Schlumberger Sees Increased Oil Demand In 2015 -- October 17, 2014

Updates

Actually, a clarification, my error:  "everyone" sees increased demand for oil next year. IEA and OPEC cut that increase in demand estimate by 300,000 bopd to 1.1 million bopd. Schlumberger cited the increase in demand for 2015 in their spending plans for next year.  Wow, I'm glad folks keep me straight on all this. I had the same problem with debt and deficit. Ha.

That is interesting: a 1.1 million bopd increase in oil demand in 2015 -- that's not trivial. Something tells me the sell-off was a bit overdone.
 

Original Post

 
IEA and OPEC both suggest oil demand will decrease in 2015 due to global slowdown. Schlumberger's outlook? Schlumberger looks for higher oil demand in 2015. I agree. The world's two largest economies, China and the US, are not falling back into recession. From Rigzone:

Schlumberger Ltd, the world's largest oilfield services company, said oil and gas spending would increase in 2015 as global oil demand is poised to rise, downplaying fears of an investment slowdown due to weak crude prices.

Schlumberger shares were up 7 percent at $97.10 in early morning trading.

The company reported a better-than-expected quarterly profit after markets closed on Thursday, helped by strong drilling activity in North America.

Oil prices have slid nearly 20 percent since June due to oversupply, signs of weak demand growth and indications that key oil producers, particularly Saudi Arabia, have limited appetite to intervene in prices.

"The key to the overall oil market is still that the global oil demand is currently set to increase by 1.1 million barrels per day in 2015, which will require growth in exploration and production investments," Schlumberger Chief Executive Paal Kibsgaard said on a post-earnings call on Friday.

The International Energy Agency earlier this week cut its 2015 estimate for oil demand growth by 300,000 barrels per day to 1.1 million bpd, citing weak global economies.

Oil demand was "largely unchanged," while supply was relatively "well balanced," Kibsgaard said on the call.

"WTI oil at $80 a barrel for a short time is unlikely to have an impact on growth and margins for the services companies, but $80 oil for more than a month or two certainly will," William Blair & Co analysts wrote in a note.

"Short time" vs "a month or two." Say what?

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What Do The Russians Say?

Rigzone/Reuters is reporting:

Gazprom Neft, Russia's fourth biggest oil producer by output, said on Friday it did not see a fall in the oil price as a long-term trend, expecting it to return to the level of $95-110 per barrel.

Gazprom Neft, the oil wing of state gas company Gazprom, added that its investment projects envisage an oil price of $95 per barrel.

Brent has lost more than 20 percent of its value since June and was dragged down earlier in the week by signals from key OPEC members that the group was unlikely to intervene. It is now trading at $85.93 per barrel.

No End In Sight For US Oil Production Boom -- October 17, 2014

The New York Times: no end in sight for US oil production boom.

My musings and others along the same line:

• Lynn Helms' comments
• Personal musings
• Countries at risk; Bakken actually sitting in a nice spot
• Could the shale oil boom be ending?

It's nice to see that The New York Times sees things the way I see things. It will be interesting to see how this plays out.

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Three More Brooklyn Oil Field Permits

CLR has permits for three more wells in the Brooklyn oil field.

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Also In The New York Times
Six Simple Words

Ever since President Clinton's presidency, parsing comments and parsing news articles has become a national pastime.

This is a another example. From The New York Times on article regarding the Ebola thing:

The business-as-usual sentiment at the White House changed abruptly, officials said, when a second nurse in Dallas contracted the disease early Wednesday morning. The fact that she had traveled on a Frontier Airlines flight despite having a fever added to the concern, officials said.

Did you see what was missing? If not, read it again.

The fact that the nurse "traveled on a Frontier Airlines flight despite having a fever" was barely the story.

Remember: she said she talked with the President Obama's health team (the CDC) about her "fever" -- not once, but perhaps several times in the course of one telephone call if not more than one telephone call -- and President Obama's health team (the CDC) said it was okay for her to fly. The CDC confirmed that (and it would not have come to light had it not been for the internet and talk radio. I think Mike Savage, more than anyone else, moved that story along (about the CDC being called) -- it was almost too much to believe. The nurse cannot be faulted; she had concerns and actually telephoned the CDC. (Actually I'm surprised she got through; I'm surprised they didn't hang up on her thinking she was a nut case, but I digress.)

That's why this story is all of a sudden so big: the president's health team told her it was okay despite her fever (albeit, low grade) and her very, very mild symptoms (a hint of malaise, perhaps).

My hunch is this: this is what the reporter's article looked like before the editor lined through six simple words:

The business-as-usual sentiment at the White House changed abruptly, officials said, when a second nurse in Dallas contracted the disease early Wednesday morning. The fact that she had traveled on a Frontier Airlines flight with the approval of the CDC despite having a fever added to the concern, officials said.

