Houston was again the center of the oil and gas industry. The Hilton America hosted the most influential people from industry, technology and government from all over the world with few omissions.
In IHS CERAWeek tradition the week opened with a broader overview of current events. There was an opening speech by Sen. Lisa Murkowski from the great state of Alaska. The Senator pointed out some of the obstacles the current administration is putting in front of the oil and gas industry. The Senator pointed out that there has been a beneficial impact on the USA economy thanks to fracking but is being held back by Washington DC not opening up federal lands or approving LNG exports. Senator Murkowski is also in favor of oil exports and if Washington will not approve exports she will introduce legislation to allow it. The Senator would like to see the USA energy self-sufficient. She pointed out that some of the best paying jobs in the USA are in energy.
This was followed by a presentation from Emilio Lozoya CEO of PEMEX. Mexico has huge oil and gas reserves but because of government policies production has been declining for many years. The recent election of a new President has tried to bring about changes letting in foreign investment and new technology. Mexico has been trying to do this for many years but there is a lot of resistance from the left. Mr. Lozoya said that Pemex was for foreign partners and expertize in the deep-water and cogen areas. They are also looking at developing gas reserves, refineries, pipelines, marine terminals and platforms. Pemex has more mature fields and not enough money to develop new fields. Outside of the oil industry, Mexico is a very open economy and a big believer in free trade. It is still early and not yet clear if Mexico can change and reverse the decline in production.
Day 2 is oil day and Daniel Yergin, the founder and host of the conference, had an outstanding line up of ministers, CEO’s and experts from around the world. From Nigeria to the Russian Federation, from the Middle East to South America. There was a clear message that there is an increasing amount of possibilities only limited by technology and capital. The last 3 years has also brought an amount of stability into the market that encourages investment. There was also a new phrase at the conference: $100 is the new $20. $100 oil can make a lot of oil reserves economical to produce.
Several countries were noticeably missing, Venezuela and Argentina. Venezuela with the largest single oil reserve in the world and Argentina with one of the largest shale gas reserves in the world. There was a question about Venezuela’s declining production. The response was that because of Saudi Arabia’s spare capacity and USA increased production there is no impact on oil markets.
Day 3 was gas day. Joe Kaeser President & CEO of Siemens AG was one of the keynote speakers and pointed out that the development of shale gas and export of LNG could create a redistribution of wealth back to the USA and reindustrialize the country.
In several of the question and answer session the Ukrainian situation was brought up. The comment was that if the USA was exporting LNG it could have a geopolitical influence and help the Europeans take a tougher stand against the Russians actions in the Crimea. The fact is that the DOE does not currently have any mandate to change its procedure on approvals as per Secretary Moniz of the Energy Department. While a project may get a license to export the DOE cannot tell you were to send the LNG. Separately he point out that CO2 levels have gone down because of the increased use of natural gas. The Secretary also point out that the USA in 2013 exported 4 mbpd of oil products and these exports are approved by the Department of Commerce. With all the light crude oil being produced in the USA, simple crude distillation is being built again in the USA.
Chris Finlayson CEO of BG Group reminded us that it was 50 years ago that the first ship of LNG was transported from Algeria to the UK. He said that the main challenge to developing LNG projects is that they are very expensive. That costs are going up for labor, producing unconventional and technology. He pointed out that there are 100 years of geological data in the USA to know where the sweet spots are there is not the same data outside the USA. Another big challenge outside the US is that there is no alignment on royalties.
Natural gas in the transportation area seems to be gaining a lot of attention. It is estimated that there is a potential of up to 6 mbpd equivalent in the USA alone.
Day 4 concentrated on Power and renewables. Several speakers talked about how coal is still King in the power sector but that there is a threat from natural gas and renewables. Gas being cheap and cleaner and renewables not yet cheap but cleaner. While Secretary Moniz likes solar the biggest gains in the renewable are coming from wind.
One of the more interesting sessions was the Geek Show. A group of genius MIT
Professors talked about the research they are doing in the field of energy. From solar to liquid metal batteries or how to harness energy from the most common elements on earth.
The conference was concluded by a speech from former Federal Reserve Chairman Ben Bernanke. He was positive about the USA economy and felt it will continue to improve.
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