Monday, September 16, 2019

Daily Activity Report For Friday Just Posted -- Monday, September 16, 2019 -- 8:12 A.M. Central Time; MRO Reports Completion Of A Huge DUC

New permits: CLR with seven new permits for their Long Creek Unit, #36954 - #36960, inclusive, LCU Ralph and LCU Reckitt Federal (previously posted based on information from elsewhere).

Two disposal wells permitted, including Bohmbach SWD 1 in Elm Creek.

Two producing wells (DUCs) reported as completed:
  • 34502, 2,558, Whiting, Thomas Federal 12-10H, Truax, t8/19; cum --; [#23709, #23708, #22074]. See full production profile for #23708 at this post.
  • 34757, 5,361, MRO, Ruth 44-23TFH, Chimney Butte, t8/19; cum --; [#27074. #26015, #26016, all off line]
Name changes: Bruin has eight more well name changes. I will get back to these later.

Seven permits renewed:
  • Oasis (6): six Pederson permits in McKenzie County
  • Windridge Operating: one Coot permit in Burke County

Notes From All Over, Part 1 -- September 16, 2019

Tea leaves: a quick scan of twitter this morning suggests --
  • it will take longer than first forecast to "get back to normal"
  • Saudi has resumed "normal" loading operations
  • full loading coming from strategic storage facilities
  • Saudi has told foreign customers to expect full supplies
  • however, Saudi said to be reducing allocations to own refineries, local economy
  • Saudi officials consider delaying Aramco IPO pending full evaluation
  • no one has yet suggested that Saudi Arabia paid Iran to hit their storage facilities to raise the price of oil -- this would be the "Hillary/Comey/Clapper" scenario
  • most interesting note: Saudi Arabia said to be concerned that other producers will over-react to the situation --- in other words, Saudi Arabia is worried about losing market share as customers find other (more reliable) sources
Market: I'm not even sure if it's worth posting share prices for oil companies. A quick look early this morning confirms what we all expected. Shares of publicly traded oil companies jumping from 2% to 15%. Maybe not as high as 15% but some approaching double-digit percentage increases.

Interestingly enough, most (all?) are still below their 52-week highs. There are headlines suggesting that prices in the oil sector still do not reflect reality. Which, of course, does not make sense if one accepts market efficiency and the philosophy of free markets.

So, get it while you can.

Get It While You Can, Janis Joplin

Disclaimer: this is not an investment site. Do not make any investment, financial, job, travel, relationship, or career decisions based on what you read here or think you may have read here.

Opinion: it's hard to believe this article (an op-ed piece) made the MarketWatch page -- "The truth about the stock market that "Never Trumpers" cannot accept. Link here. My hunch is that Brett Arends will never work for CNN Business News.
Memo to Donald Trump’s critics: Just 3,000 more points to go!
That’s how much further the Dow Jones Industrial Average has to fall before you can start saying Trump’s been bad for the stock market.
Yes, the Dow has plunged more than 1,000 points in a couple of weeks, thanks to the president’s tariff spat with China. Yes, it went through a wild swing Wednesday, plummeting more than 500 points at the open before rallying.
But: Perspective, folks.
The Dow was just 18,000 when Trump was elected nearly three years ago. Right now, even following Monday’s big drop, it’s above 26,000.
Futures: Dow down 94 points, hardly remarkable. It's almost as if nothing happened over the weekend. If the Dow finishes in the green today, even by a little bit, it will speak volumes about the health of the US economy.

If Saudi does not retaliate militarily this is why: if ten bottle rockets can knock out 50% of Saudi's crude oil exports, can one imagine how much would be knocked out in the first 24 hours of all-out war?  Yeah, that much.

Non-oil proxy today: UNP. UNP was up at the close on Friday; today, futures, UNP is absolutely flat. 

Director's Cut Pending -- To Be Released Later This Afternoon; Still Waiting For Friday's Activity Report -- Monday, September 16, 2019

Reminder: Director's Cut is scheduled to be released this afternoon at 3:00 p.m.

