Wednesday, June 7, 2017

MRO Re-Frack -- June 7, 2017

17097, 421, MRO, Ladonna Klatt 24-22H, Chimney Butte, t6/08; cum 362K 4/17; re-fracked late 2014;

Production profile around that time:

BAKKEN6-20153031093161165029662188266
BAKKEN5-20153143744330220043223240430
BAKKEN4-20153046464668238739262906346
BAKKEN3-20153161156101338450283959230
BAKKEN2-20152850865178324947453711342
BAKKEN1-2015311006310600620296098089262
BAKKEN12-2014291541414706107491501912707501
BAKKEN11-201471147137913371252101872
BAKKEN10-20143199611024511791103398690397
BAKKEN9-2014941813590038683190177
BAKKEN8-20140000000
BAKKEN7-2014191228056055
BAKKEN6-20140000000
BAKKEN5-201427151318402611763137768
BAKKEN4-2014301815160649021561644138
BAKKEN3-2014311912186239522581763104

Case Study -- Jump In Production After Neighboring Wells Were Fracked -- June 7, 2017

Updates

June 9, 2017: see first comment. This is incredibly important. Apparently the first well was a Three Forks well, not a middle Bakken well. This really makes sense trying to explain the production profile: the comment --
Very interesting! I did some research too, Way back in the well file (I have the premium subscription with NDIC) it shows that this is a Three Forks well. Back before Continental did the tests which showed there were two separate zones, all the wells were called Bakken... so this makes sense that this well showed these results with the nearby Three Forks wells being fracked....
Original Post

Disclaimer: in a long note like this, there will be typographical and factual errors. In addition, I may have missed something important, and/or there may things I am mis-reading. If this is important to you, go to the source.

This is being posted for an individual interested in "re-fracks" in the Bakken. 

For reasons I discussed with that individual, it is very tedious to research data on "re-fracked" wells in the Bakken.

This is how I do it:
1) I go back to "Retrieve Well Production History" at the NDIC site
2) I then go through the scout tickets/file reports one-by-one. This is incredibly tedious. This would be a good summer job for a high school student; and/or better yet, someone should be able to write an "app" that would do this
3) instruct the high school student or the "app" to a) go through the scout tickets chronologically; b) identify any wells with "unusual" (set your own parameters) production patterns
4) try to explain any jump in production using a) the file report; b) FracFocus; c) other sources
In this particular case, I started with file #17000 and worked chronologically to the first well a) with an unusual production profile; and, b) one that I had not identified before.

In just a matter of minutes I came across this one, #17086 and noted the unusual jump in production back in June, 2016.

I pulled that one aside, and then:
a) checked the file report for sundry forms that might explain the jump in production
b) retrieved the API number from the scout ticket and check FracFocus
These are the results.

The index well:
  •  17086, 560, Newfield, Jorgenson 1-15H, Lost Bridge, t11/08; cum 276K 4/17; the production profile showed a huge jump in production in June, 2016
Looking at the GIS map at the NDIC site, I noted the graphic that is depicted below the spreadsheet. Note the four horizontals that "cross" the index well.

Of those wells, interestingly only one was a middle Bakken, and all were fracked shortly before June, 2016, when it was noted that production for #17086 jumped:
  • 32581,  Three Forks, t6/16; 50 stages, 5.6 million lbs;
  • 29856, Three Forks t6/16; 50 stages, 3.5 million lbs;
  • 32092, Three Forks, t/16; 50 stages, 5.6 million lbs;
  • 29857, middle Bakken, t6/16; 50 stages, 5.6 million lbs;
Production profile for #17086 after neighboring wells were fracked:
PoolDateDaysBBLS OilRunsBBLS WaterMCF ProdMCF SoldVent/Flare
BAKKEN5-20180000000
BAKKEN4-20181000000
BAKKEN3-2018229571422343129301110
BAKKEN2-20182846875082220343291103967
BAKKEN1-201831455642902567411927421098
BAKKEN12-20173150945340289060735161633
BAKKEN11-201730637061593975645810305158
BAKKEN10-2017245405519031435589415348
BAKKEN9-201728438645301937486518792734
BAKKEN8-201728562449802472579605544
BAKKEN7-20170000000
BAKKEN6-201710282933172827360503532
BAKKEN5-20172918481181431861421621280718564
BAKKEN4-201753322619221018
BAKKEN3-2017123454633342380203
BAKKEN2-201728708869142563892766522030
BAKKEN1-2017318087863729659039869862
BAKKEN12-201631857383632318880365082032
BAKKEN11-20163077927660273558748294775
BAKKEN10-20163175207860268865711836109
BAKKEN9-201630907489583078982973882171
BAKKEN8-2016311539615098563417597141643154
BAKKEN7-2016311737017744962719641387615486
BAKKEN6-20161473766688801460952785699
BAKKEN5-20167143046531110
BAKKEN4-20160000000
BAKKEN3-20160000000
BAKKEN2-2016220004720464
BAKKEN1-2016311179136012521041089741





