Off The Net For Awhile -- June 15, 2018

I am really burned out. Just too much news. Scott Adams suggested the same thing earlier today.

Therefore, I don't plan to do much blogging tonight. I'm not sure how much blogging I will do over the weekend.

The numbers coming out of the Bakken have completely blown me away. I suspected this -- based on the number of DUCs still being reported and the size of the wells that are being reported that are being completed -- but even though I suspected this, I am surprised -- blown away -- by these numbers.

I need to take a break to digest all of this.

Good luck to all.

One last thought. Scott Adams suggests we are entering a Golden Age. I completely agree. I feel badly for those young folks with little worldly experience that are foregoing investing opportunities because they are being sucked in by negative news in the business pages.

I began investing in 1984. I don't recall a more exciting time to be investing.

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 think you may have read here.

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A Note To The Granddaughters

I came of age in southern California. I have pretty much lived all over the world -- except the Far East. I have fond memories of many places I've lived and would love to return to many of them, even live out the rest of my life in any one of them if it were possible.

But at the end of the day, the "land" that keeps pulling me back is southern California, most specifically South Pasadena.

A Summer Place is not set in southern California. It is set about as far away in the US from California as it could possible be. But I bet a lot of folks, who have never seen the movie, including me, assume it was set in California. Nor was Peyton Place set in California. Nor was The Summer of '42. Wow, that was a tough movie for me to watch. 1971 -- junior in college and too many things in my life going on. And then complicated by my own "summer of '71." When I met the love of my life.

Again, a reminder: I have not watched any television all day (except for the US Open) and I do not plan to watch any television (other than golf, Big Bang Theory, and Seinfeld) until the "markets" stabilize. Things are getting way too crazy.

I assume I will not be watching television (except as noted) no sooner than Monday, June 24, 2018 -- and then I will be traveling. Whatever.

My sources of news are primarily:

• Drudge Report links to US economy;
• twitter links to oil sector;
• Scott Adams;
• and, whatever readers send me.

Therefore, I can honestly say I probably have absolutely no idea what's really going on. Well, let me say it differently. I think I know what's going on but I have absolutely no way to explain any of it.

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Some of this is going to be repetitive -- these thoughts go all the way back to the beginning of the blog. Mostly for newbies. Regular readers of the blog should "know" me by now. A lot of hyperbole. I am inappropriately exuberant about the Bakken.

But for newbies, this is my take with regard to the oil sector.
predicting the price of oil is a fool's errand
oil production from only three countries really matters any more: Saudi Arabia, the US, and Putinstan
Venezuela, sitting on the world's largest reserves of crude oil, implodes; imports oil for the first time ever; and, the price of WTI and Brent plummets
How can that be?
a reader sent me a note when I asked that question. The reader's answer: look at the Bakken revolution (not just the "geographic" Bakken but the "Bakken" revolution
unfettered, the Bakken can produce 2.2 million bopd (currently North Dakota is producing in excess of 1.2 million bopd; will probably set a record in May or June; already production is ahead of schedule)
in the Bakken, upwards of 50% of wells drilled to depth are not being completed; they are called drilled but uncompleted wells (DUCs); with EURs of 500,000 bbls/well, this storage-in-situ (SIS) equates to about 1,000 wells x 500,000 bbls/well = 500,000,000 bbls of oil
this is just the Bakken; long term I think the Bakken may produce more oil than the Permian but right now the analysts tells us the Permian is a better crude oil play; so whatever numbers you see for the Bakken, right now you can probably triple them for the Permian
the Eagle Ford is probably going to be half- to three-quarters that of the Bakken in the near term
we're now hearing stories that legacy oil fields in the US are starting to come back, using technology learned by US shale operators; legacy oil fields are old conventional oil fields that many have thought were well past their prime; maybe not

Comments: Alert -- June 15, 2018

A reader alerted me to the fact his/her comments were not getting through to me; they were not being posted.

All comments are reviewed before being posted, but I post most comments if they add to the conversation. And if I post a comment, I almost always post a reply. Comments that are not published should not be a surprise to those who sent them.

So I was surprised to hear that comments were not getting through to me. I thrive on comments.

I checked my "settings" on the blogger app and I think I may have spotted one problem. I don't know how that "problem" happened but it has been corrected.

So, we will see if that fixes things.

Update: checking with blogger app -- it turns out that other bloggers are having the same problem. It may have something to do with new rules coming out of the EU. I cannot make this up. 

