What! NIMBY? -- June 11, 2015

Updates

June 17, 2015: same story is being reported over at Fox News. Clearly a NIMBY issue:

One might expect environmentalists to fight a new power plant, but a new battle being waged by California green groups against a solar facility shows there may be something new under the sun, after all.

A solar-powered plant proposed by industrial giant Bechtel on federal Bureau of Land Management property in the Mojave Desert could supply up to 170,000 homes in Los Angeles with electricity from the sun, but it also would make life difficult for about 100 Bighorn Sheep and other critters, according to the Sierra Club and the National Resources Defense Council. Their concerns have convinced the city not to buy electricity from the 350-megawatt Soda Mountain project.

Original Post

The Los Angeles Times reports:

The city of Los Angeles has dropped plans to buy electricity from a controversial solar plant proposed for the Mojave Desert, delivering a serious blow to the most environmentally sensitive renewable energy project in the state.

City officials said Thursday that the Soda Mountain Solar Project would be too damaging to bighorn sheep, desert tortoises and other wildlife near the site along Interstate 15, just south of Baker and less than a mile from the Mojave National Preserve.

The decision was made after a Department of Water and Power review found that other proposed renewable energy projects would charge the city less for electricity and would have fewer challenges in delivering the power to Los Angeles.

Bechtel Corp., developer of the plant, had hoped that Los Angeles would buy most of the power. Ron Tobler, project development manager for Bechtel, said the company is negotiating with other prospective customers for the electricity.

Analysts said those prospects are remote — and time is of the essence.

If the project does not get a power purchase agreement signed soon, "it will be extremely difficult for it to proceed with development," said Cory Honeyman, a senior solar analyst at the consulting firm GTM Research. That's largely because the window is closing on eligibility for a 30% federal tax credit for the project.

The city's decision came as a welcome surprise to environmentalists.
"The Sierra Club is delighted to see the city do the right thing and choose not to sign a power purchase agreement with this harmful project," said Sarah Friedman, a senior campaign representative with the organization. "We support clean energy, but this is the wrong place to do it."

NIMBY?

I've actually driven by the site; it's huge. I thought this was a done deal.

On Everybody's Mind -- June 11, 2015

There is so much to write about but I have to get to bed. I will leave you with one last article sent by a reader -- an incredibly good article but it will take me a bit of time for me to digest: the geopolitics of falling oil prices.

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Greece

It won't be announced Friday, but it seems to be getting closer: Greece in default. Technically Greece is already in default; it had a huge bill to pay last week but at the last minute, creditors (IMF, EC, EU, France, and Germany) extended all June debt payments (there were four) to the end of the month.

But the ever-grinning Alexis Tsipras will soon be frowning, or worse. Negotiations have stalled; negotiators have gone home; creditors are telling Alexis to get serious.

The rhetoric will be even more interesting Friday but don't expect any "great" announcement. But it's going to be a long weekend for Alexis.

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Odds

Will the Supreme Court's decision on ObamaCare be released tomorrow? Pending reliable data telling me I'm wrong, these are my "Las Vegas" odds when the Supreme Court decision will be announced:

• by June 30, 2015: no bet; it's a given
• by June 26, 2015: 1/9. A $2 bet will get you $2.20
• by June 19, 2015: 2-1. A $2 bet will get you $6.00.
• by close of business, Friday, June 12, 2015: 10 - 1. A $2 bet will get you $22.

Note: this is not a gambling site. Do not make any wagers based on anything you read here or think you may have read here. This is hypothetical only, and it is for entertainment purposes only. 

Thursday Late Night Notes, Part II: Twelve (12) Producing Wells Completed; Four (4) New Permits; Eleven (11) High-IP Wells Reported; Thirteen (13) Wells Coming Off Confidential List Friday -- June 11, 2015

Updates

August 15, 2015: there was a press release, same subject, dated August 12, 2015; not sure if there was anything new in that release, but linked here just in case. 
 

