Another One Bites The Dust -- This Time In Florida -- June 1, 2016

Miami Herald is reporting:

With Opa-locka on the edge of bankruptcy, Gov. Rick Scott declared a financial emergency for the city on Wednesday, calling for a special oversight board to take over the city’s finances and stem the bleeding that has led to crippling debts and cutbacks that have impacted every level of government.

The executive order comes just weeks after Miami-Dade County officials sent letters to the governor warning that the city could be shut down because of gaping budget shortfalls in the millions.

Halcon Reports A Nice Bakken Well -- June 2, 2016

Active rigs:

	6/1/2016	06/01/2015	06/01/2014	06/01/2013	06/01/2012
Active Rigs	27	80	189	187	215

Five (5) wells coming off confidential list today:

• 25620, PNC, WPX. Mandan 13-14HY, Reunion Bay,
• 25621, PNC, WPX. Mandan 13-14HX, Reunion Bay,
• 25622, PNC, WPX. Mandan 13-14HB, Reunion Bay,
• 25623, PNC, WPX. Mandan 13-14HW, Reunion Bay,
• 32203, SI/NC, SM Energy, Bobcat 2-28HN, Ambrose, no production data, 

Ten (10) permits renewed:

• CLR (4), two Flint Chips and two Dennis permits, all in Dunn County
• BR (3), three Midnight Run permits, McKenzie County
• Crescent Point Energy, an Aldag permit, Divide County
• Emerald, a Harry Dunne permit, Stark County
• Sinclair, a Porcupine permit, Dunn County

Five (5) permits canceled:

• WPX (5), five Mandan permits in Mountrail County (see above)

Two (2) producing wells completed:

• 30622, 310, Crescent Point Energy, CPEUSC Aldag 4-36-35-164N-100W, West Ambrose, t1/16, cum 33K 4/16;
• 32122, 601, EOG, Austin 436-2635H, Parshall, t5/16; cum --

One (1) dry hole:

• 27209, dry, Petro-Hunt, USA 153-95-4B-9-2HR, Charlson, will re-drill;

Two wells coming off confidential list Thursday:

• 32200, SI/NC, Hess, BB-Budahn-LS-150-95-0506H-1, Blue Buttes, no production data,
• 31076, 2,237, HRC, Fort Berthold 147-94-2B-11-6H, McGregory Buttes, t12/15; cum 109K 4/16;

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31076, see above, HRC, Fort Berthold 147-94-2B-11-6H, McGregory Buttes:

Date	Oil Runs	MCF Sold
4-2016	15776	13136
3-2016	15020	12039
2-2016	22437	19367
1-2016	38584	32323
12-2015	17403	12810

This Pretty Much Spells The End Of Nigeria As We Know It -- June 1, 2016

Rigzone is reporting:

Two of Chevron's most productive wells destroyed.

Chevron’s RMP 23 and RMP 24 wells in Nigeria have been blown up.

The attack was carried out in the presence of “100 gunboats, 4 warships and jet bombers,” said an NDA spokesperson in a Tweet. RMP 24 and RMP 23 were labeled by the [Niger Delta Avengers ] as some of Chevron’s highest producing wells.

The Niger Delta Avengers claimed responsibility for an assault on Chevron’s Escravos terminal in Nigeria May 26.

NDA used explosives to damage the Escravos tank farm main electricity feed pipeline, which resulted in Chevron’s onshore activities in the Niger Delta being shut down. The attack followed NDA’s warning to Chevron that no repair works should be carried out to facilities previously targeted by the group, until NDA’s demands are fully met. NDA claimed on its official website May 11 that it suspected Chevron was preparing to carry out repair works at the Okan Valve platform, which was blown up by the group at the start of the month.

This pretty much tells me, if the story is accurate, it's just a matter of time before Chevron makes an announcement of force majeure. If not, I will be very surprised. But not the first time that I'm wrong.

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Another Safe Gun-Free Zone -- Safe For The Shooter

Shooting at UCLA; two down; shooter at large (for now).

I could be wrong, but I was quite sure that UCLA was a gun-free zone. 

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La Japonaise, Freddie Mercury & Montserrat Caballe

One Reason Why WTI Is Falling (Among Many) -- June 1, 2016

Updates

June 29, 2016: the tanker is finally unloaded.
 

Original Post

 

Reuters is reporting:

Four tankers carrying over 2 million barrels of U.S. crude are stuck at sea and cannot discharge at a Caribbean terminal because Venezuela has not yet paid supplier BP.

The cargoes are part of a tender [Venezuela] awarded in March to BP and China Oil.

