Saturday, March 13, 2021

Parting Shot -- Saturday Night -- March 13, 2021

President Biden owns it:
  • revoked a perfectly legal Keystone XL permit; kills the Keystone XL;
  • banned all new leasing on federal land
  • slowed down federal permitting across the board
  • will increase royalty rates for onshore federal oil production
  • no influence over Saudi Arabia to help keep prices down
  • threatens the DAPL
  • pushes for higher oil prices to make renewable energy look more economical

Privately-Held Shale Drillers Could Create Havoc For OPEC --World Oil -- March 13, 2021

See this note from March 12, 2021: 

US Shale Could Disrupt OPEC+ Plans

Link here.

US shale could disrupt OPEC+ plans ....

However, smaller privately held oil firms are benefiting from higher oil prices as their primary way of generating cash is increased production.

This could spoil the oil management policy of the OPEC+ group again. [It's hard to believe that "smaller privately held oil firms could have that kind of effect on OPEC+.]

A reader responded to my comment about "smaller privately held firms ...."

I refer you to the 3/1/21 article on to get a sense of just how significant might be the emerging impact of the "little guys" in this Shale Revolution. ("How Privately owned shale drillers are a threat to OPEC").

Some data points ...
  • Double Point Energy has more rigs in the Permian than Chevron.
  • Mewbourne Oil has the same number of rigs as Exxon.
These smaller operators have WAY more financial incentive to buy/operate relatively tiny 10,000/20,000 acre holdings than their bigger competitors as the Big Boys generally  need bolt on, contiguous acreage by which they can economically operate at large scale.
This approach is greatly magnified if the add ons'  hydrocarbon potential is somewhat lower than the Big Boys' present acreage.

The wider Oilfield Service industry has been aggressively cultivating this adventurous cohort of  Littly Guys so as to expand their own customer base.

These are very, very interesting times as powerful cross currents continue to affect companies - and countries - all across the world.

Privately-Held Shale Drillers Could Create Havoc For OPEC --World Oil -- March 13, 2021

The data points in this article are absolutely mind-boggling. A huge "thank you" to the reader who sent me this: privately-held shale drillers poised to create headaches for OPEC,, March 1, 2021.

The battered and bruised U.S. shale industry is finding a resurgence in one of the most unlikely places: private operators most investors have never heard of. Take the case of little known, closely held DoublePoint Energy. It’s now running more rigs in the Permian Basin than giant Chevron Corp. Meanwhile, family-owned Mewbourne Oil Co. has about the same number of rigs as Exxon Mobil Corp.

That’s emblematic of what’s happening across the industry. Once minor players, private drillers held half the share of the horizontal rig count as of December. It’s the first time in the modern shale era that they have risen to the level of the supermajors.

Again, repeating: Once minor players, private drillers held half the share of the horizontal rig count as of December. It’s the first time in the modern shale era that they have risen to the level of the supermajors.

Look at this:

“It’s amazing on both fronts: private companies are getting so much bigger than we ever thought they would and the publics are drilling so much less than we ever thought they would,” said Wil Vanloh, co-founder of the private equity firm Quantum Energy Partners, whose portfolio companies have combined for 18 rigs, trailing only EOG Resources Inc. for most in the nation

The other day I said that NOG was the most fascinating small "player" in the Bakken.  One almost get the feeling that NOG could become a major player before this is all over. If not "NOG," then perhaps another "NOG."  The linked article continues:

With oil prices up close to 30% in the past two months, traders and analysts are watching shale producers closely for signs that they’re opening the spigots. 
Most big publicly traded explorers are listening to investors’ pleas and planning to keep production flat. 
But the contrast in output strategy from the private companies underscores just how anarchic the oil market is. 
America’s oil production currently stands at about 9.7 million barrels a day, about 3 million barrels a day less than a year ago before prices collapsed, according to the Department of Energy. 
That means the U.S. lost production equivalent to Iran and Angola combined, or two Gulf of Mexicos, in just 12 months. 
The question is where does it go from here. A Bloomberg survey of major forecasters including Enverus and Rystad Energy showed a variance of 700,000 barrels a day, more than half of Nigeria’s production, indicating how much uncertainty surrounds large, private producers whose plans are mostly shielded from public view. 
If private drillers keep expanding at their current pace, it could eventually mean that U.S. production ends up on the higher end of analyst forecasts. And that, of course, could weigh on prices.

