Wednesday, September 6, 2017

Say What? We're Baaaack!!! The World Spins ... I'm So Sorry -- September 6, 2017

ArgusMedia link here -- no comment -- simply posting the link and a few key data points from the article:
  • TransCanada extends Keystone XL open season
  • TransCanada is extending an open season for its long-delayed 830,000 b/d Keystone XL crude pipeline project, citing "the historic flooding and catastrophic impacts" to Houston and parts of the US Gulf coast in the aftermath of Hurricane Harvey
  • the open season will be extended by about a month to 26 October. TransCanada is seeking binding commitments for Keystone XL and for its existing 590,000 b/d Keystone pipeline, to move crude from Hardisty, Alberta, to markets in Cushing, Oklahoma, and the US Gulf coast
  • TransCanada said on 28 July that it is working on refreshing legacy shipper contracts for Keystone XL
  • opposition against Keystone XL flared most strongly in Nebraska, where the company still did not have a route approved when it pulled its state application after Obama denied the border-crossing permit
  • the Nebraska Public Service Commission held formal hearings on the project on 7-10 August
  • a decision on the state permit is expected later this year
Okay, one comment: hope springs eternal.

Okay, one more comment: it's happening again.

An iconic scene from Twin Peaks, it is happening again, "The World Spins":

Venezuela Crude Oil Imports Drop To New Low -- June, 2017 Data

Venezuela crude oil imports drop below 20 million bbls / month for the first time in several years. If one assumes the three other times that Venezuela imports dropped below 20 million bbls (in one month) were anomalies, then this might be a big deal. I don't know. One data point does not prove a point but for anyone following the Venezuela story, this has to be more than a trivial observation. Source. See what peakoilbarrel has to say about Venezuela; not a pretty picture.

See also this post.

And then, of course, there's Saudi Arabia:

Somebody's Lyin', Somebody's Cryin'

Somebody's Cryin', Chris Isaak

President Trump In Bismarck, ND -- September 6, 2017

Screenshot from Twitter:

Tallgrass Providing Storage Post-Harvey

From ArgusMedia:
Tallgrass Energy will allow up to 600,000 bl of committed volume in September on the Pony Express pipeline to be stored in the short term as "working inventory" amid uncertainty of oil markets in the aftermath of Hurricane Harvey.
Up to 200,000 bl of Bakken, 300,000 bl of Niobrara and 100,000 bl of Mixed Sweet (MXS) previously scheduled for delivery to Cushing, Oklahoma, in September can be shipped to the Deeprock South terminal for return in October.
More information on Deeprock here.

Four Producing Wells Completed -- September 6, 2017

Active rigs:

Active Rigs563375196185

Three new permits:
Operator: MRO
  • Field: Reunion Bay (McKenzie)
  • Comments:
Seven permits renewed:
  • Petro-Hunt (4): two Arsenal Federal and two Mongoos permits, all four in McKenzie County
  • Sinclair (3): three Sinclair State permits in Mountrail County
Four producing wells completed:
  • 32550, 2,082, Whiting, Koala 31-25-3H, Poe, t8/17; cum --  (#21303, #20319)
  • 32885, 946, Enerplus, Beetle 150-94-11C-12H, Spotted Horn, t7/17; cum 8K over 9 days;
  • 32886, 1,194, Enerplus, Ladybudg 150-94-11C-12H-TF, Spotted Horn, t8/17; cum 12K over 9 days;
  • 32887, 1,531, Enerplus, Wasp 150-94-11C-12H, Spotted Horn, t7/17; cum 11K over 9 days;

SRE-Oncor Moves Forward -- Bankruptcy Court Clears Deal -- September 6, 2017

Link here.
  • Sempra Energy says a bankruptcy judge approved its merger agreement with Energy Future Holdings, an important step in SRE's proposal to acquire Energy Future's 80% ownership interest in Oncor;
  • the deal still needs approval from the Public Utility Commission of Texas, which has scuttled two earlier attempted buyouts of Oncor;
  • SRE is paying $9.45B for the Oncor stake, compared with the $9B Berkshire Hathaway had offered; 
  • SRE is in line for a $190M breakup fee if the deal collapses, compared with the $270M breakup fee BRK was asking and never received since it never got a chance to put its deal in front of the judge (if you snooze, you lose)

California Senate Scraps $3 Billion Electric-Vehicle Subsidy Bill -- The Washington Free Beacon -- September 6, 2017

Back on August 26, 2017, I posted the following:
From The Los Angeles Times:
Over seven years, the state of California has spent $449 million on consumer rebates to boost sales of zero-emission vehicles.

So far, the subsidies haven’t moved the needle much. In 2016, of the just over 2 million cars sold in the state, only 75,000 were pure-electric and plug-in hybrid cars. To date, out of 26 million cars and light trucks registered in California, just 315,000 are electric or plug-in hybrids.

The California Legislature is pushing forward a bill that would double down on the rebate program. Sextuple down, in fact.

If $449 million can’t do it, the thinking goes, maybe $3 billion will.

That’s the essence of the plan that could lift state rebates from $2,500 to $10,000 or more for a compact electric car, making, for example, a Chevrolet Bolt EV electric car cost the same as a gasoline-driven Honda Civic.

Outside observers and analysts raise eyebrows at the $3-billion budget line. Supporters say the money will come mainly from the state’s cap-and-trade auction revenue, although they are vague on details. 
I say "go for it." The Danes learned the hard way that rebates on EVs were a really, really dumb idea.

$3 billion / $10,000 = 300,000 vehicles. About where they are now.
Apparently, California lawmakers have voted AGAINST this. The story is not getting widespread attention. The link is here.
The late Friday move came after criticism that the bill was short on details and failed to demonstrate exactly where the money would come from to pay for it.
The state Finance Department had opposed a previous version of the bill because it appropriated billions of dollars "without identifying a funding source."
The Apple Page 

From MacRumors: Samsung's OLED display monopoly may explain iPhone 8's rumored $1,000 price.
Samsung is one of the only companies able to reliably mass produce OLED displays suitable for Apple's smartphone needs, giving Samsung a monopoly over OLED panel display and allowing the South Korean company to charge high prices.

[An analyst suggests that the] OLED iPhone panel supply is "controlled wholly by Samsung," with Samsung likely charging Apple $120 to $130 per OLED panel module, which is approximately $75 more than the 5.5-inch LCD module price of $45 to $55 for "Plus" sized iPhones.
The high price Apple is currently shelling out for OLED displays explain in part why we're hearing rumors suggesting pricing on the upcoming OLED-equipped "iPhone 8" could start at somewhere right around $1,000 for the entry-level model. Along with an OLED panel, it also uses 3D sensor camera components for facial recognition and many other advanced components that could also add a premium to the price.
Am I Missing Something?

From The WSJ today: Goldman Sachs Group Chairman Lloyd Blankfein on Wednesday sounded a warning about the markets, saying that some of what he sees “unnerves” him.
Mr. Blankfein said the current market environment “doesn’t feel like tulip-bulb-mania,” a reference to the famous speculative bubble in the Netherlands in 1637, but was nonetheless concerning.

“Things have been going up for too long,” he told attendees at a Handelsblatt business conference in Frankfurt. “When yields on corporate bonds are lower than dividends on stocks? That unnerves me.”
With regard to dividend yields, as far as I know, there are only two ways to lower the yield. But, then again, maybe I'm missing something. 

Mike Filloon On Bakken Well Completions -- September 6, 2017

Note: there is much more to this article than what first meets the eye (as they say). There are some interesting points that Mike mentions without further elaboration. It's been a long time since Mike has had an article specifically devoted to the North Dakota Bakken. Archived.


An article from Mike Filloon that I've been anticipating, over at SeekingAlpha. Summary:
  • lower oil prices might not be enough to stop production increases in the Bakken, which may be bearish for the USO
  • increased use of proppant and fluids continues to improve production in concert with plug and perf with cement liners
  • when enhanced completions are considered, the economics are much better than expected
  • look for operators to move to newer designs exclusively in the Bakken and other U.S. plays
From the article:
The Bakken was one of the first plays to be developed in the US. It has been the focus of unconventional production, but has fallen out of favor. First the Eagle Ford then the Permian have both provided better economics. Newer plays like the STACK/SCOOP have emerged.
All have seen additional CAPEX, with dollars leaving the state of North Dakota. This has been seen by players like Continental. The Bakken is well suited for a well design analysis. It has seen more development than any other play, and this provides a longer term history.
The Bakken provides an excellent sample of well design. It shows why oil prices have not recovered, and why US production continues to increase at $50/bbl
North Dakota Bakken well completions:
  • moving from ceramic to sand (I'm also seeing a move to smaller sand from bigger sand)
  • using more sand overall
  • using more slickwater
  • the number of stages are increasing
The average location in this grouping has or will produce 208 KBO in the first 19 months of well life. We used a D&C of $6 million and $10/bbl in costs. The average well reaches payback within this time frame at $50 oil and $3 natural gas.

Now I'm waiting for Mike to discuss the peculiarities of the Bakken, i.e., the reversal of the dreaded decline rate.

The Political Page, T+229 -- September 6, 2017

Quick: without looking, which president signed an executive order implementing DACA?

August, 2017, EV Sales Have Been Posted -- Complete List -- September 6, 2017

Typos: I will correct several typos on earlier posts later. They are simply minor typos; I normally correct typos overnight as I find them but I got caught up in watching YouTube music videos and never got around to business. Whatever.

Syria: mainstream media not covering much of the war against ISIS in the mideast but it certainly seems things have changed in the last six months. I follow these events here.

Now, Back To The Bakken And Related News

Active rigs:

Active Rigs563375196185

RBN Energy: forecasted US gas supply growth to face market reality.

Fracking halted in Western Australia, to probe risks. Data points:
  • joins Northern Territory, New South Wales, and Tasmania -- have moratoriums
  • Western Australia decision was core element of the state's center-left Labor Party
  • moratorium will freeze more than A$380 million in investment
  • the blocks come despite a growing gas supply crisis in Australia, where a large portion of supply in the continent's east is drawn from coal seam developments
EPA: four-hundred workers leave "in recent days." -- The WSJ. Data points:
  • voluntary buyouts (these folks will simply find other government jobs)
  • Trump proposes a 31% funding cut (won't happen)
  • voluntary buyouts offered to 1,200 workers
  • two years ago: EPA had 15,500 employees
  • could reach 14,400 employees if more take buyouts; additional retirees
  • 14,000 clipboard bureaucrats
EV sales for August: the list is complete.  My original post on August sales is here.

Nissan Leaf to compete directly with Tesla Model 3. From The WSJ
Nissan said the car would go on sale in Japan on Oct. 2 and in the U.S. and Europe in January. When it goes on sale in the U.S. the vehicle will start at $29,990, slightly less expensive than the current Leaf.
With bulked-up battery power, the Leaf will go 150 miles on a single charge, according to the company, up from 107 miles in the previous version. It also plans to introduce a version in the next year with a range of more than 300 miles.
From the article:

Along with the Nissan Leaf article, The WSJ re-posted this story: the problem with electric cars? Not enough chargers. To hit its sales targets, Tesla has to sell 430,000 cars by the end of 2018 and 10,000 a week after that—but where are they all going to plug in? The other problem, of course, stopping every 150 miles on a cross-country trip to re-charge for 30 minutes -- waiting in line for an hour or more. Just saying.