Wednesday, October 21, 2015

A Minnesota Town That Lives Up To Its Name, Thanks To Green (?) Stinky Energy; Governor Pens Letter To BSNF -- October 21, 2015

ONEOK increases its quarterly dividend.

Disclaimer: this is not an investment site. Do not make any investment or financial decisions based on anything you read or think you might have read at this site or this post or this blog. Whatever.

Governor Says He Didn't Get The Memo 
Though His Regulatory Agencies Did

Disclaimer: there will be many typographical, and possibly factual, errors on this page. I did it quickly and did not have time to proofread it more than once.

TheStarTrib is reporting:
Gov. Mark Dayton has told BNSF Railway’s top executive that he is “deeply concerned” about the recent increase in Bakken oil trains on western suburban tracks into downtown Minneapolis, saying it puts an additional 99,000 people at risk.
In a letter to CEO Carl Ice, the governor asked the railroad not to operate oil trains on the line that passes Target Field when events are underway, to extend first-responder training to all communities along the route and assess it for a worst-case accident.
BNSF, the major crude oil hauler out of North Dakota, recently disclosed in a mandatory report to the state that 11 to 23 crude oil trains per week are using the route from Willmar, MN, through suburbs like Wayzata and St. Louis Park into Minneapolis and across the Mississippi River at Nicollet Island.
Dayton said he was concerned that BNSF did not inform him or his staff about the route change. BNSF spokeswoman Amy McBeth said in an e-mail that BNSF will be talking directly with the governor about his concerns. She did not say whether BNSF will consider halting oil trains during Target Field events, but noted that crude oil has been shipped along the corridor at lower volumes. [Wait until BNSF halts trains on the tracks leading into / out of Minneapolis for hours at a time.]
“BNSF has multiple routes in the metro area that we utilize for hauling a variety of commodities,” McBeth said. “Volumes and routes can fluctuate for a number of reasons. In all areas of the metro region where we move crude oil and other hazmat, we take a number of steps to reduce risk.”
The article does say that the governor's favorite fuel, ethanol, more volatile than Bakken crude oil, is also carried by these same trains through Minneapolis. Apparently the governor has no concern with ethanol by rail. Memo to self: google Minnesota ethanol production.

I did not read the entire article but I did not see any mention that had Minnesota expedited approval of the Sandpiper pipeline, Governor Dayton might not have had to write the letter, saving some paper and perhaps a tree. Meanwhile, the Sandpiper appears to be dead, keystoned by Minnesota officials. So the trains will continue.

Just In Time For Halloween 
Perfect Plant For Decorating

Meanwhile, elsewhere in Minnesota, they have built a stinky "poop plant" to generate electricity from food waste. You have to read well into the article to find that for the privilege of this mess, taxpayers and consumers are paying what it would have cost/MW to build a nuclear power plant.

Deep, deep in the article we learn that this monstrosity generates maybe 8 MW of electricity -- my hunch is that this is  rounded up from five or six MW. At $45 million (the stated price -- again, it was probably rounded down and we don't know the on-going operating cost), that $45 million / 8 MW translates into an incredible $6 million / MW (rounded).

This is the going cost for new utility plants: 
From an August 25, 2014, post, this is 30-second sound bite for "cost of renewable megawatt":
  • Solar: $3 million / MW
  • Wind: $2.5 million / MW
  • Natural gas: $865,000 / MW
This stinky plant in Le Sewer, MN, is costing almost twice what a small solar farm would cost, or a small wind farm, and five or six times what a natural gas plant would cost.

At least everyone feels good, even if they don't smell good.

If that link breaks, google:
– Nearly two years after going online, an innovative, municipally owned power plant that burns methane from agricultural waste is generating only a faction of its promised electricity.
The $45 million plant, built partly with federal aid in this city 50 miles southwest of Minneapolis, also is producing something its promoters said it wouldn’t — stink.
The plant, largely funded with municipal-backed bonds and $8 million in federal aid, has generated controversy from the beginning.
My hunch is that the plant will not be operating five years from now. And those bonds? WHOOPS.

The more you read of that stinking article, the worst it gets:
Most methane plants reach 50 percent of their operating capacity in a few months. Yet not all have been a success. According to the U.S. Department of Agriculture, 54 farm-based projects have been shut down, including nine in Wisconsin. A manure-based plant in Dane County, WI, that leaked liquid waste and emitted stinky hydrogen sulfide paid an $80,000 state penalty in July, court records show. [It appears Wisconsin has shut down more environmentally-unfriendly waste energy plants than there are fracking sand mines in the state. And all this time I thought folks who "fought" sand mines in Wisconsin were environmentally serious. My bad.]
You have to read to the very end of the article to find out how much this stinker actually produces:
Although the Hometown BioEnergy plant is large compared with other biogas plants — 8 million watts of output — it’s a small part of MMPA’s generating capacity, which includes large natural gas-fired units. In 2014, the biogas plant produced just 0.3 percent of the electricity MMPA supplied to the 12 cities that own the power agency.
One of the goals of the project is to meet the state mandate for utilities to get 25 percent of their electricity from renewable sources by 2025.
The plant produced 0.3 percent just to 12 cities -- it would be interesting to know the population it served. Le Sewer, home of the "Jolly Green Giant," has a population of about 5,000 (prior to the stink). The city cities on a county line and the combined population of the two counties is about 20,000 people. Minnesota state population is 5.5 million. 20,000 / 5,500,000 = 0.36%. Therefore, this stinky plant unlikely produced more than 0.001% of all the electricity consumed by residential customers in Minnesota.

As the Chinese say, a 1,000-mile trek starts with the first trek. The Chinese didn't say anything about stepping in poop to make that first step.

Later: after posting this story, a reader sent me additional information about how bad these "on-farm renewable energy science experiments" really are. It makes bird flu and hog farm run-off look tame in comparison.  Sometimes I think the Saudis did us a favor dropping the price of oil to $30, and US frackers dropping the price of natural gas to $2.50 -- drive out these alternate energy projects which are simply awful.

Nine (9) New Permits; HRC Reports A Nice Bakken Well; 2/5 Bakken Wells Reported As DUCs -- October 21, 2015

Active rigs:

Active Rigs68191182186195

Wells coming off confidential list Thursday:
  • 27002, 1,235, HRC, Nelson 157-100-25A-36-4H, Marmon, 33 stages, 4 million lbs, t4/15; cum 68K 8/15;
  • 28530, 1,068, Hess, LK-Trotter-146-97-3625H-2, Little Knife, drilling rig, June 3, 2015; TD, June 14, 2015; 10' window approx 19' into the middle Bakken; gas as high as 9,500 units; t9/15; cum 9K 8/15;
  • 29624, SI/NC, SM Energy, Dohmstriech 15B-20HN, Musta, no production data,
  • 29993, 888, Triangle USA, Lee 151-101-8-5-10TFH, Ragged Butte, 31 stages, 4 million lbs, t4/15; cum 36K 8/15; (note: wrong sundry form scanned into this file; #29333 was scanned in)
  • 31030, SI/NC, EOG, Shell 52-1930H, Parshall, no production data,
Nine (9) new permits --
  • Operators: EOG (6), Hess (3)
  • Fields: Clarks Creek (McKenzie), Capa (McKenzie)
  • Comments: the Clarks Creek permits are for a 6-well pad in section 25-152-95. See graphic at this post
Enerplus renewed two permits, a Walleye permit and a Giraffe permit, both in Dunn County.

This is interesting. Hess changed the name on two wells:
  • 29130, was changed to BW-Johnson-149-99-1003H-6 (from BW-Johnson-LE-149-99-1003H-1PNC)
  • 29931, was changed to AN-Lone Tree-152-95-1207H-1 (from AN-Lone Tree-152-95-1207H-1PNC)
  • comment: I vaguely remember seeing something along this line in one of the recent NDIC hearing docket agendas.
For those keeping score at home: there were no reports of producing wells completed.


29993, see above, Triangle USA, Lee 151-101-8-5-10TFH, Ragged Butte:

DateOil RunsMCF Sold

27002, see above, HRC, Nelson 157-100-25A-36-4H, Marmon:

DateOil RunsMCF Sold

Random Example Of Increased Density Work -- October 21, 2015


October 28, 2015: EOG has permits for a 10-well megapad in the section below in which EOG has permits for another 6-well pad.

