oil/nat gas

Question 1

what is crack spread

Answer 1

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

Question 2

calculating crack spread

Answer 2

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

Question 3

where does U.S. supply of oil come from

Answer 3

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

Question 4

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

Answer 4

oil = 80%

nat gas = 55%

Question 5

What are NOCs

Answer 5

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

Question 6

top 3 NOCS

Answer 6

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

Question 7

strategic NOCS

Answer 7

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

Question 8

OPEC countries

Answer 8

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

Question 9

When/Where was OPEC formed

Answer 9

Switzerland, 1960

Question 10

When/Where did OPEC move

Answer 10

Austria, 1965

Question 11

first state in USA to drill? name of well?

Answer 11

pennsalvania, titesville

Question 12

what is bitumen?

Answer 12

tar-like form of petroleum

Question 13

by-products of oil

Answer 13

gas, heating oil, jet fuel, diesel

Question 14

how much oil does OPEC produce globally?

Answer 14

40%

Question 15

which countries are price takers?

Answer 15

Non OPEC

Question 16

oil price drivers

Answer 16

• OPEC supply/demand
• Non OPEC supply/demand
• financial market
• balance

Question 17

top 5 most consuming states of Nat Gas

Answer 17

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

Question 18

breakdown of natural gas usage

Answer 18

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

Question 19

trend of average energy use per capita

Answer 19

declining

Question 20

traditional flow of pipelines

Answer 20

south to north

Question 21

places for nat gas storage

Answer 21

1. depleted reservoirs
2. aquifers
3. salt caverns
4. mines

Question 22

what is the spark spread

Answer 22

nat gas is the input for a turbine to produce power

Question 23

excessive nat gas storage has what effect on prices

Answer 23

drives prices down

Question 24

largest commercial use of natural gas

Answer 24

space heating

Question 25

largest residential use of nat gas

Answer 25

lighting

Question 26

goal of hedging is a guaranteed price

Answer 26

fixed prices

Question 27

goal of hedging is a market price

Answer 27

index prices

Question 28

goal of hedging is price stability

Answer 28

cap prices

Question 29

two types of nat gas indexes

Answer 29

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)

Question 30

are commodity prices generally correlated

Answer 30

yes

Question 31

total value of nat gas position

Answer 31

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

Question 32

types of spot market pricing

Answer 32

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

Question 33

delivery location for NYMEX Henry Hub

Answer 33

Sabine Pipeline in Louisiana

Question 34

types of risks to hedge against

Answer 34

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

Question 35

what is the basis equal to

Answer 35

basis = location - futures

Question 36

contango vs backwardation

Answer 36

contango = upward sloping curve ; spot < future backwardation = downward sloping curve; spot > future

Question 37

reasons against marcellus shale

Answer 37

hydrofracing underneather New York water supply

Question 38

3 factors that make shale gas possible

Answer 38

1. horizontal drilling 2. hydrofracing 3. high oil prices

Question 39

who invented hydrofracing

Answer 39

Halliburton

Question 40

amount of jobs added by shale

Answer 40

600,000

Question 41

largest oil supplier in U.S.

Answer 41

Louisiana -Texas Basin

Question 42

components of basis

Answer 42

price, time, quality

Question 43

two humps in energy production curve

Answer 43

winter and summer when consumption is the highest

Question 44

widow maker

Answer 44

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

Question 45

moving power from one place to another

Answer 45

power is lost on the way during transportation

Question 46

mecca temperature for nat gas

Answer 46

65 degrees

Question 47

what is a landman

Answer 47

individual that has mineral rights to the land

Question 48

shoulder months

Answer 48

spring and fall when nat gas consumption is lowest

Question 49

are local distribution companies price takers or price givers?

Answer 49

price takers

Question 50

is fracing done above/below water line

Answer 50

below

Question 51

difference between wet gas and dry gas

Answer 51

wet gas comes out ground and refined into dry gas

Question 52

what is the frac spread

Answer 52

refining wet nat gas into dry nat gas

Question 53

6 groups in hedging scenarios

Answer 53

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