The Energy And Market Page, Part 2, T+290 -- November 7, 2017

EIA's short-term energy outlook released:

Oil Markets:

• Brent crude oil prices averaged almost $58 per barrel in October, the highest monthly average since June 2015, as global oil stock have fallen by an estimated 400,000 barrels per day over the past six months. 
• EIA expects Brent prices to average $56 per barrel next year.
• Despite lower production in of the Gulf of Mexico during October, mainly attributed to Hurricane Nate, total U.S. crude oil production averaged 9.3 million barrels per day for the month. Our forecast continues to expect overall U.S. production to average 9.9 million barrels per day for all of 2018.

Gasoline/Refined Products:

• U.S. regular gasoline retail prices averaged $2.51 per gallon in October.
• That price was down 14 cents per gallon compared with September, and we expect prices to continue trending down in a typical seasonal pattern through the end of 2017.
• Consumers could expect to see retail regular gasoline prices average $2.45 per gallon in 2018, just above the expected average retail price per gallon of $2.40 for all of 2017.

Natural Gas:

• We foresee a likely rebound in average household residential consumption of natural gas this winter, as we expect temperatures to be closer to average and therefore colder than last year.
• Following last year’s very warm winter, consumption could climb by 8% this winter.

Electricity:

• The share of utility-scale electricity generation for natural gas and coal continues to be evenly split at about 31% for each fuel source in 2017. 
• For natural gas, that’s down three percentage points from 2016, resulting largely from a combination of higher prices coupled with increased coal and renewables generation.

Coal:

• EIA revised its projections for coal exports up this month. We now expect to see U.S. coal exports to climb by about 37% from 2016 to 2017, as coal production continues to grow.

Renewables:

• The data indicate that conventional hydroelectricity in the United States will increase by roughly 13% in 2017 compared to 2016 because of heavy snow in the West last winter. At this time, we project hydroelectric generation will return in 2018 to levels closer to those seen in 2016.

*************************************

Cold front: Unfortunately I don't have the full graph, but it's enough for me. It appears the blue (cold) covers a much, much wider area than the red (warm). Don tells me it was 2 degrees below zero in Hettinger, ND, overnight.

This comes via Twitter:

SRE: on a day the market is down, SRE is up over a percent, hitting a new 52-week high. I assume it is because of these forecasts for a colder winter. SRE pays 2.77% even at this high share price. As late as December, 2013, SRE paid a quarterly dividend of 63 cents; it now pays a dividend of 82.3 cents per share and likely to raise that dividend in March, 2018.

Disclaimer: standard disclaimer in effect.

The Energy And Market Page -- T+290 -- November 7, 2017

Production records in the Bakken. The other day this DUC was reported as completed:

• 30550, 4,516, MRO, Brush 24-8H, Bailey, 45 stages, 8.8 million lbs; t9/17; cum 59K in 26 days;  

Monthly Production Data:

Pool	Date	Days	BBLS Oil	Runs	BBLS Water	MCF Prod	MCF Sold	Vent/Flare
BAKKEN	9-2017	26	58582	57628	0	62725	23	56224
BAKKEN	8-2017	1	662	620	0	167	0	95

For newbies: is this a new first-month production record?. At 26 days, 58,582 bbls extrapolates to 69,848 bbls over 31 days; or 67,595 bbls over 30 days. It ranks up there, but it is not a record. See the tag "RecordIP" to see other posts on this subject.

 *****************************************

Tesla: It's hard to believe that "no one" is discussing this despite the rumors that Tesla's "production hell" is due to battery issues (plus other issues):

Buried in the news today (November 6, 2017) -- Tesla's head of battery engineering exits. Wow, wow, wow.  Not aware that it was mentioned on CNBC -- didn't hear it mentioned on "Fast Money" or "Mad Money."

"Tesla watch" here. 

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.

KMI: Motley Fool discusses pipelines.

ETP: Motley Foot discusses pipelines and mentions the Bakken Pipeline System. 

