Friday, February 15, 2019

Peak Oil? What Peak Oil? -- Axios -- February 15, 2019

Link here.


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Movie Night

I'm done for the week. See you tomorrow. Good luck to all.

Now, The Big Lebowski.

I bet I've watched it a twenty times, but each time I try to watch it as if I'm watching it for the first time.

How Could Anyone Bokeh A Child? -- LOL -- February 15, 2019

Best ad I've seen in a long time:


"Bokeh" is a real word, not something new; Japanese in origin.

Pemex Is Doomed -- Oilprice -- The Other Day -- February 15, 2019

See these recent posts:
Now this: Mexico to give a $5.2 billion stimulus package to Pemex.

Wow, so much in that Platts article, including:
  • Lopez Obrador previously said resources will go to Pemex's new refinery 
  • Pemex has to pay over $50 billion in debt over next six years
  • in recent years, Pemex borrowed to finance operations until becoming the world's most indebted oil operator with $104 billion in net debt, half of which is due through Lopez Obrador's presidential term, which ends in 2024.
  • despite this debt leverage, Pemex's production fell to 1.71 million b/d in December from a peak production of 3.4 million b/d in 2004.
The other day oilprice had an article suggesting Pemex is doomed (see link above). It looks like Lopez is getting religion.

Best way to follow all this? Mexico's foreign exchange reserves. See the graphics, "Mexico on the cusp," February 12, 2019.

Basic Income -- Stockton, CA -- The Experiment Begins -- February 15, 2019

Stockton, CA, 2018 - 2019, budget. Link here.
The Fiscal Year (FY) 2018-19 Annual Budget is balanced and reflects the City Council’s targets and goals. The FY 2018-19 Annual Budget is $709 million from all funding sources and supports 1,705 full- time positions. This includes $221 million for General Fund operations, $136 million for water, sewer, and stormwater utility operations and capital projects, and $352 million for all other activities.
From SacBee:
After months of planning, Stockton is sending debit cards loaded with $500 to a select group of 130 residents starting Friday as part of a closely watched experiment in universal basic income, the first led by a U.S. city. Stockton, once dubbed “America’s foreclosure capital,” was the largest city to seek bankruptcy protection before Detroit’s 2013 filing. During the recession, unemployment soared toward 20 percent, and violent crime rose. Today, one in four residents lives below the poverty line, according to the U.S. Census Bureau. 
The debit cards will go out monthly for 18 months.

$500 / month *18 months * 130 residents = $1.2 million.

"$352 million for all other activities."

Doomsday Chronicles: not many updates needed since President Obama left office.

Doomsday: US cities: tracked here. Ditto.

WTI Trending Higher; World's Largest Off-Shore Oil Field "Partially" Shut Down -- February 15, 2019

Whoo-hoo! WTI up almost 2.5% today; up $1.34; closed at $55.75 today. Brent hit the 2019 high at $65.

Field down, from oilprice:
The Safaniyah oil field in Saudi Arabia—the world’s largest—is producing at a reduced capacity after a ship’s anchor cut a main power cable. An earlier report from MarketWatch quoted information from Energy Intelligence suggesting production at the filed had completely stopped, sparking worry about global heavy oil supply.
The worry was justified: with Venezuela sliding more deeply into chaos and with new U.S. sanctions reducing the flow of Venezuelan heavy crude to refineries, another heavy crude-producing field outage is exactly what the market does not need.
Safaniyah has a production capacity of over 1 million barrels of heavy crude: reason enough for the market to get excited or worried, or both. However, now that there is more information about the possible cause of the outage and its extent, this excitement or worry might calm down.
High crimes and misdemeanors: killing an oil pipeline that could be argued is a national security issue.

