Tuesday, December 4, 2018

It's Always Darkest Before The Dawn -- December 4, 2018

From Bloomberg:
The North American fracking market -- already expected to be a downer for the holidays -- is turning out to be even worse than expected, according to the world’s biggest oil-service provider.
Schlumberger Ltd. expects sales in the U.S. and Canada to drop 15 percent in the final three months of the year compared with the third quarter, the company said Tuesday. A trio of factors including a plunge in crude prices, exhausted exploration budgets and maxed-out pipelines in America’s busiest field is prompting oil companies to let go of frack crews.
“We are seeing a significantly larger drop in activity than we expected, which is leading to a larger drop in pricing than we anticipated,” Patrick Schorn, executive vice president at the Houston- and Paris-based company, said in prepared remarks for an investor presentation. “We continue to see the weakening of the hydraulic fracturing market as temporary, with the expectation of a gradual recovery taking place over the first half of 2019.”
The number of fracking crews at work in the Permian Basin of West Texas and New Mexico is down 13 percent from a 2018 high in June, according to Primary Vision Inc. Fracking, which involves blasting water, sand and chemicals underground to release trapped hydrocarbons, is the most expensive part of drilling wells.
This is just the latest in a series of downward revisions by Schlumberger. In September, the company said a dearth of new pipeline capacity in the Permian was cooling off the red-hot region, leading to lower-than-expected third-quarter fracking results. Then a month later, the company said the fourth quarter would be even worse.

Update On Vaca Muerta -- December 4, 2018

Another reason why I love to blog. Because of the blog, I know a little bit about the Vaca Muerta; it's tracked here through a link at the sidebar at the right. The Bakken, at 1.3 million bopd, also puts the production goal in the graphic below in perspective:

North Dakota wells, including legacy wells going back decades, currently average just under 100 bbls/well/day. This includes a lot of old legacy wells which produce very, very little.

But let's use the 100 bbs/well/day as a starting point.

60,000 bopd / 100bbls = 600 wells.

$2.3 billion / 600 wells = $4 million / well.

If these are all new wells with production that average much better than 100 bbs / well, then significantly fewer wells and higher cost per well.

Coming at the data from a different direction, if each well costs about $10 million, then we have 230 wells, or 260 bopd per well, which seems about right considering these would be "new" wells producing at the high end of production prior to the typical tight oil decline rate setting in.

Regardless, 60,000 bopd is literally a drop in the bucket compared to global production / demand of 100 million bopd.

Six DUCs Reported As Completed -- December 4, 2018

Active rigs:

Active Rigs64533964191

Two new permits:
  • Operator: WPX
  • Field: Antelope (McKenzie)
    Comments; WPX has permits for a two-well Ruby pad in section 31-151-94;
Six producing wells (DUCs) reported as completed:
  • 34495, 2,429, WPX, Howling Wolf 28-33HY, Wolf Bay, t11/18; cum 1K after 17 days; note: come back and check #23778 when it comes back on line in a month or so; also check #24429 and #24379 when they come back on line in a few months;
  • 34053, 2,395, WPX, Howling Wolf 28-33HT, Wolf Bay, t11/18; cum 1K after 17 days;
  • 34815, 2,328, WPX, Howling Wolf 28-33HIL, Wolf Bay, t11/18; cum 2K after 17 days;
  • 34051, 3,477, WPX, Howling Wolf 28-33HD, Wolf Bay, t11/18; cum 1K after 17 days;
  • 34494, 2,115, WPX, Howling Wolf 28-33HF, Wolf Bay, t11/18; cum 1K after 18 days;
  • 34015, 1,498, WPX, Serrahn 11X-5EXH, Siverston, t7/18; cum 54: 19/19; note: neighboring well, #27512 showed huge jump in production after this frack; come back and check #21683 and #21682 when they come back on line;

The Market, Energy, And Political Page, Part 2, T+28 -- December 4, 2018

Apple Watches: it's not even Christmas yet, but it appears folks are buying a lot of stocking stuffers. Folks in the business of watching shipments are estimating that Apple shipped 4.2 million Apple Watches during the 3Q18. If so, shipments were supposedly up 54% year over year. I remember when Apple introduced the Apple Watch folks said not many would be sold. But note this fro the linked site:
Apple Watch shipments were up 54 percent year over year, with Apple having shipped an estimated 2.7 million devices in the third quarter of 2017. Apple's jump in shipments wasn't enough to make it the top wearable vendor, however, with that title going to Xiaomi. 
Xiaomi shipped an estimated 6.9 million wearable devices during the quarter, giving the company 21.5 percent market share, while Apple came in at 13.1 percent market share. Fitbit trailed Apple in the number 3 slot with an estimated 3.5 million wearable devices shipped.

