Masters Of War

Come you masters of war You that build all the guns You that build the death planes You that build all the bombs You that hide behind walls You that hide behind desks I just want you to know I can see through your masks. You that never done nothin' But build to destroy You play with my world Like it's your little toy You put a gun in my hand And you hide from my eyes And you turn and run farther When the fast bullets fly. Like Judas of old You lie and deceive A world war can be won You want me to believe But I see through your eyes And I see through your brain Like I see through the water That runs down my drain. You fasten all the triggers For the others to fire Then you set back and watch When the death count gets higher You hide in your mansion' As young people's blood Flows out of their bodies And is buried in the mud. You've thrown the worst fear That can ever be hurled Fear to bring children Into the world For threatening my baby Unborn and unnamed You ain't worth the blood That runs in your veins. How much do I know To talk out of turn You might say that I'm young You might say I'm unlearned But there's one thing I know Though I'm younger than you That even Jesus would never Forgive what you do. Let me ask you one question Is your money that good Will it buy you forgiveness Do you think that it could I think you will find When your death takes its toll All the money you made Will never buy back your soul. And I hope that you die And your death'll come soon I will follow your casket In the pale afternoon And I'll watch while you're lowered Down to your deathbed And I'll stand over your grave 'Til I'm sure that you're dead.------- Bob Dylan 1963

Monday, June 27, 2022

no new EIA oil data; lowest DUCs on record; DUC backlog at 4.4 months; completions 16% below 2019 average..

this week's EIA oil data was not updated; natural gas rigs at a 33 month high; DUCs lowest on record; 4.4 month DUC backlog is lowest in 7 years; completions still 16% below the prepandemic average..

oil prices fell for a second week after 7 straight weekly increases as fears of a monetary policy induced recession kept the pressure on prices...after falling 9.2% to $109.56 a barrel last week after the Fed raised interest rates three-quarters of a percent and Russian oil output returned to pre-war levels, the contract price for US light sweet crude for July delivery was volatile in overseas trading Monday, first rising more than $1 in Asia as tightening supplies outweighed concerns about slowing global economic growth and fuel demand. then tumbling to trade lower as concerns about slowing global economic growth and fuel demand offset worries about tightening supplies, as US markets were closed in observance of the Juneteenth holiday...oil prices were higher in mid-morning trade in Asia on Tuesday as the recessionary fears that plagued markets receded and traders focused on bullish near-term fundamentals, and continued higher in New York on high summer fuel demand and tight supplies to settle with a gain of $1.09 at $110.65 a barrel as trading in the July oil contract expired, while the more active August crude contract rose $1.53 to $109.52 a barrel at the same time...with Wednesday's price quotes referencing the contract for WTI for August delivery, oil prices skidded $6 in early Asian trading on Wednesday amid a push by US President Biden to bring down fuel costs, including by pressuring on major US oil firms and were still off by more than 4% as​ US​ traders turned their focus to concerns over inflation and expectations for continued tighter monetary policy ahead of Congressional testimony from Fed Chairman Powell and settled $3.33 lower at $106.19 a barrel as traders worried that​ the​ Fed​'s​ rate hikes could push the U.S. economy into recession, dampening demand for fuel....oil prices fell another 1% in early trading Thursday, after the American Petroleum Institute reported U.S. crude and gasoline inventories unexpectedly increased during the prior week, and came under further pressure as the U.S. Dollar rallied after weaker-than-expected manufacturing data in the Eurozone, and settled Thursday’s trade down $1.92, or 1.8%, at a six week low of $104.27 per barrel after another round of remarks from Federal Reserve Chair Jerome Powell fanned worries that interest rate hikes would slow economic growth....however, oil prices more than reversed Thursday's drop in early trading Friday, on comments from the Libyan oil minister that Libya's oil production had risen in the past week to around 700,000 to 800,000 barrels a day, with those figures in doubt as the National Oil Corporation chairman was withholding production data from him, and settled the session $3.35, or 3.2% higher, at $107.62 a barrel, supported by tight supplies just as demand was recovering from the Covid pandemic...while oil price​ quote​s finished 1.8% lower than last week's close, the August contract price, which finished last week at $107.99 a barrel, was only 0.3% lower..

