Week 50: December 7, 2014 -- December 13, 2014

Top story of the week
Bakken regains its position as largest tight oil play in the United States -- EIA

The Slump in Oil Prices
For the archives
Breaking down the Bakken on break-even costs
Breaking down the Bakken on break-even costs, also here
Shieks vs shale
Circling the wagons in North Dakota, Oasis
OPEC faces an insurgency, not a price war
Anticipation
TPLM CEO's thoughts on the slump in oil prices

First-person account of one person's experience in the Bakken
Link here

Operations
Director's Cut: no new production record
Halcon to build out CNG facilities
North Dakota preparing to export Bakken crude oil?
Random look at CLR's Whitman wells
Several operators report big wells
Fidelity E&P done
North Dakota on track to issue 3,000 oil and gas permits in calendar year 2014

Fracking
Methane emissions from fracking are 97% lower than calendar year 2011

Pipelines
EPD cancels Bakken-to-Cushing pipeline

Bakken Economy
Propelled by the Bakken, US became a net exporter of petroleum products in 2011
Dakota Plains storage expansion underway and on schedule
Dual-fueled trucks coming to the Bakken
Kathy Neset to expand services at Tioga airport
North Dakota taxpayers' income has doubled over the duration of the boom (since 2006)
Proposed Grand Forks fertilizer plant receives water authorization
Low gasoline prices directly attributable to the Bakken

Miscellaneous
The billionth barrel of oil

For Investors
Ticker symbol KOG no longer exists
Fidelity E&P done
TPLM CEO's thoughts on the slump in oil prices
TPLM's conference call
EOG to divest majority of Canadian interests
Halcon in the Eagle Ford, a Zeits update

Twenty-One (21) New Permits; Twenty-One (21) Producing Wells Completed, OXY USA With Another OXY USA Well -- December 12, 2014

Fourteen (14) permits canceled; looks like housekeeping; most are quite old, though part of the Bakken boom:

• Behm (1), EOG (6), Cirque (1), Chesapeake (3), Strike Oil (1), Bakken-Hunter (1), core 54 (1)

Wells coming off the confidential list today were posted earlier; see sidebar at the right.

Twenty-one (21) new permits --

• Operators: Emerald (6), XTO (4), Whiting (3), BR (3), CLR (2), Wapiti Operating (2), Samson Oil and Gas,
• Fields: Green River (Stark), Glass Bluff (McKenzie), Blue Buttes (McKenzie), Rainbow (Williams), Banks (McKenzie), Boxcar Butte (McKenzie), Enget Lake (Mountrail), Jim Creek (Dunn)
• Comments:

Twenty-one (21) producing wells completed:

• 23736, 1,643, BR, Bryce 41-5TFH, Westberg, t10/14; cum 3K 10/14;
• 25116, 653, CLR, Bjarne 2-29H, Patent Gate, t11/14; cum --
• 25529, 1,108, Zavanna, Sylvester 32-29 4TFH, Springbook, t11/14; cum --
• 25865, 1,181, Hess, HA-Thompson 152-95-2017H-5, Hawkeye, t10/14; cum 18K 10/14;
• 26674, 80, OXY USA, State Anderson 2-30-25H-143-97, Little Knife, t9/14; cum 9K 10/14;
• 26819, 653, Hess, EN-Hermanson-LE-155-93-3501H-4, Robinson Lake, t11/14; cum 10K 10/14;
• 26982, 1,309, Hess, HA-Nelson-152-95-3328H-7, Hawkey, t10/14; cum 21K 10/14;
• 27096, 1,042, BR, Ole Boe 44-14MBH-ULW, Haystack Butte, 4 sections, t6/14; cum 43K 10/14;
• 27293, 695, Hess, EN-Ortloff-156-94-2635H-8, Big Butte, t10/14; cum 12K 10/14;
• 27422, 1,163, XTO, Lyla 24X-10E, Lindahl, t11/14; cum --
• 27500, 245, XTO, Lyla 24X-10F, Lindahl, t11/14; cum --
• 27540, 1,252, Petro-Hunt, Wollan 152-96-27A-35-1HS, Clear Creek, 4 sections, t12/14; cum
• 27694, 1,126, CLR, Berlain 3-30H, Patent Gate, t11/14; cum --
• 27695, 1,060, CLR, Berlain 2-30H, Patent Gate, t11/14; cum --
• 27701, 1,512, BR, Haymaker 21-15MBH, Elidah, t12/14; cum --
• 27745, 2,416, XTO, Brandvik Federal 44X-13C, Corral Creek, t11/14; cum --
• 27800, 1,489, Hess, HA-Mogen-152-95-0805H-8, Hawkeye, t11/14; cum 24K 10/14;
• 28065, 597, Hess, En-State c-156-93-1615H-7, Alger, t10/14; cum 9K 10/14;
• 28110, 1,987, MRO, Gottlieb 11-26TFH, Bailey, t10/14; cum 5K 10/14;
• 28201, 545, SM Energy, Dallas 2X-13H, Poe, t9/14; cum 11K 10/14;
• 28234, 588, Statoil, Myron 9-4 2TFH, Squires, t11/14; cum --

