As we have in years gone by, we’re highlighting parts of the IHS Energy CERAWeek here on The Barrel. We have a rotating cast of editors coming this week to the Houston energy conference, from oil to natural gas to power, and each day we’ll have a post in which we share what stood out to us.
You can follow more of the coverage by following @PlattsOil, @PlattsGas and @PlattsPower and looking for the hashtag #CERAWeek, as well as by checking Platts.com for news stories. At the end of the conference, we’ll also have a Storify feature about the conference, compiling all our coverage in one location.
The thing that most struck me was the emphasis placed on continued investment into the industry. Several speakers pointed to reduced costs for production development, and a focus on the long-term plan — looking past the current downturn — seemed to be at the forefront.
The outlook seemed to be that it would be a mistake to wait for the low-price environment to end, and that companies have to find ways to keep sight of long-term production goals. Lukoil President Vagit Alekperov said the downturn represented a kind of trial by fire, and that the companies that could find ways to survive would come out more capable of adapting to swings in the market.
The reduced costs of investment could also open opportunities, for those able to find them, that wouldn’t have been possible before the downturn. —Joshua Mann
Alaska Senator Lisa Murkowski, a Republican and chairman of the Senate’s Energy and Natural Resources Committee, may have made the biggest splash Monday when she announced she would introduce bill to end restrictions on US crude exports this year.
Many expected Murkowski to introduce a bill to allow US crude exports, but the senator has never spoken so specifically of her planned legislative actions.
Murkowski has been an outspoken critic of US crude export policy, which bars most exports with some exceptions, but has long indicated that she would prefer the White House to act, rather than waiting for a bill to move through the House and Senate.
“Bills are harder to get through,” Murkowski said.
Murkowski’s announced bill, the details of which have yet to be worked out, could be a sign that the Alaska senator is tired of waiting for the Obama administration to act on crude export policy, but support from her congressional colleagues is not entirely clear. She cautioned Monday that many House and Senate members remain fearful that a change in export policy could trigger an increase in gasoline prices, a political price few have yet to indicate they’re willing to risk. —Brian Scheid
Drilling wells but deferring completions may be a factor in oil price volatility in the next several years and potentially even delay the industry’s recovery, said Ryan Lance, CEO of ConocoPhillips.
Company backlogs of drilled but uncompleted wells, sometimes referred to as DUCs, have become common in recent months because oil producers are reluctant to produce oil into a relatively low-priced market. However, they have drilled them because that is the least expensive part of well costs — about 25% — while completions make up about 75%.
Many in industry have become increasingly concerned that operators could start to complete a large backlog of several thousand industry wells if prices begin to rise to as little as $60-$65/barrel.
While the oil price at which industry could ramp up back is different for every company and every play type, “I hear people say [they will need] assurance that we’re getting into the $60s and $70s [per barrel] and not dropping back into the $50s,” Lance said. — Starr Spencer