Monday, September 12, 2016

Lots Of Things Happening In Energy -- Huge Story -- Anadarko Expands In Gulf Of Mexico; Proof That "Peak Oil" Is Dead (At Least For Now) --Tuesday, September 13, 2016

This is kind of funny. Later in the post I will mention the "importance of googling." I wrote that before I saw this article over at Bloomberg/Rigzone in which the journalist says this is another sign that "PEAK OIL" is dead. Google searches for "too much oil" now outstrip searches for "Peak Oil."

Anadarko Expands In Gulf Of Mexico

It never quits, Now it's Anadarko diving even deeper into the Gulf of Mexico. The data points:
  • Anadarko acquired Freeport McMoran Oil & Gas assets for $2 billion (with a "B")
  • the deal will double Anadarko's ownership in the Lucius development to about 49 percent
  • the deal will expand the company's infrastructure throughout the Gulf of Mexico
  • the deal will generate $3 billion in incremental cash flow during the next five years at current prices
  • the deal will enable the company to accelerate investment in Anadarko's Delaware and DJ basin assets 
  • the Lucius is not "Lower Tertiary," but rather the Pilocene and Miocene sands with better porosity and permeability; the Lucius field was discovered in December, 2009  
Another Great "Meanwhile Back At The Ranch"

This one popped up late Monday night, around 10:30 p.m. The pictures of North Dakota are incredible.

And the story provides a great visual ... if not the actual photograph.

Festivals In North Texas This Time Of Year

Tonight I took Sophia, age two years, two months, to the local park. We used to go daily but recently not so much. We took a break when she was not feeling well, and it's been a bit difficult to get back into the swing of things. It's a long stroller ride and it's been quite hot.

But this evening we went. Sophia's family lives in a fairly upscale neighborhood here in north Texas.

Upon coming to the park, my first thought: several birthday parties but then it dawned on me. There must be some religious holiday that I was missing. The Shi-ite group was in one large picnic area and the Sunnis were in another large picnic area on the other side of the park. Conversation, what little I heard, seemed to center on "stuff" that was for sale at Toys 'R Us. (I'm not making this up.)

Sort of like Williston when I was growing up: Lutherans in one group, Catholics in another. 

I always tell the granddaughters if they have a question, follow the money, or google it. This one seemed to call for googling, and lo and behold, we got our answer. Indeed it was a religious holiday; in fact, two:
  • Waqf al Arafa - Hajj: Saturday, September 10, 2016
  • Eid-al-Adha, Tuesday, September 13, 2016
So, this would sort of be like "Eid-al-Adah-eve."

Another source says Eid al-Adha began yesterday evening and will end Thursday evening, September 15.  And that's obviously more accurate: this is a four-day "solemn festival" (eid).

I'm kind of embarrassed I missed all this, after all the stories about Iran being upset with the way Saudi Arabia is handling the Hajj.

The Political Page
Overtime For California Farm Workers

I must be missing something (it won't be the first time I missed something -- see story above about religious holidays). This was a huge story on local radio here in north Texas earlier this evening and now I see it's a big story over in the Los Angeles Times. Right, wrong, or indifferent, it amazes me that a) it's taken this long for a Democratic Assembly and a Democratic governor to pass this bill which seems to be a no-brainer for that group; and, b) it's such a big story considering how little it actually does.

Data points:
  • overtime for farm workers who work more than 8 hours / day
  • overtime for farm workers who work more than 40 hours / week
Why shouldn't they get overtime? "Everyone" else does -- we're talking hourly workers, not salaried workers.

But then look at this:
  • it's phased in over four years and it doesn't begin until 2019. 
  • and farms with less than 25 employees get an extra three years to phase this in
A lot can happen between then and now, and even if nothing changes, that's an eternity for a lot of folks. Farm work is probably some of the most physically demanding work there is.

There are two issues here, as far as I can tell. The cost of groceries. The cost of groceries has less to do with farmers than with the cost of processing, marketing, transportation, government regulations, etc. All things being equal, I can't imagine grocery prices going up that much. The second issue: California farmers say their products will be less competitive than products from other states / countries with the result that California grocers and restaurants will buy their products from out-of-state. Somehow I doubt that. But we'll see.

