Fracking Impacts - Boom & Bust

Fracking is expensive, extreme and risky and wells have massive production decline rates requiring constant drilling, offering dramatically lower energy returns and large environmental impacts. Sweet spots are often surrounded by vast zones of much less productive wells, which do not produce a large energy surplus.

The honeymoon is over on royalties in gas-drilling country (Columbia Daily Tribune, September 2016) In Pennsylvania and other leading gas-producing states, a battle royal has developed over royalties, with landowners bitterly disputing the sums some drillers have been taking from royalty checks already severely diminished by a collapse in prices.

Big Oil Was Never That Big a Money-Maker, Goldman Sachs Says (Bloomberg, September 2016) The rising oil prices which culminating in the explosion of shale drilling in the U.S. were not the windfall investors might have imagined, according to Goldman Sachs, with returns for major oil companies actually declined between 2005 and 2014 as measured by cash return on capital invested, indicating higher costs of business

Creditors lose historic sums in oil bankruptcies, Moody’s says (Houston Chronicle, September 2016) For the lenders that bankrolled the shale boom, the oil-market crash may leave as much financial wreckage behind as the devastating telecom bust in the early 2000s, with banks and bond investors recovering only about $1 of every $5 they poured into the U.S. oil companies that eventually went bankrupt, according to a leading credit rating agency

Depleted crews, idled rigs lie in shale oil’s path to revival (Reuters, July 2016) The latest rout in oil prices has been the last straw for many workers just getting back on their feet after the last downturn, with more than 100,000 jobs have been lost since late 2014 and many workers leaving the industry, as well as equipment idled for so long that it has become unusable means any recovery will look very different

US fracking bust sparks surge in car debt (Financial Times, May 2016) Analysis of 327 counties that are heavily exposed to the fracking boom and bust reveals the damage done by the collapse in drilling activity, with late payments on car loans and mortgages rising, as slump in the oil price has led to heavy job losses and falling investment in those areas

Shale oil industry a ‘Ponzi scheme’ or can it boom again? (CNBC, May 2016) Analysts are questioning whether the country’s shale oil industry can ever boom again, with one telling CNBC that he doubted the very foundation of the U.S. shale oil industry which he said had been founded and expanded on cheap money and had effectively been a “Ponzi scheme” – an investment operation that generates returns for older investors by acquiring new investors.

Marcellus shale businesses reeling from natural gas collapse (Pittsburgh Tribune, April 2016) Energy firms and the businesses that directly cater to them are laying off thousands of workers in Pennsylvania, a story is playing out everywhere the drillers are leaving or have left — places such as Gillette, Wyo., and Oklahoma City, where the downturn has blown a billion-dollar hole in the state budget, leading to funding cuts to schools, and other services

Wage Theft Claims Surge As Oil Prices Fall (Inside Energy, February 2016) Oilfield bankruptcies of companies large and small have been surging as prices remain at their lowest levels in a decade or more, but it’s not the only way a workers are left underpaid with a growing number of oil workers are turning to the courts, saying they weren’t paid fairly even when times were good, with oil and gas companies among the top violators of wage laws

Oil bust spurs real estate crisis across US shale towns (Bloomberg, September 2015) After struggling to house thousands of migrant roughnecks during the boom, North Dakota faces a new real-estate crisis with the frenzied drilling not lasting long enough to support the oil-fueled building explosion as hundreds of dwellings approved during the heady days are rising, skeletons of wood and cement surrounded by rolling grasslands, with too few residents who can afford them

The Shale Industry Could Be Swallowed By Its Own Debt (Bloomberg, June 2015) The debt that fueled the U.S. shale boom now threatens to be its undoing with drillers devoting more revenue than ever to interest payments, as they’ve consistently spent money faster than they’ve made it, even when oil was $100 a barrel

Owner loses everything as downturn claims business (Toowoomba Chronicle, April 2015) The all too common story of a south-west Queensland small businessman who rode the wave of the coal seam gas boom but has been left with just bitter memories of a business lost to a debilitating and dramatic downturn, when two weeks ago, the banks moved in, staff were let go and the company was declared bankrupt

Half of U.S. Fracking Companies Will Be Dead or Sold This Year (Bloomberg, April 2015) Half of the 41 fracking service providers in the U.S., already down from 61 at the start of last year, will be dead or sold by year-end according to any industry executive, as demand for hydraulic fracturing has declined as customers leave wells uncompleted because of low prices.

