Wednesday, March 14, 2018

A Third Opportunity For The Kennedy Clan To See Snow? -- March 14, 2018; Boston Sets Snow Record; How Manmade Global Warming Is Like String Theory

A screenshot from the Drudge Report:

And in case the Kennedy clan doesn't read the Drudge Report, here's the screenshot from The Weather Channel:

What does manmade global warming have in common with string theoryEverything is possible.

What A Treat -- A Mike Fitzsimmons Seeking Alpha Posting From 2013 Still Accessible -- March 14, 2018

Goldman Sachs has been both bullish and bearish with regard to the Bakken over the years.

It is interesting to go back to 2013 and see the Goldman Sachs forecast then.

The forecast:

The Bakken in the graphic above includes Montana and North Dakota; I do not know if it includes that part of the Bakken in Canada.

The curve was affected by price, of course, which was affected by the Saudi Surge, announced in November, 2014, and lasted almost exactly two full years.

At the time that article was written, WTI was selling for $103/bbl.
All things being equal, the curve will move to the right.

I posted this, not so much for the Goldman Sachs prognostication but, to note the Bakken formations/sub-formations recognized by Goldman Sachs analysts and the size of the spacing units.

Two New Permits; Five Hess Wells Permitted For Re-Completions -- March 14, 2018

Active rigs:

Active Rigs574631112191

Two new permits:
  • Operators: XTO, Hunt
  • Fields: Heart Butte (Dunn); Parshall (Mountrail)
  • Comments:
Four permits canceled:
  • Enerplus: an Axe permit; a Poblano permit; a Vise permit; and, a Cayenne permit, all in Dunn County
Five permits for re-completions; again this is incredibly interesting -- these were all PNC wells - now they are permitted for re-completions; all are now CONF:
  • Hess: five CA-Anderson Smith permits, Capa oil field, NENE 26-155-96 --
    • 32149: 155-96-2535H-2
    • 32150: 155-96-2535H-3
    • 32164: 155-96-2535H-4
    • 32163: 155-96-2535H-5
    • 32173: 155-96-2535H-6

Capital One

I'm watching the NCAA March Madness basketball games. The Capital One Charles Barkley commercials are some of the best I've seen in some time. 

"The Alamo" is not yet on YouTube.

LNG: Things Are Changing -- March 14, 2018

I began the blog because of the Bakken, an oily play. I knew maybe 1% of what was going on in the Bakken, and today, I might know 1.5%. When I started the blog, I knew even less about natural gas and still barely understand much of that sector.

The shale oil story played out more staggering than I ever would have guessed, but even more surprising is how the natural gas story played out.

Now this, from an article over at the power has shifted in LNG markets. Some data points:
  • LNG used to depend on long-term (20- and 30-year contracts); no longer -- that has been stated by others also; I believe I recall that LNG contracts will now be much like crude oil contracts, 6-month contracts
  • this epic change gives consumers (China, Japan, South Korea) more power
The quandary for LNG customers who had to enter into long-term 20 and even 30-year off-take agreements was manifold since they were mostly anti-competitive in nature and, worse yet, whose terms were mostly secretive with a problematic corresponding lack of transparency for the industry. Yet, with a somewhat limited supply of the super-cooled fuel until around the start of 2015, buyers had little choice but to comply.
  • experts suggest that continued expansion of LNG supply will be needed to meet demand that is forecast to grow at an average of 1.6% per year until 2040
  • hings can change drastically in just a couple of years. Since 2016, with Australia now poised to have as many as ten major LNG export projects operational, followed by the U.S. which now has two export projects on-stream and will have five export projects operational by the end of the decade, the market has switched from being stretched thin to being over supplied – all good news for buyers thereby changing the rules of the game. This is a development that has been hard for LNG exporters to accept.
The LNG producers want long-term contracts. This writer, at the linked article, suggests that is not going to happen. I believe I've read that elsewhere.
As LNG markets continue to be well lubricated by Australia, U.S. and Russia, the fuel will increasingly trade more like a true commodity, similar in some aspects as iron oil and crude oil.
So, on the consuming side:
  • China
  • South Korea
  • Japan
On the supply side:
  • the US
  • Russia
  • Australia
  • note: Qatar not mentioned; there was a story yesterday (not posted) that Qatar's role in global LNG is decreasing
Are Kids Protesting The Wrong Crime?

Something tells me all the gun laws in the world would not have prevented the ambush on these cops "half a century ago."

And now, one of the killers walks free because:
  • he earned a masters degree in prison; and, 
  • he learned to play the flute
Link here. If the link breaks, google Herman Bell walks free.

Maybe the kids protesting the Florida school shooting need to be protesting lenient judges and lenient parole boards. 

