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Energy’s Latest Target: Women

By Alan Neuhauser

After two decades changing diapers, nanny Shelly Alexander was ready for a change herself.

“I wanted a job I could use my brain for,” says Alexander, who lives in Spring Valley in northeast Pennsylvania. “I had a great job, but I had no retirement, I had no benefits. It was just time.”

She tried working for a local gym. She made meal plans for friends, flirting with the idea of becoming a dietitian. But at age 40, four years of college to get the degree she’d need for that job held little appeal. Plus, in the past decade, a far more lucrative opportunity had moved into the area: hydraulic fracturing.

Fracking and horizontal drilling have unleashed an energy extravaganza in the Midwest and mid-Atlantic. American and international energy companies are churning out billions of barrels of oil and gas and attracting thousands of workers eager for entry-level paychecks of $50,000 to $60,000. In fact, in boom states like North Dakota, demand for workers is outstripping supply, as jobs remain unfilled for lack of qualified workers.

“We need more women, more workers,” says Randy Pacheco, dean of the San Juan College School of Energy in New Mexico. “The energy companies want to hire them. Whether it’s Chevron or BP or Conoco, they’re looking for them. They’re just looking for responsible, hardworking people.”

Regional colleges in boom towns from Pennsylvania to New Mexico have launched one-year certificate and two-year associate programs to train workers – with students’ educations often underwritten by the very energy companies that hope to hire them.

“A lot of the companies are struggling to field a workforce,” says Rick Marquardt, executive director of Lackawanna College’s School of Petroleum and Natural Gas, which opened in Dimock, Pennsylvania, the heart of the country’s fracking boom. “We get calls for interviews from [energy] companies in Pittsburgh, Houston.”

The reason, he says: “When our students come out, they’re ready to work.”

That sounded just fine to Alexander, who heard about the program through a friend last year. Within months, she’d bought herself steel-toed boots, a pink hard hat, and begun driving 90 minutes, each way, to Lackawanna’s campus three times a week to earn an associate’s degree in Petroleum and Natural Gas Measurement, one of four programs offered by the School of Petroleum and Natural Gas.

“I’m going to do something men do, and I’m going to do it better,” she says. “That’s what I’ve done my whole life.”

Alexander is one of 18 women enrolled at the School of Petroleum and Natural Gas, and the only woman enrolled in her particular program. All told, women make up 14 percent of the 129 students at the school. About 12 percent of the student body are minorities, mostly Latinos and Southeast Asians.

For $12,800 in tuition a year, they’ll spend two years immersed in the theories and science of oil and gas drilling, gaining the skills they need to work at fracking and drilling sites as well tenders, compression engineers, mud trackers and more. The goal is to produce workers, not analysts: Just about every student lands a summer internship at a fracking or drill site, and the job placement rate upon graduation is about 90 percent.

“It’s all science: physics, math computers,” Marquedt says. “We fill that gap between all the vo-tech schools and the four-year programs. We’re not interested in teaching them how to derive an equation.”

What they are interested in, though, is attracting more women to the program.

Geared toward an industry where the dorms are known as man-camps, and where the signing bonuses or other perks can include new pickup trucks – where most of the jobs, in other words, are overwhelmingly held by men – it’s a daunting challenge. A March 2014 study commissioned by the American Petroleum Institute, a trade group representing the oil and natural gas industry, found that women make up 19 percent of the workers in the oil and gas and petrochemical sectors. Women account for nearly half the country’s workforce overall.

On drilling rigs, production wells and fracking sites, that share sinks to about 15 percent, and the number is actually expected to keep falling.

Yet, says Lackawanna College president Mark Volk says, “This is a field that is open to women. We need to ensure they know there are opportunities for men and women.”

While the number of white-collar jobs for women in the industry is expected to rise through 2013, the study found, “The already-low shares of women in the semi-skilled and unskilled blue-collar occupational groups are projected to decline further,” according to the study, conducted by the consulting firm IHS Global.

For one, the chemicals used at fracking sites are hazardous to pregnant women, a 2013 report found, with the potential to cause congenital heart defects in their infants. The overwhelming number of men at the work sites and in the towns surrounding them raises the risk of on-the-job harassment and sexual assault. Police in the fracking boomtown of Willison, North Dakota, for example, have reported a marked rise in sexual assaults.

As far as the work itself, major oil and gas companies typically require their workers to have some amount of experience before they’re hired, industry insiders and school administrators say. That means most workers start at smaller, independent contractors, where back-breaking grunt work is often the order of the day, 12 hours at a time.

“With a contract company, there’s a lot of physical labor that’s required,” explains San Juan College’s Pacheco. “So it’s difficult for women to obtain that experience with the contractors and move on.”

As Irene Lewis Motts, communications director of Stark State’s Oil and Gas School in Ohio, explains, “They’re difficult jobs. Not that women can’t do it, but there’s certainly a lot of men that can’t do it, too.”

That has not deterred Sultana Holcomb, who, as a college senior studying petroleum engineering at Montana Tech, spent last summer both in offices and out in the field in an internship with Anadarko Petroleum Corporation in Houston.

