Energy Week, Episode 7: Covering the Oil and Gas Landscape With Allen Gilmer
David and Ryan were happy to welcome DrillingInfo Chairman Allen Gilmer to the show. The show begins with a discussion about DrillingInfo’s recent acquisitions and the services it provides to a wide variety of clients. The discussion then moved to a recently-released study from MIT which theorizes that the U.S. Energy Information Agency is over-estimating the potential for oil and gas recovery in U.S. shale plays, a thesis with which Allen strongly disagrees. Next, Ryan and David asked Allen about his views about the Eagle Ford Shale and its potential, before moving to a similar discussion about the Permian Basin. The show closes with Allen giving listeners his views on the outlook for natural gas this winter and in the coming years.
Links to Articles Referenced in this Episode:
MIT Study Suggests U.S. Vastly Overstates Oil Output Forecasts
After 2.5 Billion Barrels, Eagle Ford Has More Oil Coming
Gilmer: We Should View The Permian Basin As A Permanent Resource
Listen to the Podcast Here
Bloomberg carried a report late last week titled “Goldman Says Oil Market’s Too Jittery When There’s No Need to Be.” The report summarized a memo from Goldman Sachs analysts positing that the just-completed extension of the deal between OPEC and Russia to limit oil exports “indicates a reduced risk of both unexpected increases in supply as well as excess draws in stockpiles.”
The report didn’t address the reality that one of the main reasons why the crude markets remain jittery is very likely due to all the conflicting reporting in the energy-related news media leading up to that extension. While there was never any real, firm reason to doubt the extension would get done, pretty much every day in November was filled with speculative stories with click-bait headlines expressing doubts the parties could reach agreement.
While this is just the nature of the U.S. news media in general these days, the reality is that there has been precious little volatility in crude prices throughout the second half of 2017. In fact, on June 19, I wrote the following:
The mid-year review processes [for corporate upstream companies] I mention there are now coming to conclusions, and as a result of those reviews, we can expect the domestic rig count to level off and even perhaps decline slightly over the second half of 2017.
That’s exactly what has happened as these large independent producers scaled back their drilling budgets for the second half of this year, and it’s the main reason the frequent ups and downs in crude prices that had characterized the previous two-plus years have been replaced by what has been a steady rise in prices over the last five months. The key understanding to grasp in this equation is that, on the global stage.
Read The Full Piece
In this episode, David and Ryan why the oil market seems overly jittery now that it appears the market is back in balance after three years of chronic over-supply. They also discuss how super tankers co-loaded with crude from both the U.S. and Mexico have helped open up Asian markets to U.S. producers, why solar really isn’t cheaper than coal despite all the hype in the media, and celebrate the fact that Shell has now restored its full cash dividend thanks to its strengthening bottom line.
Listen to the Podcast Here