Masters Of War

Come you masters of war You that build all the guns You that build the death planes You that build all the bombs You that hide behind walls You that hide behind desks I just want you to know I can see through your masks. You that never done nothin' But build to destroy You play with my world Like it's your little toy You put a gun in my hand And you hide from my eyes And you turn and run farther When the fast bullets fly. Like Judas of old You lie and deceive A world war can be won You want me to believe But I see through your eyes And I see through your brain Like I see through the water That runs down my drain. You fasten all the triggers For the others to fire Then you set back and watch When the death count gets higher You hide in your mansion' As young people's blood Flows out of their bodies And is buried in the mud. You've thrown the worst fear That can ever be hurled Fear to bring children Into the world For threatening my baby Unborn and unnamed You ain't worth the blood That runs in your veins. How much do I know To talk out of turn You might say that I'm young You might say I'm unlearned But there's one thing I know Though I'm younger than you That even Jesus would never Forgive what you do. Let me ask you one question Is your money that good Will it buy you forgiveness Do you think that it could I think you will find When your death takes its toll All the money you made Will never buy back your soul. And I hope that you die And your death'll come soon I will follow your casket In the pale afternoon And I'll watch while you're lowered Down to your deathbed And I'll stand over your grave 'Til I'm sure that you're dead.------- Bob Dylan 1963

Thursday, March 23, 2017

Bob Dylan Rolling Stone Interview


Sunday, March 19, 2017

March OPEC report shows global oil glut still building; US horizontal drilling doubles, but uncompleted wells rise...

oil prices continued falling early this past week, but rallied on Wednesday after the EIA's report of the first US oil inventory drawdown in 10 weeks, and ultimately ended the week 29 cents higher at $48.78 a barrel...the early weakness was a continuation of last week's big selloff, as hedge funds who had built up a overwhelmingly long position in oil futures and options continued to head for the exits, and oil prices fell 9 cents to close at $48.40 a barrel on on Monday and then fell to close at $47.72 a barrel on Tuesday, after the Saudis unexpectedly reported that their February oil production had increased...however, after the EIA reported a small decrease in crude supplies and rather large drops in gasoline and distillate supplies on Wednesday, oil prices jumped 2.4% to close at $48.86 a barrel...prices drifted lower on Thursday to close at $48.75 a barrel, and then an attempt at a rally sputtered on Friday, after Baker Hughes reported a double digit increase in active oil drilling rigs, as oil went on to close the week at $48.78 a barrel...

OPEC's March report

since oil pricing, and hence the industry's plans for drilling and fracking in the US, is still largely dependent on what OPEC does, we'll start this week by looking at the new OPEC Monthly Oil Market Report for March (covering February OPEC & global data)...this first table we'll include here is from page 60 of that OPEC pdf and it shows oil production in thousands of barrels per day for each of the OPEC members over the recent years, quarters and months as the column headings are labeled...for all their official production measurements, OPEC uses "secondary sources", such as analyst's reports from satellites and shipping data, as an impartial adjudicator as to whether their output quotas and production cuts are being met, to resolve any potential disputes that could arise if each member reported their own figures...this is also the oil production data we often see quoted in the media, other than that from independent analysis by energy research divisions of organizations such as Platts and Reuters, who will compute their own numbers.. 

February 2017 OPEC crude output via secondary sources

here we can see that this official data shows that OPEC production was down by 139,500 barrels per day to under 32 million in February, from a January oil production total that was revised 42,000 barrels per day lower from what was reported last month...(for your reference, here are the official January figures before these revisions)...recall that OPEC committed to reducing their production by 1.2 million barrels per day from their October levels (shown here, with Indonesia), so these figures show the remaining 13 members are now pretty close to achieving what they agreed to...however, there are a number of different estimates out there, and depending on who's judging their output and their promises, their compliance with their pledged oil output cuts could be anywhere from 71.9% to 111.5%....however, it wasn't these official figures from OPEC that attracted the attention to this report this week, but rather the February production figures that the OPEC members reported to the OPEC Secretariat, which are shown in the next table...

February 2017 OPEC crude output as reported to OPEC

the above table, also from page 60 of the OPEC pdf, shows the oil production in thousands of barrels per day that each of the members reported to OPEC (for those that did report)...although this data is considered suspect because of the many incentives OPEC members have to fudge their data, it attracted attention and precipitated a Tuesday selloff because the Saudis reported that they increased their production by 263,000 barrels per day, rather than cutting production by 68,100 barrels per day like the official totals show...while their 10,011,000 barrel per day output was still within their committed range, the increase put to rest the market consensus that the Saudis would cover for the other OPEC members such as the Emirates (UAE), who have not met their promised cuts...while oil prices rebounded after the Saudis explained the extra production was purely for domestic storage, over 10 million bpd was still more production from the Saudis than had been expected, and cast a pall of uncertainty over the market, whee traders had believed that OPEC had their production reductions under control..

next, we'll include a graph of the total OPEC oil output for all 13 members included in this report, so we can see how this month's production stacks up compared to historical figures... 

March 18 2017 OPEC February output graph

the above graph, taken from the 'OPEC February Production" post at the Peak Oil Barrel blog, shows total oil production, in thousands of barrels per day, for the 13 members of OPEC, for the period from January 2005 to February 2017, using the official data from secondary sources...obviously, we can see that February OPEC production of 31,958,000 barrels per day is down quite a bit from their record production of 33,374,000 million barrels per day in November, achieved during their production run-up before the agreement was reached, but note that their current production is still somewhat more than what they were producing between February and May of 2016, and every other month before that, including last January, when they produced 31,628,000 barrels per day (a figure i arrived at by subtracting Indonesian production from the 14 member total they reported last year.pdf) ...similarly, we find that despite all of the brouhaha over the OPEC production cuts, their February 2017 production of 31,958,000 barrels per day is still 1.2% more oil than what the same 13 countries were producing in February 2016...

this next graphic we'll include shows us both OPEC and world oil production monthly on the same graph, from March 2015 to February 2017, and it comes from page 61 of the March OPEC Monthly Oil Market Report...the light blue bars represent OPEC oil production in millions of barrels per day as shown on the left scale, while the purple graph represents global oil production in millions of barrels per day, with the metrics for that shown on the right scale...global oil production fell to 95.88 million barrels per day in February, while it was still unchanged from a year earlier, and OPEC production of 31,958,000 barrels per day thus represented 33.3% of what was produced globally, a decrease from the 33.5% OPEC share in January and 34.0% in December...but even with the two months of production cuts we can obviously see here, there is still a surplus of oil supply globally, as the table we'll include next will show.. 

March 2017 OPEC report, global supply for February

the table below comes from page 37 of the March OPEC Monthly Oil Market Report, and it shows oil demand in millions of barrels per day for 2016 in the first column, and OPEC's forecast for oil demand by region and globally over 2017 over the rest of the table...note that the forecast for global oil demand in the current first quarter of 2017 is shown on the "Total world" line of the second column, and projections are that during the first three months of this year, all oil consuming areas of the globe will use 95.34 million barrels of oil per day, up from the 95.05 millions of barrels of oil per day they used in 2016...but as OPEC showed us in the supply section of this report and the summary supply graph above, even with their production cuts, the world's oil producers were still producing 95.88 million barrels per day during February...that means that even after all the production cuts have taken place, there continued to be a surplus of more than half a million barrels per day in global oil production... 

March 2017 global oil demand for February via OPEC

The Latest Oil Stats from the EIA

the oil data for the week ending March 10th from the US Energy Information Administration showed a large drop in our imports of crude oil, while refining of such crude was little changed, resulting in the first withdrawal of crude from US storage in 10 weeks...our imports of crude oil fell by an average of 745,000 barrels per day to an average of 7,405,000 barrels per day during the week, while at the same time our exports of crude oil fell by 180,000 barrels per day to an average of 717,000 barrels per day, which meant that our effective imports netted out to 6,688,000 barrels per day during the week, 565,000 barrels per day less than last week...at the same time, our crude oil production rose by 21,000 barrels per day to an average of 9,109,000 barrels per day, which means that our daily supply of oil, from net imports and from wells, totaled an average of 15,797,000 barrels per day during the week...

during the same week, refineries reportedly used 15,472,000 barrels of crude per day, 20,000 barrels per day less than during the prior week, while at the same time, 150,000 barrels of oil per day were being taken out of oil storage facilities in the US...thus, this week's EIA oil figures seem to indicate that we used 475,000 less barrels of oil per day than were supplied by our net oil imports, total oil well production, and what we took out of storage…therefore, in order to make the weekly U.S. Petroleum Balance Sheet balance out, the EIA inserted a phantom -475,000 barrel per day number onto line 13 of the petroleum balance sheet, which the footnote tells us represents "unaccounted for crude oil"...that "unaccounted for crude oil" is further described in the glossary of the EIA's weekly Petroleum Status Report as "the arithmetic difference between the calculated supply and the calculated disposition of crude oil.", which means they got that balance sheet number by backing into it, using the same arithmetic we just used in explaining it...

the weekly Petroleum Status Report also tells us that the 4 week average of our oil imports fell to an average of 7.6 million barrels per day, now 4.4% below that of the same four-week period last year...at the same time, the 4 week average of our oil exports fell to 887,000 barrels per day, still 127.3% higher than the same 4 weeks a year earlier, as our overseas exports of our surplus light oil were barely underway in early 2016...the 150,000 barrel per day draw out of our crude supplies included a 117,000 barrel per day sale from our Strategic Petroleum Reserve, the first of a planned sale of 5 million barrels annually that was planned during the Obama administration, 18 months ago...meanwhile, this week's 21,000 barrel per day oil production increase included a 20,000 barrel per day increase in oil production in the lower 48 states and a 1,000 barrel per day increase in output from Alaska...the 9,109,000 barrels of crude per day that we produced during the week ending March 10th was the most we've produced since the week ending February 12th last year, and was almost 0.5% more than the 9,068,000 barrels per day produced during the week ending March 11th, 2016, while it was still 5.2% below the June 5th 2015 record oil production of 9,610,000 barrels per day... 

