The Million Dollar Way (The Bakken Oil Blog)

Monday, April 16, 2018

KMI Trans Mountain Pipeline -- Previously Posted -- April 16, 2018

Previously posted:

Kinder Morgan (technically Kinder Morgan Canada Limited, I guess): Canadian pipeline, Trans Mountain pipeline -- I find this story most interesting on so many levels -- PM Justin Trudeau says the pipeline will be built.

Prime Minister Justin Trudeau is pledging financial backing and legislation to ensure that the Trans Mountain pipeline expansion is completed, after B.C. Premier John Horgan gave no ground at a hastily called meeting in Ottawa on Sunday.

Emerging from a two-hour session on Parliament Hill, Mr. Trudeau and Alberta Premier Rachel Notley made it clear that their respective governments are determined to see construction proceed this summer, despite legal and political challenges from B.C. and protests on the ground.

Read this closely:

On Sunday, Mr. Horgan continued to insist that he has an obligation to protect B.C. coasts from oil spills and said his government will pursue a reference in federal court to clarify his government’s authority to regulate transportation of oil-sands bitumen through the province.

“We continue to disagree on the question of moving diluted bitumen from Alberta to the port of Vancouver,” he said.

He added, however, that he will stand down if the court rules against his government. The B.C. Premier said the tone of the meeting was cordial, noting that Mr. Trudeau assured him Ottawa would not pursue measures to punish B.C. over its pipeline position.

Something tells me this story is not going to end well for Alberta. As soon as I read that the BC Premiere John Horgan will take this to court tells me this is not going to end any time soon -- unless Canadian judicial system works a whole lot faster than the US court system.

Also, note, PM Trudeau says legislation will be passed -- think about this -- I can't believe the legislative process is going to happen overnight on this project, and then, according to the provincial premier, he will take that legislation to court.

Remember: there are almost 1,200 BC provincial permits required -- almost 1,200 -- these are not simply one-postcard-size permit applications. These applications are probably an inch thick (or more) of supporting data. Six hundred have not even been submitted yet.

of the 587 permits the company has submitted:

201 have been approved
386 are under review

I've been told by a reader much smarter than I am regarding these judicial / political issues, that the pipeline will be built. "Arrangements" will be made to ensure the pipeline will be built.

Right now, this is where I see the process:

Kinder Morgan: no change; will not start work now that the BC premier says he wants the courts to rule on the legality of the federal government; Kinder Morgan will wait to see how the court rules, or if the BC premier "changes his mind"
British Columbia: it sounds like "they" have dug in their heels on this issue
if the Canadian Supreme Court rules in favor for Premier Trudeau, the next question will be whether those 1,187 permits all need to be approved
my understanding is that many (most?) of the provincial permits are "indigenous-native-based" issues and that the federal government would have supported these issues in the past
Horgan originally said he/his province was not against / not delaying the pipeline -- he/his province simply wanted to make sure the environment was protected, and that all i's and t's were dotted and crossed before the pipeline would move forward; but having said that, they are fully supportive of the pipeline and can't wait to see it finished

And finally this: the Business Insider article says the meeting was cordial. Of course the meeting was cordial. This is Canada, not New York City.

Interesting, Interesting Day -- The Market, Energy, And Political Page, T+47 -- April 16, 2018

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

Wow, I'm in a good mood. For those paying attention, this has been an incredibly good weekend from my point of view. I'm probably in the minority but wow! it's been incredible.

There is simply too much to write, so maybe some quick "one-liners."

Trucking: anyone paying attention probably not surprised by JB Hunt today -- shares are up 6% today.

Bank of America: look at this -- BAC's earnings up 51%. This company was specifically mentioned by one of the CNBC guys a few weeks ago -- when the question of banks came up -- he was very, very bullish on BAC -- saying that this was "the one bank" in which to invest.

Netflix: earnings huge; beat expectations. Netflix up almost 7% intra-day. My hunch: will go even higher tomorrow. Netflix US net adds rise 1.96 million, more than expected; on top of that, the first quarter is usually soft for "new adds." "The Next Big Thing" was based on Netflix -- that was back in 2013. Wow. How prescient. Netflix market cap could match the market cap for Disney. Wow.

Schwab: huge day; up 4%.

