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The Shale Daily Update – 4.3.2020

Here are 10 things you need to know about oil and gas for April 3, 2020:

Trump calls on Russia and Saudi Arabia to cut oil production – Excerpt:

The Trump administration is pressing OPEC to hold an emergency meeting as early as next week to try to end the standoff in the oil market that has threatened to cripple the U.S. oil industry, three industry and government officials familiar with the talks said.

The U.S. pressure is aimed at persuading Saudi Arabia — which has also called for a meeting — and Russia to declare a ceasefire and reverse the export increases that have drowned the global market in crude even as the coronavirus pandemic has decimated international demand.

The White House has not yet decided who, if anyone, it would send to a possible OPEC meeting next week, the industry and government officials said. Candidates included Secretary of State Mike Pompeo, Department of Energy Secretary Dan Brouillette and Trump’s son-in-law and adviser Jared Kushner, the people said.

Oil Extends Gains As OPEC Leaders Call Emergency Meeting To Discuss Trump Production Cuts – Well, guess the pressure from the President worked, as OPEC called a special meeting overnight. The cartel will hold its meeting next week via “emergency teleconference,” which one supposes must be more urgent than just your ordinary, everyday OPEC teleconference.

OPEC+ Debates Biggest Ever Cut as Virus Destroys Oil Demand – It’s worth noting that Russia’s oil minister denied the narrative told in this New York Times report, but Russia says all sorts of things that end up not being accurate. Let’s hope this is one of them.

 

Read the Rest at Shale Magazine

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Why Does Joe Biden Ignore Fracking Science ?

Today’s Campaign Update, Part II (Because the Campaign Never Ends)

Joe Biden and his fellow Democrats are fond of pointing fingers at others and accusing them of ignoring science. They resort to this canard whenever they are trying to avoid having to form a rational, fact-based argument around “climate change,” but they like to use it as a crutch against logic on other topics as well.

But in Sunday night’s debate, when Biden once again demonized hydraulic fracturing – or “fracking” – and promised his administration would invoke a “no new fracking” policy should he actually stumble into the White House next January, it was Biden and no one else who was ignoring real, actual science.

Ironically, in ignoring the actual science around the very safe, well-regulated industrial process of fracking, Biden was ignoring the advice of the senior officials who held regulatory sway over oil and gas-related activities while he served as Vice President. These officials include, but are far from limited to:

Steven Chu, Stanford PhD. Nobel Prize Winner (Physics) DOE Secretary

U.S. Senator Ken Salazar, (Juris Doctor from University of Michigan) DOI Secretary

Sally Jewell (Mechanical Engineering, University of Washington) DOI Secretary

Gina McCarthy (Master of Science in Environmental Health Engineering and Planning and Policy, Tufts University) EPA Administrator

Lisa Jackson (Master of Science in chemical engineering from Princeton University) EPA Administrator

Each and every one of these cabinet-level appointees by President Barack Obama testified and commented on the record on multiple occasions throughout the Obama/Biden administration that hydraulic fracturing was a safe and well-regulated process that offers no threat to groundwater and produces very little air emissions. These senior Obama-era officials were literally forced to make these admissions after spending years in the conduct of a vain search for examples of fracking polluting groundwater or releasing major, harmful air emissions.

The effort at the EPA rose to such hyperbolic levels that one EPA Region 6 administrator, former SMU professor, Dr. Al Armendariz, was removed after his allegations of groundwater contamination by Range Resources were proven to be false. However, that proof did not prevent the State of New York from using Armendariz’s findings in its own doctored report that was used to justify banning fracking within its state borders.

Mr. Biden loves to talk about his years of serving as Vice President to President Obama. Yet, when it comes to fracking and the science his own administration developed and communicated during those 8 years in office, the former VEEP seems to have developed a mental block.

But no worries – we will continue to remind him – and you – of the real, extremely well-developed body of science that surrounds this safe and well regulated industrial process. Because facts are stubborn and important things, especially during troubling times such as these.

That is all.

Today’s news moves at a faster pace than ever. Whatfinger.com is my go-to source for keeping up with all the latest events in real time.

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For the U.S. Oil and Gas Industry, the Time for Alarm Has Arrived

Today’s Energy Update 

I’m no fan of alarmism, whether it be about energy, the environment or any other subject, but the situation for the domestic oil and gas industry has grown somewhat alarming over the past two months. Since early January the S&P Oil & Gas Index has plunged 32%. Investors appear convinced not just that there is oodles of oil in the world but that the spread of Coronavirus brings the risk of economic flatlining in the biggest growth market for oil — China.

