Hiring Surges. Really? Unemployment Rate Rises To 5.5% -- June 5, 2015

From The Wall Street Journal:

I'm hard-pressed to argue "surges" is the right word. If so, jobs have surged for the past several years.

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Back to the Bakken

HRC reports a high IP well. 

Belfield Crossing development update. KXNET is reporting:

Plans for a 48-acre development in Belfield, North Dakota, are moving along.

It's called Belfield Crossing - a multi-use development with hotels, restaurants, travel centers, convenience stores, and several retail outlets.

It will be located just north of Interstate 94 along Highway 85.

Managing Partner Mitch Beckstead of American Landmark Group has confirmed two hotels, a grocery store, and a convenience store so far.

Active rigs:

 

	6/5/2015	06/05/2014	06/05/2013	06/05/2012	06/05/2011
Active Rigs	81	194	191	213	171

RBN Energy: Refiners and crack spreads.

Since the start of the shale oil boom in 2011 crack spread margins for Midwest refiners have averaged about $23/Bbl. Once written off refineries on the East Coast have averaged $16/Bbl this year so far (2015) and California refiners are currently enjoying average $24/Bbl crack spreads. Refinery utilization at the Gulf Coast has averaged close to 90% for the past 4 years and 92% in the Midwest. Today we review buoyant margins and operating levels at U.S. refineries.

In Episode 1 of this series we looked at the crude supply/demand balance for U.S. refiners since 2011 – the year the oil shale boom took off. Since then refiners have increased their crude oil throughput by over 1.5 MMb/d – with most of the resulting refined products output going to the export market.

Surging crude production from shale has changed the balance of crude processed in favor of domestic barrels over imports since 2011. That equation is complicated by a quality mismatch between shale crude and refinery configurations – an imbalance that has been exaggerated by the ban on most crude exports. Market inefficiencies – in the distribution system, the quality mismatch and export restrictions have largely kept U.S. crude prices below international levels – helping U.S. refiners dominate product export markets. An increase in permitted crude exports to Canada and processed condensate have helped alleviate some crude supply pressure but have not helped overall U.S. prices. Refiners in the U.S. have processed fewer crude imports and exported more refined products – both trends that increased the global crude surplus that lies behind current lower prices.

A large crude inventory built up in response to surplus supplies continues to exert downward pressure on prices. This time we take a deeper dive into regional data to look at refining margins as well as operating levels.

Our refining margin analysis substitutes “rule of thumb” 3-2-1 crack spreads for more detailed refinery yields. Recall that crack spreads are a way to boil down complex refinery operating processes to provide a basic measure of profitability using benchmark crude and product price ratios. We have frequently used the most common crack spread ratio – the 3-2-1 to represent the operation of a refinery outputting twice as much gasoline as diesel. In the past year we looked at crack spread performance at the Gulf Coast and in the Midwest and at how cracks have boomed recently as crude inventory levels increased this year.

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EOG Over At Seeking Alpha

I usually don't post these type of articles, but in this case, there are some interesting data points. Seeking Alpha has an update on EOG:

The Bakken and Three-Forks formations up in North Dakota, South Dakota and Montana house an enormous amount of oil. Continental Resources Inc sees the play holding 24 billion BOE of potentially recoverable resources. 20 billion barrels of that is potentially recoverable crude oil. In order to pump out as much of that as possible, EOG Resources is pushing onward with its aggressive downspacing pilot program. Downspacing is the process of reducing the distance between well laterals, the horizontal reach of a horizontal well, while [ideally] not having the wells interfere with each others production.

In the region it refers to as the Bakken Core, EOG has been able to shorten the distance between its laterals down to 700 feet.

To further maximize its resource potential, EOG has begun testing out 500 feet spacing.

The initial results from these wells are very promising. Its five-well pattern spacing test [Parshall 39-1608H, 58-1608H, 59-1608H, 147-1608H and 151-1608H] yielded an average initial production rate per well of 1,235 bo/d, 110 bpd of NGLs [natural gas liquids] and 0.5 MMcf/d of natural gas. EOG's three-well pattern [Parshall 42-2117H, 43-2117H and 67-2117H] that is also testing out 500-foot spacing produced similar results, with an average initial production rate per well of 1,345 bo/d, 110 bpd of NGLs and 0.5 MMcf/d of natural gas.

This blog was the first blog of its type to predict 500-foot spacing in the better Bakken, and that was posted years ago.