Tuesday, November 10, 2015

Venezuela #1 Beneficiary Of Blocked Keystone XL -- Bloomberg -- November 10, 2015; What Do You Think?

Back on November 5, 2015, I selected a few countries to see where the US was getting its imported oil. Venezuela stood out; while imports have been decreasing overall, US imports from Venezuela have been increasing. See data at the link which will also provide links to official government sites. (In retrospect, I might be wrong; snapshots of particular monthly imports can be deceiving; see below.)

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.

The Bloomberg article negates to tell us the the Keystone was dead November 10, 2011.  Wow, it's November 10th today -- that was exactly four years to the day that I said the Keystone was dead. Obama simply made it official last week, but it didn't change anything. Venezuela imports have been increasing ever since 2013.

By the way, although I showed data that US imports from Venezuela were increasing, in fact, the data is not so clear. One can take snapshots of various intervals and prove the opposite. Check out the Venezuela data for the past five years and I don't think it's all that clear. 



This will be very, very interesting to follow for the next twelve months -- to see if the official announcement made any real difference. I bet not based on past history.

Remember: the Bakken boom in North Dakota began in 2007. Imports from Venezuela started falling after that. The Keystone was dead as of 2011.

November 10, 2015

Active rigs:


11/10/201511/10/201411/10/201311/10/201211/10/2011
Active Rigs66192182191199

RBN Energy: School of Energy opportunity.

Update on slump in crude oil prices: Breitbart, September 5, 2015. Some nice graphs.

EIA "Energy Cookie" on the Highway Trust Fund:
In the fiscal year that ended September 30, 2015, the average monthly net HTF tax receipt was about $3 billion, and the average monthly outlay was nearly $4 billion. With outlays exceeding receipts and HTF balances dwindling, Congress in July transferred $8 billion from other sources to ensure the fund's solvency. Before this transfer, the HTF was at $6.1 billion, the lowest monthly value in decades. --- EIA
Another shout-out / thanks to the reader who reminded me to check in on FracFocus if the NDIC file does not include completion data. FracFocus requires the API number so if I check FracFocus I include the API number when reporting the well.

Flashback: it's hard to believe that a single wildcat well started "all this in the Three Forks" and that it was as far back as 2008 (I would have guessed, 2010, and would have been wrong). From The Bismarck Tribune, June 17, 2008:
A single successful oil well tapped below the Bakken shale formation in western North Dakota has spurred speculation that a separate - and perhaps rich - oil-producing reservoir may be buried in the state's oil patch.
Enid, Okla.-based Continental Resources Inc. says its new oil well in Dunn County produced an average of about 700 barrels of oil a day during its first week of production last month.
It was Continental's first well in the Three Forks-Sanish formation, said Harold Hamm, the company's chairman. The formation is made up of sand and porous rock directly beneath the Middle Bakken, which lies two miles under the surface in western North Dakota and holds billions of barrels of oil.
See this presentation which I believe was published about that time. I might come back to this one again, particularly slide 30. 

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Notes to the Granddaughters

After two hours of water polo practice, our oldest granddaughter is ravenous for a snack on the way home. Last night I forgot to bring something from home, so after dropping her off at the natatorium, I drove back to Tom Thumb (major grocery store in this part of the world) to see what I could find. Incredible. Apparently, at the end of the day, they clear out their pastry shelves and mark everything down for "quick sale." Plastic containers with six big fancy donuts, priced at $4.99 during the day, are marked down to 99 cents. [This might explain why Houston and San Antonio lead the nation in obesity data.]

I had one donut this morning; I did not notice much "aging." Actually, it was quite good. Less than 20 cents vs regular price of 75 cents and much less than chocolate croissant at Starbucks. I won't even get into cost of coffee at home vs Starbucks.

Meanwhile, the middle granddaughter, 4th grade, is working on her "healthy eating assignment" this week. Students are recording everything they eat and calculating the calories.

Monday, November 9, 2015

November 9, 2015 -- Venezuela, Tick, Tick, Tick --

Venezuela

Updates

November 4, 2018: one more week and Venezuela may be completely out of fuel.

June 14, 2018: Veneuzela is now importing heavy oil to meet the demands of its largest refinery. 