Active rigs:

$55.752/15/201902/15/201802/15/201702/15/201602/15/2015
Active Rigs64573841137

Five new permits:
  • Operators: XTO (4); WXP
  • Fields: Alkali Creek (Mountrail); Mandaree (Dunn)
  • Comments:
    • XTO has permits for a 4-well Krieger pad in Alkali Creek, in section 17-154-94;
    • WPX has a single permit for a St Anthony well in Mandaree oil field, section 9-149-93

North Dakota Sets At Least Three New All-Time Oil & Gas Records -- December, 2018, Data

Link here.


From The Bismarck Tribune, link here. The whole article:
North Dakota oil production hit a new record in December at 1.4 million barrels per day, the Department of Mineral Resources said Friday.
Natural gas production also hit a record at 2.65 billion cubic feet per day, according to the preliminary figures.

The Director's Cut Has Been Posted -- December, 2018 Data -- A New All-Time High

Note: for those of you who "subscribe" to the Red Queen theory, North Dakota hit an all-time production record even though the number of producing well record remains below the all-time record.

Let's see if oilprice or Art Berman mention that North Dakota reports a new all-time record despite the fact that:
  • number of producing wells has not increased
  • there are still over 2,300 wells that could be producing and aren't -- North Dakota is drilling/completing about 2,300 wells every two years
Also,
  • natural gas production has hit a new all-time high; and,
  • operators have captured a record amount of natural gas; and,
  • flaring still exceeds guidelines
The number is: 1,401,385 bopd -- a new all-time high.

Link here.

The usual disclaimer applies: this page is done very quickly. There will be factual and typographical errors. If this information is important to you, go to the source.

The Director's Cuts are tracked here.

The Director's Cut for the December, 2018, data has been posted. It will download as a PDF on your desktop.

Crude oil production:
  • December, 2018: 1,401,385, a new all-time high
  • November, 2018: 1,376,803 bopd
  • October, 2018: hits a new all-time high, revised-- 1,392,369 bopd
  • delta, bbls: +24,582
  • delta, percent: an increase of 1.8% month-over-month
Producing wells:
  • December, 2018: 15,351 -- all time high of 15,352 in October, 2018 -- but the "15,351" figure is a preliminary figure
  • November, 2018: 15,237
  • October, 2018: 15,352 -- a new all-time high
Natural gas production:
  • December, 2018: 2,650,007 MCF/day -- a new all-time high 
  • November, 2018: 2,521,128 MCF/day
  • October, 2018: 2,561,988 MCF/day, revised slightly down from 2,562,465 MCF/day) -- an all-time high
  • delta, cubic feet: +128,879 Mcf/d
  • delta, percent: 5.1%
Permitting:
  • January, 2019: 219 -- look at this increase month-over-month
  • December, 2018: 92
  • November, 2018: 116
  • October, 2018: 183
  • September, 2018: 113
Off line:
  • DUCs: 823, down 134 from last report -- huge decrease (tracked here)
  • inactive: 1,509, up 128 from last report -- wow, look at that jump in the number of inactive wells
  • total: 2,332 (down slightly from 2,338 in the last report; but 2,332 wells is still way more than the total number of wells that will be drilled in North Dakota this year)
Flaring:
  • statewide, captured: 1,995,853 Mcf/day -- daily rate (November, 2018); slightly less than last month
  • statewide, capture: 81% -- at 2,136,797 MCF/day captured is a new all-time high
  • FBIR Bakken: 80% -- it was 73% last month, so this was a huge improvement
  • current goal: 88%
Pricing:

Flashback From The Bakken, 2010 -- February 15, 2019

Analysts projected that North Dakota would produce one million bbls of crude oil by 2020.

"We" crossed that milestone some years ago. Just saying. And production is and has been constrained by any number of factors:
  • US glut of light oil; US refineries don't need more light oil
  • price volatility
  • takeaway capacity
  • competition from other shale plays (operators in multiple plays move focus from one play to another)
  • flaring issues
  • asset management
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Starbucks

I have been working from a new Starbucks in the area. It is much closer to home. Unfortunately it has become almost too crowded by the time I get there.

