Wednesday, March 16, 2016

Happy Birthday, Katie Ledecky -- March 16, 2016

Birthday: March 17.

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The Bakken Goes Boom

Book released February 26, 2016. At Amazon.com.

Story here.
“The neat thing about this book is that it’s not just academics talking to each other,” said Conway.
“It’s journalists, poets and artists, too.  Art and poetry can open up a different world for us which is why everyone whose life is affected by oil — and that means everyone, not just North Dakotans — should read this book.”
The book features contributions from national and local authors who each offer distinct visions of the challenges and opportunities of the Bakken oil boom in the context of both Western North Dakota and the world, and  captures a fascinating moment in the history both of the state and of global oil production.
Books On Broadway, in Williston, has this book in stock.

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The Amazon Halo Effect?

FedEx shares surge after reporting better-than-expected earnings. Adjusted earnings came in at $2.51 a share, handily beating Wall Street's projections of $2.34 a share and higher than $2.03 a share it reported a year ago.
"Our strong financial performance was driven by increasing demand for our broad portfolio of FedEx business solutions which helped increase revenue and adjusted profit for the corporation," CEO Frederick Smith stated.
The Memphis, TN-based company also benefited from cheaper fuel and currency exchange rates.
Would it be cheaper for Amazon to buy FedEx or build its own global delivery system?

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Trouble in Paradise?

Bloomberg is reporting:
Ricardo Reyes has left Tesla Motors Inc. after less than 18 months as vice president of global communications just as the electric-car maker prepares to sell its most important new model.
A Tesla spokesman confirmed that Reyes has left the company. He had the top communications job from November 2014 until recently. Reyes declined to comment on his departure.
The top communications job is vital to Tesla because, unlike other automakers, the electric car maker doesn’t spend millions of dollars on traditional advertising. The company instead relies on media coverage by courting automotive and technology press and has also gotten attention thanks to the savvy Twitter activity of Chief Executive Officer Elon Musk, who has 3.6 million followers on the site.
 Perhaps to spend more time with his family.

John Kemp's Weekly Energy Tweets Have Been Posted -- March 16, 2016

If the spirit moves me, I may post some of them tomorrow. Bottom line: the numbers are changing quickly (and in a positive direction for the oil and gas industry). John Kemp can be followed at Twitter.

Which reminds me. Recently (yesterday?) there was an article in The Wall Street Journal about the problems folks have with Twitter. I did not understand Twitter for the longest time, but without question, it is one of the best tools out there. Lots of advice could be given, but I think if folks "study" Twitter for a short period of time, they can make it a very, very useful tool.

One suggestion: multiple Twitter accounts if that's possible. I only have one Twitter account but I can imagine that having three or four Twitter accounts could be very useful. Sort of like having multiple e-mail addresses.

Okay, I'll post one John Kemp graphic. I still think it's possible the US could break the 10 million bbls of oil used in one day sometime this year.


Well, Isn't This Interesting! -- Maybe OPEC/Russia Are Getting Ready To Talk -- March 16, 2016

Updates

March 17, 2016: one SeekingAlpha contributor is calling this an emergency meeting with this summary:
  • a Saudi source confirms emergency meeting
  • 15 OPEC and non-OPEC producers to attend
  • the Iran "problem" appears to be solved
  • producers' talk can support prices
  • they may even try for a cut to get relief
Original Post
 
Tweeting now: Crude oil prices rallying after SaudiArabia, Kuwait, Qatar say they might limit oil output even if Iran doesn't.

Tweeting now: Qatar says the meeting is scheduled for April 17, 2016.

I posted this yesterday:
No specifics, just reading the tea leaves. Most likely the first meeting will end with concessions to Iran and then working from there, with more definitive commitments at the next OPEC meeting in June.
Things seem to be moving quickly. 

In round numbers, Iran is producing somewhere around 3.5 million bopd. Iran says they won't talk about freezing production until they get to 4.0 million bopd. Some analysts don't think Iran can get to 4.0 million bopd any time soon. Whether they can or can't seems to be a red herring. When the world is producing/consuming about 90 million bopd, a half-million bopd delta is hardly worth quibbling about. Or maybe I'm missing something.

I wonder if they will invite President Obama to the meeting. He usually has something useful to say.

Growth Of US Crude Oil Inventories Slumps -- March 16, 2016

Tweeting now: US crude inventories +1.3 million bbl last week, EIAgov says. WSJ-surveyed analysts had estimated +3.3 million bbl.

This is a huge drop in the "growth" of US crude inventories in just the past three weeks. We should see the charts tomorrow.  This was the growth just a few weeks ago, posted March 2, 2016:
U.S. crude inventories jumped by 9.9 million barrels last week, the American Petroleum Institute (API) said on Tuesday, much more than the 3.6-million-barrel increase analysts had forecast.