Active rigs:

	12/12/2014	12/12/2013	12/12/2012	12/12/2011	12/12/2010
Active Rigs	181	191	184	201	166

EPD Cancels Bakken-To-Cushing Pipeline -- December 12, 2014

Canceled.

Reuters is announcing:

Enterprise Products Partners on Friday shelved plans to build the first crude pipeline from North Dakota to the storage hub in Cushing, Oklahoma, likely hindered by competition from other shippers and lower oil prices.

In a two-sentence announcement, Enterprise said it wouldn't build the 1,200-mile (1,931 km), 340,000 barrels-per-day pipeline because too few shippers had signed up to support it.

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For The Granddaughters

There was no swimming or soccer. Everyone went out shopping. Except me. A glorious evening of home alone.

First: watching The Great Gatsy for the "enteenth" time. I never tire of it. I see something new in it every time I watch it. Same with Midnight In Paris.

The book. It really is an incredible book. I've read it numerous times, and that, too, I always see something new in it.

I've talked about The Great Gatsby on numerous occasions. This is my favorite post, from earlier this year.

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What's Up With This?

Maureen Dowd generally writes three to four columns for The New York Times. In the month of August, 2014, she wrote at least nine columns for TNYT. (I quit counting at nine). But her last column for The New York Times was dated November 1, 2014. During this period it was found that she shows her column to friends who she will feature in her columns before publishing. According to news reports, she has not responded to inquiries on the issue.

Director's Cut Is Out -- New Production Record Missed By About 0.3%; One-Third Of October Too Windy Too Complete Wells -- December 12, 2014; Glas Flared Down To 22%; Bakken Crude Oil Spot At $42/Bbl

Link here. In addition, The Bakken Magazine reports on this month's production in the Bakken.

We can finally get rid of that poll in which we asked, "Will North Dakota daily crude oil production decline before the end of November, 2014?" I haven't looked once at the poll results now now, and the results are:

• Yes: 29%
• No: 71%

I was with the "no" crowd. I thought we would get one more month. However, and this is a big "however": the preliminary number will be revised upward, and the delta is narrow:

• October, 2014, most recent data, preliminary: 1,182,174 bopd
• September, 2014, current record holding: 1,186,228 bopd
• Delta: only 4,054 bbls. 

The September "preliminary" number was: 1,184,635 bbls; it was revised upward 1,593 bbls.

So, it's going to be close.

Disclaimer: this update is always done in haste; typographical errors are likely. This is for my use only. If this is important to you, you should go to the source. 

Oil:

• October, 2014: 1,183,515 bopd (revised);  1,182,174 bopd (preliminary)
• September, 2014: 1,186,228 (revised); 1,184,635 (new all-time high)
• delta: -2,713 (daily bopd)
• -2,713 / 1,186,228 = - 0.2% -- the Red Queen won, but this month she had help from the wind.

