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

Posts tagged ‘Saudi Aramco’

How OPEC tried, but failed, to kill the Bakken By Patrick C. Miller | July 18, 2017


The full article is here-> http://www.northamericanshalemagazine.com/articles/2019/how-opec-tried-but-failed-to-kill-the-bakken

When OPEC ramped up its production in 2014 to drive down world oil prices, it was engaged in a strategy to put North Dakota’s Bakken shale play out of business, according to Daniel Fine, Ph.D., associate director of the New Mexico Center for Energy Policy.

“The downturn was a flush of flat-out production, and the target was the Bakken,” he said. “The Saudis understand the Bakken. They read everything. The most important consultants to OPEC are based in Houston—they’re Americans.”

Fine, a former MIT professor who’s also the energy policy project leader for the New Mexico State Department of Energy Minerals and Natural Resources, spoke during the opening day of the Bakken Conference & Expo July 17-19 in Bismarck, North Dakota.

He was jointed on the panel by John Yates, president and founder of Abo Empire, to discuss New Mexico’s San Juan and Delaware basins. While Yates covered the economic impact of the basins on New Mexico, Fine explained why their futures are headed in opposite directions, as well as OPEC’s impact on world oil prices.

Fine noted that at one time, the San Juan Basin was No. 2 in U.S. gas production. In recent days, low gas prices have resulted in Conoco, Chevron and WPX announcing plans to sell their interests in the basin. This year, for the first time, the Delaware Basin in southern New Mexico will eclipse the San Juan Basin in gas production.

“What is the future of the San Juan Basin? The future is that in the last 60 to 70 years, only about half of the gas has been recovered, leaving 32 trillion cubic feet of gas,” Fine said.

Turning to the subject of world oil prices, Fine discussed his experience of studying OPEC since the 1970s and what he’s learned from it. For example, in 2014 when OPEC increased its production specifically to target the Bakken and other U.S. shale plays, Fine forecast that prices would fall to $28 to $23 a barrel while others expected them to rebound to $100 a barrel.

“The Saudi mind is not the Bakken,” he said. “The operators here go for very short-term results. Their balance sheet is quarter-to-quarter. Saudi Aramco and the OPEC producers are taught to think in five-year ranges. So I picked the five-year range in 2000 to 2003 and said this might be it. It was $23 to $28.”

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? “

Oil guru Fine was right on gas prices


The full article can be found here–> http://rdrnews.com/wordpress/blog/2015/11/28/oil-guru-fine-was-right-on-gas-prices/

Energy expert Dr. Daniel Fine, left, in March predicted the current low gasoline prices. Pictured with Fine during a meeting in Roswell in March are local oil men Rory McMinn of Reed & Stevens, center, and Bob Armstrong of Armstrong Energy Corp. (Jeff Tucker Photo)

An energy expert’s prediction in March that gasoline prices in New Mexico would dip to $1.65 a gallon has been proven true.
Dr. Daniel Fine, associate director of the New Mexico Center for Energy Policy at New Mexico Institute of Mining and Technology, said at a landmen’s association’s meeting in Roswell in March that gasoline prices in New Mexico would drop to as low as $1.60 a gallon this year as the United States and the Organization of Petroleum Exporting Countries engage in a crude oil price war.
Gasoline prices in Bernalillo County dipped to $1.64 a gallon this week at some stations, according to GasBuddy.com. Gasoline prices in Chaves County were as low as $1.80 a gallon this week at Sam’s Club in Roswell.
In March, Fine predicted gasoline prices in the Albuquerque market in 2015 would rise slightly to $2.35 a gallon before leveling off somewhere between $2.35 and $1.65 per gallon. He said in March that gasoline prices in Albuquerque could ultimately drop to as low as $1.60 a gallon.
“We made it to $1.60 and I have an outline of where we’ll be in 2016,” Fine told the Daily Record this week. “I’m getting calls to return to Roswell to do the next year.”
Fine said fuel prices in the United States are at their lowest levels since 1998, unadjusted for inflation. Fine attributed the low gasoline prices to soft market demand and excess supplies of crude oil.
The United States has more crude oil reserves than it has had since 1933, Fine said.
Fine said he’s not so sure crude oil prices will rise any time soon. He said there is a lot of anticipation about a Dec. 4 meeting of OPEC in Vienna, Austria.
“There’s a little excitement in the market about what the Saudi Arabian position might be on the 4th,” Fine said. “What’s reported out is some language about stability. So the speculators are buying oil today. But I am very skeptical that this will last.”
Fine, who has been critical of OPEC, said the oil cartel is creating an imbalance in the marketplace by over-producing while crude prices continue to drop.
Fine said many economists assumed Saudi Arabia’s state-owned oil producers would cut back production as crude oil prices plummeted, but he said that did no occur.
“From Thanksgiving (2014) on, we’re in this oil price war crisis,” Fine said.

Column: Geopolitical events demand rapid response from unconventional producers by oil and gas expert Dr. Daniel Fine -Special to the Daily-Times-


For the complete article by Dr. Daniel Fine use this link-> http://www.daily-times.com/four_corners-news/ci_28389990/column-geopolitical-events-demand-rapid-response-from-unconventional?source=most_viewed

The Saudi-OPEC price war is now nine months old. Two OPEC meetings have passed without revisions or changes in strategy. It is a war against high-cost unconventional American producers that are seen as the principal threat to market share.

The West Texas Intermediate price per barrel has recovered since the low of the mid-$40 bottom to slightly above $60. This has become a trading range with algorithms following momentum making a price range. Financial or paper traders and speculators have moved the price of oil in a “rally” up $15.

Oversupply still overshadows the market. The balance of supply and demand awaits the onset of winter or 2016. The market share for OPEC and Saudi Arabia continues to expand at the expense of non-OPEC producers, but American shale or unconventional production has not declined to the point that an acceptable world balance between supply and demand appears to be in the making.

Daniel Fine

Daniel Fine (Daily Times file photo)

The CEO of Conoco Phillips was invited to the recent preliminary OPEC meeting and he challenged the producer countries with a warning: American “high cost” production will survive the price war with cost-saving efficiency already in process and yet to come. This promises American oil supply at less cost and a prospect of little change in world supply while demand remains weak and possibly weaker with China importing less crude as well as iron ore and other commodities.

What is now at play in oil price formation is geopolitics.

Tag Cloud