Right Now, The Second-Most Tracked Aircraft In The World Is A Russian Wide-Body -- October 8, 2022

Link here. A dynamic link.

Seattle.

The largest a/c, the Antoonov An-225 Mriya mentioned below was destroyed in Ukraine during the current skirmish. Link: https://www.fox10phoenix.com/news/worlds-largest-plane-antonov-an-225-destroyed-in-ukraine-russian-conflict.  On or about February 27, 2022.

From wiki.

The Antonov An-124 Ruslan (Ukrainian: Ан-124 Руслан; Russian: Антонов Ан-124 Руслан, lit. 'Ruslan'; NATO reporting name: Condor) is a large, strategic airlift, four-engined aircraft that was designed in the 1980s by the Antonov design bureau in the Ukrainian SSR, then part of the Soviet Union (USSR). 

The An-124 is the world's 2nd heaviest gross weight production cargo airplane and heaviest operating cargo aircraft, behind the destroyed one-off Antonov An-225 Mriya (a greatly enlarged design based on the An-124) and the Boeing 747-8. 

The An-124 remains the largest military transport aircraft in service. The lead designer of the An-124 (and the An-225) was Viktor Tolmachev.

During development it was known as Izdeliye 400 (Product #400) in house, and An-40 in the West. First flown in 1982, civil certification was issued on 30 December 1992. In July 2013, 26 An-124s were in commercial service with 10 on order.

In August 2014, it was reported that plans to resume joint production of the Antonov An-124 had been shelved due to the ongoing political tensions between Russia and Ukraine. 

The sole remaining production facility is Russia's Aviastar-SP in Ulyanovsk. The various operators of the An-124 are in discussions with respect to the continuing airworthiness certification of the individual An-124 planes. The original designer of the An-124 is responsible for managing the certification process for its own products, but the Russia-Ukraine conflicts are making this process difficult to manage. 

In 2019, there were 26 An-124s in commercial service.

Getting Ready For Halloween -- October 8, 2022

Sophia is going as Elsa, in Frozen.

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Travel Plans

Early autumn holiday plans.

May and I will be traveling to Nashville to see Arianna, oldest grandchild, Vanderbilt University, next week, mid-October.

I will be traveling to Portland, OR, to see the twin in late October -- Halloween!

May will be traveling to Portland, OR, to enjoy Thanksgiving with the twins. 

Probably no travel in December, at least not by air.

The round trip flight, Dallas - Portland, was trending toward $1,000 this summer. My fare for late October: $365. 

Themes -- 2022

Locator: 3320022A.

Briefly:

• mRNA
  
• Ukraine
• crypto
• diesel
• coal 
• LNG
• WTI
• US policy: "no more drilling"
• Prince MBS: "Saudi first"
  

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2022

December 4, 2022, added:

• Apple: re-shoring; leaving China
  

European de-industrialization:

• October 9, 2022 -- where this theme will be followed.

This was originally posted July 14, 2022, link here, but somehow the link was broken / lost. Nothing new here, just some housekeeping. 

For the blog:

• a new "2022 Themes": "not the future" -- things we're not going to see despite "group think"
  

Bullish:

• the way WTI has performed in past thirty days has been absolutely perfect for investors
• will explain later
• Buffett has it figured out
• see RBN Energy below
  

Gasoline demand: wow!

• stand-alone post here.
• possible explanation? I don't buy it (no pun intended) 
• to be clear, I don't "accept" the possible explanation 

Diesel: with regard to US energy, this might be the big story for 2022;

Coal:

• Germany:
• solar farm removed for coal mine
• village to be destroyed for coal mine;
• India:
  

Dire:

• before twitter went down this a.m., everything pointed to deteriorating conditions:
• energy situation in Europe;
• war in Ukraine;
• US economy;
• Tesla: Karpathy departs; gives no reason; amicable separation apparently;
• Tesla's head of AI is out; at The Verge;
• Karpathy is Tesla's AI
  
• Tesla without AI is just another car company -- Elon Musk
  
• PEMEX: link at twitter;
  

Wages:

• inflation: 9.1%
• real hourly wages: down 4.1%

Wages? What inflationary pressure. Link here:  real hourly earnings hit a new all-time low.

