Energized! #035

Friday, December 6th, 2019

Hello all,

Happy Friday and welcome to Energized, your weekly look into the geopolitics, news, and happenings of energy markets.

Before diving into this week’s content, we’d like to remind you to join our Energized LinkedIn Group. We will be releasing frequent news and snippets of Energized newsletters through the group. We hope to see you there. Also, if you haven’t already, visit our website to gain access to our free Oil 101 introductory course, our popular series of mobile-ready videos describing “How the industry works.” Ready for more? Check out our in-depth Oil 201 course which covers exploration, drilling, production, well completions, and refining. If your company or group is interested in Oil 101, let’s talk. We license our courses for use as internal training for sales, IT and operations teams. Think you know someone who would enjoy this newsletter? Pass it on! They can subscribe and access our Energized archives here.

Now, onto this week’s issue.

Energized!

Curated weekly oil and gas newsletter

Oil Prices and Markets

+ Fast Facts – Houston Chronicle “Fuel Fix”

Light, sweet crude (dollars per barrel): $ 55.17

Last Week: $57.77

Natural Gas (dollars per million British thermal units): $2.281

Last Week: $2.665

Rig count (United States): 802

Last Week: 803

Offshore Deep-Dive

2019 Review and 2020 Predictions

Towards the end of a year, it’s always interesting to look back on forecasts and predictions and see how accurate they were. Offshore drilling is mainly what this issue of Energized will focus on, as well as looking forward to the Offshore industry in 2020.

2019 was supposed to be the year that offshore turned it around, but 2019 began with some of the “lowest activity levels seen in 20 years,” according to a report by McKinsey. New project investments were initially expected to reach a value of $123 billion this year, but they only surpassed $50 billion in July. According to Rystad Energy, 15% of the $123 billion in investment was dependent on a breakeven price of $60 per barrel, meaning investment is highly unlikely as oil has been ping-ponging between $50 and $60 per barrel for the latter half of 2019. Additionally, projects that breakeven, when oil is in the $50s, may see their investments fall flat as that breakeven price is too close to the current price of oil to warrant the massive scale, logistics, and sheer capital needed to successfully hit forecasted targets.

To be fair, Offshore Magazine did feature Rystad’s prediction in June, that it would be another record year for offshore production, which we mentioned in Energized #10. But that’s production, not investment.

“In 2013, GoM oil production was 1.28 MMb/d, whereas in 2018 production averaged a record high of 1.79 MMb/d. Rystad Energy forecasts that 2019 production will average 1.95 MM/d, with some months potentially reaching 2 MMb/d.”

This production growth is mostly due to ahead-of-schedule oil and gas production from Shell’s deepwater Appomattox platform.

Rystad then updated its forecast in October, starting with the facts from 2018, “Crude oil production in the US federal Gulf of Mexico (GoM) averaged 1.8 MMb/d in 2018, setting a new annual record, according to the Energy Information Administration (EIA).”

Then moving onto 2019’s prediction: “Based on EIA’s latest Short-Term Energy Outlook’s expected production levels at new and existing fields, annual crude oil production in the GoM will increase to an average of 1.9 MMb/d in 2019 and 2.0 MMb/d in 2020.”

Then, Rystad trimmed their 2019 and 2020 forecasts in their most recent update…

“Joachim Milling Gregersen, an analyst on Rystad Energy’s upstream team, said: “2020 is expected to be another record year with average production above 1.9 MMb/d.””

So investment levels didn’t live up to the hype, but is that necessarily a bad thing? Maybe not if production levels are at a record.

“The strong production growth comes on the back of successive years of cost cutting in the Gulf. Total investments peaked at $30.2 billion in 2014. According to the consultant, they currently stand at less than half of that amount in 2019 and are projected to grow to $17.7 billion by 2022. Since 2015, development costs have decreased by 60% whereas opex are down 7% in the period.”

Another interesting point to note is that “the Gulf of Mexico has been the world’s second most prospective offshore region, trailing only Guyana. The collective resources discovered in the Gulf of Mexico over the past five years amount to 5.03 Bboe, with an estimated value of $1.9 billion.”

That being said, data from IHS Markit and offshore drilling giant, Transocean, tells a contrasting narrative.

According to IHS Markit, the worldwide offshore drilling marketed supply remains about the same as last year, but market utilization rates are up to 84.9% from 75.5% in 2018. While that sounds like good news for drilling contractors like Transocean who make money by leasing their rigs, crews, and equipment to operators such as ExxonMobil, Chevron, Total, Equinor, BP, and Shell, the company’s rig utilization stands at a mere 69%, significantly underperforming the broader offshore market.

Transocean Rig Class and Utilization
Rig Class	Used	Available	Utilization Rate
Ultra-Deepwater	18	28	64%
Harsh Environment	12	14	86%
Midwater Floaters	1	3	33%
Total Fleet	31	45	69%

Data Source: Transocean Rig Status Report October 2019

As you can see from the above chart, Ultra-Deepwater makes up the majority of Transocean’s fleet but has a poor utilization rate of just 64%. That’s partially because Ultra-Deepwater is built for environments like the U.S. Gulf of Mexico (GOM), which has the lowest marketed supply (42, or 6.5% of the overall market) of any region and one of the lowest overall utilization rates at just 78.6%. Compare that to the Middle East, which has a marketed supply of 157 rigs and a utilization rate of 87.3%, or Northwest Europe with a marketed supply of 75 and a whopping 89% utilization rate, and it feels like Transocean is in the wrong market.

For reference, the worldwide total supply of offshore rigs is 758, the marketed supply is 647, marketed contracted is 549, so the marketed utilization rate is 84.9%.

Transocean Rig Utilization by Geographical Region
Norway and the UK North Sea	11
U.S. Gulf of Mexico and Canada	10
Australia and Asia	4
South America	3
Africa	3
Total	31

Data Source: Transocean Rig Status Report October 2019

One of the reasons for the lack of major investment in the Gulf of Mexico is competition from less costly alternatives available in mature fields like the North Sea, which is dominated by Norway and the UK. As you can see, Transocean’s harsh environment rigs are doing just fine, of which all 12 that are in use are in the North Sea or Canada.

The main problem for Transocean is simple. 28 of their 45 rigs are ultra-deepwater, and that’s just not something the offshore market is using as much right now. Comparatively, almost all of their harsh environment rigs are in use, which makes sense given the North Sea’s high 89% utilization rate.

In early September 2019, the number of onshore operating drilling rigs in the United States fell below 900 for the first time since 2017. Today, the rig count is barely above 800.

As we report in every issue of Energized, the Baker Hughes Rig Count acts as a yardstick for onshore drilling contractors, but don’t let it affect your analysis of a pure-play offshore driller like Transocean.