Having said that, I am completely blown away by all the retail construction occurring in this new Texas-style mall. The mall is in the southwest corner of Grapevine, directly west of the DFW airport, along the busiest and main thoroughfare from Ft Worth - south entrance of DFW -- through Grapevine -- north entrance of DFW -- Plano.

There are dozens of new stores, any of which would be anchor stores elsewhere. But instead of two or three "anchor-like" stores, there are at least a dozen. Two years ago there was nothing here except a Target store on the far northeast corner.

A year ago, I would have said that the "mall" was pretty much complete. Wow, was I wrong. I think it's doubled in size since phase 1, as it were, and it looks like this is only phase 2 of a three- or four-phase project. Unless I missed it earlier this year, it looks like Pei Wei is the newest addition. Upscale restaurants throughout the complex.

Wow, Color Me Impressed -- Williston City Commission Approves Change In Liquor License Ordinance -- February 15, 2019

I honestly never thought this would happen. The ordinance will move from limiting the number of licenses based on population to a fee-based system.

Color me impressed.

From the Williston Wire:
After months of discussion, the Williston City Commission gave the final OK to major changes to the city's liquor ordinances Tuesday, Feb. 11. The commission unanimously approved the changed liquor ordinance, which moves from limiting the number of licenses based on population to a fee-based system. After Tuesday's meeting, City Administrator David Tuan said he hoped the new ordinance would improve access for new businesses.
Also from the Williston Wire:

Bainville coffee: They weren't coffee drinkers until life landed them in Seattle. There the gloomy weather made a warm cup of coffee feel like a bit of sunshine in hand. Now Sarah and Dustin Harmon are spreading their coffee love through a new business, Wild Calf Coffee, headquartered in Bainville, Montana. The couple don't brew coffee, however. They roast it.

New Ford dealer in Watford City:Just over one year after the Nelson family announced their plans to open a new car dealership in Watford City, new vehicles are slowing rolling into the car lot of Red Rock of Watford City, which is located at 1212 4th Ave. NE, just east of the post office. "We're excited to be coming to Watford City and being part of the growing Watford City community," stated Allex Nelson.

The Next Big Thing

Page 2

The Next Big Thing

Energy And The Western Hemisphere
US Energy Revolution
Plastic plant, North Dakota.

The continued irrelevancy of the EU.

Making America great again.
Electoral College changes.

The southern surge.

Berkshire Hathaway -- Suncor -- February 15, 2019

Canadian oil sands? Does Warren Buffett know something? Buying very, very low.

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.

From oilprice:
Warren Buffett’s investment firm Berkshire Hathaway acquired 10.8 million shares in Canada’s Suncor during the last quarter of 2018.
Suncor reported a net loss for the last quarter of 2018, but the operating result of the company was positive, at US$436 million.
The company, however, boasted record-breaking production of 740,800 barrels of heavy crude daily and also record refining rates of 467,900 barrels daily over the period.
Suncor is the largest oil company in the Canadian oil sands patch and it was a vocal opponent of the Alberta government’s decision to impose mandatory production cuts on local oil companies to stabilize prices.
Say what you want about Warren Buffett but this should again tell folks how smart this guy is. If he was interested in oil he could have invested in any number of oil companies. But someone must have educated him on the heavy oil vs light oil conundrum.

Going forward, US refiners are going to need a lot of heavy oil. There are three main sources for heavy oil in the western hemisphere:
  • Canada
  • Venezuela
  • Mexico
Is this an open book test or not?

Pipelines? Who cares. CBR is scalable.

