Tuesday, December 8, 2015

Random Look At 15 Wells In One 640-Acre Unit In Clarks Creek, SHD -- December 8, 2015

Updates

November 23, 2016: all wells back on status, but not particularly good wells. Yet.

February 3, 2016: normally I simply update production data on previously posted wells but in this case I want to keep the historical data. So I am NOT updating the data in the original post, but will update it here. I was curious to see if one could see any halo effect of fracking. I don't think so: the wells were fracked in about the same time-frame, and with the slump in oil prices, one doesn't really know what these wells are capable of producing. But the updates, for what they are worth. Since last update, five wells have gone to INACTIVE status.

These are the wells to the north:

  • 27038, 1,980, SHD, Canon (sic) 12-36H, t10/15; cum 65K 9/16; on line 21 days in 12/15; on-line only two days in January, 2016;
  • 27039, 1,759, SHD, Hammer 12-36H, t10/15; cum 87K 9/16; on line all of 12/15; on-line only 17 days in January, 2016;
  • 29962, 142, SHD, Magnum 36-11-TF2, t11/15; cum 41K 9/16; on line all of 12/15;
  • 29963, 1,231, SHD, Magnum 36-12-MB2, t11/5; cum 81K 9/16; on line all of 12/15;
  • 29964, 713, SHD, Magnum 36-13-TF2, t11/15; cum 40K 9/16; on line only 17 days in 11/15; all 31 days in 12/15;
  • 27040, 2,082, SHD, Thud 12-36H, t6/14; cum 159K 9/16; last produced 8/15 for 2 days; back on full status as of 1/16;
  • 27041, 1,905, SHD, Bullet 12-36H, t6/14; cum 177K 9/16; last produced 8/15 for 3 days; back on full status as of 1/16;
These are the wells to the south:
  • 29755, 1,096, SHD, Avalanche 36-14-MB2, t10/15; cum 51K 9/16; on line for 21 days in 12/15; only 18 days in 1/16;
  • 29754, 1,111, SHD, Avalanche 36-15-TF1, t10/15; cum 48K 9/16; on line for only 8 days in 12/15; 23 days in 1/16;
  • 29753, 1,082, SHD, Avalanche 36-16-MB2, t11/15; cum 32K 9/16; on line for 23 days in 11/15; 26 days in 12/15;
  • 26811, 1,888, SHD, Luke 13-36H, t11/14; cum 89K 9/16; last produced 5/15; only 6 days 12/15; 10 days in 1/16;
  • 26810, 1,274, SHD, Mark 13-36H, t11/14; cum 97K 9/16; last produced 8/15 for 2 days; 25 days in 12/15; 2 days in 1/16;
  • 26809, 1,753, SHD, Mattie13-36H, t11/14; cum 181K 9/16; last produced 5/15; full-up 1/16;
  • 26808, 1,636, SHD, Bucky 13-36H, t11/14; cum 143K 9/16; last produced 8/15 for 2 days; full-up in 1/16;
  • 29752, 233, SHD, Avalanche 36-17-TF2, t12/15; cum 10K 9/16; first month of production 12/15; on line for 13 days in 12/15; only 11 days 1/16 (only 445 bbls that month)
Original Post
 
This is the graphic of fifteen wells in a 640-acre drilling unit in Clarks Creek:



Note that a 640-acre drilling unit (brown background = 640-acre unit) is fairly unusual in the Bakken.

