Wednesday, August 23, 2017

Random Update Of An MRO Re-Fracked Well -- August 23, 2017

The well:
  • 16753, 314, MRO, Repp 34-34H, Bailey, t1/08; cum 153K 6/17, recent production:
PoolDateDaysBBLS OilRunsBBLS WaterMCF ProdMCF SoldVent/Flare
BAKKEN6-20171814004139251008470368194617
BAKKEN5-201712709214011
BAKKEN4-20172645139712438559127
BAKKEN3-20173156659715946017541
BAKKEN2-2017285216111444362075
BAKKEN1-2017315825481584982455
BAKKEN12-2016315395421584632145
BAKKEN11-20163060958215445319315
BAKKEN10-2016316005871584642131
BAKKEN9-20163058857814540910264
BAKKEN8-20163158356218338212122
BAKKEN7-2016315896321663784125
BAKKEN6-2016305775731613816133
BAKKEN5-2016316016231693888130

Re-fracked: 5/25/2017; 45 stages; 5.6 million lbs; from the file report: "Originally an open hole completion in 2008. MRO cleaned out lateral and did 45-stage cemented liner plug and perf style completion."

Production when first fracked:
BAKKEN7-2008193132271515748378370
BAKKEN6-200822202523186427207200
BAKKEN5-20083129792916802103810380
BAKKEN4-20083027562930674109110910
BAKKEN3-200831414638941242137513750
BAKKEN2-200829542152501627598350248
BAKKEN1-200814421341151882000

Two neighboring wells:
  • to the west, 18842, taken off-line 5/17; still waiting to see what production will be when brought back on status;
  • to the east, 18736, never taken off-line; no bump in production noted, but need to check back in a few months;

Whiting Getting Ready To Frack A Couple Of McNamara Wells In Sanish Oil Field? -- August 23, 2017

Updates

August 1, 2018: the graphic --

  
The wells:
  • 21890, 322, Whiting, Pam Locken 21-22TFH, Sanish, t4/12; cum 1524K 8/18; not all that great;
  • 21889, 1,596 Whiting, Daryl Locken 21-22H, Sanish, t2/12; cum 456K 8/18; a great well;
  • 16731, 1,323, Whiting, Locken 11-22H, Sanish, t12/07; cum 707K 8/18; a great well; nice bump in production;
  • 31858, 1,118, Whiting, McNamara 41-26H, Sanish, t9/17; cum 245K 8/18;
  • 31857, 655, Whiting, McNamara 41-26-2XH, Sanish, t10/17; cum 234K 8/18;
  • 23565, 935, Whiting, McNamara 41-26XH, Sanish, t12/12; cum 267K 8/18; a bit of a bump;
  • 31855, 735, Whiting, McNamara 42-26-3XH, Sanish, t9/17; cum 222K 8/18;
  • 17586, 2,004, Whiting, McNamara 42-26H, Sanish, t12/08; cum 514K 8/18;
  • 31854, 574, Whiting, McNamara 42-26-2XH, Sanish, t9/17; cum 198K 8/18;
  • 23567, 356, Whiting, McNamara 42-26XH, Sanish, t1/13; cum 276K 8/18;
  • 31993, 576, Whiting, Liffrig 11-27-2H, Sanish, t9/17; cum 207K 8/18;
  • 16780, 2,247, Whiting, Liffrig 11-27H, Sanish, t1/08; cum 637K 8/18; huge bump;
  • 32088, 787, Whiting, Fladeland 13-27H, Sanish, t9/17; cum 170K 8/18;
  • 22671, 1,006, Whiting, Fladeland 13-27tFH, Sanish, t8/12; cum 218K 8/18;
  • 22670, 2,563, Whiting, Fladeland 14-27H, Sanish, t7/12; cum 358K 8/18;

Original Post
 
Three nice Whiting wells have just come off-line:
  • 21890, 322, Whiting, Pam Locken 21-22TFH, Sanish, t4/12; cum 142K 6/17; off-line as of mid-May,
  • 21889, 1,596 Whiting, Daryl Locken 21-22H, Sanish, t2/12; cum 398K 6/17; off-line as of mid-May,
  • 16731, 1,323, Whiting, Locken 11-22H, Sanish, t12/07; cum 669K 6/17; off-line as of mid-May, 2017
Is Whiting getting ready to frack:
  • 31858, conf, Whiting, McNamara 41-26H, Sanish, no production data,
  • 31857, conf, Whiting, McNamara 41-26H, Sanish, no production data, 
*******************************
As of January 1, 2018:

31858, conf, Whiting, McNamara 41-26H, Sanish:

DateOil RunsMCF Sold
10-20172818219621
9-2017138658626

31857, conf, Whiting, McNamara 41-26H, Sanish:

DateOil RunsMCF Sold
10-20172195811695
9-201760872858
8-2017160

Random Update On Marcellus / Utica -- The Energy And Market Page, T+215 -- August 23, 2017 -- Making America Great

Via Twitter:


****************************
One Last Reminder

The America the Beautiful pass gives seniors age 62 and older access to federal recreational lands for a lifetime. The pass costs $10, but the price will jump to $80 starting Monday, August 28, 2017.

*********************
Closing Out Two Polls

North Dakota first produced 1 million bbls of crude oil in April, 2014. How readers voted:
  • April, 2017: 2% (probably joking or living under the Geico rock
  • April, 2016: 20%
  • April, 2015: 39% 
  • April, 2014 -- the correct answer -- 18%
  • April, 2013: 20%
The second poll: although it will be a year or so before we know whether Sempra's bid to buy Oncor's "pipes and wires" is successful, at the moment, Sempra won, Buffett lost. How readers voted:
  • Buffett wins: 15%
  • Buffett loses: 26%
  • Who cares: 59%

The Political Page, T+215 -- The Train Has Come Off The Tracks -- August 23, 2017

Max called it a train wreck, even though he voted for it, and then promptly left the US Senate. We've been watching that train wreck in slow motion. The Republican-led US House and US Senate who sent up "repeal and replace" bills on a regular basis to a Democratic president were unable to replicate those actions when they had a president who promised to sign any such bill to "repeal" ObamaCare.

The result?

The train has come off the tracks.

The most recent state that has taken action to save some passengers is Iowa. From The Wall Street Journal:
Iowa asked for federal permission to alter major provisions of the Affordable Care Act next year, a proposal that will be closely watched by officials in other states who hope to rewrite parts of the health law as Republican efforts to do so in Congress have stalled.
Iowa’s plan, which state officials said they are already preparing to implement pending federal approval, would go further than proposals that other states have made so far to revamp the health law’s rules. The Iowa setup would offer just one type of insurance plan in the individual market and reshape the subsidies that help people buy coverage, among other changes.
State officials, who are formally filing for federal approval under a special waiver setup allowed by the ACA, argue they need to repair an exchange market that is expected to be down to just one insurer that has requested sharp rate increases for 2018.
States including Idaho, Minnesota and Oregon have submitted applications for less-sweeping waivers that aim to blunt insurers’ expense for covering the claims of people with costly health conditions.
In total, 13 states have passed laws authorizing state officials to craft ACA waiver requests, according to the National Conference of State Legislatures. At least six others are considering such legislation.
“The most urgent thing for states is to stabilize the markets,” said Rosemarie Day, a health strategist and former chief operating officer of the Massachusetts exchange. But the waiver process also “opens the door to trying to accomplish some things Republicans are trying to do,” like limiting benefits currently required under the ACA. “This could be a backdoor way.”
OMG, a backdoor way. Well, if Schumer and McCain are blocking the front door ... 
Some states, such as Oklahoma, have signaled they intend to seek waivers that, like Iowa’s, could make big changes to the ACA. If those proposals proceed and are granted by the Trump administration, the upshot could eventually be a patchwork of different insurance setups across the country. However, the ACA includes firm conditions that such waivers must meet, including that coverage must be as affordable and comprehensive as it is under the federal law’s setup.
"Must be as affordable...." Don't make me laugh. That's an easy bar to meet. And as comprehensive as the federal law -- look at the bronze plans -- about the only thing they guarantee is family planning and end-of-life counseling, also easy bars to jump.
Iowa Insurance Commissioner Doug Ommen, a Republican, said the state has worked with the federal Centers for Medicare and Medicaid Services and that it hoped to get its new system up and running before individual-plan enrollment kicks off in November.
“We’re doing everything that’s needed to start it up as though we already had a yes,” he said. Iowa is also asking federal officials to move faster than the 180-day waiver review timeline designated by the ACA.
The founding fathers, even if some were slaveholders, had great sense when it came to states' rights.

