Friday, March 8, 2019

US Imports From Saudi Arabia of Crude Oil -- EIA -- December, 2018, Data Released Today

Saudi crude oil exports to US: link here. Monthly data released today:

The average for the previous eleven months this year: 871,000 bopd.

December (most recent month for which data is posted): 842,000 bopd

Previous eleven Decembers: 951,000 bopd.

December, 2018: most recent month for which data is posted: 842,000 bopd.

A lot of talk about how much Saudi Arabian exports to US have declined, but in the big scheme of things, not that remarkable so far. Also, the US needs heavy oil which they used to get from Venezuela; Saudi Arabia is said to be taking advantage of the loss of Venezuela heavy oil, but again, so far, not particularly remarkable.

Fuel Shortages In Mexico -- March 8, 2019

Link here. Fuel shortages experienced in Mexico earlier this year are incentivizing major oil companies to rely less on Pemex's supply logistics system, market observers said Friday.
BP will join a limited group of major fuel wholesalers that are importing gasoline and diesel to Mexico later this year, the company announced Tuesday.

Repsol and Total made similar announcements earlier this year, joining ExxonMobil, Glencore and Marathon Petroleum as Mexico's only private gasoline importers.

In the second quarter, BP will begin trucking 15,000 b/d of gasoline and diesel from Texas and later rail it into northern, central and western Mexico by the second half of 2019, the company said in a statement.

BP plans to develop 10 new terminals within five years in the country and imports fuel from Ohio, Texas and Washington state, Alvaro Granados, BP Mexico's downstream director, told news agency AFP on Thursday.
Distillate Prices Spike

Link here. Fire at HollyFrontier's Kansas plant .

I Never Thought I Would Live Long Enough To See This

Link here.

I don't know. Is drought "weather" or "climate"?

Anyone remember the "dust bowl?"

Dust Bowl Ballads, Woody Guthrie

As "bad" as things are, I think we've seen worse.

Woody Guthrie

During my multiple tours to northern England back in 2002 - 2004, I would walk the Yorkshire moors every weekend. I carried a little Walkman -- a portable CD player. I carried one or two CDs, and almost always carried the greatest hits of Woody Guthrie.

I have no idea how many times I must have listened to these songs but never tired of them; great walking music. Some days I walked greater than twelve hours/day. I remember starting at 8:00 a.m. and by the time I got back to the base, twelve hours later, I thought I was not going to make it back.

I notice that no one is singing about dust bowls or droughts in the US any more. But they're sure talking about global warming a lot. Whatever.

WTI Trending Downward; Gasoline Prices Trending Up -- March 8, 2019

Active rigs:

Active Rigs67594433114

Six new permits:
  • Operators: CLR (5); MRO
  • Fields: Little Knife (Dunn); Chimney Butte (Dunn)
  • Comments:
    • CLR has permits for a 5-well Fuller pad in lot 1, section 2-146-97, Little Knife oil field;
    • MRO has a permit for Meredith well in section 23-146-95, Chimney Butte oil field;
Six permits renewed:
  • RimRock Oil & Gas: three Charging Eagle permits, in Dunn County
  • Equinor Energy: three Jarold permits in Williams County
Two permits canceled:
  • XTO: two Johnson Trust Federal permits in McKenzie County

Norway State Wealth Fund To Dump ALL Oil And Gas Stocks; Venezuela Owes COP $8 Billion-- March 8, 2019

Link here.

Yeah, Like COP Will See This Any Time Soon

From SeekingAlpha:
  • Venezuela must pay more than $8B to ConocoPhillips (COP -4.2%) for the country’s seizure of the company’s oil assets in 2007, according to a ruling from a World Bank arbitration tribunal
  • the award plus an earlier $2B arbitration award makes COP the biggest victor in claims from a wave of nationalizations in Venezuela last decade, but the country still could contest the ruling
  • the tribunal found the takeover unlawful in 2013 and rejected Venezuela’s request for reconsideration in 2017
  • COP shares are lower along with most oil and gas names as crude oil prices fall sharply today

Random Look At A CLR Sakakawea Federal Well -- March 8, 2019

Is something happening?

The tea leaves suggest that Harold Hamm is looking to this calendar year, 2019, as being another huge year for the company. in addition to activity reported in the daily activity reports:
  • CLR plans to increase production significantly over next five years; from 300,000 boepd (2019) to 500,000 boepd by 2023; north will contribute 60-65% (both in 2019 and 2023)
  • [by the way, compare CLR's plans to produce 500,000 boepd by 2023 with XOM's and Chevron's plans for the Permian]
  • Hamm loves STACK/SCOOP but the reality is that it's the Bakken that's making CLR
  • recent fracks suggest CLR is still looking for huge production numbers --
    • to really see what the Bakken can do, or,
    • trying to impress investors
    • probably both
  • The mantra in tight oil seems to be "more sand, more oil."
    • more sand, more oil?
    • law of diminishing returns
    • at what point does the "frack sand volume" curve cross?
    • at what point do EURs quit rising
  • It's hard to believe, but it seems EURs continue to increase across the Bakken
  • halo effect, more there than meets the eye, or just a fantasy?
Fracking strategies are tracked here.

So, let's look at this well -- look at the frack -- almost 16 million lbs, 64 stages --
  • 33088, 1,939, CLR, Sakakawea Federal 2-19H, Elm Tree, 64 stages, 15.8 million lbs, t1/19; cum 20K 1/19;  the Sakakawea Federal wells are tracked here; the 16,908 bbls over 11 days extrapolates to 46,000 bbls/30-day month -- somewhat unremarkable for a 16-million-lb frack but we have to wait for the first full unconstrained (FFU30) 30-day production number;
NDIC File No: 33088     API No: 33-053-07816-00-00     CTB No: 233088
Well Type: OG     Well Status: A     Status Date: 12/15/2018     Wellbore type: Horizontal
Location: NESE 25-153-94     Footages: 2012 FSL 482 FEL     Latitude: 48.043356     Longitude: -102.700010
Current Well Name: SAKAKAWEA FEDERAL 2-19H
Elevation(s): 2145 KB   2117 GR   2120 GL     Total Depth: 22010     Field: ELM TREE
Spud Date(s):  6/1/2017
Casing String(s):  9.625" 2060'   7" 11633'  
Completion Data
   Pool: BAKKEN     Perfs: 11633-22010     Comp: 9/8/2018     Status: F     Date: 1/22/2019     Spacing: 2SEC
Cumulative Production Data
   Pool: BAKKEN     Cum Oil: 19629     Cum MCF Gas: 26002     Cum Water: 15269
Production Test Data
   IP Test Date: 1/22/2019     Pool: BAKKEN     IP Oil: 1939     IP MCF: 2323     IP Water: 1661
Monthly Production Data
PoolDateDaysBBLS OilRunsBBLS WaterMCF ProdMCF SoldVent/Flare

The area is incredibly active right now:

The File Report

Let's look at the file report for #33088: well, that didn't take long. Completely unremarkable, except perhaps high pressure. But look at the time it took to drill this well. I may be reading this incorrectly, but it appears 7 drilling days to drill this well.

CLR Corporate Presentation

CLR presentation, February, 2019, link here.  From the presentation:
  • 2018: was CLR's "breakout year"
  • Bakken:
    • 52 wells average 2,800 boepd IP per well
    • 60% of 2018 Bakken program paid out by end of 4Q18
    • full year, 2018: 168,177 bopd, up 21%, yoy
    • 4Q18: 183,836 boepd, up 10% sequentially (from 3Q18)
  • STACK:
    • 19 wells average 3,645 boepd IP per well
    • Boden unit wells outperforming parent type curve by ~ 40%
  • SCOOP:
    • 4Q18 oil production up 47% over 4Q17
  • Full year results:
    • $988 million net income
    • $824 million net debt reduction since December, 2017
    • record low annual LOE: $3.59/boe
    • 14% increase in YE 18 proved reserves over YE17
  • CLR: #1 producer in the Bakken
    • accounts for 14% of ND Bakken production; peers well below this number
  • four recent wells (Brandvik 9-25H, Dvirnak 5-7H, Dvirnak 8-7H, and Jensen 6-8H) well above the 1,200 Mboe type curve -- well above 1.2 million boe EUR -- incredible

Jobs -- March 8, 2019


Later, 9:13 a.m. Central Time: market not impressed. Still down 171 points in early trading and the market has been down all week. 

Later, 9:06 a.m. Central Time: the "experts" were off by a factor of 10. The consensus: 200,000 jobs added in February. The number came in at 20,000. Look at the forecasts by six folks on CNBC just before the numbers came out: this is an incredibly good example of group think. Rick Santelli was the worst.

Later, 9:06 a.m. Central Time: record number of Americans employed -- 156,949,000 -- making America great. Link here. Mainstream media unlikely to report it. The unemployment rate dropped to 3.8%, down from 4% a month earlier. But everyone is talking about the biggest U6 drop in history. The unemployment rate for Hispanics has never been this low. But the unemployment rate for African-American increased by two-tenths of a point in February. The U6 rate: more encompassing unemployment rate that counts discouraged workers as well as those holding jobs part time for economic reasons, often called the "real" unemployment rate, plunged to 7.3 percent in February from 8.1 percent in January. On a percentage basis, that's the biggest drop in U6 rate in history -- I believe I heard.

