Wednesday, June 28, 2017

Flashback -- Worth Re-Posting -- June 28, 2017

From January 22, 2015 -- I had completely forgotten all about this story; a reader reminded me of it.

Harold Hamm sells Hiland Partners to Kinder Morgan for $3 billion.
Kinder Morgan Inc. announced Wednesday it has struck a deal to buy the company, which is owned by Continental Resources Inc. CEO Harold Hamm and some family trusts. It also will assume the Enid company’s debt.

Hiland had been a publicly traded company until Hamm bought all outstanding units in 2009. It owns oil and natural gas gathering, transportation and processing pipelines in the Bakken Shale in North Dakota and Montana.
Kinder Morgan said the Hiland deal gives it a premier midstream platform in the Bakken, with a significant amount of acreage dedicated under long-term gathering agreements with companies such as Continental, XTO Energy Inc. and Whiting Petroleum Corp.
Some readers have followed the Harold Hamm story from the beginning: a good ol' boy who started life as a trucker hauling water out of the oil fields.
Some readers have followed the Harold Hamm story from the beginning: a good ol' boy who started life as a trucker hauling water out of the oil fields.

Some would say he built these businesses: CLR and Hiland Partners.

And then there are others who would say he didn't.

What A Doofus
And folks get upset about President Trump's tweets. LOL.

(In hindsight, I am surprised by all the folks in the mainstream media that had to come out to "defend" the previous president. Thank God and Greyhound there are term limits.)

Thank God and Greyhound, Roy Clark

Two New Permits; 58 Active Rigs -- June 28, 2017

Active rigs:

Active Rigs583075191189

Two new permits:
  • Operators: Liberty Resources, Kraken Operating
  • Fields: East Tioga (Mountrail); Lone Tree Lake (Williams)
  • Comments:
Two permits canceled:
  • Crescent Point Energy (2): two Poley permits, Williams County
Wells coming off confidential list later in the week:
Thursday, June 29, 2017
  • 31635, SI/NC, Newfield, Jorgenson Federal 148-96-10-15-10H, Three Forks, Lost Bridge, producing (#29857, 32092, 29856, 32581), shut in after reaching total depth, but produced 25,000 bbls in first 10 days (if that's not a typo over at the NDIC); according to FracFocus, it was fracked 4/19/17 - 4/22/17; 5 million gallons water; 16% proppant;
  • 32917, SI/NC, XTO, Nygaard Federal 13X-5BXC, Lost Bridge, no production data, (#21702, 24228, 32921, 32920, 17397)
Friday, June 30, 2017
  • 31137, SI/NC, Newfield, Jorgenson Federal 148-96-10-15-1H, Lost Bridge, producing (#29857, 32092, 29856, 32581),
  • 31636, SI/NC, XTO, Lundin 11X-15E, Siverston, no production data, (#26454, 26455)

31137, see above, Newfield, Jorgenson Federal 148-96-10-15-1H, Lost Bridge:

ateOil RunsMCF Sold

31635, see above, Newfield, Jorgenson Federal 148-96-10-15-10H, Lost Bridge:

DateOil RunsMCF Sold

The Energy And Market Page, Part III, T+159 -- June 28, 2017

The Trump Era? One wonders if after only 159 days in the presidency, one can start to call this the "Trump Era"? Be that as it may. Here's another huge energy story (a "hat tip" to the reader who sent me the link). From LA Biz, a new study projects 2 million more gas related jobs by 2040.

Where's Waldo? I can find a gazillion stories on solar and wind energy if I got to sites specific for intermittent energy. However, if one follows business news in general and/or energy news in general, it appears that oil and natural gas stories literally swamp the number of stories related to solar and wind. In fact, I haven't seen a single intermittent energy story today in any of the sites I've visited today. Even CNBC hasn't had one story on solar/wind energy today, but a lot of stories on oil. My hunch is that this would not be true if Hillary were president.

