Tuesday, October 24, 2017

API Reports Bullish -- But At The Blog, We Follow EIA Data -- October 24, 2017

This is what was reported October 24, 2017:
We will get the EIA data tomorrow, but tonight the API is reporting:
  • a small build in US crude oil inventories (519,000 bbls)
  • but, S&P Platts is forecasting a 425,000-bbl drawdown
Either way, less than a million-bbls one way or the other is inconsequential.

Meanwhile, API reports a huge drawdown of gasoline:
  • a drawdown of 5.753 million bbls
  • forecast: a much smaller draw of 2.3 million bbls
WTI/Brent prices up initially on talks of global conflict, but "then reality set in, as robust supply capacity from OPEC and US shale loomed large in skittish investor minds."
**********************************
Let's See What The EIA Reported

  • crude oil increased by 0.9 million bbls -- so much for re-balancing efforts; now at 457.3 million bbls
  • refinery utilization: still only 88% but increasing
  • gasoline production decreased last week, averaging 9.9 million b/d
  • crude oil imports increased slightly
  • total products supplied over the last four-week period averaged over 19.6 million b/d, down by 3.6% from same period last year (OPEC is counting on demand bailing them out -- not seeing that yet)
  • we will see the graph for gasoline demand tomorrow
  • after the report, WTI was down minimally, down about 0.5% in price

Price Of WTI Melting Up; Five DUCs Reported As Completed -- October 24, 2017

Active rigs:

$52.5110/24/201710/24/201610/24/201510/24/201410/24/2013
Active Rigs533568194180

Six new permits:
  • Operators: Missouri River (4); Oasis (2)
  • Fields: Squaw Creek (McKenzie); Willow Creek (Williams)
  • Comments: Missouri River Resources has permits for a 4-well Packineau pad in SWSW 4-149-94; Oasis: two Wren Federal permits in SWSW 26-153-100, Willow Creek
Five producing wells (DUCs) reported as completed:
  • 23910, 820, Slawson, Pike Federal 2-3-2H, Big Bend, t9/17; cum --
  • 26827, 790, Sinclair, Ersa Federal 2-4H, Bully, t7/17; cum 29K 8/17;
  • 29253, 1,685, Zavanna,  Sigurd 32-29 4TFH, Stockyard Creek, t10/17; cum --
  • 30379, 1,077, Statoil,  Flvag 5-8 7H, Stony Creek, t9/17; cum --
  • 30566, 1,364, Statoil, Folvag 3-8 XW 1TFH, Cow Creek, t9/17; cum

Random Note Regarding A CLR Proposal To Add 24 Wells To A Drilling Unit Already With Six Existing Wells -- October 24, 2017

Updates


August 25, 2019: production data update now that all wells have been completed;  

July 11, 2019: #35082 reports today; another huge "H1" well.

June 1, 2019: #35109 is now reporting; see below.

May 15, 2019: another Morris well --
  • 35109, 956-->conf, CLR, Morris 7-26H2, Oakdale, t4/19; cum 60K+;
    • most of the neighboring wells are now off-line
    • it looks like the following will show at least a small jump in production: #18858; 
May 4, 2019: more Carson Peak/Morris wells; a lot needs to be updated. 

August 6, 2018: CLR has two more Carson Peak permits, #35272 and #35273.
  • 17079, 559, CLR, Carson Peak 44-2H, t6/08; cum 322K 7/19; a re-frack candidate; off-line as of 5/18; back on line as of 31/9; no halo effect;
  • 17334, 811, CLR, Morris 1-23H, t11/08/ cum 317K 7/19; another re-frack candidate; off-line 5/18; back on line as of 6/18; back on line as of 4/19; looks like a pretty significant halo effect;
  • 18858, 715, CLR, Morris 3-26H, t5/11; cum 487K 7/19; yes, a candidate for a re-frack; back on line 4/19; subtle halo effect; off line as of 7/19;
  • 18859, 680, CLR, Carson Peak 3-35H, t5/11; cum 726K 7/29; nice production profile (5/18); huge jump in production;
  • 18860, 517, CLR, Morris 2-26H, t5/11; cum 300K 4/19; remains off line as of 5/19; two days in 6/19; fourteen days in 7/19;
  • 18861, 759, CLR, Carson Peak 2-35H, t5/11; cum 718K 4/19; remains off line as of 7/19;
  • 35272, 3,376, CLR, Carson Peak 4-35HSL, Oakdale, t6/19; cum 91K 7/19;
  • 35273, 2,405, CLR, Carson Peak 5-35H2, Oakdale, t6/19; cum 72K in less than two months;
  • 35082, 1,593, CLR, Morris 8-26H1, Oakdale, see this note; t4/19; cum 126K 7/19;


July 2, 2018: note the production profiles of some of these wells.

