I Wonder If Buyer Gets The Mineral Rights? Probably Not -- Friday, December 7, 2018

Largest ranch on the market (as in, up for sale) is in Texas. Link here. Data points:

• Lely Ranch near Big Bend State Park
• has been owned by a foreign dairy magnate since the 1960s
• 70,000 acres
• West Texas
• airstrip; 4,286-foot Cerro Tren Peak; creeks and arroyos
• brick headquarters home on the property
• 45 miles from Marfa 

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The Tesla My Wife Promised Me For Christmas

... but perhaps not this Christmas.

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Better Get An Oil Story For This Post

"The US pipeline industry is boomiing." -- contributor over at oilprice.

More accurately, the "US pipeline industry is undergoing huge transformation."

From the lede at the linked article:

Every once in a while, a new technological development shakes up a conservative sector.

In the oil and gas industry, the shale revolution has changed the business in multiple ways. The U.S. has been transformed from one of the world’s leading oil importers into the world’s largest producer of oil and gas. Fracking in the Permian basin has created bottlenecks as the existing infrastructure cannot cope with rising production. Producers are not able to get all the oil and gas to customers, creating a price differential with the WTI benchmark. On average, shale oil producers in the Permian basin receive $10 to $13 dollars less for each barrel compared to WTI levels.

It is not only energy companies that are benefitting from rising production, pipeline manufacturers are also reaping the rewards. Globally, the U.S. ranks #1 in pipelines planned and under construction. Most of the oil and gas pipelines planned for 2019 and 2020 will connect the Permian Basin with consumers and export terminals in the Gulf of Mexico. However, the additional capacity will create another problem by moving the bottleneck from transportation to the facilities on the coast.

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.

Words matter: when Art Berman said "shale was a retirement party" that pushed more talk of $100-oil and folks may have acted on that talk. Now that we see what the "shale revolution" has wrought, we have $50 oil.

December 7, 2018 -- A Day That Will Live In Infamy

Pending today:

November jobs report.

EIA natural gas report.

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When Sage Hits The Fan

Trump To Dump Sage

Before folks get too upset with all this, remember, Barack Obama gave carte blanche to wind farm operators to kill hawks and eagles.

There will be a ton of stories on Trump's proposed action. It will be interesting to see if he can take the heat. This could be the "yellow vest" moment for US faux environmentalists.

First example from CNN:  huge picture of beautiful sage grouse. Then the story

The Trump administration moved to amend Obama-era protections on the habitat of the sage grouse bird, potentially opening up vast areas of land in the western United States for oil and gas drilling.

According to The New York Times, the new plan would reduce the bird's habitat to 1.8 million acres, and would make 9 million acres of land available for "drilling, mining and other development."

"The BLM recognizes the authority of the individual states in managing wildlife and that plans at the federal level for managing habitat should not be one-size-fits-all," said Heather Feeney, spokesperson for the Bureau of Land Management, in a statement.

Environmental groups were swift to criticize Interior Secretary Ryan Zinke and the department's proposed changes.

Why do I get the feeling that Ryan is trying to save his job?

Federal vs states rights. And a lot of folks feel that the states can manage their backyard better than Washington, DC. I tend to agree.

By the way, from a science / biology point of view, there's much more to this story than is being reported.

The Market, Energy, And Political Page, T+ 31 -- December 7, 2018

US becomes net exporter of oil, fuels for first time in decades: The WSJ. 

I had several posts on this subject last night. Why would I add yet another story that says the same thing?

Because of the sub-headline: fracking boom briefly propels US to symbolic milestone of "energy independence."

And another opportunity to post one of my favorite YouTube clips:


What a doofus
Back to the linked article:

The shift to net exporter from importer, detailed in weekly data from the U.S. Energy Information Administration, may be short lived. Still, it demonstrates that America is moving closer to achieving “energy independence” as the shale revolution makes the country one of the world’s top oil producers and reshapes global markets.

Reducing American dependency on oil imports has been an intense focus of executives and presidents from Jimmy Carter to George W. Bush, none of whom anticipated a renaissance in U.S. drilling.

Wow, mentioning "previous presidents" and Jimmy Carter, specifically, is crazy talk.What do previous presidents have to do with guys like Harold Hamm, Mark Papa, Aubrey McClendon, geologists, pad managers, roughnecks, truck drivers, surface owners, state and local governments -- those who really made this possible?

Mentioning the likes of Jimmy Carter in the lede for an article like this is crazy talk and demeans the real "heroes."

