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

Posts tagged ‘United States Congress’

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.

Analysis: Trump and Saudi collision on oil, and Bingaman’s return to Santa Fe by Dr. Daniel Fine


The whole article is here->https://www.daily-times.com/story/money/industries/oil-gas/2018/11/25/analysis-trump-and-saudi-collision-oil-bingamans-return-santa-fe/2015081002/

n an earlier column, readers overseas benefited from this writer’s forecast that crude oil prices would fall dramatically because most commodity traders got it wrong. Simply, this column’s analysis was the buying of oil assumed a shortage would result once the sanctions against Iran would be activated the first week of November.

President Trump wanted lower oil prices with OPEC and Saudi Arabia pumping more. Two weeks ago, a call from the Middle East confirmed readers of the column had followed the analysis in the Energy Magazine and sold Brent oil — and profited.

Oil has slumped under $60 as the delusion of a shortage vanished. In the November issue column, this writer made a call: the oil price would reach $50 as a low. There is no change in that forecast. The price in the commodity market for WTI crude would touch in the very high $40 range before the Saudi-led production cut-back is realized. Why? Again, too much capacity to produce too much oil for demand.

What’s the impact on SW oil?

Oil demand without commodity traders’ bets on the sanctions against Iranian oil production and export contradicts flagging demand. Some Southwest shale producers, faced with discounts on domestic sales, are exporting oil to world markets and capturing the higher Brent price or differential between the WTI priced Midland domestic and the Brent price for the World.

But this would shift Southwest tight oil into a world market where such supply also chases weaker demand. This switches U.S. oil into world oil as exports and diverts it from going into U.S. storage.

Unlike the last three price sell-offs Saudi Arabia, speaking for OPEC, is strangely silent on calling on non-OPEC producers join it in lowering production or “balancing” the

market.

Quite the opposite. Led by shale producers in the Delaware (New Mexico) Basin in the Permian complex, United State production approaches 12 million barrels per day, a historic high and number one position against the Middle East and Russia.

Only a serious price decline, short of the 2015 bottom, would signal oil non-completions. A cutback of U.S. production by 750,000 barrels per with an OPEC cutback independent of Russian production of around one million barrels will stabilize or balance the world oil market.

But U.S producers cannot (anti-trust) belong to a collective price-setting organization (cartel).

President Trump wants lower prices, even if this means a breakup of OPEC into two and a moderate production roll-back by Southwest producers – a negative cash flow for those without or less advantaged by Tier One wells.

The overwhelming Democratic Party electoral win influenced OPEC and Saudi Arabia to resist President Trump’s pressure for lower world oil prices because he is much weaker and easier to upend in oil supply and demand world “domination.”

Bingaman is back!

The Democratic Party indirectly dimmed the “blue flame” price outlook regardless of blue wave voting margins. But enough of “color revolutions” in politics or economics?

This writer is constructively reacting to the return of former Sen. Jeff Bingaman to New Mexico’s politics through new state Governor-elect Michelle Lujan Grisham. She asked him to head her transition team.

With Democratic Party factionalism into Progressive/Ultra-Progressive forces against the traditional Moderate/Conservatives, Sen. Bingaman’s experience and history in working with the late Senator Domenici in forging the U.S Energy Act of 2005 is in best interest of New Mexico.

Recall the energy policy of “all of the above” in the Bush and Obama Administrations coupled with the Energy Policy of outgoing Governor Susana Martinez was a compromise of give-and-take between two New Mexico Senators of different parties and energy policy objectives.

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.

Tag Cloud