The Oil Games Episode 4
The fourth part of the Kayrros Oil Games is here. Previous episodes introduced the players, described the rules of the game, and linked classical game theory to oil-market movements.
The ghost of Joseph Schumpeter returns in the latest episode, which details how OPEC has dealt with the rapid rise of shale oil production so far. This is linked to the promise of creative destruction, coming out of nowhere in the last few years to change the playing field.
Episode four explains whether shale oil is just a flash in the pan or a more permanent change in the game.
KAYRROS NAMES NEW ADVISORY BOARD MEMBERS
Senior experts guide company development in oil and gas and financial sectors
NEW YORK, March 15, 2018—Kayrros is delighted to announce the appointment of energy industry experts Guy Caruso, Marianne Kah, and Frank Verrastro to its newly formed U.S. advisory board. The board will help guide the company as it expands and deepens its presence in the U.S. oil and gas industry and financial sector at a time of deep transformation in the global energy markets.
Announcing the appointments, Andrew Gould, Kayrros Advisory Board chairman said “On behalf of the entire company, I would like to extend a warm welcome to Guy, Marianne, and Frank in their roles as members of our U.S. Board. Their complementary professional experience stretching across the intersecting worlds of industry, government, and research will be vital in promoting and supporting the fast-growing activities of Kayrros in a region that is one of the top three oil producers in the world.”
Guy Caruso is a senior adviser in the Energy and National Security Program at the Center for Strategic and International Studies (CSIS). Prior to joining CSIS, he served as the Administrator of the U.S. Energy Information Administration (EIA) from July 2002 to September 2008. Before leading the EIA, Caruso had acquired more than 40 years of energy experience with particular emphasis on topics relating to energy markets, policy, and security. He first joined the U.S. Department of Energy as a senior energy economist in the Office of International Affairs. Guy has also worked at the Paris-based International Energy Agency, first as head of the Oil Industry Division, where he was responsible for analyzing world oil supply and demand as well as developments in the oil industry. He was later director of the Office of Non-Member Countries where he directed studies of energy-related developments in emerging economies.
“My career-long work with energy and economic data has shown me that we overlook many of the signals that wider data and more systemic analysis would identify”, said Guy Caruso. “The proprietary technology that Kayrros brings to the intersection of energy and advanced analytics links global oil storage, demand, and supply in a new and highly macroscopic way that deepens understanding and helps industry leaders and investors make better and more rapid decisions.”
Marianne Kah is a member of the Advisory Board and an Adjunct Senior Research Scholar at the Center on Global Energy Policy at Columbia University. She was previously chief economist of ConocoPhillips in Houston where she was responsible for developing the company’s market outlooks for oil and natural gas and served as the company’s expert in scenario planning. Prior to joining Conoco, Kah was manager of planning at the Cabot Corporation, a planner at the U.S. Synthetic Fuels Corporation, and a management analyst in the Energy and Minerals Division of the U.S. General Accounting Office. Marianne has been a frequent presenter and panelist at international energy forums and conferences that include CERAWeek, the International Energy Agency, the Aspen Institute’s Energy Policy Forum, the US Chamber of Commerce, the Columbia Center on Global Energy Policy, the King
Abdullah Petroleum Studies and Research Center, and the International Energy Forum in Riyadh, Saudi Arabia.
“With its new and highly innovative approach to integrating and analyzing all forms of data related to petroleum supply and demand, Kayrros is a dynamic organization that seeks to dramatically improve both the timeliness and the quality of the information available to oil and gas market decision-makers” said Marianne Kah. “I very much look forward to bringing further insight to Kayrros research in the U.S. markets and its relation to global industry challenges.”
Frank Verrastro is senior vice president and trustee fellow, Energy and National Security Program at the Center for Strategic and International Studies (CSIS). From 2012 to 2017, he held the James R. Schlesinger Chair for Energy and Geopolitics. Prior to that he served as director of the CSIS Energy andNational Security Program. His extensive energy and management experience spans over four decades in energy policy, operations, and project management positions in both the U.S. government and the private sector, including serving as Senior Vice President for Pennzoil Company. Frank has written extensively on energy policy, oil and gas markets, and security topics, served on the Advisory Board for the National Renewable Energy Laboratory, and is a member of both the National Petroleum Council and the Council on Foreign Relations.
Commenting on his appointment Frank Verrastro said, “The rapid growth in shale oil production in the United States, and the potential for its development in other countries, has dramatically changed the global balance of crude oil supply and demand. At a time of such rapid movement, it is essential that financial and industry players be able to draw on the advanced market-specific analytics that Kayrros and its proprietary technologies can provide”.