US refineries were operating at 85.1% of their capacity in using those 15,472,000 barrels of crude per day, down from 85.9% of capacity the prior week, and down from the year high of 93.6% of capacity in the first week of January, when they were processing 17,107,000 barrels of crude per day....their processing of crude oil is also down by 3.3% from the 15,996,000 barrels of crude that were being refined during the week ending March 11th, 2016, when refineries were operating at 89.0% of capacity....with the ongoing refinery slowdown, gasoline production from our refineries fell by 304,000 barrels per day to 9,540,000 barrels per day during the week ending March 10th, which was 4.7% less than the 10,015,000 barrels per day of gasoline that were being produced during the week ending March 11th a year ago...in addition, refineries' production of distillate fuels (diesel fuel and heat oil) was also down, falling by 83,000 barrels per day to 4,690,000 barrels per day, which was also down by 1.9% from the 4,781,000 barrels per day of distillates that were being produced during the week ending March 11th last year... 

with the decrease in our gasoline production, the EIA reported that our gasoline inventories fell by 3,055,000 barrels to 246,279,000 barrels as of March 10th, after they had dropped by a near record 6,555,000 barrels the prior week....that happened as our domestic consumption of gasoline fell by 14,000 barrels per day to 9,254,000 barrels per day, our gasoline exports fell by 206,000 barrels per day to 535,000 barrels per day, and our imports of gasoline rose by 330,000 barrels per day from last week's 17 year low to 572,000 barrels per day...while our gasoline supplies are thus down by 12,784,000 barrels from the record high set 4 weeks ago, they're only down 1.4% from last year's March 11th high of 249,716,000 barrels, and are still 4.6% above the 235,400,000 barrels of gasoline we had stored on March 13th of 2015... 

our supplies of distillate fuels also fell this week, decreasing by 4,229,000 barrels to 157,303,000 barrels by March 10th, as the amount of distillates supplied to US markets, a proxy for our consumption, increased by 418,000 barrels per day to 4,409,000 barrels per day, and as our imports of distillates fell by 187,000 barrels per day to 79,000 barrels per day, the lowest this heating season, while our exports of distillates fell by 366,000 barrels per day to 964,000 barrels per day....while our distillate inventories are now 2.5% below the bloated distillate inventories of 161,343,000 barrels that we had stored on March 11th 2016, at the end of the warm El Nino winter of last year, they are still 25.0% higher than the distillate inventories of 125,883,000 barrels of March 13th, 2015…   

finally, with our net oil imports considerably lower than in recent weeks while refinery demand for oil was flat, our commercial inventories of crude oil were drawn down for the first time in 10 weeks, decreasing by 237,000 barrels to 528,156,000 barrels by March 10th...at the same time, 816,000 barrels of oil from our Strategic Petroleum Reserve was sold, with 550,000 barrels of going that to Petro China, which left inventories in the SPR at 694,009,000 barrels, a quantity not usually considered when aggregating our oil inventories...thus for current commercial purposes, we still ended the week with 10.3% more crude oil in storage than the 479,012,000 barrels we had at the end of 2016, 7.3% more crude oil in storage than what was then a record 492,160,000 barrels on March 11th of 2016, 24.3% more crude than what was also then a record 425,047,000 barrels in storage on March 13th of 2015 and 53.5% more crude than the 344,183,000 barrels of oil we had in storage on March 14th of 2014...

This Week's Rig Count

US drilling activity increased for the 19th time in 20 weeks during the week ending March 17th, as we also saw the 7th double digit rig increase in the past 9 weeks....Baker Hughes reported that the total count of active rotary rigs running in the US increased by 21 rigs to 789 rigs in the week ending on this Friday, which was 313 more rigs than the 476 rigs that were deployed as of the March 18th report in 2016, but still far from the recent high of 1929 drilling rigs that were in use on November 21st of 2014...

the count of rigs drilling for oil increased by 14 rigs to 631 rigs this week, which was up from the 387 oil directed rigs that were in use a year ago, and nearly double the 316 rigs working on May 27th, but still down from the recent high of 1609 rigs that were drilling for oil on October 10, 2014...at the same time, the count of drilling rigs targeting natural gas formations rose by 6 rigs to 157 rigs this week, which was up from the 89 natural gas rigs that were drilling a year ago, but down from the recent natural gas rig high of 1,606 rigs that were deployed on August 29th, 2008...in addition, a single rig that was classified as miscellaneous was added this week, in contrast to a year ago, when there were no such miscellaneous rigs at work...   

a drilling platform that had been working offshore from Texas in the Gulf of Mexico was shut down this week, which lowered the current Gulf of Mexico count to 19 rigs, still down from the 26 rigs that were drilling in the Gulf during the same week of 2016...that was also down from a total of 27 rigs working offshore of the US a year ago, when there was also a rig working offshore from California, in addition to the 26 rigs that were drilling in the Gulf of Mexico at the time...

active horizontal drilling rigs increased by 19 rigs to 658 rigs this week, which is well more than double the May 27th 2016 total of 314 working horizontal rigs...that's also up by 289 horizontal rigs from the 369 horizontal rigs that were in use in the US on March 18th of last year, but still down from the record of 1372 horizontal rigs that were deployed on November 21st of 2014...at the same time, a net total of 2 vertical rigs were added this week, bringing the vertical rig count up to 70 rigs, which was also up from the 58 vertical rigs that were deployed during the same week a year ago...meanwhile, the directional rig count was unchanged at 61 rigs, which was also up from the 49 directional rigs that were deployed during the same week last year....

as usual, the details on this week's changes in drilling activity by state and by shale basin are included in our screenshot below of that part of the rig count summary pdf from Baker Hughes that shows those changes...the first table below shows weekly and year over year rig count changes for the major producing states, and the second table shows weekly and year over year rig count changes for the major US geological oil and gas basins...in both tables, the first column shows the active rig count as of March 17th, the second column shows the change in the number of working rigs between last week's count (March 10th) and this week's (March 17th) count, the third column shows last week's March 10th active rig count, the 4th column shows the change between the number of rigs running this Friday and the equivalent Friday a year ago, and the 5th column shows the number of rigs that were drilling at the end of that reporting week a year ago, which in this week’s case was for the 18th of March, 2016...           

March 17 2017 rig count summary

noteworthy in this week’s report was the first drop in drilling in the Permian basin of western Texas since October 27th, although with 308 rigs, their active rig total is still more than double their year ago count...although Texas drillers did add 4 rigs this week, the state with the largest increase this week was Oklahoma with 10 rigs, with an increase of 3 rigs in the Arkoma Woodford, while the 3 new Mississippian rigs were also likely in that state, since Kansas shows no change in drilling activity...also note the increase of 5 rigs in North Dakota, possibly in anticipation of the completion of the Dakota Access pipeline, which by cutting shipping costs would increase the wellhead price for Williston basin drillers...and even with the increase of 6 rigs targeting natural gas, the rig count in Ohio's Utica shale still remained unchanged, as 3 natural gas rigs were added in the Arkoma Woodford, 2 were added in the Eagle Ford, and one each was added in the Marcellus and the Haynesville, while one was pulled out of an "other" unnamed basin...note that outside of the major producing states listed above, both New York and Illinois added a rig this week, while Montana had one rig shut down, and now has none, same as a year ago...for New York, that one new rig is the first drilling they've seen since two weeks in July of 2015, while Illinois now has two rigs running, in contrast to a year ago, when they also had none..

DUC report for February

this week also saw the release of the EIA's Drilling Productivity Report for February, which again showed another increase in uncompleted wells nationally, mostly as a result of dozens of newly drilled but uncompleted wells (DUCs) in the Permian basin...as you'll recall, we had expected that with oil prices above $50, some of the DUC well backlog would be completed, but this report again showed that completion of wells slowed even as the drilling rig count rose, as the total count of DUC wells in the US rose from 5,352 in January to 5,443 in February...a month ago, we speculated that slowdown might be the result of a shortage of competent fracking crews, and the oilfield worker shortage issue again got play this week in an article at oilprice.com this week, where they complain that even trucker jobs with an annual paycheck of $80,000 remain unfilled...frackers have now gone nearly two years with just skeleton fracking crews operating in much of the country, and many of those who had worked in the oil fields in the previous boom have since found work elsewhere, so putting together a fracking crew familiar with the latest techniques has become much harder than before..

like in previous months, most of the February DUC increases were oil wells; the Permian basin, which includes the Wolfcamp and several other shale plays in these stats, saw its total count of uncompleted wells rise by 95, from 1,669 in January to 1,764 in February, as we'd expect with the increase in drilling that we've seen in that basin...at the same time, DUCs in the Eagle Ford of south Texas rose by 13, to 1,265 in February, and DUCs in the Haynesville of Louisiana increased by 10 wells to 170...on the other hand, the Niobrara chalk of the Rockies front range saw a decrease in DUCs (which means more wells were being fracked than were being drilled) as the Niobrara DUC count fell from 700 in January to 678 in February...in addition; the Utica also showed a decrease of 5 uncompleted wells and thus had only 92 DUCs remaining at the end of February, and the Marcellus DUC count fell by 4 to 666 uncompleted wells....for the month, DUCS in the 4 oil basins tracked by in this report (ie the Bakken, Niobrara, Permian, and Eagle Ford) increased by 90 wells, while the DUC count in the natural gas regions (the Marcellus, Utica, and the Haynesville) increased by 1 well, even though natural gas DUCs have generally declined since December 2013, as new natural gas drilling fell to record low levels and has barely recovered....

note there's more here...

