NDIC Hearing Dockets, April, 2015

Disclaimer: these summaries are for my personal use only; you are free to read them; don't quote me on them; there will be typographical and factual errors.  If this is important to you go to the source. Link here.

Highlights of this agenda here.

Wednesday, April 22, 2015
23727, cont'd
23707, cont'd
23773, cont'd
23277, cont'd
23861, Whiting, Nameless-Bakken, proper spacing,
20855, cont'd
23862, Whiting, request to withdraw, Truax and/or Grinnell-Bakken, establish three overlapping 2560-acre units; 2 wells each; Williams, McKenzie
23863, Whiting, Truax-Bakken, establish a 2560-acre unit, 2 wells, Williams, McKenzie
23864, Whiting, Banks-Bakken, amend, 14 wells on each of 2 1280-acre units; McKenzie
23770, cont'd
23865, Murex, Daneville-Bakken, amend, 8 wells in a 1280-acre unit; Divide County
23235, cont'd, notice to continue
23866, QEP, Spotted Horn and/or Squaw Creek-Bakken, amend, i) establish a 2560pacre unit; 1 horizontal well; ii) establish a 2560-acre unit, 3 wells; McKenzie
23867, Oasis, Baker and/or Last Chance-Bakken, establish two overlapping 2560-acre units; 2 wells each, McKenzie, Williams
23868, BTA, establish a drilling unit, a Tyler well, 14-142-102
23869, BR, notice to dismiss,
23870, BR, Siverston and/or Pershing-Bakken; amend, i) establish an overlapping 2560-acre unit, 1+ wells; ii) 8 wells on an existing 1280-acre unit; McKenzie
23871, BR, Killdeer-Bakken, amend, stratigraphic limits, Dunn County
23518, cont'd
23666, cont'd
23872, Vintage, notice to dismiss
23642, cont'd
23643, cont'd
23803, CLR, notice to continue
23873, Horizon-Olson, LLC, waste facility, Dunn County
23646, cont'd
23874, Murex, pooling
23875, Whiting, Sand Creek-Bakken, 14 wells on each of 2 1280-acre units; McKenzie
23876, Whiting, Poe-Bakken, 14 wells on 6 1280-acre units; McKenzie
23877, Whiting, pooling
23878, Whiting, pooling
23879, Whiting, pooling
23880, Whiting, pooling
23881, Whiting, pooling
23883, Whiting, pooling
23884, Whiting, pooling
23885, Whiting, pooling
23886, Whiting, pooling
23887, Whiting, pooling
23888, Whiting, pooling
23889, Whiting, pooling
23890, Whiting, pooling
23891, Whiting, pooling
23892, Whiting, pooling
23893, Whiting, pooling
23704, cont'd
23894, BR, notice to continue, Elidah-Bakken, amend, 2 wells on a 2560-acre unit; McKenzie
23895, BR, North Fork-Bakken, 2 wells on a 2560-acre unit; McKenzie
23896, BR, pooling
23897, BR, pooling
23898, BR, pooling
23899, BR, pooling
23900, BR, pooling
23901, BR, pooling
23902, BR, pooling
23903, BR, pooling
23904, BR, pooling
23905, BR, pooling
23906, BR, pooling
23907, BR, pooling
23908, notice to dismiss, a commingling case
23909, HRC, commingling
23910, BTA, commingling
23126, cont'd
23911, Zargon, EOR, Mackobee-Coulee Madison, Renville County
23912, Buckhorn Energy, SWD
23913, Sakakawea Ventures, SWD

Supplement, Wednesday, April 22, 2015
23955, amend the stratigraphic definition of the Tioga-Bakken pool and/or the Tioga-Devonian Pool, Burke, Mountrail, and Williams counties
23956, amend the stratigraphic definition of the Beaver Lodge-Bakken pool and/or the Beaver Lodge-Devonian pool, Williams County

