Tuesday, June 5, 2018

Idle Chatter -- A Musical Interlude -- Nothing About The Bakken -- Except For A Shout-out To The Slawson Team -- Good Luck To All -- June 5, 2018

It's funny how things work out. I had never heard "One Way Ticket" by Eruption (posted earlier) until this past week. The lyrics mention "Lonesome Town" and "Heartbreak Hotel."

"Lonesome Town" was my wife's favorite song, she tells me, when she was nine years old.

So, just for my wife who never reads the blog, "Lonesome Town,"

Lonesome Town, Ricky Nelson

"Heartbreak Hotel": 1956
"Lonesome Town": 1958
"One Way Ticket" which mentions the two earlier songs: 1959 (B-side to "Oh! Carol")

Long Hours

And he will be tweeting by 5:00 a.m. ET in just a few hours.

With those hours, he should have gone in medicine; been a trauma surgeon.

The Road To Mexico -- Elections July 1, 2018

ArgusMedia says it has a 3-part series on the Mexico election from an energy stand point. This is the first installment of that 3-part series:
Like his fellow populist leader in the US, Mexico's leading presidential candidate wants to make Mexico great again, starting with making more refined products within the country's borders.
Andres Manuel Lopez Obrador says he would make good on that promise by building up to two new refineries in Mexico, which would also come at a great estimated cost of $8bn. [Doesn't have the money.]
Lopez Obrador, an early opponent of the energy reforms, has been leading the polls for over a year, cementing a solid double-digit lead for months.
Lopez Obrador has said he will stop Mexican crude exports to boost the domestic production of gasoline and diesel. He has also argued in favor or (sic) freezing fuel prices and reviewing all awarded upstream contracts. [Here we go again. The road to Venezuela.]
After years of severe budget cuts imposed on state-run oil company Pemex, Lopez Obrador has said he would focus heavily on Pemex.
Rocio Nahle, the candidate's pick for energy secretary under a Lopez Obrador presidency, told Argus in a March interview that Mexicans could expect "a radical change in the organization of Pemex."
Lopez Obrador's Mexico-first energy program, formalized in a 415-page document published late last year, has stirred national pride among his supporters, upset by US president Donald Trump's repeated tirades against the US' southern neighbor.  [Emotional response will lead to a very bad outcome.]
Mexico's fuel and natural gas imports from the US have been rising for years. In 2017, state-run Pemex gasoline imports rose 13pc to 570,000 b/d from the previous year, while diesel imports increased by more than 26pc to 237,500 b/d.
Pemex's natural gas imports dipped 8.6pc in 2017 to 1.766 Bcf/d, but were still 62pc more than the 1.089 Bcf/d imported at the beginning of the current administration in 2012.
I only see really bad things for our southern neighbor.

On top of this, Mexico plans to impose a 20% tariff on pork legs. I can't make this stuff  up.

Once Upon A Time In Mexico

Venezuela Story Updated -- June 5, 2018

At this link.

I think this is going to be a huge story. It may be bigger than the Greek story (near default) some years ago; bigger than the recent Italian story. There are so many story lines. It will be interesting to see how this plays out. If the NY Times fails to cover this story in detail, it's letting its readers down.

Fun in the Sun


June 18, 2018: see update here.

Original Post

From The Bismarck Tribune: Lake Sakakawea levels expected to peak in coming week.
The lake is forecasted to continue its rise through next week, rising another 3.5 feet to peak near an elevation of 1,851.5 feet, according to the U.S. Army Corps of Engineers' June 5 outlook. The lake rose 4.3 feet during the month of May to its current level of 1,848.1 feet, about a foot higher than what was expected.
Two things: more than enough water in North Dakota for fracking. One can track Garrison Dam release rate at this link, but unfortunately, one day at a time, and will download as a pdf.
Weather.gov has river elevation at the Garrison Dam on a daily basis.

Cognitive Dissonance

As regular readers of the blog know, the "blogger.app" owned by Google won't allow links to Fox news outlets. Now this:

Random Update Of An Old Slawson Bazooka Well In Big Bend Oil Field -- June 5, 2018

Going back to the wells I first posted coming off the confidential list years ago, I will come across some interesting wells. Another example.

