The Domino Effect

A few weeks back Rusty Braziel sat down with Don Stowers, Chief Editor of Pennwell’s Oil & Gas Financial Journal, to talk about the big picture – some of the most important issues facing the oil and gas industry, the lasting impact of the Shale Revolution, and Rusty’s thoughts from 40-plus years in the energy business.  It turned into the cover story of their June 2016 issue.  Today, we recap a few of the interview questions. You can download the full article (along with Rusty’s smiling face on the cover) at the bottom of the blog.

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.

Over the past six years surging U.S. hydrocarbon production from shale has exceeded domestic demand in many cases – leading to the development of export infrastructure. Large volumes of natural gas liquids (NGLs) such as propane are already being exported. Natural gas exports in the form of liquefied natural gas (LNG) are about to start and the recent end to federal restrictions offers the possibility to increase crude exports if they become competitive. A critical assumption behind all these export opportunities is that the U.S. continues to be the only country (except Canada to a lesser degree) to successfully “crack the code” in shale exploitation to produce commercially significant volumes competitively. This assumption would be turned on its head if competing countries like Mexico, China, Poland, Argentina and the U.K. are able to unlock their own shale potential. Today we review RBN Energy’s first Drill Down report of 2016, which considers the many “below-ground” and “above-ground” factors that will determine whether and how quickly, shale development becomes a worldwide phenomenon.