Friday, February 9, 2018

EIA Has Released Its 2018 Annual Energy Outlook

Link here.

Many, many data points and many graphics, of course. This one is most interesting -- note that the "outlook" goes out to 2050. It appears that the EIA assumes that California, Washington (state), North Carolina, Maine, et al will ban off-shore drilling and that Alaska will be less than extraordinary. I assume much of the "other" (dark brown) is from the Gulf of Mexico.

The other thing that jumps out at me is in the graphic to the left, the "reference" case. That graphic includes data from 2000 to 2016 (which the two graphics to the right do not): look how much crude oil from shale jumped from 2000 (less than 1 million bopd) to 2016 (almost 6 million bopd). By 2050, the amount of crude oil from shale could more than double (from about 6 million bopd to 15 million bopd).

Ranking US Cities By Their Pizza Restaurants -- Nothing About The Bakken -- February 9, 2018

Posted at The Bismarck Tribune
FindTheHome, a real estate intelligence site, set out to find the pizza capitals of America. Using Yelp's API, Yelp Fusion, the data scientists calculated an aggregate "Pizza Score" for all cities with at least 100,000 people.
They used three sub-metrics to measure pizza prevalence, inherent quality and quality compared to other types of food. Those three metrics include:
- Prevalence: The total number of pizza restaurants in a given city
- Inherent Quality: The percentage of pizza restaurants in a given city rated with four or more stars
- Quality Compared to Other foods: The average Yelp rating of pizza restaurants in a given city compared to the average rating of all restaurants in that city
FindTheHome compared the average scores of pizza restaurants to other non-pizza restaurants to ensure that the cities on the list sell pizza that stands out in comparison to other types of food — think Chinese or Mexican food. The list is ranked by the Pizza Score, with the highest score being the No. 1 pizza capital in America. When ties occur, the cities are ordered according to the average rating for pizza restaurants in that city.
 At the bottom of my spreadsheet, the things that jumped out at me.

I added a fourth column that was not in the original poll. Assuming that you were an out-of-town visitor, what are the chances, not knowing anything about the pizza restaurants in town, what are the chances that you would end up at a bad pizza restaurant (actually pretty high, ranging from 24% to 66%)? By that criteria, Philadelphia should have been ranked #1: of all the cities, an out-of-town visitor would be more likely to pick a 4-star or 5-star pizza restaurant than in any other city listed.  Chicago and NYC are ranked #1 and #2 respectively but 66% of pizza restaurants in both cites are 3-star or worse. The cities below are ranked #25 at the top to #1 at the bottom:

# of pizza restaurants
# of 4 - 5 star pizza restaurants
Percent chance of finding a bad pizza restaurant
Louisville/Jefferson County, KY
Mesa, AZ
Lexington-Fayette, KY
Chattanooga, TN
Charlotte NC
Knoxville, TN
Stockton, CA
Los Angeles, CA
Berkeley, CA
Tucson, AZ
Scottsdale, AZ
Colorado Springs, CO
Irvine, CA
San Diego, CA
Oklahoma City, OK
Columbus, OH
El Paso, TX
Raleigh, NC
Portland, OR
Jacksonville, FL
Seattle, WA
Philadelphia, PA
Phoenix, AZ
Chicago, IL

  • Boston did not make the list! It's a bogus poll if Boston did not make the list
  • not one city in New Jersey! It's a bogus poll if no city in New Jersey was on the list
  • fly-over states? where are they?
  • Tennessee/Kentucky over-represented? Interesting. Not expected.
  • Arizona really, really over-represented: Tucson, Phoenix, Scottsdale, Mesa

Eleven Permits Renewed; Eight New Permits; One DUC Completed; And A Partridge In A Pear Tree -- February 9, 2019

Active rigs:

