Wednesday, August 18, 2021

And Here It Is -- Thursday Morning -- No Wells Coming Off The Confidential List -- August 19, 2021

Oh-oh: Amazon announces plans to open "huge" department stores. My hunch: Jeff Bezos watches Target and low-hanging fruit. 

Okay: Facebook announces "Horizon Workrooms" to take on "Zoom."

Biggest hoax ever. Rush Limbaugh rode this horse for the last year of his radio show: "Bull" Durham. Durham never went anywhere. Now US senate Republicans want his report to be made public. Give it up. Stay focused on where the president is trying to take us  now.

The "misery index" is being replaced by the "feel good" index. Or as it appears "today," the "not-feeling good index."

  • "misery index": unemployment + inflation
  • "not-feeling good index: consumer confidence + presidential approval polling number
  • the "new misery index": price of beer + price of gasoline

Crude oil, US: 27.2 days, down from 27.4 days previous week. Link here. 

EIA "dashboards," August, 2021, posted:

Guyana, Suriname: oil drilling activity to jump. Link to Irina Slav. This play is tracked here.

Texas: Alphabet's (Google) Waymo building Texas autonomous trucking hub.

  • major new hub
  • south Dallas
  • will accommodate hundreds of trucks
  • fifth generation autonomous system
  • purpose, local: to grow its presence on the I-10, I-20, and I-45
  • purpose, regional: to connect its Phoenix operations and supporting long haul routes

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. 

Tesla: 3Q21 miss looking increasingly likely. Link here.

Toyota: to slash September production due to global chip shortage. Plan A: 900,000 automobiles. Plan B: about 500,000 cars to be produced in September. Announces temporary production shutdown at several domestic factories. Only yesterday no one thought a recession possible.

Robinhood: continues to plunge

  • has become a crypto-company
  • has no moat

CSCO: beats on estimates, Eighty-four cents vs eighty-two cents EPS. Hits 52-week high; trading at $57.14. Pays 2.7%.

Warren Buffett: five holdings account for 88% of Berkshire Hathaway's unrealized gains. KO surged while I wasn't looking. Led me down an interesting path overnight. The five stocks: BRK, AAPL, AMEX, BofA, KO. These five holdings account for almost 90% of Berkshire Hathaway's unrealized gains. Link here. 

IRA's: retirement account balances hit record for third straight quarter. Fidelity says Baby Boomers are packing away funds at a striking pace.

WTI: crash and burn. Down $2.45 in early trading; likely to go below $63 today. Louisiana Light at $67.30.

  • due somewhat to the delta variant slowdown, but the big reason for drop in oil prices --
  • insiders see lack of discipline in the Permian; Permian operators ramping up production
  • note: even Bakken production maintained under very adverse conditions this past year

Oil prices unlikely to collapse any time soon. Link to oilprice.com.  

Trial balloon: Fed rumored to end stimulus sooner than later; now that the Fed has seen the results of that trial balloon, stimulus unlikely to come to end any time soon.

JP Morgan: doubles down on oil, long term. Link to Tsvetana Paraskova. 

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. 

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Back to the Bakken

Active rigs: 

$63.07
8/19/202108/19/202008/19/201908/19/201808/19/2017
Active Rigs24*12625953

*Updated, current, and accurate rig count posted at COB weekdays.

No wells coming off confidential list.

RBN Energy: Appalachia's dwindling natural gas pipeline takeaway capacity.

Northeast natural gas production in 2021 to date has averaged 34 Bcf/d, up 1.4 Bcf/d year-on-year, and the higher gas price environment currently is signaling more upside to production in the years to come.

At the same time, downstream feedgas demand from LNG export facilities is at a record high and also headed higher as more liquefaction capacity is set to come online in the coming months. So, despite lower-than-normal inventory levels in the Northeast, outflows from the Appalachian basin have soared to new highs this year, and utilization of outbound pipeline capacity is up to an average 90%, a level we haven’t seen since the 2016-17 timeframe.

Unlike 2016-17, when there was a slew of major pipeline projects to expand egress, now there are just two or three at most — and two of those are greenfield projects that face an uncertain future.

As such, spare exit capacity is getting increasingly sparse, and Appalachian producers are bound to hit the capacity “wall” in the next two years. When will the Northeast run out of exit capacity and how bad could constraints get? Today, we provide highlights from our new Drill Down report, which brings together our latest analysis on Northeast gas takeaway capacity and flows.

My hunch: Texas/New Mexico/Louisiana producers watching closely.

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Holy Crap, Batman! COP Chopped! -- August 18, 2021

The executive branch, the judicial branch, the legislative branch.

Rock, scissors, paper. 

The rock, a federal judge, just crushed the scissors, the executive branch: judge throws out US approval of COP's Alaska oil project, known as Willow, a planned $6 billion oil development project in Alaska. 

Link here to Reuters. 

Two of two articles reporting this story are behind a paywall; by tomorrow, the story will be available everywhere.

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Shark Tank -- August 18, 2021

I do everything to avoid geopolitical news and I've pretty much lost interest in the Afghanistan story as a military exercise.

But, it's impossible to avoid Washington politics with regard to this (Afghanistan) story.

President Biden is cold and calloused. With regards to the Afghanis that fell off a USAF cargo plane after take-off from Kabul airport, he replied to George S. "that was four, or five days ago." 

Hillary: "What does it matter now?"

SecDef Austin: out of his element. Can't handle a simple press conference.

General Milley, Chairman, Joint Chiefs of Staff: stepped in to help SecDef Austin, but he knows he is going to have to step down. In the process, he will be a gentleman and an officer, playing wingman to his civilian wingman. 

Americans are not paying attention but the mainstream media is and the mainstream media smells blood in the water. 

Shark tank.

By the away, among the three US military branches, with regard to the Afghanistan debacle:

  • the big loser: the US Army; lost a huge sandbox.
  • the big winner, short term: a close one between US Air Force and US Navy, but the US Navy is the short term winner -- no Afghanis falling from their aircraft;
  • the big winner, long term: US Air Force, long range bombers
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Honor Flights Back On -- August 18, 2021

Link here.

This was perhaps the highlight of my dad's long life, to be part of an Honor Flight back to Washington< DC.

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Why Gasoline Gets More Expensive Every Year In California -- August 18, 2021

I'm too tired -- actually not tired, but hungry, so I'm going to post the map and links to two stories and readers can sort it out. 

Thank you to the reader who alerted me to the story. 

This story has become very, very complicated due to late-developing changes. I think I have it figured out and the solution(s) seem(s) pretty straightforward. I'll let readers sort it out for themselves.

So, without further ado, the map, and the links to the three articles. 

The map:

The links:

The [Santa Barbara] Independent, August 14, 2021:

A one-two punch that very few people saw coming is now posing sudden, unexpected, and potentially unanswerable questions about the viability of ExxonMobil’s proposal to transport up to 70 truckloads of crude from its Las Flores Canyon facility on the Gaviota Coast to Phillips 66’s Santa Maria Pump Station outside of Santa Maria.

Early the Thursday morning of August 13, Phillips announced its intention to shut down its oil refining operations at the company’s Rodeo refinery located outside San Francisco — the ultimate destination for ExxonMobil’s Las Flores crude — and repurpose that industrial facility into a refinery for fats, greases, soybean oils, and other renewable energy sources.

According to a Phillips press release, the company hopes that production can begin as soon as 2024. The same statement reported the company’s intention to shut down the Santa Maria transfer facility, where the Las Flores crude was to have been transferred from trucks into Phillips’s Line 300 pipeline to the Rodeo facility. The Santa Maria facility is scheduled to be shut down in 2023.

From KSBY, August 18, 2021, ExxonMobil requests permission to move oil up US Highway 101. 

From KSBY, August 13, 2021, Phillips 66 announces it will shut down Central Coast refinery in 2023.

