Archive for the ‘energy’ Category
The full article is here-> http://www.daily-times.com/story/money/industries/oil-gas/2017/06/25/overcapacity-and-price-oil/397050001/
“With the Saudi Arabian-American strategy of removing ISIS and terror roots in Middle East societies and governments, the global oil and gas service companies have new projects to expand oil capacity of Saudi Arabia. This moves Saudi Aramco into overcapacity production range and a Second Downturn in early 2019 as forecast in this column six months ago.
Saudi oil production capacity should increase to 13 million barrels per day with Haliburton and others working on projects to increase reserves. This is prepared to flow into export markets to deprive Occidental of its short- term export of domestic oil which the production cut-back under the 1,800,000 barrels per day OPEC and Russian “deal” provided as a temporary marketing opportunity. The price of de-terrorism in the Middle East is more Saudi Arabian oil and lower world prices. Saudi Arabian demand forecasts are no more than 1 percent per annum growth: its new capacity addition could reach 4 percent per annum in the next five years following the service company projects signed weeks ago.
OPEC production and imports to the U.S are up as this column is prepared for publication. The Commodity Market, which determines the price of world oil, would have a trading range breakout if Iranian gunboats break the isolation of Qatar and engage the U.S. Persian Gulf naval capability. However, such incidents would move traders for hours only.
Natural gas prices should continue to move upward as risk hedging begins to focus on buying gas and selling crude. This is a contract which oil price risk is hedged
A laying of the risk of crude oil price declines with a simultaneous buying of natural gas.
Natural gas storage favors San Juan natural gas producers in the winter months ahead. This stimulates a regional Texas offset with new Eagle Ford dry gas promotion.
Lithium prices have sharply declined mainly because of South Korean mining production and investments. This explains the stock market and Tesla Motors. Tesla may not need its mining investment in Nevada to lower the cost of the battery pack.
This shift to downstream concentration which will re-start statewide competition for expanded facilities to relieve its Fremont, California plant. New Mexico economic development competed with three states to capture the giga-factory in Nevada. A second chance for Santa Fe to win in a second round? “
The full article is here-> http://www.daily-times.com/story/opinion/columnists/2016/10/29/fine-opec-oil-and-ours-who-wins/92440428/
This is an excerpt of the article ”
Has the oil price and market share war ended with a Saudi Arabian win? Or, as some fund managers and speculators argue, has Midland won? We are now in a trading range high of $50 per barrel for West Texas Intermediate.
Looking back two years, Wall Street, the oil and gas industry and its trade associations got it all wrong. I was a minority of one in New Mexico with my OPEC analysis of a low of $23 to $28 per barrel which was realized earlier this year. Once again there is triumphalism and hubris about winning the war against OPEC.
What is it all about? If OPEC agrees to freeze production at August output that would put OPEC between 32.5 and 33 million barrels per day. In 2013, OPEC was below 30 million. If they “freeze” it will be at 2.5 million more than early 2014 while our production had dropped almost 1.5 million.
In other words, OPEC oil expanded its market share and more significantly has displaced our oil here at home in the American market by nearly one million barrels per barrel. This is a double win for OPEC and Saudi Arabia: more of their oil imported into our market and fewer barrels of our oil produced, which is the loss of rigs and jobs and a painful downturn.
The Permian Basin and its Delaware Basin extension into New Mexico has become the new North Slope Alaska of the 1970s. It is there that drilling rigs and well completions will be re-activated next year. The “breakeven” price is lower because of geology and cost-cutting service contracts. The downturn contracts, however, will expire and non-Haliburton contractors will ask for more. Margins will tighten as costs increase. But North Dakota has leveled off and Eagle Ford is not the Permian.”
Oil leaders: OPEC threatening U.S. economy and New Mexico’s lifeblood; Nation has lost 400,000 oil and gas jobs in past two years
Dan Fine, an oil economist with the New Mexico Center for Energy Policy, speaks at a conference in Carlsbad recently about how foreign oil imports are hurting the American oil industry. Fine said OPEC has flooded the U.S. market with foreign oil since 2014 in an intentional effort to put U.S. producers out of business, while Saudi Arabian-backed companies are trying to buy American companies in an effort to control the flow of oil within U.S. borders. (Hobbs News-Sun Photo)
CARLSBAD — Oil experts say America is under attack by Saudi Arabia and OPEC, but instead of bombs, the OPEC oil cartel is dropping millions of barrels of oil on the U.S. economy in a clear effort to undermine the nation’s oil producers and kill any chance of American energy independence.
