Thursday, December 22, 2016

China LNG Imports Hit Records -- Bloomberg -- December 22, 2016

China LNG imports hit record, Bloomberg. Data points:
  • China's LNG imports surged to a record in November, 2016
  • China is the world's third-biggest buyer of LNG
  • inbound LNG shipments jumped almost 50% compared to a year ago
  • 2. million tons in November, 2016
  • natural gas imports via pipeline: a 7% increase to 2 million tons
  • it looks like China will set another record this month, December
  • pricing: spot LNG is at a nearly two-year high at $9.40/million BTU
  • China is forecast to experience the coldest winter since 2012
See also this post.

The Football Page

I remember hearing about this but had forgotten: Thursday Night Football would be live on Twitter. I just noticed the game on Twitter and I have to admit that it's not bad --

The Political Page

From PEOTUS, via Twitter:42 minutes ago, about 8:23 p.m. Central Time:
The so-called "A" list celebrities are all wanting tixs to the inauguration, but look what they did for Hillary, NOTHING. I want the PEOPLE! 
This was absolutely predictable. The 2017 inauguration balls are going to be the most sought-after events in decades. I still think there's every likelihood that before it's all over, there will be comparisons with Camelot.

Meanwhile, over at Drudge tonight, this teaser: "Washington Post lead Friday: Obama White House Feeling Upstaged...." and then it links to this story. The media is suggesting that Trump is having a greater impact on world events in his first 40 days as PEOTUS than Obama had during his entire eight years in office.

Interesting $1 Billion Science Project Okayed For Martinsdale, Montana -- December 22, 2016


December 31, 2016: twenty-four hours ago I had not heard of compressed and now it's getting a thread of its own. LOL. Another reader has chimed in on ways to store wind energy; see comments. I brought it up here so browsers could find it:
.... curious that you should bring up pumped hydro, since most of this past week iIve been involved in a comment thread about it which was somewhat over my head:

I got involved because 30 years ago I had the 'clever' idea to use pumped hydro between Lake Ontario and Lake Huron in lieu of building another nuclear power plant on Lake Erie, and brought that up in comments.
The professors and engineers at this site explained to me why that wasn't very feasible, while working up estimates on power yields and costs. I was refereed to a report for the Australian government for more details, which points out that pumped hydro accounts for 99% of all electrical power storage globally. You might be surprised, as I was, that compressed air was #2, ahead of any form of battery:
I think I will stick to the Bakken, crude oil, and natural gas. With the glut of oil and natural gas, it almost seems these other projects are solutions looking for a problem. The Australian ROAM study was dated 2012, and therefore commissioned some time before the Bakken shale revolution. The shale revolution has changed everything.

December 30, 2016: a reader sent me a long commentary on "pumped storage." I did not ask whether I could post his comment or not, but it was too good to not share. This is the reader's note, with minimal editing, anonymous.
Because "science project" suggests the billion-dollar cost will be directed toward research into the unknown, what aspect of the project is new? We were plugging things into power outlets supplied by a wind turbine (brand name: Windcharger) on our ND farm, way back in the 40's. And hydroelectric pumped storage was a fascinating new concept for me, also already decades ago, as it related to Montana's Hungry Horse Dam.

The last time I checked, the price of energy from coal-fired plants still beat both wind and solar by a mile. And it appeared to be of positive relevance that the project location was along a major power corridor linking the Bonneville and Colstrip (coal) power distribution systems. --- Instead of shuttering Colstrip plants, think of the carbon credits they could earn by powering the pumps for this and similar projects' water storage reservoir(s). (Make no mistake, I despise the gaming of the energy industry and consumers with taxes on carbon masked as trading in carbon credits.)

In descriptions of "the project," storage lakes and reservoirs are analogous to batteries. By the same token, coal and oil fields have proven themselves as storage batteries of solar power. All who question the veracity of that line should read Michael Faraday's Christmas lectures for young people and anyone else who would like to understand just about everything that was known about the universe in his day. (I believe Faraday, himself, made some such claim and one that readers of said lectures about the candle would, yet today, find credible.)

