U.S. shale is growing so quickly that it is presenting new challenges
for refiners. The quality and type of the oil mix, particularly in the
U.S., is changing because of the gusher of oil coming from West Texas.
For
years prior to the shale revolution, refiners made large investments
into downstream assets that were equipped to handle medium and heavier
types of oil. A lot of expected supply growth was coming from Canada’s
oil sands, a type of oil that is particularly heavy. Integrated oil
companies and refiners poured money into refineries, such as those along
the Gulf Coast, equipped to handle heavier varieties.
But oil coming from U.S. shale basins, especially the Permian, is light and sweet. That is creating somewhat of a mismatch between available supplies and downstream capacity.
"50K+ wells: at least 50,000 bbls of oil produced in one month.
The well:
33320, 2,903, WPX, Mandaree South 25-36HC, Spotted Horn, t10/17; cum 268K 10/18;
Production
Pool
Date
Days
BBLS Oil
Runs
BBLS Water
MCF Prod
MCF Sold
Vent/Flare
BAKKEN
3-2018
31
37317
37296
18878
35415
20934
10216
BAKKEN
2-2018
26
22735
22693
13255
21575
11515
7491
BAKKEN
1-2018
31
29377
29425
13852
30071
26768
0
BAKKEN
12-2017
31
37365
37378
22564
35459
26811
4494
BAKKEN
11-2017
30
67255
67680
45461
63883
11063
45464
BAKKEN
10-2017
11
16271
15661
16043
15441
2896
10758
BAKKEN
9-2017
0
0
0
0
0
0
0
The graphic:
Other wells in the graphic above (*** -- several of these wells produced in excess of 50,000 bbls -- some produced nearly 60,000 bbls -- of oil in one month):
19603, 332, WPX, Mandaree 30-31H, Reunion Bay, t5/11; cum 542K 10/18; ***
28874, 367, WPX, Mandaree 30-31HW, Reunion Bay, t1/15; cum 180K 10/18;
28875, 1,138, WPX, Mandaree 30-31HA, Reunion Bay, t11/14; cum 363K 10/18;
28981, 1,642, WPX, Mandaree 24-13HZ, Spotted Horn, t9/15; cum 276K 10/18;
28982, 823, WPX, Mandaree 24-13 HZ2, Spotted Horn, t9/15; cum 362K 10/18;
28983, 2,222, WPX, Mandaree 24-13HD, Spotted Horn, t9/15; cum 689K 10/18; ***
28984, 1,849, WPX, Mandaree 24-13HY, Spotted Horn, t9/15; cum 293K 10/18;
33320, see above,
33321, 2,615, WPX, Mandaree South 25-36HT, Spotted Horn, t11/17; cum 265K 10/18; ***
33322, 2,703, WPX, Mandaree South 25-36HD, Spotted Horn, t11/17; cum 250K 10/18;***
33323, 2,724, WPX, Mandaree South 25-36HZ, Spotted Horn, t11/17; cum 372K 10/18; ***
33822, 1,569, WPX, Mandaree South 24-13HI, Spotted Horn, t5/18; cum 127K 10/18;
33823, 1,778, WPX, Mandaree South 19-18HQL, Spotted Horn, t5/18; cum 178K 10/18;
33824, 2,434, WPX, Mandaree South 19-18HA, Spotted Horn, t5/18; cum 201K 10/18;
33825, 2,486, WPX, Mandaree South 30-31HEL, Spotted Horn, t5/18; cum 175K 10/18;
33826, 2,264, WPX, Mandaree South 30-31HQ, Spotted Horn, t5/18; cum 112K 10/18;
Oilprice.com: "WTI crashes after Trump "tears up" Iran deal." Well, that didn't long! Back over $70. LOL. Link here.
After the much-awaited news regarding U.S. sanctions on Iran today, the American Petroleum Institute (API) reported a draw of 1.85 million barrels to the U.S. crude oil inventories for the week ending May 4, compared to analyst expectations that this week would see a smaller draw in crude oil inventories of 719,000 barrels.
Last week, the American Petroleum Institute (API) reported a large build of 3.427 million barrels of crude oil.
The API also reported a draw in gasoline inventories for week ending May 4, to the tune of 2.055 million barrels—a bigger draw than the 450,000-barrel draw that analysts had expected.
May 31, 2018, T+21: President Trump slaps aluminum/steel tariffs on the EU, Mexico, and Canada.
