Monday, May 14, 2018

Shale Drillers Looking Farther Afield -- WSJ -- Mary 14, 2018

Link here:


The lede:
Shale drillers are ramping up production in the U.S. as oil prices rise, moving beyond the West Texas oil field that became the country’s drilling center.

From Oklahoma to North Dakota, companies are increasing investment in oil fields that fell out of favor several years ago, as $70-a-barrel crude prices make fracking and horizontal drilling economical in more places again.

While the Permian Basin in Texas and New Mexico remains the fastest-growing shale spot, congested pipelines and shortages of labor and materials there are crimping profits, making other fields attractive alternatives.

EOG Resources Inc., EOG 1.08% one of the shale sector’s leaders, is active in the Permian but also in Colorado, North Dakota and Oklahoma. In Wyoming, the company has built up larger lease holdings and expanded production over the past two years.
More from the article:
Some of the oil fields that are growing, notably the Bakken and Eagle Ford, had been popular among shale drillers and experienced their own bottleneck problems before prices started dropping in 2014. After topping out at more than $100 a barrel in June 2014, oil prices plunged, falling below $30 in early 2016 before slowly recovering. The current prices above $70 are the highest in more than three years.

Continental Resources Inc., CLR  which is focused in North Dakota and Oklahoma, is benefiting from improved pipeline capacity in those areas. It sold crude produced in North Dakota at a discount to the main U.S. oil benchmark, West Texas Intermediate, of just $4.31 a barrel, executives told investors this month. In parts of Oklahoma, that figure was less than $2.

Price differentials in the Bakken had become as wide as $28 a barrel six years ago, according to the EIA, as production outstripped pipeline capacity.

“We are having infrastructure catch up with development in North Dakota and in Oklahoma,” said Blu Hulsey, the company’s senior vice president of government and regulatory affairs.

2Q18 GDP Now Estimated At 4.0 Percent -- May 14, 2018

Latest forecast: 4.0 percent — May 9, 2018, link here:
The GDPNow model estimate for real GDP growth (seasonally adjusted annual rate) in the second quarter of 2018 is 4.0 percent on May 9, unchanged from May 3. 
The nowcasts of second-quarter real consumer spending growth and second-quarter real private fixed investment growth inched down from 3.1 percent and 5.6 percent, respectively, to 3.0 percent and 5.4 percent, respectively, after Friday's employment report from the U.S. Bureau of Labor Statistics.
The nowcast of the contribution of inventory investment to second-quarter real GDP growth increased from 0.67 percentage points to 0.78 percentage points after this morning's wholesale trade release from the U.S. Census Bureau.
Numbers like this could certainly impact the November elections.

More on this later; family commitments now.

********************************
Cryptocurrency

It took me awhile, but I finally understand cryptocurrency. I thought it was a scam. Nope. I'm a "believer" now.

This part of cryptocurrency I don't yet understand but will sort it out later.

Link. Link.

By the way, for those who missed it, the general consensus is that McDonald's will start taking "Bitcoin" by the end of the year (2018). With the new kiosk ordering, I can see how McDonald's could do that fairly easily. 

XTO Renews Nineteen (19) Permits -- May 14, 2018

Active rigs:

$71.025/14/201805/14/201705/14/201605/14/201505/14/2014
Active Rigs60512783189

Four new permits:
  • Operator: MRO
  • Field: Reunion Bay (Mountrail County)
  • Comments; MRO has permits for a 4-well pad in SENE 9-150-93
Twenty permits renewed:
  • XTO (19): permits in Williams; and, McKenzie County
  • Whiting: one Long permit in Williams County
  • One permit canceled: a Crescent Point Energy Aldag permit in Divide County
Six producing wells (DUCs) completed:
  • 33449, 626, Statoil, Weisz 11-14 XW 1H, Painted Woods, t4/18; cum --
  • 33450, 884, Statoil, Weisz 11-14 3H, Painted Woods, t5/18; cum --
  • 33451, 763, Statoil, Weisz 11-14 4H, Painted Woods, t4/18; cum --
  • 33452, 1,028, Statoil, Weisz 11-14 5H, Painted Woods, t4/18; cum --
  • 33453, 818, Statoil, Weisz 11-14 XE 1H, Painted Woods, t4/18; cum --
  • 33454, 738, Statoil, Weisz 11-14 6H, Painted Woods, t4/18; cum -- 
One permit reinstated: a Hunt oil permit in Dunn County

The Market, Energy, And Political Page, T+6 -- May 14, 2018

Updates

Later, 1:38 p.m. CDT: interesting. Under Trump -- the US Supreme Court okays betting on professional sports in all states. Wow.

