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Thursday, October 8, 2015

GDP Now -- 1.1% -- 3Q15 -- October 8, 2015

As of October 6, 2015:
The GDPNow model nowcast for real GDP growth in the third quarter of 2015 is 1.1 percent on October 6, up from 0.9 percent on October 1.

The model's nowcast of the third-quarter growth rate in real personal consumption expenditures increased 0.2 percentage points to 3.6 percent following yesterday's (October 5, 2015) light motor vehicle sales release from the U.S. Bureau of Economic Analysis. After this morning's international trade report from the U.S. Census Bureau, the model nowcasts of real net exports and real equipment investment each increased modestly.
After a gazillion dollars in stimulus and six years into the recovery, and no evidence of any global warming in 18 years, and the Russians in Syria, the forecast for the US GDP for 3Q15 is a whopping 1.1%. At least it's not a negative number. POTUS, meanwhile, is on his way to Oregon, to talk gun control. And no one in the GOP wants to be House speaker. Welcome back, Mr Speaker.

Welcome Back Kotter, Theme Song

Not Ready For Prime Time; Putin In The Mideast -- October 8, 2015

Updates

July 4, 2016: Putin sends Russia's largest warship to Syria to take out ISIS "once and for all."

May 28, 2016: Russia's long road to the Middle East -- The Wall Street Journal front page "Review" article. 

October 9, 2015: CNN has the timeline -- how Putin "took" Syria. Two things stand out: a) Obama's multiple "red lines" that were nothing more than lines in the sand; and, b) SecState Kerry "going off script -- according to the CNN analysis. Obama was seen as a paper tiger, and SecState Kerry gave Putin the opening he (Putin) needed.

October 9, 2015: this is the lead story -- the very top news story -- in today's Los Angeles Times --  Obama to end Pentagon effort to train Syrian rebels.
President Obama has decided to end the Pentagon’s failed effort to field a proxy force in Syria, senior administration officials familiar with the plan said today. 
Instead of trying to back a moderate Syrian rebel force that the U.S. would train, the administration will focus on supporting the Kurds and other established rebel groups in the country’s civil war, the officials said. 
If I remember correctly, the Pentagon spent upwards of $500 million to train five (5) Syrian rebels. I could be wrong on the amount; it was posted a few weeks ago.

Original Post
 
I think this is a much, much bigger story than the mainstream media is reporting.

I'm going to leave it at that for now, but this may become one of the "Big Stories" going forward. Having fixed (permanent) Russian air bases and Russian army bases in the Mideast, I don't think, was on anyone's radar five years ago. I don't think Putin is thinking short term. He's a chess player.

The white Russians may have lost the "Soviet Union," but there's a very, very good chance that something much, much bigger has just been handed to Putin. It might be a good time to review what Alexander the Great might have imagined. Not what Alexander the Great accomplished or did not accomplish or how it all ended for Alex the Great, but what must have been going through his mind as his military was sweeping south and southeast.

Right now, I think, the big questions to be asked are: "how far does Putin plan to go?" "How far will he take this?"

It's hard for me to believe that his political/military planners were strategically planning to take the Mideast ten years ago or five years ago or even two years ago. But if one thinks it amazing that a couple of rogue software engineers could bring down one of the world's largest automakers, imagine what Russian leaders might be able to orchestrate, especially when they have the CEO's backing.

It also couldn't come at a better time. Obama has always been perceived to be very, very weak by Putin, but now Obama is at his weakest, a lame duck. Worse, the US is just at the beginning of a presidential election year. There will naturally be a void in leadership as leaders at all levels move up and down the food chain. The GOP, for example, is seen by mainstream media to be in "disarray" with regard to the House leadership. Political candidates can opine all day long what they would do, but the fact is, they are still candidates and can't do anything for at least a year. That gives Putin a lot of time to solidify his position. Unlike the US which "invaded" a foreign, sovereign nation, Putin did not invade Syria. He was invited.

I don't think this is anything like the Afghanistan "war" for the Russians. This is a whole new ball game.

The "prize" is oil.

Idle Chatter; Commentary In Response To A Reader's Question -- October 8, 2015

A reader asks in a comment to an earlier post:
Why do we allow this situation to continue, where US producers are being forced to curtail producing while we are importing very large quantities of crude oil? Would it not benefit our economy to tax imports and if necessary, subsidize domestic oil. I can see a significant reduction in the trade deficit in conjunction with a boost to the economy. What am I missing?
My opinion as I would express them if I were having coffee at Cashwise in Williston.