Political Vision of the Mexican People (1928) - Diego Rivera

Sunday, March 12, 2017

oil price breaks as crude supplies hit another record, OPEC drilling increases again…

oil prices finally broke out of their narrow range this week, with US prices ending the week 9.1% lower than a week ago, as they fell every day this week, with the biggest drop precipitated by reports of a much larger than expected addition to our already record high supplies of crude oil...after closing the prior week down 66 cents at $53.33 a barrel, oil prices continued to weaken early this week, falling to $53.20 a barrel on Monday and to $53.14 a barrel on Tuesday, as traders remained concerned that Russia had failed to cut their production as promised in February...however, after the market closed on Tuesday, the American Petroleum Institute reported a massive 11.6 million barrel increase in US commercial oil inventories, against trader's expectations of a 1.4 million barrel increase, and oil prices began to slide in off market trading...the bottom then fell out of oil prices on Wednesday, when the EIA reported a still excessive 8.2 million barrel increase in US oil supplies, accompanied by a large surge in US oil production, and WTI contracts for April went on to drop $2.86, or 5.4%, to close at $50.28 a barrel...weakness from that crash persisted the rest of the week, as oil prices then fell another dollar to close at $49.28 a barrel on Thursday, steadied and rose back to near $50 a barrel on Friday morning, only to crash back to close at the day's low of $48.49 a barrel on Friday afternoon, after Baker Hughes reported anther double digit increase in active drilling rigs...since this was the largest price move since the OPEC cuts were initiated in November, we'll include a graph below of what it looked like...

March 10 2017 oil prices

this graph shows the daily closing prices per barrel of oil over the past 3 months for the April contract for the US benchmark oil, West Texas Intermediate (WTI), as stored or to be delivered to the Cushing Oklahoma storage depot...after oil prices jumped 14% on the OPEC production cut deal in the last week of November, oil prices then stayed in a narrow range above $52 a barrel for the next three months, with the range becoming even narrower over the last 8 weeks...over that span, with oil prices over $50 a barrel for the first time since early 2015, drilling for oil in the US has increased by nearly 30%, from the 477 rigs that were drilling on December 2nd to the 617 rigs that were working this week...over the year before that, drilling for oil generally held steady or increased slowly after peridos when oil prices were in the $45 to $50 a barrel range, while oil drilling generally slowed after periods when oil price quotes were in the low $40s or below...so we believe that this price break to below $50 a barrel will give drillers and frackers reason to pause, and even should drilling continue to expand from here, it will do so at a much slower and more irregular pace than we've seen over the past 3 months..

moreover, it seems certain that oil prices at these levels make it extremely unlikely that Transcanada can continue to pursue the Keystone XL pipeline, simply because oil sands expansion is out of the question at these price levels...because they have to burn one barrel of oil to extract three, the breakeven cost for extracting oil from Canada’s tar sands is much higher than most other places around the world; most figures i've seen indicate they need $50 US oil prices just to operate the extraction facilities now in existence, without any expansion...Keystone was originally proposed at a time when oil prices were twice what they are now., but 64 of the tar sands projects that were on the drawing board when oil prices first started falling have since been cancelled, with many of of the oil companies involved taking large losses, so the oil that was to fill the Keystone will no longer be there if the pipeline were to be completed...about a year ago, IHS estimated that a new greenfield oil sands mine (without an upgrader) required a WTI price between $85 to $95 per barrel on average to breakeven...a month ago, petrogeologist and oil analyst Art Berman at oilprice.com also showed that it would take at least $85 oil prices for 10 years to develop enough new oil sand projects to fill the Keystone XL…furthermore, there are already two massive Canadian tar sands pipeline projects already approved, which would ship any new dilbit production to the west coast and to the east...the major oil companies see the writing on the wall; just this week, Shell decided to divest nearly all of its Canadian oil sands interests in exchange for $7.25 billion, and Marathon announced an agreement to sell its Canadian subsidiary, including their interest in the Athabasca Oil Sands, and use the proceeds to buy Permian basin assets in Texas...all the deep pocketed major oil companies are getting out of the oil sands, and the small companies left with an interest there do not have the capital wherewithal to expand...

The Latest Oil Stats from the EIA

this week's oil data for the week ending March 3rd from the US Energy Information Administration indicated that our imports of crude oil rose back to near this years average, while our refinery activity fell further below the seasonal norm, resulting in a large surplus of crude for the 9th week in a row, pushing our supplies of oil to yet another an all time high...our imports of crude oil rose by an average of 561,000 barrels per day to an average of 8,150,000 barrels per day during the week, while at the same time our exports of crude oil rose by 179,000 barrels per day to an average of 897,000 barrels per day, which meant that our effective imports netted out to 7,253,000 barrels per day for the week, 385,000 barrels per day more than last week...at the same time, our crude oil production rose by 56,000 barrels per day to an average of 9,088,000 barrels per day, which means that our daily supply of oil, from net imports and from wells, totaled an average of 16,341,000 barrels per day during the week...

meanwhile, refineries reportedly used 15,492,000 barrels of crude per day during the week, 172,000 barrels per day less than during the prior week, while at the same time, 1,137,000 barrels of oil per day were being added to oil storage facilities in the US...thus, this week's EIA oil figures seem to indicate that we used or stored 288,000 more barrels of oil per day than were accounted for by our net oil imports and oil well production…therefore, in order to make the weekly U.S. Petroleum Balance Sheet balance out, the EIA inserted a phantom +288,000 barrel per day number onto line 13 of the petroleum balance sheet, which the footnote tells us represents "unaccounted for crude oil"...that "unaccounted for crude oil" is further described in the glossary of the EIA's weekly Petroleum Status Report as "the arithmetic difference between the calculated supply and the calculated disposition of crude oil.", which means they got that balance sheet number by backing into it, using the same arithmetic we just used in explaining it.....

the weekly Petroleum Status Report also tells us that the 4 week average of our oil imports anomalously fell to an average of 7.879 million barrels per day, now 1.7% below that of the same four-week period last year...meanwhile, the 4 week average of our oil exports rose to 964,000 barrels per day, which was 145.2% higher than the same 4 weeks a year earlier, as the discount on American light sweet crude has made it attractive to foreign buyers...meanwhile, this week's 56,000 barrel per day oil production increase included a 46,000 barrel per day increase in oil production in the lower 48 states and a 10,000 barrel per day increase in output from Alaska...the 9,088,000 barrels of crude per day that we produced during the week ending March 3rd was the highest since the week ending February 19th last year, just barely topping last March 4th's total of 9,078,000 barrels per day, while it was still 5.4% below the June 5th 2015 record oil production of 9,610,000 barrels per day... 

US refineries were operating at 85.9% of their capacity in using those 15,492,000 barrels of crude per day, down from 86.0% of capacity the prior week, and down from the year high of 93.6% of capacity eight weeks earlier, when they were processing 17,107,000 barrels of crude per day....their processing of crude oil is also down by 2.6% from the 15,911,000 barrels of crude that were being refined during the week ending March 4th, 2016, when refineries were operating at 89.1% of capacity....but even with the refinery slowdown, gasoline production from our refineries rose by 388,000 barrels per day to 9,844,000 barrels per day during the week ending March 4th, which turns out to be 2.8% more than the 9,580,000 barrels per day of gasoline that were being produced during the week ending March 4th a year ago...moreover, refineries' production of distillate fuels (diesel fuel and heat oil) was also higher, rising by 18,000 barrels per day to 4,773,000 barrels per day, which was also a bit more than the 4,744,000 barrels per day of distillates that were being produced during the week ending March 4th last year... 

however, even with the increase in our gasoline production, the EIA reported that our gasoline inventories fell by 6,555,000 barrels to 249,334,000 barrels as of March 3rd, for the largest drop in our gasoline supplies since April 2011....factors contributing to that big drop in our gasoline supplies were a 582,000 barrel per day increase to a near normal 9,268,000 barrels per day of domestic consumption of gasoline, and a 215,000 barrel per day drop in our gasoline imports to 242,000 barrels per day, which was the least gasoline we imported in any week since the first week of January 1999...for a historical comparison of this week's drop in gasoline supplies, we have a small graph below taken from a stack of graphs at Zero Hedge...

March 8 2017 gasoline inventories as of March 3

the above graph comes from a set of graphs in an article at Zero Hedge about this week's EIA report...it shows the weekly change in gasoline supplies over the last six and a half years, with increases in gasoline supplies indicated by a green bar above the zero line, and decreases in our gasoline supplies indicated by a red bar below the zero line, with the size of each bar indicating the magnitude of the change...Zero Hedge also includes a dark red dashed line from this week's drop back to the last time there was a drop of this magnitude, which was for the week ending April 8th, 20011, when our gasoline supplies dropped by exactly 7 million barrels in just one week...

now, this week's drop in gasoline supplies is hardly a crisis, because as you might recall just 3 weeks ago our gasoline supplies were at an all time high, beating the record set in the same week of 2016...notice the above graph also shows a series of green bars in early 2017, when our gasoline supplies were on the rise...thus, despite this week's big drop, out gasoline supplies are still up by nearly 28.4 million barrels since the first week of November, only down slightly from the March record high of 250,463,000 barrels of gasoline that we had stored on March 4th of last year, and are still 3.9% above the 239,873,000 barrels of gasoline we had stored on March 6th of 2015... 

our supplies of distillate fuels also fell this week, decreasing by 2,676,000 barrels to 161,532,000 barrels by March 3rd, as the amount of distillates supplied to US markets, a proxy for our consumption, increased by 278,000 barrels per day to 4,091,000 barrels per day, and as our exports of distillates rose by 46,000 barrels per day to a 24 week high of 1,330,000 barrels per day....while our distillate inventories have now slipped 0.6% below the distillate inventories of 162,478,000 barrels that we had on March 4th at the end of the warm winter of last year, they are still 28.7% higher than the distillate inventories of 125,503,000 barrels of March 6th, 2015…  

finally, with our net oil imports higher and our refinery demand lower, we had an even larger surplus of crude oil remaining, and hence our inventories of crude oil rose for the 9th week in a row to yet another record, increasing by 8,209,000 barrels to 528,393,000 barrels by March 3rd...thus we ended the week with 10.3% more crude oil in storage than the 479,012,000 barrels we ended 2016 with, which we can see in the bar graph below..

