Thursday, June 13, 2019

OPEC On The Ropes -- June 13, 2019

June 14, 2019: I'm surprised Iran has not yet blamed Israel for the attack on those two tankers. 

June 14, 2019:


June 13, 2019: the meme that oil prices surged after the tanker strikes is bogus. At close of trading today:
  • WTI: down 13 cents, trading at $52.15. 
  • Brent crude, off which Saudi bases its price: up one cent, trading at $61.32
  • OPEC basket: at $1.55 and trading at a whopping $61.01
June 13, 2019: Tanker strikes spell doomsday scenario for OPEC -- oilprice.

June 13, 2019: Iran torpedoes two oil tankers in the Strait of Hormuz. [Later: that was the initial report, but since then it appears that Iran had nothing to do with this -- it just happened. Time to move on]

Corpus Christi -- June 13, 2019


Six New Permits; Active Rigs Drop To 61 At Beginning Of Summer -- June 13, 2019

Active rigs:

$52.286/13/201906/13/201806/13/201706/13/201606/13/2015
Active Rigs6162562875

Six new permits:
  • Operators: CLR (4); Whiting (2)
  • Fields: Banks (McKenzie); Foreman Butte (McKenzie) 
  • Comments: 
    • CLR has permits for a 4-well Pasadena Federal pad in section 11-152-99; Banks oil field
    • Whiting has permits for a 2-well US Federal pad in lot 4/section 6-150-102, Foreman Butte oil field
Five permits renewed:
  • Whiting (3): three Larson permits in Williams County
  • Hess (2): two RS-State permits in Mountrail County
Six producing wells (DUCs) reported as completed:
  • 14711, 15, Scout Energy Management LLC, SFTU 30-26, target: Tyler; target: Madison - dry; Fryburg oil field, t12/97; cum 364K 4/19; (Tyler); Madison tested 6/19; dry;
  • 24228, 424, XTO, Nyaard Federal 13X-5E, Lost Bridge, t51/9; cum --;
  • 32917, 1,635, XTO, Nyaard Federal 13X-5BXC, Lost Bridge, t4/19; cum 17K after 15 days;
  • 32918, 941, XTO, Nygaard Federal 13X-5F2, Lost Bridge, t6/19; cum --;
  • 32920, 2,162, XTO, Nygaard Federal 13X-4EXH, Lost Bridge, t6/19; cum --;
  • 33937, 102, Petro Harvester Operating Company, LLC, PTS2 4-16 163-92 D, target Madison, Portal t3/19; cum 5K after 27 days;

Financial Times -- Nominee For 2019 Geico Rock Award? -- June 13, 2019


Financial Times: US shale's rise means supply threats no longer have the same power to shock the market.

Finally. Perhaps a nominee for the 2019 Geico Rock Award?

Making America Great -- Exxon-Sabic Texas Project -- June 13, 2019

From Rigzone:
  • a 1.8 million-metric-ton ethane steam cracker complex
  • near Corpus Christi, TX
  • will create nearly 7,000 jobs during construction
  • 600 permanent jobs; average pay: $90,000
  • joint venture
    • Exxon Mobil
    • Saudi Basic Industries (SABIC)
  • will be the world's largest steam cracker
  • just one of several key projects currently adding to Exxon Mobil's bottom line
  • the ethylene produced will be delivered to three "derivate" units:
    • a monoethylene glycol (MEG) unit
    • two polyethylene (PE) units
  • startup projected for 2022
  • this is the first SABIC project outside of Saudi Arabia
  • lead project contractors:
    • The Wood Group
    • McDermott & Turner Industries Group
    • Chiyoda and Kiewit
    • Mitsubishi Heavy Industries & Zachry Group
Broader context: this project is part of Exxon Mobil's "Growing the Gulf" series of investments in Texas and Louisiana.

Natural Gas Fill Rate -- Fairly Steep -- June 13, 2019

Updates

June 17, 2019: another way to look at the quickness of the fill rate -- see comments -- 
Another way of looking at how fast inventories recovered this year would be to compare them to last year... the storage report for the week ending March 22nd showed 2019 supplies 20.5% below those of 2018, but as you've noted above, by June 7th, 2019 supplies were 10% above those of last year...  
June 16 2019: see first comment -- reader suggests just how "steep" this NG fill rate is --
Your headline should read "fairly steepest."
Here's what I have: "The 981 billion cubic feet of natural gas that have been added to storage over the past 11 weeks has been the largest injection of gas into storage on record for any similar period this early in the injection season, probably about double the average 11 week build of the past decade, as the 712 billion cubic feet that were added during the same 11 weeks of 2014 was the only year that even appeared close... "
We've become accustomed to triple digit injections, but scanning the recent decade's spreadsheet, I find that in most years we only had one triple digit inventory build all summer, most often in the fall. The only exceptions were 2014 and 2015, and the June curve in 2014 was the only one as steep as the May curve this year ... so we may be on our way to a record year... 
Original Post

Link here.

