Miscellaneous Monday Night Notes -- November 30, 2015

Enbridge buys another small wind farm; Enbridge is tracked here. Works out to about $2 million / MW, wind.

********************************

From MarketWatch:

Kinder Morgan Inc, and Brookfield Infrastructure Partners LP said Monday they will jointly acquire a 53% equity interest in Myria Holdings Inc.'s Natural Gas Pipeline Company of America LLC, or NGPL, for $242 million. Kinder Morgan will pay about $136 million and increase its ownership interest to 50% from 20%. Brookfield will pay about $106 million and increase its ownership interest to 50% from 27%. The deal values NGPL at about $3.4 billion including debt. NGPL, operated by Kinder Morgan, is one of the largest interstate pipeline system in the U.S., with about 9,200 miles of pipeline. 

$242 million / 53% of 9,200 miles = $50,000 / mile?

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Update on Hess, per Zacks:

Hess is undergoing a transition from an integrated oil and gas company to a predominantly exploration and production entity, thereby shifting its growth approach from high-impact exploration to low-risk unconventionals, and a smaller, more focused exploration portfolio. The company divested its downstream businesses that included energy marketing, terminals, retail marketing and refining operations. In view of the global economic slowdown and new refining capacity entering the world market, the aforesaid decisions will help enhance Hess’ shareholder value.

Disclaimer: this is not an investment site. Do not make any investment or financial decisions based on anything you read here or think you may have read here. 

Saudi Arabia And Iran Become "Unwitting" Allies In Push For Market Share -- November 30, 2015

This is a nice analysis by Bloomberg of where Saudi Arabia and Iran stand with regard to current glut of global oil, as reported in Rigzone:

Almost by accident, OPEC adversaries Saudi Arabia and Iran are about to work as a team.
When the Saudi kingdom decided last year that OPEC should keep pumping to counter a surge in U.S. shale oil, Iran spearheaded resistance to the idea, saying output cuts were needed to buoy prices. Still a critic, Iran is nonetheless poised to amplify the strategy as it ramps up crude exports with the end of sanctions.

“Iran’s return is effectively the Saudi policy on steroids,” said Mike Wittner, head of oil-market research at Societe Generale SA in New York. “The policy is that low-cost Middle East crude should be gaining market share, and that it’s shale and other expensive non-OPEC supply that should be cut. So to use the Saudis’ own logic, as far as Iranian production goes -- bring it on.”

By rebuffing calls to cut supply, the Organization of Petroleum Exporting Countries has sought to protect its market share by battering other producers with lower prices. That’s paying off, according to the International Energy Agency, as some U.S. shale drillers scale back and global oil majors slash investment, leaving OPEC to fill the gap. The 12-member group is likely to keep its output policy unchanged when it meets in Vienna on December 4, 2015.

OPEC’s rivals may face renewed pressure next year as Iran revives shipments constricted by three years of sanctions over its nuclear program. Iranian Oil Minister Bijan Namdar Zanganeh has called on other member states to pare output to accommodate its return, and insists the country will restore production regardless of the impact on prices.

While Venezuela and Algeria have also called for cuts to quotas, the Saudi-led organization is likely to stay the course, according to all 30 analysts and traders polled.

Curbs on Iranian oil sales to Europe and Asia will be lifted once the country dismantles atomic equipment in line with the terms of a deal struck with world powers in July. That could happen around the end of the first quarter, Societe Generale estimates. Iran can expand output by 500,000 barrels a day -- from about 2.8 million currently -- within a week of restrictions being removed, and by 1 million barrels a day within six months, according to state-run National Iranian Oil Co.

Venezuela: tick, tick, tick.

Ten (10) New Permits; BR Reports Two High-IP Wells -- November 30, 2015

Active rigs:

	11/30/2015	11/30/2014	11/30/2013	11/30/2012	11/30/2011
Active Rigs	65	185	191	182	198

Ten (10) new permits --

• Operators: Hess (6), Whiting (4)
• Fields: Alkali Creek (Mountrail), Twin Valley (McKenzie)
• Comments: all six Hess permits are EN-Freda permits, on a single pad in 26-154-94 -- see graphic below; the EN-Freda wells are tracked here; the four Whiting permits are on a single Rolla Federal pad in 3-152-97

Two producing wells completed:

• 29803, 2,325, BR, Morgan 14-21MBH, Pershing, 4 sections, t11/15; cum 3K 9/15 2 days
• 29867, 3,126, BR, Kirkland 14-21TFH, Pershing, 4 sections, t10/15; cum 14K 8 days;

Wells coming off the confidential list Tuesday:

• 30088, SI/NC, Sinclair, Highland 5-9H, Sanish, no production data,
• 30678, SI/NC, Statoil, Charlie Sorenson 17-8 8TFH, Alger, no production data,
• 31019, SI/NC, EOG, Shell 42-3229H, Parshall, no production data,
• 31027, 796, Hess, EN-Frandson-154-93-2116H-6, Robinson Lake, 4 days to drill the lateral, 88% in zone; 100% in good rock, background gas low, 35 stages, 2.4 million lbs, t10/15; cum 21K 9/15; 22 days
• 31028, 596, Hess, EN-Franson-154-93-2116H-8, Three Forks, 7 1/2 days to drill the lateral, 62.5% in target zone, 100% in good rock, background gas very low, Robinson Lake, t10/15; cum 14K 9/15; 26 days
• 31074, SI/NC, SM Energy, Loren 1B-16HS, West Ambrose, no production data, 

