energy tidbits aug 25, 2019 · the disclaimer: energy tidbits is intended to provide general...

The Disclaimer: Energy Tidbits is intended to provide general information only and is written for an institutional or sophisticated investor audience. It is not a recommendation of, or solicitation for the purchase of securities, an offer of securities, or intended as investment research or advice. The information presented, while obtained from sources we believe reliable as of the publishing date, is not guaranteed against errors or omissions and no representation or warranty, express or implied, is made as to their accuracy, completeness or correctness. This publication is proprietary and intended for the sole use of direct recipients from Dan Tsubouchi and SAF Group. Energy Tidbits are not to be copied, transmitted, or forwarded without the prior written permission Dan Tsubouchi and SAF Group. Please advise if you have received Energy Tidbits from a source other than Dan Tsubouchi and SAF Group.

Energy Tidbits

Dan Tsubouchi

Principal, Chief Market Strategist

[email protected]

Aaron Bunting

Principal, COO, CFO

[email protected]

Ryan Dunfield

Principal, CEO [email protected]

Alan Cooper

Vice President

[email protected]

Ryan Haughn

Principal, Energy

[email protected]

Expect Analysts To Make Big Cuts To 2019 Oil Demand Growth

Forecasts Following US/China Trade War Escalation

Welcome to new Energy Tidbits memo readers. We are continuing to add new readers to our Energy Tidbits

memo and energy blogs. The focus and concept for the memo was set in 1999 with input from PMs, who were

looking for research (both positive and negative items) that helped them shape their investment thesis to the energy

space, and not focusing on day to day trading. Our priority was and still is to not just report on events, but interpret

and point out implications therefrom. The best example is our review of investor days, conferences and earnings calls

focusing on sector developments that are relevant to the sector and not just a specific company results/guidance.

Our target is to write on 48 to 50 weekends per year and to send out by noon mountain time.

This week’s memo highlights:

1. Another 10 mmb of light sour crude to hit US Gulf Coast markets in Oct 1 thru Nov 30 (Click Here)

2. TMX announces it “Re-Starts Construction on Expansion Project”. (Click Here)

3. Nebraska Supreme Court signs off on Keystone XLs Nebraska pipeline route. (Click Here)

4. Shouldn’t the Houthi drone hit on the Shaybah NGL facility reduce oil volumes being put in the pipeline? (Click

Here)

5. Expect analysts to make big cuts to 2019 oil demand growth forecasts. (Click Here)

6. Expansion of STC vs Hadi Yemen govt fighting outside Aden including in Yemen’s oil provinces. (Click Here)

7. Please follow us on Twitter at [LINK] for breaking news that ultimately ends up in the weekly Energy Tidbits memo

that doesn’t get posted until Sunday noon MT.

8. For new readers to our Energy Tidbits and our blogs, you will need to sign up at our blog sign up to receive future

Energy Tidbits memos. The sign up is available at [LINK].

Produced by: Dan Tsubouchi

Aug 25, 2019

https://twitter.com/Energy_Tidbits

http://www.safgroup.ca/research/trends-in-the-market/


2

Energy Tidbits

Table of Contents Natural Gas – Natural gas injection of 59 bcf, storage now at 369 bcf YoY surplus ................................................5

Figure 1: US Natural Gas Storage ....................................................................................................................5

Natural Gas – 5th and 6th US LNG exports projects start up ..................................................................................5

Figure 2: EIA – Gulf Coast LNG export projects...............................................................................................5

Freeport LNG train 1 starts production at 0.67 bcf/d ................................................................................................6

Cameron LNG phase 1 starts production at 1.58 bcf/d ............................................................................................6

Natural Gas – Alberta gas field receipts down to just over 11 bcf/d .........................................................................6

Figure 3: Alberta gas storage receipts and August storage builds ...........................................................................6

Figure 4: Canadian gas rig count .............................................................................................................................7

Natural Gas – Egypt Zohr is now even bigger, was 2.7 bcf/d now 3.2 bcf/d ............................................................7

Natural Gas – Japan LNG imports for July up 0.1% YoY.........................................................................................7

Figure 5: Japan Monthly LNG Imports (bcf/d) ..........................................................................................................8

Natural Gas – Japan’s uranium sales are a positive indicator to mid term LNG ......................................................8

Natural Gas – China June LNG imports +18.0% YoY or +1.2 bcf/d YoY .................................................................8

Figure 6: China LNG imports ....................................................................................................................................9

Natural Gas – Starting to see more attention to "Power of Siberia" startup on Dec 1 .............................................9

Figure 7: China gas supply by source ......................................................................................................................9

Natural Gas – No update on PNG’s “renegotiation” with Total et al signed LNG deal .............................................9

Natural Gas – Mexico’s natural gas production remains stuck below 5 bcf/d in July ............................................ 10

Figure 8: Mexico Natural Gas Production (bcf/d) .......................................................................................... 10

Natural Gas – Slowing LNG flows to NW Europe as Europe storage now 89.9% full .......................................... 10

Figure 9: Net LNG Flows To NW Europe .............................................................................................................. 11

Figure 10: Europe Gas Storage Utilization ............................................................................................................ 11

Figure 11: Spanish LNG terminal storage levels ................................................................................................... 11

Natural Gas – India LNG imports for July up 9.1% YoY ........................................................................................ 11

Oil – US oil rigs down 16 to 754 oil rigs ................................................................................................................. 12

Figure 12: Baker Hughes Weekly Rig Count – Total US Oil Rigs ................................................................. 12

Oil – Total Cdn rigs down 3 to 139 total rigs.......................................................................................................... 12

Figure 13: Baker Hughes Weekly Rig Count, Canadian Oil Rigs.................................................................. 13

Oil – US oil production is flat at 12.3 mmb/d ......................................................................................................... 13

Figure 14: Weekly Oil Production .................................................................................................................. 13


3

Energy Tidbits

Figure 15: US Weekly Oil Production ............................................................................................................ 14

Figure 16: YoY Change in US Weekly Oil Production ................................................................................... 14

Oil – New Permian pipe capacity to bring Cushing oil to Permian then to Gulf Coast .......................................... 14

Oil – Up to 10 mmb of SPR oil to hit Gulf Coast from Oct 1 thru Nov 30/2019 ..................................................... 14

The SPR reserves are “light” “sour” oil hitting the Gulf Coast ............................................................................... 15

An excellent reference report on US Strategic Petroleum Reserve ...................................................................... 15

Oil – China includes US crude oil in its new 5% tariffs effective Sept 1 ................................................................ 15

Kudlow: Trump misinterpreted on “second thoughts” on escalating China trade.................................................. 15

Oil – Positive To Keystone XL, Nebraska confirms route approval ....................................................................... 16

Oil – “Trans Mountain Re-Starts Construction on Expansion Project” .................................................................. 16

Oil – Cdn crude by rail exports up just 1,570 b/d MoM to 286,701 b/d in June..................................................... 16

Figure 17: CBR monthly exports vs WCS Diff ............................................................................................... 17

Oil – Alberta extends curtailment to Dec 31, 2020 ................................................................................................ 17

Oil – Kansas investigates earthquakes and waste water disposal wells in Reno county ..................................... 17

Oil – Hibernia still shut in ....................................................................................................................................... 18

Oil – Oil input into refineries up 401,000 b/d to 17.702 mmb/d ............................................................................. 18

Figure 18: US Refinery Crude Oil Inputs (thousand b/d) ............................................................................... 18

Oil – US “NET” oil imports down 617,000 b/d to 4.415 mmb/d ............................................................................. 18

Figure 19: US Weekly Preliminary Oil Imports By Major Countries .............................................................. 19

Oil – Mexico oil production is flat in 2019, with July at 1.671 mmb/d .................................................................... 19

Figure 20: Mexico Crude Oil Production ........................................................................................................ 19

Oil – Mexico July oil exports were 1.079 mmb/d ................................................................................................... 19

Figure 21: Mexico Crude Oil Exports ............................................................................................................. 20

Oil – Added oil wildcard? What does Iran do if Israel bombed its arms stash in Iraq? ......................................... 20

Oil – Trump shoots down any unified G7 approach to Iran ................................................................................... 20

Oil – Aramco IPO potential timing means Saudi Arabia needs OPEC+ cuts thru 2020........................................ 21

Are the Houthis the wildcard in the Aramco IPO timing? .............................................................................. 21

Figure 22: Saudi Arabia Major Oil and Natural Gas Infrastructure ................................................................ 21

Figure 23: Houthi Reported Missile Launch Capability Range ...................................................................... 22

Oil – If the Houthis hit NGL recovery at Shaybah, shouldn’t it impact oil production? .......................................... 22

Oil – Yemen: a week of fighting within the Saudi/UAE coalition vs the Houthis .................................................... 22

Figure 24: Yemen Oil and Natural Gas Fields/Pipelines Circa 2016 ............................................................ 23

Oil – US and Maduro confirm that talks have been ongoing ................................................................................. 23


4

Energy Tidbits

Oil – Almost half of Venezuela oil rigs could be idled without US waivers ............................................................ 23

Oil – China oil imports from Venezuela down to 166 kb/d in July, vs 276 kb/d in June ........................................ 23

Oil – PDVSA has paid back $3.5b in Rosneft debt since yr end 2017 .................................................................. 24

Figure 25: Rosneft Debt owed by PDVSA ..................................................................................................... 24

Oil – Colombia July oil production up 1.0% YoY, but lowest month of 2019 ......................................................... 24

Figure 26: Colombia oil production vs. rig count ........................................................................................... 25

Oil – Oil demand will be the story on Mon with the escalated US/China trade war .............................................. 25

Figure 27: Oil Demand – EIA, IEA, OPEC ..................................................................................................... 26

Oil – China oil stocks +33 mmb in July, potential warning sign? ........................................................................... 26

Oil – US rail traffic down in all sectors except oil ................................................................................................... 26

Figure 28: US rail traffic for Aug 17, 2019 week ............................................................................................ 27

Oil and Natural Gas – <2 mths to Cdn election, too close to call .......................................................................... 27

Oil & Natural Gas – Tropical Storm Dorian, too early to tell if coming to Gulf Coast ............................................ 27

Figure 29: Tropical Storm Dorian .................................................................................................................. 28

