Monday, January 18, 2021

GS: Long-Lasting Bull Market In Commodities -- January 18, 2021

One thing leads to another. First these two tweets:


There was no source for the graphic, but it probably came from this: Goldman Sachs predicts a long-lasting bull market for virtually all commodities. Link here.

I don't know if folks have started noticing this yet, but in more and more articles there are references to an impending lithium shortage. It's even mentioned in this article. This is a keeper. Archived

Highlights:

  • oil demand 102.5 million b/d in 2022, prices at $65/b end-2021 
  • energy transition to stimulate oil demand, EVs facing lithium shortfall 
  • US stimulus to kick-start policy boost for demand globally 

Expanding, from the article:

  • "every single commodity market with the exception of wheat is in a deficit today" and highlighted the example of oil, saying capital expenditure in the oil sector had fallen an unprecedented 40% in the first half of the year. He argued that even oil demand would be boosted by spending on the energy transition, due to the volume of oil consumed in the course of green energy infrastructure projects;
  • "It's important to separate the vaccine, which is a tactical upside catalyst, from the pandemic itself, which is a structural catalyst to a longer-lasting bull market. As we look out to 2021 the vaccine creates that V-shaped recovery... but looking beyond that we believe it's the beginning of a structural bull market not only in oil, but across the entire commodity complex,"  

I've seen that discussed on Fast Money (CNBC):

  • the vaccine: a tactical upside catalyst, whereas,
  • the pandemic itself, a structural catalyst to a longer-lasting bull market

Again, from the article:

  • Despite a reduction in oil demand for business travel, "we think the market's going to be in substantial deficit throughout the end of next year and beyond into 2022... You have structural under-investment in supply -- we call it the revenge of the old economy. It's not just oil, it's metals, mining, the entire old economy has shortages in investment," 
  • "The second theme, policy, sits at the center of the demand story. The big catalyst that the pandemic shifted is that policy after 2008-9 was directed at market stability: whether it was OPEC, the [US Federal Reserve,] the Chinese five-year plan, everything was around financial stability. Now, all the policy is around social need, and social need creates a redistribution of wealth towards lower-income, income-constrained households that consume a lot more... Demand is relatively strong across the board."
  • "We call it revving commodity demand -- redistributional policies, environmental policies... and then there's the versatility in supply chains" in the form of stockpiling of commodities by countries such as China, 
  • "It's the same three legs everywhere -- redistribution, Green, and then something to deal with the resilience of supply chains -- all [governments] are focused on that, whether it's the US, Europe or China," he said, arguing the policy side of the new cycle would be kick-started by a potential $500 million stimulus likely to be approved by the US Congress in the coming days
  • On the topic of energy transition, Currie played down some of the more optimistic forecasts by his fellow panelists on the pace of progress in battery technology, and the rise of electric vehicles, highlighting among other factors limitations in lithium availability.
  • "Right now Tesla and Apple consume 50% of the world's lithium market. These metals markets cannot accommodate scaling up these battery technologies at the rates that are potentially anticipated here," Currie said, going on to voice skepticism about the pace of improvement in battery technology.

Absolutely fascinating. The other day I mentioned that Toyota has/had stopped EV production in China because Apple had sucked up every available semiconductor.  I guess we can add lithium to that list: semiconductor shortages and lithium shortages.

If one is interested in reading more about this "long-lasting bull market in commodities" thesis, google:

  • pandemic a structural catalyst to a longer-lasting bull market

Got Pipe? January 18, 2021

My hunch: the sun will still "come up" in the east.

************************
Propane

My son-in-law in Portland, OR, uses a propane heater to warm his workshop. When we left the shop earlier this afternoon, I asked him if he was going to turn the heater off; he said it would burn itself out, but he does watch it closely and will turn it off -- "propane is expensive," he said. I wouldn't know. 

Link here

*****************************
Natural Gas: Old News

This was such old news I thought it was an old article but there it is, published just a couple of hours ago, at 5:00 p.m. CST, January 18, 2021. It's a nice article for the archives, but that's about it.

