Wednesday, January 8, 2020

CLR's Long Creek Unit Has Been Updated -- January 8, 2020

CLR's Long Creek Unit is tracked here.

The Long Creek Unit has been updated -- there are currently two rigs in the unit.

Damn The Torpedoes, Full Speed Ahead -- CLR -- Two Rigs On One Pad -- January 8, 2020

The CLR Angus Federal wells are tracked here.

Updates will be at that post; this page will not be updated.

This is what that 18-well pad looks like today:


The wells to watch, of course, are:
  • 18138, 1,161, CLR, Simmental 1-21H, t12/09; cum 351K 11/19;
  • 19503, 275, CLR, Simmental 2-21H, t12/09; cum 358K 11/19;
  • 23495, 240, CLR, Simmental Federal 23-16H, t6/13, cum 354K 11/19;
  • 23496, 300, CLR, Angus Federal 4-9H, t5/13, cum 370K 11/19;
  • 23493, 568, CLR, Simmental Federal 4-16H, t6/13, cum 323K 11/19;
  • 23494, 360, CLR, Angus Federal 5-9H, t6/13, cum 465K 11/19;

ADP Jobs Report -- December, 2019, Data

Another huge story, but it's almost as if no one is paying attention.

First, look at the Barron's headline: the ADP jobs report shows US payrolls rose by another incredible 202,000 (December, 2019) ... but look at this: Barron's says the ADP often "undershoots the US Labor Department reading. Wow. We will get the government reading on Friday.

From the linked article:
  • 202,000 jobs added in the private sector in December, 2019
  • most jobs added in eight months
  • sentiment: labor market remains solid
  • no evidence of wage inflation
  • "just where are these jobs coming from" -- the mainstream media says we've exhausted the labor pool -- LOL -- mainstream media not paying attention --
  • that 202,000? Well ahead of the 160,000 forecast by US economists
  • best reading since April, 2019
  • then, get this: the November, 2019, jobs figure was revised upward -- significantly -- up from 67,000 to 124,000
Reaction?
  • Bernie: resist!
  • Buttigieg: change course!
  • Biden: WTF just happened?
  • Pocahontas: well, here's the thing. 
******************************
Idle Rambling

Whether it's good, bad, or indifferent --- whenever there's a huge military conflict, potentially involving the US, one is reminded again, how amazingly robust our military is.

From the few line items reported by the press prior to last night, following the killing of that Iraqi general:
  • six B-52's fly into and stage out of Diego Garcia. Six B-52s alone would be more than enough to make Iran think twice
  • that elephant walk at that Utah air base: 52 F-35s participate in minimum interval takeoff; 52 F-35s with nothing else would be more than enough to make Iran think twice
    • this is one air base; the US has many more such bases; this is just a single air base
    • three squadrons, maybe four squadrons, I assume
    • one US Navy a/c carrier has three fighter squadrons
  • US Navy: how many submarines with 154 Tomahawk cruise missiles on each are within striking distance of Iran does one suppose there are? One? Two? Three?
Even after all my years in the Air Force, I was still amazed to see that 52-a/c elephant walk over at Hill AFB, UT -- that was really, really impressive.


*******************************
Idle Rambling

Re: that Ukrainian 737 that crashed and burned moments after take-off from Tehran International Airport.... does this pass the smell test? I find it incredible the mainstream media took this "explanation" at face value, reporting it as if it were true -- that it was an engine fire that caused this.

