Energy Week

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Check out Ellen’s interview on Bloomberg Markets: Middle East about “Saudi, Inc.” and her thoughts on the cool reception Aramco received from New York investors.
https://www.bloomberg.com/news/videos/2018-03-18/bloomberg-markets-middle-east-full-show-3-18-18-video

BP world energy outlook 2018
https://www.bloomberg.com/news/videos/2018-03-18/bloomberg-markets-middle-east-full-show-3-18-18-video

China and India main sources of growth – but don’t expect India to mirror China in development and energy demand necessarily. Gasoline and diesel demand in India was depressed last year due to demonetization policy so current demand numbers seem like a very large increase.

Outlook shows BP considers coal to be a steady presence in energy mix even through 2040. What is BP’s interest in coal? Oil demand steady between 2030 and 2040 but what about demand growth in plastics?

Natural Gas Under Assault in Some States After Brief Reign at the Top
https://www.wsj.com/articles/after-a-brief-reign-at-the-top-natural-gas-is-under-assault-1521378008
California ending construction of new natural gas plants – also Arizona, Massachusetts and Michigan moving to renewables over natural gas.

Will More Hawkish American Foreign Policy Affect Oil Markets?
https://www.investing.com/analysis/will-more-hawkish-us-foreign-policy-effect-oil-markets-200297856

New Secretary of State more hawkish towards Iran nuclear deal – will push to reinstate sanctions in May?

New European sanctions would affect nuclear deal: Iran official
https://www.reuters.com/article/us-iran-nuclear-europe/new-european-sanctions-would-affect-nuclear-deal-iran-official-idUSKCN1GT07P

Europe already responding with movement towards new sanctions on Iran for ballistic missiles.

Iranian oil development is still a problem. Movement on gas development (Total deal, Total now says they will apply for an exemption if new sanctions).

Oilfield Helping Hands - http://www.oilfieldhelpinghands.org/events/2018-ohh-oklahoma-spring-sporting-clays-tournament-special-fundraising-event

Forbes article: Counting Down 7 Big Meetings Likely On Saudi Crown Prince's U.S. Agenda

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Episode 18

Check out the free trial offers from our sponsor, DrillingInfo! www.globalenergymedia.com/di

Marathon sells stake in Libya oil to Total
https://www.google.com/amp/mobile.reuters.com/article/amp/idUSKCN1GE0Y6

Total has been making more “risky” deals lately – gas deal in Iran, oil deal in Libya – these are areas with high risks. Libyan dockworkers just went on strike,

Marathon strategy in Permian M&A – consolidation of assets, swaps to make more effective use of resources. Sale to Total fits with this strategy.

Total has longer term strategy – can afford to wait it out until Libya more stable. Marathon not interested in long game in Libya.

Australia – Tesla powerwall

Nuclear power as a base load option – perhaps will become more attractive

Mexico – leading candidate in presidential elections – Obrador – opposes privatization of Mexican oil industry that current President Pena Nieto began.
https://www.wsj.com/articles/top-candidate-andres-manuel-lopez-obrador-plots-big-shake-up-for-mexicos-oil-industry-1520852400

Elections will be in July. Uncertainty poses threat to ongoing privatization because companies are hesitant to jump into Mexico energy scene if their investments could be nationalized or nullified in the next election. Won’t want to put in millions of dollars and 5+ years of work to develop new oil resources in Mexico.

Mexican refining situation is deteriorating but Obrador wants to focus on improving it. Problem is that refining margins are small.

Forbes - GE Looks To Battery Storage For Power Boost - https://www.forbes.com/sites/ellenrwald/2018/03/11/ge-looks-to-battery-storage-for-power-boost/#abcc65e3b5e3

Preorder “Saudi, Inc.” here! - https://www.amazon.com/Saudi-Inc-Arabian-Kingdoms-Pursuit/dp/168177660X

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For show notes: https://globalenergymedia.com/energy-week-episode-17

This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit energyweek.substack.com

Can U.S. shale be “the swing producer?”

Controversial topic right now – see https://seekingalpha.com/article/4148589-u-s-shale-the-swing-producer and Robert McNally’s book “Crude Volatility”

Can we ever have a wing producer in an over supplied market?

History of Saudi Arabia’s experience as swing producer suggests that we can’t.

