Friday, February 8, 2019

Twenty New Permits WIth Some Large Mega-Pads Being Proposed -- February 8, 2019

Active rigs:

$52.722/8/201902/08/201802/08/201702/08/201602/08/2015
Active Rigs63573742136

Twenty new permits:
  • Operators: CLR (11), Enerplus (9)
  • Fields: Haystack Butte, Moccasin Creek
  • Comments: 
    • CLR has permits for an 11-well Gordon Federal pad in Haystack Butte in section 8-148-97 (see graphic below); 
    • Enerplus has permits for a 9-well "mineral/rock" pad Moccasin Creek in section 16-147-93 (see graphic below):
Eight producing wells (DUCs) reported as completed:
  • 32761, 2,023, Rimrock Oil & Gas, Two Shields Butte 13-21-33-13H, Heart Butte, t12/18; cum 37K 12/18 (24 days); neighboring wells with huge jump in production;
  • 32693, 3,033, Rimrock Oil & Gas, Two Shields Butte 13-21016-3H3, Heart Butte, t12/18; cum 48K 12/18; (26 days); neighboring wells with huge jump in production;
  • 32762, 1,103, Rimrock Oil & Gas, Two Shields Butte 13-21-33-13H3A, Heart Butte, t12/18; cum 18K 12/18; (22 days); neighboring wells with huge jump in production;
  • 32692, 1,716, Rimrock Oil & Gas, Two Shields Butte 13-21-16-3H, Heart Butte, t12/18; cum 32K 12/18; (26 days); neighboring wells with huge jump in production;
  • 33373, 1,936, EOG, Liberty 44-1311H, Parshall, t818; cum 132K 12/18; (less than 5 months)
  • 33374, 2,011, EOG, Liberty 45-1311H, Parshall, t8/18; cum 114K 12/18; (less than 5 months)
  • 34271, 1,822, EOG, Liberty 114-1311H, Parshall, t8/18; cum 134K 12/18; (less than 5 months)
  • 31882, n/d, Whiting, Hecker 11-18PHU, Bell, t--; cum 21K 12/18; (45 days) (#23419)
The graphics:

Proposed location for CLR's Gordon Federal pad -- 




Meanwhile, the proposed location for Enerplus' "mineral/rock" 9-well pad in NWNW 16-147-93. This will be a mix of middle Bakken and first bench Three Forks wells, half running north, and half running south.


Two producing wells of interest in this area:
  • 18627, 746, Enerplus, Henry Bad Gun 9C-4-1H, t4/12; cum 269K 12/18; nice jump in production when it came back on line in 9/18;
  • 18790, 1,773, Enerplus, Henry Bad Gun 16B-21-1H, t10/10; cum 464K 12/18; a steady Eddy we;; no jump in production; typical Bakken well with steep decline in the beginning and then plateau at 1,500 bbls/month (12/18)

More On Apache -- February 8, 2019

Over at SeekingAlpha -- see also this link about Apache, earlier.
Subdued Permian oil growth indicates that a large portion of its domestic upstream growth is likely to be represented by natural gas and natural gas liquids, which is consistent with past trends. In Q3 2018, Apache’s Permian production rose by 38% year over year to 222,000 BOE/d while its oil output rose by just 16% during that period. During that quarter, Apache's Permian production mix was 41% oil, 21% NGLs, and 38% natural gas.
Keep in mind that international output declines may be represented more so by crude oil than natural gas, particularly as its North Sea and Egyptian operations are primarily oil producers (crude represented 63% of its Egyptian output and 84% of its North Sea output in Q3 2018).
It will be interesting to see how Apache’s Alpine High strategy turns out over the long haul. By November 2018, the firm was pumping 55,000 BOE/d out of the area with eight rigs actively developing the play, up from a minimal amount of output in late-2016. Apache had drilled 180 wells and placed 125 wells online in the Alpine High area as of November 2018, giving it a large enough slate of well data to gauge how economical developing the region will actually be (in theory, expected well returns are strong enough to justify stepping up the pace of its development activity). Major midstream investments are being made to support this growth trajectory.
Generally speaking, the most lucrative parts of unconventional liquids-oriented plays (such as the Eagle Ford, Bakken, Permian, SCOOP, STACK, Powder River Basin, DJ Basin and others) are the most liquids-rich regions within those plays, regions that can bring wells online with high oil, condensate, and natural gas liquids cuts. Domestic natural gas prices in America have been and continue to be very low, a paradigm that is unlikely to change anytime soon. So unless these gassier wells can achieve the kind of performance seen at the Marcellus or Haynesville gas plays in terms of estimated ultimate recovery rates, it will be up to Apache to make sure it can maximize its natural gas liquids and condensate output as best it can from its Alpine High drilling inventory.
Disclaimer: again, this is not an investment site. Do not make any investment, financial, job, travel, or relationship decisions based on what you read here or what you think you may have read here.

