Tuesday, July 11, 2017

What ARE They Smoking Over There? -- France Could Close Up To 17 Nuclear Reactors -- July 11, 2017

Why? To move away from nuclear power dependency. LOL. Exactly what's wrong with nuclear power?

Data points:
  • France has 58 working reactors
  • plans still in flux
  • by 2025, France's electricity provided by nuclear plants would be capped at 50%
  • earlier in the week, France said it would ban gasoline and diesel cars by 2040
Most likely I won't live to see this debacle. Back to coal.

French national anthem, 2050:

Non, Je Ne Regrette Rein, Edith Piaf

Third Time Is The Charm -- Ballard Has A Good Well -- July 11, 2017

We can update this well first noted June 7, 2014, the original post with data udpated:

Does Ballard Have A Productive Well North Of Glenburn?

On a completely different note, another reader over at the "Discussion Group" reports that  a local farmer from the Glenburn area says that Ballard Petroleum struck oil north of Glenburn. There is a Ballard wildcat north of Glenburn:
  • 27319, 600, Ballard Petroleum, Fines 24-19, wildcat, north of Glenburn, 19-159-81; Chatfield, Madison pool, t6/14; cum 137K 5/17;
A bit further north there are to more Ballard wildcats:
  • 27703, dry, Ballard Petroleum, Mddaugh 33-23, wildcat, north of Glenburn, 23-160-81,
  • 27704, dry, Ballard Petroleum, Drovdal 13-2, wildcat, north of Glenburn, 2-160-81,
Ballard Petroleum has five permits in North Dakota. The first two permits: two wells drilled in 2012 -- both dry, both Madison wells. [Update: Ballard Petroleum Holdings now has eleven (11) permits.]

Devon Reports Record Rate For STACK Well

From Oil & Gas Journal:
  • southwest Kingfisher County, OK
  • Privott 17H; EUR of more than 2 million boe; IP was 50% oil
  • 10,000-foot lateral (a long lateral); upper Meramec interval
  • rate of 6,000 boe/d
  • record rate for IP for a well in the STACK place (Sooner Trend, Anadarko, Canadian, Kingfisher) 
  • the rate was "facility restrained"
For comparison, see FAQ 9 at this post:
Small Producers Feeling Pressure In The Permian

At $40,000 / acre I always thought the Permian was a high-risk venture for "smaller" operators. I think I posted that but don't recall. Whatever.

Now, over at Chron.com, "small Permian producers feel pinch of $45 oil."
For some small oil companies in West Texas, low crude prices are beginning to sting.

Green Century Resources, a private oil company in Midland, is weighing an investment in a drilling project that appeared profitable a few months ago when crude prices hovered above $50 a barrel. Now, with U.S. prices under the $45-a-barrel mark, the small company may have to hold off on its plans, said James Mayer, founder and chief executive of Green Century.

"If oil holds under $45, that would make a difference to us," Mayer said, adding his company is working to whittle down its projected capital and operating costs.

Several small operators in West Texas told the Houston Chronicle they're face increasing pressure from rising oil field service costs, particularly in hydraulic fracturing, in part because the downturn wiped out some of the service companies and allowed rivals to raise prices. That oil prices are falling now has convinced some to rethink their expansion plans for the year, which were set at a time when oil prices were higher.
More at the link.

EPA Asks Barack Who? -- July 11, 2017

This is simply incredible. I have followed the story off and on but never posted a note about it until now. The Salt Lake Tribune is reporting that the EPA is seeking to reverse its opposition to a controversial Alaskan gold mine.
The Trump administration has taken a key step toward paving the way for a controversial gold, copper and molybdenum mine in Alaska's Bristol Bay watershed, marking a sharp reversal from former president Barack Obama's opposition to the project.
The Environmental Protection Agency on Tuesday proposed withdrawing its 2014 determination barring any large-scale mine in the area because it would imperil the region's valuable sockeye salmon fishery.
The agency said it would accept public comments on the proposal for the next 90 days.
Amazing how fast the EPA can change their stance on something. Simply amazing. And one would think the EPA is above politics. LOL.

There are rumors that the sage grouse in Wyoming are moving to Canada.