These are the wells to the north (updated above):
  • 27038, 1,980, SHD, Canon (sic) 12-36H, t10/15; cum 65K 9/16;
  • 27039, 1,759, SHD, Hammer 12-36H, t10/15; cum 87K 9/16;
  • 29962, SI/NC, SHD, Magnum 36-11-TF2, t11/15; cum 41K 9/16;
  • 29963, SI/NC, SHD, Magnum 36-12-MB2, t11/15; cum 81K 9/16;
  • 29964, 713, SHD, Magnum 36-13-TF2, t11/15; cum 40K 9/16;
  • 27040, 2,082, SHD, Thud 12-36H, t6/14; cum 159K 9/16; last produced 8/15 for 2 days;
  • 27041, 1,905, SHD, Bullet 12-36H, t6/14; cum 177K 9/16; last produced 8/15 for 3 days;
These are the wells to the south:
  • 29755, 1,096, SHD, Avalanche 36-14-MB2, t10/15; cum 51K 9/16;
  • 29754, 1,111, SHD, Avalanche 36-15-TF1, t10/15; cum 48K 9/16;
  • 29753, 1,082, SHD, Avalanche 36-16-MB2, t11/15; cum 32K 9/16;
  • 26811, IA/1,888, SHD, Luke 13-36H, t11/14; cum 89K 9/16;
  • 26810, 1,274, SHD, Mark 13-36H, t11/14; cum 92K 9/16;
  • 26809, 1,753, SHD, Mattie13-36H, t11/14; cum 181K 9/16;
  • 26808, 1,636, SHD, Bucky 13-36H, t11/14; cum 143K 9/16;
  • 29752, SI/NC, SHD, Avalanche 36-17-TF2, t12/15; cum 10K 9/16;
It will be interesting to come back and look at the halo effect -- if any -- when the rest of these wells are fracked/completed.

*****************************
Big Iron On His Hip

Big Iron, Marty Robbins

US Shale Crude Oil Production Decline In November To Be Minimal -- December 8, 2015

Mexico's Pemex says two oil discoveries to add 40,000 bopd, link here.

Tweeting now:
EIA estimates that total U.S. crude oil production declined by about 60,000 bopd in November compared with October.
Think about that. Other reports suggest that greatest shale decline will be in the Eagle Ford.


****************************
GOP And Dems Agree On One Thing: Delay / Never Enact The ObamaCare Tax On Cadillac Health Care Plans


Updates

December 17, 2015: GOP figures out how to deep-six ObamaCare ... and the Dems play along. Bloomberg. Identical to the December 15, 2015, note that follows directly.

December 15, 2015: it looks like Congress agrees to delay three taxes that were key components of ObamaCare. is reporting:
The delays to the health care law’s
  • medical device tax;
  • so-called “Cadillac tax”; and, 
  • health insurance tax 
will be part of a larger tax break package that is expected to pass.
The ObamaCare taxes have long faced bipartisan criticism. The first two -- on medical devices and high-end insurance plans -- were supposed to take effect in 2018, but would be delayed until 2020 if the deal is made final. The third, a levy imposed on health insurers that typically is passed onto customers in the form of higher premiums, would be suspended for a year.

Original Post

The Huffington Post has a long, long article on this, but it pretty much summed up these paragraphs:
Democratic leaders in Congress have been trying to do something about the Cadillac tax for quite a while. The end of the year has provided an opportunity to act, because of a much larger package of tax cuts that the White House and congressional leaders have been discussing for several weeks. That package would make permanent some unrelated tax breaks -- some (favored strongly by Republicans) for corporations and some (favored strongly by Democrats) for the working poor.

In just the last few days, Democratic leaders -- and, in particular, Senate Minority Leader Harry Reid -- insisted that any package include a two-year delay of the Cadillac tax, so that it takes effect in 2020 rather than 2018. And while Republican leaders are in no rush to do the Democrats or the unions any favors, they are hearing from business supporters who share labor's antipathy for the tax.

The GOP leaders have signaled their support for the Cadillac tax delay as part of the big tax package -- as long as it comes with a similar, two-year "pause" in a tax on the medical device industry. That's no problem for the Democrats, since many of them represent states or districts with large device makers -- and have been joining the GOP in its calls to delay or repeal it.

In the past, the White House has fought hard to defend both the Cadillac tax and medical device tax. But the president would have a difficult time vetoing a bill that includes tax relief for the working poor, given political circumstances. Among other things, the intense political opposition to the Cadillac tax means that it is unlikely to survive, in current form, past this administration anyway. Just last week, an amendment to eliminate Cadillac tax repeal as part of a broader proposal to repeal the Affordable Care Act passed by a vote of 90 to 10.
The medical device tax was the third leg of the three-legged ObamaCare stool:
  • employee mandate
  • individual mandate (for those not covered by an employer)
  • medical device tax
The employee mandate was delayed, as was the individual mandate. It looks like the individual mandate will wither on the vine, and the employee mandate will be a shadow of the intent as employees minimize benefits.

That leaves the third leg, a tax on medical devices, still delayed, and looks dead.

