Monday, June 19, 2017

Minor Notes -- June 19, 2017

Breaking news: it's now 6:21 a.m. Central Time, and the last Donald J. Trump tweet was 13 hours ago.

Lego: If it weren't for the Lego-Maersk association I probably wouldn't care about this Reuters story.
Maersk, whose container ship and oil businesses have been struggling, announced last year that it would split up into separate companies and said it would unveil details of its structural changes by September 2018.
Market: Wow, that was fast. In an earlier post this morning I mentioned:
  • capitulation; and,
  • sector rotation
Now, this story: "funds pull back from Permian as US shale oil firms go into overdrive." From the Reuters story, data points:
  • cash, people and equipment are pouring into the prolific Permian shale basin in Texas as business booms in the largest U.S. oilfield
  • but one group of investors is heading the other way - concerned that shale may become a victim of its own success.The speed of the recovery in the U.S. shale industry in the past year has surprised oil investors after a global supply glut led to a two-year crude price slump and bankrupted many shale firms
  • eight prominent hedge funds have reduced the size of their positions in ten of the top shale firms by over $400 million, concerned producers are pumping oil so fast they will undo the nascent recovery in the industry
Liza. This is pretty cool. I've mentioned ExxonMobil's "elephant" off the coast of Guyana on two occasions:
Now today, over at Reuters some data points:
  • ExxonMobil and partners will spend $4.4 billion to develop part of the Liza oilfield off the coast of Guyana, a megaproject despite glut of oil and focus on US shale
  • this is the fifth deepwater project approved by various operators this year
  • Exxon spent nearly $7 billion earlier this year to more than double its holdings in the Permian
  • Guyana: looks good to Exxon due to its low cost of production
  • Phase One of Liza: expectations -- 450 million bbls total; 120,000 bopd
  • to come online in 2020
  • first phase: 17 wells
  • second phase: not discussed
  • Hess' share in the project: $1 billion (rounded)
Back-of-the-envelope: $4.4 billion / 450 million bbls = $10/bbl (plus, of course, what has already been spent)

Facts: this is pretty cool. At the sidebar at the right, IER suggests that "green technologies cannot survive in the marketplace without subsidies." Does anyone need more proof? Here we go again:
British power producer Drax is assessing whether to convert its remaining coal-fired power units to run on gas instead so they can compete in the country's annual capacity auction.
Drax has converted half of its Yorkshire coal plant, once Europe's most polluting coal-fired power station, to burn wood pellets but plans to switch the remaining units to biomass have stalled since the government changed renewable energy subsidies.
"One option is to repurpose the coal units to run on gas," said Andy Koss, chief executive of Drax's generation business.
But there's even more. This has been a constant theme on the blog: intermittent energy -- solar/wind -- will require additional back-up electricity, and now this in the linked article:
Drax is banking on the need for back-up electricity production capacity to complement solar plants and wind turbines and is forecasting a trebling in earnings by 2025. It is already planning to build four modern open-cycle gas turbine (OCGT) plants.

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