July, 2017 -- Atmospheric CO2

One year ago: 406.81.

(408.84 / 406.81)/406.81 = 0..4990% increase.

2Q17 GDP Now Forecast For 2.6% -- July 11, 2017

Latest forecast: 2.6 percent — July 11, 2017.
The GDPNow model forecast for real GDP growth (seasonally adjusted annual rate) in the second quarter of 2017 is 2.6 percent on July 11, down from 2.7 percent on July 6.
The forecast of second-quarter real GDP growth fell 0.2 percentage points to 2.5 percent after Friday's employment release from the U.S. Bureau of Labor Statistics.
The model's estimate of the dynamic factor for June—normalized to have mean 0 and standard deviation 1 and used to forecast the yet-to-be released monthly GDP source data—decreased from 1.08 to 0.34.
The forecast of the contribution of inventory investment to second-quarter real GDP growth increased from 0.57 to 0.61 percentage points after this morning's wholesale trade report from the U.S. Census Bureau.

Little Cafe, Huge Story -- July 11, 2017

I haven't blogged about it for various reasons but there's a huge prairie fire in southwestern North Dakota.

Here's a great story from the trenches, the link at myndnow:
Community members from McKenzie and Billings County have been providing food and water to the men and women battling the Magpie Fire.
Four Corners Cafe in Fairfield cooked breakfast and lunch for 60 people on Sunday, and provided breakfast for 95 people today.
The cafe usually makes breakfast sandwiches and burritos, fresh fruit and coffee.
The owner said its services are completely free of charge.
More at the link.

Oh, Fairfield, you ask? Population, 126.

Ring of Fire, Johnny Cash

Honesty Is The Best Policy When Dealing With Mr Trump (Just Ask General Flynn) -- July 11, 2017

This is why I know the "climate warming" issue is a scam. If the earth really was at risk of becoming too hot for mankind, bright minds like Tayyip Erdogan, president of Turkey, would never pull out of the "Paris accord" just for a few lousy bucks. The story is at Joannenova.
Ergodan does his own climate maths — decides that the most significant inflatable cash cow has disappeared from the sky. The global climate suddenly looks clearer, and so Turkey pulls back from Paris accord:
(Reuters) The U.S. decision to pull out of the Paris climate agreement means Turkey is less inclined to ratify the deal because the U.S. move jeopardizes compensation promised to developing countries, President Tayyip Erdogan said on Saturday. “Therefore, after this step taken by the United States, our position steers a course towards not passing this from the parliament,” he said.
Turkey, saving the planet, one bank account at a time. 
By the way, I hear that Germany has pulled its forces out of the multi-national force based in east Turkey that was fighting ISIS or Syria or someone. Germany has moved its "Turkish" forces to Jordan. Has something to do with the EU vs Turkey.

Meager, Meager Daily Activity Report Out Of The Bakken -- July 11, 2017

Active rigs:

Active Rigs572973190185

Six new permits:
  • Operator: Crescent Point Energy
  • Field: Marmon (Williams)
  • Comments: permits for a 6-well pad in SWSE 23-157-100
One permit renewed:
  • Hunt: an Oakland permit in Mountrail County

Halcon Sells All Of It Operated Bakken Assets For $1.4 Billion -- BizJournal -- July 11, 2017


September 27, 2017: Halcon has signed a deal with a private buyer, selling its non-operated assets in the Williston Basin. 

July 12, 2017: Yesterday it was announced that Halcon would exit the Williston Basin; focus on the Permian (see below). Today Zacks reports that shares of US-based upstream company Halcón Resources Corporation (HK) moved up 51.35% to eventually close at $6.75 on Jul 12.

Original Post 
Link here. Data points:
  • seller: Houston-based Halcon (HK)
  • buyer: an affiliate of Houston-based Bruin E&P Partners
  • price: $1.4 billion
  • the deal: includes all of Halcon's operated assets in the Williston Basin
  • why: Halcon to focus on the Delaware Basin (Permian)
  • not included in the deal: Halcon will retain its non-operated Williston Basin assets (but they may sell those assets later -- see update above, September 27, 2017)
  • acreage: 104,000 net acres
  • sweet spot of the Bakken
  • back-of-the-proverbial envelope: $13,500 / acre
Bruin E&P Operating, LLC, is listed at the NDIC Well Search site. Bruin has about 60 file reports, the most "recent," 27888, 7/30/14. Most of their file reports are between 20,000 and 27,888. These are likely the 60 wells they recently acquired from Lime Rock Resources (see below). This, of course, takes us all the way back to Ursa, which can be searched at the blog, if interested.

