Wednesday, May 25, 2016

Minimal Blogging Today -- Traveling In Local Area -- May 25, 2016

All oil refineries in France now shut down -- so what's this all about? Due to strikes.
France's oil refineries are on strike Tuesday with all eight of the country's refineries out of action.
Five of the refineries are controlled by Total and two by Esso. 
The Total CEO was reported as saying that the oil and gas company will "seriously reconsider" investments in France due to the strikes that have forced it to shut down its refineries.
The strikes will put France's "full 1.4 mbd (million barrels per day) of capacity potentially at risk."
Impact?
The strike has resulted in over 2,000 gas stations running dry across France, with drivers lining up for hours to fill their cars. 
Why?
Union workers are protesting against labor reform laws passed this month by President Francois Hollande's government aimed at reforming the country's notoriously inflexible workers' rights – including making changes to the 35-hour work week and making it easier for small businesses to hire and fire employees.
Saudi Aramco probably won't be expanding any time soon in France. 

OPEC's Ability To Ease An Oil Supply Shock Is Now Fading -- Saudi Oil Spokesman -- May 25, 2016

Active rigs:


5/25/201605/25/201505/25/201405/25/201305/25/2012
Active Rigs2883191186215

RBN Energy: market impact of 2016 northeast natural gas demand.

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Is The Conversation Changing With Saudi Aramco IPO On The Horizon?

OPEC’s Ability to Ease An Oil Supply Shock is Now Fading. Spare production capacity set to hit 8-year low, creating an unexpected risk as supply outages eat into the glut -- WSJ
This year, OPEC’s spare pumping capacity—the amount it can bring online within 30 days and sustain for at least 90—will be at its lowest level since 2008, the U.S. Energy Information Administration estimates. It said OPEC spare capacity will decline more than 22% in the current quarter compared with the previous quarter.
Since last year, OPEC members haven’t been able to agree on supply cuts to stem a glut that drove prices down by more than 50% since 2014. Instead they kept pumping full blast. The result: With recent supply outages sending the oil price back up, the cartel has little flexibility to boost production.
OPEC is irrelevant. What are the Saudi numbers?
Saudi officials have long said they can boost production by about 2 million barrels a day over today’s record daily production of 10.2 million barrels. But that 2 million barrels might not be possible in short order, a Saudi oil industry official said.
“If there was a big crisis tomorrow, then the maximum Saudi Arabia can do would be around 500,000, maybe 700,000 maximum,” the official said.
Now that Saudi Aramco is getting ready to complete an IPO, the discussion seems to be changing.  

Other than all-out war in the Mideast, I do not see any chance of "an unexpected risk" of shortageof oil, and even when there have been some huge wars in the Mideast, I do not recall any shortage associated with these conflicts.

Meanwhile, over at oilprice.com, "OPEC head calls for $65 oil." Sixty-five-dollar oil will let the Bakken thrive; won't do much for Venezuela or Saudi Arabia.

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US Trap Laid For Taliban Chief Highly Successful

From The WSJ. Front page. Huge story. Many story lines.

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Chevron To Make Oil Investment Overseas

CVX to make huge investment in Kazakh oil field. Also in The WSJ.
ASTANA, Kazakhstan—A Chevron Corp.-led consortium is set to invest up to $37 billion as it increases output at a giant oil field in Kazakhstan.
The investment represents a rare big commitment by a large oil company to spend on new production during a nearly two-year long slump in crude prices. Companies have been forced to delay or cancel about $270 billion in projects through March since oil prices began their long slide including expensive Arctic developments.
The Kazakh project, called Tengiz, is one of the world’s biggest oil fields and a key source for Chevron’s growth in crude output in the next few years.
Note the byline of that last story: Astana, Kazakhstan. From the blog last year:
By the way, speaking of Kazakhstan, this is from an October, 2014, press release:
The North Dakota Trade Office (NDTO), along with North Dakota agriculture machinery and technology companies, are returning to the KazAgro Farm Show October 27-29, 2014, in Astana, Kazakhstan.  This year, the Ministry of Agriculture of the Republic of Kazakhstan – the main sponsor of the show – has invited NDTO to co-sponsor the program, because of North Dakota’s long-standing relationship with leaders in the Kazakh agriculture sector.
Wow, I love to blog. 

