Wednesday, December 10, 2014

Global Warming Hits Syracuse, NY; Record Snowfall -- Almost 50% More Than Previous Record -- Warmists Predicted More Precipitation -- December 10, 2014

Simply amazing. Algore is in Lima, Peru, talking about global warming to a less-than-half-full auditorium, and then this comes across the teletype, almost at the very same time:
1020 PM EST WED DEC 10 2014


Shieks V Shale -- The Economist -- December 10, 2014

This week's issue of The Economist's cover story, with leading editorial and several articles, is "Shieks V Shale."

The leading editorial was very balanced. The takeaway: fracking/shale is not going away but that doesn't mean it won't be painful for those who have invested in fracking/shale.

The only article on this subject in this issue that I read was in a small box, "What is the oil cartel up to?" on page 82. It begins:
An effective cartel requires three things: discipline, a dominant market position and barriers to entry OPEC lacks all three. Its members cheat on their quotas. It supplies only 30% of the world's oil -- too little to exercise control. New producers abound.
It then goes through all the arguments, discussions, and observations we've seen here and elsewhere.
The article concludes:
If low prices stem investment in other sources of oil, such as Canada's tar sand or America's shale, that means more demand for low-cost Saudi oil in the future.
  • Because of the lack of discipline within the cartel, I have argued that the Saudis did what they did to protect its market share "within" OPEC, not to take on the US shale industry as the primary objective. It looks like I'm wrong. Or am I? If I had had a bet on that, with this issue of The Economist, I would "man up,' admit I was wrong, and pay up. But even as I pay up the bet, I'm thinking, "there's got to be more to it than that." Saudi threw Venezuela, and perhaps other OPEC members, under the bus.
  • The article mentions that Saudi can "afford" the slump in oil prices. According to the article, Saudi Arabia has a war chest (savings) of $900 billion. Fitzsimmons says this is costing Saudi Arabia $138 million per day. Even if that is remotely correct, it works out to about $50 billion/year. So, yes, Saudi has the war chest. 

Fourteen (14) New Permits, North Dakota -- December 10, 2014

Fifteen (15) oil and gas permits canceled --
  • It looks more like hoousekeeping than a reaction to the slump in oil prices. The permits are older permits (the oldest, #16594) to the newest (#19734). By operator: Hess (6, Mountrail), BR (5, Bowman, Dunn), CLR (2, McKenzie, Billings), Newfield (2, Dunn). Zavanna canceled a permit for a SWD well in McKenzie.
Fourteen (14) new permits --
  • Operators: XTO (4), Slawson (3), Oasis (2), QEP (2), Whiting (2), Enduro
  • Fields: Siverston (McKenzie), Big Bend (Mountrail), Willow Creek (Williams), Heart Butte (Dunn), Bully (McKenzie), Newburg (Bottineau)
  • Comments:
Eighteen (18) wells coming off the confidential list:
  • 22223, 16, Williston Exploration, Hutzenbiler 9-137-99 A, Tyler formation, t6/14; no production from the Tyler yet; previously a Madison well;
  • 26299, 2,273, Oasis, Oasis Meiers 5692 44-18 2B, Alger, t8/14; cum 43K 10/14;
  • 26318, 406, Oasis, Meadowlark 693 13-3 1H, Gros Ventre, t9/14; cum 22K 10/14;
  • 26496, 679, Hess, GN-PNR-158-98-1003H-1, Rainbow, t11/14; cum --
  • 26499, 540, Hess, GN-Avinder-158-98-1423H-1, Rainbow, t11/14; cum --
  • 26936, 1,089, Hess, SC-Norma-154-98-0706H-5, Traux, t11/14; cum --
  • 26996, 671, Oasis, Emerald 5603 43-10 3B, Bull Butte, t10/14; cum 6K 10/14;
  • 26998, 512, Oasis, Emerald5603 43-10 4T, Bull Butte, t9/14; cum 5K 10/14;
  • 27089, 489, Hess, GN-Alice-158-97-1324H-3, New Home, t11/14; cum --
  • 27331, 1,177, Hess, CA-Halverson-154-95-0409H-7, Hofflund, t11/14; cum -
  • 27332, 1,125, Hess, A-Halverson-154-95-0409H-8, Hofflund, t11/14; cum --
  • 27498, 604, Hess, EN-L Cvancara-155-93-2627H-6, Robinson Lake, t11/14; cum --
  • 27571, 944, Hess, EN-Jeffrey A-155-94-2734H-6, Alkali Creek, t11/14; cum --
  • 27574, 1,154, Hess, EN-Jeffrey A-155-94-2734H-9, Alkali Creek, t11/14; cum --
  • 27776, 811, EOG, Wayzetta 52-3334H, Parshall, t12/14; cum --
  • 28147, 781, Hess, BW-R Peterson-149-99-1102H-5, Cherry Creek,  t11/14; cum --
  • 28148, 543, Hess, BW-Kraetsch-149-99-1423H-5, Cheery Creek, t11/4; cum --
  • 28503, 1,344, Emerald, Harry Dunne 5-26-35H, Green River, t11/14; cum --
Wells coming off the confidential list today were posted earlier; see sidebar at the right.

