Weekend Reading -- Maybe -- March 20, 2015

A couple of days ago I was sent what looked like a great article on the Bakken but never got around to reading it. I was too tired to read it when I first got the article and now that the weekend is here, I'm into my marathon DVD movie watching in between water polo games this weekend -- a two-day tournament -- our older granddaughter has four games tomorrow and three games on Sunday.

So, I probably won't be reading many articles on the Bakken this weekend. And now, adding insult to injury, which is not quite the right metaphor, another reader has sent me links to two more articles that appear to be worth reading. So, to keep these all altogether, where I can find them again, I will post the links to these three (3) stories here.

"Bakken, Not Beaten," Oil and Gas Journal
"Some Anxiety, But No Slowdown for North Dakota Oil Boomtown," NPR
"Williams County, North Dakota, Is The Best County In America, In Three Maps," Worthalike.com 

Don't let that discourage you -- that I haven't read all these articles yet; if you see a good article on the Bakken, I would be thrilled to get the link.

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

Fly-Over Country Vs The Coasts

From the linked article above, "Williams County Is The Best County In America, In Three Maps":

There are several story lines here, the most important being the obvious of course.

But this is what is very, very scary. The US was entering the worse recession since the Great Depression in 2008 time-frame and certainly at its worse by 2009. Since than a gazillion dollars has been "spent" to jump-start the economy. Considering the recession was the worse since the Great Depression back in 2008 - 2010, one would assume that by 2012 it would have been quite easy to show a relative increase in median income across much of the nation. But even with the "recovery," most of the country remains "blue," or depressed.

Week 11: March 15, 2015 -- March 21, 2015

Reminder: myminerals.com looking for beta testers. 

The top story, of course, remains the slump in the price of oi. Not much has changed but the number of active rigs is now just seven (7) away from the century mark. Putting the slide into perspective. The Globe and Mail also talks about the slump. 

Top story of the week
The nation's third largest, and North Dakota's largest, veterinary clinic opens in Watford City

Operations
CLR lays down $2.3 million for 160 acres in Mountrail County; acreage under the river
Lynn Helms provides short update on the Bakken 
Newfield suspends drilling in Utah's Uinta Basin
"Gonna go work for Oasis"
Is it time for EOR in the Bakken?
New record: 29 wells come off confidential list - all but three go to DRL status

Fracking
President Obama says fracking is okay -- as long as it's done safely

CBR
CBR plummets due to low price of oil

Bakken 101
Explanation for Statoil's Pyramid pad oil production anomaly 

Bakken Economy
Belfield: 48-acre multi-use development project to break ground this year
Staggering numbers: oil and gas contributed $43 billion to North Dakota state's economy in just one year

Miscellaneous
The case for fossil fuels

Friday's Daily Activity Report Was Not Posted -- March 20, 2015

Active rigs:

	3/20/2015	03/20/2014	03/20/2013	03/20/2012	03/20/2011
Active Rigs	107	195	184	205	172

Four (4) new permits --

• Operators: BR (4)
• Fields: Corral Creek (Dunn)
• Comments:

Friday's NDIC daily activity report has not been posted (7:45 p.m., Friday, March 20, 2015).

Just How Crazy Is The Bakken? It Now Boasts The Third Largest Veterinary Clinic In The United States; Bakken Economy -- Williston Wire -- March 20, 2015

Headlines only; the Williston Wire is easy to subscribe to.

Vesta Housing solutions remains bullish on the Bakken. Vesta provides temporary and permanent housing solutions. Vesta recently completed its acquisition of 58 homes in Williston and Tioga, North Dakota.

North Dakota's largest veterinary clinic opened in Watford City. It it the biggest and the third largest in the nation. It boasts a staff of 14, including three veterinarians and two relief veterinarians.

Tioga to use "surge funds" for Main Street expansion and new water tower.

A change to a planned multi-use development shows the changing housing market in Killdeer, a town of 751 people in the last census. The big change is that the development's first phase will now include townhomes instead of modular and mobile homes.

