Five (5) New Permits -- January 13, 2016

Wells coming off confidential list Thursday:

• 24116, 3,746, Whiting, Skunk Creek 4-18-17-1H3, Heart Butte, Three Forks NOS, 33 stages, 7.8 million lbs, spud July 14, cease drilling July 25; talk about a straightforward well, no fuss, no muss, no errors, and an IP of 3,746; t11/15; cum 33K 11/15; 30K in one month;
• 29196, 559, CLR, Mildred 6-19H1, Brooklyn, Three Forks, 30 stages, 5.5 million lbs; t8/15; cum 48K 11/15;
• 29668, 1,122, CLR, Thronson Federal 8-21H1, Alkali Creek, Three Forks B1, 45 stages 8.3 million lbs, t8/15; cum 71K 11/15;
• 29767, SI/NC, Hess, EN-L Cvancara-155-93-2627H-9, Robinson Lake, no production data,
• 31389, drl, Denbury Onshore, CHSU ML13-09SH 05, Cedar Hills, South Red River B, cum 12K 11/15;

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31389, see above, Denbury Onshore, CHSU ML13-09SH 05, Cedar Hills:

Date	Oil Runs	MCF Sold
11-2015	4188	1055
10-2015	5552	1453
9-2015	2517	695

29668, see above, CLR, Thronson Federal 8-21H1, Alkali Creek:

Date	Oil Runs	MCF Sold
11-2015	13730	10375
10-2015	13197	19070
9-2015	20613	30876
8-2015	22480	32272
7-2015	748	0

29196, see above, Mildred 6-19H1, Brooklyn:

Date	Oil Runs	MCF Sold
11-2015	13359	20501
10-2015	11618	17257
9-2015	10197	14868
8-2015	10170	12569
7-2015	1365	0

24116, see above, Whiting, Skunk Creek 4-18-17-1H3, Heart Butte:

Date	Oil Runs	MCF Sold
11-2015	32388	0

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Active rigs:

	1/13/2016	01/13/2015	01/13/2014	01/13/2013	01/13/2012
Active Rigs	51	156	193	182	199

Five (5) new permits --

• Operators: MRO (4), Whiting
• Fields: Antelope (McKenzie), Sanish (Mountrail)
• Comments:

Wells released from the confidential list:

• 29261, 914, EOG, Parshall 88-3029H, Parshall, t7/15; cum 58K 11/15; from 12K to 7K in one month;
• 29766, SI/NC, Hess, EN-L Cvancara-155-93-2627H-8, Robinson Lake,
• 31162, drl, Abraxas, Stenehjem 10H, North Fork,

Oasis permitted a salt water disposal well in Siverston oil field, McKenzie County.
Three (3) producing wells completed:

• 11698, 502, BTA, 9210 JV-P Federal DM 1, Beaver Creek, Red River, t1/86; cum 518K 11/15; in early 2014 this well was re-entered and tested the Nisku (Birdbear); Birdbear: 6/14; spacing 320 acres; no production noted;
• 30167, 423, Hess, AN-Prosser-152-95-1102H-10, Antelope, Sanish pool, t1/16; cum --
• 30673, 503, Hess, BL-Odebaard-156-95-2116H-7, Beaver Lodge, t12/15; cum --

One (1) "recompleted" well:

• 16071, 37 (Silurian), Armstrong Operating, Hanish 26-1, Moraine oil field, multiple payzones (Duperow - PNA; Silurian -- producing until 7/15; Winnipegosis -- minimal production; Interlake - dry), most recent test date, 4/14, Silurian, oldest test date, 4/06; cum around 100K 7/15;

A New Post-Boom Record Low: Active Rigs Down To 51 -- January 13, 2016

Active rigs:

	1/13/2016	01/13/2015	01/13/2014	01/13/2013	01/13/2012
Active Rigs	51	156	193	182	199

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The Apple Page

Macrumors is reporting:

Amid an overall decline in worldwide PC shipments, Apple is the sole manufacturer that saw positive shipment growth, according to new PC shipping estimates from Gartner.