March 2, 2018: articles and headlines coming out of Venezuela suggest we may see a tipping point of some kind within the next 30 days.

February 27, 2018: the vultures are circling.

February 22, 2018: Venezuela's troubles continue. 
From ArgusMedia, some data points:
  • Venezuela's state-owned US refining subsidiary CITGO has shelved plans to re-start / operate Aruba's 235,000 b/d refinery
  • why? CITGO running short of cash to finance the $695 million plan to revamp the refinery; shortfall due to US sanctions
  • CITGO had already built a construction worker's camp and is looking for a way to move forward
January 23, 2018: Canadian oil will replace Venezuelan oil -- based on RBN Energy story at this post.

September 13, 2017: Venezuela is asking Russia to restructure its debt. Venezuela faces $3.5 billion in bond payments in October and November, 2017, with less than $1 billion of liquid reserves. Venezuela's debt to Russia stood at $2.84 billion as of September, 2016. Russia's Rosneft lent more than $1 billion to PDVSA in April this year (2017) in prepayments for future oil supplies, bringing loans to the oil company to around $6 billion in the past few years.

July 23, 2017: Venezuela could be the first sovereign producer to fail. At Bloomberg. From my perspective, Venezuelan heavy oil = Canadian heavy oil. Any loss in Venezuelan exports will be a win for Canada. Too bad the Keystone XL was never built.

June 3, 2017: further isolating Venezuela, United Airlines suspends flights to Venezuela.

March 1, 2017: Venezuela is down to its last $10 billion. 

May 13, 2016: president declares 60-day state of emergency. 

May 9, 2016: hunger is no game, WSJ op-ed. 

April 28, 2016: Venezuela does not have enough money to pay for the ink and paper required to print more money.

April 13, 2016: Schlumberger will reduce activity in Venezuela. 

February 26, 2016: 238,000 bbls of heavy Venezuela crude oil at risk.

February 25, 2016: Venezuela shipping gold to pay its debts.

February 2, 2016: Venezuela begins importiing light oil. Production of light crude oil falls short; Venezuela needs light oil to blend with heavy oil for shipping, processing.  

November 13, 2015: the story of two countries, Bolivia vs Venezuela -- BloombergBusiness.
Back in the late 1970s, when Venezuela’s oil wealth fueled the supersonic Concorde’s flights from Paris to Caracas, the idea that a poverty-stricken, landlocked nation known for bowler hats and coca leaves would someday surpass it was unthinkable. How times have changed.
Bolivia, South America’s poorest country on a per-capita GDP basis, leads or is poised to surpass Venezuela in a number of areas. Already plagued with a plunging currency and the world’s fastest inflation rate, Venezuela’s decline is stunning for a country that holds the world’s largest reserves of oil and whose late president, Hugo Chavez, once served as a mentor for Bolivia’s leader, Evo Morales.
While Morales took over Bolivia’s natural gas industry in 2006, his policies were never as radical as Chavez, who once walked through Caracas’s downtown, pointing at various companies and saying "nationalize it." Morales and Finance Minster Luis Arce “understood the importance of having orderly fiscal policy,” said Ben Ramsey, chief economist and head of sovereign debt strategy for the Andean region at JPMorgan Chase & Co. in New York, who follows the two countries. “They have massive reserves vis-à-vis their economy.”
After peaking at more than $40 billion in 2008, Venezuela’s reserves have tumbled to less than $15 billion, much of that in gold. While falling energy prices have also affected Bolivia, its reserves have been on an upward or stable trajectory under Morales, peaking at about $15 billion last year from less than $5 billion when Morales took office in 2006. 
Original Post
 
From OilPrice:
But cash is running low. Gold reserves are falling sharply as Venezuela liquidates them to raise funds to meet debt payments. Also, the Wall Street Journal reported that Venezuela withdrew $467 million in cash reserves that it keeps with the International Monetary Fund, a sign that Venezuela is scrambling to raise as much money as it can.

And inflation is running at around 85 percent, at least according to official estimates, which are likely vastly understating the true inflation rate. Crime rates are some of the worst in the hemisphere.

