What We Will Be Talking About Monday -- May 31, 2015

Updates

June 1, 2015: the Greek story? I was spot on. 

June 1, 2015: so how did we do? I was wrong when I said we wouldn't be talking about California today, although when I said that, I did mention that California will provide us many subjects to discuss throughout the month, including ObamaCare, the drought, and the minimum wage. It turns out there is a minimum wage story today. It turns out a child care center employee had her hours cut by 25% from eight hours to six hours/day; from 40 hours to 30 hours. The Los Angeles Times reports that the employee had her hours cut by 25% when the minimum wage kicked in, and that may be just the start. Her employer says that the day care center may have to close, and re-open as an after-school center. All because of the minimum wage. Regular readers know that The Los Angeles Times op-ed after op-ed asking for any examples where minimum wage hikes less to job losses or to businesses having to shut down. I guess we have our first example. Surprised to see The Los Angeles print this story.

June 1, 2015: so how did we do? Yup, 8 hours ago, Reuters posts the story on rig count -- whether drillers should crouch or pounce.  There are several stories on Greece but that was a no brainer. The big story I forgot: there are only six states that currently ban "open carry" outright. Texas is was one of those six. Today, the governor will sign the bill allowing open carry in Texas. It will get a lot of play in the east, but the stories will fail to mention that the six "states" that ban open carry include District of Columbia and New York -- and we've seen how that works out.

Original Post 

Greece heads the list. Everything points to things getting crazy as we get closer to default. Great political theater. At a minimum, the creditors will find a way to delay another 30 days.

Mideast: there are no embedded US journalists within ISIS and that's why we are getting such little news here in the states regarding "shock and awe" and the JV team, but it's clear things are building for a summer offensive. The torching of Iraq's largest refinery this past month does not bode well for the country. That one refinery was responsible for producing one-third of Iraq's domestic fuel supplies. The most interesting development: the White House clearly stating that the US is no longer responsible for Saudi Arabia's security.

Rig count: the number of active rigs in North Dakota will start the week at a record post-boom low. Some readers have suggested the number could go (much?) lower. I'll never find the post, but I think I once said 75 would be the lowest it would ever go, but maybe I'm thinking I said that.

Politics: except for those who live for politics, I don't think anyone else cares. All politics is local and the local races haven't begun for 2016. At the national level, the Democrats will coronate Hillary at the end of July, 2016, in Philadelphia. The Republican national convention will be held about 10 days earlier in Cleveland, Ohio, no doubt the home of the 2015 NBA champions. It's hard to believe but the 2015 championship series has not yet begun and it's already June. Carly and Scott will be the GOP nominees for P and VP. Not necessarily respectively.

ObamaCare premiums for 2016 will grab the headlines in November, 2015, now that we're starting to see trial balloons being released. New Mexico regulators will never allow a 50% increase in premiums.

California we won't be talking about tomorrow unless there's a big earthquake, but with big corporations leaving the state (most recently, Broadcom), ObamaCare, the drought, and the minimum wage in Los Angeles, there will be plenty to talk about over the next few months.

The Obama-Asian Trade Bill no one cares about will not be on the agenda at Williston's Cash Wise deli tomorrow morning, but it will be interesting to see how it plays out.

Waylon Reminisces

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Cable News Ratings

For the archives:

According to Nielsen “most current” estimates for the Dec. 29, 2014-March 29, 2015 quarter, Fox News cruised to a primetime victory in the key news demo of adults 25-54.

Fox News averaged 328,000 viewers nightly (up 9% vs. a year ago) and was followed by CNN (192,000, up 11%), MSNBC (136,000, down 40%) and HLN (130,000, up 11%).

CNN has now beaten MSNBC in primetime for four consecutive quarters. And for MSNBC, whose “Rachel Maddow Show” and “Last Word with Lawrence O’Donnell” had their worst showing on record, this is its lowest-rated quarter since Q2 in 2006.

Fox News was again especially dominant on weeknights, where its average audience of 409,000 adults 25-54 was larger than CNN (207,000) and MSNBC (131,000) combined.

I'm not surprised Fox News won by a landslide, I'm surprised, that CNN beat MSNBC, and even worse, HLN almost beat MSNBC. HLN is simply a video loop. 

Very Few Wells Coming Off Confidential List Monday -- June 1, 2015

Monday, June 1, 2015

• 29788, drl, Enerplus, Cactus 149-92-35B-05H TF, Heart Butte, no production data,

Sunday, May 31, 2015

• None.

Saturday, May 30, 2015

• 29271, 690, Hess, EN-Cvancara-155-93-1522H-8, Alger, t4/15; cum --
• 29604, drl, Hess, GN-Helen M-158-96-3229H-1, South Meadow, no production data,
• 29915, SI/NC, EOG, Fertile 73-0905H, Parshall, no production data,
• 30050, 116, Enduro NSCU Q-712-H2, Newburg, a Spearfish/Charles well, application says 14567 acres in spacing unit, t1/15; cum 2K 4/15;

10

We Should Know By The End Of July, 2015 -- May 31, 2015

Updates

June 18, 2015: WSJ front page article on relationship between Israel and Saudi Arabia with regard to Iran.  

It isn’t just about Yemen. Saudi Arabia—like Israel—is also concerned by Tehran’s pending nuclear deal with the U.S. and five other world powers. Fearing that the agreement, and the accompanying lifting of economic sanctions, would embolden Iran to expand its regional sway, some Saudis even hope—not so secretly—that Israeli Prime Minister Benjamin Netanyahu would use his country’s air force to destroy Iran’s nuclear installations.

“Israel is an enemy because of its origin, but isn’t an enemy because of its actions—while Iran is an enemy because of its actions, not because of its origin,” said Abdullah al Shammari, a Riyadh academic who served as a senior Saudi diplomat.

“This means that Iran is more of a threat. If I were a Saudi decision maker, I would not hesitate for a second to coordinate with Israel against Iran’s nuclear program.”

While Israeli officials are equally eager and say that secret contacts have taken place, this doesn’t mean that a diplomatic breakthrough will happen soon.

Original Post

I think we'll know by the end of July which way the price of oil will be headed by the end of the year (well, duh). One can find talking heads on both ends of the continuum: oil could still fall to $40; oil will be at $80 by the end of the year.

Two huge data points yet to be sorted out: gasoline demand in the US once the driving season begins, and the ISIS offensive that will begin this summer in the Mideast.

We've already had indications that gasoline demand in the US will hit new records this summer.

The other data point will come out of the mideast. The stories are starting to come out fast and furious with regard to the summer, 2015, ISIS offensive.

First, we had that excellent Telegraph story just the other day.

Now, we have another London newspaper story, this one in The Guardian suggesting all is not well in the kingdom:

Reports from Dammam described a car bomb explosion at the entrance to the al-Anoud mosque, despite security measures put in place because of last Friday’s incident near Qatif, in which 21 people were killed and 120 injured in the worst attack in Saudi Arabia in a decade.

The latest attack was quickly claimed by Isis, which said the “blessed martyrdom operation” had been carried out by a “soldier of the caliphate” it named as Abu Jandal al-Jazrawi. General Mansour al-Turki, spokesman for the Saudi interior ministry, said the terrorist was dressed in women’s clothes.

Analysts have described “lone wolf” initiatives encouraged by Isis, though the speed of the claim of responsibility suggested planning and coordination.

Isis has been paying special attention to Saudi Arabia since a speech by its leader, Abu Bakr al-Baghdadi, excoriating the royal family as the “head of the snake and stronghold of disease”.

And then perhaps the most bizarre story: Iran accusing Israel of assisting Saudi Arabia, or Iran accusing Saudi Arabia of requesting assistance from Israel to help fight terrorism in Yemen. International Business Times is reporting.

ObamaCare Premiums Could Rise 50% In New Mexico -- An Outlier; Minnesota To Feel The Strain -- May 31, 2015

ObamaCare

From The Billings Gazette -- watch for ObamaCare premium hikes, in Montana:

Health insurers selling individual policies on Montana’s Internet “marketplace” are reporting substantial losses for last year — and saying rate increases on marketplace policies are likely in store for next year.

