Update On Global Coal, Natural Gas Consumption -- October 24, 2014

A reader sent me a number of great articles earlier today. I'm just now getting caught up.

This is an excellent article from Forbes that show graphically how coal and natural gas consumption is growing worldwide. The interesting thing: I first saw these graphs several years ago when I first started blogging. Nothing has changed. Despite all the talk about renewable energy and all the talk about "war on coal" and all the talk about global warming climate change extreme weather ice age now, nothing has changed in the past few years with regard to global consumption of coal and natural gas. Except, I guess, we're consuming more.

The second article is on Saudi Arabia and current glut of oil and the slump in the price of oil:

Within OPEC, only Kuwait (needing a breakeven price of $75), Qatar ($71) and United Arab Emirates ($80) can withstand the current oil price decline along with the Saudis.

However, others would be left sweating. For instance, Venezuela needs the price to be an unrealistic $162. Iran needs $134, Nigeria $126 and non-OPEC producer Russia around $100. Of the four, Russia can withstand the price decline for now, but persistently low prices will start biting.

Compare with my note of October 15, 2014. 

US To Achieve Energy Independence By 2025 -- Wood Mackenzie, October 24, 2014

Link here at Rigzone:

Higher production and lower demand are driving the United States on the path to energy independence by 2025, the first time since 1952 that the nation will export more energy than it imports, according to a recent Wood Mackenzie report.

“A country can achieve energy independence through two channels,” said James Brick, senior analyst with Wood Mackenzie. “It can either produce more or consume less, and the United States is doing both.”

Over the past seven years, the United States has added 3 million barrels per day of tight oil and 27.5 billion cubic feet per day of shale gas to the world energy mix, a 42 percent increase in U.S. oil and gas production. At the same time, oil demand is decreasing, mainly due to efficiency gains in the transport sector.

U.S. oil production has increased thanks to exploration and production activities in unconventional oil plays such as the Bakken and Eagle Ford as well as activity in the Permian Basin. Crude oil production from the Bakken and Three Forks formations in North Dakota’s Williston Basin lifted the state’s crude oil production to a new record of more than 1 million barrels of oil per day in April and May of this year.

In March, analysts estimated that Eagle Ford production would keep growing through this year. In July, the U.S. Energy Information Administration reported that the increase in Permian oil production since 2007 is positioning the basin as the largest U.S. crude producing region.

The end of the United States’ ban on crude oil exports, higher tight oil production and lower transport sector demand are key uncertainties that could accelerate U.S. energy independence. But energy independence could be stalled by delays in the development of critical export facilities, environmental regulations and energy policies designed to encourage gas to be consumed in the U.S. power sector, Wood Mackenzie said.

In contrast to decreasing oil demand here in the US, it seems that Saudi Arabia's domestic consumption of oil is actually increasing.

Random Update On Enbridge Line 9 -- EIA

From an earlier post:

Enbridge Inc.’s Line 9 reversal project is in its second phase, which is expected to be in service next month. The first phase, which began eastward flows earlier this year, currently enables shipment of crude from Sarnia, Ontario, to North Westover, Ontario.

When completed, the second phase will expand capacity to 300,000 bbl/d and continue on from North Westover to Montreal, Quebec, where the crude could access refineries in Montreal or global markets via the St. Lawrence Seaway.

US Crude Oil Exports Hit 57-Year High -- EIA -- October 24, 2014

Somewhere along the line, the EIA changed their presentation/web pages a bit. I haven't changed my links but when I went to look at "gasoline demand" I see the links take me to a slightly different presentation than what I used to have. Or at least that is what it seems. Maybe my memory is playing tricks on me.

Regardless, I find this weeks EIA's analysis regarding US petroleum fascinating. It begins:

The United States exported 401,000 barrels per day (bopd) of crude oil in July 2014 (the latest data available from the U.S. Census Bureau), the highest level of exports in 57 years and the second highest monthly export volume since 1920, when EIA’s published data starts. 

Recent crude oil exports are also noteworthy for both their origins and destinations. Typically, crude exports are sourced domestically and are sent only to Canada. However, since April, crude exports have included modest amounts of Canadian-produced barrels that were moved through the United States and re-exported to Switzerland, Spain, Italy, and Singapore.

The graph at the link:

The entire analysis is very interesting. Regular readers are very aware of this development:

Enbridge Inc.’s Line 9 reversal project is in its second phase, which is expected to be in service next month. The first phase, which began eastward flows earlier this year, currently enables shipment of crude from Sarnia, Ontario, to North Westover, Ontario.

When completed, the second phase will expand capacity to 300,000 bbl/d and continue on from North Westover to Montreal, Quebec, where the crude could access refineries in Montreal or global markets via the St. Lawrence Seaway.

When you finish reading that analysis, then I recommend you click on "Gasoline" in the upper right hand corner of that page. When you get to that linked page on gasoline, scroll down to look at two charts. The first chart: gasoline stocks and days of supply. Gasoline stocks are certainly in a better place than stocks of natural gas. Gasoline stocks are well within the 5-year average. Natural gas, on the other hand, trails the 5-year average significantly.

On that same page, then scroll down to the very last graph to see gasoline demand.

Week 43: October 19, 2014 -- October 25, 2014

Operations
Shale oil outlook -- WSJ
Five-year outlook for the Bakken
No end in sight for US shale revolution -- New York Times
November hearing dockets, highlights
November hearing dockets
Active rigs at recent high
Increased density drilling -- the discussion continues

CBR
BNSF will add $1,000/old tank car as a surcharge to push operators to use safer tank cars

Flaring
Update
Tesoro significantly expands presence in North Dakota by acquiring natural gas pipeline and processing business from QEP

Fracking
Random look at some EOG fracking numbers
Operators stockpiling sand

LNG
Another company interested in LNG plants in North Dakota?

Refinery
A refinery in Devils Lake?

Bakken Economy
Full ride for Williams County high school graduates who attend Williston State College
North Dakota Legacy Fund ballooning
Williston pays for "new" jail eighteen years early

Spearfish
Random look at Corinthian, Legacy wells in North Souris, Red Rock 

Active Rigs Hold Steady; Eighteen (18) Producing Wells Completed; Nine (9) New Permits -- North Dakota, October 24, 2014

Berkshire's BNSF will add $1,000 surcharge to old railcars carrying Bakken crude. The story is reported at Bloomberg:

The surcharge will pertain to cars known as DOT-111s and won’t apply to cars called CPC-1232s that are built to higher standards adopted in October 2011, according to a BNSF notice. Mike Trevino, a spokesman for BNSF, confirmed the notice.

The extraction of oil from shale fields with limited pipelines, such as in North Dakota’s Bakken, caused U.S. rail carloads of crude to surge to 415,000 last year from 9,500 in 2008, according to the Transportation Department.

Tank cars typically hold about 700 barrels of oil, which means the surcharge would boost the cost of shipping in older cars by $1.50 a barrel. The cost to ship crude by train to East Coast refineries from North Dakota is $9 to $10 a barrel.

Some refiners, such as PBF Energy Inc., Phillips 66, and Tesoro, have already filled their fleets with tank cars compliant with the post-2011 rules.

BNSF, which operates tracks that connect into the Bakken and other shale oil fields, said in February it plans to order 5,000 new crude tank cars with safety standards higher than the CPC-1232s in an effort to push shippers toward safer cars.  

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Active rigs:

	10/24/2014	10/24/2013	10/24/2012	10/24/2011	10/24/2010
Active Rigs	194	180	190	196	151

Maybe folks with more experience than I have can explain two "new" permits in today's daily activity report:

#03440 - ENDURO OPERATING, LLC, NSCU K-709, NWNE 20-161N-79W, BOTTINEAU CO., 660' FNL and 1978' FEL, DEVELOPMENT, NEWBURG, 'Tight Hole', 1470' Ground, API #33-009-00769
#05173 - ENDURO OPERATING, LLC, NSCU J-706, SESW 20-161N-79W, BOTTINEAU CO., 665' FSL and 1882' FWL, DEVELOPMENT, NEWBURG, 'Tight Hole', 1480' Ground, API #33-009-01084

For newbies, "we" are up to 29,800 permits now:
#3440 was originally issued back in 1963.
#5173 was originally issued back in 1972.
So, I have no idea what these permits are doing on today's daily activity report.

