Tag Archives: #ConflictEnergy

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

9.11Memorial

9/11 Memorial

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.

Oil Markets Remain Oversupplied

Let’s look at  last week’s key figures for the oil & gas industry.  U.S. oil production is slightly up, whereas oil futures have been trading lower. Gasoline prices continue their trend downwards.

Friday, December 6, 2015 WTI closed at $39.97, down $1.11 for the week.

U.S. Oil Production

Friday OPEC’s meeting in Vienna did not give oil markets any relief. There was little expectation of an agreement on production cuts, despite the majority of OPEC members pleading with Saudi Arabia to reverse course and cut back the cartel’s output target level, which stood at 30 million barrels per day (mb/d) heading into the meeting.

In summary, here we are a year after Saudi Arabia decided to keep market share rather than cutting production to support pricing.  That decision combined with the U.S. shale industry keeping production levels up has precipitated in a nearly 50% drop in oil prices from a year ago.

Source: OPEC Won’t Cut, Markets Remain Oversupplied, OilPrice.com by Evan Kelly, December 4, 2015

40-Year Ban To End: House Approves

Oil Tanker Oil Tanker Working

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

Oil Pricing Heads To Bear Market?

Screenshot 2015-07-26 13.19.42Crude oil slipped back into a bear market Thursday, disappointing U.S. shale drillers that pinned their hopes on higher prices.

West Texas Intermediate, the benchmark U.S. contract, tumbled 22 per cent since June 10 to US$48.14 a barrel on Friday, erasing more than US$100 billion in market value from the companies in the Bloomberg Intelligence North America Independent Explorers and Producers Index.

Crude oil pricing are down roughly 55% from their peak of nearly $107 in June of last year and have lost about 27% from the $66.15 low in November, which at the time was the lowest settlement in 5 years

Crude’s recovery fizzled amid a worldwide glut that shows little sign of abating. U.S. production remains near the highest level in four decades, output from Saudi Arabia and Iraq surged to record levels, and Iran is focused on resuming exports after reaching a nuclear agreement with world powers.

“Just when you thought it was safe to go back into the oil patch.”   Phil Flynn, senior market analyst for Price Futures Group Inc., said by phone from Chicago.   “The bear market is definitely putting another round of fear into the shale patch and the bankers of the shale patch.”

Source: “Oil reverts back to bear market, erasing more than US$100 billion for shale drillers,” Financial Post, Asjylyn Loder and Dan Murtaugh, Bloomberg News | July 24, 2015; “It’s bad-news bear market for crude oil,”  Market Watch by Myra P. Saefong, July 24, 2015; “Sudden Drop in Crude-Oil Prices Roils U.S. Energy Firms, Major job cuts, asset sales are expected: layoffs texted to engineers and scientists,” Wall Street Journal by Lynn Cook, July 26. 2015

Will Future Wars Be Fought Over Water Rather Than Oil?

HamaltonPoolTX2 Hamilton Falls & Pool Preserve, Texas

Introduction...Let’s admit it.  The two Iraq wars were to assure the free flow of oil to the United States and its allies. Oil is the lifeblood of any modern economy.  Check for yourself.  Can you find anything in your house that isn’t made of petroleum, grown with petroleum, manufactured with petroleum, or shipped by petroleum products? I couldn’t find one single thing.

United States History of protecting Middle East oil supplies… The U.S. military has used force or the threat of force to protect energy interests primarily in the Middle East for more than five decades.  The cost the American taxpayer in the Persian Gulf just between 1976 and 2007 was $7.3 trillion.  This policy was formulated during World War II when the U.S. battled with Japan over the shipping choke points in the Pacific.

But wait, there’s more!

U.S. Battles Opec Over Expansion Of Oil Output

H&P Drilling Rig, Midland, Texas

Introduction…American drillers increased oil production at the highest rate in a Century in 2014 despite falling prices.

Opec’s efforts fail… to slow down the pace of growth of America’s oil industry last year, according to new data which revealed that drillers in the US increased production at the highest rate in more than 100 years.

The US government’s Energy Information Administration (EIA) has said that output increased by 1.2 million barrels per day (bpd) last year to reach 8.7 million bpd. This is the largest single increase since records began in the early 1900s.  America’s oil production has surged against a backdrop of volatile markets since the Organization of Petroleum Exporting Countries (Opec) effectively launched a price war in November by agreeing to leave its output quotas unchanged.

But wait, there’s more!

The Russians Are Coming, The Russians Are Coming

Screen Shot 2015-03-19 at 3.50.00 PM

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