Friday, August 6, 2021
Red River Water Project Underway -- August 6, 2021
From Geoff Simon:
The 167-mile pipeline will eventually deliver water from the Missouri River to users in eastern North Dakota, most notably the Cities of Fargo and Grand Forks. Much of the funding for the project will come from the state and its Resources Trust Fund, which receives 20.5 percent of oil extraction tax revenue.
The initial construction involves the installation of 1.2 miles of 72-inch pipe about one mile south of Carrington, which is expected to be completed by late October. The intake is located about five miles south of Washburn, and its discharge structure is six miles south of Cooperstown, near the Sheyenne River.
In his dedication remarks, Lt. Governor Brent Sanford, noting that much of the project's funding comes from oil tax revenue, quipped that "North Dakota is the only state that can turn oil into water." Sanford said the start of the project is especially timely in a year where most of the state is experiencing drought."
Natural Gas Production Projection -- August 6, 2021
From Geoff Simon:
The ratio of natural gas to crude oil being produced from Bakken wells will continue to increase, possibly doubling the state's current natural gas output in fewer than 10 years.
That was the message of Justin Kringstad, director of the ND Pipeline Authority, to members of the ND Legislature's interim Energy Development and Transmission Committee this week. Kringstad said the ratio of natural gas to oil typically starts out close to one-to-one, meaning 1,000 cubic feet of natural gas for each barrel of crude oil. But he said the ratio has been steadily climbing as more new Bakken wells are completed.
Kringstad said the higher gas-to-oil ratios are not unexpected. He told legislators most new wells today are being drilled in areas where a "parent well" already exists, which means the pressure that holds natural gas in the reservoir has already been reduced.
Click here to listen to Kringstad's comments.
.... the high case of which could have the state's natural gas production approaching seven billion cubic feet per day. The state's output as of the month of May was just under three Bcf per day.
Graphic:
Also from Geoff Simon:
Last year's pandemic-related downturn in oil and natural gas production provided midstream companies some relief in the pace at which new natural gas processing and takeaway capacity was needed. But increasing gas-to-oil ratios mean they will need to return to construction mode quickly.
Helms said the accelerated schedule won't provide midstream companies adequate time to get new processing and takeaway capacity permitted and constructed, but he said tax incentives enacted by the 2021 Legislature will encourage innovative methods of using the additional natural gas.
SB 2328 established a credit against the oil extraction tax to incentivize use of onsite flare mitigation systems in production operations. The credit is equal to $0.75 per one million BTUs of flare mitigation that results from operating a flare mitigation system on a qualifying well. Credits are capped at a maximum of $6,000 per well per month, for as many as 12 months.Helms said he's also seeing increased interest in using natural gas and gas liquids to generate electricity.
Week 31: August 1, 2021 -- August 7, 2021
Top story of the week:
- Joe Biden is still president; says 350 million Americans have now been vaccinated, which means the US is 100% vaccinated, and then some.
- Energy story after energy story of new records.
- NDIC is back! Still working on database migration, but at least daily updates getting back on track.
- Sturgis rally begins today.
Top international non-energy story:
Top international energy story:
Top national non-energy story:
Top national energy story:
Top North Dakota non-energy story:
Top North Dakota energy story:
Geoff Simon's top North Dakota energy stories:
- Iron Oil Operating with four new permits.
- CLR to spud exploratory well in Louisiana; here; here; here.
- Enerplus in the news.
- Enerplus acquires 600 wells from Hess.
Operations:
Wells:
Fracking:
Pipelines:
Natural gas:
Bakken economy:
Commentary:
Miscellaneous:
That Pad Fire North Of Charlson -- Two Wells Still Burning -- August 6, 2021
Responders might be able to put fire out by today (Friday) or over the weekend -- Williston Herald.
Original four wells on this pad. Three burning out of control after initial blowout; responders shut down fourth well so it would not burn.
About the twelfth day, responders were able to get the fire out at one of three wells. Two wells still burning. This must be about the sixteenth day these wells have been burning. I believe the fire began on a Thursday, about two weeks ago.
