In The Oil Patch: Episode 204 – David Blackman & Geoff Bland

 

Kym Bolado 1:

And now it’s time to bring on our editor of Shale Magazine, David Blackman. David, welcome to the show.

David Blackmon:

Hey, it’s a beautiful day in Texas.

Kym Bolado:

It is. The weather is just getting amazing and I really love how we are now on this, daylight savings time. And so we have a lot more daylight. It’s a really wonderful thing. So David, let’s jump into one of our favorite partners that we love very much is the port of Corpus Christi. Seen so many wonderful things going on in that area. And of course the port has had a lot of good news. So let’s talk about that. Tell me about the appeals court decision and what they’re celebrating, the port of Corpus Christi.

David Blackmon:

Well, they, they had a good a court decision or reversal from the court of Appeal here in Texas this past week. The week before, the court of Appeals had issued a stay against the Port commission being able to vote on approving a 50 year lease with Lone Star Ports related to their Harbor Island facility where they were planning to build a super tanker, a loading facility there at harbor island. And the court had stepped in an issue, a stay order, but just a week later on March 26th, they lifted that stay. So now the port commission is going to be able to approve that 50 year lease with Lone Star Ports and get that project moving again. So, you know, there was some fear that this might be a long delay in that project, but it turned out to be just a week and now they’re able to move forward.

Kym Bolado:

Is there anything else that could possibly get in their way? I mean, I guess anything could happen, but how, what is the likelihood, do you think of this just now continuing to sail through? It’s much needed. We definitely need infrastructure and the port just has a stellar reputation.

David Blackmon:

Yeah. Just like you’re saying, there’s a lot of different things that could happen, I guess. And you never know about litigation that might be filed in the future for various reasons, whether they’re founded or unfounded. But at least right now the coast is clear and they’re able to move forward. But it’s a big undertaking, major project and those kinds of things. Big enterprises like that. There’s all sorts of potential for delay. But at least right now they’re able to move forward. And the corps of engineers would be able to get in there and start deepening the intercoastal canal to make that thing capable of landing these big, a VLCC super tankers.

Kym Bolado:

Very good. So switching gears just a little bit. Let’s talk about a new study released by Platts Analytics and it’s stating that Texas is going to need an additional 10,000 miles of new pipeline and it needs to be constructed by 2050. That’s to move all of our oil and gas to market. That’s sounds like a whole lot of pipeline. Put this into perspective for us.

David Blackmon:

That is a lot of pipelines, a lot of miles of pipe that need to go into the ground and that’s what will be required to fully maximize Texas’s production potential of oil and natural gas over the next 30 years. And that’s dependent on a lot of things. It’s dependent on demand, remaining strong for both oil and natural gas. And right now that looks pretty likely to happen. If it’s based on solar and wind not coming in and disrupting the deployment of more and more natural gas in the power generating sector. And it’s based on an assumption that the price for natural gas isn’t gonna skyrocket upwards and kill demand in the manufacturing and fertilizer sector, you know, that use a lot of natural gas, but all of those things being equal and as you know, based on those assumptions, Texas is going to being the center of oil and gas production in the United States for the coming decades. And to get that oil and natural gas to market, yeah, you have to have pipelines and that’s a lot of pipe. But to put it in perspective right now, today, we have more than the well over 3000 miles of pipe going into the ground in Texas just to bring oil and gas out of the Permian Basin right now. And that doesn’t include other pipeline expansions and new construction going on in other parts of the state. So Texas at any given time has a very significant amount of pipeline construction that’s ongoing in its portfolio anyway. So 10,000 miles of pipe does sound like a lot of time that you’re talking about over a span of 30 years and when you factor that in it’s kind of just really slightly above what’s normally happening in Texas anyway.

Kym Bolado:

Yup. Interesting. Now let’s talk our favorite topic. Yours and mine were always talking about oil prices. They go up, they go down. Now WTI price was sitting at $44 back in January. And you predicted that it would strengthen through the first three months of this year and that you predicted it would probably get somewhere around $60 a barrel. And that’s almost happened as of right now. So what crystal ball are you using that allows you to really be able to see and guess these numbers pretty accurately? For the most part,

David Blackmon:

What I like to tell people is one advantage of getting old is that you experience a lot of life. That guy on the farmers’ commercial, where we’ve seen it all.

