Canadian Shale -- EIA -- 2015

Link here.

***********************
Inflation? What Inflation?

Bananas at Target this morning: 49 cents/pound, and they have so many, they will have to be marked down unless they plan to throw out a lot.

I have four grocery stores to choose from, all within biking distance, the nearest two minutes away and the farthest ten minutes away.

Tom Thumb: local regional; low-rent; last choice for me of the four; only went when we lived at our previous apartment; would never go there again; expensive; shoddy; owned by Albertson's just down the street.

Albertson's: nationwide grocer. A bit more upscale. Somewhat competitive. Much better meat selection than any other in the area. Outstanding rotisserie chicken, and still priced at $6.99. It's the only place I can find the fruit and fresh vegetables that my wife wants.

Walmart: everyone knows Walmart. No need to discuss.

Target: wow, what can I say! This store is incredibly busy. Tom Thumb is generally devoid of customers; Albertson's doing better but parking lot is really quite empty, considering. Target: parking lot is always full. People arrive before the store opens and wait for doors to open. I can bike there in less than two minutes. No exaggeration. Probably slightly more expensive than Walmart but a better shopping experience. It seems about the right size. For just a handful of items, it's a real trek to go to Walmart. I don't think Target has hot rotisserie chicken but it does have "cold" rotisserie chicken in the deli section, or whatever it's called. The meat / fish selection does not compare at all to what we get at Albertson's. But wow, that store is incredibly busy. They seem to have the right mix of self-checkout and checkers. But sometimes the self-checkout line gets really long. 

************************
Playing In The Mud

In the photo below, Corky and Jilly Bean. Correct spelling.

Sophia was painting a picture of a fairy castle or some such thing.

Sophia's mom was about to move Corky and Jilly Bean closer so they could see the painting better. 

Sophia yelled out: "No! They're playing in the mud." 

The Political Page, T+59 -- Trump's Steel Tariffs Starting To Have Desired Effect -- Op-Ed -- July 29, 2018

Updates

Later, 5:26 p.m. CDT: wow, look at this headline and story from CNN. Scott Adams noticed this past week that CNN seems to have changed its "tone." I'm seeing the same thing. This is quite interesting. And, then, of course, the publisher of NY Times requesting a meeting, and then getting a meeting, with President Trump. Trump simply wants credit where credit is due.

Original Post

Trump's steel tariffs: I have no idea who Jan van Eck is nor how reliable he might be but I assume he reports what he sees just as I report what I see.

From oilprice.com. I've archived the entire piece in case the post disappears.

************************** 
The Gap Grows

Peak oil? How US shale flipped the script in global oil markets. Over at oilprice.com again. Again, I've archived the entire piece in case the post disappears. Again, this article links to the 2018 global energy review by BP.

But the future played out differently than it seemed it would in the summer of 2008. Unbeknownst to most people, oil producers were experimenting with a marriage between two established oil drilling technologies — horizontal drilling and hydraulic fracturing.

The success of this marriage would unlock oil in tight oil and shale oil deposits that had previously been too expensive to recover, and would result in one of the greatest oil booms the world had ever seen. In fact, the “fracking revolution” caused U.S. oil production to turn upward in 2009, and then rise over the next seven years at the fastest rate in U.S. history.

While it is still true that OPEC produced 42.6 percent of the world’s oil in 2017, the majority of new oil production since 2008 has come from the U.S.

As I read that, my thoughts turned to the comments from two readers over at The WSJ:

The shale boys saved Obama from a total economic meltdown - now they shift into high gear. Amazing what creative people combined with private property can do. Meanwhile our "carbon footprint" keeps declining thanks to natural gas and not the government.

The shale drilling did save Obama from a complete economic meltdown - but he spent much of his 8 years fighting the pipelines to deliver the oil, he kept the USA from exporting LNG for 7 out of 8 years - but he worked really, really hard to make sure Iran pumped as much oil as possible ( so much for global warming) - makes one wonder whose side he was on? 

Wiki says the US oil and gas sector makes up 8% of the US GDP.

I've read recently that the oil and gas sector provides a third of Russia's revenues.

I assume, oil and gas contribute nearly 100% to Saudi's revenues.

I think it's important to consider that data when one looks at the graphs below, and when one does that, I think both Saudi Arabia and Russia face huge economic challenges going forward.

A third point: there's nothing to suggest that the graphic won't become even more remarkable when it's re-drawn ten years from now.

