Thursday, July 18, 2019

Saudi Arabia Crude Oil Storage -- July 18, 2019

From twitter, source not linked:

In very round numbers:
  • US storage: 500 million bbls
  • Saudi storage: 250 million bbls
  • global demand: 100 million bbls/day
  • daily production:
    • US: 12 million bopd
    • Russia: 11 million bopd
    • Saudi Arabia: 10 million bopd

Notes From All Over -- Part 1, July 18, 2019

Buzz. Lots of twitter talk (tweets) today about collapsing oil prices. To many, does not make sense.

Buzz. There was a note over at twitter today, "the US dollar is tanking." If the US dollar is tanking, all things being equal, the price of oil should increase.

From tradingeconomics:

EIA Explains The US Weekly Crude Oil "Adjustment" -- July 18, 2019


July 19, 2019: see first comment. The reader points out something incredibly important and something the EIA either purposely or inadvertently "forgot" to mention or point out.

In the EIA discussion, the EIA states: 
In recent weeks, the crude oil adjustment has been growing in absolute value, as high as 881,000 barrels for the week ending May 24. 
In my book, 881,000 bbls can be rounded to one million bbls. 

According to the reader the EIA omitted two incredibly important words, "per day." I've noted the change as it should have been written in bold red in the original post.

If that's accurate, it means we are talking about as much as 6.167 million bbls "adjustment" per week -- hardly trivial.

Original Post 

We've talked about this a couple of times. Sometime in the very recent past, the last month (?), the EIA has apparently changed its methodology for calculating US crude oil inventories.

And here it is, how timely, released yesterday by the EIA, released July 17, 2019, This Week In Petroleum, the crude oil "adjustment" accounts for differences in supply and disposition.

But it looks like this does not explain any change in methodology; it simply explains why "supply and disposition" seldom balance.

The EIA must have been getting a lot of phone calls from Wall Street analysts losing their shirts.

Link here.

The explanation begins:
The U.S. Energy Information Administration’s (EIA) Weekly Petroleum Status Report (WPSR) provides weekly estimates of U.S. crude oil supply, including a measure of how well the supply of crude oil and the disposition of crude oil balance with each other.
This measure—referred to as the adjustment—is a derived term equal to the difference between supply and disposition. If the reported supply and disposition of crude oil balanced perfectly each week, the adjustment would equal zero. For several reasons, however, this is rarely the case.

Weekly U.S. crude oil supply and disposition data are based on a combination of EIA survey data, U.S. Customs and Border Protection data, and modeled estimates. All statistical samples using survey data have small but unavoidable imprecisions, and model estimated data’s precision can vary. This imprecision in estimating each element of the crude oil balance can result in some over- and under-estimation in both supply and disposition.

In recent weeks, the crude oil adjustment has been growing in absolute value, as high as 881,000 barrels [sic; see comment below] for the week ending May 24.
However, this is still relatively small, when compared with the entire U.S. crude oil balance, less than 2.5% on a rolling four-week average basis (the sum of production, imports, exports, and refinery inputs) (Figure 1 at the linked article).
Although an increased adjustment is, in some part, the result of the inherent challenge of estimating perfectly each reporting period, increasing volumes of U.S. crude oil production and exports and other factors may also play a role. EIA will continue to evaluate crude oil data to identify possible sources of the higher crude oil adjustment.

Re-Balancing -- July 18, 2019

EIA's crude oil "adjustment" methods

Re-balancing data for past 34 weeks:
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
Week 27
May 30, 2019
Week 28
June 5, 2019
Week 29
June 12, 2019
Week 30
June 19, 2019
Week 31
June 26, 2019
Week 32
July 3, 2019
Week 33
July 10, 2019
Week 34
July 17, 2019

Now why would I bring that up? LOL.

Because this was on twitter today:

This will be incredibly interesting to watch.

Place your bets now.

Disclaimer: this is not a betting site. Do not place any bets, wagers, guesses involving real money based on anything you read here or think you may have read here.

MRO Came Close To Breaking All-Time 24-Hour IP Record; Nine New Bakken Permits -- July 18, 2019

Active rigs

Active Rigs5567593073

Nine new permits, #36751 - 36759, inclusive:
  • Operators: Kraken Development III (4); CLR (3); Whiting (2)
  • Fields: Sanish (Mountrail), Long Creek (Williams);
  • Comments:
    • Kraken has permits for a 4-well family pad in section 10-154-92, Sanish oil field
    • CLR has permits for a 3-well LCU Jessie pad in section 24-153-99, Long Creek oil field
    • Whiting has permits for a 2-well Lillian Viola pad in section 12-154-92, Sanish oil field;
Okay, before reading any further, re-acquaint yourself with record IPs in the Bakken at this post.

