Thursday, February 14, 2019

Implications Of US Light Oil -- Rystad Energy -- February 14, 2019

This is really, really cool. See "back story" below.

But from the Oil & Gas Journal, a must-read.


Back Story

Early this week I closed out the "big stories, 2013 - 2018," and moved to "the big stories, 2019 -- "

One section of that updated post:

US Energy Revolution
"US refinery shift to light oil" is going to be a big story for the next few years. 

Posted Without Comment -- A Bakken Story -- Mineral Owners Might Be Interested -- February 14, 2019

From The Bismarck Tribune:
A judge has ruled against the state of North Dakota in a lawsuit brought by an oil company over a gas royalty dispute.

In a case being closely watched by the industry, Northwest Judicial District Judge Robin Schmidt ruled in favor of Newfield Exploration, which sued the state and the Board of University and School Lands last year.

Newfield and the North Dakota Department of Trust Lands have been in a dispute over the interpretation of the state’s oil and gas leases. The department has alleged that Newfield and other companies have been underpaying the state for royalties on natural gas.

In response to a "concerns notice" from the department, Newfield filed a lawsuit in McKenzie County seeking a judge to declare the company has properly paid gas royalties and does not owe the state additional payments. The case focused on how the royalty is calculated when gas is sold to an unaffiliated third party, such as a gas processing plant.

In an order dated Thursday, Schmidt ruled in favor of Newfield, saying the lease requires Newfield to pay the state based on the gross proceeds it receives from the sale of gas. Schmidt wrote that the state’s argument that Newfield is required to pay based on what a third party receives for the processed gas “strains the language beyond reason and this court is not persuaded.”

It Simply Never Quits -- Was This Even On Anyone's Radar Scope? South Africa Making America Great -- February 14, 2019

Wow, while the socialists are throwing Amazon out of New York, South African capitalists are building petrochemical plants along the US gulf coast.

From twitter today:

Story can be found here. This one plant in Louisiana will add $1.3bn to its annual core earnings in the 2022 fiscal year. The story is also at the Oil & Gas Journal.

Wow, can you imagine all the building that is going on along the Gulf Coast? That's rhetorical. Even if you can imagine it, please don't write to tell me. LOL. 

Happy Valentine's Week -- February 14, 2019

$15/hr jobs: "Now that we've gotten rid of those $125,000 annual Amazon salaries, let's get back to work on those $15/hour jobs."  Occasional-Cortex.

GE shrinks Boston HQ: link here at Reuters.

Amazons pulls out of Long Island City, NY, deal.

Airbus announces it will quit building the A380 Superdumbo. 

California bullet train pretty much dead despite what the governor's office says. By the way, the federal government wants their $3 billion back that taxpayers gave California in stimulus money for this project. That's probably just one of the many reason the governor did not kill the project outright. [Later: this project will never die. It has as many lives as the typical cat: nine.]

And we still have Friday.

Soybeans. From oilprice. But there is good news. All of a sudden China is going to have to compete for the US soybean trade.
The EU announced last week that they will now allow soybeans grown in the United States to be used for biofuel in the EU. This move came as part of a campaign to improve trade relations with the United States. The European Commission’s statement stipulates that the allowance of U.S. soybeans for use in biofuels will be valid until July 1, 2021, with a possible extension if the deal meets the sustainability criteria set by the EU in the future (2021-2030).
This is not the first that the step the EU and U.S. have taken to boost trade in the last year. In July, the Trump administration agreed not to place a tariff on European Union car imports. At that time, the two economic powers were already discussing the issue of soybeans as part of a potential no-tariff deal that also included non-auto industrial goods and liquified natural gas (LNG).
Pelosi Is Correct -- The Next President Could Use "Trump Tactic" To Impose Gun Control

When "Dirty Harry" was asked about that, his terse comeback, in three words, "make my day."

Apparently the President will approve the "budget compromise" to prevent another government shutdown, but he "will declare a national emergency to build the wall." -- many sources.