With worldwide PC shipments from Lenovo, HP, Dell, ASUS, and Acer down, Apple also broke into Gartner's list of top 5 worldwide PC vendors for the first time.  

During the fourth quarter of 2015, Apple shipped 5.7 million PCs, for 7.5 percent market share. That's up from 5.5 million PCs and 6.7 percent market share in the year ago quarter, for an overall year-over-year growth of 2.8 percent.

In the United States, Apple saw more significant growth of 6.5 percent, shipping an estimated 2.2 million PCs in Q4 2015 for 12.8 percent market share.

Worldwide PC shipments totaled 75.7 million units in Q4 2015, an 8.3 percent decline, with Acer and Lenovo seeing some of the biggest drops.

Also, this could be another game changer. I would be disappointed in Apple if it did not grab this opportunity. This would be a great way to spend all that cash being held hostage overseas.

Time Warner CEO Jeffrey Bewkes reportedly told investors on Monday that he would entertain a sale of the media company, and Apple has been named as a possible suitor, according to the New York Post. AT&T, which owns DirecTV, and Fox are also said to have shown interest.

Time Warner owns a large number of assets that could lay the foundation for Apple's much-rumored streaming TV service, including CNN, HBO, TBS, TNT, NBA TV, Cartoon Network and its Warner Bros. division. A deal could allow Apple to offer a skinny bundle of channels airing popular TV shows for all ages like Adventure Time, Game of Thrones, Sesame Street, Silicon Valley and Veep.

See disclaimer. Yada, yada, yada.

John Kemp Explains This Week's Energy Tweets - January 13, 2016

"ObamaCare economics" has replaced "Reaganomics."

From google: A popular term used to refer to the economic policies of Ronald Reagan, the 40th US President (1981–1989), which called for widespread tax cuts, decreased social spending, increased military spending, and the deregulation of domestic markets.

A popular term used to refer to the economic policies of Barack Hussein Obama, the أربعة وأربعون th US President (2009 - 2017), which called for widespread health care taxes, increased social spending, decreased military spending, and increased regulation of domestic markets, particularly with regard to energy. 

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Hostage Situation; Powerball Lottery: and the Mideast on the Brink

Wasn't there a hostage situation in Iran during the Carter administration also? I vaguely remember something about that. There was even a movie, Argo. And, now, with the Obama administration, we have another American-Iranian hostage situation. Which reminds me, I almost forgot, Rush Limbaugh will be on in a minute. [Update: I hear that, yes, there was a hostage release, but SecState John "I served in Vietnam" Kerry facilitated their "immediate" release. Or something to that effect.]

Oh, yeah, I have to buy some Powerball lottery tickets for my wife. 1:292 million. I wonder if one could buy 292 million tickets at one dollar two dollars apiece for a "guaranteed win of $1.5 billion? Put that in the form of a business plan, put it on a PowerPoint presentation, and take it to your local bank for a $292 $500 million short term loan. (I thought PowerBall tickets were just a buck but I've been told they are $2 apiece; see first comment. I corrected the blog. After taxes, the business plan doesn't look all that good.]

For the archives about a speech that was described as disjointed, irrelevant, disappointing (glad I missed it):

On the very day the president is delivered his speech, the Iranian Navy captured two US Navy ships that allegedly were incapacitated and drifted into Iranian waters. Now Iran is holding these sailors hostage. Yet, there was no mention of this incident in the president’s speech.

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Graphology

So many story lines here, but I just don't have time. John Kemp explains some of the energy graphs released this week:

Oil and gas production was one of the fastest-growing industries in the United States between 2009 and 2014 according to the U.S. Bureau of Economic Analysis (BEA).

Oil production increased by more than 60 percent while natural gas production was up by more than 25 percent thanks to the shale revolution.

What is less well-known is that oil and gas production is also very energy intensive and the drilling boom contributed significantly to fuel consumption, especially diesel.

Everyone talks about all the diesel used by all the 18-wheelers supporting the oil and gas industry. But the drivers drove out to those 18-wheelers in their gas-guzzling Ford F-series pickup trucks, and their spouses with money to spend, were driving their gas-guzzling SUVs to malls they only dreamed about before the boom. Yeah, it's not just diesel but also gasoline demand that has fallen off the chart due to the current oil and gas industry challenges.

