Watch Dr. Fine’s presentation here in ENERGY MARKETS OUTLOOK-> https://youtu.be/Mo4qjIJTZEc
The article by Dr. Daniel Fine is found here-> https://www.daily-times.com/story/money/business/2018/03/25/russia-us-opec-oil-conference-houston-trump-steel-tariffs-china/421943002/
“For a week in March, Houston was the site of a world assembly of oil producers engaged in an OPEC-Russia dialogue with American shale or light tight oil producers on supply and — indirectly — price.
OPEC and Saudi Arabia pitched a market information offensive.
Put simply, American oil producers should cut-back or stabilize output in a “family” arrangement to avoid an expansion of supply that threatens the price of world oil.
But there is no U.S. Oil Company (government owned) in America, unlike all members plus Russia which are state companies. Russia is a mix. OPEC members are a price-setting cartel. So, a restaurant in Houston was selected as the site for an elite dinner of OPEC and American shale oil operators.
Platitudes and generalizations dominated the American-initiated conversation, because anything more would be in violation of U.S. anti-trust laws.
Saudi Arabia, consistent with its effort to sell shares in itself in an Initial Public Offering (forthcoming), emphasized there was enough future world demand to satisfy the Americans as well as OPEC.
This was 1.5 percent growth per year for the next decade or two. Almost silence, however, on Saudi Aramco’s capacity expansion of another l.5 million barrels per day as “spare capacity.”
Does the future demand short term or long term offer support for an unspeakable and unenforceable supply agreement that involves enough for all? Will American shale producers in the Permian exclude themselves from capturing any growth of demand?
Devon, no longer in the San Juan Basin, but dominant in Oklahoma, is going for double-digit production increases yearly and is increasing its dividend to shareholders who might otherwise be attracted to the idea of drilling and completing less to prop up the price per barrel.
The Houston dinner failed, as a half a dozen companies did not show up in compliance with legal restrictions. It failed to persuade the America shale industry to act with OPEC’s oil supply and price management as a “family” and not as a law-breaking cartel.
Flashback to 2016: Iranian oil likely to push prices lower
Less than a week later, Iran signaled that it would not renew the production cut that has removed 1.8 million OPEC barrels of oil from the world and increased prices.
Saudi Arabia was projecting a forecast that a tight market for oil is ahead this year or next as oil projects will not replace wells while demand is strong.
Few were sold on this forecast since shale oil well completions are effectively responsive to price signals with well completions compared to conventional replacement-based on prior oil field investment.
Oil traders are largely unconvinced or agnostic listening in to the Houston contradictions. Most will watch Iran in late May as a sell signal in the making of algorithms.
The Trump Administration on steel tariffs takes the Obama Administration’s failure to do so as a starting point. It was Secretary of the Treasury Lew under Obama who made the case for tariffs during his many visits to Beijing. He would accuse China of promoting an overcapacity of steel production for export and consequent flooding of the American market and the United States with cheap steel.
The Chinese no doubt listened politely to the words but did not anticipate action. They followed a strategy of export price advantage for driving American-owned and operated steel out of business.
Action was taken last month by President Donald Trump. And yet nothing in the customary reaction against Trump recalled that President George W. Bush declared sanctions against Chinese Steel export dumping over 10 years ago, which lasted 18 months, and is credited for an American steel innovation-led comeback.
National security requires American made high-quality steel not only for defense and defense-industrial capability, but also for the complex steel in San Juan and Permian natural gas and steel pipelines.
What is needed is metallurgy for manufacturing and equipment for continuous casting, cooling, rolling and welding. There is only one plant left in the United States that has some capacity for high strength pipeline steel (API X70 and X80).
The oil and gas industry in the San Juan Basin should not depend on imports from a non-continental foreign source as a matter of national security.
China already dominates the American market (oil and gas) for steel valves. There is vulnerability if China follows its rare earth history.
First, it lowered prices via exports. Second, with this weapon, American rare earth domestic production failed and China bought the technology and transferred it to China. Third, China raises prices for American users of rare earths.
The North American Trade Agreement (NAFTA) negotiations continue with more confidence that fuels (natural gas) will be exempt from negative outcomes. The exemption for Canada and Mexico from steel and aluminum tariffs based on a no-threat-to-national-security finding and continental sources, suggests understanding that trade in fuels will not be restricted.
