Good morning, here's what the Oilman has for you today:

• New Methane Rules Threaten Small Texas Drillers

• Banks Still Like Oil More Than Renewables

• Upcoming Oil and Gas Events

• Tweet of the Day

New Methane Rules Threaten Small Texas Drillers

New methane emission rules announced by the Biden admin at COP28 could be fatal for small Texas oil producers.

The rules call for equipment replacement and regular emission reporting.

Leaky pipes and inspections

Methane is the latest target of energy transition hawks.

The oil and gas industry is the biggest source of these.

Flaring is one way to reduce emissions, but it’s frowned upon.

The alternative is investing millions in equipment replacement and frequent inspections.

For a small producer, this means tens of thousands in investment.

With no real hope for any return on that investment.

“It’ll be death knell for people in the business that are my size,” one company owner told the Chron recently.

It will, indeed, be the death knell for small stripper well operators.

Especially when a methane tax kicks in next year.

Of course, there will be a tax!

Another push towards all large oil and gas players

We recently talked about the consolidation drive in the shale space.

Now, the methane regulation push will help drive small players out.

Cementing an all-star lineup for the industry.

But here’s the thing.

With all big producers, the U.S. oil and gas supply won’t be as flexible.

Production growth or reduction will now be solely in the hands of large corporations.

They’re the only ones who can afford the methane requirements and taxes and survive them.

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Banks Still Like Oil More Than Renewables

Banks are giving more debt and equity to oil and gas than wind and solar.

The shattering revelation comes from a BloombergNEF analysis.

It shows that for every dollar put into oil and gas, only 73 cents go into renewables.

Market rules are unforgiving

Bloomberg analysts claim the ratio of spending on renewables vs oil and gas needs to reach 4:1 by 2030.

So, it has to go from 0.73:1 to 4:1 in seven years.

That would be quite a challenge.

Of course, interest rates are one of the culprits.

They seem to be the culprit for everything these days.

Anyway, high rates are discouraging companies from borrowing.

Sure, that makes sense.

But they’re not issuing stock either.

Must be those rates again.

Rather than, you know, raw material cost inflation and uncertain profits.

Banks always follow the money

Bankers overdid it with their green claims and commitments.

Basically, there’s no bank that hasn’t pledged to cut out oil and gas from its coffers.

And yet data shows banks’ claims are quite different from their practices.

Shocking, right?

Banks do business with whatever industry makes money.

It’s as simple as that.

So, unless they start making some real money, renewables are no competition.

I guess the government will take care to ensure they make that money.

The question is how long the government can keep them going.

Before market rules snap back.

Upcoming Oil & Gas Events

• January 16: TIPRO/IPAA Leaders in Industry Luncheon, Petroleum Club of Houston, Houston, TX

• January 17: IPAA Private Capital Conference, The Post Oak at Uptown Houston, Houston, TX

• January 17-18: GO-WV Winter Meeting, Marriott Town Center Hotel, Charleston, WV

• January 18: Kansas Oil and Gas Day Legislative Reception, Kansas State Capital, Topeka, KS

• January 23-25: POWERGEN International, Ernest N. Morial Convention Center, New Orleans

Around the Global Patch

🇯🇵 Tokyo gas unit acquires Rockcliff energy in $2.7 billion deal.
🇮🇳 Indian minister announces purchase of Venezuelan oil.
🇷🇺 Russia initiates early oil export reductions.

Tweet of the Day

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