Thursday, June 10, 2021

US LNG Exports On Track For Another Record Year -- June 10, 2021

 US LNG exports: on track for another record high this year. Link here to Tsvetana Paraskova.

U.S. exports of liquefied natural gas (LNG) are set to surge this year from the already record levels in 2020 as demand in Asia and Europe is high, even in the off-peak season. All-time high LNG exports from America, coupled with rising domestic natural gas consumption outside of the power sector, are set to keep the U.S. benchmark, the Henry Hub spot price, averaging above $3 per million British thermal units (MMBtu) this year. This would be more than $1/MMBtu above last year’s average price of just $2.03/MMBtu, the Energy Information Administration said in its June Short-Term Energy Outlook (STEO) this week.

Recovering natural gas consumption around the world and higher than usual demand for replenishing low gas inventories in Asia and Europe have kept LNG prices in these key importing LNG regions high after the end of the winter heating season and ahead of the peak summer demand season.

Economic recovery and a rebound in LNG demand in the world’s largest LNG importing region, Asia, are set to keep spot regional prices around current levels of $10/MMBtu for most of the summer, which could be the highest price for this time of the year in seven years.

Yesterday, SRE jumped 3%; jumped almost $4. I could not find a reason why the jump in price. This is most likely the reason -- the EIA's June Short-Term Energy Outlook released this week. From June 9, 2021:  

Market:

SRE, a company I have followed "forever," jumped $4 today, almost 3%; from $135 to almost $140. I haven't seen a reason why yet (I last looked six hours ago) on a day the market was generally flat to negative. SRE "is a $124-stock" as far as I'm concerned. 

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

"Damn The Torpedoes, Full Speed Ahead" -- CLR With Four More Brooklyn Oil Field Permits -- June 10, 2021

Five new permits, #38359 - #38363, inclusive:

  • Operators: CLR (4): Petro-Hunt
  • Fields: Brooklyn (Williams); Charlson (McKenzie)
  • Comments:
    • Petro-Hunt has a permit for another Sherven Trust well in SWSW 23-153-95, 325' FSL and 1020' FWL
    • CLR has permits for four Springfield FIU wells in NWNE 17-155-98, to be sited 385' FSL and between 1813' FEL and 1948' FEL [my hunch: this error in the daily activity report will eventually be corrected]

Brooklyn: a small, non-descript field NE of Williston; "owned" by CLR; excellent example of how an operator systematically drilled one entire field with one rig; holding the entire field by production within a year or so; has received the most comments of any field.  

The graphics:


The new permits:

  • 38360, conf, CLR, Springfield FIU 10-8H1, NWNE 17-155-98, 385' FSL 1813' FEL;
  • 38361, conf, CLR, Springfield FIU 9-8H, NWNE 17-155-98, 385' FNL 1858' FEL;
  • 38362, conf, CLR, Springfield FIU 8-8H1, NWNE 17-155-98,
  • 38363, conf, CLR, Springfield FIU 7-8H, NWNE 17-155-98, 385' FSL 1813' FEL;

The wells in the graphic above:

  • 38299, conf, CLR, Rolf Federal 7-17H, Brooklyn, 385 FNL 1428 FEL,
  • 38298, conf, CLR, Rolf Federal 8-17HI, Brooklyn,
  • 38297, conf, CLR, Rolf Federal 9-17H, Brooklyn,
  • 38296, conf, CLR, Rolf Federal 10-17H1, Brooklyn,
  • 38295, conf, CLR, Rolf Federal 11-7HSL, Brooklyn,
  • 38294, conf, CLR, Gjorven Federal 8-16HSL1, Brooklyn,
  • 38293, conf, CLR, Springfield 11-8HSL, Brooklyn,
  • 38292, conf, CLR, Bismarck 8-9HSL1, Brooklyn,

Less Than One Million Vaccinations Per Day, The Last Three Days -- Not Looking Good -- June 10, 2021

Link here.

Three consecutive days with less than a million vaccinations given per day. We need 1.5 to 4.0 million vaccinations per day. Less than a million vaccinations on any given day is very, very bad news. 



