The Trigger Price for Fracking Resumption $60? Market Constraints

[william the wie]

Or at least that is the claim. This is one constraint on the market: that oil is bounded at $15-60/bbl in 2015 dollars.

That is one constraint based on production costs of existing producing fields and the cost of bringing more fields online. Companies that cannot make a profit within those boundaries of energy prices will go under.

Training and salary costs in the restaurant business are a major problem. There are many attempts to automate as many jobs as possible in these areas from the fields to the tables. So far the success rate is not great but it is on an upward curve. Some increase in UE in this area is coming.

Attempts to go to negative interest rates in Europe are spawning lower cost non-bank money storage sites. This reduction in deposits is slowing money creation.

Buybacks of stocks with borrowed money at near zero interest rates is reducing the supply of equities. The juiced up prices of the last 6-7 years will hit either higher interest rates or lower profits that will put the squeeze on.

So, what are the other constraints on this very old bull market?

 

[waltky]

Fracking gets the go-ahead in England...

Fracking go-ahead: What happens next?
Fri, 27 May 2016 - New plans for fracking have been given the go-ahead in North Yorkshire, the BBC's John Moylan looks at whether old industrial sites be used for future fracking applications.

Plans for fracking in England are being prepared in the wake of the decision made in North Yorkshire earlier this week. Brownfield sites and areas near motorway junctions could be used for future shale gas production. On Monday North Yorkshire County Council approved an application by Third Energy to frack a well near the village of Kirby Misperton in Ryedale. Campaigners say that they are still considering a legal challenge.

'Further applications'

The North Yorkshire decision is a landmark moment for the UK's fledgling shale gas sector. It is the first time a company has been given go-ahead since a moratorium on fracking was lifted in 2012. "The decision in North Yorkshire was an important first step and underlined our firm belief that the process is safe and can be done environmentally sensitively," says Ken Cronin of the industry body UKOOG. "We expect further applications and this chimes well with the need to provide a home-grown source of gas to heat our homes." And firms are stepping up their exploration plans. This week the largest independent operator of onshore oil and gas fields in Britain, Igas, said that it would drill two exploratory shale gas wells in Nottinghamshire early next year, subject to planning and permitting.

It says it could apply to use fracking at one of the sites near the village of Misson if exploratory drilling is successful. It will also be applying to frack in the North West of England. The company previously drilled wells at Barton Moss near Salford and at two locations in Cheshire. The chemicals giant Ineos has also confirmed plans to undertake large-scale 3D seismic surveys of its licence areas in Cheshire, Derbyshire and North Yorkshire, to help select exploration sites. Ineos says it is the biggest UK shale player with access to one million acres of potential shale gas reserves. Plans by the shale gas firm Cuadrilla to drill and frack wells at two sites in Lancashire were the subject of a planning inquiry earlier this year. A report and recommendation by the inquiry's planning inspector will be submitted to the government by 4 July. It will then be up to the Communities Secretary, Greg Clark, to decide whether to approve the plans.

Existing well

Some anti-fracking campaigners fear the North Yorkshire decision sets a precedent making it easier for other councils to approve fracking. But aspects of Third Energy's application meant it always stood more chance of approval. Crucially, the location is an existing industrial site where gas has been produced since the 1990s. This contrasts with the proposals by Cuadrilla in Lancashire, which were rejected by councillors, involving two greenfield sites. Cuadrilla also proposed months of work involving drilling four horizontal wells on each site which would then be fracked. The Third Energy plan will be completed within eight weeks and involves fracking an existing vertical well drilled in 2013.

'Where the geology takes you'

 

[william the wie]

This could get really big really fast.