Some comments, observations, facts:
  • when was the last time a 737 crashed and burned moments after take-off (we're not talking about the 737 MAX) due to a single engine fire? I think ... never ...
  • the 737-800 is one of the safest aircraft ever flown; many, many redundant systems;
  • the plane had just completed its most recent inspection, January 6, 2019; it's a 2016 model;
  • Tehran/Iran spokespeople are perhaps the least credible spokespeople on the planet; journalists actually take their word on this? All networks cite cause of crash due to engine fire / technical problems and this is their source: "Report."
  • immediately after the crash, the Iranian spokespeople said they had the cause of the crash; that's incredibly fast -- it almost sounds as if the press release was written before the incident;
  • why in the world did Tehran let a passenger plane take off under these circumstances; did the airport NOT get the memo that ballistic missiles were about to be launched?
  • the 737-800 is perfectly capable of flying/climbing on one engine; the loss of a single engine would not be enough to cause a crash;
  • there was no communication from the cockpit that there was any problem; whatever caused this problem, is was "instantaneous"
  • there was no indication the plane had any problems: the flight path was straight and climbing; the plane simply dropped off the radar scope; simply dropped out of the sky
  • no communication from the cockpit, and one can be sure the NSA linguists were listening to the radio communication between the airline and the tower in real time; the US knows what happened (and so does Boeing);
  • Ukraine has never had an a/c crash in 37 years
  • the debris field is huge, widespread -- it is not a debris field one sees in a kind of crash from a technical problem; a plane losing an engine would simply crash land; end up in pretty much one piece, and there would likely be survivors; but again, a 737-800 doesn't "crash" due to a loss of one engine
  • the pilot had 1,600 hours of experience, if I recall correctly
  • incredible coincidence: happens on the very night missiles are flying
  • Tehran won't give up "black box" which would explain much; later, says the black box was damaged; LOL -- based on reports of impact and description of debris field, the black box was utterly destroyed;
  • most interesting, the Iranians hinted at an a/c shoot-down in a tweet just hours before this incident actually happened
  • journalists reporting the story say "we shouldn't speculate" and yet they speculate on everything else; but journalists don't seem to want to call into question Iranian spokespeople; what am I missing?
  • this is right up there with Epstein hung himself
See comment below, a reader expanding on the observations above:
I flew the Boeing 737 for 22 years and the national guard version for 15 of those years, four years as an instructor and check airman.
The 737 national guard is one of the safest airliners out there especially when in the hands of competent pilots which this appears to be the case.
The large debris field and the absence of impact furrows in the ground or a substantial impact crater is further evidence of an inflight breakup. Several large sections of fuselage skins found in different locations show no crumpling that is normally seen in high energy impacts. The vertical stabilizer found separate from the wreckage is mostly intact with indications of shrapnel damage to the upper side that appears not to have come in contact with the ground. The fuselage skins and vertical stabilizer could easily be surmised to have separated from the aircraft inflight.
Lastly the unsubstantiated photo of the fins of an Iranian antiaircraft missile found in the area could be the biggest clue. 
Bottom line: if it walks like a duck, quacks like a duck, and swims like a duck, it's probably a duck.

Later, 1:06 p.m. CT, January 9, 2020: when the Pentagon makes an official announcement on almost anything, you can pretty much take it to the bank. The a/c "probably" / "accidentally" shot down by Iranian ground-to-air missile. Story everywhere. Google it. Fox News has it as top story; Drudge does not.

Later, 1:48 p.m. CT, January 9, 2020: Canada's PM Trudeau now says there is intelligence data that the a/c was brought down by a missile.

Later, 2:02 p.m. CT, January 9, 2020, from CBS News:  U.S. intelligence picked up signals of the radar being turned on and satellite detected infrared blips of two missile launches, probably SA-15s, followed shortly by another infrared blip of an explosion.

That last one: that's pretty chilling. 

Financial Times: First Nominee For The 2020 Geico Rock Award -- January 8, 2020

Wow, that happened quickly. We already have our first nominee for the Geico Rock Award for 2020. Somehow the Financial Times completely missed the US shale revolution that began in 2000. This may be the all-time best example of what the Geico Rock Award is all about. 

This article was brought to my attention by a reader. A huge "thank you."

The Financial Times asks this question: Why have oil prices failed to rally despite the tensions in the Middle East? And then provides five reasons:
  • the crisis is expected to de-escalate;
  • oil tanker groups are taking a wait-and-see approach;
  • OPEC and allies can increase supplies;
  • oil prices are already high;
  • higher price = higher supplies;
Anyone paying attention can see what a joke this article is. LOL.

The article is behind a paywall but going through google will probably get you to the article. 

It's hard to believe that the Financial Times could publish such an incredibly poor article. 

