Tuesday, August 29, 2017

Forecast: Three More Days Of Rain; Trump Shows Up; New Forecast: Rain Threat Over -- August 29, 2017

From the AP:
With its flood defenses strained, the crippled city of Houston anxiously watched dams and levees Tuesday to see if they would hold until the rain stops, and meteorologists offered the first reason for hope — a forecast with less than an inch of rain and even a chance for sunshine.
The human toll continued to mount, both in deaths and in the ever-swelling number of scared people made homeless by the catastrophic storm that is now the heaviest tropical downpour in U.S. history.
Five million people in the metropolitan area. Five deaths directly related to the flood?

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The Apple Page
Parallel Universes

And I'm living in one, a parallel universe. Apple wants to sell 4K movies for $20 in iTunes, while film studios want $25 to $30.

See the comments at the linked article.

My comments:
  • 4K has been around for about a decade
  • wait a week or two and one can buy the Blu-Ray for $19.99 on Amazon with all the extras, and better quality than streaming off iTunes
  • wait two weeks and the movie will be on cable
  • wait a month and it will be free almost everywhere 
  • there is so much content now, I can't even begin to keep up; several seasons of the following yet to watch (and re-watch)
    • Boyle's War
    • Sherlock (Kumberbatch)
    • VEEP
    • Miami Vice
    •  Columbo
  • $7.50 for a movie is $3 too much
*****************************************
Hauntingly Haunting

I did not really care for most of this video until the top three and the honorable mention. My wife would agree about #1 -- very, very interesting back story.


Harvey -- Wasn't He An Invisible Rabbit? -- August 29, 2017

Factoids

Annual rainfall:
  • Houston: 45.28 inches
  • Portland: 44 inches
  • Seattle: 37 inches
Harvey: 50+ inches
Updates

September 2, 2017: gasoline availability continues to improve in north Texas

August 31, 2017: Colonial pipeline shut down due to Hurricane Harvey.

August 30, 2017: US crude oil inventories dropped significantly.

August 30, 2017: WTI continues to fall: prolonged shutdowns from Harvey could strand shale output -- Bloomberg.
A few more days isn’t a problem, according to Libby Toudouze, a partner at Cushing Asset Management LP. But if the Gulf Coast closures continue into and past next week, it could spur a ripple effect across the industry.
Marathon Petroleum Corp.’s Galveston Bay refinery in Texas City, with a capacity of 451,000 barrels a day, may be forced to halt production within several days because it is running out of crude, a person familiar with operations said on Monday. Its oil comes via Magellan Midstream Partners LP, which suspended use of its pipeline in the area on Sunday.
Later, 9:45 p.m. Central Time: the "Houston" story is incredible; 52+ inches of rain; category 4 hurricane; and get this: right now, on the news:
  • nine dead due to the storm (of course, more bodies will be found) but nine dead at this point in a metropolitan area of 5 million? truly incredible
  • looting? none to speak of; and Houston is not fooling around; life sentences for "burglars" during a "crisis"; minimum prison sentences a given
  • dislocated, living in shelters? 12,000. Compare to Katrina
  • no significant damage to refineries is being reported
  • an absolutely incredible story 
Original Post
 
It looks like every news outlet is finally getting to the oil story and Hurricane Harvey. Might as well try to consolidate them in one place, starting with some earlier posts:
Now, the new stories, with comments:

Harvey sends gasoline prices climbing, deepens Venezuela's suffering -- Washington Post -- August 29, 2017. This story has so many story lines, one could blog any number of posts -- but succinctly:
  • we're not in Kansas any more: folks thinking the oil sector is where it was when Katrina struck have been under the Geico Rock for the past five years
  • the Bakken shale revolution changed everything
  • the US SPR is no longer needed: we have the Permian, the Eagle Ford, the Bakken, the Marcellus, and the Utica -- just to start, and much more after that
  • gasoline prices climbing -- give me a break: 10 - 15 cents/gallon, tops. Compare this to what an OPEC embargo would mean -- $1.00 to $1.50/gallon to begin, then rationing and maybe worse
  • Venezuela suffering: oh, give me a break. Venezuela has more problems than a few VLCC's in queue off the LOOP
Finally, a way to lower CO2 emissions, by cutting electric power  -- Bloomberg has this one figured out.
  • Homes hit worse by Hurricane Harvey may not have electricity for months
  • lower utility bills for the homeowners, Bloomberg might have added
  • solar panels would not have helped
  • Jim Polson, the writer, should have a blog
Harvey's toll on energy industry shows a Texas vulnerability --
  • actually the NY Times got it wrong: it's a national vulnerability
  • the only reason the oil industry's infrastructure is located along the coast(s) of Texas and Louisiana is because no other states are willing to help out
First, they tell us that the shale industry cannot respond to a national disaster like Hurricane Harvey, now they tell that the shale boom softened the energy blow from Harvey -- CNN Money