Producing wells: 

• October, 2014: 11,892 (preliminary, new all-time high)
• September, 2014: 11,758 (revised); 11,741 (preliminary; new all-time high)
• August, 2014: 11,565
• July, 2014: 11,293
• June, 2014: 11,079  

Permitting:

• November, 2014: 235
• October, 2014: 328
• September, 2014: 261
• August, 2014: 273
• July, 2014: 265
• June, 2014: 247
• All-time high was 370 in 10/2012
  

Pricing:

• Today, 2014: $41.75
• November: $60.61
• October, 2014: $68.94
• Sept, 2014: $74.85
• August, 2014: $78.46
• July, 2014: $86.20

Rig count:

• Today: 183 (all time high was 218 on 5/29/2012)
• November, 2014: 188
• October, 2014: 191
• Sept, 2014: 193
• August, 2014: 193
• July, 2014:  192
• June, 2014: 190

Director's comments:

• Three significant forces are driving the slow-down: oil price; flaring reduction rules; and, oil conditioning. Several operators are postponing coompletion work to achieve the NDIC gas capture goals. In October, there were nine (9) days in which the wind was too high for completion work.
• Drillers outpaced completion crews in October. At the end of October there were about 650 wells waiting on completion services, an increase of 40
• The rig count is set to fall rapidly during first quarter of 2015
• Drilling permit activity peaked in October as operators worked on their summer programs, planned locations for next winter, and adjusted capital budgets
• US natural gas storage is now10% below the 5-year average; North Dakota shallow gas exploration could be economic at future gas prices. A reminder: there is some exploration underway in Emmons County; the first well is confidential until 12/23/14.
• The percentage of gas flared dropped to 22% 
• The Tioga gas plant remained below 70% of full capacity due to delayed expansion of gas gathering from south of Lake Sakakawea

Dakota Plains Storage Expansion Underway And On Schedule -- December 12, 2014

Dakota Plains: Storage expansion underway on schedule and fully funded; new contracts increase throughput to 55,000 barrels/day beginning in Jan '15; guides FY15 EBITDA:

• The storage tank expansion project currently underway successfully achieved its winter shut-down point with construction expected to resume in the spring of 2015; the project is on schedule and fully funded. In addition, a new service agreement with an existing client enables increasing the throughput of the Pioneer Terminal to 55,000 barrels per day from January 2015. 
• Canadian Pacific has pledged an expanded rail service to underpin the forecast increases in throughput at Pioneer. 
• For 2015 the Company provides an annualized guidance that includes an average daily throughput of 57,500 barrels per day and an adjusted EBITDA of $23.4 million.

For more background, see this post from June 10, 2014. 

Midday, Active Rigs In North Dakota Decrease By Two More From This Morning -- December 12, 2014

Active rigs:

	12/12/2014	12/12/2013	12/12/2012	12/12/2011	12/12/2010
Active Rigs	181	191	184	201	166

Two comments:

• this should help the flaring problem; I know there were a lot of folks early in the boom who were upset with all the flaring
• this should give the operators time and resources to install those miniature refiners to strip NGLs off highly volatile Bakken crude oil

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For Investors

Cheniere Energy has engaged 18 financial institutions to act as Joint Lead Arrangers to assist in structuring and arranging of up to $11.5 bln of debt facilities (shares halted): The proceeds will be used to pay for the costs of development and construction of the LNG export facility and related pipeline being developed near Corpus Christi, Texas and for general business purposes. 

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.

I posted the Cheniere Energy story to provide a snapshot of the amount of money we are talking about when we talk about LNG export facilities. 

Petro-Chemical, Fertilizer, Refinery Industries

For archival purposes.

It will be interesting to follow the petro-chemical, fertilizer, refinery industry with the current slump in oil prices and a suggestion that based on supply and demand (not geo-political realities), the slump in oil prices could last a long, long time.

