Thursday, December 13, 2018

MRO With Some Nice DUCs; Newfield WIth Four New Permits; Kaiser-Francis Transfers Its Mountrail Wells To Krakken Operating -- December 13, 2018

This is the summary of the Daily Activity Report for December 13, 2018, posted a day late due to family commitments.

Operator transfer. Kaiser-Francis Oil transferred about 70 wells to Kraken Development III. LLC
  • includes very recent to very old permits 
  • it appears all are in Mountrail County
  • includes many-well known names: Kinwoodie; Kinnoin; Fladeland; Domaskin; Knife River
Active rigs:

$52.2812/14/201812/14/201712/14/201612/14/201512/14/2014
Active Rigs67524064181


Four new permits:
  • Operator: Newfield
  • Field: Pembroke (McKenzie)
    Comments: Newfield has permits for a 4-well Sailfish pad in lot 3, section 3-149-98;
Eight oil and gas permits renewed:
  • EOG ((3): one Clearwater permit in Mountrail County, and two Clarks Creek permits in McKenzie County
  • BR (3): three Veeder permits in McKenzie County
  • Petro-Hunt (2): two Noonan Federal permits in McKenzie County
Four permits canceled:
  • Resource Energy Can-Am (3): one Kimberly, one Marauder, and one Rebecca permit, all three in Divide County
Seventeen producing wells (DUCs) reported as completed (for newbies, I would pay attention only to the four new MRO wells); it looks like everything else is irrelevant for the intentions of the blog):
  • 10754, 12 (no typo), Petro-Hunt, L . Signalness 1X-10, Johnson Corner oil field, Red River, Bakken, Madison;
  • 10448, PA/347, Petro-Hunt, Silurian 19-1, Charlson, Silurian, t4/84; cum 329K 8/16; no production since 8/16;
  • 10227, PA/179, Citation Oil & Gas, Anderson State A-1, Camel Butte, t12/83; cum 188K 6/09;
  • 10078, PA/345, Whiting, Big Stick Unit 1812, Big Stick, a Madison well; t3/83; cum 84K 11/95;
  • 32026, 4,646, MRO, Hans USA 31-17TFH, Reunion Bay, t11/18; cum --;
  • 09444, PA/60, Whiting, Big Stick Unite 0301, Big Stick, a Madison well; t5/82; cum 74K 6/96;
  • 32028, 5,390, MRO, Ballmeyer USA 41-17TFH, Reunion Bay,  t11/18; cum --;
  • 33390, 4,576, MRO, Martha Grube USA 14-20H, Reunion Bay, t11/18; cum --;
  • 33391, 5,330, MRO, Nugget USA 14-20TFH, Reunion Bay, t11/18; cum --;
  • 05584, PA/441, Luff Exploration, Faris Et Al 1-22, Cold Turkey Creek, a Red River well, t5/75; cum 428K 5/03;
  • 08388, PA/184, Denbury, Mosser 3-26, T.R. oil field; a Madison well, t9/18; cum 195K 7/00;
  • 07715, 25, Behm Energy, Lloyd Powell 1, Foreman Butte, six pools (Birdbear, Duperow, Lodgepole, Red River, Souris River), t12/80; cum 2K 11/00;
  • 31773, 268, BR, Ivan 6-1-29UTFH, Elidah, t10/18; cum --;
  • 05751, 35, Zargon Oil, Bryans 9-8, Mackobee Coulee, a Madison well, t12/75; cum 86K 2/15;
  • 05584, 441, Luff Exploration,Faris Et Al 1-22, Cold Turkey Cree, a Red River well, t5/75; cum 428K 5/03;
  • 04222, 59, Hess, Antelope-Devonian Unit 2, Antelope oil field; a Devonian well; t3/67; cum 1.9 million bbls 9/17;
  • 03927, (listed twice on the DAR), 240, Scout Energy Management LLC, Fryburg Heath-Madison Unit D-804; Red River, Heath, Madison; Fryburg oil field; t12/65; cum 204K 12/65;

Is This A Parody? -- December 13, 2018

From the Vox promoting Occasional-Cortex for US president:
“There’s nothing wrong with old people per se, but essentially everyone has lost a step or two both mentally and physically by their mid-70s,” Yglesias [from the Vox] wrote. “The really awful thing about being old is that you just keep getting older over time.”

Idle Rambling On Solving The Problem Of Global Warming -- December 13, 2018

As folks may recall, the UN global warming folks want $100 billion transferred to poor countries. Linked earlier. Let me know if you can't find it.