One permit canceled:
  • Equinor: a Marcia well in Williams County
Seven producing wells (DUCs) reported as completed (I will have to update production data and other data later)
  • 34859, 4,748, MRO, Rochelle USA 21-17TFH,  API: 33-061-04222, Reunion Bay, t5/19; cum 41K over 18 days; extrapolates to 68,440 bbls over 30 days;
  • 34862, 6,026, MRO, Turkey Feet USA 41-17TFH, Reunion Bay, t5/19; cum 29K over 12 days; extrapolates to 71,010 bbls over 30 days;
  • 34861, 5,243, MRO, Atkinson USA 31-17TFH, Reunion Bay, t5/19; 29K over 14 days; extrapolates to 62,104 bbls over 30 days;
  • 34860, 7,889, MRO, Bruhn USA 21-17H, API: 33-061-04223; Reunion Bay, t5/19; cum 64K over 20 days; extrapolates to 96,615 bbls over 30 days;
  • 35323, 9,614, MRO, Driftwood USA 41-17H, Reunion Bay, t5/19; cum 32K over 10 days; extrapolates to 96,270 bbls over 30 days;
  • 34858, 4,866, MRO, Miriam USA 11-17H, Reunion Bay, t51/9; cum 40K over 20 days, extrapolates to 59,670 bbls over 30 days;
  • 35462, 1,899, Whiting, Urban 44-11-3H, Reunion Bay, t6/19; cum --; 
I may do a stand-alone post for the MRO wells.

Frack data at the NDIC site not yet available.

From FracFocus:
  • 34859, 33-061-04222: 7,463,738 gallons of water (moderate amount, not out of hte ordinary); 90%water in the frack
  • 34860, 33-061-04223: 10,288,478 gallons of water (upper end, but not a record); 91% water;

The Open -- July 18, 2019

First day.

With the cut line likely to be +2 or +3, both Tiger Woods and Phil Mickelson are not likely to be around this weekend. Tiger is +6 after 13 holes first found; Mickelson finished the first round, +5.

Politics -- Nothing About The Bakken -- July 18, 2019

This is an incredibly interesting and important story.

I don't often see "overwhelming" "vote" to "repeal" an "Obamacare" tax all in one sentence.

This story tells me more about the 2020 election than about Obamacare.

The lede:
The House voted overwhelmingly to repeal a tax Wednesday intended to fund the Affordable Care Act, preserving tax breaks for employer-sponsored insurance plans favored by large corporations.
Going into this, my "take" from the mainstream media was that the millennial journalists writing about the upcoming vote weren't really sure how the vote would go, or more likely they did know but were hoping to have some influence on the outcome. They didn't.

The US House, which also apparently voted on articles of impeachment yesterday, overwhelmingly repealed the Obamacare "Cadillac" tax. As far as I can tell, this was about the last plank in Obamacare that needed attention.

The other planks such as pre-existing conditions will likely remain intact.

But that's Obamacare.

This vote was all about perception, not the merits of the bill. This vote was a referendum on the former president; it was not a vote on health care (or how to fund it). 

With that in mind, this is what really caught my attention: the second paragraph:
In a reversal of the usual partisan roles, Democrats rather than Republicans led the charge to kill a key part of Obamacare.
But then this, in the third paragraph -- which should have been in the lede -- "overwhelming" is/was an understatement. The vote was 419 - 6 "with bipartisan support." 

Well, duh. With a vote of 419- 6 how could it be anything other than "bipartisan support"? I assume this is code for the GOP killed Obamacare.

Flip-flopper at the top of the flip-flopping list? Representative Steny Hoyer of Maryland, the #2 Democrat in the House. The #1 Democrat in the US House remains a tie, shared between Ill-Hand Omar and Occasional-Cortex. Nancy Pelosi is now a distant third and fading.

Speaking of Nancy. Apparently she was unaware of the "Cadillac tax" when she voted in favor of Obamacare -- "we won't know what's in it until it passes."

