LTO, IOCS, NITPS and CCS: Initial thoughts from CERAWeek in Houston

An oil pump in the Permian Basin near Midland, Texas, which is a primary source of ‘light tight oil’ (LTO). It is light in contrast to heavier crude found elsewhere in the world, and it is tight because it is often wedged in molecular form into shale and other sedimentary rocks like the features of the Permian Basin. (Reuters)

HOUSTON: One of the great things about CERAWeek — the “oil man’s Davos” that meets annually in Houston, Texas — is that it is a crash course in energy industry acronyms. After just a couple of days in the Bayou City I feel I can hold my own with any oil baron over a dinner table where the conversation is comprised virtually 100 percent of initials and abbreviations in the peculiar argot of the energy business.
The learning process begins the very minute you arrive at the media center in the Hilton Americas hotel where the forum is held. A handout advises you that the event must be referred to in print as “CERAWeek by IHS Market,” denoting the official corporate identity of the phenomenon that began 37 years ago as Cambridge Energy Research Associates under Daniel Yergin, the Pulitzer Prize winning energy expert who is CERA’s driving force. Well OK.
In just a few hours, you’re off in a world of crude terminology (pun intended) that shows you what you’d been missing all those years. For example, I knew that WTI stood for West Texas Intermediate, a kind of oil found in these here parts and the benchmark for American oil pricing, but I did not know that it was a type of LTO — “light tight oil.”
It is light in contrast to heavier crude found elsewhere in the world, and it is tight because it is often wedged in molecular form into shale and other sedimentary rocks like the features of the Permian Basin, the big shale field that spans Texas and New Mexico, which is currently behind the boom in American oil production.
I soon grasped the difference between IOCs — independent oil companies like Exxon and BP — and NOCs, national oil companies like Saudi Aramco and Abu Dhabi’s ADNOC, all of which are here in force in Houston.
But I began to really regard myself as an veteran oil man when I learned from Yergin himself of a third categorization of oil companies, which he called NITPs — Not In The Permian. The US shale boom is so lucrative that many IOCs and NOCs want to take part in the bonanza taking place in Texas.
A discreet dinner between members of the Organization of the Petroleum Exporting Countries (OPEC), shale producers and oil money men discussed the possibility that some NOCs might also begin drilling for LTO in the Permian, but it was unclear whether there was any outcome to the prandial discussions.
One Alaskan senator began a speech with reference to the three Ps, by which he intended to signify plans, projects and personnel, but as soon as he got into his talk it became clear what he really meant was Permian, pipelines and permits. The US oil industry has really hit paydirt in Texas shale, but it needs the government and the environmental lobby to allow it to build the infrastructure to get the black stuff out to the market.
I ended the day on the other side of the energy divide, in a conversation about GHGs (green house gasses) and CCS (carbon capture and storage), among many other sets of initials. The environmental lobby has taken the acronym-fest to a whole new level.