North Dakota Governor Gives The "All Clear" Sign -- January 15, 2021

All clear! Governor of North Dakota, Doug Burgum will lift the state's mask mandate and business capacity limits effective January 18 2021. Stories everywhere. 

Military parade: This is pretty funny: due to Covid-19 and the excitement Sleepy Joe arouses, the president's inauguration team was concerned no one would show up for President Biden's inauguration. Even President Trump had said he would not attend. So, what to do? This is easy: mandate the US military to show up in force. Remember the military parade Trump always wanted and never got? Biden will get his military parade the day he's sworn into office. National guardspeople from every state will show up for the inauguration. North Dakota is sending 130 national guardspeople. LOL. We did this all the time when I was on active duty. When someone "of importance" was scheduled to visit the base and the commander was concerned no one would show up, the commander mandated (ordered) all personnel to attend. And there were often parades. I can't make this stuff up.

Maybe it won't be so bad. The Bismarck Tribune is now reporting that crude oil production is expected to drop "a little this winter, then stabilize upon spring's arrival and possibly inch upward toward the end of 2021." Weren't we told just a week ago or so, that the state was in deep trouble with crude oil production due to the change in the administration?

Hunting for oil. Holy mackerel! Now "Japan is hunting for oil" to meet "robust" power demand amid faltering LNG stocks. Reported by Platts. This is just like New England in the US. I always thought Japan was better prepared, more pragmatic when it came to energy. Oh, that's right: Kyoto. Or spelled backwards: Tokyo.

Fuel oil. In Japan, low sulfur fuel oil commands strong premium.

Okay, well this was huge. This is pretty funny: an estimated 1,000 fast-food workers across the United States went on strike Friday over low wages, staging protests in honor of Martin Luther King, Jr. President Biden will fix that: the minimum wage will be raised but fast food restaurants will cut staff to pay for the increased wages. I was just checking my old history book: I was unaware that Martin Luther King, Jr., was so focused on the wages of fast food restaurant workers, but there it is.  Maybe the players will kneel before kick-off this weekend in support of the minimum wage, the protest du jour.

The Bismarck Tribune. To see the names of the twenty people in your state who protested yesterday, see page 3.

1,000. By the way, think about that: 1,000. That's what The Bismarck Tribune reported: "An estimated 1,000 fast-foot workers across the United States ...." Do you know what 1,000 people spread across the United States looks like. Fifty seven states -- less than twenty people from each state. Give me a break. "An estimated 1,000 people...." Either that's a huge typo or it was a  really, really slow news day.


The Suez is back! Sea-going tankers now clearly prefer transit from the US to Asia via the Suez Canal, and not, the Cape of Good Hope. Quick! Pop quiz: where's the Cape of Good Hope?

• 
tip of South America
• 
tip of South Africa
• 
tip of Bob Hope's nose
• 
tip of Tip O'Neill's nose

• wherever that US naval hospital is anchored (by the way, has that hospital ship been re-deployed to California where it seems to be desperately needed?
  

Transfer of wealth. The city's first Ferrari dealership soon to open in Caracas, Venezuela. Hopefully these will be EVs.

Week 2: January 10, 2021 -- January 16, 2021

NOTE: most of this is complete. I still have to add Geoff Simon's top ND energy stories and a few other things, but this is pretty close to finished. 

Most under-reported story this week:

• Semiconductor shortage; Toyota shuts down production in China due to "chip" shortage;
• US imports no Saudi crude oil: first time since 1985;

Most interesting energy story this week:

• China's economy is booming; US? Not so much;

Top story of the week:

• First-ever ethane-produced electricity power plant slated to be built west of Williston, ND;
  

Records:

• The Dow; the S&P 500;

Top international non-energy story:

• Freezing temperatures / snowfall in Spain, China, Japan;
• Apple and Hyundai announce partnership;

Top international energy story:

• Volatility of the price of oil; strong surge at beginning of week, only to plummet at end of week

Top national energy story:

Top North Dakota non-energy story:

Top North Dakota energy story:

• Crude oil production flat m/m (October/November 2020);

Geoff Simon's top ND energy stories:

• Mining lignite for rare earth metals;
• Lawmaker proposes an 80-mph speed limit on parts of I-29 and I-94;
• Hess to finish Tioga gas plant expansion in 2021 after Covid delays;
• Oil companies lock in drilling permits, before Biden is sworn in;
• Dickinson public schools to return to full-time, face-to-face;
• This could be one of the mildest winters on record (no one is complaining)
• Senator Kevin Cramer opens western North Dakota office in Williston;
• Shell's ethane-consuming stream cracker in Pennsylvania in the home stretch;
• Enbridge rejects Michigan's demand to shut down oil pipeline;
• India sees $55 billion investment in clean col over the next decade;
• New Mexico bill would halt fracking permits while state conducts study; whoo-hoo! 
  

Most egregious ND energy story:

Operators:

Operations:

• CLR"s Lundberg Federal wells in Rattlesnake Point;

Fracking: 

• Mining frack sand in ND;

Pipelines:

• KMI's Texas Permian gas pipeline on line; huge story;

Wells of note:

• An old Petro-Hunt well with 65X jump in production;
• MRO: four more huge wells in Reunion Bay;
• MRO to report three huge wells;
• MRO's Prior USA well;
• QEP MHA well in Van Hook;
• QEP MHA well in Van Hook;
• Hess EN-Enger well in Big Butte;

Bakken economy:

• New brewery in Williston;

Commentary:

• Fossil fuel production to increase through 2022; will remain flat in 2021 as increased coal production offsets declines in natural gas production; STEO -- EIA;
• Shale: swing producer, 2021?

Notes From All Over -- The Afternoon Before A Three-Day Weekend Edition -- January 15, 2021

All this week on CNBC, all this hand-wringing over the surging 10-year Treasury, jumping from below 1% to 1.13%. 

Some folks on CNBC talked as if the world was coming to an end. 

Today I see the 10-year Treasury dropped four basis points, back to 1.087%. The dollar was stronger despite President-elect Biden's $1.9 trillion stimulus plan, and the price of oil showed the biggest decline in weeks. Guy Adami was practically apoplectic on Fast Money yesterday with regard to the surging 10-year Treasury and the falling dollar and the $1.9 trillion stimulus plan. Tea leaves suggest the US economy is "not yet out of the woods" by any stretch of the imagination. From Rigzone below "... and weak US economic data stoked concerns..."

I didn't watch CNBC all day so I have no idea what their talking points were but when I get back to blogging anything of note regarding the Bakken, we will have a new president. 

It's a three-day weekend, and then a day before the inauguration. I suppose there could be some Bakken news Tuesday but that's about it. Then President Biden takes over. Who would have ever guessed?

EIA's January, 2021, Short-Term Energy Outlook

Link here.

This should be an interesting read, 2021: in the US, total production of fossil fuels to remain flat as increased coal production offsets declines in natural gas production.

Re-Posting: Ethane Power Plant West Of Williston -- January 15, 2021

Updates
January 15, 2021: press release, dated January 12, 2021, from Bismarck, ND, and Westlake Village, CA, data points:

• Bakken Midstream Natural Gas, LLC
• has signed its first ethane supply term sheet to support the power plant previously announced
• will be the largest power plant to utilize advances in combustion turbine technology that enables ethane as its primary fuel source;
• The Energy Center: to be located in the Mountrail-Williams Electric Cooperative near Williston, ND
• October, 2020: announced it had secured nearly $25 million from two separate capital raises
• funding rounds led by the Family Office of Founder and executive chairman, Steven E Lebow
• Lebo was joined by ND business leaders including Gene Nicholas, Ron D. Offutt, and Stephen L. Stenehjem
• Lebow, previously: 
• founded and co-led Donaldson, Lufkin & Jenrette's (DLJ) Los Angeles office and created and led GRP Partners, a US and European venture capital firm;
• from day one, he was the primary fanancier for companies including Costco Wholesale, PetSmart, Dick's Sporting Goods, Envestnet, Bill Me Later (sold to PayPal) and ULTA Beauty;
• three years of preparation and work to get to this point
• Bakken Midstream: 
• CEO Mike Hopkins
• Lebow, and co-founders Curt Launer and Shane Goettle
• Hopkins:
• has successfully developed 54 power projects around the world, totaling over twelve gigawatts
• was extensively involved in the build out of the value-added industry in Alberta, Canada
• Launer:
• number-one ranked natural gas industry analyst on Wall Street for twelve years
• in the Institutional Investor Magazine Hall of Fame
• Goettle:
• life-long North Dakota businessman and attorney with more than 25 years of state and federal level experience;
• former head of the North Dakota Department of Commerce
• former chair of EmPower North Dakota

