Tuesday, February 12, 2019

API Weekly Crude Oil Inventory -- February 12, 2019

An inventory draw of just less than one million bbls. Inconsequential but at least going in the correct direction. We'll see the EIA data tomorrow.

Counting Chickens Before One's Eggs Hatch -- February 12, 2019

Updates

February 13, 2019: from Goldman Sachs today --

 
 Original Post

From twitter today:


So, look at the graph. The x-axis starts in 2014 (although it really doesn't matter when the time period would have started). What is different this time around compared to back in 2014?

This is what Ali Al-Naimi did not have to deal with, from earlier today:


And as the price of oil improves, the US will produce more shale oil. 

Texas Oil Production Sets Record -- February 12, 2019

Link here. Data points:
  • production not seen since 1973, the same year of the Arab oil embargo
    • 2018: 1.54 billion bbls last year
    • 2017: 1.26 billion bbls
    • 1973: 1.28 billion bbls
  • Ranking:
    • Russia
    • Saudi Arabia
    • Texas
  • daily average in 2018: 4,219,178 bopd (4.2 million bopd)
****************************
New Mexico Doing Well Also

New Mexico received US$2.2 billion in revenues from oil production last year. This was a 26-percent increase on the year, or US$465 million. The total amount represented 32.3 percent of the New Mexico State General Fund recurring revenue.
According to a report of the news in the Albuquerque Journal, a substantial increase in investments and production in the state contributed to the revenue increase, as did higher oil prices, despite the fluctuations throughout the year.
New Mexico, together with Texas, is home to the Permian, the shale oil and gas play that has seen the strongest increase in interest, investment, and production over the last few years thanks to many low-cost production spots. That’s despite warnings from industry experts that the low-cost sweet spots are already taken and production costs will only rise.
Still, oil and gas companies, and private equity firms are flocking to the Permian and drillers are pumping, which most recently caused pipeline bottlenecks that pressured the prices of Permian crude. The bottlenecks are being addressed, however, and soon the play will have more oil-moving capacity.
The Permian is an outperformer: between 2017 and 2018, crude oil production shot up by as much as 860,000 bpd to 2.76 million bpd, energy investment expert Nawar Alsaadi noted in a recent analysis for Oilprice, but this may lead many to assume that this performance is the norm across shale plays.
Nawar Alssadi suggests that the Permian was an outlier, that the Eagle Ford and the Bakken did not contribute to the shale revolution and/or production from the Eagle Ford and the Bakken were inconsequential. Nawar must have missed this graphic:


******************************* 
Such A Great Story 

Link over at oilprice:
The rise of U.S. tight oil production over the last several years has upended the oil market and challenged OPEC’s hold on oil prices. This seemingly relentless growth in U.S. tight oil production has created the impression that oil prices will remain forever capped as each price spike is met by a massive wave of US tight oil supply.

"Casablanca" On TCM Starts ....

... now.

Shown with out commercial interruption. 

California To Pull Plug On Bullet Train? -- February 12, 2019

Updates

Later, 3:52 p.m. Central Time: it looks like the headline-writers were far out in front of their headlights. It turns out that the governor of California has not killed the project "outright." He will still spend money studying the issue and spend enough money to qualify for federal stimulus funds, but ... something tells me this will be very confusing to most folks. Is the project dead or isn't it? Sounds like the governor himself can't decide.

Branco's cartoon today. Incredibly coincidental:

Original Post 

The story is being reported by one news outlet. Need to confirm. The "California Bullet Train" is tracked here.

Not even Drudge has the story yet. We'll watch to see which of the big six cover it first: CBS, NBC, ABC, LA Times, New York Times, Washington Post. According to google, the AP and The [London] Guardian were the first to major outlets to report the story. Then Fox News and almost simultaneously, something called Curbed LA.