Active Rigs583640137192

Eight (8) new permits:
  • Operators: EOG (6); Whiting (2)
  • Fields: Alger (Mountrail County); Truax (Williams County)
  • Comments: EOG has permits for a 6-well Ross pad in NWNE/NWNW 8-156-92
Five permits canceled:
  • CLR (4): two Uhlman Federal permits, and two Pittsburgh permits, all in McKenzie County
  • Petro-Hunt: one Overlee permit in Burke County
Eleven (11) permits renewed:
  • EOG (5): five Wayzetta permits in Mountrail County
  • Whiting (5): two Charging Eagle permits in Dunn County; two Olson permits and  a Periot permit, all three in Williams County
  • Enduro Operating: an SND permit in Billings County
One producing well completed:
  • 33209, 1,089, XTO, Lundin Federal 11X-4F, North Fork, t1/18; cum --
Number of partridges in the pear tree: 1

FWIW: Filloon On Encana -- February 9, 2018 -- Wells Showing Massive Improvement -- Case For Many US Operators; Seems To Be Industry-Wide

Link over at SeekingAlpha.

Summary (look at these initial production numbers -- wow!):
  • ECA has 9 horizontals producing over 300 MBO since January of 2016, and a large number that model over 300 MBO within the first year of well life
  • ECA has had several recent locations at or well above the high end of its average, proving well design can continue to improve EURs
  • a comparison of 2015 wells with those completed in 2016 or after shows an increase in oil production of 54 MBO in the first 16 months of well life
The biggest improvements have been seen in Texas. The Permian and Eagle Ford have seen record wells, and production numbers well above the high end locations just a year or two ago.
The issue seems to be how high the bar can be set. Operators are now focused on stimulating each foot in the best manner, and this has helped to keep US production high in the face of lower oil prices. Everyone continues to wonder if shale can keep oil prices lower for longer, or if OPEC can control prices.
Recent wells by Encana show a massive improvement. This is the case for many US operators, and seems to be industry wide.


Faux Environmentalists Starting To Walk Back AGW -- Bloomberg -- February 9, 2018

This is most interesting. One can read this Bloomberg article many, many ways (link below).

I read it this way: the faux environmentalists are starting to walk back their wild claims that anthropogenic global warming will mean the end of earth as we know it.

Probably not going to happen, though this was predicted in 2008 or thereabouts:

It's behind a paywall, but if you don't subscribe to Bloomberg you should be able to access it by googling key phrases from the article.

Link here.

The beginning of the article:
There are some 20,000 research papers listed on Google Scholar, a search engine for academics, that mention the worst-case scenario for climate change, one where an overpopulated, technology-poor world digs up all the coal it can find. Basically, it’s the most cataclysmic estimate of global warming.
This scenario is important to scientists. It focuses minds on the unthinkable and how to avoid it.
According to a provocative new analysis from the University of British Columbia, it’s also wrong.
The scientific reference:
The new work, published this week in Environmental Research Letters, shows just how much all that phantom coal may be distorting our picture of what the future may look like. It casts “doubt on whether this outlook is still valid,” the researchers write.

The worst-case scenario is one of four siblings. Their names, from bad to worst, are RCP2.6, RCP4.5, RCP6.0 and RCP8.5. They were introduced in 2011 as a way for researchers running different climate-economic models to do comparable studies regarding how high greenhouse gas concentrations might rise by 2100.
These four storylines range from a 2100 in which aggressive global climate policy leads to low warming, to one in which humanity digs up and burns anything that’ll catch fire.
One big problem with the amount of coal burning assumed by RCP8.5 is that there’s probably not enough extractable coal to make the scenario possible. “We don’t think it’s going to happen,” said Justin Ritchie, lead author of the University of British Columbia study and a Ph.D. candidate. “That’s extremely unlikely and also inconsistent with every year since the late 19th century.” [Best example of faux environmentalists walking back their most extreme predictions.]
 A key graphic:

More from the article:
The 2015 Paris Agreement called for limiting warming to from 1.5 degrees to 2 degrees Celsius (3.6 degrees Fahrenheit). Global average temperatures have already risen almost 1C in the past century. The 1.5C goal may already be impossible, and 2C would require major emissions reductions and, later this century, technological advances to pull enough carbon out of the air.
The disconnect between the historical decarbonization trend and the demands of RCP8.5 shed light on the often-ignored foundation of the world’s climate goals: the baseline.
Paying attention to climate goals without studying optimal baselines is like watching the end of a marathon without knowing where or when it started.
The article is quite long; it's a must read (if you can get to it).

