Thursday, June 4, 2020

Notes From All Over, Midnight Edition -- June 4, 2020

Bolshevik Bob: This was worth staying up for: Russia's energy minister sees shortage in oil market next month. Link here. I guess that's why Brent just spiked to $175.43 / bbl.

Just kidding: Brent is currently up 19 cents, trading at just over $40/bbl.

China recovery:

From oilx:

Saudi imports:

Must be another great night of rioting. Since the riots began, the Dow has surged more than a thousand points. Futures tonight: up another 200 points.

From social media:I don't know why, but every once in a while I get a random urge to listen to this, and then I do, and then I'm happy.

Notes From All Over, Late Afternoon Edition -- Musk Doesn't Have Authority To Break Up Amazon -- Reuters --Thursday, June 4, 2020

I don't even know where to file this, link here:

Open wheel racing: this weekend --
  • June 6, 2020
  • 7:00 p.m. CST (sic) on NBC
  • Texas Motor Speedway
  • Are you kidding me? CST -- Texas, like most of the nation, switched to daylight savings time back in March, 2020 -- CST?
Musk doesn't have authority to break up Amazon -- Reuters -- screenshot:

Saudi raises import fees, see link here:

Let's do the math.

Saudi Arabia imports about $30 billion each quarter, link here. Import fees will range from 0.5% to 15%. Let's assume 15% on all imports. $30 billion x 0.15 = $4.5 billion / quarter or $1.5 billion / month.

PIF generates $5 billion / month on a 10% annual return.

Trump Administration Reverses Obama Administration Regarding Tribe's Mineral Rights Under The River -- June 4, 2020

Just when I think I have a slow news day, an alert reader wakes me up.

This should get one's attention:
At stake is an estimated $100 million in oil royalties waiting in escrow to be claimed as well as any future payments. Three Affiliated Tribes Chairman Mark Fox said he plans to take legal action “ASAP,” likely with a federal lawsuit.
From the reader:
I haven't seen anything about this in your blog. An "M-Opinion" was issued by the Dept. of Interior last week - May 26th.
It is huge news because it reverses an eleventh hour M-Opinion issued by the Obama Administration just days before the end of his term and concludes that the State of North Dakota owns the minerals under the Missouri Riverbed on the Fort Berthold Reservation. Keep in mind that the Riverbed refers to the land prior to the construction of the Garrison Dam.

The issue of mineral ownership has languished for years. Many felt that Obama waited so long to issue the M-Opinion because it was not well supported by the law and precedence. However, there are arguments on both sides of the issue and it is likely that the Tribe will initiate legal action to pursue their contention of ownership.
Screenshot of from the second link below:

I haven't  had time to look at all three links but will get them posted, since I was already late with this story.

I immediately checked Geoff Simon's top ND stories for last week, dated May 29, 2020. Unless I missed it, I didn't see this story at his newsletter, either.

Interestingly, the story was published in the San Antonio (Texas) Express-News yesterday, June 3, 2020. I will archive the entire article so it's not lost. Archived here.

See also this post from December 28, 2013.

NDARC Holds Steady At 12 -- June 4, 2020

Saudi Arabia: raises import duty to offset plunging oil prices. Link here.
The Saudis will be lifting import duties on products ranging from meat, dairy, and vegetables to chemicals, vehicles, and building materials. The import fees on those products will be raised by between 0.5 percentage point and 15 percentage points, starting next week.   
OPEC basket:  $35.46

Urals up 4.39%; now at $39.25.

Brent: no major blend settled above $40 today but Brent came close at $39.87.