Later, 12:15 p.m. CDT: wow, this connects the dots. See my note below regarding GE in the original post. It now makes sense. From a reader:
Mark Hanes on CNBC. .. the CNBC staff was given GE stock  as 100 % of their 401 K ... your matching $$$ were also in GE stock ...

GE went from ~ $60 to $30, and then to $ 6 at the bottom of the 0bama depression ... When Hanes called the bottom in Dow/market in mid march of 2009, he talked about all the $$$$ the NBC employees lost in their 401 K's.

So maybe now the NBC staff is doing a "Cramer" and talking up GE stock so they can retire ... ( remember that Cramer got caught selling/shorting/buying before his recommendations of a stock and paid a undisclosed $$$ figure in about 2004 or maybe earlier.
Original Post

Chatter: I had a great bike ride home. I love my Diamondback Hanjoon Metro 1 x 9; with no extra work, I think I'm 25% "more efficient," whatever that might mean. I get home, turn on television to CNBC, and then turn on the shower. While waiting for the shower, I see the Power Lunch panel has just begun talking about GE. I take a long shower. After the shower, they are still talking about GE. I have nothing "against" GE, but certainly ten minutes is a bit much for one company, especially when I can think of 1,499 companies I would rather invest in than GE.

Chatter: years and years ago -- actually decades ago -- when I first started investing, I thought it was impossible to lose. I thought more and more people would want to invest and at some point there would not be enough shares for everyone. I did not know who publicly traded markets worked. I did not know companies could issue more shares. I did not know there were buybacks. I did not know there were splits. I didn't know squat. And then, today, after they "got off" GE, the most sour of the Power Lunch panel was concerned there may not be enough shares for all the demand. Wow.

Chatter: top story -- breaking news -- update on a CBS lawsuit. Then, nothing else. I would have thought the Mideast might have been a more important story. LOL. And everyone thought the Mideast would blow up today. Nope. Apparently it's all about CBS.

Treat: later, when I have lots of free time, I have a great blog coming up with regard to my thoughts and observations regarding cable, satellite, network, television. Stay tuned (pun intended).

Dow: still up 125 points and WTI right at $71.

Talking turkey: US has lost "mediator role" in the Mideast -- Turkey's Recep Tayyip Erdogan. Yippe-ki-yay! He's talking to his base but if he really believes that, Turkey will be a Putin satellite in less than ten years.
The yip part of yippee is old. It originated in the 15th century and meant "to cheep, as a young bird." The more well-known meaning, to emit a high-pitched bark, came about around 1907, as per the OED, and gained the figurative meaning "to shout; to complain."

Yip is imitative in origin but probably also influenced by the 16th century yelp, which has an even older meaning of "boasting, vainglorious speaking." Yawp is even older, coming about in the 14th century, but now is primarily associated with Walt Whitman's late 19th century "barbaric yawp."

Yippee came about after yip. The earliest record of this exclamation of delight is from 1920 in Sinclair Lewis's novel, Main Street: "She galloped down a block and as she jumped from a curb across a welter of slush, she gave a student 'Yippee!'"
Now how about the whole phrase, yippee-ki-yay? It seems to be a play on "yippie yi yo kayah," a refrain from a 1930s Bing Crosby song, "I'm An Old Cowhand."
Comment: I don't think I learned anything from this article. Nor worth the time spent on it (three minutes).
Protect the environment. From Aljazeera, "Palestine: a distinctive voice for climate action. Those illegally denied control over their natural resources must be heard in the global climate conversation."

More from this link:


Fake news. I may be wrong on this, but think not. The mainstream media keeps telling us that "Trump canceled the Iran deal." He did no such thing. There was a negotiated "Iran deal" some years ago. It was quite harsh and it took a lot of arm twisting to get US allies to go along with it. Then, out of nowhere, President Obama unilaterally weakened the sanctions. It was the weakening of the sanctions that Trump had problems with. It's my feeling he may not have liked the original deal, but he certainly did not like Obama's deal to water-down the sanctions. It's possible Maxine Waters and Nancy Pelosi confused water-boarding with water-downing the sanctions. I digress. As it stands now, I don't know what "Iran deal," if any, remains in place. The way I understand it, the US is back to the original deal. The rest of the world? Blaming Trump for kidnapping three Koreans from North Korea.