The first to feel the flood of foreign oil into the U.S. are the independent oil producers, whose stripper wells in Texas alone account for 20 percent of the nation’s oil and gas production, said Judy Stark, executive vice president of the The Panhandle Producers & Royalty Owners Association.
Stark was one of the half dozen speakers at an event of 25 people Sept. 27 in Carlsbad where the Panhandle Import Reduction Initiative, a group of independents seeking import quotas on foreign oil, met to announce their “white paper” that will be presented to the next president.
“We know OPEC has toyed with our market for many years but what I see coming now is a threat, without a doubt, to our national security,” Stark said. “The Middle East wants control of the U.S. market. When they came out and decided to flood the market with oil and drive U.S. producers out of business, their whole point was to take back their lost market share — our production. They are telling us is they are not going to let us produce our own natural resources. Guess what? They have done a pretty good job.”
The Sept. 27 Carlsbad meeting was a first battle cry that Dan Fine, a co-founder of the initiative and oil economist with the New Mexico Center for Energy Policy, said won’t be taken up by the nation for two years — when the rest of the country wakes up and finds it is too late to stop OPEC from controlling America’s energy industry.
“We are pioneers,” Fine said. “My point is, we are sitting here today 18 months to two years ahead of everyone. Sometime in early 2018, the country will discover what we are having a discussion about here today.”
What’s at stake?
What’s at stake is some 276 billion barrels of oil reserves now estimated to exist in the United States.
According to Fine, that number surpasses what Saudi Arabia has and they are terrified. Fine quoted Harold Hamm, CEO of Continental Resources, concerning the shale oil discoveries made in the United States.
“The United States has increased oil production by an enormous 65 percent over the past five years,” Fine said, quoting Hamm’s statement. “We can and should use our nearly unlimited oil and gas supplies to drive a stake through the heart of OPEC forever.”
By Kevin Robinson-Avila / ABQ Journal Staff Writer
The full story is here-> http://www.abqjournal.com/803674/oil-producers-want-u-s-to-restrict-imports.html
“ALBUQUERQUE, N.M. — New Mexico and West Texas oil producers are gearing up for a national effort to draw all major U.S. oil basins into a grassroots movement to restrict crude imports from overseas.
Leaders of the Panhandle Import Reduction Initiative, which launched in April in the Permian Basin, are seeking public meetings and rallies in other oil-producing zones to convert what’s now a regional initiative into a national movement, said Daniel Fine, associate director of the New Mexico Center for Energy Policy, who is working with local producers.
Those efforts will kick off in September with a presentation at the fourth Southeastern New Mexico Energy Summit in Carlsbad. After that, initiative leaders expect to hold public meetings in other shale oil basins, including the Bakken in Montana and the Dakotas and the Eagle Ford in South Texas.
“We’ll take it to Carlsbad first, and then it goes national,” Fine said. “We want to organize public rallies with producers and field workers whose jobs are at stake. This is a grassroots effort in the basins where the oil bust has taken place.”
The initiative is a reaction to the Organization of Petroleum Exporting Countries’ aggressive oil-pumping policies since mid-2014, which have helped drive global oil prices to ten-year lows and thrust domestic U.S. production into crisis. Initiative leaders say those policies were a deliberate effort by the mid-Eastern members of OPEC, particularly Saudi Arabia, to drive U.S. producers out of business.
Banning crude imports from overseas would undercut OPEC’s ability to manipulate prices, they say, and allow U.S. producers to ramp up domestic production to supply the U.S. market.”
by James Fenton
“FARMINGTON – A group of oil and gas executives and energy policy experts from the Texas Panhandle and New Mexico’s piece of the Permian Basin are pushing a plan to restrict seafaring imports of foreign oil from coming into the U.S. in order to stabilize the oil and gas industry and bring back lost oilfield jobs.