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WTI Drops Below $66; CLR WIth Four New Whitman Permits -- August 18, 2021

Active rigs:

$65.46
8/18/202108/18/202008/18/201908/18/201808/18/2017
Active Rigs23*12615953

*Active rigs: per NDIC today, 24 active rigs, up one from yesterday; CLR added a rig:

  • CLR (7): Dvirnak, Pletan, Tallahassee, LCU Ralph Federal, Charolais South Federal, LCU Ralph, Bice,
  • Hess (3): CA-E Burdick, BB-State A, EN-Zunich,
  • Marathon (2): Goth 44-11H, Gene 44-23TFH,
  • Koda Resources (2): Stout 3409-1BH, Stout 3410-2BH,
  • Petro-Hunt: Murphy 162-100-4B-9-2H,
  • Bruin: FB Leviathan 151-94-27A-34-12T,
  • Slawson: Muskrat Federal 8-28-33H,
  • Oasis: Fraser Federal 5300 32-35 6BX,
  • PetroShale: Anderson South 2TFH,
  • Whiting: Maki 11-27-2HU,
  • Ovintiv: Rolla 152-97-1-12-13H,
  • Kraken: Wallace 6-7 3H,
  • RimRock: FBIR Johnson 13X-7F,
  • Hunt: Blue Ridge 159-100-6-7H 4,

Five new permits, #38493 - #38497, inclusive:

  • Operators: CLR (4); Sinclair
  • Fields: Oakdale (Dunn County); Lone Butte (McKenzie County)
  • Comments:
    • Sinclair has a permit in SWSE 13-147-98;
      • the well will be sited 1915 FSL and 2338 FWL
    • CLR has four new Whitman permits in Oakdale oil field,
      • the four wells will be sited NWNE 34-147-97
      • the wells will be sited between 233' FNL and 242' FNL (I think there is a typo for #38495), and between 2623 FEL and 2511 FEL,
      • the CLR Whitman wells are tracked here;

One producing well (a DUC) reported as completed:

  • 37128, loc/drl (scout ticket may be incorrect), Hess, BL-Frisinger-156-95-2833H-2, Beaver Lodge, first production --; t--; cum --;
  • there are four wells on this pad; the other three:
    • 37129, conf,
    • 37130, conf,
    • 37132, loc/drl,
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Another CLR Whitman Well Trending Toward One Million BBLs Crude Oil Cumulative -- August 18, 2021

The well:

  • 20212, 482 (1,008 reported on the sundry form), CLR, Whitman 3-34H, Oakdale, Three Forks first bench, API - 33-025-01261; t9/11; cum 181K 5/18; see production profile below; well, isn't this interesting -- yup, this well was fracked 9/23/17 - 10/5/17; 9.8 million gallons of water; 84% water; 15% sand; sundry form in file report: 61 stages; 14.5 million lbs sand; [Update: this well went off line 4/18 and came back on line 8/18; in 8/18 produced 4,731 bbls over 4 days which extrapolates to 35,000 bbls in one month; cum 948K 6/21;

Look at this production profile:

PoolDateDaysBBLS OilRunsBBLS WaterMCF ProdMCF SoldVent/Flare
BAKKEN6-2021301480814797250829386289850
BAKKEN5-202131160031596429023153630817300
BAKKEN4-2021301624616830301130859304740
BAKKEN3-202131179391725727723280832189200
BAKKEN2-2021281762617813346727458270810
BAKKEN1-2021221234912302243519343190810
BAKKEN12-2020311728917182289427423270150
BAKKEN11-202030183531852833223155230835312
BAKKEN10-2020312050320420391334521341130
BAKKEN9-20203020612205653945324733202958
BAKKEN8-2020312341523393454834091337030
BAKKEN7-202030254972525040642902728102520
BAKKEN6-20200000000
BAKKEN5-2020312506925630538438095376840
BAKKEN4-202024182831813136652361923099253
BAKKEN3-2020312610525993566835857354380
BAKKEN2-202028232832328652253058729735493
BAKKEN1-2020312671026794633333634332150
BAKKEN12-2019312759727551651334966345490
BAKKEN11-201930275972760376773039129150843
BAKKEN10-201925196151931767822010519254574
BAKKEN9-201927194581975859322095620086592
BAKKEN8-201931279222778010332296982921665
BAKKEN7-2019312575226021127962886328109349
BAKKEN6-20193027902279081290329790293890
BAKKEN5-20193027570276701120328086255222193
BAKKEN4-2019302842728258124863008629312382
BAKKEN3-201931286282868614764312543081923
BAKKEN2-20192825683253191420226821264500
BAKKEN1-20191613734136011012813831136280
BAKKEN12-2018221621616649926018218165941334
BAKKEN11-2018293205032060798233651307742503
BAKKEN10-20183137074369921081339302356113272
BAKKEN9-20183036826366251433138670340104265
BAKKEN8-2018447314441237846213785786
BAKKEN7-20181676784403
BAKKEN6-2018111380000
BAKKEN5-2018004030000
BAKKEN4-20181632393127473246523760
BAKKEN3-201819548656317564317413950
BAKKEN2-20182553105088595444542610
BAKKEN1-201831105131072518698937864150
BAKKEN12-2017312190321790484124087238390
BAKKEN11-201730194521980953791966718479968
BAKKEN10-201721121501140168471354971916268

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Putting Things Into Perspective -- Midweek In Pictures -- PowerLine -- August 18, 2021

Link here.

President Biden’s July statement that “there’s going to be no circumstance where you see people being lifted off the roof of the United States embassy” will stand next to President George H.W. Bush’s “Read my lips: no new taxes” pledge as the most self-damning statement from a modern president. 
And we learn that as recently as the middle of last week, the State Department was flying a regular rotation of embassy personnel to Kabul.







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Best Market Ever -- August 18, 2021

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. 

Disclaimer: I'm an eternal optimist with a 60-year horizon.

Random comments about the market:

The pullback today: a buying opportunity. Exactly what was the news that precipitated a second day of losses on the market?

Comment: unless this pullback is associated with risks of a recession, I'm not worried. Anybody see a recession in the next twelve to eighteen months. The counter-argument, of course, is the end of stimulus and the Fed begins tapering and raising interest rates.

Headlines:

  • Ten-year treasury: 1.283%.
  •  The "Fed": no decisions made about asset purchases. Kick that can down the road for another month. Talking heads: still six months before asset purchases are halted. Next question: how soon / fast does the Fed put these assets back on the market? Link here.

Best market ever:

  • between the Fed taking shares off the market and corporations buying back their own stock, there are less shares for traders / investors to buy; that's bullish
    • I remember thinking about that in 1983: generally speaking, companies don't often authorize additional shares; what you see, is what you have
  • the most recent wave of Covid-19 -- either the third or fourth wave, depending where one lives -- a) was somewhat of a surprise; b) will last longer and be steeper than expected; and, c) will slow down the re-opening

Slowing the re-opening:

  • slows down the hyper-upward movement of the market over the past year anticipating a broad re-opening by now;
  • extends the time in which traders and invaders have to purchase more shares
  • the market is being a stock-pickers' market

August doldrums.

Banks are starting to show some life.

Super-spreader meeting:

  • Jackson Hole, WY: August 26 - 28, 2021
  • Bank of England, EU won't be represented this time at this meeting: focus will be on domestic issues

The next big thing:

  • on another down day for the market, SQ is up another one percent; in one year has gone from $141 to $261 

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. 

Oil: an enigma --

  • "everyone" says producers are falling behind; that may have changed a bit with the latest, deepest "delta" wave slowing demand;
  • look at how much oil the US is now importing; an under-reported story;
  • Kabul falls, and price of oil falls;
  • strength of dollar: in a relatively narrow range for the past year; and, at 93 today, is pretty strong; to put that in perspective, the "dollar" was at 70 in March, 2008;
  • WTI at $66 seems just a bit on the high side if the sweet spot for all concerned runs $60 to $65
  • predicting the price of oil is a fool's errand
  • allows more time for investors/traders to build a position 

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The Book Page

Seventeen months old.

