Thursday, April 27, 2017

Wow -- One Of Those Days -- No End Of Surprises -- April 27, 2017

Outrun Change has a great post with a look at the historical number of active rigs in North Dakota. What always amazes me is that with more than 200 active rigs during the height of the boom, getting to one million bopd was "a big deal." With only 50 active rigs in North Dakota, the state is still producing a million bopd and has a thousand inactive wells (completed, but not producing) and another 900 DUCs (wells drilled to depth, but not completed/fracked).

A huge "thank you" to Outrun Change for linking the MillionDollarWay; very much appreciated. Again, the disclaimer: I often make mistakes and my data may differ from that of the NDIC for various reasons. To the best of my knowledge my data is accurate or very near accurate when it comes to rig counts as posted by the NDIC.

Some years from now, whoever writes the history of the Bakken should have no end of data from which to work.

A Graph Is Worth A Thousand Bbls -- April 27, 2017

This story has been told several times in several places over the past few days. I have not posted the story nor linked the story until now. There were several reasons why I did not post/link it.

But now, with this graph, perfect for posting:

I think the graph would have been even more "effective" had they drawn the x-axis to 75 billion bbls to accurately capture the 60-billion-bar for 2009. Folks are concerned that low discovery rate in past two years will mean severe supply/demand imbalance sooner (2018) than later (?).

Maybe, maybe not. But when I see the graph above, and note the 2009 bar, as well as the 2012 and 2014 bars, my hunch is it will take a few years to work that off, as well as the three billion bbls of crude oil now being stored globally.

Reason Why I Love To Blog -- Reason #2 -- I Can't Make This Stuff Up -- Top Story Of The Month? -- April 27, 2017

Just a couple of days ago I posted photos of a Chinese ship in Portland, Oregon, on the Willamette River being loaded with North Dakota wheat, and once loaded will sail to Peru (South America) to offload that wheat.

Today, of all things, over at Twitter, a photo of a tanker carrying Bakken crude oil to Asia was posted:


The photo is linked to this Downstream Today story. Data points:
  • first ever reported export of North Dakota's crude oil to Asia left port last month
  • it is expected to be the first of numerous cargoes once the key DAPL starts moving oil in May
  • Swiss-banked Mercuria Energy Trading S.A. loaded more than 600,000 bbls of Bakken crude, as well as some Mars Sour crude, in late March off the coast of Louisiana
  • very large crude carrier (VLCC)
And then this from the linked story:
The burgeoning appetite for U.S. crude among Asian refiners could be a boon for Bakken crude, especially when the Dakota pipeline starts up. That line can carry 470,000 barrels per day of oil from North Dakota's Bakken play to the Gulf, the starting point for the lion's share of U.S. oil exports.

At least two Asian refiners told Reuters that they are interested in Bakken light crude because of the products it can yield through refining.

With the start of Dakota Access (DAPL), Bakken producers such as Hess Corp and Continental Resources for the first time will have a direct route to export terminals on the Gulf Coast, better connecting them to international markets.
"There seems to be increasing demand for light quality crude in Asia," said Michael Cohen, head of energy commodities research at Barclays. "I think with Dakota Access coming online, it makes the pipeline route from the Bakken to the Gulf Coast more economical."
Memo to self: I need to send a note to Jane Nielson. 

There are several story lines here. One has to do with the reason Asia might be preferring Bakken light. Long-time readers know this story. 

Random Update Of A CLR Antelope Well In Elm Tree Oil Field -- April 27, 2017

This well has been added to the "monster well" page and to the "wells of interest" blog.
  • 21488, 1,357, CLR, Antelope 3-23H, Elm Tree, Three Forks, 29 stages, 2.8 million lbs, t8/12; cum 532K 2/17;
Note to newbies: I have no specific criteria for "monster wells." I started the "monster well" page early in the boom when EURs for middle Bakken wells were expected to be around 350,000 bbls of oil. I thought, at the time, then, any well that was on its way to 500,000 bbls in three or four years could be considered a monster well.

