WTI Up On Brent Pipeline News -- December 12, 2017

Drawdown of US crude oil inventories: API data -- huge drawdown --

• forecast: a drawdown of 4 million bbls
• actual: a drawdown of 7.382 million bbls

Fracking our way to Mideast peace: a nice article in the WSJ. 

What a doofus?

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Nodding Donkeys Nodding Off

From Bloomberg via Rigzone, data points:

• nodding donkeys, failing
• effective on vertical wells; less effective on horizontal wells
• pumpjacks can last five or six years without any problems; on new wells in the Eagle Ford, they may not last two years
• currently about 50,000 horizontal wells that have nodding donkeys; total number of horizontal wells in North America: over 1.2 million producing wells
• costs about $250,000 to install a pumpjack; $100,000 to repair or replace it
• this has been discussed before, not sure if I've ever blogged about it

From the article:

“If you’re failing your pump all the time, you’re not getting low lifting costs,” said Saponja, who had first-hand experience when he worked at a small exploration and production company in the Bakken shale region of North Dakota. Over a two-year period, Saponja said he replaced its pump more than half a dozen times.

“There is no one favorable solution for the problem,” .... trying to develop alternatives with funding from companies including Exxon and BP.

One workaround engineers have used is to shove natural gas into the hole to lighten the oil and make it easier to pump to the surface. Another is placing an electric-submersible pump, or ESP, down in the well. While both techniques work during the early stages in the life of a well, they often aren’t as effective after output falls.

This explains all the sundry forms in the NDIC files documenting that ESPs have been installed. One wonders to what extent this is associated with the "dreaded Bakken decline." If it is a significant reason for the "dreaded Bakken decline" and if the problem is solved, it will be yet another incredible story coming out of the Bakken.

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Other Market And Energy Notes

Lay Flat Hose: MBI Energy Services laid 35 miles of Lay Flat Hose to transport fracking water to its service areas. From myNDnow. I'm not sure what's particularly new about this; I saw this five or six years ago in the hills on the north side of Lake Sakakawea.

Gray Oak Pipeline, Texas: Phillips 66 and Enbridge launch open season. Data points:

• west Texas (Reeves, Loving, Winkler, and Crane counties) to Corpus Christi, Freeport, and Houston
• initial capacity: 385,000 bpd
• will consider increasing that capacity
• will link to more than 3 billion bbls per day of refining capacity and multiple export facilities

Disclaimer: this is not an investment site. Do not make any investment, financial, travel, job, or relationship decisions based on anything you read here or think you may have read here.

SRE: opening price, pending. FERC approves SRE takeover of Oncor. Other agencies still need to approve. As expected, investors are not happy. SRE shares are down almost 2%, or about $2/share. 

Active rigs:

$58.44↑↑	12/12/2017	12/12/2016	12/12/2015	12/12/2014	12/12/2013
Active Rigs	52	41	65	181	191

RBN Energy: condensate production decline hits splitters and neat conde exports.

The sharp decline in U.S. condensate production since early 2015 and the end to the ban on U.S. crude oil exports a few months later were a one-two punch for the companies that made throughput commitments to condensate splitters and made other conde-related infrastructure investments.

In what seemed like a flash, conde supply plummeted and the steep price discount to WTI and other light crude that made conde so attractive for splitting and exporting was gone. Holders of splitter capacity were paying top-dollar for what conde they could corral, and operators were forced to run their brand-new facilities at far less than capacity. And, when the general ban on crude exports was lifted in December 2015, the special status that conde had enjoyed since exports of lightly processed conde were permitted in June 2014 was a thing of the past.

Today, we continue our review of a conde world in upheaval, this time with a focus on splitters and exports.

Superlight crude and conde sit side-by-side at the far end of the crude-oil spectrum. They’re both sweet (low-sulfur) and very pourable — superlight (using EIA’s API gravity breakdown, 50.1 to 55.0 degrees) is like iced tea, and conde (API gravity of 55.1 or more — also EIA’s breakdown) is like cream soda — and they can either be refined, exported, blended with heavier crudes, or (for conde) run through a splitter. A splitter uses atmospheric distillation to separate high-API-gravity conde into its component fractions to produce intermediate, semi-finished blend stocks like naphthas and distillates that are processed further at refineries.