With the virus set to spread and the OPEC+ group running out of options to contain the oil glut, the price of West Texas Intermediate (WTI) crashed through the important $50 level this week, and promises to slide further. Chevron yesterday sent home 300 workers in London over virus fears. Thus, a year that began with a fairly promising outlook is rapidly devolving into one that will present a fight for survival for some domestic producers.

The statement on Tuesday by Dr. Nancy Messonnier, an official at the U.S. Centers for Disease Control and Prevention (CDC), that spread of the Coronavirus in the U.S. was “inevitable,” and that citizens here should begin preparing for an outbreak will certainly work to further inflame the markets. President Donald Trump has reserved television time for a statement designed to calm the situation on Wednesday night, but it could come too late to prevent further disruption in the commodity and financial markets.

Meanwhile, the U.S. market for natural gas remains chronically over-supplied with no real relief in sight. Although the NYMEX price per MMBtu has remained fairly stable during the first two months of the year, it is stable at a price that is far too low for many natural gas producers to remain profitable.

All of these factors now combine to create a precarious situation for heavily-leveraged companies as they head into debt re-determination season. Chesapeake Energy is a good example. When I wrote about that company’s long, difficult struggle to survive last November, Morgan Stanley had just lowered its price target for CHK stock from $2.25 per share to $1.25.

But it isn’t only independent producers who are finding the current market conditions to be challenging: Even ExxonMobil, despite its prime position in the Permian Basin and major international discoveries over the past two years, is experiencing a disturbing rate of value destruction. As noted by Bloomberg, XOM stock dropped to a 15-year low on Monday and fell further on Tuesday, “just over a week before Chief Executive Officer Darren Woods is scheduled to present the oil explorer’s long-term strategic plan to investors and analysts.” For the year, XOM is now down by almost 25%.

Read the Full Piece Here

Today’s news moves at a faster pace than ever. Whatfinger.com is my go-to source for keeping up with all the latest events in real time.

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Democrats Present a Stark Reality for the Oil Industry in 2020 Elections

The time has come for people in the oil and gas business — especially its senior executives and those who do government affairs work within the larger companies — to wake up to the reality of the Democratic Party as it exists today, as exemplified by its current crop of presidential contenders and caucuses in both houses of Congress.

Simply put, this is not your father’s Democratic Party.

Gone are the days when there existed a subset of fairly moderate Democratic members of Congress in both the House and Senate who could be classified as strong supporters of the oil and gas industry. There are no more Mary Landrieus in today’s United States Senate, nor even a Heidi Heitkamp to be found. In the House, you still have one identifiable Democrat — Texas Rep. Henry Cuellar, who can be said to be a real supporter of the oil and gas industry, but that’s pretty much it. And even Rep. Cuellar was so cowed by Speaker Nancy Pelosi that he cast a “yes” vote to impeach the most pro-oil and gas president in U.S. history on the flimsiest grounds imaginable in December.

Gone are the days when a startup industry trade association, America’s Natural Gas Alliance (ANGA), could be effective by hiring a former Clinton operative to be its president and hiring a raft of pro-Democrat contractors to shape its messaging. ANGA, created at the outset of the Obama Administration in early 2009, was able to quickly become a force for promoting the benefits of natural gas using that model a decade ago. A decade later, pretty much none of the Democrat senators and congressmen with whom ANGA formed effective working relationships remain in Congress. All have been replaced by Republicans, or by more radical left-wing, anti-oil and gas members.

While ANGA and other industry trade associations were able to form working relationships with many Democrats of the time — even in those years, those Democrats could not be counted on for industry support on the truly big votes. ANGA and the rest of the industry, for example, were unable to secure a single Democratic vote during the battle over the national carbon cap-and-trade bill that barely failed in 2010.

I know all of this to be true because I was intimately involved in ANGA’s work during those years when I was Director of Government Affairs at El Paso Corporation. Working to form those relationships with Democrats in Congress made sense at the time since a number of them really were pro-oil and gas, at least to some extent, and because there was a Democratic administration in place that was decidedly hostile to the industry’s interests.

Read the Rest Here

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READ: the U.S. Army Letter Notifying Iraq of Coalition Withdrawal – UPDATED

Today’s Campaign Update, Part III
(Because The Campaign Never Ends)

Today, President Donald Trump called the Iraqi government’s bluff, authorizing the commanding general of joint coalition forces in Iraq to send a formal letter to the Iraqi commanding officer notifying him of pending operations for coalition forces to depart from Iraq. This comes in the wake of the vote of the Iraqi parliament over the weekend to demand U.S. forces leave the region.

