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Monday, January 23, 2017

Kashagan Update -- January 23, 2017

Don't even ask, but somehow today I got onto the subject of Kashagan again (I need to get a life, 😃).

I follow the Kashagan at this link.

I am re-posting the update here; it's pretty interesting:

Over the years, much has changed with regard to the Kashagan (see original post at the link; compare those notes with the Diplomat link, October 17, 2106. Data points:
  • consortium: Eni, Shell, XOM, Total, CNPC (China), Inpex, and Kazakhstan-state oil company
  • at the end of the 20th century, the Kashagan was the largest oil discovery in a generation
  • production had begun in late 2013 but immediately suspended due to faulty pipes
  • back on-line late 2016
  • now very cautious optimism
  • early production (late 2016 when brought back on-line): 90,000 bopd (compare with 1 million bopd from North Dakota, mostly the Bakken)
  • costs continue to be a headache
  • behind schedule; significantly over-budget
  • since contract signed in 2000, costs have surpassed $53 billion
  • below $100/bbl, the companies running the North Caspian Operating Consortium will incur losses -- does anyone think we will see $100 oil before 2020, if ever (in today's dollars)?
  • it is estimated that production costs at Kashagan exceed $50/bbl; in other words, probably selling oil at a loss right now
  • despite that, the government directed that Kashagan go back on-line
  • first phase: in a couple of years, at its peak, Kashagan projected to yield 370,000 bopd; pretty puny in the big scheme of things (at $60 oil, if the full $60 was profit [and, of course it isn't] it would take almost seven years of producing at its peak of 370,000 bopd to pay off the $53 billion; and there are obviously continuing production costs; interest payments; etc)
  • second phase: no timeline yet -- hope to get to 1 million bopd
  • government is anxious about the project getting through its first winter (2016 - 2017); workers unhappy with low pay; workers pay increased to keep them from striking 
************************** 
This Is Truly Bizarre

Eight years of Barack Obama have led us to this (Barack has been out of office for about four days):
https://news.grabien.com/story-dnc-chair-candidates-bash-white-people-racially-charged-foru
So, with that, three strikes against me:
  • white
  • old
  • male
I'm going to shut up and go to bed.

Not A Single Asset In Their Portfolio Outside The US That Competes With Their US Opportunities Right Now; But The Worst Is Not Yet Over For Revenues, Margins -- HAL -- Janauary 23, 2017

Earnings conference call: HAL -- over at SeekingAlpha.

In a discussion with another reader concerning when the majors would return to deepwater, highly complex, or longer duration projects, I noted from the conference call:
 
First, from the CEO:
Now, there has been a lot of debate as to what commodity price will reactivate the higher cost basins, such as the deepwater complex.
It is clearly higher than the price that we are seeing today. Also impacting the price will be OPEC compliance with its new production guidance.
Most people agree that the U.S. is now the world’s swing producer and it has demonstrated its ability to ramp up production quickly at a price that may make it difficult for deepwater projects to compete.
We believe that the race to get deepwater project costs down versus the impact on commodity prices on increasing U.S. shale production will have to play out over the course of 2017.
Therefore, we do not expect to see an inflection in the international markets until the latter part of 2017. In the meantime, our international customers remain focused on cash flow, and traditional contracting cycles will likely mute any dramatic rebound coming off the bottom. We expect revenue and margins to slowly grind down during 2017, as the market seeks to stabilize. [In other words, the worse is not yet over -- "we expect revenue and margins to slowly grind down during 2017..."]
Then, also from the conference call, in the Q&A portion:
I was talking to the CEO of one of our IOC customers Friday, obviously not going to say who it was. And he said that there was not a single asset in their portfolio outside the U.S. that competes with their U.S. opportunities right now. And to me that’s a pretty amazing statement to me in terms of really how much further commodity prices have to go up to bring some of these more either highly complicated or longer duration projects to the front of the queue get an FID decision made around them.
I opined:
What I get from that: no one is even thinking about decisions to go back to deepwater until late 2017, and reading between the lines, it sounds like even then (late 2017) there will be no one making decisions. So that puts us well into 2018, maybe later, where the majors say, "Hey, let's look at deepwater."

At best, 2018, they "pull the trigger" -- agree to go back to deepwater. It would be slowly; not a lot of activity. A year to gin up, that puts us into 2019. Depending on the approval process, etc., we are well into 2020 I think before we start seeing return to deepwater and it would not be a boom by any stretch.

We're at $50 oil; the comments above said "how much further commodity prices have to go to bring some of these .... highly complicated ... or longer duration projects to the front of the queue...."