WPX With Seven New Permits, MRO Has Another Permit In The Phenomenal Bailey Oil Field -- January 8, 2020

Active rigs:

$60.321/8/202001/08/201901/08/201801/08/201701/08/2016
Active Rigs5663543958

Nine new permits, #37316 - #37324, inclusive --
  • Operators: WPX (7); MRO (2)
  • Fields: Mandaree (McKenzie); Reunion Bay (Mountrail); Antelope (McKenzie); Bailey (Dunn);
  • Comments:
    • WPX has six more Mandaree permits, six Topaz permits in section 24-149-94;
    • WPX has an additional Patricia Kelly permit in the Antelope oil field, section 3-150-94;
    • MRO has another Klovstad permit in that remarkable Bailey oil field, section 33-145-93;
    • MRO has an Oscar Thorson USA permit in Reunion Bay oil field, section 8-151-93; 
Two permits canceled:
  • Oasis: an Oasis Meiers permit in Mountrail County
  • XTO: a Sonya Federal permit in Williams County
Nineteen (19) permits renewed:
  • Resource Energy Can-Am (5): one Marauder permit; one Charger permit; one Odyssey permit; two Beetle permits, all in Divide County
  • BR (4): two Kermit permits and two Rink permits, all in McKenzie County
  • XTO (4): four Hartel permits in McKenzie County
  • EOG (4): four Austin permits in Mountrail County; 
  • Nine Point Energy: one Novak permit in McKenzie County
  • Oasis: a Borden Federal permit in Williams County
Three producing wells (DUCs) reported as completed:
  • 35255, 3,416, Hess, BB-Olson-LE-150-95-09H-1, two sections, Blue Buttes, t12/19; cum --;
  • 35256, 3,186, Hess, BB-Olson-150-95-09H-11, one section, Blue Buttes, t12/19; cum --;
  • 35257, 2,708, Hess, BB-Olson-150-95-09H-10, one section, Blue Buttes, t12/19; cum --;
***************************
That New MRO Permit In Bailey Oil Field

Newest permit:
  • 37316, loc, MRO, Klovstad 34-33H, Bailey, SESW 33-145-93, 
Three other permits in that area:
  • 37093, loc, MRO, Ruggles 14-33H, Bailey,
  • 37094, loc, MRO, Pomeroy 14-33TFH, Bailey,
  • 37095, loc, MRO, Wiest 24-33H, Bailey,
Also,
  • 19116, 462, MRO, Tramp 44-32H, Bailey, t11/10; cum 179K 11/19; needs to be re-fracked;
The graphic (quick! What is the first thing you notice in this graphic?):

Notes From All Over, Part 3 -- January 8, 2019

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

The market:
  • wow, look at that, AAPL up $2.45, now trading above $301 -- a new all-time high
  • two of three major indices at all-time highs
  • Dow could hit another all-time high

Notes From All Over, Part 2 -- January 8, 2020

Jobs -- a better way to think about November's jobs numbers. Link here.

New "Operator" In The Bakken -- Huge Story -- January 8, 2020

Updates

January 10, 2020: origination, eastern Williams County, puts this pipeline gathering system beginning south of Tioga/Ray. The oil fields in this area: Beaver Lodge, Capa, Alkali Creek. Hess has a huge presence in that area and when I think of Hess, I think natural gas. CLR, of course, also has a huge presence there. The new plant is said to be west of Williston; I can't imagine the plant being much more than 10 miles to the west of Williston, probably on the north side of the highway. The Montana state line is only 18 miles from Williston (probably less now that Williston has expanded). So, for now, my guess is somewhere along County Road 1, near its intersection with County Road 4 (54th Street NW). If I recall correctly, the new Williston airport is off 58th Street NW.


January 10, 2020: the reader who first alerted me to this story added this comment today:
On reflection, the Outrigger gas plant just seems to be part of a bigger project, specifically for ethane. 
Why would any project make ethane cryogenic separation part of it? 
Ethane has no value for long distance transfer for ONEOK as it would lose money for the pipeline. But that is not true for ethylene. Ethylene just started to be exported from Texas and is priced higher. 
What if all the ethane going into the pipeline was converted first? The pipeline contents would be elevated in price and smaller amounts could be further processed in ND.
January 10, 2020: a quick look at using cryogenic separation for NGL extraction.

