Active Rigs Set New Post-Boom Low -- 81 -- May 18, 2015; Too Much Takeaway Capacity Being Built In The Bakken? RBN Energy

Trivia: Honda's aeronautic division is headquartered here in the United States. Who would have thought? Being reported everywhere; this from Time Magazine:

The jet is Honda’s first commercial aircraft, produced by its North Carolina-based Honda Aircraft division. The potential FAA approval puts the plane on pace for delivery to customers around the middle of this year, the Journal reports.

The Journal article is much more complete. I wish I could have used that link first but my contract required a non-Journal link.

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COP to maintain CAPEX for next three years. Will focus on Eagle Ford and the Bakken.

From the department of meaningless statistics, EIA "energy cookie"

In the United States, petroleum is by far the most-consumed transportation fuel. But recently the share of fuels other than petroleum for U.S. transportation has increased to its highest level since 1954, a time when the use of coal-fired steam locomotives was declining and automobile use was growing rapidly. The recent increase can be mostly attributed to increased blending of biomass-based fuels with traditional vehicle fuels and growing use of natural gas in the transportation sector. --- EIA

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Bakken

Active rigs:

	5/18/2015	05/18/2014	05/18/2013	05/18/2012	05/18/2011
Active Rigs	81	190	189	209	175

RBN Energy -- too much pipeline takeaway being built in the Bakken? Link here. This is a must-read article for those interested in the Bakken. A reminder: this story will be archived by the source at the source.

We should point out that (unlike our chart) in the real world, takeaway capacity is not used up either in order of construction or in order of transport mode. That means Bakken takeaway capacity is now and will remain a mixture of rail and pipeline – based on shipper demand to reach particular markets.

The NDPA estimated that, in March 2015, rail capacity was being used to transport 54% of North Dakota crude production to market – a volume estimated at somewhere in the range of 650 to 700 Mb/d – with pipelines only accounting for 40% of shipments. Those numbers reflect the preference for Bakken producers to ship their crude to East Coast refineries that are best reached by rail because there are no major crude pipelines from the Midwest to the East Coast. Bakken crude is also shipped by rail to refineries in the Pacific Northwest for similar reasons.

As we explained back in February, rail continues to be favored in North Dakota because pipeline alternatives only ship crude to more competitive markets like the Texas Gulf Coast where large volumes of similar light sweet crude from the Permian and Eagle Ford basins compete for refiner’s attention. In the circumstances and given that East and West Coast refiners have invested in rail infrastructure, they remain the primary buyers of Bakken crude today.

All of that may change in 2017 when two new pipelines are expected online.

The first of these is the Energy Transfer Partners/Phillips 66 Dakota Access pipeline that would ship 450 Mb/d of Bakken crude to the Midwest and then to Nederland on the Texas Gulf Coast as well as St. James, LA (see My Head’s In Mississippi). This will be the first pipeline offering Bakken shippers direct pipeline access to Mississippi region refineries – replacing existing rail shipments of about 150 Mb/d.

The second new pipeline expected in 2017 is the 225 Mb/d Enbridge Sandpiper that will offer Bakken shippers access to Eastern Canadian refineries in Sarnia and Quebec via various pipelines that are part of that company’s “Light Oil Market Access” project that we detailed in our “Take A Pipe On The East Side” last year. Sandpiper will also increase access to Midwest refineries owned by anchor shipper Marathon Petroleum Company. These two pipelines account for most of the big jump in the red line in Figure #2 at the start of 2017 and will considerably diversify the pipeline market destinations available to Bakken shippers.

Which brings us back to our original question – will the extra 220 Mb/d of pipeline capacity on the proposed Upland pipeline be needed in 2019 and if not – what route to market will it’s shippers defect from? We will address that question in the next episode in this series.

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Cement

This was an unfortunate day to forget my camera. There must be not less than 20 cement trucks across the median, about 100 yards (football field) away from me -- pouring in more parking lot for not less than eight (8) new big box stores going in. This is in addition to several new big box stores (including large franchise restaurants like Dave and Buster's) that have already gone in. This is at the intersection of Grapevine, Colleyville, and Euless, northwest of Ft Worth.

The Greek Tragedy -- May 17, 2015

Updates

June 5, 2015: So, the first payment was due, 300 million Euros today. So, the question is, did Greece make the payment. Nope, they negotiated to kick all of June's payments to the end of the month, June 30. 

May 25, 2015: the scorecard -- amount of money Greece needs to pay the IMF in June (it's questionable whether they have enough money to meet the first installment), in Euros, rounded:

• June 5: 300 million
• June 12: 300 million
• June 16: 550 million
• June 19: 300 million
• June 19: 100 million

I'm not sure why two separate payments to the same creditor (IMF) for the same date were posted. For me, the amounts don't matter; I don't know what "300 million euros means" to Greece. The dates are the important data points.