Another Huge US Crude Oil Inventory Build -- Up Another 5 Million Bbls -- Despite A Forecast For A 2-Million-Bbl Draw -- December 4, 2018

I will be placing two recent posts in "draft" status -- taking them off the net for now, so that Bakken-specific posts are at "the top" while I'm off the net.

I will re-post those non-Bakken posts later.

US crude oil inventory reports, API: link here, posted, 3:30 p.m. CT. "Surprising build in inventories." Am I missing something here?
  • What's so surprising about this? 
    • it was reported earlier today that three OPEC countries significantly increased exports last month
    • Trump's "bait and switch" on the Iranian sanctions resulted in a huge export glut
    • Trump wants gasoline prices to go lower -- Saudi over the bbl with Khashoggi killing -- reported earlier today in Financial Times
    • gasoline demand is well off the demand last year at this time 
    • the Bakken -- as a proxy for the shale revolution -- is setting all-time production records despite 2,000 wells off-line 
    • the Permian is yet to hit its stride
  • that build? It was huge. A whopping 5.36 million build 
    • forecast: a 2.267 million draw 
    • that's a swing of over 7 million bbls -- and in the wrong direction for oil bulls
WTI: after the news -- down a paltry 36 cents though oilprice "oil prices sink" after release of API inventory data; but if EIA confirms a whopping build tomorrow, "Katy, bar the door."

Regular, unleaded gasoline down to $1.83 here in Texas; rarely; generally about $2.09; in our neighborhood, $2.29.

By The Way, Speaking Of Hyperbole

Is it just me or is all that talk about a huge oil find off Guyana that big a deal? I really don't know. Everyone seems to think it's a big deal. Motley Fool has a story today saying that the Exxon Guyana discovery keeps getting bigger and bigger. I don't know if today's Motley Fool story is a note about a previous discovery or if this is another discovery. Whatever.

By 2025, Exxon says its partnership with Hess and China's CNOOC should be able to produce 750,000 bbls oil per day. North Dakota is coming close to producing twice that much on a daily basis, and its production is significantly constrained. Unfettered, the Bakken could produce over 2 million bopd. And they say the Permian is a whole lot bigger than the Bakken. Which means the Guyana discovery is ... well, maybe not that big in the big scheme of things. Again, I don't know. But it certainly seems "Guyana as an elephant field" is becoming a meme. Or a trope. Or a cliche.

Exxon says the jointly held acreage position off Guyana could hold more than 5 billion bbls of recoverable oil. The Bakken is likely to greatly exceed that. We're just waiting with bated breath for the next USGS survey of the Bakken which seems to be moving with glacial speed.

But it is, what it is.

This Is When We Need A Blunt-Tweeting, Take-No-Prisoners Approach To Geopolitical Threats -- December 4, 2018

Red lines in the sea won't work. Link here. Aircraft carrier en route. Doesn't this happen every Christmas -- sailors deployed; miss another Christmas with their families?

The Camille Paglia Page

Regardless of one's thoughts/feelings about Ms Camille Paglia, this is some pretty good writing. If she spoke these words extemporaneously during an interview, she is absolutely incredible.

I hope we never lose the link in the ethernet.

Somehow I almost get the feeling Paglia likes Trump's style if not his politics.