natural gas prices also finished lower this week, as the prospect of lower LNG exports more than offset rising domestic demand...after falling 21.5% to a seven week low of $6.944 per mmBTU last week on the news that the Freeport LNG export terminal would be down for months, the contract price of natural gas for July delivery slid 13.6 cents, or 2% to  $6.808 per mmBTU on Monday on a forecast ​for a ​break from the record heat by the coming weekend...but prices recovered 5.0 cents of that loss to settle at $6.858 per mmBTU on Wednesday, on record power demand in Texas and on a slow slide in daily gas output...however, natural gas prices imploded on Thursday after the EIA reported natural gas working stocks rose by a larger-than-expected 74 billion cubic feet during the prior week and settled 61.9 cents or 9% lower at an eleven week low of $6.239 per mmBTU, as the bigger-than-expected storage build indicated that the extended shutdown of the Freeport LNG export plant would allow utilities to quickly rebuild low gas stockpiles...natural gas prices slipped another 1.9 cents to settle at eleven week low of $6.220 per mmBTU on Friday as the drop in LNG exports offset forecasts for hotter weather, higher demand and less output than last month, and thus finished 10.4% lower on the week...

The EIA's natural gas storage report for the week ending June 17th indicated that the amount of working natural gas held in underground storage in the US rose by 74 billion cubic feet to 2,169 billion cubic feet by the end of the week, which left our gas supplies 305 billion cubic feet, or 12.3% below the 2,474 billion cubic feet that were in storage on June 17th of last year, and 331 billion cubic feet, or 13.2% below the five-year average of 2,500 billion cubic feet of natural gas that have been in storage as of the 17th of June over the most recent five years....the 74 billion cubic foot injection into US natural gas working storage for the cited week was more than the average forecast for a 70 billion cubic foot injection from an S&P Global Platts survey of analysts, and substantially higher than the 49 billion cubic feet that were added to natural gas storage during the corresponding week of 2021, but less than the average injection of 82 billion cubic feet of natural gas that had typically been added to our natural gas storage during the same week over the past 5 years.... 

The Latest US Oil Supply and Disposition Data from the EIA (not)

as you know, i've been covering the Weekly Petroleum Status Report from the EIA in this weekly newsletter for several years now. but this week there wasn't any; the header on the report's main access page (https://www.eia.gov/petroleum/supply/weekly/) simply says Next Release Date: TBD

the following notice was on top of all the EIA oil websites i usually access all week:

Several U.S. Energy Information Administration product releases scheduled for the week of June 20, 2022, will be delayed as a result of systems issues.

their press release on this issue says: 

EIA statement on data releases for the week of June 20, 2022
Several U.S. Energy Information Administration (EIA) product releases scheduled for the week of June 20, 2022, will be delayed as a result of systems issues. Our experts are working on a solution to restore the affected systems.
We will release the Weekly Natural Gas Storage Report as scheduled on June 23. All other data releases scheduled for this week will be delayed. We will resume our normal production schedule and release delayed data as soon as possible.
We apologize for the inconvenience of this delay, and remain committed to our mission of collecting, analyzing, and disseminating independent and impartial energy information as we resolve this issue.

In a dozen years of covering weekly and monthly reports from government agencies, i've never seen anything like it....

This Week's Rig Count

The number of drilling rigs running in the US rose for the 77th time over the prior 91 weeks during the week ending June 24th, but still remained 5.1% below the prepandemic rig count....Baker Hughes reported that the total count of rotary rigs drilling in the US increased by 13 to 753 rigs this past week, which was also 283 more rigs than 470 rigs that were in use as of the June 25th report of 2021, but was also 1,176 fewer rigs than the shale era high of 1,929 drilling rigs that were deployed on November 21st of 2014, a week before OPEC began to flood the global market with oil in an attempt to put US shale out of business….

The number of rigs drilling for oil increased by 10 to 594 oil rigs during the past week, after rigs targeting oil rose by 4 during the prior week, and there are 222 more oil rigs active now than were running a year ago, even as they still amount to just 36.9% of the shale era high of 1609 rigs that were drilling for oil on October 10th, 2014, and as they are still down 13.0% from the prepandemic oil rig count….at the same time, the number of drilling rigs targeting natural gas bearing formations rose by 3 to 157 natural gas rigs, which was the most natural gas rigs deployed since September 6th, 2019, and up by 59 natural gas rigs from the 98 natural gas rigs that were drilling during the same week a year ago, even as they were still only 9.8% of the modern high of 1,606 rigs targeting natural gas that were deployed on September 7th, 2008…in addition to rigs targeting oil and natural gas, Baker Hughes continues to show two "miscellaneous" rigs still active; one is a rig drilling vertically for a well or wells intended to store CO2 emissions in Mercer county North Dakota, and the other is also a vertical rig, drilling 5,000 to 10,000 feet into a formation in Humboldt county Nevada that Baker Hughes doesn't track...a year ago, there were no such "miscellaneous" rigs running...