China’s crude oil imports jumped by 13 percent from April to near record-highs of 11.11 million bpd in May, due to favorable spreads of the Shanghai-traded yuan-denominated oil futures and a ramp-up in refinery throughput, oil analytics firm OilX said in a report this week.
Back to the Bakken

Active rigs:

Active Rigs1264615125

One new permit, #37613 --
  • Operator: BR
  • Field: Bear Creek (Dunn)
  • Comments:
    • BR has a permit for a Pullman well in SESW 18-147-95, Bear Creek; the daily report says this one is in Bear Creek, as a section line well, but from its description, it's clearly in Corral Creek based on section SESW 18-147-95 (maybe I'm misreading something) 
One producing well was reported as completed:
  • 36133, SI/A, XTO, Arlys Federal 34X-31C, Siverston, t--; cum --
    • a neighboring well, #21598, is off line; was taken off line 1/20; remains off line 4/20;

Perhaps St Greta Can Explain This -- June 4, 2020

Charting Sweden's disastrous no-lockdown strategy, link here.

Corona virus update for Sweden, link here.

From yesterday, for comparison, Norway reported 22 new cases, and no new deaths.

But look at these graphics.

New cases:

Sweden, new cases:

New deaths:

Sweden is in a very tough spot. Their "health director" says their response to Covid-9 failed, previously reported -- yesterday, I believe.

Now with this huge spike in new cases, new deaths, and a per capita rate exceeding countries like Canada, Sweden needs to re-think their strategy. It will be interesting to see what comes of this.

Notes From All Over -- The Mid-Morning Thursday Edition -- June 4, 2020

The market: all that hand-wringing over the "pause" in the rally. All three major indices up a bit in early morning trading.

Protests: scrolling through the twitter feed it looks like the enthusiasm that the protesters have will increase and last longer than that of law enforcement. It would not surprise me to see law enforcement starting to ask, "why do we even show up for work," when the state and city governments don't back them and one mistake could put them in prison forever. At least that's the gist of the twitter scroll.

Wuhan flu: I'm glad to see that Wuhan flu is no longer an issue and social distancing is now "out the window" in deference to George Floyd. The latter, by the way, tested positive for corona virus (at the autopsy). That will go down as another case and certainly as a Covid-19-related death.

Cops and robbers: many cities are facing huge pension deficits and most of them are police- and fire-related. The tea leaves suggest it's just a matter of time before underfunded pension plans are further eroded by money being transferred from these accounts to "reparation" accounts. Lawyers have a way of going after deep pockets. The pensions may be underfunded but they are still huge pockets of money.

Another Sophia Story
Sophia was in a great mood, as usual, going into Tutor Time.

I asked her what the best thing in her life was. There was some silence. I assume she was thinking. I then thought that might not be the most appropriate question to ask, so I answered for her, telling her that she has such a wonderful family, her mom and dad, and especially her two sisters, and going to Tutor Time, and so forth.

Then I was quiet.

Without missing a beat, but having had time to think, Sophia said: "catching that big fish on my first 'training' day. That was the best thing."


That was the day she did catch that huge bullhead / catfish, maybe two or three pounds, and it was her first bite / her first day ever fishing. And that was about a month ago, and she still remembers.

She called that her "training day."
By the way, if you are in the mood for another Sophia story.
On the way home from Tutor Time yesterday, Sophia told me that her class held class officer elections. Remember, she if five years old. I did not know that Tutor Time / Montessori held such elections.

I was aware of something going on because getting into the car, Sophia handed me a hand-written note on a self-made-envelope-sort-of-thing that said "Vote For Melia."

I asked her how the election turned out. She said it was a tie, 6 - 6. The boys all voted for the boy candidate, Arien, and the girls all voted for the girl candidate.

I can't make this stuff up.

I asked about the candidates' platforms. It sounds like Melia did not have a platform but she was the girls' favorite because she brought in a lot of nice things, like her American Girl doll. Arien actually did have some type of platform, promises about better food or something along that line. It was a bit unclear.

I asked who will be class president now that there was a tie. She didn't really know but putting words into her mouth, two co-presidents, perhaps, she agreed.

I asked her about the vice-president. That was much, much easier: her best friend Hunter, who also has an American Doll.

By the way, that explains why Sophia dressed up Corky in a brand new dress and took her into Tutor Time today. I suggested Corky stay home (Corky tends to wander off and has been known to be gone for two or three weeks before finally showing up again). But Sophia was adamant about taking Corky to school today.