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.
For a week in March, Houston was the site of a world assembly of oil producers engaged in an OPEC-Russia dialogue with American shale or light tight oil producers on supply and — indirectly — price.
OPEC and Saudi Arabia pitched a market information offensive.
Put simply, American oil producers should cut-back or stabilize output in a “family” arrangement to avoid an expansion of supply that threatens the price of world oil.
But there is no U.S. Oil Company (government owned) in America, unlike all members plus Russia which are state companies. Russia is a mix. OPEC members are a price-setting cartel. So, a restaurant in Houston was selected as the site for an elite dinner of OPEC and American shale oil operators.
Platitudes and generalizations dominated the American-initiated conversation, because anything more would be in violation of U.S. anti-trust laws.
Saudi Arabia, consistent with its effort to sell shares in itself in an Initial Public Offering (forthcoming), emphasized there was enough future world demand to satisfy the Americans as well as OPEC.
This was 1.5 percent growth per year for the next decade or two. Almost silence, however, on Saudi Aramco’s capacity expansion of another l.5 million barrels per day as “spare capacity.”
Does the future demand short term or long term offer support for an unspeakable and unenforceable supply agreement that involves enough for all? Will American shale producers in the Permian exclude themselves from capturing any growth of demand?
Devon, no longer in the San Juan Basin, but dominant in Oklahoma, is going for double-digit production increases yearly and is increasing its dividend to shareholders who might otherwise be attracted to the idea of drilling and completing less to prop up the price per barrel.
The Houston dinner failed, as a half a dozen companies did not show up in compliance with legal restrictions. It failed to persuade the America shale industry to act with OPEC’s oil supply and price management as a “family” and not as a law-breaking cartel.
Flashback to 2016: Iranian oil likely to push prices lower
Less than a week later, Iran signaled that it would not renew the production cut that has removed 1.8 million OPEC barrels of oil from the world and increased prices.
Saudi Arabia was projecting a forecast that a tight market for oil is ahead this year or next as oil projects will not replace wells while demand is strong.
Few were sold on this forecast since shale oil well completions are effectively responsive to price signals with well completions compared to conventional replacement-based on prior oil field investment.
Oil traders are largely unconvinced or agnostic listening in to the Houston contradictions. Most will watch Iran in late May as a sell signal in the making of algorithms.
The Trump Administration on steel tariffs takes the Obama Administration’s failure to do so as a starting point. It was Secretary of the Treasury Lew under Obama who made the case for tariffs during his many visits to Beijing. He would accuse China of promoting an overcapacity of steel production for export and consequent flooding of the American market and the United States with cheap steel.
The Chinese no doubt listened politely to the words but did not anticipate action. They followed a strategy of export price advantage for driving American-owned and operated steel out of business.
Action was taken last month by President Donald Trump. And yet nothing in the customary reaction against Trump recalled that President George W. Bush declared sanctions against Chinese Steel export dumping over 10 years ago, which lasted 18 months, and is credited for an American steel innovation-led comeback.
National security requires American made high-quality steel not only for defense and defense-industrial capability, but also for the complex steel in San Juan and Permian natural gas and steel pipelines.
What is needed is metallurgy for manufacturing and equipment for continuous casting, cooling, rolling and welding. There is only one plant left in the United States that has some capacity for high strength pipeline steel (API X70 and X80).
The oil and gas industry in the San Juan Basin should not depend on imports from a non-continental foreign source as a matter of national security.
China already dominates the American market (oil and gas) for steel valves. There is vulnerability if China follows its rare earth history.
First, it lowered prices via exports. Second, with this weapon, American rare earth domestic production failed and China bought the technology and transferred it to China. Third, China raises prices for American users of rare earths.
The North American Trade Agreement (NAFTA) negotiations continue with more confidence that fuels (natural gas) will be exempt from negative outcomes. The exemption for Canada and Mexico from steel and aluminum tariffs based on a no-threat-to-national-security finding and continental sources, suggests understanding that trade in fuels will not be restricted.”