Main Takeaways

Offshore production is at a record high in 2019, set to finish the year around 1.9 MMb/d.
Offshore production was originally poised to set another record in 2020, but Rystad trimmed its October forecast from 2.0 MMb/d down to 1.9 MMb/d in November.
Offshore investment, especially in the U.S. Gulf of Mexico, is not doing that well, significantly underperforming other regions.
Mature fields like the North Sea and offshore operations in the Middle East are utilizing the vast majority of offshore rigs, (primarily Harsh Environment rigs in the North Sea).
While the U.S. Gulf of Mexico shows promise for production growth, drilling contractors like Transocean with majority ultra-deepwater fleets are struggling due to increased oil recovery and competition from mature fields that have more rigs and higher utilization rates.

+ Water, Water Everywhere…– World Oil

“Every barrel of Texas crude oil produced yields over 6.5 bbl of water with it. As oil production has risen, managing massive volumes of produced water is ever more challenging. A new Texas Alliance of Energy Producers white paper tackles the issue, to ensure that future energy development is not constrained by water issues.”

Exxon is one of the most innovative companies. But it still (mostly) shuns renewables – The Wall Street Journal

In late November, Exxon was listed in fifth for innovation in the Management Top 250 ranking by the Drucker Institute at Claremont Graduate University. As the only nontech company in the top five, Exxon got the award largely for its patents and efficiency improvements to its oil and gas operations. Unlike other supermajors that are divesting away from oil projects and into natural gas, liquefied natural gas (LNG), and renewables such as wind and solar, Exxon is mostly sticking to what it does best by making oil and gas more profitable and less harmful to the environment.

According to Exxon, the company’s efforts on carbon capture and storage (CCS) have “accounted for more than 40 percent of cumulative CO2 captured” since 1970. CCS technological innovation is a way for oil and gas companies to participate in reducing greenhouse gas emissions while still dealing in the business of hydrocarbons.

CCS and other environmental efforts are important for Exxon since it is betting big on the future of oil and gas, and thus will benefit from proving that it is dedicated to a sustainable energy future.

Then article was a real surprise, even to EKTi founder and president, Marty Stetzer, “In my 13 years with Exxon, I saw numerous innovations in project management and process engineering, but I had no idea of the scale of this investment. According to the article, Exxon has invested $ 16 1/2 billion in R&D since 2000, that’s astounding,” said Marty.

Petrobras starts up fourth FPSO of 2019 – Offshore magazine

“This is the company’s fourth start-up this year offshore Brazil following the earlier operations at P-67 (Lula field), and P-76 and P-77, both on the Búzios field.”

“The P-68, stationed 230 km (143 mi) offshore Rio de Janeiro State in 2,280 m (7,480 ft) water depth, is engineered to process up to 150,000 b/d of oil and compress up to 6 MMcm of natural gas.”

Have a great weekend!

-Danny Foelber

EKT Interactive Managing Editor

Energized! #033

Friday, November 22nd, 2019

Hello all,

Happy Friday and welcome to Energized, your weekly look into the geopolitics, news, and happenings of energy markets.

Now, onto this week’s issue.

Energized!

Curated weekly oil and gas newsletter

Oil Prices and Markets

+ Fast Facts – Houston Chronicle “Fuel Fix”

Light, sweet crude (dollars per barrel): $57.72

Last Week: $57.24

Natural Gas (dollars per million British thermal units): $2.69

Last Week: $2.79

Rig count (United States): 806

Last Week: 817

IoT

+ More data than oil: bandwidth poised to become next bottleneck in the Permian Basin – Houston Chronicle

At first, there were not enough pipelines to move oil and natural gas to market. Then, it was a lack of water for drilling and hydraulic fracturing operations. And then it was an insufficient number of disposal sites to handle all the wastewater from the oil fields. Now, bandwidth — the capacity to transmit data over the internet — is poised to become the next big bottleneck in the Permian Basin, the nation’s largest and busiest oil field (Houston Chronicle).

If that’s not the greatest intro to an article, I don’t know what is. Sergio Chapa poignantly alludes to the brutal environment of West Texas, where nothing is ever easy.

The article has a prevailing theme, that the business case for infrastructure investment for carriers like Verizon and AT&T isn’t really there for the vast, expansive Permian.

“Operators in places like the Permian are starting to say that they’re producing more data than oil,” Bonny said. “That’s something to think about.”

For now, a lot of improvised, temporary solutions are commonplace in the Permian. If the basin is to flourish into the long-term cash cow that so many hope it to be, there has to be a consortium or combined effort of some sort on the infrastructure side.

Oil Demand

+ Growth in global oil demand more than doubled in the third quarter, IEA reveals – CNBC

“Global oil demand in the third quarter of 2019 grew by 1.1 million barrels a day, more than double the 435,000 barrels a day in the previous quarter, according to the latest report from the International Energy Agency (IEA).”

“China was the largest contributor, with demand increasing by 640,000 barrels a day year-on-year, and the energy agency’s closely-watched report projected a year-on-year acceleration in global growth of 1.9 million barrels per day for the final quarter of 2019.”

These days, China seems to be leading everything. From oil consumption growth to wind and solar, the country is balancing its need to industrialize with the equally prevalent need to decrease emissions and clean up the air pollution in urban cities.

“The IEA pointed to sluggish refining activity in the first three quarters of 2019 as contributing to a decline in crude oil demand of 300,000 barrels a day year-on-year, and the agency expects crude demand in 2019 as a whole to decline for the first time since 2009.”

IEA Week

A slew of IEA reports just in time for Thanksgiving. Dig in!

Global Energy Outlook

+World energy outlook 2019 highlights deep disparities in the global energy system – IEA

+ World energy outlook 2019 – IEA

On November 13th, the IEA released its latest World Energy Outlook.

For reports such as these, the IEA is merely a metrologist, forecasting well into the future with an inevitable amount of error. Still, the highlights from the report can offer those interested in the industry some valuable insight into the prevailing questions surrounding the energy market today, and the world to come.

Key questions tackled in the report include the following:

* What do the shale revolution, the rise of liquefied natural gas, the falling costs of renewables and the spread of digital technologies mean for tomorrow’s energy supply?

* How can the world get on a pathway to meet global climate targets and other sustainable energy goals?

* What are the energy choices that will shape Africa’s future, and how might the rise of the African consumer affect global trends?

* How large a role could offshore wind play in the transformation of the energy sector?

* Could the world’s gas grids one day deliver low-carbon energy?

Today, 850 million people around the world lack access to electricity, a painful reminder that while developing nations attempt to find a balance between renewable and unrenewable sources of energy, many people aren’t afforded that luxury.

