Frack-Stop: CLR And Whiting To Stop Fracking In The Bakken -- John Kemp -- Thursday, February 27, 2016; Unemployment Rates Below 2007 Recession Levels In Just 14 States

Updates

February 26, 2016: see notes on first time unemployment claims below, in the original post. Now, The Wall Street Journal provides additional background: in 36 states, unemployment rates still linger above pre-recession levels. The Obama administration has been a job killer: killing pipeline projects; ordering a Clean Power Plan by executive action; invigorating the EPA.

The Labor Department reported Friday that average annual jobless rates fell in 2015 from the prior year in 47 states plus the District of Columbia. Unemployment was unchanged in North Dakota and rose slightly in West Virginia and Wyoming.

In 2014, unemployment fell in every state and D.C. for the first time since 1984.

Even so, the average annual unemployment rates in 36 states plus D.C. in 2015 were higher than the average unemployment rate for those states in 2007.

The recession began in December 2007 and ended in June 2009.

Unemployment rates in just 14 states had returned to or fallen below their 2007 averages in 2015: Arkansas, Iowa, Kansas, Kentucky, Maine, Michigan, Minnesota, Missouri, Nebraska, New Hampshire, North Dakota, Ohio, Vermont and Wisconsin.

Original Post 

From John Kemp, tweeting now: FRACK-STOP: Continental and Whiting to stop fracking and well completions in the Bakken (but drilling goes on).

Regular readers of the blog already knew that -- at least with regard to CLR; I haven't seen a CLR completion in months. Whiting has still reported some completed wells recently. Financial Times is reporting:

The moves will lead to significant cuts in their production this year, part of a forecast decline in US oil output that is expected to help curb the oversupply in global crude markets.

Continental said it had stopped completing wells in the Bakken in the third quarter of last year and was focused on covering its capital spending from its operating cash flows.

Whiting said it planned to stop completing wells in the second quarter of this year in North Dakota and the DJ Basin formation in Colorado. The two companies made their statements as they reported earnings for 2015, showing net losses of $354m for Continental and $2.2bn for Whiting, including a $1.5bn writedown in the value of its oilfields.  

New crude oil threat: a huge glut of gasoline, and that's why the "moratorium" on new pipelines through Minnesota and Iowa no longer matter. From The Wall Street Journal:

Refineries in the U.S. Midwest are losing their thirst for oil, posing a new risk for the battered crude market.

The Midwest accounts for nearly a quarter of the crude processed in the U.S. and is home to shale producers that have few other outlets for their oil. But refiners there are already swimming in gasoline and other fuel, forcing them to cut back production until the excess can be worked off.

The result has been more crude oil available in the market, worsening a glut that has been undermining oil prices for the past year and a half. With U.S. crude inventories at the highest level in more than 80 years, some storage hubs have little room left to store oil.

CVR Refining LP is among the companies that have scaled back. The company said recently that it reduced runs at its 70,000-barrels-a-day refinery in Wynnewood, Okla., by as much as 10,000 barrels a day.

Refiners in the Department of Energy’s Midwest region, which stretches from North Dakota to Ohio and south to Oklahoma and Tennessee, ran at 92.9% of capacity last week, down from 98.2% a month ago. [Actually, I think I recently saw capacity at 88% recently.]

Natural gas: the US natural gas story is simply incredible. The draw last week brings the overall inventory down, but it's still above the 10-year high. Simply incredible.

More on natural gas from CNBC yesterday:

"We are now perhaps at the 10-year mark of what has been a real natural gas revolution in this country. Gas [is] now the biggest supplier, biggest fuel for electricity — overtaking coal; [the] revival of manufacturing and now getting into the export market."

Coal production dropped 32.5 percent year over year in the week that ended February, 2013. 
As recently as 2005, the Department of Energy reported that natural gas consumption in the U.S. outpaced available domestic supplies and imports were needed, but Moniz said Wednesday that position has "changed dramatically."

The secretary thinks America may be on its way to "probably … being among the very biggest exporters of natural gas in the world."

Coal: it's beyond me why this is still an issue. President Obama and his supporters will take the credit but it was the revolution in shale natural gas that should get the real credit. From CNBC yesterday:

With Washington locked in a fight over whether to wait until next year to fill the seat of the late Supreme Court Justice Antonin Scalia and the likelihood high that the next Justice will ultimately decide the fate of President Obama's climate-change plan, available evidence suggests that the economic cost of the transition away from coal-fired electricity is fairly modest.

