Helping America Navigate a New Energy Reality

quotes

Bernstein Research on the future of US shale

By on 17 Oct 2016 in quotes with 0 Comments

“We believe that the Barnett shale offers compelling evidence that technology improvements ultimately cannot overcome geology. We believe the implication is that shale is a scarcer resource than generally considered and thus are more constructive longer-term as the world must seek a more marginal barrel to match future demand growth. That is bullish for longer-term oil price.”

“Increasing lateral length hurts all horizontal well performance as frictional losses increase and in the Barnett, optimal well length was determined by balancing reduction of fixed costs with reduced incremental production. Even correcting for lateral length, Barnett wells got worse with time. The E&P narrative is that a revolution in technology of improved completions (more sand, water, clusters, geo-steering, landing, etc.) is pushing down the cost curve. Yet we fail to see it in the most complete data record we have.”

Bernstein Research

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The Oil Industry in Alaska

By on 10 Oct 2016 in quotes with 0 Comments

“This discovery [Smith Bay; see Briefs below] could be really exciting for the state of Alaska. It has the size and scale to play a meaningful role in sustaining the Alaskan oil business over the next three or four decades.”

Caelus CEO Jim Musselman.

“With an oil pipeline that is three-quarters empty, this is good news for the state of Alaska.”

Alaska Governor Bill Walker

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Statement by the Center for Climate and Security on the impact of climate change on US national security

By on 19 Sep 2016 in quotes with 0 Comments

““There are few easy answers, but one thing is clear: the current trajectory of climatic change presents a strategically-significant risk to U.S. national security, and inaction is not a viable option.”

Statement by the Center for Climate and Security, a Washington-based think tank, signed by more than a dozen former senior military and national security officials

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Analyst from Barclays talks about the 2017 industry outlook

By on 12 Sep 2016 in quotes with 0 Comments

“2017 is the sweet spot for integrated companies. It took two to three years to adjust to the drop in oil prices, and a lot of the efficiencies introduced in recent years will roll into 2017 when projects kick in and free cash flow will improve.”

Lydia Rainforth, analyst with Barclays

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The state of new oil & gas exploration

By on 5 Sep 2016 in quotes with 0 Comments

New discoveries from conventional drilling are “at rock bottom. There will definitely be a strong impact on oil and gas supply, and especially oil.”

Nils-Henrik Bjurstroem, manager with Oslo-based consultants Rystad Energy

“…seriously, there is no exploration going on today.”

Per Wullf, CEO of offshore drilling company Seadrill Ltd.

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Vienna Technology University’s study on Mayan civilization and water resource constraints

By on 29 Aug 2016 in quotes with 0 Comments

“When it comes to scarce resources, the simplest solutions on the surface are not always the best ones. You have to change people’s behavior, reassess society’s dependency on this resource and reduce consumption—otherwise society may, in fact, be more vulnerable to catastrophes than safer, despite clever solutions.”

Linda Kuil, Vienna Technology University, in a study on Mayan civilization and water resource constraint

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Managing Director at ARC Financial Corp on the definition of “rig productivity”

By on 22 Aug 2016 in quotes with 0 Comments

“The notion of ‘rig productivity’ has to be taken with caution. We can’t assume that the best-posted performance in the field is the norm for all wells…There is a statistical distortion at play. Starting in late 2014, the severe downturn in oil prices forced the industry to park three-quarters of their rigs and ‘high-grade’ their inventory of prospects. Producers focused on only their best rocks, drilling with only the most efficient rigs. All the low productivity stuff was culled out of the statistical sampling, skewing the average productivity numbers much higher.”

Peter Tertzakian, Chief Energy Economist, and Managing Director at ARC Financial Corp

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Big Oil’s reaction to global oil prices

By on 15 Aug 2016 in quotes with 0 Comments

“If we are to believe Lux Research, Big Oil should use the cash it has, while it still has it, to enter the energy storage market. It has become abundantly clear that lying low and waiting for oil prices to reach former heights is useless since nobody can say with certainty whether or even if this will happen at all.
“If we are to believe Big Oil, all is well, and crude will soon jump back to $100 a barrel to the joy of shareholders all around. If it doesn’t, Big Oil will just continue cutting costs and maintaining dividends. The problem with this approach is that it’s unsustainable over the long term. This is just basic survival, while in the meantime, other leaner, more far-seeing companies [like France’s Total] bet on a future in renewable energy.”

