Energy Sector

[Chavalit Likitvivatanavong]

What is the best short play for natural gas? KOLD is interesting but it's based on Bloomberg natgas index which I suspect correlates more with the U.S. price. I'd prefer stuff more tightly coupled with european futures (which is getting ludicrously high.)

[lnofeisone]

20 hours ago, ValueHippie said:

I own quite a lot of Kistos and some Serica.

Thanks for the names. I'll look into them. Any stories here? 

[Spekulatius]

On 7/5/2022 at 2:56 PM, Spekulatius said:

Yep, Export ban for refinery products  would hurt the refining industry but also our trade partners. I think a lot of gasoline is actually going to Mexico, so they could potentially see shortages which could put their already suffering economy over the edge.

 

It is something  that would bring prices at the pump in thr US down in the short term, but probably do a lot of damage long term.

Worth watching:

https://finance.yahoo.com/news/u-energy-secretary-urges-refiners-180205766.html

[Paarslaars]

1 hour ago, lnofeisone said:

Thanks for the names. I'll look into them. Any stories here? 

Started looking into Kistos, CEO appears to have an exceptional track record.

 

Harbour energy would also be one to add to the list to look into.

[SharperDingaan]

12 hours ago, petec said:

Thanks. What’s your view on whether more capacity (after LNG Canada phase 1) gets built on the West Coast to serve Asia?

 

No additional West Coast capacity for quite some time (5 yrs+)

The reality is that China will be sourcing much of its future gas from Russia, and pretty much taking up most of what was going to Europe via Nord Stream 2. Most would also expect China to be processing some of that gas (bought at discount), then exporting it (sold at premium) as LNG and petrochemicals. Per the Ukraine, China isn't helping Russia 'for free', and is well known for favoring the long view. At planned volumes, Coastal Gaslink should be OK, but it's unlikely they expand unless they start exporting LNG from BC.

 

Alberta/Sask also don't need it.

Under Canada's climate change objectives, there is more than enough local demand to absorb expanded local production for years to come. Rising gas cuts on aging shale wells, also reduce the amount of new drilling required to keep NG production flat, freeing up capex. Keeping the gas production/use wholly within Alberta/Sask also improves 'manufacturing efficiencies', and materially reduces the unwanted political risk.

 

Changing times. Inter-provincial trade barriers between Canadas provinces make Europe look like a picnic.

For decades, it has been much more efficient to simply export/re-import goods landed in Canadian ports, and use US road/rail to move the product to the various provinces. Like it or not, an internal EU version of the common market is inevitable, and one of the first beneficiaries will be cross Canada energy (oil, gas, electric) corridors. The more disruptive the changes, the more fragile the trade barriers get - eventually they fail, and years of change all happen at once. Doubtful this happens anytime soon, but the writing is clearly on the wall.

 

SD

 

  

[petec]

3 hours ago, SharperDingaan said:

Alberta/Sask also don't need it.

Under Canada's climate change objectives, there is more than enough local demand to absorb expanded local production for years to come. Rising gas cuts on aging shale wells, also reduce the amount of new drilling required to keep NG production flat, freeing up capex. Keeping the gas production/use wholly within Alberta/Sask also improves 'manufacturing efficiencies', and materially reduces the unwanted political risk.

So is it fair to say you don’t buy into the Peyto argument that NGTL expansion + intra-basin demand + LNG Canada = Alberta egress > production in the next few years?

 

3 hours ago, SharperDingaan said:

Like it or not, an internal EU version of the common market is inevitable, and one of the first beneficiaries will be cross Canada energy (oil, gas, electric) corridors.

Presumably needs a change of government?

[SharperDingaan]

Peyto is very likely correct, and more west coast egress would certainly be a very good thing.

Just not so sure that Alberta egress > production automatically means more WCSB production of NG. If landed Chinese/Russian LNG is cheap enough - it could well mean NG traveling up the pipe into Alberta. Particularly if a large state-of-the-art refinery (Saudi sponsored) ends up being built in Alberta.

 

The thing is, he who has the gas controls the game - agreements have little value.

Once the Russia/China egress is built, the practical reality is that Russia can turn the tap at any time (it has the gas) - and redirect its gas flow to Europe via the existing pipeline network. Guaranteed price volatility for many years to come. 

 

The government thing will take multiple parliaments, and solutions are more likely to be muddling organic versus anything planned. Too much unpredictability to be investable.

 

SD

 

 

 

 

 

Edited August 29, 2022 by SharperDingaan

[Ulti]

https://www.yahoo.com/news/canada-invokes-1977-pipeline-treaty-192117311.html

[SharperDingaan]

Sadly, it's just another example of Canada's provincial trade barriers.

