Wednesday, December 21, 2016

Better Late, Than Never -- December 21, 2016

I remember when Qatar was the BIG name in natural gas.



This was from the EIA today via Twitter. This is 2014 data. Apparently "they" are still collecting 2015 data.

Post-Shut-In Jump In Production In The Bakken -- January 29, 2017

Disclaimer: I did not follow the oil industry in North Dakota prior to the Bakken. I have no formal training or background in the oil industry. I am simply a layperson who has followed the Bakken to some degree since 2007. I would not consider my opinions on the Bakken (or the oil industry in general) to be very credible. I have my thoughts and a worldview with regard to the Bakken (which may be completely wrong) but I tweak it when new data suggests re-evaluation is in order.

My worldview is that the process and outcome of drilling conventional wells is entirely different than the process and outcome of drilling unconventional / shale / tight oil wells.

There are many, many factors to compare and contrast between drilling conventional and unconventional / shale / tight oil wells.

For example, "everyone" agrees with the "Bakken decline" phenomenon.

Recently, a reader with long experience in the oil sector stated that "all wells show a jump in production after they have been shut in for awhile, and the production jump tends to correlate with the length of time the well was off-line / shut-in." His experience goes back to vertical, conventional wells and extends into the Bakken revolution.

I have looked at a lot of production profiles, and that has not been my observation (that there is always a bump up in production after Bakken well has been returned to production after being taken off-line for some reason). There is NOT always a bump in production after a Bakken well has been shut in for awhile.

I have generally seen a huge initial production (the first 90 days) followed by a fairly severe decline, though that decline phenomenon has been less severe over the past couple of years (something operators are also noticing and reporting in their corporate presentations).

With regard to a bump up in production after being off-line, I have also noted that, in general, when a Bakken well is shut in or taken off-line for whatever reason (with perhaps one exception), production when the Bakken well comes back on-line is not particularly different than before it was taken off-line.

I certainly, as a rule, do not see a bump in production after a well comes back on-line.

The one exception: there may be a small bump in production when a well has a pump placed on it, but even then it's not every time, and it's not particularly remarkable.

Below is the typical profile that I see. This is from file report #21110, an Oasis well in an over-pressure field in the Bakken, the Alger. There is generally no explanation in the file report why the well was taken off-line. I think that's the case here; the operator notes that the well meets criteria to be identified as a "stripper well."
  • 21110, 1,327, Oasis, Heron 5693 412H, Alger, t12/11; cum 163K 11/16;
Note:
  • the high initial production;
  • the incredible decline;
  • relative flat production but steady decline;
  • absolutely, no bump in production when the well is placed back on-line after being taken off-line for a significant period of time
Again, this is the most common production profile I see in the Bakken through 2016.


 PoolDateDaysBBLS OilRunsBBLS WaterMCF ProdMCF SoldVent/Flare
BAKKEN11-2016304855561112857208397
BAKKEN10-2016311141110014211295881414
BAKKEN9-20163083075316297635110
BAKKEN8-20162050447390161635197
BAKKEN7-20160000000
BAKKEN6-20160000000
BAKKEN5-20160000000
BAKKEN4-20160000000
BAKKEN3-20160000000
BAKKEN2-2016311982500
BAKKEN1-201600310000
BAKKEN12-2015202123271246201330
BAKKEN11-201530104293519776860434
BAKKEN10-2015313553701404330700
BAKKEN9-201529772730237346418832
BAKKEN8-20152424427814154132110
BAKKEN7-20153157055419978415810
BAKKEN6-20153068467326308205680
BAKKEN5-201527555584177466642910
BAKKEN4-20153051049520317024500
BAKKEN3-20153147446918565823220
BAKKEN2-20152850952815294841146
BAKKEN1-20153182984022696412380
BAKKEN12-2014317167303150235119480
BAKKEN11-201430823827277811938030
BAKKEN10-201431111211173303330829180
BAKKEN9-201430136013163555800148262
BAKKEN8-20142652459940774801420
BAKKEN7-2014312267219933535440141
BAKKEN6-201429122911923138970364229
BAKKEN5-201473243818066645730
BAKKEN4-201430105510394066207316830
BAKKEN3-20143110501088458710230620
BAKKEN2-201428170116485311428839240
BAKKEN1-201431134013516922209716940
BAKKEN12-2013311632168311391209816950
BAKKEN11-201330189118346174297925890
BAKKEN10-2013181423141134101143584326
BAKKEN9-2013429338731344439450
BAKKEN8-201315123718037798928920
BAKKEN7-201331374938672307367832750
BAKKEN6-201330429539543058611957290
BAKKEN5-201331485253933313549450910
BAKKEN4-201330548154423400484644560
BAKKEN3-20131017701239783123611060
BAKKEN2-201327411449622993565453030
BAKKEN1-201331578454214076750671030
BAKKEN12-201230589856023837581354230
BAKKEN11-201230651566104610832679360
BAKKEN10-201231843284734815579953960
BAKKEN9-201230707270443774636559750
BAKKEN8-201231631463793546587254690
BAKKEN7-201229552853542385390235250
BAKKEN6-201230493148673020288224920
BAKKEN5-201231640572873940568752840
BAKKEN4-201230687859344079547650860
BAKKEN3-201227776475904901510847570
BAKKEN2-201224598359784396338233820
BAKKEN1-20122510610115137144430343030
BAKKEN12-20113116474155402021417562294614616
BAKKEN11-201125407937937306501705017