The IEA’s report aims to juggle the conflicting needs of fewer greenhouse emissions, but also higher anticipated energy demand. The IEA estimates that greenhouse gas emissions will need to decrease despite insufficient state and international efforts. Energy demand is expected to rise by 1.3% a year to 2040.

The report also includes recommendations and forecasts based on the Current Policies Scenario, the Stated Policies Scenario, and the Sustainable Development Scenario. The scenarios, as quoted from the IEA, are as follows:

The path the world is on right now is shown by the Current Policies Scenario, which provides a baseline picture of how global energy systems would evolve if governments make no changes to their existing policies. In this scenario, energy demand rises by 1.3% a year to 2040, resulting in strains across all aspects of energy markets and a continued strong upward march in energy-related emissions (IEA).

The Stated Policies Scenario, formerly known as the New Policies Scenario, incorporates today’s policy intentions and targets in addition to existing measures. The aim is to hold up a mirror to today’s plans and illustrate their consequences. The future outlined in this scenario is still well off track from the aim of a secure and sustainable energy future. It describes a world in 2040 where hundreds of millions of people still go without access to electricity, where pollution-related premature deaths remain around today’s elevated levels, and where CO2 emissions would lock in severe impacts from climate change (IEA).

The Sustainable Development Scenario indicates what needs to be done differently to fully achieve climate and other energy goals that policy makers around the world have set themselves. Achieving this scenario – a path fully aligned with the Paris Agreement aim of holding the rise in global temperatures to well below 2°C and pursuing efforts to limit it to 1.5°C – requires rapid and widespread changes across all parts of the energy system. Sharp emission cuts are achieved thanks to multiple fuels and technologies providing efficient and cost-effective energy services for all (IEA).

Additional commentary:

“In the Stated Policies Scenario, energy demand increases by 1% per year to 2040. Low-carbon sources, led by solar PV, supply more than half of this growth, and natural gas accounts for another third. Oil demand flattens out in the 2030s, and coal use edges lower.”

“The momentum behind clean energy is insufficient to offset the effects of an expanding global economy and growing population. The rise in emissions slows but does not peak before 2040.”

“Shale output from the United States is set to stay higher for longer than previously projected, reshaping global markets, trade flows and security.”

“The higher US output pushes down the share of OPEC members and Russia in total oil production, which drops to 47% in 2030, from 55% in the mid-2000s. But whichever pathway the energy system follows, the world is set to rely heavily on oil supply from the Middle East for years to come.”

“Electricity is one of the few energy sources that sees rising consumption over the next two decades in the Sustainable Development Scenario. Electricity’s share of final consumption overtakes that of oil, today’s leader, by 2040. Wind and solar PV provide almost all the increase in electricity generation.”

“Over the past 20 years, Asia has accounted for 90% of all coal-fired capacity built worldwide, and these plants potentially have long operational lifetimes ahead of them.”

The Asian market is teeming with opportunity, as discussed in this newsletter on the topics of LNG imports to Asia from Qatar, Australia, and the U.S. What could happen is a stepping stone approach, transitioning from coal to natural gas as soon as possible, and then shifting to renewables over time.

The IEA’s World Energy Outlook is a lot to unpack. Although forecasts are often wrong, predictions change, and expectations are tweaked, the report is asking the right questions and deserves a look for those who are curious about more than just the day-to-day energy markets.

+ Executive Summary of the World Energy Outlook 2019 – IEA

A downloadable pdf that condenses the 810-page report to 11 pages. It’s also free. Highly recommended.

Africa Energy Outlook

+ Africa Energy Outlook – IEA

+ Key Findings, Africa Energy Outlook – IEA

Africa’s role in global energy growth between 2018-40 is huge. The report compares Africa to other developing nations and areas like China, India, and the Middle East. Africa clocks in ahead of China and the Middle East in oil demand, and that’s largely because “more than half a billion people are added to Africa’s urban population by 2040, much higher than the growth seen in China’s urban population in the two decades of China’s economic and energy boom.”

Urbanization will hopefully result in more electricity for Africans. A good chunk of Africa’s population lives without electricity, making up over half of the world’s population without electricity.

The link provides some phenomenal visuals towards understanding Africa’s present energy needs, and some solutions for the next 20 years.

You can buy the full Africa energy outlook, but I suggest you check out the key takeaways first.

Wind Outlook

+ Offshore wind to become a $1 trillion industry – IEA

The Offshore Wind Outlook 2019 is an excerpt from the IEA’s World Energy Outlook 2019.

The IEA finds that global offshore wind capacity may increase 15-fold and attract around $1 trillion of cumulative investment by 2040. This is driven by falling costs, supportive government policies and some remarkable technological progress, such as larger turbines and floating foundations. That’s just the start – the IEA report finds that offshore wind technology has the potential to grow far more strongly with stepped-up support from policy makers (IEA).

“Today, offshore wind capacity in the European Union stands at almost 20 gigawatts. Under current policy settings, that is set to rise to nearly 130 gigawatts by 2040.”

“China is also set to play a major role in offshore wind’s long-term growth, driven by efforts to reduce air pollution.”

“By around 2025, China is likely to have the largest offshore wind fleet of any country, overtaking the United Kingdom. China’s offshore wind capacity is set to rise from 4 gigawatts today to 110 gigawatts by 2040. Policies designed to meet global sustainable energy goals could push that even higher to above 170 gigawatts.”

“The United States has good offshore wind resources in the northeast of the country and near demand centres along the densely populated east coast, offering a way to help diversify the country’s power mix. Floating foundations would expand the possibilities for harnessing wind resources off the west coast.”

Have a great weekend!

-Danny Foelber

EKT Interactive Managing Editor

Energized! #031

Friday, November 8th, 2019

Hello all,

Happy Friday and welcome to Energized, your weekly look into the geopolitics, news, and happenings of energy markets.

Now, onto this week’s issue.

Energized!

Curated weekly oil and gas newsletter

Oil Prices and Markets

+ Fast Facts – Houston Chronicle “Fuel Fix” as of Sunday, November 3rd, 2019

Light, sweet crude (dollars per barrel): $56.20

Last Week: $56.66

Natural Gas (dollars per million British thermal units): $2.714

Last Week: $2.30

Rig count (United States): 822

Last Week: 830

Natural Gas

+ Natural gas soars on cold-weather forecasts – The Wall Street Journal

“Prices are at their highest level since late March; investors focus on inventory data”

Natural gas prices tend to go up in the wintertime and that’s exactly what’s occurring in the commodities market with cold weather forecasts for November and the following months.

“While a sustained rally in natural-gas prices could significantly push up heating costs for consumers, cutting into available income and threatening economic growth, prices are still down for the year and well below where they were around this time last year.”