Bakken operators will be updated.

Folks might remember that Halcon announced a pre-packaged bankruptcy back on May 20, 2016.

Bruin was first mentioned on the blog on January 23, 2017.  At that post:
  • this is the first time I've heard of Bruin E&P Partners in the Williston Basin
  • over at the NDIC home page, well search, they are listed, but it appears to be the 60 new wells they just acquired from Lime Rock Resources
  • webpage
  • private equity commitment  ArcLight Capital
  • primarily interested in assets valued at $50 - $250 million 
  • office address: 602 Sawyer Street, Suite 710, Houston, TX
  • operating locations onshore across the US: 
    • Piceance Basin of Colorado
    • Gulf Coast Texas
    • Permian Basin Texas, New Mexico
    • Arkoma Basin, Arkansas
    • Williston Basin, ND and MT
  • most recently, managed Ursa Resources Group (has been at Bakken operators site for some time)
  • video: time lapse (1:46) of drilling, fracking a well in Eagle Ford

Reason #3 Why I Love To Blog -- The Road To Australia -- July 11, 2017


August 13, 2017: how is Australia meeting its crisis?
SA is now being referred to as the world's renewable crash test dummy for good reason. Set aside Saint Elon's battery backup plan for the moment. 
The SA government has now committed to leasing 9 GE TM2500 generators that burn almost 2,000 gallons of diesel fuel per hour. 
Later, 2:28 p.m. Central Time: I wish I had said this. See first comment --
Is there no end to the fake news disseminated by the MSM? It's all distortions and half-truths, with an outright lie thrown in here and there for good measure.

So let's get this straight. The blackouts which have occurred, despite some of the highest electricity prices in the world, are all the fault of those evil fossil fuel producers and their gaming the system.

Banning fracking, $0.60 cent feed-in tariffs for solar, huge up-front subsidies for solar and wind installations, grid problems caused by a surfeit of intermittent wind and solar, none of that had anything to do with causing the problems.
Even after "explaining" this to my wife, she did not want to hear it. She is so anti-Trump, so anti-oil -- don't ask.

Original Post

This is the print edition's headline: "The Energy Shortage No One Saw Coming." LOL

No one saw it coming, but we blogged about it several times quite some time ago. We even had a tag for it: Road_To_Australia. Finally, the WSJ catches up with the story. LOL.

 The story has a different headline/sub-text in the on-line posting: How Energy-Rich Australia Exported Its Way Into an Energy Crisis. The world’s No. 2 seller abroad of liquefied natural gas holds so little in reserve that it can’t keep the lights on in Adelaide—a cautionary tale for the U.S.

Like the cautionary tales that the following countries are providing the US: Germany; France; Great Britain; Saudi Arabia; Japan. The only three countries that seem to be on the same path: the US, China, Russia. And it's very possible, the US could follow Germany, et al.

Ah, yes, a cautionary tale for the US. I'm getting tired of that cliche: "cautionary tales." If I want to read "tales," I will read bedtime stories to Sophia.

From the linked article:
On a sweltering night this February, the world’s No. 2 exporter of liquefied natural gas didn’t have enough energy left to keep its own citizens cool.

A nationwide heat wave in Australia drove temperatures above 105 degrees Fahrenheit around the city of Adelaide on the southern coast. As air-conditioning demand soared, regulators called on Pelican Point, a local gas-fueled power station running at half capacity, to crank up.

It couldn’t. The plant’s operator said it wasn’t able to get enough natural gas quickly to run its turbines fully. At 6:03 p.m., regulators cut power to 90,000 Adelaide homes to prevent a wider blackout.

Resource-rich Australia has an energy crisis, one that offers lessons for America as it prepares to vastly increase natural-gas shipments abroad.

