Half of U.S. Fracking Industry Could Go Bankrupt as Oil Prices Continue to Fall
So the slide continues with no end in sight. As expected this morning, the oil price has fallen below $28 a barrel on the back of the historic news over the weekend of sanctions being lifted on Iran.
This is the lowest level for oil since 2003.
The markets are spooked that the lifting of sanctions means the imminent introduction of half a million or so more barrels of oil per day from Iran into an already oversupplied market. The country has the world’s fourth largest reserves of oil.
Speaking earlier today at the Asia Financial Forum in Hong Kong, Stuart Gulliver, CEO of HSBC said “Major producers are currently delivering 2-2.5 million barrels per day more than demand, so the question is how long they can continue to overproduce for at that level.”
Already struggling with oversupply from various countries, the market now has Iran to contend with too.
After years of isolation due to sanctions, Iran reportedly has a significant amount of oil to place on the international market immediately. Analysts from Barclays said simply: “Iranian exports come at a very bad time.”
That can only mean one thing: a market awash with oil, which will only add a downwards pressure on the already low oil price.
The numbers are becoming brutal reading for the industry: The oil price has collapsed more than 70 percent since mid-2014.
And there is no respite in store. In his speech, HSBC chief executive, Stuart Gulliver, said he predicted the price of oil to be somewhere between $25 and $40 in a year’s time.
Having limped along last year hoping for a rebound in prices this year, the industry is heading for deep trouble.
Last week, one analyst predicted that half of U.S. shale oil producers could go bankrupt before the oil price rebalances itself.
Fadel Gheit, a senior oil and gas analyst at Oppenheimer & Co believes it could be two years before oil stabilizes near $60, which is still below the break-even point for many shale producers.
“Half of the current producers have no legitimate right to be in a business where the price forecast even in a recovery is going to be between, say, $50, $60. They need $70 oil to survive,” he told CNBC.
Even the big boys are taking a hit.
Last week, BHP Billiton was forced to writedown the value of its U.S. oil and gas assets by $US7.2 billion (Aus$10.4bn), admitting it needed $US60 a barrel oil to be “cashflow positive.”
But the reality is that under $30 dollar a barrel, it is only a matter of time before we see a range of bankruptcies in the shale industry.
“At this price range, nothing is safe,” says Jesse Thompson, an economist at the Federal Reserve Bank of Dallas. And he could well be proved right.
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EcoWatch Daily Newsletter
Jean-Marc Neveu and Olivier Civil never expected to find themselves battling against disposable mask pollution.
When they founded their recycling start-up Plaxtil in 2017, it was textile waste they set their sights on. The project developed a process that turned fabrics into a new recyclable material they describe as "ecological plastic."
Mounting Piles of Waste<p>It is not only the streets of Chatellerault where pandemic pollution is piling-up, but also the world's beaches and oceans. Once there, they can take up to 450 years to degrade and disappear.</p><p>Esther Röling, co-organizer of the annual Adventure Clean Up Challenge held on Hong Kong Island, has seen this waste firsthand. In October the sports challenge pitted teams against one another in a competition to remove trash from 13 hard-to-reach coastal areas around the city.</p><p>They find tons of both disposable and reusable masks, said Röling. "You wonder how it ended up there. Was it just thrown on the ground? Or was it in a garbage bag that broke open?"</p><p>Almost 10,000 kilometers away in Antibes on the sunny French Riviera, it's a similar picture. For the past few months, divers and clean-up volunteers working with an ocean clean-up non-profit called Operation Mer Propre have been collecting an increasing number of masks found on land and in the sea.</p><p>"Since the beginning of the lockdown when we started to count, we've reached 800, 900, [and now in total] 1000 masks," said co-founder Joko Peltier. </p><p>According to <a href="https://unctad.org/news/growing-plastic-pollution-wake-covid-19-how-trade-policy-can-help" target="_blank">UN estimates</a>, up to 75% of all coronavirus-related plastic could end up as waste in oceans and landfills.</p>
The Limits of Recycling<p>Yet not all are convinced the recycling of this waste is possible on a global scale. </p><p>"What those citizen groups are doing is really beneficial but once they collect it, it should just go to a landfill or an incinerator. They shouldn't necessarily expect it to get recycled," said Jonathan Krones, an industrial ecologist and visiting assistant professor of environmental studies at Boston College.</p><p>That's because mask recycling programs like Plaxtil are few and far between and most don't have the benefit of a readily adaptable production process. </p><p>Even in countries with solid recycling infrastructure, he says, the system is designed to separate out specific types of waste like bottles or cardboard.</p><p>"I imagine that it would be technically feasible to develop a separation process to filter out masks, but there simply aren't enough of them to make that economical," he said.</p><p>Collection is a big hurdle, he adds. Since each mask only weighs a fraction of a gram and they're scattered on roads or mixed with other trash, it is difficult and costly. </p><p>"You need a lot of raw material of the right quality to make investing in the recycling technology and the recycling system worthwhile," he said.<span></span><br></p>
Hemp, Sugar Cane and Sustainable Alternatives<p>Some projects are instead addressing the material used to make masks.</p><p>French company Geochanvre have created a mask made primarily from hemp, while in Australia, researchers at the Queensland University of Technology are experimenting with a disposable product made from agricultural waste. </p><p>Biodegradable options are exciting alternatives to reduce the fossil fuels needed for the creation of plastic-based masks, said Krones, but they don't absolve the wearer from the responsibility of what happens afterwards. </p><p>Bio-based masks often need their own composing solutions, he explains, because in landfill they can produce high amounts of the greenhouse gas methane when anaerobic bacteria feeds on the organic material. Methane is known to be significantly more potent than carbon dioxide.</p><p>"I think as long as we have in our mind that we want to have disposability, we're going to have to wrestle with a variety of different sorts of environmental tradeoffs," he said, adding that reusable, fabric masks are the best option available to most people.</p><p>Precimask is developing a clear face covering with an optional visor made from hard plastic, designed to be long-lasting.<br></p><p>Air enters either side of the cheeks through a technology normally found in pool filters and car exhaust systems, said company spokeswoman Juliette Chambet.</p><p>"We wanted to make ceramic-based filters that would be washable and cleanable, which would allow them to be reused as many times as desired without having to buy a new consumable or produce waste," she said. </p><p>Ultimately, encouraging mask wearers to think about the entire lifecycle of a mask is key, explains Neveu. </p><p>"We want people who put on the masks to realize that they are also responsible for the waste, he said. "It's not inevitable that this [pandemic] will become an environmental catastrophe.</p><p><em>Reposted with permission from </em><em><a href="https://www.dw.com/en/covid-19-recycling-pollution-trash-pandemic/a-55707817" target="_blank">Deutsche Welle</a>.</em><a href="https://www.ecowatch.com/r/entryeditor/2649032193#/" target="_self"></a></p>
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