"$50 oil is WTI/ Brent is about $53. "...how much further..." he didn't say but it certainly suggests well above high 60's and probably in to the $70s. It will be interesting to watch (from other sources) what folks think the price of oil needs to get to see projects off-shore. 
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The Biology Page

Now, for something a little different. From The Economist, January 21, 2017.

I'm not going to say any more beyond this about my interest in pandas: it began with The Panda's Thumb, Stephen Jay Gould, c. 1980. Gould was a prolific writer; my introduction to his writing was The Panda's Thumb. My paperback copy is well worn.

In this week's issue of The Economist, linked above: two strange mammals illuminate the process of natural selection.

Some background:
  • panda: the word possibly derived from the Nepali phrase nigalya ponya, "bamboo-eater"
  • two types of pandas: black panda and red panda
    • black panda: a true bear
    • red panda: not a bear at all; related to weasels, raccoons, skunks
    • habitats overlap in mountainous regions of China and its neighbors
    • their last common ancestor 42 million years ago
  • their relatedness: they are both Carnivores -- you know, meat-eating
    • but, neither the black panda nor the red panda eat meat; they are strict vegetarians
    • and even more than strict vegetarians; their diet is "only" bamboo
    • both red and black pandas have six digits on their forepaws
    • the ancillary thumb is derived from one of the wrist bones and helps pandas hold bamboo stalks while eating
  • Chinese researcher now "unites" their genetics
  • three areas studied
    • the sixth digit
    • appetite for non-meat
    • metabolism: ability to digest bamboo
  • the article reminds readers of the taste buds: sweetness, sourness, bitterness, saltiness, and umami-sensitive (umami? think McDonald's Big Mac or Omaha Steaks)
  • convergent evolution
So, let's go to The Ancestor's Tale: A Pilgrimage to the Dawn of Evolution, Richard Dawkins, c. 2004, to see if pandas are discussed.

Dawkins mentions "panda" only once in the book (according to the index): p. 192, in the chapter on Laurasiatheres: a group of miscellaneous "toothy' rodents which have only one thing in common:
they all hail, originally, from the old norther continent of Laurasia.

The group includes seven orders, including Carnivora (dogs, cats, hyenas, bears, weasles, seals, etc).

And the only thing that Dawkins says about the panda, in this case, the "gentle, giant panda: not carnivorous, eating almost nothing but bamboo." And that's it.

Off to wiki:
  • they both belong to the order Carnivora (as already noted)
  • suborder: both belong to Caniforma; caniforms appeared on the scene 42 million years ago; then split into twelve families; three families are extinct (they went extinct long before man was on the scene); caniform means "dog-like"
  • the "groups" that split into the black panda and the red panda occurred fairly early after caniforms appeared on the scene
  • black pandas and red pandas are very distantly related within the caniforms, making them distant cousins at best

New Operator In The Bakken: Bruin E&P Partners -- January 23, 2017

Active rigs:


1/23/201701/23/201601/23/201501/23/201401/23/2013
Active Rigs3847157189190

Wells coming off confidential list Tuesday:
  • 32678, SI/NC, WPX, Caribou 33-34HG, Reunion Bay, no production data,
  • 32751, drl, Enerplus, Denali 148-95-12D-01H-TF, Eagle Nest, no production data,
Two new permits:
  • Operator: Liberty Resources
  • Field: Ray (Williams)
  • Comments:
Eight permits renewed:
  • Marathon (3): a Juliet permit, a Torrison permit, and a Brush permit, all in Dunn County
  • Lime Rock Resources (2): two Schneider permits in Dunn County
  • Whiting (2): two Roggenbuck permits, Mountrail County
  • BR: one Merton permit, McKenzie County
Two producing wells (DUCs) reported as completed:
  • 31589, 593, Statoil, Ruth 28-33 6TFH, East Fork, t12/16; cum --
  • 32392, 598, Statoil, Jack 21-16 5TFH-R, East Fork, t12/16; cum --
Operator transfer: 60 wells from Lime Rock Resources, to Bruin E&P Operating
  • file number, oldest: 16178
  • file number, most recent:
  • all in Dunn County
  • in/near T141N-R96W; T142N-R97W, T142N-R95W,
Bruin E&P Partners
  • this is the first time I've heard of them in the Williston Basin
  • over at the NDIC home page, well search, they are listed, but it appears to be the 60 new wells they just acquired from Lime Rock Resources
  • webpage
  • private equity commitment  ArcLight Capital
  • primarily interested in assets valued at $50 - $250 million 
  • office address: 602 Sawyer Street, Suite 710, Houston, TX
  • operating locations onshore across the US: 
    • Piceance Basin of Colorado
    • Gulf Coast Texas
    • Permian Basin Texas, New Mexico
    • Arkoma Basin, Arkansas
    • Williston Basin, ND and MT
  • most recently, managed Ursa Resources Group (has been at Bakken operators site for some time)
  • video: time lapse (1:46) of drilling, fracking a well in Eagle Ford

The More Things (Seem To) Change, The More They Stay The Same -- January 23, 2017

I assume I've seen this presentation before, but I honestly don't recall. A reader sent me the link this morning, and I went through it fairly quickly.