July 2, 2018: CLR has permits for another 8-well Carson Peak/Morris pad in SWNE 26-147-96; updated graphic:


March 15, 2018: production data has been updated. The graphic of this area has not changed since the original post.

Original Post 

A reader sent me this note. It provides a lot more background that helps explain the Bakken.
Attached is  a proposal by Continental to drill an additional 24 wells in the Oakdale field.
You recently posted an article about the new wells being completed in Rattlesnake Point, and that prompted me to send this to you.
There are 6 existing wells in the subject 2560 acre spacing, and Continental has proposed drilling another 24 wells there.
In addition, Sections 35 and 2 sit right next to the monster Whitman well that you’ve been following.
Apparently, Continental thinks there’s a natural fracture at the location of the Whitman well, so it’s likely that Continental wants to see how large an area that fracture covers.
The 2560 that sits to the east of these proposed wells are the Weydahl/Brandvik wells that Continental has drilled but not completed. There are 14 DUCs in that 2560 waiting to be fracked. Continental must have high regard for the potential in this area.
In the graphic that accompanied CLR's proposal/request, it's hard to count the existing/proposed wells. I counted 32 but the correct number is 30.



This is the current situation as noted by NDIC:


Later, I will go back and link some of the wells mentioned in this post, and some of the other posts that pertain to this.
  • 17079, 559, CLR, Carson Peak 44-2H, t6/08; cum 322K 7/19;  a re-frack candidate;
  • 17334, 811, CLR, Morris 1-23H, t11/08/ cum 317K 7/19; another re-frack candidate;
  • 18858, 715, CLR, Morris 3-26H, t5/11; cum 386K 7/19; yes, ready to be re-fracked; off line 7/19;1185
  • 18859, 680, CLR, Carson Peak 3-35H, t5/11; cum 726K 7/19; nice production profile (5/18)
  • 18860, 517, CLR, Morris 2-26H, t5/11; cum 300K 7/19; off line 8/18; starting to come back on line as of 7/19;
  • 18861, 759, CLR, Carson Peak 2-35H, t5/11; cum 718K 7/19; off line since 10/18; starting to come back on line, maybe, 7/19;
But again, a huge "thank you" to the reader for sharing this with me.

By the way, the proposal also included a list of mineral owners. There are exactly 50 mineral owners noted, including:
  • CLR: 35.36%
  • BR: 35.36%
  • XTO: 9.37%
  • Imperial Oil: 2.34%
  • Hess: 1.88%
  • three private individuals, each with 0.01%

Color Me Confused -- Tea Leaves Suggest The Permian Is Struggling -- October 24, 2017 -- The Energy And Market Page, T+276

Before I get started, wow, I am in a great mood. It feels like a Monday. I had an NFL-free Monday night, completely forgot about it, and then thought that it would be on tonight. And it's not. Six free hours tonight. Wow. 

This never would have happened under the previous administration: utility costs going down! From InvestorVillage:
From the link above, this is of interest. Compare Canada and California with the US (not including California):



Confused. I have heard / read from multiple sources that the Permian was struggling. Today, there was more talk that US E&P operators would "soon" run out of "Tier 1" drilling locations which would cause problems for those in the Permian. And then, out of the blue, two companies focused on the Permian attracted the attention of CNBC mid-day:
Disclaimer: this is not an investment site. Do not make any investment, financial, job, travel, or relationship decisions based on what you read here or think you may have read here.

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

The Dow was up more 200 points at one point during the day.

NYSE, 191 new highs, including: BRK-B; Boeing; CAT; Polaris; RDS-B; Statoil;
  • new lows, 46, including ATT (oh, my); Baker Huges a GE (BHGE) (oh, my); GE; Weatherford (WFT, oh, my)
  • EW: down $7. Ouch.
********************************
Hess: Selling Assets

Link here; data points:
  • will divest its subsidiary Hess Norge; sell statkes in Norway's Valhall and Hod fields: $2 billion
  • will sell its offshore Equatorial Guinea: $650 million
  • will sells its interests in Denmark's South Arne Field
*********************************
Making America Great

US midwest oil refiners boost output, cut region's dependence on Gulf Coast-- Reuters, data points:
  • midwest refiners banking on North Dakota oilfields
  • oil trade maps are being redrawn
  • in 2016, Midwest refining capacity rose to almost 4 million bopd, the highest annual volume on record
  • DAPL: made a huge difference
  • ten years ago, Midwest refiners a million bopd short
  • the Midwest will go from being short roughly 500,000 bpd of gasoline this year to a surplus of roughly 200,000 bpd by 2030
  • but, low demand for refined products in Midwest could be a problem

Odds And Ends -- October 24, 2017

I was going through my posts that were in "draft" status and stumbled across this one. I guess I was saving some stuff to be added separately to future posts. Whatever.

So, that I don't lose these, I will post them. But it's mostly for the archives, to be able to use these photos again, or for the archives as is.

Fed, inflation, jobs:


https://www.nytimes.com/2017/10/11/business/economy/federal-reserve-minutes.html

GOP's tax reform efforts:

On October 9, 2017, I wrote: The tea leaves suggest President Trump's tax "reform" bill is dead.Ted Cruz all but confirms that is correct. Mr Cruz says we won't see any "tax reform" until next year (2018).

Gasoline taxes by state:


Trump economy:


Miscellaneous photos from Flathead, Montana, about October 10, 2017

Improvements along the lake:


A bit of snow just a few miles west of Flathead Lake on our way home, back to Portland, OR:


And, just a few miles farther west, a rafter of wild turkeys:


The video of these turkeys is very, very jumpy; not recommended for those who are prone to airsickness:

MVI_2964

The Political Page, T+276 -- October 24, 2017

Lost decade: wow, wow, wow. Jim Cramer, commenting on the stock market surge, says "it was a lost decade." I've talked about that for many years, even have a tag, "lost decade." Actually two lost decades -- the first under Bush II; the second under Obama. 

Death by a thousand cuts: Iowa halts effort to overhaul ObamaCare. The decision, after federal officials laid out tough conditions for its approval, signals limits to states' efforts to alter parts of the health law.
Iowa had applied for federal permission to move forward under a provision of the ACA that allows states to waive certain parts of the law. Though the Trump administration initially signaled it welcomed such initiatives, states have recently gotten mixed results for their applications. The foundering of Iowa’s much-watched effort will likely be seen as another caution flag as other states consider their own future proposals.
Separately, federal officials said a Massachusetts waiver application was incomplete and couldn’t be approved fast enough.
Iowa officials had said they wanted to repair an ACA exchange that is down to just one insurer next year, Medica. The company is increasing average premiums by around 57%, due partly to the Trump administration’s cutoff of federal cost-sharing payments to insurers.
Iowa’s governor, Republican Kim Reynolds, faulted the 2010 health law for Iowa’s individual insurance market problems and the failure of the waiver application, and she called the ACA “unworkable.”
Sour grapes? More people think rending is a better deal than buying. Some 76% of millennials said rending is an affordable option, up more than 10 percentage points from a year ago.
The data from the Freddie Mac survey and another by the National Multifamily Housing Council suggest there isn’t likely to be a shift toward owning from renting among old and young alike, due to financial reasons and those of lifestyle and preference.
Landlords are likely to see this as welcome news that a widespread shift toward owning isn’t coming anytime soon.
The data also indicate the persistent shortage of homes for sale on the single-family side is depressing the appetite for homeownership.
************************************
Working On Her Spanish


E&Ps' CAPEX To Exceed Cash Flow in 2018 -- RBN Energy -- October 24, 2017

Wow, wow, wow: overnight Dow 30 futures were up 60 points. Minutes (seconds?) after earnings reports from CAT, GM, 3M, and McDonald's came out, pre-market, futures jumped to 151 points, before pulling back a bit to 140 points. Amazing.

Another record high for the Dow 30.

