Saudi Arabia to lower oil prices, the houston boom is over

McFail is terrible. Can't believe they gave him an extension. Then again going by the Pelicans lay by play guy, it truly does sound like he is a YES MAN!

 

Saudi dictates the oil price. We have always asked them to slow down production so we could profit more or profit at all. Yes, their market share has been hurt from shale technology, but this technology was only profitable because of their "generous" slowing of production. Seems they have had enough for the time being.

All of this is being done for political gain. If we can produce as we please and profit regardless of what KSA does the KSA freaks out because we don't need to appease them politically...they are just reminding us we need them.

 

Ha! Yes Saudi dictates the oil price. Clearly they have a $50/bbl target and they must be very happy they've finally achieved this milestone. (I'm kidding son). They can influence it because they have spare capacity to produce, yes, but clearly they don't fully control it, otherwise the price would be much higher.

I think you're missing the big picture -- the US as a whole is benefiting from lower oil prices. Sure, some US oil producers will take a hit, but on the whole, the country benefits from lower oil prices. Saudi is tight with the US. They are helping us. They're crippling Russia, Iran, and Venezuela right now. Not the US. I'm certain Obama or some other US politico consulted with Al Naimi before his OPEC meeting in November.

 

Oil wouldn't still be falling if Saudi had cut production as most expected. If Saudi cuts production, the price will rise. To that extent, Saudi does exert a lot of influence on the price of oil.

I personally have to wonder if Saudi is trying to drive the price to a point where it will not support continued fracking operation.

One thing is certain. If the price falls or stays where it is now for the majority of 2015, it was be very bad for the Russian economy. In addition, there will be a lot of jobs lost in the energy sector in the US.

 

In Russia they think the Saudis AND the Americans control oil prices.

 

If the dollar wasn't kicking the crap out of other currencies then oil might rise as well.

 

That is far from a guarantee. Production in northern Africa has been coming back online after the Arab Spring shut it down, and that could have kept the price going south.

 

Can anyone explain what a scheduler is responsible for in oil and gas industry? What education is needed and what can it lead to potentially career wise?

Figure I'd ask in this thread instead of creating a new one.

 

Just sayin'

 

I couldn't guess at all the implications of the Saudis letting oil fall or predict the effects; but I'd guess that there is some massive algorithm out there that does guess. Airline stock prices, currency exchanges, service companies, the price of wheat, lower cost Russian military hardware, higher tanker rates, piracy rates etc. etc. etc. The Saudi's certainly own a lot of dollars and may have hedged the up. They might make more from that that from selling oil.

I'm just saying, if I were an homogenous kingdom of trustworthy agents sitting on $900,00,000,000 I would/could buy all the information and all smart guys who analyze it, and send my minions out to see stability and profitability reigned forever.

 

There isn't a massive algorithm that predicts prices.

You seem to have this desire to believe that something or someone is controlling everything.

 

I remember when you were calling for $200/barrel oil back in 2007-2008, why anyone would listen to you is beyond me. You seem to have a limited grasp of the bigger picture. Based on what you have written you seem to also have a short-sighted view with limited knowledge of Saudi Arabia.

 

Perhaps, but I doubt it would have had nearly the market impact as the U.S. shale production.

 

High gas prices= recession
Low gas prices = recession

 

It used to be a role you could work your way up to from field ops, measurement, gas control, billing and then contract admin. But nowadays it's considered a training ground for oil and gas traders, so you've got a lot of MBAs and top-shelf undergrads applying for the roles, so it's gotten more competitive. Insofar as oil, gas or power trading have become the flyover state version of I-banking, scheduling has become the 1-2 year analyst program at least in terms of talent pool and selection process.

For most of the Continental U.S., the natural gas supply chain works as follows: product is taken from multiple wells in a producing field and transported by gathering lines to gas processing plants. At the processing plants the commodity is stripped of water, sulfur, nitrogen or any number of impurities which would otherwise reduce the gas’s heating value. The product is then moved on outlet lines to natural gas supply hubs: where the gas producers will sell the commodity to marketing and trading companies for a lower-than-average spot price. Those energy brokers will then transport the commodity across transmission pipelines and sell the product downstream to a gas utility or industrial customer at a market hub, where they can generally sell the gas for a profit. The value and significance of natural gas pipelines is therefore twofold: providing arbitrage opportunities for traders by allowing them to exploit spreads on gas prices in different regions of the country, and securing additional revenue to gas producers and energy stability to consumers in times of supply gluts or demand shocks.

