Tuesday, November 21, 2017

The Energy And Market Page, T+304 -- November 21, 2017 -- Moving From "Swing Producer" To "Most Responsive Producer"

Challenge of the day: getting past the Financial Times paywall for this story -- Conoco sets $50-a-barrel oil price ceiling for new projects. A reader sent me the link, but I posted the link/article mostly because I was surprised that the FT did not mention the Bakken in this article. From the article:
ConocoPhillips, the largest US exploration and production company, has ruled out investing in projects that need an oil price of $50 or higher to make a profit, as it attempts to raise shareholder returns after years of poor profitability.

It is also committing most of its investment for growth to shale oil resources in North America, arguing that operations there are most able to respond to volatile markets.

Companies in the US shale oil and gas industry have generally made poor returns on capital and been unable to cover their costs of drilling and completing new wells from their cash flows.
Note that in bold: Platts mentioned that the other day -- the first time I recall seeing the industry note that -- that Platts story is posted elsewhere. Also, it is subtle but perhaps we are moving "from swing producer" to "most responsive producer."


Biggest story of the day getting no love: Prince Salman to be crowned king this week.

  • more "red" states experience a drop in labor force participation -- WSJ blog
  • unemployment to reach record lows stretch back to 1969 -- CNN
  • unemployment hit record lows in 13 states this year -- the hill
  • growing natural gas glut threatens west Texas oil boom -- WSJ  
  • Germany's green energy meltdown; voters were promised a virtuous revolution but get coal and high prices instead -- WSJ 
Market: futures surging. Dow 30 futures up over 100 points. Whoo-hoo!

  • supply of precious metals won't limit (EV) battery expansion -- MIT
Graphic of the day: I will probably post this graphic more than once. This raises so many questions regarding TransCanada's decision to persist, but perhaps more on that later. A huge "thank you" to a reader for sending me this graphic:

Back to the Bakken

A reader writes me today: he has received "division orders" for his residence in Williston, from Oasis.

Only one well coming off confidential list today:

  • 33179, conf, Hess, BL-A Iverson-155-96-1312H-6, Beaver Lodge, no production data, 
Active rigs:

Active Rigs563865191184

RBN Energy: the topsy-turvy world of Mexican natural gas supply.
Mexico’s natural gas supply situation is in a state of flux, to say the least. Gas production within Mexico continues to decline, but there’s hope it can rebound in the country’s Burgos Shale region. Gas demand is rising fast, and new gas pipelines are being built to deliver Permian and other U.S. gas to new Mexican power plants. At the same time, though, delays in completing some of these new pipes have forced Mexico’s electricity authority to turn to LNG imports to keep gas supply and demand in balance. And yet, plans are afoot to export LNG to Asia from Mexico’s west coast by the early 2020s — gas that, by the way, would initially originate in Texas. Today, we explore recent developments in the Mexican gas arena.
Exports of natural gas from the U.S. to Mexico have increased sharply over the past few years, driven by a combination of rising Mexican demand for gas (mostly to fuel a fast-growing fleet of new gas-fired combined-cycle power plants) and declining Mexican gas production. In 2016, exports of U.S. natural gas to Mexico via pipeline averaged 3.8 billion cubic feet/day (Bcf/d), more than four times higher than they were in 2010, and in the first eight months of 2017 pipeline-gas deliveries from the U.S. to Mexico averaged 4.2 Bcf/d, according to the Energy Information Administration (EIA). As we said in Part 4 of our “It Was Good Living With You (W)aha” blog series on the Waha gas hub in West Texas, the pace of pipeline-export growth to Mexico in late 2017 and in 2018 will be tied in large part to how quickly new gas pipeline capacity can be completed within Mexico, but a number of pipeline projects south of the border have experienced delays.

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