Now, just a few years later, some operators won't drill a Bakken well if the likely EUR is not at least 750,000 bbls of crude oil.

Some (probably most) readers will feel that many of the wells on the "monster well" page (linked above) are not really "monster wells." That's fine. I follow them there for other reasons also.

Maybe some day I will add a page for super-monster wells -- wells that go over 1 million bbls, and then the super-duper monster wells, those that go over 2 million bbls.

It is my expectation that any given Bakken well is likely to be producing for 30 years. During that time, primary production from any given Bakken well will be affected by re-working the well; re-fracking the well; re-entering the well for additional side-tracks; activity from neighboring wells; as well as other factors. The general consensus is that 50 - 70% of a Bakken well's EUR will be produced in the first couple of years after being completed. I'm not convinced. I think the Bakken still has many surprises.

Why I Love To Blog -- Reason #46 -- April 27, 2017

I have said many, many times that the best way to track inflation and compare the economies among the 50 US states, and to compare the US economy with the global economy is to track the price of a MacDonald's quarter-pounder.

Likewise, I have often said that the best indicator of jobs / job growth is gasoline demand. I have explained the reasoning elsewhere but I doubt I could find it now. If I do, I will post the link.

Today, the number of first time unemployment claims surged unexpectedly; the number of claims jumped 14,000 without any explanation (as far as I know; mainstream media will probably say it had something to do with the weather). Whatever.

So, the number of first time unemployment claims surged unexpectedly. Let's see what gasoline demand did. Wow! Gasoline demand has been absolutely flat for the past four reporting periods and below last year's demand (prior to the most recent report today) going into the busy US driving season. Until I saw the jobs report today, I had expected the gasoline demand to rise, perhaps even going up enough to overtake the gasoline demand one year ago.

But wow! Completely unexpected (until the jobs report came out): gasoline demand decreased and remains below the demand one year ago. Gasoline prices continue to remain very, very low. Crude oil was trading in a narrow range around the $50-line but in the past 24 hours dropped 2% to $48 and change. Right now it's down 2.5% for the day, and trading at $48.38.

Gasoline demand:


Something Happening At A Hess HA-Mogen Multi-Well Pad? -- April 27, 2017

April 27, 2017: #20738 and #16694 have been off-line since 12/16. See this post where I track the HA -Mogen wells.

Random Update Of An Incredible SHD Oil & Gas Well In Deep Water Creek Bay -- April 27, 2017

I've posted on this well several times. Once can search the blog. This post includes the graphic

The well:
  • 19296, 2,388, SHD Oil & Gas, Golden 22-31H, Deep Water Creek Bay, t3/15; cum 505K 2/17
One-half million bbls of oil in about two years.

Natural gas: 346,733 MCF = another 60K of boe.

A reminder: this is an extended long lateral (three sections long, under the river).

It looks like not much has changed. The other wells on this pad are still waiting to be completed.

Monthly production:
PoolDateDaysBBLS OilRunsBBLS WaterMCF ProdMCF SoldVent/Flare
BAKKEN2-201728148631520617197998409984
BAKKEN1-201730139921374217928762107621
BAKKEN12-201627113811156712009555705557
BAKKEN11-201629144691434218037832808328
BAKKEN10-201631161961595119279870408704
BAKKEN9-201630158271559623118822408224
BAKKEN8-201631169131643523912923609236
BAKKEN7-20163119195187032931210760010760
BAKKEN6-201630173981730028221926909269
BAKKEN5-201631174261705828779915709157
BAKKEN4-20163017658176800921909219
BAKKEN3-201631180091748228734927352584015
BAKKEN2-201628151751485226159797723975580
BAKKEN1-20163120664203703023310665010665
BAKKEN12-20153120810205233934613444013444
BAKKEN11-20153022221221663620416791016791
BAKKEN10-20153121570214203090116005016005
BAKKEN9-20152913597137312773810789010789
BAKKEN8-20153117615172371247435799035799
BAKKEN7-20153118846184162925013299013299
BAKKEN6-201530214522059729348146377612971
BAKKEN5-2015312754527019403071761015838129
BAKKEN4-20153030953298964622621505167763139
BAKKEN3-20153150914483486872839880218936048
BAKKEN2-20152330105295027034623000023000


