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Shale – New technologies are boosting shale productivity in the US
US – Part-time labor is back to 1970s levels taking up slack TPP – Japan and the US are nearly over the last hurdles for a trade deal, including autoparts H5N2 – Bird flu in the US is the worst in decades, cutting into egg and poultry exports from the Midwest |
| MRP | McAlinden Research Partners | DIBS |
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| Data | Mkts | Econ | Pol | Money | Fin | Real | Labor | Svcs | Trade | Energy | Hlth | End |
Daily Intelligence Briefing - April 24, 2015
Today’s Issue Cluster: Shale
- US oil production is set to finally tick down in May ... speculators are preparing for another price spike up to $90 ... others then see another price plunge to $50
- Drilled but untapped wells have trebled in the past year ... the fracklog equals Libya's output ... $65 as the price point to produce
- New technologies are boosting shale productivity in the US ... the rest of the world has yet to join in
- Fracking wastewater induces earthquakes ... Oklahoma now has more seismic activity than California
- Oil producers are flagging financial risks of earthquake-driven regulations and litigation
- China's oil companies are shelving their shale projects and all but quashing the government's ambitious production goals
- Germany's new draft law all but bans fracking for alternative fuel but will review in three years
- Cheaper oil will add up to 1% to global growth this year according to the World Bank
Best of the Rest
US – Part-time labor is back to 1970s levels taking up slack
TPP – Japan and the US are nearly over the last hurdles for a trade deal, including autoparts
H5N2 – Bird flu in the US is the worst in decades, cutting into egg and poultry exports from the Midwest
Recent reports
- China's stocks and economy diverge
- Russia: The Ruble Runs Ahead of Oil
- Aluminum Long vs Steel Short: Iron Price Wars
- Iran's Potential Investment Implications
- Reconfiguring the Abe Trade
MRP's roster of Active Themes
MRP's latest monitors: Macro, Sector, and Country
Joe McAlinden's Market Viewpoint
| MAJOR DATA POINTS | Top |
Germany – Apr: Ifo business confidence in sixth increase; 108.6 from 107.9 / AP / b
US – Mar: Durable Orders Rise Due to Auto, Aircraft Demand; +4.0% from -1.4% / WSJ / AP
US – Mar: Orders for Business Equipment Fall for Seventh Month; -0.5% from -2.2% / R / B / b
| MARKETS | Top |
Nasdaq – Climbs to a Record, Again Fueled by Tech
Nasdaq’s most prominent companies have flourished. Apple Inc. and Google Inc. have become global giants. Microsoft Corp. , Oracle Corp. and Cisco Systems Inc. all pay dividends, which they didn’t in the 1990s. Apple, which had last paid a dividend in 1995, resumed doing so in 2012. ... The Dow and the S&P 500, which didn’t fall nearly as hard as the Nasdaq in the 2000-2002 selloff, had returned to record territory before the 2008 financial crisis and have hit many more records since 2013...
In the past six years, the Nasdaq has nearly quadrupled. That is a rapid rise, but the index covered the same ground in less than half the time from 1997 through early 2000. WSJ
The present trailing price to earnings ratio for the Nasdaq stands at 26 times, according to FactSet. This measure soared to 72 times during the dotcom fever with the likes of Cisco at 127 times, Oracle at 103 times and Yahoo at 418 times earnings....
After falling back below 1,300 during the financial crisis, the Nasdaq has risen roughly 300 per cent, however on an inflation adjusted level, the benchmark significantly trails its internet boom peak. FT / WSJ
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In the past six years, the Nasdaq has nearly quadrupled. That is a rapid rise, but the index covered the same ground in less than half the time from 1997 through early 2000. WSJ
The present trailing price to earnings ratio for the Nasdaq stands at 26 times, according to FactSet. This measure soared to 72 times during the dotcom fever with the likes of Cisco at 127 times, Oracle at 103 times and Yahoo at 418 times earnings....
After falling back below 1,300 during the financial crisis, the Nasdaq has risen roughly 300 per cent, however on an inflation adjusted level, the benchmark significantly trails its internet boom peak. FT / WSJ
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| ECONOMICS | Top |
US – Japan Overtakes China as Largest Bondholder
China's Treasury holdings declined for a sixth straight month in February... Japan's holdings of $1.224 trillion exceeded China's $1.223 trillion... To keep the yuan from plunging, the People's Bank of China started tapping its Treasurys to sell dollars and buy the Chinese currency. As a result, Beijing's foreign-exchange reserves fell from nearly $4 trillion in June 2014 to $3.73 trillion at the end of March. The drop over the three months through March was particularly steep at roughly $110 billion. N
The Treasury data, released with a two-month lag, don’t capture all of the Treasury-bond holdings China may have parked at middlemen in places such as the U.K. and Belgium. Many analysts and investors believe China has considerable holdings bought through such intermediaries. WSJ
Japan’s Government Pension Investment Fund, one of the biggest in the world, announced last year a far-reaching shift out of domestic bonds and into international equities and fixed income. ...
The US Federal Reserve remains the single biggest holder of Treasuries, after snapping up $2.5tn through its quantitative easing programme. The bond-buying has since ended, but repayments and coupons are being reinvested in the market, keeping the Fed’s holdings steady. However, Japan and China are by some distance the biggest foreign holders of Treasuries. FT
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The Treasury data, released with a two-month lag, don’t capture all of the Treasury-bond holdings China may have parked at middlemen in places such as the U.K. and Belgium. Many analysts and investors believe China has considerable holdings bought through such intermediaries. WSJ
Japan’s Government Pension Investment Fund, one of the biggest in the world, announced last year a far-reaching shift out of domestic bonds and into international equities and fixed income. ...
The US Federal Reserve remains the single biggest holder of Treasuries, after snapping up $2.5tn through its quantitative easing programme. The bond-buying has since ended, but repayments and coupons are being reinvested in the market, keeping the Fed’s holdings steady. However, Japan and China are by some distance the biggest foreign holders of Treasuries. FT
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US – Latest Sign of Emerging Inflation
Much of the downward pressure in recent months was due to plummeting oil prices, which began tumbling last summer... U.S. wages also may be starting to pick up. Average hourly earnings rose 0.3% in March from February. But when factoring in stronger inflation, real hourly earnings rose a milder 0.1%. WSJ
US – Influence Hinges on Future of Dollar, Yuan
The U.S. accounts for just 23% of world economic output, but 43% of all cross-border financial transactions are denominated in dollars, as are 63% of known global central-bank reserves. ... It wasn’t always so. While the U.S. economy surpassed Britain’s in size by the late 1800s, international use of the dollar lagged far behind use of the pound sterling because U.S. financial markets were so underdeveloped.... By the late 1920s the dollar had surpassed sterling as a reserve currency, notes economic historian Barry Eichengreen.
Thus, a country needs at least two things to issue the dominant reserve currency: a big economy and a deep, sophisticated and open financial market. China has the first, but not the second. It’s trying to change that. The yuan can now be traded in 14 places outside China. It is used to pay for nearly 25% of China’s merchandise trade. And foreign investors can own up to $1 billion of Chinese stocks and bonds. China is now lobbying for the inclusion of the yuan in the basket of currencies that comprise the IMF’s own currency, the “special drawing right,” or SDR....
Central banks that want to hold dollars can choose from trillions of dollars of easily traded, safe Treasury bonds. Nothing comparable exists in euros or yen, much less yuan, and it’s not clear China wants that to change. WSJ
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Thus, a country needs at least two things to issue the dominant reserve currency: a big economy and a deep, sophisticated and open financial market. China has the first, but not the second. It’s trying to change that. The yuan can now be traded in 14 places outside China. It is used to pay for nearly 25% of China’s merchandise trade. And foreign investors can own up to $1 billion of Chinese stocks and bonds. China is now lobbying for the inclusion of the yuan in the basket of currencies that comprise the IMF’s own currency, the “special drawing right,” or SDR....
Central banks that want to hold dollars can choose from trillions of dollars of easily traded, safe Treasury bonds. Nothing comparable exists in euros or yen, much less yuan, and it’s not clear China wants that to change. WSJ
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US – Philly Fed Coincident Indexes increased in 46 states
This map was all red during the worst of the recession, and is almost all green again. cr
US – 6th longest US economic expansion since the 1850s / bi
| POLITICS & FISCAL POLICY | Top |
US – Congress Is Tiptoeing Away From Spending Curbs
the deficit has shrunk considerably due to spending cuts and an expanding economy that has brought in more revenue. Deficits are projected to hover around 2.4% of gross domestic product over the next three years, below the average of 2.7% for the past 40 years, according to the Congressional Budget Office. Moreover, lawmakers are finding that years of spending cuts are beginning to have more bite, especially at the Pentagon. On the current path, defense spending as a share of GDP will fall by 2025 to its lowest levels in more than 60 years, a trend Defense Secretary Ash Carter called “dangerous” in a speech this month.
Even if spending doesn’t rise, the government has ceased to be a drag on economic growth. During the fourth quarter, the federal government’s contribution to GDP rose above its year-earlier level for the first time in two years, and just the second time since 2010. State and local governments posted the largest year-to-year rise in their contribution to GDP since 2009. WSJ
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Even if spending doesn’t rise, the government has ceased to be a drag on economic growth. During the fourth quarter, the federal government’s contribution to GDP rose above its year-earlier level for the first time in two years, and just the second time since 2010. State and local governments posted the largest year-to-year rise in their contribution to GDP since 2009. WSJ
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| MONETARY POLICY | Top |
Fed – Rate Decisions Hang on Dollar, Growth Concerns
As they discuss the outlook beyond midyear, officials are increasingly weighing how much the strong dollar might have hurt the prospects of achieving their economic forecast of annual growth of around 2.5%, gradual increases in inflation and continued declines in unemployment....
New York Fed economists estimate the dollar’s appreciation could reduce the growth rate of U.S. economic output by about 0.6 percentage point this year. WSJ
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New York Fed economists estimate the dollar’s appreciation could reduce the growth rate of U.S. economic output by about 0.6 percentage point this year. WSJ
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Fed – Prepares toolkit for higher rates
The central bank is planning to use the interest rate it pays on excess reserves parked at the central bank supplemented by a so-called overnight reverse repo facility (RRP) to manage its key fed funds rate — as well as keeping other levers in the wings.... The central bank has been testing this financial plumbing for a year and a half...
The Fed also faces the looming runoff of its portfolio of Treasuries, which begins early next year. Marc Chandler of Brown Brothers Harriman estimates there are at least $200bn of Treasuries in the Fed’s portfolio due to mature in 2016. Allowing the redemptions to proceed uninterrupted would in itself be a tightening of policy as the Fed balance sheet shrinks sharply. The issue for the Fed is whether to adjust the profile of redemptions FT
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The Fed also faces the looming runoff of its portfolio of Treasuries, which begins early next year. Marc Chandler of Brown Brothers Harriman estimates there are at least $200bn of Treasuries in the Fed’s portfolio due to mature in 2016. Allowing the redemptions to proceed uninterrupted would in itself be a tightening of policy as the Fed balance sheet shrinks sharply. The issue for the Fed is whether to adjust the profile of redemptions FT
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| FINANCE | Top |
US – Ex-Fed chief calls for regulatory shakeup
Paul Volcker, former head of the Federal Reserve, has issued a radical call for the US to follow the UK’s lead by streamlining its mishmash of financial watchdogs in order to close worrisome gaps in regulation.... He called for the abolition of one of three main US bank regulators, the Office of the Comptroller of the Currency, and for the merger of two markets regulators — the Securities and Exchange Commission and the Commodity Futures Trading Commission.... Referring to shadow banking, he said: “At this point the non-bank markets are more important than the commercial banking markets and the fact that the regulatory structure doesn’t really reflect that is part of the problem.” FT
Volcker also said that the top U.S. risk council - a body that groups the major watchdogs and is often criticized as unwieldy - should be streamlined and hand over some of its tasks to a more nimble group. The Treasury Secretary would continue to chair the Financial Stability Oversight Council (FSOC) under the Volcker plan, but would no longer have a vote on it, to avoid the appearance of subjecting it to political expediency. The council would set up a smaller group, the Systemic Issues Committee, which would determine which companies or activities should be subject to regulation, even if they were outside the mandate of the existing watchdogs. R
Volcker also said that the top U.S. risk council - a body that groups the major watchdogs and is often criticized as unwieldy - should be streamlined and hand over some of its tasks to a more nimble group. The Treasury Secretary would continue to chair the Financial Stability Oversight Council (FSOC) under the Volcker plan, but would no longer have a vote on it, to avoid the appearance of subjecting it to political expediency. The council would set up a smaller group, the Systemic Issues Committee, which would determine which companies or activities should be subject to regulation, even if they were outside the mandate of the existing watchdogs. R
US – Main Street banks struggle at the core
The main reason is rates. Until the Federal Reserve raises the cost of borrowing, banks’ main earnings driver — the gap between what they pay for deposits and what they charge for loans and earn on investments — will remain under pressure.... Spreads “are unimaginably low for those of us who have followed this area for a long time,” says Nancy Bush of Georgia-based NAB Research....
David Stevens, head of the Mortgage Bankers’ Association.... noted that some banks had reported their biggest mortgage volume months in their history in recent weeks but his organisation expects volumes to decline over time, with $1.23tn this year and $1.17tn in 2016, as increased numbers of new purchases fail to take up the slack from an expected drought in refinancing when interest rates finally rise. FT
David Stevens, head of the Mortgage Bankers’ Association.... noted that some banks had reported their biggest mortgage volume months in their history in recent weeks but his organisation expects volumes to decline over time, with $1.23tn this year and $1.17tn in 2016, as increased numbers of new purchases fail to take up the slack from an expected drought in refinancing when interest rates finally rise. FT
US – Small banks may have better earnings than giants
Over the past decade, smaller banks, defined as those not included in the 25 largest commercial banks by assets, have expanded to overtake their bigger brethren in commercial real-estate lending. Small banks now hold more than $1 trillion of loans backed by commercial real estate, compared with about $583 billion at bigger banks... the amount held by smaller banks rose 9.7% in the 12 months through March, compared with 4.5% for large banks. Smaller banks also have seen rapid growth in the broad category called commercial and industrial lending WSJ
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| REAL ESTATE | Top |
US – Nearing Peak, Home Price Gains to Slow
We think 4% growth in prices is a reasonable expectation over the next year or two. ... Louis Conforti, a principal with the global real-estate investment firm Colony Capital, claims that a change in the zeitgeist has developed among younger adults, driving them to rentals. He dubs the change “Uberization.” Conforti explains: “Just as many feel it’s silly to own a car when you can have a fleet at your disposal with the click of the computer, why pinch pennies to save for a mortgage down payment, rather than rent an abode, when you have no idea where you may be working in five years’ time.” Bn
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US – As California Drought Drags On, Home Builders Vie for a Voice
Home builders, which are hoping to fend off calls for restrictions or moratoriums on new construction, are pushing the idea that newly built homes conserve far more water than older homes. ... California’s home builders and much of the rest of the state are girding for the implementation of Gov. Jerry Brown’s April 1 mandate that, by June, users of state water cut their consumption by an average of 25% from 2013 levels.....
The National Association of Home Builders estimates that constructing a single-family home generates three full-time jobs for a year. Of economists surveyed this month by The Wall Street Journal, 51% said the drag from the 25% water-use cuts mandated by Gov. Brown will be too small to show up in economic data such as the state’s income growth, employment and retail activity. Another 44% predicted the impact would be small, but measurable. WSJ
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The National Association of Home Builders estimates that constructing a single-family home generates three full-time jobs for a year. Of economists surveyed this month by The Wall Street Journal, 51% said the drag from the 25% water-use cuts mandated by Gov. Brown will be too small to show up in economic data such as the state’s income growth, employment and retail activity. Another 44% predicted the impact would be small, but measurable. WSJ
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US – AIA: Architecture Billings Index increases / cr
| LABOR & EDUCATION | Top |
US – Part-time ‘slack’ may be nearing its end
U.S. part-time employment is fast-approaching levels common since the 1970s in a sign that a key part of labor market slack may be almost gone ... A Reuters/Ipsos online poll found a potentially modest gap between the hours workers want and what they can find....
Government labor surveys show the share of employees who say they want to work full time but could only find part-time work was 4.5 percent in March, down from 6.5 percent at the end of the recession in 2009 and approaching the average of roughly 3.9 percent since 1975. The share of those who choose to work part-time because of family and health constraints, lifestyle preferences, or other reasons, is around 13 percent, a level that has been relatively stable since at least the 1970s. R
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Government labor surveys show the share of employees who say they want to work full time but could only find part-time work was 4.5 percent in March, down from 6.5 percent at the end of the recession in 2009 and approaching the average of roughly 3.9 percent since 1975. The share of those who choose to work part-time because of family and health constraints, lifestyle preferences, or other reasons, is around 13 percent, a level that has been relatively stable since at least the 1970s. R
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| SERVICES | Top |
Telecoms – Comcast walks away from $45b TWC deal
Comcast officially dropped its $45bn bid for Time Warner Cable on Friday after failing to convince regulators that a deal that would have transformed the US media and internet landscape was in the public interest. “Today, we move on,” said Brian Roberts, Comcast chairman and chief executive... TWC was trying to salvage the deal as late as Thursday FT
One of the biggest concerns of the Justice Department... was that Comcast, with such a large footprint in broadband and cable television operations, could use its clout to place restraints on television networks. For example, it could pressure networks not sell their content through stand-alone Internet streaming services, like those offered by HBO and CBS, that let consumers watch programming without paying for a traditional cable subscription. NYT / WSJ / NYT / WSJ
Federal Communications Commission Chairman Tom Wheeler said on Friday that the merger would have posed an "unacceptable risk to competition and innovation." R
Washington’s opposition to Comcast Corp. ’s $45 billion takeover of Time Warner Cable Inc. will reverberate to Wall Street, as bankers, lawyers and traders see fees and profits dashed at regulators’ hands. Bankers stood to collect an estimated $380 million in fees WSJ / WSJ
The transaction’s demise is a stunning turnaround for one of the largest proposed media mergers in years. When it was announced in February 2014, many on Wall Street believed the deal had a strong shot at being approved, albeit with concessions to regulators. WSJ
The collapse of the deal effectively put an end to a series of other transactions that would have reshaped the media industry. Charter Communications, the regional cable operator, will no longer acquire some of the Time Warner Cable markets that Comcast was planning to divest. Charter’s $10.4 billion deal for Bright House Networks also was contingent on Comcast’s purchase of Time Warner Cable. NYT / B
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One of the biggest concerns of the Justice Department... was that Comcast, with such a large footprint in broadband and cable television operations, could use its clout to place restraints on television networks. For example, it could pressure networks not sell their content through stand-alone Internet streaming services, like those offered by HBO and CBS, that let consumers watch programming without paying for a traditional cable subscription. NYT / WSJ / NYT / WSJ
Federal Communications Commission Chairman Tom Wheeler said on Friday that the merger would have posed an "unacceptable risk to competition and innovation." R
Washington’s opposition to Comcast Corp. ’s $45 billion takeover of Time Warner Cable Inc. will reverberate to Wall Street, as bankers, lawyers and traders see fees and profits dashed at regulators’ hands. Bankers stood to collect an estimated $380 million in fees WSJ / WSJ
The transaction’s demise is a stunning turnaround for one of the largest proposed media mergers in years. When it was announced in February 2014, many on Wall Street believed the deal had a strong shot at being approved, albeit with concessions to regulators. WSJ
The collapse of the deal effectively put an end to a series of other transactions that would have reshaped the media industry. Charter Communications, the regional cable operator, will no longer acquire some of the Time Warner Cable markets that Comcast was planning to divest. Charter’s $10.4 billion deal for Bright House Networks also was contingent on Comcast’s purchase of Time Warner Cable. NYT / B
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Telecoms – Cablevision Offers Packages Aimed at Cord-Cutters
Unlike the Verizon offering, Cablevision’s cord-cutter deal doesn’t come with any access to cable channels such as Walt Disney Co. ’s ESPN or Viacom ’s MTV. The free digital antenna will let viewers access broadcast TV programming from CBS, Fox, ABC and NBC. .... Customers who sign up to either package can choose to pay extra to add HBO Now, the HBO channel’s stand-alone streaming service. WSJ
Telecoms – Resistance to Verizon FiOS Promotion
Walt Disney Co. and 21st Century Fox are refusing to carry some advertisements for its slim new cable packages... NBC hadn’t pulled its ads for Verizon’s new offering as of yet. WSJ / NYT
| TRADE & TRANSPORTATION | Top |
TPP – Deal Gives Obama Authority but Builds In a Delay
House and Senate committees this week easily agreed to give President Obama fast-track authority to negotiate a sweeping trade accord with Pacific nations... Senators demanded tough limits on currency manipulation by trading partners of the United States and placed restrictions on the import of products made with child labor. .... Another provision would preclude trading partners from organizing boycotts, imposing sanctions or pressing divestment on Israel — popular here, less so in the Muslim countries in the deal. ...
