Saturday, September 29, 2018

Natural Gas Could Well Be The Energy Story Of 2018-2019 -- September 29, 2018

Re-posting from earlier today, since "natural gas could well be the energy story of the year."

US natural gas:
Natural gas: this might be the story of the year -- lots of buzz, lots of talk -- from SeekingAlpha yesterday --
  • a severe cold spell could raise Henry Hub natural gas prices to a range of $12-$16/MMBtu, “similar to where marginal generation costs of fuel oil and diesel would be,” says Citi’s Anthony Yuen
  • and if bitter cold weather hits both the U.S. and “either Europe or Asia at the same time... spot LNG [liquefied natural gas] prices could surge to $20/MMBtu at the extreme," Yuen writes; Nymex U.S. natural gas currently trades at ~$3.00/MMBtu
  • Yuen thinks a spike in gas prices this winter could lift shares of gas-oriented companies such as Range Resources, Southwestern Energy, and Cabot Oil & Gas
  • shares of many gas companies, while up from winter lows, are still lower YTD, reflecting concerns that there is too much new gas supply to sustain a rally in the gas market
It is being re-posted because a reader has sent me the following story:
Domestic natural gas production of about 82 billion cubic feet a day isn't nearly enough to provide for peak winter demand, which is why up to about 4 trillion cubic feet of gas is stored underground and nearly 3 trillion drawn upon during some heating seasons.
This year, though, the U.S. Energy Information Administration expects the starting amount at the end of next month to be around 3.3 trillion cubic feet--the lowest since 2005, when natural gas prices hit their all-time high.
A projected ending storage level much below 1 trillion cubic feet often spooks traders. A 2005-style hurricane-fueled squeeze is out of the question, but a big price spike isn't.
It was just four winters ago that a cold winter caused a 75% surge in futures prices to above $6 a million British thermal units. So far there is little sign of anxiety among traders, with both front-month and February futures below $3. Thursday's weekly inventory report and forecasts for continued builds in coming weeks were encouraging, yet storage is now 20% below year-ago levels and 18% below the five-year average. Possible tough sledding ahead.
This is not from The National Inquirer, or from some nut contributing to SeekingAlpha.

The natural gas concern is from The Wall Street Journal. 

Link here.  Or here if you have a subscription to the Journal

Note: natural gas out of the Permian is going for as little as 50 cents, it was reported not too long ago.

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Micro-Dosing

Re-posting: LSD. Story here. Silicon Valley (?) getting ready to do "formal"testing. We talked about this earlier this year.

Three-page essay in the current issue of The London Review of Books, by Mike Jay, in his review of two new books:
  • How to Change Your Mind: The New Science of Psychedelics, Michael Pollan, May, 2018
  • The Science and the Story of the Drugs That Changed Our Minds, Lauren Slater, February, 2018
My hunch: marijuana is soooo old news.

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 Notes To The Granddaughters

I have journaled all my life. I have kept calendars. I make and keep lists. I am obsessive-compulsive about these sorts of things.

I wish I had done even more. I can think of many more things I wish I had done along this line.

But it looks like I paled in comparison to Kavanaugh's journals and calendars. Wow.

I think about that often. I thought of it again when reading the "Diary" essay -- a regular feature -- in The London Review of Books

Will I destroy my journals before I die? I was brutally honest in them. Often I wrote when I was most depressed.

Wow, it was so much easier back then.

Somebody to Love, Jefferson Airplane

Slawson Recap: Week 39 -- September 29, 2018

Note: this was done quickly. There may be typographical and factual errors. 

This past week I noted many great wells being reported and/or a lot of activity by some players that had been relatively quiet over the past couple of years. I caught many of them under "Bakken 2.5" at the top stories for the week. Two operators seemed to pop up more often than the others: Slawson and Bruin.

For the note regarding Bruin E&P, see this link

I only noted one Slawson well at this week's "top stories" (link above). There were just too many Slawson posts to link. Slawson deserved  a stand-alone post. Here is the list of posts that featured Slawson this past week:
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The Travel Page

Boulder, Utah: hopefully I see this most interesting destination sooner than later. Stay tuned.

Khirbet Qeiyafa, Canaan: no, I won't be seeing this site any time soon.

Boulder, Utah: "Why Two Chefs in Small-Town Utah Are Battling President Trump," Kathryn Schulz, The New Yorker, current issue. I don't subscribe to The New Yorker any more. The editors continue to suffer from Trump Derangement Syndrome. I haven't read this article yet, but my hunch is that a) it would have been a great article even without the Trump tie-in (I won't know until I finish reading it); and, b) the editors would not have published it had there not been a Trump tie-in. LOL.