When I see a jump in production of this magnitude, I assume the well was re-fracked. And in this case, it is very possible the well was re-fracked but there is no evidence that it was:
  • no sundry form
  • no FracFocus data: (API: 33-025-00729)
  • on a completely different pad than where neighboring wells were fracked 
The graphic:

Ten New Permits; Sixteen Permits Renewed; And, 21 Wells Approved For "Tight Hole" Status -- June 7, 2017

Active rigs:

$45.876/7/201706/07/201606/07/201506/07/201406/07/2013
Active Rigs522682194189

Ten (10) new permits:
  • Operators: CLR (8), WPX, Sinclair
  • Fields: Elidah (McKenzie); Reunion Bay (Mountrail); Lone Butte (McKenzie)
  • Comments: all eight of CLR's permits are in NWNE/NENE 30-151-97; although two will be separated from the other six (see graphic below)
Sixteen permits renewed:
  • CLR (10): three Flint Chips permits (Dunn County); two Dennis permits (Dunn County); two Berlain permits (McKenzie County); two Charleston permits (Williams County)
  • BR (6): three Midnight Run permits in McKenzie County; three Patton permits in Dunn County
Twenty-one (21) wells approved for "tight hole" status:
  • CLR: 10
  • BR: 6
  • Whiting: 5
******************************

Atmospheric CO2 -- May, 2017

Source here.


Essentially no change month-over-month.

Insignificant change year-over-year.

*****************************
For AGW Deniers

I post these monthly "atmospheric CO2" updates because I'm truly curious to see how this plays out over the next three decades.

I'm pretty convinced that no one can predict that the earth's average global temperature will be 2 degrees warmer one hundred years from now.

This is pretty timely:why you should be skeptical of global warming alarmists. From lifezette:
When it comes to the global warming debate, both alarmists and critics agree on one thing: The earth has warmed by roughly 0.8 degrees Celsius over the past 150 years. It’s the cause of this warming, however, that remains in dispute. And while the public is constantly bombarded with messages about the evils of carbon dioxide emissions, there are actually compelling reasons to believe that contemporary global warming has been driven by rising solar output, not carbon dioxide.

"Holy Nightmare, Batman, What Do We Do Now?" -- Saudi Cash Reserves -- As Of April, 2017

Most recent data (April, 2017):



It appears the March to April (2017) decrease was greater than the February to March (2017) decrease. One would expect that all things being equal, it will only get worse for Saudi Arabia with summer approaching. Remember: Saudi says they are talking about total production cuts (not just export cuts, but total production cuts) and going into the summer months, Saudi Arabia exports less oil (thus less revenue) because they need their own oil to run their air conditioners. Yes, they use oil to make electricity. 

Source: https://tradingeconomics.com/saudi-arabia/foreign-exchange-reserves.

For past posts on Saudi's cash situation, click on the "Saudi_Cash" tag.

"Holy, nightmare, Batman! What do we do now?"

US Crude Oil Inventories "Unexpectedly" Increase -- June 7, 2107

WTI drawdown: forecast: a 4-million bbl drawdown; actual: a 3.3 million build. Wow. From CNBC. Weekly reports are here (dynamic link). I can hardly wait to see the John Kemp graphs over at Twitter.
  • crude oil inventories: up 3.3 million bbls; now stand at 513.2 million bbls; at this rate (since it's an increase in build, and not a drawdown) the amount of US crude oil inventories will never decrease -- LOL -- see graph below
  • gasoline inventories: increased by 3.3 million bbls
  • refinery inputs: 17.2 million bopd; down 283,000 bopd
  • crude oil imports: 8.3 million bopd; up by 356,000 bopd
  • crude oil imports: over the past four weeks, up almost 10% above the same four-week period last year
WTI drops below $46. Now at $46.44. Next support, $45. If breaks through $45, watch for $42 WTI.

It looks like WTI is dragging down the overall market. WTI now at $46.16 (9:43 a.m. Central Time).

Then look at this:


Maybe I'm mis-reading something, but on a day that WTI drops to $46/bbl, the above graph does not look particularly reassuring for oil bulls.

****************************
Weeks to Re-Balance

Prior to the Saudi Surge, the US had 350 million bbls of crude oil in inventory (not including SPR) and 21 days of supply. Folks are talking about re-balancing to the historical 5-year average, which, of course, makes no sense, since the 5-year average was greatly "inflated" by the two-year Saudi surge (2014 - 2016). Granted, US demand is increasing; US is exporting crude oil; and US refineries are exporting refined products, so perhaps one can argue the "350-million" basis is a bit low, but at most, I would assume, 360. So, I'm leaving it at "350" for now.

Just for the fun of it, I was tracking, based on the weekly drawdown how long it would take to "re-balance" -- back to 350 million bbls in US crude oil inventory (see graph below). The numbers don't quite work in some cases, but the raw data is from the EIA. Drawdown (column 3 in millions of bbls is shown as a positive number; any increase in inventory is shown as a negative -- that may be confusing and I may change that in the future).

