Monday, June 26, 2017

Latest Forecast: Unchanged -- 2Q17 GDP -- June 26, 2017

Link here.

Latest forecast: 2.9 percent — June 26, 2017.
The GDPNow model forecast for real GDP growth (seasonally adjusted annual rate) in the second quarter of 2017 is 2.9 percent on June 26, unchanged from June 16.
The forecasts of the contributions of real nonresidential equipment and inventory investment to second-quarter real GDP growth declined from 0.15 and 0.76 percentage points to 0.12 and 0.69 percentage points, respectively, after this morning's durable manufacturing report from the U.S. Census Bureau.
The forecast of second-quarter real residential investment growth increased from -0.3 percent to 2.5 percent after Friday's new-home sales release from the Census Bureau.

Hyperdrive -- LNG Exports -- June 26, 2017

From an earlier post:

  • record-setting US LNG exports in May, 2017
  • despite exceptionally low profit margins
  • 17 LNG cargoes
  • 58.3 Bcf
  • some confusion with destinations (see linked article)
Note: about 60 Bcf over a 31-day month.


Today, EIA tweets: "After 2020, the United States will have the capacity to export more than 11 Bcf/d of LNG to global markets."

That's per day. More than 10 billion cubic feet per day only three years from now -- currently exporting about 2 billion cubic feet per day. 

By the way, US Senator Heidi Heitkamp was a special guest on CNBC this morning: one of her main points -- she wants to see more LNG export terminals built in the US. She said she had just returned from Norway (I believe she said Norway) where she saw a new state-of-the-art LNG export terminal and wants to see more of the same here in the US.

If we didn't have so many dams downstream, we could built an LNG-export terminal at the Missouri River - Yellowstone River confluence. LOL.

The Literary Page

Wow, right up my alley, as they say.

Light, A Radiant History: Creation to the Quantum Age, Bruce Watson, c. 2016. An imprint of Bloomsbury Publishing Plc.

Quickly paging through the book there is much about art history and that, of course, explains the Bloomsbury publisher.

I'm back in my quantum theory phase, reading The Strangest Man, a biography of P.A.M. Dirac. I still think Louisa Gilder's Age of Entanglement was a great help bringing me up to speed on the history of the theory of quantum.

EOG's Permian Rattlesnake Pad Produces $44 Million At $50 Oil In 12 Months -- Filloon -- June 26, 2017

Link here at SeekingAlpha.

  • EOG continues to set new production records in the Permian
  • its Rattlesnake 4 well pad produces over 2.1 million barrels of crude on a 12-month model (500,000 bbls/well/first year)
  • the Rattlesnake provides insight into how much competitors in the area could improve current production rates
  • the Delaware core continues to show significant upside
From the linked article:
We have watched EOG revolutionize the industry, continuing to improve production per foot. EOG began its "Mega-Frac" design, focusing stimulation around the well bore in the Eagle Ford. It then showed its proficiency in the Bakken. It has seen its best results to date in the Delaware. EOG's Delaware acreage may have the best geology and is perfectly suited to this design. More importantly, other operators can do it as well. We just may not see those results for 6 to 12 months down the road.
Take a look at this graph of four wells on a single pad. Note the change in production of the first two wells (something not talked about):

And, This, Folks, Is The Problem -- June 26, 2017

From an earlier post:
Concerning, and unexplained, gasoline demand, from Reuters:
The operator of the biggest U.S. fuel pipeline system said demand to transport gasoline to the country's populous northeast is the weakest in six years, the latest symptom of a global oil market grappling with oversupply.
Summer is typically when gasoline demand peaks in the world's biggest oil consuming country as motorists hit the road for vacation, and keeping their gas tanks full strains the capacity of U.S. refiners and pipelines.
This year, so much fuel is stored in tanks in the Northeast that Colonial Pipeline Co said in a notice to customers that demand from refiners and fuel traders to bring gasoline through its pipeline to the region from refining hubs in the South was the worst in six years.
For the first time since 2011, demand for the pipeline was below capacity for a five-day period starting early next week, Colonial said on Thursday. The news pushed down gasoline prices in the Gulf region, where the pipeline begins.
Benchmark U.S. gasoline prices led the energy complex higher and were up about 2.1 percent shortly after midday, partly boosted by expectations that fewer barrels flowing into the East Coast would alleviate a glut.
Typically, demand exceeds the pipeline's space, forcing refiners and traders to supplement delivery with tanker shipments or imports.
And this is the problem, folks, from John Kemp, just a few hours ago:

Notes for the Granddaughters

It is interesting how things work out.