The offshore rig count in the Gulf of Mexico was unchanged at fifteen rigs this week, with all of this week's Gulf rigs drilling for oil in Louisiana waters....that's one more than the 14 offshore rigs that were active in the Gulf a year ago, when 13 Gulf rigs were drilling for oil offshore from Louisiana and one was deployed for oil offshore from Texas.…in addition to rigs drilling in the Gulf, we also have an offshore rig drilling in the Cook Inlet of Alaska, where natural gas is being targeted at a depth greater than 15,000 feet, while year ago, there were no offshore rigs other than those deployed in the Gulf of Mexico....

in addition to rigs offshore, we continue to have 3 water based rigs drilling through inland bodies of water this week, including a directional rig drilling for oil at a depth between 10,000 and 15,000 feet, inland in the Galveston Bay area, and two directional inland water rigs drilling for oil in Terrebonne Parish, Louisiana, one of which is targeting a formation greater than 15,000 feet in depth, while the other is shown drilling to between 10,000 and 15,000 feet... during the same week of a year ago, there were two such "inland waters" rig deployed...

The count of active horizontal drilling rigs was up by eleven to 685 horizontal rigs this week, which was 2​64 more rigs than the 42​1 horizontal rigs that were in use in the US on June 25th of last year, but less than half of the record 1,374 horizontal rigs that were drilling on November 21st of 2014....at the same time, the directional rig count was up by two to 41 directional rigs this week, and those were up by 11 from the 30 directional rigs that were operating during the same week a year ago…meanwhile, the vertical rig count was unchanged at 27 vertical rigs this week, while those were up by 8 from the 19 vertical rigs that were in use on June 25th of 2021….

The details on this week’s changes in drilling activity by state and by major shale basin are shown in our screenshot below of that part of the rig count summary pdf from Baker Hughes that gives us those changes…the first table below shows weekly and year over year rig count changes for the major oil & gas producing states, and the table below that shows the weekly and year over year rig count changes for the major US geological oil and gas basins…in both tables, the first column shows the active rig count as of June 24th, the second column shows the change in the number of working rigs between last week’s count (June 17th) and this week’s (June 24th) count, the third column shows last week’s June 17th active rig count, the 4th column shows the change between the number of rigs running on Friday and the number running on the Friday before the same weekend of a year ago, and the 5th column shows the number of rigs that were drilling at the end of that reporting week a year ago, which in this week’s case was the 25th of June, 2021....

as usual, we'll start by checking the Rigs by State file at Baker Hughes for the changes in the Texas Permian basin...there we find that there were two rigs added in Texas Oil District 8, which covers the core Permian Delaware, and that there was a rig added in Texas Oil District 7C, which includes the southern counties of the Permian Midland....since that means that the Texas Permian rig count was up by 3 rigs, we can then conclude that the rig added in New Mexico must have been added in the western Permian Delaware in the southeast corner of that state for the national Permian count to be up four...

elsewhere in Texas, we find that two rigs were added in Texas Oil District 1, and that two more rigs were added in Texas Oil District 4....three of those four rig additions were in the Eagle Ford, and included two oil rigs and one targeting natural gas, while the other addition was targeting a basin that Baker Hughes doesn't track​ in the same region​; the Eagle Ford now has 10 natural gas rigs, in addition to 62 targeting oil...​meanwhile, a rig was pulled out of Texas Oil District 6, which was likely targeting natural gas in the Haynesville shale, because a rig was added in the Haynesville shale region of northwest Louisiana at the same...for those who are counting, the Texas rig count was up by 6 due to the addition of the rig in the state's offshore waters, not covered by a state district..

while there were three rigs added in Colorado, the DJ Niobrara chalk of the Rockies front range only saw a one rig increase, so two of those Colorado rigs and the rig in Wyoming were apparently targeting basins that Baker Hughes doesn't track....in Oklahoma, there were three rigs added in the Cana Woodford, but there were rigs pulled out of those areas of the Granite Wash and the Mississippian basins within the state at the same time, so the Oklahoma count was just up by one...meanwhile, the natural gas rig count was up by 3 because two natural gas rigs were added in a basin or basin that Baker Hughes doesn't track, in addition to the natural gas rig addition we've already noted in the Eagle Ford...