**************************************

31028, see below, Hess, EN-Franson-154-93-2116H-8, Robinson Lake:

Date	Oil Runs	MCF Sold
10-2015	14129	0

31027, see below, Hess, EN-Frandson-154-93-2116H-6, Robinson Lake:

Date	Oil Runs	MCF Sold
10-2015	21105	0

The Glut Of Oil Blamed On Quiet Weather -- November 30, 2015

Extreme weather? Climate change? Global warming? Remember all those warnings about extreme weather due to climate change? In fact, not one significant hurricane has hit US soil in ten years, and now Bloomberg is reporting that the glut of US oil is, due, in part to the lack of severe Gulf storms. Who wudda thought? Bloomberg/Rigzone is reporting:

Oil bulls can say farewell to another quiet Atlantic hurricane season in the Gulf of Mexico, which ends Monday without a storm-induced price rise to lift crude from its once-in-a-generation slump.

Barely an oil worker was evacuated from the Gulf of Mexico and the biggest storm this year -- the strongest hurricane ever in the Western Hemisphere, actually -- tore through the Pacific. The subdued June-November season overlapped with a four-month stretch of oil prices averaging less than $50 a barrel, the longest run since the global financial crisis. As well, the epicenter of U.S. production has moved onshore to shale fields spanning North Dakota and Texas.

“Once upon a time we would have been watching very closely to what’s happening in the Gulf of Mexico,” David Lennox, an analyst at Fat Prophets in Sydney, said by phone. “We’ve seen a few disasters from hurricanes, but the shale phenomenon has really taken the sting out of lost Gulf production.”

Aided by shale oil developments, U.S. production is at such a rate that oil stockpiles are more than 100 million barrels, or about one-third, above the five-year average, buffering the impact from hurricanes. While prices surged 44 percent in 2008 after Hurricane Ike struck, markets barely blinked four years later after Hurricane Isaac hit and curbed more than 90 percent of crude output in the Gulf of Mexico.

The hurricane season officially ends today.

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Done?

Oil & Gas Journal is reporting:

Wildlife recovery in Prince William Sound has been extensive enough to warrant closing federal and state legal actions against ExxonMobil Corp. from the March 1989 grounding of the tanker Exxon Valdez and subsequent crude oil spill into the sound, the US Department of Justice and Alaska Department of Law jointly announced.

A 1991 civil settlement required ExxonMobil to pay the state and federal governments $900 million over 10 years to reimburse past costs and fund restoration of injured natural resources. The two governments said the Exxon Valdez Oil Spill Trustee Council, which it formed soon after, used money from the settlement for significant restoration in areas where the spill had an impact.

The governments took preliminary action that year to preserve a potential reopener claim ...

During this period, however, continued wildlife monitoring showed that the harlequin ducks and sea otters which had looked vulnerable to the lingering oil in 2006, have recovered to pre-spill population levels and are no longer exposed to oil more than populations outside the spill area, the two governments said.

Based on that information, they and their departments and agencies on the trustee council decided that legal requirements for pursuing a reopener claim are not met, they said.

**************************************

A Throwaway Article

But the headline is correct, and the comments are worth Last summer, when oil prices were still above $100 a barrel, people had a theory for why they would never fall much below that number.

Many major oil-exporting countries had "fiscal break-even" oil prices - prices required to balance their budgets - near that level. The International Monetary Fund (IMF) put Saudi Arabia's at $98.

Faced with oil supply that exceeded demand, these countries would cut production to shore up oil prices and their finances, keeping crude prices high. How wrong they were.

The folly of relying on fiscal break-even figures to forecast future oil prices was driven home at the now infamous November 2014 Opec meeting, when its members, led by Saudi Arabia, refused to cut at all.

My favorite comment:

The IMF put Saudi oil price at $98 break even. That's wrong. The Saudis can make money at $5 to $7 a barrel, from what I read in a magazine for the oil industry.

In fact, the IMF is correct.

This comment is perhaps most accurate:

There is a point at which the price of oil is below the variable cost to pump it out of an existing well, that point is exceedingly low. There is a point at which it doesn't pay to drill at an already identified source of oil, that point is moderately low. There is a point at which it doesn't pay to look for new sources, that point is fairly high.

Producers are going to continue to optimize their returns by pumping out of existing wells and holding off on new drilling and new exploration, as far as balancing the budgets of nations is concerned, the price of oil will ignore their problems. 

The Shifting Sands Of Fortune -- EIA -- November 30, 2015

The graphics are most staggering at this EIA site.

This one deserves some attention:

It is best to go to the linked EIA site where one can enlarge the graphic above and make some interesting observations.

By the way, this is quite exciting. The above graphic was a screenshot, but the EIA has announced that one can "embed" its graphics into one's website directly. Life just keeps getting better.

From wiki:

The Hubbert peak theory says that for any given geographical area, from an individual oil-producing region to the planet as a whole, the rate of petroleum production tends to follow a bell-shaped curve. It is one of the primary theories on peak oil.

Choosing a particular curve determines a point of maximum production based on discovery rates, production rates and cumulative production. Early in the curve (pre-peak), the production rate increases because of the discovery rate and the addition of infrastructure. Late in the curve (post-peak), production declines because of resource depletion.