Original Post

Link here. 

Bismarck Tribune link here. 

Williston Herald link here.

From The Bismarck Tribune, data points:

• west of Williston
• Bakken Midstream Natural Gas
• $400-million facility
• construction: to begin in 2022
• to take two years
• CEO: Mike Hopkins
• Bakken Midsream
• formed in 2018
• mission: to develop "such" projects
• received a $200,000 investment from ND Department of Commerce
• confidentiality precludes more specific information
  

Are there any other such plants in the US that might provide readers some comparison?

• Pennsylvania Power Plant said to be the first to tap ethane for electricity -- March 27, 2020 -- NGI, link here; proposed as long ago as 2015 by GE, link here;

EIA: costs for new energy plants, 2018, link here. 

• average construction costs, combined cycle: $900 / kW = $900,000 / mW or about a million dollars for a new combined cycle plant;
• average new capacity for a new natural gas plant: 500 MW
• so, 500 megawatts x one million dollars = $500 million 

Hess natural gas processing plant: $150 million, link here. 

Hess Vantage pipeline: link here. 

RBN Energy: Shell's new ethane-consuming steam cracker in the home stretch. See this post also. Archived.

After several years of development, Shell’s $6 billion Pennsylvania Petrochemicals Complex — the first of its kind in the Marcellus/Utica shale play — is really taking shape about 30 miles northwest of Pittsburgh. The facility, which will consist of a 3.3-billion-lb/year ethylene plant and three polyethylene units, is in its final stages of construction, as is a pipeline that will supply regionally sourced ethane to the steam cracker. When the Falcon Pipeline and the PPC comes online, possibly as soon as 2022, they will provide a new and important outlet for the vast amounts of ethane that is now either “rejected” into natural gas for its Btu value or piped to Canada, the Gulf Coast, or the Marcus Hook export terminal near Philadelphia. Today, we discuss progress on the Marcellus/Utica’s first world-class petrochemical complex and what it will mean for the play’s NGL market.

And Again, The Dakotas Lead The Nation -- Chinese Flu Watch -- January 15, 2021

Vaccinations: state rankings by rate of vaccination, per 100 people, link here:

• West Virginia: 7.06
  
• North Dakota: 6.42
• South Dakota: 6.14 doses;
• National average: 3.5 doses per thousand
• Minnesota: far behind with less than 3 doses per hundred
• California: 2.5 doses -- about half that of South Dakota

Percent of allocated vaccine already administered:

• North Dakota: 71%
  
• South Dakota: 61%
• California: 28%

In storage:

• 2.5 million vaccine doses in storage
• NYC: 34%; 500,000 doses waiting in storage;

Other data points:

• In addition to these strong figures, ND and SD lead the nation in natural "penetration" rate: penetration rate of natural "cases" + vaccination --> herd immunity
• South Dakota: used electronic health records to identify individuals who qualified for the vaccine to avoid unnecessary storage;

Tracking at Bloomberg. Nice interactive graphic.

Why They Mine Bitcoin In The Arctic, In Iceland, And In The Mountains Of Iran -- January 15, 2021

Bloomberg photo-essay.

The Siberian city of Norilsk is best known as the home of mining giant MMC Norilsk Nickel PJSC. 

With a population of 180,000, it’s one of the biggest human settlements beyond the Polar Circle and only reachable by plane or boat. 

The city may soon be famous for a different type of mining though — it now hosts the Arctic’s first crypto farm for producing new Bitcoins. 