So, how many poor countries are we talking about? I have no idea. Let's start with, how many countries are in the world? According to wiki: 195. A normal bell curve would suggest less than 25% of these countries would be considered poor. Twenty-five percent of 200 = 50 countries. So, the UN wants to distribute, on average, $2 billion to each of 50 countries.

Now, let's see if anyone has come with the world's poorest countries. Well, that wasn't hard. Something called focus-economics has come up with the ten poorest countries. With another click one gets the full list of 123 countries in the survey. Scrolling down the list by GPD per capita, it certainly looks like the list is about 50 countries that could be considered poor and "deserving" of the $2 billion.

That list is actually quite interesting.

Unless I missed it South Korea is not on the list. What? I must have missed it. Oh, there it is. Not "South Korea" but "Korea" and it is high on the list, so one assumes it is "South Korea."

Cuba is not on the list. Would one consider transferring $2 billion to either North Korea or Cuba? I suppose the UN would.

Palestinians are certainly deserving but they are not on the list either, as far as I can tell. But they would definitely qualify.

I assume the $2 billion / country is the first down payment of many to follow.

Venezuela? Sitting on the world's largest reservoir of oil, it is the only country on the list of 123 with N/A or no data for 2018. 

I'm not sure how giving $2 billion to Cuba, Venezuela, or North Korea would help solve the problem of global warming.

Weekly Natural Gas Fill Rate -- December 13, 2018

Updates

December 17, 2018: a reader offers a perspective on last week's draw. For the archives -- it will be interesting to see how this plays out this winter ...
I pulled out some historical data to compare last week's report to in the last couple paragraphs here. The caveat is that it was colder than normal in November and it's warmer now, and forecast to stay that way, so after this week our withdrawals should start to moderate..

The natural gas storage report for the week ending December 7th from the EIA showed that the quantity of natural gas in storage in the US fell by 77 billion cubic feet to 2,914 billion cubic feet over the week, which left our gas supplies 722 billion cubic feet, or 19.9% below the 3,636 billion cubic feet that were in storage on December 8th of last year, and 723 billion cubic feet, or 19.9% below the five-year average of 3,637 billion cubic feet of natural gas that are typically in storage after the first week of December.
This week's 77 billion cubic feet withdrawal from US natural gas supplies was below the consensus average of 83 billion cubic feet that analysts had expected, and was a bit less than the average of 79 billion cubic feet of natural gas that have been withdrawn from storage during the first week of December in recent years.
Natural gas storage facilities in the East saw a 20 billion cubic feet drop in supplies over the week, which increased the region's gas supply deficit to 14.5% below normal for this time of year, and natural gas supplies in the Midwest fell by 29 billion cubic feet as their supply deficit rose to 14.7% below normal for the first weekend of December. Despite a surprise 8 billion cubic feet injection of natural gas into salt dome storage facilities, the South Central region still saw a net 7 billion cubic feet drop in their supplies, as their natural gas storage deficit slipped to 26.6% below their five-year average for this time of year. At the same time, 8 billion cubic feet were pulled out of natural gas supplies in the sparsely populated Mountain region as their deficit from normal rose to 22.7%, while 15 billion cubic feet were withdrawn from storage in the Pacific region, where their natural gas supply deficit rose to 28.3% below normal for this time of year.

Putting that storage data into historical perspective, the 2,914 billion cubic feet of natural gas that we had in storage on December 7th was 13.2% lower than the previous early December 5 year low of 3,359 billion cubic feet that was set on December 5th of 2014, and was 11.5% below the previous 10 year low of 3,291 billion cubic feet that was set on December 5th of 2008. This year's December 7th storage was also 1.7% below the the 15 year low of 3,166 billion cubic feet of natural gas that we had in storage on December 9th of 2005, and 2.3% below the 2,984 billion cubic feet that were in storage on December 5th of 2003, a year when supplies had peaked at a lower level than this one. We have to follow the archived records (xls) back 16 years, to December 6th of 2002, when 2,794 billion cubic feet of natural gas were in storage, to find a lower quantity of natural gas in storage at this time in December than we have now.

Over the four weeks of this year's heating season to date, 333 billion cubic feet of natural gas have withdrawn from storage in the lower 48 states; that compares to the 164 billion cubic feet that were used in the first five weeks of last year's heating season; when withdrawals began during the first week of November.
For other recent years, there were 241 billion cubic feet of gas withdrawn for use in the 4 weeks up to December 9th of 2016, 154 billion cubic feet in the four weeks up to December 11th of 2015, 252 billion cubic feet withdrawn in the 4 weeks up to Dec 5th or 2014, and 301 billion cubic feet withdrawn in the 4 weeks to Dec 6th of 2013...the comparative withdrawals in the 3 years prior to that were all smaller than 123 billion cubic feet, so there is nothing in the recent storage data history (xls) that approaches the early winter natural gas storage withdrawals we have seen this year.
Original Post

Link here.