The other three wells on this pad:
  • 31109, conf, SHD, Charging Wildcat 22-31H, API: 33-055-00182, not fracked acc. to FracFocus;
  • 31110, conf, SHD, War Eagle 22-31H, API: 33-055-00183, not fracked acc. to FracFocus;
  • 31111, conf, SHD, Luke Neset 22-31H, API: 33-055-00184, not fracked acc. to FracFocus
The graphic:


Great Article Over At Rigzone On Solving The "Marcellus / Utica" Problem -- April 27, 2017

Updates

Later, 8:33 a.m. Central Time: see first comment --
As impressive as the Dragon ship story is (they use ethane to power the ship, also), there are even larger ships - almost triple the size - to transport ethane from the Gulf to India.
Reliance Industries operates the complex in India, I believe.
The amount of gas coming from the Appalachian Basin, by this time next year, will be stunning as many pipelines will be in service by then.
Original Post

 Link here. Data points:
  • March 9, 2016
  • 27,000 cubic meters of ethane
  • loaded on the Ineos Intrepid
    • new class of LNG vessel
  • 4,000-mile voyage from US to Rafnes, Norway
  • first time US shale gas transported to Europe
  • made possibly by using new class of LNG carrier
  • the Ineos Intrepid
    • ship designer: Evergas
    • one of eight "Dragon-class" vessels
    • world's largest multigas LNG-ethan carriers
    • these eight vessels will be the "seaborne pipeline" linking US and Europe
  • in addition to Rafnes, the Dragon-class carriers deliver ethane cargoes to Ineos' cracker at Grangemouth, UK
Much, much more at the link.

April 27, 2017

WTI futures drop 2% overnight: now trading below $49.

Active rigs:


4/27/201704/27/201604/27/201504/27/201404/27/2013
Active Rigs482785182187

RBN Energy: E&P companies doubling down on Marcellus / Utica in 2017 CAPEX plans.

Scott Adams: President Trump's first 100 days.

The Energy And The Market Page, T+96 -- April 27, 2017

Disclaimer: this is not an investment site. Financial news is posted to help me put the Bakken into perspective. 
Market Day

Opens:
  • Nasdaq: up 13
  • Dow 30: up 17
  • WTI: $48.60 
UNP: Warren Buffett must be thrilled. Personally, with everything I'm reading, I never would have expected this. UNP trading near all-time highs (I believe) and UNP popped overnight -- up over 3% this morning with a dividend that will most likely be increased. I guess its 52-week high is $115, so UNP has a little way to go to beat its all-time high.

XLNX: wow, wow, wow. Beats on earnings, revenues.





Before The Market Opens

Futures. Up 28 points.

Exuberance. Oilprice.com still suggesting that OPEC could hit its target, $60 oil with extension of cuts. Right now, WTI before market opens: drops 2% overnight, now trading below $49. This has to be very worrying for Saudi Arabia and those US operators that bought Permian for $40,000/acre.

Exuberance. oil supermajors dig out of doldrums as cash poised to surge -- Bloomberg. We'll see when XOM, COP, CVX report.

What, Me Worry? US E&Ps can turn a profit on $50 to $60 oil -- Barclays. That's not the quesiton: can they make money on $30 to $40 oil?

Saudi losing share. To Iran, Iraq on oil cuts -- Bloomberg. Tea leaves suggest to me the OPEC (wink, wink, Saudi Arabia) won't extend the cuts; if the cuts are extended, won't amount to much. At $100-oil the Armaco IPO is worth $2 trillion, some say. At $50-oil, not so much.

Not quite right. Headline from last night -- "oil prices stable after big draw in US crude inventories." -- Reuters. Less than 12 hours later, WTI tumbles 2%, now below $49.

Completely missed this one: UNP trading at its 52-week high. Who wudda thought? Up almost 2% overnight.