**********************************
Meanwhile ...

Amazon Goes Electric -- February 15, 2019

Lost in all the Amazon-NYC news yesterday was this story over at Bloomberg:
Amazon.com Inc. led a $700 million equity investment in Rivian Automotive LLC, the electric pickup and SUV maker that debuted its first vehicle concepts late last year.
The backing from Amazon will bolster Michigan-based Rivian’s plans to bring an electric truck to market late next year.
Rivian remains in talks with General Motors Co. about the largest U.S. automaker making an investment or collaborating another way, people familiar with the matter said.
The support of the world’s leading online retailer signals potential for a partnership on delivery vehicles down the road. Chief Executive Officer R.J. Scaringe said in his first interview since reports of Rivian’s talks with Amazon and GM surfaced earlier this week that he was seeking companies that could help the electric-vehicle maker grow.
A year ago I never saw an Amazon van delivering packages in the DFW area (or anywhere for that matter). I saw UPS, USPS, FedEx, and worst of all, independent contractors who were generally horrible in making deliveries. 

Now a year later, I see Amazon vans everywhere in this north Texas metroplex.

I would never bet against Amazon when there is a report that the company is moving into a new niche. The company seems to start small and then literally within a year become a real force with which to reckon. 

$700 million? A drop in the bucket for Amazon.

But I think it's a game-changer. 

Electric rates are dirt-cheap overnight in the DFW area (and I assume that's true everywhere). One can sign up for a plan in our area giving one "free" electricity on weekends and every weeknight after 9:00 p.m. until 6:00 a.m.  

I would assume a lot of time (by Amazon's standards) is wasted refueling ICE vans once or twice during the day while making deliveries and paying whatever the local service station charges. 

My hunch is that Amazon will get large-volume discounts on electricity, charge their vehicles overnight, and run emission-free the next day. And large vehicles can probably accommodate a large battery pack. 

In comparison, those huge UPS brown trucks look incredibly inconvenient and must get lousy mileage. And it goes without saying it appears the USPS blue-and-white contraptions haven't been updated since the 50s. The 1950s.


The Fallout Continues -- Amazon-NYC Deal Gone Awry -- February 15, 2019

Updates

February 20, 2019: the fallout continues.

February 16, 2019: when our grandchildren ask a question, I tell them to google it or follow the money. In the case of the Amazon-NYC story googling it won't help, at least not yet. Following the money won't help in this case either because Amazon/Jeff Bezos had tons of that. To some degree it's related to money but there's an easier explanation: unions.

Hindsight is 20-20 vision and in this case, the movers and shakers knew that if Amazon did not allow the unions to build HQ2 in Long Island City, it wasn't going to happen. The Verge almost had the story several months ago ... TheVergecamethisclose.

Here's how it played out. Early on, everyone knew that Bezos would not let the unions control the project (we'll get back to the "why" later -- money was a secondary issue -- as mentioned earlier, Jeff Bezos/Amazon has tons of money). So, we start with that one simple thesis: Everyone knew that Bezos would not let the unions control his HQ2-NYC project. [By the way, this was Bezos' Achilles heel: he despised Trump so much he failed to have his people talk to Trump's people on how to get a NYC project done, but that's another story.]

So, the unions aren't going to let Amazon build in NYC if they don't get their way. Senator Schumer and Governor Cuomo knew that and The Verge camethisclose to pointing that out. They either missed it or were afraid of publishing it, thinking they would have egg on their face if they were wrong.

When it became clear that Amazon/Jeff Bezos would not "play ball," the NY unions stopped the project. It was a multi-pronged attacked: in the state senate, a democratic senator led the charge. In Long Island, the unions co-opted Occasional-Cortex, convincing her that the state was actually going to give $3 billion to Amaazon instead of using that money for other state projects. [I have trouble believing that O-C is that stupid, but that's another story for another time.]

There was a term that kept popping up -- "friendly neighbors" -- and that was code for hiring unions and playing by NY rules and NY politics.

But the interesting thing is this: money was a sidebar issue for Bezos. He had tons of it. This is what concerned Bezos: working with the unions and the state, he saw that the project would never be completed. This project would go on for years and year and years because he had deep pockets and the unions saw this as life-time employment.

Exhibit A: the "Big Dig" in Boston, MA.

Bezos: welcome to NY politics. 

Bezos saw that he would be "buying off" every politician and every union official to get this project done. The "friendly neighbors" euphemism explains it all.

