Important Immigration Policy Improvements Are Stalled

The well-respected magazine, The Economist, in its July 30th issue weighed in on immigration, but not in a way that one might expect. Specifically, it had a lot to say about America’s need for more immigrants to address the widespread problem of unfilled jobs ranging from resort workers to high-tech engineers. Sadly, the magazine article points out that the never-ending crisis over how to manage the southern border blocks any advance movements toward a sensible reform of which and how many applicants can enter into the US. Much food for thought. (Note: Former president George W. Bush was the last Republican who took on this particular issue.)

You can read the article here: https://www.economist.com/united-states/2022/07/28/a-shortfall-in-immigration-has-become-an-economic-problem-for-america.

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.

What The Economist Has to Say About ESG

This author often turns to The Economist as a source to cite when advocating a particular position.  The much-over-used acronym, ESG, became the focus of one of its recent cover stories (https://www.economist.com/leaders/2022/07/21/esg-should-be-boiled-down-to-one-simple-measure-emissions).  We read so often about “ESG this and ESG that” in the releases from publicly-traded energy companies, and The Economist points out that a lot of these factors ought to be severely de-emphasized.  We agree.  We do not take the exact opposite point of view, but we simply view matters of Social or Governance as secondary to the measurement of performance of a private enterprise.  Let us repeat, they are relevant, but they are far from primary in importance.

Unfortunately, ESG has become too big of a factor in the guiding principles of some publicly-traded energy companies (Shell?) and consequently, this once-renowned oil company has latched on to looney ideas as to where it is going to re-deploy its gargantuan base of equity capital.  Stated in a different way, this company no longer has a defensible business model. 

Somewhat similar criticisms can be leveled at other publicly-traded energy companies, while those that are funded by more opaque private equity have stayed with a more narrow focus on a core principle of profit-making. 

But!  The Economist editorial points out that the “E” in ESG ought to stand for emissions, and the opinion writers strongly support the notion of many inducements to bring about a decrease in worldwide emissions of CO2 and other harmful gasses.  That stance does not make The Economist editorial board as anti-oil, but simply means that the externalities (i.e., costs not borne by the corporation) associated with consumption of oil should be assessed back against those who chose to consume it.

We at First Keystone wholeheartedly support responsible use of hydrocarbons and we contribute to the objective by offering to lease Class A industrial facilities.

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.

Is the Slump in the Stock Prices of Oilfield Service Companies Justified?

In this space, we have chronicled the peculiarly slow ramp-up in drilling activity that has followed the dramatic resurgence in oil prices.  We have also noted that this recovery clearly appears to be ushering in a period of sustained prosperity.  In other words, we take the position that the industry is not in the midst of a quick bust-boom-bust cycle.  That’s due to extremely strong fundamentals on both the demand-side and supply-side.  That’s doubly true if you are situated in the Permian Basin. 

And the Wall Street Journal in a recent report sees it the same way (https://www.wsj.com/articles/oil-doesnt-have-to-boom-for-these-companies-to-thrive-11658506682?st=i7hzwrnfrcz9sis&reflink=desktopwebshare_permalink).  Thus, the stock market sell-off, that was prompted by the peaking out of WTI in early June, was clearly a serious overreaction.  The industry’s fundamentals remain strong, and they will be resilient. 

Many of the clients that have set up shop in the First Keystone Pecos Industrial Park also see it this way – they are taking the long view.  And that’s why First Keystone is committed to developing Class A office and industrial space for sale in the Pecos area. 

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.

Do Rig Counts Tell Us Everything We Need to Know? – Part 6: Foundation Being Built

The rig count zoomed up earlier this year to as much as 32 active rigs in June, but has clearly leveled off in the high 20s.

But the story is more interesting than a nice uptick.  We are reading Wall Street reports that show the service industry – in the summer! – is already setting the groundwork for a ramp-up in the new year.  With oil prices as stout as they have been for some time, this ramp-up that is coming sure took a long time to materialize, but it looks like there is going to be a long-lasting phase of growth in the U.S. oil & gas industry. 

No wonder – take a look at our other recent posting (July 19, 2022) on the strategic importance of U.S. oil & gas.

First Keystone continues to support companies that enable the development of strategically important natural gas in Reeves County (Texas’ #1 for NG production) and the Delaware Basin  by adding new infrastructure – such as industrial buildings for sale.

Managing the Conflict Between “Going Green” and Preventing Disastrous Energy Shortages

The war in Ukraine has prompted a re-think by the Biden Administration towards fossil fuel extraction.  President Biden even went to Saudi Arabia with hat-in-hand asking for increased production.  There is lip service given to easing the red tape inhibiting a faster ramp-up in U.S.-based oil & gas production and transportation.  In fact, if the U.S. is going to make a meaningful impact to offset the decline in supply from the USSR (oops! I meant to say “Russia”), then the path must be smoothed for the Permian and other important oil fields to ramp up production as well as midstream capacity to move the increased production to ports.  That is strategically important! 

