Saturday, January 9, 2021

Headline Of The Week? US Imports NO Saudi Crude For The First Time Since 1985 -- January 9, 2021

From World Oil:

(Bloomberg) --The U.S. didn’t import any Saudi crude last week for the first time in 35 years, a reversal from just months ago when the Kingdom threatened to upend the American energy industry by unleashing a tsunami of exports into a market decimated by the pandemic.

The absence of deliveries follows a slump in crude shipments to the U.S. that left the desert kingdom in October. Since tankers from Saudi Arabia take about six weeks to reach import terminals on either the west or Gulf coasts, the drop is only starting to show up now. This is the first week America had no deliveries based on available weekly data through June 2010 from the U.S. Energy Information Administration. A longer history of monthly figures shows this is the first time there were no Saudi imports since September 1985.

Earlier this year, the oil producing countries of the Organization of Petroleum Exporting Countries and ten non-OPEC allies agreed to cut production by a record 9.7 million barrels a day after a brief production free-for-all that saw prices plunge. The supply cuts have helped shore up crude, even as fuel consumption struggles to return to pre-pandemic levels. In the past month, oil prices have risen on hopes that demand could improve as a number of vaccines have been announced to combat the health crisis.

Saudi crude oil imports are tracked here, but official data lags.  

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Chorizo Matters

 Reminds me of "Ich bin ein Berliner."

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Rock Climbing

North Dakota Infrastructure Financing Plans -- January 9, 2021

Link here.

  • both sides of the aisle looking for a $1 - $2 billion bonding package
  • using earning from the state's Legacy Fund to pay for the borrowed money
  • GOP: $1.1 billion
  • Governor: $1.25 billion
  • Dems: $2 billion with a revolving loan fund of $750 million for school construction
  • Legacy Fund: currently at $7.8 billion; expected to earn $500 million over next two years
    • let's see, $1 billion x 5% = $50 million
    • one-fifth of $1 billion = $200 million
    • = $250 million / year = $500 million over next two years

Re-Locations: Tennessee Claims #1 Spot For First Time Ever; Texas In Top 2 For Fifth Straight Year -- U-Haul's Annual Report -- January 9, 2020

Updates

January 10, 2021: a reader responds --

I've rented a U-Haul numerous times to haul stuff from ND to NM.  I didn't change addresses or households - I just inherited a lot of stuff over the years.  I've never used United Van lines.  So, another "bump" in the numbers is that you'll see higher U-Haul numbers to states where someone already has a house. In addition, see this reader's much longer note.

Original Post

Re-locations: tracked here.

Annual U-Haul report (2020 data):

  • Tennessee: largest net gain; #1 in 2020; up from #12 the previous year;
  • Texas: for three consecutive years, Texas had the largest net gain of one-way U-Haul trucks before Florida displaced it for the number one spot last year;
  • Florida: #3 in 2020 (#1 in 2019)
  • rounding out the top ten (previous year);
    • Ohio, #4 (7)
    • Arizona, #5 (20)
    • Colorado, #6 (42)
    • Missouri, #7 (13)
    • Nevada, #8 (24)
    • North Carolina, #9 (3)
    • Georgia, #10 (16)

HOW COINCIDENTAL: on same evening I get the story above, sent to me by a reader, my Carpe Diem subscription sent me this: United Van Lines' top ten inbound vs top 10 outbound US states in 2020. I haven't looked at this yet. Let's see how it compares with the U-Haul report above.

Top ten inbound:

  • Idaho
  • South Carolina
  • Oregon
  • South Dakota
  • Arizona
  • North Caroline
  • Tennessee
  • Alabama
  • Florida
  • Arkansas

Top ten outbound:

  • New Jersey
  • New York
  • Illinois
  • Connecticut
  • California
  • Kansas
  • North Dakota
  • Massachusetts
  • Ohio
  • Maryland

This jumps out at me:

  • on the U-Haul list, Texas is consistently in the top two (for the past five years)
  • on the United Van Lines list, Texas is not even among the top ten
  • this suggests to me that lower income -- those who cannot afford a professional mover -- are larger group of those moving to Texas than to other states, like Tennessee or Florida.