Health-insurance companies had to guess at the cost of this new market, and it appears they guessed low, leading to losses in 2014.

“You’re shooting in the dark on your rates; you really don’t know,” said Jerry Dworak, CEO of the Montana Health Co-op. “You try to guess at what that rate will be, when you do that underwriting. … And you try to be aggressive, to get some (customers).”

“We made a deliberate attempt to expand access to coverage across all lines of our business, and as expected, it impacted our earnings in the short term in 2014, as compared to prior years,” added John Doran, spokesman for Blue Cross and Blue Shield of Montana.

Blue Cross’ parent company, Health Care Service Corp., reported losses of $282 million for 2014 — almost $1 billion less than its $684 million net gain for the previous year.

Politico is reporting ObamaCare premiums could rise sharply in 2016:

The cost of Obamacare could rise for millions of Americans next year, with one insurer proposing a 50 percent hike in premiums, fueling the controversy about just how “affordable” the Affordable Care Act really is.

The eye-popping 50 percent hike by New Mexico insurer Blue Cross Blue Shield is an outlier, and state officials may not allow it to go through. But health insurance experts are predicting that premiums will rise more significantly in 2016 than in the first two years of Obamacare exchange coverage. In 2015, for example, premiums increased by an average of 5.4 percent, according to PwC’s Health Research Institute.

Breitbart: ObamaCare premiums to rise in 2016:

Major insurers in some states are proposing up to 51 percent premium increases for health plans sold under the Affordable Healthcare and Patient Protection Act, commonly referred to as Obamacare. Despite single digit increases for 2015, insurance companies are seeing their costs jump and are demanding to be compensated with dramatically higher rates.

When insurance plans proposed 2015 rates last summer, they had only a little information about the health of the new customers they expected to sign up during the fall Obamacare expansion. Big insurers tended to ask for increases of less than 10%, while some smaller insurers tried to under-cut pricing by the major’s to take market share, according to the Wall Street Journal.

Meanwhile, The Los Angeles Times reports almost half of the state's ObamaCare "customers" report difficulty paying current premiums:

A new survey shows that 44% of Covered California policyholders find it difficult paying their monthly premiums for Obamacare coverage.

And a similar percentage of uninsured Californians say the high cost of coverage is the main reason they go without health insurance.

The issue of just how much people can afford will loom large as the state exchange prepares to negotiate with health insurers over next year's rates.

Many analysts are predicting bigger premium increases for 2016 in California and across the country. Insurers have more details on the medical costs of enrollees, and some federal programs that help protect health plans from unpredictable claims will be winding down.

And as President Obama has so eloquently said in the past: this will be the next president's problem.

And it may be even worse. In another Los Angeles Times story: amid slower growth, California's ObamaCare exchange cuts proposed spending:

After using most of $1 billion in federal start-up money, California's Obamacare exchange is preparing to go on a diet.

That financial reality is reflected in Covered California's proposed budget, released Wednesday, as well as a reduced forecast calling for 2016 enrollment of fewer than 1.5 million people.

The recalibration comes after tepid enrollment growth for California during the second year of the Affordable Care Act. The state ended open enrollment in February with 1.4 million people signed up, far short of its goal of 1.7 million.

A number of factors contributed to the shortfall, but health policy experts said that some uninsured folks still find health insurance unaffordable despite the health law's premium subsidies.

Those pocketbook issues make holding the line on costs an imperative for state officials. Covered California can't draw on the state general funds, and its primary source of revenue is a $13.95 monthly fee tacked onto every individual policy sold.

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Minnesota Will Feel The Strain

Regular readers understand this issue, why Medicaid enrollment is surging. The StarTribune is reporting:

Minnesota’s Medicaid rolls have soared past the 1 million mark for the first time, driven by two years of explosive growth in government insurance programs in the wake of federal health reform.

The enrollment surge — one of the largest in the country and the biggest for the state in 35 years — helped push Minnesota’s uninsured rate down to about 5 percent and has enabled more low-income families to receive regular medical care, doctors say.

But it also means that Medicaid and its sister program, MinnesotaCare for the working poor, now rank among the state’s largest health insurers, which could place long-run strains on the state budget. Fully one in five Minnesotans now receive health insurance from public programs, up from one in 10 just five years ago.

While unprecedented, the spurt was not unexpected after the administration of Gov. Mark Dayton made an ambitious push to cover more of Minnesota’s uninsured population.

And Mr Dayton loves to solve challenges by increasing personal income taxes. 

Soccer Practice Canceled Due To Wet Fields -- May 30, 2015

Soccer practice canceled due to wet fields.

The soccer fields where our 8-y/o granddaughter practices and plays soccer is on the west side of Grapevine Lake, a fairly large lake northeast of Ft Worth, on the north side of the city of Grapevine where we live.

The lake has been very, very low for several years due to the Texas drought.

For the past 15 days or so it has been raining, it seems, almost non-stop. Tonight for the first time since the rains stopped (although more rain overnight is forecast) we took a drive out to the lake. Most of the roads leading up to the lake are closed due to high water, and the traffic is very, very heavy as more and more people drive out to look at it.

I will load some better photographs of the lake later this week, but the photo above gives one a pretty good idea of the depth of the water on the soccer fields. The water is now deep enough that our older non-soccer-playing granddaughter can bring her water polo team out to the lake for practice.

The "original" edge of the lake is probably about a mile farther out in the distance.

These were some of the best soccer fields (and base ball fields in the same general area) I have seen anywhere in the country. It's going to be quite a project to get the fields back to their original condition.

This will be a huge, huge impact on the soccer program in north Texas.

The (London) Telegraph Article On Energy, The Mideast, And ISIS -- $200 Oil? -- May 30, 2015

The Telegraph has an incredibly good article on energy, the Mideast, and ISIS. Such a good article, and again it's a British paper that has the article. I'll talk more about it later. (This is such an important article, I've archived the entire article. If the link ever breaks and you want to see the story let me know.)

For now, a bit of reminiscing. Some years ago, the US Air Force sent me to northern England (Yorkshire) for prolonged periods of time for what they call "temporary duty." Over the course of several years, I probably racked up two to three, maybe almost four years cumulative time in Yorkshire, England.

While there I had a wonderful time. My job was strictly a 40-hour workweek, generally slightly less. I could not work longer if I had wanted. The building in which I worked was maintained by the "Brits" and it was an "8-to-4" / '5-days-a-week" operation and there was no getting around. The clinic closed promptly at 4:00 p.m. and I was in my civilian clothes, and hiking the countryside by 4:30 p.m.

We had weekends completely free. By 7:30 a.m. every Saturday I was either hiking or on the train to Knaresborough or Leeds or wherever the train took us. On Sunday, I ran -- yes, ran -- down the hill to the village mom-and-pop "7/11" to buy the two Sunday newspapers, The (London) Times and The (London) Telegraph. I bought eggs and fresh ham, ran back home and had ham and eggs, a beverage, and spent the morning reading two wonderful newspapers before going out for the day.

The (London) Times and The (London) Telegraph were absolutely excellent. In this country only  The New York Times Sunday comes close, but even the NYT is unable to measure up to the London Sunday papers.

***********************

Knock On Wood

Prior to the electrical storm last week, my wi-fi here in the house was problematic -- often not working well during the early evening hours between 4:00 p.m. and  9:00 p.m. But ever since the electrical storm last week, our wi-fi has been incredible. For the first time in three years, our wi-fi is working like I expected it to work.

Knock on wood.

Greatest Hits, ABBA  

Dancing Queen, 1976 -- almost 40 years ago; seems like yesterday, and still holds its own. 

Saturday, May 30, 2015

A lot of "stuff" is happening out there today. I can't keep up. There are some interesting trends, maybe I will run through them later. I talked about some of them in the previous post. A woman with a t-shirt with "Drink Wine. Save Animals. D Vine Wine. Grapevine, Texas" on the back just got her cup of Starbucks.

