The GDPNow model forecast for real GDP growth (seasonally adjusted annual rate) in the third quarter of 2016 is 3.5 percent on September 2, up from 3.2 percent on September 1.
The forecast of the contribution of net exports to third-quarter real GDP growth increased from –0.38 percentage points to –0.16 percentage points after this morning's [September 2, 2016] international trade release from the U.S. Census Bureau.
#1 "complaint" of employers: applicants lack "professional presence"
job fair oversubscribed; ten employers on a wait-list to participate
job openings will probably tip over 1,000 soon
Halliburton has 2nd high number of job opening in Williams County
Halliburton making first appearance at this job fair in over a year
military veterans can arrive one-half hour early, giving them preference for jobs
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Flashback: The Accidental Breakthrough That Revolutionized American Energy
From The Atlantic, back in 2013, before it changed it format and it editorial content.
The dramatic changes to the nation’s energy outlook are as surprising
as they are clear. Seven years ago (2006), oil production was in steep decline
and natural gas nearly as hard to find.
Today, the United States
produces over 7.7 million barrels of oil a day, up over 50% since 2006
and the most in nearly 25 years. The nation could pump more than eleven
million barrels a day by 2020. The U.S. is on track to pass Russia as
the world’s largest energy producer and should have enough gas to last
generations.
The wildcatters responsible for the transformation
are as unexpected as the energy surge they produced. These men,
operating on the fringes of the oil industry and often without
backgrounds in geology or engineering, met success drilling and
hydraulic fracturing extremely dense shale, a process that’s become
known as fracking.
George Mitchell is the father of the energy
revolution. His impact eventually could approach that of Henry Ford.
Mitchell and his team weren’t out to change history, though. They just
wanted to keep their company alive.
A very, very nice historical article. Well worth the read.
Devon Energy Corp. sees potential for tighter spacing and increased drilling inventory in the overpressured oil window of Oklahoma’s STACK play, where it is increasing drilling and investment.
The company’s third spacing pilot targeting the Mississippian Meramec formation tested a seven-well pattern across a single-section interval in the upper part of the formation.
Initial 15-day production rates in the Pump House pilot averaged 2,200 boe/d, 55% oil, and cost $6 million/well.
Drilled with 4,700-ft laterals, the Pump House wells were completed with 2,200 lb/lateral-ft of proppant across 35 frac stages with perforation clusters 25 ft apart.
**********************************
Another NASDAQ Record-Setting Day
Completely off my radar scope. I was following other things. But look at that. Did anyone really think we would see 5,000 on the NASDAQ again? Under this anti-growth administration? But there it is: NASDAQ notches another all-time record high closing.
Stocks ended mixed but the Nasdaq notched another record closing high
after Wednesday's big Apple event, in which the gadget maker unveiled
the latest version of its popular iPhone.
The Nasdaq ended the day at 5283.93, up 0.2% or 8 points from its previous closing high set Tuesday.
AAPL may have helped a bit, but not much. AAPL is well below it's all time-high, so I don't attribute the NASDAQ performance recently to anything AAPL has done.
Apache
Corp. said it made a “significant” discovery in a Texas shale formation
that holds enough crude oil to supply every refinery on the U.S. Gulf
Coast for a year.
The
Alpine High discovery in West Texas contains an estimated 3 billion
barrels of oil and 75 trillion cubic feet of natural gas, Apache said in
a statement on Wednesday. The asset is in the Delaware Basin, a
subsection of the Permian Basin that has been a hotbed of acquisition
activity among oil explorers this year.
Shares rose 7.9 percent to $55.74 at 8:34 a.m. before the start of regular trading in New York.
“This
is a world class resource," Chief Executive Officer John Christmann
told investors at a Barclays Plc conference in New York on Wednesday.
“We are very early in starting to understand how big this is going to
be."
Apache
amassed drilling rights across 307,000 contiguous acres in the region
at an average cost of $1,300 per acre, according to the statement. The
Houston-based company already has drilled 19 wells in the area and has
identified 2,000 to 3,000 more drilling sites.