May 30, 2018, T+20: President Trump is tweeting again about Attorney General Jeff Sessions. Could this be the cliffhanger for this year's series of "The Apprentice"?
May 29, 2018, T+19: EU is falling apart. Italy getting ready to "Brexit."
May 28, 2018, T+18: eighteen days since Trump tore up the Obama deal to go easy on Iran, and the Mideast is about the same as ever. At least one European government has said it will continue to import Iranian oil. Tells me all I need to know about Europe.
May 27, 2018, T+17: did Pelosi et al just get played? Tea leaves suggest Trump and Kim will still meet. Facts:
with or without the Trump-Kim summit, North Korea no longer has a viable nuclear program; their nuclear program was destroyed with the mountain collapse; they have no money, not enough time, not enough engineers to re-build their nuclear program ... ever
the nuclear program was to prevent an invasion of North Korea; that deterrent is now gone ... forever
Kim was "suing for peace"; he had lost the war; Kim is/was desperate to get anything in exchange for a piece of paper
Kim's gambit with China was big mistake; never thought Trump would really walk away; Kim was looking for June 12th summit to be a negotiating summit with Trump; Trump will only settle for a done deal by the time he gets there
Pelosi et al do not understand this
May 26, 2018, T+16: Kim Jong-Un appears to have realized his mistake. Says he still wants to meet with Trump.
May 25, 2018, T+15: Trump walks away from the June 12, 2018, summit with Kim Jong-Un. Pelosi crows.
May 23, 2018, T+15: Jared Kushner, Trump's son-in-law, finally has security clearance. NFL owners unanimously vote to ban "kneeling" on the field. One owner reported to have said he abstained. Gee, I wonder who that could have been.
May 22, 2018, T+14: with regard to the Trans Mountain Pipeline project, it appears the inmates are in charge of the insane asylum.
May 21, 2018, T+13: all roads lead to Rome. All conspiracy dots lead to former CIA director John Brenna. Now we know why he was rabid. He is trying to stay out of jail. Planting a mole inside a legitimate political campaign. Not good.
May 20, 2018, T+12: US - China agree to "end trade war." Pre-market trading surges. Hillary spending the week at Harvard, re-living old times.
The Way We Were, Barbra Streisand
May 19, 2018, T+11: About the only thing standing in the way of a new market surge -- the trade war between the US and China.
May 18, 2018, T+10: North Korea threatens to pull out of the summit scheduled for June 12, 2018. This was reported a few days ago. This would be a great opportunity for Trump to call Kim Jong-Un's bluff and walk away from the summit. Trump can tell North Korea to let China solve its problems.
May 17, 2018, T+9: Mueller celebrates its one-year anniversary.
May 16, 2017, T+ 8: All kinds of "noise" from the mideast when the US embassy opened in Jerusalem. Today: quiet. Off the front pages. Another non-story. Apparently Jared and Ivanka got home safely.
May 15, 2018, T+7: 50 Hamas terrorists killed when they rushed the IDF. Well, duh.
May 14, 2018, T+6:
May 13, 2018, T+5: would metal detectors at public schools be "constitutional"? I don't know but this is interesting.
May 12, 2018, T+4:
May 11, 2018, T+3: Hillary "Tokyo Rose" Clinton apparently renounces US citizenship while in Australia on book-signing tour. Or maybe just sounds like she wants to renounce her US citizenship. Along with Nancy Pelosi, the gift that keeps on giving.
May 10, 2018, T+2: something to talk about. Timeline: some weeks ago, Germany's Merkel and France's Merkel came to the US to talk to President Trump about Iran; obviously, by the time they left, they would have known his position. Some days before Trump made his announcement, it was obvious Trump had made up his mind. During the 24 hours leading up to the announcement and on the day of the announcement, it was noted that SecState Pompeo was not alongside the president when the announcement was going to be made and when the announcement was made. The NYT called Pompeo AWOL for one of the most important announcements ever. In fact, Pompeo was in North Korea for at least two reasons: a) Pompeo successfully closed the deal on the release of three American prisoners and is accompanying them home to Washington, DC (they arrive "tonight" at 2:00 a.m.); and, to "finalize" the date and location of the summit between Kim Jong-Un and President Trump -- which I think is even more noteworthy and newsworthy than the Iran announcement. Fox News broke the story but the google app won't "take" links for Fox News.