The t-shirt, "drink wine, save animals," reminded me of the inarguable truism (oxymoron, redundant) that Rockefeller and Standard Oil single-handedly saved the whales from extinction. I probably know as much about whales as the average Texan having visited the whaling capital and whaling museum in Bedford, Massachusetts, on many occasions. My favorite whaling books (the ones on my bookshelves):

• The Marine Mammals of the Northwestern Coast of North America: Together With an Account of the American Whale-Fishery (California Legacy Book), Charles Melville Scammon, 1874, foreword of current printing, 2007 
• The Whale: In Search of The Giants of the Sea, Philip Hoare, c. 2010 
• Eye of the Whale: Lyric Passage from Baja to Siberia, Dick Russell, c. 2004 

At the time the whales were being decimated and Standard Oil was being founded, there was no Greenpeace to save the whales. Had Standard Oil not come along, humans would have killed off the whales, if not all whale species, certainly several of the most impressive species. Forbes once had an article on that story. Google it; easy to find.

More later. I need to get home to start preparing for our older granddaughter's birthday party, later this afternoon.

This Is Not An Investment Site -- Do Not Make Any Investment Or Financial Decisions Based On What You Read Here -- May 30, 2015

Updates

June 3, 2015: in the original post below I link a Zacks story with SRE. Here is an update from Seeking Alpha, this date:

• Sempra Energy says it has signed an MOU with Woodside Petroleum to begin discussions and assessments for the potential development of Sempra LNG's proposed Port Arthur liquefaction project in Port Arthur, Tex.
• The Port Arthur project would be designed to include two natural gas liquefaction trains with a total export capability of ~10M metric tons/year, or 1.4B cf/day, as well as LNG storage tanks and marine facilities for LNG ship berthing and loading.

Original Post

I haven't even looked at the market (much) or the stories over at CNBC (on-line) most of this week. Time to catch up. Earlier when, still in bed, I was surfing the net on the iPad it seemed there were some interesting stories. I am curious if they are still there and if there are as many stories as I thought there were.

The first thing I noted: no Bakken crude oil derailments were reported in the last 24 hours.

The next thing, "Breaking News" linked at the blog reports an 8.5 magnitude earthquake in Japan; no additional details. When that was being reported on "Breaking News" about 7:30 a.m. CT, it had still not been reported over at Drudge, The Los Angeles Times, or Fox News. Still no update. I assume this story will attract little US attention a) if there is no tsunami; b) if there is no nuclear reactor destroyed; and, c) if the earthquake was not caused by fracking. [Update: deep, and off-shore, never mind; Tokyo shook; all of Japan felt it.]

I see that my credit card company website is down; can't connect. Happens rarely with this particular credit card company. I will have to pay my bill later.

This is most incredible; happens every month like clockwork. Within 24 hours of any particular month coming to an end, the car companies report their sales for that month. By Monday, 8:30 a.m., we will know the car sales for GM, Ford, and all the rest. And yet it will take three months for the US government to report crude oil imports. The government should have an estimate even before the crude oil is delivered; something called customs. Meanwhile, the bureaucrats -- and some of them are very, very clever -- have that data three months before the rest of us. But with the private sector automobile companies, we have their data within 24 hours, about the same time everyone else gets it.

And the story looks really, really good. Reuters is reporting:

Estimated sales of 1.6 million new cars and trucks in May would make for a seasonally-adjusted annual rate of 17.4 million vehicles, according to Edmunds.com, a car buying platform.

"This is going to be one of the best months ever," said David Kudla, chief investment strategist of Mainstay Capital Management in Grand Blanc, Michigan. Kudla sees May sales approaching $40 billion, not far from the $40.3 billion record in August 2014.

Weak auto results contributed to flat overall retail sales in April, but May is expected to represent a rebound. Lower gas prices could boost demand for sports utility vehicles and trucks, which have higher price tags and better margins.

There is also pent-up demand for new vehicles as consumers have been holding on to their cars for longer since the financial crisis. The average age of U.S. cars is now between 10 and 11 years.

So, we'll see.

I see a headline (did not read the story) that the Greeks are ready to compromise, could "seal a deal" this week.

So, we'll see.

Okay, now to a couple of fun stories. First, still over at Yahoo!Finance -- what dads want for Father's Day: beef. I find that interesting because I have a "love affair" with Omaha Steaks. I now make more purchases form Omaha Steaks for others (my two daughters and their families) than I do for myself. I've pretty much quit eating Omaha Steaks (for awhile) but still buy for my daughters and granddaughters. Oh, how funny, while typing the above, the linked story was downloading. I had no idea what the story was going to be about, and here it is, at the link:

In a recent survey, 80% of dads say they would like steaks for Father's Day and 57% of them will be grilling on that "special" day. And yet, only 9% are likely to receive the gift of red meat, according to Todd Simon, senior vice president of Omaha Steaks, a family-owned company that his great-great grandfather founded in 1917.

Father's Day is "our Second Christmas," Simon says and the company has launched an ad campaign this year aimed right at the hearts and stomachs of dads everywhere.

Wow, I feel vindicated. I thought I was crazy with regard to my Omaha Steak love affair.

So, we'll see.

Then this story. I'm not interesting in Abercrombie & Fitch but there was a story line in the linked article that caught my interest. I probably spend as much time in Starbucks as anyone else, and have a pretty good feel for the demographics. I am always impressed with how much teenagers in some parts of the country have; I think folks would be surprised how many teenagers I see in Starbucks in this area. I noticed it some time ago, and was going to blog about it, but never got around to it, and never all that interested, I guess. Just an observation. And here, Business Insider is reporting:

Researchers found that today's teens are increasingly spending on technology and food instead of clothing. 

For the first time in history, teens are spending as much on food as they are on clothing, according to the analysts at Piper Jaffray. This is fueled by trendy coffee drinks at Starbucks, the top food retailer among the demographic.

Many teens are also more concerned with having a new iPhone than a name-brand T-shirt, according to the survey. 

So, let's see. Google starbucks teenagers. Let's see what pops up. First hit, from NBC News, way back in September, 2007:

Kamyra L. Harding never gives her son coffee or soda, and rarely opts for treats such as chocolate cupcakes. But about twice a month, the mom does give in to her 4-year-old son Garrett David Brand’s request for a Chai tea latte from Starbucks.

“People here already know us,” Harding said on a recent visit to a Starbucks on New York's Upper West Side. “They know we want extra milk.”

Garrett has been a regular Starbucks customer since “he could hold a cup,” his mother says. Now when he passes a Starbucks he says, “I want to buy this tea.”

Starbucks, keenly aware of the pitfalls of being seen as trying to lure kids to drink sweet, caffeinated beverages, has for years insisted that it does not market to children — even as stroller traffic jams build outside some stores and teenagers pack others.

Now, however, the company is revising its stance on kids, acknowledging that the under-18 set has become part of the coffee chain’s customer base.

I'm at the Target Starbucks this morning. Heavy rain in the area so I am biking close to home. Four tables; mostly takeout. The only other table occupied right now: one mother with her two daughters. I estimate the older daughter is 13 years old; the younger is 9 years old. The mother went shopping; the girls are having Starbucks breakfast.

Another 17-y/o (or thereabouts) teenager is at the counter, ordering.

And so, it goes. These teenagers: lifelong customers. Same thing we see with regard to Apple and iPhones. Lifelong customers. And they upgrade every two years, passing their older phones down to their 8-y/o siblings.

Second hit, teen are spending all their money at Starbucks, not clothes, Huffington Post:

Remember when you were a teenager and you hung out at the mall all the time? The teenage landscape looks very different these days. Teens are over the mall and they're into restaurants.

A study by Piper Jaffray released on April 8 reveals that teens are now spending more on food than they are on clothing. It's the first time that food has trumped fashion since the study started. Since spending on food occurs less by e-commerce and more in person, most food expenditures necessarily take place at food establishments -- hence the rise of restaurants and the fall of the mall.