Ban on Venezuela Oil -- Minimal Effect On US -- February 8, 2019

I was just going to link the article at another post (which I did) and leave it at that, but it's too important to get lost in all the clutter.

Data points:
  • 14 US refineries imported Venezuelan crude oil in 2018
  • Venezuelan imports declined by 129,000 bopd from same period one year ago (2017)
  • imports from Canada and Mexico rose by 113,000 bopd and 48,000 bopd, respectfully, from 2017
  • 113,000 + 48,000 = 161,000 -- well above the 129,000 lost from Venezuela the year before
  • if I recall correctly, total amount of Venezuelan oil being imported by US in most recent data, about 500,000 bopd -- a drop in the bucket compared to Canadian, Mexican, Mideast capacity to replace 
  • Canada has a self-imposed cap on heavy oil production; that cap could be rescinded overnight
  • Mexico's opportunity to shine
  • Saudi looking at options
Over at oilprice:
The U.S. sanctions on Venezuela’s oil industry and state oil firm PDVSA are unlikely to have a significant impact on the refinery runs of the U.S. refiners, the Energy Information Administration (EIA) said in an analysis this week.
U.S. imports of crude oil from Venezuela have been falling in recent years, and U.S. refiners have been replacing heavy crude from Venezuela from heavy crude grades from other sources, the EIA said.
Last week, the U.S. imposed sanctions on PDVSA to “help prevent further diverting of Venezuela’s assets by Maduro and preserve these assets for the people of Venezuela,” Secretary of the Treasury Steven T. Mnuchin said.
Those sanctions will essentially eliminate U.S. imports of Venezuelan crude oil as the full effects of the sanctions emerge, the EIA said, but noted that it doesn’t expect “any significant decrease in U.S. refinery runs as a result of these sanctions.”
Imports of crude oil from Venezuela are still a significant portion of the U.S. Gulf Coast imports, but they have been falling in recent years due to the collapsing Venezuelan oil production. Gulf Coast imports of Venezuelan crude oil fell to an average of 498,000 bpd between January and November 2018 from an average of 618,000 bpd in the first 11 months of 2017, the EIA said.
Out of the 14 U.S. refineries that imported crude from Venezuela last year—12 of which in the Gulf Coast—imports in January-November declined by 129,000 bpd compared with the same period in 2017. While imports from Venezuela declined, imports from Canada and Mexico to these refineries rose by 113,000 bpd and 48,000 bpd, respectively, from 2017 levels, the EIA has estimated.
“Moving forward, refineries may also choose to run lighter crude oils because transportation constraints may limit the availability of heavy crude oils,” according to the EIA.
Much more at the link, and oh, by the way, sort of explains to millennials why the need for oil will never, ever go away, no matter what they "think." In quotes, 'cause I use the word "think" loosely whenever I put "think" and "millennials" in the same sentence.

Shale -- February 8, 2019

From Rigzone:
  • Apache will do more with less
  • will cut CAPEX for 2019 from $3 billion to $2.4 billion
  • did not cut production guidance: 410K to 440K boepd
  • expects strong 4Q18 to 4Q19 production increases of 6 to 10 percent as a company; 12 to 16 percent in the US and 5% from the Permian
  • targeting a "cash flow neutral" plan
  • assumption: WTI at $53/oil -- 2019 average
Over at SeekingAlpha also. And at this post.

Rystad, re-posting: yesterday it was noted that Rystad felt Permian shale operators could be profitable on $45 oil. I missed an important word in that post. See if you can find it:
“Our conclusion is that the average well completed during 2017 and 2018, which mirrors the most likely production profile and costs, appears very profitable even at local oil prices of $45/bbl,” said Per Magnus Nysveen, Rystad Energy senior partner.  
Yes, the key word that I glossed over: very.

Succinctly: the Permian appears very profitable even at local oil prices of $45/bbl.

Rystad did not use these words:
  • break-even at $45
  • possibly profitable at $45
  • profitable at $45
But, rather "very profitable at $45/bbl oil

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Beating A Dead Horse

This will be the third post / link regarding the effect a ban on Venezuela oil will have on the US. To re-cap (links later when I'm in the mood):
  • I posted first: it would have no effect
  • then RBN Energy: came to the same conclusion
  • now, oilprice: same conclusion (see more here)

February 8, 2019, T+37, Day 14 Of Open Border Negotiations.

Ta-ta, so many story lines in this Reuters story -- data points:
  • Tata Motors Ltd, New Delhi, India
  • owns British-made Jaguar Land Rover
  • Tata Motors: "stunned markets"
    • posted the biggest-ever quarterly loss in Indian corporate history of about $4 billion
    • due to slumping Chinese sales
    • JLR's China retail sales almost halved in December quarter (4Q18) as overall demand in the world's biggest auto market constracted last year for the first time since the 1990s
    • JLR also buffetted by Brexit woes and weaker business for diesel cars that make up the bulk of its sales in Europe  
    • Tata shares slumped as much as 30%
    • Jaguar Land Rover brings in most of Tata's revenue (sort of like iPhone for Apple?)
  • And it gets worse:
    • Tata warned that the JLR unit would swing to an operating loss in year to March (1Q19) vs an earlier projection for breakeven, given weak sales
Disclaimer: this is not an investment site. Do not make any investment, financial, job, travel, or relationship decisions based on what you read here or think you may have read here.

Occasional-Cortex: removes her FAQ page from her homepage regarding her socialist program -- it was noted to be removed yesterday. Hawaiian counterpart says that eliminating air travel -- as advocated by Occasional-Cortex -- would make it difficult for Hawaii. I don't know. Elon Musk could step in with underwater tunnels as the Norwegians are proposing. One simply has to think "outside the box."

Occasional-Cortex: becomes more irrelevant by the day. Even Pelois is blowing her off. But OC certainly provides a lot of entertainment. See this from The Federalist.
Note: Ocasio-Cortez’s office has taken down their page describing the Green New Deal.

A number of Democratic Party presidential hopefuls — including Cory Booker, Kamala Harris, Elizabeth Warren, Kirsten Gillibrand, Juli├ín Castro, and Beto O’Rourke, for starters — have already endorsed or expressed support for the “Green New Deal” (GND). Today, Rep. Alexandria Ocasio-Cortez and Sen. Edward J. Markey dropped details about her plan.

It is not hyperbole to contend that GND is likely the most ridiculous and un-American plan that’s ever been presented by an elected official to voters. Not merely because it would necessitate a communist strongman to institute, but also because the societal costs are unfathomable. The risible historic analogies Markey and Ocasio-Cortez rely on, the building of the interstate highway system or moon landing, are nothing but trifling projects compared to a plan that overhauls modernity by voluntarily destroying massive amounts of wealth and technology. That is the GND.
Apple: now advertising their best-selling iPhone ever, the XR for as low as $18.99 / month. And folks tell me the iPhone XR -- the best phone on the market -- is too expensive.

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SunTrust, BB&T, and Coca-Cola

Updates

February 9, 2019:
  • WSJ op-ed: Elizabeth Warren's bigger banks -- the BB&T-SunTrust merger is an attempt to compete with the giants.  Best comment: if Elizabeth Warren can claim to be an American Indian, why can't these two banks claim to be laundromats?
  • WSJ headline article: BB&T and SunTrust merger deals a blow to Atlanta. SunTrust's planned departure in $30 million deal stuns city where it has an outsize presence. Not one mention of Coca-Cola in this fluff piece. This suggests to me the writer doesn't know much of SunTrust's history.
Original Post

SunTrust bought by BB&T, posted earlier (scroll down at the link). I missed this. It's too long to go into now, but I will come back to it later. A reader brought this to my attention: no one could have afforded to buy SunTrust had it not divested itself of all of its Coca-Cola shares at the "behest" of its primary regulator, the Federal Reserve. Apparently the regulator felt SunTrust might "go under" if Warren Buffett decided to sell all his KO. From another source:
SunTrust was forced to resubmit its capital plan – known as Comprehensive Capital Analysis and Review (CCAR) – after it failed part of the stress test in March 2012. The Coke shares (or any stock holding) held by SunTrust would weigh on the bank's capital ratio under new capital rules within Basel III. Thus, SunTrust decided to accelerate its plan and sold the Coke shares earlier than expected.
CCAR: annual "stress testing" mandated by Dodd-Frank.