May 9, 2018, T+1: first full day since President Trump walked away from the Iran deal hammered out by President Obama with $400 million in cash. This will give Rachel something to talk about. [By the way, "everyone" tells me the $400 million "belonged" to Iran; Obama was simply "unfreezing" it and sending it back to its rightful owners. That's why he did it secretly; sending the $400 million in cash in unmarked bills in a military (CIA?) C-130 transport plane, under cover of darkness, into Iran, without telling Congress. The money was delivered within the last 12 hours of his presidency, making it one of the very last acts Obama did as president. "No one" really knows who actually took possession of the $400 million.]
Highlights (pretty much just the Bakken; if you want to know about the Delaware go to hte link)
76,800 boepd; full-year guidance raised to 81K - 84K boepd
growing volumes at 15% to 20% y-o-y
limited cost inflation or service tightness in either the Williston or the Delaware Basin
Bakken taught Oasis a lot; developed a lot of long-term provider relationships
Bakken: primarily focused on the core
looks like a 5-rig program in the Bakken
will complete 100 - 110 gross operated wells in 2018
CAPEX, upstream: $815 to $855 million
85% of that CAPEX in Williston
about 90% E&P capital on drilling and completions
proppant:
middle Bakken -- 10 million lbs proppant/well
Three Forks -- 4 million lbs proppant/well
particularly happy with Spratley wells in Alger; in line with Wild Basin and Alger type curves
Indian Hills wells continue to perform above the type curve
recently moved Painted Woods into the core due to strong performance seen by offfset operators
takes Oasis from 483 to 585 net locations in the core with the addition of Painted Woods
across all plays, lifting costs, $6.48/bbl; below guidance of $7 to $7.50/bbl
= 88K bbls/day = $16,000K - $32,000K/year
will use Oasis' new 200 million-cubic-feet-per-day natural gas processing plant at Wild Basin; will come online at the end of the year (2018); currently 65% complete; on time; on budget
DUC backlog grew; bumped from the high 70s to around 90 or so
Link here. Exporting a lot less oil, but charging more for it?
******************************
But Not Good News Today
Saudi "needs" $88-oil. Today, WTI and Brent are coming off recent highs. WTI is down 2.5%, now trading below $67. A reader asked my thoughts on why oil was going down today. My reply, somewhat "tongue--in-cheek":
I've never understood pricing of oil. The fundamentals certainly don't support $70-oil, but just as Scott Adams says that "facts don't matter," likewise, when it comes to oil, "fundamentals don't matter."
Movers and shakers are talking, moving the price of oil up and down, and making a lot of money doing it.
For the past month, the movers and shakers (traders in oil) have used Trump's tweets and threats on the Iran sanctions to move the price of oil up. Now that we are there (supposedly Trump will announce today) the traders in oil are suggesting that whatever Trump does or doesn't do will have no real effect in the Mideast.
For the Mideast, where there is always a war going on somewhere or the threat of a big invasion by some military, I'm sure the Iranian leaders are pretty much blowing off a lot of talk from Trump. At best, they see him around for three more years and then the US will elect a Democrat, perhaps Bernie Sanders, LOL, and so they aren't worried. And if Iran is not worried, traders in oil know things will pretty much go on usual. They probably read the CNBC report yesterday that reminded them that 100 million bbls of oil are moved every day, and whether Trump's 300,000 bbls or Obama's 1.5 million bbls are at risk, it won't affect anything.
Who knows, maybe the rumor on the street is that Trump listened to Angela and Macro and agreed to "stay the course."
In other words, I have no idea what's going on. Perhaps oil traders are simply taking profits.
From the archives:London Bridge (Lake Havasu City) London Bridge is a bridge in Lake Havasu City, Arizona. It was built in the 1830s and formerly spanned the River Thames in London, England. It was dismantled in 1967 and relocated to Arizona.
Now, another opportunity for Arizona to add to their collection of historic bridges. From The Bismarck Tribune:
The North Dakota Department of Transportation is proposing
to remove the historic Long X Bridge and is seeking a public or private
agency to adopt one or more segments of the structure.
The
announcement Monday came as the agency published the draft
environmental impact statement for the proposed expansion of U.S.
Highway 85 in western North Dakota.
Proponents of the
highway expansion say a four-lane highway is needed to improve safety
due to increased oil traffic, but others have raised concerns about
impacts to the 7-mile stretch through the Badlands and the North Unit of
Theodore Roosevelt National Park.
