Pipelines From US To Mexico: ¡Si! Pipelines From North Dakota To Illinois, Iowa, Minnesota, or Cushing -- ¡No! -- September 21, 2016

Two stories that arrived in my mailbox at the same time.

RBN Energy: Kinder Morgan's Tejas Crossover to help move natural gas from the US to Mexico (would have required President Obama's okay -- going across international border).

Huffington Post: as Dakota Access protests escalated, President Obama okayed same company for two pipelines to Mexico. (I was sent the link but have not been able to download the story yet; for some reason the URL won't download, even when googling the URL which shows up but won't download, at least at the moment.)

I have noted that it's easier to do business across US/Mexico border than it is in the US.

Someone says Mexico needs all the natural gas we're sending them to run their factories that US companies are moving from the US down to Mexico, like Ford.

This administration is more concerned about a) Mexican workers; and, b) Muslim immigrants to the US, than about American workers. 

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Active rigs in North Dakota:

	9/21/2016	09/21/2015	09/21/2014	09/21/2013	09/21/2012
Active Rigs	33	68	196	185	184

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Venezuela -- Tick, Tick, Tick

Venezuela importing US oil: from yesterday's New York Times --

The United States has always been a huge market for Venezuela’s oil. But with Venezuela’s state oil company hobbling along, it was actually forced to start importing oil from the United States.

Early this year, the United States began shipping more than 50,000 barrels a day of the light crude that Venezuela needs to prepare its own oil for export, joining a handful of suppliers that have become vital to keeping the country’s oil industry afloat.

Even that lifeline is tenuous. Venezuela’s state oil company, PDVSA, is struggling to pay for the foreign oil. Some tankers wait in port for as long as two weeks to be paid, and sometimes they leave because of a lack of payment, said an oil executive who requested anonymity to avoid reprisals from the government.

The problems are just some of the reasons Venezuela’s oil production has plummeted to 2.4 million barrels a day, down 350,000 barrels from a year ago. That is nearly a million barrels below what it was in 1998 when Mr. Chávez took power.

Unless I missed it, the article did not discuss the reason US light oil is needed by Venezuela which produces heavy oil. This issue has been posted on the blog for quite some time. Just some of the entries, and note how far back this story began:

• At risk, 235,000 bopd of Venezuelan heavy crude oil, February 28, 2016.
• Venezuela crude output falls short; forced to import oil, February 3, 2016. 
• Venezuela crude oil exported to US, December 18, 2015.
• Venezuela starts importing oil, November 3, 2014.

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The Market

Late afternoon trading: the Fed left rates alone. The Dow 30 hardly reacts; up 32 points after the news, although the initial reaction was a spike (up 0.63%; now up only 0.18%).

Open: up 88 points. Betting on the Fed? It looks like the "big boys" already know. Poll:

• will raise raises: 19%
• won't raise rates: 67%
• won't raise rates, but I'm hedging: 2%
• won't raise rates, not investing until I know: 12%

Seven New Permits -- North Dakota, September 20, 2016

Active rigs:

	9/20/2016	09/20/2015	09/20/2014	09/20/2013	09/20/2012
Active Rigs	32	67	196	182	184

No wells coming off confidential list Wednesday.

Seven (7) new permits:

• Operators: CLR (4), BR(3)
• Fields (County): Elm Tree (McKenzie); Sand Creek (McKenzie)
• Comments:

One permit canceled: a SWD well permit.

DUCs: no producing wells reported as being completed.

NGL Pricing Improves -- RBN Energy -- September 20, 2016

It appears Yahoo!Mail is down in our area. I am unable to respond to e-mail. A reader sent me an article this morning regarding "Peak Oil." I will try to reply to that reader again later. 

WTI, futures: below $43 prior to open Tuesday, September 20, 2016. At $42.86.

How bad might it be in Saudi Arabia? From The Washington Post: employees at one of Saudi

• Arabia's largest privately-run hospitals have not been paid for four months. Data points:
  Saad Specialist Hospital, eastern city of al-Khobar; 15-y/o facility
• considered one of the top hospitals in the region; attracts physicians from all over the world
• financial problems began in 2009
• 200 employees on strike; more joining the strike
• employs around 5,000 people; about 19% Saudi nationals
• last paid salaries in May, 2016

This very likely could be due to issues other than current financial problems associated with low crude oil prices.

Active rigs:

	9/20/2016	09/20/2015	09/20/2014	09/20/2013	09/20/2012
Active Rigs	32	67	196	182	184

RBN Energy: NGL-to-crude ratio pricing heading back to pre-2012 level.

The ratio of NGL-to-crude oil prices looks like it will be rebounding, and over the next two or three years could rise to levels not seen since the Shale Revolution brought down NGL prices at the end of 2012, a signal that all of the new NGL-consuming petrochemical cracker projects now under construction may not be as lucrative as their developers had once hoped. Several factors are driving the ratio’s rise: increasing U.S. demand for NGLs; more exports; stubbornly low crude oil prices and a lower trajectory of NGL production growth. Today, we examine the historical relationship between NGL and crude oil prices and the reasons why that ratio may be headed back above 50%.

