Steve Bull's Blog, page 1326
September 1, 2017
Norway Oil and Gas: Reserves, Production and Future Projection
Norwegian oil production peaked in 2000 to 2001; gas production may be peaking about now. Oil hit a low in 2013 and then recovered towards a new local peak, probably concurrent with the gas.
drilling and development
The most surprising thing I find with their industry is that the drop in oil price made almost no difference the drilling activity shown here (all data here and below taken from the NPD – Norwegian Petroleum Directorate – which provides more data than just about any other such organisation).
The chart shows numbers of wells drilled, as stacked bars, and number of operating rigs (unstacked) against the left hand axis, other curves are ratios of total against the right axis. There was a high level of drilling activity in 2013 and 2014 which then actually increased in 2015 and was still high in 2016, although exploration well numbers look to be decreasing now. This may be just a consequence of the momentum built up in the high price years, or because of the influence of Norwegian regulatory regime (which has always sought to smooth out development activity, though less so recently with new Conservative governments), or a move to new frontiers in the Norwegian and Barents Seas (the background area chart shows proportion of wells in each sea). The development wells marked N/A (information not available) are probably mostly oil judging by the fields being drilled, the non-production wells are mostly injection with a few for observation and disposal. The number of rigs and proportion of dry wells have remained pretty steady, as has the proportion of subsea wells.
…click on the above link to read the rest of the article…
Looming Gas Shortage: “Imports Can’t Make Up For This”
The East Coast will start feeling the effects of Hurricane Harvey as the gasoline supplied from the Gulf Coast starts to dry up. One of the most important pipelines that ships refined products to the Eastern Seaboard shut down on Thursday, which means that the U.S. Southeast, Mid-Atlantic, and Northeast could see supply disruptions and price increases.
The Colonial Pipeline carries gasoline, diesel and jet fuel from several refineries in Houston, Port Arthur and Lake Charles, along the Texas and Louisiana Coast, up through the U.S. Southeast to Washington DC, Baltimore, and New Jersey.
The pipeline had been operational through the worst of the Hurricane, easing fears about supply disruptions. But the outages at the nation’s top refineries along the Gulf Coast have forced the Colonial Pipeline company to announce on Wednesday that it was shutting down Line 2, which carries diesel and jet fuel due to “supply constraints.” And on Thursday, the company shuttered Line 1, the pipeline that carries gasoline. The pipeline company said that operations would only resume when it can “ensure that its facilities are safe to operate and refiners in Lake Charles and points east have the ability to move product to Colonial.”
It is hard to overstate the critical role that the Colonial Pipeline plays. It carries 2.5 million barrels of refined products per day, or as the FT notes, “roughly one in every eight barrels of fuel consumed in the country.” More importantly, it is one of the only suppliers for major cities on the eastern seaboard, including New York, Washington DC and Atlanta.
“With no refineries between the Gulf coast and Pennsylvania, the south-east is largely dependent on pipelines from the Gulf coast for their fuel, with Colonial being the largest,” Jason Bordoff, the director of Columbia University’s Centre on Global Energy Policy, told the FT.
…click on the above link to read the rest of the article…
A Hot Mess
It wasn’t until more than a week after Hurricane Katrina slammed into New Orleans in 2005 that the full extent of the damage was recognized and so it will go with the hot mess where Houston used to be. Mostly, it is inconceivable that the business activity which made Houston the nation’s fourth largest city and, according to Chris Martenson, equal to the 10th largest economy in the world, will ever return to what it was before August 26, 2017.
The major activity there has been the refining and distribution of oil products, and no activity is more central to the functioning of the US economy. So the public and our currently clueless leaders across the political spectrum, plus a legacy news media lost in the carnival of race and gender freak shows, is about to discover the dynamic relationship between energy and an industrial economy.
The pivot in this relationship is banking, which enables the conversion of oil’s raw power into everything else that goes on in a so-called advanced economy. The popular assumption is that federal disaster relief can compensate for all losses. That assumption may go out the window with the Houston flood of 2017. And no amount of federal aid can compensate for the hours, days, and weeks that will tick by as businesses struggle to return to something like their former level of normal operation.
Many businesses will never recover, especially the smaller ones that support the big one — the little tool and die shops, the construction outfits, the trucking and shipping concerns, the riggers and pipefitters, the cement companies, and so on. All of that activity existed in highly rationalized chains of on-time production and service and nothing will be on-time in Houston for a long time to come.
…click on the above link to read the rest of the article…
August 31, 2017
Is the CIA Writing Legislation for the U.S. Congress?
Today I want to highlight a troubling bill moving through Congress that seems inspired by a thuggish, authoritarian speech given earlier this year by CIA head Mike Pompeo.
I found that speech so disturbing at the time, I wrote an entire piece taking it apart. Below is an excerpt from that talk which is relevant to this piece:
WikiLeaks walks like a hostile intelligence service and talks like a hostile intelligence service. It has encouraged its followers to find jobs at CIA in order to obtain intelligence. It directed Chelsea Manning in her theft of specific secret information. And it overwhelmingly focuses on the United States, while seeking support from anti-democratic countries and organizations.
It is time to call out WikiLeaks for what it really is – a non-state hostile intelligence service often abetted by state actors like Russia. In January of this year, our Intelligence Community determined that Russian military intelligence—the GRU—had used WikiLeaks to release data of US victims that the GRU had obtained through cyber operations against the Democratic National Committee. And the report also found that Russia’s primary propaganda outlet, RT, has actively collaborated with WikiLeaks.
Pompeo said that in April. Fast forward a few months, and let’s take a look at what the U.S. Senate is up to.
From The Daily Beast:
If the Senate intelligence committee gets its way, America’s spy agencies will have to release a flood of information about Russian threats to the U.S.—the kind of threats that Donald Trump may not want made public.
The committee also wants Congress to declare WikiLeaks a “non-state hostile intelligence service,” which would open Julian Assange and the pro-transparency organization – which most of the U.S. government considers a handmaiden of Russian intelligence – to new levels of surveillance.
…click on the above link to read the rest of the article…
How Long Can U.S. Refineries Remain Offline?
When Hurricane Harvey blew into Texas last weekend, it dumped more than 30 inches of rain, flooding Houston and large areas of southeastern Texas, while leaving thousands homeless or without power. The worst storm to hit the U.S. since 2004 and by some estimates the largest rain-storm in U.S. history, Harvey has had a profound impact on the nation’s largest oil-producing and oil-refining region.
Refinery shutdowns, pipeline closures and other consequences of Harvey has sent the Gulf oil industry into a tailspin while throwing oil markets into disarray. The question facing industry analysts, investors and consumes is how long this chaos will last.
The storm forced several major Gulf refineries to shut their doors and limit operation. ExxonMobil and Total shut down facilities in the Port Arthur and Beaumont areas, while Valero, Marathon and Citgo were forced to reduce operations in refineries from Corpus Christi to Galveston Bay and Texas City.
Motiva, owned by Saudi Aramco, is the largest refinery in the U.S. with a total throughput of overly 600,000 bpd. It was forced to close at 5 a.m. on Wednesday August 30, having already reduced capacity by forty percent on Tuesday. Related: Can Mexico Capitalize On This Golden Oil Opportunity?
In total, some twenty percent of U.S. refinery capacity was affected by the storm. On Tuesday Platts reported that eighteen percent of capacity, or 3.36 million bpd, had been shut-down, while vessel traffic to coastal facilities in Corpus Christi had largely ceased. Another ten percent of capacity remains threatened as the storm moves East.
The shut-downs have sent gasoline prices soaring, offering lucrative opportunities to European refiners and depressed crude, which continues to struggle with over-supply and is now limited by the sudden loss of refinery capacity in the Gulf.
…click on the above link to read the rest of the article…
Harvey Victims Face Toxic Pollution as Hurricane Recovery Begins
TEXAS COMMUNITIES THAT have long experienced health problems from nearby oil refineries and chemical plants are now facing the fossil fuel industry’s longer-term impacts: storms made more severe by climate change and the painful recovery process that follows their landfall — a recovery made far worse by industrial contamination.
