Posts tagged “energy investing”
Let’s build upon last week’s long-term bullish case for crude oil. Much has been said about, “Global Peak Oil” production in the last few years, and probably for good reason. We know that U.S. crude oil production peaked in the early 1970s just as Mr. King Hubbert predicted back in the late 1950s.
But, is peak global oil production just around the corner?
Energy industry analysts believe that global oil production will peak sometime between 2015 and 2025. That sounds like a fairly broad range. However, the reality is that it’s a fairly short timeframe in geologic time that does not even register a notch, and it’s rapidly coming upon us.
(Read More: Five Misconceptions About Peak Oil)
I’m not a forecaster, but I have studied oil supply and demand for the last 20 years, and I do believe that global crude oil production has reached a plateau, and may very well peak sooner than we think.
Why? For one thing, on average, the global natural decline rate of producing wells is roughly 7% plus or minus 1% or 2%. That means production has to grow at least 8% a year to register a net positive increase.
Hi, I’m Lou Gagliardi, an energy industry specialist who has ‘lived through the energy cycles.’ I would like to introduce myself to the readers at Energy Trends Insider. The topic of my column will be in energy finance and investment research. My goal will be to lay out the energy terrain to help you manage risk while enjoying the upside benefits of the sector’s long-term bullish trends. I will analyze and explain what energy industry trends you need to focus on to find long-term investment opportunities that balance risk and reward trade-offs.
But first a little bit about my career and experience.
I began my career doing project economics at Texaco for all facets of the energy value chain from upstream, downstream to midstream. I eventually segued to covering oil and gas companies at IHS Herold’s valuation shop. At Herold, I provided fundamental equity investment research. My core specialties run the entire energy value chain from oil, gas, and power markets to company coverage of Western multinationals, U.S. E&Ps, Canadian oil sands, national oil companies, refining, alternative energy, MLPs, pipelines, and oil service providers.
Over the years I have been interviewed by CNBC, the New York Times, Forbes, and the Financial Times, regarding Canadian oil sands, emerging markets, Enron and El Paso. I was featured in Robert Bryce’s book on the downfall of Enron, having notified clients of Enron’s financial inadequacies prior to the market’s awareness.
Most energy projects never get beyond the development process. There are many reasons for this, but failure to obtain financing has derailed an increasing number of projects over the past few years. The most common reason is the fundamental economics of the project do not provide confidence in an adequate return being paid to investors. There is effectively no hope for obtaining financing for any energy project if the project developer cannot demonstrate sound economic fundamentals to a potential investor.
Mike DellaGala and Jonathan McClelland’s recent article in AOL energy does a great job laying out the building blocks for financing a solar project. While some of the specifics of a solar development don’t apply universally (for example, solar trading credits and the solar resource are uniquely relevant to solar), the broad principles cover the key aspects of the basic economic story for an energy project.
More challenging to understand than failed economic fundamentals is why some projects do not get funded even where a developer can demonstrate solid financial fundamentals and the potential for returns that appear to reflect the investment risk. Over the past three years there has been consistent talk of how much “money is sitting on the sidelines” looking for good energy projects. Energy investors are commonly heard to say “if the project is really that good, it will get financed,” yet some projects that appear to be good, or even to be very good, don’t ever find financing.
This week’s episode of R-Squared Energy TV answers the following viewer questions: Which industry sectors could gain significantly from a drive for energy efficiency? What are some books that you recommend on the energy industry? In this episode I will discuss the industry that I believe is most susceptible to being damaged by high oil prices, and I will go through the stack of books behind me in the video. Readers who have specific questions can send them to ask [at] consumerenergyreport [dot] com or leave the question after this post (at the original source). Consider subscribing to our YouTube channel where you’ll be able to view past and future videos. Link to Original Article: R-Squared Energy TV: Episode 4… Continue»
One of Silicon Valley’s most respected investors believes that the green tech sector could become as lucrative as information technology and biotechnology.