Link here. From The Prairie Blog.
Ukrainians are much on our minds right now, with the Last World War apparently beginning in their country. North Dakota has a smattering of them. I’m going to tell you the best Ukrainian story ever, but first a little background.
Where I grew up in Hettinger, in extreme southwest North Dakota, there were no Ukrainians. We were Germans and Norwegians, with a smattering of Swedes. Hettinger was one of about a dozen towns in extreme southwest North Dakota settled by the railroad—the Chicago, Milwaukee, St. Paul and Pacific Railroad—in the first ten years of the 20th century, much later than most other parts of the state. U.S. Highway 12, the main road between Chicago and Seattle, followed the railroad across the country. The main difference between the two transportation corridors was that the highway generally went through the middle of each town, and the railroad tracks ran along the edge.
Merchants saw to it that the highway bisected the town, to lure automobile travelers to stop at their stores, restaurants, gas stations and hotels. I remember once North Dakota’s State Highway Department floated the idea of running Highway 12 around the north side of town, and the Chamber of Commerce successfully took up arms to stop that bad idea.
But keeping the railroad out on the edge of town led to the construction of grain elevators and kept the noisy trains and the truck traffic hauling grain to the elevators out of residential and business districts. And the livestock sales rings and hog barns were right beside them, keeping their unpleasant odors relegated to the edge of town.
Settlers to southwest North Dakota came by the trainload, one full of Norwegians, the next full of Germans, and on and on, giving each town and the farmers who shopped in it an ethnic identity. On the east side of my town, between Hettinger and Haynes, the farmers were Germans and milked cows and grew corn to feed them. West of town, between Hettinger and Bucyrus, they were Norwegians, and they grew wheat and raised cattle for beef.
In my high school graduating class there was not even a hint of an eastern European surname, but I had classmates named Davidson, Ellingson, Erickson, Evenson, Johnson, Kvanvig, Lundahl, Markegard, Olson, and Severson from west of town, and Schmaltz, Schmidt, Seifert, Schoeder, Wolf, Zimmerman, Nagel and Miller from east of town.
Even the town itself had a distinguishable ethnic division, with the German Catholics living and building their church north of Highway 12, and the Norwegian Lutherans on the south side. There was much pinochle played on winter evenings on the north side of town, and much whist on the south side.
One thing is certain. No one in my high school class ever dated a Ukrainian, or even knew one, unless they had met someone at Boys State or Girls State or a state music or speech festival. We certainly never played any sports against any Ukrainians. I’m pretty sure there were no family names ending in “uk” or “iuk” or “enko” when I left Hettinger in 1965.
But there were plenty or Ukrainians not far away, fifty or so miles north of us, in Stark and Billings Counties. When I went away to college in Dickinson, and later lived there to work at The Dickinson Press, there were lots of names ending in “uk,” “yk,” and “iuk,” what linguists call “patronymic,” in other words, based on the given name of a father or other male ancestor, much like the “son” on the end of names of all those Norwegian classmates of mine.
Other name endings I discovered from my time in the Ukrainian country of western North Dakota were “enko,” “chuk,” “chak,” and “yshyn.” It was not unusual for me to write a Press story about people like Mike Olienyk, Agnes Palanuk or her son “Wild Bill” Palanuk, or one of the Charchenko or Baranko or Romanyshyn brothers. I had a landlord named Franchuk, and Zeke Lazorenko made the “Best Manhattans in the West” at the little Missouri Saloon. For a fun afternoon experience, you could wander around staring at the fascinating names on the tombstones at the cemetery at St. Demetrius Church north of Belfield.
They’re still out there, those Ukrainians. I learned how many a couple of years ago. Hence my favorite Ukrainian story.
Sometime in the last few years, the folks in Medora who run the Medora Musical nightly outdoor show from Memorial Day to Labor Day began giving their cast and crew a couple nights off each summer (they generally did 100 straight nights) and scheduled concerts in the Burning Hills Amphitheatre for the two nights the show was dark, bringing in bands and artists from all over the country.