A pretty steep curve. Inventory 10% over that of a year ago.


Z4 also notes "near Mexican export and LNG export records."


Forecast almost perfect: 102 vs 111 and I had actually seen a forecast of 108 yesterday, so 102 not all that far off.

Global Warming Drought Hits North Dakota -- June 13, 2019

I do not recall this much flooding when I was growing up in North Dakota during the 50s and 60s.

Only with the advent of global warming and widespread drought have we seen so much flooding. I guess without global warming and drought conditions, it would be worse. I don't know but I'm sure Occasional-Cortex could explain it.

I can't.


BIFs -- June 13, 2019

First things first. A new word: varve.
A varve is an annual layer of sediment or sedimentary rock. 
I guess one can think of a "varve" as the geologist's "tree ring" when looking at sediment. I don't know if there is a scientific term for "tree ring" but the study of tree rings is dendrochronology.

But I digress.

One of the ten "page tabs" at the top of the blog: geology.

I haven't added anything to that page in a long, long time.

This has nothing to do with the Bakken, so I will add it as a "note to the granddaughters."

From wiki:
Banded iron formations (also known as banded ironstone formations or BIFs) are distinctive units of sedimentary rock that are almost always of Precambrian age.

A typical banded iron formation consists of repeated, thin layers (a few millimeters to a few centimeters in thickness) of silver to black iron oxides, either magnetite (Fe3O4) or hematite (Fe2O3), alternating with bands of iron-poor shales and cherts, often red in color, of similar thickness, and containing microbands (sub-millimeter) of iron oxides.

Some of the oldest known rock formations (having formed ca. 3,700 million years ago), are associated with banded iron formations.
Banded iron formations account for more than 60% of global iron reserves, and can be found in Australia, Brazil, Canada, India, Russia, South Africa, Ukraine, and the United States.
As of 2015, the reason for the alternating stripes has not been explained but some suggest isotope signatures in the striped bands suggest a bacterial connection.

When It Rains, It Pours -- Stuff On My Mind -- June 13, 2019

1. Sailing: We have not heard from the two granddaughters and their dad for several days now. They are still sailing among the Greek islands in the Aegean Sea.

2. NBA: game 6 tonight -- this is not the time for Toronto to lose -- it would give the momentum to Golden State, and, in fact, the Toronto fan behavior in Toronto in game 5 may have been the turning point in this series. I think it can safely be said that if Golden State goes on to win the championship after being down 3 - 1, one can attribute the championship to the behavior of the Toronto fans early in game 5.

3. PGA: US Open starts today. Pebble Beach. America's golf course. Yes, the course is open to the general public.

4. NHL: Stanley Cup -- St Louis Blues. And not even close in the final game -- 2 - 0 in the first period which is pretty much insurmountable in the NHL in a game like this. 0 - 0 in the second period. 2 - 1 in the final period. Final score? A lopsided 4 - 1. 

5. Oil: war? And WTI moves up a dollar or so. OPEC no longer the swing producer.

6. Oil: it's no longer about the number of rigs. [If you doubt this, check out SLB and HAL.] It's now all about DUCs. The number of drilling rigs deployed is a function of CAPEX, and CAPEX for oil companies is generally a six-month process. The number of rigs deployed in a six-month period will remain within a narrow range; the weekly changes are predominantly due to movement of rigs from site to site, not in any change in CAPEX strategy. However, at least in the Bakken, companies can change production output literally on a daily basis.

7. Oil: US crude oil inventories 8% above the 5-year average (according to the EIA's weekly report released yesterday) and the 5-year average has been moving up from historical levels. The graphics don't really corroborate that statement. Maybe I'm missing something.

8. Mexico: going down the road that Venezuela has taken. This will not be a pretty picture.

9. Iran: to torpedo two tankers in the Strait of Hormuz -- and perhaps result in the sinking of one -- suggests that Iran is in dire straits. Pun intended. Iran risks going to war, and when a country risks going to war -- especially in one that would be quite lop-sided -- it tells me its leaders feel they have nothing to lose.

