Thursday October 29, 2015 0 comments
FORT COLLINS -- The oil-and-gas industry is going through hard times right now, with depressed prices in both the oil and natural gas markets.
Employment and the number of active drilling rigs has been steadily falling this year as rich oil-producing nations maintain high levels of production and reduce the demand for U.S. oil and gas.
But Lori Smith Schell, president of Empowered Energy, told an audience at the 2015 Natural Gas Symposium at Colorado State University that it’s not something the industry hasn’t seen before.
“Oil and gas is typically a boom-and-bust industry, and we’re clearly in a bust cycle right now,” Schell said during the Symposium’s keynote on Wednesday.
“We’re seeing a dramatic decline in the rig count, but we’ve seen this all before,” said Schell in her talk entitled “Back to the Future: Oil and Gas Market in Transition (Again).”
Empowered Energy is a Durango-based, independent energy consultancy advising energy companies, utilities and other organizations.
Schell said “historically high levels” of storage for both oil and natural gas – along with rising production per drilling rig thanks to new technology and innovation -- are further depressing prices in both markets.
“Each rig is producing faster and more,” she said.
Schell said history shows that profitability in the oil-and-gas industry is an up-and-down ride that’s either good for the industry or good for the consumer, depending on where the cycle is at any given time.
“When you hear that energy prices are always going up, that’s not always true,” she said. “Volatility will always be a part of the oil-and-gas industry.”
How long the present depression in oil prices goes on will depend in part on how long the Saudis – with vast reserves of oil – want to continue to beat down American competition.
“It’s a game of chicken, really,” she said.
Wednesday was the second day of the two-day 2015 Natural Gas Symposium presented by Colorado State University and the Center for the New Energy Economy (CNEE), which launched the symposia series in 2011.
Seven discussion sessions were held Wednesday on a variety of industry-related topics, including whether the industry is being adequately regulated and if industry funding of studies might be tainting their findings.
When asked if there are enough regulators to do the job in Colorado, Martha Rudolph, director of environmental programs for the Colorado Department of Health and Environment, said an answer to that would be “debatable.”
“We have to rely on the industry to inspect and report and to fix (methane) leaks within five days,” she said.
Regarding various oil-and-gas studies carried out by CSU that are heavily funded by the industry, Alan Rudolph, VP of research, said the university is “very much enjoying industry funding” but added it “raises the issue of neutrality.”
“I think we see this often in the interplay of industry and science,” he said.
Anthony Marchese, a CSU professor in the department of mechanical engineering, said there are built-in aspects to try to prevent industry tampering with study results.
“We partner with industry on this but it’s understood that the results will be published in peer-reviewed journals,” he said.
“There is always the chance for bias here,” he added. “The companies who volunteer (for the studies) are the ones doing things in the best way possible. (But) the emissions from our non-partner companies may be different from our partners.”
Bill Ritter, former Colorado governor and now head of the CNEE, said the symposiums are an opportunity for the oil-and-gas industry, environmental community, regulators and other stakeholders “to hold conversations about solutions” to energy challenges.
“We’ve been able to have civil conversations about topics that can be a bit controversial and volatile,” Ritter said. “We’re trying to answer those broad questions of sustainability.”