Author Archives: Bill Moist

About Bill Moist

Bill Moist, MS, CPA is Founder and President of Professional Equities, Inc., a funder of real estate; oil and gas; business projects; and trains others to take advantage of Crowdfunding. Mr. Moist is a lecturer at Graduate Business Schools and professional organizations. He is also a Texas Real Estate Broker, Certified Public Accountant (ret), Master of Science real estate tax expert, Co-founder of The Crowdfunding Training Institute, and Investor/Developer with 70+ successful projects. He can be reached on http://http://www.getcrowdfunding.ws and http://oilandgasinsider.com

Oil Prices Below $60 BBL Seen Through 2018 By Executives

Issue 115 – Expected Oil Pricing

Introduction…Almost two-thirds of U.S. oil executives expect oil prices below $60 per barrel through 2018 and not hitting $70 for two years.  This survey was published by Deloitte Services.

What the survey revealed…250 executives at companies that produce, transport, and refine oil and natural gas surveyed reflects a shift from last year when they expected commodity prices would rise and capital spending budgets would grow.

This year’s view comes as executives focus o cost controls and not on rising in commodity prices.  The new paradigm encourages shale producers to base executive compensation on the best uses of capital designed to keep costs low.

In summary…“The bottom line is that companies should focus on cost discipline and operational efficiency,” said Andrew Slaughter, head of Deloitte’s Center for Energy Solutions.

“The new reality seems to have set in; waiting for a significant price recovery may be a long haul.”

For more information, contact Bill Moist at bill@billmoist.net

Source:  “Most U.S. Oil Executives See Prices Below $60 barrel Through 2018, Oil Industry News, 13 October 2017

Sustainable Energy – Opportunity To Clean Produced Water

 Issue 114 – Cleaning 500,000 gallons of produced water in Midland, TX

What is produced water?  

Produced water is water found in the same formations as oil and gas. When the oil and gas flow to the surface, the produced water is brought to the surface with the hydrocarbons. Produced water contains some of the chemical characteristics of the formation from which it was produced and from the associated hydrocarbons.

Produced water may originate as natural water in the formations holding oil and gas or can be water that was previously injected into those formations through activities designed to increase oil production.

Why is produced water an opportunity waiting for a solution?

  1. The United States has 1 million producing oil and gas wells and nearly everyone generates water.  The sheer volume of produced water is staggering.  During 2012 (the most recent year data is available) is 21.2 billion barrels or 890 billion gallons was produced. Ninety-seven percent (97%( of the water was produced in 21 states with Texas generating one-third of the total produced water.  Just pumping that water back down is a waste of a tremendous resource.
  2. Water resources are declining especially in West Texas and the Western United States. Cleaning and reusing produced water is a  very sound sustainable energy practice.
  3. Oklahoma Regulators issued new limits to produced water being pumped underground.  Recent study links produced water to the strongest earthquakes ever recorded in Oklahoma.

What are the produced water solutions?  Two processes discussed.

#1. In Midland, Texas Gradient Technology is being used to clean 500,000 gallons of water per day.  The Midland plant is proving more economical than the old strategy of re-injecting produced water back into the wells while purchasing clean water for the fracking operations.

The project is being joint ventured with Pioneer Natural Resources.  Pioneer claims it is able to re-use nearly 100% of its produced water and recycles 85% of the heat needed to keep the system running.

#2. Our American Mud Works, LLC project in Ohio will be using a ceramic membrane process that has low requirements of preliminary treatment with minimum need for support and maintenance.

Ceramic materials are very stable chemically, thermally, and mechanically.  The benefit to the operator is no additives are needed and the process is not temperature sensitive.  Filtration with ceramic is a mild process with running cost limited by a closed production cycles and continuous process.

American Mud Works expects to clean 9,000 barrels (378,000 gallons) of water and 3,500 barrels (147,000 gallons) of high-value drilling mud per day with this first installation.

in summary.

The oilfield industry is being pushed by regulators and possible lawsuits to adopt sustainable energy practices.  In locations of water shortages, such practice is imperative.  However, at least in the case of Pioneer Natural Resources in Midland, Texas, re-use of produced water is more economical than the old strategy.

For more information, contact Bill Moist at bill@billmoist.net

Amazing New Global Opportunity For Texas Oil and Gas

Issue 113 – Ryan Sitton, Railroad Commissioner

Introduction...Amazing new opportunity could push the U.S., especially Texas, into to the forefront of global natural gas industry, says Texas Railroad Commissioner Ryan Sitton.

