• EPRINC Assessment on Mexico’s Oil and Gas Challenges by Rafael Sandrea

    Mexico is an essential piece of the North American petroleum production platform, and Mexico’s oil and gas reserves and production are at a critical crossroads. Oil reserves would be exhausted in ten years and gas reserves in six without massive new capital commitments. Of a total of 465 oil fields discovered, today a handful of ten currently account for nearly two-thirds of all domestic production; likewise, of the 700-plus gas fields discovered, ten account for almost half of all gas production.

    The energy reform measures implemented in Mexico over the last few years, also known as the New Energy Model, offer considerable potential to lift oil and gas production, increase employment and deliver technological advances, and additional revenues for Mexico’s federal, state, and local governments. The New Energy Model has brought new investment into Mexico’s petroleum provinces, and there has been significant investment in seismic surveys and commitments for new wells. This expanded activity in the petroleum sector, entirely from private investment, has led to new discoveries.

    Mexico’s new president, Andrés Manuel López Obrador (often referred to as AMLO), has expressed skepticism towards the energy reforms of the previous administration and has halted most initiatives to bring new private capital into the development of Mexico’s oil and gas resources. Although Mexico has not had a full public debate on all aspects of AMLO’s criticism of the New Energy Model, this EPRINC assessment demonstrates that without massive new commitments of capital for petroleum development, Mexico’s oil and gas future is grim.

    The Spanish-language version of the assessment can be found here.

     

    Read More
  •  

     

     

    Revisiting The Strategic Petroleum Reserve (SPR)

    The prospect for conflict in the Middle East, pending collapse of production in Venezuela, and turmoil in North Africa all remind us the world oil market still faces substantial threats of disruption.  The North American petroleum renaissance, which has lifted U.S. oil production to the point where net exports are rapidly moving into positive territory, has also opened opportunities for  Congress to sell off a substantial volume of strategic stocks to fund a range of domestic programs. EPRINC has argued that while some adjustments to the reserve size may be justified, on balance, it still plays a critical role in the security of the United States and decisions on the size of the SPR should take the long view. The SPR remains an important strategic asset.

    Given the current geopolitical environment, we are highlighting some previous EPRINC papers published on this topic.  In addition, our friend and colleague, Dr. Carmine Difiglio, has shared with us his insightful analysis of the value of strategic stocks in sustaining economic growth. Professor Difiglio, formerly with the U.S. Department of Energy, is Director of the Istanbul International Center for Energy and Climate (IICEC) at Sabanci Univerity.

    For links to the reports on the SPR, click here

    John Shages, former Deputy Assistant Secretary for Strategic Reserves, writes on Policy Challenges in Managing the Nation’s Strategic Oil Stock  (July 2014).

    For access to the report, click here

    Lucian Pugliaresi of EPRINC and Fred Beach of UT, Austin debate the value of the SPR in the Wall Street  Journal (November 2015).

    For access to the report, click here

    Larry Goldstein and Lucian Pugliaresi of EPRINC comment on Congress’s initiative  to fund health care by reducing the size of the SPR  in Politico (July 2015)

    For access to the report, click here

    Carmine Difiglio’s extensive analysis of the negative consequences of world economic growth from oil supply disruptions. Oil, economic growth and strategic petroleum stocks, Energy Strategy Reviews (2014).

    For access to the report, click here

    Michael Lynch, EPRINC Distinguished Fellow and President of Strategic Energy and Economic Research, Inc. presents a retrospective on the 1979 oil disruption and the role uncertainty and hoarding can play is amplifying the cost of an oil supply disruption. The article was recently published in Forbes and can be found here

    Read More
  • Screenshot 2019-01-02 15.13.04

    EPRINC Releases Report on Mexico’s Petroleum Future

    The energy reform measures implemented in Mexico over the last few years, also known as the New Energy Model, offer considerable potential to lift oil and gas production, increase employment and deliver technological advances, and crucially additional revenues for federal, state, and local governments. These reforms, if fully implemented, will also enhance long-term energy security for Mexico and North America. Energy reform in Mexico is contributing to the likelihood that North America will become a sustained net exporter to world markets in both petroleum (crude oil and refined products) and natural gas in the coming years. In a just-released EPRINC assessment, Michael Lynch, EPRINC Distinguished Fellow, presents his findings on the economic value to Mexico of the energy reforms in the petroleum sector. A link to the full report can be found here. A Spanish translation of the report will be posted on the EPRINC’s website in early January 2019.

    Read More
  • Screen Shot 2018-08-05 at 10.49.16 AM

    The Permian Basin Produces Gas, Too

    This report by EPRINC Non-Resident Fellow Trisha Curtis is part of the Energy Policy Research Foundation’s multi-year research program evaluating the scale and scope of the North American petroleum renaissance. As U.S. producers expand production to meet domestic requirements and the rapidly growing market for pipeline exports and Liquefied Natural Gas (LNG), it is essential that policy makers have a full understanding of the sustainability of the U.S. natural gas production platform. This report addresses the range of challenges and opportunities for expanding U.S. production of natural gas for both domestic uses and export markets through an in depth look at North America’s most prolific oil and gas basin, the Permian. The report can be found here.

    Read More
  • PetroNerds Thumbnail

    Hedging Haircuts and Big Basis Moves

    EPRINC trustee Ben Montalbano and non-Resident Fellow Trisha Curtis, both co-founders of PetroNerds, have just completed an assessment of oil hedging positions of 25 major oil producers in the Permian Basin.  Hedging is a valuable tool for distributing risk and allowing producers to protect revenue streams from price volatility. Hedges protect producers revenues when oil prices fall, but also limit gains when prices rise.  In addition, when oil prices rise it may limit the supply response if a large volume of unconventional production is hedged. Ben and Trisha’s assessment shows the percent of total production that producers hedge varies, but heading into Q1of 2018 producers hedged about 20% of total output. A copy of their assessment can be found here.

    Read More
EPRINC Assessment on Mexico’s Oil and Gas Challenges by Rafael Sandrea

Mexico is an essential piece of the North American petroleum production platform, and Mexico’s oil and gas reserves and production are at a critical crossroads. Oil reserves would be exhausted in ten years and gas reserves in six without massive new capital commitments. Of a total of 465 oil fields discovered, today a handful of ten currently account for nearly two-thirds of all domestic production; likewise, of the 700-plus gas fields discovered, ten account for almost half of all gas production.

The energy reform measures implemented in Mexico over the last few years, also known as the New Energy Model, offer considerable potential to lift oil and gas production, increase employment and deliver technological advances, and additional revenues for Mexico’s federal, state, and local governments. The New Energy Model has brought new investment into Mexico’s petroleum provinces, and there has been significant investment in seismic surveys and commitments for new wells. This expanded activity in the petroleum sector, entirely from private investment, has led to new discoveries.

Mexico’s new president, Andrés Manuel López Obrador (often referred to as AMLO), has expressed skepticism towards the energy reforms of the previous administration and has halted most initiatives to bring new private capital into the development of Mexico’s oil and gas resources. Although Mexico has not had a full public debate on all aspects of AMLO’s criticism of the New Energy Model, this EPRINC assessment demonstrates that without massive new commitments of capital for petroleum development, Mexico’s oil and gas future is grim.

The Spanish-language version of the assessment can be found here.

 

Lucian Pugliaresi and Max Pyziur Write Op-Ed on the RFS Program and Its Effect on Gasoline Prices

EPRINC’s Lucian Pugliaresi and Max Pyziur have crafted an op-ed that was published in InsideSources in response to a study published by the Renewable Fuels Association that was written by Philip Verleger which stated that the Renewable Fuel Standard (RFS) has lowered U.S. gasoline prices. According to EPRINC’s analysis of the RFS, the problem with U.S. fuels policy is not ethanol, but the RFS mandate. And that is what drives the cost of transportation fuels up, not down as Philip Verleger contends.

The op-ed can be found on InsideSource’s website here and the unabridged version can be found in PDF format here.