Road to Mexico: Mexico's growing reliance on US oil will continue. Operative word in that headline over Rigzone -- "growing." Not just "reliance on US oil, but "growing reliance on US oil." Hmmm. Wow, I haven't seen "Cantarell" in a long, long time. North Dakota producing about the same amount as Mexico. Who wudda thought?
It has been a long and winding road for Mexico’s oil industry over the past 15 years. With the peaking of supergiant Cantarell, once the world’s second largest oil field, Mexico's crude production has been sliced in half to below 2 million b/d. Proven oil reserves have collapsed from 50 billion barrels 20 years ago to just 8 billion barrels today. Mexico’s crude oil exports to primary customer, the U.S., have been plummeting. From 2006-2018, shipments to the U.S. fell 60 percent to 720,000 b/d. After lengthy delays, Mexico in 2013 critically passed its Energy Reform to bring in outside investment and expertise to help production rebound. It remains a bumpy ride, however, and the new AMLO administration has been resistant to deregulation.
In turn, Mexico has been increasingly forced to deepen its dependence on the U.S. to meet oil demand at home. Falling production has been exacerbated by a refinery shortage, surging imports of refined products. In 2018, Mexico imported 1.2 million b/d of products from the U.S., or six times more than its intake before peak oil production. The country last year imported 520,000 b/d of gasoline from the U.S., nearly a five-fold boom over the past decade.
About where we were last summer: $60.31 (WTI).
  • Brent at $66.70 still not enough to meet Saudi's budget
**********************************************
Back to the Bakken

Rig count (AIIM/FWIW): Rigzone -- Texas dropped the most rigs, at eight. The following states also lost rigs this week:
  • West Virginia (-3)
  • Louisiana (-2)
  • Alaska (-1)
  • California (-1)
  • Colorado (-1)
  • Ohio (-1)
  • Pennsylvania added two rigs
  • while North Dakota and Oklahoma tacked on one rig apiece.


Wells coming off the confidential list today -- 

Monday, September 23, 2019: 59 for the month; 191 for the quarter:
35413, conf, Crescent Point Energy, CPEUSC Austin 5-17-20-158N-99W TFH, , 
35037, conf, Hess, BB-Charlie Loomer-150-95-0718H-4,  
34820, conf, XTO, Myrna Federal 21X-2EXH, 

Sunday, September 22, 2019: 56 for the month; 188 for the quarter:
35702, conf, Petroshale, Thunder Cloud 2MBH,
35038, conf, Hess, BB-Charlie Loomer-150-95-0718H-5, 
34817, conf, XTO, Myrna 21X-2B, 

Saturday, September 21, 2019: 53 for the month; 185 for the quarter:
36003, conf, Hunt, Alexandria 161-100-22-15H 2, 
35039, conf, Hess, BB-Charlier Loomer-150-95-0718H-6, 

Friday, September 20, 2019: 51 for the month; 183 for the quarter:
35701, conf, Petroshale, Thunder Cloud 1TFH
35040, conf, Hess, BB-Charlie Loomer-150-95-0718H-7,
34819, conf, XTO, Myrna Federal 21X-2A, 
32422, conf, BR, CCU Boxcar 6-8-22 MBH, 
32420, conf, BR, CCU Audubon 7-8-22 TFH,

 Active rigs:

$60.319/16/201909/16/201809/16/201709/16/201609/16/2015
Active Rigs6465563270

RBN Energy: Ethane prices bottom out, spurring a huge inventory build. Archived.
The ethane market isn’t for the faint at heart — it’s got lots of ups and downs, and it’s impacted by an unusually wide range of variables. A year ago this month, a combination of fractionation constraints in Mont Belvieu and rising demand from new ethane-only steam crackers sent ethane prices north of 60 cents/gallon. For most of the time since then, though, ethane prices were in something close to freefall, bottoming out at only 10 cents in late July before rebounding in recent weeks to 20 cents or so. During the big, months-long price decline, ethane traders and cracker operators did what anyone does when they can buy something they’ll need in the future for next to nothing — they stocked up. Today, we examine recent trends in ethane supply, demand, prices and storage levels, and take a look ahead.

Sunday, September 15, 2019

How Big A Deal Is US Shale? -- September 15, 2019

Twenty years ago if there had been a similar attack on Saudi Arabia, we would be talking about $200 oil.

Yesterday, after the attack, "we" were talking about $100 oil.