Original Post

24/7 Wall Street is reporting:

In a deal announced Thursday morning, independent oil and gas producer Hess Corp. said it had sold a 50% stake it its midstream assets in the Bakken shale play to Global Infrastructure Partners for $2.675 billion. 

The two companies will form a joint venture to be called Hess Infrastructure Partners, which will continue to pursue the proposed initial public offering (IPO) of common units in Hess Midstream Partners L.P.

I've completely lost the bubble on all the midstream assets in the Bakken, but readers might remember this post from a year ago involving Williams and Global Infrastructure Partners II. The blog had another post regarding same company and Chesapeake. From that same 24/7 Wall Street article linked above:

For its part, Global Infrastructure Partners has substantial experience with midstream assets. The private equity firm paid $2 billion in 2012 for Chesapeake Energy Corp.’s stake and general partner units in Chesapeake Midstream before selling its stake in what was then called Access Midstream to Williams Companies Inc.  last year for $6 billion.

See Global Infrastructure Partners' website here. 

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Daily Activity Report

Active rigs:

	6/11/2015	06/11/2014	06/11/2013	06/11/2012	06/11/2011
Active Rigs	77	188	187	210	169

Four (4) new permits:

• Operators: Newfield (2), EOG, MRO
• Fields: Westberg (McKenzie), Parshall (Mountrail), Reunion Bay (Mountrail)
• Comments:

Twelve (12) producing wells completed:

• 26157, 3,869, Statoil, Johnston 7-6 4H, Banks, t5/15; cum --
• 28085, 375, CLR, Holte 3-32H1, Stoneview, t5/15; cum 32K 4/15; choked way back;
• 28231, 2,297, MRO, Elmer USA 14-11TFH, Chimney Butte, t4/15; cum 12K 4/15; 
• 23262, 2,622, MRO, Mesa Verde 44-22MBH, Clear Creek, t3/13; cum 176K 4/15;
• 28263, 3,031, MRO, Morean USA 34-12H, Lost Bridge, 4 sections, t5/15; cum --
• 28415, 2,143, MRO, Karmen USA 44-11TFH, Chimney Butte, t5/15; cum --
• 28416, 2,098, MRO, Johnny USA 34-11H, Chimney Butte, t4/15; cum 8K 41/5;
• 28781, 1,080, BR, Hammerhead 31-26TFH, Sand Creek, t5/15; cum --
• 29003, 2,166, MRO, Victor USA 34-12TFH, Lost Bridge, 4 sections, t6/15; cum --
• 29004, 2,197, MRO, Gulbrand USA 44-12TFH, Lost Bridge, 4 sections, t5/15; cum --
• 29438, 1,344, XTO, Sorenson 14X-33F, Siverston, t5/15; cum --
• 29596, 1,195, MRO,  Palmer 31-25TFH, Reunion Bay, t3/15; cum 11K 4/15;

No permits canceled.

Wells coming off confidential list Friday:

• 27858, 236, EOG, Parshall 152-0806H, Parshall, ICO, 63 stages, 18 million lbs, t12/14; cum 126K 4/15;
• 28050, 1,214, Hess, BL-Iverson-155-95-1819H-7, Beaver Lodge, t41/5; cum 26K 41/5;
• 28077, SI/NC, Oasis, Helling Trust Federal 5494 42-22 15T3, Alkali Creek, no production data,
• 28078, SI/NC, Oasis, Helling Trust Federal 5494 42-22 9T, Alkali Creek, no production data,
• 28225, 174, Triangle, Paulson 150-101-23-14-3H, Rawson, t1/15; cum 48K 4/15;
• 28425, drl/NC, Oasis, Wade Federal 5300 41-30 6B, Baker, no production data,
• 28558, SI/NC, Oasis, Wade Federal 5300 41-30 8T2, Baker, no production data,
• 28560, 1,373, Newfield, Johnson 150-99-34-27-4H, South Tobacco Garden, t3/15; cum 32K 4/15;
• 28753, 259, Hunt, Smoky Butte 160-100-32-29H-1, Smokey Butte, t2/15; cum 13K 4/15;
• 28855, SI/NC, Oasis, Helling Trust Federal 5494 41-22 8T, Alkali Creek, no production data,
• 28902, 622, Oasis, Harbour 5601 42-33 5T, Tyrone, t2/15; cum 20K 4/15;
• 29428, SI/NC, BR, Teton 3-8-10MBH, Camel Butte, no production data,
• 29929, SI/NC, Statoil, Paulson 36-1 4H, Briar Creek, no production data,