That little "leveling off" we "almost" saw last week was not sustaining. The slope today is clearly a "negative" slope.

Unemployment Claims Well Below Forecast -- Keeping America Great -- The Market, Energy, And Political Page, Part 3, T+38 -- December 13, 2018

Unemployment claims, link here:
  • prior: 231K
  • revised: 233K
  • consensus: 228K
  • actual: 206K
Break-evens: re-posting, from BTU Analystics:


Later: I am inappropriately exuberant about the Bakken. See first comment: the reader notes that breakeven costs today (late 2018) are probably (much?) greater today than they were in 2017. That's possible (although I disagree). When it comes to breakeven costs, one can find numbers across the entire spectrum. 

This is how I see it. First, the average is across the area that is being measured. In this case, the "area" is the core Bakken (or the best Bakken; tier 1). Second, the average includes all operators in the area being measured. 

The third thing is that operators manage their assets. They may not produce at maximum rate for any number of reasons. In the Permian, they are certainly not producing at maximum rate: they don't have the takeaway capacity. I would assume with takeaway capacity being very "dear," operators are very, very careful with their drilling choices, to the extent that they can. In some cases, they have to drill to hold their lease regardless of the breakeven costs.

After taking all of that into account, the most important thing for me is to understand that this is an average, which means that if the breakeven price is $40, there are areas in the core Bakken where the breakeven price might be as high as $75 for some operators. To offset that incredibly high breakeven price -- even in the core -- there are some operators that need to bring that breakeven price way down. So, I won't argue that the breakeven price in the core Bakken is (much?) higher than what it was last year (I don't agree, but I won't argue the point). But even in 2015 it was $45; and, in 2016 it was $55 -- during the Saudi Surge when WTI was heading toward $20. 

So, pick your breakeven number.

It is generally agreed that all things being equal, it is the IP that is the biggest variable that contributes to breakeven prices. If all wells cost the same to drill / complete, a well that produces 150,000 bbls in six months has a better breakeven cost than a well that produced 50,000 bbls in six months. Enerplus, Whiting, CLR, Slawson, BR, and a few others are reporting incredibly high production numbers for the first six months after the initial frack. I would assume their breakeven costs are a whole lot lower than those operators who are not reporting such high IPs. 

In addition, even in the core, there are better spots than others, and the operators can certainly pick and choose which pads they want to complete. 

I won't even get into the "neighboring well effect." This is perhaps the most interesting variable that no is discussing. It will become more obvious as the years go by.

Scroll through the cums for the wells completed in 3Q16 (or any other quarter) and compare those cums with the cumulative totals for wells completed this current quarter (link here). The difference between the lists is incredible. 

So, I won't argue the point that breakeven costs -- comparing apples to apples -- are higher this year than last year. I simply see that average as an average, and the better operators are coming in a lot better than the average to offset all those poor performers. 

This was a long reply: some will retort that "I protest too much." Suggesting that I am really, really wrong on this. But as noted, I am inappropriately exuberant about the Bakken.

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

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Pax Trump On The Korean Peninsula

At the sidebar at the right, a link to "Pax Trump On The Korean Peninsula." That was first posted several months ago.

Whoever thought we would see this in less than two years?

Now this, from twitter:


The Market, Energy, And Political Page, Part 2, T+38 -- December 13, 2018

HQ2? Who needs it? From Zack's: Amazon to open regional air hub in North Texas, create jobs.
In a bid to strengthen its delivery services, Amazon.com, Inc.,plans to open a regional air hub at the Fort Worth Alliance Airport, which is expected to commence its operations from 2019. This new air hub is also expected to create multiple job opportunities for North Texas residents. Fort Worth Alliance Airport is west of Grapevine, well north of Fort Worth, off I-35W, south of the Texas Motor Speedway and south of  ... yes ... Buc-ee's!


Here's Bucc-ee's:



The Market, Energy, And Political Page, T+38 -- December 13, 2018 -- Color Me Worried. Not. Peak Oil? Hardly.

ISO New England. Link here. Spike to $160/MWh. Coal at 6% and increase in coal not yet seen this morning. Renewable energy at 8% -- low end of "normal."