Overall market: imagine what the market would have done today if the missile barrage on Syria had occurred at 10:30 a.m. EDT this morning (Monday, April 16). In fact, for the archives, the missile barrage, which lasted all of 15 minutes, was late Friday night. Price of oil up significantly in anticipation of "war" in the Mideast. Today, price of oil is down a bit more than 1%. If one wants to "understand" how the Mideast is playing out, follow the price oil. With price of oil down a bit more than 1% today, it tells me that, for now, traders think this is the end of "this issue" this time around. There is war of words and war of bullets: the war of bullets is over -- "mission accomplished" -- and the war of words .... the amazing thing -- the markets have completely ignored the missile barrage -- the talk shows tonight (and during the rest of the week) will talk ad nauseum about events in Syria -- but the markets are telling me --- a big "yawn."

Comey: the best news for Trump supporters -- the Friday night barrage speaks volumes about all that talk about Russian collusion -- Rush Limbaugh has this figured out.

Jobs: I don't know if WSJ was writing this story from a positive, neutral, or negative point of view -- I read the headliney; haven't read the article yet. But for teenagers, this is incredibly good news and exactly what Trump was hoping for. "Facing history labor shortages, companies snap up teenagers." And the teenagers today are technologically very, very savvy.

Tesla: this might be the big investment story of the day -- on a day that the market did very, very nicely, Tesla had a bad day:

Kinder Morgan: Canadian pipeline, Trans Mountain pipeline -- I find this story most interesting on so many levels -- PM Justin Trudeau says the pipeline will be built.

Prime Minister Justin Trudeau is pledging financial backing and legislation to ensure that the Trans Mountain pipeline expansion is completed, after B.C. Premier John Horgan gave no ground at a hastily called meeting in Ottawa on Sunday.

Emerging from a two-hour session on Parliament Hill, Mr. Trudeau and Alberta Premier Rachel Notley made it clear that their respective governments are determined to see construction proceed this summer, despite legal and political challenges from B.C. and protests on the ground.

Read this closely:

On Sunday, Mr. Horgan continued to insist that he has an obligation to protect B.C. coasts from oil spills and said his government will pursue a reference in federal court to clarify his government’s authority to regulate transportation of oil-sands bitumen through the province.

“We continue to disagree on the question of moving diluted bitumen from Alberta to the port of Vancouver,” he said.

He added, however, that he will stand down if the court rules against his government. The B.C. Premier said the tone of the meeting was cordial, noting that Mr. Trudeau assured him Ottawa would not pursue measures to punish B.C. over its pipeline position.

Starbucks bathroom policy: it sounds like Starbucks has an "open-door" policy for anyone who wants to use Starbucks bathrooms whether or not someone who wants to use the Starbucks customer is a customer or not. We'll see how this goes during a huge event when scores of folks show up to use Starbucks bathroom. We'll see how this goes in Starbucks stores in urban areas where there is a large number of homeless living. I do agree, that in this case, the manager "blew it" when he/she called the police, but my hunch is that there is more to the story than we are being told. I've never seen any situation in which someone was asked to leave Starbucks simply while waiting for a friend/colleague to show up. Something tells me there is much more to this story.

"Morning Note" And Wells Coming Off Confidential List Today -- April 16, 2018

Active rigs:

$66.35↓	4/16/2018	04/16/2017	04/16/2016	04/16/2015	04/16/2014
Active Rigs	59	51	29	93	184

RBN Energy: LNG and pipeline reversals turn Louisiana gas market upside down, part 5.

Wells coming off confidential list today:

Monday, April 16, 2018:
33376, 505, NP Resources, Mosser 143-102-10-3-1H, Elkhorn Ranch, a nice well, Three Forks, NOS; 33 stages; 5.3 million lbs; t12/17; cum 25K 2/18;
32587, 1,587, CLR, Tarentaise Federal 12-19H2, Elm Tree; a very nice well, Three Forks B2; 42 stages; 7.2 million lbs, mesh/large/medium; 43K in one month; t11/17; cum 109K 2/18;
32269, SI/NC, BR, CCU Atlantic Express 23-19TFH, Corral Creek, no production data,
32267, conf, BR, CCU Pacific Express 22-19MBH, Corral Creek, no production data,

Sunday, April 15, 2018:
32268, SI/NC, BR, CCU Pacific Express 22-19TFH, Corral Creek, no production data,

