Wednesday, February 12, 2020

No New Permits -- February 12, 2020

Active rigs;

$51.662/12/202002/12/201902/12/201802/12/201702/12/2016
Active Rigs5663583641

No new permits.

No permits canceled.

No permits renewed.

No producing wells (DUCs) reported as completed.

No runs, no hits, no errors.

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Texas Sports

I really wish the rest of the country could see how seriously Texans take their sports. I assume there are similar niches / venues around the country, but it's everywhere in Texas. Tonight, due to rain, soccer practice was indoors. It was about a 30-minute drive to Real Soccer Center. Something like a dozen indoor fields. When I went to pick up Olivia, I was absolutely amazed by all the teenagers playing soccer ... and taking it very, very seriously.

Olivia talked about all the sports at her school. Everyone is required to be in a sports activity throughout the year. Of course there are the standards: football, basketball, and track and field. But there's also wrestling, tennis, golf, softball, volleyball, baseball, and swimming. And dance.

I didn't ask if there was a bowling team. Something for everyone. There were even three students who didn't really care for traditional sports but really, really loved fishing. They started their own "fishing" athletic club and the school signed off on it. So, there you have it.  Three "non-athletic" students really, really enjoying their sport: sport fishing. Only in Texas.

And, yes, they do have a skeet-shooting club. And this is just the middle school, seventh and eighth graders.


I Call Your Name, The Mamas and The Papas

A Closer Look At The Two Wells That Came Off Confidential List Today -- February 12, 2020

I get a kick out of folks telling me that "monster" wells represent a tiny fraction of all the wells drilled in the Bakken.

That's correct.

I won't argue.

But then this. These are the two wells that came off the confidential list today (see below). Neither well was particularly remarkable for wells being reported in 2019 - 2020. These are very, very mediocre wells from my point of view in the overall scheme of things. But compare these two wells with the wells that were being reported in 2008 - 2012.

These 2019 - 2020 wells are huge in comparison.

The wells reported in 2008 - 2012 were "lucky" to hit 100,000 bbls in two years. Now, it's a downer if a Bakken well doesn't hit 100,000 bbls in the first six months.

Also, note the small number of stages in these two wells. In addition, one well used a relatively small amount of sand, the other, much more sand.

The wells:
  • 35883, 771, Liberty Resources, Haley 158-93-29-32-10MBH, 27 stages; 10.8 million lbs; East Tioga, t8/19; cum 84K 12/19;
    PoolDateDaysBBLS OilRunsBBLS WaterMCF ProdMCF SoldVent/Flare
    BAKKEN12-20193112821128242703019391180051386
    BAKKEN11-201930172541707532828220022190399
    BAKKEN10-2019291851819143368822308122776305
    BAKKEN9-20193021213202694374727694242253469
    BAKKEN8-20192113743131764934019004161432861


  • 28194, 864, Oasis, Lewis Federal 5300 21-31 5B, 35 stages; 6 million lbs; Baker, t8/19; cum 110K 12/19;
    BAKKEN12-201931249682499322021351331815516761
    BAKKEN11-20192318655186521413322141164655515
    BAKKEN10-20193127716278352705128027226075203
    BAKKEN9-20193026888267862914324662229381514
    BAKKEN8-2019131215011995135571064210266285

By the way, Lynn Helms tells us that "they" are getting close to drilling out the Tier 1 areas in the Bakken. I will "never " disagree / argue with the Director, NDIC. He knows this stuff better than anyone. Having said that, note that the two wells above were middle Bakken wells. Operators still have the Three Forks. When I see no more middle Bakken wells being drilled, and 100% of new wells being drilled are Three Forks wells, then I will know that things have changed.

Notes From All Over, Part 1 -- February 12, 2020

Something to hide? Mike Bloomberg blocks footage of Aspen Institute appearance.

Racial profiling: then NYC mayor Mike Bloomberg clearly said that one could xerox the description of those using guns to commit a crime. 

New Hampshire: Wednesday morning and we still don't have all the votes counted in New Hampshire. This morning, The WSJ is reporting 263 of 301 precincts (87.4%) reporting. Close to a 3-way tie and all the talking heads still say Bernie, with results like this, will go into the convention winning on the first vote. As far as I know, there are no "winner-take-all" states in the Democrat primaries.