It's always something.

[If you want to send me e-mail, my e-mail address is found somewhere at the sidebar at the right. I don't save e-mail addresses and I pay absolutely no attention to the e-mail addresses. I pay attention to the "handle" because I recognize the "handles" of those who send me consistently great comments.]

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A Note for the Granddaughters

Updates

June 16, 2018: a reader writes that KUMV-TV went on the air in 1959. The Ray High School Band played at the "grand opening" ceremonies. The reader mentions he was once on a KUMV local talent show as a guest. I vividly remember going out to KUMV -- the tower and site was about six miles west of Williston -- to appear one some children's afternoon program. I think I was too old for Romper Room but it was possible it was Romper Room.

Original Post 

The television series Perry Mason ran on CBS from 1957 to 1966. Growing up in Williston, we got television about 1959. The first television station was KUMV-TV (K-upper Missouri valley) which was an NBC affiliate. I don't know when we got CBS and/or ABC, but I know KUMV / NBC television was our only option for many years.

So, I looked forward to our summer vacations to Rapid City, South Dakota, every summer to visit the Black Hills. We would spend one or two nights in Rapid City and we saw other stations. I vividly remember Perry Mason and Alfred Hitchcock Presents.

Wow, those were the good old days.


I never knew that Raymond Burr was screen tested for a part other than Perry Mason in the original television series. What a hoot.

Brilliant. Genius.

Wow, Wow, Wow -- June 15, 2018 -- The Bakken Is Setting New Records -- Ahead Of Forecasts

I did not see any television today. I am unable to access the NDIC. But look at this. From The Bismarck Tribune:

North Dakota oil production jumped 5.4 percent in April to more than 1.2 million barrels per day, coming in just shy of the state’s record.

Director of Mineral Resources Lynn Helms called it a big surprise to see production levels within 2,500 barrels of the all-time high of nearly 1.23 million barrels per day.

“We were not expecting that kind of a surge until late May, early June,” Helms said Friday while discussing the preliminary figures.

Natural gas production increased 7.4 percent in April, setting another record at more than 2.24 billion cubic feet per day.

Flaring: 

• natural gas production: jumped 7.4% in April; all-time record at 2.24 billion cubic feet/day
• natural gas flaring has returned to 2014 levels
• flaring jumped 91 million cubic feet/day since March -- the largest month-over-month increase ever
• it is likely that some operators will need to restrict oil production to meet flaring guidelines
• the state has been near 15% flaring limit for some time, but the reservation in April flared 22%
• five natural gas processing plants are under construction or in development
• expansion at one natural gas processing plant expected to be completed by the end of the year

And it goes on and on. Much more at the link. 

Wells: the number of active wells hit another all-time record -- 14,571 wells. 

Memo to self: send a note to Jane Nielson.

Idle Rambling -- Not Ready For Prime Time -- June 15, 2018

Updates

June 18, 2018: update of Venezuela exports. But this is the scary thing in the graphic below. Look at where the US Gulf Coast imports come from: Saudi Arabia; Mexico; Iraq; Canada; Venezuela -- none of them are very reliable any more, all for different reasons:

Original Post

 

I did not watch any television today except for the US Open (golf).

I have no idea what the talking heads said about what the price of oil did today.

All I know is this:

• Venezuela is importing heavy oil to meet demands of its one large refinery. Analysts suggest it is unlikely Venezuela will "turn around" any time quickly.
• WTI and Brent have an "awful" day. WTI falls almost 2.75%, loses $1.83, falling below $65/bbl, before closing at $65.06. Brent does even worse, falling more than 3.25%, losing $2.50/bbl, and closing at $73.44.

So, all that talk about how important Libyan oil is. All that talk about how important Iranian oil is. All that talk about how important Iraqi oil is. All that talk about how important Canadian oil is. All that talk about how important Venezuelan oil is. What a bunch of hogwash. Did I mention Brazil? Norway? North Sea?

The country with the largest oil reserves in the world. A huge exporter of heavy oil. And now it's importing oil to run its refineries. Venezuela.

And the price of WTI and Brent plummets.

I assume I'm missing something and the talking heads have all kinds of explanations for the fall in the price of oil today, but to me it certainly looks like the only three oil-producing countries that matter: Saudi Arabia, the US, and Putin.

