My wife Marina and I are just outside London right now, in Berkshire, as the annual Windsor Energy Consultations get underway.
But Windsor is on a completely different level…
Each year, the Windsor Energy Consultation is the high point of my international travel schedule. This year marks the seventh in which I will be presenting – this time, two presentations.
Now, this is a gathering quite unlike any other. The location is totally unique, of course, but the sheer amount and quality of the global energy intelligence exchanged is second to none.
Let me share with you a little of what I expect to hear about – and where I expect to hear it…
Cutting-Edge Intelligence… in the Oldest Royal Residence in Europe
The Windsor Energy Consultations – the only energy conclave convened by royal decree – take place at Windsor Castle, while the British Royal Family is in residence. Windsor Castle is the oldest (and largest) continuously used royal residence in Europe, initially built by William the Conqueror in the late 11th century.
This year, as every year, we’ll get to stay for three days, along with major players in the energy sector, ambassadors, government ministers and secretaries, and top analysts from around the world.
Now, there are only some 50 delegates to the three days of plenary sessions, buttressed by several dozen ambassadors and officials for the Ambassadorial Briefing on Saturday afternoon. The main sessions are held in the historic Vicar’s Hall astride the 14th century St. George’s Chapel.
Ten monarchs are buried at St. George's, from to Edward IV of England to George VI of the United Kingdom. The tomb of Henry VIII and Jane Seymour is in the floor; you walk right over them.
Nearby is Vicar's Hall, which has existed in one form or another for 700 years. Shakespeare had one of his early performances of "The Merry Wives of Windsor" there. About 1693 it was converted into a library, as it remains today.
Now, the choice of the hall for the Consultation is intentional. It makes for an intimate venue and, with the application of the Chatham House Rule, some frank conversation.
Established in 1927 during a particularly contentious negotiation in London, the Rule reads as follows: "When a meeting, or part thereof, is held under the Chatham House Rule, participants are free to use the information received, but neither the identity nor the affiliation of the speaker(s), nor that of any other participant, may be revealed."
In such important high-level international meetings, you can see why adherence to the Chatham House Rule is so important.
But it is the Ambassadorial Briefing that comprises the hallmark of each Consultation…
Secure Communications, 13th-Century Style
The Briefing brings together plenipotentiaries of main energy producers worldwide. Combined with the reception beforehand and the formal dinner afterwards, it provides a rare opportunity for discussion.
But that’s not the only thing that’s unique about the Briefing. It takes place in the castle's 13th-century dungeon!
That location is also intentional.
Under the watchful gaze of Curfew Tower, you descend a winding staircase from Horseshoe Cloisters to be greeted by imposing steel doors.
In a very real sense, Windsor's dungeon is a fortress. In fact, as young children growing up in the war years, the future Queen Elizabeth II and her younger sister, the Princess Margaret, used to shelter in the dungeon during not-infrequent Luftwaffe air raids over this part of the UK.
In any case, once you are inside and those doors close, no transmission of any kind can enter or leave.
That makes it a very secure location for sensitive discussions. One just hopes the staff remembers you're down there…
Here's What We're Talking About This Year
The theme of this year's Consultation involves the developing balance emerging between global oil and natural gas production and demand, as well as the prospects for financing it.
For oil, that balance remains dependent upon OPEC and major non-cartel producers continuing the cut/cap regimen agreed to at the end of November in Vienna and first applied last month.
On the natural gas front, meanwhile, that balance is developing between liquefied natural gas (LNG) terminal capacity and global demand. It's likely to hit by 2023, although changes in hub prices will change the dynamics of that movement.
LNG shipments will be rising far quicker than volume moved conventionally through pipelines. Capex for LNG infrastructure is now factored in. Meanwhile, new pipeline networks beyond the local feeder types are still possible, but the time delays and rising costs in building them will mean little international movement beyond those between contiguous countries.
Conversely, the local hubs resulting from LNG shipments will transform pricing methods and emphasize spot sales. All of this will be taking place over the next several years in an environment anticipating expanding across-the-board demand in end usage from heat and power, to transport, petrochemical feeder stock, and industrial applications.
The wildcard in all of this remains Iranian volume…
I'll Be Carrying the American Perspective
That was the reason for the recent summit I attended in Frankfurt recently.
Among the representatives present at Windsor are those from OPEC, Russia, the UK, and Norway. We will have a rare opportunity to assess how OPEC's Vienna Accord to limit production, when combined with the estimates of North Sea production, will impact oil volume.
What is lacking from the other Windsor participants is a detailed treatment of how U.S. unconventional (shale and tight) production impacts this picture.
That turns out to be my job…
This year, I'm providing 2017 estimates and analysis for the U.S. oil and natural gas market and how they figure into the broader global energy picture.
I'm expecting an eager audience for my presentations at the Windsor Consultation. Not only is there new interest in how American production influences global expectations, there is also a massive change in international financing trends.
Both are part of my two Windsor presentations…
You'll Get an Inside Look on My Presentation Soon
Tradition requires that all my slides be presented first at Windsor. But, given that they are mine, I intend to provide a link to them next week along with my later analysis. Don’t worry about me violating the Chatham House Rule – as I said, the slides are mine, and as long as I share them personally, I'm in the clear.
Now, I'll be talking some more about this in the week ahead, but I wanted to share with you a sneak-peak summary of the U.S. market "takeaways" I'm providing at Windsor.
Now, take special note of that $93 billion figure. That’s part of a wave of money pouring into the U.S. energy market. I’ve put paid-up Energy Inner Circle Members into some plays I believe will benefit from this cash inflow. You can learn more about how to join them right here.
About the Author
Dr. Kent Moors is an internationally recognized expert in oil and natural gas policy, risk assessment, and emerging market economic development. He serves as an advisor to many U.S. governors and foreign governments. Kent details his latest global travels in his free Oil & Energy Investor e-letter. He makes specific investment recommendations in his newsletter, the Energy Advantage. For more active investors, he issues shorter-term trades in his Energy Inner Circle.