Wednesday, August 19, 2015 -- CBR Volumes Falling In The Bakken; Diesel Should Be Adequate For North Dakota Harvest; Soros Buying Coal Really, Really Cheap -- Staunch Environmentalist/Global Warmist Turns To Coal

EIA "energy cookie":

Amid high uncertainty in the global oil market, EIA has lowered crude oil price forecasts in the Short-Term Energy Outlook (STEO), expecting West Texas Intermediate (WTI) crude oil prices to average $49 per barrel (b) in 2015 and $54/b in 2016, $6/b and $8/b lower than forecast in last month's STEO, respectively. Concerns over the pace of economic growth in emerging markets, continuing (albeit slowing) supply growth, increases in global liquids inventories, and the possibility of increasing volumes of Iranian crude oil entering the market contributed to the changed forecast. --- EIA

Active rigs:

	8/19/2015	08/19/2014	08/19/2013	08/19/2012	08/19/2011
Active Rigs	75	192	183	199	193

RBN Energy: a new era in Mexico's LPG (propane) market. (Archived)

Big changes are coming to the LPG market in Mexico.  LPG, or liquefied petroleum gas, is mostly propane but can include butane.  Mexico is one of the largest consumers of LPG in the world and imports significant volumes from the U.S.  Historically Petróleos Mexicanos (Pemex) has been the only legal LPG importer of record, standing between suppliers and Mexico’s buyers.  But in January 2016, Pemex will lose that status, and a year later the regulations that have capped Mexican LPG retail prices will be eliminated.  Today, we consider how opening up of the LPG south of the border may affect Mexican LPG importers and consumers, and U.S. producers and exporters.

Our blog post yesterday (August 18, 2015) detailed evolving Mexican plans to import light crude from the U.S. under a licensed swap arrangement. This time we turn our attention to deregulation of our southern neighbor’s LPG market and the prospect for increased imports from the U.S. For decades (and with strong encouragement from its federal government), Mexico has been consuming more LPG (mostly propane but including some butane, two members of the natural gas liquids – NGL – family) than all but a half-dozen other nations: the U.S., China, Saudi Arabia, Japan, India and Russia.

In the first six months of 2015, LPG sales within Mexico averaged about 280 Mb/d, which is pretty much what sales have averaged the past several years. Of the total volume of LPG sold and consumed in Mexico, about two-thirds is currently produced domestically (that is, within Mexico; the rest (about 93 Mb/d) is imported, with about 70% of imports (66 Mb/d) coming from the U.S. and the balance coming from other countries. As we have discussed previously the U.S. has become a significant exporter of LPG (propane in particular) over the past two years as U.S. production has ramped up and midstream companies have built out marine terminals along the Gulf Coast. 

The U.S. exported over 400 Mb/d in early 2014 and over 700 Mb/d in July 2015.  A substantial majority of LPG import volumes into Mexico are delivered by ship; pipelines play a role too, as do trucks and railroads.

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CBR

CBR in the Bakken. UPI is reporting:

New pipelines operating in North Dakota have pushed the volume of crude oil by rail lower during the first half of the year.

Rail broke away from pipelines as the main source of crude oil delivery in 2012. The boom in shale oil production from the so-called Williston basin, hosting the Bakken and Three Forks shale formations, had outpaced pipeline capacity, leaving companies with rail as the primary alternative transit option.

After peaking in December 2014, when the state set its crude oil production record at 1.22 million barrels per day, transport by rail has been in a general decline and is now at parity with pipeline transport.

Justin Kringstad, director of the North Dakota Pipeline Authority, said in response to email questions the decline in rail volumes was in part because of the February start of the Double H pipeline, a project led by pipeline company Kinder Morgan. That project has the capacity to deliver as much as 84,000 barrels of oil per day.

Bakken crude oil to the west coast will still go by rail.

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Diesel and The North Dakota Harvest

Updates
Friday, August 21, 2015: The Dickinson Press reports that diesel is less expensive than gasoline. 

Stamart Travel Center manager Becca Neustel of Bismarck said she’d have to look back in the books to see the last time diesel fuel was lower than gasoline.

“It’s been a very, very long time,” she said.

The price for diesel at the station was $2.55 a gallon Thursday, 24 cents cheaper than regular unleaded gasoline.

In Dickinson, diesel could be purchased for $2.59 a gallon at multiple stations throughout the city. That was about 10 cents cheaper than super unleaded gasoline, the cheapest at the pumps.

In fact, according to the U.S. Department of Energy, the last time diesel was the cheapest fuel at the pump was 11 years ago in 2004. The department said the marker was reached in July when the average price of diesel nationwide dipped 2 cents a gallon below regular gasoline.

Wrong. See this post. 

Original Post

The Houston Chronicle is reporting but it requires a subscription/password. However, Fox Business also has the AP story:

The slowdown in North Dakota's oil patch should help keep fuel supplies adequate for the state's fall crop harvest due to the dramatic drop in the number diesel-thirsty drill rigs.

The harvest, which already has begun for some crops, often spurs diesel shortages for farm machinery in the Upper Midwest.

The problem was particularly acute in North Dakota in recent years because of the oil drilling activity in the western part of the state.

Mike Rud, president of the North Dakota Petroleum Marketers Association, and Mark Watne, president of the North Dakota Farmers Union, said there is no indication that diesel supplies will be tight when the harvest ramps up to full speed next month.

The MDU diesel topping refinery is, supposedly, also on-line.

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Maybe Coal Isn't So Bad After All

Updates

September 1, 2015: following in his tracks, another multimillionaire buying up cheap coal.

A millionaire environmentalist is buying into coal with a twist he believes can turn the beleaguered black fossil fuel at least partially green.

Tom Clarke, who made a fortune in health care, recently announced a plan to buy bankrupt St. Louis-based Patriot Coal for $400 million, following a major investment in coal by the billionaire liberal activist George Soros. But Clarke said he is not simply bargain-shopping in an industry wounded by federal policies and the emergence of American oil and gas. He said he is looking to transform the industry, and intends to sell his coal at a 10 percent premium -- which he will then spend on planting trees.

Original Post

The Guardian is reporting:

Billionaire climate philanthropist George Soros invested more than $2m (£1.3m) in struggling coal giants Peabody Energy and Arch Coal in recent months, despite having once called the fuel “lethal” to the climate.

Filings with the Securities and Exchange commission show that between April and June this year Soros Fund Management (SFM) bought more than 1m shares in Peabody ($2.25m), the world’s largest private coal company, and 500,000 shares in Arch ($188,000). The firm, which Soros chairs, bought the large stakes for bargain prices. Peabody and Arch are giants of the US coal sector but have suffered massive declines in recent years, losing more than 98% of their value.

SFM made a similar move in 2014 by investing $234.4m in coal and gas company Consol. Those shares were sold off after a few months as gas prices continued to fall.