Fun And Games -- February 17, 2022

Link here. 

Link here.

Ukraine -- February 17, 2022

Link here. 

6:21 p.m. CT: An RC-135 -- Rivet Joint -- has just departed Souda Bay on the north side of Crete (Greece) headed north, obviously to Ukraine theater of operations. Call sign: Homer-Five-One.

Later, 3:17 a.m. CT, Friday morning, February 18, 2022: a significant increase in commercial air traffic over Ukraine, most of it in the west. An active Global Hawk; no River Joint.

A Closer Look At The Five DUCs Reported Completed Today -- February 17, 2022

From today's daily activity report.

Five producing wells (DUCs) reported as completed:

• 37242, 3,567, MRO, Denny 11-3TFH, Killdeer,

Pool	Date	Days	BBLS Oil	Runs	BBLS Water	MCF Prod	MCF Sold	Vent/Flare
BAKKEN	12-2021	24	29407	29448	36588	24516	22462	0
BAKKEN	11-2021	3	6561	6348	10091	4015	3581	0

• 37156, 4,122, MRO, Lowry 44-9TFH, Killdeer, 20K over 8 days extrapolates to 76K over 30 days:
  

Pool	Date	Days	BBLS Oil	Runs	BBLS Water	MCF Prod	MCF Sold	Vent/Flare
BAKKEN	12-2021	30	31120	30999	37120	26399	24180	99
BAKKEN	11-2021	8	20191	20030	25503	14314	13028	0

• 38189, 1,102, CLR, Tallahassee FIU 8-21HSL, Baker, minimal production reported;
• 38396, 1,330, CLR, Dvirnak 10-7HSL1, Corral Creek, no production reported;
• 38320, 995, CLR, Dvirnak 11-7H, Jim Creek, no production reported;

********************************
For My Brother-In-Law In Montana

US Government Releases Whopping Number Of Covid-19 Vaccine Doses Today -- February 17, 2022

Link here.

On occasion, the numbers released are incorrect and updated at a later date by the CDC. 

Government generally distributes between 600,000 doses and one million doses per day, Monday through Thursday. Today, the government distributed / released a whopping 6,839,380 doses (fourth column, column B, change from day before). That represented almost one million more doses than the entire previous week (eighth column, line 6, with 6,077,570 doses for the entire 7-day week):

Screenshot of recent vaccine data.

		A	B	C	D	F
		Doses of vaccine distributed to health facilities	Change from day before	Vaccinations given	Change from day before	Percent of distributed vaccine that is actually administered	Doses received in past week, current Monday from previous Tuesday	Average number of doses given / day in past seven days
Thursday	February 17, 2022	684,648,105	6,839,380	548,934,364	542,750	80.18%
Wednesday	February 16, 2022	677,808,725	610,500	548,391,614	442,958	80.91%
Tuesday	February 15, 2022	677,198,225	547,300	547,948,656	502,492	80.91%
Monday	February 14, 2022	676,650,925	100	547,446,164	336,440	80.91%	6,077,570	546,667
Sunday	February 13, 2022	676,650,825	31,100	547,109,724	485,061	80.86%
Saturday	February 12, 2022	676,619,725	855,300	546,624,663	643,126	80.79%
Friday	February 11, 2022	675,764,425	1,088,700	545,981,537	504,417	80.79%
Thursday	February 10, 2022	674,675,725	1,067,480	545,477,120	704,423	80.85%
Wednesday	February 9, 2022	673,608,245	1,817,280	544,772,697	633,331	80.87%
Tuesday	February 8, 2022	671,790,965	1,217,610	544,139,366	519,874	81.00%
Monday	February 7, 2022	670,573,355	100	543,619,492	399,448	81.07%	4,254,060	611,742
Sunday	February 6, 2022	670,573,255	100,800	543,220,044	544,677	81.01%
Saturday	February 5, 2022	670,472,455	154,000	542,675,367	675,567	80.94%
Friday	February 4, 2022	670,318,455	1,005,215	541,999,800	684,801	80.86%
Thursday	February 3, 2022	669,313,240	1,005,215	541,314,999	684,801	80.88%
Wednesday	February 2, 2022	668,308,025	1,213,660	540,630,198	709,076	80.90%
Tuesday	February 1, 2022	667,094,365	775,070	539,921,122	583,826	80.94%
Monday	January 31, 2022	666,319,295	-100	539,337,296	507,376	80.94%	6,422,580	575,732

Best Thread Ever; Five DUCs Reported As Completed; No New Permits -- February 17, 2022

Best thread ever. Wow, it took them a long time to come around to what we've been saying for quite some time. Like the past ten years.

And from that thread, from Bloomberg, rigs don't matter (don't take that out of context):

And, more:

We've also said this for years, link here:

And that $72 for Saudi Arabia is low-balling it. Some years ago, it was $100. 

Link here.

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

Active rigs:

$91.76	2/17/2022	02/17/2021	02/17/2020	02/17/2019	02/17/2018
Active Rigs	33	15	56	64	56

No new permits.

Five producing wells (DUCs) reported as completed:

• 37242, 3,567, MRO, Denny 11-3TFH,
• 37156, 4,122, MRO, Lowry 44-9TFH,
• 38189, 1,102, CLR, Tallahassee FIU 8-21HSL,
• 38396, 1,330, CLR, Dvirnak 10-7HSL1,
• 38320, 995, CLR, Dvirnak 11-7H,

Apache Lawsuit -- February 17, 2022

Link here.

