Idle Rambling On A Stormy -- Very Stormy -- Evening, Part 1 -- July 10, 2019

Part 2, a continuation of this story can be found here.

Re-posting.

For the archives, from BP:

Google: Baby Boomers: Born 1946-1964 (54-72 years old) Generation X: Born 1965-1980 (38-53 years old) Millennials: Born 1981-1996 (22-37 years old) Post-Millennials: Born 1997-Present (0-21 years old) 

Occasional-Cortex: b. 1989

Observations:

• timeline: 1985 to 2018
• tetrawatt hours:
• 1985: 10,000
• 2018: 26,000
• though subtle, the slope of the line is steeper from 2010 to the present compared to earlier periods
• 26000 - 10000/33 years = 485 Twh/year. At same rate, by the time OC is 70 years old (2059, the world will consume another 19,885 Twh/year, or 45,885 Twh
• I have read nothing to convince me that global energy use will decline over time 
• later: digital technologies are estimated to be consuming 9 per cent more energy every year, but the situation is only going to get worse with the wider spread of ever-higher-resolution videos
• it is difficult to say with precision but it appears that the thickness of the dark green line at the top ("renewables") has not "thickened" much in the last six years
• without question, the largest change has been natural gas, and one can also argue, coal (again, this is worldwide)
• going forward
• I don't see hydro changing much at all
• I don't see nuclear changing much at all (India, China may be forced to return to nuclear)
• years ago, ExxonMobil did a great study "proving" there is not enough land mass on earth for wind, solar that would be even remotely adequate to replace fossil fuel; off-shore wind is only along the coast, so using "land mass" is fine
• EVs
• will have no material effect on electricity demand
• suppose I'm wrong: suppose EVs completely replace ICEs -- any thoughts about electricity generation then?
• repeat: I don't see either hydro or nuclear adding much capacity
• I have seen nothing to suggest that there will be a battery-breakthrough -- ever
• current events suggest there may be a bigger short-term problem with batteries than the mainstream media is reporting

Notes From All Over -- Part 4, July 10, 2019

For the archives, from BP:

Tesla, over at SeekingAlpha -- quietly cuts leasing rates

• Tesla quietly absorbs the $1875 FIT credit reduction and leaves lease prices unchanged, which is effectively a price cut.
• Tesla is signaling that it will miss 2019 delivery guidance of 360,000-400,000 units by not reaffirming guidance.
• Tesla's Q3 risks a repeat of the disappointing Q1 results as the FIT credit reduction on July 1st likely pulled demand forward into Q2. 

Tesla: missed its shipping goal of 33,000 cars in 2Q19 by ... 200 cars

• employees promised bonus if goal of 33,000 hit
• goal missed
• no more mention of bonus; employees not expecting to see bonuses

Trump win; court tosses lawsuit re: foreigners using his hotels; won't make national news tonight; weather in Gulf Coast will be the big story.

Iran started it, Lloyds of London will stop it: tanker rates soar 10-fold after Iranian shenanigans in the Strait of Hormuz. I don't know if Iranians understand the insurance business.

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The Book Page

Casablanca: "everyone" knows the story; the censors at the time were concerned with adultery; some might see "bigamy" in the story.

Back Street, from wiki: the story follows two lovers who have limited opportunities to get together because one of them is married. Again, "bigamy."

From Jane Eyre: Portrait of a Life, Maggie Berg, c. 1987, page 11:

A year after the publication of Jane Eyre (1847), Elizabeth Rigby expressed concern that sales of the book were so high:

Mr Rochester is a man who deliberately and secretly seeks to violate the laws both of God and man [bigamy], and yet we will be bound half our readers are enchanted with him for a model of generosity and honour. We would have though that such a hero had had no chance, in the purer taste of the present day [Victorian England]; but the popularity of Jane Eyre is proof how deeply the love of the illegitimate romance is implanted in our nature.

It is quite amazing. Emily Brontë's Wuthering Heights is the classic, towering over everything the Brontës did. I always thought Jane Eyre was second-rate when compared to Wuthering Heights. But now, it appears that of the two, Jane Eyre may be the more timeless.

Fifteen New Permits; WTI Surges Almost 5% -- July 10, 2019

WTI: up 4.5% today; gained $2.60/bbl; trading at $60.43.