Australia now exports so much liquefied natural gas, or LNG, it may overtake No. 1 exporter Qatar within several years. It exported 62% of its gas production last year, according to the BP Statistical Review of World Energy.

Yet its policy makers didn’t ensure enough gas would remain at home. As exports increased from new LNG facilities in eastern Australia, some state governments let aging coal plants close and accelerated a push toward renewable energy for environmental concerns. That left the regions more reliant on gas for power, especially when intermittent sources such as wind and solar weren’t sufficient.
I'm too tired to go through the exercise of connecting the dots but regular readers don't need my help.

For The Granddaughters

One of my favorite filmmakers: D. A Pennebaker. The WSJ piece begins thusly:
D.A. Pennebaker, 91, is a documentary filmmaker whose films include “Don't Look Back,” “Monterey Pop,” “ Ziggy Stardust, ” “The War Room” and, most recently, “Unlocking the Cage.”
He has collaborated with his wife, filmmaker Chris Hegedus, since the 1970s, and received an Oscar in 2012.
I grew up pretty much by myself. My parents separated soon after I was born and moved to separate cities—my father to Chicago, and my mother and me to Quakertown, PA,, where she was from.
Later, when I was 5 and my mother was living in New York, I began shuttling between New York and Chicago. I’d be put on a train with a nametag tied to my coat. For the next day and night I was on my own with a whole train at my mercy. I rarely saw much of my parents at either end. I was cared for by sitters or hurried off to boarding schools.
Very, very interesting. Children are incredibly resilient. So much for "helicopter" mothers and "Asian tigers" or whatever they are called.

"Monterey Pop" remains one of my favorites; "Don't Look Back" is also very, very good.  Prince did humanity a huge disfavor by "never" granting interviews. Ironically, he did himself a huge disfavor; he will fade into the background. The "Mamas and Papas" and "Bob Dylan" will survive because of D. A. Pennebaker.

Your Iowan Grandmother

I cannot believe how "lucky" we are. We (her six children; and her dozen or so grandchildren) know very, very little about my mother. She spoke very, very little of her years in Iowa where she grew up. Recently we came across 30 letters -- two of them written when she was in high school; 27 of them written when she was in nursing school; and, one from a family friend many years later -- that she has saved in a special ziplock bag with instructions not to destroy them while she was living. There was nothing said about what to do with them after she dies.

I have inventoried the 30 letters, and am in the process of scanning them all. I will be sending a scanned letter to her children one at a time over the next 30 days or so. I will also provide a bit of context in the narrative about each of the letters.

One of the first phrases (?) that jumped out at me in one of her early letters was materia medica, a term I had never heard in my 30+ years of medicine. A google search brought me to this: https://books.google.com/books?id=j08hwj6UUnIC&pg=PR5&lpg=PR5&dq=medica+materia+course+for+nurses&source=bl&ots=Ssjr7qQAsQ&sig=7XQcj0tFlmq0UAlW4XVfdvinsVI&hl=en&sa=X&ved=0ahUKEwjRxMSK6YHVAhUE_IMKHZo3CYAQ6AEIMzAC#v=onepage&q=medica%20materia%20course%20for%20nurses&f=false.

I now understand why this was so incredibly difficult for her. Our own older daughter is in her fourth year of an advanced nursing degree. Materia medica is now called something else, and is one of the most difficult subjects our daughter has had to endure.

Reading the first few lines from the scanned book at the link above helps me understand why.

It appears that today's "rendition" of materia medica is Goodman and Gilman's Pharmacological Basis of Therapeutics.