As Environmental Protection Agency administrator Gina McCarthy prepares to defend the plan in a speech at the IHS CERAWeek energy conference on Wednesday, politicians in the 27 states challenging the plan in court are focused on two main impacts: How the rules hurt the coal industry, since limits on carbon emissions would push utilities to rely on lower-carbon natural gas or carbon-free renewable energy and nuclear power, and the effect on utility rates as utilities pay for new plants. 

If the case comes back to the Supreme Court for hearing on the merits, probably next year, it's likely the next Justice will cast the deciding vote. If the standoff between President Obama and the Senate prevents the seat from being filled before then, the ruling of the D.C. Circuit after the June hearing would be preserved by a 4–4 vote on appeal. On Tuesday, the Senate Republicans made it clear they had no intention of even acknowledging a Supreme Court nominee from President Obama.

Angola, so what gives?

Tweeting now: Angolan crude oil exports rise to 5-year high of 1.767 mil b/d in 2015. 

UK, so what gives?

Tweeting now: UK crude oil output surges 14% in 2015, first rise since 1999.

Canada:

Despite lower crude oil prices, EIA expects Canadian oil production to continue increasing through 2017. Canadian oil sands projects that were already under construction when prices began to fall in 2014 and that are expected to begin production in the next two years are the main driver of production growth…According to EIA's February Short-Term Energy Outlook, production of petroleum and other liquids in Canada, which totaled 4.5 million barrels per day (b/d) in 2015, is expected to average 4.6 million b/d in 2016 and 4.8 million b/d in 2017. This increase is driven by growth in oil sands production of about 300,000 b/d by the end of 2017, which is partially offset by a decline in conventional oil production. -- EIA

Job watch, CNBC/Reuters is reporting:

• first time claims surge
• first time claims jump 10,000 to 272,000
• up more than forecast (which was 270,000)
• four-week average declines; due to an anomaly in the report two weeks ago

There is one interesting thing that was not addressed, which makes the entire report fishy. Last week's number was an estimate because Virginia, Pennsylvania, and Puerto Rico numbers from last week were only an estimate. The federal government must have gotten that estimate exactly correct (LOL) because last week's number does not appear to have been revised.

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Back To The Bakken

NDIC's daily activity report for Wednesday still not posted. 

Active rigs:

	2/25/2016	02/25/2015	02/25/2014	02/25/2013	02/25/2012
Active Rigs	39	121	190	181	204

RBN Energy: Central Oklahoma STACK And SCOOP Crude Infrastructure Build Out Continues (archived).

Crude oil production growth in Oklahoma over the past two years has been so rapid that apparently the State of Oklahoma “misplaced” (under-reported?) as much as 100 Mb/d of output according to a recent Energy Information Administration (EIA) report. Whatever the true production numbers a couple of central Oklahoma plays continue to attract new drilling and infrastructure investment in the face of the oil price meltdown. Today we describe new infrastructure in the region.

In Episode 1 of this series we described continued producer interest in the South Central Oklahoma Oil Province (SCOOP) and Sooner Trend Anadarko Basin and Canadian and Kingfisher counties (STACK) plays that are part of the 60,000 square mile Anadarko Basin. The Anadarko is an “old” play - in past decades successfully exploited using conventional vertical drilling. Over the past four years, producers have used horizontal drilling and fracturing technology to extract unconventional oil and condensates from shale in the basin. Crude production (mostly from Oklahoma and Kansas) grew by 300 Mb/d between 2011 and March 2015 according to the latest monthly estimates by the EIA.

Crude output has since declined by 15% between March and November 2015 in the face of crashing oil prices. But within the larger Anadarko basin production continues to increase in the “sweet spot” SCOOP and STACK plays. Although these plays present geological challenges for producers - those companies that have cracked the shale code there have enjoyed superior results with high initial output from oil and condensate wells. The plays are also located conveniently close to the Cushing, OK crude market hub. These factors have encouraged a number of large producers such as Devon, Marathon and Continental Resources (the founder of the SCOOP play) to continue investing and expanding their acreage even as they pull back from other regions. In this second episode we look at recent infrastructure developments to get SCOOP and STACK crude and condensate production to market.