Revisiting The Strategic Petroleum Reserve (SPR)

The prospect for conflict in the Middle East, pending collapse of production in Venezuela, and turmoil in North Africa all remind us the world oil market still faces substantial threats of disruption.  The North American petroleum renaissance, which has lifted U.S. oil production to the point where net exports are rapidly moving into positive territory, has also opened opportunities for  Congress to sell off a substantial volume of strategic stocks to fund a range of domestic programs. EPRINC has argued that while some adjustments to the reserve size may be justified, on balance, it still plays a critical role in the security of the United States and decisions on the size of the SPR should take the long view. The SPR remains an important strategic asset.

Given the current geopolitical environment, we are highlighting some previous EPRINC papers published on this topic.  In addition, our friend and colleague, Dr. Carmine Difiglio, has shared with us his insightful analysis of the value of strategic stocks in sustaining economic growth. Professor Difiglio, formerly with the U.S. Department of Energy, is Director of the Istanbul International Center for Energy and Climate (IICEC) at Sabanci Univerity.

For links to the reports on the SPR, click here

John Shages, former Deputy Assistant Secretary for Strategic Reserves, writes on Policy Challenges in Managing the Nation’s Strategic Oil Stock  (July 2014).

For access to the report, click here

Lucian Pugliaresi of EPRINC and Fred Beach of UT, Austin debate the value of the SPR in the Wall Street  Journal (November 2015).

For access to the report, click here

Larry Goldstein and Lucian Pugliaresi of EPRINC comment on Congress’s initiative  to fund health care by reducing the size of the SPR  in Politico (July 2015)

For access to the report, click here

Carmine Difiglio’s extensive analysis of the negative consequences of world economic growth from oil supply disruptions. Oil, economic growth and strategic petroleum stocks, Energy Strategy Reviews (2014).

For access to the report, click here

Michael Lynch, EPRINC Distinguished Fellow and President of Strategic Energy and Economic Research, Inc. presents a retrospective on the 1979 oil disruption and the role uncertainty and hoarding can play is amplifying the cost of an oil supply disruption. The article was recently published in Forbes and can be found here

 

 

 

EPRINC Welcomes Rafael Sandrea as a Distinguished Fellow

EPRINC is excited to announce the addition of Rafael Sandrea as a Distinguished Fellow. Rafael is President of IPC Petroleum Consultants, Inc., a Tulsa based international petroleum consulting firm which specializes in oil and gas reserves appraisals and risk analysis for international upstream petroleum investments.  He is very active giving Webinars, Masterclasses online, and speaking on the themes of reserves, IOR/EOR, shale oil and gas assessment, and global oil & gas supply, around the world. More of Rafael’s background can be found here.

Emily Medina Crafts Mexico Gasoline and Diesel Market Overview

EPRINC Non-Resident Fellow Emily Medina has crafted a primer on the Mexican Gasoline and Diesel Market as part of the EPRINC Mexico Initiative.

The U.S.-Mexico-Canada Agreement (USMCA) contributes to both the strength and sustainability of the North American petroleum renaissance. North American cross-border energy trade is extensive and the movement of crude oil, refined petroleum products, and natural gas contributes to the expanding national economies in the USMCA.

An essential element to ensure efficient energy production throughout the production platform is allowing energy flows to move unimpeded. The expanding trade in petroleum products, especially gasoline and diesel, is a case in point. This trade has been beneficial to the U.S. refining industry by allowing processing facilities to operate efficiently at high volume. Mexican consumers benefit from product exports from the U.S. (and Canada) by gaining access to secure and competitively priced gasoline and diesel fuel. Some Mexican officials have raised energy security concerns arguing that Mexico is too dependent on U.S. supplies and that domestic production should be encouraged or subsidized as a substitute for imports.

Addressing energy security concerns is a complicated issue and will be the subject of a more in- depth treatment of the Mexican petroleum products market in a subsequent report. This policy brief presents an overview of the current gasoline and diesel market in Mexico.

Click here to access the paper.

LOAD MORE POSTS