World oil prices are controlled by the amount of crude oil stored
at Cushing, Oklahoma. That’s because Cushing is the pricing point for
WTI (West Texas Intermediate) oil prices, the most-traded oil futures
contract in the world.
WTI and Brent oil prices have good negative correlation with the
volume of crude oil stored at Cushing. Comparative inventory, the
present volume of oil compared with the 5-year average, and oil-price
volatility, the rate at which the price of oil moves up and down, are
shown in Figure 1.
OilPrice.com Figure 1. Oil price, weekly price volatility and Cushing stocks. Source: EIA & Labyrinth Consulting Services, Inc.
From the beginning of 2014 until the end of July, comparative
inventory fell and world oil prices were high averaging more than $100
per barrel. From August to the time of the November 28 OPEC meeting,
Cushing inventories rose and oil fell below $70. OPEC’s decision not to
cut production caused a spike in volatility and prices dropped to $46
per barrel by the end of January 2015.
Prices rose in February based on hope that falling rig counts would
bring declining U.S. production. Rising Cushing inventories brought
markets back to reality and they fell again in March (Figures 1 and 2).
OilPrice.com Figure 2. WTI daily oil-price volatility, Cushing comparative
inventory and world event time line, 2014-2016. Source: EIA &
Labyrinth Consulting Services, Inc.
Cushing storage fell from mid-April to mid-June 2015 and oil prices
rallied to $60 per barrel. Concerns about China’s economic growth and
the lifting of sanctions on Iran added to flattening Cushing inventories
and oil fell to near $38 per barrel by mid-August.
The gunmaker beat analysts' expectations for revenues and profits, as
firearm sales were more than even the company had anticipated.
Smith & Wesson posted revenues on Thursday of $210.8 million,
beating the estimate for $179 million. Adjusted
earnings per share (EPS) came in at $0.59, versus $0.41 expected.
North
Dakota was famously known as the Fighting Sioux from 1930 until the
university retired the nickname in 2012, ending a seven-year battle with
the N.C.A.A. North Dakota had been one of 18 institutions the N.C.A.A.
singled out in 2005 for American Indian mascots it deemed hostile or
abusive; all were prohibited from hosting N.C.A.A. postseason
tournaments. The university appealed, lost and chose to fight in court.
The
dispute dragged on, with the state Board of Higher Education and the
Legislature weighing in. Ultimately, in June 2012, North Dakota voters
overwhelmingly chose to phase out the nickname.
The decision by the Sioux Nation to support this idiocy was incredibly stupid. I haven't walked in their moccasins so I am not one to talk .... but everyone else has -- in fact, as the Times says, North Dakota voters "overwhelmingly supported the decision to "phase out the nickname" and very few North Dakota voters are of the Sioux Nation.
But I digress.
The Sioux Nation was well known because of their association with the UND athletic teams. Over time, the Sioux Nation will gradually be forgotten. Dumb, dumb, dumb. For the Sioux Nation to lead the fight against this nickname was simply dumb, dumb, dumb. It will take awhile, but eventually the Sioux name will be lost, and when it is, one can look back on the UND story as the tipping point, when things began to fall apart.
I always associated "fighting" Sioux with a people willing to fight for what they believed was theirs, nothing more, nothing less. There were only a few Native American Nations able and willing to do that; the Sioux were one of them.
Something tells me Sitting Bull would have said, "By God, we're fighting Sioux. We took on Custer then and we will continue to fight for our legacy now."
But UND now takes a non-descript, generic nickname that could be applied to any elementary school, middle school, high school, across the entire US. The Hawks. Really?
At the end of the article:
Further
muddling the transition is the fact that North Dakota’s 2007 settlement
with the N.C.A.A. allows it to keep the Fighting Sioux trademark.
According to Schafer, federal trademark law requires North Dakota to
maintain continuing commercial use to keep it. So it must sell some
Fighting Sioux gear or risk losing the trademark, which would allow
outside vendors to flood the market with Fighting Sioux knockoffs.
Three years ago, the university introduced the Dacotah Legacy Collection
of Fighting Sioux merchandise. Two racks of that collection’s shirts,
hoodies and ball caps in Engelstad Arena’s Sioux Shop drew the most
attention from shoppers before that Minnesota-Duluth game.
“It’s
a crazy thing,” said Schafer, a 1969 North Dakota graduate. “They say
we can’t use the Fighting Sioux, and then they say, well, you have to.
They just put us in a really stupid position. But that’s the N.C.A.A.”
The best thing for me personally about blogging is that I finally have a feeling for US oil industry. I miss a lot, I misread a lot, I don't understand a lot, but at the end of the day, I've gained a better perspective on the Bakken revolution.
Right now, these two tweets are hitting social media:
Rising oil prices supported by falling US output, which EIA says lost 25,000 b/d last week to 9.077 million
US crude oil production for week ended February 26, 2016, was down 247,000 b/d year-over-year
As usual, in that second soundbite we got the numerator but not the denominator. In the first tweet, we got the denominator, but not the percent, or what 25,000 bopd really meant; no context.
For the record, 25,000 is 0.27% of 9 million.
For the record, 247,00 is 2.5% of 10 million.
Of course US production will continue to drop, and perhaps it will drop significantly. There are suggestions that North Dakota's January, 2016, crude oil production will drop to 850,000 bopd -- which, if accurate, and it very well could be -- would be staggering.
Of course US production will continue to drop but what is surprising is how slowly that drop has occurred. It will be interesting to see where the bottom in US oil production occurs.
We are also seeing two other data points most of us did not understand a year ago:
the importance of understanding the difference between light oil and heavy oil
the reason the US continues to import Saudi oil when there is a glut of US oil
But the more interesting data point is that US shale is likely to be profitable/economical at $40 WTI but $40 WTI does very little to help Saudi Arabia or Russia.
June 21, 2016: a presentation dated May 24, 2016. Read original post below. Here are additional data points; some may be old; some may be new:
graphic updates amount of ethane rejected, stranded (it's a lot)
Canadian tsunami of natural gas coming; Canada has announced no new western Canadian cracker
Original Post
For background to this update, see this post regarding the Badlands Ethane Project. A reader sent me a link to a recent Badlands NGLs, LLC, presentation, dated Februyary 24, 2016. I said earlier it was on the internet; I'm not sure it is.
This is the premise:
the Bakken has a lot of ethane that is being rejected and put back into the natural gas stream
the Bakken has a lot of ethane, period
the Bakken is landlocked; Bakken NGL is physically and economically stranded
restrictions on what is shipped by rail will only be tightened going forward
a huge amount of value-added opportunities, think potatoes to potato chips
opportunity for petrochemical project here in North Dakota (ethane to polyethylene; feedstock for almost all petrochemical products)
With that in mind, some other data points, and these really surprised me because the Bakken is known as an "oily" play, not a natural gas play:
Permian wet gas contained 4 - 6 gallons of mixed NGL per MCF of raw wellhead gas
Marcellus wet gas contained slightly higher concentrations of NGL
The Bakken consistently produces 11 gallons of NG per MCF of raw gas
Williston ethane production outlook
2013: 175 MB/D
2015: 175 MB/D
July, 2015: 250 MB/D
2020: 260 MB/D (forecast)
The actual Bakken NGL and ethane production in the summer of 2015 (well into the Saudi Surge/Slump). It is likely the 2020 forecast above is also low.
