Sunday, September 2, 2018

An XTO FBIR Well With Huge Jump In Production; Not Re-Fracked -- September 2, 2018

The well:
  • 20600, 1,831, XTO, FBIR Blackmedicine 24X-21B, Heart Butte, t6/12; cum 338K 10/18; recent production:
    PoolDateDaysBBLS OilRunsBBLS WaterMCF ProdMCF SoldVent/Flare
    BAKKEN10-20183158396008592126222038507
    BAKKEN9-201830585958847884272826250
    BAKKEN8-201830565654198236283427460
    BAKKEN7-2018203625349298761546967541
    BAKKEN6-201831274480421724
    BAKKEN5-2018281033510545741344757783628
    BAKKEN4-20182814341138779641657129863455
    BAKKEN3-20186125814482384583372185
    BAKKEN2-201828659666511561330376402297
    BAKKEN1-20181656676195963228427622003
    BAKKEN12-201722816973711228742802893829
    BAKKEN11-20178134015303870688107566
    BAKKEN10-2017319071926613613531018263409
    BAKKEN9-20173057555734574942836643577

Two XTO Wells With Huge Jump In Production -- And Neither Re-Fracked -- September 2, 2018

The well:
  • 20521, 1,412, XTO, George Federal 21X-19B, Lost Bridge, t7/12; cum 225K 10/18; recent production profile; no production all the way back to 2/16, and then this:
    PoolDateDaysBBLS OilRunsBBLS WaterMCF ProdMCF SoldVent/Flare
    BAKKEN10-20183113793137481680221494714914314
    BAKKEN9-2018146898704385631013910259103
    BAKKEN8-20182186878810133091261370711893
    BAKKEN7-2018251021998532503713195013168
    BAKKEN6-20182002229000
    BAKKEN5-20180000000
    BAKKEN4-20180000000
    BAKKEN3-20180000000
    BAKKEN2-20180000000
    BAKKEN1-20180000000
    BAKKEN12-20170000000
    BAKKEN11-20170000000
    BAKKEN10-20170000000

BAKKEN1-20160000000
BAKKEN12-2015325570518586125129
BAKKEN11-20153024072542685391314271673
BAKKEN10-20153024602373678413320591241
BAKKEN9-2015302102213159533603022349
BAKKEN8-20153123982319693406621231776
BAKKEN7-2015312458235875850424655198
BAKKEN6-20153024832675756431229391188
BAKKEN5-20153125922437733400821161708
BAKKEN4-20153026512697833332503143
BAKKEN3-20153130833124840384603557
BAKKEN2-20152821562045572267302477
BAKKEN1-20153127582823762343703158
BAKKEN12-20143129962965837360903327

And another well in this immediate area:
  • 17407, 1,273, XTO, Fenton Federal 11X-20, Lost Bridge, t6/09; cum 242K 10/18; recent production:
    PoolDateDaysBBLS OilRunsBBLS WaterMCF ProdMCF SoldVent/Flare
    BAKKEN10-2018165237528710932807307816
    BAKKEN9-2018107900000
    BAKKEN8-201819863787651931713423013169
    BAKKEN7-201831148061440640157228029622290
    BAKKEN6-201830463040633323571187216068
    BAKKEN5-2018188020351370129
    BAKKEN4-20180000000
    BAKKEN3-20180000000
    BAKKEN2-20180000000
    BAKKEN1-201842102432323282780
    BAKKEN12-20173116481881767277623960
    BAKKEN11-20173017711670591225919130
    BAKKEN10-2017311745160972627831623776
    BAKKEN9-20173016041643121225542067230
Neither of these wells were re-fracked

This One Case Speaks Volumes About The Future / The Potential Of The Bakken -- September 2, 2018

From the September, 2018, hearing dockets:
  • 26952, Newfield, Siverston-Bakken; 14 wells on an existing 640-acre unit, section 13-149-98; McKenzie
The graphic:



The one producing well in that 640-acre unit:
  • 18689, 1,869, Newfield, Bluefin 1-13H, Siverston, the middle Bakken is 44 feet thick here, 54K lbs mesh; 502K lbs sand; 980K lbs ceramic proppant, t5/10; cum 122K 7/18;
Shortly after I started blogging about the Bakken I said that if you had one Bakken well, you would eventually have four wells; maybe 8 wells, possibly 16 wells, and possibly many, many more than that. Well, it's very possible that the Newfield Bluefin well will soon have fourteen more neighbors.