This Wall Street Journal article discusses the trading around the commodities market, so feel free to give it a read if you’re interested in that. If not, the main takeaway is that natural gas prices went up 17% since last week, which is a pretty big move for prices that have been in the low $2.00-2.40 range for some time now.

Trade, Policy, and Commerce

+“America First”? Kill the Jones Act – Wall Street Journal Opinion + The Jones Act – Investopedia.com

Before getting into the article, here’s some primer on the Jones Act. Also known as Section 27 of the Merchant Marine Act of 1920, the Jones Act was a return to American protectionist/isolationist policies commonly seen before World War 1 (think Theodore Roosevelt’s Big Stick initiatives in Nicaragua, Cuba, Venezuela, etc.) The United States was looking for ways to sustain the industrial and manufacturing boom that came as a result of America entering WWI in 1917. As a result, Congress enacted the Jones Act, which stimulated the American shipping industry by requiring “goods shipped between U.S. ports to be transported on ships that are built, owned, and operated by United States citizens or permanent residents.” That basically means that shipping costs to non-continental U.S. states or lands such as Alaska, Hawaii, Puerto Rico, Guam, U.S. Virgin Islands, etc. are significantly increased because there’s a small supply of American built, owned and operated vessels that can deliver imports. “This creates a scenario in which shipping companies can charge higher rates because of a lack of competition, with the increased costs passed on to consumers.”

The Wall Street Journal Opinion piece questions the delivery of Russian gas to an American port in the wake of U.S. natural gas supply that is now the largest in the world. Why import more supply when we have enough and producers want higher prices? The author argues the Jones Act is partially to blame.

“It’s a particular problem for liquid natural gas, since there are zero LNG tankers that meet Jones Act rules. That means Puerto Rico effectively is barred from importing gas from LNG terminals in Georgia or Louisiana. As a result, it apparently turned to Siberia. The same happened two winters ago in New England, where gas is short due to a lack of pipeline capacity. A tanker of Russian gas was unloaded in Boston. How is this an “America First” policy?”

Eliminating the Jones act would stimulate other industries and free up the possibility for more trade deals. The author argues the cost-efficiencies of eliminating the Jones Act simply outweigh the pros of insulating the American shipping industry from foreign competition. Give the article a read to decide what you think about the Jones Act and feel free to start a discussion with our nearly 200-member Energized LinkedIn Group.

Southeast Asia

+ 3 new IEA reports provide fresh insights into Southeast Asia’s energy future – IEA

“Southeast Asia Energy Outlook 2019 finds encouraging indications in many areas, but also some warning signs in terms of the security and sustainability of energy systems. The report, part of the IEA’s flagship World Energy Outlook series, was released alongside two other studies focused on the region: The Future of Cooling in Southeast Asia and ASEAN Renewable Energy Integration Analysis.”

“Southeast Asia is set to become a key driver of world energy trends over the next 20 years as its energy demand grows at twice the global average, reflecting the region’s economic rise but also increasing the challenges for its policy makers, according to a new report by the International Energy Agency.”

The IEA, one of the leading energy agencies in the world, dropped a bomb with these reports, reinforcing the potential of Southeast Asia as covered by this newsletter, specifically in our LNG Spotlight Issue.

Probably the most ambitious quote from the report was the following: “”Southeast Asia is set to have a major impact over the next two decades, adding the equivalent of Japan’s entire energy system to global demand. This rapid growth underscores the importance of Southeast Asian countries’ energy policies for their citizens but also for the world,” said Dr. Fatih Birol, the IEA’s Executive Director.”

Is Southeast Asia’s energy potential as big as Japan’s, the third-largest economy and one of the largest energy importers in the world? Dr. Birol says so. But that’s because the IEA is forecasting 60% growth between now and 2040 based on today’s policy settings. That estimate sounds reasonable when you consider that “since 2000, Southeast Asia’s 80% increase in overall energy demand has largely been met by a doubling in fossil fuel use.”

The article is full of highlights from the three reports. Worth a read if you live in Southeast Asia or are interested in the Southeast Asian energy market.

Upstream

+ IHS Markit: US oil production growth heading for “major slowdown” – Oil & Gas Journal

“US shale production—the chief source of rapid growth that made the US the world’s largest oil producer—is slowing down fast, according to a recent report from IHS Markit.”

“”Going from nearly 2 million b/d annual growth in 2018, an all-time global record, to essentially no growth by 2021 makes it pretty clear that this is a new era of moderation for shale producers,” said LeBlanc. ”

IHS Markit’s grim outlook should come as no surprise to Energized readers who are familiar with other reports and opinions such as data discussed by the Spears Brothers in Episode 126: Hitting The Brakes.

Bear in mind that slowing growth and no growth are not necessarily bad. It just means that massive upswings can’t last forever. It’s a similar comparison to a developing economy such as China, posting massive GDP growth rates every year until the economy gets big, and well, can’t grow as fast (this is happening to China by the way, whose economic growth slowed to a 27-year low). Again, it’s not terrible. U.S. production, like China, has grown so much in the past few years that it’s unsustainable, if not even healthy, for growth rates to slow so that the market can catch up to itself.

Safety

+UK records rise in offshore hydrocarbon releases – Offshore Magazine

For those of you involved in the safety aspect of the industry, this article is for you.

Two takeaways:

-“The fatal accident rate per 100,000 flying hours fell to zero for the first time since 2001, despite flying hours increasing by 12% in 2018 to 77,286.”

-“On the minus side, major hydrocarbon releases, which had declined steadily since 2012, increased to four across the shelf in 2018.”

Hydrocarbon releases basically mean oil and gas leaks, which can be extremely dangerous offshore or onshore. Safety is a major concern for offshore projects as the 10th anniversary of the Deepwater Horizon Oil Spill will occur next year.

“OGUK’s Health and Safety Manager Trevor Stapleton said: “We cannot take our eye off the ball. When it comes to getting people home safely, nothing is more important, and we must strive to always do better…””

Energy in Transition

+ Could electric roads spark a green transport revolution? – BBC News

“Specially adapted trucks in Germany are being tested on electric roads.”

The link is a fun and informative video that describes a system that is being tested on German trucks. The system looks like a typical electric rail system for passengers, only with trucks. Worth a watch if you’re interested in energy in transition. “Trucks turn off their diesel engines while connected. The driver decides when to connect and disconnect.” A pretty cool combination of diesel and renewable energy sources.

Business

+ Saudi Aramco: the buyers matter more than the price – The Wall Street Journal

The article discusses the long-anticipated IPO of Saudi Aramco, the largest National Oil Company (NOC) in the world. Aramco is responsible for producing 1/8 barrels of oil in the world. The valuation would be $1.5-2.0 trillion, more than Apple, Microsoft, or Amazon and more than five times ExxonMobil on the low end. The problem is that NOCs typically garner lower valuations than corporations due to their enhanced political risk.