Doses of vaccine distributed to health facilities

Change from day before

Vaccinations given

Change from day before

Thursday

June 10, 2021

372,830,865

335,340

305,687,618

934,142

Wednesday  

June 9, 2021

372,495,525

487,395

304,753,476

950,780

Tuesday

June 8, 2021

372,008,130

487,395

303,802,697

950,780

CLR WIth Four More Springfield Permits In Brooklyn Oil Field -- June 10, 2021

Active rigs:

$70.15
6/10/202106/10/202006/10/201906/10/201806/10/2017
Active Rigs2012646152

Five new permits, #38359 - #38363, inclusive:

  • Operators: CLR (4): Petro-Hunt
  • Fields: Brooklyn (Williams); Charlson (McKenzie)
  • Comments:
    • Petro-Hunt has a permit for another Sherven Trust well in SWW 23-153-95, 325' FSL and 1020' FWL
    • CLR has permits for four Springfield FIU wells in NWNE 17-155-98, to be sited 385' FSL and between 1813' FEL and 1948' FEL
    • Brooklyn: a small, non-descript field NW of Williston; "owned" by CLR; excellent example of how an operator systematically drilled one entire field with one rig; holding the entire field by production within a year or so; has received the most comments of any field. 

Four permits canceled:

  • Oasis: four Cliff Federal permits canceled; all in Williams County

One producing well (a DUC) was reported as completed:

  • 29506, drl/A, Denowh 31-29-4H, Glass Bluff, first production, 3/21; t--; cum 32K 4/21;

Tesla Drops The Model S Plaid Plus; Introduces The Model S Plaid -- But Why Plaid? -- June 10, 2021

Wow, Elon Musk is a master of marketing.

This was posted three days ago, on June 7, 2021:

Tesla: officially cancels its flagship sedan, the Model S Plaid Plus; would have delivered 520 miles of range, and acceleration from 0 to 60 in less than two seconds.  

Today, this announcement from Tesla, reported in The Wall Street Journal: Tesla to introduce upgraded Model S to jump-start high-end model sales. On CNBC, Phil LeBeau is all over this story; he needs to be paid by Tesla for his commercials. As does Ford. As does Boeing.

Elon Musk had promised redesign would be available months ago, a delay that means Tesla missed some of this year's booming demand for luxury cars;

the vehicle is dubbed ... drum roll .. remember, three days ago the Model S Plaid Plus was canceled ... the new vehicle ... drum roll ... the Model S Plaid.

In other words, Tesla is dropping the "PLUS" and calling it a luxury car. The announced price for this "luxury": $129,990.00. That's the starting price. Generally, the "real" price is significantly higher, but if you have to ask, you can't afford it anyway. The billionaires who can afford this car will get federal and state tax breaks, something the rest of us can subsidize, I guess. Or did Tesla exhaust its federal tax breaks? I've long lost the bubble on that and no one bothers to report it any more anyway. The betting is that Congress will simply extend the breaks as needed (i.e., politically expedient).

The original Model S Plaid Plus was said to have been able to accelerate from 0 to 60 mph in less than two seconds. 

The newly announced Model S Plaid is said to be able to accelerate from 0 to 60mph in 1.99 seconds. I can't make this stuff up.

Again, for the record, if I had all the money in the world, I would buy a Tesla. Or two.

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Why Oil Plummeted Last Year
You, Too, Can Be An Analyst



Now That TC Energy Has Abandoned The Keystone XL, Some Observations -- June 10, 2021

This page is not ready for prime time. 

See this post, also. 

Also, activists are targeting Big Oil; why that could backfire

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.

Headlines:

  • TC Energy cancels critical Keystone XL pipeline (it couldn't have been too critical; we've lived without it for two decades)
  • Canada's oil industry optimistic as prices rebound

Now that TC Energy has abandoned the Keystone XL, some observations.

  • the Keystone XL, two arenas: the political arena, and the non-political arena
  • with regard to the political arena, the faux environmentalists won
  • the Keystone XL was the pipeline story that spawned all the rest, including the Enbridge pipelines, lines 3 and 5; the DAPL; the natural gas pipelines in the northeast; etc. The Keystone XL "win" was huge; hard to say whether it will affect outcome of existing pipeline fights;

The rest of the observations will address the non-political arena:

  • headline above: "TC Energy cancels critical Keystone XL pipeline": it couldn't have been too critical; it was on the drawing board in the early 2000s', probably as early as 2005 with the US shale revolution; "we've" lived without it for almost two decades; the pipeline couldn't have been too critical;
  • there is no evidence that Gulf Coast refiners will re-configure/optimize their operations for light oil as long as heavy oil is available;
  • most surprising: Canadian oil sands operators have survived some of the most brutal economic impacts over the past few years;
    • many thought that oil from the Canadian oil sands was landlocked; absolutely not true
    • headline today: western Canadian operators optimistic about the future -- this is the day after the Keystone XL project was finally abandoned; the western Canadian operators knew this was coming years ago;
    • but the US is still going to need lots of heavy oil
  • group-think: 
    • the big loser: Canada
    • the big winners: Saudi Arabia, Russia, Latin America
  • to some extent that's true, but it's all relative
    • in reality, with regard to this very small piece of the oil pie:
      • the big loser: US consumers (price of oil / price of gasoline goes up slightly)
      • safety and efficiency: CBR is so much less efficient and so much more dangerous than pipelines; and all those traffic crossings in Kansas and Nebraska -- they've just gotten a whole lot worse; 
  • the big winner: investors; CBR; every other pipeline operator; the Permian;
    • a number of readers are very, very aware of this and have written me to tell me how they are "playing" this story
    • the big winner: investors. If you don't agree, ask yourself two questions:
      • as an investor, ask yourself, where would you be investing had the Keystone XL been in operation today?
      • as an investor, ask yourself, where should I be investing now that the Keystone XL project has been abandoned, once and for all?
    • the answers to those two questions are fascinating
  • the Keystone XL -- other than transiting the Bakken -- had absolutely nothing to do with the Bakken; the Keystone XL was going to transport heavy oil, not light oil
    • add up the "negatives" and the "positives" and the demise of the Keystone XL was a net win for Bakken operators;

Bottom line:

  • in the political arena, all sentient Americans should be upset that the Keystone XL was killed;
  • in the investment arena, where I now live, we should all be happy that the Keystone XL was killed -- perhaps not happy, perhaps "neutral" at best, but taking advantage of this new reality, in our investment decisions.

I have flip-flopped on this. for the past ten years (?) I was in the political arena when it came to the Keystone XL; for over ten years I have been steadily moving from the political arena to the investing arena; I still have a long way to go, but I'm getting there.

Saudi Arabia Foreign Exchange Reserves -- June 10, 2021

The biggest story -- okay, maybe not the biggest story -- that honor might belong to the cicada flying into President Biden's right ear and then as if that was not enough -- a swarm of them shutting down Air Force 1 --  but I digress -- where was I? Oh, that's right -- the biggest story this month (so far, and there's a lot left of this month) was the announcement that:

  • Saudi Arabia
  • was selling
  • dollar-denominated
  • bonds
  • to cover the ungodly annual $75 billion dividend
  • for holders of Saudi Aramco stock.

By the way, another digression:

  • the annual dividend is $75 billion;
  • the tranche: $5 billion
  • tell me again, how $5 billion in bonds will make any difference when the requirement is $75 billion?

We're back.

I thought with the price of oil surging and after the robust numbers in March (2021), Saudi Arabia was rolling in dough. 

Wow, was I wrong. Link here.


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The Oil Embargo Of 1973

Wiki entry here

Bottom line: biggest mistake Saudi Arabia ever made -- the embargo. Saudi's embargo was akin to shutting down 1,000 Keystone XL pipelines -- perhaps some hyperbole -- and what happened? Alternate solutions were found, including alternate sources of crude oil.

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US Crude Oil Imports

Link here, from all sources. The most interesting thing about this graph? How really little has changed from 1980 to 2021. Sure from 200 to 400 and back to 200 is a doubling and then a halving, but it's not like there's an exponential change in any part of that graph.

What is staggering to me, is the amount of oil "we" have come to depend on. This is simply not going to change any time soon. 

From wiki, the increase in US crude production and imports from 1969 to 1974 is staggering:

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Huge Disconnect

Those who think policies to cut CO2 emissions, including bans on new and existing fossil fuel pipelines, will end global demand for oil are simply out of touch with reality. Really out of touch with reality. Elizabeth Warren's press release today on the death knell of the Keystone XL is the best example of group think in an echo chamber devoid of any understanding of reality.

************************
Back to Saudi Arabia

Monthly production was way down, despite the headline: Saudi Arabia reports May crude oil production of 8.544 million bbls per day, above target. The next question, question: how much oil did Saudi Arabia use domestically for air conditioning?

The kingdom said it would pump 8.482 million bbls/day; the delta? Less than a percent. 

But it probably explains why Saudi's foreign reserves are trending so low. Whatever.