Market:
  • Dow up 214 points -- apparently the Dow and the S&P 500 both hit new records; NASDAQ just slightly below a new record
    • BA: up $3.17
    • AAPL: up a whopping $4.16 (but still not at its previous high)
    • SRE: up a bit;
    • ENB: up a bit 
Later: all three major indices hit new records. At close:
  • Dow: 29,551 -- up 275 points --  up almost one percent
  • S&P 500: 3,379 -- up 21.70 points
  • NASDAQ:  9,726 -- up 87 points

Wuhan Flu: SARS-CoV-2 And COVID 19 -- February 12, 2020

This is Page Two

Coronavirus: statistics. By country.

US seasonal flu: statistics, October 5, 2019 -- May 30, 2020 (eight-month season)

Contagion factor: link here

Personal protection: And by the way, those surgical masks? They don't work. Don't even come close.
  • micrometer = micron
  • one nanometer = 0.001 micrometers
  • one nanometer = 0.001 microns
  • coronavirus: around 100 nanometers (0.1 micron)
  • flu: 80 to 120 nanometers (0.1 micron)
  • SARS virus: 100 nanometers (0.1 micron)
  • CoV-19: unknown but probably in same range (0.1 micro)
  • easily passes through surgical masks
  • even the much larger tuberculosis "germ" can pass through surgical masks
  • wearing surgical masks outdoors, where virus-laden particles easily disperse, has even less value
  • health personnel caring for SARS patients need to wear a special mask called an N-95 respirator, and those are not 100% effective; range from 50% to 95% for particles down to 0.3 microns, if worn appropriately fitted
  • human coronaviruses are between 0.1 and 0.2 microns -- one to two times below the N-95 respirator cutoff
  • which begs the question: exactly how are health care personnel protecting themselves?
  • a micron is not to be confused with a Macron; the latter is a small political figure
So, if masks are protective, which they seem to be, why is that possible: they keep folks from touching their faces. 
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For The Record

I'm a coronavirus survivor. I had the coronavirus about three weeks ago. Recovered after a brief but fairly severe respiratory disease two weeks ago. I didn't mention it to anyone at the time for obvious reasons, but I am now "clear" and no longer infectious.
Updates

March 20, 2020: coronavirus update. This is incredibly fascinating. "Everyone" tells me how deadly the coronavirus is compared to seasonal flu. I'm beginning to doubt it. As of today the US has reported 16,058 cases. Most folks agree this is probably half (if not a whole lot more) than what really exists: most are asymptomatic; most of the symptomatic won't be tested, yada, yada, yada) and there have been 219 deaths (many of them from one nursing home, and from repatriated citizens early in the pandemic). But let's go with the numbers as presented:
  • 219 / 16,058 = 1.4% fatality death rate
Now, let's suggest that there are in fact, 75,000 cases in the US which is very, very, very likely. The number of deaths are as "exact" as one can get; the number of cases not.

So, we stick with the number of deaths because we know those are "exact" and move the denominator to 75,000:
  • 219 / 75,000 = 0.3% -- just about where seasonal flu is, and a whole lot less deadlier for younger folks than seasonal flu.
Italy may want to re-think its unfettered relationship with China. From the March 19, 2020, report:

5322 new cases and 427 new deaths in Italy. Italy now has the highest number of coronavirus deaths in the world, surpassing China. Italian army trucks form a long line in the center of Bergamo to transport the coffins from the Bergamo cemetery to cremation sites in other regions, as morgues can't cope with more coronavirus deaths [source and video] Obituaries in the local newspaper went from 1.5 pages on February 9, 2020, to 10 pages on March 13, 2020.
Comment: I can't remember if I posted it, but I also calculated that it was likely that within 15 days, Italy's total number of cases (not just deaths, but total number of cases) would surpass that of China. That is frightening. Consider the denominator.
March 19, 2020: season flu update. Headline round-up:
March 18, 2020, headline round-up:

March 17, 2020: articles of note --
March 14, 2020: irony -- Democrat governors from across the US are working with, coordinating with, President Trump and VP Pence. All governors have sounded positive and very appreciative of their dealings with the administration. Democrats "taunted" the president to be tested after coming in contact with that had tested positive for coronavirus. President Trump was tested and is negative. Mexico is talking about closing its border with the US because of the rapidly increasing number of cases in the US. I'll believe it when I see it. Mexico has reported no coronavirus-associated deaths, and has reported only 26 cases. First 2 deaths in New York State (United States): a 65-year old man from Suffern with “significant health problems” who passed away on Thursday and an 82-year old woman suffering from emphysema who died in Brooklyn on Friday.