Thursday, April 23, 2015
23797, cont'd
23914, Emerald Oil,  Foreman Butte, Bakken, proper spacing, McKenzie
23915, Fidelity, Dickinson-Bakken, proper spacing, Stark County
22998, cont'd; notice to continue
22646, cont'd; notice to continue
23143, cont'd
23144, cont'd
23589, cont'd
23916, CLR, Elm Tree-Bakken, terminate some large drilling units (Order # 21151, Order #24889); create a 480-acre unit; create a 1280-acre unit; create 2 1680-acre units; multiple wells on each unit; McKenzie, Mountrail
23729, cont'd; notice to continue
23917, HRC, Good Luck-Bakken, proper spacing
23918, Crescent Point, Little Muddy-Bakken, proper spacing
23919, HRC, Otter-Bakken, proper spacing
23920, Peregrine Petroleum, Covered Bridge-Bakken, establish a 1280-acre unit; 4 wells, McKenzie
23921, Samson Resources, Blooming Prairie-Bakken, establish an overlapping 1280-acre unit; 7 wells, Divide
23803, cont'd
23922, Newfield, Sand Creek-Bakken, establish an overlapping 1280-acre unit, 8 wells, McKenzie
23923, Newfield, clarify Order # 25827
23924, XTO, exception to the rules
23806, cont'd
23807, cont'd
23925, Souris-Spearfish/Madison, appropriate spacing for horizontal wells, Bottineau
23954 (sic), Northeast Landa-Spearfish/Madison, appropriate spacing for horizontal wells, Bottineau
23446, cont'd
23145, cont'd
23590, cont'd
23714, cont'd
23715, cont'd
23716, cont'd
23717, cont'd
23605, notice to dismiss
23013, cont'd
23926, CLR, pooling,
23927, CLR, pooling,
23928, CLR, pooling,
23929, CLR, pooling,
23930, CLR, pooling,
23931, Staoil, pooling
23932, Statoil, pooling
23933, EOG, pooling
23934, EOG, pooling
23935, EOG, pooling
23936, EOG, pooling
23937, EOG, pooling
23938, EOG, pooling
23939, EOG, notice to continue, risk penalty legalese,
23940, Samson Resources, pooling,
23941, Sinclair Oil, Lone Butte-Bakken, 6 wells on an existing 1280-acre unit, McKenzie
23942, XTO, pooling
23943, XTO, Capa-Bakken, 12 wells on each of 9 1280-acre units; 2 lease-line wells on an overlapping 260-acre unit, Williams
23944, XTO, West Capa-Bakken, 12 wells on each of 12 1280-acre units; 2 lease-line wells on each of 11 overlapping 2560-acre units; Williams
23945, XTO, Dollar Joe-Bakken, 12 wells on each of 7 1280-acre units; and 2 lease-line wells on each of 3 overlapping 2560-acre units; Williams
23946, XTO, Grinnell-Bakken, 12 wells on each of 18 1280-acre units; 2 lease-line wells on each of 9 overlapping 2560-acre units, McKenzie, Williams
23947, Legacy, Souris, commingling, Bottineau
23948, Hunt, flaring
23949, Hunt, flaring
23950, Hunt, flaring
23951, Hutn, commingling
23952, Hunt, commingling
23953, Hunt, commingling
23826, cont'd
23012, cont'd

Friday, April 24, 2015
23800, cont'd
23802, cont'd

Nine (9) Wells Coming Off Confidential List Thursday -- April 15, 2015

Six (6) new permits --

• Operators: Whiting (4), Enerplus (2)
• Fields: Epping (Williams), Stockyard Creek (Williams), Eagle Nest (McKenzie
• Comments:

Active rigs:

	4/15/2015	04/15/2014	04/15/2013	04/15/2012	04/15/2011
Active Rigs	91	183	186	206	174

Wells coming off the confidential list:

• 26043, drl, CLR, Kuhn Federal 4-12H1, Camp, no production data,
• 28135, drl, WPX, Edward Flies way 7-8-9HB, Van Hook, no production data,
• 28428, 2,070, Whiting, Good Shepherd 21-15-2H, Rawson, t10/14; cum 50K 2/15;
• 28429, 2,318, Whiting, Good Shepherd 21-15H, Rawson, t10/14; cum 54K 2/15;
• 28913, 1,711, Hess, EN-VP And R-154-94-2536H-1, Alkali Creek, t2/15; cum 29K 2/15;
• 29017, drl, XTO, Johnson Federal 11X-5F, Siverston, no production data,
• 29033, 1,583, CLR, Hayes 3-6H1, Crazy Man Creek, 4 sections, t2/15; cum --
• 29527, dry, Hess, BW-Arnegard State-151-100-3625H-7, Sandrocks, no production data,
• 29644, drl, XTO, Brian 21X-15B, Tioga, no production data,