The market: there's a huge rally in the stock market -- across all three indices, and yet, there are only 86 new highs on the NYSE suggesting that ... well, I don't know what it suggests -- but, here are some tickers symbols that caught my eye on the "new highs list: BK -- whoo-hoo; CNI; CP; GBX (Greenbrier); TSO.
  • Dow 30: up 157
  • S&P 500: up 21
  • Nasdaq: 74

"Energy Week" In DC - Harold Hamm Expands NG Deal With SK; Lithuania: Helping To Make The US Great Again; The Energy Page, Continued -- T+159 -- June 28, 2017

Over at "The Big Stories," I have a link to "LNG Exports." The first post was dated October 4, 2015. We all expected the LNG story to be a big story, but I think it is growing much faster than anyone expected. And here's another story, showing just how far-reaching Cheniere Energy is. From Zacks:
  • new deal linked between Cheniere Energy and Lithuania
  • another effort to reduce dependence on Russian energy giant Gazprom
  • Lithuania is recommending neighboring countries to do the same
  • Lithuania created a floating LNG terminal along the Baltic Sea coast in 2014
  • also imports natural gas from Norway's Statoil
  • this is the first LNG deal that Lithuania has signed with the US
  • this will help propel the US to become the world's largest LNG supplier by 2035, leapfrogging both Australia (problems of its own) and Qatar (even bigger problems)
  • and, The New York Times might note: the LNG to Lithuania does not have to go through the Panama Canal
Later, CLR / Harold Hamm will expand deal with South Korea for natural gas.
Under the backdrop of "Energy Week" in Washington, Continental Resources and SK E&S of South Korea announced they will sign a memorandum of understanding Wednesday which expands their existing joint development agreement to consider pursuing other opportunities with US shale plays, including the development and exporting of liquid natural gas. 
The Graphic Page

The fossil fuel statistics are simply staggering. Again, look at these figures just released today:
But note this: OPEC (and others) keep talking about the 5-year average. The 5-year average is no longer "valid" after the two-year Saudi surge, 2014 - 2016 and similar surge in US shale. One needs to use the 10-year average which I have mentioned many, many times. I see that John Kemp also uses the ten-year average -- at least in this tweet.

And look at that 10-year comparison: US distillate fuel oil stocks are up over 23 million bbls. That is simply staggering. The number is so staggering, the 10-year average cannot even be placed on the graph above.

US gasoline inventories: the same holds true for gasoline (compare the next chart with the chart above -- see if you can spot any differences -- I could not):

US crude oil: and to complete the picture, the US crude oil inventories graphic -- third verse, same as the first:

Henry The 8th, I Am, Herman's Hermits

Glut: reported earlier but with sketchy data. The data and associated analyses are now coming in and things don't look good. From Oil & Gas Journal, regarding US crude oil inventories:
  • EIA: the increase was only 100,000 bbls
  • API: the increase was actually 800,000 bbls (in my earlier post, I used the 851,000-bbl figure intially reported; when I get time, I have corrected it to the new EIA number)
  • EIA: US crude oil inventories stand at 509.2  -- upper half of the average range for this time of year
  • EIA: total motor gasoline fell 900,000 bbls last week but inventories still remain above the upper limit of the average range

The Political Page, T+159 -- June 28, 2017

Irrelevant. The fact that the Dow 30 surges 150 points in an already over-extended market tells me all I need to know about the relevancy of the US Senate; the stalled health care bill; and, the much-talked-about-seldom-seen tax reform bill: all irrelevant.

Fake News settles: in another win for "truth and honesty," ABC has settled with a South Dakota meat producer over an inflammatory, libelous, and, ultimately, a fake news story. The suit was for $1.9 billion. The terms of the settlement not disclosed but something tells me ABC was not prepared to lose $2 billion. LOL. 

Say what: Just the other day the mainstream press wrote that this year's grain harvest will not be as good as previous years because of global warming. Today. EIA says that ethanol capacity has actually increased year-over-year, apparently not concerned about corn production. One wonders how much grain was taken out of production so farmers could plant grass (corn). Just saying. From the EIA today:
Fuel ethanol production capacity in the United States reached 15.5 billion gallons per year, or 1.01 million barrels per day (b/d), at the beginning of 2017.
Total capacity of operable ethanol plants increased by about 4%—or by more than 600 million gallons per year—between January 2016 and January 2017…Of the top 13 fuel ethanol-producing states, 12 are located in the Midwest. The top three states—Iowa, Nebraska, and Illinois—contain more than half of the nation’s total ethanol production capacity. --- EIA
Octane capacity. Based on a story yesterday, ethanol is NOT the concern. Rather, octane is the concern going forward; there could be a shortage sometime in the out years. I hope farmers start planting more octane.

