Tuesday, April 24, 2018

EVs And The Impact Of Subsidies -- Oilprice.Com -- April 24, 2018

Regular readers know that I have said in the past that I do not like linking oilprice.com articles, but giving credit where credit is due, I have to admit the site might be the one of the best sites there is for those trying to keep track of the oil and gas sector.

Either the site is evolving or I am evolving. Hard to say.

I know I haven't taken the red pill.

I'm heading to bed, but thought I would leave readers with this article/link:
A Chinese electric vehicle maker, BYD, is attracting a lot of positive sentiment from analysts covering the company, according to a Bloomberg poll among 27 analysts. A total 18 of these have a “buy” stance on the company despite it losing US$3 billion in market cap because of lower government subsidies and intensified competition from foreign manufacturers.
The revision in the subsidy regime for electric vehicles hurt the company badly. BYD recently said its first-quarter income would be a staggering 92 percent lower than in the previous quarter because of the lower subsidies.
Yet the company will later benefit from higher subsidies that Beijing will continue providing for longer-range electric vehicles.
Speaking of long-range electric vehicles, BYD is one of the Chinese companies driving a potentially major decline in diesel fuel demand in China with their fast-growing electric bus fleet. This fleet could displace almost 280,000 bpd in fuel demand.
Bloomberg reported today that electric bus fleets across Chinese cities are expanding at the rate of 9,500 every five weeks. Last year, 99 percent of all electric buses in the world—some 380,000 of them—were in China. BYD’s electric bus production to date is 35,000, but it now has the capacity to roll out 15,000 annually.
Foreign competition is not a cause for concern for BYD, according to the analysts Bloomberg polled, even from Tesla or Nissan, which produces the most-sold electric car, the Nissan Leaf. In fact, Bloomberg estimates that BYD’s earnings per share this year will jump by 32 percent, which will outperform the rest of the sector in the country. For the Chinese EV industry as a whole, Bloomberg has estimated EPS growth at 29 percent.
If anyone comments about this article, I won't see the comment until tomorrow. Good luck to all.

By the way, I believe Warren Buffett is a big fan of BYD.

It's one of those nights. 

Some Memories Just Won't Die, Marty Robbins

Wow! Feeling The Pressure -- The Political Page, T+55 -- April 24, 2018

Mike Pompeo assured confirmation? You betcha. Heidi Heitkamp, US senator representing the Bakken,  is the first senator of the opposition party to say she will vote for Mike Pompeo's confirmation. LOL.  It must be an election year.

Also from the WSJ:
Three Democrats have said they’ll vote for Mr. Pompeo on the floor, which means this pointless exercise will soon conclude. At this rate President Trump will have all of his nominees confirmed by year 11 or 12 of his first term.
I guess this pretty much confirms how generally unimportant  ...

The Bicycle Page

Wow, I'm in a great mood.

I got a new bike.

Don't tell my wife. LOL.

A Diamondback Haanjo

I've had/have a Trek, a Trek Verve, a Specialized, a KHS, a Haro, a BMX, but this is my first Diamondback. I don't know much about it, other than it's a Haanjo. That's what it says on the frame.

I was visiting the local bicycle shop and saw this incredible bike on sale -- the price was so low I can't post it here -- several months ago. It turns out it was a "special order" that was "designed" by a biker in the local area who never came back to pay for it when it came in. The dealer was practically giving it away to recoup his losses. I paid for it in installments, paid it off last month, but didn't get around to picking it up until today.

This is what intrigued me about the bike:
  • 1 x 9 (only one gear on the front); 9 gears in back
  • a BMX-feel; very, very sporty
  • incredibly light: the dealer says it's carbon but for the price I paid, I wonder if it's not aluminum -- but it's incredibly light
I put some inexpensive lights on it for now, but next month when my bike budget is "refreshed" I will buy a front/rear "Cygolite" combo, 450 lumens up front, 50 lumens taillight

Permian Now Selling At $8/Bbl Discount To WTI; Traded As Low As $11 Lower Than WTI -- Thank Goodness For The DAPL In The Bakken -- April 24, 2018

Permian is projected to be the largest oil patch in the universe. Reported earlier. Now, Platts is reporting that Permian crude oil differentials are at their lowest (greatest?) since August, 2014, as output exceeds expectations.
Permian Basin light sweet crude WTI Midland fell to its lowest level in more than three and a half years Tuesday, with rising production and limited takeaway capacity pushing down the grade's differential.

On Tuesday, S&P Global Platts assessed WTI Midland at WTI cash minus $8.35/b on trade data heard, down $2.25/b compared with Monday's assessment. Tuesday's differential is the lowest assessment for WTI Midland since August 26, 2014, when the differential dropped to minus $9/b.
But it was worse:
Earlier in the day, the grade had traded as low as minus $11/b before slightly recovering by the early afternoon to its assessed value.
For the Bakken? All I can say is thank goodness for the DAPL.Without the DAPL, Bakken crude would easily be selling at a similar discount to WTI.

Two New Permits: Nine Permits Renewed -- April 24, 2018

Active rigs:

Active Rigs62482984185

Two new permits:
  • Operator: Nine Point Energy
    Field: Elk (McKenzie)
    Comments: Nine Point Energy has permits for two Eckert Foundation wells;
Nine permits renewed:
  • NP Resources (4): four Elkhorn Ranch Federal permits in Billings County
  • Bruin E&P (3): three Ann H. Thome permits in Williams County
  • Oasis (2): two Lewis Federal permits in McKenzie County
Five permits canceled:
  • Oasis: five Lewis Federal permits in McKenzie County

API US Crude Oil Inventory -- April 24, 2018

 Link here.

