India’s Pursuit of Hydrocarbons: Fueled by More Than Energy Concerns

India’s rise in world affairs since 1998 has been underpinned by rapid economic growth that began with the liberalization measures of 1991. The result is, among other things, a sharp increase in energy needs (India is the world’s fourth-largest energy consumer) which its domestic resources are inadequate to meet. While India is seeking to diversify its energy sources, investing in renewable energy, as well as nuclear power, its reliance on coal and hydrocarbons will only grow over the next 20-30 years – and grow faster than its domestic production will. Imports of oil already account for over 16% of India’s total energy consumption, while domestic production rose by only 1% in 2011-2012 over the previous year. Despite the landmark civil nuclear agreement between the U.S. and India, nuclear power will not factor in a significant way in India’s energy calculations for the next few decades, and recent legislation passed on nuclear liability issues may make progress on this front even slower.
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Oil & Gas Outlook: 2012-2013

The current Oil and Gas markets have departed from their historic relationship.  Oil and gas has traditionally been priced at a six to one ratio based on BTU content.  With oil at $94 /barrel, tradition says natural gas should be priced at about $15.66 per million BTUs.  Or if you believe that natural gas is the more rational price, then oil should be priced at about $16.50 per barrel.  I feel that the abundance of natural gas available has drastically reduced its price and that the price of oil is more accurately priced.  I also feel that natural gas prices are going to stay at this lower level for several more years given everything we are looking at today.
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Growing Capital Demand Creates New Structures for Midstream Investing

Changes in consumer demand, businesses shifting consumption patterns, growing demand from emerging and frontier markets, implementation of new regulatory mandates, availability of alternative energy feedstock sources, and aging infrastructures needing replacement have led to greater needs for capital for midstream energy assets.  These include refineries, power plants, LNG terminals and other facilities, both in developed and emerging markets.   Just for North American natural gas, for example, the INGAA foundation is projecting midstream capital demands of $205 billion over the next 25 years.
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Increasing Global Energy Demand Drives Higher Prices and Spurs Unprecedented Innovation in Conventional Energy

Petroleum will continue to provide the largest share of total energy supplies for decades to come as global demand for energy continues to grow. Innovation in conventional energy has made this a reality and if America continues to deploy its ingenuity, creativity, and entrepreneurial culture in the right way, the western hemisphere could be far less dependent upon foreign imports for energy. That will mean a whole new and brighter reality in energy security for the U.S. and a different global geopolitical landscape.
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