Thursday, December 6, 2018

Nothing About The Bakken -- December 6, 2018

Holy mackerel ... holy mackerel ... holy mackerel ... I'm lying here watching extended news coverage of Union Pacific 4141 carrying George H. W. Bush to his final resting place. It's incredible. I've never seen anything like it. Certainly JFK's was more moving -- how could it be otherwise -- but two entirely different circumstances. The pageantry -- if that's the right word for a solemn occasion ... was incredible. Twenty-four US fighter flyover. But the Union Pacific 4141 was even better. Hopefully there will be a YouTube video that captures this.

Here it is: 3.5 hours of Union Pacific 4141

 We live in Grapevine, the Christmas capital of Texas. Preceding the coverage of Union Pacific 4141 was a long piece on the "Parade Of Lights," the annual Christmas parade in Grapevine. Wow, that, too, was superb.

 **********************************

Jamestown Ferry, Charley Crockett
 
It's a cover; Tanya Tucker did it first. Studio version, hard to say which is "better." But his official video is so much better than her live version. He sings it with more feeling, more soul. On YouTube, Tanya's most watched version has about 260,000 hits and has been up since 2014. Charley's official video was posted January, 2018 -- about one year ago -- and has over 300,000 hits. 

Wow,Talk About A Retirement Party! -- December 6, 2018

Updates

Later, 10:10 p.m. CT: afraid that the link might be lost -- 
USGS Report Expands Permian’s Wolfcamp, Bone Spring Potential Bounty. 
The lede:
Anyone who follows the flow of U.S. oil and gas knows the Permian Basin’s Wolfcamp shale and Delaware Basin’s Bone Spring Formation are bountiful, but a new report from the U.S. Geological Survey (USGS) shows the enormity of their potential resources: an estimated 46.3 billion barrels of oil plus 281 trillion cubic feet of gas and 20 billion barrels of NGL.

That’s more than double the previous resource assessment for oil in the Wolfcamp.
I can never get my hands around "trillion cubic of natural gas." I need to compare 281 trillion cubic feet to other plays. See this link. Prior to the USGS report, natural gas reserves in the US were estimated to be 350 trillion cubic feet. Australia, 152 trillion cubic feet. Marcellus, 65 trillion cubic feet (probably will be revised upwards). 281 trillion cubic feet of natural gas -- and remember, reserves are based partly on price of production; if the price of natural gas were to go up, reserves would go up. Incredible, absolutely incredible.

I doubt this will be reported on network nightly news. But we'll certainly see a story about a cat caught in a tree and rescued by fire department on the way to a seven-alarm fire. Or another story on severe weather.

I'm inappropriately exuberant about the Bakken and I'm clearly overly optimistic with my own estimates of 50 billions bbls of recoverable oil in the Bakken, but here it is, the very, very conservative USGS coming up with almost 50 billion bbls of recoverable oil in just a couple of pay zones in the Permian.

From wiki: "To convert to one boe, the USGS gives a figure of 6,000 cubic feet of typical natural gas."

So, 281 trillion cubic / 6,000 cubic feet = 50,000,000,000 boe. Assuming I did the math correctly. Big assumption. 

Original Post
 
The USGS, which is part of the U.S. Department of Interior, deemed its review of resources in the Permian Basin province as the “largest continuous oil and gas resource ever assessed.” The assessment released Dec. 6 was more like Christmas for U.S. Interior Secretary Ryan Zinke, he said in a statement.

Wow, I need to get a life. I want to call it a night. I'm in a great mood, but exhausted. Loud 60's music recharging my battery (or is it batteries?).

I was ready to call it a day/night when a regular reader -- who seems to be as inappropriately exuberant about the US energy revolution as I am (😀) -- sent me a note.

I will post what he sent me and then get back to it tomorrow with links, etc. Also, tomorrow, a story about Trump and sage grouse.

But after this, I swear on the stack of bibles that I'm reading, I will not post any more notes until tomorrow. I will just read, watch the end of the NFL game on mute, and play 60's music as loud as I can without annoying the neighbors.

From the reader:
Greetings.
USGS report today puts Delaware portion of Wolfcamp along with Delaware Bone Spring at 46 billion barrels. 20 billion barrel NGLs.

This, combined with Midland Wolfcamp at 20 billion and Spraberry Midland at 4 billion gives 70 billion barrels technically recoverable resource from these formations alone!

There are several other formations/horizons within the Permian Basin. 
Paging Art Berman, indeed! 
Best Regards. 
Paging Art Berman! 😛

Sloop John B, Brian Wilson & Al Jardine

The Pace Of Change Is Staggering -- December 6, 2018

I've been so busy for the past two hours I have not had a chance to look at the actual data. I've only seen the headlines and I've only read a bit of the various articles regarding this historic milestone.

I assume it was not reported on any of the three major television networks this evening. I assume that 99% of Americans are unaware.