Here is a photo of the letter that is circulating on social media:

Image

Text:

sLTG Abu Amir
Deputy Director, Combined Joint Operations,Baghdad
Iraq-Ministry of Defense

 

Sir: In due deference to the sovereignty of the Republic of Iraq, and as requested by the Iraqi parliament and Prime Minister, CTJF-OIR will be repositioning forces over the coming days and weeks to prepare for onward movement.

In order to conduct this task, Coalition Forces are required to take certain measures to ensure that the movement out of Iraq is conducted in a safe and efficient manner.

During this time, there will be an increase in helicopter travel in and around the International Zone (IZ) of Baghdad. This increased traffic will include CH-47, UH-60 and AH-64 security escort helicopters.

Coalition forces will take appropriate measures to minimize and mitigate the disturbance to the public. In addition, we will conduct these operations during hours of darkness to help alleviate any perception that we may be bringing more coalition forces into the IZ.

As we begin implementing this next phase of operations, I want to reiterate the value of our friendship and partnership. We respect your sovereign decision to order our departure.

Very respectfully,

 

WILLIAM H. SEELY, III
Brigadier General, U.S. Marine Corps
Commanding General, TF-Iraq

[End]

As we have repeatedly pointed out here at the Campaign Update, one of the main reasons why Donald J. Trump was elected to the presidency in 2016 was his promise to get U.S. armed forces personnel out of the myriad interminable Middle East conflicts into which his predecessors in office had gotten our country entangled.

Trump’s basic message during the campaign was that these wars between various Islamic countries and factions have been going on for eons, and nothing the U.S. can do – no amount of treasure or lives sacrificed – will end that reality. So, let the Islamic states in the region fight it out amongst themselves, and focus U.S. military efforts in the Middle East on protecting our assets and few real allies there – Israel and Saudi Arabia, mainly.

The Iraqi parliament’s demand over the weekend, whether serious or not, plays directly into the President’s hands in this regard.

It is also key to note that this strategic gambit would not be possible were it not for the fact that the U.S. today enjoys a much higher level of energy security than it did during past presidencies, thanks mainly to the shale oil and gas revolution that has taken place here over the past decade. The U.S. is not completely energy “independent” and probably never will be, but our country today has very little compelling national interest in risking American lives and treasure to keep the oil spigots in countries like Iran and Iraq open.

So, this letter from Brig. General Seely now puts the ball squarely back in the Iraqi government’s court. President Trump has basically said, hey, if you want to become a client state of the mullahs in Iran, go for it.

It will be interesting to see how Iraqi Prime Minister Adil Abd Al-Mahdi responds.

UPDATE: Well, maybe it’s not quite goodbye after all. Here is an official Pentagon statement on the matter:

Joint Chiefs of Staff Chairman Mark Dilley earlier stated that the letter is real, but the version released on social media is a “draft” that should not have gotten out. Prior to that Defense Secretary Mark Esper said that the letter was not real.

Did someone just get caught in a mole hunt?

I will update this story if the official version keeps changing.

 

That is all. For now.

 

Today’s news moves at a faster pace than ever. Whatfinger.com is my go-to source for keeping up with all the latest events in real time.

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What You Need to Know About the Attacks on Saudi Arabia

Today’s Energy Update
(Because Energy Fuels Our Lives)

Crude oil prices closed today up about 15%. They escalated throughout the day as it became increasingly obvious that the production outages in Saudi Arabia will likely continue for weeks, and as rhetoric between the U.S., Iran and Saudi continued to become more heated. How many weeks the Saudi outages will last is anyone’s guess.

You should expect prices to continue to rise until – and if – the situation calms down and we have hard information indicating Saudi production is being restored.

In case you missed my story at Forbes.com linked and excerpted below, this is the largest sudden outage of crude production in world history, even larger than the Arab Oil embargoes of the 1970s.

It’s a big deal.

Excerpt:

Here are a dozen things everyone should know about the past weekend’s strikes on a major Saudi oil refinery, and the likely fallout from them:

  • The Houthis, a rebel army fighting against Saudi-led interests in Yemen, claimed credit for launching the attacks on Saturday. However, the U.S. government now says it believes the assault was launched from Iran, and that it may have involved cruise missiles rather than drones.
  • The strikes centered on Saudi Arabia’s Abqaiq refinery. Abqaiq is the world’s largest oil refinery, processing about two-thirds of the total Saudi supply each day. Saudi Arabia is the world’s second-largest producer of crude oil behind the United States.
  • Several large Saudi oil fields were also attacked. Those attacks, along with the disruption of the Abqaiq refinery required the Saudi government to shut-in about half of its current production, or about 5.7 million barrels of oil per day.
  • According to the U.S. Energy Information Administration (EIA), that amounts to the single biggest sudden disruption on record, more than the loss of Kuwaiti and Iraqi supply during the Gulf War in August 1990, and the 1979 decrease in Iranian output following the Islamic Revolution.

