Saturday, December 16, 2017

GDP Forecast, 4Q17 -- GDP Now -- Now At 3.3% -- December 16, 2017

Latest forecast: 3.3 percent — December 14, 2017
The GDPNow model forecast for real GDP growth (seasonally adjusted annual rate) in the fourth quarter of 2017 is 3.3 percent on December 14, up from 2.9 percent on December 8.

The forecast of fourth-quarter real consumer spending growth increased from 2.5 percent to 3.2 percent after yesterday's Consumer Price Index report from the U.S. Bureau of Labor Statistics and this morning's retail sales release from the U.S. Census Bureau.
Best Christmas Present So Far

We opened some huge boxes that contained a lot of little boxes. Our middle granddaughter suggested we do something creative with all the boxes. My suggestion: play "charades" with the boxes. One stacks the boxes in different configurations and others guess what the stack represents. The "Sears Tower" was the best; reached from the floor to the high ceiling.

Our son-in-law was a US Navy submarine officer for many years, so the next idea was a no-brainer. Later we put a periscope up but no photo and by now the boxes are pretty much destroyed from over-use. But on the wood floor, Sophia's submarine could move about 15 knots -- in extremely short spurts. The only thing we needed was a dog chasing the u-boat.

Next year, for her Christmas presents, I'm just going to go down to the neighborhood U-Haul store and buy some oversize boxes for about $1.50/box -- a lot less expensive than actually buying something to put in the boxes.

The Literature Page

The Bismarck Tribune has a review/recommendation for a Christmas gift: the biography of a North Dakota woman who invented rocket fuel. I wrote about this book back on February 26, 2015. I would rate it as a must-read for anyone interested in North Dakota history, and for those interested in the American rocket program. It really is a good book.

Justin Trudeau's Goal To Keep-Fossil-Fuel-In-The-Ground Seems To Be Working -- December 16, 2017


December 17, 2017: a reader sent the original post to a friend in Canada. The Canadian reader disagreed with me, saying that Justin Trudeau was in favor of "the Canadian oil sands pipeline." The reader had not heard of George Butts, but this would be like Hillary, had she been elected president, making Tom Steyer her "principal advisor." And this is the problem with folks who are unaware of the persistence of socialists: they are "taken in" by smooth talkers but are unaware of the inner circle advising their elected leaders.

Justin Trudeau can be "for anything he wants to be," depending upon which audience he is addressing, but it doesn't take a rocket scientist to know where his allegiances lie, see clip below.

Unfortunately this is a long clip but skip ahead to 2:05 to hear George Butts in his own words:

Confused About Canada's Energy Policy?

It will be interesting to see how "Canada" and Justin Trudeau respond to $30-oil.

Original Post
A reader sent me a note regarding Canada's Justin Trudeau's principal advisor: George Butts. This is what would have happened to us had Hillary been elected. George Butts is Tom Steyer on steroids. George Butts doesn't have the money but he has the power. He is Trudeau's principal advisor on energy (and I assume most everything else). Prior to his current "job," he was president and CEO of the World Wildlife Fund Canada, a global conservation organization. In 2014, Maclean's magazine declared Butts to be the fourteenth most powerful Canadian.

I didn't think that article was of particular interest -- to me it was just another political debacle for the Canadians. So I did not post it and had no plans to post it. Then something else just popped up -- again, another article from a reader, which we will look at farther below, but first:
This is not a rhetorical question. I am truly curious. US refineries are optimized for heavy oil; that's what the Keystone XL pipeline was all about -- bringing heavy oil from western Canada to US refineries along the Gulf coast. Of course that has not panned out.

Meanwhile, imports from Saudi Arabia have dropped significantly and heavy oil imports from Venezuela, I assume, are also dropping. So, where is heavy oil for US refineries coming from? Certainly not from Canada. (Most recent data is from September; it will be quite some time to see data for November/December, 2018.)
The article that caught my attention and changed my mind about posting that bit about George Butts follows.