March 13, 2020: Brazil president tests positive for coronavirus. Last Saturday, March 7, he was in Washington, DC, and dined with President Trump. President Trump declares coronavirus a national emergency. This is clear the tail wagging the dog. The tail being fake news / mainstream media. The dog being national governments. Ad revenue will plummet on television. This will be amazing. Two questions:
  • are emergency precautions and massive quarantines working?
  • exactly to what degree are countries being affected?

March 12, 2020: the face of death --




March 11, 2020: Italy is out of control. It has two problems, perhaps three --
  • epicenter of EU coronavirus crisis; we're not being told why;
  • unable to report accurately;
  • health care system is unlikely unable to cope
March 7, 2020: Italy is truly out of control. Italy plans large-scale lockdown in country's north to fight coronavirus. Quarantine, if approved, would ban movement into/out of northern provinces, including Milan, Venice, and Parma. Italy probably should have done this a week ago. A little late now. Infected most of the EU. Lombardy is Italy's major industrial region; would wreak havoc on Italy's fragile economy. I believe Italy may be the second largest economy, after Germany, in the EU. 

March 5, 2020:
  • Italy out of control: 769 new cases. Compare with --
    • China: 160
    • South Korea: 467
    • Iran: 591  
  • Deaths 
    • With 41 new deaths today, Italy has recorded more new deaths than China (32) today. The Chinese number is "final" for the day; the Italy number could yet rise.
March 4, 2020: County of Los Angeles declares emergency; nine new cases in California; six in Los Angeles County; Democrats declare for "open borders."

March 1, 2020:
  • US: second death; also in Seattle area; only two deaths in US, both in Washington state; first case in New York state; women traveled from Iran where there is a huge outbreak; tell me again why we are allowing flights originating in Iran to come to US;
  • Italy: Italy in deep doo-doo. Outside of China, Italy had the most new deaths in the past 24 hours, even more than Iran (although I have doubts about accuracy of Iran's numbers). Most concerning, the Diamond Princess cruise ship reports another death; the good news for the Diamond Princess: another day, no new cases. Italy is clearly the "super spreader" right now. Most of the new EU deaths can be traced back to Italy. If President Trump hopes to save his presidency, he needs to be much more forceful. He needs to quit the "politics" and the "joking" -- he needs to focus completely on coronavirus. He can tweet all he wants but he needs to focus on the science of coronavirus, not the politics. Monday he needs to ban all air flights that originate in Italy until Italy shows they've got a "handle on this." American Airlines has announced it is suspending flights to and from Milan, Italy, from both New York and Miami from March 1, 2020 until April 25, 2020, citing reduced demand. The announcement comes only hours after the U.S. State Department said it was raising its travel warning to Level 4: Do Not Travel for parts of Italy due to the coronavirus outbreak. "Parts of Italy" does not cut it; complete travel ban on any flights that originate in Italy, and then "back off" as numbers improve. Look at the surge in new cases in Italy; compare to South Korea.

February 29, 2020: major update; commentary; Diamond Princess case study; season flu update.

February 26, 2020: an update. Out of control -- Schumer, Pelosi.


February 24, 2020: an update. Is anyone paying attention?

February 22, 2020: an update. The only thing we have to fear is fear itself.

February 21, 2020: is South Korea next?

February 17, 2020: turning point or "dead-flu bounce"?

February 15, 2020: the Chinese are still "re-adjusting" their numbers after changes in the way they diagnose COVID-19:


February 14, 2020: yesterday the big news in north Texas was the fact that the first case of coronavirus-related illness had been confirmed in the great state of Texas. Really? I was curious.
It turned out that the patient was one of among several hundred US citizens that had been evacuated from China some days ago and were being quarantined on a USAF base (Lackland AFB, San Antonio, TX). I hardly consider this the first Texas case of COVID-19. At best, it should be considered a "federal" case, and if contracted in China, where it obviously was, is China also counting this as one of their cases? This individual obviously had the virus before he/she left China. But it will be a great public health case study. The patient exposed upwards of 250 people on that long, long flight from China, and who knows how many more were exposed at the airport before he/she departed.
The patient's' condition was not released. Upwards of 85% of cases are not much more than "colds" with a fever, around 10% are severe. Death rate is around 2% -- much less than SARS-1, and mostly affects those with other underlying conditions.
February 14, 2020:


February 13, 2020, 9:47 p.m. CT:
I did not hear this mentioned on any network today -- that the number of deaths -- day-over-day -- decreased by 51%, link here:


February 13, 2020: new names --
  • the new name for the virus: SARS-CoV-2
  • the respiratory illness it causes: COVID-19 (some call is the "Wu Flu")
  • for that other disease:
    • the disease: SARS
    • the virus: SARS-CoV
February 13, 2020, link:

In 50+ years of studying biology, medicine, and statistics, I have never, never seen an epidemiological graph that looked like this. The only explanation: the Chinese are using the DNC-Iowa app to tabulate deaths.


February 12, 2020:



 
Original Post

The EIA weekly report this week was quite fascinating.

1. The overall report suggests that China's coronavirus story is moderating; everything suggests that oil traders expect Chinese demand for oil to get back to "normal" soon.
  • a whopping increase in storage -- this was one of the highest builds in the last 64 weeks of re-balancing;
  • what amazes me most is that the EIA still says US crude oil in storage is still about 2% less than the average for this time of year; that may be true but the EIA fails to remind folks that US oil in storage has been increasing for the past few years due to shale revolution;
  • there was a huge increase in oil inventories, and yet WTI surged; does storage metrics even matter any more? It's all about Chinese demand, and global demand.
  • other data points suggest the Chinese coronavirus story is moderating
  • jet fuel supplied dropped week-over-week last week but this time week-over-week jet fuel supplied actually increased a bit -- another data point suggesting things might be getting back to normal. 
2. It's possible the fact that oil jumped in price despite a whopping jump in oil storage is related to the New Hampshire turnout in which Trump clearly dominated, despite the mainstream media completely missing (or at least not reporting) that story.
Without question, the big story in New Hampshire was the "Trump" story. Sure, we were all fascinated by Biden collapsing, but oil traders are more interested in global oil demand.
The price of WTI has dropped back a bit since 9:30 a.m. CT when today's report came out, but WTI is still up 2.6%.
3. I was also impressed by the change in oil imports. Last week it was close to flat; this week, up about 363,000 bopd from the previous week; not much in the overall daily imports, but notable. It's very possible it's simply due to one or two VLCC deliveries.

4. Same with jet fuel deliveries. Last week, jet fuel deliveries were down about 0.5%; this week, up about 0.7%.

Weekly Petroleum Report -- EIA -- February 12, 2020

Weekly petroleum storage, EIA data:
  • US crude oil in storage increased by a whopping 7.5 million bbls; WTI up 3.3%; up $1.63, trading at $51.57;
  • US crude oil in storage: at 442.5 million bbls in storage, US crude oil inventories are about 2% below the average for this time of year;
  • refineries operating at an incredibly low 88% operable capacity
  • imports were up by 363,000 bopd from the previous week, which on a percentage basis, is not trivial; about 6.8% less than the same four-week period last year;
  • jet fuel supplied was up 0.7% compared with the same four-week period last year, suggesting China coronavirus moderating
My remarks regarding today's report: here.

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
Week 60
January 15, 2020
-2.5
428.5
Week 61
January 23, 2020
-0.4
428.1
Week 62
January 29, 2020
3.5
431.7
Week 63
February 5, 2020
3.4
435.0
Week 64
February 12, 2020
75.0
442.5

