The energy industry — everything from oil and gas production and transportation to oil refining, gas processing and NGL fractionation — has a myriad of variables influenced by dozens of factors. It’s a value chain so vast you’d think it would be impossible to explain in simple terms. But behind it all is a well-oiled machine for developing the resources that literally fuel our modern economy. And, by understanding what happens at each link in the value chain, you can ultimately gain a clearer picture of what’s happening in energy markets. In today’s RBN blog, we kick off a series aimed at examining and explaining the oil and gas value chain, starting with the upstream world of exploration and production — what happens in production areas, the types of companies that operate in that segment, and the critical role of oil and gas reserves.
If you want to get the energy world’s full attention, give it a global pandemic, a rush to decarbonize, and a brutal land war in Europe — all in quick succession. Bam! Bam! Bam! The past two-plus years have shaken the global oil, natural gas and NGL markets to the core, and forced just about everyone involved to rethink the expectations and plans they had before everything seemed to unravel. So what happens next? How do we provide energy security, put a lid on inflation, and save the planet? To answer those questions, a good place to start is to gain a better understanding of the fundamentals — how energy markets develop, work and interact. In today’s RBN blog, we discuss highlights from RBN’s recent School of Energy, a like-you-were-there replay of which is now available.
Here’s an idea. Let’s start up a new company that does energy market fundamentals linked to rock & roll songs. Do it with practical, commercial insights. Keep the quality top notch. Then give it away for free! Sound crazy? Maybe so. But that’s how RBN Energy got started 10 years ago, and it’s worked out pretty well. Now, 2,540 blogs later and with 35,000 members receiving our morning email each day, it seems like we ought to celebrate in RBN style by telling a couple of backstories that shed light on our approach to energy markets, delving into the whole rock & roll thing, and of course divulging a few deep RBN secrets never before revealed. Until now, that is. And there’s more! You might end up receiving a free RBN 10th Anniversary Commemorative Mug. Warning: Today’s blog is a trip down memory lane for hard-core RBNers.
WTI crude finally closed above $70/bbl yesterday! Yup, change in energy markets is coming at us fast and furious. Whether it’s recovery from COVID, the return of Iranian supply, the changes in OPEC+ production, the majors being walloped by environmentalists, or a genuine upturn in crude prices, the big challenge is keeping up with what’s important, as it happens. That’s what we do at RBN, in our blogs, reports, conferences and webcasts. But many of our readers only know us through our daily blog, which confines us to only one topic each day. What if we had another no-cost service, where we would provide all our available info on energy news, market data, RBN analysis and just about anything that impacts oil, gas, NGLs, refined products, and renewables? Well, we’ve got that now. It’s called ClusterX Energy Market Fundamentals (EMF) channel. It’s an app for your phone or browser. It delivers to you everything our RBN team believes is important as soon as we can get the information into our databases. And all you need to get access to EMF is in today’s blog.
Over each of the past eight years, we’ve opened the doors at RBN’s School of Energy with updated analytical models, new subject modules, and timely special features that have reflected the evolution of energy markets from the early days of the Shale Revolution and $100/bbl crude oil, through the price crash of 2015-16 and the incredible 2017-19 rebound. But these market shifts pale in comparison with what’s happened so far in 2020: a global pandemic, crude crashing to negative $37/bbl, a wipeout in LNG exports, a Cat 4 hurricane into Lake Charles — it just seems to keep on coming. Which means there has never been a more important time to reassess market analytics in the context of these tectonic shifts in the energy industry. That is exactly what we’ll cover today in this blatant advertorial for RBN's Fall 2020 School of Energy.
In 2019, there has been a significant shift in crude oil and natural gas markets. Prices have remained stubbornly low, even when faced with the risk of significant turmoil like the Saudi drone attacks. Investors are far less forgiving, and energy-related equity values continue to lag most other sectors, despite most companies returning more of their earnings to shareholders. Oil and gas producers are focused on their sweetest of sweet spots, wringing every crumb of financial return from their investments. The risk-return equation has changed. All this makes now a good time to examine the strategies and tactics necessary for survival in this challenging phase of the Shale Era. That is especially true for the players who seem to be doing everything right, because some of the worst management mistakes can occur when performance is good.
As exports of crude oil, natural gas and NGLs have surged, U.S. markets for these energy commodities have undergone radical transformations. Exports now dominate the supply/demand equilibrium. These markets simply would not clear at today’s production levels, much less at the volumes coming on over the next few years, if not for access to global markets. It is more important than ever to understand how the markets for crude, gas and NGLs are tied together, and how the interdependencies among the commodities will impact the future of energy supply, demand, exports and, ultimately, prices. Making sense of these energy market fundamentals is what RBN’s School of Energy is about. Warning! Today’s blog is a blatant commercial for our upcoming Houston conference. But we hope you will read on, because this time around, our curriculum includes all the topics we have always covered at School of Energy, PLUS five all-new sessions dedicated to export markets.
All this talk of trade wars is one more thing for U.S. oil and gas producers to worry about. That’s because overseas exports are the only thing balancing natural gas and NGL markets, and increasingly crude oil also relies on exports to clear light-sweet volumes from U.S. shale plays. More than half of propane produced in the U.S. already moves out of the country via ship, with China, Japan and South Korea among the highest-volume destination markets. Only about 3 Bcf/d of natural gas has been exported as LNG over the past few months, but there was only one lower-48 LNG export terminal operating until last week. In a year there will be six terminals pumping out LNG to overseas markets. And so far this year, an average of 1.4 MMb/d of crude oil — one-seventh of U.S. production — has reached the waterborne export market, not including all the gasoline and distillate exports. As exports assume an ever-larger role in U.S. hydrocarbon markets, it is important to consider ramifications of possible constraints on exports, including the potential for trade retaliation in response to President Trump’s recently announced tariffs on steel and aluminum. Exports, one of the key topics we’ll consider at our upcoming School of Energy — Spring 2018, is the subject of today’s blog.