New Speaker:

Yeah, exactly.

David Blackmon:

And you know, I’ve seen a lot over the years and kind of understand what does and doesn’t impact the price of oil. And you know, the other part of it is just being able to look at how the domestic industry is developing over time and what drives that development here in the U.S. Industry and there’s nothing magic to it. It’s just having the time to spend analyzing it and looking at what’s happened. But yeah, it’s getting up there. They’ll chat that $60 mark this week and that’s good. That’s a healthy price for everybody. I think over the course of the rest of the year, it’s probably going to kind of linger there. Maybe continue to rise a little bit, but just like last year, so much of it depends on what OPAC and Saudi Arabia do in Russia. And so they’ll be meeting in the fall to determine whether or not to continue their agreement to curtail their own exports. And we’ll see how that goes. You know if they get to the point where they don’t want us sustain those cuts anymore, then you know, we’re, we’re going to have a completely different situation. But right now everything’s looking pretty good for the industry and it’s really booming.

Kym Bolado:

Last question, David, tell me about the latest issue of Shale Magazine. We have, you have a new one out. What’s going on with it?

David Blackmon:

Yeah, we do. It’s a focused on natural gas. The cover story is kind of the history of, of how the natural gas market in the United States supply and demand as developed during the course of the first 19 years of this century. And I really enjoyed writing that. I’ve been involved in that throughout, you know, in various roles in the industry. And having seen it all developed, it was kind of a fun story to write. I hope everybody will take the time to go read that and pick up the magazine. It’s a really outstanding issue with a lot of good content in it. I hope everybody will take the time to go to shalemag.com and take a look.

Kym Bolado:

And you know, David speaking of the latest issue show magazine. Anyone who wants to subscription can easily just go to shalemag, order it online. We’re pretty there. It’s pretty inexpensive compared to other magazines that are out there for a really good easy read. They should go and visit the website and grab themselves a hard copy. But I also wanted to mention you guys have some new things coming onto the magazine. You guys going to focus a lot more into 2019 on global topics and what this means for the United States. So this might help in an area where it’s so complicated, Oil and gas, and what happens globally really affects us here in the United States too. So I’m looking forward to seeing some of those articles coming out on a more of a global picture and Shale.com and Shale magazine as well.

David Blackmon:

Yeah, me too. That’s going to be a lot of fun to kind of refocus on these international issues because everything we do in Texas, we’ve talked about Texas being the center of the U.S. Industry, but everything that happens here happens impacts. It’s a global market. So everything we do here reverberates all over the world and it’s important to bring all that into perspective.

Kym Bolado:

And we’re back. You’re listening to In The Oil Patch radio show. And our guest today is Geoff Bland who is a business development engineer with Aggeko. So Jeff, welcome to In The Oil Patch radio show.

Kym Bolado:

Hi. Well I’m really excited to have Aggreko back on. We haven’t had you all back on since last year and so I’m excited to catch up with you guys cause there’s a lot of great things that you guys have been doing in the oil and gas sector. But let’s begin with a little bit of your background. I do detect you have a accent. And tell me a little bit about where you’re from. And then we’ll go into Aggreko and how long have you been with Aggreko.

Geoff Bland:

Sure. Yeah. Well I’m from the Glasgow, Scotland. I’ve been with Aggreko for about 11 years now. I started off phase. One of the lead engineers developing equipment for, like for actual manufacturer. So all of the generators and piece of equipment that we currently use is rain to assets. And I grew up in Scotland. I’ve worked in probably about 70 countries across the world. Either previous career moves or with this company and yeah, great to be on the show today.

Kym Bolado:

Excellent. Well, so you have been around the world with Aggreko so for some of our listeners who are not familiar with Aggreko, it’s a huge brand. It’s a global company. And you guys do power generation, but go a little deeper into Aggreko. What is the company itself for any listeners who are not familiar with the company?