With US offices in New York, Houston, and San Francisco, Kayrros is already bringing greater vision and deeper insight to the North American market as oil and gas production accelerates. Since its creation in Paris in 2016, Kayrros has been using increasingly sophisticated techniques to bring greater transparency to energy markets worldwide.
Kayrros is an advanced data analytics company that helps global energy market players to make better investment decisions. Kayrros experts extract value from combining alternative and market data across the energy chain. Working from offices in Paris, Houston, New York, and San Francisco, Kayrros energy teams deliver actionable information in near real time. Kayrros solutions are rapidly scalable and continually expanded to new geographies and new sources of data. For more
information please visit www.kayrros.com.
Thiago Costas, +33 (0)6 7854 1255, firstname.lastname@example.org
KAYRROS OPENS HOUSTON OFFICE, NAMES DANE LITWILLER DIRECTOR BUSINESS DEVELOPMENT
Advanced data analytics company expands global network driven by a growing need for near real-time energy market information
PARIS, 31 January 2018 — Kayrros officially opened its new Houston office with the hire of Dane Litwiller, who will head Kayrros’ Houston sales force as Director, Business Development, and is charged with helping develop Kayrros’ activity in the US and marketing Kayrros’ rapidly expanding range of oil and gas supply and demand subscription services.
“With strong growth in the global energy markets on the back of robust economic growth, investors and analysts are demanding increasingly timely investment intelligence. We are therefore extremely excited to extend Kayrros’ presence to Houston to work more closely with key players in the dynamic North American market,” said Antoine Rostand, president of Kayrros. “Dane is the perfect candidate to lead our sales efforts in the central and western United States, given his extensive experience in the crude oil and petroleum products sectors.”
After 10 years of professional in sales and business development, Dane has a deep understanding of the data critical to clients across the energy spectrum. Prior to joining Kayrros, Dane specialized in marketing energy data for better understanding of waterborne shipments of crude oil and petroleum products worldwide. Dane holds a bachelor’s degree in business administration from the University of Illinois.
With the opening of its Houston office, Kayrros can now provide its subscribers with deeper insight and data analysis of the North American market as oil and gas production in the United States rapidly accelerates. The new office is one of a number the company expects to open in 2018. Since its creation in Paris in 2016, Kayrros has been harnessing proprietary data analysis technology with increasingly sophisticated measurement techniques to bring greater transparency to energy markets worldwide.
Kayrros is an advanced data analysis company that helps global energy market players make better investment decisions. Kayrros experts extract value from combining alternative and market data across the energy chain. Working from offices in Paris, New York, San Francisco, and Houston, Kayrros experts deliver actionable information in near real time. Kayrros solutions are rapidly scalable and continually expanded to new geographies and new sources of data. For more information please visit www.kayrros.com.
Thiago Costas, +33 (0)6 78 54 12 55, email@example.com
Oil Briefly Reaches $70 as Buoyant Global Economy Bolsters Demand
Kayrros was mentioned in a New York Times article refering to oil prices. President and Founder Antoine Rostand was quoted on it. Read the full article here.
Radar des Valos: les start-up françaises de Software - Adtech les mieux valorisées
Kayrros was mentioned as one of the best valued startups in the 4th edition of the Radar des Valos from Challenges
Oil Prices Hit High, Before Sliding, Amid Disrupted Supply
Kayrros analysis on Iraq production disruptions, in The Wall Street Journal.
KAYRROS BRINGS CLARITY AND TRANSPARENCY TO GLOBAL ENERGY MARKETS
Select Kayrros data and analysis now available on the Bloomberg Terminal
NEW YORK, SAN FRANCISCO, PARIS, 29 November 2017—Kayrros today announced that it will publish a selection of Kayrros global oil and gas energy market reports and analyses on the Bloomberg Terminal.
Kayrros energy market reports have already attracted a fast-growing customer base and through the Bloomberg Terminal, will now provide new insights to leading financial professionals who seek increased transparency in understanding the global oil and gas markets. Bloomberg Terminal users will be able to consult key Kayrros data reports and analyses that result from state-of-the-art processing at increasing granularity across geographies and resource types.
“The global energy markets have long suffered from a lack of transparency that has hindered financial decision-making in the past,” said Antoine Rostand, Kayrros president. “The rapidly increasing number of alternative sources of data that add new and pertinent information can now be integrated with traditional supply and demand data to provide a near real-time picture of market drivers and behavior across platforms including the Bloomberg Terminal. This novel approach will be of value to analysts and investors alike.”