The "Cadillac" tax was employer-sponsored coverage. It would have been a debacle, and would have raised ... get this ... $201 billion (false precision with that "one billion") over ... ten years. That's $20 billion / year.  Chickenfeed. 

More from the article, written by millennial journalists:
Democrats have generally opposed measures to chip away at President Barack Obama’s signature legislative achievement, but the Cadillac tax has been unpopular since it became part of the code.
The measure to repeal it, H.R. 748, was passed under a fast-track procedure requiring two-thirds support among House members.
Yet popularity doesn’t necessarily mean good policy, said Marc Goldwein, senior vice president at the Committee for a Responsible Federal Budget. Politicians don’t like the tax on health benefits, but nearly every economist thinks the Cadillac tax or a similar measure is necessary to help slow the rise in health-care costs and curb overuse of health services, he added.
It's pretty much impossible to find who the six were that voted to support this tax. I assume the Squad of Four were two-thirds of the six. But here's the list -- easily found -- but the millennial journalists writing this story did not post the nays: 
  • Amash (who has gone off the deep end)
  • Harris -- 1st District of Maryland, a physician
  • Peters -- 52nd District of California
  • Cooper -- 5th District of Tennessee
  • Kind -- 3rd District of Wisconsin
  • Roy -- 21st District of Texas
Not voting:
  • Abraham -- 5th District of Louisiana
  • Armstrong -- North Dakota -- is this correct? [An aside: "slams Trump's tweets, but voted "no" on resolution to condemn them; not an inspiring rep]
  • Bilirakis -- 12th District, Florida
  • Gabbard -- Tulsi -- Hawaii -- running for Democrat presidential nomination
  • Halland -- New Mexico
  • Hudson -- North Carolina
  • Meadows -- North Carolina
  • Walker -- North Carolina
Disclaimer: I did this quickly. The last names are correct as taken from the government website; identification of districts/states could be wrong due to mis-identifying individuals -- the government website did not provide first names.

Wow, I was wrong, both Ill-Hand Omar and Occasional-Cortex voted to support Big Business. In fact, all four, after getting the "okay" from Occasional-Cortex voted as a bloc to support Big Business.

The bill -- get this -- was sponsored by a Democrat. The Cadillac Tax repeal bill was sponsored by Rep. Joe Courtney (D-Conn) according to The Hill, and had 369 co-sponsors.

The US House Ways and Means Committee chairman Richard Neal (D-Mass) praised the bill to repeal this Obamacare tax. 


2020 candidates getting nervous?

The current front-runners for the Democrat presidential bid would have all voted against the repeal based on their statements / speeches. Which leads me to this: Hillary Clinton was back in the news this morning, reportedly slamming President Trump's North Carolina rally that was held last night. I remain convinced she thinks the DNC convention will be a brokered convention, that the current contenders will implode, and that someone will made a diva ex machina entrance when the convention evolves / erupts into chaos. I am convinced she thinks she is that diva. She never supported Obamacare, she will remind the delegates.

No word from Michelle or Barry.

By the way, this bill to repeal an Obamacare tax should have been the easiest vote for ideologically-pure reps: this bill was passed for all intents and purposes, unanimously. This is where Ill-Hand-Omar and Occasional-Cortex could have voted their collective consciences and the bill still would have passed. 

Notes From All Over -- Part 2, July 18, 2019

China: 1H19 -- China's consumption of crude oil jumped almost 6%, year-on-year data.

Glut: this would not have happened twenty years ago. Iran announces that it has indeed seized a foreign oil tanker and the crew of twelve. What did WTI do? WTI fell almost 3%; fell over $1.50/bbl, and is now trading barely above $55/bbl.

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

UNP: wow, wow, and a triple wow. This is incredible important on many, many levels. Union Pacific earnings beat ... after CSX flops, Canadian Pacific tops. Reasons why this is important to me:
  • yesterday analysts blamed CSX's "flop" on Trump (the Chinese trade war); it will be curious what those same analysts say now
  • CSX: eastern half of the US
  • UNP: western half of the US
  • Warren owns BNSF: we won't see BNSF results any time soon, so UNP becomes a proxy for BNSF
  • a breakdown of where UNP did well; what the future will hold
UNP: the UNP beat was not trivial, and it was not subtle
  • forecast
    • earnings would rise 7% to $2.12 (I assume that meant previous earnings were $1.98)
    • revenue would dip minimally, 1.7% to $5.58 billion
  • actual:
    • earnings rose a whopping $2.22 (if previous earnings were $1.98, this represents a jump of 12% -- wow)
    • revenue slightly above the estimate at $5.60 billion
  • operating ratio rose 3.4% to almost 60%
  • all of this despite carloads down 4%; decreased agricultural and energy shipments
  • the latter likely to improve over time
UNP: keeping America great.