The Unemployment Numbers -- Another Viewpoint -- August 6, 2021
From Breitbart:
It is summertime, but the living ain't easy. The Labor Department said Friday that around 943,000 people were added on to payrolls in the month of June, around 100,000 more than forecast and near the top of the range of estimates by reputable economists. While we do not yet have the data broken down by state, it is likely that one of the reasons for the surprising strength of the employment report was the early end of enhanced unemployment benefits in 26 states. For many reasons—largely political—many economists have resisted the idea that ending the benefits early would boost employment, which would explain why they underestimated the July figure.
The headline number gave the Biden administration something to brag about, but you do not have to look very long into the numbers to see the cracks in the foundation.
The number of black Americans employed actually fell in July, and the black workforce participation rate declined. This is something of a calamity for both the Federal Reserve and the White House, both of which have defined economic success in terms of achieving racial "equity."
Workforce participation also fell for Hispanic women, the demographic group that was arguably the hardest hit by the pandemic's economic impact. This decline was especially notable because of the strength in the hospitality and leisure sector, a major employer of Hispanic women.
A strong labor market is supposed to grow workforce participation. So what gives? Well, inflation for one. The average hourly wage rose 0.4 percent in July and was up four percent compared with a year ago. Those would be grand figures in most times. But consumer prices rose 0.9 percent in June and were up 5.4 percent compared with a year ago. We will not get the July price data, but even mild inflation figures—and all indications are that July saw much more than mild inflation—would mean that wages are falling in inflation-adjusted terms. No wonder why increasing numbers of workers are deciding that it just isn't worth holding a job right now.
Meanwhile, the Biden administration and its allies in the Republican Senate continue to threaten to pass the infrastructure hoax although they can no longer claim with a straight face that the thing is "fully paid for," as they did when the bipartisan deal was first announced.
The Congressional Budget Office has found that the bill will add $256 billion to the deficit.
That kind of deficit spending might have made sense in the doldrums of last summer, when the economy was staggering from the pandemic. But with inflation already swallowing wage gains whole and likely convincing Americans on the economic margins to drop out of the workforce, passing this bill would be an act of extreme recklessness and, for Republican lawmakers, a betrayal of their mission to rein in the worst of the Biden administration's overreach. It will make the inflation disaster a bipartisan product rather than Bidenflaton.
Recklessness. Betrayal. Republicans self-inflicting political wounds. Sounds familiar. We expect it will pass forthright.– Alex Marlow & John Carney
Breitbart News Network
ONEOK Expanding Its Bear Creek Plant Southwest Of Killdeer -- Reader -- August 6, 2021
I'm sure readers know that I have become quite fascinated with "the natural gas story" internationally and nationally, but it's also a North Dakota story. It's really quite a story.
Earlier today a reader mentioned that the ONEOK plant southwest of Killdeer Mountains was expanding..
Here's the spreadsheet from North Dakota, link here.
With regard to the reader's note earlier today, I can't say for sure this article pertains but my hunch is it does.
Link here, article dated July 25, 2019:
ONEOK announced plans to expand its natural gas and natural gas liquids (NGL) infrastructure between now (July 25, 2019) and 2021, including:
- A 200 million cubic feet per day (MMcf/d) expansion of the Bear Creek natural gas processing facility and related infrastructure in the Williston Basin.
- Mid-Continent NGL fractionation facility expansions totaling approximately 65,000 barrels per day (bpd) and additional NGL infrastructure to increase capacity between the Elk Creek and Arbuckle II pipelines.
- A 40,000 bpd additional expansion of the West Texas LPG pipeline in the Permian Basin.