Read the Rest Here

 

That is all.

Today’s news moves at a faster pace than ever. Whatfinger.com is my go-to source for keeping up with all the latest events in real time.

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Democrats’ Climate Town Halls: A Direct Assault on Texas

Today’s Campaign Update, Part II
(Because The Campaign Never Ends)

“On my first day as president, I will sign an executive order that puts a total moratorium on all new fossil fuel leases for drilling offshore and on public lands. And I will ban fracking—everywhere.” – Elizabeth Warren

I was asked by a radio host this week for my initial takeaway from CNN’s 7-hour marathon of Democratic Climate Change talking points that aired on September 4. My response was the only thing that came into my head: God help us if any of these people wins the election.

By “us” I mean the oil and gas industry, in which I spent a 38-year career, and everyone in Texas, where I’ve lived my entire life. Because the reality of that 7 hours of talking points by 10 leading contenders for the Democratic Party’s 2020 presidential nomination is that pretty much every idea advanced by the candidates was a direct assault on the industry’s continuing license to operate in the United States, and thus on the Texas economy.

The Texas economy has diversified significantly since the bad old days of the 1980s, when the oil bust collapsed the state’s savings and loan and banking industries and more Texans were out of work than anytime other than during the Great Depression. But despite that diversification, oil and gas still drives more economic growth here than any other business sector.

So, when you see every candidate on that stage – including Texans Julian Castro and Beto O’Rourke – call for the banning of “fracking,” you see a proposal that would throw the Texas economy immediately into a recession and toss tens of thousands of Texans out of work. When you see Kamala Harris and several others demonize the plastics industry, you see a direct attack on Texas, whose chemicals and plastics industry has boomed in the past decade, with hundreds of billions in new capital investments, thanks to cheap natural gas prices.

When you see Andrew Wang and others talk about banning internal combustion engines and forcing everyone to drive an electric vehicle, you see a direct attack on Texas, home to the nation’s largest refining industry. When you see Elizabeth Warren and Joe Biden talk about the need to end the use of all fossil fuels in power generation, you see a direct attack on Texas, where natural gas powers more homes and businesses than all other fuel sources. Those attacks on natural gas are also attacks on the environment, given that U.S. carbon emissions have dropped to 1980s-levels in recent years thanks mainly to natural gas displacing coal in power generation.

The attacks on Texas and its economy were not limited to energy alone: Agriculture is the state’s second-most prevalent business. When you see Pete Buttigieg telling Americans that if they eat a hamburger, they’re part of the problem, you’re seeing a direct attack on Texas and its ranching industry.

When you see O’Rourke and others talk about the need to end “corporate farming,” you’re seeing a direct assault on Texas and its farmers, given that, when you look into the details of their various plans, you see that they all call for ending the use of diesel-fueled farm equipment like tractors and combines, not to mention all those Ford F-150s. That’s not just for “corporate” farmers, but for all farmers.

This stark reality, of course, is one of the main reasons why the Democratic National Committee denied requests from Washington Gov. Jay Inslee and a few other candidates to hold a formal debate focused solely on Climate Change. The party’s leaders actually entertain the notion that Texas’s shifting demographics might give their presidential candidate a shot to win the state’s electoral votes in 2020. But they also know that, if Texans become educated on the realities of how the candidates’ various “solutions” would impact their daily lives, those chances will fade accordingly.

Those DNC concerns were well-founded, and CNN did the party no favors by airing those proposals in such great detail. In presidential politics, some promises are better left unmade.

That is all.

 

Today’s news moves at a faster pace than ever. Whatfinger.com is my go-to source for keeping up with all the latest events in real time.

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Bernie Sanders’ Dorian Tweet Proves he is an Ignorant, Shameless Hack

Today’s Campaign Update
(Because The Campaign Never Ends)

Grand Bahama this morning looks a lot like Galveston did on September 9, 1900. – On September 8 of that year, the deadliest hurricane in American history slammed into Galveston Island with winds in excess of 140 mph – which would make it a Category 4 hurricane – and a storm surge that inundated the entire island.