The opportunity…Commissioner Sitton said Texas can produce a massive quantity of natural gas.  However, the real bottleneck between the state and regions where natural gas demand is in ocean-going shipping.

“Natural gas is an opportunity to take the world by storm,” said Sitton, who was speaking at the Sept. 21 Gulf Coast Industry Forum. “But in order to do that, there’s one big thing we have to do — we have to be able to get it to those markets.”

The growing demand in thriving energy economies is a global opportunity for Texas.  New tankers and coastal facilities that can handle this new volume of additional natural gas will give Texas the chance to take the lead in this market.

“This is something that will affect our state and our nation for a generation,” Sitton said.

Texas natural gas exports today…Texas has experienced an explosive growth in natural gas exports.  According to the U.S. Energy Information Administration, Texas exported 257.16 billion cubic feet in 2010.  In 2015, the latest year data is available, Texas exported 845.95 billion cubic feet of natural gas.  That’s a 70% increase in Texas exports in just five years.

In conclusion…While Texas has seen a 70% increase in export of natural gas, according to Railroad Commissioner  Ryan Sitton, the amazing global growth opportunity is just ahead if we provide the infrastructure.

We are taking advantage of a similar opportunity in another state where this demand is being addressed.  Click here for more details.

Reference:  Joshua Mann, “Texas oil and gas regulator: This is where the new action will come from,” Houston Business Journal, 25 September 2017

Now EPA To Add Energy Industry to Advisory Committees

 Issue 112 – EPA Swat Team, Something You Never Want 

Introduction…I’m not making a political statement with the photo of the EPA swat team.  But, clearly, this is something you never want to show up at your place of business.

Regulators muscle…It seems that most federal regulators and agencies have their muscle to enforce regulations and/or intimidate citizens.  I’ve had IRS agents with guns and badges show up at my office.  Fortunately, they were investigating someone else.  A friend had the EPA shut down his business for 40 days.  Only to decide he wasted causing pollution, but removing it.  At the end, the EPA was happy to leave after he paid a $35,000 fine to pay for their time.

Changes at the Environmental Protection Agency (EPA)…The EPA is making room for energy company representatives on its Science Advisory Board and the EPA Clean Air Scientific Advisory Board.

The industry has always had a voice on these panels, now potential new appointees may suggest greater influence by the regulated companies, oil and gas industry specifically.

These panels in the past were typically populated by independent academics and researchers.  However, that does not mean they don’t bring an agenda to these panels.

The list of potential new advisory board members includes officials from Exxon Mobil, Phillips 66, Alcoa, Nobel Energy, Total, and the American Chemical Council.

In conclusion…Whether this change in the EPA’s panels gives too much influence to the industry is yet to be seen.  However, it seems to bring a few people with actual experience to a committee made up primarily of academics might bring wisdom to regulations.

If you want to see how we are cleaning drilling mud and produced water from drilling sites, send me an email describing your interest.

Source:  Lee Fang, “How Exxon Mobil May Soon Have Greater Sway Over Science Used In EPA Policies,” The Intercept, 22 September 2017.

Did Oil and Gas Pass ‘Unprecedented’ Weather Test?

 Issue 111 – Refineries and oil storage flooded by Harvey August 30, 2017

Introduction…August 27 Hurricane Harvey pummeled Texas described by the National Weather Service as ‘unprecedented.’  This hurricane delivered torrential rainfall that was ‘unknown’ and ‘beyond any experience.’

The severity of the storm damage to the oil and gas industry of Houston and along the coast was unknown.

Valero Energy and Motiva, a Saudi Aramco subsidiary, experienced flood waters around storage tanks looking like serious and lasting damage.

Three weeks later it was apparent that lessons learned from Katrina and Rita in 2005 made operations recovery much quicker.

Harvey’s impact was considerable but short-lived.  At the point of greatest disruptions, August 29, about 3.9 million b/d of refining was offline.  Additionally, 1.5 million b/d experienced reduced capacity.

Just 17 days later, the impact was minimal with only three refineries with combined capacity of 325,000 b/d remained offline.  Another 1.4 million b/d was starting up and only 2.3 million b/d was operating below maximum output.

In conclusion...The industry was able to reassure the world, that it faced the unprecedented challenge of Harvey, and weathered the storm.

Source: Ed Crooks, “How US oil and gas passed the test of ‘unprecedented’ weather,” Financial Times, 16 Sept 2017.