Only one well coming off the confidential list Thursday:
  • 27546, conf, Hess, LK-Summerfield-147-96-15H-6, Bear Creek,  -- clearly says that it come off confidential list today, but still on the list
Active rigs:

Active Rigs187193181200166

United Airlines To Give Away 23,000 iPhone 6 Pluses -- December 10, 2014

Macrumors is reporting:
United Airlines today announced that it plans to distribute Apple's new iPhone 6 Plus to more than 23,000 of its flight attendants during the second quarter of 2015.

The phones will be able to handle "most onboard retail transactions" such as food and drink purchases, and will allow flight attendants to access their email, the website, the United Airlines Intranet, plus policies and procedures manuals.  
This is an incredibly smart business decision.

The military -- at least the USAF, and I assume all branches -- pretty much went on-line with just about everything starting back in the early 2000's -- including electronic medical records. I think there was a story some time ago about American Airline pilots ditching those huge black briefcases and replacing them with iPads. Yes, here it is (the story).

I'm impressed. Good for United.

Kathy Neset To Expand Air Services At Tioga Airport -- Bismarck Tribune -- December 10, 2014

The Bismarck Tribune is reporting:
Kathy Neset is starting Tioga Aerocenter, a private business that will provide general aviation services, such as fueling, parking, flight planning materials and flight instruction.
Neset and the Tioga Airport Authority said the upgrades will increase air travel in and out of Tioga.
“It provides a flight support, ground support and a welcome stop for people coming to Tioga by air,” Neset said.
Currently, the airport is unattended and pilot services are limited. There are almost no maintenance services and fuel is self serve.
For folks in Ferguson who might be reading this: self-serve does not mean free. 

WTI Plunges 5% -- Down To $60 -- December 10, 2014

Probably due to BofA's outlook posted earlier.

It will be interesting to see how fast they can stack rigs in the Bakken.

Active rigs:

Active Rigs187193181200166

RBN Energy: Canadian LNG export facilities in trouble -- slip, slipping. sliding away
But: The development of US liquefied natural gas (LNG) export facilities is picking up steam. Four projects—Sabine Pass LNG, Cameron LNG, Cove Point LNG, and Freeport LNG—are now under construction (up from only one this past summer), and Sabine Pass is only a year or so away from liquefying and exporting its first LNG. But what about Western Canada? It’s got tremendous LNG export potential, but project proposals continue to face headwinds from cost concerns, regulatory uncertainty and the most recent hurdle – lower oil prices.
Today, we consider the latest news on efforts to move Western Canadian gas to Japan and other overseas markets.
At Least It's Hard To Catch

Being tweeted now, 12:18 p.m. CT, December 10, 2014: Word Health Organization reports Sierra Leone had 397 new confirmed Ebola cases in week ending December, 2014: 3 times as many as Guinea and Liberia combined - @Reuters; death toll from Ebola outbreak rises to 6,388 deaths out of 17,942 cases as of Dec. 7 - @Reuters

Random Update Of Two Whiting Wells In Park Oil Field -- December 10, 2014


June 22, 2018: an update of these Whiting wells at this post. Graphic today:

March 8, 2016: huge wells; updated here.

