Wednesday, May 22, 2019

Gasoline Demand -- May 22, 2019

Link here.

Five New Permits -- May 22, 2019

Active rigs:

Active Rigs6464512582

Six new permits:
  • Operators: MRO (4); Whiting (2)
  • Fields: Reunion Bay (Mountrail County); Foreman Butte (McKenzie County)
  • Comments:
    • MRO has permits for 4 wells in Reunion Bay (either two locations very close together or on one pad)
      • one in lot 3/section 2-150-93
      • three in section 34-151-93
    • Whiting has permits for a 2-well Irwin pad in section 25-150-103, Foreman Butte
That was all.

EIA Weekly Petroleum Report -- May 22, 2019


Later, 9:25 p.m. CT: look at the note below -- that is accurate -- total gasoline imports last week rose to 1,350,000 bbls/day -- that's an increase of almost 600,000 bbls/day and an eight-year high. Gasoline demand is down (year-over-year). Last week, for example, gasoline imports were only 752,000 bbls/day-- significantly less than the 1.3 million bbls/day this past week. One has to ask the question: what's driving the increase in gasoline imports? I really don't know. My hunch: is has to do with the West Coast. Let's check. From Reuters, last month, record amounts of gasoline were imported from Europe into the west coast.

Later, 5:56 p.m. CT: regarding today's EIA weekly petroleum report, a reader noted --
Noteworthy: 2nd gasoline storage build in 14 weeks despite a 281,000 bpd increase in product supplied because our imports of gasoline rose by 598,000 barrels per day to an eight-year high of 1,350,000 barrels per day, while our exports of gasoline fell by 369,000 barrels per day to 416,000 barrels per day.
Later, 12:50 p.m. CT: WTI off over 3%; down almost $2.00; now trading at $61.16. The best model to explain all this at this post. On top of the huge build that was announced yesterday, we now have forecasts that US shale oil production is set to grow by 16% in this calendar year (2019); and, finally, unless something significant happens, it looks like the Mideast risk premium has been taken out of current pricing.

Original Post
WTI: down 1.5%; down almost a buck; now trading at $62.22/bbl. Gee, I wonder why?
Big_Orrin over at twitter says that based on API "actual inventories" this is his EIA forecast:
  • crude: +8.2 million bbls
  • Cushing: +1.2 million bbls
  • distillate: +1.0 million bbls
  • gasoline: +2.3 million bbls 
The EIA numbers for week ending May 17, 2019:
  • US crude oil inventory: increased by 4.7 million bbls
  • US crude oil inventory: stands at 476.8 million bbls, about 4% above the 5-year average (last week, total inventories were said to be about 2% above the 5-year average)
  • refinery operating capacity: operating at 89.9% -- very low -- and it's down slightly from last week
  • both gasoline and distillate fuel production decreased last week
  • US crude oil imports have dropped considerably, now down close to 10% compared to same four-year period last year
  • gasoline imports average 1.4 million bpd; it would be interesting to see how much of this was "California"
  • gasoline inventories increased by 3.7 million bbls (significantly exceeded forecast; see above)
  • distillate fuel inventories increased by about 1 million bbls (in line)
  • but look at this: propane/propylene inventories are about 22% above the 5-year average; increased by 3 million bbls last week
  • jet fuel supplied was up again; up 2.5% compared to same four-week period last year 
Twitter response: pending

From twitter: pay attention to Brazil and Mexico (actually, in the graphic below, note all of South America vs rest of world). Also, note Iraq -- where XOM, others pulled out their personnel due to mideast tensions; from zero back to some imports from Venezuela:

Week Ending
Million Bbls Storage
Week 0
November 21, 2018
Week 1
November 28, 2018
Week 2
December 6, 2018
Week 3
December 12, 2018
Week 4
December 19, 2018
Week 5
December 28, 2018
Week 6
January 4, 2019
Week 7
January 9, 2019
Week 8
January 16, 2019
Week 9
January 24, 2019
Week 10
January 31, 2019
Week 11
February 6, 2019
Week 12
February 13, 2019
Week 13
February 21, 2019
Week 14
February 27, 2019
Week 15
March 6, 2019
Week 16
March 13, 2019
Week 17
March 20, 2019
Week 18
March 27, 2019
Week 19
April 3, 2019
Week 20
April 10, 2019
Week 21
April 17, 2019
Week 22
April 24, 2019
Week 23
May 1, 2019
Week 24
May 8, 2019
Week 25
May 15, 2019
Week 26
May 22, 2019

Update On Mexico -- May 22, 2019

Over at "big stories": Mexico could go the way of Venezuela.

With that in mind, here's a screenshot from twitter.

This is from a long, long update on Mexico. Archived.
  • leftist elected president: Mexico's energy market reform is now five years old; the new president was elected partly on a promise to dismantle that reform
  • centralizing control: "a more naked grab at power"
  • administrative changes: the state has first right-of-refusal for projects; not subject to market concerns
  • pipeline construction: construction on at least five natural gas pipelines has been suspended due to environmental regulations and/or land-use constraints  
  • processing infrastructure: so bad that Pemex declared a force majeure at one of its gas processing plants, and indications are that the wound was self-inflicted, and unlikely to be fixed
  • underserviced demand: Pemex unable to meet demand, especially in the south
  • LNG imports: Mexico has no existing gas storage infrastructure
When (not if) Mexico implodes, the US will look back at the current "southern surge" as a walk in the park, and a warning ignored.

HES: Top-Performing US Oil Producer So Far This Year -- May 22, 2019

When I think of Hess, I think of Tioga, ND. Tioga is about the smallest oil capital in the world.

But there it is: the "year's top-performing US producer" has no exposure to the Permian. None. Nada. Zilch. Wow.

From Bloomberg:
This year’s top-performing U.S. oil producer doesn’t have any operations in the world’s fastest-growing shale play.
New York-based Hess Corp. has climbed about 64% this year to trade above $66 on Tuesday in New York. The S&P 500 Energy Index, meanwhile, is up just 12% over the same period.
Hess is leading the pack with the exception of Anadarko Petroleum Corp., which is being bought by Occidental Petroleum Corp. following a bidding war with Chevron Corp.
Unlike a long list of other oil drillers, Hess isn’t staking its name on the prolific Permian Basin, which has seen shale output nearly double in two years. Instead, the company is tapping a massive discovery more than 3,000 miles away in Guyana and tinkering with techniques to improve results in North Dakota.
“There’s value in portfolio diversity,” said Devin McDermott, an analyst at Morgan Stanley who has a buy rating on the stock. “Hess has an attractive balance of short-cycle shale, which can be flexed up and down with the oil price, and this very attractive longer-cycle development in offshore Guyana.”
Last year's top performing oil stock was ConocoPhillips, which has operations all over the globe, including some assets in the Permian and several other U.S. basins.
Much more at the link.

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 think you may have read here.

Let's go back and look at the "revenue per employee" study.  Of the S&P 500, Hess was #11 on the revenue per employee list, at about $3.75 million / employee. Revenue per employee grew at a 46% rate year-over-year (2018-over-2017).

Development Comes To A Halt In NYC And Environs? -- Con Edison Limits New Service -- May 22, 2019

This story is followed at links below:

New York denies natural gas pipeline; and, here; and, here.

Now, this, today -- it was "predicted" that Con Edison would follow suit ... and they did ....

Off The Net For Awhile

I have to bike home, and then get Sophia ready for TutorTime and take her to school. Hopefully I will be back on the net by 9:00 a.m. Central Time.

Good luck to all.

Project Reconciliation

This is the name of the "effort" by "numerous indigenous groups" to buy a stake in the Trans Mountain pipeline from Alberta to the west coast of Canada.

On another note, this is cool -- the use of the word "riding" -- something we've talked about before.


Number to watch: 11.

Russia's crude oil production continues to drop. Now around 11.1 million bopd vs a recent 11.4 million bopd. 