EIA's Short-Term Outlook -- July 11, 2017 -- Oil, Very, Very Bearish

EIA's short-term outlook:

Oil Markets:
  • A lower forecast for crude oil prices is expected to shave a little off projected growth in U.S. oil production next year compared with the previous forecast, but annual output is still on track to reach a record high in 2018.
  • A revised oil price forecast that is $2 to $4 per barrel lower for late 2017 and during 2018 than the prior forecast will make it less profitable for some U.S. producers to drill for oil.
  • The United States will account for almost 90% of the increase in global production of crude oil and other liquid fuels by non-OPEC countries in 2018.
Gasoline/Refined Products:
  • The price U.S. consumers are expected to pay for gasoline this summer has been revised down as lower crude oil costs provide a break at the pump.
  • The price of crude oil, which accounts for about half the retail price of gasoline, has declined in recent months on rising U.S. crude oil production and high petroleum inventories.
Natural Gas:
  • U.S. natural gas production is expected increase through the rest of this year and during 2018 in response to higher natural gas prices and growing liquefied natural gas exports.
  • The United States will become a net exporter of natural gas this year, and U.S. liquefied natural gas exports in 2018 are expected are expected to increase 45% from this year’s levels.
  • U.S. natural gas inventories at the start of the upcoming heating season this November are expected to be lower than last year, but still 2% above the five-year average.
  • Forecast milder temperatures for this summer compared with last summer will reduce the need for air conditioning, resulting in the average U.S. household consuming 5% less electricity from June through August.
  • Higher coal-fired generation and more exports are expected to be major contributors to an increase in U.S. coal production this year, with coal output in western states rising the most.

WTI Clawing Its Way Back -- July 11, 2017

Active rigs:

Active Rigs572973190185

RBN Energy: existing and planned gas pipelines out of the Permian, part 2.
Production of associated natural gas in the Permian’s Midland and Delaware basins is forecasted to continue rising through the early 2020s, challenging existing pipeline takeaway capacity out of the region. There also are limits to how much gas can flow northeast into the Midcontinent and the Upper Midwest — after all, those regions have access to gas from other areas too, including the Rockies, western Canada, the Marcellus/Utica and the Midcon itself. The same holds true for Texas’s Gulf Coast, which has emerged as another battleground for gas producers. Today we continue our series on the ability of existing pipes out of the Permian to move natural gas to market and the enhancements that will be needed to allow Permian production to keep growing.
In Part 1 of our series, we said that the pace of Permian production growth will be influenced by many factors, including the degree to which the market price for crude oil exceeds the play’s breakeven prices and the ability of midstream companies to add incremental pipeline takeaway capacity as that capacity is needed. While the pursuit of crude oil is driving drilling and production activity in the Permian, rapid growth in crude output is being accompanied by large volumes of associated gas and natural gas liquids (NGLs) that also must be dealt with.
Fortunately, the Permian has been a major production area for decades — a lot of crude, gas and NGL pipeline infrastructure is already in place. But, as we’ll get to, it won’t be enough. Part 1 built on our It Was Good Living With You, (W)aha series, which described the hub-and-spoke pipeline networks in West Texas that play critical roles in transporting large volumes of Permian gas to customers as far away as Southern California and Minnesota.

Idle Chatter On The Market -- UNP, Specifically -- July 11, 2017

Disclaimer: this is not an investment site. Do not make any investment, financial, job, travel, or relationship decisions based on what you read here or what you think you have may have possibly read here.

I started investing in 1984 or thereabouts. One of my fondest investments was BNSF (BNI at the time). I have no idea how well I did or how badly I did. But it seemed like a great investment for a number of reasons and I loved investing in BNSF/BNI. Then Warren Buffett bought BNI.

Some years later I started investing in UNP as a replacement for BNI. UNP is another holding that I "enjoy" having in my portfolio. I don't know if it's a great holding or not, but it seems to be doing okay.

I bought more shares yesterday. I see the Dow dropped about a 100 points this morning (sort of a "flash crash") before it recovered a bit. I was curious how UNP did. Currently it is off 0.36%. A third of a percent. 4 cents on a $100 stock.

Out of curiosity I looked at the UNP share price over the past  year. This is quite remarkable:
  • recent low, November 1, 2016, just before the election when all the polls showed Hillary winning, one could have bought UNP at $87
  • by November 16, 2016, just after Donald Trump elected president, UNP at $100
  • since then the high, I believe, has been about $113 -- that's 13% greater than $100
So, we'll see.

I'll never see the money. My investments all go into portfolios that will be passed on to the daughters and granddaughters. I don't know if I will hold UNP "forever." I may sell it tomorrow. I doubt I will buy more simply because I am "over-weighted" in UNP now, as they say on Wall Street.

I sort of like regional monopolies with huge moats.