For some reason, clicking on many ".gov" sites brings up the message that my Safari browser cannot access the site---even formerly favorite NASA sites. Such was the case, when searching for verification of widespread use of hydroelectric pumped storage. But if you scroll to chapter 3 of the successfully linked site, a graphic will illustrate the point. Many, for me, inaccessible sources mention Hungry Horse Dam, but I note it is missing on the map of MT. I presume it is just a minor among the selected majors.

For further, out-of-the-box thinking, I will be interested to know to what extent the feeder stream for "the project" is dewatered by irrigation, drought or, potentially, by the project itself; and, to know If the water stored and used for power generation will be a closed system, so that, once charged, the only major loss of water would be from evaporation.

If pumped water storage is a solution to unreliable wind energy, why not go straight for wind storage?--- "What?" is what I, too, said, the first time I heard mention of this.

I still marvel at a selling point for mining potash in north central ND. The caverns created by solution mining could be utilized to store wind to supplement wind power generation when the wind didn't blow. I presume that, like natural gas, air is very compressible, so abandoned salt and potash mines are capable of holding their volume in air many, many times over. Utilizing the power of wind turbines to compress the air when wind is abundant, its release to drive wind turbines would, theoretically, help solve the problem of reliability in the wind energy sector. OK, coal or gas backup may still be required, both of which are abundant in the area.

Let's consider a hybrid between above notions of wind storage on the plains and "pumped storage" for "the project" in mountainous terrain with the necessary differential in elevation between hydroelectric generators and the reservoir for storage of pumped water. Yes, how about water and wind teaming up to generate hydroelectric power on the flat plains of North Dakota and Saskatchewan, where potash mining is in progress in Sask. and where potash pilot wells and leasing indicate considerable potential in ND. In a closed water storage system, one wouldn't even have to pump water uphill which would surely consume more energy than could be generated by letting gravity pull it back down through the spinning blades of water turbines. Compressed air, as in a home water system pressure tank, would push the water through the blades of hydro-turbines. And the same water could be recycled ad infinitum, obviating the need for thousands of acre feet of water that would have to be replenished if discharged into an irrigation canal or the stream from which tapped. OK, coal or gas backup to maintain air pressure and operation of compressors would still be nice.

The science is there to quickly determine whether there would be any energy and profit gain at the end of such a process. But, going back to "the project," the aim appears to be the same---to use wind itself, a more expensive energy source than NG or coal, to solve its problem with its own reliability, through use of surrogate, hydro-power to produce energy more cheaply than that from the original input (wind).

Now then, does it not appear to be a fool's errand to create through adoption of "wind" the problem we are, in both examples, trying to solve through some version of pumped storage? Rather than the default coal-fired plants, a necessary duplication in both "storage" systems, I would bypass wind altogether and cast my lot with coal and NG in step one of both "pumped storage" systems. Did I forget to emphasize "CLEAN" in coal?

Why would we need the second system at all, if one opted for coal? --- For the subsidies, the carbon credits, the mandated regulations, and because the wind and mine caverns are there (or can be). How else would they be economic? 
Original Post
Company plans to "store" excess electricity generated by wind farm for periods when turbines not producing electricity. Story here. Data points:
  • water running downhill would turn hydropower turbines to produce electricity
  • water would be pumped back up with pumps powered by electricity generated by wind farm
  • when wind turbines not turning, dammed water would be released to flow downhill to turn hydropower turbines
  • top of the hill: 3,000-foot long reservoir
  • 177-acre site
  • near the tiny town of Martinsdale; population, less than 100 people
  • Absaroka Energy, Bozeman, MT; central part of the state
  • $1 billion, 400-megawatt storage project
  • 50-year license granted by Federal Energy Regulatory Commission
  • water would be drawn from Cottonwood Creek, a tributary of the Musselshell River, via an existing irrigation system for a nearby ranch
  • site is located near a pair of large transmission lines that originate in Colstrip, MT
  • construction to begin no earlier than 2018
The Literature Page
For The Granddaughters

In the November 24, 2016, issue of The New York Review of Books, Julian Bell reviews two new books on the British painter and art critic, J. M. W. Turner. A portrait of Turner will be on the new England £20 note.

