Some of the world’s largest energy producers, along with government officials from nations where significant amounts of fossil fuels reside are gathering this week in Houston for the annual CERAWeek conference. High-profile speakers from Russia and Saudi Arabia have grabbed attention but the real story is likely to be the ways the energy sector is adjusting to prices that are far below historic highs and innovating to maximize production.
Matt Smith, director of commodity research at ClipperData says that the industry is in a good place, with crude oil prices significantly higher than they were at this time last year.
“It’s going to be particularly more upbeat than it was at this time last year…and now here we are sort of languishing above $50 dollars for [a barrel of] crude,” he says.
Smith says that producers have adjusted to prices that are far lower than they once were.
“Fifty dollars is likely to be the new $100 – we’ve seen the U.S. and particularly in Texas the last couple of years adjust to this lower price environment and be able to hunker down and be more efficient,” Smith says. “The market is much better adapted to cope with that and so that’s a message we’ll be hearing out of a number of these CEOs that are going to be talking at CERAWeek.”
Energy-watchers are also looking to CERAWeek speakers for clues about government energy policy. But Smith doesn’t think much will be learned.
“We’ve got all these different people there. We’ve got the Mexican President Peña Nieto, Justin Trudeau the prime minister of Canada, and…Khalid Al-Falih [Minister of Energy, Industry, and Mineral Resources] from Saudi, We’ve also got [Energy Minister Alexander] Novak from Russia as well,” Smith says.
But he also warns not to expect fireworks.
“It’s going to be really interesting to hear what Al-Falih has to say – but at the same time, it’s very much a PR exercise from these guys,” he says. “They’re in Texas and so they’re in this place that they’re not going to be trying to put people’s noses out of joint by any means.”
CERAWeek is an industry conference, and Smith says a gathering of so many energy producers and leaders is likely to yield exchanges of knowledge among participants, even if the conflict between the members of OPEC, and shale producers in North America remains an important backdrop.
“When you have 350 speakers there from the oil and gas and energy market, you’re going to have a confluence of ideas,” Smith says. “And so even though the key topic from an oil and gas perspective is going to be the OPEC versus shale battle…there’s going to be a lot of focus on energy innovation, on environmental issues, on regulatory issues as well.”
Written by Shelly Brisbin.
