Thursday, August 22, 2013

Brent/WTI Spread Narrows

Rigzone is reporting:
U.S. crude oil rose more than $1 on Thursday, while Brent crude rose less and its premium over U.S. crude narrowed by more than $1 in a lightly traded session.
This week has seen volatile spread trading in the oil market, with U.S. crude's discount widening from less than $3 to above $6, then narrowing again to finish Thursday under $5.
In recent weeks, political tensions in the Middle East and North Africa have bolstered Brent's price, but reports of some Libyan ports readying for exports eased supply concerns.
"If Libyan production comes back on line, that's going to drive the spread more narrow. But if Libya's back online, and there's still geopolitical risk, that's a tug of war," said Rich Ilczyszyn, founder of in Chicago, Illinois.
Maybe later, I'll be brave enough to write what made me choose to post this video....

Living Next Door To Alice, Smokie

Adults only: strong, inappropriate language; you've been warned --

Living Next Door To Alice, KristoferKatatonic

For Those Hoping To See Less Flaring In The Bakken, Federal Help Is On The Way

Assuming more federal regulation will lead to less fracking, which will lead to less drilling, which will lead to less flaring, this is good news for those concerned with too much flaring in North Dakota. KOG and WPX should be concerned, and to some extent, Whiting, I suppose.  But all those folks who want to see less flaring should be out buying bottles of champagne tonight. Just don't open them yet.

Disclaimer: this is not an investment site, but I will be watching KOG share price to get an idea where analysts stand on this issue. But no one should make investment decisions based on what is posted at this blog or what they think has been posted at this blog. This is not an investment site. It is for entertainment and education, and not necessarily much of the latter.

Rigzone is reporting:
The Independent Petroleum Association of America (IPAA) and the Western Energy Alliance (WEA) say the second draft of the Department of the Interior’s (DOI) proposed draft rule to regulate hydraulic fracturing and well construction on federal lands would undercut U.S. state authority to regulate energy production.
The industry groups submitted comments on the second draft Thursday. The proposed rule would cost the energy industry $345 million a year and discourage independent producers from exploring for natural gas and oil on federal lands, IPAA President and CEO Barry Russell said.
“Our federal system has vested the states with the authority to ensure that development of energy sources is safe and responsible,” Russell said in an Aug. 22 statement, adding that DOI should not be in the business of undermining the progress made by state regulators and local environmental groups in developing shale resources.
It was very clear to me where the new Secretary of the Interior stood on this issue. 

Three Wells Coming Off The Confidential List Friday; Statoil With A Huge Well; 2/3 To Drill Status

  • 24223, drl, CLR, Hawkinson 4-22H2, Oakdale, Three Forks, no production data,
  • 24445, drl, Hess, EN-State B 155-93-1609H-2, Alger, Three Forks, no production data,
  • 24833, 3,084, Statoil, Houston 11-2 1H, Buford, middle Bakken, t7/13; no production data,
Statoil's Houston well in Buford: spud, February 23, 2013; cease drilling, March 16, 2013; middle Bakken; a deep well (21,405 feet); a new formation (to me) noted: Kinderhook, just below the Lodgepole; minimal reporting.

The Hess EN-State well in Alger: spud, February 23, 2013; cease drilling, April 27, 2013; a Three Forks wells; fairly deep, 21,053 feet; for example, no mention of the Kinderhook; gas units unimpressive with a peak of 337 in the middle Bakken; if gas units in the Three Forks were mentioned, I missed it.

CLR's Hawkinson well in Oakdale: the geologist's summary was not yet posted, a Three Forks well. 
I'm in an incredibly good mood this evening. And none of it has to do with the Bakken directly, but to some degree, my great mood is related to the Bakken. I was thinking about how great the Bakken has been as a laboratory for the current US energy revolution. I think folks forget the "laboratory" aspect of the Bakken. Imagine if we had the likes of the New York governor who banned fracking. Wow.

So, the laboratory is important. And that made me think of another one who experimented, taking chances:

Rosemarie, Andy Kaufman

"The original":
Rosemarie, Slim Whitman

Thirteen (13) New Permits -- The Williston Basin, North Dakota, USA; An Interesting Name Change; Samson Resources Transfers 14 Wells To Bakken Hunter; Abraxas With Another Nice Well

Active rigs: 182

Thirteen (13) new permits -- 
  • Operators: Newfield (3), Whiting (3), CLR (2), SM Energy (2), Legacy, Hunt, Ballantyne
  • Fields: West Ambrose (Divide), Tobacco Garden (McKenzie), Estes (McKenzie), Harding (McKenzie), Cartwright (McKenzie), Red Rock (Bottineau), Alexandria (Divide), Tolley (Renville), Stoneview (Burke)
  • Comments: we haven't seen Newfield in a long time; their 3 permits are in Tobacco Garden, a good field
Wells coming off confidential list were reported earlier; see sidebar at the right. 