Saudi Aramco hopes to get half of the money from Saudi Arabia and half from global investors. The company expects to pay a $75 billion annual dividend. The article notes that Saudi Aramco is a source of pride in Saudi Arabia, so the real challenge will be raising international capital.

+ Chevron selling Azerbaijan interests to MOL – Offshore Magazine

“MOL has agreed to acquire Chevron Global Ventures’ and Chevron BTC Pipeline’s E&P and midstream interests in Azerbaijan for $1.57 billion.”

Chevron’s sale to MOL, a Hungarian multinational oil and gas company, is likely part of the company’s effort to focus more on onshore production and refining.

Chevron’s unconventional portfolio value has doubled between 2017 and 2019 thanks to land optimization, well performance, and better technology.

It’s no surprise Chevron has been able to grow its unconventional upstream assets so rapidly: The company is spending $3.6 billion of its $20 billion capital and exploratory expenditures in the Permian alone, with another $1.6 billion in other shale plays. Chevron has an industry-leading earnings per barrel (EPB) of $2.66 and the highest-complexity refinery system with an NCI of 12.7.

“The Nelson Complexity Index (NCI) is a measure of the sophistication of an oil refinery, where more complex refineries are able to produce lighter, more heavily refined and valuable products from a barrel of oil. Refineries that are higher on the Nelson Complexity Index are valued higher relative to their peers because of their ability to handle lower quality crude oil or produce more value-added products. Due to their greater complexity, high NCI refineries are more costly to build and operate.” –Investopedia

Have a great weekend!

-Danny Foelber

EKT Interactive Managing Editor

Head Writer | Eau Claire Writing

Eau Claire Writing is a Houston-based freelance writing company that specializes in gas compression, turbomachinery, onshore and offshore drilling, and well service content for the oil and gas industry.

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Energized! #030

Friday, November 1st, 2019

Hello all,

Happy Friday and welcome to Energized, your weekly look into the geopolitics, news, and happenings of energy markets.

Now, onto this week’s issue.

Energized!

Curated weekly oil and gas newsletter

Oil Prices and Markets

+ Fast Facts – Houston Chronicle “Fuel Fix” as of Sunday, October 27th, 2019

Light, sweet crude (dollars per barrel): $56.66

Last Week: $53.64

Natural Gas (dollars per million British thermal units): $2.30

Last Week: $2.32

Rig count (United States): 830

Last Week: 851

Upstream

+New innovations touted to give shale oil a boost – Houston Chronicle

“The U.S. shale boom is at a tipping point as it struggles to profit amid weaker oil prices, but the industry is leaving tens of billions of dollars in the ground each year with wells that aren’t nearly efficient enough.”

If you’re interested in the shale plays, I would give this article a read. It’s the result of an analysis of 80,000 drilled wells in the Permian. “Better well designs coupled with a greater understanding of the shale rock and fluid movements underground could boost efficiency levels by about 20 percent, representing almost $25 billion in annual savings for the U.S. shale sector, said Scott Sanderson, a principal in Deloitte’s oil and gas strategy and operations practice.”

Speaking of Deloitte, here’s the report the Houston Chronicle alluded to:

+ How the shale revolution is reshaping the US oil and gas labor landscape – Deloitte Insights

“Not only has the shale revolution transformed production in the US oil and gas industry, it is reshaping the composition of the industry’s workforce in ways that will fundamentally redefine tomorrow’s oil and gas job opportunities.”

“This article delves into the two subsectors—exploration and production (upstream) and oilfield services (OFS)—and analyzes the overall employment trend over the past 15 years. Our analysis, covering the three phases of oil price movements and the progress of the shale revolution, indicates that the structural changes in the sector have had significant implications on employment, demand for different kinds of skilled professionals, and wages across occupations, although to varying degrees. Nonetheless, the past may not be the best prologue to what lies ahead, given the uncertainty around how the labor market will likely shape up in the future as the sector adopts new technologies to increase well productivity and change cost structures.”

Excellent analysis by Deloitte and worth the read.

The article is broken into three phases.

Phase 1 (2003–2008): The beginning of the US shale revolution

High oil prices, high employment, high capital expenditures, high demand from developed and developing nations. High oil prices as a result of depleting conventional reserves. The shale revolution was motivated by the need for more reserves.

Phase 2 (2008-2014): Big focal shift in the shale revolution and employment trends

Strong employment, strong investment growth, shift from shale gas to shale oil. US crude oil production soared and grew at the fastest pace between 2012 and 2014.

The great recession caused job loss in 2008-2010 but rebounded in 2010 as oil prices revived and stabilized.

“Wages paid to the highly and mid-skilled professionals grew much faster than the overall US industry average, especially during the global financial crisis. The annualized wage growth for highly skilled professionals increased 4.9 percent in 2008–2010, almost twice the overall US industry annualized wage growth of 2.5 percent.”

Phase 3 (2014–2017): The oil downturn and shale’s responsiveness to oil prices

layoffs, year-over-year price declines. Both shale drilling and production recovered their losses from late-2016 after the oil price stabilized above US$50/bbl. Loss of oilfield services jobs, growth in downstream jobs.

“The third phase saw the longest and one of the deepest downturns in oil prices. Three consecutive years of decline led to the slashing and deferring of investments in areas deemed expensive to drill and develop.”

“Although there was always a need for shale companies to become capex light and production efficient, the oil price downturn compelled them to adopt new technologies and focus on the best resources to strike a new balance in the equation.”

“Higher productivity stemming from technology gains and a better understanding of the resource base may cap employment growth. Nonetheless, technology and automation will likely help companies create unimagined, new, and unique work profiles.”

+Drilling and production outlook market report – Spears&Associates

“The Drilling and Production Outlook (DPO) is a quarterly forecast of rig activity, wells/footage drilled and spending through 2025 for more than 50 countries. It is used by oilfield equipment and service companies as an important planning tool for future sales, marketing and manufacturing efforts.”

“Global oil demand growth has slowed, but the supply outlook remains constructive.

US oil production growth slowing
Saudi Arabia cutting output
US sanctions reducing oil exports from Iran”

“The OPEC+ group is expected to continue to curb output into 2020 in an effort to keep global oil inventories near normal and support oil prices. Pressured by their investors, US operators are expected to focus on profitability over volume growth and exhibit a high degree of capital discipline going forward, resulting in a 10% decline in US drilling and frac activity in 2020.”

