Tuesday, July 30, 2019

The WPX Grizzly Wells In Spotted Horn

The wells:
  • 34585, 2,188, WPX, Grizzly 25-36HY, Spotted Horn, t9/18; cum 138K 5/19;
  • 34586, 3,384 WPX, Grizzly 25-36HF, Spotted Horn, t9/18; cum 261K 5/19;
  • 34590, 2,820, WPX, Grizzly 25-36HIL, 4 sections, Spotted Horn, t9/18; cum 239K 5/19;
  • 34589, 2,620, WPX, Grizzly 25-36HW, Spotted Horn, t9/18; cum 231K 5/19;
  • 34587, 3,024, WPX, Grizzly 25-36HX, Spotted Horn, t9/18; cum 215K 5/19;
  • 34588, PNC, WPX, Grizzly 24HA, Spotted Horn,

  • 32683, 2,198, WPX, Grizzly 24-13HA, Spotted Horn, t3/17; cum 412K 5/19;
  • 32684, 2,695, WPX, Grizzly 24-13HG, Spotted Horn, t3/17; cum 437K 5/19;
  • 32686, PNC, WPX, Grizzly 24-13HS, Spotted Horn, 
  • 32687, 1,673, WPX, Grizzly 24-13HW, Spotted Horn, t4/17; cum 283K 5/19;
  • 32685, PNC, WPX, Grizzly 24-13HX, Spotted Horn,

So Many Stories On So Many Levels -- July 30, 2019

Updates
August 4, 2019: Permian doesn't look so hot as producers hit snags -- Bloomberg.
  • Concho plunges after being forced to slow down oil production
  • "This is a big event for the sector."
  • the 23 wells that make up Concho's "Dominator" project in the Permian Basin were spaced too closely, and production will have to slow to avoid overshooting budgets
August 3, 2019: the "University of Houston Energy White Papers" are linked here. The most recent one, dated 02.2019, "Opportunities and Challenges" in the Permian" will download as a pdf. I haven't been able to "catch" its URL, although I assume it can be done (I've done it numerous times in similar situations).

The white paper is superb. It's a keeper.

I had not heard of the "Marfa Basin" or the "Marfa Sub-Basin" before (or if I had, I had forgotten). It looks like the one of the earlier references to the "Marfa Basin" was back in 2010 by Drilling Info. Science and Technology, 2019, also references the "Marfa Basin."

I've added "Marfa Basin" to the sidebar at the right (which will bring it back to this post).

On another note, a cheesy, cheesy link, but for the archives. I don't want to lose this particular link.

Original Post 

This really is incredible, the headline, from Rigzone: "Permian output is getting unwieldy for Gulf Coast ports."

Despite all the growth in Gulf Coast infrastructure ...
A new study from the University of Houston (UH) concludes that U.S. refiners and other domestic customers will be unable to absorb growing Permian Basin production.
It also finds most Gulf Coast ports are not ready to handle the largest – and most cost-effective – ships for exporting crude oil.
Prepared by UH Energy and the UH Department of Industrial Engineering, the study finds that the Port of Houston likely will be unable to handle very large crude carriers (VLCCs). UH researchers cite the relatively shallow depth of the Houston Ship Channel and air quality considerations as key limitations to introducing VLCCs at the port.
UH also noted that the Port of Corpus Christi – destination for much export-bound Permian crude – is expanding and adding VLCC handling capabilities. Currently, the only Gulf Coast port that can fully load VLCCs is the Louisiana Offshore Oil Port (LOOP), the university added.
The authors maintain that delays in expanding export capacity will slow Permian production – a particularly burdensome development for independents, who already face pressure from the majors’ expanding operations there.
This, of course, also has huge implications for the Bakken. 

Huge implications for:
  • the US; 
  • for Europe;
  • for Saudi Arabia;
  • for China.
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Truth In Advertising

Overwhelmed With Data Right Now -- Will Get Back To Blogging Later This Evening -- July 30, 2018

WTI: $58.37

API: bullish draw. 6.024 million bbls vs 1.818 million bbls forecast. As usual, false precision.