The deal was to import some 8 million barrels of West Texas Intermediate (WTI) crude so Venezuela could dilute its extra heavy crudes and feed its Caribbean refineries.

Tic, tic, tic. It looks like the government ran out of "other people's money."

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Update On Eastbound Flows From Houston To Storage/Distribution Hub At St James, LA

These are some data points from an RBN Energy blog earlier this week.

Three and a half years ago, per RBN Energy:

the flow-reversals of the Houston-to-Houma (LA) pipeline and a connecting pipeline between Houma and the mammoth crude storage complex in Clovelly, LA was part of a wholesale change in Gulf Coast pipeline infrastructure aimed at facilitating the flow of domestic crude to market from growing shale production basins in the Bakken, the Permian Basin and the Eagle Ford to Houston and from there, to the hub at St. James.  

More recently:

St. James (located on the Mississippi 60 miles upriver from the Big Easy) serves as a critical storage and distribution hub. It receives crude by pipeline, by barge and tanker, and by rail; it has more than 30 MMbbl of storage capacity; and it sends crude out to area refineries with a combined capacity of 2.6 MMb/d. St. James also feeds the 1.2 MMb/d Capline pipeline, which transports crude and condensates north to Patoka, IL (but which has been running at far less than full-capacity). Much as Taylor Swift, The Eagles and Dolly Parton each draw a wide range of fans, the St. James hub serves as an oil mixing bowl, receiving regionally produced crudes such as the Gulf Coast benchmark Light Louisiana Sweet (LLS), Heavy Louisiana Sweet (HLS), medium sour crude Mars (produced offshore in the Gulf of Mexico, or GOM), and West Texas Intermediate (WTI), as well as ultra light crude from the Eagle Ford (condensate) that is piped north through Capline, connecting through other Canadian pipes to Alberta for use as a diluent in heavy Western Canadian oil sands.

The game changer: the Zydeco reversal --

Enabled St James to receive piped-in deliveries of Bakken and other Midcontinent crudes

Archived; a great summary.

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Summer Reading

Papa: Hemingway In Key West, James McLendon, c. 2007. This is a keeper. I've read many, many biographies of Hemingway and his wives. When my daughter gave me this slim paperback I was not particularly ready to read it. I was pretty much "hemingwayed-out." But yesterday, I picked it up and started reading it. Super. It covers his "lost years," 1928 - 1940. I think folks who live in Key West or who have visited Key West would love this book.

For those who might be interested in the rich and famous of the first half of the 20th century, those who would have been jet setters had there been jets then, I cannot recommend Rhonda K. Garelick's Mademoiselle: Coco Chanel and the Pulse of History highly enough. This is an incredibly interesting and entertaining book. I stumbled upon this book while visiting the Dallas Museum of Art and the museum's presentation of La Pausa. Googling will fill in the details.

I have no desire to read any biographies of Winston Churchill but coincidentally The New York Review of Books had an article on two Winston Churchill biographies in its most recent issue. It would be interesting to see if much is written about Coco Chanel and Winston Churchill.

Auto Sales For May Starting To Come In; OPEC Oil Output Falls From Near-Record In May On Nigeria Outages -- Reuters -- June 1, 2016; Huge, Huge Story: Swiss Complete Alps Tunnel -- And Did It On Time

Automobile sales data for May, 2016, starting to come in. From Detroit Free Press, some data points:

• last year (2015) automakers set an all-time record when they sold 17.47 million new cars and trucks
• this year, on track to beat that record
• Fiat Chrysler: eked out a small sales increase in the US in May; sales rose 1.1%
• Fiat Chrysler: 74 consecutive months of YOY sales gains, but almost exclusively due to Jeep; Jeep rose 14% for the SUV brand
• Ram brand sales flat
• Dodge: sales fell 5%
• new 2017 Chrysler Pacific minivan not yet hitting its stride
• Ford sales fell 5.9%
• Ford F-Series pickups: a 9% increase, but increase not enough to offset a steep 25% drop in Ford's auto sales; Honda Civic outsold F-Series in April, 2016 -- one wonders the incentives Ford used to move Ford pickups in May
• Ford F-Series pickups: 67,412 pickups sold

Reuters reports:

OPEC's oil output fell in May from near a record high as attacks on Nigeria's oil industry and other outages outweighed increases in Iran and Gulf members. A rise in supply from Saudi Arabia plus Iran suggests the group's top producers remain focused on market share, following the failure of an initiative in April between OPEC and non-OPEC producers to support prices by freezing output.

From Rigzone:

Crude oil exports from the Arab Gulf rose by 9 million barrels week-on-week, to reach 121 million barrels, in the seven days ending May 28.

