The Nation's Biggest Fuel Pipeline Is Back In Business -- August 10, 2017

From Bloomberg via Rigzone. Colonial Pipeline is back to business as usual -- with more demand to move fuels to the East Coast from Houston than it has space for.

After running below capacity about 45 days starting in July, the largest gasoline pipeline in the U.S. has restarted its practice of rationing space. The company froze shippers’ ability to nominate more fuels this month to maintain the line’s five-day cycle shipping frequency.

To be a big player in the U.S. gasoline market, it’s essential to have a gateway to the high-demand center surrounding New York City. Some traders supply that hub with foreign imports, but 1.3 million barrels a day move north on the Colonial Pipeline from the refining hub near Houston.

Last week the arbitrage, or selling opportunity for European gasoline exports to New York, fell to the lowest level since January 2016. Upcoming imports from Europe will also be stifled as the region’s largest refinery shut unexpectedly. Royal Dutch Shell Plc will attempt to restart one of two crude units at the Pernis refinery Friday.

“Inventories of gasoline have been drawing down across the East Coast and now it makes sense to take more barrels through Colonial’s pipeline,” said one analyst.

************************************

The Katie Ledecky Page

Data points from NBC Sports and FINA:

• 20 years old; Stanford sophomore
• world championships, Budapest, late July, 2017
• 1500-meter freestyle: wins by a whopping 19 seconds; already owned the world record and has the seven fastest times in history for this event
• 400-meter freestyle: Katie Ledecky, #1
• 800-meter freestyle: Katie Ledecky, #1
• 4 x 100-meter freestyle with Katie Ledecky, #1
• 4 x 200-meter freestyle with Katie Ledecky, #1
• five gold medals 

From The New York Times: Bidding to become only the second female swimmer to win six golds at a single world championships, Ledecky settled for silver in the 200-meter freestyle Wednesday evening when Federica Pellegrini of Italy claimed a stunning victory on the final lap.

 Missy Franklin has the 6-gold medal record.

CLR's Kukla Wells Updated -- August 10, 2017

A reader mentioned some good results regarding CLR's Kukla wells. I've updated their production here. Interestingly, they are just south of the nice CLR Candee wells.

WTI Drops Along With The Equity Market -- August 10, 2017

Active rigs:

$48.49↓	8/10/2017	08/10/2016	08/10/2015	08/10/2014	08/10/2013
Active Rigs	57	33	72	193	184

Six new permits:

• Operators: MRO (4), BR (2)
• Fields: Bailey (Dunn); Edge (McKenzie)
• Comments: first time I've seen permits in Edge oil field (probably just forgot but very rare); MRO has permits for a 4-well pad in SESW 35-146-94

Eight permits renewed:

• Petro-Hunt (6): four USA permits; two Phelps trust permits; all six in McKenzie County
• EOG (2): two Austin permits, Mountrail County

Bakken Hunter: according to the NDIC, Bakken Hunter has about 30 permits/wells in North Dakota; no permits for Magnum Hunter at that site. At "Bakken Operators" this is the information regarding Bakken Hunter since 2013 (the usual disclaimer):

Magnum Hunter Resources (MHR) (Bakken Hunter is the subsidiary working the Bakken;)

• emerged from bankruptcy protection in 2016; emerges as Blue Ridge Mountain, Inc.; exited the Bakken in 2017
• December 16, 2015: files for bankruptcy protection. 
• September 27, 2014: looking to leave North Dakota; SeekingAlpha, Richard Zeits
• June 3, 2014: 97,000 net acres in North Dakota; Bakken acreage big in Canada, MT
• August, 2013: 377 net drilling locations in the North Dakota Bakken; 
• Will align its wells with existing ONEOK natural gas pipelines; 
• March 2013

The Political Page, T+202 -- August 10, 2017

Updates

August 16, 2017: NOKO (Kim) blinked. He says he has "called off" the four-missile launch on Guam. Comes after tough talk from Trump. In the past, concessions to NOKO would have been made to get Kim to "blink." Now Iran fills the void with threats to renege on "the deal" and may re-start (wink, wink) its nuclear program. 

Later, 10:06 p.m. Central Time: if allies go to war with NOKO, "everyone" seems to agree it would be catastrophic. If so, one wonders why the rest of the world isn't taking stronger action on sanctions -- this doesn't add up. Total embargo on NOKO seems appropriate, but yet that's not even being talked about -- at least in the mainstream press. China fears a humanitarian catastrophe --if war breaks out, there will be a humanitarian catastrophe. 

Later, 4:17 p.m. Central Time: NOKO - US rhetoric heats up. When should one start to take any of this seriously? When the US orders all non-essential civilian and all non-essential military and all family members of US military personnel out of SOKO; and, bans US travel to SOKO.  