“Being a woman in the oil and gas industry, you definitely stand out,” Holcomb says. “It’s not like you’re out there in the field in a dress and high heels, but you do get attention.”

But, she adds, “I enjoy it, because I know I’m doing something right. I’m part of this new generation force that’s tearing down the stereotypes.”

Women like Holcomb are, as she describes, “making way for more women to come into the industry.” And as the IHS study points out, there remains “significant potential for female blue collar employment.” The key to fulfilling it, it says, is training.

That’s where the schools come in. Like military service academies, oil and gas programs like the ones at Lackawanna and San Juan give students enough knowledge to jump a rank, skipping low-status grunt work or intensive training to go straight to better paying and less-labor-intensive jobs with Chevron, Cabot, Halliburton and other major companies at fracking and drill sites.

It’s one of the reasons why helping launch a school to exclusively train an industry workforce can be a savvy financial investment for oil and gas companies. Not only does Cabot’s $2.5 million endowment of Lackawanna, for example, make for good PR, but the job training is funded in part by student-paid tuition.

Schools can also function as de facto recruitment agencies, too, helping attract the female and minority workers that the companies say they’re seeking. Lackawanna, for example, launched a support, advisory and networking group for its female students and alumni.

“We’re bringing together women in the industry at different levels,” says school project coordinator Betty Seelendbrandt, who launched and advises the group.

The discussion, she says, focuses less on issues one might expect from male-dominated drill sites and company towns, like sexual harassment or the danger of assault, than on other concerns: “The trepidation I think for most women is very commonplace, and that of fear of math and science,” Seelendbrandt says.

Latha Ramchand, dean of the C. T. Bauer College of Business at the University of Houston, offers a similar view.

“There are biases built in from an early age: ‘I can’t do math, I can’t do engineering.’ We just need to get over that mindset,” she says. Oil and gas programs, particularly ones that recruit women, help accomplish that.

During a recent visit to a fracking site, “we did’t see too many women where they were fracking,” Ramchand says. But, she adds, “If we have these dialogues – why don’t we have more women in these professions – if we have women at the table, men at the table, female role models we might change that.”

Holcomb, the Montana Tech student, agrees. Both men and women, she says, need to “realize the world is changing, and realize more and more women are working in the engineering workforce.”

Women entering the industry, she adds, should “have fun with it, too. It’s exciting when you’re breaking ground, when you’re doing something new not too many females have experienced.”

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Article Source: Neuhauser, A. (2014). Energy’s latest target: women. US News & World Report. Retrieved from


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Report: Without The Fracking Boom, Oil Would Be At $150 Per Barrel

By Michael Bastasch

The price of oil fell from about $100 per barrel to $80 per barrel in a matter of months, bringing with it lower gasoline prices for drivers and a modest boost to the economy ahead of the holiday season.

This is all thanks to the advent of hydraulic fracturing, or fracking, and horizontal drilling in the U.S., without which gasoline prices would be nearly one dollar higher and oil would cost as much as $150 a barrel, according to a recent report.

Energy experts at ICF International estimate that “international Brent crude oil prices would have averaged $122 to $150 per barrel in 2013” without the massive increases in oil production from fracking. Instead, oil prices have fallen to around $80 per barrel and are projected to fall even further — maybe even to $60 per barrel.

“Given the international nature of U.S. petroleum product movements, ICF also estimates that 2013 U.S. petroleum product prices were between $0.29 and $0.94 per gallon lower than they would have otherwise been without” fracking, ICF reports.

“This reduction in petroleum product prices have saved U.S. consumers an estimated $63 to $248 billion in 2013 and estimated cumulative savings of between $165 and $624 billion from 2008 to 2013,” ICF notes in its report that was prepared for the American Petroleum Institute — the country’s main oil and gas lobbying group.

Fracking is a well-stimulation process in which water, sand and some chemicals are injected into shale formations deep underground to extract oil and natural gas. This practice, combined with horizontal drilling has revolutionized the U.S. oil and gas industry and put the country on the path to be the world’s largest oil and gas producer.

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Article Source: Bastasch, M. (2014). Report: Without The Fracking Boom, Oil Would Be At $150 Per Barrel. Retrieved from

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EV Energy Partners wants to sell off Utica assets in January

By Bob Downing

Texas-based EV Energy Partners is preparing to sell off its Utica shale assets in eastern Ohio in 2015, along with its interest in processing facilities.

There has been “enough drilling activity and consistent result to de-risk our assets and acreage,” said John Walker, the company’s executive chairman.

The value of the company’s Utica shale leases have grown significantly, he said in an earnings call with analysts and the media earlier this week.

The company intends to kick off a serious sale effort in January to sell off its joint venture acreage with Chesapeake Energy and Total SA in 10 Ohio counties, plus other leases held by the company, he said.

The company wants to sell about 120,000 acres within the 660,000-acre joint venture. That includes about 55,000 acres in Carroll County.

It also intends to seek a buyer for its 21 percent interest in Utica East Ohio that operates natural gas processing plants in Columbiana and Carroll counties and a liquids-separating plant in Harrison County.

