Why I Love To Blog -- Reason #4 -- June 8, 2017

The first thing I did when I saw the headline via Twitter was to check the date of the article. It was posted eight hours ago, so it's a brand new article. The Financial Times headline: Russia/Rosneft ready to step up crude output if Opec deal falters.

Wow, I've mentioned that several times in the past week: already the deal to extend production cuts seems to be faltering. From the article:

Russia’s largest oil company has served notice that it will step up production in the event of a sudden end to the agreement among major crude producers to curb output in an effort to prop up prices.

In a rare interview, Igor Sechin, Rosneft’s chief executive, said the company was closely monitoring output from US shale producers, amid debate in the oil market over whether the Opec-led agreement’s effectiveness is waning.

“Well, if the question is how Opec is going to exit from these arrangements: abruptly,” Mr Sechin said. “We will also be prepared. If something goes wrong, we will not let them occupy our markets. We’ll defend ourselves.”

It's very, very important to parse the quote, and if I'm correct in parsing the quote, this is how I read it:

• if global crude oil prices fail to rise with the extension, various OPEC countries may start to get nervous, at which point, it will be every Arab for himself, as OPEC countries race to save market share
• Russia will immediately begin increasing production if any OPEC country starts to take advantage of the quotas

Since Iran is exempt, one wonders if the warning shot from Rosneft was aimed at Iran?

It looks like the OPEC / non-OPEC deal is turning into a game of chess. And, if anyone knows how to play chess, it's the Russians.

Speaking of chess, Sophia will turn 3 years old later this summer:

The Never-Ending Story -- Still Not Finished -- Kemper -- PennEnergy -- June 4, 2017

I track the story here. 

Wow, this caught me by surprise. I thought it was finally finished. But apparently not.

Mississippi Power Co. says it will file plans Monday for customers to pay their share of its $7.3 billion Kemper County power plant, even though the plant isn't finished. 

The unit of Atlanta-based Southern Co. didn't yet have a cost update in a Wednesday statement, after Mississippi Power pushed back Kemper's completion date for the 10th time in 18 months. The utility is struggling to reliably run the plant. Customers could be asked to pay more than $4.3 billion. Southern shareholders have lost $2.9 billion.

North Dakota Oil Industry Shows Signs Of A Rebound -- Minneapolis-St Paul StarTribune -- June 4, 2017

John Kemp provided the link via Twitter, from The StarTribune: North Dakota oil industry shows signs of a rebound. Dateline: Mountrail County, ND. One "word": DAPL. Okay, two words: DAPL; price. Data points:

• last year (2016), the state's oil production was more than 6x what it was in 2008 
• North Dakota job sector that mostly includes oil workers stood at 16,400 in April, 2017, a 10% increase over same period one year ago (2016); second consecutive month in which ND saw year-over-year increases in oil jobs
• on-line job openings were at a 12-month peak in April, 2017; up 94% (almost double) from a year ago

With this news, Sophia says she is ready to drive north, look for a job. She's looking for something in retail, perhaps Toys 'R Us, or fast food, Panda Express. (For newbies, Texas has a very laid-back attitude toward drivers -- as long as the car is registered, and there's no texting):

Yes, she does need to get her seat belt on. 

Are Super Rigs The Driver Behind Bakken 2.0? -- June 4, 2017

Oilprice asks the question whether super rigs are the driver behind the new shale boom?

We've talked about this before. Certainly rigs have a lot to do with this but of the top seven reasons behind the new shale boom I would list these:

• geologists have gotten a lot smarter with regard to drilling for unconventional oil
• roughnecks have gotten a whole lot better with the tools they've been given, including super rigs
• everyone understands the geology a whole better; the older the horizontal play, the better the understanding
• much, much, much better completion strategies which have nothing to do with the drilling rigs; including re-fracks and taking neighboring wells into consideration
• operators are focusing on the best spots to drill
• better management of assets; better management of reserves; better management of producing wells
• a hell of a lot of infrastructure has been put in place over the past 10 years

In fact, I'm not sure "super rigs" have anything to do with the "new shale boom." Super rigs can drill to depth much more quickly, making the whole operation more economically efficient, but if we had the same rigs as we had in Bakken 1.0 we would just have more rigs drilling to depth -- it would be the seven factors listed above (and others) that would still account for Bakken 2.0.

All one has to do is look at the very, very few wells that are actually being drilled now compared to the number of wells that were being drilled during the boom. I don't think super rigs are doing all that much in the big scheme of things, except driving down price, and that's being offset by the increase in costs of services and fracking solutions.