Thursday Late Night Notes: Part I -- Bloomberg's Take On OPEC -- June 11, 2015

This is really, really cool. I have written these three words for quite some time now, most recently on June 6, 2015: OPEC is dead.

Now, I see Citi is suggesting the same but waffling? Bloomberg is reporting:

Not that long ago, it used to be that oil traders and energy giants hung on OPEC's every word. Now we have Citigroup's global head of commodities research asking if it's time to write the group's obituary.

Granted, the headline and the article pretty much says it, but Forbes with the very same story would have had the headline: OPEC is dead.

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Wow! The Change From One Year Ago Is Staggering

Updates

June 12, 2015: I have a deep concern. No one questioned me on the "original post" below. I posted the "original post" on June 11, 2015, suggesting that the difference between this week's data and the data one year ago was staggering. I was being facetious. The difference is significant but not enough to be concurrent with the price of oil going from $100 to $50 per bbl. For me, a difference between 24 days and 29 days in the number of days of crude storage is inconsequential. And the trend is down.

Original Post

This is the number of days of stocks of crude oil in the United States. Look at the staggering difference in the most recent reporting period (as of June 6, 2015) and then comparing it to one year ago.

• most recently: 24.4 days supply of crude oil for the United States
• one year ago: 28.7 days

Staggering.

By the way, when I first started blogging, eight years ago or thereabouts, the number of days of crude oil stocks was about 22 days if I recall correctly.

Source. Also note the graph at that link; it's pretty striking but a drop from 490 million bbls to 470 million bbls doesn't amount to a hill of beans.

Natural Gas Fill Rate; East Region Remains Below 5-Year Average -- June 11. 2015

NG fill rate: 111 (a dynamic link).

Comments:

• practically at the 5-year average, which I've talked about before
• in the East Region, stocks were 106 Bcf below the 5-year average following net injections of 62 Bcf 

This will be almost as interesting to follow as the crude oil and gasoline supply and demand over the next two years. 

Random Update On An 18-Well Pad? Hess EN-Fretheim/EN-Cvancara In Robinson Lake, The Bakken, North Dakota; June 11, 2015

I've talked about these wells more than once. Perhaps one of the better posts is the one from August 3, 2014.

Instead of re-writing that entire post, I think I will simply update the post linked above.

A reader sent in a photo taken in the past few days of the two pads.

I can't think there is a more exciting story being told when one sees upwards of 15 pumpers and a new rig on the pad.

As Predicted -- June 11, 2015

I'll be off the net for the rest of the day.

I will leave with this.

Thursday, Part III -- June 11, 2015

Greece talks collapse. Link here. Not only is there any progress, the group is breaking up, going home for the weekend.

A spokesman for the International Monetary Fund says its team has returned to Washington after negotiators made "no progress" on resolving Greece's debt crisis.

Gerry Rice told reporters Thursday that "We are well away from an agreement."

Based on what little I know about economics and listening to the sage advice of Nobel-Prize-winning economist Paul Krugman, the IMF, EU, EC, Germany, and France all need to throw huge amounts of money towards Greece to stimulate their economy. It was just reported this morning that Greece's unemployment rate is now at 27%. Austerity for Greece is not the answer. In addition to those mentioned, the US and Russia also need to throw huge amounts of cash to the Greeks. The Russians may not have much loose cash to throw around but they could certainly help out by providing Greece with all the free natural gas and oil the country might need. It would be a twofer: taking this natural gas/crude oil off the open market would help support global energy prices. So there you have it. Paul Krugman's answer for Greece.

