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The Great Saudi Shale Swindle – OilPrice.com

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The Great Saudi Shale Swindle | OilPrice.com

Simon Watkins

Simon Watkins is a former senior FX trader and salesman, financial journalist, and best-selling author. He was Head of Forex Institutional Sales and Trading for…

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Saudi Arabia’s oil and gas giant, Aramco, has been given the go-ahead to launch the Jafurah shale gas field project, which will be the biggest shale gas development outside the U.S. The official reason is that the project will boost domestic gas supply and end the burning of oil at its power generation plants. The first reason is true by dint of the fact that it is a simple truism whilst the second is only partly true. It is extraordinarily unlikely to end Saudi Arabia’s oil burning at its power generation plants – given Saudi Arabia’s history of lying in this regard – but it may possibly reduce it. The core element that Saudi did not mention in its official comments on this issue is that the Kingdom will desperately need another primary energy source in the relatively near future because it has nowhere near the amount of oil remaining that it has stated since the early 1970s. So, will Saudi Arabia’s further comments that the Jafurah field will be a key part of the Kingdom becoming a significant gas exporter in ‘the near future’ also turn out to be nonsense?

If the provenance of these comments – Saudi Oil Minister Prince Abdulaziz bin Salman – is anything to go by, then the global energy markets would be better off reading the latest Harry Potter book as guidance to what Saudi Arabia may achieve in the years to come. This is the individual who said at the time of the 14 September attacks against two of Saudi Arabia’s key oil facilities that “the Kingdom plans to restore its production capacity to 11 million bpd by the end of September and recover its full capacity of 12 million bpd two months later.” Bearing in mind that he was Oil Minister at the time, it was surprising to see that both figures were wrong. In reality, from 1973 to the end of 2020, Saudi Arabia has averaged crude oil production of just 8.151 barrels per day (bpd) and had never averaged anywhere near 11 million bpd until it finally did so in November 2018 (11.093 bpd, to be precise, and only briefly) because U.S. President Donald Trump had expressly told King Salman to get the oil price down ‘or else’ Related: Oil Prices In Freefall As Pandemic Fears Grow

The reality as well is that Saudi Arabia’s long-stated ‘spare capacity’ of between 2.0-2.5 million bpd, based on the assumption of a 10 million bpd crude oil production average, is, and has always been, highly exaggerated. Quite aside from the actual mathematics involved, it is fair to assume that if the Saudis had been in possession of anything near 12 million bpd capacity, the absolute number one occasion to have pumped it on a sustained basis would have been in 2014 when it had just embarked on the neo-existential strategy of trying to destroy the then-nascent U.S. shale oil industry by dumping prices through overproduction.  Additionally, the EIA defines spare capacity specifically as production that can be brought online within 30 days and sustained for at least 90 days. In a rare moment of reality a couple of years ago, even Saudi Arabia admitted that it would need at least 90 days to move rigs to drill new wells and raise production to the mythical 12 million bpd or 12.5 million bpd level.

At the same time, of course, Saudi Arabia’s reserves numbers appear to be of the Hans Christian Andersen school of economics, as highlighted in my latest book on the global oil markets. At the beginning of 1989, Saudi Arabia claimed proven oil reserves of 170 billion barrels but only a year later, and without the discovery of any major new oil fields, the official reserves estimate somehow grew by 51.2 percent, to 257 billion barrels. Relatively shortly thereafter, it increased again to the longstanding 266 ‘or so’ billion barrels level. Bewilderingly – and a mathematical impossibility – Saudi Arabia’s proven oil reserves figure has stayed at around the same level for nearly 30 years, despite Saudi pumping an average of nearly three billion barrels of oil every year from 1973 to the end of 2017 – totalling 132 billion barrels – with, again, no new significant oil finds being made during that period.