It's noteworthy that one of the widows was not asked to attend the parole hearing and only heard the results of the hearing "after the fact."

GDP Now Forecast For 1Q18 Drops Below 2% -- March 14, 2018

Link here.

Latest forecast: 1.9 percent — March 14, 2018.
The GDPNow model estimate for real GDP growth (seasonally adjusted annual rate) in the first quarter of 2018 is 1.9 percent on March 14, down from 2.5 percent on March 9.
After yesterday's Consumer Price Index release from the U.S. Bureau of Labor Statistics and this morning's retail sales report from the U.S. Census Bureau, the nowcast of first-quarter real personal consumption expenditures growth fell from 2.2 percent to 1.4 percent.
Easy come, easy go.

The Literary Page


March 29, 2018: another source for the Crusades --
Holy War: The Crusades and Their Impact on Today's World, Karen Armstrong, c. 1988, 1991, and 2001 -- with preface written in light of the events on "9-11." 

Original Post
The word of the day: Betjemanian, as in, "He also had, from early on, a Betjemanian love of Englishness." -- The New Yorker, March 12, 2018, page 72.  From wiki:
Sir John Betjeman (pronounced, "betch-man'), CBE (28 August 1906 – 19 May 1984) was an English poet, writer, and broadcaster who described himself in Who's Who as a "poet and hack".
He was Poet Laureate of the United Kingdom from 1972 until his death. He was a founding member of the Victorian Society and a passionate defender of Victorian architecture. He began his career as a journalist and ended it as one of the most popular British Poets Laureate and a much-loved figure on British television.
If I had but one period of my life to re-live and re-live, it would be my years in northern England. I must have walked hundreds of miles in northern Yorkshire over those several years, regardless of the season or the weather.

The books for today:
  • The Oxford Illustrated History of the Crusades, edited by Jonathan Riley-Smith, c. 1995
  • The Sherlock Holmes Book, a DK book, c. 2015
The crusades:
  • 1095 AD
  • a church council meeting in Clermont, chairman: Pope Urban II
  • called on Frankish knights to vow to march to the East with two mandates:
  • free Christians from the yoke of Islamic rule
  • liberating the tomb of Christ, the Holy Sepulchre in Jerusalem from Muslim control
  • multiple crusades to the East and also to the west, most notably, Spain
  • Crusades began in 1107-1108; diverted into a preliminary and disastrous invasion of the Byzantine empire: 1120 - 1125; 1128 - 1129; 1139 - 1140; and 1147 - 1149
  • the Second Crusade: 1147 - 1149
  • by then, the movement had extended to Spain, the reconquest of which from the Moors had already been equated with the liberation of Jerusalem by Pope Urban II
  • the Second Crusade was a fiasco; three further crusades in Spain before 1187, one in northern Europe, and a few expeditions, notably that of 1177, to Palestine, the thirty years that followed were in many ways the lowest point the movement reached before the 15th century
  • everything changed, however, with the Muslim victory at Hattin, and the loss of Jerusalem and nearly all of Palestine to Saladin in 1187
  • the Third Crusade: 1189 - 1192; the German Crusade (1197 - 1198) recovered most of the coast, King Henry II of England;
  • Crusades generated enthusiasm through the 13th century
  • Children's Crusade: 1212
  • the Crusade of the Shepherds: 1251
  • the Fourth Crusade: 1202 - 1204; military forces sailed to the East; diverted to Constantinople, which the crusaders took, together with much of Greece
  • the Fifth Crusade: 1217 - 1219; ended with the recovery of Jersualem by treaty 
  • the first crusade of King Louis IX of France: 1239 - 1241; 1248 - 1254; inspired by the loss of Jerusalem in 1244
  • Louis's second crusade: 1269 - 1272
  • crusading armies invaded Egypt: 1218
  • Tunisia: 1270
  • and, it continues, more crusades to Spain, northern Europe, and north Africa: 1187 - 
  • these on-going crusades were fought against political opponents of the papacy in Italy -- endemic between 1255 and 1378
The last great Muslim offensive: the siege of Vienna by the Ottoman Turks in early September, 1683, with the Muslim encampments ringing the city and a spider's web of trenches pressing on the fortifications. The advance of the Ottomans into the heart of Europe precipitated the last great crusade league, which went on to recover large parts of the Balkans for Christendom.

The crusades affected everything -- religious thought, politics, economy, society -- even generating its own literature.
  • King Henry II: 1154 - 1189 (planned the Third Crusade but died in 1189 and his son King Richard I, the Lion-Hearted, led the crusade instead)
  • King Richard I: 1189 - 1199
  • King Richard II: 1377 - 1399
  • King Richard III: 1483 - 1485
Crusading is not easy to define: p. 8.