The well: FracFocus has no data to suggest this well was re-fracked. It was originally fracked back in 2009. The jump in production suggests it was re-fracked but FracFocus has no data to suggest that. In addition, there is no sundry form to suggest that it was re-fracked. This well does not appear on my "wells of interest" list, either. If one looks at the NDIC map, one will see a lot of fracking in the neighborhood of this well back in 2014. So, again, for newbies: this was another well that jumped in production after neighboring wells were fracked. Reason, of course, unknown why that happens, according to folks who write me about the phenomenon. [Later, for those with mineral rights, it is not important to know "why"this happen -- it's only important that it happens. LOL.]
  • 18239,  1,042, Slawson, Bazooka 1-20H, Big Bend, t11/09; cum 342K 4/18 
Note jump in production in November, 2014:

Six CLR Mountain Gap Wells In Dunn County Approved For "Tight Hole" Status --

API: US crude oil inventories -- a decrease of 2.028 million bbls.

Back to the Bakken

Active rigs:

Active Rigs61502582194

Six new permits:
  • Operator: Whiting (4); Hunt (2)
  • Field: Big Stone (Williams); Wolf Bay (Dunn County)
  • Comments: Whiting has permits for a four-well Schilke pad in SESW 21-159-98;
Thirteen wells were approved for "tight hole" status:
  • six CLR Mountain Gap wells in Dunn County
  • a mix of others
And that was all.

Random Update Of A Very Old QEP MHA Well In Deep Water Creek Bay Field; Random Update Of An Old EOG Three Forks Well -- June 5, 2018

Going back to the wells I first posted coming off the confidential list years ago, I will come across some interesting wells. Two examples.

First, this well:
  • 17940, 1,217, QEP/Questar, MHA 1-13-14H-150-91, McLean County, Deep Water Creek Bay field, t1/10; cum 356K 4/18; note this well was completed back in 2010; it showed the typical Bakken decline but then got a breath of fresh air in December, 2017. FracFocus shows that it was refracked in November, 2017. It was a small re-frack (and thus relatively inexpensive) -- only 6 million gallons of water and proppant constituting slightly less than 15% of total frack mix. The peak production (15,000 bbls in 1/18) was almost as much as the original frack.
Recent Monthly Production Data:
PoolDateDaysBBLS OilRunsBBLS WaterMCF ProdMCF SoldVent/Flare

Then, this well:
  • 18172, 112, EOG, Fertile 35-23H, a Three Forks well;  t9/09; cum 142K 4/18; this well was taken off-line back in November, 2016; prior to that it was a pretty lousy well; but then March, 2018, it was brought back on line. On January 29, 2018, the NDIC sent EOG a letter noting that this well had not produced in over a year, a violation of NDIC code. EOG was told to put this well back into production or submit request to plug and abandon. So it's back in production. Back in October, 2017, EOG requested this well be placed on IAW but apparently that was denied. 
Recently Monthly Production Data:

PoolDateDaysBBLS OilRunsBBLS WaterMCF ProdMCF SoldVent/Flare

Venezuela Fails To Meet Crude Oil Contracts -- June 5, 2018


June 11, 2018: update.

June 7, 2018: 24 million bbl backlog; Venezuela's fate looks very, very bleak

June 6, 2018: nominee for 2018 Geico Rock Award?

Later, 7:58 p.m.: this screenshot --
The embedded link takes you to this story: China independents look for other crude oil grades to cover Venezuelan shortfall.

