous 2020 Thanks To The Fed - 20th May 20
It’s Not Only Palladium That You Better Listen To - 20th May 20
DJIA Stock Market Technical Trend Analysis - 19th May 20
US Real Estate Showing Signs Of Covid19 Collateral Damage - 19th May 20
Gold Stocks Fundamental Indicators - 19th May 20
Why This Wave is Usually a Market Downturn's Most Wicked - 19th May 20
Gold Mining Stocks Flip from Losses to 5x Leveraged Gains! - 19th May 20
Silver Price Begins To Accelerate Higher Faster Than Gold - 19th May 20
Gold Will Soar Soon; World Now Faces 'Monetary Armageddon' - 19th May 20

Market Oracle FREE Newsletter

Coronavirus-stocks-bear-market-2020-analysis

OPEC, Get Ready For The Second U.S. Oil Boom

Commodities / Crude Oil Jul 15, 2015 - 11:39 AM GMT

By: OilPrice_Com

Commodities What OPEC countries fear most is a follow-up technological revolution that will lead to a second oil boom in the U.S., and that fear is now being realized.

A technological revolution spurred the U.S. oil boom that resulted in the greatest increase in domestic oil production in a century, and while that has stuttered in the face of a major oil price slump and an OPEC campaign to maintain a grip on market share, the American response could be another technological revolution that demonstrates that the first one was merely an impressive embryonic experiment.


It's not only about shale now—it's about reviving mature oil fields through advancements in enhanced oil recovery, potentially opening up not only new shale fields, but older fields that have been forgotten.

There are myriad gloom-and-doom stories about what is often alluded to as a short-lived oil boom in the U.S. But what many fail to understand is that revolutions of this nature are phased, with the advent of new technology typically followed by a temporary halt in progress while we study the results and come up with something even better.

What we're looking at here are advancements in EOR for greater production and cost efficiency that can weather oil price slumps and awaken America's sleeping giant oil fields. Soon we are likely to see some new players in the field buying up oil assets and putting more advanced EOR technologies to work to re-ignite the revolution.

The shale revolution was stunning, indeed. But there have been setbacks—even beyond the oil price slump that has rendered fracking expensive. Fracking uses a lot of water. According to a recent U.S. Geological Survey study, the process uses up to 9.6 million gallons of water per well and is putting farming and drinking sources at risk in arid states, and especially in major drought-ridden shale-boom venues like Texas.

Phase two of the U.S. oil boom hits at the heart of the inadequacies of the first phase, in a natural progression.

There are two very interesting EOR advancements that have caught our attention in recent months: CO2 EOR and Plasma Pulse Technology (PPT).

CO2, or carbon dioxide EOR, involves injecting CO2 into ageing oil fields to sweep residual oil to the surface. In some cases, it can extend the production life of a field by more than 25 years. The U.S. is fortunate in this regard because it has a large volume of low-cost, naturally occurring CO2 at its disposal; however, in order to be widely employed the infrastructure to deliver it to oil fields has to be in place.

Visiongain estimates that global CO2 EOR spending will be $4.74 billion this year. "This will decline in the short term as low oil prices take their toll on the capital spending programmes of CO2 EOR operators, but is expected to rise rapidly in the next decade."

Then we have something a bit more futuristic, even though it is already commercially viable—Plasma Pulse Technology, or PPT. This is a patent pending technology that enables the "re-opening" of wells without water, without polluting chemicals and without causing earthquakes. The "re-opening" side of this equation means that it doesn't open rock like fracking, rather it comes in afterwards and cleans up well bores to clear the pathway for oil to flow faster and more efficiently to the surface like it once did.

Plasma Pulse Technology (PPT) creates a controlled plasma arc within a vertical well, generating a tremendous amount of heat for a fraction of a second, while the subsequent high-speed hydraulic impulse wave emitted is strong enough to remove any clogged sedimentation from the perforation zone without damaging the steel casing. The series of impulse waves also penetrates deep into the reservoir, which re-opens reservoir permeability for up to a year per treatment.

But to determine what new EOR technology is going to steal the limelight in the coming months and years, we follow the progress of the EOR leaders and the big strategic investors, such as Russian billionaire Roman Abramovich.

The market leader in extracting oil and gas using CO2 enhanced oil recovery processes is Denbury Resources (NYSE:DNR), which many will agree is a company that offers investors long-term value because of its focus on efficiency.

As for Abramovich, he is a metals magnate who also happens to own the Chelsea football club and is the 143rd wealthiest person in the world, worth about $9 billion according to Forbes. He is the main owner of UK-registered Millhouse LLC, a private investment company whose assets have included major stakes in Sibneft, which is now Gazprom Neft. In 2005, Millhouse sold a 72 percent stake in Sibneft to Gazprom for more than $13 billion.

In fact, PPT first caught our eye back in February, when Abramovich—who has a track record of very strategic investments--moved to invest $15 million in a Houston-based company called Propell Technologies Group, Inc. (OTC:PROP). Until Abramovich brought it to the world's attention, few had probably ever heard of Propell, which has a wholly-owned subsidiary called Novas Energy U.S.A, the licensee and developer of the PPT technology.

The subsidiary licenses the technology from a venture capital-backed Russian energy technology company named Novas Energy, and the Russian connection makes sense here. After all, Plasma Pulse technology has been very successfully employed in both Russian producer and injector wells. More than anything, this Russian connection speaks volumes about the efficiency of this advanced EOR technology: Russia doesn't have draconian fracking regulations pressuring companies to use environmentally friendly technology. What this means is that it's cost effective; otherwise Russians wouldn't be using it.

Beyond the technology itself, if we follow Abramovich further we get a glimpse of what's about to happen on the U.S. EOR scene. In February, Abramovich took a stake with Propell, which was made through a Cyprus-registered company called Ervington Investments Limited. The February deal saw Propell raise $5 million from the sale of 1,525,424 shares of a preferred stock at $3.28 per share. The deal also gave Ervington the option to invest an additional $9.75 million, under the same terms, which it took advantage of on July 6. This Abramovich investment will be used to acquire oilfields with the overall aim to employ the new technology to increase output.

You have to read between the lines here. Abramovich doesn't do anything small. He'll get the infrastructure in place and then look to acquire a significant position in the U.S. oil sector at today's fire sale prices to employ this EOR technology.

If OPEC keeps oil prices below $100 for some time to come, the smart investor will be looking for something that captures long-term value, which means focusing on operational efficiency.

So while many might assume that EOR is now too expensive to be supported during an oil price slump, a little counter-intuition tells us that this will change in the immediate future and investors will start looking at companies who are actually behind this new technology or the companies who are focusing on using this new technology--whether it be CO2 EOR or PPT--to get more out of their oilfields.

Over the long-term EOR makes production cheaper. And as Chesapeake Energy's (NYSE:CHK) Jason Pigott succinctly put it: "We can't control prices, so we have to focus on how much it costs to get it out of the ground."

When low oil prices close doors, technology steps in to reopen them, and certainly innovation will drive the next U.S. oil boom—and the latest advancements are already commercially viable. The door has been re-opened.

What OPEC knows is this: The U.S. has over 21 billion barrels of oil that could be economically recovered with today's EOR technologies. And according to figures from the U.S. Department of Energy and the Western Governors Association (WGA), further advances in this technology could cause that figure to double.

Source: http://oilprice.com/Energy/Crude-Oil/OPEC-Get-Ready-For-The-Second-US-Oil-Boom.html

By James Stafford of Oilprice.com

© 2015 Copyright OilPrice.com - All Rights Reserved
Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

OilPrice.com Archive

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules