Tuesday, November 14, 2017

Cheniere Will Make Investment Decision To Build A Third Liquefaction Train At Corpus Christi LNG Export Terminal -- November 14, 2017

I track the US LNG export terminals here. The original post was posted October 12, 2016.

At that post, this data point:
Cheniere: plans to build three more 4.5-MTPA liquefaction trains at its Cheniere's Corpus Christi facility

February 9, 2018: with CNPC deal, Cheniere's train 3 at Corpus Christ becomes more likely Wow -- China. Ka-ching.
Cheniere Energy, Inc. has entered into two liquefied natural gas (LNG) sale and purchase agreements (SPA) with China National Petroleum Corp. (CNPC), the Houston-based company reported Friday.
“These long-term SPAs build upon the Memorandum of Understanding we signed in November, and we look forward to a successful long-term partnership with CNPC,” Cheniere President and CEO Jack Fusco said.
According to Cheniere, CNPC unit PetroChina International Co. Ltd. will purchase approximately 1.2 million tonnes per annum (mtpa) of LNG under the SPAs with Cheniere subsidiaries Corpus Christi Liquefaction, LLC and Cheniere Marketing International LLP. A portion of the supply will start this year and the balance will begin in 2023, Cheniere added. Each SPA term continues through 2043 and the LNG purchase price will be indexed to the Henry Hub price plus a fixed component.
Fusco also stated that Cheniere expects the SPAs to support the development of a third train at the Corpus Christi Liquefaction export terminal that it is building along Corpus Christi Bay in San Patricio County, Texas.
Original Post

Now, the update from Argus Media:
Cheniere Energy said it plans to make a positive investment decision next year on a planned third liquefaction train at the Corpus Christi LNG export terminal in Texas.
"I have a whiteboard in my office with a to-do list on it, and the only thing on that to-do list is to FID Corpus Christi train 3," Cheniere chief executive Jack Fusco said today on an earnings call. An FID refers to a final investment decision.
Cheniere is building two trains and associated facilities at Corpus Christi for $11bn. Each unit would have peak capacity of 5mn t/yr, equivalent to 694mn cf/d of gas, and baseload capacity of 4.5mn t/yr. The two-train project is 72pc complete and scheduled to start operating in 2019.
The Houston-based company has said it can build a similar-sized third train at a unit cost of $500-$600 per tonne of annual production, or about $2.25bn-$2.7bn for the baseload output. The third train would be cheaper by using existing infrastructure.
Cheniere signed some 20-year offtake deals for train 3 before oil prices dropped in mid-2014, but not enough to finance the unit. The company is negotiating with some large Asian utilities to sell more output from train 3, including potentially finalizing a preliminary agreement reached last week with China's state-owned CNPC.
Much more at the link.

LNG export terminal projects -- update in one graph, from this post (previously posted):

Quick! How Long Does It Take To Drill A 2.5 Mile Long Horizontal In The Bakken -- November 14, 2017

Answer: three days.

Don't believe me? Listen to Lynn Helms at Platts.

And much more at the podcast.

The Movie and Television Page
Belated "Happy Birthday" To Norman Lloyd
103 Years Old Last Week

Quick: who is the oldest working Hollywood actor?

From wiki:
Norman Lloyd (born Norman Perlmutter; November 8, 1914) is an American actor, producer and director with a career in entertainment spanning eight decades.
He has worked in every major facet of the industry including radio, theatre, television and film dating back to the Great Depression, and at 103 years of age is the oldest working Hollywood actor.

The series ran from 1982 to 1988: I don't recall seeing any of the episodes, but for some reason it seems I must have watched it. I left the United States in 1983 and remained overseas for 13 consecutive years while serving in the US Air Force. If I saw any of the episodes I would have seen the first season's episodes in 1982-1983 while stationed at Grand Forks AFB,  ND. But after June, 1983, any "American" television I saw until 1996 was on one station: Armed Forces Radio and Television Service (AFRTS).

Five New Permits; Two Permits Renewed -- November 14, 2017

Huge disappointment: the Director's Cut, tentatively scheduled to be released today, was not released today.

Active rigs:

Active Rigs543864186185

Five new permits:
  • Operators: Kraken Operating (3); XTO (2)
  • Fields: Oliver (Williams); Heart Butte (Dunn)
  • Comments: Kraken Operating has three permits, but there might be a typo in "Daily Activity Report." Two of the permits are in section 31 and one permit is in section 30, but the descriptions suggest all three wells should be in the same section -- unless they are drilling two wells in one direction and the other well in the opposite direction, something I talked about years ago [Update: in the November 15, 2017, daily activity report, this was corrected; all three Kraken Operating Stevenson wells are in section 31-158-98]
Two permits renewed:
  • Slawson: a Fox permit in Mountrail county; and a Shakafox permit, also in Mountrail County;

Oh-Oh! API Reports That US Crude Oil Inventories Rose A Whopping 6.513 Million Bbls -- November 14, 207

Earlier today I had this "headline": Tea Leaves Suggest US Crude Oil Inventories Are Rising -- November 14, 2017 -- The Market And Energy Page, T+297. I suggested that when I saw WTI drop more than 2% in price.

