The Million Dollar Way (The Bakken Oil Blog): 09/08/23

Friday, September 8, 2023

Week 36: September 4, 2023 -- September 10, 2023

Locator: 45578TOPSTORY.

Top story:

China's economy tumbles and no sign it can recover. It's all about demographics

And central management

Unless stopped by the courts, Donald Trump on track to become GOP's presidential nominee -- setting up historic re-match

Top international non-energy story:

Russian-Ukraine war continues

Top international energy story:

Saudi Arabian foreign exchange reserves plummet

Top national non-energy story:

Closer and closer to UAW strike

AAPL tumbles; tech sector follows AAPL

Top national energy story:

Focus on fracking: most recent edition.

EIA has to insert huge "adjustment. No one knows what is going on.

Top North Dakota non-energy story:

Top North Dakota energy story:

DAPL: US Army Corps of Engineers publishes preliminary recommendation; no surprises;

Geoff Simon's quick connects:

Quick connects.

Bakken economy:

holding in there

Commentary:

US economy: a Goldilocks economy

Entertainment:

Atmospheric CO2 -- August, 2023

Locator: 45577CO2.

Link here.

Despite all those Canadian fires and the huge fire in Maui, atmospheric CO2 rose at no great rate than predicted.

Just Another Incredible Story -- Guyana -- Exxon -- September 8, 2023

Locator: 45576GUYANA.
Locator: 45576SURINAME.

Guyana: link here. See this post for map. Think about this: this is really, really huge. XOM "owns it" and this only play challenges OPEC!

In a mere four years, Guyana went from first discovery to first oil, a rapid timeframe in an industry where it can take years to bring major energy projects online. The former British colony is now a major South American oil producer and global petroleum exporter.

As a result, Guyana is benefiting from a tremendous economic windfall, with the country emerging as the world’s fastest-growing economy with 2022 gross domestic product (GDP) expanding by a stunning 62%. Industry consultancies and the government in Georgetown expect Guyana to be pumping 1.2 million barrels of crude oil per day by 2027, a figure greater than many OPEC members.

Exxon’s commitment to developing the offshore 6.6-million-acre Stabroek Block indicates oil output could soar even higher. This has the potential to alter global energy market dynamics and challenge the price-making power of the OPEC Plus consortium.

Data from Guyana’s Ministry of Natural Resources shows the country of less than one million was lifting 351,600 barrels of oil per day at the end of July 2023. That production volume pumped by the Liza Destiny and Unity floating production storage and offloading vessels (FPSOs) is greater than their combined nameplate capacity of 340,000 barrels per day.

Exxon, which holds a 45% stake in the Stabroek Block and is the operator, prioritized development of the block in late-2020 due to the Liza oilfield’s low breakeven price of $25 per barrel to $35 per barrel and high-quality light sweet crude oil. That saw the global energy supermajor ramp up activity with a large exploration drilling campaign that eventually yielded over 30 discoveries and more than 11 billion barrels of oil resources in the Stabroek Block.

Consortium:

XOM: 45%, and operator
Hess: 30%
CNOOC: 25%

************************
But Is It The "Right" Kind Of Oil?

It sure is.

Light.

Sweet.

Link here.

Following ExxonMobil’s commercial discovery at the giant Liza field in the Stabroek Block offshore Guyana in 2015, it was confirmed that the oil found is of ‘high quality’. The term “High Quality” is commonly used to refer to crude oil which is sweet (low sulphur content) and light (high API gravity). This means oil which has been determined to rank higher on the American Petroleum Institute (API) Gravity Scale and determined to be of a low sulphur content.

This bodes well for Guyana as sweet light crude is the preferred type from which the highest value petroleum products are derived. However, it is important to note that the price of Guyana’s crude will be dependent on more than just its quality. More on this later.

Why is high-quality oil more in demand?

The market value of any given type of crude is in large part determined by the two main measured characteristics determining oil quality, which are density and sulphur content.

Crude oils are classified from light to heavy based on the API gravity scale and are classified as sweet if they contain less than 0.42%sulphur (NYMEX).

Crude Oil density is measured in API Gravity. This scale has become the recognized standard in the oil industry worldwide for the classification of crude oil. The calculation for API gravity of an oil is complicated but on the API Gravity scale which ranges from 0 to 50, crude oils with an API gravity greater than 10 are lighter than water and will float, while those with an API of less than 10 are heavier than water and will sink.

API gravity and sulphur content are important determinants of oil quality because heavy oils are harder and more expensive to produce or extract from reservoirs while high sulphur or sour crude is corrosive and requires more refinery processing to remove the sulphur and therefore produces more expensive gasoline and diesel.

The two best known Sweet Light Crudes are Brent (UK North Sea) and West Texas Intermediate (WTI). Venezuela has vast reserves of extra heavy crude while crude from Mexico with sulphur content greater than 3% is considered as sour crude.

The ExxonMobil reference to oil in the giant Liza Field as “high-quality oil bearing sands” means that the crude oil found in Guyana has been measured to have both a high API gravity (> 30) and a low sulphur content(< 0.5%). This is significant as it means that Guyana’s crude will flow easily from the reservoir rock to the producing well while the low sulphur means that the crude will be less corrosive on producing well and the cost of refining the oil will be lower.

No New Permits -- September 8, 2023

Locator: 45575B.
Locator: 45575GUYANA.

Guyana: link here. See this post for map. Think about this: this is really, really huge. XOM "owns it" and this only play challenges OPEC!

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

CLR Brangus: 14-well CLR Brangus pad completed and updated. Link here.

Acrtive rigs; 35.

WTi: $87.51.

No new permits.

Clearing Out My In-Box Before The Weekend -- September 8, 2023

Locator: 45574MISC.

Bud: up 5% since the recent low.

Stellantis:

Ford: like the rest of the market, Ford is having a better day today. Having said that, of the three "Big 3 legacy" auto manufacturers in the US, Ford is most at risk:

The WSJ: another incredibly disappointing series of articles in this daily.

Polestar: increased marketing on OTT -- on a day that "all" the other EVs are in the green --

NVDA -- Nvidia;

**************************
The Book Page

The Gettysburg Cyclorama: The Turning Point Of The Civil War On Canvas -- Chris Brenneman And Sue Boardman -- c. 2015 Notes.

July 1 -3, 1863.

Terms:

"Pickett's Charge" -- the third day
"the bombardment or the cannonade"
"copse of trees"
"the stone wall"
"the Angle"
from Seminary Ridge, marching toward Cemetery Ridge -- a mile wide
began to converge on the center of the Union line near the copse of tree and the angle in the stone wall
General Armistead broke through, but mortally wounded
came to be known as "the high water mark of the Confederacy"
Pickett's charge failed
the US Civil War was effectively over but went on until 1865

Huge Story -- Minimal Impact, Except For Mexico -- September 8, 2023

Locator: 45573MEXICO.

I don't know if I would have bothered posting this had it not been covered by Charles Kennedy.

Link here.

Covid-19 Update -- September 8, 2023

Locator: 45572COVID.

Several items:

Growth factor: most important metric, previously discussed; link here.

non-credible source; like reading something from Vogue; The WSJ Covid-19 expert was a former restaurant critic. She may be proved right, but if so, more luck, than science:

credible source:

Beth Mole:

Sumathi Reddy:

Buzz:

new vaccines / prior infection: will likely prevent/mitigate serious disease;
new outbreaks: will be made worse due to governmental complacency and lack of individual responsibility;
it appears "herd immunity" was a meme; didn't play a role in management of Covid-19, in 2020;
"masking," per se, makes no sense; "masking" in toto, makes all kinds of sense.
role of Covid-19 and "disappearance of "seasonal flu" will become clearer this season (2023 - 2024)

Current and old links:

Wuhan flu. The blog. Coronavirus: statistics. Seasonal flu: CDC.
Covid Data Tracker Weekly Review: link here, new. Covid data tracker: by community, new.

Politics:

the fact that it was the lead story -- why President Trump did not fire Dr Fauci -- speaks volumes about journalists covering this story.
mainstream media has never -- to the best of my knowledge -- explained this in language that eighth graders -- their audience -- could understand

TGIF -- September 8, 2023

Locator: 45571INV.