EIA Today

Later today, the EIA will post its weekly US crude oil inventory data. Big_Orrin over at twitter says that based on API "actual inventories" this will be the EIA forecast:
  • crude: +8.2 million bbls
  • Cushing: +1.2 million bbls
  • distillate: +1.0 million bbls
  • gasolien: +2.3 million bbls
Making America Great

Link here. I don't know about "you," but I find these stories absolutely fascinating. Here's another one. Saudi Aramco agrees to buy a stake in Sempra Energy's Texas LNG export terminal. This is Aramco's first entry into production of oil or gas outside Saudi Arabia.
Aramco can potentially ship the LNG home to the kingdom’s power plants or trade it globally. The state-owned company and Sempra signed a preliminary agreement to acquire a 25% stake in the plant, but didn’t disclose the value of the potential deal.
A recent transaction could give a guideline for what the deal is worth. France’s Total SA paid about $1.5 billion for the LNG assets of utility Engie SA, which included shares in Sempra’s Cameron LNG plant in the U.S.
I think that's pretty cool.

See "Prince Salman's 2030" link at the sidebar at the right.

Show Me The Money -- I'll Believe It When I See It

Freak Snow?

When I see a headline like the one below -- freak snow -- it tells me two things. Folks have not been following the weather for the last ten years; and, folks do not understand the cycle of sunspots.

Transformative Technology Needed? -- Powerline -- May 22, 2019

This is another very, very good article at Powerline.

The article begins:
The United States, and much of the Western world, has gone badly off the rails on the subject of energy. Obsessed with CO2 emissions, a minor factor in the Earth’s climate, Western policymakers have turned to archaic technologies like wind energy as though they were futuristic
Transformative technology needed? The writer concisely states everything I've been arguing for years with regard to renewable energy. From the linked site:
Energy expert Mark Mills has produced five parts of a series in Real Clear Energy discussing the tremendous demands for electricity from developing electronics and associated high-tech equipment.
The development of “smart” technology and artificial intelligence will place burdens on the grid that renewables cannot meet.
Among the critical requirements for data centers, and other “smart” centers is that electricity must be reliable. Wind and solar are not, and battery back-ups are quickly depleted. The power demands are too great.
If we want a disruption to the energy status quo, we will need new, foundational discoveries in the sciences. As Bill Gates has put it, the challenge calls for scientific ‘miracles.’ Any hoped-for technological breakthroughs won’t emerge from subsidizing yesterday’s technologies, including wind and solar.
The Internet didn’t emerge from subsidizing the dial-up phone, or the transistor from subsidizing vacuum tubes, or the automobile from subsidizing railroads.
If policymakers were serious about the pursuit of the next energy revolution, they’d be talking a lot more about reinvigorating support for basic science.
The idea that batteries will somehow make intermittent energy sources like wind and solar reliable is fanciful.
There is, however, a newish technology close at hand that could solve any problems relating to power generation without–unlike wind and solar–emitting CO2, if you think that is important. That technology is nuclear energy. 
Throwing money down a CO2 rathole:
There has been a number of comments made about ExxonMobil giving $100 million to the National Renewable Energy Laboratory and other DOE laboratories with emphasis on “developing transformative advanced energy technologies with a focus on reducing emissions.”
However, based on reports much of this money will be going into failed technologies such as “biofuels, carbon capture and storage technologies.” One wonders if anything really transformative will come from this research.
Some years ago it looked like nuclear energy was going to be the answer to our energy needs. Miniature nuclear plants -- nuclear plants in a barrel -- were on the horizon and actually already in use in remote areas (such as Alaska). That "nuclear revolution" was disrupted / short-circuited by another revolution: the shale revolution. 

By the way, back to the beginning of this article:
The United States, and much of the Western world, has gone badly off the rails on the subject of energy. Obsessed with CO2 emissions, a minor factor in the Earth’s climate, Western policymakers have turned to archaic technologies like wind energy as though they were futuristic.  
The only reason "we" turned to this archaic technology was to minimize CO2 emissions (if that's even important). It had nothing to do with a shortage of energy (even without shale, we had nuclear and coal). There was a recent article that a wind turbine will result in a net increase in CO2 emissions based on all the "costs" associated with manufacturing and siting the turbine. 