The
Department of Transportation’s preferred alternative is to expand
Highway 85 between Interstate 94 and Watford City to a divided,
four-lane highway with a depressed center median.
The department’s preferred option is to remove the bridge that was
constructed in 1959 and replace it with a four-lane bridge to the east.
The bridge is available to “any responsible state, local or private
agency willing to take ownership of, relocate and preserve the Long X
Bridge in a new location,” with preference given to public entities, the
agency said.
Last month, a record 95,745,000 Americans were counted as "not in the
labor force," meaning they are not employed and are not seeking a job,
according to the Labor Department's Bureau of Labor Statics. "This
category includes retired persons, students, those taking care of
children or other family members, and others who are neither working nor
seeking work," BLS said.
In a March 2018 report,
the Congressional Budget Office noted that a lower labor force
participation rate is associated with lower gross domestic product and
lower tax revenues. It is also associated with larger federal outlays,
because people who are not in the labor force are more likely to enroll
in federal benefit programs, including Social Security.
Lower tax revenues? April, 2018, tax revenue -- sets all-time record. See original post.
Original Post
Making America great again:I was traveling yesterday. I see this was mentioned by the Washington Times. I assume it got wide play across all major networks including MSNBC and CNBC:
Weren't we told by mainstream media, Obama apologists, and never-Trumpers that the Trump Tax Bill would result in greatly reduced revenue for the US government? That's what I recall.
April: IRS tax haul collected $515 billion, swamping the previous monthly record of $190 billion set in 2001 -- wow, that's amazing -- all the way back to 2001. That takes us back to King George III, doesn't it?
And not only that, the haul of $515 billion greatly outpaced spending which was reported at less than $300 billion.
***********************************************
Summer in North Dakota: a reader tells me that folks in North
Dakota hope to see summer sometime later this year. Right now, the
forecast is this: "official" summer for North Dakota will be from August
15 - August 18, and then first signs of winter. Here it is, May 7,
2018, last evening, over at the Grand Forks Herald, Lake Sakakawea could challenge last ice-out date. This, despite global warming:
Ice remains on a good portion of Lake Sakakawea and it may remain that way for at least another week.The
upper end of Lake Sakakawea has been ice free for several days.
However, the middle and lower ends of the reservoir remained coated in a
great sheet of ice. Sakakawea's latest ice-free date is May 17, 1979.
Comment:
my hunch is that folks are going to be watching this very, very
closely. There are few stories in North Dakota that are bigger than a)
flaring; b) pipeline protests; and, c) ice-free dates.
Headline a bit over the top, from Reuters: "oil surges on Venezuela-Conoco disute, Iran sanction worries. In fact, WTI goes slightly over $70 (hardly surges), and then falls back to slightly under $70. This morning: $69.92. Hardly surging.
Comment: For its current budget Saudi needs $88-oil to stay afloat; last year it needed $83-oil. Right now, Brent well below that at $75.
From the linked article:
Oil prices rose for the fourth straight day on Monday to hit levels
not seen since late 2014, boosted by the latest trouble for Venezuelan
oil company PDVSA and the possibility that the United States could
re-impose sanctions on Iran.
U.S. West Texas Intermediate (WTI) crude futures rose $1.01, or 1.5
percent, to settle at $70.73 a barrel. This was the first time since
November 2014 that WTI had climbed above $70. Brent crude futures jumped
$1.30, or 1.7 percent, to settle at $76.17 a barrel.
U.S. oil major ConocoPhillips moved to take Caribbean assets of
Venezuela's state-run PDVSA to enforce a $2 billion arbitration award.
Iran sanctions: pending. Trump expected to make announcement today.
API US crude oil inventory numbers to be released later this afternoon, 3:30 p.m. CDT, I believe.
Boom: Comcast to make ALL CASH unsolicited offer for Fox. Like this will go anywhere.
Gone: NY attorney general resigns over reports of really weird activity. No links. Story everywhere. Good riddance. Makes Donald Trump look like a Boy Scout.
I wonder if the NY attorney general story will be reported on MSNBC this morning. More likely, Eric Schneiderman will become MSNBC analyst for #MeToo, #BlackLivesMatter, #Hey,WeAllDoIt; and, #What'sTheBigDeal. Rumors are Bill Clinton continues to keep a very, very low profile.
It appears the story was broken by Jane Mayer and Ronan Farrow in The New Yorker. Really? The New Yorker actually published this story. Hell must be freezing over.
