China's Coal Boom -- Daily Newsletter -- Bloomberg -- January 17, 2025

Locator: 44702COALCHINA.

Link here.

This is not a surprise to anyone following the global energy story. 

The figures run contrary to hopes that China may have begun to reduce emissions last year, more than half a decade ahead of its 2030 target, after massive additions of wind and solar power and a rebound in output of hydropower.

But all that extra clean energy wasn’t enough to cope with the expansion in electricity consumption, which was set to outpace overall economic growth for the fifth straight year in 2024 due to strong demand for computing, and as sectors from heating to transport electrify.

The trajectory of electricity demand will be key to determining whether fossil fuel generation begins its decline in 2025. At the same time, China is maintaining its world-leading pace of renewables deployment, and is spending more on power lines and energy storage equipment to ensure the clean energy isn’t wasted.

LOL, taking the same road that Germany took:

It’s increasingly possible that renewable sources can meet all of the country’s new electricity consumption this year, and pave the way for China’s power sector to achieve peak emissions in 2025, said Gao Yuhe, a Beijing-based analyst at Greenpeace East Asia.

But lying through their teeth. LOL.

Notes From All Over -- The Early Morning Edition -- Part 2 -- August 24, 2020

Top story of the day, and it's not even 6:15 a.m. CDT:

 Re-posting:

China: gears up for record breaking US crude oil haul.

U.S. oil exports to China are set to reach a record next month in a sign that Beijing is stepping up purchases to meet its commitments under a landmark trade deal reached earlier this year.

Chinese crude buyers have chartered about 19 tankers for September to send roughly 37 million barrels of oil to China, according to provisional tanker fixtures. If these proceed as planned, the exports would surpass a record set in May at 35.2 million barrels, according to U.S. Census data compiled by Bloomberg. The May volume was also the most by any U.S. oil buyer for a given month, data show.

Under phase one of the deal, the world’s largest oil importer promised to buy an additional $200 billion of U.S. goods and services in 2020 and 2021, including $52 billion in energy products, in an agreement signed in January. Purchases so far have lagged that target. A review of the deal that was set for for August 15 was canceled, and has yet to be rescheduled.

Peak Oil? What Peak Oil -- March 2, 2019

We talked about this just a few weeks ago: for investors, how to value a company based on reserves?

Rigzone weighs in.

The article doesn't answer that question. In fact, the article hardly addresses that question.

Instead, the article is about global reserves in general. Data points:

• current estimated global oil reserves: 1.7 trillion bbls
• global demand, about 100 million bbls/day
• doing the math: 45 years at current demand and no further addition to reserves
• since 1980, we've extracted about 950 billion bbls -- let's call it a trillion bbls -- and during that period proven oil reserves have soared by over one trillion bbls
• why peak-oil production is wrong: the US has had a reported oil supply lifetime ("reserves-to-production" of just 8 - 14 years reported every year since the end of WWII. This suggests we should have run out of oil many decades ago. Yes ,over 50 billion bbls and 12 million bbls/day, proven reserves and total crude oil production are the highest in US history
• why peak-oil production is wrong: there is little economic incentive to look for resources that will not be needed for many decades
• global shale and deepwater opportunities are overwhelmingly under-explored but will become more attractive as demand continues to mount
• most people do not know that 60 - 70 percetn of a reservoir's OOIP remains stranded after primary and second operations because it is so difficult to extract
• tertiary recovery -- CO2-EOR could be the next oil revolution in the US after shale

By the way, something to think about.

For decades oil companies have said CO2 is not an issue. Now they are changing their story. Sure, they are being forced into political correctness. But didn't this work out just great? All of a sudden CO2 will be needed for tertiary production.

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Canada 

Relaxing production cuts. Will bring more heavy oil to market just when it's most needed.

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China

Says massive shale oil reserves found in northern China. Doesn't amount to a hill of beans, yet, and won't for decades. But, then again, it will add to global reserves. See first article above.

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Venezuela

Colluding with Russia. Venezuela will move its European headquarters to Moscow.

Back in the USSR, The Beatles

This Is Really Cool: New England Shuns Marcellus; Yankees' Loss Is Dixie's Gain -- RBN Energy -- August 24, 2018

Blinked: China's Unipec to resume US oil purchases after tariff policy changes. LOL. Did anyone think otherwise? From oilprice:

The international trading arm of China’s refining major Sinopec, Unipec, will resume U.S. crude oil purchases from October.

The company had suspended crude oil imports from the United States amid the trade spat between Washington and Beijing in anticipation of crude oil making it onto the tariff list. When this did not happen, Unipec started buying U.S. crude again despite the trade dispute escalation that saw China slap 25-percent tariffs on U.S. oil products and coal.