The Hubbert peak theory is based on the observation that the amount of oil under the ground in any region is finite, therefore the rate of discovery which initially increases quickly must reach a maximum and decline. In the US, oil extraction followed the discovery curve after a time lag of 32 to 35 years. The theory is named after American geophysicist M. King Hubbert, who created a method of modeling the production curve given an assumed ultimate recovery volume.

Note: on December 18, 2018, wiki had not changed one word of that lead-in to the page on Hubbert Peak Theory (link here).

How has the theory held up? Also, from the same link:

A 2007 study of oil depletion by the UK Energy Research Centre pointed out that there is no theoretical and no robust practical reason to assume that oil production will follow a logistic curve. Neither is there any reason to assume that the peak will occur when half the ultimate recoverable resource has been produced; and in fact, empirical evidence appears to contradict this idea. An analysis of a 55 post-peak countries found that the average peak was at 25 percent of the ultimate recovery.

EURs in the Bakken have been increasing ever since the boom began.

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Some Observations On Growth In US Reserves, Year-Over-Year

The industry definition of reserves and related terms:

• reserves: those quantities of petroleum which are anticipated to be commercially recovered from known accumulations from a give date forward. 
• contingent reserves: those quantities of petroleum which are estimated, on a given date, to be potentially recoverable from undiscovered accumulations
• commerciality: it is recommended that, if the degree of commitment is not such that the accuulation is expected to be developed and place on production with a reasonable time frame,the estimated recoverable volumes for the accumulation be classified as continent resources. A reasonable time frame for the initiation of development depends on the specific circumstances but, in general, should be limited to around 5 years... reserve quantities would then represent the estimated recover resulitng from the imlementation of that plan. [An exception:gas fields in which there are contracts for the out-years.]

When I look at the map of the US above, the change in reserves from 2013 to 2014, this does not mean that original oil in place has increased or decreased over the past year, rather the data has to do with what is likely to be recovered over the next five years.

1. Oil losers

• Gulf of Mexico
• California
• Alaska
• Utah

2. Oil winners

• Texas
• North Dakota
• Oklahoma
• Colorado
• New Mexico

3. Most interesting -- look at this -- the natural gas winners include North Dakota; it may be trivial compared to the state of Texas, but it is huge for a state like North Dakota with a small population

4. There are not many states or areas that are losers in both oil and natural gas, but Alaska is a huge loser in both -- dark red.

5. The tale of two states: New York and Pennsylvania. It's all politics. 

Monday, November 30, 2015

Active rigs:

	11/30/2015	11/30/2014	11/30/2013	11/30/2012	11/30/2011
Active Rigs	64	185	191	182	198

RBN Energy: Permian Delaware and Midland Crude Gathering Build Out Continues.

While crude oil takeaway capacity out of the Permian Basin from major hubs is probably overbuilt for the time being that is not the case for gathering systems bringing barrels from the wellhead to mainline terminals. Production in the Permian has slowed since the drop in oil prices reduced drilling activity but is still increasing from sweet spots in the Midland and Delaware basins in West Texas where pipeline gathering can save producers as much as $2/Bbl in trucking fees. Today we continue our review of gathering infrastructure build out to deliver more crude to takeaway hubs in the Permian.

In Episode 1 we summarized the changing balance over the past year between Permian crude production and pipeline takeaway capacity out of the region. Since the summer that balance has favored producers because major pipeline capacity opened up since the end of last year (2014) to East Houston (the 300 Mb/d Plains All American/Magellan Midstream Partners BridgeTex pipeline), to South Texas and Corpus Christi (the 250 Mb/d Plains Cactus pipeline) and to Nederland/ Port Arthur, TX (the 200 Mb/d Sunoco Logistics Permian Express II pipeline).

With the impending addition of the 540 Mb/d Enterprise Products Partners Midland to Sealy pipeline expected online in mid-2017 overall crude takeaway capacity out of the Permian is looking overbuilt given that production in the basin has slowed down (although still increasing) from the dramatic growth seen between 2012-2014. Yet Permian wells remain among the most productive in U.S. shale plays and drilling continues in the sweet spot areas of the play – the Midland and Delaware basins. As a result there is considerable pipeline infrastructure build out continuing to connect new production to the big takeaway pipeline hubs. We began an update on the Permian gathering projects first detailed last summer in our “Come Gather ‘Round Pipelines” series with additions by Occidental, Plains, Blueknight Energy Partners, Navigator Energy Services and Medallion Midstream. Today we conclude that roundup of projects currently under construction.

From In-Play:

Tallgrass Energy Partners increases its revolving credit facility from $850 million to $1.1 billion: The firm has increased its revolving credit facility from $850 million to $1.1 billion, and has an option to further increase the revolving credit facility by up to an additional $400 million of commitments to $1.5 billion. As of Sept. 30, 2015, TEP had $696 million drawn on its revolving credit facility. Tracked here.

OPEC ready to rumble over Saudi Arabia output. Story at WSJ. All talk. Saudi won't budge.

It looks like Libya will belong to ISIL. Story at WSJ. Pretty good for a JV team.

Even as foreign powers step up pressure against Islamic State in Syria and Iraq, the militant group has expanded in Libya and established a new base close to Europe where it can generate oil revenue and plot terror attacks.

Since announcing its presence in February in Sirte, the city on Libya’s Mediterranean coast has become the first that the militant group governs outside of Syria and Iraq. Its presence there has grown over the past year from 200 eager fighters to a roughly 5,000-strong contingent which includes administrators and financiers, according to estimates by Libyan intelligence officials, residents and activists in the area.