3440, conf, Enduro, NSCU K-709, a Spearfish/Charles well, Newburg, last produced oil 2/08; it first produced 10/63, and cum 327K 2/08

5173, conf, Enduro, NSCU J-706. In October 2008, NDIC sent a letter stating that this pad had been returned to original conditions. There is no production data for this well; the GIS map server show is as plugged and abandoned, not dry, so it must have produced something at one time.

 

But, if one includes those two old permits, there were nine (9) permits today:

• Operators: BR (3), Enduro (2), Ballard (2), Petro-Hunt, KOG
• Fields: Pershing (McKenzie), Newburg (Bottineau), Chatfield (Bottineau), Tioga (Mountrail), Truax (Williams
• Comments: see above. In addition Ballard Petroleum has a permit for a wildcat in Bottineau County; note also Ballard has a permit for another well in that new field, the Chatfield. The name of the proposed Ballard well in Chatfield oil field does not carry an "H" designation.

Eighteen (18) producing wells completed:

• 21375, 2,516, Statoil, Barstad 23-14 6TFH, Alger, t9/14; cum --
• 26327, 1,942, XTO, Boomer Federal 34X-35H, Lost Bridge, t9/14; cum --
• 26328, 1,916, XTO, boomer Federal 34X-35D, Lost Bridge, 69/14; cum --
• 26331, 493, Hess, GN-Dalseng-158-97-1423H-1, New Home, t9/14; cum --
• 26800, 974, Hess, SC-Tom-153-98-1514H-5, Truax, t9/14; cum --
• 27025, 825, Hess, HA-Nelson a-LW-152-95-3427H-1, Hawkeye, 4 sections, t9/14; cum --
• 27295, 1,014, Hess, EN-Ortloff-156-94-2635H-6, Big Butte, t9/14; cum --
• 27356, 1,490, XTO, Franchuk 24X-19A, Murphy Creek, t8/14; cum 5K 8/14;
• 27357, 1,431, XTO, Franchuk 24-19E, Murphy Creek, t8/14; cum 4K 8/14;
• 27358, 1,821, XTO, Franchuk 24X-19B, Murphy Creek, t8/14; cum 6K 8/14;
• 27359, 1,137, XTO, Franchuk 24X-19F, Murphy Creek, t8/14; cum 1K 8/14;
• 27552, 2,422, XTO, Walton Federal 41X-19G, Bear Den, t9/14; cum --
• 27618, 271, Slawson, Whirlwind 3-31H, Big Bend, ICO, t8/14; cum 14K 8/14;
• 27619, 519, Slawson, Whirldwind 6-31TFH, Big Bend, ICO, t8/14; cum 9K 8/14;
• 27622, 944, SM Energy, Donna 12X-35H, Camp, t9/14; cum --
• 27623, 898, SM Energy, Carol 12-35H, Camp, t9/14; cum 1K 8/14;
• 27624, 827, Dixie 12X-35H, Camp, t9/14; cum --
• 27675, 464, Slawson, Mole 3-20H, Big Bend, t8/14; cum 7K 8/14;

KOG re-surveyed five (5) P. Vance locations.

HRC renewed five (5) permits in Williams County, the Helstad, Johnson, and Sylte Mineral Trust wells.

Scout Ticket Corrected: The IP For Carol 12-35H Was 898 Bbls -- The Bakken -- October 28, 2014

Updates

October 28, 2014: the scout ticket has been corrected. As thought, the IP was 898, not 8988.

NDIC File No: 27623   
Well Type: OG     Well Status: A     Status Date: 9/2/2014     Wellbore type: Horizontal
Location: NWSW 35-152-100      Latitude: 47.941648     Longitude: -103.453152
Current Operator: SM ENERGY COMPANY
Current Well Name: CAROL 12-35H
Total Depth: 21513     Field: CAMP
Spud Date(s):  3/22/2014
Completion Data
   Pool: BAKKEN     Perfs: 11413-21513     Comp: 9/2/2014     Status: F     Date: 9/5/2014     Spacing: 2SEC
Cumulative Production Data
   Pool: BAKKEN     Cum Oil: 1281     Cum MCF Gas: 1731     Cum Water: 0
Production Test Data
   IP Test Date: 9/5/2014     Pool: BAKKEN     IP Oil: 898     IP MCF: 895     IP Water: 602

