Archive for the ‘energy industry’ Category
The Full article in the Farmington Daily Times Energy Magazine (USA TODAY)
With the OPEC-Russia meeting ahead, the price of oil is at a crossroad.
President Trump wants lower prices for gasoline at the pump and the Democratic Party wants a shortage to lift prices higher. This is the 2020 presidential election, to re-elect Trump or a create a Democratic left-center White House.
Is OPEC-Russia ready to sustain output cutbacks for $70 Brent Oil or continue revenue maximum against market share? Curiously, in the conversation at Vienna the Oxy purchase of Anadarko will resonate. Why? Oxy must now increase its export of oil to lower its debt (Warren Buffet and more) and prevent a serious management miscalculation of paying too much for Anadarko.
Permian Delaware shale, with new high volume pipelines completed soon, must find expanding import markets of l.5 million barrels of oil per day or the equivalent of OPEC-Russia resuming late 2016 output for export.
As this writer concludes this column for the The Farmington Daily Times’ Energy Magazine, which Is going on hiatus in San Juan County after this edition, there is no change in an outlook that dates back to the oil price crash of 2014-2016.
There is too much oil (over-supply) against world demand for it.
Exxon-XTO in the Permian is prepared for $40 per barrel, and to still add $82 billion value in the New Mexican Permian or the Delaware in the next 40 years.
However, along with Chevron, Oxy, EOG and Pioneer, it must have a market for the economic recovery of reserves estimated at nearly 47 billion barrels in the Permian Delaware Basin. They must export against OPEC-Russia production.
The lifting cost of Saudi Aramco oil remains lower than Permian Shale. Saudi Aramco has sold debt (bonds) and 63% of its cash flow goes to its government? With oil demand slack and sluggish, and electric vehicles preparing for a 2024 market challenge both technically and politically (zero emissions).
While associated natural gas has partially become a free commodity from Permian Delaware producers, natural gas is up next, after coal, as a target for Green Energy. It should resemble oil on a smaller scale as price dependent entirely on exports in the form of LNG.
Will Persian Gulf, Australian, and Russian natural gas production roll backward in favor of American LNG? American exporters today cannot compete in a $5 per ton Asian LNG market.
Some San Juan Basin producers at the recent San Juan Basin Energy Conference openly discussed shifting capital spending
from natural gas to oil development.
This writer reaffirms his $50 average price for WTI oil in 2019 presented for the smaller independent producers at a briefing at Merrion Oil last December, but beginning early in 2020 forecasts a second half average of $38 per barrel .
In New Mexico, the Governor can adjust the Energy Transition Act basic law next February, but it should be a petroleum-revenue 30 day session without serious oil and gas organized opposition.
New Mexico is now a hybrid Green State with more exportable oil and gas than every OPEC country except Iraq and Saudi Arabia, and yet it will impose the most effective rules for methane capture.
No amount of ad hominem distraction against its policy and leadership will change this direction, and the nation could follow with the outcome of the national election next year.
Daniel Fine is the associate director of New Mexico Tech’s Center for Energy Policy. The opinions expressed are his own.”
Energy Industry Looks To The Future At 2019 San Juan Basin Energy Conference A recent influx of dynamic, new oil and gas operators are bringing innovative applications of modern technology to restore the San Juan Basin to its place as a leading basin in the United States
The San Juan Basin Energy Conference was founded to provide a forum for exchange of ideas regarding the development of the abundant energy resources found in the region. The theme of this year’s conference is “Looking to the Future”. A recent influx of dynamic oil and gas operators, bringing innovative applications of modern technology to the Gallup sandstone and the Mancos shale formations, promises to restore the San Juan Basin to its place as one of leading basins in the United States.
Regional producers continue to leverage their experiences to apply industry-best practices in efficient implementation of the recently-surging development. The San Juan Basin Energy Conference 2019, sponsored in part by Hilcorp, Whiptail Midstream, and LOGOS Resources II, LLC brings together the basin’s top companies and industry experts to share views on the industry and discuss plans for the future within the San Juan Basin.
Tickets and sponsorship information are available at sanjuanbasin2019.com. Ticket prices are $250/person and sponsorship prices range from $1,000–$10,000. Net proceeds will go to San Juan College’s research park, Four Corners Innovations, Inc.
