Crude 'smart' tech & 'Silicon Bayou'

Days IV and V of CERAWeek 2019 have zipped by with an emphasis on power markets and technology. Since it was all about electricity and technology; here's a photo of ABB's Formula E car on display here in Houston, and yes the Swiss automation and robotics giant's YuMi robot was here too.

Day IV of #CERAWeek2019 is pretty #power & #electricity heavy, so here's a glimpse of an electric Formula E car courtesy @ABBgroupnews pic.twitter.com/a53wu9FV4h

— Gaurav Sharma (@The_Oilholic) March 14, 2019

And here is the Oilholic's full report for Forbes on how technology is making rigs 'smarter'. Its not just the greenfield sites we see this at play in, as a number of brownfield sites are being retrofitted as well to optimise performance and efficiencies. 

Finally, as is customary at CERAWeek, the Mayor of Houston Sylvester Turner turned up, and this year he reminded delegates that H-Town has sufficiently diversified to have the spheres of education, medicine and information technology sit happily alongside the City's energy sector.

In fact, the IT industry here is growing at such a rapid place that you can call it 'Silicon Bayou' and promote #SiliconBayou, he added. The Oilholic promptly did so. And that's all from CERAWeek 2019 and Houston. Keep reading, keep it crude!

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© Gaurav Sharma 2019. 

Crude talk in H-Town

As the Oilholic prepares to say yet another goodbye to Houston, one cannot but help wondering why the new found pragmatism here over the possible direction of the oil price is not reflected elsewhere in the oil market.

Brent is currently within touching distance of $80 per barrel, while the West Texas Intermediate is firming up above $71 per barrel. 

Having spent a whole week deliberating with market participants out here in America's oil capital, including physical traders, few seem to think the oil price can sustain three figures, even if it gets there.

The sentiment was echoed by several delegates at the Baker McKenzie Oil & Gas Institute 2018 with most there, including leading legal and financial advisers, dismissing a sustainable return to a three-figure oil price. In fact, most are advising their clients not to get carried away, and mark a return to the profligacy of the sort we saw in the US oil patch when the price was last in three figures back in 2014.

Their clients, i.e. representatives of leading oil companies and project sponsors also share the sentiment, and while appreciative of relatively higher oil prices, are in no mood to get carried away.

Yet with Venezuelan production heading to a historic dive below 1 million barrels per day, US President Donald Trump's withdrawal from the Iran nuclear deal and the general geopolitical malaise in the Middle East, hedge funds and money managers are piling in to the futures market in the hope of extending a rally largely supported by OPEC's output cuts.

Plenty of food for thought, but the oil market is in real danger of overstretching itself! And on that note, that's all from Houston folks. Time for the ride home to London. Keep reading, keep it 'crude'!

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© Gaurav Sharma 2018. Photo: View of downtown Houston, Texas, USA from Burnett Street on the outer edge of town. © Gaurav Sharma, May 2018.

Thoughts From Baker McKenzie’s Oil & Gas Institute 2018

Earlier today, the Oilholic was delighted to attend the Baker McKenzie 2018 Oil & Gas Institute; an event that grows bigger by the year, and has become a true 'crude' fixture in Houston.

From Big Oil getting to grips with Big Data to capital raisings in mature jurisdictions, emerging market legal considerations to mergers and acquisitions - there was plenty on the agenda to for everyone. Of course lurking in the background to it all is the direction of the oil price and US President Donald Trump's re-imposition of sanctions on Iran, the Israeli-Iranian tussle in Syria, OPEC and all the rest. It's pushed Brent crude above $77 per barrel and WTI above $71. 

While every US shale player would gladly accept the current prices; quite like the Oilholic, few at the Institute felt the elevated prices would last. Given there are several variables in the equation - including, but not limited to, what OPEC would do next month, what sort of levels US producers are likely to record, how many Iranian barrels are likely to be knocked off the market, etc. - getting carried away by the bulls would not be a good idea. 