To
accelerate drilling in the discovery, Apache raised its full-year 2016
capital budget by 11 percent to $2 billion, according to the statement.
Alpine High will account for about one-quarter of the company’s drilling
budget this year.
Comments: four Outlaw Gap permits and one Outlaw Wagon, all in section 23-153-97; it looks like the Outlaw Gap wells will be standard 1280-acre spacing; the Outlaw Wagon well will be along the section line.
Eight permits renewed:
Slawson (7): two Phatkat Federal permits; two Vixen Federal permits; and, two Submariner Federal permits, all in Mountrail County
Newfield: one Jorgenson Federal well in Dunn County
Five permits canceled:
Hess canceled three BL-Blanchard permits in Williams County; and one HA-State-LW permit in McKenzie County
Oasis canceled one Rolfson well in McKenzie County
WPX reports a dry hole:
22269, dry, WPX Energy Williston, LLC, Fettig 6-7HB, Eagle Nest, Dunn County: the file report is actually quite colorful for a file report; problems with drilling; obviously there is oil there but it was drilling issues and then financial decisions on whether to continue.
Later, 4:30 p.m. Central Time: to put this in perspective, in an earlier post following the announcement of "SCOOP," CLR said the SCOOP added about 1.8 billion boe to their reserves.
Later, 1:37 p.m. Central Time: even other folks are starting to note "Saudi Arabia's problem".
Apache did something old-fashioned on Wednesday that oil investors love: It said it had found more oil -- a lot more: 3 billion barrels. It has apparently also stumbled upon 75 trillion cubic feet of gas. [To get a feeling of what 75 trillion cubic feet "means," go to this site: http://themilliondollarway.blogspot.com/2016/06/random-update-of-marcellus-utica-june.html.]
The
stock duly jumped, though investors shouldn't take those numbers at
face value. Initial estimates of a field's potential usually err on the
side of crazily optimistic. Rival Hess enjoyed a fillip in late June
when it announced a big discovery off
the coast of Guyana. On Tuesday, its stock slipped by 3.5 percent after
it announced "disappointing" results from an exploration well there.
Still,
if the Alpine High discovery in west Texas is anywhere close to what
Apache cracks it up to be, then rival producers -- OPEC, say -- should
be at least mildly concerned. And that's because, in one way, the slides
about Alpine High in CEO John Christmann's presentation on Wednesday
weren't even the most threatening ones.
See graphic at link for Saudi's biggest problem. This is the narrative:
The Permian basin's attractions are well known in the E&P sector -- just ask Blackstone or EOG Resources. As oil prices have collapsed, producers have slashed jobs,
idled rigs and basically tried to do more with less. Part of that has
involved focusing on the best acreage that can turn a profit, in cash
terms anyway, even at lower oil prices. Hence the rush, or retreat, to
the Permian.
What's interesting about Apache's slide, though, is the number that isn't on there: $10.
That's
the difference between the two oil-price scenarios laid out, $50 and
$60 a barrel. Christmann said Apache had 700 locations it could drill in
that area that were "very economic at $50."
Bump the price to $60,
though, and Apache reckons the number of viable locations jumps to
anywhere between 2,450 and 3,200.
Wow, wow, and wow. Early this morning, well before the article linked above was posted, I mentioned that I'm completely content with $45 oil. In fact, I argue that the sweet spot for WTI pricing right now is $46 to $52. I used $60 as the high end of the sweet spot. I find it interesting that this Bloomberg article chose exactly the same numbers. Amazing.
And neither number helps Saudi all that much. Sixty-dollar-oil for Saudi Arabia is not much better than $50-oil when one's national budget calls for $100 oil, something we haven't seen for almost two years now. Oil today: up nicely today to $46.11. Right at the low end of the narrow sweet spot: $46 - $52 in today's dollars; current conditions.