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 story is here-> http://www.abqjournal.com/803674/oil-producers-want-u-s-to-restrict-imports.html
“ALBUQUERQUE, N.M. — New Mexico and West Texas oil producers are gearing up for a national effort to draw all major U.S. oil basins into a grassroots movement to restrict crude imports from overseas.
Leaders of the Panhandle Import Reduction Initiative, which launched in April in the Permian Basin, are seeking public meetings and rallies in other oil-producing zones to convert what’s now a regional initiative into a national movement, said Daniel Fine, associate director of the New Mexico Center for Energy Policy, who is working with local producers.
Those efforts will kick off in September with a presentation at the fourth Southeastern New Mexico Energy Summit in Carlsbad. After that, initiative leaders expect to hold public meetings in other shale oil basins, including the Bakken in Montana and the Dakotas and the Eagle Ford in South Texas.
“We’ll take it to Carlsbad first, and then it goes national,” Fine said. “We want to organize public rallies with producers and field workers whose jobs are at stake. This is a grassroots effort in the basins where the oil bust has taken place.”
The initiative is a reaction to the Organization of Petroleum Exporting Countries’ aggressive oil-pumping policies since mid-2014, which have helped drive global oil prices to ten-year lows and thrust domestic U.S. production into crisis. Initiative leaders say those policies were a deliberate effort by the mid-Eastern members of OPEC, particularly Saudi Arabia, to drive U.S. producers out of business.
Banning crude imports from overseas would undercut OPEC’s ability to manipulate prices, they say, and allow U.S. producers to ramp up domestic production to supply the U.S. market.”
“FARMINGTON – A group of oil and gas executives and energy policy experts from the Texas Panhandle and New Mexico’s piece of the Permian Basin are pushing a plan to restrict seafaring imports of foreign oil from coming into the U.S. in order to stabilize the oil and gas industry and bring back lost oilfield jobs.
The group’s plan, which would exempt crude oil imported from Mexico and Canada, is an effort to push back against the price wars the group said are being waged by OPEC, or the Organization of the Petroleum Exporting Countries, led by Saudi Arabia.
Members met at the School of Energy at San Juan College Tuesday to promote the “Panhandle Import Reduction Initiative,” which they say could be implemented in multiple phases within 90 days of the next administration, with the ultimate goal of reducing heavy crude oil imports to about 10 percent of demand.” SEE VIDEO-> OIL IMPORT QUOTA RALLY: TV BROADCAST
by James Fenton
The full article is at–> http://www.daily-times.com/story/money/industries/oil-gas/2016/06/14/energy-group-hopes-reduce-foreign-oil-imports/85855044/
“FARMINGTON – A group of oil and gas executives and energy policy experts from the Texas Panhandle and New Mexico’s piece of the Permian Basin are pushing a plan to restrict seafaring imports of foreign oil from coming into the U.S. in order to stabilize the oil and gas industry and bring back lost oilfield jobs.
The group’s plan, which would exempt crude oil imported from Mexico and Canada, is an effort to push back against the price wars the group said are being waged by OPEC, or the Organization of the Petroleum Exporting Countries, led by Saudi Arabia.
Members met at the School of Energy at San Juan College Tuesday to promote the “Panhandle Import Reduction Initiative,” which they say could be implemented in multiple phases within 90 days of the next administration, with the ultimate goal of reducing heavy crude oil imports to about 10 percent of demand.
Launched in November, the initiative aims to cut foreign oil imports enough to activate more domestic drilling rigs and boost domestic production to meet current demand levels within four years.
Former state legislator and Four Corners Economic Development Chief Operating Officer Tom Taylor said the drop in natural gas prices eight years ago and the fall of crude oil in 2014, has delivered prolonged pain to the regional economy.
“We find ourselves … in a situation now where we’re down about 6,000 jobs, most of those in the oil and gas industry,” Taylor said of the San Juan Basin. “We have about 11,000 people who have left (San Juan County) … So while we’re down 6,000 jobs and down 11,000 people, we’ve built seven fast-food restaurants, three more under construction, and two big box stores. It’s a different world out there.
“But the fact of the matter is that the economic base of the community is in trouble. And not only is the community in trouble, but the state of New Mexico is in trouble, and not only is New Mexico in trouble but our nation and its security. It’s all tied together. It’s a very difficult situation we find ourselves in when we have one country that can control oil prices. It goes beyond free trade. It’s a problem we need a solution to. We are at the dependence of foreign oil.”