Even without a subscription, The New Yorker allows a few free e-articles each month, so if you haven't visited The New Yorker recently you should be able to access the article.
 
It begins:
In south-central Utah, where the topography is spectacular, desolate, and extreme, the pessimistic tradition in place-names runs strong. Head south from Poverty Flat and you’ll end up in Death Hollow.
Head east from Dead Mare Wash and you’ll end up on Deadman Ridge, looking out toward Last Chance Creek and down into Carcass Canyon. During the Great Depression, when the whole state turned into a kind of Poverty Flat, the Civilian Conservation Corps sent a group of men to the region to carve a byway out of a virtually impassable landscape of cliffs and chasms.
The men nicknamed the project Poison Road: so steep that a single drop would kill them. Midway up, the ridge they were following gaped open and plunged fifteen hundred feet to the canyon floor. They laid a span across it, and called it Hell’s Backbone Bridge.
Today, the entire route built by those men is known as Hell’s Backbone Road. Still largely unpaved, still treacherous in bad weather, it connects the town of Escalante to the tiny hamlet of Boulder, long reputed to be one of the most remote settlements in the continental United States.
As late as 1940, the mail there was delivered via an eight-hour trek by mule team; the first lights did not flicker on until Christmas Eve, 1947. Until the nineteen-seventies, locals had to spend up to forty-eight hours in transit to obtain any number of essential goods and services: a new pair of socks, medical care, anything beyond an eighth-grade education.
Eventually, the county paved a different road into town, the two-lane Highway 12; as a result, assuming that you are already in Utah, getting to Boulder is no longer particularly difficult. Yet by contemporary standards the town remains strikingly out of the way.
Its population hovers around two hundred and fifty people, many of whom bear the same last names as the earliest Westerners to settle the area: to the extent that Boulder is full at all, it is full of Kings and Roundys, Lymans and Ormonds and LeFevres.
Most of those families came to Utah because they were Mormon and came to Boulder to pasture their cattle, and the twin influences of the Latter-day Saints and ranching still dominate today. Boulder is the kind of place where those who aren’t related by blood are related by marriage, and those who aren’t related by either are effectively kin by proximity—the kind of place, in short, where everyone knows everyone else’s children, parents, politics, struggles, scandals, and cattle brands. 
But this is what the story is all about and why I hope to visit sooner than later: Hell's Backgone Grill & Farm.

From the article:
And down at the end of town, just before the road starts climbing steeply back into the wilderness, there is a hotel called the Boulder Mountain Lodge, and, on its grounds, a restaurant called Hell’s Backbone Grill.
Actually, the restaurant is the second Hell’s Backbone Grill. The first one opened in 1996, closed in 1999, and sat empty until it was acquired, for three thousand borrowed dollars, by two women who had never attended culinary school or started a restaurant or lived in Utah.
Nonetheless, in 2000 they moved to Boulder, reopened Hell’s Backbone Grill, and, in short order, changed everything about it except the name. In the years since then, it has gained a reputation as one of the best restaurants in the Southwest, and also the most improbable. It is an all-organic, sourcing-obsessed, vegetarian-friendly venture in the middle of a traditional ranching community; a part-hippie, part-hipster, Buddhist-influenced culinary retreat in conservative Mormon country; a farm-to-table operation in a landscape not exactly known for its agricultural bounty; and a high-end, foodie-magnet restaurant that is four hours on a good day from the nearest major metropolitan area.
Khirbet Aeiyafa? That will have to wait until the next post.

Some Incredible Bruin Wells Ready To Come Off The Confidential List -- September 29, 2018

Note: this was done quickly. There may be typographical and factual errors. 

By the way, when these new wells come off the confidential list, look at these neighboring, older wells:
  • 20328, off line for six to seven months; came back on line for 16 days in 8/18; t3/12; cum 535K 8/18;
  • 22708, off line for four to five months; came back on line for 12 days in 7/18; then off line again; t4/14; cum 297K 7/18;
  • 22707, off line for six months; still off line as of 8/18; t4/14; cum 494K 2/18;
This past week I noted a lot of great wells being reported and/or a lot of activity by some players that had been relatively quiet over the past couple of years. I caught many of them under "Bakken 2.5" at the top stories for the week. Two operators seemed to pop up more often than the others: Slawson and Bruin. More on Slawson later. Bruin E&P seems to be on a roll with some great "Fort Berthold" wells. It appears they had one well that produced 96,182 bbls of crude oil in one month. We will know more when that well comes off the confidential list. In fact, I just checked. The reader was correct.
  • 31774, conf, Bruin E&P, Fort Berthold 151-94-27A-34-16H, 33-053-07183, t--; cum --; fracked 6/26/18 - 6/28/18:
DateOil RunsMCF Sold
8-20189618372538
7-20186033816676

Frack data from FracFocus says it was fracked with 281,231 gallons of water; with only 13.6 water by mass; sand was 83.5% by mass. That is so far from what one normally sees, ... well, before I say any more ... time to check some others. See below.
  • 31775, 33-053-07184, fracked 6/24/18 - 6/25/18, 12 million gallons of water; 87% water by mass:
DateOil RunsMCF Sold
8-20186337039587
7-20185205609
  • 32431, 33-053-07466, fracked 6/24/18 - 6/26/18, 10.8 million gallons of water, 85.8% water by mass;
DateOil RunsMCF Sold
8-20187681777901
7-2018228464417
  • 31776, 33-053-07185, fracked 6/2/18 - 6/3/18, 11.8 million gallons of water; 86.6% water by mass;
DateOil RunsMCF Sold
8-20183095928941
7-201877081842

  • 31777, 33-053-07186, fracked 5/31/18 - 6/3/18, 12.3 million gallons of water; 87.2% water by mass;
DateOil RunsMCF Sold
8-20186198843584
7-2018224912576
  • 31778, 33-053-07187, fracked 5/16/18 - 7/6/18; 10.8 million gallons of water; 88% water by mass:
DateOil RunsMCF Sold
8-20182119823870
7-2018383246

The graphic (the six wells above are indicated by the arrow pointing to the"six well Bruin E&P Fort Berthold pad in the northwest corner of section 26:


For newbies: there are some wells that don't produce 60,000 bbls of crude oil in one calendar year!

Screenshots of the frack referenced above:


Ordinary High Water Mark Study Accepted By The NDIC -- September 29, 2018

Disclaimer: there are opinions interspersed with facts in this post. It may be hard to separate fact from opinion. Do not make any financial or investment decisions based on what you read here. This is a layman's perspective based on newspaper articles. If this information is important to you, go to the source and get professional advice.

NDIC accepts "ordinary high water mark study" results: the state owns 9,500 more acres than originally shown by the US Army Corps of Engineers; mineral owners along the river between New and Williston may find they don't have as many acres as they once thought they did.
The study, directed by the Legislature, aimed to resolve disputes over oil and gas ownership by investigating the accuracy of the 1950s river survey conducted by the U.S. Army Corps of Engineers.
The Industrial Commission’s action determines the ordinary high water mark of the Missouri River. The final report concludes that North Dakota owns about 9,500 more acres than the corps survey of the river showed. The consultant did reduce the state’s ownership by about 900 acres based on “clear and convincing evidence” received during a public comment period last spring.
Josh Swanson, an attorney who represents several mineral owners, said Thursday he’s disappointed by the Industrial Commission’s decision, which he called sanctioning “a blatant taking of thousands of acres of mineral acres of private landowners.”
My understanding is that the study, at the NDIC website, which has been previously linked, is the study that the NDIC accepted. The links are at this post.
Two additional comments:
  • it appears that some of the best oil locations in the Bakken are along the river between New Town and Williston
  • 9,500 acres / 640 acres = 14 sections
How big is 14 sections? One of the very best fields in the Bakken is the Helis Grail; it is 30 sections in size (at the time of the original post).

Individuals who originally homesteaded may have had 160 acres, and over time, some successful farmers may have put together a section of land, or 640 acres (some may have done much, much better; I don't know). But if one's entire 160 acres were within the state's OHWM land, this would be an incredible blow.

If one bought mineral rights years ago in this contested area, and one has clear title to those mineral rights, I have no idea how that title-transfer process works. I guess that's why one buys "title insurance" when buying "real estate." Am I getting too far ahead of my headlights? See disclaimer above.

The original study was done in 1950? For almost 70 years that study was accepted by the state? I must be missing something.

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British Week At Central Market, Southlake, TX


Third DAPL Defendant Sentenced To "Three Years In Federal Prison" -- September 29, 2018

Link here.
  • 1st of seven: three years federal prison
  • 2nd of seven: 57 months federal prison
  • third of seven (link above): "three years federal prison"
Three down; four to go.

North Dakota: Oil, Nuclear Missiles, Honey, Winter Wheat; Ducks Unlimited; Now ... Straw -- September 29, 2018

Updates

Later, 2:37 p.m.: from a reader --

There happens to be a smaller coal fire power plant in Spiritwood. My guess is it would be burned in that plant.
Original Post
 
The only question I have: how do readers find these "bizarre" stories?