Peak oil, what peak oil: analyst suggests Alaska's North Slope is an "arrested, late-emerging-phase 'super basin' rather than a mature basin."

• analysis doe not provide "actionable" intel
• data points of interest, remaining reserves:
• 38 billion bbls boe
• that figure includes 50 trillion cubic feet of natural gas
• 28 billion bbls of oil
• EUR of the North Slope: 55 billion boe (specifically the analyst suggests 54.8 billion boe, not 54.7 or 54.9 but 54.8 -- that's when you know ...)
• 38 boe yet to be produced, combined with the 16.8 billion that has already been extracted
• let's see what the divisor was
• 38 billion boe - 28 billion = 10 billion NG boe 
• 50 trillion / 10 billion NG boe = 5,000 (I've always used 6,001
• compare the estimated natural gas reserves in the North Slope with other global reserves at this post: https://themilliondollarway.blogspot.com/2018/08/us-remains-natural-gas-king-oilprice.html. 
• the US: 341 trillion cubic feet
• although one source suggest the Marcellus-Utica could produce a quadrillion cubic feet (1,000 x trillion)

NG exports: will triple over the next 12 months (2019). Will account for 10% of US production.

WTI: trending toward $69. OPEC basket" $71.75.

Burnaby update: Canada's Supreme Court rules against Burnaby, for the pipeline. Time to start bringing in the sacred bulldozers.

Saudi Aramco IPO: in case folks have lost the bubble on the IPO -- bottom line, the Prince will shelve the Saudi Aramco IPO and take a stake in Sabic, becoming perhaps the world's largest petrochemical company?

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Back to the Bakken

Only one well coming off the confidential list today --

• 30524, 884, CLR, Burr Federal 23-26H2, Sanish, fracked 10/23/17 - 10/23/17 -- problem? only one day frack; 7.8 million gallons of water; 88% water; t5/18; cum 32K over 47 days; apparently no problem with the frack; Three Forks 2; 63 stages; 8.1 million lbs;

Active rigs:

$68.55↑↑	8/24/2018	08/24/2017	08/24/2016	08/24/2015	08/24/2014
Active Rigs	62	54	31	74	192

RBN Energy: northeast gas pulled south by Florida power plants and Sabal trail.

• Florida’s increasing demand for natural gas for power generation isn’t new, but like a young alligator in the Everglades, its appetite is voracious and growing. More and more gas-fired power plants have been coming online, increasing gas demand and spurring the development of new gas pipeline capacity into the state. And, because of big shifts in where gas is being produced and where it’s flowing, the Sunshine State will soon be receiving an increasing share of its gas needs from the Marcellus region. Today, we begin a two-part look at how rising generation-sector demand for gas and a new pipeline are changing gas-flow dynamics in the U.S. Southeast.

One doesn't have to read much more to see who the winners are, who the losers are. As to paraphrase, the NY governor, NY never was that great. Certainly not when it comes to strategic planning.

Huge Refineries Going Up In China -- April 20, 2018

The largest refinery in the US is the Motiva, at 600,000 bbls crude oil / day. And only one or two other come close. Hold that thought.

From Reuters today:

Chinese private chemical producer Hengli Group has won state approval to import 400,000 barrels per day (bpd) crude oil, the largest quota ever for a private refiner, as it challenges the country’s smaller independent plants in an oversupplied Chinese fuel market.

Another private chemical firm, Zhejiang Ronsheng Group, is also expected to start operating a new 400,000-bpd refinery in the eastern city of Zhoushan later this year. 

I think a lot of folks forget how big China really is.

It would be interesting to know if these refineries are configured/optimized for light, sweet oil (Bakken) or heavy oil (Mideast). I really don't know.

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Zacks On The Bakken

Link here.  North Dakota oil production slips but set for 2018 milestone -- Zacks.

As per North Dakota’s oil regulator, the state’s daily crude output fell 0.4% in February after edging down 0.3% in the previous month. The North Dakota Department of Mineral Resources’ (‘DMR’) latest data said that oil production in February averaged 1,174,769 barrels a day, down 4,795 barrels a day from January.

But unlike crude, natural gas output went up – from January’s 2,071,820 thousand cubic feet per day to 2,102,266 thousand cubic feet per day – a new all-time high. As operators scramble to the core areas of the Bakken, wells here tend to produce more gas along with crude (present gas flare rate of around 15%).

Meanwhile, North Dakota’s total number of producing wells numbered 14,327 at the end of February, essentially unchanged from the previous month.

While the slight drop in oil activity – primarily attributed to cold weather – is the third month-over-month production decrease in a row, the decline was much smaller than anticipated. Moreover, daily output remained above 1 million barrels for the thirteenth month.

Therefore, notwithstanding the temporary blip, the newest numbers confirm the resurgence in volumes extracted from North Dakota, centered on the Bakken Shale formation.

China Sets Second-Highest Record For Crude Oil Imports; US Hits Record For Amount Of Oil Exported To China -- December 8, 2017

It might be my imagination but it certainly seems the fossil fuel energy story has moved faster in the past six months than expected.

Now we get this story -- big "thank you" to Don for alerting me to the story.

From CNBC:

• China crude oil imports for November: second-highest on record
• China crude oil imports from the US in November: highest amount on record
• driving the record for US crude exports to China: WTI discount to Brent -- currently about $6/bbl

Rule of thumb: a $7 spread (advantage to WTI) almost guarantees WTI will outsell Brent to Asia, all else being equal. If the spread is less, depends on a number of factors how much US crude oil China will import. The greater the spread over $7 the more likely that data point will be the single data point necessary for China to buy US oil.

Chinese Crude Oil Imports -- Big Story -- November 13, 2017

A couple of days ago I noted an article in which it was reported that the Chinese government had relaxed rules on crude oil imports by the small "teapot" refineries. It turns out that the smaller refiners may not have the resources necessary to be able to import their allowed allotments.

From Platts:

China has raised 2018 crude oil import quotas for independent oil companies by a sharp 63% from 2017 levels, a move that triggered a rally in the Middle East sour crude complex to a three-year high, but traders and analysts said the quotas would still fall short of Chinese independent refiners' requirements.

The country's Ministry of Commerce Wednesday said total crude oil import quotas for independent oil companies in 2018 would be 142.42 million mt (2.86 million b/d), compared with 87.6 million mt (1.76 million b/d) that the government had set for 2017, according to calculations by S&P Global Platts. But actual quotas awarded so far in 2017 stand at 103.52 million mt.

Reason Why I Love To Blog -- Reason #2 -- I Can't Make This Stuff Up -- Top Story Of The Month? -- April 27, 2017

Just a couple of days ago I posted photos of a Chinese ship in Portland, Oregon, on the Willamette River being loaded with North Dakota wheat, and once loaded will sail to Peru (South America) to offload that wheat.

Today, of all things, over at Twitter, a photo of a tanker carrying Bakken crude oil to Asia was posted:

The photo is linked to this Downstream Today story. Data points:

• first ever reported export of North Dakota's crude oil to Asia left port last month
• it is expected to be the first of numerous cargoes once the key DAPL starts moving oil in May
• Swiss-banked Mercuria Energy Trading S.A. loaded more than 600,000 bbls of Bakken crude, as well as some Mars Sour crude, in late March off the coast of Louisiana
• very large crude carrier (VLCC)

And then this from the linked story:

The burgeoning appetite for U.S. crude among Asian refiners could be a boon for Bakken crude, especially when the Dakota pipeline starts up.

That line can carry 470,000 barrels per day of oil from North Dakota's Bakken play to the Gulf, the starting point for the lion's share of U.S. oil exports. At least two Asian refiners told Reuters that they are interested in Bakken light crude because of the products it can yield through refining.

With the start of Dakota Access (DAPL), Bakken producers such as Hess Corp and Continental Resources for the first time will have a direct route to export terminals on the Gulf Coast, better connecting them to international markets.

"There seems to be increasing demand for light quality crude in Asia," said Michael Cohen, head of energy commodities research at Barclays. "I think with Dakota Access coming online, it makes the pipeline route from the Bakken to the Gulf Coast more economical."

Memo to self: I need to send a note to Jane Nielson.

There are several story lines here. One has to do with the reason Asia might be preferring Bakken light. Long-time readers know this story. 

China's Peak Oil Problem --September 13, 2016

Updates

Later, 2:02 p.m. Central Time: after reporting earlier that ConnectiCare was coming to an end (see below) it is now being reported that another ObamaCare co-op is closing shop: New Jersey. There are only six (6) ObamaCare co-ops still operating.

The New Jersey co-op is the 17th Obamacare co-op to collapse, joining other co-ops that have failed including two in Oregon, one each in Illinois, Connecticut, Arizona,

Colorado, Kentucky, Michigan, Nevada, New York, Ohio, South Carolina, Tennessee, Louisiana and Utah, as well as a co-op that served both Iowa and Nebraska.

This leaves only six co-ops in existence of the 23 that were originally created under Obamacare.