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

Insanity: Saudi Arabia will build a $500 billion economic zone in the Red Sea area -- Financial Times; data points:
  • $500 billion is one-half trillion dollars
  • in kingdom's northwest region
  • new zone will be called Neom
  • 26,000 sq km -- will run across Saudi Arabia, Jordan, and Egypt
  • all greenfield sites
  • nine different sectors, including: energy, water, biotech and robotics (well, that's three)
  • former CEO of Alcoa tapped to become CEO of Neom 
Futures: all major indices GREEN. Dow 30 up 60 points. From John Kemp, via Twitter, just a few points from backwardation (21 cents now; narrowest since 4Q14)

WTI: $52.31

Active rigs:

$52.3110/24/201710/24/201610/24/201510/24/201410/24/2013
Active Rigs533568194180

RBN Energy: many E&Ps defy soft prices and expect 2017 capex to exceed cash flow (again).
Despite some hints that U.S. exploration and production companies are slowing some of their drilling in high profile shale basins — including last week’s decline of 15 operating rigs in the Baker Hughes count, our analysis of 43 representative E&Ps suggests that more than half expect their upstream capital spending in 2017 to exceed cash flow — a definite sign of optimism — and one fifth of the E&Ps will outspend cash flow by more than 50%.
Is this a case of rose-colored glasses? Blind faith? Or have E&Ps’ post-price-crash efforts to high-grade their portfolios and improve their operational efficiency given them well-deserved confidence that if they don’t “back down” on capex things will turn out well?  Today, we analyze the cash flow versus the capex of 43 U.S. E&Ps and discuss what it all means.
After weathering the oil price decline in 2014-16, U.S. E&Ps have been repositioning themselves to survive and even thrive in a $50/bbl world by (among other things) focusing on the sweetest of production sweet spots and wringing more oil, gas and natural gas liquids out of each well by drilling longer laterals, using more frac sand and fine-tuning their completion techniques. In late 2016, the 43 E&Ps we’ve been tracking announced a 42% increase in 2017 capital spending, and despite oil prices dipping below $50/bbl in the second quarter of 2017, our universe of producers remained committed to their accelerated investment plans.
But as noted above, there have been indications that E&Ps have started to pull back somewhat, with a 5% decline in the rig count since the end of July cited as evidence.


*****************************************
Other Market And Energy News

Earnings this morning before the opening bell:
  • CAT: huge earnings report
  • GM: beats estimates for eighth straight quarter
  • McDonald's: does okay
Iraq: Iraq began using a new offshore crude-exporting facility to help boost shipments by sea and make up for a suspension of pipeline exports from the country's north due to a conflict with Kurdistan. Data points:
  • can support supertankers which can carry 2 million bbls of oil
  • this is a new loading point in the Persian Gulf
  • southern exports will rise by 200,000 bopd -- Irqai oil minister
  • Iraq currently pumps 4.47 million bopd; hopes to increase it to 5 million bopd
  • nice discussion of SPMs -- single point mooring (see below)
SPMs: single point mooring (same link) --
The loading point, known as a single point mooring facility, or SPM, had been scheduled to start operating in December (2017).
The government started the SPM earlier than planned because they want to raise exports from Basrah to compensate for the losses at Kirkuk.
Iraq exported an average this year of 3.25 million barrels a day of its Basrah Light and Basrah Heavy crude via the Gulf. The vessel Chloe is set to load a mixed cargo of Heavy and Light oil, according to the shipping agent report.
Iraq already operates three other SPMs, as well as four berths at its Basra Oil Terminal and another two at the nearby Khor Al Amaya terminal. When operating, the SPMs can pump about 900,000 barrels daily aboard tankers, but the time needed to carry out mooring and unmooring operations reduces their effective capacity to little more than half that amount. Bloomberg calculations show that the three older SPMs have loaded an average of about 480,000 barrels a day each since the beginning of 2015.
SPMs enable Iraq to pump crude to ships at sea without requiring that they dock in port. The country’s narrow coastline, hemmed in by Kuwait to the south and Iran to the east, has little room for shipping berths. Its shallow waters are difficult for the largest tankers to navigate and contribute to traffic delays.
Apple: iPhone X to remain in extremely tight supply once released. The operator word is "extremely." It seems every new Apple phone is in tight supply once released, but seldom are supplies reported as "extremely tight." LOL. Launch begins November 3, 2017, but on-line pre-orders begin this Friday (October 27, 2017.