Monday, January 10, 2022

Boston Is Burning The Midnight Oil To Keep The Lights On Tonight -- January 10, 2022

Holy mackerel, electricity demand is hardly that remarkable in New England but yet to meet demand, fourteen percent of ISO NE's electricity is being generated by oil!

Link here

Electricity prices in NE are surging (again) tonight and electricity demand is hardly noteworthy.


Sixth decile.

But look at this:

  • oil: 14%
  • renewables: only 10%; two-thirds of that generated by burning oil; and, of course,
  • when burning that much oil, one is probably burning coal, and they are:
  • coal: 3%

It's almost criminal -- if Texas was generating fourteen percent of its electricity by burning oil we would never hear the end of it. And for New England, they are but a few miles from the largest reservoir of natural gas in the universe. This is simply amazing. 

I had no clue that Boston would burn so much oil to keep electricity prices palatable. I only thought Saudi Arabia wasted their natural resource this way. 

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Winter In North Texas

I have no idea what the temperature was this afternoon in north Texas, in the DFW area. All I know was that I could ride my bike in a short-sleeve, light shirt. It was incredibly unseasonably nice. If this is global warming, I'm all in.

When my wife got home about 8:15 p.m. the first thing she asked was whether we had the heat on (I did not), the apartment felt so warm. We almost turned on the air conditioner. LOL. 

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College Football Championship

I tried watching but the commercial interruptions were interminable. I'm watching TCM, blogging, and in a few minutes my wife and I will watch Perry Mason re-runs. I will check in on the game near the end of the fourth quarter.  Later, 9:54 p.m. CT: I just checked in on the Alabama - Georgia game. Didn't see the score; commercial break.

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Great Day

I couldn't be in a greater mood. I'll provide some details later, if I remember. Hints: Apple and Jamie Dimon.

Can One Be Too Exuberant? January 10, 2022

A reader who writes me regularly about the Utica and the Marcellus, sent me a note earlier today. My reply:

Great to hear from you. Coincidentally, I received your note after reading about the announcement that EPD was buying a natural gas midstream company as an entry into the Permian.

Your note on top of that reinforced my thoughts earlier this morning that the "US" is going to be absolutely dominant in energy -- as we've discussed on the blog the last few days.

But what I find most interesting is that when they say "the US" when it comes to energy, "they're" really only talking about Ohio, Pennsylvania, maybe West Virginia, Texas, New Mexico, and hopefully to some extent North Dakota.

North Dakota is huge by North Dakota's standards but in the big scheme of things, it's all about the Utica/Marcellus and the Permian.

It just blows me away (no pun intended with regard to renewable energy). Industry knows that the US will have this accessible, affordable, dispatchable energy for decades to come.

I'm already inappropriately exuberant about all this; your notes are not helping. LOL. It just makes me more exuberant.

What did the Utica / Marcellus reader write me that was so "inspiring"?

The soon-to-be-completed cracker from Shell is located 'just' upriver (75 miles, Ohio river) from Dilles Bottom, Ohio (southeastern most Belmont county). 
The Shell cracker - in Monaca, PA, is just north of Pittsburgh and is the largest privately funded construction project in the history of Pennsylvania (~$6 billion).

It is anticipated that this Shell facility could be the most profitable unit in the entirety of Shell's assets as the feedstock - ethane - is both readily available locally and is about the cheapest ethane on the planet. 
(This is the stuff regularly 'rejected' into the pipelines and burned off along with methane). 
In addition to advantaged sourcing, the market for the produced polyethylene is vast as the northeast/midwest and - increasingly - southeast manufacturers are, by far, the biggest consumers of polyethylene which is a component of SO many products in our daily lives.

Now, Dilles Bottom, Ohio, is the proposed site of a second cracker by the owners PTT (big Thai petrochemical outfit). 
Despite years of delays, there is high hope for the construction of this second cracker to take place. 
If/when it does, that part of the country will experience an economic boom of lasting consequence that will rival Williston's.