Tuesday, May 24, 2016

Two More DUCs In The Bakken; Quiet Daily Report -- May 24, 2016

Five (5) more permits --
  • Operators: BR (3), EOG (2)
  • Fields: Blue Buttes (McKenzie), Parshall (Mountrail)
  • Comments:
Active rigs:


5/24/201605/24/201505/24/201405/24/201305/24/2012
Active Rigs2882191185214

Wells coming off confidential list today:
  • 31223, SI/NC, XTO, Harley Federal 24X-15F, Sand Creek, no production data,
  • 31837, SI/NC, XTO, Lund 21X-17AXD, Sand Creek, no production data,
  • 32226, loc, Hess, EN-Ruud-LE-154-93-2734H-1, Robinson Lake,
No wells coming off confidential list Wednesday.

Slawson renewed fifteen (15) permits:
  • ten of them were Torpedo Federal wells, in Mountrail County
  • four of them were Serpent Federal wells, in Mountrail County
  • one was a Rebel Federal well, also in Mountrail County
Resource Energy canceled one permit, an Angvick permit in Divide County.

Three (3) producing wells were completed:
  • 30412, 2,684, Slawson, Lightning Federal 6-24-13TFH, Big Bend, t4/16; cum --
  • 30413, 1,008, Slawson, Lightning Federal 2-24-13H, Big Bend, t4/16; cum --
  • 30414, 1,622, Slawson, Lightning Federal 7-24-13TFH, Big Bend, t4/16; cum --

Wow! Fires Still Burning And Question Is Being Raised If More Takeaway Capacity Needed As OIl Workers Return To Canadian Oil Sands

Active rigs:


5/24/201605/24/201505/24/201405/24/201305/24/2012
Active Rigs2882191185214

RBN Energy: will the oil sands need more takeaway capacity?
Production in Alberta’s oil sands region is gradually rebounding after devastating wildfires that forced output scale-backs and temporary shutdowns of some production facilities, terminals and pipelines. It may be a while before life—and production—in the oil sands are back to normal, but Canada’s National Energy Board, producers and others expect the region’s output to continue to rise (if only gradually) the next few years, reflecting long-term oil sands expansion projects committed to when oil prices were more than double what they are today. There are very different views, though, about whether the oil sands will eventually need more takeaway capacity in the form of new or expanded pipelines. Today, we continue our look at the oil sands post-wildfires with a review of existing and proposed pipeline capacity.
Wildfires are notoriously unpredictable and, sure enough, as soon as the worst seemed to be over in the Fort McMurray, AB area, new flare-ups in mid-May threatened oil sands production areas north of the city. Thanks to heroic efforts by Alberta fire crews, no production area has experienced any significant damage (so far at least—fingers crossed), but a few work camps have been destroyed or damaged, and will need to be rebuilt. Good news is trickling in though, such as Imperial Oil’s May 19 announcement that it has restarted limited operations at its Kearl oil sands site. If, as everyone hopes, the wildfires are brought under control within the next few days, it seems likely that oil sands production will ramp up gradually over the next few weeks, and that by mid-summer Alberta’s output might be close to the 3.1 MMb/d that the province was producing before the fires were sparked.
This tells me two things:
  • even at $45 oil, Canadian oil sands economical for some
  • amazing ability of oil E & P to recover under most adverse conditions

Monday, May 23, 2016

OPEC's Death Knell -- May 23, 2016

Bloomberg/Rigzone is reporting:
Saudi Arabia, one of the founders of OPEC, is sounding the group’s death knell.

