Monday, June 26, 2017

EOG's Permian Rattlesnake Pad Produces $44 Million At $50 Oil In 12 Months -- Filloon -- June 26, 2017

Link here at SeekingAlpha.

Summary:
  • EOG continues to set new production records in the Permian
  • its Rattlesnake 4 well pad produces over 2.1 million barrels of crude on a 12-month model (500,000 bbls/well/first year)
  • the Rattlesnake provides insight into how much competitors in the area could improve current production rates
  • the Delaware core continues to show significant upside
From the linked article:
We have watched EOG revolutionize the industry, continuing to improve production per foot. EOG began its "Mega-Frac" design, focusing stimulation around the well bore in the Eagle Ford. It then showed its proficiency in the Bakken. It has seen its best results to date in the Delaware. EOG's Delaware acreage may have the best geology and is perfectly suited to this design. More importantly, other operators can do it as well. We just may not see those results for 6 to 12 months down the road.
Take a look at this graph of four wells on a single pad. Note the change in production of the first two wells (something not talked about):

And, This, Folks, Is The Problem -- June 26, 2017

From an earlier post:
Concerning, and unexplained, gasoline demand, from Reuters:
The operator of the biggest U.S. fuel pipeline system said demand to transport gasoline to the country's populous northeast is the weakest in six years, the latest symptom of a global oil market grappling with oversupply.
Summer is typically when gasoline demand peaks in the world's biggest oil consuming country as motorists hit the road for vacation, and keeping their gas tanks full strains the capacity of U.S. refiners and pipelines.
This year, so much fuel is stored in tanks in the Northeast that Colonial Pipeline Co said in a notice to customers that demand from refiners and fuel traders to bring gasoline through its pipeline to the region from refining hubs in the South was the worst in six years.
For the first time since 2011, demand for the pipeline was below capacity for a five-day period starting early next week, Colonial said on Thursday. The news pushed down gasoline prices in the Gulf region, where the pipeline begins.
Benchmark U.S. gasoline prices led the energy complex higher and were up about 2.1 percent shortly after midday, partly boosted by expectations that fewer barrels flowing into the East Coast would alleviate a glut.
Typically, demand exceeds the pipeline's space, forcing refiners and traders to supplement delivery with tanker shipments or imports.
And this is the problem, folks, from John Kemp, just a few hours ago:


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Notes for the Granddaughters

It is interesting how things work out.

All golf tournaments are 4-day events. I was watching the Travelers tournament in Cromwell, CT, closely on Thursday-Friday, but missed almost all of it on Saturday because of water polo (oldest granddaughter playing in the two-day North Texas tournament).

Then yesterday, Sunday, I knew I would miss all of it, again because of water polo. I kept track of the scores on the internet. It was obvious it was an incredible tournament, and I knew I was missing it. I last checked in when the tournament was almost over; I was driving Arianna to her 5:00 p.m. "date" and knowing that when I got home (Sophia was also with us) I would find out who won. It looked like Spieth might lose after doing so well in the first three days.

I came into the apartment with Sophia, got her started on her projects, and then turned on the television. To my surprise, the tournament was tied at end of regulation play.

The two, Spieth and Berger, were just getting ready to tee off on the first tee (the 18th hole) for a sudden-death playoff.

Bergen was on the green in two strokes and clearly looked like he would win. Spieth's hit off the tee was awful; he hit a tree (that nobody else hit in the tournament) and the ball barely got down the fairway.

Spieth's second shot put him in a sand trap in front of the green. At that point, it was pretty clear he was going to lose to Bergen who was already on the green.

Incredibly, and I got to see it live, Spieth hits the ball out of the sand trap and incredibly, the ball rolls into the cup. Everyone goes nuts and he wins.

It's funny how things work out. I really wanted to see the tournament and I was able to see the most exciting conclusion, live. Had it not worked out, that would have been okay: in the big scheme of things, I much prefer going to water polo and much prefer being with any of the granddaughters to almost anything else.

As usual, Sophia was awesome. She is so much fun.

By the way, two pictures tell a complete story. This occurred under the watchful eye of her mother at Sophia's home, not at our apartment -- I was not taking care of Sophia at the time -- this is "not my fault":


The Political Page, T+157 -- June 26, 2017

Updates
 
Later, 2:24 p.m. Central Time: wow, the mainstream media is hardly reporting this. And when they do report it, they release bits and pieces in dribs and drabs. This morning the US Supreme Court handed President Trump a huge victory, putting in place an injunction against the lower court ruling that tried to thwart the president's travel bans. That was barely reported. And had it not been for a Presidential tweet one would not know that the ruling was unanimous, 9 - 0, by the Supreme Court. Wow.