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The Lego Page


All Politics -- Nothing About The Bakken -- February 12, 2020

New Hampshire: I watched the reporting of the New Hampshire, 2020, primary on MSNBC, CNN, Fox News. Most of the time I spent on MSNBC: it's so much fun watching their reactions and how they spin (or try to spin) the news. Observations:
  • all night, on MSNBC, Brian Williams kept trying to bring the story back to the DOJ prosecutors that resigned over the "Stone" case; he was never able to get that narrative going; both my wife and I follow the news very, very closely (my wife more than I, in fact) and neither of us could remember exactly what "Stone" had done; most Americans won't even know who "Stone" was;
  • if I had watched MSNBC only, I would have thought that turnout was poor for the GOP; in fact, I would not even have been aware anyone voted in the GOP primary but we will get to those numbers later
Turnout in New Hampshire: this is absolutely amazing.
  • Trump doubled Obama's 2012 vote total in New Hampshire;
  • with 87% of precincts reporting:
    Trump: 120,000 votes
  • Obama, with 100% of precincts reporting: 49,080 votes
  • the gap will increase once all 2020 votes are in
  • incumbent President George W. Bush: 53,962 votes (2004)
  • incumbent President Bill Clinton: 76,797 votes (1996)
  • there was a coordinated effort by RNC and Trump to drive up turnout for Trump in NH
  • Trump had huge rally in Manchester, NH, on the eve of the state's primary
  • Trump's rally: more than all other rallies in NH that same night (my hunch: more were turned away from Trump's rally due to lack of room) than actually went to Dem rallies)
  • voters "seemed to have a zeal uncommon for supporters of an incumbent president"
  • Sanders/Buttigieg, combined: 140,000 votes with 87% precincts voting
Spin: from the Minot Daily News -- there were so many headlines one could have written --
  • there are still more open jobs than there are unemployed people, an unusual situation that has persisted for nearly two years:
  • before that, the ranks of those out of work exceeded the number of open jobs (and Obama famously said those jobs were never coming back; he was "writing" off the unemployed as a hopeless situation)
  • job openings have fallen; now at their lowest level in two years
  • the decline comes after job openings hit highest level on records dating back to December 2002
  • nearly all other measures of labor market remain healthy
  • so the AP headline writer chose one data point of many to use as the headline; one data point that could be spun as negative; all others very, very positive and signally a strong jobs market
  • as bad as the spin was at the Minot Daily News, it would have been worse at The Bismarck Tribune;
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The Lego Page


Two Wells Coming Off The Confidential List Today -- February 12, 2020

KMI: to increase dividend by 25%.

McDermott: link here, in bankruptcy.


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Back to the Bakken

Active rigs:

$51.072/12/202002/12/201902/12/201802/12/201702/12/2016
Active Rigs5663583641

Two wells coming off confidential list today --

Wednesday, February 12, 2020: 36 for the month; 143 for the quarter, 143 for the year:
  • 35883, 771, Liberty Resources, Haley 158-93-29-32-10MBH, 27 stages; 10.8 million lbs; East Tioga, t8/19; cum 84K 12/19;
  • 28194, 864, Oasis, Lewis Federal 5300 21-31 5B, 35 stages; 6 million lbs; Baker, t8/19; cum 110K 12/19;
RBN Energy: NGLs, gas processing and frack spread
OK, we admit it. Our title may be a bit of an overstatement in early 2020, but it was absolutely true back in 2012, when the frac spread was $13/MMBtu. These days, the frac spread — the differential between the price of natural gas and the weighted average price of a typical barrel of NGLs on a dollars-per-Btu basis — is only $2.48/MMBtu as of yesterday. But with Henry Hub natural gas prices in the doghouse — they closed on February 11 at $1.79/MMBtu — getting $4.27/MMBtu for the NGLs extracted from that gas, or an uplift of 2.4x, is still a pretty darned good deal. And that’s Henry Hub. Natural gas prices are lower in all of the producing basins, and are likely headed back below zero in the Permian this summer. So even with NGL prices averaging 30% lower than last year, the value of NGLs relative to gas can be a big contributor to a producer’s bottom line — assuming, of course, that the producer has the contractual right to keep that uplift. Today, we begin a blog series to examine the value created by extracting NGLs from wellhead gas, including processing costs, transportation, fractionation, ethane rejection, margins, netbacks and the myriad of factors that make NGL markets tick. We will start with the frac spread — what it tells us in its simplest form, how we can improve the calculations so it can tell us more, and, just as important, the economic factors that the frac spread excludes.
In a way, the frac spread is best described by what it’s not. First of all, as we use the term, it is unrelated to hydraulic fracturing, the well-completion technique. You do hear the term “frac spread” used to describe a fleet of fractionation equipment, which includes all of the water trucks, sand haulers, pumps, etc. that an oilfield services company uses to complete a hydraulic fracturing job. But that has nothing to do with what we are talking about here. The term is actually a shortening of “fractionation spread,” but that’s a misnomer too, because frac spread does not refer to NGL fractionation either — fractionation being the process of splitting a mixed NGL stream (or “y-grade”) into purity products like ethane, propane, normal butane, isobutane and natural gasoline. Instead, the frac spread is simply a measure of the value of natural gas versus the value of a basket of NGLs. In other words, it is a rough-cut indication of the value added at natural gas processing plants by extracting NGLs from the raw natural gas stream from the wellhead.