It appears that $60-WTI (in today's dollars) is the magic number. I still think it's going to be very interesting to see whether US shale "can turn on a dime."

I think US shale can ("turn on a dime") and will if WTI stays above $60.  

And I would assume most of those small players are in the Permian, west Texas and New Mexico, where the pipeline infrastructure is well-enough developed to handle any increased oil production, unlike ND which risks closure of the DAPL.

BR's Veeder Wells In Blue Buttes Updated -- March 13, 2021

The BR Veeder wells in Blue Buttes have been updated. These are huge wells. Since last update some time ago, several new Veeder wells reporting production.

Sixth Round -- Early Evening Edition -- March 13, 2021

Time change: remember to move clocks forward one hour tonight.

BP: if you want to invest in oil and gas, look elsewhere. I said this a month ago. "They" must be reading the blog.

Cardboard: recycle story? It seems I read this story a year ago.

Texas crude: in round numbers, Texas is producing as much crude oil as Saudi Arabia exports -- five million bopd.

Agree 1000%:

Fifth Round -- Notes From All Over -- The Late Saturday Afternoon Edition -- March 13, 2021


Marias River -- The Lewis And Clark Page -- March 13, 2021

Link here

Maria's River becomes Marias River. 

The moniker-minding U.S. Geological Survey drops apostrophes from all official place names.

Four-Pound Test Line


CONRAD, M.T. - It was a quiet evening for former Glendive angler Robbie Dockter and his daughter out on the Marias River March 3.

Dockter says a life goal was to land a 10-pounder in Montana. At first glance, he assumed it was over 20. When they got back to the pickup, his scale showed approximately 32 pounds. When they returned to where they had cell service, Dockter asked his daughter to look up the record.

“She told me the state record is from 1966, and it was 29 pounds,” he said. “Well yeah that’s cool, but what is the state record now? She’s like ‘that is the state record dad.’”

After that, he knew he was going to have to look into this and see if his catch was actually record-breaking.

He went online to see what he needed to do to certify the fish. He visited his local supermarket to weigh the fish again. The scale maxed out at 30 pounds, meaning he would have to find a larger one. He got in contact with a game warden and used a 100-pound scale elsewhere to get an accurate reading.

The fish came up to 32 pounds 6 ounces. It was 37 inches long with a 28.5-inch girth.

On March 10, Dockter said fish biologists came to identify the fish as a brown trout.

Photo of this huge fish at the linked article. 

Fourth Round -- Notes From All Over -- The Early Saturday Afternoon Edition -- March 13, 2021

NASCAR: Phoenix, today at 4:30 p.m. CT. Check local listings.

Crestwood's Bakken system looking good. After tough start in 2020, Crestwood Bakken's system is looking good, says 4Q20 earning report.

  • Crestwood Equity Partners LP's Arrow system; Fort Berthold Indian Reservation;
  • record volumes of natural gas, crude and water in 4Q20;
  • company expects a lot more activity in 2021;
  • "extremely economic" in a $55- 60/bbl crude price environment;
  • expects to connect 45 three-product wells in 2021 if crude oil remains near $60
  • crude oil
  • natural gas
  • water
  • twenty-five to thirty of those 45 wells are now DUCs;
  • company connected 21 three-product wells in 4Q20:
  • company connected 70 such wells in all of 2020;
  • Arrow estimates about 600 three-product drilling locations in its catchment area;
  • "many of Arrow's customers on very strong financial footing" after increased level of M&A;
  • won't be affected by Biden's "America Last" energy policy because BLM was excluded in the executive order;
  • Crestwood continues to develop contingency plans if DAPL shutdown;
  • current volume (2020: 130,000 bopd
  • alternate if DAPL shut down: three pipeline outlets with a capacity of more than 120,000 bopd;
  • also has trucking options; "a big increase in new contracting and demand" over the last few months:
  • also excited about Powder River Basin after its largest producer customer, Chesapeake Energy Corp, emerged from bankruptcy;
  • about 60% of Chesapeake's mineral acreage is on private or state lands
  • in the PRB, Crestwood's gathering systems:
    • Jackalope system
    • Bucking Horse processing plant
  • Chesapeake Energy: 
    • nearly 540,000 net acres in Appalachia
    • 420,000 net acres in Brazos Valley of east Texas
    • 225,000 net acres in the Gulf Coast region
    • 220,000 net acres in South Texas (Eagle Ford?)