Every wind turbine you see will have resulted in more CO2 emissions than it might have saved. Ironically, those CO2 emissions will be front-loaded; the minuscule decrease in CO2 emissions per turbine will occur over 20 - 30 years.

US Shale Set For 16% Growth In 2019 -- That's This Year -- May 22, 2019

It may be interesting to take a look at this research again:
I say that because of this Rigzone article today: US shale set for 16% oil growth in 2019.

I find that incredible. There are not many industries in which a product grows by 16% year-over-year, and this is in an industry in which the product is over-supplied.

I simply find this incredible. It speaks volumes.

One thing that jumps out at me: breakeven costs. Oil companies are not drilling wells to lose money. If shale oil production is going to increase by 16% year-over-year it tells me that someone is making money on shale.

By the way, corroboration for that last statement -- making money -- note the dividend increases by a number of shale operators.

From Rystad/Rigzone:
As if they’re not already on a roll, U.S. shale operators are on track to increase oil production by 16 percent in 2019, according to analysis by energy research firm Rystad Energy.
Rystad said the growth in U.S. onshore production from first quarter 2019 through fourth quarter 2019 could equate to 1.1 to 1.2 million barrels per day (MMbpd), or 16 percent, for the full year.
Small Operator Expands Texas Storage Terminal

From Rigzone. Data points --
  • Bluewing Midstream LLC
  • South Texas bulk liquids terminal at Port of Brownsville
  • Phase II expansion: ground breaking
  • the terminal currently has storage capacity for 800,000 bbls of liquids (gasoline, diesel, jet fuel, other petroleum products)
  • expansion will add 300,000 bbls of capacity
  • should be completed by end of year (2019)
Monoethylene Glycol Plant Proposed
Shell: $1.2 Billion
Ascension Parish, LA

Shell could decide to proceed with the MEG project next year. If that happens:
  • 23 direct jobs
  • average annual salary of $100,000 plus benefits
  • 112 indirect jobs
  • 1,000 construction jobs
The MEG plant would be sited at Shell's Geismar facility in Ascension Parish, LA. That plant:
  • Shell added a 423,000-tonne per year alpha olefins unit at Geismar in 2018
  • brings total manufacturing capacity to 1.3 million tonnes per annum across four units
  • also manufactures detergent alcohols, ethylene glycol, and ethylene-based industrial chemicals

Reason #1 Why I Love To Blog -- Feedback From Readers -- May 22, 2019

It was a huge surprise (at least to me) that McKenzie County ranked first among all US counties in crude oil production -- one would have thought that title would have gone to a county in Texas. Now, a reader provides a ranking of US counties producing natural gas:
A listing of US ounties by natural gas production would be interesting also. 
I tried approximating it using That site doesn't really have a suitable view on the free side. But I did cum production ranking by county, restricting it to wells started in 2017 & 2018 (to try to get recent production ranking). 
McKenzie was first ND county at 12th (surprised it was even that high...but it is an oil powerhouse, so is some gas too). List obtained:
1. Susquehanna (NE PA part of Marcellus)
2. De Soto (LA Haynesville sweet spot)
3. Washington (SW PA part of Marcellus)
4. Reeves (southern Delaware part of the Permian)
5. Weld (CO, sweet spot of Niobrara)
6. Greene (SW PA part of Marcellus)
7. Webb (TX, southern EF, bordering Mexico)
8. Karnes (TX, sweet spot of EF oil)
9. Eddy (NM, northern Delaware part of Permian)
10. Bradford (NW PA part of Marcellus)
11. Loving (TX, central Delaware part of the Permian, borders NM)
12. McKenzie (ND Bakken, biggest oil producing county in US)
Note: that this is hz wells only and recent ones. Also, OK is excluded. 
A huge "thank you" to the reader. Wow, that took a lot of work. I'm impressed with this work. Like the reader, I am also impressed that McKenzie County ranked so high in natural gas production. 