Figure 30: Summer 2007 Hurricane Tracking Paths ..................................................................................... 28

Governance – Will the redefined purpose of a corporation set stage for more lawsuits? ..................................... 28

Energy Tidbits – Now on Twitter ............................................................................................................................ 29

Energy Tidbits – Sign up on our email distribution for tidbits and blogs ................................................................ 29

LinkedIn – Look for quick energy items from me on LinkedIn ............................................................................... 29

Misc Facts and Figures.......................................................................................................................................... 29

Hawaiian pizza originated in Chatham .......................................................................................................... 30


5

Energy Tidbits

Natural Gas – Natural gas injection of 59 bcf, storage now at 369 bcf YoY surplus

The EIA reported a 59 bcf natural gas injection and came the same as the expectations of a 59 bcf injection to bring storage to 2.797 tcf as of August 16. This is a widening of the YoY surplus to 369 bcf vs 357 bcf YoY surplus last week, but storage is down 103 bcf against the 5 yr average. The continued expectation is for the YoY storage surplus to keep widening from higher YoY production which is holding HH prices below $2.50. There are 11 weeks to get to Nov 1, the official start of the winter heating season. Below is the EIA’s storage table from its Weekly Natural Gas Storage Report. [LINK] Figure 1: US Natural Gas Storage

Source: EIA

Natural Gas – 5th and 6th US LNG exports projects start up

The 5th and 6th US LNG export projects have started up with the start up of the Freeport LNG Train 1 and Cameron LNG Phase 1. This is in line with the expectations for a ramp up in US LNG exports during H2/2019. In its most recent Short Term Energy Outlook [LINK], the EIA estimated Q2/19 LNG exports were 4.43 bcf/d and are expected to jump to 4.82 bcf/d in Q3 and 6.08 bcf/d in Q4/19. Figure 2: EIA – Gulf Coast LNG export projects

Source: EIA

YoY storage at

369 bcf YoY

surplus

5th and 6th US

LNG exports

projects start up

http://ir.eia.gov/ngs/ngs.html

https://www.eia.gov/outlooks/steo/pdf/steo_full.pdf


6

Energy Tidbits

Freeport LNG train 1 starts production at 0.67 bcf/d

LNG World News reported [LINK] that Train 1 of their Freeport LNG project has started producing. Freeport Train 1 was originally expected to be in service by year end 2018. It is located on Quintana Island on the Texas Gulf Coast. The first cargo is expected to be exported at the end of August. Train 1 has export capacity of ~0.66 bcf/d (5 mm tonnes per year) of LNG; trains 2 and 3 are under construction and have similar export capacity. Train 1 is being quickly followed by Trains 2 and 3, “Freeport LNG Trains 2 and 3 remain on track to meet their previously announced schedules with Train 2 initial production of LNG scheduled for the fourth quarter of 2019 while initial production from Train 3 is scheduled for the first quarter of 2020.”

Cameron LNG phase 1 starts production at 1.58 bcf/d

Sempra’s Cameron LNG export project has also started up its Train 1 of its Phase 1 LNG Phase 1, in total, has 3 trains each with a capacity of ~0.53 bcf/d and total planned capacity of~1.58 bcf/d. In its Q2 call [LINK], Sempra noted “Train 2 + 3 first LNG production targeted in Q1-2020 + Q2-2020, respectively”

Natural Gas – Alberta gas field receipts down to just over 11 bcf/d

There were some great charts and comments from the NBF Energy sales on Tues related to lower YoY Alberta gas receipts. We tweeted [LINK] “Who doesn’t love a good chart? NBF Energy Sales Alberta field receipts just over 11 bcf/d, well below prior yr, driven YoY storage deficit to a ~67Bcf shortfall YoY. Their reason for lower Alberta receipts “No activity, spending… producers shrinking, natural declines”. The deficit is expected to widen further as dismal conditions continue for Cdn gas producers, NBF commented “If we continue to inject at the current month to date rate for the balance of August, the deficit will continue to widen out closer to -72Bcf with about +9Bcf going into storage for all of August relative to a build of +20Bcf”. There is no doubt that Cdn gas producers are feeling the pinch of continued low gas prices and have to watch capex.

Figure 3: Alberta gas storage receipts and August storage builds

Source: NBF Energy Sales

Alberta gas field

receipts down to

just over 11

bcf/d

https://www.lngworldnews.com/freeport-lng-celebrates-start-of-train-1-production/

http://investor.sempra.com/static-files/e1a64afb-39a2-44a6-8dfb-3ac9dac4ed4a

https://twitter.com/Energy_Tidbits/status/1163813013834461184


7

Energy Tidbits

Figure 4: Canadian gas rig count

Source: NBF Energy Sales

Natural Gas – Egypt Zohr is now even bigger, was 2.7 bcf/d now 3.2 bcf/d

Eni announced [LINK] this week that its offshore Zohr (Egypt) now has production of 2.7 bcf/d, and is expected to reach 3.2 bcf/d by Dec 31/2019. Eni said the 3.2 bcf/d potential is a result of, “the completion of all eight onshore treatment production units – the last one commissioned in April 2019 – and all Sulphur production units in August, the production start-up of two wells in the southern culmination of the field (in addition to the ten wells already drilled in the northern culmination) as well as the start-up on August 18th 2019 of the second 216 km long 30” pipeline connecting the offshore subsea production facilities to the onshore treatment plant.” We do not normally highlight any specific international gas discovery but did so in the case of Zohr starting in our Sept 6, 2015 Energy Tidbits, wherein we highlighted ENI’s “supergiant” Zohr natural gas discovery offshore Egypt because it was believed to be huge and that it could have first production in a very quick time frame. Our warning has been that Zohr would have a significant impact on LNG markets due to its size and quick time to production. Eni’s update means that Zohr has gone from zero to 3.2 bcf/d in ~4 years from discovery. The size of Zohr has turned Egypt from a net natural gas importer to a net natural gas exporter. And with natural gas volumes now competing for markets in Europe with a key advantage – its basically in Europe. Our February 24, 2019 Energy Tidbits Memo [LINK] noted that offshore gas production from the Zohr field has turned Egypt from a net importer to a net exporter of natural gas. “Eni has moved Egypt from net natural gas importer in 2017 (consumption of 5.4 bcf/d vs production of 4.7 bcf/d) to an exporter. Assuming some consumption growth (ie up to 7 bcf/d or so) given natural gas availability, Eni is adding approx 3 bcf/d of export natural gas. which is why Egypt is restarting LNG exports.” Our Supplemental Documents package includes the Eni release.

Natural Gas – Japan LNG imports for July up 0.1% YoY

Last Sun night, we tweeted [LINK] on the just released Japan’s Ministry of Finance monthly import/export data for July [LINK]. Japan LNG imports for July were 10.56 bcf/d, up 0.1% YoY and up 27.9% MoM from 8.32 bcf/d in June. This basically flat YoY LNG imports is in the face of rising LNG exports worldwide, global LNG exports in July were +14.4% YoY and +5.8 bcf/d YoY and Japan imports were only +0.1% YoY. This is a key reason why there is an LNG surplus and low prices, Japan is the worlds largest LNG importer, and their LNG import demand growth did not rise relative to increased supply. The other key data point for Japan LNG imports being flat YoY in July, whereas Japan’s July imports of other fossil fuels were coal was +11.8% YoY and oil was +5.1% YoY. Below is our table that tracks Japan LNG import data.

Japan July LNG

imports up 0.1%

YoY

Egypt Zohr is

now even

bigger, was 2.7

bcf/d now 3.2

bcf/d

https://www.eni.com/en_IT/media/2019/08/eni-zohr-gas-production-reaches-27-bcfd

http://www.safgroup.ca/wp-content/uploads/2019/03/Energy-Tidbits-Feb-24-2019.pdf


http://www.customs.go.jp/toukei/shinbun/trade-st_e/2019/2019074e.pdf


8

Energy Tidbits

Figure 5: Japan Monthly LNG Imports (bcf/d)

Source: Japan Ministry of Finance

Natural Gas – Japan’s uranium sales are a positive indicator to mid term LNG

The return of Japan’s nuclear power post Fukushima has been slow, but it has been a factor in LNG imports over the past year. This week, we saw an indicator that the return of nuclear power will continue to be slow, and likely at a pace that is below the expectations/hopes of some of the Japanese utilities. Reuters story “Japanese utilities start selling uranium fuel into depressed market” [LINK] noted that ““Given the extended shutdown of our reactors, we are selling uranium as well as cancelling long-term contracts where necessary,” Japan Atomic told Reuters in a statement”. Prices for uranium have been weak but sales are occurring as the odds of restarting reactors after eight years do not seem to be improving, “If the utilities are not going to use the fuel, and it is unlikely they will get many more reactors going, then at some point they will have to take losses on their holdings”. We think this is an indicator for the expected pace for the return of nuclear and a positive for mid term LNG support in Japan. Utilities selling uranium from nuclear reactors is a good indicator that utility companies expect a slower or even less nuclear capacity will restart in Japan. This will not immediately raise LNG prices, but it should have a positive support for LNG in Japan.

