The Market, Energy, And Political Page, Part 3, T+51 -- October 3, 2018

Early morning market: all four major indices on a tear; up again. Rumor: Fed chairman Jerome Powell to call emergency Federal Reserve meeting -- to discuss raising "Fed rate" to 6% before Halloween (from the current 2.25% or thereabouts) in attempt to cool economy. Deep State deeply concerned that "making America great again" is going too far. 

Apple watch: I am absolutely amazed to see all the folks I see wearing the Apple Watch. Speaks volumes about so many things right now.

Opening bell:

• three of four major indices up; Russell 2000 continues to struggle; NASDAQ below 52-week high but trading above 8,000; 
• NOG: holds gain on opening; up almost 1.5%
• OAS: up slightly
• JAG: up half a percent
• all majors: up at least a bit; some more than others
• XLNX: up almost 2%
• UNP: up about 3/4ths percent (thank you Ms LaDuke)
• SRE: down slightly
• BRK-B: up a bit

Word of the day: avoirdupois -- second meaning. 

Inquiring minds want to know: .... and the Saudis would want to put "a lid on oil prices" -- why?

Jobs! Are you kidding me! Making America great again -- it will be a sad day when Trump leaves office. The US added a "robust 230,000 jobs in September." From the AP:

U.S. businesses added a robust 230,000 jobs in September, a private survey found, a sign that strong economic growth is spurring companies to add more workers.

Payroll processor ADP said Wednesday that September's job gain was the most in seven months. It followed 168,000 new jobs in August, a figure that was revised slightly higher.

Hiring was strong across most major industries. Construction firms added 34,000 jobs, while professional and business services, which includes higher-paying jobs such as engineering and accounting as well as temp workers, added a strong 70,000. Education and health services added 44,000 jobs.

ADP's report comes a day before the government releases jobs data for September. Economists believe Friday's report will show that employers added 183,000 jobs, according to data provider FactSet.

"The labor market continues to impress," Ahu Yildirmaz, vice president of the ADP Research Institute, said.

Steve Liesman must be going nuts. It makes no sense.

As Fed chairman said the other day: "the economy might be too good to be true." One almost gets the feeling that the Fed is behind the proverbial 8-ball in its attempt to slow down this economy. Fortunately "we" have the EU that will do that for us -- slow down the global economy, thus slowing the US economy to some extent. Saved by France.

And Trump, of course, has nothing to do with this. After two lost decades under Bush II and Sir Saint Obama. 

Banks -- not too big to fail. Sounds like the Fed chairman is getting an earful from the likes of Jamie Dimon. From Yahoo!Finance:

The Federal Reserve is developing new rules that would change how it defines a big bank and potentially lower regulatory costs for a broader number of financial institutions.
As part of a series of rule changes under consideration, the Fed is preparing to revise asset size and other thresholds in its capital and liquidity rules, according to people familiar with the matter.

Sarbanes-Oxley; Dodd-Frank; Elizabeth Warren-Pocahontas -- past and future disasters.

Traffic Held Up For Five Hours After Tragic Accident South Of Willisotn -- October 3, 2018

Link here. From twitter: photograph taken looking south from the new bridge southwest of Williston, just below Indian Hill.

The Market, Energy, And Political Page, Part 2, T+51; GM Up Ove 6% In Pre-Market Trading -- October 3, 2018

WTI: melting up, as they say. 

NOG: You don't see this often, NOG trading pre-market. NOG is up again, up over 2% in pre-market trading. JAG not trading pre-market yet.

Disclaimer: this is not an investment site. Do not make any investment, financial, job, travel, or relationship decisions based on what you read here or what you think you may have read here.

Others:

• AAPL: could hit another new high today
• T: up a nickel, but hasn't done anything in years
• TSLA: up 1%
• F: up a nickel
• GM: up over 6%
• XLNX: up 1%
• BRK-B: up about a third of a percent

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Suitable For Framing

The Market, Energy, Political Page, T+51 -- October 2, 2018

Technology: awesome. Last night was our local "Neighborhood Night Out." The price of admission: something to share with everyone. I used the Chick-Fil-A app for the first time -- earlier in the afternoon I ordered chicken strips to be picked up at 5:30. I arrived at the restaurant at 5:20 p.m. The chicken strips came out at exactly 5:30 with all the "stuff" one needs to serve, including napkins and plastic tongs. I was more than impressed. I can see why millennials use mobile to order.

Pre-market trading: tea leaves suggest another huge data. Dow (irrelevant) already nearing another 100-point gain. Look at AAPL. WTI steady; apparently all that $100-oil talk on "pause." EIA weekly data will be released in a couple of hours.