AAPL: wow. Only concern -- for doing so well, very, very conservative with regard to dividends. Reports largest June revenue ever. So, why were profits lower? Margins dropped from 38% to 37%.

MDU: nice report; shares don't yet reflect that.

Porosity, permeability: more later. Getting interesting. Now that I understand it.

Long Island, spot electricity: surges to $88. And it's only going to get worse.

Will help save planet: Prince Harry says he and his wife will have only two children. Whew! That makes me feel better.

Baltimore: remember the Obama stimulus program? Each new job the Obama stimulus created in Baltimore cost $3 million; posted on the blog May 4, 2015; Obama says, "say what?"

Long Island, NY, Spot Price For Electricity -- $88 -- July 30, 2019

Link here.

$88 spot price electricity on Long Island, right now (4:58 p.m. ET, July 30, 2019). Wind and solar energy, as a reminder, are advertised as "free." Monumental step backward.


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Back to the Bakken

Active rigs;

$58.167/30/201907/30/201807/30/201707/30/201607/30/2015
Active Rigs5863613573

Three new permits, #36801 - #36803, inclusive:
  • Operator: CLR
  • Field: Camp (McKenzie)
  • Comments:
    • CLR has permits for a 3-well Florida Federal pad in section 14-152-100, Camp oil field
Three permits renewed:
  • XTO (3): three Michael State Federal permits in Williams County
One producing well (a DUC) reported as completed:
  • 35647, 875, Kraken Operating, Ruffing 27-34 LW 1H, Lone Tree Lake, t7/19; cum --; 

Idle Rambling On Porosity, Permeability -- July 30, 2019

This is way beyond my core competency. This is way beyond my headlights.

I have no formal education in fluid movement, viscosity, etc.

What follows is simply my two cents worth in line with the "purpose" of the the blog.

This has to do with permeability and porosity, two concepts that really, really confuse me.

I'm trying to connect the dots:
  • ever-increasing natural gas production in the Bakken, a crude oil play, not a natural gas play
  • better and better oil wells being reported (in terms of oil production)
  • the observation that there seems to be a lot of produced water in these new wells
A reader recently send me this comment in reply to this post:
EOG made an early announcement in 2008 on EOR in the Bakken and afterwards buried it. (Wouldn't give a followup, but just never implemented it.) Recently they have supposedly been doing field gas EOR in parts of the EF. Even that has not really spread to other operators or all of their acreage. And in general, things that work spread.

So that's nice that Liberty is still hacking away at it. But I would go super skeptical on the "this could be huge". If it's moving to huge-dom, you'll know it because multiple operators start doing it and it becomes routine, not a test. 
The reader has a very good point: the "EOR/EOG announcement was made two years ago (2017) and then seemed to disappear. Two years later, maybe a "test."

I have a lot of thoughts on that but I will it stand.

Other very credible sources are suggesting that the size of molecules is the important story here.

I used to have great difficulty correlating size of molecules with porosity, permeability.

But I'm coming around.

Methane (one carbon, four hydrogens, essentially the diameter of one atom, carbon).

H2O: (one oxygen, two hydrogens, esseentially the diameter of one atom, oxygen).

One oxygen atom has an atomic radius of 60 picometers, think water.

One carbon atom has an atomic radius of 170 picometers, think methane, natural gas.

Ethane is twice the size of CH4 -- two carbon atoms -- and so much ethane is being produced that it is often "rejected."

Propane: 3 carbon atoms.

Butane: 4 carbon atoms.

Pentane: 5

Crude oil: multiple multi-carbon molecules.

Things starting to make sense.

Not ready for prime time. Just some idle rambling. The bottom line: Bakken wells -- especially those that are re-fracked or affected by neighboring fracked wells are showing significantly increased amounts of small-molecule products, like methane and water.

Random Note On ISO New-England -- Jluly 30, 2019

For me, this single graph speaks volumes. Link here.

Nuclear energy is pretty much steady Eddy, day-in, day-out won't change much. Same with hydroelectric power, I assume.

At the end of the end of the day (metaphorically) it's now a "natural gas energy vs renewable energy" story.

Look at this: it blows me away. Again, nuclear energy and hydroelectricity power provides a certain floor. After that, everything is in play.