But wow, look at the raw data. At the same time, be aware of the caveats.

Having said that, in July, 2015, about 3.5 years ago, the US was importing around 5 million bbls of oil and petroleum products every day. Five million bbls.

As recently as August, 2018, just a few months ago, the US was still importing around 5 million bbls of same every day.

Literally overnight, it seems, imports dropped to 2 million bbls per day and then actually went negative in the last reporting period.

By the way, much of America's crude oil imports is necessary. We've discussed that before and won't say any more about that now.

I don't think it's a big deal that the US became a net exporter last month, or the month before, or six months, or a year from now. It's the trend that is so incredible. Volumes could be written about this. It will be interesting to see how this plays out in business sections of regional and national publications, especially in "opinion" and "essay" pieces.

My hunch is that if Occasional-Cortex has any synapsing neurons, she should request a tutorial on what this means for the US economy, perhaps from Art Berman or Larry Kudlow. I think she would be able to argue that with numbers like these, more importantly, the trend, the US could pay for a) Medicare for all; b) free college for all; c) and a basic universal income. Perhaps there might even be enough left over to pay Honduran migrants to stay in Mexico. 

Link here.

The graphic:


********************************
Crazy

Wow, I'm in a great mood.

Open road "racing" this evening -- bringing the oldest granddaughter home from water polo practice. Incredible roads here in north Texas -- north side of DFW. When the traffic is light and wide open -- wow.

KXT played this song during the right home, after dropping Arianna off, played it really, really loud ... so many thoughts rushing through my mind .. Hunter S Thompson; former girlfriends; family; life; money --

Crazy, Gnarls Barkley
 
And then this in the YouTube lineup:

Suspicion, Terry Stafford
 
1964: Central Junior High (middle school); pinball; football; bicycling; best friends, Catcher in the Rye

"The California Effect" -- December 6, 2018

Three areas in which California is having a huge effect on US data points and US economy:
  • national politics
  • fossil fuel energy data
  • automobile / CAFE standards
CAFE standards: California's role in establishing automobile / CAFE standards was a huge topic a few years ago. It will become a huge issue again when a Democrat wins the US presidency which could be as soon as 2020. California's auto market is so big that whatever standards the state sets, it is difficult for automobile manufacturers to ignore. The easiest road to take: accept California standards as standards for the entire US.

Politics: I've talked about this before, but simply put, regardless of one's party designation walking into a California voting booth, one will be a Democrat walking out. California now requires that the two top vote-getters in the primary go head-to-head in the general election. So, from now on, for US Senator, it will be one Democrat running against another Democrat. For governor and all other statewide offices, the same. Any Republican voter walking into the booth has only two options: vote or not vote for state offices. If the voter votes, that vote will be recorded as a vote for a Democrat. That's obviously not the case when voting for US president, but the outcome will be the same. The popular vote in California from here on out will be "Democratic." Demographically, it is impossible for that to change in the next forty years.

Fossil fuel: like Hawaii, when it comes to energy, California is an island. Most of its energy comes from out-of-state sources, and much of that from foreign sources. I'm sure someone will fact check me on that. For sure, most of California's crude oil comes from foreign sources.

*****************************
Politics
 
With that in mind, when it comes to national data about the popular vote in California for statewide office, one needs to "back out" California numbers. As long as California numbers are included in national voting data, the popular vote will go to the Democrat candidate. In California, at the state level, a Democrat will always win a state-wide contest. For US president, the national results -- with California numbers included -- will, from now on, have a popular vote that goes Democratic and an electoral college vote that may or may not go Democratic, if the national election is a close race.

We've talked about that before and that's enough on politics for now.

**********************************
CAFE Standards

We've talked about this before and not much need to discuss it again. At the moment, it's not a topic of national interest except for, perhaps, the car manufacturers.

************************************
Fossil Fuel

Today, the EIA announced that for the first time in 75 years, the US was a net exporter of crude oil and petroleum products.

In fact, if one were to "back out" California imports of crude oil, the US would have become a net exporter of crude oil and petroleum before now.

This graphic comes from the state of California:


If I am reading the graph correctly, California refineries receive about 650 million bbls of crude oil each year. That number has remained fairly constant since 1990, and was significantly higher for a short period in the 1980s.

California and Alaska sources provided about 290 million bbls of crude oil.

650 - 290 = 360 million bbls of foreign crude oil. The "gap" could widen (greater crude oil imports for California): the Alaskan pipeline has temporarily been shut down (back open?) but Alaskan crude oil production has been dropping significantly over the past thirty years. Under favorable administrations that might be reversed, but the tea leaves suggest that future US presidents will be less "open" to increasing Alaskan crude oil production. Be that as it may, the fact is, if one backs out California imports, the US would have been a net exporter of crude oil and petroleum products long before last month.

California, onshore and offshore, has huge crude oil reserves and the graphic could be significantly different under different scenarios. I think one could argue that California could become a net exporter of crude oil and petroleum products if allowed to do so.