Here are the API numbers: US crude oil inventories were forecast to fall 2.2 million bbls; in fact, according to API data released late this afternoon, US crude oil inventories ROSE 6.513 million bbls.

I use EIA data, not API data, to calculate the time it will take to "re-balance" (supply/demand).  I have been tracking this data to "re-balance" for 28 weeks. In that time, we have never had a number greater than 6 million bbls in build. See EIA data here.

Worse, the swing (forecast of minus 2.2 to plus 6.513) equals a net 8.713 million bbls -- in other words, according to the API, there are 8.713 million bbls of crude oil MORE than what was forecast.

If this data holds up in the EIA data, it is clear that the Red Queen has not fallen off her treadmill.

Earlier today, the talking heads said the 2% drop in the price of WTI was the news that Chinese demand for crude oil might be dropping. Nope: the 2% drop in the price of WTI was due to the "rumors" of what the API was going to report.

Venezuela Oil Production Lowest In 28 Years; Venezuela Exports To US Almost Half What The Bakken Produces -- November 14, 2017

A reader sent me a link to an article reporting that Venezuelan crude oil production has dropped to a 28-year low. It will be interesting to watch Venezuelan crude oil exports to the US over the next few months.

This is a look at Venezuelan crude oil exports to the US, in thousands of bbls per month. In the most recent month in which data was provide, Venezuela exported less than 20 million bbls of heavy oil to the US.

North Dakota is producing over 30 million bbls of light oil on a monthly basis. It looks like the last time Venezuela shipped 30 million bbls of oil to the US in any given month was December, 2012. The last year that Venezuela consisted exported that amount of oil to the US was in 2011. The Bakken was hitting its stride in 2010. The "glory years" for Venezuelan oil production appears to have been just before the Great Recession.

Venezuela says it is producing slightly less than 2 million bopd. North Dakota is producing slightly more than 1 million bopd.

Notes To The Granddaughters

Our family (wife and two daughters) lived in Germany for a total of about eight years (three different assignments) while I was in the US Air Force.

Among a gazillion memories we have of Germany is "scherenschnitte."

From wiki:
Scherenschnitte, which means "scissor cuts" in German, is the art of paper cutting design. The artwork often has rotational symmetry within the design, and common forms include silhouettes, valentines, and love letters. The art tradition was founded in Switzerland and Germany in the 16th century and was brought to Colonial America in the 18th century by Dutch immigrants who settled primarily in Pennsylvania.
I had not thought of scherenschnitte in a long time but while reading Mindy Johnson's history of the "ink and paint" women of Walt Disney studios, I came across the following on page 60:
One of the earliest women to make a major mark in animation was German-born Charlotte "Lotte" Reiniger, who created the first of her silhouette animations as titles for Paul Wegener's 1916 feature film Rubezahls Hochzeit (Rumpelstiltskin's Wedding).

This form of shadow animation stemmed from the long-established folk tradition of silhouette cutting, or scherenschnitte, an art form primarily demonstrated by women artists in the early 1900s.

Tea Leaves Suggest US Crude Oil Inventories Are Rising -- November 14, 2017 -- The Market And Energy Page, T+297

WTI dropped over 2% this morning. Now, trading below $56.

API: weekly US crude oil inventory data out today at 3:30 p.m. Central Time. I use EIA data which comes out on Thursdays; API and EIA data are often quite different.

Keystone XL: for those who still care, Nebraska regulators will announce their decision next week. I have no less than 1,033 stand-alone posts tagged with "Keystone." One of the earliest posts tagged with "Keystone" was dated September 14, 2010, in which the question was asked: will we see 1 million bopd crude oil production in North Dakota by 2020? LOL. I think we hit that milestone in 2014. And unfettered, we would be well past 2 million bopd by now. But I digress. It's been more than seven years since we first started debating the Keystone XL. I've flip-flopped on the issue more than once; with more data, my feelings about the KXL change. Right now, I no longer care. Canadians should care. [Update: November 20, 2017: Nebraska regulators approve 3 - 2 the "concept" that TransCanada can build the Keystone XL pipeline through their state .. but not where the company had planned. Back to square one. Even if TransCanada agrees to the new route, what's not to say that the Nebraska state supreme court won't step in and stop the whole thing? All this "excitement" that the pipeline has been approved is grossly misplaced.]