Original Post

China's peak oil problem: First, an update on China's peak oil problem -- Chinese oil production has tanked; lowest in six years -- Forbes. I first posted a "China's peak oil" problem back on August 26, 2016. This from Forbes dated today's date. Some data points:

• China: world's second largest crude oil importer
• China: fifth largest crude oil producer
• China: domestic production fell nearly 10% in the past 12 months -- the lowest in more than six (6) years
• second consecutive month of decline in production
• but look at this: Chinese production is in the same ballpark as the Bakken unfettered

• Bakken unfettered: 2.2 million bopd
• Chinese production: 3.87 million bopd 

• Chinese imports reaching record highs

• up 16% this past year
• on glide path to pass US as the world's largest oil importer
  

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Active rigs in North Dakota:

	9/13/2016	09/13/2015	09/13/2014	09/13/2013	09/13/2012
Active Rigs	35	69	199	180	192

RBN Energy: the return of LNG imports as a backstop for US pipeline gas.

California and New England are two of the nation’s quirkier regions when it comes to energy –– and we mean that in the nicest way possible. So maybe it’s not too surprising that, at a time when the U.S. is just beginning a big push to export natural gas as LNG, the Golden State and “Yankeeland” (as some still refer to New England) are turning to imported LNG to help them deal with possible gas shortages during peak demand periods this coming winter. In neither case is liquefied natural gas considered to be a long-term fix, but –– for now at least –– LNG may be playing a role in keeping the pilot lights lit and the electric lights on. Today, we look at how the stockpiling and use of LNG can still make sense in a nation with an abundant supply of gas.

Just a few years ago, before the dawn of the Shale Era, just about everyone thought that U.S. natural gas production had peaked and that our energy future would involve increasing volumes of imported LNG. That sparked the development of a number of LNG import terminals, most of them along the Gulf and Atlantic coasts. Mexico, anticipating a similar fate, developed a few import terminals too, including one –– Energía Costa Azul –– in Baja California, just south of San Diego, CA. As we all know, the Shale Revolution turned LNG-importing plans on their head (at least in the U.S.), and several of those LNG import terminals are being converted into liquefaction/LNG export terminals with the aim of selling a significant portion of U.S. gas production overseas. All this makes it somewhat ironic that, given the vast volumes of gas being produced domestically today, LNG imports are making a bit of a comeback, if only temporarily and for a special purpose –– namely, as a backup source of gas in the event that existing regional infrastructure cannot supply enough traditionally piped-in natural gas during short periods of very high demand.

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What a Difference One Day Makes

Look At These Headlines

What a difference a day makes. From today's WSJ unless otherwise stated:

• top of the fold, front page: divided Fed inclined to stand pat
• merger to create global fertilizer giant (Potash Corp; Agrium; $36 billion)
• Hanjin restarts cargo deliveries
• Apple, Daimler on BOE list (to buy corporate bonds)
• stocks gain as rate fears abate
• oil rises on weak dollar, stockpile drop (remember last week: the stockpile drop was supposedly a one-off due to huge Hurricane Hermione)
• markets wag the Federal Reserve
• negative rates may do more harm than good -- Bloomberg
• GM's Chevy Bolt (EV) to go 238 miles per charge -- Yahoo!Finance
• early morning trading: Dow 30 off 120 points and still well above 18,000; NASDAQ off 20 points and still well above 5,000 

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The Chevy Bolt

The LA Times takes a test ride -- hardly a vote of confidence.

• range anxiety even before they started, and range anxiety throughout the trip

But then look at how they did it:

Granted, I wasn’t traveling much above 50 mph most of the way, and was often going much slower. But when I got to Cambria, my max number was 204, my minimum 141 and my average 173.

Top speed 50 mph most of the way to "conserve energy" and to max distance. Top speed of 50 mph. The article actually said, "not much above 50 mph" so we are talking about driving at 45 mph to get the mileage needed. 

The devil is always in the details.


So, how is TSLA doing today? Not good. Down almost 2% and worse, now below $200/share. Adding "radar" to cameras/software for crash avoidance is going to cost a lot in time, money, and engineering resources.

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The Market

Mid-day trading: the "big boys" must have gotten the word from the Fed -- we're going to announce a Fed "rate increase" on Wednesday. The Fed has entered a "quiet period" but when the market slumps 200 points after an earlier 400-point drop, one knows the "big boys" know what the Fed is going to do. This has nothing to do with energy.

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Connecticut: Latest State to End ObamaCare Policies

From The Hartford Courant. Some data points:

• latest state to end ObamaCare policies
• state program is called: ConnectiCare
• ConnectiCare covers "nearly" 50,000 people
• the company would "still like to sell policies if it gets the rate increase it wants"
• ConnectiCare got the rate it requested (17.4%) back in August, but now realizes that's not enough: needs an average 27.1 percent increase
• two smaller insurers had already departed: UnitedHealthcare and HealthyCT
• if ConnectiCare leaves, only Anthem remains (single payer system -- what the Dems wanted in the first place -- so what's the problem?)
• 2016: 108,000 people in CT were covered by ObamaCare policies (the four companies mentioned above)
• the Connecticut Insurance Department shut down HealthyCT -- with only 10,000 customers, not enough financial resources to run a program

Hillary has Connecticut locked up. If not, she would be there in a "heartbeat" to say HillaryCare would fix the problem.