Defunding police: Belfield, ND -- to disband police department. Link here. K-9 Thor out of a job.

ND wind: wind farms won't be required to install "red light" mitigation technology. Link here. USAF says to do so would give China, Russia, Iran advantage if we go to war. Okay. That's a stretch. Older wind farms constructed before permits were required will now be required to have permits if they want to replace old turbines with new turbines.

Non-fungible tokens: more elitism, white privilege. Link here. Big player in NTFs? Nicole Buffett. Yes, that Buffett:

In Los Angeles, artist and portrait photographer Justin Aversano creates his own work and collaborates with partner Nicole Buffett (Warren’s artist granddaughter). Through their individual and combined works, they sold more than 130 pieces in two weeks to the tune of more than $100,000. He describes the emerging NFT phenomenon growing from a sense of community.

Think Missoula, MT: Montana, second hottest housing market in the US, according to

Utah: hottest housing market, making Missoula, MT, the penultimate in housing heat;
weakest housing market in 2020: Hawaii. Rounding out the top five: Nebraska, Idaho and Indiana.

China coal: China is making no shift from coal in five-year plan; set out incremental increases in climate targets to 2015, allowing for continued expansion of "clean" coal -- disappointing climate watchers. Link here. Disappointed today; "woke" tomorrow.

US crude oil production: second highest ever in 2020, despite dropping back eight percent, the largest annual decrease on record. Link here.

"America Last" energy policy: making enemies abroad rich. Link here.

  • New Mexico politicos not happy. Link here. Actions have consequences. "Woke."
  • Biden administration will re-evaluate "America Last" energy policy March 25, 2021. Link here. Story is in Reuters health care section.

Third Round -- Notes From All Over -- The Late Saturday Morning Edition -- March 13, 2021

Back to normal: previously posted that Texas would be back to normal in less than two months (don't take that out of context) -- today, Bloomberg is reporting that "Texas refineries are nearly back to normal." 

  • sixteen of eighteen plants shut by the February Freeze have started some or all units;
  • at least one refiner may run at full rates on better margins
  • while it’s still more than two months before summer driving season starts, there’s money to be made. A measure of profit margins on making gasoline, diesel and other refined products relative to crude oil, known as the 3-2-1 crack spread, surged above $22 a barrel Friday, March 13, 2021
  • Total's Port Arthur refinery on the Texas Gulf Coast, for one, has nearly completed its restart and may run at full rates by early next week because of market improvements; isn't Total one of the European E&Ps going green? Asking for a friend.
  • as of Friday, March 13, 2021, the last two refineries that had not restarted any units yet, Shell Deer Park and Chevron Pasadena, were expecting to begin the process over the next several days


8 Back to normal:

  • Marathon El Paso: 131k b/d
  • Valero Port Arthur: 335k b/d
  • Valero Corpus Christi: 290k b/d
  • Exxon Beaumont: 369k b/d
  • Valero Houston: 205k b/d
  • Valero Texas City: 225k b/d
  • Motiva Port Arthur: 607k b/d
  • Delek Big Spring: 73k b/d

8 Restarting:

  • Citgo Corpus Christi: 167.5k b/d. Everything restarted except the coker
  • Exxon Baytown: 560.5k b/d. Restarted hydrocracker, Pipestill 7 crude section
  • LyondellBasell Houston: 263.8k b/d. Everything up but one CDU and one coker
  • Flint Hills Corpus: 338.5k b/d. Restarted 265k b/d West Plant, 73.5k b/d East Plant start continues
  • Total Port Arthur: 225.5k b/d. Still restarting FCC, small CDU, may be back up early next week
  • Marathon Galveston Bay: 585k b/d. Multiple units restarted, including largest crude section
  • Valero Three Rivers: 89k b/d. Catalytic reformer, hydrocracker, FCC restarted
  • Valero McKee: 195k b/d. FCC restarted Feb. 21, hydrocracker still down

