Weekly NG Fill Rates, Gasoline Demand -- November 5, 2015; Look At Recent US Crude Oil Imports From Brazil

Updates

November 10, 2015: in the post below I selected a few countries to see where the US was getting its imported oil. Venezuela stands out; while imports have been decreasing overall, US imports from Venezuela have been increasing. I have talked about this before. US refiners along the Gulf Coast need heavy oil to off-set the glut of light oil. US refiners along the Gulf Coast invested $6 billion to optimize their operations for heavy oil from Canada before the Bakken shale revolution. Refiners scrambled to figure out what to do. It turns out a blend of heavy oil and light oil works (though not as good as what the refiners had expected if using only heavy oil from Canada). Now we have a Bloomberg story that says the same thing -- regular readers of the blog and RBN Energy were already well aware of this. From the Bloomberg story:

President Barack Obama’s rejection of TransCanada Corp.’s proposed Keystone XL pipeline could give Venezuela’s ailing economy a lifeline.

With the world’s largest oil reserves, the South American country produces heavy crude that’s similar in consistency to the one coming from Canada’s oil sands, and its economy relies largely on shipping it to the same U.S. Gulf Coast refineries that Keystone XL was meant to supply.

“The number one beneficiary of all this will be Venezuela and other suppliers of heavy oil that ship to the Gulf Coast by tanker,” IHS Energy Inc. Vice President Jim Burkhard said by e-mail.

Venezuela is facing an economic crisis as the price of crude, its main source of revenue, has plummeted by more than half since June last year to trade below $50 a barrel. The slump has caused a rift within the Organization of the Petroleum Exporting Countries, of which Venezuela is a member, as Saudi Arabia continues to pump crude from the ground at an unprecedented pace.

The Canadians should be paying attention. 

Original Post

 

Natural gas fill rate (dynamic link): 52. In the East Region, stocks were 9 Bcf below the 5-year average following net injections of 32 Bcf.

Gasoline demand (dynamic link): continues to rise though the delta between this year and last remains about the same. Four week averages:

• week ending 10/23/15: 9.149 million bopd
• week ending 10/30/15: 9.205 million bopd
• one year ago 10/31/14: 8.977 million bopd

I don't recall when I last updated crude oil import data, but at risk of repeating myself (check out the delta between Saudi imports and Venezuela imports for August, 2015):

OPEC import data updated as of August, 2015:

• OPEC, August, 2014: 101.5 million bbls
• OPEC, August, 2015: 85.3 million bbls

• Saudi imports, August, 2013: 41.3 million bbls
• Saudi imports, August, 2014: 27.8 million bbls
• Saudi imports, August, 2015: 31.2 million bbls

• Venezuela imports, August, 2013: 21.0 million bbls
• Venezuela imports, August, 2014: 26.9 million bbls
• Venezuela imports, August, 2015: 29.0 million bbls

 Imports of crude oil into the US, all countries:

• August, 2013: 317.6 million bbls
• August, 2014: 288.9 million bbls
• August, 2015: 302.8 million bbls

Imports from Canada:

• August, 2013: 95.6 million bbls
• August, 2014: 106.4 million bbls
• August, 2015: 121.5 million bbls 

Imports from Mexico:

• August, 2013: 28.2 million bbls
• August, 2014: 24.7 million bbls
• August, 2015: 22.6 million bbls

Imports from Brazil:

• August, 2013: 7.5 million bbls
• August, 2014: 6.6 million bbls
• May, 2015: 3.4 million bbls
• June, 2015: 7.7 million bbls
• July, 2015: 6.5 million bbls
• August, 2015: 12.3 million bbls

Tortoises Block Wind Towers -- November 5,2015

Wow.

Federal judge tosses out BLM's approval of Nevada's largest wind project. E&E Publishing is reporting:

A federal judge in Nevada has thrown out the Obama administration's approval of what was projected to be the Silver State's largest wind power project, ruling that the Interior Department did not properly evaluate potential impacts to golden eagles and Mojave Desert tortoises.

U.S. District Judge Miranda Du's seven-page order issued late Friday is a sharp rebuke of the final environmental impact statement (EIS) for the 200-megawatt Searchlight Wind Energy Project conducted by the Bureau of Land Management and a biological opinion conducted by the Fish and Wildlife Service. Former Interior Secretary Ken Salazar signed a record of decision formally approving the project in March 2013.

Legal experts say this is the first time a court has formally ruled invalid a final EIS, biological opinion and record of decision for a renewable energy project.

The order is based on a lawsuit filed in April 2013 in U.S. District Court for the District of Nevada in Las Vegas by two groups -- Basin and Range Watch and Friends of Searchlight Desert and Mountains -- and three residents who live near the proposed wind project against Salazar, BLM and FWS.

Check out E&E Publishing at wiki.