It's Getting Crowded In The Bakken; Operators On Top Of Operators With Overlapping Drilling Units On Top Of Overlapping Drilling Units -- The Kennedy-Miles Wells -- December 21, 2016

This is a long note; the usual disclaimer applies:
  • there will be factual and typographical errors
  • facts and opinions are interspersed; it can be difficult to separate facts from opinions
  • if this information is important to you, go to the source.

In addition: it would be interesting if a Bakken expert might chime in on the last observation at the end of the post.

Update: see first comment regarding Pugh clauses. 

**************************
The Post

I always find it "interesting" when I post something and then something from "out-of-nowhere" seems to pop up.

A couple of days ago I spent a lot of time updating CLR's Kennedy-Miles 2560-acre stand-up drilling unit in Dimmick Lake:
Now, check out Case #25524 in January, 2016, NDIC dockets, agenda released today:
Application of Oasis Petroleum North America LLC for an order amending the applicable orders for the Dimmick Lake, Siverston and/or Johnson Corner-Bakken Pools, McKenzie County, ND to (i) authorize up to three wells to be drilled on six overlapping 2560-acre spacing units consisting of Sections 25, 26, 35 and 36, T.151N., R.97W.; Sections 30 and 31, T.151N., R.96W. and Sections 25 and 36, T.151N., R.97W.; Sections 28, 29, 32 and 33; and Sections 29, 30, 31 and 32, T.151N., R.96W.; Sections 1, 2, 11 and 12; and Sections 2, 3, 10 and 11, T.150N., R.97W.; (ii) authorize up to eighteen horizontal wells to be drilled on four 1280-acre spacing unit described as Sections 25 and 36, T.151N., R.97W.; Sections 29 and 32, T.151N., R.96W.; Sections 2 and 11; and Sections 3 and 10, T.150N., R.97W.; and (iii) for such other relief as may be appropriate.
Without pen and paper (or really good Adobe Photoshop skills), it's way too difficult to diagram this. Maybe later. Suffice it to say that there are several points of interests for newbies, and even a comment that perhaps a "Bakken expert" might be willing to also comment.

First: in this are, "overlapping drilling units" are overlapping additional "overlapping units.

Second: this is why people have questions how royalties work with overlapping units. The note at that link is way too verbose, too complicated. I'm going back to correct it. Bottom line: each well and its pool stand on its own.

Third point of interest: in the area under discussion, the Kennedy-Miles drilling unit, SM Energy also had extensive interests. In 2016, SM Energy sold its acreage in this area to Oasis

Fourth, today the agenda for the January, 2017, hearing dockets was released. Note Case 25524 (case, not permit number):
25524, Oasis, Dimmick Lake, Siverston and/or Johnson Corner-Bakken, i) 3 wells on each of six overlapping 2560-acre units; ii) 18 wells on four 1280-acre units; 90 wells, McKenzie
Fifth, Oasis is requesting to site wells in 2560-acre drilling units that also contain sections in the CLR Kennedy-Miles drilling unit.