The first major news outlet to cover this story has a great video that was actually produced just before the news that the project was canceled. Some data points from the video which is now overcome by events:
  • the cost for the bullet train has jumped another $2.8 billion
  • a single section, 119 miles in the Central Valley near Sacramento is now estimated to come in at $10 billion; original section was to cost $6 billion
  • reasons for sudden jump in cost estimate:
    • higher land acquisition
    • relocation of utilities
    • need for safety barriers
    • growing stakeholder demands
  • already a decade behind when the plug was pulled
  • but look at this: the tipping point came when California rushed to spend $2.8 billion to show enough progress to get $2.5 billion in federal stimulus funds before December 31, 2018, deadline
  • thus, California just spent another $2.8 billion to save $2.5 billion; and,
  • that was probably the tipping point for the new governor
Questions: How much was spent in all to get this far;? How much will it cost to tear down what is already put in place; complete utility projects; pay-off contracts? Civil suits?

No major news outlet is reporting it yet, although the AP has.

Screenshot at 3:27 p.m. Central Time, February 12, 2019:

Three New Permits; Eighteen DUCs Reported As Completed; Eight Permits Canceled; Twenty-One Permits Renewed; And A Western Meadowlark On A Fence Post -- February 12, 2019

Active rigs:

$53.112/12/201902/12/201802/12/201702/12/201602/12/2015
Active Rigs63583641137

Three new permits:
  • Operator: Petro-Hunt
  • Field: Little Knife (Billings)
  • Comments:
Twenty-one permits renewed:
  • Enerplus (7): seven "Lizard" wells in McKenzie County 
  • EOG (6): three Liberty LR permits and three Sidonia permits, all in Mountrail County
  • Whiting (3): one Kaldahl permit and two Olson permits, all in Williams County
  • Rimrock (2): two Charging Eagle permits in Dunn County
  • BTA (2): two Agate permits in Golden Valley;
  • Petro Harvester: one Miller permit in  Burke County
Eight permits canceled:
  • Cobra: various permits in Renville County and Bottineau County
Eighteen producing wells (DUCs) reported as completed:
  • 29891, 316, Lime Rock, William Sadowsky 7-4-9H-142-96; Manning, t1/19; cum --;
  • 31260, 392, Oasis, Kjorstad 5300 34-22 5B, Willow Creek, t2/19; cum 135K 12/18;
  • 33654, 1,087, Hess, GO-Vinger-156-98-2116H-4, Wheelock, t3/18; cum 67K 12/18;
  • 31463, n/d, Bruin, Fort Berthold 148-94-36C-25-9H, McGregory Buttes, t--; cum --;
  • 31264, 915, Oasis, Kjorstad 5300 34-22 9B, Willow Creek, t6/18; cum 122K 12/18;
  • 32960, 912, Oasis, Ceynar 5298 44-32 13B, Banks, t6/18; cum 217K 12/18;
  • 32944, 475, Oasis, Ceynar 5298 42-32 9T, Banks, t6/18; cum 95K 12/18;
  • 33315, 788, Oasis, Muri 5198 22-4 3B, Banks, t6/18; cum 224K 12/18;
  • 31261, 767, Oasis, Kjorstad 5300 34-22 6T, Willow Creek, t5/18; cum 128K 12/18;
  • 31259, 415, Oasis, Kjorstad 5300 34-22 4T, Willow Creek, t5/18; cum 82K 12/18;
  • 32958, 574, Oasis, Ceynar 5298 44-32 15BX, Banks, t5/18; cum 173K 12/18;
  • 34269, 567, Oasis, Muri 5198 11-4 14T, Banks, t6/18; cum 119K 12/18;
  • 32959, 916, Oasis, Ceynar 5298 44-32 14TX, Banks, t5/18; cum 151K 12/18;
  • 33699, 1,118, Oasis, Lite 5393 31-11 5B, Sanish, t5/18; cum 123K 12/18;
  • 33698, 381, Oasis, Lite 5393 31-11 6T, Sanish, t5/18; cum 112K 12/18;
  • 32961, 500, Oasis, Ceynar 5298 44-32 12T, Banks, t6/18; cum 147K 12/18;
  • 32801, 171, Oasis, Ceynar 5298 42-32 11T, Banks, t6/18; cum 103K 12/18;
  • 25956, 1,828, Equinor, Mark 4-9F, Mark 4-9F 5H, t1/19; cum --;

Tight Labor Market; At Record Levels -- WSJ -- February 12, 2019

Link here.