October 23, 2015: in the graphic below, where "another proposed 6-well EOG Hawkeye pad" is going, add four (4) more wells.  

Original Post
Increased density work, noted in the daily activity report, October 21, 2015.

There are some incredible wells in this area: search for #22484 or #22486 in the blog.

In the graphic above, the star-shaped area is expanded below:

The darker area represents Fort Berthold Indian Reservation. This is the general area (the reservation) that more pipelines are needed to help gather and process natural gas, but the FBIR wants $10 million / mile of pipeline. ONEOK scrapped plans for the pipeline. Previously posted.

Seeking Alpha Article On EOG; Qatar Is World's Largest LNG Exporter -- October 21, 2015

EOG Data Points

The linked article at Seeking Alpha is for the operational data points regarding EOG. It is not for investment purposes.
EOG has historically and continues to grow its reserves and drilling inventory rapidly. In 2015 alone, EOG added 960 net drilling locations and 600 MMboe of potential reserves in the Bakken. Its net potential reserves in the Eagle Ford, which is either the first or second most economical play in the United States depending on how it is measured, are 3,200 MMBoe through net acreage of 561,000.
Core and non-core positions in the Bakken are 620 and 400 MMBoe respectively encompassing a total of 230,000 acres. The Delaware Basin position of 310,000 acres and approximately 1,350 MMboe is the other main drilling area. EOG also has smaller holdings in the DJ Basin, Powder River Basin, and Midland Basin Wolfcamp. Total remaining drilling locations add up to 11,000 and over 20 years of drilling capacity.
The firm is the largest oil producer and acreage holder in the Eagle Ford Shale. 92% of Q2 completions were on multi-well pad sites which improve economics considerably. 89% of the land is held by production providing significant flexibility. Most is positioned in the crude oil window portion of the formation and subsequently production is 78% liquids, 12% natural gas, and 10% NGLs.

Upstream firms must recognize substantial cost savings if they have any hope of maintaining production levels without eating a hole through their balance sheet. EOG's completed well costs in the Bakken have declined from $8.8 million in 2014 to $7.1 currently. Its near term target is even lower at $6.5 million. This 35% reduction in well costs helps mitigate a lot of oil's 50% decline. Average drilling time in the Bakken was 20.8 days in 2012 but averaged only 8.2 in Q2 2015 with the target closer to 5. While some costs will increase when oil recovers, many will not and it is easy to see how EOG could be positioned for seriously strong financial performance.

An important point is that EOG has continued drilling at a pace not far from earlier cycles. It is not, however, bringing all these wells online. It is slowly building an inventory of wells that will cost a fraction of a new well to bring online. In future periods, there is a high probability that per barrel costs will be much lower than average since prior periods absorbed a significant amount of the expenses. [We call them DUCs.]
EIA's "Energy Cookie"
EIA "energy cookie":
Qatar is the largest exporter of liquefied natural gas (LNG) in the world. The country’s exports of LNG, crude oil, and petroleum products provide a significant portion of government revenues…Qatar is also at the forefront of gas-to-liquids (GTL) production, and the country is home to the world’s largest GTL facility ---EIA
It will be interesting to see if this changes by 2030.

A Top-10 List Nice Not To Be On
Minnesota Made The List

Kiplinger: ten (10) least tax-friendly states for retirees. I went through the list once. I can almost recall it from memory [2014]:
  • New York [#10, same in 2014]
  • New Jersey #9, same in 2014]
  • Nebraska [#8, same in 2014]
  • California [#7, same in 2014]
  • Montana (surprising)[ #6, same in 2014]
  • Oregon (not surprising)[#5, same in 2014]
  • Minnesota (not surprising) [#4, same in 2014]
  • Rhode Island [#1 in 2014]
  • Connecticut [#3 in 2014]
  • Vermont (not surprised it's on the list; surprised it's #1) [#2 in 1014]
What happened to Massachusetts?

