Back To Belarus -- February 2, 2020

Someone much smarter than I am is also following the Belarus story. The reader writes:

Couple of quick data points ... 

Lithuania already has an FSRU ( Floating Sorage and Regasification Unit) through which it can easily pipe gas to Belarus. 

Poland is planning on 2 FSRUs to supplement its original, standard land based LNG terminal. Poland, also, can supply Belarus, Czechoslovakia,  even Ukraine through existing pipes.

Biggest surprise, perhaps? 

Pricing.

Thailand is planning on buying LNG from Malaysia at current ~$4/mmbtu spot RATHER THAN USE THEIR OWN, DOMESTICALLY PRODUCED GAS which costs ~$7.80 per. (Wow!) 

India is trying to renegotiate the $8+ it currently pays Qatar on negotiated long term contract as it can buy spot LNG (read ... USA) for under $5.

Egypt just  drastically cut  back its LNG exports as its realized pricing can't compete with US spot. 

Algeria severely curtalied its PIPED gas to Europe for same reasons. 

Turkey paying $5.60 per, for LNG spot through its FSRUs,  less than Gazpom-piped $7,80.

People will be absolutely stunned, in the coming years, at the ferociously quick, expansive impact US LNG will have on global energy markets. 

FSRUs are rapidly going in all over the globe and $2.50/$2.00 Henry Hub gives the US a powerful advantage.

Thank you, Free Enterprise. 

Thank you, Roughnecks, entrepreneurs, risk takers, hard workers, visionaries one and all.

Thank you for the note; very, very interesting. 

I did not post it at the original note, but someone also suggested that US could supply LNG at half the price Russia was trying to negotiate, and that's with transportation charges.

Peak Oil? What Peak Oil? US Proved Reserves Of Crude Oil Increased Another 12 Percent -- February 2, 2020

Updates

Later, 6:27 p.m. CT: in the comments I mention that the price of oil is an existential issue for Saudi Arabia. A reader responded:

Just as Saudi, Kuwait, Russia and several other regimes rely upon oil revenue for political/social ends, other countries are in the same boat with natgas. The countries include Russia, Qatar, Algeria, Malaysia.

All these countries tie their pricing to various oil indexes (say, 12% of Brent, for illustrative purposes).

The completely disconnected  - from global markets - pricing at Henry Hub gives US producers a HUGE economic edge when competing now in global markets. 

Regional hub pricing has just emerged with JKM, TTF, and NBP to provide free market parameters vis a vis supply/demand in Asia, Europe, indeed, everywhere.

Independent (read, non-government-owned) companies are upending these long established paradigms at blinding speed.

Original Post

It's not so much that proved reserves increased so much, it's the degree to which proved reserves increased, a stunning twelve percent, coming on top of record growth in progression many years since 2005. I think a lot of folks thought that growth would have slowed by now.

Link here.

According to the Energy Information Administration (EIA), U.S. proved reserves of crude oil and lease condensate increased to 47.1 billion barrels in 2018—a 12 percent increase compared with the previous record set at year-end 2017 of 42 billion barrels. U.S. proved reserves of natural gas increased to 504.5 trillion cubic feet—a 9 percent increase compared with the record level set in 2017 of 464.4 trillion cubic feet. 

When I first started blogging, I never understood why "proved reserves" would b contingent upon price.

Proved reserves are oil and natural gas quantities that geological and engineering data find with reasonable certainty to be recoverable from known reservoirs under existing economic and operating conditions. Reserves estimates change from year to year as new discoveries are made, existing fields are appraised, reserves are produced, prices and costs change, and technologies develop.

Memo to self: note to Art Berman.

And more:

U.S. proved reserves of oil and natural gas have increased despite record production of these fuels in 2018. U.S. crude oil and lease condensate production increased 17 percent in 2018 to an average of 10.96 million barrels per day—1.6 million barrels per day more than in 2017.

U.S. natural gas production increased 12 percent in 2018 to 89.9 billion cubic feet per day—10 billion cubic feet per day more than in 2017.

The largest net increase in oil and natural gas proved reserves in 2018 was in Texas, totaling 2.3 billion barrels of crude oil and lease condensate proved reserves and 22.9 trillion cubic feet of natural gas proved reserves. The major share of that increase was located in the Wolfcamp and Bone Spring shale plays in the Permian Basin.

The next largest net gains in crude oil and lease condensate proved reserves in 2018 were in New Mexico and North Dakota. New Mexico’s crude oil and lease condensate proved reserves increased by 750 million barrels and North Dakota’s increased by 422 million barrels in 2018.

It's my understanding that Saudi Arabia's proved reserves has/have not changed in decades.

Natural Gas: Interesting, Interesting, Interesting -- February 2, 2020

Updates

February 3, 2020: from RBN Energy today --

When it comes to Texas natural gas markets, the Permian tends to steal the show. With its roughly 2 Bcf/d of annual production growth, constrained pipelines and absurdly cheap — sometimes even negative — pricing, it’s hard for the other gas hubs in the Lone Star State to garner much attention.