When the futures market opened this evening (6:00 p.m. EDT), WTI spiked 12%, jumping almost $6/bbl, trading over $61/bbl.

Now, at 11:53 p.m. CT, WTI is up 8.95% at $59.77.

$59.77? LOL. Are you kidding?

$59.77.

I talked to my wife who is out in California: at worse they expect gasoline to go up 25 cents/gallon. Anyone remember the OPEC embargo?

That's still not high enough to "save" Saudi Arabia.

It may not even be enough to save some US shale operators.

It's still well below what Harold Hamm thinks is a fair price for oil.

This is really amazing.

All because of the US shale revolution.

Had the Keystone XL pipeline not been killed by President Obama, the events in Saudi Arabia would have been even less concerning for the global oil market. But Obama knew better. What a doofus.

I recall a great movie of some years ago, The Manchurian Candidate or something like that.

******************************
Conspiracy Theory -- They're Watching Me

My wife is out of town. When she's out of town the television is not turned on at all.

At all.

Except for NASCAR.

I was away from the house all day (or better said, away from the 1,000-square-foot hovel we call an apartment all day) -- attending a water polo tournament involving our oldest granddaughter. On the drive home I checked the smart phone, googling "NASCAR today."

Wow, the race coverage was to begin at 6:00 p.m. I would be able to watch all of it.

I turned on the television about 5:30 p.m. and got ready to watch the race. Volume was off. I saw someone singing the national anthem. I saw a crawler identifying someone as the race marshall.

I don't recall seeing the start of the race. I fell asleep. I woke up at 8:25 p.m. CT or thereabouts. The television set was still on.

But.

Channel 31, NASCAR race, was frozen. I saw a still "photo" of three cars rounding a curve. But no movement. The screen was frozen. We get a thousand channels through Spectrum Cable. To the best of my knowledge, scrolling through the entire 1,000 stations -- some hyperbole, here, but not much -- I couldn't access three. One of the three out of the 1,000 stations: the NASCAR race.

LOL.

One thousand channels, and of the three that are "knocked out," one of them is NASCAR.

Fortunately I was able to stream the event on my laptop just in time to see the winner, M. Truex, Jr., drive into the winner's circle.

Bummer.

Later, 11:00 p.m. CT: all channels are now working normally.

YouTube Bans "Live Streaming" From Right Side Broadcasting News (RSBN) -- September 15, 2019

This is fascinating.

I don't know what you will see when you go to this site: https://www.youtube.com/watch?v=WSW4bM-ia-4.



It may or may not show up. Hopefully what I'm seeing now will be there when you click on it.

YouTube has banned "live streaming" from this broadcasting network. Really, really amazing.

And folks think that the Russians are influencing American elections. LOL.

Right now, RSBN is still on twitter, but I wouldn't be a bit surprised if their twitter account is also banned.

***********************************
Trump Rally At Rio Rancho, NM

This is going to be huge. All city government offices will be closed all day tomorrow. All schools are closed tomorrow. There are 3,000 parking spaces for the arena. Right now, authorities anticipate more than 8,500 attending. Do the math. Folks are already standing in line. Law enforcement support from across the state has been called in. Absolutely fascinating.

Whether or not this event is overshadowed by events in the Mideast is hard to say, but one can argue that the event will be even bigger with current geopolitical events. I would imagine the mainstream media is looking for a story that is bigger than this event and that would be the story in the Mideast.

This is absolutely amazing.

Senator Tom Udall will retire at the end of his term (2020). This will end a dynasty in the west. -- NY Times. New Mexico is "in play" as they say, and that's why President Trump is visiting.

Rio Rancho is a "suburb" on the northwestern side of Albuquerque, NM. From wiki:
Rio Rancho is the largest city and economic hub of Sandoval County in New Mexico. A small portion of the city extends into northern Bernalillo County.
It is the third-largest and also one of the fastest expanding cities in New Mexico. As of the 2010 census, Rio Rancho had a population of 93,820.
Rio Rancho is part of the Albuquerque Metropolitan Statistical Area.