I can't say for sure -- I haven't found documentation on the net -- but I think Julian Bell is the grandson of Clive Bell and Vanessa Bell. Vanessa was the sister of Virginia Woolf. This is the genealogy, I believe:

Quentin Claudian Stephen Bell, 1910- 1996, historian and author, was the son of Clive Bell and Vanessa Bell (née Stephen), and the nephew of Virginia Woolf (née Stephen).  Quentin Bell and wife Anne Olivier Popham Bell had three children including a son named Julian Bell. Julian Bell is a painter and writer, living in Lewes, Sussex.  It all fits.

In addition, Julian Bell's younger sister is a writer: Virginia Nicholson, the writer of Charleston: A Bloomsbury House and Garden, Among the Bohemians and Singled Out.

We have a copy of Charleston: A Bloomsbury House and Garden.

Blackstone Group In Talks To Buy A Stake In Energy Transfer Partners, The Company Building DAPL -- December 22, 2016

This is not an investment site. Do not make any investment, financial, travel, relationship, or job-related decisions based on anything you read here or think you may have read here. I have not started the note yet, but generally one can expect factual or typographical errors in my notes. Facts and opinions are often interspersed and it can be difficult to separate fact from opinion.

Reuters is reporting that Blackstone Group is in talks to buy a stake in assets owned by Energy Transfer Partners, the company building the ... okay, let's hear it again ... controversial .... Dakota Access pipeline, or DAPL.

Okay, not a long note. That's all I'm going to say.

Active Rigs Stable At 41 In North Dakota -- December 22, 2016

Note: Corral Creek oil field has been updated. A reader noted that some wells in Corral Creek have a "PH" in their legal names. According to a COP employee, the "PH" stands for "pilot hole" -- a well that will be used for monitoring with no intention of production. Some of these wells could be converted into SWD wells.

Active rigs:

Active Rigs4165174191188

No wells are coming off the confidential list Friday.

Four new permits:
  • Operator: CLR
  • Field: Siverston (McKenzie)
  • Comment: four Vardon permits
Five permits renewed:
  • CLR (2): a Tanager permit and a Nuthatch permit, both in Divide County
  • Hunt (2): two Palermo MCNIC permits, in Mountrail County
  • XTO: a Hartel permit in McKenzie County

Politics: Only Two Cabinet Posts Yet To Be Filled -- Veterans Affairs, Agriculture -- December 22, 2016

Cabinet. In "Putting Together Trump's Cabinet," I've added an update today (December 22, 2016) suggesting Trump's top choice for Secretary of Agriculture. If the candidate does not "fail" the interview, the candidate would be a "three-fer" for Trump.

Warned: even The Washington Post and the three network evening news shows tonight will not be able to spin this story. The UN was ready to "condemn" Israel for new settlements. Now, out of the blue, this headline: "UN scuttles vote on Israeli settlement after Trump warning." Details: Egypt blinked:
Egyptian officials scrapped a plan to proceed with a United Nations Security Council vote condemning the construction of Israeli settlements, following pushback from Israeli officials and President-elect Trump.
"Egypt requested the vote's delay to permit them to conduct an additional meeting of the Arab League's foreign ministers to work on the resolution's wording," Haaretz reported, citing Western diplomats.
But the vote might be postponed "indefinitely," according to the report. Israeli settlement construction drew condemnation from the State Department earlier this year, in addition to the rebukes of more customary critics, raising fears in Israel and among congressional Republicans that President Obama might not veto a resolution on the matter in the waning days of his presidency.
President-elect Trump stated his opposition to the resolution, as Israeli Prime Minister Benjamin Netanyahu was lobbying Egyptian President Abdel-Fattah El-Sisi to drop the resolution.
Something tells me the phone call between Egypt and "Trump" was not a long phone call with the subject of US aid coming up early in the call.

