Second Bakken Pipeline Shutdown Further Threatens Shale Recovery
Bloomberg News reported the government is shutting down another Bakken pipeline.
Earlier this month, a federal judge stunned the U.S. energy sector with an order to shut down the Dakota Access pipeline. Environmentalists hailed it as the first time a fully operating system had been forced to close by a legal challenge.
As it turns out, it was actually the second time an oil pipeline was ordered shut in a matter of four days.
On July 2, a lesser-known conduit called Tesoro High Plains was ordered shut for the first time in its 67 years of operation. Together, the two pipelines ship more than one-third of crude from America’s prolific Bakken shale formation to market. Their travails signal the ebbing of the oil industry’s sway in the U.S. heartland and underscore the growing heft and savvy of challengers who’ve become emboldened to demand higher compensation and safeguards.
“In the past, it was a shotgun approach of challenging pipelines,” said Brandon Barnes, an analyst for Bloomberg Intelligence. “Now, the resources are more plentiful and the challengers are far more nuanced and sophisticated in their approach.”
Laid Off Oil Workers Looking at Investing in Wells
Imran Khan and Jeremy Pate, Swan Energy , revisited the Chevron story regarding the layoffs due to the sale.
“So Jason the terrible part about the Chevron acquisition is 80% of Noble’s work force is going to get laid off,” Pate said. “All those families that had a normal monthly income are going to be without. Some may get severances packages and some may not.”
Pate continued saying Swan Energy has been administering a kind of well sharing program for their employees and others. He said this has become a way for some to make a monthly income for whatever their personal need is.
“Swan does have a program that can help them out. We can help them out through their 401K. Most people have a 401K that they are going to have to roll out of their Noble 401K into an IRA or something like that. ” Pate said. “So how we can help them is that we have a program that they can roll their 401K, tax-free, into another 401K that they can invest into oil wells through Swan Energy.”
International Investments Impact on Shale Play USA
Luke Daniels, Core Well Commercial Capital, discusses some of the recent international oil and gas moves and how that will impact Shale Play USA. Daniels cites examples of the Chinese market, private equity firms taking control, the downturn and how companies are reinventing their business models.
“Traditionally you could follow a linear growth model for your business, however,” Daniels said. “This has changed to a need for an exponential growth pattern. This is extremely difficult for small to mid-size companies that just do not have the endless capital to compete. So, you have two options boot strap it or find an alternative source of funding, which is what we do.”
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