Analysis by the father of American Geopolitics Dr. Daniel Fine, MIT.

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Our View: Limiting oil imports would help to protect American producers


By A-J Editorial Board

The full article is here-> http://lubbockonline.com/filed-online/2016-04-28/our-view-limiting-oil-imports-would-help-protect-american-producers#.Vyf6UPkrLIU

“When the price of oil drops, so does the cost of gasoline. But while people are enjoying paying lower prices at gasoline pumps, plunges in oil prices can cause economic damage in Texas.

And it can put American oil producers out of business when the price of foreign oil imports gets cheaper than the costs of extracting oil from the ground in the U.S.

Oil producers in the Panhandle recently announced the Panhandle Import Reduction Initiative. Their hope is to limit the amount of oil that can be imported from other countries.

We wish them success in getting sympathetic ears to hear their initiative and gathering like-minded people to help further it.

They are right that a limitation should be set on the amount of oil imports from the Organization of Petroleum Exporting Countries.

Representatives of OPEC’s 18 nations recently met in Doha, Qatar. Among their topics of discussion was whether to freeze oil production levels.

The nations didn’t reach an agreement on the subject.

“OPEC and Russia and various countries met and decided they weren’t going to freeze oil and, in fact, OPEC said they will increase production again. This will drive the price down to $26 (a barrel) again,” said oil producer Tom Cambridge.”

This is what an oil bust looks like by Jonathan Thompson


Low prices have energy companies and communities reeling as rig counts plummet and unemployment climbs.

The full article is here-> http://www.hcn.org/articles/this-is-what-an-oil-bust-looks-like

“In early March, Daniel Fine, associate director of the New Mexico Center for Energy Policy, told a gathering of tribal energy officials that the oil bust is officially on. Those gathered, however, sure as heck didn’t need an expert to tell them that. In the oil and gas patches it has become clear that the economic gains of the so-called shale revolution are being wiped away by one of the worst fossil fuel downturns in U.S. history.

Now, the oil companies are crying for help. First, they got the crude oil export ban lifted. Next they want proposed federal rules on methane emissions weakened or scrapped. As if any of that will help.

Back in 2010, the price of a barrel of Brent crude (the international oil price benchmark) topped $80. That made it profitable to extract oil from tight shale formations, which is especially costly. A drilling frenzy ensued, domestic oil production skyrocketed, oil companies raked in profits and oil patch communities prospered.

But all that new oil on the market, plus China’s slowing economic growth, began to dampen oil prices in the summer of 2014. Instead of curtailing production to keep prices afloat, OPEC’s leaders launched a thinly veiled price war, clearly aimed at putting U.S. producers out of business. Here are some indicators that OPEC won the war:

The U.S. rig count has collapsed to levels not seen since, well, ever. With both oil and natural gas prices at near-record lows, it simply doesn’t make economic sense to spend up to $10 million to drill a well. So the rigs are shutting down. In September 2014, 1,931 oil and gas rigs were operating in the U.S.; today there are just 476. That’s a 75 percent decrease, and it’s still some 50 percent lower than the 1987 count, which followed what was considered the biggest, baddest bust ever, until now. Tom Dugan, who runs an oil and gas production company in northwest New Mexico, told the Farmington Daily Times, “It’s the hardest bust I’ve been through and I have been in this business for 57 years.”

Energy policy expert says oil slump a bust


by James Fenton, jfenton@daily-times.com5:02 p.m. MST March 5, 2016

The complete article is here-> http://www.daily-times.com/story/money/industries/oil-gas/2016/03/05/energy-policy-expert-says-oil-slump-bust/81289608/

FARMINGTON — “It’s officially a “bust.”

That’s the verdict from Daniel Fine, one of Gov. Susana Martinez’s senior advisers on energy policy. The U.S. oil and gas industry — and the San Juan Basin — is in a “bust” period, Fine said Tuesday at an inter-tribal energy conference at San Juan College’s School of Energy.

“This is what a bust is. You lose the workforce,” said Fine, who is associate director at New Mexico Center for Energy Policy at New Mexico Tech. “Loss to the country and to the Southwest will be the workforce. It will be decimated at levels of less than $30 a barrel (of crude oil).”