Flathead Lake

It's going to take awhile to readjust to living in an urban area again after returning from a week at Lakeside, Montana. I had not been to Flathead Lake for twenty years. It's possible I had been there more recently but I do not recall.

It was a sort of mini-family reunion at the lakeside home our father/mother built back in 1979 during a recession, if not nationally, at least regionally. There is a very limited amount of land available for development on the lake. Dad got "in" early, and he has one of the best lots on the lake. The only ones better are the lots that actually extend to the lake. "Our" house is on a lot that has a small, community grassy area in front of it, and then the lake. The view of the Mission Mountains and the Swan Range is incredible.

There were eight of us out there, all adults, but extending across several generations, from 30-year-old millennials to 65-year-old baby boomers like me.

We subscribed to "vacation" internet. CenturyLink provides internet service on a seasonal basis. We had internet/wi-fi but no television. Looking back, it is interesting that not one person of the eight ever even mentioned television. I take that back: one day we did manage to lift the 8-ton 1950's style television on to the back of the pickup trick to take out to the dump. As far as I know, the set had not been plugged in for years.

Only three of us had laptop computers -- only the men had laptop computers. We were on them for a short time in the morning, and then a very, very short time in the late evening. I was probably on the computer the most, simply because of the blog.

The women, five of them, did not have a laptop among them. One of them did not even have a smart phone or any other mobile device. The others each had a smart phone except for one who had a wi-fi only iPod.

It was incredibly peaceful not having television.

I have a maximum of ten years left of enjoying Flathead Lake. My plans are to go out there at least three times a year -- this year it will only be twice.

If I did not have the responsibility of the granddaughters, I would move out there "permanently." It would be my primary home, but I would spend a significant amount of time in Texas, especially during the winter. It's very possible five years from now when two of the three granddaughters are either in college or high school, and there's only Sophia, I may start extending my stays on the lake.

It's unnerving how addicted I am to the television (when it's available) and how little I miss it when it's not available.

Some Canadian Oil Sands Pipelines At Funding Risk -- Headline -- Bottom Line: Inconsequential In Big Scheme Of Things -- July 11, 2017

From Zacks:
Kinder Morgan, Inc.’s KMI Trans Mountain pipeline expansion may not receive funding from Canadian lender, Desjardins, which cited concerns about the project’s impact on the environment. Desjardins had committed $145 million to Kinder Morgan’s Trans Mountain pipeline expansion.

Desjardins, the largest association of credit unions in North America, is no longer contemplating on funding energy pipelines. Per the sources, on Jul 7, the company temporarily suspended lending for such projects and stated that it could finalize the decision. However, a final statement would be made by the lender in September.

Per sources, Desjardins, a financier of Kinder Morgan Canada Ltd's expansion of Trans Mountain pipeline, has been appraising its policy for such lending for months.

If Desjardins sticks to its decision permanently, the association will stop funding other major Canadian pipeline projects, including TransCanada Corp's Keystone XL, Energy East and Enbridge Inc's ENB Line 3.

Such a move would follow that of Dutch lender ING Groep NV, which has a long-standing policy of not backing projects directly linked to oil sands. It is the latest indication that pipelines could face difficulty while applying for funds as banks face pressure from withdrawals.
Data points:
  • Desjardins: largest association of credit unions in North America
  • ING Groep NV: Dutch lender -- long-standing policy of not backing projects linked to oil sands
  • Desjardins: appears to be taking same stance -- backing away from projects linked to oil sands
  • Desjardins: had committed $145 million to KMI's TransMountain pipeline expansion; apparently re-appraising that commitment; decision to be announced September, 2017
  • Desjardins decision: if Desjardins sticks to decision permanently, it would not fund -- TransCanada's Keystone XL, Energy East; and, Enbridge's ENB Line 3
That's fine.
Best State To Start A Business

As soon as I saw Minnesota one place above Texas, I knew the rankings were bogus. The problem: too much weight placed on "education."  Take education off the list of parameters used and Minnesota would be at the bottom of the list. An educated work force is incredibly important but it's not as if Minnesota has a moat around the state when it comes to education. Whatever.