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John Kemp Also Linked A NewStatesman Article

January 13, 2016: from the NewStatesman: Behind Saudi Arabia’s bluster is a country that feels under grave threat.

Saudi Arabia feels with good reason more threatened than at any time in its modern history, at least since the subversive Kulturkampf of the 1950s and 1960s from Nasser’s Egypt.

This stems from five sources: first, the challenge of Sunni and largely Salafi jihadism; second, the sustained ideological and material challenge of the Islamic Republic of Iran; third, the collapse of large parts of the Middle East state system following the Arab spring; fourth, a sharp fall in global energy prices; and fifth, a sense that historical alliances – notably but not only with the United States – are fraying.

These threats are real.

A decade or so ago, the heirs to Juhaiman al-Otaybi’s 1979 Grand Mosque attackers, al-Qaeda in the Arabian Peninsula, launched a terror campaign within the kingdom with the aim of inspiring a general Sunni insurgency. The Saudis were slow to realise what they were facing. Once they did, they mobilised and ruthlessly crushed the terrorists.

But they did not go away. The remnants regrouped in Yemen and from there plotted, recruited others (including the American imam Anwar al-Awlaki) and directed further attacks, against Western and Saudi targets. More recently there has been a wave of attacks, claimed by Islamic State, mostly on Shia targets – but also on security forces and a Sunni mosque at a military base near the Yemeni border.

Remember the fall of the Shah of Iran? It happened during the period when the US president was very, very similar to our current president. Both ideologues and internationally weak and isolationists. From wiki: The Carter Administration increasingly became locked in a debate about continued support for the monarchy. In the current situation, President Obama has explicitly stated and has explicitly acted in such a matter to let the Saudis know they are on their own.

At Twitter, John Kemp also has two maps that show how much new territory Iran has "acquired" over the centuries, something I have not seen reported recently or in current context of the "Mideast on the Brink":

• http://gulf2000.columbia.edu/images/maps/Iran_takeover_Gulf_lg.jpg 
• http://gulf2000.columbia.edu/images/maps/IranTerritorialChanges_lg.png

Saudi Arabia has a long, long memory. The Mideast measures "things" over generations. The United States? Quarterly (every three months).

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Where Are They Now? The American Hostages Held By Iran?

To the best of my knowledge, the American hostages are still being held despite Iran's promise to release them "promptly" or whatever the Arabic-translated word was. [Update: I hear they were released.]

John Kemp's Weekly Energy Tweets -- January 13, 2016; Gasoline Demand Has Plummeted; Signs Of Severe Recession In Store? POTUS Promises Even More Fossil Fuel Regulations This Year

Updates

Later, 11:12 a.m. Central Time: shortly after writing the subject link, a reader sent me a long Bloomberg Gadfly article (which I highly recommend). There was much, much in the article, most of which we have touched on many times before. Germane to this particular post was this paragraph in the linked article (I've divided it into two paragraphs):

For example, Summers puts the probability of a recession in the U.S. within three years at 63 percent once the country is already three years into a recovery. We are currently more than six years in.

Verleger, meanwhile, calculates that since 1970, U.S. annual economic growth has tended to run between 1.8 and 2.6 percentage points higher than the country's oil demand growth, in expansions and recessions, respectively. The implication is that the U.S. looks overdue for a slowdown. And if economic growth were to slip to 2 percent or less, then oil demand in the world's biggest market could actually fall. 

If we move into a recession it's very likely it could be much more severe than even the "Great Recent Recession." We might need a businessman in the oval office to lead us through the downturn. We don't need someone who solves problems with more rules, regulations, and revenue enhancements.

Original Post

 

GE will move to Boston.

The conglomerate has been weighing a move out of Connecticut since the summer, when lawmakers passed a budget that included $1.2 billion in tax increases despite protests from some of the state's biggest corporations. In earlier 2015 comments, Immelt claimed GE's state taxes had increased five times since 2011.