2 Preparing to Initiate Restart:

  • Shell Deer Park: 318k b/d. Making equipment repairs, set to begin restart next several days
  • Chevron Pasadena: 112.2k b/d. Has initiated restart -- shouldn't this be moved up on the scorecard? There must be a fine line between "restarting" and "initiating a restart." Maybe it's a NASA thing.

Energy Shares Could Surge Next Week

Reuters link here

I wonder whatever happened to John Kemp, the Reuters energy analyst? I quit following him when he became blatantly political. Sort of like me. LOL. 

Investors betting on U.S. energy shares have enjoyed a blistering rally, as the sector leads a move into value and economically sensitive stocks that has gripped the equity market. How much further that run continues could hinge on the success of the economic recovery, supply dynamics in oil markets and whether companies can stay disciplined on spending.

The near doubling in the price of crude has helped make shares of oil and gas companies - for years a losing bet - one of the best performing areas of the market, with outsized gains in the stocks of companies such as oil major Exxon Mobil Corp and Diamondback Energy Inc, which have surged 89% and 231%, respectively, since early November.

With a gain of over 80% in that time, the S&P 500 energy sector is back to levels last seen in February 2020, when the stock market began its plunge as the COVID-19 outbreak took its toll on the economy.

And so many of these companies pay great dividends and are likely to announce increases.


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.

Rig Count -- Baker Hughes

In case you missed it, even as crude oil prices surge:

  • rigs
  • dipped
  • by one
  • US rigs now number 402 units 
  • one year ago: 792
  • off-shore: also dropped one to 13, compared to 19 a year ago
  • Canada she 25 rigs (happens every spring, due to thaw): stands at 116, a net loss includes a 22-oil rig decrease; now stands at 58 oil rigs; down from 175 a year ago;
  • most interesting: Baker Hughes derives information partly from Enverus which produces daily rig counts using GPS tracking units;

Link here

Saudi Arabia: rig count, unchanged.

Second Round -- Notes From All Over -- Saturday Mid-Morning Edition -- March 13, 2021

Chevron: a huge surprise; link here.

  • aspirations to pump one million bopd from the Permian;
  • will ramp up investment in the Permian through 2025



: the week in picture -- the royal stimulus edition. Perhaps one of the best ever. 

Quick, Pop Quiz: How Much Brent Oil Is Brought To The Market Each Day -- March 13, 2021

Hint: on some days less than half what the Bakken produces. 

Guess what: Platts dated Brent will include transportation costs of shipping WTI to Rotterdam. Say what?

Something Fishy Going On With Brent? -- Pricing Agency Platts Defers Changes To Dated Brent -- Industry Pushback -- Re-Posting As A Stand-Alone -- March 3, 2021



From the Bloomberg article:

How do you measure the value of the world’s most important commodity?

It’s a conundrum that brought uproar in the oil market over the past few weeks after S&P Global Platts, the company that publishes the world’s key crude price, announced on February 22, 2021, that it was going to radically change the very nature of that benchmark, known as Dated Brent.

Just nine days after announcing its ambitious overhaul, which had been meant to begin in June 2022, Platts was forced to apologize to the market for the suddenness of the move. A week later it went a step further: the changes would be shelved for an as-yet-undefined period.

“It is not surprising that it caused such an uproar in the market,” Adi Imsirovic, senior research fellow at the Oxford Institute for Energy Studies and an experienced oil trader, said in a paper on the reform. The proposal was “nothing short of revolutionary.”

And more:

While Platts may have hit pause on the plan, what the saga really highlighted was a more fundamental problem facing the global oil market. Volumes of Brent oil -- which gets its name from a Scottish oil field whose production peaked in the 1980s -- have slowed to a trickle. Platts widened what constituted ‘Brent’ to include four other grades -- Forties, Oseberg, Ekofisk and Troll -- but even those are slowly running out.