Most noteworthy (and most important): she did not mention "Beto." Not mentioning Beto suggests to me that Beto remains a Texas / Californian phenom and is on no one's radar scope outside of Texas. From the linked article:
If the economy continues strong, Trump will be reelected. The Democrats (my party) have been in chaos since the 2016 election and have no coherent message except Trump hatred. Despite the vast pack of potential candidates, no one yet seems to have the edge.
I had high hopes for Kamala Harris, but she missed a huge opportunity to play a moderating, statesmanlike role and has already imprinted an image of herself as a ruthless inquisitor that will make it hard for her to pull voters across party lines.
Screechy Elizabeth Warren has never had a snowball’s chance in hell to appeal beyond upper-middle-class professionals of her glossy stripe. Kirsten Gillibrand is a wobbly mediocrity. Cory Booker has all the gravitas of a cork. Andrew Cuomo is a yapping puppy with a long, muddy bullyboy tail. Both Bernie Sanders (for whom I voted in the 2016 primaries) and Joe Biden (who would have won the election had Obama not cut him off at the knees) are way too old and creaky.
To win in the nation’s broad midsection, the Democratic nominee will need to project steadiness, substance, and warmth. I’ve been looking at Congresswoman Cheri Bustos of Illinois and Governor Steve Bullock of Montana.
As for Hillary, she’s pretty much damaged goods, but her perpetual, sniping, pity-me tour shows no signs of abating. She still has a rabidly loyal following, but it’s hard to imagine her winning the nomination again, with her iron grip on the Democratic National Committee now gone.
Still, it’s in her best interest to keep the speculation fires burning. Given how thoroughly she has already sabotaged the rising candidates by hogging the media spotlight, I suspect she wants Trump to win again. I don’t see our stumbling, hacking, shop-worn Evita yielding the spotlight willingly to any younger gal.
That's a very good point and at risk of sounding sexist that sounds exactly right: Hillary would rather have Trump be re-elected than have a woman other than herself (Hillary) become president. I'm not even sure Hillary even wants any other woman to be among the top three or four Democratic nominees.

I wonder if Bill's heart is really in the "Bill and Hillary" tour? Is it only his loyalty to the woman who stood by his man?

Stand By Your Man, Tammy Wynette
I've talked with several Beto supporters and none of them could tell me what his message was or what his policies are.

The Market, Energy, And Political Page, T+28 -- December 4, 2018


Later, 5:22 p.m. Central Time: I kind of had the same thoughts after Macron, France and the yellow vests:

Original Post 

We'll talk about this later. I'm a bit behind, so will come back to all of this later. Link here.

Macron will "re-consider." From Reuters.

The global carbon tax revolt, from The WSJ:
France’s violent Yellow Vest protests are now about many domestic concerns, but it’s no accident that the trigger was a fuel-tax hike. Nothing reveals the disconnect between ordinary voters and an aloof political class more than carbon taxation.
The fault line runs between anti-carbon policies and economic growth, and France is a test for the political future of emissions restrictions. France already is a relatively low-carbon economy, with per-capita emissions half Germany’s as of 2014.
French governments have nonetheless pursued an “ecological transition” to further squeeze carbon emissions from every corner of the French economy. The results are visible in the Paris streets.
The article has 684 comments so far. Some of these comments:
I'm not a climate change naysayer, but there's a lot of low-hanging fruit on the planet in terms of cutting carbon from the atmosphere.  That low-hanging fruit isn't France, especially at this time. [see data below]

We have been hearing this hair on fire doomsday hysteria for literally decades. Most all of it coming from those so easily duped into being led by government propaganda that more often than not is only an excuse to grab money from the producers and redistribute it while skimming much of it into their own pockets. Clean water, air and environment are good things and America has made great progress since my youth of smog hanging over Atlanta.

If you want to reduce dependence on carbon based fuels, don't tax carbon, don't regulate it, develop better alternatives so people willingly chose them. But I guess that defeats the purpose.

How Macron thinks a gas tax will counter "man-made global warming"? By making the population immobile? That is a genius solution in the 21st century.  And the French still think there would be no one better than Macron? Then you deserve what you got.

