WTI Plunges To $113 -- One Well Coming Off Confidential List -- June 16, 2022

US Open! Open!

WTI: plunges to $113

• consensus: due to Russia increasing production and exports: raises a number of questions
• also: Biden's trip to Saudi still on schedule
• also: some suggest US could get into business of refining (unlikely but could offer huge incentives to open one or two mothballed crude oil refineries)
• if the latter happens, suggests for first time that "green" ideologues in the White House are "losing" to the Biden "political" faction
• SecEnergy: starting to fold on "green" energy; giving in to pragmatists?
• but what if plunge in WTI related more to risk of "severe recession"? 
  

Commentary:

• top analyst looks back on 2020 Foreign Policy article; archived.
• it may be behind paywall but I was able to read entire article
• I found the article worthless and wrong in so many places
• if I'm correct, there's an easy explanation; may re-post as a stand-alone

Most important twitter post on shale today? Link here.

• needs to be re-posted as a stand-alone
• twitter comment: "Let's see if Permian production comes in > 5 million for March and April -- that will give a clue how optimistic this might be
• Rystad Energy's mea culpa? Reminds one individual of "Equinor's mea culpa."
• another: "I have no doubt the US capable of producing 13 million bopd, and will likely do so by the end of the year (2022). But 16 million bopd? That kind of forecasting is based on BS assumptions.
• EIA, pdf, Permian: https://www.eia.gov/petroleum/drilling/pdf/permian.pdf

Freeport: bigger story than most thought one week ago

Baby formula:

• Abbott plant back on hold; "flooding"

Top story yesterday: Ford

• absolutely worse news ever for EVs
  

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

Far Side: link here.

WTI: $113.60

Active rigs: 37 or thereabouts

Thursday, June 16, 2022: 24 for the month, 162 for the quarter, 322 for the year

• 38435, conf, WPX, Wounded Face 14-15HW,

 RBN Energy: global market impacts of the Freeport LNG outage, part 2. 

Freeport LNG is expected to be offline for an extended period following last week’s explosion and fire at the export terminal, leaving the global gas market even more undersupplied than it already was. The outage cuts U.S. export capacity by about 2 Bcf/d at a time when Europe is still taking in huge volumes of LNG to offset declines in Russian supplies and bolster storage ahead of winter. This is all happening as another large exporting nation, Australia, is facing a critical winter energy crisis of its own and South American demand is headed toward its seasonal high, straining an already tight market. Today’s RBN blog continues our series about the ongoing Freeport outage, this time looking at the impact to the global gas and LNG markets.

Conclusion:

Ninety days takes the full-facility outage at Freeport LNG into September, meaning that no Freeport LNG cargoes will be available during this summer, with Asia and Latin America potentially feeling the loss more strongly than Europe. For Latin America, that’s because, as we noted earlier, it’s peak demand season and when U.S. cargoes would typically head south; for Asia, it’s because of Freeport-specific contracts and also rising seasonal demand. We were already seeing a drop in U.S. LNG sendout to Europe, which accounted for about 75% of total U.S. exports from January through April, but that dropped to 65% in May and appeared to be declining further this month even prior to the outage.

Beyond September, the brunt of the impact could swing back to Europe, which could find itself in a precarious position heading into winter as it seeks to secure LNG cargoes in the face of an ongoing war that has put it at odds with what has been its largest gas supplier.