UNP: up almost 5% after results posted, but, of course, that was after a pullback of 7% (?) yesterday; now trading up almost $8 at $172.

More "Emoji" Coming

Yes, you can tell it's a slow news day. LOL. 

Link here.

Apparently the plural of emoji is .... emoji. Or maybe emojis. Or maybe both are acceptable.

On The Way To School

Corky and friend.

Reason #45,889 Why I Love To Blog -- Yes, This Can Be Connected Back To The Bakken -- Jluly 18, 2019

One thing leads to another.

Early on in the blog, I got a real kick out of some of well names selected by Slawson, CLR, Enerplus, and some others.

CLR had an entire group of wells named after cattle.

And then one thing led to another.

First there was Buelingo.

Then there was Brangus. At the time, I moved on, not having the time to look further.

So, now, on a slow news day -- a very slow news day -- back to Brangus.

From wiki:
Brangus is a hardy and popular breed of beef cattle, a cross between an Angus and a Brahman. Animals eligible for registration as Brangus cattle are 5/8 Angus and 3/8 Brahman. Brangus is a registered trademark of the International Brangus Breeders Association (IBBA).
So where did this all come from? It turns out that this particular breeding is a strategy for tick resistance in tropical cattle and other tropical/sub-tropical maladies. 

Which led me to Zebu cattle, or maybe, "zebu" cattle.

That was new to me. Apparently zebu cattle are thought to be be the world's oldest domesticated cattle. The name Zebu today can be used as a direct name for that breed of cattle but it is also used as a general name for breeds such as Brhaman, Gir, Guzera, and Nelore.

The 30-second speech would include:
  • Zebu originated in Southwest Asia, having evolved from three breeds of Indian cattle (Guzerat, Nelore, Gir)
  • to Africa at an early data
  • to Brazil in the 17th and 18th century
  • 1921: nine-year ban on Zebu imports due to a Rinderpest outbreak
  • characteristic large ears, loose skin, presence of a hump: used as method to identify pure-bred Indian cattle
  • Indu-Brazil breed
  • why breeders like Zebu:
    • heat tolerant
    • parasite (tick) and disease resistance
    • hardy
    • milk, meat, and draft
So, it appears cattle breeders saw global warming coming centuries ago and started breeding heat-tolerant cattle. 

Notes From All Over -- Part 1, July 18, 2019

Flaring: shoot-out in Texas over flaring? See this Bloomberg story via Yahoo!Finance. I could be wrong, but it appears this will turn into a issue of who ultimately has jurisdiction: the regulators or the courts. This may not turn out well.
A Kinder Morgan Inc.-led natural gas conduit is getting blowback in a place that’s so far been a refuge for the embattled pipeline industry: Texas. And it comes as drillers in the Lone Star state need pipeline space more than ever.

The $2 billion Permian Highway Pipeline would carry gas from America’s most prolific shale basin in West Texas to the Gulf Coast, helping to relieve bottlenecks that have led producers to burn off enough fuel to supply every home in Texas.

But landowners along the route are staging a fight, arguing against the company’s use of eminent domain and urging city and county officials to consider potential environmental and safety consequences.

The dispute poses a risk of pitting environmentalists concerned about the burning of excess gas -- called flaring -- against property owners who don’t want a pipeline running through their backyard or ranch. Oil explorers in West Texas are producing record amounts of gas as a by-product of crude drilling, and without new pipelines, their only option is to flare the gas into the sky.
Disclaimer: this is not an investment site. Do not make any investment, financial, job, career, travel, or relationship decisions based on anything you read at this blog or think you might have read at this blog.

US equities: a couple of down days, but surprisingly, the Dow remains solidly above 27,000. The S & P 500 has slipped back below 3,000 and it looks like we might not see that threshold for awhile. A credible source opines that it is the Russell US Indexes that are dragging the other indices down. Apparently, the Russell US Indexes have become the leading US equity benchmarks for institutional investors.
  • Russell 3000 index: the umbrella index
  • Russell 1000: large cap
  • Russell 2000: small cap
Russell 3000: top holdings at wiki.