I wonder what #26612, in the section to the west, is doing?
  • 26612, 1,507, Newfield, Hoffman 149-98-14-23-2H, Pembroke, t8/14; cum 187K 7/18; 
Now, go back and read the linked NY Times article at this post from earlier this morning.

By the way, "everyone" keeps talking about the "dreaded decline rate" in the Bakken.

Take a look at this well (at this link) -- the full production profile.

I'm not sure this well has paid for itself yet. At 187K bbls and $50/bbl = $9 million. I

f it hasn't paid for itself yet, it must be getting close.

It's decline rate was typical for a Bakken well -- dropping rapidly the first year, but by the end of the second year, production had leveled off and remained practically unchanged over the last two to three years. It's amazing, this well is only four years old. This well will go on producing for 30 years. It will be re-worked. It will be re-fracked -- mini-re-fracks and major re-fracks. It will be positively impacted when neighboring wells are fracked. If history is any guide, a full re-frack will result in a "new" well.

Imagine buying a single-unit rental house four years ago for $$10 million. Over the next four or five years you get enough rental income to pay off the house, and deduct mortgage payments, business expenses along the way. And then the renter continues to pay the same rent for decades, perhaps even going up a bit. And there's a good chance the property could appreciate. And with remodeling (re-fracks) the house appreciates in value. And you can use the collateral of this one house to buy a four-unit apartment complex. 

September, 2018, Hearing Dockets Have Been Posted

The NDIC hearing dockets for September, 2018, have been posted. Link here.

Dockets are posted at the NDIC site here.

Dockets are tracked here

The usual disclaimer applies. As usual this is done very quickly and using shorthand for my benefit. There will be factual and typographical errors on this page. Do not quote me on any of this. It's for my personal use to help me better understand the Bakken. Do not read it. If you do happen to read it, do not make any investment, financial, job, relationship, or travel plans based on anything you read here or think you may have read here. If this stuff is important to you, and I doubt that it is, but if it is, go to the source.

Highlights in bold.

