GulfSlope Energy Inc (GSPE)

[smith199]

While reading the 2024 Gulf Coast Energy Outlook (GCEO) forecast released yesterday, I found these positive comments:

Link to Excellent Slideshow: https://www.lsu.edu/ces/publications/2023/2024gceoslidesreduced.pdf

Link to Report: https://www.lsu.edu/ces/publications/2023/gceo_2024.pdf

* GCEO believes that the global market will continue to increasingly rely on the U.S. as a reliable source of energy and hydrocarbon-based products. This international demand will continue to facilitate investment within our region and sustain another decade of increased production of oil and natural gas. In the long-term GCEO still sees the Gulf Coast as well positioned as a net exporter of energy. In fact, political instability in other parts of the world can solidify the Gulf Coast of the U.S. as a reliable source of hydrocarbon-based products such as liquid fuels, chemical products, fertilizers, and polymers. GCEO continues to see longer-term opportunities for investment and employment growth in the energy manufacturing sectors.

* Gulf Coast oil and gas production rebounded even more quickly than the nation as a whole post pandemic and today Gulf Coast oil production is approximately 8.5 percent above the pre-pandemic peak. Gulf Coast natural gas production is 16 percent higher.

* The GCEO anticipates that oil and gas production will continue to increase, although fewer rig counts will be needed to produce more hydrocarbons. Thus, the industry is expected to continue producing more with fewer inputs, a sign of continued efficiency improvements.

* For perspective, in 2022 (the most recent full year of data available), natural gas accounted for 40 percent of electricity generated nationwide, wind for 10 percent, and solar for less than 4 percent. Renewables share of electricity generation are likely to increase, but natural gas is likely to be the largest fuel source for some time.

* This year’s GCEO modeling will assume that inflation continues to gradually slow to the Federal Reserve’s target of two to three percent over the next few years. Wage growth will gradually begin to outpace inflation, and demand for energy globally will continue to rise. GCEO, much like years past, anticipates that long-run energy demand growth will lead to increased U.S. energy exports, especially to the growing developing world.

* At the time of this writing, oil prices are in backwardation, with prices anticipated at about $78 per barrel by the end of 2024. In the long run, futures markets anticipate natural gas prices to oscillate between about $3.50 to $5 per MMBtu. European and Asian markets have not experienced the same rapid convergence to pre-Russian invasion of Ukraine norms, and this has created a comparative advantage for the Gulf Coast in attracting capital for projects in the processing and exporting of hydrocarbon-based products from the Gulf Coast region.

* Gulf Coast crude oil production forecast is anticipated to increase over the forecast horizon. For perspective, in 2022 regional crude oil production averaged 8.5 MMbbl/d. In calendar year 2023, which at the time of this writing is partially completed, ProdCast estimates Gulf Coast oil production to average 9.3 MMbbl/d, or an increase of approximately 9 percent. By 2032, Gulf Coast oil production is forecasted to reach 11.6 MMbbl/d.

* This year’s outlook identifies $222 billion in announced energy manufacturing investments out to 2030, a number that is 26 percent higher than the 2023 GCEO. The 2023 GCEO identified as much as 69 percent of all energy manufacturing investment to be located in Louisiana, driven in large part by LNG export investment.

* Louisiana is forecasted to gain approximately 1,000 upstream jobs in 2024, or about 4 percent due to the current lagged effect of relatively high prices, and then levelize in 2025 and 2026. Texas is forecasted to gain approximately 8,000 upstream jobs in 2024, or about 4 percent, then gain 2,500 jobs in 2025 (a 1.2 percent increase) and then flatten out 2026

* The Gulf Coast region’s refining sector continues its post-pandemic economic rebound, driven in by export opportunities arising, in part, from the geopolitical uncertainties in Eastern Europe, and increasingly, the Middle East. This year refinery utilizations are reaching levels not seen since 2019, approaching the mid to upper 90 percent range. Refined product trade: past trends seen in last year’s GCEO are likely to continue as the U.S.’ position as a global energy exporter strengthens. Disruptions and uncertainties in global energy markets, including refined product markets, will likely see a buttressing of current strong relative U.S. export positions in global markets, if not some smaller opportunities for growth.

* Geographic differences in crude oil and natural gas prices often drive pipeline development. If prices at “Point A” are higher than “Point B” at a given time, firms have the incentive to develop transportation resources to capture this price differential (or “basis”). Although oil production is anticipated to increase, due to the investment in pipeline infrastructure over the past decade, the need for increased barge and rail shipments is unlikely at this time. Last year’s GCEO questioned whether pipeline additions could become necessary once U.S. oil production reached pre-pandemic levels. Given oil production has just recently eclipsed pre-pandemic levels and is currently experiencing historical highs, ….time will tell whether pipeline constraints will become prevalent in the future. But as of today, markets appear to be in balance.

* Electricity is an important input for energy manufacturing that can comprise as much as 75 percent of ‘total variable operating costs’. Thus, regional electricity price competitiveness is important in regional economic development. The Gulf Coast continues to be a region with competitive industrial retail electricity rates. National average industrial electricity rates, at around $0.08 per kilowatt-hour (“kWh”), are considerably higher than the Gulf Coast composite regional average of less than $0.07 per kWh, which gives the region about a 13 percent electricity cost advantage.


My Holiday starts now. Wishing a Happy Thanksgiving to all.



Mrs. Smith