Kayrros possesses a unique combination of oil and gas market knowledge and experience with advanced data analytical capability. Kayrros extracts value from alternative and market data across the energy space to improve estimates and deliver more accurate forecasts.
Additional information about Kayrros can be found at www.kayrros.com or on the Bloomberg Terminal by typing KROS <GO>.
The Oil Games Episode 3 - OPEC Market Share Explained by Game Theory
In the first two episodes of the Oil Games, we met the Players, discovered the Rules of the Game, and began to understand the strategies of the various Players. We understood that oil and gas discoveries just like any other technological innovation were first and foremost a matter of financing. We asked ourselves the question what drives investors to allocate funding to the pursuit of discovery and found that the answer was just the same as in any other business, namely the expected return on investment. But we also understood that shale oil changed the rules. Is shale oil indeed the ultimate realization of Schumpeter’s promise? Is it really a break from the past, or is it a flash in the pan and just like any other source of oil?
Episode 3 starts addressing these crucial questions. We will go step by step to understand how both game theory and economic analysis move the invisible hand that guides the behavior of the Players to lead to a remarkably stable OPEC market share. Read full article here.
Kayrros COO speaks at the Codex Conference
In September 2017, Simone Pugliese spoke about how alternative data can change the energy markets. Watch his presentation here.
Permian Dynamics Shifting As Drillers Double Down
Kayrros research on well productivity in the Permian mentioned in the Newsbase. Read the full article here
Oil Edges Higher on Geopolitical Tensions
Kayrros analysis of satellite data reflecting of oil field activity in North Iraq mentioned in the Wall Street Journal.
In charts: has the US shale drilling revolution peaked?
Kayrros analysis on Permian well productivity mentioned in The Financial Times
Kayrros mentioned in The Financial Revolutionist
Read article here
KAYRROS ANNOUNCES NEW GLOBAL CRUDE OIL INVENTORY TRACKING CAPABILITY
Unique analytics platform aggregates crude oil inventory volumes from worldwide locations
PARIS, NEW YORK, SAN FRANCISCO, 4 October 2017—Kayrros today announced the release of a new product offering for its growing subscriber base. The Kayrros Global Crude Oil Inventory Tracker aggregates data derived from proprietary satellite imagery from 43 worldwide locations in the US, China, India, MENA, Venezuela and the Caribbean. This unique proprietary method allows Kayrros to track a total of approximately 1.5 billion barrels of crude oil storage capacity. Before the end of this year Kayrros will add approximately 200 other locations around the globe.
“Kayrros coverage of the global crude oil storage market with this level of granularity allows better visibility on actual crude oil inventory levels and more clarity on regional imbalances that were hidden up to now”, said Antoine Rostand, Kayrros president. “When added to our existing coverage of oil and gas supply and demand worldwide, this new research capability makes Kayrros the only energy alternative data company that integrates near real-time data across the value chain thus bringing greater transparency via actionable market intelligence and insight.”
Kayrros possesses a unique combination of oil and gas market experience and advanced data analytics capability backed by substantial industry knowledge. Kayrros products have proven that publicly available data can be supplemented with alternative data and advanced technology to identify information gaps, achieve additional market transparency, and establish a predictive edge over standard industry benchmarks.
Kayrros is an information service company that helps global energy market participants make better investment decisions. Kayrros experts extract value from combining alternative and market data across the energy chain. Working from offices in Paris, New York, and San Francisco, Kayrros experts deliver actionable information in near real time. Kayrros solutions are rapidly scalable and continually expanded to new geographies and new sources of data. For more information please visit www.kayrros.com.
Kayrros media contact: Thiago Costas, +33 (0)6 78 54 12 55, firstname.lastname@example.org
Unfinished Business: Why Oil Output May Surprise
Estimates of U.S. crude-oil production were probably too high because drilling didn’t translate into completion, but the news isn’t all good for oil prices. More in The Wall Street Journal.
Kayrros Series A deal mentioned in Fortune
Read article here
The impact of Harvey
How the tropical storm in Texas has left the oil industry facing multiple difficulties. Another mention to Kayrros co-founder Antoine Halff in the Financial Times.
Storm Harvey raises awkward questions over US energy ambitions
Concentration of oil and gas infrastructure on Gulf Coast leaves it vulnerable to weather events. Read Kayrros co-Founder Antoine Halff’s article in the Financial Times.
Storm Harvey exposes Achilles heel for global energy market
Kayrros co-founder Antoine Halff mentioned by the Financial Times article on the exposure of US energy infrastructure to Gulf cost storms. Read more here.