From biofuelsdigest and from MarketWatch: North Dakota straw to fuel California cars -- data points:
  • NewEnergyBlue, based in Massachusetts
  • six months away from groundbreaking: a cellulosic ethanol refinery
  • will be sited in Spiritwood Energy Park near Jamestown, North Dakota
  • $170 million financing to be finalized (no mention of Elon Musk)
  • 280,000 tons of North Dakota wheat straw/year --> 16 million gallons of fuel/year
  • this will be the only cellulosic ethanol capable of exceeding California's rigorous air-quality standards
  • will also produce clean lignin
  • will not require any fresh water in the proprietary process
  • 20,000 miles / year / 40 mpg = one car = 500 gallons of fuel per car
  • 16,000,000 / 500 gallons = 32,000 cars (0.2% of cars registered in CA)
  • number of cars in California: 15 million 
  • one small step for North Dakota straw; one giant step for Governor Moonbeam
Lignin?
Global commercial production of lignin is a consequence of papermaking.
In 1988, more than 220 million tons of paper were produced worldwide. Much of this paper was delignified;
Lignin comprises about 1/3 of the mass of lignocellulose, the precursor to paper. It can thus be seen that lignin is handled on a very large scale.
Lignin is an impediment to papermaking as it is colored, it yellows in air, and its presence weakens the paper. Once separated from the cellulose, it is burned as fuel. Only a fraction is used in a wide range of low volume applications where the form but not the quality is important.
Sounds like there is already an over-abundance of lignin, but a bit more on the market probably won't hurt.
Because lignin reduces stack emissions in coal-fired power plants, it's a cleaner replacement than wood chips. Lignin is also a lightweight binder for composites that replace metal parts in automobiles and other products.   
After its Spiritwood refinery is up and running on Dakota straws, NewEnergyBlue says it expects to double capacity of future biomass refineries and also process corn stalks.
Corle envisions a series of refineries throughout the grain belts of the U.S. and Canada, each producing 32 million cellulosic gallons a year and attracting escalating support from capital markets keen on catching the next wave of renewable energy. "California alone could easily absorb production from 70 of our refineries to reach their goal. Other states and Canada are following California's successful low-carbon model."

New England Natural Gas Could Very Well Be The Story Of The Year -- Week 39: September 23, 2018 -- September 29, 2018

Vern Whitten quarterly package of photos; northwestern North Dakota here.

If you have time for only one post/story this weekend, read the September, 2018, Rystad Energy production newsletter at this link.

Peak oil? What peak oil? US hitting crude oil production records. So much for Hubbert.

US gasoline demand dropped precipitously.

Some of this has been previously posted.

US natural gas:
Natural gas: this might be the story of the year -- lots of buzz, lots of talk -- from SeekingAlpha yesterday --
  • a severe cold spell could raise Henry Hub natural gas prices to a range of $12-$16/MMBtu, “similar to where marginal generation costs of fuel oil and diesel would be,” says Citi’s Anthony Yuen
  • and if bitter cold weather hits both the U.S. and “either Europe or Asia at the same time... spot LNG [liquefied natural gas] prices could surge to $20/MMBtu at the extreme," Yuen writes; Nymex U.S. natural gas currently trades at ~$3.00/MMBtu
  • Yuen thinks a spike in gas prices this winter could lift shares of gas-oriented companies such as Range Resources, Southwestern Energy, and Cabot Oil & Gas
  • shares of many gas companies, while up from winter lows, are still lower YTD, reflecting concerns that there is too much new gas supply to sustain a rally in the gas market
WTI: closes solidly above $73. Data points:
  • "relentlessly climbs"
  • Iranian sanctions: would remove 1.5 million bopd from global market
  • Saudi Arabia will boost production by 0.5 million bopd in 4Q18
Saudi boost: Saudi Aramco to boost oil capacity by over one-half million bopd in 4Q18 -- link at Reuters

Iran: reported earlier that by November or so, South Korea would no longer be importing Iranian oil. Now it is being reported that China's top refiner will halve Iranian oil imports.

US crude oil production: staggering -- Rystad Energy. Link here.

US crude oil production, July, 2018: just short of 11 million bopd

Chevron: growing volume will support a growing dividend. -- SeekingAlpha.