The CDC director, by all rights, should have taken the lead, perhaps be appointed the Ebola czar. The fact that he was not suggests that for all intents and purposes, the president lost faith in him, "fired him in place," and appointed someone else to be in charge.

More Than Just The Bakken In North Dakota -- Kenmare Goose Fest -- North Dakota -- October 17, 2014

Link here:

8 Day Hunting Festival

GooseFest has something for everyone!!

Held during the latter part of October, what is better than a day of goose hunting? How about eight days of goose hunting during Kenmare, North Dakota's GooseFest, an annual hunting festival which falls during the peak migration of snow geese?

Kenmare lies along the Des Lacs National Wildlife Refuge and is also situated between the Upper Souris Refuge and the Lostwood Refuge. Each year, the three refuges are hosts to over 400,000 snow geese for several weeks during the fall migration.

Each fall the Kenmare area becomes the center of a true hunter's paradise. Besides the snow geese, hunters will find abundant populations of Canada geese, mallard ducks, Hungarian partridge, sharptail grouse, and ringneck pheasant. After bagging a limit of geese, the avid hunter can spend the afternoon flushing upland game.

I am definitely not a hunter. My brother was an excellent hunter. Self-taught. Bow-hunter: big game as well as fishing with a bow. I hunted occasionally with my dad, and then again went hunting with one of the closest friends I ever had while in the US Air Force, stationed at Grand Forks AFB. Some incredible memories. Wild duck may just be some of the best eating ever.

Williston Pays Off Its "New" Jail Eighteen (18) Years Early -- October 17, 2014

The Bismarck Tribune is reporting: Williston pays off "new" jail in six (6) year, eighteen years ahead of schedule. Williston is now looking at doubling the size of the "new" jail. From the link:

The county sold $14.5 million in bonds for the jail that was built in 2008, with a payoff date in 2032.

The half-percent sales tax enacted to fund the facility raised the entire amount in five years, and the county plans to pay off the bond on Nov. 1.

Commissioner Dan Kalil said the county could have continued the special tax, but that it notified the state earlier this month that it would not do so.

"We told the public it was for the jail and when we had the money it would end," he said. "It's done."

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A Reference To Mark Twain's Eve's Diary

 
Interview, Only Lovers Left Alive, Tilda Swinton

Week 42: October 12, 2014 -- October 18, 2014

Story of the week?
$4 billion plastics plant? In Bismarck?
$4 billion plastics plant announcement

CBR
Why the Bakken is sitting pretty, even with a price slump

Operations
North Dakota oil production hits new record in August, 2014 (latest data)
August production numbers

Bakken economy
Williston's taxable sales up 15% year-over-year

Slump in oil price
Lynn Helms' comments
Personal musings
Countries at risk; Bakken actually sitting in a nice spot
Could the shale oil boom be ending?

Other formations
A random look at the Silurian

Taxable Sales, 2Q14: Williston's Taxable Sales Up 15% Year-Over-Year -- October 17, 2014

Taxable sales for 2Q14:

• Fargo: $707,24,918
• Williston: $911,990,254

This is the 12th consecutive month that taxable sales in Williston exceeded taxable sales in Fargo; the last time Fargo was ahead of Williston was 2Q11.

This is the second highest monthly taxable sales recorded in Williston; the highest recorded was $952,804,340 back in 3Q12.

Taxable sales in Williston, one year ago, 2Q13: $795,558,467.

Taxable sales for Williston, 2Q14, increased by almost 15% over 2Q13. 

Daily Activity Report -- October 17, 2014

Active rigs:

	10/17/2014	10/17/2013	10/17/2012	10/17/2011	10/17/2010
Active Rigs	190	185	186	195	153

Wells coming off confidential list today were posted earlier; see sidebar at the right.

Eleven (11) new permits --

• Operators: Oasis (5), CLR (3), SM Energy (2), Petro-Hunt,
• Fields: Cottonwood (Mountrail), Brooklyn (Williams), Garnet (Divide), Burg (Mountrail), Powers Lake (Mountrail)

Comments: Very, very interesting fields to get new permits considering slump in price of oil

Operator transfer from MRO to Triangle Petroleum: 9, all from the current Bakken boom; all in Williams County.

Off The Net For Awhile

Speaking of Ebola, which we weren't, from Wiki:

From 1976 (when it was first identified) through 2013, the World Health Organization reported a total of 1,716 cases. The largest outbreak to date is the ongoing 2014 West African Ebola outbreak, which is currently affecting Guinea, Sierra Leone, and Liberia. As of 15 October 2014, 8,998 suspected cases resulting in the deaths of 4,493 have been reported.