From Katrina to Harvey: Storm Resilience in the Age of Shale
“Three days after Hurricane Harvey made landfall near Houston, rains continue to lash the region, unleashing catastrophic flooding. Apart from the human suffering, the storm’s devastating impact should also serve as a powerful reminder that no country, no matter how large its oil and gas production may be, is fully insulated from the risk of an energy supply disruption.” Read more about Harvey’s impact and associated risks to the energy supply here.
Overestimation of US Gas Production Growth
“Kayrros projects that domestic output will average 73.7 billion cubic feet per day in October, far lower than the US Energy Information Administration’s (EIA) prediction of 76.9 Bcf/d.” Full article available in the Natural Gas Week from Energy Intelligence.
Kayrros anticipated shift in US lower 48 oil supply and storage
Kayrros anticipated shift in US lower 48 oil supply and storage confirmed by latest market data. See note here.
The Oil Games Episode 2
In the first episode of the Oil Games we met the Players and discovered the Rules of the Game. A surprising discovery of that first episode was that a ‘discovery’, whether in the world of innovation or in the search for oil and gas, doesn’t rhyme with ‘surprise.’ It might indeed come as a surprise that discoveries have nothing to do with the legend of the great scholar or the magic of serendipity. Oil and gas discoveries, like technological innovation, are first and foremost a matter of budget. In the search for underground deposits, just as in the race for the next disruptive technology, funding is the key. The business of discovery is a business like any other. So what drives investors to allocate funding to the pursuit of discovery? As always, it is the expected return on investment. And the return on investment itself depends on the structure of the industry in which we are working—monopolistic, competitive, or somewhere in between. Which brings us back to game theory, and the strategies adopted by the various Players. Read the full article here.
Bottlenecks Are Holding Back a Second Shale Boom
“The U.S. is now less than 200,000 barrels per day off its June 2015 high of 9.6 million barrels per day, and analysts expect production to keep growing. But as good as all of that sounds, it could be even better. As the FT reports, shortages of drilling rigs and roughnecks to operate them are holding back even more impressive output increases” See article here
La production de pétrole de schiste victime de son succès aux États-Unis
“Décidément, le marché pétrolier n’en finit pas de déjouer les pronostics. Le rebond de la production de brut aux États-Unis pourrait être moins important que prévu, note le Financial Times.” Selon Le Figaro.
Shortage Of Fracking Crews Slows The Shale Boom
“Some of the constraints that shale companies will run into are on the access to oilfield services (OFS), including rigs, equipment and personnel, according to Kayrros, a French research firm backed by the former CEO of OFS giant Schlumberger, and reported on by the FT”. Read the full article here.
French Consultancy Warns of Slower US Oil Growth
“The main theory that we have is that there is more inertia in the ramping-up of the fracking sector,” Antoine Rostand, president of Kayrros, told Oil Daily. “We see, obviously, production growth, but probably slower than what most analysts are projecting.” Full article available in the Oil Daily from Energy Intelligence.
US oil output growth hit by lack of operators and equipment
Kayrros President, Antoine Rostand, on the US crude oil production growth in the Financial Times.
The Oil Games - Chapter 1
The Oil Games are as a series of interconnected episodes in which we will try to explain and predict market behavior using Kayrros’ extensive knowledge of the energy industry, the world economy, mathematics and game theory in particular. The series’ target audiences include the practitioners, investors, and observers of the oil industry who are interested in finding new ways of understanding this fascinating business. The authors are Jean-Michel Lasry, Antoine Halff and Antoine Rostand. This is an ongoing story with future episodes being published in sequence by Kayrros. Here is the inaugural installment, in which we propose to apply the economic model of innovation to the oil and gas sector.Read the full article here.
Transparency used to be a dirty word in energy — now it’s turning into the norm
Article on the need for greater transparency in the energy sector and how Kayrros is helping in that space, in the Business Insider UK
Offshore rig operators reel from oil price rout
Antoine Rostand, President of Kayrros, comments on the impact of low oil prices for offshore rig operators in the Financial Times.
Oil veterans’ new frontier
Kayrros revolutionizing energy markets - Andrew Gould, Chairman of Kayrros’ Advisory Board and Antoine Rostand, Kayrros President, on their new venture, in the Financial Times.
Oil Field Services – A seller’s market in the making?
Oil Field Services – A seller’s market in the making: Antoine Rostand, President of Kayrros , explains how the current landscape is likely to impact mergers, acquisitions and consolidation in the oil field services sector.