As I wrote to a friend: the Bakken is getting crowded. Operators are drilling on top of each other, even without "top leasing." It's getting very, very confusing. And more important than ever for folks to keep on top of things if they have mineral rights. Easier said than done. 

Now a question for a Bakken expert: I think I understand why one operator (Oasis, in this case) can drill horizontals into sections where another operator (CLR, in this case) already has horizontals. I think I understand it, but I can't articulate it easily. I am simply curious if others have noted this.

Finally, this is why, I think, the Corral Creek-Bakken unit was unitized by the state some years ago. 

******************************************

The following graphics for my use only. I don't have Adobe Photoshop so I can't do this the way I would like. I would like to use "transparent" colors for the colored squares, but I can't do that. So instead of using transparent-colored squares, I simply made the squares slightly different sizes so I could imagine how the six overlapping units relate to each other. The usual disclaimer applies: there may be errors. If this information is important to you, go to the source.

The first graphic:
  • the CLR Kennedy-Miles wells are noted; they are on the stand-up 2560-acre spacing unit
  • AA, BB, CC, and DD are four 1280-acre spacing units on which Oasis will request 18 wells for each unit
  • 4 x 18 = 72 wells



*******************************

The second graphic, much more complicated. As noted, I was unable to use "transparent-colored squares" which would have been a better way to do this, but hopefully it makes sense.

The "bottom layer" is the dark blue stand-up 2560-acre CLR Kennedy-Miles spacing unit. That unit and those eight wells have been there for quite some time. This past week, CLR was granted eight more permits which will be placed in the same area, making a total of 16 Kennedy-Miles wells on this 2560-acre spacing unit. Eight horizontals will run south; eight horizontals will run north.

In the January, 2017, NDIC dockets, Oasis is requesting to place up to 3 wells on the six 2560-acre rectangular spacing units represented in various colors:
  • A (pink): sections 30, 31 // 25, 36
  • B (green): 29, 30, 31, 32
  • C (yellow): 28, 29, 32, 33
  • D (light blue): 25, 26, 35, 36
  • E (beige): 1, 2, 11, 12
  • F (red): 2, 3, 10, 11
It's interesting to note that Oasis has two (2) 2560-acre units that overlap CLR's 2560-acre stand-up unit. 


The Matthew Schmidt Wells -- December 21, 2016

Background: it's hard to believe but back as early as September, 2010, I noted that among the big-name operators in the Bakken, OXY USA seemed to have a special knack for reporting very poor wells in very good areas of the Bakken. I thought it might be a one-off for awhile, but I kept seeing the same thing over and over so I started tracking OXY USA wells in the Bakken. I think I posted every OXY USA well that came off the confidential list from that September, 2010, until June 9, 2015, and the trend of poor wells seemed to continue.

There were exceptions, and over time, poor wells seemed to have better production for unknown reasons.

In October, 2015, it was announced that OXY USA sold 300,000 Bakken acres for $500 million to Lime Rock Resources; selling 346 wells, which appeared to be the biggest transfer of wells up to that time in the Bakken. For newbies: OXY USA was focused in the southwest part of the Bakken, down near the Belfield area, where Whiting was also focused at the time (it's "southern play in the Bakken").

Today, December 21, 2016, a reader wrote to tell me that one of these Lime Rock Resources/OXY USA wells is now producing, but still on the SI/NC list. The reader tells me that he is very, very happy with the early results of this well and very pleased with Lime Rock Resources.
  • 28470, 1,374, Lime Rock Resources, Cabernet, see below; t11/16; cum 90K 7/17;
I believe there are four Matthew Schmidt wells. If so, I will start tracking the Matthew Schmidt wells here. 

*****************************
The Matthew Schmidt Wells

The four Matthew Schmidt wells:
  • 18427, 876, Lime Rock Resources/OXY USA, Matthew Schmidt 1-35-2H-143-97, t5/10; cum 191K 7/17;
  • 22917, 470, Lime Rock Resources/OXY USA, Matthew Schmidt 2-35-2H-144-97, t7/13; cum 182K 7/17;
  • 22918, 784, Lime Rock Resources/OXY USA, Matthew Schmidt 3-35-2H-144-97, t7/13; cum 241K 7/17;
  • 28470, 1.374, Lime Rock Resources/OXY USA, Matthew Schmidt 4-2-35H-143-97, t11/16; cum 90K 7/17;


