Monday, July 6, 2015

Random Update Of BR #17118, A Re-Fracked Well -- July 6, 2015

A reader sent me this note as a comment to another post which I posted earlier, but I thought it would be interesting to take a look at this well. First the comment that the reader sent me:
Take a look at BR's #17118 just shows the potential of the untapped barrels by refracking old wells. It has produced more bbls in 9 months since the refrack than it did in the initial 6 years of production.
Now, to search the blog to see if I've talked about this well before:
  • 17118, 289, BR, Remington 14-11H, Blue Buttes, t6/08; cum 211K 8/16; only 14 days in 8/16
Nope, it's only been mentioned once before, back on November 19, 2010.

Early production:

Production after December, 2008, until June, 2014, was "pathetic." Then it was taken off-line for the entire month of July, 2014, and came back on line in September, 2014. Here is the production profile from August, 2014, to the present:

PoolDateDaysBBLS OilRunsBBLS WaterMCF ProdMCF SoldVent/Flare

So, what gives? What's the file report have to say?

From the most recent sundry form, recieved by the NDIC on April 24, 2014:
BR requests: to restimulate (re-frack) the lateral and increase production. The well was drilled and completed as an open hole well with a single stage completion. Precision 825 will be used to install a 4 1/2" liner and and the well restimulated (re-fracked). 
I assume "Precision 825" is a drilling rig.

BR does not currently use any of the following in fracking:
  • fuels, diesel
  • fuels, diesel, no. 2
  • fuel oil no. 2
  • fuel oil no. 4
  • kerosene
There is an interesting letter on file with regard to royalties to a mineral owner. Mineral owners may be interested in reading the letter. The part that interested me:
If this was back-payments for production sold from the two wells, your interest may not be great enough to exceed the requirement in the paragraph aboeve (greater than $50). Oil prices in May 2007 were around $60/barrel and rose to over $140/barrel in July 2008. Unfortunately, prices dropped drastically to a low of around $20/barrel in December 2008 and this is reducing your payments significantly from what they were last year.
Original drilling / geologist's summary:
  • target: "Sanish" member of the Bakken formation
  • 20,831 feet
  • gas units in the 5-- to 1,000 unit range; 5 - 8' flare
  • open-hole frack; perforated intervals, 11,193 to 20,382 feet
  • 1,044,000 lbs sand
  • 8,699 bbl gelled cross-linked fluid
  • IP: 289
Think of all the open-hole fracks that operators might be interested in re-fracking. I may have missed it, but I did not see the amount of proppant used or the number of stages for this re-frack.

The original application said the target zone was the "Bakken," not otherwise specified. 

In a long note like this, there will be factual and typographical errors. If this information is important to you go to the source.

Look at the graphic: of the nine wells, one was recently re-fracked, greatly increasing production; the other 8 are waiting to be completed. And this is just one section in the entire Bakken.

There's one more data point about this well that is of interest, but I am purposely not posting it. I am posting this teaser in case someone else points it out, and I can say that I noted it also (for bragging purposes).

Best of Willie Nelson

UNP Sets Frack Sand Shipment Record -- July 6, 2015

Before reading this note, remember these two data points:
  • EOG has a significant presence in the Eagle Ford
  • EOG likes to use a lot of sand in their fracks
San Antonio Business Journal is reporting:
While the nation was celebrating the Fourth of July, three companies broke an oil industry record in the Eagle Ford shale just south of San Antonio.
Unimin Energy Solutions, Union Pacific Railroad and Twin Eagle Sand Logistics moved the largest shipment of frac sand by rail in U.S. history.
The 140-train car shipment arrived at Twin Eagle's facility at the Mission Rail Park in Elmendorf on the Fourth of July.
Twin Eagle has been regularly receiving trains with 130 railcars filled with frac sand but the shipment received this weekend broke a national record.
Powered by four diesel engines and measuring 6,200 feet long, the shipment was certified by Union Pacific as the largest single frac sand rail delivery in the United States.
This is very, very interesting:
Recent industry reports show that new drilling and general demand for frac sand is down but the amount of the finely ground silica used per well on the remaining shale oil and natural gas drilling sites is increasing.
More data points valuable for future reading and for newbies:
One study shows that shale drilling sites are now using an average of 2,100 tons of frac sand per well. With each rail car capable of carrying of 100 tons of frac sand, the Fourth of July shipment arrived carrying 14,000 tons of frac sand, which is enough to supply up to seven average wells.
The sand will be stored at Twin Eagle's silos where 18-wheelers will come to be filled and haul the sand to jobs sites. Company officials said it takes four to five 18-wheelers to haul one rail car's worth of sand to a drilling site. At that rate, it would take at least 94 truck trips to haul enough sand to a drilling site.
If a ton = 2,000 lbs, then 2,100 tons = 4.2 million lbs which sounds about right. The average should increase if EOG continues to impress with 10-million-lb sand fracks.