I’m sure all the money the government collects from these taxes will be used judiciously and effectively (sarcasm). This is a big wealth redistribution, money grab, and power play by the political elites. I’m so glad there is a growing community of folks who are not swallowing the ‘we must manage climate change with your money’ kool aid.  
CO2 emissions by country (data from 2015, most recent year in which data is available)
  • China:  9,000
  • US: 5,000 and leveling off, decreasing
  • India: 2,000 and growing by leaps and bounds
  • Russia: 1,500
  • Japan: 1,000
  • Gemany: 750
  • Saudi Arabia: 500
  • UK: 400
France: 300 or 3% of that of China; 1.5% of that emitted by the  top ten emitters
Folks, France is not the problem when it comes to global warming. One wonders what lobby is funneling money into Macron's coffers.

My hunch: more CO2 will be emitted by the elite traveling to Poland to attend the UN global warming conference now being held.

Personal note: why I never accepted the "manmade global warming story" from the beginning. Remember: we have been told repeatedly that if we do nothing, the earth will no longer be habitable for humans. At least as far back as ten years ago we were told we only had ten years to solve the problem. Data I'm reading suggests that, almost thirty years later, we have made no headway -- in fact, one could argue efforts have stalled/backtracked (e.g., France), so with that in mind, my reply to a reader, in a "not-ready-for-prime-time" e-mail why I never accepted the "manmade globale warming story":
In 1941 or thereabouts there was an existential issue for most of Europe and maybe even the entire world. Had Germany and Japan won the war, the world would have been divided between those two countries. It was so important to win that war, the US spent huge amounts of resources and money (including the Manhattan Project) to defeat the Germans/Japanese at any cost.

FDR and Churchill did not go on speaking tours and winning Nobel peace prizes for a PowerPoint presentation to raise money to fight Germany.

We are now being told that we are facing something much, much worse than what we faced in 1941. We are being told we have only ten years to save the world, and if the temperature jumps one or two degrees we are all doomed. Dead. The earth destroyed. Another Venus.

We've only had "ten years to save the earth" since 1994. By some accounts, even before 1994.

And yet, how do the smartest and most powerful people in the world go about saving us from something much worse than the Germans and the Japanese? Books, conferences, pledges of money to some committee in South Korea to disperse to South Pacific island nations; PowerPoint presentations.

This, more than anything else, tells me that the smartest and most powerful people in the world really don't believe we are in any trouble. Books, speaking tours, yada, yada, yada hardly seems sufficient if things are as bad as they say they are.

If manmade CO2 really was the problem, the best (and only solution) would be nuclear power plants. And no one is building nuclear power plants any more (with rare exception). There would be huge global efforts to plant more trees to absorb CO2. There would be "Manhattan Projects" to build "factories" that would suck CO2 out of the atmosphere. Coal would have been banned worldwide decades ago. Martial law around the world would fast-track solar/wind farms, transmission lines, etc., until nuclear power plants could be built.

No, the fact that the UN is simply hosting conferences around the world and not doing much more tells me everything I need to know about "manmade global warming." 
With France giving in to what are minor riots in the big scheme of things speaks volumes. Even France agrees that this inconvenience is not worth the effort to save the world.
New England is managing just fine. Link here. The folks kept the 0600 surge in electricity demand below $125/MWh. But it's just like clockwork. About 0600, the electricity demand begins to surge in New England. The natural gas plants kick in; wind and solar are unchanged -- not dispatchable. Natural gas hits its peak and a call goes in to have Canada "send" more hydro-electricity to New England. But that hydro-electricity spot price is incredibly expensive. So, to keep the price from surging further, the call goes in to fire up the coal-generated electricity plants. Day in, day out, just like clockwork.   

Oasis To Report Two Huge Wells Today -- Tuesday, December 4, 2018

Why Trump has Saudi Arabia "over a barrel": from The Financial Times. A  long, long article, much more at the link, but nothing regular readers don't already know.
The shale boom has not only transformed once rundown towns deep in the west Texas desert; it is increasingly reshaping the landscape of international politics. The emergence of the US as a born-again energy superpower — one of the key factors in the recent fall in oil prices — has led politicians in Washington to weigh how it might reshape some of its oldest alliances, raising uncomfortable questions for the oil producers of the Middle East .

For Saudi Arabia, the US’s chief ally in the Arab world, the past two months have delivered a stark lesson in how its relationship with Washington has been reshaped by the Texas oil revolution.

