Energy Week

Is the fear factor too strong for an economic recovery even if economies start to open up?
- stimulus matters
- gov subsidizing fear
Oil Slump, Coronavirus Create a Perfect Storm for Nigeria’s Economy
https://www.wsj.com/articles/oil-slump-coronavirus-create-a-perfect-storm-for-nigerias-economy-11588000761
- Nigeria’s break even oil price is $133/barrel
- Oil accounts for 60% of government revenue and 90% of foreign exchange
- Was once number 1 country for pipeline theft. How much is that driving up break-even price?
- Political ramifications of low oil prices will be amplified in Nigeria
How the U.S. could use taxpayer dollars to save oil and energy companies
https://mobile.reuters.com/article/amp/idUSL2N2CC2KF
- Could the U.S. “nationalize” the oil industry? No, not likely
- Could the U.S. gov bailout oil industry by getting equity state in oil companies and then selling it back?
What Saudi Arabia Can Do to Lead Again on Oil
https://www.bloomberg.com/opinion/articles/2020-04-23/coronavirus-3-things-saudi-arabia-can-do-to-lead-again-on-oil
- Replace leadership at the top to try and restore market confidence in Saudi Arabia’s leadership
When oil became waste: a week of turmoil for crude, and more pain to come
https://mobile.reuters.com/article/amp/idUSKCN228059?
- What will happen to midstream contracts if small companies go bankrupt or the assets are purchased by other companies?
- Midstream companies might be in trouble
Oklahoma asks Trump to declare coronavirus an 'act of God' to help oil producers
https://www.reuters.com/article/us-oil-usa-oklahoma/oklahoma-asks-trump-to-declare-coronavirus-an-act-of-god-to-help-oil-producers-idUSKCN2280OR
- declaring Force Majure on oil would allow leases to be maintain, but why don’t producers Just renegotiate with the land owners?
- compare this to North Dakota which is issuing well wavers for 5,000 wells. Production could decline about 300,000 bpd.
Russia's Tatneft cuts oil output ahead of OPEC+ amid lack of storage, poor demand: sources
https://mobile.reuters.com/article/amp/idUSKCN2290Y0
South Korea Has Run Out of Commercial Storage Space for Oil
https://www.bloomberg.com/amp/news/articles/2020-04-27/south-korea-has-run-out-of-commercial-storage-space-for-oil
Global oil supply to fall 6% by 2030 due to delayed projects: data
https://www.reuters.com/article/us-global-oil-supply-graphic/global-oil-supply-to-fall-6-by-2030-due-to-delayed-projects-data-idUSKCN2261LL
DOE Announces Crude Oil Storage Contracts to Help Alleviate U.S. Oil Industry Storage Crunch
https://www.energy.gov/articles/doe-announces-crude-oil-storage-contracts-help-alleviate-us-oil-industry-storage-crunch
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Trump tweets about oil and WTI moved up 35%
Can the United States regulate oil production?
- would need to pass a law through Congress to give Energy Department authority to regulate oil production
- regulate it through EPA flaring regulations
- BLM could regulate
- regulate through taxes
But all would mean companies would sue
Oil Investors Grow Desperate for Supply Cuts Amid Glut
https://www.wsj.com/articles/oil-investors-grow-desperate-for-supply-cuts-amid-glut-11586088000
- Check out the really awesome throw-back Nintendo graphic on this article
- US joining OPEC? US would be a less reliable partner than Russia
Explainer: Antitrust law won't get in the way of U.S. acting to raise oil prices
https://finance.yahoo.com/news/explainer-antitrust-law-wont-way-215552855.html?
- anti-trust experts Believe that the US could regulate oil production but is it really?
- What if Trump says they should collude but companies are hesitant unless they receive an exemption from anti-trust regulations? And then changes his mind. This happened in 1956 with Eisenhower.
Oil set to ‘crater’ Monday as OPEC meeting delayed, tensions flare between Saudi Arabia and Russia
https://www.cnbc.com/2020/04/04/oil-set-to-crater-monday-as-opec-meeting-delayed-tensions-flare-between-saudi-arabia-and-russia.html
OPEC, Allies Set to Debate Oil Cuts as Saudis Delay Pricing Move
https://www.wsj.com/articles/opec-allies-set-to-debate-oil-cuts-as-saudis-delay-pricing-move-11586090711
Oil Producers Race for Output Deal With G-20 at Center Stage
https://www.bloomberg.com/news/articles/2020-04-05/oil-negotiators-race-for-global-pact-with-u-s-role-in-balance?sref=5F8Ao01j
Canada in talks with OPEC, as oil rout continues
https://ca.finance.yahoo.com/news/canada-in-talks-with-opec-as-oil-route-continues-162622627.html
Check out Ryan Sitton’s “interesting” graph of oil demand forecasts https://twitter.com/ryansitton/status/1245430213254807552?s=21
Trump Should Prepare To Be Scapegoated For A Failed Russia-Saudi Oil Meeting
https://www.forbes.com/sites/ellenrwald/2020/04/06/trump-should-prepare-to-be-scapegoated-for-a-failed-russia-saudi-oil-meeting/#37e271f3760d
This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit energyweek.substack.com

