Wednesday, September 9, 2020

Crude Oil -- Surprise Build -- API -- September 9, 2020

API: it's always a surprise. Analysts expected a draw of 1.335 million bbls. In fact, there was a "surprise" build: a build of almost 3 million bbls. We will wait to see what the EIA reports tomorrow. 

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Back To The Bakken 

Active rigs:

$38.05
9/9/202009/09/201909/09/201809/09/201709/09/2016
Active Rigs1162665537

No new oil and gas permits.

Two permits renewed:

  • EOG: two Burke permits, Mountrail County.

Notes From A Third-World Country -- September 9, 2020

 From SeekingAlpha:

  • PG&E has begun restoring electricity to ~30K of the 500K California homes and businesses it blacked out Monday as fires whipped by winds gusting above 60 mph scarred the state and knocked out electrical lines. 
  • The wind storm prompting the shutoffs had faded enough to let field workers inspect the lines for damage, the utility says. California's other big utilities, units of Edison International and Sempra Energy, also have been forced to shut power rather than risk more fires, and the practice has spread into Oregon, where Portland General Electric shut off power to 5K customers Monday as the same wind storm battering California hit the state. 
  • More shutoffs could remain ahead, as California's fire season typically peaks in September and October, before the rains return. 

And the floods. 

But notice that first line -- key words and numbers --- has begun --- 30K of the 500K --- that's less than 10% ... and they are just beginning ... 

And, as always, the EV revolution has yet to begin ....

DAPL Update: Energy Transfer's Investor Presentation -- September 9, 2020

A huge "thank you" to a reader for sending this my way.

For the archives, this will download a PDF: Energy Transfer's investor presentation, September, 2020. From a reader:

  • page 10 shows that management is buying in.  That's a good sign.  Of course, I'm chagrined to see what a small slice of the pie DAPL is to them
  • page 13 shows they think the doubling will be complete by Q3 of 2021

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For The Archives

Up in Minnesota, from a reader, look at these incredible prices for beef. Of course, they are limiting customers to 20 pounds of chicken at a time. LOL. Time to buy another freezer for the garage.

Sirloin tip at $3.99/pound:

Best we can do here, in north Texas, at our neighborhood grocer, a major chain, around $9.99 / pound, though it can quickly get more expensive:


Remember
: the five most important foods for a healthy immune system --

  • orange juice -- vitamin C
  • sunflower seeds -- vitamin E
  • Belgian-style beer -- probiotics
  • zinc -- steak
  • protein -- steak

Exactly what you take out to a day on the lake.  Which also provides a bit of social distancing.

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LEGO

And also for the archives.

The retired set for almost $,1000.

Bakken: Costs Have Come Way Down -- September 9, 2020

I would assume the top three costs for drilling and completing a well:

  • time: the total amount of time a rig and a fracking team spends on site
  • fracking: two components -- amount of time it takes to frack and amount of proppant
  • after that, everything else
  • the operators have probably reached the lower limit of number of days on site to drill a well --
    • one to two days for the vertical
    • twelve hours for the curve
    • one to days for the lateral
  • amount of proppant: being optimized; not seeing very much wells completely with massive amounts of proppant
  • time to complete a frack: it appears the amount of time for an individual well has come down, but perhaps not by much -- about ten days; but fracking a number of wells on one pad quickly in succession has brought the overall average down, I would assume

Top Story Of The Week -- Perhaps The Year -- Re-Posting -- September 9, 2020

Sweden had no lock down; no mask mandate; and no mandatory return of affected individuals back to retirement homes. 

Graphics here



Of the four graphs, this one is currently the most interesting. This is the "total" number of deaths, not the change per se -- one would expect the curve to rise at least a little. But right now, the number of deaths has flattened out. Obviously over time, the number of deaths will continue to increase, but right now, this is quite remarkable. Not at all expected.

One can argue, had the US done this, we would be in the "same place" as Sweden, but under the circumstances, with the media hyping the story and the opposition taking advantage of the crisis, there's no way any politician, except perhaps "a Barack Obama" could have done what Sweden did.


 

Deaths per million population (set search criteria to "yesterday" and "deaths / 1 million pop):

  • In a league of its own:
    • #1: San Marino: 1,237
  • Also-rans:
    • #2: Peru: 911
    • #3: Belgium: 854
  • The rest of the top ten:
    • #4: Andorra: 686
    • #5: Spain: 683
    • #6: UK: 612
    • #7: Chile: 610
    • #8: Bolivia: 603
    • #9: Ecuador: 601
    • #10: Brazil: 599
  • Not even making the top ten:
    • USA, #12, with 586 (and throw out NY, NJ which were outliers in the US, and we would drop much farther down the list; see below)
    • Sweden, #13, 2ith 577 deaths per million
    • Mexico, #14, 525

Now, let's do the international list but add US states:

  • New Jersey: 1,815
  • NYC: 1,702
  • Massachusetts: 1,326
  • Connecticut: 1,255
  • Louisiana: 1,101
  • Rhode Island: 1,000
  • Mississippi: 869
  • DC: 866
  • Arizona: 717
  • Michigan: 682
  • Illinois: 663
  • Maryland: 630
  • Delaware: 625
  • Pennsylvania: 616
  • Sweden: 577
  • Georgia (US): 572

Link here.

This was the problem the US had from the very beginning, from an April 16, 2020, posting:


AP COVID-19 data: fact-checked by Brian Williams, Rachel Madcow, and the NYT editorial board.
By the way, Brian Williams could claim he knew this all along, simply stringing his guest out -- he, the straight man; she, the comedienne.
Really Bad Math, Brian Williams

Notes From All Over -- September 9, 2020

Tiffany tumbles: buyer LVMH walks away from deal. 

Disclaimer: this is not an investment site.  Do not make any investment, financial, job, career, travel, or relationship decisions based on what you read here or think you may have read here.

Top story of the year: Nobel Peace prize nominations starting to be released.


MLB post-season: if season were to end today (two days ago): link here; as a reader noted, NY Yankees are in. Texas Rangers? Not so much. I don't think I've ever seen such a terrible season. Granted: I hardly follow baseball. I think I finally understand the infield fly rule. LOL. Nope.
 
Apple: special event will be all about the new Apple Watch. Considering that the special event was somewhat unexpected -- the "big one" is still expected for October -- suggests that Tim Cook is really, really excited about the new Apple Watch which will be "Series 6." The questions on everyone's mind: how good will the EKG app be; has it received necessary FDA approval (if that approval is even necessary); and, will it have pulse oximetry capabilities?

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Politics

Internal polling suggests Trump's lead over Biden is widening.

There are several items of note to suggest that.

First, there were some very, very bizarre items over at twitter this weekend suggesting the Dems were getting desperate. These included tweets regarding:

  • the Wuhan flu in NYC
  • the effort to defund the police
  • and, of course, the "Dan-Rather-George-W-Bush" hit

In the past week, Hidin' Biden has had to walk back these three major policy statements made by him:

  • no, he won't ban fracking;
  • no, he won't shut down the US economy again; and,
  • no, he won't issue an executive order mandating universal masks

He has not walked back his tax policy. 

Some time ago, Biden announced his support for the Cuban regime. It was just a matter of time that we would see this headline: Biden campaign frets as Latino support fizzles in South Florida.



Just When You Thought It Couldn't Get Any Worse: The Upcoming Release Of Crude Oil From The SPR -- RBN Energy -- September 9, 2020

OPEC basket, link here: $40.29. Holy mackerel. Remains in free-fall. This is simply amazing. I haven't seen anything like this in quite some time. By the way, one has to ask the question (again), why now? Why didn't this happen a month ago; a week ago? This happened very suddenly beginning September 1, 2020, but accelerated through the third, and snowballing September 7, the day after it seemed to stabilize. There are three direct reasons to explain the timing with a fourth contributing reason:

  • traders were waiting to see how the US driving season would end on Labor Day weekend (preliminary numbers now suggest gasoline demand in the US dropped, after initial projections looked good)
  • by September 1, 2020, traders realized that all that hype about Hurricane Laura was just that. Hype. Laura went from "unsurvivable" to "no-impact" in less than a day;
  • huge setback in fight against Covid came to light on Monday, September 9, 2020 (yet to post); will affect global demand for crude oil going for forward; although I have trouble accepting this as a huge factor, it was another nail in the coffin, as they say (yet to be posted)
  • contributing to the OPEC basket meltdown:
    • those reports of crude oil tankers off China with up to 40 days wait to off load

Most interesting: this free fall in the OPEC basket price comes at a time when "all" the pundits are suggesting we will be "re-balanced" by the end of the year; certainly doesn't look that way

  • we will start to see that narrative change by the end of September

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Back to the Bakken

Active rigs:

$37.41
9/9/202009/09/201909/09/201809/09/201709/09/2016
Active Rigs1162665537

Wells coming off the confidential list -- Tuesday, September 8, 2020:

  • 36835, loc/NC,  XTO, HBU Muller 31X-12F, Hofflund,
  • 36777, SI/A, Whiting, Iverson 11-14-3H, Sanish, t--; cum 75K 4.5 months;
  • 36113, drl/A,  Hess, GO-Dahl-156-97-2215H-2, Dollar Joe, t--; cum 71K 4.8 months;
  • 33866, drl/drl,  Hess, BL-Myrtrice-LW-156-96-2535H-1, Beaver Lodge; section line well; 2560-acre spacing

A bit of background.

  • 36835
    • spud March 10, 2020
    • Three Forks
    • TD: May 7, 2020
    • 9.5 total days of drilling
    • 92.2% of thelateral wellbore was within the target interval; 100% within the TF 1st bench
  • 36777
    • spud: September 17, 2019
    • surface hole, TD reached: September 17, 2019
    • vertical curve 1, TD reached: September 20, 2019
    • TD: September 23, 2019
    • four days of drilling?
  • 36113
    • spud: November 23, 2019
    • KOP reached at 4:08 p.m. CT, November 26, 2019; drilling of the curve began immediately;
    • TD: December 1, 2019
    • vertical drilled in two runs
    • 10' target window centered 25' below the top of the middle Bakken
    • lateral, begun: November 29, 2019, 1:40 a.m. CT
    • TD: December 1, 2019, 5:55 p.m. CT; 2.5 days drilling

RBN Energy: the upcoming release of crude oil from the strategic petroleum reserve. Archived.

As the year 2020 wears on, it seems that every month brings a new surprise. In August, in addition to the ongoing pandemic and protests, a major hurricane was added to the mix. What comes next is anybody’s guess. A zombie apocalypse? An alien invasion? At this point, the possibilities seem boundless. And the energy industry has been no stranger to this year’s turmoil, what with COVID-related demand destruction, an oil-price collapse, and production shut-ins. Amidst the chaos, the Department of Energy (DOE) announced that for the first time, private-sector energy companies would be allowed to store crude oil in the U.S.’s Strategic Petroleum Reserve (SPR), which resulted in the leasing of 23 MMbbl of capacity. Recently, those volumes have begun to be drawn back out. Today, we examine the factors influencing movements of crude oil into and out of the U.S. SPR.

RBN is pleased to announce that today’s blog is the winning submission in our first-ever blog writing competition held for students in Texas A&M’s Trading Risk & Investment Program (TRIP).

Mexico Moves To Change Constitution To Undo Energy Reform Put In Place Just A Few Years Ago -- September 9, 2020

Link here.

Mexico will present a set of infrastructure projects in the energy sector where private companies will be invited to participate, while it prepares to undo the energy reform conducted by the previous administration.

Mexico will announce a set of infrastructure projects before Sept. 15, when Mexicans celebrate Independence Day, President Andres Manuel Lopez Obrador said Sept. 7. The joint plan between the government and the private industry to reactivate the economy had originally been announced in November.

According to a presentation filtered to the press, which presumably originated in the office of the presidency, the government's announcement will consist of 168 projects worth roughly $44.4 billion where the private industry will provide over 50% of equity.

The announcement comes at a time when lawmakers from the president's party prepare to discuss a series of changes to the constitution that would effectively undo the energy reform carried out by former President Enrique Pena, which opened up the sector to private investment after over seven decades of monopoly.

Remember, foreign companies -- you know, those companies with the equity and know-how need not apply.

Meanwhile, the same story that has been circulating for quite some time now, Bloomberg is posting it again: Mexico is cutting Pemex' s oil output forest in latest setback.

Mexico is cutting its 2021 forecast for oil production at Petroleos Mexicanos by 8.4% as the state producer struggles under a $107 billion debt load and the impact of the deadly coronavirus.

The country’s Finance Ministry lowered its preliminary estimate for output next year to 1.857 million barrels a day, down from 2.027 million in an April forecast, according to a draft of next year’s budget proposal obtained by Bloomberg News.

