Saudi Pivots To Natural Gas -- Simon Watkins -- Oilprice -- October 25, 2021

Note: to put this article in perspective, some background posts --

• natural gas is tracked here;
• the US: king of natural gas. 

Link here to the Simon Watkins article. Archived.

• Saudi Arabia is making some big bets on natural gas as a push to clean up its energy mix.
• According to Saudi Arabia, its much-hyped Jafurah field has an estimated 200 trillion cubic feet of gas (TcF).
• Saudi Arabia will probably need gas production of around 23-25 Bcf/d within the next 15 years just to cover its own power and industrial demand. [365 days x 25 billion cf per day = 9,000 billion = 9 trillion cubic feet / year; let's round that to 10 trillion; 10 / 200 = 5%]
  

Saudi Aramco’s request for bids from local and international companies to build out a water desalination plant project in the Jafurah shale gas field brings back into focus the Kingdom’s claims to be at the forefront of the global energy transition towards cleaner energy through the reduction of carbon emissions. 

As with many of its biggest claims regarding its oil industry – analyzed most recently here – this claim regarding its drive towards cleaner energy is also extremely misleading, and would also appear to align with the country’s alleged attempts to lobby the UN to play down the need to move rapidly away from fossil fuels. 

Saudi Arabia announced with much fanfare early in 2020 that it is to spend at least US$110 billion on the Jafurah gas project, with the intention being that it would become the world’s third-largest gas producer by 2030, after the U.S., and Russia, and a net exporter of gas by that time. 

As even Aramco has noticed that Saudi Arabia does not have abundant freshwater supplies - its chief executive officer, Amin Nasser, keenly observed early on that ‘we are not rich with water’ – the company will use seawater instead for the fracking process, hence the new contracts for a desalination plant.

According to the Saudis, the Jafurah field has an estimated 200 trillion cubic feet of gas (TcF), a figure that should be taken in the context of all other Saudi energy reserves estimates but let us pretend for the purposes of debate that it is true. In the meantime, Aramco has natural gas reserves supposedly of 319.5 trillion cubic feet (TcF), according to figures released in 2019. This number had bewilderingly increased from the previous 302.3 TcF just a year before and even more bewilderingly just a couple of years before it had been 233.8 TcF.......

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The Beatles Abbey Road ...
... How It Should Have Been

Link here.

A Closer Look At An MRO DUC Reported Completed Today -- October 25, 2021

This DUC was reported as completed today, pretty nice, eh?

• 37743, 3,862, MRO, Grinnel USA 33-14H, Moccasin Creek, scout ticket not updated;
  

Pool	Date	Days	BBLS Oil	Runs	BBLS Water	MCF Prod	MCF Sold	Vent/Flare
BAKKEN	8-2021	15	14908	15507	10062	10522	9328	0
BAKKEN	7-2021	31	34540	34452	23526	24446	21169	597
BAKKEN	6-2021	30	53411	53327	42244	34241	29815	738
BAKKEN	5-2021	29	45451	44471	37257	27503	20618	3887
BAKKEN	4-2021	10	0	0	643	0	0	0

Parent wells:

• 20642, 1,137, MRO, Good Bear USA 21-14H, Moccasin Creek, t10/11; cum 413K 8/21; off line February through April, 2021;
• 20644, 1,221, MRO, Good Bear USA 31-14H, Moccasin Creek, t12/11; cum 255K 8/21; off line February through April, 2021;
  

One eight-well pad, a two-well pad, and two singletons:

• 24744, IA/2,715, MRO, Fox USA 14-1H, Moccasin Creek, t1/15; cum 483K 10/20;
• 24745, IA/1,916, MRO, Melvain Fox USA 14-4TFH, Moccasin Creek, t2/15; cum 580K 1/21;

• 28075, IA/2,715, MRO, Anthony USA 23-14H, Moccasin Creek, t2/15; cum 513K 1/21;
  
• 28076, IA/3,255, MRO, Hale USA 23-14TFH, Moccasin Creek, t2/15; cum 303K 1/21;

• 37746, drl/NC, MRO, Pauline USA 32-14H, Moccasin Creek, first production, 4/21; t--; cum 178K 1/21;
  