The Shale Revolution has had many market effects –– it’s made fortunes, transformed regions like the Marcellus/Utica and Bakken into energy and economic powerhouses, and given the U.S. a degree of energy independence that few would have predicted a decade ago. It’s also wreaked havoc on what for years had been reliably consistent relationships or ratios between different types of hydrocarbons. The NGL-to-crude ratio is a case in point. First, an explanation. As we at RBN define the measure, the NGL-to-crude ratio is a weighted average of OPIS/Mont Belvieu natural gas liquids (NGLs) prices divided by CME/NYMEX front month crude oil futures. The weighted average for the NGL mix that we use to calculate the ratio is 42% ethane, 28% propane, 11% normal butane, 6% isobutane, and 13% natural gasoline. 

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The Market

Close: My original note was wrong. The market finished very strong after the Fed announced "no" rate raise; Dow 30 up 164 points. Warren Buffett quoted today: "There comes a point where money has no real utility." NYSE:

• new highs:  33
• new lows: 26

Opening: Dow 30 up 80. 

Futures: up 63.

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A Note for the Granddaughters

Helen of Troy: The Story Behind the Most Beautiful Woman in the World

Bettany Hughes

c. 2005

p. xxxvi: author transliterated all Greek, including the Bronze Age version of ancient Greek, 'Linear B'; hence PA-MA-KO has become pharmakon ('useful little things' -- the 3,500 year old root of our word pharmacy).

They Said It Couldn't Be Done -- LNG By Rail -- September 19, 2016

This one was certainly off my radar scope. A huge "thanks" to a reader for sending it may way. From KTOO.org dated today:

Standing next to a massive cylindrical rail car at the Anchorage Railroad Yard, Alaska Railroad Mechanical Supervisor Josh Cappel asked a fireman to test out the car’s hand-operated braking system.

“Go ahead and fire that thing up tight. Come on, a little tighter than that — there you go!” Cappel joked, drawing laughs from the crowd of about 16 other members of the Anchorage Fire Department.

Starting tomorrow, the Alaska Railroad will be the first in the nation to carry liquefied natural gas by rail. With the Federal Rail Administration’s blessing, LNG will travel the tracks from Anchorage to Fairbanks.

As with any new venture, safety is always a topic of discussion. Cappel said he’s training the Anchorage Fire Department in case the worst happens.

“It’s very important for everyone to understand how rail cars work, especially the fire department,” said Cappel. “If they are responding to any kind of disaster they need to know how these cars work so they don’t get hurt and the people they are rescuing don’t get hurt.”

A new tag: LNGBR.

Video here with some great footage. 

Wow, I love the blog. 

Huge Things Going On In Energy: An Encana Update -- September 19, 2016

I've been following Encana fairly closely over the last few years but have done a poor job updating Encana on the blog, mostly because Encana is not in the Bakken.

Quick recap: once upon a time, Encana had a huge presence in the Piceance, even going so far as to say they "owned" the Piceance. Not any more.

From Bizjournals in which they said they were selling their assets in the Piceance:

The sale of Encana’s assets in North America and the United States could bring the company $1 billion, helping to reduce the company’s roughly $5.4 billion in fixed and revolving debt.

Encana officials have listed as its “core” focus the company’s Montney and Duvernay assets in Western Canada, along with the Permian Basin and Eagle Ford assets in western part of Texas and the southeastern part of New Mexico.

According to Reuters, the sources said Encana is open to offers on all of its non-core assets including its Piceance Basin assets in western Colorado, its San Juan Basin assets in New Mexico, its Tuscaloosa Marine Shale assets in Mississippi and Louisiana, the Deep Panuke offshore gas field in Nova Scotia and its Horn River and Wheatland assets in western Canada.

The Encana corporate presentation for September, 2016, does not even mention the Piceance. 

The article that brought this back to me was a Bloomberg article in which Encana said it was raising $1 billion to increase drilling in the Permian. 

Encana Corp., the Canadian oil and natural gas producer, is selling about $1 billion of shares to fund drilling next year in Texas and repay debt.

The company agreed to sell 107 million shares at $9.35 apiece. An additional 16.05 million shares can also be purchased, as part of the deal.

Encana joins producers including Crescent Point Energy Corp. in selling shares in recent weeks to fund drilling as U.S. crude is up 65 percent from its February low. Most of the company’s investment next year will be targeted toward increasing output in the Permian Basin in West Texas, the largest U.S. oil field.

One of Canada’s largest gas producers, Encana has increasingly focused its attention on boosting oil and petroleum liquids production from shales including the Permian, where it established a position with the 2014 purchase of Athlon Energy for $7.1 billion. The company said it aims to double the number of wells on stream in the Permian in 2017, compared to this year.

The snippet about Crescent Point Energy explains some of the rumors I've received about Crescent Point Energy over the past few months.