Wednesday, July 12, 2017

At T+173, Trump Has Turned The US Economy Around -- July 12, 2017

I was gone all day so I did not see this data roll in over the day; I saw it all at once, when I got home and started going through the day's news.

When one simply scrolls through the stories, and the graphics, at this link, it's hard not to say that after only 173 days, the Trump administration has turned the US economy around. And that doesn't even include the jobs data from last week.

I Wish I Had Said This

Some people ask me the secret of our long marriage. We take time to go to a restaurant two times a week. A little candlelight, dinner, soft music and dancing. She goes Tuesdays, I go Fridays.

Peak Oil? What Peak Oil? -- World-Class Formation Discovered Off Mexican Shore -- July 12, 2017

From The Wall Street Journal:
One of Mexico’s earliest private-sector energy investors says that it has struck it big with a significant oil discovery in Mexican waters.

Britain’s Premier Oil PLC, along with partners Talos Energy of Houston and Sierra Oil & Gas of Mexico City, said Wednesday that exploratory drilling in the Zama-1 field, located in the shallow waters of the Gulf of Mexico, had uncovered a “world-class” formation with between 1.4 billion and two billion barrels of light crude oil, or roughly double earlier predictions.

Earlier this year, the group had estimated that there were between 700 million and 800 million barrels in the deposit.
It may be "world-class," but OOIP pales in comparison to what the Bakken has.

More at the link.

Also in the Oil & Gas Journal.

US Refinery Inputs Hit Record

State Rankings: Total Energy Consumed Per Capita, 2014

Via Twitter, an EIA ranking.

I'm not quite sure why EIA's most current data for this metric goes all the way back to 2014. One would think that data should be available for 2016 by now. Whatever.

Top ten in energy consumption per capita:
  • Louisiana
  • Wyoming
  • North Dakota
  • Alaska
  • Iowa
  • Texas
  • Nebraska
  • South Dakota
  • Indiana
  • Oklahoma
Bottom ten
  • New York (#51)
  • Rhode Island
  • California
  • Hawaii
  • Florida
  • Connecticut
  • Arizona
  • Massachusetts
  • Vermont
  • Nevada
  • Maryland
  • New Hampshire
Posted only for "grins." There are so many reasons such a metric is meaningless. 

We'll start with the amount of energy used in farming. 'Nuf said.

One other thought: all things being equal (and they definitely are not in this case): there is a correlation between quality of life and energy consumption. 

Meager, Meager Daily Activity Report -- July 12, 2017

Active rigs:

Active Rigs582873190186

Four new permits:
  • Operator: Crescent Point Energy
  • Field: Lone Tree Lake (Williams)
  • Comments: permits for a 4-well pad in 9-157-99

Market, Energy, And Political Page -- T+173, July 2017

I was out and about all day. Just got back in. Quickly.

Record. Screenshot from The Drudge Report:

Trump rally extends. From Reuters: Dow sets record-high close; Fed signals gradual rate hikes.

Watergate? Hardly. All they got on Trump, JR: "I love it." And Donald himself released it. Time to move on.

Facebook's Mark Zuckerberg visits Williston. Even Reuters, via Rigzone reported the story.

Crude oil inventories drew down a whole lot more than anyone expected a few weeks ago. Time to re-balance dropping fast. Time to re-balance: 47 weeks. What's not to love. (Update: methodology was wrong in some parts of this table; it has been updated and corrected at this post):

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
Week 10
July 6, 2017
Week 11
July 12, 2017

The drawdown:

OPEC production cuts (wink, wink):
Too good not to show again (previously posted):
Perhaps the best chart of the month:

Gasoline demand related to new jobs? I don't know.

Second best chart of the day:

Re-posting: Turkey withdraws from Paris climate accords. Says it wants US financial aid.

Everybody is saying this. Halliburton says oil will spike in 2020 after $2 trillion in industry cuts. Okay. Saudi is hoping.

Expansion. Williams Partners begins first phase of Hillabee expansion. Data points:
  • Alabama
  • enhance the capacity of the partnership's Transco pipeline system
  • will use the new Sabal Trail pipeline to supply gas to Florida as demand for cleaner energy is increasing rapidly in the growing power generation market
  • FERC has approved the project
  • will add more than 1.1 million dekatherms /day of pipeline capacity to the Transco system only four years from now (2021)
  • three phases
  • another huge story that will get little press; meanwhile, a report that a high school is installing a wind turbine gets national attention. LOL.

US Refinery Inputs Hit Record

Prediction: Tesla goes to the capital markets to raise more cash not later than August 31, 2017.

Our Day At The Perot Museum in Dallas

Weekly Crude Oil Data Will Come Out Today; The Energy Page, T+173 -- July 12, 2017


July 18, 2017: from Barron's -- "NRG's plan to divest of renewables could prove short sighted."

Original Post
Yellen: following the "real news" regarding Janet Yellen this morning, stock market futures are surging. Wow. 

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

Global oil production: OPEC's first 2018 outlook -- the cartel is still pumping too much. OPEC sees 2018 demand for its crude below current production. OPEC output also exceeded demand during first half of this year. Tell me again about the OPEC cut (wink, wink).

Halcon: quick note. Yesterday it was announced that Halcon would exit the Williston Basin; focus on the Permian. 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.

NRG: lots and lots of buzz about NRG Energy yesterday.  Huge debt problem; high consumer electric prices in Texas because of wind energy. NRG says it is making "transformational changes." The only "transformational change" I'm interested in when it comes to NRG is a) whether our electric rates in Texas will drop; and/or, b) whether NRG will backtrack on wind energy. Here's the press release:
NRG Energy Inc. announced Wednesday a "transformation plan" aimed at cutting recurring costs by $1.1 billion, slashing debt obligations by $13 billion and completing assets sales worth up to $4.0 billion.
The integrated power company said it plans to deploy up to $6.3 billion in excess cash through 2020, including $4 billion by end of 2018, in either projects or investments or shareholder return programs. As part of the plan, the company is targeting divesting 50% to 100% of its interest in NRG Yield and its leading renewables platform.
NRG is surging about 17% this morning.

XLNX: could hit new high today. [Yup, hit a new high. Whoo-hoo!]

Drop in US crude oil inventories: Reuters: oil rises above $48 as API reports drop in US fuel stocks. If this number holds up, it's very, very bullish ... and quite surprising. The API reported yesterday that US crude oil inventories fell by 8.1 million barrels.

EIA has also lowered its forecast for the amount of US oil production forecast for next year. Previously, the EIA suggested that US oil production would hit 10 million bopd -- an all-time record sometime next year (I thought there were even suggestions that the10-million threshold would be hit by the end of the year). Now, the EIA suggests US crude oil production will "only" reach 9.9 million bopd next year.

And then, of course there are all those reports of "stealth" demand no one is noting.

Goldman Sachs, recently admitting that it had really been burned on its crude oil prognostications, now warns that crude oil could drop below $40.

Citi says there could be some short term pressure on crude oil but by the end of 2017, WTI could approach $60.

My wishy-washy reading of the tea leaves: the fundamentals suggest that WTI cannot get to $60 by the end of the year, but oil trading is as much "emotional" as "rational." Thus, if we have several weeks of crude oil inventory declines greater than expected, the price of oil could rise significantly. The problem for Saudi: the smaller operators in the Permian are starting to show significant stress: they spent a lot to enter the Permian and will have to spend even more to develop it. They will take every increase in the price of oil as an opportunity to increase Permian production. For the Permian, it looks like the "magic number" for many operators is $50.

And so it goes.

Refinery Operations

From the EIA today:
As of January 1, 2017, U.S. operable atmospheric crude distillation capacity reached 18.6 million barrels per calendar day (b/cd), 1.6% higher than at the beginning of 2016.
This increase in operable capacity was slightly lower than last year’s increase of 2.0%.
The capacities of secondary units that support heavy crude oil processing and production of ultra-low sulfur diesel and gasoline, including thermal cracking (coking), catalytic hydrocracking, and hydrotreating/desulfurization, also increased.
Catalytic hydrocracking and deasphalting units experienced the largest capacity increases over the past year, rising by 4.5% and 6.1%, respectively. --- EIA
US Refinery Inputs Hit Record

Breaking News Vs Real News

I'll be gone most of the day -- family outing -- so I won't be blogging until later this evening, so trying to "catch up" before I leave for the day.