Natural gas: 70:

Renewable energy: 5%.

Throw out nuclear power and hydroelectric power, the percentage of energy provided by natural gas ... is practically 100%.


NDIC Data Delayed? I Don't Know, Maybe -- July 30, 2019

Unless I have the wrong wells coming off the confidential list today -- which I occasionally do -- it looks like we're not going to see those results until later today. If so, I will miss the early release -- I have lots of Uber driving today.



Someone's Not Happy -- All Major Indices Down -- Biggest Week Of The Year For The Fed? -- And Folks Aren't Happy? -- July 30, 2019

Summer doldrums: all major indices down in pre-market trading. So why is the market falling? 3-second soundbite -- Chinese trade negotiations not going well.

Hack: Capital One headline -- 100 million customers affected -- full story suggests a much less alarming story.

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

Earnings:
  • McDermott: plummets on forecast for full-year loss. 
  • BP: profit outstrips forecasts; lifted by higher oil output -- wasn't BP leading the industry in "going green"? Whatever. I guess the money is still in oil, not wind turbines or solar panels; very comfortable with demand growth outlook;
  • Mastercard: beats profit estimates
  • P&G: pushed up prices in all five of its main divisions in 4Q18
  • US Silica: tops profit estimates on higher volumes; better-than-expected quarterly profit; sold 13% more sand quarter-over-quarter
  • BRK-A/BRK-B: to report earnings Saturday, August 3, 2019; Barron's says to watch stock buyback number
I'm reminded of all that hand-wringing a month ago that 2Q19 earnings were going to be "ugly," and Jim Cramer's mantra for the quarter: not nearly as big as feared.

Calendar today, 292 companies reporting today, a huge day:
  • AAPL; after close today
  • MDU: forecast, 27 cents
  • Halcon Resources (HK): forecast, a loss of 7 cents/share
  • Halcon Resources Corp (HKRS): forecast, a loss of 8 cents/share
  • ONEOK: after market close, forecast, 71 cents
Mexico: AMLO wants to cut rates.

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For Those Who Advocate Censoring, Regulating Facebook

From Kevin Birmingham's 2014 The Most Dangerous Book: The Battle for James Joyce's Ulysses, p. 156:
By 1921, the General Intelligence Division had files on nearly half a million subversives, and that was just a start. Ezra Pound would have a file. So would Ernest Hemingway, Theodore Dreiser, Langston Hughes and John Steinbeck. So would James Joyce. The files were methodically cataloged and cross-referenced by the division's ambitious young director, J. Edgar Hoover. He had received his appointment on the eve of the Red Raids, when he was twenty-four years old, and he got his start as a government librarian.
From wiki:
Around the time of World War I and the First Red Scare, William J. Flynn of the Bureau of Investigation had J. Edgar Hoover set up a General Intelligence Division (GID). Hoover used his experience working as a library clerk at the National Archives to set up the system using extensive cross-referencing.

The GID took files from the Bureau of Investigations (later renamed the Federal Bureau of Investigation) and 'systematized' them via index cards; according to Walker and contrary to evidence, the cards covered 200,000 people.
But by 1939, Hoover had more than 10 million people 'Indexed' in the FBI's domestic file system.
Although the GID was shut down in 1924 after objections from people such as William J. Donovan who called into question its constitutionality, Hoover and the FBI continued to expand the Index system for use by the agency, by Hoover, and by Hoover's political associates well into the 1970s. Today, the Index files covering untold numbers of Americans are still accessible by the FBI and its 29 field offices.

Crude Oil Pipeline Gathering Systems In The Permian -- RBN Energy -- July 30, 2019

To get a feeling of how big the Permian is going to be, consider this.

Quick: name the crude oil gathering systems in the Bakken. I consider myself fairly well-read with regard to the Bakken but I can't name may pipeline systems.

A reader mentioned that some time ago, also, complaining that the industry was not addressing the pipeline shortage in the Bakken. RBN Energy has recently had two posts on this subject.

