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

Posts tagged ‘Mexico’

Increasing Natural Gas Trade Between the U.S and Mexico


The Heritage Foundation Background Paper

Increasing Natural Gas Trade Between the U.S and Mexico

July 1, 2019 22 min read Download Report

Authors: Dr. Daniel Fine, Ph.D and Nicolas Loris

 

SUMMARY

Increased energy trade has important economic and strategic significance for the United States and Mexico. Mexico’s energy-market reforms that opened access and improved natural gas trade between American producers and Mexican consumers have been beneficial for citizens in both countries. President López Obrador’s desire to return to energy nationalism threatens those gains. Both the U.S. and Mexico should commit to policies and regulations that continue to open access to markets, improve transparency, and expand opportunities for investment. Doing so will benefit both Americans and Mexicans.

Analysis: Oil market glut will lead to declining prices through 2020 by Dr. Daniel Fine


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.

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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


 


NEWS PROVIDED BY

LOGOS RESOURCES LLC

Mar 15, 2019, 09:52 ET

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.
DOLORES SILSETH
(505) 566-3402
SILSETHD@4CII.ORG

SOURCE LOGOS RESOURCES LLC

Related Links

http://www.logosresourcesllc.com

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.

ENERGY DOMINANCE NEEDS NAFTA 1/16/18 Heritage Foundation


Description

Last year, U.S. Trade Representative Robert Lighthizer notified Congress of the Trump Administration’s intent to modernize the North American Free Trade Agreement (NAFTA). After several rounds of negotiation among the United States, Canada, and Mexico, many critical issues remain unresolved.

Opportunities abound for negotiating a better NAFTA. As the Trump Administration pushes for modernization, one commonsense policy area that should be preserved and improved is energy. Canada and Mexico are two of America’s most important trade partners in energy markets. The Trump Administration should build off that success. Strengthening the integration of energy markets among the three countries will unleash the massive amount of energy abundance in North America.

Join us as we hear from experts on how enhancing energy trade with Canada and Mexico will result in more jobs and affordable power for American households and help achieve the Trump Administration’s goal of energy dominance.

Dr. Daniel Fine: Oil and gas: A look at what 2018 may bring


by Daniel Fine, Energy Magazine – Daily Times USA TODAY

Trump leads mass deregulation effort; comeback seen for San Juan Basin

For more of the article go here-> http://www.daily-times.com/story/money/business/2017/12/24/fine-oil-and-gas-look-what-2018-may-bring/956281001/

“The price of oil in 2018 will be volatile with commodity market traders selling on signals of OPEC-Russia “cheating” or members producing more oil than the extended Algiers Agreement output quotas. This should be expected as U.S. shale producers push past 10 million barrels per day and exceed 1970 as the all-time high for the United States.
At 10.4 million bpd (barrels per day), American oil production will surpass Saudi Arabia and Russia.  Herein lies the price range: 2015 all over again.
Real OPEC and Russian output will break Algiers (1.8 million barrels off the world market until September). Price range to $62.50 WTI high in the first half of the year and $38.65 at end of the second half or one year from today; 2019 would resemble most of 2015.
There is a second threat to price and production in the Southwest and Dakota. Hedge funds invested in public or listed companies want share buy-backs or dividends. In short, they want to make money now as opposed to operators sinking more cashflow into new production projects. The conflict inside Hess is the first example.
Traditional oil operators are 5-year business planners for returns on investment while the new private equity owners or investors are quarterly or payback pressure points for higher stock market share prices and distribution. OPEC/Russia is the external market threat leading to the lower price range alongside an internal investor/owner threat of less cash flow plow back for future production projects and more for short-term return on investment.
Oil price and production will also reflect Saudi Arabian domestic instability over its simultaneous offensive against Iranian influence in the Middle East and social and economic modernization against traditionalism. The plan is for less dependence on oil exports with technology and manufacturing in the national economy: social change and the status of women in the “revolution.”

 

Overcapacity and the price of oil Dr. Daniel Fine, New Mexico Center for Energy Policy


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? “

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