Crypto:

• third miner files for bankruptcy: Celsius
• big question: how does this affect two miners coming to MonDak?
• minor (pun intended): three bankruptcies; is this the end for crypto, or is this simply good miners pushing out bad miners? 
• worse news: depositors will lose their entire holdings.
• FTX: fails; $32 billion lost (literally) overnight.
  

LNG:

• COP to take 30% stake in Sempra's Port Arthur LNG project; link here; and, press release here;

Aluminum cans:

• as if we didn't have enough to worry about -- California's recycling program crumbles
• beer industry will struggle without aluminum cans
• affects small brewers
• almost reads like a press release from glass bottle suppliers;
• I don't see a problem
• I won't drink from a can if given a choice, and I never buy beer in a can; always bottles;
• more on this later

OXY: Buffett is nearing the "magic" 20% mark

• at 20%, everything changes
• OXY's net income expected to exceed $10 billion this year
• link here.
• at 20%, the threshold that would let it record its proportionate share of Occidental's earnings with its own results, known as the equity method of accounting.
• also owns $10 billion of Occidental preferred stock that throws off $800 million of annual dividends, and has warrants to buy another 83.9 million common shares for $5 billion.
• Berkshire uses the equity method for its 26.6% stake in Kraft Heinz Co
• OXY's share price has doubled this year
• in 2010, Berkshire bought the BNSF railroad for $26.5 billion after earlier accumulating a 22.6% stake.

Climate:

• link here at twitter;
• if accurate, it changes everything;
• stand-alone here.

ESG Is Dead -- October 8, 2022

My "oil" portfolios are outperforming all my other "portfolios." 

ESG is dead. Link here.

From April 17, 2022:

Link here. 

From "Themes."

The energy transition is dead. Tracked here. 

• ESG is dead, too. Tracked here.

Energy Transition is dead. 

I don't subscribe to Barron's but that may be what I may think about as a birthday present. But then I read somewhere that Barron's has really gone downhill. I don't know. 

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RBN Energy

RBN Energy yesterday: E&Ps shower cash on shareholders as cash flows rise with soaring oil and gas prices.

Just two years ago, the onset of the pandemic slashed the share prices of many oil and gas producers and the idea of parking cash in a U.S. E&P seemed to make as much sense as leaving your Porsche on a midtown street with the keys in it and the motor running. But times — and commodity prices — have changed, and hydrocarbon producers have transformed themselves into cash-flow-generating machines that attract the sagest investors. Want proof? Warren Buffett’s Berkshire Hathaway recently purchased another 10.4 million shares of Occidental Petroleum (Oxy) for over $500 million, bringing its stake in the company to a substantial 16.4%. In today's RBN blog, we detail how the major U.S. E&Ps are allocating their cash flow to keep investors happy.

What a difference two years makes! In our July 2020 blog Stayin’ Alive, we discussed Oxy’s chances of recovering from the massive $36.5 billion debt it had accumulated in its ill-timed $58 billion acquisition of Anadarko Petroleum just before oil prices started to plummet in mid-2019. With its investment rating reduced from investment grade to junk, the company slashed its quarterly dividend from $0.79/share to a token $0.01, cut capital spending, and launched a major divestiture program. But soaring commodity prices have subsequently bailed out Oxy and the industry. Embracing fiscal discipline and eschewing production growth in favor of cash generation, E&Ps are transforming into significant yield vehicles — a turnaround that's led to a fivefold increase in the S&P E&P stock index. Producers who survived the pandemic with strong balance sheets, such as Pioneer Natural Resources, Diamondback Energy, Devon Energy, and EOG Resources, are already providing 10%-plus annual returns through a combination of regular and variable dividends and share repurchases. Others, like Oxy, have channeled growing cash flows to meet debt-reduction targets as they transition to significant shareholder returns.

RBN Energy today: refinery shutdowns around the world, part 2.

We often tend to focus on the U.S. refining picture, but, just like crude oil, refined products trade globally, and international closures ultimately have the same effect as domestic ones on the worldwide products market. Recent international closures have been distributed throughout the world — concentrated in developed countries, including several in Europe, as well as Japan, Singapore, Australia and New Zealand, but also in some developing economies like South Africa and Sri Lanka. Most of these capacity reductions were driven by the same forces as in the U.S., namely, poor economics as a result of the pandemic-lockdown-driven demand plunge in 2020 and 2021, as well as expectations that margins would take a long time to recover post-COVID. Of course, worries that the energy transition and policies to that end would suppress demand in the long-term also played a key role, as did some fundamental competitiveness issues at individual facilities. In today’s RBN blog, we take a closer look at the more than 2 MMb/d of international capacity closures since 2019.