Natural Gas – China June LNG imports +18.0% YoY or +1.2 bcf/d YoY

On Friday, China reported LNG import data for July. We tweeted [LINK] on the data “China July #LNG imports 7.6 bcf/d +18.0% YoY +1.2 bcf/d YoY. Much lower YoY growth in 2019. Japan July LNG imports flat YoY means 2 largest LNG importers were +1.2 bcf/d YoY in July vs global LNG exports in July +5.8 bcf/d YoY explains why big LNG surplus and weak LNG prices”. We should be clear that we call the YoY LNG import “relatively weak” at +18.0%, it is a solid growth rate and one that would be great for other countries. However, relative to the massive 2018 LNG import growth rates, it is in fact “relatively weak”. And the reality is that +1.2 bcf/d YoY growth in China LNG imports means that there are a lot of surplus LNG cargos looking for a home. Global LNG exports in July were +14.4% YoY and +5.8 bcf/d YoY, well above the growth rate in China and Japan, the two largest LNG importers, which is a key reason for the surplus LNG and weak prices. Below is our table of monthly China LNG imports.

bcf/d 2014 2015 15/14 2016 16/15 2017 17/16 2018 18/17 2019 19/18

Jan 12.66 13.06 3.1% 11.22 -14.1% 12.85 14.6% 12.79 -0.5% 11.69 -8.7%

Feb 12.88 13.25 2.9% 12.30 -7.2% 13.35 8.5% 14.22 6.5% 12.60 -11.4%

Mar 12.46 12.60 1.2% 12.62 0.1% 12.61 -0.1% 12.28 -2.6% 11.30 -8.1%

Apr 11.54 10.56 -8.5% 10.21 -3.3% 10.52 3.0% 8.97 -14.7% 9.00 0.3%

May 10.06 8.91 -11.4% 8.55 -4.0% 9.66 13.0% 9.92 2.7% 8.62 -13.1%

June 10.91 10.61 -2.8% 10.02 -5.6% 9.90 -1.2% 8.88 -10.3% 8.32 -6.3%

July 12.14 10.77 -11.3% 10.19 -5.4% 10.19 0.0% 10.55 3.6% 10.56 0.1%

Aug 10.92 10.93 0.2% 11.96 9.4% 11.24 -6.0% 11.73 4.4%

Sept 11.64 11.06 -5.0% 10.67 -3.5% 9.31 -12.7% 10.04 7.8%

Oct 10.75 9.38 -12.8% 9.73 3.7% 9.50 -2.3% 10.12 6.5%

Nov 11.00 10.71 -2.7% 12.07 12.7% 10.26 -15.0% 10.15 -1.0%

Dec 12.79 12.51 -2.2% 11.69 -6.5% 12.31 5.4% 11.23 -8.8%

China July LNG

imports up 18.0%

YoY

Japan’s uranium

sales are a

positive indicator

to mid term LNG

https://www.reuters.com/article/us-japan-nuclear-fuel-sales-exclusive/exclusive-japanese-utilities-start-selling-uranium-fuel-into-depressed-market-idUSKCN1VD0K4



9

Energy Tidbits

Figure 6: China LNG imports

Source: Bloomberg, LNG World News

Natural Gas – Starting to see more attention to "Power of Siberia" startup on Dec 1

We have been a little surprised that we haven’t seen more stories focus on Gazprom’s 3.6 bcf/d Power of Siberia export natural gas pipeline to China, but we expect it to get more attention as markets start to realize it will have a major impact on LNG markets in 2020. A Bloomberg Terminal story only had a brief note on the impact it will have on LNG markets in China, “A faster ramp-up of Kazakhstani supply in the second half and commissioning of Russia’s Power of Siberia pipeline will limit LNG's upside potential in the period.” Power of Siberia is on track for first deliveries to China on Dec 1/2019. It will be a disrupter to 2020 LNG markets as noted in our March 30, 2019 energy blog “LNG Price Pressures 2020/2021 With Gazprom Adding ~8.9 Bcf/D Export Gas Pipeline Capacity Into Europe And China” [LINK]. Its 3.6 bcf/d capacity is a significant addition to China’s gas supply. Our Supplemental Documents package includes the Bloomberg Terminal story and our March 30 blog.

Figure 7: China gas supply by source

Source: China National Development and Reform Commission, Bloomberg

Natural Gas – No update on PNG’s “renegotiation” with Total et al signed LNG deal

As of our earlier than normal news cutoff at am MT, there is no update from Papua New Guinea on their efforts to renegotiate the PNG recently signed (Apr) LNG agreement with Total, Exxon and Oil Search following last weekend’s meeting in Singapore. This followed the big reversal by PNG that they wanted to renegotiate the deal as opposed to their recent comments (see our Aug 4, 2019 Energy Tidbits) that they were only looking from some tweaks to the deal. And PNG called the Singapore meetings a renegotiation, whereas the

bcf/d 2016 2017 17/16 2018 18/17 2019 19/18

Jan 3.8 5.4 39.3% 8.0 50.0% 10.2 27.1%

Feb 3.1 4.1 32.3% 6.8 66.9% 7.5 9.1%

Mar 2.6 3.1 17.7% 5.0 64.5% 6.3 24.8%

Apr 3.0 3.4 14.7% 5.4 57.8% 7.3 34.0%

May 2.2 4.5 104.5% 6.4 41.9% 6.9 7.6%

June 3.5 4.9 38.2% 6.3 30.1% 7.3 14.9%

July 2.5 4.8 95.1% 6.4 33.4% 7.6 18.0%

Aug 3.5 4.9 37.4% 7.3 49.2%

Sept 4.1 5.5 36.8% 7.0 26.3%

Oct 2.9 5.5 93.0% 7.1 29.6%

Nov 4.3 6.5 52.6% 9.6 47.5%

Dec 5.8 7.8 34.5% 9.7 25.0%

No update on Total

PNG LNG deal

More starting to

focus on "Power

of Siberia"

http://www.safgroup.ca/research/articles/lng-price-pressures-2020-2021-with-gazprom-adding-8-9-bcf-d-export-gas-pipeline-capacity-into-europe-and-china/


10

Energy Tidbits

Total et al group has been maintaining they have a signed agreement. On Thurs, PNG’s Post-Courier reported on PNG PM Marape comments on the Total LNG deal. The Post Courier wrote “the government will continue to engage in dialogue and discuss further its proposal seeking a new gas deal in the Papua LNG, Prime Minister James Marape said yesterday. This is despite the meeting in Singapore between the PNG government negotiating team and two major oil conglomerates not reaching a decision. Mr. Marape said nothing concrete was decided at the meeting with oil and gas giants, Total, ExxonMobil and Oil Search for an amicable solution. But he said during a tour of the National Research Institute yesterday that the government was positive that a favourable dialogue and discussion with the Papua LNG players would be reached”. Our Supplemental Documents package includes the Star Courier story. [LINK]

Natural Gas – Mexico’s natural gas production remains stuck below 5 bcf/d in July

One of the key Mexican energy themes continues to be their inability to grow domestic natural gas production, which means increasing natural gas imports from the US. On Fri, Pemex reported its July natural gas production and Mexico natural gas production in Junly was 4.892 bcf/d, which has been virtually unchanged for the past 210 months. July was +0.7% YoY vs July 2018 and flat MoM to June 2019. Below is our ongoing table from the Pemex monthly data. [LINK]

Figure 8: Mexico Natural Gas Production (bcf/d)

Source: Pemex

Natural Gas – Slowing LNG flows to NW Europe as Europe storage now 89.9% full

We have been highlighting the linkage between significantly higher than normal Europe storage levels and weak LNG prices. Our thesis is Europe LNG storage is dumping ground for surplus LNG, if getting full, LNG has to find another customer in non peak demand season, float around in storage, or output gets held back. It is leading to slowing LNG flows to Europe, but even still Europe storage is filling up quickly. Europe storage is now at 89.9% utilization, whereas last year the highest level reached was 86.9% on Oct 28, 2018. And that must be a reason for the slowing flows to NW Europe. This week, Bloomberg Terminal story “Hot Weather, Cheap LNG Lure Tankers to Spain’s Terminals” that noted how Spain has 5 LNG storage sites and approx. 1/3 of Europe’s capacity and all of which are far above average levels for this time of year.

Natural Gas Production bcf/d 2015 2016 16/15 2017 17/16 2018 18/17 2019 19/18

Jan 6.584 6.162 -6.4% 5.326 -13.6% 4.910 -7.8% 4.648 -5.3%

Feb 6.676 6.122 -8.3% 5.299 -13.4% 4.853 -8.4% 4.869 0.3%

Mar 6.558 6.030 -8.1% 5.383 -10.7% 4.646 -13.7% 4.857 4.5%

Apr 6.257 5.921 -5.4% 5.334 -9.9% 4.869 -8.7% 4.816 -1.1%

May 6.202 5.841 -5.8% 5.299 -9.3% 4.827 -8.9% 4.841 0.3%

June 6.390 5.881 -8.0% 5.253 -10.7% 4.840 -7.9% 4.843 0.1%

July 6.374 5.785 -9.2% 5.216 -9.8% 4.856 -6.9% 4.892 0.7%

Aug 6.366 5.686 -10.7% 5.035 -11.4% 4.898 -2.7%

Sept 6.477 5.619 -13.2% 4.302 -23.4% 4.913 14.2%

Oct 6.397 5.583 -12.7% 4.759 -14.8% 4.895 2.9%

Nov 6.316 5.515 -12.7% 4.803 -12.9% 4.776 -0.6%

Dec 6.236 5.380 -13.7% 4.811 -10.6% 4.881 1.5%

Europe storage

now 89.9% full

Mexico natural

gas production <5

bcf/d

https://postcourier.com.pg/talks-continue-new-papua-lng-deal-says-pm/

http://www.pemex.com/en/investors/publications/Indicadores%20Petroleros%20Archivos/eprodcrudo_ing.pdf


11

Energy Tidbits

Figure 9: Net LNG Flows To NW Europe

Source: Bloomberg

Figure 10: Europe Gas Storage Utilization

Source: Bloomberg

Figure 11: Spanish LNG terminal storage levels

Source: Bloomberg

Natural Gas – India LNG imports for July up 9.1% YoY

On Thurs, LNG World News reported India LNG imports in July 2019 were 3.1 bcf/d, which is +9.1% YoY [LINK]. We suspect that we should continue to see solid India LNG imports because of low LNG prices as India has been sensitive to high LNG prices. LNG World News also wrote “The cost of imports dropped when compared with July 2018. The figure stands at $0.8 billion while last year’s figure stood at $0.9 billion.” India LNG import growth remains modest since India is still at the early stages of its need to build out more gas infrastructure if it is to significantly increase LNG imports. And it has been long known that high LNG prices are a factor, which is why the current low LNG prices should continue to help

India July LNG

imports up 9.1%

YoY

https://www.lngworldnews.com/indias-lng-imports-rise-nine-percent-in-july/


12

Energy Tidbits

LNG imports. We noted this high price theme in our June 17, 2018 Energy Tidbits [LINK], when we discussed the BP chief economist speech and Q&A on their “Energy in 2017: two steps forward, one step back”. At that time, we wrote “(vii) Interesting Q&A comment. The chief economist with an India company on why there isn’t more natural gas and why coal is still going up. The Indian executive said it was because the cost of natural gas was significantly more expensive than domestic coal. The push in India is to get more power to more poorer people, but if natural gas is significantly higher, it can’t be done, they have to rely on coal.”

