Morning Note -- October 16, 2018 -- Bone Saws Are The New Box Cutters

From a presidential tweet this morning, a president with a great sense of humor and willing to share. This was part of a tweet thread that began with a tweet from President Trump:

LNG export terminals: link to an old post with list of LNG export terminals planned along the Texas / Louisiana coast. 

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The gloves are off: the other day I wrote that "the gloves are off," now that the world has come down hard on Saudi Arabia following the murder of Kashoggi. From Bloomberg:

For 45 years, it’s been considered out of bounds for Saudi Arabia. But all of a sudden, Riyadh made what many read as a veiled threat to use the kingdom’s oil wealth as a political weapon -- something unheard of since the 1973 Arab embargo that triggered the first oil crisis.

Saudi Arabia, the world’s biggest oil exporter, said on Sunday it would retaliate against any punitive measures linked to the disappearance of Washington Post columnist Jamal Khashoggi with even “stronger ones." In an implicit reference to the kingdom’s petroleum wealth, the statement noted the Saudi economy “has an influential and vital role in the global economy.”

Roger Diwan, a longstanding OPEC watcher at consultant IHS Markit Ltd., said the Saudi comments broke “an essential oil market taboo.”

This had to have been the most well-planned state-level murder ever planned. International. One or two private jets land at Istanbul airport, arriving from Saudi Arabia. Fourteen thugs. Diplomatic bags? Fourteen guys just happen to arrive by plane the very same time the victim visits the consulate. One wonders to what degree the government of Turkey played a role. We've been through Istanbul numerous times: it's not an easy airport to get through with regard to passport control and customs.

I wonder if Mike Pompeo asked the Saudi King which brand they used. It looks like bone saws are the "new" box cutters.

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LNG Texas: Canada has their "LNG Canada" -- one project. And we still haven't seen how that will play out. But Texas? Texas has an "LNG Texas" project, too -- actually more than one can follow. Today, Rigzone is reporting that another LNG Texas project "advances":

NextDecade Corp. has secured a draft environmental impact statement (EIS) from the Federal Energy Regulatory Commission (FERC) for its Rio Grande LNG project near Brownsville, Texas, along with its associated Rio Bravo Pipeline, the company reported Friday afternoon.

“We appreciate the FERC staff’s continued commitment to the review of our project,” Matt Schatzman, NextDecade’s president and CEO, said in a written statement. “The draft EIS represents a culmination of several years of analysis and evaluation in conjunction with multiple federal, state and local agencies and stakeholders.”

FERC, which reviews and permits LNG facilities in the United States, issued the draft EIS as required by the National Environmental Policy Act. The document follows a detailed review of environmental, engineering, social and other aspects of NextDecade’s proposed project. The 27-million-tonne-per-annum Rio Grande LNG export facility would receive natural gas from the Agua Dulce gas hub near Corpus Christi via the company’s 4.5 billion cubic foot per day Rio Bravo Pipeline.

Comment: there are many, many blog posts on LNG export terminals in Texas / Louisiana -- this post, at one time, provided a fairly comprehensive list of such terminals.

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Back to the Bakken

Wells coming off the confidential list today -- Tuesday, October 16, 2018:

• 34686, SI/NC, XTO, FBIR Yellowwolf 31X-10D, Heart Butte, no production data,
• 34474, SI/NC, XTO, FBIR Ironwoman 31X-10D, Heart Butte, no production data,
• 34079, SI/NC, XTO, Ravin 21X-15A, Siverston, no production data,
• 29774, 1,674, Slawson, Gobbler Federal 3-35-26H, Big Bend, 43 stages; 8.3 million lbs, t9/18; cum --

Active rigs;

$71.39→	10/16/2018	10/16/2017	10/16/2016	10/16/2015	10/16/2014
Active Rigs	69	58	31	67	189

RBN Energy: the LNG Canada project will impact gas markets, but not soon enough.

The final investment decisions by Royal Dutch Shell and its partners in the LNG Canada liquefaction and export project in British Columbia are a long-term boon to Western Canadian natural gas producers and to TransCanada, which now can proceed with its planned Coastal GasLink pipeline across the full breadth of BC. But the LNG Canada facility in Kitimat and the new 420-mile, 2.1-Bcf/d pipe won’t come online until 2023 — an eternity for producers in the region’s Montney and Duvernay shale plays, who through much of 2018 have been enduring profit-crushing price discounts for their gas relative to Henry Hub. Today, we consider the largest North American liquefaction/LNG export project to be sanctioned in several years, and why BC and Alberta producers wish it were coming online much sooner.

Natural Gas: Just When Things Seemed To Be Going So Well For Trump's America -- October 15, 2018

October 16, 2018: a reader -- who knows much more about natural gas than I do -- provided his 30-second elevator speech in a comment which I brought up here for easier access --

We'll go into winter with natural gas supplies at a 15 year low (EIA says 13) but because of the coming El Nino winter, we will not experience widespread shortages or a price spike...(supplies in the Midwest are 13.2% below normal, while supplies in the East are now only 9.1% below normal for this time of year...)