The Oilprice article has some interesting data points:

• US rigs: 908 now compared with 504 one year ago
• Helmerich & Payne has just bought Motive Drilling Technologies in a push toward automation, and possibly, autonomy
• efficiencies in drilling has allowed companies to survive 
• EIA currently expects US crude oil production to average 9.3 million bopd in 2017 and lmost 10.0 million bopd in 2018
• after recent production figures, Rystad Energy believes the EIA will again review up its US production outlook
• Oilprice calls US shall the "new swing oil producer"

I'm not sure there is a "swing oil producer" any more.  I guess it depends on what the definition of "swing" is.

Why I Love To Blog, Reason #4,589 -- June 4, 2017

Just the other day I posted over at the "daily note": Hillary continues to suck all of the oxygen out of the room. The gift that keeps on giving.

Today, from The Hill: "Dems want Hillary Clinton to leave spotlight."

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White Privilege: Exciting Books

Three of four black California male students don't meet state reading standards (K-12).

My two takeaways from the DailyNews article:

• analysts were more concerned with the gender gap, not the fact that 75% of black California males can't read
• analysts blamed it on the "fact" that black California males do not like to read because reading is boring

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Has The World Gone Nuts?

A dozen killed; dozens more injured, and London party-goers are upset that Uber was "slow" to turn off "surge pricing."

The story is very, very clear that once Uber figured out what was going on, dynamic pricing was immediately turned off. By the way, leave it to CNN to take this story and run with it. If nothing else it diverts those who can read from the Kathy Griffin story and the Bill Maher story.

So, we have another dozen Londoners killed in the third terrorist attack in as many weeks (?) -- certainly months -- and many more dozens severely injured, some of whom will die or be maimed for life, and London party-goers are upset Uber was slow to turn off dynamic pricing. Wow.

US SefDec has grave concerns about a conflict with North Korea; Venezuela is imploding; Putin (apparently off the radar scope) still has menacing designs on at least three Eurasian locales; the Mideast is out of control; and, London party-goers are upset Uber was "slow" to turn off "surge pricing."

Wow, the world truly seems to have gone nuts. It's not so much that London party-goers seemed not to have a lot of concern or sensitivity to the victims or an understanding of the gravity of the event, but that fact that Google Finance made this their top story and let it hang there, as their top story, for hours.

Hopefully, UK's prime minister Theresa May will address Uber's lack of insensitivity on Monday.

But I guess if that's the "market's" biggest concern -- how social media feels about "surge pricing" after a significant terrorist event, investors can breathe a sigh of relief. Things in the world must not be all that bad.

Wells Coming Off #COVFEFE List This Week; EOG With Some Huge Wells -- June 4, 2017

Note: I track wells that produce more than 50,000/month at this post.

Friday, June 9, 2017
None.

Thursday, June 8, 2017
25957, SI/NC, Statoil, Mark 4-9F 4TFH, Williston, no production data,
31889, 1,877, HRC, Fort Berthold 152-94-22D-15-10H, Antelope, Three Forks, 33 stages; 9.9 million lbs, t12/16; cum 129K 4/17; (#20567)

Wednesday, June 7, 2017
None.

Tuesday, June 6, 2017

• 25956, SI/NC, Statoil, Mark 4-9F 5H, Williston, no production data,
• 32097, SI/NC, Abraxas, Stenehjem 6H, North Fork, no production data,

Monday, June 5, 2017

• 25955, SI/NC, Statoil, Mark 4-9F 6TFH, Williston, no production data,

Sunday, June 4, 2017

• 31756, 1,163, CLR, Maryland 5-16H, Catwalk, 38 stages, 17 million lbs; TD, 23,027 feet, t12/16; cum 80K 4/17;
• 32292, SI/NC, Statoil, Mark 4-9F 7H, Williston, no production data,
• 32512, 1,505, EOG, Mandaree 30-0706H, Squaw Creek, 37 stages, 17 million lbs sand; TD, 20,495 feet, t12/16; cum 157K 4/17; (19004)
• 32513, 1,910, EOG, Mandaree 24-0706H, Squaw Creek, 44 stages, 28 million lbs sand; TD, 20,483 feet, t12/16; cum 228K 4/17; 19004)

Saturday, June 3, 2017

• 28435, 871, EOG, Fertile 55-0333H, Parshall, Fertile 55-0333H, 50 stages; 12.73 million lbs, t12/16; cum 60K 4/17; API: 33-061-03114;  FracFocus says it was fracked 10/9/2016 - 11/1/2016; total base water volume (gal): 5,097,268; sand, 23% by mass;
• 32098, SI/NC, Abraxas, Stenehjem 7H, North Fork, no production data,
• 32293, SI/NC, Statoil, Mark 4-9F 8TFH, Williston, no production data,
• 32514, 1,355, EOG, Mandaree 31-0706H, Squaw Creek, 46 stages, 29 million lbs; TD, 20,914 feet, t12/16; cum 247K 4/16; (19004); API: 33-053-07503; according to FracFocus, total base water volume (gal): 14,059,212; sand, 20% by mass; frack 10/13/2016 - 11/13/2016;