So, we'll see how fast the 9th Circuit stops this one.

Green New Deal -- Controlling Emissions

From twitter, "Green New Deal" has new method of cutting down on emissions.

[Do not try this at home, in your garage, in your driveway, or on the street.]

Rumors are that they will do the same with farting cows. Now that's a photo I would like to see.

On Amazon and GE -- from Chesto Over At The Boston Globe

The article:
Change of heart for headquarters plans: The high-stakes Corporate Incentive Game just became tougher to play. Two of the most prominent headquarters deals of this century took major turns today, twists that will influence the ways in which many state and city leaders handle public incentives for years to come.

First, the New York headline: Amazon just bailed on its HQ2 plans for Queens amid an uproar over a roughly $3 billion package promised by state and city officials. The Seattle-based retail giant will go ahead with the other half of HQ2 in the D.C. area, put more jobs in Nashville, and expand other outposts. (Boston is among the cities that could be poised to land more Amazon jobs.)

Then, the Boston bombshell: General Electric made public its decision to sell its future headquarters property in Fort Point, and scale back its plans for the site. Instead of 800 jobs, there will be around 250. No shiny, 12-story waterfront tower -- at least not for GE. Instead, we get a more modest headquarters on the Channel: The industrial company will lease space in two brick buildings, and move in this summer from temporary offices nearby.

GE, a neighbor of Amazon’s in Fort Point, made some big promises when it agreed to move here three years ago from Connecticut. But the company’s situation has changed dramatically; thrifty new CEO Larry Culp is downsizing and divesting, the better to improve profits and restore investors’ shaken faith in the beaten-down stock. It seemed like nearly everyone had expected Culp to pare back the HQ.

The Baker and Walsh administrations also made promises back then: $120 million in state infrastructure funds for GE’s Fort Point property, and up to $25 million in city tax breaks. GE is now pledging to fully reimburse MassDevelopment for the $87 million in state funds that were spent so far. (Both GE and MassDevelopment own portions of the site.) And GE says it won’t take a dime in tax breaks from the city.

Relocation specialist John Boyd says he has never witnessed so much contentiousness over the issue of tax incentives as he’s seeing today. (The back-and-forth about Foxconn’s fate in Wisconsin is another example.) The New Jersey-based consultant sees an increasingly populist zeitgeist among politicians -- in part because of concerns about income inequality, the gulf between the haves and have-nots.

But Boyd also expects tax breaks and other incentives will continue to play important roles in corporate expansion decisions, particularly in high cost states such as New York and Massachusetts. For example: MassMutual and Wayfair won massive tax incentive packages within the past year from Massachusetts officials -- valued at $46 million and $31 million, respectively -- in return for aggressive job growth.

These kinds of deals could get more scrutiny in the months ahead. Boston City Councilor Michelle Wu just introduced a proposed ordinance this week that would create new requirements for corporate handouts. And Jamie Eldridge, a vocal tax-incentive foe in the state Senate, vowed to press for reforms on Beacon Hill.

A few dozen protesters marched in the snow outside GE's big event back in April 2016, when the company previewed its move to Boston’s business community. They were a bit of a ragtag bunch, easily discounted by the well-dressed power players convening upstairs in the State Street tower. But these kinds of activists are getting increasingly hard to dismiss.

Each time a politician agrees to a major tax credit package or another kind of subsidy, a political calculus is made -- the economic benefits will be worth the sacrifice, they will outweigh any backlash. That math could get trickier now. The changes at GE and Amazon could prompt public officials to be more cautious the next time they decide to dip into that well.

