Friday, June 6, 2014

Outside Of The Bakken, My Number One Interest Is The PJM Story -- So Many Stories Intersect At PJM

Active rigs:

Active Rigs194189215171121

RBN Energy: a PJM update.
Sitting within or near the Marcellus/Utica shale gas play and facing tightening environmental rules that start kicking in next April, power generators in the PJM (a large region that includes the states of Pennsylvania, New Jersey, Maryland, Delaware, West Virginia and Ohio as well as parts of Virginia, North Carolina, Kentucky, Indiana, Illinois and Michigan) and New York electricity markets very likely will burn increasing amounts of natural gas the next few years.
But with pressure to rebuild depleted gas inventories after this year’s Polar Vortex winter and the next wave of coal-unit retirements still months away, to what degree will generators in the region turn to gas this summer? In this episode in our gas power burn series, we provide a progress report on gas-inventory rebuilding and look at this summer’s coal-versus-gas dynamics in PJM and New York.
In the first episode of our series, Should I Store or Should I Burn—Will Power Burn Jeopardize Gas Injection Season—we recounted how the polar vortices in January and February (and colder-than-normal weather in December 2013) resulted in record draw-downs in stored natural gas.
By the beginning of spring, gas inventories were well below 900 Bcf. While the pace of inventory rebuilding has picked up in recent weeks (119 Bcf the week ending May 30, according to the U.S. Energy Information Administration, or EIA), the inventory level (at 1.5 Tcf as of May 30) remains a hefty 33% below where it was at the same time last year (2.4 Tcf) and 37% below the five-year average for late May (2.4 Tcf).
Note: RBN Energy posts generally disappear over time and archived for subscribers. If you want to read this story before it goes away, do it sooner, not later.
According to EIA statistics, in the summer of 2013, generators in the seven states that make up the core of PJM (Pennsylvania, Maryland, New Jersey, Delaware, Virginia, West Virginia and Ohio) plus New York consumed an average of 4.6 Bcf/d. In the gas-friendly summer of 2012 (hot weather and low gas prices), gas consumption by generators in the core of PJM plus New York averaged 5.3 Bcf/d, or 16% higher than the summer of 2013.
EIA does not provide state-by-state, month-by-month forecasts of expected gas-fired generation or gas consumption for power production, but does provide forecasts for the broader Northeast and Midwest regions, which together include PJM and New York.  But if we assume gas-fired power generation in the PJM/New York subset of the combined Northeast and Midwest this summer to be equal—at best—compared with last summer, and quite likely down a little, we might expect a summer of 2014 gas power burn in PJM/New York of perhaps 4.5 Bcf/d.
If that turns out to be the case, then that surplus gas will likely increase storage injections. But if PJM and New York have a brutally hot, humid summer and a lot of gas-fired power is used to keep pace with spiking electricity demand, significantly less Marcellus/Utica gas would be diverted to the region’s underground storage facilities.
That doesn’t mean of course that those storage inventories can’t be replenished by inflows from Gulf Coast, Rockies or Canada – the traditional gas suppliers to the Northeast.  However, a return to the summer of 2012’s gas power burn level of 5.3 Bcf/d could reduce locally produced gas injection by some 800 MMcf/d, or nearly 100 Bcf over the four-month summer period—unless all that gas demand forces gas prices high enough to spur more local gas production (and it may well). The result could be logistics challenges getting sufficient gas into NY/PJM storage from outside the region before winter.
By the way, the activist environmentalist Mr Steyer is probably very, very aware of the value of these generators to terrorists, particularly the ones who have just been released. I say that because it was noted yesterday that Mr Steyer is quite concerned about terrorist attacks on the Keystone XL North pipeline, which has not been built yet.

Go to the linked article to see the rest of the story.

Note to self: saved.

For Investors Only -- June 6, 2014

As I have said many times, a 100 Bakken wells would hardly move the Exxon Mobil production needle, but for some of the "pure Bakken-play" operators, a few good wells can make a huge difference. Look at the Oasis wells that came off the confidential list today:
  • 24927, 1,760, Oasis, Wayne Zumhof Federal 5300 44-15T, Willow Creek 1st Bench Three Forks, 36 stages, 3.8 million lbs sand/ceramic, t1/14; cum 32K 4/14;
  • 25221, 2,074, Oasis, Aspen Federal 5300 24-15B, Willow Creek, middle Bakken, 36 stages, 3.7 million labs sand/ceramic, t2/14; cum 54K 4/14; 
  • 25393, 2,614, Oasis, Augusta 5200 11-28B,  Camp, t1/14; cum 53K 3/14;
  • 25577, 3,134, Oasis, Ida 5200 21-28B, Camp, t1/14; cum 63K 4/14;
  • 25689, 1,992, Oasis, Crawford 5493 44-7T, Robinson Lake, t12/13; cum 35K 4/14;  
  • 25725, 1,468, Oasis, Jase 5892 21-30T, Enget Lake, t2/14; cum 25K 4/14;
  • 25726, 1,450, Oasis, Mahaila 5892 21-30H, Enget Lake, t2/14; cum 32K 4/14;
  • 25740, 810, Oasis, Fairfax 6093 12-26B, Gros Ventre, middle Bakken, 36 stages, 4.5 million lbs sand; t12/13; cum 27K 4/14;
  • 26057, 1,593, Oasis, Montague 5602 42-34 5B, Cow Creek, t2/14; cum 17K 4/14;
  • 26124, 1,041, Oasis, Lefty 5200 14-30 2T, Camp, t4/14; cum 13K 4/14;
  • 26178, 1,391, Oasis, Satsuma 5693 44-35B, Alger, t4/14; cum 11K 4/14;
  • 26179, drl, Oasis, Clementine 5693 44-35T, Alger, no production data,
  • 26182, 140, Oasis, Morgan 6093 12-6 1H, Gros Ventre, 1st Bench Three Forks, 36 stages; 4.3 million lbs sand; t1/14; cum 13K 41/4;
Other than these thirteen (13) wells, only two other wells will come off the confidential list today. 

So, what does the market have to say about this report? Let's check the market: the price of WTI oil is down slightly at the movement but Oasis up about 1.5%, up above $50/share again.

Disclaimer: this is not an investment site. Do not make any investment decisions based on what you read here or what you think you may have read here. 


Trading at new 52-week highs:  AAPL (again, shorts are really, really getting squeezed -- ouch); BHI, COP, CRL, EOG, HAL, HK, NFX, OKE, PSXP, SLB, SRE, UNP, HES, WFT.

Another poorly written analysis of AAPL -- the analysts must be short.