Thursday, April 19, 2018

"The Kraken" Pads -- Epping Oil Field -- April 19, 2018

NDIC reports permits for two Kraken Operating pads in Epping oil field. If I'm not misreading the permits, one "The Kraken" will run five horizontals from the north to the south in the same two sections as another "The Kraken" which will run six horizontals from the south to the north in those two sections.

The graphic:



The wells: pending (April 17, 2018; April 18, 2018, daily activity reports) --
34805,
34806,
34807,
34808,
34809,
34810,

34793,
34784,
34795,
34796,
34797,
34798,
34799,

The completed wells to the east, in Brooklyn oil field, are CLR's Mildred wells.

Eight New Permits, But That Was About It -- April 19, 2018

Active rigs:

$68.264/19/201804/19/201704/19/201604/19/201504/19/2014
Active Rigs59502993188

Eight new permits:
  • Operators: Kraken Operating (5); Nine Point Energy (3)
  • Fields: Epping (Williams); Squires (Williams)
  • Comments: Kraken Operating has permits for another 5-well Kraken pad in NWNW 13-155-99; Nine Point Energy has permits for a 3-well Erickon pad in SWSW 26-155-102
Four permits renewed:
  • Sinclair: four Forest USA permits, McKenzie County
One permit canceled: Crescent Point Energy, one CPEUSC Manchuk permit in Williams County

A Reader Brings Up A Good Point -- How Low Will It Go? -- April 19, 2018

Updates 

April 20, 2018: first two weeks in April, 2018 -- in the Twin Cities (Minnesota) -- coldest on record. Just not enough atmospheric CO2 in the upper midwest. 

April 20, 2018: from the Chicago Tribune, why some readers feel NG storage will continue to fall at least for another week --



April 20, 2018:




Original Post



Making America Great Again! The Federal Government Cedes Control On CCS To North Dakota -- April 19, 2018

Don sent me this story some weeks ago. I did not post it at the time, I don't think. Can't remember. If I did not post it, I don't remember why. Maybe I was very busy. Whatever.

Here it is now, sent to me by another reader: the EPA -- the federal government, wow -- approves North Dakota's request to manage its CSS program! Data points:
  • the State of North Dakota felt that it (the state) could "implement and enforce" its own Class VI Underground Injection Control (UIC) program; and, requested permission to do so
  • oh, yes, now I remember, I did do a google search to learn about the UIC program and then moved on
  • Class VI UIC: long-term storage of CO2 captured from industrial and energy-related sources
  • generally referred to as CCS: carbon capture and storage
  • 2016: the state awarded almost one-half million dollars to Red Tail Energy and the EERC (UND) to study CCS at Red Tail Energy's ethanol manufacturing facility near Richardton, ND, to reduce the carbon footprint associated with ethanol production
Now, I remember why I did not post it (if, in fact, I did not post it): the press release exceeded the acronym/sentence ratio allowed by the blog's editor.

In short hand, this is how the above data points would have looked:
  • EPA grants ND I&E of Class VI Underground Injection Control (UIC)  
  • Class VI UIC: LTS of CO2 from I&ER sources
  • Class VI UIC: CCS
  • 2016: ND awarded $490K to Red Tail Energy & EERC (UND) to study CCS at RTE's EMF near 58652 to reduce the CF associated with EP
Comment: I am amazed that the federal government would trust the state of North Dakota to "implement and enforce" CCS. Making America great again!

By the way, it is my understanding that President Trump is in favor of carbon capture and storage; but he is adamantly against carbon capture and release.

Later: my bad. A reader informed me that President Trump has not tweeted on carbon capture and release. Trump's concern with "capture and release" has to do with illegal immigrants along the southern border.

GDP Now -- 1Q18 -- Forecast -- April 19, 2018

A big "thank you" to Don for noting this forecast had been released. I've lost a bit of interest in the forecast:
  • it seems not to correlate well with what actually transpires
  • we seem to be stuck in a 0.5 to 2.5% growth cycle; fairly unexciting (yes, I know for Steve Liesman, that's a huge spread, but for the rest of us, just another data point)
    • if it goes negative, it gets interesting really, really fast
    • it would have to go well above 3% to get me excited
Regardless, here's the forecast, for 1Q18: 2.0% -- April 17, 2018
The GDPNow model estimate for real GDP growth (seasonally adjusted annual rate) in the first quarter of 2018 is 2.0 percent on April 17, up from 1.9 percent on April 16.
Small increases in the nowcasts of real consumer spending growth, real nonresidential structures investment growth, and real inventory investment after this morning's industrial production release from the Federal Reserve Board more than offset a slight decrease in the nowcast of real residential investment growth after this morning's new residential construction release from the U.S. Census Bureau.