A surprise addition from Senator Robert Menendez, Democrat of New Jersey, was an innocuous-sounding “No Fast Track for Human Traffickers” amendment, which would prohibit expedited consideration of trade agreements with any country in the top tier of the State Department’s human trafficking list. Included in that list of 23 nations in Malaysia.NYT
the new bill before both the Senate Finance and House Ways and Means committees this week lays out new requirements for openness and review. The president would have to notify Congress of the accord’s completion 90 days before he intends to sign it, a delay similar to past requirements. But in a new twist, the full agreement would have to be made public for 60 days before the president gives his final assent and sends it to Congress. Congress could not begin considering it for 30 days after that. That extra time means that Congress probably will not consider the Trans-Pacific Partnership until at least October, the thick of the presidential primary debate season and just as White House hopefuls are preparing for the first primary voting. NYT / wapo
A surprise addition from Senator Robert Menendez, Democrat of New Jersey, was an innocuous-sounding “No Fast Track for Human Traffickers” amendment, which would prohibit expedited consideration of trade agreements with any country in the top tier of the State Department’s human trafficking list. Included in that list of 23 nations in Malaysia.NYT
the new bill before both the Senate Finance and House Ways and Means committees this week lays out new requirements for openness and review. The president would have to notify Congress of the accord’s completion 90 days before he intends to sign it, a delay similar to past requirements. But in a new twist, the full agreement would have to be made public for 60 days before the president gives his final assent and sends it to Congress. Congress could not begin considering it for 30 days after that. That extra time means that Congress probably will not consider the Trans-Pacific Partnership until at least October, the thick of the presidential primary debate season and just as White House hopefuls are preparing for the first primary voting. NYT / wapo
TPP – Japan, US move closer on autoparts
Though no grand bargain was reached, Japan and the U.S. did lay out a path toward resolving differences over automotive trade in their latest cabinet-level meeting on the Trans-Pacific Partnership..... Rice, autos and other specific TPP issues are not on the agenda for the April 28 summit between Japanese Prime Minister Shinzo Abe and U.S. President Barack Obama. But neither leader can avoid making painful trade-offs if the TPP talks are to come to fruition. N / N
TPP – ‘Fighting the secret plot to make the world richer’
Jason Furman, the chairman of the president’s Council of Economic Advisers, says that by 2025 the TPP would raise American incomes by 0.4% per year. Public support for foreign trade is high. Gallup finds that 58% of Americans see it mostly as an opportunity—a figure that has risen 17 percentage points since the recession—and only 33% see it as a threat. Republicans’ views have not changed much, but the proportion of Democratic voters who see trade positively has shot up from 36% to 61% since 2008 ... the US Chamber of Commerce estimates that imports boost the average American family’s purchasing power by $10,000 a year.
However, trade has probably also held down blue-collar workers’ wages in rich countries. A new paper, from Ann Harrison of the University of Pennsylvania and colleagues finds that if there had been no imports, median real wages in America in 2008 would have been 3% higher than they actually were. For workers in menial tasks, they would have been 15% higher. Another paper found that a quarter of the employment decline in American manufacturing from 1990 to 2007 was caused by competition from Chinese imports. Yet it is difficult to blame trade deals for this. America has no free-trade agreement with India, yet imports of goods from there have more than doubled over the past decade. E
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However, trade has probably also held down blue-collar workers’ wages in rich countries. A new paper, from Ann Harrison of the University of Pennsylvania and colleagues finds that if there had been no imports, median real wages in America in 2008 would have been 3% higher than they actually were. For workers in menial tasks, they would have been 15% higher. Another paper found that a quarter of the employment decline in American manufacturing from 1990 to 2007 was caused by competition from Chinese imports. Yet it is difficult to blame trade deals for this. America has no free-trade agreement with India, yet imports of goods from there have more than doubled over the past decade. E
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| ENERGY & ENVIRONMENT | Top |
The industry is still evolving rapidly. Flourishing innovation in the Bakken and the other centres of US oil production has turned them into the energy industry’s equivalent of Silicon Valley: crucibles of creative activity where engineers collaborate and compete to push back the frontiers of technology. Ideas being developed here could one day be deployed anywhere in the world, because countries from Argentina to China have their own shale reserves, and are looking to follow the US lead....