Original Post

Jobs: good, bad, indifferent --actual -- 20,000, 3.8%
  • forecast
    • 210,000, 3.8
    • 200,000, 3.9
    • 195,000, 3.5
    • 200,000, 3.9 
    • 189,000, private jobs only, Steve Liesman, doesn't do govt numbers,
    • 239,000, won't give rate, Rick Santelli
Dow, futures:
  • before February jobs number is released: down 130 points
  • after Februaryjobs number is released: down 200 points; now moving down 220 points
Reaction on CNBC to jobs report:
  • 20,000 vs 200,000
  • "don't read too much into one number
  • unemployment number remains low
  • I wouldn't panic
  • analysts "way off"
  • Steve Liesman: "lots of stuff gives me questions about the number"
  • weather
  • winter storms
  • construction numbers fell off the cliff
  • government shutdown -- during this period; confusing 
  • 63.2% participation rate remains unchanged 
  • U6: huge drop; largest drop on record; U6 number is "pretty amazing"
  • housing starts up 18.6% vs 9.5% estimate
  • bottom line: talking heads very, very positive about the number; not concerned;

Only One Well Comes Off Confidential List Today; Russian Oil Imports Surging; Jobs -- March 8, 2019

Jobs: good, bad, indifferent --actual -- 20,000 3.8%
  • forecast
    • 210,000, 3.8
    • 200,000, 3.9
    • 195,000, 3.5
    • 200,000, 3.9 
    • 189,000, private jobs only, Steve Liesman, doesn't do govt numbers,
    • 239,000, won't give rate, Rick Santelli
Dow, futures:
  • before February jobs number is released: down 130 points
  • after Februaryjobs number is released: down 200 points
Russia's oil exports to US surge amid sanction on Venezuela. Link here. Data points:
  • data from February
    • Russian imports highest since 2011
    • taking advantage of the Venezuelan collapse
  • So, let's see how much oil we're talking about --
    • 3.19 million bbls in the week February 23 t0 March 1
    • about 500,000 bopd
    • but most of it naphtha and fuel oil 
  • Venezuela (preliminary EIA data)
    • most recent week: 83,000 bopd
    • previous week: 208,000 bopd
    • Venezuela uses naphtha as a diluent
ISO New England: link here. Actually doing quite well; remains in $50 - $75/MWh range; 2% coal; renewables, 8%.

Back to the Bakken

Only one well coming off confidential list today -- Friday, March 8, 2019: 27 wells for the month; 27 wells for the quarter
  • 33088, 1,939, CLR, Sakakawea Federal 2-19H, Elm Tree, 64 stages, 15.8 million lbs, t1/19; cum 20K 1/19;
Active rigs:

Active Rigs65594433114

RBN Energy: part 2 -- more Mexican gas pipelines on the way, but challenges loom.
The Mexican market is critically important to Permian producers. Rising gas demand south of the border — along with expected gains in LNG exports from new liquefaction/export facilities along the Gulf Coast — are key to their plans to significantly increase production of crude oil, which brings with it large volumes of associated gas.
All that gas needs a market, and nearby Mexico is a natural. For a number of years now, Mexico’s ComisiĆ³n Federal de Electricidad has been working to implement a plan to add dozens of new gas-fired power plants and to support the development of new gas pipelines to transport gas to them from the U.S. The new pipelines have been coming online at a slower-than-planned pace. But what pipeline capacity has been added across the border from West Texas is already changing Mexico’s gas market. The El Encino Hub in Northwest Mexico is one such area where there are signs of a shifting supply-demand balance. Today, we continue a blog series on key gas pipeline developments down Mexico way and the implications for gas flows, this time delving into the dynamics at the El Encino Hub.
The aim of this series is to provide an update on pipeline development in Mexico. In Part 1, we focused on pipelines entering Mexico from far West Texas.
We noted that natural gas enters Northwest Mexico on three pipelines from the U.S.: Kinder Morgan’s El Paso Natural Gas (EPNG; aqua-green lines), the ONEOK-operated Roadrunner (orange line), and the Energy Transfer-operated Comanche Trail (brown line). Note that Roadrunner is owned in a 50/50 joint venture between Fermaca and ONEOK, while Comanche Trail is owned by a consortium comprising Carso Group (51%), Mastec (33%) and Energy Transfer (16%).
Volumes on these three pipelines have been running around 400 MMcf/d combined, about half of which is delivered to power plants and local distribution companies (LDCs) near the town of Samalayuca, which is just south of the major Northwest Mexico industrial center of Ciudad Juarez. The rest of the gas then flows south toward El Encino, mostly on Fermaca’s Tarahumara Pipeline or on SISTRANGAS. In the future, gas from West Texas will also be able to access the Samalayuca-Sasabe Pipeline.