To what extent does the role of swing producer depend on demand forecasts?

Does OPEC even have much spare capacity anymore?
Nigeria, Libya, Venezuela, Saudi Arabia do, but others might not.

Operating in a different market now – is “swing producer” even a useful term to consider?
Market in which traders can get daily rig counts, dynamic sources of news, decline rates for shale oil wells

Supertanker news: Corpus Christi trying to secure funding to widen and deepen its port to make room for 2 supertankers simultaneously. Implications for U.S. oil exports.

LOOP – Saudi tanker takes US produced oil and transports it to China – shows how US oil finally being integrated into the global market

Aramco IPO – is it coming to the NYSE?

High oil prices indicative of good economy, but lower oil prices can also help jumpstart economic growth.

Lower gasoline prices actually encourage consumers to spend more on gasoline.

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Podcast episode 15

Geopolitics
- Turkey and Iraq:
Turkey is selling oil from the Kurds through its Ceyhan port
Iraq seeking talks with Turkish government to try and shut that down
Iraq wants to sell Kirkuk’s oil to Iran
- ISIS:
Destroyed Iraqi oil infrastructure
Ran its own fairly sophisticated oil industry
Targeted airstrikes took out most of ISIS “dark” oil industry
- Saudi-Russia oil deal
Traditionally Saudi Arabia and Russia have not been allies
Saudi Arabia and Russia are on opposing sides in Syria, definitely in Iran
But they are close in energy deals – signed big LNG deal and Russian interests
hoping to invest in Aramco IPO
Russia and Saudi Arabia are supplying most of China’s crude oil
- Egypt and Israel
History of war
“Cold” Peace – not much economic cooperation
Egypt just signed a big natural gas deal with Israeli companies to provide Egypt
with natural gas
Business is leading diplomacy…

Curacao Refinery
- Will Chinese firm come in and take over from PDVSA?
- Would someone else come in? Curacao wants a company that will make improvements to refinery – potential opportunity for foreign companies?
- Would that hurt Maduro?

This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit energyweek.substack.com

RYAN DOESN’T LIKE RAJON RONDO! WHAT IS THIS?! but he is up for a PEXY Award! http://www.pipelineenergyexpo.com/conference/awards.html (‘One to Watch’ in the Pipeline Industry Award)

Rigcount
- major reaction to narrative of rising rigcounts
- everyone knew rigcount would go up, why such a major reaction?
- Traders love volatility
- Reporters sometime have agendas – want to move markets
- Organizations have strategiv interest to move markets, sell products and that influences coverage
- Drillinginfo rigcount 5 days a week vs. Baker Hughes which comes out 5 days a week.
- OPEC reaction: Are they keeping track of rigcount in United States? Does this impact OPEC strategy?

India
- Indian companies buy $600 million stake in Abu Dhabi offshore oil concession, promotes India’s energy security and indicating that India isn’t really moving to all EV sales.
articles here: https://www.forbes.com/sites/ellenrwald/2018/02/12/india-says-yes-to-oil-once-again/#1e90bb6e7cdd
and https://www.bloomberg.com/news/articles/2018-02-10/india-is-said-to-win-first-stake-in-abu-dhabi-offshore-oil-block

Kirkuk’s Oil Chessboard
Essay in Cairo Review - https://www.thecairoreview.com/essays/kirkuks-oil-chessboard/
Check out TankerTrackers - http://tankertrackers.com/#/ and on twitter @TankerTrackers

This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit energyweek.substack.com

Pre-order “Saudi, Inc.”
Saudi, Inc.: The Arabian Kingdom's Pursuit of Profit and Power: Ellen R. Wald: http://amzn.to/2DXZezE

Saudi, Inc.: The Arabian Kingdom's Pursuit of Profit and Power by Ellen R. Wald, Hardcover | Barnes & Noble® http://bit.ly/2GtbFC1

Why Apple, Google, Microsoft And Amazon Are More Valuable Than Exxon And Chevron - http://bit.ly/2GUKkIX

1) Pipelines
New England suffering from lack of natural gas pipelines, causing price spikes and shortages. Politicization has hindered building new pipelines.

2) New York Energy Lawsuits
City of New York suing big oil – irony is that New York is built on the back of oil and gas and requires oil and gas to run. No intention to halt use of oil and gas just effort to sue companies to collect damages while continuing to use their products. Looks good for the mayor but can have far reaching ramifications.