Geoff Bland:

Well, I think the key thing to understand about what we do is it’s not necessarily like rain to generators. We are solution providers more than, more than anything. We do turn-key projects, anything from, you know, 60 kilowatts to all the way up to three-400 megawatt applications. We do a temperature control. We do an oil free year. We have an Phil and I was engineering and we basically can solve the problems that the customers, businesses are facing. So, we use our assets, which we manufacture ourself in Scotland to provide really unique solutions that save a lot of money or solve very complex problems.

Kym Bolado:

Well, you know, most individuals in a lot of people are familiar with Aggreko as they see that these generators, that had the Aggreko name on them. But I’m glad you kind of explained. Aggreko Is such a larger company and it is all over the world and it is helping in so many different ways. Not just in power but coming up with, with solutions. So that’s what I want to switch gears to you and talk about the custom design, this install job, if you will, on a project. Or an application that you guys were using. It was actually using the SCR and an, SCADA, which was a lot of letters in there which you had not utilized before in Nam. So first of all, give me an overview and how are you utilizing them to come up with solutions?

Geoff Bland:

Well, I guess just to Kinda clarify, so on SCR is a Selective Catalyst Reduction system and SCADA is basically a communications network which allow all your pieces of kit to communicate together and essentially to meet the hook system from a hardwired possession. So, I mean we, we’ve just recently installed it’s a job which at the final install is looking to be able to at 40 megawatts of power which if you’ve operated in west Texas, generally anywhere in the states that they want us can start to become a limit. One advantage we’ve always had as a company is that we are temporary solution, which means all of our assets up to a year are not necessarily required to be a measured. So the emissions ouputs and are colored by the OEM manufacturer capabilities. So all of our engines are badged to low, still pre and anything more than a year you typically have to start measuring and reporting at the emissions output. The lower you can get the emissions from your pieces of kit, essentially the more pieces of kit you can have on site. So if your operation involves many emission sources like you know, for example compressors or engines or anything like that, then the lower you can keep those items, the more business you can do, the large your project can be. So for the, the project that you’re talking about, we actually employed, we actually came up with a design for, it’s a natural gas powered engine. These engines we can run on anything from street whale gas all the way to to clean gas and we can tune the emissions to fairly low labels. It’s probably about an eighth of the emissions that you would get from a diesel unit. But what we actually employed in this project with to SCR’s whichessentially clean up all of the residual nox out of the engine. And we actually reduced from that, that already quite a low number. We were just at by a further 95% per engine, which means that essentially we were providing a solution which is in only given, you know, maybe 5% of the emissions. It’s virtually as clean as, asside from the Co2, which is unavoidable from a combustion process. All the nasties which are in the, the gas are removed and it is virtually as clean as clean air that’s huge. So it’s been, it’s basically been a big advantage in terms of achieving near impairment without having to move into the higher levels of a title five or any of those other aspects which, you know, idle the length of time to the apparent generation.

Kym Bolado:

Right. Well, Jeff, when we returned from break, I want to get back into the topic of, you’re talking about these applications that are being created as a solution for the oil and gas industry. I guess if you follow the oil and gas industry like we do in the oil patch you kind of understand that trying to get a big site up and running can take time with that power. And then of course as it’s, as it’s powering up there’s a lot of different situations that come into play that an operator has to deal with as well. And, and so some of the things that you guys are doing are not only providing that power but also creating a better environmental impact for them as well. When we return, we’ll get back on the subject of air admissions. You’re listening to in the old patch radio show and we’ll be right back.

Commercial :

Aggreko has been powering the Permian Basin for over 10 years. Supporting Permian producers with temporary power to get their product to market when utility power is not available, Aggreko Is your reliable alternative. Aggreko supports power systems as small as a single 200 kilowatt to as large as 50 megawatt power plant. So when your utility power is delayed call on Aggreko to engineer a deisel, natural gas, or battery solution to fit your needs. We have immediate availability right here in the Permian Basin. Call 1-800-AGGREKO or online at aggreko.com.