Thursday, September 20, 2018: one page, a supplement -- one case
  • 26953, PetroShale, McGregory Buttes-Bakken; four wells on an existing 320-acre unit; Dunn County; E/2 of section 19-148-93;
Thursday, September 20, 2018: eleven pages
  • 26903, NDIC, bond issue; Hydroil Solutions LLC
  • 26904, NDIC ditto
  • 26905, NDIC, to review the temporarily abandoned status of the Scout Energy mangement well, #12179, Fryburg field, Billings County
  • 26906, NDIC, ditto, #13634 in Fryburg field, Billings County
  • 26907, Hunt, Ross-Bakken, establish an overlapping 3200-acre unit; 3 wells; Mountrail
  • 26908, RimRock, Heart Butte-Bakken, establish four overlapping 2560-acre units; 2 wells; Dunn County
  • 26909, Southwestern Production Corp, Tracy Mountain-Tyler, establish a laydown 320-acre unit; S/2 of section 21-138-102, ; one well; Billings County;
  • 26910, Liberty Resources, White Earth-Bakken, establish an overlapping 1280-acre unit; 8 wells; Mountrail
  • 26911, Newfield, North Fork-Bakken, establish an overlapping 1280-acre unit; 1 well; McKenzie
  • 26912, CLR, Epping-Bakken, establish an overlapping 2560-acre unit; 1 well; Williams County
  • 26913, CLR, Indian Hill-Bakken; terminate an existing 2560-acre unit; 8 wells on an existing 1280-acre unit; McKenzie County
  • 26914, CLR, Big Gulch-Bakken, establish an overlapping 2560-acre units; 2 wells; Dunn County
  • 26915, EOG, Parshall-Bakken; establish an overlapping 1280-acre unit; multiple wells; establish three overlapping 1920-acre units; multiple wells; create four overlapping 2560-acre units; multiple wells; Mountrail
  • 26916, EOG, alter the definition of the stratigraphic limits for the Squaw Creek-Bakken, for the existing 1280-acre unit as described; to allow all future wells to be drilled in the stratigraphc interval from 50 feet above the top of the Bakken formation to above the top of the Birdbear formation; McKenzie County
  • 26917, EOG, revoke a PetroShale permits; 
  • 26918, XTO, pooling
  • 26919, XTO, pooling
  • 26920, XTO, pooling
  • 26921, Liberty Resources, pooling
  • 26922, CLR, pooling,
  • 26923, CLR, pooling,
  • 26924, CLR, Cedar Coulee-Bakken, 11 wells on each of two existing 1280-acre units; Dunn County
  • 26925, CLR, Banks-Bakken, 2 wells on an existing 2560-acre unit; McKenzie, Williams
  • 26926, CLR, comingling
  • 26927, Slawson, pooling
  • 26928, Slawson, pooling
  • 26929, Slawson, pooling
  • 26930, Slawson, Arnegard-Bakken, 9 wells on an existing 1280-acre unit; McKenzie 
  • 26931, Slawson, Baker-Bakken, 9 wells on an existing 1280-acre unit; McKenzie 
  • 26932, Slawson, Ellsworth-Bakken, 9 wells on an existing 1280-acre unit; McKenzie
  • 26933, Slawson, North Fork-Bakken; 14 wells on an existing 1280-acre unit; McKenzie
  • 26934, Slawson, Pleasant Hill-Bakken, 9 wells on an existing 1280-acre unit; McKenzie
  • 26935, Slawson, Tobacco Garden-Bakken; 8 wells on an existing 1280-acre unit; McKenzie
  • 26936, WPX, pooling
  • 26937, WPX, commingling
  • 26938, EOG, Parshall-Bakken, 2 wells on an overlapping 2560-acre unit; Mountrail
  • 26939, Enerplus, risk penalty legalese
  • 26940, Enerplus, risk penalty legalese
  • 26941, Enerplus, risk penalty legalese
  • 26942, Enerplus, risk penalty legalese
  • 26943, Rimrock Oil & Gas, Heart Butte-Bakken, 13 wells on an existing 1280-acre unit; 11 wells on an existing 1280-acre unit; 12 wells on an existing 1280-acre unit; Dunn County -- 36 wells total
  • 26944, Sinclair, flaring
  • 26945, Sinclair, flaring
  • 26946, Sinclair, flaring
  • 26947, Newfield, pooling
  • 26948, Newfield, pooling
  • 26949, Newfield, pooling
  • 26950, Newfield, pooling
  • 26951, Newfield, Pembroke-Bakken, 14 wells on each of two existing 1280-acre units; McKenzie
  • 26952, Newfield, Siverston-Bakken; 14 wells on an existing 640-acre unit, section 13-149-98; 14 wells on each of three 1280-acre units; McKenzie
Wednesday, September 19, 2018: six pages
  • 26875, MRO, Bailey and/or Chimney Butte-Bakken; terminate two 2560-acre units; establish a 5120-acre unit; two wells; Dunn Count
  • 26876, MRO, Bailey-Bakken, establish a 2560-acre unit; 2 wells; Dunn
  • 26877, True Oil, Red Wing Creek-Madison, flaring
  • 26878, Petro-Hunt, establish a 320-acre unit; recomplete the Haugen 3-9 well (#15013) in the Madison pool, McKenzie
  • 26879, NDIC, Grinnell-Bakken; review the status of the leases in a 2560-acre unit to monitor the progress of developing those sections, McKenzie, Williams
  • 26880, Whiting, Sanish-Bakken, establish two overlapping 1920-acre units; 2 wells on each unit; Mountrail
  • 26881, Whiting, Sanish-Bakken, establish two overlapping 1920-acre units; 2 wells on each; Mountrail
  • 26882, Whiting, Sanish-Bakken, establish four overlapping 1920-acre units; two wells on each; Mountrail
  • 26883, Whiting, Sanish-Bakken; establish four overlapping 1920-acre units; 2 wells each, Mountrail
  • 26884, Bruin E&P, Marmon-Bakken, establish two overlapping 3840-acre units; one horizontal unit; Williams
  • 26885, Swanson, SWD
  • 26886, Swanson, SDW
  • 26887, Swanson, SWD
  • 26888, Oasis, SWD
  • 26889, Oasis, SWD
  • 26890, Kraken Operating, pooling
  • 26891, Hess, commingling
  • 26892, Hess, commingling
  • 26893, Petro-hunt, pooling
  • 26894, Bruin E&P, Antelope-Bakken, 15 wells on a 1280-acre unit; McKenzie County
  • 26895, Bruin E&P, pooling
  • 26896, Bruin E&P, pooling
  • 26897, MRO, Bailey-Bakken; 8 wells on an existing 1280-acre unit; 2 wells on a 2560-acre unit; Dunn County
  • 26898, MRO, commingling
  • 26899, MRO, commingling
  • 26900, MRO, commingling
  • 26901, MRO, pooling
  • 26902, BR, commingling
Friday, September 7, 2018: three pages -- it looks like these are all bond issues affecting Cobra Oil and Gas Corp -- an NDIC motion to review bond amounts:
  • 26860 - 26874, inclusive; most if not all were Madison unit wells;