7.34 million unfilled jobs across the US.

Job openings push further into record territory at end of 2018. The number of available jobs exceeds unemployed Americans by one million at the end of 2018.

The article has garnered only two comments. That speaks volumes.

From the linked article:
There were a seasonally adjusted 7.34 million unfilled jobs on the last business day of December.
That was up from a revised 7.17 million at the end November, and surpassed August’s then-record of 7.29 million openings.
The increased openings late last year was followed by robust hiring in January, separate Labor Department data showed earlier this month.
**********************************
Also At Record Levels: Canadian CBR

Article at Minneapolis Star-Tribune here. From the article:
Oil imports by rail from Canada have hit a historic high, meaning more oil trains are rolling across Minnesota and raising the alert level of local emergency managers.
Rail shipments from Canada to the United States more than doubled during 2018 as Canadian oil production outstripped the capability of pipelines to ship the stuff, including the six Enbridge-owned lines crossing northern Minnesota.
Oil train traffic through Minnesota from North Dakota was also up noticeably in 2018, though nowhere near peak levels of 2014. The North Dakota rail uptick is largely rooted in oil price shifts.
Canada’s two big railroads, the Canadian National (CN) and the Canadian Pacific (CP), have major routes in the state, the former running through the Twin Ports, the latter through the Twin Cities. The BNSF Railway also moves some Canadian crude in Minnesota.
BNSF said it’s seen a “moderate” increase in Canadian oil shipments. Canadian Pacific declined to release any oil train details. Canadian National said its total oil shipments jumped 77 percent from 2018’s third quarter to the fourth quarter, though it didn’t disclose more specific data.
Over the last four months of 2018, 299 oil trains on the Canadian National’s tracks crossed from Ontario at Ranier, Minn., up from 121 during the same time a year ago.
Oil trains typically have 100 tank cars, each carrying around 30,000 gallons.
The last major CBR accident, Casselton, ND, resulted in a fireball and no injuries, occurred over five years ago. 

Prior to that, a tragic CBR incident occurred in Canada, 
High-profile accidents thrust oil trains into the spotlight a few years ago, the biggest being a fiery 2013 disaster in Lac-M├ęgantic, Quebec, that killed 47 people. A year later, a BNSF oil train crashed and burned near Casselton, N.D., about 20 miles west of Fargo. Over 1,400 people were evacuated, but there were no injuries.
 I could be wrong but I think there is a solution to all that concern about ever-increasing CBR.

Archived here.

Most Under-Reported International Story? -- Mexico On The Cusp -- February 12, 2019

Again, a huge "thank you" to a reader for suggesting (subliminally, it turns out) to go down this rabbit hole.

A recurrent theme on the blog is the trouble Saudi Arabia is in.

However, it appears I may have missed an even bigger story.

Mexico.

See this post for background, and here.

So, let's check Mexico's foreign exchange reserves, link here.

First, the one year graphic:


Now, the five-year graphic:


And, finally, the "max" data available:


Let's look at the one-year chart for Saudi Arabia:

One year:

From my perspective:
  • Saudi Arabia is starting to get control of their fiscal situation based on the one-year graphic
  • Mexico was in great shape until very, very recently
  • Mexico's five-graph is scary, but the one-year graph is even scarier
Tea leaves:
  • Saudi is in a better position to shore up its economic situation -- for any number of resaons
  • Mexico's situation is likely to get much, much worse
  • this was exactly the wrong time for Mexico to elect a leftist president
  • there was probably a reason that a leftist was elected president of Mexico, and it's reflected in the one-year graphic

XTO Soon To Frack The Bobcat Federal Wells In Bear Creek -- February 12, 109

The XTO Bobcat Federal wells are in the process of being fracked (or will soon be fracked):
  • 34355, SI/NC, XTO, Bobcat Federal ...;  33-025-03404
  • 34356, SI/NC, XTO, Bobcat Federal ...;  33-025-03405
  • 34357, SI/NC, XTO, Bobcat Federal ...;  33-025-03406
  • 34358, SI/NC, XTO, Bobcat Federal ...;  33-025-03407,
  • 34559, SI/NC, XTO, Bobcat Federal ...;  33-025-03444,
  • 34359, SI/NC, XTO, Bobcat Federal ...;  33-025-03408
All neighboring wells have been taken off line-- they have been off-line for about six months.