Re-reading this reminded me of the note about Ohio from "Focus on Fracking," posted earlier: 

Utica Shale Saves Eastern Ohio Counties from COVID Recession | Marcellus Drilling News -

Economists are still analyzing the impact of the coronavirus pandemic from 2020, let alone assessing impacts from 2021.

Cleveland State University researchers have run the numbers and have discovered something interesting.

Of Ohio’s 88 counties, only 18 grew their economies in 2020. Of those 18, two counties stood head and shoulders above the rest for increases in economic activity. Both counties have something in common: Utica Shale drilling.The two counties that soared in 2020 due to Utica drilling were Monroe and Harrison. Other Utica-drilling counties were also on the list of 18 counties improving in 2020, including Belmont and Jefferson. Beginning to see a trend here?

We laugh at anti-fossil fuel fools who yammer on that “there is no increase in jobs or economic activity from shale oil and gas drilling.” What planet do they live on?!

The Utica pulled Ohio eastern counties’ bacon out of the fire in 2020, and (we suspect) in 2021 as well.

Hydraulic fracturing has buoyed the economy in eastern Ohio.Two small eastern Ohio counties in the heart of Ohio’s natural gas country posted the biggest economic gains among the state’s counties in 2020.The big gains in Harrison and Monroe counties came even as COVID-19 plunged most of Ohio’s 88 counties and its biggest metro areas into a brief, but steep, recession.

Only 18 counties had growth last year.Harrison and Monroe counties each posted a 20.5% increase in their economy in 2020, according to federal data released this month.

Both counties are small so even a minimal increase in the economy can produce big change.Monroe County’s economic activity was measured at $1.9 billion in 2020, while Harrison’s was measured at $1.6 billion.

Both counties have benefited from the surge in natural gas and oil drilling in Appalachia over the past decade that has helped offset the decline in coal use.

Total investment in the region has hit $93 billion from 2011 through 2020, according to Cleveland State University researchers who track oil and gas spending in the region. Monroe County also has benefited from the redevelopment of the old Ormet aluminum smelter site in recent years that includes the new natural gas power plant at the Long Ridge Energy Terminal, which one day could run on hydrogen as well as gas.Harrison County also is developing a power plant.Monroe County’s gain follows a 23.7% increase in 2019 and 7.7% in 2018.Other counties in Appalachia also were among the 2020 winners.The county in between Monroe and Harrison, Belmont, had the fifth-highest growth rate in 2020, 5.4%. That county also has benefited from the natural gas boom.The economy of Jefferson County, north of Belmont County and also a benefactor of the energy investments, grew by 5.6% in 2020.In the northwest part of the state, Paulding County posted a 7.7% growth rate, the third highest in Ohio.

Daughter Well With Huge Jump In Production -- This Is What The Bakken Is All About -- January 10, 2022

Two producing wells (DUCs) were reported as completed today. Let's take a look at this one:

  • 37857, 2,616, MRO, Morgan USA 21-5TFH, Reunion Bay, first production, 9/21; t--; cum 92K 11/21; more on this one later. 

Before we begin, some observations:

  • MRO is probably the most exciting operator in the Bakken right now; they've held that distinction for several years at least by one parameter;
  • MRO has an incredible re-frack program in at least two fields, the Bailey and Reunion Bay;
  • when MRO fracks daughter wells, one almost expects to see huge jumps in production in their older, neighboring wells;

So, now, back to today. Today, this DUC was reported as completed:

Two producing wells (DUCs) reported as completed:

  • 37857, 2,616, MRO, Morgan USA 21-5TFH, Reunion Bay, first production, 9/21; t--; cum 92K 11/21; more on this one later.

This well is on a two-well pad; I assume both are completed; we will look at the second well on that pad later. 

I was more curious about the daughter well  running parallel to the two new wells:

  • 18230, 552, MRO, Fisher USA 21-5H, Reunion Bay, t11/09; cum 471K 11/21.

This well was drilled back in 2009.