New fire hall, county fair building planned for Sidney.

Minot Mall to get multi-million dollar makeover -- but when I look at the makeover -- it seems to be just that: carpet and paint.

Smithsonian Channel will debut "Boomtowners" April 26. 

President Obama Says Fracking On Federal Land Okay -- Just Be Safe -- March 20, 2015

Folks a lot smarter than I can tell me that I'm wrong, but this story does not sound particularly alarming.

Reuters provides a very, very superficial look at the new rules for fracking on federal lands. About the only information:

The rules require energy companies to reinforce boreholes and otherwise prevent leakage and provide data on the cocktail of chemicals that helps extract crude oil and gas out of the ground. The rules will add transparency to the practice, long shrouded by companies reluctant to reveal "trade secrets."

Most companies are providing data regarding the "cocktails."

New York State, of course, will still ban fracking while they study the issue for another 14 years.

Random Look At A 5-Well Pad In The Grail -- March 20, 2015

Updates

April 16, 2017: is QEP getting ready to frack some new wells in this area?

May 7, 2015: this "mis-allocation" story gets curiouser and curiouser (see below). The jump in production in December, 2014, for #18973 was attributed to mis-allocation of commingled crude oil production from this pad. Now I see another jump in production in March, 2015. Also note that when  #28168 was fracked, only one well was taken off-line ($18973); the other three continued to show production. #28165 has shown minimal production since January, 2015, whereas #18973 has shown a significant jump. Misallocation? Tanks on the pad full? Typing in the lat/long (47.816946, -102.838920) on google maps, one will find an old photo of the pad (just one pumper).

It is time to look at production from all wells on this pad:

#18973:

Pool	Date	Days	BBLS Oil	Runs	BBLS Water	MCF Prod	MCF Sold	Vent/Flare
BAKKEN	3-2015	31	11168	11032	3505	10588	9428	1081
BAKKEN	2-2015	28	8865	8753	4064	10435	8761	1522
BAKKEN	1-2015	12	4012	4099	1069	2550	0	2505
BAKKEN	12-2014	30	12206	12061	4779	14089	0	13975
BAKKEN	11-2014	30	0	0	0	0	0	0
BAKKEN	10-2014	31	0	0	0	0	0	0

#28165:

Pool	Date	Days	BBLS Oil	Runs	BBLS Water	MCF Prod	MCF Sold	Vent/Flare
BAKKEN	3-2015	0	0	11	0	0	0	0
BAKKEN	2-2015	1	584	700	182	714	600	104
BAKKEN	1-2015	13	8815	8832	3098	9210	0	9112
BAKKEN	12-2014	23	12088	12166	5019	14246	0	14133
BAKKEN	11-2014	27	21431	21291	12279	25501	0	25342
BAKKEN	10-2014	31	5959	5877	6326	9891	0	9854

 #28166:

Pool	Date	Days	BBLS Oil	Runs	BBLS Water	MCF Prod	MCF Sold	Vent/Flare
BAKKEN	3-2015	31	19987	19764	5595	23128	20622	2365
BAKKEN	2-2015	20	16841	16922	4590	20901	17560	3051
BAKKEN	1-2015	31	28058	27941	9067	34444	0	34133
BAKKEN	12-2014	29	24147	24258	8581	31175	0	30949
BAKKEN	11-2014	30	38553	38375	25356	59651	0	59364
BAKKEN	10-2014	31	16130	15909	8266	23767	0	2366

#28167:

Pool	Date	Days	BBLS Oil	Runs	BBLS Water	MCF Prod	MCF Sold	Vent/Flare
BAKKEN	3-2015	22	20286	20075	4493	22698	20234	2321
BAKKEN	2-2015	18	17932	18077	2802	21861	18362	3191
BAKKEN	1-2015	31	33905	33868	5942	41700	0	41324
BAKKEN	12-2014	29	37980	38041	6000	47603	0	47247
BAKKEN	11-2014	25	49630	49395	10433	60573	0	60204
BAKKEN	10-2014	31	20395	20116	8041	31493	0	31367

#28168, which is said to be IA -- no production since the middle of January, 2015.

