Sunday, April 15, 2018

The Market And Energy Page, Part 2, T+ 46 -- Making America Great Again -- April 15, 2018

I was going to post a number of stories at this post, but this one story is so incredibly important, it will be the only one posted.  A huge "thank you" to a reader for sending me this article.

Making America Great Again: from the Houston Chronicle -- global petrochemicals growth shifts from Middle East to Gulf Coast. This is quite a story:
For the first decade of this century, U.S. petrochemical producers, such as LyondellBasell of Houston and Chevron Phillips Chemical of The Woodlands, flocked to the Middle East, spending years developing partnerships and building massive facilities to tap cheap natural gas feedstocks to make plastics and other materials.
But now, the U.S. Gulf Coast has become the locus of global petrochemical growth, outpacing the Middle East in a shift that’s only expected to accelerate as North American shale producers siphon more natural gas from vast reserves in West Texas and elsewhere. Even Saudi Arabian companies, including the government-owned Saudi Basic Industries Corp. and Saudi Aramco, are making the shift, with plans to invest billions of dollars to expand chemical operations here and develop new partnerships with Houston and other U.S. firms.
The migration of petrochemicals manufacturing is more evidence that the Gulf Coast is becoming an energy hub rivaling the Middle East, which for a half century has played an outsized role in the global economy and geopolitics. It shows that the so-called shale revolution pioneered by Houston and Texas producers is continuing to reshape global markets, transform trading relations and lift the region’s economy, which so far has attracted more than $60 billion in petrochemical investments - an influx of capital, according to the Greater Houston Partnership, that will support tens of thousands of jobs for years to come.
The shift from the Middle East to the Gulf Coast is driven by two simple facts: Supplies of natural gas liquids such as ethane, a feedstock for petrochemicals and plastics, are dwindling to the point of shortage in Saudi Arabia and elsewhere, but growing rapidly here as drilling in the Permian Basin in West Texas and other shale plays floods the market with cheap, abundant raw materials for chemicals. U.S .ethane production is projected to increase nearly 60 percent to 2 million barrels a day by 2021, up from 1.26 million barrels a day in 2016.
And more:
That dynamic is pushing some of the Middle East’s premier energy companies to expand along the U.S. Gulf Coast with multibillion dollar projects that underscore the industry’s faith in the longevity of the shale boom. Coinciding with the recent visit of Saudi Crown Prince Mohammed bin Salman, who is leading a drive to diversify an economy long centered on oil production, Saudi Aramco announced that its Houston-based refining subsidiary, Motiva Enterprises, will make its first major foray into petrochemicals through two separate agreements with Illinois-based Honeywell UOP and TechnipFMC, which has headquarters in Houston, Paris and London.

The Market And Energy Page, Part 1, T+46 -- April 15, 2018; British Columbia Issues Permit For KMI's Trans Mountain Pipeline

Breaking news! Breaking News! British Columbia issues permit for Trans Mountain pipeline; British Columbia heads to Ottawa! Wow! [Huge thank you to reader who sent met the link.] Here's the story, linked here:
  • the $7.4-billion project requires 1,187 provincial permits: note -- that was not a typo -- the project requires 1,187 permits from British Columbia. I assume, the project requires a few permits from the province of Alberta; and, a few permits from the federal government (Ottawa)
  • so, where do we stand on the 1,187 British Columbia permits -- making progress:
  • 587 permit applications have been submitted 
  • that means the company still needs to submit 600 more applications
  • of the 587 permits the company has submitted:
    • 201 have been approved
    • 386 are under review
  • the submitted permits must align with 37 conditions outlined in BC's environmental certificate and the 157 conditions detailed int he National Energy Board's approval 
  • assumption: as the permit applications come in, I assume the BC provincial government can add more conditions, if necessary
  • by the way, had Hillary been elected president, it doesn't take a rocket scientist ...
Mexico doing the same thing as British Columbia, from Argus Media --
Mexico's indigenous consultation process is the main risk factor for energy projects.
Companies looking to develop energy and infrastructure projects in Mexico are required to participate in an indigenous consultation process prior to applying for permits related to projects that could significantly impact an indigenous community.
The energy ministry, or when relevant the transport ministry, decides when a consultation may be required. This would include if a proposed natural gas pipeline or wind farm is likely to displace indigenous people from traditional or sacred land.
The indigenous consultation is not a complexity of project development only in Mexico. It applies in any country with an indigenous population, according to the International Labor Organization's Agreement 169. But two factors have converged in Mexico that are making the issue more urgent — the prospect of the first supreme court decision on the matter, and a flood of pending projects and investments flowing from the historic 2014 energy reform. 
Argus Media failed to mention a third factor that is converging: Mexico is about to elect a two-time loser, a far left politico that does not bod well for Mexico ... or the US.