In 2014, American teens visited the mall an average of 29 times per year, down from 38 times in 2007. "Quietly, the restaurant has displaced the mall as the socially acceptable place to hangout for teenagers in America."

Now, back to that Business Insider story, the story that was posted in the past 48 hours. It turns out that story was based on a Piper Jaffray study that was posted at the Huffington Post last April, 2014. More than a year ago.

Talk about recycling news.

A lot of stories on oil. Gloom and doom. Or opportunity. Depends.

For me, it's a long, long story, going back to the early (or was it the late?) 1980's when I was first looking at individual stocks to buy. My first purchase ever, that I recall, was Burlington Northern -- I don't know what it was called then, or the ticker symbol -- but I remember vividly watching a BNSF train (if that's what they were then?) go by the restaurant we were in while visiting Fargo, ND. It was a long, long coal train. It was then and there I decided to buy shares in that railroad. I can't say for sure it was my first individual stock that I bought (I had only invested in mutual funds prior to that) but it was certainly among the top five.

I also bought shares in two utilities at the time; one went bankrupt a long, long time ago; the other is still one of my better holdings. Since this is not an investment site, I won't get any more specific. Along the way, I continued to follow utilities -- SRE was one of them -- again, no recommendations one way or the other or whether I have invested in SRE in the past or not but it has always intrigued me, being located in southern California somewhere. I see California as a highly regulated state and a state that might not treat its utilities very well, so it has been interesting to watch how nimble SRE has been responding to the changing energy environment. I often compare it to MDU.

Zacks has a long article on SRE today. Oh, there it is, based in San Diego. I am intrigued with this company because of its natural gas relationship with Mexico.

This post is long enough. Time to press on.

Oh, how funny. A mom with her two daughters (or one daughter and a friend) has just stepped up to the Starbucks counter. The girls are about 14 years old, it appears. The mother will have a coffee of sorts; the girls a trendy drink of sorts. Lifelong customers. (They are here in Grapevine/Euless/Colleyville for a volleyball tournament. They won their first game, and now have a break before their next game.)

Random Look At A BR Case In June Hearing Dockets Requesting Permission For 22 Wells In A 2560-Acre Drilling Unit -- May 29, 2015

There were a few interesting items in the June hearing dockets that came out today, including this case:

• 24120, BR, Pershing-Bakken, 22 wells on a stand-up 2560-acre unit (29/32-150-96, 5/8-149-96), McKenzie

This is the proposed 2560-acre stand-up drilling unit:

The vertical wells in section 29-150-96 are all very, very old Madison wells (with one exception).

I find it interesting what BR must have found on the core samples taken from the other Bakken horizontal wells in the area. The earlier wells were not particularly outstanding wells, but they were good wells. It looks like BR thinks they can get even better wells going forward.

Up at the very top of the graphic, one can see two rigs next to each other: BR sites. Most everything in the center of the graphic is BR. BR is a subsidiary of COP.

The single rig off to the northwest (upper left corner) is an Abraxis site.

Note the Grail oil field just to the east (right).

*******************************

When Does The NFL Season Start? I'm Starting To Go Through Withdrawal

I Hate Myself For Loving You, Joan Jett

President Obama Sets Another Record -- May 29, 2015

CNS is reporting:

Even if you leave out the first quarter of 2009—when the recession that started in December 2007 was still ongoing--President Barack Obama has presided over the lowest average first-quarter GDP growth of any president who has served since 1947, which is the earliest year for which the Bureau of Economic Analysis has calculated quarterly GDP growth.

The numbers are so bad, Janet Yellen doesn't believe them (the numbers). She faults the models which have been in use since 1947.

For the record, the White House blamed 1Q15 GDP on the weather, which was said to be "wintry." 1Q15 is January, February, March -- generally "wintry" months. Can't make this stuff up.

From The Williston Wire -- May 29, 2015

Stony Creek Rail Yard, industrial park with rail access to open:

A longtime Williston business has announced it is building a rail served industrial park that is shovel ready. Red River Supply has released its Stony Creek Rail Yard Master Plan. The 180-acre site is located in southeast Williston with immediate access to rail and road transportation. The development is owned and operated by Rich Vestal and his family. Vestal started the business in 1978 and since then it has grown and diversified. Red River Supply currently provides rail access, transloading, trucking, drilling and completion supplies, warehousing as well as new industrial park.

Starbucks to open in Williston -- at Mercy Medical Center.

Watford City breaks ground on $83 million events center -- previously reported.

Construction begins on new Bismarck public schools athletic complex:

Construction is underway at Legacy High School for the new Bismarck Public Schools Athletic Complex. The facility will have a football and soccer field, 8-lane track, 2 practice fields, 2 softball fields, and 2 baseball fields. Initially the complex will hold 3,500 people. "This is a district facility. This is going to be used by all of the high schools, all of the middle schools, and by a lot of our private schools," says Jim Haussler, Bismarck Public Schools Activities Coordinator.

Ground breaking held for affordable apartments in Sidney; Sunset Village Apartments; 36 units

 Really, really cool: Watford City-based singer/songwriter and Nashville recording artist Jessie Veeder kicked off the celebration of the release of her fourth original studio album Northern Lights by hosting a CD release concert and party recently at the Outlaws' Bar & Grill Ballroom in Watford City. Veeder was joined by several members of her band, special guest and friend, Adam Taylor, and her dad, Gene Veeder

Week 21: May 24, 2015 -- May 30, 2015

Best posts of the week
Crude oil up almost 5% in one day; OPEC numbers released

Operations
June, 2015, dockets  
QEP: three proposed 4-well pads in Heart Butte
QEP: two proposed 4-wells pads in Heart Butte
Two busy sections in Robinson Lake; one Hess, One Oasis
Enerplus' huge Monarch well comes off confidential list
24/7 Wall Street on Bakken rig count

Bakken 101
Background gases in Bakken wells
EOG drilling fast in the Bakken

Bakken economy
Bowman County's new airport opens
Drones -- UND -- Grand Forks -- Grand Sky 

Fracking
Investopedia talks about Chesapeake's opportunity to re-frack
Locations and sources for fracking sand -- a USGS database

Flaring
Random observation

Mergers/Acquisitions
Crescent Point Energy to Acquire Legacy Oil + Gas

Miscellaneous
US crude oil import numbers
US oil production hits 43-year high
US gasoline demand, breaking all kinds of records

Agriculture
North Dakota exports jump to $5 billion / year

Active rigs:

	5/29/2015	05/29/2014	05/29/2013	05/29/2012	05/29/2011
Active Rigs	80	187	183	218	172

Five (5) new permits --

• Operators: BR (3), Hess, Crescent Point
• Fields: Union Center (McKenzie), Beaver Lodge (Williams), West Ambrose (Divide)
• Comments:

Five (5) permits canceled including three HRC permits in Dunn County.

Five (5) producing wells completed:

• 29349, 656, Hess, SC-Ellingberg-LW-154-98-3229H-1, Truax, t5/15; cum --
• 29818, 915, SC-Norma-LE-154-98-0706H-1, Truax, 4 sections, t5/15; cum --
• 28872, 594, Hess, GN-halseth-158-97-3130H-2, New Home, t5/15; cum --
• 29117, 1,651, XTO, Frisinger 34X-8D, Hofflund, t4/15; cum --
• 29116, 1,435, XTO, Frisinger 34X-8H, Hofflund, t4/15; cum --

Cool -- Bowman County's New Airport Opens -- May 29, 2015

A cool $16 million.

Bakken.com is reporting:

Lt. Gov. Drew Wrigley says the Bowman County Municipal Airport 4 miles east of the town of Bowman spans 400 acres and has a 5,700-foot runway — the longest small general aviation runway in the state.

Wrigley says the opening of the airport will help address the impacts of rapid growth in the oil patch region.

Funding came from a variety of local, state and federal sources, including more than $2.9 million in state Energy Impact grants.

