Miscellaneous Notes -- April 6, 2015; Update On Zavanna Natural Gas Processing Plant Northeast Of Williston

Updates

Later, 2:38 p.m. CT: a reader provides a bit of insight regarding the fact that "all" new Zavanna wells coming off the confidential list are going to DRL status. First, re-read this post from last fall: a new Zavanna natural gas processing plant seven miles northeast of Williston. Second, the reader sent me a scanned copy of a letter from Zavanna suggesting that Zavanna plans to frack a number of wells in Stockyard Creek (one of the best spots in the Bakken). These data points suggest to me that Zavanna is taking the new NDIC flaring rules seriously and is doing what it can to meet the requirements. The natural gas processing plant is near Springbrook, North Dakota, about 7 miles northeast of Williston; the website link is here. I don't know where the plant is located but most likely somewhere along County Highway 6 east of US Highway 85, north of Williston. Google maps indicate a lot of activity in this area. Be sure to note that the Flatirons site mentions "gas lift" -- be sure to check that out at wiki if you are unfamiliar with gas lift.

Original Post

During the slow-down in drilling and the severe slump in oil prices, a couple of observations with regard to "new wells coming off the confidential list":

• most wells are going to DRL status
• Zavanna wells consistently go to DRL status
• it appears most Hess wells go to DRL status
• toss-up among CLR wells; some completed; some DRL status
• Whiting and QEP tend to complete their wells
• Statoil tends to go to DRL status, but in the old days they were completed relatively quickly
• Enerplus wells generally go to SI/IA status

One can look at wells that came off the confidential list in the 1Q15 at this link; this page has not been updated (as of April 6, 2015) so it will show the status of the wells when they came off the confidential list; these 1Q15 wells will be updated in the next calendar quarter.

This is just idle chatter; no statistical analysis. It's just my impression, and my impression could be way off. Don't make any decisions based on my impressions; if this information is important to you, go to the source.

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Reminder: this is not an investment site. Do not make any investment or financial decisions based on anything you read here or think you may have read here.

I think there was a story over the weekend, which I did not post, suggesting that oil production from Texas was steady or increasing despite laying down of rigs. Today, from Yahoo!In-Play:

Matador Resources provides operational update; achieved record quarterly production of approximately 2.1 million BOE for the first quarter of 2015: Production for the first quarter of 2015 was almost double the 1.1 million BOE produced in the first quarter of 2014 and up about 10% sequentially from 1.9 million BOE produced in the fourth quarter of 2014. First quarter 2015 production was ahead of the Company's estimates by about 10% as a result of better-than-expected performance from newly completed wells in both the Delaware Basin and the Eagle Ford shale, as well as earlier completion dates on several Eagle Ford wells leading to less shut-in production during the first quarter.

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Today's EIA Blurb

On refining and light tight oil:

With the growth in U.S. production of light tight oil (LTO) in recent years, petroleum refiners in the United States have been processing greater volumes of LTO. To date, increased volumes of domestic LTO have mainly been accommodated with no- and low-cost options such as reducing light crude oil imports, increasing refinery utilization rates, making incremental efficiency improvements (crude unit debottlenecking), and displacing medium crude oil imports. A new EIA report (http://www.eia.gov/analysis/studies/petroleum/lto/) reviews a range of additional options that U.S. refiners may consider to expand LTO processing capacity. --- EIA 

And another blurb from the EIA today:

The top 100 oil fields as of December 31, 2013, accounted for 20.6 billion barrels of crude oil and lease condensate proved reserves, which was 56% of the U.S. total (36.5 billion barrels) in 2013…The top 100 gas fields as of December 31, 2013, accounted for 239.7 trillion cubic feet of total natural gas proved reserves, about 68% of the U.S. total natural gas proved reserves in 2013 --- EIA

A fairly useless statistic. And it's more than a year old; it's 2013 data. Auto manufacturers get their monthly sales data out the first day of the next month. There's trivia, and then there's EIA trivia.

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Counter-Intuitive

This one caught me by surprise -- at least until I got into the article. The WSJ is reporting that low oil prices may curb domestic demand. Yes, it will take a fairly long article to explain that one. 

This is an old, old story for long-time readers, but I'm not sure if newbies are aware of this issue: the Mideast consumes a lot of their own oil; they are consuming more; local consumption puts exports at risk.

The article begins:

The sharp drop in oil prices hasn’t been kind to the world’s petro-states, but it has provided an opening to address one of their most pressing economic problems: runaway domestic energy demand.

In the Middle East, the growth in demand is driven in part by expanding populations, as well as a deliberate move into energy-intensive industries such as aluminum and petrochemical production. But a big part stems from the region’s ubiquitous energy subsidies.

Voracious energy use in countries such as Saudi Arabia and Iran is threatening exports from the most oil-rich region in the world. Failing to restrain this galloping demand could leave global markets more volatile, pressure domestic budgets and eventually nudge prices back up.

As a group, OPEC members—mostly countries in the Middle East and Africa, plus Venezuela and Ecuador—now consume almost as much energy as China, with less than half its population. The Middle East, especially, is expected to account for a major chunk of future global demand growth. Saudi energy use is expected to grow at a 3.8% rate through 2020, according to the International Energy Agency. That’s slower than the country’s 5.7% annual average over the past six years, but well above the expected global average of 1.2%.

Consumption is “out of control,” said Steve Griffiths, an executive director at the Masdar Institute, an energy think tank in Abu Dhabi.

Nearly every country in the Middle East long ago embraced the notion that cheap fuel was essentially a birthright. As a result, energy is all but free in some places, such as Saudi Arabia, where a gallon of gasoline costs 45 cents. Governments pick up the rest of the tab, either paying for imports or forgoing income that could be earned by exporting domestic oil or gas rather than selling it for rock-bottom prices at home.

Most countries have realized that’s not sustainable. Some countries, such as Iran, Nigeria and Venezuela, have already hit that wall: They are unable to maintain their spending on imports to meet demand or balance their budgets without the export revenue they are forgoing to satiate consumers’ growing energy appetite. Iran has made some halting progress in raising prices closer to market levels; Nigeria and Venezuela haven’t.

Much more at the link. This graphic is from the linked article above:

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I've Been Everywhere -- Greek Prime Minister

Last week the Greek prime minister was in France to visit the IMF. This week he travels to Moscow.

It's all for show. Russia has no money. The Greeks even said that -- it's not for money; it's for show.

From the print edition:

Greek officials said Mr Tsipras isn't looking for money from [Putin]. Russia's weak finances and limited interest in Greece mean it isn't a viable source of funding anyway.

Instead, they said the visit is aimed at pleasing Greek voters with a show of defiance toward European creditors.

Okay.
I've Been Everywhere, Johnny Cash