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Chinese growth: 5 themes to watch for

People walking in front of the Shanghai skyline and the under construction Shanghai Tower (R). Global investors will be focused on China on Wednesday morning as the government releases second-quarter figures for economic growth, as well as monthly data on industrial production, fixed-asset investment and retail sales. Here are five key themes to watch for. 1. Headline GDP Chinese premier Li Keqiang said in London last month that he was “confident” China would meet its full-year gross domestic product target of 7.5 per cent growth. Economists expect second-quarter expansion to be 7.4 per cent, unchanged from the 18-month low hit in the first quarter, according to a Reuters poll. But if growth comes in closer to 7 per cent, the full-year target will be in jeopardy and make the government more likely to notch up its stimulus measures. 2. Property sales Real estate contributes 23 per cent to China’s […]

Posted On : Published By : Tom Whipple
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What Is Power Consumption Telling Us About The US Economy?

We track US power consumption on a weekly basis as reported by Barron’s, as we believe this information provides insightful – albeit sometimes “noisy” and seasonally unadjusted – clues about the performance of the economy over time. The expectation is that a more robust economic environment requires more power, although factors like colder winters and warmer summers relative to the norm can greatly skew the analysis. With that in mind, let’s have a look at the weekly historical performance of this indicator going back to 1995 (in MM kWhs): Many peaks and bottoms can be observed as power demand changes seasonally over the year. We have used polynomial smoothing to extract a trend line (in black). Some quick observations: US power consumption peaked in 2006 (red line), approximately in line with the peak in the US housing market, and the trend line has flatlined since. By definition a peak […]

Posted On : Published By : Tom Whipple
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Kemp: The Real Shale Revolution

Article title LONDON, July 14 (Reuters) – By now everyone knows the shale revolution was made possible by the combination of horizontal drilling and hydraulic fracturing. But although fracking has captured the popular imagination, and is often used as a synonym for the whole phenomenon, horizontal drilling was actually the more recent and important breakthrough. Mastery of horizontal drilling around 1990, originally for oil rather than gas exploration, was the decisive innovation that lit the long fuse for the shale revolution that erupted 15 years later. "Horizontal drilling is the real marvel of engineering and scientific innovation," David Blackmon wrote in Forbes magazine last year ("Horizontal drilling: a technological marvel ignored", January 2013). "While impressive in its own right, the main innovations in fracking have been beefing up the generating horsepower to accommodate horizontal wells rather than vertical ones, and refining of the fluids used to conserve water and […]

Posted On : Published By : Tom Whipple
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North Dakota Expects ‘Big Surge’ in Summer Crude Output

North Dakota , the second-largest oil-producing state in the U.S., expects output to surge through the summer as more benign weather gives roughnecks extra time to work in the field. Output rose about 3.6 percent to 1.04 million barrels a day in May, the state’s Department of Mineral Resources reported yesterday. It was the largest increase since August. The growth came even as rain and high winds kept well completion crews out of the fields for several days during the month. Better summer weather will lead to production growth in the region of 5 to 6 percent a month in June, July and August, said Lynn Helms, director of the state’s Department of Mineral Resources. “We still expect the big surge to come in June, July and August in terms of completions and some really rapid production increases,” Helms said on a conference call with reporters yesterday. North Dakota […]

Posted On : Published By : Tom Whipple
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More U.S. Condensate Producers Seen Seeking to Export

Enterprise Products Partners LP (EPD) and Pioneer Natural Resources Co. (PXD) , two of the first fuel suppliers to win approval to send U.S. condensates abroad, may be about to get some company. Less than a month after Enterprise and Pioneer said they received approval to export processed condensate, others are seeking the same permission, said Jacob Dweck, a partner at the law firm Sutherland Asbill & Brennan LLP, who represented Enterprise in its request to the U.S. Commerce Department. Dweck declined to identify the companies or say how many there were. The U.S. has prohibited most crude exports since 1975. Exports of products such as gasoline and diesel are legal. Condensates are ultra-light hydrocarbons that are gaseous when extracted from oil and natural gas reservoirs. Exports may ease a glut of crude created by a boom in output from hydraulic fracturing and horizontal drilling in shale formations. U.S. […]

