March 2022 - 1keystone.com

Biden Administration Focused on Increased U.S. Oil & Gas Production

March 30, 2022 Article by Jeffrey Price

Ever since the transition from the Trump Administration to the Biden Administration, rank-and-file leaders of the US O&G industry have been outspoken in expressing frustration with the Biden Administration declaring it as being “anti” fossil fuel. Sometimes, actual anecdotal examples surface some of which hold water. More often, the criticisms border on irrational hysteria with no concrete complaints. Many seem to forget that The Great Shale Revolution flourished under the aegis of the Obama Administration. In fact, Biden has done very little to impede[1] upward activity of the oil & gas industry. If impedances include tight restrictions on methane emissions, then – as long as those regulations are sensible – that would be a good thing.

Today, in the heat of a new Cold War, the criticisms leveled at the Biden Administration are crumbling as it laser-focuses on combatting the Russian menace. Level-headed advisors have finally gotten Biden’s ear and successfully pointed out that the U.S. has ascended into a global powerhouse as a producer of oil & gas. And, the Administration realizes that it has the capability to upgrade U.S. capacity, and thereby offset ultra-sensitive dependencies on Russian-supplied oil that exists in select European countries (e.g., Italy and Germany). Respected energy prognosticator, Daniel Yergen, weighed in with an excellent opinion piece published by the Wall Street Journal (before the Ukraine war broke out) – click here to read. Yergen points out that the U.S. has shifted the power dynamic away from OPEC (e.g., Iran and Saudi Arabia) and even Russia by being able to supply LNG in vast quantities to Northern Europe.

Let’s hope the pronouncements coming from the Biden Administration (e.g., Secretary of Interior Granholm) are not undercut by frivolous regulations that slow down the progression of a strategic ramp-up in US O&G production. What’s an example of “frivolous”, you say? How about silly attempts to prohibit cooking stoves using natural gas? Another example that might be truly important? That would be the federal judge instructing the federal government to take into account the carbon footprint associated with oil & gas produced from a federal lease. Do you know what that means? It means that the U.S. has decided that it will buy oil from foreign sources that aren’t dumb enough to self-impose UNILATERALLY a carbon penalty on its own production. The rational solution would be to apply a carbon tax across all oil consumed in the United States regardless of where it comes from. Why shackle U.S. producers?

First Keystone is taking steps right now to aid the increase in U.S.-based O&G production by accelerating our construction program to make available for lease a 5,000 s.f. office/warehouse located in Pecos.

The opinions expressed above reflect only those of the author and do not represent those of the First Keystone Pecos Industrial Park organization. First Keystone welcomes responsible fact-based discourses on these topics.

[1] It is a fact that the number of leases offered by the Biden Administration are comparable to those offered by the Trump Administration under comparable time periods.

Independents Leading the Charge to Surge U.S. O&G Production!

Article by Jeffrey Price

Please check out this brief, but very interesting, video report from the Washington Post covering the actions of our good friend in Oklahoma City, Joe Brevetti (founder of Charter Oak Production). In a nutshell, this small – but feisty – independent is punching way above its weight in making a difference in terms of America’s effort to bolster O&G production – this is a patriotic move (and, you don’t hear any moaning about impedances from the Biden Administration).

First Keystone supports the needed increase in US-based O&G production, and accordingly, we are fast-forwarding our program to develop more warehouses for lease in Pecos.

The Resolve of the Allies and the United States to Impose a Total Embargo on Russian Energy

March 18, 2022 Article by Jeffrey Price

This topic has gone from 0 to 60 in a record amount of time! Major publications are awash with articles on which country is willing to do what. The Wall Street Journal has gone out of its way to fire off round after round of criticisms aimed directly at the Biden Administration. In my opinion, some of them have merit and others come out of the same playbook used by those Philadelphians who threw snowballs at Santa during an Eagles game (40 years ago). A much more dispassionate treatise on this subject came from Max Fisher of the New York Times in his excellent piece, “Russia’s Other Contest with the West: Economic Endurance”. Please, take a few minutes to read it as it is about as good a rendition of forces on each and every party with respect to this very tough matter. (https://www.nytimes.com/2022/03/09/world/europe/russia-ukraine-economy.html) For the average American, it simply translates into some pain at the gas station. It is far different for a middle class family living in Germany or Italy. And the offset is that the average Russian citizen, many of whom barely grasp what’s going on in Ukraine thanks to Russia’s powerful disinformation campaigns, are utterly bewildered by the implosion of their own economy. The article has an excellent section near the end that delves into the potential collapse of support for Putin that has traditionally come from “Russian political elites…[who prize his] stabilizing the country and winning it respect abroad”. Many also expressed concern over his handling of the economy – an opposition to military adventurism in Ukraine.

