Thursday, July 13, 2017

ObamaCare Repair -- July 13, 2017

What sanctions? U.S. Boost to Oil Drilling Will Barely Dent Russia’s Energy Monolith. From The WSJ --
But some industry observers say the U.S. shale boom—which reshaped world markets for crude oil and natural gas before Mr. Trump took office—has only limited impact on Russia’s standing as a major energy provider to Europe and Asia.
Sounds like a Euro-centered article. I'm not exactly sure why The WSJ would even publish this story. The tone almost sounds like something I would expect to see in the most liberal "national" newspaper, The LA Times. Maybe I'm missing something.

ObamaCare: On June 30, 2017,  I said that it was Medicaid that was THE sticking point for the US Senate regarding ObamaCare. Today on CNBC the talking head said the very same thing. ObamaCare is now all about Medicaid for the US Senators. I think it's a most interesting spectacle.

Feds caved to CAVE: that was easy -- Federal Agency Drops Rail Plan in Connecticut and Rhode Island. From The WSJ:
The Federal Railroad Administration released Wednesday its final version of a $153 billion plan to speed up service and improve reliability on Amtrak’s busy Northeast Corridor, dropping a controversial plan to build a new rail segment through Connecticut and Rhode Island.
The federal agency said its plan will shave off 45 minutes of travel time for Amtrak riders between New York and Boston and 35 minutes from Washington, D.C., to New York. The project for the nation’s busiest passenger rail segment—which stretches 457 miles from Washington to Boston—still needs funding from Congress.
Travel, Scotland. A Keats-Inspired Tour of Scotland, From Pubs to Peaks From The WSJ -- 
An hour's drive from Glasgow, on the banks of Scotland’s misty Loch Fyne, the Cairndow Stagecoach Inn makes an unlikely home for poets.
At the tartan-carpeted bar, locals gather for themed dances, complete with fog machines and pulsing laser lights. It’s easy to miss a small frame on the wall, which carries a quote from the poet John Keats, who spent a weary night at the roadside stop-off in 1818.
In a letter to his younger brother Tom, Keats wrote of the stay: “We were up at 4 this morning and have walked to breakfast 15 miles through two tremendous Glens.” He described taking a bath in the saltwater lake, opposite the Inn’s windows.
“Quite pat and fresh but for the cursed Gad flies,” he wrote. One thing or another had dogged the 22-year-old Keats since leaving London that summer on an epic walking-tour which would stretch over 600 miles.
From June through August, he and his friend Charles Brown wound their way through the Lake District up to Scotland, where they trekked the muddy Isle of Mull and climbed the U.K.’s highest peak, Ben Nevis. They began in Lancaster, England, and parted at Scotland’s tip, Inverness, where Keats felt too sick to go on.
If I had all the money in the world, I would have a home in Scotland. A friend I met some years ago offered me the use of his summer home on a southwestern Scottish peninsula but I was never able to take advantage of that invitation. 

A Trip To Williston, ND: Mark Zuckerberg Understands Why Trump Won (Hint: It Wasn't Russia) -- ZeroHerdge -- July 13, 2017

Just after I suggested Mark Zukerberg's trip to Williston, ND, wasn't going to be covered by "anyone," a reader sent me this link over at  ZeroHedge. LOL.

A huge "thank you" to the reader.

Trump Records 23rd New Stock Market High

Market up 17% since election.

More then just "fat cats" on Wall Street are participating.

Anyone with a whole life insurance policy is participating.

Anyone with an annuity is participating.

Anyone who has a any type of retirement program through work is participating.

Anyone who has any type of any kind of retirement program is participating.

Any non-working spouse who has a working spouse with a retirement program is participating.

Any child or grandchild of any baby boomer who has invested over the past twenty years is participating.

The vast majority of Americans who pay federal income taxes are participating. 

Daily Report From The Bakken

Pretty, pretty meager.

Active rigs:

Active Rigs583072190186

One new permit:
  • Operator: Liberty Resources
  • Field: Gros Ventre (Burke)
  • Comment:
Twelve permits renewed:
  • EOG (4): four Wayzetta permits, in Mountrail County
  • Whiting (4): three MC MHA permits in Dunn County; one Wright permit in McKenzie County
  • BR (3): one CCU Boxcar permit and two CCU Audobon permits, Dunn County
  • Texakota: a Hemsing permit in Williams County, West Tioga field

Technology Redefining the Energy Sector -- US News -- July 13, 2017


Later, 1:48 p.m. Central Time: see second comment -- something new -- something I had not seen before --
When cumulative production is charted between wells with equal amounts of conventional proppant use, the ones with microproppant added show little gains at first, with a widening advantage as they reach the 1-year mark....

It...does not fit neatly into the current industry focus on maximizing early production as the testing suggests that the benefits of microproppant become apparent later in the life of a well.
Wow, now it's not just sand vs ceramic proppant, but the size of the individual "pellets." This is not a bit surprising but it does add one more variable to the mix. Good stuff.

Later, 1:44 p.m. Central Time: see first comment where there are some great links. This caught my eye since it really fits the original post:
Enhanced oil recovery from unconventional formations has been sought since unconventional development first began.
While recovery factors in conventional reservoirs commonly exceed 25%, unconventional development seldom recovers more than 9%.
There is, therefore, a tremendous amount of oil and gas still in place in unconventional fields, waiting to be recovered. 
Think about that. If current unconventional recovery is less than 9%, imagine what 12%, 15%, 18% might mean in the out years.
Original Post

I thought this was another one of those superficial articles. If so, I had planned to simply link at one of the earlier posts. Surprise, surprise. It's a very, very good article, but you have to read past the fluff.

From US News via Yahoo!Finance:
Technology has redefined the energy sector. The first thing investors should understand, says Reynolds, is how horizontal drilling and hydraulic fracturing technology has revolutionized the energy industry.

It used to be that oil companies were primarily explorers hunting for oil pockets they could tap and bring to market, and the potential of those fields was limited by the price of oil.

"The fields were discrete, so if there was 100 million barrels there would always be 100 million barrels," Reynolds says. "The value of that discrete field was simply calculated based on the price of oil."

The result was that oil companies were always on the hunt, spending billions each year in pursuit of the next oil field. Reynolds says the industry got a reputation for "destroying capital" as a result, since expensive deepwater exploration "didn't have high enough success rates to make for sustainable companies" and the high cost of extraction relied on perpetually high energy prices.

Now, technological advances like fracking allow oil companies to access massive onshore shale oil fields with greater ease and much lower investment. The volatility in energy prices will never go away, Reynolds says, but now "the only thing these guys need to worry about is getting the cost of getting that oil out of that shale lower and lower -- and over the 10 years this (fracking) industry has really existed, that's all they've done."

As a result, many investors are expecting North American shale companies to "grow 20 to 30 percent, or even more," Reynolds says. And since risk is lower than conventional oil companies thanks to cost controls, these shale companies look particularly attractive right now.
Note: over the 10 years this (fracking) industry has really existed. Exactly my numbers. Corresponds exactly with the EOG "discovery" well in the Parshall oil field in 2007. As Donald Trump, Jr, would say, "I love it."

We've talked about this on the blog numerous times.

When they first started fracking in the Bakken, they talked about recovery rates (we're talking primary production here) of 1 to 3 percent. Early analysis suggested they were getting significantly more production than 3 percent, and, in fact, Whiting was soon talking about 5 to 8 percent recovery.

Now, I think the new number is as much as 20% recovery (not yet, but apparently a realistic goal).

If the OOIP of the Bakken was 500 billion bbls, a 1% recovery rate meant 5 billion bbls of crude oil would eventually come out of the Bakken.  At 3%, it become 15 billion bbls. At 6%, it becomes 30 billion bbls. Regardless of the recovery rate, the later bbls are less expensive to produce than the earlier bbls. (Don't take this out of context; not all would agree.)

At 1 million bopd, one year, 365 million bbls, 10 years, 3,650 million bbls or 3.6 billion bbls of crude oil after ten years.

Over time, each additional bbl comes in at a lower cost. In conventional drilling, well, I'm starting repeat the article linked above.

Workout And Snarky Political Comments On The Economy -- July 13, 2017 -- Nothing About The Bakken

Ah, yes.  A few days ago I posted that I vaguely recalled an earlier post suggesting that the SaudiAramco IPO may never see the light of day; it may never be launched. I said I would spend the rest of the day looking for that post. Well, I finally found the post, dated May 27, 2016:
Could see the IPO? Does this mean that it's possible there won't even be an IPO? Once the Supreme Council sees how much information the EU and the SEC want, my hunch is the Supreme Council is going to get very, very cold feet (no matter how hot the sand is). For a paltry $10 billion in cash, the Saudis are going to have to divulge tons of information on their operations that they've held secret for decades.
Not only will the King have to divulge a lot of family secrets, he will see this as selling the family's jewels.

