Thursday, December 7, 2017

Thursday, December 7, 2017 -- More Truck Drivers Needed In Texas In 2018

"Pearl Harbor Day." This is an appropriate place for this story on Carl Vinson -- story sent to me by a reader.

North Dakota wells coming off confidential list today
Thursday, December 7, 2017: 32 for the month; 142 for the quarter
  • 33208, 1,244, Whiting, Evitt 14-12-4TFHX, Truax, Three Forks, 39 stages; 9.3 million lbs; t6/17; cum 90K 10/17;
  • 33134, 1,063, Liberty Resources, T. Haustveit E 156-95-26-3MBH, 27 stages, 8 million lbs, Beaver Lodge, t6/17; cum 99K 10/17;
Getty Center, LA: reports of fire engulfing the Getty Center seem to have been exaggerated. Radio report.

Al Franken update: pending

Jobs report and 4Q17 GDP forecast: link -- better jobs report than expected
  • prior: 238,000
  • consensus forecast: 240,000
  • actual: 236,000
  • 4-week average: 241,500 (down 750)
  • 144th consecutive week claims remained below the 300,000 threshold, which is associated with a strong labor market 
  • nonpayrolls probably increased by 200,000 in November after surging 261,000 in October 
  • GDP Now forecast, December 5, 2017 -- 4Q17 forecast at 3.2%, down from 3.5% on December 1, 2017
Gasoline demand graph: link --

Houston: new US crude oil trading hub; competes with Cushing --WSJ --
  • as US crude oil exports surge, analysts say Houston better reflects oil-price dynamics than Cushing
  • much of the US crude oil destined for export bypasses Cushing completely and goes direct to Houston
  • until recently, the price of WTI in Houston was about the same as the price at Cushing, plus the roughly $2-a-barrel cost of a ride south on a pipeline. But that difference has widened to more than $5 in recent weeks, as strong overseas demand pushed Houston prices higher.
  • how bad is it?
“Cushing is becoming irrelevant,” said Philip Verleger, an energy economist who helped develop the Nymex oil futures contract in the early 1980s.
  • not everyone agreess
Euan Craik, CEO Americas of Argus Media group, which compiles the Houston prices, said the two benchmarks are complements rather than substitutes. So far, there hasn’t been as much trading in a contract that only tracks Houston prices—most of the futures market activity is still linked to the Cushing price.
GE to cut 12,000 jobs in power business revamp: link here at Reuters -- mostly French, German, Swiss. GE rival Siemens [poster child for wind energy] is cutting about 6,900 jobs (about 2% of its global workforce)

Port of Vancouver oil terminal disapproved. Not unexpected. Like Hawaii, the northwest becomes more of an energy island. The good news: Washington State has plenty of hydroelectric power. For the archives; I'm not particularly interested. 

$60: JPMorgan's new "magic number" for shale oil -- Bloomberg via Rigzone --
  • Permian: operators won't change course as long as WTO stays in the $45 - 55 range
  • a one- to two-quarter run above $60 was the "consensus catalyst for another leg higher"
  • with that said, some explorers say they plan to at a rig her or there, but very few mention rig drops
  • JPMorgan expects production to remain "mostly flattish" -- industry copes with labor and equipment shortages
  • for the archives: at the time this was posted, WTI has been trending down toward $56
Back to the Bakken

Active rigs:

Active Rigs533964188193

RBN Energy: E & Ps face challenges in managing "last mile" logistics.
With frac sand use — and costs — on the rise in the Permian, a number of exploration and production companies (E&Ps) are becoming more involved in managing sand acquisition and logistics. It’s not an easy job, because even though a greater share of the frac sand used in Permian wells is expected to come from local, West Texas sand mines in the coming year, those “last mile” logistics — the delivery of sand by truck from the mine, plus unloading and storage of sand at the well site — are especially complex. Today, conclude our series on frac sand with a look at the challenges E&Ps face when they assume supply chain responsibility for sand.
E&Ps in the red-hot Permian and other U.S. shale and tight-oil and gas plays have had remarkable success the past few years in ratcheting down the cost of drilling and completing new wells and to increase hydrocarbon production per well. And, as they have gained a more nuanced understanding of their hydrocarbon resources, producers and their pressure pumpers have been implementing increasingly sophisticated and well-specific completion strategies to wring ever-increasing volumes of crude oil, natural gas and natural gas liquids from their wells. These gains have been particularly significant in the Permian, where E&Ps have largely figured out how to optimize production from the region’s multiple, stacked pay zones. Two key elements of their success are drilling longer horizontal wells or laterals (now often 7,500 or 10,000 feet, and sometimes longer) and intensifying completions with the use of more pressure, more frac sand per linear foot of lateral and more frac stages.
Trucking: this interesting note regarding truckers from today's RBN Energy article:
Frac sand truckers can (and do) put in a lot of hours. Federal Motor Carrier Safety Administration (FMCSA) rules limit truck drivers like those hauling sand in the Permian to a 14-hour workday and no more than 11 hours of that on the road — after that 14-hour mark is hit, a driver must take at least a 10-hour break. There’s also a weekly cap (no more than 70 hours) and after that mark is hit the driver must take a 24-hour break.
Drivers must maintain written logbooks to track their hours — officially known as “records of duty” (RODs) — so they can prove they’re abiding by the FMCSA limits, but as you might guess, an independent trucker making a lucrative hourly rate may be tempted to fudge his (or her) log hours. Well, starting in a few days (December 18, 2017), drivers will be required to install and use an Electronic Logging Device (ELD), which, as its name suggests, electronically tracks when and where a truck is driven, who’s driving it etc.
(Trucks that already have been using a much simpler automatic on-board recording device, or AOBRD, can continue using that until December 18, 2019; by then they will need to install an ELD.)
The ELD requirement will pretty much put an end to drivers putting in more than 14 hours a day or 70 hours a week, which means that even more drivers will be needed to replace the “lost” capacity enabled by the paper logging process.
As the driver capacity issue is further stretched, the law of supply/demand takes over and the trucking companies will likely need to offer even higher pay to attract more drivers to the Permian and other shale plays.
How to move frack sand, also from the linked article:
The industry has gravitated to two types of containerized solutions for the sand to minimize dust.  First, there are a number of metal sand box (“sand in a can”) solutions in which metal boxes are filled at the transload site or local mine with more than 20 tons of sand and trucked to the well site on a flatbed truck. These boxes can be unloaded quickly at the site with a large forklift truck and the sand then can be fed directly into the mixer with minimal dust. The second solution is to use mobile silos that are moved to each new well site. Sand is trucked to these silos via a pneumatic or bottom-dump truck with around 24 tons of sand in each truck and either moved via air pressure into the silo or dumped onto a mostly closed conveyor system. There are advantages and disadvantages to both containerized processes and the companies responsible for choosing the systems have preferences for which to use for each well situation.
The good news is that these containerized solutions to the silica dust problem may also improve the efficiency of frac sand deliveries — by reducing the time it takes to move sand from the truck.  The time that drivers spend waiting in line to make their deliveries will be trimmed as well. That, in turn, will increase the productivity of each driver (more deliveries per week) and hold down the need for more drivers. Innovation continues for all the possible solutions, with a focus on improving the cycle time for the truck at the well, on further reducing dust, on ensuring safety for the workers and on minimizing the need for more truckers.

Geology, the Devonian: a few items over the past few days have mentioned the Devonian. I'll probably re-post this at a stand-alone post, but I don't want to lose the link, so here it is:
Map of the day via Twitter. States with populations less than Los Angeles Counties:

US LNG export capacity: note how huge Sabine is --

Cold in Europe? Italy at pre-alert level for natural gas withdrawals, from Twitter:

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