Idle Chatter (Again): The KMI Trans Mountain Pipeline -- April 19, 2018

Updates

April 20, 2018: in the original post, I noted that I might be misreading KMI/CEO's comments regarding the Trans Mountain pipeline. It appears that I had it pegged exactly right. From Irina Slav at oilprice.com --
Asked about whether funding from the government would ensure the Trans Mountain expansion, Kean said “They’re really two separate things. Most of the investment is in British Columbia, where the government is in opposition to the project ... That is an issue that, in our view, needs to be resolved.”
Alberta, by the way, is ready to buy the project and take it off Kinder Morgan’s hands. This option may have sounded far-fetched a week ago but now it is beginning to look increasingly like a legitimate solution to the problem the pipeline maker is facing.
Link.
Original Post

 I think the KMI Trans Mountain pipeline story is fascinating. I'm learning a lot about geography and the permitting process.

Again, can you imagine? Twelve hundred (1,200) provincial permits needed for this project; and 600 permits are yet to be submitted. Of those submitted, about half have been reviewed/approved. Twelve hundred permits -- that's absolutely ludicrous. Preposterous. Ridiculous.

A reader writes:
Yesterday's announcement by CEO of KMI at conference call that Alberta pipeline probably won't be built has set off an enlarging, volatile firestorm of statements (see headlines in graphic below).
Saskatchewan is planning on joining any future sanctioning targeting British Columbia.  
Oil/gasoline restrictions are discussed.
National politics in turmoil. 
All this could be a tipping point in the decades-long anti-fossil-fuel drama.
With regard to the Saskatchewan position:


From the transcript, words from the CEO:
Now we're going to switch to KML. Last week, we announced that the KML had a decision point on the Trans Mountain expansion project. We announced the suspension of non-essential spending and that under current conditions we would not put additional KML capital at risk.
We also said there's no readthrough from this in terms of our willingness to invest in Canada. We have invested in Canada, British Columbia, as well as Alberta, and we expect to continue investing. But as we said then, it's become clear this particular investment may be untenable [ph] for a private party to undertake.
The events of the last 10 days have confirmed those views. We pointed out there are significant differences between governments, those differences are outside of our ability to resolve. We are continuing our stakeholder discussions between now and May 31 and we're looking for a way forward on this project.
All of that is the same as what we said on the call last week, nothing new there.
However, discussions are underway and as the Prime Minister said on Sunday, we're not going to undertake those discussions in public and we do not intend to provide additional updates on the status of those until we reached a sufficiently definitive agreement or the discussions have terminated. So again, not much update, but discussions have commenced.
I may have misread the transcript, but it appears the CEO has two concerns with regard to the pipeline. One concern is the "tangible": process, permitting, financial, building, etc." The other concern is the "intangible." 

If I read the transcript correctly, the CEO is concerned that even if the pipeline is built (the "tangible"), that is not the end of the story. If the people and the government of BC do not "buy into" the benefits of this pipeline, the "tangible" is at risk. Once built, the people and the government can "incrementally shut down this project" even after it's built. The "buy in" is the "intangible."

Here's the part of the transcript in which "two issues" are mentioned:
Yes, there are really two separate things. I mean, there needs to be a way, most of the project and most of the investment is in British Columbia where the government is in opposition to the project and has look for and found ways to incrementally regulate it. And that is an issue that, in our view needs to be resolved or addressed in order to be able to successfully construct in the province. And so we think of this two separate or related things. 
I wrote back to the reader regarding my thoughts, again, not ready for prime time:
Another reader suggested I might be misreading previous comments/decisions by KMI, suggesting that the pipeline would not be built. That reader suggested that "payoffs" would be made to BC and after the province gets their "ransom," the province would okay the pipeline.
I see this as an ideological struggle -- that is partly why this is so fascinating. In my mind, this has become a "religion." It's not about money.

I wouldn't bet one way or the other that the pipeline will be bet, but I bet it's going to be a dirtier and nastier fight than folks realize. I think BC will dig in their heels even more.

I wish I could write better, articulate better how I see the world dividing up along ideological lines when it comes to fossil fuel. But as the reader says above -- this may be a real tipping point in the decades-long anti-fossil fuel drama -- at least for western Canada, and maybe Canada as a whole.

We will also see it in California. As long as gasoline stays below $4.50/gallon in California, residents there will "put up with it." But if gasoline were to hit, on a regular and long-lasting basis, $6 / gallon, I think that the "silent majority" might actually say "enough is enough."
Absolutely fascinating.