At last tally, GE employed about 5,700 people in the state of Connecticut, with about 800 people in its Fairfield headquarters. 

It will be interesting to see which other corporations follow GE's lead.

At the international level, we have "inversions." Just saying.

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John Kemp's Weekly Energy Tweets

With regard to John Kemp's weekly energy tweets, we will start with gasoline demand and refer you back to this link.

Shocking! Not only is current US gasoline demand significantly below demand for gasoline one year ago; the current demand is even below the ten-year median, a period in which the ObamaCare economy was mostly in need of “critical care.”

This has severe recession written all over it, unless things change dramatically over the next few months. It's very possible the combination of what is going on in the oil and gas industry and ObamaCare going into full implementation this year will create the perfect storm. And it won't be pretty. 

From John Kemp:

US distillate demand (diesel fuel) has dropped off the chart (okay, almost):

 
Meanwhile, gasoline stocks have soared:


And look at this, US refineries processed a seasonal record -- and almost an all-time record --16.4 million bopd, up over a half-million bopd compared with 2015: 

US distillate stocks soared 6.1 million bopd, close to a 10-year seasonal max set in 2011:

 
I really don't want to post all these graphs, but they are so incredibly amazing I don't want to lose them. So, I'm posting them for the archives.

And if the graphs above don't get your attention, maybe this one will, the one that shows that US total refined product stocks rose almost 10 million bbls last week (I didn't mark the graph, hopefully you can spot the red line):

You get the picture. No more graphs, but they are all similar.

US commercial crude stocks were basically unchanged last week; still at record levels.

US total crude and product stocks rose an astounding 10 million bbls last week and so far above past records, a new chart will have to be generated.

New Post-Boom Record Low: 53 Active Rigs -- January 13, 2016

Active rigs:

	1/13/2016	01/13/2015	01/13/2014	01/13/2013	01/13/2012
Active Rigs	53	156	193	182	199

From Tuesday's daily activity report. Note: when you go to the daily activity report index, and click on 1/12/16, you get a report dated January 12, 2015 -- I assume that's a typographical error. If so, there were --
Five (5) new permits --

• Operators: Whiting (2), SM Energy (2), Hess
• Fields: Bell (Stark), Ambrose (Divide), Hawkeye (McKenzie)
• Comments:

Three (3) producing wells completed:

• 27627, 599, Hess, EN-Farhart-156-93-0409H-2, Baskin, t12/15; cum --
• 30080, 888, Triangle, Arnegard 150-100-23-14-4H, Timber Creek, t1/16; cum --
• 30079, 251, Triangle, Arnegard 150-100-23-14-10TFH, Timber Creek, t1/16; cum --

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Temporarily Abandoned in the Charlson

This well was placed on the "temporarily abandoned" list, and the geologist's narrative at the file report says it is "awaiting re-entry" by the operator.

• 28018, TA, Petro-Hunt, USA 153-95-22D-15-4H, Charlson, SESE 22-153-95, API 33-053-05785, spud 8/14.

This well has not been fracked. While drilling the horizontal, an initial trip gas of 3,283 units was recorded which was accompanied by a 20-foot flare. On a later trip, a maximum trip gas of 3,029 units was noted, accompanied by a 25 - 30' flare. Again, on a third trip, 4,103 gas units were recorded with another 25 - 30' flare. A fourth trip yielded an even bigger flare, 30 - 35 feet, with a trip gas of 4,333 units. Not to be outdone, the roughnecks were not going to quit: at a measured depth of 16,595' -- another motor failure -- trip gas was measured at 6,858 units with a 35 - 40' flare. Total measured depth: 20,237 feet reached on Christmas Day, December 25th, 2014.

This is what that area currently looks like:

The index well, #28018, is on a five well pad. Only one well is active; three of the wells are "TA" and one well is a DUC (SI/NC).