Taylor said about a third of New Mexico’s general fund comes from the oil and gas industry in the form of taxes and fees.”
For Immediate Release Farmington, New Mexico
Contact: Dr. Daniel Fine 505-771-1865
Christa Rommé 505-566-3618
THE SAN JUAN BASIN IS JOINING THE FIGHT TO REDUCE FOREIGN OIL IMPORTS TO INCREASE LOCAL PRODUCTION
The Panhandle of West Texas, a center of American oil since early in the 20th century, answers OPEC and Saudi Arabia with a call for a Presidential Proclamation to establish quotas on imports of foreign oil. And they have asked the San Juan Basin to join this call. Presenters from Texas and New Mexico will be leading a local discussion about what measures can be taken to reduce our national dependency on foreign oil. Similar to “buy local” campaigns across the nation encouraging retail consumers to spend their dollars at home, this proclamation would have Americans buy oil produced in America. Demand for US production would then go up, putting recently laid-off workers back in the field. The United States should no longer allow Saudi Arabia and the middle east to manipulate our economy by crippling our ability to produce and use our own natural resources. We have been forced to comply with the consequences of decisions made by a country whose intent was to take over a “market share” that was ours and make it theirs. The results were oil prices plummeting to $26 a barrel.
The “bust” in oil exploration and production has left families, companies, both large and small, with bankruptcy and hundreds of thousands out of work. Since Thanksgiving of 2014, Saudi Arabia has increased its production to lower prices to shut-in unconventional oil in all areas of the US. It is a price war which has suspended the prospect of American energy self-sufficiency.
The Panhandle Import Reduction Initiative for oil import quotas on foreign oil is nothing new. It aims to revive the 1959 quota system of President Eisenhower who acted to sustain a healthy oil industry and middle class communities which it employs for reasons of national security. And it worked for 14 years to keep domestic oil from going out business because of foreign imports.
Import quotas on light tight oil will be 100% — no more imports within the first 60 days of the new American President’s term next year. Light tight oil or oil from shale is an American technology triumph and the pathway to abundance and security against foreign oil supply cut-off threats. Southwest and Dakota oil will be unbound. North American oil will avoid the risk of dependence on the world ocean as the transportation for imports. Oil from shale has so far supported national income savings in the balance of payments of over 500 billion dollars in the last five years.
President Eisenhower’s import quotas limited heavy sour oil to 10-12% of yearly American oil demand — enough to take care of Canada’s current exports to the United States.
The lower the oil price goes and the longer it stays there because of the Saudis flooding the market, the higher it will go and the longer it will stay there when demand gets greater than supply but it could be too late for the US because the US operators and other international companies are not investing in exploration, the oil that we will need in 5 to 10 years is not being discovered and developed today. OPEC cannot supply all the world’s needs. When demand outpaces supply, the price will skyrocket and stay there until the oil operations that are now curtailed can ramp back up. That may take years due to all the layoffs taking place today. All consumers will be hurt by the high prices. That would not happen if we had reasonable prices today to let us keep exploring for and developing new oil reserves for our future needs.
We are at a cross road and its time we take a stand. Imported oil is rapidly increasing and could or will return our country into the same dependency which began in the late 1970s and lasted to 2010; therefore, risking our national security. American investment in major oil projects has been stopped by the price war. So far OPEC and Saudi Arabia are over-producing in world conditions of over-supply to lower prices enough to prevent required replacement of shale reserves. This is the Panhandle Import Reduction Initiative’s answer to Doha and later OPEC in June and beyond:
Import Quotas will start a new cycle.
The presentation, featuring Dr. Daniel Fine with New Mexico Tech and New Mexico State Energy Policy, T. Greg Merrion and other industry experts will take place on Tuesday, June 14th from 11:00am – 12:45pm in the Merrion Room at the School of Energy at San Juan College, 5301 College Boulevard, Farmington. This event is free and open to the public.
The full story is here-> http://www.daily-times.com/story/opinion/columnists/2016/05/28/fine-oil-halftime-2016/84610710/
“The question of the oil-price reality pervaded the talks and private conversations at the Four Corners Oil and Gas Conference earlier this month. From the lowest price per barrel in nearly eight years to a recovery halfway to $100 in less than three months! Is the “bust” in the San Juan Basin dissolving as others before?