Iron Oil Operating With Four New Permits -- August 6, 2021
Active rigs:
| $68.28 | 8/6/2021 | 08/06/2020 | 08/06/2019 | 08/06/2018 | 08/06/2017 |
|---|---|---|---|---|---|
| Active Rigs | 23 | 12 | 60 | 64 | 58 |
Four new permits, #38459 - #38462, inclusive:
- Operator: Iron Oil Operating,
- Field: Sather Lake (Antelope)
- Comments:
- Iron Oil Operating has permits for four Antelope wells in NENW 17-149-101;
- the wells will be sited between 350 FNL and 360 FNL and 1727 FWL and 1412 FEL
Three permits renewed:
- 36822, loc/loc, Enerplus, Cadence 148-93-18C-07H-TF, McGregory Buttes,
- 36823, loc/loc, Enerplus, Tempo 148-93-18C-07H-TF, McGregory Buttes,
- 36824, loc/loc, Enerplus, Octave 148-93-18C-07H, McGregory Buttes,
A Cute Little Story -- August 6, 2021
I've talked about this before. A lot of folks see the year of the plague, 2020, as a "black swan." A reader called me out on that telling me I don't understand the meaning of a "black swan." That's fine. A lot of folks think of Covid-19 as a "black swan."
I don't see Covid-19 / the year of the plague as a "black swan."
Nor do I see it as bad news except in one arena, which I won't go into now; I don't want to digress.
Covid-19 / the year of the plague has been incredibly important, beneficial, and rewarding on so many levels.
First of all, at this point in my life, after "family," investing may be the most important and interesting aspect of my life. This has been a most rewarding period for investors and it will only get better. Not all the reasons for this are intuitive.
Wow, it's been simply incredible on so many levels.
But let's narrow this down to one small arena: the Bakken, or perhaps a bit more encompassing, the US unconventional oil sector.
The Bakken revolution began in Montana, 2000.
The Bakken revolution began in North Dakota, 2007.
I started blogging in 2007, but the current blog only goes back as far as 2009.
I'll have to go back and look but the Permian shale revolution took off in 2010 time frame or thereabouts.
So, by 2019, the chaos of 2007 - 2010 had morphed into an orderly development of the Bakken over the next few years. A USGS assessment was completed in 2013, and an update to include the first bench of the Three Forks was scheduled for 2020.
Then, 2020, the year of the plague. Everything came to a stop. Literally.
That gave all of us a chance to take a collective breath.
It took a few months, but when folks realized "we" weren't "going to open" for another year or so, the smart CEO's initiated new short-term planning (how to survive during the lockdown). mid-term planning (how do we "come out" of the lockdown -- I'm thinking of SAM -- hard seltzer misstep), and then long-term planning (compressing 2020 - 2035 into 2020 - 2025).
So, 2020, the plague year, gave "everyone" a chance to take a deep breath.
Break, break.
"Everyone" says that the days of drilling in the Bakken will eventually come to an end so companies like CLR need to look elsewhere for new plays.
2020 gave them an opportunity to look around; there wasn't much else to do.
The two things oilmen like to do: drill wells and make deals. There wasn't much drilling during the year of the plague.
And that brings us to Louisiana.
For those who have kept up with the blog, they know what I am talking about. Later, I will provide the links to bring everyone up to speed.
But to get started, this "blog" may be a great spot to start. The link will download as a pdf.
Look at the date that blog was posted: May, 2019.
Wow.
2019: the last year before the year of the plague. Everything came to a stop.
2021, and then 2022, even more so, price of oil improves and the economy opens up.
West to east, south Texas to Louisiana: the Louisiana-Mississippi Stack Play (I think Harold Hamm loves anything with the word "stack" in it. His favorite breakfast is probably a stack of pancakes.)
It appears in the LAMS, the Austin Chalk overrides (sits atop) the Tuscaloosa Marine Shale, with Austin Chalk as the source rock sitting between the two, at least according to the second slide.
Colloquially, from Texas east to Louisiana, geologists / oilmen refer to it as the "Austin Chalk Trend, (slide 5).
Slide 13: the Austin Chalk geographic regions:
- TX-South
- TX-Central
- TX-East
- LA-West
- LA-East: the predominant play in the LA-East block is the "LAMS Stack Play" straddling the Louisiana-Mississippi state line
Slide 15 is interesting. You know, I've designated the history of the Bakken from Bakken 1.0 to Bakken 4.0.