Two (2) producing wells completed:
  • 23624, 1,235, Abraxas, Lillibridge 20-17-3H, Pershing, t7/13; cum --
  • 24525, 483, True Oil, Hagen Federal 23-25-30-29H, Red Wing Creek, t/13; cum --
Samson Resources transfers fourteen (14) wells to Bakken Hunter, LLC:
  • all in Divide County; all in two townships (163-96; 163-97)
  • lowest permit number: 21356
  • highest permit number: 22253
  • it appears most, if not all, are on confidential status
One (1) interesting well name change:
  • 26103, Slawson, from Goldenban 2-2-1TFH to Goldenban 2-2-1MLH 

Jobless Claims Rise But Trend HINTS At Quicker Hiring; Claims Jump By 13,000

I cannot make it up. That's the headline at Reuters: Claims Rise But Trend Hints At Quicker Hiring.

Exactly what is that supposed to mean?

Okay, let's look at the story:
The number of Americans filing new claims for unemployment benefits rose last week but held close to a six-year low and gave a positive signal for hiring during the month.
Initial claims for state unemployment benefits climbed 13,000 to 336,000, just above the level expected by economists in a Reuters poll, Labor Department data showed on Thursday.
Wow. Initial claims jumped 13,000 -- that's one of the highest jumps in recent weeks, and Reuters  did what they could to bury it:
  • second paragraph
  • buried in a very long sentence
  • "held close to a six-year low"
  • "just above the level expected by economists in a Reuters poll"
 And the spin continues:
Despite the increase, the four-week moving average for claims, a better gauge for labour market trends, fell to its lowest level since November 2007, suggesting the economy was growing enough to fuel steady improvement in the labour market.
"We are looking at moderate job growth." 
At 330,500, the four-week average was about 5 percent lower than it was during the employment report's survey week in July, when employers added a lacklustre 162,000 jobs to payrolls.
But this says it all: the stock market showed no reaction. 



Last week everyone got excited when the number dropped 15,000! Today's report: back up 13,000. Back to 336,000. Now, let's do a bit of math: 336,000 - 13,000 = 323,000. So, last week's number of 320,000 must have been revised upward by 3,000 to 323,000 (which Reuters conveniently overlooked). So, last week's "15,000" drop was actually a 12,000 drop, which did not offset this week's jump. 

Disclaimer: I often make simple arithmetic errors but 336,000 - 13,000 is 323,000, which is 3,000 higher than the figure reported last week (320,000).

Just saying.


Aha!! Yes, I'm correct!! Yeah! Bloomberg reports last week's revised figure of 323,000. I was right on! Yeah!

Thursday Morning Links, New, And Views; Gallup Reports Huge Jump In 30-Day Unemployment Rate; China's Demand For Oil Hitting New Records; US Sanction Gap Allows China To Import Iraqi Oil; President Using Golfer's Approach To The Mideast


August 23, 2013: Platts is reporting US RIN prices fall amid aggressive selloff from one refiner.
US RIN prices fell again Thursday amid an aggressive selloff from one obligated refiner, multiple sources said.

No broker or trader sources could confirm the identity of the party, but at least three brokers and two traders said there were market talks of heavy selling from one obligated party.

"They're just unloading right now," one broker said. "Everyone's scrambling to figure out why." Corn-based ethanol (D6) RINs for 2013 were assessed 2.5 cents lower at $0.74/RIN, current-year advanced biofuel (D5) RINs shed 2 cents at $0.8150/RIN, and current-year biomass-based diesel (D4) RINs fell 3 cents to $0.86/RIN.

Current-year RIN assessments fell for the third straight session following the Platts record six-session ascent that ended Monday. 
Original Post
"Fed stays the course on bond buying." This tells me one thing: things are not so good in ObamaNation.

Wells coming off the confidential list have been posted; OXY USA has another OXY USA well. 

The Yahoo! Finance link to NYMEX crude oil price is broken (again) at its homepage.

A reader tells me that the price of gasoline in China is $4.78/gallon. That is in line with this report in which gasoline is said to be $4.73/gallon back in July.  (US dollars)

Car sales to rise 12% in August -- JD Power.