Apache's Alpine High tracked here.

Ukraine -- February 17, 2022

Link here. 

Two RC-135s -- River Joint -- flying along northern border of Ukraine between Kiev and Lviv. Both are apparently RAF a/c. Call signs RRR7214 and RRR6817.

It also appears that a Global Hawk has just entered Ukrainian airspace from the south, the call sign 23155 is an "invalid" call sign and no a/c is identified, but it's flying at an altitude of 51,000 feet -- the only a/c currently in this theater at that altitude is the Global Hawk. This one would be from NAS Sigonella. Later, 11:27 a.m. CT, that "23155" call sign has been replaced with "XCCRM," also a bogus call sign.

Transponders of all four aircraft have now "disappeared" -- 9:59 a.m. CT, February 17, 2022.

Mexico To Become Net Importer Of Crude Oil? Bloomberg -- February 17, 2022

On February 9, 2022, looking at global crude oil production, I wrote the following:

• Historically: higher prices have led to increased production; groups to watch as oil trends toward $90 / bbl:
• first tier:
• US
  
• US shale operators
• US offshore (ex: Guyana)
• Russia
• Saudi Arabia
• second tier:
• OPEC - some Africa (outside Saudi Arabia, Russia, Libya)
• Iran: in second tier only if one believes Biden will lift sanctions
  
• Mexico: I'm being generous not moving Mexico to background noise
  
• Canada: without Keystone XL and adequate seaports, pretty much flat-lined production;
  
• background noise:
• Ecuador -- not OPEC
• some Africa including Libya  -- OPEC

Being reported today:

PEMEX: previously reported that Pemex would begin curtailing exports of crude oil this year, and completely end exports in 2023. There may have been an explanation and, if so, it just got worse. From Bloomberg: forecasts now suggest that Mexico will have to import crude oil to produce enough fuel for its own country.  

So, not only is Mexico moving from being an exporter of crude oil but now becoming an importer of crude oil.

From February 13, 2022, this is what conventional oil production in terminal decline looks like, graphic might have been drawn by Hubbert:

Enerplus Reports A Nice Heart Butte Well; War Has Begun -- February 17, 2022

Updates

Later, 10:06 a.m.: headline in WSJ confirms earlier note -- hostilities have begun. When is an incursion not an incursion? 

Later, 10:20 a.m.: wow, talk about a rigged women's figure skating at the Olympics. The favored-to-win, having tested positive for an illegal substance, is allowed to continue competing. Favored to win, she does not even medal. Her teammates won gold and silver. Had she won a medal there would have been no medals ceremony. We'll probably never see her again. My heart goes out to Ms Valieva; absolutely sickening. Talk about child abuse. Many things bothered me today; this may have bothered me the most.

Original Post

Futures: after a decade of blogging about oil, I finally understand futures, backwardation, and contango. 

An analogy: booking an airline flight.  

Six months ago, I booked a flight from DFW to Portland, Oregon. The cost: $256. Today, six months later, that flight now costs $656. Six months ago I was willing to pay $256 for a flight I would take six months from then. I did not know what the price would be six months ago, but I assumed it would be more expensive than $256. 

So, now we have oil futures. The futures curve is not a forecast of where commodity prices are heading, but rather a snapshot of what the market is willing to pay for delivery in the future.

Ukraine: has the invasion already begun? Shelling has already begun; Russia has expelled the US deputy ambassador to Russia; and, US SecState changed plans at last minute to speak at UN.

PEMEX: previously reported that Pemex would begin curtailing exports of crude oil this year, and completely end exports in 2023. There may have been an explanation and, if so, it just got worse. From Bloomberg: forecasts now suggest that Mexico will have to import crude oil to produce enough fuel for its own country. See also this article by Michael Kern.

WTI: $91.18.

Fair value, WTI: $122, link here. 

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

Active rigs:

$91.75	2/17/2022	02/17/2021	02/17/2020	02/17/2019	02/17/2018
Active Rigs	33	15	56	64	56

Thursday, February 17, 2022: 34 for the month, 89 for the quarter, 89 for the year

• 34063, conf, Enerplus, Orbweaver 149-92-32C-29H, Heart Butte: first production, 8/21; t--; cum 128K 12/21;

Pool	Date	Days	BBLS Oil	Runs	BBLS Water	MCF Prod	MCF Sold	Vent/Flare
BAKKEN	12-2021	18	18131	18109	21383	13021	9296	318
BAKKEN	11-2021	24	26951	26990	31734	21035	16379	280
BAKKEN	10-2021	31	39478	39513	52996	44431	24690	14053
BAKKEN	9-2021	17	24843	24680	34537	22423	14015	4621
BAKKEN	8-2021	14	18127	17828	37818	13988	7271	4686

RBN Energy: is western Canada's gas production renaissance in jeopardy?

The gradual increase in Western Canada’s natural gas production in recent years has been powered by the highly prolific Montney formation, a vast unconventional resource that straddles the Alberta/British Columbia border. 

With Western Canadian gas price benchmarks at multi-year highs and producers enjoying their best financial position in ages, it would seem logical to expect more gas production growth from the Montney in the future. However, a recent ruling by the BC Supreme Court could negatively affect the pace of well developments and jeopardize future growth in the Montney formation. In today’s RBN blog, we consider this possibility.