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 The Political Page

This morning on local talk radio, a journalist assigned to the Hillary Campaign, who says he's neutral, says all the noise about Hillary's medical problems won't change voters' minds. He may want to check the daily USC-LA Times poll in which Trump turned sharply up (45.8%) and Hillary turned sharply down (42.8%) in the first poll after the "event." This is the widest spread in several days, but more importantly, the mojo shifted in the past 72 hours.

This would be the first poll after the medical event and after the campaign blew this off as simply a case of "walking pneumonia" in an otherwise robust, healthy, 68-year-old grandmother who occasionally passes out, according to the "neutral" journalist covering the Hillary campaign. The only thing he was upset about was the fact that the "Clinton Campaign," not Hillary, lied to the press about her medical status, failing to divulge until 48 hours later that she had been given a medical diagnosis on Friday. He wasn't quite sure about the exact number of hours; he said he would have to check his notes. I can't make this stuff up.

• 24 hours ago, September 12: Hillary: 44.4 vs Trump 44.1
• 48 hours ago, September 11, Sunday, the day of the medical event; poll before the medical event: Hillary, 45.0 vs Trump, 43.6
• 72 hours ago, September 10, Saturday, a full day before the medical event: Hillary, 44.8 Trump,  43.8.

The polling link is dynamic but it is interactive and you can find exact numbers all the way back to July 10, 2016.

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Valiant Ambition: George Washington, Benedict Arnold, and the Fate of the American Revolution

Nathaniel Philbrick

c. 2016

DDS: 973.4 PHI

Chapter 3
A Cabinet of Fortitude

Recap:

• three regional entities of the American Army by June 1776
• the Army of the North: Brig Gen Benedict Arnold, successfully held Fort Ticonderoga
• the Army of the South (Georgia, North and South Carolina): has repulsed British Gen Clinton
• the Grand Army, everything in between: General Washington, mostly failures; some great retreats
• General Washington at risk of losing his command

Now:

• General Washington has evacuated NYC; rushed across New Jersey, and in early December, "crossed the Delaware," and set up HQ in Newton, PA, just across the Delaware River from where Howe set up his HQ in Trenton, NJ
• Howe: at a disadvantage; spread thin; guerrilla / back-country warfare
• Howe: put his Hessians in New Jersey; they saw the same problem (spread thin; back-country warfare of attrition)
• General Washington planning daring attack under darkness on Trenton, the HQ of Howe

Crossing the Delaware (again) and taking Trenton -- the Hessians

Washington doubled down; taking Trenton exceeded all expectations; ready to push the Brits out of New Jersey, back to NYC

The battles of Trenton, Assunpink Creek, and Princeton: often looked to as the point at which Washington blossomed into the brilliant commander we revere today. [First Battle of Trenton, Second Battle of Trenton in this chapter.]

His troops were too exhausted to move on to Brunswick (on the Raritan River), so he reluctantly marched to the north, taking several days to get to Morristown to recoup.

Update On Chinese Crude Oil Imports -- RIgzone -- June 29, 2016

The writer argues that jump in Chinese crude oil imports may be due to rapid filling of their strategic petroleum reserve and increasing refinery operations for export, rather than an overall increase in demand due to domestic growth in GDP.

Some data points from the article:

• China: world's #2 consumer of crude oil
• imports rose 16.5% in the first five months of this year compared to same period last year
• three reasons cited
• domestic crude oil production falling; dropped over 7% in May
• produced about 4 million bopd in the January - May period; a drop of about 170,000 bopd from 2015
• therefore: 170,000 bopd of the additional 1 million bopd import increase due to decrease in local production
• filling strategic storages at a fairly rapid pace (locking in great prices while they can)
• estimate: about 1 million bopd went into either commercial or strategic storage
• third factor: rising exports of refined products
• diesel exports surged over 300%
• gasoline exports surged almost 65%

Chinese Surging Oil Demand Saving OPEC's Butt -- The Telegraph -- April 16, 2016; Bill Nye: First We Need To Jail Climate Deniers

Note: my thoughts on the upcoming Doha meeting tomorrow at this link. 

This is really pretty cool. The other day I wrote:

Earlier today it was reported that OPEC forcast non-OPEC production falling faster than predicted, from 700,000 bopd to 730,000 bopd or about a 0.03 percent change. LOL.