The Energy And Market Page, And Some Politics Thrown In, T+19 -- February 9, 2018

WTI: drops over 3% in mid-morning training. WTI now solidly below $60.

LNG exports: it never quits. 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.

Road To Canada: from Bloomberg, but a paywall, so this link with the same story to the Financial Post:
  • Canada institutes minimum wage; this was from globalnews less than six months ago -- repeat, less than six months ago:
Concerns over the provincial minimum wage increasing to $15/hr by 2019, combined with the proposed elimination of so-called tax loopholes for small business have some economists predicting significant job losses in Ontario.
  • Canada's labor market suffered its biggest monthly job loss since the last recession -- all part-time -- as employers faced quickening wage gains
  • Canada shed a net 88,000 jobs in January (2018), a sharp drop to a recent stellar performance that saw 2017 produce the biggest increase in jobs since 2002
  • the drop
    • 137,000 part-time jobs
  • a gain
    • 49,000 in full-time work
  • the drop coincided with an increase in the minimum wage in Canada's largest province -- Ontario; the national wage rate accelerated an an annualized pace of 3.3 percent, the fastest since 2015
  • but one can find any number of folks arguing just the opposite, and finding statistics to prove their point (see the comments at the linked article), but it's hard to argue with facts even if you have your own statistics
Making America great: I find this graphic incredibly interesting. The dollars spent on utility infrastructure in the United States doubled -- from $10 billion to $20 billion over seven years of one administration. I find that remarkable. Doubled. As in 100% increase. One would think that this might be something we would have seen in a developing country but this was in a country that apparently had a pretty good utility infrastructure.

These are the kinds of graphics we need in the Obama Library. One would think that this would be something he would want to showcase. By the way, the $10 billion over seven years works out to almost exactly one penny per American per day (assuming I did the math right). What a great country.

People talk a lot about the money needed for the country's infrastructure. My hunch: a lot of money is already being spent on infrastructure. (And, yes, I know what drove that doubling of infrastructure expenditures. Don't even get me started.)

Disclaimer: this is not an investment site. Do not make any investment, financial, job, travel, or relationship-related decisions based on what you read here or what you think you may have read here.

Geee! GE is solidly below $15/share now. I remember some weeks ago, the talking heads over at CNBC suggested GE could/would/should hit $15. The question, I suppose now, is whether GE will hit $10? Probably not. Maybe $14 is its floor.

Wow, I would love to opine, but this is not an investment site.

Island Rising!


February 10, 2018: from JoanneNova --

Original Post 

The poster-child island for "anthropogenic global warming sea rising" or AGWSR for short -- is growing. I can't make this stuff up. From
The Pacific nation of Tuvalu—long seen as a prime candidate to disappear as climate change forces up sea levels—is actually growing in size, new research shows.
Has the UN sent Tuvalu that $50 billion -- mostly from US taxpayers -- to save themselves from rising seas yet?

Budget Busting BS

Somehow I can't get too excited about all that talk that the budget deal went too far -- busting the budget caps again.

We're talking $300 billion over two years -- over two years. Or less than $150 billion / year -- Buffett, Bezos, and Cook could cover that without blinking an eye.

And, of that $300, $90 billion (or over 25%) will be for disaster relief --
The aid package would earmark $23.5 billion to replenish FEMA's primary fund for recovery and repair programs, provide $28 billion for block grants to rebuild housing and essential infrastructure such as highways, and dedicate $2 billion to improve the power grid in the U.S. Virgin Islands and Puerto Rico where nearly 40% of the island remains without electricity months after Hurricane Maria made landfall.
After you subtract all non-military stuff out, in the big scheme of things, on a percentage basis, the military isn't getting the windfall Rachel will have you believe.
The agreement would increase defense spending this year by $80 billion and domestic spending by $63 billion beyond strict budget caps, according to a summary of the deal obtained by POLITICO. Next year, defense spending would increase by $85 billion and domestic funding by $68 billion beyond the caps. The deal also includes $140 billion for defense and $20 billion for domestic in emergency spending over two years.
Most entertaining: Senator Bernie Sanders went through a laundry list of why this was a great bill -- all the funding it provided for his favorite programs ... but, as he said, "at the end of the day, I have to vote no on this budget deal." Why? Because he's Bernie Sanders. That's what he does.