Later, 9:13 a.m. Central Time: a huge "hat tip" to Don who sent me the link: "the genius of Trump's tweets."
Google, Twitter and Facebook control much of the news we see today, but Trump’s tweets get around their dominance.
Similar to the Drudge Report website, Trump’s tweets are so well-known that people view his tweets independently of the tech giants.
The Drudge Report receives comparable traffic to Google News and The New York Times — despite the fact Google News prominently promotes the Times in search results and on its homepage.
Drudge isn’t even carried in Google News, since the site merely aggregates links to articles.
Google is the most trafficked site in the U.S. as well as in the world.
Most of the time, Google News is full of articles by the left-leaning media critical of Trump and conservatism.
But Trump’s tweets changed all that. Reporters race to report on his tweets, filling up Google News with articles that are far more favorable to Trump, since there is so little room left for spin with his tweets. A quick perusal of Google News right now reveals this headline near the top, “Trump accuses Clinton of colluding with Democrats to defeat ‘Crazy Bernie Sanders.’” The Washington Post article acknowledges, “Trump took to Twitter Sunday morning…”
There really is very little way to write the headline to make Trump look bad. There wasn’t any extra information to glean something from outside of one short tweet.
Original Post 

Huge presidential win: I almost missed this one. This is a huge win for the president but the way CNBC presented the story, I almost missed it. First, it should have been "breaking news" and it was not. Second, it came as part of a low-key segment from the milk-toast CNBC White House correspondent, who seemed to almost say in passing that the Supreme Court has issued an emergency injunction against lower court actions that tried to hamstring Trump's "travel bans."

Presidential tweets: I generally don't try to read too much into the president's tweets. For me, they are generally very straightforward and don't require a lot of analysis. However, one of the president's tweets this a.m. seems to have a very different message regarding ObamaCare -- a message very different than what he has had in the past.

Two issues:
  • first: during the campaign, it was "repeal and replace" -- no compromise on this; it would happen "day 1"
  • second: the legislative process has been very, very difficult; but the president continues to push the process along; as recently as last week, his tweets or public statements remained positive and he continued to make telephone calls to senators to get them to support the GOP plan
But, now today, it looks like he is coming around to what others in the GOP have said: just let ObamaCare run its natural course.

His tweet: 
Republican Senators are working very hard to get there, with no help from the Democrats. Not easy! Perhaps just let ObamaCare crash & burn!
For me, I have no idea why the GOP would want to sign off any national health care bill. It is a lose-lose.

By the way, as noted earlier, President Trump can easily weigh in on ObamaCare using executive orders. In fact, I am somewhat perplexed he did not do more along that line while waiting for Congress to get its act together.

The Energy And Market Page, T+157 -- June 26, 2017

Making America great again. BMW's largest factory in the world -- Spartanburg, SC. Capacity:
  • 450,000 vehicles/year. Last year, about 411,000 vehicles. Just announced:
  • $600 million new investment at Spartanburg between now and 2021
  • 1,000 new hires
  • will help BMW reach its target of 450,000 vehicles/year at this one factory
  • CNBC was quick to point out that BWM planned this move even before Trump talked about BATs -- an unnecessary point in a business story, but an important point for a left-leaning network
  • the Spartanburg facility is BMW's worldwide source for SUVs -- the Spartanburg facility is a big, big deal for everyone involved or interested in the story
Making America great again. German-based company will bring a $12 million aviation-related plant to Auburn, Alabama.
Winkelmann Group is a fourth-generation German company that has three divisions including automotive, building and industry, and flowforming, which is a metal-forming technique.
The Auburn site will use the company's flowform technology that primarily builds high-precision, high-strength, thin wall roto-symmetrical parts from various metals.
"With the North America operation, my team will be able to better serve the aerospace and defense industry, as well as the commercial automotive and oil and gas industry in the U.S.," CEO Heinrich Winkelmann said in the release.
Supply problem, or demand problem. The consensus seems to be that with regard to WTI / Brent, it's a "demand" problem, not a "supply" problem. I've bought into that consensus -- that it's a "demand" problem. On CNBC this morning, Kevin Caron of Washington Crossing clearly said it's a "demand" problem. Many moving parts. 

Understanding Permian Gas Takeaway Capacity at Waha Hub, Part 2 -- RBN Energy -- June 26, 2017

Active rigs:

$43.236/26/201706/26/201606/26/201506/26/201406/26/2013
Active Rigs583075192187

RBN Energy: Understanding Permian Gas Takeaway Capacity at Waha Hub, Part 2.
Permian natural gas production has climbed 1.75 Bcf/d, or nearly 40%, in the past three years to more than 6.3 Bcf/d in 2017 to date, and it’s poised to grow to nearly 12 Bcf/d over the next five years. Note that’s a “dry” or “residue” gas number; gross gas production is a couple of Bcf/d higher. As Permian production growth occurs, pipeline takeaway capacity from the primary trading hub in the area — the Waha Hub — will become increasingly constrained, a trend that will drive pricing and flow dynamics into the early 2020s. How full are the takeaway pipelines now and how quickly will constraints emerge? Today we continue our series on the Waha Hub with a look at current takeaway capacity and flows from the hub.
A reminder, the Waha hub, from an earlier RBN Energy post:
The Waha Hub is situated in northern Pecos County in West Texas near Fort Stockton — about 260 miles east of El Paso. Geologically speaking, the hub sits atop the Permian’s Southern Delaware Basin, an oil-rich part of the larger play. Like any good, liquid trading hub worth its salt, Waha is well connected, with ample receipt, delivery and takeaway capacities. The Waha Hub comprises interconnects with more than a dozen takeaway pipelines, including four major interstate pipelines and nine Texas intrastate pipelines, together totaling more than 10 Bcf/d of takeaway capacity. This capacity is all the more important given that there is little demand near the hub itself — less than 250 MMcf/d, on average — which makes Waha primarily a transit hub.