Another Geico Award Nominee -- October 23, 2016

Updates

Later, 7:36 p.m. Central Time:  see first comment below. I brought it up here to make it browser-searchable.

WSJ seems to be forecasting something that's already happening...aggregate DUCS over the 4 oil basins (ie the Bakken, Niobrara, Permian, and Eagle Ford) have now been lower in each of the last 6 months, as oil well completions started picking up when oil prices first started rising in the spring, while the DUC count in the natural gas regions (the Marcellus, Utica, and the Haynesville) has generally slowly declined since December 2013, as new natural gas drilling fell to record low levels...

• http://www.eia.gov/todayinenergy/detail.php?id=27932
• http://www.eia.gov/petroleum/drilling/
• graphs here:http://www.eia.gov/petroleum/drilling/pdf/duc_supplement.pdf

Original Post

 

From the linked article below, the new nominee:  Tim Rezvan.

Tim Rezvan, managing director of Americas research at Mizuho Securities USA Inc., said that while the untapped wells represent a large resource, it will take time to begin pumping them.

“You can’t get those turned on overnight,” Mr. Rezvan said.

I don't know what he means by "overnight," but he's obviously not reading the MillionDollarWay blog. LOL. The production from any DUC completed in the Bakken will show up within 30 days, in the next Director's Cut. In the oil industry, production from a well within 30 days is pretty much "overnight."

From spud to production in the Bakken, we are talking a couple of weeks if the price is right.

From The Wall Street Journal:

U.S. oil and gas companies have drilled thousands of wells they have yet to tap, creating a ready reserve of fuel that could surge onto the market when energy prices recover.
As producers report quarterly earnings over the next few weeks, a question looms: When will they start exploiting these “drilled but uncompleted” wells?

While the industry often has an inventory of drilled wells awaiting completion, the backlog has grown significantly over the past two years as companies like Continental Resources Inc. and EOG Resources Inc. deliberately delayed tapping wells to wait for higher energy prices.

Federal estimates show the number of such wells in the nation’s seven most prolific drilling regions stood at 5,069 in September, up from 3,768 in January 2014, before oil prices began falling.

Because companies have already spent the money to drill the wells, known in the industry as DUCs, bringing on the supply they hold is cheaper than drilling and fracking a new well. That means DUCs are an economic proposition for many companies, especially with U.S. crude now trading at around $50 a barrel.

Ryan Duman, a senior analyst at energy consulting firm Wood Mackenzie, said he expects to see companies completing many of the delayed wells in the next 18 months.

“You’re at a point where pretty much every DUC that’s sitting out there is in the money,” Mr. Duman said.

Wood Mackenzie estimates that the industry has about 2,000 more wells awaiting completion than it normally would. Those extra DUCs are capable of producing more than 250,000 barrels a day of crude and 4 billion cubic feet of natural gas a day, the firm estimates. That is equal to roughly half of California’s daily oil output in July and West Virginia’s daily gas production the same month.

Mr. Duman called the untapped resources contained in the DUCs a “meaningful amount of supply” that would have “some implications on commodity prices.”

Many of the DUCs, he added, are located in the Marcellus drilling region of Pennsylvania and the Bakken in North Dakota.

You can see all Geico Award 2016 nominees at the link at the sidebar at the right. Obama would most likely win the 2016 award, but previous winners cannot be repeat winners; they can be nominated.

In the "Radicalized Muslim Terror" category, President Obama was nominated for his under-estimation of the JV team; went golfing; would get the intel briefing on the 15th tee. That nomination was made quite some time ago.

Today, in The WSJ we read that the JV team has struck Kirkuk, even as the allies move in on Mosul.  Having withdrawn 99% of US troops from Iraq, the US no longer has the capability of fighting the JV team in two different cities. Whatever.