University of Texas at Austin

2015 Think Corner

LET'S MAKE A DEAL!

CEE 20th Annual Meeting:
Houston Branch - Federal Reserve Bank of Dallas Conference Center
December 9-10, 2015

CEE’s 2015 annual meeting, like many annual meetings before it, and other “think days” throughout the year, brought together a wide range of stakeholders in the realm of energy economics, and friends of CEE, for a no-holds-barred, confidential discussion about the future economics of a key energy issue.

Agenda

  • Wednesday, December 9
  • Thursday, December 10
    • 9:00 a.m. Power and Utilities Part 1 – Fuzzy Logic? Thinking Outside the Houston Box (Carefully)
      • Juan Eibenschutz, CNSNS/CEE Global Advisors (tentative), chair and leader – scene setting
      • Gürcan Gülen, BEG/CEE Senior Energy Economist/Research Scientist & Chen-Hao Tsai- insights from CEE/UTEI research
      • Jim Caldwell, CEERT- Economics of renewables
      • Christi Tezak, Clearvire Energy Partners- range of issues facing utilities in an increasing complex market encumbered by federal intervention and state-by-state rules
      • Ed Kelly, IHS/CEE Modeling Advisors
    • 10:45 a.m. Power and Utilities Part 2 – Transmission and Storage
      • Rahul Verma, BEG/CEE Graduate Student Researcher- Insights from CEE research on critical minerals for energy storage
      • Daniel Crotzer, Fractal Business Analytics- The potential for batteries
      • Shawn Patterson, Apex- the case for CAES
    • 11:45 a.m. Closing Thoughts for Day 2, Comments on/Recommendations for CEE Research
      • Terry Thorn, CEE Advisory Panel, chair
    • 12:15 p.m. Closing Lunch Discussion
      • Ed Kelly, IHS/CEE Modeling Advisors- Technology Disruptions – Gas and Power Deep Dive
    • 1:30 Adjourn

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A Comparative Anatomy of Oil Price Routs: A Review of Four Price Routs Between 1985 and 2014
Bob Skinner, CEE Advisor - November, 2015 

With layoffs and cutbacks in the oilpatch and the ripple effects spreading out through Canada's economy, it may seem as though the latest drop in oil prices could stall the economic engine in Alberta for a long time. This paper argues, however, that the current rout is unlike the other three major ones (when the price of oil dropped 60 per cent or more) experienced in the last 30 years. The factors affecting the oil price drop and its potential for rebound differ significantly. The routs of 2008 and 1997 were mostly demand-driven, triggered by credit crises in key markets. Both 2014 and 1985 started as demand-driven, too, but significantly, they changed to supply-driven crashes. There, however, the similarities end between today and 30 years ago. Fears that we may be in for a long-term rout, similar to that of 1985, which lasted more than a decade, may be allayed by examining the very different circumstances surrounding the contemporary situation. Given an uninspiring macroeconomic outlook, a supply-side solution will be imperative.


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Battery Materials: Got Juice?
November 2015

CEE takes its first look at critical minerals as some expect the share of electricity as motive power for transportation to increase with the growing popularity of electric vehicles (EVs) and plug-in hybrid EVs (PHEVs). Batteries also may provide storage for grid and off-grid power. Currently, preferred transport battery chemistry is Li-ion as the main cathode component with cobalt (Co) added for safety. Lithium-Ion Batteries (LIBs) are expected to maintain their dominance in the EV sector because of their relatively high ratings in energy storage and dispatch, cost, life span and performance under various ambient conditions. What are the global resources and reserves for Li and Co? With what mine-design production capacities? Are there any logistical, legal, and/or regulatory constraints to timely and cost-efficient development and delivery of these resources?