Iran, Iraq and Qatar increased exports during the time period, while others “saw loadings soften”.

Iranian crude exports increased by 20 percent week-on-week to 16.29 million barrels. On average, the country has exported more than 2 million barrels per day in May.

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Let's Make America Great Again

The US can't complete a new pipeline through Iowa or Nebraska, or a bullet train in California, but the Swiss celebrate a $12 billion rail tunnel, the world's longest, through the Alps. The AP is reporting:

Just like Hannibal in ancient times, Swiss engineers have conquered the Alps.

More than 2,200 years after the commander from the ancient North African civilization of Carthage led his army of elephants and troops over Europe's highest mountain chain, Swiss leaders have completed another gargantuan task — and on time: Burrowing the world's longest railway tunnel under the Swiss Alps to ease trade and congestion in European trade and travel.

Switzerland on Wednesday was inaugurating the 57-kilometer (35.4 mile) Gotthard Railway Tunnel, a major engineering achievement deep under snow-capped peaks carried out over 17 years at a cost of 12.2 billion Swiss francs ($12 billion). [The much simpler California bullet train is probably already over budget at more than $65 billion.]

Many tunnels crisscross the Swiss Alps, and Gotthard Pass already has two — the first, also for trains, was built in 1882. But the Gotthard Base Tunnel is a record-setter: It eclipses Japan's 53.8-kilometer Seikan Tunnel as the world's longest and bores deeper than any other tunnel, running about 2.3 kilometers (1.4 miles) underground at its maximum depth.

The thoroughfare aims to cut travel times, ease roadway traffic and draw cargo from pollution-spewing lorries trucking between Europe's north and south. Once it opens for commercial service in December, the two-way tunnel will take up to 260 freight trains and 65 passenger trains per day.

Swiss planners have dreamt of such a tunnel for decades. And it should have an impact far beyond Switzerland for decades to come.

We've driven Swiss Alps tunnels numerous times; they were incredible. There is a sense of claustrophobia. A 35-mile tunnel will take about 30 minutes of underground driving -- and if there's a stau, it's not going to be any fun.

But wow, what an achievement -- 17 years, on time, $12 billion; more than a mile underground.

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For Retail Investors, Perhaps Our Biggest Loss Was Louis Rukeyser

He Kept "Us" Balanced

From Yahoo!Finance:

Once again, the stock market is within arm's reach of its all-time high.

This is a real shame for investors who've been sitting on the sidelines, crippled by fear of the ever-present uncertainties that threaten to trigger the next sell-off. On Friday we learned that equity funds experienced $9.2 billion worth of outflows, which was the seventh straight week of outflows. 

Meanwhile, investor sentiment remains historically low.

From the linked article:

Over the span of his legendary career in investing, Warren Buffett has said a lot of brilliant things. But during the darkest, most hopeless moments of the financial crisis, Buffett wrote an op-ed for The New York Times that was particularly timely.

“The financial world is a mess, both in the United States and abroad,” Buffett said in the piece dated October 16, 2008. “Its problems, moreover, have been leaking into the general economy, and the leaks are now turning into a gusher. In the near term, unemployment will rise, business activity will falter and headlines will continue to be scary. So ... I’ve been buying American stocks.”

Just the day before, the Dow Jones Industrial Average fell a breathtaking 733 points or 7.9%.

This was only a month after Lehman Brothers went bankrupt, Merrill Lynch was saved by Bank of America, and AIG secured an $85 billion bailout package.

To be clear, Buffett never suggested the stock market had hit rock-bottom. He only argued the market would be higher in years to come.

Louis Rukeyser would have said the same thing.

This is not an investment site. Do not make any financial, investment, travel, job, or relationship decisions based on what you read here or what you think you may have read here. 

By the way, with all the money now being made on Wall Street and in Silicon Valley (Amazon, Facebook, Apple, Alphabet, and Microsoft) and all the talk about the widening gap between the middle class and the top 1%, I'm beginning to wonder if the 2020's might not be a replay of the 1920's here in the US.

I'm starting to lay in champagne and Scotch. 

Fightin' Words; Fight's On -- June 1, 2016

Earlier we updated the LNG / Poland story. Today, Bloomberg has more:

Poland will struggle to replace all the natural gas it gets from Russia’s Gazprom PJSC, including with U.S. supplies, as it bids to lower dependence on its eastern neighbor, according to the Moscow-based company.

“Of course, everybody is free to choose how to purchase his gas and to ensure the competitiveness of his economy," Gazprom Deputy Chief Executive Officer Alexander Medvedev told reporters in Moscow Tuesday. “There is a well-known fairy-tale about an old woman who asked a golden fish to turn her into a Sea Empress but in the end she found herself back with her broken washtub in front of her," he said, referring to a story by Alexander Pushkin.