The world’s biggest crude exporter has already undermined OPEC’s traditional role of managing supply, instead choosing to boost output to snatch market share from higher-cost producers, particularly U.S. shale drillers, and crashing prices in the process.

Now, under the economic plan known as Vision 2030 promoted by the king’s powerful son, Deputy Crown Prince Mohammed bin Salman, the government is signaling it wants to wean the kingdom’s economy off oil revenue, lessening the need to manage prices. Moreover, the planned privatization of Saudi Arabian Oil Co. will make the nation the only member of the Organization of Petroleum Exporting Countries without full ownership of its national oil company.

“The main take-away from Saudi Vision 2030 is that there’s just no role for OPEC,” Seth Kleinman, head of European energy research at Citigroup Inc. in London, said by phone on May 16. “Or, you can have an OPEC without Saudi Arabia, which just isn’t much of an OPEC.”

The first change of oil ministers in more than 20 years may also recast the country’s relationship with OPEC. The group’s 13 members, which contribute about 40 percent of the world’s supply, gather in Vienna on June 2.
Regular readers know my thoughts about OPEC.

Over at "big stories," the Saudi-OPEC myth

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The Apple Page: No Shortage This Time Around?

Macrumors is reporting:
Directly contradicting a previous claim of projected weak demand for the iPhone 7, Apple has reportedly asked its Asian suppliers to prepare for the highest iPhone production target in "about two years."

Apple has requested between 72-78 million units of the new iPhone, which is much higher than the 65 million handsets that Wall Street analysts previously predicted.

Canadian Oil Sands Producers Already Bringing Workers Back In -- May 23, 2016

Link here.

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Spring Has Finally Arrived 

80 degrees at 10:00 p.m. Finally.

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Homes

I've probably lived in thirty different places over the years, moving every one to three years in the USAF, plus the years in undergraduate and then graduate school.

I can unequivocally say that the apartment we are currently in is perhaps the "best" place I have ever lived. I love it.

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Entertainment Tonight

The DVD Woodstock: Three Days of Peace & Music. I can compare it to Monterey Pop Festival. The former, 1969; the latter, 1968. 

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Cosmos Sapiens

As mentioned earlier, I continue to enjoy John Hands Cosmos Sapiens, c. 2015, first published, 2016.

John Hands is clearly in the same camp as the authors of The Privileged Planet though I doubt he would want to admit that. The authors of The Privileged Planet and John Hands all seem to agree that from the time of the Big Bang (if that did indeed occur) to the rise of humans, an infinite number of things had to have happened "just right."

John Hands said he was born and raised a Catholic; he became an atheist and now says he's agnostic. The more one reads of his book, the more difficult it is to accept that he is "simply" an agnostic. One gets the feeling he is an unwilling agnostic. Sort of like the folks who will end up voting for Hillary.

Starting on page 132, at the bottom of the page, John Hands delves into several "coincidences" that had to occur for life to begin.
One element deemed essential to humans and all known forms of life is carbon, more specifically the stable isotope carbon-12. But as Hoyle pointed out, three parameters must be highly tuned for sufficient carbon-12 to be produced in stars.
The author then provides the two nuclear-chemical equations that were required. The first was the fusion of two helium molecules to form beryllium. The second was a molecule of beryllium and a molecule of helium fusing to form carbon-12.