The graphic:



Saudi Needs $80 - $85 Oil To Balance Budget -- Reuters -- February 12, 109

Link here.

Whether that's OPEC Basket, Brent, or WTI -- hard to say but all three are well below $80.

Most Interesting Story All Week? -- February 12, 2019 -- Mexican President Flip-Flops -- Will Allow Fracking

There is increasing talk that Pemex could fail.

When Mexico's new president was running for office, he said he would ban fracking in his country -- even though the prolific Eagle Ford in Texas extended south into northern Mexico.

Yesterday Argus Media reported that President AMLO has had a change of heart. He will allow -- or should we say, his regulators will allow -- Pemex to frack .... drum roll .... four wells.

Why the change of heart? AMLO says the technology has gotten better, has gotten safer. LOL.

Some data points:
  • Pemex will invest up to $203 million under the two-well drilling scenario.
Let's stop there.

Let's do the "cut and paste" from the article:
Pemex will invest up to $203 million in the exploration plans under the two-well drilling scenario, with the potential to incorporate up to 201 million boe into national reserves.
So, the data points:
  • two wells
    • $203 million (am I missing something here?)
  • two wells
    • 201 million boe 
Back-of-the-envelope: I don't even want to think about it. LOL.

For newbies: in the Bakken,
  • about $8 million / well
  • EUR for a single well: 1.3 million bbls crude oil
Other data point from the article:
Mexico's 3P oil reserves dropped by 40 percent to 25.5 billion boe from 42.2 billion boe between 1 January 2014 and 1 January 2018, according to the annual reserves report, according to data published just last week.

Three Wells Coming Off The Confidential List Today -- Tuesday, February 12, 2019

Wells coming off the confidential list today -- Tuesday, February 12, 2019: 46 wells for the month; 149 wells for the quarter
  • 34671, drl, Hess, GO-Bergstrom 156-98-2833H-2, Wheelock, no production data,
  • 33103, n/d, CLR, Sakakawea Federal 11-19H1, Elm Tree, t--; cum --;
  • 29403, n/d, Oasis, Seattle Federal 5200 42-35 7B, Camp, t--; cum--;
Active rigs:

$53.692/12/201902/12/201802/12/201702/12/201602/12/2015
Active Rigs63583641137

RBN Energy: Golden Pass FID heats up race for US LNG exports. Pretty cool. We've been following the Golden Pass export terminal pretty closely on the blog.
The dam has broken on the “second wave” of U.S. LNG export projects. ExxonMobil and Qatar Petroleum last week announced a final investment decision on their joint venture liquefaction and export project — called Golden Pass Products — at the brownfield site of the Golden Pass LNG terminal on the Texas side of the Sabine-Neches Waterway. That’s a skipping stone’s throw from Cheniere Energy’s Sabine Pass LNG and Sempra Energy’s Cameron LNG terminals on the Louisiana side of the Gulf of Mexico outlet, as well as a number of other second-wave contenders. With construction slated to begin late next month, the Golden Pass project expects to become operational and begin taking feedgas by 2024. Today, we provide an update on Golden Pass, its potential feedgas needs and how it will be supplied.
2019 is set to be a pivotal year for U.S. LNG exports. Not only is it looking to be a watershed period for liquefaction capacity additions from the first wave of export projects that are already under construction and due online over the next couple of years but it’s also likely to be a milestone year for the second wave of North American export projects as they race toward FIDs. We are tracking 24 of these mostly pre-FID projects, 18 of them along the coastlines of the contiguous U.S.