Oil and Gas

With budgets tight and spending cut at a minimum, regulation of resources has progressed as current US state oil and gas regulations asserted to protect water resources, as stated by the Ground Water Protection Council. The intensification of regulating hydraulic fracturing, which is essential in producing natural gas from shale formation, has been permitted by the US Environmental Protection Agency.
What is hydraulic fracturing? It is a method used to create fractures into rock formations. The purpose of hydraulic fracturing is to increase the rate in which fluids like water, oil or gas can be produced from the formation created by the hole. Regulatory focus of hydraulic fracturing include: permitting, well construction and plugging, hydraulic fracturing, tanks, temporary abandonment, pits, and waste handling and spills. Reports were recorded by 13 states to document the acts of the GWPC in regards to this new regulation and can be found available online at http://www.gwpc.org. However, discrepancies remain for the measurement of content and amount of fuel purchased is impossible as the oil produced from Canada’s oil sands are blended without segregation amongst other oil sources from several US refineries. Nonetheless, oil and gas groups have been positive as the American Petroleum Institute states,

“The study confirms what the industry has been saying: Regulation of oil and gas field activities, including hydraulic fracturing, is best accomplished at the state level where regional and local conditions are best understood, and where state regulators are on hand to conduct inspections and oversee specific applications like well construction and testing and plugging as well as hydraulic fracturing. Hydraulic fracturing is a tried-and-true, more than 50-year-old technology, increasingly essential for producing the nation’s natural gas. ”

Hence with regulation playing an active role in being more efficient in the oil and gas department of resources, this seems to be a revolutionizing aspect of improved method of producing domestic natural gas. As the US strives to enforce changes in the way the country utilizes resources, efficiency should be a philosophy ingrained and followed (almost) religiously in any business and production factories in production as well to create a cleaner tomorrow.

Expectations of an economic recovery have been exceeding the actual rate in which this economic climate has been clearing up. Nonetheless, the stormy clouds and overcast remain as global oil and product inventories remain high with the consumer demand continues to dwindle. According to Deutsche Bank analyst Adam Sieminski, the Organization Petroleum Exporting Countries (OPEC) needs to further lessen its crude oil and material output due to environmental and economic means. It has been a general trend nowadays to reduce crude oil outputs from foreign countries and convert to cleaner, renewable energy. However, Sieminski reports that the likelihood of OPEC cutting back its crude output is slim due to the rising prices of oil. Why is that when demand for gasoline has been less than 5%, from its preceding week of 8%, reflecting on a decreasing trend of demand?

It seems to be that the conglomeration of rising expectations and confidence in economic recovery and increased funds in consumer expenditure and use of US refineries have driven OPEC to continue its crude oil production. Although these increases reveal positive growth in the economy, but this may be deceiving. There are possibilities of gasoline cracks on tertiary stocking and could fall apart.

“Eventually, in our view, refiners will have to scale back, and this will force crude oil back to $50/bbl,” Sieminski said.

The vacillation of oil prices and demand have impacted the oil inventories, miscalculation the use of oil and increasing the amount that is retained in supply. Deutsche Bank forecasts that WTI will average $47/bbl for 2009 and increase to average $55/bbl next year while US natural gas forecasts $4.50/MMbtu this year and increasing to $6.50/MMbtu next year.

This situation is a reflection on the inefficiency of expectations, which impacts the untapped sources and escalating inventories. If there had been a better grasp of the economic situation with realistic forecasts, there would be better efficiency in our resources that correlates to the consumer demand. However, could a little idealism hurt the state of our economy?

Perhaps it’s that string of hope that we can hold onto that encourages economic movement. What do you think?

Could there possibly be signs of potential exit in this economic turmoil? So far, it seems so. Prices for crude oil are beginning to increase at a relatively slow pace which analysts asses as an indication of increased optimism in the economy. With the recent outbreak of the global swine flu and the bankruptcy of Chrysler Inc., on a brighter note, oil prices has also have stabilized to $50/bbl and demand has increased since the record low in the month of February. Consumer spending, the factor that drives two-thirds of the global economy have dramatically decreased since the economic condition that we have been facing as income levels dropped. However, Raymond James analysts claim that oil prices will fluctuate with the support of the consumer optimism on the market and their basis of demanding more crude oil for daily use.

In regards to the widespread swine flu that has that made contact internationally, the oil market seems to disregard the effects on the potential reduction of fuel used on airplanes and jets for national and international travel. However, there doesn’t seem to be strict regulation – just concern for taking precautions for such cases. There has been a situation where Jose Sergio Gabrielli, chief executive of Petroleo Brasilerio SA (Petrobras) has cancelled a planned flight because of the flu. Nonetheless, there have not been any major impacts on airline travel.

