American Oil and Gas Reporter - June 2016 - 107

ConventionCoverage: Texas Alliance of Energy Producers

Industry's Future Still Looking Bright
WICHITA FALLS, TX.-Even if oil
and gas prices stagnate during the next
few months, the longer term looks pretty
good, according to a commodity market
outlook presented at the Texas Alliance
of Energy Producers' annual convention
by analysts Kyle Cooper, formerly with
Criterion Research and now with
TradeWell Energy, and Britt Hance at
Texla Energy Management Inc.
"I think we will be in a less than
robust environment for a little longer,
but unless the world's economies completely collapse, I think 2017, '18 and
beyond actually look very nice," Cooper
assessed. "With the improvements in
technology and efficiency, we do not
need $100-a-barrel oil for the industry to
be very, very profitable."
He pointed to the example of a major
international producer that had started to
operate one of the world's most powerful
supercomputers. "It is designed specifically
for reservoir simulation," Cooper said.
"Companies are putting their best minds
and efforts into improving technology
and getting better at what they do."
As he considered near-term conditions,
Cooper offered a remark that he said was
at once earnest and sarcastic. "Supply
and demand do not matter to me," he
said. "I care about what (goes into) the
storage tanks because that is the most
visible, easily obtainable, accurate statistic
about the difference. It is the balance of
inventories that, in my mind, is the most
important, relevant, fundamental factor
we can get at every day."
Although U.S. petroleum demand was

Pausing after their market outlook presentation are, from left, Kyle Cooper, formerly with Criterion Research and now
with TradeWell Energy, and Britt Hance
with Criterion Research. During their remarks on the second day of the Texas
Alliance of Energy Producers 2016 convention, April 19-20 in Wichita Falls, Tx.,
Hance noted that industrial U.S. natural
gas demand still was short of the 23 billion cubic feet a day peak it reached
early in the previous decade.

below its peak, he noted that consumption
was starting to rise. "We are selling about
17 million cars a year," he noted. "Of
course, some (cars) retire, but energy use
is still growing. It is going to balance
(with supply) eventually."
Gas Growth
Hance's remarks on the natural gas
outlook pointed out that Cheniere Energy's Sabine Pass liquefied natural gas

LEFT: Accepting the 2016 Tommy Taylor Memorial Scholarship is
Owen Crawford (center) from Luke Taylor (left) and outgoing
Alliance Chairman George Rogers. RIGHT: Gretchen Davis (left)

export facility on the Gulf Coast near
the Louisiana/Texas border was a significant source of new consumption that
would keep expanding. "It began the
first full-cycle train in March," he reported. "Each train is capable of receiving
as much as 650 million cubic feet a
day, and it will be bringing on at least
five trains-probably six-in the next several years."
If even half the liquefaction facilities
in progress in the United States come on
line, Hance said, the result will be significant demand growth and a market transformation. "In the next three-five years,
natural gas, like crude oil, will become
more of a globally traded and priced
commodity," he predicted.
Moreover, Hance continued, some
U.S. gas exports need not be liquefied.
"Our neighbors to the south, for political,
economic and operational reasons, realize
their neighbor to the north holds a vast,
cost-effective resource," he related. "We
send Mexico 3.0 billion-3.5 billion cubic
feet a day, and it has been growing."
He noted that U.S. industrial demand
peaked at 23 Bcf/d early in the previous
decade, but that steep U.S. prices chased
away a significant chunk of that consumption. "We took it down to 17 Bcf/d;
so 6 Bcf/d of America's industrial capacity
was mothballed or dismantled because it
was not economic," Hance observed. "Today we are running about 20.5 Bcf/d, so
we are rebuilding. Low natural gas prices
are building industrial demand."
Moreover, he went on, a number of
U.S. projects under construction will add

and Rogers bestow the Joe McMann Scholarship for Petroleum
Engineering to Logan Lewis.

JUNE 2016 107

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