US Becomes Net Oil Exporter -- Crude Oil And Petroleum Products -- For First Time Since George H. W. Bush Bailed Out Of His Plane 74 Years Ago -- December 6, 2018

Links to various articles reporting this story.
  • The US just became a net oil exporter for the first time in 75 years: Bloomberg
  • In major shift, US now exports more oil than it ships in: Reuters
  • US becomes net oil exporter for first time in 75 years: oilprice
  • shale is not a revolution, it's a retirement party: Art Berman
Now, this screenshot from Google search, note the date, February 7, 2018 -- less than a year ago:


The link:
  • The United States is on pace to be a net energy exporter by 2022, the Energy Department forecasts. 
  • Surging natural gas exports, higher crude shipments and robust fuel flows will help the United States achieve the status for the first time since 1953. 
  • Tepid demand growth for energy in the United States will also help the nation become a net exporter.
  • Comment: one can argue that the US would already be a net exporter of energy if it weren't for faux environmentalists killing and delaying crude oil and natural gas pipelines
The California effect: link here

Reader's response: caveats here

Reader's Comments On Announcement That US Is Net Exporter Of Oil For First Time In 75 Years -- December 6, 2018

A reader provided an assessment of the my exuberant enthusiasm regarding the announcement that the US has become a net exporter of oil for the first time 75 years. With minimal editing:
The weekly petroleum report showed the US as a net exporter of crude and products for the first time since the 1940s.

See this link: https://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=WTTNTUS2&f=W.

At the bottom, you can see that "net imports" turned negative, at 0.2 million bpd. Yes. "negative imports" means EXPORTS.

Several articles on this as well (Bloomberg, Reuters, Financial Times, etc.)

Now the caveats:

Numbers bounce around a lot. We have been running about 2.5 million bopd net imports. So, don't expect to average net exports in the near future.

While production is rising, the main thing that drove the number to turn into net exports was that we had low net imports. This can vary a lot just based on individual ship deliveries. We typically have 2-3 crude supertankers come in per week and it looks like we had none the last week reported. This is just chance and will change soon.

The weeklies are much less accurate then the monthlies (which lag couple months).

The number is not just crude oil, but crude AND PRODUCTS. This includes both diesel and the like as well as most NGLs (propane, mostly).

All that said...crude imports have been dropping for a while now. We were 12 million bpd net imports (including products) in 2005. We've been moving closer and closer to net exports. Not yet there in terms of average. But it was inevitibale that we would get an individual data point showing net export. And there you are.

Paging Art Berman..

US: Net Exporter For First Time In 75 Years -- December 6, 2018

Seventy-five years ago was 1943. A year later George H. W. Bush was bailing out of a US Navy jet over Chi Chi Jima in the Pacific.

Today, this screenshot from the Drudge Report. We'll get back to this later. I am off to picking up some granddaughters from school.


Bloomberg has the oil story. I'll read it later.

Kaiser-Francis Sanish Wells In 4-153-92

The graphic:


The wells:
  • 17717, 292, Kraken/Kaiser-Francis Oil, 3 Jacks LLP 44-4H, Sanish, t2/08; cum 221K 7/19;

  • 24857, 318, Kraken/Kaiser-Francis Oil, Van Hook 44-4H, Sanish, t0/13; cum 66K 7/19;

  • 24559, 932, Kraken/Kaiser-Francis Oil, Purcell3-4-33H, Sanish, t10/13; cum 161K 7/19;
  • 24560, 870, Kraken/Kaiser-Francis Oil, 3 Jacks 3-4-33H, Sanish, t10/13; cum 141K 7/19;

  • 31284, PNC, Kraken/Kaiser-Francis Oil, Liberty 4-5-32H, Sanish,
  • 31285, PNC, Kraken/Kaiser-Francis Oil, Sikes 4-5-32H, Sanish,
  • 31286, PNC, Kraken/Kaiser-Francis Oil, Knife River 4-5-32H, Sanish,
  • 31287, PNC, Kraken/Kaiser-Francis Oil, Rat Lake 4-5-32H, Sanish,
  • 31266, PNC, Kraken/Kaiser-Francis Oil, Parshall 4-5-32H, Sanish,
  • 31267, PNC, Kraken/Kaiser-Francis Oil, Pratt 4-5-32H, Sanish,
  • 31268, PNC, Kraken/Kaiser-Francis Oil, Banner 4-5-32H, Sanish,

  • 24052, 738, Kraken/Kaiser-Francis Oil, Wayne 3-4-33H, Sanish, t4/13; cum 238K 7/19;

A Duperow Well Added To The List Of Monster Wells -- December 6, 2018

This Duperow well has been added to the "monster well" list:
  • 11137, 191, Rim Operating, Pederson 5-24, Hardscrabble, t6/85; cum 816K 10/18; still active; but just barely
  • 11137, 40, Rim Operating, Pederson 5-24, Hardscrabble, t405; cum 28K 10/18; still active; but just barely ,

The Market, Energy, And Political Page, Part 4, T+30 -- December 6, 2018

Gasoline demand: a concerning plateau --


The Market, Energy, And Political Page, Part 3, T+30 -- December 6, 2018

Politics: I'm having trouble reconciling all the accolades for George H. W. Bush and the yearning for the polite politics of another age. Oh, give me a break. Quick? Who nominated Clarence Thomas to be a Supreme Court justice? To replace whom?