Original Post

#27623 - SM ENERGY COMPANY, CAROL 12-35H, NWSW 35-152N-100W, MCKENZIE CO., 8988 BOPD, 602 BWPD - BAKKEN

The scout ticket says the same thing:

NDIC File No: 27623   
Well Type: OG     Well Status: A     Status Date: 9/2/2014     Wellbore type: Horizontal
Location: NWSW 35-152-100     Latitude: 47.941648     Longitude: -103.453152
Current Operator: SM ENERGY COMPANY
Current Well Name: CAROL 12-35H
Total Depth: 21513     Field: CAMP
Spud Date(s):  3/22/2014
Completion Data
   Pool: BAKKEN     Perfs: 11413-21513     Comp: 9/2/2014     Status: F     Date: 9/5/2014     Spacing: 2SEC
Cumulative Production Data
   Pool: BAKKEN     Cum Oil: 1281     Cum MCF Gas: 1731     Cum Water: 0
Production Test Data
   IP Test Date: 9/5/2014     Pool: BAKKEN     IP Oil: 8988     IP MCF: 895     IP Water: 602

Monthly Production Data

Pool	Date	Days	BBLS Oil	Runs	BBLS Water	MCF Prod	MCF Sold	Vent/Flare
BAKKEN	8-2014	31	1281	964	0	1731	0	1731

The scout tickets are seldom wrong, but the sundry forms with the IP have not yet been scanned in. The geologist's narrative is also not scanned in yet.

My hunch is that Emily was in the process of scanning in the sundry forms when she saw the IP of 8,988 which caused her to drop her cup of coffee on the sundry forms and scream; in the process completely ruining the sundry forms precluding scanning.

For newbies, my hunch is the correct IP is more like 898. But this is the Camp oil field which is a pretty good oil field.

Here is its sister well, and the scout ticket, also reported today:

#27624 - SM ENERGY COMPANY, DIXIE 12X-35H, NWSW 35-152N-100W, MCKENZIE CO., 827 BOPD, 608 BWPD - BAKKEN

NDIC File No: 27624    
Well Type: OG     Well Status: A     Status Date: 9/2/2014     Wellbore type: Horizontal
Location: NWSW 35-152-100      Latitude: 47.941909     Longitude: -103.453152
Current Operator: SM ENERGY COMPANY
Current Well Name: DIXIE 12X-35H
Elevation(s): 2285 KB   2258 GR   2260 GL     Total Depth: 21598     Field: CAMP
Spud Date(s):  3/24/2014
Casing String(s): 9.625" 2265'   4.5" 21583'  
Completion Data
   Pool: BAKKEN     Perfs: 11470-21598     Comp: 9/2/2014     Status: F     Date: 9/5/2014     Spacing: 2SEC
Cumulative Production Data
   Pool: BAKKEN     Cum Oil: 676     Cum MCF Gas: 61     Cum Water: 0
Production Test Data
   IP Test Date: 9/5/2014     Pool: BAKKEN     IP Oil: 827     IP MCF: 831     IP Water: 608

Monthly Production Data

Pool	Date	Days	BBLS Oil	Runs	BBLS Water	MCF Prod	MCF Sold	Vent/Flare
BAKKEN	8-2014	31	676	399	0	61	0	61

Full College Scholarship For Any Student Graduating From A Williams County High School -- October 24, 2014

This is really cool.  A read saw the article and sent me the link. The Williston State College, from their website:

Williston State College operates as a two-year public community college in the North Dakota University System. The college is one of eleven institutions under the jurisdiction of the North Dakota State Board of Higher Education.

Williston State College offers transfer programs leading to Associate in Arts and Associate in Science Degrees. Students can complete the first two years of many majors and transfer with junior status to most four-year colleges and universities.

Apparently anyone with a high school diploma from any high school in Williams County qualifies for a full scholarship to Williston State College. I say "apparently" because that's how I'm reading the Williston Herald article. If accurate, this is really quite incredible:

Williston State College has announced that all Williams County high school graduates will be able to go to WSC for free through a scholarship.

The scholarship, announced Thursday, will pay for all tuition, books and fees. The program will start in the fall 2015 semester and is open to any full-time student with a diploma from an accredited Williams County high school.