Saturday, April 14, 2018:
33013, 711, Oasis, Hagen Banks 5198 12-6 9BX, Banks, producing, Banks, 4 sections, 50 stages; 4 million lbs; mesh; large/medium, and medium ceramic, t10/17; cum 76K 2/18;
32916, 767, Oasis, Hagen Banks 5198 13-6 10T, Banks, a very nice well; Banks, Three Forks B1; 50 stages, 4 million lbs; mesh; large/medium, and resin-coated medium, t11/17; cum 121K 2/18;

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

Sunday, April 15, 2018

The Market And Energy Page, Part 2, T+ 46 -- Making America Great Again -- April 15, 2018

I was going to post a number of stories at this post, but this one story is so incredibly important, it will be the only one posted. A huge "thank you" to a reader for sending me this article.

Making America Great Again: from the Houston Chronicle -- global petrochemicals growth shifts from Middle East to Gulf Coast. This is quite a story:

For the first decade of this century, U.S. petrochemical producers, such as LyondellBasell of Houston and Chevron Phillips Chemical of The Woodlands, flocked to the Middle East, spending years developing partnerships and building massive facilities to tap cheap natural gas feedstocks to make plastics and other materials.

But now, the U.S. Gulf Coast has become the locus of global petrochemical growth, outpacing the Middle East in a shift that’s only expected to accelerate as North American shale producers siphon more natural gas from vast reserves in West Texas and elsewhere. Even Saudi Arabian companies, including the government-owned Saudi Basic Industries Corp. and Saudi Aramco, are making the shift, with plans to invest billions of dollars to expand chemical operations here and develop new partnerships with Houston and other U.S. firms.

The migration of petrochemicals manufacturing is more evidence that the Gulf Coast is becoming an energy hub rivaling the Middle East, which for a half century has played an outsized role in the global economy and geopolitics. It shows that the so-called shale revolution pioneered by Houston and Texas producers is continuing to reshape global markets, transform trading relations and lift the region’s economy, which so far has attracted more than $60 billion in petrochemical investments - an influx of capital, according to the Greater Houston Partnership, that will support tens of thousands of jobs for years to come.

The shift from the Middle East to the Gulf Coast is driven by two simple facts: Supplies of natural gas liquids such as ethane, a feedstock for petrochemicals and plastics, are dwindling to the point of shortage in Saudi Arabia and elsewhere, but growing rapidly here as drilling in the Permian Basin in West Texas and other shale plays floods the market with cheap, abundant raw materials for chemicals. U.S .ethane production is projected to increase nearly 60 percent to 2 million barrels a day by 2021, up from 1.26 million barrels a day in 2016.

And more:

That dynamic is pushing some of the Middle East’s premier energy companies to expand along the U.S. Gulf Coast with multibillion dollar projects that underscore the industry’s faith in the longevity of the shale boom. Coinciding with the recent visit of Saudi Crown Prince Mohammed bin Salman, who is leading a drive to diversify an economy long centered on oil production, Saudi Aramco announced that its Houston-based refining subsidiary, Motiva Enterprises, will make its first major foray into petrochemicals through two separate agreements with Illinois-based Honeywell UOP and TechnipFMC, which has headquarters in Houston, Paris and London.

The Market And Energy Page, Part 1, T+46 -- April 15, 2018; British Columbia Issues Permit For KMI's Trans Mountain Pipeline

Breaking news! Breaking News! British Columbia issues permit for Trans Mountain pipeline; British Columbia heads to Ottawa! Wow! [Huge thank you to reader who sent met the link.] Here's the story, linked here:

the $7.4-billion project requires 1,187 provincial permits: note -- that was not a typo -- the project requires 1,187 permits from British Columbia. I assume, the project requires a few permits from the province of Alberta; and, a few permits from the federal government (Ottawa)
so, where do we stand on the 1,187 British Columbia permits -- making progress:
587 permit applications have been submitted
that means the company still needs to submit 600 more applications
of the 587 permits the company has submitted:

201 have been approved

386 are under review

the submitted permits must align with 37 conditions outlined in BC's environmental certificate and the 157 conditions detailed int he National Energy Board's approval
assumption: as the permit applications come in, I assume the BC provincial government can add more conditions, if necessary
by the way, had Hillary been elected president, it doesn't take a rocket scientist ...