However, because El Nino flips the continental US weather (warm in the north, cold in the South) we may see spot shortages in the South Central region, where their natural gas storage deficit decreased to 25.0% below their five-year average..

October 15, 2018: for investors, this seems to be another open-book test. 

October 15, 2018: oh-oh. Maybe the Natural Gas Supply Association spoke too soon. From SeekingAlpha --

Bullish weather forecasts again led to a sharp rally in core winter natural gas contracts to start the week, boosting November natural gas prices by more than $0.08 to $3.242/MMBtu, and spot gas jumped $0.17 to $3.135/MMBtu as early-season cold drove up demand across much of the U.S.

With unseasonably low temperatures expected to persist through the end of October, NatGasWeather expects the coming weather pattern to further raise storage inventory deficits vs. the five-year average to more than 650 Bcf and likely toward 700 Bcf.

The background state will remain bullish for quite some time until record production finally shows signs of improving deficits, “something that’s not expected to happen until after October due to the coming colder-than-normal pattern," the forecaster says.

In the SeekingAlpha note above, the writer suggests the deficit could trend toward 700 Bcf. In the graphic from last week, "stocks were 627 Bcf less than last year at this time and 607 Bcf below the five-year average.

My 30-second elevator speech:

• natural gas will be the talk of the town in New England as prices rise from $3-nat gas to $6-nat gas
• natural gas will be the talk of the town but there will be no crises, no emergencies; the drillers; and natural gas suppliers will be able to respond -- after all, this is Trump's America;
• Pocahontas will have all the answers; and, 
• President Trump owes her $1 million

History of natural gas prices, link here:

August 3, 2018: natural gas reserves are "dangerously low."

Original Post
October 3, 2018 

If this turns out to be accurate, there is no reason for someone like me to track the natural gas fill rate any more. If we get through a "cold" winter with no problems this winter, I will no longer follow the natural gas fill rate.

From twitter:

From Platts:

The Natural Gas Supply Association anticipates lower storage levels will be countered by soaring production this winter, resulting in neutral pressure on wholesale natural gas prices, despite record domestic consumption this winter.

The outlook anticipates a record demand of 102.7 Bcf/d, mostly tied to an increase in electric sector and industrial use of gas, as well as exports, combining to add 3.4 Bcf/d, on average, to consumption.

On the supply side, lower storage inventories at the start of the winter -- 3.3 Tcf versus about 3.8 Tcf last winter -- were seen as exerting upward pressure on prices this winter compared with last. In contrast, offering downward pressure, production this winter was forecast to average 84.9 Bcf/d, up from 77.4 Bcf/d last winter.

Much more at the link.

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A Riddle

How does one make a perfect right angle without a compass? All you have to work with is the concept of lines.

Howard Bloom explains how the Sumerians, four thousand years ago, made perfect right angles which were absolutely crucial in building their ziggurats.

From wiki:

Ziggurat: (in ancient Mesopotamia) a rectangular stepped tower, sometimes surmounted by a temple. Ziggurats are first attested in the late 3rd millennium BC and probably inspired the biblical story of the Tower of Babel (Gen. 11:1–9).

The angles had to be perfect if the tall towers were not to topple over.

From Howard Bloom's The God Problem, page 105:

If the angle at which your walls meet is off by even a bit, you will build an unstable structure, a crooked tower. But you don't have the concept of an angle. Any kind of angle. And you don't have a word for a "right angle." What's more, you are fourteen hundred years away from the notion of ninety degrees. So how do you make sure that you've got your corner angle, your right angle right? You do it with scratch marks in clay. You do it with numbers. Naked numbers. And with the strange patterns that numbers summon forth.

The Sumerians laid their bricks -- each nineteen modern inches long -- forming perfect right angles for their ziggurats. No compass. How did they do it?

The answer is very, very clever. I can't wait to tell our oldest granddaughter who is taking geometry this year how it was done. Again, no concept of "angles" and certainly no concept of "degrees," and yet the Sumerians knew how to make what we would call ninety-degree angles.

My hunch: every blue-collar carpenter out there knows the answer.

And Just When Things Seemed To Be Going So Well For Crown Prince MBS -- October 15, 2018

It will be interesting to look at the numbers a few months from now after the Kashoggi story plays out. My hunch: this story will fade away sooner than later. After all, to quote a former US Secretary of State, "what does IT matter?"

But for now, one can say this:

• short term it looks like Saudi Arabia has turned the corner; and,
• Saudi Arabia has a long way to get back to where it was

Link here.

 

Two New Permits; CLR Is Really Active In The Brooklyn Oil Field -- October 15, 2018; North Dakota Back To 69 Active Rigs Going Into The Fall

India: won't hit its 2022 renewable energy target. I'm shocked! Shocked! Will Algore demand sanctions on India?