From Tsvetana Paraskova: natural gas prices set to go higher. Data points:

  • winter temperatures below seasonal norms from Europe to Asia;
  • spot LNG prices in north Asia jumped to record highs last week;
  • the key price marker in Europe, the Dutch Title Transfer Facility (TTF) hit the highest in more than two years;
  • even when natural gas seasonal demand drops back to normal, buyers will look to restock;
  • the surge in spot price for LNG "obliterated" even Bitcoin prices;
  • Asia's LNG benchmark: Japan-Korea Marker (JKM) -- highest on record, last week;
  • record prices in Asia / Europe will gradually be felt in the US;
  • for exporters, the wide spread between Asia's LNG prices and Henry Hub suggests there will be very little chance of seeing US LNG cargo cancellations -- as in the summer of 2020

****************************
Amazon Fresh

I have never used "Amazon Fresh" so I have never been able to talk about the experience. But tonight, here in Portland, OR, my son-in-law needed to order a few items and he simply ordered on his iPhone app and less than two hours later, the groceries were delivered, including some over-the-counter medication for one of the twins. It wasn't an emergency and it really wasn't the end-of-the world if he had not ordered it, but it saved them a trip to the grocery store. And it had nothing to do with Covid. Simply the ease of ordering on a holiday evening and not having to leave the house. He put the order in at 6:00 p.m. and it arrived at 7:30. The prices for most items were less expensive than what I pay at my own grocery store back in Texas. And no sales tax in Oregon. I find that absolutely amazing. Who would have thought, twenty years ago, that we would have such personalized service?

DUCs Won't Save US Oil Production -- Op-Ed Or Fact? -- Art Berman Via Forbes Via HellenicShippingNews -- January 18, 2021

From hellenicshippingnews, four hours ago:

U.S. oil production has fallen more than 2 million barrels per day since March 2020. Many reasonably expect that DUCs (drilled uncompleted wells) provide a solution to output falling further.

They won’t.

There are about 5,800 DUCs in the main U.S. tight oil plays. These are already drilled and could be converted into producing wells for the cost of completion which is about half the total well cost.

Most DUCs, however, are uncompleted for a reason namely, that their owners don’t believe that their performance will be as good as wells that they chose to complete instead.

Even assuming similar performance, the larger problem is that large numbers of DUCs are already being completed and official EIA 914 production remains less than 10.5 mmb/d.

North Dakota publishes monthly data on DUCs that can be compared with active, producing wells.

See linked article for more and for graphics. 

With regard to the article: if only it were that simple.

Tag: Director's Cut. North Dakota production --

  • March, 2020: 1,428,273 bopd; DUCs: 975; rig count: 52 rigs;
  • November 2021: 1,224,540 bopd (preliminary); DUCs: 710; 11 rigs;

Note: Friday, May 15, 2020, the number of active rigs in North Dakota: 12.

Delta:

  • November, 2021 / March, 2020, crude oil production: down 14%
  • November, 2021 / March, 2020, active rigs: down 80%
  • November, 2021 / March, 2020, DUCs: down 27%; 

And after all that, I don't think it's a matter of "DUCs" saving the shale industry. As Art Berman himself said, the industry is made of myriad details: DUCs are just one component, albeit a huge component. I suppose it's like grain in silos. That grain may or may not save a farmer from bankruptcy -- too many other factors to consider -- but that grain in the silo does provide some life support. All things being equal, a farmer would appreciate grain in a silo rather than no grain in the silo.

So, Time To Halt Fracking In New Mexico? Some Think So -- Whoo-Hoo! -- January 18, 2021

Remember all those predictions that New Mexico would vault to #2, behind Texas, in crude oil production, knocking North Dakota to third. Not so fast. New Mexico legislature may consider halting new fracking permits while the state conducts "impact studies."

Whoo-hoo! Go for it. 

Link here.

Mining Lignite For Rare Earth Minerals -- Geoff Simon -- January 18, 2021

 From Geoff Simon last week, frack sand in North Dakota and mining lignite for rare earth minerals. Oh, this will make the east coast environmentalists go nuts. LOL. All that strip mining for EVs. 

Senate Appropriations Committee members heard an update this week from Lynn Helms, Director of the Department of Mineral Resources, related to research by state geologists that has led to the start of frac sand mining operations, and the possibility of mining lignite for rare earth minerals. 


Helms said rare earth minerals are the elements used in computers, LED televisions, and defense applications.


“Most everything today, in terms of electronics uses some level of rare earth minerals,” he said, noting that currently 95% of the world’s supply comes from China. 


Helms said that 12 samples from four different locations are well above the DOE’s economic threshold for the potential of mining rare earth minerals.

He said the outlook in North Dakota for capturing the elemental material from lignite seams, as well as fly ash from lignite combustion, is “very exciting.”

Timi Yuro And Willie Nelson -- Nothing About The Bakken -- January 18, 2021

Willie Nelson is a most interesting individual. I've always marveled at the number of other artists he helped along the way. I'm reminded of Jeffrey Lebowski's "what makes a man?"