The recent increase in oil price to slightly above $50 is a welcome development for the oil and gas industry, but I do not foresee any dramatic short term changes in the direction taken by oil and gas companies to implement aggressive cost reduction measures and tighter management of new projects. One of the sectors severely impacted by these sweeping changes is oil field services - a vital segment in securing the longevity of the industry as a whole.
Oil field service providers have historically jostled for lucrative contracts with international and national oil companies (IOCs and NOCs) but with the oil price decline, these companies have reduced CAPEX and OPEX and squeezed service providers on their margins.
While for each individual oil and gas operator this may make perfect sense in the short term, what may not be as evident is that when the whole industry acts in this way it causes years of disruption for the oil field service industry. In response, oil field service firms are forced to take drastic measures. Measures, which cannot easily be undone and a have far-reaching impact on four key drivers required to meet any future increase in demand for oil field services as and when production increases.
With personnel being at the heart of any oil and gas operation, it is never an easy decision to let people go in order to drive down costs. Nevertheless in the current market, oil and gas companies are resorting to curbing recruitment or implementing hiring freezes which have had knock-on effects on the global oil and gas recruitment pool. Universities are having to shrink their curriculums, leaving fresh graduates frustrated with their career choices and most likely seeking alternative career paths in the long run. This will no doubt have hard-hitting medium-to-long-term consequences for an industry that has for years been preparing itself for the ‘big crew change’.
At the sharp end of upstream oil and gas, we are witnessing the very real impacts of persistently low oil prices with all but the latest 6th and 7th generations of technologically advanced rigs being retained (stacked) for a much-anticipated future uptick in the workload. For the rest, unfortunately the scrap yard beckons. It is a tough decision to make as even by stacking expensive drilling rigs and platforms, oil and gas operators face losing thousands of dollars daily for crew and equipment upkeep – upwards of $40,000 a day in regions like the Gulf of Mexico for instance.
The US shale market – seen as the proverbial canary in the coalmine for the rest of the conventional oil and gas industry – has been hit hard by low oil prices. Between 2012 and 2015 key shale oil and gas producing regions in the US have witnessed drilling activity drop off dramatically. Oil service majors who serve these regions and who are already under immense cost-reduction pressure, are opting to dig into and cannibalize existing inventories. Additionally, in the current market, these companies are likely to hike up their rates to recover costs before considering investment in new hardware.
Engineering Procurement and Construction
Current research suggests that the order books of engineering procurement and construction (EPC) companies could potentially dry up within the next two years due to projects being cancelled or put on hold. Without the availability of a minimum level of oil and gas project work and with no new projects on the horizon, capacity is being eroded among EPCs as well.
As oil prices are anticipated to rise so too will the need for oil service companies by NOCs and IOCs, however, when that happens, the fear is that there is likely not going to be the required service capacity in the market.
There will also be a lack of qualified people, rigs and fracking equipment. Add to the mix, the impact on EPC contractors and you have a perfect scenario for a seller’s market for services. It’s a scenario of collective suicide for oil and gas companies who will not be able to ramp up production as rapidly as they think as they will have to wait for service companies to catch-up and rebuild the industry.
This new landscape has the potential to create fertile ground for a new round of mergers, acquisitions and consolidation in the oil services sector. The picture for the industry is anything but rosy going forward but all is not lost - there are clear steps oil and gas operators can employ to remedy the current situation.
*The findings in this post have been presented to the OPEC R&D Forum
Kayrros Forecasts 101
Kayrros utilizes a comprehensive machine learning methodology to forecast future supply and demand.
The first stage involves collecting data from a wide variety of sources and applying corrections when data is missing.
For Supply forecasting, the main inputs of the model include economic indicators like prices, activity measurements such as the rig count, fracking and drilling rates together with external factors such as weather forecasts. Demand forecasts are based on features including but not limited to macroeconomics data (population, GDP growth, unemployment, CPI, imports/exports), industrial indicators (production index, vehicle production, vehicle sales, car energy efficiency, air passenger and freight traffic), weather data, financial data (market prices of crude oil, gas and other petroleum products).
The next phase involves feature engineering, where raw data are transformed and combined to find the best predictive representation of the inputs. The best features and models linking data to the predictions are selected by an adaptive back-testing procedure, where the Kayrros algorithm learns the best link between the data and the relevant benchmark.
Specific to consumption forecasts, and as demand data is highly seasonal, Kayrros uses an additive model to separate the effects of trends and seasonality from the main consumption. Algorithms include both a linear and a non-linear forecast, to best capture the trend changes.
Finally, the performance of the model is evaluated through a thorough back-testing approach which simulates the output of the model from past data to predict out-of-sample future benchmark values, just like a trading strategy would do for prices.
Published on 10/20/17