Bowling tournament. Scott Adams' periscope a couple of hours ago was incredibly good. Helps me understand the "McCain is not a hero" trope.  Warning: strong language.

FANG Delivers -- Mike Fitzsimmons -- May 14, 2018

Link here, over at SeekingAlpha.

Some takeaways (pun intended):
But of course the main concern with Permian producers these days is adequate takeaway capacity, both for oil and natural gas. As a result of transportation bottlenecks, many producers in the region are seeing significantly lower realized prices. [C]urrently Midland crude futures are trading at a $12/bbl discount to WTI, and the strip widens throughout the summer to $14/bbl in August.
Note that FANG's realized oil price during Q1 was $61.66/bbl ($56.82 after hedging). That's very strong and has to do with the majority of FANG's production being shipped via pipelines.
The key going forward is the company's announcement of a 50,000 bpd agreement on the Gray Oak pipeline. I covered the Gray Oak pipeline in [an earlier] Seeking Alpha article. Phillips 66 always seems to be ahead of the pack when building critical pipeline infrastructure (consider the Bakken Pipeline System and Sand Hills NGLs pipelines, for instance) and Gray Oak is not only a winner in terms of its potential for 1 million bpd of transport, but also its connection to Buckeye Partners' Corpus Christi terminal that will load VLCCs for exporting Permian crude to global markets.
As most of you know, US refining capacity for light-sweet shale oil has topped out, so new production will have to exported - that is the key moving forward. Gray Oak can solve this problem for Permian (and Eagle Ford) producers. I expect strong subscription announcements for the Gray Oak pipeline at the close of the second open season - which is currently in progress.
I hate hedging. LOL. Apparently, so does Harold Hamm, and several others in the Bakken. 

Poll: Will WTI Hit $85 By The End Of August, 2018 -- May 14, 2018

Against my better judgment, a new poll. One reader has suggested we will see $79.50 by August, 2018.

The poll: will WTI hit $85 by the end of August, 2018?
  • yes?
  • no?
  • prefer not to answer; I'm no fool
  • your guess
Poll at top of sidebar at the right.

************************************
For Investors Turning 21 Years Old This Year

Open your own on-line brokerage account and start your own "mutual fund." Become the next Warren Buffett.

Start with these nine recommendations from Goldman Sachs, from The Street:

The hot list:
  • Align Technology (ALGN) (+22% revenue growth estimate) 
  • Amazon (AMZN) (+22%) 
  • Autodesk (ADSK) (+27%) 
  • Cabot Oil & Gas (COG) (+34%) 
  • Concho Resources (CXO) (+30%) 
  • Facebook (FB) (+27%) 
  • Netflix (NFLX) (+25%) 
  • Pentair (PNR) (+22%) 
  • Vertex Pharmaceuticals (VRTX) (+22%) 
My comments:
  • Netflix: I've blogged about this from the beginning, it seems; Netflix was the basis for my "next big thing" page
  • Concho: a huge Mike Filloon favorite (that may be true for Cabot, also, but I forget
  • Amazon: a no brainer
  • Facebook: agree
Disclaimer: this is not an investment site. Do not make any investment, financial, job, travel, or relationship decisions based on what you read here or think you may have read here. The above information was posted for educational and entertainment purposes only. Perhaps not much education but lots of entertainment. The best way to double your money: fold your dollars in half and put them back in your pocket. LOL.

UNP:
  • one year ago: $107
  • today: $142
  • change: (142-107)/107 = 33%
  • better than any of GS picks for next year, save COG 
The seven stocks GS recommended for 2018, a year ago (link here):
  • BofA
  • Wells Fargo
  • MetLife
  • Northrop Grumman
  • L-3 Technologies
  • Deere
  • Intercontinental Exchange

Pet Peeve -- Fake News -- Even When It Comes From Rigzone -- May 14, 2018

Link here.


