The Market, Energy, And Political Page, T+70 -- August 9, 2018 -- Is The State Purposely Making The Forest Fires Worse?

Haynesville monthly natural gas production, reaches five-year high:

New natural gas plant expansion proposed for McKenzie County. Link here. Will quadruple capacity at this one plant.

• expand the Roosevelt Gas Plant
• from 50 to 200 million cfpd
• would be the 6th natural gas expansion or new plan under development in the state
• located seven miles south of Watford City
• the state has already penciled this one in -- see the spreadsheet for the state here

Natural gas fill rate (link here):

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The Last Straw

Is Jerry Brown / California purposely making the record-breaking fires worse to "prove a point?" 

The state is rigorously following environmental regulations -- at the risk of making things worse; perhaps endangering lives. Google -- Commerce chief scolds California over environmental policies he says hinder firefighters: ‘Lives are at stake.'

But back to the straws. For those who missed it, from July 23, 2018:

It doesn't matter whether the data is correct or not; the question is how an entire industry and, the millennials, fell for his data. I guess the same way they fell for the global warming data -- if you say it enough times, it becomes fact. Public school education.

The Market, Energy, Political, And Fake News Page, T+70 -- August 9, 2018

Regardless of where the trade war stands on T+75, I plan to move on after that date. We'll have to see what the president tweets on Day 75 of the trade war. Right now I'm leaning toward "T+1 on Iran sanctions."

From CNM today:

Now, back to the market.

Disclaimer: this is not an investment site.

Wow, I'm in a good mood.

WTI: for investors, we are still well above the sweet spot. The sweet spot for me, is around $55-WTI. That's low enough to prevent any adverse effect on the overall economy, and the oil companies will do just fine. At $66-WTI, the oil companies should be doing very, very well, and the economy should do just fine. Saudi Arabia will pretty much implode if they can't get oil above current price point.

WTI: the consensus on the street suggests that oil will trend higher, although I have a bit of trouble thinking it will trend much higher than its recent highs.

Ticker symbols:

• AAPL: hit a new high today. And it wasn't subtle: up over 1%; up over $2.25/share. Wow. Who wudda guessed? I was thinking that by now folks would be taking profits. My hunch: before the year is out, talk of a dividend increase will crescendo.
• BRK-B: up slightly; nothing to write home about but going in the right direction.
• NOG: nimble traders -- which I'm not -- could have done well on NOG today. It dropped almost ten percent shortly after the opening, trading below $3.00/share, but recovered, and is now down less than 5%, trading at $3.16. Had one bought 10,000 shares of NOG at $2.98 ($29,800) and then sold at $3.15, a nice gain of $1,700 in about one hour. Again, remember, this is not an investment site. 
• ENB: up 1%; earlier this week it was reported that Enbridge would be bringing on-line $7 billion worth of projects by the end of the year
• EEP: up 2%
• EPD: up slightly less than 1%; also, the July, 2018, distribution was a bit higher than the July, 2017, distribution
• KMI: up a bit less than 1%
• TRP (the Keystone XL; the Trans Mountain folks): up over 1%; could "charge" Canada 26% more to complete the Trans Mountain project, and Canada really has no choice but to pay whatever it takes at this point
• SRE: up slightly
• S: up half a percent
• COP is up 1% but CVX is down a bit 

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The Book Page

I don't have the book in front of me so I can't quote from it.

The book:

She Has her Mother's Laugh: The Powers, Perversions, and Potential of Heredity, Carl Zimmer, c. 2018. Paging through it suggests it's the kind of book I generally don't like -- a great thesis, but veering off in all directions, but it's thick at 574 pages and will keep me occupied for the week.

I suppose I'm about a third of the way through the book, reading a couple of chapters each evening. I can't say I really, really enjoy the book, but it's written in such a way that makes it difficult to put it down. The writing seems a bit "wordy" and the author interjects a lot of banality with long passages about his immediate family that seem unnecessary, but there may be a "revelation" regarding his own daughters by the end of the book.

This is what makes the book fascinating: his unique way of connecting the dots with regard to following the "genetics" story. He seems to start off with some trivial point about genetics, develops the story over several pages, even over several chapters, connecting the dots, until a most interesting story develops.

The most recent example: somehow, the author got onto the subject of "feeblemindedness" which led to the Kallikak family and then to Vineland Training School. And, then after having brought up Pearl S Buck earlier, which confused me, the author comes back full circle to tell the story of Pearl Buck's only biological/natural daughter. Pearl Buck did have an adopted daughter.

One would think with my background in pediatrics, I would know "all there is to know" about PKU (phenylketonuria) but I completely missed this story.

It turns out the physician who "discovered" the cause of phenylketonuria was a Norwegian. I wish I had known that in high school. My absolutely wonderful eastern European chemistry teacher said he would have given me an "A" for the course if I could find any Norwegian that produced anything of value. LOL. It was all in great fun. I think. I hope.

I'm not sure I can recommend the book to the general audience, but for someone who likes connecting dots in the world of genetics, this book is very rewarding.

On another note, right, wrong, or indifferent, it was interesting to read the author's short summary of Rosalind, Watson, and Crick and their discovery of the nature of DNA.

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Straws

Sophia can relate to this. Sophia loves playing "tag, you're it!"

Beyond The Pale -- Mexico Bans Fracking -- August 9, 2018

Mexico, apparently, has vast shale oil and natural gas reserves in a basin that directly connects to the Eagle Ford in Texas.