Every well is different, and drilling generates a wealth of data about pressures, types of rock, the way it was fracked, the proppant used. After six years of production, data can be analysed to see which methods and conditions have generated the best results. Deploying that IT effectively is key to the future of the shale revolution.... New technologies are coming into use all the time: new fracking fluids, better drills, more sensors to deliver data on what is happening down the well, and more computer power to analyse that data to inform decisions about how the next well should be drilled. There are also more straightforward savings to be achieved simply by managing operations better....
A weaker oil price is on balance good news for the world economy, adding an expected 0.5 to 1 per cent to global growth this year, according to World Bank estimates. The effect on some of the losers from cheaper oil, however, could be catastrophic. “The shale revolution is the most politically disruptive factor in the global oil market since the formation of Opec in 1960,” says Edward Morse, head of commodity research at Citigroup. FT
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Every well is different, and drilling generates a wealth of data about pressures, types of rock, the way it was fracked, the proppant used. After six years of production, data can be analysed to see which methods and conditions have generated the best results. Deploying that IT effectively is key to the future of the shale revolution.... New technologies are coming into use all the time: new fracking fluids, better drills, more sensors to deliver data on what is happening down the well, and more computer power to analyse that data to inform decisions about how the next well should be drilled. There are also more straightforward savings to be achieved simply by managing operations better....
A weaker oil price is on balance good news for the world economy, adding an expected 0.5 to 1 per cent to global growth this year, according to World Bank estimates. The effect on some of the losers from cheaper oil, however, could be catastrophic. “The shale revolution is the most politically disruptive factor in the global oil market since the formation of Opec in 1960,” says Edward Morse, head of commodity research at Citigroup. FT
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Shale – US production peak over
Shale oil production in the U.S. has come to an inflection point. Companies have begun cutting back output after several years of expansion. ... Total production in the seven most prolific shale oil fields, including Bakken which spans states including North Dakota and Eagle Ford in Texas, will dip 1% in May from a month earlier to 5.56 million barrels a day, according to an estimate by the U.S. Energy Information Administration. This will be the first significant drop in shale oil production since prices began declining around July last year...
Ryan Lance, chairman and CEO of ConocoPhillips, a leading shale player, said he is betting on increasing volatility during a speech at IHS Energy CERAWeek conference, which started in Houston on April 20. "If $80 or $90 is coming back, there's a good chance of $50 and $60 coming back as well," Lance said. Shale oil production is likely to pick up again if prices rise, causing prices to fall back again. N
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Ryan Lance, chairman and CEO of ConocoPhillips, a leading shale player, said he is betting on increasing volatility during a speech at IHS Energy CERAWeek conference, which started in Houston on April 20. "If $80 or $90 is coming back, there's a good chance of $50 and $60 coming back as well," Lance said. Shale oil production is likely to pick up again if prices rise, causing prices to fall back again. N
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Shale – 4,700 drilled but uncompleted wells in the US
Drillers in oil and gas fields from Texas to Pennsylvania have yet to turn on the spigots at 4,731 wells they’ve drilled, keeping 322,000 barrels a day underground... almost as much as OPEC member Libya has been pumping this year. ... the fracklog... has tripled in the past year .... with storage tanks the fullest since 1930... The U.S. fracklog has ballooned as drillers wait for prices to recover, with oil wells making up more than 80 per cent of the total. B
Half of the 41 fracking companies operating in the U.S. will be dead or sold by year-end because of slashed spending by oil companies, an executive with Weatherford International Plc said... There were 61 fracking service providers in the U.S., the world’s largest market, at the start of last year. Consolidation among bigger players began ... in November B / b
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Half of the 41 fracking companies operating in the U.S. will be dead or sold by year-end because of slashed spending by oil companies, an executive with Weatherford International Plc said... There were 61 fracking service providers in the U.S., the world’s largest market, at the start of last year. Consolidation among bigger players began ... in November B / b
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Shale – Oil at $65 Seen Freeing 500k bpd Fracklog
Oil needs to recover to $65 a barrel for U.S. drillers to tap a pent-up supply locked in shale wells and unleash more crude on markets than is produced by Libya. Dipping into this “fracklog” would add an extra 500,000 barrels a day of oil into the market by the end of next year, Bloomberg Intelligence said B
Shale – Maps Pinpoint Earthquakes Linked to Drilling
The United States Geological Survey on Thursday released its first comprehensive assessment of the link between thousands of earthquakes and oil and gas operations, identifying and mapping 17 regions where quakes have occurred... By far the hardest-hit state, the report said, is Oklahoma, where earthquakes are hundreds of times more common than they were until a few years ago...