“Conversely, exploration and new field development activity in markets outside North America is expected to grow 4% in 2020 as IOCs and national oil companies cautiously step up investment in order to maintain oil production capacity. ”

Source: Spears & Associates

Offshore

+ Eni highlights 2019 exploration track record – Offshore Magazine

“Eni delivered six offshore discoveries as operator during the first nine months of the year.”

Location of the five recent discoveries in block 15/06 offshore Angola. (Courtesy Eni)

“According to the company’s latest results statement, three of the finds were in block 15/06 off Angola, bringing the number of new fields proven since exploration resumed on the block last year to five.

Eni estimates the cumulative resources at 2 Bbbl in place.”

+U.S. coast guard responds to three spills – The Maritime Executive

“The U.S. Coast Guard is responding to an oil sheen in Breton Sound, Block 37, Louisiana. It is just one of three spill responses underway on Monday. The three-mile by 10-mile sheen originated from a damaged and inactive wellhead owned by Texas Petroleum Investment Company (TPIC). Currently, the well is intermittently discharging a mixture of oil, water and mud. The cause of the damage to the wellhead is unconfirmed and is currently under investigation.”

“5,000 feet of boom has been deployed on the northwest corner and south of Breton Island. So far, there are no reports of impacted wildlife.”

The coast guard also investigated a sheen in Virginia, likely a petroleum product, as well as an “oil discharge in Pass A Loutre Wildlife Management Area, Louisiana, where crude oil is leaking from a storage tank owned by Whitney Oil and Gas. The maximum potential for the spill was estimated to be 2,520 gallons, but the discharge was contained before all the contents of the tank entered the water.”

+ Somalia says Shell, Exxon agree to pay $1.7 million for oil blocks lease – Reuters

“Royal Dutch Shell and Exxon Mobil have paid $1.7 million to Somalia to lease offshore blocks for 30 years, the country’s state news agency reported on Friday.”

Climate Change

+ Exxon hid “catastrophic” climate prediction, state suit says – Bloomberg

ExxonMobil “was sued by Massachusetts for allegedly hiding its early knowledge of climate change from the public and misleading investors about the future financial impact of global warming, two days after a trial started on similar claims in New York.”

ExxonMobil finds itself in the cross-hairs in response to a “205-page complaint” filed last Thursday. The Massachusets complaint comes on top of a “suit filed a year ago in New York by alleging Exxon misled the general public as well as shareholders by concealing the looming crisis.”

So where does the “catastrophic” quote in the headline come from? “Exxon went so far as to disregard the findings of one of its own scientists, who decades ago correctly predicted the amount of CO2 in the atmosphere in 2019 and said that climate change would become “catastrophic.”

Massachusets Attorney General, Maura Healey, has been investigating Exxon since 2016 and “claims Exxon’s actions violated the Massachusetts Consumer Protection Act.”

This suit will be a story to watch. By now you’ve probably seen ExxonMobil ads on biofuels, promoting #UnexpectedEnergy and Exxon’s new motto “Energy Lives Here”. The company has been rebranding itself as an energy company, not just an oil and gas company, in an attempt to change negative public perception about Big Oil. For Exxon, the stakes are high. Redefining its brand will help the company recruit top talent and probably bolster the depressed stock price. In the meantime, negative press and lawsuits do Exxon no favors.

In response, Exxon’s claimed the state “twisted” reality “by conflating two internal metrics the company uses to account for the financial impact of climate change on its business. Instead, Exxon had evidence proving the two metrics were used for different purposes and were never intended to be public, refuting New York’s claims that the differing numbers were kept to give the public a falsely rosy picture of the company’s financial health.”

Have a great weekend!

-Danny Foelber

EKT Interactive Managing Editor

Head Writer | Eau Claire Writing

Unsubscribe | Update your profile | 9813 Shadow Wood Dr., Houston, TX 77080

Energized! #029

Friday, October 25th, 2019

Hello all,

Happy Friday and welcome to Energized, your weekly look into the geopolitics, news, and happenings of energy markets.

Now, onto this week’s issue.

Energized!

Curated weekly oil and gas newsletter

Oil Prices and Markets

+ Fast Facts – Houston Chronicle “Fuel Fix” as of Sunday, October 20th, 2019

Light, sweet crude (dollars per barrel): $53.64

Last Week: $54.49

Natural Gas (dollars per million British thermal units): $2.32

Last Week: $2.27

Rig count (United States): 851

Last Week: 856

Offshore

+Record Gulf of Mexico oil production expected to continue – Offshore Magazine

According to the EIA, crude oil production in the Gulf of Mexico averaged 1.8 MMb/d in 2018, setting a new annual record.

“Based on EIA’s latest Short-Term Energy Outlook’s expected production levels at new and existing fields, annual crude oil production in the GoM will increase to an average of 1.9 MMb/d in 2019 and 2.0 MMb/d in 2020.”

“Eight new projects are expected to come online in 2019 and four more in 2020.”

Due to the continual increase in onshore production despite price declines, offshore is expected to account for just 15% of crude oil production in 2019 and 2020 compared to 23% of total US crude oil production in 2011.

The article notes the importance of distinguishing between onshore and offshore patterns. As noted in this newsletter, offshore is a longer-term game reliant on hitting goals and meeting deadlines rather than prices alone. Breakevens tend to be significantly lower to justify the often lofty capital expenditures incurred for offshore projects.

“Crude oil price increases in 2017 and 2018 relative to lows in 2015 and 2016 have not yet had a significant effect on operations in the GoM, but they have the potential to contribute to increasing rig counts and field discoveries in the coming years. Unlike onshore operations, falling rig counts do not affect current production levels, but instead they affect the discovery of future fields and the start-up of new projects.”

Climate Change

+ Facing climate change, ExxonMobil ramps up energy research – Axios

“The world’s biggest publicly traded oil company has been creating new partnerships with American and foreign universities in recent years totaling at least $75 million, and it just inked another, unprecedented $100 million deal with the U.S. Energy Department.”

This is a great article for those of you interested in the ways the largest integrated oil and gas company is investing in renewable energy. It’s not just about money, it’s partnerships too. “In 2014, Exxon began pursuing an internal goal to establish several partnerships with leading universities — roughly one per year — that go far beyond money. Exxon-employed scientists spend significant time at the universities. Many have offices, give guest lectures and co-author peer-reviewed research.”

Exxon recognizes the scrutiny it faces in the public eye. This scrutiny is a major headwind for the reputation of Exxon and the ability for the company to hire talented employees.

This is an excellent article for a breakdown of what Exxon is doing to turn itself into an “energy” company not just an “oil and gas” company.