Note recent production, this past year. Note: 38,379 bbls in 20 days extrapolates to almost 58,000 bbls over 30 days:

PoolDateDaysBBLS OilRunsBBLS WaterMCF ProdMCF SoldVent/Flare
BAKKEN11-20213038482385632863949590465860
BAKKEN10-20212727469
272092604531739295970
BAKKEN9-20213039331
397755409747402443080
BAKKEN8-20212038379377589140240602365901676
BAKKEN7-20210000000
BAKKEN6-20210000000
BAKKEN5-20210000000
BAKKEN4-202116823124522479062919
BAKKEN3-20213117491849346164913590
BAKKEN2-2021281684158732817351197270

This was the best this well had ever done previously, shortly after it was first drilled back in 2009:

BAKKEN2-20102035513549825312303012
BAKKEN1-201018441348451415383903740
BAKKEN12-200931744973131738633206332
BAKKEN11-20093010923109504143928509285
BAKKEN10-200910407734324592346503465

Hubbert's theory says this will not happen.

In the last four months, this well produced 143,6621 bbls of crude oil. Total oil produced prior to these last four months: 327,393 bbls.

  • 143,662 / 327,393 = 44%. 
  • 143,662 / 471,054 = 30%.

So, in the past four months, this well that was drilled almost twelve years ago, produced 30% of its total production to date, and, it produced 44% more of what it has produced in twelve years. That was in four months, and all it cost was the cost of a re-frack. 

The infrastructure was already in place, and the well had already been drilled. 

Well, I think one gets the picture. 

I could say more but I would be accused of gilding the lily. 

Oh, one more thing, this well has long paid for itself, and even if it hadn't, the costs were sunk costs and all has been long forgotten.

Now, back to that other well on the two-well pad:

  • 37856, holy mackerel, another nice well, loc/NC, MRO, Evans USA 11-5TFH, first production, 9/21; t--;  cum 113K 11/21; note, 56,135 bbls over 29 days extrapolates to 58,071 bbls of crude oil:
oolDateDaysBBLS OilRunsBBLS WaterMCF ProdMCF SoldVent/Flare
BAKKEN11-20212929112292842568736858345930
BAKKEN10-20212927703275142902432988308320
BAKKEN9-20212956135558835749063573592190
BAKKEN8-202110026000

There's another MRO four-well pad to the east and so much activity in the area, it would take weeks to get it all posted, and that could only be done if NDIC data was up-to-date but their map is apparently out-of-date since July, 2021, last summer.

WTI Holds Above $78; Petro-Hunt With One New Permit; Two DUCs Reported As Completed -- January 10, 2022

Reminder: college football championship game, 7:00 p.m. CT tonight. ESPN?

Headline: "Kuwait's oil wealth fund looks to be entirely ESG compliant." LOL. 

Apple's Air Tags: police warning on Apple's AirTags on CNBC's Shepard Smith tonight. This is quite a story. It will be interesting to see/hear if Shepard Smith reports the "kicker" on this story. One can easily prevent the problem. There's only one catch.

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Back to the Bakken

Active rigs:

$78.44
1/10/202201/10/202001/10/201901/10/201801/10/2017
Active Rigs3255665336

NDIC says 34 active rigs but that includes a rig drilling a salt water disposal well and a rig drilling a well related to carbon capture, the Milton Flemmer 1 well.

One new permit, #38737.

  • Operator: Petro-Hunt;
  • Field: Little Knife (Dunn)
    • Comments: Petro-Hunt has a permit for a Hartman well in SWSE 35-145-97; 
    • to be sited 400 FSL and 1616 FEL.

Two producing wells (DUCs) reported as completed:

  • 37405, 1,680, CLR, Gale 12-32H, Cedar Coulee, t--; minimal production;
  • 37857, 2,616, MRO, Morgan USA 21-5TFH, Reunion Bay, first production, 9/21; t--; cum 92K 11/21; see this post.

Clearwater Basin, Canada -- January 10, 2022

Methinks the social media excitement with regard to this story might be a bit overdone. 