********************************
Cognitive Dissoance

The Los Angeles Times: Should people on the no-fly list be allowed to buy guns? Yes.

I'm Going Slightly Mad, Queen

Seven (7) New Permits -- December 8, 2015

Active rigs:


12/8/201512/08/201412/08/201312/08/201212/08/2011
Active Rigs65191193181202

Seven (7) new permits --
  • Operators: XTO (5), Petro-Hunt (2)
  • Fields: Siverston (McKenzie), Little Knife, Little Butte
  • Comments:
Wells coming off the confidential list Wednesday:
  • 24683, SI/NC, Petro-Hunt, Klatt 145-97-18A-19-1H, Little Knife, no production data,
  • 30412, SI/NC, Slawson, Lightning Federal 6-24-13TFH, Big Bend, no production data,
  • 30673, SI/NC, Hess, BL-Odegaard-165-95-2116H-7, Beaver Lodge, no production data,
Ten (10) producing wells completed (check out this post for the SHD wells in Clarks Creek):
  • 27038, 1,980, SHD, Canon 12-36H, Clarks Creek, the Magnum pad, Three Forks, max gas at 4,500 units, t10/15; cum --
  • 27039, 1,759, SHD, Hammer 12-36H, Clarks Creek, t10/15; cum --
  • 28615, 884, Sampson Resources, Strom 2536-8H, Ambrose, t2/15; cum 80K 10/10;
  • 29753, 1,082, SHD, Avalanche 36-16-MB2, Clarks Creek, t11/15; cum --
  • 29754, 1,111, SHD, Avalanche 36-15-TF2, Clarks Creek, t10/15; cum --
  • 29755, 1,096, SHD, Avalanche 36-14-MB2, Clarks Creek, t10/15; cum --
  • 29804, 2,806, BR, Kirkland 14-21MBH, Pershing, t11/15; cum --
  • 29963, 1,231, SHD, Magnum 36-12-MB2, Clarks Creek, t11/15; cum --
  • 29964, 713, SHD, Magnum 36-13-TF2, Clarks Creek, t11/15; cum --
  • 31170, 2,208, Whiting, Skunk Creek 4-18-17-8H3, Heart Butte, t11/15; cum -- 

Tesoro Corp To Acquire Williston Crude Oil Transportation / Storage Asset -- Great Northern Midstream -- December 8, 2015

Updates

December 30, 2015: see Google satellite image of the Fryburg CBR terminal that Tesoro will be acquiring.

December 17, 2015: the story on Tesoro's pending acquisition of Great North Midstream (see below) in The Bismarck Tribune in which Tesoro will add capacity to pump 65,000 bopd of out of the Bakken:
Awaiting regulatory approval, Tesoro agreed last week to acquire Great Northern Midstream LLC and its crude oil pipeline, gathering system, storage and rail loading facilities in the state.
Assets include:
  • the 97-mile BakkenLink crude oil pipeline (connects to several 3rd-party gathering systems;
  • a 28-mile gathering system in the core of the Bakken where most of the drilling in today's low-price environment is being done;
  • a 154,000 bopd rail loading terming (Fryburg); and, 
  • a 657,000 barrel storage facility in Fryburg 
More:
Tesoro already has the Tesoro High Plains Pipeline, which pumps crude oil directly into the company’s 68,000 barrel-per-day refinery in Mandan.
“This acquisition would not substantially change the way we move product to our Mandan Refinery. We expect our enhanced system to provide Tesoro’s West Coast facilities with cost-effective access to advantaged crude oil and provide producers additional market access. Customers gain additional flexibility from the rail loading and storage facility, which can provide outbound deliveries to the West, East and Gulf coasts,” Tesoro spokesperson Brendan Smith said.
Original Post
Tweeting now:
Tesoro Corp to acquire Great Northern Midstream, which has Williston crude oil transportation and storage assets.
*************************
EAI Longer-Term Energy Outlook

December 8, 2015: from the EIA, today:
While U.S. onshore oil production is expected to continue declining through most of next year, offshore oil output in the Gulf of Mexico is on track to steadily rise.
In its new monthly forecast, the U.S. Energy Information Administration said offshore Gulf oil production is expected to increase to 1.7 million barrels per day during the fourth quarter of 2016 up about 250,000 barrels per day from the fourth quarter of last year.
See my commentary posted over the weekend in which I suggest it is unlikely that I will see $60 - $65 oil again in my investing lifetime.