When It Rains, It Pours -- Busy, Busy, Sunday Night -- September 15, 2019

Most fascinating: to see the price of gasoline at your neighborhood service station tomorrow
  • for the record, the price of unleaded regular was running $2.16 to $2.39 here in north Texas
  • along the highway, higher-priced stations, here in north Texas (DFW area): $2.39
  • I filled up for $2.16/gallon this morning in downtown Keller, TX, well away from the highways
Mideast on the brink. Story tracked here. There are so many story lines:
  • timing of the attack
    • more and more stories that Iran's economy was ready to implode due to US sanctions
    • Iran announced as recently as this week that it would pursue "speedier centrifuges": Iran admits to using advanced centrifuges, violating nuclear deal
      • time to "take out" Iran?
      • EU's "gut check": side with Iran or side with the US 
      • Iran admits it is intentionally violating the "nuclear deal"
    • Saudi getting ready to announce Aramco IPO
    • Israel's Netanyahu on the ropes
    • Brexit
    • Bolton "fired"
    • new "Alfalfa" in place for just one week (the step-brother to the heir to the throne; another son of the king of Saudi Arabia)
    • US 2020 presidential campaign has begun
    • son of Osama bin Laden confirmed killed in Afghanistan this past week
    • Trump's determination to withdraw from Afghanistan
    • the decision NOT to meet with the Taliban at Camp David 
    • US Federal Reserve under pressure to cut rates
  • global oil market 
    • attack could settle the argument: is US shale the swing producer?
    • during Mideast hostilities, Saudi Arabia may not be the swing producer
    • September and October (2019) production data won't be seen until December, 2019 and January, 2020
  • price of oil: what pundits are saying
    • even if terminal "back to normal," risk premium is now $5 - $10/bbl (forever and ever, amen)
    • if terminal takes more than a week to return to normal, think $75 WTI
    • if terminal takes a month to return to normal, think $100 WTI
  •  military: just when you thought it was safe to reduce US troops in the Mideast 
    • will Trump listen to US generals or will Trump go it alone?
    • exactly who is in charge of the US military? -- quick, name the Secretary of Defense  
  • US intelligence agencies
    • fake news
    • credibility issue
    • exactly who is in charge of US intelligence? -- quick, name the new national security advisor
  • geopolitics
    • Saudi Arabia's response is almost a "lose-lose" proposition
      • "turn the cheek" and "let it go": risks looking weak
      • military response: push the Mideast into an all-out war
Rahm Emanuel: "never let a crisis go to waste." Issues that should be affected by the attack on Saudi's oil terminals and oil field
  • opening Alaska to drilling
  • pipelines: Keystone, DAPL, others
  • US Federal Reserve decision to go rogue, or stay the course
  • Bernie, Pocahontas, et al: ban fracking
    • this is the time for Trump to emphasize that the Dems want to ban fracking 
    • he won't get many opportunities like this
Nominee for 2019 Geico Rock Award: IEA
  • IEA: "the US shale revolution has reshaped the energy landscape at home and abroad, according to latest IEA policy review"
    • note: I consider the IEA an extension of OPEC, the EU, WTO, and the UN
  • Nominees for the 2019 Geico Rock Award: here;
  • Geico Rock Award nominees for 2018
  • the IEA, as a nominee for the 2019 Geico Rock Ward --the timing of this report, that "the US shale revolution has reshaped the energy landscape at home and abroad" is simply too much -- I can't make this stuff up:
    • the price of oil -- at $50 to $60 -- is an existential issue for Saudi Arabia (and, thus by extension, a huge, huge deal for the EIA)
    • sanctions on Iran did not drive up the price of oil; US shale more than made up for any shortfall
    • the Libyan oil story is irrelevant (as are the oil stories of several other legacy oil providers)
    • Iran was about to implode
    • Venezuela was about to implode (of course, we've been saying for a decade now)
    • Mexico was about to implode
    • the IEA statement released September 13, 2019
  • the attack on Saudi Arabia: September 14, 2019; 04:00 a.m. local time

Nominees For the 2019 Geico Rock Award

Nominees for the 2019 Geico Rock Ward
  • Heritage Foundation chief economist Steve Moore: folks moving from New York to Florida due to Trump's new tax law
  • Financial Times: US shale's rise means supply threats no longer have the same power to shock the market.
  • Javier Blas: the US is producing the "wrong" kind of oil 
  • Neil Ackerman: stone circles found in England are notoriously difficult to date
  • Mark Jaccard: "we are still living in a fossil-fuel-based economy"
  • IEA: US shale revolution changed global energy market
  • House of Saud: taking 5% of the global oil supply off the market might cause oil prices to rise;

Wind Farms -- September 15, 2019

See this post.