Pool	Date	Days	BBLS Oil	Runs	BBLS Water	MCF Prod	MCF Sold	Vent/Flare
BAKKEN	8-2021	18	15581	15538	9029	12673	11322	185
BAKKEN	7-2021	31	36268	36408	22357	27305	24572	474
BAKKEN	6-2021	30	38843	38791	24787	27399	24741	219
BAKKEN	5-2021	30	54742	54857	40175	43169	39183	514
BAKKEN	4-2021	16	32252	31787	22710	19735	16893	1086

• 37745, drl/NC, MRO, Leon USA 32-14TFH, Moccasin Creek:
  

Pool Date Days BBLS Oil Runs BBLS Water MCF Prod MCF Sold Vent/Flare BAKKEN 8-2021 17 15690 15604 20848 13619 12167 199 BAKKEN 7-2021 31 30555 30647 43499 25723 23149 446 BAKKEN 6-2021 30 30293 30161 45362 23085 20846 184 BAKKEN 5-2021 29 28289 28463 39972 22830 20722 272 BAKKEN 4-2021 17 24581 24226 38717 19453 16652 1070

• 37744, drl/NC, MRO, Eugene USA 33-14TFH, Moccasin Creek, no production data;
  

• 37743, drl/NC, MRO, Grinnel USA 33-14H, Moccasin Creek:

Pool Date Days BBLS Oil Runs BBLS Water MCF Prod MCF Sold Vent/Flare BAKKEN 8-2021 15 14908 15507 10062 10522 9328 0 BAKKEN 7-2021 31 34540 34452 23526 24446 21169 597 BAKKEN 6-2021 30 53411 53327 42244 34241 29815 738 BAKKEN 5-2021 29 45451 44471 37257 27503 20618 3887 BAKKEN 4-2021 10 0 0 643 0 0 0

• 37742, drl/NC, MRO, Marian USA 33-14H, Moccasin Creek, no production data;
• 37741, drl/NC, MRO, Leon USA 33-14TFH, Moccasin Creek, no production data;
• 37740, drl/NC, MRO, Sylvestor USA 23-14H, Moccasin Creek, no production data;
• 37739, drl/NC, MRO, Wolf USA 23-14TFH, Moccasin Creek, no production data;

Afternoon Report; Apple -- Is Anyone Paying Attention? -- October 25, 2021

Monday night football: should be a good one -- New Orleans Saints at Seattle Seahawks.

Melissa's "Fast Money" a complete disappointment: the full hour spent on Facebook earnings; Tesla valuation; international hacking threat; and ended with some closing comments and odds and ends; worst program ever;

Rivian: delivering now, the R1T pickup truck.

Apple: deep dive into M1 Pro and M1 Max; highlights performance and efficiency improvements, source. Is anyone paying attention?

"The chips here aren't only able to outclass any competitor laptop design, but also competes against the best desktop systems out there, you'd have to bring out server-class hardware to get ahead of the M1 Max – it's just generally absurd."

The site was expecting significant boosts in performance, but "didn't expect some of the monstrous increases that the new chips are able to achieve." The chips outclass any competing laptop design, and also rival the best desktop systems available.

ISO New, link here:

• as usual, spiked at 6:00 a.m., never really recovered from the spike to $80/MWh
• spiked again during mid-day, this time to $110
• pretty much stayed at $80 all day long;

*********************************
Let's Go, Bakken

Active rigs:

$83.63	10/25/2021	10/25/2020	10/25/2019	10/25/2018	10/25/2017
Active Rigs	29	14	57	68	54

Three new permits:

• Operator: MRO
• Field: Bailey (Dunn)
• Comments:
• MRO has permits for three new wells in Bailey oil field, Rossol, Tarpy, and Ludwig; to be sited in lot 3 section 6-145-93
• the wells will be sited between 354 and 355 FNL and between 1741 and 1661 FWL

Two permits renewed:

• Grayson Mill, #37207, A Tufto in Williams County
• BR, #37925, Lone Beaver in McKenzie County

One permit canceled:

• Rimrock Oil & Gas, #31436, Narwhal in Dunn County

Four producing wells (DUCs) reported as completed:

• 35449, 1,674, QEP, MHA 4-27-26H-150-92, Van Hook,

Date	Oil Runs	MCF Sold
8-2021	21734	10114
7-2021	23293	10762
6-2021	21330	10735
5-2021	30785	11741
4-2021	1393	161

• 37743, 3,862, MRO, Grinnel USA 33-14H, Moccasin Creek, scout ticket not updated;
  

Pool	Date	Days	BBLS Oil	Runs	BBLS Water	MCF Prod	MCF Sold	Vent/Flare
BAKKEN	8-2021	15	14908	15507	10062	10522	9328	0
BAKKEN	7-2021	31	34540	34452	23526	24446	21169	597
BAKKEN	6-2021	30	53411	53327	42244	34241	29815	738
BAKKEN	5-2021	29	45451	44471	37257	27503	20618	3887
BAKKEN	4-2021	10	0	0	643	0	0	0

• 37606, 1,625, CLR, Carus 3-28H, Cedar Coulee, scout ticket not updated;
• 37054, 885, CLR, Angus Federal 13-9H2, Elm Tree, no production data; scout ticked not updated;

Notes From All Over -- The UNP Note -- October 25, 2021

Dow and S&P 500 both close at new records. Whoo-hoo!

Tesla: hits $1 trillion valuation. That 100,000-vehicle deal with Hertz is ... staggering. Eighteen years to hit $1 trillion. Simply incredible. That is a record for how fast a company hit $1 trillion market value. Amazon took 21 years; Apple took 42 years. Another winner? Cathy Wood and ARKK. It's amazing how many "pros" lost money on this stock (TSLA) due to emotion. Why is TSLA here, at this price?

• Elon Musk can raise prices and still sell every car coming off the assembly line;
• charging infrastructure keeps getting better and better; just wait until the infrastructure bill is passed;
• when you hit $1 trillion market, there's no looking back

Apple TV vs Amazon Fire Stick: link here. I might talk about this later. But Amazon Fire Stick is the winner. Period. Dot. 

UNP: top shelf. Hits a new record. Wow. 

WTI: not only did WTI drop below $85, it dropped below $84.

******************************
Cushing

Note: this is well beyond what I know or understand. It is simply random, and idle, rambling. The content is accurate to some extent, see links, but much of it is personal opinion. If this is important to you, go to the source.

It's important to remember the new "US crude oil contract" introduced this past summer.

Right now there is a lot of press about the empty storage tanks at Cushing. What most of those articles fail to mention is the new Midland WTI American Gulf Coast contract (ICE: HOU) established by Magellan, Enterprise and ICE. Source/Hart Energy. HOU quotes here.

This is way beyond my headlights, but for the sake of discussion one wonders if Magellan and Enterprise are exporting as much oil as they possibly can every day, oil that would otherwise be going to Cushing to be stored. 

I don't know. But something is going on and my hunch is that within the year, by mid-2022, we'll start to get a better analysis in the mainstream press of exactly where all the US crude oil is going and where it's stored. If Cushing is as empty as these reports suggest, WTI should be a lot higher than $85. Anyway, there seems we need an explanation why WTI is only $85 when "Cushing" is running on empty.

I could be way wrong on this. Just idle rambling.

Notes From All Over -- We Start With Retirement Update -- October 25, 2021

Link here.

Data points:

• the average monthly benefit for retirees in 2020 is $1,503, or $18,036 a year;
• if you start collecting at the earliest opportunity, at age 62, you won’t receive your full benefits;
• in fact, you’ll only receive about 70% of your benefits

Example:

• non-working spouse who starts collecting at age 62 years of age:
• $1,503 * 0.70 * 0.50 = $525 / month
• that may or may not be accurate but we can start there. 

************************************
Labor Shortage: A Short History

Labor shortage? Was the labor shortage a long time coming? Did the roots of the labor shortage begin with President Trump?

Highlights from the 2020 data: 

In 2020, the share of the U.S. civilian labor force that is foreign born was 17.0 percent, down from 17.4 percent in 2019. 