I'm Getting A Headache -- July 11, 2017


July 15, 2017: This is a great example of a writer suggesting that EVs run on electricity. I said the same thing in the original post. I was surprised no one caught my mistake. EVs do run on electricity, but better said, they run on whatever makes the electricity and right now, for the most part that's natural gas and/or coal. If your EV is running on electricity made by coal, I'm not sure one can say "electricity is ultimately more efficient than gasoline, and the growth of natural gas development and green technologies such as solar and wind have drastically reduced its cost." Running on coal certainly can't be more beneficial than running on natural gas or wind energy, at least according to the Algore crowd, but that's where most of the world's electricity ultimately comes from: coal.

Later, 2:24 p.m. Central Time: see first comment; includes this link. From the linked FT article:
Two of the world’s largest oil companies have hit back against predictions that electric vehicles threaten a collapse in demand for hydrocarbons and warned that global energy security would be at risk if investment is withdrawn from fossil fuels too soon. [See original post for a most ridiculous story.]
Saudi Aramco and Royal Dutch Shell acknowledged that a shift towards renewable energy — including battery-powered cars — was under way but said oil and gas would remain indispensable for decades to come. 
“There seems to be a growing belief that the world can prematurely disengage from proven and reliable energy sources like oil and gas, on the mistaken assumption that alternatives will be rapidly deployed,” Amin Nasser of Saudi Aramco told an energy conference in Istanbul. 
Addressing the same event, Ben van Beurden of Shell said the transition to low-carbon technologies would “take place over generations” rather than as a rapid “revolution”. 
It didn't take much pushback for Ben to start changing his tune. LOL.

Original Post
The headline caught my attention but then when I saw the source, I realized immediately the whole premise would be wrong.

The premise is this: EVs run on solar power. LOL.

Wrong. EVs run on electricity. And unless we are mandated to use the most expensive electricity available, utilities will provide and consumers will use the least expensive electricity, wherever it comes from: solar, wind, ocean waves, nuclear (fission or fusion), oil, natural gas, coal, hydroelectric.

Over at Bloomberg:

Remember peak oil? Demand may top out before supply does. The premise is this: if EVs become the norm, then oil won't be needed any more for transportation.
Patrick Pouyanne, CEO of Total SA, says demand will peak at some point in the 2040s, which is why the French energy giant he runs has been investing in solar power.
Ben van Beurden, CEO of Royal Dutch Shell Plc, has said the zenith could arrive a lot sooner, in the next 15 years or so, if electric cars became really popular.
“The energy transition is unstoppable,” Van Beurden told the St. Petersburg forum in early June. “In the most aggressive scenario, you can see oil already peaking in late 2020s or early 2030s.” In the time scale of the oil industry, where multibillion-dollar projects often take a decade or longer to come to fruition, that’s as close as it gets to saying “the day after tomorrow.”
If such forecasts prove right, oil prices are likely to remain low for a lot longer. That raises the possibility that some hard-to-reach deposits, like those in the Arctic, may never be tapped, turning what today are considered valuable reserves into assets of questionable worth. That worries big institutional investors such as BlackRock Inc. that manage mutual funds composed of energy stocks.
Maybe I'm missing something, but the whole premise seems wrong.

The premise is so wrong, I can't even begin to articulate it in a short post. All things being equal, EVs will increase the demand for energy, not decrease it. Many readers have written to tell me exactly that: EVs are an inefficient way of using energy.

Saudi uses oil to run their air conditioners because oil is so cheap for them. If demand for oil reaches a peak in 2040, long before the supply of oil reaches its peak ... I'm getting a headache.

Look at the cost of new intermittent farms compared to the cost of natural gas plants:
The capacity-weighted cost of installing wind turbines was $1,661 per kilowatt (kW) in 2015, a 12% decrease from 2013…The cost of utility-scale solar photovoltaic generators declined 21% between 2013 and 2015, from $3,705/kW to $2,921/kW…The average cost of natural gas generators installed in 2015 was $696/kW, a 28% decline from 2013…Construction costs alone do not determine the economic attractiveness of a generation technology. 
"Capacity-weighted cost" (I assume) means that the incredibly inefficiencies of wind and solar have been factored into the cost of these things. It's been my impression that folks "factoring" such inefficiencies err widely on the positive side.