Wait a minute!  What about the transition to green energy!?  Well, the respected Economist weighed in on the answer to that question with an excellent lead editorial on June 24, 2022.  Here is a salient excerpt:

One priority is finding a way to ramp up fossil-fuel projects, especially relatively clean natural gas, that have an artificially truncated lifespan of 15-20 years so as to align them with the goal of dramatically cutting emissions by 2050. The trick is to get business to back schemes designed to be short-lived. One option is for governments and energy grids to offer guaranteed contracts over this period that provide an adequate return on the understanding that capacity will be shut down early. Another is to pledge eventual state support to make these projects cleaner, for example through carbon capture and storage.

These inducements, along with others, accomplish both aims – indeed, regardless of the war, there need to be mechanisms put in place to keep energy flowing while the green energy ramps up. 

First Keystone continues to be part of the solution by building new infrastructure – such as industrial buildings for lease – that is supporting companies that enable the development of strategically important natural gas in Reeves County (Texas’ #1 for NG production).

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.

Feasible Plans to Convert to a Decarbonized Economy

We read with great interest a book review in the Wall Street Journal the other day – its title was “How the World Really Works” by Vaclav Smil.  The author is a polymath who has competencies across many, many diverse, but interconnected fields.  Check it out (https://www.wsj.com/articles/how-the-world-really-works-book-review-putting-it-all-together-11651848551?st=iq7nlpt21rqcjv3&reflink=desktopwebshare_permalink).

because what we found most illuminating was his point that the math simply doesn’t work to rapidly cut over to a renewable energy infrastructure for the entire American (or world) economy.  He points out that the sources of the electric and the transmission infrastructure are not even close to being adequate to enable anything resembling a rapid phase-out of fossil fuels.  He ridicules hard dates (e.g., 2050) for targets if the massive funding for new infrastructure isn’t also in place.  He points out that the poorer countries can’t even consider these notions!  It is just another example, from a qualified party, to introduce Green New Deal acolytes to harsh reality. 

First Keystone is all in favor of green initiatives – and taking them fast.  But our sober-minded approach to national energy policy is to provide infrastructure, such as warehouses for rent in Pecos (TX), the epicenter of the Delaware Basin, recognizing that this infrastructure is needed to generate much-needed natural gas that is a critical transition fuel. 

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.

Transitions to Green Aren’t As Easy As Saying It!

As the ongoing nature of the Ukrainian war has become more painfully apparent, energy pundits of all stripes have evidenced varying degrees of awareness that there needs to be a transition in the U.S. policies on domestic production and exportation of fossil fuels.  The key word in the previous sentence is “degrees” since unabashed fans of the O&G industry – primarily from the right end of the political spectrum – did not need the war to reach that conclusion.  While shifts within the left have been far more interesting to watch play out.  Sadly, the knee-jerk reaction of the Green New Deal types cannot be self-suppressed.  And, the folly of their opinions is painfully obvious to anyone who has passed third grade arithmetic.  But, when one can read a level-headed editorial from the highly-respected Thomas Friedman of the left-leaning New York Times who points out…

Let’s look at both. For too long, too many in the green movement have treated the necessary and urgent shift we need to make from fossil fuels to renewable energy as though it were like flipping a switch — just get off oil, get off gasoline, get off coal and get off nuclear — and do it NOW, without having put in place the kind of transition mechanisms, clean energy sources and market incentives required to make such a massive shift in our energy system.

It’s Germany in 2011, suddenly deciding after the Fukushima accident to phase out its 17 relatively clean and reliable nuclear reactors, which provided some 25 percent of the country’s electricity. This, even though Germany had nowhere near enough solar, wind, geothermal or hydro to replace that nuclear power. So now it’s burning more coal and gas.

A 2019 working paper for the U.S. National Bureau of Economic Research found that in Germany “the lost nuclear electricity production due to the phaseout was replaced primarily by coal-fired production and net electricity imports…

…then one can see there has been a genuine progression!  And a for country that seems to have a hard time generating bi-partisan coalitions on anything, the left plus the right just might “get it” on this one!  The Friedman editorial is not a sea change, but for a pundit with a huge following, his editorial is not insignificant.  (https://www.nytimes.com/2022/05/17/opinion/russian-oil-green-energy.html) 

And, First Keystone’s leadership, which often agrees with Thomas Friedman, is also doing its part by offering warehouses for lease in Pecos (TX) to serve the growing needs of the oil & gas industry.

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.

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

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!

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 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.

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

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. 

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.