Four Graphs / Charts From This Week -- December 7, 2022

• refiners are operating at an astounding 95.5% of their operating capacity;

D5S+2 -- December 7, 2022

From oilprice:

There's a heck of a lot of "stuff" packed into those two "headlines."

One can argue whether those two "headlines" are factual, accurate, likely to change, unlikely to change, but they certainly fit my "world myth" at the moment. I'm sure Peter Zeihan is watching closely, at least the Russian oil export story.

Two quick comments and then I'll bring up the links to the two articles. I haven't seen the articles yet.

First, I agree 1,000% that the downside to the oil markets is limited. Perhaps it plays out this way:

• short-term: a reset to $75 / $70 (Brent/WTI); and, then,
• mid-term: a return to prices oil bulls like

Second, if accurate that Russia's oil exports nosedive following a price cap,

• one can arguably say that nothing is going well for Mr Putin.

Drones attacking airbases deep inside Russia, southeast of Moscow are just the tip of his problems.

Earlier today Putin brought up the "nuclear card" again -- probably about the same time he was briefed that his crude oil exports were going "south" --  and I'm speaking metaphorically, not geographically or directionally.

Now the links.

Alex Kimani has been quite active the past few days; now again. 

Now, the second link.

Well, well, well. Alex Kimani again. Just after I mentioned that Alex has been quite active the past few days.

Russian crude-oil exports have taken a serious hit since new sanctions and a price cap came into force earlier in the week, with the Wall Street Journal reporting that figures from two data providers on Russian crude both show a big fall, though their magnitudes differ. 

According to one commodity-analytics firm Kpler, Russia’s seaborne exports fell by nearly 500,000 barrels per day on Tuesday, a 16% decline from the November average of 3.08 million bpd. 

Meanwhile, TankerTrackers.com, which tracks sea vessels using signals and satellite images, has reported that Russia's crude exports fell by nearly 50%. With shipments from the Black Sea and Baltic ports accounting for most of the fall.

Some will immediately say this is all temporary -- due to the Turks -- and within a day or two, the Russians and Turks will sort it out. 

So, we'll see. 

But, can you imagine what oil traders are going through right now? Absolute pandemonium, confusion, no clue what's going on. There are so many moving parts. This is probably not a good time to be short oil.

******************************
More

But Not Ready For Prime Time

I said this at the top (see above):

First, I agree 1,000% that the downside to the oil markets is limited. Perhaps it plays out this way:

• short-term: a reset to $75 / $70 (Brent/WTI); and, then,
• mid-term: a return to prices oil bulls like

If that's accurate:

• US oil companies will do just fine at $75 / $70;
• sure, their profits will take a hit, but they've been through much worse;
• in the big scheme of things, $75 / $70 is pretty good.

But long term, as soon as a year from now, it could be really, really good for US oil companies.

Think of it this way. A year ago, there were three actors on the global stage (in the theater of oil):

• the US
• OPEC
• Russia

Today, there are two:

• the US
• Saudi Arabia

A year from now, there will still be only two:

• the US
• Saudi Arabia
  

And if the global economy "explodes" in a good way -- a year from now --

• coming out of a pandemic;
• coming out of a global recession;
• the demand for oil might be more than just noteworthy.

But between "now" (tonight to be specific) and "then" (December 7, 2023) it could be quite the exploding Ferris wheel ride. But I think I read something on twitter today to the effect that, that is when fortunes are made.

Atmospheric CO2 -- November, 2022, Data

With all the volcanoes around the world right now that are active, and some erupting, including two actually near the Mauna Loa Observatory, at least one reader is wondering why the most recent atmospheric CO2 number is not a whole lot higher. 

The increase y/y is about what we've seen for the past several years. It's almost as if the volcanoes are having no effect on atmospheric CO2.

Jeffrey Epstein didn't kill himself.

Link here.

Natural Gas -- US -- EIA Update -- December 7, 2022

Link here.

With regard to three states whose biggest source was wind, I would need to know if this is installed capacity or actual consumption.

New Mexico's Oil Production Could Exceed That Of Mexico Before The End Of Next Year -- December 7, 2022

Re-posting: this is an incredible story picked up by Alex Kimani over at Oilprice. I don't know the geographic footprint of New Mexico's oil production or that of Mexico but I would consider New Mexico's footprint very, very small compared to that of Mexico, and New Mexico has no off-shore production. In addition, production from federal lands in New Mexico must be problematic -- all in all, it's just remarkable that New Mexico's oil production is comparable to that of Mexico, or actually exceeds Mexico's production.

New Mexico's crude oil production likely to exceed that of Mexico sometime in the next couple of months:

• not official yet, but projected;
• Mexico crude oil production (link here): 1.700 million bopd for the past two months (July, August)
• New Mexico crude oil production (link here to EIA): 1.681 million bopd (August)
• going forward the gap will narrow and New Mexico is likely to produce more oil than Mexico

Eight New Permits; Eight Permits Renewed; Eight DUCs Reported As Completed -- Just How Prolific Is US Shale Oil? New Mexico Crude Oil Production Likely To Exceed Mexico's Crude Oil Production -- December 7, 2022

Texas: "flu-like illnesses" surging in Tarrant County (Ft Worth); abuts Dallas County; home of DFW International Airport.

• "Flu like illnesses": seasonal flu; Covid-19; and, pneumococcal.
• vaccines available for all three diseases;
  
• national data suggests vaccinations for "seasonal flu" down this year compared to last year;

DE: increases dividend, quarterly from $1.13 to $1.20. Payable next February 8, 2023; record date, December 30, 2022. 

The most notable story of the day: New Mexico's crude oil production likely to exceed that of Mexico sometime in the next couple of months:

• not official yet, but projected;
• Mexico crude oil production (link here): 1.700 million bopd for the past two months (July, August)
• New Mexico crude oil production (link here to EIA): 1.681 million bopd (August)
• going forward the gap will narrow and New Mexico is likely to produce more oil than Mexico

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

Active rigs: 43.

WTI: $72.40 -- down another $1.85 today.

Natural gas: $5.816.

Eight new permits, #39469 - #39476, inclusive:

• Operators: Ovintiv (5); MRO (2); Lime Rock Resources
• Fields: Siverston (McKenzie County); Killdeer (Dunn County); Murphy Creek (Dunn County)
• Comments:
• Lime Rock Resources has a permit for a Federal Kubik Trust well, NWNW 17-143-95; 
• to be sited 553 FNL and 408 FWL;
• MRO has permits for a McConnell well and a Sagler well, SESW 33-146-94; 
• the McConnell to be sited 360 FSL and 1819 FWL; and, the Sagler to be sited 1att 360 FSL and 1859 FWL
• Ovintiv has permit for four Newman wells, SESW 21-150-97; 
• to be sited 409 FSL and between 1954 FWL and 2174 FWL

Eight permits renewed:

• BR (4): four CCU Plymouth permits in Dunn County
• Petro-Hunt (2): two Noonan Federal permits in McKenzie County
• Lime Rock: a State B permit in Dunn County;
• Slawson: an Armada Federal permit, NW SW 14-151-92

Eight producing wells (DUCs) reported as completed:

• 38728, 1,239, Kraken, Raymond 16-21 2H,
• 38729, 1,105, Kraken, Raymond LW 16-21 12H,
• 38602, 1,239, WPX, Samuel Packineau 8HA,
• 38603, 863 (no typo), WPX, Samuel Packineau 8HW,
• 38432, 1,836, WPX, Wounded Face 14-15HC,
• 38433, 1,883, WPX, Wounded Face 14-15HX,
• 38434, 2,243, WPX, Wounded Face 14-15HB,
• 38736, 1,003, WPX, Samuel Packineau 8HB,

Another interesting well name change:

• 36162, CLR changes the name of its Fuller 11-2H1 well to the new name: Fuller 11ND;

The Road To New England -- December 7, 2022

Re-posting this story coming out of New Hampshire. We anticipated this story some months ago (see tag, "road_to_New_England"). Also posted here.

Two things jumped out at me in this story:

• again: another New Hampshire journalist not mentioning the state's moratorium on natural gas pipelines which would have solved the problem years ago; and, at the end of the article,
• the finger pointing begins.

New Hampshire.

“It all comes down to liquefied natural gas,” said Sam Evans-Brown, executive director of Clean Energy New Hampshire. The current market volatility, Evans-Brown said, is making electricity both expensive and hard to purchase. [Doesn't mention the natural gas pipeline moratorium.]

 Memo for Clean Energy New Hampshire: it's not LNG, it's the pipelines that carry LNG.

Situation:

Rates are already at all-time historic highs – and there’s no indication that the new rates will provide any relief to those already struggling with high energy costs. For example, when this process played out in Connecticut, rates went from 12 cents per kilowatt hour to 24 cents. In Western Massachusetts, rates went from 15.3 cents to 22 cents, while the eastern part of the state went from 17 to 25.5 cents. Right now, Eversource’s New Hampshire rates are already 22 cents, a rate that’s been in effect since August.

Eversource New Hampshire proposes new rates every six months; the state regulators approve/reject. The new rate begins February, 2023, and the new rates must be provided to the state regulator this week.

New England: its largest electric generator, Mystic Generating Station in Everett, MA, runs on LNG, which the writer reminds readers that LNG is, OMG, a fossil fuel. 

Again, no mention of the pipeline moratorium. 

Now:

• this week, as noted, Eversource New Hampshire needs to propose new rates that become effective, February, 2023

Eversource which generally prices LNG between $2 and $8 is now competing with European prices that are now running $65 to $100. 

The writer than blames the weather (winter -- apparently something new and/or unique in New England) and again fails to mention the pipeline moratorium.

Eversource wants the process to include the states Office of the Consumer Advocate, the Department of Energy, and the Public Utilities Commission. 

The Office of the Consumer Advocate wouldn't go along. He was smart enough to see that Eversource was trying to share the blame or deflect the blame.

It will be fascinating to see what price natural gas (you know, a fossil fuel) suppliers are willing to offer Eversource. 

The action begins this week, on /about December 8, 2022 -- tomorrow.

Road To New England -- Electric Rate Hikes -- And It's All About LNG -- December 7, 2022

After posting the original post below, a read sent me this story from New Hampshire.  

A tanker full of liquefied natural gas heads to New England’s largest electricity generator. Then, it abruptly changes course, abandoning its North American contract for a higher bidder in Europe.

Scenarios like this are driving up energy costs across New England, experts warn. And that makes it nearly impossible to predict just how expensive electricity will become this winter. 

“It all comes down to liquefied natural gas,” said Sam Evans-Brown, executive director of Clean Energy New Hampshire. The current market volatility, Evans-Brown said, is making electricity both expensive and hard to purchase.

And now, it’s time for two of the state’s utilities to do exactly that: go to market and purchase energy for a six-month period that starts in February. But energy experts are concerned that a routine process could go haywire given this market volatility. 

Rates are already at all-time historic highs – and there’s no indication that the new rates will provide any relief to those already struggling with high energy costs. For example, when this process played out in Connecticut, rates went from 12 cents per kilowatt hour to 24 cents. In Western Massachusetts, rates went from 15.3 cents to 22 cents, while the eastern part of the state went from 17 to 25.5 cents. Right now, Eversource’s New Hampshire rates are already 22 cents, a rate that’s been in effect since August.

Much, much more at the link.

***************************
Original Post

Engie: this is pretty cool. Yesterday on the blog:

December 6, 2022: Sempra signs LNG supply deal with Engie for Port Arthur project

• Engie: French power company
• Phase 1 of the proposed Port Arthur LNG project under development
• Engie will purchase 875 metric tones / year; 15-year term

The obvious question was not asked. What else is Engie up to?

Glad you asked.

Link here. 

Note: Engie (French) is now buying LNG from the United States.

What makes this so interesting is this: do you all remember that great story and that great map from January 29, 2018 -- three years ago?

At that time, New England was importing Russian LNG transiting through the French Engie terminal.

So, we now have New England competing with Europe for US LNG from the Permian. 

From that January 29, 2018, story:

From Bloomberg today: as first LNG tanker from Siberia awaits landing in Boston, a second ship may be coming.

A second tanker carrying Russian natural gas may be on the way to the U.S., following in the footsteps of a ship now sitting near Boston Harbor with a similar cargo.

The Gaselys tanker, which has been sitting for two days in the waters outside of Boston, carries liquefied natural gas originally produced in Siberia, according to vessel tracking data. The ship, poised to dock at Engie SA's Everett import terminal, would be the first LNG shipment from anywhere other than Trinidad and Tobago in about three years.
Now Engie is poised to pick up a second Russian cargo from northern France that may land in Massachusetts on Feb. 15, according to Kpler SAS, a cargo-tracking company.

The tankers would arrive at a time when New England is paying a hefty premium for supplies as pipeline capacity limits flows of cheap shale gas from other parts of the country in the peak demand season.

The tanker named Provalys was sailing to France's Dunkirk terminal to pick up LNG on Friday and unload a small amount of it nearby in Belgium before heading across the Atlantic, the cargo tracker said. Engie couldn't be immediately reached for comment about this shipment.

Gaselys loaded its cargo at the Isle of Grain terminal near London, where another tanker had unloaded the Russian LNG. French energy giant Engie bought the cargo on the spot market "due to the high natural gas demand during the recent record cold snap," Carol Churchill, a spokeswoman at Engie's Everett terminal said in an email Wednesday.

Again, unless I missed it, Bloomberg does not mention the de facto natural gas pipeline moratorium in New England.

EIA's Weekly Petroleum Report -- December 7, 2022

Weekly Petroleum Report.

 The API report from yesterday.  

The EIA weekly petroleum report today:

• commercial crude oil inventories: decreased by 5.2 million bbls
• at 413.9 million bbls, US commercial crude oil inventories are 9% below the five-year aveerage
  
• refiners are operating at an astounding 95.5% of their operating capacity;
• US crude oil imports: yawn.
  
• US distillate inventories increased by 6.2 million bbls but are still 9% below the five-year average.
  
• jet fuel supplied was up a pretty remarkable 7.5% considering no traveling holiday this past week
  
• the gasoline demand data will be posted later today 
• WTI: price remains "flat" today after huge drop the past few days;
  

Gasoline demand, link here:

***************************
How Quickly Things Change

Engie: this is pretty cool. Yesterday on the blog:

December 6, 2022: Sempra signs LNG supply deal with Engie for Port Arthur project

• Engie: French power company
• Phase 1 of the proposed Port Arthur LNG project under development
• Engie will purchase 875 metric tones / year; 15-year term

The obvious question was not asked. What else is Engie up to?

Glad you asked.

Link here. 

Note: Engie (French) is now buying LNG from the United States.

What makes this so interesting is this: do you all remember that great story and that great map from January 29, 2018 -- three years ago?

At that time, New England was importing Russian LNG transiting through the French Engie terminal.

So, we now have New England competing with Europe for US LNG from the Permian. 

From that January 29, 2018, story:

From Bloomberg today: as first LNG tanker from Siberia awaits landing in Boston, a second ship may be coming.

A second tanker carrying Russian natural gas may be on the way to the U.S., following in the footsteps of a ship now sitting near Boston Harbor with a similar cargo.

The Gaselys tanker, which has been sitting for two days in the waters outside of Boston, carries liquefied natural gas originally produced in Siberia, according to vessel tracking data. The ship, poised to dock at Engie SA's Everett import terminal, would be the first LNG shipment from anywhere other than Trinidad and Tobago in about three years.
Now Engie is poised to pick up a second Russian cargo from northern France that may land in Massachusetts on Feb. 15, according to Kpler SAS, a cargo-tracking company.

The tankers would arrive at a time when New England is paying a hefty premium for supplies as pipeline capacity limits flows of cheap shale gas from other parts of the country in the peak demand season.

The tanker named Provalys was sailing to France's Dunkirk terminal to pick up LNG on Friday and unload a small amount of it nearby in Belgium before heading across the Atlantic, the cargo tracker said. Engie couldn't be immediately reached for comment about this shipment.

Gaselys loaded its cargo at the Isle of Grain terminal near London, where another tanker had unloaded the Russian LNG. French energy giant Engie bought the cargo on the spot market "due to the high natural gas demand during the recent record cold snap," Carol Churchill, a spokeswoman at Engie's Everett terminal said in an email Wednesday.

Again, unless I missed it, Bloomberg does not mention the de facto natural gas pipeline moratorium in New England.

******************************
Barstool Math

Link here.

C'mon man. 

Covid-19 Update -- December 7, 2022

Updates

December 8, 2022: as Peter Zeihan would say, "the magic of mRNA." Both Moderna and Pfizer have an updated Covid vaccine that "covers" the newest Omicron strains, and which adults are now receiving. Today, the FDA approved these updated Covid vaccines for infant and children > 6 months old. See this link.

Original Post

Elevator speech in Los Angeles:

• Covid-19 cases surging again; hospitals feeling the impact
• the Covid-19 variant remains "omicron" -- new sub-variants
• the new sub-variants, BQ.1 and BQ.1.1 are offshoots of previous strain (sub-variant) that caused the previous surge, BA.5 -- very infectious but not particularly lethal
• the current Pfizer vaccine protects against the newest sub-variants

We'll see the updated CDC figures later this week, but for now, coming out of Los Angeles:

• Los Angeles County appears to be in the midst of another full-blown coronavirus surge, with cases doubling since Thanksgiving.
• As L.A. County coronavirus cases leap, more people head to hospitals.
  
• The big rise — which partially captures but likely does not fully reflect exposures over the Thanksgiving holiday — is prompting increasingly urgent calls for residents to get up to date on their vaccines and consider taking other preventive steps to stymie viral transmission and severe illness. 
• Also on the rise is the number of coronavirus-positive patients being cared for in hospitals, sparking concerns about renewed stress on the region’s healthcare system and raising the specter of an indoor public mask mandate if the trends continue, possibly soon after New Year’s Day. 
• COVID-19 deaths also have begun to increase. 
• Fatality rates are highest among those who either haven’t been vaccinated or are not up to date on their booster shot.
• More coronavirus news
• Defense Secretary Lloyd J. Austin III said he wanted to keep the military’s COVID-19 vaccine mandate in place.
• Pfizer is asking U.S. regulators to authorize its updated COVID-19 vaccine for children younger than 5 — not as a booster but as part of their initial series of shots. 

The California state-wide Covid-19 statistics don't yet show a surge in the number of cases. Link here. 

New York appears to be in the midst of a bigger surge than California:

Let's see if we can find another source to corroborate The LA Times story above. Shouldn't be too hard, if accurate.

Okay, so here it is, from the dailynews: 

To put the 29 deaths over three days in perspective, Los Angeles averages one traffic fatality every 30 hours. Link here. So, 30 deaths over three days is 10x the number of expected traffic fatalities. Ten times.

Coverage, link here:

Comment: I wonder if folks remember the original reason for the drastic measures taken in 2020 to control the pandemic? 

Comment: as Peter Zeihan has pointed out, the fact that the newest version of the Pfizer vaccine provides coverage against the current variants causing the surge shows the "magic" of mRNA.

Blogging Stats -- December 7, 2022

At the sidebar, the number of posts by year:

It is projected, the blog will end with 4,194 posts for this year, 2022, which compares to 4,313 in 2013, the year with the most posts. To date, 2013 is the only year in which the number of posts broke 4,000. 

I try to consolidate new posts as much as possible. In addition, for every new post, I probably update as many as ten (maybe more) older posts. I updater a lot of old posts.

Worst-Kept Secret -- December 7, 2022

AppleCar: link here.

• to be released in 2026;
• to be $100,000+

EVs: link here. Scorecard.

Meanwhile, lots of questions (and this is in The WSJ) about the Tesla semi (truck):

Three Wells Coming Off Confidential List Today -- December 7, 2022 -- A Day That Will Live In Infamy

D5S +2: late yesterday afternoon, link here --

• Russia's seaborne crude oil exports have halved in the past 48 hours.

Peter Zeihan today:

Unless you live under a rock, you've probably heard that Europe has placed a $60 price cap on Russian crude exports.

This is uncharted territory for EVERYONE, so I'm not here to predict how all this will play out. Instead, I want to lay out the matrix of factors that you should keep top of mind as this unfolds.

But the real fun is a "Red Pill" moment: The single global price for crude that we've all enjoyed for the last 85+ years...GONE. Meaning that global shipping becomes riskier and riskier by the day.

In terms of energy, we are well on our way to how things were in the 1930s. Exciting right?

Putin, Poland, and Abrams: two links --

• ZeroHedge: US approves sale of almost $4 billion in M1 Abrams tanks to Poland.
• Peter Zeihan: 

Apple: getting all the headlines late yesterday afternoon and will be a big story today but for most of us, it seems like really, really old news. Link here. 

When the news broke yesterday afternoon, TSM spiked from <$80 to $83.54. In pre-market trading this a.m., it appears TSM will shed 75 cents at the open.

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

The Far Side: link here.

Active rigs: 43.

WTI: $74.66. (D5S+12 = December 5th sanctions + 2 days)

Natural gas: $5.656.

Thursday, December 8, 2022: 19 for the month, 128 or the quarter,   672 for the year.
38895, conf, CLR, Bonney 10-3HSL1,
38851, conf, Crescent Point, CPEUSC Lowe 5-18-19-158N-99W-MBH-LL,

Wednesday, December 7, 2022: 17 for the month, 126 for the quarter, 670 for the year.
38894, conf, CLR, Bonney 9-3H,
38850, conf, Crescent Point, CPEUSC Fantuz 2-13-24-158N-100W-MBH,
38348, conf, Hunt, Smoky Butte 160-100-31-30H 5, 

RBN Energy: why did the frack spread collapse? And what's next?

Over the past nine months, the frac spread —a rough-cut measure of the value of extracting NGLs from raw gas at gas processing plants — has taken a terrifying plunge, from $9.82/MMBtu in early March to only $2.16/MMBtu on Monday.

Given that the frac spread is the differential between the price of natural gas and the weighted average price of a typical barrel of NGLs on a dollars-per-MMBtu basis, a 78% nosedive like that suggests that something is seriously out of whack, and that at least some market players are taking a real hit financially. In today’s RBN blog, we discuss the frac spread, the drivers behind its recent freefall, and what it would take for gas processing margins to rebound.