All golf tournaments are 4-day events. I was watching the Travelers tournament in Cromwell, CT, closely on Thursday-Friday, but missed almost all of it on Saturday because of water polo (oldest granddaughter playing in the two-day North Texas tournament).

Then yesterday, Sunday, I knew I would miss all of it, again because of water polo. I kept track of the scores on the internet. It was obvious it was an incredible tournament, and I knew I was missing it. I last checked in when the tournament was almost over; I was driving Arianna to her 5:00 p.m. "date" and knowing that when I got home (Sophia was also with us) I would find out who won. It looked like Spieth might lose after doing so well in the first three days.

I came into the apartment with Sophia, got her started on her projects, and then turned on the television. To my surprise, the tournament was tied at end of regulation play.

The two, Spieth and Berger, were just getting ready to tee off on the first tee (the 18th hole) for a sudden-death playoff.

Bergen was on the green in two strokes and clearly looked like he would win. Spieth's hit off the tee was awful; he hit a tree (that nobody else hit in the tournament) and the ball barely got down the fairway.

Spieth's second shot put him in a sand trap in front of the green. At that point, it was pretty clear he was going to lose to Bergen who was already on the green.

Incredibly, and I got to see it live, Spieth hits the ball out of the sand trap and incredibly, the ball rolls into the cup. Everyone goes nuts and he wins.

It's funny how things work out. I really wanted to see the tournament and I was able to see the most exciting conclusion, live. Had it not worked out, that would have been okay: in the big scheme of things, I much prefer going to water polo and much prefer being with any of the granddaughters to almost anything else.

As usual, Sophia was awesome. She is so much fun.

By the way, two pictures tell a complete story. This occurred under the watchful eye of her mother at Sophia's home, not at our apartment -- I was not taking care of Sophia at the time -- this is "not my fault":

The Political Page, T+157 -- June 26, 2017

Later, 9:13 a.m. Central Time: a huge "hat tip" to Don who sent me the link: "the genius of Trump's tweets."
Google, Twitter and Facebook control much of the news we see today, but Trump’s tweets get around their dominance.
Similar to the Drudge Report website, Trump’s tweets are so well-known that people view his tweets independently of the tech giants.
The Drudge Report receives comparable traffic to Google News and The New York Timesdespite the fact Google News prominently promotes the Times in search results and on its homepage.
Drudge isn’t even carried in Google News, since the site merely aggregates links to articles.
Google is the most trafficked site in the U.S. as well as in the world.
Most of the time, Google News is full of articles by the left-leaning media critical of Trump and conservatism.
But Trump’s tweets changed all that. Reporters race to report on his tweets, filling up Google News with articles that are far more favorable to Trump, since there is so little room left for spin with his tweets. A quick perusal of Google News right now reveals this headline near the top, “Trump accuses Clinton of colluding with Democrats to defeat ‘Crazy Bernie Sanders.’” The Washington Post article acknowledges, “Trump took to Twitter Sunday morning…”
There really is very little way to write the headline to make Trump look bad. There wasn’t any extra information to glean something from outside of one short tweet.
Original Post 

Huge presidential win: I almost missed this one. This is a huge win for the president but the way CNBC presented the story, I almost missed it. First, it should have been "breaking news" and it was not. Second, it came as part of a low-key segment from the milk-toast CNBC White House correspondent, who seemed to almost say in passing that the Supreme Court has issued an emergency injunction against lower court actions that tried to hamstring Trump's "travel bans."

Presidential tweets: I generally don't try to read too much into the president's tweets. For me, they are generally very straightforward and don't require a lot of analysis. However, one of the president's tweets this a.m. seems to have a very different message regarding ObamaCare -- a message very different than what he has had in the past.

Two issues:
  • first: during the campaign, it was "repeal and replace" -- no compromise on this; it would happen "day 1"
  • second: the legislative process has been very, very difficult; but the president continues to push the process along; as recently as last week, his tweets or public statements remained positive and he continued to make telephone calls to senators to get them to support the GOP plan
But, now today, it looks like he is coming around to what others in the GOP have said: just let ObamaCare run its natural course.

His tweet: 
Republican Senators are working very hard to get there, with no help from the Democrats. Not easy! Perhaps just let ObamaCare crash & burn!
For me, I have no idea why the GOP would want to sign off any national health care bill. It is a lose-lose.