A BR CCU Zephyr Well Seems To Be Back On Track After Struggling -- September 2, 2018

Looks like this well is back on track:
November 23, 2017: follow up in three to six months; this well was fracked 1/17; had a great frack; then struggled; looks like it might be producing nicely as of 6/18 --
  • 31999, 2,004, BR, CCU Zephyr 14-34 TFH, Corral Creek, t3/17; cum 82K 7/18; challenges? (2/18;); production profile now:
PoolDateDaysBBLS OilRunsBBLS WaterMCF ProdMCF SoldVent/Flare
BAKKEN7-2018298707864755973965343818
BAKKEN6-20182087028453506460645437241
BAKKEN5-20180000000
BAKKEN4-20180050000
BAKKEN3-201813063011181701450
BAKKEN2-201828027053400
BAKKEN1-201828128062757764070
BAKKEN12-20171000000
BAKKEN11-201789309304176925170
BAKKEN10-2017311401140689914767360

Update On The XTO Lund Wells And The XTO Serrahn Wells In Siverston Oil Field -- Wells In The Process Of Being Completed -- September 2, 2018

Back on September 15, 2017, this post:

Comments: XTO has permits for a 5-well Serrahn pad in 5-150-97, Siverston oil field (300 feet from the north line and 800 - 1000 feet from the west line) -- see below

Let's see what #21682 is doing:
  • 21682, 968, XTO, Lund 44-8NH, Siverston, 22 stages, 2.8 million lbs, t7/12; cum 175K 7/18; back on-line; look at production after coming back on line:
PoolDateDaysBBLS OilRunsBBLS WaterMCF ProdMCF SoldVent/Flare
BAKKEN7-201819704267851212110133010133
BAKKEN6-201824924083454165816580
BAKKEN5-20180000000
BAKKEN4-20180000000
BAKKEN3-20180000000
BAKKEN2-20180000000
BAKKEN1-20180000000
BAKKEN12-20170000000
BAKKEN11-20170000000
BAKKEN10-20170000000
BAKKEN9-20170000000
BAKKEN8-20170000000
BAKKEN7-20170000000
BAKKEN6-2017208001300627311830080
BAKKEN5-201731145612411095508148840

The graphic:


The wells:
  • 33802, 1,214, XTO, Lund 44X-8C, Siverston, t7/18; cum 19K 7/18;
  • 33803, SI/NC, XTO, Lund 44X-8G, Siverston,
  • 33804, 894, XTO, Lund 44X8H, Siverston, t7/18; cum 9K after 17 days;
  • 33805, SI/NC, XTO, Lund 44X-8DXA, Siverston,
The Serrahn wells noted in the graphic below:
  • 34015, SI/NC, XTO, Serrahn 11X-5EXH, Siverston,
  • 34014, SI/NC, XTO, Serrahn 11X-5A, Siverston, 10K after 10 days; similar production for the rest;
  • 34013, SI/NC, XTO, Serrahn 11X-5E, Siverston,
  • 34012, SI/NC, XTO, Serrahn 11X-5B, Siverston,
  • 34011, SI/NC, XTO, Serrahn 11X-5F, Siverston,
  • 27512, 1,652, XTO, Serrahn 41X-6D, Siverston, t7/14; cum 165K 7/18 -- recent production:
PoolDateDaysBBLS OilRunsBBLS WaterMCF ProdMCF SoldVent/Flare
BAKKEN7-201815661664571147317140131743863
BAKKEN6-20180000000
BAKKEN5-20183149055903870366
BAKKEN4-20180000000
BAKKEN3-20180000000
BAKKEN2-201872254911206355930
BAKKEN1-201831173318881025407338170

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


Producing well:
  • 21682, 968, XTO, Lund 44-8NH, Siverston, 22 stages, 2.8 million lbs, t7/12; cum 168K 7/17; off-line right now; work being done on pad;

Production Data Now In For The Top Three -- September 2, 2018 ... And The Winner Is ....

