I’m traveling and in meetings for much of this week, so posting may be lighter than normal. One of the huge events on the spring agenda for energy-related companies and policy makers is IHS CERAWeek, taking place March 6-10 in Houston, Texas.
The year promises to be especially exciting given the recent announcement by OPEC to limit oil production in an effect to boost oil prices and revenues for all the member countries. With the higher prices, the economics of shale oil production in the U.S. becomes much more attractive.
It will be fascinating to see how quickly production can be brought online to take advantage of the higher prices before this increased production drives down prices. And how much tolerance with OPEC members have to loss of market share.
I closely follow many of energy reporters to get their views on how long these moderately higher prices will last. With the potential of the Texas Permian basin region, the consensus seems to be that production rates can be brought online in near term. Time will tell what the reaction to these increased production levels will be from the OPEC countries. Here are some samples of tweets highlighting the dynamic state of today’s energy markets:
#Oil trades near $51 after slumping on signs of #shale fightback. More: https://t.co/oWJoFSyHs0 #OOTT
— World Oil Online (@WorldOil) December 7, 2016
Forecasts for US #oil output likely to keep rising post #OPEC deal as hedging boosts #shale margins – @tchiling @BNPParibas #WTI #gas #OOTT pic.twitter.com/v1SawTfBfR
— Christopher Johnson (@Eco_Vox) December 5, 2016
#Oil Market Turns Upside Down as Shale Rushes to Hedge Post #OPEC https://t.co/HxcupcuYAe with @alexlongley1 and @anussbaum1 #OOTT #shale pic.twitter.com/2ggeFXpp8d
— Javier Blas (@JavierBlas) December 5, 2016
The other wildcard is the new administration set to assume power in late January. The regulatory pressures facing upstream, midstream and downstream producers may be relaxed which would also encourage further production due to more favorable project economics.
With CERAWeek occurring right in the midst of these dynamics, it will be fascinating to get a sense for the mood of the energy leaders and policy makers. Last year was definitely more one of gloom with sub $30/bbl oil.
If you’ll be going to CERAWeek, make sure to connect with some members from the Emerson senior leadership team and energy automation consultants.
