Friday, September 1, 2017

Fifteen Permits Renewed -- September 1, 2017

Before we get started, this EIA site looks new. It may not (be new). I don't know but it looks new to me and looks pretty good. The link has been permanently linked at the "links" page.

Harvey Re-Start

It is amazing how fast the oil sector is returning to "normal." Remember all that oil the US government was going to release from the SPR? As far as I know, only one refiner was in on the deal, planning to take 500,000 bbls (plant capacity is 250,000 bbls daily; so two days crude oil for this plant) and then raising that to 1 million bbls. Now we learn that Phillips will not take all that was offered. They apparently have plenty of crude oil as things get back to normal. Phillips will take only 700,000 bbls of crude oil -- about three days of crude oil for this plant.

A "triple A" spokesperson said that release of crude oil from the SPR will have a great effect on supply of gasoline -- what a dunderhead. Is dunderhead a word? 


In the background, re-runs of MASH. What a great series. On so many levels.


Wishing everyone a great weekend.

I'm in such a great mood -- seriously -- I'm going to take a break for a few hours. I might blog the daily activity report, but then sit back, reflect a bit on everything, and maybe post later this evening. I don't know. It's been another incredible week.

But I can't resist posting this story, which will probably be re-posted.

My dad was the "president" of the Williams County (Williston) commission when the "original" Lewis and Clark bridge was built. He was on the bridge, giving a speech, when that bridge was opened, for the ribbon cutting ceremony.

Regardless, fast forward several decades, and "we" now have a new Lewis and Clark bridge. From The Williston Herald:
Dozens of dignitaries gathered at the south end of the bridge Thursday afternoon for a ribbon cutting to mark the completion of the $80 million project — the largest single infrastructure project in the history of the North Dakota Department of Transportation. Its completion marks the end of six years of construction to make U.S. Highway 85 four lanes from Watford City to Williston.
Yes, this is a huge, huge story, that will hardly be a footnote in the book on the Bakken revolution.

Huge story.

More from The Williston Herald:
When the old bridge was built (1973), it handled about 1,000 vehicles a day. Now, though, about 10,000 vehicles a day use the structure. The new bridge can also handle larger trucks because of its wider, 12-foot lanes.
Think about that: 1, 000 vehicles / day in 1973. With the Bakken boom, 10,000 vehicles per day. [If that is currently 10,000 vehicles/day, during the Bakken book it would have been much higher -- it's hard to believe that current traffic is 10,000 vehicles/day, but perhaps.]

But now I know why I didn't know much about the "old" bridge. In 1973, I was away from home, in my last year of college.

This is just such an incredible country. 

I'm in such a good mood, I would love to take May out for a really extravagant sushi dinner tonight, but, hey, we can't "burn" gasoline -- not much available in the area, although things are already improving.

What a great country.

By the way: I think the Lewis and Clark bridge story is a huge story and yet it was almost buried at the end of the Williston Wire. That tells me that so much more is happening in the Bakken. It simply doesn't quit.

Meanwhile, Williston celebrates opening of wastewater facility, another huge story. From The Williston Herald, some data points:
  • Williston’s population went from 14,716 in 2010 to roughly 27,763 in 2015, and its 2017 population is now estimated at 30,000
  • wastewater management was a huge problem during the Bakken boom
  • it’s a problem the city won’t have to face again, no matter the ups and downs of oil and gas
  • new wastewater project just opened
  • $105 million
  • will serve 60,000 people
  • with some additional construction, up to 120,000 people 
  • on time, on budget
  • the city continues to have a large debt load on the plant and said they expect the state of North Dakota to back the city throughout the whole repayment plan 
  • every effort was made to build the expansion using as little tax money possible, and the city was able to get a dispensation that allowed the city to use a set of rates that did not put the entire boom-related impact on Williston citizens 
  • the technical process uses biological and other agents to produce a cake of biosolids that is both safe and nutrient rich — so much so it is potentially valuable for agricultural uses
  • the solids left behind, meanwhile, get a separate treatment process to turn them into a Class A biosolid, which is the highest quality level achievable; all pathogens are destroyed; the final product is like an earthy, soil product that is around 18 to 20 percent solids that would be beneficial for reuse for cropland 
  • at least initially, it will get used as a topsoil amendment for capping the city’s landfill, which has a shortage of good soil for that purpose
Daily Activity Report

Daily rigs:

Active Rigs5676194184192

One new permit:
  • Operator: Petro-Hunt
  • Field: Charlson (McKenzie)
  • Comments: #33976, USA 153-95-8A-31-4H, NENE 17-153-95
Fifteen permits renewed:
  • QEP (7): seven Kirkland permits in McKenzie County
  • Petrogulf (4): four Three Tribes permits in McKenzie County
  • Whiting (3): two Koppinger permits and one Cymbaluk Federal permit, all in Stark County
  • Crescent Point Energy: one CPEUSC Lowe permit in Williams County

Jobs? Unemployment Rate Ticks Up; GM Sales Huge; The Market And Energy Page, T+224; Is HPE Really Poised To Fall 21%? -- September 1, 2017

Most important story of the day: Port Houston container terminals to resume operations Friday (today). -- source, WSJ

Futures up nicely. Again.