FOUR CORNERS INNOVATIONS, INC.
SOURCE LOGOS RESOURCES LLC
“Some 30,000 children marched in Belgium weeks ago against Climate Change. It is only a matter of two years before a few members of Congress, alone with only cameras today, will march at the head of crowds of 500,000 down Pennsylvania Avenue.
It will have its colors; green — and yellow for the French — as 2020 arrives.
New Mexico Gov. Michelle Lujan-Grisham placed the state in the march which calls for America to join the Paris Agreement on climate change when she joined the U.S. Climate Alliance. But is it all for Green Energy without technology?
So far there is nothing on the road that eliminates carbon. The Green Deal is loaded: it offers “Green Energy” with diversionary political baggage.
Is it around the corner? It is. In six years, Audi-Porsche-VW will have an electric car on I-25 that will be zero-emissions, cost $27,000 (today’s dollar) with a range that beats Tesla.
Too soon to shake heads negatively. The surprise is a mass electric car with a German engineering in a Ford. Indeed, Ford will no doubt bid for the license is this writer’s forecast.
The revolutionary change is green energy and colorless technology. The kids in Belgium would be getting drivers licenses by then. What happens to I-25 or 550?”
Analysis: Things are flat in the Permian, and there’s a push for renewables in Santa Fe by Dr. Daniel Fine
The article by Dr. Daniel Fine is here-> https://www.daily-times.com/story/money/industries/oil-gas/2019/01/27/analysis-things-flat-permian-governor-wants-renewables/2595583002/ The Permian-Delaware Basin rig count should start falling as oil operators, large and small, are flat for 2019.
Spending has been sharply reduced as supply now dominates the A.I. (Artificial Intelligence) used by many commodity traders in oil.
The large or integrated oil companies have all the rigs of 2018 in place for 2019. This would make October the price peak of the latest boom or recovery in oil. Permian-Delaware Basin production would decline at least 500,000 barrels in 2019 to offset the supply glut and stabilize at $50 per barrel.
OPEC members, notably Saudi Arabia, need a fiscal price of oil of $85 per barrel to pay for government and social spending. But at $60 per barrel, cash flow will not make it.
Its new public relations-lobbying in the U.S will require Sovereign Wealth Fund borrowing at market rates, which will be higher mainly because of U.S Senate sanctions over the murder of a Saudi journalist writing for the Washington Post.
This writer forecast a 2019 $50 per barrel average price of oil when prices fell to $43.00 last month.
At the same time, many small and independent producers have break-even at $50 with high-interest debt!
There are Chapter 11 bankruptcies valued at $140 billion from the Panhandle in Texas to the San Juan Basin that resulted from the OPEC -Saudi Arabian price and market share war of 2014-2016 against Southwestern small/independent shale and tight sands producers who now want reparations or damages.
This could hold up financial public relations as state courts hear from local energy banks and their Chapter 11 or equivalent clients.
Saudi Aramco is looking at American LNG investment in the Gulf Coast.
But that would compete against Russian Gazprom export pipeline gas to the European market.
This would confront Russia with Saudi Arabian conflict and threaten Russian-Saudi Arabian accord in OPEC.
Governor Michelle Lujan Grisham of New Mexico has announced a target of 50 percent renewable energy in 10 years. Electricity rate payers would bear the cost. She also placed New Mexico in the Climate Change Treaty Camp. However, if the Democratic Party wins the White House in 2020 there is no doubt that Washington will follow Santa Fe and our new governor.
In the meantime, the new Secretary of Energy Minerals and Natural Resources, Sarah Cottrell Probst, is a world expert in carbon tax architecture to mitigate global warming.
And there could be trade-offs with the super-majors in the Permian-Delaware basins.
The new Administration is expected to create a new energy policy that will replace the effort of ex- Governor Martinez. One issue that did not appear in 2015 was well-density.
The current company-state conflict centers around increased density because of down-spacing in the sub-surface. The opposition is beyond this specific technical capability: it is about more production of oil and carbon in relation to climate change.
What happens in New Mexico will have an impact on regulations in other states and, later, in national energy policy.