• 28168, 649, QEP, State 3-16-21BH, Grail, middle Bakken; 36 stages; 3.6 million lbs: t11/11/14; 

Pool	Date	Days	BBLS Oil	Runs	BBLS Water	MCF Prod	MCF Sold	Vent/Flare
BAKKEN	3-2015	0	0	0	0	0	0	0
BAKKEN	2-2015	0	0	16	0	0	0	0
BAKKEN	1-2015	14	1102	1126	940	1379	0	1367
BAKKEN	12-2014	22	3393	3353	2161	3087	0	3055
BAKKEN	11-2014	0	0	22	0	0	0	0
BAKKEN	10-2014	19	1634	1612	1324	308	0	29

Original Post

Disclaimer: in a long note like this, there will be typographical errors; it is possible there are factual errors, but hopefully not; it is difficult, sometimes, to separate facts from my thoughts on what the data shows. If this information is important to you, go to the source, such as the NDIC or a landman.

This will be a long post, but it might serve to enlighten us about the Bakken.

It involves five QEP wells on one pad sited in the Grail oil field. There seems to be a bit of "confusion" with regard to the scout ticket for the first well on this pad; the scout ticket says #18973 is a Blue Buttes well; it is not; it is a Grail well just like the others.

The "original" State well on this pad was drilled/tested back in 2010 -- that's five years ago.

Then, in late 2014 (October, 2014, or thereabouts) four more State wells on this pad were drilled/fracked tested.

Let's look at the four most recent wells first and their production profiles:

• 28165, 1,444, QEP, State 1-16-21BH, Grail (scout ticket), runs south into the Grail (GIS map server), middle Bakken, 32 stages, 5.4 million lbs, t10/14; cum 42K 1/15:

Pool	Date	Days	BBLS Oil	Runs	BBLS Water	MCF Prod	MCF Sold	Vent/Flare
BAKKEN	1-2015	13	8815	8832	3098	9210	0	9112
BAKKEN	12-2014	23	12088	12166	5019	14246	0	14133
BAKKEN	11-2014	27	21431	21291	12279	25501	0	25342

• 28166, 2,204, QEP, State 2-16-21BH, Grail (scout ticket), runs south into the Grail (GIS map server), middle Bakken, 33 stages; 8.6 million lbs;  t10/14; cum 107K 1/15:

Pool	Date	Days	BBLS Oil	Runs	BBLS Water	MCF Prod	MCF Sold	Vent/Flare
BAKKEN	1-2015	31	28058	27941	9067	34444	0	34133
BAKKEN	12-2014	29	24147	24258	8581	31175	0	30949
BAKKEN	11-2014	30	38553	38375	25356	59651	0	59364
BAKKEN	10-2014	31	16130	15909	8266	23767	0	23668

• 28167, 2,761, QEP, State 2-16-21TH, Grail (scout ticket), runs south into the Grail (GIS map server), Three Forks B1, 39 stages; 9.9 million lbs; t10/14; cum 142K 1/15:

Pool	Date	Days	BBLS Oil	Runs	BBLS Water	MCF Prod	MCF Sold	Vent/Flare
BAKKEN	1-2015	31	33905	33868	5942	41700	0	41324
BAKKEN	12-2014	29	37980	38041	6000	47603	0	47247
BAKKEN	11-2014	25	49630	49395	10433	60573	0	60204
BAKKEN	10-2014	31	20395	20116	8041	31493	0	31367

• 28168, 649, QEP, State 3-16-21BH, Grail (scout ticket), runs south into the Grail (GIS map server), middle Bakken, 36 stages; 4.6 million lbs; t12/14; cum 6K 1/15:

Pool	Date	Days	BBLS Oil	Runs	BBLS Water	MCF Prod	MCF Sold	Vent/Flare
BAKKEN	1-2015	14	1102	1126	940	1379	0	1367
BAKKEN	12-2014	22	3393	3353	2161	3087	0	3055
BAKKEN	11-2014	0	-1	21	0	0	0	0
BAKKEN	10-2014	19	1634	1612	1324	308	0	298

Several story lines among those four wells. We will come back to those story lines later. 