Harvey Recovery Faster Due To Changes After Karina

Issue 110 – First Corpus Christi Refinery Online

Introduction...Many changes have been made since the 2005 Hurricane Katrina tore though east Texas and Louisiana where 25% of the nation’s refinery is located.  This was reported on a September teleconference reported by the American Petroleum Institute.

Harvey’s damage…400,000 barrels per day (bpd) of production was offline to refineries and gas processing.  Ports and terminals are mostly open.  That is more important now than after Katrina because the U.S. is a major exporter of crude and oil products.

Pipelines, which are critical are mostly back to capacity including Colonial and Explorer Pipelines.

There has also been fewer electricity outages than during Katrina, an important element of refining.

Improvements…Government response has improved, noted Robert McNally, a fellow at Columba University.

The federal government understands that oil is the life-blood of a modern society.  Restoration of supplies and transportation came quickly after Harvey, McNally said.

In conclusion…“We definitely were better prepared. We appreciated the need to deal with all of the energy aspects that we identified during Katrina, but also communication between state and federal authorities seems to have gone better this time,” said Guy Caruso who previously lead the US Energy Information Agency.

Source: Nick Snow, “Changes since Katrina made post-Harvey recovery better,” Oil and Gas Journal, 8 September 2017.

Texas Refineries Prepare To Reopen – Gasoline Falls

 Issue 109 – Marathon Petroleum Refinery In Houston

Introduction...Wednesday night the reports came out that Texas would have gasoline shortage.  Thursday the lines started forming at the gas stations.  I needed gas, but decided to wait until Friday when the lines would be gone.  Well, the lines were gone, but so was the gasoline.  I went to a dozen stations before i found a Walmart that had gas.  The station was hidden behind a retaining wall, so the motorists emptied the Racetrac across the street.

By Sunday, I saw several of these gas stations were refueled and selling again.

What happened?  After rising 25% last month, gasoline prices fell for first time in two weeks as impact of Hurricane Harvey impact assessed.  Some Texas Gulf refineries have opened Saturday including Exxon Mobil 560,500 barrel per day (bpd) Baytown facility, the second largest oil refinery.  Several others are preparing to restart its refineries this week include Citgo Petroleum 157,500 bpd refinery in Corpus Christi, Texas.  Phillips 66 is preparing to resume operations at its 247,000 bpd facility in Baytown, Texas.

Another positive change for the oil industry is Occidental Petroleum has re-opened its Ingleside, Texas which is a key export hub for Permian Basin oil producers.

About 4.4 million barrels a day of U.S. refining remains closed.  The Strategic Petroleum Reserve will supply 1 million barrels of crude to the Gulf Coast plant.

Saturday, the volume of offshore U.S. Gulf of Mexico crude production still shut in declined to about 160,000 bpd.

Nearly half of U.S. refining capacity is located in the Gulf Coast region located near crude oil supplies from Texas oil fields.  Most major Texas ports remained closed to large vessels, limiting offloading imported crude.

In summary…While the Hurricane Harvey’s impact on Houston and the Gulf Coast has been horrific, the Texas oil production and crude refining facilities are being restored at a rapid pace.

What Impact Will Hurricane Harvey Have On Gasoline And Crude Pricing?

 Issue 108 – Harvey Rainfall In Texas Beyond Anything Experienced

Introduction…Hopes for an immediate relief from Hurricane Harvey’s wrath in Houston and along Gulf Coast seem unlikely. The National Weather Service calls the flooding “unprecedented” and warns things may become more dire if a record-breaking 50 inches of rain falls on parts of Texas in coming days.  How will Harvey disrupt gasoline and crude supplies and pricing?

Impact on Texas refining capacity…So far 10 refiners close as Harvey brings havoc to the hub of Texas energy.  Here is the short list of the top refineries closed:

By late afternoon Sunday, refineries run by Exxon, Citgo, Petobras, Flint Hills, Magellan, Buckeye, Shell, Phillips 66, and two plants run by Valero Energy were closed according to S&P Global Platts and the companies.  Total refining shut down estimated to be 2.2 million barrels per day or one-third of the nation’s capacity to refine oil into gasoline, diesel and other products.

Also 22% of the oil and 26% of the natural gas produced in the gulf was closed.

Bull and Bear response to Harvey...”It’s a gasoline story more than a crude oil story at the moment,” Ed Morse, Citi’s global head of commodities research, told CNBC’s “Squawk on the Street” on Friday.

Gulf Coast gasoline for spot delivery was at $1.73 per gallon, up 23 cents from Tuesday, according to Oil Price Information Service. Nymex gasoline was up about 5 cents over the same period.

