WHY IS IT MAKING SENSE TO INVEST IN US OIL & GAS?

In late 2016 and early 2017, Blackstone Group made one of its biggest bets on the growth of natural gas production, wagering that even if gas prices remain stuck at depressed levels, it can profit. Blackstone has been splashing out on natural gas. The firm recently agreed to pay $1.57 billion for a 32.4% stake in the Rover Pipeline. The private-equity firm has built a roughly $7 billion bet on natural gas by investing in drilling fields, pipelines and a gas export terminal. Blackstone raised its latest energy fund, a pool with more than $8 billion, in late 2014 and early 2015, when collapsing crude prices stoked optimism that investors could snap up oil assets on the cheap.

Blackstone joins a crowded field of private-equity firms that have barreled into gas investments since the combination of horizontal drilling and a rock-cracking process called hydraulic fracturing unlocked new drilling fields across the country. These firms’ cash helped feed a drilling frenzy that has produced a flood of the heating and power-generation fuel.

If we look at what is happening in the U.S., in Brazil and Canada, we are going to see a rebalancing of global oil flows. By the end of this decade, the Western Hemisphere may be importing very little oil from the Eastern Hemisphere.
Five years ago, nobody focused on the economic impact of domestic energy production. Over one million jobs have been created by the development of unconventional gas. It makes the U.S. more competitive. We can see how the growing recognition of the economic impact is changing the political discourse about energy in the U.S., including, very clearly, in the presidential campaign. You would not have had this kind of discussion about energy 10 years ago.

US Oil & Gas production changes the geopolitical perspective about energy. The U.S. is more self-sufficient and less dependent on foreign energy. We are already independent in terms of coal and natural gas; greater reliance on regional and domestic supplies increases our sense of security. Th new Trump administration is clearly pro-US energy and we can see it in the symbolic Keystone project now in full swing.

Some critics wondered if the potential of unconventional fields—shale and tight oil—was exaggerated. Is this boom real? And the proof is in the numbers. Shale gas (2% of U.S. gas production at the start of the century) is now almost 45% of U.S. gas production. From about 5 Billion Cubic Feet in 2007 we are at 15 Billion in 2015 And using this technology in new areas and established oil fields has really revitalized U.S. oil production.

During the oil industry's first century, the U.S. was the world's dominant oil producer. During World War II, six out of seven barrels of oil used by the Allies came from the U.S. After World War II, the U.S. became a net importer of oil, and it was during the 1970s that it came to be a huge importer.
In early 2000 the question was at what pace would imports grow? Since then, we have seen a big turnaround—from importing 60% of our crude in 2005 to 37% today. This is a big change, and that number will continue to go down as production increases and we continue to be more efficient in terms of the overall consumption and the development of renewable energy. It is a significant turnaround.

The main driver behind this change is the new ability to use in oil fields technologies that were developed for shale gas. It is technology and entrepreneurship, initiative, people having different ideas and acting on them. we could see the same phenomenon happening in other countries. China announced this Month that there are ready to invest vast shale oil and gas project in the North.

The challenges remain. There is still a lot of controversy about shale-gas development. Public acceptability is important. The environmental question needs to be addressed and it will be. There is a more intense focus on the water management than a few years ago. Also, transportation, pipelines and terminals in North America are struggling to catch up with the new production.

This is a revolution that started a few years ago and with the political instability in Venezuela and in the Middle East, securing access to Oil and Gas is mandatory so domestic Oil & Gas production is here to stay and flourish for the next few decades.

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