Last month, EV Energy Partners sold its 9 percent interest in Ohio’s Cardinal Gas Services to two South Korean companies for $162 million.

EV Energy Partners, a publicly traded company that is part of privately held EnerVest Ltd., has said for some time that it intends to sell off Utica assets to monetize the holdings for its institutional investors. The company has been marketing about 335,000 acres in Ohio since 2013.

The EnerVest companies are one of Ohio’s largest oil and gas companies with 8,700 vertical wells in Ohio. They were the largest producer from traditional gas and oil wells in Ohio and generated 25 percent of Ohio’s natural gas prior to the Utica shale boom. They control about 900,000 acres in Ohio.

In other news, EV Energy Partners said production could begin in December on a much-watched Utica oil well in Tuscarawas County.

The company drilled the experimental well with eight other industry partners, Walker said.

“This is a test of what could be EnerVest and EVEP’s most valuable asset in the Utica,” he said.

Getting oil from the Utica shale has proven to be difficult for drillers, to date.

That well near Uhrichsville is being hydraulically fractured or fracked with liquid butane and mineral oil. That should be completed in two weeks.

“We’re excited but cautious as we are bringing new technology to bear in this process,” said company president and CEO Mark Houser. “We are in the middle of the completion operations and have completed five of the 20 (fracking) stages so far.”

A full review of the well will be offered in the next few months, he said.

The oil window covers all or parts of Portage, Stark, Trumbull, Tuscarawas, Holmes, Coshocton, Guernsey, Muskingum, Perry, Morgan, Athens, Vinton and Hocking counties.

EV Energy Partners is also getting about 80 barrels of oil per day plus natural gas from four Stark County horizontal wells that were drilled into the shallow Clinton sandstone. A fifth well is not yet in production.

Drilling each well costs about $2.6 million. Each well is projected to produce about 150,000 barrels of oil equivalents. The wells could generate 20 percent return on its investment at $80 per barrel for crude oil.

The company said the East Canton oil field where more than 4,000 wells have been drilled since 1947 has an estimated 1.5 billion barrels of oil and only 7 percent has been recovered.

The field in Stark, Carroll and Tuscarawas counties covers about 214,000 acres and EnerVest companies control half of it, the company said.

It says it has identified 70 potential drilling sites and that number could grow if the wells are successful, Houser said.

The company is “very pleased” with the initial Clinton results, he said.

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Article Source: Downing, B. (2014). EV Energy Partners wants to sell off Utica assets in January. Retrieved from

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BP to deploy new robotic EOR technology on North Sea’s Clair Ridge

By Rita Brown

BP confirmed it is now operating the world’s first robotic coreflooding system in a bid to boost its enhanced oil recovery abilities.

The firm also confirmed the new technology will now be fully deployed on its Clair Ridge project in the North Sea.

The £4.5billion field is the first large scale enhanced oil recovery scheme. It’s expected to produce up to 120,000 barrels of oil a day, with a total estimate of 640 million over its 40-year lifespan.

Coreflooding, which measures the effectiveness of water and gas injected into oil-bearing rocks, is also used to assess the potential for flooding in an oil field.

The new robotic outfit will boost BP’s testing capabilities from a few dozen a year to hundreds. The robotic system can operate seven days a week, 24 hours a day.

Ahmed Hashmi, BP’s head of upstream technology, said: “The EOR technologies being developed by BP are vitally important to help increase global oil supplies.

“We believe this step-change in our coreflooding capability will hugely improve the speed and efficiency with which we can deploy new technologies to recover more oil from reservoirs.”

Through freeing up evaluation resources, it’s also thought the new robotic system will cut the development time allocated to new technology by more than 50%.

Earlier this year, BP was awarded the Offshore Technology Conference Distinguished Achievement Award for the Clair Ridge LoSal EOR project, recognising the company’s specialist EOR technologies.

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Article Source: Brown, R. (2014). BP to deploy new robotic EOR technology on North Sea’s Clair Ridge. Retrieved from

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Oil and Gas Production: Digitizing Oil Fields

By Brian Sallery

Previously I delved into digital communication standards now commonly used within the oil industry and the importance of sharing real-time operational data between data centres and contractors.

There is also a strong move towards a completely digital virtual oil well operated and controlled by a minimum of workers, but why are companies spending millions to develop and integrate these virtual systems?

Oil prices consistently rise year on year, even when the stock markets crash, oil is always one of the first commodities to recover its costs. However the industry has always faced a shortage of skilled workers for the many areas of hydrocarbon production. It has been estimated that over 100 million barrels oil will be needed everyday by 2015 and with this amount of supply required many more engineers, geologists and rig workers will be needed. In many African countries experts are used due a lack of skilled local workers, therefore the idea of a digital oil field turns from the realms of fantasy, to now becoming reality. So what is meant by the term digital oil field (DOF)?

Software is now available to capture the daily operations and behaviours of an oil rig and can be used to manage the whole production lifecycle.  Such software should allow for a full visualisation of the reservoir and the wellbore. This enables managers and engineers to see real-time monitoring and control data offsite, real-time drilling data which should include down-hole pressures, drill directions and rotational speeds.