On even of Paris climate conference, the UK decides not to fund Shell carbon capture scheme. Too expensive, even if it means the earth is lost to global warming.

Meanwhile, in California, if you install solar roof panels, as far as the state is concerned, you don't count:

California's aggressive push to increase renewable energy production comes with a catch for people with solar panels on the roof: You don't count.

If a home or business has a rooftop solar system, most of the wattage isn't included in the ambitious requirement to generate half of the state's electricity from renewable sources such as solar and wind by 2030, part of legislation signed in October by Gov. Jerry Brown.

That means rooftop solar owners are missing out on a potentially lucrative subsidy that is paid to utilities and developers of big power projects.

It also means that utility ratepayers could end up overpaying for clean electricity to meet the state's benchmark because lawmakers, by excluding rooftop solar, left out the source of more than a third of the state's solar power.

Southern California And Global Warming -- November 29, 2015

The Los Angeles Times is reporting that a northern California town is colder than Barrow, Alaska, as deep freeze intensifies.

A record cold snap continued across Northern California on Sunday, including more below-zero temperature readings.

According to the National Weather Service, it was actually colder in Alturas, CA, the seat of Modoc County in the far northeastern corner California, than it was in Barrow, Alaska, which lies above the Arctic Circle and is the northernmost city in the United States. Alturas registered minus-3 degrees, while Barrow recorded 3 degrees above zero.

It was even colder in Alturas on Saturday -- minus-5, breaking a record set in 1931 -- and that was warmer than one spot in California, in the Lassen National Forest east of Redding, which checked in at minus-11.

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Mission Accomplished 

Tweeting now: Maricopa County, A, police fatally shoot suicidal man in Sun City, officials say - @azcentral.

Enerplus To Report Two More Monster Bakken Wells Monday -- November 29, 2015

Monday, November 30, 2015

• None.

Sunday, November 29, 2015

• 27806, 2,059, BR, CCU Olympian 21-2MBH, Corral Creek, t10/15; cum 8K 9/15 29 days
• 31075, SI/NC, SM Energy, Rolie 1-16HN, West Ambrose, no production data,

Saturday, November 28, 2015

• 26988, 2,842, Enerplus, Bull 152-94-18B-19H-TF, Antelope, 41 stages, 10 million lbs, t6/15; cum 211K 9/15;
• 26989, 2,357, Enerplus, Rattle 152-94-18B-19H, Antelope, 40 stages, 10 million lbs, t6/15; cum 179K 9/15;
• 27807, 2,333, BR, CCU Olympian 21-2TFH, Corral Creek, 24-foot thick target, 25 - 49 feet below the base of the lower Bakken shale, in target zone 100% of the time, gas units peaked a bit above 2,000 units, t10/15; cum --
• 30167, SI/NC, Hess, AN-Prossr-152-95-1102H-10, Antelope, no production data,
• 30429, SI/NC, Statoil, Ruth 28-33 2TFH, East Fork, no production data,
• 30431, SI/NC, Statoil, Ruth 28-33 3H, East Fork, no production data,
• 31014, 702, WPX, Elk 17-20HE, Van Hook, 4 sections, t10/15; cum --

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26989, see below, Enerplus, Rattle 152-94-18B-19H, Antelope:

Date	Oil Runs	MCF Sold
10-2015	25394	0
9-2015	27343	76975
8-2015	38647	65774
7-2015	38286	63057
6-2015	47528	74585
5-2015	1098	25328

26988, see above, Enerplus, Bull 152-94-18B-19H-TF, Antelope:

Date	Oil Runs	MCF Sold
10-2015	35682	0
9-2015	41992	50122
8-2015	41606	61754
7-2015	43097	56943
6-2015	46640	76813
5-2015	1374	25498

Hold On To Your Hats -- Something Tells Me This Might Be The Best Spot In The Bakken? -- November 29, 2015

Perhaps that's a bit of hyperbole, the "best spot in the Bakken," but this is pretty incredible.

Before reading further, bring yourself up to date by looking at this original post from one year ago, October 14, 2014.

Now, we have two monster Enerplus "snake" wells that will be reported tomorrow after coming off the confidential list yesterday (Saturday). I can't wait to see the completion data:

26989, conf, Enerplus, Rattle 152-94-18B-19H, Antelope, after less than six months, 178,296 bbls:

Date	Oil Runs	MCF Sold
10-2015	25394	0
9-2015	27343	76975
8-2015	38647	65774
7-2015	38286	63057
6-2015	47528	74585
5-2015	1098	25328

26988, conf, Enerplus, Bull 152-94-18B-19H-TF, Antelope, after less than six months, 210,391 bbls:

Date	Oil Runs	MCF Sold
10-2015	35682	0
9-2015	41992	50122
8-2015	41606	61754
7-2015	43097	56943
6-2015	46640	76813
5-2015	1374	25498

Note where the Enerplus "snake" wells are relative to this vertical, monster well drilled in the same formation back in 1958:

• 1779, PA/301, P & P Producing, Inc., Harvey Hopkins A 3, t5/58; cum 1.123 million bbls 11/87.

Hop, Skip, And A Jump From Ireland For The Kennedy Clan To See All This Snow-- November 29, 2015

Iceagenow is reporting:

“Seventy-three patches of snow have survived on Scotland’s hills from last winter – the most for 21 years,” reports the BBC. 