On the other hand, let's run though the crude oil pipelines that RBN Energy has highlighted so far.
  • Brazos
  • EagleClaw Midstream: 150 miles of pipeline; 90,000 bbls crude oil storage; key connections to regional pipeline systems
  • NuStar Energy: entered the Permian two years ago with the acquisition of Navigator Energy Services' 520-mile system in Midland; has since added 350 miles of new pipeline; tripled the volume of crude oil transport
  • EnLink Midstream's Greater Chickadee in the Midland and its Avenger system in the Delaware
  • MPLX
  • 3 Bear Energy's Hat Mesa oil Gathering System, 200 miles and small trunk lines in the northern Delaware Basin
  • Oryx Midstream Services' 860-mile Oryx Trans-Permian system
  • Delaware Basin's Stateline are: a joint venture of WPX Energy and Howard Energy Partners 
  • Delek US, Midland, to Delek's Big Spring, TX, refinery
  • Medallion Mistream's fast-growing, 1,000-mile system; 116-mile Delaware Express system in the southern Delaware
  • San Mateo Midstream's system in the Delaware Basin; one in Eddy County; one in Loving County, TX; company's plan for two new systems in New Mexico
  • Reliance Gathering's 185,000 bopd pipeline network; Midland; 
  • the Beta Crude Connector: a 100-mile+; 150,000 bopd system: joint venture between Concho and Frontier Energy Services; Midland Basin
Later, I will list the pipeline systems in the Bakken that RBN Energy is highlighting.

This was an interesting data point from today's RBN Energy post:
Now, on to Brazos Midstream. The Fort Worth, TX-based company got its start in April 2015, by which time crude oil prices had slid by more than half (to less than $50/bbl) from their mid-2014 highs.
With financial backing from Old Ironsides Energy, a then-new private equity firm, Brazos quickly determined that the Permian (and more specifically the southern Delaware Basin in West Texas) would offer the best midstream development opportunities, and concentrated its efforts there. The move proved to be prescient.
Thanks to producers’ success in “cracking the code” in the Wolfcamp, Bone Spring and other hydrocarbon-rich formations, the Permian turned out to be the only crude-focused shale play where production actually increased during the mid-decade downturn in crude prices — the new wells also generated large volumes of associated gas, much of it rich in NGLs.
Soon after Brazos’s launch, the company partnered with Jetta Operating Co. to build out and upgrade its small crude and gas gathering system in Ward and Reeves counties. By April 2017, Brazos had 35 miles of crude gathering pipelines and two crude storage terminals (Bison and Cross V) with a combined capacity of 50 Mbbl, as well as about 150 miles of gas gathering pipelines and a 60-MMcf/d gas processing plant (Comanche I, in eastern Reeves County). That month, Brazos entered into an important gas processing contract with Diamondback Energy for the roughly 100,000 gross acres Diamondback had recently acquired from Brigham Resources in Reeves and Pecos counties. This contract helped underwrite the development of a new 200-MMcf/d processing plant (Comanche II) right next door.
Much, much more about Brazos at the link. 

Notes From All Over, Part 2 -- July 30, 2019

Snow in France in July: cancels second to last stage of the Tour de France 



 Wind:


Venezuela: faces the loss of Citgo --
Venezuela could lose its largest U.S. asset after a court allowed a Canadian gold miner to seize shares of Citgo Petroleum Corp.’s parent to satisfy an arbitration award.
A U.S. appeals court ruled on Monday that Crystallex International Corp. may seize U.S.-based stock of Citgo’s parent, which is part of Venezuela’s state-owned oil company, to cover a $1.4 billion award over the nationalization of gold fields.
Unless reversed on appeal or blocked by the Trump administration, the decision would allow Crystallex to auction the shares to satisfy Venezuela’s unpaid debt to the Canadian company. That means the country, in the grip of its worst recession, could lose control of the refiner that processes Venezuelan crude into desperately needed hard currency.
It also complicates efforts by interim President Juan Guaido to retain control of Venezuelan assets including Citgo while waging a power struggle with current leader Nicolas Maduro for leadership of the country. Guaido has asked U.S. President Donald Trump to bar creditors from seizing the country’s assets.
Rats: kind of fun. From one of my favorite political blogs, linked at the sidebar at the right.