The Market, Energy, and Political Page, Part 2, T+50 -- April 19, 2018

This article really caught my attention, from oilprice.com. I posted it earlier as one story among many. Needs to be re-posted/discussed. From the article:
China National Offshore Oil Corporation sold two liquefied natural gas cargoes on a local exchange for the first time, just as China emerged from severe gas shortages this winter, during which industrial gas users had to divert supplies to residential customers.
CNOOC could hold another LNG auction next month, according to the official at the Shanghai exchange.
The Chinese drive to burn more gas instead of coal left residents in the north freezing in a cold snap in early December, prompting China to backpedal on the coal ban in some areas to ease natural gas shortages.
Ahead of the longest holiday period in China—the Lunar New Year in the middle of February, [China] was gobbling up LNG cargoes from all over the world as it was trying to avoid severe natural gas shortages.
This resulted in China becoming the world’s second-largest LNG importer in 2017, outpacing South Korea and second only behind Japan.
Chinese LNG imports surged 46 percent last year.
Wow, talk about so many story lines. Just that last line, for example: Chinese LNG imports surged 46 percent last year.

I immediately thought of this article posted just a few days earlier:
Now, today, from energypost.eu:

Oh, well.

Yes, to answer the question, India was a signatory to the Paris climate accords.

The accord: only words.
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The History Page: Corfu

About a month ago, I posted a bit about the Crusades.

A bit more background, this time from 1434, Gavin Menzies, page 64, going back to the "Middle Ages,"
... the three major seafaring powers of Europe -- Aragon (Spain), Genoa (Italy), and Venice (city-state), exploited [the geography of the Mediterranean and the weather influenced by the mountains that surround the Sea] to conduct trade with the east through Alexandria and Cairo. Venice and Genoa were entirely dependent on trade for their huge wealth.

Venice's wealth was rooted in her capture of Byzantium. In 1204 a Crusade had been launched to take Jerusalem. Financing for the Crusade was hard to come by until the [Venetian] Doge Dandolo offered support -- provided the Crusaders would capture Zara (contemporary Zadar in Croatia) on their way south. The Crusaders agreed, becoming mercenaries in the process.
From my note at the link above:
  • the Fourth Crusade: 1202 - 1204; military forces sailed to the East; diverted to Constantinople, which the crusaders took, together with much of Greece
  • the Fifth Crusade: 1217 - 1219; ended with the recovery of Jersualem by treaty 
Back to Menzies (see also Zheng He),
The temptation to capture Byzantium for Venice, as well, proved irresistible to the Crusaders, who initiated the sack of the Orthodox Christian capital by another Christian state. [I have always wondered about this  -- the dots now connect.]

When Byzantium fell, her empire was divided amongst the victors. Venetian spoils, exemplified by the four bronze horses and marble on the facade of Saint Mark's Basilica, included Byzantine islands and ports from the Black Sea through the Aegean to the Ionian Sea. Venetian galleys thus had friendly harbors all the way to Byzantium and Alexandria.

Venice now controlled the Adriatic. In 1396, six years after she had defeated Genoa and fourteen years after the Cretan revolt, she acquired Corfu. To Venetians, Corfu was of vital importance due to its strategic location. Corfu was of vital importance due to its strategic location. Corfu became the fortified base from which Venetian galleys policed the strait leading to the Adriatic.
Corfu: the second largest island in the Ionian Sea; including its small satellite islands, forms the northwesternmost part of Greece.


With regard to the four horses and St Mark's Basilica, from wiki:
The Horses of Saint Mark were installed on the balcony above the portal of the basilica in about 1254. They date to Classical Antiquity, though their date remains a matter of debate, and presumably were originally the team pulling a quadriga chariot, probably containing an emperor. By some accounts they once adorned the Arch of Trajan.
The horses were long displayed at the Hippodrome of Constantinople, and in 1204 Doge Enrico Dandolo sent them back to Venice as part of the loot sacked from Constantinople in the Fourth Crusade.
For another day, completely unrelated but showing up about now in Menzies' book, I will leave you with this question: what was the origin of the name, the Croatans, for a Native American tribe along the Roanoke River in Virginia (US)? I assume there is much written on the etymology of that name but I just haven't taken time to research it. While living in Virginia some years ago I often visited the area under discussion and was always fascinated by the word (Croatan) but never went down that etymology path.

John Barth might have provided an answer. I see from my storage list The Tidewater Tales, John Barth, c. 1987 is in box #6011 in storage. I started [reading] that book some years ago; lost interest, but now, might find it very interesting.