30-second elevator speech:
the "crusades" may have begun with the pope concerned about the Muslims in the Holy Land but over time, the "crusades" turned into a papal fight against all opponents stretching from Spain to Asia and as far north as the Baltic states; from 1095 - 1683; wow, 1100 - 1700
Chapter 5: Songs.
  • the great epic traditions of Germany and France: Chanson de Roland; the oldest epic in French; almost certainly dates from about the time of the First Crusade; versions in both French and Occitan, the literary language of southern France
  • Roland, a duke of the march of Brittany, 778, perished in what may have been a minor skirmish in the Pyreness; but the minor skirmish, over time, took on tones of an epic: by the 11th century there had been a striking change of scale: the account of events in the Chanson de Roland turns the incident into a major confrontation between Charlemagne's empire and the forces of Islam, culminating in Charlemagne's successful conquest of all of Spain and the enforced conversion of the citizens of Saragossa (it's possible that the skirmish in the Pyrenees, 778, never even involved Muslims)
If I were to come back to this book. I would begin with Chapter 5.

The Sherlock Holmes Book

A fun, little book whose audience would be 14-year-olds who love Sherlock Holmes. And also the rest of us.

Sir Arthur Conan Doyle
  • b. in Edinburgh, Scottish again, May 22, 1859, just before the US Civil War
  • strict Jesuit boarding school, Stonyhurst school in Lancashire where he met a fellow student named Moriatry
  • questioned his religious believes and by the time he left that Jesuit school was an atheist; turned to spiritualism; left that school in 1875
  • a year of school with the Jesuits in Feldkirch in Austria
  • returned to Edinburgh University, 1876- 1881: studied medicine
  • met two professors who would later serve as models for two more characters:
    • Professor Rutherford: Professor George Edward Challenger, the central character in his famous science-fiction novel, The Lost World (1912)
    • Dr Joseph Bell: whose method of deducing the history and circumstances of his patients appeared little short of magic; here was the model and inspiration for Sherlock Holmes; his first collection of Sherlock Holmes stories was dedicated "To My Old Teacher Joseph Bell"; Joseph Bell was a father figure for Conan
  • gradually built up a medical practice but also began writing fiction
  • "I thought I would try my hand at writing a story in which the hero would treat crime as Dr Bell treated disease and where science would take the place of romance." 
  • he noted that prior to his method, most detective stories had results which were obtained in nearly every case by chance
  • 1887: A Study in Scarlet, the first Sherlock Holmes novel
  • 1893: on a trip to Switzerlan with his wife Louise, wrote his final Sherlock Holmes, consigning his hero to the watery depths of the Reichenbach Falls, locked in the arms of the criminal mastermind Professor Moriarty
  • physically faithful to his first wife, Louise, but never passionately in love with her; more of a friendship
  • 1897: falls in love with Jean Leckie, a Scottish woman, 14 years his junior
  • 1906: Louise died of tuberculosis
  • 1907: Conan married Jean a year later
  • 1900: serves in the Second Boer War as a medic
This book would be a great gift for an adolescent "in love" with Sherlock Holmes

One Reason Why Texans Like Texas -- Composite Cost Of Living -- March 14, 2018

Graphic from ZeroHedge:

New Jersey:
  • a pension funding level of only 37% for the 2015 fiscal year, the worst of any state in the US 
  • governor proposes a record $37.4 billion budgt
  • the budget proposal is 4.2% higher than the current fiscal year budget
  • would boost spending on schools, pensions and mass transit
  • governor will propose taxes "on almost everything" and increase taxes on the wealthy -- a proposal so preposterous even the states Dems are against it
Much, much more at the link.

From the graphic above, it appears for the same standard of living here in Texas, one's income would have to increase by about 55% to live in California, and that seems about right when I compare the cost of gasoline and groceries. When I throw in the cost of housing and state income tax (which Texas does not have), I truly think my income would have to 2.5x higher for us to afford to live in California. And note: the composite costs of living in the graphic above are stage averages: can you imagine the cost of living in San Francisco, much of Los Angeles, San Diego, Sacramento, etc.

Not Texas, But Not Bad
Road To Oatman, AZ

Shadows of a Man, Chris Isaak

EIA Stuns Oil Bulls -- Huge Inventory Build -- Almost 10x Forecast -- March 14, 2018

Tesla: shipping flawed parts --
  • Tesla employees say the company is manufacturing a high ratio of flawed parts and vehicles that need rework and repairs
  • the electrical vehicle maker has had to ship some flawed parts to remanufacturing facilities to avoid scrapping them, rather than fixing them in-line, according to sources; Tesla denies this
  • CEO Elon Musk is under pressure to ramp up production of the Model 3 sedan, Tesla's first mass-market electric vehicle
Growing pains.