Politically incorrect, link here:


The BR Raider Wells In Twin Valley

The graphic:


The wells:
  • 34249, 32 (no typo), BR, Raider 1B MBH, Twin Valley, t1/19; cum 99K 7/19;
  • 34248, 33 (no typo), BR, Raider 1C UTFH, Twin Valley, t1/19; cum 80K 7/19;
  • 20710, 606, BR, Barkley 1-5H, Twin Valley, t10/11; cum 292K 7/19;
  • 34253, 207, BR, Raider 4A MBH, Twin Valley, t10/11; cum 149K 7/19;
  • 34252, 227, BR, Raider 3C UTFH, Twin Valley, t2/19; cum 140K 7/19;
  • 34251, 107, BR, Raider 3B MBH, Twin Valley, t1/19; cum 149K 7/19;
  • 34250, 55 (no typo), BR, Raider 3A UTFH, Twin Valley, t1/19; cum 123K 7/19;

  • 27522, 4.207, Whiting, Flatland Federal 11-4TFHU, Twin Valley, t10/14; cum 541K 7/19; note production jump 10/16: second production jump, 3/19;
BAKKEN1-201730570554081310260642595450
BAKKEN12-20162961538449137227984264591468
BAKKEN11-201630819057731104367283662939
BAKKEN10-2016261159511638173233719326511016
BAKKEN9-20160000000
BAKKEN8-20160000000
BAKKEN7-20161123652523366119921189971
BAKKEN6-201630661665061118331963308650
BAKKEN5-20163171747322123537264347242478
BAKKEN4-2016307460718114304074440454230
BAKKEN3-2016318284837117344673246190480

The Oasis A. Johnson / Nikolai Federal Wells In Banks Oil Field

The graphic:




Sixteen wells sited in one section. Many more to follow. Haven't even touched B2 or B3. 

The wells:
  • 20266, 777, Oasis, Wold Federal 15-33H, Banks, t3/12; cum 131K 10/18;

  • 35612, PNC, Oasis, A. Johnson 5397 43-33 12T, Banks,
  • 35613, drl, Oasis, A. Johnson 5397 43-33 11B, Banks,
  • 35614, drl, Oasis, A. Johnson 5397 43-33 10T, Banks,
  • 35615, loc, Oasis, A. Johnson 5397 43-33 9T, Banks,

  • 35617, drl, Oasis, A. Johnson 5397 43-33 9B, Banks,
  • 35616, loc, Oasis, A. Johnson 5397 43-33 8B, Banks,
  • 35618, drl, Oasis, A. Johnson 5397 43-33 8T, Banks,

  • 35486, loc, Oasis, A. Johnson 5397 42-33 2B, Banks,
  • 35485, loc, Nikolai Federal 5397 42-33 3T/Oasis, A. Johnson 5397 42-33 3T, Banks,
  • 35483, loc, Nikolai Federal 5397 42-33 5T, Banks,
  • 35482, loc, Nikolai Federal 5397 42-33 6B, Banks,
  • 35481, loc, Nikolai Federal 5397 42-33 7T, Banks,
  • 35730, drl, A. Johnson 5397 42-33 6T/Nikolai Federal 5397 42-33 6T, Banks,
  • 35729, drl, A Johnson 5397 42-33 7B, Banks,
*************************************
Huge Room For Improvement

Production profile for #20266 after initial frack:
BAKKEN12-2012312972283218601289412437401
BAKKEN11-2012293655412725451506314730234
BAKKEN10-201261518127070738552981874
BAKKEN9-2012303090289616321130910879199
BAKKEN8-2012304050432028561484214606186
BAKKEN7-2012283947353153311181711012805
BAKKEN6-2012264067404324461380194964305
BAKKEN5-20123168126894387723928218322096
BAKKEN4-20123012765131548418397432804811695
BAKKEN3-201216881280208741241611322910932

Recent production, #20266:
PoolDateDaysBBLS OilRunsBBLS WaterMCF ProdMCF SoldVent/Flare
BAKKEN10-201831846989700350731907
BAKKEN9-20183010621146735405537550
BAKKEN8-2018196934745202383215142
BAKKEN7-2018318997204403416301195
BAKKEN6-20182987311677153463309380
BAKKEN5-201827128487769043333857206
BAKKEN4-201821219213074495
BAKKEN3-201831884992620398636733

Off The Blog For Awhile

Spell checking the blog and looking for dead / broken links:


Yogurt, peas, and quinoa. Can't get much healthier than that.