I mentioned the Wall Street Journal, and I should not have omitted Fox News, but some of the claims leveled at Biden, such as complaining about the cancellation of the Keystone XL pipeline, are spurious if they are meant to explain why gas prices are so high. This link is a FACT-CHECK piece by Linda Qui writing for the New York Times. (https://www.nytimes.com/2022/03/09/us/politics/fact-check-republicans-biden-gas.html)

Lastly, under the heading of macabre comedy, is this editorial from the March 8^th Wall Street Journal where the editorial board unrelentingly lambastes Biden for cozying up to such nice folks as Maduro (Venezuela) or MBS (Saudi Arabia). Finally in the last few words of the barrage of criticism, they point out that “shale producers can increase production twice as fast…” – well, let’s get on with it! (https://www.wsj.com/articles/joe-bidens-u-s-oil-embargo-russia-energy-natural-gas-vladimir-putin-ukraine-11646780609)

Right now, to support the needed increase in US-based O&G production, First Keystone is fast-forwarding our program to have ready-for-delivery warehouses for lease.

What is the Appropriate Role for the U.S. O&G Industry in the Response to the Russian Invasion?

March 11, 2022 Article by Jeffrey Price

Very little was written about this subject until most folks went to their local gas station and experienced a big surprise. The “Big Picture” is that our gasoline prices are driven by global forces and it is virtually impossible to insulate an American consumer from these forces without a massive federal subsidy to support a lower gasoline price. These concepts are used in countries such as Egypt, India, Venezuela, and Saudi Arabia for gasoline. And, it places a tremendous stress on the public treasury. European countries are considering subsidizing natural gas prices right now. In my opinion, that would be a really bad idea in this country. In fact, open discussion about eliminating the federal tax on gasoline is moving in exactly the wrong direction – Americans can and should pay more to improve their roads via this tax! To learn a little more about the interplay of these forces, take a look at this article https://www.cnn.com/2022/03/10/politics/record-gas-prices-wont-be-solved-by-drilling-more-oil-climate/index.html.

A sober viewpoint comes from Bret Stephens of the New York Times advocates… “Be honest about energy. The world will need carbon-based fuels for decades to come. And we are better off extracting more of it in North America — including on U.S. federal land — than by asking Saudi Arabia to ramp up production or hoping to get more from Venezuela and Iran with sanctions relief. The alternative to increasing domestic oil and gas production isn’t only clean alternative energy. It’s also filthy petrostate energy.”

But, will the O&G industry actually respond and ramp-up production? As reported last week, the industry seemed to greet this crisis with a big yawn as senior management genuflected in the direction of Wall Street. So, is Wall Street to blame for this unpatriotic and counterproductive stance? It’s impossible to not hear blame directed at the Biden Administration. Well, the CNN article points out that criticizing the Biden Administration for insufficient permits is factually inaccurate. But, its report also points out that the Administration really ought to cut through the red tape in order to to speed up construction of new LNG terminals.

One of the better summarizations of the debate of who is to blame – Wall Street or the federal government? – was provided by CNBC’s Stephen Liesman – check out this clip from Morning Joe (https://www.msnbc.com/morning-joe/watch/-they-want-to-be-on-the-right-side-of-history-inside-the-white-house-s-ban-on-russian-oil-134962245593) to get his understandable explanation on who should do what. (Spoiler alert: They each need to do something!)

First Keystone is taking steps right now to aid the increase in U.S.-based O&G production by accelerating our plans to make available for lease warehouses by adding a 5,000 s.f. version of our Bobcat line of products.

The Permian Basin Community’s Response to the Russian Invasion of Ukraine

March 4, 2022 Article by Jeffrey Price

I do not know what to believe. Here is a link to the New York Times article (3/3/22) in the Business section (https://www.nytimes.com/…/02/business/oil-prices-opec.html). It’s pretty good, and it points out that OPEC Plus has turned a blind eye toward the conflict. (After all, the Vice Chair of this organization is a Russian minister. I guess OPEC Plus is a formal organization???) It is obvious to any American citizen who shares this writer’s concern for the citizens of the Ukraine, that a component of the American response ought to be to ramp up crude oil production in all possible ways. From my perspective, I was appalled at the indifferent remark made by Vicki Hollub (CEO OXY) who did not seem to care nor have the breadth of knowledge to grasp that her company is strategic who told analysts that there was “no need and no intent to invest in production growth”. I don’t want to single her out for criticism because there are others: Pioneer, Devon, and Continental, which the article states “were committed to limiting production to avoid oversupplying the market and pushing down prices to unprofitable levels”. Some people have called me gullible. (That was about 50 years ago.) This report, if accurate, is unbelievable – these stances are an outrage. It’s not collaborating with the enemy, but it is darned close. But does this tell the whole story? Maybe not. A friend of mine shared with me conversations he’s had with his friends in Midland who are working with privately-owned producers, and “the buzz” is that they are ramping up. By the way, what capitalist would not ramp up right now!? (God help those shareholders who still own shares in these publicly-traded companies.) But, from an overall American point of view, any patriot who is opposed to the totalitarian brutality going on in Russia/Ukraine would make these moves. I hope that these entrepreneurial oilmen (and ladies) represent the mainstream of thinking in the Permian Basin community. In my view, this would be the quintessential response from a strategic American industry! First Keystone, although not a producer, is doing our part by ramping up our own production to provide industrial buildings for sale in the Delaware Basin.