Have Russia and Saudi Aramco ruined everything for oil and gas? This week, we investigate the problems of the oil price war and the geopolitical questions surrounding the global oil industry.
Russia Says It Is Ready to Weather the Coronavirus Storm
https://www.wsj.com/livecoverage/coronavirus/card/EsYOOaU3UYHS6KQVDJYY
'Oil price war,' coronavirus could drive gas prices below $2 gallon
https://www.usatoday.com/story/money/2020/03/09/gas-prices-oil-prices-coronavirus-crude-oil-petroleum-opec/4998630002/
Oil crashes by most since 1991 as Saudi Arabia launches price war
https://www.cnn.com/2020/03/08/investing/oil-prices-crash-opec-russia-saudi-arabia/index.html
How Putin spurned the Saudis to start a war on America’s shale oil industry
https://www.latimes.com/business/story/2020-03-08/oil-price-war
Six Thoughts on the Collapse of the Oil Market
https://www.bloomberg.com/opinion/articles/2020-03-09/oil-collapse-6-ways-saudi-arabia-s-move-will-hit-global-markets
- Is this a conspiracy between Russia and Saudi Arabia to take out US shale in retaliation for US sanctions on Nord Stream 2 pipeline? No conspiracy.
- Is a desire To get back at the Americans even a factor in Russia’s decision?
- Shale is collateral damage.
- Russia now in the driver’s seat of the Saudi-Russia relationship, not Saudi Arabia.
- Drilling party!
- March 18 JTC meeting is NOT binding
- Remember that there are more barrels off the market from Libyan that Russia + Saudi Arabia want to put back on the market in April
- Not the end of the US shale industry but if this goes on long enough will there be a fundamental shift in the natural of US shale oil industry?
This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit energyweek.substack.com

New York Times Western Pennsylvania podcast episode - https://podcasts.apple.com/us/podcast/the-swing-issue-that-could-win-a-swing-state/id1200361736?i=1000463544308
How the stock market has performed during past viral outbreaks, as epidemic locks down 16 Chinese cities
https://www.marketwatch.com/amp/story/guid/6A955A3E-3D43-11EA-A3B8-BC9F4A046959?
- check out charts showing market and other epidemics
- But do these epidemics REALLY impact the market?
- SARS 2003 coincided with invasion of Iraq and H1N1 2009 coincided with housing market bust
Oil drops below $60 as China virus stokes demand concern
https://www.reuters.com/article/us-global-oil/oil-drops-below-60-as-china-virus-stokes-demand-concern-idUSKBN1ZQ02Z
- China may just continue with its policy of importing into storage
OPEC eyes deeper cuts to head off impact of China virus: source
https://www.spglobal.com/platts/en/market-insights/latest-news/oil/012720-saudi-arabia-ready-to-support-oil-market-as-china-coronavirus-spreads-minister?
- If OPEC says it will continue cuts through end of 2020 now does that really mean anything?
In Crucial Pennsylvania, Democrats Worry a Fracking Ban Could Sink Them
https://www.nytimes.com/2020/01/27/us/politics/pennsylvania-democrats-fracking.html?smid=nytcore-ios-share
- Fracking provides $$ for the state and democrats get to distribute that, but what do voters think?
Dr. Dean Foreman with API - API Monthly Statistical Report
- More refining and petrochemical expansions
- Exports of 9 million bpd = crude oil + products. Record despite the fact that products side is down. Crude oil exports up even before US-China trade deal
- despite slowing drilling activity, production is up
- Seasonality aside this is a trend driven by strong production growth but should expect growth to slow and inventories to normalize in future
- Increase in US crude exports due to IMO 2020 can’t be correlated for sure, first quarter data will show more.
- Dearth of buying from China due to trade negotiations. US was finding other markets for US crude oil and other products across Asia, Latin America, etc.
- Details of US-CHina Phase one trade deal show that China will commit to purchasing US “energy” includes: coal, products, crude oil, etc. really is a $52 billion commitment over 2 years. What does this mean for the economy?
- 1/2 million to 1 million more barrels per day. LNG increases too.
- Mix of refined products that China buys from US are heavy on naphtha and propane. These are sold at a discount to crude oil. So crude oil is the product that can really move the needle.
- But US can only export so much crude oil.
- Shipping implications of this for Panama Canal. Don't let more than 4 LNG ships through locks at one time.
- Logistical implications of how the market will sort out the transportation issues of all of this.
- Natural gas market broken? Actually its the largest in the world. Not broken. 45 years of nat gas on record for Henry Hub - lowest prices.
- DUCs down by 10%
- Gasoline deliveries diverged regionally: seeing changes over time. More decline in urban and less in rural. Gasoline demand decreased but reformulated gasoline decreased more and conventional gasoline increased. Pretty strong given the trade and agriculture downturn this past year.
Catch Dr. Foreman at the Argus Crude Oil Summit on Feb 5!
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China’s corn-based ethanol fuel threatens food security while crowding the market, state commentary warns

