Dear Valued Members,
MGA will be organizing a tea-talk on “Gas Market Reforms in Malaysia: Global Trends and Third Party Access”. Designed to provide insights on the changing landscape of the global gas market and opportunities to participate in an exciting new phase of the Malaysian gas market, the tea-talk will showcase eminent speakers with intimate knowledge of the gas market and how the latest developments are unfolding.
Details of the tea-talk are as follows:
Date: 9 May 2017 (Tuesday)
Time: 2.30 – 5.00 PM
Venue: Grand Salon, Grand Hyatt Hotel, Kuala Lumpur
Our speakers as follows;
•IEDA GOMEZ, speaking on “Global Trends and Outlook for the Gas Market”.
Ieda is an independent consultant and director of the UK based consultancy Energix Strategy Ltd. She is also the Senior Visiting Research Fellow at The Oxford Institute for Energy Studies and Senior Adviser to the Brazilian think tank FGV Energia
Ieda has over 30 years of extensive international experience in the oil, gas and energy industry, which includes gas and power project development, energy market fundamentals, energy strategy, gas and LNG sales and marketing, energy pricing, regulation, contract negotiation, asset management, re-structuring, privatization and set up of new ventures.
She was previously a Group Leader with BP plc, with a host of international assignments spanning over nearly 14 years. She was also the CEO of the Sao Paulo Gas Distribution Company (Comgas), the largest gas distribution company in Brazil. She is currently a non-executive director with several French and US companies and an active contributor to the International Gas Union (IGU) programme committees and task forces.
•RUMAIZI A HALIM, speaking on “An Overview of the Gas Supply Act (Amendment) 2016 and Its Impact on the Gas Market Landscape.”
Rumaizi is the Head of Gas Market Development and Operation at Energy Commission Malaysia (ST), responsible for enabling the Gas Supply Act (Amendment) 2016 and Third Party Access (TPA), and working closely with all market players to ensure compliant with the requirements of the Act.
He is also responsible in promoting competition in gas market and monitoring market operation.
Prior to joining Energy Commission, he was with PETRONAS Gas Berhad (PGB) for 24 years heading various strategic positions, where he played an instrumental role in developing the TPA framework that has leveled the playing field for all players.
Fee to attend the tea-talk is as follows;
•Non Members: RM200
(Prices are per person and inclusive of GST)
Seats are limited and is on a first come first served basis. Kindly register by returning the attached form to Afira by 3rd May 2017.
We look forward to your participation in the tea-talk.
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Headline crude prices for the week beginning 10 December 2018 – Brent: US$62/b; WTI: US$52/b
Headlines of the week
The Permian is in desperate need of pipelines. That much is true. There is so much shale liquids sloshing underneath the Permian formation in Texas and New Mexico, that even though it has already upended global crude market and turned the USA into the world’s largest crude producer, there is still so much of it trapped inland, unable to make the 800km journey to the Gulf Coast that would take them to the big wider world.
The stakes are high. Even though the US is poised to reach some 12 mmb/d of crude oil production next year – more than half of that coming from shale oil formations – it could be producing a lot more. This has already caused the Brent-WTI spread to widen to a constant US$10/b since mid-2018 – when the Permian’s pipeline bottlenecks first became critical – from an average of US$4/b prior to that. It is even more dramatic in the Permian itself, where crude is selling at a US$10-16/b discount to Houston WTI, with trends pointing to the spread going as wide as US$20/b soon. Estimates suggest that a record 3,722 wells were drilled in the Permian this year but never opened because the oil could not be brought to market. This is part of the reason why the US active rig count hasn’t increased as much as would have been expected when crude prices were trending towards US$80/b – there’s no point in drilling if you can’t sell.
Assistance is on the way. Between now and 2020, estimates suggest that some 2.6 mmb/d of pipeline capacity across several projects will come onstream, with an additional 1 mmb/d in the planning stages. Add this to the existing 3.1 mmb/d of takeaway capacity (and 300,000 b/d of local refining) and Permian shale oil output currently dammed away by a wall of fixed capacity could double in size when freed to make it to market.
And more pipelines keep getting announced. In the last two weeks, Jupiter Energy Group announced a 90-day open season seeking binding commitments for a planned 1 mmb/d, 1050km long Jupiter Pipeline – which could connect the Permian to all three of Texas’ deepwater ports, Houston, Corpus Christi and Brownsville. Plains All American is launching its 500,000 b/d Sunrise Pipeline, connecting the Permian to Cushing, Oklahoma. Wolf Midstream has also launched an open season, seeking interest for its 120,000 b/d Red Wolf Crude Connector branch, connecting to its existing terminal and infrastructure in Colorado City.
Current estimates suggest that Permian output numbered around 3.5 mmb/d in October. At maximum capacity, that’s still about 100,000 b/d of shale oil trapped inland. As planned pipelines come online over the next two years, that trickle could turn into a flood. Consider this. Even at the current maxing out of Permian infrastructure, the US is already on the cusp on 12 mmb/d crude production. By 2021, it could go as high as 15 mmb/d – crude prices, permitting, of course.
As recently reported in the WSJ; “For years, the companies behind the U.S. oil-and-gas boom, including Noble Energy Inc. and Whiting Petroleum Corp. have promised shareholders they have thousands of prospective wells they can drill profitably even at $40 a barrel. Some have even said they can generate returns on investment of 30%. But most shale drillers haven’t made much, if any, money at those prices. From 2012 to 2017, the 30 biggest shale producers lost more than $50 billion. Last year, when oil prices averaged about $50 a barrel, the group as a whole was barely in the black, with profits of about $1.7 billion, or roughly 1.3% of revenue, according to FactSet.”
The immense growth experienced in the Permian has consequences for the entire oil supply chain, from refining balances – shale oil is more suitable for lighter ends like gasoline, but the world is heading for a gasoline glut and is more interested in cracking gasoil for the IMO’s strict marine fuels sulphur levels coming up in 2020 – to geopolitics, by diminishing OPEC’s power and particularly Saudi Arabia’s role as a swing producer. For now, the walls keeping a Permian flood in are still standing. In two years, they won’t, with new pipeline infrastructure in place. And so the oil world has two years to prepare for the coming tsunami, but only if crude prices stay on course.
Recent Announced Permian Pipeline Projects
Headline crude prices for the week beginning 3 December 2018 – Brent: US$61/b; WTI: US$52/b
Headlines of the week