March 8 2017 crude inventories to March 3 by year'

the above graph comes from an emailed package of graphs from John Kemp, senior energy analyst and columnist with Reuters (see my footnote below) and it shows in bar graph fashion the amount of oil added to US crude inventories between December 31st and the first weekend in March for each of the past 11 years...while surplus crude is normally added to storage during the winter months, when refineries are runnng slower, it's quite obvious that the surpluses have been much larger than average (shown by the red dash) over the past three years...what that has resulted in in terms of increasing supply is then shown in the next graph we'll include below...

March 11 2017 crude oil inventory as of March 3rd

the above graph comes from a weekly pdf booklet of petroleum graphs produced by Yardeni Research, a provider of independent investment and economics research, run by Dr Ed Yardeni...it shows the end of the week supply of crude oil in millions of barrels for each week beginning with January 2013, up to and including this week's report for March 3rd, with graphs for each year color coded as indicated...here we can see how our oil inventories stayed in a narrow range during 2013 and 2014 (and during the years before then, for that matter), represented by the mustard and green bands, typically falling to below 330 million barrels by the end of each summer and then rising to nearly 370 million barrels by early spring....however, at the beginning of 2015, represented by the blue colored graph, our inventories of oil started rising each week till they topped 450 million barrels at the end of April 2015, and then stayed elevated in a range 80 to 100 million barrels above the previous norms over the rest of that year...that continued into 2016, represented by the grape colored graph, and although the rate of increase tailed off from the previous year, our 2016 oil supplies still generally averaged about 15% above 2015's elevated levels, and more than 40% above historical levels...now we see in the scarlet colored graph, representing the first nine weeks of 2017, that our oil supplies are now again rising at an faster rate from the records set in 2016...as a result, we now have 7.7% more crude oil in storage than the then record 490,843,000 barrels we had stored on March 4th of 2016, 27.2% more crude than the 415,425,000 barrels of oil we had in storage on March 6th of 2015 and 56.2% more crude than the 338,333,000 barrels of oil we had in storage on March 7th of 2014...

This Week's Rig Count

US drilling activity increased for the 18th time in 19 weeks during the week ending March 10th, as we saw the 6th double digit rig increase in the past 8 weeks....Baker Hughes reported that the total count of active rotary rigs running in the US increased by 12 rigs to 768 rigs in the week ending on this Friday, which was 288 more rigs than the 480 rigs that were deployed as of the March 11th report in 2016, but still far from the recent high of 1929 drilling rigs that were in use on November 21st of 2014...

the count of rigs drilling for oil rose by 8 rigs to 617 rigs this week, which was up from the 386 oil directed rigs that were in use a year ago, but down from the recent high of 1609 rigs that were drilling for oil on October 10, 2014...at the same time, the count of drilling rigs targeting natural gas formations rose by 5 rigs to 146 rigs this week, which was up from the 94 natural gas rigs that were drilling a year ago, but down from the recent natural gas rig high of 1,606 rigs that were deployed on August 29th, 2008...the rig that was classified as miscellaneous that has been running for several months was finally shut down this week, and thus there are now no such miscellaneous rigs at work...   

two more drilling platforms were added to those working in the Gulf of Mexico this week, both offshore from Louisiana, which brought the Gulf of Mexico count up to 20 rigs, still down from the 26 rigs that were drilling in the Gulf during the same week of 2016...that also brought the total US offshore count for the week up to 20 rigs, all in the Gulf of Mexico, down from a total of 27 offshore rigs a year ago, when there was also a rig working offshore from California, in addition to the 26 rigs in the Gulf of Mexico...also this week, a rig was also set up to drill through an inland lake in Louisiana, where there are now 5 such inland lakes rigs active, up from the 3 that were drilling on inland waters a year ago...

the number of horizontal drilling rigs working in the US increased by 6 rigs to 639 rigs this week, which is now up by 264 horizontal rigs from the 375 horizontal rigs that were in use in the US on March 11th of last year, but still down from the record of 1372 horizontal rigs that were deployed on November 21st of 2014...at the same time, a net total of 6 vertical rigs were added this week, bringing the vertical rig count up to 68, which was also up from the 55 vertical rigs that were deployed during the same week a year ago...meanwhile, the directional rig count was unchanged at 61 rigs, which was also up from the 50 directional rigs that were deployed during the same week last year....

as usual, the details on this week's changes in drilling activity by state and by shale basin are included in our screenshot below of that part of the rig count summary from Baker Hughes that shows those changes...the first table below shows weekly and year over year rig count changes for the major producing states, and the second table shows weekly and year over year rig count changes for the major US geological oil and gas basins...in both tables, the first column shows the active rig count as of March 10th, the second column shows the change in the number of working rigs between last week's count (March 3rd) and this week's (March 10th) count, the third column shows last week's March 3rd active rig count, the 4th column shows the change between the number of rigs running this Friday and the equivalent Friday a year ago, and the 5th column shows the number of rigs that were drilling at the end of that reporting week a year ago, which in this week’s case was for the 11th of March, 2016...         

March 10 2017 rig count summary

the first thing we have to note is that this week's increase came without an increase in drilling in Texas, who did not see an increase for the first time since September...the states with the largest increases this week included Louisiana, with the two new rigs in the Gulf, the one on an inland lake, and two in the Haynesville, and Colorado and Oklahoma, who each added three rigs...Oklahoma's increase does not appear to be of horizontal drilling outfits, since none of the shale basins in that state show a gain. whereas the 4 rig increase in the Denver-Julesburg Niobrara could account for the Colorado or the Wyoming increases....note that the Utica in Ohio added two rigs this week and now has 22 rigs active, double the 11 rigs that were active a year ago....also note that of the states not listed above, Mississippi also added a rig and now has 4 rigs active, up from 2 rigs a year ago, while Nevada saw its only rig, which had been working in the state since July, shut down...

International Rig Counts for February

Baker Hughes also released the international rig counts for February on Tuesday of this past week, which unlike the weekly North American count, is an average of the number of rigs that were running in each country during the month, rather than the total of those rig drilling at month end....Baker Hughes reported that an average of 2,027 rigs were drilling for oil and natural gas around the globe in February, which was up from the 1,918 rigs that were drilling around the globe in January, and up from the 1,761 rigs that were working globally in February of last year....increased North American drilling again accounted for most of the global increase, as the average US rig count rose from 683 rigs in January to 744 rigs in February, which was also up from the average of 532 rigs that were working in the US in February a year ago, while the average Canadian rig count rose from 302  rigs in January to 342 rigs in February, which was also up from the 211 Canadian rigs that were deployed in February a year earlier....outside of Northern America, the International rig count rose by 8 rigs to 941 rigs in February, which was still down from 1,018 rigs a year ago, as increases in drilling in Europe and Latin America more than offset small decreases in Asia and Africa..

the count of rigs deployed in the Middle East was unchanged at 382 rigs in February, after their drilling activity had increased by 6 rigs in January, which still left them down from 404 rigs a year earlier...OPEC member Kuwait, whose compliance with the cartel's agreed to cuts has been on par so far, activated 7 additional rigs in February, and thus had 59 rigs deployed, up from 43 rigs a year earlier...the Qataris, also an OPEC member, also added a rig in February and thus had 11 rigs working, up from the 6 that were drilling new wells a year ago...Bahrain, an island country in the Gulf who is not an OPEC member, also added a rig and now have 2 drilling, in contrast to a year ago, when they had no activity....on the other hand, the Saudis idled 4 of their rigs during the month, and now have 120 rigs active, which is down from the 128 rigs they had working a year ago..still,  Saudi Arabia's rig count had averaged near 125 rigs weekly since early 2015, up from their average of around 105 rigs in 2014, so they've not yet pulled back to the level of drilling they were doing before OPEC started the price war...Egypt, who is not an OPEC member, shut down 2 of their rigs in February, leaving them 23 rigs still active, down from 35 rigs a year earlier...in addition, OPEC members Iraq and Abu Dhabi of the United Arab Emirates, and Israel each shut down 1 rig for the month...for Iraq, that left 40 rigs still active, down from 49 rigs a year earlier, for Abu Dhabi, that left 47 rigs down from 48 a year earlier, andthat  left Israel with no drilling activity, down from 1 active rig a year ago..

meanwhile, the Latin American region saw their active drilling rig numbers increase by a net of 3 rigs to 179 rigs, down from 237 rigs in February of last year, and down from 321 rigs as recently as September of 2015, as the region idled 92 rigs over the first 6 months of 2016...OPEC member Venezuela added 3 rigs and thus had 54 rigs active for the month, which was down from the 69 rigs they had deployed a year earlier...in Argentina, where they had shut down 11 rigs in December and another 7 rigs in January, added two back in February and thus had 54 rigs working, down from 65 a year earlier and down from over the over 100 active rigs Argentina saw through most of 2015...Columbia, also not a cartel member, also added two rigs in February, bringing their active total up to 22 rigs, up from 7 rigs a year earlier....in addition, OPEC member Ecuador added 1 rig rig and thus had 7 rigs active, up from 4 rigs a year earlier...Latin American countries reducing their rig count included Brazil, who was down 2 rigs to 14 rigs, and down from 35 rigs a year ago, and Bolivia, Peru, Guyana, minor producers who each shut down 1 rig...

