Here We Go -- October 5, 2022

Biden administration, needs to, immediately:

• double the US SPR release; the SPR is only three percent below its historic average; three percent;
  
• done! Within minutes after OPEC+ announces cut, Biden announces an additional ten million bbls of crude oil will be released from the SPR in November;
• it will all be exported: US refiners are pretty much maxed out
  
• ban US petroleum and petroleum products exports

Immediately.

Before this gets out of control:

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Ukraine 

Is Kherson a turning point? by Peter Zeihan on October 5, 2022.

Ukrainian forces are poised to rout Russian defensive formations around the critical southern city of Kherson. 

This comes weeks after a planned counter offensive went into effect, but on the heels of significant gains made against Russian troops in Ukraine's northeast, which saw Kyiv recapture Izium and and the strategic rail hub of Lyman. 

The battle for Kherson will represent a significant bellwether in the current phase of the Ukraine conflict. Russia's best troops and equipment are stationed there. If they dissolve, as have other fronts in recent weeks, not only does this have significant implications for Russia itself but the capture of advanced Russian equipment by Kyiv's forces will represent a larger and more significant transfer than nearly anything NATO has provided up to this point.

Three Wells Coming Off Confidential List Today -- October 5, 2022

Weekly EIA petroleum report, link here:

• US crude oil inventories decreased by 1.4 million bbls despite huge SPR releases:
• refiners are operating at 91.3% of their capacity
• distillate fuel inventories decreased by a whopping 3.4 million bbls;
• we could really use that Canadian heavy oil that would have arrived by the Keystone XL;
• jet fuel supplied was up 2%

OPEC+ cut: we should know shortly. 

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Back to the Bakken

The Far Side: link here.

WTI: $86.15. Shale operators are focused on break-evens of under $40. Just saying.

Natural gas: $6.802. Europe has filled their natural gas storage depots.

Thursday, October 6, 2022: 12 for the month, 12 for the quarter, 457 for the year
38807, conf, Crescent Point Energy, CPEUSC Fantuz 5-13-24-158NN-100W-MBH,

Wednesday, October 5, 2022: 11 for the month, 11 for the quarter, 456 for the year
38806, conf, Crescent Point Energy, CPEUSC Defrance 6-12-1-158N-100W-MBH,
36990, conf, Enerplus, Moray 149-94-36C-25H-TF,
35625, conf, Bowline, Lee 151-101-8-5-13H, 

RBN Energy: oil prices have moved lower with SPR releases, but production still lags, part 2. 

The swift increases in crude oil and gasoline prices that followed Russia’s invasion of Ukraine in February — and the sanctions that were implemented soon thereafter — spurred a lot of concern that the U.S. and global economies would go into a tailspin. In response, government officials here and abroad turned to their strategic reserves as a way to quickly balance the market and rein in prices while buying time for additional oil production to come online. But U.S. production growth and rig activity have hit a wall since June, when releases from the Strategic Petroleum Reserve (SPR) started to pick up steam, reducing the prospects for a significant output increase this year. 

In today’s RBN blog, we examine the changes in the market since the major withdrawals were announced, how the hoped-for bridge to higher oil production has so far failed to materialize, and why it’s unlikely the government will turn to the SPR if prices spike again soon. The Biden administration, fully aware of the public's sensitivity regarding gasoline prices, hasn’t been shy about tapping the SPR. Last November — when prices first started to rise — it authorized a 32 MMbbl exchange in which barrels would be released by the end of April but would need to be returned to the SPR during fiscal 2022-24. Then, a 30 MMbbl withdrawal was announced shortly after Russia’s invasion of Ukraine in late February. Finally, on March 31, President Biden said the U.S. would release another 180 MMbbl of crude from the SPR over six months, or about 1 MMb/d.

Taking A Break -- Off The Net For Awhile -- October 5, 2022

Cut: We should know soon the OPEC+ cut decision. 

• It is interesting to see the "+" after OPEC on this one.

WTI: holds. Up about fifty cents, trading at just under $87.

• CVX: up slightly.
• DVN: up 2%. And, yet it still has a P/E under 9.00. Pays almost 7%.
• SRE: down 2%; trading under $155; P/E of 44; pays 3%.
• EPD: around $24; P/E of 11; pays 7.7%.
  

Insult:

• this is being called a Biden win: $280 million to nation's schools for mental health support;
• there are approximately 100,000 public schools in the US
• $280 million / 100,000 = $2,800 per school
• Ukraine:

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The Book Page

From Transformer: The Deep Chemistry of Life and Death, Nick Lane, 2022, p. 164: 

We keep coming around to ferredoxin, the red protein, so central to all metabolism. 

Its deep antiquity and central role in life was most clearly appreciated by the great pioneer of bioinformatics, Margaret Dayhoff. ' 

The very same year that Daniel Arnon and colleagues first reported the reverse Krebs cycle, 1966, Margaret Dayhoff (working with Richard Eck) published a paper that launched a thousand ships in the journal Science. 

Dayhoff had done her degree in maths at New York University before taking a PhD in quantum chemistry at Columbia, using punched cards to calculate resonance energies of chemical bonds. 

She joined the National Biomedical Research Foundation as Associate Director, where she collaborated with the celebrated cosmologist Carl Sagan, synergising her work on bond energies with her computational skills to develop programmes that could calculate the equilibrium concentration of gases in planetary atmospheres, including Venus, Jupiter, and Mars, as well as the primordial atmosphere of the Earth. 

I'm struck that Carl Sagan was at the time married to Lynn Margulis; whatever else he did, perhaps his greatest bequest to humanity was kindling the cosmological perspective of two of the most brilliant women of the twentieth century, 

Uniquely, Dayhoff could link a deep understanding of the quantum mechanisms underpinning planetary processes such as photosynthesis (grounded in bond energies) with her pioneering computational work on comparing protein sequences -- the basis of modern phylogenetics -- to reconstruct the history of life on Earth like never before. 

The beginning of it all was was her classic paper on ferredoxin in 1966.

Abstract:

The structure of present-day ferredoxin, with its simple, inorganic active site and its functions basic to photon-energy utilization, suggests the incorporation of its prototype into metabolism very early during biochemical evolution, even before complex proteins and the complete modern genetic code existed. 

The information in the amino acid sequence of ferredoxin enables us to propose a detailed reconstruction of its evolutionary history. 

Ferredoxin has evolved by doubling a shorter protein, which may have contained only eight of the simplest amino acids. 

This shorter ancestor in turn developed from a repeating sequence of the amino acids alanine, aspartic acid or proline, serine, and glycine. 

We explain the persistence of living relics of this primordial structure by invoking a conservative principle in evolutionary biochemistry: The processes of natural selection severely inhibit any change in a well-adapted system on which several other essential components depend.

A Musical Interlude -- October 5, 2022

Top Story Of The Day -- October 5, 2022

This is pretty cool. About a year ago I predicted -- and posted on thee blog -- that we would see a glut of used cars and new cars on dealers' lots by July, 2022 -- as the supply chain improved. 

It looks like I might have been right on target -- missing by just a couple of months. 

Link here.