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

Posts tagged ‘energy industry’

Energy expert: New Mexico oil production has lessened potential for war


A must read! -> 2/11/2019 Hobbs News Sun | Sunday, February 10, 2019 | 7
Energy expert: New Mexico oil production has
lessened potential for war
CURTIS C. WYNNE NEWS-SUN

County ranks third in the nation in oil production.

Lea and Eddy counties have made history by reducing the possibility of a

Middle Eastern war for oil, according to Daniel Fine, a research and

development energy expert at New Mexico Tech.

Why? Because oil and gas production eliminates this nation’s need to rely on

the Middle East for fossil fuel.

Having served in developing former Gov. Susana Martinez’s energy policy and

in the Energy, Minerals and Natural Resources Department, Fine said he’s

currently writing an energy paper for a Washington, D.C. think tank.

“What has happened now, with President Trump’s policies and the

(Department of) Interior policies under (David) Bernhardt, is the chance of the

United States getting into a Middle East war to protect its interests in oil supply

and imports has evaporated, finished,” Fine said.

He dated the potential for war in the Middle East over oil as early as the 1970s.

“We have almost 50 years of tension and potential military participation in the

Middle East to provide us with imported oil from there,” Fine said. “The two

counties in New Mexico have eliminated this and have now played an important

role in peacemaking…” See the link below->

Hobbs News Sun _ Sunday, February 10, 2019 _ 7

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Reactions to Delaware Basin news shows misunderstanding of petroleum economics by Dr. Daniel Fine


The article is here-> https://www.daily-times.com/story/money/industries/oil-gas/2018/12/18/delaware-basin-news-reveals-public-misunderstanding-oil-industry-economics/2282224002/

News of the size of oil reserves in the Delaware Basin (New Mexico’s share of the Permian) while OPEC was deciding how many barrels it will cut from the world market to lift prices caused epic confusion – and revelations of how little “authorities” and the media understand petroleum economics.

The New Mexico media, which relies mainly on interviews with petroleum industry spokespersons, got it wrong.

Government numbers came out as 46 billion barrels (Permian total) with 26 in New Mexico. This means nothing but oil in good rock along with technical recovery as an estimate. Some excited “authorities,” who should know better, exclaimed that there was more.

However, the estimate is based on the application of technical means to recover the oil. The reserves of real oil depend on ultimate economic recovery. This means technical based on geology, plus economics. A high price will recover the billions of barrels while a low price will not.

In short, the numbers reflect the rocks without economics.

The Delaware reserves plus the Texas Permian are now there to expand supply over 12 million b/d in the United States.

This writer has warned that world oil demand is sluggish and imprecise with only references to legacy guesswork that the developing world plus China demand will support prices long term or forever. Yet, world oil consumption has increased only 5 percent in the last 10 years.

OPEC, with Saudi Arabia as its leader, has expired as the world administrator of the price of crude oil. At its December meeting in Austria, Qatar quit after nearly 70 years and announced concentration in LNG production and world export as the existing market leader.

OPEC emerged with a serious factional split between OPEC original and OPEC with Russia. There would have been no agreement without Russia and its old Russian Federation members as producers. Moscow is the new world oil price-setter indirectly while OPEC Original becomes a collaborator in cartel for now. Simply put, Saudi Arabia no longer is the “residual supplier” alone.

The production roll-back of 1.2 barrels per day by both “OPEC” is not enough for “balance” supply and demand for world crude oil.  It is being tested daily by commodity traders. In a briefing to New Mexico independent and small producers before the meeting in Austria, this writer warned that 1.7 million b/d was needed for balancing stabilization. Without that size of a production and export reduction, the average price of WTI oil in 2019 will average $50 per barrel.

Nearing 12 million b/d and over the Permian producers voluntarily will be required by this price to revise capital spending and place production into DUC (non-completions) and storage. There is doubt that the export of tight or shale oil would continue if the Brent price falls lower and loses its premium over WTI. A net cutback of Permian between 500,000 to 750,00 b/d should be a non-OPEC response to an oil glut even more serious than 2014.

Saudi Arabia is untouched as an American strategic ally in confronting Iran in the Middle East as a hegemonic threat.

Despite some Republicans and the Democratic Party in Congress, violation of human rights over the death of a Saudi journalist and critic of the Crown Prince will not override U.S. national interests in the Middle East.

President Trump has not deviated from post—World War Two foreign and defense policy.

Trump wants low oil prices for American consumers and forced OPEC this summer to pump more to offset export sanctions on Iran.

Still, with OPEC under a deep division which no President could achieve since 1973, Trump as a geopolitical manager of world oil has removed about 500,000 b/d between January and December of 2018. America, via Trump and without a formal cartel alignment, determines much of the price of world oil.

The United States and its Southwest tight and shale oil has changed from dependence on world oil to domination. Never again can OPEC engage the U.S. in a price and market share war as it did in 2014-2016 through supply acceleration in an oversupplied world market.

WTI emerges as the new world price. It is American barrels that set the price and OPEC is a price-taker. Since there are nearly 50 billion barrels in reserve in New Mexico, how will the Permian producers set a return on investment in a free market for petroleum?

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.

Fine: NAFTA, natural gas and the San Juan Basin


As seen here in the Farmington Daily Times-> http://www.daily-times.com/story/money/business/2018/01/28/fine-nafta-natural-gas-and-san-juan-basin/1032781001/

The North American Free Trade Agreement is now in a final stage with the U.S. team looking over the “energy chapter,” which has been approved by Canada and Mexico. The Administration’s position, with a revisionist-protectionist core, offers President Trump a withdrawal-from-NAFTA option, at least a tactical move to shake up Canada and Mexico in the interest of American merchandise and agricultural exports.
However, not much is known from the inside on plans for natural gas exports to Mexico.  In 1992, the beginning of NAFTA, Mexico’s oil and gas industry was government owned and operated so it fell outside a free trade agreement.
Today, Mexico permits private capital to build, own and operate oil and gas exploration, production and transportation (pipelines) under its Energy Reform Law.
This admits natural gas into the NAFTA framework. Nearly $6 billion of Southwest natural gas was sold (exported) to Mexico last year.

Mexico imports 53 percent of its natural gas from the United States – with 60 percent on track. Needless to say, Mexico is dependent on American natural gas for its power generation.Texas natural gas pipeline entry points dominate the trade, while the Delaware and the San Juan basins are next as business and strategic sources.
The Mancos Shale natural gas below the Four Corners must access the expanding Mexican market in any revision of NAFTA terms. The Trump Administration’s understanding of American natural gas trade with Mexico should include regional economic integration. Energy is required for Mexican industrial growth, and Mexico has constructed the pipelines on its side border to receive and transport natural gas from the Permian and the San Juan Basin.

NAFTA revised should make natural gas exports from the U.S. Southwest a natural resource exemption from narrow foreign trade objectives. Natural gas reserves in the Southwest can be accessible to Mexican importers if pipelines to cross-border points attract American investment long-term. NAFTA changes
would create risk disincentives.

U.S. NAFTA negotiations can be aligned with the Trump-Zinke energy policy of world domination if the export “New Mexican natural gas” is designated a “win – win.”
If the Mexican market for American natural gas is lost, New Mexican natural gas would be mostly “stranded” without offset storage; and, it would push back on the Permian with an oil-only reality as the output of gas from Pennsylvania and Ohio output expands.

Unless Texas and New York media understand the history behind the oil price collapse history of 2014-2016 the industry and public will be compelled to repeat that history soon.

Oil prices are coupled into a “bubble”; or worse – speculation in a “coin” which exists as a product of computer software. Is Bitcoin speculation infecting the value of oil in commodity trading at least momentarily?
Will hedging create a trade?

With New Mexico oil production over 500,000 barrels per day (323,000 four years ago), the coming 30 days in Santa Fe (Legislative Session) should see a Democratic Party state budget expansion or plain spending offensive which would mirror 2018 primaries and general election conflict between progressives and centrists.
There is no threat from off-shore (Atlantic and Pacific Ocean) to New Mexican oil and gas development. President Trump is right to remove off-shore prohibitions, but now the market takes over. The cost of San Juan Basin natural gas is 80 percent less than exploration and production 50 miles out in North Carolina’s Atlantic Ocean.
Three or four dimensional seismic investments—yes; production—no; not as long as there is economic shale natural gas on-shore in New Mexico and the Southwest.

Daniel Fine is the associate director of New Mexico Tech’s Center for Energy Policy. The opinions expressed are his own.

Texas, New Mexico oil producers push for import limits (AP)


Apr. 19, 2016 6:40 PM EDT

ALBUQUERQUE, N.M. (AP) — Oil drilling companies and royalty owners from the Texas Panhandle to New Mexico’s stretch of the Permian Basin are embarking on a grass-roots campaign to limit foreign oil imports, salvaging what they say is a major sector of the U.S. economy.

“American oil is competing against a cartel of government operators which has a stated initiative of driving an American industry out of business,” said Tom Cambridge, one of the Panhandle producers leading the campaign.

The grass-roots movement is pushing for the next president of the United States to issue a proclamation setting quotas for imports — something that hasn’t been done in more than four decades.

“It’s not that this is the first time but this is a more concerted, deliberate effort and I think it’s gaining ground,” said John Yates Jr., a member of a well-known family that is a leader in the industry and has over the last century developed some of New Mexico’s largest and most significant oilfields. The complete article is here-> http://www.bigstory.ap.org/article/74b8fac6517649d7a0ecac7fa55951ad/texas-new-mexico-oil-producers-push-import-limits

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.”

Inter-Tribal Energy Gathering Keynote w/leading energy expert Dr. Daniel Fine


Inter-Tribal Energy Gathering

March 1-2, 2016

San Juan College School of Energy

Farmington, NM

Free to the public

This gathering of Rocky Mountain West mineral producing Tribes, First Nations and Alaska Native Corporations is created to build Tribal Executive capacity on important issues in regards to oil & gas. We will be creating awareness and discussion on the impacts of the government’s oil & gas policies, generate information to create hydraulic fracturing regulations that can be shared from a web-based format, and host a networking opportunity for Tribes, First Nations and Alaska Native Corporations, so that you may get to know each other professionally and socially.

This specific event is intended to facilitate a multi-Tribal discussion on proposed, pending and recently implemented state and federal regulations on hydraulic fracturing. As part of “Front Page News”, many attempts to implement regulations that are certain to impact Tribal oil and gas economies without adequate or meaningful consultation or dialogue with Tribal Leadership. This is an opportunity for Tribal Executives to hold in confidence, that discussion with an analytical review of existing regulations for consideration of “The Good, The Bad and the Ugly” of said regulations. The evaluation of Colorado, North Dakota, New Mexico and Tribal Regulations will be discussed. The proposed outcome of the facilitated session is a set of DRAFT Regulations for Tribal consideration for adoption.

The second part of the agenda is to hold a discussion and ultimately arrive at decisions on the formation of a Multi-Tribal Energy Organization that has been widely discussed and proposed by Tribes for Tribes. Finally, the introduction of various leading innovative technologies for Tribal consideration and evaluation will conclude the event in an up-close and personal hands on approach will be presented in a round-robin format. Come and meet the executives. Don’t miss this exciting and highly participatory event!

Governor Martinez first Hispanic to lead GOP governors


LAS VEGAS, Nev. – Gov. Susana Martinez will hold the reins of the Republican Governors Association through the 2016 election cycle, after being elected Thursday by fellow GOP governors as the deep-pocketed national group’s new chairwoman.

The vote means Martinez’s national profile will likely rise, as she’s expected to spend large chunks of next year traveling out of state to raise money and rally support for Republican gubernatorial candidates around the country.

N.M. Gov. Susan Martinez

But she insisted the increased RGA duties – which began immediately with Thursday’s election – will not distract her from her day-to-day responsibilities in New Mexico.

“It’s an honor, and it allows me to showcase New Mexico throughout the country,” Martinez told the Journal during a break from the RGA annual meeting, held at the Encore at Wynn Las Vegas hotel. “I think that’s really an amazing opportunity.”

Martinez, who had been the RGA’s vice chairwoman, is the first woman and first Hispanic to lead the GOP governors group. She was recommended for the top position by the RGA’s executive committee and elected to the post Thursday by acclamation. Wisconsin Gov. Scott Walker, who recently dropped out of the Republican presidential race, was elected the group’s vice chairman.

No other Republican governors formally announced bids for the chairmanship.

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