Oil – US oil rigs down 16 to 754 oil rigs

Baker Hughes reported its weekly rig data on Friday. US oil rigs were down 16 to 754 oil rigs as of August 23. Increases were in Mississippian +1. Decreases were in Permian -7, DJ Niobrara -5, Others -3, Cana Woodford -1, and Ardmore Woodford -1. This decline is in line with the just completed Q2 earnings calls that saw the consensus service sector view change from US rigs bottoming in Q2 to a more negative view that US rigs would decline in Q3 and then again before finding a bottom in Q4. Below is our graph of the Baker Hughes weekly US oil rig data.

Figure 12: Baker Hughes Weekly Rig Count – Total US Oil Rigs

Source: Baker Hughes, SAF

Oil – Total Cdn rigs down 3 to 139 total rigs

Cdn producers are being very careful with capex in light of terrible gas prices, weak stock prices and no real access to capital. It has shown up in the Cdn rig count coming out of spring break up. Notwithstanding its gas prices that are in the tank, the normal post spring break up increase has hit oil rigs more than natural gas rigs. Baker Hughes reported total Cdn rigs were down 3 to 139 total rigs as of August 23. Cdn oil rigs were down 6 to 95 oil rigs (down 58 from 153 a year ago). Cdn gas rigs were +3 to 44 Cdn gas rigs. The ramp up post the break up trough in 2019 has been very slow, only +78 rigs in the 16 weeks since Cdn rigs bottomed at 61 total rigs. This compares to 2018, where Cdn rigs increased by 150 in the 16 weeks post the 2018 spring bottom. For Cdn oil rigs, they have moved from 17 to 95 oil rigs (+78 oil rigs) in 2019 vs 32 to 153 oil rigs (+121 oil rigs in 2018). For Cdn gas rigs, in spring break up Cdn gas rigs were at 40, but dropped down to 32 in mid July, and are now at 44 gas rigs in 2019, whereas Cdn gas rigs increased from their spring bottom of 43 to 76 gas rigs (+33 gas rigs) in 2018. Below is our graph of the Baker Hughes weekly Cdn oil rig data.

Total Cdn rigs -3

this week

US oil rigs were

-16 this week

http://www.safgroup.ca/wp-content/uploads/2018/11/Energy-Tidbits-June-17-2018.pdf


13

Energy Tidbits

Figure 13: Baker Hughes Weekly Rig Count, Canadian Oil Rigs

Source: Baker Hughes, SAF

Oil – US oil production is flat at 12.3 mmb/d

EIA reported US oil production was flat at 12.3 mmb/d for the August 9 week. Lower 48 production was up 100,000 b/d 12.0 mmb/d. These numbers are almost perfectly aligned with the lower August STEO numbers. The new EIA Short Term Energy Outlook forecasted Q3/19 production to average 12.29 mmb/d, which was revised down from the July forecast due to hurricane impact. Below we pasted an excerpt from the EIA weekly oil production data. [LINK]

Figure 14: Weekly Oil Production

Source: EIA

US production

at 12.3 mmb/d

http://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=WCRFPUS2&f=W


14

Energy Tidbits

Figure 15: US Weekly Oil Production

Source: EIA, SAF

Figure 16: YoY Change in US Weekly Oil Production

Source: EIA, SAF

Oil – New Permian pipe capacity to bring Cushing oil to Permian then to Gulf Coast

The ramp up in Permian oil pipeline capacity to Gulf Coast is not just increasing Permian oil takeaway capacity for increasing oil production, but also changing regional oil flows. We saw a good example of this with the Reuters story [LINK] on Lotus Midstream LLC’s proposal to reverse the oil flow direction in their West Texas to Cushing Centurion Pipeline. Centurion consists of two lines that have a total capacity of 170,000 b/d and currently transport crude from the Permian to Cushing storage hub, and one of them may be reversed so Cushing oil travels to the Permian, “Lotus is considering reversing the flows on either its Centurion North Line, which has 110,000 bpd of capacity, or the South Line, with 60,000 bpd capacity.” This would provide Cushing oil with access to better priced Gulf Coast markets and could help lower US storage inventories, “Reversing the flow on a portion of Lotus’s Centurion pipeline would send oil on a circuitous route from the country’s main storage hub at Cushing to the its top shale field in West Texas and then via new pipelines into Gulf Coast export hubs, they said … an unusual move that could lift U.S. benchmark prices by draining supplies.” Our Supplemental Documents includes the Reuters story.

Oil – Up to 10 mmb of SPR oil to hit Gulf Coast from Oct 1 thru Nov 30/2019

There will be more light sour hitting the Gulf Coast in Oct/Nov with the US Dept of Energy’s “Office of Fossil Energy” announcement of its plan to sell up to 10 million barrels of crude oil from the SPR (Strategic Petroleum Reserves) for deliveries in October and November [LINK]. The oil will come from three SPR sites Bryan Mount, West Hackberry and Big Hill; all sales

SPR to sell up to

10 mmb

New Permian pipe

to bring Cushing

oil to Permian

https://www.reuters.com/article/us-usa-crude-pipelines-exclusive/exclusive-lotus-midstream-mulls-reversing-west-texas-to-cushing-pipeline-sources-idUSKCN1VA1ZL

https://www.spr.doe.gov/doeec/2020-01/Docs/FY20MandatorySalesNOS.pdf


15

Energy Tidbits

will be light sour crude. The 10 mmb sale is equivalent to approx. 164,000 b/d averaged over the two-month period. This is part of an existing approval to sell up to $2 billion of SPR crude oil, for fiscal years 2017 to 2020, to carry out an SPR modernization program.

The SPR reserves are “light” “sour” oil hitting the Gulf Coast

One reminder is that the SPR sales are light sour oil and not heavy oil. The detailed sales offering notes that the oil will from three SPR sites - sour oil from Bryan Mound storage site, sour oil from West Hackberry storage site and sour oil from the Big Hill storage site. The other reminder is that the SPR sales will be hitting Gulf Coast refineries.

An excellent reference report on US Strategic Petroleum Reserve

We just checked and the link still works for an excellent Aug 2016 109-pg reference report “Long-Term Strategic Review of the U.S. Strategic Petroleum Reserve” [LINK]. The report is over two years old, we flipped thru the report again and it is still an excellent reference report. We last referenced this report in our Mar 3, 2019 Energy Tidbits, and again, we will recommend adding this report to reference libraries, as it provides excellent information the SPR including history (pg 4), location/description (pg 10), excellent schematic on drawdown process (pg 13), map of locations (pg 15), Northeast Home Heating Oil Reserve (pg 19), excellent detail on each site (pg 23), infrastructure challenges (pg 36), maximum drawdown rates of 4.1 to 4.3 million b/d for 90 day’s (pg 41), distribution system (pg 44), depiction of how the SPR can drawdown 695 million barrels in 180 days (pg 51), example SPR response on a range of scenarios (pg 60), analysis of SPR under 4 scenarios 430, 549, 564, 630 million barrels (pg 77), modernization program (pg 81), and conclusions (pg 102).

Oil – China includes US crude oil in its new 5% tariffs effective Sept 1

The increased Permian oil egress to the Gulf Coast and the SPR added volumes to Gulf Coast are coming at a bad time considering China’s adding a 5% tariff on US crude oil imports effective Sept 1. On Fri morning, we tweeted [LINK] “Thx GoogleTranslate, 1,717 items w/ added 5% tariff Sept 1 did include #1191 crude oil, but not US LNG imports. China must be comfortable can replace US light oil imports, but don’t want to take a chance on LNG going into the winter.” We used GoogleTranslate to go thru the 1,717 items listed by China [LINK] that were going to be subject to the additional 5% tariffs on Sept 1. The 1,717 items included US crude oil but did not include US LNG. There were a range of other items included in the Sept 1 tariffs such as liquified butane, coking bituminous coal, etc. But the big one was crude oil. We can see the ability to replace US crude oil. LNG is interesting given the current surplus, but we remind that this is non peak natural gas demand season.

Kudlow: Trump misinterpreted on “second thoughts” on escalating China trade

One of the breaking G7 news stories this morning were the views that Trump may be setting up an opening for China/US trade de-escalation. In a Q&A with reporters, Trump was asked “you have second thoughts about escalating the war with China?” Trump responded “I have second thoughts about everything”. This was being reported as potential opening. One item that we just snuck in after our 6am MT news cutoff was a live interview CNN State of The Union had with Larry Kudlow starting around 7am MT. We tweeted [LINK] “Live right now, Brianna Keilar interview with Larry Kudlow on #CNNSOTU that Trump's second thoughts were misinterpreted or he didn't hear the question, rather Kudlow says Trump's second thoughts were perhaps he need to go higher on the tariffs. #OOTT” Kudlow clearly wanted to correct any misinterpretation of the Trump second thoughts and he said a couple

China hits US

crude oil with 5%

tariff

https://www.energy.gov/sites/prod/files/2016/09/f33/Long-Term%20Strategic%20Review%20of%20the%20U.%20S.%20Strategic%20Petroleum%20Reserve%20Report%20to%20Congress_0.pdf


http://gss.mof.gov.cn/zhengwuxinxi/zhengcefabu/201908/P020190823604938915640.pdf



16

Energy Tidbits

times that Trump’s second thoughts were on if he should gone higher on the tariffs ie. a tougher hit. Kudlow was clearly trying to correct the view.

Oil – Positive To Keystone XL, Nebraska confirms route approval

There was a major hurdle cleared on Friday for Keystone XL with the TC Energy (recent name change for TransCanada) announcement [LINK] that the Nebraska Supreme Court has upheld the approval of the Keystone XL route through the state. This was a confirmation of the Nebraska Public Service Commission’s decision in November 2017 and a major positive to the 830,000 b/d Keystone XL, which has been a decade in the making. If the Supreme Court hadn’t approved the route, TC Energy would have had to reapply for Nebraska state permits. There are still hurdles with the challenge in federal courts in Montana on the US Army Corps of Engineers approvals. In theory, the Montana challenge could be resolved in the coming months and TC Energy could likely be in a position to move ahead in sometime in 2020. However, we wonder if TC Energy would start on construction ahead of the 2020 elections. Lets not forget that the reason for the delay was the Obama administration. It hasn’t been a big discussion point so far in the Democratic Presidential debates but its early and we would expect Democrats, should they win, will likely try to stop Keystone XL once again. Our Supplemental Documents package includes the TC Energy release.