Active rigs: 185 (steady)

RBN Energy: the woes of Alberta natural gas -- stuck in the middle.

Unemployment numbers will be out later today (initial benefits claims) but Gallup is already reporting a huge jump in the unemployment number
Outside of the federal government's Bureau of Labor statistics, the Gallup polling organization also tracks the nation's unemployment rate. While the BLS and Gallup findings might not always perfectly align, the trends almost always do and the small statistical differences just haven't been worthy of note. But now Gallup is showing a sizable 30 day jump in the unemployment rate, from 7.7% on July 21 to 8.9% today.
I assume the administration is already massaging the numbers; the report will be nowhere nearly as bad as reality.

Energy News

China's demand for oil is growing significantly, according to Platts:
China's apparent oil demand in July rose 6.6% to an average 9.82 million barrels per day (b/d) or 41.52 million mt, according to a just-released Platts analysis of Chinese government data.

On a month-over-month basis, apparent demand in July was down 1.7% from June but still demonstrated robust growth, which observers believe is a sign China’s recovering economy.

Apparent oil demand in June had soared 11.7% from June a year ago to an average 9.99 million b/d ­– which was the highest growth rate since February 2011.
Great news for the Bakken: North Sea oil production to fall much more than expected. Rigzone is reporting:
Britain's North Sea energy output will fall this year more sharply than forecast in February as ageing fields grow less productive and need more maintenance, and it will not start to pick up until 2015, Oil & Gas UK said.
The industry association also highlighted in a report on Wednesday that the production efficiency of existing North Sea oilfields "remains in worrying decline" despite an upsurge in investment this year.
Drops in oil and gas output have held back Britain's economy in recent years, hitting attempts to stimulate growth, which is expected to be a major issue in the 2015 general election. The body's forecasts disappoint expectations for the pace of a revival.
The group said it now expected production of between 1.2 million and 1.4 million barrels of oil equivalent per day (boepd) this year, with similar output in 2014, before an improvement begins.
Remember: Britain came within six (6) hours of running out of natural gas during the late winter cold snap in 2012-2013 winter.

Platts is reporting that the increasing price in RINS is altering refiners' blending policies:
The price of ethanol RINs has rocketed in 2013 to more than $1 and the  price of 2013 ethanol RINs hit a record Platts assessment of $1.44/RIN in July. Up until early this year, they traded at a few cents per RIN.
A RIN, or Renewable Identification Number, is generated when a gallon of biofuel is made. When the renewable fuel is blended with gasoline or diesel, the blender gets that RIN, which can then be used to meet its federal renewables targets or traded for cash. Refiners that physically blend renewables can cut the amount they spend on RINs purchases, and even gain a $1/gal credit on blending biodiesel.
Some market sources said that sellers, especially big market players in the gasoline market, are “slamming the racks” by offering mostly conventional gasoline, blended with ethanol, at lower prices.
The smaller refiners, in turn, are being "slammed."  Regular readers know my feelings about RINs.


Another company that will move full-time workers to part-time status due to O'BamaCare: AAA Parking --
The parking garage operator, which employs more than 1,600 companywide, will move about half of its 500 full-time hourly employees to part-time status effective April 15, in response to the law Congress passed in 2010.
Wells Fargo will cut 2,300 mortgage-related jobs saying activity will slow this year. Anyone following the news knows that house sales are up -- so one of two things is going on: either Wells Fargo sees something the rest of us are not yet seeing; or they are pulling folks off the payroll in anticipation of ObamaCare (yes, I know big corporations got a one-year delay in implementing O'BamaCare, but often big corporations go through months of analysis prior to cutting 2,300 jobs -- they would have done that analysis in anticipation of O'BamaCare. Even with O'BamaCare delayed, it would make good sense to cut those employees if the company could afford it. Again, WFC didn't just wake up yesterday and decide to cut 2,300 jobs -- the "study" was probably begun before the decision to delay O'BamaCare was announced).


This looks really, really serious now. Not only are the Japanese putting out a call for help, the call is described as a "prompt" call in help in stemming the radioactive leak. Wow, I'm glad our Secretary of Interior doesn't have to worry about really BIG problems.  

California regulators have taken a page from the Obama administration on how to respond to a big energy company who causes mayhem: bankrupt them. California is considering sending PG&E into bankruptcy for an explosion in 2010 that killed eight people. This would be the second time in 12 years that PG&E has filed for bankruptcy.  