10. Iran: if OPEC doesn't vote Iran out of its organization --- wow! And I bet the organization doesn't vote Iran out.

11. Iran: those countries upset with sanctions on Iran now have a new event to consider -- does one want to do business with a country so incredibly and inappropriately adventurous. If a country is willing to attack non-combatants (the Saudi Arabian civilian airport earlier; and now two oil tankers), does anyone have any doubt that country would use its nuclear weapons on the countries of Satan?

12. Relevancy of the Mideast: on the brink of war, and the US stock market (the Dow) is actually in the green -- albeit not by much.

13. Texas weather: one of the best springs/early summers we've had since we've lived here -- since 2000. Today in north Texas, it's a beautiful, beautiful 77 degrees.

14. Nick Lane's The Vital Question: Energy, Evolution, and the Origins of Complex Life, c. 2015. I've read it twice; I'm re-reading parts of it now. For a high school planning to major in biology or biochemistry in college, this would be a great book to read over the summer.

15. Global energy, Latin America: the choices that countries made when they entered the 21st century will determine how they enter the 21st century. These choices are still being made. In Latin America, the four countries of most interest:
16. Center of the energy universe: Corpus Christi --


17. BP Stats Review 2019: global energy demand grew by 2.9%, the fastest since any time since 2010 - 2011. Other data points:
  • natural gas consumption and production was over over 5%, one of the strongest rates of growth for both demand and output for over 30 years
  • renewables, despite fast and furious growth, still accounted for only a third of the increase in total power generation (I assume no growth in nuclear energh, hydro, or coal, so this means, two-thirds of energy growth was due to fossil fuel, mostly natural gas
  • coal consumption up 1.4%; coal production up 4.3% -- increased for the second year in a row -- someone stockpiling coal?  This second year in a row of increase followed three years of decline (2-14 - 2016). 
  • the US recorded the largest-ever annual production increases by any country for both oil and natural gas, the vast majority of increases coming from onshore shale plays
  • BP is drinking the CO2-global warming kool-aid
18. Cost of renewables: folks are finally seeing the true cost of solar and wind electricity. This is most interesting: the purported savings in CO2 emissions from a single wind turbine will never exceed the amount of CO2 emissions generated by the manufacture and deployment of that one wind turbine.

19. Tattoos: I still find them incredibly unattractive.

20. Alexa: I still don't understand the controversy. If you don't want someone listening in on your conversations, don't buy the Echo, or turn it off when you having intimate conversations with your significant other.

21. Speaking of which ... it's just a matter of time ...

(It's Just) A Matter Of Time, Randy Travis

The backstory from wiki:
Brook Benton and Clyde Otis placed the song on a demo tape for Nat King Cole, and he agreed to record it. However, Otis became an A&R manager at Mercury Records, and signed Benton to the label.
Otis felt that "It's Just A Matter Of Time" would be an ideal single for Benton, and he asked Cole not to record the song so it could be Benton's first release on the label.
Belford Hendricks, a classically trained composer, co-wrote and arranged the recording.
Benton's version, in a style clearly influenced by Cole, was a quick success, rising to number three on the Billboard pop charts while topping the R&B chart for 9 weeks in the spring of 1959, the longest run atop the chart of any song that year.
On April 12, during the song's chart run, Benton made his national television debut, singing the song on The Ed Sullivan Show.

War? -- June 13, 2019

Hormuz horror: tanker torpedo attack. One of the tankers is flagged indirectly to the United States. Iran says the tanker has sunk, though other sources deny it. The other tanker was Panama-flagged. The US-tied tanker was chartered by Taiwan and was sailing from UAE.

Tracked at "Mideast on the brink."

Oh, give me a break! Does anyone really think Iran thinks these things out?


From twitter:
  • US DOD: Iran "highly likely" to be behind oil tanker attacker. "Ya think?"
  • strangely, tankers carrier Iranian crude oil seem immune to attacks
  • the Hyundai vessel was sailing on to the UAE. Why it decided to transfer them (the sailors) to Iran is not clear at this time.
  • 23 crew members on one ship; 21 on the other; the 23 were originally being moved by Hyundai Dubai 
  • massive damage to starboard side of one tanker; very likely will be scuttled
  • Oman security forces are near the vessels; can't yet confirm if the Front Altair is sinking (the insurance company is watching closely); vessel on fire; resources available to put the fire out? 
  • Front Altair: naphtha on tanker originated from Abu Dhabi's ADNOC (and Katie McQue spelled it as "naptha")
  • Kokuka: methanol on tanker originated from Saudi's Sabic and Qatar
  • occurs during Japanese PM's visit: timing? awkward.
  • the market just doesn't respond to supply threats like it once did.
    • an alleged Iranian-supplied missile hits a civilian airport in Saudi Arabia
    • two tankers torpedoed in the Strait of Hormuz
    • price of oil: maybe it will go up a dollar a bbl
Hyperbole over at oilprice?