3) Exxon, Chevron, Shell earnings reports
Shell’s stock price was up because Shell sold off holdings and bought BG Group which helped their balance sheet. Exxon and Chevron had profitable quarters but did not meet analyst expectations so share price fell. Also analysts seemed upset that Exxon CEO did not speak or answer questions on earnings call.

4) Peak Demand
Potential when more cities are powered by combination of nuclear and natural gas. As developing countries reach consumer economies demand for oil for transportation will level off at a consistent level.

5) Iranian oil update
Crude oil swaps with Russia and Iraq progressing reveal problems with Iranian oil infrastructure.

This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit energyweek.substack.com

https://globalenergymedia.com/energy-week-episode-12/

Pre-order “Saudi, Inc.”
Saudi, Inc.: The Arabian Kingdom's Pursuit of Profit and Power: Ellen R. Wald: http://amzn.to/2DXZezE

Saudi, Inc.: The Arabian Kingdom's Pursuit of Profit and Power by Ellen R. Wald, Hardcover | Barnes & Noble® http://bit.ly/2GtbFC1

Canadian shale oil revolution?

Canadian production may have greater impact on U.S. shale oil if lighter grades of oil are mixed with heavier Canadian grades in Canada as opposed to in U.S.

Transportation of Canadian oil still an issue – exports to Asia but still want Keystone XL pipeline to move oil to Gulf.

Solar Tariff –
Will Trump admin tariff on solar panels from China hurt solar energy industry in United States?

Costs will increase for rooftop solar panels but some companies say will open solar panel factories in U.S. BUT – does this really help the energy industry as a whole?

Could this be a bellwether for further tariffs on Chinese products? Reaction against Chinese currency manipulation?

Grid flexibility is key – ability to generate solar power and sell it to the grid while taking power from the grid at other times. Are we too entrenched in the large scale grid system to really implement a dynamic grid that account for back and forth? Perhaps in Africa?

Dollar weakness impacts price of oil – sometimes the market can be wrong

Harold Hamm – expressed great dismay at EIA reports, especially regarding storage numbers.

EIA Webinar on data methods – weekly reports are largely based on modeling not on real time data

3 components:
1)Alaska: real time date from Alaskan production delivered daily (only 5% of US production)
2)Gulf of Mexico – projections based on EIA STEO model
3)Lower 48 states – projections based on EIA STEO model,

STEO model includes many sources, including DrillingInfo, corporate financial filings, etc.

View the slides from the presentation at the link below
http://bit.ly/2DMMp82

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OPEC & Shale

-Khalid al Falih commented at recent OPEC meeting that global demand will outpace shale production so there’s plenty of room in the market for shale oil
-Combination of falling production from some formerly big players like Venezuela and growing demand in India and China and lack of investment in new large scale projects
-Will higher oil prices keep the money flowing to shale oil companies?

Prospects for profit for shale oil companies

-Will companies look to diversify into downstream? Yes, but government regulation is a factor in refining
-Could US energy companies look to establish downstream operations in Mexico as they liberalize their energy industry?
-Definite opportunity though NAFTA is an issue
-To what extent will service costs positively or negatively impact shale oil companies’ bottom lines? Service costs are up but companies are being pickier in how many people they hire
-Can they scale back up without as much as waste?
-Impact of hedging on shale oil companies. Could some miss the boat on the highest prices?
-Oversupply of light oil could push prices down for shale companies in particular

Russia-Saudi oil cooperation
-OPEC—non-OPEC production cut progress good though Iraq and Kazakhstan called out for overproduction
-Will the production cuts continue through 2018? Al Falih indicates they will but expectation is that exit will be discussed in June
-Al-Falih and Novak’s relationship as a sign of how well the production deal is working.
-Russian economy – how dependent is it on European natural gas market and/or Chinese market? Could European diversification to American or other sources of natural gas spell trouble for the Russian economy?


Article: Are Cryptocurrencies More Currency Or Commodity?
https://www.forbes.com/sites/ellenrwald/2018/01/18/after-the-bitcoin-crash-are-cryptocurrencies-more-currency-or-commodity/#7d43e6884e9c

This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit energyweek.substack.com

This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit energyweek.substack.com