Slide 15, Austin Chalk play concepts:
- Austin Chalk 1.0: vertical wells, feast or famine
- Austin Chalk 2.0: horizontal, across naturally occurring fracture lines, focus where you find them
- Austin Chalk 3.0: frack, thick saturated porosity
Time, slide 16:
- 2016: EOG commences leasing
- 2017: EOG spuds early well
- 2018: MRO commences leasing
- 2018: COP commences four-well-drilling program
- 2018: MRO spuds early well
- 2019: EOG permits a new well, bringing us up to the date of the presentation
The next few slides show more of the geology / strata / source rock.
"The Austin Chalk in the Tuscaloosa trend of Louisiana is a high TOC source rock."
"Log analysis in the eastern portion of the Louisiana Austin Chalk requires a different approach."
This presentation centered on LAMS, LA-East.
We are interested in LA-West: the hydrocarbon kitchen for Austin Chalk, TMS, Tuscaloosa, lower Cretaceous and Smakover, straddling the Texas/Louisiana state line, four parishes to the north of the gulf coast.
Slide 21: interesting. EOG has projects to the east and to the west, but apparently (at the time of the presentation) nothing in the center, over the TX/LA state line.
Slide 28: spend some time on this slide --
- the far left vertical blue line runs along the TX/LA state line, north to south;
- Equinor has two blocks on this line
- parishes from south to north:
- Cameron: on the coast
- Cal-cashew
- Beauregard
- Vernon
- the two Equinor blocks sit right on Vernon Parish -- wow
- remember, Equinor was huge in the Bakken, and Equinor exited the Bakken
- the vertical line in the middle has two MRO blocks
- farther east: EOG, COP, DVN, XEC, and ATS -- a lot of familiar (and big) names
TMS:
- Amelia Resources:
- kickstarted Encana who ultimately became largest leaseholder
- technical transfer
- first 60,000 acres
Austin Chalk:
- Amelia Resources:
- kickstarted ConocoPhillips (COP) who is one of the largest leaseholders in the play
- technical transfer
- first 85,000 acres
Slide 36: look how long it took to drill a well in the Austin Chalk, 2019 -- upwards of 50 - 70 days.
Slide 37: Austin Chalk atop the Tuscaloosa Marine Shale geology
Slide 47: oil needs to stay above $60
Now the cherry on top.
Imagine this at the El Rancho, in Williston, some years ago:
Harold Hamm, CLR, talking with Sven, Equinor.
Sven: "You know, Equinor is leaving the Bakken, and actually, leaving America. We enjoyed it. Sad to leave."
Harold: "Yeah. It's been a great ride. If you ever get back, look us up in Oklahoma."
Sven: "Not! Maybe Florida, California, Texas --- but not Oklahoma. But thanks for the invite."
Harold: "By the way, before you go. Do you have anything we might be interested in?"Sven: "Let me tell you a story. Have you heard of Louisiana?"
Notes From All Over -- Part 7 -- August 6, 2021
Updates
August 12, 2021: in the original post, I mentioned in passing I'm pretty sure where these tanks and Bradley vehicles are headed. A hint: they are not headed to the Mideast; they are not headed to the desert. These tanks are painted "forest green" not "desert tan." The paint scheme and port of disembarkation is all one needs to know, to surmise where these tanks are headed.
Original Post
Tanks on the move: link here, photos pending. I have my own thoughts on where these are headed, but will keep those thoughts to myself. I sent my thoughts to the reader who alerted me to this story; maybe we'll know more in a few months. However, in the process I learned a bit more about railroads and railways.
5-7 Cavalry Squadron. I'll let the one US Army reader that I have tell me if I have this correct.
- Ft Stewart, Georgia:
- 3rd Infantry Division
- 1st Armored Brigade Combat Team
- 7th Calvary Regiment
- 5th Squadron: an armored cavalry squadron of the 1st ABCT
Of note, the 7th Calvary Regiment:
- formed 1866, following the end of the US Civil War; to wage US - Indian wars
- Battle of the Little Bighorn, 1876, Lieutenant Colonel George A. Custer
**************************************
Other Stuff
Electricity consumption: per capita, North Dakota, Louisiana, and Alabama lead the nation in electricity consumption. Link here.