June 13, 2015: random update here

May 7, 2015: updated -- screenshot of same area today --

Updated production for the two wells in question and other wells in the immediate area:
  • 28055, 1,754, Whiting, Smith Federal 41-13PH, Park, Three Forks B1, 17 stages, 1.6 million lbs, s10/10; t5/15; cum 276K 4/18;
  • 28056, 2,282, Whiting, Smith Federal 44-12PH, Park, Three Forks B1, s10/14; t4/15; cum 391K 4/18;
  • 20526, 2,446, Whiting, Smith 34-12TFH, Park, t9/11;  cum 376K 4/18;
  • 20504, 2,696, Whiting, Pronghorn Federal 21-13TFH, Park, t12/11; cum 283K 4/18;
  • 27691, 2,683, Whitng, Pronghorn Federal 11-13PH, Park, t11/14; cum 315K 4/18;
  • 23419, 1,556, Whiting, Hecker 11-18PH, Bell, t11/12; cum 334K 4/18;
  • 23420, 1,861, Whiting, Frank 14-77PH, Bell, t11/12; cum 391K 4/18;
  • 19444, 3,106, Whiting, Hecker 21-18TFH, Bell, t3/11; cum 413K 4/18;
  • 20828, 2,456, Whiting, Frank 34-7TFH, Bell, t1/12; cum 416K 4/18;
  • 32288, SI/NC, Whiting, Smith Federal 34-12-2PH, Park,
December 10, 2014: it looks like there may be an explanation to the question asked below. A reader answers:
I know that Whiting likes to drill the surface on one well, move to the next, drill the surface, then move back to the first well and drill the intermediate. Then they move to the second and drill the intermediate. Sometimes they will stay on that well and drill to TD. Then move back and finish the other well. I'm guessing that's what it's showing. They do this because after cementing the casing it takes a little time for the cement to set up enough to continue. This way they don't have to wait for the cement. They just move to the next well.
This will help a lot of readers; many of us were not aware that there were two "zones," the surface and the intermediate before the big rig drilled to TD. It makes sense; about the cement casing setting/curing. Much appreciated. 
Original Post
A reader noticed:
Not sure what is going on in Park 12-140N-100W. Wells 28055 and 28056, for last 3 weeks map hasn't changed. 28056 shows 2 laterals, then they stopped, started drilling 28056, then stopped, and are back to drilling 28055 again? Any ideas? 
I don't have any information. The sundry forms / file report do not shed any light. Both are Three Forks B1 wells. Maybe another reader knows more.
Here's the screen shot of the area today:

These are the two wells in question and other wells in the immediate area (production will be updated above; the data below will not be updated):
  • 28055, drl, Whiting, Smith Federal 41-13PH, Park, s10/10; producing, 15K first month, 3/15;
  • 28056, conf, Whiting, Smith Federal 44-12PH, Park, s10/14; producing, 17K first month, 3/15;

  • 20526, 2,446, Whiting, Smith 34-12TFH, Park, t9/11;  cum 287K 3/15;
  • 20504, 2,696, Whiting, Pronghorn Federal 21-13TFH, Park, t12/11; cum 190K 10/14;
  • 27691, conf, Whitng, Pronghorn Federal 11-13PH, Park, producing, a huge well;
  • 23419, 1,556, Whiting, Hecker 11-18PH, Bell, t11/12; cum 210K 10/14;
  • 23420, 1,861, Whiting, Frank 14-77PH, Bell, t11/12; cum 244K 101/4;
  • 19444, 3,106, Whiting, Hecker 21-18TFH, Bell, t3/11; cum 333K 10/14;
  • 20828, 2,456, Whiting, Frank 34-7TFH, Bell, t1/12; cum 305K 10/14;
2015 Budget Bill

Probably as good an overview as any.  I think the blaring headline over at Drudge was a bit misleading. Regardless, I think the GOP did the correct thing with regard to ObamaCare. I like the headline: GOP fully funds ObamaCare. No one can blame the GOP for killing ObamaCare. It will die on the vine on its own.

Speaking of which, even Harry Reid agrees with Schumer:
The third-ranking Senate Democrat noted that just about 5 percent of registered voters in the United States lacked health insurance before the implementation of the law, arguing that to focus on a problem affecting such "a small percentage of the electoral made no political sense."
And everyone knew that: only five (5) percent of registered voters in the United States lacked health insurance.

The bad news: the percent has NOT changed, but everyone is paying significantly higher prices for insurance they had prior to ObamaCare.

The fact that Harry Reid says his party has not recovered from "the rollout" (of ObamaCare) suggests he still doesn't get it. ObamaCare is still the law of the land, and will be the law of the land when voters go to the polls in November, 2016. ObamaCare: the gift that keeps on giving.