I asked Sophia if she had run for any class officer position. She said, "no." I asked why. Two reasons:
  • no one listens to her instructions; and, 
  • she can't read; those that ran, could read.
Mind you, Sophia reads quite well; she is five years old.

Arien is in the after-school program. He is eleven years old.
By the way, Sophia added that if two boys would have voted for Melia, she would have won. Apparently the girls put a lot of pressure on two boys to vote for Melia but in the end, it appears, they were not swayed by the "American Girl" angle.

Closer Look At The Most Recent CLR Wahpeton Well To Be Reported -- June 4, 2020

Comments And Observations

See the original post below:
  • this was a huge "test" project when first proposed by CLR some years ago;
  • the first thing I noted was how much work is left to be done in the Bakken; look at all the "white space" yet to be drilled in this drilling unit;
  • in general I was disappointed when the first Wahpeton wells were reported; for the Banks oil field, they are not particularly noteworthy;
  • the most recent wells are quite incredible, to say the least;
  • the most recent Wahpeton to be reported suggests CLR is using moderate-size fracks;
  • technically, these are not "daughter" wells in the strict sense of the word, but one could argue that despite a dozen or so wells already drilled in this drilling unit, the naysayers never would have expected these kinds of wells; and,
  • as I said above: lots of white space ... oh, and one more things --
  • multiple "formations" yet to be targeted;
Original Post

Yesterday this producing well (DUCs) was reported as completed:
  • 35915, SI/A, CLR, Wahpeton 17-16H, Banks, t--; cum 107K in 2.5 months
The Wahpeton family of wells.
From the file report:
  • spud date: June 18, 2019
  • TD date: August 6, 2019
  • targeting the middle Bakken
  • the geologist's narrative in incredibly detailed; for example:
    • "the (by now dreaded) possible thinning in the Lodgepole failed to appear. This ended up being the final ideal target point."
  • it took three curve assemblies to build the curve;
  • Bakken shale collapse issues are of lesser, but still manifest, concern in this area, and angles of intercept and shale exposure footage remain important data
  • a single assembly completed the lateral
  • drill out on morning of August 4, 2019 --  TD at mid-afternoon on August 6 -- is that about 60 hours to drill the lateral?
  • background gas
    • background gas initially averaged around 700 - 1000 units
    • after 12750' MD, readings climbed to around 2000 - 4000 units
  • the target was approximately 18' thick
Fracking data:
  • frack data not yet scanned in at NDIC
  • from FracFocus:
  • fracked 12/6/19 - 12/18/19
  • 8.4 million gallons of water; relatively moderate frack; 
  • 87.4% water by mass;
Initial production.
  • 35915:
PoolDateDaysBBLS OilRunsBBLS WaterMCF ProdMCF SoldVent/Flare

From a Continental Resources exhibit. Sent in by a reader:

The Wahpeton wells are sited in section 16, and run north to south, ending in section 21.
  • 36134, 41K extrapolates to 46K in a 30-day month:

PoolDateDaysBBLS OilRunsBBLS WaterMCF ProdMCF SoldVent/Flare

The graphics:

US Distillate Demand At A 28-Year-Low; Distillate Supplies At A 37-Year High -- June 4, 2020

EIA's weekly petroleum report -- observations continued.

The reader who first noted the EIA's discrepancy in US crude oil inventory data also noted, posted at this link:
Also of note: distillate demand was at a 28 year low, and distillate supplies were at a 37 year high (1983), and what's most notable about that is that they were actually higher in 1983... 
We also added over 4 million barrels to the SPR, & that appears to be the most ever added in one week.
See this post regarding EIA production estimate released yesterday, June 3, 2020.

