A New Bullish Sentiment In Oil Markets

Oil prices gained 2% Thursday on a combination of news that included a rumor that OPEC will extend output cuts until the middle of next year, though this was tampered by a build in US crude oil inventories. It's also responding--more than anything--to the faintest of signals that there may be positive developments in the US-China trade war. A 2-percent gain is about all we can hope for at this point in time, when OPEC can no longer affect major oil price movements. The highlight of the week was Putin's description of US shale technology as "barbaric" for its disregard for the environment and his positioning of Russia as an environmentally responsible oil and gas superpower. Intelligence has long pointed to Russian efforts to discredit fracking, which is a clear threat to Russia's Gazprom market share, most immediately in Europe. Recent data suggests that Russia is one of the top five C02 emitters in the world.

What Just Happened Offshore Guyana?

There's plenty to be excited about offshore Guyana with the strong of discoveries for Exxon and Hess and, more recently, the move to push first production to December this year, way ahead of 2020 schedule. 

So, then why is Tullow--the other company behind some major discoveries in the same basin--seeing its stock drop?

Ireland-based Tullow Oil and its smaller partner, Eco Atlantic, have just been taken to the cleaners over Guyana. In a day (Nov 20th), Tullow stock shed 27%, and Eco Atlantic's shed around 50%. That's a culling; and it's all because of results from its two discovery wells, Jethro and Joe. 

Both encountered heavy oil. Why is that a problem? Because what the market was looking for here was the massive light oil potential of this block, Orinduik. (Exxon's Liza field, will produce light, low sulfur crude.) 

Both companies were riding high on two major discoveries. Jethro was discovered in August, with 55 meters of net pay in a high-quality sandstone reservoir. Joe was discovered less than a month later, with 16 meters of net pay in deposits from the Upper Tertiary period. Each contained more than 100 million barrels of recoverable oil. 

The heavy crude Tullow is now talking about are sour heavy grades, comparable to what is produced in the North Sea and the Gulf of Mexico, according to Eco Atlantic. Should investors be worried about this? Yes. They're not exiting for no reason. 

They were counting on Liza's light, low sulfur crude--instead, they got heavy crude with high sulfur content, which means that it may end up being harder (and more expensive) to produce, transport and refine, so it will sell at a lower price as well. Now, everyone's questioning whether Tullow will even be able to develop these discoveries, and it's not enough to hope that the rest of the block may turn up that Liza light. 

Solar Steroids, A Major Industrial Power Breakthrough

The most exciting news on the renewables scene in a long time is the unveiling of Heliogen, a new technology that could be the key to tying big industry to renewable energy, thus significantly reducing greenhouse gas emissions. 

The innovation comes to us via Idealabs, and is basically solar power on industrial-dose steroids. Heliogen builds on the idea of concentrated solar power and makes it applicable to industry through the use of computational power. This is truly where high tech meets Mother Nature. The simple version is this: High resolution cameras capture real-time video of a field of mirrors. Those mirrors are in turn controlled by sensors that force the sun's energy on a specific spot to over 1,000 degrees Celsius. We've never hit this temperature before (only around half that). This is enough to feed industrial processes.

If you're looking for the future breakthrough investment, look here, at Idealabs.