The [London] Financial Times: The New Oil War -- October 8, 2022

Link here.

I called it a few days ago. Whoo-hoo!

How in the world did Biden get us into a war with Saudi Arabia?

First, he attempts to cut off our oil from Canada by killing the Keystone XL. Then he slow rolls US shale by delaying the permit approval process, then starts an oil war with Saudi Arabia, and, now looks to ban all off shore drilling.

Is there a pattern here?

In the process he has killed ESG and renewable energy. 

ESG is dead. Link here.

Renewable energy will remain a niche player.

Is there a pattern here?

To fill the gap: nuclear energy and coal.

Nuclear energy. Being shut down? 

Coal. 

ESG and renewable energy will kill coal.  

It's difficult to connect the dots unless one understands there are not always conventional dots to connect.

In this case, two huge US players have a huge connection with coal.  

The first:

Before entering politics, this West Virginian helped found and was the president of Enersystems, a coal brokerage company his family owns and operates.

At some point [early in his political career], this coalmonger moved his Enersystems [coal] holdings into a blind trust. 

In a financial disclosure from 2020, this US senator reported that his non-public shares of Enersystems [coal] were worth between $1 million and $5 million and that between 2011 and 2020 he was paid $5,211,154 in dividend income from them. 

In 2020, he received over $500,000 in dividends. 

Enersystems [coal] is 71% of his investment income and 30% of his net worth. 

Most remarkably, this coalmonger is the chair of the US Senate Committee on Energy and Natural Resources. 

He has been listed as one of the 20 richest senators. 

Biden has depended on this individual to get key bills passed.

The second:

• either the largest or second largest mover of coal by rail in the US.
• in the 2022 survey, he was ranked the 4th richest man in the US.
• I doubt the president of the United States would ever say "no" to a phone call from the county's fourth richest individual who also happens to be a Democrat.
  

Living In The World Of Leslie Nielsen

Link here.

"Two words: made in America."

And it gets worse. Link here.

Sakhalin -- Closer Look And Update -- October 8, 2022

Sakhalin- oil and gas project, link to NS Energy: 

The oil and gas from the Chayvo, Odoptu and Arkutun-Dagi fields is transported through a pipeline to the Chayvo onshore processing facility. The capacity of the processing facility is approximately 250,000 barrels of oil and 800 million cubic feet (Mcf) of gas a day.

Link to Giovanni Staunovo. 

Link here to Peter Zeihan. 

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Background

The geography and geo-politics:

• Sakhaliln Oblast, wiki.
• the Russian geographical island, Sakhalin, wiki.

Oil and natural gas:

In 1996, two large consortia, Sakhalin-I and Sakhalin-II, signed contracts to explore for oil and gas off the northeast coast of the island. The two consortia were estimated[by whom?] to spend a combined US$21 billion on the two projects; costs had almost doubled to $37 billion as of September 2006, triggering Russian governmental opposition. The cost will include an estimated US$1 billion to upgrade the island's infrastructure: roads, bridges, waste management sites, airports, railways, communications systems, and ports. In addition, Sakhalin-III-through-VI are in various early stages of development.

The Sakhalin I project, managed by Exxon Neftegas Limited (ENL), completed a production-sharing agreement (PSA) between the Sakhalin I consortium, the Russian Federation, and the Sakhalin government. Russia is in the process of building a 140-mile pipeline across the Tatar Strait from Sakhalin Island to De-Kastri terminal on the Russian mainland. From De-Kastri, the resource will be loaded onto tankers for transport to East Asian markets, namely Japan, South Korea and China.

A second consortium, Sakhalin Energy Investment Company Ltd (Sakhalin Energy), is managing the Sakhalin II project. It has completed the first production-sharing agreement (PSA) with the Russian Federation. Sakhalin Energy will build two 800-km pipelines running from the northeast of the island to Prigorodnoye (Prigorodnoe) in Aniva Bay at the southern end

The consortium will also build, at Prigorodnoye, the first liquefied natural gas (LNG) plant to be built in Russia. The oil and gas are also bound for East Asian markets.