I find that absolutely amazing -- going back to 1983 -- from the American History:
  • By 1983, the economy had rebounded and the United States entered into one of the longest periods of sustained economic growth since World War II. 
Global Natural Gas Stocks

From Bloomberg via Rigzone:
The specter of negative prices is hanging over energy markets more than a month after oil’s unforgettable crash below zero.
While crude has staged a rapid recovery after a deal by the biggest producers to curb a surplus, the $600 billion global gas market remains extraordinarily oversupplied. Traders and analysts say the worst may be yet to come as demand falls and storage nears capacity, creating the ideal conditions for negative prices in some parts of the world.
It shows just how far the global energy industry is from recovering from a pandemic-fueled slide in demand and signals more pain for producers from the shale fields of Texas to Australia’s Curtis Island. Unlike the oil market, there’s been no sign of a coordinated response to address the glut, meaning the fallout could be deeper and longer.
“We are in uncharted territory with low demand levels and high storage stocks,” said Guy Smith, head of gas trading at Swedish utility Vattenfall AB. “In the shorter term there is real risk that conditions may be set to allow negative prices in Europe, but only in the very short term.”

Six Wells Coming Off Confidential List Today; Update On Propane -- RBN Energy -- June 4, 2020

Jobless numbers, link here:
  • prior: 2.123 million
  • revised: 2.126 million
  • consensus: 1.790 million
  • actual: 1.877 million
  • the headline: first time unemployment claims more than expected; that is accurate, but the actual number is pretty much in line with the consensus, considering the difficulty of these predictions now
  • the market is taking it in stride; futures point to some profit-taking, but nothing particularly noteworthy; AAPL is holding; down 0.23% in pre-market trading;
Before we get to "first things first," this is very, very encouraging -- trains, planes and trucks are rebounding.

First things first: I can't remember if I reminded folks that the weekly "Focus on Fracking" update was posted earlier this week. Here's the link.

First things first: best news all week -- MSNBC Rachel Maddow's rating slide continues depsite unprecedented news cycle. Data points:
  • MSNBC's most popular program: Rachel Maddow
  • in sixth place including non-primetime shows such as "The Five" and "Special Report with Bret Baier" -- say what? Bret Baier?
  • alarming: in key demographic of adults age 25 -54, Maddow was tied for #7 in cable new
  • behind five different Fox News shows and even one program on CNN -- say what? CNN? That is a new low
First things first: cable news ratings -- link here -- May, 2020 --
  • all networks saw considerable gains
  • Fox News up 44% in prime time; claimed the top spot for the 221st consecutive month; at 3.44 million viewers
  • MSNBC: in second place, a 16% increase. at 1.92 million viewers
  • CNN: biggest increase; up 117% compared to last year, but still in third place with 1.65 million viewers
  • the 25- to 54-year-old demographic:
  • Fox News: up 48% to 558,000
  • CNN: up 151%, to 464,000
  • MSNBC: up 21%, to 293,000
  • Fox News: top five most-watched programs on cable news; #1 - "Hannity"
  • Tucker Carlson: let the category advertisers covet most -- the 25-to-54 demographic; averaging 700,000 viewers each night -- wow!
  • Rachel Maddow was not mentioned until the very last paragraph
  • more at the link 
In days:
  • US crude oil supply: 41.3 days. It appears the "days of supply" maxed out at 42 days. I can't find it now, but I think I opined that the max would come in at 38 days something like that.
EIA weekly petroleum report:
Oil prices:
  • Brent: $39.50
  • Urals sour: $39.25
  • OPEC basket, link here: $35.46
Australia: to lease space in US SPR.