This column is an independent analysis by Dr. Daniel Fine, who is the associate director of New Mexico Tech’s Center for Energy Policy and the State of New Mexico Natural Gas Export Coordinator. The opinions expressed are his own.
n an earlier column, readers overseas benefited from this writer’s forecast that crude oil prices would fall dramatically because most commodity traders got it wrong. Simply, this column’s analysis was the buying of oil assumed a shortage would result once the sanctions against Iran would be activated the first week of November.
President Trump wanted lower oil prices with OPEC and Saudi Arabia pumping more. Two weeks ago, a call from the Middle East confirmed readers of the column had followed the analysis in the Energy Magazine and sold Brent oil — and profited.
Oil has slumped under $60 as the delusion of a shortage vanished. In the November issue column, this writer made a call: the oil price would reach $50 as a low. There is no change in that forecast. The price in the commodity market for WTI crude would touch in the very high $40 range before the Saudi-led production cut-back is realized. Why? Again, too much capacity to produce too much oil for demand.
What’s the impact on SW oil?
Oil demand without commodity traders’ bets on the sanctions against Iranian oil production and export contradicts flagging demand. Some Southwest shale producers, faced with discounts on domestic sales, are exporting oil to world markets and capturing the higher Brent price or differential between the WTI priced Midland domestic and the Brent price for the World.
But this would shift Southwest tight oil into a world market where such supply also chases weaker demand. This switches U.S. oil into world oil as exports and diverts it from going into U.S. storage.
Unlike the last three price sell-offs Saudi Arabia, speaking for OPEC, is strangely silent on calling on non-OPEC producers join it in lowering production or “balancing” the
Quite the opposite. Led by shale producers in the Delaware (New Mexico) Basin in the Permian complex, United State production approaches 12 million barrels per day, a historic high and number one position against the Middle East and Russia.
Only a serious price decline, short of the 2015 bottom, would signal oil non-completions. A cutback of U.S. production by 750,000 barrels per with an OPEC cutback independent of Russian production of around one million barrels will stabilize or balance the world oil market.
But U.S producers cannot (anti-trust) belong to a collective price-setting organization (cartel).
President Trump wants lower prices, even if this means a breakup of OPEC into two and a moderate production roll-back by Southwest producers – a negative cash flow for those without or less advantaged by Tier One wells.
The overwhelming Democratic Party electoral win influenced OPEC and Saudi Arabia to resist President Trump’s pressure for lower world oil prices because he is much weaker and easier to upend in oil supply and demand world “domination.”
Bingaman is back!
The Democratic Party indirectly dimmed the “blue flame” price outlook regardless of blue wave voting margins. But enough of “color revolutions” in politics or economics?
This writer is constructively reacting to the return of former Sen. Jeff Bingaman to New Mexico’s politics through new state Governor-elect Michelle Lujan Grisham. She asked him to head her transition team.
With Democratic Party factionalism into Progressive/Ultra-Progressive forces against the traditional Moderate/Conservatives, Sen. Bingaman’s experience and history in working with the late Senator Domenici in forging the U.S Energy Act of 2005 is in best interest of New Mexico.
Recall the energy policy of “all of the above” in the Bush and Obama Administrations coupled with the Energy Policy of outgoing Governor Susana Martinez was a compromise of give-and-take between two New Mexico Senators of different parties and energy policy objectives.
Dr. Daniel Fine is the associate director of New Mexico Tech’s Center for Energy Policy and the State of New Mexico Natural Gas Export Coordinator. The opinions expressed are his own.
The full article is here-> Full Article by Dr. Fine
“Unlike 1973, and its oil embargo against the United States, there is no supply threat from the Middle East. Consequently, only a demand unknown moves the price of crude oil. Permian/Delaware has displaced the Middle East as a source and even Mexico imports U.S. production.
This has caused euphoria in Santa Fe among lobbyists who prepare for a new Governor from the Democratic Party.
She will have to decide that the rhetoric of renewable energy is no match for her budget bounty made up of revenue flows from Lea and Eddy Counties. Token demonstrations for higher taxes from oil and gas producers no doubt will occur, but in Santa Fe only the price of oil is the threat that can take the punch off the table.
And here the connected experts publicly answer reporters that the Permian is an exceptionalism in oil and gas: it will never become a basin in a downturn.
