Monday, March 18, 2019

The Bakken Is Back -- March 18, 2019

Link here.

From the linked article:
When it comes to passengers flying into and out of Williston, the boom is back.
Numbers released this week by the North Dakota Aeronautics Commission show boarding numbers are up 16 percent so far this year compared to 2018 and up 13 percent compared to last February.
In the first two months of the year there were 12,397 passengers at Sloulin Field, compared to 10,657 for the same period last year.
Airport  YTD boardingsPercentage change from 2018 
Fargo  75,0356.17% 
Grand Forks  18,8950.87% 
Minot 24,517 9.79% 
Williston 12,397 16.33% 

Williston’s numbers are higher than they’ve been since 2015, when nearly 20,000 passengers flew into and out of Sloulin Field in the first two months of the year.
The increase in traffic comes as construction continues on Williston Basin International Airport, which is scheduled to open in October.
More at the link.


Elenore, The Turtles

US LNG Driving Down Gas Prices In Britain -- March 18, 2019

British imports by source. Link here. Only three countries are relevant:
  • Qatar
  • Russia
  • the US
Everything else is background noise.

Not too long ago, it was all about Qatar. Overnight, it seems, Qatar has become irrelevant.

Now, the US and Russia are eating Qatar's lunch, as they say.An amazing graphic.

Making America Great: Natural Gas

Reading the headlines this past year, I thought utilities were focusing on only solar and wind. Wow, not quite.

Despite all the tax breaks, subsidies, grants, and government mandates, natural gas (thank you) is doing just fine:


Happy Together, The Turtles

WTI Breaks Through $59 -- March 18, 2019

Active rigs:

Active Rigs65584732107

Five new permits: pending
  • Operator: XTO
  • Field: Heart Butte (Dunn County)
  • Comments: XTO has permits for a 5-well FBIR Baker pad in section 25-149-92 in Heart Butte oil field (see below)

Four permits renewed:
  • BR: two Saddle Butte permits and two Curtis permits, all in McKenzie County
Six producing wells (DUCs) reported as completed:
  • 34162, 469, XTO, Pelton Federal 11X-35BX, Bear Creek, t1/19; cum --;
  • 35834, SI/NC, Whiting, Moline 31-14-5TFHU, Tyrone,
  • 32463, 421, Petro-Hunt, Milt Sandra 15-20HS, Ambrose, t3/19; cum --;
  • 35289, 771, Whiting, Berg Trust 34-22-3TFH, Pembroke, t3/19; cum --;
  • 34670, 1,142, Hess, GO-Bergstrom 156-98-2833H-4, Wheelock, t2/19; cum --;
  • 34669, 1,520, Hess, GO-Bergstrom 156-98-2833H-5,  Wheelock, t2/19; cum -0;
XTO Baker Wells Sited in Section 25-149-29, Heart Butte Oil Field

There's currently a 5-well Baker/Walker pad situated in this section:
  • 23395, 1,158, XTO, FBIR Baker 34X-25E, Heart Butte, t1/13; cum 231K 1/19;
  • 19293, 1,537, XTO, FBIR Walker 34X-25, Heart Butte, t7/11; cum 355K 1/19;
  • 23394, 1,170, XTO, FBIR Baker 34X-25A, Heart Butte, t1/13; cum 252K 1/19;
  • 23393, 943, XTO, FBIR Baker 34X-25F, Heart Butte, t1/13; cum 218K 1/19;
  • 19292, 1,358, XTO, FBIR Baker 34X-25, Heart Butte, t7/11; cum 220K 1/19;
The Book Page

The Silk Roads: A New History of the World, Peter Frankopan, c. 2015, first Vintage softcover printing, 2017. At B&N: $27.00.

It looks like a good book but I'm always leery when I read "a new history...." of anything.

China and India competing for trade in the 14th and 15th century. From the book:
Cochin emerged as a rival to Calicut int he fifteenth after an aggressively competitive tax regime succeeded in attracting considerable trade ....

Widening horizons in this way, however had its costs. Zheng He's first expedition involved some sixty large ships, several hundred smaller vessels and nearly 30,000 sailors, representing a very substantial outlay in terms of pay, equipment and the extensive gifts sent along with the admiral for us as tools of diplomacy. This and other initiatives were paid for by a sharp rise in the production of paper money, but also by increasing mining quotas -- which led to a trebling of revenues from this sector in just over a decade after 1390. -- pp. 190 - 191.
Zheng He? See this post. Or search "Menzies" at the blog.