Commercial :

Aggreko has been powering the Permian basin for over 10 years. Supporting Permian producers with temporary power to get their product to market when utility power is not available. Aggreko is your reliable alternative. Aggreko supports power systems as small as a single 200 kilowatt to as large as 50 megawatt power plant. So when your utility powers delayed call on Aggreko to engineer a diesel, natural gas, or battery solution to fit your needs. We have immediate availability right here in the Permian basin. Call 1-800-AGGREKO or online at aggreko.

Kym Bolado:

We’re back. You’re listening to In The Oil Patch radio show. Our guest today is Geoff Bland, who is the business development engineer for Aggreko, a global company. Jeff, before the break, you were briefly discussing a custom design that you guys had created. But I want to back up a little bit because you guys are really focusing on the Midland area. Well you guys are a global company, but there’s a lot of great things that are happening in Midland and you guys are a part of it because of the fact that there are so many obstacles in dealing in a rural area like the west Texas Permian Basin area. And I think the important thing to talk about is how Aggreko has been kind of leading the way, if you will, in these customers designs to really help utilize and help the oil fileds utilize a more efficient way through y’alls technologies. So let’s back up again and just kind of help me to understand how you guys developed the technology with this SCR. What was the solution for these companies? Break it back down for me.

Geoff Bland:

Well, I mean, I would say this first of all days, the key reason that we are actually cleaned so hard in that area at the moment is essentially nobody wants to have to have a generation package on their facility. It’s not necessarily what people want to spend their money on, but the challenge has been the utility and the area has been a be such that, you know, essentially the loss of business which is being caused by these long nights of black outs on the grid. Meaning that we can actually provide a huge amount of extra revenue for our customers by providing a solution that is either there is a backup to utility or actually take an order all together. I mean, we have, we have actively taken people off the grid because for them it makes more business sense to do that. We’re provide a micro grid solution, which is basically feeding. We can hook on anywhere on that network and then we can put a genery to basically take a customer off. And the way we do that reliaby and the reason that we get such good feedback is because we tend to do it a little bit like Lego blocks. You know, we add units together with redundancy. When a unit needs serviced, there’s no loss of power. We basically have a package which is very compact. We can deploy it in a matter of days or weeks and you know, provide 10-20 megawatts without skipping a beat. So I mean these applications are not new thoughts. We do all of your worlds. We’ve made our name and a lot of cases through either events or like world disasters. So I mean, we’re jetting when the situation is hardest in providing a solution to get people back up and running. So there is a perfect example of where that’s our mentality meets the needs of the client.

Kym Bolado:

You think about it though are something that we don’t think about a lot is just power as a whole. You know, everybody wakes up in the morning, they think, let me just flip a switch on and my lights come on. A running water, access to clean, running water. All of these of course require energy of some sort and it’s no different in the oilfield where if they’re in a rural area, it takes time for the utility company to come out there run lines. And I guess what I’m hearing is that has been a definite problem. And the oilfield and probably all over the world when we’ve had hurricanes or if you have a huge concert, which I’ve seen that too. And you guys are the power for this massive concert with lights and music and all this bunch of energy than is necessary. But we don’t really think about how do these things get that kind of power. And I guess we just kind of assume, well we’re, you know, we’re just going to call our local utility company and have this, you know, we’re going to tap into it and it doesn’t quite work that way. And so you guys are providing that to the energy companies but these programs are specifically being designed to where it’s, it’s a little bit more in depth than that. You guys are actually helping with air missions as well. And so it’s like, it isn’t just filling the needs of what a company needs for their energy resources, but it’s also helping them when we understand how much regulation is required from them for flaring and stuff like that. When we return from break, I want to get back on the topic of the admissions and the product, how it’s helping in that area as well. You’re listening to in the oil patch radio show and we’ll be right back.

