The Early, Early Morning Note -- September 20, 2018 -- Natural Gas Is Plunging To As Low As 50 Cents -- RBN Energy

10-year bond: 3.083 percent. All things being equal, now that the 10-year bond is yielding more than 3%, the stock market should crash today.

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

**************************

Way ahead of my headlights. I don't understand natural gas. We've been through this before. I may have it all wrong -- I'll let others fact-check me on this -- but overseas "they" are paying $8 for natural gas ("units" intentionally omitted); in the US, at the Henry Hub (or whatever hub "they" use, natural gas is selling for $3. In the Permian, natural gas is treading water (a strange metaphor, to say the least):

"Permian prices have so far managed to avoid falling below the dreaded $1.00/MMBtu threshold, a precipice that historically defines a gas producing basin as definitively oversupplied." 

See below. And now RBN Energy is reporting that Permian natural gas can be had for as little as 50 cents.

**************************

Peak oil? Yup, but this time it's Russia. Before reading any further/farther, consider the source. Okay, moving on. Link here. The article is simply quoting comments from Russian Energy Minister Alexander Novak, who I assume, has no agenda. LOL. Data points:

• Russia's oil production could peak as early as 2021
• why?
• high taxes and costs

Other data points:

• Russian oil production expected to average around 553 million tons this year
• 553 million tons = 11.105 million bopd (11,105,000 bopd -- again, the false precision)
• by 2021, production will rise to 570 million tons
• let's do the math = 11,446,383 bopd
• but then, production may start to fall and may reach just 310 million tons by 2035
• let's do the math = 6,225,226 bopd
• and then this: "Russia is capable of adding 300,000 bopd to its production within a year," the Russian Energy Minister said. The Russian energy minister did not say "which" year.

The Russian energy minister failed to mention that by 2035 everyone in California will be driving an EV, manufactured by Moonbeam-Mars-Musk Joint Ventures and even as little as 6 million bopd from Russia will be about 3 million bopd too much.

Must have been a slow news day over at oilprice.com.

It's a slow news day here.

Weekly jobs report: unexpected plunge.

• consensus, new claims: 210,000
• actual: 201,000
• last week: 204,000
• so, analysts forecast a jump of 6,000 in new claims
• note: the four-week moving average of 208,000, last week, hit 50-year lows for the second straight week
• Trump is being given no credit for any of this, of course

**********************************

Back to the Bakken

Wells coming off the confidential list today -- Thursday, September 20, 2018

• 34359, SI/NC, XTO, Bobcat Federal 11X-2A-S, Bear Creek, no production data, 
• 31773, SI/NC, BR, Ivan 6-1-29UTFH, Elidah, no production data, 

Active rigs:

$71.51↑	9/20/2018	09/20/2017	09/20/2016	09/20/2015	09/20/2014
Active Rigs	66	55	32	67	196

RBN Energy: SoCalGas storage constraints sideswipe Permian gas prices.

It’s no secret by now that Permian natural gas pipelines have been running near full the last few months, jam-packed like Southern California traffic while trying to whisk away copious volumes of mostly associated natural gas to markets north, south, west and east of the basin.

Despite every major artery running near capacity this summer, Permian prices had so far managed to avoid falling below the dreaded $1.00/MMBtu threshold, a precipice that historically defines a gas producing basin as definitively oversupplied. That all changed yesterday, as word came in that Southern California Gas Company, one of the largest recipients of Permian gas, has nearly filled its gas storage caverns and will soon need far less gas hitting its borders.

That’s particularly bad news for the Permian, which has few other options if it needs to reduce the supply that is currently flowing west out of the basin to California. A large unplanned outage for maintenance was also announced on one of the pipelines leaving the Permian and heading north to the Midcontinent. As a result, the SoCalGas news and maintenance combined to put a huge dent in Permian gas prices, some of which plunged as low as 50 cents in Wednesday’s trading. Today, we detail this most recent development and the implications for Permian gas takeaway.