With what was analyzed earlier with optimism correlating to oil prices, analysts have anticipated much more optimism ahead for the global economy as well as a 50 cent increase for gas oil in the month of May. Nonetheless, these projected measures cannot be stated for certain, as prices and the global state of the economy is in a constant state of fluctuation. Oil producers must be prepared; however, for what may occur because if they project progression in prices and miscalculate what may actually occur, prices of oil may once again, drop drastically due to the excessive inventory that resulted from the lessened demand from consumers. Projection, though not always completely accurate, must be decided with precaution due to the potential adverse effects from miscalculation.

What do you think? Will prices of oil continue to increase, respectively to the current state of our economy? If not, what do you project with your company in relation to the so-called wave if optimism in which analysts have proclaimed to envelop our global consumers?

Steps towards green alternatives have been undergoing progress as avid supporters persistently encourage usage of more environmentally and economically efficient means of energy. Due to the oil crisis, ethanol fuel has been a high performance form of motor fuel relieving hazardous exhaust emotions that provided promising prospective for a more efficient form of energy. Ethanol, a biodegradable blend though fermentation and distillation of starch and sugar, does not increase global warming by emitting greenhouse gas, provides a high octane at a low cost, and can also reduce net carbon dioxide and hydrocarbons in the atmosphere. As a result of these benefits, ethanol supporters such as Growth Energy, Renewable Fuels Association (RFA), the American Collation for Ethanol, and the National Ethanol Vehicle Coalition have been petitioning the Environmental Protection Agency to increase the limit on ethanol blends of gasoline from 10% to 15%. What would be the effects of implementing this proposition?

Not only would it be environmentally friendly means of energy to fuel our society’s everyday activities, but Wesley Clark, co-chairman of an ethanol supporting group Groth Energy claims that increasing the blend to E15 would create 136,101 jobs and add $24.4 billion/year in to the American economy. By raising at the levels of 15% in the blends for oil, the United States’ dependence in foreign fossil fuels would decrease; only problem is, some manufactures claim that more testing is necessary because higher ethanol blends could damage existing vehicle technologies. The causation would be that high blends could affect the pollution-control mechanism in these machines. In that sense, would it be worth the risk?
Ethanol advocates seem to believe so. Research and renovation have been the key steps towards realization of the domestic ethanol industry. As you can see, by mere research to seek efficiency, environmental efficiency and economic stimulation is projected to occur. Reflecting on this, perhaps in every company, there must be some sense of innovative change to achieve such efficiency and stimulation at this time of need. Whether it’s a small step of restructuring of your human resources to entirely renovating your means of production, environmental, economic, and societal pressures stress efficiency by every means possible.

Have you begun the revolution?

Industrial Energy Efficiency

   For the past few decades, our energy consumption and dependence on fossil fuels have increased exponentially, along with our complaints on oil prices. With the fluctuation on prices and demand, our everyday consumers’ wallets cry for mercy and the sense of urgency in seeking other sources of energy have been of popular concern. This is because of the worry of depleting sources and damages on the environment due to lack of eco-friendly alternatives. Thus new research on innovative methods in be more energy efficient and alternative and renewable energy sources on domestic lands have been established as a priority for the Department Interior  in attempts to reduce its dependence on foreign oil.

            The world’s economy may be spiraling down into a slump, but for the Oil & Gas Industry, there has been preventive maintenance that has been keeping this industry afloat and more aware of its acquired assets, revenue and profits. Fortunately, despite the current condition of the flailing global economy, the state of Gas & Oil industry has been pulling its weight.  You might be incredulous with such a bold statement find that this implausible with all the controversy over oil for the past years, but companies have implemented Maintenance Scheduling solutions designed to meet production targets and reducing production costs while maintaining safety and environmental standards towards a clean energy economy. Features of this scheduling system include: optimizing maintenance strategies, improving the performance of the equipment used in the industry and detecting and fixing errors that prevent optimal performance. This solution also standardizes information within each company including work hours, maintenance schedules, resource availability, as well as reduces the maintenance of cost and hours of work and human resources.

            It seems like our economy could use some of this scheduling maintenance software to help improve its’ condition. So, will the economy be able to recover quickly enough with its direction towards clean energy? Would this entail costs and sacrifices with our domestic markets and foreign relations? What do you think?