Natural Gas Net Balance Tightens Significantly In Just One Month -- RBN Energy -- December 15, 2016

Saudi's goal remains 12 million bopd. From Reuters (note the URL: http://sports.yahoo.com/news/exclusive-cost-pump-oil-policy-105546225.html).

Saudi Arabia has long said it could produce as much as 12 million barrels per day (bopd) of oil if needed, but that pump-at-will claim - which would require huge capital spending to access spare capacity - has never been tested.

Sources say the kingdom may have stretched its current limits by extracting a record of around 10.7 million bpd this year, which could be one reason why Riyadh pushed so hard for a global deal to cut production.

Riyadh, the world's top oil exporter, felt the burn of cheap oil this year when crude was trading below $50 a barrel, as the reality of its costly war in Yemen and the task of shaking up its economy to create thousands of jobs began to sink in.

"Twelve million bpd has been planned since 2008-2010 and every annual budget worked towards that goal," the source told Reuters on condition of anonymity.

To achieve that goal, the company has annual operating expenses (opex) of $20 billion and capital expenditure (capex) at around $40 billion, the source said. "When the 12 million bpd plan is achieved by 2018, the overall capex will fall to $20 billion," he added.

We're starting to get some big numbers: 

• defense / military: $80 billion
• oil opex and capex: $60 billion 
• via Twitter, David Sheppard calculates operating costs are $5 / bbl or $15 including capex

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Peak Oil 

Peak oil? Okay, this story was not about crude oil, it was about natural gas, but the point is made. Reuters is reporting that In the waters off Malaysia, Royal Dutch Shell is finding gas quickly and cheaply to replenish depleting fields where only a few years ago geologists had lost hope of discovering any new reserves.

The Anglo-Dutch group is combining the latest technology with the wisdom of industry veterans to unlock new oil and gas deposits where it already operates, usually within 20 km (12 miles) of existing platforms.

The result has been a string of finds which, while modest in size, can generate cash rapidly to suit an era of drastically reduced exploration budgets across the energy industry.

After a costly flop in Alaska, Shell has turned away from giant "frontier" projects, focusing instead on exploring closer to home, such as in Malaysia where it has been producing oil for more than a century. Many of its rivals are following suit.

"With new data, new seismic and new brain power you can find extraordinary amount of hydrocarbons for the future," Ceri Powell, Shell's head of exploration.

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Back To The Bakken

Active rigs:

	12/15/2016	12/15/2015	12/15/2014	12/15/2013	12/15/2012
Active Rigs	40	64	182	191	181

RBN Energy: US natural gas storage whipsaws prices -- again.

In December to date, US demand has averaged 92 Bcf/d, 10.3 Bcf/d higher than last year’s 81.7 Bcf/d in the same period. Add to that the incremental 0.6 Bcf/d in Mexican exports and 1.3 Bcf/d in LNG exports, and overall demand is running more than 12 Bcf/d higher than last year.

Moreover, based on the latest 15-day weather forecasts, our models are projecting demand remains well above 2015 levels for the balance of the month (see blue-dotted line in Figure 4). In fact, current forecasts are calling for the highest demand for December since the winter of 2013, assuming weather materializes as currently expected.

All in all, based on the current weather forecasts, December 2016 consumption should average close to 10 Bcf/d higher than 2015, and about 11 Bcf/d higher if you include exports. And on a net basis, including all supply and demand components, the net balance (supply minus demand) this month would be about 14 Bcf/d tighter than last year. That is a long way from where we were in November, when we were just 0.6 Bcf/d tighter year on year.