The U.S. has been drilling for oil and gas for more than 160 years, and what to do with those wells once they are no longer productive has long been an issue, as they can also be significant emitters of methane, a major greenhouse gas. Today, we discuss a new approach that aims to address both issues.
Unlike most of us, CEOs and other senior executives at U.S. oil and gas companies derive the lion’s share of their compensation not from salaries, but from bonus and incentive programs tied to performance targets set by their boards of directors. So it’s no surprise that the dramatic strategic shift implemented by U.S. E&Ps and integrated energy companies over the last decade has been steered by an equally dramatic change in their compensation incentives. In today’s RBN blog, we review how top executives at oil and gas companies are compensated and analyze the shift in the incentives they are motivated to meet.
The Shale Revolution transformed the U.S. oil and gas industry operationally and functionally in the late 2000s and early 2010s, but the most significant changes occurred years later. Through the middle and latter parts of the last decade, E&Ps continued to improve their drilling-and-completion techniques and significantly increased production as they gained experience. This production growth was enabled by — or driven by, depending on the perspective — midstream companies’ aggressive efforts to build out the pipelines, gas processing plants and other infrastructure required to handle higher production volumes and exports. More recently, capital market constraints, the Covid pandemic and a looming ESG narrative have propelled the industry into the next phase of its evolution, highlighted by fiscal discipline, which delivers improved shareholder returns through managed capital spending. But how long will this stage last — and what’s next? In today’s RBN blog, we examine the energy industry’s maturation and the differences between this transformation and those in other industries.
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.
The energy market has been in chaos for some time. Even before Russia’s horrific attack on Ukraine, the multinational push to decarbonize the global economy was slow-motion-crashing into reality. Of course, global supply shortages only got worse following the invasion and the widespread response to it. The disruptions highlight the critical need for a balanced energy policy, both in the U.S. and abroad. This became evident in Europe last year, when a heavy, early reliance on renewable energy, largely wind, left much of the continent short on fuel and scrambling for natural gas when the wind didn’t blow enough. The overall supply-demand balance caused prices to rise steadily as the global economy climbed out of its COVID-induced recession. Then the situation became more dire as embargoes on Russian crude oil and gas were planned and implemented. In the U.S., the Biden administration, eager to both “green” the economy and keep gasoline prices in check, has been giving mixed signals to E&Ps and their investors, telling them to both ramp up investments in production and expect to play a smaller and smaller role going forward. It’s a confusing world. In today’s RBN blog, we look at the current energy environment, the policy roller-coaster, challenges to the increased usage of renewables that remain unaddressed, and how the politics of decarbonization are making the ongoing energy transition a very difficult row to hoe.
When crude oil prices crashed in the second half of 2014 and 2015, producers survived by becoming leaner and more efficient. That transition included drastic reductions in the rates paid to services companies while wringing ever more oil and gas out of each well and, in the process, permanently altering the economics of drilling and completion. This year, producers are again facing a lower-price environment; since early October (2018), crude prices have dropped more than 30%. In the current, more conservative investment environment, can producers do it again? Can additional value be squeezed out with bigger well pads and longer laterals? Today, we continue a series exploring the benefits and risks of these highly concentrated and highly complicated operations.
Dominator. Showboat. Brass Monkey. These are not player names in the re-established XFL; these are project names given to colossally proportioned drilling pads in the Permian and Appalachia. A single one of these well pads can be home to 20, 30, even 60 or more permitted well spots, each with miles-long laterals branching out in multiple directions. In today’s blog, we begin a series exploring the motivations that sparked this trend to larger pads and discuss the impact they’re having on the upstream and midstream sectors.
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.
Over the past five years exploitation of abundant gas and oil bearing shale basin formations by combining and augmenting two long-standing technologies has revolutionized North American energy markets. If you are at all involved in the energy industry you know that these technologies – horizontal drilling and hydraulic fracturing - are bigger than Bieber right now. Maybe bigger than Taylor Swift. Today we explain how they work and why they are so important.