WTI, following the reports of the torpedoed tankers: up 2.76%; up $1.41; trading at $52.55. And folks are still debating whether the US is the "swing producer."

Swing producer: it's not the number of rigs, it's the number of DUCs.

US Leads The World In Oil Reserves -- Rystad -- June 13, 2019

Updates

Later, 10:26 a.m. CT: a reader commented (see first comment):
More detail at the Rystad press release itself.

https://www.rystadenergy.com/newsevents/news/press-releases/United-States-cements-its-position-as-world-leader-in-oil-reserves/.

Scan down and there is a table with lots of country by country detail. It's a little complicated but there is a legend at the bottom to explain the reserve categories.
Original Post

Global oil reserves: US not leads the world in oil reserves. From Rystad via Rigzone. At wiki, the US is still listed as #14. The list at wiki as of June 13, 2019 (data from 2012):
  • Venezuela
  • Saudi Arabia
  • Canada
  • Iran
  • Iraq.....
  • ....US
From Rystad:
  • US: 293 billion bbls of recoverable oil resources
  • Saudi Arabia: 273 billion bbls
  • Russia: 193 billion bbls
  • Rystad's US estimate is 5x more than the reported proven reserves published in the BP Statistical Review of World Energy 2019 

US Jobless Claims -- Jump; Three Wells Coming Off Confidential List Today -- June 13, 2019

Stanley Cup: Boston Bruins come up short. Shout to the St Louis Blues. 

US jobless claims: pending
  • prior (revised): 218K (219K)
  • consensus: 216K
  • actual: 222K
Global oil reserves: US not leads the world in oil reserves. From Rigzone. At wiki, the US is still listed as #14. The list at wiki as of June 13, 2019:
  • Venezuela
  • Saudi Arabia
  • Canada
  • Iran
  • Iraq.....
  • ....US
From Rystad:
  • US: 293 billion bbls of recoverable oil resources
  • Saudi Arabia: 273 billion bbls
  • Russia: 193 billion bbls
  • Rystad's US estimate is 5x more than the reported proven reserves published in the BP Statistical Review of World Energy 2019  
Hormuz horror: tanker torpedo attack. One of the tankers is flagged indirectly to the United States. Iran says the tanker has sunk, though other sources deny it. The other tanker was Panama-flagged. The US-tied tanker was chartered by Taiwan and was sailing from UAE.
********************************
Back to the Bakken

Wells coming off the confidential list today -- Thursday, June 13, 2019: 41 for the month; 230 for the quarter;
  • 34935, SI/NC, XTO, Darlean 41X-2H, Alkali Creek, no production data,
  • 34864, SI/NC, Hess, BB-Eide-151-95-3328H-10, Blue Buttes, no production data,
  • 34863, SI/NC, Hess, BB-Eide-151-95-3328H-9, Blue Buttes, no production data,
RBN Energy: US motor fuel exports to Mexico to hit a rough patch.
For some time, U.S. motor fuel exports to Mexico had been increasing at a healthy pace, reliably filling the void created by a series of production setbacks at Pemex’s refineries south of the border.
From 2014 to 2018, U.S. gasoline exports to Mexico soared by more than 160%, from an average of 197 Mb/d five years ago to 517 Mb/d last year. Diesel exports rose by nearly 130%, to 279 Mb/d, over the same period. But that export-growth momentum has since sagged — in fact, export volumes for both gasoline and diesel actually declined in the first few months of 2019, primarily due to logistical challenges within Mexico.
Also, Mexico’s new president has proposed ambitious plans to boost state-owned Pemex’s refining capacity, possibly posing a longer-term threat to U.S. exporters. So, is the boom in refined-product exports to Mexico over? Today, we examine what’s behind the downshift, and what the Mexican government’s effort to reinvigorate Pemex’s existing refineries — and build an entirely new one — may mean for U.S. gasoline and diesel exports in the 2020s.
The stories coming out of Mexico will be a lot of white noise, as they say. The big story is that Mexico is clearly headed down the same road as Venezuela. Whether they reverse course or not is the bigger story.