What to do with your Christmas tree after February? South Korean wood pellet imports hit a record in November, 2018. I can't make this stuff up. It is the 21st century, isn't it?

UN climate initiative update: a long, long article to say this about the Polish conference now wrapping up -- no progress. None. Zilch. Nada. Goose egg. Zero. But I assume the attendees had a rip-roaring good time flying into and out of Katowice in their private jets. One year close to Armageddon, and they keep flying their private jets, and taking SUV motorcades to these conferences. Remember: this is an existential issue for humanity --

The 2015 Paris Agreement's ultimate goal is to limit global warming to no more than 2 degrees Celsius from pre-industrial levels by 2100 and to aim for no more than 1.5 C.  

US shale -- leading the world into an energy crisis: great op-ed. Over at Financial Times. Archived. Very, very interesting. Some thinking outside the box. Having said that, see if you can:
a) figure out the solution to the problem raised by the writer: and,
b) why this particular writer might write this "op-ed";
c) explain why I'm not a bit concerned
From the linked article, the lede:
The obsession with US shale oil is leading the world into an energy crisis.
The world’s leading forecasting agencies have hailed shale’s tremendous growth as key to meeting oil demand in the coming decades. But by focusing on volume rather than quality, they are missing the point. Crude extracted from shale rock is generally far lighter than conventional oil and is not the type wanted by the world’s oil refiners as demand for heavier products such as diesel increases and demand for petrol decreases.
At the same time, we are approaching the limits of achieving full vehicle fuel efficiency while European consumption has grown faster than previously anticipated. Once the lack of demand from refiners starts to limit the growth of US shale production, we will end up with lower oil supply and higher consumption.
Meanwhile, Rigzone says the world could be "oversupplied" by 2020 -- again.

Of the "original" big three -- Chrysler, GM, and Ford -- only Chrysler -- now Fiat Chrysler seems to be hitting on all 12 cylinders. But not all good news. From windsorstar:
The Windsor Assembly Plant’s 6,000 workers will be getting the first two weeks of January off next year.
Unifor Local 444 notified its members on its Facebook page and Twitter Wednesday afternoon that Fiat Chrysler Automobiles will be closing the plant and employees will be on layoff on from January 2-4, 2019, and the week of January 7, 2019, returning the week of January 14, 2019. That is in addition to previously announced holiday shutdown dates of December 31, 2018, and January 1, 2019.
The last time the plant’s 6,000 workers were on layoff was at the end of October and early November when the plant was idled to adjust inventories. The plant also shut down last January. The plant manufactures the Chrysler Pacifica and the Dodge Grand Caravan.

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Waterloo Sunset, The Kinks

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Back to Blogging

Changing the conversation, why I love to blog -- always in the forefront -- as my wife would say -- LOL --  on December 7, 2018, I posted this:
Someone mentioned yesterday that it would be wise to take Occasional-Cortex seriously. She may be a ditz, but she will change the conversation, and sometimes that is all it takes. Age 29, born 1989. A real millennial. 
Screenshot from twitter:


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Best Interview Ever?

If you don't have time for the entire interview, begin at 3:57. To be safe, so you don't miss the lead-in to this best part of the interview, start a few second earlier. Also, note the other "celebrity."

Dame Edna and k. d. lang

Number Of Active Rigs In North Dakota At Four-Year High; WTI Trending Down; Enerplus To Report A 50K Well -- December 13, 2018

Altruistic? The back story must be quite interesting. For those who have been under the Geico Rock for the past several months, Canada has curtailed heavy oil sands production because there is not enough takeaway capacity. Alberta seems to be trying everything to ameliorate the situation -- is "ameliorate" the best word I could have used? -- but I digress -- now this from S&P Global:
Enbridge's plan to swap 50,000 of North Dakota's Bakken barrels with Western Canadian barrels on its Mainline by mid-2019, after coming to an agreement with one of the shippers on the line, furthered strengthened Western Canadian crude prices. See WCS price at this post. WCS is currently trading for $26/bbl vs $52 for WTI. Wow.
Maybe some good pipeline news? Michigan Legislature -- Enbridge Line 5 .....
The Michigan Legislature approved a bill Tuesday that would allow the replacement of a 65-year-old oil pipeline in a key Great Lakes waterway, voting to create a state authority that would oversee the construction of a tunnel to encase a new segment of pipe.
The measure — passed on 74-34 and 25-12 — would create the three-member Mackinac Straits Corridor Authority, which would be required to sign an agreement for the construction, maintenance and operation of the utility tunnel by Dec. 31 after Snyder appoints its members. The massive engineering project is expected to take seven to 10 years to complete, at a cost of $350 million to $500 million — which the company would pay.
Confused?


