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Tuesday, January 10, 2023

US Energy Independence -- Simon Watkins -- January 10, 2023

Themes: 2023.  

The Over-Riding Themes

Global energy: the 21st century is America's century.

Medicine: it's all about CRISPR, mRNA.

Information: it's all about semi-conductors, automation, robotics.

Link here. Archived.



From the linked article:
Although the U.S. marked an historic shift in 2020 by becoming a net exporter of petroleum, it has remained a net importer of crude oil since the end of the Second World War.
For the relatively uninitiated, which appears to include Saudi Arabia in its ‘oil output figures’ of anything above its true average crude oil production figure of 8.23 million barrels per day (bpd) from 1973 to the end of last week, petroleum and crude oil are not interchangeable words in global oil market terms.
Basically, ‘crude oil’ is just crude oil, but petroleum includes crude oil, refined petroleum products, and other liquids (including gas condensates). This technical but important distinction aside, it is not beyond the realm of possibility that 2023 may see the U.S. finally become a net exporter of crude oil for the first time since 1945 and the ramifications of this for its policy towards the Middle East could be huge.
To get the figures out of the way first: the EIA forecasts that the U.S.’s net crude oil imports will fall to 3.4 million bpd in 2023 as domestic crude oil production increases to an annual average close to the all-time monthly high of 13 million bpd in November, all other factors remaining equal. In the run-up from its historic shift in 2020 to become a net exporter of petroleum products, the U.S. was producing an average of just over 11 million bpd of crude oil from the beginning of 2020 to end of 2022. However, in the last few months of 2022, the U.S. produced over 12 million bpd, on a rising trajectory, with the EIA initially forecasting that its crude oil production in 2023 would average at least 12.44 million bpd. On the other side of the supply/demand equation, in recent years, the U.S. has steadily consumed around 20 million bpd of crude oil, leaving a net crude oil import figure of around 7 million bpd. However, according to the EIA, in 2021 the U.S. only imported 6.1 million bpd of crude oil, although this figure rose to 6.3 million bpd in the first half of 2022. Additionally, according to widely circulated U.S. government data, November 2022 saw the U.S. import just 1.1 million bpd of crude oil.  

Partly this was due to sanctions on Russian crude oil and gas exports but in larger part it was due to the rolling releases of crude oil from the U.S.’s Strategic Petroleum Reserve and to the above-mentioned production increases in U.S. crude oil production in the latter part of 2022
Short-term reductions in U.S. crude oil imports can continue to be affected every now and again by such SPR releases. However, the onus for sustained import reductions to allow the U.S. to become a net exporter of crude oil can come from policies announced by U.S. President Joe Biden’s team when oil prices were spiking around the time of Russia’s invasion of Ukraine in February 2022. 

Back in March. 2022, U.S. Energy Secretary Jennifer Granholm said that Biden’s administration had started taking steps that should result in a ‘significant increase’ in domestic energy supply by the end of 2022.
Progress on those efforts has been slowed by the cascade of other events surrounding Russia’s ongoing war against Ukraine, but Granholm’s comments underlined that the green energy rhetoric of Biden’s early presidency was beginning to make way for action based on the cold hard fact that high oil and gas prices damage the U.S. economically and are catastrophic for the re-election chances of sitting presidents and their parties. According to Granholm in March, the U.S. was working to identify at least 3 million bpd of new global oil supply, with assurances from several high-level oil and gas executives that their companies were set to dramatically increase investments and bring online new rigs
Much more at the link.

Oasis With Three New Permits -- January 10, 2023

Will weekly EIA data corroborate today's data? Link here. API data:

  • crude oil inventories rose by almost 15 million bbls
    • refineries had been shut down a week earlier due to freezing weather and were just getting back to business as usual
    • and, yet, gasoline prices continue to drop
  • SPR release: a very, very small 0.8 million bbls
  • US crude oil production rose to 12.1million bpd in first week of 2023
    • represents an increase of 400,000 bpd for 2022
    • but still one million bpd lower than peak production seen in March, 2020

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Back to the Bakken

Active rigs: 44.

WTI: $74.62.

Natural gas: $$3.603.