Later, 7:38 p.m.: link here --
Venezuela's state-owned PdV is considering a declaration of force majeure on some of its oil supply contracts in June unless its clients agree to accept volume reductions of up to 50pc, PdV officials tell Argus.
PdV's tumbling crude production, chronic breakdowns of its heavy crude upgraders and difficulty importing critical light crude and naphtha are progressively reducing the amount of oil available for export. The company was already taking advantage of flexibility in its supply contracts to shave off up to 10pc in export volumes.
But larger cuts are now looming.
PdV "in the best case only has about 695,000 b/d of crude supply available for export in June," a PdV marketing division executive said.
Because the distressed company's problems are structural, any force majeure declaration would set a commercial bar that the Opec country could not quickly overcome.
PdV is asking its principal clients that are collectively owed 1.5mn b/d of crude in June to accept smaller volumes and restructure existing supply contracts for up to one year.
Among the drivers behind PdV's supply deficit is ongoing maintenance at its PetroPiar upgrader in which Chevron owns a 30pc stake. The facility, which has been off line since early May, supplies about 160,000 b/d of synthetic crude to the country's export portfolio. Maintenance will last through the end of June at the earliest, PdV officials say. Chevron declined to comment.
Three other upgraders, all run by PdV, are in poorer operational condition.
PdV could invoke force majeure if new supply deals involving smaller volumes cannot be worked out with clients such as Chinese state-owned CNPC, India's Reliance and Russia's Lukoil.
The energy ministry likely would attribute a force majeure declaration to US financial sanctions and the effects of its debt-related dispute with US independent ConocoPhillips that severed PdV's Dutch Caribbean logistics last month. From the perspective of Venezuela's increasingly isolated government, the strategy would boost its international case against sanctions by adding pressure to the oil market.
The company's June obligations include 1.27mn b/d of 16°API Merey blend to eight clients, including Valero, Nynas and Tipco.
Original Post

Link here.
"Among the affected clients due to the low availability of crude to export are Nynas, Tipco, Chevron, CNPC, Reliance, Conoco, Valero, and Lukoil, which will partially receive the volumes established by the contracts."
The amount the company will not be able to supply is close to half of the total committed volumes of this grade, Merey 16, for June.
It only has 578,000 bpd of the grade available, while the total contracted volume is 1.271 million barrels daily.
PDVSA’s total crude commitments for the month stand at 1.495 million bpd, but it only has 694,000 bpd available.
You can bet the US refiners (Chevron, Conoco, and Valero) are scrambling -- and paying top dollar -- for supplies from other sources. And then folks wonder why the price of gasoline goes up.

Did President Trump know this when he asked Saudi Arabia to increase production? Did President Trump have inside information? Did the Trump administration use inside information when it "quietly" asked Saudi Arabia to increase production? Did the Trump administration break protocol?

These are no doubt the questions CNN is asking.

Why did President Trump not tweet this? Is this fake news? If true, why did the Trump administration not alert us before it was announced by oilprice.com and most likely, others? I assume MSNBC is asking these questions.

Does this explain why WTI turned "green" today? And not by just a little bit. WTI is up 75 cents/bbl. Too bad it's the "wrong kind" of oil. But drillers can "exchange" oil on the open market.

The dots connect.

For newbies: US refineries are optimized for heavy oil. The US is producing light oil, not heavy oil. US refineries need heavy oil to "balance" light oil before they can refine it. Sources for heavy oil for the US: western Canadian oil sands; Venezuela; Saudi Arabia.

The whole purpose of the Keystone XL was to ensure an adequate source of heavy oil for US refiners. The US oil industry knew that two of three sources (Venezuela and Saudi Arabia) were not as reliable as western Canadian oil, and thus, for national security reasons, it can be argued, planned to build the Keystone XL with private funds which would benefit all Americans. But President Obama killed the Keystone XL when the state of Nebraska failed to approve the route of the pipeline. What a doofus. Even Justin Trudeau seems to have better sense than the former US president.

And, now folks are, again, complaining that the price of gasoline is increasing. As Maureen Dowd said, President Obama was just too good for us. Say what? Thank goodness for term limits.

Has Never Happened Before 2018

Has now happened twice in 2018: job openings (6.7 million) exceeds workers (6.4 million).

Speaking Of Fulfilling Contracts ... US Social Security

From The WSJ:
The Social Security program’s cost will exceed its income this year for the first time since 1982, forcing the program to dip into its nearly $3 trillion trust fund to cover benefits.
By 2034, those reserves will be depleted and Social Security will no longer be able to send it its full scheduled benefits, according to the latest annual report by the trustees of Social Security and Medicare released Tuesday.
Unless Congress acts to bolster the program’s finances, beneficiaries would receive about three-quarters of their scheduled benefits after 2034.
If you actually read the whole story, and not just the headline, the report is actually not all that bad (for Social Security):
Social Security consists of two programs, one for retirees and one for people who claim disability benefits. Taken separately, the retirement program’s reserves are depleted in 2034, a year sooner than projected in last year’s report.
The disability fund is expected to run out in 2032, as opposed to 2028 in last year’s report. 
For Medicare? That's a different story. That's in big, big trouble.