The scholarship money is coming from the Alva J Field Trust, WSC Foundation and the N.D. Higher Ed Challenge Fund, which was made to stimulate the spirit of philanthropy for North Dakota's colleges and universities. The fund allows for every $2 in eligible private donations to be matched with $1 of state funding.

The Alva J. Field Memorial Trust donated $1 million in scholarship funds. The state matched with $500,000.

The Alva J. Field Memorial was established by widow Maude Field in memory of her late husband Alva J. Field. In her will, she placed her farm land in a trust for the proceeds to be used to help educate young adult graduates from Williams County. The farm's land value has grown exponentially with Bakken oil production. Rising land value has allowed the trust to donate vast amounts of money to Williams County students.

The scholarship can be used by potential students no matter how long ago they graduated from a Williams County high school. High school GPA will not factor into receiving the scholarship. While attending WSC, Williams County scholarship students must keep a 2.0 GPA to keep the scholarship and have a minimum of 12 credits a semester.

Both my brother and I benefited from low-interest rate loans from the Alva J. Field Memorial Trust many, many years ago. 

Has EOG Quit The Bakken For 2014? Sand Creek Oil Field Has Been Updated; 7 Rigs In The Field; Shale Oil Outlook -- WSJ; October 24, 2014

Link here for the Sand Creek oil field update.

I spend a lot of time updating various oil fields. I literally go through hundreds of wells every week. For all the talk of uneconomical wells in the Bakken I don't see many older Bakken wells being abandoned. One could argue that oil companies keep some uneconomical wells open and producing simply because they are too busy to reclaim abandoned well sites. It can also be argued that a lot of these uneconomical wells might be kept active to hold the leases by production. What I find interesting, is that even when I find wells (or fields) that seem to be uneconomical, operators continue to drill in those fields, or near those wells. Some of these operators have many, many other better fields to drill, and yet even the fields that seem on the surface (no pun intended) not so great, those fields are still being drilled. The operator I find most interesting is EOG: the company reports very few new wells despite a gazillion identified drilling locations) and has only 5 active rigs today in North Dakota. I have to scroll all the way back to July 23, 2014, for the most recent well that EOG has reported. I don't see any EOG wells reported yet this quarter. [Update: see comment dated October 25, 2014:

I find it interesting that 3 of EOG's rigs have been on the same well since July, and SST 58 has been in Montana for quite a while yet still shows on the ND list. EOG also picked up H+P 454 nearly 2 months ago but hasn't been changed to EOG on the list. It still shows as drilling for XTO.

Note: I often miss things, make mistakes. If this information is important to you, visit the source, generally the NDIC.

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Price Slump Won't Stop The Bakken Boom

It seems this story was posted earlier, but the WSJ says it was posted "15 hours ago." Whatever. The WSJ is reporting:

With oil prices sliding, energy investors are worried, while Saudi Arabia and Russia no doubt hope, that low prices will cap America’s boom in shale-oil production.

Green-energy types sit by, happy to see turmoil in the fossil-fuel sector.

Three factors make it unlikely that the decline in oil prices will bring the shale revolution to an end.

First, shale production is profitable at today’s lower prices. We know this because the boom began during the Great Recession years of 2008-09, when prices fell below $50 a barrel. The price U.S. shale producers got for their oil during the boom averaged around $85 to $90, even though the world price stayed well over $100. That spread—the difference between the West Texas Intermediate (WTI) and world (Brent) price—was a direct consequence of too much domestic oil chasing too little capacity to move, store and use it. Yet in the past five years alone more than $500 billion of private investment went into hydrocarbon infrastructure.

U.S. shale output was obviously profitable enough to spur the stunning growth in production and infrastructure when domestic prices were in the same range as world prices today.

Second, shale production is getting more efficient, which means that profits are possible at prices even lower than today. Smart drilling techniques—horizontal drilling, hydraulic fracturing and information technologies that accurately locate where to place rigs and enable precise steering of the drill through meandering horizontal hydrocarbon-rich shales—are far more productive than when the boom started. According to the Energy Information Administration, the quantity of shale or natural gas produced per rig has increased by more than 300% over the past four years.

This rise in productivity matches (in equivalent terms of capital cost per unit energy out) the improvements in solar power, but it took 15 years for solar’s gains. Solar is now experiencing a slow-down in efficiency improvements; there is no sign of a slow-down in shale technology.