January 3, 2021 -- January 9, 2021

Most under-reported story this week:

Most interesting energy story this week:

Top story of the week:

  • The storming of the Capitol.

Records:

Top international non-energy story:

Top international energy story:

Top national non-energy story:

Top national energy story:

Top North Dakota non-energy story:

Top North Dakota energy story:

Geoff Simon's to ND energy stories:

  • Lynn Helms sees the writing on the wall: with a Biden presidency, "it's not a pretty picture"
  • MHA Nation wants oil tax agreement signed last year, re-visited
  • lawmakers consider road trains
  • state is being asked to change a 40-year-old law that allows the state to collect up to 18% interest and 12% in penalties on unpaid royalties
  • still no cause officially reported in Washington state train derailment
  • Keystone gets water certification from Montana for water crossing permit
  • oil and gas industry produces helium, a much-needed element in MRI equipment
  • US imports no Saudi crude oil for first tine since 1985; lack of demand cited;

Most egregious ND energy story:

Operators:

Operations:

Fracking:

Wells of note:

Renewable energy:

Commentary:

Ford Dethroned In Large Pickup Truck Category -- First Time Since 2015 -- January 9, 2021

Link here.

Autos tracked here. What else is going on?

Bismarck Tribune looks at top 2021 vehicles.

Worth taking a spin:

  • 2021 Cadillac Escalade: luxury SUV
  • 2020 Mazda CX-30: small SUV
  • 2020 Hyundai Sonata: sedan; non-starter for me;
  • 2020 Subaru Legacy: sedan; nonstarter for me;
  • 2021 Acura TLX A-Spec: sedan; nonstarter for me:
  • 2021 Ford F-150 King Ranch hybrid; $60K; outside my budget
  • 2021 Chevrolet Corvette Stingray; $60K; for me, "old man's car"; seen too many driven by old, bald men;
  • 2021 Mercedes-Benz E450 4Matic All-Terrain; $70K way outside my budget; name of vehicle rolls right off your tongue, as they say:
  • 2021 Genesis G90: sedan; non-starter for me; $73K
  • 2021 Rolls-Royce Ghost: sedan, $332K; now I know this list is ridiculous

Best vehicles of 2021 (best for whom?; on what basis?):

  • 2021 Kia K5: top rated sedan; $24K
  • 2021 Ford F-150: top-rated truck; group think; $30K
  • 2021 Kia Telluride; top-rated SUV; $33K; on my short list;
  • 3021 Ford Mustang Mach-E: top-rated luxury EV; I'll wait to see 2nd or 3rd iteration;
  • 2021 Mercedes-Benz E-Class: top-rated luxury sedan; $55K

The list seems a bit short. Maybe top three in each category would have been more interesting.

And more helpful.  No Honda. No Toyota. No GM (or rather "gm"). No minivan. No Jeep.

Rigs Matter -- January 9, 2021

Link here

I've long lost the bubble on this one -- the importance of drilling for Saudi Arabia, i.e., the importance of the number of active rigs for Saudi Arabia. I remember a lot of interesting posts some years ago regarding how important it was for Saudi Arabia to keep drilling.

But wow. Look at the timing. I don't think one can cut the number of rigs by this degree overnight without a bit of planning and that doesn't even take into effect the time to physically bring down the rigs. Link here

Interestingly enough the mainstream media posts this data after Saudi Arabia "surprises" everyone by agreeing to cut production. Prince MBS played the mainstream media like a fiddle.

This next year, July, 2021 - June 2022, could be particularly interesting for those watching global drilling. 

There's a huge difference among the Supermajors, the NOCs and US shale producers. See this post

Back to the Bakken:

Saudi Arabia does not have DUCs. A well drilled is a well completed. I don't know the rules in the Permian, but I assume they are similar to those in the Bakken. In the Bakken, oil operators are allowed two years to complete a well after it has been spud. And even then, waivers can be granted to extend that two-year deadline.  

In the Bakken (this does not include any Permian data):

DUCs tag.

Inactive wells in North Dakota.

In the last quarter of the year, 4Q20, the number of wells reported as completed. Many of these wells in fact were still carried as "not completed":

43 for the month (December, 2020); 99 for the quarter (Oct - Dec, 2020), 764 for the year (calendar year 2020).

Number of wells in North Dakota that are off-line for operational reasons, most recent data, October, 2020:

  • DUCs: 724
  • completed, but inactive: 2,934
  • total off line for operational reasons: 3,658
  • producing: 15,512
  • total off line for operational reasons (most recent data) / number of wells reported as completed (CY2020): 3,658 / 764 = 4.79, rounded = five years inventory; this is a combination of:
    • new wells that will set IP records:
    • new wells that will not set records but will be incredible wells, nonetheless
    • new wells that are "average"
    • good wells that can be better through asset management
    • good wells that need to be re-fracked with small re-fracks
    • good wells that need to be re-fracked with large re-fracks
    • all wells off line but not scheduled to be abandoned that need to be re-fracked 
    • lousy wells that will never get better; many will be permanently abandoned

Oil &Gas Capex Outlook For 2021

Re-posting as a stand-alone post.

Westwood Global Energy Group outlook. Quite surprising "data point" regarding "17 selected US shale producers." Analysis of three E&P peer groups:

  • five Supermajors:
  • four selected National Oil Companies;
  • seventeen selected US shale producers
  • bottom line, not surprising: 2021 CAPEX likely to remain relatively flat or decrease slightly compared to 2020

Summary:

  • Supermajors: reinvested 88% of operating cashflow into CAPEX 1Q20 - 3Q20; Brent averaged $41/bbl; reinvestment was the highest ratio of all assessed groups;
    • collectively: will cut expenditures by $10 billion
    • WTI at $48/bbl is needed in 2021 for operating cashflow to cover both CAPEX and dividends
  • NOCs: likely to maintain or slightly reduce CAPEX
    • the NOC group is less leveraged relative to the Supermajors and the US shale producers and has capacity to access debt markets as required:
  • US shale producers: the least burdened by shareholder pay-outs and managed to be self-funding in 2020, but several companies are still very highly leveraged and servicing debt is likely to be the overriding consideration in 2021
    • CAPEX could rise if WTI increases to above $45/bbl
  • average "required" oil price (US$/bbl)
    • Supermajors: Brent, $48/bbl
    • NOCs: Brent, $48/bbl
    • US shale producers: $40/bbl

Some data points:

Supermajors
:

BP and ExxonMobil reported that capital expenditures alone exceeded OCF in the first 9 months of 2020, with recycle rates of c.117% and 134% respectively. Chevron’s US$7.8bn in shareholder pay-outs exceeded OCF by US$450m.

This cash outflow was funded through new debt issuance but is clearly unsustainable longer term without an oil price recovery.

NOCs:

Saudi Aramco spent c.US$50bn on shareholder pay-outs in the first 9 months of 2020 and c.US$20bn in capital expenditures.

Should Aramco continue with these levels of capex and shareholder pay-outs, then an average 2021 Brent oil price of c.US$55/bbl is estimated to be needed at 2020 production levels for self-funding from OCF, or else further capital raising could be required.

Saudi Aramco raised $8 billion in the debt markets in November. Saudi Aramco has indicated that it will exhibit capital restraint next year (with FY capex potentially as low as US$25bn). Rosneft and Sinopec would also require c.US$55/bbl in 2021, if capex and shareholder pay-outs were to be kept at 2020 levels; though neither firm has issued capital guidance for 2021.

US shale producers:

In aggregate, the 17 company US shale peer group generated US$19.4bn in operating cashflows and spent US$15.6bn in capital expenditures in Q1-Q3 2020, a recycle rate of c.80%. 
The US shale companies paid shareholders on average c.9% of the OCF generated or US$1.7bn over the same period.

Three US shale companies (Pioneer Natural Resources, EOG Resources and Cabot Oil & Gas) paid more than 15% of OCF as shareholder pay-outs, accounting for c.60% of the total for the group.

Of the 17 assessed US Shale companies, 10 reduced net debt during Q1-Q3 2020, showing that deleveraging has been the key priority for the group.

Comment: this seems a fairly bullish report for US shale producers but the analysis was done during a favorable political (Trump) environment; this all changes under a Biden environment.