So, Saudi Arabia really needs Jafurah to work and, to this effect, announced that it is to spend at least US$110 billion on the project, with the intention being as well that it will become the world’s third largest gas producer by 2030, after the U.S., and Russia. As even Aramco has noticed that Saudi Arabia does not have abundant freshwater supplies – Aramco chief executive officer, Amin Nasser, highlighted this shrewd observation last week (“we are not rich with water”) – Aramco is apparently going to use seawater instead for the fracking process. Unsurprisingly, there is no shortage of U.S. companies keen to provide their fracking technology and engineering services to Aramco, a situation dripping in irony as the U.S. shale players are now in a position to screw Saudi Arabia to the wall in terms of extreme pricing for their services just as Saudi wanted to completely destroy them from 2014 to 2016. Precisely how screwed Saudi Arabia is going to be will be evident when Aramco holds its bidding rounds for the work, technology, engineering, and chemicals on the fields in the coming weeks. Related: Shale Decline Inevitable As Oil Prices Crash

So, is this project likely to make Saudi Arabia a major gas exporter by 2030? No, is the short answer, and here is why. According to the aforementioned weaver of fairy tales – Prince Abdulaziz bin Salman – the Jafurah field has an estimated 200 trillion cubic feet of gas (TcF), a figure that should be taken in context of all other Saudi energy reserves estimates but let us pretend that it is true. In the meantime, Aramco has gas reserves supposedly of around 233.8 Tcf, which for the purposes of this analysis, we can also pretend is true. The plan is for Aramco to start production from Jafurah in 2024 and to reach 2.2 billion cubic feet (Bcf) per day (Bcf/d) of gas by 2036. Last year – without Jafurah – Aramco produced 8.9 Bcf/d of natural gas, a notional total of 11.1 Bcf/d. Crucially, however, even with this current 8.9 Bcf/d of gas production in place, Saudi has been burning around 400,000 bpd of oil for power generation (on top of enormous actual volumes of fuel oil and diesel).

All other factors remaining equal, one billion cubic feet of gas equals 0.167 million barrels of oil equivalent, so 2.2 Bcf/d (the future Jafurah output) equals 0.3674 million barrels of oil equivalent, or 367,400 barrels. Therefore, the total projected new amount of gas to come from Jafurah is around 367,400 barrels per day, which is not even enough to cover the current amount of oil being (400,000 bpd) burned for power generation in Saudi Arabia, even if Aramco’s already elevated gas production holds steady. Based on independent industry estimates on changing Saudi demographics and corollary changing power demand patterns, the Kingdom will probably need gas production of around 23-25 Bcf/d within the next 15 years just to cover its own power and industrial demand, compared to the 11.1 Bcf/d of Aramco’s current peak production added to the notional production from Jafurah. In sum, then, even if the quality of the Jafurah find is unparalleled in the history of gas finds, then Saudi would still be in deficit in its power generation sector if there was a straight switch from crude oil burning to gas-only burning.

By Simon Watkins for Oilprice.com

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Stop Asking Your Interviewer Cliché Questions

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Most job search advice is cookie-cutter. The advice you’re following is almost certainly the same advice other job seekers follow, making you just another candidate following the same script.

In today’s hyper-competitive job market, standing out is critical, a challenge most job seekers struggle with. Instead of relying on generic questions recommended by self-proclaimed career coaches, which often lead to a forgettable interview, ask unique, thought-provoking questions that’ll spark engaging conversations and leave a lasting impression.

English philosopher Francis Bacon once said, “A prudent question is one half of wisdom.”

The questions you ask convey the following:

  • Your level of interest in the company and the role.
  • Contributing to your employer’s success is essential.
  • You desire a cultural fit.

Here are the top four questions experts recommend candidates ask; hence, they’ve become cliché questions you should avoid asking:

  • “What are the key responsibilities of this position?”

Most likely, the job description answers this question. Therefore, asking this question indicates you didn’t read the job description. If you require clarification, ask, “How many outbound calls will I be required to make daily?” “What will be my monthly revenue target?”

  • “What does a typical day look like?”

Although it’s important to understand day-to-day expectations, this question tends to elicit vague responses and rarely leads to a deeper conversation. Don’t focus on what your day will look like; instead, focus on being clear on the results you need to deliver. Nobody I know has ever been fired for not following a “typical day.” However, I know several people who were fired for failing to meet expectations. Before accepting a job offer, ensure you’re capable of meeting the employer’s expectations.

  • “How would you describe the company culture?”

Asking this question screams, “I read somewhere to ask this question.” There are much better ways to research a company’s culture, such as speaking to current and former employees, reading online reviews and news articles. Furthermore, since your interviewer works for the company, they’re presumably comfortable with the culture. Do you expect your interviewer to give you the brutal truth? “Be careful of Craig; get on his bad side, and he’ll make your life miserable.” “Bob is close to retirement. I give him lots of slack, which the rest of the team needs to pick up.”