Posted On : Published By : Tom Whipple
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EIA’s Drilling Productivity Report

Note: Just as I was finishing this post North Dakota published their production numbers for May 2014. North Dakota production was up over 36,000 barrels per day on 227 new well completions according to The Director’s Cut. I will have a post on all that tomorrow. The EIA’s Drilling Productivity Report has just came out. Below are a few charts gleaned from that report. The World’s seven largest publicly owned oil companies have peaked. Their combined production has declined 12.4% since 2009. The Drilling Productivity Report shows, or tries to show, the true decline rate of shale oil and gas. I usually only track the oil however. Bakken Legacy Decline In January the EIA estimated that Bakken production from new wells would equal 88 kb/d. They estimated that the declines of all older wells would equal 63 kb/d leaving net production at 25 kb/d. In August they estimate that […]

Posted On : Published By : Tom Whipple
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US shale drillers becoming immune to oil and gas prices: Raymond James

US exploration and production companies will become the long-promised "factories" with positive cash flow starting this year as growing production efficiencies make them relatively immune to flat commodity prices, investment bank Raymond James said Monday. "With rising US production and falling costs per unit of production, US E&P companies are now poised to actually grow cash flows even in a flat or modestly lower energy price environment," Raymond James’ top oil and gas analyst Marshall Adkins said in a note to clients. "We now think the US oil and gas business can be viewed as more of a sustainable growth industry rather than a pure commodity call," Adkins said. After a decade of spending roughly 40% more than it took in in revenues during the shale land grab, E&Ps have driven per barrel and per Mcf costs down to a point where in a flat price environment profits are […]

Posted On : Published By : Tom Whipple
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North Dakota crude production jumps 36,379 b/d, reaches new high: state

North Dakota’s crude production in May reached another all-time high, continuing to climb above the 1 million b/d mark it reached in April, the state’s Department of Mineral Resources said Monday. May production rose 36,379 b/d from April to a record 1,039,635 b/d, the DMR said in a statement. The number of producing wells in the state also jumped to a record 10,892 in May, up 227 from April, it said. Bakken and Three Forks production made up 94% of the May output, or 974,695 b/d, with 7,526 wells producing in those formations, according to DMR data. –Josh Brown, [email protected] –Edited by Richard Rubin, [email protected] Crude Oil Marketwire Crude Oil Marketwire delivers vital intelligence to help you make critical decisions. Delivered daily direct to your desktop, Crude Oil Marketwire provides detailed market information including; crude oil price spreads, daily crude oil forwards, trade updates, industry officials’ commentary, futures settlement […]

Posted On : Published By : Tom Whipple
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Oil Industry, U.S. Railroads Said to Agree on Tank Car Standard

Oil companies and railroads have offered U.S. regulators a proposal for a tougher tank-car design and a plan to phase out older model rail cars, according to two people involved in the talks. The American Petroleum Institute , which represents companies including Exxon Mobil Corp., and the Association of American Railroads, whose members include Berkshire Hathaway Inc.’s BNSF railway, agreed on a proposal for tank cars that have steel shells a half-inch thick, slightly thicker than current standards. The two groups also agreed on a goal for a three-year phase out of older models known as DOT-111s that safety investigators have said are vulnerable to rupture in a crash, said the two sources familiar with the issue. To contact the reporter on this story: Jim Snyder in Washington at [email protected] To contact the editor responsible for this story: Steve Geimann at [email protected]

Posted On : Published By : Tom Whipple
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Peak Oil: Denial Magic 1

They should be magicians. Successful magic depends on the artist being able to distract the viewers from the sleight-of-hand performed. Keep them preoccupied with one topic or one item and it’s then much simpler to create the illusion of magic. Peak oil deniers are a lot like that. Toss out some carefully massaged facts bearing the imprint of near-truths but without context (just to be safe), engage in a pattern of irrelevancies to help muddy the waters, toss in some meaningless numbers while carefully shielding the important ones from the discussion, and presto! No more peak oil theories. But as with magic, the show must end. We walk back out into the light and back into reality, where some of us still believe that facts matter. Perhaps not today while the Happy Talk keeps everyone entertained, but soon enough that show will end as well, and then the realities—good […]

Posted On : Published By : ASPO-USA