Let's see what happens when Iran re-enters the market. Biden presses to re-open the fossil fuel market for Iran and accepts Russian Nord Stream 2 and kills the Keystone XL. Must have played very, very well for his well-heeled political donors. Hey, by the way, the buzz in Washington is that President Biden putters around the White House every day while the real business of the Oval Office is being accomplished by a former president.

One Well Coming Off The Confidential List; A DUC -- June 10, 2021

10-year Treasury: 1.496%.

Economic data (needs to be confirmed, these may be incorrect, taken on the fly from CNBC):

  • US inflation numbers to be released today for May, 2021; 5.0%; first time it has exceeded 3.8% since 1992;
  • first time unemployment claims: down 9,000 to 376,000
  • continuing claims drop week/week; first time it's happened during the plague year
  • morning brief

Covid-19: number of Americans receiving vaccinations has plummeted; average over past two days, less than one million vaccinations given per day; 

  • my data suggests only 55% of all American adults have been vaccinated; I think the government is telling us as man as 70% of Americans have received at least one dose. 

Amazing: US natural gas exports and natural gas for electricity generation reached record highs in 2020 -- the plague year. Link here.  

Not only that, but atmospheric CO2 levels rate of growth appears to have increased during the plague year, previously posted. And the Biden boom will exacerbate things. Expect to see Greta hit the lecture circuit.

DEN: what I'm watching closely.

Moats
: Apple and WWDC 2021 -- link here

Moats: FERC and Biden have widened pipeline company moats. Big story for Jim Cramer today.

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.

Record: S&P missed it by one point -- yesterday, S&P missed an all-time record by one point. But today, at the open -- S&P hits new all-time record.

Maritime construction
: ship orders surge as carriers rush to add capacity. Link here. Big shipyards running out of construction slots. Memo to self, new tag: the Biden boom.

Starbucks: regional and temporary -- Starbucks faces shortage of cups, syrup as operations get back to pre-Covid "normal." Link here

Headlines:

  • TC Energy cancels critical Keystone XL pipeline (it couldn't have been too critical; we've lived without it for years)
  • Canada's oil industry optimist as prices rebound

Canada: more Canadian oil than ever imagined the US

Heavy oil: needed by the US more than ever, link here. US crude oil imports (with w/w changes) --

  • Canada: 3,971 (+824)
  • Brazil: 261 (+194)
  • Russia: 256 (-27)
  • Saudi Arabia: 144 (-44)

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Back to the Bakken

Active rigs:

$70.05
6/10/202106/10/202006/10/201906/10/201806/10/2017
Active Rigs2012646152

One well coming off the confidential list -- Thursday, June 10, 2021:

  • 37674, drl/NC, MRO, Hartson USA 24-31H, Reunion Bay, no production data

RBN Energy: proposed "green," "turquoise," and "blue" hydrogen production projects. Archived.

We get the sense that many hydrogen-market observers are looking for a silver bullet — the absolute best way to produce H2 cheaply and in a way that has an extremely low carbon intensity. If anything has become clear to us over the last few months, however, there isn’t likely to be an “Aha!” or “Eureka!” moment anytime soon. Rather, what we have seen so far in regard to hydrogen production has been a veritable smorgasbord of production pathways, with varying degrees of carbon intensity. While costs vary by project, it is also fair to say that a front-runner has yet to emerge when it comes to producing inexpensive hydrogen at scale. There is a silver lining though, if not a bullet, and that is the realization that there are many options when it comes to procuring environmentally friendly hydrogen. Today, we provide an update of currently proposed hydrogen projects.

Gasoline Demand -- June 10, 2021

Link here.

Doesn't seem to be comforting for oil bulls:

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A Fistful Of Dollars

The Keystone XL Is Dead: Good News For The Bakken And So Many Others -- June 10, 2021

Keystone XL: dead. Milestones here. Pipelines were tracked here but over time this pipeline and others became of less interest to me once I understood the issues. From the very beginning, going all the way back to 2013 when first announced, I said the Keystone XL was dead, killed by Obama. Took a long time to finally die. Will talk about it later. 

I've flip-flopped on my feelings regarding the Keystone XL because I have changed in the past ten years. 

In the past ten years, I have become less idealistic, less political, and a better investor. Keeping that in mind, "killing the Keystone XL" was advantageous for me. It's counterintuitive but for "American" investors, killing the Keystone XL was very good for me and very good for anyone invested in the Bakken (financially, emotionally). 

I'm not in the mood to discuss it now, but I'm correct on this one.

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To Sir, With Love