• 28015, TA, Petro-Hunt, USA 153-95-23C-14-2HS,
• 28016, 912, Petro-Hunt, USA 153-95-22D-15-1HS, a middle Bakken well, 37 stages, perf and plug, 4.7 million lbs, t11/15; cum 31K 11/15; first full month of production  - 30,000 bbls
• 28017, TA, Petro-Hunt, USA 153-95-22D-15-5H,
• 28018, TA, Petro-Hunt, USA 153-95-22D-15-4H,
• 30183, SI/NC, Petro-Hunt, Sherven Trust 153-95-27A-7HS,

Petro-Hunt's monster well in the Charlson, is located 3.2 miles to the north-northeast:

• 16059, 729, Petro-Hunt, USA 2D-3-1H, Charlson field, t10/06; cum 1.53 million 10/15; still producing 5,000 bbls/month; a short lateral; no fracked; no acid, nothing, according to the sundry form, a Three Forks well; API 33-053-02682;

Junk Yards And Strip Joints Confined To Industrial Zones In Boomtown, USA -- January 13, 2016

Updates

January 14, 2016: FLASHBACK! Don reminded me of this -- I had forgotten or did not know -- but the city of Williston suspended the liquor licenses for both strip clubs on at least two occasions in the past due to problems at the club. FoxBusiness back on December 10, 2014, reported the second suspension for both clubs. 

January 14, 2016: wow, this is a busy season for nominations for the 2016 Geico Rock Award. This is the headline: ‘First the man camps, and now this’: Strip club patrons, employees disappointed by city commission’s move.

Well, duh. The boom is over. The man camps were always promoted and approved on the basis that they were temporary. Hellooooo.... temporary. As in not permanent. With regard to the two strip joints on south Main:

There are two issues here:

• zoning
• alcohol

Zoning:

I have no sympathy for these businesses. The handwriting was on the wall five years ago, maybe longer. They should have been working with city council about where best to have the businesses. Businesses move all the time. These businesses are given a year to move. My dad has to move his business in less than six months when the owner did not renew the least; many years ago; had to build new building during the winter months. Businesses move all the time.

Alcohol:

Alcohol was probably the #1 reason why the police had all those calls to these businesses. Again, the owners/managers never got control of the situation. Had they eliminated the "police call" issue it probable would not have come to this. I'm irritated the city did not take care of this problem earlier; certainly, a liquor license/renewal of a liquor license is contingent upon law-abiding / socially-acceptable behavior.

By the way, for those who are unaware of this, the city of Williston has completely renovated Main Street, from the north (at First Lutheran Church) all the way down to the Amtrak Station (south Main). There are some major, modern changes occurring. The strip joints, from what I can tell, never enhanced the outside appearance of their establishments. From what I can tell, there was no effort to clean up their outward appearances to better blend in with the other businesses. 

Original Post 

Best news of the day:

Williston commission votes to move strip clubs out of downtown. Ordinances would also prevent adult businesses from selling liquor.

When Don sent me the link I replied:

Fantastic. Finally. Industrial zones. Ha. That gets them around the "free speech" argument that strip clubs have used before. Strip clubs have successfully sued in the past that "free speech" allows them to operate unfettered. Williston says they can still operate, but they need to move from downtown. It's a zoning thing. Boston, Massachusetts, did the same thing decades ago. I'm surprised it took Williston this long.

The city probably waited until the boom was over to separate booze from the strip clubs. I'm sure alcohol revenues have decreased significantly now that the boom is over.

Finally, I wonder what a caberet license costs? I wonder if caberets will be allowed to let customers bring their own booze?

Would a liquor store be considered an "adult business"? Are "bars" and "taverns" "adult businesses"? Is Williston going dry? Will Bill Cosby go to jail? How did that lawsuit by the dancers against the strip joints turn out? Inquiring minds want to know.

So many songs from which to choose. 

The Party's Over, Willie Nelson

Wednesday The 13th -- January 13, 2016

Updates

January 14, 2016: the note on the Commonwealth of Massachusetts generated a "sidebar" discussion; see comments. Coincidentally, having just sent a note to another reader, I received a follow-up comment (see below). My reply is really poorly-written and not ready for prime-time, but it is what is is, a reply to a comment about GE moving to Boston.

Without question GE is doing the right thing.

1. Connecticut is in the backwaters of New England.

2. Boston is the center of New England. The absolute center. On the East Coast, NYC is #1; Boston is #2; Washington would not even make the top ten list if the capitol was not there.

