OGI This Week
Optimism: Operators at Scotia Howard Weil’s recent conference discussed plans to spur production growth through various methods. Regulation: More than 100,000 oil and natural gas wells—more than 90% using hydraulic fracturing—on public and Native American lands have new rules governing their use and production. Worldview: Jed DiPaolo, senior adviser to Duff & Phelps, views energy commodity prices through the lens of geopolitics, and urges patience and conservative spending.
Support: Lifting the export ban would be “pro-consumer, pro-economy, pro-national security,” said Doug Suttles, CEO and president of Encana Corp., at the recent Vail Global Energy Forum. Uncertain: The EPA’s revised air quality standards for ozone were challenged by industry groups as unsupported by science, redundant and costly. Outlook: A recent oil market report analyzed global demand for crude oil, domestic crude storage capacity and global refinery throughput rates. These combined factors could push U.S. production down toward zero growth by May, the report said.
Incentive: Texas, particularly, could have influence in setting global oil prices if the crude oil export ban is lifted, according to a Texas railroad commissioner. Impact: The smallest projected increase since February 2011, of less than 300 barrels per day of oil, will happen in April, according to the Energy Information Administration. Erasure: Various disruptions from weather to political unrest recently impacted oil supply, as outages wiped out 2.7 million barrels per day.
Money Matters: Few companies were prepared with financial measures, such as explicit return-on-capital targets, before the oil price downturn, a survey finds. Drilling Down: Coiled-tubing fracks are a popular completions method for some geologies, such as sandstone. Pause Button: Clayton Williams could face a drop in production of as much as 10% as it idles some domestic rigs.
Off balance: Drilling techniques used in the shale boom have altered the balance of oil and gas supply and demand. Yes or no? FTI Consulting recently polled more than 1,000 by phone on whether they support exporting crude oil. Key resource: "The ultimate key to survival" in an oil price downturn is "good rock," according to the CEO and chairman of Magnum Hunter.
How Can We Help? Seasoned private-equity providers discuss ways they can help provide capital in the current price environment. Necessary Ingredients: Time, effort and capital combine to create successful LNG value chains, according to experts at Hart Energy’s recent World LNG Fuels conference. Speculation: There could be a 50% reduction in Marcellus-Utica activity levels, according to Enlink Midstream Partners’ CEO.
Q&A: The University of Houston’s chief energy officer discusses the school’s involvement in leading the Subsea Systems Institute for deepwater disaster prevention. No. 1: The oil price decline pushes technology to be the highest-ranking investment for the first time above energy, Houston’s high-net-worth investors say. Keeping Up: E&Ps “will work through the factors standing in the way of production cutbacks,” according to a study.
Money: Several banks with $1 billion or more in assets are “among the most at-risk” for lower lending if oil prices stay low, a report said. Chatter: The commodities market and OPEC were among topics oilman T. Boone Pickens discussed on Twitter with “legions of Twitter followers.” Valuable: Patent assets remain underutilized, but executives are starting to realize they can use them to “unlock financial value.”
Stable: The Middle East will not experience the same decline in exploration and production spending as the rest of the world, a recent survey indicates. Trending: Which North American wells have peak rates greater than 1,000 barrels of oil equivalent per day? An analyst recently explored this trend. Possible Decline: “Early signs” of a spending slowdown included the drop of 118 rigs “over the past six weeks,” an analyst said.
Secure: Industry knowledge that is considered valuable exists in ‘the marketplace and the commercial sector,’ a senior consultant said at a recent cybersecurity conference. In Favor: Jack Gerard, head of the American Petroleum Institute, recently spoke in favor of approving the Keystone XL pipeline. Timing: Mergers and takeovers could be well-positioned in a down market for acquisitions and divestitures.
Cutting Back: ‘Billions of dollars’ are off the budgets of many small- and large-cap E&Ps for the new year. Follow The Rules: New regulations for tank cars and wellhead requirements will impact profitability of North Dakota crude oil, analysts say. Legislation: ‘Lack of federal regulation’ of hydraulic fracturing in a Republican Congress ‘is a plus for E&P companies’ according to a report.
Upcoming: The Vail Global Energy Forum will partially focus on North America’s development as ‘an energy powerhouse,’ said founder Jay Precourt. Advantage: Lower commodity prices in 2015 might give private equity a ‘competitive edge’ over public companies. Seaworthy? Between 2014 and 2020, $60 billion will be invested in floating LNG projects worldwide. Will it be successful?