Ronan Farrow: an American journalist, lawyer, and former government advisor. In late 2017, Farrow's
articles in The New Yorker helped to uncover the Harvey Weinstein
sexual abuse allegations. For this reporting, or this reporting, The New Yorker won the 2018 Pulitzer Prize for public service, sharing the award with The New York Times.
Short squeeze: reported previously -- Elon Musk getting ready to pull off a huge short squeeze. Yesterday/today it is being reported that Elon Musk bought $10 million worth of TSLA. He could flip them today and make a tidy profit -- shares were up almost 3% yesterday on news of that deal, trading up almost $9 and back over $302/share.
Shipowners and refiners are struggling with how to prepare for January
1, 2020, when all vessels involved in international trade will be
required to meet significantly stricter limits on emissions of sulfur
oxides (SOx), either by using fuel with a sulfur content of less than
0.5% or by “scrubbing” the exhaust of ship engines when using the much
higher-sulfur bunker fuel that most ships now rely on.
The International
Maritime Organization’s (IMO) new sulfur rule isn’t a minor tweak.
It’s
a game changer that already is causing widening spreads on the futures
market between 3.5%-sulfur heavy fuel oil (HFO) — the traditional global
bunker fuel — and rule-compliant low-sulfur distillates.
The rule also
promises to be a boon to complex Gulf Coast and other refineries that
can break down residual-based HFO into higher-value, lower-sulfur
distillates. Today, we begin a new series on how shipowners, refiners
and the markets for HFO and low-sulfur marine fuel are responding (or
not) to the coming change in global bunker requirements.
Key points:
Much like necessity is the mother of invention, uncertainty is the
mother of inaction. The fence-sitting that we’re seeing by shipowners
and refiners is, in many ways, a direct result of the approach the IMO
took in implementing its 0.5% sulfur rule. Rather than calling for
shipping fleets to gradually lower their average sulfur emissions over
time (say, 2.5% sulfur by 2018, 1.0% by 2020 and 0.5% by 2022 — and to
do so entirely through the use of low-sulfur distillate — the IMO opted to establish only what the end would be (emissions equivalent to the use of 0.5% sulfur fuel) and a single date for the implementation, but not dictate the means
by which the end would be achieved. That left shipowners and refiners
staring each other down and saying, in effect, “You tell me first what you’re going to do to deal with this, then I’ll decide.” So far, neither side has really made a move.
It can take about 12 months to contract for and retrofit an existing
ship with a scrubber (which requires a drydocking for hull penetrations
to allow scrubber wash water to flow in and out), about 2 years to
contract for and build a new, fully scrubbed ship from scratch and even
longer (four or five years) to design and build a major refinery upgrade
to boost distillate production.
Given those long lead times, it’s fair
to say that, with the January 2020 compliance date closing in and only
between 158 and 600 ships fitted with scrubbers (more on this in a
moment), the vast majority of the ships affected by the IMO’s 0.5%
sulfur rule will comply by switching from high-sulfur HFO to either
rule-compliant 0.5% sulfur marine distillate or blends of higher-sulfur
HFO and ultra-low sulfur distillate.
[As for the number of vessels with
scrubbers, analysis of IMO’s Global Integrated Shipping Information
System (GISIS) by Navigistics
shows that there are currently 158 ships equipped with scrubbers, while
the Exhaust Gas Cleaning Systems Association (EGCSA) claims there are
now ~600 ships so equipped.
And then this little nugget:
The differential between ultra-low sulfur diesel and high-sulfur HFO is
widening in the futures market, with the differential for January 2020
delivery at about $171/bbl versus its current (forward month – June
2018) $156/bbl.
The spread widens dramatically starting in mid-2019,
about the time ship operators will need to begin planning for the
switch-over of their vessel fuel systems for IMO-rule compliance. The
differential continues to grow as the rule-implementation date
approaches.
It’s important to point out that from June 2018 to January
2020, the futures price for West Texas Intermediate (WTI) drops from
about $70/bbl to $60/bbl (14%) and the price for high-sulfur HFO falls
from about $62/bbl to $43/bbl (32%), but the price for ultra-low sulfur
diesel stays close to flat, inching down only 2%, from about $218/bbl to
$213/bbl.
Note to diesel truck drivers: The shift to low-sulfur fuels
for shipping won’t only be affecting shipowners and charterers.
Doing the math: $215/42 = $5.12. And I assume that's wholesale.