The Oil Industry’s ‘Man Camps’ Are Dying (Bloomberg, April 2015) America’s oilfield “man camps” – mini-settlements that sprang up throughout drilling regions in Texas, North Dakota, and Colorado – are turning into ghost towns as drillers cut back the free housing, food, and air travel once used to lure shale boom workers, slashing as much as $114 billion in spending this year and laying off tens of thousands of employees

Coalbed Methane: Boom, Bust and Hard Lessons (WyoHistory, April 2015) in the early part of this century, the fervor surrounding coal-bed methane gas and its potential was as enormous but now Wyoming’s coal-bed methane gas play in the Powder River Basin is a bust, few of the 24,000 wells drilled during the heyday of the 2000s produce much gas, many sit idle and approximately 3,000 wells are left orphaned—a liability for the state to clean up

Fracking Town’s Desperate Laid-off Workers: ‘They Don’t Tell You It’s All a Lie’ (Alternet, March 2015) Life at the center of the country’s largest fracking boom has changed, with jobs drying up but many job seekers seem unwilling to leave—at least not until they can make a success out of their sacrificial move to a place with six months of winter, the worst traffic they’ve ever seen, and a disgruntled, if not miserable, populace

Junk Bonds Backing Shale Boom Facing $11.6 Billion Loss (Bloomberg, December 2014) Bond investors who helped finance America’s shale boom are facing potential losses of $11.6 billion as oil prices plummet by the most since the credit crisis, with the $90 billion of debt issued by junk-rated energy producers in the past three years falling almost 13 percent since crude oil peaked in June

New U.S. oil and gas well November permits tumble nearly 40 percent (Reuters, December 2014) Plunging oil prices, which fell below $70 a barrel last week, sparked a drop of almost 40 percent in new well permits issued across the United States in November, seen as precursor to a decline in rigs drilling wells, in a sudden pause in the growth of the U.S. shale oil and gas boom that started around 2007

Shale Drillers Idle Rigs From Texas to Utah Amid Oil Rout (Bloomberg, November 2014) The shale-oil drilling boom in the U.S. is showing early signs of cracking, with drillers slowing down as crude prices tumbled 24 percent in the past four months, and the slide threatens to curb a production boom in U.S. shale formations

Fracking Firms Get Tested by Oil’s Price Drop (Wall Street Journal, October 2014) Tumbling oil prices are starting to frighten energy companies around the globe, especially drillers in North America, where expensive shale crude is expensive to pump, since at $90 per barrel and below, many hydraulic-fracturing projects start to become uneconomic, according to a recent report by Goldman Sachs

Halcon’s Wilson Drills More Debt Than Oil in Shale Bet (Bloomberg, September 2014) A decade into a shale boom that has made fracking a household word, drillers are propping up the dream with a mountain of debt, with companies are paying a steep price for the gains, most are spending money faster than they make it, an average of $1.17 for every dollar earned and plugging cash shortfalls with junk-rated debt

U.S. Study Finds Boomtown ‘Curse’ (Daily Yonder, August 2014) Rocky Mountain counties that prospered during the 1970s oil-and-gas boom are doing worse now than they would have without the boom, a new study says, with higher unemployment long after the energy bust had struck, suggesting current boomtowns in North Dakota, Pennsylvania and Texas would have been economically better off without fracking

Shakeout Threatens Shale Patch as Frackers Go for Broke (Bloomberg, May 2014) Shale debt has almost doubled over the last four years, hitting $163.6 billion in the first quarter, while revenue has gained just 5.6 percent, according to an analysis of 61 shale drillers, with a dozen of those wildcatters are spending at least 10 percent of their revenue on interest, but drillers are caught in a bind, needing to keep borrowing to pay for exploration needed to offset the steep production declines typical of shale wells

Junk Bonds Fuel the Shale Boom (Bloomberg, May 2014) The shale boom is backed by a surge in junk bonds that has been as vital as drilling technology, with the amount issued by exploration and production companies growing nine-fold since 2004, which keeps companies going as they spend money far faster than they make it, with output from shale wells dropping sharply in the first year, producers have to keep drilling more wells just to maintain production

We’re fracking to stand still (Globe and Mail, December 2013) In the Bakken Shale output from wells that are over a month old is declining 6.3 per cent each month, for an annual rate of 53 per cent, requiring constant drilling and so much energy is needed to drill these wells that only the best produce a large energy surplus

Report: Industry-backed studies exaggerate fracking job estimates (Democrat & Chronicle, November 2013) A report casts doubt on industry funded estimates of jobs created through Marcellus Shale gas drilling, finding only one in 795 jobs is directly related to drilling, suggesting the jobs impact has been exaggerated in order to minimize or avoid altogether taxation, regulation, and even scrutiny of fracking

Long-Term Costs Of Fracking Are Staggering (Think Progress, March 2013) Report finds that unconventional fossil fuels all share a host of cruel and limiting traits, offering dramatically lower energy returns, consuming extreme and endless flows of capital, providing difficult or volatile rates of supply over time and have large environmental impacts in their extraction

Shale Gas Bubble: Insiders Suggest Fracking Boom Is a Bust (Huffington Post, January 2013) The economics of risky and expensive unconventional gas recovery simply don’t match up with claims of a “nearly limitless” supply and sweetspots are often surrounded by vast zones of less-productive wells that in some cases cost more to drill and operate than the gas they produce is worth

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