Original Post

 
Did the mainstream media misread Trump's "fire and fury" speech? Prior to that speech, Trump's approval rating had dropped to an all-time low, and lower than anything recorded by Barack Obama during his presidency. Trump's approval rated had dropped to 38%.

His approval rating "popped" to 44% following the "fire and fury" speech. The "44%" comes from a Drudge Report headline; the link takes you to the Rasmussen daily presidential tracking poll to which Drudge linked.

*********************************

The Physics Page

The Jazz of Physics: 

The Secret Link Between Music and the Structure of the Universe

Stephon Alexander

c. 2016

DDS: 523.1 ALE 

The title intrigued me. The first three pages made me look at the jacket to see a photo of the author and get the typical short bio. Blew me away. But the first chapter really, really blew me away. An accomplished jazz musician who became physicist. I've only read the first chapter and the first two pages of the second chapter, but for now, I'm hooked.

[Later, August 26, 2017: I've completed the book. Overall, a good book, but anti-climactic. After finishing it, my first thought: the author has had quite a "ride," but from what I can tell hasn't accomplished anything remarkable in the world of physics. That's the case with the entire field of physics right now. It's hard to believe the thousands of physicists worldwide, the technology, and the billions of dollars being spent (large hadron colliders; space travel) and nothing to really show for it. At least compared to the late 19th and early 20th centuries. I'm sure I'm wrong, but that's my impression.]

*********************************

My Favorite Things, John Coltrane

The Market And Energy Page, T+202 -- August 10, 2017

2018: After two lost decades for the US, one wonders what happens next. The tea leaves suggest a most interesting 2018 for the United States. First, a link to a story; and, second, a graphic. First, OPEC now forecasts that the demand for its crude oil will increase in 2018 due to rising global consumption. Rising global consumption of crude oil seems to be the consensus for most analysts. In its most recently monthly report, OPEC suggests that the world will need 32.42 million bopd next year, an increase of 220,000 bopd from the previous forecast.

Meanwhile, the EIA says that strong domestic and export demand is outpacing US gasoline production, resulting in stock draws. This graphic summarizes many of the data points noted (some of them posted) in the past 24 hours:

GDP Now: Latest forecast: 3.5 percent — August 9, 2017.

The GDPNow model forecast for real GDP growth (seasonally adjusted annual rate) in the third quarter of 2017 is 3.5 percent on August 9, down from 3.7 percent on August 4.

The forecast of the contribution of inventory investment to third-quarter real GDP growth declined from 1.11 percentage points to 0.99 percentage points after this morning's wholesale trade report from the U.S. Census Bureau.

From the AP:

Bonanza Creek Energy Inc. on Tuesday reported second-quarter net income of $93.4 million, after reporting a loss in the same period a year earlier.

The Denver-based company said it had profit of $1.67 per share. Earnings, adjusted for non-recurring gains, came to 27 cents per share.

The oil and gas company posted revenue of $44.1 million in the period.

Bonanza Creek shares have decreased 76 percent since the beginning of the year. The stock has decreased 72 percent in the last 12 months.

So Close! But A New All-Time Record Set -- Gasoline Demand -- August 10, 2017

So close: four-week average for gasoline demand, almost matching last year's number. Most recent four-week number:

• 2017: 9.763 million b/d
• 2016: 9.776 million b/d
• delta: 13,000 b/d -- wow

But, we did hit an all-time record of gasoline demand on a weekly basis for the first week in August (not an all-time record for any week, but an all-time record for the first week in August):

Gasoline demand flirts with new records despite all those EVs being sold in the US and all those new CAFE standards.

Refineries respond:

Disclaimer: I often misread tables and graphs. If this information is important for (to) you, ignore my comments, go to the source.

****************************************
 Lego

Lego replaces its 61-year-old Brit Bali Padda after just eight months on the job. Wow. Lego replaces him with a digitally-savvy Dane. Story at The WSJ. This comes in light of Lego's growth slowing, slipping behind Mattel as the world's largest toy company.

*******************************************

The Drudge Report

Chicken or egg?

Does mainstream media frame "The Drudge Report" or the other way around?

Problems In The Permian? -- August 10, 2017

Updates

Later, 11:17 a.m. Central Time: Don helped me out with new airfields in the Bakken (see note below regarding the "talking head" that misspoke), with this link to the FAA. Don noted:

Minot got a runway,  Dickinson got runway expansion, and a terminal expansion ... at peak had Delta, United and a regional carrier. Bowman has a new 5700 ft CEMENT runway with lights ... and an all-new facility 4 miles east of town. And, of course, Williston is currently building a new international airport. 

 Original Post 

WTI: $50.13.

Jobs: 244,000 today, up 3,000 from last week's 241,000 (revised upward by 1,000). Narrative: jobless claims are now meaningless. Numerator/denominator (jobless claims/total employed) is at an all-time record low: employers no longer watching jobless claims -- their problem is this: employees unable to find qualified candidates for the jobs they need filled. 