This article from was sent by another reader: Canadian oil prices plunge to $30/bbl. Data points:
  • oil from Canada's oil sands is now selling at $27/bbl discount relative to WTI -- the sharpest difference in more than four years
  • Western Canada Select (WCS): benchmark for oil from Alberta's oil sands, has plunged in December, falling to just $30 per barrel at the end of this past week
  • reflects: 
    • different quality from lighter forms of oil
    • extra transportation costs to move oil hundreds of miles out of Alberta
  • but a discount is usually something like $10/bbl; not more than $25
  • a price deterioration of this magnitude has not been seen in years
  • reasons for increased transportation costs: CBR is imploding; perfect storm
    • TransCanada's Keystone pipeline capacity was slowed in November while the company made repairs
    • led to a glut of WCS; WCS was diverted into storage as the pipeline underwent repairs
    • second, railroad companies were unable to accommodate the oil industry on short notice; equipment constraints and crew constraints (one wonders if such constraints are worse in a liberal-leaning/regulation-heavy country like Canada vis-a-vis the US)
    • Canadian oil companies have been tied up trying to ship delayed oil cargoes; have not been able to accept oil shipments
Much more at the linked article.

My hunch: Justin Trudeau is receiving a lot of angry phone calls from Alberta but George Butts is more than happy with how things are turning out. Butts leads the "keep-fossil-fuel-in-the-ground" parade.

Saudi Arabia Crude Oil
US Imports 


Venezuela Crude Oil
US Imports


Bakken, An Oily Play, Is Producing More Natural Gas Than The Mediterranean's Largest Offshore Natural Gas Field -- December 16, 2017

Egypt's giant natural gas field has started production, according to Bloomberg (pay wall) but Reuters also has the story:
  • the Zohr field may turn Egypt from LNG importer to gas exporter
  • Egypt’s Eni SpA-operated Zohr natural gas field will bring the country closer to its goal of energy self-sufficiency
  • discovered in 2015 by Italy’s Eni, the field contains an estimated 30 trillion cubic feet of gas
Gas from the Mediterranean’s largest offshore field is pumped to a facility in Port Said city, to be prepared for delivery to the national distribution network, with initial production of 350 million cubic feet per day. Daily output is set to rise to about 1 billion cubic feet in June and 2.7 billion by the end of 2019, he said.
So just how big is that "giant" field that has captured Bloomberg's attention? For natural gas, about the same size as the Bakken?

First the data points again, from that huge Egyptian gas field:
  • 350 million cubic feet per day initial production
  • 1 billion cubic feet per day by June (2018?)
  • 2.7 billion cubic feet by the end of 2019
Natural gas production from the "oily" Bakken, North Dakota, October, 2017 (most recent month being reported)
  • 63,918,772,000 cubic feet for the month of October
  • divided by 31 days = 2,061,895,879 bbls/day OR 2.061 billion cubic feet 
It would be nice for Bloomberg to provide some comparison with the Bakken or the Permian. Thank you very much.

See also this post for reserves of natural gas around the world.

"I Did Not Get The Memo" -- December 16, 2017

Well, now we know how this Palestinian became a billionaire: catering for US troops during the reign of George H. W. Bush:
Sabih al-Masri, a Palestinian billionaire and the chairman of Jordan’s largest lender Arab Bank, was detained in Saudi Arabia for questioning after a business trip to Riyadh, family sources and friends said on Saturday.
They said Masri, a Saudi citizen and Jordan’s most prominent businessman with holdings in hotels and banking, was detained after heading to the Saudi capital last week to chair meetings of companies he owns.
Masri, who originally comes from a prominent merchant family from Nablus in the Israeli-occupied West Bank, amassed a fortune from partnering with influential Saudis in a major catering business to supply troops during the U.S.-led military operation to retake Kuwait from Iraq in the 1991 Gulf War. 
Apparently he did not receive the memo:
Confidants said Masri had been warned not to travel to Saudi Arabia after mass arrests last month of Saudi royals, ministers and businessmen in the biggest purge of the kingdom’s affluent elite in its modern history. 
My hunch: the Russians intercepted the advice not to go to Saudi Arabia, and Masri thought all the CNN reports about Prince Salman rounding up rich folks in Riyadh was simply "fake news."

Notes From Twitter

India in 1947 had rather less difficulty gaining its independence than we are having in 2017 leaving the Brussels empire. Time for Boris to go the full Gandhi.
Bakken economy:
Too many data points in this article to go through -- I will archive the article because it will disappear over time -- but for now, simply this: the public school enrollment continues to grow beyond expectation in North Dakota's oil patch.