“If we get rapid accumulation in 24 hours the refineries simply can’t pump the water fast enough out of the location,” he told CNBC’s “Squawk Box.” That could lead to damage to electric pumps in refineries, potentially requiring repairs that could take weeks or months, he added.

As the consensus estimate begins forming around a weeks-long outage, the picture for crude demand just becomes worse and worse, said John Kilduff, founding partner at energy hedge fund Again Capital due to deduction in demand by the refineries.

In summary…The full impact of Harvey on gasoline and crude inventories and pricing will be determined in the next three or four days until the storm damage to the refineries is fully determined.

More than 6.5 million people live in the region impacted by Harvey and several deaths have been reported.  The flooding impact is “unprecedented.”  Our thoughts and prayers go out to those suffering.

Time To Cut Ethanol?

 Issue 107 – Ethanol Justification Illusionary?

Introduction…”The closest thing to earthy eternal life is a government program,” President Ronald Reagan.  Maybe ethanol and biofuel mandates are included in his statement.  Those who benefit from a government subsidy, often giving millions to political campaigns, and vocally defend it.  While those who are apposed are usually disorganized and busy with everyday life.

It was a noble cause…The Renewable Fuel Standard (“RFS” created in 2005 and expanded in 2007, by the Energy Independence and Security Act was passed and expanded.  The laws require refiners to blend increasing amounts of ethanol into gasoline and expected the private sector to produce a growing amount of “cellulosic” biofuels and “advanced” biofuels.

The promise then for biofuels were scary exaggertions, which now have become illusions.

The promises unfulfilled…The justification for this government give away, were told is that it would reduce pollution.  However, cars are already 95% cleaner than they were in 1970, so there is no real befit here.

America was deleting its petroleum reserves and the RFS would reduce oil imports from unfriendly nations.  But, horizontal drilling and hydraulic fracturing (“fracking”) has given the U.S. at least a century of new reserves.  Net imports of petroleum averaged 4.9 MMb/d, the equivalent of 25% of total U.S. petroleum consumption in 2016, up slightly from 24% in 2015, which was the lowest level since 1970.

Renewable fuels would prevent dangerous manmade climate change, we wer also told. Contrary to the hysteria, computer models and  Al Gore’s new movie, humanity and the planet are not experiencing unusual or unprecedented climate changes.  Inconvenient to Mr. Gore’s story, not a single category 3-5 hit U.S. mainland since October 2–5.  That’s a record 11 years and 10 months.

To get a far more complete, facutal, and honest climate science, see the Climate Hustle documentary instead.

To produce ethanol, the United States has devoted 40 million acres or 40% of its corn crop.  In addition it uses billions of gallons of water to irate corn fields, plus giant amounts of fertilizer, pesticides, and fossil fuels to its production.

In conclusion… the two big promises of RFS were the reduction of fossil fuel usage and reduction of pollution have not materialized by burning corn in our cars.  Autos that burn 95% cleaner and the increased petroleum production in part due the frackers have solved those problems.  Time to push the lobbyists aside to do what is best for America and repeal the Renewal Fuel Standards.

Sources: “Biofuel justifications are illusionary,” What’s Up With That, 30 July 2017; “Oil: Crude And Petroleum Products Explained.” US Energy Information Administration, 8 May 2017

 

Oil Markets Rebalance On Strong Demand

 Issue 106 – Oil Demand Strong

Introduction…World oil demand will grow more than expected this year, helping to ease a global glut despite rising production from North America and weak OPEC compliance with output cuts, the International Energy Agency said on Friday.

The 2017 demand growth forecast to 1.5 million barrels per day (bpd) from previous month report of 1.4 million bpd.  The report said it expected demand to expand further next year.

OPEC is cutting output by 1.2 million bpd. while Russia and other non-OPEC producers are cutting production by 600,000 bpd until Mach 2018.

Compliance by OPEC cuts in July fell by 75%, the lowest level since cuts began in January according to the IEA.

The net result is the overall oil supply in July rose by 520,000 bpd which is 500,000 bpd abovet last year’s levels.

The strain on oil producers to support oil prices as the non-OPEC output is expected to expand by 0.7 million bpd in 2017 and by 1.4 million bpd in 2018.  There are strong gains in U.S. production as we are not participating in the output caps.

In conclusion…Strong oil demand growth is helping to clear the excess oil inventories in industrialized nations in both June and July.

Source: Dmitry Zhdannikov, “IEA Says strong oil demand growth helping market rebalance,” Reuters, 11 Aug 2017.