Gasoline Shortages, Formula Shortages -- Folks May Need To Take These Shortages More Seriously -- May 19, 2022

I'm heading to bed. Exhausted.

But three quick thoughts:

• gasoline shortages, formula shortages, semi-conductor/chip shortage: one may want to take these seriously; more tomorrow, if I remember;
• shale oil remains bigger than folks realize -- watch Vicky Hollub, Warren Buffett
• it's amazing how fast we've gone from $1.99 gasoline to folks talking about $10-gasoline -- in less than a year? I guess elections matter.

Detroit Diesel. Not good. Maybe more tomorrow, if I remember. 

Disclaimer: this is not an investment site.  Do not make any investment, financial, job, career, travel, or relationship decisions based on what you read here or think you may have read here.

All my posts are done quickly: there will be content and typographical errors. If anything on any of my posts is important to you, go to the source. If/when I find typographical / content errors, I will correct them.

XOM Found A Buyer For Its North Central Barnett Shale Gas Assetss -- May 19, 2022

Link here.

BVK: Thailand and back to the US.

It's Not Over Until Big Mama Sings -- May 19, 2022

It's not over until Big Mama sings. Link here.

Earlier tonight, from the blog:

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Largest Pure-Play E&P In The Delaware Basin

In other news, https://oilprice.com/Latest-Energy-News/World-News/US-Shale-Merger-Creates-A-New-7-Billion-Giant.html.

Centennial Resource Development and Colgate Energy Partners III, LLC have agreed to combine in a $7.0-billion merger of equals, creating the largest pure-play exploration and production (E&P) firm in the Delaware Basin in the Permian.

The combined firm will be the largest pure-play E&P company in the Delaware Basin, with around 180,000 net leasehold acres, 40,000 net royalty acres, and total current production of approximately 135,000 barrels of oil equivalent per day (Boe/d).

The $7.0 billion merger of equals values Colgate at approximately $3.9 billion and is comprised of 269.3 million shares of Centennial stock, $525 million of cash, and the assumption of approximately $1.4 billion of Colgate’s outstanding net debt.

Seven New Permits; Eight Permits Renewed; Two DUCs Reported As Completed -- May 19, 2022

WTI: $112.

Active rigs: 39 or thereabouts.

Seven new permits, #38960 - #38966, inclusive:

• Operators: Rimrock (5); EOG (2)
• Field: Heart Butte (Dunn County); Squaw Creek (McKenzie County)
• Comments:
• EOG has permits for two Mandaree wells in NWNW 10-149-94; 
• to be sited 524 FNL and 373 FWL; and, 516 FNL and 334 FWL
• Rimrock has permits for five Charging Eagle wells in SWSW 10-147-92; 
• to be sited 351 FSL and between 563 FWL and 443 FWL

Eight permits renewed:

• Southwestern Production Corp (3): Billings County; three TWM permits.
• EOG (3): three Liberty LR permits in Mountrail County;
• BR (1): a Patton permit in Dunn County
• Whiting (1): a Monson permit in McKenzie County

Two producing wells (DUCs) reported as completed:

• 37913, 1,584, CLR, Charolais South Federal 15-10H,
• 32426, 74 -- not atypical for BR, BR, Cleetwood 21-27MBH-A

Jobless Claims -- May 19, 2022

From May 15, 2022:

I remember doing the same back-of-the-envelope analysis in the early days of the blog and coming up with similar numbers. 

Link here. Or direct to paywalled MarketWatch. 

So, now, today's numbers.

Barron's and Reuters: both had the same story line.

The number of Americans filing new claims for unemployment benefits unexpectedly rose last week, reaching a four month-high and potentially hinting at some cooling in demand for workers amid tightening financial conditions.

So, what were these astronomically high numbers?

Initial claims for state unemployment benefits increased 21,000 to a seasonally adjusted 218,000 for the week ended May 14, the highest level since January. Economists polled by Reuters had forecast 200,000 applications for the latest week. 

Give me a break.  Does this really get you excited?