*********************
Fox Business 

Provides background to the two September, 2017, deadlines

Random Note On Two Wells In The Bakken -- August 23, 2017 -- Huge Production Reporting Error In This Post

Updates

September 14, 2017: huge, huge reporting error for #17106. See this post

Original Post
Note #16180 at the very bottom of the post. This well was re-fracked.

About two weeks ago, I posted this:

Here's the monthly production data for the past 12 months for this well: DISREGARD -- the 90,038 was a typographical error or reporting error by the NDIC. See the September 14, 2017, update linked above.
  • 17106, 361, BR, CCU Bison Point 14-34H, Corral Creek, t7/08; cum 241K 6/17
PoolDateDaysBBLS OilRunsBBLS WaterMCF ProdMCF SoldVent/Flare
BAKKEN6-20172890038890271821918558185450
BAKKEN5-2017151213711959113181031482032107
BAKKEN4-201772422242261700

It looks "real," but I suppose there could be an error to explain a monthly production to 90,000 bbls of oil from an on-shore well in North America, but for now it is what it is.

Today, Marathon reports the results of a completed DUC in Chimney Butte:
  • 33247, 2,774, MRO, Mittelstadt 34-12H, Chimney Butte, t6/17; cum 75K 6/17; as of 8/17, the 70,261 production number has not been changed:
PoolDateDaysBBLS OilRunsBBLS WaterMCF ProdMCF SoldVent/Flare
BAKKEN6-20173070261700396838750603606031225
BAKKEN5-20176468942230414504114

I  have a link at the sidebar at the right for Bakken wells that have produced 50,000 bbls of crude oil or more in a single month, but 70,000 and 90,000 -- if these numbers hold -- and there may be errors -- this is simply staggering.

If these numbers are accurate, and if they results are reproducible based on Bakken 2.0 parameters, this begins a whole new chapter in the Bakken.

The location of the MRO Mittlestadt well is noted in this graphic:



Chimney Butte oil field has had an incredible increase (on a percentage basis) in crude oil production.  For links to other recent production data by field, go to this link.




Notice the nice bump in production in this neighboring well:
  • 16180, 128, MRO, Marlin 24-12H, Chimney Butte, t8/06; cum 258K 6/17; it turns out this well was refracked, 4/17; 14 stages; 2.8 million lbs;
Recent production profile:
PoolDateDaysBBLS OilRunsBBLS WaterMCF ProdMCF SoldVent/Flare
BAKKEN6-2017196679712011847607828632480
BAKKEN5-20177509645900468804113
BAKKEN4-20170000000
BAKKEN3-20170000000
BAKKEN2-201700320000
BAKKEN1-20174116460917412315
BAKKEN12-201631100610271301130837103
BAKKEN11-2016301102959130120599023
BAKKEN10-20163111589941391321103586

Production after original completion:
BAKKEN2-200723313728412556221222120
BAKKEN1-2007263040286242728372402597
BAKKEN12-20063144604421642415204152
BAKKEN11-20063051655423773509105091
BAKKEN10-200631797881101324758607586
BAKKEN9-200628791980311770870408704
BAKKEN8-200617229817611240177701777
BAKKEN7-20069134010690137001370

Marathon With Six New Permits; MRO Reports Two Of The Better Completed DUCs Seen In Some Time -- In Fact, One Is Huge -- August 23, 2017

Active rigs:


8/23/201708/23/201608/23/201508/23/201408/23/2013
Active Rigs543176192182

Six new permits:
  • Operator: MRO
  • Field: Reunion Bay (McKenzie)
  • Comments: MRO has permits for a six-well pad in NWNE/NENE 30-152-93
Five producing wells (DUCs) reported as completed:
  • 27420, 1,875, CLR, Garfield Federal 5-5H1, Banks, t7/17; cum --
  • 31185, 1,264, CLR, Richmond 4-26H1, Brooklyn, t8/17; cum --
  • 32170, 1,425, Petro-Hunt, Dolezal 146-97-31D-30-1H, Little Knife, t7/17; cum --
  • 33247, 2,774, MRO, Mittelstadt 34-12H, Chimney Butte, middle Bakken; t6/17; cum 75K 6/17; API: 33-025-03256; FracFocus, 4/30/17 - 5/21/17; 11.7 million gallons of water; 91% water; 7.8% sand; (#16908 - pending, #16180 -- nice bump, #20233 - pending); see below
  • 33248, 3,382, MRO, Honda 34-12TFH; Chimney Butte, t6/17; cum 49K after 29 days; see below;
*********************************
See Above -- DUCs

33247, 2,774, MRO, Mittelstadt 34-12H, Chimney Butte, t6/17; cum 75K 6/17:
PoolDateDaysBBLS OilRunsBBLS WaterMCF ProdMCF SoldVent/Flare
BAKKEN6-20173070261700396838750603606031225
BAKKEN5-20176468942230414504114

33248, 3,382, MRO, Hond 34-12TFH; Chimney Butte, t6/17; cum 49K after 29 days:
PoolDateDaysBBLS OilRunsBBLS WaterMCF ProdMCF SoldVent/Flare
BAKKEN6-20172949018485380453472421020964

FTC Clears Amazon-Whole Foods Merger -- August 23, 2017 -- Making America Great -- T+215

Being reported on CNBC. Link to follow if necessary.

I mention that this "makes America great" not because of the decision but because the decision was actually made by a government agency in less then ten years. Sometimes the time it takes for a decision to be made is more important than the decision.

*****************************
He Probably Didn't Color Inside The Lines 
In Kindergarten Either

From DenverCBS local:
The Western Colorado Drug Task Force seized 25 pounds of meth during a traffic stop on Interstate 70.
The driver was just 13 years old.
A deputy with the Mesa County Sheriff’s Office and drug task force stopped the Dodge Avenger in Fruita as it was traveling on I-70.
Three people, all from Los Angeles, were in the car, including the driver, identified as a 13-year-old. All three are facing drug charges including distribution/manufacturing/possession with intent of meth, heroin, ketamine, cathinone.
The 13-year-old driver is facing additional charges of failing to drive in a designated lane, and driving without a valid driver’s license.
Little Deuce Coupe, The Beach Boys

Headline Worse Than The Bite -- Moody's Downgrades Williston Public School District 1 -- August 23, 2017

A reader spotted this; thank you.

Link here.

It will make borrowing costs more expensive, but the reasons for the downgrade point out good news for the Bakken economy in the big scheme of things.

************************
Wow! No, WOW Air

Link here at USA Today. Can St. Louis support a non-stop route to Iceland? How about Cleveland, Cincinnati and Detroit?
Icelandic budget carrier WOW Air thinks so, and – with fares that begin at less than $100 one-way – it’s betting those Midwest markets will be profitable additions to its fast-growing U.S. network.

WOW Air announced service from the four cities on Wednesday, an expansion that will give it a total of 12 U.S. destinations.

WOW's new routes will launch this spring, with tickets going on sale Wednesday. One-way fares to Iceland will start at $99.99 from all four cities. Connecting flights to WOW’s other European destinations begin at $149.99.
"Icelandic Air" from wiki:
The late 1960s were an exciting time for Loftleiðir.
In 1969 the company acquired International Air Bahama, a small airline operating Douglas DC-8 jet aircraft out of the Bahamas with transatlantic nonstop service between Nassau and Luxembourg, and a year later Loftleiðir became one of the founders of Cargolux, a cargo airline.
Also in 1970, Loftleiðir entered the jet age with its first two Douglas DC-8 aircraft. During those years, Loftleiðir was often referred to, even by the company's own staff, as "the Hippie Airline" or even "the Hippie Express".
Loftleiðir was not famous for speed or punctuality, but flying with the company became a sort of rite of passage for young "hippies" from America traveling to Europe, one of whom was future president of the United States Bill Clinton.
I took "Icelandic Air" round-trip to Europe in the summer of 1973.  I took out a loan of $1,000 from my mother for one summer of traveling to Europe and back. That $1,000 included air fare to Europe from NYC, round trip; three months of traveling in Europe; flight from NYC to Minneapolics and Amtrak home from Minneapolis to Williston. I returned with $400 from the original $1,000. And yes, I paid my mom back, in full, the $1,000. I do not believe she charged me any interest.

My one book in my backpack: Europe on less than a dollar / day. and I stayed will below a dollar/day, average, while on the ground in Europe. I was probably in Europe for two full months, but a week or so on either end in the states, making NYC connections.

Except for two weeks in German hostels, I never paid for a room at night. The Germans hostels or inns generally set me back one dollar a night, and that included breakfast. All lodging -- except those ten nights or so in Germany -- was with friends in Europe; with a US Navy family member in Naples, Italy (two or three nights); camping out; with a Portuguese farm family for a week; overnight trains or plane flights.

I bought a Eurailpass stateside before leaving for Europe. 

I hitchhiked from Williston to NYC. A small amount of travel in Europe was hitchhiking. Other than the air flight, Amtrak back in the states on the return trip, and the Eurailpass, there were no other travel expenses. No credit cards. No cell phone. I must have carried about $600 in cash while in Europe. I don't recall.

Museums always had a "free day" but museums were not at the top of my list of things to do.

It's hard to believe, now, a backpack and a sleeping bag and that was it. I remember the backpack vividly. It was the best backpack I ever had.

US Shale Frackers Eye World Conquest -- One Year Ago -- The Telegraph -- August 23, 2017

This is probably as good a "look-back" as I've seen, from The [London] Telegraph. Archived.

Remember: this article is from a year ago, during the early stages of the "depression."

It's a long article and covers many areas, so let's go through some of the data points with my comments thrown in.

Most remarkable prognostication from the article, from Mark Papa, "a legendary figure in the shale fraternity and now at Riverstone Holdings": 
“I can see a case where US shale is the biggest supplier of oil in the world by 2020. We could turn the whole thing on its ear, producing 13-14m b/d. But it will be really ugly getting through this valley,” he said. 
Most interesting comment from the article, also from Mark Papa:
Mr Papa said it will not be long before engineers work out how to double the efficiency of shale extraction to the 50 percent levels seen in conventional oil wells. "It'll probably come in the next ten years. That's the next big break-through," he said.
For newbies, as I understand it, Mr Papa is talking about "primary production" and does not include enhanced oil recovery using waterflooding or CO2 injection.

This raises the question: what is the current primary production estimated to be in the Bakken? At the beginning of the boom, it was widely accepted that primary production would range between 1 and 3 percent. For a 500-billion bbl original-oil-in-place reservoir, that worked out to 5 to 15 billion bbls.

Around 2014 or so, Whiting and others were suggesting that operators were achieving 7% primary production in the Bakken and reading between the lines, it appeared that some operators might have been achieving as much as 12% or at least trying to hit that target.

At 10% primary production, a 500-billion bbl original-oil-in-place reservoir works out to 50 billion bbls of recoverable oil.

Currently, the Bakken is producing about 350 million bbls annually, or 1 billion bbls every three years. Unfettered, Bentek estimated (and some continue to estimate) that the Bakken can produce 2.2 million bbls daily if the "price was right."