The third factor is the profound economic leverage afforded by the enormous scale and diversity of America’s hydrocarbon infrastructure. Many oil-producing nations have only a few big oil fields and a handful of companies, sometimes just one. The U.S. has dozens of world-class fields, thousands of production companies, tens of thousands of related businesses, and millions of miles of pipe and rail.

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Earnings Calendar

About the only earnings announcement that interested me today was UPS:

UPS reported third-quarter 2014 adjusted earnings per share of $1.32, beating the Zacks Consensus Estimate of $1.28. The bottom line also grew 13.8% from $1.16 earned per share in the corresponding quarter last year.

This is not an investment site. Do not make any investment, financial, or relationship decisions based on what you read here or think you may have read here.

Edwards Lifesciences up almost 11% after yesterday's report.

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Daisy

Young and Beautiful, Lana Del Rey

Nice Update On New Pipeline Activity In The Great Plains, From The Rockies To Patoka -- RBN Energy; October 24, 024

Active rigs:

	10/24/2014	10/24/2013	10/24/2012	10/24/2011	10/24/2010
Active Rigs	194	180	190	196	151

RBN Energy: First in a series, an update on all the pipeline projects across the midwest, from the Rockies to Patoka, IL.

New pipeline projects to take crude out of the Rockies are starting to make the map look like a spider’s web. The latest proposal comes from Spectra Energy – owners of the Express and Platte pipelines that ship crude from Hardisty to Wood River via Guernsey, WY. Spectra hope to build a pipeline carrying light sweet crude from Guernsey to the Midwest pipeline hub at Patoka.

The project would bypass Cushing and push more light crude to the east with potential access to Midwest refineries or even the East Coast. Patoka is also poised to become an origination point for shipments to the Gulf Coast. Today we review the Spectra project’s chances in a crowded pipeline field.

******************************************
The Road To New England
Constitution Pipeline

From Yahoo!In-Play:

Williams Partners: Constitution Pipeline receives Federal Energy Regulatory Commission's final environmental review: Constitution Pipeline Company, owned by subsidiaries of Williams Partners (WPZ), Cabot Oil & Gas (COG), Piedmont (PNY), and WGL Holdings (WGL) reported a key regulatory milestone toward approval to construct its proposed pipeline on a schedule that targets increasing natural gas supply to New York and New England markets in time for the winter 2015-16 heating season.

• The Federal Energy Regulatory Commission on Oct. 24 published its final environmental review of the proposed 124-mile Constitution Pipeline.

The approximately 124-mile Constitution Pipeline is being designed with a capacity to transport 650,000 dekatherms of natural gas per day (enough natural gas to serve approximately 3 million homes). Buried underground, the 30-inch pipeline would extend from Susquehanna County, PA, to the Iroquois Gas Transmission and Tennessee Gas Pipeline systems in Schoharie County, NY.

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The Ebola Experience: NYC-Style

Mayor of NYC: "We learned from the Dallas experience."

The NYC Health Commissioner's definition of quarantine self-isolate:

"We know that he left his apartment and so that he -- self-quarantine would have meant he never left his apartment. But he did self-isolate in the sense that ... he limited his contact with people and saw friends. He did leave his apartment, so I don't want to give the impression that he was in his apartment the entire time."

The same health commissioner went on to later note that the Ebola patient took the subway (the A train, L train, and the 1 train), went to a bowling ally, took an Uber, later went to the High Line, and "may have stopped and gone to a restaurant along the way." He also went for a 3-mile run around the city.

Additionally, the patient spent time with his fiance and two friends.

Or, more succinctly, to quarantine/self-isolate in NYC, one must limit oneself to:

• see friends
• take no more than three subways (the A train, the L Train, and the I train)
• go bowling
• take a taxi (Uber, perhaps)
• visit a public park (the High Line, e.g.)
• take a 3-mile run around the city
• stay overnight with fiance, friends

About the only thing he did not do was visit a ""Minit Clinic."

I can't make this stuff up. And that's why checking temperatures at JFK airport is futile.

Last night I watched "This is Spinal Tap," a rock documentary. The writing in the rockumentary was not half as good as what the NYC Health Commissioner came up with.