This is the annual energy forecast put out by BP every year; this one was published 2016, and takes the forecast through 2016.

It is important when growing through the comments and the graphics to pay special attention to the "gotchas":
  • rate of growth (positive or negative)
  • share of each component of energy
  • absolute amount of energy provided by each component
The presentation seems to lean heavily on "rate of growth" and "changes in patterns of growth." This is very, very different from absolute amounts being used.

When it comes to energy, this appears to be the bottom line: between now (2014) and then (2035) the size of the (energy) pie will have grown substantially. The relative sizes of the various slices (oil, natural gas, coal, nuclear, renewable, hydro) will change, but even there, the relative sizes won't change much. Case in point: between 2014 and 2035, the slice of coal will go from 30% of the full (energy) pie to 25%. Someone one a diet would hardly notice; but for the dieter, it's actually "worse" in 2035 than 2014 because the size of the pie (and the size of the slice) will be bigger. 

Some graphics that jumped out at me:

War on coal: after all this talk about the "war on coal" the relative size of the "coal slice" will go from 30% to 25% -- hardly noticeable in the real world, and that is over the course of 20 years. We'll see how big the entire (energy) pie is in 2035 compared to 2014 later. First the graph:



Also, note that almost nothing else changes:
  • oil goes from 32% to 29% over 20 years; hardly perceptible in the size of the slice
  • natural gas increases slightly but the change in the size of the slice will hardly be seen
  • nuclear: anyone that can predict 4% vs 5% over 20 years has a pretty good crystal ball
  • hydro: to maintain that size slice, it will have to grow
  • renewables: triples, but remains inconsequential; the bigger problem is the strain renewables will place on the grid; renewable energy will need to be backed up by natural gas or coal
Growth in energy relative to growth in population: again, referring to the graph above. If I read the graph correctly,
  • total energy ("primary energy"): will grow 34% between 2014 and 2035
  • however, the global population will "only" increase by 21" 
And, of course, that makes sense. The population growth will be greater in those countries / continents (China, Africa) where energy use per capita will increase, greatly off-setting energy savings in more developed countries / regions (US, EU).

The Size of the (Energy) Pie

This is a good example of watching out for the "gotcha's." The right side of the graphic suggests that China's energy consumption will decrease. No. This is rate of growth, consistent with a maturing country. I would pretty much ignore the right side of the graphic.


The left side of the graphic shows how significantly the size of the (energy) pie grows. In 2014, we're sitting at about 13 billion toe; by 2035, it increases to about 17 billion toe. Back-of-the-envelope:
  • coal, at 30% of 13 billioin toe = 3.9
  • coal, at 25% of 17 billion toe = 4.25
So, although the coal slice of the (energy) pie gets smaller as a percent, it increases in size in absolute terms.

Something else caught my eye: India is "subsumed" (I assume) in the "yellow" (racist, unintentional) "Other Asia." The BP folks are a whole lot smarter than I am, but to not separate out India on this graph seems a bit interesting.

Global vehicle fleet:

The graph speaks for itself:


The Fallacy of Crystal Balls: this is the graph that interested me most. No comment (for now).



***************** 
A Note to the Granddaughters

We have three granddaughters, ages 13, 10, and 2 1/2.

We have been primarily responsible for getting them to their school and non-school events, including:
  • competitive swimming
  • gymnastics
  • water polo
  • field soccer (outdoor)
  • futsal (indoor soccer — “arena football”)
  • band practices
  • track events
The first couple of years were in Charleston, South Carolina. The next four years were in the Boston, MA, area. The last three years (now going on our fourth year) were in the DFW (Dallas-Ft Worth-Grapevine) area.

The number of miles we have put on four or five different automobiles across the southeast, the northeast, and now the south, is not something I would want to know, but having said that, I wish I had kept a 3 x 5 index card on each event. It would have been a stack of memorabilia surpassed in size and importance only by the world-record ball of twine located somewhere in the midwest.

