EIA Weekly Petroleum Report -- July 8, 2020

EIA, link here:

• US crude oil in inventory: 539.2 million bbls;
• at 18% above the five-year-average, this is the highest I've seen, on a percentage basis;
• how will shutting down the DAPL affect this;
• the five-year average is already very "fat"
• change week-over-week: increased by a significant 5.7 million bbls
• refineries are operating at 77.5% of capacity; operating at historic lows; 
• imports: crude oil imports averaged 7.4 million bpd which is a whopping increase of 1.4 million bpd -- more than double of what I had been seeing
• over the past four weeks, crude oil imports had averaged about 6.6 million bpd but that average is going to trend high
• imports are still 8.5% less than the same four-week period last year 
• oil markets starving for heavy oil from Russia, Saudi Arabia; link here;
• jet fuel supplied: down 57.2% same same four-week period last year

Re-balancing:

Week	Date of Report=	Change	Million Bbls Storage
Week 0	November 21, 2018	4.9	446.9
Week 1	November 28, 2018	3.6	450.5
Week 2	December 6, 2018	-7.3	443.2
Week 3	December 12, 2018	-1.2	442.0
Week 4	December 19, 2018	-0.5	441.5
Week 5	December 28, 2018	0.0	441.4
Week 71	April 8, 2020	15.2	484.4
Week 72	April 15, 2020	19.2	503.6
Week 72	April 22, 2020	15.0	518.6
Week 73	April 29, 2020	9.0	527.6
Week 74	May 6, 2020	4.6	532.2
Week 75	May 13, 2020	-0.7	531.5
Week 76	May 20, 2020	-5.0	526.5
Week 77	May 28, 2020	7.9	534.4
Week 78	June 3, 2020	-2.1	532.3
Week 79	June 10, 2020	5.7	538.1
Week 80	June 17, 2020	1.2	539.3	15%
Week 81	June 24, 2020	1.4	540.7	16%
Week 82	July 1, 2020	-7.2	533.5	15%
Week 83	July 8, 2020	5.7	539.2	18%

Imports:

Crude Oil Imports
Week (week-over-week)	Date of Report	Raw Data, millions of bbls	Change (millions of bbls)	Four-week period comparison
Week 0	March 11, 2029	6.4	0.174
Week 1	March 18, 2020	6.5	0.127
Week 2	March 25, 2020	6.1	-0.422
Week 3	April 1, 2020	6.0	-0.070
Week 4	April 8, 2020	5.9	-0.173
Week 5	April 15, 2020	5.7	-0.194
Week 6	April 22, 2020	5.6	-0.700
Week 7	April 29, 2020	5.3	0.365	-19.700%
Week 8	May 6, 2020	5.7	0.410
Week 9	May 13, 2020	5.4	-0.321	-26.100%
Week 10	May 20, 2020	5.2	-0.194
Week 11	May 28, 2020	7.2	2.000	-16.400%
Week 12	June 3, 2020	6.2	-1.000	-18.300%
Week 13	June 10, 2020	6.4	0.000	-13.300%
Week 14	June 17, 2020	6.6	-0.222	-10.000%
Week 15	June 24, 2020	6.5	-0.102	-11.600%
Week 16	July 1, 2020	6.5	-0.600	-11.300%
Week 17	July 8, 2020	7.4	1.400	-8.500%

Jet fuel:

Jet Fuel Delivered, Change, Four-Week/Four-Week
Week	Date of Report	Change
Week 0	3/7/2020	-12.80%
Week 1	3/14/2020	-12.60%
Week 2	3/21/2020	-8.90%
Week 3	3/28/2020	-16.40%
Week 4	4/4/2020	-0.22%
Week 5	4/11/2020	-39.70%
Week 6	4/18/2020	-53.60%
Week 7	4/24/2020	-61.60%
Week 8	5/1/2020	-66.60%
Week 9	5/8/2020	-68.50%
Week 10	5/15/2020	-67.90%
Week 11	May 22, 2020	-66.60%
Week 12	June 3, 2020	-68.70%
Week 13	June 10, 2020	-63.70%
Week 14	June 17, 2020	-62.30%
Week 15	June 24, 2020	-62.50%
Week 16	July 1, 2020	-60.00%
Week 17	July 8, 2020	-57.20%

Notes From All Over -- The "Nosebleed" Edition -- July 8, 2020

Graphic of the decade, link here:

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

How high can TSLA go? Well, apparently higher. It's trading above $1400 in early morning trading, adding another $10, or about three-quarters of a percent.

APPL? up almost 2%; adds another $6/share to trade at $379. Next stop: $400? At least some are saying that.

Others:

• IMUX: down a bit
• D: down a bit, but essentially flat

Cleaning out the in-box:

Save the date: Disney World still set to re-open this Saturday, July 11, 2020. 