*************************************** 
December 21, 2016

NDIC File No: 28470     API No: 33-025-02558-00-00     CTB No: 128470
Well Type: ON CONFIDENTIAL STATUS
Location: SWSE 2-143-97     Latitude: 47.227633     Longitude: -102.935649
Current Operator: LIME ROCK RESOURCES III-A, L.P.
Current Well Name: MATTHEW SCHMIDT 4-2-35H-143-97
    Field: CABERNET


Production data released prior to confidential status that is still available:

   Pool: BAKKEN     Cum Oil: 400     Cum MCF Gas: 1     Cum Water: 13614

Monthly Production Data
PoolDateDaysBBLS OilRunsBBLS WaterMCF ProdMCF SoldVent/Flare
BAKKEN10-20163400013614100

Noted March 2, 107:
DateOil RunsMCF Sold
1-201744263351
12-201680553817
11-201687542268
From the file report:

This well is back on the confidential list but information prior to confidential from the rile report:

Change of operator from OXY USA to Lime Rock Resources in letter dated March 22, 2016.

Well completion report received by NDIC on April 6, 2015, but not fracked at that time.

It looks like TD = 20,516 feet. Middle Bakken penetrated at 11,041 feet.

Operator at that time: OXY USA.
  • middle Bakken
  • spud September 27, 2014
  • total depth, October 5, 2014
  • note: eight days, to include KOP, curve, and then lateral continued
  • spud to TD = 16 days. The lateral was done in one (1) run, 4.18 days
  • gas flare, 6 - 8 feet

Number Of Active Rigs Creeping Up In North Dakota -- December 21, 2016

Cramer: Rick Perry, director on the board of the company that is building DAPL; Rick Perry is Trump's nominee for Energy Secretary.

Active rigs:



12/21/201612/21/201512/21/201412/21/201312/21/2012
Active Rigs4265182192189

Six permit renewals:
  • Lime Rock Resources (3): three Schneider permits in Dunn County
  • HRC (3): three Fort Berthold permits in Dunn County
Two wells coming off confidential list Thursday:
  • 29560, SI/NC, Statoil, Heinz 18-19 4H, Patent Gate, no production data,
  • 31329, 628, Oasis, Johnsrud 5198 12-18 6T, Siverston, 36 stages, 3.9 million lbs, t6/16; cum 85K 10/16;
******************************************

31329, see above, Oasis, Johnsrud 5198 12-18 6T, Siverston:


PoolDateDaysBBLS OilRunsBBLS WaterMCF ProdMCF SoldVent/Flare
BAKKEN10-20163120083200492417542201344697732
BAKKEN9-20161496489689100791580294126306
BAKKEN8-201631212062121325940396112881810607
BAKKEN7-20163126117262092768946753440692498
BAKKEN6-2016975807385141231239958456491

NDIC Dockets -- Agenda For January, 2017 Posted

Cases That Caught My Eye


25518, MRO, Reunion Bay-Bakken and Antelope-Sanish, i) establish a 2560-acre unit, one well; ii) establish two 2560-acre units, two wells in each; iii) 16 wells on a 2560-acre unit; iv) 8 wells on a 1280-acre unit; v) 10 wells on a 1280-acre unit: 39 wells, McKenzie County
25520, True Oil, Red Wing Creek-Madison; allow the injection of gaseous substances other than propane, including without limitation, ethane in the Red Wing Creek Unit, McKenzie County
25521, Oasis, Banks-Bakken, establish an overlapping 2560-acre units, 3 wells; and 18 wells on an existing 1280-acre unit: 21 wells, McKenzie County
25522, Missouri River Resources, Bailey-Bakken, establish a 3840-acre unit; 25 wells; Dunn County
25524, Oasis, Dimmick Lake, Siverston and/or Johnson Corner-Bakken, i) 3 wells on each of six overlapping 2560-acre units; ii) 18 wells on four 1280-acre units; 90 wells, McKenzie


25543, Resource Energy Can-Am LLC, Ambrose-Bakken, i) establish five overlapping 1280-acre units; eight wells on each; 40 wells, Divide County
25544, Resource Energy Can-Am LLC, Whiteaker-Bakken, i) establish an overlapping 1280-acre unit; eight wells; Divide County
25545, NDIC Commission, terminate Livestock-Lodgepole Unit, operated by Denbury Onshore, LLC, Stark County

