In an era when too many countries seem to be sliding
toward more government control of everything, including energy policy,
Argentina’s recently inaugurated president is a breath of fresh air. Indeed, President
Javier Milei (Fig. 1) has shown quickly that he is
not afraid to trumpet his message and philosophy of common sense government and
free market capitalism.
Taking office on Dec. 10, 2023, after
winning a runoff election for the presidency on Nov. 19, President Milei quickly
issued 13 decrees and reduced the number of cabinet positions from 18 to 9 as
part of his effort to reduce the size of government. In addition, Milei also talked
about privatizing some of the country’s government-run corporations, including
state oil company YPF.
And on
Jan. 17, 2024, Milei delivered a fiery speech at the World Economic Forum’s
annual meeting in Davos, Switzerland. In that speech, he remarked, ““Today,
I’m here to tell you that the Western world is in danger.” He then encouraged political
and business leaders assembled at the WEF event to reject socialism and instead
adopt “free enterprise capitalism” to improve the standard of living for people
everywhere. No doubt, that was a shock to the system for many of the leaders
assembled at Davos. No one would dare speak to this group quite the way that
Milei did, save for maybe former U.S. President Donald Trump.
Speaking of YPF, one of Milei’s first decisions was to
appoint veteran oil executive Horacio Marin, with 35 years of experience, as
the company’s new president and CEO. The appointment comes at a time when YPF
has been performing better in its operations. YPF SA increased its oil
production 7%, or 15,000 bpd, in the first nine months of 2023, compared with
the same period in 2022. This improvement is due to greater upstream activity,
with 225 wells drilled in this period, compared to 192 wells a year earlier, said
the company.
Last October, YPF achieved output of
250,000 bopd, the highest production figure in nearly eight years. On the
downstream side, the firm's refining capacity reached a record high of 310,000
bpd in several months of 2023, with a 5% increase, or 13,000 bpd overall, for
the first nine months of the year, as compared to the same period in 2022.
This obviously prompts the following
question: If YPF can perform this well under government control, how well might
it function, if the company were privatized?
John Kerry to switch roles. Last month, this editor
profiled some of the buffoonery emanating from President Joe Biden’s climate envoy,
John Kerry, during his participation in the COP 28 climate conference. One
would have thought that we’d see a bit less of Kerry, early in the New Year,
but not so. He has managed to stay in the headlines on a remarkably consistent
basis.
First, during the weekend of Jan. 13, word leaked out that Kerry
will be switching roles later this winter. He will leave his climate envoy job
to take a position as a climate champion in Biden’s re-election campaign. When
that will take place is still uncertain. In the meantime, Kerry continues his
jet-setting ways and made sure that he attended the World Economic Forum’s
annual meeting in its usual place in Davos, Switzerland, Jan. 15-19. At Davos, on
Jan. 16, Kerry confirmed that he will be switching roles.
Reacting to Kerry’s intended job switch, several industry
friends told this editor that they’re happy to see that his zealous
environmentalism will no longer “be screwing up U.S. energy policy.” As one of
them said directly, “if Kerry has to mess up something, let it be Biden’s
re-election campaign.”
Updated “polluters indexes” from U.
Mass-Amherst. Sounding much like comrades-in-arms to John
Kerry, two researchers at the University of Massachusetts-Amerst’s Political
Economy Research Institute (PERI) have come out with their latest Greenhouse 100 Polluters Index,
Toxic 100 Air Polluters Index and Toxic 100 Water Polluters Index. These
indexes, they say, are supposed to reveal the top industrial polluters in the
U.S.
Sounding just a
wee bit left-of-center, Michael Ash, co-director of PERI’s Corporate
Toxics Information Project and professor of economics and public policy at UMass
Amherst, said, “In making this information available, we are building on the
historic achievements of the right-to-know movement. Our goal is to engender
public participation in environmental decision-making, and to help residents
translate the right to know into the right to clean air, clean water and a
livable planet.”
That’s all fine
and dandy, but the fact of the matter is that all of PERI’s updated
publications are based on U.S. Environmental Protection Agency (EPA) figures
for 2021, the latest year for which data have been published. And we all know
that the EPA loves to play with figures (especially if it makes oil and gas
firms look bad), so how accurate are these data, and how seriously can we take
them?
