Wednesday, December 23, 2015

Weekly Crude Oil Inventories Down In The US; Twitter Energy Tweets -- Platts, John Kemp, EIA -- December 23, 2015; US Natural Gas Reserves Staggering


December 23, 2015: for easier googling, I will bring the first comment up here (google does not search comments as far as I know):
I have been following the goings on in the Appalachian Basin (Marcellus, Utica, Upper Devonian, the deeper formations including the Trenton Black River) for over a year now.
Simply staggering developments as well as future potential.

The recent Deep Utica wells (Richard Zeits has the best analysis on Seeking Alpha) are showing that the Utica may well surpass the Mighty Marcellus in both output and economic viability.

People who 'knock' the Utica simply are unaware of what is going on there.
Observations that Utica wells decline rapidly are refuted by the 14 wells Rice Energy has producing on restricted choke with NONE showing ANY decline yet and the output is 15MMcfd/17MMcfd (boe near 3,000 boepd).
Range had a highly publicized Utica well that declined dramatically (Claysville 11H).
However, a sister well on the same pad (Clsysville 9H has INCREASED output from 11 to 12MMcfd. Range has learned from their first Utica, and the other operators are progressing as well.
Gulfport, in the slightly shallower Ohio Utica, recently reported about 15 wells that cumulatively produced 18Bcf in this past 3rd Quarter. (Over one million barrels oil - energy equivalent).
Original Post
The tweets:
  • U.S. commercial crude oil inventories week ending 12/18/2015 DOWN 5.9 MMbbl, refinery utilization= 91.3%
  • North Sea Brent Blend crude oil loadings down 7,976 b/d at 173,301 b/d in week to Dec 22
  • Global oil market balance will be restored in 2016, says UAE energy minister Mazrouei
  • OPEC assumes average 2015 crude oil price will be $55/b, gradually rising $5/b each year to $80/b in 2020
  • E. Canadian crude oil production doubles, reach highest output since early spring following turnarounds
The East Canadian crude oil story: some data points --
  • 6 million bbls/month of November vs 3 million bbls/month of October (two of the four fields down for maintenance)
  • the four offshore Canadian fields produced 56 million bbls in first 11 months of 2015, vs 72 million bbls in same period of 2014
  • For newbies: North Dakota produced 1.2 million bbls/day; and, unfettered, could produce 2 million bopd
Another Under-Reported Story

A link to convert cubic meters to cubic feet.

The wiki link for global natural gas reserves.

I've always considered Qatar the story to follow when it comes to natural gas. At the wiki link, Qatar ranks #3 in the world for natural gas reserves.

Disclaimer: I often make simple arithmetic errors. Numbers rounded. Natural gas reserves according to BP/wiki, 2013 - 2014 (US estimate as of December 2013). Top five countries:
  • Russia: 6,000 trillion cubic feet
  • Iran: 1,000 trillion cubic feet
  • Qatar: 900 trillion cubic feet
  • Turkmenistan: 600 trillion cubic feet
  • US: 350 trillion cubic feet
  • #11: Australia: 152 trillion cubic feet (as of January, 2014). (See this post.)
Now, let's go back and re-run the numbers that were posted earlier:
  • that recent huge Mediterranean natural gas find: 30 trillion cubic feet
  • Barnett, revised USGS figures: 53 trillion cubic feet
  • Utica, newly revised figures: 782 trillion cubic feet
  • Marcellus, EIA revised estimates: 65 trillion cubic feet, "proved" reserves
  • Bakken/Three Forks, USGS estimate: 7 trillion cubic feet
  • Qatar: 800 trillion cubic feet, wiki, conversion
Maybe it's just me, and maybe I made a colossal mistake, but if I did not make a mistake -- and I often make horrendously simply arithmetic errors -- but if I did not make a mistake:
  • the Utica alone, newly revised, has more reserves than Turkmenistan, #4
  • the Utica and the Marcellus, along, would put the US in the #3 position, ahead of Qatar
  • if the US fields not included are similarly revised, it's possible the US would move to #2, second only to Russia
If this is accurate, this is another under-reported story in the US. I don't always agree with Thomas Boone Pickens, but in this case, I think he had it right. It's a crying shame what the Obama administration is doing to the US.

There is some question on the accuracy of my interpretation of the data: the Marcellus link references the 2013 data for the US but does not make it clear whether the 65 trillion cubic feet for the Marcellus is new data or 2013 data. It makes no difference. Look at the final statement in that linked article:
But Penn State geoscientist Terry Engelder said their work assumes current prices. He said that ignoring prices, there is likely 480 trillion cubic feet of gas that is technically recoverable in the Marcellus.
Again, for newbies, reserves are based on "five years going forward": technology, prices, politics, geo-politics, the whole shebang. 

The USGS is incredibly conservative; oil men are incredibly optimistic; and, state geologists are perhaps the most "honest."

Remember, much of the Marcellus is off-limits for production (New York state bans fracking).

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