Note, I have tags for "fertilizer" and "refinery" at the bottom of the blog. I will add "Petro_Chemical."

For the archives.

Note how this story dovetails with the proposed Grand Forks fertilizer facility (Don caught this); original estimates of $1.7 billion were recently raised to $1.85 billion. Also note the cost overrun in a fertilizer factory under construction in Iowa.

Bloomberg is reporting on $100/hour welders and the construction of petro-chemical facilities:

A growing surplus of cheap natural gas from shale drilling is driving a boom in the U.S. chemical industry, which uses the fuel as a raw material for plastics, fertilizer and paints.

Plans by chemical companies to build or expand 215 plants worth $133 billion in the U.S., however, are overwhelming the construction work force in the primarily rural areas where they would be located, boosting costs and causing delays.

“We’re all competing for the same limited workforce,” Floren said in an interview. “The only way to address that is train people, which takes time, or bring in foreign workers, which is not allowed.”

Other chemical companies are facing the same issues, Nassef Sawiris, the CEO of OCI NV, said in a joint interview at Bloomberg’s New York headquarters with Floren and Charlie Yao, chief of the Chinese methanol producer Yuhuang Chemical Inc.

“It’s a shocker,” Sawiris said.

OCI, based in Geleen, Netherlands, is already over budget because of labor costs at a nitrogen fertilizer plant under construction in Iowa, according to Sawiris, and he’s having difficulty finding trained construction workers at a methanol facility in Texas that’s expected to open in 2016.

I keep coming back to two things with regard to all this:

• the US is formidable when it comes to energy -- no one else even comes close
• the US has the least expensive coal, natural gas, oil, wind, solar, hydro in the entire world -- and most of it is not subsidized by the government; subject to free-market realities; this will trickle through the entire economy

I track the "Big Stories" here. 

Slump In Oil Price, October 1, 2014 - December 31, 2014: Mid-East Geo-Politics

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

Mid-East Geo-Politics

Pricing, Part I

Pricing, Part II
Permit Status
Saudi Arabia Market Share
OPEC Realities

Updates

February 1, 2016: Mideast politics suggests Saudi won't cut production despite recent reports that Russia/Saudi were talking about cooperating on cuts.

August 23, 2015: WSJ sits down with Saudi general. 

July 30, 2015: Saudi Arabia to buy 600 Patriot missiles from the US; $5 billion -- The Weekly Standard.

April 18, 2015: US arms sales to the Mideast, especially Saudi Arabia -- NYT

January 23, 2015: 90-year-old Saudi king dies; 80-year-old brother assumes throne;

December 22, 2014: more clarity -- CLR, Hamm, Forbes, Saudi, Iran, Russia. 

We start off with: is President Obama organizing communities in the Mideast?

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Six Dots To Connect

Six dots to connect:

• is President Obama getting ready to throw Israel under the bus? (same link as above)
• is the GCC set to unravel President Obama's Arab Spring initiatives? (first unmistakable sign -- court's reversal of Mubarak's conviction)
• Saudi's close relationship with US/Bush/Cheney does not exist with US/Obama/Hillary/Kerry
• ISIS, al-Qaeda threaten to topple Libya, Syria, Kurdistan, Iraq, Saudi Arabia
• does Saudi see Russia's hand in Syria-Iran-Isis-al-Qaeda?
• protecting their market share: Russia-China hegemony; threat of North American energy revolution; Canadian oil sands

I tell my granddaughters, when something doesn't make sense:

• follow the money
• ask the question, "Why now?"
• google it 

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The Six Dots

Is President Obama getting ready to throw Israel under the bus?

