Advanced BioFuels USA

by Clifford Krauss (New York Times)  … In the last four years, roughly 175 oil and gas companies in the United States and Canada with debts totaling about $100 billion have filed for bankruptcy protection. Many borrowed heavily when oil and gas prices were far higher, only to collectively overproduce and undercut their commodity prices. At least six companies have gone bankrupt this year, and Weatherford International, the fourth-leading oil services company, which owes investors $7.7 billion, is expected to file for bankruptcy protection on Monday.

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One concern is that the industry will be forced to leave oil and gas in the ground as climate change prompts environmental restrictions on drilling or a shift to alternative fuels.

“The psychology has turned,” said David Katz, president of Matrix Asset Advisors, a New York investment firm that owns Occidental shares. “When you talk to investors they are concerned about oil companies spending money on something that will be in decline. There are more concerns that electric cars and hybrid cars are going to get more and more popular.”

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Shale production upended the global oil market once dominated by OPEC, and oil prices fell sharply.

Energy experts say annual global oil demand is growing about 1.2 percent, which is not enough for American oil companies to produce more oil profitably. Demand was growing roughly three times as fast in the early 2000s, but greater fuel efficiency and an economic slowdown in China have reduced the world’s thirst for oil.

That slowdown has been particularly hard for smaller companies not lucky or smart enough to invest in the most productive fields. Because shale wells decline rapidly, executives also liken this business to running on a treadmill that never stops — they need to drill new wells constantly to maintain production and continue to generate revenue.

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Rystad Energy, a consulting firm, found that 36 of the 40 shale oil companies it looked at in the first quarter of this year could not generate enough revenue to sustain their businesses, reduce debt and reward their investors with dividends or share buybacks.

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Chevron and other large American oil companies are investing in carbon capture and sequestration to bury greenhouse gases or produce new fuels, though such technologies are expensive and unproven on a large scale.

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Since last year investors have called on companies to cut expenses, reduce debt and pay higher dividends or buy back more shares. In response, the industry has dropped the number of rigs it commissions to drill new wells in recent weeks.

Scott Sheffield, chief executive of Pioneer Natural Resources, a major producer in the Permian Basin, says a major industry consolidation may be coming.  READ MORE

The streak of lower gas prices is over (Houston Chronicle)

U.S. Drilling Slowdown Triggers Oil Bankruptcy (Wall Street Journal)

As Drillers Struggle, Shale Investors Seek Safety in Mineral Rights: Getting a cut of oil and gas production appeals to investors wary of shale companies struggling to make money (Wall Street Journal)

Shareholders Have No Love for Shale Companies: Investors are down on fracking firms, even as the companies pump record volumes of oil and gas (Wall Street Journal)

Wall Street Gears Up For Onslaught Of Oil & Gas Bankruptcies (OilPrice.com)

OPINION: The decade we won our energy independence (Washington Examiner/Continental Resources/Domestic Energy Producers Alliance)

The 2010s: When energy ‘scarcity’ became ‘abundance’ (Washington Examiner)

Oil price rise muted in 2019 despite sanctions, supply cuts, attack in Saudi Arabia (Reuters)

Oil on track for best year since 2016 as supply concerns ease (Bloomberg/Houston Chronicle)

Excerpt from Washington Examiner: However, a rise in youth-led activism at the close of this decade in response to a 2018 report by the United Nations Climate Change panel has inspired states and localities to act.

That activism has also prodded Democrats running for president in 2020 to pledge to reach net-zero carbon emissions by 2050, a goal that would require mostly getting off fossil fuels.

“There is still a role for gas to replace some of the remaining coal and balance renewables,” Bordoff said, alluding to the intermittent nature of wind and solar. “But over time, we need to increasingly think about the role of gas in a deeply decarbonized economy.”

Even discounting external factors, the U.S. shale boom is beginning to struggle under its weight.

U.S. shale oil production will essentially flatten out in 2021 after slowing to 440,000 barrels per day in 2020, the consultancy IHS Markit projected in November, blaming trade tensions and weaker demand.

Oil and gas companies are also grappling with managing leaks of methane, a potent greenhouse gas that is the main component of natural gas, in the course of their operations.

With gas becoming dominant, and the economy growing, U.S. emissions rose in 2018 after years of declines. (EIA projects emissions to fall again slightly in coming years.)

“There is still an opportunity for some period of time for the U.S. to sell oil and gas if it cleaned up methane leakage,” said Amy Myers Jaffe, director of the program on Energy Security and Climate Change at the Council on Foreign Relations. “Doing something about climate is a process under which we are still going to be able to export what we don’t use in the U.S.”  READ MORE