Initial claims for state unemployment benefits increased 21,000 to a seasonally adjusted 218,000 for the week ended May 14, the highest level since January. Economists polled by Reuters had forecast 200,000 applications for the latest week.

In other words, one word that describes today's numbers: yawn.

My hunch: Reuters and Barron's are trying to avoid discussing the elephant in the room: $10-gasoline. 

The problem is not going to be a shortage of workers (that will be bad enough), the big problem will be with workers having enough money to be able to afford gasoline to get to work in the first place. Amazing how Reuters and Barron's avoiding the elephant in the room. 

Interestingly enough, the bigger problem may not be the high price of gasoline, but adequate gasoline to meet demand.

Washington State Preps For $10 Oil — May 19, 2022

No demand destruction yet. But Washington State will still vote for Biden-Harris. Fine with me. I’m moving into “bunker mentality.” This looks ugly and scary.

Links later. Google it. Easily fact-checked. The good news: Washington State folks are very, very well off — they all have 6-figure jobs with Microsoft. Ten-dollar gasoline will be just fine.

https://nationworldnews.com/washington-state-gas-stations-run-out-of-fuel-preparing-for-10-a-gallon/

Time for President Biden to freeze gasoline prices, nationalize XOM.

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Largest Pure-Play E&P In The Delaware Basin

In other news, https://oilprice.com/Latest-Energy-News/World-News/US-Shale-Merger-Creates-A-New-7-Billion-Giant.html.

Centennial Resource Development and Colgate Energy Partners III, LLC have agreed to combine in a $7.0-billion merger of equals, creating the largest pure-play exploration and production (E&P) firm in the Delaware Basin in the Permian.

The combined firm will be the largest pure-play E&P company in the Delaware Basin, with around 180,000 net leasehold acres, 40,000 net royalty acres, and total current production of approximately 135,000 barrels of oil equivalent per day (Boe/d).

The $7.0 billion merger of equals values Colgate at approximately $3.9 billion and is comprised of 269.3 million shares of Centennial stock, $525 million of cash, and the assumption of approximately $1.4 billion of Colgate’s outstanding net debt.

That WTI-Brent Price Reversal -- May 19, 2022

Link to Alex Kimani:

To be fair, the price of WTI should be higher than that of Brent, considering its sweeter and lighter quality. After all, WTI has an API gravity of 39.6 degrees and a sulfur content of 0.24%, while Brent has an API gravity of around 38 degrees and a sulfur content of somewhere around 0.40%. The lower the density, the easier it is for it to be refined into gasoline or diesel fuel. Conversely, the higher the density, or "heavier," the oil is, the harder it is to refine. 

However, since 2013, Brent has been the more expensive crude blend thanks to its status as the global oil benchmark and a better indicator of global oil prices. That is the case because Brent essentially draws its oil from more than a dozen oil fields located in the North Sea, while WTI is sourced from U.S. oil fields, including the pivotal Cushing Oil Field. 

According to ICE Futures, ~60% of the world's traded oil is priced off of Brent. But the crude hierarchy was upset for a brief moment a few days ago after WTI stole Brent's crown as the more expensive oil. 

On Tuesday, WTI price crossed Brent to trade at $115.4/bbl vs. 115.2/bbl, an anomaly that the experts are saying is an indication of how the market has been scrambled by the pandemic and the war in Ukraine ahead of the busy summer driving season.

The WTI-Brent spread is tracked here. 

See comments:

Now I remember what this is about, there was excitement about it happening a couple months ago, too... 

... Brent oil contracts roll off the board almost a full month before WTI contracts, which means price quotes on news sites are quoting prices for different months for the two benchmarks... 

... in this week's case, they'd have been seeing Brent prices for July and WTI prices for June...but the backwardation is insane; next month's prices have been running ~$3 lower for both.... 

... if they'd compare similar contracts, i.e., July to July, they'd find the Brent price is still higher...