A reader commented after reading the EIA prognostication at that post:
The US Energy Information Administration (EIA) claims that wind power can generate electricity for 8¢ per kilowatt-hour (kWh). However, this is based on poor assumptions and glossing over important realities.

It assumes average wind turbine lifetime is 30 years, the same as a conventional fossil fuel power plant. In reality, most turbines last only 15 years, and less offshore. It ignores the cost of backup power. It includes no cost for transmission lines from wind farms to distant cities. Most significantly, it omits subsidies.

A 2016 Utah State University study shows the following extra costs omitted or miscalculated by the EIA for wind power: 15-years not 30-year life expectancies (US 7¢ per kWh), backup power (at least 2.3¢ cents if the back-up is natural gas), transmission costs (2.7¢), government subsidies (23¢).
All that means the real cost of wind power is a staggering 43¢ per kilowatt hour! That’s seven times the cost of natural gas-generated electricity!
The Utah State University study will download as a pdf.

To the best of my knowledge, wind farms
  • pay no royalties to anyone but the surface owner;
  • return any cash to the local community; and, 
  • require subsidies, tax breaks, mandates to survive.

Happy Days Are Here Again -- A Goldilocks Frame Of Mind-- And Great Music -- September 15, 2019

Disclaimer: this is not an investment site. Do not make any investment, financial, career, travel, job, or relationship ....

.... break, break, I don't care what you say. I finally remembered the song that I couldn't recall.

First, this was the song I was listening to last night ...

One Headlight, The Wallflowers

.... and it reminded me of another song. But I couldn't recall .... now, 24 hours later, it's here! Wow! I just love the way the human frontal lobe -- or is it the parietal lobe ... probably the latter ... works .... 

My Love For Evermore, The Hilly Moon Explosion
 
... now back to where I was ...

.... decisions based on what you read here or think you may have read here.

Wow, I'm in a great mood.

Right now,I'm in a Goldilocks frame of mind. The market was flirting with new highs when we last left it last week. But oil and gas sector was dragging.

Now, today ... the Dow drops 115 points. A rounding error in the big scheme of things, but WTI? Up 12% or thereabouts. Happy days are here again.

Harold Hamm must be smiling. He would have lots to say about this.

Is Oilprice reporting anything? Nothing.

Wow.

Futures: Dow recovering a bit.

WTI: up 10%. Now trading, in pre-market, at $60.66.

Saudi is going to see this and realize that, hey, cutting back production might be the answer. Well, duh?

Later: see first comment. A reader nominates the House of Saud for the 2019 Geico Rock Award.

Top International Energy Story Of The Year? -- We'll See -- September, 15, 2019

The Permian is now the world's top oil producer -- Robert Rapier, senior contributor, energy, Forbes, April 6, 2019. Link here.
Conventional wisdom held that Ghawar has been producing 5 million barrels per day (BPD) of crude oil for decades. The prospectus notes that Ghawar has produced more than half of the Kingdom's cumulative oil production to date, but it reported that 2018 production was only 3.8 million BPD.
We don't know for certain the reasons, but we now have this report from Saudi Aramco that Ghawar produced 3.8 million BPD in 2018. The Energy Information Administration reports that the Permian Basin is now producing 4.2 million BPD. For all of 2018 the Permian Basin averaged 3.4 million BPD, but production during the year increased by 1.1 million BPD. Production hit the 3.8 million BPD mark in October and has risen in every month since then.
So, we can reasonably conclude that right now -- regardless of the reason -- the Permian Basin has overtaken Ghawar as the world's top oil-producer. That may not last if Saudi is constraining production in Ghawar, or if Permian production slows down anytime soon.
But it marks the first time in decades that Ghawar wasn't the top-producing oil field in the world.
What about Khurais oil field?

Well, what about it?

Wiki link here.