As soon as I read that, I knew that the price of oil rests on the Chinese and the Indian economy. Right on cue, Bloomberg/Rigzone report: China’s crude imports climbed to a record in the first quarter as higher refining margin encouraged refiners to boost purchases.

A reader sent me this link from The Telegraph: soaring Chinese crude oil demand is saving OPEC's butt.

A dramatic build-up in China’s strategic petroleum reserve and surging demand for imported crude oil are likely to transform the global energy markets this year, regardless of any production freeze agreed by OPEC and Russia this weekend.

Chinese credit stimulus and a 20 percent rise in public spending has set off a fresh mini-cycle of growth that is already sucking in oil imports at a much faster pace than expected.

Barclays estimates that the country will import an average of 8 million barrels per day this year, a huge jump from 6.7 million bopdlast year. This is arguably enough to soak up a big chunk of the excess supply currently flooding global markets.

Standard Chartered said Chinese imports could reach 10 million bopd by the end on 2018, implying a supply crunch and a fresh spike in oil prices as the market is turned on its head.

Energy consultancy Wood Mackenzie says $400 billion in oil and gas projects have been shelved [worldwide] since the onset of the commodity slump. A great number of depleting fields will not be replaced.

Feifei Li, Barclay’s oil analyst, said China is in a rush to fill four new storage sites of its petroleum reserve coming available this year. “It is an urgent priority of the government to fill up the tanks while the price of oil is cheap,” he said.

Fresh storage is likely to average 250,000 bopd, five times the level last year. The pace will rise further in the second half of the year.

China is building vast underground rock caverns in the interior of the country as a top national security priority, fully aware of the way Japan was squeezed by the US fuel embargo in the late 1930s. It aims to boost reserves to 550 million barrels and ensure a 90-day buffer to resist an external supply shock.

China’s own output of oil has fallen by 200,000 bopd over the last year as PetroChina and Sinopec slash investment, while demand has continued to grow.

So much more at the article. Worth archiving.

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Bill Nye: We Need To Jail Climate Deniers

First we start with the weather men. Accuweather is reporting: Powerful April snowstorm to bury Colorado Rockies, High Plains this weekend.

A slow-moving, strengthening storm will cause snowfall to ramp up over a large part of the Rockies and to spread over part of the High Plains this weekend.

People in the region, including the Denver area, should be prepared for travel disruptions, power outages and property damage.

Top International Energy Story For The Week? Re-Posting -- March 9, 2016

Tweeting now:  China crude oil imports hit record 8 MMbopd in February. Quick: how much crude oil is the US importing each month according to latest figures? If you said 7 MMbopd you were right on target, and paying attention. Or a lucky guess. Reuters has the story.

China's February crude oil imports jumped 20 percent on year to their highest ever on a daily basis, as prices at their lowest in more than a decade drove buying from a group of new importers and state and commercial stockpiling. 

On a daily basis, February's imports also jumped roughly 27 percent from 6.29 million bpd in January.

Can you imagine if we woke up one day and learned Bakken crude oil production increased by almost 30% month-over-month. That's how I see a 27% month-over-month increase in crude oil by China. This is a huge story.

It will be interesting to see how soon (or if) the mainstream media reports this story in the business pages. It will be interesting to see how/if The Wall Street Journal covers this story.

More from the linked story:

China's imports reached a previous record of 7.81 million bpd in December, 2015, closing out 2015 with an average 6.71 million bpd.

The February volumes were more than a million bpd higher than the final estimate by Thomson Reuters Oil Research and Forecasts, which had expected more deliveries to spill over into March.

March imports are forecast by the Thomson Reuters analysts at under 7 million bpd.

A single swallow does not a spring make. 

Wednesday Morning Links -- December 30, 2015

Not even OPEC can fix oil glut, The Wall Street Journal. A nice little story with a nice graphic. Some data points from the article:

• Producers in Russia, Brazil and Norway pumped more oil in 2015 than the closely watched forecasters International Energy Agency and Energy Information Administration had projected. Meanwhile, oil-field investments made years ago when prices were higher are set to begin producing, even as exploration-and-drilling projects scheduled to bear fruit in the coming decades are being delayed or canceled outright.
• Global oil production increased by 2.28 million barrels a day, or 2.4%, in 2015. OPEC and the U.S. account for most of the growth, but the rest has come from Brazil, China, Canada, Russia and elsewhere. The EIA expects global output to grow by 250,000 barrels a day, or 0.3%, in 2016.
• "The idea that OPEC and the other large oil producers like Russia would reduce output at these lower prices is misguided,” said John Brynjolfsson, chief investment officer of Armored Wolf, which manages money as part of a family office. “For a couple of years to come, output will exceed demand.”
• Some money managers disagree. Bullish investors believe that non-OPEC supply could fall sharply in 2016, spurring a rebound in prices by year-end. Large producers faced pressure to cut spending even before oil prices plunged, and the pace of spending cuts accelerated in 2015. Producers delayed or canceled about 13 million barrels a day worth of oil output in the past five years, equal to about 14% of current global production, including 5 million barrels a day that would have been produced by 2020 deferred due to low prices, according to energy-focused investment bank Tudor, Pickering, Holt & Co.
• “Demand is growing and supply is reducing,” said Tim Guinness, chief investment officer of Guinness Atkinson Asset Management Inc., which manages $300 million in energy-equity investments. Mr. Guinness said he expects to see Brent oil prices at $75 a barrel by the end of 2016. “The world was out of balance. It’s now coming back into balance.”
• U.S. production fell from 9.6 million barrels a day in April 2015, a 43-year peak, to 9.2 million barrels a day in November, according to EIA estimates. The decline has been slower than many expected at the beginning of the year. The EIA predicts U.S. output will fall to 8.5 million barrels a day in September 2016 before increasing again.

Much, much more at the linked story.

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Stating The Obvious

The Fiscal Times has another story on the failure of ObamaCare: Millie Dent says ObamaCare hasn't made health care affordable, according to another study. Some data points:

• The study found that the median single enrollee earning between $35,310 and $47,080, or a family of four earning between $72,750 and $97,000, will spend almost 15 percent of their income next year on Obamacare insurance premiums and out-of-pocket costs in 2016, even with federal government subsidies. The percentages increase for those with worsening health and those over age 45. 
• And 10 percent of people in the income range the Urban Institute researchers looked at, between 200 percent and 500 percent of the federal poverty level, will spend more than 21 percent of their income on health care costs.
• The health care law created penalties for not signing up, and those fees rose this year and will climb again next year. But once the penalties flatten, if the cost of health care continues growing, more people will face financial pressure to drop out of the exchange, Buetggens says: “It’s going to be a gradual decrease in enrollment, but it’s definitely real.”

What amazes me are all the articles talking about financial headwinds for US consumers and ObamaCare is never mentioned.  But 15% of American's income will be spent on ObamaCare. Another 15% on federal income taxes, and probably another 10% on state, local (property), and sales taxes. The good news: a family of four with two cars, with annual mileage of 12,000 miles on each, at 25 mpg, gasoline at $2.00 / gallon works out to about $36/week -- the price of one meal at McDonalds for the family of four.

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Into The Big Leagues

I'm probably wrong on this, but it's my impression that the Lundberg Survey rose to prominence during the OPEC embargo. Dan Lundberg founded the survey in 1950 but I don't think it became a household word until the 1970's and 1980's with the OPEC embargoes and other geopolitical events affecting the price of gasoline.

I think we are seeing the same thing with RBN Energy. I think RBN Energy started out as a free
digital newsletter back in 2011 or thereabouts. It has since become a leader in in-depth analysis of the American oil and gas industry. I'm starting to see RBN Energy quoted in more and more news stories about the oil and gas industry.

Here is just one example of many: in a Rigzone story today, RBN Energy LLC analyst Sandy Fielden was quoted from a December 27, 2015, report.

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Chinese Energy Growth Forecast For 2016

Some argue that the slump in oil prices in 2015 had less to do with an increased supply of oil and more to do with the unexpected slowdown in demand for oil in China. If so, this might be good news for the oil and gas industry. China expects its energy consumption to grow in 2016. Some data points from the Reuters/Rigzone article:

• China's apparent demand for crude oil will reach 550 million tonnes (11 million barrels per day) and apparent demand for natural gas will hit 205 billion cubic metres, Nur Bekri, head of the National Energy Administration (NEA), said, according to Xinhua.
• Electricity consumption will rise to 5.7 trillion kilowatt-hours and coal consumption will be 3.96 billion tonnes.
• Crude oil production is expected to rise to 220 million tonnes (4.4 million bpd), even as global prices near 11-year lows. Natural gas production, including shale gas and coal-bed methane, is expected to rise to 140 bcm, he said.

Back-of-the-envelope:

• crude oil demand at 11 million bopd vs domestic production of 4.4 million bopd leaves a delta of about 7 million bopd
• natural gas demand at 205 billion cubic meters vs domestic production of 140 bcm leaves a delta of about 65 bcm

I can't get my hands around "65 bcm of natural gas," so I turned to Iowa State University to provide me the conversion factor:

• 1 billion cubic meters NG = 6.29 million barrels of oil equivalent

So, 65 x 6.29 = 408 million boe / 365 or another 1.1 million boepd delta.