drilling activity in the Asia-Pacific region slipped by a net of 2 rigs to 196 rigs in February, which was still up from the 182 rigs working ove the region a year earlier...the Chinese shut down 2 more offshore rigs, after they had shut down 5 offshore rigs in January and 3 offshore rigs in December, leaving them with 18 rigs working offshore, down from the 25 offshore rigs they were running last February...India shut down 1 rig but still had 115 rigs active, up from 99 rigs a year earlier....and Vietnam also shut down 1 rig, leaving 3 rigs active, the same as they had a year ago...meanwhile, Thailand added one rig and thus had 13 rigs active, which was still down from 16 rigs a year earlier, and Bangladesh also started drilling with a single rig, in the first drilling in Bangladesh since the end of 2014...

on the other hand, drilling activity picked up in Europe, rising by 9 rigs to 107 rigs rigs, which was was the same number of rigs working in Europe a year ago at this time, as their offshore drilling activity rose from 31 rigs to 38 rigs, also up from the 36 rigs offshore of Europe a year ago...Noway added 4 platforms offshore to bring their total to 16 rigs, all offshore, down from 18 rigs offshore a year ago...the UK also added 3 offshore, increasing their offshore count to 11 rigs, up from 7 rigs offshore last February....Sakhalin Island, off the east coast of Russia but inexplicably included in the European totals, added 2 rigs offshore and 3 on land, bringing their total deployment to 12 rigs, up from 6 rigs a year ago...Romania added 2 land based rigs and shut down 1 offshore, and thus have 7 onshore rigs active, same as a year ago...in addition, Poland added 2 land based rigs and thus had 10 active, up from 7 rigs a year ago, and Greece started up a rig offshore, their first activity since last July...meanwhile, Turkey shut down 3 rigs, leaving them with 29 rigs still working, same as a year ago, Italy shut down one offshore platform, leaving 4 rigs on land still active, the Dutch shut down an offshore rig, leaving them with 2 offshore, and France, Hungary and Iceland each cut back from 2 rigs to one, as none of them ran more than 2 rigs over the recent year...

lastly, the African continent excluding Egypt saw a net decrease of 2 rigs to 77 rigs in February, which was also down from the 88 rigs working in Africa last year at this time...OPEC member Angola shut down 2 rigs, and now has 3 rigs active, also down from the 8 rigs they had active a year earlier..OPEC member Algeria shut down 1 rig, leaving 50 rigs still working in Algeria, down from the 52 rigs they had a year ago...Tunisia shut down 1 of the two rigs they had active, which is still more than a year ago when they had no rigs active...on the other hand, OPEC member Nigeria, who is exempt from the organization's production cuts for the time being, added 1 rig and now have 7 rigs working, which was still down from the 9 rigs they had deployed a year ago, and Senegal started up a single rig in their first drilling activity since May of last year...finally, note that Iranian, Russian, and Chinese rig counts are not included in this Baker Hughes international data, although we did note that China's offshore area, with an average of 18 rigs active in February, were included in the Asian totals here...  

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as noted above, one of the graphs that i included above was from an emailed package of graphs from John Kemp, a senior energy analyst and columnist with Reuters...he advises that his mailing list is open to anyone, quoting him: "SIGN UP to receive a free daily digest of best in energy news + my research notes by emailing john.kemp@tr.comi've been receiving a daily mailing of links & graphics, copies of his columns as published, and a weekly pdf of graphs... so if anyone is interested in receiving the same, just write to John Kemp as noted above...alternatively you can also follow him on twitter, @ https://twitter.com/JKempEnergy where he seems to post much of what he otherwise mails....

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note:  there’s more here

Sunday, March 5, 2017

more on US LNG export capacity additions, another record for crude supplies, et al

oil prices finished lower this week, but still remained in the same $2 trading range that they've been in for most of this year... prices barely budged on Monday, as US crude for April rose 6 cents, or 0.1%, to settle at $54.05 a barrel while the expiring April contract for Brent crude, the international benchmark price, fell 6 cents, or 0.1%, to $55.93 a barrel...US crude futures then gave up 4 cents of their Monday gains in trading on Tuesday, as traders anticipated that the after market release of oil industry inventory data from the American Petroleum Institute would show an eighth consecutive increase in US crude supplies...oil prices then slipped 18 cents to $53.83 as the expected inventory build materialized, but its impact was muted by news that OPEC compliance with the pledged output cuts had risen to 94% in February...prices then fell more than 2 percent on Thursday to close at $52.61 a barrel after news that Russian crude production remained unchanged in February, therefore meaning they were still producing 200,000 barrels per day more than they had promised...oil prices then found support on Friday after reports emerged that extra production cuts by the Saudis put OPEC compliance near 100%, and went on to close the week at $53.33 a barrel, up 72 cents for the day but still down 66 cents for the week...

natural gas prices, meanwhile, were up every day this week after Monday, but still ended lower than their February 17th print and more than 28% below their post Christmas high....while there is typically little daily news to indicate the underlying reasons for natural gas price changes, Monday saw April natural gas prices fall to $2.693 per mmBTU, after last week's March contract expired at $2.787 per mmBTU...from there it climbed to $2.774 per mmBTU on Tuesday, to $2.799 per mmBTU on Wednesday, to $2.804 per mmBTU on Thursday, and finally to $2.827 per mmBTU on Friday, up 5 cents from last week, despite the fact that the weekly natural gas storage report showed a net increase of 7 billion cubic feet for the week ending February 24th, the first time surplus gas was ever added to storage in February...

of course, these daily quotes are for April natural gas at the Henry Hub in Louisiana, and actual natural gas selling prices vary widely across the country....at the time Henry Hub gas for March was selling for at $2.62/MMBtu on Wednesday, down 77 cents month over month, gas at the Algonquin city gates in Ontario was trading at $3.26/MMBtu, down $4.13 month on month, gas at the New England border was selling for $2.98/MMBtu, while three large terminals in the Appalachians saw gas below $2...that depressed price for Appalachian natural gas is a function of still inadequate pipeline capacity, which keeps natural gas prices for heating and electricity in our region lower than the rest of the country, while simultaneously slowing further increases in drilling and associated fracking...we can expect that advantage to end soon, given the pipelines that are now under construction, or soon to start....

the EIA's Natural Gas Weekly Update for the week ending March 1, 2017 featured a 'news for the week' headline of "U.S. liquefaction capacity continues to expand", and since our own focus of last week's newsletter was on the expansion of LNG exports, we'll start today with a graph from that EIA weekly report, which will provide us with a timeline for the expansion of that export capacity..

March 4 2017 LNG capacity additions under construction

the above graphic, taken from this week's Natural Gas Weekly Update, shows the expected completion time and the natural gas capacity for each of the liquefied natural gas (LNG) trains now under construction in the US...each of these trains are color coded as to which LNG plant they are part of, and the size of the bar represents the capacity in billions of cubic feet of gas per day that the train is expected to process when it's completed...briefly, each of these "trains" takes raw natural gas as it comes out of the delivery pipeline and removes all the impurities that are normally in the raw gas that can't be included in LNG because they freeze at different temperatures than methane, then lowers the temperature of the pure methane to approximately −260 °F, at which point the gas becomes liquid and thus takes up about 1/600th the volume of natural gas in the gaseous state...it is then stored in supercooled tank farms at the terminal until it is ready to be loaded onto ocean going tankers...(btw, if LNG should ever come in contact with even cold water, it will explode to 600 times its volume)

the sky blue bars above represent trains 4 and 5 of the Sabine Pass LNG facility at Sabine Pass, Louisiana, on the Gulf of Mexico at the Texas border, which now has three LNG trains already in operation...the "nameplate capacity" of each of the Sabine Pass trains is 0.7 billion cubic feet of gas per day, but the three existing trains are now processing 2.3 billion cubic feet of gas per day, so i assume these capacities aren't cast in stone...the 4th train of Sabine Pass is expected to be operational in the 3rd quarter of this year, and thus will shortly boost our national natural gas exports up to 3.0 cubic feet of gas per day...following that, train 1 of the export facility at Cove Point Maryland, indicated by the brown bar, is expected to add another 0.7 billion cubic feet of gas per day of liquefaction and export capacity in the 4th quarter of this year....Cove Point was originally an LNG import and storage terminal, so what were once distribution pipelines from that facility will now be the pipelines that will be delivering fracked gas from the Marcellus and Utica shales to that terminal for export..

the rest of the liquefaction and export capacity now under construction will not be complete until the second half of 2018 or later...Elba Island LNG, located in Georgia, is shown in grey and featured in  this week's Natural Gas Weekly Update...Elba Island will be using a new technology that will consist of ten small-scale liquefaction trains, each with a capacity to liquefy approximately 33 million cubic feet per day (MMcf/d), with 6 to be completed in the 3rd quarter of next year, and 4 to be added at the beginning of 2018, for a total project export capacity of 0.35 billion cubic feet per day...at the same time, the first train of Cameron LNG Liquefaction Project in Hackberry, Louisiana, indicated in green, will add another 0.7 billion cubic feet of gas per day of liquefaction and export capacity in the 3rd quarter of next year, with additional 0.5 billion cubic feet of gas per day trains to be added at that facility in the 4th quarter of 2018 and the 3rd quarter of 2019...Cameron trains 4 and 5, currently on the drawing board, are not included in the above graphic of under construction facilities...

in the 4th quarter of 2018, the first train of the Freeport Liquefaction and Export Project, indicated by orange bars, will be completed, adding another 0.7 billion cubic feet of gas per day of liquefaction and export capacity, and they'll add similar sized trains in the 2nd quarter and 4th quarter of 2019...they already have 20 year contracts to sell the output of that LNG terminal to Toshiba, BP, Osaka Gas and Chubu Electric, which means they'll have a claim to US natural gas production before Americans will...lastly, the first two trains of the Corpus Christi Liquefaction facility, shown in a wine color, will be added in the 1st and second quarters of 2019...this was originally an LNG import and regasification terminal run by Cheniere Energy, the parent of the Sabine Pass facility, and is being refitted to liquefy and export LNG...when the plants represented by the graphic above are completed, the US is projected to have a 9.4 billion cubic feet per day liquefaction and export  capacity, the third largest in the world, just behind that of Australia and Qatar...that would represent about 10% of our total natural gas production, assuming there no major changes in our own consumption over the next three years..

