Activity Outlook In US Shale Following OPEC Meeting -- June 5, 2015

Reuters via Rigzone is reporting:

The U.S. drilling-rig count, which recorded its 26th straight weekly decline this week, is close to bottoming out ahead of a recovery in the second half of the year, mainly in the Permian and Eagle Ford shale plays in Texas, analysts said.

Oil prices are expected to hold roughly at current levels over the next three to six months after OPEC agreed on Friday to stick by its policy of unconstrained output for another six months, but did not raise its output ceiling.

That implied stability is expected to encourage drilling, especially in cost-efficient U.S. shale basins.

More:

"Most additions (this year) will be focused on the Permian, the No. 1 play right now ... No. 2 is going be the Eagle Ford," said Gabriele Sorbara, an analyst at Topeka Capital Markets.

The Bakken:

Analysts said that if oil prices drop to the low $50s, costlier shale plays such as the Bakken in North Dakota and the Niobrara, straddling Wyoming and Colorado, could experience a further drop in activity.

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Hawaii's Experience With ObamaCare

The Huffington Post is reporting:

Hawaii's health insurance exchange announced on Friday that it will be shutting down, and its nearly 40,000 enrollees will be transitioned to the federal Obamacare marketplace, Healthcare.gov.

The private, nonprofit Hawaii Health Connector, which has been embattled from its inception, has not generated “sufficient revenues to sustain operations,” according to the office of Hawaii Gov. David Ige.

The state invested $130 million in the Connector, but the exchange has been plagued by low enrollment numbers and technological issues, making it noncompliant with the federal requirements outlined in the Affordable Care Act. 

According to Hawaii Health Connector CEO Jeff Kissel, Hawaii's health exchange will become a state-run exchange that uses HealthCare.gov, which is similar to the setup in Nevada, New Mexico and Oregon.

I know that Oregon's state-run site failed also; I don't know the history of Nevada's or New Mexico's state run systems, but Oregon, Nevada, New Mexico, and Hawaii all have something in common. 

Minnesota Approves Certificate Of Need For The Enbridge Sandpiper; Just The Beginning Of A Lengthy Process -- June 5, 2015

KARE11 is reporting:

In a 5-0 vote, the Minnesota Public Utilities Commission approved plans for the Sandpiper pipeline project Friday.

The proposed project was said to increase the amount of oil flowing across Minnesota by 225,000 barrels a day, from North Dakota to Superior, WI.

The final route of the 612-mile pipeline has not been approved and will likely not be finalized until 2016.

The lead group opposing the Sandpiper says the group is not "anti-pipeline." Apparently just NIMBY. Or haven't gotten the "respect" they feel they deserve. I assume it's more of the latter.

StarTribune also has the story.

Minnesota regulators approved a certificate of need Friday for the proposed Sandpiper pipeline from North Dakota's Bakken oil fields to Superior, Wisconsin, but will hold separate proceedings on exactly which path it should take across northern Minnesota.

While the Public Utilities Commission agreed 5-0 that the $2.6 billion, 610-mile pipeline is necessary and in the public interest, commissioners didn't foreclose the possibility of rerouting it away from environmentally sensitive lakes, streams and wetlands.

Enbridge Energy will still have to go through a lengthy review of its proposed route and a proposed alternative for part of the route that avoids some lakes and wetlands.

It looks like this could go on for decades, but at least one hurdle is behind us.

I track various pipelines of interest here. The timeline of the Sandpiper so far:

Initial application was not approved by FERC in March, 2013; Enbridge says project remains on schedule.  Update, October 29, 2013: The Bismarck Tribune reports that the Minnesota PUC will take a year to listen to local farmers who oppose the pipeline. Update: June 25, 2014: North Dakota PSC approves the pipeline. Update: June 5, 2015: Minnesota approves certificate of need for the pipeline; lengthy review for route still envisioned. 

Eggs Being Rationed In Texas; GE May Move Corporate Headquarters Out Of Connecticut Due To High Taxes -- June 5, 2015

HEB is "our" grocery store chain in Texas. The Washington Post is reporting:

In recent days, an ominous sign has appeared throughout Texas. 

"Eggs [are] not for commercial sale," read warnings, printed on traditional 8 1/2-by-11-inch pieces of white paper and posted at H-E-B grocery stores across Texas. "The purchase of eggs is limited to 3 cartons of eggs per customer."

H-E-B, which operates some 350 supermarkets, is one of the largest chains not only in the state, but in the whole country. And it has begun, as the casual but foreboding notices warn, to ration its eggs.

"The United States is facing a temporary disruption in the supply of eggs due to the Avian Flu," a statement released on Thursday said. "H-E-B is committed to ensuring Texas families and households have access to eggs. The signs placed on our shelves last week are to deter commercial users from buying eggs in bulk."