However, all the charts and slides converge on upward supply without much on demand to offset the upward slope. It is almost impolite to ask where is the market for the massive supply of oil now and in the near-term future? What about demand for oil?
China? Not quite as electric cars – yes, Tesla or Chinese versions appear as I-Phone-like technology against the combustion engine.
California, with 40 million people and seven states following its waiver, can set miles per gallon requirements on engines towards zero emissions.
This is the meaning of President Trump’s policy to force California back into the Union where Washington decides on what the combustion engine can and will do.
This a decisive battle over Climate Change and the “Resist” (Trump) movement of the Democratic Party.
After all, it is California which pledged to support the Paris Climate Change Treaty which Trump opposed.”
The article by Dr. Daniel Fine is here-> https://www.daily-times.com/story/money/industries/oil-gas/2018/07/20/oil-and-gas-prices-after-putin-trump-summit-analysis/808906002/
During President Donald Trump’s summit in Helsinki with Russian President Vladimir Putin, both leaders made controversial statements leading to accusations of treason. USA TODAY
This is above all an issue now for the first time in world petroleum history because Russia has become part of OPEC in the agreement to manage world supply of oil and, indirectly, its price.
OPEC and Russia produce almost half of the supply of world oil. At full capacity, and spare capacity added in, they would be slightly over 50 percent. For now, OPEC plus Russia is the world price-setter for oil.
Shale and tight oil, mainly from the Southwest and North Dakota, along with conventional oil production in the United States, should account for 12 percent later this year if prices stabilize.
This was the reality of talk between Putin and Trump.
Trump-Putin summit kicks off in Helsinki
Putin, with OPEC, controls the price of world oil. America is not the price-setter: it is the price-taker.
But President Trump is the first U.S. President to take on OPEC. He has said that OPEC prices are “artificial” and as such violate free trade in oil.
This was true under the Obama presidency in 2014 when OPEC, following Saudi Arabia, set out to destroy shale oil producers in America in a price war against high-cost American producers by increasing production at a time of world-wide oversupply.
Recall, the downturn in the San Juan and Permian basins.
Trump and Interior Secretary Ryan Zinke have made an energy policy of domination which now includes having an edge in price-setting. They want more oil even if it means lower prices as supply challenges demand.
No doubt, Trump explained this to Putin and inferred that Russia might leave its de facto membership in OPEC.
How would Putin reply, if asked by Trump? His reputation is such that he sees an opening and prompts Trump to consider ending some sanctions against Russia in oil exploration and production. Why not allow Russian oil companies to borrow to finance capital projects in Western banks? Why not re-open Exxon-Mobil Arctic oil joint projects? Is more Russian production of oil another way to lower oil prices at the pump and upend OPEC?
News of the Trump administration’s invitation to Russian President Vladimir Putin to meet with the president in Washington appeared to catch Dan Coats, the Director of National Intelligence, off guard as he attended a security forum in Colorado. (July 19) AP
Trump could sense a deal but one which would rattle Republicans back in Washington. His official domestic political opposition no doubt would block any such deal unless Trump is out of office either through impeachment or in 2020.
There is a Congressional process in Washington to place OPEC under American Anti-Trust laws. The Administration would sue the sellers of OPEC oil in U.S courts.
Sounds easy, but similar to 1973 it failed in the embargo crisis by OPEC of oil exports to the United States. Apart from the legal process, how would OPEC oil be treated if it were re-exported from Mexico or Nigeria, for example.
If imports from OPEC-Russia were to stop, American self-sufficiency together with Canadian imports and other non-OPEC producers with slightly higher prices would replace OPEC oil.
However, if OPEC itself dissolves there would be individual producers prepared to sell their oil as former members of OPEC. This would resemble a free market in world oil and Trump would have an American First triumph in which the price oil is more likely to be real than artificial, that is, market-derived from free-flowing supply and demand.
Dr. Daniel Fine is the associate director of New Mexico Tech’s Center for Energy Policy and is the State of New Mexico Natural Gas Export Coordinator. The opinions expressed are his own. Find more columns by Dr. Fine at www-daily-times.com or read Energy Magazine back issues in our Special Publications