Despite Growing Global Economy, Global CO2 Emissions No Higher Than They Were In 2013 -- March 16,2 016

From  Oil & Gas Journal:
Emissions of carbon dioxide remained unchanged for the second year in a row in 2015 while the global economy continued to grow, according to preliminary data from the International Energy Agency.
CO2 emissions totaled 32.1 billion tonnes last year, about their level since 2013.
EIA said electricity generated by renewable energy “played a critical role.”
Renewable energy accounted for about 90% of new electricity generation in 2015, IEA said. Of that increment, wind accounted for more than half.
Apparently no credit is given for the #1 economy in the world switching from coal to natural gas. 

Considering how little intermittent energy accounts for total global energy, I would like to see a peer-reviewed study to back up the IEA's contention that the "good news" is due to wind and solar energy.

Saudi Arabia Preparing To Monetize Assets? Top International Story Of The Week? -- March 16, 2016

Updates

March 11, 2018: Shell announces change of plans. After the "separation," Shell had planned to permanently decommission the Convent refinery. Shell has now decided to do a major overhaul of that refinery and keep it running for another five years. 

May 26, 2017: update here. Saudis to spend $18 billion along the Texas coast; Motiva remains its crown jewel in the states.

April 1, 2017: Saudis take 100% control of America's largest oil refinery. The US should now nationalize the refinery. LOL. And, oh, by the way, the "deal" closed under the Trump administration but it was approved and signed under the Obama administration. Saudi Arabia is already America's second-largest source of crude, behind only Canada. The US imported 1.3 million barrels of Saudi crude a day in February, up 32% from last year, according to the Energy Information Administration.

March 8, 2017: pretty much finalized -- split is complete, after a 19-year joint venture. Data points:
  • the joint venture was called Motiva
  • Royal Dutch Shell and Saudi Arabian Oil (Saudi Aramco) 
  • finalized
  • Motiva operates three refineries along US Gulf Coast 
  • Aramco will pay $2.2 billion to Shell
  • Aramco will assume almost all of Motiva's debt of $3.2 billion (includes Shell's share of $1.5 billion)
  • Shell will assume only $0.1 billion in net debt
  • motive for deal: allows Saudi to expand global refining operations
  • Shell needed to reduce debt following acquisition of BG Group for $47 billion  
  • Saudi will take full control of the Motiva Enterprises legal identity and the 600,000 bopd Port Arthur refinery in Texas
  • Saudi will also take over 24 distribution terminals along with the exclusive license to use the Shell brand for gasoline and diesel sales in Texas and other Southeast and Mid-Atlantic markets
  • Shell will gain complete ownership of Louisiana Refining System consisting of 235,000 bopd Norco refinery as well as 230,000 bopd Convent refinery
  • Shell will retain 11 distribution terminals along with the Shell branded markets in Florida, Louisiana, and the US Northeast
September 12, 2016: Saudi Aramco bidding for LyondellBasell refinery in Houston Ship Channel; capacity 270,000 bopd; would increase Saudi's crude oil refining capacity by 50% along the Gulf coast. 

March 20, 2016: USA Today -- Saudi now owns largest refinery in the US

March 18, 2016: after split, Saudi Aramco wants to buy more US refineries. Reuters is reporting:
Saudi Arabia's national oil company wants to buy more U.S. refining and chemical plants to expand its footprint in the world's largest energy market once the break-up of its joint venture with Royal Dutch Shell Plc is complete.
Ending an often rocky nearly 20-year relationship, Shell and Saudi Aramco announced on Wednesday plans to break up Motiva Enterprises LLC after almost two decades, dividing its assets and leaving Aramco with one plant, the nation's largest crude oil refinery, in Port Arthur, Texas.
Officials from Saudi Refining, the downstream arm of Aramco, told employees following the announcement that the state-owned firm was intent on buying more assets once the Motiva break-up is finished.
This would make sense:
  • monetizing this refinery asset, would provide seed money for buying additional refineries
  • Saudi looking for refinery access in the US
  • it's easier to buy refineries than to build new refineries in the US, although it begs several obvious questions
Original Post
 
This seems like this will be a huge story. It may be bigger than I realize or many realize, for a number of reasons. I will probably list this as a top international story when I compile the top stories for the week.

Motiva Enterprises, LLC, is a huge refinery operation along the US gulf coast, a 50-50 joint venture between Shell Oil Company and Saudi Refining (controlled by Saudi Aramco). The main reason US imports Saudi oil is to supply this enterprise.

