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energy final > oil/nat gas > Flashcards

oil/nat gas Flashcards

1
Q

what is crack spread

A

difference between crude oil input and outputs of gasoline and heating oil

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2
Q

calculating crack spread

A

3 barrels of crude oil = 2 barrels of gas and 1 barrel of heating oil

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3
Q

where does U.S. supply of oil come from

A
  1. North America (50%)
  2. OPEC (30%)
  3. Non OPEC (20%)
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4
Q

how much oil and nat gas do the top 100 companies produce

A

oil = 80%

nat gas = 55%

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5
Q

What are NOCs

A

national oil companies, more focused on governmental and national interests than pure profit

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6
Q

top 3 NOCS

A
  1. Saudi Aramco (12%)
  2. National Iranian Oil (5%)
  3. PdUSA (4%)
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7
Q

strategic NOCS

A

oil companies associated with the government but have a balance between profit-driven motives and national interests

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8
Q

OPEC countries

A

saudi arabia, iraq , iran, kuwait, angola, ecuador, algeria, nigeria

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9
Q

When/Where was OPEC formed

A

Switzerland, 1960

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10
Q

When/Where did OPEC move

A

Austria, 1965

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11
Q

first state in USA to drill? name of well?

A

pennsalvania, titesville

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12
Q

what is bitumen?

A

tar-like form of petroleum

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13
Q

by-products of oil

A

gas, heating oil, jet fuel, diesel

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14
Q

how much oil does OPEC produce globally?

A

40%

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15
Q

which countries are price takers?

A

Non OPEC

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16
Q

oil price drivers

A
  • OPEC supply/demand
  • Non OPEC supply/demand
  • financial market
  • balance
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17
Q

top 5 most consuming states of Nat Gas

A
  1. Texas
  2. California
  3. Louisiana
  4. New York
  5. Florida
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18
Q

breakdown of natural gas usage

A
  1. industrial 32 percent
  2. electrical generation 24 percent
  3. residential 22 percent
  4. commercial 14 percent
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19
Q

trend of average energy use per capita

A

declining

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20
Q

traditional flow of pipelines

A

south to north

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21
Q

places for nat gas storage

A
  1. depleted reservoirs
  2. aquifers
  3. salt caverns
  4. mines
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22
Q

what is the spark spread

A

nat gas is the input for a turbine to produce power

23
Q

excessive nat gas storage has what effect on prices

A

drives prices down

24
Q

largest commercial use of natural gas

A

space heating

25
Q

largest residential use of nat gas

A

lighting

26
Q

goal of hedging is a guaranteed price

A

fixed prices

27
Q

goal of hedging is a market price

A

index prices

28
Q

goal of hedging is price stability

A

cap prices

29
Q

two types of nat gas indexes

A
  1. Gas Daily = average price of all settled contracts for that day
  2. Inside FERC = average price of all settled contracts for that month, determined during the 3rd week of the previous month (bid week)
30
Q

are commodity prices generally correlated

A

yes

31
Q

total value of nat gas position

A

spot price x number of contracts x 10,000 mmbtus x number of days

32
Q

types of spot market pricing

A

firm = guaranteed except for force majure
interruptable = non guaranteed
base load = guaranteed except for durastic price change in one direction

33
Q

delivery location for NYMEX Henry Hub

A

Sabine Pipeline in Louisiana

34
Q

types of risks to hedge against

A
  1. price risk = risk of price movement that is adverse to your natural position
  2. basis risk = difference between price points in 2 locations
  3. physical risk = risk that delivery doesn’t come or isn’t on time
  4. cross-commodity risk = risk that nat gas moves inversely with the prices of other energy commodities
35
Q

what is the basis equal to

A

basis = location - futures

36
Q

contango vs backwardation

A

contango = upward sloping curve ; spot < future

backwardation = downward sloping curve; spot > future

37
Q

reasons against marcellus shale

A

hydrofracing underneather New York water supply

38
Q

3 factors that make shale gas possible

A
  1. horizontal drilling
  2. hydrofracing
  3. high oil prices
39
Q

who invented hydrofracing

A

Halliburton

40
Q

amount of jobs added by shale

A

600,000

41
Q

largest oil supplier in U.S.

A

Louisiana -Texas Basin

42
Q

components of basis

A

price, time, quality

43
Q

two humps in energy production curve

A

winter and summer when consumption is the highest

44
Q

widow maker

A

trying to guess the price of nat gas in March and April

45
Q

moving power from one place to another

A

power is lost on the way during transportation

46
Q

mecca temperature for nat gas

A

65 degrees

47
Q

what is a landman

A

individual that has mineral rights to the land

48
Q

shoulder months

A

spring and fall when nat gas consumption is lowest

49
Q

are local distribution companies price takers or price givers?

A

price takers

50
Q

is fracing done above/below water line

A

below

51
Q

difference between wet gas and dry gas

A

wet gas comes out ground and refined into dry gas

52
Q

what is the frac spread

A

refining wet nat gas into dry nat gas

53
Q

6 groups in hedging scenarios

A
  1. producers
  2. consumers
  3. marketers
  4. local distribution companies
  5. pipelines
  6. end users

energy final (7 decks)

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