January 10, 2020: gas processing and fractionation

Original Post

Huge thanks to a reader for alerting me to this story. This is huge, perhaps the biggest energy story in the Bakken this week.

Links:

Outrigger Energy.
Outrigger Energy II LLC is a private, full service midstream energy company specializing in greenfield project development with current systems operating and under construction in the DJ and Williston Basins. The company was formed in 2017 after Outrigger Energy LLC sold its assets to Targa Resources and Tallgrass Energy Partners.
Outrigger deal with XTO to expand Bakken midstream infrastructure. Paywall.
Private midstreamer Outrigger Energy II LLC has agreed to provide long-term natural gas gathering and processing services to a subsidiary of supermajor ExxonMobil Corp to assist in developing Williston Basin assets in North Dakota.
Business Wire, press release:
Outrigger Energy II LLC announced today that it has entered into a long-term definitive gas gathering and processing agreement with XTO Energy, Inc. to service XTO’s production in Williams County, ND.
The gathering system will comprise a 70-mile, 20- and 24-inch diameter, rich gas pipeline originating in eastern Williams County and terminating at a new 250 MMcfd cryogenic gas processing plant located west of Williston, ND.
Plans are also underway for a plant expansion of up to an additional 200 MMcfd, for total gas processing capacity of 450 MMcfd.

Outrigger will construct, own and operate the cryogenic processing plant and gathering system. The high efficiency plant features ethane recovery and rejection capabilities that will provide direct market access to the Northern Border Pipeline system for residue gas and the ONEOK NGL pipeline system for natural gas liquids.
Future NGL fractionation facilities may be added to provide finished NGL products for local markets.

Dave Keanini, Outrigger’s CEO, stated, “We are grateful XTO has entrusted Outrigger to build a gathering system with substantial capacity and state-of-the-art facilities that will assist XTO with execution of its significant development plans in Williams County. Routing of the gathering line will provide other Williston Basin operators access to much needed gathering and cryogenic processing capacity. Moreover, this additional midstream capacity for gas production north of the Missouri River allows the State of North Dakota to make strides towards its goal of minimizing gas flaring in the Basin. Over the last six years, the Outrigger team has achieved an excellent track record of project execution, safe and reliable operations and customer service in the Delaware, Midland, Powder River and DJ Basins, and we couldn’t be more excited for the opportunity to do the same in North Dakota.”

Notes From All Over, Part 1 -- January 8, 2020

The three most useless things to a pilot are the altitude above you, the runway behind you and a tenth of a second ago.

For an investor, the most useless thing: dry powder.

Boy, I'm going to take a lot of heat for that. LOL.

For more pilot rules of flying, click here.

********************************
Great Mood

Media: my media bookmarks are decreasing in number. I have pretty much quit checking in on Drudge -- maybe once a day or every two days -- unless there are hints of really important news. If I don't see a rotating beacon, I move on. My go-to source for political op-ed: Power Line, or is it, Powerline? Whatever. Really, really good writing.

Fox News is the only news site I go to for headline stories.

For business news, Fox Business News.

Casualties:
  • 0: 15 ballistic missiles targeting Iraqi air bases: 0 casualties
  • 56: funeral march: at least 56 Iranians died in the funeral procession
  • 176: Ukrainian airliner shot down by errant Stinger missile
***********************************
Profound

Before the speech:
  • Dow up 48 points
After the speech:
  • Dow up almost 200 points (later: up over 200 points)
  • S&P 500: a new all-time high
  • NASDAQ: at an all-time high
  • WTI: breaks below $60/bbl
  • oil companies down huge (share price)
The speech: everyone who wants peace had to have liked the President's speech.

Perhaps the best US presidential speech on Iran. Ever. And the speech lasted all of six minutes? About the length of the Emancipation Proclamation.

President: "Iran appears to be standing down." Standing down. Those words are only used by presidents when referring to "wars." If so, was this the shortest "war" ever -- overnight missile barrage with no US response?