*************************
EAI Short-Term Energy Outlook

Winter Fuels:
  • The effect of lower crude oil prices, along with the potential for above-normal temperatures, is spilling over to lower residential heating oil expenditures, as the average household using heating oil should save almost $600 this winter.
Crude Oil:
  • While U.S. monthly onshore oil production is expected to continue declining through most of next year, oil output in the Gulf of Mexico is on track to steadily rise.
  • Energy companies have cut back on their onshore oil exploration and drilling activities in response to low crude prices, but oil production in the Gulf of Mexico is less sensitive to short-term movements in crude prices as companies are committed to completing more complex and costly offshore oil projects once they begin.
Gasoline/Refined Products:
  • After paying the lowest Thanksgiving gasoline prices in seven years, U.S. drivers will continue to save money at the pump through December as low crude oil prices keep downward pressure on motor fuel costs.
  • Local fueling stations in some areas of the country are already selling gasoline for less than $2 a gallon and those prices are expected to drop further in December.
Natural Gas:
  • U.S. natural gas inventories posted their first decline of the winter heating season in late November, but natural gas inventories at the end of December are expected to be the third highest ever for the month.
Electricity:
  • For the first time, more electricity is expected to be generated from natural gas than coal for five months in a row from July through November, as sustained low prices for natural gas make it more cost-competitive as a generating fuel.
Renewables:
  • Both U.S production and net imports of biodiesel are expected to increase in 2016 in response to new federal renewable fuel standard targets.

Competing For Market Share -- John Kemp -- December 8, 2015

This is a most interesting graph put together by John Kemp. See if you spot what I've been saying all along:


Answer: Despite all the talk, and a $35 billion, 5-year program announced in 2012, to increase production, Saudi Arabia's production has remained incredibly stable over time.

By the way, Hubbert's Peak Oil theory seems to be either wrong, or the US curve is moving to the right.

Phishing For Phools -- December 8, 2015

Updates

December 20, 2016: the Freeport terminal is on-line; first shipment sailed December 16, 2016.

Later, 12:21 p.m. CT: see first comment. Just after receiving that comment, I saw this story. Phillips 66 commissions a 100,000 b/d NGL factionator in Texas -- 
Phillips 66 Co. has commissioned a 100,000-b/d NGL fractionator near its 247,000-b/d Sweeny refinery in Old Ocean, TX.
Supported by 250 miles of pipelines and a multimillion-barrel storage cavern complex, Sweeny Fractionator One is now producing purity ethane and LPGs that deliver via pipeline to local petrochemical customers as well as to the market hub at Mont Belvieu, TX.
The company said it expects to begin LPG deliveries to international markets once it completes the 150,000-b/d LPG export terminal at Phillips 66’s existing marine terminal in Freeport, TX.
The Freeport LPG export terminal, which will have an initial export capacity of 4.4 million bbl/month, remains on schedule for startup during second-half 2016.
At a combined capital investment of more than $3 billion, Sweeny Fractionator One and the Freeport LPG export terminal will connect to a 100,000-b/d de-ethanizer unit to be installed at the Old Ocean site that will upgrade US propane for export  
December 8, 2015: here's another example of the cost of new natural gas projects. Seeking Alpha is reporting on the Caithness Moxie Freedom power plant in Luzerne County, PA, the first plant using GEs high efficiency 7HA.02 gas turbines to be project financed.
The 1,029 megawatt (MW) plant will be able to generate the equivalent power needed to supply approximately one million US homes.  
GE Energy Financial Services and its co-leads arranged $592 million senior secured credit facilities to support the Caithness Moxie Freedom Projects construction and operation, with eight other banks in the syndicate. 
I don't know if this is the total cost of the project, but if so, $592 million / 1,029 MW = $575,315 / MW.

Compare that with $6 million / MW that the Minneapolis folks paid for a few MW of solar energy at their airport.

Also note the efficiency of these turbines:
GEs HA gas turbines are the worlds largest and most efficient at more than 61% combined cycle efficiency, and lead the industry in total life-cycle value. HA technology provides cleaner, reliable and cost-effective conversion of fuel to electricity.
Compare that to the load factor of solar energy: 9%.