Hydraulic fracturing, a drilling technique that injects a high-pressure mix of water and chemicals into the ground to break rock formations and release gas, has drawn widespread attention. But injecting water to dispose of waste from drilling or production is a far greater contributor to earthquakes. NYT
Oklahoma last year experienced 585 earthquakes of 3.0 or greater magnitude—big enough to be felt indoors—according to the state, more than in the previous 30 years combined. WSJ / AP
Earthquake activity in Oklahoma in 2013 was 70 times greater than the rate of earthquakes prior to 2008. Geologists historically recorded an average of 1.5 earthquakes of magnitude 3 or greater each year. The state is now recording an average of 2.5 magnitude 3 or greater earthquakes each day, according to geologists. AP
Shale – OK overtakes CA as state with most seismic activity / b
Shale – Fracking’s New Legal Threat: Earthquake Suits
So far, most of the tremors under investigation in Oklahoma and other oil-producing states, including Arkansas, Kansas, Ohio and Texas, have been too small to cause major damage. But the prospect of facing juries over quake-related claims is reverberating throughout the energy industry, which fears lawsuits and tighter regulations could increase costs and stall drilling....
the most serious seismic risk comes from .... disposal of toxic fluids left over from fracking and drilling by putting it in wells deep underground. Geologists concluded decades ago that injecting fluid into a geologic fault can lubricate giant slabs of rock, causing them to slip. Scientists say disposal wells are sometimes bored into unmapped faults. The practice isn't new, but has proliferated with the U.S. drilling boom. Some state regulators are already trying to address deep-injection-wells worries.... big oil companies like Continental Resources Inc. have flagged potential financial risks if earthquakes lead to stricter regulations. WSJ
the most serious seismic risk comes from .... disposal of toxic fluids left over from fracking and drilling by putting it in wells deep underground. Geologists concluded decades ago that injecting fluid into a geologic fault can lubricate giant slabs of rock, causing them to slip. Scientists say disposal wells are sometimes bored into unmapped faults. The practice isn't new, but has proliferated with the U.S. drilling boom. Some state regulators are already trying to address deep-injection-wells worries.... big oil companies like Continental Resources Inc. have flagged potential financial risks if earthquakes lead to stricter regulations. WSJ
Shale – Fracking breaches ‘hidden from public’
Over the past six years the shale revolution unleashed by fracking and horizontal drilling has developed so quickly that many state and federal regulators have been left standing. Only now are they beginning to catch up by introducing new safeguards, but not all public officials deem them necessary. Of 36 states with active oil and gas development, the NRDC and a watchdog called the FracTracker Alliance found that only three make data on violations easily accessible to the public — Colorado, Pennsylvania and West Virginia... In 33 states there is little or no public information on well site issues monitored by regulators such as oil spills, drinking water contamination, air pollution and the strength of well casings FT
Shale – ND to join WY lawsuit against federal fracking rules
North Dakota... will join Wyoming in a lawsuit challenging a new federal rule requiring more information about the process when it's used on U.S. government lands. The Obama administration announced in March that it will require companies that drill on federal lands to disclose the chemicals used in hydraulic fracturing. The U.S. Bureau of Land Management rule, under consideration for about four years, takes effect in June. Wyoming and North Dakota believe the move is unlawful in part because it interferes with their own regulations AP
Interior Secretary Sally Jewell announced a sweeping overhaul ... of the rules governing oil and gas production on federal land, saying the government's regulations have not kept pace with the industry's technological advancements. The review is the latest in a series of energy reforms announced by the Obama administration in recent months, and will focus on royalty rates, bonding requirements, rental payments and minimum-lease bids paid by oil and gas companies working on federal lands... While energy production on federal land accounts for a fraction of total American output, the issue is of special importance in Wyoming. The Cowboy State led the nation in natural gas sales from production on federal land and was third in crude sales in 2013 CST
Interior Secretary Sally Jewell announced a sweeping overhaul ... of the rules governing oil and gas production on federal land, saying the government's regulations have not kept pace with the industry's technological advancements. The review is the latest in a series of energy reforms announced by the Obama administration in recent months, and will focus on royalty rates, bonding requirements, rental payments and minimum-lease bids paid by oil and gas companies working on federal lands... While energy production on federal land accounts for a fraction of total American output, the issue is of special importance in Wyoming. The Cowboy State led the nation in natural gas sales from production on federal land and was third in crude sales in 2013 CST
Shale – German Cabinet Approves Anti-Fracking Draft Law
Germany’s draft law bans the use of hydraulic fracturing technology for drilling operations shallower than 3,000 meters, and all types of fracking in nature reserves and national parks.... Fracking technology has been used since the 1960s in Germany, allowing the industry to maximize the output of conventional gas fields. While fracking for conventional gas deposits will remain permitted, the new law tightens rules aimed at preventing water contamination from fluids released during the fracking process.... A panel of experts will reassess technological and scientific developments in mid-2018, potentially allowing commercial fracking in some cases from 2019. WSJ
Shale – Cnooc shelves project
China National Offshore Oil Corp (Cnooc) has decided to shelve its shale gas project in Anhui province... Chinese and international oil companies are cutting spending following a steep slide in crude prices over the past year, and expensive shale projects are begin targeted. Cnooc said last month it planned to reduce spending this year by up to 35 per cent.... Cnooc joins larger Chinese firm PetroChina, which has already sharply scaled back on shale project in Sichuan province that it was developing FT
China's desire to achieve a U.S.-style shale boom is reflected in a 2012 plan to produce an ambitious 60 to 100 billion cubic meters of shale gas by 2020.... But by 2014, the State Council had already cut China's 2020 shale gas production goal to just over 30 billion cubic meters, an acknowledgement of the significant obstacles the country faces in exploiting its shale gas resources. C
China's desire to achieve a U.S.-style shale boom is reflected in a 2012 plan to produce an ambitious 60 to 100 billion cubic meters of shale gas by 2020.... But by 2014, the State Council had already cut China's 2020 shale gas production goal to just over 30 billion cubic meters, an acknowledgement of the significant obstacles the country faces in exploiting its shale gas resources. C
| HEALTH | Top |
H5N2 – Bird flu cuts into egg, poultry exports in Iowa, Midwest
A few countries — including China, Russia, South Korea and Thailand — have shut off all imports of poultry products from the United States. Mexico, Japan and Canada are among 33 countries declining to accept poultry products from entire states, including Iowa, the nation's leading egg producer, and Minnesota, the top turkey grower in the U.S. Other countries, including Hong Kong, limit the ban to counties where the virus has been confirmed. Some countries — including Honduras, Kazakhstan and Qatar — require products to be heated to a temperature that will kill the virus before they'll accept poultry products....