The second most interesting comment from the article: I vividly recall analysts saying that it was impossible for frackers to "turn on a dime," that it would take months for frackers to spud a well and bring it to production. I remember that vividly because I was not seeing that in the Bakken. From spud to production, operators could measure it in days -- generally about 30 days. And bringing in more rigs was not all that difficult. The biggest problem for the Bakken was competition from the Permian for skilled work crews but with things starting to turn a bit sour in the Permian, the Bakken may have some relief. But I digress. From the article:
"Restarting production may be easier than people think. Everything is ready to go. There are plenty of rigs. All the ingredients are there. There is a lot of money looking for the bottom of the cycle, waiting to get back in," he said. 
In the first two or three years of the Bakken boom, there was minimal infrastructure and constrained takeaway capacity. Both of those have been resolved.

Not mentioned in the article, in the Bakken alone:
  • 850 DUCs
  • 1,500 wells that are shut in for various reasons
At the end of this quote, IHS was thinking specifically of the Bakken, but since 2016, everything changed when the DAPL came on line (early 2017):
IHS said there are three groups of 'invisible barrels' likely to bear the brunt as the market stabilizes: small-scale 'stripper wells' of around 2m b/d, half of them in the US; those with high-fixed costs in North Sea and the Gulf of Mexico that are going into steeper decline; and those in remote locations or with long pipelines, and a $10-$12 disadvantage. "
They are in the eye of the storm," it said. 
Hess disagrees
The great unknown for world oil markets is how fast the frackers will come back. John Hess says it will take two years once prices recover.
"It is a big logistical undertaking. You've got to mobilize rigs and find people. Assets need permits in the US, and that takes 90 days," he said. "Balance sheets are in disrepair and there is too much debt. The high-yield market has basically dried up and that was the primary source of financing for the shale boom. Debt agencies are in a panic and running everything through $30 oil for the next few years," he said. 
I think where Hess and I disagree has to do with the definition of "recover." It may take two years for E&Ps to return to historical levels of prosperity (as measured by share price or market capitalization) but it certainly won't take two years to see an incredible rush back into the Bakken if oil prices a) began to trend toward $60; and, b) tea leaves suggest that the trend would continue.

Possibly the most incorrect prognostication:
Scott Sheffield, head of Pioneer, expects trouble in the Eagle Ford and Bakken fields, but it is a different story in the lucrative Permian Basin of West Texas, the "crown jewel" holding steady at 2m b/d even at current prices. He claims it is as big as the giant Ghawar field in Saudi Arabia, and could eventually produce 6m b/d. 
I agree that production will remain steady (or grow) in the Permian, but it may be more financially challenging than first expected. Paying $60,000/acre in an era of "lower for longer" is not going to cut it, as BHP found out.

Break-evens for US operators: no one knows. The "number" is all over the place. Everyone agrees that "very few things make sense at $30. It's better to leave the oil in the ground."
David Hager, head of Devon Energy, said shale frackers have slashed cuts costs way more than outsiders generally realize since the heady days of the boom, when service fees and wages were rocketing.
"A lot of plays work at $45-$50, and the vast majority from $55-$60. They certainly don't need $90," he said.
This is optimistic. A study by Rystad consultants in Norway puts the break-even price at $68, but nobody knows for sure and frackers disagree among themselves.
Shake-out:  again, Mark Papa -- Mr Papa said the 70 percent crash in oil prices since mid-2014 will wipe out those companies that leveraged to the hilt betting that crude prices would stay above $100 forever.

BHP Billiton is a great example. The company itself agrees that it overpaid when it spent $20 billion to enter US shale plays (the Eagle Ford and the Permian), previously posted/linked. Only because of its size and other mining businesses did BHP survive (and thrive, for that matter).

Re-Balancing: perhaps by end of 2016, into 2017, but difficult to predict. This is what caught my eye, and many readers say the same thing. A new bust-boom cycle:
Mr Papa expects the global balance of supply and demand to tighten by 1.6m b/d this year. This would mop up the glut, before gradually eating into record stocks next year.
"The market is going to grow to 100m b/d. Where is the quantity going to come from? Capital spending on mega-projects has stopped cold,” he said.
“I can see a case where US shale is the biggest supplier of oil in the world by 2020. We could turn the whole thing on its ear, producing 13-14m b/d. But it will be really ugly getting through this valley,” he said.
See my most current estimates regarding "re-balancing" at this post.

