Sunday, June 20, 2021

Shale oil and gas fraud: A sign of a peak in oil supplies?

Those of us who watched incredulously as investors shovelled more and more money into what we were sure were money-losing shale oil and gas drillers do not find the current spate of fraud lawsuits against these drillers surprising.

The gargantuan claims about shale hydrocarbon reserves—which were compared more than once to those in Saudi Arabia—were clearly designed to woo investors into bidding up the stock price and/or hoovering up the constant stream of junk bonds emitted by the shale oil and gas drillers. The hype succeeded for a long time, even during the crash in oil prices in 2015 and beyond when investors convinced themselves that they were picking up "bargains."

It wasn't until the pandemic-induced plunge in oil prices that the reality of those outlandish claims was revealed, and many companies disappeared.

Sunday, June 13, 2021

Who pays for the care of "orphaned" oil and gas wells? You do

When oil and gas wells end their useful life, one of two things happens: 1) They are plugged and capped to prevent further flows or 2) they are simply abandoned.

When they fall into the second category, they are called "orphaned" wells and they become the responsibility of the government to secure. But that's if the government actually knows about them. Records of well placements are not always so carefully maintained and can get lost during bankruptcies and changes in ownership or due to sheer carelessness. As a result, there appear to be far more abandoned wells than the orphaned ones that governments know about.

Since I last wrote about this problem in 2012, there has been a huge wave of drilling in Texas, North Dakota, New Mexico and Colorado as the so-called shale revolution unleashed billions of barrels of previously inaccessible oil and trillions of cubic feet of natural gas on the world. Now that drillers in the shale fields have fallen on hard times, many wells are idle and at risk of being abandoned.

Sunday, June 06, 2021