For example, last week, based on a drawdown of 6.4 million bbls / week, it would have taken about 25 weeks to re-balance. Using an average up to that time of 3.9 million bbls/week over the five-week period, and an inventory of 509.9 million bbls, it would have taken 41 weeks to "re-balance" to 350 million bbls. Whew. 

To "re-balance":
  • with today's increase, the average over six weeks of drawdown: 2.7 million bbls/week on average over the past six weeks
  • with today's inventory number of 513.2 million bbls, it would take 60 weeks to "re-balance" to 350 million bbls.  (Update: methodology was wrong in some parts of this table; it has been updated and corrected at this post):
Week
Date
Drawdown
Storage
Weeks to RB
Week 0
Apr 26, 2017

529
180
Week 1
May 3, 2017
0.9
528
178
Week 2
May 10, 2017
6
522
50
Week 3
May 17, 2017
1.8
520.2
59
Week 4
May 24, 2017
4.4
515.8
51
Week 5
May 31, 2017
6.4
509.9
41
Week 6
June 7, 2017
-3.3
513.2
60

Disclaimer: I make a lot of simple arithmetic errors. 

Miscellaneous Notes -- T+138 -- June 7, 2017

Presidential tracking poll shows Trump's approval rating exceeds Bill Clinton's at same point in presidency.

Paris Agreement? Good riddance says op-ed in LA Times. One of the best op-eds I've seen on this issue, and to see it in the LA Times speaks volumes.
We would be the ones making real efforts and incurring real costs, yet we would be the ones chastised for failing to deliver.
This dynamic is already playing out. Pundits are lauding China for achieving peak emissions far sooner than they pledged, without interrogating whether this says more about the country’s progress or its pledge. Meanwhile, EU leaders look down their noses at the United States, even as their emissions rise and U.S. emissions fall.
Why would the United States remain party to such an agreement? We shouldn’t have accepted its terms in the first place, and in an important sense, we didn’t. The U.S. Constitution requires the Senate to approve any treaty by a two-thirds supermajority, in part to prevent a president from making rash, politically motivated promises on the international stage that lack consensus support back home. Obama, knowing he did not have the Senate’s consent, chose to push ahead anyway. If reversing that mistake enrages some foreign diplomats, they have only themselves and their former negotiating partners in the Obama administration to blame.
Oil, what bulls need: Cramer notes -
"Now, the one thing that's in the oil bulls' favor, and Schlumberger has been telling people this, is that most new deep-water projects around the world have stopped" since 2015, Cramer said. "That's a chief reason why Schlumberger's earnings have been so, I'd say, sub-par versus, say, Halliburton, which gets much more of its business from servicing on-shore drilling." 
Insanity: Tesla is spending billions for one gigafactory. Now it says it will scale to 10 - 20 gigafactories.
Assuming Tesla can sell its cars, the full manufacturing capacity of those Gigafactories will come straight out of the market share of existing automotive companies. If they do not respond to the inevitable shift of consumers to electric vehicles in time, Tesla will have more time to eat up their market share.
That clearly includes the market share of BMW, Audi, Mercedes, and Lexus, among others. Tesla estimating that it will build 10 to 20 Gigafactories is a statement that Tesla believes it will have to build at least 10 Gigafactories at the current pace before other manufacturers catch up.
If they respond slower, which seems to be the case with every automotive manufacturer today with the exception of perhaps Chevrolet and its Bolt, Tesla would have an even larger head start in the transition to electric vehicles and would be able to build more factories before there were enough competition to saturate the market. 
Say what? The head of the US patent office has abruptly resigned.

Appalachia Natural Gas Production Outlook -- RBN Energy -- June 7, 2017

Oil. Weekly data today. Drawdown of US crude oil forecast to be 4 million bbls (good) but reined products build (bad). OPEC production creeping up; doubts increase that OPEC / non-OPEC can hold the line for 15 months. WTI below $48.

RBN Energy: Appalachia natural gas production outlook.

Active rigs:

$47.666/7/201706/07/201606/07/201506/07/201406/07/2013
Active Rigs522682194189

 US production:


OPEC stumped: global oil market trends, US production stump OPEC strategy. This is the lede but much more at the link:
Despite six months of lauded compliance with its own production quotas, OPEC’s effort to accelerate a global oil market rebalancing moves at a dawdling pace.
Global oil prices hover nearer the November 2016 price when the cuts were announced than a $60-plus per barrel target. Meanwhile, crude and product stocks among OECD (Organization for Economic Cooperation and Development) countries ended April roughly 56 million barrels higher than the December total. Annual non-OPEC output is expected to gain 1 million barrels per day (MMbpd) in 2017 and 1.5 MMbpd in 2018, according to Societe Generale (SG) estimates.
The United States is the key driver behind growing non-OPEC supply. In Texas, where the Permian Basin production rate is relentless, the Texas Petro Index (TPI) improved to 164.3 – its first year-over-year increase in 27 months – according to the Texas Alliance of Energy Producers in a June 5 statement.
 Mideast tiff? Saudi dispute with Qatar has 22-year history rooted in gas. Nice historical review of Iran - Qatar relationship.