5,700 feet -- about the length of a short lateral.

"B" Side Will Get More Air Time -- May 29, 2015

Updates

June 8, 2015: great op-ed on the ethanol scam in today's WSJ. It begins:

Mark down May 29 as the date when the last tether connecting ethanol subsidies to reality came unhitched, and the fuel made from corn and tax dollars achieved a kind of postmodern perfection. On the same day the Obama Administration conceded that the U.S. auto fleet cannot practically consume enough ethanol to fulfill Congress’s quotas, it announced a new program so motorists can consume more ethanol.

In other words, the point of the subsidy is the subsidy, and therefore the U.S. must subsidize ethanol because the U.S. already subsidizes ethanol. Once in place, such self-referential mandates appear to be eternal.

The 2007 energy bill’s renewable fuel standard requires certain annual volumes of ethanol to be bootlegged into the U.S. gasoline supply, but for years the mandate has crashed into the “blend wall.” Ethanol is corrosive, and gallons of conventional gas with concentrations of the stuff higher than 10% damage the engines and fuel systems of most of the cars and trucks on the road today.

The problem is that Americans aren’t guzzling enough gallons to achieve Congress’s mandates at E-10—that is, 10% ethanol, 90% gas. Either we need to drive more in less fuel-efficient cars, consuming more overall. Or the concentration of ethanol in a given gallon needs to rise, risking accidents, breakdowns and valve, pump, cylinder and injector replacements rarely covered by consumer warranties. For model years 2001 through 2011, no car makers allow blends above E-10, and a little fewer than half say it is safe to fill up with E-15 for the last two model years.

To avoid filling this ethanol junkyard but also to avoid displeasing the corn lobby, the Environmental Protection Agency simply refused to finalize the quotas for 2014 and 2015. So the EPA has finally admitted in a regulation that “due to constraints in the fuel market to accommodate increasing volumes of ethanol, along with limits on the availability of non-ethanol renewable fuels,” the volume targets “cannot be achieved.”

The EPA thus proposed quotas that are 3.75 billion gallons below the statutory minimums for 2014, 2015 and 2016.

Renewable Fuels Association president Bob Dinneen raged that this rare EPA recognition of the real world “eviscerated the program’s ability to incentivize investments in infrastructure that would break through the blend wall.” 

Original Post

 

It took a few minutes to sort out what I thought I had heard on the radio. I heard the story on the "B" side but I did not hear the story on the "A" side. Folks who grew up with 45 rpm vinyl will know what I mean.

Anyway, on the "B" side, the EPA will cut ethanol mandates. Bloomberg Politics is reporting:

The U.S. Environmental Protection Agency on Friday proposed cutting quotas for the use of renewable fuels, lowering the mandate for corn ethanol this year and next from the 15 billion gallons set by law.

The decision, more than a year overdue, is a retreat from aggressive goals set by Congress almost a decade ago to promote American-grown alternatives to fossil fuels obtained from hostile nations. The program is backed by corn growers who sell almost a third of their crop to fuel producers, and opposed by the oil industry.

More than a year overdue, the proposal is made halfway into the "new" year. Whatever.

On the "A" side, President Obama pledges $100 million of tax money to be used to support the ethanol initiative. Bloomberg Politics is reporting:

The Obama administration is set to pledge $100 million Friday to expand the use of special fuel pumps that allow drivers to blend more ethanol into their gasoline, according to people briefed on the announcement.

The U.S. Department of Agriculture, which has long championed these so-called blender pumps, may unveil the plan on the same day that the Environmental Protection Agency announces quotas for the use of renewable fuels. With ethanol makers facing a possible cut in their quota below the statutory level of 15 billion gallons, the grant program will let the administration of President Barack Obama demonstrate that it still supports the fuel, which in the U.S. is produced mostly from corn.

The pledge was reported yesterday, even before the EPA reported the new quotas (see side "B" above).  $100 million is a rounding error in a multi-trillion dollar economy but that's why it's reported in Bloomberg Politics.

"A" side:

Reason To Believe, Rod Stewart
"B" side:

Maggie May, Rod Stewart
It depends on which "DJ" you listen to whether you hear the "B" side, or the "A" side. On conservative talk radio, we heard the "B" side; elsewhere it was the "A" side with regard to ethanol.

In this case, the "B side will be the bigger hit, just as it was with the Rod Stewart vinyl above.

June, 2015 Dockets

Disclaimer: these summaries are for my personal use only; you are free to read them; don't quote me on them; there will be typographical and factual errors.  If this is important to you go to the source. Link here.

Past dockets are archived here. 

Wednesday, June 24, 2015

23727, cont'd
23707, cont'd
23641, cont'd
23642, cont'd
23643, cont'd
24068, Petrogulf, Antelope-Sanish, establish 640-ace spacing, two units, multiple horizontal wells, McKenzie, Mountrail
24069, Petrogulf, Antelope-Sanish, establish an overlapping 1280-acre unit; 3 wells, McKenzie, Mountrail
22803, cont'd
24070, Cornerstone, Flaxton-Bakken, proper spacing, Burke
24071, Hunt, Red Wing Creek-Bakken, proper spacing, McKenzie
23965, cont'd
24072, Petro-Hunt, Clear Creek-Bakken, establish an overlapping 2560-acre unit; 1 well, McKenzie
24073, QEP, Deep Water Creek Bay and/or Parshall-Bakken, establish 3 overlapping 1920-acre units; 1+ wells, McLean, Mountrail
24074, QEP, Heart Butte and/or Mandaree-Bakken, establish 3 overlapping 1280-acre units; 1+ wells, Dunn, Mountrail
24075, QEP, Heart Butte and/or Van Hook-Bakken, establish an overlapping 1280-acre unit; 3 wells, Dunn, McLean
24076, QEP, Heart Butte-Bakken, extend, establish nine overlapping 1280-acre units; 1+ wells each, Dunn
24077, QEP, Heart Butte, Twin Buttes, and/or Moccasin Creek-Bakken, establish seven overlapping stand-up 1280-acre units; 1+ wells, Dunn
24078, MRO, Reunion Bay and/or Big Bend-Bakken, establish two overlapping 2560-acre units; 2 wells each; Mountrail
24079, BR, Fancy Buttes and/or Dimmick Lake-Bakken, amend, establish a 2560-acre unit 2 wells, McKenzie
24080, BR, Haystack Butte-Bakken, amend, establish a 2560-acre unit; 1+ wells, McKenzie
24081, Hess, Beaver Lodge-Bakken, establish an overlapping 2560-acre unit 1 well; authorize 11 wells on a 1280-acre unit (3/10-155-96; Williams
24082, Hess, Capa-Bakken, establish an overlapping 1280-acre unit; 1 well, Williams
24083, Hess, Alger and/or Manitou-Bakken, establish an overlapping 2560-acre unit; 2 wells; Mountrail
24084, SM Energy, Dimmick Lake and/or Siverston-Bakken, establish 3 overlapping 2560-acre units, 1 wells each; authorize up to 11 wells on each of two 1280-acre units; McKenzie
24085, Oasis, SWD
24086, Murex, flaring
24087, Murex, flaring
24088, Petro Harvester, pooling
24089, Petro Harvester, pooling
24090, Petro Harvester, pooling
24091, Petro Harvester, pooling
24092, Petro Harvester, pooling
24093, Petro Harvester, pooling
24094, Petro Harvester, pooling
24095, Petro Harvester, pooling
24096, American Eagle, pooling
24097, SM Energy, pooling
24098, SM Energy, pooling
24099, SM Energy, pooling
24100, SM Energy, pooling
24101, SM Energy, pooling
24102, Hess, Alkali Creek-Bakken, 12 wells on a 1280-acre unit (26/35-154-94), Mountrail, McKenzie
24103, Hess, pooling
24104, Hess, pooling
24015, Hess, pooling
24106, Hess, pooling
24107, Hess, pooling
24108, Hess, pooling
24109, Hess, pooling
24110, Hess, pooling
24111, Hess, pooling
24112, Hess, pooling
24113, Hess, pooling
24114, Hess, pooling
24115, Hess, pooling
24116, Hess, pooling
24117, Hess, pooling
24118, Hess, pooling
24119, BR, Elidah-Bakken, 8 wells on a 1280-acre unit; McKenzie
24120, BR, Pershing-Bakken, 22 wells on a stand-up 2560-acre unit (29/32-150-96, 5/8-149-96), McKenzie; see stand-alone post on this case;