Warned: a four-fer. China, Putin, Iran, and North Korea have all been warned. Sanctions have not worked. We're back to an arms race. Trump has tweeted that the US nuclear arsenal needs to be "enhanced." And what is talk-TV talking about? The new White House spokesman and re-arranging the chairs in the White House press room. Wow. I can't make this stuff up but it supports my observation that talk shows are scripted days in advance and it takes time to arrange interviews with analysts and experts on new developments. By next week we should be seeing network interviews with experts on US nuclear deterrence. 

Atmospheric CO2 -- November, 2016

Natural Gas, Gasoline Demand -- December 22, 2016

Natural gas, prices leap -- from print edition, WSJ:
Natural-gas prices rose Wednesday (yesterday) more than in an session since last year, with traders betting that winter cold is eating into a longstanding glut. Data points:
  • up 27.9 cents in last session; 8.6%
  • up to $3.542 / Btu
  • largest gain by percentage since December 28, 2015
  • largest gain by dollar value since January, 2015
Natural gas drawdown -- from CNBC a few minutes ago (9:37 a.m.):
most recent report:
  • 209 bcf drawdown (dynamic link here)
  • about 4x y-o-y (same time last year)
  • about 2x 5-year average
  • prices: big move over last three months -- about a 20% increase over past 3 months
New England natural gas -- ISO Express (dynamic link here)

Gasoline demand (we've discussed the relationship between job reports and gasoline demand before):

Now That The Election Is Over -- Jobless Claims Jump to Six-Month High; Executive Order: My Daughters Won't Work On Wall Street -- Obama -- December 22, 2016

GDP, final revision, 3Q16: revised up to 3.5% gain.

GDP, latest update, 4Q16: latest update, December 16, 2016:
Latest forecast: 2.6 percent.
The GDPNow model forecast for real GDP growth in the fourth quarter of 2016 is 2.6 percent on December 16, up from 2.4 percent on December 14.
The forecast of fourth-quarter real personal consumption expenditures growth increased from 2.1 percent to 2.4 percent after yesterday's Consumer Price Index release from the U.S. Bureau of Labor Statistics.
Jobs -- From Bloomberg:
  • forecast: 257,000
  • actual: 275,000
  • four-week average: 263,750

Cao Dwang, Shanghai, to Ohio. $600-million investment; Chinese auto glass tycoon; cites high taxes and soaring labor costs at home; comes after Trump threatened to declare Beijing a currency manipulator and slap 45% punitive tariffs on Chinese imports to protect American jobs.   

Executive order: president says his daughters will not work on Wall Street. I can't make this stuff up.

Free market capitalism ...  in Mexico? Mexico will end price controls on gasoline.  Prices at the pump could increase as much as 20%. Move will be phased in, beginning in the northern border states.

Along that same line ... US refiners cash in on Mexico's record fuel imports.
The fuel trade could top a million barrels per day (bpd) at times in 2017 as Mexico becomes increasingly dependent on the United States for strategic energy supplies and providing business worth more than $15 billion a year to refiners such as Valero, Marathon Petroleum and Citgo Petroleum.

The rise in Mexico's fuel imports reflects an economy that, after expanding for 27 quarters in a row even amid a public austerity plan, has been unable to increase its refining output to satisfy the consistent growth of its energy demand.

It has led to rapid reversal in energy trade between the two countries. In 2016, crude exporter Mexico will be a net oil importer from the United States for the first time as shipments of refined fuel heading south outnumber shipments of crude to the north, according to the U.S. EIA.
The Apple Page

The big story over at Apple for quite some time -- the past several months -- has been the new wireless Apple earbuds. These were critical now that Apple was phasing out the 3.5 mm headphone jack. Apple missed on its delivery; many rumors why.

The ear buds are now shipping. Apple fans are ecstatic.

