Yeah, the terminology is a bit weird, as petrol itself is a light distillate. But the generic term 'distillates' seems to refer to heavier fractions that go into diesel and kerosene (for jet fuel and heating), and heavier fuels.

it varies i think by location
includes , Gas Oil, Diesel, Kerosene,
Jet fuel for the minister etc.
not sure if heavy fuel oil is included

Interesting how WTI has decoupled hard from Brent (and collapsed relatively) in recent months.

In a nutshell the US can increase pumping but its pipelines cannot deliver the increase to market and this cannot be hidden anymore.

Also interestingly, it has a positive effect on oil in the Bakken/Dakotas which used to trade at its own discount to WTI because of the cost of rail transport. The pipeline bottleneck in the Permian means there is more demand for Bakken oil shipped to Gulf refineries by rail. Though I believe the pipeline situation will get sorted out in the medium term (end of this year?).

Just noticed this advance on making superconducting tapes for 50 Tesla magnets. The challenge of such materials is to avoid tearing themselves apart as they generate Lorentz forces equivalent to tens of thousands times atmospheric pressure. Unfortunately in this case "high temperature" means a few tens of Kelvins, not the 77K of liquid nitrogen. Practical magnets for broad use would ideally be above liquid nitrogen temps, rather than liquid helium. But it's all progress.

Is this the end of the CARB? jmc will likely be doing a little jig.

https://www.bloomberg.com/news/articles ... ting-power

Just in case jmc gets too carried away, here's a little something to jar him back to reality. The Environmental Justice Warriors of San Bernardino County throw a free vegetarian breakfast along with a workshop on improving air quality. Paid public relations people tell you how your tax dollars are being spent on environmentally friendly vehicles for low income people, and which are the best apps for tracking air quality. An old-style hippy environmentalist gets ornery.

Here is one number to show what a mega bubble the US Shale Bubble really is, and this number dates from september BEFORE the price of oil dived sharply starting october.

Yes, this means that shale oil frackers only planned on financing 21% of their activities in 2019 from cashflow and that they intended to suck in almost 80% of their requirements from muppets sophisticated investors. A traditional oil company finances everything from cashflow.



It would be no surprise then to find out that they already owe $0.25Tr to these muppets sophisticated investors and due for repayment/refinancing in the next 5 years.

And nor would it be a surprise to know that paying interest on their existing loans costs 20% of cashflow already and that they are underwater in the 'Permian' shale in west Texas where transport costs to market are large. There are relatively few oil pipelines in the Permian, not enough for any expansion, and the amount of gas flared off there equals Irelands daily gas consumption alone....and no there are no gas pipelines in the Permian either.

This lunacy must come to an end, surely the muppets sophisticated investors realise they will not get most of their money back even with Permian oil fetching $60 rather than the $40 they will often take for it today. $40 Permian means they cannot cover the interest on their loans.

We might see a bit of a pipeline bubble to finish this off before it all goes bang. And don't forget that more oil was thrown on the flames last month.

https://www.forbes.com/sites/arielcohen ... 23c27f2c91



Too big an "if" for me though.

The upward revision for Permian resources is still pretty amazing. Yes, they are classed as "undiscovered, technically recoverable". Sure, people may lose their shirts. Favourable economics are not guaranteed. But like with the oil price slump in 2014, someone else may step in and take the spoils if the initial drillers go to the wall. The industry as a whole proved more resilient than expected, even if individual operators didn't.

Like in the last cycle, the number of DUCs (drilled uncompleted wells) is soaring again. In the last five years it has gone from 600 to 4,000 just in the Permian. Production has gone from 1.4 mbpd to 3.8 mbpd. There's no doubt the resources exist to support huge expansion. Oil price and pipeline capacity could keep a lid on it in the short term, and current investors could get burned. In the long run the US, which has already edged out Russia for world's second biggest producer, could even overtake the Saudis if the Permian turns out to be bigger than the mighty Ghawar field.

The rules are

1. It is a resource until drilled
2. It is a reserve after you drill and get an estimate of recoverables

But then a shale well declines very fast and some are reduced to a useless trickle of oil within 4 years of first recovery and the well goes OPEX negative. The Permian is not the worst shale, you get near enough $1m of oil (at say $50 BBL) per hole there, other shale formations return a lot less than that.

Against that the new resource is quite far west, much in New Mexico rather than Texas, and the temptation for drillers is to 'complete' a couple of very sweet spots and claim that all their drilled/incomplete wells will be equally good resources once complete....and they won't be complete in a hurry I can guarantee you.

Utter hogwash but the US drilling industry have plenty of previous in inflating massive bubbles.

I well remember the insane Gas bubble that exploded in Oklahoma in 1982 and if you only ever read one book on bubbles then you should read this classic on that notorious fiasco which boiled down to someone saying the deeper you drilled (deeper than anyone had ever drilled in fact) the higher the pressure would be and surely the more gas was down there....around 6 or 7 miles down it was.

Then people started to believe in this nonsense. The bubble collapse brought down one of the 10 largest banks in the US then and severely damaged 3 of the remaining top 20 banks at the time.

The shale bubble has sucked in $0.3TR of which $0.25TR needs full refinancing within five years and this for an industry that pays out 20% of its turnover last year (over $50 a barrel time) just to service the existing loans they have.

In the US you can lend to these clowns at a blended 7% or so or go risk free Fed Bonds for 10 years at 3%