Captains and sailors from ships coming into port had been warning islanders for days in advance of a large storm lurking in the Gulf, and a prominent local weather man, Isaac Cline, also tried to warn locals that a big storm was coming. But government officials assured residents that a major hit on the island was virtually impossible due to the shallow waters of the Gulf of Mexico and other factors, and predicted that any storm in the Gulf of Mexico would be most likely to make landfall in Florida. Thus, few people evacuated Galveston in advance of the storm, and, without air travel or gasoline powered automobiles, evacuation for most residents would have been difficult if not impossible in any event.

Thus it was that more than 8,000 Galvestonians died in the resultant inundation. Cline himself lived in a two-story home near the downtown area, and was only able to survive the rising flood waters by climbing onto the roof of his house along with his family. The destruction of all but the sturdiest of buildings on the island, like the famous Moody Mansion and many of the downtown business establishments, was utter and complete.

For many months afterwards, the refuse and debris from those buildings that had been carried out to sea was washed back up onto the island’s shores, along with the rotting carcasses of human beings, farm animals and pets who had perished in the storm. The cleanup operations were grim and seemingly unending; the stench was horrible and reportedly lingered for years afterwards.

The story we see coming out of Grand Bahama this morning is similar and tragic. The island was largely inundated by the storm surge, and thousands of houses and non-sturdy buildings have been destroyed. The refuse and debris from those buildings that was carried out to sea will wash back up onto shore in the months to come.

But that debris and refuse will not be accompanied by the rotting bodies of thousands of dead human beings. Many of the island’s pets and other animals were also taken to safety and even evacuated off the island, thanks to volunteer animal rescue operations. That happy result is largely due to modern means of predicting the path these storms will take days in advance. But it is also due to the existence of modern means of travel that allowed so many of the residents there to evacuate the island.

Virtually all of those means of travel, whether by boat, by plane or by automobile in the case of mainland U.S. residents in several states who are evacuating their own homes in advance of the storm’s path, are powered by gasoline or diesel fuel. Almost 100% of them. Even the growing number of electric vehicles on the roads now obtain their charge from power stations whose electricity is generated by a U.S. energy grid that is more than 80% powered by fossil fuels, including coal.

These modern, fossil-fueled means of transportation are why, when the ultimate death toll from this very strong hurricane is totaled up, the number most likely will consist of two digits instead of four or five.

So, when you see craven Democrat/Socialist presidential candidate Bernie Sanders issue a tweet like this:

…remember that the deadliest hurricane in American history occurred in 1900, when Americans were traveling using horses and buggies, almost a full century before the climate change scam was invented by the global socialist political movement.

Next time you run into someone who works in America’s oil and gas industry, thank them for producing the fuels that help save so many human lives in advance of these terrible storms. I guarantee you they will appreciate the gesture.

That is all.

 

Today’s news moves at a faster pace than ever. Whatfinger.com is my go-to source for keeping up with all the latest events in real time.

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6 Big Reasons Why The Next 10 Days Are Crucial For Oil Markets

Today’s Energy Update
(Because Energy Fuels Our Lives)

Here is a rundown of six big factors and events impacting crude prices as the first half of 2019 nears its end.

The “fear premium” redux. – Crude prices rose dramatically on Thursday after it was revealed that Iran’s Revolutionary Guard shot an unmanned U.S. drone out of the sky as it flew near the strategic Strait of Hormuz. Oil markets are always sensitive to any conflict taking place near this key choke point, through which about 20% of global crude supply makes its way to market each day.

President Donald Trump’s cautious approach to responding to Iran’s latest provocation appeared to calm the markets on Friday . After jumping by more than 5% in Thursday’s trading, WTI rose by slightly less than 1% Friday.

Rather than escalating armed conflict with a conventional military response, the Associated Press reported Saturday that President Trump had ordered a cyber attack on computer systems that control Iran’s rocket and missile launchers. That report was based purely on anonymous sources, but if it turns out be accurate, such a non-violent approach could further calm touchy  markets on Monday.

The jump in crude price isn’t only about Iran. – While most reports attributed last week’s 10% rise in crude prices to the situation with Iran, the reality is that the price had already run up by 5% by close of trading on Wednesday. In fact, WTI actually dropped to $51.79/bbl on Monday due to ongoing bearish factors, before jumping up to $54.05 in Tuesday’s trading after President Trump tweeted early that morning that he and Chinese President Xi Jinping would be holding side meetings at the upcoming G-20 Summit in Japan. Wednesday’s report from the U.S. Energy Information Administration that crude inventories had dropped the previous week also kept the upwards price momentum going before news of the Iran strike broke.

Read the Rest Here

 

Follow me on Twitter at @GDBlackmon

Today’s news moves at a faster pace than ever. Whatfinger.com is my go-to source for keeping up with all the latest events in real time.

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