By the way, as noted earlier, President Trump can easily weigh in on ObamaCare using executive orders. In fact, I am somewhat perplexed he did not do more along that line while waiting for Congress to get its act together.

The Energy And Market Page, T+157 -- June 26, 2017

Making America great again. BMW's largest factory in the world -- Spartanburg, SC. Capacity:
  • 450,000 vehicles/year. Last year, about 411,000 vehicles. Just announced:
  • $600 million new investment at Spartanburg between now and 2021
  • 1,000 new hires
  • will help BMW reach its target of 450,000 vehicles/year at this one factory
  • CNBC was quick to point out that BWM planned this move even before Trump talked about BATs -- an unnecessary point in a business story, but an important point for a left-leaning network
Making America great again. German-based company will bring a $12 million aviation-related plant to Auburn, Alabama.
Winkelmann Group is a fourth-generation German company that has three divisions including automotive, building and industry, and flowforming, which is a metal-forming technique.
The Auburn site will use the company's flowform technology that primarily builds high-precision, high-strength, thin wall roto-symmetrical parts from various metals.
"With the North America operation, my team will be able to better serve the aerospace and defense industry, as well as the commercial automotive and oil and gas industry in the U.S.," CEO Heinrich Winkelmann said in the release.
Supply problem, or demand problem. The consensus seems to be that with regard to WTI / Brent, it's a "demand" problem, not a "supply" problem. I've bought into that consensus -- that it's a "demand" problem. On CNBC this morning, Kevin Caron of Washington Crossing clearly said it's a "demand" problem. Many moving parts. 

Understanding Permian Gas Takeaway Capacity at Waha Hub, Part 2 -- RBN Energy -- June 26, 2017

Active rigs:

Active Rigs583075192187

RBN Energy: Understanding Permian Gas Takeaway Capacity at Waha Hub, Part 2.
Permian natural gas production has climbed 1.75 Bcf/d, or nearly 40%, in the past three years to more than 6.3 Bcf/d in 2017 to date, and it’s poised to grow to nearly 12 Bcf/d over the next five years. Note that’s a “dry” or “residue” gas number; gross gas production is a couple of Bcf/d higher. As Permian production growth occurs, pipeline takeaway capacity from the primary trading hub in the area — the Waha Hub — will become increasingly constrained, a trend that will drive pricing and flow dynamics into the early 2020s. How full are the takeaway pipelines now and how quickly will constraints emerge? Today we continue our series on the Waha Hub with a look at current takeaway capacity and flows from the hub.
A reminder, the Waha hub, from an earlier RBN Energy post:
The Waha Hub is situated in northern Pecos County in West Texas near Fort Stockton — about 260 miles east of El Paso. Geologically speaking, the hub sits atop the Permian’s Southern Delaware Basin, an oil-rich part of the larger play. Like any good, liquid trading hub worth its salt, Waha is well connected, with ample receipt, delivery and takeaway capacities. The Waha Hub comprises interconnects with more than a dozen takeaway pipelines, including four major interstate pipelines and nine Texas intrastate pipelines, together totaling more than 10 Bcf/d of takeaway capacity. This capacity is all the more important given that there is little demand near the hub itself — less than 250 MMcf/d, on average — which makes Waha primarily a transit hub.

Sunday, June 25, 2017

The EQT - Rice Energy Deal -- Human Interest Story -- June 25, 2017

The update is at this link; worth a read.

A Japanese Spaghetti Western

To make a very long story very short, I happened to come across a Japanese comedy, Tampopo. I knew nothing about the movie before watching it except that it was about Japanese food and Japanese culture surrounding food.

About a third of the way through I realized that had this been an American film, the lead actor and actress would have been John Wayne and Katherine Hepburn.

After the movie, I googled "Tampopo wiki" and this is what I found:
Tampopo (literally "dandelion") is a 1985 Japanese comedy film by director Juzo Itami, starring Tsutomu Yamazaki, Nobuko Miyamoto, Kōji Yakusho, and Ken Watanabe. The publicity for the film calls it the first "ramen western", a play on the term Spaghetti Western (films about the American Old West made by Italian production studios).
And, yes, John Wayne, not Clint Eastwood. 