To quote, Jim O'Brien, Chair of Baker McKenzie's Global Energy, Mining & Infrastructure Practice Group and one of the architects of the Institute, the US oil patch is "feeling good" about itself at the moment, but at the same time there is a fair degree of realism that a return to $100 prices is unlikely.

In fact, one of the key takeaways from the Institute was how oil and gas players, both large and small, were aiming to achieve breakeven at prices as low as $30. 

Underpinning that drive would be digitisation across the board enabled by big data, AI, automation and robotics coming together to bring about the kind of process efficiencies capable of making a tangible difference to the operating expenditure of oil and gas companies. Touching on this very subject was a keynote speech by Paulo Ruiz Sternadt, boss of Siemens-owned Dresser-Rand. (Full Forbes report here)

Representatives of Baker McKenzie, BP, Accenture, Shell and many others also touched on the topic. LNG, employment diversity and private equity in the business were other subjects under discussion, as was the topic of investing in Mexico (Forbes post here) and the latest developments in Saudi Arabia. All in all, another interesting afternoon of deliberations. But that's all for the moment from Houston folks. Keep reading, keep it 'crude'!

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© Gaurav Sharma 2018. Photo: Delegates at the Baker McKenzie 2018 Oil & Gas Institute in Houston, Texas, USA © Gaurav Sharma 10 May, 2018.

Flurry of soundbites & final musings from Houston

As IHS CERA Week came to a close on Friday, the Oilholic published two Forbes interviews with a 'tech twist', given technology enabled process efficiencies and cost optimisation seem to be in overdrive in the oil and gas industry.

First off, it was a pleasure, yet again, to exchange views with engineering and robotics giant ABB’s boss Ulrich Spiesshofer.

In a wide-ranging interview, Spiesshofer noted: "We are taking the oil and gas industry from an automated into an autonomous operations sphere, where you have self-learning processes, where you use AI to augment human potential, to optimize the control loop for operations and maintenance." (Read the whole interview here.)

Secondly, yours truly also exchanged views with Peter Zornio, Chief Technology Officer of Emerson's automation division, who said the inexorable direction the energy sector was heading in via broad spectrum digitisation meant more business for his company.

"We are working on a proposal where we become a turnkey supplier directly looking at client equipment and alerting them when something goes wrong."

While Emerson is offering full-scale outsourcing, Zornio admitted the industry might not be ready for this level of optimisation. The whole discussion is available here.

With bags packed from CERA Week 2018, this blogger's two standout quotes from the event were uttered by BP CEO Bob Dudley and International Energy Agency's Executive Director Fatih Birol. Dudley reminded the audience of the importance of the integrated model in current climate, when he noted: "Our downstream business contributes billions of dollars to the dividend we give to our shareholders."

And Dr Birol, when asked what should US producers make of their new found clout in the oil and gas world with forecasts of American production exceeding that of market leaders Saudi Arabia and Russia, quipped: "They should enjoy!"

Finally, on a week-on-week basis, the oil benchmarks ended Friday (9 March) over 1% higher; read what you will into it – but one reckons, price oscillation in the $55-70 per barrel range is about par. 

That's all from Houston folks, as it's time for the flight home to London. But before the Oilholic takes your leave, here is a view (above) from Houston Rodeo 2018, which this blogger had the pleasure of visiting yet again. 

It's a fantastic affair that draws in thousands every year – with a carnival atmosphere, barbecues, fun rides, livestock on display topping up the rodeo – all with a very unique Texas flavour! Keep reading, keep it ‘crude’!

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© Gaurav Sharma 2018. Photo 1: Houston's Skyline. Photo 2: Houston Rodeo 2018, being held in Texas, US © Gaurav Sharma March, 2018. 

Onto blockchains and barrels in Houston Town

Greetings dear readers, the Oilholic is back in Houston, the oil and gas capital of the world, with OPEC soundbites from far afield having ensured Brent is back above $50 and on track to end the week higher than where it began. 