On top of that, I read somewhere on the "internets" that China is going to increase tariffs on oil, natural gas, and refined products coming out of the US. That certainly suggests to me there is no shortage of oil. Or maybe there is and China is simply trying to get ahead of the curve by raising the price of gasoline for their citizens so they switch over to EVs.

Idle chatter. Not ready for prime time.

WTI Drops Below $65 -- June 15, 2018 -- Bakken-WTI Differential Hits All-Time High -- One "Word": DAPL -- Off The Net For Awhile

Updates

Later, June 15, 2018: closed at $65.06. This certainly suggests that the "loss" of Venezuela oil does not matter.

Original Post

Currently trading at $64.96.

Off the net for most of the day. Family commitments.

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WTI-Bakken Differential

This is pretty cool. From Platts:

The Bakken shale crude differential in Williston, North Dakota, climbed to its highest recorded level Thursday despite a narrowed Brent-WTI spread, with Clearbrook barrels climbing to an eight-month high.

Close to the Bakken oil fields, Williston barrels climbed 15 cents day on day to be assessed at NYMEX light sweet crude calendar-month average (WTI CMA) plus $1.75/b, on the back of a Dakota Access Pipeline trade heard and talked rebid 5 cents lower.

This was the highest field barrel differential since S&P Global Platts began assessing Bakken in Williston in April 2014.

Williston-origin Bakken for FOB transport on BNSF trains was heard traded at NYMEX WTI CMA plus $1.95/b.

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No Recovery In Sight

Link here.

Graphic:

One has to wonder. Did Venezuela ever matter? Before Venezuela imploded, the price of WTI was rising and hitting some new recent highs. Now Venezuela is imploding, importing oil for the first time, and the price of oil plummeted today. Again, did Venezuela ever matter? If Venezuela doesn't matter, does Libya? Does Iran? If you ask me, it comes down to the US, Saudi Arabia, and Putin. Everything else if background noise and irrelevant.

The Keystone XL "Might" Be Completed Before My Investing Days Are Over -- But I Doubt It -- June 15, 2018

PTI: WTI falls over 2.5%; loses $1.71/bbl; now trading just above $65. WTI risks dropping below $65. RBN Energy practically predicted this decline in today's report. My comment after reading the RBN Energy post this morning:

• This is what concerns me: the MEH-WTI differential chart at the RBN Energy post.

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"Update" On The Keystone XL

From The Bismarck Tribune:

Separately in Nebraska, a husband and wife who don't want the proposed Keystone XL pipeline to run through their farm this week deeded a plot of their land to a Native American tribe, creating a potential roadblock for the project.

Art and Helen Tanderup signed over a 1.6-acre plot of land to the Ponca Indian Tribe on Sunday. The Ponca enjoy special legal status as a federally recognized tribe.

The land has been used as a planting space for sacred Ponca corn for the last five years, and it was chosen in part because it sits on the $8 billion pipeline's proposed route. It's also part of the historic Ponca route that tribe members were forced to take when the U.S. government relocated them to present-day Oklahoma in 1877.

"What the impact will be, I don't know," Tanderup said. "But now, they'll have a voice in this issue. They will be a player at the table."

And when that court case ends, some other farmer will deed another 1.6 acre plot along the route. Ad nauseum.

These guys are wearing out their welcome.

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The US Open

 Updates

Later, 2:04 p.m. CDT:  it was "interesting" to listen to Fox sports commentators while Tiger Woods was playing. Based on everything I knew, I expected the cut line to be about +7 / +8 (see below). At that cut line Tiger Woods was going to miss by a mile. The commentators were doing everything they could to keep fair weather PGA fans like me tuned in. They knew the only reason folks like me were watching was because Tiger Woods was playing. If he's out of the picture, we won't be watching. So, as Tiger was shooting +10 and then +11, the color analysts kept suggesting the cut line would be +12 and Tiger would make the cut. LOL. Yes, that was possible but unlikely. The weather was improving and one would assume the scoring would get better.

I just tuned back into the tournament, and I see that the projected cut is at +7. If so, Tiger Woods will miss the cut. Phil Mickelson is likely to miss the cut. Jason Day and Rory McIlroy are also likely to miss the cut. Jordan Spieth is "coming back" and may make the cut. He's fortunate to be playing in better weather this afternoon. Now, some of the players not doing well are suggesting they don't like the "featured group" format. The PGA put together "featured groups" made up of well-known golfers.