Huge US Crude Oil Draw But WTI Tanks; News Out Of OPEC Not Good -- December 6, 2018

Weekly US petroleum report, link here:
  • wow, wow, wow -- API and EIA certainly don't agree on this data point -- US crude oil inventories
  • EIA; US crude oil inventories declined by a whopping 7.3 million bbls
  • US crude oil inventory now at 443.2 million bbls; at 6%, down from 7%, above the five-year average
  • refineries working at 95.5% of their capacity; sort of a middling number
  • gasoline production responding to gasoline demand: below 10 million bpd
  • distillate production responding to global warming: well over 5 million bpd (at 5.6 million bpd)
  • remember all that talk about increasing imports -- not so fast -- most recent data, US crude oil imports were down by almost one million bbls per day (actual, 943,000 bpd)
  • total distillate fuel supplied was 4.1 million bbls, up 5% from year ago
  • jet fuel up again; up almost 4% from a year ago
Week
Date
Change w-o-w
In Storage
Week 0
Nov 21, 2018
4.9
446.9
Week 1
November 28, 2018
3.6
450.5
Week 2
December 6, 2018
-7.3
443.2

WTI: "tanks" despite large US draw
  • WTI sinks almost 4%; down $1.86 / bbl; trading right at $51
  • obviously, as posted just moments ago, the news coming out of OPEC is not good for oil bulls
  • will OPEC get it right this time around; can US shale operators handle a second round?
  • Canada in deep trouble; a lot of social programs to pay for
********************************
A Seafood Luncheon

Conch and octopus. Neither has any taste -- it's all about the condiments, salad, tempura, etc. Both are over-rated. Either that or I haven't found the best recipe yet.



The Market, Energy, And Political Page, Part 2, T+30 -- December 6, 2018

NIMBY, too close to Bismarck: this is pretty funny. Regulators deny wind farm permit that would have crimped Bismarck's urban expansion in 2100. This speaks volumes. NIMBY. Over near Tioga is okay, but heaven forbid, not near the Bismarck airport. We may need that land some day. And besides, the "visual." And why isn't Chicago building wind farms in their own state. Over at The Bismarck Tribune:
Chicago-based Pure New Energy USA is proposing to develop the 250-megawatt Burleigh-Emmons Wind Farm, which would be located about 15 miles southeast of Bismarck and 12 to 13 miles from the city’s airport.
We are in trouble: CO2 emissions rose to a record high in 2018. Washington Post. Of course, as one reader pointed out, a lot of CO2 was generated by:
  • folks burning tires in Paris;
  • diesel locomotives / CBR, with pipeline activity shut down; and,
  • of course, all those jets flying Hollywood and UN elites to global warming conferences in far-flung places. Poland is a long way from NYC where the UN is headquartered
But certainly not by US drivers: gasoline demand down from previous year.

Poca-haunts-us: amazing how she gets such good treatment. The New York Times says Trump "bullied" her -- when, in fact, all he did was call her out for her craziness. Someone said the other day on talk radio -- I think it was Rush Limbaugh -- one political party can dish it out, but can't take it. I just can't imagine why The New York Times ran such a long story on Pocahontas ... check that. I understand very, very well why The NYT ran the story. This is the "re-set" button just before she announces she's running. Wow, I'm glad Hillary Clinton coined the political "re-set" button. It's going to be a useful metaphor. Her own (Hillary's) re-set button is probably so faded most folks can't see it any more.

Negative heat: from global warming to climate change to negative heat. Huge thanks to Don for the ideas. Link here.


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Real Silverware

Our favorite place to have lunch in Ft Worth, TX, uses real silverware (hidden in the paper napkins in the photo below).


Jobs Data -- December 6, 2018

ADP employment rate, for November, 2018, link here:
  • prior: 227,000
  • consensus: 175,000
  • actual: 179,000
Jobless claims for past week, link here:
  • prior: 234,000
  • consensus: 225,000
  • actual: 231,000

The Market, Energy, And Political Page, T+30 -- December 6, 2018

The news coming out of OPEC does not sound good for those hoping for a cut in production. US is no doubt putting a lot of pressure on Saudi Arabia. Russia, too, a huge problem. 