The Marcellus / Bakken "Disparity
Marcellus producers have commitments of 300 MB/D ethane to Europe, India: take or pay
Marcellus accounts for about 25%of European polyethylene capacity
Europe and Indian PE manufacturers pay BTU ethane price plus 35 cents/gallon transportation costs
in contrast, the value of North Dakota ethane produced and sold bears no resemblance to the market-plus-freight price realized by Marcellus
Current Bakken NGL distribution
ONEOK: 111 MB/D
Vantage: 20 MB/D
Tioga Lateral: 3 MB/D
WBI: 5 MB/D
Northern Border: 100 MB/D
Total: 240 MB/D
Local consumption and takeaway capacity (rail/truck): 135 MB/D
Ethane probably 25% of the 100MB/D being taken away
Ethane content of 25% is problematic for both rail/truck
It gets worse: risk of Williston Basin ethane being physically stranded in five years
Northern Border is the sole Williston Basin NG pipeline outlet
by 2020, Williston Basin ethane could result in exceed what Northern Border could handle
by 2020, Bakken NGLs - Y grade likely to be stranded: due to "tsunami" of NGL being produced; ONEOK's takeaway capacity would almost need to double and in light of low NGL prices, not likely to happen
The Tsunami
From Canada, northwest of the Bakken: Horn River, Montney, Duvernay (British Columbia)
Montney, conservative case/high case: 449 / 645 TCF of natural gas
Duverney: 443 Tcf of natural gas
Duverney, alone: liquid production could grow from 27,000 bopd (2015) to 320,000 bopd ten tens from now (2025)
number of new Western Canadian crackers announced/planned: zero
To date: only one new western North America cracker/PE license announced: Badlands ND/Badlands Shangri-La
purchase C1 through C4
crack C2 and produce polyethylene
sell purity C3 and I-C4
isomerize N-C4 and sell I-C4
return "lean gas" to the pipeliens, thereby reducing BTU content
Badlands Plans
two world-class facilities
two locations: North Dakota and "Shangri-La"
first: Shangri-La -- "on the water" -- 36 months to hydrocarbons
second: North Dakota -- not "on the water"
Technology
cracker: Technip -- market leader; building 3 plants in US for Sasol, CP Chem, and Dow
PE: Univation -- market leader, owned by Dow
captive co-monomer manufacture: "name brand"
product off-take: "name brand"
Agreements:
feedstock agreements in advanced discussions in both locations
EPC: agreement in principal; lump sum turn key
financing: advanced stage
site selection: advanced stage; Shangri-La site close to selection; North Dakota close to selection
Shangri-La Facility Cracker: Technip cracker
Technip cracker: same design being built for SASOL and Chevron Phillips
94 modules fabricated in Mexico; delivered "on the water" to Gulf Coast
Shangri-La Facility PE
2 Univation PE reactors; up to 24 different PE products
according to Univation (formerly Union Carbide), Badlands will produce the most diverse product line of any Univation licensee
North Dakota PE: identical Univation reactors and capacity
Public
sector growth is expected to drive mid-single digit volume increases in
our infrastructure business which accounted for 41% of our aggregates
demand in 2015.
The growth reflects continued state level funding
initiatives that are positively impacting several of our key states,
including Texas, North Carolina, Iowa, Georgia and Florida.
For example,
in Texas, nearly $10 billion of department of transportation lettings
are planned, up from $6.1 billion in 2015. Dallas, Fort Worth alone is
the beneficiary of four major design build projects aimed at mitigating
that areas congestion and improving traffic flow. There is also
significant and continuing infrastructure work in and around Houston.
This is particularly interesting for me since I point out new highway projects almost everyday to May when we driving around the north side of the DFW metroplex. There's a huge amount of new highway construction northeast of Ft Worth on the way to Plano. Likewise, there's a huge amount of highway construction on I-35E going south into north Dallas. A lot of new interchanges -- which is a huge deal, of course -- and lots of new lanes and new ramps.
$10 billion in highway construction in Texas, in 2016, and much (most?) of it in 2016.
*********************************
Natural Gas Inventories
The natural gas inventory curve still looks incredible. Inventories were down a bit, week-over-week, but the delta between current inventories and 10-year highs seems to have increased slightly, very slightly.
March 7, 2016: I've written about this in the past; can't find it now. Automotive manufacturers and technology companies like Apple have spent decades and poured resources (money, people) into developing better batteries, with not much success to show for all that effort. The research will continue, but automobile manufacturers are moving their attention, time, and money to self-driving cars. This says it all: BWM stakes its future on self-driving cars.
BMW AG, which became the world’s largest maker of luxury cars by
focusing on Autobahn thrills, is shifting gears to automated driving as
urbanization and changing attitudes toward cars redefine transportation.
