Category Archives: Conflict Energy

Saudi Arabia – A Kingdom In Retreat

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The Kingdom is struggling with weak GDP growth, higher fees and taxes, and an economy that is unable to pay the dues to its workers, leaving thousands of workers from South Asia with an uncertain future.

When a nation is unable to provide food to its migrant workers, it says a lot about their financial condition.

The oil price crash has forced the oil-rich Kingdom to introduce austerity measures, and delay payments to already cash-strapped contractors.

“It looks like austerity has hit hard and more than we had anticipated, halting construction projects and stopping hiring,” said Jason Tuvey, Middle East economist at Capital Economics, reports the Financial Times.

Who is the Hardest Hit?…Construction laborers from India and Pakistan are most affected by the Kingdom’s hardships. This group of workers are left without a job, and without basic amenities such as insurance coverage, food, shelter and medical facilities—a situation that has improved after respective consulates stepped in to offer their own citizens aid.

Saudi’s Empty Pockets…Setting aside the Kingdom’s positive outlook, until the Saudi economy reduces its reliance on oil, the situation is likely to get worse before it gets any better. With oil prices reeling close to $42 a barrel, the Saudi economy is likely to run out of cash, according to the International Monetary Fund.

“All oil exporters will need to adjust to the new low oil price,” the IMF warned, reports the Independent. “All” in this case, includes, probably most importantly, Saudi Arabia.

Meanwhile, Saudi Arabia continues its record oil production, reaching 10.67 million barrels per day, up about 120,000 bpd on the prior month—with no signs of slowing. Although this will allow Saudi Arabia to hold onto its marketshare, which they can hardly be blamed for trying to cling to, it will no doubt add to the supply glut, and certainly will not bode well for oil prices in the short term.

In conclusion…And if oil prices continue to languish near today’s lows, it will be years before Saudi Arabia can regain its erstwhile glory.

 Source: Oil Price.com, Is Saudi Arabia About To Cry Uncle In the Oil Price War, By Rakesh Upadhyay – Aug 11, 2016

U.S. Now Largest Global Oil Reserve

 The United States has surpassed Saudi Arabia and Russia as the global leader in oil reserves.  This from a Norwegian consultancy firm report.

“We have done this benchmarking every year, and this is the first year we’ve seen that the US is above Saudi Arabia and Russia,” Per Magnus Nysveen, head of analysis at Rystad Energy, said. He credited the rise to a sharp increase in the number of discoveries in the Permian basin in Texas over the past two years.

The report found that many, especially members of the Organization of Petroleum Exporting Countries, exaggerated the size of their reserves in self-reported surveys. Rystad Energy came to the conclusion by only recording each country’s economically viable reserves.

American oil reserves have grown dramatically in the past two years due to improvements in technology for extracting shale called fracking. Increased productivity has cut the cost of extracting oil in half in the past two years, when compared to the price per barrel.

Nysveen is forecasting the price of the barrel to bottom out soon as supply is beginning to rebalance. “At the end of the year, we will see increases again in US oil production,” he said.

In summary…The future implications of the larger reserves as positive for the US economy. As the world’s largest consumer of oil, the reserves will help cut America’s trade deficit and strengthen the dollar. Geopolitically speaking, the large reserves will prevent oil from being used as a political tool against the United States as it can remain self-sufficient.

The last eight American Presidents have promised independence from foreign oil.  In spite of much opposition, the U.S. oil and gas industry has been using innovation to change the balance of geopolitical power in our favor.

Trump Pledges U.S. Energy Independence

Trump Pledges Energy Independence Bismarck- Donald Trump pledges complete U.S. energy independence.  Further he wants to put the focus on putting workers before regulations.  This message was delivered to a crowd who are eager to make the Bakken great again.

Trump told 7,000 people at Williston Basis Petroleum Conference that his policies on energy will put drilling rigs and people back to work.

“Under my presidency, we’ll accomplish a complete American energy independence. Complete,” said Trump, prompting cheers from the crowd that lined up for blocks to get into the Bismarck Event Center.

“North Dakota, you brought us over the line folks,” he said. “I will always remember that.”

“Costly regulation makes it harder and harder to turn a profit,” Trump said. “If crooked Hillary Clinton is in charge, things will get much worse, believe me.”

Trump said he has a 100-day action plan, which includes destroying all of Obama’s executive actions. He specifically mentioned repealing the Waters of the U.S. rule and canceling the Paris climate agreement.

Trump also said he would approve the Keystone XL Pipeline, but said the U.S. should get a significant chunk of the profits.