Furthermore Real-time surveillance will trigger alarms when production integrity has been breached. This allows companies to fully audit operations and procedures. Booz&Co reported that one company had introduced selected oil field technologies and has saved a massive US$20 million annually by automating data storage facilities, data integration across multiple systems and wellbore visualisation by using fewer but more skilled staff, located at a central control centre.

If such savings can be made why are the technologies not being taken up by every petroleum operator? Many smaller organisations are simply unable to absorb the initial implementation costs or have the forethought to properly use the available software.

Often when a new system is required it causes a ripple effect over the current system while it is being integrated into working practices. From my experience managers often struggle with new technologies, both with their effectiveness and implementation.

Furthermore workers at the ‘coalface’ can be resistant to change asking questions like ‘I have done it this way for years why should I change now?’ and this can be a major drawback to the implementation of a virtual digital system.

The whole point for a digital oil field is to help tackle some of the following areas: Supporting staff development allowing for functional specialisation of assets and operations. Supplementing an ageing workforce where oil workers with years of experience are able to move into a less physical role as they age but still utilises their immense knowledge.

Modern oil fields have a large amount of data to process with sensors being placed on almost every piece of equipment and a digital oil field brings with it the advantages of visualisation software. Also the risks and uncertainties are reduced if not eradicated due to the use of workflows and risk prediction algorithms. The problems of a lack of skilled workers are also eased as computer integration usually allows one person to do the work of many.

Finally information and knowledge is easily exchanged with organisation that have different specialism, tasks and agendas which may be very different from the main oil production skill set of the operator.

However there are issues to consider as with any new technology one must first decide on what aspect to digitise. With so much data and information to be processed a company can be quite literally overloaded and as a result paralyse a company’s decision making processes instead of helping them be more proactive with decisions.

Therefore it becomes necessary to carefully select or ‘cheery-pick’ the data required for specific information goals. The problem is if you record all available data then storage costs become prohibitive and the times required to process and sift through to find something relevant increases with every upload.

Alternatively by only selecting certain types of data, you risk deleting information that might have intrinsic value to the company. So good visualisations are vital, which allows complex data to be shown in a graphical format to simplify the decision making process.

Oil rigs produce huge amounts of data on a daily basis, so it is not about implementing digital technologies but how oil companies use it to communicate the right information to the right people in the field. The Chevron Machinery Support Centre (MSC) looks at real-time data distributed over 6 continents from Kazakhstan to Colombia they monitor 65% of the U.S gas supplies. At their hub computer operators, overview a number of computer monitors looking for distribution paths to meet current gas supplies and to check for system alerts. Recently one of their African drilling operations started to overload.

An alarm immediately alerted the controllers of a compressor problem at MSC some 6000 miles away from the original incident; this allowed the fault to be found and resolved quickly without any injuries to the workforce and saved millions of dollars in possible production downtime.

Chevron has now implemented a number of digital systems to its upstream operations one of which is called Upstream Workflow Transformation (UWT) which has taken decades of investment and development to produce, but is now at the forefront of its digital campaign.

As a way of combining IT, automation and instrumentation technologies DOF software offers many benefits from faster reservoir production and analysis, increased workforce safety and operational management through the use of workflows, as long as data is properly analysed and filtered to give expected results for manager and engineers to make timely and accurate decision.

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Article Source: Sallery, B. (2014). Oil and Gas Production: Digitizing Oil Fields. East African Business Week. Retrieved from

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Oil companies tap virtual technology to train workers

By Kyle Rothenberg

Oil companies are starting to train their oil rig workers in a virtual world — literally.

Instead of employees learning from PowerPoint presentations during training class, some companies are beginning to roll out training programs where employees get to play custom-made video games teaching them safety, rules, and procedures out on an oil rig.

The training could ultimately save their lives because working on an oil rig can be a dangerous job.

The 2013 fatality rate in the oil and gas extraction industry was 3.2 deaths per 100,000 workers according to the Bureau of Labor Statistics. That is about eight times higher than the average fatality rate in all other U.S. industries.

“When you have workers who have never been on an offshore platform, they don’t know what to expect,” said Skyra Rideaux, spokesperson for Louisiana Immersive Technologies Enterprise (LITE) — a company that creates virtual reality gaming software. “We create a virtual environment for them where they actually get to see what a rig looks like and what they’ll be doing,” she added.

Frank’s International — an industry leader in casing, installing and distributing oilfield tubulars — is experimenting with virtual reality training and hired LITE to develop software programs that recreate teachable situations on oil rigs.

Even though Frank’s International is not a part of the oil and gas extraction industry, there are still dangers when working with heavy machinery and virtual reality training can help, according to the company’s communication director Josh Grodin.

Training employees using video games and virtual reality experiences is a more efficient way of learning because it creates a more “hands on” approach that sparks engagement in the classroom, according to Jacke West, training director at Frank’s International.