With sales growth lagging behind No. 2 Mercedes-Benz, BMW is under
pressure to show it can still innovate. To that end, the company
presented a concept called BMW Vision Next 100. The car includes an
interactive windshield that can warn of bicycles, pedestrians or other
road obstacles even if they’re blocked from human view.
The future
car would interact much more with the outside world than the vehicles
of today, BMW said, showing a video of how a light on the dashboard
might do the equivalent of waving a pedestrian forward at a crosswalk by
blinking green. The concept could be reality within 20 to 30 years.
Large-scale energy-storage
systems, long considered the elusive link to integrating solar and wind
power into electric grids, are slowly becoming a reality.
U.S. homes and
businesses -- mainly utilities -- installed storage systems with 221
megawatts of capacity in 2015, according to a study released Thursday by
Boston-based GTM Research and the Energy Storage Association. That’s
about enough to power a city the size of Cincinnati, Ohio, for an hour
and is more than triple the 2014 total.
The
U.S. has about 580 megawatts of energy storage installed now, up from
80 megawatts in 2008.
The increase comes as power companies struggle to
incorporate energy from wind and solar farms, where production ebbs and flows based on breezes and sunshine.
This story will only get bigger as the years roll by.
**********************************
Cleveland and The Rock and Roll Hall of Fame
From "the big batteries" to "the big bopper" we now turn to the question of why the Rock and Roll Hall of Fame is in Cleveland. Yes, Ohio.
I am probably the only person in my age group (45 - 75) that does not know why the R&R HoF is in Cleveland. I never thought of looking up the answer to that question but then through simple serendipity I found the answer. While reading The 50s: The Story of A Decade, the second in a series, by The New Yorker, I came across "Rock 'N' roll's Young Enthusiasts" by Dwight Macdonald, November 29, 1958.
This is absolutely fascinating. Where were we in 1958:
The great symbol of rock 'n' roll, of course, is not Alan Freed but Elvis Presley, the Southern back-country boy who began his big-time career only two years ago and who, before he was draftet, last March, received fifty thousand dollars for three brief TV appearances.
As Freed stands for the blues-rhythm-Negro element of rock 'n' roll, so Presley stands for the country-music element -- hillbilly songs, folk tunes, and cowboy ballads, most of them composed in Tin Pan Alley and all of them heavily corned with sentiment. Of the current rock 'n' rollers, Presley is by far the most vulgar, to use the word in its good sense (earthy) as well as in its bad (coarse).
Imitators on the order of Jerry Lee Lewis, recently extruded from England when it became known that his bride and travelling companion was thirteen, are just vulgar-bad. but Presley has a Greek profile, an impress physique, lots of animal magnetism, and a not disagreeable singing voice; in fact, it was rumored that he had some talent before Hollywood and television got hold of him.
Because of his uninhibited pelvic movements and the vulgar-good-bad way he sings his "leerics," most parents taken an even dimmer view of Presley than of other rock 'n' rollers. For somewhat the same reasons, he has the most enthusiastic teenage following in the business. Wherever he sings, "I LIKE ELVIS" buttons sprout like mushrooms after rain.
Now, back to Freed.
the term, "rock 'n' roll" was coined by Alan Freed
he was still the high priest of rock 'n' roll in 1958 when this article was written
began plugging "race records" in 1949 on Station WJW in Cleveland
"race records" as they were called then called were "rhythm" and "blues" numbers that appealed especially to Negroes (from the article)
Freed thought whites might also go for this kind of music if it had a broader name, so he called his program "The Moondog Rock 'n' Roll Party."
the original Moondog, a Times Square personage, enjoined Freed from using that name
no one has contested his right to "Rock 'n' Roll"
Freed gave the first of several Moondog Balls; overwhelming attendance, enthusiasm
1954, Freed moved to WINS, New York City
1957, Columbia released Rock Around the Clock, starring Freed
1957, Freed put on a Christmas show at the New York Paramount; biggest crowds in theatre's history
1958, when The New Yorker article was written: 4,000 Alan Freed Clubs here and abroad; receives a thousand fan letters a week
And that's why the R&R HoF is in Cleveland.