The Latest Oil Stats from the EIA

this week's oil data for the week ending February 24th from the US Energy Information Administration indicated that our imports of crude oil increased from the prior week's depressed levels, that our refinery activity also increased from last week's two year low but remained below normal, and that we again had a surplus of crude added to our stockpiles for the 8th week in a row, which were thus at another an all time high...our imports of crude oil rose by an average of 303,000 barrels per day to an average of 7,589,000 barrels per day during the week, while at the same time our exports of crude oil fell by 490,000 barrels per day to an average of 721,000 barrels per day, which meant that our effective imports netted out to 6,868,000 barrels per day for the week, 793,000 barrels per day more than last week...at the same time, our crude oil production rose by 31,000 barrels per day to an average of 9,032,000 barrels per day, which means that our daily supply of oil, from net imports and from wells, totaled an average of 15,900,000 barrels per day during the week...

meanwhile, refineries reportedly used 15,664,000 barrels of crude per day during the week, 393,000 barrels per day more than during the prior week, while at the same time, 214,000 barrels of oil per day were being added to oil storage facilities in the US...thus, this week's EIA oil figures seem to indicate that we used or stored 22,000 less barrels of oil per day than were accounted for by our net oil imports and oil well production…therefore, in order to make the weekly U.S. Petroleum Balance Sheet balance out, the EIA inserted a phantom -22,000 barrel per day number onto line 13 of the petroleum balance sheet, which the footnote tells us represents "unaccounted for crude oil"...that "unaccounted for crude oil" is further described in the glossary of the EIA's weekly Petroleum Status Report as "the arithmetic difference between the calculated supply and the calculated disposition of crude oil.", which means they got that balance sheet number by backing into it, using the same arithmetic we just illustrated.....

the weekly Petroleum Status Report also tells us that the 4 week average of our oil imports fell to an average of 8.185 million barrels per day, now just 5.1% higher than the same four-week period last year...meanwhile, the 4 week average of our oil exports was at 881,000 barrels per day, which is noted as 122.5% higher that a year earlier...that apparent big jump in our oil exports has led some in the media to suggest our oil exports are replacing those oil exports held off the global markets by OPEC...however, that's a percentage increase off a very small base, and our year to date oil exports which averaged have 763,000 barrels per day only represent 341,000 more barrels per day than last year's average of 421,000 barrels per day....at the same time, our oil imports have increased by 413,000 barrels per day from a year ago, from an average of 7,871,000 barrels per day during the first 8 weeks of 2016 to an average of 8,284,000 barrels per day this year....what appears to be happening is that we are exporting light sweet crude which we have an abundance of, and importing heavier sour crudes which our refineries are optimized to use...so while our oil exports may rise as we unload our surplus light oil, because we're importing even more oil to replace what we're exporting, our exports are not a threat to the OPEC cuts..

meanwhile, this week's 31,000 barrel per day oil production increase was facilitated by a 32,000 barrel per day increase in oil production in the lower 48 states, while at the same time oil output from Alaska fell by 1,000 barrels per day...our crude oil production of 9,032,000 barrels during the week ending February 24th was the most we've produced since mid-March of last year and was only a half percent lower than the 9,077,000 barrels of crude per day that we produced during the week ending February 26th of last year, while it remained 6.0% below our record for oil production of 9,610,000 barrels per day that we set during the week ending June 5th 2015  ..

US refineries were operating at 86.0% of their capacity in using those 15,664,000 barrels of crude per day, up from 84.3% of capacity the prior week, but down from the year high of 93.6% of capacity seven weeks earlier, when they were processing 17,107,000 barrels of crude per day....their processing of oil is also still down by 1.2% from the 15,852,000 barrels of crude that were being refined during the week ending February 26th, 2016, when refineries were operating at 88.3% of capacity....but even with the refinery pickup, gasoline production from our refineries was little changed, rising by just 27,000 barrels per day to 9,456,000 barrels per day during the week ending February 24th, which as it turns out was 1.3% more than the 9,335,000 barrels per day of gasoline that were being produced during the week ending February 26th a year ago, when gasoline output inexplicably slumped for a week...at the same time, refineries' production of distillate fuels (diesel fuel and heat oil) rose by 288,000 barrels per day to 4,755,000 barrels per day, which was still a bit less than the 4,801,000 barrels per day of distillates that were being produced during the week ending February 26th last year... 

with the nominal increase in our gasoline production, the EIA reported that our gasoline inventories fell by 546,000 barrels to 255,889,000 barrels as of February 24th, as our domestic consumption of gasoline inched up by 23,000 barrels per day to a still below normal 8,686,000 barrels per day, while our gasoline exports rose by 43,000 barrels per day to 891,000 barrels per day and our gasoline imports rose by 90,000 barrels per day to 457,000 barrels per day...however, even with this week's inventory draw down, our gasoline supplies were at an all time high for the 3rd week in February, as they were up slightly from the 254,989,000 barrels of gasoline that we had stored on February 26th of last year, while they were 6.6% above the 240,060,000 barrels of gasoline we had stored on February 20th of 2015... 

even with the large increase in our distillates production, our supplies of distillate fuels also fell, decreasing by 925,000 barrels to 165,133,000 barrels by February 24th, which was still much less of a drop than the 4,924,000 barrel drawdown of distillates last week...that was as the amount of distillates supplied to US markets, a proxy for our consumption, fell by 479,000 barrels per day to 3,813,000 barrels per day, and as our imports of distillates rose by 81,000 barrels per day to 210,000 barrels per day, while our exports of distillates rose by 277,000 barrels per day to 1,284,000 barrels per day....even so, our distillate inventories are still 0.4% higher than the distillate inventories of 160,715,000 barrels of February 26th during the warm winter of last year, and 33.5% above the distillate inventories of 122,976,000 barrels of February 27th, 2015…  

finally, with the increase in our net oil imports significantly larger than the increase in refinery demand, we again had surplus crude remaining, and hence our inventories of crude oil rose for the 8th week in a row to yet another record, as they increased by 1,501,000 barrels to 520,184,000 barrels by February 24th...thus we ended the week with 8.6% more crude oil in storage than the 479,012,000 barrels we ended 2016 with, 6.9% more crude oil in storage than the then record 486,699,000 barrels we had stored on February 26th of 2016, 26.8% more crude than the 410,246,000 barrels of oil we had in storage on February 27th of 2015 and 56.5% more crude than the 332,453,000 barrels of oil we had in storage on February 28th of 2014...so you can all see what those record supplies look like, we'll include a picture of the interactive graph that accompanies the ending stocks of crude oil page at the EIA, which is much easier to understand than the complicated graphs on this that we've featured recently...

March 4 2017 crude supplies for February 24th

This Week's Rig Count

US drilling activity increased for the 17th time in 18 weeks during the week ending March 3rd, but just barely....Baker Hughes reported that the total count of active rotary rigs running in the US increased by just 2 rigs to 752 rigs in the week ending on this Friday, which was still 267 more rigs than the 489 rigs that were deployed as of the March 4th report in 2016, but far from the recent high of 1929 drilling rigs that were in use on November 21st of 2014...

the count of rigs drilling for oil rose by 7 rigs to 609 rigs this week, which was up from the 392 oil directed rigs that were in use a year ago, but down from the recent high of 1609 rigs that were drilling for oil on October 10, 2014...meanwhile, the count of drilling rigs targeting natural gas formations fell by 5 rigs to 146 rigs this week, which was still up from the 97 natural gas rigs that were drilling a year ago, but down from the recent natural gas rig high of 1,606 rigs that were deployed on August 29th, 2008...there also remained a single rig that was classified as miscellaneous, which is marked as a 1 rig increase from a year ago, when there were no such miscellaneous rigs at work...   

one more drilling platform was added to those working in the Gulf of Mexico this week, this time offshore from Texas, which brought the Gulf of Mexico count up to 18, still down from 24 during the same week of 2016...that also brought the total US offshore count for the week up to 18 rigs, all in the Gulf of Mexico, down from 24 offshore rigs a year ago, when they also were all in the Gulf of Mexico...

the number of horizontal drilling rigs working in the US increased by 9 rigs to 633 rigs this week, which is now up by 244 horizontal rigs from the 389 horizontal rigs that were in use in the US on March 4th of last year, but still down from the record of 1372 horizontal rigs that were deployed on November 21st of 2014...at the same time, a net of 1 vertical rig was added this week, bringing the vertical rig count up to 62, which was also up from the 58 vertical rigs that were deployed during the same week a year ago...on the other hand, 8 directional rigs were taken out of service during the week, cutting the directional rig count back to 61, which was still up from the 42 directional rigs that were deployed during the same week last year....

as usual, the details on this week's changes in drilling activity by state and by shale basin are included in our screenshot below of that part of the rig count summary from Baker Hughes that shows those changes...the first table below shows weekly and year over year rig count changes for the major producing states, and the second table shows weekly and year over year rig count changes for the major US geological oil and gas basins...in both tables, the first column shows the active rig count as of March 3rd, the second column shows the change in the number of working rigs between last week's count (February 24th) and this week's (March 3rd) count, the third column shows last week's February 24th active rig count, the 4th column shows the change between the number of rigs running this Friday and the equivalent Friday a year ago, and the 5th column shows the number of rigs that were drilling at the end of that reporting week a year ago, which in this week’s case was for the 4th of March, 2016...        