LITE released a couple of virtual training exercises for Frank’s International just a few weeks ago — taking about six months to create the software. But the next video game exercises currently under production for Frank’s will not take as long, and should be completed in about a year or so, according to Rideaux.

“We learn by experiencing,” said Erin Marietta, LITE’s chief operating officer. “Everyone learns in an environment where you can touch and feel. And that’s what virtual reality does. It’s getting cheaper and a lot easier to produce,” she added.

The program costs $60,000 to $80,000 to develop, and it’s like playing a “Call of Duty” first-person video game, according to Rideaux.

West said the old-school ways of using PowerPoint presentations in the classroom are a thing of the past.

“Virtual reality training is the future,” he explained. “And our budget has been approved to expand the training in 2015.”

Part of the expansion West refers to will give oil rig trainees at his company the opportunity to use the Oculus Rift — a 3D virtual reality device created by Oculus VR, which was bought by Facebook for $2 billion earlier this year.

Oculus Rift is a head-mounted display that creates a fully immersive video gaming experience. Right now the device is only available as a development kit for software creators, but it’s expected to become commercially available in April 2015.

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Article Source: Rothenberg, Kyle. (2014). Oil companies tap virtual technology to train workers. Fox News. Retrieved from

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New app developed to help workers in the Eagle Ford Shale

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By James Aldridge

San Antonio lawyer and entrepreneur Marco Flores has launched a new Eagle Ford Mobile Network App that companies can use to tap into business opportunities in the Eagle Ford Shale.

The app is free to download and it is designed to give South Texas residents, businesses and workers in the region access to pertinent information, such as GPS-based directory information, job listings, equipment sales, industry news and the ability to search whether a person has a valid Commercial Driver’s License.

Some of the directory information accessible to rural smartphone users include contact information on oil field service providers, food catering companies, lodging, organizations that help small businesses and advocate for safety. Workers out in the field will be able to use the app to track places to eat and sleep.

“It’s going to totally disrupt the traditional ways people have historically accessed some of the basic information they need out in the field, in a good way,” Flores said in a news release. “It’s going to save businesses invaluable time and money.”

The app is available for download on Google Play and the Apple iTunes App stores. More information is available at

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Article Source: Aldridge, J. (2014). New app developed to help workers in the Eagle Ford Shale. Retrieved from

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Oil refinery

Islamic State Loses Its Oil Business

By Matthew Philips

It’s been a month since President Obama announced that the U.S. would engage in a sustained campaign of airstrikes against Islamic State, the militant Sunni rebellion in Syria and Iraq. The idea was to bomb Islamic State into nonexistence, which has proved difficult. Not only is the movement well-armed, battle-hardened, and deeply entrenched in much of Syria and northern Iraq, it’s also very well-financed, thanks to oil wells and refineries it’s been able to capture. By late June, Islamic State was raising as much as $2 million a day refining and smuggling oil, making it one of history’s wealthiest terrorist groups.

Though the airstrikes have failed to keep Islamic State from advancing in the field, they have apparently succeeded in dismantling its sophisticated oil network, reducing the movement’s ability to make gasoline and diesel for its tanks and trucks and cutting off a vital source of funding. A report from the International Energy Agency in Paris has just estimated that Islamic State controls only about 20,000 barrels of daily oil production, down from about 70,000 as of August. Most of it remains in Iraq.

In early August, Islamic State controlled sections of Syria and Iraq that together are about the size of Wyoming. At that point, its territory included seven oil fields and a refinery in northern Iraq, as well as six of the 10 oil fields in eastern Syria. Although the movement was able to produce only about half the potential output under its control, it had no problem tapping the region’s well-established oil smuggling network.

Most of the group’s oil flows through local middlemen and is paid for almost entirely in cash, making transactions extremely difficult to track and shut down. This has insulated Islamic State from traditional methods the West has used to dry up terrorist funds in the past, such as international banking sanctions and anti-money laundering laws.

A straight-up bombing campaign does seem to be doing a lot of that work. According to the IEA report, U.S.-led sorties over northern Iraq and Syria are “frustrating the jihadists’ ability to operate oil fields and refineries.” At its peak, most of the oil smuggled from Iraq was loaded from the Ajeel oil field near Tikrit on tanker trucks and routed toward Kurdistan. The IEA, citing Iraqi oil industry sources, estimates that Islamic State was loading about 120 tanker trucks with about 20,000 barrels a day from Ajeel. Sustained airstrikes, including ones targeting convoys, have cut that traffic to about 10 trucks a day, or about 2,000 barrels, according to the IEA’s report.

In Syria, the IEA estimates that Islamic State’s oil output is down to about 10,000 barrels a day. Airstrikes by the U.S., the Saudis, and the UAE have wiped out “dozens of teapot refineries” in Syria, depriving the movement’s war machine of a key source of gasoline. Turkey and the Kurds have also cracked down on its smuggling operation. In late September, the Kurds reportedly seized four militant tanker trucks from the Ajeel field and detained the drivers.