Natural Gas Consumed To Generate Electric power In The US Reached A Record High In 2020

Link here.
Consumption of natural gas in the United States decreased among residential, commercial, and industrial users
In contrast, natural gas use for electric power generation rose, based on the U.S. Energy Information Administration’s (EIA) monthly data through October 2020 and estimates for November and December.

Natural gas consumed to generate electric power in the United States reached a record high, averaging 31.6 billion cubic feet per day (Bcf/d) in 2020, or 2% more than the 2019 average. 
This increase occurred despite slightly lower total U.S. electricity consumption this year
Natural gas consumed by electric power plants set a daily record high of 47.2 Bcf at the end of July, according to S&P Global Platts estimates, because of record-high summer temperatures and low summer prices.
Headline for this EIA report: in 2020, US natural gas prices were the lowest in decades.

I don't know about other readers, but I think that's not the story. Better headlines?
  • natural gas for electric power generation rose in 2020 -- during pandemic
  • natural gas consumed to generate electric power in the US reached a record high
  • natural gas to generate electric power set record despite overall fall in amount of electricity consumed

A lot of story lines here. 

I would expect story lines to change in 2024, three years from now, for 2023 data, after US pivots to renewable energy. 

One would think $2-natural gas is a huge challenge to "new" renewable projects. I don't know. It's all about tax incentives, grants, etc. The interesting thing: electricity is fungible. It doesn't matter how it's produced. All electricity gets to the consumer the same way. Through the grid. 

Notes From All Over -- Saturday Morning Edition -- January 9, 2021

Death: Bob's Burger's chief animator, Dave Creek; age 42; complications of a skydiving accident;

Autos: sneak peak -- Ford Maverick -- Ford's upcoming compact track. Data points:

  • Ford: manufactures SUVs and trucks only; and the new Mustang Mach-E
  • Maverick pickup truck: one of two vehicles that will become entry-level models for Ford
  • Hermosillo, Mexico
  • currently builds the Ford Bronco Sport
  • price for base model: around $20,000
  • will replace Ford's mediocre Ecosport
  • C2 architecture: latest-generation Focus sold abroad; the Escape; and, the  2021 Bronco Sport;
  • leaked tailgate photo here;

India's fuel demand: December consumption rose for a straight fourth month

Dealmaking: oil and gas dealmaking peaks in 4Q20 as pandemic spurs consolidation. I don't think there is much new here. Deals in 2020 are tracked here

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Oil and Gas Outlook, 2021

Westwood Global Energy Group outlook. Quite surprising "data point" regarding "17 selected US shale producers." Analysis of three E&P peer groups:

  • five Supermajors:
  • four selected National Oil Companies;
  • seventeen selected US shale producers
  • bottom line, not surprising: 2021 CAPEX likely to remain relatively flat or decrease slightly compared to 2020

Summary:

  • Supermajors: reinvested 88% of operating cashflow into CAPEX 1Q20 - 3Q20; Brent averaged $41/bbl; reinvestment was the highest ratio of all assessed groups;
    • collectively: will cut expenditures by $10 billion
    • WTI at $48/bbl is needed in 2021 for operating cashflow to cover both CAPEX and dividends
  • NOCs: likely to maintain or slightly reduce CAPEX
    • the NOC group is less leveraged relative to the Supermajors and the US shale producers and has capacity to access debt markets as required:
  • US shale producers: the least burdened by shareholder pay-outs and managed to be self-funding in 2020, but several companies are still very highly leveraged and servicing debt is likely to be the overriding consideration in 2021
    • CAPEX could rise if WTI increases to above $45/bbl
  • average "required" oil price (US$/bbl)
    • Supermajors: Brent, $48/bbl
    • NOCs: Brent, $48/bbl
    • US shale producers: $40/bbl

Some data points:

Supermajors
:

BP and ExxonMobil reported that capital expenditures alone exceeded OCF in the first 9 months of 2020, with recycle rates of c.117% and 134% respectively. Chevron’s US$7.8bn in shareholder pay-outs exceeded OCF by US$450m.

This cash outflow was funded through new debt issuance but is clearly unsustainable longer term without an oil price recovery.

NOCs:

Saudi Aramco spent c.US$50bn on shareholder pay-outs in the first 9 months of 2020 and c.US$20bn in capital expenditures.