Updates

September 10, 2018: another data point. Iraq in September, 2018 --
  • production: 4.4 million bopd
  • exports: 3.6 million bopd 
Original Post
 
The EIA is now rounding data production to the nearest "100,000 bopd" but that's probably better than "false precision." It appears the EIA made the change starting in June, 2018.

We have August production data for Russia and the US.

Saudi Arabia will release it's August data on September 12, 2018.

So the data, for August, 2018:
  • Russia has bragging rights: 11.21 million bopd, data here
  • US: posting 11.0 million bopd -- data here;
  • Saudi Arabia, estimate: 10.42 million bopd -- see below
And, for July, 2018
  • Saudi Arabia: 10.48 million bopd, which would round up to 10.5 million bopd -- data  here; up and down; up and down; lots of talk over the past decade, but at the end of the day, Saudi is pretty consistent at 10.5 to 11.0 million bopd. See Saudi production note below.
Story:
Russia has been the main beneficiary from its agreement with the Organization of Petroleum Exporting Countries made two months ago to unfetter production. The country added nearly 250,000 barrels a day of output in June and July, while its biggest partner in the pact -- Saudi Arabia -- has kept supply below the level it was said to have indicated in June amid concerns over strength of global demand.
Still, the Saudis pumped more than 10.42 million barrels a day last month, according to two OPEC delegates. That’s an increase of nearly 140,000 barrels from the July output it has reported to OPEC. The cartel is due to disclose its August data on Sept. 12.
Note: someone must be reading the blog.

I have used the word "unfettered" since 2010 or thereabouts when discussing Bakken production, as in, "unfettered, North Dakota could produce 2.1 million bopd."

But this is the first time I've come across a Bloomberg article using the word "unfetter" when discussing oil. Need to google. My bad. A quick google search reveals Bloomberg uses "unfetter" or "unfettered" quite often. Whatever.

By the way, from an earlier post, just a few weeks ago, regarding Saudi production:
Saudi Arabia nearly sets all-time production record. Yawn. How many times have we heard this story
The kingdom’s oil production grew by 230,000 barrels a day in July, to 10.65 million barrels per day. This is just shy of an all-time peak reached in 2016, according to a Bloomberg survey of analysts, oil companies and ship-tracking data.
********************************
How Did I Miss This?

This story is more than two years old but I was not aware of this name change until now.

I spent one summer in Barrow, Alaska, while in college. Great experience.

But back in 2016, the name was changed.

Story here.

Kraken Operating Hitting Its Stride -- September 2, 2018

Kraken Operating will be reporting two new wells this next week:
  • 34042, conf, Kraken Operating, Sidney Josephine 32-29 1H, Burg, a nice well; 
  • 34041, conf, Kraken Operating, Jenna Mary 33-28 1TFH, Burg, a very nice well;
These wells are in the northwestern part of the state, certainly considered in the Tier 2 or Tier 3 area of the Bakken. There can be Tier 1 locations inside "Tier 2 / Tier 3" regions. See the "Bakken heat map."

Kraken Operating also reported some nice wells in the Montana Bakken last week (previously posted).

Kraken Operating is tracked at "Bakken operators" although much has not been posted regarding this operator on that page.

More Idle Ramblings On A Sunday Afternoon In North Texas -- September 2, 2018

While putting together the top stories of the past week I had some random thoughts. I've pretty much forgotten most of them now, but let's see if I can recall some of my observations.

Canada: the pipeline stories and "landlocked" resources in Canada need to be put into perspective.

Look at this graph:


It certainly appears that even without the additional pipeline capacity, Canadian oil is getting to the states.

The actual numbers:

Look at that increase in the past couple of years.

It was recently reported that Canadian CBR will jump from 200,000 bopd to 800,000 bopd now that the Trans Mountain Pipeline expansion project has been killed. At least that's what I recall; I could be wrong. That's fine. We all have our own world views, our own myths.

140,000,000 bbls/month = 5 million bopd.

800,000 bopd / 5 million bopd = 16% of Canadian oil will go by CBR.

For newbies: the US refiners along the Gulf Coast need heavy oil to "balance" the light oil from the shale plays in the US. US refiners along the Gulf Coast were optimized for heavy oil from Venezuela and Canada twenty years ago -- just before the US shale revolution which changed everything, and further exacerbated when Obama killed the Keystone XL.