Words being used by talking heads:
  • nothing from the US Democrats ... yet
  • dramatic turn of events
  • "everything is telling us everyone is happy with this" -- the markets
  • are the markets ahead of their skis?
  • the speech: calm, measured, not bellicose
  • speech could be translated into Farsi in ten minutes; will go viral in Iran 
Fox Business News:
  • anchors: best and brightest, it seems
  • guests, analysts: excellent
  • Varney: a bit too treacly
  • Cavuto: good 

Feel Good Story For Mom-And-Pop Retail Investors -- January 8, 2020

SAT reading comprehension question #6. Read the article below and point out the single most important data point reported for mom-and-pop retail investors and millennial investors.

From a long time ago, behind a paywall:
Leading US university endowments struggle to beat tracker funds.

Decade-long study raises questions about private equity investments.

 Harvard, the largest US university endowment, delivered returns of 8.5 per cent.

Cheap funds that tracked the US stock market over the past decade outperformed the 60 leading US university endowments, a group of sophisticated institutions that have championed more costly alternative strategies as a way to enhance returns.

Many US universities have followed the example of Yale, whose chief investment officer David Swensen and senior director Dean Takahashi helped pioneer the “endowment model” where private equity managers and hedge funds play a larger role in an investment portfolio.

Several other institutional investors globally have drawn inspiration from the endowment model of US universities and raised their allocations to alternative assets to boost returns. But none of the investment portfolios run by the eight Ivy League universities and 52 other endowments outperformed a basic US stock market tracker fund over the past decade.

Vanguard’s VFIAX tracker fund, which offers exposure to 500 of the largest US-listed companies and costs 4 basis points a year, delivered annualised returns of 14.7 per cent net of fees over the 10 years ending June 30.

Other trackers with low fees also had similar performance. Over the same period, the top-performing US endowment Bowdoin, a private liberal arts college in Maine, delivered annualised returns of 12 per cent.

Last place went to the endowment of Texas-based Southern Methodist University, which reported returns of 7.4 per cent.

Harvard, the largest endowment with assets of $40.9 billion, ranked 50th after delivering returns of 8.5 per cent.

Three of other Ivy League endowments — Princeton, Yale and Dartmouth — ranked in the top 10 for returns over the past decade.

The data have fuelled debate over whether endowments are receiving value for money from private equity strategies where a 2 per cent management fee and a 20 per cent performance fee is the norm.

“I’m paying a fortune in fees, commissions and carry [performance fees]. Why shouldn’t we just index and be done with the hassle,” said an endowment board member who declined to be named.

Simon Hallett, head of the European endowment and foundation practice at the consultancy Cambridge Associates, said US universities with higher allocations to private equity and venture capital tended to outperform those that favoured hedge funds over the past decade.

“Endowments have to deliver real [after inflation] returns of about 6.6 per cent to meet universities’ spending requirements and to avoid cuts to payouts. Private equity has been a ‘good trade’ for endowments in helping them meet their objectives, even if their 10-year returns look disappointing compared with the S&P 500,” said Mr Hallett.

Steven Kaplan, a professor at the University of Chicago Booth School of Business, said comparing endowments with US equity trackers over the past decade was unfair because it coincides with an unprecedented bull run for Wall Street.

A study by Mr Kaplan published this year concluded that US buyout funds run by private equity managers had generated additional returns of 350 basis points over the S&P 500 between 1986 and the end of the third quarter of 2018.

“US buyouts have historically outperformed the S&P 500 by a fairly wide margin,” said Mr Kaplan.

Ludovic Phalippou, professor of finance at Oxford Saïd Business School, said that although returns from public equities over the past decade have been boosted by the Federal Reserve’s quantitative easing, the policy has also helped private equity performance to “skyrocket”.

“QE has also favoured private equity big time, but unlike Vanguard, they captured it all in fees,” said Mr Phalippou.

A portfolio made up of 60 per cent in global equities and 40 per cent in bonds is an often-used benchmark for endowments. V

Vanguard’s LifeStrategy Moderate Growth fund, which is based on that portfolio and costs 13 basis points, has delivered annualised returns of 9 per cent, a level that 18 endowments, including Harvard and Cornell, failed to match.