Were there a coast/coast/coast energy corridor through Canada, this issue wouldn't exist. Ultimately there will be a re-route around the bands territory, with the US/CAD federal government putting up a portion of the costs (result of int'l agreement). The reality is that the US involvement, means resolution is unpredictable, and will take years.

 

Similar thing occurs with lumber, alcohol, employment, vehicles, drugs, etc.

On paper, a great many leased vehicles in Canada are actually bought in Alberta (no GST), then 're-leased' to company subs in the other provinces. Upon arrival (manufactured, imported) the vehicle is just sent directly to whichever province it is going to. Problem is that because Alberta does not charge GST (ideological reasons), and everyone else does; this magnifies the impact of any changes to inter-provincial trade barriers - hence it's safest to 'do nothing'. Institutionalized inertia.  

 

SD

 

[Spekulatius]

Oof -Night live in Baghdad yesterday:

 

[petec]

23 hours ago, SharperDingaan said:

Just not so sure that Alberta egress > production automatically means more WCSB production of NG.

No, but higher prices, surely?

 

23 hours ago, SharperDingaan said:

If landed Chinese/Russian LNG is cheap enough - it could well mean NG traveling up the pipe into Alberta.

No way. Just the shipping across the Pacific would be similar to cash drilling costs in Alberta, and that’s before drilling in Russia, piping to China, cooling, regasifying, and piping to Alberta. What am I missing?

[SharperDingaan]

Discounted gas supply.

We know that Russian oil currently sells at a discount of roughly $35/bbl, gas has a similar % discount. These discounts also rise 01/01/2023 when ships with Russian cargos can no longer offload at European ports. Given that investment to build the pipeline is coming from China (the party), the discount will be permanent for the length of the supply agreement, and structured; higher at start (40-50%?), tapering to zero by the end of the agreement. Neither party are angels.

 

To minimize the payback period, China will need to dump as much as possible, as soon as possible, and take LNG prices down. Even if they sell at a net 75c on the dollar, and only pay 50-60c, they will still do very well.

 

Cheap LNG in quantity will take away much of Canadas Asian market, AND either push prices down in Alberta, or flow up the pipe - if there is a big and long-term user in Alberta (global refinery) it's almost guaranteed. Take or pay gas coming up the pipe, in return for a twinning and refined product going down the twinned pipe.

 

Changes the game.

 

SD

 

 

[Ulti]

https://podcasts.apple.com/us/podcast/foreign-affairs-the-worlds-first-energy-crisis/id1081481629?i=1000577828767

excellent podcast done in June on Geopolitics\energy transition\renewable over the next few decades.

[Gamecock-YT]

https://twitter.com/BNONews/status/1565241174226501637

[james22]

Catalyst?

 

Three of the largest investment shops in the U.S.—BlackRock, Vanguard and State Street—have long used their dominance in passive-investment funds to force corporations to comply with their preferred set of environmental, social and governance policies. Their reign, however, may be nearing its rightful end, as America’s law enforcers are waking up to the threats the Big Three pose to investors and the economy.

 

https://www.wsj.com/articles/break-up-the-esg-investing-giants-state-street-blackrock-vanguard-voting-ownership-big-three-competitor-antitrust-11661961693

[SharperDingaan]

Nobody has to lend to Texas, or roll their long term debt as it come due. Creditors make the call, not these three. All that they do is survey the owner/creditor interest on the topic of the day, discern the majority view; and act accordingly. 

 

If you don't own or lend you have no say. if you hold a minority view you have no say. That's what you signed up for. Regulator's/attorney's are not gods, and can only uphold the laws of the land - they may like to think they are gods, but what they 'think' means squat.

 

The squeaky wheel, is just one of many, and doesn't the grease.

It gets replaced.

 

SD

Edited September 1, 2022 by SharperDingaan

[nafregnum]

https://www.mystateline.com/news/national/california-asks-residents-not-to-charge-electric-vehicles-days-after-announcing-gas-car-ban/

 

Makes me wonder if any agencies have done the necessary modeling to figure out how much more green energy a state like California would need if all its cars were electric today.

 

Instead of mandating "All cars EV by 2035" I wish they'd say "All cars Hybrid by 202X" and "All cars plug-in Hybrid with at least 35 miles of EV capacity by 202X+4" ... 