One (1) producing well completed:

• 28383, 302, CLR, Flicker 1-28H1, Juno, t3/15; cum --

Oasis temporarily abandoned one well in process of converting it to a SWD well:

• 20968, TA, Oasis, Schmidt 5602 42-10H, Bonetrail, it looks like a problem with the well after cementing; decided simply to convert it to a SWD well

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 28913, see above, Hess, EN-VP And R-154-94-2536H-1, Alkali Creek:

Date	Oil Runs	MCF Sold
2-2015	27809	36047

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Rise Less Than Expected

Reuters is reporting:

Oil prices rallied and U.S. crude jumped nearly 6 percent to a 2015 peak on Wednesday after government data showed crude oil inventories in the United States rose less than expected last week.

Though hitting a record level for a 14th consecutive week, U.S. crude inventories rose only 1.3 million barrels to 483.69 million, the smallest build since the week ending Jan. 2, the Energy Information Administration said on Wednesday.

That build was below expectations for a 4.1 million barrel rise in a Reuters survey of analysts.

One wonders if the EIA includes storage in the myriad new tanks around Williston. It's hard for me to believe that oil companies would go out of their way to account for all stored oil. 

For The Archives -- April 15, 2015; Kennedys Might Get Some More Skiing In This Weekend

The biggest story for the morning: US natural gas reserves at 110 years at current usage rate.

I remember years ago when they said US coal would last a hundred years.

I wonder if the same can't be said for oil with one slight tweak: US crude oil reserves will last a hundred years at projected decline in usage rate.

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For The Archives

Who beat Harry Reid? asks Rush.

Hillary stages photo-op; has three votes for sure. 

Homeland Security buys 62 million rounds of AR-15 ammo. Does the US government issue AR-15's? I honestly don't know.

Hillary's campaign says to call her Hillary is sexist; but she uses "H" for her logo. I remember when folks told me it was inappropriate to call the Unaffordable Care Act by its other name, ObamaCare. It turns out that everyone calls it ObamaCare now instead of its other name, the Unaffordable Care Act.

Ebola virus found in semen six months after recovery. Two questions: a) who thought of this?; and, b) why?

Attention deficit drugs are going mainstream; increasingly used by corporate suits.

This is April, isn't it? The Kennedys might get some more skiing in this weekend in Colorado. Dr Roy Spencer is reporting:

A strong spring storm developing over the Northern Rockies will bring heavy snow and strong winds to portions of Wyoming and Colorado over the next few days, with the heaviest snows expected on Friday. Winter storm watches and warnings are starting to be issued, with more modest snow totals expected in Montana, Idaho, Utah, and New Mexico.

Predicted total snowfall amounts from the GFS model exceed 5 ft in scattered areas by Sunday morning.

Random Look At An Oasis Well In Camp Oil Field -- April 15, 2015

In the process of updating the Camp oil field (I may not get the update completed today):

• 25247, 531, Oasis, Mabel Federal 5201 41-12T, first bench, 50 stages; 9 million lbs, sand/ceramic; t11/14; cum 72K 2/15;

Something tells me the decline (see below) is operator-driven. 

Production profile:

NDIC File No: 25247    
Well Type: OG     Well Status: A     Status Date: 11/9/2014     Wellbore type: Horizontal
Location: SWSW 12-152-101     Latitude: 47.994930     Longitude: -103.560764
Current Operator: OASIS PETROLEUM NORTH AMERICA LLC
Current Well Name: MABEL FEDERAL 5201 41-12T
Total Depth: 20446     Field: CAMP
Spud Date(s):  8/27/2014 
Completion Data
   Pool: BAKKEN     Comp: 11/9/2014     Status: F     Date: 11/9/2014     Spacing: 2SEC
Cumulative Production Data
   Pool: BAKKEN     Cum Oil: 71814     Cum MCF Gas: 57571     Cum Water: 90394
Production Test Data
   IP Test Date: 11/9/2014     Pool: BAKKEN     IP Oil: 531     IP MCF: 526     IP Water: 2607

Monthly Production Data

Pool	Date	Days	BBLS Oil	Runs	BBLS Water	MCF Prod	MCF Sold	Vent/Flare
BAKKEN	2-2015	28	12287	12193	4996	13438	12301	1137
BAKKEN	1-2015	27	10071	10330	11742	9958	9292	666
BAKKEN	12-2014	31	25003	24798	27934	23780	23780	0
BAKKEN	11-2014	22	24453	24091	45722	10395	10395

Stayin' Alive -- April 15, 2015

Updates

April 15, 2015: remember the "drop-dead date" for Greece -- April 9, 2015. The date, as expected, has moved. The "new" "drop-dead date" for Greece is April 24, 2015, nine days from now.  