One August night when my wife Lillian and her sisters were on a summer European vacation, I ventured west to hear a rock band fronted by a returning Belfield native, Brody Dolyniuk. Brody had moved to the West Coast after high school to pursue a musical career and had done pretty well. He was the lead singer and his band was a tribute band which did songs from Queen, The Who, Led Zeppelin and Pink Floyd, among others. They toured the country, fronting real symphony orchestras, in places like Philadelphia, Atlanta, New Orleans, Honolulu, Seattle, and Las Vegas. Brody had a really good gig going.
Now Brody Dolyniuk was coming home, without the orchestra, to show the folks back in western North Dakota what a kid from Belfield with a funny name to most other parts of the country could accomplish in the music world.
I’m an old rocker, and with a lineup of hard rock tributes like that, I went into the amphitheater fully expecting to be about the oldest person in a small crowd, for a rock show in the Bad Lands. But I was surprised to see a big crowd, probably a thousand people, and it looked like I was about median age. A pretty big and pretty old crowd for a hard rock band playing outdoors a hundred miles from anywhere, in the North Dakota Bad Lands.
The show was great. Brody and his band just rocked the place, and he was a great singer–his Freddy Mercury was as good as Freddy in his heyday at Queen, and the crowd went nuts over his rendition of Robert Plant’s “Stairway To Heaven.”
As the show neared an end, Brody engaged the audience, telling them how great it was for a kid (well, not so much a “kid” anymore—he’s well into his 40s) like him to come home, and sing for the home folks, because he had been raised just 15 miles down the road in Belfield.
And then he said he saw some folks he knew in the audience, and he said “Okay, everyone whose names end in K, stand up.” The crowd let out a roar and started clapping, as more than half the audience—probably most of Belfield and western Stark County–stood up and puffed out their chests. The rest of us just roared.
The word had spread. Brody’s coming home to sing for us. That explained all the boots and bib overalls and straw hats in the oldest crowd ever to see a rock concert in North Dakota.
“Everyone whose names end in K.” What a great observation. Loyal Ukrainians. I wonder how long he had been waiting to say that. I’m not sure Pink Floyd would go over very big up at St. Demetrius Church, but I bet they’d like Led Zeppelin’s “Stairway To Heaven.”
And I’m pretty sure they’re praying this week up at St. Demetrius for their fellow Ukrainians back in their home country. We should be too. You think I was kidding when I called it the “Last World War?”
EIA monthly Short Term Energy Outlook came out today:
https://www.eia.gov/outlooks/steo/
As usual, nothing radical, but some changes, since they can incorporate “what happened recently” (is there a fancy econ term for that)?
Crude price:
Near term up a bunch, since…well price is up now. But very backwardated. Whole strip moved but the impact is more on the near term and less on the .far out. I mean it all goes up (usually)…but the prompt gyrations overstate the long term expectations. EIA actually has their own price deck, not just using the strip. But it usually approximates the strip in shape/amount. Typically slightly higher (although maybe not now, given how crazy the strip is).
Crude production:
They seem to have incorporate both the recent outperform on production (we hit almost 11.8 MM bopd in NOV, from the last 914 survey) as well as the price deck going up. They moved DEC estimate up from 11.6 to 11.8 for instance. They do have a drop down in JAN (not sure why, maybe reversion to their model, maybe seasonality). They have 11.64 for JAN…but last month they had 11.56. So up some. And then their exit rate for DEC22 moved up from last month prediction: 12.19 going to 12.39. And DEC23 also up: 12.67 to 12.84. All of that still puts us under pre-Covid levels of production.
Overall:
A. The industry will naturally produce more when incented more with price. Still much slower under Biden (given price) than under Obama/Trump. But…it’s something to see some growth.
B. EIA has had a habit of misunderestimating shale. But I don’t think that’s the case now. Rig counts are very moderate, given price levels. We are in a regime where it is easier for EIA to make predictions.
i am watching usa distillate fuel and kerosene: stock and production.
I think inventory watching is overrated. If we’re backwardated, there’s an incentive to minimize inventory. If we’ve a forward curve to store it. (I’ve been at a refinery where we actually filled the tanks to try to make money on the roll…not sure it did anything but it made the McKinsey/Goldman/Carlisle hotshot manager feel like he was.) There’s this whole thing of looking at inventories to see if it looks like we have current supply/demand under/over 1. But really, the info you need is already in the futures strip itself.