Active rigs:

$60.43	7/10/2019	07/10/2018	07/10/2017	07/10/2016	07/10/2015
Active Rigs	58	66	57	29	73

Fifteen new permits (#36705 - #36710, inclusive):

• Operators: Bruin (10): Hess (5)
• Fields: Eagle Nest (Dunn); Beaver Lodge (Williams)
• Comments:
• Bruin has permits for a 6-well Fort Berthold pad in lot 4/section 19-148-94, Eagle Nest oil field
• Bruin has permits for a 4-well Fort Berthold pad in section 19-148-94, Eagle Nest oil field
• my hunch is this is one big 10-well pad
• Hess has permits for a 5-well BL-Amelia pad in section 15-156-95, Beaver Lodge oil field

One producing well (DUC) reported as completed:

• 32163, 1,812, Hess, CA-Anderson Smith-155-96-2635H-5, Capa, t3/19; cum 66K 5/19 (less than three months); a six-well pad; frack data not yet available; [neighboring: #16083, back on line; #16480, a long way to the east, is IA, and offline since 12/18]; 

From the file report, #32163:

• spud: October 27, 2018
• TD: November 4, 2018 (seven days, spud to TD)
• middle Bakken
• vertical drilled in two runs with a planned bit trip at 7,402 feet
• curve: began October 30 at 3:44 a.m.
• curve landed at 4:02 p.m., same day, October 30; twelve hours to drill the curve
• lateral began on November 1
• ceased drilling, November 4, 2018, at 3:55 p.m. CT
• finished 16.69' low of the target center-line and estimated to be out of the bottom of the geologic zone of interest

Notes From All Over -- Part 3, July 10, 2019

WMB: just when I think I've had enough of this company, WMB makes another top-five list. This time: the S&P's 500 best highest-yielding dividend stocks. LOL. I doubt everyone will agree. For example, EPD is not on that top-five list. Just saying.

Also, just saying, the disclaimer: this is not an investment site. Do not make any investment, financial, career, travel, or relationship decision based on what you read here or what you think you may have read here.

Schwab: I spoke with a corporate IT Schwab executive for about 45 minutes last night. Fascinating. The technology now being used to track investors on the internet (and not just Schwab customers, but all investors) is way beyond what anyone might suspect. Not one bit scary; not one bit creepy. Beneficial to both Schwab and investors. Schwab's biggest competitors, in his opinion: the boutique brokers catering to high-end investors. I would have thought it might be bank-brokerage houses. I use Schwab as a discount broker; I don't use Schwab as a bank. I go elsewhere for banking. Maybe I'm missing something. This was not his area of expertise so I did not go down that road.

Politics: free college; student-debt reform -- we've talked about this before. I know the candidates are not serious about this; if they were serious, Obama would have acted. Neither Obama nor Trump are picking the low-hanging fruit when it comes to college debt.

Politics: "Medicare-for-all": won't happen. Period. Dot.

Politics: is the distinction between "residency" and "citizenship" important any more? That's a discussion for the granddaughters; not for the blog, per se.

ICYMI -- This Is The Reason For The Huge Decrease In US Crude Oil Inventories -- Making America Great -- July 10, 2019

Making America great: according to Z4 Research -- the largest piece of the 9.5-million-bbl decrease was the 6.7-million-bbl decrease long the Gulf Coast due to exports and higher gulf coast refining. This is a huge, huge story.

Adjustment: #OOTT says the crude adjustment factors plunges by 812K bpd w/w to -472K bpd which explains a decrease of 5.68 million bbls w/w -- crude inventory shift. If that's accurate, then starting next week, we will be comparing apples to apples. This week, we were comparing apples to oranges. But it appears there's a difference of opinion regarding drop in inventory between #OOTT and Z4 Research, if I'm reading both tweets correctly.

US crude oil and petroleum products exports: at this link. Lags about two months.

US crude oil exports: at this link. Lags about two months.

US crude oil exports, Ycharts, very current, link here:

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The Book Page

My two books for this week will be:

• Running With the Bulls:My Years With the Hemingways, Valerie Hemingway, c. 2004
• Jane Eyre: A Portrait of a Life, Twayne's Masterwork Studies, Maggie Berg, c. 1987

I've long completed my Hemingway and Brontë phase, but I've long forgotten the history of the three sisters, so time to take another look. Hemingway? I've lost interest in Hemingway long ago but "he" (or the myth) remains fascinating and so it's hard to pass up another account of his life.

Valerie Hemingway was born Valerie Danby-Smith, an Irish reporter back in 1959, when she first met Ernest Hemingway, devoted two years of her life traveling with Hemingway and his wife, Mary, through Spain and France, and living with them during the final months in Cuba.