In conclusion… Whether you like Donald Trump or hate him, at least he is talking about what he will do to help America become energy independent.  It is crazy to send our petro dollars to those who promise to destroy us.

Shale Oil Shifting Balance Of Power

Crude Oil OutagesBalancing Oil Supply…The Organization of Petroleum Exporting Countries’ abiility to balance global supply (and prices) now limited by shale oil production, a former Qatari energy minister said.

OPEC was able to balance the market in the past because because shale oil deposits and other non-OPEC nations output was insignificant, Abdullah bin Hamad told reports at the industry even in Doha.

“OPEC can’t act as swing producer because it will lose market share,” said Al-Attihay former Qatar energy minister.

Crude prices tumbled more than 75% from the 2014 peak due to the global glut in part due to U.S. shale oil production.

Market Forces…“Frankly, I don’t expect anything from the next OPEC meeting because OPEC decided not to play against the market,” IEA former executive.  “Market forces are too strong now, and you can’t play against those forces whey they are strong.”

“Just cut production by 1.5 million barrels a day and the next day the prices goes up and the other oil producers will take the whole share–there is no benefit for OPEC in that,” Al-Attiyah.

Crude Oil Outages Soaring…Escalations in sabotage, tech problems, and natural disasters are impacting world crude oil supply as documented by the EIA in the above diagram for the last 12 months.  This increase in outages most likely are a factor in the recent oil price increases to $50 a barrel.

In Summary…The closer a market looks and acts like an oligopoly (a state of limited competition,) the greater the pricing power those producers have by limiting production.  The good news is the pricing power has shifted away from OPEC to where now the market as a whole is determining pricing.  From a U.S. national security perspective, we are more secure now due to this shifting of market pricing power.

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Source: “Shale Oil Seen Stifling OPEC’s Classic Market-Balancing Act,” Wael Mahdi, Bloomberg, May 256 2016

6 Saudi Officials Supported Terrror Attack: 9/11 Commission Member

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One more reason to support domestic oil and gas production…Six Saudi officials are believed to have actively supported al-Qaida members in the run-up to the 9/11 attacks on America, former 9/11 Commission member and investigator John Lehman has disclosed.

Lehman, who was a member of the 9/11 Commission between 2003 and 2004, said there is documented evidence against employees of the Saudi Ministry of Islamic Affairs, and specifically against individuals who worked for the Saudi Embassy in the U.S., Saudi charities and the Saudi government-funded King Fahd Mosque in California.

“There was an awful lot of participation by Saudi individuals in supporting the hijackers, and some of those people worked in the Saudi government,” said Lehman, stressing that these individuals had strong ties with the Saudi government in Riyadh.

The issue is resurfacing now as pressure builds to release the 38 pages of the 9/11 Commission investigation that had been redacted. Lehman’s disclosure of this information to the media is expected to increase this pressure.

Lehman’s disclosures also come at a time when the long-standing relationship between the U.S. and Saudi Arabia is being questioned and re-evaluated.

The Commission member’s disclosures contradict previous statements from other Commission members.

The Commission’s chair and vice chairs, former Republican New Jersey Gov. Tom Kean and former Democratic Rep. Lee Hamilton of Indiana, released a statement in April saying that “only one employee of the Saudi government was implicated in the plot investigation.”

Still, Lehman—former Navy secretary under Ronald Reagan–stressed that “we have found no evidence that the Saudi government as an institution or senior Saudi officials individually funded the organization.”

In summary...Lehman also implored the pubic to remember that 15 of the 19 9/11 attackers were from Saudi Arabia. He is now calling for a new, thorough investigation into the extent of Saudi involvement. But more immediately, Lehman is calling for the remaining 28 pages of the redacted 9/11 Commission report to be declassified—a move that could spur along the already partial break in U.S.-Saudi relations.

40-Year Ban To End: House Approves

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The 40-year ban on exporting American Oil to foreign nations was a response to the October 1973 OPEC oil embargo for the U.S. involvement in the Yom Kippur War.

Our reasons for the ban are long gone now that the U.S. has surplus oil production.  We have lost 35,000 (6.5%) good paying petroleum related jobs from October to April according to the US Bureau of Labor.  Finding more markets for our petroleum production seems like a reasonable idea.

On Friday, October 9, 2015 the House of Representatives, lead by our own Rep. Joe Barton, voted 261-159 with 26 Democrats joining  to lift the 40-year old ban on U.S. exporting oil.