To date, Mexico apparently imports 85% of the natural gas it consumes.

It seems tapping their shale natural gas would be a no-brainer.

It's not.

The new president-elect of Mexico, declared last week, that he will ban fracking in Mexico.

Irina Slav, over at oilprice suggests that fracking the Burgos Basin makes no economic sense anyway, but still, just the fact that President-elect Andres Manuel Lopez Obrador has said he will ban fracking seems to be ... well, beyond the pale.

It will be interesting to see Obrador's plans for the rest of the country's oil / natural gas sector.

Something tells me the "road to Mexico" is quickly becoming the "road to Venezuela."

NOG Reports Earnings -- August 9, 2018

Fast And Furious

Beyond belief. Mexico bans fracking? 

Jobless claims: down 6,000 from a revised 219,000. First decline in three weeks. The new number, 213,000 was below the 217,000 estimate. Until recently, claims have not been this low since the early 1970s. From MarketWatch. Also at Econoday. Reuters says that jobless claims "unexpectedly fell."

The meter is running: Trans Mountain update. From Bloomberg -- the Canadian government may need to pay more to expand Trans Mountain. Kinder Morgan says:

• the expansion will cost 26% more than estimated -- from my perspective, 26% is not trivial
• it will take a year longer to complete
• new price estimate: $7.1 billion (although I had originally heard the cost was going to be $7.4 billion; so I don't see how this is a price increase); price increase is "based on the uncertainty the investment had encountered." -- and, of course, KinderMorgan is now a contractor to the owner of the project (the owner being Canada with very deep pockets)
• sounds a lot like the DAPL; at the end of the day, a few malcontents are going to cost consumers, taxpayers, others, a huge amount of money for no good reason

A target Saudi cannot afford to miss: unemployment. Link here at Bloomberg. 

I'm shocked! I'm shocked!: discrepancy over Saudi oil data could rattle markets. Link here over at The WSJ. Yesterday I posted:

Never mind: first we are told that Saudi production dropped in July, and then we are told Saudi reported record high production in July, and now this headline from oilprice: why Saudi oil production suddenly dropped. Apparently even Tsvetana is confused -- in her opening paragraph ... "as if oil market participants haven't had enough conflict market forces to digest ...."

Double standard? I came home yesterday after a bike ride, and opened up The WSJ online. The first headline that I see: the Albertsons - Rite Aid merger has been called off; and the meeting between these two companies to discuss this merger has been canceled. Now, how is this any different than Elon Musk tweeting his thoughts about taking his company private?

In the Albertsons - Rite Aid case, we have a story being reported by a journalist. We are getting the story second-hand; the journalist is reporting the story based on what he is being told and he/she is telling it from his perspective.

By the time The WSJ story was posted, how many "insiders" were already aware of this information. It was a long article and it obviously took time to compose. In addition, the reporter would have confirmed the story with at least one other source, I assume. That all takes time and while the story is being put together, background information obtained, other sources being contacted, any number of WSJ staffers had access to the story, and "insiders" were able to act on the news.

On the other hand, though details were lacking, we get the Tesla story directly from the CEO. If Elon Musk would have scheduled a meeting with the board of directors to discuss his idea, and then a spokesman for Tesla call The WSJ with the news and then let The WSJ report that story -- would that have been the appropriate way to do things? Would it have been better for the WSJ to report a story in which, "according to anonymous sources, Elon Musk is considering taking his company private"? And no one can say that tweeting such information is "unconventional" these days. We have the President of the United States tweeting daily, direct to the world, without going through reporters, his thoughts -- many of which can have great influence on the markets.

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Back to the Bakken

NOG: 2Q18 earnings. NOG shares drop almost 10% on opening. 

No wells come off the confidential list today.

Active rigs:

$67→	8/9/2018	08/09/2017	08/09/2016	08/09/2015	08/09/2014
Active Rigs	64	57	33	73	193

The arrow: on a day like this (and yesterday, too) it's hard to decide which way to place the arrow in the box score above. WTI took a 4% dive yesterday so the down arrows were appropriate, but in the overall scheme of things, $66 is still a nice price. The oil companies will survive on $50 WTI; thrive on $60 oil; and, post phenomenal results with $70 WTI.

RBN Energy: contenders in the race to build crude oil export terminals off the Texas coast.

Much like their heated competition to build new crude oil pipelines from the Permian to the Gulf Coast, midstream, logistics and trading companies are jockeying to construct the first new export terminal capable of fully loading Very Large Crude Carriers — Trafigura joined the fray earlier this week. While VLCCs are by far the most cost-efficient way to haul crude to Asia, their Godzilla-like physical dimensions restrict the number of land-based terminals they can use. And even those that can accommodate these seagoing behemoths can only load a VLCC part-way — “reverse lightering” out in deeper, open waters is required to fill the supertanker to the tippy top. So a handful of ambitious midstreamers are developing plans for offshore terminals out in deep water, miles from the Texas coast. Today, we continue our review of these proposals with a look at JupiterMLP’s plan for a terminal off Brownsville — and a new Permian pipeline to the city.

NOG 2Q18 Earnings

Press release.

NOG: pre-market trading -- up a nickel; up about 1.5%. [Later: about an hour into trading, NOG was down over 10%. Apparently analysts took a deeper look.] [Later, later: NOG shares have recovered a bit, now down only 5.3%, at 9:25 a.m. CDT.]