https://www.scmp.com/economy/china-economy/article/3207013/chinas-corn-based-ethanol-fuel-threatens-food-security-while-crowding-market-state-commentary-warns#Echobox=1673879264

China can't feed its own people, and they are using corn for fuel

The US puts ethanol in gasoline to replace MBTE (found to cause cancer) but now puts more in its gasoline to replace petroleum - policy started during Bush Admin

What is going on in China? Why don't they just reduce the amount of ethanol in their gasoline?

On gas stoves:

see

for a good explanation

for a quick run down:

Biden agenda, lithium mine, tribes, greens collide in Nevadahttps://www.nbc4i.com/news/politics/ap-politics/ap-bidens-agenda-lithium-mine-tribes-greens-collide-in-reno/- What's really green or not?- $700 million loan guarantee offered by Biden admin for this mine even though permits are being challenged in judicial system

Special Guest Kunal Patel from the Dallas Fed on the Q4 2022 Energy Survey

Ellen's Investing.com Column

https://www.dallasfed.org/research/surveys/des/2022/2204#tab-report

~ 200 oil and gas firms in 11th district (152 responses to survey)

Main takeaways:

expansion of activity solid

costs continued to increase but some moderation in increases

supply chain delays continue to persist

employment demand in the field

uncertainty up amongst executives

Most executives think price of oil at end of 2023 will be in the $80 range (average $84/barrel)

Capital expenditures: 2022 vs. 2023

firms are looking to increase capital expenditures

BUT there's also cost inflation, so much of the capital expenditure increases could just be due to cost inflation

expect small increase in activity, nothing too significant, but spending will go up.

https://www.dallasfed.org/research/surveys/des/2022/2204#tab-questions

Will cost inflation be higher than last year? thinking is that is won't be as much of an increase.

How does this fit with the EIA forecast? Activity will increase. More firms are saying they are increasing production not declining but the increase is declining. Slower growth is the key word here.

EIA says 12.6 million bpd by end of 2023. Can the Permian hit that? On an annual basis we will produce more, but on a month to month basis we won't hit as high production levels (13 million bpd in 2019).

"Slowing growth" is the word for 2023?

But maybe slower growth isn't a bad thing? Activity will be higher in 2023 than in 2022. How long will our resources last?

Cost inflation makes it hard for firms to know how much they are going to spend this year. Supply chain disruptions are still having a major impact. Even if firms wanted to increase activity they couldn't because they don't have the parts.

Maturing asset base is listed as number 2 reason why growth isn't happening as fast. Are US assets closer to end of life cycle?

price volatility mentioned in comments "The volatility in commodity prices is creating bid–ask spreads to blow out on transactions. Fewer deals are to be had in this style of environment."

regulatory environment listed less this quarter

could there be a recession? this came up a lot

CEOs prediction for the price of oil at the end of the year is most impacted by what the price of oil was at the time they were asked for the prediction.

What price are you using for your budget question gets a much more conservative answer though CEOs are moving up the underlying price for their budgets.

"Leasing has increased and new drilling has increased."

Q1 2023 Survey will be out at the end of March!

This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit energyweek.substack.com