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2015 Update to CEE's Research on National Oil Companies (NOCs)
October 2015

This report serves as an update to our snapshot released in March 2015. Full cycle costs for our sample of NOCs have begun to come down for the first time sine 2011. To achieve a 10 percent return on investment NOCs need an $67 oil price, on average. To recover current capital spent, NOCs need a roughly $78 price. The major portion of NOC cost structure is the fiscal contribution to the state (FCS), the roughly 40 percent of total revenue that NOCs give up to their governments in various forms. We observe that for NOCs to achieve meaningful cost reductions, their home governments would need to undertake substantial fiscal reforms and manage public finances much differently.


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Outlooks on Industrial Sector Demand for Natural Gas
June 2015

CEE developed and maintains a comprehensive inventory of projects in gas-intensive industries since early 2014. This effort is part of CEE’s sectoral look at the U.S. demand for natural gas, which includes modeling of environmental regulations in the power sector, and investigation of global natural gas markets (demand growth in key countries, LNG sector and competitiveness of U.S. exports). We reported some estimates from the database in June 2014 and updates in February 2015. This research note provides some details on individual projects (cost, capacity, locations) and our evaluation of project status and gas consumption calculations. We will continue to monitor the gas-intensive projects and provide updates as warranted. 


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Challenges Facing Growth in Light Tight Oil (LTO) Production
June 2015

The increased production of lighter crude oil and NGLs present challenges across the oil and gas value chain. The majority of current refining capacity is configured to utilize heavier crudes with more sulfur. New midstream infrastructure is needed in locations where this new production is occurring. Finding markets for these products is a challenge as domestic demand is limited. What will happen to the light/heavy price spreads? Who absorbs the cost of these imbalances? Contact CEE with questions.


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Monitoring U.S./Global Oil and Gas: Upstream Attainment, Producer Challenges, Part Deux
March 2015

Since 2010 we have tracked a sample of producers active in U.S. domestic oil & gas to better understand upstream economics through the lens of publicly traded companies. This work is essential for full understanding of U.S. energy balances. Our sample represents the top tier of producers including leading shale players. On average, and on a BOE (oil and liquids) basis, U.S. producers need an oil price signal of roughly $80 to return current capital spent. On a MCFE (gas) basis, producers need a roughly $13 gas price to recover 2014 capital spent. Our work was featured by the Houston Chronicle on March 30.


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Update to CEE's Research on National Oil Companies (NOCs)
March 2015 

CEE benchmarks NOCs, part of our ongoing research on NOCs since 1998.  Full cycle costs for our sample of NOCs have increased steadily since 2011 reporting.  To achieve a 10 percent return on investment NOCs need an $80 oil price, on average.  To recover current capital spent, NOCs need a roughly $102 price, as some in our sample made significant acquisitions.  The major portion of NOC cost structure is the fiscal contribution to the state (FCS), the roughly 40 percent of total revenue that NOCs give up to their governments in various forms.  We observe that For NOCs to achieve meaningful cost reductions, their home governments would need to undertake substantial fiscal reforms and manage public finances much differently.


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Industrial Gas Demand
February 2015

CEE developed a comprehensive inventory of projects in gas-intensive industries in early 2014. We reported some estimates from the database in June 2014. We are now providing an update. There is a smaller number of projects worth between $65 and $98 billion depending on their status, likely to add 2-3 BCFD to 2012 natural gas demand. The biggest change is the elimination of the recently-cancelled SASOL GTL facility—we were cautious about this project’s prospect in our June 2014 release.


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Monitoring U.S./Global Oil and Gas: Upstream Attainment, Producer Challenges
February 2015

Since 2010 we have tracked a sample of producers active in U.S. domestic oil & gas to better understand upstream economics through the lens of publicly traded companies.  This work is essential for full understanding of U.S. energy balances. Our sample represents the top tier of producers including leading shale players. Overall, FD capex has dropped, largely a result of improved acreage positions as well as drilling management resulting in increased reserve additions.  Cash costs remain substantial and stubborn and the industry remains predominantly cash flow negative. The minimum full cycle cost is between $70-80 per BOE, or $11-12 per MCFE.