Global warming: Algore brought inconvenient truths about global warming to the American public back in the early 1990s. Inquiring minds want to know when record low temperatures were set in the US by state
  • Alabama, 1996
  • Illinois, 1999
  • Indiana, 1994
  • Iowa, 1996
  • Kentucky, 1994
  • Maine, 2009
  • Minnesota, 1996
  • Wisconsin, 1996
  • all records, I do believe, were set in the post-industrial age.
Record hot temperatures? Almost all records were set before 1994.


Discussions about ObamaCare take place in two different arenas. One arena is the political arena, the argument between states' rights and national health service. The second arena is in the money arena. In the "money" arena, there are three legs to this three-legged stool: a) taxes on medical devices; b) corporate mandate; and, c) the individual mandate. But what does the big round seat that sits on the three legs represent? Medicaid. Right now, my hunch is that the US congress and US Senate could get together on the three legs, but the big obstacle is where one's butt sits -- Medicaid.

From Ballotpedia:
Between fiscal years 2014 and 2015, total government spending in Illinois increased by approximately $10.8 billion—from $58.6 billion in fiscal year 2014 to an estimated $69.4 billion in 2015. This represents a 15.52-percent increase.
  • in Illinois in fiscal year 2014, 51.9 percent of total tax revenues came from income taxes
  • sales taxes and gross receipts accounted for 40.2 percent of total state tax collections.
  • education accounted for 18.7 percent of state expenditures in fiscal year 2015, 
  • Medicaid accounted for a whopping 26%, almost 40% more than that spend on education
Illinois cannot afford a cut in US federal Medicaid support. Period. Dot.

The Market And Energy Page, T+159 -- June 28, 2017

Wow, this was unexpected. So much for all that concern about "no vote" on health care bill in the US Senate -- new records today? At the opening:
  • Dow 30: up 100 points
  • Nasdaq: up 10 points
  • S&P 500: up 10 points 
China and natural gas, records being set. From Reuters:
  • China's goal: decrease coal consumption; replace with LNG
  • China's target: increase the share of natural gas in energy consumption from 6% (2015) to 10% (2020)
  • China's target: average annual increase of 4% in share of LNG for energy consumption
  • China's current rate of increase: more than double -- wow!
  • China's biggest gainer: LNG imports -- up almost 40% in the first five months of 2017
  • rise in natural gas output (domestic production) stands in sharp contrast to the decline in crude oil production which fell to the lowest on record in May as output declines from older fields
  • Australia: among China's suppliers, Australia fared bet; Australians imports rose almost 43% in first five months of 2017
  • pricing? Australian LNG -- almost $7/mmBtu, vs about $3 in the US
  • Australia's price advantage is still largely tied to the 25-year supply deal from the North West Shelf venture, signed in 2002 at a fixed price of $3.80/mmBtu 
  • with cost of intermittent energy in Australia, Asia is now paying less for their electricity than Australia (reported elsewhere)
Worried? Harold Hamm sounds worried.
  • says oil below $50/bbl is not sustainable (really?)
  • says oil below $40/bbl would cause US producers to reduce drilling (okay)
  • warns US drillers to be prudent, exercise discipline
  • reminder: of all the E&P names with whom we are familiar, only Harold Hamm/CLR is unhedged ("naked" as they say)

US Crude Oil Inventories Rise Slightly Week-Over-Week -- June 28, 2017

Active rigs:

Active Rigs593075191189

RBN Energy: natural gas takeaway constraints pose challenge for crude oil production in the Permian. This sounds vaguely similar to the early days of the Bakken boom in Norht Dakota.

Failing. That OPEC cut in production? It's not working. Apparently crude oil inventories in the US rose slightly week-over-week. The forecast had been for a slight decline. US crude oil inventories rose by 851,000 bbls. At this rate, it will take 71 weeks to re-balance:

Weeks to RB
Week 0
Apr 26, 2017

Week 1
May 3, 2017
Week 2
May 10, 2017
Week 3
May 17, 2017
Week 4
May 24, 2017
Week 5
May 31, 2017
Week 6
June 7, 2017
Week 7
June 14, 2017
Week 8
June 21, 2017
Week 9
June 28, 2017