Kemp's Weekly Fossil Fuel Tweets -- October 21, 2015; Fascinating Observations

Residual fuel oil stocks trending higher; at highest seasonal level since 2006.

Propane stocks appear to be peaking but still at record; + 20 million bbls above prior-eyar level.

US distillate stocks draw hard (-2.6 million bbls) eroding surplus over 2014 9(+19.3 million bbls) and 10-year average (+14.9 million bbls).

US gasoline stocks only slightly higher than last year once adjusted for increased consumption.

US gasoline stocks fell -1.5 million bbls; second consecutive decline, as refineries work down excess inventories.

US gasoline consumption averaged 9.1 million bopd over last four weeks, which is +272,000 bopd above prior year level. Saudi got us hooked on gasoline again.

US refinery throughput edged up +78,000 bopd as refiners reach the mid-point of maintenance season.

US crude oil imports are running high during maintenance season with surplus going into refinery/merchant storage.

Rise in crude oil stock was driving by continued strong flow of import s (7.5 milion bopd) despite refinery maintenance.

US commercial crude oil stocks jumped by another 8.0 million bopd last week, taking four-week gain to +22.6 million bbls. The refiners like that inexpensive foreign oil.

Notes to the Granddaughters

After finishing The Catcher In The Rye, I googled "Diary of a Wimpy Kid" "Catcher in the Rye". Here are some of the hits:

What They're Talking About In Williston -- October 21, 2015; Update On A New Madison Oil Field In North Dakota

They wouldn't be drilling if they weren't still making money, I don't suppose. Crescent Point reported an IP on a Bakken well (#29771) in Williams County, using a lot of stages (35) and a lot of proppant (5 million lbs)'; 1280-acre spacing.

Crescent Point started the kick-off point early in the morning (before sunrise, 4:00 a.m.) on April 27, 2015, and reached total depth just after midnight (0003) on May 14, 2015. Took awhile. The lateral is the tough drilling; reaching vertical depth should be fairly routine. This well was 27 miles north, 3.5 miles west of Williston. D and C facies of the middle Bakken; target was the 10' D & C facies. Max gas was 6,482 units.

The geologist's report was brutally honest: the horizontal well path did a poor job of following the formation dip. With the exception of one shale strike resulting in a sidetrack, 100% of the cased production well bore was drilled within the middle Bakken formation. 1.8% was drilled within the productive E facies rock of the middle Bakken formation. 26.9% was drilled within the productive D facies rock; 41.7% within the productive C facies rock; 16.2% was drilled within the less productive B facies rock of the middle Bakken formation; and, finally, 13.4% was drilled within the productive A facies rock of the middle Bakken. Ability to follow our 10' middle Bakken target zone fared poorly with 39.1% of the lateral being drilled within our 10' target window.

We've talked about that before.

And then nine more permits yesterday, four EOG, four BR, and then one by Berenergy. But I think folks are missing the big, big story right now -- how much oil is being stored underground. During the boom, frack spreads had trouble keeping up with the drilling and the fracklog was generally around 400, all for operational reasons.

Now with the low price of oil, operators are drilling to total depth but not completing the wells, and the state started using a new acronym (DUC) -- or at least new to me. The fracklog went from 400 to 800 fairly quickly. I think many of us thought it would plateau or peak at 800 and then start to drop again, with the one-year rule, but surprise, surprise, it hit 933 in the August data (Director's Cut, October, 2015). Every day I'm seeing more and more DUCs, it seems, and fewer and fewer of these DUCs being completed (the "producing wells completed" daily statistic).

By the way, getting back to that Berenergy / Chatfield oil field well. I could be wrong, but I think the Chatfield is a "new" Madison oil field in the Williston Basin. See this September 29, 2014, post. The field is 20 miles NNE of Minot.