So, I assume, we're looking at about 8 million boepd Chinese import demand.

For 2015:

• China imported 330 million tonnes (6.6 million bpd) of oil and 60 bcm of natural gas. Installed energy capacity will have reached 1.47 billion kilowatts, up 7.5 percent.

Coal:

• By the way, the Chinese China will stop approving coal mining projects for three years starting in March, and aims to close more than 1,000 mines that have "lagged behind." 
• coal consumption for 2015: 3.96 billion tonnes (tonnes with "es" on the end)
• as a percentage of energy contribution, coal will fall to 62.2% (in 2016) from 64.4% (in 2015)

Intermittent energy will make up 13.2 percent of primary energy needs in 2016, up from 12 percent in 2015, according to the linked article. 

Real Crude Oil Prices From 1861 To 2015 -- December 15, 2015; China May Call It Quits -- Has Enough

From Mr Badri, tweeting now:

OPEC's Badri does not expect crude oil prices to remain low for more than a year, according to media report.

From John Kemp:

Pretty much tells me all I need to know.

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Meanwhile, China May Call It Quits -- Has Enough

Platts is reporting:

After more than doubling its strategic oil reserves since last year, China may apply the brakes to its buying spree as storage availability is expected to be limited, while a climate of depressed prices will reduce any urgency to snap up cargoes, market observers said Monday.

The National Bureau of Statistics said Friday that China's SPR more than doubled its crude reserves to 26.1 million mt, or 191.31 million barrels by mid-2015, from 91.11 million barrels on November 20, 2014.

The latest reported SPR stock were equivalent to around 29 days of China's crude imports, Platts calculations showed, based on the country's average imports of 6.63 million b/d over the first 11 months of the year, according to data from the General Administration of Customs.

So, China has 29 days worth of import protection. Quick! How much import protection does the US have? More than a year's worth. 450 days to be exact. And that does not count the DUCs. I think US DUCs are adding about 500,000 bopd.

Chinese-Controlled CNOOC In Deep Doo-Doo In Canada -- July 23, 2015

This is being reported in The Wall Street Journal today:

China’s Cnooc Ltd. knew it was buying into trouble when it acquired Canada’s Nexen Inc. in 2013. It is now finding out just how much.

Weeks after the state-controlled oil company bought Nexen for $15 billion, its executives were in Calgary with a blunt message for the Canadian company, which had struggled for years to extract crude from the oil sands in the Alberta wilderness.

Two years later, Cnooc is still trying to fix Nexen, its troubles compounded by low crude prices.

And now Cnooc must explain an oil spill: This month, a pipeline Nexen installed last year ruptured, spilling nearly 31,500 barrels of a mixture of crude oil, wastewater and sand in northern Alberta.

The nice thing about this article is it helps me sort out the three big Chinese oil companies: CNOOC, Sinopec, and China National Petroleum Corp.

Back to CNOOC:

Buying Nexen appeared to fulfill the Chinese conglomerate’s three-decade mission to become a global oil company. Nexen gave Cnooc stakes in:

• Canada’s oil sands; 
• North Sea wells off Scotland; 
• Yemen; and, 
• an increased Gulf of Mexico presence.

Call me naive but every one of those appear to have been a bad investment:

• besides cost of extraction, oil from Canadian oil sands is landlocked with no Keystone XL
• recent news regarding UK off-shore wells is not good
• Yemen? what more needs to be said?
• Gulf of Mexico: with $50 oil, not economic and huge environmental risks

Not only that, but:

Nexen was the highest-priced of those acquisitions, and its Canada project shows how wrong some of those bets have gone. Its oil-sands project, called Long Lake, is one of the least productive oil-sands operations in northern Alberta—Canada’s oil-sands center—based on key benchmark measurements, according to BMO Capital Markets, Bank of Montreal’s investment-banking unit.

Back to the spill:

The spill [31,000 bbls] is among the largest onshore in recent years.

By contrast, a 2010 leak that flowed into Michigan’s Kalamazoo River was estimated at 20,000 barrels. Nexen’s spill has been contained to a field along the pipeline and hasn’t contaminated water sources.

The pipeline may have been leaking for up to two weeks before the leak was detected after it returned to service on June 29 following routine maintenance.

The leak shut production of some 9,000 barrels a day.

Nexen was already weighing on Cnooc’s bottom line. Cnooc has pledged to cut capital expenditures around 30% this year, after reporting nearly $700 million in impairment losses for 2014 that it blamed on operations in North America and the North Sea. Its energy-sales revenue fell 40% in the first quarter.