2034? I'll be in my 80's. A minor tweak to Social Security benefits now will easily extend the program for another 15 years. Medicare? Maybe ObamaCare will help solve this problem. Thank goodness it was not repealed.

Oh! Carol, Neil Sedaka

Random Update Of A Very Old EOG Well In Parshall Oil Field -- June 5, 2018

This page will not be updated.

Let's take a look at the very first well I ever posted at "new wells reporting." Appropriately, it was an EOG well in the Parshall oil field:
  • 17972, 1,695, EOG, Parshall 15-31H (1 sec), Parshall; t8/09; cum 392K 4/18; jump in production 7/13; off-line as of 2/17; back on-line as of 5/17; small jump in production 5/17;
The meme that Wall Street has is that the Bakken wells have a high rate of decline, and by extension, have a short life time. So how is this well doing? Some observations:
  • a short lateral, only 14,484 feet
  • steep decline (as expected)
  • declined to 3,000 bbls/month by mid-2013, and then, without a re-frack, had a jump in production to over 8,000 bbls/month
  • then declined again, to 2,000 bbls, and then 1,000 bbls / month by early 2017
  • then, again, without a re-frack, jumped again, for a short period of time to 4,000 bbls/month
  • currently at 1,500 bbls / month

Off The Net For Awhile -- Good Luck To All -- June 5, 2018

Remember BRAC? Closing all those US military bases? It looks like some of those military bases (and posts) in Texas may get a new lease on life. And a lot of money from the US government for the surrounding communities. What's not to like? From NBC News:
HHS officials will soon tour military installations near the border in Texas as they search for more space to house children while they wait for placement. The officials will tour Dyess Air Force Base, Goodfellow Air Force Base, and Fort Bliss.
This day in history:
1981 World's first today in history program with editable data "TODAY", invented by Michael Butler runs for the first time on a mainframe computer.

The Market, Energy, And The Political Page, Part 4, T+5 -- June 5, 2018 -- WTI

Wow, did we just see the bottom for WTI?

I've been watching it closely this morning -- checking in every 30 minutes or so, and after flat to negative all morning, WTI has turned green. Now up 0.37%, up about 24 cents, to $64.99. Two things. First, the floor. Is the floor for WTI about $65? With all the headwinds now addressed -- can anyone think of any more headwinds? -- WTI goes below $65 and then turns "green."

Now the analysis. A reader suggested it.

The US has "quietly" asked Saudi Arabia to increase output by one million bopd. Reasons were provided earlier, but it does not matter what the reasons are. The fact remains, the US has "quietly" asked Saudi Arabia to increase output by one million bopd.

There can only be one possible reason why the US would "quietly" ask Saudi Arabia to increase output. The administration is worried the price of oil is going to rise. So, if the price of oil is going to rise, wouldn't another million bopd from Saudi Arabia tend to stem/lower the price of oil? Sure, maybe, eventually.

But this is what the reader suggested: we won't see that oil for another six months. First, Saudi Arabia and Russia are due to meet in June. Saudi Arabia could react more quickly, but the tea leaves suggest Saudi Arabia will wait for that meeting.

That brings us to July. Then, of course, it takes awhile for Saudi Arabia to actually physically open the spigots -- either from existing supplies or wells in the field.

And, then of course, a bit of time to arrange for the tankers to show up at the Saudi terminals.

And finally, the tankers to reach the US and then the refineries  and then the refining ....

So, add it all up and one can make a case that the price of oil is going to rise in the short term.

Just saying.

Disclaimer: it's a fool's errand to predict the price of oil.


Can you believe that this is a Neil Sedaka song? From wiki:
"One Way Ticket," the B-side on Sedaka's 1959 single "Oh! Carol". In 1961, the song featured in the track listing of his third studio album, Neil Sedaka Sings Little Devil and His Other Hits, but was never released as a standalone single. Despite this, the song made it to #1 on the Japanese pop charts, where it was affectionately called "The Choo-Choo Train Song".
1959: almost sixty years ago.

