Monday, January 29, 2018 -- Peak Oil? What Peak Oil? Canadian Shale Oil On The Front Burner

The Geography Page

Updates

February 19, 2018: it's being reported that the US, Japan, India, and Australia are teaming up to "take on" China's "belt and road" initiative.

The plan was on the agenda of Australian Prime Minister Malcolm Turnbull's meeting with President Donald Trump later this week.
 
China's multibillion-dollar Belt and Road Initiative aims to connect Asia, Europe, the Middle East and Africa with a vast logistics and transport network, using roads, ports, railway tracks, pipelines, airports, transnational electric grids and even fiber optic lines.

Maybe no one would agree with me but I see this as (positive) fallout from Trump's decision to ditch the TPP -- pitting the entire Asia-Pacific against the US. Trump wants bilateral deals, not deals with EU-like entities where things get tied up for decades. Trump also likes competition. And here it looks like China will get some competition from an unlikely group of four: India, Australia, Japan, and the US.

Original Post

Expansion: From Twitter this is a map of China's new "belt and road initiative" investment strategy.

Item: China has announced it is a "near-Arctic" country and will compete with the US, Canada, Russia, Iceland, Denmark, et al for a piece of the Arctic.

China's "belt and road initiative," from The Economist:

Launched in 2013 as “one belt, one road”, it involves China underwriting billions of dollars of infrastructure investment in countries along the old Silk Road linking it with Europe.

The ambition is immense. China is spending roughly $150bn a year in the 68 countries that have signed up to the scheme. The summit meeting (called a forum) has attracted the largest number of foreign dignitaries to Beijing since the Olympic Games in 2008. Yet few European leaders are showing up. For the most part they have ignored the implications of China’s initiative.

Wiki: this is such a big deal, "one belt, one road" has its own wiki page.

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Investors Spooked

Purge winds down. Saudi corruption purge winds down but scars will liner -- Reuters.

Saudi Arabia’s stock market celebrated the release of some of the kingdom’s top businessmen from detention on Sunday but the after-effects of a purge of the business elite may last for years, deterring private investment.

Billionaire Prince Alwaleed bin Talal, head of global investment firm Kingdom Holding 4280.SE, was among at least half a dozen tycoons freed at the weekend after over two months of confinement in Riyadh’s Ritz-Carlton Hotel.

Their release signaled a massive anti-corruption drive, in which authorities detained over 200 people and said they aimed to seize $100 billion of illicit assets, was drawing to a close. The Ritz-Carlton is to reopen to the public in mid-February.

Fallout: the purge is one more reason supporting my view (previously posted), the SaudiAramco IPO won't happen; if it does, it will be listed only on the Saudi exchange. From twitter:

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Market And Energy Page

Savings are in: ten-year bonds now yielding over 2.7%.

DPS: Dr Pepper Snapple spikes almost 40% this morning. Keurig buys Dr Pepper Snapple -- largest soft-drink deal ever. Personal note: we were given a Keurig for Christmas. I was not a fan of Keurig until our trip out to Lakeside, MT: now I'm a "believer" in Keurig. Love it.

Filloon: over at SeekingAlpha, Hess' well designs in the Bakken.

Hess oil production over the first 16 months of well life has improved by 38 MBO and natural gas has almost doubled.

McKenzie County: the average location after January of 2016 produces 140 MBO and 276 MMcf over the first 16 months of well life.

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

Shale is in: from Reuters -- why Canada is the next frontier for shale oil. An update of the Duvernay and Montney.

Canadian producers and global oil majors are increasingly exploring the Duvernay and Montney formations, which they say could rival the most prolific U.S. shale fields.
Canada is the first country outside the United States to see large-scale development of shale resources, which already account for 8 percent of total Canadian oil output. China, Russia and Argentina also have ample shale reserves but have yet to overcome the obstacles to full commercial development.

Together, the Duvernay and Montney formations in Canada hold marketable resources estimated at 500 trillion cubic feet of natural gas, 20 billion barrels of natural gas liquids and 4.5 billion barrels of oil, according to the National Energy Board, a Canadian regulator.  

[For perspective: the Bakken is estimated to have 50 billion bbls of recoverable oil, more than 10x the estimate for the Duvernay/Montney given above. Both the Duvernay and the Montney are linked at the sidebar at the right.]

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Back to the Bakken 

Active rigs:

$65.71↓	1/29/2018	01/29/2017	01/29/2016	01/29/2015	01/29/2014
Active Rigs	57	38	45	146	190

RBN Energy: refined-product delivery and storage infrastructure in Mexico, part 3.

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Flashback: The Bakken Is Dead -- Platts -- 2016

Even Platts joined the chorus back in 2016. Platts didn't say it specifically, that the Bakken was dead, but certainly that was how their story on February 19, 2016, could have been interpreted.

For months, analysts have said that reports of the death of the Bakken oil boom have been greatly exaggerated.

Despite the historic collapse in oil prices and North Dakota’s rig count falling to levels not seen since 2009, producers have largely maintained steady supply levels as they employed better technology in the most promising geology.

While production wasn’t nearing 2 million b/d as some statewide officials had dreamed of a year earlier, it was holding stable in a range of about 1.16 million b/d to 1.21 million b/d throughout much of last year and even increased from one month to the next five times throughout the year.

When monthly production did fall off, it was incremental and often blamed on secondary factors, like flaring reduction targets or oil conditioning rules.
But the long-awaited drop in Bakken production may have officially begun, as data released by North Dakota’s Department of Mineral Resources this week shows.

It continues:

Daily oil production averaged just over 1.15 million b/d in December, down 29,506 b/d, or 2.5%, from the previous month. It marks the lowest daily production level in the state since August 2014 and the first real downturn in statewide oil supply caused by the persistent dip in prices.

Fast forward to a month or so ago. North Dakota crude oil production is back in the "1.16 milliion b/d to 1.21 million b/d" range. Crude oil production surged 7.1% month-over-month in October, 2017.

Oil production

• October, 2017: 1,185,499 bopd
• September, 2017: 1,107,345 bopd
• Delta: +78,154 bopd, +7.1%
• huge jump in production

Unfettered, North Dakota will produce 2.2 million bopd (previously posted).

Many North Dakota mineral owners are reporting record royalty payments. 

The Hess-Targa deal, recently announced/previously posted is a big, big deal. The Bakken is back.

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Where's The Action?

From The Emergent Group:

• Permian Basin +4.4% to 427 rigs compared to last week's 409 rigs
• Cana Woodford -4.2% to 68 rigs compared to last week's 71 rigs
• Eagle Ford -1.5% to 66 rigs compared to last week's 67 rigs
• Marcellus +7.8% to 55 rigs compared to last week's 51 rigs
• Haynesville -2.2% to 45 rigs compared to last week's 46 rigs
• Williston stayed flat at 45 rigs this week
• DJ-Niobrara stayed flat at 25 rigs this week
• Utica stayed -4.2% to 23 rigs compared to last week's 24 rigs
• Granite Wash +9.1% to 12 rigs compared to last week's 11 rigs