Sometimes, the information is lost in translation (obfuscation; cluttered paragraph). Let's parse the indented paragraph into data points:
  • wind: $1,661 per kW
  • solar: $2,921 per kW
  • natural gas: $696 per kW
Folks will argue that wind and solar will get cheaper as technology improves; but apparently, the same folks argue that won't be true for natural gas.

Solar is 5 times more expensive than natural gas (on a "capacity-weight basis"); solar is incredibly unreliable (Ivanpah proved that). 

My headache is getting worse.

The bottom line, if oil is so cheap because supply greatly exceeds demand (in 2040) folks will start burning oil to make electricity. The Saudis already do that.

The argument for EVs shifting gasoline consumption to "something else" works if that "something else" is coal or natural gas. But the gedankenexperiment using a supply-demand graph just doesn't work -- at least for me.

By the way, this is one of the reasons I quit subscribing to Bloomberg and when I find a copy at the library I tend to page through it quickly. Too much nonsense.

Reason #2 Why I Love To Blog -- July 11, 2017 -- One Swallow Does Not A Spring Make; Will We See Another Swallow Next Month? Watch Out For The Black Swan

On July 7, 2017, I wrote:
We'll be off the net for awhile -- traveling. But we leave you with this:
July 7, 2017: oil prices plunge 3% as signs of oversupplied market persist.
The S&P 500 energy index sinks to its lowest level since April 2016, with U.S. crude oil now -2.9% to $44.20/bbl following EIA data that showed continued strength in U.S. oil production in the final week of June just as OPEC exports hit a 2017 high, casting doubt over efforts by producers to curb oversupply.
Ah, yes, OPEC exports hit a 2017 high, "casting doubt over efforts by producers to curb oversupply."

Sort of reminds  me of this once said by a disbarred president: "Fool me once, shame on you; fool me twice, shame on me.
Today, just four days later, over at Bloomberg:
Headline: Saudi Arabia Exceeds Oil-Production Cap for First Time
  • June crude output said to rise to 10.07 million barrels a day
  • Kingdom, major producers agreed to curb global oil supply
  • Saudi Arabia told OPEC it pumped 10.07 million barrels a day in June, a person with knowledge of the data said, exceeding its production limit for the first time since brokering a deal to curb global crude supply to counter a glut.
    The world’s biggest oil exporter boosted output from 9.88 million barrels a day in May, surpassing the limit of 10.058 million it accepted in an agreement between OPEC and other major suppliers including Russia.
    Under the deal reached in December, Saudi Arabia agreed to reduce production by 486,000 barrels a day, the most of any country participating in the cuts. The person with knowledge of the June data asked not to be identified because the information isn’t public.
    Normally, an increase in production in the middle of the summer for Saudi Arabia would not be significant: Saudi needs huge amount of oil during the summer to run its citizens' air conditioners. But they agreed to a production cut, and they did not keep to the agreement they brokered.

    But even more significant: if their only "sin" was to increase production, one might have overlooked it -- due to the "air conditioner issue" -- but in light of the fact that OPEC overall brought 2017 exports to a new record -- that's the real "sin."

    By the way, about a year ago I know I wrote on the blog that I doubted we would ever see a Saudi Aramco IPO launch. I just know I wrote that. But I'll never find it. But I will spend the day looking for that post. LOL. Apparently there's a rumor out there (somewhat sketchy, I will admit) that the IPO may not happen. When I saw that, this is what I wrote in an e-mail (not ready for prime time):
    With regard to the Arab IPO: I know I posted on the blog a year ago that I doubted we would ever see the IPO -- not because of price of oil, but because the KING would never go along with selling part of his kingdom AND the KING would never go along with the transparency required. I will now spend the rest of the day looking for that post. LOL. I'll never find it.
I have posted several times that if the price of oil failed to move back toward $60, it was "ever Arab for himself." I just did not expect it this (Saudi Arabia breaking the production cap agreement) so soon.

Perhaps this is a one-off, but one wonders. One swallow does not a spring make. The question is whether we will see another swallow next month. If so, watch out for the black swan.