There are at least two questions being asked. The easy one first: why not, if necessary, subsidize domestic oil industry? Politically it can't happen, especially under this administration. As recently as yesterday President Obama suggested eliminating "subsidies" already in place for the domestic oil and gas industry and "using" that money for intermittent energy (wind and solar). Even under the most conservative administration, subsidizing the domestic oil and gas industry would be the wrong way to go. Taking away some of the regulatory obstacles would be a lot better. Free market capitalism will sort this all out. Low prices have made the industry much more efficient. Some (maybe many) oil and gas companies will not survive but the overall US oil and gas industry will do just fine, over time.

The second question has to do with imports. RBN Energy and others have addressed this very, very well. US refineries were optimized for heavy oil back in the 90's or before, back when US production was "dead" and no suggestion that it was every going to come back. Most of the oil being imported then was heavy oil. Western Canadian oil was also heavy oil and that's why the Keystone was so important -- to continue bringing heavy oil to the refineries along the Gulf coast that were optimized for heavy oil.

Then the perfect storm: the frackers cracked the code on lifting tight US oil; unfortunately it was all light oil and not what the US refiners (except some on the East Coast) wanted or could use. These refiners were holding out for the Keystone to bring heavy Canadian oil; it was way too expensive (billions of dollars) to retro-fit all those refineries to optimize them for light "shale" oil. Those refineries are still optimized for heavy oil -- which US oil is not.

While all the haggling over the Keystone was going on, the refiners jerry-rigged their operations so that with a "mix" of heavy oil and light oil they could make things "just barely" work.

What the US really needs is more imported heavy oil, and that's what is being imported for the most part. Rather than worry about exporting our crude oil in the short time (politically not going to happen), efforts would be better spent to "trade" our light oil for overseas heavy oil (from Venezuela, example). Obviously Venezuela doesn't need our light oil but the global market could come up with a system where trade-offs were made [Venezuela heavy oil to the US; US light oil to Europe or Asia.]

A significant amount of imported Saudi oil is going to the refinery that Saudi Aramco owns along the US Gulf Coast. That, I doubt, will ever stop as long as Saudi has ownership in that refinery.

The one area that is of concern -- and part of your question: recently US refineries on the east coast specifically said they were not going to use any more Bakken light oil (for the time being) because the light oil they were getting from African west coast was less expensive. In a perfect world, the US could have stepped in and targeted West African operators with higher tariffs to protect the Bakken, but trade wars tend not to work out very well.

There is much more that could be written but that's at least a start.

Four (4) New Permits, North Dakota; Liberty Resources With A Nice Well; Two More DUCs -- October 8, 2015

Active rigs:


10/8/201510/08/201410/08/201310/08/201210/08/2011
Active Rigs68190184193194


Wells coming off confidential list Thursday:
  • 29101, 762, Liberty Resources, ND State 158-95-16-9-10TFH, McGregor, 35 stages, 3.9 million lbs, t4/15; cum 67K 8/15; see graphic at this post;
  • 30439, SI/NC, Hess, EN-Kiesel-LE-155-94-1918H-1, Manitou, no production data,
  • 30779, SI/NC, BR, CCU Gopher 1-2-15TFH, Corral Creek, no production data,
Four (4) new permits --
  • Operators: Whiting (3), Newfield
    Fields: Sourth  Fork (Dunn), Lost Bridge (Dunn)
  • Comments:
Three permits renewed: a Hess Ti-Beauty Valley; a MRO Clarice USA; and, a MRO Delia USA

CLR canceled one permit, a Paca well in Williams County

Four (4) producing wells completed:
  • 28982, 823, WPX, Mandaree 24-13 HZ2, Spotted Horn, must have been a DUC, t9/15; cum --
  • 28983, 2,222, WPX, Mandaree 24-13HD, Spotted Horn, t9/15; cum --
  • 28984, 1,849, WPX, Mandaree 24-13HY, Spotted Horn, must have been a DUC, t9/15; cum --
30717, 671, Hess, EN-D Cvancara S-154-93-0904H-7, Robinson Lake, t9/15; cum --

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

29101, see above, Liberty Resources, ND State 158-95-16-9-10TFH, McGregor:

DateOil RunsMCF Sold
8-2015138022184
7-20151766415977
6-201566647447
5-201516435945
4-2015106870

That Didn't Take Long; Russia Launches A Trial Balloon ( er,.. Cruise Missile) -- October 8, 2015

Earlier today I posted:
I wonder what an errant cruise missile hitting a Saudi oil field would do to the price of oil? Just asking?
Now, just a few hours later, Fox News is reporting that an errant Russian cruise missile hit Iran and not Syria.

