Opinion

Analysis: Things are flat in the Permian, and there's a push for renewables in Santa Fe by Dr. Daniel Fine


The Permian-Delaware Basin rig count should start falling as oil operators, large and small, are flat for 2019.

Spending has been sharply reduced as supply now dominates the A.I. (Artificial Intelligence) used by many commodity traders in oil.   

The large or integrated oil companies have all the rigs of 2018 in place for 2019. This would make October the price peak of the latest boom or recovery in oil. Permian-Delaware Basin production would decline at least 500,000 barrels in 2019 to offset the supply glut and stabilize at $50 per barrel.

OPEC members, notably Saudi Arabia, need a fiscal price of oil of $85 per barrel to pay for government and social spending. But at $60 per barrel, cash flow will not make it.

Its new public relations-lobbying in the U.S will require Sovereign Wealth Fund borrowing at market rates, which will be higher mainly because of U.S Senate sanctions over the murder of a Saudi journalist writing for the Washington Post. 

This writer forecast a 2019 $50 per barrel average price of oil when prices fell to $43.00 last month.   

At the same time, many small and independent producers have break-even at $50 with high-interest debt!

There are Chapter 11 bankruptcies valued at $140 billion from the Panhandle in Texas to the San Juan Basin that resulted from the OPEC -Saudi Arabian price and market share war of 2014-2016 against Southwestern small/independent shale and tight sands producers who now want reparations or damages. 

This could hold up financial public relations as state courts hear from local energy banks and their Chapter 11 or equivalent clients.

 

Saudi Aramco is looking at American LNG investment in the Gulf Coast.
But that would compete against Russian Gazprom export pipeline gas to the European market.  

This would confront Russia with Saudi Arabian conflict and threaten Russian-Saudi Arabian accord in OPEC.

Governor Michelle Lujan Grisham of New Mexico has announced a target of 50 percent renewable energy in 10 years. Electricity rate payers would bear the cost. She also placed New Mexico in the Climate Change Treaty Camp. However, if the Democratic Party wins the White House in 2020 there is no doubt that Washington will follow Santa Fe and our new governor.  

In the meantime, the new Secretary of Energy Minerals and Natural Resources, Sarah Cottrell Probst, is a world expert in carbon tax architecture to mitigate global warming.   
And there could be trade-offs with the super-majors in the Permian-Delaware basins.
The new Administration is expected to create a new energy policy that will replace the effort of ex- Governor Martinez. One issue that did not appear in 2015 was well-density.

The current company-state conflict centers around increased density because of down-spacing in the sub-surface. The opposition is beyond this specific technical capability: it is about more production of oil and carbon in relation to climate change.   
What happens in New Mexico will have an impact on regulations in other states and, later, in national energy policy.

This column is an independent analysis by Dr. Daniel Fine, who is the associate director of New Mexico Tech's Center for Energy Policy and the State of New Mexico Natural Gas Export Coordinator. The opinions expressed are his own.

 


Visit source site

https://daily-times.com/story/money/industries/oil...

Santa Felatest oil and gas newsNew MexicoAlbuquerqueRenewable EnergyrenewablesrenewableSolar energyoil newsweekly oil newsBusinessBusiness newsgeopoliticalGeopoliticsForeign affairsForeign policyOPECNon-OPECNon-OPEC ProductionNOPECOPEC MEETINGRussiaRussian marketRussian Direct Investment FundMichelle Lujan GrishamGovernor of New MexicoDemocratPermianPermian BasinAmerican Petroleum InstituteDelaware BasinSan Juan BasinFarmington New MexicocoloradodenverBakkenBakken crudeCompressed Natural Gas industryNational Security CouncilNational SecurityHomeland SecurityDepartment of CommerceDepartment of DefenseDepartment of EnergyDepartment of InteriorDepartment of International TradeDonald TrumpPresident TrumpTrumpChinaChina National Offshore Oil CompanyChina Petroleum & Chemical CorporationKingdom of Saudi ArabiasaudiSaudi ArabiaSaudi Arabia OilSaudi AramcoQATARMiddle Eastenergy securityDr. Daniel Fineindustry newsnewsOil And Gas Industry Latest Newsoil and gas industry newsoil and gas newsOil Industry Newsweekly market newsweekly newsweekly news updateWorld NewsRepublicans

More items from wfine94268


Reactions to Delaware Basin News Shows Misunderstanding of Petroleum Economics by Dr. Daniel Fine

News of the size of oil reserves in the Delaware Basin (New Mexico's share of the Permian) while OPEC was deciding how many barrels it will cut from the world market to lift prices caused epic confusion – and revelations of how little “authorities” and the media understand petroleum economics. The ...

Will Fine


Posted 2 months agoOpinion > OPECNon-OPECNOPEC +91

Analysis: Trump and Saudi Collision on Oil, and Bingaman’s Return to Santa Fe

In an earlier column, readers overseas benefited from this writer's forecast that crude oil prices would fall dramatically because most commodity traders got it wrong. Simply, this column's analysis was the buying of oil assumed a shortage would result once the sanctions against Iran would be activ ...

Will Fine


Posted 2 months agoOpinion > Senator BingamanBingamanSanta Fe +71

Dr. Daniel Fine: Trump and Oil in Trade Geopolitics

Unlike 1973, and its oil embargo against the United States, there is no supply threat from the Middle East. Consequently, only a demand unknown moves the price of crude oil. Permian/Delaware has displaced the Middle East as a source and even Mexico imports U.S. production.  This has caused euphori ...

Will Fine


Posted 5 months agoOpinion > United StatesMiddle EastPermian +69

Analysis: What's Next for Oil and Gas Prices After Putin-Trump Summit? by Dr. Daniel Fine

(Photo: Pablo Martinez Monsivais,/AP) The opposition in Congress wants to see a transcript of what President Donald Trump and Russian President Vladimir Putin talked about for two hours alone. No doubt some of that time was spent discussing OPEC and the price of oil. This is abov ...

Will Fine


Posted 7 months agoOpinion > Donald TrumpPresident of the USAPresident +56

Dr. Daniel Fine: Oil – Before and After the November Election

The Trump Administration is moving towards less royalty rates on Federal land leases, less Bureau of Land Management discretion on Environmental Protection Act obstruction on the Application for Petroleum Drilling process, less coal and nuclear power generation decline, and less oil supply confiden ...

Will Fine


Posted 7 months agoOpinion > Ryan zinkeDonald TrumpPresident Trump +66
All posts from wfine94268