For anyone else, I would have complained about all the driving and all the things I have missed (mostly NFL football games and NASCAR) but for the granddaughters, I have never complained.

One of the benefits of all this driving: I have really, really learned the “geography” of the locations we have lived. I don’t have a smart phone and I don’t have GPS in the car, so I study the map very, very well before I leave. About three years ago when we first arrived in this area, I was taking Olivia to soccer training. I was running late, it was dark, I was getting lost. As we neared the field, I asked Olivia if this was the right location, if it looked familiar to her. She said she did not know. She said it was my job to get her where she needed to be; it was her job to play soccer. She was seven years old at the time; not much has changed.

I say all that to say this: it is absolutely amazing all the sports venues available in the DFW area.

After sixty years of being involved in sports in one way or the other, around the world (Turkey, Germany, England, north Africa) I can say I have seen a lot of sports venues, and without question none compare to what I have seen in the DFW area.

The number of facilities seem to never end, and in general they are huge. This morning it’s a futsal game in north Carrollton on I-35E. This afternoon it will be Olympic Program Development training in south Carrollton on I-35E.

Meanwhile, the oldest granddaughter will be at water polo practice in a huge natatorium in Southlake.

And the youngest, little Sophia will be at soccer practice in yet another large sports complex, also in Southlake.  

*************************
Final Score

2 -1, we were behind, with 37 seconds to play.

Olivia on the assist, teammate scores, and the game ends tied, 2 - 2. An incredible game. In this league, a tie is almost as good as a win, especially when coming from behind with only 30-some seconds left on the clock.

********************************
Futsal

Now a little grandfatherly bragging.

As noted above, futsal is to field soccer as arena football is to American (outdoor) football. Unlike field soccer where it is 8 v 8 (plus the goalies), futsal is 4 v 4 (plus the goalies). In a sense it seems a bit faster-paced (smaller field of play; no throw-ins (“kick-ins” instead). [In some futsal arenas where the walls define the playing area, there is no out-of-bounds, and therefore no throw-ins/kick-ins, and much faster paced.

Olivia appears to have about eight team members, five on the court, three on the bench. Olivia has played most of the game, just now coming out. From my vantage point, she seems to be as good as any, perhaps better than most. She is “playing up” (she is the only one her team one year younger than the “official” age for this group). She was specifically “recruited” to play with this older team.

With eight minutes left in regulation time (50-minute games), the game is tied 1 - 1 (see final score above). This is FC Dallas, (football club Dallas) and some of these girls will move up through the farm system to play for a professional team (such as FC Dallas), some of whom will play college soccer and some of whom we will see on US Olympic team in eight years.

Immigration -- January 23, 2017

Updates

March 24, 2019: out of control at the southern border. Detention centers overflowing. ICE releasing detainees; simply not enough room. Busloads of illegal aliens being dropped off at bus stops in El Paso and in Phoenix.

September 11, 2017: a US Supreme Court justice re-instated Trump's travel ban; says lower court wrong; US Supreme Court will hear arguments beginning October 10, 2017.

Original Post
 
Bill Clinton and Barack Obama come out in support of Donald Trump's immigration policies. [March 24, 2019: it's interesting that this video has been taken down at YouTube. Clinton, Obama, and Trump were all on the same page when it came to the southern border .. until Trump became president.]



From C-Span.

Let's see if this one is pulled:

Rigs Steady At 38 -- January 23, 2017

Lost a huge bet: I was sure Rex Tillerson would go down to defeat, or at best, 51 - 50 with VP Pence casting the deciding vote. But now I hear Marco Rubio has decided to vote to confirm Tillerson; Lindsey Graham and John McCain had indicated earlier they, too, would vote to confirm.

Abu Dhabi feeling the heat: will merge two state funds into one; one $125 billion investment fund. 

Kroger Supermarket: one of our favorite supermarkets here in Texas -- unfortunately there is no Kroger's near where we live. This is incredibly good news. From Reuters: Kroger will add 10,000 permanent posts. Hopefully this means they may add some stores.

Executive orders:
  • shut the door on negotiating Trans-Pacific Partnership
  • re-negotiate NAFTA   
  • hiring freeze except for military
  • "Mexico City" order -- to defund International Planned Parenthood
Snowpack in California: link here. Great news for the Kennedys if they want to go skiing. Percent of normal for this date:
  • north: 143%
  • central: 168%
  • south: 197%
  • statewide: 168%
*************************************
Back To The Bakken

Active rigs:


1/23/201701/23/201601/23/201501/23/201401/23/2013
Active Rigs3847157189190

RBN Energy: RBN's steam cracker feedstock model and its uses.