****************************
OPEC Exports

Tweeting now: OPEC crude oil exports to rise by 430,000 b/d to average 24.07 mil b/d over 4 weeks to Oct 24, UK-based tanker tracker Oil Movements says.

Encana Sells All Assets In DJ Basin; How Long Your iPhone Would Last If Powered By Various Forms Of Energy -- October 8, 2015

Link here. Pretty much puts it in perspective.

Natural gas fill rate (dynamic link):  95. In the East Region, stocks were 22 Bcf below the 5-year average following net injections of 57 Bcf.

Gasoline demand (dynamic link): after a fairly dramatic drop over the past few weeks, demand seems to be leveling off, about 500,000 bopd greater than one year ago.

**********************
Encana To Sell Its DJ Assets

Oil & Gas Journal is reporting
Encana Oil & Gas (USA) Inc., a wholly owned subsidiary of Calgary-based Encana Corp., has agreed to sell its DJ basin assets in Colorado to a new entity 95% owned by Canada Pension Plan Investment Board and 5% by Broe Group, Denver, for $900 million.
The deal includes the entirety of Encana’s 51,000 net acres in the basin, where the company reported first-half production of 52 MMcfd of natural gas and 14,800 b/d of crude oil and natural gas liquids. Based on Encana’s development plan at year-end 2014, estimated proved reserves were 96.8 million boe, of which more than 40% was gas.
$900 million / 51,000 net acres = $18,000 / acre (rounded). Okay.

*************************
VW Found The Scapegoats

It took a couple of weeks, but VW finally found the scapegoats
A top Volkswagen executive on Thursday blamed a handful of rogue software engineers for the company’s emissions cheating scandal and told outraged lawmakers that it would take years to fix all of the nearly 500,000 vehicles affected in the U.S.
“This was a couple of software engineers who put this in for whatever reason,” Michael Horn, VW’s U.S. chief, told a House subcommittee hearing.
To my understanding this was not a corporate decision. This was something individuals did.” Horn, chief executive of Volkswagen Group of America, apologized for the scandal and said he only learned of the problem a couple of days before the company admitted it to regulators on September 3, 2015.
The Hillary defense? The next thing we will learn is that it is these same two software companies are tied into the Hillary e-mail scandal.

Let's parse that second sentence in bold: "To my understanding this was not a corporate decision."  "To my understanding..." is key. Clintonesque. What is the definition of a "decision."

US Shale Oil Stares Into Abyss With OPEC Ready To Push It Over -- The [London] Telegraph -- October 8, 2015

From The [London] Telegraph:
Shale drillers in Texas and North Dakota hung on for longer than anyone expected, but are too reliant on crude trading at above $60 a barrel to remain profitable.
To their credit, shale drillers and operators in Texas and North Dakota have hung on for far longer than anyone expected after OPEC launched its pre-emptive oil price war last November. However, a year of oil prices trading at an average of around $50 per barrel is finally succeeding in reversing the dramatic increases in US production that had been so troubling the Gulf’s oil-rich sheikhs.

Total US output has fallen by almost 600,000 barrels per day (bpd) since the end of the first quarter, with the biggest declines occurring recently as operators begin to crack under the financial pressure caused by OPEC’s squeeze on prices. By next year, the US government expects output to decline to an average of 8.6m bpd, down from an average of 9.3m bpd in 2015.

According to Mark Papa, the former head of US shale oil specialist operator EOG Resources, this is just the beginning of the downturn in North America. Speaking at the annual Oil and Money conference in London this week, Mr Papa said: “We are about to see a pretty dramatic decline in US production growth.”
Be sure to parse that last sentence: "We're about to see a pretty dramatic decline in US production growth." The operative word is in bold.

