Monday, August 14, 2017

A Huge "Thank You" / "Shout Out" To A Very Alert Reader -- August 14, 2017

Earlier today I was duped into posting a "sponsored ad" story. My antennae were up; I thought the story a bit "strange" but it was posted by a reliable (?) website and so I linked it.

An alert reader noted that the story was bogus. It was a "sponsored ad" that looked like a legitimate news story.

As soon as the reader notified me, I took the link and the story down. There is really no reason to post this note, but I wanted to let the reader know that I really appreciate the note letting me know that I had been "duped," as they say.

Update On The Cameron LNG Export Facility, Louisiana

On another unrelated note, a reader sent me this update on the Cameron LNG export facility in Louisiana:
A six month delay of the beginning of commercial operations for Cameron LNG, LLC, the three-train LNG export facility in Louisiana, is credit negative for the project because it postpones the commencement of cash flow generation.
In-service dates for each train may now be delayed until 2019.
However, strong contractual protections mitigate any permanent financial effect for the project. Cameron’s sponsors, Sempra, ENGIE SA, Mitsui & Co., Ltd., and Mitsubishi Corporation, fully mitigate completion risk to the project.
The note comes from a reliable source and is simply an update. No hidden agenda.

Kim Just Blinked -- The Political Page, T+206 -- August 14, 2017

Wow, and Trump will get absolutely no credit. Kim just blinked. The Wall Street Journal is reporting that Kim has backed off on launching missiles on Guam. LOL. China is apparently "playing along" to support Trump. Truman: walk softly and carry a big stick. Trump: tweet loudly and carry a bigger stick. Maybe do what Obama suggested: take a gun to a knife fight.

What are futures doing?  Dow 30 up another 63 points, at 7:54 p.m. Central Time. WTI unchanged at $47.59.

WTI Down On Strong Dollar; Three New Permits; Four DUCs Completed -- August 14, 2017

Active rigs:

Active Rigs563374194184

Three new permits:
  • Operators: Petro-Hunt (2); Liberty Resources
  • Fields: Charlson (McKenzie); North Tioga (Burke)
  • Comments:
One permit canceled:
  • Samson Oil and Gas: a Rainbow permit in Williams County
Four producing wells (DUCs) reported as completed:
  • 31972, 3,072, Statoil, Lougheed 2-11 XW 1H, Todd, t717; cum -- (watch 20282)
  • 32548, 3,438,  Whiting, Koala 31-25-2TFH, Poe, T7/17; cum -- (watch 20319, 20413, 21303)
  • 32722, 533,  BR, Remington 3D UTFH, Blue Buttes, t7/17; cum --
  • 32723, 522,  BR, Remington 3E MBH, Blue Buttes, t7/17; cum --

The Market And Energy Page, Part 2, T+206 -- August 14, 2017

GEEE! Apparently Warren Buffett dumped his entire holdings of GE. Now it's time for him to dump Wells Fargo. Story here. GE is trading at a near-52-week low (August 15, 2017).

Eclipse keeping Portland weird. Platts is reporting:
Portland ULSD soared to its highest point in more than a year on weak local supply, a Midwest refinery disruption and the preternatural convergence of celestial bodies, market sources said Friday.
Market sources have tied the unusual ULSD demand in Portland to the 2017 solar eclipse. Oregon is in the path of the first total solar eclipse in 38 years to cross the continental US. Oregon officials estimate an influx of 1 million visitors to the state for several days surrounding the day of the eclipse, August 21. The Oregon office of Emergency Management has warned of "long lines for fuel."
Eclipse: the eclipse is going to be bigger than folks realize. One example: my son-in-law is flying the entire family to Atlanta, GA, from DFW. At Atlanta, they will rent an oversized SUV and take a 3-hour leisurely drive to Nashville to see the eclipse where it will be a "total" (100%) eclipse. Following the several hour event, they will return on a leisurely drive back to Atlanta, and then fly back to DFW.

Eclipse: the last such "US" eclipse was 38 years ago. I must have been about 29 years old. Thirty-eight years ago must have been around 1979. I was living and working in northern California.

Eclipse: from NASA --
The last total solar eclipse viewed from contiguous United States was on Feb. 26, 1979 whose path passed through the northwestern U.S. states of Washington, Oregon, Idaho, Montana, North Dakota, and Canadian provinces of Saskatchewan, Manitoba, Ontario and Quebec.
After the August 2017 total solar eclipse, the next annular solar eclipse that can be seen in the continental United States will be on October 14, 2023 which will be visible from Northern California to Florida. Following this, we will have a total solar eclipse on April 8, 2024 visible from Texas to Maine.
In 2024, I will be around 73 years old, only seven years from now.