Clearwater formation, wiki entry

December 15, 2021: Tamarack Valley Energy, Ltd -- acquires Crestwynd Exploration Ltd.; press release.

  • $185 million
  • 4,500 boepd
    • = $40,000 / flowing boepd
  • deal
    • Forecast 2022 production of ~4,500 boe/d(2) is expected to deliver $90 million of operating netback
    • Low annual sustaining capital of $30 to $35 million required to hold production levels flat on the acquired assets(3)
    • 209 (153.7 net) future drilling locations(4), across only 50% of the 99,360 net acres acquired which supports maintaining current production levels for seven years
    • Additional unbooked future exploration upside potential across the balance of the acquired acreage
    • Consolidates Tamarack's existing Southern Clearwater working interest to 95% and solidifies its dominant position as the largest operator in the area

September 1, 2021: Baytex provides updates to 2021 Clearwater appraisal program.

February 11, 2021: "the shine is back on the Clearwater."

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Social Media Excitement, January 10, 2022

From the slides below:

  • Link here
  • Link here.
  • Link here.
  • Link here. Link here. Slide 16. 
  • Headwater Exploration (HWX – TSX) is in the core of the play.  They have a land package in the area of the Marten Hills.  They purchased the land from Cenovus Energy (CVE – TSX) last year.

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I think there's a reason most of us have not heard of the Clearwater Basin.

The Scanlan - P Scanlan - King Wells Updated -- January 10, 2022

I promised a reader I would get back to these wells and look at them again. 

Note: in a note like this there may be typographical and/or content errors.

Graphics:

The wells, to the north:

  • 18770, 819, Whiting, Scanlan 3-5H, Truax, t9/10; cum 391K 11/21;
  • 33294, 1,600, Whiting, Scanlan 11-5-2TFH, Truax, t1/18; cum 235K 11/21;
  • 33295, 1,595, Whiting, Scanlan 11-5TFH, Truax, t1/18; cum 272K 11/21;
  • 33296, 2,095, Whiting, Scanlan 11-52H, Truax, t12/17; cum 240K 11/21;
  • 33297, 1,591, Whiting, Scanlan 11-5H, Truax, t12/17; cum 305K 11/21;
  • 33404, 2,053, Whiting, Thomas 43-4H, Truax, t1/18; cum 247K 11/21;
  • 33405, 1,229, Whiting, Thomas 43-4TFH, Truax, t1/18; cum 230K 11/21;
  • 33406, 2,502, Whiting, Thomas 43-4-2H, Truax, t1/18; cum 208K 11/21;
  • 33407, 1,633, Whiting, Thomas 43-4-2TFH Truax, t9/10; cum 257K 11/21;

The wells, to the south:

  • 20856, 1,349, Whiting, King 3-8H, Truax, t1/12; cum 398K 11/21; 
  • 33455, 2,454, Whiting, King 11-8H, Truax, t12/17; cum 261K 11/21; 
  • 33456, 2,252, Whiting, King 11-8H-2H, Truax, t12/17; cum 237K 11/21; 
  • 33457, 1,525, Whiting, King 11-8TFHU, Truax, t12/17; cum 254K 11/21; 
  • 33409, 1,102, Whiting, Scanlan 42-9TFH, Truax, t12/17; cum 227K 11/21; 
  • 33410, 1,947, Whiting, Scanlan 42-9-2TFH, Truax, t12/17; cum 176K 11/21; 
  • 33411, 1,980, Whiting, Scanlan 42-9-3TFH, Truax, t12/17; cum 183K 11/21; 
  • 25602, 2,631, Whiting, P Scanlan 153-98-16-9-5-5H, t3/14; cum 336K 11/21; 
  • 25600, 2,665, Whiting, P Scanlan 153-98-16-9-5-12H, t3/14; cum 345K 11/21; 
  • 20856, 1,349, Whiting, King 3-8H, t1/12; cum 398K 11/21;

Child Tax Credit Could Pivot To Gasoline Vouchers By Memorial Day -- January 10, 2022

Some are now predicting that the US government will "print" gasoline vouchers for those with "qualifying incomes." Pilot program would likely begin in California, New York, Illinois, and states where incumbents are most vulnerable. 