Officially, Mary Danby-Smith was Hemingway's personal secretary.

Five years after Hemingway's death, Mary married the writer's estranged son Gregory. This should be very, very good.

Back to the Brontës: the three sisters, Emily (Wuthering Heights); Anne (Agnes Grey); and Charlotte (Jane Eyre, more; friend of the family's biographer, Elizabeth Gaskell). Charlotte outlives Emily who refused medical attention and died in December, 1848. Their brother, Branwell, the ne'er-do-well, died only three months earlier, September, 1848. Anne was also very ill at the time, and dies while at Scarborough in May, 1849. Charlotte, along with their father, Patrick, survived them all. In her grief, Charlotte persevered by writing Shirley.

It will probably be a slog to get through this thin biography but it will bring back memories of some of the happiest days in my life while living and working in Yorkshire, England, United Kingdom.

Notes From All Over -- Part 2 -- Alabama And Japan: Making America Great -- July 10, 2019

Sell in May, go away. Not this year. All three indices hit all-time records last week. It looks like we may see new records today. S&P 500 is less than 2 points from an all-time high and 3,000 points. Wow, wow, wow. Dow up 165 points at one point; now up about 126 points.

Later, here it is, time to go buy Sophia a new pair of shoes:

US deficit: apparently no one cares. 

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

NOG:

• an interesting pure-play Bakken barometer
• acquired producing assets in last three months which accounts for increased guidance for 2Q19
• 1Q19: huge non-cash loss due to hedging, 1Q19; adjusted, earned 7 cents/share; forecast, 12 cents/share; NOG trading as high as $2.90 on April 23, 2019;
• 2Q19: most recently I've seen earnings estimates of 13 to 14 cents for NOG; NOG currently trading about $1.90/share

EPD: appears to have hit an intra-day high.

Politics, another one bites the dust: British ambassador to the US -- quits over leaked tapes.

Worthless metric: monthly automobile sales.

• Note: automobiles. The "automobiles sold" metric is meaningless. The "vehicles sold" metric is not meaningless. It's no longer about automobiles for those investing in "automobile" companies. It's now all about SUVs and pick-up trucks. If on a small truck chassis, it's very possible existing and future CAFE standards are / will be more generous for SUVs than for automobiles. 

Toyota: to build a new SUV, not a new car, at their Alabama (US) plant. Link here.

• a new sport utility vehicle at a $1.6 billion joint venture assembly plant in Alabama rather than produce Corolla cars
• announced in January 2018 would build the factory in Alabama with Mazda Motor Corp
• the shift was due to "a growing consumer appetite for light trucks and SUVs" 
• still expects to start production in 2021
• last week, the company said U.S. Corolla sales fell 5% in the first six months to 152,868, while overall Toyota car sales fell 8% 
• its U.S. SUV sales only fell 1% over the same period
• this article says Alabama is #5 among US states producing "cars and light pickups."
• this article says Alabama is #9 of ten

EIA's Weekly Petroleum Report -- July 10, 2019

Gasoline Demand

Gasoline demand: most recent week -- at 9.754 million bpd, getting very, very close to a record milestone, 10 million b/d -- never been done before as far as I know.

Updates

Later, 9:51 a.m. CT:

Making America great: according to Z4 Research -- the largest piece of the 9.5-million-bbl decrease was the 6.7-million-bbl decrease long the Gulf Coast due to exports and higher gulf coast refining. This is a huge, huge story.

Adjustment: #OOTT says the crude adjustment factors plunges by 812K bpd w/w to -472K bpd which explains a decrease of 5.68 million bbls w/w -- crude inventory shift. If that's accurate, then starting next week, we will be comparing apples to apples. This week, we were comparing apples to oranges. But it appears there's a difference of opinion regarding drop in inventory between #OOTT and Z4 Research, if I'm reading both tweets correctly. 

Original Post

EIA's weekly petroleum report: pending

• US crude oil inventories, last week: decreased by a whopping 9.5 million bbls
• US crude oil inventories: at 459.0 million bbls, about 4% above the five-year average
• refining capacity: 94.7% capacity; on the high side;
• WTI at 9:06 a.m. CT (supposedly before the EIA data is known): $59.53
• WTI at 9:45 a.m. CT (fifteen minutes after release of EIA data): $59.42; this suggests to me that movers and shakers saw data before it was released to general public -- just saying -- either that, or analysts were really, really good at predicting the EIA report today --
• imports: about 12% less than the same four-week period last year (this speaks volumes for the US refiners -- adapting to the glut of light oil coming from the Permian)
• jet fuel: an anomaly? something not often seen -- jet fuel supplied was down almost 4% compared with same four-week period last year

Making America great: according to Z4 Research -- the largest piece of the 9.5-million-bbl decrease was the 6.7-million-bbl decrease long the Gulf Coast due to exports and higher gulf coast refining. Wow. 

The question, of course, is whether the EIA has adjusted the way it measures US crude oil inventories The adjustment has already occurred, or will occur. I don't know where that stands.

Re-balancing:

Week	Week Ending	Change	Million Bbls Storage
Week 0	November 21, 2018	4.9	446.9
Week 1	November 28, 2018	3.6	450.5
Week 2	December 6, 2018	-7.3	443.2
Week 3	December 12, 2018	-1.2	442.0
Week 4	December 19, 2018	-0.5	441.5
Week 5	December 28, 2018	0.0	441.4
Week 6	January 4, 2019	0.0	441.4
Week 7	January 9, 2019	-1.7	439.7
Week 8	January 16, 2019	-2.7	437.1
Week 9	January 24, 2019	8.0	445.0
Week 10	January 31, 2019	0.9	445.9
Week 11	February 6, 2019	1.3	447.2
Week 12	February 13, 2019	3.6	450.8
Week 13	February 21, 2019	3.7	454.5
Week 14	February 27, 2019	-8.6	445.9
Week 15	March 6, 2019	7.1	452.9
Week 16	March 13, 2019	-3.9	449.1
Week 17	March 20, 2019	-9.6	439.5
Week 18	March 27, 2019	2.8	442.3
Week 19	April 3, 2019	7.2	449.5
Week 20	April 10, 2019	7.0	456.5
Week 21	April 17, 2019	-1.4	455.2
Week 22	April 24, 2019	5.5	460.1
Week 23	May 1, 2019	9.9	470.6
Week 24	May 8, 2019	-4.0	466.6
Week 25	May 15, 2019	5.4	472.0
Week 26	May 22, 2019	4.7	476.8
Week 27	May 30, 2019	-0.3	476.5
Week 28	June 5, 2019	6.8	483.3
Week 29	June 12, 2019	2.2	485.5
Week 30	June 19, 2019	-3.1	482.4
Week 31	June 26, 2019	-12.8	469.6
Week 32	July 3, 2019	-1.1	468.5
Week 33	July 10, 2019	-9.5	459.0

Out And About In The Bakken -- July 10, 2019

Check out the Hess BB-Chapin wells; they are started to come off line 4/19 suggesting activity in the area. The BB-Chapin wells are tracked here.

• 29163, 809, Hess, BB-Chapin A-LS-151-95-0403H-1, Blue Buttes, t8/15; cum 190K 5/19;
• 29162, 1,001, Hess, BB-Chapin A-151-95-0403H-10, Blue Buttes, t8/15; cum 173K 5/19;
• 29161, 1,051, Hess, BB-Chapin A-151-95-0403H-9, Blue Buttes, t8/15; cum 160K 5/19;
• 29160, 980, Hess, BB-Chapin A-151-95-0403H-8, Blue Buttes, t8/15; cum 155K 5/19;
• 29159, 1,193, Hess, BB-Chapin A-151-95-0403H-7, Blue Buttes, t7/15; cum 191K 5/19;

Of interest:

• 29680, IA/4,135, Equinor/Statoil, Richard 8-5 5H, Banks, t10/16; cum 241K 12/18; came off line 12/18; still off line 5/19; last sundry form: converted to gas life, 4/18; co-located with the Cheryl wells;

The Equinor Cheryl/ Richard wells; this list may / may not be complete. In early 2019, it was noted a lot of activity in this area with great wells coming off line. This is the update as of July 10, 2019, but this page will not be updated. These wells are tracked here. These are huge wells.