Spices were often a euphemism for opium along the "silk roads." It would be interesting to know more about opium trade early on in the Silk Road history, let's say, well before the 16th century. The first mention of opium in Frankopan's book is with the 19th century Sino-British opium wars.

When Paris Sizzled: The 1920s Paris of Hemingway, Chanel, Cocteau, Cole Porter, Josephine Baker, and Their Friends, Mary Mauliffe, c. 2016.


I have always said "1969" was the best year for music. Now this, from Hollywood Reporter:
Sony Pictures on Monday released the first poster for Quentin Tarantino's Once Upon a Time in Hollywood.
In the official promo art for the forthcoming drama, stars Brad Pitt and Leonardo DiCaprio are seen dressed in late '60s garb for the film centered around the actors' respective characters, Cliff Booth and Rick Dalton, as they move through a city and a business they hardly recognize anymore.

The highly anticipated film was first announced in February 2018. Tarantino — who is directing and producing the film, for which he also wrote the script — describes it as "a story that takes place in Los Angeles in 1969, at the height of hippy Hollywood."

"I've been working on this script for five years, as well as living in Los Angeles County most of my life, including in 1969, when I was seven years old," Tarantino has said of the film. "I'm very excited to tell this story of an L.A. and a Hollywood that don't exist anymore. And I couldn't be happier about the dynamic teaming of DiCaprio and Pitt as Rick and Cliff."
His Name Was Bill 

Da Doo Ron Ron, Lala Brooks

Monday, March 18, 2019, T+75, Part 8

How the California oil boom died -- oilprice -- March 14, 2019 -- link here. From the link:
Since 2010, U.S. oil production has increased by 131 percent, with huge gains in oil production in the following states (among others):
• North Dakota – up 634 percent
• Colorado – up 508 percent
• New Mexico – up 377 percent
• Texas – up 330 percent
• Oklahoma – up 238 percent
In fact, only three major oil-producing states have seen a decline in oil production since 2010: California, Louisiana, and Alaska. One of the graphics I created for my presentation shows the stark contrast between oil production in Texas and California as the shale boom unfolded.
California is missing the shale boom.
I'll stop here for now, but this is one of the reasons I love to blog. We talked about the Monterey Shale many years ago and predicted that California would not participate in the shale revolution for two reasons: geology and politics. Right on both accounts.

Had California successfully participated in the shale boom, it's very like Californians would be paying $1.99/gallon vs the $5.00/gallon they now pay (yes, a bit of hyperbole -- but this is a blog, not a fake news media outlet.)

The article at the link is a "keeper."

I'll be off the net for awhile. Going to H Mart in Plano to pick up some chicken paws.

For Your Love

For Your Love, The Yardbirds

Monday, March 18, 2019, T+75, Part 7

If you came here looking for the Bakken, I apologize for all these non-Bakken notes. I'm off my meds. LOL.

If you are looking for today's morning note, scroll down several posts or go directly to this link.

Overnight, we got this photo of a big cat on our neighbor's porch overlooking Flathead Lake, Montana. This would be at Mission View Terrace, just a mile or so away from Lakeside.

After the cat left, our neighbor measured the distance on the porch, to estimate the length of the reclining cat.

The cat did not appreciate the neighbor's attempt to take "direct" measurements. There is some question whether our neighbor will leave the hospital with both hands intact. Just joking.

But this is not the same neighbor that paints an "X" on the bottom of the boat to mark a great fishing hole. That would be the neighbor to the south.

I think I posted this a couple of days ago, can't remember. Sophia's first word -- other than her own name -- that she learned to spell and print on her own:

California Girls

California Girls, Fendertones

Monday, March 18, 2019, T+75, Part 5

Chicken paws.

A huge, huge "thank you" to a reader for sending a note on "chicken paws." I read the note -- some days ago. I didn't know what to do with the note, and then, one thing led to another, and here I am, at chicken paws. (It's better than thinking about Occasional-Cortex -- although it only takes three dots to connect "chicken paws" with Occasional-Cortex.)

At the link:
The United States Department of Agriculture does indeed make a distinction between chicken feet and chicken paws.
The chicken paw on the left (see photo at the link) does not have as much of the lower leg as the chicken foot on the right. While the difference may seem subtle to many people, it's apparently very important to consumers in China.
Two things: today, my wife and I will go to sushi in Plano. After lunch we will stop at H Mart, the "Asian Walmart for groceries." The entire store is awesome but my favorite is the seafood and frozen fowl section.

