American Oil and Gas Reporter - April 2019 - 121

Lees Rodionov, president of North America
Land for Schlumberger,
details innovative partnerships between the
company and producers that yield mutually
beneficial results.

capacity is also expected by the end of
2021, but fractionation capacity constraints on the Gulf Coast are expected
to remain a bottleneck until 2020, Schneider projected.
Despite Saudi predictions, Citi Research does not envision a global oil
supply gap at $50-$60 a barrel, he said,
which is the firm's estimated price range
during the next four-five years.
Mutual Advantage
Upstream efficiency has exacted a cost
from service companies, but Schlumberger
is working with operators in search of
innovative ways to realize mutual gains,
said Lees Rodionov, president of North
America Land at Schlumberger.
Efficiencies have doubled initial production rates since 2014 and trimmed
well costs by 50 percent in terms of estimated ultimate recovery, she said. But
the focus should shift from returns to
finding the proper balance between minimizing cost and maximizing production,
Rodionov suggested.
While the market outlook is generally
positive, she advised, relationships between
service companies and producers should
change. "Service companies need to raise
prices, but commodity prices didn't move
in a way that allowed for enough margin
across the whole value chain, so we are
going to have to do something different,"
she said.
She cited the example of a relationship
between Schlumberger and Occidental
Petroleum in New Mexico's portion of
the Delaware Basin. According to Rodionov, it was patterned after operator/service
company relationships long established
in offshore projects, but not seen in U.S.
land operations. Under the arrangement,
the operator agrees to stay with a service
company throughout field development,
with agreed-upon rules that dictate pricing
changes, she detailed. In the arrangement
with Oxy, she illustrated, Schlumberger

operates a service facility on Oxy acreage
from which the service company also
works for other producers in the region.
The agreement calls for a focus on
broader well completion and treatment
systems instead of individual offerings,
Rodionov described. In a recent investor
presentation, Oxy mentioned its expectation to realize between $500,000 and
$750,000 a well from the partnership,
she said.
Abusive Trade Relationship
"If you want to understand the American economy during the last 10-12 years,
it is all summarized in four words: shale
oil and gas," advised economist, political
writer and pundit Stephen Moore. "It has
changed everything about the American
economy."
Co-author of a new book titled Trumponomics: Inside the America First Plan to
Revive Our Economy, Moore detailed
how the U.S. economy had grown faster
during Trump presidency than during the
Obama administration. Moore attributed
much of that to the Trump administration's
embrace of tax cuts, a lighter regulatory
hand and pro-America energy policies.
Remarking on the nose dive oil prices
took in late 2018, Moore attributed it to
an unnecessarily tight money policy at
the Federal Reserve under Chairman
Jerome Powell. "In my opinion, Powell
is a menace to the economy," Moore assessed. "He has gotten this picture completely wrong."
During a deflationary trend, the Fed
raised interest rates to tighten the money
supply, a maneuver typically undertaken
to curb inflation, he observed. Higher
rates follow as other countries and
foreign investors clamor for dollars to
invest in the surging U.S. economy,
while higher rates reduce the amount
of available dollars.
"The Fed should be lowering interest
rates, not raising them," Moore insisted.

"It should also be buying bonds rather
than selling them to get dollar liquidity."
Nevertheless, the U.S. labor market
is a strong as it has been in 50 years
and the nation's economy is the envy
of the world because Trump's pro-business policies have boosted small business
optimism and consumer confidence, he
said. Citing a barometer of regulatory
easing, Moore noted that, during
Trump's first year in office, the number
of pages in the Federal Register decreased 36 percent, in contrast to a 22
percent increase from 2009 to 2017,
Moore said.
"That has been a major asset for
your industry," he advised. "There is no
other industry in America that liberals
hate more than your industry. You know
it. We have seen it. They exposed themselves last month when they said they
wanted to put oil and coal workers out
of their jobs."
Although higher tariffs on imported
steel hurt the industry, Moore acknowledged, Trump's moves against China
were good because of that nation's own
detrimental tariffs. China also effectively
steals $300 billion a year in intellectual
property and products, Moore added.
"We are in an abusive trade relationship
with the Chinese," he described. "They
cheat. They steal. They lie. They are involved in international espionage. They
hack into our computer systems. This is
not a friendly power. I think I speak for
Trump because I agree with him on this:
We should no longer regard China as a
friend and ally. The Chinese are an adversary and an enemy and Trump is

Economist, writer and commentator
Stephen Moore talks about his book
Trumponomics: Inside the America First
Plan to Revive Our Economy. Less than
a month after TIPRO's conference, President Trump appointed Moore to the Federal
Reserve Board.

APRIL 2019 121

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