But again, for me this is not an issue about overtime. The surprising thing for me is that this took Governor Brown and his Democratic Assembly this long to pass this bill. For them, as noted above, it seems like it should have been a no-brainer.

Will it encourage more migrant workers coming up from Mexico? Probably, but that seems to be the least of our problems right now. I can think of a much bigger problem right now and her initials are HRC, not to be confused with the ticker symbol for Halcon Resources.

The Political Page (Continued)

Everyone has seen the video by now.
In the video, it is very, very clear that Hillary collapsed, truly collapsed. The New York Times has a video of the collapse and title the video, "Clinton Loses Balance at 9/11 Memorial." She did not simply lose her balance; she collapsed. The caption, incredibly, states, "Hillary Clinton appeared briefly unsteady ..." Hell. It was more than "appearance." And it was more than "briefly unsteady." She collapsed and had to be lifted into the waiting van. I guess it depends on one's definition of several words: "appeared," "briefly," and "unsteady." The NYT loses an incredible amount of integrity in such reporting. Within a week or so, my hunch is that this video will disappear from the NYT archives.

So, this much is pretty much not refutable:
  • except to the press, it appears that Hillary has a serious medical problem; to the rest of us with at least an eighth grade education and common sense, it appears fairly obvious what is going on
  • she may or may not have pneumonia but that has nothing to do with what appears we are seeing now
  • she appears to have a medical disorder resulting in atonic seizure-like episodes or fainting episodes
  • her seizure-like episodes or fainting spells appear to result in a loss of consciousness but apparently do not result in a post-ictal state; if so, the post-ictal state is very, very short (she does admit to losing consciousness in the past -- as opposed to the future, I suppose)
  • her medical problem is most likely secondary to an underlying cause, perhaps related to an earlier injury
  • at least one body guard / handler has emergency injectable medication; the individual is not a Secret Service agent
  • a person with any common sense who has been diagnosed with pneumonia and susceptible to dehydration does not attend an event without bottled water
  • people who witness another individual buckling, falling, and losing consciousness react in a particular matter -- usually "with great anxiety" and "an urge to intervene" -- unless they've seen it so many times, they are a) used to it; b) expect it; c) know that it is treatable; and, d) that it is self-limiting
  • most people who experience buckling, falling, and losing consciousness are rushed to the nearest medical facility unless those around them have seen it so many times, they are a) used to it; b) expect it; c) know that it treatable; and/or d) know that the event is self-limited
  • most people who experience buckling, falling, and losing consciousness are not taken to their adult daughter's home in lieu of a medical facility, unless .... see above
  • parents who have children with a seizure disorder become quite calm over time after they have witnessed their children with multiple seizures. Most seizures -- with very few exceptions -- end on their own, and do not require medication. "We" treat seizures mostly to prevent "other" injury

Huge, Huge Things Going On In The Energy Arena -- Headline Story In NYT -- Saudi Bidding For Another US Refinery -- September 12, 2016

Data points from the NYT article:

Two New Permits; That's About It -- The Bakken -- September 12, 2016

DUCs. Most recent estimate for DUCs from the EIA.

Director's Cut. The last time I checked, the Director's Cut (July, 2016, data) is scheduled to be released Friday, September 16, 2016.

No wells coming off confidential list Tuesday.

Active rigs:

Active Rigs3769197182193

Two new permits;
  • Operator: Crescent Point Energy
  • Field: Dublin (Williams)
  • Comments:
Five permits renewed:
  • HRC (3): one Berg permit and two Sylte Mineral Trust permits, all in Williams County
  • WPX (2): two Beaks permits in Dunn County
Five permits canceled:
  • Slawson (2): a Moleback permit and a Cruiser permit, both in Mountrail County
  • Whiting: a P Bibler permit in Williams County
  • Resource Energy Can-Am: a Laura permit in Divide County
  • Zavanna: A Sakakawea permit in Williams County
Two producing wells completed:
  • 31509, 306, CLR, Bice 6-32H1, Chimney Butte, 4 sections, t8/16; cum --
  • 31510, 760, CLR, Bice 5-32H, Chimney Butte, 4 sections, t8/16; cum 3K over first 7 days;

Nothing On The Bakken -- Just Some Light Reading -- September 12, 2016

It is my current routine to bike 5 - 10 miles to the local libraries -- the mileage depends on which libraries I visit and which routes I take -- Monday through Friday, leaving the house at 9:00 a.m. and returning home at 2:30.