I find this absolutely amazing.

This is pre-K. Pre-kindergarten. She starts kindergarten this autumn. 

No Wells Coming Off Confidential List Today -- July 18, 2019

Politics: US House is irrelevant -- Trey Gowdy. I could be wrong but I thought I heard that the US House voted on articles of impeachment yesterday.  I'm waiting for the headline with the results of the vote; haven't seen it.

Tea leaves: it appears the only folks pushing solar and wind energy are Germany; parts of England; Scotland; New England (US); parts of the west coast (US); and that's about it. I may have missed a few, but that's about it. When one reads the Rigzone article linked below about LNG demand to spike five-fold in parts of Asia, one realizes just how parochial "our" thinking really is about renewable energy. Combine that with the story in the July 5, 2019, issue of The Economist about India about to begin coal mining operations in one of the world's biggest coal mines in Australia and one starts to get a much different picture than one sees when reading press releases disguised as news stories coming out of Minnesota and Iowa.

21st century: America's century.

22nd century: China's century.

The baton -- from America to China: will be passed 2051. To be more specific, Tuesday, June 6, 2051.

Mission to the moon: watching the documentaries over the past few evenings about the 1969 moon landing and the missions leading up to it -- absolutely fascinating. I'm not sure "we" can do it again.

Woodstock: 1969.

Jobless claims: pending, link here -- 
  • prior: 209K
  • prior revised: 208K
  • forecast: 215K
  • actual: 216K  -- well, that was anti-climactic
LNG: LNG demand to spike five-fold in parts of Asia. From Rigzone:
Demand for liquefied natural gas (LNG) from South and Southeast Asia will more than quintuple by 2040, reaching 236 million tonnes per annum (mmtpa), Wood Mackenzie predicted Wednesday. In a research note emailed to Rigzone, WoodMac noted that nearly one-half of the Asian demand spike will come from two major markets: Indonesia and India. Asti Asra, WoodMac principal analyst, noted that different sectors will drive demand growth in India and Indonesia – expected to require 63 mmpta and 43 mmtpa, respectively, of LNG in 2040.
Back to the Bakken
No wells coming off confidential list today.

Active rigs:

Active Rigs5667593073

RBN Energy: how rising baseload demand for gas is reshaping seasonal patterns.
Natural gas storage activity this spring suggested extremely bearish fundamentals.
The market injected gas into storage at a record pace, well above year-ago and 5-year-average levels.
The high injection rate was in part a result of demand loss as weather abruptly moderated in April and May. However, a look at injections on a weather-adjusted basis suggests there’s another dynamic at play — namely, that increased baseload demand for gas in the power sector amplified the effects of the mild weather this spring, lowering demand even more than temperatures alone would indicate. Moreover, that same dynamic could have an opposite, equally extreme effect during the hotter months when power generation is the primary driver of gas demand. Today, we look at the latest gas storage and demand trends, and what they can tell us about the balance of injection season.
The winter of 2018-19 was one of records and extremes for the gas market, including record production and demand, and both the highest and lowest spot gas prices ever recorded in the U.S. physical gas market. It’s safe to say that theme extended into spring. Lower-48 gas production continued setting record highs, as did demand, particularly from LNG exports. And we can add one more extreme to that list — some of the highest storage injections seen this decade for the April-May time frame.
Injections in April and May of 2019 totaled 332 Bcf and 524 Bcf, respectively, exceeding both year-ago and 5-year-average levels (dashed red oval). In April, injections came just 24 Bcf shy of the highest total injection for that month seen this decade (356 Bcf in 2010). By contrast, the net storage change was a net withdrawal of 11 Bcf in the comparable weeks last year, and the next-highest injection level in the past 5 years was 250 Bcf 4 years ago in 2015.
The higher-than-normal injections continued through May, but not to the extent they had in April. May’s total injection of 524 Bcf was the highest of the decade and 142 Bcf above last year, though it was only 2 Bcf higher than the 5-year high of 522 Bcf seen in 2015. June injections also were above average, at 404 Bcf, but not as high as the 429 Bcf seen in June 2014. When compared to 5-year average, the deviations in storage injections have swung from being as much as 180 Bcf higher than the historical average in April, to less than 80 Bcf higher in May and then to about 90 Bcf higher in June.