On Thursday and Friday ministers from OPEC, the oil cartel that controls roughly a third of global production, and its allies including Russia and Kazakhstan, will meet in Vienna to decide how to respond to the 30 per cent plunge in oil prices to nearly $60 a barrel over the past two months. With US output surging, and Russia and Saudi Arabia also producing at close to record levels, traders are convinced the market will be awash with oil next year.

Previously such a fall would have prompted OPEC and its allies to agree to cut production. But for Saudi Arabia, which remains the world’s top oil exporter and the cartel’s de facto leader, that decision has been complicated by the murder of Jamal Khashoggi.

In the autumn of 2014, the Saudi government tried to reassert its authority in the oil market against the nascent threat from shale. As a global glut of crude swelled up, Riyadh declined to cut production, in the belief it could drown the Texas producers in a sea of cheap oil.

But shale proved far more resilient than Saudi Arabia — the only country with significant spare production capacity — had hoped. Two years on OPEC members returned to restricting output, with the help of Russia and other non-member producers, to lay the foundations for a recovery in prices.

As the oil price has fallen this autumn, the memories of 2014 have been resurfacing. But Jason Bordoff of Columbia University’s Center on Global Energy Policy says there is at least one crucial difference. “We now know how resilient shale can be. We saw how companies could cut costs and become more efficient to keep producing. That complicates OPEC’s decision-making,” he says. “This time around, OPEC knows it can’t kill shale, but maybe just wound it.”
Fracking challenges with $50-oil, from The WSJ:

Back to the Bakken

Wells coming off confidential list today -- Tuesday, December 4,2018 -- both Three Forks wells, not the small amount of proppant and relatively modest number of stages:
  • 33241, 643, Oasis, Muri 5198 12-4 6T, Banks, Three Forks, 50 stages; 4 million lbs, t6/18; cum 121K 10/18;
PoolDateDaysBBLS OilRunsBBLS WaterMCF ProdMCF SoldVent/Flare

31265, 851, Oasis, Kjorstad 5300 34-22 10T, Willow Creek, Three Forks, 40 stages; 6.1 million lbs, t6/18; cum 98K 10/18:
PoolDateDaysBBLS OilRunsBBLS WaterMCF ProdMCF SoldVent/Flare

Active rigs:

Active Rigs64533964191

RBN Energy: tight supply-demand balance brings back natural gas price volatility.
Volatility is back big time in the U.S. natural gas market. The CME/NYMEX Henry Hub prompt natural gas futures contract in mid-November raced up more than $1.00 (28%) in the span of two days to a settlement of about $4.84/MMBtu on November 14, the highest price since February 2014, only to whipsaw back down 80 cents the next day. And, since then it hasn’t been unusual to see daily swings of 20-45 cents in either direction. As of yesterday, the now-prompt January 2019 contract was at about $4.34/MMBtu, down 27 cents on the day. The gas market hasn’t seen quite this level of volatility in a decade or more. Why now and what are the fundamentals behind it? With the coldest, highest-demand months still ahead, today’s blog provides an update of the gas supply-demand balance driving the recent price volatility.

The Bible Page

I continue to enjoy the history and literature of the Bible. I had never read Maccabees; incredibly interesting. There's something really, really cool reading about the origin of a moveable feast for the first time when a) I was ready to learn about it; and, b) it was actually being celebrated in "real time."

We start with Alexander the Great. When he died, his kingdom was divided among four of his generals. From another source:
Alexander the Great: kingdom divided among four, as of 301 BC (source: http://www.fsmitha.com/h1/ch12dis.htm):
  • Macedonia and Greece (western Greece): Cassander
  • Thrace and Asia Minor (eastern Greece): Lysimachus
  • Egypt, Cyprus, nearby Asia Minor: Ptolemy, a Macedonian
  • Eastern Asia Minor to Indus River: Seleucus
Seleucus "controlled" an incredibly large amount of territory. My hunch is he was focused on the area around Baghdad. Judea, the southern territory as it were, was part of the Seleucid Empire, which extended from the Mediterranean Sea to the subcontinent of India.