Bakken Pipeline System (from "Pipelines"):

Two legs (link here):

• Dakota Access Pipeline (DAPL)
• Energy Transfer Crude Oil Pipeline

Disclaimer: I generally do not correct old posts (except for typographical errors). I often make factual and typographical errors. The older a post is, the more likely things have changed. To the best of my ability, when discussing the Bakken, I try very hard not to make factual errors. Except for my exuberant and irrational enthusiasm for the Bakken I don't have any real agenda with regard to the Bakken, but that does not mean I don't have strong opinions about the Bakken. I guess I do have one agenda: to "prove" the Bakken skeptics wrong. (I'm talking production, not investment.)

US Shale Crude Oil Production Will SOAR Over The Next Four Years; Production Will Grow Considerably Faster Than Expected -- OPEC -- November 7, 2017

You may want to re-read this post first, in which the author(s) argue that shale oil will not be able to keep up, suggesting that "peak oil" and "re-balancing" are right around the corner.

Now, we have a Bloomberg article with this headline: OPEC now says US shale will grow even faster than they previously thought.

Before we look at this article, we may want to look at the slides posted in the last couple of days, coming from the Bakken:

• Whiting
• CLR
• Oasis

Now, to the Bloomberg article (a thank you to Don for alerting me to the article):

• OPEC raises forecast for shale oil output in annual report
• shale producers show "resilience and ability to bounce back"

Look at the adverbs:

OPEC said shale oil production will grow considerably faster than expected over the next four years.

More data points:

• US shale operators too advantage of OPEC's cuts which triggered a crude-price recovery
• North American shale output will soar to 7.5 million bopd in 2021 -- OPEC
• that's 56% higher than it forecast a year ago

Much more at the link, but I think that's enough for now.

This is how OPEC sees the future of global shale:

For The Archives -- Re-Balancing And Peak Oil Right Around The Corner -- November 7, 2017

Four articles for the archives:

• "The perfect storm," October 25, 2017. Over at SeekingAlpha.
• Brent hits $64 -- this is just the start of the bull market, November 6, 2017. Over at SeekingAlpha.
• from BloombergBusinessweek: the fracking boom hits a mid-life crisis, November 1, 2017. 
• OPEC fights back, Bloomberg, November 7, 2017.

Two graphs from the SeekingAlpha articles:

 Quiz, open-book: at the first linked article above, what oil basin did the contributor fail to mention?

From the linked BloombergBusinessweek article:
“There’s a complacency that shale is going to continue to produce at the kind of volumes that we had in the past,” says Jim Brilliant, a portfolio manager for Century Management Investment Advisors in Austin, whose investments include shares in energy-related companies. Output has recently failed to meet expectations. As of June, the U.S. Energy Information Administration expected an average of about 9.3 million barrels a day, more than 220,000 barrels a day higher than companies reported.
Two comments:

• see this post (at that post, click on the link to the Whiting, Oasis, and CLR slides); and,
• 220,000 / 9.3 million = 2.3% -- I would say that's a rather good forecast (remember, pollsters as late as the week before the election, had Hillary Clinton 15 points ahead of Trump, and winning the election 

From the Bloomberg article, "OPEC fights back," dated November 7, 2017, one almost has to laugh. These were the two concluding paragraphs:

While prices are a bit better now, the coming years don’t look so great. OPEC is probably going to need to sustain its cuts for another year. Even if the cuts finish in late 2018, it’s looking at zero growth in demand for its crude until 2025 as shale takes all the new market share. 

OPEC’s World Oil Outlook 2017, published today, gives further encouragement. OPEC expects shale oil production to peak after 2025 and decline from about 2030. OPEC will then be required to increase its own output from about 33 million barrels a day in 2025 to 41.4 million in 2040, according to the report.

Tuesday, November 7, 2017

Active rigs:

$57.25→	11/7/2017	11/07/2016	11/07/2015	11/07/2014	11/07/2013
Active Rigs	52	38	64	193	181

RBN Energy: natural gas production from crude-focused basins growing again.

Lower-48 natural gas production has climbed more than 4.0 Bcf/d in the past 10 months. While Marcellus/Utica activity continues to drive the bulk of the recent increases in total volumes, crude-focused basins, like the Permian and SCOOP/STACK plays, also are picking up steam as a new generation of oil rigs is deployed to the fields and vying for market share. In other words, production growth is no longer a one-man — uh, one-basin — show. Today, we look at what’s happening with gas production outside the Northeast.

Lots of stuff to blog, but I think I'm going to wait after I drive the granddaughters to school.