ColdmanSax

Subsea Blowout Preventers (BOPs) This is the technology that allows us to drill oil and gas wells under the sea, that red circle in the left image is an offshore worker for scale. The image on the right shows a subsea BOP sitting on top of a subsea wellhead. I guess most people have no idea that these systems even exist, so let’s have a look at what they are and how they work. The purpose of a Blowout Preventer is to prevent blowouts. So what is a blowout? Wells are so deep that the pressure at the bottom of the well can be 10,000-20,000 psi, this is 1,000x more pressure than atmosphere. What that means is that wells always want to explosively vent their entire reservoir contents into the sky, and oil reservoirs typically contain a few hundred million tonnes of carcinogenic crude oil. If a subsea oil well has a blowout, then you can accidentally poison an ocean. This famously happened to BP in 2010, when the Deepwater Horizon BOP failed. When you drill a well, your “primary barrier” is your drilling mud. This is a heavy liquid that you pour into your well and the hydrostatic pressure of this dense mud is heavy enough to keep the contents of the reservoir at the bottom of the well. A well is a deep hole filled with a mud that has a density of 1.0 - 2.4 kg / litre, the denser the mixture of mud, the greater the pressure at the bottom of the well. The job of a drilling engineer is to keep the mud weight such that the contents of the reservoir stay put, without all the mud flowing into the reservoir. If the density of the fluid in the well drops, eg it gets replace with oil or water instead of mud, then the pressure is such that the well will start to “unload”, which means it will flow to the surface. A BOP is used as an emergency backup system, so that when the drilling mud has a problem you can slam shut the BOP valves and stop the well unloading. Once a well starts to unload there is no force in nature to stop it. You get 1 shot at preventing the blowout. Usually you will have drill pipe insider the well too, running from the rig all the down the riser and all the way into the well. This complicates closing the BOP somewhat, so BOPs are designed to shear drill pipe insider two when they close. Drill pipe is 6in diameter toughened steel. Cutting it with a valve that also has to seal 10,000psi to avoid poisoning an ocean is no mean feat. Doing this remotely under 2 miles of seawater is even more challenging. But these systems exist, every offshore drilling rig has a BOP, it’s 450 tonnes of steel forgings, high pressure pipework, controls, and the most incredible sealing technology known to mankind. Around 30% of the world’s oil supply is produced offshore using technology like this. This is the upstream industry that produces 1/3rd of all fuel, plastic, fertiliser, you name it, this is how we do it. We’ve been doing this for 50 years.

I hear this quite a lot--if Iran can withstand US pressure, what's to stop them from continuing this standoff indefinitely? The leadership wants a deal to end the war--resolving the confrontation on favorable terms is the endgame, and ultimately why they fought the war as aggressively as they did. A perpetual state of "no war, no peace" is not their preference. Nor is it sustainable.

AI winners: How long can these stunning margins be sustained? 👀

1) From Drilling to Open Pit Optimization For Dummies. (An updated 🧵) Imagine you have project and hire a truly great geologist who has drilled some fantastic looking sections based on a small surface anomaly he found from a surface geochemistry sampling program.

$MP CEO Jim Litinsky believes NdPr magnets could become the next “memory chip” style supply shock. As AI, humanoid robotics, and advanced technologies scale, rare earth magnet demand could hit a point where the market suddenly realizes there simply isn’t enough supply.

Kenya🇰🇪 suspends $1 billion Microsoft data centre as energy shortfall raises doubts over Africa’s AI ambitions Kenya’s plans to host a $1 billion data centre backed by Microsoft and UAE-based G42 have stalled, after President William Ruto said the country lacks sufficient power capacity to support the project.

Steve Hanke, Professor of Applied Economics, says the world is rearming and arms need raw materials. Since December, tantalum is up 133%, lithium spod 52%, niobium 28%, and gold is still heading to $6-7K. Move out of high tech, get into hard commodities. We're in a super cycle

Buy more bitcoin than you sell.

The CEO of the world's largest asset manager just said something that should reframe how every investor thinks about the AI trade. Larry Fink, managing $11.5 trillion at BlackRock, stood at the Milken Institute Global Conference and said four words that matter, "We just don't have enough compute." "The United States is short power. We're short compute. We're short chips. And there's going to be shortages in all three and memory, four things. I actually believe a new asset class will be buying futures of compute." Think about what that means. Fink is predicting that compute becomes a tradable commodity like oil, like grain, like natural gas where investors buy forward contracts on future capacity because the shortage is so structural and so predictable that a derivatives market will emerge to price it. That is not a minor observation from a finance executive but rather the chairman of the most powerful capital allocator on the planet telling you that compute scarcity is a multi-year, investable megatrend. The data backs him up completely. Data centers will consume 70% of all memory chips produced globally in 2026. Advanced HBM production from Samsung, SK Hynix, and Micron is sold out through 2026 and into 2027 and a single AI server consumes 10-20x more memory than a conventional workload server. DRAM supply growth is running at just 16% annually while AI infrastructure demand is growing at 80%+. The chip crunch, the power crunch, and the compute crunch are not temporary dislocations, they are structural, and they will get worse before they get better. Fink also said something the bears keep getting wrong: "There is not an AI bubble. There is the opposite. We have supply shortages. Demand is growing much faster than anyone has ever anticipated." This is why the Milk Road Pro portfolio is built the way it is, long the companies producing and supplying the constrained resources: chips, memory, compute infrastructure, and power. Check out Milk Road Pro, link below to access our full thesis and plays.

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Spending on the so called green energy is shrinking fast . The U-turn is real .

I am confident enough in myself to say that I feel like I'm the only person not making life-changing money in semiconductors and AI stocks. Like I completely missed it. So now I feel the desire to buy "the next rotation." I don't know. Hope my insecurities help others.

The Koala likes this deal but in particular the option to buy another 1% of the 4% royalty in the 45 days after closing for The Metals Royalty Company $TMCR DRI is one of the least appreciated growth commodities by consensus and it should be far more appreciated and to get something like this in the USA is another great example of the independent counter-cyclical vision that has led BPB to where he is today Would not be surprised to see TMCR exercise that option in the 45 day window post closing once the market digests and understands this deal Also this further reinforces to me why (as has been my thesis since 2022 on this vehicle) this is the best way to express a view on deep sea mining happening one day The addition of this cash flow makes TMCR a positive cash flow perpetual option on NORI-D Royalty investors understand how valuable something like that is