What’s Waiting for Me at Windsor Castle
Marina and I are off to another airport…
On Thursday, we’ll be flying “across the pond” for a stay at Windsor Castle outside London.
We’ll be there for the annual Windsor Energy Consultations. It’s a three-day event that promises to include some intense discussions with some of the most gifted energy minds in the world.
The event has been hosted for the past 15 years by the Windsor Energy Group (WEG).
Established by royal charter, this world-renowned group holds sessions throughout the year and all around the globe. But this particular event takes its name from the seminal session that is held each year on the first weekend of March while the royal family is in residence at the Castle.
On this particular trip, I am also bringing along Money Map Press Publisher Mike Ward, his wife Molly, and Associate Publisher Alex Williams to experience the affair. So you can be sure that you will be well represented!
For the first time ever, the focus of the assembly will be the United States…
A Huge Opportunity for American Know-How
The basis of this year’s meeting began with a briefing I provided to the Windsor Energy Group last October in London.
At the time, I suggested that the changing global energy balance was in large part influenced by what was happening in North America, especially in the American market.
At Windsor Castle, there will now be the opportunity for some of the most important energy minds to discuss what this is likely to mean in 2014 and beyond over an intense three-day period.
Make no mistake, the rest of the world is already aware of how unconventional oil and gas production is reshaping the energy landscape. And it is not just a North American phenomenon any more.
However, we do have a several-year head start on the rest of the world and that’s why everyone is intently keeping an eye on what is happening over here.
This is already becoming a global move.
According to the most recent figures from the U.S. Energy Information Administration (EIA), the real worldwide impact is becoming manifest. The U.S. is still ranked second in the world for shale (or tight) oil technically recoverable reserves (TRR), behind Russia and ahead of China. Yet the new figures now indicate that over 83% of these resources are located elsewhere.
And the changes in shale gas are even more dramatic.
The U.S. is now ranked fourth in shale gas TRR, behind China, Argentina, and even Algeria. The distinction with gas is even more striking than with oil. Almost 91% of the shale gas that can be extracted is someplace other than the U.S.
What these other parts of the world need desperately is American technology, expertise, know-how, and (in many cases) money. All of this will give U.S. companies a huge market moving forward.
And many of them will be making far greater profits on foreign projects than those at home. But that is a subject for another occasion.
The Coming Boom(s) South of the Border
At Windsor there are other themes to address. From my perspective, the discussion needs to move beyond commentary on the America experience to some serious consideration of the potential for development in other places.
As a result, in one of my briefings I intend to expand on the importance of the North American shale “revolution” as it relates to the major changes occurring to our south – especially in Mexico and Argentina.
According to the EIA, Argentina is second in the world for shale gas potential and fourth for shale oil. Mexico, on the other hand, is sixth in shale gas and seventh in shale oil. Taken together – and adding in the potential found in Brazil, Columbia, and Venezuela – these new findings are going to transform South America.
In the initial phase, though, it will be Argentina and Mexico that are going rewrite the script.
Argentina already has what may be the largest shale gas basin ever found. It’s called the Vaca Muerta, or “Dead Cow.” I discussed it in this issue of OEI back in July. It came on the heels of a major initiative between Argentinean state gas company YPF SA (NYSE:YPF) and American major Chevron Corp. (NYSE:CVX) to develop the basin. Unfortunately, Argentina has had financial transparency problems, a lack of infrastructure, and some recurring legal difficulties that have delayed the attempt.
In Mexico, though, there are some very promising basins stretching out like a backbone down the eastern portion of the country. The most likely plays are actually extensions of the Eagle Ford in South Texas, already a major U.S. producer.
And now major legislative and constitutional changes in the makeup of the national oil company PEMEX allow for the first genuine introductions of foreign investment and joint ventures into Mexican energy since the government nationalized the business in the 1930s.
Of course, there are questions here as well. More study is needed. A series of stratigraphic (exploratory and test) wells need to be spud to determine what the Mexican potential actually is. For that, these areas of the country need to provide better political and financial stability than they have exhibited.
Notwithstanding, I believe the first move to accelerate significant unconventional production will come in Mexico before it hits in Argentina.
In fact, shortly after we return from London on March 9, Marina and I will be turning around to deliver a briefing in Mexico City along with some other interesting meetings there. Of course, we’ll be bringing you along for those as well.
But first thing’s first…
At Windsor Castle, I’m hoping to expand the discussion to consider what the recent American experience actually means for other parts of our hemisphere and the rest of the world.
That’s going to mean several more conversations in other parts of the globe…
And that means more time spent on airplanes.