DUC well report for May

Monday of last week (June 13) saw the release of the EIA's Drilling Productivity Report for June, which included the EIA's May data on drilled but uncompleted (DUC) oil and gas wells in the 7 most productive shale regions (shown under the report's tab 3)....that data showed a decrease in uncompleted wells nationally for the 23rd consecutive month, as both completions of drilled wells and drilling of new wells increased in May, but remained well below average pre-pandemic levels...for the 7 sedimentary regions covered by this report, the total count of DUC wells decreased by 46 wells, falling from 4,295 DUC wells in April to 4,249 DUC wells in May, which was the lowest number of US wells left uncompleted on record, and also 33.0% fewer DUCs than the 6,339 wells that had been drilled but remained uncompleted as of the end of May of a year ago...this month's DUC decrease occurred as 911 wells were drilled in the 7 regions that this report covers (representing 87% of all U.S. onshore drilling operations) during May, up from the 824 wells that were drilled in April, while 957 wells were completed and brought into production by fracking them, up by 13 from the 944 well completions seen in April, and up by 157 from the 800 completions seen in May of last year....at the May completion rate, the 4,249 drilled but uncompleted wells remaining at the end of the month represents a 4.4 month backlog of wells that have been drilled but are not yet fracked, down from the 4.5 month DUC well backlog of a month ago, and the lowest backlog since December 2014, despite a completion rate that is still more than 16% below 2019's pre-pandemic average...

only the oil producing regions saw a DUC well decreases during May, since both the natural gas producing Appalachian and Haynesville shales saw modest DUC well increases....the number of uncompleted wells remaining in the Permian basin of west Texas and New Mexico decreased by 37, from 1,294 DUC wells at the end of April to 1,257 DUCs at the end of May, as 399 new wells were drilled into the Permian basin during May, while 436 already drilled wells in the region were being fracked....in addition, the number of uncompleted wells remaining in Oklahoma's Anadarko basin decreased by 9, falling from 724 at the end of April to 715 DUC wells at the end of May, as 61 wells were drilled into the Anadarko basin during May, while 70 Anadarko wells were completed....meanwhile, DUC wells in the Niobrara chalk of the Rockies' front range decreased by 6, falling from 320 at the end of April to a record low of 314 DUC wells at the end of May, as 99 wells were drilled into the Niobrara chalk during May, while 105 Niobrara wells were completed....at the same time, DUCs in the Eagle Ford shale of south Texas decreased by 5, from 612 DUC wells at the end of April to a record low of 607 DUCs at the end of May, as 105 wells were drilled in the Eagle Ford during May, while 110 already drilled Eagle Ford wells were being fracked....in addition, there was a decrease of 3 DUC wells in the Bakken of North Dakota, where DUC wells fell from 429 at the end of April to a record low of 426 DUCs at the end of May, as 75 wells were drilled into the Bakken during May, while 78 of the drilled wells in the Bakken were being fracked.....

among the natural gas producing regions, the drilled but uncompleted well count in the Appalachian region, which includes the Utica shale, rose by one well, from 497 DUCs at the end of April to 498 DUCs at the end of May, as 98 wells were drilled into the Marcellus and Utica shales during the month, while 97 of the already drilled wells in the region were fracked....at the same time, the uncompleted well inventory in the natural gas producing Haynesville shale of the northern Louisiana-Texas border region rose by 13, from 419 DUCs in April to 432 DUCs by the end of May, as 74 wells were drilled into the Haynesville during May, while 61 of the already drilled Haynesville wells were fracked during the same period....thus, for the month of May, DUCs in the five major oil-producing basins tracked by this report (ie., the Anadarko, Bakken, Niobrara, Permian, and Eagle Ford) decreased by a total of 60 wells to 3,319 DUC wells, while the uncompleted well count in the major natural gas basins (the Marcellus, the Utica, and the Haynesville) increased by net of 14 wells to 930 wells, although as this report notes, once into production, more than half the wells drilled nationally will produce both oil and gas...

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note: there’s more here

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