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Voting With Their Feet

Back on February 9, 2015, we talked about the high taxes on individuals in Connecticut. It looks like Connecticut is at it again, raising taxes so high on corporations, that GE is exploring plans to move their corporate headquarters out of state.

Sioux Falls, SD, is inviting.

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North Dakota Maintains Housing Record Begun In 2010

The AP is reporting:

North Dakota built new housing at a faster clip than any other state from 2010 through last summer, as people flooded the state in search of work in the booming oil patch.

The U.S. Census Bureau’s latest annual estimate shows North Dakota’s housing growth rate far outpaced any other state’s in the year leading up to last July 1, continuing a longer trend dating back to the last 10-year Census in 2010.

The state’s 3 percent growth in housing units from mid-2013 through mid-2014 was well ahead of Utah’s 1.4 percent, which ranked second, according to the new report. From 2010 through mid-2014, North Dakota’s housing units grew by 10.4 percent, far exceeding second-place Texas’ 4.5 percent.

Among U.S. counties with at least 5,000 housing units, Williams County in the heart of the North Dakota oil patch had the fastest growth rate from mid-2013 through mid-2014, at 11.6 percent.

Six (6) New Permits -- North Dakoa, June 5, 2015

Active rigs:

	6/5/2015	06/05/2014	06/05/2013	06/05/2012	06/05/2011
Active Rigs	82	194	191	213	171

Six (6) new permits --

• Operators: Hess (4), CLR (2)
• Fields: Beaver Lodge (Williams), Catwalk (Williams)
• Comments: the Hess permits are for a 4-well pad

One permit canceled: Oasis Kuykenall permit in McKenzie County.

Idle Chatter -- June 5, 2015

Reuters at Rigzone has a nice article on Saudi and pricing. Note the 7th paragraph:

Some analysts warn that the recent price crash - which has reignited demand and slammed the brakes on much global investment - may be sowing the seeds of another supply squeeze as early as next year.

The second (internet) page of the article gets even more interesting. Folks much smarter than I have talked about this for at least a year, the implications of the following data points:

Saudi Arabia launched a $35 billion five-year exploration and production investment plan in 2012 meant to sustain its current capacity. While the number of U.S. oil rigs has fallen by more than half since last year due to low prices, those drilling in the Middle East have risen to near the highest in records going back to 1975, according to Baker Hughes data. More than 400 rigs are operating in the region, a more than 10 percent rise from 2013, with just over half of those in Saudi Arabia.

Note: the $35 billion five-year program announced in 2012 was meant to sustain its current capacity. 

So, with a $35 billion five-year exploration and production program which began in 2012, almost four years ago, and with a 10% rise in active rigs year-over-year, what has it gotten Saudi Arabia?

It looks like that $35 billion program is working: sustaining current production. 

It's a bit hard to read: the Saudi Arabia "line" moves up slightly, very slightly, 2008 through 2014. But note that the bar graph is boe (both crude oil and natural gas). Also, remember, Saudi Arabia's domestic crude oil requirements have also increased significantly since 2008. Saudi Arabia is now engaged in what will be a long and lengthy civil war (or war on terrorism, if you prefer). So, a $35 billion five-year exploration / production program AND with more than 400 rigs active in the region, hasn't resulted in a production line like the US "blue" line.

The tea leaves suggest "we" are being set up for $200 oil.

What if the writers at Reuters are correct, suggesting a supply squeeze as early as next year? Is anything else going on next year? Oh, that's right. A presidential campaign with one side known for a desire to kill the US oil and gas industry and the other side often accused of thinking no farther (or deeper) than "drill, baby, drill."

We live in very interesting times.

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The JV Team Advances

Tweeting now:  Islamic State seizes another town in Libya - @Reuters

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Huge Background Story If Anyone Is Interested

From Seeking Alpha:

• ConocoPhillips says it is quitting shale gas exploration in Poland after failing to reach production-level flows from its gas wells located in the northern part of the country.
• COP was the last major oil company looking for shale gas in Poland, after Chevron's withdrawal at the start of this year; it says it invested ~$220M in Poland since 2009.
• Poland imports ~60% of its gas from Russia and had hoped domestic shale gas production would allow it to break its dependence.

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Hotter Than Ever; Atmospheric CO2 > 400 PPM

More Sea Ice Than Ever

So It Goes

NOAA says "anthropogenic global warming" is back on track, warmer than ever, and the Antarctic Sea ice sets a new record for the month of May. Even in the Arctic, more ice than in the cooler years of 2004 and 2006.

April, 2015, atmospheric CO2: 403.

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Before He Approves The Keystone

I can imagine the president will declassify this report before he gets around to reviewing the Keystone XL North pipeline application. In case the link breaks, the linked article is from The [London] Telegraph about the secret report that Saudi Arabia financed "9/11." The pages in question were redacted by friends of the king (FOK).

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This Is Not An Investment Site

The old adage, "sell in May, go away" seems to be back in play.