Some years ago I said the metric to follow if one was curious whether families would remain in the Bakken "after the boom" was to follow school enrollment figures. In the very, very early days of the boom, "experts" said oil workers (mostly men) would be coming to work in the Bakken but their families would not join them, and that eventually the workers (and any families that might have joined their working spouses) would leave the state.

Apparently, to a large extent that did not happen. 
Maine governor wants to get rid of solar panel subsidies:
Maine's Republican governor says he wants to reverse regulators' move to delay a gradual ramp down in compensation for new solar panel owners who generate excess energy. LePage has said utility regulators should have gotten rid of the financial incentive system altogether.
By the way, if there is a shortage of money for North Dakota public schools, the Legislature is authorized to start spending oil money from the "Legacy Fund" as of June, 2017.
Another nuclear reactor ordered to shut down in Japan: link here.

Source for unexplained radiation over Europe: it was the Russians after all.

Another meth lab in Williston? Link here. Having said that, it must have been another slow news day in the Bakken.

Championship Game: January 6, 2018

Did North Dakota Just Set A New Record: Daily BOE Production For Month Of October, 2017?


December 16, 2017: a reader writes, wondering when ND will start reporting new production records?
A few months ago I was impressed with how many wells produced over 30,000 bbls in one month in the Bakken.
We are now up to 96 wells that have produced more than 30,000 bbls in one month!
Well #52 and #73 on the list of wells produced greater than 30,000 bbls in one month are both EOG wells.
Thirty-four (34) wells in four (4) different counties produced over 40,000 bbls of oil in October. Fourteen (14) wells by 7 different operators in 6 different fields produced over 50,000 BBL per month. Three different operators in 2 different fields are producing over 70,000 BBL!!!!
December 16, 2017:  a reader writes me that US News made a similar "mistake" some months ago: "North Dakota oil production jumps slightly in August."
Original Post

  • Newsweek: "up slightly" -- sets all-time record for monthly natural gas production
  • Platts: "output jumped" -- highest average since August, 2015
  • Oil & Gas 360: "approaching 2014 record"; "oil production jumped significantly"; both oil and natural gas production increased month-over-month";
  • milliondollarway: North Dakota set a "boe" production record, despite near record low of active rigs, and 2,200 non-producing but completed wells
I could be wrong, but the Newsweek headline ("up slightly") appears to have been written by Barack Obama based on headlines from Platts and Oil & Gas 360. In fact, I believe on a "boe" basis, North Dakota has set a new production record.

The president was either ignorant of America's entrepreneurial spirit and the Bakken revolution already occurring or he was colluding with the Saudi Arabians and George Soros to kill the US oil industry

Production, crude oil:
  • December, 2014, all-time record: 1,227,483 bopd
  • October, 2017: 1,185,499 bopd
Production, natural gas:
  • December, 2014: 1.51 billion cubic feet per day -- 1,510,858,000 cubic feet / day
  • October, 2017: 2.06 billion cubic feet per day-- all-time record (2,061,895,838 cubic feet / day)
Production, boepd (this may be an all-time record; I often make errors, and I only checked these two months):
  • December, 2014:  1,227,483 + 251,768 = 1,479,250 boepd
  • October 2017: 1,185,499 + 343,592 = 1,529,091 boepd
Active rigs (see graphic below):
  • December, 2014: 184 active rigs
  • October, 2017: 56 active rigs
Inactive wells:
  • In December, 2014: 
    • literally, a handful of DUCs
    • number of inactive wells too few to be mentioned by NDIC
  • In October, 2014:
    • 1,000 DUCs (rounded) -- increasing
    • 1,500 "inactive wells" -- increasing
Competition for resources and investors:
  • December, 2014: almost no competition from the Permian for resources
  • October 2017: NDIC has remarked on competition from the Perman for resources  
Average daily oil production per well (see graphic below), link here:
  • December, 2014: 105 bbls/day/well
  • October, 2017: 85 but rising from an all-time "Bakken low" of 72 bbls/day/well
Price of WTI:
  • first half of CY 2014: $110/bbl
  • first half of CY 2017: $55/bbl

Active rigs:

Active Rigs534064184191

Daily oil per well (last column):