Sad, really, really sad: Microsoft co-founder Paul Allen dead at age 65.

Cherokee nation: Elizabeth Warren has opened a can of worms. We're all Native Americans if her DNA is accurate and the date is correct. At best, she is 1,024th part Cherokee, which is slightly less than what the average European-American is. Very, very interesting. And no, I'm not posting the Cher video again. The Atlantic, January 26, 2015. Genetic testing and Native Americans is a huge story. Probably bigger than the Bakken.

Marijuana: CNBC talking head says polls suggest North Dakota could be next state to approve legalization of marijuana.

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Back to the Bakken

Active rigs:

$71.78	10/15/2018	10/15/2017	10/15/2016	10/15/2015	10/15/2014
Active Rigs	69	59	31	66	190

WTI: have we seen the recent bottom? WTI's floor of $70 held; it seems the Saudi Khashoggi affair could affect price of oil either way (up/down); it seems like there are more factors likely to drive the price of WTI up rather than down; 

Two new permits:

• Operator: CLR
• Field: Brooklyn (Williams)
• Comments: wow, CLR is really active in the Brooklyn oil field; coincidentally, I updated many of the wells in Brooklyn oil field earlier this afternoon; Brooklyn oil field is tracked here; I've always considered Brooklyn oil field a mediocre (at best) oil field in the Bakken, but CLR seems to really testing this field. We're going to see a lot of effect on older wells when newer wells are drilled. See graphic of field below and at the link.

Seventeen permits renewed:
CLR (9): three Bliss permits and three Elveida permits permits (all six in Divide County); one Cuskelly permit in Dunn County; two Boulder Federal permits in McKenzie County
EOG (5): four Burke permits (Mountrail County) and one West Clark permit (McKenzie County); 
Slawson (3): three Armada Federal permits in Mountrail County
One producing well (a DUC) reported as completed:

• 33996, 1,527, Hess, BB-Burk-151-95-1807H-6, McKenzie, t9/18; cum -- 

With regard to the Hess BB-Burk well, the other day, this was noted --

• 33995, 2,363, Hess, BB-Burk-151-95-1807H-7, Blue Buttes, 9/18; cum --; part of a 10-well pad running south to north; neighboring 5-well pad running north to south:
• 17060, off-line;
• 23499, coming back on line after being off line for one-two months;
• 23500, ditto,
• 23501, never off line, no jump in production,
• 23502, ditto

From the "Fields and Field Updates" page:

• Blue Buttes: sweet spot in the Bakken; west of the reservation; an old field; "owned" by Hess

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Brooklyn oil field (see above):

The Market, Energy, And Political Page, Part 2, T+63 -- October 15, 2018

Earlier I mentioned that I've started following "crudehead" over at Twitter. That and 50 cents will get you a senior cup of coffee at McDonald's. No such discount at Starbucks, alas.

But I digress. Back to "crudehead." His/her general theme seems to be:

• says if either supply side/demand side deviates from expectations, pricing can get very, very "messy" -- in either direction I assume

Which doesn't seem particularly profound. I don't know if he/she (and from now on, I plan to use the literary "he") leans toward being an "oil peaker" or not. But I think so. Regardless, this screenshot probably encapsulates the "supply-demand" argument as well as any:

If South Korea cuts Iran oil to zero, where is the "spare capacity"? Where is the supply?

China's teapot refineries: more oil, please.

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The Book Page 

My two books of consequence this week:

• The Double Bond, Primo Levi: A Biography, Carole Angier, c. 2002
• The Aeneid, Virgil, translated by Frederick Ahl, c. 2007, introduction by Elaine Fantham

Frederick Ahl:

• Classics and Comparative Literature, Cornell  University (presently)
• College Year, Athens
• as performed in and directed a wide range of plays in Greece and the US
• has authored other books on Greek plays and playwrights

Elaine Fantham
Princeton University, 1986 - 2000
author of other books on the classics

An article in the current issue of The New Yorker brought me to The Aeneid.

Deep in the recesses of my mind, Dr Ford and her supporters label her a survivor. They need to read the history of Ravensbrück. Perhaps that's was brought me to a biography of Primo Levi, who authored Survival in Auschwitz, which I have not read, but will probably read after I finish Carole's biography.

"Survival" and "survivor" seem to be two words currently in fashion.

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A Dirac Unit

Link here.

From another blogger:

Reading a new biography of the Nobel-winning physicist P. A. M. Dirac, I found a different definition of the unit Dirac, i.e., one word per hour. This definition is more realistic than the former.

The relevant description [refers to a] "unit of taciturnity."

Surely the unit commemorates Dirac's taciturnity, but it should be called a unit not of taciturnity but of volubility or talkativeness, because the number of words per unit time is smaller for the person of higher taciturnity.

Like me, it appears, that blogger has too much time on his/her hands. LOL.

For the record, I always thought the Dirac unit was a unit of "talkativeness," and not "taciturnity."