From spectropop:

Timi Yuro was among the most powerful and emotional singers of the 1960s. Her passion and commitment did not fall far short of Aretha Franklin's. 

In 1962, when Yuro's record producer Clyde Otis left Liberty, Phil Spector was asked to take over her recording of Otis's song "What's A Matter Baby?"

Spector gave her big voice an even bigger backing and the grandiose record returned her to the US Top 20. An album should have followed, but Spector had other commitments.

Yuro lost her voice in 1980 and underwent surgery for throat cancer. Around the same time, a re-recording of 'Hurt' was a hit in Holland and, when she was able to sing again, she recorded two albums for the Dutch market. In 1982 Willie Nelson repaid her earlier kindness by lending her both his band and his recording studio for an album, 'Timi Yuro - Today', which also featured his guest vocals. 

From YouTube's davesk2

Timi Yuro's final stab at the big time came via old friend Willie Nelson. 
The singer had met Nelson during the early 1960s when he was still a struggling country songwriter, the free dinners that Timi's mother, Edith Yuro, served up for her daughter's pal and kept the songwriter from starving in his lean years. 
In 1963 Timi had helped Willie out by including his songs "Are You Sure" and "Permanently Lonely" on her album "Make the World Go Away." 
Nelson never forgot the kindness he was shown. In December 1981, upon learning that Yuro had cancer and couldn't get financing for an album "Timi Yuro Today," Willie offered to record her at his studio. 
"He paid for everything," Yuro said. "He let me stay there and I did that whole album there." Her album of Willie Nelson songs – released 1982 – was said to be the most emotionally charged of her career and the relief and joy that she felt in actually being able to sing again. 
The vinyl album " Timi Yuro Today" was reissued as a cd in 1991 on her own T.R.M.I label, re-mastered and remixed by Yuro herself and titled "Timi Yuro Sings Willie Nelson," with 2 compositions with Willie called "There’s a Way" and "Did I Ever Love You?"

A Hess EN-Labar Well Extrapolates To 100K; Gas Levels In #37061 At Record Levels -- January 18, 2021

The well:

  • 37063, drl/A, Hess, EN-Labar-154-94-1003H-6, 33-061-04615, Alkali Creek, first production, 7/20; t--; cum 108K 11/20; 27K over 8 days extrapolates to 100K over 30 days; fracked 6/7/20 - 6/18/20; 6.6 million gallons of water; 84.1% water by mass;
    PoolDateDaysBBLS OilRunsBBLS WaterMCF ProdMCF SoldVent/Flare
    BAKKEN11-202018119151189673591869418054640
    BAKKEN10-202021165031659898412440924082327
    BAKKEN9-20203025032249941553039730377202010
    BAKKEN8-202031283382820124633594763750021976
    BAKKEN7-2020826663266639808315351298318552

There are seven wells on this pad, running diagonally from the northwest to the southeast;

The horizontals will run north from section 15 to section 3.

As of this date, January 18, 2021, all wells are on confidential status. Most likely all are fracked.

From the file report for #37063:

  • spud date: March 31, 2020
  • cease drilling: April 9, 2020
  • TVD: 10,605.61' (0.61 feet = 7.32 inches)
  • MD: 21,212'
  • target: Three Forks
  • surface location: NENW 15-154-94
  • bottom hole location: section 3-154-94, 115.05' NFL and 2,199.14' FEL
  • Three Forks encountered at 10,935' MD, 10,623' TVD
  • the center of the ideal geological target located 31' from the top of the Three Forks formation;
  • gas units: averaged 362 units with a maximum of 4,014 units;

The other wells on this pad:

  • 37067, conf, Three Forks, 33-061-04619, fracked 5/27/20 - 6/5/20,  6.6 million gallons of water, 84.1% water by mass;
DateOil RunsMCF Sold
11-20202217933147
10-20202503037530
9-20202814642572
8-20204133135496
  • 37066, conf, middle Bakken, 33-061-04618, fracked 5/28/20 - 6/5/20; 6.5 million gallons of water, 83.8% water by mass;
DateOil RunsMCF Sold
11-20202548736968
10-20202645641469
9-20203001744685
8-20204138434128
  • 37065, conf, Three Forks,
DateOil RunsMCF Sold
11-20202088533467
10-20201599322895
9-20202430336162
8-20203092535527
7-2020110635250
  • 37064, drl/A, Hess, EN-Labar-154-94-1003H-7, 33-061-04616, middle Bakken; Alkali Creek, first production, 7/20; t--; cum 116K 11/20; already off line again after less then three months of production; huge;
DateOil RunsMCF Sold
11-2020677917
10-20201709326403
9-20203314449728
8-20204273749309
7-20202239815256
  • 37062, drl/A, middle Bakken, first production, 7/20; t--; cum 38K 11/20;
DateOil RunsMCF Sold
11-20203834855161
  • 37061, drl/A, Hess, EN-Labar-154-94-1003H-4, Three Forks B1, first production, 7/20; t--; cum 131K 11/20; fracked 6/7/20 - 6/17/20; spud date, April 20, 2020; cease drilling, April 29, 2020; curve ended in the Three Forks; took 23 hours to build; took almost exactly 72 hours to drill the horizontal; TVD: 10,576.37'; TD: 21,494'; max gas: 9,270 units;
PoolDateDaysBBLS OilRunsBBLS WaterMCF ProdMCF SoldVent/Flare
BAKKEN11-202017118041179256982040219703699
BAKKEN10-202021179221804179532577725432345
BAKKEN9-20203029418293901370045839435192320
BAKKEN8-202031368093663122816679124281925093
BAKKEN7-202019350463504615048510052099930006

 Older wells of interest:

There are three older wells sited in section 3. The horizontals of these wells run south into section 10. Two of the horizontals will parallel the newer EN-Labar wells; a third horizontal, #17561, runs diagonally across these newer wells:

  • 17561, AB/197, Hess, EN-Labar-154-94 0310H-1, Alkali Creek, t2/09; cum 93K 10/15; offline since 10/15;
  • 22550, IA/1,053, Hess, EN-Labar-154-94 0310H-2, Alkali Creek, t8/12; cum 311K 4/20; remains off line;
  • 22551, IA/1,041, Hess, EN-Labar-154-94 0310H-3, Alkali Creek, t8/12; cum 324K 3/20; remains off line; 

The nearest well outside this drilling unit, to the west is:

  • 23445, 1,291, Hess, BB-Budahn A-150-95-0403H-3, Blue Buttes, t6/13; cum 368K 11/20; not taken off line while the new EN-Labar wells were fracked;

Wells Coming Off The Confidential List Over The Three-Day Weekend --January 18, 2021

The wells:

Monday, January 18, 2021: 25 for the month, 25 for the quarter, 25 for the year.

  • 37502, loc/NC, CLR, Miles 14-6HSL,
  • 37226, loc/drl, XTO, Kulczyk 43X-17FXG2,
  • 37063, drl/A, Hess, EN-Labar-154-94-1003H-6, 33-061-04615, Alkali Creek, first production, 7/20; t--; cum 108K 11/20; 27K over 8 days extrapolates to 100K over 30 days;
    PoolDateDaysBBLS OilRunsBBLS WaterMCF ProdMCF SoldVent/Flare
    BAKKEN11-202018119151189673591869418054640
    BAKKEN10-202021165031659898412440924082327
    BAKKEN9-20203025032249941553039730377202010
    BAKKEN8-202031283382820124633594763750021976
    BAKKEN7-2020826663266639808315351298318552

Sunday, January 17, 2021: 22 for the month, 22 for the quarter, 22 for the year.

  • 37644, loc/drl, XTO, Kulczk 43X-17BXC, 33-061-04753, Alkali Creek,

Saturday, January 16, 2021: 21 for the month, 21 for the quarter, 21 for the year.

  • 37201, drl/A, Hess, TI-Fossaa-158-94-1819H-1,33-061-04638, Tioga, first production, 7/20; t--; cum 60K 11/20;
    PoolDateDaysBBLS OilRunsBBLS WaterMCF ProdMCF SoldVent/Flare
    BAKKEN11-2020301085410793160521306712189878
    BAKKEN10-202017710971479887680068000
    BAKKEN9-202030153811558222825161681614424
    BAKKEN8-2020302533625354242544600145883118
    BAKKEN7-2020213861010160735513253298
  • 37017, drl/A, Hess, BL-Amelia-LS-156-95-1514H-1, 33-105-05353, Beaver Lodge, first production, 7/20; t--; cum 60K 11/20;
    PoolDateDaysBBLS OilRunsBBLS WaterMCF ProdMCF SoldVent/Flare
    BAKKEN11-20203014363143071328624348243444
    BAKKEN10-202031155871563516525320703202248
    BAKKEN9-2020292293122751343483240532305100
    BAKKEN8-202000470000
    BAKKEN7-202066842679563747932786666

