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Crude Observations

The Mask Edition

Ah the dog days of summer. It is truly the best time of year. We are currently in what we in Calgary call “the one week where the weather doesn’t 100% suck” and where we try to get all the summer activity we can in before the various indignities our weather regularly foists on us return to make our lives more of a living hell than lockdown and social isolation. Don’t believe me? Why it was only last week that the daily pattern of “Severe Thunderstorm Warning” followed by terrifying hailstorm and sheet lightning finally came to a merciful end. And we did have a plus 30 day, marking the warmest recorded temperature in Calgary since July of last year.

 

And now, as of today July 31, we have another week of warmth on the horizon which will be immediately followed by (if it hasn’t already started) wasp season.

 

But I digress. I didn’t plan on writing about the weather today so I apologize, but it does play a rather prominent role in our daily lives.

 

Instead, since today is indeed the peak of summer or the middle or the beginning of the end, it coincides with an annual tradition, which is short and lazy meandering blogs because I want to get outside. Sue me. Outside where I am not required to wear a mask – unless I can’t practice social distancing of course then I will throw one on, because, you know, it’s the right thing to do and breathing in a mask is actually quite easy.

 

On the subject of masks, we here in Calgary will be under mandatory mask orders as per the city starting tomorrow, so of course masks are top of mind. Why mandated? Well apparently some people need the heavy hand of the law and the threat of a fine to do the right thing. So here we are.

 

Don’t worry, I’m not going to tirade about masks and try to shame people into wearing a mask, or argue about individual rights and freedoms or posit anything about the effectiveness of masks in this setting or that.

 

Instead, I’m going to let you in on something – this mask thing has been around forever. There are dozens of references to masks throughout history – books, poems, films. Accordingly, I thought it might be fun (😐 – insert eye roll here) to take a look at some famous mask movies and, where appropriate or feasible, recast them for the current environment.

 

The Man in The Iron Mask

 

In this classic adaptation of the famed Alexandre Dumas story, years have passed since the Three Musketeers, Scheer, Singh, and May fought together with their friend Blanchet. In Ottawa, the arrogant, tyrannical King Trudeau II is more interested in money and enriching his friends, so he orders Poillievre, the son of Scheer, off to face death at a non socially distanced committee room. Trudeau is unaware that his loyal protector and informant, Blanchet, is secretly plotting to overthrow him. Unbeknownst to all, Trudeau has kept his twin brother imprisoned for the last six years in an iron mask. The Three Musketeers and Blanchet abduct the twin brother and place him on the throne in place of Trudeau.

 

The Mask

 

In this remake of a classic comedy, when timid premier Jason Kenney discovers a magical mask containing the spirit of the Norse god Loki, his entire life changes. While wearing the mask, Kenney becomes a supernatural welder, able to safely build pipelines at ten times the regular pace which allows him to catch the eye of local Energy Exec Murray Edwards. Unfortunately, under the mask’s influence, Kenney also runs roughshod over local permitting processes, which angers aspiring executive Joe Biden and his goons, who don’t want any pipelines built. Hilarity ensues.

 

 

The Mask of Zorro

 

After being imprisoned for 20 years, Zorro – Mulroney — receives word that his old enemy, Trudeau, has returned. Mulroney escapes and returns to his old headquarters, where he trains a lazy and aimless Peter Mackay to be his successor. Meanwhile, Trudeau hatches a plot to rob Alberta of its oil. Together Zorro/Muolroney and Mackay set out to foil Trudeau’s dastardly plot.

 

Halloween

 

Crazy guy in a mask returns to his hometown intent on killing a bunch of high school students. In the remake, a crazy guy in a mask returns to his hometown intent on kicking a bunch of high school students.

 

Bionicle: Mask of Light: The Movie

 

The island of Fort MacMurray must face one final threat from the evil European Lenders. The only hope for the survival of the islanders rests with two intrepid reporters, who must find the seventh War Room and deliver him the Mask of Light. What? You expected more from Bionicle?