There is no question that this could get really, really nasty ("blood on the streets," as they say in some places), but whenever I read these doom and gloom stories, I think about the following:
  • the Chinese, subcontinent Indian, and Indonesian middle class continues to grow, and the middle class loves gas-guzzling SUVs and air-conditioning
  • the low price for crude is getting Americans (and the rest of the world) hooked on crude oil again
  • Saudi Arabian production is maxed out (discussed numerous times on the blog)
  • production in the Mideast may increase -- it may increase significantly -- but nothing is guaranteed
  • Russia is now in the Mideast; Russia's presence changes everything
  • Russia's economy is on the ropes; we can talk about Ecuador and Venezuela failing due to the low price of oil, but the Russian Bear won't ... fail (one has to ask why Russia went into the Mideast)
  • upwards of 50% -- maybe more, I keep forgetting -- of all US oil production comes from onshore
  • US onshore production coming from three plays: the Permian, the Bakken, and the Eagle Ford (and the Eagle Ford looks to be lagging due to low crude oil prices)
  • off-shore projects have dried up; it will take a decade to get a new off-shore project up and running
  • the Arctic was a huge disappointment 
I wonder what an errant cruise missile hitting a Saudi oil field would do to the price of oil? Just asking?

I am inappropriately exuberant about the Bakken. I may be whistling past the graveyard. But I don't think Genie Energy went looking for oil in the Golan Heights because they thought oil was "dead."

By the way, this is a cool essay by Boone Pickens ... cool because he talks about D-Day/Normandy. I am reading Stephen Ambrose's D-Day and have recently blogged about it.  I feel bad for Boone Pickens: Washington politics must give him a lot of heartburn.

The Numbers Don't Add Up In So Many Ways -- October 8, 2015

SC Times applauds Xcel's recent announcement to shut down two coal-burning plants but asks the question, "what's the cost?" LOL. These idiots never talk about the number of coal-burning plants China is building every week. But back to the question, "at what cost." We'll know in a few years.

Electricity is so cheap in this country, Americans -- or at least those who live in California and Minnesota -- are willing to pay double, maybe triple what they pay now, just to feel good. Some data points from the article. From wiki: On October 2, 2015, Xcel Energy filed plans with the Minnesota Public Utilities Commission to shut down the plant's Unit 2 in 2023 and Unit 1 in 2026, each with a capacity of 750 MW (Sherco has three units).
  • the two Sherco coal plants to be closed: 1,500 MW
  • a new 700-MW natural gas plant: $700 million
  • 50-MW solar installation: cost not provided, but at $2 million/MW = $100 million
Again, I may have misread things, and misunderstood things, but it appears that Xcel is eliminating 1,500 MW and replacing that with 750 MW. The coal plants have probably been paid for by rate-payers and now are simply a matter of maintenance (though, maintenance costs do go up as they get older, but nothing compared to brand new plants).

Solar is less than 20% efficient (or whatever the number is) and thus some of the "new" natural gas generated electricity will be needed to back up that intermittent energy. [Although Elon Musk is willing to sell Minnesotans millions of dollars worth of batteries to store electricity generated from all those sunny days in Minnesota; not much solar energy generated at night in Minnesota.]

One can also assume that the amount of energy Minnesotans use in 2023 and 2026 will be greater than it is today, unless Xcel is assuming that a lot of Minnesotans will be moving out of state, moving to California where they can pay even more to feel good.

By the way, the folks in Becker, where the coal plants are sited, are hoping that the natural gas plants will be built at the Sherco site, or nearby. From wiki:
The power plant has a normal staff of about 350 people, but up to 800 more employees are on site when the generating units are shut down and undergoing maintenance. The city borders of Becker extend around the plant, making the town heavily dependent on the plant for property tax revenue. The plant's annual $4 million property tax bill covers about 75% of the total for the city of about 4,600 people.
By the way, putting that 50-MW solar installation into perspective: Minnesota has a net summer electricity capacity of about 16,000 MW.

50/16000 = 0.3%. The feel-good factor.

[Note: from my perspective, switching from coal to natural gas is great news, as I've posted before. I have no problem with this. It's the intermittent energy I have problems with which I have problems.]

Reason #45,453 Why I Love To Blog -- October 8, 2015

One of the first equity investments I ever made -- decades ago -- was buying shares of Burlington Northern (BNI). I vaguely remember buying shares in five different publicly traded companies; BNI was one of them.

I had a lot of fun following BNI over the years. I have a clipping somewhere of a front page story in The Wall Street Journal -- this was before it was available on-line -- about the race between BNI and Union Pacific to have the first dual track rail from Chicago to Los Angeles. Wow, that must have been back in the late 1980's, maybe 1990's; I forget. But it was quite a race to see which railroad would be first.

