Wednesday, April 18, 2018

Photo-Op? -- April 18, 2018

I may be getting ahead of my headlights but the tea leaves suggest an historic signing ceremony in May, 2018.

We know that Trump's "personal emissary" -- Mike Pompeo -- has already met with Kim Jong Un."

On March 29, 2018, I posted:
Nobel Peace Prize, 2019 (posted at 11:06 a.m. Central Time, March 29, 2018):

  • shared: Kim Jong Un, Xi Jinping, and DJT (remember: only three can share a Nobel Prize -- so it's possible, Kim Jong Un, POTUS, and Moon Jae-in)

Permian Operators Facing Huge Challenges -- April 18, 2018

WTI is surging (?) -- it might hit $70 this week. But a reminder, from RBN Energy:
Price differentials in the Permian Basin are widening at a rapid pace.
The discount for Midland crude to West Texas Intermediate (WTI) at Cushing has widened by over $4/bbl since the beginning of March and the discount to Magellan East Houston (MEH) crude was over $7/bbl yesterday (April 3, 2018).
Permian production is increasing at a breakneck pace as new players are entering the scene. Private equity-backed exploration and production companies (E&Ps) are no longer just acquiring and flipping acreage, as they are being forced to prove their assets are profitable and can generate a return on investment.
The combination of large drilling plans from the majors and new production from these smaller operators — with no new pipeline takeaway capacity in sight — has sent Permian crude pricing into a tailspin. Today, we begin a new series on the recent slide in Permian prices, how new producer strategies are contributing to it, and what it means for pipeline space, trucking and midstream infrastructure.
We saw the same thing in the Bakken during the boom.

Remember: a lot of the operators paid a huge amount of money to get into the Permian.

From Platts this week:
Pipeline capacity is currently constrained out of the Permian, reflected in wide price discounts for Midland WTI crude. Midland WTI is averaging at a $4.33/b discount to Cushing WTI so far in April, compared to a 93 cents/b premium in January, S&P Global Platts data shows.

WTI Midland moved higher on the news of additional takeaway capacity Monday. WTI Midland was assessed at a $3.70/b discount to Cushing WTI, up 35 cents/b on the day.

S&P Global Platts Analytics is projecting crude oil output in the Permian to reach 5.266 million b/d by 2020, compared with 3.657 million b/d in 2018.
If Permian goes to "5," the Bakken goes to "2."

Update On North Dakota's Flaring Rules -- Great, Great News For All -- Pragmatic -- Not Going Down The Road-To-New-Zealand -- Not Trying To Save The World -- April 18, 2018

From The Bismarck Tribune:
North Dakota regulators are keeping current benchmarks for reducing wasteful flaring of excess natural gas but are giving industry more flexibility to comply.
The North Dakota Industrial Commission voted unanimously Tuesday to adopt changes to the gas capture policy, many of which were recommended by an industry task force.
“They’re saying they will get to 88 percent by Nov. 1,” said Lynn Helms, director of the Department of Mineral Resources.
The changes expand some of the caveats that allow industry to be in compliance with the gas capture policy even if a company’s flaring rate exceeds the benchmark.
For example, industry can exclude flared volumes from the first 14 days of production. The revised policy increases that to the first 60 days.
In addition, the commission will change how it treats flared gas outside of the Bakken core where infrastructure is underdeveloped and gas is considered “stranded.” Allowing some temporary exemptions for stranded gas aims to incentivize pipeline development in those areas, Helms said.
Bottom line:
  • industry can exclude flaring data for 60 days, up from 15 days
  • "stranded" wells could be declared temporarily exempt from flaring rules

