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Posts Tagged ‘Noble Energy’

Vortex Tools discusses the Northern Colorado Energy Summit (#2015EnergySummit) and an energy future based on low oil and gas prices.

Last week I spoke at the Northern Colorado Energy Summit in Loveland, Colorado (#2015EnergySummit). That’s me—second from the right—missing the suit jacket memo:

EnergySummitPic

As the Summit was titled “Drilling Down: The Economic Impact of Declining Energy Prices,” Vortex Tools was invited to speak on our applications recovering more oil condensates and reducing operational costs. We’ll be speaking on similar topics at the Rocky Mountain Energy Summit conference: August 24th-27th, 2015.

As with any trade show, the NoCo Energy Summit had booths loaded with swag (“I don’t know what this is, but I’m taking it anyway”), free meals and coffee, a fat stack of business cards exchanged, and, if you weren’t farting around on your smartphone the whole time, some great info to be gleaned from the panels. Of note:

Oil Prices Will Remain Low

I know, you get 10 speculators on stage and you’ll get 10 different opinions as to why oil and gas prices are low and if/when they’ll come back, but when you average them all out, very few think oil prices will get much above $60/barrel by year’s end. You can blame strict air quality regulations; you can blame the recent Iran deal; you can blame the downturn in the Chinese stock market (like I said, multiple speculators equals multiple opinions), but even with the small ups and downs this year, oil prices remain low overall.

Dan Kearney is the Senior Business Development Analyst with Noble Energy. When asked about whether the worst is over with low oil prices, he said, “I think we’re in between storms, and that we’ll continue to be between storms.” A recent uptick in oil prices led to producers flooding the market—hoping to grab part of that value increase along with everyone else—and this saturated the market, dropping oil prices back down again.

Another Low is Coming in 2015

Sarp Ozkan is an oil and gas Market Analyst for Ponderosa Energy. When asked the same question as above, he said that the next oil price drop will come in October or November this year. That seemed more specific than the rest, but he had good reason: That’s refinery maintenance season (and they’re currently running at 90%+ of capacity—leading to problems when they’re shut down).

$100+/Barrel Oil Wasn’t Very Realistic (Or Likely to Return Soon)

So things aren’t looking too great for 2015 oil prices and, as noted during the Summit, no OPEC country is balancing its budget at $50 oil. While some lament that $100/barrel oil is far, far away (if ever again), Ozkan ran the numbers as to where the oil and gas market can do well with lower prices. After factoring in lower commodity prices, increased regulations, and reducing operational costs to keep up, the price-per-barrel point to see good margins was $65/barrel. $60/barrel was about breakeven; below that was a loss; but $65/barrel is the marker where the industry profitability opens back up. At least that’s one analyst’s view.

The Global Middle Class is Growing and Needs Energy

Tisha Schuller was the President/CEO of the Colorado Oil and Gas Association (COGA) for five years and now serves as Project Director for Stanford University’s Natural Gas Initiative. Schuller began her career as an environmentalist, but became an oil and gas advocate for two main reasons:

  1. When comparing the total impact (energy output versus environmental imprint) of oil and gas versus alternative energy options, the numbers were heavily in favor of oil and gas; and
  2. She realized that giving access to this abundant energy resource is one of the best things you do for impoverished communities. Otherwise you are limited by daylight and what your body can do. Even in Colorado, abundant and affordable energy is valuable. For those living below the poverty line, 25% of their income is spent on energy. Schuller also noted that pesky detail that everything you’re standing on, sitting on, leaning on, texting on comes from petroleum.

As the breakfast keynote speaker, Schuller noted some reasons to be positive despite the down energy market:

  • Although it feels like the middle class in the U.S. is getting smaller, the global middle class is growing—mostly in Asia. According to Reuter’s, it will more than double in size by 2030.
  • With this growth will come great demand for energy, and 84% of it will be from oil and gas. It is currently estimated the need will be above the supply. When it comes to basic economics, you know what that does to prices.
  • Many believe that this will enable the U.S. to export oil. As someone later stated, “If Iran can, the U.S. should be able to also.” Analysts believe that the U.S. leaves $5.50/barrel of profit on the table by not exporting oil.
  • Operational costs continue to come down (hello, Vortex tools) as do emissions. Currently, CO2 emissions in the U.S. are down to 1992 levels. The U.S. is the only country to achieve this as a free market.

So the oil and gas market has reasons to be hopeful; just most of them aren’t showing up in 2015…

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Colin McKay Miller is the VP of Marketing for the SpiroFlo Holdings group of companies:

SpiroFlo for residential hot water savings (delivered 35% faster with up to a 5% volume savings on every hot water outlet in the home), industrial water purification (biofilm removal), and reduced water pumping costs.

Vortex Tools for extending the life of oil and gas wells (recovering up to 10 times more NGLs, reducing flowback startup times, replacing VRUs, eliminating paraffin and freezing in winter, etc.).

Ecotech for cost-effective non-thermal drying (for coal, biosolids, sugar beets, dairy waste, etc.) and safe movement of materials (including potash and soda ash).

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Vortex Tools covers the ongoing scaling back of the oil and gas industry in 2015—specifically: layoffs in Colorado.

I can describe the current American oil and gas experience in four words: Layoffs and low prices.

Whether it’s big companies or small companies, the story is the same: 2015 budgets were delayed then drastically reduced. From there, oil and gas companies have hemorrhaged employees (yet production continues to climb).