The graphic above: ten years of data. By the way, look at the volume being traded. That may be a bigger story than today's price. Contango, backwardation, the tango, flamingo, you say po-TAE-to, you say po-TAW-to, it's all Greek to me. But it certainly doesn't look like folks are jumping into the WTI market to sell their positions.

This is the headline:


$140 ten years ago.

$110 seven years ago.

$100 five years ago.

$70 today.

And Rigzone: crude prices continue to soar to multi-year highs. And Rigzone is an "expert" in this arena.

If one looks at the graph, it appears that over the most recent 10-year period, $70 oil is right where we need to be.

For me:
$55 oil is the sweet spot for global economy / US economy / oil companies.

$70 oil is really, really nice for US oil companies / international oil companies.

$83 oil: that's what Saudi Arabia needed last year (2017) to balance their budget for one year.

$88 oil: that is what Saudi Arabia says it needs for this year's budget (2018)

$100 oil -- wow. If there's an orderly climb to $100-oil, we won't see it for five years. $100-oil in less than two years (2020) will be loved/hated -- depending on one's perspective.

I'll probably my sweet spot for oil from $55 to $70 if WTI moves to $80.

Predicting the price of oil is a fool's errand. All data points above are historical. No predictions implied or given.

Disclaimer: this is not an investment site.

EOG is flirting with its all-time highs. Art Berman should be happy.

*************************************
Making America Great Again

I can get a feeling for the state of the US economy by following the railroads, particularly Burlington Northern or UNP. Unfortunately, BNI was bought by Berkshire Hathaway and we no longer get much information regarding that railroad except maybe a little during the annual BRK meeting.

So, now I follow UNP:

When oil prices surge, transportation stocks -- such as UNP -- then begin to fall. So far, we are not seeing that. Also, railroads -- particularly BNI and UNP seem to correlate well with how the auto industry is doing.

May 14, 2018 -- T+6

Updates

Later, 1:34 p.m. CDT: television interview -- Hillary looks very, very fragile -- her response to recent Trump successes: "Trump is hard to follow." LOL. 

Later, 1:32 p.m. CDT: wow, the alt-left media will have trouble reporting this one -- Chuck Schumer praised Donald Trump --

In a rare moment of agreement with President Trump, Senate Minority Leader Charles Schumer (D-N.Y.) on Monday praised the president for moving the U.S. Embassy in Israel from Tel Aviv to Jerusalem.
“In a long overdue move, we have moved our embassy to Jerusalem. Every nation should have the right to choose its capital,” Schumer said in a statement. “I sponsored legislation to do this two decades ago, and I applaud President Trump for doing it.”
Later, 9:26 a.m. CDT: thank goodness for the Drudge Report. It links articles from all sources, but mostly the big geopolitical news comes from the NY Times and the Washington Post. With the Drudge Report I can get the headlines and don't have to read the "spin." It is amazing how far the LA Times has fallen. I religiously check headlines at the Drudge Report, and geopolitically, the links are NY Times and Washington Post. I seldom see links to the LA Times.


Original Post 

Wow, does anyone know this?


This tells me all I need to know about Joe Lieberman. What a great guy.
 
This is really quite cool. The mainstream media suggests that the Mideast is about to blow up with the opening of the US embassy in Jerusalem. Wow! Things moved fast. How many presidents have promised to move the US embassy to Jerusalem? I've lost count. I've lost the bubble on this, but if I recall correctly the US Congress (that would be both the House and the Senate) and every US president in modern history has supported a US embassy in Jerusalem.

Never happened.

John McCain (from his own website -- which will disappear in a few months):
Washington, D.C. ­– U.S. Senator John McCain (R-AZ), Chairman of the Senate Armed Services Committee, released the following statement today on President Trump’s decision to recognize Jerusalem as the capital of Israel:
I have long believed that Jerusalem is the true capital of Israel. However, issues surrounding the final and permanent status of Jerusalem must ultimately be resolved by Israelis and Palestinians as part of an internationally supported peace process. That is why today's policy announcement, as well as any future relocation of the U.S. Embassy in Israel from Tel Aviv to Jerusalem, should be part of a comprehensive diplomatic strategy in coordination with regional partners to achieve peace and security between Israelis and Palestinians.”
And that, folks, is the difference between John McCain and Donald Trump. John had his beliefs, but failed to lead. President Trump led. With John, Obama, and Hillary, we get talking points, policy papers, speeches. With Trump, we get action.