Note The IPs Of The DUCs Completed By MRO -- April 18, 2018

The wells:
  • 33412, 6,509, MRO, Winona USA 21-2TFH-2B, Antelope, Sanish pool, API - 33-053-07955; 7.4 million gallons; 85% water; 45 stages; 10 million lbs; t4/18; cum 325K 10/18;
  • 33413, 8,475, MRO, Chauncey USA 31-2H, Antelope, Sanish pool, API - 33-053-07956; no production data as of 2/18; 11.5 million gallons; 91% water;
  • 33414, 5,524, MRO, Wilbur USA 31-2TFH, Antelope, Sanish pool, API - 33-053-07957; 8.5 million gallons; 85% water;
  • 33415, 7,572, MRO, June USA 31-2H, Antelope, Sanish pool, API - 33-053-07958; 9.4 million gallons; 84% water, t3/18; cum --
  • 33416, 4,892, MRO, Miles USA 41-2TFH-2B, Antelope, Sanish pool, API - 33-053-07959; 8.1 million gallons; 85% water; 45 stages; 11.6 million lbs;t4/18; cum 335K 10/18;
The graphics:

Comments: pending, once we start seeing some monthly production numbers.

Did MRO Just Set A Bakken Record? -- April 18, 2018

Active rigs:

Active Rigs59512993188

Three new permits:
  • Operator: Newfield
  • Field: Siverston (McKenzie)
  • Comments: Newfield has permits for a 3-well Yellowfin pad in SWSW 32-151-98
Eleven new permits:
  • Oasis (4): four State permits in Mountrail Count
  • Lime Rock (2): two State Dvorak permits in Dunn County
  • Sinclair (2): two Horovitz permits in McKenzie County
  • Hess (2): two BW-Spring Creek permits in McKenzie County
  • Enerplus: an Arnica permit in Dunn County
Four permits canceled:
  • Bruin: a Fort Berthold permit in Dunn County
  • Hess: a BW-Thelma permit in McKenzie County
  • MRO: a Robert permit in Mountrail County
  • Nine Point Energy: a Fritz permit in McKenzie County
Two producing wells (DUCs) completed:
  • 33414, 5,524, MRO, Wilbur USA 31-2TFH, Antelope, Sanish pool, API - 33-053-07957; 8.5 million gallons/85%, t4/18; cum --
  • 33415, 7,572, MRO, June USA 31-2H, Antelope, Sanish pool, API - 33-053-07958; 9.4 million gallons; 84%, t3/18; cum --
  • wells that might be interesting to check on in a few months:
    • 17008, 298, MRO, Myrmidon 1-2H, Antelope, Sanish, t8/08; cum 56K 2/18; off-line since 5/17;
    • 33491, SI/NC, MRO, Shoots USA 41-2H, Antelope, Sanish,
    • 33492, SI/NC, MRO, Mamie USA 21-1TFH, Antelope, Sanish,
    • 18471, 380, MRO, Hunts Along USA 12-1H, Antelope, Sanish, t1/11; cum 139K 2/18; off-line since 5/17; see update here;
    • 32865, SI/NC, MRO, Demaray USA 41-2TFH, Antelope, Sanish,
    • 33493, SI/NC, MRO,  Mark USA 11-1H, Antelope, Sanish,
    • 33494,  SI/NC, MRO, Timothy USA 11-1TFH-2B, Antelope, Sanish,

Newfield May Be The Best Producer In The Bakken -- Filloon -- April 18, 2018

Link over at SeekingAlpha.
  • improving well productivity is being seen across all US plays, and some operators have done a better job of this than others
  • NFX 2017 locations produced the most oil, followed by MRO and OAS
  • the majority of NFX 2017 horizontals will produce more than 200 MBO in the first year of well life, with several over 300 MBO
Newfield has always been one of the better operators with respect to well design. It has had other issues, but it has been ahead of the technological curve. Well design and oil production is just one of many variables to consider, but it is extremely important in seeing where the industry is going. If an operator continues to outperform wells of other operators adjacent to the location, we see the under performing operators mimic that design.
This is the EOG Resources effect. It was doing huge, sand heavy frac jobs in areas operators said had too high of pressures. EOG proved the industry (or at least a large number of competitors wrong) wasn't looking at the situation correctly. The physics changed with the engineering, and we are still seeing its effect.
Newfield and EOG (EOG was still a great deal better) had outperformed in ND when the first horizontals targeting the middle Bakken were taking place. Newfield was working NE McKenzie, while EOG had a Parshall Field focus. Early results do not prove it will continue this into the future, but it has been consistent.
In ND, Newfield is the best operator based on oil production over the first 12 months of well life. This is based on locations completed in 2017. We pulled the data on 803 horizontals from 15 publicly traded companies. Continental is the most active followed by Exxon, and Whiting.