March 3 2017 rig count summary

as you can see above, the rig count increases this week were in the oil basins that saw their largest expansion earlier in the decade and have been more or less ignored recently, as the Permian and the SCOOP / STACK in Oklahoma's Cana Woodford have been in ascendancy....the Eagle Ford of south Texas, which once hosted 259 rigs, added 5 this week to bring their total back up to 69 rigs, while the Williston basin of North Dakota, home of Bakken crude, which had 224 rigs at that time, added 3 rigs this week to get their count back up to 38 rigs...meanwhile, the three major gas basins, the Marcellus, the Utica, and the Haynesville, each saw one rig pulled out, while 2 gas rigs were also removed from unnamed "other basins"...since Pennsylvania saw a 2 rig decrease and the Ohio rig count remained unchanged at 19 rigs, it's apparent that the Utica shale rig which was shut down this week had been drilling in Pennsylvania..

 

note:  there’s more here..

Sunday, February 26, 2017

the coming LNG export wave; oil refining at a two year low, refinery utilization at a 4 year low, oil exports at all time high

oil again traded in a narrow price range this week, ending about 1.0% higher at $53.99, although such a week over week comparison really shouldn't be made, because this week's prices were for April delivery, while last week's price quotes were for March oil...after closing last week at $53.40 a barrel, March oil traded 22 cents higher on the Presidents’ Day holiday for settlement on Tuesday as traders again played rising U.S. drilling activity against OPEC production cuts....prices then rose to near three-week highs on Tuesday after OPEC Secretary General Mohammad Barkindo told an oil conference that compliance with the output cuts was above 90 percent and that oil supplies would fall, with the expiring March contract closing out at $54.06 and the new front month April contract up 1% to $54.37...prices for April oil then fell about 1.5% on Wednesday on expectations of another surge in U.S. inventories, which were to be reported after the market closed at 4:30 PM, with that April contract closing at $53.59 a barrel...however, oil prices bounced back to close at $54.45 a barrel on Thursday after API estimates of supply indicated a small draw, with distillates seeing the largest draw since October 2014...oil prices then fell back on Friday, after EIA data showed an increase in both crude production and inventories, and yet another record high for the later, and ended the session 46 cents lower at $53.99 a barrel....

on the other hand, natural gas prices took another tumble this week, with the contract for March falling from a quote of $2.834 per mmBTU on Monday to $2.564 per mmBTU on Tuesday, as the post holiday markets opened to record warmth across a broad swath of the country...that price for March natural gas then recovered a bit in light trading, to $2.592 per mmBTU on Wednesday and to $2.617 per mmBTU on Thursday, when trading in the March natural gas contract expired...prices for the April natural gas contract then rose 3.8 cents to close at $2.787 on Friday, as increasing power loads and modestly higher peak power forecasts helped support prices...

as we pointed out last week, natural gas drilling activity has typically slowed at these price levels, only picking up when price quotes approach $4 per mmBTU, such that drillers can usual contract to sell their initial high output at prices above those levels...so while indications are that contract prices will stay below those break even levels in the near term, the specter that natural gas exports will eventually put pressure on supplies and raise prices to stimulate more drilling is still a threat we'll have to deal with...that was brought to the fore by two reports that were released this week, both of which forecast higher future demand for US LNG (liquefied natural gas) exports...

the first report, released Monday, was Royal Dutch Shell’s Outlook, an annual report which had previously been released by British Gas (BG), who Shell bought out early last year...they expect global natural gas demand to average an annual increase of 2% a year between 2015 and 2030, with LNG demand expected to rise at twice that rate, at 4 to 5% per year...in the year just ended, LNG import demand grew by 17 million tons to 265 million tons...the bar graph below from Shell shows where most of the growth in LNG imports came from last year:

February 25 2017 LNG import growth

the above graphic comes from page 9 of the the slide booklet of the 2017 Shell LNG Outlook and it shows the counties that increased their LNG imports last year, and by how much...in addition, those countries who were not LNG importers in 2015 are indicated in red, so all of their 2016 imports thus represent increased demand...note the US is the 3rd from the left, as even we increased LNG imports a bit last year...according to Shell, future demand for LNG will come from 2 groups of countries; those where LNG will be needed to replace declining domestic production, which includes countries such as India, Thailand, Malaysia, Indonesia, Kuwait, the Emirates, and Egypt, and those where LNG will supplement existing pipeline or domestic supplies, such as China, southern Europe and eastern Europe...

the second report that projected rising LNG demand was from the Wednesday release of the EIA's daily "today in energy" series, and was titled Liquefied natural gas exports expected to drive growth in U.S. natural gas trade...projecting from the Annual Energy Outlook 2017 base reference case, they expect us to become a net exporter of natural gas on an average annual basis by 2018...this will occur as our imports of natural gas from Canada fall and as our LNG exports increase, as they expect four more LNG export facilities that are currently under construction to be completed by 2021...the lead graphic from that report, which we'll include below, shows how this plays out over the next 20 years...

February 23 22017 natural gas trade projections

the above graphic, which we've copied from Wednesday's release Today in Energy, shows our imports of natural natural gas in trillions of cubic feet as a negative below the zero line, and our exports of natural gas in  trillions of cubic feet as a positive above the zero line, with historical data represented for the years from 1980 to 2016, and projections shown for the years from 2017 to 2040...below the zero line, our natural gas pipeline imports from Canada are shown in pink, and our LNG imports are represented by light blue...above the line, our natural gas pipeline exports to Mexico are represented by the burnt orange shading, our pipeline exports to Canada are represented by the rose shaded section, and our projected LNG exports from existing and under construction port facilities are represented by the navy blue shaded part of the graph...while we've had weeks in 2017 where our exports may have exceeded our imports, and will likely have such weeks again in 2017, this projection is on an annual basis, and according the EIA, we were a small natural gas net importer in 2016 and will again be an importer in 2017....clearly, our current LNG exports are still so small they barely show up in 2016 on a graph of this scale...

right now, only one U.S. export facility is currently in operation, Sabine Pass, on the Gulf of Mexico border between Texas and Louisiana, where just 4.5 million tons per annum is operational, and 27 million tons per annum is still under construction... however, the Federal Energy Regulatory Commission has approved natural gas export terminals with a capacity of 17 billion cubic feet (bcf) per day, which would represent the offshoring of about 19% of current U.S. natural gas production...furthermore, if all terminals for which applications are pending or expected are included, the quantity of our LNG exports goes up to 42 billion cubic feet (bcf) per day, or about 47 percent of our current natural gas production...right now, roughly 40% of our natural gas production comes from the old legacy gas fields in the south, primarily in Texas and Louisiana, while the other 60% of our output comes from 7 shale basins, with the Marcellus and the Utica account for roughly half of that...should all these export terminals be pushed through, however, almost all of the new gas will have to come from the pure natural gas shale plays, the Marcellus, the Utica, and the Haynesville, which means there will be a massive expansion of drilling and fracking to meet these natural gas export requirements...

Australia is a bit ahead of us in exporting LNG, and their experience should give us a sense of what our coming LNG exports will do to U.S. natural gas prices...contracts for natural gas exports are written well in advance of delivery, and as a result Australians living in the country's eastern region ended up paying more than twice as much for natural gas last winter than did Japanese customers taking delivery of liquefied natural gas (LNG) from the same fields...the same could easily happen here...presently, US gas futures prices are generally below $3 per mmBTU, while current LNG prices in Japan are over $7 per mmBTU...even worse, just a couple weeks ago Spain was paying more than $10 per mmBTU for LNG...if an US gas exporter contracts to deliver LNG to Japan or Spain at those prices, they'll get the gas from US shale production before US customers who dont have a contract do...if that should occur during a cold snap in mid winter, a shortage of natural gas could develop domestically, sending our prices skyrocketing...and in such a case, some of us who cant afford the higher priced natural gas simply wont get it....we know this happens, because just three years ago an LP gas shortage developed in the US for exactly the same reason, and as US LP gas prices spiked while our LP gas exports soared, a North Dakota Standing Rock Sioux woman was found dead, froze to death in her mobile home, with an empty propane tank...we can expect the same to happen here once natural gas prices rise to levels beyond which those on fixed income can afford it...