Look at the Ballard wildcat that "discovered" the Chatfield (as far as I know):
  • 27319, 600, Ballard Petroleum, Fines 24-19, t6/14; cum 66K 8/15;
This is a vertical well; would have cost very little to drill, compared to a Bakken; no fracking, and in the first year, 66,000 bbls and look at the production profile. I don't see much of a decline:

PoolDateDaysBBLS OilRunsBBLS WaterMCF ProdMCF SoldVent/Flare

The other Ballard well in the Chatfield:
  • 29807, 352, Ballard, Nelson 34-19, Chatfield, a Madison well, t3/15; cum 39K 8/15; 
Production profile for #29807:

PoolDateDaysBBLS OilRunsBBLS WaterMCF ProdMCF SoldVent/Flare
See graphic below, to see where these two Ballard well are.

You know, if that Chatfield well works out, it brings us full circle. Shortly after starting the blog, I received a number of notes from readers -- no, that's not true -- I first heard it from a "hot shot" operator while I was visiting Williston. I was turning around on the road in front of his office, and actually got out of the Honda Civic to take a photo of the new Baker Hughes building west of Williston, and he came out and we talked, and he told me of the rumor of a "river" of oil NNE of Minot. I did not post that at the time for any number of reason. Mostly I didn't want to get him into trouble. Or me.

Sometimes I feel like I'm just beginning to see the light.

Beginning To See The Light, Velvet Underground

CNBC Finally Reports That Dirty Little Secret: Why Unemployment Rate Has Dropped From 10% to 5% -- October 21, 2015

The secret is out. 

I guess now that the Obama administration is winding down, mainstream media can start writing stories that had been previously ignored or distorted. I never thought I would see this article by CNBC:
If some economists are right, it's going to take a whole lot less progress in the jobs market to get the unemployment rate to keep falling.

Anyone following the steady decline in the jobless figure knows that the reasons for the move are complex and not just about more people finding work. Some of the reasons, in fact, are not particularly positive signs pointing to real economic progress.

Much of the decline has been about people simply leaving the workforce. A record 94.7 million Americans are considered out of the labor force, pushing the participation rate to its lowest level since October 1977.
If someone is not actively looking for employment, they simply aren't counted in the headline number. That's been a big reason the rate has declined from 10 percent in 2009 to 5.1 percent currently.
It simply doesn't take as much job creation as it used to in order to get the unemployment rate to drop. The current employment to population ratio of 59.2 percent is about the same as it was when the unemployment rate was 9.6 percent.
Much more at the link, but it doesn't add much to what we already knew.

The Sun Came Up In The East This Morning
Dog Bites Man
Another Cop Shot

CNBC / Market Realist is reporting: US horizontal rig count lowest since January, 2010.

Grand Forks' UND EERC WIth Three-Year, $3.5 Million Methanol Research Project; The North Dakota Two-Step -- October 21, 2015

Wow, wow, and wow. The things one finds in the most unexpected places. Over at Rigzone, I almost skipped this article, and probably would have except for the fact I'm all caught up and had some time to look around. This was the headline that I almost ignored: lowering the bar to methanol production.

I went to the link because I vaguely recall reading about methanol a long time ago but had completely forgotten all about it, but I thought maybe it would help me understand the Bakken better.

Wow, was I surprised. The story had a North Dakota connection, right there in the third paragraph:
Methanol is a key chemical ingredient for the production of liquid fuels, solvents, resins and polymers. A common method for producing the compound, steam methane reforming (SMR), entails applying high-temperature (approximately 1,500 to 1,800 degrees Fahrenheit) steam to natural gas or another methane-rich feedstock to produce "syngas." Next, impurities are removed from the syngas and a catalyst is applied to yield liquid methanol.
SMR is not without its drawbacks, however, according to a Connecticut-based manufacturer of stationary fuel cell power plants, FuelCell Energy (FCE).
"Steam reforming to generate methanol is highly energy-intensive, with a substantial carbon footprint," noted Kurt Goddard, vice president of investor relations with FuelCell Energy, Inc. (FCE). It "generates criteria pollutants such as smog-producing nitrogen oxides (NOx) and particulate matter that can cause public health issues."
SMR's complexity, which stems from its reliance on high temperatures through multiple steps, limits its practical application to large plants that can achieve a commercially viable economy of scale, added Ted Aulich, principal process chemist for fuels and chemicals with the University of North Dakota Energy and Environmental Research Center (EERC).
Aulich and his team at EERC recently embarked on a three-year project led by FCE to develop a simpler, less cost-prohibitive alternative to the two-step SMR process. Their goal is to develop a fuel cell capable of converting natural gas and other methane-rich gas into methanol.
Through the course of the $3.5 million project, which received funding from the U.S. Department of Energy's Advanced Research Projects Agency (ARPA-E) and the North Dakota Department of Commerce, EERC will work to improve the performance and economics of an "anode catalyst," which Aulich explained is a critical component of EC-GTL.
Much more at the link. I thnk the whole AGW scam is a scam, but, hey, if the "they" want to shower money on North Dakota, to lower CO2 emissions, I'm all for it. It looks like Grand Forks and Fargo are on a roll.

What is methanol used for? A lot of stuff

Mony, Mony, Billy Idol

North Dakota #1 In Nation For Economic Development -- US Chamber Of Commerce -- October 21, 2015

Wow, I'm in a great mood. I finished Catcher in the Rye; I'm having a grand time with re-reading a book on physics. I have no idea what I fiction I will read next; I haven't read Woolf in a long time, or perhaps Joseph Conrad. We'll see.

First two thoughts I had when nearing end of the book:
  • huge difference from the writing of Virginia Woolf in Mrs Dalloway
  • was this the 1950 version of Diary of a Wimpy Kid? 
I remember the thrill I felt when I recognized the climax in The Great Gatsby. I think it was a lot easier, a lot more obvious, recognizing the climax in The Catcher.

Gas is less than $2.00/gallon here in Texas. It's $2.09 almost everywhere, but there is a station a couple of miles away selling regular for $1.85. They say it will go down in price next week.

We're going to get drenched in north Texas starting tomorrow night and going through Sunday. I will believe it when I see it, but when it rains here, it really rains here.

And then several stories Don sent me last night that had to wait until this morning to get posted. We had an unusual soccer game last night -- unusual only in the fact it was on a Tuesday night. Soccer is generally on the weekends. It was a recreational game so not critically important; we lost 4 - 2. For me, the highlight was the spectacular goal our granddaughter scored off her left foot, from the far left side of the field, putting it into the far right corner of the goal, tying the game 2 - 2, after trailing 2 - 0 most of the game. This team beat us 8 - 0 so it was a better game this year.

Now for the stories Don sent me.

This was clearly the most incredible. The US Chamber of Commerce voted North Dakota #1 in the nation for economic performance. The Bismarck Tribune is reporting:
North Dakota has been ranked first in the nation on its economic performance and the talent in its pipeline by the U.S. Chamber of Commerce Foundation. 
In addition, the state was ranked sixth in overall business climate, according to the foundation's sixth annual "Enterprising States: States Innovate" study released Tuesday.
The study highlights the states best poised for the science, technology, engineering and math (STEM) focused economy.
North Dakota is at the top in STEM job growth but is still low in the actual number of STEM jobs per capita, according to the study.
Much, much more at the link.

How's the Bakken bust affect employment in the state? The Dickinson Press is reporting that North Dakota's unemployment rate dropped in September. Yup, dropped. I assume that puts us back in the #1 spot for that category also. The story:
North Dakota experienced a dip in its unemployment rate in September, down 0.3 percent statewide from August.
Job Service North Dakota reported Tuesday that the 2.2 percent September rate is unchanged from 2014. The seasonally-adjusted unemployment rate, which takes external factors like weather and daylight into account, puts the unemployment rate at 2.8 percent, well below the 5.1 percent national average.
I always like that "seasonal adjustment" stuff.  I assume a lot of the riff raff will take the first Amtrak out once it starts getting cold, which usually happens Halloween Eve, give or take a few days. The Geographic Discovery fakomentories on all the crime in North Dakota will keep more of the riff raff out of the state, now that they know we're unto them, and the 12-member Fort Berthold Indian Reservation has things under control. Assuming two have to be in the station to man the phones, and there are three shifts, it leaves about one law enforcement officer on the road at all times in that huge area, about the size of Manhattan, I suppose. In this case, though, the Indians got to keep that land about the size of Manhattan.