 

Friday the 13th

 

Pretty much Halloween set on a different day wearing a different mask. Strong Canadian content, the star may be a goalie.

 

Scream

 

Pretty much Friday the 13th but set on a different day wearing a different mask.

 

The Purple Mask

 

In an update on the 1955 Tony Curtis and Angela Lansbury classic, a purple-masked swordsman travels the United States rescuing jailed protestors and fighting police aggression, injustice and systemic racism. At the end of the movie it is revealed that the purple mask wearing hero is none other than Trump inner-circle maven and Treasury Secretary Steve Mnuchin.

 

Star Wars

 

This movie is a classic mask-centric stuff. Half the characters wear a mask at some point so it appears that this movie was made with pandemics in mind. Not only are the Imperial troopers wearing masks, they are encased in plastic, making them virtually virus proof. While the heroes rely on the Force to keep them free of infection, clearly the Dark Lord, Darth Vader himself, and the rest of the Sith universe, have the good sense to keep themselves protected.

 

Batman

 

Ah, the caped Crusader. He is with out a doubt the gold standard of mask wearing superheroes. Dark, brooding and masked up. Millions love Batman (well except the George Clooney version) so if he can wear a mask, so can anyone. And yeah, I know he doesn’t cover his mouth, but I’m pretty sure there’s some kind of bat filter that we just can’t see. Plus, rubber suit, right?

 

OK, enough of that. I wanted to move on to a couple of things I am working on that will likely be subjects for a future blog.

 

New Rules for Tidying Up Abandoned Oil Wells

 

The Alberta government and the Alberta Energy Regulator on Thursday announced a new set of rules for oil and gas companies regarding the cleanup of an ever-expanding number of orphan and abandoned oil wells. Based on clear polluter-pay principles the plan treats these liabilities as a sinking fund with no time limit, so companies are required to spend a certain percent of the cost of their inactive wells on cleanup. Presumably the expectation is that with this type of specific direction companies will be able to make a significant dent in their inactive portfolios in the short to medium term resulting in an eventually stabilized market. Concurrent with this, the AER is be given a mandate to look closer at companies’ financial capacity to meet their cleanup obligations allowing for earlier intervention. Finally, there are a number of landowner friendly revisions included which will empower landowners to force cleanup of abandoned wells on their property.

 

Is it s a Wave or a Tsunami

 

The number of E&P and service companies filing for creditor protection or entering liquidation proceedings is accelerating. What started as a few outlying names has now turned into a veritable tsunami of companies either exiting, restructuring or abandoning the game altogether. In the United States 23 producers and 18 service firms have sought protection so far since the pandemic began including such notable names as Chesapeake, Whiting Petroleum, BJ Services (liquidation), BOS Solutions, Entrec and Diamond Offshore Drilling. Those companies together accounted for close to $55 billion in debt. Ouch.

 

Clearly we are in unusual times and as the pandemic continues to rage, expect to see more companies reach that tipping point, especially if demand fails to recover or OPEC expands production too quickly as they seem about to do.

 

That said, out of all this creative destruction comes massive opportunity. I believe that August is going to be sleepy as many companies catch their breath and take some time to rest up because the last four months of 2020 are going to be a wild ride, so buckle up.

 

Finally, sports.

 

Sports, sports, sporty sport sport sports. Yeah baby – sports is back! Woohoo! Or wait, is it back? OK, just checked. It’s still back.

 

Phew!

 

Each of the five (welcome to the party soccer!) major sports leagues have implemented their plans for a return to play and in the case of Major League Soccer, Major League Baseball and the NBA have actually begun playing games that have meaning. The NHL starts its playoff mayhem this weekend and the NFL, well the NFL is a monolithic beast moving to its own, currently on-schedule, regular season open the Thursday after Labor Day.