Exodus:

"Exodus" from major US cities will continue for next two years; much of this is "geographic smoke and mirrors"; here in the DFW area, folks might "move" from Dallas but they are simply moving up the road to suburbs along Texas Highway 75 -- McKinney, Plano, Frisco, all the way to the Oklahoma state line; big deal;

Peak oil? What peak oil? 

Equinor makes another significant North Sea discovery; link here.

Equinor ASA revealed Wednesday that it has discovered gas and condensate in exploration well 30/2-5 S Atlantis, which is situated by the Kvitebjorn field in the Norwegian section of the North Sea.

The proven reserves of the find are estimated to be between 19 and 63 million barrels of oil equivalent, according to Equinor. 

PEMEX: really, really, broke. Now asking to pay creditors with IOUs. Link here.

Petroleos Mexicanos’s nearly $105 billion in debt already makes it the biggest borrower of any oil company in the world. And it’s accruing more.

Pemex, as the Mexican state oil company is known, is asking some of its contractors if they can wait until next year to be paid money that is owed to them now ...

Three contractors that are being asked to defer payment are waiting on $115 million in payouts ... could easily total billions of dollars.

According to the people, contractors enter their invoices on Pemex’s website and receive a confirmation number and an estimated time of payment. The invoice number, known as “Copade,” is no longer being issued in some cases.

West Coast LNG export terminal approved by US DOE, link here:

The U.S. Department of Energy issued a final long-term order to authorize exports of liquefied natural gas (LNG) from a project in Oregon that they expect will help the U.S. sell gas to the fastest-growing import market, Asia.

The U.S. Department of Energy authorized exports of up to 1.08 billion cubic feet per day of natural gas from the proposed Jordan Cove LNG Terminal in Coos Bay, Oregon, owned by Canada’s Pembina Pipeline Corporation. This is about 20 million boepd.

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Four Wells Come Off The Confidential LIst Today -- July 8, 2020

OPEC basket, down slightly from yesterday, at $43.15:

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Back to the Bakken

Bakken will never return to its glory days -- Bloomberg. 

Active rigs:

$40.68	7/8/2020	07/08/2019	07/08/2018	07/08/2017	07/08/2016
Active Rigs	10	59	64	56	30

Four wells coming off the confidential list -- 

Wednesday, July 8, 2020: 31 for the month; 31 for the quarter, 476 for the year:

• 37060, drl/NC, CLR, Angus Federal 7-9H, Elm Tree, no production data,
• 36697, drl/NC, WPX, Pronghorn 22-15HA, Spotted Horn, no production data,
• 35642, SI/A, CLR, Boston 5-25H1, Brooklyn, t--; cum 45K in 49 days;
• 35641, SI/A, CLR, Boston 6-25H, Brooklyn, t--; cum 48K over 48 days;

RBN Energy: Assessing future demand and sources of diluent, part 4.

So far, 2020 has been another bad year for bitumen producers in Alberta’s oil sands. For the second year in a row, they have been forced to endure production curtailments, this time in response to COVID impacts on demand and the resulting record-low heavy oil prices. Still, there are at least glimmers of hope that the bitumen market will soon enter at least a modest recovery mode, and that further gains will be possible in 2021 and beyond. Moving all of that bitumen to market in pipelines and in rail cars is going to require even more diluent than the record amounts already consumed in late 2019 and early 2020. Today, we consider the outlook for bitumen production, what that outlook means for future diluent demand, and if that demand can — or cannot — be met by the various sources of diluent supply.

Over the course of this series, we have been taking a closer look at diluent, the light liquid hydrocarbons that are blended with bitumen — the extremely heavy and viscous form of crude oil from Alberta’s oil sands — to create a more fluid form that can flow in pipelines or be shipped in rail cars. With bitumen production on the rise since the start of the century and pushing Canada into the top ranks of global oil producers, an entire side industry has arisen to gather and distribute diluent to the oil sands regions of Alberta.

In Part 1, we began our analysis with a look at the shifting diluent supply and demand in Western Canada. Using a relationship known as the blend ratio — or the amount of diluent required per barrel of bitumen — we estimated that diluent demand more than doubled in the past decade or so, rising from about 300 Mb/d in 2010 to more than 750 Mb/d as of early 2020

Part 2 looked more closely at the sources of diluent supply in Western Canada and the various pipeline gathering systems that move those liquids to the Edmonton/Fort Saskatchewan and Hardisty trading hubs. To sum up, a large share is sourced from mixed NGLs (referred to as y-grade) in the form of condensate (also known as natural gasoline), which is extracted from the NGLs at gas and fractionation plants. Significant volumes of diluent also come from simple processing of the liquids directly from the wellhead (called field condensate, but also called condensate in Canada, to keep it confusing). And finally, a small portion of diluent demand is met by using Alberta-sourced butane (or normal butane) as a blending agent. The biggest of the liquids pipelines facilitating movement of diluent supply out of the supply regions is the Peace Pipeline system operated by Pembina Pipeline Corp., but there are also a number of smaller pipeline gathering networks in the region operated by Keyera Energy and Plains Midstream Canada.