This is a very small snippet of this history at the "Cleveland Rocks" page of the R&R HoF website.
********************************************
A theme song for one of the 2016 GOP presidential candidates:
Worker at Syrian Ministry of Electricity on nationwide blackout: 'This is a just technical issue that happens in many countries
Syrian government expects power to be fully restored in next 12 hours after nationwide blackout, says cause not known
Original Post
Tweeting now: Syria's electricity network down across the whole country for unknown reason, state media reports - Reuters. This will put a damper on recharging EVs in Syria.
Automakers from mass-market PSA Peugeot Citroen to upscale Daimler AG’s
Mercedes-Benz promised to challenge Tesla Motors Inc. with electric cars
that have longer ranges and more affordable prices.
After largely
sidelining the technology in recent years amid sluggish demand, the
revived interest in battery-powered cars is necessary for automakers to
meet tighter European Union regulations for carbon-dioxide emissions
starting in 2020.
Again, almost all electricity comes from coal or natural gas around the world.
Don notes:
there are 26 different models; a dozen or so manufacturers
a total of 7,881 EVs (and hybrids) sold in 29 days (February, leap year), in the USA
compare: Ford sold 7,489 units/day
except for a few Ford EV sales, all Ford sales were sold without federal government or state government subsidies or other incentives
Oil and gas sales, including
cash from settled derivatives, totaled $363.7 million for 2015 and $86.5
million for the fourth quarter of 2015
Reduced capital expenditures
by 76% compared to 2014, while still growing total production by 3%
year-over-year to 16,285 barrels of oil equivalent ("Boe") per day,
above stated guidance
Reduced cash general and administrative expenses by $2.1 million or 14% compared to 2014
Ended the year with $403.4
million of liquidity, composed of $3.4 million in cash and $400 million
of revolving credit facility availability
Participated in the completion of 292 gross (18.6 net) wells
1.8 million barrels of oil are hedged for 2016 at an average price of $77.50 per barrel
Northern's adjusted net income
for the year was $47.6 million , or $0.78 per diluted share. GAAP net
loss for the year, which was impacted by a $1.2 billion non-cash
impairment charge, was $975.4 million, or a loss of $16.08 per diluted
share. Adjusted EBITDA for the year was $277.3 million.
US Initial Jobless claims: 278,000; up 6,000. Now at 278,000, vs consensus of 270,000. The forecast was for a drop from the
previous week. Actually increased. Four-week average drops to 270,250
due to anomalies a few weeks ago. The spin begins, starting with the AP: weekly applications rise but remain near historic lows. That's not the point. After trillion in stimulus and six yeas into a recovery we shouldn't be seeing a jump of 16,000 claims in the past two weeks.
The number of Americans filing for unemployment benefits unexpectedly
rose last week, but the underlying trend continued to point to a
strengthening labor market.
The headline: "trend points to firming labor market." LOL. This is the same line Reuters has used for the past several years.
*********************************
The Hillary Defense
USA Today is reporting that Volkswagen did not think the scandal would not cost that much. Really? LOL.
"It was expected that the diesel matter could be resolved with the U.S.
authorities by disclosing the software modification, agreeing on
appropriate measures to restore vehicle compliance with the law and the
payments of potential fines in line with prior U.S. settlements."
Sort of the Hillary defense. What does it matter?
*********************************
Inexplicable
Some have called the Saudi decision to open the spigots in October, 2014, a trillion-dollar mistake. According to Business Insider, Saudi Arabia had about $750 billion in the summer of 2014, but by the end of December, 2015, was down to around $600 billion. That's a $150 billion shrinkage.
Reuters is reporting that Saudi Arabia is shopping the global markets for a $10 billion loan.
$10 billion?