US natural gas:
  • fill rate well below 5-year average and the gap is not closing
  • New England could face natural gas shortage over next month or so
  • natural gas being diverted from New England to Florida
  • Florida: #1 electricity producer in US; #2, Texas
  • Florida: converting from coal to natural gas

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Back to the Bakken
Week 39

From Geoff's top North Dakota energy stories:


Back of the envelope:
  • some folks suggest North Dakota production will level off at 1.5 million bbls / day
  • unfettered, the Bakken should be able to produce 2.2 million bopd (early, early estimate)
  • 2.2 million x 365 = 800 million bbls/year
  • 40 billion bbls / 800 million bbls = 50 years of production
  • 500-billion-bbl reservoir x 12% primary recovery = 60 billion bbls
  • unfortunately many of us won't be around fifty years from now
Land grab:
NDIC accepts "ordinary high water mark study" results: the state owns 9,500 more acres than originally shown by the US Army Corps of Engineers; mineral owners along the river between New and Williston may find they don't have as many acres as they once thought they did

Records
SHD's Golden well pegs the company's natural gas pressure gauge
Bruin: almost 100,000 bbls of crude oil from one well in one month

Bakken 2.5
Slawson' sweet spot north of the river
XTO wants to unitize a large area of the Bakken -- good luck with that
MRO wells in Bailey oil field hitting 300,000+ bbls crude oil in one year
XTO's huge Sand Creek well;
CLR's Antelope wells -- Christmas in  July
Hess EN-Jeffrey wells; CLR Florida / Alpha wells
CLR's Kennedy-Miles wells
BR's Jerome wells
BR's CCU Corral Creek well
BR's Dodge well 
CLR's Hendrickson wells
Bruin E&P on a roll
Newfield Wisness well
QEP Tipi with 110,000 bbls in two months
Equinor picking up the pace: here; and, here; and, here; and, here;
PetroShale anticipates eleven (11) more wells on an existing 640-acre drilling unit
 
Fracking
Completion strategy for MRO wells in Reunion Bay

Refinery
East Coast refinery back in the news; taking advantage of the WTI - Brent spread 

Natural gas
ONEOK to build yet another natural gas processing plant, Demicks Lake II
ONEOK to increase natural gas processing in the Williston Basin

Bakken economy
Williston, Dickinson lead increase in August enplanements (boarding at airports) 

Miscellaneous
Awaiting results of the "ordinary high water mark" study
Legacy Fund deposits hit recent record

Other formations
Southwestern to target the Tyler

MRO Wells In Bailey Oil Field Hitting 300,000+ Bbls Crude Oil In One Year -- September 29, 2018

Some time ago I posted this well with production data at the link:
  • 16180, 128, MRO, Marlin 24-12H, Chimney Butte, t8/06; cum 319K 5/18; re-fracked 4/17 -- 14 stages, 2.8 million lbs (200,000 lbs/stage - standard)
For some reason I didn't think of looking at the other Marlin wells.

The graphic:



The wells of interest:
  • 16908, 248, MRO, Marlin 14-12H, Chimney Butte, t3/08; cum 150K 7/18; it was taken off line when Hondo/Mittelstadt were fracked, there was not jump in production;
  • 16180, see above,
  • 33248, 2,774, MRO, Hondo 34-12TFH, Chimney Butte, see note for #33247;
  • 33247, 2,774, MRO, Mittelstadt 34-12H, Chimney Butte, at one year of production this well had produced 329,238 bbls of crude oil; t6/17; cum 329K 7/18; note how its frack correlates with jump in production of #20233;
  • 20233, 947, MRO, Marlin 44-12H, Chimney Butte, not re-fracked; t6/11; cum 214K 7/18; note jump in production starting in late 2017 and then a much bigger jump in early 2018:
PoolDateDaysBBLS OilRunsBBLS WaterMCF ProdMCF SoldVent/Flare
BAKKEN7-20183147894853527474195998946
BAKKEN6-2018305490528162937437682091
BAKKEN5-20183165566861697665034964935
BAKKEN4-20183076607558785562944332969
BAKKEN3-201831109321095511832971062972059
BAKKEN2-20182140843945386228817431657
BAKKEN1-201822132112701466122010122
BAKKEN12-2017315827575962995144430235
BAKKEN11-20173066646829681551923984317
BAKKEN10-20173172877130753456834102618
BAKKEN9-201730645764367755791836373412
BAKKEN8-201718354334365066432322751575
BAKKEN7-20177789012394085
BAKKEN6-2017928728231633915291
BAKKEN5-201700260000
BAKKEN4-20171241841319556840550
BAKKEN3-201731115611535231602125440
BAKKEN2-201728100310104161342105710
BAKKEN1-20173110971072518137510666
BAKKEN12-2016319831004477113581034
BAKKEN11-201630912894418109379322