KO: Coca-Cola. Sold for 66 cents/share in 1980. Today about $50/share. Whatever. Pays about 3%.


TKO: technical knock-out.

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Canadian Pipelines

Canada's most important pipeline right now: Enbridge Line 3. Status (no links, simply my understanding of "where" we are):
  • November, 2018: Minnesota regulators continue to support
  • December, 2018: protestors begin fund raising to stop the project
  • will probable be in the news in spring, 2019; expect to see ND/StandingRock/DAPL veterans in northern Minnesota once the weather improves

Recent Bakken Discount To WTI -- February 8, 2019

A reader asked why royalty checks from EOG were so low for November, 2018 in a comment at another post.

That was due to the incredibly low price for Bakken oil (even compared to WTI), not unique to EOG.

I noticed the low Bakken price at the time but did not know why and did not investigate. I assumed it was a "takeaway" problem, either rail or pipeline.

Later, Lynn Helms explained it was a one-time (or will last only a short period of time) anomaly due to some "takeaway constraint." He was much more specific; I remember blogging about it but can't find that post now. If I run across it I will post it. Regardless, both Lynn Helms and Platts (see link below) noted it and commented on it as a one-time anomaly due to some specific pipeline constraint.

Be that as it may, the Bakken discount to WTI will be seen in the December data which will be posted in the February, 2019, Director's Cut, due out next week. In fact, based on the data below, it could be worse. Bakken pricing seems to be slowly improving.

My hunch is that some reader will know specifically the pipeline constraint that resulted in this pricing anomaly. Any help on this will be appreciated -- even if it's anonymous.

Two links:
From the January, 2019, Director's Cut with November, 2018, data:


By the way, if the judge were to rule "against" the DAPL -- yes, a case is still being considered by "the judge" -- .... well, what can I say?

Polar Bears -- February 8, 2019

To some, I might be seen as trolling. To others, I might be seen as trying to argue my case. Perhaps subconsciously I am, on both accounts. But consciously, I simply find this fascinating. And it explains why ABC News no longer talks about it. It's complicated.

I started with the 1922 article on global warming, a phenomenon, it appears, first noticed by the Norwegian fishermen. They noted global warming before anyone else it seems. The Norwegian farmers of the sea, just as farmers of North Dakota, pretty much understand and can predict weather as well as any weatherman.

Forecasting weather, not climate. Any given farmer or rancher probably has only four generations within with to "work" his knowledge of weather or climate: the stories he/she might have heard as a toddler from his grandparents; and, the weather he/she experienced while growing up and learning from his parents who might have talked about what they remember from their own grandparents, his/her great-grandparents. And then, of course, what he/she was experiencing as an adult.  Four generations, maybe 100 years of "personal" weather experience. Until the mid-20th century, I doubt most North Dakota farmers or ranchers had much time to "study" weather. They experienced it and understood it. Their livelihood and the very survival of their families depended on their understanding and ability to forecast. The weather, not the climate.

So, the farmers of the sea, the Norwegian fisherman first noted global warming back in 1922.

The article implied, at least to me, these Norwegian farmers of the sea thought, at best, they might have, at best, ten years of "farming" left.

Ten years.

That rang a bell. Where had I seen that before? Well, lookeee here ... from NBC News when no one had yet heard the term "fake news." From NBC News, September 14, 2006 -- an interesting date -- September 14th is the birth date of a very important person in my life, but I digress -- this headline -- again, this was back in 2006: "Warming Expert: We Have Only One Decade Left To Act In Time." 

One decade. Ten years. That was back in 2006. The lede:
A leading U.S. climate researcher says the world has a 10-year window of opportunity to take decisive action on global warming and avert catastrophe. 
NASA scientist James Hansen didn't say (nor did Occasional-Cortex say) that the earth would end in ten years; they both said we only had ten years in which to "take decisive action on global warming to avert catastrophe." [Occasional-Cortex said twelve years, which on late-night television later said that was hyperbole.]

To the best of my knowledge, unless a PowerPoint presentation and a Nobel peace prize represent "decisive action" it appears we have passed the ten-year-point of no return.