If I were a betting man, and I'm not, I think the chance of seeing a SaudiAramco IPO in 2018 has betting odds of about 5 - 1. For ever dollar bet that it will take place, you win five if the IPO launches in 2018. This is completely hypothetical. There is actually no bet on this, at least from me or this blog.

Tell Me Again What The Obama Administration Was Doing For Eight Years

That's rhetorical. I'm not seeking any comments. Not even six months into President Trump's presidency and the signs of an economy that is finally gaining traction.

On the other side of the coin, not even six months into President Trump's presidency and we now have CNBC telling us that after eight years of the Obama presidency, one-third of Americans never recovered from the Great Recession, the one that was developing in President Obama's first year oin office. Everyone agrees there was a recovery, but it was the slowest recovery in history, and now we learn -- from CNBC -- that one out of three Americans have not yet recovered. The very people that Obama seemed to be most concerned about were hit the hardest. (The operative word is "seemed.")

The story leads to four comments/questions/observations:
  • what was Obama doing for eight years?
  • in less than six months under a new president, we are seeing what appears to be a huge turn in the economy
  • why wasn't this CNBC story published in October, 2016; certainly the data did not change over just a few months -- unless it was even worse in October; if so, another indication that things have changed for the better
  • it's the economy, stupid -- as a former (and disbarred) president would say; this is why Hillary lost; she didn't lose because the Russians removed the maps of Pennsylvania, Wisconsin, and Michigan from her Rand McNally atlas
Speaking of which, whatever happened to Jill Stein? Again, rhetorical; please don't comment.

Exercising With Weights

Years ago I remember wearing ankle weights while running.

Now, while biking, I've found that "handlebar weights" work just as well. LOL.

I have to ride back; get another set of weights to balance the ride. I need to get a "LOL" emoji.

The Energy And Market Page, T+174, Part III -- July 13, 2017

Camelot II is in Paris. Press conference pending.

Not riding Nvidia's coattails. XLNX is down slightly at the opening.

Saudi sends less oil to the US: according to Kemp. We'll see. If accurate, this will be quite interesting, on many levels. The big question: how much oil does Saudi's refinery in the US refine on a daily basis? If Saudi drops below the one-million-bbl threshold, that should be a headline. From Reuters
U.S. crude imports from Saudi Arabia averaged less than 900,000 barrels per day (bpd) in the four weeks ending on July 7, according to the U.S. Energy Information Administration.
U.S. imports from Saudi Arabia are running at the slowest rate since 2015, and the slowest for the time of year for over five years.
Imports from Saudi Arabia will fall even further to less than 800,000 bpd in August, according to a Saudi industry source familiar with the kingdom's oil policy. 
The most recent data available at the EIA site is all the way back to April.

Prediction. Plan B. I bet Warren Buffett has a back-up plan if Elliot Management thwarts BRK's bid to buy Oncor.

Whopping (their words, not mine). Old news. OPEC's production cuts (wink, wink). From 24/7 Wall Street:
In its monthly Oil Market Report for July released Thursday morning, the International Energy Agency (IEA) said that global crude supplies rose by a whopping 720,000 barrels per day in June, due to increases from both OPEC and non-OPEC producers. Total output was 97.46 million barrels a day, up by 770,000 barrels a day.

Commercial inventories in May in OECD countries totaled 3.047 billion barrels, up by 6 million barrels from the April total. OECD stockpiles are now 266 million barrels above the five-year average, down by 34 million barrels from the prior month's total. The IEA said that preliminary indications show a "moderate reduction" in June stockpiles.
Much, much more at the link.
Much, much more at the link. As I've said before, the tea leaves suggest that the fundamentals suggest that the price of oil should be much lower than it is. It almost appears "every Arab for himself" with Saudi Arabia taking the brunt of the cuts (wink, wink).

Oil pricing, from EIA:
EIA now forecasts Brent crude oil spot prices to average $51 per barrel (b) in 2017 and $52/b in 2018. West Texas Intermediate (WTI) crude oil prices are expected to be $2/b lower than Brent prices in 2017 and 2018. Daily and monthly average prices could vary significantly from this forecast because global economic developments and geopolitical events in the coming months have the potential to push oil prices higher or lower than the current Short-Term Energy Outlook (STEO) price forecast. --- EIA  
Sempra news: wins $115 million deal to build liquid fuel terminal. Details:
  • Sempra's unit: IEnova
  • 20-year contract
  • awarded by Mexico's Veracruz Port Adminisration
  • construction, maintenance, and operations
  • capacity: will supply 1.4 million bbls of gasoline, diesel, and jet fuel to central Mexico
  • will begin 2H18
  • 500 direct and 2,000 indirect workers will be needed
Texas hyperdive. Enterprise Products Partners, London co. plan new ethylene export terminal on Houston Ship Channel. Also at Zacks.
The proposed terminal would be built at Enterprise’s Morgan’s Point complex, where the company already has the world’s largest ethane marine export terminal.
The Houston company would manage the construction, operations and commercial activities of the new terminal, while Navigator Gas would utilize its fleet of 14 ethylene-capable vessels to deliver ethylene to customers.
The new terminal would connect to Enterprise’s ethylene salt dome storage and ethylene pipeline system, both of which currently are under construction.
The storage facility will have approximately 600 million pounds of capacity, and the pipeline system will connect to ethylene producers and consumers along the Gulf Coast. 
EEP. Spike in price of EEP coming? Or pump and dump?

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

The Energy And Market Page, T+173, Part II -- July 13, 2017

Enquiring minds want to know: will CNBC, Rachel Maddow, Morning Joe, or anyone else cover Mark Zuckerberg's visit to Williston, ND? I do believe that Williston, ND, is the only place in the world where Christiane Amanpour has not visited and CNN does not have a film crew. LOL.

Lithium: the new "peak oil."

List of 12: Motley Fool lists the top twelve (12) crude oil producing countries in the universe. Six of those countries are not part of OPEC and, according to Motley Fool are "keeping OPEC's dominance at bay":
  • Mexico, #12 - crude oil production has fallen 32% since 2004, due to the natural decline in its large Cantareil field
  • Brazil, #10 - its oil production has risen more than 40% in the past decade after opening its fields to foreign investment
  • Canada, #7 - US crude oil imports -- 38% from Canada; 34% from OPEC
  • China, #6 - used to be a net exporter; now due to huge domestic demand, the world's largest importer of crude oil
  • United States, #3 - EOG singled out by Motley Fool
  • Russia, #1 - actually topped Saudi Arabia in average daily production, after delivering, last year, its best annual average of the past three decades. Russia sanctions? What Russian sanctions?  See first comment: it is incredibly interesting to me that the US and Angela Merkel are so far apart on this issue -- my hunch is that the G-20 conference had more to do with Russian sanctions than with climate concerns. From the first comment: the outcome of the new Russian sanctions would force Trump in a position of choosing between an escalation of domestic attacks over his "allegiance" to Russia, or burning even more bridges with European allies such as Germany, Austria, France and other nations invested in Nord Stream 2, who have warned the US not to proceed with the sanctions.
    On Saturday, it appeared that Trump appears to have chosen the latter option, because the "White House is expected to push House Republicans to change the Senate’s Russia sanctions bill to make it more friendly to Russia."
Edwards: liked by Zacks. Whoo-hoo.

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

New wells coming off confidential list: this is longest dry spell since I started the blog. We haven't seen any wells come off the confidential list since Monday and we won't see any until tomorrow, when we see two.

Dreamers Act: President Trump, during his early days, suggested that his administration might defend (support) President Obama's "Dreamers Act" which some suggested was a huge illegal amnesty program. President Trump said he had "a big heart" and might support the Dreamers Act. The tea leaves now suggest that Trump may not support Obama's amnesty program. I'm sure it has nothing to do with all the crap that the Trump administration and his family has had to put up with, but at some point, even someone as magnanimous as Trump (remember, he said he had no interest in having his DOJ pursue Hillary) can take only so much. The irony is that it's very possible his DOJ is so busy and Trump's agenda is so filled with "Russian stuff," the administration simply does not have the resources (human, time, money) to defend an Obama policy. I remember my days as part of the "Deep State" and knew that even there we had to prioritize our agenda.

Continued: read this article, and ask yourself -- seriously: if the Democrats in the US Senate and the House had actually been even a little supportive of the Trump administration could things be a bit different with regard to immigration policy for this group of folks? I mean, this affects kids that have been here for sixteen years; many of whom have no idea of their legal status. "A million" sounds like a huge number but against a population of 360 million it is a drop in the bucket.

Personal dream: getting back to Flathead Lake, Montana, full-time.