One Way Ticket, Eruption

The Market, Energy, And The Political Page, Part 3, T+5 -- June 5, 2018 -- McDonald's

McDonald's: I have blogged about this many times. I probably "know" McDonald's as well as any blogger. Across the country, McDonald's has been doing two big things the past two years: remodeling their restaurants inside and out; and, adding self-ordering kiosks.

See this article.

An analyst yesterday suggested that the kiosks result in folks ordering more than they order when ordering at the counter. To the CNBC talking head this made no sense. Obviously he had not yet used the kiosk ordering system. I can tell you from personal experience it's absolutely true. People order more from the McDonald's kiosk than when ordering from the counter. Trust me.

First of all, when I am by myself, I tend to order a medium size of French fries off the kiosk but only a small size when ordering at the counter. Don't ask me why. It's not rocket science. It's all about pictures and wants and expectations.

With Sophia, who will turn four in the next month or so, it's absolutely interesting. We order off the kiosk and it's so easy for her to see the picture, and then ...

... let me digress... think about it. ... when I step up to the counter, I only have my "prepared" order in my head. No pictures, no marketing, no ads, no nothing, just my "prepared" order -- and it never really changes .. but then I step up to the kiosk and I see the entire panoply of McDonald's offerings. Things I never thought of. Marketing. Subliminal marketing. In-your-face marketing. It's all there. And you're hungry ... and a gazillion offerings pop up. So my "prepared" order of a regular hamburger ($1.00), a small order of French fries, and a small diet coke goes out the door: a Big Mac, a medium order of French fries, and a large diet coke (note: regardless of size of fountain drinks, they all cost $1.00 -- it's only a matter of time before McDonald's offers fountain drinks for free for orders over $8.00). So .. that's my kiosk experience .. now back to what I was saying ...

But then, with Sophia, it's absolutely interesting. We order off the kiosk and it's easy for her to see the picture and point to whatever she wants. Before, with me, she had three choices -- the ones I gave her. Now, with the kiosk, Sophia has a gazillion choices and if I don't let her order what she wants, I have to listen to her complain for the next hour.

But it's worse. While she's in PlayPlace she comes back and says she wants another side of French fries. Back to the kiosk. Partly because it's so much fun. Partly because it's so easy. Partly because it's a grandparent thing.

Kiosk ordering in McDonald's? Brilliant.

For investors: again, this is an open-book test.

Disclaimer: this is not an investment site. Do not make any investment, travel, relationship, job, travel, or financial decisions based on what you read here or think you may have read here. Don't make any fast food restaurant choices based on what you read here, either.

By the way, I also learned that McDonald's is now using BlueTooth to locate where folks are sitting who have ordered off the kiosk to more easily locate them when bringing them their order. Imagine that: a little "mapquest" for each McDonald's employee.

By the way, the Japanese have been doing this for years. At revolving sushi restaurants, one orders off a kiosk. This may be a rare case where an American company copied from the Japanese and not the other way around. LOL. 

Question of the day: when will Starbucks get with the program and offer kiosk ordering. It seems like a no-brainer.

Nothing About The Bakken -- The Market, Energy, And Political Page, Part 2, T+5 -- June 5, 2018


Later, 1:54 p.m. CDT: at lunch I asked the two older granddaughters, age 14 and 11, if they had heard of "Group-FaceTime"? Wow, did their faces light up! They had both heard of "Group-FaceTime" -- remember, it was just announced yesterday at the Apple worldwide developers conference. But the teens were so excited about this the "news" moving through social media like nobody's business, as they say. The older one said this will make it so much easier when "they" are working on group projects. Right now, it's passing e-mail back and forth when working on a group project. The younger one, age 11, says they used Skype, but some parents won't let their children use Skype. The 11-year-old says everyone is asking why it took so long for Apple to copy Skye. She thought it could be a win-win for both Skye and Apple but, at the end of the day, thought it was a huge plus for Apple, and at best a small plus (maybe a negative) for Skype. The older one said that Google/Android has something similar but the audio quality if not as good as Apple's "FaceTime" so she is thrilled with this announcement. She did say that Skype was better than Google/Android.

I was amazed that they both knew about this new application less than 24 hours after it had been announced. I was even more amazed how excited they were about this. They also noted that the application can only be used on Apple products but they said that would not be a problem, because "everyone" has an iPhone.