I assume we will see a story on June 6 that Greece is "technically" in default but "discussions continue. Negotiators see a way toward a solution." Most likely, the IMF will re-negotiate these payments, set a new date, and loan Greece the money they need to make the current payments.

Original Post

 
The "original" drop dead date was April 9, 2015.

Then it was April 24, 2015.

Then April 30, 2015. 

Then sometime in May.

Now, tonight, BloombergBusiness is reporting that the drop dead date now extends to June 30, 2015.

Banks have enough collateral to stretch that lifeline to about 95 billion euros under the terms currently allowed by the ECB, a person familiar with the matter said. With the central bank raising the ELA by about 2 billion euros every week, that could take banks to the end of June.

A crunch will come if the ECB increases the haircut on Greek collateral to levels not seen since last year. That could be prompted by anything from a complete breakdown in talks to a missed debt payment, the official said. A continuation of the current impasse could even be all that’s needed, the official said.

An increased haircut would reduce the ELA limit to about 88 billion euros, the person said. While that gives banks about four weeks before hitting the buffers, the leeway is so limited that Greece might need to impose capital controls, limiting transactions such as ATM withdrawals, to conserve the cushion.

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Not Exactly Headline News

In January, 2015, Saudi crude oil imports into the US hit the lowest rate since 1988 (Ronald Reagan was president). Most recent data can be found at EIA. Tonight Financial Times is reporting that Saudi Arabia is turning to China to make up for loss of imports into the US. This hardly seems like headline news.

Saudi Arabia’s oil exports to the US have fallen to the lowest level since the financial crisis, showing the impact of the shale boom and fast-growing imports from Canada.

The US has bought an average of less than 1m barrels a day of Saudi crude over the past year, weekly and monthly US government data show.

The only similar experience in recent memory was during the 1980s, when the kingdom slashed its own oil production in a failed attempt to prop up the price.

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Notes To the Granddaughters

Book review in this weekend's "Review" section of the Wall Street Journal, The Millionaire and the Bard, Andrea Mays, c. 2015, 350 pages. The millionaire, over three decades a Standard Oil executive, amassed fully a third of the 240 surviving First Folios.

About 750 copies of “Mr. William Shakespeare’s Comedies, Histories & Tragedies” were printed in 1623 in London, of which some 240 survive today. The book contained 36 plays.

200-plus years later: Enter Henry Clay Folger Jr., born in 1857 in Brooklyn, and related to Benjamin Franklin (and to the founder of the Folger Coffee Co.). Folger’s family was not wealthy, but he matriculated at Amherst and received a law degree from Columbia in 1881.

Folger would become an expert on the oil industry, to the great benefit of Standard Oil, where he worked most of his adult life. In 1923, he became the chairman of the board of Standard Oil of New York, a post he held until he retired in 1928. Folger had three passions: Shakespeare (especially First Folios), oil and golf.

Folger was not a robber baron. He was fair, honest, principled and modest, in business and in his private life. But when it came to Shakespeariana, he was relentless in pursuit and willing to spend whatever it took to get what he wanted.

Folger purchased his first First Folio in the 1890s. By the time he and Emily were finished, three decades later, they had acquired 82 First Folios—about one-third of those in existence—and 256,000 books, “60,000 manuscripts, 200 oil paintings, 50,000 watercolors, prints, and photographs; dozens of sculptures, half a million playbills; plus theater programs, musical instruments, costumes, and more.” His most expensive First Folio was bought in 1928 for $68,750. He didn’t always get everything he desired, but he came close (it took him four years to secure the Sibthorp First Folio).

Meanwhile, probably not coincidentally, The Dallas Morning News had a similar story, page 6E, highlighting how Dallas connects with this book. It turns out that the Dallas Public Library also has a copy of the First Folio. The Dallas Shakespeare Club bought a copy for $275,000 in 1984 to mark the group's 100th anniversary.

The folio went on display in Dallas the same week in 1986 that Ross Perot donated another folio to the University of Texas at Austin, which now owns three.

4/7 Bakken Wells To DRL/SI/NC Status; Sedalia To Report A Successful Well -- May 17, 2015

Monday, May 18, 2015

• 28465, drl/NC-->TATD, Petro-Hunt, USA 153-96-24D-13-6H, Keene, no production data,
• 29323, 389, Hunt, Blue Ridge 159-100-18-17H-1, Blue Ridge, t2/15; cum 16K 3/15;
• 29348, 927, Hess, SC-Ellingsberg-154-98-3229H-4, Truax, t5/15; cum 111K 10/16;
• 29854, 320, Sedalia Energy, Pratt Madison Unit 1H, Pratt oil field, t12/14; cum 12K 3/15;