From 1976 to through 2013, there were a total of 1,716 case. Almost 40 years and less than 2,000 cases.

Then, all of a sudden, an outbreak that seems to be significantly different. Again, according to wiki:

An epidemic of Ebola virus disease (EVD) is ongoing in certain West African countries. It began in Guinea in December 2013, then spread to Liberia and Sierra Leone. Twenty additional cases occurred in Nigeria and were preliminarily contained, and one case in Senegal was contained and the outbreak there declared over on 17 October.

Cases of secondary infections of medical workers in the United States and Spain occurred, neither of which has yet spread to the general population.

As of 15 October 2014, the World Health Organization (WHO), the United States Centers for Disease Control and Prevention (CDC), OCHA and local governments reported a total of 8,998 suspected cases and 4,493 deaths (4,995 cases and 2,729 deaths having been laboratory confirmed), though the WHO believes that this substantially understates the magnitude of the outbreak with possibly 2.5 times as many cases as have been reported.

On 14 October, during a news conference in Geneva, the assistant director-general of the WHO stated that there could be as many as 10,000 new Ebola cases per week by December 2014.

The article then goes on to "blame" almost everything, and everyone except George W. Bush, for the magnitude of this outbreak.

When I go through the list of things that the WHO explains why this epidemic is worse than before, the excuses seem to be the same things that existed between 1976 and 2013. There seems to be nothing new under the sun.

The question I don't hear anyone asking: is there something different about the Ebola virus this time, and if so, what is it?

Less than 2,000 cases from 1976 until last year. Now, in less than 10 months, with a much better understanding of the disease, with much better medical care in place, and a UN Ebola response team (LOL), one has to ask the question, has the transmission of the Ebola virus changed in some way?

Two nurses who were trained in "universal precautions" became infected -- somehow this does not make sense.  With possibly 22,495 cases so far (8,998 x 2.5) in less than a year, compared to less than 2,000 total cases over almost 40 years up until 2013 ..... bothersome.

Electricity Rates Soaring In States With Emphasis On Wind Power -- October 17, 2014

I continue to transcribe my 2009 journal. It is amazing how many things I wrote about then that are headlines now. This one for instance, sent to me by Don.

Forbes is reporting:

Electricity prices are soaring in states generating the most wind power, U.S. Energy Information Administration data show. Although U.S. electricity prices rose less than 3 percent from 2008-2013, the 10 states with the highest percentage of wind power generation experienced average electricity price increases of more than 20 percent.

According to the U.S. Energy Information Administration (EIA), the 10 states in which wind power accounts for the highest percentage of the state’s electricity generation are:

• Iowa – 27%
• South Dakota  – 26
• Kansas – 19
• Idaho – 16
• Minnesota – 16
• North Dakota – 16
• Oklahoma – 15
• Colorado – 14
• Oregon – 12
• Wyoming – 8

The wind power industry claims switching from conventional power to wind power will save consumers money and spur the economy. However, data from the top 10 wind power states show just the opposite. From 2008-2013 electricity prices rose an average of 20.7 percent in the top 10 wind power states, which is seven-fold higher than the national electricity price increase of merely 2.8 percent.

Look how price increases parallel wind energy:
The 2008-2013 price increases in the top 10 wind power states were:
Iowa – 16%

• South Dakota – 25
• Kansas – 26
• Idaho – 34
• Minnesota – 22
• North Dakota – 23
• Oklahoma – -2
• Colorado – 14
• Oregon – 16
• Wyoming – 33

Sad to see "North Dakota" in that group.  One of the few missteps for that state, I suppose. 

For Minnesota,

In Minnesota, electricity consumers spent $6.4 billion on electricity in 2013. Had Minnesota electricity prices risen at merely the national average from 2008-2013, however, Minnesota electricity consumers would have spent only $5.4 billion on electricity. That’s $1 billion in excess electricity costs in 2013. If we divide that up among Minnesota’s 2.1 million households, the extra electricity costs drained $476 from the average Minnesota household in 2013.

The good news: $500/12 months = $40 or about $1.40 "to feel good" about saving the world.

Friday -- October 17, 2014

Statoil CEO abruptly resigns; to head another oil and gas company.

Now it's Ms Yellen who says things are worse under President Obama. First it was Obama's hand-picked VP Joe Biden who said that over the course of the Obama-Biden administration, the average salary has increased by less than 14 cents. WOW. Now Ms Yellen is worried about the income inequality under President Obama:

Yellen's words come as the Fed prepares to exit the third leg of its monthly bond-buying program known as quantitative easing. The central bank had cut the program's level to $15 billion a month, and is expected to shut it down completely when the Federal Open Market Committee meets Oct. 28-29.