But this is what is very, very interesting. Normally on the #1 Apple message board there is a lot of negativity against Apple and Apple products for any number of reasons. Not so with the ear buds. They are getting incredible press. Here is the take by the WSJ:
We tested Apple’s long-awaited Q-tips—um, earbuds—versus other truly wireless headphones on five sets of ears. Geoffrey A. Fowler found one resounding winner.
The story:
I’m the first to admit that Apple’s new AirPod earphones resemble Q-tips dangling from my lobes. Or maybe robotic ear antennas.
But I think you’ll get over looking like a cyborg and want a pair anyway.
Before they finally started shipping this week, I had the chance to use a set of $160 AirPods for three months. They aren’t perfect, but they quickly became my favorite earbuds. I’ll go further: AirPods are Apple’s best new product in years.
Just in time for Christmas. And Hanukkah. 

Oil And Gas -- 2016 In Review -- Forbes -- December 22, 2016

If you have time to read only one story today, this might be it: "the oil and gas situation, 2016 year in review." It begins:
In the history of the oil and natural gas industry in the United States, 2016 will be remembered as one of the most eventful in terms of major market developments, asset transactions and developments in public policy. 
The writer's top observations:
  • the Permian Basin exploded
  • costs of drilling plunged
  • EURs soared
  • hundreds of companies filed for bankruptcy
  • fracking was exonerated
  • anti-development moved from upstream to midstream
  • LNG exports ramped up
  • oil exports almost doubled
  • the US became a net exporter of natural gas
  • OPEC "surrendered"
And then this -- PEOTUS nominees:
Along with him will come nominees like former Texas Gov. Rick Perry for Secretary of Energy, Montana Congressman Ryan Zinke for Secretary of the Interior, Oklahoma Attorney General Scott Pruitt as EPA Administrator, and ExxonMobil CEO Rex Tillerson for Secretary of State.  If that looks like a pretty pro-oil and gas lineup to you, trust me, you are not alone.
The writer mentions only a very few companies by name. One that he mentioned: Oasis, with regard to plunging drilling costs.

Peak Oil? Food For Thought -- Platts -- December 22, 2016

Some great statistics in this article. The theme: despite the current glut in oil, much of that due to the shale revolution, demand is likely to put stress on supply in the future. It appears, bottom line, IEA has simply moved the "peak oil" concern from 2020 to 2040. Some data points:
  • 1998: IEA forecast peak oil in 2020
  • how far was the IEA off? IEA projected demand at 111 bopd by 202; in fact, current demand is struggling to hit 99 bopd
  • today: IEA says CAPEX slumped in past two years due to price downturn; price downturn "pulled the rug out from under upstream spending and investment decisions": IEA sees a potential oil supply "gap" of 16 million bopd by 2025
  • the gap of 16 million bopd by 2025 threatens new spike in oil prices
  • global tight oil: 4.6 million bopd in 2015; will peak at 7.5 million bopd in 2035
  • IEA predicts decline by 23.7 million bopd over the next decade alone, the IEA forecasts, the equivalent of losing the entire output of Iraq every two years
So, we'll see.

  • the Bakken: 2 million bopd
  • the Eagle Ford: 2 million bopd (EIA: suggests about 1 million bopd)
  • the Permian: 4 million bopd (EIA: suggests about 2 million bopd)
  • subtotal: 8 million bopd in three plays
I can't even begin to count all the other tight plays in the US, but one could start with SCOOP and STACK. The IEA folks need to get out and about.

Active Rigs In North Dakota Steady At 42 -- December 22, 2016

First things first: "The Biggest Shot in NBA History." -- a great WSJ sports article. Spoiler alert: the biggest shot in NBA history? It wasn't Michael Jordan's, Ray Allen's or any of Robert Horry's. It was Kyrie Irving's clutch shot in Game 7 of the NBA Finals -- even if nobody realize.

US BAT and the EU VAT: the former is "illegal" under WTO; the VAT is just fine. Just yesterday, I made the observation that the US BAT is nothing different, in the eyes of some folks, than the German VAT. It's way different, of course, but ....