And, oh by the way, the whole debacle reveals Bezos' Achilles heel. More on that later.

Later, 12:11 p.m. Central Time: I agree with the writer at The WSJ. For those who live in the flyover states, Amazon's decision to not build in New York is a huge win. It is also a huge win for tech centers outside New York: North Carolina; Texas; Washington (state); California; and, maybe Virginia.
In its announcement, the company said it would continue to invest in its 17 other North American corporate and tech hubs, as well as its forthcoming expansions in Northern Virginia and Nashville. Setting politics and any immediate fallout aside, the decision could significantly benefit America’s tech economy in the long run, say experts in regional economic development.
The answer to overcrowding in Seattle and Silicon Valley wasn’t to build yet another tech headquarters in an already crowded city like New York, but to spread out. The best situation of all, they argue, would be if Amazon were to distribute its intended 25,000 New York jobs across these other sites, where it already employs more than 20,000 people.
Original Post

A comment from one of the articles:


So, apparently there is a lot of construction going on in New York but job creation? I have no idea whether the comment above is accurate. Someone can fact-check it if interested. I am not.

Miscellaneous:

The good news is that democracy is working. It looks like 50% of the folks didn't like Amazon coming to the NYC area for one reason or another and 50% of the folks wanted to see Amazon. So, in the big scheme of things, it's a wash.

**********************************
Tree-Clearing

What a massive solar farm does to a forest ... I pretty much thought this was "outlawed" in the US these days. Isn't this called clearcutting or something to that effect, something that timber companies were banned from doing years ago?

 And it looks like this is just the beginning:


Heavy Vs Light Oil -- A Primer -- February 15, 2018

This link was posted earlier today.
In the appendix of this 2018 ENI review are some incredible graphics of all the various crude oils produced in the world, "mapped" out based on daily volume production, sulfur content, and API (heavy vs light).

It is an incredible resource. This is one of the graphs which includes the "most important" crude oils from around the world. Because of the size of the graphic, it's hard to get a good screenshot. My recommendation: go to the link and and check it out for yourself.

Screenshot:


Zoom in on the low sulfur, light oil, upper left-hand corner of that graphic:


The legend for this table:


When you look at the graphic above, which country is most at risk? Link here.



I showed these graphics to Sophia last evening and her reaction! "Oh, now I get it!"

The Day After, T+44 -- February 15, 2019

Amazon: wow, can you imagine the "Monday-morning quarterbacking" that is now going on in Long Island? Talk about an incredibly prescient article over at The Verge, three months. From the article:
  • Rep.-elect Alexandria Ocasio-Cortez was one of the lawmakers who voiced their objection to an NYC headquarters,
  • the strongest indication of Schumer’s stance came at a press conference yesterday when NYC mayor Bill de Blasio said he had worked closely with Schumer on the deal, and the senator “believes it’s going to be a game changer for our city and our state.” Schumer has made no public statements to that effect.
  • State Senator Mike Gianaris said in a joint statement. “It is incumbent upon us to stand up on behalf of the people we represent and that is what we intend to do.”
Mike may want to request assistance from the Witness Protection Program before the weekend is out.

****************************
Miscellaneous

$22 Trillion And counting: Drudge banner: "spending binge worse than under Obama, Bush."

What? Me worry? The dow is up another 350 points in early trading.

Airlines: fighting for survival. Indian Airline on verge of collapse; close to getting a bailout; Jet Airways approves rescue deal to plug $1.2 billion gap.