Mr Skorina said a common benchmark for endowments was “really tricky” because each university has specific needs.

“Some need a lot of money from the endowment each year but others do not. So that affects the return targets set by each endowment’s governing body,” he said. Mr Skorina added that US colleges and universities are highly competitive. “Endowment board members and trustees at these schools look at their peers and say, ‘why aren’t we doing better? Look at what Seth Alexander at MIT and Paula Volent at Bowdoin are earning for their schools.’ Questions about the value of an investment office are becoming more widespread among endowment board members,” he said.

These questions are becoming more pressing due to mounting uncertainty over the outlook for private equity. Private equity managers are paying record prices to secure deals and combining these investments with high levels of debt. They are also sitting on a record amount of unallocated capital, known as dry powder, which is close to $2.5 trillion, suggesting that profitable deals are becoming harder to find.

“In the past, realised returns from private equity buyouts have been lower when [unallocated] capital and [deal valuation] multiples have been high,” said Mr Kaplan.

These concerns were shared by Lisa Shalett, chief investment officer of Morgan Stanley Wealth Management, who said the “best days are behind” private equity managers. “

A decade of double-digit returns for private investment funds has ended. Current and future [private equity fund] vintages are likely to have annual returns below 10 per cent,” she added. The debate about US universities’ endowment model and its large exposure to alternatives, particularly private equity, has a lot further to run.

Weekly Petroleum Report -- EIA -- Januaty 8, 2020

Dow: last night, Dow futures were down 333 points. Nancy Pelosi asks for prayers. President Trump tweets "all is well." The Dow today? Opens in the green. WTI drops 1.4%. Who wudda thought?
  • EOG: gives back its recent gains
  • IMUX: gains almost a percent
EIA weekly petroleum report, link here:
  • US crude oil in storage increased by 1.2 million bbls (didn't API say it was going to decrease by a significant amount? Whatever.)
  • US crude oil in storage now stands at 431.1 million bbls, at the five-year average
  • but look at this: total gasoline inventories surged 9.1 million bbls last week despite the fact that US crude oil refinery inputs were somewhat less than the previous week
  • total gasoline supply in stoare is now about 5% above the five-year average -- sort of the wrong time for Iran to go to war if they hoped to disrupt supplies of oil or gasoline -- whatever
  • refineries operated at middling range of their capacity, at 93% capacity
  • gasoline production actually decreased but inventories surged -- oh, oh -- recession is just around the corner
  • distillate fuel production also decreased
  • propane: remember the shortage some years ago? Not this year. Propane/propylene inventories are about 17% -- wow, 17% -- above the five-year average
  • jet fuel: St Greta is fuming -- jet fuel product supplied was up over 8% over the same four-week period last year
Re-balancing:
Week
Week Ending
Change
Million Bbls Storage
Week 0
November 21, 2018
4.9
446.9
Week 1
November 28, 2018
3.6
450.5
Week 2
December 6, 2018
-7.3
443.2
Week 3
December 12, 2018
-1.2
442.0
Week 4
December 19, 2018
-0.5
441.5
Week 5
December 28, 2018
0.0
441.4
Week 49
October 30, 2019
5.7
438.9
Week 50
November 6, 2019
7.9
446.8
Week 51
November 14, 2019
2.2
449.0
Week 52
November 20, 2019
1.4
450.4
Week 53
November 27, 2019
1.6
452.0
Week 54
December 4, 2019
-4.9
447.1
Week 55
December 11, 2019
0.8
447.9
Week 56
December 18, 2019
-1.1
446.8
Week 57
December 27, 2019
-5.5
441.4
Week 58
January 3, 2020
-11.5
429.9
Week 59
January 8, 2020
1.2
431.1

Gulf Of Mexico Hits Record Daily Production -- Peak Oil? What Peak Oil? -- January 8, 2020

Google "doofus-in-chief." That will have to wait. But, rest assured, we'll get to it.