LNG

+Canadian East Coast LNG export plans progress with Pieridae’s Shell deal – Reuters

“The Canadian LNG industry has been slower than its U.S. counterpart to take advantage of soaring gas demand around the world and build export plants, in part due to securing feedstock supplies for the terminals. This contrasts to the U.S. Gulf Coast, where there is so much gas being produced thanks to the shale revolution, some producers have had to pay buyers to take it off their hands. This makes it easier for LNG projects there, which tend to buy gas rather than own gas assets. Five large LNG export terminals operate in the United States including the 25 million tonne a year (mtpa) Sabine Pass, operated by Cheniere Energy <LNG.A>. By contrast, there are no operating LNG export facilities in Canada although Shell has begun constructing a massive one on the West Coast.”

“Pieridae Energy moved closer to building a liquefied natural gas export terminal on Canada’s East Coast after taking ownership of fields from Royal Dutch Shell which will feed gas into the plant, the company said. The Goldboro LNG terminal would be the first on Canada’s East Coast and compete with the growing number of plants on the U.S. Gulf Coast, hoping its shorter distance to Europe and further west will help sell its LNG by cutting shipping costs. Pieridae said in a statement late on Thursday it had closed a C$190 million ($145 million) acquisition of Shell’s gas assets in Alberta’s Foothills region, giving it most of the gas needed to supply the first of two plants at the Goldboro terminal.”

+ Big U.S. liquefied natgas players move fast; smaller ones try to keep up – Reuters

“A gap is emerging in the U.S. liquefied natural gas (LNG) industry as big players such as Exxon Mobil Corp and Cheniere Energy Inc race ahead to build export terminals with fewer long-term contracts, while smaller developers struggle to find financing for their first plants.”

The article discusses how ExxonMobil and Cheniere are pulling away from smaller players as they invest in infrastructure developments while others try and keep up.

“The industry is moving away from long-term agreements to justify construction of a new facility to a true commodity business,” said Charif Souki, co-founder and Chairman of Tellurian Inc.”

“Tellurian has been seeking investors for its 27-mtpa Driftwood export terminal in Louisiana. Instead of trying to line up long-term purchase agreements, it offers customers the opportunity to invest in the company’s gas production, pipelines and liquefaction. The company has delayed the start of construction to early next year from a previous target of the first half of this year, according to company presentations. It also reduced how much its partners need to invest in the project to receive LNG to $500 per tonne from a previous target of $1,500 per tonne. By contrast, Exxon and Qatar Petroleum decided this year to move ahead with their 15-mtpa Golden Pass project in Texas without substantial long-term agreements, while Cheniere is adding a sixth liquefaction train at its Sabine Pass terminal in Louisiana, initially supported by fewer long-term contracts than in the past.”

Larger players are actualizing their goals while smaller players face delays that could cripple them if the market continues to be filled with increased supply. Everyone wants to get into the LNG game, it’s truly a race to see who can get the infrastructure built and begin exporting.

Middle East: A Deep Dive

United States-Saudi Arabia-Iran Relations and Opinion

Two weeks ago, I attended a Rice Global Engineering & Construction Forum at Rice University on Saudi Arabia, Iran, and the Middle East. Dr. Richard Stoll, the Albert Thomas Professor of Political Science at Rice University, and a Baker Institute Rice Scholar gave a talk on the current actions of Iran with the drone attack on Saudi Arabian petroleum infrastructure. He discussed the motivation for those actions, and what Iran expects to achieve in the Middle East, and to a greater extent, in Europe and the Western World as a result of these actions. Dr. Stoll also provided some thoughts concerning actions the United States should take with both Iran and Saudi Arabia, and the historical relationship between the United States and Saudi Arabia.

My greatest takeaway from this talk was the extent of deep-rooted conflict Stoll addressed between Iran and Saudi Arabia. Despite admitting Saudi Arabia’s low-ranking human rights scores by various reports such as those by Freedom House and World Report, Stoll was adamant about the United States’ responsibility to back Saudi Arabia in the oil and gas economy of the Middle East.

To sum up Stoll’s talk, there’s no stopping Iran’s ability to acquire nuclear weapons anyway. The country can dodge sanctions and embargoes by improvising using outdated technology. According to Stoll, the conflict between Iran and Saudi Arabia is cultural, religious, economic, and has no end in sight.

Several newsletters ago, I recommended The Prize by Daniel Yergin, arguably the greatest book on the history of oil and gas ever written. In that book, Yergin pays homage countless times to Ibn Saud and his establishment of Saudi Arabian oil dominance as well as the role Saudi Arabia played as one of the only pro-US players in OPEC during the United States’ 1970s energy crisis

“At the age of forty-five, Ibn Saud was the master of Arabia. In the course of a quarter of a century of skillful war making and astute business politics, he had reestablished Saudi ascendancy over nine-tenths of the Arabian Peninsula. The restoration was virtually complete” (268), The Prize. Unlike prior Arabic leaders, Ibn Saud was an adopter of western inventions like cars and the telephone, squashing conservative rebellions wherever they sprang up.

Fast forward a few decades later, and towards the end of World War II, on February 13th, 1945, President Roosevelt talks with Ibn Saud for five hours aboard the USS Quincy on the Great Bitter Lake on the Suez Canal. FDR, Churchill, and Ibn Saud got along marvelously, marking the beginning of Saudi Arabia’s geopolitical partnership with the West. Ibn Saud presented Churchill with such amazing gifts that Chrchhill felt bad so he promised to get Ibn a new Rolls Royce which he did.

After the war, Ibn made sure his oil only went to American companies, garnering interest from Standard Jersey and Socal.

Once Britain left the Suez Canal in November 1971, it would mark the beginning of a few very quick years when Western influence fell in the Middle East. Soon after, there was the oil crisis in 1973. The British departure from the Suez was the first domino to fall. With the British military out, it’s really the producers who controlled the land, unlike the precedent of “concessions” which was standard before 1971.

“The 1970s also saw a dramatic shift in world oil. Demand was catching up with available supply, and the twenty-year surplus was over. As a result, the world was rapidly becoming more dependent on the Middle East and North Africa for its petroleum” (549).

The 1960s and 70s were flush with cheap oil prices encouraging the production of gas-guzzling cars. This was the time of expensive and inefficient air conditioning units in cars and other energy-consuming accessories that would backfire. Sure enough, the USA ran out of surplus capacity, with 1970 being the year of peak production. The Chairman of the Texas Railroad Commission, which was allowed full production capacity, put it gravely when he said, “Historic occasion, damned historic, and a sad one. Teas oil fields have been like a reliable old warrior that could rise to the task when needed. That old warrior can’t rise anymore”. The new production from Indonesia and Nigeria and new world demand exceeded the growth that the Middle East and Africa could grow at.