These numbers come from a man who counts them, Iain Cameron.

“The reason so many patches survived is undoubtedly to do with the very cool spring, which saw frequent and heavy snow showers right through May and even into June,” says Cameron. 

Apparently Scotland didn’t get the memo that the entire globe is heating up.

And the day before, this headline:

Wisconsin snowfall buries previous record. 

And before that:

Scotland forecast to get two feet of snow. 

The Kennedy clan isn't going to be able to keep up with all this snow. By the way, is Venezuela still giving away heating oil to Massachusetts? This is interesting, from a year or so ago:

Compounding a budding emergency fuel assistance crisis in Western Massachusetts, officials with Citizens Energy, founded by former U.S. Congressman Joseph P. Kennedy II, report that the foundation has not received its annual fuel installment from Citgo and the Venezuelan government.

The 35-year-old nonprofit agency, also known as Joe-4-Oil, began by providing discounted heating fuel to low-income Massachusetts residents. It expanded its reach to 26 states in the aftermath of Hurricane Katrina in 2005, when oil prices skyrocketed. Since Katrina, Citgo has partnered with the South American government to donate a half-billion dollars in oil.

In Western Massachusetts, emergency fuel providers said Citizens Energy typically offers assistance in January when many needy households are running low on federally funded heating fuel benefits. However, Kennedy recently issued a statement in response to a reporter's request that signals potentially grim news.

My hunch the program is dying on the vine. The best I've seen is from the website, a) you need to fill out an application ; and, b) there's a waiting list.

I think it would have been a lot easier and more reliable just to put in those pipelines from the Marcellus and the Utica. But "Joe" is such a nice guy.

Asia's Perspective On Oil As OPEC Meeting Draws Near -- November 26, 2015

From Bloomberg/Rigzone:

Oil buyers in Asia are sure of one thing as OPEC prepares to meet: They’ll emerge as winners from the group’s rift over production.

Members of the Organization of Petroleum Exporting Countries will gather Dec. 4 in Vienna, where Iran has said it will announce plans to boost production by 500,000 barrels a day. That may further lift the 12-member group’s output, which has exceeded its target for 17 months. The increase in volumes would exacerbate a global glut and benefit the biggest oil- consuming region’s refiners, which are seeking cheaper sources of crude.

OPEC is forecast to stick with its strategy of defending market share by maintaining output and driving down higher-cost production elsewhere, according to analysts and traders surveyed by Bloomberg . That’ll leave members including Saudi Arabia free to continue pumping even amid calls from Iran to make room for its extra supply after international sanctions over its nuclear program are lifted.

“This is probably the best time we’ve ever had as a buyer,” said Kim Woo Kyung, a spokeswoman for SK Innovation Co., South Korea’s largest refiner. “We are enjoying an overflow of oil.”

OPEC has exceeded its output target of 30 million barrels a day since June 2014 as it pumps near record amounts of crude, boosted by increases from its biggest members, Saudi Arabia and Iraq. The group’s strategy to defend market share has helped lift refining margins for Asian processors, who have been treated to a steady flow of cheap cargoes from the Middle East to Mexico, Nigeria and Russia.

Profits from turning crude into naphtha, which is used to produce gasoline as well as petrochemicals, surged to $9.42 a barrel this month, the highest level since at least May.  Purchasing costs for refiners have slumped. Japan, Asia’s second-biggest oil consumer, spent an average of $51.22 a barrel in September for supplies, down from $113.47 in January 2014.

Much more at the link.

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A Note to the Granddaughters

What seven classic novels have to say about the stages of life, from Edward Mendelson's The Things That Matter, c. 2006. Here are the seven classic novels:

• Frankenstein, Mary Shelley
• Middlemarch, George Eliot
• Mrs Dalloway, Virginia Woolf
• To The Lighthouse, Virginia Woolf
• Between The Acts, Virginia Woolf
• Wuthering Heights, Emily Brontë
• Jane Eyre, Charlotte Brontë

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Sweeping Up

In anticipation of her grandmother coming home later this week, Sophia is sweeping the kitchen floor.

Sweeping Up

Week 47: November 22, 2015 -- November 28, 2015

There is no evidence of global warming here in North Texas; I had to turn on the heat to take off the chill, but the furnace -- or whatever it is that provides heat in these small apartments -- is now off and it's a comfortable 67 degrees. Last night, over at my daughter's McMansion it was way too warm; they have the thermostat set at 71 degrees. They were gone for the weekend and I took advantage of the opportunity to watch some football on their big screen television.

Wow, that was a digression. All I had planned to do was link the only story I plan to post with regard to all the excitement and hyperbole that will surround the 2015 Paris Peace Talks on Global Warming, where every western leader will be padding his or her resume to hopefully contend for the 2016 Nobel Peace Prize.

The article, of course is  -- in fact, put this much in google: your complete guide to the climate debate -- see how few letters you have to put into the search box to get the WSJ article to show up. You will be surprised. I put in this much: your complete g and the article was the first hit. I didn't even get past the "g." I've read enough of it to tell me it is all I need to post on the 2015 Paris Peace Talks on Global Warming. The only reason folks will be tuning in is to see if ISIS (or as President Obama calls the JV team, ISIL) is able to crash the party.