The Greenhouse 100 Polluters Index ranks
companies for direct release of greenhouse gases from industrial facilities. The
index, based on EPA’s Greenhouse Gas Reporting Program, ranks companies by
their domestic emissions responsible for global climate change. One has to
wonder how that is determined. Predictably, Vistra Energy, Southern
Company, Duke Energy, Berkshire Hathaway and American Electric Power are the
top five (worst) firms on this list, due to most of them being fossil
fuel-burning electric utilities. And it’s interesting that multi-billionaire
Warren Buffett’s Berkshire Hathaway conglomerate is on the list—does he
know that? Also, ExxonMobil ranks ninth on this list, based largely on releases
from its oil refineries.
The Toxic 100 Air Polluters Index is based
on EPA’s estimate of total potential chronic human health risk from toxic
chemical air pollutants. The top five firms of this group are LyondellBasell
Industries, Kaiser Aluminum, BASF, Indorama Ventures and Salzgitter. Three of
these companies are in the top five almost entirely because of chromium or
ethylene oxide releases from a single facility, indicating large potential
improvements from a focus on reducing pollution from those sites.
Finally, the Toxic 100 Water Polluters Index ranks companies by comparative chronic human
health hazard from water pollutants directly released or transferred to
publicly owned treatment works from large facilities in the U.S. during 2021. The top five companies on this list
include Dow Inc., LyondellBasell Industries, Celanese, Huntsman Corp., and
Honeywell International. PERI’s release said that while Dow is linked to 16
facilities in the water pollution database, the vast majority of the company’s
total water hazard, weighted by the toxicity of each chemical, is from
1,2,3-Trichloropropane at its facility in Freeport, Texas.
Looking at this
group of indexes, one can surmise that their real purpose is not so much to
inform individual citizens, but rather to embarrass corporations, particularly
those in the oil and gas industry. These indexes can be used to say, “See, look
at how bad these fossil fuel companies are for the environment,” and then, in
turn, be used to prop up the never-ending call for “renewable” energies, no
matter how inefficient or full of hidden costs they may be.
More of the same on the menu? As
this January issue was preparing to go out to readers, we continued to work on
our winter drilling forecast, which will appear in the February issue. As of
this writing, we had not put together all of the numbers. However, we can offer
some initial trends that we are seeing.
In the U.S., there is a sense that 2024 will be more
of the activity level experienced during fourth-quarter 2023. We don’t expect
any major shift upward or downward in drilling activity. The question, as we
worked on refining the numbers, is whether the total U.S. figure will be up
slightly, down slightly or roughly even with 2023’s total. Perhaps the
overarching reason for this static picture is that U.S. operators are waiting
to see what happens in the presidential election next November. Accordingly,
they are not taking many risks, not boosting activity beyond current levels.
This seems to be true, regardless of company size, whether a major, large
independent, mid-sized firm or small, mom-and-pop outfit. No one wants to go
too far out on a limb, if the “wrong,” anti-E&P candidate wins in the fall.
Meanwhile, the picture is brighter for international
activity and for offshore projects globally. We see the Middle East leading the
way again, with activity up in Africa and relatively healthy in the Far
East/South Asia. There may be a mild increase in South America, as well. Offshore,
the Middle East again is a leader in growth, along with Africa and the Far
East/South Asia. These trends will become more clear, once we finish compiling
the numbers. So, stay tuned for the full forecast in our February issue. WO
IN THIS ISSUE
Special
focus: Hydraulic Fracturing. In one article of our lead theme this month, authors from Halliburton
discuss how, in
the evolving landscape of hydraulic fracturing, a transformative synergy of
electrification, automation and real-time optimization has emerged. The
commingling of these technologies is paving the way for unprecedented
efficiency and performance gains, while also reducing costs and NPT. In the
second feature of this section, an NOV author describes how a next-generation
electric fracturing system improves efficiency and ESG performance. An
innovative 5,000-hp frac platform combines intelligent electrical architecture
and simplified drivetrains to increase power density and flexibility,
streamline rig-up logistics and minimize carbon emissions.
Managed pressure drilling: Driving MPD adoption with performance-enhancing technologies. In one of this month’s primary sub-themes, a Weatherford author details how a new performance solution for MPD applications was launched to address a substantial portion of the market between existing entry-level and premier tier offerings. The author describes the differences in these solutions and presents a case study highlighting performance improvements.
G&G technology: Quantum computing and subsurface prediction. Several authors from Geophysical Insights and one consultant discuss how quantum computing has vast potential to reshape subsurface evaluations, providing capabilities and advanced geoscience analyses that are orders of magnitude faster and superior to any computer system that exists today. Taking advantage of quantum mechanical effects, quantum computing can process millions of calculations concurrently. It is this phenomenon that provides encouragement that quantum computers will take geologic subsurface interpretation beyond anything we can imagine today.