Initial Production Data For Wells Coming Off Confidential List This Next Week -- January 18, 2021

The wells:

  • 37064, drl/A, Hess, EN-Labar-154-94-1003H-7, 33-061-04616, Alkali Creek, first production, 7/20; t--; cum 110K 11/20:
DateOil RunsMCF Sold
11-2020677917
10-20201709326403
9-20203314449728
8-20204273749309
7-20202239815256
  • 37505, conf, CLR, Miles 11-6H2, Dimmick Lake,
  • 37504, conf, CLR, Miles 13-6H2, Dimmick Lake,
  • 37224, conf, XTO, Kulczyk 43X-17F, Alkali Creek,
  • 37223, conf, XTO, Kulczyk 43X-17EXH, Alkali Creek,
  • 36244, conf, BR, Maverick 2C TFH, Dimmick Lake,
  • 37225, conf, XTO, Kulczyk 43X-17AXB, Alkali Creek,
  • 37502, loc/NC, CLR, Miles 14-6HSL, Dimmick Lake,
  • 37226, loc/drl, XTO, Kulczyk 43X-17FXG2, Alkali Creek,
  • 37063, drl/A, Hess, EN-Labar-154-94-1003H-6, Alkali Creek, first production, 7/20; t--; cum 108K 11/20;
  • 37644, loc/drl, XTO, Kulczk 43X-17BXC, Alkali Creek,
  • 37201, drl/A, Hess, TI-Fossaa-158-94-1819H-1, 33-061-04638, Tioga, first production, 7/20, t--; cum 60K 11/20;
PoolDateDaysBBLS OilRunsBBLS WaterMCF ProdMCF SoldVent/Flare
BAKKEN11-2020301085410793160521306712189878
BAKKEN10-202017710971479887680068000
BAKKEN9-202030153811558222825161681614424
BAKKEN8-2020302533625354242544600145883118
BAKKEN7-2020213861010160735513253298
  • 37017, drl/A, Hess, BL-Amelia-LS-156-95-1514H-1, 33-105-05353, Beaver Lodge, first production, 7/20; t--; cum 60K 11/20;
PoolDateDaysBBLS OilRunsBBLS WaterMCF ProdMCF SoldVent/Flare
BAKKEN11-20203014363143071328624348243444
BAKKEN10-202031155871563516525320703202248
BAKKEN9-2020292293122751343483240532305100
BAKKEN8-202000470000
BAKKEN7-202066842679563747932786666

Wells Coming Off The Confidential List This Next Week -- January 18, 2021

Monday, January 25, 2021: 32 for the month, 32 for the quarter, 32 for the year.

  • None.

Sunday, January 24, 2021: 32 for the month, 32 for the quarter, 32 for the year.

  • None.

Saturday, January 23, 2021: 32 for the month, 32 for the quarter, 32 for the year.

  • None.

Friday, January 22, 2021: 32 for the month, 32 for the quarter, 32 for the year.
37064, conf, Hess, EN-Labar-154-94-1003H-7,

Thursday, January 21, 2021: 31 for the month, 31 for the quarter, 31 for the year.
37505, conf, CLR, Miles 11-6H2,

Wednesday, January 20, 2021: 30 for the month, 30 for the quarter, 30 for the year.
37504, conf, CLR, Miles 13-6H2,
37224, conf, XTO, Kulczyk 43X-17F,
37223, conf, XTO, Kulczyk 43X-17EXH,
36244, conf, BR, Maverick 2C TFH,

Tuesday, January 19, 2021: 26 for the month, 26 for the quarter, 26 for the year.
37225, conf, XTO, Kulczyk 43X-17AXB,

Monday, January 18, 2021: 25 for the month, 25 for the quarter, 25 for the year.
37502, conf, CLR, Miles 14-6HSL,
37226, conf, XTO, Kulczyk 43X-17FXG2,
37063, conf, Hess, EN-Labar-154-94-1003H-6,

Sunday, January 17, 2021: 22 for the month, 22 for the quarter, 22 for the year.
37644, conf, XTO, Kulczk 43X-17BXC,

Saturday, January 16, 2021: 21 for the month, 21 for the quarter, 21 for the year.
37201, conf, Hess, TI-Fossaa-158-94-1819H-1,
37017, conf, Hess, BL-Amelia-LS-156-95-1514H-1,

Focus On Fracking Has Posted -- January 18, 2021

Focus on Fracking: has posted. The lede --
  • global oil supply near December's demand; US distillates exports at a forty-month low; gasoline production at a thirty-four week low.