The link to the WSJ article: http://www.wsj.com/articles/your-complete-guide-to-the-climate-debate-1448656890. I hate to think this is the 144,865,890th article the WSJ has had on the climate debate.

I suppose the big story of the week was the fact there is a glimmer of hope that Saudi Arabia has decided to hold the line at $40. Unfortunately, the fly in that oily soup is the fact that there are more than 1,000 wells waiting to be fracked in North Dakota and probably twice that many in Texas.

At the very end of the week, a reader sent me a fairly reliable hint that Shell United States is coming to North Dakota. I have problems with Shell. I really don't know whether it's Shell, or Royal Dutch Shell, and until the spill in the Gulf of 2010, I kept confusing BP and Shell. But whatever, at least someone has credible information to suggest "Shell" will enter the Bakken in a big way. I have a post on it in draft but won't post it until the credible information is ... well, a bit more credible. I don't want to get anyone into trouble.

So, what were the big stories last week? Not many. Perhaps the highlight was the autumn portfolio of North Dakota / Minnesota photographs sent by Vern Whitten.

Operations
Lime Rock Resources finally posts their Russian Creek acquisition
October's North Dakota oil production remained flat month-over-month
a second bench Three Forks well looks very promising
a birthday greeting to Mr Woodrow Star "A" 1, 57 years young

Flaring
EIA posts an update on flaring in North Dakota 

Refinery
Proposed Devils Lake refinery on hold

Miscellaneous
I formally added "propane" to the "next big story" page; it's been there all along but a bit hidden
the US officially gets on the top ten list of countries with proved oil reserves 
the US increased its proved reserves estimate for sixth year in a row
Katie Ledecky named female athlete of the year -- a three-peat
North Dakota's shortfall grows

Closing The Loop: Lime Rock Resources Announces Closing Its Third Acquisition In The Williston Basin -- The Russian Creek Acquisition -- November 27, 2015

Press release here, dated November 20, 2015.

Lime Rock Resources, acquirers and operators of producing oil and gas properties in the United States, today announces that it has successfully closed a third acquisition in the Williston Basin.

The Russian Creek acquisition of acreage and producing wells in the Williston is the Lime Rock Resources funds’ largest acquisition to date. The Lime Rock Resources team has begun leveraging operational synergies with its other Williston Basin properties and applying its operational expertise to the large-scale asset.

The three Williston Basin acquisitions:

• West Stanley
• Sanish
• Russian Creek

The entire description of the Russian Creek acquisition:

Lime Rock Resources acquired the North Dakota and Montana oil-weighted properties in the Williston Basin in 2015 from a large, publicly traded E&P company.

The OXY USA Russian Creek acquisition back in 2010 is described at this post. It is not known if the Lime Rock Russian Creek acquisition is identical to the OXYUSA Russian Creek acquisition.

No New Permits; Eighteen Permits Renewed -- November 27, 2015

Active rigs:

	11/27/2015	11/27/2014	11/27/2013	11/27/2012	11/27/2011
Active Rigs	64	183	191	185	202

No new permits.

Eighteen permits renewed, including:

• Emerald Oil, 4; two Noonan Federal permits; two D Annunzio permits, all 4 in McKenzie County
• Oasis, 5: five Jensen permits, Williams County
• BR, 4: Elizabeth Stroh and Cecilia Stroh wells in Dunn County
• CLR, 3: three Omlid permits, McKenzie County

CLR canceled four permits: two Garner permits and two King permits, all in Williams County

Post-Shut-In-Production Jump -- January 29, 2017

The date-time stamp will show something from 2015 or thereabouts. I am using an old "draft" post to place this note for various reasons.

Posting this now without comment. [Note: only two days of production in November, 2016; I will come back to this well in a couple of months.]

Before choosing this well to look at, I specifically looked for an older well in the Williston area where much more activity has taken place after this well was originally completed.

20510, 705, Zavanna, Everett 1-15H, Stockyard Creek, t1/12; cum 245K 11/16;

This is the graphic for this area:

Monthly Production Data:

Pool	Date	Days	BBLS Oil	Runs	BBLS Water	MCF Prod	MCF Sold	Vent/Flare
BAKKEN	11-2016	2	169	161	26	48	18	0
BAKKEN	10-2016	31	706	425	849	1814	1352	0
BAKKEN	9-2016	30	2661	2775	2394	6844	6383	14
BAKKEN	8-2016	31	3103	3037	2845	8365	6648	1255
BAKKEN	7-2016	31	1923	1813	1533	3680	2629	589
BAKKEN	6-2016	7	828	814	439	1083	978	1
BAKKEN	5-2016	0	0	0	0	0	0	0
BAKKEN	4-2016	0	0	0	0	0	0	0
BAKKEN	3-2016	0	0	0	0	0	0	0
BAKKEN	2-2016	0	0	0	0	0	0	0
BAKKEN	1-2016	0	0	0	0	0	0	0
BAKKEN	12-2015	15	475	410	786	814	462	128
BAKKEN	11-2015	30	3836	3521	2837	7227	6514	266
BAKKEN	10-2015	31	4434	4398	3506	8655	7251	942
BAKKEN	9-2015	30	4924	4864	3649	8605	7305	853
BAKKEN	8-2015	26	3587	3575	2122	4637	4199	51
BAKKEN	7-2015	9	780	405	1049	918	735	49
BAKKEN	6-2015	30	6569	6501	3368	24188	23534	207
BAKKEN	5-2015	31	7706	7688	3879	12906	9751	2693
BAKKEN	4-2015	30	10108	10102	5605	14858	14354	57
BAKKEN	3-2015	31	11958	12033	5774	16088	12318	3308
BAKKEN	2-2015	28	10682	10573	7602	14870	9664	4789
BAKKEN	1-2015	31	10030	9850	7785	13742	12239	1041
BAKKEN	12-2014	31	13375	13600	11084	19405	13462	5481
BAKKEN	11-2014	30	16367	16217	26363	23577	22902	228
BAKKEN	10-2014	7	4801	4176	13663	5837	2969	2764
BAKKEN	9-2014	0	0	0	0	0	0	0
BAKKEN	8-2014	6	967	1437	789	1207	0	1118
BAKKEN	7-2014	24	4875	4852	5693	5666	0	5308
BAKKEN	6-2014	12	1963	1593	3609	2115	0	1906
BAKKEN	5-2014	1	130	0	0	15	0	0
BAKKEN	4-2014	15	353	0	5427	249	0	25
BAKKEN	3-2014	15	1474	2071	1459	1899	1572	103
BAKKEN	2-2014	28	5701	6269	6660	7276	6607	252
BAKKEN	1-2014	13	3709	2594	6299	4720	4103	423
BAKKEN	12-2013	0	0	0	0	0	0	0
BAKKEN	11-2013	11	936	1410	591	1150	941	45
BAKKEN	10-2013	31	3333	3106	1565	4476	3336	678
BAKKEN	9-2013	30	3033	3188	1505	3526	3091	0
BAKKEN	8-2013	31	3807	3448	2016	4042	2389	1191
BAKKEN	7-2013	15	2586	2340	1481	1897	1147	526
BAKKEN	6-2013	11	1239	2048	554	1853	1625	64
BAKKEN	5-2013	24	4736	4140	2392	5180	4081	741
BAKKEN	4-2013	0	0	0	0	0	0	0
BAKKEN	3-2013	21	3393	3344	1794	4290	3794	167
BAKKEN	2-2013	7	647	1000	260	1018	833	81
BAKKEN	1-2013	29	3348	3420	1338	5776	5329	15
BAKKEN	12-2012	31	3959	3979	1284	7164	5636	1066
BAKKEN	11-2012	30	3921	3456	1483	7244	6171	626
BAKKEN	10-2012	31	4444	5232	1625	6938	3566	2910
BAKKEN	9-2012	30	4698	4171	1546	7521	5610	1464
BAKKEN	8-2012	31	4716	4303	1599	6713	5625	626
BAKKEN	7-2012	28	6188	7001	2033	9497	7841	1239
BAKKEN	6-2012	21	4583	4417	1588	5494	3268	1913
BAKKEN	5-2012	31	7260	7051	2917	12036	8620	2954
BAKKEN	4-2012	30	8165	8459	2868	11531	6928	4156
BAKKEN	3-2012	21	7138	6406	2988	10196	8764	1030
BAKKEN	2-2012	28	11928	11776	4672	15761	9213	6116
BAKKEN	1-2012	19	12597	12230	12552	15977	0	15679
BAKKEN	12-2011	1	323	0	1918	772	0	742

EIA White Paper On Flaring In North Dakota -- November 27, 2015

This was posted by the EIA on November 13, 2015. This brings us up to date. At the link, it is easy to see the "relaxed" rules on flaring.

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AGW in Scientific American

I was surprised to see this in Scientific American.  It's another "scientific journal" that lost its way. The National Geographic, among the US glossies, is perhaps the worse when it comes to global warming hype.

From the linked article:

The climate change debate has been polarized into a simple dichotomy. Either global warming is “real, man-made and dangerous,” as Pres. Barack Obama thinks, or it’s a “hoax,” as Oklahoma Sen. James Inhofe thinks. But there is a third possibility: that it is real, man-made and not dangerous, at least not for a long time.

This “lukewarm” option has been boosted by recent climate research, and if it is right, current policies may do more harm than good. For example, the Food and Agriculture Organization of the United Nations and other bodies agree that the rush to grow biofuels, justified as a decarbonization measure, has raised food prices and contributed to rainforest destruction.

Since 2013 aid agencies such as the U.S. Overseas Private Investment Corporation, the World Bank and the European Investment Bank have restricted funding for building fossil-fuel plants in Asia and Africa; that has slowed progress in bringing electricity to the one billion people who live without it and the four million who die each year from the effects of cooking over wood fires.

My hunch is that the Hollywood elite are not all that worried about the millions of people who still cook over wood fires. 

Propane -- The Next Big Story -- November 27, 2015

Updates

June 22, 2017: in less than five years, the US has flipped from next importer of LPG to net exporter, and exports are surging.

Original Post

From crisis to glut in less than a year. 

John Kemp is reporting:

Liquefied petroleum gases (LPG) are the fastest-growing category of hydrocarbon exports from the United States, with volumes up almost four-fold since 2012.