The exports of poultry products have been growing. For example, the United States exported 42.5 million dozen shell eggs in 2014, up from nearly 16 million in 2012 and 38.8 million dozen eggs as processed egg products, up from 15 million just two years earlier. AP
The exports of poultry products have been growing. For example, the United States exported 42.5 million dozen shell eggs in 2014, up from nearly 16 million in 2012 and 38.8 million dozen eggs as processed egg products, up from 15 million just two years earlier. AP
H5N2 – U.S. chickens face worst bird flu in decades
The U.S. poultry industry may be facing the worst outbreak of deadly bird flu in more than three decades, according to the World Organisation for Animal Health. "They are dealing with a level of exposure that is probably unprecedented back to the outbreak in 1983 in Delaware and Pennsylvania," Brian Evans, a deputy director general .... An outbreak of another H5N2 virus in the Northeast in 1983 and 1984 resulted in the destruction of 17 million chickens, turkeys and guinea fowl ... The OIE has reported various strains of bird flu in 26 countries across the globe since Jan. 1, ... The current H5N2 strain has also been reported in Canada and parts of Asia, particularly Taiwan and China B
H5N2 – USDA starts on potential vaccine
A pure "seed strain" would target the H5N2 virus ... as well as some other highly pathogenic viruses in the H5 family that have been detected in other parts of North America. If the USDA decides the vaccine is necessary to stop avian influenza, it will provide that seed strain to drug manufacturers.... USDA officials say the H5N2 virus could be a problem for the poultry industry for several years. And they say the virus could reappear this fall when the wild waterfowl that are believed to carry it fly south for the winter. Another concern is that it could spread to big poultry-producing states in the East....
James Sumner, president of the Georgia-based USA Poultry and Egg Export Council, said some countries might regard vaccine use as a reason to bar imports from the U.S. The vaccine could mask any viruses that poultry are carrying, because tests for the disease look for antibodies — the same antibodies that vaccines trigger a body to produce... Dr. Kyoungjin Yoon, an avian influenza expert at Iowa State University, said human experience shows flu vaccines don't always match well with viruses in circulation. AP
James Sumner, president of the Georgia-based USA Poultry and Egg Export Council, said some countries might regard vaccine use as a reason to bar imports from the U.S. The vaccine could mask any viruses that poultry are carrying, because tests for the disease look for antibodies — the same antibodies that vaccines trigger a body to produce... Dr. Kyoungjin Yoon, an avian influenza expert at Iowa State University, said human experience shows flu vaccines don't always match well with viruses in circulation. AP
H5N2 – CDC eyeing bird flu vaccine for humans
Federal officials said Wednesday they're taking steps to create a human vaccine for the bird flu virus that's slammed the Midwest poultry industry, though they still consider the danger to be low and the food supply not at risk. Dr. Alicia Fry, an influenza expert with the federal Centers for Disease Control and Prevention, said ... "We're really at the beginning of this and so are monitoring very closely. And we're cautiously optimistic that we will not see any human cases,"... It's standard CDC procedure with all new flu viruses to begin looking at creating a human vaccine, Fry said. She said they're preparing a seed strain, essentially a pure sample of the right viruses that could be the foundation for a vaccine. AP
| ENDNOTES | Top |
English most studied foreign language
English is by far the most commonly studied foreign language in the world, with 1.5 billion learners... Chinese actually has the most native speakers in the world, with 1.39 billion people speaking its various dialects, compared to 527 million native English speakers. Yet only about 30 million people in the world study Chinese as a foreign language. wapo
Warren Hatch, PhD, CFA
Portfolio Management and Global Investment Strategy
McAlinden Research Partners
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