So, 1922: only ten years.

1994, Algroe: only ten years.

2006, James Hansen: only ten years.

2019, Occasional-Cortex: only twelve years.

There seems to be a pattern here. Every time we pass a global warming deadline, we're given another ten or twelve years.

So, I was curious. How are the polar bears doing? We haven't heard much about them lately.

Going through a bit of surfing last night, I read quite a bit about polar bears. This is what I learned:
  • the population of the Hudson Bay polar bears is the metric "everyone" accepts as sacrosanct when it comes to proving that the science is settled
    • perhaps that metric has become "the" metric because the Inuit livelihood and survival in this region depends on their understanding of the tundra (and the weather/climate) to know how to manage their crop
  • those who probably best know the status of the polar bear population, the Inuit polar bear farmers, continue to argue for increased hunting of said bears because the population of polar bears is so high the Inuits themselves are endangered
    • some years ago, the number of polar bear tags sold were in the range of 40; the Inuits suggested that the number could easily be doubled last year or the year before
  • no one really knows the number of Hudson Bay polar bears except one person (I'm not making that up) and he (a "warmist") won't release his figures
    • an all-time high of 2,000 to 3,000 Hudson Bay polar bears has been estimated
    • at the time the polar bear became the metric, it was estimated that there were 1,200 Hudson Bay polar bears
    • now, there are between 800 and 900 Hudson Bay polar bears
  • contrary to what millennials will tell you, there are no polar bears in the Antarctic, and polar bears do not eat penguins except when the former vacation at the South Pole
  • the consensus is that whatever the number of polar bears there are today:
    • the population is stable and has been stable for quite some time
    • the polar bear farmers appear not to be concerned; they want to double the number of polar bears taken by Native Americans
    • only one person has the "official number" and he is not sharing that number with the rest of us
The number one internet source for this information seems to be Polar Bear Science (see links below).

These are a few of the sources:
  • Derocher admits Western Hudson Bay polar bear population may not be declining, December 30, 2018; link here, note the date; can't get much more recent
  • Environment Canada maps of polar bear population and status assessments 2018, June 11, 2018, link here; note the date; again, very current 
  • Breaking: 2016 West Hudson Bay polar bear survey shows the population is still stable, September 19, 2019, link here;
  • "So many bears" draft plan says Nunavut polar bear numbers are unsafe (too many of them); plan leans heavily on Inuit knowledge, contradicts western scientific thinking, CBC, November 12, 2018, link here; note source and note data

Six Wells Come Off The Confidential List Today -- February 8, 2019

Wells coming off the confidential list today -- Friday, February 8, 2019: 37 wells for the month; 139 wells for the quarter
  • 34271, 1,822, EOG, Liberty 114-1311H, Parshall, t8/18; cum 134K 12/18;
  • 33101, IA -- no IP data, CLR, Sakakawea Federal 7-19H1, Elm Tree, t--; cum --;
  • 33100, IA -- no IP data, CLR, Sakakawea Federal 5-19H2, Elm Tree, t--; cum --;
  • 32925, 13 (no typo), BR, Renegade 34-10MBH, Sand Creek, t12/18; cum 6K after 10 days;
  • 30316, 2,159, Hess, EN-Weyrauch C-154-93-2932H-11, Robinson Lake, t12/18; cum 9K after 7 days;
  • 29997, 834, Slawson Fox 1 SLH, Big Bend, t1/18; cum --;
Arctic rigs:

$52.672/8/201902/08/201802/08/201702/08/201602/08/2015
Active Rigs63573742136

RBN Energy: at long last, new outlets for Alberta propane.
Well, it finally happened. After several years of assessing the possible development of a large, integrated propane dehydrogenation (PDH) plant and polypropylene (PP) upgrader unit, a joint venture of Canada’s Pembina Pipeline and Kuwait’s Petrochemical Industries Co. (PIC) earlier this week announced a final investment decision (FID) for the multibillion-dollar project in Alberta’s Industrial Heartland.
The new PDH/PP complex won’t come online until 2023, but when it does, it will provide yet another new outlet for Western Canadian propane, which has been selling at a significant discount in recent years. Today, we discuss Pembina and PIC’s long-awaited PDH/PP project, Inter Pipeline’s development of a similar project nearby, Western Canadian propane export plans — and what they all mean for propane prices.

At Least It's Dry -- Williston, ND -- February 8, 2019