A number of low-income communities that sit on the fence-lines of the Gulf Coast petrochemical industry have been hit particularly hard by Hurricane Harvey. On Thursday morning, Hilton Kelley stood at a makeshift first responders headquarters in Port Arthur, Texas, directing out-of-state rescue professionals to parts of his neighborhood where he knew people were probably still trapped. A curfew put in place from 10 p.m. to 6 a.m. was just ending and the streets were eery and barren, with a few alarms going off in nearby buildings. Kelley’s home had filled with a foot and a half of water, and his wife and granddaughter had taken shelter at his soul food restaurant, Kelley’s Kitchen.
“What I saw is really not uncommon to us here that live on the fence-line of these facilities — what I saw was some major flaring at the Motiva refinery and the Flint Hills chemical plant, with black smoke coming off the tips of the flare,” Kelley said. The pungent odor irritated the sinuses and made his eyes squint.
Residents of the mostly black community in Port Arthur have an outsizedcancer mortality rate, and Kelley has fought for years to convince area plants like the Motiva refinery — the largest in the U.S. — to reduce carcinogenic emissions.
Port Arthur residents sit in the auditorium of the Woodrow Wilson Middle School after they were evacuated from the flooding of Hurricane Harvey on Aug. 30, 2017. Photo: Joe Raedle/Getty Images
…click on the above link to read the rest of the article…
Boomers Are Turning 71—These 4 Charts Paint A Perfect Storm It Will Set Off For Investors
Few investors understand the magnitude of the looming demographic crisis and its ramifications.
The first Baby Boomers turned 70 last year. At the same time, the US fertility rate is at its lowest point since records began in 1909.
This disastrous combination means by 2030, those aged 65 and older will make up over 20% of the population.
Source: Mauldin Economics
In the meantime, the percentage of working-age cohorts are in decline. Combined together, these trends create a perfect demographic storm for the US economy.
Here’s why.
A Deflationary Environment
The chart below shows that growth in the working-age population has been a leading indicator of nominal GDP for decades.
Source: Census Bureau, Bureau of Economic Analysis
One of the reasons for that is that spending drops on average by 37.5% in retirement. Given that consumption accounts for 70% of US economic activity, this is a major deflationary force.
Economic growth and corporate profits go hand in hand. Which means this trend will cut down company earnings and, in turn, investors’ returns will go down further.
That’s not yet the worst news. Along with declining profits, America’s aging population has ever more profound implications for investors.
A Big Shift in Financial Markets
According to BlackRock, the average Boomer has only $136,000 saved for retirement. Even assuming 7% returns—when they’re more like 2%—it’s a yearly income of only $9,000. That’s $36,000 shy of the ideal retirement income.
This huge funding gap in pensions means Boomers will be forced to look for income elsewhere. Historically, that has come from bonds.
The research shows once you hit the age of 65, you go through the most profound asset class shift since you were in your 30s. You start to trim your equity and start to raise your bond exposure.
Source: Mauldin Economics
…click on the above link to read the rest of the article…
“Rapidly Intensifying” Hurricane Irma Barreling Straight Toward The East Coast
The National Hurricane Center (NHC) has just updated its forecast for what it is now referring to as a “rapidly intensifying” Category 2 hurricane in the Eastern Atlantic ocean and the results look disastrous for a large swath of the Caribbean and Southeastern United States. Here is a brief summary of Hurricane Irma from the National Hurricane Center released at 11AM EST:
Satellite images indicate that Irma is rapidly intensifying. Very deep convection has formed in the central dense overcast, which is now displaying a small and clearing eye. Dvorak estimates were up to 77 kt at 1200 UTC, and since the cloud pattern continues to quickly become more organized, the initial wind speed is set to 85 kt.