But first, we will return to the oldest well on that pad. This well runs south into the Grail oil field (GIS map server):

• 18973, 2,579, QEP/Helis, State 1-16/21H, Blue Buttes (scout ticket - a mistake; this is a Grail well), Three Forks; t10/10, cum 484K 1/15; inactive since 4/14; looks like it might be back on line as of 10/14; yes, now shown to be active, 12/14; huge jump in production in 12/14; coming back on line after permission to commingle production from multiple wells; 24 stages; 2.9 million lbs; production profile since January, 2014:

Pool	Date	Days	BBLS Oil	Runs	BBLS Water	MCF Prod	MCF Sold	Vent/Flare
BAKKEN	1-2015	12	4012	4099	1069	2550	0	2505
BAKKEN	12-2014	30	12206	12061	4779	14089	0	13975
BAKKEN	11-2014	30	0	0	0	0	0	0
BAKKEN	10-2014	31	0	0	0	0	0	0
BAKKEN	9-2014	0	0	0	0	0	0	0
BAKKEN	8-2014	0	0	0	0	0	0	0
BAKKEN	7-2014	0	0	0	0	0	0	0
BAKKEN	6-2014	0	0	0	0	0	0	0
BAKKEN	5-2014	1	1	1	0	231	0	0
BAKKEN	4-2014	25	5465	5790	587	408	0	0
BAKKEN	3-2014	31	5599	5821	607	2597	2176	0
BAKKEN	2-2014	28	4490	4158	368	4632	4252	0
BAKKEN	1-2014	31	5299	5296	487	6337	5920	0

Look at the huge jump in production in December, 2014, after being off-line for several months. The well was taken off-line during the period when the four (4) new wells were being drilled / fracked. Don't be misled by the huge decline in the following month; note, the well only produced for 12 days in January, 2015.

Also note: some of the wells were on-line for less than half the month of January, 2015; this must have been an operational decision, not due to the weather, because the other wells on the pad were on-line the full month of January, 2015. A full month of production at the same rate seen for 12 days would have been over 10,000 bbls in January, 2015.

The well file report is not helpful in answering that question, as far as I can tell. There are three possibilities: a) an error due to mis-allocation due to commingling with other wells into tank battery; b) halo effect of new fracking; or, c) re-fracked.

Based on data of the production / runs from the other wells, I rule out (a) -- mis-allocation.

That leaves a halo effect or a re-frack. Since there is no mention in the well file report of a request to re-frack or a notification to re-frack (although I may have missed it, or the paperwork may be still be in the mail), it appears the jump in production is due to the halo effect of new fracking.

I was the first non-advertising supported blog that opined that fracking was effective out to 500 feet (radially) -- at best. Interestingly enough, the distance between the old TF well and the new TF well is no more than 528 feet at most spots along the two horizontals.  

So, what accounts for the huge jump in production for the older well (#18973)? Again, there was not a huge decline the following month; the well was only on-line for twelve (12) days in January.

Re-cap:

• 18973: Three Forks, 24 stages; 2.9 million lbs; 2,579,
• 28165: middle Bakken, 32 stages, 5.4 million lbs; 1,444,
• 28166: middle Bakken, 33 stages; 8.6 million lbs; 2,204,
• 28167: Three Forks B1, 39 stages; 9.9 million lbs; 2,761, 
• 28168: middle Bakken, 36 stages; 4.6 million lbs; 649, 

Here is what the GIS map server looks like in this area as of this date (file number, formation, pounds of proppant in millions, IP):

I hope I'm not making a mistake here, or that there isn't a typo, but I cannot explain the huge difference in the IPs between #28168 (middle Bakken) and the other three middle Bakken (and the two TF wells for that matter). One has to assume the geology was identical. It is possible the seam was "thinner" but highly doubtful. We don't have the geologist's report yet, but the percent of time the bore is in the seam is critical. 