The Latest Oil Stats from the EIA

this week's oil data for the week ending February 17th from the US Energy Information Administration showed that our imports of crude oil fell to the lowest level since October and our refining of that crude oil fell for the 6th week in a row to the lowest rate in two years, leaving us with a small surplus of crude to add to our stored oil supplies, which thus were at another an all time high...our imports of crude oil fell by an average of 1,205,000 barrels per day to an average of 7,286,000 barrels per day during the week, while at the same time our exports of crude oil rose by 185,000 barrels per day to an average of 1,211,000 barrels per day, which meant that our effective imports netted out to 6,075,000 barrels per day for the week, 1,390,000 barrels per day less than last week...at the same time, our crude oil production rose by 24,000 barrels per day to an average of 9.001,000 barrels per day, which means that our daily supply of oil, from net imports and from wells, totaled an average of 15,076,000 barrels per day during the week...

meanwhile, refineries reportedly used 15,271,000 barrels of crude per day during the week, 187,000 barrels per day less than during the prior week, while at the same time, 81,000 barrels of oil per day were being added to oil storage facilities in the US...thus, this week's EIA oil figures seem to indicate that we used or stored 276,000 more barrels of oil per day than were accounted for by our net oil imports and oil well production…therefore, in order to make the weekly U.S. Petroleum Balance Sheet balance out, the EIA inserted a phantom 276,000 barrel per day number onto line 13 of the petroleum balance sheet, which the footnote tells us represents "unaccounted for crude oil"...that "unaccounted for crude oil" is further described in the glossary of the EIA's weekly Petroleum Status Report as "the arithmetic difference between the calculated supply and the calculated disposition of crude oil.", which means they got that balance sheet number by backing into it, using the same arithmetic we just illustrated.....

the weekly Petroleum Status Report also tells us that the 4 week average of our oil imports fell to an average of 8.36 million barrels per day, still 7.5% higher than the same four-week period last year...at the same time our crude oil exports at 1,211,000 barrels per day was another new record for oil exports, beating the record set last week, and as a result our crude oil exports are now averaging 3 times what we were exporting last February...meanwhile, this week's 24,000 barrel per day oil production increase included a 17,000 barrel per day increase in oil production in the lower 48 states and a 7,000 barrel per day increase in output from Alaska...topping 9 million barrels per day for the first time since last April, our crude oil production for the week ending February 17th was just 1.1% lower than the 9,102,000 barrels of crude that we produced during the week ending February 19th of last year, while it remained 6.3% below our June 5th 2015 record oil production of 9,610,000 barrels per day...

the 15,271,000 barrels of crude per day that were refined this week was down by 10.7% from the 17,107,000 barrels per day being refined during the first week of this year, and 2.4% less than the 15,685,000 barrels being refined during the same week last year....US refineries were operating at 84.3% of their capacity in the week ending February 17th, their lowest operating rate in nearly 4 years, down from 85.4% of capacity the prior week and down from the 87.3% capacity utilization rate during the week ending February 19th year ago...since we're at an interim nadir for refinery throughput and capacity utilization this week, we'll include a graph of what that looks like compared to historical trends below...

February 23 2017 refinery throughput for Feb 17

the above graph comes from an emailed package of graphs from John Kemp, who is a senior energy analyst and columnist with Reuters (see my footnote below)...this graph shows US refinery throughput in thousands of barrels by "day of the year" for the past ten years, with the past ten year range of our refinery throughput on any given date shown in the light blue shaded area, and the median of our refinery throughput, or the middle of the daily range, traced by the blue dashes over each day of the year...the graph also shows the number of barrels of oil refined for each week in 2016 traced weekly by a yellow line, with our year to date oil refining for 2017 represented in red...there is an obvious seasonality to oil refining, with demand highest in the summer and again around the holidays, but we can still see that for most all of 2016 and the first five weeks of 2017, oil refining was either at seasonal record highs or near the top of the average range...however, with domestic inventories of gasoline, distillates and most other refined products also at record levels in recent weeks, storage space for refined products has been stretched to its limits, profit margins for refineries fell to the lowest in a year, and thus refiners have cut back on the amount of oil they processed...

however, even though they refined less oil this week, gasoline production from those refineries still rose by 479,000 barrels per day to 9,429,000 barrels per day during the week ending February 17th, which was still 5.4% less than the 10,009,000 barrels per day of gasoline that were produced during the week ending February 19th a year ago...meanwhile, refineries' production of distillate fuels (diesel fuel and heat oil) also rose, increasing by 136,000 barrels per day to 4,467,000 barrels per day, which was up fractionally from the 4,438,000 barrels per day of distillates that were being produced during the week ending February 19th last year, during a mild El Nino winter... 

however, even with the increase in our gasoline production, the EIA reported that our gasoline inventories fell by 2,628,000 barrels to 256,435,000 barrels as of February 17th, in the second drop in our gasoline supplies in the past 8 weeks...that happened as our domestic consumption of gasoline rose by 230,000 barrels per day to a still below normal 8,663,000 barrels per day, while our gasoline exports rose by 293,000 barrels per day to 848,000 barrels per day and our gasoline imports fell by 238,000 barrels per day to 367,000 barrels per day...however, even with this week's inventory draw down, our gasoline supplies are up by nearly 29.3 million barrels since Christmas, remain statistically on a par with the 256,457,000 barrels of gasoline that we had stored on February 19th of last year, and are still 6.8% above the 240,014,000 barrels of gasoline we had stored on February 20th of 2015... 

similarly, even with the increase in our distillates production, our supplies of distillate fuels fell by 4,924,000 barrels to 165,133,000 barrels by February 17th, as the amount of distillates supplied to US markets, a proxy for our consumption, rose by 439,000 barrels per day to 4,292,000 barrels per day, and as our imports of distillates fell by 87,000 barrels per day to 129,000 barrels per day and as our exports of distillates were up 15,000 barrels per day to 1,007,000 barrels per day....even so, our distillate inventories are still 2.7% higher than the distillate inventories of 160,715,000 barrels of February 19th last year, and 33.4% above the distillate inventories of 124,698,000 barrels of February 20th, 2015…  

finally, with the major curtailment in our refining, we again had surplus crude remaining, and hence our inventories of crude oil rose for the 7th week in a row, increasing by 564,000 barrels to 494,762,000 barrels by February 17th, which was yet another record for our crude supplies...thus we ended the week with 8.2% more crude oil in storage than the 479,012,000 barrels we ended 2016 with, 8.9% more crude oil in storage than the then record 476,325,000 barrels we had stored on February 19th of 2016, 29.7% more crude than the 399,943,000 barrels of oil we had in storage on February 20th of 2015 and 56.7% more crude than the 331,024,000 barrels of oil we had in storage on February 21st of 2014...   

This Week's Rig Count

US drilling activity increased for the 16th time in 17 weeks during the week ending February 24th, but the 5 week string of double digit rig count increases has finally ended....Baker Hughes reported that the total count of active rotary rigs running in the US increased by just 3 rigs to 754 rigs in the week ending on this Friday, which was 251 more rigs than the 502 rigs that were deployed as of the February 26th report in 2016, but still far from the recent high of 1929 drilling rigs that were in use on November 21st of 2014...

the number of rigs drilling for oil rose by 5 rigs to 602 rigs this week, which was up from the 400 oil directed rigs that were in use a year ago, but down from the recent high of 1609 rigs that were drilling for oil on October 10, 2014...meanwhile, the count of drilling rigs targeting natural gas formations fell by 2 rigs to 151 rigs this week, which was still up from the 102 natural gas rigs that were drilling a year ago, but down from the recent natural gas rig high of 1,606 rigs that were deployed on August 29th, 2008...there also remained a single rig that was classified as miscellaneous, which is marked as a 1 rig increase from a year ago, when there were no such miscellaneous rigs at work...   

the drilling platform that had been working offshore from Alaska was shut down this week, coincidentally the same week that we learned that an offshore gas pipeline under the Cook Inlet sprung a leak...that left the total US offshore count for the week at 17 rigs, all in the Gulf of Mexico, down from 27 offshore rigs a year ago, when again they were all in the Gulf of Mexico...at the same time, a rig was set up on an inland lake in southern Louisiana, where there are now 4 of them, up from two inland water rigs a year ago...

.the number of horizontal drilling rigs working in the US increased by 10 rigs to 624 rigs this week, which is now up by 227 rigs from the 397 horizontal rigs that were in use in the US on February 26th last year, but still down from the record of 1372 horizontal rigs that were deployed on November 21st of 2014...on the other hand, 3 directional rigs were shut down during the week, cutting the directional rig count back to 69, which was still up from the 47 directional rigs that were deployed during the same week last year...in addition, a net of 4 vertical rigs were stacked this week, reducing the vertical rig count to 61, which was still up from the 58 vertical rigs that were deployed during the same week a year ago...

as usual, the details on this week's changes in drilling activity by state and by shale basin are included in our screenshot below of that part of the rig count summary from Baker Hughes that shows those changes...the first table below shows weekly and year over year rig count changes for the major producing states, and the second table shows weekly and year over year rig count changes for the major US geological oil and gas basins...in both tables, the first column shows the active rig count as of February 24th, the second column shows the change in the number of working rigs between last week's count (February 17th) and this week's (February 24th) count, the third column shows last week's February 17th active rig count, the 4th column shows the change between the number of rigs running this Friday and the equivalent Friday a year ago, and the 5th column shows the number of rigs that were drilling at the end of that reporting week a year ago, which in this week’s case was for the 26th of February, 2016...        

February 24 2017 rig count summary

again, this week's drilling changes were mostly about Texas, where they added 8 rigs, including 3 in the Permian in west Texas and another 3 in the Eagle Ford of south Texas...2 more rigs were also added in the Cana Woodford, site of the hot SCOOP and STACK plays...two rigs were shut down in Alaska, including the one offshore, and a net of two were pulled from Louisiana; otherwise, not much changed...note that outside of the major producing states shown above, Indiana also had their only active rig shut down this week; that left them unchanged from a year ago, though, when the state also had no drilling activity...

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as i noted, one of the graphs that i included above was from an emailed package of graphs from John Kemp, a senior energy analyst and columnist with Reuters...i had used two of his graphs taken from his twitter account the prior week and in so doing, noted a twitter message from him which said: SIGN UP to receive a free daily digest of best in energy news + my research notes by emailing john.kemp@tr.com
so i requested to be included on his daily digest mailing list and he responded: With pleasure.  If you know anyone else who might like to receive the daily digest and my research notes, please encourage them to contact me and I will add their emails to the circulation as well.  The mailing list is open to anyone interested in energy. Very best wishes.  John. 
i am now receiving a daily mailing of links & graphics, copies of his columns as published, and what appears a weekly pdf of graphs... so if anyone is interested in receiving the same, please write to John Kemp as noted above...alternatively you can also follow him on twitter, @ https://twitter.com/JKempEnergy where he seems to post much of what he otherwise mails...since i dont use twitter, his emails work best for me...

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note: there's more here..