Industry experts predict that Mexico will face a shortfall of at least 8 tcf of natural gas during the period 1994-2010, due largely to slowing economic growth in Mexico, its inadequate natural gas infrastructure, and its current glut of unmarketable high-sulfur fuel oil which is co-produced with the natural gas. $$ How does the DOE view the future of natural gas vs coal vs renewable energy as per its 1995 budget? Their R&D budget numbers tell it all…natural gas $153 million, coal $128 million, and renewables $1.36 billion. $$ Marathon’s Sakhalin Island PSA (production sharing agreement) with the Russians is nearing realization. All that remains is approval by the Russian Parliament (OK) and agreements regarding the project’s tax, legal, and financial constraints (caveat emptor!). $$ In 1993, for the first time in history, the value of natural gas production in the U.S. exceeded that of crude oil output. (My, how things have changed!)
Light sweet crude oil - $14.11/bbl; Natural gas - $2.33/MMbtu; U.S. active rig count – 752
The FTC’s attempt to halt the $26.8 billion merger of BP Amoco and ARCO is shaping up as the biggest oil antitrust legal battle since the government broke up Standard Oil nearly a century ago. Both sides vow a court battle that could go all the way to the U.S. Supreme Court. $$ Meanwhile, across the pond, the European Commission approves TotalFina’s takeover of Elf, based on pledges by Total Fina to sell certain assets, including French service stations and LPG assets. $$ The day of the “virtual” oil company draws closer, as witnessed by Burlington Resources outsourcing operations of its Gulf of Mexico properties to Houston’s Baker Energy. Under the contract, Baker will operate and maintain all of Burlington’s OCS gulf properties, which include 54 manned and unmanned oil and gas facilities. $$ More than 70 U.S. congressmen--primarily Democrats—sign a letter urging President Clinton to ask the U.N. to lift sanctions against Iraq, claiming that the trade embargo is hurting the people of Iraq, not Saddam Hussein.
Light sweet crude oil - $28.82/bbl; Natural gas - $2.55/MMbtu; U.S. active rig count – 762
EnCana spuds a wildcat in the Columbia River basin in otherwise nonproducing Washington state. They are reportedly taking a second look at a potential unconventional gas play discovered there in the 1980’s. $$ Venezuelan President Hugo Chavez declares that his government plans to sell its interests in eight Citgo Petroleum refineries in the U.S. along with an undetermined number of its Citgo retail outlets in the U.S. Chavez stated that Citgo should be sold because it was denying PDVSA adequate revenue and because it was, in effect, “contributing tax money to the government of President George W. Bush rather than to Venezuela.” (Those two just need to drop the gloves and get it on!) $$ A group led by ExxonMobil spuds one of the most-watched wells ever in the Gulf of Mexico, an ultradeep Miocene well in 70 ft of water that could reach a depth of more than 30,000 ft and take a year to drill. $$ The DOE reports plans to budget $3 million/year to fund their microhole systems program, which targets reduced borehole sizes (3 ½ in. to 4 ½ in.) and miniaturized downhole equipment to reduce the cost of drilling and simplify access to drill sites.
Light sweet crude oil - $46.08/bbl; Natural gas - $6.11/MMbtu; U.S. active rig count – 1,280
The Rest of the Yarn
This month we continue our look-back at the life and times of Clint Murchison, one of the “Big Four” oilmen who laid the foundations of a flamboyant lifestyle that would come to define the image of Texas Oil.
With Southern Union Gas Company now up and running, Murchison began looking for customers outside of Texas and Oklahoma. While vacationing in New Mexico, he discovered that neither Albuquerque nor Santa Fe used natural gas. Instead of hunting and fishing, Murchison and Wofford Cain ended up spending weeks negotiating the acquisition of a small oil company that had found gas in the mountains near Farmington. Once the gas supply was secured, Murchison had little trouble obtaining a franchise to supply Santa Fe.
Albuquerque was another story. A half-dozen competitors sprang up to bid against him for the Albuquerque franchise. At a city council meeting the mayor of Albuquerque asked whether any of the bidders could supply a $25,000 cash bond to insure its financial viability. Everyone raised their hands. When the mayor asked for $50,000, Murchison and one other bidder raised their hands. When the bidding went to $100,000, only Murchison raised his hand. He scribbled out a check and left with the franchise. As they walked out of the meeting, Wofford cornered him and said, “We don’t have that kind of money in the bank.” Murchison responded, “We’ll worry about that when we get back.”
Murchison operated this way the rest of his life; as the son of a banker, he knew he could find a gullible loan officer somewhere that would lend him the money. In this case he took a train to Dallas and met with one of his father’s oldest friends, Nathan Adams, president of First National Bank of Dallas. Adams was a crucial building block in the budding Murchison empire and would remain so for years. One meeting was all Murchison needed to get the $100,000. “If you are honest and you are trying, your creditors will play ball,” he told Cain afterward.
Next month, Murchison takes a page from Alexander the Great. (Article excerpted from “The Big Rich.”)
In 1959, what operator overtook Standard Oil of New Jersey as the nation’s largest crude producer?
If you would like to participate in this month’s quiz, e-mail your answer to email@example.com by noon February 15. The winner, who will be chosen randomly from all correct answers, will receive a $50 gift card to a nice restaurant.
Answer to January’s Quiz
In 1962 the world’s deepest LPG storage involved Dakota Salt and Chemical’s salt-layer storage operations which were conducted through a trio of wells at 8,400 to 8,500 ft near Williston in Williams County, North Dakota (surrounded by all that Bakken oil!).
Answer to December’s Quiz
In 1961, Illinois ranked third (behind Texas and Oklahoma) in total footage for completed wells in the U.S.
No winner this month, probably because the question was too ambiguous. My bad!