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Title : Morning Note -- Thursday, September 13, 2018
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Morning Note -- Thursday, September 13, 2018

Weekly jobs report, pending:

• consensus: 210K
• prior: 203K, so, if accurate, the consensus would mean an increase of 7,000 week-over-week
• Hurricane Florence will affect numbers for next month or so, but wont' affect today's numbers

Fake news? No, probably just late. The EIA says that the US likely became the world's biggest oil producer earlier this year. 

America likely overtook Russia and Saudi Arabia in terms of oil output to become the world’s biggest producer earlier this year, according to the Energy Information Administration.

U.S. crude output exceeded that of Saudi Arabia in February for the first time in more than two decades, based on preliminary estimates from the agency’s Short-Term Energy Outlook. In June and August, it overtook Russia for the first time since 1999.
The EIA expects U.S. oil output to continue to exceed Russian and Saudi production for the rest of 2018 and in 2019. Growth has shot up in recent years from areas such as the Permian basin in West Texas and New Mexico.

Pipelines. Re-posting. From Rigzone.

Oil producers in the Permian Basin appear to be worried that key pipeline projects to boost takeaway capacity from the region might not hit their 2019 targeted start-up dates.

Wood Mackenzie noted that Permian oil production is ramping up at “breakneck speed,” with growth estimated at more than 400,000 barrels per day year-over-year on average through 2022. The study’s authors contend the production surge is overwhelming takeaway capacity within the Permian, causing oil and gas to sell inside the basin at steep discounts to national indexes. To illustrate, they noted that significant pipeline capacity constraints as recently as 2015 caused the Mid-Cush WTI discount to widen to $20 per barrel. As a result, many Permian operators have turned to derivatives to hedge against the risk of price differentials growing wider, Wood Mackenzie stated.

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Back to the Bakken

Wells coming off the confidential list today --
Thursday, September 13 2018
34356, conf, XTO, Bobcat Federal 14X-35A, Bear Creek, no production data,
34247, conf, WPX, Otter Woman 34-27HEL, Mandaree, producing,
32964, conf, Oasis, Ceynar 5198 12-5 5T, Banks, a huge well;

Active rigs:

$69.43→	9/13/2018	09/13/2017	09/13/2016	09/13/2015	09/13/2014
Active Rigs	65	55	35	69	199

RBN Energy: what happened to the northeast gas takeaway constraints, part 3.

For the first time in years, natural gas takeaway capacity constraints from the Marcellus/Utica producing region appear to be easing, even as production volumes from the area continue to record new highs. That’s allowed regional supply prices this year to strengthen dramatically relative to national benchmark Henry Hub. A closer look at pipeline flow data indicates these developments stem from shifting gas flows that coincide with the ramp-up of Energy Transfer Partners’ Rover Pipeline. In today’s blog, we continue our update of the Northeast gas market with the latest on Rover’s gas receipts, along with its effects on other regional takeaway capacity and price relationships.

This is Part 3 in our series looking at recent shifts in the U.S. Northeast’s natural gas market. First, we started with a macro look at the critical role the Northeast gas production continues to play in the overall U.S. supply-demand picture. Lower-48 gas production in 2018 to date has averaged ~8 Bcf/d higher year-on-year. Nearly 50% of that growth has come from the Northeast. Moreover, given that the Northeast produces much more gas than it needs, the bulk of that incremental supply has flowed out of the region to other markets, including the Midwest and Gulf Coast states. Marcellus/Utica volumes have more than doubled in the five years since 2013, climbing by 16 Bcf/d to an average of 28 Bcf/d in 2018 to date, up from about 12 Bcf/d in 2013.

Until now, production has continued to outpace takeaway capacity, with incremental production volumes quickly inundating any available space on the pipes and keeping supply-area prices at severe discounts compared to other markets .

However, that imbalance has seen a dramatic — albeit partial — correction this year. Even as Marcellus/Utica supply continues to set record highs this summer, prices at Dominion South (Dom S) — the representative pricing hub — have strengthened compared to prior years. After tanking to more than $1/MMBtu discounts versus Henry Hub each of the past four summers, Dom S cash prices this July and August averaged less than $0.40/MMBtu behind Henry.

This shift has coincided with the step-change in Northeast takeaway capacity brought on by the start-up of ETP’s Rover Pipeline, which has been phasing in westbound capacity from southeastern Ohio since last September (2017).

Rover Pipeline flows have climbed from less than 1 Bcf/d with the initial start-up to nearly 3 Bcf/d now, as additional supply laterals were completed. The most recent bump comes from the new Majorsville lateral from West Virginia to Ohio, which was approved for service on August 23 and, within days, ramped up to nearly 400 MMcf/d.

Another lateral — Burgettstown — was approved at the same time but receipts from there have been near zero so far. The Burgettstown lateral will be supplied by MarkWest’s 200-MMcf/d Harmon Creek gas processing plant, due in service in the fourth quarter of 2018, and ETP’s Revolution processing plant, which is reportedly completed and awaiting full approval of the remaining supply laterals — Sherwood and Columbia Gas Transmission (CGT). Rover filed for federal approval of these two laterals last Friday (August 31).

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