.... oil prices need to rise to $88 per barrel in order to guarantee global oil investments. “If the price of oil stays at $40, there will be a depreciation of investment, and within a few months we are going to see a price of $150, $200. Who does this suit? Nobody,” the Venezuelan president said on state TV.
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The Apple Page

I find this interesting. This is a good example of government regulations holding back innovation. The link is at Macrumors:
Cook also said Apple doesn't have plans to introduce sensors or other health features that would cause the FDA to get involved with the device. He didn't rule out the possibility of other products that require FDA approval, like apps.
We don't want to put the watch through the Food and Drug Administration (FDA) process. I wouldn't mind putting something adjacent to the watch through it, but not the watch, because it would hold us back from innovating too much, the cycles are too long. But you can begin to envision other things that might be adjacent to it -- maybe an app, maybe something else."
I would trust the sensors Apple would use and they would eventually be "rubber-stamped" by the FDA, but not for at least a decade.

Cook knows what he is doing. 

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Shadows in a Mirror, Chris Isaak

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Notes to the Granddaughters

I get a lot of free stuff by writing reviews for Amazon.com.

My wife says I am being dishonest: I rate almost everything 5 stars and am not "honest" in the reviews. (In fact, I am honest. The fact is, I only order stuff that is worth "5 stars." Why would I order something that would be less than 5 stars? It's not like I have time to waste.)

Today, I reviewed an advance copy of a book that will be released in a few weeks, Sex in the Sea, a very serious scientific marine biology book. I received it for free, but I specifically ordered it because I thought it might be something our oldest granddaughter would be interested in. She wants to become a marine biologist.

I gave the most honest review I have ever written, and I used words and phrases directly from the book.

I have written hundreds, maybe thousands of reviews for Amazon, and have never had a review rejected.

I posted the review and then sent a copy to my wife who is out in California. I received a phone call almost immediately despite the time difference. She was probably still in bed this morning when she called. She told me that I couldn't possibly post that review and I had to take it down immediately. I reiterated what she had told me about my reviews, and that this time I was going to write one of my best "honest" reviews. She was not in a mood to be trifled would.

I told her the review had been rejected by Amazon because it violated Amazon's policies.

She was relieved.

I re-submitted the review, replacing the "offensive" words with hyphens. Again, not one word was a swear word or an inappropriate word except when used as used in the book. This time, the review was accepted. The recommendation was the same: 3 stars. The only thing that was changed, the words Amazon did not want used were replaced with hyphens. [I have subsequently edited the review again, eliminating the hyphens so that there is nothing "objectionable" in the review. It is still rated 3 stars, although now that I have spent more time with the book, maybe 4 stars is warranted.]

It was interesting to learn that Amazon.com rejected an honest review because I mentioned that some sea creatures engage in group sex.

Every Well Has A Story -- November 9, 2015

Disclaimer: the usual disclaimer holds. There will be typographical and factual errors. Opinions and facts will be interspersed; it is often hard to tell opinion from fact; the shorthand and notes are for my use only; feel free to read them but don't quote me on any of this stuff. This is not an investment site. Do not make investment or financial decisions based on anything you read here or think you may have read here. If this information is important to you, go to the source.

Updating some old wells. Note the date these wells were drilled (the "t" date is the test date -- so "t5/07" means the well was tested May, 2007. Wells are tested about the time they are completed/fracked, and at the time these wells were drilled, they were fracked soon after.

Also note the total production to date (cum XXXK 9/15).

These wells were drilled when:
  • average EUR in the Bakken was estimated to be about 350,000 bbls
  • not a lot was yet known about the Bakken (where the sweet spots were; how best to complete the wells)
  • when infrastructure was greatly lacking
These wells will be producing for another 20 years, if not longer. 