From 2019 to 2020, the overall labor force declined by 2.8 million; the foreign born accounted for 1.1 million of this decline, or 38.4 percent. -- May 18, 2021

I don't have the data for 2016 - 2020, but folks might remember there was a huge effort to downsize the foreign-born segment of the work force during the Trump administration. To help the American worker. Okay.

*******************************
Tesla

Tesla raises prices by about 5% over the weekend. These are $100,000 cars. I would have to see price changes of Porsche, Lamborghini, etc, to put this in perspective.

• Lamborghini:
• the topless Aventador (Lamborghini): $577,661 - over $643,000, July 12, 2020
• other sources: the average price of a Lambo sits around $300,000 to $320,000
• other sources: the typical Lambo goes for about $200,000
• Porsche, various sources:
• 2022 Macan: from $55,000
• 2022 Cayenne: from $69,000
• 2021 Cayman: $59,900 - $100,200
• 2021 Porsche 911: $99,200 - $216,300

Bottom line: Tesla price increases --

• simply keeping pace with "transitory" inflation;
• demonstrates continued demand outstripping supply;
• for the elite who already have two or three other ICEs;
• yes, I know there are exceptions -- for some Tesla owners, it's their only vehicle, or perhaps a second vehicle
• did not change my mind on whether to order a Tesla one way or the other

*************************
Picture Perfect

Out Of Control -- October 25, 2021

DWAC: whacks the market again. Up another 15%. Trading over $105. Trading temporarily stopped, but back to trading now. 

*****************************
Geology 101

Words for the day:

• gabbro
• mafic: rich in magnesium (ma) and iron (f)
  
• intrusive
• plutonic equivalent

This site should help.

Note how recently this site was updated / refreshed (October 16, 2021) -- don't tell me geology is dead. LOL. 

This is so cool. Igneous rocks:

• Intrusive rocks / Plutonic rocks: magma that never reaches the surface of the earth, in ascending order of silica content):
• gabbro
• diorite
• granite
• pegmatite
  

• Extrusive rocks / volcanic rocks: magma that reaches the surface of the earth, in ascending order of silica content):
• basalt
• andesites
• dacites
• rhyolite
• pumice
• obsidian

 Pluto? a bit of spin?

The earlier name for the god was Hades, which became more common as the name of the underworld itself. In ancient Greek religion and mythology, Pluto represents a more positive concept of the god who presides over the afterlife.

Obviously the origin of the concept of intensely burning hell. 

Jargon Confused? October 25, 2021

Jargon confusion? This should help.

• how to calculate volatility with spot and strip prices, Motley Fool, May 10, 2017.
• how to calculate annualized volatility, Motley Fool, October 20, 2016.
• roll yield defined, Investopedia, July 9, 2021 (note how recent this article was posted). 

Jargon revolution -- the Bakken revolution. 

Let's Go, Brandon -- October 25, 2021

 

Link here. 

Just in time for Halloween. Scary.

*******************************
Jargon

Jargon confusion? This should help.

• how to calculate volatility with spot and strip prices, Motley Fool, May 10, 2017.
• how to calculate annualized volatility, Motley Fool, October 20, 2016.
• roll yield defined, Investopedia, July 9, 2021 (note how recent this article was posted).

Five Wells Coming Off Confidential List -- October 25, 2021

Covid-19: from a couple of days ago, average new Covid cases per capita in Florida are now the lowest of any state in the continental US. Some suggest Florida has no political coercion or mandates. Look at the source for that factoid: The New York Times. Source. 

Books on Broadway, Williston, ND: new audiobooks platform lets you listen while supporting your hometown bookstore. Link to The Williston Herald.

Saved by the SPAC: DWAC could make him rich again. Link to Bloomberg via Yahoo!Finance. At $10 when it first hit the news waves a few days ago, up another 12% in pre-market trading, up about $11; trading at $104.

The sound bite just doesn't work: "It's not a wealth tax, but a tax on unrealized capital gains of exceptional wealthy individuals." Targets 700 of the wealthiest individuals in the US. My hunch: John Kerry is just below the cut line. Warren Buffett will have to re-think his buy-and-hold strategy; re-think capital gains vs dividends. Source. 