John McCain is in "good" company (LOL):
Charles Schumer:
Senate Minority Leader Charles Schumer advised President Trump to declare Jerusalem the "undivided" capital of Israel ahead of Trump's expected announcement on the matter this week, the New York Democrat told The Weekly Standard on Tuesday. The White House said Tuesday that Trump will announce that the U.S. will recognize Jerusalem as the capital of Israel, but will delay moving the embassy from Tel Aviv. 
Nancy Pelosi:  
Jerusalem is the eternal capital of the Jewish homeland.  But in the absence of a negotiated settlement between Israel and the Palestinians, moving the U.S. embassy to Jerusalem now may needlessly spark mass protests, fuel tensions, and make it more difficult to reach a durable peace.
Rachel Maddow? Snarky.
T+6. See the Daily Note.

Less than eighteen months on the job, and President Trump has a US embassy in Jerusalem. Just as he promised. Another campaign promise kept. Obama? Hillary? We would have gotten another speech supporting the move, "but now is not the right time."

But I digress. The mainstream media suggests that the Mideast is about to blow up with the opening of the US embassy in Jerusalem.

So, what's new? The mideast is always ready to blow.

Whenever I read the Mideast is about to blow, I immediately check the market. If we're headed for WW III, the market will collapse. Where is the Dow today? After a week of great gains, the Dow is up another 100 points today.

Oil? It should be surging. Everyone says we're headed for $100 oil and now rockets are headed for Saudi oil export terminals. What is WTI doing? Up 14 cents. Repeat, WTI is up 14 cents on $70-oil. I must be missing something.

Certainly Jared and Ivanka wouldn't be in Jerusalem if things were about to blow. Or would they. I know Hillary's plane landed on some runway while under fire. She had to run in her flats, holding on to her hat, ducking and weaving, trying to avoid gunfire while scrambling to the terminal. At least that's how she recalled things. Something tells me Jared and Ivanka are walking in, much more dignified.

Something tells me this is the "big picture": the IDF has things under control if the event remains "local." But if Syria, Iran, or others want to get involved, the US Navy; the US Air Force; and, a few good US Marines are covering Israel's flank(s).

Wow, what a great time to be alive. We actually have a president who has kept his promises. And his promises align with 75% of Americans. Even though polls show only 49% of Americans approve of Trump. I guess it just depends on whom you ask.

Singapore next month.

North Korea is dismantling their nuclear program -- including the hardware -- a month early -- before the summit even begins. In the past -- think Vietnam, Paris, Kissinger -- we had the summit and all the promises, and then the can was kicked down the road. Again. How long did Kissinger and his counterpart discuss the shape of the table?

Now, on to Singapore.

*****************************************
The Literature Page

A reader suggested Tai-Pan. I am now reading it. Loving it. Got my copy at Powell's in Portland.

If one wants to get up to speed regarding the modern history of China and Asian geography in general, read The Opium Wars and Tai-Pan. 

It is amazing how much "stuff" in Tai-Pan and the opium wars is "transferable" to the Mideast.

I hope the Nobel Peace Prize, 2019, goes to Kim-Xi Moon.

That would mean the Nobel Peace Prize, 2020, goes to Jared, Ivanka, and Don. LOL.

Idle Chatter Regarding The Bakken -- May 14, 2018

I was traveling last week which put me behind in my blogging. Readers sent me a lot of links and a lot of comments. I'm almost caught up.

This was a comment sent be a reader that caught my attention. I'm sure many readers have similar thoughts:
General comment. How big a deal is re-fracking of existing wells going to be and what kind of long term impact on reserves will there be?
Looking at the GIS Map at NDIC you see lots of horizontal legs all over the place. How many of those wells are 10 years old or were drilled before the latest enhanced completion techniques applied?
I don't know how widespread the effort is among producers and I don't know how much effort CLR has put into this re-frac effort but I recently looked at the results of Bridger 44-14H and in my uneducated opinion was easily impressed.
During the month of March in 26 days the well produced 13,665 BBL of oil and 19,800 MCF of gas. When the well was first completed 10 years ago the most productive month May-08 of the new well was 7,422 BBL oil and 5,364 MCF gas.
In the last 217 days of production the well has produced 140,222 BBL oil and 162,209 MCF gas. In the first 2,655 days of production (9 1/4 calendar years) the well produced 138,952 BBL oil and 128,205 MCF gas.
I agree completely. I think you are right on track ....