By the way, killing the Keystone XL was a tectonic event; it was completely unexpected; it will forever be seen as the "event" that empowered the North American anti-pipeline movement.

In the US oil industry, the Keystone XL will forever be seen as an unexpected momentous event.

In the world of terrorism: Yassir Arafat conceiving the idea of hijacking a commercial airliner.

In race relations: Rosa Parks and seating on a bus.

In women's rights: Margaret Sanger and the birth control pill.

In biology: Jim Watson and a bit of luck.

********************************
Denmark

I never thought of Denmark as an exporter of oil so I was taken aback to read that Denmark has become a net importer of oil. That completely blew me away. 

This is a huge story; I don't think folks have caught on to this yet.

Going forward, global trade will become more free, less dependent on tariffs. There is no reason for tariffs on automobiles any more, for example. As free trade becomes "more free" the gap between energy-producing countries and energy-consuming countries will widen. Europe will become the only continent in the world to depend on imported energy. That's huge and that explains a lot of angst among the Europeans. They see the writing on the wall.

All things being equal -- i.e., truly "free" trade -- and the gap between the the US and the EU will continue to widen. 

*************************************
Metonyms

Had it not been for Rockefeller (in this case, "Rockefeller" is used as a metonym) at least one more species of whale, and possibly three species of whales would now be extinct due to humans killing off whales for their oil.

Can you imagine the world had crude oil not been discovered?

Can you imagine the world had there not been a shale fracking revolution in the US and 90% of the world's oil supply controlled by Vladimir Putin and Prince Salman?

It would be interesting to trace back the history of renewables with an emphasis on that small factoid.

Prior to 2007, and probably prior to 2000, that's exactly where the world was headed. Ten years ago, the US was building huge terminals along the Gulf Coast to import natural gas; now, those same terminals have been re-purposed to export natural gas. The US is now free to export crude oil -- the law was changed under President Obama.

*********************************
Lost Decades

The US has had two lost decades: the Bush decade and the Obama decade, 2002 -- 2016. The US appears to be making up for lost time. Record low unemployment; record economy.

The rest of the world suffered through the same two lost decades, but, unlike the US, most of the world looks forward to another lost decade. Canada is in a world of hurt -- it can't close a deal, and NAFTA is coming to an end. Even with a "Hillary" in office in 2020, it will be hard to put that genie back in the bottle.

Mexico: a socialist president who appears to know how to run the country's oil industry.

Into the ground.

Venezuela. Oh my goodness. No light at the end of that tunnel.

I'm not keeping up with the Argentina story, but that doesn't sound good, either.

Mideast: in deep, deep trouble.

Turkey is going the route of Venezuela. I think Turkey is going to be one of the biggest international stories of the decade. And not a "good" international story. [September 3, 2018, The Washington Post: Turkey's woes could be just the start as record global debt bills come due.]

In the US we will see something similar: winners and losers.

California will go its own way. It will survive (and thrive) despite Sacramento's penchant for spending other people's money. The "big state" that needs to be worried: New York.

New York will lose a seat or two in the US House. Texas, California will gain.

New York state and Canada, it seems, have a lot in common. (Sacramento: another metonym for those playing along at home.)

I saw a beer ad on television last night: the state where more people move to than any other state: Texas. Welcome all those newcomers with a beer. Great ad.

***************************************
Beto

The meteoric rise of Beto ("Justin") is fascinating on so many levels.

Idle Ramblings On A Sunday Morning In North Texas -- September 2, 2018

Updates

Later, 1:04 p.m. CDT: see fracking story below.


Over the past year:
  • AAPL shares appreciated 41%
  • NOG shares appreciated 326%
I'm glad I don't read The NYT for my business news. LOL.
Original Post 

What an incredibly beautiful weekend. I love three-day weekends. There are only two things that drive a five-day week in the US:
  • the economy; and,
  • the educational system.
We all know a little bit about both.

The economy: American productivity is such that most companies could do quite fine with a four-day week. For those companies that need to need to operate 24/7, they could move to a "4-day week" and a "3-day week." Nurses these days often do that -- they get a 4-day week one week, followed by a three-day week the next week.

The education system is so incredibly inefficient, schools could accomplish the same amount of "production" in four days that they do in five. Home schoolers know that, and those who teach as full-time substitutes at public schools know that.