CBS: in news, both morning and evening, #3 of three. Changes coming? Norah O'Donnell looking vulnerable. Not a pretty picture. Source. 

No thanks: Denver airport jobs fair had hoped for 5,000 visitors. Only one hundred showed up. 

Reflationary environment, a different investing environment. Morgan Stanley.

UK: no plan B. Source. 

Coal generated less than 2% of electricity in the U.K. in 2020, according to International Energy Agency data, compared with a fifth in the U.S., a quarter in Germany and almost a third in Japan. Surviving U.K. coal power stations have orders to close by late 2024.

Mr. Johnson has said the drive to cut emissions could rejuvenate the economy, particularly in struggling towns such as Blyth that were Labour Party strongholds until he flipped them Conservative in 2019.

The evidence is mixed. Blyth, just north of Newcastle, is home to a growing number of companies in the renewable and battery industries, but thousands of secure jobs lost when coal mines closed are yet to be replaced. Unemployment here is higher than in the U.K. overall and the town’s main drag is peppered with closed shops and discount stores.

Hertz/Tesla: Hertz orders 100,000 Teslas. TSLA, pre-market: up 4.4%. Announcement comes just after Tesla announces increase in prices. Morgan Stanley upgrades, from $900 to $1200 target price. Tesla will open at new high. Hertz deal said to be $4 billion = $40,000 / vehicle. Hertz will roll out its own charging network at airports. With deal, Tesla market cap goes over $50 billion.

Jargon confusion? This should help.

• how to calculate volatility with spot and strip prices, Motley Fool, May 10, 2017.
• how to calculate annualized volatility, Motley Fool, October 20, 2016.
• roll yield defined, Investopedia, July 9, 2021 (note how recent this article was posted).

*********************************
Back to the Bakken

Active rigs:

$84.63	10/25/2021	10/25/2020	10/25/2019	10/25/2018	10/25/2017
Active Rigs	29	14	57	68	54

Five wells coming off confidential list:

Monday, October 25, 2021: 21 for the month, 21 for the quarter, 244 for the year:

• 36928, conf, Rimrock, FBIR Guyblackhawk 24X-27D, Heart Butte, HUGE WELL, 74K 8/21; first production, 7/21; t--; cum 78K 8/21;
• 36917, conf, Whiting, Satterthwaite 14-35HU, Robinson Lake, first production, 5/21; t--; cum 45K 8/21;
• 36065, conf, Enerplus, Obsidian 147-93-16B-21H-TF, Moccasin Creek, first production, 4/21; t--; cum 40K 8/21;
  

Sunday, October 24, 2021: 18 for the month, 18 for the quarter, 241 for the year:

• 37977, conf, Hess, EN-Joyce-LE-156-94-1721H-6, Manitou, 51K in 5/21, a huge well, first production, 4/21; t--; cum 121K 8/21;
• 36769, conf, Hess, CA-Russell Smith-155-96-2425H-10, Capa; first production, 4/21; t--; cum 55K 8/21;

Saturday, October 23, 2021: 16 for the month, 16 for the quarter, 239 for the year:

• None.

RBN Energy: producing, transporting, liquefying, and buying responsibly sourced natural gas, part 2. 

It seems that hardly a week goes by without another announcement on responsibly sourced natural gas. Either in response to rising interest among electricity generators, gas-distribution utilities, and gas-consuming industrials in procuring RSG or as proactive moves to boost their own ESG cred, a number of players in the gas sector — from producers to pipeline companies to LNG exporters — have been working to qualify their natural gas, their long-haul pipes, or their liquefaction plants for RSG status. 

A few producers have also been reaching deals to supply independently verified RSG to the market, with the expectation that at least a subset of gas/LNG buyers will be willing to pay the price premium involved. But all this is relatively new, and there’s still a lot that needs to be sorted out on the RSG front. In today’s RBN blog, we continue our series on RSG with a look at recent announcements and the associated challenges when selling RSG.

Maria Mondolia -- September 11, 2021

Yes Sir, I Can Boogie, Baccara