Comment: as regular readers know --

I am an investor, not a trader. I have a rolling 30-year horizon;

my heirs will never ask what I paid for a given stock;

I don't time the market; I am always fully invested to extent possible; cash is held in high-dividend paying stocks; I seldom do tax-loss harvesting, but I keep it in mind when raising cash when re-balancing the portfolio

I seldom sell anything; there are exceptions; it seems my biggest "paper losses" have been on equities I have sold

I live by this: "a delayed investment is a delayed opportunity"; time value of money;
I don't "understand" bonds;
generational investing; investing has changed immensely in the past 70 years

1960: mom-and-pop investors flying blind
1980: mom-and-pop investors had much more information; but much of it, "Morningstar" and "Motley Fool" and "Value Line"
2000: so easy to put investments on auto-pilot and do very, very well
2020: mom-and-pop investors have increasing difficulty staying the course due to social media.

best advice: read, read, read.
dividends: the third month of each quarter is a huge quarter for me for investing dividends;
I have an investment plan and do a fairly good job sticking to it

40%: big cap; generally dividend paying
30%: tech (Apple is not "tech"; it's in a class by itself)
20%: Big Pharma
10%: Daimler, Ferrari,
0%: ETFs

I invest new money twice a month, regardless of what the market is doing;
energy -- oil, natural gas -- huge investment for me in the past; now, energy is in my "utility" bucket; I am adding no new money to energy;
timeline:

I started this blog in 2007
it took 15 years of learning from my readers to get my "investment act" together
I started taking investing seriously in 2021; prior to that I let professionals call the shots;
over the course of fifteen years or so on the blog, I have "called" four huge winners.
I remain haunted by one graph (I have posted it multiple times)

This is called a buying opportunity. We don't often get them. Link here.

Walmart: to start cutting pay.

Theft: from the beginning, I thought CEOs blamed their problems on theft. Link here. Except Portland.

Investing:

high-quality dividend stocks are on sale now. Barron's. Link here.
the utilities sell-off has gotten ouut of hand; one stock is selling at an absurd price. Barron's. Link here.

Oil:

link here;

Renewable Energy Is Dead -- An Update -- September 8, 2023

Locator: 45570WIND.

Link here. Mazda joins Toyota in strategic planning. There's only one POV that's less accepted than an EV, and that's the PHEV -- a "fake EV."

Link here.

From an earlier post where this is tracked.

For The Archives -- Nothing About The Bakken -- September 8, 2023

Locator: 45569ARCHIVES.

Another Huge Pipeline -- That Won't Cross State Lines -- Whoo-hoo! No! Waha -- September 8, 2023

Locator: 45568B.

RBN Energy: what about some Permian gas locally to make gasoline, SAF, and power?

Permian producers are churning out ever-increasing volumes of associated gas, all of which needs to find a home. New or expanded takeaway pipelines to Gulf Coast markets are an obvious option — and a few projects are in the works — but locking in capacity requires long-term commitments that many producers are loathe to make. As a result, the balance between Permian takeaway capacity and the volumes of gas that need to exit the basin is always on a knife’s edge, often resulting in a Waha basis so ugly that producers are essentially giving their gas away. But what if there was a way to put more Permian gas to good, economic use within the basin, and ideally very close to where it’s produced? Better yet, what if the producers could garner some environmental cred in the process? In today’s RBN blog, we discuss a trio of Permian projects — a couple of them involving top-tier E&Ps — that would use local gas to make gasoline, sustainable aviation fuel (SAF) and electricity.

Back in January, we stuck out our collective neck and provided a 2023 outlook for Permian crude oil and natural gas. It turns out — so far at least — that we were pretty much on target. (Dashed gold line in Figure 1 shows 2023 Permian gas forecast and right end of solid purple line shows actual year-to-date production.) According to RBN’s latest Crude Oil Permian and NATGAS Permian reports, August production is averaging 5.76 MMb/d and 16.8 Bcf/d, respectively — on track for the 6 MMb/d and 17.25 Bcf/d we predicted for year-end 2023. (Whew!) The point here is not to toot our own horn, but to say that Permian production continues to grow and that gas-related infrastructure in particular (gas gathering systems, gas processing plants, gas and NGL pipelines, and LNG export terminals) will need to continue to grow with it.

Figure 1. Permian Natural Gas Production and Forecast. Sources: RBN, Enverus

As we’ve discussed in a number of blogs over the past couple of years, new gas infrastructure is being developed — lots of it, in fact. By the end of this year, a 500-MMcf/d expansion of the 2-Bcf/d Whistler Pipeline will be coming online, as will a 550-MMcf/d expansion of the 2.1-Bcf/d Permian Highway Pipeline (PHP). Then, in Q3 2024, the 2.5-Bcf/d Matterhorn Express pipeline is scheduled to start up. A couple of additional pipelines are in the works (but not yet sanctioned), including ONEOK’s planned Saguaro Connector (to the Mexican border) and Energy Transfer’s proposed Warrior Pipeline from the Waha Hub to south of Dallas/Fort Worth, as well as others in earlier stages of development.

The Energy Transition Is Dead -- An Update -- September 8, 2023

Locator: 45567WIND.

Link here.

From an earlier post where this is tracked.

WTI Moving Nicely In Early Morning Trading — September 8, 2023

Locator: 45566B.

WTI: $87.58.

Monday, September 11, 2023: 77 for the month; 279 for the quarter, 524 for the year
None.

Sunday, September 10, 2023: 77 for the month; 279 for the quarter, 524 for the year
39673, conf, Hydra Services, SWD,
39030, conf, Liberty Resources, Temple 159-96-36-25-3MBH,

Saturday, September 9, 2023: 75 for the month; 277 for the quarter, 522 for the year
39067, conf, Hess, TI-Fossaa-158-94-1819H-2,
38901, conf, Whiting, Snowshoe Federal 31-30-2H,
38899, conf, Whiting, Snowshoe Federal 31-30-4H,
37927, conf, BR, Parrish 2C MBH,

Friday, September 8, 2023: 71 for the month; 273 for the quarter, 518 for the year
39613, conf, Kraken, Gladys 29-20-17-3H,
37472, conf, SOGC (Sinclair), Saetz Federal 3-36H,

RBN Energy: what about some Permian gas locally to make gasoline, SAF, and power?

Permian producers are churning out ever-increasing volumes of associated gas, all of which needs to find a home. New or expanded takeaway pipelines to Gulf Coast markets are an obvious option — and a few projects are in the works — but locking in capacity requires long-term commitments that many producers are loathe to make. As a result, the balance between Permian takeaway capacity and the volumes of gas that need to exit the basin is always on a knife’s edge, often resulting in a Waha basis so ugly that producers are essentially giving their gas away. But what if there was a way to put more Permian gas to good, economic use within the basin, and ideally very close to where it’s produced? Better yet, what if the producers could garner some environmental cred in the process? In today’s RBN blog, we discuss a trio of Permian projects — a couple of them involving top-tier E&Ps — that would use local gas to make gasoline, sustainable aviation fuel (SAF) and electricity.

Back in January, we stuck out our collective neck and provided a 2023 outlook for Permian crude oil and natural gas. It turns out — so far at least — that we were pretty much on target. (Dashed gold line in Figure 1 shows 2023 Permian gas forecast and right end of solid purple line shows actual year-to-date production.) According to RBN’s latest Crude Oil Permian and NATGAS Permian reports, August production is averaging 5.76 MMb/d and 16.8 Bcf/d, respectively — on track for the 6 MMb/d and 17.25 Bcf/d we predicted for year-end 2023. (Whew!) The point here is not to toot our own horn, but to say that Permian production continues to grow and that gas-related infrastructure in particular (gas gathering systems, gas processing plants, gas and NGL pipelines, and LNG export terminals) will need to continue to grow with it.

Figure 1. Permian Natural Gas Production and Forecast. Sources: RBN, Enverus

As we’ve discussed in a number of blogs over the past couple of years, new gas infrastructure is being developed — lots of it, in fact. By the end of this year, a 500-MMcf/d expansion of the 2-Bcf/d Whistler Pipeline will be coming online, as will a 550-MMcf/d expansion of the 2.1-Bcf/d Permian Highway Pipeline (PHP). Then, in Q3 2024, the 2.5-Bcf/d Matterhorn Express pipeline is scheduled to start up. A couple of additional pipelines are in the works (but not yet sanctioned), including ONEOK’s planned Saguaro Connector (to the Mexican border) and Energy Transfer’s proposed Warrior Pipeline from the Waha Hub to south of Dallas/Fort Worth, as well as others in earlier stages of development.

Bricks And Minifigs — Bedford, TX Grand Opening Today — Friday, September 8, 2023

Locator: 45565LEGO.

Link here: https://www.facebook.com/bricksandminifigsgrapevine/.

Not sure if grand opening is at 10:00 a.m. or 11:30 a.m. today.

Pages

Friday, September 8, 2023