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The Taliban Began Their Final Assault The Weekend Of President Obama's Birthday Bash -- August 18, 2021

Other than the Donald Trump administration, which former president probably knew most about Afghanistan?

The Taliban began their final assault on Kabul at the very time the Biden presidency was pre-occupied with the Obama birthday bash planning and celebration. The Taliban has learned a lot fighting the Americans for twenty years. And the Russians before that.

See this post. 

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The Taliban - US Arms Deal
The Deal Of The Century

On another note, I've always said the Arabs are the best traders / dealers in the world. I know that from first-hand experience after spending years in Turkey. They know their stuff.

But, without question, the military deal the Taliban made with the US under the Biden administration was unprecedented.

Anyone who knows the story, knows that the Afghan army was heavily infiltrated by the Taliban. After twenty years, even the lowliest recruit had risen to the top of the organization. 

Bagrum Air Base was perhaps one of the largest overseas bases maintained by the US military on July 1, 2021. Look how huge this base was. Just the food alone is probably enough to support the military for another year.

Unlike other wars, the US did not destroy equipment it left behind. In this case, the US turned over all equipment to the "Taliban" and not only that, one knows that the Afghanis that operate this equipment and know how to maintain this equipment quickly changed uniforms on August 15, 2021. 

I'm waiting for a "freedom of information" request by the US mainstream media for a line-item list of what was handed over to the Taliban on July 1, 2021, at Bagrum. 

Again, I think a lot of folks assumed the US military would destroy equipment left behind but in fact it was left in best condition possible so that the Afghanistan army would still be able to defend itself. 

This is an incredible story: a US arms deal of unimaginable proportions. 

Feel free to fact check this.

Here's the time line provided by The Guardian and USA Today:

  • Friday 6: The Taliban shoot dead the head of the Afghan government’s media information centre at a mosque in the capital. They also capture their first Afghan provincial capital, the city of Zaranj in southwestern Nimroz, “without a fight”.
  • Saturday 7: President Obama's 60th birthday party on Martha's Vineyard.  The former president and his staffers pre-occupied with biggest birthday spectacular since The Great Gatsby; Afghanistan dropped off their radar scope, sometime in July, if not before.
  • Monday 9: The northern city of Kunduz follows on Sunday 8 August and Monday 9th, along with Sheberghan, Sar-e-Pul, Taloqan, Aibak and Farah. In what becomes a familiar pattern, fighters reportedly swept into Aibak without meeting any resistance. The deputy chief of Samangan province confirmed that the local governor had withdrawn his soldiers in order to protect the civilian population.
    • Despite the bloodshed and sweeping advances, US president Joe Biden gives no suggestion he will delay the troop withdrawal, which is to be completed by 31 August, ahead of the 20th anniversary of the 9/11 attacks.
  • Wednesday 11: With the key besieged northern city of Mazar-i-Sharif the next Taliban target, Afghan president Ashraf Ghani flies up to rally his forces. But his visit is overshadowed by the surrender of hundreds of Afghan soldiers in nearby Kunduz and the overnight capture of a ninth provincial capital, Faizabad. Pul-e-Khumri, 140km north of Kabul, also falls.
    • The US military warns that the whole of Afghanistan could fall “within 90 days.”

Within 90 days? Well, that was correct.  

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This Technology Is Amazing

As usual, we were a bit late getting around to sending a wedding anniversary gift to our younger daughter. Not to worry. Ordered something from Amazon today; the gift will arrive tomorrow, and that is one day before the wedding anniversary. It may be the cleverest gift we've ever gotten them. LOL.

Verizon / iPhone: my wife bought a new iPhone a few days ago and established her own account, saving (remarkably) her existing phone number, at the same time. Today, on the day the switch-over officially began, her phone quit working. As in "quit working." 

She had to use my phone to call Verizon. It was a complicated problem to describe, and the process took about ten minutes. During that entire ten-minute conversation, my wife never once spoke to a human being ... unless the human being was impersonating a robot .... the solution was incredibly simple, which my wife was able to accomplish on her own. I overheard a very little bit of the conversation and was completely amazed what Verizon AI (if one calls it that) was able to do.