- US average: around 4,500 kWh per person;
- at the top: Louisiana, North Dakota, and Alabama
- at the bottom: Hawaii, California, New York
- just wait until they start cryptomining in North Dakota. LOL. Yes, I know: the plan is to use natural gas. But I do believe, cryptominers use electricity generated from fossil fuels. Just as EV owners overwhelmingly use electricity generated from fossil fuels.
Geopolitics:
- WWII: Germany and Japan
- 2021: China and Iran
The chemistry page: ichthammol. Wiki entry here.
- ichth: relating to "fish" (think Devonian)
- hamm: low-lying alluvial land beside a stream
- ol: chemical ending for any alcohol
- ichthammaol: another form of fish oil?
- now that you've seen this word, you are going to notice it on any number of therapeutic products for the skin and scalp
No Wells Coming Off Confidential List Today -- August 6, 2021
Active rigs: the official numbers will be reported in the daily activity report which is released at COB of business, each non-holiday weekday. The data for previous years is probably correct in this graphic, but I do not know:
| $69.73 | 8/6/2021 | 08/06/2020 | 08/06/2019 | 08/06/2018 | 08/06/2017 |
|---|---|---|---|---|---|
| Active Rigs | 23 | 12 | 60 | 64 | 58 |
No wells coming off confidential list today.
RBN Energy: is another build-out of natural gas storage capacity just ahead?
If you’re a relative newcomer to the energy industry, the subject of natural gas storage might make your eyes glaze over — the sector is often treated as a backwater by traders and investors focused on liquid hydrocarbons. But it wasn’t always so. In the decades leading up to the early 2000s, the U.S. gas market underwent a series of fundamental changes, each spurring the development of new storage capacity, first in the Northeast, then the Midwest, and finally along the Gulf Coast. Along the way, the primary use of storage — balancing seasonal swings in gas demand — remained consistent, but there was also a wild-and-woolly period in the mid-2000s that was rife with meme-stock-like trading frenzy. It’s hard to say for sure, but we may be on the verge of needing still more gas storage capacity. In today’s blog, we’ll discuss the history and nature of U.S. natural gas storage to give context on what the future might hold.
It may come as a surprise that the origins of natural gas storage in North America began not in the U.S., but in Canada. It was in 1915 that a depleted natural gas well in Ontario was reconditioned into a gas storage facility. But as much as we love poutine and maple syrup, we’ll save our blog on Canadian storage for another day. Today we are focused on U.S. storage. After proof of concept in Ontario, the depleted Zoar gas field in New York was repurposed to help meet the wintertime gas needs of nearby Buffalo in 1916. The Zoar field is now the oldest operating underground gas storage facility in the world, and a testament to the durability of these operations.
Notes From All Over -- Part 6 -- August 6, 2021
Wow, wow, wow! Here we go! "Dow futures jump after better-than-expected jobs report. LOL. [This is inaccurate conclusion.] Earlier this morning I posted that their was too much hand-wringing over the jobs story. I said then, and I have maintained "forever," the jobs would take care of themselves.
So,what are future doing?
- DOW: up 78 points. After the report surges, up 180 points at the open.
- S&P 500: up 5.5 points. After the report up 10 points at the open.
- NASDAQ: down 35 points. After the report pares losses, only down 16 at the open.
- WTI: up 1.45%, now trading above $70 again
Both the Dow and the S&P 500 hit new all-time records.
It's a fool's errand to predict the price of oil, but the tea leaves certainly suggest producers are running "behind," right now. And there may be a mismatch of the type of oil in demand if that makes sense.
But holy mackerel, this jobs report is amazing. Jay Powell must be smiling. And so is Biden.
- payrolls increase by 943,000, well past the estimates; but look at this:
- unemployment rate drops to 5.4%.
Wow.