Fed watch: likelihood of Fed raising rates in September, almost zilch. Maybe 0.25% in December, but that comes from a talking head at CNBC whose biggest concern seems to be NYC potholes (see below). 

Comment to start the day: the number of comments a WSJ story generates speaks volumes. There were 80 comments to the WSJ article on the Permian (see below) which suggests readers interested in the Permian were very surprised (concerned?) by this development. On the other hand, the WSJ story reporting that OPEC's production rose in July must have surprised no one: not one comment.

Talking head misspeaks: talking about infrastructure, talking head on CNBC says there has been no new airport built in the US in 23 years -- he needs to get out to the Bakken -- see the new Williston airport being built. Didn't Bowman, ND, get a new airport? At least a new runway. Minot with a new terminal a couple of years ago, I believe. I'm surprised he didn't say there has been no new refiney built in 50 years; in fact, at least one, again, in the US. Same talking head complains about lack of activity on roads: he needs to come to north Texas. He needs to get out of NYC. He didn't talk about the LNG export facilities -- his main concern: potholes in downtown NYC. Wow.

The Permian: for quite some time I've questioned the exuberant enthusiasm of operators who were willing to pay $40,000 / mineral acre to jump into the Permian. Lately there have been some "concerning" stories in the mainstream business media that suggest my thoughts may not be far off the mark. Today, in The Wall Street Journal: investors question oil output in Permian Basin. Worries mount after Pioneer reported its Permian wells are producing more gas than expected:

Investors helped turn West Texas’ Permian Basin into America’s fastest-growing oil field, but their confidence is cracking over whether drillers can keep production rising.

Questions mounted last week after Pioneer Natural Resources Co. PXD 1.60% reported that its Permian wells are producing more gas and natural gas liquids such as propane than expected. That worried investors, who care a lot more about oil.

Shares of Pioneer and other Permian producers tumbled as a result. Pioneer ended the week down 16%, while Parsley Energy Inc. PE -0.78% and Concho Resources Inc. CXO 0.76% both declined more than 9% over that stretch.

Most wells produce natural gas as a byproduct alongside oil, and that gas output tends to rise over time. That is because as a reservoir is depleted, its pressure drops and gas vapors separate from liquid—reaching the “bubble point” at which natural-gas production accelerates.

Pioneer last week indicated that some of its Permian wells are reaching this point sooner than it anticipated.

The Permian gas problem: RBN Energy seems to be all over this issue. Today, RBN Energy has a third installment on Permian natural gas (see below). 

OPEC cuts (wink, wink): OPEC says crude output rose in July. I'm shocked, shocked! In The Wall Street Journal today, "a blow to cartel's efforts to reduce output and drain a global supply glut." 

OPEC crude-oil production rose further in July, in the latest sign the cartel’s efforts to reduce output and drain a global supply glut are falling short.

The Organization of the Petroleum Exporting Countries’ output rose by roughly 0.5%, to 32.87 million barrels a day last month, up by 172,600 barrels from June. The uptick, which was smaller than the prior month’s increase, was driven by higher production in Libya, Nigeria and Saudi Arabia, according to OPEC’s closely-watched monthly market report.

The report comes as Saudi Arabia—OPEC’s largest member and the world’s biggest crude exporter—has been pressuring other members of the cartel for better compliance with an agreement to curb production output.

*************************************

Back To The Bakken

Active rigs:

$49.89↑	8/10/2017	08/10/2016	08/10/2015	08/10/2014	08/10/2013
Active Rigs	57	33	72	193	184

RBN Energy: Permian natural gas processing plants and NGL pipelines, part 3.

The year-ago completion of Energy Transfer Partners’ Lone Star Express NGL pipeline from West Texas to the Mont Belvieu storage and fractionation hub near Houston was a big deal. The new, 533-mile pipe increased effective NGL takeaway capacity out of the Permian by more than 25% and gave Energy Transfer a larger conduit for moving NGL produced at its Permian natural gas processing plants directly to the company’s still-growing complex of fractionators in Mont Belvieu. Energy Transfer also owns another big NGL pipeline out of the Permian: the Lone Star West Texas Gateway. Today we continue our blog series on the NGL side of the Permian with a look at what is currently the biggest fish in the play’s NGL pond.

All of the drilling going on in the Permian — 379 active rigs as of August 4, according to Baker Hughes — is focused on crude oil, but the 70,000-square-mile play in West Texas and southeastern New Mexico also produces large volumes of associated natural gas (about 6.5 Bcf/d as of this week and NGLs (nearly 800 Mb/d) that help to fatten producers’ wallets. The focus of this blog series is Permian NGLs: the natural gas processing plants that separate raw gas into dry gas and mixed NGLs and the pipelines that transport mixed NGLs (also known as y-grade or raw mix) to storage and fractionators, primarily in Mont Belvieu.