3. For purely financial reasons, Texas might have been better but "Connecticut/New England" culture would never have adapted to Texas. No ocean (at least not near Dallas). No yachts.

4. Boston is the #2 financial center of the US -- in some sense -- better than NYC; perhaps more accessible than NYC.

5. 25 universities and colleges in Boston metroplex; top-notch MBAs (Harvard), engineers (MIT), medical technology (Mass General/Tufts). My hunch is that GE had been looking at Boston for quite some time; they used CT taxes as the excuse to move.

6. Everyone will focus on the money side of the story; I'm thinking of the quality of life; access to MBAs and engineers; access to capital (dollars); access to Cape Cod.

Huge story.

The reader (see comments) is absolutely correct: the progressive/liberal/Rachel Madcow philosophy that GE seems to have accepted will fit right in with Boston politics. A win-win for everyone.

Original Post 

Active rigs:

	1/13/2016	01/13/2015	01/13/2014	01/13/2013	01/13/2012
Active Rigs	54	156	193	182	199

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Uh-Oh

 Reuters is reporting: Petrobras cuts spending plan again as oil-price drop bites.

Petróleo Brasileiro SA, Brazil's state-controlled oil producer, on Tuesday slashed its investment plan for the third time in just over six months as it tries to preserve cash to pay its debt, the industry's largest.

With planned 2016 investments of $20 billion, versus $27 billion in June, Petrobras also trimmed its outlook for oil production in Brazil this year by nearly 2 percent to 2.145 million barrels per day from 2.185 million bpd.

The production cut underscores the difficulties facing Chief Executive Officer Aldemir Bendine during Brazil's worst recession in at least 25 years and with its currency, the real, in a tailspin.

"Every day Petrobras is under more and more pressure," said Fabio Fuzette, who runs Sao Paulo investment fund Antares Capital. "If oil prices stay low, I'm not very hopeful. We will likely see more of the same shortly."  

Although North Dakota's daily production of about 1 million bopd is half that of Brazil's, it is interesting that one could argue that North Dakota's production "rivals" that of Brazil's -- at least in the same ballpark.

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MetDeath

MetLife will divest itself of its "bread and butter." The US government has determined that MetLife poses a threat to the US financial system if it fails. US bureaucrats have calculated that if all of MetLife's insureds die on the same day, the event would take down the US financial system (I can't make this stuff up).

MetLife Inc. doesn’t believe it poses a risk to the financial system. But it isn’t waiting to find out if courts agree.

The insurer is seeking to divest a large piece of its U.S. life-insurance unit as part of a plan to ease some of the capital burden it is expected to face under new federal regulations, the company said Tuesday.

Under the plan, the company would spin off, sell or take public a business that has been at its core for decades: selling life insurance and other financial products to individuals and families across the U.S. MetLife is one of the best-known sellers of financial protection to American households.

That may or may not be interesting. The reason this article caught my attention: it explains why GE got out of the financial business. I always thought GE got out of its financial business for "business reasons." I was wrong. The government forced GE to get out. From the linked article:

MetLife would be following in the footsteps of General Electric Co. , one of the other four nonbank firms labeled systemically important. In April 2015, it made one of the biggest strategic moves in its long history by laying out plans to get out of the banking business and refocus on the conglomerate’s industrial operations.

We might see the same with AIG:

The move comes as American International Group Inc., another nonbank designated as systemically important, has faced pressure from billionaire investors Carl Icahn and John Paulson to split into three separate companies to reduce the capital burden and boost shareholder returns. 

Pocahontas is watching this closely. And probably ordering a case of champagne.

Interestingly enough, these moves by GE and MetLife, and possibly by AIG, could be a boon to shareholders. See disclaimer, yada, yada, yada.

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Prescient

This is an incredibly interesting story. Michael Dell is about to make billions. The story is interesting enough without my comments.

ATT is mentioned in the article. See disclaimer, yada, yada, yada.

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CommonUnWealthy

It's my understanding that the individual 57 US states, unlike the US government which can print money, must balance their state budgets on an annual basis, or maybe a biannual basis if they have a biannual budget. I could be wrong. Whatever.