Oil – “Trans Mountain Re-Starts Construction on Expansion Project”

The big positive news to the Cdn oil sector news this week was Trans Mountain’s Wed announcement “Trans Mountain Re-Starts Construction on Expansion Project”. Trans Mountain was fairly specific in the release saying “Construction work will soon begin in communities along the route, including along the right-of-way in Alberta between Edmonton and Edson, and in the Greater Edmonton area. This includes an immediate return to work at Burnaby Terminal and on land at Westridge Marine Terminal. Specific start dates in the remaining construction areas are subject to final regulatory approvals and permits.“ They were clear there remaining final regulatory approvals and permits to be received, but are starting construction. We are in the camp that believes they must be highly confident of receiving the remaining approvals/permits. Trans Mountain also noted “The timelines for approval of all outstanding regulatory matters could have an impact on Project costs, schedules and final in-service dates; however, if approvals are received as anticipated, the Trans Mountain Expansion Project will be in-service by mid-2022.” Our Supplemental Documents package includes the Trans Mountain release. [LINK]

Oil – Cdn crude by rail exports up just 1,570 b/d MoM to 286,701 b/d in June

The National Energy Board reported Canadian crude by rail exports were almost unchanged in June [LINK]. June CBR volumes were reported at 286,701 b/d, which is up 1,570 b/d from 285,131 b/d in May and up 84,024 b/d YoY vs 202,677 b/d in June 2018. Part of the reason MoM numbers were basically flat is the fairly steady WCS – WTI differential in June vs. May. Diffs averaged $13.15 in June compared to $14.46 in May. Wider diffs make CBR more economic, which led to rising volumes in the past few months. But note that we expect crude by rail to decline in Aug/Sept. Our Aug 4, 2019 Energy Tidbits highlighted the Imperial Oil Q2 call on Aug 2 and in the Q&A, mgmt. clearly said it was ramping down its crude by rail to the PADD 3 Gulf Coast because of the narrowing of the WCS/WTI differential didn’t provide the economic incentive to move the oil. Imperial mgmt. said “And I said before that we look for something that creates a sustainable rail incentive of like a differential or an arbitrage between the same barrel in two occasions of $15 to 1$12 a barrel. And we are not there”, and “But our outlook for August and September is will ramp down rail because it is not economic to move those barrels on rail.” Below is our graph of Cdn crude by rail exports compared to the WCS – WTI differential.

Cdn crude by rail exports basically flat MoM in June

Positive To

Keystone XL,

Nebraska

confirms route

approval

Positive To

Keystone XL,

approval

https://www.tcenergy.com/announcements/2019-08-23nebraska-supreme-court-affirms-keystone-xl-route-approval/

https://www.transmountain.com/news/2019/trans-mountain-re-starts-construction-on-expansion-project

https://www.neb-one.gc.ca/nrg/sttstc/crdlndptrlmprdct/stt/cndncrdlxprtsrl-eng.html


17

Energy Tidbits

Figure 17: CBR monthly exports vs WCS Diff

Source: NEB, SAF

Oil – Alberta extends curtailment to Dec 31, 2020

The Alberta production curtailments were originally planned to finish year end 2019, but the Kenney govt surprised most by announcing [LINK] on Tues that the curtailments are being extended to Dec 31/2020, with the possibility of ending earlier. The govt cited continued pipeline delays, in particular Enbridge Line 3 as the reason for the extension. Some rules for curtailment were changed in the announcement; one is “Increasing the base limit for curtailment from 10,000 to 20,000 barrels per day”, this means that 16 out of over 300 producers will be impacted by the updated curtailments. This change will result in an increase of 25,000 b/d vs the October limit of 3.79 mmb/d. 60 days of notice will be provided when rule changes are made to the production limits. The new rules will come into effect in October 2019. Our Supplemental Documents package includes the Alberta press release.

Oil – Kansas investigates earthquakes and waste water disposal wells in Reno county

Last Sun night, we tweeted [LINK] “Cluster of earthquakes (incl a 4.2 and 4.1) in southern Kansas, SW of Hutchinson. Notwithstanding major waste water disposal wells (at least until end of 2017) are E and SE of Hutchinson, still expect some attention on waste water injection and earthquakes.” This followed last weekend reports of 11 earthquakes in 5 days in Reno country (southern Kansas) including 4.2 and 4.1 earthquakes. The earthquakes were to the southwest of Hutchinson (the county seat for Reno), and we noted that the major waste water disposal wells were to the east and southeast of Hutchinson. The hurricane activity in southern Kansas has been more to the south of Reno. The Kansas City Star wrote [LINK] “While Reno County has been known to experience a few low-magnitude tremors here and there, experts say an earthquake topping magnitude 4.0 is surprising. “This [4.2] was not unexpected in terms of magnitude. It was not unreasonable based on the recursion situation, the number of 2′s and 3′s you’ve had,” Kansas Geological Survey director Rick Miller said.” However, we weren’t surprised to see that on Wed, the Kansas Corporation Commission announced [LINK] “KCC launches investigation into Hutchinson earthquakes” “The Kansas Corporation Commission (KCC) is collecting data and analyzing recent injection well activity in Reno County in an effort to uncover the cause of a series of earthquakes in the Hutchinson area. Amid damage reports and a concern for public safety, the KCC is conducting an investigation and will evaluate whether additional action is needed to safeguard Kansans. In 2015, the KCC issued an order reducing injection rates in portions of Harper and Sumner counties after the number of earthquakes in that area began to trend upward. In 2016, the Commission issued a second order limiting injection in additional areas of Harper and

Kansas

investigating

earthquakes

Alberta extends

curtailment to

Dec 31, 2020

https://www.alberta.ca/release.cfm?xID=64334E345B437-9D7E-8BAA-1B711C38AC1D4891


https://www.kansascity.com/news/state/kansas/article234125492.html

https://kcc.ks.gov/news-8-21-19


18

Energy Tidbits

Sumner as well as parts of Kingman, Sedgwick and Barber counties when earthquake activity there started to rise.” We expect the end result will likely be additional waste water injection restrictions in Reno country ie. added costs to the oil sector but not an item that restricts drilling. Our Supplemental Documents package includes the KCC release.

Oil – Hibernia still shut in

It was only on Aug 15 that Hibernia restarted oil production after being shut in since July 17 The return to oil production only lasted 3 days and last Sunday night, Hibernia announced [LINK] that production was shut in again following a temporary power outage that led to discharge of some water and oil. We are somewhat surprised that there hasn’t been any update since Aug 20 [LINK] , when Hibernia said it “is continuing response efforts regarding a release of oil and water from the Hibernia platform’s drains system on August 17. Observations from surveillance flights, satellite imagery, and the vessel surveillance conducted late Monday indicated the sheen concentration had decreased. Satellite imagery today showed no observable sheen. This is attributed to natural weathering and mechanical collection and dispersion efforts. Additional surveillance flights are planned for when weather permits. Demobilization of vessels will commence, with wildlife observation and water sampling continuing. Production remains shut down. An investigation is ongoing. More information will be released when it becomes available”. Prior to the shut in, Canada Newfoundland Offshore Petroleum Board’s latest Hibernia production stats are for May 2019 and it was producing 116,400 b/d of oil. It is a light sweet crude, with API 32-34° and sulphur of 0.4%-0.6%. The Hibernia company is owned by Exxon, Chevron, Suncor, Canada Hibernia Holding Corporation, Murphy Oil and Equinor Canada.

Oil – Oil input into refineries up 401,000 b/d to 17.702 mmb/d

For the reported August 16 week, EIA estimates crude oil inputs to refineries were +401,000 b/d to 17.702 mmb/d for the August 16 week. With this week’s increase, crude oil inputs are still lower YoY, but still relatively strong overall. As a reminder, crude oil inputs to refineries are expected lower in 2019 vs 2018 with the closure of the PES Philadelphia refinery complex (335,000 b/d) following the Q2 fire. However, crude oi inputs should still trend a little higher to peak later in Q3. Refinery utilization was up by 1.1% this week at 95.9%. Below is our graph of the EIA weekly crude oil input to refineries.

Figure 18: US Refinery Crude Oil Inputs (thousand b/d)

Source: EIA, SAF

Oil – US “NET” oil imports down 617,000 b/d to 4.415 mmb/d

US “NET” imports were down this week, with a 617,000 b/d decrease to 4.415 mmb/d. US imports were down 497,000 b/d to 7.218 mmb/d. US exports were up 120,000 b/d to 2.803

Oil input into

refineries up

401,000 b/d

US NET oil

imports down

617,000 b/d

Hibernia still

shut in

https://www.hibernia.ca/news/2019/HiberniaNewsReleaseAug18.pdf

https://www.hibernia.ca/news/2019/HiberniaNewsReleaseAug20_2019_430pm.pdf


19

Energy Tidbits

mmb/d. (i) Canada was down 218,000 b/d to 3.630 mmb/d for the August 16 week, which is 433,000 b/d lower compared to Canada’s high this year of 4.063 mmb/d for the Jan 18 week. (ii) Saudi Arabia was down 185,000 b/d to 371,000 b/d for the August 16 week. 371,000 b/d is very low for Saudi, as imports from Saudi have averaged 542,000 b/d so far in 2019. (iii) Colombia was +252,000 b/d to 496,000 b/d, which is above average YTD imports from Colombia (iv) Iraq was +289,000 b/d to 507,000 b/d. (v) Venezuela remained at 0 due to US sanctions. (vi) Mexico was down big -391,000 b/d to 527,000 b/d this week, as Mexico seems to follow a pattern of up big one week, and down big the next. Below is our table of the US oil imports by major country.