Notes to the Granddaughters

Sophia's pre-kindergarten class has been studying space travel for the past two weeks. I assume they are watching videos of Elon Musk's red Tesla hurtling towards the red planet. Today, they are enjoying real astronaut food. What an incredibly clever way to market ice cream. Color me impressed:

They Must Be Reading The Blog -- February 9, 2018

The energy situation in the northeast has been fascinating to watch and I've posted many, many times on the subject (along with a similar issue in south Australia).

Today, a headline internet story from Forbes: more oil and natural gas invalidate "keep it in the ground" movement."
There is a destructive "keep it in the ground" movement arising from environmental groups to block oil and natural gas development and the pipelines required to transport them. The center of this opposition is in New York and the New England states, where numerous policymakers seek to artificially constrain energy supply. Yet, despite producing none themselves, their reliance on gas electricity has surged. ISO New England now gets about 50% of its power from gas, versus 10% to 15% a decade ago. New York sits in the same boat: gas now generates ~45% of the state’s electricity, doubling its market share since 2005.
It's no wonder, then, that blocking energy development and pipelines has established home power rates in New England and New York that are at least 50% higher than the national average. Industrial rates are more than double, and encourages companies to leave the area. This is unfortunate and illogical since U.S. natural gas prices have been at historic lows. 

There is not enough non-fossil-fuel energy transported to the region to satisfy the needs of businesses and families. For example, Massachusetts has nearly 20 times more gas power capacity than wind and solar capacity combined. Not surprisingly, the "keep it in the ground" movement has no explanation on why those states with the most aggressive renewable energy goals are increasingly using more natural gas. In stark contrast, of course, I've already clearly explained it.
Policies intended to reduce oil and gas consumption are dubious: Even if they work in the short term, over time they just lower oil and gas prices and encourage more usage. I've already clearly explained it. Oil and gas are so obviously ingrained in the U.S. and global economies, supplying over 60% of all energy. In the real world, this means that more economic growth ultimately means more oil and gas demand. That's why year after year demand continues to grow. There is no significant substitute for oil whatsoever. And know that natural gas power plants don't get retired with more wind and solar power, but get built even more because gas is flexible backup required.
Unfortunately for middle-income ratepayers, the energy issue is New York and New England is no longer fact-based. The issue has become political and CAVE dwellers are winning in that region.

Speaking of which, it will be interesting to see how the region does this weekend with winter storm Mateo approaching.

For Those Interested In Midstream, RBN Energy Has Another Great Post Today -- February 9, 2018


September 13, 2018: Zohr field at 2 billion cubic feet / day. See this update here.

February 12, 2018: Turkish warships are impeding a rig from reaching a location of Cyprus where Italian energy company Eni is scheduled to drill for gas. -- from Twitter. Update from Reuters. Turkey is wearing out its "welcome" in the EU. Eni says it will produce 2.9 Bcf per day from Zohr field by second half of 2019. Compare that "2.9 Bcf" to the Bakken: from the last Director's Cut,
What was North Dakota's natural gas production in the most recent month, November, 2017? Yup, another all-time high: 2.1 billion cubic feet / day.
Original Post 

Peak oil! What peak oil? Remember this story? The Bakken, an oily play, is producing more natural gas than the Mediterranean's largest offshore natural gas field. I think I originally posted the Zohr field announcement back on October 30, 2015. Today, a "new ENI discovery 'confirms' extension of Zohr-like play in Cyprus EEZ"; from Rigzone, prior to the new discovery:
Zohr, the largest ever discovery of gas in the Mediterranean Sea, came online in December last year. Located in the Shorouk Block offshore Egypt, the field has potential resources in excess of 30 trillion cubic feet of gas in place (around 5.5 billion barrels of oil equivalent), according to Eni.
The Bakken: 50 billion boe recoverable? 10% of that being natural gas? 5 billion boe (natural gas) from an oily field?

Yes, I know. This story is about natural gas, not oil, but who ever says "peak natural gas."