A380 Superdumbo: collapse. The story that is not being reported. Remember: this is the reason Airbus pulled the plug on the Superdumbo -- United Arab Emirates slashed their orders. That speaks volumes. The Mideast is in deep doo-doo. And lookee here -- Bloomberg via Rigzone:
The oil crash came and went but the debt pile it left across the Gulf is still growing, leaving the region’s energy-dependent economies more vulnerable next time a crisis strikes.
All but debt-free before crude prices nosedived in 2014, many Gulf governments tried to borrow their way through while making only cautious and halting efforts to cut spending and diversify their economies.
Meanwhile, a Saudi-led blockade of Qatar has split the six-state Gulf Cooperation Council and complex regional dynamics mean it’s no longer a foregone conclusion that the strong will bail out the weak with no strings attached.
If oil prices crash again, the pain could be greater than five years ago, raising the risk of a regional recession because governments would have to slash spending while markets would be more reluctant to lend, according to Bloomberg economist Ziad Daoud.
“Gulf economies are more vulnerable to a collapse in oil prices today than during the last rout in 2014,” Daoud said. “Debt is higher, foreign exchange reserves are lower and the chance of pooling resources is smaller. A sharp drop in oil prices could prove more damaging this time around.”
The worst oil crash in a generation was a moment of truth for energy juggernauts around the Gulf, which include the world’s biggest exporters of crude and liquefied natural gas.
After splashing petro-wealth on generous state handouts during more than a decade of surging oil prices, Gulf governments, suddenly cash-strapped, spent the past few years carefully trimming benefits to citizens and cutting subsidies while trying to avoid a popular backlash.
Saudi Arabia and the United Arab Emirates have imposed excise and value-added taxes for the first time. But the prospect of slimming bloated wage bills is fraught with political peril, and they remain the biggest-ticket item on Gulf budgets. [And UAE slashed their big-ticket items, like the Airbus 380.]
While Oman and Bahrain stand out, the experience of the bloc’s two smallest economies might be less an exception than a warning for what could lie ahead if governments don’t diversify -- and fast.

The Big Story: Saudia Arabia On The Ropes -- February 15, 2019

March 6, 2019: Saudi Arabia foreign exchange reserves.

February 20, 2019: God smiles on the US Gulf Coast refiners.

February 15, 2019: it's all going wrong for OPEC, Bloomberg via Rigzone:
Even as oil producing states in OPEC and beyond begin implementing the output cuts they agreed in December, the world’s need for their crude is shrinking further, suggesting that they will need to extend the deal through the second half of the year.
The latest forecasts from supply-and-demand studies of the oil industry’s most-watched organizations – the International Energy Agency, the U.S. Energy Information Administration, and the Organization of Petroleum Exporting Countries itself – show the need for OPEC crude diminishing as demand forecasts are trimmed and U.S. supply outlooks are increased.
The industry’s three main agencies are unanimous in reducing their assessments of the volume of oil the world will need from OPEC countries this year compared with what they were forecasting last month. The average level of the reduction from the January forecast is 300,000 barrels a day, that’s about the combined production of OPEC’s two smallest members Equatorial Guinea and Gabon.
Of greater concern for producers, two of the three agencies see the world needing less OPEC crude in the second half of the year than the first. Only the IEA currently sees the demand increasing as the year progresses. The differences aren’t big, the EIA and OPEC see the need for OPEC oil falling by another 50,000-60,000 barrels a day in the second half compared with the first. The IEA sees a similar sized shift in the opposite direction. None of the agencies sees the need for the group’s crude rising enough to allow them to end their current supply management deal.
What has driven the fall in the need for OPEC crude? A mixture of lower demand growth projections and higher non-OPEC supply, in particular from the U.S.
February 15, 2019: A380 Superdumbo: collapse. The story that is not being reported. Remember: this is the reason Airbus pulled the plug on the Superdumbo -- United Arab Emirates slashed their orders. That speaks volumes. The Mideast is in deep doo-doo. And lookee here -- Bloomberg via Rigzone:
The oil crash came and went but the debt pile it left across the Gulf is still growing, leaving the region’s energy-dependent economies more vulnerable next time a crisis strikes.
All but debt-free before crude prices nosedived in 2014, many Gulf governments tried to borrow their way through while making only cautious and halting efforts to cut spending and diversify their economies.
Meanwhile, a Saudi-led blockade of Qatar has split the six-state Gulf Cooperation Council and complex regional dynamics mean it’s no longer a foregone conclusion that the strong will bail out the weak with no strings attached.
If oil prices crash again, the pain could be greater than five years ago, raising the risk of a regional recession because governments would have to slash spending while markets would be more reluctant to lend, according to Bloomberg economist Ziad Daoud.
“Gulf economies are more vulnerable to a collapse in oil prices today than during the last rout in 2014,” Daoud said. “Debt is higher, foreign exchange reserves are lower and the chance of pooling resources is smaller. A sharp drop in oil prices could prove more damaging this time around.”
The worst oil crash in a generation was a moment of truth for energy juggernauts around the Gulf, which include the world’s biggest exporters of crude and liquefied natural gas.
After splashing petro-wealth on generous state handouts during more than a decade of surging oil prices, Gulf governments, suddenly cash-strapped, spent the past few years carefully trimming benefits to citizens and cutting subsidies while trying to avoid a popular backlash.
Saudi Arabia and the United Arab Emirates have imposed excise and value-added taxes for the first time. But the prospect of slimming bloated wage bills is fraught with political peril, and they remain the biggest-ticket item on Gulf budgets. [And UAE slashed their big-ticket items, like the Airbus 380.]
While Oman and Bahrain stand out, the experience of the bloc’s two smallest economies might be less an exception than a warning for what could lie ahead if governments don’t diversify -- and fast.