Figure 19: US Weekly Preliminary Oil Imports By Major Countries

Source: EIA, SAF

Oil – Mexico oil production is flat in 2019, with July at 1.671 mmb/d

On Fri, Pemex reported July oil production of 1.671 mmb/d, which is exactly flat MoM (hmmm!), but down 8.3% YoY from 1.823 mmb/d in July 2018. The July production data is partially supportive of Pemex’s forecast that oil and natural gas production is bottoming in 2019, and there will be a return to growth later in 2019. We say partially because production is flat, and not decreasing. However, production has been basically flat in 2019, so we still haven’t seen proof that growth will return in H2/19. Below is our ongoing table of the monthly Pemex oil production data. [LINK]

Figure 20: Mexico Crude Oil Production

Source: Pemex

Oil – Mexico July oil exports were 1.079 mmb/d

Mexico oil exports in July 2019 were 1.079 mmb/d, down 6.7% YoY from 1.156 mmb/d in July 2018, and back above 1 mmb/d after dipping below 1 mmb/d in June for only the 2nd month in the last several years. Pemex also reported that its oil exports to the US in July were

June 21/19 June 28/19 July 5/19 July 12/19 July 19/19 July 26/19 August 2/19 August 9/19 August 16/19 WoW

Canada 3,219 3,642 3,945 3,535 3,725 3,463 3,728 3,848 3,630 -218

Saudi Arabia 565 681 501 435 466 419 277 556 371 -185

Venezuela 0 0 0 0 0 0 0 0 0 0

Mexico 462 445 515 809 488 670 737 918 527 -391

Colombia 372 409 406 297 341 350 235 244 496 252

Iraq 247 365 362 342 357 424 199 218 507 289

Ecuador 89 288 130 110 184 191 256 453 216 -237

Nigeria 160 259 0 240 308 167 282 443 507 64

Kuwait 0 0 0 0 0 0 88 107 0 -107

Angola 0 0 0 0 0 0 0 0 0 0

Top 10 5,114 6,089 5,859 5,768 5,869 5,684 5,802 6,787 6,254 -533

Others 1,542 1,496 1,443 1,064 1,159 979 1,346 927 964 37

Total US 6,656 7,585 7,302 6,832 7,028 6,663 7,148 7,714 7,218 -496

Oil Production (thousand b/d) 2015 2016 16/15 2017 17/16 2018 18/17 2019 19/18

Jan 2,251 2,259 0.4% 2,020 -10.6% 1,909 -5.5% 1,623 -15.0%

Feb 2,332 2,214 -5.1% 2,016 -8.9% 1,876 -6.9% 1,701 -9.3%

Mar 2,319 2,217 -4.4% 2,018 -9.0% 1,846 -8.5% 1,691 -8.4%

Apr 2,201 2,177 -1.1% 2,012 -7.6% 1,868 -7.2% 1,675 -10.3%

May 2,227 2,174 -2.4% 2,020 -7.1% 1,850 -8.4% 1,663 -10.1%

June 2,247 2,178 -3.1% 2,008 -7.8% 1,828 -9.0% 1,671 -8.6%

July 2,272 2,157 -5.1% 1,986 -7.9% 1,823 -8.2% 1,671 -8.3%

Aug 2,255 2,144 -4.9% 1,930 -10.0% 1,798 -6.8%

Sept 2,271 2,113 -7.0% 1,730 -18.1% 1,808 4.5%

Oct 2,279 2,103 -7.7% 1,902 -9.6% 1,747 -8.1%

Nov 2,277 2,072 -9.0% 1,867 -9.9% 1,697 -9.1%

Dec 2,275 2,035 -10.5% 1,873 -8.0% 1,710 -8.7%

Mexico Oil

Production

1.671 mmb/d in

July

Mexico July oil

exports back

above 1 mmb/d

http://www.pemex.com/en/investors/publications/Indicadores%20Petroleros%20Archivos/eprohidro_ing.pdf


20

Energy Tidbits

580,000 b/d, which was down YoY from 792,000 b/d in July 2018, and up MoM from 552,000 b/d in June 2018. Below is our table of the Pemex oil export data.

Figure 21: Mexico Crude Oil Exports

Source: Pemex

Oil – Added oil wildcard? What does Iran do if Israel bombed its arms stash in Iraq?

On Thurs, we tweeted [LINK] “Added oil wildcard? What does Iran do now Netanyahu seems to admit Israel bombed Iran arms stashed in Iraq? Admitting it seems to put Iran on the spot to do something. Especially since it has been tit for tat ie. seize UK tanker, downing US drone”. Our tweet was based on the reports that Netanyahu seemed to confirm that it was Israel that bombed the Irans arms stash in Iraq. We think these reports should be noted as it is an added geopolitical risk to oil. Lets be clear, its not that there was really a doubt it was them, but that it was something that no one really expected them to admit it. Also by not admitting it, it also didn’t put Iran on the spot to do something. If Iran acknowledges this Israeli attack, it will put them on the spot on how do they respond. Or do they do as Reuters reported this morning in Syria. Reuters reports that Israel said this morning that they carried out an air strike against “Iranian Quds Force operatives and Shiite militias which were preparing to advance attack plans targeting sites in Israel from within Syria over the last number of days”. And Reuters further reports a denial by Iran “This is a lie and not true. Israel and the United States do not have the power to attack Iran’s various centers, and our (military) advisory centers have not been harmed,” said Revolutionary Guards Major General Mohsen Rezaei, who is also the secretary of a powerful state body, ILNA reported.” The risk is that Iran has been in a tit for tat approach with the recent seizing of the UK tanker and shooting down a US drone. So the question is will Iran respond? We think it just adds a dynamic/wildcard on Iran. Our Supplemental Documents package includes the Israel National New story [LINK].

Oil – Trump shoots down any unified G7 approach to Iran

It is too bad we are travelling with an early news cutoff as there is lots of good comments coming from the G7. We had an early 6am MT cutoff, but in writing the final draft, the news was breaking on G7 and Iran and we snuck in this item. Earlier, we tweeted [LINK] “US rejects unified G7 pitch to Iran. Trump ““We’ll do our own outreach,” “But I can’t stop people from talking”. Macron backtracks “G-7 is an informal club. No mandate is given in the context of the G-7.” No momentum to get US back to JOCPA, no change to Iran tension/risk. #OOTT”. Bloomberg terminal G7 live updates have been excellent this morning. Macron had to back off his messaging of a united G7 approach once Trump shot that down. We think the interpretation is that it eliminates any near term hope to get the US back to the JOCPA. Iran’s positioning has been consistent that it will honor the JOCPA with inspections and a drop in US sanctions. The hope was that the G7 might provide an opportunity for the others to convince the US to soften its position and de-escalate the Iran situation. That hope is now

Oil Exports (thousand b/d) 2015 2016 16/15 2017 17/16 2018 18/17 2019 19/18

Jan 1,261 1,119 -11.3% 1,085 -3.0% 1,107 2.0% 1,071 -3.3%

Feb 1,305 1,241 -4.9% 1,217 -1.9% 1,451 19.2% 1,475 1.7%

Mar 1,228 1,062 -13.5% 1,001 -5.7% 1,176 17.5% 1,150 -2.2%

Apr 1,035 1,081 4.4% 1,017 -5.9% 1,266 24.5% 1,023 -19.2%

May 1,114 1,204 8.1% 958 -20.4% 1,222 27.6% 1,205 -1.4%

June 1,047 1,098 4.9% 1,157 5.4% 1,110 -4.1% 995 -10.4%

July 1,187 1,146 -3.5% 1,255 9.5% 1,156 -7.9% 1,079 -6.7%

Aug 1,261 1,261 0.0% 1,114 -11.7% 1,181 6.0%

Sept 1,169 1,425 21.9% 1,159 -18.7% 1,206 4.1%

Oct 1,280 1,312 2.5% 1,342 2.3% 1,027 -23.5%

Nov 1,178 1,273 8.1% 1,388 9.0% 1,135 -18.2%

Dec 1,008 1,115 10.6% 1,401 25.7% 1,198 -14.5%

Added oil

wildcard in Iran

and Israel?

Trump shoots

down unified G7

approach to Iran


http://www.israelnationalnews.com/News/News.aspx/267778



21

Energy Tidbits

gone for the near term ie. no change to the Iran tension and geopolitical risk. Our Supplemental Documents package includes this morning’s Bloomberg terminal reporting.

Oil – Aramco IPO potential timing means Saudi Arabia needs OPEC+ cuts thru 2020

There were multiple reports this week that seem to clearly indicate Saudi Aramco is having discussions with potential advisors and others to be ready for the Aramco IPO once Saudi Arabia decides to pull the trigger. The question is when? We believe they are pointing to a potential IPO timing of March/early April ie. a similar timing as this year’s early April Saudi Aramco public bond sale. Saudi Aramco did a lot of prep work for the last potential IPO so that there shouldn’t be any timing restrictions therefrom. Plus it makes sense for the IPO going into the traditional increasing oil demand period in Q2 and Q3. But if so, it means that Saudi Arabia is locked into the need for OPEC+ cuts to continue thru 2020 and not stopping as currently scheduled on March 31/20.

Are the Houthis the wildcard in the Aramco IPO timing? On Tues, we tweeted [LINK] “… wildcard for IPO timing? UAE moving troops out of Yemen, escalating fighting between the coalition Yemen partners, escalating Houthi attacks, incl successful long range drone hit Aramco 1 mmb/d Shaybah complex don’t point to end to Houthi war. What to do with Houthis? “ Could you imaging if Aramco was marketing for the IPO and the Houthis were successful at another long range attack on a major Aramco oil facility? Plus don’t forget the significance of the Houthi long range drone attack at Shaybah is that if proves the Houthis have the capability to reach any and all Aramco major oil fields, refineries and export terminals. It makes us wonder what do the Saudis do on the Houths if they are in fact thinking of a potential IPO in the spring? Do they escalate bombing??

Figure 22: Saudi Arabia Major Oil and Natural Gas Infrastructure

Source: EIA

Aramco

positioning for

2020 IPO



22

Energy Tidbits

Figure 23: Houthi Reported Missile Launch Capability Range

Source: GoogleMaps, SAF

Oil – If the Houthis hit NGL recovery at Shaybah, shouldn’t it impact oil production?