[Sweet]

40 minutes ago, nafregnum said:

https://www.mystateline.com/news/national/california-asks-residents-not-to-charge-electric-vehicles-days-after-announcing-gas-car-ban/

 

Makes me wonder if any agencies have done the necessary modeling to figure out how much more green energy a state like California would need if all its cars were electric today.

 

Instead of mandating "All cars EV by 2035" I wish they'd say "All cars Hybrid by 202X" and "All cars plug-in Hybrid with at least 35 miles of EV capacity by 202X+4" ... 

 

Is it not obvious?

 

No they haven’t.

[Spekulatius]

42 minutes ago, Sweet said:

 

Is it not obvious?

 

No they haven’t.

Well, first order principles would suggest that you need to replace all the gasoline used in California with the energy equivalent of electricity. It's probably a bit less because electric motors are more efficient than ICE, but then you have the electric energy conversion and transmission losses to deal with, so probably a wash.

 

Charging is done mostly at night, if you charge at home and have a smart charger, so may not be that bad from a grid utilization POV.

[Spekulatius]

3 hours ago, Gamecock-YT said:

https://twitter.com/BNONews/status/1565241174226501637

Died from “severe illness”. He also got a lifetime achievement award from Putin:

https://www.bbc.com/news/world-europe-62750584

[bizaro86]

8 hours ago, Spekulatius said:

 

Charging is done mostly at night, if you charge at home and have a smart charger, so may not be that bad from a grid utilization POV.

 

That would work great if they weren't also removing all the baseload power from the grid.

Edited September 2, 2022 by bizaro86

[CorpRaider]

PHEVs seem like the better solution to me for the foreseeable future.  Take the commuting and routine (~50 mile daily) driving and make it electric with smaller lighter batteries so you don't have as many strains on battery inputs/supply chain and get more miles electric faster.  Then you are just building off the current infrastructure.  Charge at home or work and pump gas when you run out in between on a road trip.  Toyota has been running the dual drive train/system for decades and they are reportedly more reliable/lower maintenance even than the usual legendary Toyotas.  I'm trying to hold out for a PHEV Taco or 4Runner, but those kias and hyundai small suvs are very attractive. 

Edited September 2, 2022 by CorpRaider

[SharperDingaan]

8 hours ago, bizaro86 said:

That would work great if they weren't also removing all the baseload power from the grid.

 

Non hybrid EV's charge at night, and again during the day at their destination; without the day charge, the owner typically can't get home, especially when also using air conditioning. Forecasting the mix of hybrid vs non hybrid EV, and the take-up of EV on limited data and an untried conversion plan - has a considerable standard deviation associated with it. Ancient US electric grids also experience severe line loss capacity as ambient temperature rises - at 30 degrees Celsius, capacity often sinks to 40-50% of design capacity or less.

 

More EV take-up than expected, more people plugging in re their air conditioning use, and less ability to deliver the power where needed (line loss) - adds up to todays issues. Straight forward solution: replacement/upgrade of the electric grid. 

 

But that isn't going to happen .... until millions of rich people get tired of having to sweat everyday - coming home to a house that is hot because the a/c cut out and there was nowhere to put an emergency generator  Change ain't happening until people start to stink!

 

SD

 

 

[Spekulatius]

34 minutes ago, CorpRaider said:

PHEVs seem like the better solution to me for the foreseeable future.  Take the commuting and routine (~50 mile daily) driving and make it electric with smaller lighter batteries so you don't have as many strains on battery inputs/supply chain and get more miles electric faster.  Then you are just building off the current infrastructure.  Charge at home or work and pump gas when you run out in between on a road trip.  Toyota has been running the dual drive train/system for decades and they are reportedly more reliable/lower maintenance even than the usual legendary Toyotas.  I'm trying to hold out for a PHEV Taco or 4Runner, but those kias and hyundai small suvs are very attractive. 

Most plug in hybrids won't last 50 miles though. I am hoping for a Hyundai Tuscan plug in hybrid (on a wait list currently) but they are more in the 25-30mile range.

 

I do agree that they are a great value proposition, although most of them have lost the federal incentives currently.

[CorpRaider]

Yeah, I would only do the Ford Escape (40 miles), Sorento or Tuscon (33), Rav4 (42), or Kia SantaFe (32).  I've seen some estimates that 30 miles round trip would over the commutes for like 70% of Americans.  Pump that up to 50 and add some charging at the office/CBD and it should be yuge.  

 

Hey, I read that a lot of people are passing on the reservations for RAV4's and others because of the loss of the tax credit (and potential for new credits/changes in incentives based on the IFRA).  So maybe you will get bumped.

Edited September 2, 2022 by CorpRaider