BitCluster, the facility’s Russian owner, is already planning an expansion after starting operations late last year. 

The city of Norilsk has temperatures as low as -40 degrees Celsius (-40 Fahrenheit), making it one of the coldest places on the planet. It is so remote that the locals call the rest of Russia “the mainland.” The temperatures are a big part of the appeal for bitcoin mining, as the two biggest running costs for the process are cooling and electricity. 

BitCluster clients only pay 2.75 rubles ($0.04) per kilowatt hour, among the cheapest rates globally. Norilsk Nickel's power unit mostly uses gas or hydropower to produce electricity.

Might the Bakken be good for mining Bitcoin: cold, and lots of energy.  

When you look at those mining rigs, what do I see? Apple mini-Macs. Just saying. They're already being used for the cloud by AWS.

A Closer Look At The Huge Hess EN-Enger Well In Big Butte -- January 15, 2021

The well:

• 36379, drl/A, Hess, EN-Enger-156-94-1423H-4, 33-061-04468, Big Butte, first production, 7/20; t--; cum 122K 11/20; fracked 5/23/20 - 5/29/20 -- a 6-day frack; 7.6 million gallons of water; 86% water by mass;

Pool	Date	Days	BBLS Oil	Runs	BBLS Water	MCF Prod	MCF Sold	Vent/Flare
BAKKEN	11-2020	30	18711	18673	11403	23707	23392	315
BAKKEN	10-2020	26	16407	16506	12095	19305	19097	208
BAKKEN	9-2020	30	25804	25798	18250	36132	34811	1321
BAKKEN	8-2020	31	32549	32441	20632	50624	33392	17232
BAKKEN	7-2020	29	28699	28592	14966	44204	11913	32291

The nearest well to the west is off line:

• 20772, 1,181, Hess, EN-Enger-156-94-1423H-1, Big Butte, t12/11; cum 289K 5/20; remains off line 11/20;

The nearest well to the east is:

• 19227, 723, Hess, EN-Wefald-156-94-1324H-3, Big Butte, t6/11; cum 348K 11/20; was off line for only a few months, 5/20 -7/20; on line now but producing only 600 bbls/month;

Director's Cut Has Been Posted -- November, 2021, Data

Director's Cut: posted, link here.

The usual disclaimer applies: in a long note like this, done quickly, there will be content and typographical errors. If this is important to you, go to the source.  

October, 2020, data. This is all preliminary data for October. When the final number is tallied (next month), it will reveal a slight increase in production month-over-month):

Crude oil production:

• November: 1,224,540 (preliminary
  
• October: 1,222,871 bopd (preliminary); 1,231,048 bopd (final)
  
• delta: - 6,508 bopd
• delta: - 0.53%

Natural gas production:

• November: 2,887,402 (preliminary)
  
• October: 2,873,654 MCF/day (preliminary); 2,881,717 (final)
  

Natural gas capture:

• November, 93%
• October, 93%

Rig count:

• today: 11 (no SWD or CS rigs)
  
• December: 14 (but may include CS and SWD)
• October: 14 (ditto)

Wells

• December:
• permitted: 66
• November: 
• permitted: 52
• completed: 44 (preliminary
• inactive: 2,870
• DUCs: 710
• total off line for operational reasons: 3,580 
• producing: 15,601 (preliminary)
  
• October:
• permitted: 74
• completed: 59 (preliminary); 74 (revised)
  
• inactive: 2,934
• DUCs: 724
• total off line for operational reasons: 3,658
• producing: 15,512 (preliminary); 15,524 (final)

**********************************
Wells

Wells, permitted:

• December: 66
• November: 52
• October: 74
• September: 51

Wells, completed:

• November: 44 (preliminary)
  
• October: 59 (preliminary); 74 (revised)
  
• September: 76 (revised); 54 (final)
  
• August: 66 (final)

Wells, inactive:

• November: 2,870
• October: 2,934
• September: 3,749

Wells, waiting on completion (DUCs):

• November: 710
• October: 724
• September: 793

Wells, producing

• November: 15,601 (preliminary)
• October: 15,512 (preliminary); 15,524 (revised)
  
• September: 15,389

Fracking: the number of well completions has been very volatile since March (2020) as the number of active completion crews decreased from 25 to 1 and now 7 with the CARES incentive.