My hunch: when historians write the biography of President Obama fifty years from now, they will have problems finding a more divisive president in the history of the United States; and, it's very possible, they will have problems finding a president that did more to destroy his own political party than any other US president. Richard Nixon? I don't know; I didn't follow the aftermath all that closely.

Circling The Wagons In North Dakota; Oasis And The Slump In Oil Prices -- December 10, 2014

Remember: This is not an investment site. Do not make any investment, financial, or relationship decisions based on what you read here or what you think you may have read here. Make no travel plans based on what you read here. I post quickly and frequently; typographical and factual errors are likely. If this information is important to you, go to the source.
MarketWatch is reporting:
Oasis Petroleum stock OAS, sank 11% in early trade Wednesday, after the company announced preliminary 2015 capex plans, showing it will sharply reduce spending as oil prices continue to fall.
The company pegged capex at $750 million to $850 million for the year. That compares with the $1.425 billion set aside in 2014, according to analysts at Topeka Capital Markets. The company is planning to invest $650 million to $750 million in drilling and completion activity for annual production growth of 5% to 10%.
It will move to a six rig development program by end March and will focus activities in the Indian Hills.
"In addition to prudently managing our development program, we also have a strong hedge position in 2015 with over 53% of 2015 oil volumes hedged with an average floor of $89.13,"
Chief Executive Thomas Nusz said in a statement. Shares have fallen 76% in the year so far, while the S&P 500 has gained 12%.

Petroleum Products Soar Under Obama Administration -- December 10, 2014

Don sent this link to me a couple of days ago. I wanted to make some comments on it but have not had a chance. I will link it now, and maybe come back to it later.

Reason #2,134 Why I Love To Blog -- Brazil Should Be Energy Independent? -- December 9, 2014

Just when I think I have one little piece of the energy picture figured out, someone throws me a curve ball.

I've been blogging on the Bakken since 2007, though the current blog only goes back to 2009. Of all the countries in the world, the one country -- okay, one of several counties -- that I thought had its energy future solved, particularly with its off-shore oil and ethanol was Brazil.

When I read articles in the mainstream media -- e.g., in The New York Times, The Los Angles Times -- I get the feeling that a lot of folks think that the energy picture is fairly static. Some countries use more energy than they produce; other countries produce more energy than they need, and export it; and the exporters and importers have pretty much remained the same since the 1950's. Sort of like ketchup: someone grows the tomatoes, and someone turns the tomatoes into ketchup, and someone distributes the ketchup all over the world (except France and Germany, where they eat French fries with mayonnaise). And the countries that grew tomatoes in the 1950s are the same ones today, and same with the makers of ketchup. Likewise, the Mideast produces oil, the West buys oil, and it's all the same.

But reading about energy day in and day out, from a layperson's perspective, one really gets the feeling that the least "static" thing in the world is energy. Day in and day out, producers are trying to find more energy, from every source, while consumers' appetite continues to grow and grow. It seems, that unlike ketchup, providing enough energy for any given country is a struggle, day in, day out. And we haven't even mentioned geo-politics.

Everyone knows China and India will struggle to meet its energy needs, and until recently the same for the US -- everyone thought the US would be at the mercy of OPEC, Russia, Mexico, Canada for its oil. And now the slump in oil prices. Peak oil? What peak oil?

But completely off my radar scope was Brazil. With it's off-shore oil, I thought Brazil was sitting in the cat bird's seat with regard to energy. So this Rigzone story caught me completely off-guard.

The article begins:
In a given year, Brazil imports nearly $70 billion in goods and services from the United States, according to figures from the Office of the U.S. Trade Representative.
Some of the top U.S. products that make their way to Latin America's largest economy include refined petroleum, electrical machinery, aircraft and organic chemicals.
In Walter Fróes' opinion, Brazil needs another import from its northern trading partner: the expertise necessary to economically produce hydrocarbons from its virtually untapped shale formations. 
What? I thought Brazil was going to be a net exporter and energy independent with all its oil and ethanol and hydroelectricity. Apparently things are not as good as cracked up to be in Rio city.