Waha Price Collapse Signals Worsening Gas Supply Glut In The Permian -- RBN Energy -- February 15 2019

Waha later, whoo-hoo now: WTI up 2%, up over $1.00/bbl; now trading above $55. Whoo-hoo.

Busy, busy day. Later:
***********************************
Back to the Bakken

Wells coming off confidential list today -- Friday, February 15, 2019: 56 wells for the month; 159 wells for the quarter
  • 33922, 938, Oasis, Dawson 5494 42-12 3B, Alkali Creek, t9/18; cum 132K 12/18;
  • 33918, 940, Oasis, Dawson 5494 42-12 4T, Alkali Creek, t9/18; cum 120K 12/18;
  • 33916, 901, Oasis, Dawson 5494 41-12 2T, Alkali Creek, t9/18; cum 114K 12/18;
  • 30136, 1,008, CLR, Pletan 5-18H2, Jim Creek, t11/18; cum 48K 12/18;
Active rigs:

$55.492/15/201902/15/201802/15/201702/15/201602/15/2015
Active Rigs65573841137

RBN Energy: Waha price collapse signals worsening gas supply glut in the Permian.
The U.S. natural gas market last week was again reminded of the hair-trigger conditions that Permian producers and marketers are operating under — with gas production pushing against available takeaway capacity, all it takes is an otherwise minor/routine maintenance event on even one West Texas takeaway pipeline to send regional gas prices spiraling into negative territory. Waha Hub gas prices last week collapsed to their lowest level ever, with intraday trades even going negative — meaning some had to pay the market to take their gas. This wasn’t the first time that’s happened in the Permian — a similar event occurred in late November 2018 — but it was the worst to date and signals a heightened supply glut in the region, at least until the first new takeaway pipeline comes online in the fourth quarter of this year. Today, we explain the recent price weakness in West Texas and implications for Permian basis in 2019.
A reminder, the Waha hub, from an earlier RBN Energy post:
The Waha Hub is situated in northern Pecos County in West Texas near Fort Stockton — about 260 miles east of El Paso. Geologically speaking, the hub sits atop the Permian’s Southern Delaware Basin, an oil-rich part of the larger play. Like any good, liquid trading hub worth its salt, Waha is well connected, with ample receipt, delivery and takeaway capacities. The Waha Hub comprises interconnects with more than a dozen takeaway pipelines, including four major interstate pipelines and nine Texas intrastate pipelines, together totaling more than 10 Bcf/d of takeaway capacity. This capacity is all the more important given that there is little demand near the hub itself — less than 250 MMcf/d, on average — which makes Waha primarily a transit hub.