Commercial :

Shale Oil and Gas Business Magazine is the one stop shop that’ll keep you in front of the customers that you need to grow your business. So let’s start growing your business in Texas. Email us [email protected]

New Speaker:

The Texas Alliance of Energy Producers has a rich and commanding history of fighting for the independent oil and gas industry. The Texas Alliance became a statewide organization in 2000 with the merger of two of the oldest oil and gas associations in the nation, the North Texas Oil and Gas Association, and the West Central Texas Oil and Gas Association. Today with more than 2,600 members, the Texas Alliance is the largest statewide association in the country serving independent energy producers and associated industries. Through our efforts in Washington DC and Austin, the Texas Alliance, it’s focused on a better business climate for you. The Texas Alliance has a staff consisting of highly experienced senior staff and supporting consultants serving our membership. Offices are located in Austin and Wichita Falls. Become a member today by visiting Texasalliance.org or email us [email protected]

Kym Bolado:

Hi, this is Kym Bolado, host of in the oil patch radio show. Starting every second Saturday of the month at 2:00 PM, we will have a live call in show in which John Tutera, the president of Texas Alliance of Energy Producers will be joining me in studio to answer all your questions. So be sure to take advantage of getting your most important oil and gas questions answered live and join us on the show. The call in live line is (210) 526-3656. Again, the call in live number is (210) 526-3656

Kym Bolado:

And we’re back. You’re listening to In The Oil Patch radio show. Our guest today is Geoff Bland who is a business development engineer with Aggreko. Jeff, before the break we were talking about how you guys are developing these custom design, specifically meeting the customers needs. So one size fits all is not really Aggreko’s way of doing business. You go in, you guys design a plan that works for the oil company the operators and the mid streamers and create a solution for them. I want to talk about turbines versus what you guys are doing. Or maybe you can tell me what is your favorite generator solution that helps meet the customer’s need. Because there’s been a lot of different turbines versus generators. So give me your thoughts on that.

Geoff Bland:

So we favor two things particularly. The first is saving the customer money and the second is reliability of power. For us, that is the key, the cornerstone of every system that we put together. We’ve invested in a lot of technology. We’ve got patents for various things across the spectrum. I would say that the debate or in turbines versus resets typically always come up because turbines take up less space that for a large amount of power than a reset solution. Okay. That’s the advantage. So if you have a very small space and you need 30 megawatts of power, maybe turbines are the way to go. However what that does is it means if that turbine needs repair or has an issue then you lose all your power right away. And the only way you can avoid that is by having two turbines. So then you’re invested in 60 megawatts of power in order to get 30 megawatts output. Our solution, we tend to favor using around about a one to 1.5 megawatt block. We have a number of smaller units as well, but for our large jobs, we use a 1 to 1.5 meg. I mean, like I mentioned before, we lego brick them together. So it’s all very customizable to the customers lot. So for example, if they need 11 megawatts of power, we might put 12 generators there, each putting out a megawatt. That gives them, if one of those generators goes out, then they still can do the entire, amount of power. It’s very scalable. And if for example, the customer thinks they need to 30 megawatts but once it up to full capacity, you know, it might only be 20 megawatts. They don’t always know that up front. So our solution, allows that scalability to happen on the fly. So we can, we can remove generators, add generators as the customer needs them with no loss of a loss of power. We can actually just drag and drop extra generators and we just provide the extra connection points in the fuel manifold.

Kym Bolado:

And I like your visual, it’s like Lego’s connecting them together and makes sense on a visual that yeah, you just keep adding and adding and increasing the power without ever risking being completely offline.

Geoff Bland:

We do the same thing around using the waste from the engine. So we can actually essentially reuse the waste heat that is put into jacket waterthe exhaust. We have scalable solutions that can, again, mount on the roof of the generators and provide either steam or hot water as a byproduct and isolate, and it actually brings the efficiency of the entire package all the way up to about 60-70%. Which is huge on fuel saving if the customer wants or needs those, those aspects, if they have a hot water need or a steam need. We’ll do things like, stimulation of oil sands or we could do it for, if it’s some minor operation where they’re doing things. We do applications like that across the world. So again, we design it so it’s scalable.

Kym Bolado:

Well that’s pretty interesting though, Jeff, because you’re basically saying that y’all are taking waste of what is being generated and reusing it. And Right now obviously when you reuse something, you’re saving money no matter what. It’s better for the environment. And so you guys are able to take waste and utilize it to help the bottom dollar for an oil company, which is, you know, not to mention it’s just recycled.

Geoff Bland:

Yeah.