On that news, TSLA shares surged 20% -- investors relieved that Elon Musk would ramp up production no matter what. Just joking. This is not an investment site. Do not make any investment, financial, job, relationship, or travel decisions based on anything you read here or think you may have read here.

US Gasoline Demand

US gasoline demand increased week-over week. In addition, the most recent 4-week average is also up.

US gasoline demand graphic: pending.

US Dollar Strength/Weakness

USDX started in March 1973, soon after the dismantling of the Bretton Woods system.
At its start, the value of the U.S. Dollar Index was 100.000. It has since traded as high as 164.7200 in February 1985, and as low as 70.698 on March 16, 2008.
The make-up of the "basket" has been altered only once, when several European currencies were subsumed by the euro at the start of 1999.
The make-up of the "basket" is overdue for revision as China, Mexico, South Korea and Brazil are major trading partners presently which are not part of the index whereas Sweden and Switzerland are continuing as part of the index. [One word: incredible. Comment: and they say there is no "manipulation."]

Weekly petroleum report here.

Forecast: 560,000-bbl build.

Actual: US crude oil inventory increased by 5 million bopd. Not only are inventories "going in the wrong direction" but this was the biggest build in six or seven weeks, when the build was 6.8 million bbls (January 31, 2018, report).

Other data fro the weekly petroleum report:
  • refineries operating at 90% of operable capacity -- last week, 88%
  • gasoline production increased, back over 10 million bbs/day
  • distillate fuel production decreased but essentially steady at 4.5 million bbls/day
  • US crude oil inventories now stand at 430.9 million bbls -- "still in the lower half of the average range for this time of year" [really?]
  • despite gasoline inventory decreasing by 6.3 million bbls, gasoline inventories are still in the upper half of the average range for this time of year [graphs will still be quite remarkable]
Re-balancing: with the huge (and unexpected) jump in US crude oil inventory, the number of weeks to re-balance also took a huge jump -- now up to 33 weeks -- the ninth week of increasing number of weeks to re-balance. In fact, with EIA forecasts, one could almost argue that we will never see re-balancing unless a "new normal" is established for the US. That "new normal" would probably have to move from 350 million bbls to 450 million bbls in inventory.

Weeks to RB
Week 0
Apr 26, 2017

Week 24
October 12, 2017
Week 25
October 18, 2017
Week 26
October 25, 2017
Week 27
November 1, 2017
Week 28
November 8, 2017
Week 29
November 15, 2017
Week 30
November 22, 2017
Week 31
November 29, 2017
Week 32
December 6, 2017
Week 33
December 13, 2017
Week 34
December 20, 2017
Week 35
December 28, 2017
Week 36
January 4, 2018
Week 37
January 10, 2018
Week 38
January 18, 2018
Week 39
January 24, 2018
Week 40
January 31, 2018
Week 41
February 7, 2018
Week 42
February 14, 2018
Week 43
February 21, 2018
Week 44
February 28, 2018
Week 45
March 7, 2018
Week 46
March 14, 2018

All we can do now is wait for John Kemp's graphs to see how bad  this really is (posted later, see below).

WTI is down about half a percent and is getting very, very close to the $60-floor, currently trading at $60.34. Perhaps the only thing keeping WTI above $60 is the weak US dollar.

Selected graphs from John Kemp.

Refinery throughput is simply staggering:

And refineries have a lot of oil with which to work:

This is the only graphic that might explain why WTI holds above $60 (along with the weak US dollar).

Wednesday, March 14, 2018

Active rigs:

Active Rigs584631112191

RBN Energy: LNG and pipeline reversals turn Louisiana gas market upside down.
There was a time many moons ago when vast quantities of natural gas from offshore Louisiana production flowed through scores of gas processing plants along the coast, then moved north and east in pipelines destined for the Northeast and Midwest. Those flow patterns have since been turned on their head, with offshore production steadily declining and the need for gas supplies for LNG exports along the coast ramping up, driving gas southward to meet that demand. That southbound gas includes Haynesville production — now back in growth mode — and a deluge of inflows from the Marcellus/Utica on reversed pipelines and new pipes.
Supply in northern Louisiana will continue rising, while demand in southern Louisiana will do the same. With Henry Hub at the epicenter of this transformation, the consequences not only for Louisiana but for the entire natural gas market will be far-reaching. Today, we begin a series to examine how Louisiana natural gas flowed historically, the shifts that have already happened, the impact of more changes just ahead, and what it all means for the future of natural gas in Bayou Country.