In the oil and gas industry, sometimes it is hard to figure out what is real and what isn’t – what is really happening, and what really isn’t happening. I spent 38 years in the industry, and still have a hard time figuring it all out. Here are some good recent examples of stories whose headlines made bold claims that, upon reading the entire stories, turned out to be quite nuanced:
- Are investors really abandoning the shale industry?
- Did the World Bank really cut off funding of oil and gas projects?
- Has the business case for building the Keystone XL pipeline really passed?
All are good questions, all of which have been the subject of multiple media reports in the past weeks, and all have more complex answers than the simplistic media headlines that are all most people actually read. So, let’s clarify some things.
Are Investors Abandoning The U.S. Shale Industry?
We’ve seen many reports alleging that investor funds are drying up for the shale industry during the second half of this year, yet shale producers somehow keep managing to get their business done. Indeed, in recent weeks we’ve seen a series of announcements of major new investments in domestic shale by private equity and institutional investors, and the Fall debt redetermination season passed without noticeable major hiccups.
So, what gives? A look at recent presentations by the CEOs at corporate shale producers, like this one from Encana’s Doug Suttles, shows a focus on responding to demands by investors that these companies dedicate more of their resources towards actions that will increase returns on investment capital, a pressure I wrote about in early November. One result of this investor pressure has been the announcement of a wave of stock buy-back programs since August. Investors are also pressuring companies to change executive compensation programs that have been, in their view, too focused on increasing production at the cost of profits.
Read The Full Piece Here
Episode 5 – Debating energy-related issues based on facts and reality rather than hyperbole
Show Notes: In this episode David and Ryan discussed the pending deal between Russia and OPEC to extend their export limitation agreement through the end of 2018, and how crucial that deal is for the direction of crude oil prices on the global market. Also discussed: natural gas production in the Permian Basin; what’s next for the Keystone XL Pipeline; the ongoing revival of Alaska’s oil and gas industry; and why renewables won’t be crowding fossil fuels out of the energy markets anytime soon.
Listen to the Podcast here
Had fun talking about how anti-fossil fuels conflict groups have made the pipeline industry their newest boogeyman target for demonization earlier today with Ryan Mills at @AFPM:
Listen to the Podcast Here
Read the Full Piece Here
Some thoughts on the domestic oil and gas situation as we move into April…
The rigs just keep on coming…: The industry activated more than 70 additional drilling rigs during the month of March, bringing the total new rigs activated during the first quarter of 2017 to more than 200. My “bold” prediction as the year began was that it would take four months, not three, for the U.S. industry to bring that number of new rigs onto the market. So, ok, I was too timid.
Interestingly, more than a dozen of these newly-active rigs have moved into the Haynesville Shale region, which is experiencing a somewhat surprising resurgence of activity, even in the seemingly interminable weak price market for natural gas. The play’s abundance of pipeline takeaway capacity and proximity to major export facilities are two of the main reasons for this uptick in activity, as detailed by Forbes contributor Jude Clemente in his piece of March 25.
March’s increase in rigs drilling for oil was also less focused on the Permian Basin than in prior recent months, with other basins like the Eagle Ford, the SCOOP/STACK and the DJ Basin also seeing significant upticks in activity. How much longer this rising rig count can last is anyone’s guess, but it was a major reason why…