Peak oil! What peak oil? The US is "poised" to sell half of its Strategic Petroleum Reserve -- from Bloomberg via Rigzone:
The spending deal making its way through Congress calls for selling 100 million barrels of oil from the Strategic Petroleum Reserve by 2027. Combined with other sales approved last year, that would mean the volume of oil in the reserve would fall by 45 percent, to about 303 million barrels.
"This is the biggest non-emergency sale in American history," said Kevin Book, managing director of ClearView Energy Partners in Washington. "This is nothing short of liquidation of a safety net."
Let's see: the US produces 10 million bopd? 300 million bbls = 30 days; 100 million bbls (in spending bill) = 10 days. Color me, "not worried." 

ExxonMobil's Reserves -- Exxon Is Back!


Later, 11:19 a.m. Central Time: this is really quite remarkable. Just a few hours after posting the note below, I stumble across this Reuters article via Twitter -- ExxonMobil's reserves jump 19% on growh in US shale and UAE. Along with everything at the original post, add this:
  • the company paid more than $6 billion last year to double its acreage in the Permian Basin, the largest U.S. oilfield. That shale deal added more than 800 million boe to reserves, the company said.
  • Exxon added another 800 million boe to its reserves from operations in the United Arab Emirates's Upper Zakum field
Original Post 

Peak oil! What peak oil? Last night I quickly ran through a Google search regarding ExxonMobil's recent announcement about its 2017 crude oil and natural gas reserves. Because I went through it quickly, the search was neither full nor completely accurate (I suppose), but I think I have it down to a 30-second elevator speech:
  • ExxonMobil had an incredibly good 2017 with regard to reserves replacing production. Both on a percentage basis (a whopping 183%) and a raw number (2.7 billion boe) basis, ExxonMobil had an incredible year
  • this past year, 2017, was the second best year for XOM since 2009 for replacement (in 2010, XOM hit the numbers out of the ballpark)
  • the 2015 and 2016 were anomalies due to new SEC rules
  • ExxonMobil's "reserve life" hit a historical high of almost 17 years in 2014, but it is clawing its way back, from 13 years in 2016; and now, 14 years in 2017
Peak oil. What peak oil?

The Bakken strikes back: for the archives. Nothing new in this story. It was reported in various forms last autumn (2017). But it's fun to read again.

Wow: Algerian energy firm Sonatrach will invest $56 billion from 2018 to 2022. I think that rivals US / international majors; I could be wrong; will have to check later.

Back to the Bakken

Active rigs:

Active Rigs583640137192

Oil hits 7-week low on expectations of higher US, Iran output -- Reuters.

RBN Energy: a new analysis of US midstreamers' assets and outlooks.
The recent rise in crude oil prices to levels not seen since late 2014 certainly has captured everyone’s attention, and generally boosted the financial prospects for U.S. producers and midstreamers alike. But while it’s often said that a rising tide lifts all boats, the fact is that accurately assessing the relative value of — and prospects for — specific midstream energy companies requires a deep, detailed analysis. Where are their assets located? How do they complement each other? Do their contractual obligations help or hinder? Sure, things may be looking up in the midstream sector in a big-picture sense, but that hardly makes every midstream company a winner. Today, we review highlights from a new East Daley Capital report that shines a bright light on 28 U.S. midstream companies.
We ran a series of blogs highlighting ..... In Part 1, we focused on the report’s argument that a surprising number of supply-push contracts for crude oil and natural gas pipeline capacity will be expiring in the next few years, and in many instances the likely terms for contract extensions or renewals may be much less favorable to the pipeline owners. The theme we discussed in Part 2 was that vertically integrated midstream companies that can gather natural gas, process it to remove natural gas liquids (NGLs), then pipe gas to market and mixed NGLs (or “y-grade”) to storage and/or fractionators — and maybe even fractionate the y-grade into ethane, propane and other “purity products” — have a real leg up on midstreamers whose assets are more disjointed. The third theme, which we talked about in Part 3 was that location really, really matters ­­— that is, the near- and mid-term success of a midstream company depends to a significant degree on how many of its pipelines, processing plants and other assets serve production areas that are on the rise and not on the edge.