Crude oil production over 10 million barrels per day, just a fraction of a percent away from the November 1970 all-time record. Natural gas and NGLs already well above their respective record production levels. And for all three commodities, the U.S. market has only one way to balance: exports. One-third of all NGL production is getting exported, 15% of crude production now regularly moves overseas, and the completion of several new LNG export facilities will soon have more than 10% of U.S. gas hitting the water. The implications are enormous. Prices of U.S. hydrocarbons are now inextricably linked to global energy markets. It works both ways — U.S. prices move in lock step with international markets, and international markets are buffeted by increasing supplies from the U.S. It’s a whole new energy market out there, and that’s the theme for our upcoming School of Energy — Spring 2018 — that we summarize in today’s blog. Warning — this is a subliminal advertorial for our upcoming conference in Houston.
For the past three years, the price for U.S. WTI crude oil at Cushing has remained close to $50/bbl while natural gas at the Henry Hub has gravitated in a range around $3.00/MMbtu. It has been one of the most stable periods of energy prices in decades. But below the surface of stability at the major hubs, prices at the regional level have been wildly volatile, driving dramatic swings in geographic basis. Alternating cycles of basis blowouts followed by basis collapses have become standard fare for U.S. oil, gas and NGLs as producers ramp up production, local prices get hammered due to capacity constraints, midstream companies respond by (over) building infrastructure, and regional price differentials implode due to overcapacity. With more production growth and infrastructure on the way, these basis cycles will keep on coming. In today’s blog, we’ll consider a few of the market sectors particularly susceptible to basis volatility, and provide a subliminal advertorial for our upcoming School of Energy, where we explore both the underlying causes and the outlook for future basis cycles.
Today’s energy markets are being rocked by new technologies, massive flow shifts to exports, and a myriad of new midstream infrastructure projects — to say nothing of the continuing onslaught of Mother Nature. It is more important than ever to understand how the markets for crude oil, natural gas and NGLs are tied together, and that is why it is time again for RBN’s School of Energy. But … this is not the best time for our Houston conference venue. So we’ve made the decision to GO VIRTUAL! We will webcast the entire School in real-time, with the same content, the same faculty and the same models. And since an understanding of the new realities of today’s energy markets is so essential, we have renewed, restructured and rebuilt our curriculum to CONNECT THE DOTS across our content, data and models. That’s the theme for our upcoming School of Energy 2017 – Virtual Edition, which we summarize in today’s advertorial blog.
If you missed the Golden State Warriors’ NBA Championship win last week, or an unbelievable putt at the U.S. Open this weekend you can always see it on ESPN’s SportsCenter. But what if you missed the most recent RBN School of Energy? Well, you’re in luck — we’re now offering 11 hours of video from SOE, which unlike other natural gas, crude oil or NGL conferences covers all three markets with hands-on course work. In each of the seven streaming-video modules, we drill down on an important aspect of the markets, explain how it works and provide spreadsheet models accompanied with instructional videos. Fair warning: Today’s blog is an unabashed advertorial.
For the past month, WTI crude oil prices have averaged $49/bbl, trading within a relatively narrow $7/bbl range. Two years ago, this price would have been devastating for producers, but not so in late 2016. The crude directed rig count is up by 127 since May, +11 just last week. U.S. crude production is down about 1.2 MMb/d since April 2015, but over the past three months has stabilized at 8.5 MMb/d. On the gas side, since the second quarter of 2016 a combination of lower natural gas production and higher demand (from the power, industrial and export sectors) has worked off a big inventory surplus. Consequently, U.S. natural gas prices are up more than 70% since March, even considering the big price drop over the past week. NGL prices are at the highest value relative to crude for any October since 2012. Is this it? Is this what a Shale Era recovery looks like? In today’s blog, we consider a possible road map for the next couple of years. Warning, we have also included a short infomercial for RBN’s School of Energy next week in Houston.
U.S. crude oil prices languish below $50/bbl, but the oil-directed rig count is up by 90, an increase of almost 30% over the past 12 weeks. Natural gas production is down less than 1% from the all-time high hit back in February even though the price of natural gas remains below $3/MMbtu. The price spread between U.S. propane and international markets is far below a level that should justify exports, but LPG exports to overseas markets continue at astronomical levels –– approaching 700 Mb/d, most of which is propane. What’s wrong with this picture? Why does it seem that relationships between energy production, demand and prices have broken down, or at least have undergone some fundamental shift? That is what our upcoming School of Energy Fall 2016 is all about. Warning: Today’s blog includes a commercial for our upcoming Houston conference, scheduled for November 2 and 3 at The Houstonian Hotel.
Crude oil and natural gas prices are back from the abyss, but does that mean the long awaited recovery is underway? Maybe so. But maybe not. Energy markets are fickle, driven by a chain of interactions where one market event triggers another, and then another. Rusty Braziel’s best-selling book, The Domino Effect, explores 30 such market events, which are represented by dominoes – hence the title of the book. More dominoes are falling now and still more will fall in years to come. This book explains the interconnectedness of energy markets through an analysis of energy market fundamentals: prices, flows, infrastructure, value, and economics. And good news for fans of audio books: The Domino Effect is now available on Amazon in Audible format. Today’s blog, an advertorial for the audio book, highlights what The Domino Effect has to say about what’s going on now.