• 30943, 2,517, Equinor, Richard 8-5 6TFH, t9/16; cum 226K 4/19; came off line 4/19; remains off line 5/19; production jumped 3/19;
• 30942, 2,206, Equinor, Richard 8-5 4TFH, t9/16; cum 330K 5/19; remains on line;
• 30944, 4,040, Equinor, Richard 8-5 XE 1H, Banks, t8/16; cum 399K 5/19; remains on line; was off line 6/18 to 12/18;
• 22807, 3,793, Equinor, Richard 8-5H, Banks, t4/13; cum 410K 5/19; remains on line; was off line intermittently for short periods of time in 2018;
• 17755, 543, Equinor, Roscoe 2H-8, Banks, t5/09; cum 351K 3/19; off line as of 3/19; remains off line 5/19;
• ***22806, 3,464, Equinor/Statoil, Cheryl 17-20 3TFH, t2/13; cum 299K 5/19; off-line, 2/18 but back on-line 3/18; API -- 33-053-04095; FracFocus, not re-fracked; most recent production, 5,169 bbls in 5/19;
• 22807, 
• ***22808, 4,439, Equinor/Statoil, Cheryl 17-20 4H, t2/13; cum 451K 5/19; off-line 2/18 but back on-line 3/18; off line again, but then back on line 11/18; most recent production, 5,262 bbls in 5/19;
• ***29610, 3,651, Equinor/Statoil, Cheryl 17-20 5H, t12/16; cum 249K 5/19; came off-line, 2/18; API -- 33-053-04097, FracFocus, not re-fracked; back on line as of 6/18; see this post;
• 31139, 1,979, Equinor/Statoil, Cheryl 17-20 6TFH, t9/16; cum 287K 3/19; came off-line 2/18; back on line as of 11/18; huge wells; off line as of 3/19;
• ***31140, 4,209, Equinor/Statoil, Cheryl 17-20 XE 1H, t8/16; cum 348K 5/19; came off-line 2/18; back on line as of 12/18; most recent production, 15,855 bbls in 5/19; API: 33-053-06900;
• 32289, AB/2,491, Equinor/Statoil, Cheryl 17-20 1H-R, Banks, t11/16; cum 168K 3/18; off-line 3/18; still off-line 5/19;
• ***29610, 3,651, Equinor/Statoil, Cheryl 17-20 5H, Banks, t12/16; cum 2449K 5/19; off-line 2/18;back on-line 5/18; huge jump in production; off line as of 12/18; back on line as of 5/19; most recent prodution, 5,961 bbls over 7 days in 5/19;
• ***29611, 2,486, Equinor/Statoil, Cheryl 17-20 8TFH, Banks, t10/16; cum 267K 5/19; off-line 2/18; back on-line as of 4/18; huge jump in production; off line as of 1918; but now coming back on line as of 12/18; just came back on line in 5/19; only one day in 5/19;
• ***29612, 2,719, Equinor/Statoil, Cheryl 17-20 7H, Banks, t8/16; cum 344K 5/19; great well, fracked 8/16 but then a big jump again 11/17; huge production; no significant decline; offline as of 10/18; back on line as of 5/19; most recent production, 9,238 bbls over 9 days in 5/19;
• ***29684, IA/2,052 Equinor/Statoil, Cheryl 17-20 XW 1TFH, Banks, t7/16; cum 230K 12/18; off-line 3/18 for just a short period of time; off line as of 10/18; remains off line as of 5/19;
• ***22322, 4,630, Equinor/Statoil, Cheryl 17-20 2TFH, Banks, t4/13; cum 347K 5/19; API -- 33-053-03955; huge jump in production; off-line as of 12/18; came back on line 4/19; in 4/19 and 5/19, on line for 45 days with over 4,000 bbls of production;
• 21814, dry, Equinor/Statoil, Cheryl 17-20 1H, Banks, casing collapse; Statoil requested a TA on this well to allow for a replacement well to be drilled;
• ***21815, 4,680, Equinor/Statoil, Richard 8-5 1H, Banks, t4/13; cum 396K 5/19; went off-line 2/18;back on-line as of 5/18;back on line 4/19; in 4/19 and 5/19, on line for 46 days with over 4,000 bbls of production;
• ***29680, IA/4,135, Equinor/Statoil, Richard 8-5 5H, Banks, t10/16; cum 241K 12/18; went off-line 3/18 just for a short period; huge jump in production; remains off line, 5/19;
• ***29681, 2,078, Equinor/Statoil, Richard 8-5 8TFH, Banks, t7/16; cum 166K 12/18; off-line since 11/17; back on line as of 4/18; huge jump;remains off line, 5/19;
• ***29682, IA/2,166, Equinor/Statoil, Richard 8-5 3TFH, Banks, t7/16; cum 205K 12/18; off-line since 2/18; back on-line as of 4/18; huge jump; remains off line, 5/19;
• ***29683, IA/3,895, Equinor/Statoil, Richard 8-5 7H, Banks, t7/13; cum 289K 12/18; huge jump in early 2018; remains off line, 5/19;
• ***29685, 2,068, Equinor/Statoil, Richard 8-5 XW 1TFH, Banks, t7/16; cum 216K 12/18; off-line since 2/18; back on-line as of 4/18; off line as of 12/18; remains off line 51/9;

Notes From All Over -- Part 1 -- July 10, 2019

Allies: both the UK and Egypt have each "detained" an Iranian crude oil tanker, one tanker going through the Strait of Gibralter, the other going through the Suez Canal.