For investors bullish on oil, this is not a bad idea. I could support it.  

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BRK-B: the ultimate Warren Buffett stock? IBD

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Traditional IRAs Vs Roth IRAs

There are a lot of articles right now discussing the pros and cons of traditional IRAs vs Roth IRAs. From an earlier post, October 9, 2021:

Investing: re-posting -- see this post:

Roth vs traditional IRAs: see if you can find the fallacy in the argument presented by this writer -- "why I won't do a Roth IRA conversion -- even  if this is the last chance." Brett Arends is very, very knowledgeable and has been around for quite some time. How he missed this fallacy is beyond me. His argument:

  • most of us -- including the writer, Arends -- are almost certainly going to be better off in a traditional IRA
  • his fallacy: see if you can find it

This article really, really "haunts" me -- the writer is so off the mark. Roth vs traditional IRA? This is a no-brainer. 

If I only knew then what I know now.

The writer assumes lower middle class and middle class are big investors. No. Living month-to-month. The "investor class" will be much better off with Roth IRAs. 

Just wait until investors who got a very, very small tax break at the front end and then see how huge the RMDs will be at the other end, regardless of the tax bracket. At the front end, getting a tax break on a $6,000 investment; at the other end, being taxed on a $25K RMD.

At the front end one has a choice, contributing to a Roth IRA or a traditional IRA.

At the back end, with a traditional IRA, you have no choice. The government decides for you how much you must "liquidate" and how much tax you will pay on that distribution. With a ROTH IRA the decision is all yours. At least until the government changes the law.

Fracking's Economic Effect On Ohio -- January 10, 2022

From "Focus on Fracking" overnight:

Utica Shale Saves Eastern Ohio Counties from COVID Recession | Marcellus Drilling News -

Economists are still analyzing the impact of the coronavirus pandemic from 2020, let alone assessing impacts from 2021.

Cleveland State University researchers have run the numbers and have discovered something interesting.

Of Ohio’s 88 counties, only 18 grew their economies in 2020. Of those 18, two counties stood head and shoulders above the rest for increases in economic activity. Both counties have something in common: Utica Shale drilling.The two counties that soared in 2020 due to Utica drilling were Monroe and Harrison. Other Utica-drilling counties were also on the list of 18 counties improving in 2020, including Belmont and Jefferson. Beginning to see a trend here?

We laugh at anti-fossil fuel fools who yammer on that “there is no increase in jobs or economic activity from shale oil and gas drilling.” What planet do they live on?!

The Utica pulled Ohio eastern counties’ bacon out of the fire in 2020, and (we suspect) in 2021 as well.

Hydraulic fracturing has buoyed the economy in eastern Ohio.Two small eastern Ohio counties in the heart of Ohio’s natural gas country posted the biggest economic gains among the state’s counties in 2020.The big gains in Harrison and Monroe counties came even as COVID-19 plunged most of Ohio’s 88 counties and its biggest metro areas into a brief, but steep, recession.

Only 18 counties had growth last year.Harrison and Monroe counties each posted a 20.5% increase in their economy in 2020, according to federal data released this month.

Both counties are small so even a minimal increase in the economy can produce big change.Monroe County’s economic activity was measured at $1.9 billion in 2020, while Harrison’s was measured at $1.6 billion.

Both counties have benefited from the surge in natural gas and oil drilling in Appalachia over the past decade that has helped offset the decline in coal use.