One of the criticism of lifting the ban from the Natural Resources Council was Lifting the Oil Export Ban is a giveaway to the oil industry that would undermine the progress our country is making to use more clean energy and fight climate change.

Really?

The U.S. and Texas in particular has some of the most stringent environmental controls in the world.

I had an opportunity to speak with Ryan Sitton, Texas Railroad Commission a few months ago.  He has a degree in Mechanical Engineer and ran a 500 person oil and gas engineering firm.  Mr. Sitton worked all over the world.  Occording to Mr. Sitton’s experience, many OPEC producers have no concern for the environment.  Environmental destruciton is not a concern.

If we are really concerned about the environment, wouldn’t it be better to produce petroleum in Texas where we have the world’s seond largest EPA?

President Barack Obama is threatening to veto the legislation.  Maybe, but I am proud of our Rep. Joe Barton for bringing a little sanity to Washington, DC.

Posted by Bill Moist

Bill Moist is President and Founder of Professional Equities, Inc, a funder of real estate, oil & gas, and business projects.  He also trains people how to take advantage of funding projects with Crowdfunding.  Bill is a professional lecturer at Graduate Business Schools and professional organizations.  In addtion he is a Texas Real Estate Broker, Certified Public Accountant, Master of Science real estate tax expert, and Investor/Developer with 70+ successful projects.

 Sources: House Votes to end 40-year ban on sending American oil overseas, Star Telegram, by Sean Cockerham, October 9, 2015: US crude oil prices hit lowest since 2009, eliminating thouse of jobs, The Guardian, by Debbie Carlson, August 21, 2015; Commissioner Ryan Sitton, Railroad Commission of Texasrrc.state.TX.US

The Russians Are Coming, The Russians Are Coming

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Introduction…Well, not all of the Russians are comping to Texas. But, one Russian billionaire, Roman Abramovich, who just invested $15 million in new fracking technology is here.  So, why would Abramovich invest in technology after Vladimir Putin, President of Russia, denounced it publicly?

Previous Anti-Frackers?...When the anti-fracking campaign started to heat up late last year in Denton, Texas—the heart of the shale revolution—conspiracy theories were spread within the pro-fracking community that the Russians were behind the whole thing. <!–There’s more!–>The logic was that the American shale revolution threatened Russia’s market share.  In a recent press conference Putin became visibly angry when the question of Fracking was asked as to its impact on Russia.

Clean Plasma Fracking Technology… Roman Abramovich has invested $15 million in Houston-based Propell Technologies Group, Inc. (OTC:PROP) and its new fracking technology from wholly owned subsidiary Novas Energy. Significantly, this new enhanced oil recovery (EOR) technology enables ‘clean’ hydraulic micro/nano fracturing of oil reservoirs—that is, without water, without polluting chemicals and without earthquakes.

According to Propell, the Plasma Pulse patented downhole tool creates a controlled plasma arc within a vertical well, generating a tremendous amount of heat for a fraction of a second. The subsequent high-speed hydraulic impulse wave emitted is strong enough to remove any clogged sedimentation from the perforation zone without damaging steel. The series of impulse waves/vibrations also penetrate deep into the reservoir causing nano fractures in the matrix which increase reservoir permeability for up to a year per treatment.

It may or may not be a coincidence that Propell’s Plasma Pulse Technology is licensed from Novas Energy, a venture capital-backed Russian energy technology company.

There is also another Russian element to this: PPT has been very successfully employed in Russian injector wells. This is perhaps the most significant aspect to consider. Russia does not have draconian fracking regulations pressuring companies to use environmentally friendly technology. Instead, they are using PPT to improve enhanced oil recovery (EOR) and reduce production costs.

Where Is Abramovich Going With This Investment?… This will not merely be a $15 million investment,” said one source close to the deal. “You have to read between the lines here. Abramovich doesn’t do anything small. He’ll get the infrastructure in place and then look to acquire a significant position in the US oil sector at today’s fire sale prices. We’ll probably be looking at hundreds of millions in investment at the end of the day.”

I n Conclusion...What an irony that a Russian billionaire is investing in clean Fracking technology that started in Texas?  We have already seen Chinese money move into Texas oil patch.  This very well could mean we will see more Russian money coming to Texas.

P.S.  While the Putin was apposed to U.S. Fracking, it could be another Russian who helps remove the environmental concerns over Fracking.
Sources: “Roman Abramovich Invests $15M In New US Fracking Technology,” OilPrice.com by By James Stafford, February 24, 2015