Mexico doing the same thing as British Columbia, from Argus Media --

Mexico's indigenous consultation process is the main risk factor for energy projects.

Companies looking to develop energy and infrastructure projects in Mexico are required to participate in an indigenous consultation process prior to applying for permits related to projects that could significantly impact an indigenous community.

The energy ministry, or when relevant the transport ministry, decides when a consultation may be required. This would include if a proposed natural gas pipeline or wind farm is likely to displace indigenous people from traditional or sacred land.

The indigenous consultation is not a complexity of project development only in Mexico. It applies in any country with an indigenous population, according to the International Labor Organization's Agreement 169. But two factors have converged in Mexico that are making the issue more urgent — the prospect of the first supreme court decision on the matter, and a flood of pending projects and investments flowing from the historic 2014 energy reform.

Argus Media failed to mention a third factor that is converging: Mexico is about to elect a two-time loser, a far left politico that does not bod well for Mexico ... or the US.

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

It never quits: Sempra Energy to build a $130 million liquid fuel terminal in Mexico. Data points:

IEnova will construct the marine liquid fuels terminal -- remember, new restrictions on commercial marine fuel
location: at the La Jovita Energy Hub, port city of Ensenada
the terminal: will be known as Baja Refinados
will commence operations 2H20
will supply 1 million bbls (sic) of gasoline and diesel
will allow Chevron to utilize 50% of the facility's storage and fuel capacity

FF: books $4.2 billion charge; restates earnings, as expected; data points:

earnings to be released next Friday (April 20, 2018)
shares down 1%, after close, after rising 2.4% during the day

ETP: holds binding open season for new pipeline; data points:

diesel fuel pipeline
will connect Hebert and Midland in Texas
initial capacity: 30,000 bbls/day
will come online by 3Q20

Trump says he wants the US out of Syrian "conflict" by the end of the year; sooner if possible
Assad's answer: use chemical weapons

Dumb and dumber: the most dumassed decision after the Allies hit Syria?

telling Trump his attack failed

Dumb and dumber: New Zealand's strategy to end global warming? Story here:

halt immediately any new permits for offshore oil and gas exploration
yeah, that will solve the "problem"
mostly it will push future investment overseas
but, I suppose, the hobbits are happy

Anadarko; completion design changes in the DJ -- from the Energent Group -- dramatically decreasing the amount of sand in DJ completion strategies?

Anadarko’s original well design uses between 500 and 800 pounds of proppant per foot with a proppant per gallon water ratio above 0.50. The new well design averages near 250 pounds per foot and has a proppant per gallon water ratio below 0.25.
If those ratios are based on mass (weight), here's what I'm seeing in the Bakke:
9,000-ft laterals
10 million gallons of water
90% water (mass)
10% proppant (mass): generally large sand or mesh/large sand; very little ceraic being used in wells that I've looked at; some operators are using mix of large/medium/small sand
10 million lbs sand
so, compared to Anadarko in DJ, the Bakken:
10 million lbs sand / 9,000 feet = 1,000 lbs of proppant / foot
ratio of proppant per gallon water: 0.10

Disclaimer: I often misread things; I often "round" numbers; I make assumptions that are often incorrect or turn out to be incorrect later.

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

Global Warming

In the 15th century, the Chinese sailed a fleet of ships north from China, up to the Arctic, to the North Pole, continues over the pole, and then south to the North American continent.

[In the 15th century, in Zheng He's era] the Chinese had no concept of the North Pole as the highest point of the earthly sphere. Accordingly, when they traveled north from China to the North American continent, traversing the North Pole (the great circle route), they believed the journey was always northward.

The modern geographic understanding is that the great circle route from China to North America runs north to the North Pole, then south to North America. This concept was unknown to the Chinese.

To the Ming Chinese, "in the northward extension from the Imperial Ming" means a place beyond the North Pole. This understanding is reflected in the 1418 world map, which shows a passage through the polar ice across the North Pole leading to America [the northward passage].

According to the Dutch meteorological office, there were three exceptionally warm winters in the 1420s, which could have melted the Arctic sea ice.

And there you have it.

From 1434: The Year a Magnificent Chinese Fleet Sailed to Italy and Ignited the Renaissance. Gavin Menzies, c. 2008.