Investors in Apple? This is not rocket science. AAPL is up $1.33, setting new all-time highs.

Original Post 

Apple, Inc.


Generally there's a lot of negativity "expressed" after an Apple event: the annual software conference, the annual hardware announcement, or the quarterly earnings reports.

But this time, something different.

Closing price on May 18 or May 21 -- about $187.

Today, about $193.

In between, the annual Apple software conference.

Apparently there was a lot of good stuff that came out of that conference, but the "FaceTime" development might have been the easiest to understand and the most important. Who knows? Maybe.

"FaceTime" can now accommodate 32 people. Thirty-two little tiles on the screen, but they all fade into the background and one large tile comes up for the person speaking.

I remember all the conference calls I attended during my years with the US Air Force. It took an administrative assistant at each site to call the operator and get access to the conference. I assume the same thing occurs these days with earnings conference calls.

I don't know how many readers have used "FaceTime" but it's an effortless process. You click on a telephone number and you are instantly connected to "FaceTime." Seriously, that's it.

Now, with upgrades to Apple's operating systems, it sounds like "FaceTime" will work across all Apple platforms (which I think it already did).

Now, there's no excuse for 31 analysts not to be able to call in on "FaceTime" for earnings calls.

A CNBC talking head noted one downside. The CNBC talking head noted that "FaceTime" can only be used in the Apple ecosystem. He/she noted that Microsoft tried the same things some years (decades) ago -- trying to limit Microsoft products to Wintel products, and excluding Apple. Microsoft, the CNBC talking head noted, failed. The talking head wondered if Apple was making a mistake by trying the same thing -- limiting "FaceTime" to its own platforms.

Answer: no.

I'm blogging in the homeless shelter near where I live. There are eleven people in the shelter right now. Seven of the eleven brought their laptops with them. An eighth is on a tablet. Of those eight mobile devices all but one is an Apple product.

[Later: decades ago, most folks had only one option -- Wintel and Microsoft. Today, folks have many, many options. The Apple option is generally the most expensive.]

I may be wrong about Apple. But don't tell me. Don't bring me down. LOL:

Don't Bring Me Down, Electric Light Orchestra

Notes to the Granddaughters

Our oldest granddaughter has a water polo tournament this weekend on the south side of Houston, Texas. I will be taking her.

Her first game is around noon on Friday. Her last game is mid-afternoon on Sunday.

Because of her busy, busy summer schedule, we can't start driving until after 6:00 p.m. Thursday night.

Because it's always impossible to get through the city of Houston, we will stay overnight on the north side of Houston, Thursday night. We should get there about 9:30 p.m. local time.

Friday morning we will drive the last hour or so around Houston. We will get to the tournament with plenty of time to spare.

But this is why I'm writing the note. On our return trip home, we are so close to the terminals on the Gulf Coast east of Houston and so close to the swamps and bayous of Louisiana I am tempted to drive east through Lake Charles, LA, and then up to Shreveport on our way home. It's an 8-hour drive, but we could stay overnight in Shreveport, and still get back to Grapevine early Monday morning.

I haven't been to Louisiana in a long, long time, and this could be an opportunity not to be missed. One hundred ten degrees, hot, humid, buggy, what's not to miss? LOL. I just checked the weekend weather forecast for Lake Charles: 90 degrees and no rain. Partly cloudy. Looks like a road trip.

If anyone in the Lake Charles to Shreveport, Louisiana, region has "one-don't-miss" thing in the ara, please let me know. 