Meanwhile here, upstream innovations helping the US oil patch in this era of ‘lower for longer’ oil prices are the talk of the town, but among the digitisation platforms the crude world has started taking to with increased ferocity – the subject of blockchains – keeps propping up.

Don’t worry, yours truly was bit foxed too at the start, wondering what on earth is a blockchain, let alone its platform deployment in an industry thatm let’s face it, lags others in digitisation. 

So in simple terms, a blockchain is akin to a digitally distributed ledger that can be replicated and spread across many nodes in a peer-to-peer network, thereby minimising the need for oversight and governance of a single ledger. 

Each transaction on the ledger is recorded and added to the previous one. These additions result in a growing 'chain' of information. 

At the 2017 Baker & McKenzie Oil & Gas Institute, it was a much discussed subject, albeit included in the wider discussion on digitisation in the sector.

Here’s the Oilholic’s full report on the deliberations for IBTimes UK, which is well worth reading. While nothing is foolproof, there is growing consensus within the industry that blockchain ledgers can help fight fraud and corruption. 

As if that wasn’t enough for you on the subject of ‘crude’ digitisation, Shell’s top lawyer David Brinley also told institute delegates the oil major’s technology hub in Bangalore, India has never been more integral to its business than it is now.

"From automation to 3D printing of project prototypes, to an app on how to locate your car in a car park – Shell would like to be at the forefront of inexorable technological changes we are seeing in the 21st century." 

Away from crude chatter, the Oilholic leaves you with a glimpse of a refreshing pint at The Richmond Arms pub, which tasted even better after yours truly cheered on Manchester United to the UEFA Europa League final. 

If you happen to be in Houston, and need to watch English Premier League clubs in play, or European football (er...called socccer here) there’s no better place to watch in The Galleria area for starters, and in the whole city in some ways too.  

That’s all for the moment from Houston folks! Keep reading, keep it ‘crude’!

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© Gaurav Sharma 2017. Photo 1: Chevron Towers, Downtown Houston. Photo 2: Pint at the Richmond Arms Pub, Houston. Texas, USA. © Gaurav Sharma 2017.

CERAWeek 2017 ends & so does the 'OPEC put'!

It’s a wrap from CERAWeek 2017, with Canadian Prime Minister Justin Trudeau telling his high net worth Houstonian audience assembled by IHS Markit, that no country would leave 173bn barrels of oil - as Canada has – in theground.

The Oilholic wonders if his ‘crude’ words would have been quite as forthcoming if he was surrounded by tree huggers in British Columbia. 

Nonetheless, as Trudeau says, it is all about tapping the tar sands ethically and responsibly, now that US President Donald Trump has approved the long-delayed Keystone XL pipeline. Away from all the public relations mumbo-jumbo of the Canadian Prime Minister, it looks like the OPEC put, OPEC & non-OPEC price floor of $50, call it what you will is now over.

That’s after Saudi Energy Minister Khalid Al-Falih warned the oil market not to take Riyadh’s support for granted. Here are The Oilholic’s thoughts in a detailed post for Forbes. Despite long bets by money managers, such calls appeared bereft of clear thinking, and were solely predicated on Opec rolling over its cuts beyond June, despite US producers cashing in on it.

Since Al-Falih’s quip included “we will not bear the burden of free riders” the market took notice, and WTI fell the most among benchmarks, breaching the $50 floor for the first time in 2017 as the number of operational US rigs continues to rise.

Away from the oil price, yours truly had a fascinating conversation on behalf of the International Business Times UK with Vimpar Kapur, President of Honeywell Process Solution (the multinational conglomerate’s automation unit). 

Kapur opined that process efficiencies in the oil and gas business are likely togather further momentum over the next 12-18 months as the crude world gets used to a $50s oil price. And that’s all from Houston folks! It’s been a fascinating week, but it’s time for that parting selfie, and a brief trip to Canada before the flight home to London. Keep reading, keep it ‘crude’!

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