DUCs and wells off-line for operational reasons are tracked here.

My Hunch: Most Of JPMorgan's Employees Already Earn $15/Hour -- January 15, 2021

To the extent that I care (and I don't care much), earnings are tracked at the sidebar at the right. 

JP Morgan, link here. 

"Delivered results that blew away analysts' expectations even as the Covid-19 pandemic continued to exert significant headwinds on the global economy. Look at these numbers:

• EPS: $3.79 vs $2.62 -- amazing -- are you kidding me!
• revenue: $29.2 billion vs $28.65 billion expected
• net income: $12.1 billion or $3.79 per share
• up 42% from a year ago
• this included a $2.9 credit reserve releases: resulted in a 72-cent increase in earnings per share; a net benefit of $1.89 billion in credit reserves
• the bank maintains a reserve topping $30 billion

Note: I understand maybe three of the six bullets above (LOL);

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.

China's Economy Is Booming: The US? Not So Much -- January 15, 2021

China set to topple US as biggest economy: this has been predicted for quite some time, but it will happen sooner due to Covid-19. The US lock down began less than a year ago: today China's share of global output, trade, and investment, is up. The US? Not so much. Companies are seeking closer trade and investment ties. Link here to Bloomberg.

China’s economic ascent is accelerating barely a year after its first coronavirus lockdowns, as its success in controlling Covid-19 allows it to boost its share of global trade and investment.

The world’s second-largest economy is set on Monday to report gross domestic product increased 2.1% in 2020, the only major economy to have avoided a contraction.

That should ensure its share of the world economy rose at the fastest pace this century. Global output fell 4.2% last year, according to the World Bank, pushing China’s share of it to 14.5% at 2010 dollar prices -- two years earlier than expected.

And it’s not just a blip that’ll reverse once other large economies begin to recover as vaccines are rolled out. Economists expect China’s GDP will expand 8.2% this year, continuing to outpace global peers including the U.S.

China is now on course to pass the U.S. as the biggest economy in 2028, said Homi Kharas, deputy director for the global economy and development program at the Brookings Institution, two years faster than he previously estimated.

After withstanding President Donald Trump's trade war, China is deepening economic ties within Asia and Europe and looking to domestic consumption to power its next phase of growth. President Xi Jinping said this week that “time and the situation” were on the country’s side in a new year marked by domestic turmoil in the U.S.

 

One Well Coming Off Confidential List; Director's Cut To Be Released Today -- January 15, 2021

Director's Cut: scheduled to be released later today, link here.

COP closes on Concho. 

*****************************
Back to the Bakken

Active rigs:

$52.80	1/15/2021	01/15/2020	01/15/2019	01/15/2018	01/15/2017
Active Rigs	11	52	68	55	36

 

Rig	Operator	Well Name and Number	Current Location	County	File No	API	Start Date	** Next Location
H & P 515	PETRO-HUNT, L.L.C.	HAGEN 144-98-12D-1- 2H	NENW 13-144N-98W	BIL	35807	33007019140000	1/12/2021	Undetermined
H & P 454	CONTINENTAL RESOURCES, INC.	Gale 5-32H	NENW 32-147N-96W	DUN	37373	33025039920000	1/6/2021	Undetermined
CYCLONE 38	CONTINENTAL RESOURCES, INC.	Gale 11-32H	NWNE 32-147N-96W	DUN	37402	33025040110000	1/10/2021	Undetermined
NABORS B27	WPX ENERGY WILLISTON, LLC	Dakota 1-36HY	SWSE 1-149N-93W	DUN	37832	33025040830000	1/7/2021	Undetermined
NABORS B6	BURLINGTON RESOURCES OIL & GAS COMPANY LP	F JORGENSON 1D MBH	SESW 11-151N-97W	MCK	37480	33053093720000	1/9/2021	Undetermined
NABORS x10	MARATHON OIL COMPANY	Black USA 11-35H	SWNE 34-152N-94W	MCK	37610	33053094390000	1/8/2021	Bullseye
UNIT 414	SLAWSON EXPLORATION COMPANY, INC.	STALLION 7-1-12H	LOT3 1-151N-93W	MTL	36123	33061044200000	1/13/2021	Undetermined
H & P 492	MARATHON OIL COMPANY	Etherington USA 34-31TFH	SWSE 31-151N-93W	MTL	37675	33061047650000	1/8/2021	Undetermined
H & P 259	MARATHON OIL COMPANY	Watterberg USA 41-5TFH	LOT4 4-150N-93W	MTL	37787	33061047980000	1/5/2021	Undetermined
NABORS X28	HESS BAKKEN INVESTMENTS II, LLC	BL-A IVERSON- 155-96-1312H-8	NWNE 24-155N-96W	WIL	36770	33105052780000	12/26/2020	Undetermined
NABORS B13	OASIS PETROLEUM NORTH AMERICA LLC	Cliff Federal 5300 43-35 5B	SWSE 35-153N-100W	WIL	37266	33105053960000	1/6/2021	Undetermined

Only one well coming off confidential list -- Friday, January 15, 2021: 19 for the month, 19 for the quarter, 19 for the year.

• 36379, drl/A, Hess, EN-Enger-156-94-1423H-4, 33-061-04468, Big Butte, first production, 7/20; t--; cum 122K 11/20; fracked 5/23/20 - 5/29/20 -- a 6-day frack;
  

RBN Energy: Shell's new ethane-consuming steam cracker in the home stretch. See this post also. Archived.

After several years of development, Shell’s $6 billion Pennsylvania Petrochemicals Complex — the first of its kind in the Marcellus/Utica shale play — is really taking shape about 30 miles northwest of Pittsburgh. The facility, which will consist of a 3.3-billion-lb/year ethylene plant and three polyethylene units, is in its final stages of construction, as is a pipeline that will supply regionally sourced ethane to the steam cracker. When the Falcon Pipeline and the PPC comes online, possibly as soon as 2022, they will provide a new and important outlet for the vast amounts of ethane that is now either “rejected” into natural gas for its Btu value or piped to Canada, the Gulf Coast, or the Marcus Hook export terminal near Philadelphia. Today, we discuss progress on the Marcellus/Utica’s first world-class petrochemical complex and what it will mean for the play’s NGL market.

Shell's Ethane Cracker In Pennsylvania -- RBN Energy -- January 15, 2021

Wow! What a great coincidence: yesterday the "big" Bakken story was the announcement that an ethane power plant was being considered for a site west of Williston. Someone mentioned that Pennsylvania ethane complex, but not much more was said. 

Now today, an RBN Energy blog on the ethane steam cracker in Pennsylvania.

RBN Energy: Shell's new ethane-consuming steam cracker in the home stretch.

After several years of development, Shell’s $6 billion Pennsylvania Petrochemicals Complex — the first of its kind in the Marcellus/Utica shale play — is really taking shape about 30 miles northwest of Pittsburgh. The facility, which will consist of a 3.3-billion-lb/year ethylene plant and three polyethylene units, is in its final stages of construction, as is a pipeline that will supply regionally sourced ethane to the steam cracker. When the Falcon Pipeline and the PPC comes online, possibly as soon as 2022, they will provide a new and important outlet for the vast amounts of ethane that is now either “rejected” into natural gas for its Btu value or piped to Canada, the Gulf Coast, or the Marcus Hook export terminal near Philadelphia. Today, we discuss progress on the Marcellus/Utica’s first world-class petrochemical complex and what it will mean for the play’s NGL market.

Notes From All Over -- The Late Night Edition -- The Asian - US LNG Paradox -- January 15, 2021

Updates

Later, 2:54 a.m. CT, January 15, 2021: bitter cold brings chaos as global energy systems show strain; power and gas prices spike to records across global markets; more cold weather from the Arctic possible from end of January -- Bloomberg. Wow, perfect storm in a good sense; all bullish for oil companies:

• weakening dollar;
• OPEC+ agrees to maintain/cut; Saudi surprises by cutting more than expected;
• global freeze;
• global economy recovering from Covid (maybe)

Later, 2:22 a.m. CT, January 15, 2021: see if anyone mentions the Groningen? Nope. Groningen on the blog.

Later, 01:50 a.m. CT: literally one minute after posting the note below the following popped up on twitter. Link to Financial Times here. LNG rally heralds more volatile gas prices to come: spike in demand in Asia triggers scramble for supplies.

When restaurants in Japan open their windows to help combat the spread of Covid-19, you might not think it would have much effect 6,000 miles away in lockdown Britain.

But the shivering diners of Tokyo and Kyoto, where restaurants are still allowed to admit customers for limited hours, are not just an illustration of the differing emphases put by governments on the dangers of the aerosol spread of the virus. They also tell a story of interconnected energy markets and increasingly how what happens in Asia can have a large knock-on effect for the UK and Europe — from what consumers pay to heat their homes to the ability of national grid systems to comfortably keep the lights on.

As a brutal cold snap has hit Japan and much of north-east Asia in recent weeks, Japanese utilities have had to scramble to source fuel supplies. Power prices in Japan have soared to record highs and the government has asked citizens to limit energy consumption by turning off lights and appliances, even while urging them to keep the heating on and the windows open.

But the biggest pinch point for Japan has been the country’s reliance on liquefied natural gas, a once relatively niche commodity that has grown in global importance over the past decade. Japan has long been one of the biggest importers of LNG, which is natural gas that has been super-chilled and compressed so it can be delivered by ship. The country lacks pipeline access to gas or its own reserves of a fuel that it needs for heating, electricity generation and manufacturing.

But as the LNG market has grown, Japan has had to increasingly compete with other countries looking to substitute highly polluting coal. Energy consultancy Wood Mackenzie estimates LNG has risen from 11 per cent of global gas supplies in 2010 to 15 per cent today (and it forecasts it will reach more than 20 per cent by 2040).

Prices for LNG cargoes in the Asian spot market have soared to record levels this week as the cold snap hit, up almost 20 fold from just a few months ago when the market was seen as oversupplied. Energy traders have diverted every LNG cargo they can towards the Asian market, with China and South Korea also scrambling to buy.

But they have been hamstrung by a number of problems, from a lack of available tankers and delays at the Panama Canal, to outages at various projects. Goldman Sachs described the situation this week as a gas market that had “shifted from a bearish perfect storm last year to a bullish perfect storm now”.

Much more at the link. Will be archived.  

Original Post

LNG pricing: Asia vs US. A few days ago a reader asked why Asian LNG could be priced more than 10x higher than US LNG. A reader who knows the subject very, very well replies:

Addressing one of your reader's curiosity as to why US gas prices are not rising despite torrid Asian (and now European) demand:

US LNG plants are operating near 100% capacity: about 11 Bcfd. They are simply maxed out and the feedgas supplies are tied into Henry Hub. 

Somewhat counter-intuitively, US prices may drop mid-February as a shortage of available ships may cause a drop in US LNG exports. Slightly longer term (balance of 2021 out to October or so), HH pricing should stay firm (around $2.80?) as the demand to replenish depleted storage supplies should be very strong.

Taking a slightly broader view, the jarring discrepancies between contractual arrangements versus spot market is/has been HUGE!

That is to say, customers with firm, long term contracts are doing okay. Those needing both LNG and ships on a spot basis ... not so much.

This should greatly incentivize customers such as Japanese, Turkish, and Indian utilities to enter into firm purchasing agreements.

The ripple effect should make for a much more favorable climate for pending US LNG projects to obtain financing which has been the main stumbling block this past year.

Fast and furious:

• Switzerland: public transportation shut down in Zurich; heavy snowfall;
• China blinks: may allow imports of Australian coal;
• Venezuela: one step closer -- to losing Citgo;
• Norway: to increase production to more than 2 million bpd from 1.7 million bpd now; mostly from the giant Johan Sverdrup field (global warming? EVs?)
  

Electronic land posting: link here.