Four New Permits; Crescent Reports Eight Completed DUCs -- February 14, 2019

Active rigs:

Active Rigs65573641137

Four new permits: pending
  • Operators: Equinor (2); WPX; Whiting
  • Fields: Last Chance (Williams); Antelope (McKenzie); Sanish (Mountrail)
  • Comments:
    • the two Equinor permits, #36087/36088 -- Marcia wells in section 3-153-100; both in the 1280-acre unit, sections 3/10-153-100; one a middle Bakken well; one a Three Forks B1 well;
    • the WPX permit is for a Ruby well in Antelope oil field, section 31-151-94;
    • the Whiting permit is for a Meiers well in the prolific Sanish oil field, section 17-154-92
Nine producing wells (DUCs) reported as completed:
  • 33959, 276, Crescent Point Energy, CPEUSC Bennie 8-20-17-157N-99W TFH, Lone Tree Lake, t11/18; cum 28K 12/18; a very nice well despite the IP;
  • 33955, 32, Crescent Point Energy, CPEUSC Bennie 7-20-17-157N-99W TFH, Lone Tree Lake, t11/18; cum 25K 12/18; a very nice well despite the IP;
  • 33961, 205, Crescent Point Energy, CPEUSC Bennie 4-20-17-157N-99W MBH, Lone Tree Lake, t11/18; cum 42K 12/18; a very nice well despite the IP;
  • 33957, 205, Crescent Point Energy, CPEUSC Bennie 3-20-17-157N-99W MBH, Lone Tree Lake, t11/18; cum 31K 12/18; a very nice well despite the IP;
  • 33960, 205, Crescent Point Energy, CPEUSC David 9-29-32-157N-99W TFH, Lone Tree Lake, t11/18; cum 33K 12/18; a very nice well despite the IP;
  • 33956, 276, Crescent Point Energy, CPEUSC David 8-29-32-157N-99W TFH, Lone Tree Lake, t11/18; cum 16K 12/18; an "ok" well despite the IP;
  • 33962, 205 (no typos), Crescent Point Energy, CPEUSC David 5-29-32-157N-99W MBH, Lone Tree Lake, t11/18; cum 48K 12/18; a very nice well despite the IP;
  • 33958, 32 (no typo here either), Crescent Point Energy, CPEUSC David 4-29-32-157N-99W MBH, Lone Tree Lake, t11/18; cum 42K 12/18; a very nice well despite the IP;
  • 31366, 79, Petro-Hunt, Beaver 1B-28HN, Ambrose, t2/19; cum --

Oil And Gas Revenue: New Mexico, North Dakota -- February 14, 2019

I thought I had posted this story, but I can't find it, so I will re-post it. From oilprice:
New Mexico boasts $2.2 billion in oil revenue for 2018.
New Mexico received US$2.2 billion in revenues from oil production last year, data from the state’s Tax Research Institute showed. This was a 26-percent increase on the year, or US$465 million. The total amount represented 32.3 percent of the New Mexico State General Fund recurring revenue.
A reader wondered how that would compare with oil and gas revenue for North Dakota.I didn't want "to go there" because I assume there are many different ways to measure that statistic. But since I was asked, here goes.

First, the Legacy Fund, on average, about $50 million / month is added directly to the Legacy Fund. This is only part of the entire amount of dollars from oil and gas to the state, but $60 million x 12 months = $720 million. If $720 million represents 30% then the total oil and gas revenue would be in the range of $2.4 billion.
Thirty percent of total revenue derived from taxes on oil and gas production or extraction must be transferred by the State Treasurer to a special fund in the state treasury known as the Legacy Fund. The Legislative Assembly may transfer funds from any source into the Legacy Fund and such transfers become part of the principal of the Legacy Fund.
Taking advantage of this authority, the legislature enacted language which provides additional deposits to the Legacy Fund from the Strategic Investment and Improvements Fund (SIIF) once a $300 million unobligated balance is met. This provision resulted in additional deposits to the Legacy Fund totaling $148.7 million in the 2011-13 biennium and $200.2 million in the 2013-15 biennium. This provision was removed from law in 2015 by the 64th Legislative Assembly.
I don't know if New Mexico has something similar to North Dakota's Legacy Fund.