Then two years ago I ran into a BNSF honcho while attending a swimming meet. I mentioned that story, and congratulated him on his company being the first, winning the race, beating Union Pacific. He said BNSF wasn't quite there. I was somewhat dumbfounded. Two decades and they still weren't there. I wasn't sure if he was accurate in his response.

Yesterday, a reader sent me a link to a Crain's/Chicago Business story
After this year, BNSF Railway Co. will be more than 99 percent finished with a second, parallel line to its 2,200-mile (3,500-kilometer) Los Angeles-to-Chicago route. Doubling up will create a rail superhighway speeding deliveries of toys, electronics, autos and other goods, because trains won't have to yield to each other on sidings as they do on single tracks.

Snatching consumer products and other freight from big rigs is more crucial than ever. Coal, once a pillar of U.S. rail traffic, is fading as utilities burn cheaper and cleaner natural gas. Average weekly carloads are down 20 percent from five years earlier, according to data compiled by Bloomberg.

The Los Angeles-to-Chicago route links the busiest U.S. container port to the biggest mid-continent rail hub, giving BNSF a leg up in the race to find alternatives to those dwindling coal cars. And there's room to grow: consultant FTR Transportation Intelligence estimates that trains now move only about 19 percent of the 71 million trailer loads that travel 550 miles or more, a rough threshold for where rail becomes an viable option.

“We have significant opportunities to convert” truck cargo to rail, said Katie Farmer, chief of BNSF's consumer group. “We've really narrowed the gap now between what was traditionally rail service and over-the-road trucking.”

That's where the dual tracks come in. More and longer trains can be run on two tracks than on a single line. Once the double-tracked section in Oklahoma is completed at the end of October, BNSF will have just seven more miles of line to build — involving three costly bridges — and will be able to run 78 trains a day in that region, up from 62 now.

With no need to pull over, they can also go faster. A BNSF train laden with truck trailers now can make the Los Angeles- Chicago run in 64 hours, said consultant Jindel. Completing the twin-tracking will shave off as much as three hours, he said.

XPO Logistics Inc., an arranger of shipments for customers such as Costco Wholesale Corp., figures that about a third of the long-haul freight that it now sends by truck is a candidate to switch to train, Chief Strategy Officer Scott Malat said. If that rule of thumb were applied across the industry, there could be more than $100 billion of business up for grabs by railroads, he said.
Much more at the link.

Now that BNSF has been bought by Warren Buffett it's harder to get updates on BNSF. A big thanks to the reader for sending me this link.

Reason #5 Why I Love To Blog -- October 8, 2015

The other day I posted the story that under the cover of Syrian turmoil aggravated by the Russians moving in, Israel quietly expands into the Golan.
There might be another story coming out of the Mideast. With US-Israel relations at an all-time low, and tea leaves suggesting Obama won't help Israel even if Israel needed help, Israel might be willing to "work under the radar" to do things it would never have thought of doing in the past.

There are two stories that suggest things might be changing.
Building on the Golan Heights would normally result in huge public outcry from the US but President Obama already has his hands full with regard to Syria and no plans for Syria anyway. The Golan Heights is the least of his worries. In addition, with relations at an all-time low between the US and Israel, this can't make things much worse.
That first line: "There might be another story coming out of the Mideast." Here's that story. Fox News is  reporting today:
After Israel complained for years that it was surrounded by oil-rich states but didn’t have a drop within its own borders, it appears there’s a big-time turnaround with the announcement Wednesday that massive oil reserves have been located in the Golan Heights,close to the country’s border with Syria.
Afek Oil and Gas, an Israeli subsidiary of the U.S. company Genie Energy, confirmed the find in an interview with Israel’s Channel 2 TVbut conceded that until the oil is actually extracted, they won’t be sure of the actual amounts and quality of the oil that has been discovered.
“We are talking about a strata which is 350 meters thick and what is important is the thickness and the porosity,” the company’s chief geologist, Yuval Bartov, explained. “On average in the world, strata are 20-30 meters thick, so this is ten times as large as that, so we are talking about significant quantities. The important thing is to know the oil is in the rock and that's what we now know.”
Read the rest of the story at the link to find out the name of one notable investor in Genie Energy.

But the Golan Heights? Who would have guessed? What a great story.