The CNBC news teaser: the Fed (Janet Yellen) would "shrink its balance sheet appreciably." This should have put huge pressure on the stock market. But then the "rest of the story" was reported:
  • the Fed's balance sheet would still take quite some time to be brought down (bullish)
  • the Fed's balance sheet would still be greater than what it was pre-crisis (wow, bullish, unexpected)
So, again, the teaser suggested news that was going to put huge pressure on the market but when we saw the actual report, it was a surprise in the opposite direction.

Market reaction? Futures surged.

'Nuf said.

Honesty Is The Best Policy

When no one is listening to you anyway, you might as well try something new -- like speaking the truth.

Burgos Shale Play -- Mexico -- Just Across The Texas Border -- RBN Energy -- July 12, 2017


July 12, 2017: be sure to read the first comment. I will add the Pimienta to the sidebar at the right under "other plays.'
Just one play, the Pimienta, spans 1,000 km and is between 50 and 100 km wide (27,000 sq. miles, 17 million acres). Rock quality is similar to the Eagle Ford, but it has "more than 200 m of gross shale thickness, double the typical Eagle Ford thickness in South Texas," the O&G Journal says.

"The Pimienta can be found in the volatile oil to wet gas windows (0.8-1.2%) and at optimal depths of 2-3.5 km. Porosity has been measured at a reasonably high 7%. Reservoir pressure often is high, reaching 50% over hydrostatic in places. The stress gradient has tested at a moderate 0.9 psi/ft, enabling good 3D fracturing systems during stimulation. Coupled with the vast prospective area, these are intriguing reservoir properties."
Original Post
Active rigs:

Active Rigs572873190186

RBN Energy: can Mexico spur gas production in its Burgos Shale play?
It may take a number of years to pan out, but Mexico is taking steps to accelerate the development of its natural gas-rich Burgos Shale region, which lies just across the Rio Grande from South Texas’s newly resurgent Eagle Ford play.
Today (July 12, 2017), Mexico’s Secretaría de Energía (SENER) is expected to name the winners of a competitive bidding process for the rights to drill for natural gas within 1,500 square miles in the states of Nuevo Leon and Tamaulipas.
If the effort to juice Burgos drilling activity and production proves successful, it could affect how much natural gas Mexico needs to import from the U.S. Today we discuss the prospects for reversing gas production declines south of the border and the challenges that exploration and production companies (E&Ps) face in Mexico’s most promising shale play.

Saudi Story -- Interesting -- July 12, 2017

I think CNBC is about to report on this story:

Nope, CNBC did not report on that story. After the commercial, CNBC came back and simply reported on the usual mid-week crude oil data points. We'll get the official numbers later this morning.

The reason I thought CNBC was going to report on the Saudi story was because the "teaser" said that the price of WTI popped. Right now it looks like WTI is up about 1.6% to $45.74.

Saudi Aramco To Spend $300 Billion Over Next Decade

Saudi Aramco is worried about global oil supplies in the out years. Interesting.

The story is at Bloomberg via Rigzone:
Saudi Aramco, which plans what could be the world’s biggest initial public offering, will invest more than $300 billion over the next decade to maintain its spare oil-production capacity and explore for more natural gas, President and Chief Executive Officer Amin Nasser said.

The outlook for oil supplies is “increasingly worrying,” with about $1 trillion in investments lost during the current industry downturn and fewer new deposits being discovered, Nasser said at a conference in Istanbul. Some estimates suggest that at least 20 million barrels a day of new output is needed over the next five years to offset rising oil demand and the natural decline of developed fields, he said.

“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,” Nasser said in a speech on Monday. The petroleum industry will be at the heart of global energy for years, and the transition to use of alternatives will be “long and complex,’ he said.