Declining Saudi Crude Oil Imports Into The US Now Affecting Regional Spreads -- June 29, 2017

This is my simplistic view of the subject; I could be wrong; it wouldn't be the first time. 

US refineries along the Texas-Louisiana gulf coast are optimized for heavy oil.

Without heavy oil, US refineries are not going to need as much Bakken oil.

That's why the Keystone XL was so important for the Bakken -- not because it would have carried Bakken oil (although that was possible) but because US refineries needed a stable source of heavy oil. US refineries blend light oil (US glut) and foreign heavy oil (cartel) to make things work.

This was a difficult concept for President Barack Obama to understand.

So, there is a relative glut of light, sweet oil (Bakken oil, WTI) and a relative decline in heavy oil (Canadian oil sands -- operators fleeing; Venezuela -- imploding; and, Saudi Arabia -- in deep doo doo). One should be able to predict the way prices will move based on that data.

So, let's see.

From Platts, today:

Declining Saudi crude imports to USGC strengthen regional differentials.A drop in the volume of Saudi Arabian sour crude imports to the US Gulf Coast has served to boost medium and heavy sour crude differentials.

Amid an increasingly tight global sour crude market driven by OPEC cuts, Saudi Arabian crude imports to the Gulf Coast in June decreased month on month by 9.975 million barrels to a level of only 11.519 million barrels, according to US customs data.

In May, Saudi crude imports totaled 21.494 million barrels and in April these imports reached 19.801 million barrels.

As imports from Saudi Arabia have tightened, the differential for domestic medium sour grade Mars has increased 85 cents/b since reaching a three-month low of WTI cash minus $1.80/b on June 20. Mars was assessed at minus 95 cents/b on Thursday after five trades were heard during the day at that level. (Mars off-shore platform.)

And this one-off:

The tightened supply in the Gulf Coast proved the perfect market for five cargoes of Mexican heavy sour Maya crude, diverted to the region from the US West Coast. Mexican state oil company Pemex diverted the cargoes to the USGC due to pipeline damage following both a regional flood and later a fire at the Salina Cruz refinery, according to market sources.

By the way, speaking of the Keystone XL killed by President Barack Obama, note this CBR story posted earlier today. Apparently, some folks in Washington thought CBR was better for the environment than pipelines. LOL.

Eleven New Permits; Five Permits Renewed; Four DUCs Completed; And A Partridge In A Pear Tree -- June 29, 2017

Active rigs:

$44.89	6/29/2017	06/29/2016	06/29/2015	06/29/2014	06/29/2013
Active Rigs	59	30	77	191	189

Eleven new permits:

• Operators: SHD (7); Newfield (4)
• Fields: Van Hook (McLean); Keene (McKenzie); Westberg (McKenzie); Clear Creek (McKenzie)
• Comments: the seven SHD permits are for a seven-well pad in NENW 18-150-91; the four Newfield permits are for a four-well pad in NENE 16-152-96;

Five permits were renewed:

• Petro-Hunt (4): four USA permits in McKenzie County
• Whiting: one Two Shields Butte permit in Dunn County

Four producing wells (DUCs) reported as completed:

• 28921, 1,269, Sinclair, Highland 4-9H, API: 33-061-03219, fracked 5/10/17 - 5/20/17; 4.5 million gallons of water; 7% proppant; Sanish, one section, t51/7; cum -- , (21087 -- off-line, 18377 -- off-line)
• 30081, 952, Sinclair, Highland 3-9TFH, API: 33-061-03420, fracked 5/10/17 - 5/19/17; 3.2 million gallons of water; 10% proppant; Sanish, one section, t51/7; cum -- , , (21087, 18377)
• 30088, 1,305, Sinclair, Highland 5-9H, API: 33-061-03422, fracked 5/22/17 - 5/26/17; 4.8 million gallons of water; 8% proppant; Sanish, one section, t51/7; cum --  , (18377 -- off-line)
• 31628, 375, XTO, Ames Federal 31X-13B, Grinnell, API: 33-105-04126,  fracked 12/22/16 - 1/10/17; 7.9 million gallons of water; 14% proppant; t5/17; cum --, (20582 -- 20582, Ames, XTO, Grinnell, re-frac; also here)

Partridge in a pear tree: I lied.

July, 2017, NDIC Hearing Dockets

The July, 2017, NDIC hearing dockets have been posted.

The highlights of these dockets have been posted below; the full summary will be completed later.

The hearing dockets are tracked here.

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Disclaimer 

 

Disclaimer: as usual this is done very quickly and using shorthand for my benefit. There will be factual and typographical errors on this page. Do not quote me on any of this. It's for my personal use to help me better understand the Bakken. Do not read it. If you do happen to read it, do not make any investment, financial, job, relationship, or travel plans based on anything you read here or think you may have read here. If this stuff is important to you, and I doubt that it is, but if it is, go to the source.

Highlights

Wednesday, July 26, 2017 (nine pages)

Mostly pooling and commingling cases.

Thursday, July 27, 2017 (eight pages)

25978, Liberty Resources, North  Tioga-Bakken; create four 1920-acre units; 8 wells on each of those units; 32 wells total; Burke County
25982, Windridge Operating, Portal-Madison; i) create an 800-acre unit; ii) create a 1280-acre unit; or alternatively, i) create a 400-are unit; ii) create a 640-acre unit; two wells on each of the drilling units, Burke County
25983, Samson Oil, Foreman Butte-Madison, create an overlapping 1280-acre unit; facilitate an EOR pilot operation, McKenzie County
25985, DW Slate LLC, Eagle Nest-Bakken; create a 320-acre unit, two wells; and, create an overlapping 640-acre unit, two wells; Dunn County
26004, EOG, Alger-Bakken; 9 wells on an existing 1280-acre unit; Mountrail County
26007, Enerplus, Spotted Horn-Bakken; 9 wells on each of two existing 640-acre units; 5 wells on an existing 640-acre unit; 11 wells on each of two existing 1280-acre units; and, 11 wells on an existing 1920-acre unit; 56 wells total; McKenzie, Mountrail County
26008, Enerplus, Antelope-Sanish, 7 wells on each of two existing 640-acre units; 13 wells on each of three existing 1280-acre unit; 53 wells total; McKenzie County
26009, Enerplus, Heart Butte-Bakken; 5 wells each of two existing 320-acre units; 11 wells on each of eight existing 1280-acre units; 98 wells total; Dunn County
26010, WPX, Squaw Creek-Bakken; four wells on an existing 320-acre unit; McKenzie

Supplement, Thursday, July 27, 2017

25901 (notice to dismiss rec'd); CLR, Oakdale-Bakken, 12 wells on an existing 1280-acre unit, Dunn County

Just Two Days After Heidi Heitkamp Says She Wants To See More US LNG Export Terminals -- The Trump Administration Says Yes! Let's Make America Great Again! -- June 29, 2017

Link to both stories here. Wow. That Heidi Heitkamp -- keeping her thumb on the pulse of the Trump economic machine.

The Seldom Used, Much Anticipated Q&A Page -- June 29, 2017

Q: from Goldmans Sachs commodity analysts -- "How did we get it so wrong?"

A: they weren't reading The Million Dollar Way Blog.

From the linked article: Goldman Sachs Group Inc. analysts might not be the only ones to have incorrectly called commodity prices this year, but they are at least trying to figure out how they misjudged the market.