For these reactions to proceed three conditions must be fulfilled:
  1. The lifetime of Be-8 (about 10^17 seconds) must be sufficiently long compared with the He-4 + He-4 collision time (about 10^21 seconds) to allow the first reaction to occur, but it must not be so stable that the chain of reactions stops here; it is.
  2. Fred Hoyle predicted that the yield of carbon would be negligible unless the reactions were resonant, with the vital resonance level of the carbon-12 nuclear lying near 7.7 MeV. A resonance in nuclear fusion is an energy peak at which the reaction is maximally efficient. Experimenters later confirmed that the resonance level of carbon-12 nucleus is 7.6549 MeV. This lies just above the 7.3667 MeV energy needed to fuse helium-4 and beryllium-8 and so enables this reaction to proceed.
  3. The fusion of carbon-12 with another helium-4 nucleus would produce an oxygen nucleus. However, oxygen-16 nucleus has an energy level at 7.1187 MeV. This lies just below the total energy of carbon-12 + helium-4 at 7.1616 MeV. If it had been higher, then nearly all of the carbon would have been rapidly removed from stellar interiors by conversion into oxygen.
At the end of each chapter, Hands provides his conclusions. In this case, this is his fourth of five conclusions:
Though necessary, even the conservation principles and quantum theory are not sufficient to explain how the complex organic molecules, of which we and known forms of life consist, evolved. If the values of three nuclear parameters (as noted above) were slightly different, insufficient carbon would have been generated in stars to produce organic molecules; if the values of two dimensionless constants -- the fine-structure constant and the proton-to-electron mass ratio -- were slightly different, no atoms or molecules at all would have been formed. No theory explains why these parameters have the values they do.
Others have noted the same thing.

One gets the feeling that John Hands is having trouble "believing" that all this "just happened" to work out. 

Just saying.

Israelis In North Dakota To Test Drones -- May 23, 2016

From the PhillyTribune.com:
HILLSBORO, N.D. — A high-flying drone that will be used to test precision agriculture methods made its inaugural flight Friday in North Dakota amid handshakes and smiles from aircraft operators and farm officials.
The Israeli-manufactured Elbit Systems Hermes 450 aircraft took off from the Hillsboro airport to start a summer-long project that will take pictures of farmland in the fertile Red River Valley. The test is meant to show whether the larger drone is more efficient to capture imagery of agricultural land than satellites or smaller unmanned aircraft.
“Absolutely, this is really exciting,” said drone pilot Matthew Mason, a New Hampshire resident who is spending the summer in a Fargo hotel. “With this camera we can count seeds and all sorts of stuff. The capabilities are like, wow, this is crazy.”
North Dakota is believed to be the only state qualified to fly the aircraft because it has clearance from the Federal Aviation Administration to fly drones at higher altitudes.
The FAA in 2013 selected North Dakota as one of six drone test sites in the U.S. and has since approved the site to fly above the current 200-foot blanket for most of the country.
The Hermes 450, which is 20 feet long with a 35-foot wing span, is expected to take pictures as high as 8,000 feet. It will cover an area about 4 miles wide by 40 miles long.
I replied in an e-mail to the reader who sent me this:
The agricultural uses are endless.
I spent several months some years ago filling out hail crop insurance for farmers in western North Dakota. The forms are somewhat difficult to complete, and incredibly tedious. That's at the front end.
If the farmer has a hail damage loss to report, an insurance adjuster from somewhere -- could be one or two days away -- has to drive out to western North Dakota, survey the damage from the ground, which is hardly very accurate or efficient -- insurance companies are going to use drones to assess crop damage in the future. I would bet on it.
Another drone use for agriculture: aerial spraying. Drones don't have to be small.

Four Consecutive Years Of Declining Oil Volumes Which Has Never Happened Before -- IHS -- May 23, 2016

Oil & Gas Journal is reporting that the conventional discoveries of oil and gas outside North America have fallen to the lowest level since 1952. Some data points:
outside of North American in 2015: just 12 billion boe recoverable resources were discovered from conventional wells
  • lowest level since 1952 (about the time I was born)
  • wow: the volume of oil alone discovered in 2015 totaled just 2.8 billion bbl -- also a record on the downside -- since the ramp-up of oil and gas exploration following WWII
  • 9 million boe of conventional gas discovered: fifth straight year that gas discoveries have exceeded oil discoveries
  • the fall in discovered volumes for conventional oil outside North America has been stead and dramatic during the past few years
  • four consecutive years of declining oil volumes, which has never happened before
  • the bottom has completely fallen out of conventional exploration
  • the supply gap in the future is going to be challenging to overcome