On Top Of Everything Else, SABIC Now Has Another Problem -- Profitability -- July 30, 2019

I am re-posting this as a stand-alone. This is a huge story on so many levels.

The Salman Plan is tracked here; linked at the sidebar at the right.

Oh-oh: SABIC profit sinks to lowest in ten years. We've been talking about this ever since we started blogging One never likes to see "profit" and "plunged" in same sentence. From Bloomberg:
  • first very in very first sentence in the story: plunged
  • SABIC (Saudi Basic Industries Corp) 2Q19 profit plunged  to lowest level since 2009
  • net income dropped to $565 million (riyal/dollar = 3.75)
  • the average estimate was $900 million
  • net income one year ago: almost $2 billion
  • Two other data points from the article:
    • The petrochemicals maker said last week it suspended talks with Clariant AG on their high-performance plastics venture a day after the Swiss company’s CEO Ernesto Occhiello unexpectedly quit. Sabic cited "current unfavorable market conditions" for halting talks and said it’s looking forward to continuing the discussions once conditions improve.
    • Saudi Aramco, the world’s biggest oil producer, is in the process of buying a majority stake in Sabic from the kingdom’s sovereign wealth fund for $69.1 billion. The Middle East’s biggest-ever deal had been first mooted last year after the initial public offering of Aramco was postponed.

Notes From All Over, Part 1 -- July 30, 2019

Really? Yesterday I posted the story on the number of SWD wells that the Permian will need over the next decade. To my surprise, this story has legs. It was the #1 story over on Rigzone today. I had to read the story again, I thought my math was wrong. It's not. It's a Bloomberg story; must have been a really, really slow news day.

Fracking: Rystad Energy reporting an uptick in fracking after a flat spell from February to May. Finally a metric that means something:
  • June: preliminary estimate for number of wells being completed in the US -- 47/day
  • spring month average: 45/day
  • if trend continues, US fracking in 2H19 could beat previously set record set in May, 2018
Oh-oh: SABIC profit sinks to lowest in ten years. We've been talking about this ever since we started blogging One never likes to see "profit" and "plunged" in same sentence. From Bloomberg:
  • first very in very first sentence in the story: plunged
  • SABIC (Saudi Basic Industries Corp) 2Q19 profit plunged  to lowest level since 2009
  • net income dropped to $565 million (riyal/dollar = 3.75)
  • the average estimate was $900 million
  • net income one year ago: almost $2 billion
  • Two other data points from the article:
    • The petrochemicals maker said last week it suspended talks with Clariant AG on their high-performance plastics venture a day after the Swiss company’s CEO Ernesto Occhiello unexpectedly quit. Sabic cited "current unfavorable market conditions" for halting talks and said it’s looking forward to continuing the discussions once conditions improve.
    • Saudi Aramco, the world’s biggest oil producer, is in the process of buying a majority stake in Sabic from the kingdom’s sovereign wealth fund for $69.1 billion. The Middle East’s biggest-ever deal had been first mooted last year after the initial public offering of Aramco was postponed.
Wow, link here:

  • Last year, the US:
    • reached a new production record;
    • doubled its export volumes; and,
    • became a top ten exporter
  • Other data points:
    • global demand grew by 1.4% in 2018
    • slightly under the five-year average of 1.7%, 2013 - 2017
China trade war worries? Two data points to consider:
  • China working furiously to keep 50 global companies from exiting China
  • China's Communist Party Politburo: will implement proactive fiscal policy; will continue to cut fees, taxes
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Whither Weber

When I was out in Montana this summer, I wanted to buy another Weber grill, the iconic deep charcoal grill so that I could "do" beer-can chickens. The grill we had simply did not have enough "head-room."

I was surprised to find that the Wal-Mart in Kalispell did not have have any Weber grills, except possibly some small-table-top hibachi-like grills, but absolutely none of the Weber grills we have all come to love.

So, we drove over to a big-box home improvement story. I think it was Lowe's. Even more surpsised. Again, no iconic Weber grill even though they had a huge Weber sign in the barbecue section. It appeared to me that folks were moving to out-door kitchens built around propane.