In Part 3, we shifted our focus to the pipelines that distribute the diluent from the primary hubs mentioned above to the oil sand regions of Alberta. The largest operator is Inter Pipeline Ltd., with its Polaris, Corridor, and Cold Lake systems. Other pipelines that distribute diluent include Norlite (Enbridge/Keyera), Rainbow II (Plains Midstream Canada), and Access (Wolf Midstream). These pipelines all distribute diluent from the Edmonton/Fort Saskatchewan hub, while two smaller pipelines into and out of the Hardisty hub are operated by Husky Energy. We concluded that blog by noting that there is more than enough in-region capacity (1.6 MMb/d) on the existing set of diluent distribution pipelines to handle current diluent demand (~750 Mb/d).

Twenty-Three Permits Renewed; Four DUCs Reported; Three New Permits -- July 7, 2020

API week crude oil storage estimate:

• estimate forecast: an inventory draw of 3.114 million bbls
• actual estimate: a build of 2.048 million bbls

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Back to the Bakken

Active rigs:

$40.57	7/7/2020	07/07/2019	07/07/2018	07/07/2017	07/07/2016
Active Rigs	10	58	64	56	30

Three new permits, #37702 - #37704, inclusive:

• Operator: Whiting (2); Petro-Hunt
• Field: Sanish (Mountrail); Charlson (McKenzie)
• Comments: 
• Whiting has permits for a two-well Lacey pad in NESE 2-152-92, 350' FEL and about 1900' FSL; Sanish oil field
• Petro-Hunt has a permit for a USA well in NWNW 14-153-95, 195' FNL and 1166' FWL; based on the name of this well, it will be a long lateral (1280-acre spacing) running north into sections 11 and 2;

Twenty-three permits renewed:

• CLR (10): two of each of the following: Dennis, Flint Chips (all four in Dunn County); Berlain (both in McKenzie); Charleston and Olympia (all four in Williams County);
• CPEUSC (8): four CPEUSC Narcisse permits; four CPEUSC Austin permits5, Williams County
• Lime Rock (3): three Harlson Rebsom permits in Dunn County
• EOG (2): two Austin permits in Mountrail County (spelled incorrectly on the DAR)

Four producing wells (DUCs) reported as completed:

• 35557, SI/A, Oasis, Bobby 5502 14-2 8BX, Squires, t--; cum 19K in 1.5 months;
• 34826, drl/A, Hess, HA-Nelson A-152-95-3427H-9, Hawkeye, t--; cum 70K in 2.5 months;
• 34827, drl/A, Hess, HA-Nelson A-152-95-3427H-8, Hawkeye, t--; cum 68K in 3 months;
• 34828, drl/A, Hess, HA-Nelson A-152-95-3427H-7, Hawkeye, t--; cum 82K in 3 months;

Production data:

34828:

Pool	Date	Days	BBLS Oil	Runs	BBLS Water	MCF Prod	MCF Sold	Vent/Flare
BAKKEN	5-2020	31	20788	20761	12216	34159	33002	1157
BAKKEN	4-2020	30	25191	25491	17120	47714	43833	3881
BAKKEN	3-2020	31	36111	35676	28034	68920	29843	39077
BAKKEN	2-2020	0	0	0	0	0	0	0

34826:

Pool	Date	Days	BBLS Oil	Runs	BBLS Water	MCF Prod	MCF Sold	Vent/Flare
BAKKEN	5-2020	31	25670	25615	11993	45385	43848	1537
BAKKEN	4-2020	30	26953	27019	12291	45494	41793	3701
BAKKEN	3-2020	18	17509	17298	8300	31900	13813	18087

34827:

Pool	Date	Days	BBLS Oil	Runs	BBLS Water	MCF Prod	MCF Sold	Vent/Flare
BAKKEN	5-2020	31	18992	18987	15081	43147	41686	1461
BAKKEN	4-2020	30	26722	26853	18314	49853	45797	4056
BAKKEN	3-2020	24	22724	22450	19185	42166	18258	23908

35557:

Pool	Date	Days	BBLS Oil	Runs	BBLS Water	MCF Prod	MCF Sold	Vent/Flare
BAKKEN	5-2020	0	0	0	0	0	0	0
BAKKEN	4-2020	0	0	0	0	0	0	0
BAKKEN	3-2020	13	8725	9133	14767	6697	6190	197
BAKKEN	2-2020	29	9801	9287	10526	8220	6387	1543