Total production to date is not comparing apples to oranges exactly due to slight difference in number of months of production, but there is a huge difference in total production for the new Three Forks well compared to the three middle Bakken wells.

I haven't done any other analysis of Three Forks vs middle Bakken wells in the Grail oil field. Could be interesting.

Again, in a long note like this there will be typographical errors. There may be factual errors. There could be some whoppers. No errors were done on purpose and will, of course, be corrected when found. I have not proofread the post yet but will eventually get around to it. If this information is important to you, go to the source, such as the NDIC or a landman.

An EOG Wayzetta Well Back On-Line But Not Doing Much -- March 20, 2015; Gadeco With A Troublesome Well In Epping Oil Field

Update on this well, now that it is back on-line:

• 26929, 133, EOG, Wayzeta 148-0311H, Parshall, Three Forks NOS, 1920 acres; target: "E section of the Three Forks; middle Bakken with good shows and a thickness of 47 feet; background gas units were unremarkable, peaking at less than 700 units; near the end of the lateral, the wellbore brushed the lower "F" marker; 47 stages; 14.8 million lbs sand, but not much production, t6/14; was inactive (IA) 8/14 - 11/14; back on status 12/14; cum 2K 1/15;  

Production profile:

Pool	Date	Days	BBLS Oil	Runs	BBLS Water	MCF Prod	MCF Sold	Vent/Flare
BAKKEN	1-2015	31	345	338	29533	851	61	226
BAKKEN	12-2014	31	73	78	32062	615	0	38
BAKKEN	11-2014	9	303	296	8432	243	19	58
BAKKEN	10-2014	0	0	0	0	0	0	0
BAKKEN	9-2014	0	0	0	0	0	0	0
BAKKEN	8-2014	5	12	39	5094	23	1	2
BAKKEN	7-2014	31	602	601	35189	318	27	159
BAKKEN	6-2014	14	790	768	18164	1757	137	1558
BAKKEN	5-2014	2	14	10	0	10	0	0

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

Another Troublesome Well?

This is a Gadeco well in Epping oil field:

• 20398, 1,313, Gadeco, Golden 25-36H, Epping, Bakken, t6/12; cum 94K 10/14; IA as of 8/14; back on status for one month, 12/14, but then off-line all of 1/15; now listed as A.

Production profile since early last year:

Pool	Date	Days	BBLS Oil	Runs	BBLS Water	MCF Prod	MCF Sold	Vent/Flare
BAKKEN	1-2015	31	0	0	0	132	0	132
BAKKEN	12-2014	31	1368	1368	0	5678	0	5678
BAKKEN	11-2014	30	0	0	0	0	0	0
BAKKEN	10-2014	31	0	0	0	0	0	0
BAKKEN	9-2014	30	0	0	0	0	0	0
BAKKEN	8-2014	31	0	0	0	0	0	0
BAKKEN	7-2014	31	1241	1505	0	0	0	0
BAKKEN	6-2014	30	4359	4525	0	5035	0	5035
BAKKEN	5-2014	31	4984	4754	0	4998	0	4998
BAKKEN	4-2014	30	4839	5067	0	4965	0	4965

Obama To Throw Florida's Manatees Under The Bus -- March 20, 2015

Miami Herald is reporting:

From November to April, hundreds of manatees huddle in the warm discharge canal of one of Florida’s biggest coal-fired plants, the Big Bend Power Station near Tampa, as camera-toting families point and laugh from a viewing deck at the gentle creatures lolling near the smokestacks.

Some two-thirds of Florida’s endangered manatees rely on discharge waters from power plants for winter warmth, according to federal biologists.

It’s a fact that congressional Republicans are seizing on to challenge the centerpiece of President Barack Obama’s agenda to fight climate change, a plan to slash carbon emissions that could force large-scale closures of coal plants. 

My hunch: this is a human interest story that has no legs. The manatees will be thrown under the bus.

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

Stay Secretive, My Friends

Stay Secretive, My Friends

US Imports Of Renewable-Based Diesel Plunges 36% For 2014 -- March 20, 2015

Initial results of wells coming off the confidential list are being posted here.

