Notes From All Over -- Part 2 -- February 8, 2022

Updates

Comment: President Biden should get ahead of this. There are ways to thread this needle that could make him look like a real statesman. But if Trudeau beats him to the punch ... on the other hand, there's no way Trudeau can come out of this looking good after all he has said ...

Comment: all things being equal, the market should take off tomorrow, watching the economy re-open; this is interesting: it looks like the troops are leading the generals.

Breaking: Alberta, Canada, to scrap vaccine passport program at midnight tonight, provincial premier Jason Kenney. Follows Saskatchewan lead. See below.

Later, 7:50 p.m. CT: Sweden is opening up in four minutes and 73% of country is fully vaccinated.

• US is 64%
• Canada is 80%
• Denmark lifted restrictions one week ago; 80% of country's eligible population fully vaccinated
• Trudeau in hiding; at an undisclosed location; in quarantine
• Biden in denial; 
  

Original Post

End of Covid-19 mandates: disappearing faster than a melting snowman in north Texas; 

• last two holdouts, two peas in a pod -- Joe Biden and Gordon "I forgot his first name" Trudeau; link here.
• and, here: Saskatchewan to remove proof of vaccination policy next Monday, February 14, 2022
  

Canadian trucker protest:

• effectively a union walkout over work conditions;
• Canadian government is calling them terrorists, racists, fascists, and demanding they go back to work;
• link here;
• only when they're protesting pipelines or BLM can they block businesses, loot stores and topple statues; link here;
  

India: I don't know if folks recall, but the Mexican president has said the country will begin to phase out crude oil exports this year, and completely eliminate them next year. Today, it was announced, by Mexico, that the export of Mexican crude oil to India has ended. 

India: the US refiners may be operating at 87% operable capacity, but Indian refiners are going all out. Indian refiners operated at 101% of capacity in December, 2021, up from 87% in August, 2021. State-run processors are trying to buy more term and spot crude oil. Link here.

A wash: so, if Iran oil is brought to the global market and Mexico ends all exports, is that about a wash in the big scheme of things?

Ukraine: this is how far apart Putin and the west are with regard to this issue --

Insanity:

• President Biden: going all out for an "EV environment," says he will take the lead from China;
• China: building a new coal plant every week; which dwarfs anything they or the US are doing with EVs
• "we" could theoretically electrify the entire global fleet tomorrow and emissions would still increase because of coal growth in China (and India); link here. Tripping over dollars to pick up pennies.

Net-zero by 2050:

• UK pledges to be net zero by 2050, link here;
• that noise you're hearing is Greta's head exploding
• to align more closely with China
• agreement a few months ago at COP26 to be net zero by 2030 just wasn't going to work out
• best thing about this: gives cover for Big Oil to have same goal -- net zero by 2050, which XOM just announced

Insanity:

• shut down the Keystone XL, ban drilling on federal land, vacate previously permitted leases; and then, this:
• White House urges global oil producers to pump more to curb prices.
• If Canada would pump more, they couldn't get it out of country; Biden shut down the Keystone XL; link here.

Insanity:

• to lower gasoline prices the White House says they may release more SPR oil, link here;
• this tells me they do not understand the pricing of oil
• price drives narrative;
  
• I did not know this either until I started blogging and investing in oil but I now understand why, all things being equal, a release of SPR oil will increase the price of crude oil;
• bottom line: if invested in oil, if bullish on oil, write to the White House advocating another release of SPR oil;
• actually for investors, it's a two-fer -- I"ll explain later if anyone cannot connect the dots.

Long-term oil bull:

• the energy transition (to net zero) will end up raising the price of oil;
• link here;
• BP CEO: "an accelerating energy transition doesn't necessarily lead to a lower oil price." Link here.
  
• if you can't connect the dots, let me know; I'll steer you to someone who can connect the dots;

Doofus: US SecEnergy ties renewable energy to world peace; link to Charles Kennedy;

• but before world peace breaks out, we need to solve world hunger.

Expensive meat:

• maybe we should not have let 80% of meatpacking industry be controlled by four foreign-owned companies to begin with ... link here;

Market today:

• another perfect 10:1
  

The Permian:

• this is so cool. I posted this the other day, using my own arithmetic (LOL)
• now, confirmed by WAR52 over on twitter:
• Whiting enters the Permian;
• paid over $60,000 for a flowing boepd;
• initiates a dividend of $1 / share on an annualized basis
  

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The Apple Page

The knock-out punch: "tap to pay on iPhone." Link here. Previously posted. And here.