Should Aramco continue with these levels of capex and shareholder pay-outs, then an average 2021 Brent oil price of c.US$55/bbl is estimated to be needed at 2020 production levels for self-funding from OCF, or else further capital raising could be required.

Saudi Aramco raised $8 billion in the debt markets in November. Saudi Aramco has indicated that it will exhibit capital restraint next year (with FY capex potentially as low as US$25bn). Rosneft and Sinopec would also require c.US$55/bbl in 2021, if capex and shareholder pay-outs were to be kept at 2020 levels; though neither firm has issued capital guidance for 2021.

US shale producers:

In aggregate, the 17 company US shale peer group generated US$19.4bn in operating cashflows and spent US$15.6bn in capital expenditures in Q1-Q3 2020, a recycle rate of c.80%. 
The US shale companies paid shareholders on average c.9% of the OCF generated or US$1.7bn over the same period.

Three US shale companies (Pioneer Natural Resources, EOG Resources and Cabot Oil & Gas) paid more than 15% of OCF as shareholder pay-outs, accounting for c.60% of the total for the group.

Of the 17 assessed US Shale companies, 10 reduced net debt during Q1-Q3 2020, showing that deleveraging has been the key priority for the group.

Comment: this seems a fairly bullish report for US shale producers but the analysis was done during a favorable political (Trump) environment; this all changes under a Biden environment.

A Musical Interlude -- January 9, 2021

PowerLine cartoons will be posted soon. 

I will try to do one better to get our minds off the events of this past week.

At this link, the comments are priceless:

  • if you look very closely, there's a guitar in this video;
  • I watched it closely several times, I still can't find the guitar;
  • I'm using this video to teach myself guitar chords
  • pop quiz: Les Paul or Fender
  • 48 seconds; posted eight years ago; 18 million views; what a great country.

For those who have forgotten the opening lyrics to this song:
Now look at them yo-yo's, that's the way you do it
You play the guitar on the MTV.
That ain't workin', that's the way you do it
Money for nothin' and chicks for free.
Now that ain't workin', that's the way you do it.
Lemme tell ya, them guys ain't dumb.
Maybe get a blister on your little finger,
Maybe get a blister on your thumb.
Money For Nothing, Dire Straits

Dark Is Good; North Dakota Leads Nation In Getting Vaccine Into Arms -- January 9, 2021

Link here.

Ominous.

Not as bad as it was earlier this month in the midsection of the country, but apparently San Diego is in deep trouble right now and city is failing in getting vaccine to residents. Apparently the city received 120,000 doses a month ago, and has administered about 50,000 doses.
From a reader, recently back from Mexico, the Mexicans are convinced their Covid-19 problem is emanating from the states.  

Dark is not good:

Ominous: re-surging -- 

By the way, which "big state" has never appeared on the graphic above, never? Whoo-hoo! It probably has, but I have probably forgotten.

LNG Update; Huge Winter Storm For US Next Week? -- January 9, 2021

Updates

January 12, 2021: Argus reported that BP has just employed the ship LNG Abalamabie for $350,000 per day. That makes it the most expensive vessel charter in maritime history, surpassing the $300,000-per-day peak previously recorded in the very large crude carrier (VLCC) segment. Link here

Original Post

I saw "the story" on LNG yesterday but I was too exhausted to post it and forgot all about it. In addition, not having some comparative data readily available I did not note the magnitude of some of the data. 

Fortunately a reader wrote me late last night providing me the data I wish I had posted earlier. A huge "thank you" to the reader:

Quick followup to your LNG posts, with some emphasis.

The JKM price (North Asia), was a record ~$20/mmbtu yesterday and jumped to ~$35 today.

Daily spot charters for LNG carriers is at a nosebleed ~$165,000/day,  when $100, 000/day is high.

BP just chartered a Nigerian flagged carrier for a preposterously high $350,000/day.

Virtually every shipment now on the water is heading to Asia, which will draw down European storage significantly in the coming months.

US LNG exports should remain strong through the summer to restock Europe, BUT, there may actually be cancellations from US LNG facilities in February as there seems to be  virtually no ships available for transport.

