Pipes Without Borders

By Robert Rapier and Igor Greenwald • February 2, 2017 • Issue Articles

In this issue:

The ill-tempered beast of politics intrudes again on our enchanted land of pumpjacks and pipelines.

Sometimes, its exertions can be helpful, as this week when the Trump administration’s tough talk on Iran trumped swelling oil and fuel inventories to prop up crude prices.

Other times, not so much. Mexico has turned into by far the largest foreign market for U.S. energy thanks to growing natural gas imports through old and new pipelines. The Trump administration’s insistence on trade concessions, support for a border tax and insistence that Mexico pay for the border wall it doesn’t want threatens our mutually beneficial bilateral trade, even if it’s not especially likely to disrupt the multiple lucrative cross-border projects in the work by the companies we recommend.

We explain why Mexico has turned into a crucial U.S. energy partner, as well as the how.

U.S. crude output, meanwhile, is set to rebound significantly this year, now that OPEC appears to have put a floor under oil prices. This is a huge deal for oil service providers focused on U.S. shale, and we have three new portfolio recommendations.

Energy investors are used to the harsh discipline of free markets. Now they need to be mindful, perhaps as never before, of political risks. The beast doesn’t care about your portfolio or ideology. Don’t turn your back to it.

Portfolio Update

Helmerich & Payne (NYSE: HP) added to Growth Portfolio; buy below $80
RPC (NYSE: RES) added to Aggressive Portfolio; buy below $23
Superior Energy Services (NYSE: SPN) added to Aggressive Portfolio; buy below $21

Commodity Update

The oil markets were spooked a bit last week due to another weekly jump in the oil rig count. The U.S. land oil rig count is now the highest since November 2015, and some are speculating that production could ramp up quickly enough to offset the OPEC supply cuts. We expect only a small portion of the cuts will be offset this year with increased U.S. production. The other major piece of news among the commodities is the continued strength in propane, with prices soaring to 52-week highs and nearly tripling in a year.

In Other News

President Trump signed executive orders to advance the Dakota Access and Keystone XL pipelines

Bernstein Energy said global oil inventories dropped by 24 million barrels in the fourth quarter of last year

OPEC announced that of the of the nearly 1.8 million barrels per day (bpd) its members and other major producers agreed to remove from the market starting this year, 1.5 million bpd has already been cut

BP (NYSE: BP) has listed six mega-trends it believes will shape the future of energy, including a peak in global oil production as early as 2025

Prices for U.S. renewable fuel credits dropped sharply on news of a government regulations freeze that heightened uncertainty about the program’s future.

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About The Author

Robert Rapier

Bio | Archive

It's hard to imagine anyone better suited to covering the energy-investment waterfront than Robert Rapier.

Robert is no armchair analyst—he has two decades of in-the-trenches experience in a wide range of fossil fuel and biofuel technologies, including refining, natural gas production, gas-to-liquids, ethanol production and butanol production.

During a six-year stretch at ConocoPhillips, Robert ran a team of engineers in Scotland working on oil and gas projects in the North Sea.

For two years, Robert was an efficiency expert in a Texas petrochemical plant. The process changes he implemented saved the facility $9 million a year. He later worked as the Engineering Director for a Dutch environmental-technology company and provided engineering support for a Chinese facility the company was constructing.

Robert was also a butanol engineer in Germany for the Celanese Corporation, where he designed a novel butanol unit that cut production costs by $5 million per year.

In all, Robert has spent more than a dozen years working on liquid fuels technologies. Along the way he's picked up five patents, including one for a breakthrough way to convert ethane into ethylene (U.S. Patent 7,074,977).

Now, in addition to guiding readers to timely investments in Utility Forecaster and Rapier's Income Accelerator, Robert travels the world evaluating startup energy companies for deep-pocketed investors. After grilling management and assessing the technology on-site, he makes a go/no-go investment decision. His wealthy private investors and hedge fund backers trust him to make the right choice for the same reason we do: his vast real-world experience in just about every facet of the energy industry. If Robert votes thumbs-up, millions of dollars flow into these cutting-edge outfits.

Robert earned his master of science in chemical engineering and a bachelor of science in chemistry and mathematics (double major) at Texas A&M University. He tells us he was "this close" to finishing his Ph.D. before he decided he was having a lot more fun making money in energy stocks.

A prolific writer, Robert's articles have appeared in Forbes, The Wall Street Journal, The Washington Post and the Christian Science Monitor -- and he has been a featured expert on 60 Minutes and The History Channel. His new book, Power Plays: Energy Options in the Age of Peak Oil (Apress, 2012), helps investors sort through doom and gloom, hype and misinformation to understand the true costs, benefits and trade-offs for each of our major energy options.

In what little spare time he has left, Robert consults for a number of energy projects, including biodiesel, ethanol, butanol and biomass gasification facilities.