24121, BR, pooling
24122, BR, pooling
24123, BR, pooling
24124, BR, pooling
24125, BR, pooling
24126, BR, pooling
24127, BR, pooling
24128, BR, pooling
24129, BR, pooling
24130, QEP, pooling
24131, QEP, pooling
24132, QEP, pooling
24133, HRC, commingling
24134, Luff Exploration, pooling

Thursday, June 25, 2015

22837, cont'd
22988, cont'd
22646, cont'd
23425, cont'd
24002, cont'd
24003, cont'd
24004, cont'd
24005, cont'd
24135, Corinthian Exploration, Boundary Creek-Spearfish, proper spacing, Bottineau
24136, Fram Operating, Nailor Trust, temporary spacing, Renville
24137, Samson Resources, Blooming Prairie-Bakken, establish an overlapping 2560-acre unit; 1 wells; multiple wells; Divide
24138, Samson Resources, Blooming Prairie-Bakken, establish an overlapping 2560-acre unit; 1 well, Divide
24139, XTO, Banks and North Tobacco Garden-Bakken, reduce minimum setbacks, McKenzie
24140, XTO, Siverston-Bakken, reduce minimum setbacks, McKenzie
24000, cont'd
24141, SHD, Deep Water Creek-Bakken, establish an overlapping 2080-acre unit; establish an overlapping 4160-acre unit; 3 wells on each, Dunn, McLean
24014: cont'd
24015: cont'd
24016, cont'd
24142, Resonance Exploration, authorization to drill vertical wells in Westhope-Spearfish/Madison, Bottineau
24020, cont'd
23922, cont'd
24143, waste treatment plant
24144, waste treatment plant
23646, cont'd
24145, Cynosure Energy, Glenn Paetz, temporary spacing, Mountrail
24146, waste treatment plant
24147, treating plant
24148, treating plant
23800, cont'd
23802, cont'd
23981, cont'd
24030, cont'd
24063, cont'd
24064, cont'd
24149, Peregrine, pooling
24150, Basin Shale, pooling
24151, Basin Shale, pooling
24152, Peregrine, Hay Draw-Bakken, 3 wells on an existing 1280-acre unit, McKenzie
24153, Basin Shale, pooling
24154,  Basin Shale, pooling
24155, Basin Shale, pooling
24156, Basin Shale, pooling
24157, Basin Shale, pooling
24158, Basin Shale, pooling
24159, Triangle, pooling
24160, Samson Resources, pooling
24161, Crescent Point, pooling
24162, Zavanna, pooling
24163, Zavanna, pooling
24164, Zavanna, pooling
24165, Slawson, pooling
24166, Slawson, pooling
24167, Slawson, pooling
24168, Abraxas, North Fork-Bakken, 15 wells on an existing 1280-acre unit; McKenzie
24169, CLR, commingling
24170, CLR, commingling
24171, CLR, commingling
24172, CLR, commingling
24173, CLR, commingling
23452, cont'd
24055, cont'd
24053, cont'd
23826, cont'd
24174, SWD
24175, SWD
24176, SWD
24177, SWD
24066, cont'd
24178, SWD

Blame It On Winter -- May 29, 2015

Updates

Later, 6:32 p.m. CT: President Obama sets another record. 
 

Original Post

The New York Times suggests that this past winter was partly the reason for the contraction:

While statistical quirks and one-time factors like wintry weather in some parts of the country played a role, as did a work slowdown at West Coast ports, the lackluster report for January, February and March underscores the American economy’s seeming inability to generate much momentum.

Two comments:

• global warming
• winters tend to come every year 

"Wintry weather" in some parts of the country in January? LOL. In some parts of the country? LOL.

That "work slowdown" at West Coast ports? Hardly noteworthy. 

But to suggest that the contraction bothers the president is crazy. A president's legacy is not shaped by the economy -- especially one quarter. Unless there's a recession. Unless there's a recession after a gazillion dollars in stimulus.

But after a gazillion dollars in stimulus finally worked its way through the economy, we end up with tea leaves suggesting a recession. Remember: two successive quarters of contraction has been the traditional definition of a recession. GDPNow forecasts a further contraction in 2Q15.

That's why Janet Yellen is looking to revise the way GDP is calculated, but I don't think the Fed can move that fast to change things by July 30, 2015, the date for advance estimate of GDP for 2Q15.

*************************

White House Version

This is from the White House:

The first-quarter slowdown was the result of harsh winter weather, tepid foreign demand, and consumers saving the windfall from lower oil prices.  

Harsh winter weather? Winter comes every year and this year was another year of global warming according to the West Wing.

Tepid foreign demand? We rely on foreign demand to grow the economy? I thought it was all about minimum wage workers at McDonald's.

Saving the windfall from lower oil prices? Saving -- most Americans who saw any "windfall" were living month-to-month and were spending any money not spent on gasoline.

Another month of contraction, and it's a recession by the traditional definition.

This is simply hogwash. But you have to give them credit for trying.

The March, 2015, Crude Oil Import Numbers Are Finally "Out" -- May 29, 2015

Updates

Later, 2:04 p.m. CT: this is a most interesting day. The stock market has had a very bad week; down 200 points one day earlier this week, and then down another 120 points today. My hunch: RECESSION talk. Revised 1Q15 GDP shows significant contraction -- almost 1% -- and the "excuses" were laughable: a harsh winter, folks not spending money saved on cheap gasoline, and foreigners not buying US products. The "market" saw right through those laughable excuses.

Oil is more interesting. Up almost 5%. And this occurs almost the same week that Iraq said that it was going to flood the market with crude oil and OPEC gave Iraq "high fives" all around. I can only assume the price of oil went up 5% due to financial and economic factors of which I understand nothing. However, if one looks at the data below, the 5% rise makes all kind of sense.   Remember, this data came out late yesterday / early today (depending on when you found the data) and within hours oil rose 5% -- one of the biggest jumps ever.

Possibly the 5% rise in the price of WTI has to do with the ethanol announcement by the EPA.

A reader tells me (4:00 p.m. CT) that it's due to the rig count going lower. That's very possible; North Dakota active rigs tied a post-boom low, I believe: 80.

Data from Baker Hughes showed that the number of oil rigs fell by 13 to 646, the lowest level since August 13, 2010.

The tally of combined oil and gas rigs fell by 10 to 875, the lowest since January 31, 2003. Last week, the oil rig count fell by just one, the slowest pace in 24 weeks.

The price of West Texas Intermediate crude has rallied from the year-to-date low it reached in May. Following the data on Friday, it jumped as much as 4%, back above $60 per barrel. 

The reader appears to be correct.

This is so prescient, posted back on August 8, 2013: the Bakken could threaten the future of OPEC.

Original Post

Finally, the March, 2015, numbers are out.

Saudi oil imports into the US:

For all their talk about losing market share, Saudi oil imports into the US in March, 2015 (most recent data available) almost matches that of March, 2010, and March, 2011. The US economy contracted by 0.7% in 1Q15 -- a  very inconvenient truth. 


Total crude oil imports into the US:

I suppose I'm missing something, and I suppose I'm the only one, but it seems all this talk about decreasing imports is a bit overdone. Of course, the data is old, back to March, 2015, and this is already June (almost) but look at the numbers (and note that March is not exactly the high driving season in the US):

• total crude oil imported to US jumps from 276 million bbls to almost 300 million bbls over past six months
• OPEC imports jump from 81 million bbls to almost 88 million bbls over same period
• Saudi Arabia imports back up to 32 million bbls after drop to 26 million bbls six months ago
• Venezuela is hanging in there
• Angola drops significantly (for that country, not for the US)
• Nigeria rises significantly (for that country, not for the US)

The country that plans to "flood the market with crude oil" took the biggest US import hit: Iraq.

