TIME Shell

Here’s Why Oil Giant Shell Is Slashing Thousands of Jobs

Company sees a ‘prolonged downturn’ in the oil industry

There was no sugar coating on Shell’s earnings report Thursday: “Today’s oil price downturn could last for several years,” the company said.

In reporting a 25% decline in net income in the second quarter, the company said it would be combating the “prolonged downturn” in the oil industry by slashing 6,500 staff and contractor jobs this year and reducing capital investment by $7 billion or 20%. The company employs 94,000 worldwide. Shell’s dreary outlook on Thursday comes after its prediction in April that oil prices would return to $90 per barrel in three years. Crude oil has slumped 50% in the last year—at one point hitting a six-year low.

Shell isn’t alone in trying to grapple with cheap oil. This week Chevron said it would cut 1,500 jobs in an effort to cut costs by $1 billion. Likewise, ConocoPhillips said it’s continuing layoffs as it tries to reduce spending by $1 billion over two years.

Graves & Co., an energy consulting firm, estimates that the energy sector has lost 50,000 in the past three months—that’s on top of the 100,000 layoffs since oil prices began to tumble last fall.


Oil Is The New Gold: Inside North Dakota’s Oil Rush

An oil derrick is seen at a fracking site for extracting oil outside of Williston
Shannon Stapleton—Reuters An oil derrick is seen at a fracking site for extracting oil outside of Williston, North Dakota March 11, 2013.

North Dakota is on the new frontier of a U.S. fuel economy, where more oil is produced domestically than imported.

North Dakota is now producing more than one million barrels of oil a day, part of a modern gold rush that holds both promise and uncertainty for the future of the state.

Oil production statistics released by the state’s Department of Mineral Resources (DMR) revealed that the state produced 1,002,445 barrels per day in April 2014, up from 793,832 the year before. The new statistics mean that North Dakota now joins the ranks of Texas, Alaska, California and Louisiana- the only states to ever generate more than one million barrels per day. (Texas is the only other one still producing that amount.)

North Dakota expects its production to climb: the DMR predicts oil production to peak at 1.5 million barrels per day around 2017.

This tracks a broader, national trend, as well: This year U.S. oil field production outpaced imports by about one million barrels a day.

Sudden turnaround

Just five years ago, North Dakota was producing less than 200,000 barrels a day. Alison Ritter, public information officer for the oil and gas division of the DMR, traces the beginning of the oil boom to the 2006 discovery of the Parshall Oil Field on the Bakken formation, the oil-rich shale rock material under the western part of the state. Using a combination of horizontal drilling and hydraulic fracturing, commonly called “fracking,” workers initially extracted an impressive 463 barrels a day from the discovery well. “It wasn’t the first time this was used [in North Dakota],” Ritter says of the drilling strategy, “But it was the first time it was used well.”

Since then, North Dakota’s economy has exploded. The state now has the fastest growing economy in the U.S. and the lowest unemployment rate: 2.6% compared to a national average of 6.3%, according to the National Bureau of Labor Statistics. The number is well below that in Williston, the town at the heart of the oil rush, which has an unemployment rate of less than 1%.

People eager to cash in on the boom have been flocking to Williston for years; the town’s population has doubled since 2010. Housing prices are skyrocketing, and construction is struggling to keep pace with the population. In the first quarter of 2013, Williston issued nearly $72 million in building permits, more than twice the amount during the same period of 2012.

Incomes in the town match the rising real estate prices- in 2014, Walmart hired entry-level workers in Williston at a staggering $17.40 per hour to compete with the salaries people can fetch on the oil fields.

“In some ways we would have had more trouble with this had the national economy been good when this started,” says Tom Rolfstad, executive director of Williston Economic Development. “We’ve benefitted. Going into this we were worried about where we were going to get workers… but because of the national recession, we have workers coming from everywhere and we have investors coming in from everywhere looking to invest.”

Growing pains

Yet the steady stream of hopeful workers into the small town means that, even with high wages, many are stuck living temporary housing facilities sprouting up in the Bakken oil region while they wait for more permanent housing to be built.

“They’re not as bad as people think,” Rolfstad says of the facilities, often called man camps. “They’re more like a college dormitory. But we realize that this is going to be a long-term proposition, so we’re more about trying to do things permanently than temporarily. We’re really trying to build a city that has quality and not just quantity.”

North Dakota also needs to expand refining facilities to accommodate the flood of oil. The state currently has only one refinery, capable of refining 68,000 barrels a day. Though two more refineries are in the works, for now most of the oil is shipped via railway and pipeline to other refineries south and east of the state.

But with all the excitement of new growth comes downsides, as well. Williston schools are overcrowded and emergency services are strained. Meanwhile, the character of the town and the state are changing. “When you go to a restaurant now, you might wait in line to get in and wait in line again to pay,” says Rolfstad. “These are big city things we’ve never experienced before.”

TIME Oil Industry

Exxon Mobil to Reveal Fracking Data

The company has agreed to be more transparent about the environmental impact of its shale gas extraction practices amid shareholder pressure from New York City's pension fund, among 13 others, which holds a billion-dollar stake in Exxon

Exxon Mobil will begin releasing information about the environmental impact of hydraulic fracking in the coming months, following an agreement with the New York City Comptroller’s office and the non-profit As You Sow.

The agreement came at the behest of the city’s pension fund—which holds a $1.02 billion stake in Exxon—and 13 other co-filers, who have been pushing the company to increase transparency over the practice of fracking for five years.

Under the agreement, the company will report on what risk shale gas production operations, including fracking, have on environmental issues like wastewater, air pollution, and methane emissions. In a 2013 report, Exxon was ranked among the lowest out of 24 companies in regard to transparency on fracking operations.

“We have seen the significant risks that come from hydraulic fracturing activities,” New York City Comptroller Scott Stringer said in a statement. “Corporate transparency in this arena is truly necessary for assessing risk and ensuring that all stakeholders have the information they need to make informed decisions.

An Exxon Mobil spokesperson told Reuters Friday that they understand people have concerns about fracking because the process is so new. “People want more information and the more they know, the better,” said Alan Jeffers.

Updated, April 3: The original post has been updated to include the non-profit As You Sow’s involvement in the agreement with Exxon Mobil.



EPA’s New Emission Rules Could Increase Gas Prices, Save Lives

Gasoline pump at gas station
Kyoungil Jeon—Getty Images

Agency says reduction in sulfur levels in gasoline will prevent up to 2,000 premature deaths a year

The Environmental Protection Agency announced new, tough guidelines on oil companies Thursday, aimed at reducing sulfur emissions from gasoline. Oil refineries will now have to remove sulfur from gasoline, decreasing total sulfur levels by 60 percent.

The expected reduction in smog will help Americans with respiratory problems like asthma and emphysema, said the EPA. The agency calculates that the new measures will prevent up to 2,000 premature deaths each year and 50,000 cases of respiratory disease in children, and save Americans between $6.7 billion and $19 billion in health care costs annually.

Pollution will also greatly decrease, according to the EPA. The effects of the new guidelines will be equivalent to taking 33 million cars off the road, it said.

But the U.S. oil industry says that the new regulations will likely increase its costs. Investing in new, expensive technology to remove sulfur will translate to an extra nine cents per gallon, heads of the oil industry claim, according to USA Today. The EPA makes a more conservative estimate: the agency claims that drivers will see a only a one penny per gallon spike in prices at the pump.

[USA Today]

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