Tuesday, May 2, 2017

Minor Notes, Cleaning Out My In-Box -- May 2, 2017

A reader sent me this link; the Bakken was mentioned: Crestwood Announces First Quarter 2017 Financial and Operating Results; New Bakken Expansion Projects to Support Record Arrow Volumes; Delaware Permian Nautilus Gathering System On-Track for Early In-Service Date.

When I got the note, I responded to the reader:
That's pretty cool. I actually have a tag at the blog for the Arrow Pipeline system. I've tagged it in about five posts, could have missed some posts; earliest as back in 2011:

That was back in 2011.

And this was back in 1974, for me:

The Most Beautiful Girl In The World, Charlie Rich

April, 2017, US EV Sales

Before you look at the April, 2017, EV sales numbers, take a look at this note regarding EVs. This is nothing new; one of the blog's regular readers has been sending me this "data' for years, but this story, sent to me by another reader, says it in language most should be able to understand.

Okay, now that you've read that, time to move on. Here are the April, 2017, US EV sales. I get a kick out of the data for Chevrolet Spark EV: 1. One. One more than zero. One less than two. One. They could have printed names and addresses of all those who have bought Chevy Sparks this year. LOL.

Tesla Model 3 can't come soon enough. Sales of Tesla Model S and Model X dropping fastly (as Trump might say). Tesla, March, 2017, all models (2): 6,200; April, 2017, all models (2): 1,840: a 70% decrease.

The Immigrant Song, Kare O With Trent Reznor and Atticu Ross

So, where were we? Oh, that's right. US EV sales.

Chevrolet Volt sales fell. Nissan Leaf sales fell (their 15-minutes of fame falling fast). Toyota Prius Prime sales grew (a bit); Chevrolet Bolt EV sales rose to 1,292. But, in general, going down the list, sales dropped for every make/model.

So, bottom line: Spark, no. Bolt, yes.


Spurs: 99.

Rockets: 126.

First game in this series. Wow. Last night. Mercifully, the Spurs have tonight off. Is anyone going to San Antone? 

Is Anybody Going To San Antone, Charlie Pride

Should The NDIC Go To "Weekly" Activity Reports? -- May 2, 2017

Ouch: I believe WTI has dropped below $48.

Down, hopefully not out: NDIC GIS map server still down -- what is this, three days?

Active rigs:

Active Rigs492986186190

No new permits.

One permit renewed:
  • Whiting: a Kostelecky permit, Stark County.
And that was it. Is it time for the NDIC to go to a weekly report? 

John Kemp's Weekly Analysis Of Crude Oil -- May 2, 2017

In the discussions about "re-balancing" and "supply/demand" we have a gazillion experts voicing their opinions. It's my opinion that folks are not paying attention to the time frames involved. For example, yesterday on CNBC, the Chevron CEO said US shale cannot meet the world's growing demand for crude oil. From the interview:
Global oil demand is growing by more than a million barrels per day each year.
American producers are meeting much of that consumption growth after a revolution in drilling technology that has allowed them to unlock oil and gas from shale rock formations.
That was the takeaway: shale won't be able to keep up.

But I wonder if most folks missed the time frame (maybe traders didn't; oil is back below $49 again today after rising above $49 earlier):
"Shale can help. Certainly between now and the end of the decade it will be a big contributor to meeting that million-barrels-of-oil-demand growth that's out there."
Between now and the end of the decade shale will be a big contributor to the meeting the million-bbls-oil-demand but eventually shale oil will decline.
Maybe. But I've heard the same "peak oil" mantra since 1973.

Be that as it may, John Kemp posted his analysis of the current shale debate at Reuters earlier today.

Four of his data points:
  • total U.S. crude production has increased from a recent low of 8.567 million bpd in September to 9.031 million bpd in February
  • production continued rising in March and April, and now stands at over 9.2 million bpd, according to weekly estimates published by the agency  
  • weekly estimates are considered less reliable than the monthly numbers, but the two series have tended to follow one another closely, so there is no reason to doubt the continued growth in output 
  • U.S. crude production is increasing at an annual rate of more than 1 million bpd, comparable to the boom of 2012-2014
This is what jumped out at me:
  • the Chevron CEO says global demand is rising at the rate of one million bopd per year
  • John Kemp's data suggests that US production alone is rising at the rate of one million bopd per year
But there's even more: most of the this increased US production has come from non-shale producers in the Gulf of Mexico and Alaska, but Kemp notes: the massive increase in the number of rigs drillign onshore should ensure shale output rises substantially in the remainder of 2017.

Kemp has many, many more data points at the linked article above.

Idle chatter.

Why I Love To Blog -- Reason #78 -- May 2, 2017

The other day I suggested that "we" need at least another 60 weeks of OPEC production cuts to "rebalance" supply / demand.

So, back to the note. The other day I suggested that "we"  need at least another 60 weeks of OPEC production cuts to "rebalance" supply / demand. Today, there are analysts suggesting that OPEC needs to extend cuts through the end of next year (2018).

From an earlier post today:
OPEC cut: another six months won't be enough -- Bloomberg data points:
  • OPEC cuts may need to be extended through end of next year (2018) -- well beyond end of this year, as currently being discussed
  • talk of sub-$40 oil if US stockpiles increase
  • Harold Hamm: US oil output is poised to expand this year by at least 400,000 bopd, most of it from the Permian Basin, to a level of about 9.4 million bopd
Note. 60 weeks: that's the minimum needed, but I don't believe that will be enough for two reasons, neither of them have to do with US shale production:
  • major conventional projects that were begun in 2009, 2012, and 2014 are coming on line now
  • the 60 weeks assumes a 3-million bbl drawdown every week from now
For me, that's the metric I will be following: the weekly US crude oil inventory drawdown, +/- 3 million bbls.