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Oil Production Won't Meet Demand In Five (5) Years -- Former Shell CEO

CNBC is reporting:
"We cannot ever produce enough oil, in my opinion, to satisfy global demand five or 10 years out. We have to start using natural gas and more biofuels as a source of transportation fuel," former Shell Oil CEO John Hofmeister said in an interview with CNBC.
On Thursday, the American Petroleum Institute reported petroleum deliveries rose by 3.6 percent from a year ago to 19.7 million barrels a day, making it the highest April deliveries in eight years.
This is not an investment site. Do not make any investment, financial, travel, work, or relationship decisions based on what you read here, but as for me, I'm looking around. 

Russia Overtakes Saudi Arabia As China's Leading Supplier Of Crude Oil -- EIA -- May 23, 2016 -- Prince Salman: Welcome To The World Of Realpolitik

Over at "Big Stories" I have a link to "the global power shift: Russia-China hegemony." Note: that initial post on this "big story" was posted on May 15, 2016, just months before Saudi Arabia turned on the spigots, saying that it was all about protecting "market share."

The most recent update at that page was about a year later, November 16, 2016, a story about the war of attrition between Russia and Saudi Arabia.

That is the background to this story, sent to me by a reader today, thank you very much. From oilprice.com: Saudi Market Share Takes A Hit As Russia Doubles Oil Exports To China. Some data points from that article:
  • Russian oil exports to China more than doubled in April, 2016, year-over-year
  • in April, Chinese crude oil imports from Russia: 4.81 million metric tons
  • in March, one month earlier, almost as much: 4.65 million tons
  • whereas, two of China's three major oil suppliers saw a decline: Saudi Arabia and Iran
  • Saudi crude oil exports to China fell an astonishing 22 percent to 4.12 million tons
  • Iran crude oil exports to China fell 5.1 percent o 2.76 million tons
  • Angola: increased its business with China by 39 percent to 3.98 million tons
EIA: Russia has overtaken Saudi Arabia as China's leading supplier of crude oil at the end of 2015
And more: new projects worth several billion dollars between Russia and China have led the two countries to cooperate closely regarding energy industry issues.
One or two swallows does not a spring make, but this is incredibly interesting on many accounts.

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Some One-Liners

Prince Salman: welcome to the world of realpolitik.

Vietnam, Kissinger, China, Russia: what goes around, comes around.

I can imagine Russia and China have a lot more joint ventures that make sense than any with Saudi Arabia.

Saudi may be in worse shape than we realize.

Even if it didn't make sense economically for Russia to work with China, politically it is definitely in Russia's interests.

China will probably do things based on economic / financial basis alone. Russia will think politically as much as economically / financially. 

It will be interesting if The Wall Street Journal or Business Insider picks up on any of this.

Halcon With Three High-IP Wells In Eagle Nest -- May 23, 2016

Active rigs:


5/23/201605/23/201505/23/201405/23/201305/23/2012
Active Rigs2582189185211

No new permits; however, fifteen (15) permits renewed --
  • Hess (5), four EN-VP and R- permits, all in Mountrail County; and an Ocotillo permit in Dunn County
  • Kaiser-Francis (4), a Liberty, a Sikes, a Knife River, and a Rat Lake permit, all in Mountrail County
  • QEP (4), three MHA permits, all in Dunn County
  • Enerplus (2), a Copper and a Rocket permit, both in Dunn County
Three producing wells completed:
  • 22503, 3,244, HRC, Fort Berthold 148-95-25B-36-2H, Eagle Nest, t5/16; cum --
  • 27414, 2,712, HRC, Fort Berthold 148-95-25B-36-6H, Eagle Nest, t4/16; cum --
  • 27415, 3,158, HRC, Fort Berthold 148-95-25B-36-5H, Eagle Nest, t4/16; cum --