Was this on last night's network evening news? Would Walter Cronkite have mentioned it? Why did President Trump not mention it? Oh, that's right ... tied up with planning for impeachment hearings; taking out terrorists; monitoring a kerfuffle over Iraq; being briefed on a Ukrainian a/c with 167 SOB most likely shot down by errant Stinger missile; reading up on earthquake history in and around Tehran; having late dinner with SecState Pompeo; praying per Pelosi's prancing; planning next MAGA-rally ...

... sorry for the digression. Sometimes I get ahead of myself ... where was I? Oh, that's right.

Gulf of Mexico hits record daily production.

Not "recent" record production, but all-time record daily production.

Remember all that hand-writing about less CAPEX being spent off-shore? 

Records, records, records:
The U.S. Gulf of Mexico (GOM) made history in August 2019 as it exceeded oil production of 2 million barrels per day according to the U.S. Bureau of Safety and Environmental Enforcement.

The record average daily production from the GOM comes after the Outer Continental Shelf experienced a record-setting 2018. This included oil production of more than 640 million barrels in federal waters.
Production increases in 2019 paved the way for $2.34 billion more offshore royalty revenue for the Federal Treasury. In addition, GOM production will continue to set records through 2020, according to the U.S. Energy Information Administration.

RIg Counts -- Commentary -- Rigzone -- January 8, 2020

Wow. Wow. Wow.

And wow.

"This isn't your father's oil and gas rig count." -- Rigzone.

How long have we been saying that on the blog. Two years? Three years? Four years? I don't know. Time seems to move at a different speed in the Bakken.

From the linked article, the lede:
Every Friday, the Baker Hughes oil and natural gas rig count gets released. This is vital field information that energy analysts eagerly await. In essence, the count is supposed to convey the current thinking of the U.S. oil and gas industry. As it is supposed to go, higher oil prices mean higher rig counts which mean higher production. And in the opposite direction, lower prices mean less rigs and falling production. While it is true that more rigs usually enter the fields when prices go up, it can take months of higher prices before drillers are confident enough to bring additional rigs into service. And there is also a lag time with dropping prices, not immediately dragging the rig count lower. Many times lower prices just mean removing the less efficient rigs from the field.
The end:
Most can agree that we cannot really blame analysts for being so wrong about the shale revolution, a deficiency likely to continue on into the coming decade.
Going back to 2007, for instance, shale was not even being mentioned as a potential source of major new supply. While probably growing slower in 2020, the industry has transformed global energy markets in ways never thought possible – not even by the oil and gas companies themselves. This helps explain why the IEA forecasts that the U.S. will account for 85% of new global crude output and 35% of new natural gas through 2030. For finances, WTI prices sticking above $65 or $70 would be just the boost the shale industry needs. Ultimately, it will be a burgeoning U.S. export business that will mandate new output. The EIA has domestic gas demand rising 1-2% per year for decades to come, while the country’s oil use will remain flat or even decline slightly.
Go to the linked article for everything in between.

But let's repeat that one line:
Most can agree that we cannot really blame analysts for being so wrong about the shale revolution, a deficiency likely to continue on into the coming decade.
"... being so wrong ... a deficiency likely to continue on into the coming decade."

Hmmmm...

... and this is pretty cool ... this is the first post tagged with "Commentary_2020."

Happy New Year!

Biggest Energy Story Of The Week? Some Might Think -- SRE To Open Regional HQ Center In Texas -- January 8, 2020

Link here (paywall). Also here, no paywall.

I suggested this should happen some time ago.

Sempra.

Houston.

Need I say more.

Sure.

Purpose:
  • to oversee electricity transmission (Oncor)
  • to manage liquefied natural gas export operations in TX and LA
"Center of Excellence"
  • will be located in upscale "Uptown Houston"
  • area of high-rise offices, hotels, shops and restaurants near the Galleria
  • hundreds of new engineering and construction positions
  • "Sempra has undergone a dramatic expansion in Texas over the past two years."
  • Oncor deal, $9.5 billion closed in early 2018
  • Port Arthur LNG: Sempra permit in April, 2019
  • 50% stake in the McAllen-based power line operator Sharyland Utilities, May, 2019
My two cents worth: for me, this story is as big as Schwab buying Ameritrade. These are huge stories.