Original Post

Wow, I couldn't be in a better mood.

There seems to be a news embargo on:

• EbolaLand
• ISIS and the Mideast implosion
• Greece
• the Ukraine war
• Iowa politics

All I see are good-news stories on the internet today. I don't watch television (as a general rule) so I have no idea what is really going on. About the only "bad" news is Soviet ships in the English Channel. British fighters respond (LOL) and tourists gawk. It certainly looks like the -- disclaimer: this is not an investment site; do not make any investment or financial decisions based on anything you read here -- worst has passed. Have we seen the Hillary "re-set" in the market, the price of oil, housing?

The weather is incredible this morning in north Texas. That will change tomorrow and through the weekend as another "winter" storm comes through -- this is April, isn't it? The Kennedys might get some more skiing in this weekend in Colorado.

Stayin' Alive, The Bee Gees
The little bit of bad news that is getting past the censor today is this story on Greece. The Telegraph is reporting:

The depth of Greece's financial woes have been laid bare as official figures showed the country has fallen further into the red following the election of its Leftist government.

Greece's primary budget surplus, which excludes its debt interest payments, shrunk to just over €1bn during January and February, compared to €3.17bn over the same period in 2014.

Separate data from the country's official statistics authority also showed a gaping hole in the public finances last year. Greece's budget deficit reached 3.5pc in 2014, while its primary budget surplus was only 0.4pc.

Public debt also hit an eye-watering 177pc of GDP in 2014 or €317bn, according to the Hellenic Statistical Authority. 

It looks like George Soros could buy the entire country, not just an island. 

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

Embracing Cap and Trade

What a great state! California! The Los Angeles Times is reporting:

Almost 11 million customers of the state's for-profit electric utilities will be getting credits averaging $27 per household on either their April or May bills. The rebates come courtesy of a complex California program that requires polluting industries to pay for the right to release into the atmosphere carbon dioxide and other gases that contribute to global warming. 

The rebates account for a portion of the revenues generated by the so-called Cap and Trade program. Most of the proceeds are dedicated to climate change mitigation and other environmentally beneficial activities. They include some funding for a proposed high-speed rail project that would link Los Angeles and San Francisco.

This was the last line of the article. I have no idea what it means:

The rebate will continue twice a year until 220.

Wednesday -- More Miscellaneous -- April 15, 2015; Today's EIA Fortune Cookie

Oh, I almost forgot -- tax day today. Postmark it today; send it registered and it will take six weeks to get to the IRS.

Today's EIA blurb:

The timing of the projected end to U.S. net energy imports depends on assumptions about oil prices, energy resources, and economic growth. In the AEO2015 Reference case, imports and exports are balanced starting in 2028. In other cases, such as the High Oil Price and High Oil and Gas Resource cases, the United States becomes a net exporter of energy in 2019. However, in the Low Oil Price case, the United States remains a net energy importer through 2040. --- EIA

The EIA blurb has morphed from "blurb" to "fortune cookie." If I remember, it will morph to "energy cookie" tomorrow. 

This is a most interesting WSJ article: 100,000 layoffs in the oil and gas industry, and yet I don't see those numbers reflected in the weekly monthly jobs reports. These 100,000 jobs would be "direct." I assume there would also be a lot of "indirect" jobs lost.

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

Muscle Shoals Continued

Saved, Bob Dylan
Saved.

Slow Train Coming.

Apple Page -- April 15, 2015; Apple Trouncing the Competitors; Some Are Partnering With Apple

Macrumors is reporting:

Apple's App Store increased its revenue lead by 10 percentage points over Google's Play Store in the first quarter of 2015.

The App Store's revenue was also almost 70% higher than the Play Store, despite Google Play receiving 70% more app downloads during the three-month period ending March.

24/7 Wall Street:

Argus reiterated its Buy rating for Apple raised its price target to $145 from $135, implying upside of 15%, without including the dividend. The firm has another more forward-looking price target, via a two-state discounted free cash flow model, that gives a value for Apple north of $200. 

I was having trouble with my Apple MacBook Pro. It's a workhorse and I use it a lot. It's "fixed" but it still gives me a few hiccups.

I bought the least expensive MacBook Air to ensure that I always had a computer. I was not aware how incredibly the MacBook Air really is. I would have argued that among Apple laptops it provides the best bang for the buck. I asked one of the local Apple employees that I've known for awhile, what he thought, was the best Apple, bang for the buck. His answer: "the retina." All flash drive, no moving parts; and "the retina" with the least amount of memory if one is talking "bank for buck." All flash drive is incredible.

The least expensive MacBook Air was about $850 -- I was eligible for a discount, which surprised me. I was not aware that Apple gave discounts except for students, and I wouldn't qualify for a student discount.

So, let's see what the least expensive "retina" is -- I haven't looked at these in a long time. $1,300 for 8GB/128GB 13-inch retina. I have to agree.

Also in Apple news: Samsung has created a team of 200 employees who will work exclusively on Apple products. If you can't beat 'em, join 'em.

Samsung is relying more on its display and semiconductor units after falling into a tie with Apple for leadership of the global smartphone market. Relations between the companies thawed after they dropped all lawsuits against each other outside the U.S., and Apple is now the biggest external customer for Samsung components.

If you haven't seen the innards of an Apple computer, now's the time. Link here. The comments are particularly helpful for newbies. There are two huge story lines: Apple has never, never designed computers for individuals to tweak; you get what you buy, and that's it. And second, a newer story line: the battery may be getting to be the long pole in the tent regarding cost -- folks may find it more cost effective to simply buy a new computer when the battery needs replacing, which occurs 3 - 5 years out. I doubt most Apple computer batteries last five years with heavy use. My MacBook Pro battery lasted about 2.5 years with very heavy use.

A third trend which Microsoft pioneered, but Apple will eventually be the gold standard: same IOS on all products -- from the tablet to the desktop. And yes, all with touch screen.

I Don't Want To Talk About It, Rod Stewart and Amy Belle 

This is not as good as the original posting, but this video is subject to being removed from YouTube which usually means progressively worst versions will be posted. Whatever. It's funny how the mind works. While watching this I had a flash memory of a little pie shop in Newell, South Dakota. Makes no sense whatsoever. No connection.

Quick Look At WTI -- April 15, 2015

Cushing, Oklahoma, WTI spot price FOB, dollars per barrel (beware: the link may take a long time to load; watch the spinning wheel or the sand glass):

I do not know the "number" the NDIC has posted. In an earlier post, I thought February was the first month to begin the five-month "window." But the table above suggests January was the first month. If so, we are in the fourth of five months. So, we'll see.

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Iowans And Hillary

Delilah, Tom Jones

Conditioning North Dakota Crude Oil -- April 15, 2015

A regular reader sent me a link to an incredibly good link to help understand the Bakken. I'll post a bit here but it's worth going to the linked article to get the whole story; great graphics.

Responding to pressure to reduce the volatility of North Dakota crude oil after the train disaster in Lac-Megantic, Quebec in 2013 which killed 47 people and another derailment and fire in North Dakota that same year, the North Dakota Industrial Commission (NDIC) passed standards on December 9, 2014 to require oil-conditioning equipment at the well head to separate production fluids into their gas and liquid components, thereby reducing the volatility of the crude.

The standard requires producers to heat crude oil to at least 110 degrees F. at a pressure of 50 psi., effective April 1, 2015. The standard device commonly used to accomplish this is known in the industry as a “heater-treater.

The order requires a Reid Vapor Pressure (RVP) of 13.7 psi. “RVP” is a measure of gasoline volatility indicated in pounds per square inch, the higher the RVP the more quickly it evaporates, RVP at normal atmospheric pressure is 14.7 psi. Just how many heater-treaters may be required is a heated subject of debate between the State regulators and the industry.

Two recent State announcements attempt to provide some indication of where things might stand.

The North Dakota Department of Mineral Resources has indicated that 80% of Bakken crude has an average RVP of 11.8 psi, less than the requirement and therefore in compliance.