Amazing what a little cold weather can do.
See posts regarding record snow in Spain and record cold in Asia.
 
In addition, there is now a report out that the weekend of January 18th or thereabouts could record a record cold spell for much of the US. 


Apple May Have Made As Much As $64 Billion From Its App Store In 2020 -- Sources -- January 9, 2021

Previously reported: Apple recorded $1.8 billion in sales from the App Store in one week between Christmas eve and New Years Eve. That was an incomplete story with a lot of data points missing. Now we have more, from The Verge:

  • Apple's App Store made an estimated $64 billion in 2020
  • compared to an estimated $50 billion in 2019
  • represents a 28% increase y/y
  • and look at this: the increase between 2018/2019, y/y was 3.1 percent
  • games, fitness, and productivity apps
  • Apple generally takes 30% from apps sales
  • recently reduced that to 15% for apps with smaller revenue
  • however, the top two percent of App Store developers generate 95 percent of the revenue
  • note: these are all estimates; Apple doesn't break out App Store sales

Wall Street Is The Most Bullish On Commodities In A Decade -- Bloomberg -- January 9, 2021

Link here.
Commodity investors are back in full force, with record wagers that crops, metals and oil are set for a rally.

Data points:

  • weakening dollar
  • world on path to recover from pandemic
  • precedent? China-driven commodities super-cycle earlier this century
    • China is on a buying spree again
    • China is loading up on American crops
    • China has already bought a record amount of grain
    • soybean purchases are running at the fastest pace since 1991
  • central bank stimulus around the world
  • worldwide increased fiscal spending on infrastructure
  • [mutual?] funds are the most bullish in at least a decade on 19 commodities
  • money managers' bullish bets on corn are at the highest in almost ten years
  • Alvean: world's largest trader of sugar, forecasts sugar shortages for next two years
  • crude oil surging in price
  • gold prices rose to a 16-week high
  • silver: net-long positions rose for the fifth time in the last six weeks
  • platinum net-longs are the highest since February, 2020

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. 

Women Taking Brunt Of Job Losses Due To Pandemic -- January 9, 2021

I have no idea if this is accurate; there is so much fake news out there, and then, again, we have gaslighting. 

But this is from CNN, so you know it has to be true. It was reported yesterday that although economists expected a gain of 50,000 jobs in December, 2020, in fact the US recorded a loss of 140,000 jobs in that month. CNN is reporting that "all of those lost jobs were held by women."

From the linked story:

A year ago, a rare thing happened to American women.

For three months, women held more jobs than men in the US economy — something that had only occurred one other time in history, during a short period in 2009 and early 2010
Sure, there were still many other gender gaps: women were more likely than men to work part-time, for example, because of caregiving responsibilities at home, and even among full-time workers, they earned on average only 81 cents for every dollar of their male peers. 
Nevertheless, women were making gradual gains. 
The pandemic quickly changed that story. And now, it just got worse. 
According to new data released Friday, employers cut 140,000 jobs in December, signaling that the economic recovery from the coronavirus pandemic is backtracking. 
Digging deeper into the data also reveals a shocking gender gap: Women accounted for all the job losses, losing 156,000 jobs, while men gained 16,000. 
Meanwhile, a separate survey of households, which includes self-employed workers, showed an even wider gender disparity. 
It also highlighted another painful reality: 
Blacks and Latinas lost jobs in December, while White women made significant gains
These are net numbers, which can mask some of the underlying churn in the labor market. Of course many men lost their jobs in December, too — but when taken together as a group, they came out ahead, whereas women fell behind.

Snowstorm Shuts Down Spain -- January 9, 2021

Updates

Later, 8:26 p.m. CT: news continues --

Original Post 

Link here.

Storm Filomena has blanketed parts of Spain in heavy snow, with half of the country on red alert for more on Saturday. Madrid, one of the worst affected areas, is set to see up to 20cm (eight inches) of snow in the next 24 hours
The city's airport has closed along with a number of roads. 
According to local media, the snowfall in Madrid is the heaviest in at least 40 years
The country's AEMET weather agency said the snowfall was "exceptional and most likely historic".

See also this story: snow in Spain; freezing in Asia. 

Never see snow again? Video here.