Original Post
 
Finally some good news coming out of Minnesota. This is a nice story coming out of Minnesota because it gives us current cost estimates for a new natural gas plant vs solar/wind.

PrairieBizMagazine is reporting:
Minnesota Power is moving forward with plans to build a major natural gas-fired power plant, accepting bids through January from multiple companies in an ongoing push to move away from coal.
The utility is expected to negotiate with multiple bidders in 2016 for the plant which could be built anywhere in the Upper Midwest -- not necessarily in northern Minnesota, but within the Midwest electric grid system, company officials said.
Specifications require the proposals to be between 200 and 400 megawatts, and the facility -- essentially a large gas turbine that would fire to create electricity when demand requires -- will cost from $300 million to $400 million to build, said Al Rudeck, Minnesota Power's vice president of strategy and planning.
$400 million / 400 WM = $1 million / MW. At $300 million / 400 MW = $750,000 / MW.

Compare that to the $7 million / MW that airports in Minnesota and Wisconsin are spending for solar and then then this:

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
It looks like the numbers haven't changed much, except for the hobby projects at Minnesota and Wisconsin airports. Note the data about solar load factor at this post

Phishing for Phools.
*******************************
Phishing For Ohio Phools

When I read this article sent to me by Don, I had to laugh.

My comments back to Don:

I had to laugh -- as soon as I saw the size of the project: 20 MW.
  • 20 MW with local utility committed to buy 5 MW
  • $120 million
  • $6 million / MW
  • Phishing for Phools
The good news: the fish will have no shortage of dead-bird parts to feast upon.

National Oilwell Varco Cuts Half Its Staff In Norway -- December 8, 2015

National Oilwell Varco to cut another 900 employees in Norway:
U.S. oilfield equipment maker National Oilwell Varco Inc will cut its Norwegian workforce by another 900 people after low oil prices resulted in fewer orders.
The layoffs come on top of cuts announced in June when the company said it would cut 900 permanent jobs and 600 contractors from its Norwegian workforce by the end of this year.
The cuts announced on Monday were all permanent jobs, the company said in a statement. Following the latest round, National Oilwell Varco will have laid off about half of its staff in Norway.

WTI At 7-Year Low; Around $37 -- December 8, 2015

Price of gasoline, 1918 - present:


Truax oil field has been updated. Link here

Active rigs:


12/8/201512/08/201412/08/201312/08/201212/08/2011
Active Rigs64191193181202

RBN Energy: Part 2 on Corpus Christi, December 8, 2015.

Over the past few years, midstream companies have responded to the boom in crude oil and lease condensate production in the Eagle Ford and the Permian by developing significant new pipeline capacity to, as well as storage and dock facilities in, both Houston and Corpus Christi. Now, with production in the Eagle Ford off its high and growth in the Permian slowing, these same midstreamers (and producers, marketers, refiners, and exporters of condensate and other refined products) are taking stock, and assessing not only what new infrastructure might still be needed in this period of lowered expectation, but whether shifting more of their attention (and liquids) towards Corpus instead of Houston might be warranted. Today, we continue our look at Corpus Christi’s increasing role as a crude/condensate powerhouse.
Even with the declines in drilling and completion activity we’ve been seeing with lower oil prices, a lot of light crude and lease condensate is still being produced in the Eagle Ford and the Permian Basin. According to the U.S. Energy Information Administration (EIA) drilling productivity report (DPR), crude and condensate production in the Permian is estimated to be just over 2 MMb/d in November 2015 (up slightly from a year ago); production in the Eagle Ford (where the active rig count is flirting with 100—off from an average of 250 in the 2012-14 period) has been sliding of late, and is estimated to be 1.3 MMb/d in the same month. Together that’s a huge 3.3 MMb/d of crude and condensate to move to market.
As we said in Episode 1, Corpus Christi is now a competitive alternative to Houston as a market hub for Eagle Ford and Permian crude and condensate headed to the Gulf Coast. Not only is Corpus close to (and well-connected by pipeline with) the Eagle Ford and connected (to a lesser degree) with the Permian, the city and its environs boast considerable crude/condensate storage, oil-refining and growing condensate splitting capacity, as well as one of the nation’s best and busiest ports. Let’s begin this time with an overview of crude/condensate pipelines out of the two plays to Corpus and Houston.