But as long as the "economy" works on a 5-day basis, the schools will remain on a 5-day basis.

Commercial airline pilots have an incredibly efficient schedule, from what I can tell, and emergency room physicians do so, also. Regulations and policies probably discourage this practice now, but in the "old days," emergency room physicians could work a 48-hour continuous, unbroken stretch at a time. Moonlighting.

A close physician friend did that routinely while in the US Air Force while assigned to Grand Forks AFB in the early 80s. His Air Force job was generally Monday through Friday, giving him weekends off. When he had weekends free, he drove to a rural hospital where he signed in at 6:00 p.m. Friday and signed out at 6 p.m. Sunday -- 48 hours pays for one weekend. Not much activity in the emergency room at a rural hospital, but the service had to be "covered."

I digress. But, wow, three-day weekends are nice.

Took me 23 minutes to get to "work" today -- Starbucks. Normally takes a few minutes more, but it's not the length of the ride that matters; it's the quality of the ride. Today -- everyone in Texas is at church or in bed, except a few cyclists. Beautiful, beautiful ride.

************************************
Fracking
Updates

Later, 12:38 p.m. CDT The "next financial crisis" with regard to fracking took place between 2014 and 2016 when Saudi Arabia tried to crush US oil companies. Saudi Arabia failed, but there was a financial crisis in the US oil sector, and many US oil companies failed/went away and/or declared bankruptcy and reorganized and are still drilling.

But the preponderance of business articles written about the fracking industry today suggests things have turned around quite spectacularly and we will see it in the year-end (2018) earnings reports.

The op-ed actually comes close to that, and then stops short -- it would not fit his thesis. I think most folks who actually follow the oil industry closely would argue that the fracking industry has never looked so robust.

A proxy for the Bakken would be the share price of either NOG (a non-operator) or CLR (an operator). These two companies probably know more about the geology of the entire Bakken than any other single oil company. Analysts and investors have now had almost twenty years of experience and/or records of the US fracking industry to study, and most would say that they have been through the worst. Share prices of CLR,and NOG for exactly one year:





A five-year graph would show exactly what the NY Times writer was writing about. But the article should have been written in 2014.

Original Post
 
A reader sent me a link to a New York Times op-ed / book review on the economics of fracking.

Because the op-ed was really a book review, it was already outdated; some "facts" are wrong; and other facts are not even provided. The book was written by a contributing editor at Vanity Fair, which I believe, is struggling financially (but could be wrong, but I doubt it).

The most glaring error: the real reason fracking succeeded. Not once was the price of oil mentioned nor the OPEC embargo nor the efforts of previous administrations and presidential wannabees to stop fracking.

The op-ed: "The next financial crisis lurks underground."

The writer's thesis: the "decline rate" and the "Red Queen."

From the article:
A key reason for the terrible financial results is that fracked oil wells show a steep decline rate: The amount of oil they produce in the second year is drastically smaller than the amount produced in the first year. According to an economist at the Kansas City Federal Reserve, production in the average well in the Bakken — a key area for fracking shale in North Dakota — declines 69 percent in its first year and more than 85 percent in its first three years. A conventional well might decline by 10 percent a year. For fracking operations to keep growing, they need huge investments each year to offset the decline from the previous years’ wells. 
And the link goes to a New York Times article dated November 22, 2014, with a byline of Willliston, ND. A lot has happened in the oil patch in the past four years.

That was true then and remains true today, although the numbers may be somewhat different.

The bottom line: the author of the book and the writer of the op-ed argue that companies drilling in the Permian and the Bakken must keep drilling to replace the oil they produce every year.

I could be wrong, but doesn't General Motors need to keep producing new cars each year to stay in business.

Profit? Let's talk Amazon and Tesla.

Crisis for investors? Let's talk GE. Wow, let's talk GE.

And that canard that frackers are not making a profit is outdated. The frackers, in general, are now producing profits. And many of them are paying (and increasing) dividends. Companies don't increase dividends if they're losing money.

But enough of this.

Oh, one last thing, the title of the op-ed and the thesis of the book: the next financial crisis lurks underground.

Without taking this out of context, isn't this a banking / Wall Street / private investment story? If the companies go bankrupt, the US government isn't going to bail them out, and banks are minimally exposed to risk in the oil industry in the big scheme of things.