I’m not an expert on refined products demand. Sort of makes sense that jet fuel would be in more demand. But really the US never went off a cliff like overseas areas did. Lot of internal air travel (which is most of ours, unlike Austria say) kept going even during the pandemic. Or had mostly come back last year. There’s a seasonal effect also (more travel in the summer), so the system is probably fine to meet demand even if up, right now (since we are in the slow time of year). Will be interesting to see what happens in the summer though.
odd enough that you should mention oil & gas production on a labor supply thread…DUCs (drilled but uncompleted wells) are at record lows in 4 major basins, and the lowest since February 2014 nationally….but a lot of what i’m seeing on industry sites right now are complaints they can’t find enough workers to increase production, even at higher pay…we already have 1.7 job openings for every person who’s looking for work, in almost every industry…but you can’t just hire anyone off the street to drill a well to 15,000 feet and then horizontally a mile or more through a 200 thick band of shale; in Ohio, there’s a Utica Shale Academy to teach that job….then, even if you get your extra wells drilled, you still have to contract a fracking crew to complete it for production to start…i’ve seen that a couple oilfield service providers are now talking about fielding another completion crew, but that won’t happen in the first half; you’d be talking about maybe 25 or 30 semi tractor trailers loaded with specialized equipment and the experienced personal to man them…
which brings me to this, from about a week ago:
DOI announces $1.5B in funding for orphaned well clean up – The Department of the Interior announced $1.15 billion in funding is available to states from the Bipartisan Infrastructure Law to create jobs cleaning up orphaned oil and gas wells across the country.This is a key initiative of President Biden’s Bipartisan Infrastructure Law, which allocated a total of $4.7 billion to create a new federal program to address orphan wells. Millions of Americans across the country live within a mile of an orphaned oil and gas well. Orphaned wells are polluting backyards, recreation areas, and public spaces across the country. The historic investments to clean up these hazardous sites will create good-paying, unionjobs, catalyze economic growth and revitalization, and reduce dangerous methane leaks.
the original theory behind funding the orphan well cleanup was that it would put unemployed oil and gas workers back to work…but with the industry already looking for workers, what do does DOI expect to do, train those who quit their jobs flipping burgers or stocking shelves to clean up those hazardous well sites? so it appears that either the orphan well cleanup effort will stall from a shortage of capable workers, or it will be done poorly by those who don’t know what they’re doing, creating a whole new problem of leakage from hundreds of poorly capped wells sometime in the future…
1. Good job steering it back to wages! For the reasons MC mentioned, I’m always skeptical of worker “shortages”. If you pay enough you can get people. It’s not like we have anywhere the activity of 2014 or even 2018. Yes, they’ve gotten sick of the boom/bust. But still, pay enough and you can get them. I’m not even sure that wages have reached the insane levels we saw in 2014 or 2018 yet either (especially CPIed). Not saying they haven’t just don’t know. And the whole “people complained and a news story was written is too anecdotal.
2. DUCs are low, agreed. There was a bulge of DUCs from the slowdown, but we’re getting close to working inventory now. Eventually, it becomes a constraint and you have to add rigs or drop spreads.
I usually figure 2:1 ratio needed. oil-directed rigs versus spreads (oil and gas, they don’t differentiate). It’s a very ballpark-y thumb rule but seems to work. Right now oil rigs is at 497 (post Covid record), but spreads are at 265 (and were as high as 275 before the holidays). So, we are a little under my 2:1 thumb rule. Not awful though. I do wonder if one of the reasons for the slow post-Xmas rebound of spreads is the DUC inventory situation and basically rigs becoming a bottleneck.
OPEC reported their production for January today, up by just 64,000 barrels per day over December…..the cartel including Russia had committed to increasing production by 400,000 barrels per day each month since July; it’s now looking like they’re running ~ 800,000 barrels per day short of that; almost 1% of global demand…
i earlier mentioned backwardation as another constraint on increasing US production…March 22 WTI closed just short of $90 today, but March 2023 WTI, which probably better represents the price they’d get after filing for a permit, moving a drilling rig to the site, and contracting a backlogged completion crew to frack the well, closed at $78.54…
and there it is, right in front of my eyes, but i missed it; if oil is $90 today but futures say it’s worth $78.54 a year from now, no one in their right mind would want to hold any inventory…