US stock market, the Dow: up almost 250 points yesterday, up another 65 points in early trading today.

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.

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Tesla

From a Seeking Alpha contributor regarding Tesla:

Is Elon Musk reconsidering whether he wants to be a major car player or would he prefer to be a major battery manufacturer? Listening to the powerwall product announcement, I got the impression that Elon Musk is having second thoughts about whether Tesla can ever make money in the automobile industry due to the very high capital requirements.

Everybody, it seems, except retail investors who are getting sucked into Tesla, knows this dirty little secret: Tesla is a battery company disguised as an automobile company. As an "automobile company" it will make huge amounts of money by a) selling its CAFE credits to major automobile manufacturers; and, b) being bought out five years from now by GM for the battery technology.

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GE Will Leave Connecticut

Will GE move its headquarters to Texas?

Thursday, Part II; Energy Demand To Surge This Year, Next -- June 11, 2015

Several interesting stories on global oil demand, connecting a couple of dots that I predicted months ago: when Saudi starts giving their oil away at $50 / bbl, global demand will increase.

This is the lead story over at Yahoo!Finance right now, Reuters is reporting an exclusive: Saudi Arabia ready to raise oil output further to meet demand.

Wow -- to meet demand. For its cheap, cheap oil. Who wudda thought.

Saudi Arabia increased production in May to around 10.3 million barrels per day (bpd) - its highest rate on record - as a result of increased global demand.

Any increase in production in a market which already faces a glut would signal that OPEC is unrelenting in its decision to maintain global market share.

The strategy is seen as a major factor in the sharp decline in oil prices over the past year.

"We have plenty of crude... You are not going to see any cuts from Saudi Arabia," Al-Subaey said after meeting Indian oil officials in New Delhi.

Look at the number: 10.3.

We'll come back to that later if I remember.  

But this was the earlier story: Reuters is reporting that oil demand will surge this year. Wow -- due to cheap, cheap oil being given away by Saudi Arabia. Who wudda thought?

World oil demand will rise much more than expected this year, the International Energy Agency (IEA) said on Thursday, in the latest sign that the collapse in oil prices is helping to boost fuel use.

Look at the new projection, this is not trivial:

The agency, in a monthly report, raised its forecast for global oil demand growth in 2015 by 280,000 barrels per day (bpd) to 1.40 million bpd, bringing demand this year to almost 94 million bpd.

"Recent oil market strength of course partly stems from unexpectedly strong global oil demand growth," said the Paris-based IEA, which advises industrialised nations on energy policy. 

From 280,000 bopd to 1.4 million bopd. Huge. 

Financial Times data here:

• Saudi Arabia utput in May reached 10.33m barrels a day
• the kingdom’s oil output had been 10.31m b/d in April
• The "10.33 million" is said to be a record, but the previous record was not reported (I'm not counting the 10.31 million in April)

However, from The Wall Street Journal:

The Kingdom’s previous record peak was 10.2 million barrels a day in August 2013. It told the Organization of the Petroleum Exporting Countries that it produced 9.64 million barrels a day in February.

Mr. Naimi said that the kingdom’s production will continue at around 10 million barrels a day, signaling that his country is determined to ride out the price slide without making any output cut. 

Now, recall that Saudi Arabia announced, in 2012, a $35 billion, 5-year plan, to sustain production.

I think T. Boone Pickens pegged Saudi correctly.

Thursday, Part I, Active Rigs Plummet To 77-- June 11, 2015

Wow, this is starting out as another incredible day. The stories coming out of the Bakken are incredible, especially when one starts connecting the dots. The NDIC daily activity report did not get posted last night, but it is up now.