And 2015 was a year of layoffs and cutbacks.

Since the collapse of oil prices on the commodities market in fall of 2014, the number of  workers laid off from local oil and gas companies — from the large corporations to the smaller independents — has been in the thousands.

“We’re in a ‘bust.’  So be ahead of the curve, and think ahead in this business by at least six months,” Fine told the Native American and non-tribal energy leaders and business people in the Merrion conference room at the new $15.8 million school.

He said looming federal regulations such as the the U.S. Bureau of Land Management’s proposed Onshore Oil and Gas Orders Nos. 3, 4 and 5 along with proposed updates to its rule aimed at reducing “fugitive” atmospheric methane from oil and gas operations were doubling the pain already caused by low crude oil prices. He said that a third of all U.S. oil and gas producers — especially those burdened with debt — will inevitably go bankrupt.

But Fine’s sobering analysis wasn’t without one ray of hope for the industry.”

Fine: Washington, D.C., on oil and gas


by Dr. Daniel Fine, New Mexico Center for Energy Policy

The complete article is here-> http://www.daily-times.com/story/opinion/columnists/2015/12/28/fine-washington-dc-oil-and-gas/77979916/

The “deal” between the parties over the energy future of the United States and the San Juan Basin at the end of 2015 was the most misguided example of politics at the fuel pump since the 1970s. Then it was retail price control and now it’s a free-for-all in the price of oil in the world market with West Texas Crude approaching 10-year lows.

Lifting the restriction on exporting crude oil adds American oil to a world market which is over-supplied. Expect no cash flow increase for American producers and still lower world prices than with the restriction or ban in place.

This is not the place to assess the other side of the “deal.” However, tax credit extensions for wind and solar as alternative fuels to replace coal and later natural gas are no longer of concern to the Republican Party in Congress.

With petroleum economics based on market prices, there is virtually no way that the “deal” will bring about tens of thousands of new jobs in the oil and gas fields. How does exporting crude oil lead to increased drilling and rig deployment if this increases supply in an oversupplied world market? On the contrary, it leads to lower prices and negative cash flows for producers who must cut their workforces.

If oil and gas prices rebound in the next three years, the alternative fuels are beneficiaries as tax credits shape new non-fossil fuel investment, offsetting the risk of lower oil and gas prices, This was no doubt the objective of the climate change politics of Paris and the Democratic Party in Congress as well as the White House.

Although U.S. oil refiners will have a transportation cost tax adjustment from the “deal,” what prevents them from buying foreign oil at lower prices than American oil (North Sea Brent at declining prices)?

Daniel Fine is associate director, New Mexico Center for Energy Policy at New Mexico Tech, and project leader of the Energy Policy, state of New Mexico, Department of Energy Minerals and Natural Resources. The opinions he expresses in this column are his own.

NM Energy Outlook Summit: Forecasts hazy for industry in flux by Sal Christ Reporter Albuquerque Business First


For the complete article use this link–> http://www.bizjournals.com/albuquerque/blog/morning-edition/2015/11/nm-energy-outlook-summit-forecasts-hazyfor.html

Panelists at Business First’s second annual New Mexico Energy Outlook Summit yesterday offered but one common ground: Something needs to be done to turn the industry around.

Emceed by ABF publisher Candace Beeke, the event brought together Dr. Daniel Fine, associate director of the New Mexico Center for Energy Policy at New Mexico Tech and a senior policy analyst in the New Mexico State Department of Energy Minerals and Natural Resources; Ron Darnell, senior vice president of public policy for PNM Resources (NYSE: PNM); Bob Gallagher, president of RMG Consulting; and Regina Wheeler, chief executive officer of Positive Energy Solar.
Ron Darnell, senior vice president of public policy at PNM Resources, speaks during Thursday’s New Mexico Energy Outlook Summit while Regina Wheeler (left), CEO of Positive Energy Solar, looks on.

Over the course of 90 minutes, which included a keynote speech delivered by Fine and a panel discussion, the group addressed questions about the state of the energy industry in New Mexico and the United States, what 2016 might look like for the oil and gas industry and possible solutions to the current industry slump. While driven, in part, by audience-submitted questions, everyone offered a much differing perspective.

