What do you do when prices are in the cellar, hundreds of rigs are idle, production growth has evaporated and the whole industry seems to be wondering how the numbers are going to work. Well of course, it’s time to head back to school to understand the new realities of energy markets. That is what School of Energy Spring 2016 is all about. This is nothing like other natural gas, crude oil or NGL conferences! The course work is hands-on. In each module we’ll drill down on an important aspect of the market, explain how it works, download spreadsheet models and learn how to use them. This time we’ve added more models than ever, crunching the numbers that explain everything from production economics to petrochemical margins in the context of today’s prices. You walk out the door with the how-to Powerpoints and the Excel models on your hard drive. Warning - today’s blog is a blatant commercial for our upcoming Houston conference.
School of Energy Spring 2016 is scheduled for April 6 and 7 at the Houstonian in Houston.
If you are not familiar with RBN’s School of Energy, the conference is structured more like a classroom, where we work through current developments in some aspect of the market and then examine those developments in the context of excel models that grapple with a wide range of issues including production forecasting, coal versus gas displacement, crack and frac spreads, gas processing economics, and ethane rejection. These models are similar to what we’ve used in past Schools, except that they have all been updated and upgraded. Likewise, the course content follows the same themes we write about each day in the blog – The relationships between the energy commodities are changing…such that the markets for natural gas, NGLs and crude oil are tied together in ways never seen before the Shale Revolution. What happens in gas impacts NGLs, which influences crude oil, which loops back to the natural gas market. As we’ve said frequently, there was a time when you could live out your career in the gas business, or the NGL business, or the crude business and get by with knowing very little about the other hydrocarbon markets. Those days are gone forever. School of Energy is designed to integrate your knowledge of these three commodities with hands-on, practical instruction and training.
See the School of Energy brochure for detailed course content and syllabus.
Our theme for this session is “Making the Numbers Work”. That is no small challenge for companies across the energy spectrum. Consider the following examples. The frac spread has averaged $2.00/MMbtu since June, down from $8.00/MMbtu a couple of years ago. How can gas processors make any money at that level? Steam cracker margins have been languishing at $0.14/lb lately, down from more than $0.60/bl in early 2014. Not good for the petchems. Brent vs. WTI has averaged $3.00/bbl since September. How would you make crude exports work at that differential, even if they were permitted? Refiners that were enjoying crack spreads that got up to $30/bbl this summer are now stuck with numbers under $15/bbl. And then we have producer rates of return with crude prices under $36/bbl and gas under $2.00/MMbtu. Or should we say, lack of returns. Ratios, differentials, price spreads, all crushed. Good grief. And what is the industry doing? Building more infrastructure of course.