Until The Equinox

Equinoxe 4, Jean-Michel Jarre

Filloon On The Delaware -- August 14, 2017

Filloon over at SeekingAlpha: monster Delaware wells provide insight into longer term implications for the USO.
  • the Delaware has more upside than any unconventional play in the lower 48
  • the Delaware is deeper than Midland, and this provide unique well pressures in Loving and Lea counties
  • these results are why Suntrust loves this area
  • we are just starting to figure out how good the Delaware is, and how far reaching the play will become
From the article:
Well results show much better production at the high end of the curve. As in all plays, some wells grossly under perform.
More importantly, is the very large oil production on the high end.
We focused on locations using more than 10 million pounds of proppant and/or more than 1,000 pounds per foot. This seems to be a base case or low end of enhanced completions. It also provided inclusion of wells that have a shorter lateral length.
Only wells completed after October of 2015 were included. The slide above has four locations producing more than 500 KBO. These wells had a well life of 9 to 13 months. These are better than most anywhere, and seem to be isolated to EOG. Nine locations produced more than 400 KBO. 28 wells produced more than 300 KBO. The total enhanced completions within this time frame were 311.
In summary, the Delaware has seen less activity than most other US unconventional plays. Operators continue to increase spending in the Delaware. There is more de-risking and downspacing to assess. This increased risk could provide more up or downside.
Recent results show there could be something special in the Delaware, and we do not know which intervals and how large an area it encompasses. Although oil prices may remain low, the Delaware should continue to increase production. We believe the Delaware is one of the best areas to be. Concho, EOG, and Cimarex are just a few names that seem well placed going forward. 

The Political Page, T+206 -- August 14, 2017

From CO2 Now:

  • gasoline demand in the US is setting new records
  • natural gas production in the US is setting new records
  • Germany is closing nuclear plants (zero emission plants) and replacing them with coal 
Previous month:

From a year ago:

Putting the change into perspective, year-over-year:
  • 407.25 - 404.39 = 0.7% change over one year.
  • 2.86 parts per million change = 0.000286% change.
  • Is that even statistically significant? Is that even reproducible?

The Market And Energy Page, T+206 -- August 14, 2017

From Reuters: US shale output poised to keep rising despite investor concerns.
Shale production in the largest U.S. oilfield should rise by as much as 300,000 barrels per day by December, according to updated forecasts following the industry's latest quarterly results.
The higher outlooks, amid worries the recent breakneck pace of gains may not be sustained, come on the heels of one high-profile Permian Basin producer's oil output miss last quarter and decisions by several other energy companies to trim annual budgets.
Oil production from the Permian Basin of West Texas and New Mexico is closely watched because its low costs and rapid growth have pressured efforts by the Organization of the Petroleum Exporting Countries to drain a global crude supply glut.
Consultancy Wood Mackenzie sees another 300,000 barrels per day (bpd) coming from Permian projects by the end of the year, raising its year-end forecast by 200,000 bpd.
Rystad Energy, meanwhile, projects output from the Permian will rise by 300,000 bpd in the six months from June to December.
Both expect oil production in the Permian next year will approach or surpass the 2.7 million bpd mark.
DAPL Fallout

From whotv in Iowa: FBI raids home of admitted DAPL vandals.
Developers expected protests -- but they did not expect the work of arsonists--but multiple pieces of equipment were set on fire during construction of the Bakken Oil Pipeline, and the FBI now appears closer to making an arrest.
Agents already have a confession, and on Friday went looking for evidence that could lead to an arrest.
"We then returned to arsonry as a tactic. Using tires and gasoline-soaked rags we burned multiple valve sites, their electrical units, as well as heavy equipment located on DAPL easements throughout Iowa," said pipeline protestor Ruby Montoya.
Last month, Montoya and Jessica Reznicek admitted to burning millions of dollars in construction equipment along the Bakken Oil Pipeline. The two were then arrested for damaging a sign outside the Iowa Utilities Board building.
On Friday morning, FBI agents raided the home where the two are living and spent several hours at the home searching for evidence, including welding equipment needed to burn holes in the pipeline.
So Much For That 1% Correction Last Week

The Dow 30 is currently up 155 points (10:49 a.m. Central Time), and the Dow 30 is now "Green" for the month of August (again).

Only 35 new highs on the NYSE today, including: Allstate and Fiat Chrysler. Chrysler? Say what? Here's the story: Chinese automaker reportedly bids for Fiat Chrysler.

And then this surprise: Japan's GDP crushes expectations. Japan's economic growth soared in 2Q17 (ended June), logging the fastest increase in more than two years. Data points:
  • real GDP surged by 1% in the June quarter, easily surpassing expectations for a smaller increase of 0.6%
  • the expansion was larger than any individual economic forecast offered, putting the scale of the beat into perspective
  • seasonally adjusted annual rate (SAAR) of growth soared to 4%, again topping forecasts for an expansion of 2.5%
  • fastest increase since the 1Q15
  • extends Japan's streak without recording a negative growth quarter to six, the longest stretch since mid-2006
  • growth in the March quarter (1Q17) was also revised up to 1.5%,  higher than initial estimates of 1%
Compare to US forecast for 3Q17: 3.5%.