Back to the Bakken

Active rigs:

Active Rigs1264615125

Six wells coming off confidential list today -- Thursday, June 4, 2020: 19 for the month; 164 for the quarter, 391 for the year:
  • 36470, drl/NC, Slawson, Periscope Federal 8-10-11-12H, Big Bend, no production data,
  • 36457, drl/drl, BR, Glacierfill 1D, Clear Creek, no production data,
  • 36456, drl/drl, BR, Glacierfill 1C Clear Creek, no production data,
  • 36354, drl/NC, Slawson, Gunslinger Federal 8-12-1TFH, Sand Creek, no production data,
  • 36240, drl/NC, Slawson, Periscope Federal 4 SLH, Big Bend, no production data,
  • 35189, drl/drl, XTO, Hoffmann Federal 21X-6H, Siverston, no production data,
RBN Energy: a precarious position for propane markets: reading the signals.
Energy markets balance — eventually. In the midst of the turmoil we’ve experienced this year, there have been periods when it seemed like markets were going to hit the wall. But even with the historic WTI oil price glitch on April 20, the physical crude oil markets continued to function. That’s the way it is supposed to work, and it’s good news. The bad news is that figuring out how these markets are balancing in these volatile conditions can be challenging if not downright perplexing. Nowhere is that more true than the market for U.S. propane. Production is down, but so is demand. Inventories are up, and so are prices. Propane continues to be exported, even though global demand has been whacked by COVID.
In today’s blog, we explore these developments and put the spotlight on RBN’s NGL Voyager, our subscriber report and data service that we have just reformatted, upgraded and generally reconstructed to meet the information needs of today’s NGL marketplace.

US Production May Be Significantly Less Than EIA Estimate: Bloomberg, Reader -- June 4, 2020

Wow, this is really, really cool.

After the EIA weekly petroleum report was released yesterday, a reader who follows this very, very closely, noted:
I haven't even looked at the rest of the report, but the first thing I noticed is that a million barrels of oil per day went missing for the third week in a row, ie, production + imports + storage withdrawal has been 1 mbpd greater than refinery use + exports + the SPR addition... 
Best guess is that their production number has been wrong...
You can see my reply at this post.

Overnight, Bloomberg posted an article saying the very same thing: oil traders are asking why US inventory math doesn't add up. 
Oil traders and analysts scrutinizing U.S. inventory data for signs of a market recovery are being confronted by an odd situation: the math just doesn’t add up.
Various government data sets including stockpiles, production, imports and exports are signaling that current official figures on at least some supplies are excessive.
The excess is showing up in the U.S. Energy Information Administration’s so-called crude supply adjustment factor -- the difference between stockpile numbers and those implied by production, refinery demand, imports and exports.
That has averaged negative 980,000 barrels daily over the past four weeks -- the largest in records going back to 2001, and equivalent to more than 27 million barrels.
That's nearly exactly what the reader reported: a one-million-bopd discrepancy. The Bloomberg article continues:
The adjustment factor tends to swing back and forth ...
Some investors lay the blame for the current discrepancy on U.S. oil production numbers. While daily output fell 700,000 barrels to 11.2 million in May, they believe oil’s plunge into negative territory in April should have led to a steeper decline.
Just last month, consultancy IHS Markit said that U.S. oil producers are in the process of curtailing 1.75 million barrels a day of existing output by early June...
The EIA pushes back:
While output may be a factor, it’s unlikely the full answer. According to the EIA’s Robert Merriam, the accuracy of its production modeling compared to subsequent monthly data has been good, often within 1-2% in most months.
... the EIA’s weekly data has recorded a production decline of 1.9 million barrels, which he said was substantial compared with historical numbers.
He said that there have also some large weekly swings in reported inventory levels and refinery runs, so all the elements within the crude data are moving around far more than they usually do, adding that “the timing of reporting those could also be driving the adjustment lately, as they always do.”
A year ago, the crude adjustment factor caught the attention of energy enthusiasts when the figure was more than 800,000 barrels a day for four weeks, implying the reverse -- that something in the data was undercounted.
The EIA, at the time, had suspected that besides understating oil production, one of the reasons was plant condensate that was associated with natural gas output, but blended into the crude oil stream.
Bottom line: there is evidence that US production has declined further than the official estimates. That's interesting because it seems to me that production numbers from Russia and Saudi Arabia are coming in much lower than I had anticipated. [I'm probably the only one that holds that opinion but the production cuts in those two countries seem to be quite remarkable.]

Related: over at twitter after the weekly EIA petroleum report was released --