Sunday, May 28, 2017

OPEC Still Doesn't Understand Free Market Capitalism -- May 28, 2017

From Reuters, note the last paragraph:
"If we get to a point where we feel frustrated by a deliberate action of shale producers to just sabotage the market, OPEC will sit down again and look at what process it is we need to do," said Nigerian Oil Minister Emmanuel Kachikwu. 
By the way, for those who have forgotten (I had), Mark Papa is CEO of Permian oil producer Centennial Resource Development Inc:
Some OPEC members seem keen to show they have shed any prior naivete about shale, making it a key topic during Thursday's meeting after barely mentioning it before. Shale's limitations, including rising service costs, also were discussed.

"We had a discussion on (shale) and how much that has an impact," said Ecuador Oil Minister Carlos PĂ©rez. "But we have no control over what the U.S. does and it's up to them to decide to continue or not."

Mark Papa, chief executive of Permian oil producer Centennial Resource Development Inc, was asked by OPEC delegates to give a presentation on shale's potential last week. He appeared to have played his cards close to his chest.

"In terms of the threat, we still don't know how much (U.S. shale) will be producing in the near future," Nelson Martinez, Venezuela's oil minister said after the talk.
US Shale Killing OPEC

From an Investor's Business Daily op-ed:
Despite cuts in oil output and threats of even more, the OPEC cartel can only watch in disappointment as prices for crude defy their efforts to raise them. Credit fracking for the cartel's loss of power over the world market.

These are desperate times for OPEC. On Thursday, oil prices plunged nearly 5% when it became apparent OPEC wouldn't cut output further, which would have put a serious dent in members' finances. Instead, the cartel will extend current cuts for nine more months.

In essence, they're declaring victory and going home.

Just three and a half years ago, the price for a barrel of West Texas Intermediate crude peaked at $110.62 a barrel. At the time, President Obama was pushing Americans to conserve and warning, "we can't drill our way out of the problem."

Turns out, we could. Today, oil prices are struggling to rise above $50 a barrel, thanks in large part to vast new supplies of crude on the market from American frackers. They've used technology to dramatically slash costs, so OPEC can no longer control the global market price.
Will They Or Won't They -- Only Putin Knows For Sure

From The New York Times:
Global oil prices were in a deep slump. And because oil profits lubricate the Russian economy, the Kremlin was casting about for a solution. So Russia’s leaders set politics aside and cut a deal with Saudi Arabia: Russia agreed to join the Organization of the Petroleum Exporting Countries on a production cut, with the intent of lifting global oil prices.

On the face of things, the agreement worked: Prices picked up, and along with them the cost of gasoline and consumer goods in developed countries.

There was just one catch: Russia, in fact, did nothing.

“There was a beautiful public relations effect,” said Aleksey I. Turbin, at the time a senior official at the Ministry of Energy who helped negotiate the deal with the Saudis.

That was 16 years ago, but once again, an oil-dependent Kremlin is, if not exactly desperate, at least eager to prop up prices, and again questions abound on whether it is serious about cutting output or just assembling another public relations effort.
Closing The Poll

I guess I forgot about this poll. Whatever. The poll: good, bad, or indifferent, your thoughts on "special counsel" to investigate the "Russian thing":
  • good: 30%
  • bad: 34%
  • indifferent: 36%
Interesting: most "evenly divided" poll I've seen in a long time.

Random Update Of Global Warming -- May 28, 2107


June 1, 2017: Trump announces the US will run, not walk, away from the Paris climate accords.

May 31, 2017: TV crawler -- Trump will walk away from the Paris climate accords.

Original Post

Hillary: we'll support the coal miners. How? Talk.
Trump: we'll support the coal miners. How? Walk.

Rumors are that Trump will walk away from Paris / Kyoto.

Tea Leaves On Global Warming
80% -- Won't Stay Engaged With Paris
20% -- Will Stay Engaged With Paris

In my mind, I still think there's a 80-20 chance that Trump will stay engaged with Paris / Kyoto on global warming, but these are the tea leaves suggesting he has made up his mind:
  • it's now being leaked he has made up his mind; Trump will walk
  • Merkel comes out with an incredibly "defiant" speech suggesting she knew Trump's leanings at the G-7 conference
  • no love lost between Macron and Trump
  • I can't imagine Trump wanting to be part of the Merkel-Macron camp on anything
  • why would be announce his support of AGW back in Washington when he could have announced it in Europe and gotten a few moments of adoration?
  • he himself says he "hit a home run" on his first overseas trip; I doubt he wanted to spoil it by taking a highly controversial position at the very end; I doubt he wanted the AGW announcement to be the only thing the mainstream media would talk about when he returned
  • drives home the point that he wants other countries to pay their fair share in NATO (not directly connected, but "it's all political" and it's all part of "making America great again")
  • his first visit was to Saudi Arabia where many, many business deals were signed; not exactly AGW-oriented 
  • more than ever he needs to start keeping his campaign promises
  • he needs to separate himself from Hillary -- if he is seen as supporting Paris/Kyoto, he's going to be seen as not that much different than Hillary on this issue
A couple of data points that still give me pause:
  • Ivanka has taken the opposite view based on other reports
  • ex-CEO of ExxonMobil, Tillerson has taken the opposite view based on other reports, and Tillerson may be Trump's "strongest" member of his cabinet 
As far as I can tell, Trump came back from Europe with exactly "no" wins. From Saudi Arabia and Israel, he came back with a wheelbarrow full of wins.