The group’s plan, which would exempt crude oil imported from Mexico and Canada, is an effort to push back against the price wars the group said are being waged by OPEC, or the Organization of the Petroleum Exporting Countries, led by Saudi Arabia.
Members met at the School of Energy at San Juan College Tuesday to promote the “Panhandle Import Reduction Initiative,” which they say could be implemented in multiple phases within 90 days of the next administration, with the ultimate goal of reducing heavy crude oil imports to about 10 percent of demand.
Launched in November, the initiative aims to cut foreign oil imports enough to activate more domestic drilling rigs and boost domestic production to meet current demand levels within four years.
Former state legislator and Four Corners Economic Development Chief Operating Officer Tom Taylor said the drop in natural gas prices eight years ago and the fall of crude oil in 2014, has delivered prolonged pain to the regional economy.
“We find ourselves … in a situation now where we’re down about 6,000 jobs, most of those in the oil and gas industry,” Taylor said of the San Juan Basin. “We have about 11,000 people who have left (San Juan County) … So while we’re down 6,000 jobs and down 11,000 people, we’ve built seven fast-food restaurants, three more under construction, and two big box stores. It’s a different world out there.
“But the fact of the matter is that the economic base of the community is in trouble. And not only is the community in trouble, but the state of New Mexico is in trouble, and not only is New Mexico in trouble but our nation and its security. It’s all tied together. It’s a very difficult situation we find ourselves in when we have one country that can control oil prices. It goes beyond free trade. It’s a problem we need a solution to. We are at the dependence of foreign oil.”
Taylor said about a third of New Mexico’s general fund comes from the oil and gas industry in the form of taxes and fees.”
The full story is here-> http://www.daily-times.com/story/opinion/columnists/2016/05/28/fine-oil-halftime-2016/84610710/
“The question of the oil-price reality pervaded the talks and private conversations at the Four Corners Oil and Gas Conference earlier this month. From the lowest price per barrel in nearly eight years to a recovery halfway to $100 in less than three months! Is the “bust” in the San Juan Basin dissolving as others before?
Yet, Ken McQueen, retiring vice president of WPX in the San Juan Basin, and the most effective in technical innovation in the basin, said: “price is not everything.”
This is the view of surviving management. It is not shared by financial institutional players and speculators.
Before Thanksgiving 2014, I presented a forecast for the oil price in a new “crash” range of $23 to $28. This was based on analytical experience and petroleum economic history. The trade associations were then spinning that it was an opportunity and would turn around in weeks.
They had no understanding of Saudi Arabia and OPEC as the price-setter. The price of oil collapsed three months ago to $26.70.
There was an abortive effort by OPEC and Russia at Doha, Qatar, to freeze production at Jan. 1 levels to “re-balance” world demand and supply. It failed because OPEC was no longer outside the Middle East political and religious war — Shia-Iran, with oil export sanctions recently lifted, did not show up.
But a one-day oil field workers stay-at-home in Kuwait took one million barrels of oil off the over-supplied world market within 24 hours and the financial market players covered their short or future sale positions.
The bet was now that every “outage” or supply disruption in the world would “re-balance” demand and supply and move West Texas Intermediate prices higher.
Saudi Arabia alone is replacing all the “outage” oil while the San Juan Basin and Southwest producers have record lay-offs, bankruptcies, community economic dislocations, and cuts in production: a million barrels less per day by Christmas is anticipated.
Without the freeze of OPEC production, $50 a barrel prices are here nevertheless. Does the rig count recover — only 15 working in New Mexico from over 100 just 18 months ago?
Yes and no. Companies should start stimulating (fracking) the heavy inventories of uncompleted wells. A boom again? Hardly. With more drilling of uncompleted wells at $50, American Southwest unconventional production rises. Saudi Arabia and the Gulf nation producers would see once more the threat to market share which started the bust in the first place.
Higher oil prices equate to more production and energy-related banks and funds might find new borrowers. Is this the constraint of lower and longer oil prices? It doesn’t matter what supply forecasts come from traders’ prattle on cable TV. The final half of 2016 will be negative on price and oil demand. The price war with Saudi Arabia/OPEC continues.
There are three counter-strategies to Saudi Arabia and OPEC from American shale oil producers and communities:”