Physics: does water expand or contract in volume when it freezes? Something to think about when trying to tie sea levels with the chunk of ice that broke away from Antarctica this past week. If that is too difficult, then ask this: if one has a flake of ice in a gallon of water, how much will the water level rise/fall in that gallon bucket when that flake of ice melts? LOL. If the link is broken, google -- After Antarctica sheds a trillion-ton block of ice, the world asks: Now what?

The Energy And Market Page, T+174 -- Another $300 Billion -- July 13, 2017

$300 billion: The other day Saudi Aramco said it would spend $300 billion over the next decade in the oil sector after "fretting" over global oil supplies in the out years. Now, today, we learn that India wants to spent $300 billion on oil to meet growing demand. Couldn't India simply send $300 billion in cash in small unmarked bills in an American C-130 under the cover of darkness. Oh, wait, the US already did that under the previous administration. LOL. But whatever, I digress. Time to move on.

Privatization: Bloomberg has an interesting angle to the story yesterday that a "world class" formation was found off-Mexican-shores. It's interesting that Bloomberg was able to publish this. This seems antithetical to the Obama/Hillary/Schumer/Pelosi crowd:
A consortium of Premier Oil Plc, Sierra Oil & Gas S de RL de CV and Talos Energy LLC made the discovery in the shallow waters of the southern Gulf of Mexico just two years after winning the exploration license. It’s the first new find by a private company in the country in almost 80 years, according to consultant Wood Mackenzie Ltd., possible only after the government ended the monopoly of state-run Petroleos Mexicanos.
Job watch: first time claims for unemployment claims data is released at 8:30 a.m. ET. While waiting, one can view the graphic of past data here.  Last week was not a good report, but the overall data for last week was incredibly good (part of the Trump story, I suppose). This week, econoday forecasts another huge number: 246,000 first time claims, almost as bad as the previous week. So, we will see. It's always interesting to see how the market reacts, and then how the White House spins the story if it's a bad report.

The jobs report:
  • 247,000
  • Last week 248,000 was revised up to 250,000
  • June PPI: up 0.1%
  • response on the market: market up slightly 
  • Rick: these numbers led Rick to suggest that Janet Yellen is "starting walk back" her hawkish remarks earlier this year; jobs reports are starting to scare her? Nope, she wants to keep her job.
Oil production cut? What cut? This story is getting older and older. Reuters provides an update -- something we've reported on the blog for months: 
OPEC's compliance with production cuts fell in June to its lowest levels in six months as several members pumped much more oil than allowed by their supply deal, thus delaying market rebalancing, the International Energy Agency said on Thursday.  
Hypocrisy, but I guess this is why we haven't heard much (anything?) from the previous president on this issue, LOL:
The pulse of America: one of the reasons the Drudge Report is so popular -- it has its thumb on the pulse of America. The photo above encapsulates what Americans know about the current witch hunt - regardless of what side of the issue they are. Speaking of a witch hunt, I am thrilled to have recently read Witches by Stacy Schiff. It helps put the term into perspective. Now, that was a "witch hunt." LOL.

Update On The SPR -- RBN Energy -- July 13, 2017

Active rigs:

Active Rigs583072190186

RBN Energy: why tracking Strategic Petroleum Reserve stocks matters more now.
The U.S. Strategic Petroleum Reserve (SPR) is the largest government-owned crude oil stockpile in the world with a mission to protect the country during severe supply interruptions. The facility was developed in three phases from 1977 through 1991.
In its current form, the SPR is comprised of four oil-storage sites along the U.S. Gulf Coast; the sites were chosen largely because of  their proximity to much of the nation’s refining capacity and access to underground salt deposits that can be mined to create storage space for hydrocarbons.
Two sites, Bryan Mound and Big Hill, are located in Texas, and the West Hackberry and Bayou Choctaw sites are in Louisiana. In total, these sites offer storage capacity of 713.5 million barrels (MMbbl) through 60 operational underground salt caverns. The SPR system is designed for an initial maximum drawdown rate of just over 4.4 MMbbl/d that could be sustained for up to 90 days.
Each of the four storage sites was originally configured with the capability to deliver drawdown barrels to their designated distribution terminals and pipelines to then be sold in a competitive sales process in the event of a supply crisis. Purchasers are then responsible for making their own transportation arrangements via three major pipeline and refinery distribution systems: Seaway, Texoma, and Capline. However, in recent years the ability of the SPR to meet oil demand during a supply crisis has become compromised due to aging surface and subsurface infrastructure and changes in crude oil distribution patterns spawned by the Shale Revolution.
The Gong Show: if Harvard School of Business were to develop its version of the "Gong Show," it would be called the "Shark Tank."