With being headquartered in Colorado, we’ve kept tabs on what’s happening around us. Over the last six months:

  •  Noble Energy planned to cut 220 jobs or 10% of its workforce, 80 from Colorado (and Noble is one of the main companies in the state).
  • WPX Energy cut 8% of its nationwide workforce, scaling its Denver office back from 156 people to 15 (25 Denver-based jobs were eliminated—120 were offered to relocate to Tulsa, OK).
  • Bayou Well Services decided to permanently lay off 250 Colorado employees.
  • Sabine Oil and Gas Corp. laid off 102 Denver-based employees starting in December 2014.
  • Linn Energy will shut its Denver office, cutting 52 jobs.

(Despite this, we’ve still sold Vortex DX-I tools into the Wattenberg basin [in northeastern Colorado] to increase oil recovery efficiency in horizontal applications when combined with gas lift.)

Field install of the DX-I Vortex tool

Field install of the DX-I Vortex tool

Some of this is scaling back the bloat that occurred with high oil prices, but some of it has to do with the downside of how many American companies conduct business. I can’t remember where I ran across this study, but it noted how different parts of the world formulate their business plans. Great Britain works off a five-year plan; Germany, a 10-year plan; and Japan, 15 years. The United States? Companies usually plan around whatever will increase stock prices this quarter.

You might think that 5-15 years is too long of a planning period, but planning around what can bump numbers within a 90-day period is woefully shortsighted and often hamstrings future development. However, with oil and gas, when it hurts financially, it hurts big, and when recovery comes, companies can often buy their way to solutions then. For 2015, however, even if it’s a great market to pursue oil and gas efficiency—squeezing every bit of value from the well—it’s going to be a year of engineers trying not to get fired.

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Colin McKay Miller is the VP of Marketing for the SpiroFlo Holdings group of companies:

SpiroFlo for residential hot water savings (delivered 35% faster with up to a 5% volume savings on every hot water outlet in the home), industrial water purification (biofilm removal), and reduced water pumping costs.

Vortex Tools for extending the life of oil and gas wells (recovering up to 10 times more NGLs, reducing flowback startup times, replacing VRUs, eliminating paraffin and freezing in winter, etc.).

Ecotech for cost-effective non-thermal drying (for coal, biosolids, sugar beets, dairy waste, etc.) and safe movement of materials (including potash and soda ash).

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CSU went with a ram — the most fearsome of mascots

Vortex Tools talks about the Natural Gas Symposium and how the Colorado flood affected oil spills in the area.

This week I attended the Natural Gas Symposium at Colorado State University in Fort Collins.

It was a bit of an odd crowd—there was a table full of anti-fracking retirees (especially as there’s a moratorium, Fort Collins Initiative 2A, to ban fracking for five years this November), a slew of locals who attend everything, then larger companies and politicians.

I should say former politician, singular, as several were stuck in DC with the partial government shutdown. In fact, a government worker told me that with the shutdown, government holidays go away, too, so if the shutdown had gone on, they would’ve been required to show up to work on Thanksgiving and Christmas.

Anyway, former Colorado Governor Bill Ritter, now that he’s retired (and I’m guessing paid per appearance), is everywhere these days, but he opened up the Symposium—read: a fancy word for a series of 75-minute speaker panels—with a discussion with the CEO of General Electric and the CEO of Noble Energy. Pretty fancy for a free conference.

I’ve had a couple of posts on the Colorado flood lately—how it didn’t help drought levels and how the oil and gas industry seems to be unfairly targeted in catastrophe situations—but I heard an interesting comment at the Symposium: one of the speakers noted that, with the deluge of water, the oil from damaged wells was essentially washed away.

It’s kind of like filling up a tenth of a glass with grape juice, then running it under a faucet. It doesn’t take long for the juice to dilute out. Sure, oil has more impact than grape juice, there isn’t a sink drain in nature, and maybe you’ve even heard that good ol’ notion that oil and water don’t mix—it isn’t just a metaphor, people—but right now, a) there are larger issues to address in the aftermath of the flood; and b) we’re stuck waiting for most of the oil to show up to treat… if it does.

However, I think the flood damage, coupled with the negative impression people have of oil and gas in Colorado, could lead to the fracking ban passing in November.

Let me be clear: I don’t like everything about fracking, and I don’t think it will exist in its current form in five years, but if you completely ban the practice, you basically shut down new oil and gas activity. While there are plenty who are happy with this notion, they’ll be surprised at the huge hit to the local economy. One Fort Collins council member went so far as to say that anyone who signs their name to the fracking ban should put up x amount to cover the financial loss. Meanwhile, the oil and gas industry will just move their operations to other states until it switches back.

Good luck getting the rest of the states to do the same, by the way. Call me crazy, but they might even welcome the revenues that Colorado would shoo away by passing 2A.

I think there’s a need to curb some of the energy use of fracking—especially as the industry is not required to reuse all that fracking water they then pump underground—but let’s talk compromise rather than local industry amputation.

A common statement I heard is that the oil and gas industry is not opposed to regulation, just bad regulation. Good regulation is necessary for safety, and when there isn’t enough, you get the kind of political move we’re seeing coming now.

However it goes, we’ll get a prediction of what 2014 will look like for Colorado oil and gas in November.

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Colin McKay Miller is the VP of Marketing for the SpiroFlo Holdings group of companies:

SpiroFlo for residential hot water savings (delivered 35% faster with up to a 5% volume savings on every hot water outlet in the home), industrial water purification (biofilm removal), and reduced water pumping costs.

Vortex Tools for extending the life of oil and gas wells (recovering up to 10 times more NGLs, reducing flowback startup times, replacing VRUs, eliminating paraffin and freezing in winter, etc.).

Ecotech for cost-effective non-thermal drying (for biosolids, sugar beets, dairy waste, etc.) and safe movement of materials (including potash and soda ash).

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