They have $600 billion in the bank. Their reserves have decreased $150 billion in the past year. Some say they made a trillion-dollar mistake, and here they are, looking for a $10 billion loan. It makes absolutely no sense. Yes, Apple, Inc. has also done this: with billions in cash, Apple has taken out additional loans, but Apple is a "business" and borrowing money could not have been less expensive. In addition, Apple had a stellar balance sheet and a top credit rating. Saudi's credit rating is slipping.
But $10 billion is a drop in the oil bucket relative to the other numbers.
But the graph at the linked site is striking. Prior to October, 2014, Saudi's cash reserves continued to build. The decline began slowly, but wow, the decline was striking in late 2015.
The company has 14,500 full- and part-time employees at its 450 stores
and its offices, according to the bankruptcy filing. Nearly two-thirds
of those workers are part-time. It also disclosed more than $1 billion
in liabilities and assets valued between $500,000 and $1 billion.
When the company was bought by a hedge fund 10 years ago, it was the
largest sporting goods retailer. But it has struggled with the debt load
associated with a leveraged buyout a decade ago. It has been overtaken
by Dick's Sporting Goods, which has grown by providing a more high end shopping experience.
High end: Dick's.
Low end: Wal-Mart.
End: Sports Authority
*************************************
Grocery Discounter Grows
This will be an interesting story to follow: Aldi is growing in America and expected to surge in the next few years. Already in the UK:
Aldi and rival discounter Lidl have upended the grocery market in the
UK, forcing the nation's largest supermarkets to dramatically cut prices
and lay off workers to stay competitive.
Just a few years ago, the possibility of overseas ethane exports was
almost incomprehensible. Lack of infrastructure, high handling costs, no
suitable ships and minimal market demand made ethane exports seem
extremely unlikely. But then the shale gas boom transformed the ethane
market. Now U.S. ethane production greatly exceeds demand and each day
hundreds of thousands of barrels of ethane are being rejected into the
natural gas stream. Consequently a few pioneers are hammering through
the challenges associated with overseas ethane exports, including the
construction of specialized tankage, loading facilities, ships and
unloading facilities. And international chemical companies are spending
hundreds of millions of dollars to modify olefin crackers to use the
cheap feedstock. Now the first of those pioneers has made it to the new
ethane frontier. In today's blog we examine the impact of imminent
ethane exports from the Energy Transfer/Sunoco Terminal at Marcus Hook,
PA.
The infrastructure needed to move Marcellus/Utica ethane to offshore
markets is in place. Mariner East 1 pipeline is moving a mixed
ethane/propane stream from West Virginia, Ohio and Western Pennsylvania
producers to the Marcus Hook Terminal, about 20 miles west of
Philadelphia, PA on the Delaware River. There it is processed in a
deethanizer to separate ethane from propane and then the ethane is
stored in a 300,000-barrel cryogenic (super cold) ethane storage tank
before loading on ships. Those ships are ready and waiting for their
first ethane voyages. Chemical company Ineos contracted with ship owner
Evergas for 8 Dragon Class ships tailored to meet the specific needs of
this project. They are some of the most flexible and advanced multi-gas
carriers yet to be built at 27,500 cbm.
The vessels will provide Ineos with a flexible
solution for their ethane supplies with the option of transporting LNG,
LPG as well as petrochemical gases including ethylene. Four of these
vessels, JS Ineos Insight, JS Ineos Intrepid, JS Ineos Ingenuity, and JS
Ineos Inspiration are already on the water moving propane and butane.
The other four tankers are scheduled for delivery through mid-2017.
**************************
Devito: Newest Nominee For The 2016 Geico Rock Award
Danny DeVito doesn't mess around.
Speaking on the controversy surrounding the Oscars' lack of diversity while at the Sundance Film Festival, the actor said, "It’s unfortunate that the entire country is a racist country."
DeVito added, "We are living in a country that discriminates and has certain racial tendencies which -- racist tendencies -- so sometimes it’s manifested in things like this and it’s illuminated, but just generally speaking we’re a racist -- we’re a bunch of racists."
I guess he has not been invited to the White House where we have an African-American president. President Obama was elected to a second full term, pretty much by a political landslide.
OilPrice.com
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