 

The COVID protocols are a smorgasbord of bubbles, rules, layers of protection, distancing, masks, snitch lines, cautions, education, handwashing, isolation and whatever the league planners can come up with to lock down as much of the leagues as possible. With the obvious exception of the Florida Marlins who clearly either didn’t get or didn’t read the memo.

 

I know many people don’t care for sports. They don’t like the pampered athletes and resent the special treatment. I get it. But sports, as annoying as this may be, matter. They are a distraction from all the crap the world throws at you on a daily basis. They lift us up and let us down. They certainly give us something to talk about instead of COVID, masks, the crisis in the energy sector and whatever in the world Trudeau has done this week.

 

If you are a sports junkie like I am, you are in for the most amazing three months in sports history that has ever existed presuming that everyone can keep it together that long and that the Florida Marlins stay in quarantine.

 

For the first and only time ever you will have the NBA, NHL, MLS and MLB all in playoff competition concurrent with the mother of all leagues, the mighty NFL. Throw in some tennis, a rescheduled Masters and the dumpster fire gong show of the US election, Black Lives Matter, anthem kneeling and Donald Trump tweet storms and this could possibly be the single most interesting time to be alive.

 

As long as the Florida Marlins don’t ruin it for everyone.

 

Stormont Capital Crude Coffee

 

Great group last week. This week will be a mystery. Maybe.

 

Email me if you want to participate at sparnell@stormontcapital.com

 

Prices as at July 31, 2020

  • Oil
    • Oil storage was… down! (male up your mind!)
    • Production was … FLAT?
    • OPEC+++++ is musing about increasing production come August
  • Natural Gas
    • Storage was up, historically very high; consumption flat; production flat; exports flat.
  • WTI Crude: $40.44 ($40.59)
  • Western Canada Select: $30.39 ($33.93)
  • AECO Spot: $1.814 ($1.970)
  • NYMEX Gas: $1.862 ($1.718)
  • US/Canadian Dollar: $0.7441 ($0.7364)

 

Highlights

  • As at July 24, 2020, US crude oil supplies were at 526.0 million barrels, a increase of 10.6 million barrels from the previous week and 89.4 million barrels higher than last year.
    • Production was flat for the week at 11.100 million barrels per day, which of course we know is impossible. Production last year at the same time was 12.200 million barrels per day.
    • Imports fell to 5.146 million barrels from 5.941 million barrels per day compared to 6.663 million barrels per day last year.
    • Crude exports from the US rose to 3.211 million barrels per day from 2.993 million barrels per day last week compared to 2.574 million barrels per day a year ago
    • Canadian exports to the US fell to 3.289 million barrels a day from 3.354 million barrels per day last week
    • Refinery inputs increased during the current week to 14.595 million barrels per day
  • As at July 24, 2020, US natural gas in storage was 3,241 billion cubic feet (Bcf), which is 15% above the 5-year average and about 24% higher than last year’s level, following an implied net injection of 26 Bcf during the report week
    • Overall U.S. natural gas consumption rose 1.0% during the report week.
    • Production was up 0.2% for the week. Imports from Canada fell 2.1% from the week before. Exports to Mexico were down 0.9%
    • LNG exports totaled 25 Bcf
  • As of July 31, 2020, the Canadian rig count increased 3 to 45 (AB – 31; BC – 9; SK – 4; MB – 0; Other – 1). Rig count for the same period last year was 137.
  • US Onshore Oil rig count at July 31, 2020 is at 180, down 1 from the week prior.
    • Rig count a year ago was 770
  • Natural gas rigs drilling in the United States is down 1 at 69
    • Rig count a year ago was 171
  • Offshore rig count was unchanged at 12.
    • Rig count a year ago was 22

Trump Watch: Making a pitch for the Suburban House Wife

Kenney Watch (new!): Leg closed for the summer. No jumping in a fountain this year!

Trudeau Watch (for balance): Weeeeeeeeeeeeeee!

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