Record high production with prices still rangebound! As of year-end 2017, Lower-48 natural gas production was at an all-time high — 77 Bcf/d and rising. NGL production from gas processing was at 3.7 MMb/d, the highest since EIA started recording the numbers. And U.S. crude oil output stood at 9.8 MMb/d, within spitting distance of the 10 MMb/d record set back in October/November 1970. All this with the price of WTI crude oil no more than 9% higher than it was this time last year, and natural gas prices 20% below year-end 2016. Yup, the dogs are out. Productivity is the culprit: longer laterals, super-intense completions, manufacturing-process pad drilling — the list goes on. Clearly the U.S. can’t absorb all this production growth, so the export market must be the answer. Or is it? Are we really that confident that world markets will make room for still more U.S. hydrocarbons? If not, what does it mean for prices? And ultimately, how will these prices impact U.S. producers? These are big questions, and with this much turmoil in the market it is impossible to know what will happen. Impossible? Nah. No mere market turmoil will dissuade RBN from sticking our collective necks out to peer into our crystal ball one more time to see what 2018 holds.
2017 Track Record
Each year before we get to our new Prognostications, we find it instructive (and sometimes sobering) to look back at how we did the previous year. In other words, to check our work. This time around we did that in Rearviewmirror, posted last Friday, December 29. Overall, we think we did pretty well, with accurate predictions for the range of crude prices, rig productivity, producer strategies, Permian natural gas basis, the frac spread and ethane rejection. We were a bit less prescient regarding gas prices and crude production. For more on our outlook for 2017, check out The Top 10 RBN Energy Prognostications for 2017.
And Now 2018
According to the Chinese calendar, 2015 was “Year of The Goat” and that year certainly lived up to its name. The Goat was followed in 2016 by “Year of the Monkey” and in 2017 by the “Year of The Rooster.” Cock-a-doodle-do! Again, pretty good descriptions of energy markets in those years. So now in 2018 we face “Year of the Dog.” While many RBNers are dog people, we’ve got to admit that at first blush a dog year doesn’t sound all that inviting. So let’s give it a positive spin. As our title proclaims, the dogs are out! Production is growing and unless something goes awry with OPEC or the world economy, the future looks bright. But as our 2018 graphic implies, it is going to be dog-eat-dog competition out there.
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About the song
The Baha Men released “Who Let the Dogs Out?" in July 2000, and it became the group’s only hit single in the U.S. and UK. The song reached the Top 40 in the U.S. and went to #2 on the UK singles chart, gaining further popularity after it appeared in the movie “Rugrats in Paris.”
The Baha Men were formed in the Bahamas in 1980, initially going under the name High Voltage. They specialized in disco and funk covers, and were very popular in the Bahamas’ hotel and nightclub circuit. Later in the 1980s, the band started focusing more on junkanoo music (a colorful Bahamian street carnival music, featuring goombay drums, cowbells, & bright costuming) and original tunes. They were discovered by Steve Greenburg, who signed them to his Atlantic Records world beat subsidiary (called Big Beat Records) in 1991. Changing their name to the Baha Men, they released their first album for Big Beat, entitled Junkanoo, in 1992 — it yielded the local hit "Back To the Island." The Baha Men’s 1994 album Kalik had the international hit "Dancing in the Moonlight" on it. Greenburg then moved the band to Polygram Records, where they released 1997's "I Like What I Like" and 1998's "Doong Spank." Neither album was successful and the band was dropped from the label. Greenburg started his own label (S-Curve) in 2000, and signed the Baha Men to it.
"Who Let The Dogs Out" received the Billboard Music Award for World Music Album of the Year in 2000, a Grammy in 2001 for Best Dance Recording and a Kids Choice Award for Favorite Song in 2001, and has the dubious distinction of gaining the third-highest number of votes in Rolling Stone Magazine's Most Annoying Songs Poll (conducted in 2007), most likely due to its memorable chorus, "Woof, woof, woof, woof, woof."