With regard to GDP, link here. Most recent figures, 2016:
  • 2016: $5 billion or slightly over 9% of North Dakota's GDP from oil and gas extraction
  • 2014: $11 billion or almost 20% of the state's GDP came from oil and gas extraction
All years:
  • 2016: $4.957 billion; or 9.27%
  • 2015: $7.021 billion or12.44%
  • 2014: $11.147 billion; 18.67%
  • 2013:$9867 billion, or 17.95%
  • 2012: $8.573 billion or 16.33%
  • 2011: $5.330 billion or 12.64%
  • 2010: $3.027 billion, or 8.36%
  • 2009: $1.717 billion, or 5.28%
  • 2008: $1.836 billion, or 5.65%
  • 2007: $1.137 billion, or 3.94%

But comparing apples to apples, look at the GDP contribution for each state:
  • North Dakota, anywhere from 10% to 20%
  • New Mexico, most recently: over 30% 
I would assume honey makes up the rest of North Dakota's GDP. North Dakota is #1 in honey production and has held that record for years.

  • New Mexico: 2 million
  • North Dakota: 800,000

Oil And Gas -- Making America Great Again

Shale oil.

Off-shore oil.

Natural gas.

LNG and LNG export terminals.



Ethane and ethane exports.

Shock And Awe! The Shot Heard 'Round The World -- Happy Valentine's Day -- Amazon Has Already Seen Enough -- Pulls Out Of NYC Deal -- February 14, 2019

Amazon: no need to link this story. It will be everywhere. Bloomberg, de Blasio, Cuomo -- fit to be tied. 25,000 high-paying jobs lost. Occasional-Cortex taking a victory lap. I think I saw a data point that said the average job would be $150,0000; I think same source said it would ultimately bring $27 billion to Long Island area; apparently the area is already overwhelmed with development, with cranes everywhere. [Later: the Amazon - NY story was a "union" story and the unions won. That's how important this issue was for the unions. Everything else is simply idle chatter.]


It blows me away that the turnout for the election in which Occasional-Cortex won was 4%. That needs to be fact-checked, but it comes from a very reliable source. Four percent of the electorate bothered to show up to vote.

A huge slice of her district is Latino. I can't imagine any politician taking pride in losing 25,000 jobs for her constituents. And these were high-paying jobs. Every city of any consequence in this country competed to get this project.

This will take some time to sink in.

I don't watch network business news any more but one wonders what CNBC anchors think about this. I know what -- I forget his first name -- Kernan would have to say. LOL. Oh, that's right. Same as Biden's. Joe. Good ol' Joe. I wonder if he's even with CNBC any more. He was the only one with common sense and intelligence. Most had neither.


The question I keep hearing is what did Amazon offer New York?

Answer: 25,000 high-paying jobs.

Not getting much attention but apparently the unions were against this: Jeff Bezos wanted to build this with non-union workers, and my hunch it had little to do with hourly wages; he wanted the job done without a lot of drama;

So what if the state did not get any direct property taxes / fees from Amazon? The sound bites are a bit confusing but it sounds like:
  • it was projected that Amazon would pay $27 billion in taxes over 10 years (I don't know if that's state taxes or something else)
  • Amazon was given a $3-billion incentive spread out of 10 years (again I don't know the details or the veracity of the soundbites
Throwing The Baby Out With The Bathwater

So, let's assume the Amazon - Long Island City project was a poor deal for New Yorkers. Instead of throwing the bums out why not try to re-negotiate the deal?

Governor Cuomo has it right. Mayor de Blasio completely blew it. But the, of course, de Blasio is cut from of the same cloth as Occasional-Cortex.

Natural Gas -- 2018-2019 -- Dodged A Bullet -- Starting To Build -- February 14, 2019

Link here.