Don also sent a link to a Seeking Alpha story. This one was on railcars. Four bullets at the link. These are the two links that caught my eye. 
  • U.S. rail carloads fell 1.6% in the quarter on lower demand for coal, crude oil and metals.
  • Railcar makers still enjoy a backlog of more than 122K units, although that is down from a record of 142K at the end of last year.
With all the headwinds in the oil and gas industry, a decrease of 1.6% in rail carloads is hardly noteworthy. And with a backlog of 122,000 units I doubt Trinity Industries or Greenbrier will run out of things to do before the economy turns for the better.

And the famous Texas kid that lives just down the street from us will be moving to Qatar with his family where they will, no doubt, begin a clock-manufacturing business. It will be interesting to see if some of those clocks show up in northern Iraq before it's all over. I'm betting the family is back in the US before 2020. And the way Putin is putting his kingdom back together, they could, for all we know, be back in the USSR.

By the way, speaking of back to the future, it is "back to the future" day today. Everywhere. 

Back in the USA, Linda Ronstadt

Wednesday, October 21, 2015

Active rigs:

Active Rigs68191182186195

RBN Energy: how flow data provides transparency into natural gas production, part 3.

In all sorts of commodity markets, buyers and sellers would give their eye-teeth to have access to accurate daily supply and demand data.  Access to such data would provide insight into the utilization of transportation assets, transportation patterns and ultimately --- the holy grail of commodity markets – price.  What if there was a commodity market where you could know supply and demand on a daily basis?  Well there is.  And it is the natural gas market.  Gas market analysts have access to the luxury of pipeline flow data that (in the right hands) provides reasonably accurate estimates of daily supply (including production) and demand. In today’s blog, we explain how the natural gas industry uses flow data to track gas production trends in real time.
In Part 1 of this series, we compared the pros and cons of U.S. gas production data from the Energy Information Administration (EIA): the Natural Gas Monthly (NGM), and two forward-looking reports, the Short-Term Energy Outlook (STEO) and the Drilling Productivity Report (DPR). The EIA historical production data is considered the benchmark and for good reason. But the big downside of this data is that it is lagged by two months so the latest NGM, for instance, only provides actual estimates through July 2015. The STEO and DPR data provide projections largely based on history, to extrapolate that data forward. However current market dynamics of rapidly improving productivity and a disconnect between drilling rigs and production render such backward looking projections somewhat moot. Another way to look at gas supply (and demand) in more real-time that we introduced in Part 2 – is pipeline flow data. Using daily, real-time flow data from our friends at Genscape, we showed that production from the Marcellus and Utica basins combined has continued to grow since July. Today we’ll show you how we built the Appalachia production flows using Genscape’s natural gas flow database.
First a brief primer on what flow data is, where it comes from and some of its pitfalls (because no one data source is perfect).
Taken Longer Than Folks Thought

From Bloomberg/Rigzone:
After a year suffering the economic consequences of the oil price slump, OPEC is finally on the cusp of choking off growth in U.S. crude output.

The nation’s production is almost back down to the level pumped in November, when the Organization of Petroleum Exporting Countries switched its strategy to focus on battering competitors and reclaiming market share. As the U.S. wilts, demand for OPEC’s crude will grow in 2015, ending two years of retreat, the International Energy Agency estimates.

While cratering prices and historic cutbacks in drilling have taken their toll on the U.S., OPEC members have also paid a heavy price.
A year of plunging government revenues, growing budget deficits and slumping currencies has left several members grappling with severe economic problems. The fact that the U.S. oil boom kept going for about six months after the group’s November decision also means OPEC has so far succeeded only in bringing the market back to where it started.
“It’s taken a hell of a long time and it will continue to take a long time -- U.S. oil production has been more resilient than people thought,” said Mike Wittner, head of oil markets research at Societe Generale SA in London.
“The bottom line is the re-balancing has begun.”
OPEC abandoned its traditional role of paring production to prevent oversupply last November as a tide of new oil from the U.S. eroded its share of world markets. The group chose instead to keep pumping, allowing the subsequent price slump to squeeze competitors with higher costs. Its representatives will meet in Vienna Wednesday with non-member countries including Russia for technical talks.