Last weekend’s big oil news was the successful long range Houthi drone attack on Saudi Aramco’s Shaybah oil complex at its border with the UAE. Saudi Arabia acknowledged the attack hit the NGL facility at Shaybah, but noted there was a limited fire and, most importantly, “no interruptions to Saudi Aramco’s oil operations”. By Tues morning, the oil market focus on Shaybah had gone away. We were still left with questions and on Tues afternoon, we tweeted [LINK] “Weren't Shaybah NGL facilities set up to extract NGL from associated natural gas from Shaybah oil production. If the “limited fire” f/ Houthi drone was in NGL facility, shouldn't any reduced NGL recovery capacity lead to reduced light oil production/deliveries?” and [LINK] “... from Shaybah? but may not show up in total Saudi oil production/exports as Saudi can offset by other capacity in this period of OPEC+ cuts. Perhaps only data point is if Saudi light oil exports reduced and medium sour increased?” Our question is that if we accept the Houthi drone hit the NGL facility at Shaybah, why won’t this impact oil production? Shaybah is a super light oil field, but one with natural gas and NGLs hence the reason for the NGLs recovery in the field before the oil is sent via pipeline north to Abqaiq. If the NGls recovery goes down, then it has to impact the amount of oil processed because Saudi Aramco won’t ship the unprocessed oil in the pipeline. This is the quality control issue where crude has to be at the specific quality for the refinery. It just seems logical that Aramco needs to strip out and recover the NGLs so if the NGLs recovery goes down, it should impact oil production. Think of Shaybah as a Permian oil steam that has to separate out any natural gas and NGLs before the oil is shipped in the pipeline for export.

Oil – Yemen: a week of fighting within the Saudi/UAE coalition vs the Houthis

There was a lot happening this week with the Saudi led coalition vs the Houthis and all of it looks to be to the negative. We have been tweeting about these events with the tag line “Houthis must love it, Saudis must hate it” because the coalition to fight the Houthis is looking like it is falling apart. Maybe not officially apart, but fighting internally amongst themselves instead of fighting the Houthis. Its hard to see how the Hadi and STC get back to working together vs the Houthis. We still wonder if this is leading to a return to separate North and South Yemen. The key developments this week were (i) continued STC vs Hadi Yemen govt fighting. (ii) STC vs Hadi fighting expanded outside of Aden. (iii) STC vs Hadi fighting moved ~200 miles outside of Aden to oil rich Shabwah governorate (see below map). (iv) Hadi govt reportedly calls for UAE expulsion from the Saudi coalition.

Isn’t the NGL

recovery needed

to produce proper

spec oil?

STC vs Hadi

fighting expands

outside Aden




23

Energy Tidbits

Figure 24: Yemen Oil and Natural Gas Fields/Pipelines Circa 2016

Source: National Yemen

Oil – US and Maduro confirm that talks have been ongoing

Venezuela and the US have both confirmed that talks between the Maduro and Trump administrations are ongoing, which should not be surprising given that there were prior discussions in March/April. This week there was an AP story [LINK] where both countries said talk are happening, but gave few details. Maduro said, “We’ve had secret meetings in secret places with secret people that nobody knows,” Maduro said, adding that all talks had been carried out under his “direct” authorization. “Sure there’s been contact and we’ll continue having contact.” The US has not said who exactly is involved in the talks but said “his government is talking to “various representatives” of Venezuelan President Nicolás Maduro”. Recall that in March and April when talks started, there was strong momentum for Guaido to overthrow Maduro. But now that regime change momentum has stalled in the past four months, we have to wonder who is most anxious to have discussions?

Oil – Almost half of Venezuela oil rigs could be idled without US waivers

On Fri, we tweeted [LINK] on a good Bloomberg article “Half of Venezuela's Oil Rigs May Disappear If U.S. Waivers Lapse” [LINK] that noted 10 of the 23 rigs drilling in July will be shut down if the US doesn’t extend waivers, and how this could “hamper” energy production. Our tweet said “Bloomberg: half of Venezuela rigs could idle w/o US waivers, “could further cripple” oil prod. We think its “will” not “could” ie. less rigs means less oil prod. Venezuela is not offshore platforms on plateau, its onshore heavy with lots of wells.” We believe that if the rigs are idled, Venezuela oil production will definitely decline. Venezuela is not made up of bog offshore oil that produces at a plateau level. Rather Venezuela is old style conventional heavy oil onshore production made up of thousands of wells. And this is the type of production that needs ongoing maintenance, well workovers, drilling, etc to maintain oil production.

Oil – China oil imports from Venezuela down to 166 kb/d in July, vs 276 kb/d in June

There is no question that Trump’s full economic sanctions on Venezuela (see our Aug 11, 2019 Energy Tidbits) is having an increasing impact on Venezuela. At that time, China’s CNPC announced they were halting Aug loadings from Venezuela for the risk of impact of US sanctions. It looks like China, in total, may have already started a wind down of oil imports

US and

Maduro’s team

reportedly

talking

Almost half of

Venezuela rigs

at risk without

US waivers

China imports

166 kb/d in July

from Venezuela

https://apnews.com/ff17c5f57f9f49619120d5b6e90a9d02


https://www.bloomberg.com/news/articles/2019-08-22/trump-takes-aim-at-oil-rigs-crucial-to-venezuela-s-energy-future


24

Energy Tidbits

from Venezuela ahead of the full economic sanctions. This morning, Reuters reported on by country oil import data for July from China’s General Administration of Customs. As of our early news cutoff of 6am MT, Bloomberg Terminal had not yet updated its CCCIIQVZ China Customs Crude Oil Imports Quantity/Venezuela data. Reuters reported China oil imports from Venezuela in July were 165,720 b/d, down from 275,646 b/d in June. YTD July 31, China oil imports from Venezuela were down 13.4% YoY to 322,601 b/d. Our Supplemental Documents package includes the Reuters story. [LINK]

Oil – PDVSA has paid back $3.5b in Rosneft debt since yr end 2017

Rosneft reported its Q2 results this week and included an item that will surprise many – how much money PDVSA has repaid Rosneft in the past 18 months. Rosneft’s Q2 call slide below notes PDVSA paid back $0.7b in Q2/19 to reduce its outstanding debt to Rosneft to $1.1b at June 30/19. The interesting part of the slide was that PDVSA owed $4.6b at Dec 31/17, paid back $3.5b in the past 18 months to get the debt down to $1.1b at June 30/19. On Wed, we tweeted [LINK] on the PDVSA debt repayment and we wondered “Does it put Rosneft into a position to reinvest in Venezuela at right time?” The reality is that whenever Venezuela is opened up, the opportunity to put in fix up capital to increase production to supply the close US Gulf Coast market will attract many oil companies. Below is the slide from the Rosneft Q2 call, note the bottom right graph includes the PDVSA debt to Rosneft.

Figure 25: Rosneft Debt owed by PDVSA

Source: Rosneft

Oil – Colombia July oil production up 1.0% YoY, but lowest month of 2019

Colombia reported July oil production [LINK] of 868,745 b/d, which was up 1.0% YoY, but this is the lowest level out of all months so far in 2019. Colombia oil production has been between 0.89 to 0.90 mmb/d all year, except for this month. It looks like Colombia oil production is going to continue to be range bound unless there is a ramp up in drilling. For that matter, Colombia oil production has been rangebound for the past few years. Our table below shows the Colombia rig count vs. production levels.

PDVSA debt to

Rosneft down to

$1.1b

Colombia July oil

production up

1.0% YoY, but

lowest month of

2019

https://www.reuters.com/article/us-china-economy-trade-crude/chinas-july-venezuela-oil-imports-fall-over-u-s-sanctions-idUSKCN1VF06N


https://hydrocarbonscolombia.com/category-article/production/


25

Energy Tidbits

Figure 26: Colombia oil production vs. rig count

Source: Bloomberg, Baker Hughes, SAF

Oil – Oil demand will be the story on Mon with the escalated US/China trade war

The market and oil story on Mon will be the reaction to Trump’s added China tariffs tweets that came out after the market close. Prior the Trump tweets, the Dow was down 623 points (2.37%) and WTI was down $1.18 to $54.17 on Fri. Even prior to Fri, the week’s story was about slowing global economies having to start to impact US sooner than later. Our Energy Tidbits memos have been highlighting our view that the EIA, IEA and OPEC were going to be forced to lower their oil demand forecasts when they come out with their Sept monthly reports. Yesterday, we tweeted [LINK] “#Oil weakness should continue as markets respond to Trump China tariffs post mkt close. Also, big trade escalation should see analysts cut 2019 oil demand growth, maybe closer to +0.7 mmb/d YoY, maybe lower? And well below EIA/IEA/OPEC est +1.0 to 1.1 mmb/d YoY n 2019. #OOTT” We expect to see analysts cut 2019 oil demand growth forecasts in response to the big trade war escalation. There will be a mix of reactions but all have to be for lower oil demand growth. Its hard to say how much lower, but we won’t be surprised to see analysts cut 2019 oil demand growth to something close to +0.7 mmb/d YoY, or even possibly lower. These lower analyst oil demand forecass will stand out relative to the current EIA, IEA and OPEC 2019 oil demand growth forecast that range from +1.0 to +1.1 mmb/d YoY. One thing to keep in mind as we look forward to the updated Sept EIA, IEA and OPEC oil demand forecast is that they tend to layer in demand cuts over a couple months instead of making one big cut. Below is a table of the current oil demand forecasts for the EIA’s Short Term Energy Outlook Aug 2019, IEA Oil Market Report Aug 2019, and OPEC Monthly Oil Market Report Aug 2019.

Expect big

reduction in oil

demand growth

forecasts



26

Energy Tidbits

Figure 27: Oil Demand – EIA, IEA, OPEC

Source: EIA, IEA, OPEC

Oil – China oil stocks +33 mmb in July, potential warning sign?

On Monday there was a Platts story [LINK] on China’s high July oil stocks, we tweeted [LINK] “China oil demand warning sign? Platts: China implied oil stocks July 31 were +33.29 mmb vs June 30. Higher than expected “as reported throughput in July retreated month on month despite less refinery outage and improving refining margin activities”. In July 2018, oil stocks only rose by 8.68 mmb, far lower MoM. Platts reported that the stock build was unexpected, “The July implied stock build was higher than the previous expectation, as reported throughput in July retreated month on month despite less refinery outage and improving refining margin activities.” Refineries in the country did not increase activity after a better price signal, which makes us wonder if its a warning sign of slowing Chinese oil demand and rising inventories. Our Supplemental Documents package includes the Platts story.