These wells are back on active status:
  • 16457, 922, EOG, C & B 1-31H, Parshall, went inactive 1/15; back on status of 9/15; t5/07; cum 434K 12/14; 
  • 16997, 1,520, EOG, Van Hook 1-13H, t6/08; cum 579K 9/15; placed on inactive status in 4/13; appears to be pumping again in 7/13; producing as of 7/13; again, off-line, 10/14; again, off-line as of 11/14; back on status as of 9/15; 
  • 17092, 3,027, Behr 11-34H, Sanish; s4/08; produced 500,725 bbls in 591 days; inactive Jan/Feb 2015; now back on status 3/15; 1.03 million 9/15;
According to the NDIC, these wells are still flowing freely (no pump):
  • 17158, 4,184, Whiting, LL, Richardson Federal 11-9H, Sanish, t10/08; F; cum 895K 9/15; 
  • 17147, 2,101, XTO, Boucher 41X-21, Hofflund, t4/09; F; cum 700K 9/15;
According to the NDIC, this well is still on active status but it was on-line for only five (5) days in August, 2015, and only one (1) day in September, 2015, and produced no oil last month:
  • 17287, 1,137, EOG, Austin 22-31H, Parshall, t10/08, cum 861K 9/15;
We now know why this well was taken off-line:
  • 18193, IA/1,666, OXY USA, Martin 34-31H, t10/09; cum 320K 3/15; not much production since May, 2014; is off-line; inactive; a sundry form dated 3/31/14 says that 12.28 tons of contaminated soil was removed; another well is being added to the pad; the existing tank batter and berm will be removed to ensure adequate cleanup and a new lined dike will be installed to accomodate the dual well pad;
This well is waiting to be re-drilled according to a sundry form from 2014; this well has never been on a pump:
  • 18408, IA/1,945,  Amber Renee 25-36H, Sanish; one mile to the west of the Chandler James; t2/10; F ; 822K 8/14 -- 661K in about two years; no pump; still 9K/month 1/13; IA 1/14; still inactive 7/15; the most recent sundry form shows this well is scheduled to be "re-drilled";
Every Picture Tells A Story, Rod Stewart

Three Songs, Two (2) New Permits, Five (5) Producing Wells Completed; And No Partridge In A Pear Tree --- November 9, 2015

I continue to marvel at the Bakken. The boom began in Montana in 2000, and in North Dakota in 2007. Going back to the daily activity report dated November 1, 2007, the year the ND Bakken boom began, the new permit numbers were 16888 - 16891. Today, the new permits are numbered 32230 - 32231, and the producing wells are file numbers as high as 31011. Who wudda guessed eight years ago? I know I'm speaking heresy here, but I am thrilled that everything has slowed down in the Bakken. There are a lot of good things one could say about the slowdown but regular readers can probably figure out what I'm talking about. Those who arrive at the blog/site by accident wouldn't care any way, so might as well move on.

Active rigs:


11/9/201511/09/201411/09/201311/09/201211/09/2011
Active Rigs65193182192198

First of three:


In My Secret Life, Leonard Cohen
Perhaps one of the best songs ever.

Wells coming off the confidential list Tuesday:
  • 31001, A, Hess, EN-Cvancara A- 155-93-3231H-8, Robinson Lake, API: 33-061-03649; no test date, cum 16K first 27 days; according to FracFocus this well was fracked 8/4 - 6/2015; with 1,644,636 gallons water, and 14.93% sand (from RockPile Energy); for those interested, search the blog for RockPile Energy;
  • 31010, SI/NC, EOG, Shell 46-3229H, Parshall, no production data, API: 33-061-03652;
Two (2) new permits:
  • Operators: Denbury, WPX
    Fields: Cedar Hills (Bowman), Mandaree (Dunn)
    Comments:
Producing wells completed:
  • 30702, 750, SM Energy, Hagen 3-28HS, Burg, t10/15; cum 6K 9/15;
  • 30777, 1,960, BR, CCU Red River 7-2-15TFH, Corral Creek, t10/15; cum --
  • 31013, 1,348, Newfield, Wahus Federal 152-97-13-24-4H, Westberg, t9/15; cum 9K 9/15;
  • 31012, 833, Newfield, Wahus State 152-97-12-1-12H, Westberg, t9/15; cum 7K 9/15;
  • 31011, 1,348, Newfield, Wahud Federal 152-97-13-24-1H, Westberg, t9/15; cum 9K 9/15;
Denbury canceled one permit today; #30026, CHSU 42-31SH in Bowman County.  

Second of three:

I'm The One Who Got Away, Devil Doll

Oh, why not? One more:


My Sweet Lord, George Harrison
Perhaps one of the best songs ever. Also.

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31001, see above, Hess, EN-Cvancara A- 155-93-3231H-8, Robinson Lake:

DateOil RunsMCF Sold
9-20151628620407