Estimates had been for 845,000 and a headline jobless rate of 5.7%. Having said that, the graphic at this link is not particularly exciting. But, wow, if your cup is half full like mine, this is huge. Look at that graph at the link. Think about it for a few minutes. Then think about the US economy, the stock market, the GDP going forward.
Average hourly earnings also increased more than expected, rising 0.4% for the month of July.
The drop in the headline unemployment rate looked even stronger considering that the labor force participation rate ticked up to 61.7%, tied for the highest level since the pandemic hit in March 2020. A separate calculation that includes discouraged workers and those holding jobs part-time for economic reasons fell even further, to 9.2% from 9.8% in June.
************************************
Covid-19
This is going to be the big story for the rest of August: companies across the board are going to require employees to be vaccinated.
Example: United Airlines announced that overnight. This is a first for domestic airlines, but the others will quickly fall in line.
Example: CNN has zero tolerance policy on this one. Fires three workers coming to work unvaccinated. And, oh, by the way, so far, that policy has been held up in court.
********************
Covid-19
Notes From All Over -- Part 5 -- Friday, August 6, 2021
Refiners haven't been this profitable in four years! Link here.
US oil exports rise, June, 2021: link here.
Gasoline demand: quick! While we are at it, what was the most interesting data point about the most recent EIA report regarding US gasoline demand? Posted just two days ago.
Pop quiz: US oil exports rose in June. What is driving US exports? This is incredibly important, or at least incredibly interesting.
Coal is dead! Long live coal, link here: if this was being reported in oilprice I would blow it off, but this is in ArgusMedia: US coal exports hit a two-year high in June.
Again, for all the talk that fossil fuel is dead, are folks seeing a trend in the stories here?
- Canada: setting oil export records
- US: setting LNG export records
- Brazil: record imports from the US
- US: record-setting coal exports
- Saudi Aramco's earnings will triple, quadruple this quarter; will report tomorrow;
- Russia see below (spoiler alert)
Answer to pop quiz: earlier I mentioned that the #1 country from which the US imports oil. I asked readers which country was number two. Here's the link to the answer.
Non-energy: XLNX, AMD. I don't understand this either but it's fascinating to watch.
Non-energy: feel-good story from the Olympics -- doctors said her career was over. She switched sports and won Olympic gold. Link here. Some would infer from the story that hip dysplasia is a mild malady; it isn't. It's devastating.
Non-energy: another feel-good story from the Olympics -- why Olympic silver medalist Courtney Frerichs felt she won even before starting the race. Link here.
Re-posting: I'm most disappointed in Bryan De.
Notes From All Over -- Part 3 -- Friday, August 6, 2021
Today's jobs number / job numbers: link here. Here's yet another article on the "jobs" picture. A lot of hand wringing. Doesn't bother me a bit. I don't think anyone really cares. Don't take that out of context, but by "everyone," I mean investors, federal-level politicians, two-thirds of US senators at any given time. It appears Jay Powell is concerned about the unemployed, but at the end of the day, I think he's more concerned about tanking the stock market.
Best tweet all day; link here.
Dividends vs buybacks: this will be behind a paywall, unfortunately. This is a great, great discussion regarding this subject.
The interesting thing is that about a week ago, or maybe two weeks ago, I brought this up for the first time ever on the blog, after ten-plus years of blogging. I had not seen this discussed before. I thought I was missing something; I felt I was certainly in the minority. But with the huge amount of money the oil companies are making, and even more so, the huge amount of money Apple, Inc., is reporting, it has been amazing to see such little return when it came to dividends. Although the link above is behind a paywall, if you want to see the story, find the 2Q21 COP transcript and go to the Q&A.
COP fumbles the ball on the one-yard line, link here, this may be the same link as above -- and this time I was able to access it (again).
- over the past few years, ConocoPhillips has done a great job at upgrading the portfolio, cutting costs, and generating tons of free cash flow.
- indeed, in Q2, the company generated $2.8 billion in additional FCF and ended the quarter with a massive cash hoard of $9.2 billion in cash and cash equivalents.