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It never quits: Sempra Energy to build a $130 million liquid fuel terminal in Mexico. Data points:
  • IEnova will construct the marine liquid fuels terminal -- remember, new restrictions on commercial marine fuel
  • location: at the La Jovita Energy Hub, port city of Ensenada
  • the terminal: will be known as Baja Refinados
  • will commence operations 2H20
  • will supply 1 million bbls (sic) of gasoline and diesel
  • will allow Chevron to utilize 50% of the facility's storage and fuel capacity
FF: books $4.2 billion charge; restates earnings, as expected; data points:
  • earnings to be released next Friday (April 20, 2018)
  • shares down 1%, after close, after rising 2.4% during the day
ETP: holds binding open season for new pipeline; data points:
  • diesel fuel pipeline
  • will connect Hebert and Midland in Texas
  • initial capacity: 30,000 bbls/day
  • will come online by 3Q20
Disclaimer: this is not an investment site. Do not make any investment, financial, job, travel, or relationship decisions based on anything you read here or think you may have read here.
Dumb and dumber: most dumassed decision in the past two weeks?
  • Trump says he wants the US out of Syrian "conflict" by the end of the year; sooner if possible
  • Assad's answer: use chemical weapons
Dumb and dumber: the most dumassed decision after the Allies hit Syria?
  • telling Trump his attack failed
Dumb and dumber: New Zealand's strategy to end global warming? Story here:
  • halt immediately any new permits for offshore oil and gas exploration
  • yeah, that will solve the "problem"
  • mostly it will push future investment overseas
  • but, I suppose, the hobbits are happy
Anadarko; completion design changes in the DJ -- from the Emergent Group -- dramatically decreasing the amount of sand in DJ completion strategies?
  • Anadarko’s original well design uses between 500 and 800 pounds of proppant per foot with a proppant per gallon water ratio above 0.50. The new well design averages near 250 pounds per foot and has a proppant per gallon water ratio below 0.25. 
  • If those ratios are based on mass (weight), here's what I'm seeing in the Bakke:
  • 9,000-ft laterals
  • 10 million gallons of water
  • 90% water (mass)
  • 10% proppant (mass): generally large sand or mesh/large sand; very little ceraic being used in wells that I've looked at; some operators are using mix of large/medium/small sand
  • 10 million lbs sand
  • so, compared to Anadarko in DJ, the Bakken:
  • 10 million lbs sand / 9,000 feet = 1,000 lbs of proppant / foot
  • ratio of proppant per gallon water: 0.10
Disclaimer: I often misread things; I often "round" numbers; I make assumptions that are often incorrect or turn out to be incorrect later.

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Global Warming
In the 15th century, the Chinese sailed a fleet of ships north from China, up to the Arctic, to the North Pole, continues over the pole, and then south to the North American continent.
[In the 15th century, in Zheng He's era] the Chinese had no concept of the North Pole as the highest point of the earthly sphere. Accordingly, when they traveled north from China to the North American continent, traversing the North Pole (the great circle route), they believed the journey was always northward.

The modern geographic understanding is that the great circle route from China to North America runs north to the North Pole, then south to North America. This concept was unknown to the Chinese.

To the Ming Chinese, "in the northward extension from the Imperial Ming" means a place beyond the North Pole. This understanding is reflected in the 1418 world map, which shows a passage through the polar ice across the North Pole leading to America [the northward passage].

According to the Dutch meteorological office, there were three exceptionally warm winters in the 1420s, which could have melted the Arctic sea ice.
And there you have it. 

From 1434: The Year a Magnificent Chinese Fleet Sailed to Italy and Ignited the Renaissance. Gavin Menzies, c. 2008.

North Dakota Oil Industry Still Studying Flaring Challenge -- April 15, 2018

See this post to see natural gas production as percent of total boe (crude oil + natural gas produced in North Dakota).

