Guest “how to spot fake news” by David Middleton
Reporting from Ice Station Dallas
Fake news isn’t necessarily false or untrue.
U.S. oil output plunges as Arctic air freezes Permian shale fields
By JAVIER BLAS AND SHEELA TOBBEN on 2/16/2021
(Bloomberg) –U.S. oil production has plunged by more than 2 million barrels a day as the coldest weather in 30 years brings havoc to key producing states that rarely have to deal with frigid Arctic blasts.
Oil traders and company executives, who asked not to be identified, lifted their forecasts for supply losses from an earlier estimate on Monday of 1.5 million to 1.7 million barrels. They said the losses were particularly large in the Permian Basin, the most prolific U.S. oil region, which straddles West Texas and southeast New Mexico. Output cuts were also significant in the Eagle Ford, in southern Texas, and the Anadarko basin in Oklahoma.
Two million barrels would be the equivalent of about 18% of overall U.S. crude production, based on the most recent government data.
The Permian oil outage helped to push West Texas Intermediate, the crude benchmark in the U.S., above $60 a barrel on Monday for the first time in more than a year. Since then, oil prices have fallen slightly because U.S. refineries have also closed due to the cold, reducing the amount of crude needed right now. Energy Aspects Ltd., a consultant, estimated that 3.1 million barrels a day of refining capacity was down as of Monday.
Blas asserts that U.S. crude oil production is down by 18%. While I have little doubt that Permian Basin oil & gas production has been impacted by the deep freeze, I haven’t been able to find any hard data yet… But my Google searches keep linking back to variations of the Javier Blas article quoted above and other Bloomberg sources, which cite nothing that is verifiable. In another example Jonathan Garber of Fox Business cited Bloomberg’s Javier Blas and little else in an article asserting a 27% drop in U.S. production.
OIL Published 21 hours ago
Texas storms cause epic drop in U.S. oil production
‘It really is a perfect storm’
By Jonathan Garber FOX Business
Frigid temperatures knocked out electricity across Texas and resulted in one of the largest U.S. oil production disruptions ever.
Shut-ins related to the winter storm have removed about 3 million barrels of daily oil production, or 27% of U.S. output, much of which comes from the oil-rich Permian Basin located in West Texas and Eastern New Mexico.
Occidental Petroleum Corp., the No. 2 oil producer in the Permian Basin, on Tuesday gave customers a force majeure notice, according to Bloomberg, alerting them deliveries would not be made due to production snafus caused by the frigid temperatures. A company spokesperson did not respond to FOX Business’ request for comment.
Other companies that shut in facilities include oil majors Chevron Corp. and ExxonMobil Corp.
Chevron was forced to suspend production in the Permian Basin while ExxonMobil closed refineries in the Houston area. A number of other wells and refineries across the region were forced to temporarily shut-in.Fox Business
So… Bloomberg says that Oxy delivered a force majeure notice to customers (Winter Storm Younger Dryas is definitely a force majeure)… But Oxy was too busy to confirm what Bloomberg told Fox Business. The link is to an article that explains what force majeure is. Chevron hasn’t announced anything about Permian Basin production and Exxon shutting in refineries in the Houston area is totally irrelevant to Permian Basin or U.S. crude production. A lot of refineries have been forced to shut down by Winter Storm Younger Dryas.
This is what Oxy had to say:
Monday, February 15, 2021
Occidental Reschedules Fourth Quarter and Full-Year 2020 Results Due to Impacts of Severe Winter Storm
Monday, February 15, 2021 8:30 PM EST
HOUSTON – February 15, 2021 – Occidental (NYSE:OXY) announced today it has rescheduled its upcoming earnings release and conference call due to impacts of the severe winter storm. The company will announce its fourth quarter and full-year 2020 financial results after close of market on Monday, February 22, 2021, and will hold a conference call to discuss results on Tuesday, February 23, 2021, at 1 p.m. Eastern/ noon Central.
The conference call may be accessed by calling 1-866-871-6512 (international callers dial 1-412-317-5417) or via webcast at oxy.com/investors. Participants may pre-register for the conference call at https://dpregister.com/sreg/10150650/df971440ac.
Fourth quarter and full-year 2020 financial results will be available through the Investor Relations section of the company’s website. A recording of the webcast will be posted on the website after the call is completed.Oxy
What’s the point in reporting guesses from “oil traders and company executives, who asked not to be identified” and second-hand unconfirmed hearsay? While some companies will probably soon announce impacts to their production, basin-wide and national production data won’t be available for a while.
This bit from the Javier Blas article is also “odd”…
The Permian oil outage helped to push West Texas Intermediate, the crude benchmark in the U.S., above $60 a barrel on Monday for the first time in more than a year. Since then, oil prices have fallen slightly because U.S. refineries have also closed due to the cold, reducing the amount of crude needed right now.
OK… So, the production outage pushed WTI up, then the realization that refineries were offline pushed it back down. Well, then, this calamitous collapse in crude oil and refined product production should have driven gasoline futures through the roof… Right?
March gasoline futures did shoot up by about $0.10/gal in heavy trading on 16 February, but the volume has dropped to almost nothing. The same pattern occurred with April futures.
Despite the alleged collapse in US oil production, gasoline prices are still on the same trajectory they’ve been on since the November coup d’état (I don’t give a rat’s @$$ if you disagree with my use of this phrase).
This bit from the Fox Business article is hilarious:
Typically, with a hurricane, producers and refiners are given a week’s notice and have plenty of time to shut in their operations. But this arctic storm took the area by surprise, resulting in a “disorganized shut-in of these facilities,” Schork said.Fox Business
The record-shattering cold temperatures and winter storm were accurately forecasted well-ahead of time. No one should have been surprised by the weather. The only real surprise was that almost all of the wind turbines froze, depriving the grid of about 25% of its usual electricity generation.
While I have no doubt that Winter Storm Younger Dryas has temporarily impacted crude oil and natural gas production. Assertions that it’s down 18% or 27% are meaningless. We won’t know how much it’s down or for how long for days, if not weeks. The disruptions will be well behind us by the time they can actually be quantified. The storm and record cold weather has clearly shut down refineries and made it nearly impossible for tanker trucks to deliver gasoline in many places.
This clearly rates a fake news rating:
“U.S. oil output plunges as Arctic air freezes Permian shale fields”
I don’t even know what a “Permian shale field” is… Would it be like a field of Burgess Shale (a Cambrian shale field)?
We won’t know if, or how much, U.S. oil production has been affected by Winter Storm Younger Dryas for several days, or weeks. The easiest way to spot fake news is to look for dramatic headlines based on anonymous sources. Of course most mainstream media articles written about the oil & gas industry are fake news.