- yet, after a one-penny increase in the quarterly dividend last year, the annual dividend remains an unimpressive $1.72/share.
- Bank of America analyst Doug Leggate called out CEO Ryan Lance on the dividend issue, but it is clear from Lance's answer that shareholders can't expect a decent dividend anytime soon.
- it's the equivalent of a football team driving the ball the entire length of the field with hard-fought running and passing plays, only to fumble the ball on the one-yard line.
COP: best quarterly earnings in three years. Link here. One would never know it by its stock price. Geeeee...I wonder why? Oh, see the dividend stories above. To say the least, I'm not happy, either.
Notes From All Over -- Part 4 -- Friday, August 6, 2021
Earnings transcripts, 2Q21:
- SRE: link here.
- MDU: link here.
- MNRL: beats estimates.
- DVN / WPX: earnings call. This one might catch a few folks off-guard. I completely forgot and I'm long WPX. Sorry, DVN.
We have a winner: Apache. Alpine High? Link here. Apache nabs $4-plus for Permian natural gas, boosted by prescient hedging strategy. By the way, the wiki entry for Apache is a very, very interesting read. I never knew. Along with MNRL, APA is a trading stock for me but it's quickly becoming an investment-grade holding. LOL. I'm talking like I actually know something about investing. I don't. LOL. Ask my broker.
APA: from the linked article above --
After fetching $4.61/Mcf for its Permian Basin natural gas in the first quarter, APA Corp. is stepping up its activity in some prospects and extending its exploration in Texas.
The gassy Alpine High development in the Permian Delaware sub-basin of West Texas had been the Houston-based explorer’s No. 1 global play. As gas prices stagnated and oil prices strengthened, more capital was moved to Egypt, the North Sea and offshore Suriname.
Still, with prices on the rise early this year, CEO John Christmann IV had said in February the Alpine High and other U.S. prospects were likely to see more love in 2021.
“We made excellent progress during the first quarter with regard to our top priority of free cash flow generation and net debt reduction,” Christmann said during the quarterly conference call Thursday.
“We performed well relative to our production expectations,” with “good capital and cost discipline,” even with the “challenging weather events” during February’s deep freeze.
The challenging weather, however, proved a boon for Apache, which in March became an APA subsidiary.
Notes From All Over -- Part 2 -- Friday, August 6, 2021
EVs: for all the talk about EVs, the numbers don't add up and we saw that in spades, as my dad used to say, this past week. The grid simply can't handle it, and that's just the start.
Expensive electricity: in the US, it's just a matter of time. The "UK regulator" has just okayed -- HODL -- drum roll -- a 13% hike in natural gas and electricity retail bills. after soaring wholesale prices. Imagine, if your local utility went to your local regulator asking for a 15% increase in electricity prices. Link here.
Cheap natural gas: the era is over. Prices surge by 1,000% -- ZeroHedge.
Aramco reports tomorrow, Saturday, August 7, 2021: estimates, about $25 billion for the quarter. Link here. Last year's Aramco's net profit was less than $7 billion. And the world is not even close to a full "re-opening."
Brazil: increases LNG imports from the US amid its worst drought in more than 90 years. Link here.
Namibia: I honestly don't know if this is a scam or a legitimate news story. Something doesn't ring true, but then again, I'm probably missing something.
The story seems to be only found in oilprice which seems strange, if the story is as big as James Stafford suggests it is. Regardless, yesterday's story provides an interesting update, listing every oil and gas company that's apparently involved one way or the other. I think most most folks have heard of Cathie Wood's ARRK -- well, this African story could generate an ETF all of its own.
I think it's worth archiving, coming back to it in a few years. Link to James Stafford here. One last thought: about two years ago, maybe five years ago, I forget, XOM's CEO or some such person said there were no big elephants to find out there. If the Namibia story is "real," this is an elephant. Of all the companies Stafford mentions, it's notable that XOM is not on the list.
Canada: link to Charles Kennedy. Of all the contributors over at oilprice, Charles Kennedy is top shelf, so this is another huge story from this past week: surghing oil exports lead to largest Canadian trade surplus since 2008. Link here.