From the Director's Cut for February, 2018, data:
Natural gas production increased slightly, setting a new all-time record:

  • February: 2,102,266 MCF/day (350K boepd)
  • January: 2,071,820 MCF/day
Flaring:

  • statewide, 88% capture
  • statewide, Bakken: 89% capture
  • FBIR Bakken: 87% capture
  • ND goal: currently 85%
  • ND goal: will increase to 88% capture in November, 2018; increasing to 91% beginning November 1, 2020
Now, this, from The Bismarck Tribune:
North Dakota’s oil industry is advocating for the state to keep its current gas capture targets but make some tweaks to the policy that regulates natural gas flaring.
North Dakota oil production held flat in February at 1.17 million barrels per day while natural gas production hit a new record at 2.1 billion cubic feet per day, according to preliminary figures the agency released Friday.
Flaring decreased from 310 million cubic feet per day in January to 256 million cubic feet per day in February. Companies captured 89 percent of Bakken gas produced statewide in February, exceeding the state’s requirement of capturing 85 percent.
The state requirement is set to increase to 88 percent in November, a level regulators and industry leaders had cautioned could be difficult to meet as natural gas production is expected to continue breaking records.

Wells Coming Off The Confidential List This Next Week -- April 15, 2018

Friday, April 20, 2018:
34011, SI/NC, XTO, Serrahn 11X-5F, Siverston, no production data,
33790, drl, Crescent Point, CPEUSC Berner 5-19-18-157N99W MBH, Lone Tree Lake, no production data,
32347, SI/NC, BR, CCU Mainstreeter 7-2-30 TFH, Corral Creek, no production data,

Thursday, April 19, 2018:
32588, 1,650, CLR, Tarentaise Federal 13-19H, Elm Tree, 60 stages; 9.7 million lbs; mesh/large/medium; Tarentaise wells are tracked here; t11/17; cum 114K 2/18;
32348, SI/NC, BR, CCU Mainstreeter 6-2-30 MBH, Corral Creek, no production data,
29844, 1,789, CLR, Stangeland 4-7H1, Crazy Man Creek, Three Forks, 4 sections, 59 stages; 6.4 million lbs; t11/17; cum 81K 2/18;

Wednesday, April 18, 2018:
33789, drl, Crescent Point, CPEUSC Nelson 5-30-31-157N-99W MBH, Lone Tree Lake, no production data,
29843, 1,735, CLR, Hayes 5-6H, Crazy Man Creek, 4 sections,  t12/17; cum 76K 2/18;

Tuesday, April 17, 2018:
33228, 489, Oasis, Hagen Banks 5198 12-6 13TX, Banks, 4 sections; 50 stages; 4 million lbs, mesh/large/medium/medium ceramic, Hagen Banks are tracked here; t11/17; cum 54K 2/18;
32805, 2,225, CLR, Ryden 6-24H, Jim Creek, a nice well, 4 sections, 61 stages; 15.7 million lbs; Ryden wells are tracked here; t12/17; cum 67K 2/18;

Monday, April 16, 2018:
33376, 505, NP Resources, Mosser 143-102-10-3-1H,  Elkhorn Ranch, a nice well, Three Forks, NOS; 33 stages; 5.3 million lbs; t12/17; cum 25K 2/18;
32587, 1,587, CLR, Tarentaise Federal 12-19H2, Elm Tree; a very nice well, Three Forks B2; 42 stages; 7.2 million lbs, mesh/large/medium; 43K in one month; t11/17; cum 109K 2/18;
32269, SI/NC, BR, CCU Atlantic Express 23-19TFH, Corral Creek, no production data,
32267, SI/NC, BR, CCU Pacific Express 22-19MBH, Corral Creek, no production data,

Sunday, April 15, 2018:
32268, SI/NC, BR, CCU Pacific Express 22-19TFH, Corral Creek, no production data,

Saturday, April 14, 2018:
33013, 711, Oasis, Hagen Banks 5198 12-6 9BX, Banks, producing, Banks, 4 sections, 50 stages;  4 million lbs; mesh; large/medium, and  medium ceramic, t10/17; cum 76K 2/18;
32916, 767, Oasis, Hagen Banks 5198 13-6 10T, Banks, a very nice well; Banks, Three Forks B1; 50 stages, 4 million lbs; mesh; large/medium, and resin-coated medium, t11/17; cum 121K 2/18;