Agree Completely: Even Rapid Transition To Lower-Carbon World Won't Kill Demand For Crude -- BP -- February 14, 2019

Let's Get Serious

From Financial Times:
Global oil demand will prove resilient over the next two decades even if ambitious targets set in the Paris climate change accord are met and the adoption of renewable energy is “off the charts,” according to BP’s annual energy outlook. I
In a “rapid transition” to a lower-carbon world, set out by the UK oil and gas company on Thursday, demand for crude would only drop 20 per cent by 2040. The scenario included the most efficient use of energy by industry and buildings, increased electrification of transport and radical policies to clean up the power sector.
“Oil is playing a major role in the energy system out to 2040 . . . even with renewables off the charts,” said Spencer Dale, BP’s chief economist. “The level of understanding about the arithmetic on some of this stuff is not as high as it could be.”
Exxon has been saying this for decades. By the way, that BP story above -- that seems like a shift in editorial policy from BP. For the past several years BP has been beating the drum for renewable energy.

From earlier this week: RBN Energy: massive shift of US crude oil, natural gas and NGLs into global markets.

U.S. crude oil, NGL and gas markets have entered a new era. Exports now dominate the supply/demand equilibrium. These markets simply would not clear at today’s production levels, much less at the flow rates coming over the next few years, if not for access to global markets. This year, the U.S. may export 20-25% of domestic crude production, 15% of natural gas and 40% of NGLs from gas processing, and those percentages will continue to ramp up. What will this massive shift in energy flows mean for U.S. markets, and for that matter, for the rest of the world?

Everything Else

Happy Valentine's Day. Looks like Schelosi will sene President Trump a valentine care with $1.5 billion to continue building the wall.

Solar contraction:
Massachusetts lost 1,320 solar jobs last year, trailing only California, as the industry suffered its second straight year of falling employment, according to the Solar Foundation's annual jobs census. Massachusetts also fell to third among states in solar jobs, with 10,210, ceding the spot to Florida, which added 1,769 jobs to bring its total to 10,358. The report said installations of solar panels in Mass. were held back by the introduction of demand charges, the minimum price that solar panel owners pay to utilities per month, and uncertainty surrounding the state's SMART program, a newer form of state-sanctioned subsidies to reimburse solar panel owners that is somewhat less generous than a previous program. -- s/ Chesto, over at The Boston Globe.
 The Book Page

From Genius: The Life and Science of Richard Feynman, James Gleick, c. 1992, page 338. 

If this book has a climax, this may be it. Richard Feynman, 1957, thirty-nine years old, is depressed. He has not found the "right problem" to solve. Then, in September, 1957, he co-writes an article that reaches Physical Review just days before another team reports a similar theory at a conference in Padua, Italy. 
The discovery was esoteric compared to other milestones of modern physics. If Feynman, Gell-Mann, Marshak, or Sudarshan had not made it in 1957, others would have soon after. Ye to Feynman it was as pure an achievement as any in his career: the unveiling of a law of nature. His model had always been Dirac's magical discovery of an equation for the election.

In a sense, Feynman had discovered an equation for the neutrino.

"There was a moment when I knew how nature worked," he said. "It had elegance and beauty. The goddamn thing was gleaming." 

To other physicists, "Theory of the Fermi Interaction," barely six pages long, shone like a beacon in the literature. It seemed to announce the beginning of a powerful collaboration between two great and complementary minds.
Feynman died shortly before midnight, February 15, 1988, seventy years old or thereabouts.

It's getting serious -- it looks like someone was out to out-Hoover J. Edgar.

Saving America -- One SAV American Bull At A Tme -- February 14, 2019

See also: See comments.

