Oil Ground Up

This episode of the Oil Ground Up podcast features host Rory Johnston in conversation with Andy De La Rosa, a senior field engineer with 15 years of experience in the wireline industry. De La Rosa describes wireline as the "tip of the spear" for the fracking process, utilizing specialized trucks with miles of steel conductive cable to send perforating guns downhole to fracture rock with shaped charges. Beyond the technicalities, the guests examine the wave of industry consolidation and how independent firms like Underdog Wireline survive market downturns.

The Oil Ground Up podcast welcomes Doug Terreson to parse the dynamics of the chaotic and confusing current oil market. Terreson details his illustrious career path, which included drilling oil wells for Schlumberger, managing one of the world’s largest energy funds on the buy side at Putnam, and managing the global energy group at Morgan Stanley and Evercore for 30 years. He explains how his research note, "The Era of the Super Major" (1998), spurred the industry's most significant consolidation phase since 1911 by forcing companies to pivot from growing production to a value-based model. This focus on value was reinforced by "The Pledge" in 2017, which mandated greater capital discipline, flat spending, and tying intrinsic value metrics to CEO pay. Discussing the present, Terreson analyzes the complex situation where fundamental analysis points to potentially massive inventory builds that have never been seen before. However, he suggests the market must also account for aggressive geopolitical currents, including a potential strategic push from the U.S. and allies that may be defunding three different global conflicts. Finally, Terreson shares his long-term view on the refining sector, recalling his profitable "Golden Age of Refining" call and asserting that utilization rates and margins are poised to rise again due to zero net growth in global refining capacity.

The Trump Administration has gotten increasingly aggressive in its relations with Nicholas Maduro's government in Venezuela, accumulating a historic volume of US military capability in the Caribbean and cancelling a raft of oil sector operating licenses. Whether or not this leads to outright regime change, it seems like we are on the precipice of something major occurring on Venezuela.What could all of this mean for Venezuela's chronically challenged but stupendously high potential oil industry? To help me explore this question, I'm joined today by Dr Francisco Monaldi, the director of the Latin America Energy Program and the Wallace S Wilson Fellow in Latin American Energy Policy at the Center for Energy Studies at Rice University's Baker Institute for Public Policy. Fransisco has spent decades chronicling and analyzing Venezuela's oil sector and brings a very welcome and encyclopedia body of knowledge to bear in our conversation.

The Western Canadian oil industry pumps more crude than most OPEC members but its production is located far from consuming markets and depends on a dizzying array of pipelines to connect that supply to end demand. At the same time, Canada's oil producers have had to navigate a quagmire of ever-shifting politics, policy, and regulations—especially concerning greenhouse gas emissions—that were widely seen to be restraining the sectors growth.To help me dig into the meat of this discussion, frame the current position of the massive oil sands industry today and where we're headed, as well as how to parse the ongoing negotiations between Canada's West and Ottawa, Rory is joined this week by Kevin Birn, Global Head, Center of Emissions Excellence and Chief Analyst, Canadian Oil Markets, at S&P Global.

Rory Johnston welcomes Arjun Murti, a partner at Veriten and former Goldman Sachs equity research analyst with 33 years of experience covering the full energy value chain. Murti discusses his Substack, SuperSpiked, explaining that the branding harkens back to the 2004 call for a super cycle, though the current framework emphasizes multi-year "super volatility" rather than a new permanent price state. The experts dive into the core short-term commodity debate, analyzing the divergence in demand forecasts between the "big three" agencies and critiquing the inconsistency between high oversupply forecasts and only short-term low price predictions. Murti firmly pushes back on the peak oil demand narrative, arguing that continued growth is illogical to deny given the massive unmet energy needs of billions globally. They explore how companies, particularly US-based EMPs, should lean into current market pessimism by prioritizing "fortress balance sheets," proactively managing costs, and protecting their returns on capital. This insightful conversation offers a differentiated, optimistic view of the sector, framing the present environment as a time for strategic risk-taking rather than capital destruction, supported by long-term belief in economic and energy growth

This episode of the Oil Ground Up, hosted by Rory Johnston, welcomes back Robert Connors of Crude Chronicles to delve into the broad historical sweep of oil market cycles. Connors explains his long-term analysis, introducing the "DOPE cycle" (Doubt, Optimism, Parabolic Euphoria), and suggests the current oil market finds itself in the early "doubt wave" phase. The discussion examines key market drivers, including Connors' thesis that rising marginal costs of non-OPEC production effectively set a higher floor for future oil prices. Furthermore, they analyze granular, higher-frequency labor data which indicates that the oil and gas labor market has "cracked" and is now "frozen," with non-farm payrolls having rolled over. Connors outlines his "oil bull in a glut full of bears" thesis, arguing that macro forces like populism and currency debasement, combined with falling non-OPEC productivity and corporate incentives focused on high returns, point toward higher prices over the long term. Listen to gain a deep historical perspective on how current OPEC management, non-OPEC supply dynamics, and structural industry changes are positioning the oil market for the next phase of the cycle.