[The timing of the story does raise a red flag.]

Jobless Claims Plummet -- Lowest Level Since .... This Summer -- October 8, 2015

Wow, lowest level since mid-July. A few months ago. Whatever. BloombergBusiness is reporting all is well with the world:
Filings for unemployment benefits in the U.S. declined last week to the lowest level since mid-July, extending a run of applications near decade lows that shows dismissals remain in check.

Jobless claims fell by 13,000 to 263,000 in the week ended Oct. 3, the fewest since July 18, a Labor Department report showed Thursday. The median forecast in a Bloomberg survey called for 274,000 applications.
Last week's figures were revised downward another 1,000 applications, from 277,000 to 276,000.

The four-year average dropped to 267,500, the lowest since first of August (270,500) about two months ago.

The story does not mention the horrendous jobs report from last Friday.

Thank goodness everything is back on track. 

Thursday, October 8, 2015, Part II

Buffett builds rail superhighway to grab truck freight -- Chicago Business/Crain's.
After this year, BNSF Railway Co. will be more than 99 percent finished with a second, parallel line to its 2,200-mile (3,500-kilometer) Los Angeles-to-Chicago route. Doubling up will create a rail superhighway speeding deliveries of toys, electronics, autos and other goods, because trains won't have to yield to each other on sidings as they do on single tracks.
US shale oil stares into abyss with OPEC ready to push it over -- The [London] Telegraph. Shale drillers in Texas and North Dakota hung on for longer than anyone expected, but are too reliant on crude trading at above $60 a barrel to remain profitable.
To their credit, shale drillers and operators in Texas and North Dakota have hung on for far longer than anyone expected after Opec launched its pre-emptive oil price war last November. However, a year of oil prices trading at an average of around $50 per barrel is finally succeeding in reversing the dramatic increases in US production that had been so troubling the Gulf’s oil-rich sheikhs.

Total US output has fallen by almost 600,000 barrels per day (bpd) since the end of the first quarter, with the biggest declines occurring recently as operators begin to crack under the financial pressure caused by Opec’s squeeze on prices. By next year, the US government expects output to decline to an average of 8.6m bpd, down from an average of 9.3m bpd in 2015.

According to Mark Papa, the former head of US shale oil specialist operator EOG Resources, this is just the beginning of the downturn in North America. Speaking at the annual Oil and Money conference in London this week, Mr Papa said: “We are about to see a pretty dramatic decline in US production growth.”
Massive oil reserves discovered in Israel -- Fox News.  We'll connect some dots later. I have a number of errands and family commitments right now.

Thursday, October 8, 2015

Active rigs:


10/8/201510/08/201410/08/201310/08/201210/08/2011
Active Rigs67190184193194

RBN Energy: low oil and gas prices mean bargains for producers and midstreamers.
For nearly two months -- Since late July -- WTI crude oil prices have averaged $45/bbl, never once closing above the $50/bbl mark.  Over the same period, the natural gas price at Henry Hub has averaged $2.70/MMbtu and now languishes $.20/MMbtu lower.  Is this a time to be wallowing in misery and self-pity?  Absolutely not!!  This is the time for midstreamers and producers to reposition their businesses with a laser-like focus on the opportunities that low prices have served up.  There are bargains out there in the oil (and gas) patch.  If producers are in the right locations, with drilling costs much lower than last year, there is good money to be made.  And likewise, opportunities abound for midstreamers to pick up assets at very attractive prices to get that production to market.  But to execute such a strategy, you must have a rock-solid understanding of what is really going on in today’s markets for crude oil, NGLs and natural gas.  Our goal for the upcoming State of the Energy Markets Conference scheduled for October 28, 2015 in Denver, CO is just exactly that - to give you a rock-solid market knowledge based on hard data and thorough analysis.  Today’s blog is an advertorial for the conference.
RBN’s approach to pulling this hard data and analysis together is a bit different than your run-of-the-mill consultancy.  For example, we don’t forecast prices.  Ever since crude prices crashed last year, we concluded that there are just too many moving parts in the global oil market for us (or anyone else for that matter), to come up with a single view of what will happen to prices over the next few years.  So instead, we start with multiple price scenarios – possible trajectories for prices that are plausible, based on what we know now about the market. We don’t consider these scenarios high or low cases, reference cases or any of the other standard nomenclature.  A scenario is simply a time series of forward prices that we can use in our modeling methodology to understand market responses.