State inspectors recently reported that 55% (165) of the roughly 300 existing heater-treaters operated within the guidelines, 33% (99) were operating at lower temperatures and 12% (36) applied no heat to crude oil.

The 12% is believed to represent smaller operators who could be severely impacted by the new rules.

The 800 pound gorilla in the room with these statistics though is what percentage of the existing wells have no heater-treaters, potentially a lot more than 300 given the thousands of wells in North Dakota.

A search of the DI database for existing directional wells in North Dakota reveals 12,994 directional wells. Accepting the State’s 80% rule and taking only 20% of the 12,994 wells leaves 2599 wells without equipment. To be conservative we will assume as many as 6 wells could be treated with one heater-treater (the number will actually vary depending upon production and equipment capacity) the additional units would total 133 (2599/6 – 300 = 133).

If labor and equipment were to run $100,000 per installation costs would be in the neighborhood $13,300,000 to reach compliance.

More than doable. 

Wednesday Morning -- Miscellaneous -- April 15, 2015

Everywhere it is being reported that sit-down restaurants are moving to table tablet ordering:

Olive Garden has a tablet for two waiting for you. The Italian restaurant chain said Tuesday that it is installing Ziosk computer tablets at all of its U.S. locations so customers can order and pay by touch screen. Olive Garden, owned by Florida's Darden Restaurants, started using Ziosk tablets in some of its restaurants last year.

The chain said Tuesday that locations using the devices have experienced faster dining times and increased tip percentages for wait staff. It will start rolling them out at additional restaurants next month and expects the 7-inch devices to be in all of its more than 800 U.S. restaurants before year's end. 

Red Robin and Chili's to follow.

By the way, we went out to eat at Red Robin last night; it was the monthly school fund raiser. Incredibly busy. Not impressed with the hamburger meat; I've become "spoiled" by real hamburger and real bison burgers.

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Very Briefly

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.

From 24/7 Wall Street:

For the purposes of discussion, the analysts at Credit Suisse have narrowed down to five potential takeover candidates. Three are MLPs and two are general partners. They are ONEOK Inc., ONEOK Partners L.P., Targa Resources Corp., Targa Resources Partners L.P., and MarkWest Energy Partners L.P.

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Briefly

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.

I heard on the radio this morning: "stocks" hit a 14-year high in Europe yesterday. I think the economic crisis in Europe is a bit overblown.  

In the US, pre-market, the Dow is up a bit  and oil is up a bit.

Cracks in OPEC continue to appear. Iran joins Libya in asking for production cuts to be made.

Briefly, from Zacks:

Oneok's favorable cash generating capacity and ongoing investments in growth projects will likely drive its performance in the future. In addition, its practice of paying regular dividends is commendable. However, stringent regulations coupled with dependence on the local distribution companies for supplying energy services remain potential setbacks.

Los Angeles school district okays plans for two all-girl schools.

The AP is reporting that manufacturing activity decreased in New York this past month. The press release suggests this is a reflection of the nation's economy.  I think it's regional. The northeast pretty much has an anti-business bias based on the limited information I have.

Manufacturing activity in New York shrank in April for the first time in four months, a sign that the strong dollar and sluggish consumer spending may be holding back factories.

The Federal Reserve Bank of New York says that its Empire State manufacturing index fell to negative 1.2 reading from a plus 6.9 in March. The latest reading is the lowest since December.

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Not So Briefly

Reuters at Rigzone is reporting:

The U.S. government on Tuesday forecast domestic crude production will rise even more than expected a year ago, undeterred by the worst price rout since the financial crisis. U.S. crude oil production will peak at 10.6 million barrels per day in 2020, a million barrels more than the high forecast a year earlier, according to the annual energy outlook by the Energy Information Administration, the statistical arm of the U.S. Energy Department. Crude production will then moderate to 9.4 million bpd in 2040, 26 percent more than expected a year ago, the agency said. The reference case in the report forecasts Brent prices of $56 a barrel in 2015, rising to about $91 a barrel in 2025, $10 a barrel less than levels expected a year ago. The report uses the 2013 value of the dollar as its measure. Despite lower prices, higher production will result mainly from increased onshore oil output, predominantly from shale formations.

Memo to self: memo to Jane Nielson. 