In this episode of Oil Ground Up, host Rory sits down with June Goh, Senior Market Analyst at Sparta, for a masterclass on the physical oil market. With a background as a chemical engineer and years of experience in scheduling, trading, and strategy at Shell's Pulau Bukong refinery, June offers a uniquely nuanced and holistic understanding of how refineries operate and drive global commodity flows.June begins by demystifying commodity arbitrage, the pricing differences that physical and paper traders watch to make decisions. She explains how Sparta, a company founded "for traders, by traders," automates these complex, time-intensive calculations to provide real-time signals on whether trade routes are open or closed.June also unpacks the opaque Chinese oil market, explaining the surprising strength in demand driven by manufacturing, the government's focus on energy security through strategic stock-building, and the ongoing consolidation of its refining sector into "mega independent refineries". Finally, the episode looks ahead to India, a critical swing market where potential EU sanctions on products made from Russian oil could dramatically reshape global trade.OGU Listeners are now offered a special offer for Rory Johnston's Commodity Context Newsletter. Learn more about a subscription ⁠HERE⁠.

Today we speak with Dr. Ilia Bouchouev, former President of Koch Global Partners where he launched and managed the global derivatives trading business for over 20 years. Traditional supply and demand models no longer explain the oil market, where the correlation between fundamentals and price is now close to zero. Ilia leads Rory into a narrative about his "virtual barrel" thesis, exploring why the market now trades 60 times more oil on paper than is physically consumed daily. Ilia introduces a new paradigm for understanding price formation: modeling the "reaction function" of market participants to a host of factors beyond just fundamentals, such as macroeconomic data, flows, and even tweets. Discover the real "who's who" as Ilia debunks common misinterpretations of the Commitment of Traders report, revealing the blurred lines between hedgers and speculators.Learn about the different speculative players, from algorithmic CTAs to "quantamental" funds, and how "fast money" has proven to be the most profitable and volatile force driving short-term prices. The conversation also explores how professional traders analyze the complex futures curve, using carry trades and convexity to trade spreads rather than direction. Finally, understand the macro tug-of-war between traders using oil for recession hedging versus those using it to hedge against inflation, and gain a new framework for analyzing one of the world's most critical commoditiesOGU Listeners are now offered a special offer for Rory Johnston's Commodity Context Newsletter. Learn more about a subscription HERE.

ory dives deep into energy risk management with industry veteran Steve Sinos. Steve, with over 20 years of experience, explains how energy derivatives—from Futures and Options to CFDs—are crucial risk management tools designed to shift, not destroy, market risk. The episode frames this through the practical scenario of advising a regional airline on hedging its largest cost: fuel price exposure. Steve details the non-mechanical, iterative process of understanding controllable versus unknowable factors, emphasizing that effective risk management forces explicit trade-offs to achieve strategic goals. The discussion covers the diverse hedging approaches of airlines and E&P companies, focusing on product selection, instrument choice, and the critical challenge of basis risk. He shares insights on managing for quantifiable success over predicting "black swan" events, and the shift towards optimizing the "efficiency of a risk dollar" for specific cash flow targets. Listeners will also learn about interpreting complex market data like Commitment of Traders (COT) reports to avoid speculative biases and navigating unique market structures, such as the current "smiley curve" in crude futures. This episode underscores the risk manager's role as a "therapist," helping strategic leaders make informed decisions by understanding the sacrifices required to meet their objectives

Rory speaks with Bloomberg expert Brett Gibbs about the Renewable Fuel Standard (RFS) and its profound impact across energy, agriculture, and gasoline prices. Brett highlights the market's policy-driven nature, contrasting stable ethanol volumes with the rapid, four-fold growth of renewable diesel, which now significantly displaces petroleum diesel. A key distinction is renewable diesel's chemical identity to petroleum diesel, allowing one-for-one substitution and no blend limits, unlike biodiesel. However, renewable diesel production remains uneconomic without crucial policy support like RFS RINs and tax credits, as feedstock costs (e.g., soybean oil at $4/gallon) vastly exceed petroleum diesel prices ($2.33/gallon). The conversation delves into the RFS's complex credit system and recent policy shifts favoring domestic feedstocks, such as the removal of indirect land use change penalties on US soybean oil, boosting its tax credit value. While roughly 50% of feedstocks are waste-based, scaling these is challenging, leading to reliance on virgin oils like soybean oil, which accounts for up to 50% of US soybean oil production now. Looking ahead, the US biofuel industry is expected to see a plateau in growth, with the administration aiming for stable 80% utilization to balance agricultural support with consumer fuel costs, while buying time for new technologies. Key indicators for tracking the market include the D4 RIN price and soybean oil prices