Sakhalin-1, wiki.

The Sakhalin-I (Russian: Сахалин-1) project, a sister project to Sakhalin-II, is a consortium for production of oil and gas on Sakhalin Island and immediately offshore. It operates three fields in the Okhotsk Sea: Chayvo, Odoptu and Arkutun-Dagi.

In 1996, the consortium completed a production-sharing agreement between the Sakhalin-I consortium, the Russian Federation and the Sakhalin government. The consortium was managed and operated by Exxon Neftegas Limited (ENL), a unit of ExxonMobil,[1] until Exxon's withdrawal in March 2022 following the 2022 Russian Invasion of Ukraine.[2] The Russian government froze Exxon's investment in August 2022 and ordered its transfer to a newly created Russian company the following October.

Sakhalin-II, wiki.

The Sakhalin-2 (Russian: Сахалин-2) project is an oil and gas development in Sakhalin Island, Russia. It includes development of the Piltun-Astokhskoye oil field and the Lunskoye natural gas field offshore Sakhalin Island in the Okhotsk Sea, and associated infrastructure onshore. The project is managed and operated by Sakhalin Energy Investment Company Ltd. (Sakhalin Energy).

Sakhalin-2 includes the first liquefied natural gas plant in Russia. The development is situated in areas previously little touched by human activity, causing various groups to criticize the development activities and the impact they have on the local environment.

The original consortium, was a joint venture between Marathon Oil, McDermott, and Mitsubishi. They won a tender from the Russian Government in 1992. Later that year Royal Dutch Shell joined the joint venture. In 1994 the JV incorporated in Bermuda to form Sakhalin Energy Investment Company Ltd. Sakhalin Energy, led by Marathon, negotiated the first PSA directly with representatives of the Russian government. The Russian Party maintained project planning and budget approval. The initial investment decision was to proceed with the oil field development led by Marathon. McDermott sold its share to the other partners in 1997 and Marathon traded its shares to Shell for an interest in other properties (the BP operated Foinaven field, near the Shetland Islands, and an eight block area in the Gulf of Mexico—including the Ursa field) in 2000.

The decision to proceed with the gas project investment was made in 2003. The expected budget increased dramatically by 2005–2006. The pipeline portion of the gas project was heavily criticized due to environmental issues. Legal proceeding on perceived violation of the Russian environmental regulations were initiated. 

In the result, The Russian government ordered to terminate the project in September 2006. 

Under legal and political pressure, the consortium was forced to sell a majority stake to Gazprom. On 21 December, Gazprom took control over a 50%-plus-one-share stake in the project by signing an agreement with Royal Dutch Shell. Russian President Vladimir Putin attended the signing ceremony in Moscow and indicated that environmental issues had been resolved.

The LNG plant was inaugurated on 18 February 2009. The first cargo was loaded to the LNG carrier Grand Aniva at the end of March 2009.

After the Russian invasion of Ukraine in February 2022, Shell said that it would exit Sakhalin-2 and other ventures in Russia. On 30 June 2022, Russian President Vladimir Putin signed a decree ordering the transfer of the Sakhalin-2 project to a new domestic operator. Foreign investors will be required to apply to retain their existing shares in the new Russian company within a month. The Russian government will then decide whether to allow foreign shareholders to keep their stake. If they are rejected, the government will sell the foreign shareholder’s stake and keep the proceeds in the shareholder’s special account.

Sakhalin has been mentioned often on the blog: search Sakhalin. 

The Costco Page -- October 8, 2022

Our older daughter went to Costco yesterday to have tires rotated. While waiting ...

No photo: hot dog and 20-oz drink, still. $1.50.

Rotisserie chicken: still, $4.99.

65" Samsung television: was $1,099; dropped in price to $499. Sophia got one.

The Wall Street Journal: link here --

Shipping and commodities prices have seen steady declines recently, but Costco Wholesale Corp. isn’t yet in a position to pass savings on to customers, the CFO said. 

Pricing at the retailer’s 839 global warehouse stores hasn’t decreased, according to Chief Financial Officer Richard Galanti, despite the lower prices for shipping goods and for things like gasoline and steel. 

Costco in some cases locked in prices it pays to suppliers months ago and inflationary pressures from rising labor costs persist, which means the drops in shipping and commodities prices aren’t necessarily benefiting the company’s balance sheet yet.