For newbies.

How big a deal is re-fracking of existing wells going to be and what kind of long-term impact on reserves will there be?

I suppose the answer depends upon whom you ask. If you ask Art Berman, he will likely tell you that a) the Bakken is all  hype; b) the best days of shale are behind us; c) fracking is overblown; d) "shale" was not a "revolution; and, e) technology won't "save us." All of that comes directly from Art's webpage, or what I infer from his articles over the years.

For me, I am inappropriately bullish on the Bakken.

This is where I start from and am willing to back away from some of this if data shows I am wrong. There is nothing new here. This has all been posted before:
  • the Bakken has the highest TOC by percentage of any oil play in the world; TOC is the most important of the four variables in an oil play
  • CLR once said there was a trillion bbls of OOIP; subsequently backed off to 500 billion bbls
  • Price said there was ~ 500 billion bbls OOIP in the Bakken
  • the life history of a well is important, this is all primary production: 
    • drilling to depth but not completed
    • constrained
    • first frack/completed
    • workovers
    • neighboring wells fracked
    • re-fracked when neighboring wells fracked
    • mini-fracks 
    • major re-fracks
    • repeat
  • in the core Bakken: no less than 24 wells per 1280-acre; some areas many more wells
  • at the beginning, during the boom, 2007 - 2010
    • monthly IPs: 5,000
    • EURs: 350,000
  • now: 
    • monthly IPs: 30,000
    • EURs: 1.5 milllion bbls
  • operators won't drill a well unless EUR of 1 million bbls
  • 24 wells x 1 million bbls = 24 million bbls in 1280-acre drilling unit
  • percent production: no one talks about this any more; not sure where we are
    • at the beginning, during the boom, 2007 - 2010: 1 -3% OOIP would be produced by primary production
    • my numbers suggested closed to 5 - 7% at that time; and, I posted that
    • subsequently, Whiting suggest 7% OOIP was being produced by primary production; suggested we would see 12%
    • some might suggest we are at 12% production of OOIP
  • the question: what is the OOIP in the Bakken
    • 50 billion bbls, at 12% = 6 billion bbls
    • 100 billion bbls, at 12% =
    • 150 billion bbls, at 12% = 
    • 500 billion bbls, at 12% =
    • 1,000 billion bbls, at 12% = 
  • the Bakken is producing 365 million bbls/year
  • no one disagrees that the Bakken will produce at least 365 million bbls/year for ten years
  • = 3,650 million 
  • so, at ten years = 4 billion bbls, and at 50 billion bbls, at 12% = 6 billion bbls
  • repeat, at ten years, 12% primary production on 50 billion bbls OOIP = 6 billion bbls
  • USGS: most recent USGS analysis was done with the middle Bakken at 75% where it is today; probably less than 10% where upper bench of Three Forks is today; did not even consider the lower benches of the Three Forks
Disclaimer: I am inappropriately bullish about the Bakken.

Disclaimer: my numbers are based on unfettered production; geopolitics and national politics can change everything; a Hillary-ban on fracking would obviously change everything

Disclaimer: I often make simple arithmetic errors

Disclaimer: this is not an investment site. Do not make any investment, financial, travel, job, or relationship decisions based on anything you read here or think you may have read here.

Barrels Of Oil Per Well Per Month In The Bakken -- May 14, 2018

After posting this earlier, I was curious how production / well in the Bakken was trending (see that data below the graphic):
B is for Bakken. B is for Best. Bakken is the top producer of crude oil among US shale plays -- ranked by "productivity of new wells." This has been previously posted.
Link here: barrels of crude oil per well per day -- average (obviously):
  • 2018, two months of data: 84 bbls of crude oil / well / day
  • 2017: 79 
  • 2016: 80
  • 2015: 96
  • 2014: 101
  • 2013: 96
  • 2012: 92
  • 2011: 75
  • 2010: 65
  • 2009: 52
  • 2008: 44
  • 2007: 34
  • 2006: 33
  • 2005: 30

Monday, May 14, 2018

Zeits: takes a look at what effect the Trump decision on Iran will have on domestic production. A must read. This, from the middle of the interview:
SA: This recent article notes that the Permian may soon become a testing ground for oil producers to limit methane emissions. What does that mean for the companies active in that area, and how does that impact investors in those names?
LS: First, I want to point out that North Dakota has done a stellar job of achieving reduced methane emissions in an oil industry that developed there virtually overnight. The Permian faces the same issues: a great deal of natural gas is produced in association with the oil. Thus, reducing natural gas emissions means more natural gas pipeline capacity is needed - into markets that are not exactly screaming for it - or shutting in profitable oil wells.
Just as critical a concern that caught everyone by surprise is the lack of oil takeaway capacity. There are only a few refiners located in the Permian, so companies depend on trucks, gathering systems, and large pipelines to move oil to refining markets or export. We’re at the limit of that capacity.
The need for both Permian oil and gas takeaway capacity suggests a growth opportunity for pipeline and midstream companies, which - investors and their tax advisors should note - are usually structured as master limited partnerships. Examples are Magellan Midstream  and Energy Transfer Partners.
Wow, that was my thought some months ago: that everyone was caught by surprise in the lack of oil takeaway capacity. There are only a few refiners located in the Permian, so companies depend on trucks, gathering systems, and large pipelines to move oil to refining markets or export. [The Permian is] at the limit of that capacity.


*****************************
Back to the Bakken
 Active rigs:


$70.815/14/201805/14/201705/14/201605/14/201505/14/2014
Active Rigs60512783189

After years in the doldrums, ethane prices are increasing, not so much in absolute terms, but where it counts — relative to the price of natural gas. That means less ethane will be rejected — sold as natural gas — and more will be recovered as liquid ethane and sold as a petrochemical plant feedstock. As still more new ethane-only petrochemical plants come online over the next couple of years, ethane demand will increase, boosting ethane prices and resulting in still less ethane rejection. Does that mean ethane rejection will be a thing of the past? No, not even close. U.S. natural gas production, especially gas with a high ethane content, is growing so fast that ethane supply will continue to outstrip demand for the foreseeable future, with important consequences for ethane prices.
  • Bakken: produced - 80,000 bbls/day; rejected: 100,000
  • Marcellus/Utica: produced - 300,000; rejected: 300,000 
  • PADD 4:  produced - 120,000; rejected: 180,000
  • PADD 3: produced - 1,200,000; rejected -- 0
  • everything else: produced - 345,000; rejected 20,000
  • total: produced - 1,545,000; rejected 600,000
  • Gulf Coast: demand: 1,800,000

Bring A Gun To A Knife Fight -- Macron -- May 14, 2018

Shouldn't be too difficult: Kim Jong-Un says he will dismantle "their" nuclear test site. The Brits have this link. Considering that it's buried under a mountain and likely completely destroyed, this shouldn't be too difficult. Simply post a sign on the road to the mountain: "Closed. Nuclear Site Dismantled By God Upon Instructions From Trump." The Japanese probably wish Fukushima was under a mountain.

Over-qualified woman withdraws her name as nominee for US ambassador to Singapore. Stories everywhere. No links needed. Rose from typist to top US executive. Alt-left can't handle that. Not supposed to happen. All the time raising five kids. It was the last fact that probably doomed her nomination.

Too cold or too much snow. Regardless, the annual faux environmental expedition to study the Great Ice Patch has been canceled for this summer. The snow was simply too deep and wasn't going to melt before summer vacation was over. Google "great ice patch."

#1, again. I've posted many lists over the years where North Dakota is ranked #1 among the 57 US states. A reader caught this one last week: the link is here. I assume the ranking is based on "per capita," if not, it's worse/better than I thought in my home state. If the link breaks, it's under MSN: Health and Wellness -- again, I can't make this stuff up. As the reader noted, Texas did not even make the top 20. Nor did California.

Bringing a gun to a knife fight. No link, the blogger app blocks Fox News.

A 20-year-old Frenchman born in Chechnya rampaged through a festive Paris neighborhood Saturday evening slashing passers-by with a knife, investigators said. The man, identified as Khamzat Azimov, killed one person and wounded four others in a festive area near Paris’ old opera house. Police shot him to death as he charged them.
Comment: good for them. I did not know French police were allowed to carry guns.