National Park Passes For Seniors WIll Surge Later This Year -- Visit Teddy Roosevelt NP; Get Your Lifetime Senior Pass Now For $10 -- August 14, 2017

This is from US News but this story is easily followed everywhere. Data points:
  • currently, seniors can purchase a lifetime pass to US national parks for $10 -- yes, lifetime pass to all US national parks for a one-time fee of $10
  • seniors: 62 years and older
  • the deal has been available for two decades
  • August 28, 2017 -- in two weeks -- The America the Beautiful Lifetime Senior Pass will go up to $80
  • thank your Congressman/Congresswoman -- the legislation was passed last year
  • $10 to $80? a 700 percent increase in price
  • for those under 62, the price will not change: $80 for an annual pass
I've never understood why there is a fee for US citizens to visit the parks they own, but that's another rant for another day.

Nine Wells Coming Off Confidential List Over The Weekend, Monday -- August 14, 2017

These are the wells that came off the confidential list over the weekend and today (three other wells coming off the confidential list were SI/NC):
  • 32240, 238, Oasis, Forland 5198 41-33 2TX, Siverston, 50 stages, 3.8 million lbs, t2/17; cum 96K 6/17;
  • 31530, 1,822 QEP, Foreman 12-11-1-2T2H, Blue Buttes, 17 stages, 3.1 million lbs, t2/17; cum 71K 6/17;
  • 31532, 1,962, QEP, Foreman 5-2-1BH, Spotted Horn, 49 stages, 9.6 million lbs, t2/17; cum 87K 6/17;
  • 31533, 992, QEP, Foreman 1-2-1T3H, Spotted Horn, 49 stages, 3 million lbs, t2/17; cum 42K 6/17;
  • 31534, 1,757, QEP, Foreman 4-2-1BHR, Spotted Horn, 49 stages, 10 million lbs, t3/17; cum 85K 6/17;
  • 31535, 2,238, QEP, Foreman 2-2-1THR, Sptted Horn, 49 stages, 10 million lbs, t3/17; cum 104K 6/17;
  • 31689, 2,003, QEP, Foreman 12-11-1-2BH, Blue Buttes, 49 stages, 9.4 million lbs, t2/17; cum 82K 6/17;
  • 31690, 2,177, QEP, Foreman 6-2-1BH, Spotted Horn, 49 stages, 9.3 million lbs, t2/17; cum 110K 6/17;
  • 32239, 1,640, Oasis, Rolfson S 5198 41-33 14BX, Siverston, 50 stages, 4 million lbs, t2/17; cum 141K 6/17;
Note, for example, the Rolfson well has produced more than 140,000 bbls in less than 5 months.

Hopefully, Art Berman is paying attention.

Bakken and Western Canadian Producers Wrangle for Gas Takeaway Capacity; Paradox Basin Surprise? -- August 14, 2017

Active rigs:

Active Rigs573374194184

RBN Energy: Bakken and western Canadian producers wrangle for gas takeaway capacity.
Associated natural gas production from North Dakota’s oil-focused Bakken Shale is rising as rigs are being added in the region. Bakken gas output reached a record 1.18 Bcf/d this past May.
The incremental gas production in the area is intensifying competition with imports from the already-beleaguered Western Canadian Sedimentary Basin (WCSB), which share the same pipeline capacity and target the same Midwest demand markets. The trend also is prompting calls for more pipeline capacity out of the Bakken. How much more capacity is needed and by when? Today, we look at existing natural gas takeaway capacity and flows out of the Bakken.
We first wrote about rising Bakken gas production and the impending battle with Canadian gas for pipeline takeaway capacity in a July 2012 blog.
At the time, crude oil was trading at upwards of $80/bbl. Oil production from North Dakota’s Bakken Shale had just climbed above 600 Mb/d. Associated gas volumes, including the natural gas liquids content, were just barely approaching 700 MMcf/d, and nearly 40% of that gas was being flared because of midstream capacity constraints, allowing little more than 400 MMcf/d of dry gas to hit the pipelines. But at $80/bbl, oil production was slated to climb rapidly, and with it came increasing volumes of associated gas.
By late 2014, Bakken oil output had doubled to 1.2 MMb/d, dry gas volumes were approaching 900 MMcf/d, North Dakota implemented new restrictions on gas flaring to be phased in over a few years and consequently the market was becoming concerned about pipeline takeaway capacity. But about that time, the 2014 oil-price collapse took a severe toll on rig counts, Bakken crude output declined slowing the growth in associated gas volumes, and for a little while concerns about the possibility of insufficient gas takeaway capacity were deferred — at least until now.