Driver's license: Apple preparing for Driver's licenses on iPhone. Link here.

One New / Suspended Permit; One DUC Reported As Completed; Twenty-Nine Permits Renewed — February 8, 2022

Drew Wrigley: to be North Dakota's new attorney general. Based on his resume .... but, wow, Wayne Stenehjem took a lot of "oil" knowledge with him. 

Active rigs:

$89.73	2/8/2022	02/08/2021	02/08/2020	02/08/2019	02/08/2018
Active Rigs	34	14	54	64	57

One new permit / suspended:

• Operator: CLR
• Field: Jim Creek (Dunn)
• Comments:
• I have not seen this before, and do not know the significance of a "permit approved and suspended" -- maybe approved by the NDIC and immediately suspended by the Federal government; who knows/whatever
• the well, if drilled, will be sited in SWSE 27-146N-96W:
• the well head will be761 FSL and 2345 FEL

One producing well (a DUC) reported as completed:

• 33570, 2,207, Grayson Mill (Equinor), Jennifer 26-35 7H, East Fork, no production data, scout ticket still carries it at SI/A.
  

Twenty-nine permits renewed:

• BR (9): the following permits, all in McKenzie County -- four Lone Beaver permits; one Olebully permit, and four Ole permits.
• Petro Hunt (8): the following eight permits, all in Divide County -- Laura, Macey, Marlyn, Maria, Jeffrey, Kade, Kelly, Bob.
• Enerplus (7): the following seven permits, all in McKenzie County -- Anole, Basilisk, Frilled, Gecko, Cayman, Lizard, Tegu.
• NP Resources (5): in Billings County -- three Beaver Creek permits, and, in Golden Valley County -- two Agate permits.

Notes From All Over -- Part 1 -- February 8, 2022

YUM: increases dividend to 57 cents. Pretty special:

• 2022: 57 cents
• 2021: 50 cents
• 2020: 47 cents
• 2019: 42 cents

LNG export terminal: Venture Global gets "okay" for fourth LNG block at Louisiana Calcasieu plant; previously posted; link here.

Spare Capacity Is A Myth -- Bison Interests -- February 8, 2022

Link here.

A decade of underinvestment in traditional energy supply chains has finally caught up to world economies. Surging demand, tightening inventories, and soaring prices are causing energy shortages and blackouts. Coal and natural gas inventories are at dangerously low levels, diesel power generation is switching on, factories are shutting down, and blackouts are already happening in China.

 

The situation has deteriorated materially since Bison’s “The Myth of OPEC+ Spare Capacity” was published, yet the consensus remains that OPEC+ can tame oil markets at any time by unleashing its abundant spare capacity. In this context, it is timely to provide more insight into OPEC+’s spare capacity shortfall relative to consensus, to share our estimation methodology and to highlight recent developments that support our findings.

 

The global energy situation is increasingly dire. Limited natural gas exports from Russia have pushed European prices to all-time highs, with UK and other European alternative energy power generation disappointing and proving unreliable. Shortages of thermal coal and liquefied natural gas (LNG) are forcing major Asian economies to shut down power plants and blackout cities. Additionally, soaring oil prices are exacerbating inflationary pressures across supply chains and reducing affordability of already inefficient diesel power generation. A cold winter could aggravate the situation, and low global inventories of natural gas and coal increase the risk.

Bison Interests is quickly becoming a companion link to RBN Energy.

Crude oil quality matters: HSFO. If you are unfamiliar with this acronym, it speaks volumes about your understanding of this issue.

The Bakken Is Back -- Reuters -- February 8, 2022

Article of the day: Reuters on activity in US shale basins. 

New activity is stirring in secondary oilfields like Colorado's DJ Basin, Wyoming's Powder River, Louisiana's Haynesville and North Dakota's Bakken shale, which last year lost its spot as the second largest U.S. oil producing region.

"When you look at the oil prices in the Bakken, the prompt price is close to $90 a barrel," said Bob Phillips, chief executive of energy pipeline company Crestwood Equity Partners. "That doesn't happen very often."

Last week, Crestwood completed a $1.8 billion deal to purchase Oasis Midstream Partners' oil, gas and gas-processing assets in North Dakota and Texas as part of a plan to become a top-three midstream operator in the Bakken, Powder River and Permian shale fields.

In Wyoming's Powder River oilfield, Continental Resources has made several acquisitions since last year, the latest from Chesapeake Energy. That purchase could revive the area's output.

Still, outside of Haynesville and the Permian, oilfields lag their peak production. Bakken producer Hess Corp. aims to increase its overall production by 12% to 15% this year, driven by output in the Bakken and Guyana. Chevron plans to boost its Permian shale output 10% and Exxon said it could deliver 25% more oil and gas from its Permian holdings.

In the Bakken, oil output is around 1.2 million barrels per day (bpd), below its 1.52 million bpd late 2019 peak. In the Eagle Ford shale of South Texas, oil is averaging 1.1 million bpd, off the peak 1.7 million bpd in early 2015.

Much, much more at the link. 

Global Warming: Another Ten-Year Reprieve -- February 8, 2022

Link here. Sent to me by a reader. From the European Physical Journal Plus. 

Joe Cramer is at an undisclosed location. He has not been seen since the Metaverse / Facebook debacle. 

And that's it for me. no CNBC for me today, continuing my four-day streak of not watching CNBC. Will get back to it when the market settles down.

Connecting the dots:

• states can't life the mask mandate fast enough;
• directly follows the Canadian truck convoy / protest;
• even a blind man could see how the 2022 midterms were going to play out if the mask mandates remained in place;

White House: my hunch is that the White House can only manage one crisis at a time. The next crisis: Ukraine. Result:

• get the mask mandate off the table; they saw what was happening in Canada.

No Wells Coming Off Confidential List; A Snowball Rolling Downhill -- February 8, 2022

Article of the day: will re-post as a stand-alone later, but on my way to take Sophia to bus stop. Reuters on activity in US shale basins.

Not so fast: maybe WTI won't hit $100. Down today; falls below $100. Down 2%; down $1.79. Trading at $89.53.

BP:

• profit jumps from $6 billion loss to $13 billion profit; highest profit in eight years;
• net profit, $12.8 billion; forecast, $12.5 billion, full year
• 4Q21: profit of $4.1 billion, extrapolates to $16 billion full-year; forecast, $3.9 billion
• maintained its dividend -- say what! Announces a $1.5 billion share buyback program
  
• 20% investment with Rosneft made huge difference; London loves it;
• CNBC crawler: BP shares jump -- yup, up 33 cents;  up about a percent; some jump considering they went from a $6 billion loss to a $13 billion profit; what am I missing.
  

Nvidia won't buy ARM. Oh-oh. 

Peleton: misses on earnings. Shares down another 2.5% in pre-market trading.

Canadian truck convoy: lots of story lines. And the backstory here.

Decision fatigue: that's the name for the "change in mask mandate decision."

California: And just like that, California will lift mask mandate.

Still required for unvaccinated residents and for everyone in select settings, such as nursing homes or while aboard public transit. Apparently public schools are safe. The science changed overnight. Mask mandates remain for Los Angeles County and much of San Francisco. There, the science has not changed.

Australia: now that the tennis tournament is over, Australia will open its borders to all vaccinated tourists and business travelers.

The science has changed -- CNN, Anderson Cooper. Link here. This was predicted on the blog in mid-December. This is now a snowball rolling downhill. States in New England, north Atlantic coast can't end school masking mandates fast enough. Perhaps a better analogy: a Tiger Woods golf ball running off the green into the lake. More here.

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Back to the Bakken

Active rigs:

$89.53	2/8/2022	02/08/2021	02/08/2020	02/08/2019	02/08/2018
Active Rigs	34	14	54	64	57

No wells coming off confidential list today or tomorrow.

RBN Energy: growing US LNG output has influenced global logistics, pricing, part 2. 

The first wave of LNG projects has done more than just catapult the U.S. to the top tier of LNG exporters, it has reshaped markets, helped move LNG closer to being a true global commodity, and spurred changes in everything from ship sizes and routes to contract types and pricing formulas. Talk about having an impact! And, with new projects still coming online in the U.S. and final investment decisions expected on new terminals and expansions this year, the U.S. LNG industry’s effect on the global gas trade is sure to grow. In today’s RBN blog, we look at the practical impacts that have accompanied growing U.S. production with an emphasis on logistics and, perhaps most important, the changes to LNG pricing in Asia.

Bison Interests: space capacity is a myth. 

Crude oil quality matters: HSFO. If you are unfamiliar with this acronym, it speaks volumes about your understanding of this issue.