Making America Great -- It Never Quits -- The Second Wave Of Ethane Crackers Begins -- October 3, 2017

Wow, it never quits! Making America great. The positive ramifications from the shale revolution continue to reverberate through the economy.

A reader sent me this story from the Pittsburgh Business Times about the new ethane cracker being built in Pennsylvania. From the article:

Shell Chemicals' $6 billion ethane cracker being built in Beaver County [Pennsylvania] isn't just important to the tri-state region, it's also playing a big role in the U.S .petrochemical industry.

"That essentially is the beginning of the second wave" of ethane crackers, ...

The Potter Township plant made the list of 13 ethane crackers being built from 2017 until 2021 ...

"You'll see the biggest buildup in the U.S. petrochemical industry we have ever seen," [a spokesman] said. It's part of the estimated $85 billion a year in investment in the domestic petrochemical industry since 2010, a big change since the industry's downturn a decade ago.

What revived the petrochemical industry from stiff foreign competition? The shale boom that has lifted many parts of the country, including southwestern Pennsylvania.

The Shell cracker in Beaver County is scheduled to go online in the second half of 2021. That will come at a good time for the petrochemical industry, which is growing at a rate of about four world-class steam ethane crackers like the Shell plant a year.

Additional data points:

• ethane production has doubled since 2005 and is likely to grow another third by 2020
• already, 318 petrochemical projects worth a total of $185 billion since 2010
• the shale boom is likely to supply enough ethane for a second wave of crackers; will be lead by the Potter Township plant

Comment: it should go without saying that Hillary Clinton promised to do what she could to stop fracking in the US had she been elected president. I am absolutely convinced that she may not have been able to stop the US shale revolution and fracking but she certainly could have slowed it down with executive orders, additional EPA regulations, and the use of the bully pulpit. 

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And In Minnesota, This Beats Solar Panels

Meanwhile in Minnesota, being reported in Minneapolis/St Paul Business Journal:

Emerson Automation Solutions is growing again in Minnesota, investing in plants in Chanhassen and Shakopee as it enjoys renewed strength from oil-industry customers.

The Star Tribune reports that the company will soon embark on a $14 million project in Chanhassen that will add another 80 workers to that location and convert 30,000 square feet of offices into more factory space. That follows a $10 million renovation project in Shakopee, where Emerson has hired 100 new workers.

The company, a division of St. Louis-based Emerson Electric Co., makes pressure, temperature, flow, level and wireless measurement instrumentation. It employs more than 2,400 people in Minnesota.

The company expanded into Shakopee in 2013 with a $70 million, 500-job facility, but work slowed shortly afterward as oil prices tumbled. (Emerson has a big chunk of the market for oil and gas monitoring equipment.) Prices since stabilized again at about $50 a barrel — not boom-era prices but enough to get customers spending on equipment again.

Huge Drop In US Crude Oil Inventories; Re-Balancing Drops To 41 Weeks; WTI Slips Below $50 -- October 3, 2017

Updates

Later, 11:21 p.m. Central Time: wow, that was fast. Just minutes after posting the original post in which I noted that WTI was flirting with $50 again, I re-checked the site and see that WTI has now slipped below $50:

 

Original Post

 

US crude oil inventories: the original estimates were way off (posted last night). The EIA weekly petroleum report (a dynamic link) shows that there was a significant decline in US crude oil inventories: declining by 6.0 million bbls. The number of weeks to "re-balance" decreased from 46 weeks to 41 weeks with that data:

Week	Date	Drawdown	Storage	Weeks to RB
Week 0	Apr 26, 2017		529.0	180
Week 1	May 3, 2017	0.9	528.0	198
Week 2	May 10, 2017	6	522.0	50
Week 3	May 17, 2017	1.8	520.2	59
Week 4	May 24, 2017	4.4	515.8	51
Week 5	May 31, 2017	6.4	509.9	41
Week 6	June 7, 2017	-3.3	513.2	60
Week 7	June 14, 2017	1.7	511.5	57
Week 8	June 21, 2017	2.5	509.0	62
Week 9	June 28, 2017	-0.2	509.2	71
Week 10	July 6, 2017	6.3	502.9	58
Week 11	July 12, 2017	7.6	495.3	47
Week 12	July 19, 2017	4.7	490.6	43
Week 13	July 26, 2017	7.2	483.4	38
Week 14	August 2, 2017	1.5	481.9	47
Week 15	August 9, 2017	6.5	475.4	35
Week 16	August 16, 2017	8.9	466.5	30
Week 17	August 23, 2017	3.3	463.2	29
Week 18	August 30, 2017	5.4	457.8	27
Week 19	September 7, 2017	-4.6	462.4	32
Week 20	September 13, 2017	-5.9	468.2	39
Week 21	September 20, 2017	-4.6	472.8	46
Week 22	September 27, 2017	1.8	471.0	46
Week 23	October 4, 2017	6.0	465.0	41

Futures: futures don't mean squat but it is interesting that WTI right now is flirting with $50 again. Right now, this dynamic link shows that WTI is down 0.7% (36 cents) and trading at $50.06. It's very possible WTI could drop below $50 tomorrow.

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A Man And His Dream

The trusses were put in place yesterday; and today the roof was entirely enclosed. My son-in-law built a "sled" of sorts, leaning against the building, and then brought the 4x8 plywood sheets up to the roof. Shingles and the building will be protected from the elements.

Update On A Dual Completion Well -- October 3, 2017

For the archives. This is really quite a story and I'm sure it would be lost over time if it were for a reader to provide the update -- one of the reasons why I love to blog: capturing some of the stuff that might otherwise be lost. I am indebted to readers for bringing so much to my attention and helping me understand the Bakken better.

I say that because a reader provides a very, very interesting update to a "dual completion oil well."

The update is at this link: https://themilliondollarway.blogspot.com/2015/07/great-video-of-unique-well-in-north.html.

A Photo Worth A Thousand Words -- October 3, 2017

I normally don't do this, a stand-alone photograph, but a reader alerted me to this, and it was too good to ignore:

Original photo at this link.

Tuesday, October 3, 2017

Global warming hits upper midwest/west: record snowfall reported in Montana. First blizzard of the season breaks October snow record in Havre, Montana; heavy snow closes I-70 in Colorado.

No excuses this time. No hurricanes; no floods; no war; just players continuing to show their disrespect / displeasure with the flag/national anthem. MNF ratings down.   

MNF snared an 8.4 in metered market numbers. That’s down 10% from the Cowboys and Cardinals game of September 25. Year-to-year, the Chiefs’ fourth straight win this season dipped 8% in the early numbers from the comparable Minnesota Vikings’ 24-10 win over the New York Giant on October 3, 2016 – a season of sliding ratings that the NFL wants to forget, but may repeat.

Last week’s MNF went on to score a 5.1 rating among adults 18-49, 13.7 million viewers and win the night among cable and broadcasters. Even with the decline of last night’s game, it is likely that MNF will prove No. 1 for ESPN once again.

Active rigs:

$50.41↓	10/3/2017	10/03/2016	10/03/2015	10/03/2014	10/03/2013
Active Rigs	57	33	68	188	185

RBN Energy: lower prices dampen oil-weighted profitability in second quarter of 2017.

After posting a whopping $160 billion in losses in 2015-16, the 43 exploration and production companies (E&Ps) whose financial performance we’ve been closely tracking roared back to profitability in the first quarter of 2017 on higher commodity prices and cost savings from drilling efficiencies on high-graded portfolios. However, lower oil prices slowed the earnings train in the second quarter, as total adjusted pre-tax operating profit dropped 11.6% to $8.0 billion.

Understandably, the 21 oil-focused producers in our universe suffered the biggest impact from depressed crude realizations, reporting a 29% decline in operating profits to just $1.9 billion. The good news is that oil peer group earnings remained solidly in the black, increasing the odds that 2017 will be their first profitable year since 2014. Today, we analyze the results for the individual companies in our Oil-Weighted Peer Group.

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The Energy And Market Page

Everything I need to know about the future of EVs: Warren Buffett takes a 40% stake in Flying J.

• the company is the largest operator of truck stops and rest stops in North America, with 750 locations
• Forbes ranks it 15th on its list of largest private companies, with more than $20 billion in revenue
• BNSF, in 1999, as a private company, had $9.1 billion in revenue

Markets: open at record highs; extend rally. T+ 256.

Auto sales, September, Ford: link --

• Ford sales up almost 9%
• F-series truck sales up over 20%
• transit van sales gain 25% (proxy for US economy)
• Lincoln SUV sales up over 10%

Auto sales, September, EVs: link (most report today; some report later in the week) --

• overall, not much change from previous month, except with Tesla
• Tesla, Model S: jump from 2,150 to 4,860 (month-over-month)
• Tesla, Model X: jump from 1,575 to 3,120 (month-over-month); Tesla cut prices on the "X"
• Tesla, Model 3: guidance -- ramp up to 1,500 in the month of September; actual: 115, up from 75 in August, 2017
• Chevrolet Volt steady at around 1,500
• Chevrolet Bolt rising, up from 1,000 earlier this year; now up to 2,600
• Nissan Leaf, sales decreased significantly, from 1,154 to 1,055

Auto sales, September, GM: link --

• best September US retail performance since 2007
• 12% increase year-over-year increase in total sales in September, at 279,397 vehicles
• 17% increase at Chevrolet; 9% increase at GMC
• crossover deliveries were up 43%
• trucks up 10%
• but: passenger gars were down 11%

Auto sales, September, Fiat Chrysler: link --  huge disappointment

• sales dropped 10%; reflected double-digit declines for Chrysler, Dodge, and Fiat
• RAM truck sales largely remained level

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The Market

NYSE, new highs, 182 216 223 243 260 304, including -- BP; BRK-B; D. R. Horton; GM; Navistar; Phillips 66; RDS-B;

• new lows: 12

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The Literature Page

Wow, for the first time since the 2016 presidential election, it seems The New Yorker has changed. I'm not sure if this represents a trend or if this is simply a one-off. The most recent issue of The New Yorker:

• the cover appears, at least on the surface, to have nothing to do with President Trump
• unless I missed one, there are no political cartoons (not too long ago, without saying they were going to do it, every cartoon in The New Yorker was about Trump, and yes, in a negative light)
• there was not one feature article on Hillary or Trump
• only the lead essay in "The Talk Of The Town" was about Trump and that was clearly not unexpected, and won't change
• personal highlights from this week's issue
• in "Life and Letters," "Cather People: visiting the prairie that inspired America's great novelist of landscape," by  Alex Ross. And, of course, that had to have been about Willa Cather; the only novel of hers I have read, My Antonia" I read on an Amtrak trip from Portland, OR, to Williston, ND
• a book review, "Shot of Courage: Ulysses S. Grant, defended," by Adam Gopnik. I outlined Grant's memoirs years ago and developed a study guide of the Civil War based on his memoirs; over the weekend I read parts of Mark Twain's autobiography to include how he (Twain) came to own the publishing rights of Twain's memoirs
• the art review was of Auguste Rodin who is said to have sent sculpture tumbling into modernity; decades ago while hitchhiking through Europe, I spent half a day in the Rodin museum in Paris; it was hard to find; my feet were incredibly tired; and I was incredibly hungry
• a movie review, "American Made," starring Tom Cruise; the movie looks very, very good, but the star seems to me to be possibly one of the creepiest guys "in Hollywood" right now, so, no, I have no plans to see the movie