Three new permits, #39560 - #39562, inclusive:

  • Operator: Oasis
  • Field: Cottonwood (Mountrail)
  • Comments:
    • Oasis has permits for three Hagen Federal wells, SWSE 31-157-92;
      • to be sited 310 FSL and betweeen 2103 FEL and 2193 FEL

Three permits renewed:

  • Enerplus: three Fort Berthold permits, Eagle Nest, Dunn County

Eight permits canceled:

  • EOG: five Round Prairie permits; two Mont permits; and one Hardscrabble permit, all in Painted Woods

Odds And Ends -- Nothing About The Bakken -- Nothing About Investing -- January 10, 2023

Posted elsewhere.

The top 100 songs of 1969.

There was an 18-month-period, from late 1968 through mid-1970 that clearly had some of the best music ever.  This was the year of Woodstock. The Beatles were still going strong, but touring less, and would soon stop completely.  Led Zeppelin's first two albums, Zeppelin I and Zeppelin II, were released in 1969. Self-titled "Velvet Underground" was released in 1969. The era of "free love" and the uncertainties of the Vietnam War probably contributed to some of this really incredible music.
Speaking of the Vietnam war, I turned 18 in 1969. My lottery draft was July 1, 1970; my lottery number was 103. The highest lottery number called for this group was 125; all men assigned that lottery number or any lower number, and who were classified as available for military service, were called to report for possible induction.
I would have been deferred by virtue of being enrolled in college. I was worried that I would be called up before I graduated from college. I was convinced, but wrong, that the war would still be going on when I graduated from college.

Whoo-hoo! My "insight" never ceases to amaze me. 

Add this to the list of "1969" great songs. LOL.

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The Book Page
 

Released today, brand new edition, released / copyright / published January 10, 2023. Amazon delivered to to my door today.

I opened the Amazon box that contained this book about ninety minutes ago.

Five minutes ago, I paged through it with Marlowe (1969) playing in the background.

My first thoughts on paging through the book in the past 120 seconds.

  • this particular edition needs to be read by every serious reader of literature;
  • this book should not be used to compare Mailer to Hemingway, but rather to J. D. Salinger;
    • Hemingway would never write a novel this long -- around 708 pages;
  • the twenty-three letters written to his first love, Beatrice, and his family, are priceless; nine of these letters are published for the first time -- written while Mailer was deployed in the Philippines (and still fighting) and in Japan following the end of hostilities;
  • released to mark the centennial of Mailer's birth and the 75th anniversary of his landmark debut novel;
  • I did not look at but am eager to read the "detailed notes."
  • Mailer: The Naked and the Dead; Selected Letters 1945 - 1946. J. Michael Lennon, editor, c. 2023.

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The Lego Page

For the grandsons.

 

See You Later Today -- January 10, 2023

Today is so slow, I'm not going to blog until the end-of-day report unless something big needs to be reported.

Good luck to all.

New feature: Bloomberg law. Work stoppages / strike action: The most heavily besieged employer was Starbucks, which faced at least 107 union-initiated strikes in 2022.


For some unknown reason the EIA data has been released, but the dashboards have not been updated.  



EIA dashboards:

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Meanwhile, We're Going Higher
Need To Destroy More Jobs

A shot across the bow.

At best: simply, "higher for longer."

At worst: "much higher for much longer."

The good news: for those with investing / disposable income and a 30-year horizon, another year of accumulating shares at discount prices. 

Whoo-hoo.

On this news: WTI jumps a buck; now trading at $75.57.

  • DVN: which had been in the red, is now in the green.

In the cat-bird seat: those who focused on dividend-paying stocks for the past two years. 

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The Medical Page

Link here. Archived.

Dr Prasad and I are on the same page of music. However, I have no problem with masking and support it, in the right venues / circumstances.

For the last few weeks, the media has been filled with stories about what The New York Times has described as our latest “viral onslaught.” It’s been dubbed a “tripledemic”—a combination of Covid-19, influenza, and respiratory syncytial virus (RSV), which is being blamed for high rates of illness and an excess of hospitalizations, especially among children.
The message is clear: fear winter respiratory viruses, and take every possible precaution you can. It’s time to slap on those N95s once more, avoid crowds, and socialize outdoors if possible.  
But the best available evidence contradicts the narrative from the media and many public health officials. The precautions being recommended are essentially unproven—akin to burning an incense stick, or wearing garlic to ward off vampires. 
The way to think of the tripledemic is that it’s just another example of what we used to call normal life. And the insistence on never-ending precautions in the face of inevitable exposure to germs is not only medically misguided, it also threatens to stigmatize the most mundane human interactions.

Nvidia -- Tech Talk -- January 10, 2023

Themes, 2023

The Over-Riding Themes

Global energy: the 21st century is America's century.

Medicine: it's all about CRISPR, mRNA.

Information: it's all about semi-conductors, automation, robotics.

For Investors

Investors

Chips: link here. Chips, semiconductor: link here.

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TSMC

Two can play this game. Biden signed the "Chips Act" in 2022. Now, Taiwan did the same thing. Link here.


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Nvidia

By now, folks should have a pretty good understanding of TSM.

Now, Nvidia.

First this, which showed up in my twitter feed overnight.

Ada Lovelace: link here.

Ada Lovelace, also referred to simply as Lovelace, is the codename for a graphics processing unit (GPU) microarchitecture developed by Nvidia as the successor to the Ampere architecture, officially announced on September 20, 2022
It is named after English mathematician Ada Lovelace who is often regarded as the first computer programmer and is the first architecture to include both a first and last name.
Nvidia announced the architecture along with the new GeForce 40 series consumer GPUs and the RTX 6000 Ada Generation pro workstation graphics card.
The new GPUs were revealed to use TSMC's new 5 nm "4N" process which offers increased efficiency over the previous Samsung 8 nm and TSMC N7 processes used by Nvidia for its last generation Ampere architecture.
Note: TSMC 4N process (custom designed for NVIDIA) - not to be confused with TSMC's regular N4 node.

Ampere: link here.  

Ampere is the codename for a graphics processing unit (GPU) microarchitecture developed by Nvidia as the successor to both the Volta and Turing architectures, officially announced on May 14, 2020.
It is named after French mathematician and physicist André-Marie Ampère.
Nvidia announced the next-generation GeForce 30 series consumer GPUs at a GeForce Special Event on September 1, 2020.
Nvidia announced A100 80GB GPU at SC20 on November 16, 2020.
Mobile RTX graphics cards and the RTX 3060 were revealed on January 12, 2021.
Nvidia also announced Ampere's successor, Hopper, at GTC 2022, and "Ampere Next Next" for a 2024 release at GPU Technology Conference 2021.
Note: TSMC's 7 nm FinFET process for A100.

Turing: link here

Turing is the codename for a graphics processing unit (GPU) microarchitecture developed by Nvidia.
It is named after the prominent mathematician and computer scientist Alan Turing.
The architecture was first introduced in August 2018 at SIGGRAPH 2018 in the workstation-oriented Quadro RTX cards, and one week later at Gamescom in consumer GeForce RTX 20 series graphics cards.
Building on the preliminary work of its HPC-exclusive predecessor, the Turing architecture introduces the first consumer products capable of real-time ray tracing, a longstanding goal of the computer graphics industry.
Key elements include dedicated artificial intelligence processors ("Tensor cores") and dedicated ray tracing processors (“RT cores”).
Turing leverages DXR, OptiX, and Vulkan for access to ray-tracing.
In February 2019, Nvidia released the GeForce 16 series of GPUs, which utilizes the new Turing design but lacks the RT and Tensor cores.
Turing is manufactured using TSMC's 12 nm FinFET semiconductor fabrication process.
The high-end TU102 GPU includes 18.6 billion transistors fabricated using this process.
Turing also uses GDDR6 memory from Samsung Electronics, and previously Micron Technology.

Texas Grid Is Doing Just Fine, Thank You -- January 10, 2023

Link here.

ERCOT approved almost 654 MW of generation, all renewables, for commercial operation in December, and another 2.9 GW of capacity neared commercial operation, increasing the grid's total operational capacity to 142.6 GW, up 9.1 GW from the end of 2021.

Another 2.5 GW, evenly divided among wind, solar, and battery storage, have signed interconnection agreements and financial security posted with start-up planned by the end of May, according to ERCOT's Capacity Changes by Fuel Type Charts, released January 5, 2023.