****************************
The Full Agenda


25518, MRO, Reunion Bay-Bakken and Antelope-Sanish, i) establish a 2560-acre unit, one well; ii) establish two 2560-acre units, two wells in each; iii) 16 wells on a 2560-acre unit; iv) 8 wells on a 1280-acre unit; v) 10 wells on a 1280-acre unit: 39 wells, McKenzie County
25519, MRO, Reunion Bay-Bakken and Antelope-Sanish, establish a 3200-acre spacing units; one well; McKenzie, Mountrail
25520, True Oil, Red Wing Creek-Madison; allow the injection of gaseous substances other than propane, including without limitation, ethane in the Red Wing Creek Unit, McKenzie County
25521, Oasis, Banks-Bakken, establish an overlapping 2560-acre units, 3 wells; and 18 wells on an existing 1280-acre unit: 21 wells, McKenzie County
25522, Missouri River Resources, Bailey-Bakken, establish a 3840-acre unit; 25 wells; Dunn County
25523, Oasis, SWD, McKenzie County
25524, Oasis, Dimmick Lake, Siverston and/or Johnson Corner-Bakken, i) 3 wells on each of six overlapping 2560-acre units; ii) 18 wells on four 1280-acre units; 90 wells, McKenzie
25525, Oasis, pooling,
25526, Oasis, pooling,
25527, Oasis, pooling,
25528, Oasis, pooling,
25529, Oasis, pooling,
25530, Oasis, pooling,
25531, Oasis, pooling,
25532, Oasis, pooling,
25533, Oasis, pooling,
25534, Oasis, pooling,
25535, Oasis, pooling,
25536, Oasis, pooling,
25537, Oasis, pooling,
25538, Oasis, pooling,
25539, Oasis, pooling,
25540, Oasis, pooling,
25541, Oasis, pooling,

25542, NDIC Commission, review treating plant permit
25543, Resource Energy Can-Am LLC, Ambrose-Bakken, i) establish five overlapping 1280-acre units; eight wells on each; 40 wells, Divide County
25544, Resource Energy Can-Am LLC, Whiteaker-Bakken, i) establish an overlapping 1280-acre unit; eight wells; Divide County
25545, NDIC Commission, terminate Livestock-Lodgepole Unit, operated by Denbury Onshore, LLC, Stark County
25546, Statoil, pooling,
25547, Statoil, pooling,
25548, Statoil, pooling,
25549, Statoil, pooling,
25550, Statoil, pooling,
25551, CLR, pooling,
25552, CLR, pooling,
25553, CLR, commingling,
25554, XTO, pooling,
25555, XTO, pooling,
25556, Resource Energy Can-Am LLC, pooling,
25557, Resource Energy Can-Am LLC, pooling,
25558, Resource Energy Can-Am LLC, pooling,
25559, Resource Energy Can-Am LLC, pooling,
25560, Resource Energy Can-Am LLC, pooling,
25561, Resource Energy Can-Am LLC, pooling,
25562, Resource Energy Can-Am LLC, pooling,
25563, Resource Energy Can-Am LLC, Ambrose-Bakken, 8 wells on an existing 1280-acre unit; Divide County
25564, Newfield, Bear Den-Bakken, 2 line wells, McKenzie County
25565, McKenzie Energy Partners, SWD

Update On SCOOP, STACK -- RBN Energy -- December 21, 2016

First things first: first baby bison of the season spotted at Theodor Roosevelt National Park, North Dakota, video. (See comment below regarding this video; the "baby" may be a bit older by now.)

Top 10 Stories of the Year -- AP
#10 - Hillary Clinton's e-mail issue, Comey
#9 - Supreme Court -- Scalia dies; Senate refuses to consider nominee
#8 - Syria
#7 - Democratic Party e-mail leaks
#6 - attacks on police (#BlackLivesMatter)
#5 - worldwide terror attacks (there were so many, they could not break them out; with one exception)
#4 - Pulse Nightclub massacre
#3 - blacks killed by police
#2 - Brexit
#1 - US election (so many subplots)(Democratic Party is now a regional party, not a national party -- "Morning Joe"
Border adjustment tax. I keep forgetting to post this. Germany always had the VAT; I see nothing wrong with a US-BAT.

GITMO: I'm hoping President Obama can empty GITMO before he leaves office, so that the prison can be used to house illegal immigrants charged with violent crimes waiting for their deportation hearing. 

Obama removes more of the Arctic from oil exploration: a non-story; oil glut out as far as the eyes can see; however, huge story for Alaska, I would assume.

Eyes wide shut? MSNBC "Morning Joe" suggests the EU's "open borders policy has been disastrous but then doesn't say a thing about Obama's open borders policy for the past eight years.

Did she mispeak? on a CNBC "Squawk Box" this morning, an analyst discussing US shale in light of OPEC, she said that there are indications of a trillion bbls of recoverable oil in US shale oil. I know at one time CLR suggested the Bakken could be a one-trillion bbl reservoir (with a primary recovery rate of 5% = 50 billion bbls. It was quickly dialed back to 500 billion bbls reservoir, but 50 billion recoverable bbls in the Bakken is a long way from 1 trillion bbls recoverable across US shale. Maybe not: wiki also uses the 1 trillion bbls recoverable. Peak oil? Hardly. 

Completely off my radar scope: India overtakes Britain as world's sixth largest economy. This is a huge story. Other data points:
  • India also surpassed China as the world's fastest-growing economy this past year
  • IMF says India would retain that title (fastest-growing) for the foreseeable future
  • it's GDP is predicted to increase by 7.6% through 2017
The question remains: why is India off everyone's radar scope?

***********************************

Electoral College: this was a story that was not reported anywhere in the media this past election -- the changing landscape of the electoral college. The bottom line, comparing the electoral college between 2000 and 2016 (all within my lifetime):
  • the south (+16) vs elite northeast (-7) + Pacific Coast (+2) + industrial Midwest (-10)
  • = +16 for the south vs -15 for the rest of the country (forget about fly-over country) = a swing of 31 electoral votes in 2016 compared to 2000
I was reminded of that by this story: Illinois loses more residents than any other state. I'm coming back to this later, if I remember. Think Schumer. Back to Illinois, data points:
  • for third consecutive year, Illinois lost more residents than any other states
  • Illinois' population is at its lowest in nearly a decade
  • one of just eight states to lose residents; population first began to drop in 2014 (isn't that when Rahm returned to Chicago?)
  • West Virginia had greatest decline; according to this site, the list:
    • Illinois (electors dropped from 21 to 20, 2000 to 2016)
    • West Virginia
    • Connecticut (electoral votes stable at 7, from 2000 to 2016; could that change after 2020?)
    • Mississippi (went from 7 to 6 electoral votes, 2000 to 2016)
    • Maine (electoral votes already at 3)
    • Vermont (electoral votes already at 3)
    • New Mexico: an outlier; a the only sunbelt state (x MS); it's all economics; electoral votes at 5; always votes Democratic
  • polls suggest the trend will continue for Illinois; reasons cited: high taxes, state budget stalemate, crime, the unemployment rate, and the weather (global warming not coming fast enough, apparently)
  • more than any other city, Chicago depended on Mexican immigrants to balance the sluggish growth of its native-born population
  • residents moving to the Sun Belt: Texas, Arizona, and Florida
  • leading the exodus: the African-American population
  • other midwestern states also losing population, but "the pattern is on steroids for Illinois"
*******************************
Back To The Bakken

Active rigs:


12/21/201612/21/201512/21/201412/21/201312/21/2012
Active Rigs4165182192189

RBN Energy: natural gas production trends in the SCOOP and STACK, Part 1

The SCOOP and STACK combo play in central Oklahoma recently has emerged as one of the most prolific and attractive shale production regions in the U.S. Like the Permian Basin (albeit on a much smaller scale), rig counts in this play have weathered the crude oil price decline better than most of the rest and, along with the Permian, are leading a rebound as prices move higher. These days, SCOOP/STACK producers are primarily targeting crude oil and condensates, but the area also is seeing a resurgence of natural gas output from associated gas. More than that, given its economics, location and ample infrastructure, gas supply from the region has the potential to be directly competitive with Marcellus/Utica supply. Today, we begin a series analyzing production trends in the SCOOP/STACK, with a focus on natural gas.