Years ago, my wife-to-be almost broke up with me when, while touring northern California, I suggested "doughnut holes" for breakfast. She did not know about doughnut holes, but immediately visualized them, thinking that I was warning her about gaining weight. Wow, did she blow up at me when I suggested "doughnut holes." That was 43 years ago. I remember it like it was yesterday.

We had a lot of miscommunication those days.

One day while driving around Sacramento, CA, the capital of the Golden State, my wife wondered out loud if I knew where Jerry Brown lived. Of course, she was referring to the governor, but I had a very, very close friend in college, also named Jerry Brown. When asked if I might know where Jerry Brown might live, again, my wife blew up when I said, "I suppose somewhere in Minneapolis."

But I digress.

Back to chicken paws. On the way to sushi today, I'm going to casually suggest we buy some chicken paws on the way home. Of course, she will correct me, telling me I misspoke, and that I meant "chicken claws" or chicken feet. I won't say a thing; I will simply pick up a bag at H Mart. LOL.

The Book Page

I am reading several books right now, mostly literature.

But I am carrying with me, The Los Alamos Primer: The First Lectures on How to Build An Atomic Bomb, by Robert Serber, annotated by Robert Serber, edited with an introduction by Richard Rhodes, University of California Press, c. 1992.

The book is hardcover. At the museum in Los Alamos it cost me $79. It's available at Amazon for $43. Lesson learned. Again. But no regrets. None. The museum gave me a bunch of free stuff including another hardcover book. 

Mother's Day

I should save these for Mother's Day but that's too long to wait.

Quick, pop quiz:

1. What was Buzz Aldrin's (second man on the moon) mother's maiden name?

2. Who was"Enola Gay" -- the name painted on the B-29 that dropped the first atomic bomb?

3. Extra credit: the name of the B-29 that dropped the second atomic bomb?

Enola Gay, The OMD

Monday, March 18, 2019, T+75, Part 4

More to follow, but just had to post this picture. Lunch at the Kimbell Museum of Art, Fort Worth, Texas. The museum's luncheon may just be the best-kept secret in the metroplex.

The soup in front of Sophia, is Brunswick Stew. Until yesterday I had never (knowingly) supped on Brunswick Stew. Fantastically delicious: navy bean soup with lots of chicken.

More importantly I learned the origin of Brunswick Stew, and the origin of Brunswick.

But here's the biggest treat: this gives me an opportunity to highlight something a reader sent me: chicken paws. 
The Book Page

After visiting the Bellotto / Dresden exhibit yesterday, I had to go back and re-read the Kurt Vonnegut / Slaughterhouse-Five section in Richard Rhodes' The Making of the Atomic Bomb, c.1986.

At the time of the bombing, Vonnegut was a slave-prisoner working in a maple syrup factory. The state factory was making maple syrup for pregnant mothers. The factory was in/near a slaughterhouse. When the bombing began, the slave-prisoners took shelter in the bovine slaughterhouse, two floors below ground. The bombing was very short-lived. When the survivors came to the surface they saw Dresden completely destroyed.

Monday, March 18, 2019, T+75, Part 3

Disclaimer: this is not an investment site. Do not make any investment, financial, job, travel, or relationship decisions based on what you read here or what you think you may have read here.

WTI: up 31 cents; trading at $58.83.

Market, at the close:
  • Tesla, down another 2.2% -- dropped below support at $270; trading at $269/share
  • XLNX, up another 1%; up about $1.11 -- trading over $125/share
  • UNP, up 1%; now trading over $166/share
  • AAPL, climbing the wall of worry; up 2%;
  • RDS-B, up about 1%
  • CVX, up about 0.5%
  • COP,  flat for the day; but closes "green" for the day
  • BRK, up about 1%
So, observations:
  • it was reported last week that Norway dumped "all" their fossil fuel investments; turned out to be untrue. The state trust kept the really, really good majors like RDS-B and Exxon. LOL. 
  • climbing the wall of worry: the Apple story is going to be incredible; just saying.
  • if Exxon really does produce oil in the Permian at $15/bbl (as reported earlier), "Katie, bar the door"
  • my favorite major: RDS-B; it doesn't mean I invest/trade RDS-B, it just means, of the majors, I find it most interesting, although Exxon is getting my attention with their Permian talk
  • I'm still blown away by Black Hills Corporation; see this link; I have never bought BKH;  
  • for a young investor like Connor, I suppose, I could not ask for a better market a better time to invest --
I assume I posted this screenshot and provided the link, can't remember:

The Art Page

Yesterday, as part of our five-day wedding anniversary extravaganza (day 3 of 5), we took Sophia to the Kimbell Museum of Art, Ft Worth, TX. Wow, she had a great time.

The special exhibit: Bellotto / Dresden.

When one reads about ISIS destroying priceless artifacts, just remember it was Churchill's decision -- and his alone -- to firebomb Dresden (there were no military targets there), perhaps one of the worst atrocities of WWII from the Allied side.

No excuses.

At the museum:

Monday, March 18, 2019, T+75, Part 2 -- Beto Sets Capitalist Fund-Raising Record

Record year for North Dakota oil? Yup -- but this time, canola oil. LOL. From The Bismarck Tribune, data points:
  • North Dakota: #1 one in canola (also #1 in nuclear weapons; honey; some varieties of wheat; some varieties of legumes, and, occasionally in #1 in common sense); 
  • canola in North Dakota:
    • 2018: a record average yield of 1,960 pounds -- let's round that to 2,000 pounds -- that would be a ton -- of canola per acre
    • the state, 2018: a record 3.1 billion pounds, up 24% from 2017
  • but look at this, North Dakota produced a whopping 88% of the total US canola production of 3.6 billion pounds
  • canola fares best in cool conditions; so it's popular in North Dakota, especially the northern part of the state
    • some fields yielded 3,000 pounds or more per acre
  • canola: first produced in Canada in 1974
  • historically found in northwestern North Dakota, but now, with a canola processing plant in northwestern Minnesota, more farmers in northeastern North Dakota are planing canol
  • with poor prices for soybeans, more farmers could switch to canola
    • but with strong correlation between soybeans and canola, the price of the latter not particularly attractive, either
  • much more at the link: Willie Nelson's bus can run on canola oil.
Monday, March 18, 2019, T+75: Beto says he set fund-raising record -- says he raised $6.1 million in first 24 hours after announcement. Previous record: crazy Bernie, the socialist, raised $5.3 million in the first 24 hours. Now it's Biden's turn.

Floods: apparently the rise of the Atlantic Ocean pushed back into the Gulf of Mexico, pushing back on the Mississippi River, up to the Missouri River, and now we have record floods in Nebraska. The governor of Nebraska was on the radio today suggesting that the current floods in Nebraska are the worst on record, going back all the way to .... the 1960s.

See this Greenpeace link, trying to erase their history.

Have You Seen The Rain? CCR

Monday, March 18, 2019, T+75 -- Just Another Day In Paradise

Disclaimer: this is not an investment site. Do not make any investment, financial, job, travel, or relationship decisions based on what you read here or what you think you may have read here.

The market: early morning trading -- my watch list is 100% green except for Dominion, down slightly, and Tesla, down another $4, down 1%, and trading below $273/share.

But, first things first: since the Spurs game (March 13, 2019), the Mavericks have played two more games.
They lost 100 - 99 to the Las Vegas Nuggets; Dirk scored nine points in 19 minutes of play. So, that would have put Dirk 17 points away from moving up the all-time scoring list. Then, yesterday (Saturday), the Mavericks finally won a game, beating the Cleveland Cavaliers 121 - 166. Dirk: wow -- 14 points in 29 minutes. It was a home game. That should mean he is one basket from tying Wilt Chamberlain in all-time scoring. Let's check. Wilt Chamberlain, 31,419. Dirk Nowitzki, 31,416. Yes! Three more points. It's a home game, tomorrow (Monday) night -- against the New Orleans Pelicans. Start time: 7:30 p.m. By 8:00 p.m. it "all be over." Tune in late and you will miss the excitement.
Meanwhile, I'm not sure if this is good for US network ratings with regard to the Players PGA tournament: not one of the four leaders at the beginning of the fourth round was an American. In order, a Spaniard; an Englishman; northern Ireland; and, Australia. Anyone in the top 20 from South Korea? I don't think so.
Three years ago, "we" wondered whether Tiger would ever play again.

Two years ago, "we" wondered if Tiger would ever make "the cut" again to play a full tournament.

One year ago,"we" wondered if Tiger would complete a full tournament.

This year, the announcers are excited if Tiger finishes among the "top 20." Right now, in the fourth round, after eight holes, he is tied for 30th, having moved up 13 places in the early fourth round holes. [Final: tied for 30th.]

NASCAR: Is anyone else disturbed that Kyle Busch is allowed to race with the junior varsity? Only in NASCAR, I guess. I'm pretty much tired of it.
Having said that, he was incredible in the Sunday varsity race. Good for him. But he needs to quit racing with the junior varsity.
Shut Down, The Fendertones

Disclaimer: to repeat, this is not an investment site. Do not make any investment, financial, job, travel, or relationship decisions based on what you read here or what you think you may have read here.

BKH: I'm not sure how I ended up here. I was looking for something else and ended up looking at Black Hills Corp. At least one reader was invested in BKH at one time. I must have been curious. Wow. Look at this. This is a utility. Utilities are said to be boring, seldom moving much in either direction. But look at this one-year chart: $55/shr a year ago, now trading at $73. Who wudda guessed.

It is "enlightening" to see how BHK has done over a 5-year span and compare both the one-year / five-year charts with MDU. Who wudda guessed?


No good deed goes unpunished:
  • Factoid: tax rates went down for everyone; more for some, less for others, but tax rates went down across the board
  • Factoid: high earners living in McMansions in some blue states in New England may pay more due to capping of SALT deductions; those affected: tiny minority of all Americans
  • Factoid: polls suggest one out of five Americans think they will pay more in taxes for 2018 after tax cuts went into effect
  • Conclusion: more Americans than ever are earning more than ever. Make America great.
  • Perhaps: it would have been better for President Trump to have increased tax rates for everyone. The criticism would have been no different, but Congress would have had more money to spend. And it would have taken a bit of wind out of the sails of crazy Bernie and the other 75 Democratic candidates who want to raise taxes.
No good deed goes unpunished. Some politicians learned that decades ago.

Exxon Looks To Produce Permian Oil For $15/Bbl -- XTO -- Bloomberg -- March 18, 2019

$15-Oil In The Permian. ExxonMobil's plans:
Exxon Mobil Corp. plans to reduce the cost of pumping oil in the Permian to about $15 a barrel, a level only seen in the giant oil fields of the Middle East.
The scale of Exxon’s drilling means that it can spread its costs over such a big operation that the basin will become competitive with almost anywhere in the world, Staale Gjervik, president of XTO Energy, the supermajor’s shale division, said in an interview.
Development, operating and land acquisition costs will be “in and around $15 a barrel,” he said on the sidelines of the CERAWeek Conference by IHS Markit in Houston. West Texas Intermediate futures traded at almost $59 on Thursday. “The way we are approaching it is very unique compared to most, if not really everybody out there, as far as the scale," he said.
Exxon plans to deploy 55 rigs in the Permian this year, by far the most of any driller, as it aims to increase output in the region fivefold to about 1 million barrels a day by 2024.
Its strategy also includes building its own takeaway infrastructure from separation tanks to pipelines, and it’s even joining a giant conduit project to make sure its oil doesn’t get stuck in bottlenecks that have depressed prices in West Texas.
Some analysts raised their eyebrows over Exxon’s ambitious plan for the Permian, but Gjervik -- a Norwegian who joined Exxon in 1998 and has worked in Angola, Nigeria and the North Sea -- argues that it’s exactly that kind of massive scale that will help the company generate $5 billion of cash flow from the region by 2023.
More at the link.

For newbies: XTO is a pretty big operator in the Bakken

Big Oil Dodged A Bullet

Norway, link here.
Norway took a partial step in divesting oil and gas stocks in its massive $1 trillion wealth fund, approving the sale of smaller exploration companies while sparing the biggest producers such as Royal Dutch Shell Plc and Exxon Mobil Corp.
After more than a year of deliberation, the government approved excluding 134 companies classified as exploration and production companies by FTSE Russell, including Anadarko Petroleum Corp., Chesapeake Energy Corp., Cnooc Ltd. and Tullow Oil Plc. The proposal would see the fund sell about $7.5 billion in stocks.
The Rally

Disclaimer: this is not an investment site. Do not make any investment, financial, job, travel, or relationship decisions based on what you read here or what you think you may have read here. 

The tea leaves this morning suggest the recent "oil rally" will continue through this summer, although it may not be particularly remarkable.