California: some talking head on CNBC earlier today said that gas prices would go up across the US. First, as mentioned above, gasoline prices might go up 5 - 15 cents/gallon, but nothing compared to what an OPEC embargo of the 1980s would have done. But this is even more interesting: the hurricane in Texas should have no effect on gasoline prices in California. California is an island; the state doesn't get oil from Texas and the state formulates its own gasoline at in-state refineries. If the price of gasoline rises in California, someone is taking advantage of the situation.  

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Another Country Singer 

If there was ever any doubt that Linda Ronstadt was a country singer, those doubts are erased in this music video. The pedal steel gee-tar is heavily featured throughout the concert.

 
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The Poll

Tomorrow morning I could be tied up. I don't want any cheating on the poll -- in which we asked whether US crude oil supplies would increase/decrease. Survey shows:
  • yes, there will be a drawdown; the number will come in under 463.2 million bbls of crude oil: 52%
  • no, there will not be a drawdown; the number will be greater than 463.2 million bbls: 48%
Wow, talk about close.

August 30, 2017: the drawdown was huge

Ten New Permits; Eight Permits Renewed; Three Producing Wells Completed -- August 29, 2017

Active rigs:

$46.328/29/201708/29/201608/29/201508/29/201408/29/2013
Active Rigs543076194183

Ten (10) new permits:
  • Operators: Slawson (4); MRO (3); Abraxas (3)
  • Fields: Big Bend (Mountrail): Reunion Bay (Mountrail); North Fork (McKenzie)
  • Comments:
Eight permits renewed:
  • Slawson (7): four Vixen Federal permits; two Phatkat Federal permits; and, a Phoenix permit, all in Mountrail County
  • Resource Energy: an Olav permit in Divide County
Three producing wells completed:
  • 30830, 485, XTO, TAT State Federal 14X-36E, Bear Creek, t7/17; cum --  (#18797, see below)
  • 30833, 630, XTO, TAT State Federal 14X-36G, Bear Creek, t6/17; cum 17K 7/17;
  • 31487, 830, Sinclair, Martens 4-6H, Sanish, t6/17; cum 10K 7/17;
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XTO's TAT State Federal Pad

#18797 is on an 8-well pad; DUCs are now being completed.

The well:
  • 18797, 1,743, XTO, TAT State Federal 14X-36F, Bear Creek, t3/12; cum 257K 7/17;
Production profile at this post.

The graphic:



AAPL Hits All-Time High -- August 29, 2017

Remember, yesterday I posted that every NYPD will get an iPhone and every NYPD squad car will get an iPad.

Hoo-ahh!

Meanwhile, Warren Buffett just made a quick $12 billion on a clever Bank of America investment back in 2011. From CNBC:
  • Warren Buffett's Berkshire Hathaway will exercise warrants in Bank of America allowing it to acquire 700 million common shares at an exercise price of $7.14 each, or about $5 billion
  • at Thursday's closing price, that stake is worth more than $17 billion
  • Berkshire will also become the bank's largest shareholder. 
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LOL

Yesterday I said I was waiting for Newsweek to report on the footwear that Melania would be wearing to Texas today. USA Today provided the headline and the story:


 Looks like a scene out of Top Gun. LOL.


One reader noted that until "they" read the stories, no one "saw" the baseball cap she was wearing. LOL.

For Oil Bulls, A Nice Report From IEA -- By The End Of 2018, Global Demand -- 100 Million Bbls/Day -- August 29, 2017

Kroger's re-opened in Houston.

That puts things into perspective. And the video shows no riots inside Kroger's.

That speaks volumes.

Now, back to oil.

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Global Crude Oil Demand Growing

At least that's what the IEA is saying (dynamic link?) But how the agency says it is certainly confusing. I won't add to the confusion by trying to re-write. I will simply "cut and paste':
  • new data for non-OECD countries for 2015 reduces global oil demand by an average 330 kb/d in 2015-2018. For 2017, growth has been revised up to 1.5 mb/d, with demand reaching 97.6 mb/d
  • in 2018, growth slows slightly to 1.4 mb/d when demand will be 99.0 mb/d. In 4Q18, demand will reach 100.1 mb/d
  • in July, global oil supply increased by 520 kb/d versus June. It was the third consecutive monthly increase. Global supply is up 500 kb/d on a year ago
That first bullet is very, very confusing. Non-OECD oil demand drops a little, but OECD (?) demand grows? So, who wudda thought? 100 million bopd -- demand? I thought wind, solar, EVs, coal were the answer.