At 1100 AM AST (1500 UTC), the center of Hurricane Irma was located near latitude 16.9 North, longitude 33.8 West. Irma is moving toward the west-northwest near 10 mph (17 km/h). This general motion is forecast through early Friday, followed by a generally westward motion on Saturday.
Maximum sustained winds have increased to near 100 mph (155 km/h) with higher gusts. Irma is forecast to become a major hurricane by tonight and is expected to be an extremely dangerous hurricane for the next several days.
Hurricane-force winds extend outward up to 15 miles (30 km) from the center and tropical-storm-force winds extend outward up to 80 miles (130 km).
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Michael Ventrice ✔@MJVentrice
A 50% chance that the northern Antilles experiences a Hurricane landfall next week; topography may cause models some issues with intensity.
8:46 AM – Aug 31, 2017
Irma is expected to grow into a “major hurricane” within the next 24 hours with maximum sustained winds of 120 mph before growing even stronger throughout the weekend and eventually becoming a Category 4 storm.
The storm is moving west at roughly 10 mph and isn’t expected to pose its first threat to land until next week.
…click on the above link to read the rest of the article…
Google Has Become a Major Threat to Democracy in America
About 10 years ago, Tim Wu, the Columbia Law professor who coined the term network neutrality, made this prescient comment: “To love Google, you have to be a little bit of a monarchist, you have to have faith in the way people traditionally felt about the king.”
Wu was right. And now, Google has established a pattern of lobbying and threatening to acquire power. It has reached a dangerous point common to many monarchs: The moment where it no longer wants to allow dissent.
When Google was founded in 1998, it famously committed itself to the motto: “Don’t be evil.” It appears that Google may have lost sight of what being evil means, in the way that most monarchs do: Once you reach a pinnacle of power, you start to believe that any threats to your authority are themselves villainous and that you are entitled to shut down dissent. As Lord Acton famously said, “Despotic power is always accompanied by corruption of morality.” Those with too much power cannot help but be evil. Google, the company dedicated to free expression, has chosen to silence opposition, apparently without any sense of irony.
In recent years, Google has become greedy about owning not just search capacities, video and maps, but also the shape of public discourse. As the Wall Street Journal recently reported, Google has recruited and cultivated law professors who support its views. And as the New York Times recently reported, it has become invested in building curriculum for our public schools, and has created political strategy to get schools to adopt its products.
It is time to call out Google for what it is: a monopolist in search, video, maps and browser, and a thin-skinned tyrant when it comes to ideas.
…click on the above link to read the rest of the article…
Bill Blain: “I’ve Got October 12th As The Day The Big Equity Crash Occurs”
Submitted by Bill Blain of Mint Partners
The big risk? The ECB taper… what follows?
“It will not always be summer; build barns.”
Today’s sermon is about complacency.
Yesterday, I read in a Fixed Income analyst comment something about the: “robust macro backdrop ahead of the ECB meeting on Sept 7th creating a solid base for risk assets and prompting a steady flow of borrowers to get funding programmes underway..” Sure enough, there is a feeding frenzy developing in the new issue bond market…
Meanwhile, my stock picking chartist Steve Previs warns the gauges he follows, like put/call ratios and VIX, reflect an “overly confident” market. He thinks a top is coming.
Personally, I’ve still got October 12th at 10.30 in the morning tagged as the moment the big equity crash occurs and I get out my buying boots ready for the opportunities that will follow. (Why Oct 12th? Why not..? The date has a nice ring about it as day of manic market mayhem – and the following day is a Friday the 13th… meaning it will panic folk even more!” Mwwwhahahaha..! )
n the fixed income markets I think we’re glossing over the likely pain to come courtesy of the ECB.
What happens post the next ECB meeting, (or more likely the ECB meeting after that, or the one after that, based on the ECB’s predilection for kicking the can down the road)? Forget inflation and growth nonsense.. at some stage the ECB has no choice but to ‘fess up how it’s actually been mutualising European debt, and cut its buying programme. We’re all talking about European normalisation, wondering when, but when it actually happens, please explain exactly how that “solid base for risk assets” works.
…click on the above link to read the rest of the article…