Total investment in the region has hit $93 billion from 2011 through 2020, according to Cleveland State University researchers who track oil and gas spending in the region. Monroe County also has benefited from the redevelopment of the old Ormet aluminum smelter site in recent years that includes the new natural gas power plant at the Long Ridge Energy Terminal, which one day could run on hydrogen as well as gas.Harrison County also is developing a power plant.Monroe County’s gain follows a 23.7% increase in 2019 and 7.7% in 2018.Other counties in Appalachia also were among the 2020 winners.The county in between Monroe and Harrison, Belmont, had the fifth-highest growth rate in 2020, 5.4%. That county also has benefited from the natural gas boom.The economy of Jefferson County, north of Belmont County and also a benefactor of the energy investments, grew by 5.6% in 2020.In the northwest part of the state, Paulding County posted a 7.7% growth rate, the third highest in Ohio.

It would be interesting to see if UND would consider researching the economic effect fracking has had on four counties in North Dakota: Williams, McKenzie, Dunn, and Mountrail.

Corky Trying To Reach Her Broker To Put In A Buy For Zynga -- January 10, 2022

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Back to the News

Speaking of bananas: a banana worth squeezing. This whole story makes me very, very nervous about Daimler. 

Second best sports story all day: Tom Brady defies coach; goes back in to get Gronk his final catch for a $500K bonus. After the Antonio Brown story, this speaks volumes about Brady; speaks volumes about the coash.

Chips: Apple make TSMC sets another quartely sales record on strong demand. Theme for 2022.

PFE: looking good this morning. Announces new deals. 

Two words one doesn't like to see in same sentence: Mexico auto production plunges to lowest annual level since 2014 amid chip shortage. The whole country is producing three million vehicles on an annual basis. Is Tesla producing 500,000 on an annual basis? Actually, much more

EOG: appears to have gotten two thumbs up from Simply Wall St.

WTI Slips Below $79; Thirty-four Active Rigs; Three Wells Coming Off Confidential List -- January 10, 2022

EPD: announces a $3.25 billion acquisition of Navitas Midstream. Accretive in 2023.

  • provides an entry point into the Midland Basin for EPD
  • 1,750 miles of pipeline; 1 billion cubic feet/day of cryogenic natural gas processing capacity with the completion of the Leiker plant, expected to be completed 1Q22;
  • should be immediately accretive to distributable cash flow
  • DCF accretion in the rand of 18 cents to 22 cents / unit in 2023
  • EPD just announced a 3.3% dividend increase; has the highest credit rating within the midstream sector according to at least one analyst;

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Back to the Bakken

Active rigs:

$78.44
1/10/202201/10/202001/10/201901/10/201801/10/2017
Active Rigs34
55665336

Monday, January 10, 2022: 11 for the month, 11 for the quarter, 11 for the year

  • 37234, conf, Bruin, Wm Polar 157-101-24C-13-7B,

Sunday, January 9, 2022: 10 for the month, 10 for the quarter, 10 for the year

  • None.
Saturday, January 8, 2022: 10 for the month, 10 for the quarter, 10 for the year
  • 38351, conf, Resonance Exploration, Resonance Wilmot 8-27H,
  • 27002, conf, CLR, LCU Reckitt Federal 5-22H1,

RBN Energy: US LNG feedgas demand looks primed to build on record highs

Global natural gas prices went through the roof in December, and while prices are back down from those highs, they remain incredibly strong compared to years past and the economics for U.S. 
LNG exports are riding high. LNG exports have been in the money for quite some time, but feedgas deliveries to U.S. export terminals throughout the spring and summer of 2021 were somewhat lackluster as maintenance and operational issues at terminals and nearby pipelines kept feedgas from hitting its full potential. 
Gas deliveries to those terminals began climbing in the fall, first back to full utilization levels, and then beyond. 
Much of the record feedgas demand has been from commissioning activity at Sabine Pass Train 6, which produced its first LNG in December and is on track to begin full service early this year. But beyond that, operators have been pushing the existing fleet of terminals to operate at peak levels and produce additional cargoes, likely for sale in the spot market or on short-term contract, an extremely profitable endeavor given the prices in Europe, where most if not all destination-flexible cargoes have headed. In today’s RBN blog, we look at what’s driving LNG feedgas demand to its recent highs and how much higher it could go.