Quick: the number one country from which the US imports crude oil is Canada. Quick: name the number two country.
Heavy oil: this is an amazing story. From Charles Kennedy and the same link as above:
Canada’s exports to its main trade partner, the United States, also rose to a record in June, driven by increased exports of crude oil, passenger cars, and light trucks. Canada’s trade surplus with the United States widened from US$4.7 billion (C$5.9 billion) in May to US$6.6 billion (C$8.3 billion) in June, the largest surplus since August 2008, Statistics Canada said.
In May this year, Argus reported that Canadian crude oil exports to the United States were going to increase this year as additional pipeline capacity comes online and oil sands output increases. Moreover, demand for heavy crude has also been on the rise, with few producers available.
Despite no Keystone XL: those record Canadian export numbers? Think about it. No Keystone XL. Much of that oil is being transported on pipelines that have had capacity expanded or reversals in flow, but the real winner is CBR. The loser: faux environmentalists: a lot of CO2 emitted by those diesel trains, carrying oil that could have been transported by pipeline. By the way, knock on wood, when was the last CBR derailment?
Notes From All Over -- Part 1 -- Friday, August 6, 2021
Opening salvo: as a reader said, for an industry that is supposed to be dead, or at least dying, there was a heck of a lot of incredibly great news for the oil and gas sector this past week.
I think the biggest story is the slowdown in EV excitement. Few are talking about it yet, but the Biden administration hosting an "EV conference" and not inviting Tesla speaks volumes. Biden has backtracked, at least from my perspective, saying he wants fifty percent of all new cars sold in the USA by 2050 (?) to be EVs but that includes hybrids. Tea leaves from just a few months ago suggested automobile manufacturers were eyeing one hundred percent and indeed some auto manufacturers have said their entire portfolio will be EVs in just a "few" years. I don't think it's going to happen.
Close on the heels of that story: the incredible natural gas story. I've always wondered about the disconnect between high natural gas prices overseas vs low natural gas prices stateside, thinking that it was only a matter of time before the US would follow overseas prices. And, although the spread is still huge, natural gas prices in the US are surging. And, this despite the fact that a number of cities / states are moving to "electricity only." As if electricity is not generated by natural gas.
Oil and gas investors had a great week. There were a few disappointments. COP's dividend was probably the biggest one. More on that later.
Oh, I almost forgot, the biggest story for many readers will be the news that CLR will be drilling an exploratory well in Vernon Parish, Louisiana, targeting the Austin Chalk-Louisiana, just west of the Tuscaloosa Marine Shale.
And, the DAPL expansion, too. Wow, the stories simply don't quit.
My desktop is overflowing with stories that need to be posted.
Marathon renewable diesel refinery in Dickinson, ND: I thought I was late to this story, and that it had become an old story. Wow, I was surprised to see a huge story in the Oil & Gas Journal, from yesterday, dated August 5, 2021: Marathon completes startup of North Dakota renewable diesel factory. Link here.
Marathon Petroleum Corp. (MPC) has fully commissioned a grassroots renewable diesel production unit built as part of the operator’s conversion of its former conventional crude oil refinery in Dickinson, ND, into a renewables manufacturing site. Data points:
- former conventional crude oil refinery
- following operational startup in late-2020 and based on Haldor Topsoe AS’s proprietary HydroFlex technology, the new Dickinson unit is now producing 100% renewable diesel from soy and corn oil at its full design capacity of 12,000 b/d
- commissioning of the Dickinson refinery’s HydroFlex unit follows MPC’s late-2019 decision to convert the refining site into a renewable diesel production plant as part of the operator’s plan to increase output of fuels that align with objectives of California’s Low Carbon Fuel Standard (LCFS) as well as MPC’s own greenhouse gas (GHG)-reduction targets
- with final engineering on the project now underway, the reconfigured Martinez renewables refinery is scheduled to achieve first-phase production rates of 17,000 b/d of renewable diesel by second-half 2022 before ramping up to its full production capacity of 47,000 b/d by 2023
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