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OIL AND GAS
London opening oil and gas doors
by Daniel J. Graeber
London (UPI) Aug 18, 2015


Bearish Asia drags on crude oil prices
New York (UPI) Aug 18, 2015 - Concerns about the health of the Asian economy ushered in another down day for crude oil prices, with key indices drifting toward new market lows Tuesday.

Brent crude oil prices pulled further away from the $50 per barrel threshold Tuesday, losing a small fraction of one percent in early trading to $48.55. West Texas Intermediate, the U.S. benchmark for crude oil prices, was relatively flat, but testing a new yearly low at $41.86 per barrel.

Markets suffered Monday after the Japanese economy showed signs of weakness after reporting momentum in early 2015. Japan in February exited two quarters of consecutive downturn, but reported the economy declined at an annualized rate of 1.6 percent from April to June.

Crude oil prices are trading well below last year's levels around $100 per barrel because of oversupply and weak demand. Prices started a substantial downward trajectory in November when the Organization of Petroleum Exporting Countries said it needed to keep production static in part to satisfy expected demand from Asia.

OPEC said the rally in oil prices during the first half of the year was fueled largely by strong economic data out of Asia.

July declines in crude oil prices were fueled by near-consecutive crashes on the Shanghai Composite Index. In one of its worst sessions ever, the Shanghai closed Tuesday down 6.15 percent. The People's Bank of China, in what was the largest single-cash cash injection of its kind, pumped $18 billion into markets in an effort to reverse the momentum

China devalued its currency last week in an effort to prop up the economy. The official Xinhua News Agency said concerns remain, however, about the durability of Chinese rescue efforts.

With a potential for growth in the fledgling shale sector, the British government said Tuesday it was expecting bidders for new onshore oil and gas acreage.

"As part of our long-term plan to build a more resilient economy, create jobs and deliver secure energy supplies, we continue to back our onshore oil and gas industry and the safe development of shale gas in the U.K.," British Energy Minister Nick Bourne said in a statement.

More than 100 sites could be available after review of environmental consultation laws. The industry's regulator, Oil and Gas Authority, said around two dozen of those were formally on the auction block already.

The government cautioned that no licenses were issued. Instead, the companies behind the 27 sites released will be given formal word once the review of the other sites is completed.

Last week, the British Geological Survey started a baseline environmental survey in Yorkshire, where Third Energy U.K. Gas Ltd. has submitted an application to use hydraulic fracturing at one well site.

BGS has started environmental surveys in Lancashire, where shale pioneer Cuadrilla Resources aims to explore for natural gas using hydraulic fracturing, known also as fracking.

With natural gas imports expected to account for 76 percent of total demand by 2030, the British government said it was fast-tracking the permit processes for shale exploration.

"It's important we press on and get shale moving, while maintaining strong environmental controls," Bourne said. "Investment in shale could reach $51.5 billion and support 64,000 jobs, creating financial security for hardworking people and their families, while providing a cost-efficient bridge to lower carbon energy use."

Shale gas is in its infancy in the country. Environmental groups have expressed reservations about the emergence of shale exploration. BGS said surveys conducted before drilling begins could allay public concerns.


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