Jobs:
first time unemployment claims surge; back up to 260,000; an increase of 13,000 from the previous week's revised level (previous week revised up by 1,000). The 4-week moving average was 251,750, an increase of 2,250 from the previous week's revised average.
The DOL said there were no special factors impacting this week's initial claims. Mainstream media suggested claims could rise following Hurricane Matthew, when in fact, South Carolina was one of two states with largest decreases in new unemployment claims. States with largest gains in unemployment claims, the usual suspects: CA, PA, TX, NY, WA.
The Wall Street Journal suggests that the surge in claims was due to Hurricane Matthew. The DOL said there were no special factors impacting this week's initial claims, and South Carolina was one of two states with largest decrease in new unemployment claims. Florida was not mentioned by the DOL.
The WSJ says the number was also impacted by Columbus Day. Really?
Interestingly, the
Journal was way off on its forecast. The
Journal anticipated 250,000 new claims, a slight increase.
This is what the
Journal said about the holiday:
The Columbus Day holiday, on Oct. 10, also makes the data
difficult to read. Holiday periods can affect seasonal adjustment of the
data.
I do believe these holidays happen every year; are predictable; and, unremarkable. All things being equal, holidays should result in few applications because state and federal offices would be closed, making it more difficult to get some claims filed -- or least delaying them into a new week. Maybe that was it. The surge was due to folks waiting a week to file claims. LOL.
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Shale Drillers Are Going Long, Not Deep, In The Oil Patch
From Bloomberg/Rigzone. It looks like SM Energy learned the technology for going long in the Bakken and is now taking that technology to the Permian. Very interesting story.
Long is the new deep.
Just ask SM Energy Co., which on Tuesday spent $1.6 billion to expand its acreage in America’s most prodigious oil patch, the Permian Basin.
The unique geologic makeup of the Permian, consisting of multiple layers of oil- and gas-trapping shale that span hundreds of miles, is well suited for a technique that’s allowing producers to pull more crude out of fewer wells.
Explorers there are drilling longer and longer wells, running thousands of feet sideways to tap as much of the crude-bearing rock as possible.
The technique means owning drilling rights across 1,000 acres in the Permian may actually be just as valuable as holding ones for 5,000 because you’re having to bore less wells.
It’s a strategy more and more companies are taking advantage of to cope in an era of historically low oil and natural gas prices.
This ability to bore longer so-called laterals “adds enormous value to each well that we drill,” Herbert Vogel, SM Energy’s executive vice president for operations, said during a call Tuesday on its purchase of 35,700 acres in the Permian from QStar LLC. “I can’t understate how much of a difference contiguous acreage makes.”
The average length of laterals has increased by hundreds of feet in both oil- and gas-bearing rock this year, with an unofficial record 18,544 feet, about 3.5 miles, claimed by a well in Ohio. Denver-based SM said it expects to drill 10,000-foot (3,048-meter) laterals over most of its Texas property in the Permian. And it’s not alone.
This is interesting because the other day a small operator noted they had 1,000 surface acres but 5,000 net mineral acres, or something to that effect, which I had not seen before and which did not make sense. Operators may subtly be changing the say they "market" their mineral acres.
Mineral acres (surface acres) may mean one thing to traditional leaseholders, but they may mean something different to operators and investors, if that makes sense.
Other data points at the linked article:
- unofficial record of 18,544 feet (3.5 miles); claimed by a well in Ohio (I assume this is the horizontal segment only); a "super lateral"
- SM Energy: expects to drill 10,000-foot laterals over most of its Permian acreage
- doubling laterals from 5,000 feet, combined with other techniques, could make a well 4.5x more valuable
- it only takes two to three days to drill that extra 5,000 feet; only spending 10% more (does not include additional fracking cost); getting a 25% net increase in productivity
- Chesapeake: stretching to an average 8,000 in Eagle Ford; and, 10,000 in Haynesville (Louisiana)
- Eclipse Resources plans two, 19,000-foot lateral in the Utica but not unless oil tops $50/bbl
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Contrarian
Exxon's CEO doesn't see "supply shortage" pushing up oil prices.
Says ample production from US shale regions will keep prices subdued for years to come, disagreeing with others in the industry who have warned about a looming shortage.
Other speakers at the conference echoed his views.
ConocoPhillips CEO Ryan Lance estimates that new wells are viable in the Permian, Eagle Ford and Bakken shale basins at just $40 a barrel.
Production in the Permian can grow by 300,000 barrels a day for the next 10 years “easy,” said Scott Sheffield, chief executive officer of Pioneer Natural Resources Co., which is adding five drill rigs in the basin.
“It’s difficult to see a big supply precipice out there,” Tillerson said. “It’s difficult to see a big price blowout.
”Despite persistent fears of bankruptcies in the U.S. oil patch as banks cut lending to the energy industry, Tillerson said the current boom-and-bust cycle has “confirmed the viability of a very large resource base in North America,” adding that shale would serve as “enormous spare capacity” to meet future demand.
The comments are likely to reinforce the emerging view at the Oil & Money conference, which every year gathers some of the leading industry voices, that oil prices will remain at around $50 to $60 a barrel for the next few years.
Saudi can't make it on $50 to $60 a barrel for the next few years. If things go the way they seem to be going, there may be a huge shakeup in Mideast leadership economically and militarily.
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Back to the Bakken
Active rigs:
| 10/20/2016 | 10/20/2015 | 10/20/2014 | 10/20/2013 | 10/20/2012 |
|---|
| Active Rigs | 33 | 68 | 191 | 184 | 186 |
RBN Energy:
for the first time, LNG exports impact US natural gas supply, demand, and price. Part 2.
After about four weeks offline for modifications and maintenance,
Cheniere’s Sabine Pass liquefaction terminal in Cameron Parish,
Louisiana began accepting nominal deliveries of feed gas starting last
Friday, indicating the facility is due to ramp up to capacity any day
now. Since the first export cargo in February, about 130 Bcf, or 0.6
Bcf/d, of natural gas has been delivered to the terminal.
While those
aren’t quite game-changing volumes yet, deliveries just prior to the
outage were averaging more in the vicinity of 1.2 Bcf/d and indications
are that deliveries could ramp up to more than 1.0 Bcf/d in short order
with the restart and grow to more than 2.0 Bcf/d by the end of 2017.
It’s clear that LNG exports are quickly becoming a prominent and
inescapable feature of the U.S. natural gas market.
Today, we wrap up
our series on the growing impact of LNG exports on the U.S.
supply/demand balance.
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Fear-Mongering With Large Numbers
New Yorkers subsidizing aging nuclear plants "could" cost them -- worse case scenario -- $8 billion.
OMG.
Over 12 years.
New York state population: 20 million.
Works out to 9 cents/day/New Yorker.
Once the judge sees that bottom-line number,
he/she will throw out the suit. As frivolous.
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The Market
UNP plummets;
drops almost 7% in trading as it misses estimates. Earned $1.36 vs estimates of $1.39. Profits dropped 13%.
Mid-day trading: that was a nice reversal. Now up about 20 points. NYSE:
- new highs: 47 -- CNOOC;
- new lows: 16
Open: Dow 30 down 60. Market must be worried about last debate; new polls. Profit-taking in oil, or reality sets it: drops over 2% and back to barely above $50.
Bank of New York Mellon surprises.
Top line and bottom line both beat estimates. Forecast 81 cents; actual, 90 cents.