I have a bit of difficulty reconciling the above graph with the graph below which has been posted numerous times when it comes to Russia ... and then one looks at the x-axis on the graph above. Over ten years, Russia's production has only increased by one-half million bopd.

I've talked about this on numerous occasions over at "The Big Stories."

By the way, in the graphic at the top, what major continent/region is not even represented? Yup, Europe/the EU. One wonders with all the cutbacks on the continent whether the EU/Europe actually showed a decline. Of course, there's Great Britain and Norway -- but as I've noted a long, long time ago, Europe is truly at a tipping point. The most recent linked story at that site: Europe is importing a record amount of coal (February 22, 2018 -- earlier this year).

********************************

The Apple Page

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.

Our oldest granddaughter has/had a very, very old iPhone 6. It's a "hand-me-down" from one of the parents, and may in fact be twice handed down before it got to her. It had a cracked  screen and was no longer holding a charge when she brought it to the local Apple store to have the battery replaced and the screen fixed.

When the Apple folks opened the iPhone they noted that the battery was "swollen" and completely distorted. They talked to the store manager and he said to just give Arianna a brand new out-of-the-box iPhone 6 at no charge. Not even charging what they could have for a) fixing the screen; and/or, b) replacing the battery. A brand new out-of-the box iPhone 6 at no charge.

I was quite impressed.

At the strategic level, corporate headquarters is giving local managers a lot of leeway.

At the tactical level, this tells me that boxes of iPhone 6's are still widely available but customers are moving up to newer models. If there was a shortage of iPhone 6's they would not easily give them away.

It will be interesting to see if this is validated in Apple's earnings, due to be reported after the market closes on Tuesday, July 31, 2018. Earnings forecast: $2.18.

If AAPL meets consensus, it will be the second best showing for the 3Q in the last several years:

Global Discoveries Recover -- July 27, 2018

Updates

July 30, 2018: the increase is led by discoveries in Guyana.

One day later, July 28, 2018: crude oil supply crunch might be looming -- WSJ. Dearth of investments in oil projects mean a spike in prices above $100 could be on the horizon. Think about this: BHP takes a $10 billion bath on shale E&P. Do you blame oil companies for being hesitant about investing in new projects? Sure, the sector looks good under a Trump administration, but under anyone other than Trump, all bets are off. Best example: the US refinery industry bet on the completion of the Keystone XL, never, never, ever expecting "a President Obama" to kill the project. These two comments from readers at the linked article:

The shale boys saved Obama from a total economic meltdown - now they shift into high gear. Amazing what creative people combined with private property can do. Meanwhile our "carbon footprint" keeps declining thanks to natural gas and not the government.

The shale drilling did save Obama from a complete economic meltdown - but he spent much of his 8 years fighting the pipelines to deliver the oil, he kept the USA from exporting LNG for 7 out of 8 years - but he worked really, really hard to make sure Iran pumped as much oil as possible ( so much for global warming) - makes one wonder whose side he was on? 

Today: global oil discoveries see remarkable recovery in 2018. This goes back to that discussion some years ago that "we" were going to run out of oil because oil companies had cut back on exploration. I never accepted that premise.

Global discoveries of conventional oil and natural gas are seeing an exciting recovery with discovered resources already surpassing 4.5 billion boe in H1 2018, Rystad Energy analysis shows.

The average monthly discovered volumes YTD are estimated at 826 million boe, up approximately 30% compared to 625 million boe in 2017.

Re-posting, the original post:

Crude oil E&P: we've talked about this before -- folks worried that the oil industry has fallen behind in exploration -- I consider it a meme and a false narrative. I'm not worried, one way or the other.  Unfortunately, this article does not put "$37 billion" into perspective (except for past three years), from Rigzone, majors on pace to approve $37 billion in projects during this calendar year (2018).

... over 30 percent ($12 billion) of these had already been approved during the second quarter.

BP, Eni, Royal Dutch Shell, Total, ExxonMobil, and Chevron  approved over $77 billion worth of greenfield projects from 2015 to the first quarter of 2018.

Of this figure, BP approved the most at $27.6 billion, followed by Eni at $25.4 billion, and Shell at $11.1 billion.

So, $77 billion / 13 quarters = $6 billion quarter (from 2015 to 1Q18, inclusive = 13 quarters). This calendar year, $37 billion / 4 quarters = $9.25 billion / quarter.

Even this arithmetic doesn't do much for clarification or perspective -- but it is what it is.

Another link. 

