Saturday, July 8, 2017

Goldman Sachs On The Transformation Of The Oil Industry -- Bakken 2.0 -- July 8, 2017

I'll link these on the "Welcome" page. Very, very nice...from a reader, "down south."

Apparently these are a bit older -- I've haven't viewed them yet .. but they are carrying the theme of celebrating the ten million page views.



The 'New Oil Order' created by the U.S. shale revolution is reshaping global energy markets and bringing with it a new era of volatility."

For those pressed for time, I recommend these two videos from theGoldman Sachs web page:

--Crude Awakening - Adapting to the New Oil Order: Goldman Sachs' Michele Della Vigna--

--Lower for Longer? The Impact of the New Oil Order: Goldman Sachs --

... And Here It Is ... 10-Millionth Page View -- July 8, 2017

Thank you to everyone.

And good luck to everyone.

Global Traders Are Betting US Shale Will Persevere -- Bloomberg -- July 8, 2017

"Hat tip" to a reader from "down south" for providing this link: world's top oil traders bet American shale is here to stay. From Bloomberg via Rigzone.
The world’s biggest energy traders are betting shale oil production is here to stay.

European trading houses from Trafigura Group Pte. to Mercuria Energy Group Ltd. and Vitol Group have invested in U.S. infrastructure and struck supply deals to secure flows of shale oil and gas. The agreements show the traders see long-term opportunities in an industry that has already upended global energy flows, particularly since the U.S. lifted a four-decade old ban on exports at the end of 2015.

“Shale, barring a major environmental issue, has become the new reality,” said Jean-Francois Lambert, a former commodity trade finance banker with HSBC Holdings Plc and now an independent consultant. “It brings more optionality for oil trading and this is exactly what traders need.”

Shale oil and gas has transformed global energy markets. The production boom provoked the Organization for Petroleum Exporting Countries into a market-share war that drove crude prices down from above $100 in 2014 to below $50 today. Through a combination of technological advances and more efficient production methods, the industry proved more resilient to the downturn than most people expected. So when OPEC changed tack in November and started cutting production to boost prices, U.S. output surged again to the highest since 2015.
Much, much more at the link including a list of deals being made by these long-term traders/investors.

The Katie Ledecky Story

This is old news but I did not know the back story, or at least how CNBC reported it.

On her way to winning the 200 meter freestyle at the Phillips 66 Nationals in Indianapolis, CNBC reported that "Katie Ledecky's win was not the most impressive swim to open the Nationals."

CNBC gave that honor to Mallory Coverford:
Mallory Comerford was undoubtedly the star of the day at nationals, part of the TeamUSA Summer Champions Series, presented by Comcast.
So how did Mallory Comerford and Katie Ledecky do when they went head-to-head in the finals, when it counted?
  • Katie Ledecky: first place, winning time -- 1:55.87
  • Mallory Comerford: fourth place, almost three seconds behind Katie, at 1:58.39 and barely beating fifth place Claire Rasmus (1:58.64)
So much for being the "star of the day."

10 Million Page Views -- July 8, 2017

Unfortunately, because I'm traveling, I may actually miss capturing a screenshot of when the total page views go over the "10 million" mark, but we'll see.

Depending on the time of day and the day of the week, I can anticipate 50 to 200 hits/hour.

A few minutes ago:

Unfortunately I have no prizes for the individual who "logs" the 10-millionth page view.

This has taken about ten years. To put that in perspective, I assume the Drudge Report has 10 million page views every few minutes or so.

Idle Chatter Saturday Morning -- Flathead Lake, EVs -- July 8, 2017


August 6, 2017: in the original post I mention the challenges of charging the millions of EVs in the not-too-far-distant future. Now, Fortune asks the same question: where are all those electrics cars going to charge? Something tells me no one has thought this through.  

Original Post
I had a great week up on Flathead Lake, Montana.

I flew into Portland, OR, from DFW to pick up our younger daughter and the two of us picked up a rental car and drove to Lakeside, MT.

Economizing, I wanted a compact sedan but they were more costly than compact SUVs. We drove a Chevrolet Trax. It's a lot of fun to drive a "new" car (10,000 miles) but I certainly was not impressed by the "dash."The knobs were incredibly small -- I mean, really, really small. They were hard to operate with ungloved fingers; in the winter one could not operate the knobs without taking one's gloves off. The standard "menu" was not intuitive -- to display mileage, trip odometers, etc. In addition, they eliminated the little stem that is the easiest way to re-set mileage to zero. The car was snappy; fun to drive in town but I assume most new compacts would be fun to drive in town. So, a nice rental, but I would never buy it for myself.