FWIW: yesterday the story was that "the poor global economy" and "increasingly weak demand" was capping oil prices. Today, WTI jumps 2.2%, up $1.29, and trading at $59.12 (WTI). There was a note on twitter that the Fed chairman hinted he was "open" to a rate cut. I did not know he had already spoken, but that was on twitter so it had to have been true.

The market: overnight, futures were negative -- after three days of losses in the US equity market. But apparently the twitter note was accurate: the Fed chairman wants to keep his job; says he is open to a rate cut; and, the market is up (futures).

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 might have read here.

S&P 500: it's likely that we will see 3,000 before the end of September. The S&P closed just six points below 3,000 last week; today it is about 11 points below that "magic number."

NOG: one generally doesn't see these small companies trading before the market opens, but NOG is up 2 cents in pre-market trading; JAG is not yet trading. Let's see what CVX is doing -- with two days of good news: hmmm, not trading yet (7:58 a.m. CT). Later: I see JAG is off to a great start, up almost 3%; NOG up 2%; CVX up 1.6%. I guess all that talk yesterday about a global slowing economy was based on "news releases" sent out by sell-side analysts. WTI right now (8:46 a.m. CT): continues to creep upward, now at $59.44.

Politics: if it's true that Senator Susan Collins rejected a fellow GOP senator's offer to boot Brett Kavanaugh, it speaks volumes about Ms Collins. A patriot. Someone with some integrity.

Gold: geee -- just the other day I was told gold was overbought and time to sell -- LOL --

Lessons learned: one thing I've learned through the "milliondollarway" blog, there are buy-side analysts and sell-side analysts, and for each facts don't really matter. Small movements in commodities one way or the other can mean big bucks for both groups of analysts. Meanwhile, I'm content with my "buy and hold" philosophy, and sticking to my plan.

Two Wells Coming Off Confidential List Today -- July 10, 2019

Wells coming off confidential list today -- Wednesday, July 10, 2019: 10 for the month; 10 for the quarter;

• 35545, SI/NC, WPX, Delores Sand 29-32HZ, Antelope-Sanish, no production data,
• 31808, drl, EOG, Riverview 22-3031H, Clarks Creek, no production data, the EOG Riverview wells in Clarks Creek are tracked here; in addition, EOG has Riverview wells in Antelope-Sanish; neither site has been updated in a long time;

Active rigs:

$59.12	7/10/2019	07/10/2018	07/10/2017	07/10/2016	07/10/2015
Active Rigs	57	66	57	29	73

 RBN Energy: how Edmonton got rid of its butane surplus, part 2.

Offer any energy commodity at a low-enough price and buyers will surface, as long as there’s a way to get that liquid or gas from where it’s being sold to where it’s being used or put on a boat for export. That’s been the recent experience of the butane market in Western Canada, where a perfect storm of events last fall caused butane prices in Edmonton, AB, to freefall to near zero. But things have turned around, at least for now. Today, we take a look at the dramatic recovery of the Edmonton butane market and what might lie ahead.

Markets always find a way to clear. That’s a commodity market truism usually uttered when catastrophe appears to be looming. In Edmonton this past spring, the fear was that the seriously oversupplied butane market might be the exception to this rule. When we last looked at the Western Canadian natural gas liquids (NGLs) market a few months ago in Part 1 of this series, butane prices had been in a prolonged slump since the fall of 2018, when they had tumbled to near zero as the region’s butane inventories built to record levels. Last fall’s problems can be attributed primarily to insufficient demand, compounded by logistical challenges. To recap, Alberta’s butane production historically has gone to four main consumers: crude oil blenders, export buyers, Keyera’s Alberta EnviroFuels (AEF) plant (which converts butane to iso-octane), and to local and regional refiners, including in Washington State and Minnesota. Western Canada’s crude blenders use butane as a diluent for heavy crude oil to reduce its viscosity and enable easier transport through pipelines; the blending market accounts for more than 50% of daily production. The rest goes to refiners, who use butane seasonally as they make winter-grade gasoline, to the export market and to AEF.