********************************** 

 32514, see above, EOG, Mandaree 31-0706H, Squaw Creek:

Date	Oil Runs	MCF Sold
4-2017	44579	62883
3-2017	46992	61386
2-2017	51215	78844
1-2017	57816	67644
12-2016	45725	35402

 28435, see above, EOG, Fertile 55-0333H, Parshall, Fertile 55-0333H:

Date	Oil Runs	MCF Sold
4-2017	13634	8516
3-2017	11270	6792
2-2017	7149	2410
1-2017	13121	1747
12-2016	14388	4280

32513, see above, EOG, Mandaree 24-0706H, Squaw Creek:

Date	Oil Runs	MCF Sold
4-2017	25309	35948
3-2017	47542	63119
2-2017	45644	70021
1-2017	53048	53916
12-2016	55892	37427

32512, see above, EOG, Mandaree 30-0706H, Squaw Creek:

Date	Oil Runs	MCF Sold
4-2017	20392	26149
3-2017	22990	36518
2-2017	20958	30480
1-2017	45145	45349
12-2016	46741	27703

31756, see above, CLR, Maryland 5-16H, Catwalk:

Date	Oil Runs	MCF Sold
4-2017	14695	12595
3-2017	19026	13852
2-2017	14601	16914
1-2017	21481	20911
12-2016	9585	7134

31889, see above, HRC, Fort Berthold 152-94-22D-15-10H, Antelope:

Date	Oil Runs	MCF Sold
4-2017	20205	29525
3-2017	22159	30231
2-2017	26481	43777
1-2017	36252	22455
12-2016	22928	4436

Worth Reposting: Saudi Blowing Smoke -- Bloomberg -- June 4, 2017

Updates

June 4, 2017: Saudis just blowing smoke -- Bloomberg. Nice update of the three Motiva refineries: Port Arthur in Texas (Saudi Aramco); Norco, Convent in Louisiana (Shell). The Shell refineries take very little Saudi Arabian oil; Port Arthur takes 238,000 bopd from Saudi Arabia (21% of all Saudi crude sales to the US. To the other two refineries, only 33,000 bopd sourced from Saudi Arabia.

Crude loading during June in Saudi Arabia will arrive off the U.S. coast between mid-July and mid-August. By then, refinery runs will already be at their seasonal peak and attention will be starting to turn towards the fall slowdown, which typically gets under way around the end of July. This may allow the Saudis to claim a seasonal downturn as evidence of cuts.

Bloomberg tanker tracking data shows Saudi crude exports to the U.S. in May at around 840,000 barrels a day. That is a drop of 160,000 barrels from April. Significant? Perhaps, but it only takes them back to where they were in January, the first month of the output deal.

From the Bloomberg article, this is an interesting chart. I did not know this. I assume nearly 100% of Saudi oil coming to the US was going to "Motiva." It turns out that only about a quarter of Saudi oil coming to the US ends up at "Motiva."

May 28, 2017: perhaps the graph below explains why the Vienna meeting was a bust for OPEC. LOL.  
 

Original Post

 

Note how much higher OPEC production is today -- after the production cuts -- than it was in 2014, prior to the production cuts. I guess it's how one defines "production cuts."

Thought experiment: overlay this chart with US shale production during same period of time.

Everything Changed, Nothing Changed -- June 4, 2017

The other day I posted that Trump announcing that the US will run, not walk, away from the Paris climate accord sent a huge message to countries around the world.

In another post I asked what countries will now consider it safe to follow suit, that is, walk away from the scam. It will be interesting to see which countries continue to send money to South Korea to fund the "Green Fund" as part of the "deal."

[The second link will likely open a PDF on your desktop. As far as I know, no embedded viruses, but fair warning. It is interesting to note that China, India, Russia, Saudi Arabia, Qatar, have not seen fit to fund the "Green Fund" whereas President Obama, with no Congressional approval or oversight, had no problem sending $500 million to this fund three days before he left office, according to The Washington Post.]

For now, his announcement has put things on hold. Reuters is reporting that the EU and China failed to agree on a formal climate statement at recent summit. The parties are said to have failed to agree on something as un-challenging as a climate statement (remember: this is all voluntary and parties are allowed to set their own targets -- in other words it's all talk anyway). Generally summits are held when both parties have already agreed on something. Something must have happened for the parties to walk away from pre-summit agreements.

My hunch is that the summit was too far along to be canceled but with the Thursday afternoon, June 1, 2017, announcement, China opted to step back, parse Trump's speech, and wait before committing to anything new.

As Hillary would say: Trump hit the "reset" button.