Why I Love To Blog -- Reason #4 -- June 8, 2017

The first thing I did when I saw the headline via Twitter was to check the date of the article. It was posted eight hours ago, so it's a brand new article. The Financial Times headline: Russia/Rosneft ready to step up crude output if Opec deal falters.

Wow, I've mentioned that several times in the past week: already the deal to extend production cuts seems to be faltering. From the article:

Russia’s largest oil company has served notice that it will step up production in the event of a sudden end to the agreement among major crude producers to curb output in an effort to prop up prices.

In a rare interview, Igor Sechin, Rosneft’s chief executive, said the company was closely monitoring output from US shale producers, amid debate in the oil market over whether the Opec-led agreement’s effectiveness is waning.

“Well, if the question is how Opec is going to exit from these arrangements: abruptly,” Mr Sechin said. “We will also be prepared. If something goes wrong, we will not let them occupy our markets. We’ll defend ourselves.”

It's very, very important to parse the quote, and if I'm correct in parsing the quote, this is how I read it:

• if global crude oil prices fail to rise with the extension, various OPEC countries may start to get nervous, at which point, it will be every Arab for himself, as OPEC countries race to save market share
• Russia will immediately begin increasing production if any OPEC country starts to take advantage of the quotas

Since Iran is exempt, one wonders if the warning shot from Rosneft was aimed at Iran?

It looks like the OPEC / non-OPEC deal is turning into a game of chess. And, if anyone knows how to play chess, it's the Russians.

Speaking of chess, Sophia will turn 3 years old later this summer:

The Never-Ending Story -- Still Not Finished -- Kemper -- PennEnergy -- June 4, 2017

I track the story here. 

Wow, this caught me by surprise. I thought it was finally finished. But apparently not.

Mississippi Power Co. says it will file plans Monday for customers to pay their share of its $7.3 billion Kemper County power plant, even though the plant isn't finished. 

The unit of Atlanta-based Southern Co. didn't yet have a cost update in a Wednesday statement, after Mississippi Power pushed back Kemper's completion date for the 10th time in 18 months. The utility is struggling to reliably run the plant. Customers could be asked to pay more than $4.3 billion. Southern shareholders have lost $2.9 billion.

North Dakota Oil Industry Shows Signs Of A Rebound -- Minneapolis-St Paul StarTribune -- June 4, 2017

John Kemp provided the link via Twitter, from The StarTribune: North Dakota oil industry shows signs of a rebound. Dateline: Mountrail County, ND. One "word": DAPL. Okay, two words: DAPL; price. Data points:

• last year (2016), the state's oil production was more than 6x what it was in 2008 
• North Dakota job sector that mostly includes oil workers stood at 16,400 in April, 2017, a 10% increase over same period one year ago (2016); second consecutive month in which ND saw year-over-year increases in oil jobs
• on-line job openings were at a 12-month peak in April, 2017; up 94% (almost double) from a year ago

With this news, Sophia says she is ready to drive north, look for a job. She's looking for something in retail, perhaps Toys 'R Us, or fast food, Panda Express. (For newbies, Texas has a very laid-back attitude toward drivers -- as long as the car is registered, and there's no texting):

Yes, she does need to get her seat belt on. 

Are Super Rigs The Driver Behind Bakken 2.0? -- June 4, 2017

Oilprice asks the question whether super rigs are the driver behind the new shale boom?

We've talked about this before. Certainly rigs have a lot to do with this but of the top seven reasons behind the new shale boom I would list these:

• geologists have gotten a lot smarter with regard to drilling for unconventional oil
• roughnecks have gotten a whole lot better with the tools they've been given, including super rigs
• everyone understands the geology a whole better; the older the horizontal play, the better the understanding
• much, much, much better completion strategies which have nothing to do with the drilling rigs; including re-fracks and taking neighboring wells into consideration
• operators are focusing on the best spots to drill
• better management of assets; better management of reserves; better management of producing wells
• a hell of a lot of infrastructure has been put in place over the past 10 years

In fact, I'm not sure "super rigs" have anything to do with the "new shale boom." Super rigs can drill to depth much more quickly, making the whole operation more economically efficient, but if we had the same rigs as we had in Bakken 1.0 we would just have more rigs drilling to depth -- it would be the seven factors listed above (and others) that would still account for Bakken 2.0.

All one has to do is look at the very, very few wells that are actually being drilled now compared to the number of wells that were being drilled during the boom. I don't think super rigs are doing all that much in the big scheme of things, except driving down price, and that's being offset by the increase in costs of services and fracking solutions.

The Oilprice article has some interesting data points:

• US rigs: 908 now compared with 504 one year ago
• Helmerich & Payne has just bought Motive Drilling Technologies in a push toward automation, and possibly, autonomy
• efficiencies in drilling has allowed companies to survive 
• EIA currently expects US crude oil production to average 9.3 million bopd in 2017 and lmost 10.0 million bopd in 2018
• after recent production figures, Rystad Energy believes the EIA will again review up its US production outlook
• Oilprice calls US shall the "new swing oil producer"

I'm not sure there is a "swing oil producer" any more.  I guess it depends on what the definition of "swing" is.

Why I Love To Blog, Reason #4,589 -- June 4, 2017

Just the other day I posted over at the "daily note": Hillary continues to suck all of the oxygen out of the room. The gift that keeps on giving.

Today, from The Hill: "Dems want Hillary Clinton to leave spotlight."

*************************
White Privilege: Exciting Books

Three of four black California male students don't meet state reading standards (K-12).

My two takeaways from the DailyNews article:

• analysts were more concerned with the gender gap, not the fact that 75% of black California males can't read
• analysts blamed it on the "fact" that black California males do not like to read because reading is boring

*******************************
Has The World Gone Nuts?

A dozen killed; dozens more injured, and London party-goers are upset that Uber was "slow" to turn off "surge pricing."

The story is very, very clear that once Uber figured out what was going on, dynamic pricing was immediately turned off. By the way, leave it to CNN to take this story and run with it. If nothing else it diverts those who can read from the Kathy Griffin story and the Bill Maher story.

So, we have another dozen Londoners killed in the third terrorist attack in as many weeks (?) -- certainly months -- and many more dozens severely injured, some of whom will die or be maimed for life, and London party-goers are upset Uber was slow to turn off dynamic pricing. Wow.

US SefDec has grave concerns about a conflict with North Korea; Venezuela is imploding; Putin (apparently off the radar scope) still has menacing designs on at least three Eurasian locales; the Mideast is out of control; and, London party-goers are upset Uber was "slow" to turn off "surge pricing."

Wow, the world truly seems to have gone nuts. It's not so much that London party-goers seemed not to have a lot of concern or sensitivity to the victims or an understanding of the gravity of the event, but that fact that Google Finance made this their top story and let it hang there, as their top story, for hours.

Hopefully, UK's prime minister Theresa May will address Uber's lack of insensitivity on Monday.

But I guess if that's the "market's" biggest concern -- how social media feels about "surge pricing" after a significant terrorist event, investors can breathe a sigh of relief. Things in the world must not be all that bad.