Gianfrancesco Melpignano

North Sea Brent crude oil spot prices decreased by $2/bbl in March to a monthly average of $56/bbl. This decrease followed a $10/bbl increase in February, the first increase in eight months. Several factors put upward pressure on Brent prices in February, including news of falling U.S. crude oil rig counts and announced reductions in capital expenditures by major oil companies. This upward price pressure abated in March, as the combination of robust world crude oil supply growth and weak global demand contributed to an increase in the rate of global inventory builds. Total global oil inventories are estimated to have increased by 2.1 million bbl/d in March, compared with a 0.9 million bbl/d increase in February. Strong global oil inventory builds are expected to continue in the coming months. Inventory builds are projected to moderate later in the year and provide support to crude oil prices.

The monthly average WTI crude oil spot price decreased to an average of $48/bbl in March, down $3/bbl from February. WTI prices fell in March in large part because of commercial crude oil inventories in Cushing, Oklahoma, which increased to a record 58.9 million barrels as of March 27. The record inventory levels have put downward pressure on the price of crude oil for prompt delivery compared with the price of crude oil for delivery in later months.

EIA projects the Brent crude oil price will average $59/bbl in 2015, unchanged from last month's STEO, with prices rising from an average of $56/bbl in the second quarter to an average of $67/bbl in the fourth quarter. The Brent crude oil price is projected to average $75/bbl in 2016. However, this price projection remains subject to the uncertainties surrounding the possible lifting of sanctions against Iran and other market events (see analysis box below). WTI prices in 2015 and 2016 are expected to average $7/bbl and $5/bbl, respectively, below Brent. The Brent-WTI spread for 2015 reflects continued large builds in U.S. crude oil inventories, including at the Cushing, Oklahoma, storage hub.

The current values of futures and options contracts continue to suggest high uncertainty in the price outlook (Market Prices and Uncertainty Report). WTI futures contracts for July 2015 delivery traded during the five-day period ending April 2 averaged $52/bbl while implied volatility averaged 46%, establishing the lower and upper limits of the 95% confidence interval for the market's expectations of monthly average WTI prices in June 2015 at $35/bbl and $78/bbl, respectively. The 95% confidence interval for market expectations widens over time, with lower and upper limits of $32/bbl and $97/bbl for prices in December 2015. Last year at this time, WTI for July 2014 delivery averaged $99/bbl, and implied volatility averaged 17%. The corresponding lower and upper limits of the 95% confidence interval were $85/bbl and $115/bbl.

Given the high level of uncertainty in oil markets, several factors could cause oil prices to deviate significantly from current projections. Among these factors is the potential lifting of sanctions against Iran if a comprehensive agreement is reached (see box below). The level of unplanned production outages could also vary from forecast levels for a wide range of producers, including OPEC members Libya, Iraq, Nigeria, and Venezuela. The degree to which non-OPEC supply growth is affected by lower oil prices will also affect market balances and prices.

Several OPEC and non-OPEC oil producers rely heavily on oil revenue to finance their national budgets. Some producers have already started adjusting their upcoming budgets to reflect the crude oil price decline. If crude oil prices fall further or are sustained at current levels, oil-dependent producing countries will face tough decisions. These decisions could potentially lead to austerity programs and fuel subsidy cuts that could spark social unrest, leaving some countries vulnerable to supply disruptions if protesters target oil infrastructure. Potential new supply disruptions are a real possibility and present major uncertainty in the world oil supply forecast.

http://www.eia.gov/forecasts/steo/report/prices.cfm

In English

http://www.nature.com/ncomms/2015/150421/ncomms7728/full/ncomms7728.html

In Italiano

http://www.greenreport.it/news/acqua/fracking-le-iniezioni-di-acque-reflue-provocano-terremoti/#prettyPhoto

In the United States, natural-gas production from shale rock has increased by more than 700 percent since 2007. Yet scientists still do not fully understand the industry's effects on nature and wildlife, according to a report in the journal Frontiers in Ecology and the Environment.

As gas extraction continues to vastly outpace scientific examination, a team of eight conservation biologists from various organizations and institutions, including Princeton University, concluded that determining the environmental impact of gas-drilling sites — such as chemical contamination from spills, well-casing failures and other accidents — must be a top research priority.

With shale-gas production projected to surge during the next 30 years, the authors call on scientists, industry representatives and policymakers to cooperate on determining — and minimizing — the damage inflicted on the natural world by gas operations such as hydraulic fracturing, or "fracking." A major environmental concern, hydraulic fracturing releases natural gas from shale by breaking the rock up with a high-pressure blend of water, sand and other chemicals, which can include carcinogens and radioactive substances.

Eight conservation biologists from various organizations and institutions, including Princeton University, found that shale-gas extraction in the United States has vastly outpaced scientists’ understanding of the industry’s environmental impact. Each gas well can act as a source of air, water, noise and light pollution (above) that — individually and collectively — can interfere with wild animal health, habitats and reproduction. Of particular concern is the fluid and wastewater associated with hydraulic fracturing, or “fracking,” a technique that releases natural gas from shale by breaking the rock up with a high-pressure blend of water, sand and other chemicals. (Frontiers in Ecology and the Environment )

"We can't let shale development outpace our understanding of its environmental impacts," said co-author Morgan Tingley, a postdoctoral research associate in the Program in Science, Technology and Environmental Policy in Princeton's Woodrow Wilson School of Public and International Affairs.