Truism: No matter how much due diligence you do, only when you start working for the employer will you experience and, therefore, know their culture firsthand.

  • “What opportunities are there for professional development?”

When asked this question, I immediately think the candidate cares more about gaining than contributing, a showstopper. Managing your career is your responsibility, not your employer’s.

Cliché questions don’t impress hiring managers, nor will they differentiate you from your competition. To transform your interaction with your interviewer from a Q&A session into a dynamic discussion, ask unique, insightful questions.

Here are my four go-to questions—I have many moreto accomplish this:

  • “Describe your management style. How will you manage me?”

This question gives your interviewer the opportunity to talk about themselves, which we all love doing. As well, being in sync with my boss is extremely important to me. The management style of who’ll be my boss is a determining factor in whether or not I’ll accept the job.

  • “What is the one thing I should never do that’ll piss you off and possibly damage our working relationship beyond repair?”

This question also allows me to determine whether I and my to-be boss would be in sync. Sometimes I ask, “What are your pet peeves?”

  • “When I join the team, what would be the most important contribution you’d want to see from me in the first six months?”

Setting myself up for failure is the last thing I want. As I mentioned, focus on the results you need to produce and timelines. How realistic are the expectations? It’s never about the question; it’s about what you want to know. It’s important to know whether you’ll be able to meet or even exceed your new boss’s expectations.

  • “If I wanted to sell you on an idea or suggestion, what do you need to know?”

Years ago, a candidate asked me this question. I was impressed he wasn’t looking just to put in time; he was looking for how he could be a contributing employee. Every time I ask this question, it leads to an in-depth discussion.

Other questions I’ve asked:

 

  • “What keeps you up at night?”
  • “If you were to leave this company, who would follow?”
  • “How do you handle an employee making a mistake?”
  • “If you were to give a Ted Talk, what topic would you talk about?”
  • “What are three highly valued skills at [company] that I should master to advance?”
  • “What are the informal expectations of the role?”
  • “What is one misconception people have about you [or the company]?”

 

Your questions reveal a great deal about your motivations, drive to make a meaningful impact on the business, and a chance to morph the questioning into a conversation. Cliché questions don’t lead to meaningful discussions, whereas unique, thought-provoking questions do and, in turn, make you memorable.

_____________________________________________________________________

 

Nick Kossovan, a well-seasoned veteran of the corporate landscape, offers “unsweetened” job search advice. You can send Nick your questions to artoffindingwork@gmail.com.

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Canadian Natural Resources reports $2.27-billion third-quarter profit

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CALGARY – Canadian Natural Resources Ltd. reported a third-quarter profit of $2.27 billion, down from $2.34 billion in the same quarter last year.

The company says the profit amounted to $1.06 per diluted share for the quarter that ended Sept. 30 compared with $1.06 per diluted share a year earlier.

Product sales totalled $10.40 billion, down from $11.76 billion in the same quarter last year.

Daily production for the quarter averaged 1,363,086 barrels of oil equivalent per day, down from 1,393,614 a year ago.

On an adjusted basis, Canadian Natural says it earned 97 cents per diluted share for the quarter, down from an adjusted profit of $1.30 per diluted share in the same quarter last year.

The average analyst estimate had been for a profit of 90 cents per share, according to LSEG Data & Analytics.

This report by The Canadian Press was first published Oct. 31, 2024.

Companies in this story: (TSX:CNQ)

The Canadian Press. All rights reserved.

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Cenovus Energy reports $820M Q3 profit, down from $1.86B a year ago

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CALGARY – Cenovus Energy Inc. reported its third-quarter profit fell compared with a year as its revenue edged lower.

The company says it earned $820 million or 42 cents per diluted share for the quarter ended Sept. 30, down from $1.86 billion or 97 cents per diluted share a year earlier.

Revenue for the quarter totalled $14.25 billion, down from $14.58 billion in the same quarter last year.

Total upstream production in the quarter amounted to 771,300 barrels of oil equivalent per day, down from 797,000 a year earlier.

Total downstream throughput was 642,900 barrels per day compared with 664,300 in the same quarter last year.

On an adjusted basis, Cenovus says its funds flow amounted to $1.05 per diluted share in its latest quarter, down from adjusted funds flow of $1.81 per diluted share a year earlier.

This report by The Canadian Press was first published Oct. 31, 2024.

Companies in this story: (TSX:CVE)

The Canadian Press. All rights reserved.

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