So many story lines, but perhaps the two most important story lines:

• as the Obama administration winds down, bureaucrats and judges are less afraid of the president
• there is internal squabbling among the various government agencies over how to protect the environment; four years ago the eagles and tortoises were losing; today they seem to be winning more than they are losing

This Strike In Brazil Could Be A Big, Big Deal -- Look At The Numbers -- November 5, 2015

Updates

November 7, 2015: update from Reuters/Rigzone --

Brazil's state-run oil company Petroleo Brasileiro SA is increasing its effort to weaken the impact of a five-day strike, taking back control of at least two offshore oil units from striking workers. In the Campos Basin northeast of Rio de Janeiro, workers were fully or partially in control of 46 maritime units on Friday, down from 48 on Thursday.

Late Thursday, Petrobras said it had reduced strike-related production cuts to 100,000 barrels a day from 273,000 on Monday.

FUP workers began striking Sunday afternoon seeking to derail a company plan of investment cuts and assets sales that they have criticized as a plan to sell off the company to foreigners at bargain basement prices. The FUP said Petrobras is underestimating production cuts. The union has estimated that the strike is affecting 400,000 barrels of oil output a day but has declined to say which platforms or fields have suffered production cuts and by how much.

Original Post

 

The Brazilian oil strike appears to be gathering steam. Reuters/Rigzone is reporting:

A four-day strike against Petrobras gathered steam on Wednesday, cutting crude and natural gas output from the No. 2 South American oil producer and threatening to become the most disruptive walkout at the state-run oil company in 20 years.

Petroleo Brasileiro SA, as Petrobras is formally known, is expected to continue to report significant output cuts after new offshore units were affected by the strike, which began on Sunday. On Monday Petrobras said it had lost 273,000 barrels a day of crude output, or about 13 percent of its Brazilian output.

It has made no formal estimate for output since then.

The cuts have already caused the biggest strike-induced hit to Petrobras' crude output since a 32-day strike in 1995 that led to lines at gas stations and military occupation of refineries.

The latest strike is also likely to increase pressure on a company hobbled by a vast corruption scandal and struggling under $130 billion of debt, the largest in the world oil industry. "This is serious because it is happening in the midst of Brazil's worst economic crisis in decades and in the middle of Petrobras' worst crisis ever," said Adriano Pires, head of the Brazilian Infrastructure Institute, a Rio de Janeiro Energy research company.

Meanwhile, things aren't so rosy in Libya either. Bloomberg/Rigzone is reporting:

Libya’s oil output dropped below 400,000 barrels a day after the divided country’s internationally recognized government in the east closed a port run by a rival administration in the west, in a push to assert control over more energy assets and exports.

Production fell after crude exports halted at the port of Zueitina.

Libya pumped 430,000 barrels a day in October, data compiled by Bloomberg show.

Zueitina will be closed until further notice, and tankers seeking to load crude there must now register with a rival NOC management loyal to the internationally recognized government based in eastern Libya. Vessels registered with the NOC administration in Tripoli, seat of an Islamist-backed government, are “illegitimate” and won’t be permitted to load at Zueitina.

Random Update Of QEP Fracking / Completions In The Grail -- November 5, 2015; One Well Produced More Than 100,000 Bbls In Less Than Five Months; Meanwhile NRG Is Calling It Quits

In general, QEP appears to be fracking with 49 stages, 10  million lbs proppant in the Grail:

• 29373, 2,235, QEP, P. Levang 2-14-23BH, Grail, 49 stages, 10 million lbs, t5/15; cum 97K 9/15;
• 29374, 2,342, QEP, P. Levang 1-14-23BH, Grail, 49 stages, 10 million lbs, t5/15; cum 72K 9/15;
• 29375, 2,298, QEP, P. Levang 14-13-23-24-LL, Grail, 48 stages, 9.9 million lbs, t5/15; cum 103K 9/15; API: 33-053-06254-00-00; 122,000 bbls of water; proppant represented almost 19% of total frack fluid; generally in the 6 - 8% range;
• 29749, 2,159, QEP, P. Levng 1-14TH, Grail, 49 stages, 6.7 million lbs, t5/15; cum 89K 9/15; 

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NRG Splitting Off Intermittent Energy

So, how is this switch to inermittent energy working out for the "green" utilities. Let's check in on NRG, perhaps one of the more aggressive utilities with regard to switching to intermittent energy. This is the headline and "sub-headline" at The Wall Street Journal this week: NRG Chief's green ambitions are put on back burner; money-losing investment in renewable energy didn't sit well with investors.

Throughout its 26-year life, NRG Energy Inc. has made most of its money by running big electric plants that burn fossil fuels. But six years ago, the company’s chief executive began a billion-dollar push into clean power: rooftop solar, wind farms and electric-car charging stations.

And David Crane, the CEO, became increasingly outspoken about the need to go green. In an essay earlier this year, Mr. Crane warned his fellow electricity executives that by failing to embrace clean energy they “are losing the hearts and minds of the future generation of Americans.”