However, the myopic focus on West Texas overlooks a noteworthy gas market shake-up taking place on the Texas Gulf Coast, where most of the Permian’s incremental gas production is headed and where multiple new liquefied natural gas facilities are coming online to move the new supplies into world markets. Also, new export pipelines are moving increasing volumes south of the border to Mexico.

Today, we provide an update on the latest in Texas Gulf Coast gas infrastructure changes and their potential impacts on the region’s supply and demand balance.

Later, 6:16 p.m. CT: a reader responded to the chart and the comments below:

You are 100% correct that the associated gas from the Permian, Bakken, SCOOP/STACK, and, even the Niobrara greatly threaten present operations in the Appalachian Basin.

Heck, the massive, 52 Trillion cubic feet Barnett  resource is barely being drilled and that is right in Texas.

Better pipelines heading north from the Appalachian Basin would help as will an increase in LNG exports.

Strong political/social joy up there  if it all shut down tomorrow.

Determining factor will be cost of production.

Toby Rice is striving to be viable at $2 Henry Hub.

I think he - and EQT - will succeed, along with several others.

But not every Appalachian Basin operator will exist in current form in future years absent dramatic - and unlikely  - bump in pricing.

Original Post  
I was talking to another person about the natural gas "issue" in the US right now. That was yesterday.

Today, I caught this graph on twitter (find the original data at EIA: https://www.eia.gov/naturalgas/crudeoilreserves/). From that link:

Another year of stronger oil and natural gas prices increased 2018 oil and natural gas proved reserves in the United States to another all-time record level.

Crude oil and lease condensate proved reserves rose by 12%, and natural gas proved reserves rose by 9%. U.S. crude oil and lease condensate production increased by 17%, and U.S. total natural gas production increased by 12%.

That's exactly what I said in that conversation yesterday. Comments:

• red arrows: crude oil plays
• blue arrows: natural gas plays
• red arrows: surprisingly large jump in natural gas growth, considering these are generally considered to be oil plays
• blue arrows: having trouble competing with oil plays' production of natural gas
• on top of that, natural gas from the Permian is perfectly located for export
• in the northeast, politicians are pushing back on natural gas production
• I think most agree that sub-"$2-natural-gas" is not viable 
• I don't think anyone saw this coming but natural gas plays are competing not among themselves, but with oil plays for natural gas production
• growth in Texas natural gas production was greater than West Virginia, Pennsylvania, and Ohio combined

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

Update On Several CLR Florida Federal Wells In Camp Oil Field -- February 2, 2020

This page won't be updated. CLR has a rig on site. The CLR Florida/Florida Federal wells are tracked here. The CLR Florida wells are very good wells. 

The wells:

• 36802, drl, CLR, Florida Federal 6-11HSL, Camp,
• 32476, ros, CLR, Florida Federal 7-11H1, Camp,
• 32474, drl, CLR, Florida Federal 8-11H, Camp,
• 36803, drl, CLR, Florida Federal 9-11H1, Camp,

• 36801, drl, CLR, Florida Federal 6-14HSL, Camp,
• 32475, drl, CLR, Florida Federal 7-14H1, Camp,
• 32473, drl, CLR, Alpha 8-14H, Camp,

Petro-Hunt Is Active In The Charlson; Wells Exceeding 500K Cumulative -- February 2, 2020

This well coming off the confidential list this week:

• 33976, conf, Petro-Hunt, USA 153-95-8A-31-4H, Charlson, NENE 17-153-95;

Other wells on that pad:

• 33886, SI/NC, Petro-Hunt, USA 153-95-8A-31-3H,  Charlson,
• 30368, 2,097, Petro-Hunt, USA 153-95-8D-6-2H, 55 stages; 4.6 million lbs; Charlson, t9/17; cum 287K 11/19; off line 6/19; back on line 10/19;
• 18111, 776, Petro-Hunt, Thompson 8D-4-4H, Charlson, t5/11; cum 592K 11/19; off line 6/19; back on line 9/19;
• 30369, 1,613, Petro-Hunt, Thompson 153-95-8D-6-3H Charlson, t9/17; cum 335K 11/19; off line 6/19; back on line 9/19;
• 30685, 1,380, Petro-Hunt, USA 153-95-9C-4-3H Charlson, t8/17; cum 311K 11/19;

Neighboring wells running south from the north:

• 27208, 2,262, Petro-Hunt, USA 153-95-4B-8-2HS, Charlson, t12/14; cum 638K 11/19;
• 27918, 1,167, Petro-Hunt, USA 153-95-4B-9-1HS, Charlson, t12/14; cum 455K 11/19;

In addition, Petro-Hunt is drilling these two new wells, a section to the north:

• 36950, conf, Petro-Hunt, USA 153-95-8A-31-2H, SENE 8-153-95;
• 36951, conf (ros), Petro-Hunt, USA 153-95-8A-31-1H, SENE 8-153-95;