Photo Journalism

The Bismarck Tribune has a photo essay on drilling near the national park in southwestern North Dakota (archived in case the link breaks). Three comments:
  • look how absolutely "clean" those pads are
  • look how incredibly close the oil rigs (and all drilling activity, for that matter) come to the incredibly beautiful and highly traveled Maah Daah Hey Trail (slide #6 or thereabouts) 
  • in the last slide, folks from New York can see a photo of a "North Dakota landowner" -- must be a rare breed -- and the encroaching oil activity on the national park
My biggest concern: once these photographs of the natural beauty of North Dakota goes viral, the state will be inundated with out-of-state tourists and assorted other riff-raff looking to experience a time warp:

Riff-Raff and Magenta show Brad and Janet how to do the Time Warp
Rocky Horror Picture Show

The last thing North Dakota needs is another replay of the DAPL protest.

Random Update Of Oasis Hanover Federal Well Coming Off Confidential List Today -- November 14, 2017

This well came off confidential list today:
  • 26975, 856, Oasis, Hanover Federal 5300 44-11 2B, Willow Creek, 50 stages; 10 million lbs; t517; cum 103K 9/17;
The graphic:

Existing wells in the graphic above:
  • 28309, SI/NC, Oasis, Hanover Federal 5300 42-11 9T, Willow Creek, no production data,
  • 28308, SI/NC, Oasis, Hanover Federal 5300 42-11 8B, Willow Creek, no production data,
  • 28307, SI/NC, Oasis, Hanover Federal 5300 42-11 7T, Willow Creek, no production data,
  • 30392, 2,112, Oasis, Hanover Federal 5300 13-14 7T, Willow Creek, t5/17; cum 61K 9/17;
  • 20387, 1,445, Oasis, Hanover Federal 5300 13-14H Willow Creek, t5/17; cum 358K 9/17; see production profile below.
See production data for #20387, FracFocus [API 33-105-02133] with no data for a re-frack:
Monthly Production Data:

PoolDateDaysBBLS OilRunsBBLS WaterMCF ProdMCF SoldVent/Flare

Initial production for this well:

Distillate Stocks Low As Heating Season Arrives -- November 14, 2017

Director's Cut scheduled to be released this afternoon. Link here.

Talking their book: OPEC points to larger 2018 oil supply deficit as market tightens. Reuters 

Reality: oil falls for a third day, knocked by rising US output. Bloomberg.

Cove Point update: FERC okays Cove Point LNG test cargoes

Boom!: China's natural gas demand to triple by 2040 -- IEA.

Hunch, 2040 headline: NY Governor Andrew Cuomo, IV, signs bill extending the ban on fracking in NY state. Pennsylvania reports another huge budget surplus on sales of natural gas.

Official: Venezuela in default. We should start seeing more stories on Russia, China buying Venezuela assets.

China oil imports to reach 15.5 million bopd in 2040-- IEA.
Oil will still remain the backbone of China's transport fuel demand till 2030, growing by 3.3% per year on average, but its share will fall to just above three-quarters, from nearly 90% today, the IEA said. The remaining 25% of transport fuels will be biofuels, natural gas and electricity.

The IEA said that China would become the world's largest oil consumer by the early 2030s, overtaking the US, and touch 15.5 million b/d in 2040. But the slowdown means that India will become the largest source of global oil demand growth from around 2025.
Returning home: President Trump negotiates return of UCLA hoodlums. No link; story everywhere. Original story here.

Back to the Bakken

Wells coming off confidential list today --
  • 33535, SI/NC, MRO, Arkin 44-12TFH, Bailey, no production data,
  • 31851, 1,196, Whiting, 3J Trust 34-8-2P, Bell, Three Forks, 45 stages 6.4 million lbs, t5/17; cum 98K 9/17;
  • 26975, 856, Oasis, Hanover Federal 5300 44-11 2B, Willow Creek, 50 stages; 10 million lbs; t517; cum 103K 9/17;
Active rigs:

Active Rigs543864186185

RBN Energy: where did our distillate go? Stocks low as heating oil season arrives. Anyone following the weekly EIA petroleum report have probably asked the same question. Great post today by RBN Energy.
U.S. inventories of distillate — especially ultra-low-sulfur diesel (ULSD) and heating oil — are at their lowest pre-winter level in three years after falling during the summer months for the first time since inventory records started being measured in 1982.
Rising diesel exports are one culprit; another is the shutdown of a number of Gulf Coast refineries during and immediately after Hurricane Harvey.
The good news is that distillate prices have been increasing, as have the margins for refining crude oil into distillate — both encouraging refineries to ramp up their diesel/heating oil production. Today, we look at recent developments in the distillate market and what they may mean for diesel and heating oil prices this winter.
ISO New England link here. Currently at $65/Mwh and surging.

Cold front to hit Texas this weekend.

Coin show in Grapevine, TX, this weekend, also.