Locking It In -- US Shale Producers Making Deals -- January 15, 2021

From Reuters:

U.S. shale producers are taking advantage of the oil market’s rally to levels not seen in nearly a year by locking in prices for future sales.

U.S. crude futures this month jumped above $50 a barrel to the highest since February, 2020. The rally has sparked optimism among shale companies, but after a bracing year of pandemic-induced demand destruction, they are not ready to ramp up production. Instead, they are using futures markets to lock in higher sale prices.

U.S. oil production peaked at nearly 13 million barrels per day in late 2019, but is now around 11 million bpd after the coronavirus lockdowns crushed fuel demand and oil prices. Output is not expected to rise much in 2021, but those that hedged now are guaranteed sales of barrels at more than $50 even if prices drop again.

“Producers locked in a certain amount of wells at a certain price and hedging at $50 makes you look like a rockstar. This year will be about free cash flow,” one executive at a U.S. shale producer said.

Producers that are hedging are likely locking in about 15% to 20% of production at a time, said Tom Petrie, chairman at energy investment bank Petrie Partners.

Fascinating to watch. The consensus, it seems, oil is yet to rise quite a bit more -- and that's refiners are willing to lock in at current prices. What a game!

Another Texas Company Returns To Its Roots -- January 15, 2021

Another one to add to the list. 

From a press release:

Digital Realty (NYSE: DLR), a leading global provider of data center, colocation and interconnection solutions, announced today (January 14, 2021) it will relocate its corporate headquarters from San Francisco, California to Austin, Texas, strengthening its existing presence in Texas and strategically positioning the company to better serve its increasingly global customer base.  

Digital Realty will maintain a significant presence in the San Francisco Bay Area as one of the world's leading technology hubs, while the relocation of the corporate headquarters to Austin reflect the company's established track record of success and growth in Texas, along with its extensive investment in the state in terms of capital as well as talent. 

Digital Realty has deep roots in the state of Texas, dating back to early 2002 when its predecessor acquired 2323 Bryan Street, a major regional connectivity hub in downtown Dallas.

For the better part of two decades, Digital Realty has been at the forefront of data center innovation, enabling global service providers, multinational enterprises and small businesses alike to achieve various iterations of digital transformation. 

Today, Digital Realty owns more than 30 data centers across the state of Texas, encompassing more than four million square feet and over 100 megawatts of customer capacity.  In addition, nearly 20% of the company's North American employee base is located in Texas. 

New MacBook Pro Models: Back To The Future -- January 15, 2021

For Apple aficionados this is huge: there are rumors that the next generation MacBook Pro will address the top three irritants of the current (and recent) versions of the MacBook Pro.

First, the MagSafe is back. This is huge. College students loved the MagSafe. The MagSafe was a quick-release power cord attachment. At Starbucks, if someone got up and "tripped" on your power cord, no problem. The power cord simply separated from the computer and nothing happened. With the current USB-C power cord, if one trips on your power cord at Starbucks, the computer is pulled off the table, coffee is spilled, and a huge commotion ensues. Everyone wanted the MagSafe back but no one thought it possible.

So, there, the MagSafe is rumored to be back.

Second, the TouchBar is gone. I don't know anyone on social media that liked the Touch Bar. It has the feeling of something that Microsoft would have come up with. Stubbornly, Tim Cook seemed to stick with the Touch Bar. But now, apparently, someone got to Tim Cook. 

So, there, the Touch Bar is rumored to be gone. And the physical function buttons are restored.

Third, more ports. Wow, that has been a sore spot for new MacBook owners -- so few ports (and the "wrong" kind of ports) that everyone needed to purchase "dongles" or adapters to connect to their peripherals, like printers or external storage devices. Of course, the Apple goal: everything would be connected wirelessly but apparently that was a bridge too far. 

So, there, more ports, and no more dongles if the rumors are true. 

This story was just posted an hour or so ago over at MacRumors. When I saw the article there were only four comments; by tomorrow morning there will be over a hundred. Right now, forty-three minutes after the first comment, there are now seventy-two comments. And I bet all seventy-two comments will be surprised, thrilled, ecstatic. We'll see.