It's back ... the Groningen. I can't count the number of posts I had on this Dutch natural gas field over the years ... until it went away. But now this: the story is back even if Groningen is not. From Rigzone:
The EU is facing the perfect storm of dwindling local supply, rising demand and increased dependence on Russian state-owned Gazprom for its supply of natural gas, as analysts and observers mull what, if any governmental action, must be taken.
At issue is mainly how output from the Groningen field in the Netherlands will continue to decline, thus making the EU more dependent on both pipeline and liquid natural gas (LNG) from outside the EU borders.
According to European Commission data, the EU imported 69 percent of its natural gas in by the first semester of 2018. Over 37 percent of the gas the EU member countries imported by the first semester 2018 came from Russia, while 33 percent and 11 percent came from Norway and Algeria, respectively.
Excluding Turkey, the EU imported record high pipeline volumes from Norway and Russia, which increased to 116 billion cubic meters and 169, respectively, in 2017, according to data from Rystad Energy. “We expect Europe to increase its imports over the next years as the Groningen field will continue to decline driven by the announced scale backs,” Sindre Knutsson, senior analyst, gas markets, Rystad Energy. “Post 2020, both Norwegian and UK production is set to decline, strengthening this effect.”
Russia aside, the risk of over-dependence on a single supplier is more important than the possible downsides of boosting gas imports overall, said Thierry Bros, senior research fellow, Oxford Institute for Energy Studies, said.
Declining gas production in the region is coupled with rising demand, which obviously means the EU will need more gas from different sources — but that not necessarily mean the EU member states will be “overly dependent” per se, Bros said.
And then a long bit on the Russian factor. Well worth the read. 

Revisiting "bait and switch": the writer places the blame in the wrong place. Also from Rigzone:
The Organization of Petroleum Exporting Countries (OPEC) created a mess.
That’s according to FGE founder and chairman Fereidun Fesharaki, who made the statement in a television interview with Bloomberg on Wednesday.
“Donald Trump said that he is going to take it [Iran oil exports] from three million barrels per day to zero and OPEC countries they prepared for it, producing too much oil in September and October, and now we have a huge amount of inventories,” Fesharaki said in the interview.
“We need to cut 1.4 million barrels per day of oil for three months to be able to bring it in balance. So it is not something which can be fixed quickly, but OPEC created a mess, partly because of … [its] own actions, partly because being misled by Donald Trump, but now OPEC has to clean up the action with a little bit of help from the Russians,” he added.
Fesharaki highlighted three possible OPEC meeting scenarios in the Bloomberg interview.
“You can have a one million barrels per day cut which the markets will be disappointed [in] but would not allow a significant drop in the price, maybe a couple of dollars. You can have a no deal, which could then result in substantial drop in the price, or you can have 1.3, 1.4 million barrels per day deal and the markets will move up slightly,” Fesharaki stated in the interview.
One can blame OPEC if one wants, but it was the "bait and switch" on the waivers that were directly responsible. Saudi Arabia was either a) taking advantage of the situation; or, b) was being responsible by increasing production in anticipation of a global shortage of oil. But it was the waivers that upset the apple cart, or perhaps better said, tipped over the oil bbl.

Three Wells Come Off Confidential List Today, Including A Lodgepole -- December 6, 2018

Aspirin: useless as a preventative medication for "older" people, actually causes harm. Over at twitter. What I don't understand: this was published in New England Journal of Medicine some months ago --  I missed it, and now it's a big topic over at twitter. Actually, still a lot of room for argument. A search: somewhat buried over at google. A screenshot:
 ******************************************
Back to the Bakken

Wells coming off the confidential list today -- Thursday, December 6, 2018:
  • 34892, SI/NC, MRO, Gloria 24-16H, Jim Creek, t--; cum 28K after 13 days extrapolates to 65,215 bbls over 30 days;
PoolDateDaysBBLS OilRunsBBLS WaterMCF ProdMCF SoldVent/Flare
BAKKEN10-2018132826027869309911960620717536
  • 34711, dry, Armstrong Operating, Harvest States 7-11 (a reader wrote in earlier suggesting this well was a dry well), Eland, date; 6/21/2018; no geologist's or drilling report; planned to be 320-acre spacing unit; TD = 10,050 feet and TVD - 9;972 feet;
  • 33109, 1,923, CLR, Wiley 11-25H2, Pershing, Three Forks, 51 stages; 8.3 million lbs, 4 sections, t6/18; cum 120K 10/18;
PoolDateDaysBBLS OilRunsBBLS WaterMCF ProdMCF SoldVent/Flare
BAKKEN10-20183118985189941347642667386993754
BAKKEN9-20183025805258032250357523522924968
BAKKEN8-20183130469305312782063328589504107
BAKKEN7-20183037798376673828971170668714058
BAKKEN6-2018967086642776611381101411162

Active rigs:

$51.3212/6/201812/06/201712/06/201612/06/201512/06/2014
Active Rigs62533864188

RBN Energy: at what point would higher Henry Hub prices really rein in LNG exports, part 3?
Reliably low Henry Hub natural gas prices are a primary, long-term driver of U.S. LNG exports. But prices were up as much as 40% during November and, with gas inventories unusually low, Henry prices could spike considerably higher if winter weather continues to come in colder than normal. Which raises the question, how high would gas prices need to go before U.S. liquefaction becomes the lever that balances the U.S. gas market? The short answer is, it depends on where the LNG is headed — and lately, a lot more is bound for Europe. Today, we continue our review of the current gas market with an analysis of LNG variable costs and UK National Balancing Point prices, and how they will help determine LNG export volumes if U.S. gas prices spike.
This is the third blog in this series: in the first blog we analyzed how low gas storage inventories heading into winter set the market up for more gas price upside — and more gas price volatility — than has been the case in recent years, particularly if winter weather turns unusually cold. And indeed, as cold weather materialized early in the 2018-19 heating season, the NYMEX Henry Hub gas price went on a wild ride, shooting up and down within the $4-5/MMBtu range through November, before the December contract settled at $4.71/MMBtu.
In a second blog, we pointed out that the traditional governor for gas prices — switching between gas and coal in U.S. power generation — may not materialize in the same way it has in recent years, due to low coal inventories and some structural changes in the coal market. And again, the November market has borne out this concern, with gas-fired generation scrapes coming in strong even as gas prices rallied.
Fortunately for anyone short gas supplies, weather forecasts have moderated in recent weeks. And even as winter gas prices shot up over the last month, summer 2019 Henry Hub futures have moved only modestly, up about $0.10/MMBtu during November while the winter 2018-19 strip rallied by $1.20/MMBtu.
That structure of the forward curve incentivizes generators to burn whatever coal they have available in stockpiles now (rather than bid up power prices to draw in additional gas-fired generation this winter and preserve coal stockpiles) because there will be more gas available later. And while we certainly agree with the premise of strong gas supply growth again in 2019, there’s a distinct possibility that there won’t be enough coal supply (even accounting for the possibility of reduced thermal coal exports, as some of those supplies get redirected into domestic power generation) to keep gas prices in the $4-5/MMBtu range, if weather turns very cold for a sustained period.
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Fort Worth Stockyards

Exxon, Chevon To Exit Azerbaijan -- Focus On The Permian -- December 6, 2018

Wow, talk about a blind spot. It appears I never posted many stories about Azerbaijan. I was very aware of it, but apparently not interested enough in posting many stories nor even linking it among all the oil plays I've listed at the sidebar at the right.

At one time -- I suppose when President Obama was telling us we could not drill our way to lower gasoline prices -- Azerbaijan was really, really important. In fact, at one time, US oil companies signed what is known as the "contract of the century" when it partnered with the former Soviet republic. From oilprice.

It appears that US oil companies are now planning "to exit" Azerbaijan and focus on the Permian. The article says the companies will focus on "US shale," but that has become a/an euphemism for "the Permian."

The Bakken and the Eagle Ford have pretty much reached steady state / the manufacturing phase. But the Permian is yet to take off.

From the linked article:
Since the oil industry started to recover from the 2014 price crash, U.S. supermajors ExxonMobil and Chevron have been re-aligning their global operations with their longer-term priorities, betting more on the shale patch at home and on several strategic projects worldwide.

The companies are now looking to exit Azerbaijan, including the country’s biggest oil field and some pipeline infrastructure. This would mark the withdrawal of U.S. companies from the Azeri oil industry a full 25 years after western majors, including five U.S. firms, signed what is known as “the Contract of the Century” in the former Soviet republic.

As part of a re-prioritization of its global operations, ExxonMobil is looking to sell its minority stake in the giant Azeri oil field Azeri-Chirag-Gunashli (ACG) in the Caspian Sea, hoping to obtain as much as US$2 billion for its interest, Reuters reported on Tuesday, citing banking and industry sources.

Chevron, for its part, is reviewing its global asset portfolio and has “decided to initiate the process of marketing, with a view to a potential sale, of our Chevron affiliate interests in the Azeri Chirag and Deep Water Gunashli (ACG) project and the Baku-Tbilisi-Ceyhan (BTC) Pipeline."
Those other foreign projects alluded to in the article?
In recent years, Exxon has shifted its global focus to offshore exploration in Guyana, where it has found major reserves of oil—including a tenth find announced earlier this week—with plans to start producing from the Liza Phase 1 development of up to 120,000 barrels oil per day by early 2020.
The Liza Complex now best compares to Brazil’s Lula-Iracema, one of the world’s largest deepwater finds. Guyana can “easily become the fourth largest oil producing nation in Latin America by the next decade, with chances to outperform the countries preceding it. If Venezuela and Mexico fail to address production declines, Guyana could quickly surpass them to number two,” said Luiz Hayum, research analyst with WoodMac’s Latin America upstream oil and gas team.

Chevron, for its part, is involved in giant oil projects in another country on the Caspian Sea, Kazakhstan, and holds major stakes in two giant oil fields—Tengiz and Karachaganak.
If the article mentioned "Kashagen" I missed it. But Kashagan Field is an offshore oil field in Kazakhstan's zone of the Caspian Sea. The field, discovered in 2000, is located in the northern part of the Caspian Sea close to Atyrau and is considered the world's largest discovery in the last 30 years, combined with the Tengiz Field.