Apache Corp. said it has discovered the equivalent of at least two billion
barrels of oil in a new west Texas field that has the promise to become
one of the biggest energy finds of the past decade.
The
discovery, which Apache is calling “Alpine High,” is in an area near the
Davis Mountains that had been overlooked by geologists and engineers,
who believed it would be a poor fit for hydraulic fracturing. It could
be worth $8 billion by conservative estimates, or even 10 times more,
according to the company. Shares rose by as much as 13% after U.S.
markets opened Wednesday.
Apache started acquiring mineral rights
in the area two years ago and subsequently discovered its potential.
The company then quietly went about locking up more land in the field,
believed to be up to 450,000 acres overall. Its position now exceeds
300,000 acres, or roughly two-thirds of the field, and is about 20 times
the size of Manhattan.
The company has begun drilling in the
area and says the early wells, which produce more natural gas than oil,
are capable of providing at least a 30% profit margin at today’s prices,
including all costs associated with drilling.
More:
The discovery is likely to transform Apache, currently the nation’s
sixth-largest independent energy company with a market capitalization of
$20.1 billion. Alpine High may now be the biggest asset for Apache,
known in the industry for its frugality and record of buying assets from
other companies rather than finding its own.
Apache shares have spiked almost 7%.
***************************
The Apple Page
Wow, wow, and wow. The Apple Event closed with one of the most interesting music videos I featured at the blog more than once. Had it not been for the blog, I would not have seen the original video nor connected it with the Apple Event today.
At the end of the day, with regard to the Apple Event, Apple has simply partnered with anyone and everyone that's important in the US. Except Amazon. Google. Facebook.
U.S. retail gasoline prices are expected to continue falling through the end of 2016, even though gasoline demand this year is expected to be the highest ever.
The average pump price for December is on track to be the lowest for the month in eight years. [Prices would be still lower if it weren't for ethanol mandates.]
Gasoline retail prices are down this year because of a combination of modest crude oil prices and abundant supplies of gasoline from high levels of refinery production.
Crude Oil:
The decline in U.S. oil production this year and in 2017 is not expected to be as steep as in previous forecasts, because of improved drilling rig efficiencies and more rigs drilling.
Builds are expected in global oil inventories during the second half of 2016. However, the pace of builds will be slower than in 2015 and early 2016, but this should still limit upward pressure on oil prices in the months ahead. [Great news for consumers.]
Drawdowns in global oil inventories are expected to start in mid-2017, which will contribute to higher oil prices in the second quarter of next year. [Self-fulfilling prophecy.]
Natural Gas:
After a brief slowdown in early 2016, U.S. natural gas production is expected to increase during the second half of this year and continue rising through 2017.
The United States is on track to become a natural gas net exporter in the second quarter of next year.
Hurricane Hermine led to the evacuation of several offshore oil and natural gas production platforms and caused some shut-in production. The hurricane-related shut-ins contributed to estimated Gulf of Mexico natural gas production in August that was 5% lower than the July level, but overall U.S. production was still up slightly. [Bottomline: Hurricane Hermine -- a non-event.]
Electricity:
This summer’s higher electricity sales because of warmer weather are more than offset by lower power use during the recent milder winter, resulting in an overall decline in electricity demand by the residential sector for 2016.
Coal:
While coal use for electricity generation will be lower this year, the amount of electricity from coal is expected to increase in 2017 in response to higher natural gas prices.
Renewables:
Improved water conditions on the West Coast have increased electricity generation from hydropower in California this summer, and the state has also increased its generation from other renewable energy sources such as wind and solar.
Total U.S. solar power generating capacity by the end of 2017 is expected to be almost double the generating capacity from two years earlier. [Percent-wise: unchanged or actually lower than total energy consumed.]
... a sudden, intuitive perception of or insight into the reality or essential meaning of something, usually initiated by some simple, homely, or commonplace occurrence or experience.
Or perhaps it's simply the seven stages of grief: disbelief, denial, bargaining, guilt, anger, depression, and acceptance/hope.