Reason #35 Why I Love To Blog -- The Groningen Is Back In The News -- June 25, 2017

Had I not blogged, I doubt I ever would have ever even known about the Groningen. But here it is again, in the WSJ, and another reason why I love to blog.
For decades, the giant Groningen gas field beneath the flat, green farmland in the north of this country counted among the greatest prizes for Exxon Mobil Corp. XOM 0.65% and Royal Dutch Shell RDS.B 0.43% PLC.

Then the earthquakes started.

The exploitation of Groningen—the biggest gas field in Europe—has been causing tremors for over two decades, rattling a bucolic province with no previous history of quakes and exposing two of the world’s biggest energy companies to a criminal probe and rising reconstruction bills.

Amid a public outcry, the Dutch government has imposed increasingly strict limits that have more than halved Groningen’s gas production since 2013. Now, authorities are proposing another 10% cut in hopes of further reducing earthquakes. And a Dutch public prosecutor is preparing to open a criminal investigation into responsibility for the earthquakes.

Groningen was expected to be one of the world’s largest gas producers for decades to come. Last year, it made up almost 10% of both Exxon and Shell’s total gas production globally and its reserves are among the companies’ largest undeveloped resources.
Again, as usual, the comments are most interesting, though somewhat disappointing considering this is in the WSJ.

It Just Doesn't Quit -- Making America Great Again -- June 25, 2017

A huge "hat tip" to a reader for sending me this link to the WSJ article: "The Shale Revolution's Staggering Impact In Just One Word: Plastics: Petrochemicals, once simply a cheap byproduct, are powering a U.S. manufacturing boom and export bonanza."

If I could write, this is the article I would have written.

Carter: cardigan sweaters.

Obama: we can't just drill our way to cheaper gasoline.

Businesswomen and businessmen (Elon Musk, Aubrey McLendon, Harold Hamm): taking risks to make America great again.

From the linked article:
When new parents in Rio de Janeiro buy baby food in plastic containers, they are bringing home a little piece of the U.S. shale revolution.

That boom in drilling has expanded the output of oil and gas in the U.S. more than 57% in the past decade, lowering prices for the primary ingredients Dow Chemical Co. DOW -0.56% uses to make tiny plastic pellets. Some of the pellets are exported to Brazil, where they are reshaped into the plastic pouches filled with puréed fruits and vegetables.

Tons more will be shipping soon as Dow completes $8 billion in new and expanded U.S. petrochemical facilities mostly along the Gulf of Mexico over the next year, part of the industry’s largest transformation in a generation.

The scale of the sector’s investment is staggering: $185 billion in new U.S. petrochemical projects are in construction or planning.
Last year, expenditures on chemical plants alone accounted for half of all capital investment in U.S. manufacturing, up from less than 20% in 2009.
Integrated oil firms including Exxon Mobil Corp. and Royal Dutch Shell PLC are racing to take advantage of the cheap byproducts of the oil and gas being unlocked by shale drilling. The companies are expanding petrochemical units that produce the materials eventually used to fashion car fenders, smartphones, shampoo bottles and other plastic stuff being bought more and more by the world’s burgeoning middle classes.
Much, much more at the link.

Earlier today, another reader send me the link to this Bloomberg story:  Trump to Call for U.S. ‘Dominance’ in Global Energy Production. After reading the article, I replied to the reader:
  • unlike Obama, Trump really will mean "all the above" -- not just intermittent energy like Obama
  • it will take many, many years, possibly decades but energy is going to separate the US from the rest of the world --- unless the US elects another "Obama" president
  • I'm still waiting for Keystone XL action
  • within the continental US, there will be winners and losers among states, and in most cases, the losers can blame it on self-inflicted policy mistakes. States like NY will suffer due to a) bad energy policies; and, b) bad tax policy
  • California is likely to accelerate self-inflicted injuries -- add the bullet train to bad energy policies and bad tax policy
  • winners: Texas, Louisiana, Wyoming, Oklahoma, North Dakota
  • Colorado? Depends whether they take the road to California or the road to Texas 
From the linked Bloomberg article:
With “Energy Week,” Trump is returning to familiar territory -- and to the coal, oil, and gas industries on which he’s already lavished attention. Trump’s first major policy speech on the campaign trail, delivered in the oil drilling hotbed of North Dakota in 2016, focused on his plans for unleashing domestic energy production.
The issue has also been a major focus during Trump’s first five months in office, as he set in motion the reversal of an array of Obama-era policies that discourage both the production and consumption of fossil fuels.

Yes, Sir, I Can Boogie, a factory is its people, not its bricks