What fresh hell is this? Keystone XL pre-construction activities blocked by judge. And so it goes. At the link, a long line of cars running on gasoline taking workers out to plant "sacred corn."

That ship has sailed: for those with nothing better to do, if one wants to track the first shipment of LNG from Corpus Christie, here's the link to the site.

Liberal logic. Mexico ancels two oil and gas auctions.
Mexico’s administration, led by new president Andres Manuel Lopez Obrador, has canceled two February bidding rounds, including one auction that would have been the first in Mexico’s history offering blocks targeting shale resources.
The release also stated that the CNH would be postponing seven farmouts with PEMEX.
Mexico’s president Lopez Obrador, who took office December 1, 2018, stated in July that he wanted to boost Mexico’s crude output to 2.5 million barrels per day. The veteran leftist also previously said that Mexican oil auctions would be suspended until contracts already awarded had been reviewed.
Solace: re-posting. Owners of sea-going oil tankers find "solace" in shale.

Will keep operating but Houston-based Parker Drilling Company has filed for Chapter 11 bankruptcy.

McDermott and BHGE join Australia gas project. A reminder that Australia is among the top two or three natural gas exporting nations, like, in the universe.
Located approximately 124 miles (200 kilometers) offshore Western Australia, the Equus Gas Project comprises 11 natural gas and condensate fields in the Carnarvon Basin, according to Western Gas’ website. The company, which acquired the project from Hess Corp, in November 2017, stated that the fields hold an independently certified resource of more than 2 trillion cubic feet (Tcf) of gas and 42 million barrels of condensate. Comment: 2 trillion cubic feet in context?
A reader reminded me that Pennsylvania alone produces 2 trillion cubic feet of natural gas every four months.
EOG declares dividend of 22 cents/share. This is unchanged from previous quarter. Prior to that, the dividend was 18.5 cents. The company must be doing just fine, thank you.

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

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Back to the Bakken

Wells coming off the confidential list today -- Thursday, December 13, 2018:
PoolDateDaysBBLS OilRunsBBLS WaterMCF ProdMCF SoldVent/Flare
BAKKEN10-20182724994253302029420460191070
BAKKEN9-20182928677284942392419858488713726
BAKKEN8-20183149882508114241833085265030435
BAKKEN7-20181224156226302966614960265012310
BAKKEN6-20181300000

Active rigs:


$5112/13/201812/13/201712/13/201612/13/201512/13/2014
Active Rigs67514065181



RBN Energy: could US natural gas stocks catch up this winter?
The U.S. natural gas market’s supply-demand balance in 2018 has been razor thin, with demand ramping up to match strong production gains. The result has been a large and stubborn storage deficit compared to prior years and price volatility, the likes of which the market hasn’t seen in a decade or more. How will the current storage level affect the winter gas market, and what are the prospects for storage to catch up before the winter is up? Today’s blog considers potential scenarios for the season-ending gas inventory balance.
After treading near $3/MMBtu nearly all year and daily settlements moving within just 10 cents day-to-day, the CME/NYMEX Henry Hub prompt natural gas futures contract last month began exhibiting wild volatility — the kind not seen in a decade or more. The December prompt contract settled in a wide range, starting the month near $3.20/MMBtu, catapulting up to $4.84/MMBtu and moving in 20 to 80-cent increments on many days. That volatility has continued into this month with the January prompt contract.
The cause of this newfound volatility is the market’s hypersensitivity to even the tiniest shifts in the weather outlook. That super sensitivity, in turn, stems from a combination of a tight supply-demand balance this year and a massive deficit in the storage inventory relative to recent years.
Total supply on average this year has trended nearly flat with total demand (not including storage), which implies the tightest supply-demand balance going back at least to 2010. That’s saying a lot, considering production has surged 8 Bcf/d year-on-year and continues to set records regularly. But gas demand has mounted a strong rally of its own this year and closed the gap with supply, and that’s depleted the storage inventory relative to prior years.

Can't Get Enough Of Darlene Love? -- December 13, 2018

Eighteen of twenty-eight Late Night performances by Darlene Love and her trademark song, from 1986 - 2014. There is no performance from 2009 due to no original Letterman show that year due to the writers' strike.

Enjoy. You will probably need four or five cups of eggnog to listen / view all eighteen videos. LOL.

Christmas, Baby Please Come Home, Darlene Love

If still not enough, my "own" collection over at the Fugue blog.