For Those Tracking The Second Direct-To-VLCC Tanker From LOOP To China -- April 18, 2018

Track the Nave Photon here. See update here, May 19, 2018.

See this link. The latest satellite position was several days ago, so the ship has probably rounded the cape and is in the Indian Ocean.

Coordinates:  -26.1103° , 3.269467°

Friday Nite Fireworks -- April 18, 2018 -- The Next Big Thing

This will generate a fair amount of interest over the next year in the Bakken. From The Bismarck Tribune:
Mineral owners and their attorneys will be busy for the next two months reviewing a new study of the historical channel of the Missouri River, a report that aims to resolve disputes over oil and gas ownership.
Consultant Wenck Associates presented Tuesday an overview of its study of the ordinary high water mark of the Missouri River as it existed before the construction of the Garrison Dam, which created Lake Sakakawea.
The full survey and supporting materials will be made public by Friday at
I love maps.

Wait for Friday Nite fireworks.

The Next Big Thing

Speaking of fireworks, I've added this to "the next big thing" page.
LSD, micro-dosing, 24/7: yes, actually happening in Silicon Valley. The story "broke" in 2017, but is now hitting mainstream media, posted April 18, 2018.
I missed this a year ago, but better late than never.  Huge, huge "thank you" to Scott Adams.


Wiki now has a page on "millennials."

Follows "Generation X"; precedes "Generation Z." Therefore, also known as "Generation Y." 

Note: the correct spelling -- two "n's."

For various reasons, I'm going to update the following post by making one change. I'm changing the years of birth for millennials (previous, 1983 - 1998) to 1984 - 2000 (comes pretty close to range that wiki gives).
Millennials. Lots of talk these past few weeks about "millennials." Time to re-look at the "definitions. From an earlier post:
I had forgotten the "definition" of "Generation Z" but vaguely recalled blogging about it:
  • iGen, generation Z, centennials: 2000 -
  • oldest iGen: 2000 - 2005 (my thoughts -- teens in 2018)
  • middle iGen: 2006 - 2011 (my thoughts -- middle schoolers in 2018)
  • younger iGen: 2012 - (my thoughts -- pre-K in 2018)
  • millennials, generation Y, 1984 - 2000 
    • younger millennials (part of generation Y, children of baby boomers): 1992 - 2000
    • older millennials (part of generation Y, children of baby boomers): 1984 - 1991 (in 2017:  26 - 34)
  • generation X: 1965 - 1983 (no precise dates, late baby  boomers)
  • baby boomers: 1946 - 1964  
Definitions (from this site)
  • iGen, generation Z, centennials: 1996 --
  • millennials or generation Y: 1977 - 1995 (18-year span)
  • generation X: 1965 - 1976 (11-year span)
  • baby boomers: 1946 - 1964 (18-year span)
  • traditionalists or silent generation: born 1945 and before
Birth years important to me:
  • 2014: youngest iGen
  • 2006: middle iGen
  • 2003: oldest iGen
At age five years of life, for
  • the youngest iGen, 2019 - Apple's iPhone X
  • the middle iGen, 2012 - Apple's iPhone 4s
  • the oldest iGen, 2009 - Apple's iPhone 3g
There was a huge jump from iPhone 3, 4 to iPhone 6, 7, 8 and, then iPhone X. Based on iPhone models, the middle and oldest iGen generations are very similar; however, the youngest iGen generation is almost a new generation, being so much different than older iGen individuals.