Eight (8) wells come off the confidential list today:

• 27735, 517, Oasis, McCauley 5601 41-34 5T, Tyrone, t2/15; cum 30K 4/15; choked back
• 28958, 976, Hess, BL-Iverson-155-95-1819H-8, Beaver Lodge, t4/15; cum 17K 41/5;
• 29429, SI/NC, BR, Teton 5-8-10MBH, Camel Butte, no production data,
• 29544, 871, Hess, EN-Madisyn-154-94-0706H-4, Alkali Creek, t41/5; cum 22K 4/15;
• 29731, drl, Hess, EN-Weyrauch B-LW-154-93-3031H-1, Alkali Creek, no production data,
• 29733, drl/NC, XTO, Eckert 41X-6G, Indian Hill, no production data,
• 29853, SI/NC, WPX, Beaks 36-35HZ, Mandaree, no production data,
• 29896, 1,226, Slawson Howo 7-33-4TFH, Big Bend, t41/5; cum --

Active rigs:

	6/11/2015	06/11/2014	06/11/2013	06/11/2012	06/11/2011
Active Rigs	77	188	187	210	169

This is a new post-boom low and somewhat surprising. I track milestones in rig counts at this post.

Seven (7) new permits: 

• Operators: Slawson (3), XTO (2), BR (2)
• Fields: Big Bend (Mountrail), North Fork (McKenzie), Grinnell (Williams), Clear Creek (McKenzie)
• Comments: the Clear Creek field is a sweet spot in the Bakken; northeast McKenzie County; part of CLR's multi-well, multi-year TFS study (October, 2012)

Four (4) producing wells completed:

• 23517, 1,411, Newfield, Johnson 150-99-34-27-2H, South Tobacco Garden, t3/15 cum 31K 4/15;
• 28681, 595, CLR, Leonard 4-12H, Northwest McGregor, t5/15; cum 10K 41/5; choked way back
• 28682, 583, CLR, Leonard 3-12H1, Northwest McGregor, t5/15; cum 6K 4/15; choked way back
• 28683, 346, CLR, Leonard 2-12H, Northwest McGregor, t5/15; cum 4K 4/15; choked way back

One (1) permit canceled, an EOG well in Parshall oil field. No big deal.

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Condensate Update

RBN Energy: Will Gulf Coast Condensate Splitting Trump The Export Market?

Two years ago production of super light crude known as condensate in the South Texas Eagle Ford was surging.

Most Gulf Coast refineries did not want to process this light material and it was discounted to regular crude. The discounts led to a number of project announcements to build stand-alone condensate splitters – a kind of simple refinery that would process it into refined products.

During 2014 these projects were cast into doubt by the easing of condensate export restrictions that appeared to offer a less expensive solution to the condensate challenge. More recently the possibility of declining production could also threaten splitter economics. But splitters are still being built and coming online this year and next – with two new projects announced recently.  Today we review current splitter projects in the light of market developments.

We have devoted a lot of space in the RBN blogosphere to the topic of condensate – a material that has numerous definitions. In this blog we are talking about lease condensate – a very light form of crude oil with a high API degrees gravity level typically between 55 and 70, and sometimes lighter.

Lease condensate starts life as a gas underground and condenses from the gas stream at surface temperature and pressure. Although many of the crudes being produced from shale basins in the U.S. are very light the volume of condensate produced in the South Texas Eagle Ford basin is higher than most. Because lease condensate has a lot of light end hydrocarbons (and varies considerably in quality) it is less attractive (valuable) to most Gulf Coast refineries that are configured to handle heavier crudes and as a result its price is discounted.

Attempts to extract value from lease condensate in the past four years have variously involved shipping it to Canada for use as a diluent to blend with heavy oil sands bitumen crude – although that market generally prefers natural gasoline (plant condensate) produced by NGL plants as well as processing it locally in simple refineries known as condensate splitters. A third market to export condensate to Asia and Europe developed in 2014 after the Bureau of Industry and Security (BIS) clarified regulatory interpretations that had prevented the export of condensate (except to Canada).

The BIS began to recognize partially processed condensate to be exported as a refined product. However, as we explained earlier this year the export market for processed condensate is quite competitive and depends on wide discounts to international crude prices. In this blog series we look at the ongoing build out of condensate splitter capacity at the Texas Gulf Coast despite the easing of export rules and the now very real impact of slowing production growth.