My hunch: the robot answering my wife's questions was probably playing chess with another robot while listening to my wife. Or mining cryptocurrency.

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TGT Not Feeling The Love -- August 18, 2021

These two charts tell me everything I need to know what to do next:



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The Book Page 

From a book review, How The Mountains Grew: A New Geological History of North America, John Dvorak, 2021, Pegasus, 304 pages, in The Wall Street Journal:

For a book about North America, it’s fitting that it opens and closes near the center of the continent. The prologue deals with the ancient granites of Mount Rushmore, SD, the stuff from which Gutzon Borglum carved four presidential faces. The epilogue describes the vast coalfields of Center, ND, where experiments in carbon sequestration are now in high gear.

The book’s 16 evocatively titled chapters are arranged chronologically, but set wherever that slice of time is best revealed. “Bombardment and Bottleneck,” for example, deals with microbial life of the Archean Eon that survived a storm of asteroids. “The Great Dying” examines Earth’s greatest mass extinction, at the end of the Paleozoic Era. “A Grand Staircase” steps forward through the Mesozoic Era. “The Great Lakes of Wyoming” concentrates on the abrupt pulse of strong global warming in the Cenozoic Era that led to our class of mammals, the primates. 

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The Book - Sofa Page

These boys are seventeen months old. 

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Pop Quiz: One Of The Three Following Headlines Is Fake -- Which One? -- August 18, 2021



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Twitter

Former president Trump: banned.
Taliban: not banned.

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Weekly EIA Petroleum Report

Before we get started, a reader wrote to tell me that farmers in Minnesota are paying 40% more for propane this year than last year. 

The numbers:

  • US crude oil in storage: decreased by 3.2 million bbls;
  • US crude oil in storage: now stands at 435.5 million bbls; 6% below the five-year average
  • Refiners are operating at 92.2% of their operable capacity (yawn).
  • Imports averaged 6.4 million bbls/day, down by 46,000 bbls; imports are now a whopping 14.1% more than same four-week period last year. Thank you, Mr Biden. I believe, Russia is our second biggest supplier, after Canada.

  • Propane: inventories are 18% below the five-year average. Thank you, Mr Biden.
  • Distillate fuel inventories decreased by 2.7 million bbls last week; are not 8% below the five-year average;
  • But look at this: total products supplied are up by 13.2% from same period last year.
  • Jet fuel supplied: was up 56.1% compared to same period last year

Gasoline demand, link here, down on both the top line (four-week average demand) and the bottom line (weekly demand):

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One Well Coming Off Confidential List -- WTI Holds Above $66 -- August 18, 2021

Active rigs

$66.54
8/18/202108/18/202008/18/201908/18/201808/18/2017
Active Rigs23*12615953

*Current active rig data released COB.

One well coming off the confidential list:

Wednesday, August 18, 2021: 10 for the month, 21 for the quarter, 201 for the year:

  • 37843, conf, WPX, Charles Blackhawk 31-30HY, Heart Butte, no production data, 

RBN Energy: Wolf Midstream sanctions straddle plant to increase Canadian NGL supplies. 

Supplies of natural gas liquids, especially propane, have become increasingly tight in recent months, with prices reaching multi-year highs in the U.S. and Canada. 
Despite the strong price signals, increasing production is typically a lengthy, complex, and expensive process involving producers drilling new wells to yield more liquids-rich natural gas and crude oil. There is also another way to increase supplies: by extracting them from already processed and pipelined natural gas via a straddle plant that more intensively recovers additional NGLs, such as propane, from the existing gas supply. Canada’s Wolf Midstream has recently sanctioned such a plant, as well as a related pipeline and extraction plant in Alberta that it hopes to bring into service in 2023. In today’s blog, we examine this new straddle plant and Western Canada’s current propane supply situation.

Here's a headline from the EIA yesterday: US natural gas net trade is growing as annual LNG exports exceed pipeline exports.  

From the EIA weekly petroleum report: Propane: inventories are 18% below the five-year average.

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