Oil Tops $68 For First Time In More Than Three Years -- April 18, 2018

From CNBC:

Weekly petroleum report, link here:
  • US crude oil inventories: decreased by 1.1 million bbls; now at 427.6 million bbls
  • operable refining capacity: 92.4% (flat, but technically down a bit)
  • otherwise, ho-hum
  • I no longer track "time to re-balance"; that metric has become irrelevant
  • the "old" US crude oil inventory baseline number was 350 million bbls
  • the "new" US crude oil inventory baseline number is 400, maybe 420 million bbls
For The Granddaughters

Well before the 15th century, the Chinese were using the equatorial system for open water navigation. From Gavin Menzies, 1434, page 33:

For the stars, the Chinese had the same system of measurement they used to determine latitude and longitude. This system was called the equatorial system -- vastly simpler than the equinoctial system [Wiki does not have a page for the equinoctial system], used in medieval times which relied on the ecliptic or the horizon. After 1434, Europeans adopted the Chinese system, which remains with us today.

For The Granddaughters

If there is one part of the world's geography that gives me the most trouble, it is Indonesia, Malaysia, and Brunei.

I was reminded of that while talking to a woman of Asian descent recently (the Tucson wedding).

My wife is Hispanic-Japanese -- her mother was Japanese, born in Japan and emigrated to the United States during the Korean War.

I have always enjoyed trying to recognize the ethnicity of people I meet -- based on any number of criteria. I remarked to this woman that I was was having trouble with her ethnicity, running through about six different Asian possibilities. I failed to mention Filipino. When she said she was Filipino, I was quite taken aback. She did not appear Filipino to me and after after a bit of conversation it turned out that only her mother was Filipino. Her father was not Asian. That explained everything.

She looked more Japanese than Filipino and interestingly, had a connection to Malaysia -- and that's where the blog helped me out immensely.

I know almost nothing about that part of the world (geographically) but because I had been following the route of the Shaden on the blog, I was somewhat familiar with the straits, Malacca, and Singapore. Absolutely fascinating.

Just one more reason why I love to blog and how much it has permeated all aspects of my life.

[I completely missed the next one, but I was working with almost no information. I suggested to the woman next to Ms Filipino above that she looked to be Welsh or Irish -- completely wrong: she was of Lithuanian/Polish background. When we were stationed in Europe, we were struck by how beautiful Polish pottery was -- and, of course, that became the topic of conversation.]

If It's DMI, It's Not Fake News -- April 18, 2018 -- The Middle Kingdom


Notes For The Granddaughters

I'm still in my "China phase." Absolutely fascinating.

From wiki, two items.

Zhōngguó is the most common sinitic name for China in modern times.
The first appearance of 中國 on an artifact was in the Western Zhou on a ritual vessel known as He zun.
It is formed by combining the characters zhōng (中) meaning "central" or "middle", and guó (國/国), representing "state" or "states"; in contemporary usage, "nation".
Prior to the Qin unification of China "Zhongguo" referred to the "Central States"; the connotation was the primacy of a culturally distinct core area, centered on the Yellow River valley, as distinguished from the tribal periphery.
In later periods, however, "Zhongguo" was not used in this sense.
Dynastic names were used for the state in Imperial China and concepts of the state aside from the ruling dynasty were little understood.
Rather, the country was called by the name of the dynasty, such as "Han dynasty" (Hanchao 漢朝), "Tang dynasty" (Tangchao 唐朝), "The Great Ming" (Daming 大明), "The Great Qing" (Daqing 大清), as the case might be. Until the 19th century when the international system came to require a common legal language, there was no need for a fixed or unique name.
The English translation of "Zhongguo" as the "Middle Kingdom" entered European languages through the Portuguese in the 16th century and became popular in the mid 19th century.
By the mid 20th century the term was thoroughly entrenched in the English language to reflect the Western view of China as the inwards looking Middle Kingdom, or more accurately the Central Kingdom.
Endymion Wilkinson points out that the Chinese were not unique in thinking of their country as central, although China was the only culture to use the concept for their name.
The term Zhongguo was also not commonly used as a name for China until quite recently, nor did it mean the "Middle Kingdom" to the Chinese, or even have the same meaning throughout the course of history.
For our marine biologist, from wiki:
A polynya is an area of open water surrounded by sea ice.
It is now used as geographical term for an area of unfrozen sea within the ice pack.
It is a loanword from Russian: полынья (polynya) Russian pronunciation: [pəɫɨˈnʲja], which refers to a natural ice hole, and was adopted in the 19th century by polar explorers to describe navigable portions of the sea.
In past decades, for example, some polynyas, such as the Weddell Polynya, have lasted over multiple winters (1974–1976).
Remembering People's Names

