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According to The Wall Street Journal, fracking companies are seeing their sources of capital on Wall Street dry up as investors are looking elsewhere given that many of the frackers have been operating at a loss for more than a decade. The lack of capital to keep these companies liquid is forcing them to cut costs and plan for slower growth. This is particularly true for small companies with lots of debt, but it is also happening to larger companies that are desperately trying to meet earnings targets set by their Wall Street lenders. There are some ominous signs of trouble ahead for shale, as The Journal explained:
Why This Matters: Oil has always been boom and bust and shale is no different, with producers and their financial backers suffering from a get rich quick mentality that leads to overproduction so that oil and gas flood the market, thus driving down the price. Until now, the fracking companies had Wall Street to keep them liquid during the downturns. It is amazing that these companies are this close to the edge of going under even though recently they have received major “help” from the Trump Administration, which has rolled back environment and safety standards for fracking operations.It seems like the fracking bubble may be about to burst. Yet another reason why renewable energy projects are increasing, which is good news for the planet.
President Trump trumpeted his trade deal with China, but so far it has been a bust, according to The Wall Street Journal — the Chinese have not purchased nearly the amount of energy (in terms of total dollars) as they promised — only $2B in oil and gas purchases against a commitment of $25B for this year.
A federal judge in Washington, DC ruled yesterday that the Dakota Access Pipeline must shut down and empty all its oil until the government completes an environmental review of the pipeline’s impacts, giving the Standing Rock Sioux Tribe, whose reservation lies downstream, a huge victory. Similarly, late in the day, the Supreme Court refused to overturn the order of a district judge that shut down construction of parts of the Keystone XL pipeline so it is also blocked for now.
Why It Matters: The Dakota and Keystone XL news is greatly tempered by the fact that numerous other pipeline projects can go ahead despite their inadequate permit unless they are individually challenged in court and blocked.
Yesterday, Dominion Energy and its partner, Duke Energy, announced they were ending a 600-mile natural gas project that would have cost at least $8 billion to complete. As the Richmond Times-Dispatch wrote, Dominion and Duke canceled the construction of the Atlantic Coast Pipeline in the face of mounting regulatory uncertainty caused by a federal court […]
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