Oil – US rail traffic down in all sectors except oil

We had an early news cutoff of 6am MT due to travel this morning so are missing the Sunday morning talk shows. Last weekend, the Trump team fanned out to reinforce the strength of the US economy. Now with China’s new tariffs on Fri and Trump’s post market added tariffs on China, they will need an even bigger sales pitch. There is an increasing amount of “data” that indicates a slowing US economy, but one that shows up in our weekly scan of key websites is the Association of American Railroads weekly rail traffic data [LINK], that we look at for US crude by rail indicators. The new weekly data for the Aug 17 week is pasted below and shows US rail car traffic is down YTD in all sectors other than petroleum/petroleum products. Mexico is also down in almost all sectors. Canada is the bright spot in North America with the fewest by sector traffic decreases. Our Supplemental Documents package includes the AAR weekly report.

EIA STEO Aug 2019 IEA OMR Aug 2019 OPEC MOMR Aug 2019

Total mmb/d YoY mmb/d China YoY Total mmb/d YoY mmb/d China YoY Total mmb/d YoY mmb/d China YoY

Q1.18 99.14 98.60 97.93

Q2/18 99.59 98.90 98.18

Q3/18 100.47 100.00 99.48

Q4/18 100.41 99.50 99.72

2018 99.91 99.30 98.82

Q1/19 99.79 0.65 0.48 99.10 0.50 0.30 98.79 0.86 0.35

Q2/19 100.29 0.70 0.57 99.70 0.80 0.70 99.25 1.07 0.35

Q3/19 101.54 1.07 0.57 101.30 1.30 0.40 100.69 1.21 0.35

Q4/19 101.98 1.57 0.55 101.40 1.90 0.60 100.91 1.19 0.36

2019 100.91 1.00 0.55 100.40 1.10 0.50 99.92 1.10 0.35

Q1/20 101.26 1.47 0.55 100.10 1.00 0.30 99.87 1.08 0.29

Q2/20 101.79 1.50 0.46 101.10 1.40 0.20 100.33 1.08 0.32

Q3/20 103.04 1.50 0.44 102.80 1.50 0.40 101.83 1.14 0.31

Q4/20 103.25 1.27 0.48 102.70 1.30 0.20 102.14 1.23 0.35

2020 102.34 1.43 0.47 101.70 1.30 0.30 101.05 1.13 0.32

Notes : OPEC MOMR Aug did not provide quarter spl i ts for 2018, estimated based on OPEC MOMR June spl i ts

US rail traffic

down in 2019

China oil stocks

+33 mmb in July

https://www.spglobal.com/platts/en/market-insights/latest-news/oil/081919-chinas-end-july-implied-crude-stocks-rise-33-mil-barrels-on-month?utm_source=hootsuite&utm_medium=twitter&utm_term=plattsoil&utm_content=8b0adb5f-2c04-427d-b406-467508f58b74&utm_campaign=oilnews


https://www.aar.org/news/rail-traffic-for-the-week-ending-august-17-2019/


27

Energy Tidbits

Figure 28: US rail traffic for Aug 17, 2019 week

Source: AAR

Oil and Natural Gas – <2 mths to Cdn election, too close to call

We are now less than 2 months away from the Cdn federal election scheduled for Mon Oct 21 election. As we have been highlighting, we are in a period (per election call) where we should be seeing Liberal $ giveaways. This week, we were a little surprised by the range of first polls following the Ethics Commission conflict of interest finding Trudeau violated conflict of interest rules on SNC Lavalin. In the four polls post the Ethics Commissioner report, the Liberals either stayed flat or increased voter support. As of our early news cutoff at 6am MT, there have been four polls since the Trudeau conflict of interest finding, and all of them show an extremely close race between the Conservative and Liberal parties. We are surprised that the polls seem to show zero impact, at least to date, from the Trudeau conflict of interest finding. (i) The new Leger Aug 21 poll [LINK] shows a dead heat at 33/33 for the two parties. The Liberals were unchanged at 33% vs the July 25 poll. The Conservatives at 33% are down from 36% in the July 25 poll. (ii) The new Abacus post Ethics Commissioner report Aug 21 poll [LINK] also shows a dead heat at 32/32. The Liberals are unchanged at 32% vs the prior Abacus pre Ethics Commissioner report, whereas the Conservatives at 32% are down 1% from 33%. (iii) The IPSOS post Ethics Commissioner Aug 19 poll [LINK] shows Conservatives at 35% vs Liberals at 33%. The Conservatives are down 2% vs last month whereas the Liberals have gained 2% vs last month. (iii) The Dart & Maru Blue / Toronto Sun post Ethics Commissioner Aug 21 poll [LINK] shows the Conservatives at 39% (+2% vs last month) vs the Liberals at 32% (unchanged vs last month). The interesting part of this poll is that there are only 9% Undecided, which must be considered a plus to the Conservatives.

Oil & Natural Gas – Tropical Storm Dorian, too early to tell if coming to Gulf Coast

Last night, we tweeted [LINK] on the emergence of Dorian into Tropical Storm status this weekend. The National Hurricane Center’s latest update is as 5am MT today and it shows the Dorian path moving a little to the north and towards the Dominican Republic. We said it was still to early to tell if it was going to come into the Gulf Coast, but Mon/Tues will likely be the critical period to determine the path. The rule of thumb we have used is that a hurricane/tropical storm in this direction with a path at or just north of the Dominican Republic will typically turn north along the Atlantic Coast, whereas a hurricane or tropical storm path

Polls show very

close race for

Cdn federal

election

Too early to tell if

Dorian will hit Gulf

Coast

https://leger360.com/wp-content/uploads/2019/08/Federal-Politics-August-2019.pdf

https://abacusdata.ca/what-impact-did-the-ethics-commissioners-report-have-on-the-political-landscape-not-much-it-seems/

https://www.ipsos.com/sites/default/files/ct/news/documents/2019-08/august_16_to_19_2019_canada_factum_1.pdf

https://dartincom.ca/wp-content/uploads/2019/08/SunPostMedia-Fed-Vote-August-21-2019.pdf



28

Energy Tidbits

that is south of the Dominican Republic is more likely to go into the Gulf Coast. The best example of this rule of thumb was the below hurricane path map for 2007.

Figure 29: Tropical Storm Dorian

Source: National Hurricane Center

Figure 30: Summer 2007 Hurricane Tracking Paths

Source: National Hurricane Center

Governance – Will the redefined purpose of a corporation set stage for more lawsuits?

We are a little surprised that this Business Roundtable redefined purpose of a corporation [LINK] hasn’t got more attention. The more we think about this redefined purpose of a

More lawsuits

from redefined

purpose of a

corporation?

https://opportunity.businessroundtable.org/ourcommitment/


29

Energy Tidbits

corporation, the more we think there are a wide range of consequences from the commitments made by the CEOs who signed this commitment. (i) The obvious one is it has to open up the potential for an increase in lawsuits, in particular the commitment from these CEOs to protect the environment – “Supporting the communities in which we work. We respect the people in our communities and protect the environment by embracing sustainable practices across our businesses”. (ii) The related item is how this has to change the standard defense of companies when they are challenged on their actions. Companies defend their actions as in the best interests of shareholders. This seems to put that standard defense or primary defense argument out the door, which is another reason why we expect increased lawsuits. (iii) We also wonder about lawsuits or employment actions from employees. The CEOs commit to compensating employees “fairly”. We recognize that it can be a broad term, but it has to put pressure on CEOs and boards to pay all the employees “fairly” with the threat (we think) of employees putting forward the case (likely many publicly) that they aren’t being compensated fairly, especially lower level employees. Its why linked to this will be increased employee costs. (iv) We also wonder about shareholders if CEOs take major actions that don’t place shareholder value as the priority? (v) Also what about shareholders if compensation committees change their formula for executive compensation to reflect items like community? Some (we are surprised not more) shareholders don’t like big executive compensation payouts when stocks prices/shareholder returns are in the tank and this has the potential to increase the de-linkage of executive comp vs shareholder returns. Our Supplemental Documents package includes the Business Roundtable redefined purpose of a corporation.

Energy Tidbits – Now on Twitter

For new followers to our Twitter, we are trying to tweet on breaking news or early views on energy items, most of which are followed up in detail in the Energy Tidbits memo or in separate blogs. Our Twitter handle is @Energy_Tidbits and can be followed at [LINK]. We wanted to use Energy Tidbits in our name since I have been writing Energy Tidbits memos for over 19 consecutive years. Please take a look thru our tweets and you can see we aren’t just retweeting other tweets. Rather we are trying to use Twitter for early views on energy items. Our Supplemental Documents package includes our tweets this week.

Energy Tidbits – Sign up on our email distribution for tidbits and blogs

Please note that we have set up our Energy Tidbits memo on our Stream Asset Financial website alongside our blogs. The distribution for the Energy Tidbits memo will be via the same notification system used for our blogs. To ensure you receive Energy Tidbits memos, please go to our blog sign up. We will be using the blog notification list for Energy Tidbits. The blog sign up is available at [LINK].

LinkedIn – Look for quick energy items from me on LinkedIn

I can also be reached on Linkedin and plan to use it as another forum to pass on energy items in addition to our weekly Energy Tidbits memo and our blogs that are posted on the SAF Energy website [LINK].

Misc Facts and Figures.

During our weekly review of items for Energy Tidbits, we come across a number of miscellaneous facts and figures that are more general in nature

Look for energy

items on LinkedIn

Sign up to receive

future Energy

Tidbits memos

Energy Tidbits now

on Twitter

https://twitter.com/Energy_Tidbits

http://www.safgroup.ca/research/trends-in-the-market/

http://www.safgroup.ca/


30

Energy Tidbits

Hawaiian pizza originated in Chatham We normally refer to Business in Vancouver for some excellent insights on BC impacting oil and LNG, but this week we noted their “Poll on Canadian food tastes is packed with regional flavour” [LINK]. It was on items like 79% of Cdns would “definitely” or “probably” eat poutine, but one historical food item we did not know was that Hawaiian pizza wasn’t created in Hawaii but in Chatham, Ontario. Wikipedia attributes it to Sam Panopoulos in 1962 at the Satellite Restaurant in Chatham. Being Calgarians, we know our big hits like Ginger Beef at the Silver Inn in Calgary and the Caesar in 1979 at the Calgary Inn (now Westin Hotel)

https://biv.com/article/2019/08/poll-canadian-food-tastes-packed-regional-flavour