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

Gasoline Demand

I'm still looking for a record demand in gasoline over this Memorial Day weekend.

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

Peak Oil

Peak Renewables

Today's EIA news blurb:

After reaching record levels in 2013, United States imports of biomass-based diesel fuel (both biodiesel and renewable diesel) fell 36%, to 333 million gallons in 2014. Uncertainty surrounding future Renewable Fuel Standard (RFS) targets and the absence of a late-year influx of volumes from Argentina were two main factors in this decline. ---EIA

The glut of oil and natural gas probably had something to do with this 36% decrease.

It's not worth the effort, but is 333 million gallons of diesel fuel for the entire year of 2014 for the entire United States, including Hawaii, even a rounding error?

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

Insider Information

Bonus EIA news blurb:

Angola is the second-largest oil producer in sub-Saharan Africa, behind Nigeria. The country experienced an oil production boom between 2002 and 2008 as production started at several deepwater fields…Angola has been the second-largest supplier of crude oil to China since 2005, behind Saudi Arabia. The United States, the European Union, and India are also major destinations for Angolan oil. However, U.S. imports of Angolan crude oil continue to decline because of increased U.S. production of similar quality crude grades. ---EIA

Yes, as one can see in the graphic below of the most recent publicly-released data, Angola's crude oil imports into the US have decreased from 4.941 million bbls in July, 2014, to 5.581 million bbls in December, 2014....

.... oh, never mind.

Don't tell me insiders in Washington, DC, don't see data up to three months sooner than the rest of us.

How Crazy Is The Bakken? March 20, 2015

This is a Reuters headline story today: Continental Resources adds to oil acreage at North Dakota.

I was expecting a huge acreage deal. In fact: 160 acres. LOL.

WILLISTON, N.D. (Reuters) - Continental Resources Inc, the second-largest North Dakota oil producer, spent $2.3 million at a state land auction for the right to explore for crude on 160 acres, outbidding its nearest rival with just seconds left on the clock.

How much is a Bakken acre worth these days at depressed oil prices? $2.3 million / 160 acres = $14,375/acre.

The rest of the story:

After five days of online bids from privately held Slawson Exploration Co and others, Continental waited until the last 30 seconds of the auction on March 10 to best privately held Tracker Resource Development III LLC by $100 per acre for a bid of $14,200 per acre.

Much of the land is near or under the eastern part of Lake Sakakawea, the dammed portion of the Missouri River that lies near the Fort Berthold Indian Reservation.

It's not known how much oil may lie there, though the reservation alone accounts for roughly a third of the state's daily oil output.

Continental already operates a well on a nearby spit of land.

The state, which opened bidding at $5,000 per acre and had hoped for at least $10,000.

Based on the hints of the story ...

• east of Lake Sakakawea
• mostly under the lake
• near the reservation
• CLR already had a well there "on a spit of land"

... this was my guess where the acres were:

So, if my hunch is close, then we look for the results of the most recent on-line auction, and specifically search for T153N-R93W. And here it is:

My hunch this is the lease information based on the hints in the story:

And there it! Section 16, just a mile west of the existing CLR Margaurite permits!

By the way, this was just one incredible lease; there have been many, many others. To see them all, go to the link above (https://land.nd.gov/minerals/mineralapps/lease/leasesearch.aspx) and then type in "153" and "93" for township and range. Note: when you get to that page, those leases have been over many years; only the two noted above were most recent.

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

Captain Kangaroo and Mr Green Jeans

When I was growing up in Williston, we didn't have a television set until I must have been five or six years old, and then when we finally got a television set, we only got one station -- NBC.  And except for Romper Room (weekly, local) and Bonanza (Sunday nights) there wasn't much that interested me.

But every summer that we were able to travel all the way to Storm Lake, Iowa, where my maternal grandparents lived was wonderful. They had a television set and they got several stations ... well, at least two. The show I remember most during those early days was Captain Kangaroo. Loved it.

For whatever reason, when I saw the photo below, I immediately thought of that show (Captain Kangaroo was in fifty shades of grey, not color) but the photo below is what I imagine Captain Kangaroo would have looked like had it been in color.

The photo was part of a story in which Minnesota is going to spend a gazillion dollars in the name of safety by improving railroad crossings. It was noted that not one crude oil train had ever gone off the tracks at a rail crossing. The gazillions of dollars will be raised in part by an increase in the cost of Amtrak tickets.

By the way, can you imagine this? Threehundredtwentysixthousand (326,000) Minnesotans live near oil train tracks. Wow. "Oil train tracks." Also "grain tracks." And "ethanol tracks." And "Amtrak Tracks." LOL.

In an unrelated story, threehundredtwentysixthousand (326,000) Minnesotans would move to North Dakota if they could afford to.

Friday - March 20, 2015

Active rigs:

	3/20/2015	03/20/2014	03/20/2013	03/20/2012	03/20/2011
Active Rigs	107	195	184	205	172

RBN Energy: Update on natural gas burn for 2015.

Cold weather, abundant supplies of natural gas and lower-than-normal winter gas prices spurred record power burns in January and February, and the power burn for the rest of 2015 is likely to be record-breaking too. It almost has to be; all the gas expected to be produced this year needs to go somewhere, and there’s only so much that can be stored.

That suggests continued softness in natural gas prices—hardly good news for gas producers.

Today, we examine the outlook for this year’s power burn, and the variety of factors that point to record-breaking gas consumption by the U.S. power sector.

For natural gas, the 2012 power burn season was one for the record books. As we said a while back in 2012 Natural Gas Power Burn—Was That a Wild and Crazy Year?, abnormally high gas consumption by the power sector that year [peaking at a record-shattering 1.08 trillion cubic feet (Tcf), or almost 35 Bcf/d, in July 2012] was driven primarily by very low spring and summer gas prices--the result of fast-rising gas production and much-higher-than-normal storage levels at the end of the “non” winter of 2011-12 (2.4 Tcf, vs. the five-year average of less than 1.9 Tcf).

With a return to higher gas prices, the gas power burn sagged in 2013 (peaking at 29.2 Bcf/d, again in July) and 2014 (peaking at 28.9 Bcf/d in August). Now, gas prices (and futures) are down to their lowest level since September 2012, gas storage levels are 500 Bcf higher than they were this time last year, and 2015 gas production is expected to remain strong (likely topping 73 Bcf/d, on average), despite recently announced cutbacks in drilling.

Before we consider the factors suggesting a record-breaking power burn this year, let’s look at the 2012 power burn phenomenon in a little more detail because it helps inform us about this year’s potential. Mild weather and abundant supplies in the winter of 2011-12 precipitated a big post-winter drop in gas prices (to about $2/MMBTU in April 2012).

Gas prices that low (and they stayed below $3/MMBTU through that summer and early fall) get utilities and independent power producers (IPPs) thinking about taking some coal-fired units offline temporarily and replacing their output with energy from gas-fired combined-cycle units.

Much, much more at the link.

Two thoughts come to mind immediately --

• first, the low natural gas prices back in 2012 resulted in record amounts being used; it will be interesting if we see the same thing this Memorial Day weekend -- but with gasoline, not natural gas; will the US set a new Memorial Day weekend gasoline demand record this year with such low gasoline prices?
• second, the "demise" of coal has much more to do with market reality (abundance of cheap natural gas) as with renewable energy, Algore fees and penalties 

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

Friends in Low Places

Reuters/Rigzone is reporting:

China will lend Venezuela around $10 billion in coming months, half as part of a bilateral financing deal and the other half for the development of oil fields.

Fresh funds are a boon for financially squeezed Venezuela and will likely increase market confidence over the OPEC country's ability to meet major debt payments and arbitration awards.

Venezuelan bonds rose on Thursday following the news. However, relief may be tempered as the loans appear largely earmarked and will only go so far in countering the steep tumble in oil prices and Venezuela's severe recession.