By the way, to reiterate: I doubt McKenzie County will hold the title of #1 crude oil producing county for very long -- and it won't bother me a bit. I am quite happy to see New Mexico do well. 

Update On The Montney: Did WTI Just Peak? -- May 22, 2019

Plastics plant:
From the beginning I had my doubts about a "plastics plant" in North Dakota, but I have to admit that with "plastics plant," Tioga, and Hess all in the same sentence once starts to get excited. From a reader,  The Tioga Journal Tribune suggests a "plastics plant" could bring 200 jobs to Tioga. The article is dated May 21, 2019, so it's sort of current.
First things first: if you haven't seen these --
It is hard to argue there is any similarity with regard to the weather between Scotland and north Texas. However, when I got on my bike this morning to come into work at 4:50 a.m., it was overcast, there was a strong southerly wind, and it was a bit brisk. My first thoughts: this feels like the weather I remember on my long walks in northern Yorkshire years ago. By the way, interestingly enough, there are many ties to Scotland in north Texas, with regard to place names, etc.
Tesla: tea leaves -- not looking good.
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 think you may have read here.

Back to the Bakken

Wells coming off the confidential list today -- Wednesday, May 22, 2019:
  • 35726, SI/NC, XTO, Halverson 13X-33DXA, Capa, no production data,
  • 35359, SI/NC, Hunt, Halliday 146-92-19-18H-4, Werner, no production data,
  • 35320, SI/NC, MRO, reyes USA 21-16H, Reunion Bay, no production data,
  • 35301, SI/NC, WPX, Minot Grady 26-35HY, Squaw Creek, no production data,
  • 35271, SI/NC, Petroshale, Bear Chase 2MBH, Spotted Horn, no production data,
  • 34904, SI/NC, Hess, SC-JCB-154-98-1720H-7, Truax, no production data,
  • 34294, SI/NC, Petro-Hunt, USA 154-95-36D-35-2H, Charlson, no production data,
Active rigs:

Active Rigs6564512582

RBN Energy: Pembina's plan to move more condensate out of the Montney. This is really, really cool. I just updated the Montney a few days ago (see below).
As Western Canadian natural gas production has been recovering off lows from a few years ago and pushing higher, one of the by-products of this recovery has been steadily rising production of natural gasoline, an NGL “purity product’ also known as plant condensate. Condensate production has been growing so much that Pembina Pipeline Corp. — a leading transporter of natural gasoline in the region — has been undertaking another round of expansions to its Peace Pipeline system to move more of the product to the Alberta oil sands. There, condensate is used as a diluent to allow the transportation of viscous bitumen to far-away markets via pipelines or rail. Today, we take a closer look at Pembina’s effort to expand the Peace Pipeline.
Pembina Pipeline Corp. is a major midstream player in the Canadian oil and gas sector. The company owns and operates extensive pipeline networks across Western Canada (primarily in Alberta and British Columbia) that transport crude oil, NGLs (including natural gasoline/condensate) and natural gas to downstream users, as well as to storage, terminals, fractionation facilities, and wholesale marketing and refining operations. Pembina is also involved with Canada Kuwait Petrochemical Corp. in the development of a PDH/PP (propane de-hydrogenation/polypropylene) plant now under construction at its Redwater complex just outside of Edmonton, AB.
The recent update on Montney:
May 12, 2019: recent headlines from  naturalgasintelligence - Montney:
  • Encana's well costs have dropped $1 million/well after merger with Newfield Exploration in February, 2019
  • Montney's unconventional potential of almost 2,000 trillion cubic feet (333 billion boe?) said to be barely tapped
  • Duvernay, Monteny growth requires natural gas pipeline expansion
  • links between fracking, earthquakes remain elusive, Canadian report
  • Encana adds Anadarko Basin to "core three" with Montney, Permian