Throughout the energy crisis of the 1970s, Saudi Arabia continued to thwart all-out price gouging from OPEC on energy consumers in North America and Europe, a lever Saudi Arabia could have easily pulled to essentially destroy western economies. This was one thing I couldn’t forget when I first read The Prize. Although a political strategy that still pays dividends today, the fact that Saudi Arabia flexed its muscles on its OPEC partners countless times to keep oil prices somewhat affordable is a testament to the partnership between the United States and Saudi Arabia.

Although the two countries don’t agree on everything, it’s clear why Professor Stoll was so set on the partnership between the US and Saudi Arabia. The power of Iran’s weapons arsenal alone is one reason why professor Stoll is confident the drone strikes on Saudi Arabia, as covered in Energized #24, were an attack by Iran on Saudi Arabia.

+ Goodbye to the Middle East – Peter Zeihan, October 15th, 2019

Peter Zeihan provides a starkly contrasting view of Saudi Arabia and the Middle East to Professor Stoll. Zeihan is completely against American involvement in the Middle East, writing with a sobering and solemn tone all the while condemning violent and inhumane actions by many Middle Eastern countries, including Qatar.

Zeihan is considered to be a “seer” of sorts on global topics. His recent commentary is a response to the October 7th news that U.S. President Donald Trump will execute a partial withdrawal of U.S. forces from Syria which escalated to a full-scale withdrawal on October 9th. The withdrawal leaves the Kurdish forces unprotected, America’s allies in the Middle East.

“The Kurds – whether in Syria or Iraq – have been America’s only reliable regional allies since America’s first major confrontation with Iraq back in the early 1990s.”

“Without the Kurds’ assistance the overthrow of Saddam Hussein would have been far nastier affair, post-Saddam Iraq would have been far less stable, the defanging of ISIS and the destruction of the ISIS caliphate would not have happened. In Syria in specific, the Kurds habitually provided at least five times the forces the Americans did.”

Zeihan’s tone is bitter but unsurprised. “The United States was always going to leave Syria. If the Americans were unwilling to commit 100,000 troops to the overthrow of Syria’s Assad government and its subsequent forcible reconstruction, then there was little reason to become involved in a decades-long, grinding multi-sided civil war.”

“Aside from the Iranian vector, American national and strategic interests in Syria are utterly nonexistent. Syria – even backed up by Iran – is a military pigmy that Israel could easily shatter. If Jerusalem really wanted to, it could roll into Damascus in a long weekend.”

Zeihan discusses the history of the Kurdish-American relationship and the inevitable withdrawal out of the region. “The far more important fact – comfortable or uncomfortable depending upon your view – is that the evolving American view of Syria is really little more than a microcosm of an evolving American view of the Middle East writ large. American troop deployments throughout the region have been plunging for a decade and are now down to about one-tenth of their peak. America now has more troops in Afghanistan than the rest of the region combined, and that deployment is well on its way to a complete phase out.”

Zeihan acknowledges the intensity of the decline of American forces in the region, but he isn’t surprised. He goes on to address just how chaotic the region’s leadership is, expecting an Iraqi civil war to ensue within the coming years and the current Saudi Arabian de facto leader, Crown Prince Mohammad bin Salman, to go down as “one of the evilest individuals in modern history.”

“The sheer volume of public support, money, arms and ideological cover given to religiously-tinted fighters – that’s jihadis or terrorists based on your politics – by various Saudi citizens and royals alike has boomed in step with the Kingdom’s regional ambitions…Saudi Arabia habitually backs the most extreme, violent interpretation of Islam and regularly exports it far and wide at the end of a gun or leading wave of an explosion.”

Zeihan and Professor Stoll agree that Saudi Arabia’s human rights atrocities are unacceptable. That being said, Zeihan believes the United States should terminate it’s relationships with Saudi Arabia and even Qatar, citing examples of Qatar-backed terrorist threats. “Mohammad bin Salman is not a friend, nor is Saudi Arabia an ally. America used to have to put up with this sort of activity from the Saudis during the Cold War because without Saudi oil, the global trading system would have collapsed and taken the American alliance network with it. Courtesy of America’s shale revolution, those days are over.”

As discussed in Energized, the shale revolution has brought upon American pricing power that limits the strain the OPEC-lever can inflict on energy importers.

Zeihan adds the melancholy note of the fate of the Kurds and its close resemblance to the Hmonh people, a fractious mountain group allied with America during the Vietnam war. “The Kurdish dream of independence was never going to be more than a dream. Landlocked and partitioned, the only way a real Kurdistan could emerge would be if one of the four countries which house Kurds actively sponsor it. That’s just not in the cards. The Kurds are a lost cause; They were never more than an ally of the moment.”

“So why all the noise back in the United States? Aren’t the Americans exhausted with the Middle East? Shouldn’t they be celebrating?”

“In part it is because abandoning an ally is bad form, particularly if you think the U.S. should play a role in preventing genocide, promoting human rights, stymieing traditional rivals, or keeping a hand on the throat of the global economy. Even if you think none of this is the U.S.’ business, you’ve got to admit a lot of stuff happens in the region, and having a finger in the pot does prove useful from time to time. In the grand scheme of things, 2000 troops in Syria isn’t that big of a deal.”

Zeihan concludes with a breakdown of each region. Most situations are negative.

The article is informative and bleak. Zeihan is taking the American-Middle East relationship much further than Professor Stoll’s casual fireside talk at Rice. Buckle down and give it a read, I think it’s more worthwhile than the lecture I heard.

Have a great weekend!

-Danny Foelber

EKT Interactive Managing Editor

Head Writer | Eau Claire Writing

Unsubscribe | Update your profile | 9813 Shadow Wood Dr., Houston, TX 77080

Cookie Use Notice

Offshore Deep-Dive

2019 Review and 2020 Predictions

Transocean Rig Class and Utilization

Data Source: Transocean Rig Status Report October 2019

Transocean Rig Utilization by Geographical Region

Data Source: Transocean Rig Status Report October 2019

Main Takeaways

IoT

Oil Demand

IEA Week

A slew of IEA reports just in time for Thanksgiving. Dig in!

Global Energy Outlook

Africa Energy Outlook

Wind Outlook

Natural Gas

Trade, Policy, and Commerce

Southeast Asia

Upstream

Safety

Energy in Transition

Business

Upstream

Phase 1 (2003–2008): The beginning of the US shale revolution

Phase 2 (2008-2014): Big focal shift in the shale revolution and employment trends

Phase 3 (2014–2017): The oil downturn and shale’s responsiveness to oil prices

Source: Spears & Associates

Offshore

Location of the five recent discoveries in block 15/06 offshore Angola. (Courtesy Eni)

Climate Change

Offshore

Climate Change

LNG

Middle East: A Deep Dive

United States-Saudi Arabia-Iran Relations and Opinion