Original Post
 

Tiger Woods may be playing better than ever. The problem: the younger players are playing even better. Tiger Woods, currently +11, early in the second round. He bogeyed the first two holes in today's second round.

Halfway through the second round for Tiger Woods, the weekend "cut" line looks like it will be +7 / +8. Tiger is currently +11 through thirteen holes.

Fox Sports getting worried. Weekend ratings will plummet if Tiger Woods misses the cut. Fair weather golf fans won't tune in if Tiger Woods is not in the hunt. As it is, I can already feel the enthusiasm waning.

But the PGA / US Open / Shinnecock Hills folks are getting nervous. They are predicting the cut line at +12 which would mean Tiger will probably make the cut.  

Not sure how "they" decided on the "pairings." Tiger Woods, +11, who is in danger of missing the cut, is paired with Dustin Johnson who leads the US Open with a -2 and appears to be in control. The third in this "pairing": Justin Thomas.

Certainly doesn't look like global warming on Long Island. Cold, raining. Announcers are suggesting that players may need to wear long underwear. They were impressed that Tony Finau was one of the few players wearing a short-sleeve shirt this morning (second day, June 15, 2018).

The only sports event worth watching this month. Except perhaps the Belmont Stakes and the Triple Crown. I think my comment can be justified. LOL. 

GDP Estimate For 2Q18 Rises Again -- June 15, 2018

Latest forecast: 4.8 percent — June 14, 2018.

The GDPNow model estimate for real GDP growth (seasonally adjusted annual rate) in the second quarter of 2018 is 4.8 percent on June 14, up from 4.6 percent on June 8.

After this morning's retail sales release from the U.S. Census Bureau, the nowcast of second-quarter real personal consumption expenditures growth increased from 3.4 percent to 3.6 percent.

How is this forecast playing in politics? See next "story" (below).

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This Should Get The Alt-Left Riled Up

From The Washington Examiner:

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US Oil Firms Use Shale Know-How 

To Revitalize Old Oilfields -- Reuters

Link here.  

After shale producers pushed U.S. oil and gas output to all-time highs, some are now taking what they have learned to fields that until recently were considered played out.

If they are successful, the U.S. energy boom could find another gear as producers find profitable ways to extract the billions of barrels of oil remaining in older fields.

Production from the Austin Chalk jumped to 57,000 barrels per day (bpd) last year from 3,000 bpd five years ago and up 50 percent from the previous year, according to consultancy Wood Mackenzie, which expects rapid production gains to continue.

The number of drilling rigs in the Austin Chalk has doubled in the past six months to 14.

Heavyweights ConocoPhillips, Marathon Oil Corp and EOG Resources Inc have leased land or drilled here in the past year.

Other non-shale plays getting fresh attention include the Meramec in Oklahoma and the Central Basin Platform in Texas.

Devon Energy Corp is one of the biggest producers in the Meramec, where it plans to boost output to 140,000 bpd by the end of the year from 107,000 bpd at the end of 2017.

In the Central Basin Platform in the Permian oilfield, smaller producers such as Ring Energy Inc have begun investing heavily, hoping to rejuvenate an area that first produced nearly a century ago. There is no publicly available data on Meramec and Central Basin's total production.

Much more at the link.  

Director's Cut With April, 2018, Data,

The Director's Cut,  Friday, June 15, 2018, with April, 2018, data.

Link here.

See this post.

Disclaimer: the Director's Cut summary that I try to do every month is done very, very quickly. There will be typographical and/or factual errors. That's why I have the link. If this information is important to you, go to the link.

The number is: 1,224,948 bbls/day (nearly sets an all-time record) (preliminary numbers; final numbers will be posted next month; final production numbers generally higher than preliminary numbers)

Crude oil production:

• April, 2018: 1,224,948 bbls/day (preliminary) (all-time high was 1,227,483 bbls/day back in December, 2014)
• March, 2018: 1,162,134 bbls/day
• Delta, month-over-month: 62,814 bbls -- one of the highest "deltas" I've seen in ten years of blogging; on a percentage basis: 5.4% -- I've seen greater, but not often
• Delta between April, 2018, data and the record back in December, 2014: 2,535 bbls/day; on a percentage basis, 2,535 / 1,224,948 = 0.207% -- wow, that was close; and it's very possible when the final figures are posted, it will be a record
• the preliminary March data was 1,162,071 data; the final March data was 1,162,134 bbls/day or a delta of 63 bbls