The Market, Energy, and Political Page, T+50 -- April 19, 2018

Best article so far today, link here:
From the link --
In 1940, Congress passed the Bald Eagle Protection Act ...
... in 1978, North Dakota had no known nesting pairs and hadn’t for quite some time.
By 1999, the U.S. Fish and Wildlife Service proposed taking the eagle completely off the endangered species list. On June 28, 2007, that proposal was granted ...
Today, bald eagle numbers in the lower 48 states have climbed to more than 9,000 nesting pairs.
In North Dakota, the number of nesting eagle pairs has risen from zero, to more than 200 documented in 2017.

One needs to ask:
  • any correlation between the astonishing comeback of this bird of prey and the sage grouse?
  • any correlation between the astonishing comeback of this bird and economic activity (farming, oil) in North Dakota?
Comments:
  • there were no nesting pairs in 1978 in North Dakota; were NoDaks really killing off bald eagles all that time? certainly it wasn't due to "saving" the nests because there were no nests
  • I assume as bald eagles grew in numbers across the lower 48, they expanded their range; it simply became more and more crowded in other states
*****************************************

Best tweet so far today:


Natural gas draw:


Gasoline demand: ho-hum, ho-hum --


Market:
  • OAS: jumped 10% yesterday. Story here. Zacks says: be careful.
Disclaimer: this is not an investment site. Do not make any financial, investment, job, travel, or relationship decisions based on anything you read here or think you may have read here.

WTI Could Hit $70 Briefiy By End Of The Week -- April 19, 2018

Permian: this story seems to be everywhere. I sort of blew it off, but then it showed up in the WSJ which brings a bit of gravitas to the story. The headline: is the US shale boom hitting a bottleneck? Congested pipelines, shortages of materials and workers stand in the way of Permian Basin's continued growth. The story has precisely 150 comments so far; that's a lot of comments; stories like this in the WSJ generally have less than five comments and often zero. Running through the comments, the common thread: a nice problem to have; will be solved.

This past weekend I drove through Odessa-Midland-Pecos on I-10. This is exactly what I saw, from a comment to the linked story above:
A trip on US Highway 285 from Fort Stockton TX to Carlsbad NM would show just how crazy it has gotten in the Permian.
It's 140 miles of boomtown, with dozens of hand-lettered signs at each intersection showing the way to new wells or water supplies, temporary pipelines stretched on the desert soil, RV "parks" laid out on bulldozed, treeless sand, and thousands of big trucks bringing supplies and pickups carrying workers.
The turnoff to Mentone, tiny county seat of the least-populated county in Texas, is now a traffic jam much of the day. You'll either love it or hate it, depending on your politics and connection to the oil business.
That was my exact experience. I think the activity must be 10x, 20x, maybe more than what the Bakken was at the height of the boom. Mostly because the geographic area of the Permian is so much bigger than the Bakken footprint. 

One person completely mis-read Mark Papa's comments about a year ago when the latter suggested the US shale was at its peak.

****************************
Other

Jobless claims (link here):
  • consensus: 230K
  • actual: 232K
  • change: -1,000
KMI: dividend increase. 

China: CNOOC sells LNG in first auction as China looks to avoid new gas crunch.


***********************************
Back to the Bakken  
Where Fracking Is Never Out of Fashion

Active rigs:


$69.274/19/201804/19/201704/19/201604/19/201504/19/2014
Active Rigs59502993188

RBN Energy: natural gas-weighted E&Ps continue to grow despite lackluster prices, part 4.

Four years ago this month, crude oil was selling for north of $100/bbl and natural gas prices were more than 50% higher than they are now.
But while hydrocarbon prices sagged later in 2014 — and through 2015 and early 2016 — the declines didn’t deal a crippling blow to U.S. exploration and production companies. Instead, most of the upstream industry weathered the crisis remarkably well. Amidst that striking recovery, the 10 gas-focused E&Ps we’ve been tracking have engineered the strongest return to profitability.
After $40 billion in pre-tax losses in 2015-16, they reported a collective $5.2 billion in pre-tax operating income in 2017, with all 10 producers in the black, as well as a 150% increase in cash flow over 2016, to $11.7 billion. However, gas prices have languished below $3.00/MMBtu since early February 2018 — their lowest level since mid-2016 — which means that the gas producers don’t have the tailwind that higher oil prices have been providing to their oil-focused and diversified competitors.
Today, we conclude our blog series on E&Ps’ 2018 profitability outlook and cash flow allocation with a look at companies that focus on natural gas production.