No bull! North Dakota bull sells for $1.51 million. And that's just for an 80% interest. Story at Dickinson Press 
  • by-line: St. Anthony, ND (see the rest of the story at this post)
  • seller: SAV America
  • SAV: Schaff Angus Valley
  • buyer: Herbster Angus Farms of Falls City, NE
  • third year in a row that SAV has broken its own record for highest-selling bull
  • last year was the previous record: $800,000
  • prior to that: $750,000
  • SAV: operated by fourth-generation Schaffs
  • great-grandfather Schaff homesteaded the ranch south of Mandan, ND
  • the $1.51 million bull -- 1,107 pounds at 205 days; most bulls don't approach that weight until they are yearlings (365 days for millennials)
  • and, yes, a note will be sent to Occasional-Cortex if I can find her DC luxury apartment address
A recession by any other name: Germany
  • previous quarter: contraction by 0.2%
  • most recent quarter: 0.0%
  • by "usual" definition, not a recession
Airbus: pulls plug on A380 Superjumbo; deliveries stop in 2021
  • backlog not enough to sustain production
  • Emirates slashed orders
  • by this time, Airbus projected 1,200 380 a/c
  • in actuality: 234 (or thereabouts -- but definitely less than 250)
  • European consortium? Why does that not surprise me?
Venezuela: as noted several times on the blog, Venezuela has a diluent problem; another story today.

Push comes to shove: US refiners will solve heavy oil problem.

Who said shale costs more to drill than conventional oil? Chevron says it will focus on shale; less expensive? Over at Rigzone:
For Mike Wirth, the future of Big Oil lies at home, under the dusty fields of West Texas.
As he celebrates his first year as chief executive of Chevron Corp., Wirth sees the Permian Basin as a plentiful source of high-quality crude for years to come, but that’s not all. The low break-even costs to pump in the Permian are forcing Chevron to be more efficient everywhere, Wirth said, from the deepwater platforms in the Gulf of Mexico to its liquefied natural gas plants.
In a time of transition, where everyone from politicians to shareholder activists is bashing Big Oil, shale’s success is forging a new reality, Wirth said: Lower your costs, or die.
Repeating:  The low break-even costs to pump in the Permian are forcing Chevron to be more efficient everywhere. And correct me if I'm wrong, but I believe it's less expensive to drill in the Bakken than in the Permian -- and oh, by the way -- oil produced per rig in the Bakken is two to three times that of the Permian.

Re-posting: Hess will focus on Bakken, Guyana in 2019. Story everywhere. This is one link.

Most under-reported story this year: US crude oil production will hit 12-million-bopd milestone much sooner than anticipated even as late as last year. Stories everywhere. Reader says US is already producing 12 million bopd. Link previously posted.

Three Wells Come Off Confidential -- February 14, 2019

Market: down

Back to the Bakken

Wells coming off the confidential list today -- Thursday, February, 14, 2019: 52 wells for the month; 155 wells for the quarter
  • 32067, drl, XTO, Maddy Federal 24X-34F, North Fork, no production data,
  • 35174, 377, Resonance Exploration, Resonance Lodoen 4-6H South, Sergis, a Madison well, t9/18; cum 3K 1/19;
  • 34669, drl, Hess, GO-Bergstrom 156-98-2833H-5, Wheelock, no production data,
Active rigs:

Active Rigs64573641137

RBN Energy: disappearing arbitrage opportunities for Canadian CBR.
Crude-by-rail (CBR) has been a saving grace for many Canadian oil producers. With extremely limited pipeline takeaway capacity, rail options from Western Canada to multiple markets in the U.S. have acted as a relief valve for prices — there for producers when they need it, in the background when they don’t.
In 2018, we saw a major resurgence in CBR activity from our neighbors to the north, with volumes reaching an all-time high of 330 Mb/d just this past November. But just as quickly as CBR seemed ready for takeoff, the rug got pulled out from underneath those midstream rail providers and traders who had lined up deals and railcars to take advantage of wide price spreads. When Alberta’s provincial government announced its 325-Mb/d production curtailment beginning at the start of 2019, many midstream/marketing and integrated oil companies bemoaned what it could potentially do to market opportunities.
And they were spot-on. Wide price differentials for Canadian crudes to WTI disappeared quickly and eliminated most, if not all, of the economic incentive to move crude via rail, and even by pipeline. In today’s blog, we recap the recent move away from crude-by-rail by some of Canada’s largest CBR players, and discuss the risks of long-term CBR commitments in volatile times. Archived.