Natural gas production:

• April, 2018: 2,241,623 MCF/day (374,000 boepd) -- a new all-time record
• March, 2018: 2,119,751 MCF/day (353,000K boepd) -- previous all-time record
• February, 2018 : 2,106,121 MCF/day (351,000 K boepd)

Well Completions:

• April, completions, preliminary: 69
• March completions: 74
• February completions: 74
• January completions: 65

DUCs + inactive wells:

• DUCs, waiting on completion: 942, up 26 from the end of March to the end of April
• inactive well count:  1,521, down 132 during same time period
• April, 2018, DUCs and inactive wells: 2,463

Flaring:

• statewide: 84%
• statewide, Bakken: 85%
• FBIR Bakken: 78% -- federal; atrocious, compared to state
• ND goal: 88% capture; increasing to 91% beginning November 1, 2020

The Economic Gap Between The US And The EU Widens -- June 15, 2018

Updates

June 15, 2018: another in-depth article. She is a lame-duck leader. She won't be re-elected. As long as she remains in power, she will drag down Germany, and, by extension, the EU.

Later, 10:27 a.m. CDT: Angela Merkel's government may collapse due to her stance on immigration.

Original Post 

Latest 2Q18 GDP forecast: 4.8 percent — June 14, 2018.

The GDPNow model estimate for real GDP growth (seasonally adjusted annual rate) in the second quarter of 2018 is 4.8 percent on June 14, up from 4.6 percent on June 8.

After this morning's retail sales release from the U.S. Census Bureau, the nowcast of second-quarter real personal consumption expenditures growth increased from 3.4 percent to 3.6 percent.

I haven't updated "The Big Stories" in a long, long time. My first post at that page was dated May 21, 2013 and its thesis was how the US energy revolution and how Europe's misguided policies will widen the economic gap between the US and Europe.

Re-posting:

From The Wall Street Journal: "strong spending data show US economy chugging ahead of Europe and Asia. Second-quarter growth on track to exceed a 4% pace -- the fastest of any quarter in almost four years. The gap between the US and the EU widens. Canada is not even part of the discussion.

It's interesting to scroll the big stories at the first link above. It is amazing how much has happened in the past five years.

Buried in that long list of items is this one: Europe at a tipping point. Dated May 18, 2013, it predicted the toll renewable energy would have on Europe. From the blog, April 7, 2013: Germany looking to stop wind energy initiatives sooner than later; wind energy has killed Germany's manufacturing base -- Bloomberg. And then this, yesterday, Europe on the ropes:

Voters across Europe have lost faith in politics partly because of “unachievable targets” on renewable energy, said German Energy Minister Peter Altmaier, who rejected calls from a group of other EU countries to boost the share of renewables to 33-35% of the bloc’s energy mix by 2030. Altmaier made the comments during an on-the-record exchange between the 28 EU energy ministers, who are gathered in Luxembourg today (11 June) for a meeting of the Energy Council.

Remember: Germany is the economic engine driving the EU. The only item completely missing on "The Big Stories" page: the renewable debacle in Australia. I completely missed that one.

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Back to the Bakken

$66.86→	6/15/2018	06/15/2017	06/15/2016	06/15/2015	06/15/2014
Active Rigs	62	56	27	77	187

RBN Energy: Cushing pipelines filling up and the impact on price differentials. Archived.

Crude oil pipelines out of Cushing are filling up. With U.S. crude production approaching the 11 MMb/d mark, more and more production from the Rockies, Midcontinent and Permian is funneling into the Cushing, OK, trading hub. It’s getting increasingly difficult to get all of that volume to the major demand center at the Gulf Coast.

The two major pipelines out of Cushing — Seaway and Marketlink — are near full capacity and differentials are responding as West Texas Intermediate (WTI) at Cushing is now trading at a $7.60/bbl discount to Magellan East Houston (MEH) at the Gulf. Today, we look at some of the major factors affecting the WTI-MEH spread, space on major pipelines between the two points, and potential implications going forward.

I was disappointed the blog did not have a graphic showing storage at Cushing. But other than that, a great post.

There must be scores of posts regarding this story on the blog but it seems the Cushing story reached its high-point back in 2015. One typical post at this site. The tea leaves suggesting the price of oil is set to rise could be very, very wrong.

This is what concerns me: the MEH-WTI differential chart at the RBN Energy post.