Boom! Permian will need $300 billion in CAPEX for growth through 2023 -- that's only five years from now -- Rigzone. Predictions --

• rise by up to 3 million barrels of oil equivalent per day
• possibly produce up to 5.4 billion barrels of oil equivalent per day
• have a need for up to 41,000 new wells (mostly unconventional) to be drilled to meet production outlook
• require more than $300 billion in capital expenditures (CAPEX) to keep pace with growth projections

LNG Canada: may be first of many -- Bloomberg. The $14 billion LNG Canada contract goes to Fluor and JGC.

Davis Refinery -- southwest North Dakota. Press release from Meridian Energy Group. The press release will probably "disappear" in six months. Part of it:

Nearly five years ago, Meridian had set out to do what no other organization had ever attempted – engineer and design the first full-conversion refinery in the US to achieve Synthetic Minor Source status for air quality, and Meridian accomplished that task on June 13th, 2018. However, even before Meridian was able to apply for the Permit to Construct (“PTC”) application from the North Dakota Department of Health – Air Quality Division (“NDDoH”), the Meridian had to apply for siting permissions in the form of a Rezoning and Conditional Use Permit (“CUP”) from Billings County. As part of the CUP process, the County was tasked with the comprehensive review of the location of the Davis refinery and its impact on the local environment and surrounding areas. Billings County issued CUP in July of 2016 after a review so detailed it took approximately 2 to 3 times longer than a typical review of similar magnitude.

With the siting of the Davis Refinery fully approved by Billings County, Meridian completed additional site-specific engineering and in November of 2016 submitted its application for the PTC to the NDDoH, beginning an 18-month review of the Davis Refinery engineering by NDDoH. The PTC application and supporting engineering represented a convergence and integration of the latest and best available control technology ever assembled in a modern refinery. The scrutiny and demands made by the NDDoH were intense, including the need for the Davis Refinery to achieve and maintain Class 1 Air Quality standards during full operation due to its proximity to the Theodore Roosevelt National Park.

Bakken crude oil waterborne price will now be available through Argus. Link here.

A waterborne assessment for Bakken crude will be published from today by the leading global energy and commodity price reporting agency, Argus. The new assessment will provide clarity for exporters about the value of Bakken cargoes loading from ports on the US Gulf coast.

Bakken is a light sweet crude produced in a formation that spans North Dakota and Montana in the US, and parts of Canada. Production of the grade was 1.5mn b/d in September. Until now, Bakken has been priced along the US pipeline delivery chain — including at Clearbrook in Minnesota, Cushing in Oklahoma (the delivery point for Nymex light sweet crude futures), and the refining cluster at Beaumont/Nederland on the Texas coast.

Argus' new price will be for cargoes of 500,000-650,000 bl loading at Beaumont/Nederland 15-45 days ahead of the day of assessment. Daily price assessments will be published in the Argus Crude and Argus Americas Crude services.
The completion of Energy Transfer Partners' 525,000 b/d Dakota Access Pipeline in June last year has allowed more Bakken light sweet shale oil to move to the US Gulf coast for domestic and export markets. Bakken crude comprises around 185,000 b/d of overall US exports of up to 2.2mn b/d, meaning that the Bakken export market has become large enough and transparent enough to merit assessment of a spot waterborne crude price.

I've got a secret!

 

Natural Gas May Well Be The Story Of The Year -- More Proof -- See RBN Energy Today -- October 3, 2018

Starbucks: arrived at Starbucks about 6:00 a.m. this morning. Happened to be within earshot of three young businessmen working major real estate issues between California and Texas. Their conversation validates everything we seem to intuitively feel regarding the two states when it comes to the economy. Seems the huge movement of Californians (businesses) to this part of Texas (Plano, Frisco, McKinney) continues; perhaps accelerating. Liberal politics in California seems to be scaring businessmen. Marijuana: the individual from California says not eager to getting into marijuana (legal, but it's not legal; lots of regulations); Texas businessmen think marijuana will be huge opportunity in California -- medically legal now. Texas businessmen think using old industrial buildings are perfect for growing marijuana. Argument: local growing (high cost) vs importing from equator. Austin (TX) much bigger challenge for new California business vs DFW. DFW and Austin very different markets; different philosophies. DFW still huge area to grow. Oracle moving into Austin; after 3-hour car tour of Austin bought huge riverside area. Will be 3 - 5 year buildout. Will be huge. Huge Japanese influence. More opportunity in Ft Worth than Austin but Austin has the "bigger" draw. That may change once people start looking at the metrics. Conversation coming down to California vs Texas. In Texas, coming down to Austin vs Ft Worth. Not mentioned: San Antonio; Houston; Odessa-Midland. I had completely forgotten the "bullet train" from Dallas to Houston -- should be operational within next few years. Schwab putting in huge campus just west of DFW; 3,000 Schwabians; already having huge positive effect on local Schwab retail businesses.