Bakken Redux? How Much To Flare/Burn? -- June 5, 2018

From Bloomberg: natural gas glut in Permian sparks dilemma over how much to burn.
Texas is facing a burning question that’s pitting the state’s economy against its environment, and oil drillers against each other.
With natural gas pipelines in the Permian Basin reaching 98 percent of capacity, Texas is weighing whether to keep intact or loosen strict state regulations that limit flaring, the process used by drillers to burn off excess gas pumped up along with their oil.
Now the limit for individual wells is 45 days. After that, without a rare-granted exemption, the gas must be piped away or the well must close.
Shut wells mean less revenue for companies and the state at a time when oil prices and production are surging while regional gas prices are in a tailspin. Ending or expanding the cap solves the problem. But it also gives drillers that haven’t paid for space on existing pipes a competitive edge over those that have, and could spark environmental protests.
“This is not a simple thing we’re talking about,” said Ryan Sitton of the Texas Railroad Commission, which oversees the oilfields. “It’d be a pretty big policy shift and we want to be very thoughtful about what the ramifications could be."
Sitton said he’s meeting with producers across the Permian, and hopes to have a decision within six months, when he believes the dilemma will come to a head.
Multiple gas pipelines criss-cross the Permian, with a total capacity of 8.1 billion cubic feet a day. But as the price of crude has risen, so has production, growing 25 percent in the last year. The gas associated with that boom has filled up all but two percent of pipeline capacity as of the end of April, according to RBN Energy LLC, and Rystad Energy AS suggests oil output may grow 10 percent more by the end of 2018.
Natural gas prices in the Permian, meanwhile, are the cheapest in the nation.
Last week (or the week before, I forget), policy planners from the Permian visited North Dakota to talk about how the latter state handled the boom. One wonders if flaring was on the agenda. So far it looks North Dakota has threaded the needle. 

Global Warming Has Run Its Course -- WSJ -- June 5, 2018

Without question, this is the best op-ed we will see this week. From The WSJ, "Climate Change Has Run Its Course. Its descent into social-justice identity politics is the last gasp of a cause that has lost its vitality."
Climate change is over. No, I’m not saying the climate will not change in the future, or that human influence on the climate is negligible. I mean simply that climate change is no longer a pre-eminent policy issue. All that remains is boilerplate rhetoric from the political class, frivolous nuisance lawsuits, and bureaucratic mandates on behalf of special-interest renewable-energy rent seekers.
Judged by deeds rather than words, most national governments are backing away from forced-marched decarbonization. You can date the arc of climate change as a policy priority from 1988, when highly publicized congressional hearings first elevated the issue, to 2018. President Trump’s ostentatious withdrawal from the Paris Agreement merely ratified a trend long becoming evident.
A good indicator of why climate change as an issue is over can be found early in the text of the Paris Agreement. The “nonbinding” pact declares that climate action must include concern for “gender equality, empowerment of women, and intergenerational equity” as well as “the importance for some of the concept of ‘climate justice.’ ” Another is Sarah Myhre’s address at the most recent meeting of the American Geophysical Union, in which she proclaimed that climate change cannot fully be addressed without also grappling with the misogyny and social injustice that have perpetuated the problem for decades.
The descent of climate change into the abyss of social-justice identity politics represents the last gasp of a cause that has lost its vitality. Climate alarm is like a car alarm—a blaring noise people are tuning out.
The op-ed is behind a paywall but one should be able to get to it using the usual methods.

423 comments to that article already -- must have touched a nerve. Let's see the gist of the comments:

The best comment was off-topic.  A reader noted that the majority of plastic that is thrown in the ocean comes from liberal west coast cities. Pretty funny.

The Market, Energy, And Political Page, T+5 -- June 5, 2018

A reader sent me this story, from another source.

It was the first item, from another source, on my Twitter feed this morning:

The screenshot says "The US government has quietly asked ..." What do they mean, "quietly asked"? Apparently President Trump didn't tweet the request. LOL. In fact, President Trump has been telegraphing for quite some time that he would do this. He now follows the pattern of every US president in modern history -- asking Saudis for help to keep the price of oil down.

And, of course, it validates the argument of those who suggest Saudi still "sets" the price of oil worldwide.