WSJ Links

A Coptic monument in Egypt was finally destroyed after centuries of withstanding other threats.
Why Virgin Mary Church endured until modern times is a mystery. Some churches in Cairo survived because Coptic popes made them their residence. Being built on a place Jesus and his mother had visited gave others in Egypt a claim to fame and a chance at survival, while in still others the miracles performed by the patron saint were a reason for pilgrims to visit and donate. Virgin Mary Church had none of these. For hundreds of years, its sole claim to miracles: a Roman column that, according to parishioners, produced oil once a year on Good Friday. The church was probably too small and too remote from the center of authority to merit notice. Its flock never abandoned it. Most of the Copts had converted to Islam over the centuries, but in Delga a critical mass remained that kept putting candles in front of the old icons.
In this maelstrom, the ancient Virgin Mary Church was not spared. In a day of brutality, the people of Delga distinguished themselves. All three of Delga's Coptic churches were destroyed. So were a Catholic and a Protestant church in the city. In place of Virgin Mary Church, the mob placed a sign: The Martyrs Mosque.
Sort of sums up my feelings about 15th century mentality. The story is about much more than a mere church; it is another genocide story that won't be remembered by the mainstream media in this country. Certainly not be those who get a tingle up their legs listening to President O'Bama.

India in a world of hurt -- oil at record highs.
The price of crude oil is at a record high—if you're in India.
Global crude is trading around $105 a barrel, or nearly 40% off its historical peak. But the weak rupee has pushed the price of oil imports into India to their highest ever level in local currency terms. The rupee has plunged about 14% in the past three months, from 55 per dollar at the end of May to about 64 per dollar now.
This is particularly painful as India imports four-fifths of its oil needs—a major factor in the country's current account deficit—and New Delhi subsidizes the cost of oil paid by consumers. Nomura's Anil Sharma says every one rupee drop against the dollar adds an extra 81 billion rupees ($1.26 billion) to the subsidy bill.
The government has gradually reduced fuel subsidies this year, cutting about once every month. At the current rate, subsidy cuts will shave an average of 22 billion rupees per month off the total bill this fiscal year, says Moody's analyst Vikas Halan. But the effect of the cuts is limited because of the rupee's swift decline. A fall of one rupee against the dollar wipes out nearly four months of subsidy cuts.
Much of the pain of higher oil subsidies is likely to be felt by India's state-owned oil giant, Oil and Natural Gas Corp.
UPS to end health care benefits for some spouses, citing O'BamaCare. Smart move. Others have already done it; more will follow. Previously reported.

Another one about to bite the dust? The sun may be setting on the Las Vegas Sun.

 So, finally after weeks of nothing, a story on Syria with the word "suspects" in the headline: the US suspects Syria used gas -- 1,000 casualties would be witnesses if they could talk. Where's Baghdad Bob?

US home sales near four-year high.

Well, how did this ever happen? A sanction gap allows China to import Iranian oil. Sometimes $2,000/hour lawyers miss little things like this. LOL.

The UK moves to "tackle" income squeeze and consumer spending. If it's the UK, I assume more taxes on the "rich" to offset tax cuts and cuts in fees elsewhere.  

In the Mideast, US policy has "bogged down."
In just a few years, the U.S. has executed a 180-degree strategic turn in the Mideast, from President George W. Bush's muscular interventionism to President Barack Obama's more backseat approach.
That, according to some regional diplomats and experts, has disoriented Arab governments and Israel, who have become accustomed to extensive U.S. leadership in their region. 
It's not so much a "backseat" approach as an approach that a golfer would use. Cautious.


Remember my post from yesterday?
Remember Zimmerman? President O'Bama said he could identify with the African-American youth that was stalked and killed. Now we have bored, lazy African-Americans (2) and one bored, lazy white teenager who (are alleged to have) killed a high-achieving white Australian. The question is: who will President O'Bama identify with in this most recent killing? He has many choices. You can't have it both ways. My hunch: he won't even mention it. 
It looks like I was about 100% correct. Today from The Daily Caller:
Josh Earnest, principal deputy White House press secretary, said he was not familiar with the murder of Australian jogger Chris Lane during Wednesday’s White House briefing.
When asked by Fox News chief White House correspondent Ed Henry about the Chris Lane case, Earnest responded, “I’m not familiar with it, actually.”
What incredible hypocrisy. They must laugh out loud in the speech-writing room before coming out to meet the press. This writing is truly as good as "30 Rock" or "curb my enthusiasm." And Josh is so earnest in his answers. I can't make this stuff up.