The Million Dollar Way (The Bakken Oil Blog)

Wednesday, November 30, 2022

China, Covid, And Finally Understanding The "Why" -- The New Yorker -- November 30, 2022

I finally understand it. It finally makes sense.

China.

The lock downs.

The craziness.

There two competing (?) theories:

politics: this theory has to do with power; Xi's obsession with remaining in absolute control;
medical: the other has to do with Xi's genuine fear of Covid-19 getting out of control.

In the big scheme of things,

there really aren't that many active cases of Covid-19 in the country; and,
even more interesting, the seriousness of the disease is minimal (as reported by others, the Chinese no longer fear the disease; and the mortality in China from Covid -- where healthcare is much less sophisticated than that in the west -- is 0.025%.

Compare that with a mortality rate of 1.1 percent in the US.

Okay, so I have flip-flopped on this issue. I initially thought it was a political issue -- Xi using Covid-19 as an excuse to lock up those who disagree / disagreed with him; even if that meant shutting down entire cities that might threaten his regime.

Most recently, I have stated on the blog that it is my opinion Xi is absolutely terrified of Covid-19 and what might happen to China if CCovid truly got out of control.

The media continues to oscillate around those two issues: are the lock downs a tool to maintain political power or a real (medical) concern for the implications for China if the disease gets out of control?

So, that's where most of us stand -- the "us" being who even follow the Chinese Covid story and care.

Break, break.

I subscribe to The New Yorker.

As part of that subscription I get a "daily New Yorker note."

Today, (Wednesday, November 30, 2022) the "daily New Yorker note" had a long essay titled, "Why China's COVID policies led to protest." The full title: "How Covid's policies and party politics set the stage for the protests in China."

Whether the author of that essay -- Isaac Chotiner -- realizes it or not, he stumbled into solving the dilemma. Is it politics or is it medical paranoia that is driving the massive lock downs?

It's all politics. But the reasons remain obscure for almost all Americans, including me until now.

Absolutely brilliant.

Xi is only part of the problem and it appears he's going to have a major, major challenge turning this ship around. A speech by Xi ending his "zero Covid policy" is not going to work. It's much, much more complicated than that. But very, very easy to explain / understand when one understands the Chinese political structure.

Nine New Permits; One DUC Reported As Completed -- November 30, 2022

Not ready for prime time: in response to an article that suggested that OPEC had cut production by 710,000 bpd in the month of November, a reader asked my thoughts on whether OPEC at some point would quit exporting oil to the US. My response, not ready for prime time:

1. The US exported record amounts oil and refined products this past week, almost 12 million bpd -- compare that to 710,000 bpd which is divided up among all countries to which OPEC exports and domestically consumes.

https://oilprice.com/Latest-Energy-News/World-News/US-Crude-Oil-Oil-Products-Exports-Hit-All-Time-High.html.

2. US imports approximately 1.5 million bopd from OPEC. https://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=MTTIMXX1&f=M

3. If OPEC were to cut us off, Permian, Eagle Ford, and Bakken could easily make up the difference. In fact, the Bakken might be able to do that on its own. Then there are the other half dozen shale plays onshore and all the federal offshore that could be opened if necessary. Then Canada. And now Venezuela is in play.

4. Global production is around 90 million bopd; that's an average. Can easily reach 100 million bopd. An OPEC cut of a million bopd is inconsequential, ...

5. ... but to answer your question, I doubt OPEC will ever quit exporting oil to the US. The more interesting question is when the US will say "no more OPEC oil for the US (NOPEC).

6. I no longer pay much attention to much of anything OPEC says or does. Unless they open the taps to drop oil to $20 / bbl which seems like something they would never do.

************************

Back to the Bakken

Active rigs: 40.

WTI: $80.48.

Natural gas: $7.017.

Nine new permits (Julianne Geiger, last week, "The shale boom is over."): #39438 - #39446, inclusive.

Operators: Kraken (5); MRO (4);
Fields: Burg (Willams County); Bailey (Dunn County)
Comments:

Kraken has permits for five Orbit wells, NWNE 25-159-99;

to be sited between 425 FNL and 557 FNL and at 2315 FEL;

MRO has permits for four wells in Bailey oil field, SESW 33-146-94 -- Bunk, Luptak, Margery, and Claudia,

to be sited 360 FSL and between 1899 FWL and 2019 FWL

One producing well (a DUC) reported as completed:

38730, 1,511, Kraken, Fairbanks 17-20 6H,

The following wells were released from the confidential list (Julianne Geiger, last week, "The shale boom is over."):

CLR: #37946; #37947; #38921; #37953; #38785; #37952; #37950; #37951; #37949
Slawson: #38843;
Petro-Hunt: #38933; #38859; #38860;
Enerplus: #37966;
Hunt: #38777; #38779;
Kraken: #38730;
Neset Consulting: #38890 (Halite 1);

So Many Bittersweet Memories -- November 30, 2022

Ms Christine McVie was 79 years old.

To think we were contemporaries ... it seems "just like yesterday."

What I would do to have those days back ... the late 70's.

Wow, Something Was Temporary -- November 30, 2022

CRASH, link here:

Staggering -- November 30, 2022

Weekly EIA petroleum report: staggering

US crude oil inventories: decreased by a staggering 12.6 million bbls
US crude oil inventories: at 141.9 million barrels, US crude oil inventories are 8% below their five-year average;
refiners operating at a whopping 95.2% of their operable capacity;

WTI -- prior to release of report: up 3.06% right now; trading at $80.59.

Market reaction: