Saturday, January 17, 2015

Something To Think About -- January 17, 2015

I'm going to come back to this later, but something to think about.

I think the low-cost operators coul drill and complete a well, prior to the slump in oil prices, for about $6 million in the Bakken. Prior to new completion techniques, costs were pretty much 50/50 between drilling and completing/fracking.

Let's say day rates for rigs decrease by 30%.

Let's say operators focus on drilling, delay fracking.

Or, let's say operators concentrate on re-fracking wells drilled back at the beginning of the boom. 

Something to think about.

Rigzone Predictions: The Slump in Oil Prices

The articles on the slump in oil prices continue to come fast and furious. I will probably post/link many of them for archival purposes, though it's a bit tiring and repetitive.

Having said that, this is perhaps the best opinion piece I have seen to date on what the future holds with regard to the slump in oil prices. It was posted over at Rigzone a couple days ago. These articles are often archived and available by subscription only in a short period of time.

From that article, these are the main bullets. Go to the link for a more detailed look.
  • upstream costs are the silver lining for operators
  • refracks start to look better than new fracks
  • Haynesville -- dry gas is back
  • Eagle Ford remains the cream of the crop
  • Permian M&A will heat up in 2H15
  • US Gulf of Mexico activity will defy low oil prices
  • operators ease off the gas in Canadian unconventionals ...
  • ... and hit the brakes in the Canadian oil sands
  • North American LNG loses some luster, but maintains momentum
  • ethane is maxed out
  • 2014 outages are a structure feature of the chemicals market, rathn than random variation
  • Keystone XL remains in a holding pattern
  • the MLP boom still has a bit of room to run
  • US crude oil export policy -- evolution rather than revolution
  • the benefits of Mexico's opening will accrue mainly to larger players
Regular readers should not be a bit surprised by any of these.

There is enough "stuff" in that article to keep me busy for months.

Random Update On Enbridge Line 61 -- January 17, 2015

An op-ed in The New York Times:
Enbridge is seeking to increase Line 61’s capacity threefold, making it a third larger than the projected Keystone XL. The last real line of defense against this expansion is an obscure zoning committee in Dane County, Wis., which is scheduled to meet on January 27, 2015, to decide whether to attach conditions to Enbridge’s permit for a new pump station. Voting to do so would risk a lawsuit from Enbridge, which maintains that the county has no legal right to impose such conditions.
I track "pipelines of interest" here.

Meanwhile, being the "fair and balanced" newspaper it is, The New York Times also had an op-ed piece on the Keystone:
Even as the Keystone debate reaches its current crescendo, all that is left, really, is the symbolism. The Republican right claims that Keystone will create jobs. It won’t, not to any significant degree. The Democratic left says that the oil Keystone will bring to the Gulf is so dirty, so carbon laden, that it will wreak havoc on the climate. It won’t do that either. If the president ultimately decides not to approve Keystone, he will do so knowing full well that he has not stopped the tar sands oil in any meaningful way.
I particularly enjoyed the writer's honesty in qualifying his statement that the Keystone won't create jobs. Two comments: "significant" is in the eye of the beholder. In general, having a job is better than not having a job, I suppose. Considering that the Obama administration has created no new jobs, just the fact that TransCanada might create any jobs is noteworthy.

The second comment has to do with welders.

Had the Keystone been approved years ago, there would have been a huge shortage of welders, exacerbating the boom in the Bakken. I'm not saying the shortage would have stopped/delayed the Keystone but it would have competed for welders working in the Bakken, Eagle Ford, Permian oil patches.

There's a real concern with the slump in oil prices about the jobs for blue collar folks like welders. Wouldn't it be interesting if the Keystone was approve and welders got their jobs back?

[An aside: I find it interesting that the Al Sharptons and the Barack Obamas of the world keep making stump speeches on the need for more jobs, and then in Washington put out press releases and veto threats to stymie job creation. The stump speeches get limited press coverage; the press releases get full press coverage.]

Week 2: January 11, 2015 -- January 17, 2015

New North Dakota production record
What the Bakken rig situation looks like today
Permitting stats for calendar year 2014
Net acreage by producer in the Bakken

Random update on BNSF expansion plans

Random update on the BakkenLink pipeline 

Bakken Economy
The Williston Wire
Fertilize plants in North Dakota
Williston building permits, 2014 vs 2013
Record births in the Bakken oil patch

Enhanced Bakken Supply Chain Initiative -- First annual manufacturing and logistics conference, Williston
Some politicians want a "do-over" with regard to new flaring rules and conditioning rules