First Friday Q&A on Oil & Gas This Week

Welcome back to another episode! This week’s episode is our First Friday Q&A for March. You ask the questions and we answer them. Big thanks to everyone who wrote in. If you want to get a question answered for next month’s FFQA, click the link below. Enjoy!

Have a question? Click here to ask.

Show Notes & Links:

2017 on the road sponsor Lee Hecht Harrison http://www.lhh.com

As global experts in talent management, LHH is currently helping 75% of the Fortune 500 Oil & Gas companies simplify the complexity of leadership and workforce transformation.

Geoconvention May 15-19 Calgary, Canada

OGTW listener special – Exhibitors standard 10×10 space on the floor for a reduced rate of $1,600 (normal price is $1,800).

For more information email Dustin – dustin@geoconvention.com

Questions:

My name is Sam List and I am a senior studying Geology and Business at the University of Wisconsin – Madison. I am a really big fan of the show and have been listening ever since this past summer when I worked in downtown Houston for for a small oil and gas company as a geologist prospecting plays in the SCOOP and STACK of Oklahoma. I have a passion for the geosciences and the oil and gas industry but I am not sure what type of research or what field I want to specialize in when I get to graduate school. After working in Houston where it seemed like the geologists have focused on petroleum geology, petroleum engineering, and sed/strat. I was wondering which areas within the geoscience’s do not get the attention and dedication of research that is necessary for advancing the oil and gas industry?

Dear Jake: Firstly, I enjoy & anticipate listening to your podcast’s weekly. My question is concerning investors/venture capitalist. We are a young construction company with incredible year over year growth even during the recent downturn. We have opportunities for growth in the Permian basin that requires us considering a capital injection if we are to take advantage of opportunity. Banks are risk averse & require excess collateral, factoring working capital companies exclude “progressive” construction companies such as ours. It appears that our last avenue is investors/venture capitalist’s if we are to continue on our current growth curve. Any assistance, advice or information will be greatly appreciated

I have a question for Mark. You’ve predicted that unconventionals will go global this year. Outside the US were do you predict the biggest activity will be? Who’s going to be the next biggest producer of oil & gas from tight plays?

second question, I’ve heard counter arguments that unconventionals will have difficulty going global do to the lack of infrastructure and services. What are your thoughts on this?

Mr. LaCour, I hope this message finds you well. I’m not sure if you remember me, but I sent you and James Hahn an email about possibly speaking at Pepperdine Law a few months ago. I’m sorry we weren’t able to finance the engagement, it certainly would have been a wonderful opportunity for students interested in O&G. A few weeks ago, I remember you stating on the podcast something about an O&G company that had set up a program to pay for tuition and would offer to hire students upon graduation. It helped to ensure that students in that region were trained in the specific field that the company needed to staff. Like you, I think this is a wonderful concept that other companies should adopt. Do you remember the specifics of the company or the school that were involved in this program? I would like to research and write an article on the topic. I’m still an avid listener of the podcast, congratulations on your continued growth!

Hey guys, so my question pertains to big data in respect to the future of reservoir engineering and it is quite long so please feel free to pick and choose what, if anything, you’d like to answer.
My questions are as follows:

(a) What role, if any, do you think big data analytics will play in the reservoir engineering of unconventional reservoirs? Specifically, what are your thoughts on the increasing need for new reservoir engineering techniques in evaluating and managing the complexities of unconventional reservoirs? i.e. Organic-rich shales

(b) If so, what do you think that transition will look like? i.e. Will existing reservoir engineers have to make the transition from conventional methods? How so? Or will there be a new job opening for data scientists in the industry?

Finally, I would also like to take this chance to ask if you guys would be interested in scheduling a “Tech Talk” with The University of Oklahoma’s Society of Petroleum Engineering Chapter. These meetings usually field about 100 or so students who are petroleum engineering majors or are interested in the petroleum industry. If so, please send me an email and we can discuss it in further detail.

There has been a lot of talk recently about the OPEC supply cuts and their impact on oil prices and it seems quite evident that these supply cuts didn’t have the desired impact of raising prices to levels that OPEC wanted as the US shale producers ate up the difference preventing a serious price recovery. We seem to forget that the main incentive for the OPEC countries isn’t to increase dividends to shareholders but rather to continue to fund social programs and prop up their governments in their home countries, The average deficit of the OPEC countries in 2016 was +10%, it was similarly as high in 2015, which is an unsustainable deficit. To put this in perspective, the EU allows a deficit of 3% a year for member countries. These countries are in OPEC to maintain some consistency in supply and in tandem price, The profits they derive from oil, which occur in part due to the collusion the OPEC allows, fund the home governments at home and ensure stability in these countries. My three part question is, has the paradigm shifted? OPEC makes up 30m/b of production out the 90m/b or so barrels used daily in the world, has their percentage of oil production ever been lower since their inception in the 70s? If oil prices continue at this rate, which is way below the needed rate by a lot of these countries to ensure a reasonable deficit, could these countries theoretically increase their production in order to make up for the short fall they are seeing due to the decrease in the price of oil? Do these countries even have the reserve capacity to increase supply even if they wanted to?

More of a comment, but when y’all were discussing the Texas Rail Road Commission in the March 27th episode and you blatantly dismissing peoples’ (Sierra Clubs) concerns over whether companies should be allowed to donate money to the Texas Rail Road Commission you scoffed at the idea that their could be an ethical issue. Allowing a company to give donations to its governing company is unprecedented and it most obviously does create a conflict of interest. Just to throw a few instances out their, publicly traded companies are not allowed to donate money to the SEC, public accounting firms can’t donate money to the PCAOB, law firms can’t give money the department of justice, because all of these instances would most obviously create conflicts of interests. I agree that the commissions mandate should be extended but god forbid something bad happened, a spill or an accident, and if it was revealed that the firm in question had made donations to the commission. It is not hard to see how people could peg that as collusion and that money was was a tit-for-tat kind of affair, regardless of whether said accident was collusion or purely a bad coincidence. We could see some serious backlash and we don’t want to see public sentiment turn against the O&G industry here in Texas. We don’t want people to believe that the regulatory body over the industry is somehow in the pocket of industry and the best way to prevent that is to ensure that funding for the commission isn’t based upon the discretion of the companies whom they are chartered to regulate.