"The past has taught us that environmental impacts of large-scale development and resource extraction, whether coal plants, large dams or biofuel monocultures, are more than the sum of their parts," Tingley said.

The researchers found that there are significant "knowledge gaps" when it comes to direct and quantifiable evidence of how the natural world responds to shale-gas operations. A major impediment to research has been the lack of accessible and reliable information on spills, wastewater disposal and the composition of fracturing fluids. Of the 24 American states with active shale-gas reservoirs, only five — Pennsylvania, Colorado, New Mexico, Wyoming and Texas — maintain public records of spills and accidents, the researchers report.

"The Pennsylvania Department of Environmental Protection's website is one of the best sources of publicly available information on shale-gas spills and accidents in the nation. Even so, gas companies failed to report more than one-third of spills in the last year," said first author Sara Souther, a postdoctoral research associate at the University of Wisconsin-Madison.

"How many more unreported spills occurred, but were not detected during well inspections?" Souther asked. "We need accurate data on the release of fracturing chemicals into the environment before we can understand impacts to plants and animals."

One of the greatest threats to animal and plant life identified in the study is the impact of rapid and widespread shale development, which has disproportionately affected rural and natural areas. A single gas well results in the clearance of 3.7 to 7.6 acres (1.5 to 3.1 hectares) of vegetation, and each well contributes to a collective mass of air, water, noise and light pollution that has or can interfere with wild animal health, habitats and reproduction, the researchers report.

"If you look down on a heavily 'fracked' landscape, you see a web of well pads, access roads and pipelines that create islands out of what was, in some cases, contiguous habitat," Souther said. "What are the combined effects of numerous wells and their supporting infrastructure on wide-ranging or sensitive species, like the pronghorn antelope or the hellbender salamander?"

The chemical makeup of fracturing fluid and wastewater is often unknown. The authors reviewed chemical-disclosure statements for 150 wells in three of the top gas-producing states and found that an average of two out of every three wells were fractured with at least one undisclosed chemical. The exact effect of fracturing fluid on natural water systems as well as drinking water supplies remains unclear even though improper wastewater disposal and pollution-prevention measures are among the top state-recorded violations at drilling sites, the researchers found.

With shale-gas production projected to surge during the next 30 years, determining and minimizing the industry’s effects on nature and wildlife must become a top priority for scientists, industry and policymakers. Image of Wyoming’s Jonah Field, a major site of shale development. (Photo courtesy of Ecoflight.)

"Some of the wells in the chemical disclosure registry were fractured with fluid containing 20 or more undisclosed chemicals," said senior author Kimberly Terrell, a researcher at the Smithsonian Conservation Biology Institute. "This is an arbitrary and inconsistent standard of chemical disclosure."

The paper's co-authors also include researchers from the University of Bucharest in Romania, Colorado State University, the University of Washington, and the Society for Conservation Biology. The work was supported by the David H. Smith Fellowship program administered by the Society for Conservation Biology and funded by the Cedar Tree Foundation; and by a Policy Fellowship from the Wilburforce Foundation to the Society for Conservation Biology.

Shale Gas is natural gas that is present in shale rocks. Throughout the world, different types of sedimentary rock contain natural gas deposits, for example sandstones, limestones or shales. Sandstone rocks often have high permeability, which means that the tiny pores within the rock are well connected and gas can flow easily through the rock. In contrast, shale rocks usually have very low permeability, making gas production more complex and costly.

Shale gas is considered a so-called “unconventional gas”, together with “tight gas” from sandstones or limestones with low permeability and “coal bed methane” (CBM). While both conventional and unconventional deposits do host natural gas, it’s the more elaborate production methods that distinguish unconventional from conventional deposits; hydraulic fracturing (Fig. 1) is often applied to unconventional natural gas deposits. The distribution of different types of natural gas deposits varies around the world´s different regions, see Fig. 2.

Formation

Like oil and coal, natural gas in shales has, essentially, formed from the remains of plants, animals, and micro-organisms that lived millions of years ago. Though there are different theories on the origins of fossil fuels, the most widely accepted is that they are formed when organic matter (such as the remains of a plant or animal) is buried, compressed and heated in the earth´s crust for long time. In the case of natural gas, this is referred to as thermogenic methane generation.

Though the basic principles of shale gas formation are fairly well understood, generation of the gas within individual shales may differ significantly. Better knowledge is needed e.g. on basin modeling, petrophysical characterization, or gas flow in shales for an improved understanding of unconventional reservoirs.

For European gas shales this research is conducted within GASH, the first European interdisciplinary shale gas research initiative. GASH integrates available knowledge on European shales and conducts research projects in order to predict shale gas formation and occurrence in time and space.