When a reader asked about this story, this was my reply (there is a "fact" in the story that I may have wrong but I will leave the reply as is):
1. Trump has said he wants the price of oil to trend lower. And I think he has already been quoted as asking the Saudis to increase production.
2. There have been several stories (same source, I assume) the last couple of days that airlines have said they will raise prices if oil prices continue to rise. In addition, at least one airline has already said it will raise prices regardless. I saw those articles as a public relations gambit to put pressure on the White House to get oil prices down.
3. The US refineries need to heavy oil (which they used to get from Canada and Venezuela) to balance the light oil. US refineries were optimized for heavy oil some years ago and now can only function if they have heavy oil to "balance" the light oil. Still inefficient, but that's their only choice.
4. As noted, Venezuela oil may or may not continue to flow -- White House obviously is aware of that.
5. California does not get oil from the rest of the US. It either uses its own in-state oil or imports (Saudi oil). California oil is now trading at $73 / bbl vs $64 for WTI. And I believe Saudi Arabia is ready to raise the price of their oil; whether that affects California or not, I don't know. Californians are already paying nearly a dollar more per gallon of gasoline than the rest of the country. It will probably get worse if Saudi does not increase its production.
6. California politics very, very dicey for some GOP candidates. Any relief at all would be helpful. Folks assume California across the state is anti-Trump, but not true. There are some California GOP reps in Congress. Some of those seats could be lost in the mid-term. High gas prices won't help.
It goes without saying that midterm elections are only six or seven months away.

And, On A Second Note -- About That Request For An Increase In Saudi Production

When asked about that, I also noted in an e-mail, not ready for prime time:
If Trump can use the bully pulpit to get the price of oil down, he will try. Yesterday, I thought we might have seen the bottom when I saw the price of oil advance (very) slightly, but now with WTI down again today, and then with news that the US government has asked Saudi Arabia to increase production, my hunch is WTI is headed lower before it heads higher.

Adding one large pipeline from the Permian and giving a huge tax break to operators in the Bakken would result in a 2 million bopd INCREASE literally overnight.

WTI is already solidly below $65 -- and driving season has begun. Something tells me the refiners over-prepared for the driving season. Boom and bust.

I believe one can find links that FANG was strongly recommended by Jim Cramer (CNBC and Mike Filloon (SeekingAlpha). I could be wrong on both accounts.

Yesterday, without question, Cramer was telling viewers to run away, not walk away, frlm FANG.

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

Speaking of which, like Melania Trump, we haven't seen or heard much from Mike Filloon lately, or maybe I just haven't been paying attention. 

FANG has gone from $136 / share to $111 / share in less than a month, I believe. You can fact check me on that.

WTI Continues To Trend Down -- June 5, 2018

Active rigs:

Active Rigs61502582194

RBN Energy: US natural gas flows and prices are now inextricably tied to LNG export markets
Three years ago, U.S. Lower-48 LNG exports were zero. Today that number is above 3.0 Bcf/d. Three years from now, U.S. exports will make up about 20% of the global LNG trade. Perhaps even more momentous, LNG exports will equal 10% of U.S. gas demand. That’s more than deliveries to the entire residential and commercial market sectors during the six summer/shoulder months each year.
All of which means that U.S. LNG exports are quickly becoming a much more important factor in both domestic and international markets. The U.S. gas market is no longer an island. In fact, the long-awaited integration of the U.S. into global gas markets is upon us, with significant implications for infrastructure utilization, trade flows and of course, price. To make sense of these new market realities, it is necessary to assess the gas value chain from U.S. wellhead to global destination — in effect, to follow the molecule from the point of production, through pipeline transportation to liquefaction and export, and from the dock to destination markets. That’s exactly what we will do in the blog series we are kicking off today.
U.S. gas exports are up from about 4% of demand in 2015 (virtually all to Mexico by pipe) to more than 10% today (60% to Mexico by pipe, 40% as LNG).
By 2023, gas exports will increase to about 18% of U.S. demand, with two-thirds of the total moving via ship into the global LNG market (and only one-third to Mexico via pipe). 
If Cheniere’s Sabine Pass flows are any indication, most of the time the LNG volumes will move as base load, meaning that they will flow regardless of the price spread between U.S. and international destination markets.
But not always. When trading opportunities present themselves, lifting schedules can change. When liquefaction hardware malfunctions, U.S. shipments can be curtailed without the necessity of shutting in producing wells — just put the gas into ample U.S. storage. Likewise, when international prices collapse, U.S. supplies can be held off the market. These dynamics will be a new reality for long-time LNG market players. And one more thing. Note that in Figure 1 we have placed the global LNG supply and U.S. gas demand graphs adjacent to each other to emphasize a key point. As the graphs show, U.S. LNG exports (blue bar segments in both graphs) are a bigger deal for the global market than they are for the U.S. market. As U.S. exports grow, the implications of that relationship will become increasingly apparent.