There is still a lot of work to do. The Islamists retain control of Syria’s largest oil field, the Omar field in the Deir Az-Zour region of the country. The squeeze on finances has made Islamic State even more desperate to control oil fields and refineries. Its fighters have turned Iraq’s largest refinery into a battleground–forcing it off-line and sharply reducing output. With most of its refining capacity in Syria destroyed, Islamic State might go after two big refineries, closer to Lebanon in the west of Syria, that are under the Assad government’s control, opening up a much broader two-front war and potentially limiting the movement’s ability to wage war to the east, in Iraq.

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Article Source: Philips, M. (2014). Islamic state loses its oil business. Assyrian International News Agency. Retrieved from

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GARTMAN: We’re Witnessing The End Of The Oil Era

Dennis Gartman has a new forecast for oil: a lot lower.

In an appearance on CNBC’s Fast Money on Monday, Gartman, publisher of the Gartman Newsletter, said that crude oil prices will fall demonstrably from current levels.

Earlier on Monday, it had been reported that Gartman saw crude oil going to $10 a barrel, but he backed a bit off that claim in his appearance on Monday, saying that maybe next time he ought to be a bit more circumspect when he talks to CNBC’s producers.

But the central spirit of Gartman’s not quite $10 call was still intact, with Gartman saying simply that the era of oil is over. At one point, Gartman went so far as to compare crude oil to whale oil, which became obsolete following the advent of crude in the early 20th century.  

In discussing the “end of oil,” Gartman referenced news from Lockheed Martin earlier this month that the aerospace giant has made a technological breakthrough in developing a power source based on nuclear fusion. And while Business Insider’s Jessica Orwig reported that some in the scientific community are skeptical of this breakthrough, Gartman sees the potential in this breakthrough as being something of a death knell for oil. 

Gartman also referenced other factors weighing on oil prices, namely a supply glut and a market that is contango.

A market is said to be in contango when the futures contract for a commodity is more than what the expected price will be in the future.

So basically, if I pay $80 for a futures contract for a barrel of oil I want to get next year, but if expectations are that the spot price of a barrel of oil will be $60 in a year, the futures contract — again, assuming the spot price doesn’t move — will have to fall.

This is all a bit oversimplified. 

But Gartman’s central point is that things look absolutely terrible for crude oil, and while Gartman was reticent to commit to his $10 a barrel call, he added that “it doesn’t really matter” where oil prices go exactly, except that they are definitely going lower.

Gartman’s comments come after what was an ugly morning for oil, which fell below $80 a barrel for the first time since June 2012.

The tumble in oil came after analysts at Goldman Sachs cut their price target on WTI crude oil to $70 by the second quarter of next year.

In his note, Goldman Sachs analyst Jeff Currie wrote:

“We are lowering our oil price forecast to reflect the required slowdown in US production growth: our WTI crude oil forecast is $75/bbl for 1Q15 and 2H15 (from $90/bbl previously). Given our unchanged WTI-Brent spread forecast of $10/bbl, our Brent forecast is now $85/bbl ($100/bbl previously)… Our 2016 and long-term forecasts are now $80/bbl WTI, $90/bbl Brent. Uncertainty around the required price to slow down US shale production growth is a key risk to our price forecast.”

After Monday’s early sell off, oil futures were trading just below $81 a barrel near 5:30 p.m. ET.

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Article Source: Gartman, D. (2014). GARTMAN: We’re witnessing the end of the oil era. Business Insider. Retrieved from

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Shale Boom Shines Light on Natural-Gas Liquids

By Nicole Friedman

An unsung byproduct of oil and natural-gas production is getting more attention from hedge funds and investors as they seek new ways to bet on the U.S. shale boom.

Natural-gas liquids, which include ethane, propane, butane, isobutane and natural gasoline, are separated out from crude oil and natural gas. They are known as the fuels in propane grills and butane lighters and as feedstocks to make plastics and chemicals. Until recently, they attracted little investor consideration.

But that has begun to change amid a swift increase in both supply and demand. U.S. production of NGLs topped 3 million barrels a day this year. Production volume has grown 60% in the past decade to become on par with the amount of oil produced in Texas or Iraq. Petrochemical manufacturers world-wide are expanding to take advantage of the new supply.

Investors can act as middlemen between producers and consumers of NGLs, particularly as banks are backing away from commodities trading. They also are more easily able to make bets on prices as trading volumes grow. Many investors are using NGLs as a way to bet on the North American energy boom while sidestepping the pipeline bottlenecks and export restrictions that have held down most U.S. energy prices.

It helps that unlike oil and natural gas, NGLs can easily be exported overseas, where prices are higher. Connections to the global market make it less likely NGLs will meet the same fate as natural gas, which saw prices crash when production swamped U.S. demand. NGLs fetch an average of $9.94 a million British thermal units, more than double the price of natural gas.

“Anyone you can think of in the energy space is there,” said Greg Bower, a broker at Blue Ocean Brokerage. “There’s new people in it all the time.”

Still, the drop in oil and natural-gas prices over the past few months has taken its toll, with the price of propane futures recently hitting a 14-month low on the New York Mercantile Exchange. Even so, that market has more than tripled in size since the start of May to a record $2.8 billion.