Kemper. Phoenix rising. Heidi Heitkamp in the news.

More appointments: Shaking things up. Carl Icahn, billionaire investor / activist; and, Peter Navarro, a critic of trade with China, join the president-elect's economic team. WSJ says Trump needs to add Larry Kudlow to the team. Agree. Navarro will head the new White House National Trade Council, a new entity. Icahn will be appointed "special advisor on regulations'; opened seven Icahn charter schools in New York. None of these positions will require Senate confirmation. Talking heads continue to raise "conflict of interest" issues. Heidi Heitkamp was director of ND gasification project; any doubt where her allegiances lie. Pelosi? Give me a break. "Joe" made excellent observation on Icahn to push back all this concern about "conflicts of interest."

And another appointment: Kellyann Conway will have title in White House, something like "Special Advisor."

Blind spot: President Reagan was the first president to appoint a Latino to his cabinet. President Trump is likely to be the first president in 28 years to not appoint a Latino to his cabinet. Other than an editorial in the WSJ has anyone said anything about this? 

Squawk Box: giddy with forecast. Two analysts suggest S&P 500 up to 2400; "Joe" says way too low with what Trump is suggesting. Analyst jokingly raise it to 2500, and "Joe" says that is still too low.

SUVs. The headline suggested bad news. Not. Here's the headline: US car makers idle plants among oversupply concerns. It's a good news story: they have an oversupply of sedans, compact cars, and minivans because .... drum roll ... Americans buying high-margin, gas-guzzling SUVs. Others suggest "not so fast": pick-up truck sales and SUVs sales have to slow down, also. Why?
“There is just not much demand for that small economical car,” said Scott James, president of Mike Shaw Automotive, which owns dealerships in Colorado, Texas and Louisiana. “It’s cheap gas.”
Prices at the pump have edged higher this year, hitting an average of $2.20 per gallon this week for regular unleaded, compared with $1.92 a year ago, according to the U.S. Energy Information Administration. But current prices still remain well below the $3-4 range seen between 2011 and 2014.
Mr. James said he has no shortage of pickup-truck and SUV buyers, but that his “gut” tells him that new-vehicle sales overall are headed for a slowdown next year. “It’s certainly plateauing,” he said. “It can’t keep going strong forever.”
Aleppo evacuation nears end. UN is getting ready to send monitors to Aleppo to observe the "evacuation-that-was." I'm sure this has not escaped Trump's attention.

Confused. North Carolina adjourns; fails to repeal transgender law.

President Obama's advice to PEOTUS: undated, a screen shot from about December 18, 2016, just before he used executive order to "permanently" ban drilling in the Arctic and issued new rules with intent to kill coal industry:
Back to the Bakken

Active rigs:

Active Rigs4265174191188

RBN Energy: how the rebounding LNG market will help US gas producers.
Are things really as bad as all that? No, they probably aren’t, especially if you take a longer-term view.
There are signs that the international LNG market’s mid-decade funk may be over, or that it’s at least in the process of ending. One indicator is that, as of this week, spot prices in eastern Asia­­—the epicenter of LNG demand—have risen to about $9/MMBtu, a gain of ~80% from the ~$5 spot prices of a few months ago. LNG demand is also up in 2016 compared to 2015—not necessarily at the two biggest LNG importing countries (#1 Japan and #2 South Korea), but declines there were more than offset by rising LNG demand from up-and-comers like #3 China and #4 India and from the six countries (Pakistan, Jamaica, Lithuania, Poland, Egypt and Jordan) that started importing LNG in 2015-16.
Nice 30-second soundbite: eastern Asia is the epicenter of LNG demand -- #1 Japan, #2 South Korea, #3 China, and #4 India.

But look at this: six countries started importing LNG in 2016: Poland, Pakistan, Egypt, Jordan, Lithuania, and Jamaica.

LNG and Poland: huge back story on so many levels.

LNG and Jordan, Egypt: huge back story on so many levels.