He still believes that, he said in an interview. But he is backing away from the renewable-energy businesses anyway—to placate investors, he said.

In the 15 months before he decided to split off the renewable-energy businesses, the company’s shares lost about 50% of their value. The shares have dropped 25% since the new strategy was announced in mid-September.

Current investors aren’t upset about the plan to hive off the green businesses, said Jonathan Arnold, an equities analyst for Deutsche Bank Securities in New York. “They’re just sorry it isn’t being implemented more quickly.”

Jettisoning his green ambitions has been deflating, conceded 56-year-old Mr. Crane, who has run the Princeton, N.J., company since 2003. A Harvard-trained lawyer and former investment banker, he has become an electric-car enthusiast; he owns a Tesla Roadster, Nissan Leaf, Fisker Karma and BMW i8 sedan—electric cars.

My electric company here in Texas, unfortunately, is NRG, and I have some of the highest electricity bills I have ever had based on usage. And every month the bill comes in an envelope festooned with little pictures of little wind towers. Drives me nuts. I pay on-line and don't need the monthly bills in the mailbox either, but that's another story.

On a completely different note. I now know why my electric bills are so high. The CEO of NRG: A Harvard-trained lawyer and former investment banker, he has become an electric-car enthusiast; he owns a Tesla Roadster, Nissan Leaf, Fisker Karma and BMW i8 sedan—electric cars.

Thursday, November 5, 2015

Will the Legacy Fund and perhaps one of the largest state projects in the history of North Dakota cross paths? The Bismarck Tribune is reporting that the project to pipe water from the Missouri River in western North Dakota to eastern North Dakota is moving forward. The Red River Valley Water Supply Project is a one-billion-dollar project. The final designs could be completed by the end of 2017, with phased construction occurring from 2018 to 2024. The Legacy Fund is off-limits until 2017, at which time the state legislature can decide if / how to spend some of that money. 

One year later: American oil patch thriving on ingenuity, Forbes. 

We’re now one year into the oil bust. For a time there was hope that this downturn would be kind of like 2009, where prices fell sharply in the wake of global economic collapse, but shot back up just as quickly – leaving little collateral damage behind.

It’s clear now that’s not going to happen. The 2009 collapse was driven by a sudden drying up of demand. This time around there’s just too much supply — especially in the United States. And it’s simply not going away. According to the Energy Information Administration, domestic crude oil output peaked in April at 9.6 million barrels per day. Since then it has slipped to about 9.2 million bpd, about where it was a year ago, when the bust began.

Update on Colstrip coal plant in Billings, MT, Montana's largest coal plant; closure a foregone conclusion -- Montana Public Radio.

Coincidence?

• Reuters headline: Cost of Cheapest Obamacare Plans Is Soaring.  
• Target to close 13 stores nationwide; layoffs in 2015 total about 2,500 so far, but that was mostly corporate. November 4, 2015.   
• 3M to cut 1,500 workers, October 22, 2015.  
• Kraft Heinz to close seven plants, cut 2,600 jobs. November 4, 2015.   
• Monsanto slashing 2,600 jobs. Will exit the sugar cane business. October 7, 2015.  
• ConAgra cuts 1,000 jobs; moves HQ from Omaha to Chicago. October 1, 2015.

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Active rigs:

	11/5/2015	11/05/2014	11/05/2013	11/05/2012	11/05/2011
Active Rigs	69	190	183	189	196

RBN Energy: Extreme Petrochemical Feedstock Margin Declines for Steam Crackers.

Falling crude oil prices and other factors have crushed margins in the steam cracker/olefin unit segment of the petrochemical industry.   Margins per pound of ethylene have declined from more than 60 c/lb in October 2014 to less than 20 c/lb today (November 2015) for NGL feedstocks, including ethane.  We expect some petrochemical companies might be feeling a chill in the air.  That’s because five new Gulf Coast world scale steam crackers and a couple of smaller units are under construction or being developed to add still another 20 billion/lbs of capacity by the end of 2018.    In today’s blog, we assess NGL feedstock margin declines.

First, a quick recap of the U.S. petrochemical industry from our March 2014 blog, “Beyond Hypothermia and Extreme Propane Price Spikes – Petrochemical Feedstock Switching 2013-14”.  In the U.S. there are currently 37 steam crackers (a.k.a, olefin units or ethylene units) owned by 15 companies which soak up the vast majority of the NGLs consumed in the petrochemical sector.  In aggregate, these units consume nearly 1.7 MMb/d of NGLs as feedstock, which is over half of all U.S. domestic NGL consumption. Most of these units are on the Gulf Coast.  Ethane holds the largest share of the feedstock market with propane, normal butane, and naphtha (natural gasoline) holding the second, third and fourth positions, respectively.  Steam crackers also use a small volume of gas oil (distillate range material) as a feedstock.