Poland, which relies on Russian gas for two-thirds of its needs, has sought lower prices from Gazprom amid political tensions between the nations over President Vladimir Putin’s policies in eastern Europe. The European Union nation will get its first shipments of liquefied natural gas from Qatar and Norway into a new terminal next month, and has proposed doubling its capacity and building a pipeline to Norway to completely cut its reliance on Russia.

Poland was Gazprom’s fifth-biggest EU customer last year, buying about 9 billion cubic meters (320 billion cubic feet) worth more than $2 billion. It is one of the most vocal opponents of a push by Putin to expand a natural gas link to Europe that circumvents Ukraine.

Huge Insurer To Exit Califoria Over Huge ObamaCare Losses -- June 1, 2016

ObamaCare, headline, section B, today's Wall Street Journal: UnitedHealth to exit California, a key market. Business losses mount.

• Trump: "Let's Make America Great Again"
• Hillary: "Let's Re-Visit ObamaCare"
• Gary Johnson: "Let's Make Hillary President"

May's auto sales data will be out this week. Last month's data, April's top selling cars:

#10: Chevrolet Malibu
#9: Chrysler 200
#8: BMW 3-Series
#7: Chevrolet Camaro
#6: Toyota Camry
#5: Honda Accord
#4: Mazda MX-5 Miata
#3: Ford Mustang
#2: Ford F-Series
#1: Honda Civic

Tesla: free-charging won't be available for Model 3 owners, unlike earlier models/owners.

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Back to the Bakken

Active rigs:

	6/1/2016	06/01/2015	06/01/2014	06/01/2013	06/01/2012
Active Rigs	27	80	189	187	215

RBN Energy: condensate update.

“Condensates are long and you can’t give them away … No, things have changed – condensate supply is tight and prices are running up relative to WTI … But wait wait, the oversupply is back and prices are down again.” No wonder the market’s love for condensates has faded.  It’s a liquid hydrocarbon that is being buffeted by every force the market can bring to bear: declining production, lots of new committed infrastructure (stabilizers, pipelines, and splitters), wide-open export markets, volatile crack spread splitter economics -- the list goes on. Adding to this whirlwind is the fact that historically there has been limited analytical data to work with, with most condensate information buried deep inside crude production numbers from producer investor presentations and less-than-revealing Energy Information Administration (EIA) crude oil reports.  But we have some new tools to help understand what’s going on, including the EIA’s new 914 crude quality data and condensate export numbers from ClipperData.  Today, we continue our exploration of rapidly evolving condensate markets.

In Part 1 of Faded Love we revisited RBN condensate classics, including Fifty Shades of Condensates and Like A Box of Chocolates. 

We showed that while condensates are produced from all of the major basins across the U.S., the Eagle Ford in South Texas has been responsible for most of the production growth over the past five years, and how the Eagle Ford has been hit harder by low crude prices than any of the other major shale plays, resulting in declines in condensate production.  We then touched on the splitters built to process condensates in the U.S. and on other infrastructure to handle segregated processed condensate for export – now no longer required since the lifting of the crude/condensate export ban.  With the ban gone, there’s no longer anything special about a condensate barrel; it is just like any other crude oil, except lighter.  These developments have converged to create a topsy-turvy market for condensates, where both opportunities and dangers lurk for those brave enough to buy, sell and trade condensate barrels.

From today's RBN Energy blog: an update on the new EIA form 914:

The new 914, in use since January 2015 reporting, is an expanded survey for the collection of oil and gas production data from a sample of operators of oi/condensate and natural gas wells in 15 states and the federal Gulf of Mexico. For our purposes here, the big deal is that the new EIA-914 collects this crude oil production data in 10 API gravity buckets. So, after years of, well, Dancing in the Dark (our mid-2015 blog on condensate splitters), we get our first shot at official condensate statistics using the two API gravity buckets above 50 degrees API shown in Figure 1. Sampled producer companies (those large enough to be included in the survey) are required to fill out the form each month for their oil production and oil sales by API gravity category. There are 10 API gravity categories on the form reported in total for the U.S., but due to EIA’s confidentiality rules, these are collapsed to only four categories for the reporting of state‐level API gravity estimates.

There are all sorts of statistical quirks and machinations that EIA must go through to use this data due to the facts that 1) it is only a sample (85% volumetric coverage based on data from 450 operators out of roughly 13,000 oil and gas operators in the U.S.), and 2) EIA trues up and reconciles the 914 form data with production data from the individual states provided and consolidated by our friends at DrillingInfo.