Later:

WTI for June delivery rose $1.02 to settle at $113.23 a barrel in New York.
WTI for July, which has greater volume and open interest, rose 39 cents to settle at $110.28.
Brent for July rose 51 cents to settle at $112.55 a barrel.

March, 2022, Vehicle Miles Traveled Hit All Highest Ever March Level -- May 19, 2022

Link here.

PGA championship, first round:

• afternoon group still playing
• Rory McIlroy: at the top of the leader board with -5
• Jordan Spieth: +2
• Tiger Woods: +4 -- T109
• the cut? three breaks right now:
• T79 
• T92
• T109
  

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Back to the Bakken

WTI: $111.60

Active rigs: 39 or thereabouts

No daily activity report published today.

Reason #25 Why I Love To Blog -- May 19, 2022

Starting about ten days or so ago, I started noting that:

• it is not an oil production problem;
• it is not an oil pipeline problem;
• it IS a refining problem.

I started posting my thoughts on this earlier this week.

A reader, thank you very much, corroborated my "analysis."

Charles Kennedy is now reporting that gas stations in Washington State are running out of fuel.

Gas stations throughout eastern Washington State are sold out of gasoline, and some are selling only diesel, while nationwide U.S. gas prices hit another all-time high and Washington’s average gasoline price is now nearing $5.20 per gallon.

In the Tri-Cities area (Kennewick, Pasco, and Richland), residents are scrambling to find a gas station that hasn’t run out of gasoline, The Post Millennial reports. Residents in the area have flagged in a local Facebook group that more than 10 gas stations in the region are out of fuel.

A gas station in Auburn has reprogrammed displays to show double-digit prices, although it doesn’t expect $10 regular gasoline price and sells the more expensive race fuel, a spokesman for the station told The Post Millennial.

I know the Tri-Cities area very well. I drive through it every summer on my trip between Portland, OR, to Flathead Lake, MT.

On another note, the US House has just passed a bill to prevent price gouging or something to that effect. 

I am seriously reconsidering my travel plans for this summer. This may not the "correct" summer to be traveling.

A Few More Items Before Tiger Tees Off -- May 19, 2022

First things first: tea leaves regarding Tiger Woods over the next four days:

• will start strong; will use golf club as "cane."
  
• will start to show some minor fatigue as early as the back nine, first day
• will certainly fade by end of second day
• if he makes the cut, it will be close

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Scallops

Link here.

CLR: Enhanced Oil Recovery Project; Priimary Production Recovering Upwards Of 15% Of OOIP -- May 19, 2022

CLR: enhanced oil recovery project, link here. Or direct to The Williston Herald.

• Buddy Comindgo Pipeline Project
• transport natural gas from an existing transmission line to an existing oil well
• $3.55 million
• enhanced recovery
• think about that: spending $3.55 million to test enhanced recovery from an existing well
• at $100 at the well head:
• $3,550,000 / $100 = 35,500 bbls of oil
• 2,000 bbls / month = 18 months
• specifics:
• origin: East MonDak WBI Energy Transmission Line
• terminus: Continental's Buddy Domindgo Well Pad
• natural gas to be compressed and injected downhole into the existing well to test the feasibiliity of this method for prolonging thee well's production life;
• without enhanced recovery:
• the current technology will leave 80 to 85 percent of the oil tied up in shale rocks behind, North Dakota Director of Mineral Resources Lynn Helms has said in past monthly oil production reports — an enormous target, that makes even a 1 to 2 percent gain in oil recovery highly economic.
• Continental has already acquired all of the rights of way needed for the project, and expects to take two months completing the project once it is permitted.

Too bad the NDIC map is not available to locate the origin and terminus.

But look at that: primary production in the Bakken recovering upwards of 15% of OOIP, link here:

• 500 billion bbls OOIP
• 15% of 500 billion = 75 billion bbls
• at 1 million bbls / day x 365 = 365 million bbls / year
• 75 billion / 365 million bbls = 205 years.
• others have said 250 billion bbls OOIP
• 15% of 250 billion = 37.5 billion bbls
• = 102 years

Note: I am inappropriately exuberant with regard to the Bakken and often make simple arithmetic errors.  