Saudi crude oil imports into US in graphic form:

Saudi blames the plunge in market share in late 2014 to US shale. How then do we explain the same drop in 2012 - 2013, and then the subsequent rise back to almost the 50-million-bbl line in 2014? Throughout that entire period, from 2011 on, US shale oil production was increasing significantly. 

I still maintain that "we're" being set up for a price spike before the end of 2017. Saudi is not going to continue giving their oil away at $60; and, off-shore CAPEX won't turn on a dime.

But regardless of where the price of oil ends up, there is no question:

a) we're not running out of oil; and,
b) global appetite is insatiable

US Oil Production Hits 43-Year High -- May 29, 2015

Huge housing promotion this weekend in Williston. The Dickinson Press is reporting:

An onslaught of housing is set to hit the booming Williston housing market with more than 2,126 units coming online this year. Amid that crush, the principal investors behind Eagle Crest Apartments are hoping to make not just an entrance, but a grand one.

For their opening ceremonies from 11 a.m. to 6 p.m. CDT Saturday and noon to 5 p.m. Sunday, the Paul Sawtell Quartet, a professional jazz ensemble being flown in from Seattle performs, and organizers are bringing in vintage automobiles and tractors from a couple of car clubs in Canada.

The development is at 3710 26th Street West.

 Hopefully, the Google map is incorrect:

I assume the location is at least approximately correct, but one wonders about the designation of 26th Street West running straight south from 32nd Avenue West. 

Eagle Crest includes 168 units in five buildings, 20 percent of which are affordable units for families with an income cap of about $35,000 for a family of four.
The low-income family units are already filled.

And the building continues:

The principals of this development will turn next to the Hawkeye Village project, Sessions said, a 160-acre development that includes 168 single-family dwellings as well as 57 duplexes.

************************************ 
US Economy Shrinking

US economy shrinks in 1Q15. GDP revised from expectations in December as high as 2.9% growth for 1Q15, down to a minus 0.7%. Market Watch is reporting:

Businesses invested more in equipment than initially estimated, but spending on structures such as oil rigs fell precipitously. 

I guess if you remove the oil and gas statistics, the economy is doing very, very well. Nowhere to go but up from here. More at this early morning post.

It looks like the government is getting ready to "massage" the data; they say the economy is doing much better than what the numbers show. Reuters is reporting:

Economists, however, caution against reading too much into the slump in output. They argue the GDP figure for the first quarter was held down by a confluence of temporary factors, including a problem with the model the government uses to smooth the data for seasonal fluctuations.

Economists, including those at the San Francisco Federal Reserve Bank, have cast doubts on the accuracy of GDP estimates for the first quarter, which have tended to show weakness over the last several years.

By this time next year, the Fed will have revised how they calculate GDP.  Just in time for the presidential election.

**********************************

Active rigs:

	5/29/2015	05/29/2014	05/29/2013	05/29/2012	05/29/2011
Active Rigs	81	187	183	218	172

RBN Energy: use of drones in the oil industry.

US oil production hits 43-year high. CNBC is reporting:

U.S. oil production surged to a 43-year high, despite a price war that resulted in a more than 50 percent reduction in active U.S. oil wells.

The Department of Energy reported a draw down in crude inventories of 2.8 million barrels for the week ended May 22. 

The DOE also reported that U.S. production rose to 9.566 million barrels per day, surpassing the previous peak of 9.422 million set in March. While no weekly data is available beyond 1983, the production number is the highest, if translated to a monthly basis, since May 1972.

***********************************

Fleeing California

Broadcom exits southern California. The Los Angeles Times is reporting:

Irvine chip maker Broadcom Corp. is the latest of many corporate headquarters to exit Southern California, leaving the business community puzzling over the causes and effects.

The technology stalwart — set to be sold for $37 billion in cash and stock to semiconductor rival Avago Technologies — launched in Santa Monica in 1991 and then moved to Orange County in 1995.

After Thursday's transaction, the company will be incorporated in Singapore, mostly for tax reasons, but its principal operating headquarters will be in San Jose. A significant presence will remain in Irvine.

Other defections:

Last year, Toyota Motor Corp. said it would move its sales and marketing headquarters to suburban Dallas from Torrance, and Occidental Petroleum Corp. moved its headquarters from Los Angeles to Houston; and Irvine-based Botox maker Allergan Inc, was taken over by Irish firm Actavis and its headquarters eventually relocated to Dublin.

Earlier departures included DaVita Inc., which operates kidney dialysis service centers and decided in 2009 to move from El Segundo to Denver. The next year, Northrop Grumman Corp. said it would jump ship from Los Angeles to Falls Church, VA.

The LA Times says it's just part of "big business."

Yup. And big business is leaving California. 

****************************************

Amtrak Update

We usually see this Amtrak story about every 18 months. Nothing new to see here. The Dickinson Press is reporting. Actually it's a Reuters report re-posted in TDP. The story: the Empire Builder loses money. Washington (DC) debates shutting it down. Won't happen.

IBD Interview With Chevron CEO -- May 29, 2015

It's one-thirty a.m. (1:30 a.m.) central time, Friday morning. I was just getting ready to head for bed when a reader sent me a 3-page article from Investor's Business Daily: Q&A: Chevron CEO Talks Oil Prices and Energy Independence.

It's a very, very good article. I am amazed how calmly these CEOs can talk about these things; they are very, very good at keeping things in perspective.

Some observations (data points from the article and then my comments, or vice versa). Again, I am inappropriately exuberant about almost everything when it comes to the oil and gas industry and an eternal optimist.

Before I get to the article: back in the 70's it appeared to me there was going to be a real shortage of oil, if not energy in general. Now, there is so much energy available that wind farms are being paid not to produce electricity in the US Pacific Northwest.

Perhaps for investors in select sectors, and perhaps for workers in select sectors, things look "bad" in the oil patch. For consumers, things could not look brighter in the US (except in California, as you will see in the article).

So, now the article, and how I read it. 

Question: is the low price of oil "normal" for the US?
Answer: at $60 now, it's going to take somewhat higher prices to justify a lot of incremental drilling activity.

Question: are we running out of oil?
Answer: no.

Question: did the Saudis intentionally drive down the price of oil to put shale oil producers out of business?
Answer: he never really answered the question, but he had a great historical perspective -- 

If you go back 30 years ago, at one point the Saudis cut production from 9 million barrels a day to 2 million. OPEC opened up surplus capacity of 15 million barrels a day that took 20 years to work off. Right now we're not in that situation. We have perhaps 2 million to 3 million barrels a day of surplus capacity.

Question: what does the US need to do to become energy independent?
Answer: "oil, gas, nuclear energy, and the right policies" is what he said; this is what I "heard": "yada, yada, yada." I think the whole issue of the US becoming energy independent is over-rated; a distraction.

Question: how important is it to lift the crude oil export ban?
Answer: we need to export light crude oil and import heavy crude oil. Regular readers of the blog already knew this.

Question: what about pipelines?
Answer: yada, yada, yada.

Question: the climate change issue? 
Answer: some data points --

• US accounts for just 15% of the world's greenhouse gas emissions
• the US has a very energy-efficient economy
• California has an aggressive set of laws (AB 32 and the Low Carbon Fuel Standard)
• California's laws that just went into effect could add $1/gallon to the price of gasoline
• California accounts for less than 1% of global greenhouse gas emissions
• data centers (very energy intense) are not being built in California
• Apple has moved data centers to North Carolina
• Microsoft has moved data centers to San Antonio (Texas)

Question: income inequality?
Answer: yada, yada, yada

Question: EVs?
Answer: ain't gonna happen. 