At least two new hedge funds are focused on trading NGLs, people familiar with the matter say. KC Alpha Fund I launched in January with $850,000 and a plan to focus on trading NGLs, along with other energy products, according to people familiar with the fund.

Norman MacDonald, portfolio manager at Invesco Ltd. , owns shares in oil-and-gas producers that generate a large amount of NGLs, including Range Resources Corp.

“I don’t think the market really truly appreciates just what [NGLs] can do” for oil-and-gas producers, added Mr. MacDonald, who manages the $1.4 billion Invesco Energy Fund.

NGL trading is still sparser and less transparent than in the vast markets for crude oil or natural gas. However, growing volumes are making it easier to get in and out of positions in the market, building NGLs’ appeal to large investors. Futures trading volumes in these markets rose 18% in the first six months of 2014 compared with the same period last year, according to Intercontinental Exchange Inc.

“You’re seeing global macro hedge funds step in,” said Sid Perkins, managing partner at Houston brokerage Ion Energy Group, which is owned by OTC Global Holdings. “They’ve been watching it for the last few years, and were waiting until the market got to a point where it was liquid enough for them to come in and trade.”

Another problem for traders is that NGL markets are typically not that volatile, so there are fewer opportunities to profit from price moves. Propane, the largest NGL market, saw prices spike in February as high demand from farmers, home-heating and overseas buyers all stretched supplies during a frigid winter. But stockpiles rebuilt rapidly this summer, reducing expectations for a similar squeeze this year.

The lack of transparency in the market is keeping OppenheimerFunds Inc. from trading NGLs, said George Zivic, portfolio manager for the $420 million Oppenheimer Commodity Strategy Total Return Fund.

“Unless you’re privy to what [producers and manufacturers] are doing on a month-to-month basis, you can really get squeezed,” Mr. Zivic said.

Others see potential for prices to rise, potentially drawing in more investors. Enterprise Products Partners LP plans to build a terminal by the third quarter of 2016 to export up to 240,000 barrels a day of ethane from the Gulf Coast. When Enterprise opened a propane export facility in 2013, trading volume expanded as traders prepared for greater access to overseas markets, said Michael Angell, markets editor for the Oil Price Information Service, which tracks spot NGL prices.

“I’m actually beginning to move some of my businesses more into the NGL side because of the demand,” said Steve Reese, chief executive of Reese Energy Consulting and Reese Energy Training in Edmond, Okla., who said he is planning to start a propane business. “The trading activity has definitely increased.”

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Article Source; Friedman, N. (2014). Shale Boom Shines Light on Natural-Gas Liquids. The Wallstreet Journal. Retrieved from

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Mineral rights, royalties flowing to Western Pa. charities

By Katelyn Ferral

Some universities and charities don’t need a gas well in their backyards to be enriched by the Marcellus shale frenzy.

Contributions of mineral rights and royalty checks are flowing in from landowners who are sitting on fortunes because of the gas boom.

Penn State University said it has received five to 10 gifts of royalty income or bonuses from gas drilling. West Virginia University has received about 24 donations of oil and mineral rights. And the University of Pittsburgh is weighing its first such donation.

Charitable donations of complex assets, such as collectibles, real estate, royalties and mineral rights, are not uncommon. When these assets appreciate significantly, their owners may consider donating them, not just to share the wealth and be altruistic but for tax advantages.

Researchers who track philanthropy say there are no statistics that measure gifts of mineral rights and royalties, but Michael Hoffman, a charitable planning consultant with Fidelity Charitable based in Pittsburgh, said there is growing interest from potential donors.

“Definitely, there’s a lot of discussion. We see a definite increase of inquiries in that area,” Hoffman said.

Penn State said it received its first such donation in 2008, which tracks the boom in the state’s gas drilling industry. Although the university’s mineral rights and royalties donations have dwindled since 2012, when gas prices bottomed out, the class of charitable gifts under which they fall (noncash complex assets) has been growing.

The number of people reporting noncash donations to the Internal Revenue Service increased 21 percent from 2006 to 2011, the most recent year available. At Fidelity Charitable, one of the biggest operators of donor-advised charitable funds, noncash complex assets accounted for 17 percent of the gifts it handled in 2013, up from 3 percent in 2009, spokeswoman Kim Judecki said.

Universities in Texas and Oklahoma, situated amid drilling for decades, have benefited from mineral and oil rights donations for years. Now, gas drilling in Appalachia is bringing this potential windfall to Pennsylvania schools.

“This is an opportunity for Pennsylvania colleges to have kind of an unusual revenue stream,” said Betsy Suppes, a geologist based in Johnstown, who has consulted nonprofits and universities on mineral rights gifts since 2002.

Receiving mineral rights as a donation can be more burden than benefit for some nonprofits because they require a lengthy and costly vetting process before they can be accepted. But institutions and groups say they are expecting such gifts to increase with growing gas production in the Marcellus and Utica shales.

“We anticipate if the price of gas goes back up, there will be more drilling and also more gifts,” said Mike Dagenhart, assistant vice president in the Office of Gift Planning at Penn State.