According to wiki, this date, Motiva Enterprises consists of:
  • three (3) oil refineries in the gulf coast region of the US
    • a 600,000 bopd refinery in Port Arthur, TX
    • a 235,000 bopd refinery in Convent, LA
    • a 240,000 bopd refinery in Norco, LA
  • on May 25, 2012, Motiva completed its expansion of the Port Arthur refinery to a capacity of 600,000 bopd; this made it the largest refinery in NA and the fifth largest in the world
  • marketing outlets include 7,600 Shell-branded service stateions
It is being announced that Saudi and Shell will "separate" and each will hold 50% of the Motiva Enterprises. At Oil & Gas Journal:

Saudi Refining Inc (SRI) will retain:
  • the Motiva name
  • 100% ownership of the 600,000 bopd Port Arthur, TX, refinery
  • retain 26 distribution terminals
  • maintain an exclusive, long-term license to use the Shell brand for gasoline and diesel sales in Texas, the majority of the Mississippi Valley, the US southeast, and the US mid-Atlantic markets
Shell will assume:
  • sole ownership of the 235,000 bopd Norco refinery
  • sole ownership of the 242,250 bopd Convent refinery (Motiva previously announced this refinery will be integratedto create the Louisiana Refining System (LRS)
  • the distribution terminals, as well as Shell-branded markets, in Florida, Louisiana, and the US northeast
Note: the numbers are at slight variance to the wiki source.

To keep this simple: in the break-up, Saudi keeps the Port Arthur, TX, refinery, and Shell gets the two refineries in Louisiana.

Shell owns a co-located petrochemical plant at the Norco refinery.

More at the link.

The reason this seems to be a huge story is this: I don't think anyone ever imagined that Saudi would start monetizing assets. This suggests that a) they are in deeper financial difficulty than "we" realize; and, b) unlike other downturns in the oil industry, Saudi does not see their problems as short term.

Again, Saudi can't live on $60 oil. The US shale industry will be thrown a lifeline at $40; will survive at $50; and may begin to thrive again at $60. For Saudi, $60 oil only slows the hemorrhaging of their cash reserves.

In addition to this, Saudi has announced that its government ministries will cut spending for this year by 5%.

In the past 24 months (I forget exactly when), Saudi canceled/deferred huge solar energy projects because they couldn't handle the cost.

In The Bakken: Permits Expiring And Permits Being Cancelled; No DUCs Being Completed -- March 16, 2016

There are no wells coming off the confidential list Thursday and only well coming off the confidential list Friday.

Active rigs:



3/16/201603/16/201503/16/201403/16/201303/16/2012
Active Rigs31111190185205

Three (3) new permits:
  • Operator: Whiting
  • Field: Epping (Williams)
  • Comment: the new permits are for a 3-well pad and appear that they will be sited north to south, which seems strange based on siting of other wells in this area; I've recently seen another example of this; not sure what it means, but my imagination runs wild.
Expired permits:
I only checked one, but it appears that 14 Jersey / Jersey Federal permits have expired, CLR permits, #27878 - #27884, inclusive; #27892 - #27898; in addition to these 14 permits, it appears a number of other permits have also expired, including two Newfield permits and three SM energy permits (Stenberg wells, McKenzie County)
Nine (9) permits renewed, including --
  • BR (4), a Rollacleetwood, a Cleetwood, a Curtis, and a Saddle Butte, all in McKenzie County
  • Enerplus (2), a Saturn permit and a Venus permit in Dunn County
  • Enduro (2), one in Bottineau County, one in Renville County
Permits cancelled:
  • Whiting (2) - P Berger permits in Williams County
  • Triangle (1) - a Dwyer permit in McKenzie County
  • Thunderbird, a Lange permit in McKenzie County 
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The Schaffer/Gilfer Wells

February 5, 2017:
Although the pumpers will be aligned in a different orientation (north/south), the horizontals will run the same north-to-south direction as the neighboring P Peterson wells:
  • 32622, drl, Whiting, Schaffer 21-15-HU, Epping, 2560-acre spacing; BH - 224 FSL 236 FEL SESE 21-155-99; middle Bakken;
  • 32621, SI/NC, Whiting, Gilfer 21-15-TFHU, Epping, 2560-acre spacing; BH - 224 FSL 214 FWL SWSW 22-155-99; Three Forks B1;
  • 32620, SI/NC, Whiting, Gilfer 21-1-H, Epping, 1280-acre spacing; BH - 224 FSL 764 FWL SWSW 22-155-99; middle Bakken;
Update on production of the four-well pad 500 feet to the east (the P Peterson wells are tracked elsewhere):
  • 26564, 1,878, Whiting, P Peterson 155-99-3-15-22-13H3, Epping, t5/14; cum 145K 10/18;
  • 26565, 1,516, Whiting, P Peterson 155-99-3-15-22-14H, Epping, t5/14; cum 138K 10/18;
  • 26566, 1,271, Whiting, P Peterson 155-99-3-15-22-14H3, Epping, t5/14; cum 115K 10/18;
  • 26567, 1,566, Whiting, P Peterson 155-99-3-15-22-15H, Epping, t5/14; cum 178K 10/18;
Updated graphic:


Original Post
Graphic of the proposed site for the Schaffer pad:


CNG News From Texas, UPS -- March 16, 2016

Huge news -- one has no idea how often I've wondered why we're not hearing more stories like this. A huge "thank you" to a reader for sending me this, from Houston bizjournal:
Atlanta-based United Parcel Service Inc. will build 12 compressed natural gas (CNG) fueling stations for a new fleet of trucks, some of which will be located in four cities across Texas.
In addition to the stations, UPS will also deploy 380 new Class 8 trucks — 18 wheelers or semis — as part of a $100 million investment in cleaner fuel.
UPS is working toward a goal of logging one billion miles driven by alternative-fuel vehicles by 2017. The shipping company's current alternative-fuel fleet comprises 6 percent of its total fleet.
In February, UPS expanded its agreement with California-based Clean Energy Fuels Corp.  to use up to 500,000 gallon equivalents of renewable liquefied natural gas annually in Texas. UPS stations in Houston and Mesquite will dispense the RLNG to a fleet of about 140 UPS tractors.
If one reads the article, one can finally understand why the USPS never went to CNG and it never will.

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The Hypocrisy Page
or
The Perfect Bumper Sticker For The 2016 General Election

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Easy, Easy For GOP

Regarding President Obama's Supreme Court nomination, some data points and comments:
  • it is now customary for the president's first nomination to be borked
  • this nomination is President Obama's sacrificial lamb
  • GOP will get wobbly; 75% chance Senate will consider the nomination
  • however, if the Senate does not consider this nomination, the Senate will not consider anyone President Obama nominates
  • if the Senate leadership does not invoke the "Biden Rule" on Supreme Court, I will be quite distraught
  • my hunch: he will be confirmed in late November (2016), early December after some theatrical grandstanding (the GOP won't want a Hillary nomination; and the GOP won't trust a Trump nomination)
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A Note for the Granddaughters

I always get on my bike from the left side. Never, never, never do I get on from the right side. Except twice, that I recall. It's awkward, and I'm prone to losing my balance when getting on from the right side.

This morning, because my bike was left overnight on the patio, I was on the grass when I got on. For some inexplicable reason, I decided to get on from the right side. The bike was oriented to go downhill, and the lawn was disrupted by dozens of two-inch to four-inch tree roots that the kids trip over every day running through the backyard. What could possibly go wrong?

I finally "recovered" from the feeling of nausea about a half-mile down the road. LOL.

But I made it to Starbucks in, otherwise, great shape.

The Morning After Missouri; GDP Forecast Drops On Heels Of Dismal Retail Sales -- March 16, 2016

Active rigs:


3/16/201603/16/201503/16/201403/16/201303/16/2012
Active Rigs30111190185205

RBN Energy: propane stocks.

Yesterday, dismal retail sales for February were reported, and worse, retail sales for January were revised downward. I was immediately curious how this would affect "GDPNow." It certainly did. The latest GDPNow report was dated yesterday, March 15, 206:
The GDPNow model forecast for real GDP growth (seasonally adjusted annual rate) in the first quarter of 2016 is 1.9 percent on March 15, down from 2.2 percent on March 9. The forecast for first-quarter real consumer spending growth fell from 3.3 percent to 2.7 percent after this morning's retail sales report from the U.S. Census Bureau.
It's been interesting to follow Obama-Putin chess match these past few months. Updates here

Politics: it appears Cruz, Rubio, and Kasich really mismanaged Missouri.

More politics: The New Times has an op-ed -- will the Democrats ever face an African-American revolt? I can't believe anyone -- especially The NY Times is asking this question. The answer is a resounding no. At best, African-American simply won't turn out to vote. Maybe that's all we can expect from a revolt.
An insurrection now threatens the future of the Republican Party — an insurrection of white working class voters who have been among the party’s most loyal supporters since the civil rights movement of the 1960s. These men and women felt that they lacked an effective political voice, until they heard the siren call of Donald J. Trump.
Could the Democratic Party face a comparable revolt?
Beginning with the administration of Lyndon Baines Johnson, African American voters have provided Democrats with their margin of victory in elections at every level across the nation, year after year.
How have African-American voters been faring over all? Badly. The Democratic debt to black voters is immense, and the party has not paid up.
There is no evidence yet of a political rebellion parallel to the one taking place in the Republican Party, despite the fact that poor black Americans are having a much tougher time than the white working class Republicans flocking to Trump.