Such robust capacity growth would tend to weaken pressure on power prices, and forward traders may already be taking this trend into account. S&P Global M2MS ERCOT North Hub on-peak forward indexes for June, July, and August averaged less than $84/MWh January 6, 2023, compared with an ERCOT North day-ahead on-peak average of more than $124/MWh in June through August 2022. ERCOT North Hub is the market's most liquid pricing location.

From June through August 2021, ERCOT North day-ahead on-peak power averaged $50.60/MWh.

New England: around 32,000 MW (32 GW) vs about 145,000 MW (145 GW for Texas. 

This Will Affect Global Economy; The Most-Under-Reported Story So Far This Year -- January 10, 2023

For two years, folks compared Sweden with Norway, North Dakota with South Dakota, and Texas with New York. They should have been comparing Japan with the rest of the world. What in the world did Japan do wrong?

Answer: Japan went from complete shutdown to "no" restrictions overnight a couple of weeks ago (December 28, 2022, to be exact). Link here. What did they expect? But apparently the Japanese tourism economy was in a death spiral. 

Then: Japan, South Korea changed their minds on travelers from China.

This morning:

Here are Japan's numbers: link here




Boring Tuesday -- Five Wells Coming Off Confidential List Today -- January 10, 2023

Five four things that we've talked about for over a year and nothing has changed:

  • stagflation;
  • the recession;
  • oil to hit $140;
  • Biden will announce to run for re-election
  • Biden has not visited the southern border.

Let's say, inflation comes way down earlier than expected -- those COLAs -- active military, retired military, and social security -- those COLAs are going to look really, really nice. Link here.

RMDs: thank goodness, no Santa Claus rally. RMDs really low this year (compared to last year -- which was a real disaster). But the better news: minimum age raised for taking first RMDs -- "age 73 in 23."

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Back to the Bakken

Active rigs: 45.

The Far Side: link here.

WTI: $74.46.

Natural gas: $3.565.

Wednesday, January 11, 2023:
27880, conf, CLR, Jersey Federal 18-6H,

Tuesday, January 10, 2023:
38530, conf, Whiting, Kannianen 43-31-2H,
38196, conf, Hess, EN-Rehak A-155-94-1423H-7,
37565, conf, Petro-Hunt, Johnson 158-94-14A-23-2H,
36179, conf, BR, George 2C MBH,
27879, conf, CLR, Jersey FIU 17-6H,

RBN Energy: why US natural gas liquids production is surging. Archived.

Since the advent of the Shale Revolution way back in 2008, U.S. production of natural gas liquids from gas processing has grown pretty much non-stop, from an annual average of 1.8 MMb/d 15 years ago to 5.9 MMb/d in 2022 — a 9% compound annual growth rate. Today, NGL production exceeds 6.1 MMb/d and that number might be even higher if the glut of supply wasn’t depressing prices and discouraging the recovery of a lot of ethane. All that production has major implications for domestic pricing, upstream economics, midstream infrastructure, and downstream consumers like petrochemicals, not to mention international markets, which now receive roughly 40% of U.S. output. In today’s RBN blog, we examine what’s causing NGL production to continually increase.

To understand what’s going on with U.S. production of the mixed stream of natural gas liquids collectively known as NGLs (ethane, propane, butane, isobutane and pentanes+), it’s important to recognize the relationship between NGLs and the production of crude oil and natural gas — after all, they all come from the same holes in the ground in hydrocarbon-rich areas like the Permian, Bakken, and Eagle Ford. Because of their common origin, RBN refers to the three commodity streams (crude, gas and NGLs) as the “drillbit hydrocarbons.”

These days, about 80% of drilling in the U.S. is primarily directed at crude oil production, which makes sense because (generally speaking) crude is the most valuable of the drillbit hydrocarbons on a per-Btu basis. Crude doesn't emerge from shale plays on its own, of course — instead, it comes out of the ground mixed with what’s typically referred to as associated gas, a gurgling combination of methane (natural gas), mixed NGLs and various impurities. The composition of this oil/natgas/NGLs stew varies widely, not only between shale basins but within each basin and from well to well — and even within each well over time.