I read The New Yorker magazine on Monday or Tuesday, and then read one "serious" book from start to finish over the course of as many days as it takes. I am currently reading Nathaniel Philbrick's Valiant Ambition, c. 2016. I take a break from that reading to look at other books. Today, nothing seemed to interest me, but then I saw the type of book that never interests me -- a "contemporary" political book. This one was titled Five Presidents and I had no plans to read much of it except to see what the writer had to say about the JFK assassination. After reading that short chapter, I went back and started at the beginning.

The few notes below will explain why I decided to take the time to write this note.

Five Presidents: My Extraordinary Journey with Eisenhower, Kennedy, Johnson, Nixon, and Ford
Clint Hill with Lisa McCubbin
c. 2016

A very easy book to read. Mostly short -- 5 - 8 pages -- vignettes of a personal nature.  It helps put things into perspective with regard to the Obama administration and the Trump-Clinton contest.

It's amazing to think back what happened in the 60s, starting with the Bay of Pigs / Cuban Missile Crisis Kennedy Assassination and to the resignation of Nixon -- with the Vietnam War in the background/foreground throughout.

This is the first person account of a secret service agent who rose through the ranks to be on a first-name basis with those five presidents. In addition to what one would expect to read in a book like this, one also "feels" the relationship that grows among the people involved.

Clint Hill was the Secret Agent on the back of the car when JFK was assassinated and the one who protected Mrs Kennedy on the ride to Parkland. Even if you don't know his name, you certainly remember him if you were around in 1963.

Clint Hill was one of only three agents who was invited to attend JFK's 46th birthday party on that very famous presidential yacht, the Sequoia, on May 29, 1963. Some months later, Jacqueline Kennedy, on the plane that carried the casket with her husband, she requested to see Clint Hill before LBJ's swearing-in ceremony. Her concern at that moment, in her blood-encrusted outfit, "What's going to happen to you now, Mr Hill?" genuinely concerned about his future. 

Now for the "you've got to be kidding!"

Page 6:
"I never had any intention of becoming a Secret Service agent. Growing up in Washburn, North Dakota, my goal was to coach athletics and teach history. I have come to realize, that sometimes your life takes a turn in a direction over which you have no control -- ....

When I was seventeen days old, my mother had me baptized and then, on a snowy January morning, left me on the doorstep of the North Dakota Children's Home for Adoption in Fargo. Three months later, Chris and Jennie Hill drove to Fargo with their four-year-old adopted daughter, Janice, and out of all the children at the orphanage, chose me to make their family complete....

I had a wonderful childhood. Washburn, North Dakota, is perched on the north bank of the Missouri River, about halfway between Bismarck and Minot, ..."
He then tells of growing up in North Dakota which sounds so familiar.

Upon graduation from Concordia College, Moorhead, MN, 1954, his first intention was to return to North Dakota to find a job in a local high school teaching history and coaching athletics.... but then drafted by the US Army -- the draft board in McLean County....Army Intelligence School in Dundalk, MD .. then to Denver, CO ... first met Secret Service agents when Eisenhower was hospitalized at Fitzsimons Army Hospital in Aurora.

It was pure serendipity that he ended up working for the Secret Service. He describes how that happened on page 11.

He was assigned to the White House detail in 1959.

Of the thousands of books I might have selected today for some light reading, who would have ever guessed that such a book had a North Dakota connection?



From today's page R7 of The WSJ. Helpful advice from the WSJ. After reading their situation, I did not read the WSJ's advice.

Here's the situation.

Mom, Dad, and a toddler.

Want to have it all.

  • Dad: 34; unemployed until recently; now earns $60K selling insurance; expects to earn $90K next year
  • Mom: 32 years old; part-time nurse; works only weekends; $60K
  • Toddler: no income
  • student loans: $30K (2/3rds is hers)
  • credit card: $8K
  • recent medical bills: $3K
  • the wife's student loan is in forbearance: she does not have to make payments; interest accrues and is added to the principal; in February, 2017, she will have to begin paying $350/month
  • husband: $100/month for student loan; never finished his degree
  • rent: $1,300
  • electricity: $200
  • groceries: $1,200
  • health insurance: $410
  • preschool: $750
  • car payment: $468
  • car insurance: $90
  • gasoline: $200
  • cable and internet: $150
  • cellphones: $200
  • dog food, vet bills: $200
  • credit card minimum: $381
  • restaurants (estimate): $400 (actual, probably closer to $600)
  • toys for daughter: $150 -- yes, that's right -- $150 per month on toys for daugther
  • life insurance: $20,000 policy on the husband
  • each: a 401(k)
  • husband's IRA: 3% of his income, currently $2,800
  • wife's IRA: not yet funded
Assuming they pay 10% in federal taxes and 5% in state taxes, their net is $102,000 annually and $8,500 net monthly.
  • Total monthly expenses as they show above, including the $350 student loan payment starting soon: subtotal: $6,449 
  • retirement: $233 for the 401(k)
  • total expenses (monthly): $6,682
Balance: $1,818 or about $2,000 each month, rounding.

I wonder where the other $2,000 each month is going? Taxes? Note: there is no entertainment expenses for them except cable, internet, and restaurants. Maintenance on automobile? Clothing? Travel? Medical co-pays and deductibles (with monthly premium that low, the deductibles and co-pays are quite high).

Sagging Condensate Margins Affecting Kinder Morgan Splitters -- RBN Energy -- September 12, 2016

Dust Pneumonia Song, Woodie Guthrie


Active rigs:

Active Rigs3769197182193

RBN Energy: sagging condensate margins affecting new Kinder Morgan splitters.
Two new 50-Mb/d, Kinder Morgan-owned and -operated condensate splitters came online during the first seven months of 2015, backed by a 10-year BP commitment to process a total of 84 Mb/d through the units.
Located in the Houston Ship Channel’s refinery row, the splitters were expected to provide a profitable outlet to process growing volumes of the ultra-light crude oil known as condensate. Instead, average plant throughput through July 2016 has been only 71% of capacity, well below the 90% average operating level of neighboring refineries. The relatively low level at which these units have been operating reflects sagging condensate processing margins.
Recent changes in condensate movements reflect broader trends in condensate production, which has declined significantly in the face of lower crude prices and narrowing differentials between condensate and “regular” light sweet crudes such as the Gulf Coast benchmark, Light Louisiana Sweet (LLS).
More On that EOG Acquisition Of Yates Petroleum

The number of articles over at SeekingAlpha regarding EOG's purchase of Yates Petroleum is quite extraordinary. Here is another one.
A company that rarely acquires others, EOG Resources Inc recently bought up privately held Yates Petroleum Corporation for roughly $2.5 billion, including $2.3 billion in stock and a net $151 million in cash/debt assumed. That's part of what made the news so intriguing, it doesn't hurt EOG Resources' strong balance sheet yet the company gets a much longer top tier growth runway. What also peeped (sic -- the writer probably meant "piqued"; "peep" is what baby chickens do) many investors interest is that EOG was buying up a lot of quality acreage in the Delaware Basin, 186,000 net acres, for around a third to half the price other M&A deals have fetched.
I think EOG got that Permian acreage for a lot less than "a third to half the price other M&A deals have fetched." More from the article:
For a refresher, EOG's premium wells generate a 30% ATROR at $40 WTI, which is what management referred to as a minimum with many of those locations exceeding that rate.
When factoring in other costs, like G&G and infrastructure investments, that goes down to 15%. EOG sees that level as more of a buffer than what to expect its real return to be with tons of room for upside. At $50 WTI, those locations yield an ATROR of at least 60% on an incremental well basis.
EOG Resources repeatedly brought up how it was aware that the market was curious about whether or not the firm could replenish its top tier drilling portfolio as it brings wells online in a low price environment. Before the Yates acquisition, EOG had 3,200 premium locations in February 2016, which shot up to 4,300 premium locations as of August 2016 on the back of cost reductions and stellar operational performance. The Yates deal added another 1,740, bringing EOG's premium portfolio up to ~6,000 locations with room to move higher.
Global Oil Production

OPEC says non-OPEC output stronger than expected.  Two data points:
  • there are suggestions that those stories suggesting Saudi Arabia has cut back production may be dubious: "secondary sources such as traders, shippers and consultancies told OPEC that Saudi production continued to climb to 10.6 million bbls/day
  • non-OPEC production will fall by about 610,000 bopd, about 180,000 bopd less than previously forecast -- OPEC's estimate

Black Lives Matter

Chicago: 3,000 shooting victims as of early September. Data points:
  • "Ferguson effect"
  • article failed to mention Baltimore's policy: give them some room to destroy
  • follows "onslaught of criticism from the Black Lives Matter movement"
  • Chicago mayor: Chicago police have gone "fetal" -- less likely to interdict criminal behavior -- that was back in 2015; worsened in 2016
  • the city allows the ACLU to review every police stop
  • three gangs -- the Vice Lords, Black Disciples and Four Corners Hustlers -- reached a pact in August to assassinate Chicago officer
Venezuela -- Tick, Tick, Tick

China rethinks its alliance with reeling Venezuela. Security concerns and unpaid bills, China may be recalculating its alliance with Venezuela. Venezuela may not get meaningful fresh loans or investment from China.

The Market

Closing: great opportunity for those paying attention. Market surges 240 points --and there you have it; a lot of talk. NYSE --
  • new highs: 34
  • new lows: 40
Late afternoon: great opportunity for those paying attention. Market surges 240 points -- so much for all that talk about a "Fed" rate increase. NYSE --
  • new highs: 27
  • new lows: 40
Mid-day: the bleeding has stopped, at least temporarily. Market up about 60 points. NYSE --
  • new highs: 20
  • new lows: 37 -- it was a huge rout Friday, a loss of nearly 400 points
Open: Computer algorithms in control.

The Political Page

Perhaps all this will simply burn itself out, but the number of stories about Hillary's "medical event" on Sunday are appearing everywhere. Even the LA Times is having trouble ignoring the story. I cannot even imagine how many times this video is being shown on network television.

Seeing all the headlines in so many different media outlets suggests the sharks smell blood.

During the Khruschhev days of the Soviet Empire, as a kid, I seem to recall all those photographs and stories of Soviet statesmen not in official photographs because of "the flu." I guess in the Soviet Union, "they" got "the flu." In Hillary's America, "we" get "pneumonia."

This is an important link not to lose; hopefully the link won't break for at least one year. 

Valiant Ambition: George Washington, Benedict Arnold, and the Fate of the American Revolution
Nathaniel Philbrick
c. 2016
DDS: 973.4 PHI
Chapter 2
The Mosquito Fleet
The detailed story of Brig Gen Benedict Arnold's successes in the fall of 1776 on Lake Champlain. By capturing Fort Ticonderoga he prevented the British from joining up with Admiral Howe and General Howe to the south (in NYC) and cut America in half.
Benedict Arnold's home: New Haven, CT. His wife died at this time; he left three sons to fight on Lake Champlain.
The story of Benedict Arnold's success taking Montreal and his defeat at Quebec are also discussed.

All in all, a naval battle on Lake Champlain.

The Brits ordered their troops "back up the lake to St Johns for the winter (winter of 1776 - 1777), Arnold cold take consolation in knowing that that no matter what the cost, he had done it -- he had prevented the British from taking Fort Ticonderoga and continuing to Albany and, eventually, to NYC. And perhaps just as important, while Washington's army to the south continued to suffer setback after setback, Arnold had shown that it was possible to stand up and fight." -- p. 56