By the way, looking back the at the stories, the photos, the results, something tells me Trump enjoyed the first part of the trip a whole lot more than the second part of trip.

Worse, it wasn't even alphabetical.

Global Warming Update

Data points from US National Weather Service:
  • never since the U.S. Drought Monitor was established in 1999 has there been so little drought across the contiguous U.S. 
  • only 4.52% is in some degree of drought (D1-D4, where D1 is moderate drought and D4 is exceptional drought). 
  • 85.73% isn't even abnormally dry (D0). 
  • contrast that with the most widespread drought since 1999 in late September 2012 when 65.45% was at least D1. Only 23.41% wasn't considered at least abnormally dry.
US drought monitor.

Memo to self: e-mail link to Algore.

New Millenial Narrative For Losing: "I Nearly Won."

Wells Coming Off Confidential List This Next Week -- May 28, 2017

Saturday, May 27, 2017
  • None.
Sunday, May 28, 2017
  • 33107, SI/NC, Kraken Operating, Coveleski 26-35 4H, Lone Tree Lake, no production data,
Monday, May 29, 2017
  • 32100, SI/NC, Abraxas Petroleum, Stenehjem 9H, North Fork, no production data,
  • 33012, 824, Oasis, Teal 5692 13-22H, Alger, 23 stages, 8.5 million lbs t12/16; cum 55K 3/17;
  • 33106, SI/NC, Kraken Operating, Coveleski 26-35 3H, Lone Tree Lake, no production data,
Tuesday, May 30, 2017
  • None.
Wednesday, May 31, 2017
  • None.
Thursday, June 1, 2017
  • 32099, SI/NC, Abraxas Petroleum, Stenehjem 9H, North Fork, no production data,
  • 33105, SI/NC, Kraken Operating, Coveleski 26-35 3H, Lone Tree Lake, no production data,
Friday, June 2, 2017
  • 28434, 1,308, EOG, Fertile 102-0333H, Parshall, 46 stages, 11.91 million lbs, t12/16; cum 92K 4/17;
28434, see above, EOG, Fertile 102-0333H, Parshall:

DateOil RunsMCF Sold

 33012, see above, Oasis, Teal 5692 13-22H, Alger:

DateOil RunsMCF Sold

USGS Topographic Maps For Free -- Via National Geographic -- May 28, 2017

Don alerted me to a very, very interesting feature National Geographic now provides for free: printable USGS pdf topo in the contiguous United States.

This is the link:

From the link:
National Geographic has built an easy to use web interface that allows anyone to quickly find any 7.5 minute topo in the contiguous U.S.A. for downloading and printing. Each topo has been pre-processed to print on a standard home, letter size printer. These are the same topos that were printed by USGS for decades on giant bus-sized presses but are now available in multi-page PDFs that can be printed just about anywhere. They are pre-packaged using the standard 7.5 minute, 1:24,000 base but with some twists:
Page 1 is an overview map showing the topo in context 
Pages 2 through 5 are the standard USGS topo cut in quarters to fit on standard printers 
Hillshading has been added to each page of the PDF to help visualize the topography
It's incredibly easy to use. Once you get to the site, click on the map of the United States and keep zooming in on the area you are interested in. You have to zoom in several times to get to the "red" pointers. Click on the "red pointer" and begin exploring. 

And, yes, the link has been added to my "Data Links" page. 

EOG May Be The Apple Of Unconventional Production -- Part 1 -- Filloon -- May 28, 2017

Part 2 at this post

  • IBD has stated EOG may be the Apple of oil and we test this theory in what may be the its best acreage
  • Delaware Basin core well results have outpaced the rest of the country, and EOG's most recent results point to much better results for competitors in the future
  • We took a sample of 135 horizontal locations in the same general area where EOG has produced huge initial production to provide an idea of average economics
  • Results continue to outpace the rest of the country and point to lower breakeven prices going forward
Is EOG Resources the Apple of oil? IBD seems to think so and with good reason. Oil recovery has become a science with the advancement of shale. This is the reason for the large discrepancy in initial production rates by operator. Conventional vertical production did require proficiency. This proficiency may have been more about geology than technology. US operators continue to pester OPEC with better economics.
Although decreased costs are touted, improved recoveries will drive the industry.

EOG is even using Apple technology, including the iSteer smartphone app. It is using precision targeting as well. EOG has real time data streaming from every asset. It applies proprietary algorithms with in-house software. It also uses over 65 in-house desktop and mobile software applications. EOG also applies data science to optimize completion design to specific geology. These are just a few of the ways that EOG continues to outperform. More importantly, we would expect other operators to match this performance in the future.

The Delaware Basin may be better than Midland. We have continued to be bullish this play as production per foot has consistently outperformed. This has been seen with a lower inventory of wells turned to sales. The bullish narrative gets better when we look at EOG results. Focusing on northern Loving County, Texas and southern Lea County, New Mexico provides a visual to why there is so much activity in the area. From March of 2016, 135 horizontal locations have been completed. 74 of those wells are owned by EOG.
Much, much more at the link.