Revised 3Q14 GDP Almost Hits 4%; Tuesday -- November 25, 2014; EOG Submitting Plans For 1500 Wells In Wyoming

A reader sent this link: aerial view of the Dakotas, Smithsonian Channel. Pretty cool. 

On November 23, 2014, I posted a long note on "the" New York Times opinion piece disguised as a news article; today, there is a link to Mike Kemp's response over at Rigzone. Worth reading. 

US economy rockin' and rolling: revised GDP figures for 3Q14 suggest the economy grew at 3.9% vs 3.5%, the original figure. I think there's on more schedule revision; maybe "we'll" hit 4%.

Active rigs:

	11/25/2014	11/25/2013	11/25/2012	11/25/2011	11/25/2010
Active Rigs	189	187	183	201	162

RBN Energy: the propane story, an update.

Last winter a Midwest propane shortage of epic proportions caused prices at the Conway, KS trading hub to spike over $4/Gal in January 2014 (nearly twice the price of crude oil at the time).

The shortage was caused by a perfect storm of events starting with high propane demand from farmers for crop drying in the late fall and ending with record retail and commercial heating demand during the Polar Vortex cold weather in January.

The high demand was compounded by the partial closure of the Kinder Morgan Cochin pipeline supplying propane to the Midwest from Western Canada and a temporary shutdown of the Hess Tioga fractionation plant in North Dakota, not to mention booming Gulf Coast propane exports reducing domestic availability.

This year the Midwest propane market appears to be much better supplied in spite of the loss of the Cochin pipeline that has now been reversed to carry diluent to Canada. Prices should therefore be less volatile than last year – unless Mother Nature throws another icy winter curve ball. Today we look Midwest propane prices and supply this year.

We have previously described the seasonal nature of the U.S. market for propane – (the only natural gas liquid (NGL) with a hit animated TV series - see NGL Trading Part 2 Propane).

About 57 percent of propane demand comes from residential and commercial space heating during the winter. That has traditionally left a surplus of supplies in the summer months, which is injected into storage so that it can be retrieved when needed to meet heavier winter demand. And to some extent what happened last winter in the Midwest propane market was just a classic case of too much demand draining available storage and causing prices to run up.

But changes in the overall NGL market also impacted what happened to propane in the Midwest last year – changes to infrastructure and to overall propane supply and demand that had wider reaching consequences. As a result propane marketers and consumers now need to pay more attention than usual to fundamentals like price, storage levels and weather forecasts in order to secure supplies at reasonable market prices.

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EOG Submits Plans To Drill 1,500 Wells in Wyoming

Don sent me the link at the Casper Star Tribune:

EOG Resources, a Houston oil company, has submitted plans to the U.S. Bureau of Land Management to drill up to 1,500 oil wells along the Campbell-Converse county line. 

The plan calls on developing 150 wells annually for 10 years and seeks an exemption from seasonal drilling restrictions aimed at protecting a rare raptor, the ferruginous hawk.
The BLM, which owns much of the mineral rights in the area, must first complete an environmental study before signing off on the proposal, known officially as the Greater Crossbow Oil and Gas Exploration and Development Project. The nearly 120,000-acre area is between Wright and Bill.

That analysis will be carried out separately from the environmental impact study the bureau is conducting in Converse County, where up to 5,000 wells are projected to be drilled in the next decade.

For a bit of background regarding "the 5,000 wells," see this post of August 18, 2014. 

This is reminiscent of the early days in the Bakken in which EOG submitted plans for about 570 wells in the Parshall and/or Van Hook oil field (Bakken) in one case.  [That takes us back to 2009 when I knew very little about the Bakken; I had been following the Bakken for only two years by 2009.]

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Saudi Arabia and The Slump In the Price of Oil

A reader sent me this link at Business Insider: 

OPEC's biggest crude producer Saudi Arabia will have its sights set on the upstart US shale oil business at a crucial cartel meeting to debate possible output cuts on Thursday.

Analysts say the kingdom is strong enough to withstand lower prices.

"Saudi Arabia wants to try and knock out shale oil competitors from the market," said Saudi economist Abdulwahab Abu-Dahesh.

"They have the fiscal strength to remain steadfast for two to three years," he told AFP.
Oil prices have collapsed to four-year lows on factors including dampening demand in a sluggish world economy, a sharp rise in output from shale oil and other unconventional sources, and a strong dollar.

It will be interesting to follow. In the meantime, the US consumer is going to be doing very, very well with gasoline falling in price. 

Venezuela will feel the pain the most but won't have much voice at the OPEC meeting. Russia will also feel the pain but is not a member of OPEC. Bloomberg is reporting that Venezuela is looking to meet with Saudi Arabia, Russia, and Mexico ahead of the OPEC meeting.

CNBC  also has a story on Saudi Arabia, shale oil (yes, I know that's not quite correct), and the slump in the price of oil. My perspective: if Saudi Arabia wants to keep giving away their resource for $75/bbl (and probably lower), that's find with me. The Bakken may slow down, but it won't go away. And US consumers are going to love "cheap oil."

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Halcon

Halcon could have difficulty finding economical wells in 2015 -- Filloon.