Geoff Bland:

I mean, the best advantage actually is that we can use a waste fuel, such as a flare gas or something which is basically just being a byproduct of the oil production. We can use that gas. We can then provide the power for the customer and we can also utilize the waste from the engine as well if it’s required and provide a few custom products. So, as we mentioned at the start, the key thing for us is to understand what the customer’s needs are and we can tailor to match that.

Kym Bolado:

Now, you know, the first part of show, we’ve talked a lot about the design and how Aggreko is meeting the needs of oil companies and helping them come in and be more efficient. And of course being way more resourceful with the dollars, which is an absolute necessity right now in the times that we’re living with oil and gas companies that the bottom dollar really matters. But there’s something that’s even bigger that is very interesting to me, which is one of the main reasons why I wanted to talk to Aggreko again is you guys are really doing a lot in the area of emissions and you spoke just a second ago about flaring and how you guys can also utilize or lower and operators flaring through some of the programs and application you guys are doing. You guys are really coming, you’ve come up with some really great ideas pertaining to how to help the operators use or flare less, which is a really good thing for the environment. And of course it’s just a really good thing to be doing. But we do have to take a quick break. You’re listening to in the oil patch radio show and we’ll be right back.

Commercial :

And now it’s time to bring on the editor of Shale Magazine David Blackman, David to this week’s show.

Geoff Bland:

Hey, it’s another beautiful day in Texas.

Kym Bolado:

It is. I can hardly wait till it really, really gets warm and then it’s time to go hit the lakes, beaches and of course the Guadalupe River.

Geoff Bland:

Fun, fun, fun.

Kym Bolado:                    Hey, let’s talk a little bit about Joe Biden. You know, he came out with his own climate plan this week and it’s not a price tag of no big deal. Just $5 trillion. Yeah, yeah. My question is, does it seem like the Democrats now these days are throwing around numbers that are in the trillions and it just seems like perception wise, this is no big number.

Geoff Bland:

Right?

Kym Bolado:

What would we get out of this kind of investment with his climate?

Geoff Bland:

Well, you wouldn’t get anything. I mean, in terms of helping the climate, you would get nothing. I mean, literally nothing. wWhich is exactly what the IEA said about the green new deal, which would cost $19 trillion. You know, it literally would do literally nothing for, for the climate. It will do a lot for renewable fuels. He proposes $400 billion in new subsidies for wind and solar. And you know, since a big giveaway program in that regard. You get a lot of new taxes. He would repeal the Trump taxing track, Trump tax cuts, and also implement either a cap and trade program or a carbon tax. Heavier regulations on oil and gas emissions. But he does talk about continuing to encourage the production of natural gas in the United States, even as he’s trying to shut down oil production, which shows he doesn’t even understand how oil and gas are produced together out of the same wellbores. So it’s just, you know, it’s another thing that all of these candidates are doing. Beto O’rourke had his own plan few weeks ago that, you know, dropped like a dud and it was 7 trillion, I think. And Elizabeth Warren’s got a $12 trillion plan. Kirsten Gillibrand probably has a plan to, but nobody cares. And it just goes on and on and on and it’s silly season right now. None of it’s realistic. None of it has a chance in the world of getting through any congress and it’s so cynical and it’s just very discouraging quite honestly. I tried to tune it out as much as I can.

Kym Bolado:

I’m telling you that the season prior, you know, to who is going to be the nominee, it gets pretty, pretty crazy. And Yeah, depressing when you look at all the different, you know, speakers’ nonsense that they tend to speak. Let’s switch gears and talk about Riastat energy reported this past week about flaring going on flaring gas in the Permian Basin and that it had reached an all time peak during the first three months of this year. So what I want to talk about is what’s happening out there and you know what kind of problems will this present for the oil and gas industry?