Pemex, as the company is also known, has been hit hard by Covid-related deaths among its workers at a time when the oil-market crash only made the ambitions of Mexican President Andres Manuel Lopez Obrador to increase production more difficult.

Even the revised output number looks “optimistic,” said [one analyst]. “It seems that they have not learned,” he said, predicting that Pemex will fail to meet the lower target.

The Finance Ministry estimates oil prices will average $42.10 a barrel next year, up from a preliminary forecast of $30 a barrel at the start of April. The numbers are part of a budget proposal that would increase Pemex’s spending by just 0.6% next year, to 544.6 billion pesos ($25 billion).

Global Warming Smacks Denver, CO -- September 9, 2020

From yesterday: Denver just experienced the earliest freeze on record. Denver's temperature went from 93 degrees on Monday, Labor Day, September 7, 2020, to 32 degrees (freezing) on Tuesday, September 8, 2020.

Meanwhile, atmospheric CO2, link here:

Saudi Arabia: Squeezing Cash Cow Aramco To Stay Afloat -- Financial Post -- September 9, 2020

This Bloomberg story is behind a paywall, but one can access it through the Financial Post, link here:

(Bloomberg) — The world’s biggest oil company is getting squeezed by its main shareholder, the Saudi Arabian government.

Even with crude dropping below $40 a barrel this week and its cash flow plunging, Saudi Aramco is trying to pay a $75 billion dividend this year, almost all of it to the state. Concerns are mounting, including among global fund managers who bought into the company during a record initial public offering last December, that Aramco is putting strategic projects on ice and racking up debt too quickly.

Aramco has been the country’s cash cow for decades. But the pressure it faces has been thrown into sharper relief by the coronavirus-induced collapse in energy demand — Brent crude fell another 5% on Tuesday — and now that it’s a listed firm with shareholders from New York to Tokyo.

Crown Prince Mohammed bin Salman, the 35-year-old de facto ruler, has pledged to diversify the kingdom from oil and spend billions developing everything from futuristic cities to tourism and financial services. For that, he needs Aramco’s money.

“The crown prince has basically decided the company is a piggy bank he can raid to fund his other projects,” said Jean-Francois Seznec, a senior fellow at the Atlantic Council of Washington’s Global Energy Center, and a Middle Eastern specialist. “It will limit how much they can invest in things like maintaining the oil fields and developing new technologies.”

Much more at the link.

Without Question: Top International Story Of The Week -- Perhaps The Year -- Sweden Has "Defeated" Coronavirus -- September 9, 2020

Sweden had no lock down; no mask mandate; and no mandatory return of affected individuals back to retirement homes. 

Graphics here





 

Deaths per million population (set search criteria to "yesterday" and "deaths / 1 million pop):

  • In a league of its own:
    • #1: San Marino: 1,237
  • Also-rans:
    • #2: Peru: 911
    • #3: Belgium: 854
  • The rest of the top ten:
    • #4: Andorra: 686
    • #5: Spain: 683
    • #6: UK: 612
    • #7: Chile: 610
    • #8: Bolivia: 603
    • #9: Ecuador: 601
    • #10: Brazil: 599
  • Not even making the top ten:
    • USA, #12, with 586 (and throw out NY, NJ which were outliers in the US, and we would drop much farther down the list; see below)
    • Sweden, #13, 2ith 577 deaths per million
    • Mexico, #14, 525

Now, let's do the international list but add US states:

  • New Jersey: 1,815
  • NYC: 1,702
  • Massachusetts: 1,326
  • Connecticut: 1,255
  • Louisiana: 1,101
  • Rhode Island: 1,000
  • Mississippi: 869
  • DC: 866
  • Arizona: 717
  • Michigan: 682
  • Illinois: 663
  • Maryland: 630
  • Delaware: 625
  • Pennsylvania: 616
  • Sweden: 577
  • Georgia (US): 572

Link here.

This was the problem the US had from the very beginning, from an April 16, 2020, posting:


AP COVID-19 data: fact-checked by Brian Williams, Rachel Madcow, and the NYT editorial board.
By the way, Brian Williams could claim he knew this all along, simply stringing his guest out -- he, the straight man; she, the comedienne.
Really Bad Math, Brian Williams
Really Bad Math, Brian Williams