Yet, Ken McQueen, retiring vice president of WPX in the San Juan Basin, and the most effective in technical innovation in the basin, said: “price is not everything.”
This is the view of surviving management. It is not shared by financial institutional players and speculators.
Before Thanksgiving 2014, I presented a forecast for the oil price in a new “crash” range of $23 to $28. This was based on analytical experience and petroleum economic history. The trade associations were then spinning that it was an opportunity and would turn around in weeks.
They had no understanding of Saudi Arabia and OPEC as the price-setter. The price of oil collapsed three months ago to $26.70.
There was an abortive effort by OPEC and Russia at Doha, Qatar, to freeze production at Jan. 1 levels to “re-balance” world demand and supply. It failed because OPEC was no longer outside the Middle East political and religious war — Shia-Iran, with oil export sanctions recently lifted, did not show up.
But a one-day oil field workers stay-at-home in Kuwait took one million barrels of oil off the over-supplied world market within 24 hours and the financial market players covered their short or future sale positions.
The bet was now that every “outage” or supply disruption in the world would “re-balance” demand and supply and move West Texas Intermediate prices higher.
Saudi Arabia alone is replacing all the “outage” oil while the San Juan Basin and Southwest producers have record lay-offs, bankruptcies, community economic dislocations, and cuts in production: a million barrels less per day by Christmas is anticipated.
Without the freeze of OPEC production, $50 a barrel prices are here nevertheless. Does the rig count recover — only 15 working in New Mexico from over 100 just 18 months ago?
Yes and no. Companies should start stimulating (fracking) the heavy inventories of uncompleted wells. A boom again? Hardly. With more drilling of uncompleted wells at $50, American Southwest unconventional production rises. Saudi Arabia and the Gulf nation producers would see once more the threat to market share which started the bust in the first place.
Higher oil prices equate to more production and energy-related banks and funds might find new borrowers. Is this the constraint of lower and longer oil prices? It doesn’t matter what supply forecasts come from traders’ prattle on cable TV. The final half of 2016 will be negative on price and oil demand. The price war with Saudi Arabia/OPEC continues.
There are three counter-strategies to Saudi Arabia and OPEC from American shale oil producers and communities:”
by the Lubbock Avalanche-Journal editorial board
The full story is here-> http://lubbockonline.com/filed-online/2016-04-28/our-view-limiting-oil-imports-would-help-protect-american-producers#.VzaWRPkrLIU
“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.”
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.
Encana announces multi-million dollar drilling plans for 2014 in the San Juan Basin
By Leigh Black Irvin The Daily Times
FARMINGTON — Encana Corporation announced earlier this month a new company strategy and vision, with much of that strategy being focused on the San Juan Basin where it plans to invest hundreds of millions of dollars in new oil and gas production beginning in 2014.
The announcement has prompted a flurry of speculation among those in the local oil and gas industry that the increased drilling will begin immediately after the first of the year.
In a Nov. 5 news release, the Calgary-based Encana outlined key points of its strategy, the first of which states that it will “focus its capital investment on five oil and liquids-rich resource plays in North America.”
The release goes on to state that Encana will “invest approximately 75 percent of its 2014 capital into five high return oil and liquids-rich plays: the Montney, Duvernay, DJ Basin, San Juan Basin and Tuscaloosa Marine Shale.”
In dollar amounts, this translates to 350 million to 400 million dollars in capital that Encana plans to invest in the San Juan Basin in 2014, said Encana spokesman Doug Hock.
“We will run two to four rigs in the area where oil and liquids are,” said Hock. “Our strategy is to develop oil and natural gas liquids plays in the Mancos Shale over the course of 2014.”
Hock said that to date, Encana has drilled some 20 wells in the Basin at a rate of approximately one well a month, and the increased production plans are a result of the positive drilling performance already seen in the basin, as well as economic conditions that make drilling in this area beneficial to the company. For more of the article use this link–> http://www.daily-times.com/farmington-business/ci_24615895/encana-announces-multi-million-dollar-drilling-plans-2014
Geopolitics, Resource WAR 
Written
on December 5, 2013