Some data points from the article:
Brazil obtains more than three-quarters of its electricity from hydropower, and lingering drought conditions in the country have exposed the shortcomings of this heavy reliance on hydro.
"Because of environmental problems, we don't build hydro power plants with reservoirs in Brazil anymore," explained Fróes. "As a result of that, the hydro generation has become similar to wind generation, which means that when the rains are good, electricity production is good. When the wind is good, generation is good. "
The price in Brazil has even approached $300 per megawatt-hour (MWh), or 30 cents per kilowatt-hour (kWh).
By comparison, the average retail price of electricity for residential, commercial and industrial customers in the United States – which boasts a more diverse array of fuels for power generation – was slightly less than 11 cents per kWh in September 2014
I'll stop here, but there is much more at the link:
To be sure, Brazil is adding new gas-fired power plants. Although the country produces natural gas, much of it associated gas from offshore oil production, it does not currently produce enough gas to satisfy all of its growing domestic demand. 
But who would have thought? Brazil? When you go through the article, one gets the feeling Brazil is not a lot unlike Mexico and Venezuela on how they manage their natural resources. Or their government.


By the way, did you see this at the very beginning of the story: "...Some of the top U.S. products that make their way to Latin America's largest economy include refined petroleum...." Don sent me a link to an article the other day I have not had a chance to post yet. This is a good opportunity.

Tracking The 2014 - 2016 Slump In Oil Prices

For archival purposes, I have a number of links grouped together to track/document the 2014 - 2015 slump in oil prices.
Based on the headlines, we are getting a bit more clarity on exactly what this is all about.
Permits canceled after slump in prices; producers abandoned, November, 2014 -- December, 2015
Affected by slump in oil prices, January 26, 2015
Fly On A Wall
Bakken and Permian Panels

Some Things To Think About
Wood MacKenzie -- January, 2015

Re-fracks look better than new fracks

Relationship Between Brent and WTI Pricing
Recent EIA analysis has shown that Brent crude oil prices have more influence on U.S. spot gasoline prices than do changes in West Texas Intermediate (WTI) crude oil prices. The price of Brent crude oil has fallen by 57.8%, near its lowest price level in six years, since reaching $115 per barrel on June 19, 2014. U.S. gasoline prices have declined as well, with spot gasoline prices in New York Harbor falling 54.7%. -- EIA, January 22, 2015

Kuwait hopeful the bottom is in, Rigzone, February 16, 2015

It's all about the Asian market, but let's blame the US, February 11, 2015

Drop in rig count, update, February 10, 2015

Anxiety in Boom Town, February 10, 2015

Rigzone essay, January 30, 2015

Is oil's big capitulation / sell-off yet to come? -- January 27, 2015

Slump In Oil Price, October 1, 2014 -- December 31, 2014: Pricing, Part II

Slump In Oil Price, October 1, 2014 - December 31, 2016

Pricing, Part I
Pricing: Part II, The "Right Price" For Crude Oil 

The "right" price for OPEC, Brent, WTI oil means different things for for different "folks"

Saudi Arabia:
  • historically able to manipulate prices due to relative "monopoly" 
  • one player: the state
  • state owned, state controlled; completely different model than US, Canadian model
  • price of oil is independent of cost of producing
  • price of oil is correlated almost completely with the kingdom's budget
  • over time, one would expect the kingdom's budget to increase (and, by extension, the price of Saudi oil needs to go up)
    • expectations
    • inflation
    • military necessities
  • historically, greatly affected by OPEC supply, pricing, strength of dollar
  • free market capitalism; different model than Saudi's model
  • many players; no state unity
  • break-even point is only one factor
  • more than just profit; also rate of return, cash flow, CAPEX
  • mature operators vs new, growing operators
  • trickle-down costs; as price of oil comes down, "cost" of components to produce oil come down
  • mature fields vs new fields
The break-even point is somewhat irrelevant in big scheme of things for reasons I have discussed before.


OPEC's benchmark crude drops below $30 for first time in 12 years, January 7, 2016
Brent crude oil now less expensive than bottled water, December 11, 2015
Real oil prices, from 1983 to 2015
Brent hit 5-year low ($60) before rallying back to $62 -- December 15, 2014
Fracking, well completion delays -- December 13, 2014
Trickle down costs will lower break-even prices; welders earning $100/hour during boom -- December 11, 2014
Break-even points for various locations in the Bakken -- December 11, 2014
Note break-even points for plays in the US -- December 10, 2014