And then this:

With fewer barrels to trade, the decline poses a threat to the reliability and credibility of a measure that affects everything from crude oil transactions, to long-term refining and drilling contracts. Gas supply deals and a whole host of derivatives -- even Brent crude futures -- all rely to varying degrees on that one number, published every day some time after 4:30 p.m. in London.

Platts’s idea was radical: add American crude into the mix and base its flagship oil price assessment on the trading of delivered cargoes, a move that effectively adds the cost of shipping to the price. Until now they have been based on the prices of barrels as they are loaded.

Bottom line: a most incredible story. It's behind a paywall, but there may be ways for folks to get to the article, and it's very likely Rigzone will post the story next week. 

For me this was a most satisfying story on so many levels.

Notes From All Over -- The Early Saturday Morning Edition -- March 13, 2021

We start with a great comment from a reader, posted elsewhere:

1. 17 frac spread jump is huge.

2. Still need more spreads though. We are up to 187 spreads. I estimate we need something like 200-225 spreads to hold steady at 11.X MM bopd. Mark at C6 says somewhere in the 200-230 is needed. But in any case, we are getting close to a stabilizing number of spreads.

3. Realize this is total frack spreads and does include a small amount in the gas basins. (But a small fraction of oil wells are not fracked, so it evens out.)

4. Right now, we are still drilling DUCs. But you can't burn the furniture forever. We need about 400-450 oil rigs, along with 100 gas rigs, to "hold serve". Right now, we are at 310 oil rigs and 90 gas rigs. Gas is pretty close to right number. Oil still needs to add rigs.

We need 400-450 oil rigs

Fast and Furious


  • 20 homicides so far this year, compared to just one at this same point last year;
  • U-Haul has run out of 20-foot trucks; unable to guarantee that reserved trucks will be available

Kalispell, MT:

  • has such an over-supply of 20-foot trucks that U-Haul will discount rentals if trucks are rented for one-way moves



  • suspends gasoline production
  • due to more equipment breakdowns at the PdV refinery; link here, and here;



  • don't bet against the Fed;
  • don't bet against Tim Cook;
  • next generation Apple Silicon MacBooks expected to drive record-breaking shipments this year -- MacRumors, March 12, 2021;
  • for the archives; this is not a recommendation one way or the other; simply fascinating to watch Apple logistics

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.

Speaking of logistics:


  • processor shortage could impact Samsung, same link as above;


  • resumes buyback program at $1.5 billion annualized level: link here;
    • had been suspended following its Concho transaction;
  • among other "presumed" advantages of buybacks, buybacks save a company huge amount in dividends
  • in this case:
    • COP: $60/share
    • $1.5 billion / $60 = 25,000,000 shares
    • annualized, pays $1.72 / share
    • $1.72 x 25,000,000 = $43 million; trivial in the big scheme of things, I suppose; I don't know
  • company says it aims to return greater than 30% of its cash from operations to shareholders annually;
    • funds from operations; link here
    • let's say $10 billion, this year
    • outstanding shares: 1.078 billion shares
    • $3.3 billion / 1.078 billion = $3.06 / share
    • compare

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.

Samsung -- Qualcomm

Link above.

There's no indication that Qualcomm's supply troubles will impact Apple, but smartphone manufacturers like Samsung could be in trouble. Apple develops its own A-series chips that are manufactured by TSMC, but it does use Qualcomm's modem chips.

Samsung and other Android manufacturers rely on Qualcomm's Snapdragon chips to power their smartphones, and demand has soared over the course of the past few months. Qualcomm is facing shortages of some of the subcomponents used in its chips, and the component issues could impact production of mid and low-end Samsung models.

A source told Reuters that Qualcomm's flagship Snapdragon 888 chip is impacted, but it's not clear if this is impacting the manufacturing of Samsung's high-end smartphones.

I think this is a huge story: Tim Cook's decision to go-it-alone.  This is another great example of Apple's culture carried over from Steve Jobs.