On the other hand, the US debt is $10 trillion and rising and is "owned" by all Americans.

But, yes, if you don't understand the industry, I would not recommend investing in the oil sector. 

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My Consequential Book This Week

River: One Man's Journey Down the Colorado, Source to Sea, Colin Fletcher, 1997.

I don't particularly care for the writing style -- verbose. One has to read closely and slowly to get any "facts" from the book. It's a great "travelogue" book -- one to read while resting by the poool if one has lots of time, and literally nothing else to do. But it moves glacially, and if one is easily distracted, one won't get far in this book. Maybe one page or two at a sitting.

I got it mostly for the maps.

Some quick notes:
  • the source of the Colorado River is Peak Lake (actually a pond) on Knapsack Col in the Wind River Range on the western side of the Continental Divide
  • the author started his trek at the four ponds just below Peak Lake -- he did not climb the Knapsack Col to get to the "ultimate" source. He started at the "penultimate" source, I guess
  • from the four ponds, the source flows north, at which point it is called Green River
  • about mile 10, the Green River turns south at "Big Bend"
  • about 100 miles south, one reaches Big Piney, still in Wyoming, and then about 20 miles later one gets to the Oregon Trail (Sublette Cutoff), just north of the Fontenelle Reservoir
  • at about 230 miles one reaches Green River, Wyoming, just north of Flaming Gorge Reservoir
  • the Green River enters Utah about 280 miles downstream, into the Uinta Mountains of Utah; Flaming Gorge Dam is in northern Utah on the Green River
  • the Green River exits Utah and enters Colorado for about 40 miles before it re-enters Utah and the Uinta Basin
  • finally, around Mile 650, the Green River meets the Grand River at the "Confluence," still in Utah; from now it's the Colorado River we all know; it was a political decision to rename the Grand River; together, the main river and the former Grand became, together, "the Colorado"; see this post for more of the story;
  • at about Mile 910, the Colorado River exits Utah and enters Arizona; just after entering Arizona, the river is dammed by the Glen Canyon Dam; the Navajo Generating Station is just off the southeast corner of the dam
  • another eighty miles and the Colorado River is in Grand Canyon National Park, where it turns abruptly, making a 90-degree turn, from flowing south to flowing west; standing on the south side of the Grand Canyon, the river flows from your right to your left; from the east to the west
  • the author marks his "Grand Canyon" map from Mile 1003 to Mile 1227
  • the author's "Grand Canyon" map ends at the Arizona/Nevada state line
  • as noted, the author's "Grand Canyon" map ends about Mile 1227, just short of the Nevada/Arizona state line
  • Hoover Dam, on the border between Nevada and Arizona, about 30 miles southeast of Las Vegas, is located around Mile 1290 on the author's map; Lake Mead, behind the dam, extends almost all the way back to the Grand Canyon
  • from Lake Mead, the river flows directly south from Boulder City, between Laughlin/Bullhead City, to Needles, CA, about Mile 1360; "Point 1180" on the author's map is about Mile 1380
  • the river forms the California/Arizona boundary until it reaches Mexico, just west of Yuma, Arizona
  • the Rio Colorado forms the boundary between Baja California and Sonora, Mexico
  • the river ends in the Gulf of [Baja] California, at Mile 1741, El Gulfo de Santa Clara
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Reincarnation

Yesterday, I made a short visit to our local Target store. I had Sophia in tow. A few errands.

I parked the car next to a sleek, black Maserati sedan. It brought back vivid memories of being a passenger in a Maserati being driven by an older male acquaintance at fairly high speeds somewhere in the Italian mountains, a long, long time ago.

I remember it as if it were yesterday. I vividly recall the scenery and the incredibly smooth feel of the Maserati on the straightaways and the smooth handling as it took the curves. I recall the scenery, but I don't recall the "smell" of the forests. But the windows would have been rolled up. I remember the leather seats and how comfortable the bucket seats felt. It was a big sedan, but yet, it was a sports car all the same. It was very, very roomy -- unlike the Porsche 911-- I felt very small in the oversized passenger seat. I remember the manual shift with the wooden knob. I don't remember much else of the interior finish -- other than the exquisite leather seats -- but I do recall the wonderful finish -- most likely a dash with a wood finish.

The only problem: I've never -- in this lifetime -- been in a Maserati in Italy. Or in a Maserati anywhere else for that matter.

Spooky.