• sanctions on Israel being discussed by the Obama administration -- Christian Science Monitor, December 8, 2014
• little downside risk: Obama no longer up for re-election; already lost House, Senate (not much more to lose, except veto-proof majority in Senate -- unlikely)
• Obama needs major legacy initiative
• presidents are change agents
• most of his initiatives will die within next ten years (global warming, ObamaCare); needs a legacy
• throwing Israel under the bus changes the dynamics in the Mideast
• Saudi has thrown Obama administration under the bus; tit-for-tat

Does Saudi see Russia's hand in Syria-Isis-al-Qaeda?

• the answer seems pretty obvious
• with Obama creating a vacuum in the Mideast, will Saudi's alliance with Israel become move transparent?
• slump in prices, feeling the pain: Venezuela, Iran, Russia, off-shore oil, Canadian oil sands, US shale -- pretty much in that order

Active Rigs In North Dakota At 183 -- December 12, 2014

Active rigs:

	12/12/2014	12/12/2013	12/12/2012	12/12/2011	12/12/2010
Active Rigs	183	191	184	201	166

RBN Energy: this is a great review of the Permian and Eagle Ford as an introduction to shipping NGLs out of the Permian. Another must-read for those interested in the Bakken, Eagle Ford, and the Permian.

It’s become clear that NGL production in the Permian and the Eagle Ford—which currently totals 1.2 MMb/d, up from 0.5 MMb/d four years ago—has only just begun its rise. By this time next year, Permian/Eagle Ford NGL production could exceed 1.3 MMb/d; by late 2017 it may approach 1.5 MMb/d, and by late 2019,  top 1.7 MMb/d. That’s a heady rise, and requires a lot of new-build gas processing plants, NGL pipelines and other infrastructure.  (Of course, if lower crude prices over a long period of time result in a lot less drilling, than the numbers could come in lower.  But for now, let’s stick with this outlook.)

Later:

Before we get into the nitty-gritty of gas processing capacity, pipelines and the rest, let’s hold a quick refresher course on our two basins: the Eagle Ford and the Permian.  The Eagle Ford is known for its ‘three window’ structure – dry gas, NGL/condensate, and oil.  The Permian  is really a mega-play with several sub-basins. 

The Permian’s sub-basins include Delaware, Central, Midland, Eastern Shelf, Northwestern Shelf, Diablo Platform and Ozona Arch. Underlying those sub-basins are the stacked plays--multiple hydrocarbon-bearing strata with names like Sprayberry, Wolfberry, Cline, Wolfcamp and Bone Spring. 

Some of these stacked plays have seen crude, gas and NGL production ramp up dramatically over the past few years, and still others could be on the cusp of a mega-growth phase if the economics hang in there. We should point out that crude oil production in the Permian has become increasingly gassy of late—that is, a larger percentage of  crude oil production from the higher growth areas of the Permian comes along with a lot of associated gas, much of it quite rich (with a high BTU content – meaning more NGLs can be extracted).

And a great, great graphic at the link, and much more narrative. 

Something Non-Bakken, Non-Oil, Non-North Dakota While Waiting To Get Started On A Slow Friday Morning -- December 12, 2014

With regard to the blog, a reminder: I post the link to almost every story -- probably 75% -- that is relevant to the Bakken. However, with the number of links that are sent to me, I do not want to clutter the blog with a lot of short stand-alone posts. I tend to group like subjects when I start getting a lot of links that need to be posted for archival purposes, but not enough for a stand-alone post. If you send me something and don't see it linked, it probably is, just at some early post that gets updated.

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I'm off to a slow start. This is part of the reason. I was reading this story before I got up this morning -- on the iPad in bed, enjoying a relaxing Friday morning. Actually, that's inaccurate, I started reading it in the hard copy New Yorker that I subscribe to. Then, later on the computer. I was using the iPad for other articles. Whatever.

This is a very, very interesting article -- nothing to do with oil or the Bakken or North Dakota. There are so many story lines in this article -- it's very interesting. At first I wasn't sure, but it sure looks like the real thing.

I was able to access it without signing in; hopefully you can reach it if interested.

http://www.newyorker.com/magazine/2014/12/15/blood-simpler.