Some data points:

• US propane exports, 2012: 200,000 bbls
• US propane exports, 2015: nearing one million bopd 
• composition: a range of light hydrocarbons to include ethane, butane, and propane, among others; 
• purpose: petrochemical feedstock to residential heating and cooking
• rules: unlike crude oil, LPG is treated as a refined product and can be exported with few restrictions, a position the U.S. Department of Commerce confirmed in 2014
• traditionally, most LPG has been marketed in neighbouring countries, including Canada, Mexico, Central America and the Caribbean
• in 2012, neighbouring countries accounted for 55 percent of all LPG exports, rising to almost 80 percent if South America is included.
• by 2015, however, the total share of LPG exports to other countries in the western hemisphere had dropped to just 53 percent
• exports to Europe, Africa and especially Asia have surged and now account for nearly half of all the LPG shipped abroad
• China has overtaken Canada and Mexico as the most important export market for U.S. LPG, taking more than 24 million barrels, almost 100,000 bpd, in the first eight months of 2015

Much more at the link.

Previous posts of interest:

• US propane exports, October 29, 2015
• propane rejection, July 12, 2015
• propane update, RBN Energy, December 4, 2014
• tight propane supply reaches crisis, February 10, 2014

Friday, November 27, 2015

Active rigs:

	11/27/2015	11/27/2014	11/27/2013	11/27/2012	11/27/2011
Active Rigs	65	183	191	185	202

RBN Energy: New York State of Contango – The Out of Season Heating Oil Storage Play

The New York market for residential and commercial heating oil is traditionally tight in the winter months when demand exceeds local production and supplies are supplemented from storage and inflows/imports from outside the region.

Coming into winter this year inventory levels were above normal for the time of year and market prices are in contango (a condition where future prices are higher than today) – encouraging further storage. Today we explain how the result is an extension of traditional seasonal storage trade opportunities and a shortage of available inventory capacity.

Traders have long taken advantage of seasonal demand patterns for energy by buying when consumption and prices are low in the off-season then storing until supplies become tighter during the high demand season and selling at a profit. Northeast natural gas traders routinely used to take advantage of higher winter prices for gas that they buy cheap in the summer months and inject into storage – selling at a premium when winter weather pushes prices higher. That strategy is getting harder these days because abundant production in the northeast from the Marcellus and the Utica is keeping winter prices lower (as we pointed out earlier this week in “I Walk The Line”).

Another popular trade based on the same principal involves purchasing heating oil during the summer in the northeast - placing it in storage and selling when winter demand pushes prices higher. In both cases (natural gas and heating oil) the success of the trade relies on seasonal demand outpacing local production during the winter and pushing up prices enough to cover the trader’s storage costs and a margin to boot.

The seasonal heating oil trade is popular in the New York region because the CME/NYMEX heating oil futures contract requires delivery in New York harbor – meaning that participants have a pretty efficient hedging tool to lock in the seasonal spreads to profit from the trade. This year however high crude oil and refined product inventory levels in a generally oversupplied market are weighing on prompt prices versus those for future deliveries - a market condition known as contango that we have discussed several times this year. In New York the current heating oil market contango is providing an additional opportunity for traders to profit from storage outside the traditional summer/winter seasonal play.

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There's Still Lots Of Life In Canadian Oil

There were a lot of energy-related stories throughout The Wall Street Journal today but none of them were worth linking -- the stories have already been covered in the blog ad nauseum or they are mostly fluff pieces it seems. There was one exception: Canadian Oil Sands attracts attention, page B8, very last page of that section and easy to miss. Searching for it on the web, I see that it it is an old story, posted two days ago. In fact, now I vaguely remember seeing it earlier and may have even posted / linked it. Whatever.

More than two dozen potential suitors have expressed interest in making an offer for Canadian Oil Sands Ltd. , including four “highly credible parties,” according to documents the company filed in an effort to thwart Suncor Energy Inc. ’s hostile bid.
The interest by other parties may slow Suncor’s momentum ahead of a Dec. 4 deadline it has set for a response to its all-stock bid—currently worth about 4.47 billion Canadian dollars ($3.36 billion)—for Canadian Oil Sands, the largest owner of the Syncrude oil-sands mining consortium.

Canadian Oil Sands last month rejected Suncor’s bid as too low and asked securities authorities in its home province of Alberta to uphold a “poison pill” provision enacted after Suncor made its bid that gives shareholders at least 120 days to consider a takeover offer.

Suncor has cited a lack of competing offers as one reason why Canadian Oil Sands shareholders should accept its bid, which is 0.25 of a share for each Canadian Oil Sands share. The Alberta Securities Commission has scheduled two days of hearings starting Thursday to consider Canadian Oil Sands’ effort to block that bid by ruling on its updated shareholder-rights plan.

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A Note for the Granddaughters

As long as I've got the WSJ  in front of me, I might as well finish it. This is pretty cool. Our granddaughters had several Barnes and Noble gift cards that they have "collected" over the past year. On Wednesday, their mom took them to B&N to stop until they dropped. Our older granddaughter was thrilled to get the new illustrated edition of the first Harry Potter novel, as well as a small field guide called Fantastic Beasts and Where to Find Them, written by "beast" authority Newt Scamanader, based on J. K. Rowling's book. I mention this because the WSJ has an interview with Eddie Redmayne (Oscar winner, Theory of Everything, Stephen Hawking) who will play Newt Scamander in an upcoming movie.

I guess you have to hang around middle school teenagers to keep up with current events. But then again, that's always been true. Had I not taught middle school for a few years, I never would have known who Justin Bieber was/is.

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Finishing

The same WSJ has a long article on The Revenant. I think I've blogged about this before. Don't remember. Don't want to go through it again. Yes, here it is. The link to the WSJ story story is here.