August jobs report, pending:
  • everyone forecasts: 160,000 range
  • Rick Santelli forecasts: 244,000 (he might have been right had previous monthly figures not been revised -- see below)
  • actual: 156,000 vs forecast of 179,000
  • actual: 4.4% vs expectations of 4.3%
  • actual: U-6 underemployment rate -- 8.6% (I don't recall CNBC reporting this so prominently in the past -- certainly I don't recall seeing this data point being reported during the Obama administration; could be wrong); link for historical underemployment rate;
  • 62.9% labor force participation; unchanged
  • how did the market react? Dow immediately from +72 to +48 (wow, that was quick); several minutes later, recovered somewhat to +54 (if the actual number did not change much, at least the trend reversed, on the upside)
  • July figures revised downward to  189 from 209 (govt miscounted govt employees -- go figure)
  • June figures revised downward to 210 from 231 (govt miscounted govt employees -- go figure)
Underemployment: see above. The 8.6% was never put into context -- at 8.6% -- almost back to historical lows. Another non-story.

Auto sales, link here: Phil LeBeau (CNBC), expect, "solid, but not great" numbers. Expect sales rate of 100 - 200,000. Of course, over the next few weeks/months, the effect of Hurricane Harvey.
  • Ford: down 2.1% vs estimates, down 2.4%
  • GM: up 7.5% vs 1.9% estimates
  • Fiat: down 10.5 % vs down 4.7% estimate
WSJ Headlines (and Comments)

Happy face: Job satisfaction highest in decades.

Debt ceiling: Harvey relief bill could  help Congress raise debt ceiling.  (This is a no-brainer.)

Trainwreck: White House will cut ads and grants aimed at encouraging ObamaCare sign-ups.

GDP: Op-ed: Houston-area economy is larger than Sweden and will drag down US GDP (by the way, Hurricane Harvey was the final nail in that coffin of any chance of a September, 2017, "Fed rate" increase; possibly true for December "Fed rate"-- no increase once he $190 billion damage estimates continue to roll in -- unless, of course, I underestimate how much the Feds hate Texas)

Peggy Noonan: the American spirit is alive in Texas.

Nightmare? If Trump ends DACA -- Obama's "Dreamers Act" -- the issue falls to Congress. (And that's how it should be done. Every Dem will vote for it; and, every RINO will vote for it; will Trump veto it; if so, veto-proof?)

Easy come, easy go: Texas judge quashes Obama-era overtime pay rule. (This one should be interesting.)

Oh, yeah; Apple confirms September 12, 2017, launch date.

Oh-oh: Pre-market: HPE down 21%. See below.

Oh-oh: Meg Whitman has a different mess to clean up. See below.

IRAs: Roth vs Traditional 401 (k): study finds a clear winner.

US bombers in show-of-force after North Korea missile. (Under all previous administrations, US "gave in" to North Korea's demands after North Korea launched missiles; this time it's different. It would be interesting to see how the generals "voted" on this one; we all know it was Trump's decision. Huge story.)

Meg Whitman

From The WSJ --
So Ms. Whitman has some explaining to do, which hopefully will come during the company’s fiscal third-quarter earnings call next week. That was already shaping up to be a difficult task. Hewlett Packard’s stock price has fallen by 7% following each of its last two quarterly reports. A slump in the sales of servers, data-storage gear and other enterprise tech hardware have put pressure on what is left of the business following the divestitures of its services and software divisions.

Ms. Whitman needs to show a way out of that slump, which won’t be easy. Splitting from the computer-and-printer half nearly two years ago established Hewlett Packard Enterprise with a little over $50 billion a year in annual revenue. The subsequent divestitures leave the Enterprise Group and Financial Services units remaining, which are projected to generate about $29 billion in combined revenue for the fiscal year ending in October. That is down 6% from what those businesses generated last year.
A big problem is servers, which will account for more than 40% of Hewlett Packard’s revenue. Server sales for the six-month period ended April 30 slid more than 13% from the same period last year. Rival Dell—now private— has been pricing its own servers aggressively and has gained share. And Microsoft —Hewlett’s largest customer—has been cutting back on server orders as part of a broader move toward designing its own gear to power its data centers.
Maggie May, Rod Stewart


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The Impact of Harvey on Crude Oil Markets -- RBN Energy -- September 1, 2017

Smart move: oil glut, refineries shut down, and government begins releasing oil from the SPR. 

Active rigs:

Active Rigs5676194184192

RBN Energy: the impact of Harvey on crude oil markets.
Our preliminary estimates for the U.S. averages for this past week are that crude oil production will be down by 0.8 MMb/d to 8.7 MMb/d, reflecting about 1.2 MMb/d of production offline at the peak of the outage (mostly offshore and Eagle Ford). Imports are expected to be down by about 1.1 MMb/d to 6.8 MMb/d due to significant cargo cancellations into the Gulf Coast.
Consequently, total supply is projected to be down by 1.9 MMb/d (compared to the previous week) to about 15.5 MMb/d. Refinery-run reductions are projected to peak at about 3.0 MMb/d (up to more than 4.0 MMb/d including Port Arthur/Beaumont outages that did not happen until later in the week).
That works out to a decline in refinery runs of about 2.1 MMb/d for the week. Exports are projected to be down to about 0.3 MMb/d, or about 0.6 MMb/d below last week.
As a result, total demand is estimated to be lower by about 2.7 MMb/d to 16.0 MMb/d, implying a storage withdrawal of about 3.3 MMbbl.  After we did those numbers, on Thursday, August 31, DOE released 1.0 MMbbl of oil from the Strategic Petroleum Reserve on an exchange deal with Phillips 66 for their Lake Charles refinery.
Regardless, if these numbers are in the ballpark, instead of building inventory because of all the refinery outages, the industry will withdraw from inventory due to production shortfalls and especially lower imports.
But don’t forget, much of the inventory is still sitting in vessels out in the Gulf of Mexico, just out of the reach of government statisticians. These volumes will be coming in just as soon as Gulf Coast docks are up and running.