There are various tricks for remembering people's names. Of course, the first "trick" is to determine immediately if someone/someone's name is "worth" remembering.

I was reminded of that yesterday. I ran into an individual I met for the first time some weeks ago while standing in line at some Texas bar-be-cue. I really enjoyed the conversation. I don't recall if we exchanged names, probably thinking this a chance meeting, unique, that would not happen again.

Well, it did. I happened to see him at the same bar-be-cue yesterday. Groundhog day, I guess. I had a great time talking about my quick trip to Tucson. We exchanged names. This time I won't forget. Pro-fat. Prophet. Eli.

More than 20 years ago I met an Air Force officer that I thought might someday be important for me to know/remember -- someone who might affect my Air Force career. I've never forgotten his name. His name: Colonel Waddell. My "reminder"? Duck. I even, to this day, remember where I met him. Our paths never crossed again after that.

The Market, Energy, And Political Page, T+49 -- April 18, 2018

UNP: jumps 2%. Follows earnings report for CSX yesterday.

Disclaimer: yada, yada, yada. Bottom line -- this is not an investment site.


PLM: up almost 3%. Nickel surging.

WTI: might we see $68 today?
  • $40 WTI: Bakken operators iffy
  • $50 WTI: Bakken operators survive
  • $60 WTI: Bakken operators thrive
  • $70 WTI: Bakken operators ...
For The Record

After a 2,022-mile round trip Tucson, AZ - Grapevine, TX, in an Enterprise Rent-A-Car Toyota Corolla LE (2018), one observation: without question, my 2012 (bought in December, 2011) Honda Civic is a much, much nicer automobile for my needs.  My Honda Civic gets significantly better mileage; my Honda Civic seems much more "solid," certainly quieter; my Honda Civic seems to be much more responsive. The dash and controls on the Honda Civic are much nicer. The "stick" for cruise control on the Toyota Corolla simply seemed weird.
  • 2018 Toyota Corolla LE, starting: $19,345
  • 2018 Honda Civic, starting:$18,840

Huge Jump In WTI Pricing -- April 18, 2018

Getting real: Australia's Northern Territory scraps fracking ban. I'm starting to like Irina Slav's reporting.

Double whammy: KMI's Trans Mountain pipeline on hold; Alberta depends on CBR. Now, Bloomberg is reporting a rail strike over at Canadian Pacific Railway is possible.

Back to the Bakken 
Where Fracking Is Always in Fashion
Active rigs:

Active Rigs59512993188

RBN Energy: the impact of pipeline constraints and apportionment on Permian producers and differentials, part 3.

Well, This Is Awkward -- Mainstream Media Has Not Reported The Southwest Pilot Story -- Saved A Disabled Plane -- April 18, 2018

Identity of Southwest Airlines pilot not being reported for some reason.

Also awkward: Arctic sea ice volume surges 3 trillion cubic meters since early March. Also note being reported. Source: Danish Meteorological Institute.

Also awkward: Starbucks incident -- racial. Customers identified over and over by mainstream media as African-American. No mention of ethnic background of the manager at Starbucks that asked the customers to leave. Had the manager been "white," this would have been all over the news. The manager was a female; we do know that. But race? Not reported. Impossible to find.

Really awkward: last year, Greenland had their fifth largest surface ice mass gain on record, gaining nearly 600 billion tons of ice.