OPEC, from twitter this morning:
  • cancelled its "extraordinary" meeting penciled in for April
  • next meeting will be the regularly scheduled meeting in June
  • Saudi Arabia won't change course on cutting production until it sees significant inventory drop
  • inventory continuing to increase despite efforts
Back to the Bakken

Wells coming off confidential list over the weekend, today --Monday, March, 18, 2019: 79 wells for the month; 299 wells for the quarter
  • 35240, SI/NC, WPX, Spotted Horn 26-35HUL, Squaw Creek, no production data,
  • 34625, 2,059, CLR, Anderson 7X-4H, Willow Creek, t10/18; cum 148K 1/19;
  • 33857, 1,031, Oasis, Berry 5493 42-7 8T, Robinson Lake, t10/18; cum 95K 1/19;
  • 33856, 1,220, Oasis, Berry 5493 42-7 9B, Robinson Lake, t10/18; cum 116K 1/19;
  • 23942, SI/NC, XTO, FBIR Yellowwolf 21X-10E, Heart Butte, no production data,
Sunday, March, 17, 2019: 74 wells for the month; 294 wells for the quarter
  • 35011, conf, WPX, Spotted Horn 27-34HD, 
  • 34643, 1,651, CLR, Anderson 10X-4HSL1, Crazy Man Creek, t10/18; cum 96K 1/19;
  • 34253, SI/NC, BR, Raider 4A MBH, Twin Valley, no production data,
  • 33889, 778, Oasis, Berquist 5298 13-27 9B, Banks, t10/18; cu 114K 1/19;
  • 32814, 2,110, CLR, Brandvik 8-25H1, Corral Creek, t1/19; cum 106K 1/19;
  • 23938, SI/NC, XTO, FBIR Yellowwolf 21X-10A, Heart Butte, no production data,
Saturday, March, 16, 2019: 68 wells for the month; 288 wells for the quarter
  • 34252, 227, BR, Raider 3C  UTFH, Twin Valley, t2/19; cum --;
  • 32408, SI/NC, Slawson, Slasher Federal 1 SLH, Big Bend, no production data;
  • 32786, 596, BTA Oil Producers, 20901 Elkhorn 433 1H, Elkhorn Ranch, t11/18; cum 31K 1/19;
  • 32934, 276, BR, Renegade 44-10MBH, Sand Creek, t12/18; cum --;
  • 32933, 165, BR, Chuckwagon 41-15MBH, Sand Creek, t12/18; cum --;
  • 31803, 1,633, CLR, Jensen 7-8H, Chimney Butte, t1/19; cum 66K 1/19;
Active rigs:

Active Rigs65584732107

RBN Energy: IMO 2020 and the heavy-sour crdue shortage.
Last year, the impending implementation of International Maritime Organization’s rule mandating the use of lower-sulfur marine fuels starting January 1, 2020, widened the price spread between rule-compliant 0.5%-sulfur bunker and the 3.5%-sulfur marine fuel that has been a shipping industry mainstay. Traders’ thinking was that demand for high-sulfur bunker would evaporate in the run-up to IMO 2020, as the new rule is known.
But since early January, the spread between low- and high-sulfur fuel at the Gulf Coast has narrowed from nearly $11/bbl to less than $2/bbl. The culprit is a shortage of heavy-sour crude caused by a number of factors. Today, we begin a two-part series on low-sulfur vs. high-sulfur fuel and crude values as IMO 2020 approaches.
Given IMO 2020’s broad implications — not only for the shipping industry but for crude oil producers and refineries — it’s natural that the rule would be a frequent topic in RBN blogs.
The IMO — a specialized agency of the United Nations — for a number of years has been ratcheting down allowable sulfur-oxide emissions from the engines that power the 50,000-plus tankers, dry bulkers, container ships and other commercial vessels plying international waters.
IMO 2020, the agency’s latest rule, calls for the current 3.5% cap on sulfur content in bunker fuel in most of the world to be reduced to a much stiffer 0.5% nine-plus months from now. [There is an even tougher 0.1%-sulfur limit already in place in the IMO’s Emission Control Areas (ECAs), which include Europe’s Baltic and North seas and areas within 200 nautical miles of the U.S. and Canadian coasts.]
We also looked at the six primary factors ­­seen as bringing the marine fuel market into something approaching a balance as IMO 2020 kicks in: (1) some degree of non-compliance with the rule, (2) on-ship “scrubbers” to capture sulfur-oxide emissions, (3) blending of existing low-sulfur fuel oil with distillate to make rule-compliant marine fuel, (4) refinery upgrades (to produce more low-sulfur products), (5) shifts in crude slates and crude oil flows, and (6) increased global refining throughputs.