By the way, now that Saudi Arabia owns the "crown jewel" of the US refining system -- the Port Arthur refinery in Texas, with current capacity of 600,000 bopd throughput -- expect Saudi imports into the US to increase. In fact, they already have. In the most recent data available, the US has imported 32% more oil from Saudi Arabia than the same period one year earlier. This was well into the OPEC agreement to cut production.


Map At NDIC Website Still Unavailable -- May 2, 2017

Active rigs:

Active Rigs492986186190

RBN Energy: Bakken déjà vu all over again -- looming takeaway constraints out of the Permian. Archived.
Put simply, the Permian, which covers parts of West Texas and southeastern New Mexico, has been the engine that has propelled U.S. crude oil production upward. 
Total production from all of the other major shale/tight oil basins—Eagle Ford, SCOOP/STACK, Niobrara, Bakken and Offshore Gulf of Mexico—is down from about 5 MMb/d in 2015 to about 4.3 MMb/d today. The number has been flat for the past six months. 
Crude oil production in the Permian has increased from 1.2 MMb/d in 2012 to 2.2 MMb/d today, with more than 200 Mb/d of that increase happening over the past six months.
And it’s not just crude oil. Natural gas production in the Permian is up 35% over the past three years, with most of that production classified as associated gas that comes along with crude oil. It’s a similar story for natural gas liquids (NGLs), with the Permian now churning out about 750 Mb/d of NGLs from gas processing, or more than 20% of the nation’s total.
But there are potential problems looming on the Permian horizon. There is simply not enough midstream infrastructure to accommodate this astronomical growth.
Even though almost 100 years of oil and gas production have supported the development of thousands of miles of crude, gas and NGL pipelines that crisscross the region, midstream developers are having a hard time keeping up with today’s incredible rate of production increases.
Scott Adams: the North Korean weapons test pattern

The Market And Energy Page, T+102 -- May 2, 2017

Disclaimer: this is not an investment site. 

Market opening: the rally continues. Dow 30 up 30. Nasdaq at a new all-time record. AAPL at new all-time high. 

GM, Ford: sales come in significantly less than forecast.

Infosys: huge story. Indian company known for outsourcing lower cost engineers to US, now plans to open a 2,000-employee tech center in central Indiana, with another 8,000 jobs for American IT workers in other locations across the country in coming years. This is all part of Trump's making America great again; has to do with H-1B visas.

Fed: set to leave interest rates unchanged; may hint at June hike.

Dow futures: mostly negative overnight; now down about 16 points for the Dow 30
WTI: recovering a bit, up about 0.75%; back over -- just barely -  $49

COP misses by 3 cents; shares down about 1.5% in pre-market trading.

Peak Oil? What peak oil? BP says 1 billion additional bbls "possible" in Gulf of Mexico hubs - Reuters via Rigzone. Data points:
  • new seismic imaging technology makes forecast possible
  • "full waveform inversion" imaging technology applied to data from Atlantis, Mad Dog, Thunder Horse, and Na Kika fields
Peak demand? What peak demand? "Enormous" demand for oil forecasted in 2019 - 2020 -- KPC CEO -- Rigzone. Data points:
  • talking their book: Kuwaiti Petroleum Corporation
  • same argument: the demand will arise as a result of the lack of investment in the upstream industry during the downturn
  • "probably" $70 - $80 oil
  • comments
    • he has a different definition of demand that I so
    • it sounds like he's talking about a supply problem in 2019 - 2020, not a demand problem
    • $70 - $80/bbl hardly represents an "enormous demand"
Rebalancing? oil price optimism wears off as Texas wildcatter drill on -- Bloomberg data points:
  • investors increasingly skeptical that oil price rebound is on the horizon
  • producers in Texas are leading the longest shale revival since 2011
  • making OPEC-led efforts to rebalance the market increasingly difficult
  • WTI slid 5.4% during the report week, falling below two technical barriers -- the 50-day and 100-day moving averages; the drop below $50 was another barrier broken
OPEC cut: another six months won't be enough -- Bloomberg data points:
  • OPEC cuts may need to be extended through end of next year (2018) -- well beyond end of this year, as currently being discussed
  • talk of sub-$40 oil if US stockpiles increase
  • Harold Hamm: US oil output is poised to expand this year by at least 400,000 bopd, most of it from the Permian Basin, to a level of about 9.4 million bopd
Other headlines from Rigzone 
  • Libya oil rebounds as major fields restart; back to more than 700,000 bopd; Libya is exempt from any OPEC cuts
  • Total will invest $500 million to produce shale gas in Argentina -- note: shale gas, not shale oil 
  • Saudi Aramco cut it oil price for Asia due to losing market share; cut 40 cents/bbl to an 85% discount to the regional benchmark; Saudi Arabia ceded market share to Iran and Iraq by making deeper cuts in output than it promised 
Market, miscellaneous:
  • Shire up more than 2.5%; EPS $3.62 vs $3.32 forecast 
  • Aetna reports 1Q loss on failed Humana bid; beat earnings estimate; after scaling back its participation in Obamacare, ups 2017 forecast
  • Encana beats forecast for both earnings and revenue
  • Noble's 1Q17 loss narrower than expected; beats on revenue
  • BP earnings buoyed by rising crude prices 
  • Mastercard beats EPS forecast; could trade at all-time high today

The Political Page, T+102 -- May 2, 2017

Emoluments clause. This was a big story in February, 2017. And then the story died.

Obamacare. Dying on the vine. Molina, key California provider for ObamaCare ousts CEO. Not gonna make it.

But I don't want to talk about it.

I Don't Wanna Talk About It, Rod Stewart