Actual: a build of 1.099 million bbls. Forecast not provided. Most folks follow the EIA data that is released on Wednesday, 10:30 EDT.

Goldman Bullish On Oil

Suggests demand for oil will "continue to soar."

Permian Basin -- Staggering -- Bloomberg -- April 24, 2018

Data points from Bloomberg:
  • growing into the largest oil patch in the world
  • will hit record production in May, 2018 (3.2 million bopd)
  • will produce more than 5 million bopd by 2020 (previously reported; another source)
  • Saudi Arabia, Iran, Iraq, the Permian now
  • Saudi Arabia, the Permian, Iran, Iraq by the end of the year
  • Iran and Iraq each produce less than 5 million bopd
  • Iran: produced about 3.81 million bopd in March, 2018
Too bad it's the wrong kind of oil. LOL.  

Random Update Of China And LNG Imports -- April 24, 2018

When I first started blogging some years ago, I knew nothing about natural gas. I think I know a bit more now, but not much.

So, for me, Irina Slav's article on China and natural gas is fascinating. I believe I have seen all of this data before but it's interesting to see it another context.

The headline: can China combat its natural gas crisis? Well, obviously China will combat its natural gas crisis; it already is.

The real question is whether China will succeed. I assume China will succeed but the story will be interesting to follow. If it does not succeed, it's back to more coal and nuclear. India has already made one choice: India will cut back on plans for some nuclear reactors and rely on coal instead.

China, on the other hand, appears to be taking a different direction. Some data points:
  • last year (2017)
    • China became the world's second-largest LNG importer
    • China imported 38 million tons of LNG
    • China increased it LNG imports by 46 percent over the previous year -- 46%!
  • Now (2018):
    • "China will boost its LNG import capacity to 26 million tons annually over the next six years from the current 9 million tons. China's total of LNG import capacity is 17 million tons." (sic)
    • China is turning depleted gas fields into storage facilities 
    • China plans to have all 25 underground gas storage sites before this winter (2018 - 2019)
    • China plans to increase LNG by 25% this year, up to nearly 50 million tons
  • fresh customs figures, March, 2018:
    • almost a 65% increase in LNG shipments
    • 3.25 million tons (annualized = 39 million tons)
  • first quarter this year
    • 12 million tons LNG imported
    • almost a 60% increase on 1Q17
  • lots of infrastructure needed: import terminals; pipelines; storage faclities
  • will drive GDP

Wow, Wow, Wow! Why I Love To Blog -- Reason #3 -- Absolutely Nothing About The Bakken -- April 24, 2018

The other day I mentioned that I am in my "China phase."

A reader responded with this comment:
If you are still in your China phase, James Clavell's series of books about the Noble House are great reads. I started with Tai-Pan and worked myself around to all the others that are tied into the Noble House Theme. Some great info on the opium "trade" that Great Britain was conducting at that time in history. 
Today, while slogging through The Opium Wars, W. Travis Hanes III, c. 2002, I came across this paragraph:
Anticipating the end of the East India Company monopoly, in 1832 Jardine and Matheson joined forces to form Jardine, Matheson & Co., and in 1834 had shipped the first private loads of tea and silk from China to Britain. The company quickly became the most powerful and influential firm in the China trade and in the future Hong Kong; along with its colorful founders, it was the model for James Clavell's novels Tai-Pan and Noble House. 
Wow. And that's why I love to blog. Had the reader not taken the time to send me that note, I would have simply quickly read the paragraph, moved on, and not giving it much thought. All of that will now stick with me for a lot longer than it otherwise might have.

I replied to the reader that I had not read any of Clavell's novels (yet) but the thought that comes immediately to mind: Ayn Rand's novels.

Again, my Eurocentric education shortchanged me when it came to Asia. Quite fascinating.

By the way, I assume there are a gazillion books on China that are better than the one I am reading, but it turns out the Hanes book is a whole lot better than I originally thought it was going to be. I see why out local library has it on the shelves.

In a sidebar and getting way off topic, reading about the opening salvo in the "opium wars" reminds me of an episode of Miami Vice in which an American high-ranking officer involved in the drug trade during the Vietnam War comes back to haunt Don Johnson's character. See "Back in the World."

Fascinating, fascinating, fascinating.

True Faith, New Order

Wow! Look At This -- Active Rigs Up To 62 -- As Low As 56 Just A Few Weeks Ago -- April 24, 2018; WTI Flirting With $69 (Again)

Obama's revenge: yesterday I posted/commented on a story with a "Trump's Revenge" headline. For those following the US oil story, it's very clear that the US is suffering from "Obama's Revenge." Killing the Keystone XL almost single-handedly put the US in the situation it finds itself with the wrong kind of oil. Was this all calculated? 

Tea leaves in Kuwait: production will increase -- and will increase significantly -- in the out years.

Tea leaves in Saudi Arabia: Saudi Aramco will "lift" oil-trading volume to six million bopd, currently trading about 3.5 million bopd. Prince Salman is leading the change in Mideast strategy as the region continues to produce less oil Compare with:
  • Vitol, the largest independent trader: 7 million bopd (previously mentioned on the blog)
  • Shell:  12 million bopd (a publicly traded company)
  • BP: 8 million bopd (a publicly traded company)
Back To The Bakken
Where Fracking Is Always In Fashion

Active rigs:

Active Rigs62482984185

RBN Energy: Oklahoma -- processing plants, pipelines planned to keep pace with gas growth, part 2. Earthquakes in Oklahoma? That story is dead. Really, really dead. Apparently.