Mike Filloon On QEP Wells In The Bakken -- June 11, 2015

This is another cool story. Regular readers have already noticed the incredible wells that QEP has been reporting. One can find examples like these over on the "High IP" page:

• 28019, 2,509, QEP, Moberg 4-20-21BH, Grail, t11/14; cum 133K 4/15; being choked back
• 28020, 2,325, QEP, Moberg 3-20-21TH, Grail, t11/14; cum 135K 4/15; being choked back
• 28021, 2,529, QEP, Moberg 3-20-21BH, Grail, t11/14; cum 134K 4/15; being choked back
• 28022, 2,566, QEP, Moberg 2-20-21TH, Grail, t11/14; cum 134K 4/15; being choked back

Today, we have Mike Filloon's take on these wells, and it's quite incredible. His article will be archived.

Summary

• Many operators like QEP are converting to sand-heavy 50-plus stage fracs.
• We are just beginning to realize the production uplift from better well designs, which are part of the reason why U.S. production remains high on fewer completions.
• QEP EURs in Grail Field are already above 1000 MBoe, and we expect an additional uplift of 25% as it converts to 50-plus stage wells.
• High grading and better well designs flatten out the depletion curve and should be considered when monitoring U.S. production going forward.
• Well costs continue to head lower, aiding in decreasing payback times for producers.

We continue to see well design create significant production improvements. These improvements should increase costs, but this isn't being realized. Well service costs are heading lower, plus drilling and completions work is being done in a shorter period of time. Longer laterals, an increased number of stages, increased proppant and larger volumes of water are still translating to lower costs.

EOG Resources  can be thanked for the push in better well design. It is the best unconventional operator in the world, and owns a large number of the best-producing wells in the United States. Its secret is source rock stimulation. EOG focuses on breaking up rock. By creating more fractures, it releases the most resource.

While most operators like Continental, Whiting, and Exxon, were still using sliding sleeves and ceramic proppant, EOG was doing something different. It was using plug and perf with very large amounts of sand. The company focused on fracking around the well bore. This produced a large number of wide, short fractures. This void needs large amounts of sand to keep the fracs open. It has produced monster results, and most operators are now trying to duplicate this design.

So much more at the link. 

On a side note, to pat myself on the back, it's interesting to see Filloon incorporating screen shots of google earth maps which this blog has been doing "forever," just as I often use music videos to complement a post, which RBN Energy also does. I believe the milliondollarway pre-dates both Filloon's contributions at Seeking Energy and I know for sure that the blog pre-dates RBN Energy.

Having said that, no one beats Filloon at what he does; Z-Man comes close. I pale in comparison, can't touch either of them, but folks interested in the Bakken can learn a lot from all these sites. RBN Energy, of course, is probably the best "general energy" site for the kind of stuff I like to cover.

Oops! NOAA Has Done It Again -- Manipulating Data -- June 11, 2015

The sad thing is that even my wife fell for this scam.

The Dickinson Press is reporting that NOAA, once again, is manipulating data:

Satellite images that circulated the Internet more than two years ago purported to show natural gas flares lighting up the Bakken Oil Patch as bright as a major metropolitan city were “highly processed,” “manipulated” and “inaccurate,” researchers at the University of North Dakota’s Energy & Environmental Research Center said Wednesday.

Chris Zygarlicke, the EERC’s deputy associate director for research, said he took an interest in the images because the science involved aligns closely with his background. He said having driven through western North Dakota and the Oil Patch, he believed the images were inaccurately portraying the area.

“There’s no way that we’re lighting up the land like you see people talking about everywhere,” he said.

So, since late 2013, Zygarlicke and researchers from the EERC and UND’s aerospace department have used images gathered from the National Oceanic and Atmospheric Administration to determine what the Oil Patch truly looks like from space.

The UND study found the images that went viral on the Internet in January 2013 and were published across worldwide media -- including in publications such as National Geographic -- were actually a representation of heat sources, not light. 

I have to add a new tag: NOAA_Lies.