Yesterday, I had a long, long discussion on barbeque and grilling with others while blogging at Starbucks. One of the most knowledgeable participants in the discussion recommended The Barbecue Outfitters on the corner of Kimball and TX 114 in Southlake.

Yesterday afternoon I drove out to Southlake. I spoke with the owner-manager "Micky" for a fw minutes. Among other things I mentioned my experience with Weber. I suggested that folks were moving away from Weber charcoal grills to outdoor propane kitchens.

Even though she had a huge Weber sign in her window, she really had no Weber grills. She said as much: she said she had Weber outdoor propane kitchens but no charcoal grills but she said it was because it was "impossible to do business with Weber." She said she wanted to run her own store; she did not want Weber to run her store. Fascinating. Sort of reminds me of Apple, Inc.

So, again, no deep iconic Weber grills.

Instead of Weber charcoal grills, The Barbecue Outfitters offers the Green Egg. 

By the way, these outdoor propane kitchens are incredibly huge. Talk about "iron chef on steroids." Actually, to be more precise, "stainless steel on steroids." Some of these stainless steel grills were bigger than my entire kitchen-dining room. My hunch is that the average purchaser will grill a couple of hot dogs and a few hamburgers most days, an occasional beer-can chicken; and a few steaks o the weekend.

Whatever.

By the way, best kept secret: The Barbeque Outfitters grill every Saturday in the front of their store. They serve breakfast, brunch, lunch, and early dinner. They start serving about 10:30 and go at least until 3:30. but "Micky" suggested that by 3:30 not much will be left. She says they grill everything. there is no big buffet per se, but they will grill whatever they are grilling, serve it, and then switch to something else. I was reminded of the difference between grilling and barbequing.

This is a pretty good site -- just be careful -- a lot of pop-ups and requests to send notifications.

By the way, I mentioned the barbeque story in Waxahachie, TX. She was very, very familiar with the store. She had a huge selection of rubs from the Meat Church. I think I've blogged about this store before.

By the way, with the growth rate projected for DFW over the next couple of decades, The Barbecue Outfitters will have to expand to additional stores. They already have two "storefronts" at the Kimball/TX 114 location. And they are already really, really cramped for space.

Three Wells Come Off The Confidential List Today -- July 30, 2019

Story that most fascinates me today: what I call the "plastic straw" story in the Permian. More on that later.

Most important business story not being reported: Boeing. The Boeing 737 MAX story is officially being followed here.

Just how big will the Permian be? I like to think I know the Bakken very well, but if you asked me the names of the crude oil gathering systems in the Bakken, I could not name very many. DAPL. Okay. That's one. Completely different with the Permian. See RNB Energy post today (below).


**************************************  
Back to the Bakken

Wells coming off the confidential list today -- Tuesday, July 30, 2019: 46 for the month; 46 for the quarter;
  • 34584, 806, Enerplus, Crocodile 151-94-17A-20H-TF, Antelope-Sanish, t1/19; cum 156K 5/19; 
  • 34583, 639, Enerplus, Alligator 151-94-17A-20H, Antelope-Sanish, t1/19; cum 152K 5/19;
  • 32950, 166, BR, State Dodge 2A TFS, Dimmick Lake, t5/19; cum --;
Note: Enerplus' Lizard pad is tracked here.

Active rigs:

$57.547/30/201907/30/201807/30/201707/30/201607/30/2015
Active Rigs5963613573

RBN Energy: Brazos Midstream's crude oil gathering system in the Delaware Basin, part 13.
Crude oil gathering systems in the Permian and elsewhere are, by their very nature, evolving things. They increase in mileage and crude-carrying capacity as new wells are drilled and completed, and it’s not uncommon for smaller systems to be consolidated into larger ones. It’s also become typical for the ownership of these systems to change — sometimes year to year — as early investors cash in on what they’ve developed, and buyers see opportunities to rake in increasing revenue and take their newly acquired systems to the next level. Also, owners of neighboring systems sometimes form joint ventures that combine their assets, all to make their operations work better for their producer customers. Today, we continue our series on Permian gathering with a look at Brazos Midstream’s crude gathering system in the Delaware Basin, which has experienced considerable evolution.