The AP is reporting that time is running out for the Commonwealth of Massachusetts. The Commonwealth may not be so wealthy. I would link the story over at the Boston Globe but their paywall is pretty tough to tunnel through, so I won't even see their ads. Whatever. So, from something called boston.com, the same story -- in fact, I think it's the very same story:

Gov. Charlie Baker has ordered nearly $50 million in spending cuts as part of a plan to erase a state budget shortfall.

In a letter late Friday to state lawmakers, the Republican said his administration is projecting a $320 million deficit in the budget for the fiscal year that ends July 1. The projected shortfall is based on current revenue forecasts.

Baker said officials also have identified $55 million in additional non-tax revenues, mostly federal reimbursements.

So, back-of-the-envelope: $320 million deficit, minus $55 million from federal reimbursements, minus another $50 million in governor-mandated spending cuts = a deficit of $215 million, and les than seven or eight months to get it right.

Just one more reason, Boston is burning the midnight oil to get GE to relocate from Connecticut where taxes are in the mesophere to Massachusetts where taxes are only in the stratosphere.

By law, Massachusetts governors are empowered to make mid-year budget cuts if anticipated revenues won’t be enough to cover expenditures. Such cuts are limited to executive branch agencies.

Other areas — like state education spending and state aid to local cities and towns — are off limits.

With a $50 million-cut-to-the-executive-branch, just how big is the "governor's budget"? I assume  a lot of folks are updating their resumes.

Will North Dakota Oil Production Show An Increase Or Decrease When November, 2015, Data Is Reported This Week -- January 13, 2016

Poll at the top of the sidebar to the right.

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Unexpected As Reuters Suggests, 

Or Expected As John Kemp Might Suggest?

 Reuters is reporting:

U.S. crude stocks fell unexpectedly last week, while gasoline and distillate inventories built, data from industry group the American Petroleum Institute showed on Tuesday.

Crude inventories fell by 3.9 million barrels in the week to 480.071 million, compared with analysts' expectations for a increase of 2.5 million barrels. Crude stocks at the Cushing, Oklahoma, delivery hub fell by 302,000 barrels, API said.

Regular readers of the blog may not be surprised. This was discussed a couple of days ago in a long blog on gasoline demand in which it was noted that John Kemp said that the 2015/2016 straddle resulted in artificially high crude oil stock. Crude oil stocks for this end-of-year straddle was the worse in a decade:

It is interesting that John Kemp in his Reuters article suggested that the huge rise in US gasoline stocks reported most recently is simply an anomaly of year-end shenanigans.

The 10.6 million barrel jump in U.S. gasoline stocks last week, reported by the Energy Information Administration on Wednesday, sent gasoline futures tumbling 4 percent and intensified the selloff in oil prices.

Estimated gasoline consumption was also down 1.2 million barrels per day (bpd), over 13 percent, compared with the prior week, adding to market alarm about the health of fuel demand.

But most of the increase in stockpiles and apparent drop in fuel consumption was likely due to year-end seasonal quirks rather a sign of slackening consumption.

The latest data on gasoline consumption, production and stocks are for the week ending on Friday Jan. 1 and straddle year-end.

In the previous five years, from 2010/11 to 2014/15, gasoline stocks increased by an average of more than 6 million barrels over the year end period, with increases ranging from 3.6 million to 8.1 million barrels.

But let's look at the figures again, or as they say in the Hillary camp, let's parse that article:

• the jump this past week was 10.6 million bbls; let's round that to 11 million bbls
• the jump for similar weeks straddling the old year/near year averaged 6 million bbls
• 6 million bbls is not half of 11 million bbls, but it's awful darn close
• the range over the past five years has been 3.6 to 8.1 million bbls (rounding: 4 to 8 million bbls)
• the 11 million bbls exceeds anything we've seen in the past five years, and not by a trivial amount (double-digit jump this year; single-digit jump all previous years)
• in fact, a jump of 11 million bbls is almost three times the smallest jump

the fact that oil futures hardly reacted to the news suggests analysts were expecting this.