Sunday, May 17, 2015

• 28880, 908, Oasis, Langved 5393 42-10 3T2, Sanish, t4/15; cum --
• 29250, drl/NC-->TATDC, Zavanna, Sigurd 5-8 5TFH, Crazy Man Creek, no production data,
• 29257, 1,418, Newfield, Rolla Federal 153-96-29-4H, Sand Creek, t5/15; cum 73K 10/16;
• 29546, 329, Petro-Hunt, Powell 159-93-30A-31-1H, East Tioga, t4/15; cum --

Active rigs:

	5/17/2015	05/17/2014	05/17/2013	05/17/2012	05/17/2011
Active Rigs	83	190	189	211	173

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Sedalia Energy, LLC

Sedalia Energy has about twenty (20) permits in North Dakota; they have been drilling off and on since at least 1962. There activity is in four or five sections in far northwest North Dakota, McHenry  County in the Pratt oil field (see first comment below). They are all vertical wells.

The nearest active Sedalia well to #29854 above (the two wells might be on the same pad):

• 3251, AB/360, Sedalia, Herdt Estate 1, Pratt oil field, a Madison well, t10/62, cum 226K 3/15;  this well has been offline since 12/14, the very month the new well (#29854) began producing.

29854, see above, Sedalia Energy, Pratt Madison Unit 1H, Pratt oil field:

Date	Oil Runs	MCF Sold
3-2015	2842	0
2-2015	2965	0
1-2015	4114	0
12-2014	1901	0

So, how does the initial production of #29854 look compared to the initial production of a similar well drilled almost 55 years ago?

3251, see above, Sedalia, Herdt Estate 1, Pratt oil field, a Madison well, t10/62, cum 226K 3/15;  this well has been offline since 12/14, the very month the new well (#29854) began producing:

MADISON	10-1963	27	1664	0	1018	0	0	0
MADISON	9-1963	29	1870	0	1009	0	0	0
MADISON	8-1963	31	1992	0	1447	0	0	0
MADISON	7-1963	31	2108	0	1008	0	0	0
MADISON	6-1963	30	2109	0	930	0	0	0
MADISON	5-1963	28	2141	0	752	0	0	0
MADISON	4-1963	30	2639	0	683	0	0	0
MADISON	3-1963	28	2543	0	387	0	0	0
MADISON	2-1963	28	2757	0	448	0	0	0
MADISON	1-1963	13	912	0	80	0	0	0
MADISON	12-1962	19	1642	0	0	0	0	0
MADISON	11-1962	20	1485	0	0	0	0	0
MADISON	10-1962	0	0	0	0	0	0	0

Huge, Huge Story For Those Paying Attention -- ISIS Takes Ramadi -- May 17, 2015

Folks following this story know how big this story has become. This could be ISIS's Battle of the Bulge. CNN reports that ISIS has taken Ramadi. This could be Baghdad's "last stand." The coalition, led by US air support, spared almost no cost to holding Ramadi -- no cost, except no American boots on ground.

Some U.S. officials have tried recently to downplay the significance of Ramadi, saying they are not focused on the city.

But retired Lt. Col. Anthony Shaffer, a senior fellow at the London Center for Policy Research, said the situation in Ramadi is a significant sign that forces fighting ISIS need to take a different tack.

"Ramadi's a bad news story, period," he said. "It's not going well. The military units we've trained in the Iraqi army are basically laying down their guns and running."

Perhaps more later but this is a huge story.

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EU Pushing For US Crude Oil Exports

The Wall Street Journal is reporting:

The European Union is increasing pressure on Washington to include an energy chapter in a planned trans-Atlantic trade deal that would allow U.S. exports of natural gas and oil and reduce the bloc’s dependency on Russia.

Fossil-fuel exports from the U.S. have been restricted for decades. Yet growing internal production of oil and gas has eased some of Washington’s concerns over energy independence and the Energy Information Administration believes the U.S. will become a net gas exporter in 2017.

In recent years, the Energy Department has granted long-term gas-export licenses to six U.S. gas projects, which will eventually be able to sell 8.61 billion cubic feet (240 million cubic meters) of gas a day. At the same time, the U.S. oil industry is lobbying to lift the ban on oil exports, hoping that new markets would boost prices.

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I keep looking for the perfect book to help me understand Scotch. I think I finally found it today. Already on my bookshelf:

• Whisky, The Manual, Dave Broom, c. 2014
• Michael Jackson's Complete Guide to Single Malt Scotch, 5th Edition, c. 2004, but in mint condition

Today, I added what may be the best of the three:

• Whisk(e)y Distilled: A Populist Guide to the Water of Life, Heather Greene, c. 2014

Michael Jackson's and Dave Broom's are very similar in style. I assume Michael Jackson's is the "bible" of books on Scotch, but I do like Broom's also. But for a nice narrative, not just an encyclopedia of whisky, Heather Greene's is very, very delightful.

I don't know if the woman on the jacket of the book is Heather Greene, but if she is I would listen to whatever she has to say on the subject of whiskey.