The Second Temple of Solomon on Mount Zion had been re-established centuries earlier but now the Seleucids pretty much desecrated the temple. The majority of the Jews, apparently, went along to get along. The Seleucid king at the time was the particularly notorious Antiochus Epiphanes. Apparently a big sticking point was the gymnasium that King Antiochus allowed the gentiles to build in Jerusalem.

The author of 1 Maccabees says that Antiochus conquered Egypt. That would have been around 170 BC. [Antiochus subsequently lost Egypt, around 168 BC; that is not mentioned in the early chapters of Maccabees -- as far as I've read so far.]

According to the author of Maccabees, two years later Antiochus took Jerusalem; destroying much of it, and re-built much of it to include a surrounding wall, making it his fortress in Judea. Those Jews that were not killed, either accepted Antiochus as their new king, or fled.

The Seleucids practiced their own pagan religion and forced all those in Jerusalem to do the same. It is interesting that monthly sacrifices on the alter occurred on the 25th of each month.

One of the Jewish rebels who escaped was Mattathias, a priest, who fled and settled about midway between present-day Tel Aviv and Jerusalem, in a small town called Modein.

Mattathias and his five sons, led a small band of Jewish rebels. Mattathias led the rebellion but appointed Simeon to be the spiritual leader; he appointed his son Judas to be the general and warfighter. The five sons:
  • John Gaddi
  • Simon (Simeon?) Thassi,
  • Judas Maccabaeus
  • Eleazar Avaran
  • Jonathan Apphus
From wiki, the etymology of "Maccabees":
The name Maccabee is often used as a synonym for the entire Hasmonean dynasty, but the Maccabees proper were Judah Maccabee and his four brothers.
The name Maccabee was a personal epithet of Judah, and the later generations were not his direct descendants.
One explanation of the name's origins is that it derives from the Aramaic maqqəḇa, "the hammer", in recognition of Judah's ferocity in battle.
The traditional Jewish explanation is that Maccabee (Hebrew: מכבים‎ Machabi, מכבים) is an acronym for the Torah verse that was the battle-cry of the Maccabees, "Mi chamocha ba'elim YHWH", "Who is like You among the heavenly powers, Lord!" as well as an acronym for "Matityahu haKohen ben Yochanan.
The correlating Torah verse Exodus 15:11, The song of Moses and the Children of Israel by the Sea, makes a reference to Elim, with a mundane notion of natural forces, heavenly might, war and governmental powers. The scholar and poet Aaron Kaminka argues that the name is a corruption of Machbanai, a leading commando in the army of King David.
The patriarch, Mattathias, died a natural death before his sons began actively fighting the Seleucids. Before he died, he instructed his sons to "pay back the gentiles to the full and hold fast to the ordinance of the Law." On his death, Judas Maccabaeus took his place.

In the course of several battles described in the first two chapter of 1 Maccabees, Judas Maccabaeus and his brothers drove the Seleucids out of Jerusalem.

During the course of these battles, separately the Syrians and the Egyptians also tried to take Jerusalem but failed. Judah Maccabaeus and his brothers were able to repel all invaders (but the Egyptian battles sound particularly tough).

Be that as it may, the Maccabees restored the second temple of Solomon on Mount Zion. From 1 Maccabees:
On the twenty-fifth of the ninth month, Chislev, in the year 148 (around 164 BCE) they rose at dawn and offered a lawful sacrifice on the new altar of burnt offering which they had made....the alter was dedicated ... for eight days they celebrated the dedication of the altar...
The book at this point does not mention the story of the Menorah's eight candles and the never-depleting oil. From wiki:
The Jewish festival of Hanukkah celebrates the re-dedication of the Temple following Judah Maccabee's victory over the Seleucids. According to Rabbinic tradition, the victorious Maccabees could only find a small jug of oil that had remained uncontaminated by virtue of a seal, and although it only contained enough oil to sustain the Menorah for one day, it miraculously lasted for eight days, by which time further oil could be procured.
I had never read the "original" story of Hanukkah. It was absolutely amazing how easy it was to read. Only two or three chapters of 1 Maccabees.

The Jewish calendar is a lunar calendar and thus "moves" with the moon. Chislev corresponds to our current November-December period.