Prognostication was the name of the game at the recent summer PVF Roundtable meeting.

Bob Tippee, the longtime editor of the Oil & Gas Journal, spoke to a group at the summer PVR Roundtable meeting in Houston. Photo by Mike Miazga/Supply House Times


Prognostication was the name of the game at the recent summer PVF Roundtable meeting held at The Houston Engineering and Scientific Society Club in Houston.  

In front of another huge crowd of about 300 PVF industry executives, featured guest speaker Bob Tippee, Oil & Gas Journal’s longtime editor, returned and shared in detail his publication’s 2012 midyear forecast. He also took time afterward to speak with Supply House Times on a number of pertinent industry topics.  

Part of Tippee’s forecast centered around the continued growth of unconventional energy sources such as the shale plays, which he feels will have huge long-term economic implications.  

“We’re talking about producing from source rock like the Eagle Ford and Bakken (shale plays),” he said. “The industry has figured out how to mobilize hydrocarbons trapped in long and continuous reservoirs that go over long and wide areas. The ramifications are huge. We’re talking about enormous volumes of oil.  

“There will be setbacks. There will be shales where they never do crack the nut. There will be price slumps that will run a number of producers out of business. But overall, we have a much more secure and deliverable supply of hydrocarbon than we did before. The problems of low price and price collapse will eventually get smoothed out when manufacturers catch onto the fact we have a supply of low carbon fuel and natural gas. That will be very good for American manufacturing.”  

In preparing his publication’s forecast, Tippee was surprised by the current crude oil price. “If you have fl at demand and expectations for demand going down and a big inventory build the first half of the year and the supply is going up even though you have some supply problems, why is the price going up?” he asked. “Usually it’s because the dollar has weakened. It didn’t. The Euro weakened.  

“This is just an observation, but when spare production capacity gets down to the level that geopolitical factors provide reasons to worry about, and they definitely do right now with Iran and Syria together, spare production capacity goes down if those two things go down. Traders know that and get very jittery and respond to any geopolitical burp and the price goes up. Over time, it will go down again.

Geopolitical concern coupled with a little less pessimism about global economics explains the price.”  

Tippee sees retreating oil prices and continued low natural gas prices in the coming months if certain components fall into place.  

“If there aren’t any big geopolitical upsets and nobody invades Iran and we don’t have another Libya situation, then I think oil prices settle out and natural gas in the U.S. stays cheap for another year to 18 months and then as demand starts to absorb some of the deliverability, natural gas prices get reasonable,” he said. “Gas settles out at $5-$6 per 1,000 cubic ft. and oil settles out at $90-$100 a barrel, that’s a wild guess. The price of gas wouldn’t be horrible and the supply will be secure and steady. But that will never happen because there will be political upsets and surprises and hurricanes - all things that screw up the market.”  

Given all the activity occurring, Tippee isn’t shocked at the uptick in PVF business this year. “Things should be pretty good in the U.S. with the infrastructure going in,” he said. “There has to be a lot more capacity to deal with natural gas. Gas is good for equipment by nature. Gas is good for people who sell metal materials. There is going to be more business as more heavy material comes down from Canada from the oil sands. These refineries will need retrofits and need new valves, fittings and pipe.”  

New PVF Roundtable members introduced at the meeting included NIBCO, Trace Applications, Forged Components, Louisiana Valve Source, OK Pipe & Fittings, Bakersfield Pipe & Supply, MOGAS, Philip Cornes USA and A & L Valve.  

The next PVF Roundtable - and the final one of 2012 - is Tuesday, Oct. 30 at The H.E.S.S. Club. The evening will be highlighted by the anticipated return of guest speaker John Hofmeister, retired Shell Oil president and founder and CEO of Citizens for Affordable Energy. For more information on PVF Roundtable, visit www.pvf.org.

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