The cross-country ride was wonderful -- we left late Sunday afternoon, stayed overnight in Spokane, and arrived at Lakeside early the next morning. On our return trip we drove back in one day. It took about 10 hours, I suppose -- it did not seem long. The traffic was easy except in the Coeur d'Alene area where it was extremely heavy southbound on "395" (our return trip). We avoided the city on the way out to Flathead Lake, bypassing it on I-90 (also quite busy at that point) and turning north at St Regis.

I love the speed limits in Montana. I think they post speed limits just to give someone something to do. With small two-lane country roads allowing 70 mph there certainly is little need to get caught speeding.

We stopped for gasoline about every three to four hours -- fuel range would have allowed longer stretches, but it was nice to stop and stretch. It was quite incredible. No matter where we were, we simply exited the highway, pulled into a service station -- no waiting -- re-fueled and were back on our way, unless we wanted to take a little break to stretch. But it was incredibly convenient.

I say all that to imagine what it would have been had we had an EV. First, of all, it would have been a pain to find a charging station. Under the best of circumstances, we would have had to watch paint dry for 30 - 40 minutes while charging the vehicle. Under the worst of circumstances we would have had to wait 2 to 3 hours for our turn to charge.

Ten years from now when everyone has an EV, imagine the current service station with twelve gasoline pumps. Cars spend an average of five minutes or less filling up with gasoline; driving in and driving out. During peak summer driving, the service station lots are completely full of cars, moving in and out at a fairly brisk pace. Now imagine if each of those pumps were replaced with a charging station. Cars wouldn't be moving in and our every five minutes; they would be parked for 30 - 60 minutes. It will be an interesting phenomenon.

For some reason there were a lot of stories this past week about EVs. The one that caught my attention was the one suggesting that by 2025 (less than ten years from now), 75% of all new car sales in the US would be electric. LOL. I must be missing something.

The big news coming out of Tesla this week: Elon Musk said their production milestones had slipped due to a severe battery production backlog. That sounds plausible with plans to ramp up to 100,000 to 200,000 vehicles by this time next year. So, what is Elon Musk looking for this month? He said he plans to deliver thirty ... repeat, thirty ... vehicles by the end of July. With all the hype and all the stories surrounding this announcement, one would have thought he was preparing to launch 30 Americans into space on the nation's first manned space voyage to Mars. In fact, he was talking about delivering 30 EVs. This is not rocket science. And Tesla's market cap is greater than that of GM's (although it has since dropped back a bit). I must be missing something.

Hopefully, CNN and ABC and MSNBC and CNBC will stream photos of the thirty Tesla EVs when they are delivered.

One wonders if the grid will be able to handle 30 more EVs all delivered on the same date. Hopefully they are not all delivered to the same West Hollywood neighborhood.

Fire Pit Grill

This was the grill / fire pit down by the dock out at Flathead Lake.


Week 27: July 2, 2017 -- July 8, 2017

Gasoline demand
It looks like a new record was set this past month (June, 2017) for US gasoline demand
Gasoline prices at historic lows

Saudi Arabia
Foreign exchange reserves continue to fall, though not quite as fast as previously
In the final week of June, OPEC exports hit a 2017 high
Weeks to "re-balance": 58

US economy
Jobs reports are quite incredible
US crude oil exports hit monthly record

Future is poorly thought out; also here;
Tesla: rubber meets the road; the tea leaves suggest things not looking good; severe battery shortage amidst announcement that Tesla would deliver 30 cars by the end of July

Intermittent, unpredictable energy
Pricing updated
Coal: 1,600 new coal plants in 62 countries 

The Bakken

Hearing dockets for July released

Bakken 2.0
Seven new permits; 22 permits renewed; 5 DUCs completed -- daily report

Update on Tesoro's refinery in Dickinson

Show the frackers a little gratitude -- Investor's Business Daily
EOG reported two short laterals: 22 and 24 stages; 8 million lbs

Bakken economy
Best US state to start a business -- North Dakota  

The Political Page, T+169 -- July 8, 2017

From The Telegraph, how Melania and Ivanka Trump "save the day" at the G20 conference.
This morning (July 8, 2017) Ivanka, 36, took up the seat reserved for the President during the third working session of the G20 leaders while Mr Trump attended separate meetings elsewhere at the summit.
G20 leaders often send proxies to working sessions while they hold bilateral meetings with other leaders, but it is thought to be the first time a leader’s daughter has fulfilled such a role.

Was A New "US Gasoline Demand" Record Recently Set? -- July 8, 2017


Later, 1:41 p.m. Central Time: see first comment --
I missed that record high too, & I look at that table every week. I even commented on it as a reason for that week's drop in gasoline inventories:
"Our end of the week gasoline inventories decreased by 578,000 barrels to 241,866,000 barrels by June 16th, after increasing by 5,420,000 barrels over the prior two weeks ... this week's gasoline supplies were reduced because our domestic consumption of gasoline jumped by 547,000 barrels per day to 9,816,000 barrels per day, after falling by 553,000 barrels per day the prior two weeks" 
Now to explain the significant jump, third week in June? Let's see, if one gets paid every two weeks ... one has the cash to buy at the beginning of the third week ... you know, we might hit 10 million bbls before the end of the summer ....

Original Post

This is the US gasoline demand in million bbls / day on a weekly basis. It appears that we may have set a record in the third week of June. If that was mentioned in the mainstream media I missed it. At 9.8 million bbls of gasoline demand/day, we are very, very close to 10 million bbls/day.

The four-week average is still below last year, but last year was a "record year" for gasoline demand.

Saudi Arabia Foreign Exchange Reserves -- May, 2017 Data

Source: Trading Economics.

Show The Frackers A Little Gratitude -- Investor's Business Daily -- July 8, 2017

From IBD:
Less than 10 years ago, America's energy future looked bleak.

World oil prices in 2008 had spiked to more than $100 per barrel of crude.

"Peak oil" — the theory that the world had already extracted more crude oil than was still left in the ground — was America's supposed bleak fate. Ten years ago, rising gas prices, spiraling trade deficits and ongoing war in the oil-rich Middle East only underscored America's precarious dependence on foreign sources of oil.

Despite news of a radically improved but relatively old technology called "fracking" — drilling into shale rock and injecting water, sand and chemicals at high pressure to hydraulically "fracture" the rock and create seams from which petroleum and natural gas are released — few saw much hope.

In 2012, when gas prices were hitting $4 a gallon in some areas, President Obama admonished the country that we "can't just drill our way to lower gas prices." That was a putdown of former Alaska governor and vice presidential nominee Sarah Palin's refrain, "Drill, baby, drill."

Obama barred new oil and gas permits on federal lands. Steven Chu, who would become secretary of energy in the Obama administration, had earlier mused that gas prices might ideally rise to European levels (about $10 a gallon), thereby forcing Americans to turn to expensive subsidized alternative green fuels.

But over the last five years, frackers have refined their craft on private properties, finding ever cheaper and more efficient ways to extract huge amounts of crude oil and natural gas from shale rock.
Much more at the link.

And some folks think Rick Perry is a doofus. Re-posting: "Steven Chu, who would become secretary of energy in the Obama administration, had earlier mused that gas prices might ideally rise to European levels (about $10 a gallon), thereby forcing Americans to turn to expensive subsidized alternative green fuels."

Seven New Permits; 22 Permits Renewed; 5 DUCs Completed -- July 8, 2017

Active rigs:

Active Rigs563075189188

Seven (7) new permits:
  • Operators: Whiting (6), Slawson
  • Fields: Sanish (Mountrail); Big Bend (Mountrail)
  • Comments: Whiting has permits for a 6-well pad in SESE 31-154-93 (see below)
Twenty-two (22) permits renewed:
  • Hess (5): five BB-Lars Rothie wells, McKenzie County 
  • CLR (4): two Charleston permits and two Olympia permits, all in Williams County
  • Thunderbird Resources (3): three Watson A permits, all in McKenzie County
  • Slawson (3): three Submariner Federal permits, all in Mountrail County 
  • BR (2): one Veederstad permit, and one Cleoff permit, both in McKenzie County
  • EOG (2): two Burke permits in Mountrail County
  • Whiting: one Tomchuk permit, in Stark County
  • Nine Point Energy: one Simpson permit in McKenzie County
  • Sinclair: one Porcupine permit in Dunn County
Five producing wells (DUCs) reported as completed:
  • 30573 1,040, XTO, Rink 13X-4C, Garden, t5/17; cum --
  • 30574, 587, XTO, Rink 12X-4H, Garden, t5/17; cum --
  • 31875, 777, CLR, Corsican Federal 2-15H1, Sanish, t6/17; cum --
  • 31876, 1,556, CLR, Corsican Federal 3-15H, Sanish, t6/17; cum --
  • 32733, 2,008, Newfield, Lost Bridge Federal 148-96-9-4-12H, Lost Bridge, t5/17; cum 28K after 20 days;

See new permits above:

20058, 2,020, Whiting, Bartelson 44-31H, Sanish, t5/12; cum 216K 5/17;