I went through disbelief but not denial.
I never went through any bargaining or guilt.
Anger, yes, and perhaps even depression.
And now I'm comfortably at acceptance (but not hope).
If it was an epiphany it occurred sometime in the last 24 hours. I can't say when the specter began to appear, but it was staring me in the face, full frontal, when I read the article that Saudi Arabia is looking to cut $20 billion in government spending. That, of course, comes on top of several previous stories in which Saudi Arabia was desperate to cut costs, raise cash.
After I saw that story, I saw a number of articles that pretty much convinced me my epiphany was not off-base.
This morning, after driving one of the granddaughters to school, the business report on the radio stated that "oil would start the day at $44-something." And that was it.
We've been at $44-something for so long, it was no longer news. Yesterday, and over the past few days, there were suggestions that oil was headed higher. Oil went a bit over $45 but that was it. This morning it is being reported that Iran will continue increasing production regardless of what RussiaArabia does.
The epiphany: $45 is good for the US. I am more than happy to see oil in the $46 - $52 range, in current dollars, current circumstances. That's the sweet spot for me. Sixty-dollar oil might be a bit on the high side, but I'll take that, but no more.
I like filling my Honda Civic for less than $2.00 / gallon.
I love to see SUV and big pick-up sales records being broken.
Intermittent energy (wind, solar) requires more and more tax breaks, government mandates to survive. On its own, wind, solar can't compete with "cheap" fossil fuel.
Investors in the oil sector re-set their portfolios when oil hit $30. Oil hit $28.47 on January 19, 2016.
The US economy can't handle a quarter percent raise in the Fed rate -- at least according to conventional wisdom. If the US economy can't handle a quarter percent raise in the Fed rate, could the economy handle $100-oil at this point? Hardly.
US shale operators are making money on $45 oil. North Dakota is doing just fine, thank you. Another $60 million infrastructure project just announced, and Target Logistics is defying Boomtown's directive to shut down mancamps. Apparently the operators and Target know something The Atlantic does not know.
It took two years, but finally low oil is resulting in some merger action; there would be more merger and acquisition activity but US regulators frown on anything "good" happening in the oil sector.
At $45 oil, oil companies are working smarter. We have seen Darwinian economics at work; we will see more. This is the big story: at $45-oil, the entire Mideast picture changes. Saudi can't survive on $45 oil. Funding terrorist activities will take a low priority. Iran's star is rising. We will see new alignments in the Mideast, to include Russia. OPEC is seldom talked about any more. Now it's simply all about Saudi Arabia, or maybe Saudi Arabia-Russia. Or perhaps, Saudi-Arussia. Not to be confused with Saudi Dakota.
They say Saudi can produce oil for under $10/bbl. That doesn't give the Saudis much incentive to improve technology in the oil patch, and with less and less money to pay for such R&D, US companies will take their business elsewhere. The low hanging fruit in Saudi Arabia is not finding cheaper ways to bring oil to the surface; Saudi's low hanging fruit is cutting the country's social spending, terrorist funding, and long term energy projects -- which, of course, runs the risk of a death spiral.
Meanwhile, the low hanging fruit in the US oil sector:
cutting costs to bring profits in at $40 oil
taking this opportunity of low costs to continue to build out the infrastructure
mergers and acquisitions; we see the true value in established companies, pipelines. infrastructure
weed out inefficiencies
weed out poor performers
award the nimble and aggressive (most recent example: EOG buying the Permian for "a song")
Continental Resources' most recent presentations remind us how far shale operators have come in just a few years. When the boom began, the big talk in the Bakken was one well in every 640 acres and EURs of 350,000. Now, we're talking 12 wells (and more) in every 1280-acre drilling unit and 1 million EURs as a target. Filloon talked about 1 million EURs years ago; he was spot on. When the boom began, wells were costing upwards of $12 million to complete (and many of those were short laterals); the target now, $8 million and some operators even target closer to $6 million. In STACK/SCOOP, CLR expects EURs of 2 million boe.
More interesting, CLR has caught on to "clever" marketing, clever financing, clever bookkeeping -- whatever you want to call it. Taking advantage of the way Wall Street analysts reward and punish public companies (quarterly earnings), CLR now re-sets the bar every quarter. Forget how much it cost to drill a well last quarter. Put that well in SI/NC status, and then report the new completion cost for that well in the current quarter -- just the $3 million for fracking the well and voilà , a 70% ROR. The well was drilled a year ago; the analysts have already moved on. They are looking at future earnings. CLR projects 190 DUCs at the end of the year. The money for those wells to be drilled to total depth has already been expensed. Now CLR just talks about what it will cost to complete those wells.
And guess what? When those wells are completed the price of oil might be a bit higher than when they were drilled. Is this a great way of doing business or what?
I've completed the seven stages of grief (skipping some stages, as noted above). $45 oil is perfect; it's at the low end of the range for the sweet spot, $46 - $52 at current dollars, current conditions.
I'm not even looking for the downside of "low" oil prices any more.
If oil drops below $40, I will go through the seven stages again.
****************************
Dorothy Outslicks Grace
When I first heard this group, my first thought was: Grace Slick. I had not heard of the group until recently. See wiki:
DOROTHY fielded early comparisons to The Kills, The White Stripes, Patti Smith and Grace Slick. London-based fashion publication Hunger TV commented "it feels good to know raw power, sex and whiskey is back en vogue".
On July 24, 2014, Huffington Post named "After Midnight" the #1 song on their 12 Songs You Need to Know This Week, calling them "dangerous," "kick-ass" and "exactly what rock needs".
Big story today: the Apple Show -- begins at 12:00 noon today. I assume live streaming on Safari browsers. Macrumors will have full coverage. Apple's online store is already down -- happens every time -- ahead of today's iPhone 7 "event."
....seeking consent to build a 475,000 dekatherm per day (Dth/d) expansion in Texas and Louisiana.
The expansion – Gulf Connector Project – will link the U.S. natural gas supplies with global liquefied natural gas markets.
..... two phases. The Gulf Connector Project is intended to provide 75,000 Dth/d to Freeport LNG Development, L.P.’s liquefaction project by the second half of 2018, while it will deliver 400,000 Dth/d to Cheniere Energy’s Corpus Christi liquefaction terminal in 2019.
Currently, both the liquefaction facilities are under construction.
... will commence in the third quarter of 2017 ... expected to come online during the second half of 2018.
Say not! A new pipeline in Minnesota? From the press release, data points:
MDU/WBI Energy
Valley Expansion Pipeline Project
eastern North Dakota and western Minnesota
will connect WBI Energy’s existing system near Mapleton, North
Dakota, with the Viking Gas Transmission Company pipeline near Felton,
Minnesota
38 miles
16-inch
40 million cubic feet of natural gas / day
$55 to $60 million
construction to begin in 2018; to be in service by end of 2018
That $400 million payment to Iran for the four American hostages? It was a downpayment. The big payout occurred over the next 19 days: $1.3 billion payout. No links. Easy to find.
Stocks ended mixed but the Nasdaq notched another record closing high
after Wednesday's big Apple event, in which the gadget maker unveiled
the latest version of its popular iPhone.
The Nasdaq ended the day at 5283.93, up 0.2% or 8 points from its previous closing high set Tuesday.
Early afternoon: market is still down about 30 points, but we now have 196 issues on the NYSE hitting new highs. Only six issues trading at new lows. Several energy issues hitting new highs.