Irina Slav, Oilprice.com

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The economic viability of U.S. drillers

By on 1 Aug 2016 in quotes with 0 Comments

“The North America market has turned. We expect to see a continued modest uptick in the U.S. rig count during the second half of the year.”

Dave Lesar, Halliburton CEO said two weeks ago

[Among drillers] “There is a lot of hope, but hope is not a plan. Companies keep saying we can make money at $45 oil but these companies do not put their money where their mouth is.” Below $55 a barrel, about half of U.S. oil production is “uneconomic,” according to

Fadel Gheit, an Oppenheimer & Co. energy strategist in New York

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The ensuing labor shortage in the oil industry

By on 18 Jul 2016 in quotes with 0 Comments

“When oil prices crashed in the 1980s, the same thing that is happening today occurred in the industry then: companies went out of business and workers were laid off. And because there were few job openings, very few young people between the mid-1980s and 2000 went into oil and gas. As a result, much of the workforce that stuck around is now aging and moving closer to retirement, setting up the industry for a labor crunch, or the ‘Great Crew Change,’ as some dub it. There are too few experienced professionals to replace retiring workers.”

Nick Cunningham, Oilprice.com

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India’s growing demand for fuel and its impact on excess capacity

By on 11 Jul 2016 in quotes with 0 Comments

“[India’s] fuel demand is rising, and India’s excess capacity is very small. We all need to expand if demand sustains.”

Sanjiv Singh, director of refineries at India’s biggest processor

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The connection between electricity generation and water

By on 4 Jul 2016 in quotes with 0 Comments

“Electricity generation is a significant consumer of water: it consumes more than five times as much water globally as domestic uses (drinking, preparing food, bathing, washing clothes and dishes, flushing toilets and the rest) and more than five times as much water globally as industrial production…If policymakers fail to take into account the links between energy and water, we may come to a point in many parts of the world where it is water availability that is the main determinant of the energy sources available for use.”

Gary Bilotta, University of Brighton

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Consulting geologist’s outlook on the future of oil markets

By on 27 Jun 2016 in quotes with 0 Comments

“The disturbing truth is that the real cost of oil production has doubled since the 1990s. That is very bad news for the global economy. Those who believe that technology is always the answer need to think about that…Tight oil may have bought us a few years of abundance but the resulting over-supply, debt and prolonged period of prices below the cost of production have exacted a terrible cost. Under-investment, a damaged service sector, weak oil company balance sheets and a decimated work force practically ensure cripplingly higher prices a few years in the future.”

Art Berman, consulting geologist

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The BOE Report on the current state of the global oil & gas industry

By on 20 Jun 2016 in quotes with 0 Comments

“The embattled crude oil and natural gas industry worldwide has slashed capital spending to a point below the minimum required levels to replace reserves — replacement of proved reserves in the past constituted about 80 percent of the industry’s spending; however, the industry has slashed its capital spending by a total of about 50 percent in 2015 and 2016. According to Deloitte’s new study, “Short of Capital? Risk of underinvestment in Oil and Gas is amplified by competing cash priorities,” this underinvestment will quickly deplete the future availability of reserves and production.”

The BOE Report

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CEO of Stephenson & Co. on the future of Canadian Oil Sands

By on 13 Jun 2016 in quotes with 0 Comments

On the Canadian oil sands: “It is not a growth sector, and one of the issues particularly for the oil sands is, if you’re sitting in London or New York or Hong Kong or Tokyo and you’re running institutional money, are you really going to think about being a shareholder in something that’s going to cost billions, take 10 to 15 to 20 years to realize a return and be in the high-cost production when price is under pressure and global growth is slow? I don’t think so…. In general, we’re the [world’s] high-cost producer…. And in a US$50 [oil market] … we’re just not competitive.”

John Stephenson, CEO of Stephenson & Co.

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Fate of expanding Canada’s oil and gas production

By on 6 Jun 2016 in quotes with 0 Comments

“The widely recited rhetoric that Canada must continue its de facto energy strategy of liquidating its remaining non-renewable resources as fast as possible to maintain the economy has no credibility.”