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Venezuela -- Tick, Tick, Tick

The Wall Street Journal is asking which country or which countries will "break"?

Petrodollars are rapidly turning into petropennies. As oil prices flirt with the $30-a-barrel level, a key question becomes whether producing nations can continue to stand the pain.

Assessing the economic and political risks to major exporters is far from straightforward. Depending on whom you ask, the crude price large producers such as Russia, Saudi Arabia, Iran, and Venezuela require to balance their budgets is anywhere from the high double digits to low triple digit dollars per barrel.

The Journal's analysis may surprise you. It may not be Russia or Venezuela, but rather ... drum roll ... Saudi Arabia:

Seemingly insulated Saudi Arabia actually may be less secure.

Its budget deficit hit about 15% of gross domestic product last year and the government recently has taken unprecedented steps such as fuel and water subsidy cuts to ease fiscal pressure, not to mention disclosing plans to sell part of national oil champion Saudi Aramco. The coming months will show how the so-called social bargain, in which there is no income tax and the vast majority of Saudis work in some capacity for the government, holds up in an age of austerity.

With both Shiite minority dissidents and Islamic State challenging the monarchy while its military is involved a war in neighboring Yemen, it is an awkward time to put public sentiment to the test.

I have no idea if "15% of GDP" is significant or not. Let's check on the US budget deficit as a percent of GDP:

The United States recorded a Government Budget deficit equal to 2.50 percent of the country's Gross Domestic Product in fiscal year 2015. It is the lowest budget deficit in 7 years. Government Budget in the United States averaged -3.02 percent of GDP from 1948 until 2015, reaching an all time high of 4.60 percent of GDP in 1948 and a record low of -12.10 percent of GDP in 2009. Government Budget in the United States is reported by the U.S. Treasury.

This would suggest that Saudi Arabia's budget deficit is SEVERE.

It's All About Crude Oil Exports -- January 13, 2016

This is truly coincidental. Yesterday I posted a note updating the location of the first ship carrying US crude oil to Europe under the recently relaxed crude oil export rules. Today, on the front page of the on-line edition of the Wall Street Edition (possibly the third page of the print edition) is a long article on that first shipment, as well as a second shipment. And the story is accompanied with a graphic showing the distance from Texas to Trieste (Italy), exactly what I did (except I did it from Miami, FL, to Naples, Italy, for other reasons); and the current location of the tanker, which I also did (based on information freely available).

From the linked article we also learn that the ultimate destination is not Switzerland but rather Bavaria, southern Germany where there is a refinery located between Munich and Nuremberg. We also learn, for what it's worth, that the oil was pumped from around Karnes County, TX, 60 miles south of San Antonio (Eagle Ford).

Also coincidentally, I guess one could say, RBN Energy has a great piece on the huge new export "facility" that is being developed along the Louisiana coast. It's an update of LOOP -- get prepared to read a lot more about that port as the years go by.

And there's another first with regard to US exports. For a bit of off-beat news with regard to natural gas exports, FuelFix is reporting that tugboats left useless by US shale boom finally have a job to do:

Somewhere in the Gulf of Mexico right now, the Energy Atlantic is headed for Louisiana to collect an historic cargo: the first exports from America’s shale gas revolution.

Waiting to steer the giant tanker into Cheniere Energy Inc.’s $15 billion Sabine Pass terminal is a fleet of tugboats that’s spent the past seven years killing time — some days holding emergency exercises, some days racing each other. They were all set to escort shipments of natural-gas imports, but the ships never arrived: unexpectedly, the U.S. started producing enough gas of its own.

“The boats are beautiful — you could eat off the floor in the engine room,” said Richard Ennis, head of natural resources at ING Capital. With the switch to exports, the tugs will at last have a job to do — even if it’s not the one they expected. They “may actually get a scratch on them,” Ennis said.

The surge in oil and gas output from U.S. shale drillers has the potential to transform world markets. At home, it’s left a chain of idle import facilities from the Northeast to the Gulf Coast, as energy companies pile onto the export bandwagon instead: $50 billion-worth of terminals are due to come online in the next five years.