Shale frackers running out of tricks to survive

Ain’t anything moving here

In 2015, the fracking outfits that dot America’s oil-rich plains threw everything they had at $50-a-barrel crude. To cope with the 50 per cent price plunge, they laid off thousands of roughnecks, focused their rigs on the biggest gushers only and used cutting-edge technology to squeeze all the oil they could out of every well.

Those efforts, to the surprise of many observers, largely succeeded. As of this month, U.S. oil output remained within four per cent of a 43-year high.

The problem? Oil’s no longer at $50. It now trades near $35.

For an industry that already was pushing its cost-cutting efforts to the limits, the new declines are a devastating blow. These drillers are “not set up to survive oil in the $30s,” said R.T. Dukes, a senior upstream analyst for Wood Mackenzie Ltd…

The Energy Information Administration now predicts that companies operating in U.S. shale formations will cut production by a record 570,000 barrels a day in 2016. That’s precisely the kind of capitulation that OPEC is seeking as it floods the world with oil, depressing prices and pressuring the world’s high-cost producers. It’s a high-risk strategy, one whose success will ultimately hinge on whether shale drillers drop out before the financial pain within OPEC nations themselves becomes too great…

❝“You are going to see a pickup in bankruptcy filings, a pickup in distressed asset sales and a pickup in distressed debt exchanges,” said Jeff Jones, managing director at Blackhill Partners, a Dallas-based investment banking firm. “And $35 oil will clearly accelerate the distress…”

Couldn’t happen to a more deserving crowd.

A return to cheaper oil was thought to be disastrous for shale, but companies figured out how to increase productivity and lower costs.

Producers slashed spending, idling more than 60 per cent of the rigs in the U.S. They drilled and fracked faster, meaning fewer rigs and workers could make the same number of wells. They focused on their best areas and used more sand and water in the fracking process so each well gushed with more crude. By April, when the rig count had fallen in half, output was still rising.

All that effort did was push prices lower and expectations for a price recovery further out into the future. Now shale companies face a grim future, having played most of their best cards…

Extractive industries have one supremely disastrous feature. They consider the cost of start-up [or re-starting] “too expensive”. So, tapering, slowing down rates of extraction is considered a sin in the religion of profiteering. Not just oil. Coal, iron ore, copper, aluminum…all the mined commodities are in similar trouble.

And, as is traditional, the executives who acted just like their predecessors are now getting the same result. Starting with losing their jobs.

Couldn’t happen to a more deserving crowd.

Darwin Award candidate

Roadside condom vending machine destroyed by the thieves

A man died on Christmas Day in Germany after he was hit in the head by a flying piece of metal from a condom machine that he and two accomplices blew up in an apparent robbery attempt

The 29-year-old man was taken to hospital in the western town of Schöppingen, near the Dutch border, by the two other men who fled the scene of the explosion in a car, leaving behind condoms and money scattered around the gutted vending machine.

The two men told hospital officials that their friend had fallen down the stairs, injuring his head. Suspicious of their story, the officials called the police.

During questioning, police said, one of them admitted that the three had blown up the condom machine, and that their fellow conspirator was hit in the head by metal as he tried to take cover.

Sometimes, you get what you deserve, eh?

The most ridiculous health claims of 2015

‘Tis the season to reflect on the year that was. So to celebrate, Julia Belluz takes a look at the most wildly off-base health claims of 2015. A few of the highlights:

1) Gwyneth Paltrow told women to steam clean their vaginas. Don’t do this.

In January, Gwyneth Paltrow — who has a long history of spouting absurd health claims — stooped to a new low, endorsing steam cleaning one’s vagina to boost energy and rebalance female hormones. An excerpt:

The real golden ticket here is the Mugwort V-Steam. You sit on what is essentially a mini-throne, and a combination of infrared and mugwort steam cleanses your uterus, et al.

Needless to say, you should definitely not do this.

4) Canada’s biggest newspaper spread misinformation on the HPV vaccine

In February, the largest daily in Canada, the Toronto Star, reported that women were being harmed and even killed by the HPV vaccine. The story was based mostly on a few anecdotes and ignored all the evidence to the contrary. The paper eventually apologized and retracted the story.

5) The media hyped (bad) stories claiming that kale is dangerous

In recent years, an alternative medicine practitioner has been doing a few experiments, some in the kitchen of his houseboat, that supposedly found high levels of heavy metals in kale, suggesting people were slowly being sickened by the green. The claim went viral. The science behind the claim was terrible.

7) Everybody freaked out (needlessly) about bacon and cancer


When a World Health Organization research agency announced that eating processed meats (like bacon, salami, and hot dogs) could increase a person’s risk of cancer, it spawned panicked headlines. Few stories appreciated, however, that the actual increase in risk was tiny.

RTFA for several more chuckles, that is, if you feel something at least approaching sound scientific practice is required before heading out to make million$ from your claims.

Yes, Doctor Oz is included.