Global oil supply: up for the third consecutive month. That OPEC cut (wink, wink) is really working, huh?

Their paragraph on re-balancing is easier to read:
The re-balancing of the oil market desired by the leading producers has been a stubborn process and it takes time for the numbers to confirm what many observers instinctively feel has already happened.
Sure enough, new data suggests that in 2Q17 global stocks fell by 0.5 mb/d and preliminary data for July, particularly in the United States where stocks fell by 790 kb/d, is supportive.
Even so, we must not forget that they are falling from a very great height in volume terms. At the end of 2Q17, OECD commercial stocks, which are the component of the global total for which we have the most visibility, stood at 3,021 million barrels, still more than 219 million bbls above the five-year average although they have now fallen below 2016 levels.
As an exercise, if OECD stocks fell by 0.5 mb/d until the end of 1Q18 when the current output agreements expire they would still be about 60 mb above the five-year average.
And it should be pointed out: the five-year average includes that "very great height in volume" that occurred during the surge. 

Hurricane Harvey "Tests" US Shale -- The WSJ -- August 29, 2017

From today's WSJ: Harvey’s widespread destruction tests U.S. shale. Archived.
The tropical storm is the biggest to hit the sector since shale drilling took off a decade ago; production may be slow to bounce back.

Before Harvey made landfall as a hurricane Friday, many big shale producers in the Eagle Ford shale fields near Corpus Christi, Texas, shut down their oil and gas wells, and initial estimates for lost production were between 400,000 and 500,000 barrels a day.
As the hurricane’s widespread devastation has become clearer, several analysts say it is almost certain that much, if not most, of the region’s 1.4 million barrels a day of output is shut down.

Not mentioned:
  • the Bakken
  • East Coast refineries
  • mid-continent refineries
  • CBR
I thought this interesting in the article:
Restarting wells may not guarantee that they flow at the same rate as before the storm, said Tony Sanchez, chairman of Eagle Ford operator Sanchez Energy Corp. , in an interview before the storm.
While Mr. Sanchez said he didn’t expect the outages to be too extensive or last too long, he said that on a technical level he fears that shale wells, once shut off, could lose pressure.
“It’s not just a matter of flipping a switch,” he said. “There is significant risk in those wells not coming back to previous levels.”
Maybe I'm missing something, but that does not seem to be a problem in the Bakken. In fact, more often than not, it seems, taking a well off-line for a few months is beneficial. 

The article certainly raises the issue of the need for "redundancy."

It will be interesting to see how high gasoline prices rise in New York state. I assume there will be minimal impact on prices in California.

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The Evolution of Beauty: 
How Darwin's Forgotten Theory of Mate Choice Shapes the Animal World -- And Us
Richard O. Prum
c. 2017
DDS: 591.56DRU 

Darwin's first great book: On the Origin of Species by Means of Natural Selection: "Darwin's dangerous idea.

One problem: the peacock's tale.

Darwin's "really dangerous idea" was his second book: The Descent of Man, and Selection in Relation to Sex.

Baculum.

The author argues that theologians have it wrong. Eve was not made from an Adam's rib. Count them: men have 12 pair of ribs, just like women. 

Chimney Butte Oil Field

The Hartman wells have been updated.

According to a reader, two years ago:
The Hartman wells in Dunn County were part of a density test by CLR where they placed 6 new wells next to 2 existing wells. The two 3rd bench wells represent the last time he looked at the wells at that time: a total bust with one and the second 3rd bench well was the most productive of the 6 new wells
I was remiss in updating Chimney Butte oil field.

Most recently, Chimney Butte ranked #2 among all major Bakken oil fields in production increase, on a percentage basis, month-over-month. 

Chimney Butte oil field is a relatively moderately sized oil field in the Bakken:


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Permits
(Data yet to be updated)



2017 (as of August 29, 2017)
33248, 3,382, MRO, Hondo 34-12TFH, Chimney Butte, t6/17; cum 49K in 29 days;
33247, 2,774, MRO, Mittelstadt 34-12H, Chimney Butte, t6/17; cum 75K in 36 days; including 70,261 blls in 30 days in June, 2016;


2016
None

2015
32094,
32094,
32093,
31803,
31802,
31801,
31800,
31799,
31512,
31511,
31510,
31509,
30668,

2014
29478,
29477,
29476,
29475,
29474,
29473,28418, 2,110, MRO, Cole USA 24-11TFH, Chimney Butte, 34 stages, 5.8 million lbs; t5/15; cum 153K 6/17;
28417, MRO,
28416, MRO, 
28415, 2,143, MRO, Karmen USA 44-11TFH, Chimney Butte, t5/15; cum 139K 6/17;
28238, 838, MRO, Hollingsworth 24-22TFH, Chimney Butte, t9/14; cum 130 6/17;
28237, 949, MRO, Mattie 14-22TFH, Chimney Butte, t9/14; cum 142K 6/17;
28231, 2,297, MRO, Elmer USA 14-11TFH, Chimney Butte, t4/15; cum 165K 6/17;
28005, 986, MRO, Meehl 44-24TFH, Chimney Butte, t7/14; cum 102K 6/17;
27582, 1,426, MRO, Gorey 44-10TFH, Chimney Butte, t7/14; cum 98K 6/17;
27581, 2,342, MRO,Viani USA 44-10H, Chimney Butte, t6/14; cum 187K 6/17;
27568, 1,797, MRO, Lewis 44-22H, Chimney Butte, t6/14; cum 161K 6/17;
27567, 1,448, MRO, Hellerud 14-23TFH, Chimney Butte, t6/14; cum 122K 6/17;
27560, 2,154, MRO, Friederich 34-24H, Chimney Butte, t7/14; cum 174K 6/17;
27559, 2,052, MRO, Harry 34-24TFH, Chimney Butte, t7/14; cum 133K 6/17;
27558, 1,749, MRO, Samann 34-24H, Chimney Butte, t7/14; cum 130K 6/17;
27455,
27454,
27453,
27452,
27451,
27450,

2013
27348, 1,155, MRO, Winston 34-10TFH, Chimney Butte, t7/14; cum 111K 6/17; recently, a slight bump in production; subtle;
27347, 1,827, MRO,Marshall 34-10H, Chimney Butte, t6/14; cum 159K 6/17;; steady decline;
27346, 1,713, MRO, Cuskelly 34-10TFH, Chimney Butte, t7/14; cum 106K 6/17; steady decline;
27077, 1,342, MRO, Vollmer 24-24TFH, Chimney Butte, t7/14; cum 114K 6/17; steady decline;
27074, 1,689, MRO, Adamson 14-24TFH, Chimney Butte, t7/14; cum 129K 6/17: steady decline;
26018, TA/30, MRO,
26016, 2,084, MRO, Schaefer 34-23TFH, Chimney Butte, t2/14; cum 161K 6/17; steady decline; stable;
24864, 1,815, MRO, Kupper 24-10TFH, Chimney Butte, t4/13; cum 225K 6/17; steady decline; stable;
24841,
24839,
24836,
24835,

2012
23606,
23605,
23604,
23213,
23212,
22773,
23603,

2011
21744,
21569,
21524,
20692, 683, MRO, Dawn Kupper 31-15H, Chimney Butte, t10/11; cum 264K 6/17; nice bump, 10/14; recently off line for a short period; no real change in production;
20548, 356, CLR, Candee 2-9H, Chimney Butte, t3/12; cum 247K 6/17;
20547, 744, CLR, Kukla 2-16H, Chimney Butte, t4/12; cum 218K 6/17; huge well; steady decline;
20546, 813, CLR, Candee 3-9H, Chimney Butte, t4/12; cum 262K 6/17;
20544, 1,301, CLR, Kukla 3-16H, Chimney Butte, t4/12; cum 386K 6/17; huge well; steady decline;

2010
20233, 947, MRO, Marlin 44-12H, Chimney Butte, t6/11; cum 144K 6/17; steady decline; stable; off line 4/17 - 6/17; now back on line -- re-frack?
19375, AB/308, MRO, Gertrude Tuhy 34-24H, Chimney Butte, t3/11; cum 47K 10/15;
18993, 884, MRO, Rosa Benz 44-23H, Chimney Butte, t4/11; cum 194K 6/17; steady decline; stable;

2009
18060, 626, MRO, Darvey Klatt 44-22H, t3/10; cum 185K 6/17; off-line for over two years; steady production; candidate for re-fracking;

2008
None.

MRO wells from prior 2008
17333, 356, MRO, Harold Benz 24-24H, Chimney Butte, t9/08; cum 290K 6/17; huge bump 7/14;
17311, 367, MRO, T. Kupper 14-11H, Chimney Butte, t10/08; cum 197K 6/17; huge bump, 6/15;
17176, 482, MRO, Ted Kupper 14-23H, Chimney Butte, t7/08; cum 332K 6/17; huge bump, 9/14;
17097, 421, MRO, Ladonna Klatt 24-22H, Chimney Butte, t6/08; cum 366K 6/17; huge bump, 12/14;
16940, 299, MRO, Kupper 43-10H, Chimney Butte, t4/08; cum 278K 6/17; huge, huge bump, 9/14;
16908, IA/248, MRO Marlin 14-12H, t3/08; cum 142K 6/17; comes off line regularly; off line now as of 5/17;
16811, 77, MRO, T Kupper USA 34-11H, Chimney Butte, t4/11; cum 193K 6/17; huge bump 6/15;
16626, 289, MRO, Kupper 34-10H, Chimney Butte, t9/07; cum 313K 6/17; huge bump 7/14;
16366, 130, MRO, Klatt 31-14H, Chimney Butte, t8/07; cum 103K 6/17; nice bump 9/14;
16180, 128, MRO, Marlin 24-12H, Chimney Butte, t8/06; cum 258K 6/17; nice bump 5/17;

Topsy Turvy: Korea; Harvey; Trump; Consumer Confidence Index Jumps -- "May You Live In Interesting Times" -- August 29, 2017

Active rigs:

$46.628/29/201708/29/201608/29/201508/29/201408/29/2013
Active Rigs553076194183

RBN Energy: oil producers plot strong investment, output growth despite price headwind.
Hurricane Harvey and major flooding in Houston and other areas may affect energy markets and lead the 21 exploration and production companies in our Oil-Weighted Peer Group to readjust their 2017 investment programs. But in the weeks leading up to the Lone Star State’s most catastrophic weather event in decades, these E&Ps remained committed to their sharply accelerated 2017 capex plans.
Their updated guidance issued with first-half 2017 earnings releases reveal a 44% increase in 2017 capital spending over 2016’s level to $26.5 billion, only a 2% reduction from the $27 billion initially budgeted for this year. The peer group also stayed confident in the long-term profitability of the major U.S. resource plays, which are receiving 80% of their 2017 capex, despite investor concern about lower prices that have triggered a 23% decline in the median enterprise value per barrel of oil equivalent for the Oil-Weighted peers since December 2016. Today we continue our review of updated capital spending plans by 43 U.S.-based E&Ps, this time with a look at companies that focus on oil.
Bakken 2.0: one year out, new Bakken wells are producing more than they were producing after the initial frack.

From the RBN Energy post linked above, regarding the Bakken:
Whiting Petroleum announced the largest reduction in capital spending — $148 million, or 14%, to $912 million (blue rectangle in Figure 1) — which was largely triggered by a decline in net cash from operating activities to $111 million in the second quarter of 2017 from $161 million in the same period in 2016. The company is dropping the rig on its Redtail field in the DJ Basin, where production declined to 6% of total output from 8% at year-end despite the allocation of 40% of total capex. The company cut its production growth forecast by 3% because of the sale of non-operated Williston Basin properties, but it still projects 14% output growth between the first and fourth quarters of 2017 because of enhanced completion techniques on its remaining core Bakken fields.

Continental Resources and Hess Corp. each reduced its 2017 capital budget by $100 million but they also boosted their production forecasts by a total of 4.6 MMboe
WTI: operators are contractually committed to provide a certain amount of oil to refiners. If the spot price of oil drops significantly, operators can buy "cheap oil" on the open market to meet their contracts, keeping their own oil in storage underground.

Utilities: CNBC reporting that utilities buck trend, move higher; utilities set record intraday high.

Consumer confidence index: beats expectations, 122.9 vs 120.7. The present situation index added nearly six points to 151.2, near a 16-year high. From CNBC, I may have mis-heard/mis-reported, but I think that's what I heard. Here's the story over at Yahoo!News.
US consumer confidence jumped for the second straight month in August, surpassing expectations amid buoyant feelings about the present situation.
However, the survey showed consumers' are not expecting the economy to improve much in the short-term.
The Consumer Confidence Index jumped nearly three points to 122.9, while the present situation index added nearly six points to 151.2, near a 16-year high. But the expectations index was up just a point to 104, after jumping more than three points in July.
Economists had expected consumer sentiment to remain about flat from July at 120.3. The index is still down from a high recorded in March of 124.9 points.