Friday, April 8, 2016

India, the new "China." From Bloomberg/Reuters:

The world’s second-most populous nation is increasingly becoming the center for oil demand growth as its economy expands by luring the type of manufacturing that China is trying to shun. And just like China a decade ago, India is trying to hedge its future energy needs by investing in new production at home and abroad. 

India may have one advantage its neighbor to the northeast didn’t. While China’s binge came during a commodity super-cycle that saw WTI crude reach a high of $147.27 a barrel in 2008 -- due in no small part to its demand -- India’s spurt comes during the biggest energy price crash in a generation.

While oil has tumbled more than 50 percent from mid-2014 levels, the South Asian nation spent $60 billion less on crude imports in 2015 than the previous year even while buying 4 percent more.

In 1999, China’s economy was less than a 10th of its current size of more than $10 trillion, and bicycles vied for space with taxis and buses on crowded streets in major cities like Shanghai. In the ensuing 17 years the economy, spurred on by foreign investment in manufacturing, grew from the seventh largest in the world to No. 2. Vehicle sales surged and oil demand has nearly tripled since then, positioning the country to overtake the U.S. as the world’s largest crude importer this year.

Active rigs:

	4/8/2016	04/08/2015	04/08/2014	04/08/2013	04/08/2012
Active Rigs	31	91	191	185	208

RBN Energy: Natgas Storage Spreads Are Back, Alright!

A few years ago, natural gas storage was one of the hottest segments of midstream infrastructure development.   But along came shale, then oversupply, then depressed prices.  The forward curve flattened out, killing off new storage development projects and putting a lot of financial pressure on those companies that own or lease storage capacity.  But recently things have shifted, at least part of the way back to the good ole days.

The summer/winter spread currently sits at $0.63/MMBtu (April 7, 2016), the highest level since 2012, and up significantly from the past years average of around $0.30/MMBtu.  Midstream companies with available storage should be able to lock in higher prices compared to past years.  In today’s blog, we look at the situation now facing natural gas storage operators and show how recent shifts in the market may affect their returns.

USGS: fracking does not cause earthquakes. For the archives. We already knew this.

A study by the U.S. Geological Survey identifying the potential for natural and human-induced earthquakes identifies wastewater injection—not fracking—as the primary cause of increased tremors in the south central U.S.

In a first-of-its-kind study, USGS examined the potential for human-induced and natural earthquakes for a one-year period to supplement its standard 50-year forecast. Within the central and eastern U.S. (CEUS)—an area populated by 7 million people—the agency’s report said there’s a chance of damage from all types of earthquakes similar to the natural earthquakes in the high-hazard areas of California.

The maps released with the study show that east of the Rocky Mountains, much of the seismic activity is in Oklahoma, Kansas and Texas. Although this activity is sometimes attributed to hydraulic fracturing conducted by the oil and gas industry, USGS said “this process is only rarely the cause of felt earthquakes.”

According to the report, “Wastewater disposal is thought to be the primary reason for the recent increase in earthquakes in the CEUS.”

Bakken average production costs lowest among shale plays: again, for the archives; previously posted from a different source; this from Bakken Magazine:

Oil and gas industry upstream costs in 2015 were 25 percent to 30 percent below 2012 levels in the Bakken and four other onshore areas evaluated.

To better understand the costs of upstream drilling and production activity, EIA commissioned IHS to study costs on a per-well basis in the Bakken, Eagle Ford, Marcellus and Permian (Delaware and Midland basins) plays. Titled “Trends in U.S. oil and natural gas upstream costs,” the report is available here.

The period studied is from 2006 through 2015, with forecasts to 2018. Well costs in the regions studied were:

- Bakken wells costs were $7.1 million in 2014, but will drop to $ 5.9 million in 2015.
- Eagle Ford wells averaged $7.6 million in 2014, but will fall to $ 6.5 million in 2015.
- Marcellus wells will cost $6.1 million in 2015 after having an average cost of $6.6 million in 2014.
- Midland Basin wells were $7.7 million in 2014, but will drop to $ 7.2 million in 2015.
- Delaware Basin wells cost $6.6 million in 2014 and will drop to $5.2 million during 2015.

Yips. for my brother-in-law, from ESPN, the video will go viral --

Ernie Els made dubious Masters history in the opening round Thursday by scoring a 9 on the par-4 first hole -- the highest in 80 years of the tournament.

Els, 46, a World Golf Hall of Famer who has won four major championships, six-putted the first green at Augusta National after chipping from off the green to within 3 feet for what appeared to be an easy par.

It could have been worse. The Masters live scoring had it listed as a 10 all day, until officials conferred, reviewed videotape and determined that Els had taken just six putts, instead of seven. He finished with an 8-over-par 80 and is tied for 81st.