Irony: The most anti-Big Oil president in US history couldn't stop this train:

More from the linked article:

America is now the world’s top producer of oil and natural gas. This week in Vienna, the Organization of the Petroleum Exporting Countries is once again weighing whether to curtail production, a decision driven in part by surging American oil output, which has topped 11 million barrels a day. 

The U.S. exported 3.2 million barrels of oil during the week that ended on Nov. 30, along with about 5.8 million barrels of gasoline, diesel, jet fuel and other products. Those exports exceeded combined imports of 8.8 million barrels a day in the week, making the country a net exporter, according to the EIA. This is the first time the U.S. has been a net exporter since at least 1973, federal data show.

While many analysts don’t expect the distinction to last long this year, it may occur for a sustained period next year or in 2020, according to some forecasts. Oil and natural gas production continues to grow at a breakneck pace, and dozens of companies are spending billions of dollars to build out infrastructure for exports of everything from crude and natural gas to plastics components, mostly along the Texas Gulf Coast.

Enough of this. Time to move on.

Pearl Harbor-- December 7, 2018

Miscellaneous screenshots.

It's a bit hard to see on this graph, but Canadian CBR now exceeds Bakken CBR.

CLR Reports Another Huge Wiley Well Today -- December 7, 2018

One one well coming off the confidential list today -- Friday, December 7, 2018:

• 33108, 1,547, CLR, Wiley 12-25H, Pershing, 4 sections, 51 stages; 8.3 million lbs, t7/18; cum 121K 10/18; the Wiley wells are tracked here:

Pool	Date	Days	BBLS Oil	Runs	BBLS Water	MCF Prod	MCF Sold	Vent/Flare
BAKKEN	10-2018	31	23410	23403	9129	50143	45479	4412
BAKKEN	9-2018	30	27645	27605	16636	59202	53819	5113
BAKKEN	8-2018	25	22053	22134	14660	46372	43165	3008
BAKKEN	7-2018	31	35281	35198	34250	73203	68781	4174
BAKKEN	6-2018	15	12662	12585	15645	23509	22039	1301

Active rigs:

$51.57	12/7/2018	12/07/2017	12/07/2016	12/07/2015	12/07/2014
Active Rigs	63	53	39	64	188

Price of neighborhood regular unleaded gasoline: $1.89. 

RBN Energy: major fundamental shifts swing crude oil prices in Canada.

For months, the crude oil market had Canada figured out. Production was growing, bit by bit.

Pipelines were maxed out. Railcars were hard to come by but were providing some incremental takeaway capacity. Midwest refineries, a big destination for Canadian crude, went in and out of turnaround season, moving prices as they ramped-up runs. Overall, the supply and demand math was straightforward also, tilted towards excess production.

Canadian crude prices were going to continue to be heavily discounted for the next year or two, until one of the new pipeline systems being planned was approved and completed. Western Canadian Select (WCS) — a heavy crude blend and regional benchmark — was averaging at a discount to West Texas Intermediate (WTI) near $40/bbl in November, dragging down Syncrude prices with it.

As the market was settling in for a long, cold winter in Canada, a bombshell dropped:

Alberta’s premier announced on December 2 (2018) that regulators would institute a mandatory production cut, taking 325 Mb/d of production offline, and that the government would invest in new crude-by-rail tankcars. That announcement has had a massive impact on prices, with WCS’s differential narrowing to $18.50/bbl most recently. In today’s blog, we look at several catalysts for the recent swing in Canadian prices, and how the recent governmental intervention will impact differentials.

The fact that Canadian crude has been heavily discounted to WTI at the Cushing (OK) hub is nothing new. We most recently discussed these price differentials and analyzed the price breakdown last spring.

Canadian prices have been subject to massive discounts due to a severe lack of takeaway capacity. WCS has been steadily trading at a double-digit discount to WTI for years due to a limited number of outlets for barrels.

WCS had averaged a discount of $26/bbl in 2018 before widening even further to $50/bbl on October 11.

Syncrude, WCS’s lighter brother (red line), had been averaging a $5/bbl discount before blowing out to $30/bbl in October and $34/bbl in early November. During that time, there was a myriad of bad news engulfing Canadian crude differentials.

The Keystone XL pipeline project, which finally appeared to be heading for daylight, was hit with another ruling from a federal judge to halt construction. Canadian producers Canadian Natural Resources, MEG Energy, Cenovus Energy and ConocoPhillips all announced they were going to cut back on some production until prices improved. And many of those same producers also announced they had signed year-or-longer commitments to ship crude via rail, signaling that they were worried enough about long-term pipeline constraints that they would roll the dice on more expensive, binding take-or-pay rail deals.