Miscellaneous comments:

• the words "renewable, wind, solar, hydroelectric, Biden, Pocahontas, or Michelle" were not mentioned by either IBD or by the Chevron CEO
• California, accounting for 1% of global greenhouse gas emissions is enacting legislation like the state accounts for 99% of GGGE
• both Microsoft and Apple are moving data centers out of California
• the Chevron CEO doesn't think the crude oil export issue is worth discussing, which is about how I feel

In the big scheme of things, this interview should be reassuring to everyone in the US -- except those who live in California. If Californians like $5 gasoline, they can look forward to $6 gasoline. And the state will still vote for the wrong party.

"Katy, Bar The Door!" Alice In Wonderland: US Economy Likely Shrank 1Q15 But Fundamentals Strong -- Reuters -- May 28, 2015

Friday morning, we can look forward to: the second estimate of Q1 GDP will be released at 8:30 ET (Briefing.com consensus -0.7%) while Chicago PMI for May (consensus 53.0) and the final reading of the Michigan Sentiment Index for May (consensus 89.0) will be reported at 9:45 ET and 10:00 ET, respectively.

Okay, is that a minus 0.7%? Have to check. Meanwhile, back in April, the revised estimate was a paltry 0.2%.

Back in December, consensus was that 1Q15 US GDP would be 2.9%. This was gradually revised down to 1-1.25%.

Wall Street is forecasting a big downward revision to -0.9% from 0.2%.   

I suppose if the revised GDP comes in 0.00% or anything above 0.00%, the market will surge. Otherwise, flat to huge sell-off. If there is no huge sell-off with a negative GDP reading, it means that the "movers and shakers" already anticipated the negative reading and that accounts for the down days we've had this month. 

Whatever.  

The third (and last) estimate is released June 24 for those looking that far ahead.  

From almost 3% back in December's estimate to a minus 0.7% now. Pretty fascinating.  

[Update, 2: 14 a.m. May 29, 2015: I just love the spin. 1Q15 GDP is likely to be revised downward. By a lot. And now only down, but into negative territory. And Reuters' assessment: fundamentals strong. This is so bizarre, I had to take a screenshot: I can't make this stuff up:

Reuters = President Obama's speech writer.

*******************************

Tea Leaves Couldn't Be Any Clearer: Obama Is Suffering From Iraq Fatigue

Iraq is on its own. We've done all we can. 

My hunch is he has the same thoughts about Israel. 

Setting Us Up For $200 Oil? -- May 28, 2015

This is a most interesting story coming out of Bloomberg via Rigzone today. Note the bit in bold in red:

China’s lead over the U.S. as the world’s biggest buyer of crude oil is poised to get bigger, and it’s largely thanks to teapots.

Dozens of small refiners, known as teapots to those in the industry, account for a third of the Asian nation’s processing capacity. They are now expanding as new rules will almost double the amount of crude the refiners, including Shandong Yongxin Energy Group, can import.

America, the world’s largest economy, is now the least reliant on foreign oil since 1994, while China is taking advantage of the slump in prices to expand its strategic stockpiles -- a strategy that help it overtake the U.S. as the biggest buyer last month.

The flow of oil to Asia will help create a global supply deficit by the end of the year, according to Sanford C. Bernstein Ltd.

“The expected new crude import quota for teapot refineries will help bolster China’s appetite for foreign oil,” said Gao Jian, an analyst at SCI International, a Shandong-based consultant. “Crude imports this year will exceed 2014’s level.”

China bought a record 7.4 million barrels a day in April, up almost 17 percent from March and 3.1 percent from the previous high in December, customs data show. The U.S. imported about 7.3 million barrels a day, according to government figures.

That "7.3 million" figure bought by the US is interesting. Compare that with other data points in the linked article:

The Energy Information Administration forecasts the country will import an average 6.54 million barrels a day next year, down from 6.69 million in 2015. It received 6.99 million last year.

And finally: 

China’s record purchases are adding to signs of increasing demand that will create a global shortfall of 1.5 million barrels a day in the fourth quarter, Bernstein said in a May 27 report. That will drive up Brent crude prices to $80 a barrel, the researcher predicts. The European benchmark oil closed at $62.58 on the London-based ICE Futures Europe Exchange on Thursday.

Even if Iraq was able to "flood the market with oil," a 800,000 bopd increase will hardly meet the 1.5 million bopd shortfall, and I seriously doubt Iraq can do much to increase its production of oil by as much as they say.

I also have trouble reconciling $80-oil with a global shortfall of 1.5 million bopd. If there's a 1.5 million bopd global shortfall in oil, the price of oil will go a lot higher than $80. That's my two cents worth.

In addition to increasing Chinese consumption, note the record gasoline consumption being reported in the US. 

One Minute Apart -- This Is The Country That Says It Will Flood The Market With Crude Oil -- Mary 28, 2015

The only flood I see is blood in the Tigris.

Runaway, Del Shannon

Coolest Post Of The Day: Breaking All Kinds Of Records -- May 28, 2015

It took awhile for the EIA to massage the data, I guess, but the report was finally released, and what a report it was. Look at the increase in gasoline demand for the most recent reporting period. It looks like about 150,000 bbls per day more than last year:

Then this data. For all that talk about less gasoline demand in this country, this is the data from 2000 to most recent reporting period, March, 2015. U.S. Product Supplied of Finished Motor Gasoline (Thousand Barrels):

The columns across are monthly, January to December. Source.

A couple of observations:

• I may have missed it, but I don't believe "280,000 or more" was seen prior to the year 2000
• greater than 280 million bbls of finished motor gasoline per month is seldom reached
• greater than 290 million bbls has been reached a few times, but it is rare
• we came close to 300 million bbls in the summer of 2007, just before the great recession
• 280,708 in March, 2015, from 269,207 in March, 2014 represents a 4% increase
• the high last summer was 287,911,000 bbls in August; a 4% increase would be 299,427,000 -- about as close to 300 million bbls as one can get without going over

My hunch is that we will go over 300 million bbls of gasoline in the month of August, 2015.

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Back on , January 19, 2015, I wrote:

Has the US ever gone over 9.5 million bpd gasoline demand? Yes, starting back in 2003 there were many periods in which demand for gasoline in the US fluctuated around 9.5 million bopd.

• fourth week in August, 2003: 9.668 bpd
• second week in August, 2004: 9.521 bpd
• third week in August, 2005: 9.471
• first week in August, 2006: 9.697
• third week in August, 2007: 9.762
• the last week of August, 2014: 9.480 million bpd

I am unaware of any weekly period in which gasoline demand went over 9.5 million bpd over the Memorial Day Weekend, but it certainly looks like we could do that later this spring. 

Wow, that was back on January 15, 2015, when I wrote that. How did we do? We won't know for another week, but we went over 9.7 million bopd in the most recent reporting week:

Weekly U.S. Product Supplied of Finished Motor Gasoline (Thousand Barrels per Day):

I think that's an all-time record for the fourth week in May; if not an all-time record for the fourth week in May, awfully close.

So, back in January, I predicted that we would go over 9.5 million bpd this past Memorial Day weekend which would be a record. We won't know for another week or so, but at 9,734,000 bbls / day last week, that came close to hitting an all-time record. I think the record is 9,762,000 bbls / day, set in the third week of August, 2007.

Wow, wow, wow.

Wow.

By the way, the record for number of US drivers driving on Memorial Day was set in 2005; the AAA prediction is that 2015 will set a new record. That number has not yet been posted. 

Note: I often make typographical and factual errors in my exuberance. There may be many typographical and factual errors on this page. If this information is important to you, go to the source. Let me know if CNBC talking heads are talking about these records. Based on what little I hear on the radio or television, I get the feeling that most folks think gasoline consumption is dropping in the US.


Living Next Door To Alice, Smokie
Be sure to read this week's EIA "Week in Petroleum," released May 28, 2015.

*****************************

Flashback: From 2010

Do you realize 25% of all married men kiss their wife good-bye when they leave the house?

Of these same men, 90% will kiss their house good-bye when their wife leaves.

I don't remember who sent me that. Probably Don.