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.
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.
| BAKKEN | 4-2015 | 30 | 4257 | 4446 | 2930 | 3213 | 3005 | 58 |
| BAKKEN | 3-2015 | 31 | 5364 | 5571 | 3954 | 3848 | 3693 | 0 |
| BAKKEN | 2-2015 | 28 | 6613 | 6704 | 4636 | 5696 | 5022 | 534 |
| BAKKEN | 1-2015 | 31 | 9401 | 8773 | 7771 | 8085 | 7204 | 726 |
| BAKKEN | 12-2014 | 31 | 11747 | 11888 | 11979 | 10097 | 9345 | 597 |
| BAKKEN | 11-2014 | 25 | 12401 | 12118 | 11437 | 10130 | 7863 | 2142 |
| BAKKEN | 10-2014 | 1 | 41 | 0 | 0 | 66 | 0 | 61 |
| BAKKEN | 9-2014 | 23 | 1833 | 1850 | 679 | 1623 | 1508 | 0 |
| BAKKEN | 8-2014 | 31 | 2666 | 3028 | 1398 | 2162 | 2007 | 0 |
| BAKKEN | 7-2014 | 31 | 2672 | 2739 | 1687 | 2273 | 2118 | 0 |
| BAKKEN | 6-2014 | 30 | 2072 | 1798 | 1821 | 1742 | 1592 | 0 |
| BAKKEN | 5-2014 | 31 | 2622 | 3093 | 1407 | 2282 | 2127 | 0 |
| BAKKEN | 4-2014 | 30 | 2513 | 2068 | 1352 | 1873 | 1723 | 0 |
| BAKKEN | 3-2014 | 31 | 2828 | 2722 | 1517 | 2232 | 2077 | 0 |
| BAKKEN | 2-2014 | 28 | 2642 | 2911 | 1524 | 1845 | 1705 | 0 |
| $65.50↑ | 6/5/2018 | 06/05/2017 | 06/05/2016 | 06/05/2015 | 06/05/2014 |
|---|---|---|---|---|---|
| Active Rigs | 61 | 50 | 25 | 82 | 194 |
| Pool | Date | Days | BBLS Oil | Runs | BBLS Water | MCF Prod | MCF Sold | Vent/Flare |
|---|---|---|---|---|---|---|---|---|
| BAKKEN | 4-2018 | 19 | 6816 | 6562 | 8853 | 2689 | 1733 | 248 |
| BAKKEN | 3-2018 | 19 | 6690 | 6982 | 5953 | 3735 | 2202 | 670 |
| BAKKEN | 2-2018 | 24 | 9105 | 8923 | 9480 | 4833 | 3508 | 390 |
| BAKKEN | 1-2018 | 30 | 15035 | 15339 | 16952 | 8351 | 3834 | 3937 |
| BAKKEN | 12-2017 | 31 | 19139 | 18697 | 37343 | 9084 | 3457 | 5219 |
| BAKKEN | 11-2017 | 15 | 4519 | 4206 | 4180 | 1085 | 0 | 854 |
| BAKKEN | 10-2017 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| BAKKEN | 9-2017 | 6 | 241 | 252 | 169 | 1349 | 198 | 1151 |
| BAKKEN | 8-2017 | 31 | 1436 | 1446 | 848 | 1054 | 1054 | 0 |
| BAKKEN | 7-2017 | 31 | 1532 | 1588 | 918 | 1661 | 1238 | 2 |
| BAKKEN | 6-2017 | 30 | 1659 | 1665 | 913 | 2095 | 792 | 895 |
| BAKKEN | 5-2017 | 31 | 1792 | 1754 | 969 | 2099 | 321 | 1357 |
| BAKKEN | 4-2017 | 30 | 1730 | 1746 | 970 | 1272 | 864 | 0 |
| BAKKEN | 3-2017 | 22 | 1030 | 991 | 780 | 829 | 452 | 0 |
| BAKKEN | 2-2017 | 22 | 946 | 960 | 581 | 702 | 349 | 0 |
| Pool | Date | Days | BBLS Oil | Runs | BBLS Water | MCF Prod | MCF Sold | Vent/Flare |
|---|---|---|---|---|---|---|---|---|
| BAKKEN | 4-2018 | 30 | 620 | 645 | 1328 | 481 | 231 | 30 |
| BAKKEN | 3-2018 | 14 | 590 | 537 | 1067 | 263 | 161 | 0 |
| BAKKEN | 2-2018 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| BAKKEN | 1-2018 | 1 | 0 | 0 | 17 | 0 | 0 | 0 |
| BAKKEN | 12-2017 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| BAKKEN | 11-2017 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| BAKKEN | 10-2017 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| BAKKEN | 9-2017 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| BAKKEN | 8-2017 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| BAKKEN | 7-2017 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| BAKKEN | 6-2017 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| BAKKEN | 5-2017 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| BAKKEN | 4-2017 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| BAKKEN | 3-2017 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| BAKKEN | 2-2017 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| BAKKEN | 1-2017 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| BAKKEN | 12-2016 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| BAKKEN | 11-2016 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| BAKKEN | 10-2016 | 27 | 190 | 187 | 329 | 242 | 16 | 11 |
| BAKKEN | 9-2016 | 30 | 302 | 306 | 484 | 291 | 47 | 0 |
| BAKKEN | 8-2016 | 31 | 417 | 461 | 558 | 311 | 64 | 0 |
| BAKKEN | 7-2016 | 31 | 450 | 390 | 595 | 335 | 80 | 3 |
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.
"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.
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.
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.
"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.
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.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.
Natural gas prices in the Permian, meanwhile, are the cheapest in the nation.
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.
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.
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.
| $64.42↓ | 6/5/2018 | 06/05/2017 | 06/05/2016 | 06/05/2015 | 06/05/2014 |
|---|---|---|---|---|---|
| Active Rigs | 61 | 50 | 25 | 82 | 194 |
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.