Is Portland, OR, Reintroducing Plastic Bags -- Banned Since 2011? December 6, 2018

If I'm reading this article correctly, it sounds like Portland City Council just caved on "the plastic bag issue." The article is at KATU.

One has to read the last paragraph to get the complete story.

Apparently Portland City Council has thrown in the towel on the issue of plastic bags and Styrofoam containers. At least that's how I read the last paragraph:
Portland's new ordinance will repeal the city's codes on Styrofoam containers and plastic bags. The code that restricted the use of polystyrene foam has been in place since 1990; and, the code that banned plastic bags has been in place since 2011. 
The way I read that paragraph is that the city will rescind those codes.

Wow. That's hard for me to believe. I must be missing something.

How in the world would the Portland City Council manage to vote unanimously on this one? They will ban plastic straws.

The headline is misleading. The headline and the lede suggest that the city will ban straws and other single-use utensils. No. Not banned. Just not used unless the customer requests them.

Obviously a restaurant like McDonald's can still have a plastic straw dispenser arguing that no one will get a straw unless they "request one by pushing down on the little lever to dispense said straw."

I know restaurants like McDonald's do not carry silverware which begs the question: Every time a patron asks for a salad, must the $15/hour employee ask the customer if she would like a fork with that? Wow, I can already hear the snarky replies. Perhaps Portland folks carry forks in their purses and/or in their suit pockets. I know that when I was in the USAF, a lot of us carried our own silverware in our flight suits just in case the third world country we were flying to did not have utensils, plastic or otherwise.

If the plastic ware is re-used that would apparently meet the new standards. Perhaps McDonald's should place a plastic container next to the trash where folks can leave their plastic utensils to be used by others. If so, those would no longer be considered "single-use," would they?

Well, we'll see how this turns out. But for me, the bigger news is that apparently Portland is going back to plastic bags and Styrofoam containers.

From the article:
A proposal aimed at reducing litter and saving sea creatures passed through the Portland City Council with a unanimous vote on Wednesday.
The proposal forbids local restaurants, bars and coffee shops from giving out plastic straws or other single-use utensils unless they ask for them.
The same goes for plastic cutlery for take-out orders or deliveries.
The city restrictions would be imposed on all plastic serviceware - defined by the city as straws, stirrers, utensils, and condiment packaging.
Portland has long been a leader in enacting policy to cut back on litter. The Rose City has restricted the use of polystyrene foam since 1990, and passed a citywide plastic bag ban in July of 2011.
The new ordinance will repeal those city codes on Styrofoam containers and plastic bags, replacing them instead with the Code Prohibitions and Restrictions on Single-use Plastic.
I will be curious to hear if in fact Portland is going to re-introduce plastic bags. It seems to me that plastic bags make a lot more sense for consumers, especially for those camping out in Portland (the homeless) than paper bags -- particularly in a wet, rainy climate.

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Blogging

Indiana Going Green To Save Money? Needs To Increase Utility Rates 12% To Save Consumers Money -- December 6, 2018

Interesting story over at What's Up With That? sent to me by a reader. Indiana utility seeks 12 percent rate hike to shut down coal power. The article was apparently first published in The American Spectator.
Under a renewable energy proposal from Northern Indiana Public Service Company (NIPSCO), Indiana consumers would face a 12 percent electricity rate hike, which will cost the average household more than $100 per year in additional electricity costs.
NIPSCO is justifying its renewable power rate hike by asserting renewable power saves consumers money, but there’s absolutely no truth to these claims.
Indiana ranks seventh in the nation in coal production and generates 68 percent of its power from coal. Together, affordable coal and natural gas generate 95 percent of Indiana’s electricity. As a result, Indiana electricity prices are substantially lower than the national average. National electricity prices are 10 percent higher than in Indiana.
Unfortunately, NIPSCO wants to put an end to these low prices. It is proposing to shut down two perfectly functioning coal power plants that provide much of NIPSCO’s low-cost electricity. In their place, NIPSCO wants to build expensive wind and solar power equipment and battery storage for when the wind isn’t blowing or the Sun isn’t shining. NIPSCO claims transitioning from affordable coal power to wind and solar will save consumers money, but at the same time that it makes these unfounded claims,
NIPSCO is proposing to hike electricity rates 12 percent to pay for the renewable energy “savings.”
NIPSCO is a government-protected monopoly utility, with Indiana state government guaranteeing NIPSCO a profit of approximately 10 percent for every dollar it spends. .
Battery storage is a myth.

Much more at the link.

What about that statement that Indiana electricity prices are substantially lower than the national average? See this link. Rates are lower but certainly not what I would call "substantially lower." Compare with Wyoming.

Considering that these coal plants have long been paid for, and considering how inexpensive coal is, it is quite surprising to me that Indiana's residential electricity is only 8 percent lower than the national average.