Geoff Bland:

Well, it’s big problem and the reason it’s happening is, again because we have a shortage of pipeline capacity to bring the natural gas out of the Permian Basin to the Gulf coast for processing and export use here in the United States in various home heating and then other uses that we use it here. And the pipeline’s take a while to get built by the end of the year. You know, we’re going to have plenty of pipeline capacity and this problem will rapidly dissipate. But while it’s happening, it’s a major black eye from a public relations standpoint to the oil and gas industry. It’s a shame it happens this way and it’s a shame that some companies frankly abuse their privilege of being able to, to flare this gas. They continue to seek extensions on the ability to flare gas even after they have pipeline hookups available just because it’s expensive to hook some of their wells up to pipelines. And at the end of the day, it’s one of the biggest problems this industry has from a public perception standpoint. That just in every boom area, regardless of where it happens in the country, we have this issue and there never seems to be much real progress made by the industry in really doing things necessary to resolve it before it becomes a major black eye. And so here we are just going through the same thing in the Permian. We went through in the Eagle Ford and the Bakken and the Marcellus and on and on and on. So I don’t, it’s sad. I love this industry. I just wish it could get together and really take necessary steps to stop this from happening every place that it goes into a boom.

Kym Bolado:

One of the things that I really enjoy doing, you help us as well is energy minutes that are being submitted out to a lot of the radio shows that we’re on and even shows stations that don’t carry our program, but they’re interested in what we call our energy minutes. One Minute of energy that’s happening for the day that you can take and and look at it for the day, what’s happening in energy. in it, we’re consistently talking about the price of oil. Rather it’s you, myself or commissioner Ryan Sitton with the Texas Railroad Commission. Oil prices and you know, to say that all prices are falling again and they’re below a 52 briefly this week. They went below 52 briefly this week. So is demand really falling off that much that it’s causing this. Maybe there are other factors at play here too. Tell me a little bit about what you think.

Geoff Bland:

Well, there seems to be a prevailing thought that demand is falling off. I don’t really think we have any real, demonstrable proof of that other than we’ve had some significant inventory builds over the past month or so. But there’s a lot of seasonal factors at play in these inventories, crude oil storage inventory’s going up and down at various times of the year. So until you have three or four months that establishes a trend I don’t think you can really even say that that’s a real significant thing. But the market sees these inventory builds and goes into panic. They see the inventories building, they see the trade dispute with China escalating. They see the President now talking about putting tariffs on Mexico because of the immigration crisis at the border and the drug crisis at the border. And so all of these things happening at once has a emotional impact on the markets than it is a real numbers impact. And so I don’t really think demand is slackening off at all. China’s still importing millions of barrels of oil every day. And so is India and so is the United States. And the demand for crude oil is actually remaining pretty strong. That it’s just this mental perception in the market when they see these kinds of headline news popping up that causes the price to drop. Hopefully the news cycle will change here soon and in the markets will calm down a little bit. But for right now, we’ve had a $11 drop in the price if crude oil in just three weeks. And that’s, that’s a big deal to these companies that are operating on small margins.

Kym Bolado:

Right. Well, you know, these other factors that I asked you about it, they’re at play. Is there a source that the energy industry or the media uses that, you know, where we are with demand, that kind of balances or unbalances the weekly brief of energy and where does everybody collect the data from and how valid is it?

Geoff Bland:

Well there are various sources of the data. API puts out a weekly inventory storage report and so does the Energy Information Administration here in the United States. And that’s really the main source of all this data as the EIA. They’re really good and their numbers are what they are, but they’re not always, frankly, they have to go back and revise their numbers pretty much every month. And, so its.

New Speaker:

And this is not a discredit them.

New Speaker:

No.

New Speaker:

You can only go by what you being told in other countries and the countries that are you know, in OPEC.

New Speaker:

Right.

Kym Bolado:

And they’re not always accurate as well. So, sometimes these things are off and then of course it causes a scenario like what we’re seeing correct, Where energy can go up or down on the prices or crude oil and those factors lead to and link back to some of the reasons why it shifts dramatically from time to time.

Geoff Bland:

Yeah. See, it’s very similar to the stock market too. Stock market is the same way. As much it goes up and down as much based on emotion as it does on reality. So until you have a trend that lasts more than a couple of weeks, you know, into several months, you don’t really know if it’s a trend. So it’s all emotional in the short term.

Kym Bolado:

Makes perfect sense. And David, thanks for coming this week and joining us and talking to us about energy and I look forward to hearing some more of your energy minutes this week on the radio.

 

 

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