When energy traders buy gas at supply hubs and sell it at market hubs, they must transport it to the market hub via an interstate pipeline. In order to transport gas on a pipeline, they first have to reserve transport capacity on the pipeline by negotiating, drafting and signing a transportation contract with a capacity marketer on the pipeline. Once the transport contract is signed and activated, the shipping trader may enter a transport nomination to have gas schedule and flow on the pipeline. Typically the trader will have a scheduler on their team nominate the gas shipment on the pipeline. On a large interstate or intrastate pipeline, the high volume capacity, multitude of available receipt and delivery locations and broad multi-state service area ensures that there are always a large number of shippers on a pipeline system on any given day. This guarantees that at some locations there will be a total nominated volume that exceeds the point’s capacity, and that there will be mismatching sales and purchase volumes. In either of those circumstances, pipeline schedulers' job is to reduce the shipper nominations to ensure both matching flow volumes across the pipeline and reasonable physical flow to maintain the pipeline’s condition and integrity.

Because reducing a shipper’s nomination essentially puts them in violation of their purchase or sales agreements with upstream producers and downstream consumers, schedulers can spend a large part of their day taking calls from gas trading customers and explaining to them why their shipment was cut. This requires schedulers to utilize our Throughput Management scheduling system to trace the shipper’s nomination path from the physical receipt point where the gas producer would have flowed the product into the pipeline, through any and all pooling points and intermediate sellers and purchasers of the gas, downstream to the physical delivery point where the gas flows to the physical end-user. In addition to tracing the shipper’s nomination path for an upstream or downstream mismatch that would have caused the cut, schedulers also have to review any point volume reductions by gas control, system outages or pipeline tariff provisions to see if any of those issues caused the shipper’s gas shipment to be cut. Schedulers then offer nomination recommendations to the shipper to help prevent being cut during next scheduling cycle or gas day, or advise them if the cut cannot be avoided.

Beyond confirming and scheduling daily gas nominations, schedulers also have to work with upstream and downstream pipelines to ensure that the physical volume flowed at their interconnects match the volume that was originally scheduled.

 

Or, if you work for more progressive organizations, its a bit more interesting:

(1) the schedulers are empowered to utilize and optimize a large portfolio of both firm and interruptible transportation, storage, imbalance, and park and loan contracts to ensure that as few customers get cut as possible. In oil, you can throw in some trucks, trains, and barges while you are at it.

(2) those costs are compared to the intraday or intramonth markets and compared to see which solution minimizes costs while maximizing client and firm value

(3) the schedulers, being the interface with the pipelines, do daily surveillance of electronic bulletin boards to track and report on pipeline maintenance, curtailments, upcoming regulatory and rate changes, and available capacity up for bid

(4) the schedulers work with the trading desk or client to project future flows given upcoming maintenance, weather, and projected regional demand. This helps plants, industrials, refineries, etc make smart decisions around how much supply they can get from all paths and work to ensure reliable product flow all month long

 

In a nutshell in a trading shop the schedulers make sure that the gas is moved from where the traders bought gas to where they sold it. In a large shop, they try to optimize the routes taken to minimize the transportation fees charged to the company. They need to make sure the volume is balanced, ie the buys match the sells and keep track of the volume that actually makes it to the destination.

In Oil, this transport includes tankers, barges, rail, and truck in addition to pipelines.

 

Haha, simulpost with ^^^^. As others have said, scheduling can lead to other jobs more related to trading and is often a way people use to get in with the front office, since most of the knowledge is acquired via on the job training and requires no specialized skills as a pre-req, though general knowledge of the energy trading industry and proficiency with computers is a plus.

 

Would you guys say the best way to get into something like that is with a finance degree? I have an accounting degree not sure how that would help but also an MBA. And if it's as competitive as you make it seem I may be out of luck if they aren't from one of the bigger schools.

 

All this proves to me is that oil is the biggest government run monopoly in the world. It makes me angry as hell to know that I was paying 4 dollars a gallon when I could have been paying less than 2 dollars a gallon.

If the oil industry wants to raise the prices they'll do it and you'll like it. We have no control over it except to not drive cars.