Seven Wells Coming Off Confidential List Today -- February 7, 2019

NDIC daily activity report: for yesterday -- pending -- link here.

Jobs: first time unemployment claims -- 234,000 -- link here:

• previous: 253,000 (surge due to government shutdown)
• forecast: 225,000
• actual: 234,000 (Steve Liesman will be happy)

************************************

Back to the Bakken 

Wells coming off the confidential list today -- Thursday, February 7, 2019: 31 wells for the month; 133 wells for the quarter

• 34615, 937, Oasis, Florence 5303 11-2 2B, Painted Woods, t8/18; cum 93K 12/18;
• 33726, 1,995, CLR, Norway 4-5H1, Fancy Buttes, 11/18; cum 57K 12/18;
• 33462, 1,622, CLR, Omlid 5-19H2, Elidah, t12/18; cum 14K after 12 days;
• 33374, drl, EOG, Liberty 45-1311H, Parshall, t8/18; cum 114K 12/18;
• 33373, drl, EOG, Liberty 44-1311H, Parshall, t8/18; cum 132K 12/18;
• 32924, SI/NC, BR, Renegade 34-15TFH, Sand Creek, no production data,
• 30317, 1,685, Hess, EN-Weyrauch C-154-93-2932H-12, Robinson Lake, t12/18; cum 5K after 4 days;

Active rigs:

$53.26	2/7/2019	02/07/2018	02/07/2017	02/07/2016	02/07/2015
Active Rigs	62	58	40	42	136

RBN Energy: how will the ban on Venezuelan crude affect US refiners? Yesterday I said the ban on Venezuela crude oil will have NO effect on the US (in the big scheme of things -- the refiners will have some challenges, and the price of gasoline might go up slightly -- but overall not a big deal). It will be interesting to see what RBN Energy says.

The U.S. Treasury Department last week announced new sanctions on Petróleos de Venezuela, S.A. (PDVSA), the national oil company of Venezuela, that effectively halts imports of Venezuelan crude oil into the U.S. Given that the Venezuelan crude imported to the U.S. is of the heavy sour variety, which is not produced in large amounts in the U.S. (except for California), certain refineries along the Gulf Coast are left scrambling to find alternative sources of feedstock for their facilities. Today, we evaluate historical crude oil imports from Venezuela, the refineries that are most heavily impacted, and the potential effects of the sanctions on U.S. refiners.

Refineries in Petroleum Administration for Defense District (PADD) 3, which includes the Gulf Coast, processed an average of 9 MMb/d of crude oil in 2018, and of that total, approximately 1.6 MMb/d was of the heavy sour variety. Of the heavy sour portion, ~420 Mb/d came from Venezuela. Some may wonder how a country that supplies less than 5% of PADD 3’s crude slate could cause industry headaches; today, we’ll explain why.

Wow, the RBN Energy analysis comes to the very same conclusion to which I came:

What does all this mean? Substituting crude oils on short notice, especially heavy grades that are generally less fungible (from a quality standpoint) and likely already under contract to other buyers, is a tricky process. It requires linear program (LP) modeling in conjunction with commercial intelligence to determine the “next best” grade(s) to purchase, which of course depends on each refinery’s specific configuration. Assuming Gulf Coast refiners can’t increase imports of Canadian and Mexican crude oils by meaningful amounts (due to Canadian delivery constraints and Mexican production declines), coking refiners there will be scrambling to get their hands on alternative heavy crude oil streams. Grades closer to home in South America are a potential — albeit limited — source, so we’ll likely see some increases in imports from the Middle East and Russia. With this supply crunch, the light-heavy differential along the Texas and Louisiana coast should remain narrow (in other words, heavy crude oil stays relatively expensive) and also have a domino effect on medium sour grades (e.g. Mars), as we’ve already seen. Refiners will adapt, but processing profits may take a hit in the near term — especially for refineries highly dependent on Venezuelan grades. Things may change as we get closer to January 2020, when IMO 2020 takes effect. We’ll continue to track this and provide an update when appropriate.

Be cognizant of railbit and dilbit.

Nice graphic from RBN Energy at this post.