*******************************

Equinor

Link here. 

Norway’s Equinor and the Canadian province Newfoundland and Labrador have agreed to develop a deepwater oil project off Canada’s eastern coasts that will cost US$5.2 billion, according to the Premier of Newfoundland and Labrador, Dwight Ball.

Equinor Canada is the operator of the Bay du Nord oil discovery, made in 2013 and estimated to hold more than 300 million barrels of light, high-quality crude oil.

The province of Newfoundland and Labrador is now buying a 10-percent equity stake in the Bay du Nord oil project, which is expected to be sanctioned in 2020 and aims for first oil in 2025.

Bay du Nord is the first remote, deepwater project in the province’s offshore. It is located 500 kilometers (311 miles) from shore at a depth of around 1,200 meters (3,937 feet). The Bay du Nord project opens a new basin—the Flemish Pass—and is the first project to be negotiated under Newfoundland and Labrador’s generic oil royalty regulations.

The good news: no pipeline through Burnaby will be needed.

Peak Oil? What Peak Oil? All Those Deferred Projects? Getting Off The Ground -- Bloomberg -- January 23, 2018

I can't count the number of times I've read stories and heard from folks that all the big global energy projects that have been deferred over the years will result in a huge crude oil shortfall. Maybe. Maybe not.

But now Bloomberg is reporting that all those deferred projects are finally getting off the ground.

The global oil industry’s backlog of big drilling projects is starting to shrink as prices improve.

From production vessels tapping Brazil’s deep-water reserves to pipes connecting rigs to underwater wells in China, the number of ventures delayed since the oil crash that finally got approval to get off the ground totaled 18 last year, according to a report by consultant Rystad Energy. That compares with only five in 2016 and two in 2015.

That’s a start, but there are still 104 delayed oil and gas projects waiting for investment approval, according to Rystad.

Much, much more at the link.

To re-cap, big global projects the past few years:

• 2015: two
• 2016: five
• 2017: 18
• pending: 104 

By the way:

• keep this data point in mind
• the most recent Bloomberg stance is a lot different than it was just on December 28, 2017, less than one month ago 

About That "Decreased Conventional Discoveries" -- A Bit Of Perspective -- December 22, 2017

Updates

May 27, 2019: update on conventional -- high-impact -- exploration.

February 1, 2018: Richard Zeits talks about ten million bopd.

February 1, 2018: Chevron has best year for new oil discoveries since 2011.

December 28, 2017: Bloomberg repeats the gloom and doom story.

December 26, 2017: from Yahoo!Finance:

Original Post 

The other day I linked a story sent to me by a reader about conventional oil discoveries. At the time I said I did not "like" such stories but posted it for the archives. This was the story:

The story over at oilprice.com. 

The oil industry discovered the least amount of oil in 2017 in almost eight decades, breaking the previous record low set in 2016.

The global oil industry has discovered less than seven billion barrels of oil equivalent so far this year—a drop-off from the 8 billion boe discovered last year. Last year’s total was the lowest since the 1940s. The 2017 figure is down by more than half from the 15 billion boe discovered in 2014-2015, and down sharply from the 30 billion boe discovered in 2012.

The plunge is the result of a third consecutive year of relatively low upstream exploration budgets. So many oil companies slashed their spending on exploration when the market downturn began in 2014, and they have yet to restore that spending to anything close to pre-2014 levels.

The problem with these articles: the writer does not put this into perspective. 

Here's a little bit of perspective from April 27, 2017:

This story has been told several times in several places over the past few days. I have not posted the story nor linked the story until now. There were several reasons why I did not post/link it.

But now, with this graph, perfect for posting:

I think the graph would have been even more "effective" had they drawn the x-axis to 75 billion bbls to accurately capture the 60-billion-bar for 2009. Folks are concerned that low discovery rate in past two years will mean severe supply/demand imbalance sooner (2018) than later (?).

Maybe, maybe not. But when I see the graph above, and note the 2009 bar, as well as the 2012 and 2014 bars, my hunch is it will take a few years to work that off, as well as the three billion bbls of crude oil now being stored globally.

These are discoveries, not production.

In 2007, the North Dakota Bakken boom began.

The Bakken reached its stride in 2010 - 2012. Even through 2014 significant discoveries were being made.

I don''t know when Big Oil will increase CAPEX to explore for new conventional basins/fields, but my hunch is there is no hurry. Had the bar in the graph above not been truncated, it would have stretched off the graph, into the paragraph above.