David Hughes, researcher and geologist, in a recent report “Can Canada Expand Oil and Gas Production, Build Pipelines and Keep Its Climate Change Commitments?”

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Director of IHS Energy on the outlook of upstream oil discovery

By on 30 May 2016 in quotes with 0 Comments

“The fall in discovered volumes for conventional oil outside North America [to just 2.8 billion barrels, the lowest level since 1952] has been steady and dramatic during the last few years. We’ve seen four consecutive years of declining oil volumes, which has never happened before. The bottom has completely fallen out for conventional exploration, and the result portends a supply gap in the future that is going to be challenging to overcome. In the current cost-cutting environment, the outlook for 2016 discovery volumes is not likely to be better, either.”

Leta Smith, director, IHS Energy, upstream industry future service

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European oil trader on idle oil tankers in Singapore

By on 23 May 2016 in quotes with 0 Comments

“I’ve been coming to Singapore once a year for the last 15 years, and flying in I have never seen the waters so full of idle tankers,’ said a senior European oil trader a day after arriving in the city-state.”

Keith Wallis and Roslan Khasawneh, for Reuters

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Head of Russia’s biggest oil firm Rosneft on OPEC

By on 16 May 2016 in quotes with 0 Comments

“At the moment, a number of objective factors exclude the possibility for any cartels to dictate their will to the market. … As for OPEC, it has practically stopped existing as a united organization.”

Igor Sechin, head of Russia’s biggest oil firm Rosneft

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New Zealand’s Energy and Transport Minister on electric vehicles

By on 9 May 2016 in quotes with 0 Comments

“It’s clear that electric vehicles are the future. A move from petrol and diesel to low-emission transport is a natural evolution, and it is our aim to encourage that switch sooner, rather than later.”

Simon Bridges, New Zealand’s Energy and Transport Minister

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President and chief economist at Prestige Economics on oil prices

By on 2 May 2016 in quotes with 0 Comments

“Oil prices simply aren’t going to rise fast enough to keep oil and energy companies from defaulting. Then there is a real contagion risk to financial companies and from there to the rest of the economy.”

Jason Schenker, president and chief economist at Prestige Economics

“Put bluntly, the standard claim that the world has proved conventional oil reserves of nearly 1.7 trillion barrels is overstated by about 875 billion barrels. Thus, despite the fall in crude oil prices from a new peak in June 2014, after that of July 2008, the ‘peak oil’ issue remains with us.”

Professor Michael Jefferson of the ESCP Europe Business School, a former chief economist at oil major Royal Dutch/Shell Group, former Deputy Secretary-General of the World Energy Council

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Halliburton CEO on an “unsustainable market”

By on 25 Apr 2016 in quotes with 0 Comments

“What we are experiencing today is far beyond headwinds; it is unsustainable. My definition of an unsustainable market is one where all service companies are losing money in North America, which is where we are now.”

Jeff Miller, President of oil services company Halliburton

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Bloomberg reporter on Wall Street & oil

By on 18 Apr 2016 in quotes with 0 Comments

“Wells Fargo’s foray into oil shows how Wall Street misjudged the risks hidden in an esoteric type of energy financing long thought to be bulletproof.”

Asjylyn Loder, Bloomberg News

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OilPrice.com analyst on investment & prices

By on 11 Apr 2016 in quotes with 1 Comment

“Generally, it takes 18 months before the world has a decent picture of supply and demand. This is little consolation to those trying to do real time analysis on the direction of prices. That is why I can say categorically “the fix is in”. In other words, fields are declining, meaning investment is far below levels required just to replace production. The only thing that will change the vector of these declines is more spending, lots more spending, and the only thing will spur lots more spending is higher prices. Significantly higher than $40/bbl.”

Brad Beago, Oilprice.com, in Fortune magazine

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Consulting firm on Argentina oil

By on 4 Apr 2016 in quotes with 0 Comments

“Most of the fields in Argentina are mature, and they are declining in production. A lot of investment [$20 billion per year] is needed to sustain production. This is having an impact on production curve now [with the rig count down from 112 in 2014 to 64 in February].”

Alejandro Gagliano, a partner at Giga Consulting in Buenos Aires

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