In his keynote speech, Fine said he was “coming with realism and bad news” and believed that while no one can forecast the price of oil, “we should prepare for 2003 prices.” He estimated that the price of oil could drop to the $22 to $28 range by June 2016.

Fine also said that the state could see a 10 percent reduction in shale production by that time, as well. He cited increased foreign production of oil over the last couple of years, China’s stabilization at a lower growth rate, decreased commodity demand and the Organization of Petroleum Exporting Countries’ (OPEC) price war with the U.S. shale industry.

Governor’s energy plan sets up New Mexico for new opportunities by Ripon Advance News Service


Governor’s energy plan sets up New Mexico for new opportunities by Ripon Advance News Service | Friday, Sep 25, 2015 @ 2:57pm For a link to the plan and the full article –> https://lnkd.in/e4mVTVk

New Mexico Gov. Susana Martinez recently announced a sweeping, statewide energy plan aimed at embracing a wide array of energy sources, including oil and gas — which already accounts for more than $1 billion in yearly state revenues — solar, wind and new technologies. The far-reaching energy policy and implementation plan

entitled “Seizing our Energy Potential: Creating a More Diverse Economy in New Mexico,” is the state’s “first comprehensive energy policy and plan since 1991, nearly 25 years ago,” Michael Lonergan, Martinez’s press secretary, told Ripon Advance.

The plan put forth by Martinez, who is the nation’s first female Hispanic governor, calls for “an ‘all-of-the-above’ approach to energy development that promotes production from all sources” in order to create jobs, diversify a key sector of New Mexico’s economy and support the nation’s efforts to achieve energy independence, among other goals, Lonergan said this week.

Lonergan told Ripon Advance that the key components and initiatives of the plan include: improving New Mexico’s energy infrastructure; promoting greater production of all sources of energy; improving energy workforce training in the state’s higher education system; reducing freshwater consumption in production; streamlining regulatory processes; and exploring and potentially seizing on new energy opportunities.

Improving the state’s energy infrastructure, for example, will include new rail lines to improved electric transmission that will allow New Mexico to better move its energy and its products to markets in the Southwest and Southeast United States, as well as into Mexico and other markets.

In particular, rail from the Four Corners region to Interstate 40 would reduce the cost of transporting coal, crude oil and agricultural and other non-energy products from northwest New Mexico to markets throughout the state and beyond. Such improvements also would allow materials for energy production to be brought into New Mexico at a lower cost to producers.

In a statement unveiling her statewide energy plan earlier this month, Martinez called New Mexico “one of the most energy-rich and energy-diverse states in the nation.”

Editorial: Governor’s energy plan is excellent future blueprint


New Mexico has a wealth of energy resources. And now it has a comprehensive plan to help guide development of those riches to grow the state’s economy.

Last week at the 2015 Southeastern New Mexico Mayor’s Energy Summit in Carlsbad, Gov. Susana Martinez laid out a broad “all of the above” energy policy. “There is no reason we shouldn’t be an energy leader,” she later told attendees at the eighth annual Domenici Public Policy Conference in Las Cruces.

Her plan embraces a wide range of energy sources, ranging from oil and gas to solar, wind and up-and-coming technologies, such as “small modular reactors,” which must still be approved by the federal Nuclear Regulatory Commission.

While the oil and gas industry has been – and still is – the backbone of the state’s energy economy (accounting for more than a billion dollars in revenues to the state each year), it’s clear there is plenty of opportunity for the growing renewable energy sector given New Mexico’s abundant sunshine, miles of windswept open spaces and nuclear experience and expertise.

One of the keys is development of more infrastructure – electricity transmission lines to move power generated by wind and solar, and new refineries and improved roads, rail and pipelines to transport resources in and out of the energy-producing areas in the southeastern and northwestern parts of the state.

It also proposes deployment of new battery storage technologies and exporting coal as utilities start using less of that resource as a result of agreements with the federal government to reduce greenhouse gas emissions and improve air quality.

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