Mixmaster: intersection of highways 360, 114, and 121, at the apex of the Dallas, Ft Worth, Grapevine triangle. Starbcks; In 'N Out; new shopping center with millennial focus (we talked about Hopdoddy earlier this week); Texas light rail from Ft Worth to DFW via Grapevine;

Reminder for later: Brent, Equinor, Mariner, Brassey

• Equinor acquires stake in Rosebank project offshore the UK
• Equinor Rosebank deal good for UK upstream -- Rigzone
• Brent - wiki
• Equinor - Mariner
• Statoil -- Bressay
• oil sands - API -- wiki
• MRO to exit UK North Sea; will focus on US shale

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Back to the Bakken

Wells coming off the confidential list today -- Wednesday, October 3, 2018 --
34664, conf, EOG, Wayzetta 164-23M, Parshall, no production data, 
34261, conf, MRO, Young Woman USA 44-12H, Reunion Bay, no production data,


Active rigs:

$75.23→	10/3/2018	10/03/2017	10/03/2016	10/03/2015	10/03/2014
Active Rigs	65	57	33	68	188

RBN Energy: part 5 -- the experienced, deep-pocketed team behind the Golden Pass LNG project.

Updates

February 1, 2019: COP pulls out of the Golden Pass project; will probably sell its interest to ExxonMobil.

Original Post

It’s crunch time in the race to advance the next-round of liquefaction/LNG export projects along the U.S. Gulf Coast to a Final Investment Decision (FID). And if we’re to assume that only a small number of these multibillion-dollar projects will get their financial go-aheads, it would seem eminently reasonable to put a win-place-or-show bet on a joint venture that includes the world’s leading LNG producer (by far) and one of the largest U.S. natural gas producers — oh, and the partners have very fat wallets too. Size and money aren’t everything, of course, but as we discuss in today’s blog, the team behind the Golden Pass LNG project plans to build its liquefaction trains at the site of an existing LNG import terminal with strong interconnections with coastal pipelines already in place.

2019 will be a pivotal year for the second wave of U.S. LNG export projects. Global demand for LNG continues to rise, and LNG marketers and customers — acutely aware of how much it takes to build new liquefaction capacity — are eager to line up the incremental LNG supply they will need in the early to mid-2020s. Want proof? Royal Dutch Shell, the lead partner in the LNG Canada project, on Tuesday (October 2, 2018) announced a FID on the 14-million-metric-tonnes-per-annum (MMtpa) liquefaction/export terminal in Kitimat, BC. (The project’s other partners are Petronas, PetroChina, Mitsubishi and Korea Gas.)

As it turns out, the U.S. is in many ways one of the best places in the world to locate a new liquefaction/LNG export project. There’s ample natural gas supply in the Marcellus/Utica, Permian and other U.S. plays, an extraordinary network of gas pipelines in place, and a skilled workforce capable of executing these very complicated facilities. By the end of next year, there’s a good chance that at least one new liquefaction/LNG export project will get the financial go-ahead and start construction. More may follow in 2020.

The Golden Pass LNG:

Today, we look at Golden Pass LNG, a joint effort by three global energy powerhouses — Qatar Petroleum, ExxonMobil and ConocoPhillips — to expand their existing LNG import terminal on the Sabine-Neches Waterway near Sabine Pass, TX, into a liquefaction/LNG export facility.

Much like Austin’s East Sixth Street is a mecca for live music and New Orleans’ Bourbon Street is a hub of late-night debauchery, the greater Sabine Pass area (on the border of Louisiana and Texas) already has drawn more than its share of liquefaction/LNG export facilities (Sabine Pass LNG, Cameron LNG and a number of second wave contenders, including Venture Global’s Calcasieu Pass), and for good reason. There’s easy, deep-water access to the Gulf of Mexico and large tracts of waterfront land, but just as important, there are few places on the planet with as many long-haul gas pipelines nearby to deliver large volumes of U.S.-sourced natural gas.

Like most of the initial round of U.S. liquefaction/LNG export projects now in operation or under construction, the Golden Pass LNG site already is home to an LNG import terminal that was developed in the 2000s, when almost everyone was expecting a flood of LNG from Qatar and other foreign sources. Having docks, storage tanks and connecting pipelines in place gives these brownfield projects at least a modest financial leg up over their greenfield-site competitors — their import-related investments were made and paid for years ago.

Qatar Petroleum (which owns 70% of Golden Pass LNG), ExxonMobil (with 17.6%) and ConocoPhillips (with 12.4%) are planning to build three 5.2-MMtpa liquefaction trains for a total of 15.6 MMtpa of capacity. That would require a total of about 2 Bcf/d of natural gas (using a rule-of-thumb ratio of 1 Bcf/d for each 7.6 MMtpa of liquefaction capacity). They also are planning onsite, gas-fired power plants with a capacity of 200 to 250 MW that would provide power for the liquefaction trains and other terminal operations.