Kemp at Rigzone:

Oil production from major U.S. shale plays will decline by almost 60,000 barrels per day between April and May according to new estimates from the Energy Information Administration.

Production is expected to decline in the Bakken, Niobrara and Eagle Ford plays next month. Only the Permian Basin is expected to post a small month-on-month increase in output ("Drilling Productivity Report" Apr 2015).

With the number of rigs drilling for oil in the United States down by almost 53 percent in just six months, according to oilfield services company Baker Hughes, the shale boom appears to be approaching a turning point. The crude market remains substantially oversupplied as a result of past production, but the degree of excess supply should narrow in the coming months.

Natural Gas Reserves Estimated At 110 Years In US At Current USage -- April 15, 2015

Active rigs:

	4/15/2015	04/15/2014	04/15/2013	04/15/2012	04/15/2011
Active Rigs	91	183	186	206	174

RBN Energy: it's all about natural gas.

Yesterday the Energy Information Administration (EIA) released their 2015 Annual Energy Outlook that forecasts U.S. demand for natural gas to increase by as much as 42% from 2014’s 26 TCF/year to 37 TCF/year by 2040. That translates to 101 BCF/d and is predicated on long term supplies of relatively cheap gas! Can the U.S. produce that much gas over the long term?  Last week a group that is little known outside the natural gas industry – the Potential Gas Committee (PGC) provided an answer to that question when they announced their latest estimate of economically recoverable natural gas resources in the U.S. Today we analyze the impact of the latest PGC estimate and its long-term implications for the natural gas industry.

On April 8, 2015 a biennial natural gas industry event took place that didn’t get much press coverage outside the industry, and what it did get was kind of muted.  It shouldn’t have been muted.  The event was the press conference announcing the new Potential Gas Committee estimate of US recoverable natural gas resources.   The Committee, or PGC, is a large group of industry volunteer experts who gather for a couple of years at the Colorado School of Mines in Golden Colorado, analyzing and evaluating the ability of all the producing regions of the nation to give up economically recoverable natural gas.  This is the number that gets added to the Energy Information Administration’s (EIA) evaluation of proved reserves (the gas supply they’re really sure about), to arrive at a total resource ultimately available to the market.

The headline last week was that the PGC estimate of economically recoverable reserves had gone up 5.5 percent since the last estimate two years ago in 2012.  Whoopee.  Not a very big number.  But we have to look at the absolute numbers, and see what they’ve done since shale development came to the front of the class in 2008, to understand that we have something pretty profound going on here.  Figure 1 depicts the sum of the PGC estimate and EIA’s proved-reserve estimate in trillion cubic feet (TCF), for each study year since 1990.  Shale is set out in green, in order to show its importance to this newfound abundance. Conventional gas estimates are in light blue and the EIA proved reserves are gray.

The new total estimate as of year-end 2014, including both EIA proven reserves and PGC undeveloped but expected reserves, is 2,853 TCF.  U.S. demand for natural gas is about 26 TCF a year.  So, 26 divided into 2,853 is a lot of years, 110 to be exact—PGC is saying we have 110 years’ worth of recoverable natural gas at today’s usage rate.

Where were we before people really paid attention to gas from shale?  The 2006 PGC estimate, plus proved reserves, was 1,525 TCF.  The 2014 resource estimate is 87 percent higher than what everyone knew about in 2006, and the difference is primarily shale development.  Meanwhile, between 2006 and 2014, the industry produced a total of about 200 TCF, meaning an apples-to-apples comparison with the 2006 estimate would be the 2014 resource estimate plus the 200 TCF that’s already been consumed, or 3,053 TCF—more than a doubling of the 2006 estimate.

Another important thing to note about the PGC estimates is that they’ve steadily increased every two years since 2006—this year is not an outlier at all.  Why?  Because the industry’s technical ability to get a much higher percentage of the gas out of tight formations such as shale has been expanding very rapidly.  That is, the PGC estimate is based on “recoverable” resource - only a portion of the total natural gas known to exist in those formations. The most significant variable that has been changing with the new estimates is how much can be extracted in practical terms, both in terms of technology and of economics.  In other words, the extractable share of the known gas goes up every time technology improves to move more gas out of the formations.

Much more at the link.

The takeaway for me: the US will not have an energy shortage ever.