However, the Fed likely will keep short-term interest rates anchored near zero, where they have been for nearly six years. Critics say the central bank has been too low for too long, and in fact has helped exacerbate inequality by providing liquidity that has largely helped stock prices zoom nearly 190 percent higher amid an otherwise slow economic recovery.

And, of course, she, too, is afraid to mention the 800-lb gorilla in the living room.

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I see President Obama has picked a political hack -- Algore's chief of staff -- to be the Ebola czar -- no medical background, I'm sure. But I could be wrong; he may have his MD and post-graduate training in infectious diseases. I wonder if he will fly to western Africa, go on a hand-shaking/photo-op tour?

This is not an investment site. Do not many any financial, investment, or relationship decisions based on what you read here or what you think you may have read here.

Let's see, oil is down to $82 or thereabouts.

The one thing I haven't heard anyone talk about: speculators; speculators trading in oil futures, driving prices lower. LOL.

Housing starts beat expectations.

Initial unemployment claims hit 14-year low.

Americans are getting a huge "tax break" -- just in time for the new Apple computers and tablets -- as price of gasoline solidly below $3.00 now, except in some localities. Still about $4.00 in Malibu for all the folks heading out there this weekend for surfing. Do they even surf off Malibu any more? Huntington Beach: about $3.30.

I didn't read the story; just saw the headline: Fed to keep pumping.

What's not to like?

Yesterday I came across this in my journal from a few years ago, January 28, 2009:

 -- oil is holding at $43 – well off its appropriate value of $75 and crazy high of $145 – and with news that there is a glut of oil, including oil being held in tankers off shore.

The North Dakota Bakken boom began in 2007. In 2009 the boom was barely started, most of the drilling -- exploratory wells, the most expensive kind. And they were expensive. $4 - $6 million for short lateral, one-stage fracking. WTI was down to $43. And the boom kept going. The Great Recession probably hit bottom about then and it was a long slog to get where we are today. Sort of puts things into perspective.

On January 26, 2009, one could have loaded up on KOG at 34 cents / share. Sort of puts things into perspective.

At the end of the day, three events put my thoughts about investing in oil in perspective:

• the Exxon Valdez 
• the Texaco bankruptcy
• how incredibly deep BP pockets were back in 2010

Active rigs in North Dakota:

	10/17/2014	10/17/2013	10/17/2012	10/17/2011	10/17/2010
Active Rigs	190	185	186	195	153

 
RBN Energy continues its series on CO2 EOR. 

That big bad company, Wal-Mart, is going to "bump" all employees above the minimum wage. Of course, they've been doing that in Williston, Boomtown, USA, for quite some time. Starting pay at Wal-Mart - nearly $20/hour now in Williston? Don't give me that "it's expensive to live there." A lot of folks already live there, some of whom are not working (yes, hard to believe, isn't it?).

Speaking of which, there is a baby boom in North Dakota; reported over at CNN. I remember all the talk early in the Bakken boom that only men would end up living in Williston. From the very beginning, based on my experiences in the military, I knew (and opined often on the blog) that wives and girl friends would follow. I didn't talk much about a baby boom -- my mind was focused elsewhere, I guess. All I knew was that wives and girlfriends would follow their men to the Bakken. And many of them have done very, very well, also, on their own. It's really quite impressive. I'm looking forward to one last trip to Williston before the end of the year.

Earlier this week (October 14, 2014), I listed in order the countries, or "entities" hurting due to low oil prices, and put them in order. I put Venezuela at the very top, #1 in the "pain" department. I see Bloomberg says Venezuela has gone from bad to worse due to low oil prices. Is Chavez still sending heating oil to Boston for free? Yes, I know he's dead, but his spirit lives on ... speaking of which, to the best of my knowledge Fidel Castro is still with us ... must be 88 years old or thereabouts ...

But deep-sea drilling contracts are being honored despite slump in oil prices (speaks volumes):

Chevron adds new drillship to deepwater operations in the Gulf of Mexico; the Pacific Sharav will work for Chevron under a five-year contract : Co announced that the Pacific Sharav, a deepwater drillship built to Chevron's specifications, has arrived in the Gulf of Mexico to work under a five-year contract with Pacific Drilling.

Earnings: GE beat expectations (they were "saved" by new focus on oil); Schlumberger is doing very well, having beat expectations; same with Morgan Stanley, beating expectations. 

More:

Range Resources announces new credit facility and ratings upgrade; five-year agreement with a syndicate of twenty-nine financial institutions has a maximum facility size of $4 bln

CareTrust REIT declares special dividend of $5.88 per share

Okay, that's all.