Posts Tagged ‘Fuel Fix’

Vortex Tools covers how low prices are shaping the budgets, workforce, and operations of oil and gas companies.

Even if you don’t know the specifics of the steep 2014 decline in oil prices, if you’re on social media, you’ve likely seen a pic or 10 of low prices at the gas pump. But there’s also a sense of wondering how long these low oil and gas prices will last. Depending on which talking head you listen to, some believe oil prices will stay low until the end of 2016, while others think oil could hit $200/barrel in the next few years.

However it goes, this is what’s currently happening in the oil and gas industry:

Large Budget Cuts: Typically budgets for the New Year are finalized by the end of January at the latest, but in 2015, many company budgets have been delayed. Right away this means that budgets are ~10% lower, as parts of January and February were put on hold expenditure-wise. Then, as budgets have come out, a lot of them are 40-50% lower than the year before (Pioneer Natural Resources’ capital expenditures dropped by 45%, Apache gutted $3.5 billion from the year previous). This means:

Layoffs: With companies losing billions in the fourth quarter of 2014, employee cuts have followed. BP laid off 300 Scottish workers in January and Halliburton plans to lay off 5,000-6,500 of their 80,000 workers. (As the VP Marketing for Vortex Tools, my inbox has seen a spike in job applications, too.) According to Fuel Fix, “Halliburton’s move brings the number of layoffs announced by the world’s four biggest oil field services in recent weeks to more than 30,000 workers around the world. That’s about 9.4 percent of their combined workforce.” Even with layoffs attempting to balance out costs and stock prices, there are still:

Equipment Cost Pains: Oil and gas prices may be down, the amount of workers may have dropped to meet the work pace, but it still costs about the same to complete a new well or work over an existing well.  In dealing with steep, hyperbolic decline shale wells—oil and gas wells that start with high, valuable production, but quickly reduce to lower rates—operators have to keep drilling to stay profitable, so there’s a lot of unavoidable cost.

These pain points mean that some companies won’t survive, whereas others are using this as an opportunity to lean up their business model and pursue a more efficient direction. One member of the Vortex team, Richard Haas, was an oil and gas operator for 36 years. He started when oil was worth $11 a barrel and gas 16 cents an MCF (adjusted prices still lower than today). In addition, gas value was not adjusted based on its BTU (or energy) equivalent—it all got valued the same no matter how much it fueled. Because of this, Richard knew how to wring every bit of oil or condensate from the production stream. Now that oil is at less than half the value of where it was eight months ago, it’s going to take that kind of efficiency thinking for companies to thrive at low oil prices.

With Vortex tools increasing production efficiency, reducing chemical/surfactant costs, and eliminating pollution fines, that type of required efficiency is available now.

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Colin McKay Miller is the VP of Marketing for the SpiroFlo Holdings group of companies:

SpiroFlo for residential hot water savings (delivered 35% faster with up to a 5% volume savings on every hot water outlet in the home), industrial water purification (biofilm removal), and reduced water pumping costs.

Vortex Tools for extending the life of oil and gas wells (recovering up to 10 times more NGLs, reducing flowback startup times, replacing VRUs, eliminating paraffin and freezing in winter, etc.).

Ecotech for cost-effective non-thermal drying (for coal, biosolids, sugar beets, dairy waste, etc.) and safe movement of materials (including potash and soda ash).

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