Penn State is trying to make the process easy for potential donors. The university has staff that is dedicated to vetting such gifts and advising people who want to donate. It is petitioning the IRS to streamline forms to make it easier for donors to assign a percentage of their royalty interest to a charity or university, Dagenhart said.

Penn State officials are working with Tom Hoffman, an Erie attorney who advises clients on royalty and land rights gifts, to coordinate with charities and gas companies on mineral rights donations.

Hoffman advises clients on how to donate mineral rights and royalties so they’re taxed at the lowest rate. Donating can help lower the overall value on an estate that’s taxed when it is inherited. He is spearheading an initiative to ask landowners with gas money to consider donating a percentage to charities and universities.

“We’re trying to help charities create the thought that if you have shale energy you should leave a legacy so that when all the energy is out of the ground there’s a legacy for future generations,” Hoffman said.

The University of Pittsburgh has not received a mineral rights gift yet, but one such gift is currently being vetted with a donor, said Albert Novak, vice chancellor for Institutional Advancement.

“We’re a long way from getting that done, there’s just so much due diligence around a gift,” he said.

Due diligence includes such things as verifying mineral rights leases, reviewing land records and performing environmental assessments.

But how to receive and benefit from such gifts are new to institutions in Pennsylvania — and donors, too, Novak said.

“I suspect as more and more citizens, especially in the Marcellus shale area, come to benefit from these types of earnings that that’s going to factor in other philanthropic plans too,” Novak said.

Many universities and nonprofits say they don’t have the staff or money to thoroughly investigate the land rights and want to avoid any potential controversy associated with the shale drilling industry.

“Oftentimes, we want to sell that as soon as possible,” said Dan Clare, director of communications at Disabled American Veterans (DAV), a national charity that helps veterans receive their benefits and has an office in Pittsburgh. The group has received mineral rights in the past but no longer holds any and is not seeking them.

Both the Washington County Community Foundation and Community Foundation of Greene County, based in counties that have seen an influx of gas drilling, say they’ve received or are promised gifts from wills either from mineral rights or royalties.

“The big change is people making charitable contribution to us, and we know that their revenue has been increased because of the industry,” said Betsie Trew, president of the Washington County Community Foundation.

Both groups say they are seeing the most donations coming from people who have lived in the counties for years, not from big gas companies.

Officials from the universities, nonprofits and foundations said donors nearly always want to remain anonymous.

At the Community Foundation of Greene County, Executive Director Bettie Stammerjohn has her staff looking into how the group should approach mineral land rights should they be donated. The group has received royalty payments, and some donors have promised their gas money once it’s paid out, she said.

“We’re starting to see a little bit more of that in Greene County,” Stammerjohn said. “We saw some initially and that kind of dried up, and I think that was from the initial signing bonuses. It took a while for some of the wealth to come into play.”

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Article Source: Ferral, K. (2014). Mineral rights, royalties flowing to Western Pa. charities. Retrieved from

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The North Dakota Oil Boom Now Pays for College

By Maureen Mackey

Location, location, location. That’s long been the mantra of real estate agents everywhere. Now, it turns out, that applies to a college education.

All high school graduates in Williams County, North Dakota, are eligible for a full ride to two-year Williston State College starting in fall of 2015 – including fees and books – the college announced this week. Students must attend full time (taking 12-18 credit hours per semester) and stay in good academic standing. Even local high school graduates from earlier years qualify.

This opportunity is due to several wells of support in oil-rich North Dakota – the Alva J. Field Memorial Trust, which is donating $1 million; the state itself, which is contributing $500,000; and the Williston State College Foundation, which in the past seven years has seen its balance sheet grow from roughly $7.5 million to $27 million.

“A lot of that is oil revenue,” Terry Olson, director of the foundation and interim president of Williston State College, told AP. The same oil boom that has created high-paying jobs for able-bodied adults has also created a need for nurses, managers, accountants and others, Olson added – “everything else that goes along with a booming environment.”

The scholarship is “an extraordinary opportunity” for local high school graduates, said North Dakota’s Lieutenant Governor, Drew Wrigley, in a statement announcing the program. Current in-state residents pay $150.27 per credit hour for tuition and fees at Williston State, which offers associate degrees in everything from finance to welding technology and residential carpentry technology. The campus occupies 80 acres in Williston, in northwestern North Dakota, site of the current shale boom.

Bakken Shale, the state’s main oil-producing reservoir, contains billions of barrels of crude, which has enabled North Dakota to become the second largest oil-producing state in the nation surpassing Alaska and California, the Energy Information Administration said recently. In April, North Dakota produced 30 million barrels of oil – the same amount it produced in all of 2004. Fracking – or hydraulic fracturing – uses highly pressurized water to force both crude oil and natural gas from the shale deep below the Earth.

Oil production in the Bakken is estimated to keep rising until about 2020, then level off and begin to decline. So while it may pay to graduate from high school in the northwest corner of North Dakota and attend Williston State for free, it may also pay to do it now – before the boom goes bust.

Article Source: Mackey, M. (2014). The North Dakota oil boom now pays for college. The Fiscal Times. Retrieved from

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