And there's more. Over at Rigzone, Port Arthur LNG progresses with Aramco deal.
Saudi Aramco’s Aramco Services Co. unit has signed an interim project participation agreement with Sempra LNG for the latter firm’s Port Arthur LNG project under development in Jefferson County, Texas.
That's a new development.
According to Sempra, the agreement marks another milestone for the companies in conjunction with Port Arthur LNG. Last May, Aramco signed a heads of agreement with Sempra to purchase 5 million tonnes per annum of LNG from Port Arthur LNG and to acquire a 25-percent equity investment in the project.
What it might look like:
  • two liquefaction trains
  • up to three LNG storage tanks and associated facilities
  • approximately 11 mtpa of LNG exports long-term
  • will consider a potential expansion of the proposed Port Arthur LNG project
    • the expansion would add two liquefaction trains – bringing the total to four – and give the terminal the capability to export approximately 22 mtpa of LNG
List of potential (and existing) US LNG export facilities are tracked here

Private Payroll Growth Surges! -- January 8, 2020

Jobs! Wow! private payroll growth surges -- CNBC --  
  • Bernie: resist!
  • Buttigieg: change course!
  • Biden: WTF just happened?
  • Hillary: re-calculating, re-calculating, re-calculating
Strait of Hormuz:
  • remains open
  • Petrobras, Bahri, "other" tanker companies suspend sailing through the strait
  • Bahri? "Saudi tanker giant"
  • Bahri? "that's all of Saudi's VLCCs?"
WTI: I had to check several sources to confirm price of WTI.
  • Wow! We go to war in the Mideast and WTI drops in price overnight?
"Best" article on recent events in the Mideast? Some think so:

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

Active rigs:

$61.951/8/202001/08/201901/08/201801/08/201701/08/2016
Active Rigs5663543958

Only one well coming off the confidential list today:

Wednesday, January 8, 2019:
  • 33185, conf, BR, Franklin 34-36TFH
Tuesday, January 7, 2019:
  • 34364, 325, Petro Harvester, FLX4 17-18 163-90 H, a Madison well, Flaxton, t11/19; cum 10K 11/19;
  • 33186, SI/NC, BR, Franklin 34-36MBH, Little Knife, no production data,
RBN Energy: as the infrastructure build-out wants, what's ahead for midstreamers?
For much of the 2010s, the U.S. midstream sector has been on a development spree. New or expanded everything — pipelines, gas processing plants, fractionators, storage facilities, liquefaction trains, export terminals and more — all to keep pace with the production gains of the Shale Era. But now, at the start of the 2020s, the build-out frenzy appears to be fizzling and flickering. Midstreamers’ capital spending plans are on the decline, at least for now, as most of the infrastructure needed to handle current and expected volumes for the next few years is either in place or under construction. But that doesn’t mean things won’t stay interesting — far from it. This new decade brings with it a period of midstream-sector strategizing and portfolio rejiggering. Today, we discuss highlights from East Daley Capital’s newly released “Dirty Little Secrets” report about the next phase of midstream strategy.
What a wild decade we all just finished. In what now seems like an instant, the U.S.’s energy supply outlook flipped from dire to darn good, and its role in international hydrocarbon markets switched from net importer to net exporter — and a pretty significant exporter at that. Just a few days ago a new decade began, and now is the perfect time to consider what’s ahead for the midstream sector. It’s not just the calendar that’s changing — the entire sector is nearing the end of an unprecedented period of expansion, and entering an epoch of top-to-bottom reevaluation, reimagining and realigning.
The file report on #34364:
  • directional, not horizontal
  • 12 stimulation stages (hydraulic fracture); 1.2 million lbs proppant
  • TD: 12,887'
  • target: lower Midale porosity 
  • Burke County
  • 3.3 miles northeast of Flaxton, ND, in the central portion of the Williston Basin
  • drilling operations began, spud date: July 20, 2019
  • curve portion kicked off in the Triassic Spearfish formation
  • TD: July 30, 2019
  • penetration rates: 120 to 425' / hour
  • connection gas units: 400 to 2500 units
  • shows: 500 to 4,200 units
  • "samples and gas values ... suggest that significant economic reserves remain in situ and continues developmental drilling seems warranted."