By the way, I disagree with Mark Papa on this point: 
"The market is going to grow to 100m b/d. Where is the quantity going to come from? Capital spending on mega-projects has stopped cold,” he said.
The tea leaves suggest there is more than enough oil out there to preclude that concern. But the tea leaves also suggest I am in the distinct minority. Most agree that shale cannot make up for all the off-shore CAPEX that has been deferred or canceled. The reason I disagree: Mideast potential, especially Iraq. Much could be written but perhaps for a different day.

Not just shale
"Most companies will survive to take advantage of the recovery. We will ramp up, stay alive, meet the challenge, and look forward to a brighter day. It is not just shale that doesn't work at today's prices, nothing much at all works," said Mr Hager.
I did not post it but there was a recent article suggesting that "stripper wells" are returning. Operators that had shut down stripper well operations are are now returning. I didn't post the story because it seemed to be a press release from oil companies in California where fracking is not panning out for political and geologic reasons. But if I'm wrong, and strippers are coming back, that speaks volumes for the oil sector.

Not mentioned in the article: fracking strategies. Sand is getting more expensive; ceramics remain very expensive. The trend toward ever-increasing amounts of proppant to complete a well seems to be coming to an end. Much more sand is being used, but more sand is being mined, and, either God or nature again seems to smile on the US frackers: huge amounts of fracking sand have been discovered in west Texas, in/near the Permian. Rail won't be required; truckers will do the job. Ceramics appears to be "out" -- too expensive and experience suggests sand does just as well. All those concerns about sand "not holding up" may have been more marketing than real. The big change in sand has to do with size of sand. Operators are going to "smaller" sand.

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


*****************************
Addendum
Playing Around With Numbers

In the examples below, one can pick whatever numbers in bold one wants.


The North Dakota Bakken (middle Bakken plus Three Forks first bench)
  • Williston to Minot: 120 miles
  • Williston to Belfield: 100 miles
  • 100 miles x 100 miles = 10,000 square miles -- the North Dakota Bakken
640 acres/square mile = 6.4 million acres

5,000 1280-acre drilling units

500 billion bbl original-oil-in-place reservoir

500 billion bbls OOIP / 6,400,000 acres = 78,125 bbls OOIP/acre

78,125 bbls OOIP/acre x  1280 acres/drilling unit = 100 million bbls OOIP / 1280-acre drilling unit
500 billion bbls OOIP / 5,000 1280-acre drilling units = 100 million bbls OOIP / 1280-acre drilling unit

12 wells / 1280-acre drilling unit

100 million bbls OOIP x 7% production rate = 7 million bbls recoverable oil / 1280-acre drilling unit
7 million bbs / 12 wells = 583,333 bbls / well

Summary: at 7% production rate across the middle Bakken/Three Forks first bench yields:  583,333 bbls/well

Whether one agrees with the assumptions or not (the numbers in bold) it is amazing that the law of large numbers seems to work. I think everyone agrees that EURs of 600,000 bbls is not unrealistic (yes, I know there are a lot of poor Bakken wells out there, but one can also argue that a lot of those poorer Bakken wells were drilled under less than optimal conditions, beginning with poor understanding of the geology and extending through inexperienced roughnecks.

If, in fact, operators are approaching 14% productivity rate in the Bakken, then one can expect million-bbl EURs.

Idle chatter but it helps me validate OOIP estimates; company talk about production rates; and, EURs of wells that are being drilled over time.

The Market And Energy Page, T+215 -- August 23, 2017 -- Time To Re-Balance: 29 Weeks

Weekly re-balancing report: US crude oil reserves declined by 3.3 million bbls this past week. My estimate for re-balancing, if the decline stays on pace (average over past 17 weeks): 29 weeks. From my perspective, this is much more quickly than I would have predicted just a few months ago. This takes us to the end of the year. I had expected the re-balancing to take us well into 2018, if ever.

Again, for newbies: I define re-balancing as having 350 million bbls of US crude oil in storage (does not include the SPR), or about 22 days of storage.

Week
Date
Drawdown
Storage
Weeks to RB
Week 0
Apr 26, 2017

529.0
180
Week 1
May 3, 2017
0.9
528.0
198
Week 2
May 10, 2017
6
522.0
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
Week 7
June 14, 2017
1.7
511.5
57
Week 8
June 21, 2017
2.5
509.0
62
Week 9
June 28, 2017
-0.2
509.2
71
Week 10
July 6, 2017
6.3
502.9
58
Week 11
July 12, 2017
7.6
495.3
47
Week 12
July 19, 2017
4.7
490.6
43
Week 13
July 26, 2017
7.2
483.4
38
Week 14
August 2, 2017
1.5
481.9
34
Week 15
August 9, 2017
6.5
475.4
35
Week 16
August 16, 2017
8.9
466.5
30
Week 17
August 23, 2017
3.3
463.2
29

After the report was released, WTI went back above $48, but just barely.

*******************************
Gasoline Demand

EIA will post the graph later today, or tomorrow, but based on the weekly report, it appears "we" did not set a new record for "gasoline demand." The record was set last year, but we are coming close.

From the report:
Total products supplied over the last four-week period averaged over 21.0 million barrels per day, up by 1.4% from the same period last year.
Gasoline demand: Over the last four weeks, motor gasoline product supplied averaged 9.7 million barrels per day, down by 0.4% from the same period last year.
Distillate fuel product supplied averaged over 4.2 million barrels per day over the last four weeks, up by 14.4% from the same period last year. Jet fuel product supplied is up 1.3% compared to the same four-week period last year.
That was the four-week average: 9.7 million b/d of gasoline deliveries.

Unless I missed it, the report does not provide gasoline deliveries for the past week. It's very possible, with the four-week average down by only 0.4% from last year, the weekly gasoline demand will exceed that for the same week one year ago.

The best indication for weekly gasoline demand might be these data points:
  • gasoline production increased last week, averaging about 10.6 million barrels per day 
  • total motor gasoline imports (including both finished gasoline and gasoline blending components) last week averaged 555,000 barrels per day 
  • total motor gasoline inventories decreased by 1.2 million barrels last week, but are near the upper limit of the average range. Finished gasoline inventories increased while blending components inventories decreased last week
********************************** 
Odds And Ends

Making America great!. LG Electronics to build factory in Michigan for EV parts. Data points:
  • WSJ article -- so pretty sure it's not fake news
  • LG Electronics, Seoul, South Korea
  • $25 million factory for EV car parts
  • Detroit suburb of Hazel Park, MI
  • will produce battery packs for EVs
  • will expand into other key components later
  • the company began supplying parts to GM's Chevrolet Bolt EV last year -- those parts produced mostly in its South Korea plant
Not necessarily good news. Warren Buffett spotted this, jumped on it, but it appears Sempra outbid him. But it's not good news for the utility industry. Merger activity in the sector suggests utilities are struggling. The fittest will survive. By the way, apparently Sempra and Warren were not buying the entire Oncor business; a contributor over at SeekingAlpha (posted earlier/elsewhere) suggests that Sempra and (I assume) Warren are/were just bidding on the unregulated part of the business: the "wires and pipes" as they say. If true, neither Sempra nor Warren wanted to put up with retail customers. See this article on Vectren, sent to me by a reader. Thank you. [Note: a SeekingAlpha contributor said that Sempra was only buying the "wires and pipes." I do not know if that is accurate. The slide show provided by Sempra regarding this deal did not suggest that, at least as I read the slides, but I may be wrong.]

Expensive: by the way, the Sempra deal appears to be more expensive than the headline would suggest: $9.3 billion for the buyout does not include $9 billion in debt that the company has. Of course, I assume, both Sempra and Warren could re-finance that debt at very low interest rates.