At the open: fairly flat; down 11 points (Dow 30). Did SRE hold its gain? Yup, flat this morning. Did ENB hold its gain? Yup, actually up a bit this morning. EW and XLNX both down a bit, but essentially flat. NYSE --
new highs: 99 -- ONEOK (a big whoop); WPX (the saga continues)
September 9, 2016: the Federal judge denied the Native Americans' request to stop further construction based on a strong legal argument. However, as I understand it, literally moments after the Federal judge released his opinion, the Obama administration (through the Departments of Justice, Army, and Interior) ordered construction to stop until "national discussion can take place" regarding concerns of Native Americans. There are many, many story lines here. I'm not sure on what legal grounds the Obama administration can stop the construction but it should be noted that the US Army Corps of Engineers only said it was "okay" to build the pipeline. The Corps never actually signed the necessary paperwork that would allow the easement across the river. Or something to that effect. Many, many story lines here but not worth the time. We'll let the "Big Boys" fight it out. But it is a trifecta: the Keystone XL, the Sandpiper, and now the Dakota Access Pipeline stopped by a relatively few number of folks, who, it appears, prefer CBR. This is a huge win for Texas (the Permian and the Eagle Ford) and for Warren Buffett (CBR).
September 7, 2016: before we all get too excited a sleuth over at Say Anything Blog notes that the Dakota Access Pipeline parallels a natural gas pipeline in the very area that the Native Americans are concerned about. If accurate, and if the judge can read, and if, and if, and if ...
An American Indian tribe succeeded Tuesday in getting a federal judge
to temporarily stop construction on some, but not all, of a $3.8
billion four-state oil pipeline, but its broader request still hangs in
the balance.
U.S. District Judge James Boasberg said Tuesday that
work will temporarily stop between North Dakota’s State Highway 1806
and 20 miles east of Lake Oahe, but will continue west of the highway
because he believes the U.S. Army Corps of Engineers lacks jurisdiction
on private land.
He also said he’ll rule by the end of Friday on
the Standing Rock Sioux Tribe’s challenge of federal regulators’
decision to grant permits to the Dallas, Texas-based operators of the
Dakota Access Pipeline, which will cross North Dakota, South Dakota,
Iowa and Illinois.
Predicted. Twenty-four protestors stop a $3.8 billion project ... and it isn't even on their land. What a great country.
Supporters of a proposed massive infrastructure project in Appalachia say that it would provide a strong impetus for growth in the region's petrochemicals sector.
"The Appalachian Storage Hub is needed to take full advantage of chemical and plastic raw materials found in the Marcellus, Utica and Rogersville shales," Kevin DiGregorio, executive director of the economic development non-profit Chemical Alliance Zone, Inc. (CAZ), said of the proposed $10 billion natural gas transmission and storage project that would provide regional access to natural gas liquids (NGL) from shale plays in West Virginia, Ohio, Pennsylvania and Kentucky.
The storage and distribution system would comprise underground storage facilities for ethane – and possibly other NGL such as propane and butane – as well as pipelines to move ethane and other raw materials to cracker and other manufacturing facilities, DiGregorio explained. "The proposed 'six-pack' pipeline system would transport methane, ethane, ethylene, propane, propylene and chlorine to manufacturing facilities throughout the region," he said.
NGL likely would be stored in depleted natural gas fields, depleted salt domes or other natural underground caverns, noted DiGregorio. Exactly where the hub would be located remains undetermined, but experts reportedly are exploring candidate sites.
Geology researchers from universities in West Virginia and Ohio are compiling a list of the top three to five potential locations in the quad-state region based on various technical criteria.
Much of Appalachia's existing chemical and plastic manufacturing capacity straddles the corridors of the Ohio River and its main tributaries. New capital projects – particularly Shell's ethane cracker near Pittsburgh and PTTGC America's proposed ethane cracker in Belmont County, Ohio – would also enjoy easy river access to facilitate transport of raw materials, products and equipment. The benefits of having a multibillion-dollar storage hub would extend well beyond the locality and state hosting it.
"With the accomplishment of the built-for-purpose Appalachian Storage Hub, the citizens of all four states stand to gain in a similar way," he predicted. "The petrochemical industry, and innovation engines associated with it, will grow with the availability of critical raw materials and intermediates delivered in a safe and environmentally sound manner."