Clearing Out The In-Box Before The PGA Championship -- May 19, 2022

NDIC website: soon to hit the one-year anniversary of the NDIC site being "compromised" or down. "Get well" date extended to May 31, 2022. My hunch: we will be lucky to see the NDIC site back up to "minimal" standards by the end of summer. 2023?

From the NDIC -- update as of 6pm CT, Wednesday, May 18: We are estimating features to be partially available by end of day Friday, May 20th. DMR’s web services are being brought back online in stages. You may see some features back on the website over the coming days. Priority is being focused on the Basic and Premium Subscription Services, Well Index and Downloads, and GIS Map Server. Due to additional issues encountered, the GIS Map Server is estimated to be available again around Tuesday, May 31st. Should this date move up or temporary solutions be made available we will provide and update on the map server.

Tesla: Model S crash in California prompts federal probe, link here. 

The collision is the 42nd included in NHTSA’s Special Crash Investigation of advanced driver assistance systems like Tesla Inc.’s Autopilot. The broader probe began in 2016 after a fatal accident in Florida involving a Model S that was operating with its automated driving system activated. 

Tesla vehicles have been involved in all but seven of the advanced driver assistance systems that have been added to NHTSA’s investigation.

ESG: Tesla removed from the list. Makes sense. Link here. This is going to be a real problem going forward for Greta et al. Several oil companies are on the ESG list, for what it's worth.

The S&P 500 ESG Index: Tesla removed; six oil-and-gas-related companies added. Link here. 

Draw-down, link here.

Yellen in the dark, link here.

KODA Resources With Three New Permits: Hess Reports Six Dry Holes -- May 19, 2022

NDIC site: back to daily activity report and that's about it. Scout tickets, map, basic subscription, premium subscription service "get well" date moved from May 18, 2022, to May 31, 2022. 

WTI: $108

Reversal: this was yesterday, when WTI was priced slightly higher than Brent. That's a reversal from the norm but decades ago, that was the norm: WTI priced higher than Brent. Not sure what to make of it. Temporary? Like inflation?

Time will tell:

Road to California:

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Back to the Bakken -- or what little we know today --

CLR: enhanced oil recovery project, link here. 

Active rigs: 39

Three new permits, #38957 - #38959, inclusive:

• Operator: Koda Resources
• Field: Fertile Valley (Divide)
• Comments:
• Koda Resources has permits for three Stout wells in NENE 16-160-102, to be sited between 309 FNL and 369 FNL and between 367 FEL and 368 FEL

Four producing wells (DUCs) reported as completed.

• 37909, 746, CLR, Charolais South Federal 11-10H2 (reported May 18, 2022)
• 37910, 1201, CLR, Charolais South Federal 12-10H (reported May 18, 2022)
• 37911, 1,054, CLR, Charolais South Federal 13-10H (reported May 18, 2022)
• 37912, 845, CLR, Charolais South Federal 14-10H2 (reported May 18, 2022)
• 37913, 1,584, CLR, Charolais South Federal 15-10H (reported May 19, 2022)
• 32426, 74 -- typical for BR, BR, Cleetwood 21-27MBh-A (reported May 19, 2022)
  

Hess reports six dry holes, #37136 - #37141, inclusive: BW-Rolfson wells in McKenzie County

RBN Energy: LNG may not join as global commodity, but markets seem just fine with that.

In the nearly 60 years since its inception, the LNG industry has changed significantly. Once a market in which cargoes were sold under long-term, point-to-point contracts in dedicated ships, it has evolved into one in which destination flexibility accounts for an increasing share of LNG trade, with more volumes being sold under short- and medium-term contracts. The changes reflect a trend toward the increasing commoditization of LNG, with the similarities between the LNG and crude oil markets becoming apparent. In today’s RBN blog, we look at the differences in how the oil and LNG markets have developed, whether LNG might achieve the same commodity status as oil, and why the major market players may not want LNG to follow the path of its older cousin.

All this, a huge draw and more: