Your Inside Look at the Single Most Important Energy Event of the Year
As you read this, Marina and I are flying to London, for the annual Windsor Energy Consultations later this week.
That’s my third major international energy meeting in the last month. You’ve already seen all the details on the previous sessions in Paris and the Iranian gas summit in Frankfurt.
But Windsor is on a completely different level…
Each year, the Windsor Energy Consultation is the highpoint of my international travel schedule. This year marks the seventh in which I will be presenting – this time, two presentations.
Now, let me tell you, this is a gathering quite unlike any other, both when it comes to location…
And especially when it comes to how crucial the global energy information shared there is.
We’re Meeting in the Oldest Royal Residence in Europe
For one thing, it takes place outside London at Windsor Castle, Berkshire, while the British royal family is in residence. Windsor Castle is the oldest (and largest) continuously used royal residence in Europe, initially built by William the Conqueror in the late 11th century.
We get to stay there for three days.
For another, the Windsor Energy Consultations remain the only energy conclave authorized by a royal decree from Queen Elizabeth II. Each year, it brings together major figures from the energy sector, ambassadors, ministers, and top analysts from around the world.
There are only some 50 delegates to the three days of plenary sessions, buttressed by several dozen ambassadors and officials for The Ambassadorial Briefing on Saturday afternoon. The main sessions are held in the historic Vicar’s Hall astride St. George’s Chapel.
By tradition, we have a late night tour of the Chapel, one of the most famous medieval high-arched edifices in England. The Knights of the Garter meet here. Ten monarchs are buried at St. George’s. The tomb of Henry VIII and Jane Seymour is in the floor. You walk right over them.
Nearby is Vicar’s Hall, which has existed in one form or another for seven hundred years. Shakespeare had one of his early performances of “The Merry Wives of Windsor” there. About 1693 it was converted into a library, the format it retains today.
The choice of the hall for the Consultation is intentional. It makes for an intimate venue and, with the application of the Chatham House Rule, some frank conversation. Established in 1927 during a particularly contentious negotiation in London, the Rule reads as follows: “When a meeting, or part thereof, is held under the Chatham House Rule, participants are free to use the information received, but neither the identity nor the affiliation of the speaker(s), nor that of any other participant, may be revealed.”
But it is the Ambassadorial Briefing that comprises the hallmark of each Consultation…
Old-School Security: Meeting in a Castle Dungeon
It brings together plenipotentiaries of main energy producers worldwide. Combined with the reception beforehand and the formal dinner afterwards, it provides a rare opportunity for discussion.
But that’s not the only thing that’s unique about the Briefing. It takes place in the castle’s dungeon!
That location is also intentional.
Under the watchful gaze of Curfew Tower, you descend a winding staircase from Horseshoe Cloisters to be greeted by imposing steel doors. Once you are inside and those doors close, no transmission of any kind can enter or leave.
That makes it a very secure location for sensitive discussions. One just hopes the staff remembers you’re down there…
The theme of this year’s Consultation involves the developing balance emerging between global oil and natural gas production and demand, as well as the prospects for financing it.
For oil, that balance remains dependent upon OPEC and major non-cartel producers continuing the cut/cap regimen agreed to at the end of November in Vienna and first applied last month.
On the natural gas front, meanwhile, that balance is developing between liquefied natural gas (LNG) terminal capacity and global demand. It’s likely to hit by 2023, although changes in hub prices will change the dynamics of that movement.
LNG shipments will be rising far quicker than volume moved conventionally through pipelines. Cap ex for LNG infrastructure is now factored in. Meanwhile, new pipeline networks beyond the local feeder types are still possible, but the time delays and rising cost in building them will mean little international movement beyond those between contiguous countries.
Conversely, the local hubs resulting from LNG shipments will transform pricing methods and emphasize spot sales. All of this will be taking place over the next several years in an environment anticipating expanding across-the-board demand in end usage from heat and power, to transport, petrochemical feeder stock, and industrial applications.
The wildcard in all of this remains Iranian volume…
I’ll Be Showcasing the American Perspective
That was the reason for the recent summit I attended in Frankfurt recently, which you can read about here.
Among the representatives present at Windsor are those from OPEC, Russia, the UK, and Norway. We will have a rare opportunity to assess how OPEC’s Vienna Accord to limit production, when combined with the estimates of North Sea production, will impact oil volume.
What is lacking from the other Windsor participants is a detailed treatment of how U.S. unconventional (shale and tight) production impacts this picture.
That turns out to be my job…
This year, I’m providing 2017 estimates and analysis for the U.S. oil and natural gas market and how they figure into the broader global energy picture.
What I have been witnessing in my travels for the past year will be reinforced by those attending the Windsor Consultation. Not only is there new interest in how American production influences global expectations, there is also a massive change in international financing trends.
Both are part of my two Windsor presentations…
You’ll Get an Inside Look on My Presentation Soon
Tradition obliges that all my slides be presented first at Windsor. But given that they are mine, I intend to provide a link to them next week along with my later analysis. As I do so personally means that they’re not in violation of the Chatham House Rule.
In anticipation, the two slides below provide a summary of the takeaways I shall provide at Windsor and embellish upon in upcoming issues.
Much more on all of this and further implications beginning here next week.
Now, my premium Energy Inner Circle members have already had a chance to move in ahead of this expected $93 billion wave of energy investment. But word is getting out… To find out how you could join in before it’s too late, click here.