The only personal disappointment: BNSF did not set the national record in the Bakken. 
So, one drilling site:
  • 5 18-wheelers = one rail car
  • 94 truck trips for one drilling site
If You Can't See "Him," He Can't See You

This afternoon our adult daughter sent several photographs of our one-year-old granddaughter visiting the Ft Worth Zoo -- or is the Dallas Zoo -- probably the Dallas Zoo. Doesn't matter.

These are precious:

 My, what big teeth you have. 

 I can't see you, so you can't see me.

Ten (10) New Permits -- North Dakota, USA, July 6, 2015

Active rigs:

Active Rigs76191188213168

Ten (10) new permits --
  • Operators: Hess (7), EOG (3)
  • Fields: Capa  (Williams), Parshall (Mountrail), Stanley (Mountrail)
  • Comments: the Hess Capa permits are for a 7-well pad, see graphic below. Note the monster well, #2515 (I track monster wells here).

Three (3) wells coming off the confidential list Tuesday:
  • 29563, SI/NC, Statoil, Skarston 1-12 8TFH, Banks, no production data,
  • 29962, drl, SHD, Magnum 36-11-TF2, Clarks Creek, no production data,
  • 29982, SI/NC, BR, CCU Dakotan 2-7-17TFH, Corral Creek, no production data,
Three (3) producing wells completed:
  • 29321, 2,676, Statoil, East Fork 32-29 6TFH, East Fork, frack data not posted yet, t5/15; cum 4K 5/15;
  • 29318, 2,315, Statoil, Folvag 5-8 5H, Stony Creek, frack data not posted yet, t6/15; cum --
  • 28780, 1,603, BR, Hammerhead 21-26MBH, Sand Creek, t6/15; cum --

Manipulation -- Here We Go Again -- July 6, 2015

Linn Energy sells assets in Texas: Linn Energy snags $1.5B and sells Texas assets --
Houston-based Linn Energy LLC announced on July 6 that it has finalized partnerships for future developments and has sold assets in Texas.
According to a statement from the company, Linn Energy signed a definitive agreement to sell its remaining assets in Howard County, Texas, for $281 million to an undisclosed buyer.
The property, located northeast of Midland, Texas, in the Permian Basin, includes approximately 6,400 acres for horizontal drilling and 133 gross wells.
Let's do the math: $281 million / 6,400 acres =  $44,000 / acre. Yes, I noted that the deal included producing wells, wells that do not need to be drilled, bringing the price / acre down significantly.

For newbies: gross wells are all wells in which a company has an operating interest, but the operating interest could be as low as 3 to 5 percent, or as much as 90% or more. A more helpful statistic would have been the number of net wells. For example, 5% in each of 20 wells would equal one net well.


Front page in the business section, Los Angeles Times:
Filling up at the pump is often painful in California, where drivers tend to pay more for gasoline than in most other states.
Many industry watchers attribute the high fuel costs to unique forces — chiefly California's clean-burning gasoline formula — that have isolated the market and kept it tightly balanced between supply and demand.
But some consumer advocates and politicians allege that price manipulation by oil refiners is to blame.
This year, price fluctuations were especially surprising. The price of crude oil began falling last summer, with pump prices following.
In February, Tesoro Corp. idled its Northern California refinery in Martinez after a nationwide union walkout. Next, Exxon Mobil Corp. scaled back operations at its Torrance facility when an explosion damaged an air pollution monitoring unit.
Average pump prices shot up nearly a dollar before floating back down. Last week, a gallon of regular gasoline cost an average of $3.44 in California, more than 20 cents lower than a week earlier and about 70 cents lower than a year earlier, according to AAA. But drivers in the state are still paying nearly 70 cents more than the national average. [It looks like 20 cents of that 70 cents can be attributed to California's state tax; see below.)
Whether those higher prices are a natural economic reaction or a sign of collusion between companies is up for debate.
State taxes on gasoline at this site. Some selected examples:
  • Alaska: 11.30 cents
  • California: 42.35 cents
  • Massachusetts: 26.54 cents
  • Minnesota: 28.60 cents
  • North Dakota: 23 cents
  • South Dakota: 30 cents
  • Texas: 20 cents
Average commute in the United States by state:
  • California: 27 minutes (folks in Los Angeles can quit laughing, now)
  • North Dakota: 16 minutes
  • Texas: 25 minutes
By county:
  • Williams County, North Dakota: 15 minutes
  • Los Angels County, CA: 29 minutes (folks in Los Angeles can quit laughing, now)
Unless I missed it, the LA Times story linked above mentioned nothing about a) the gasoline formulation regulations in California; and, b) how California activists continue to work to shut down California refineries. The LA Times looks more and more like a blog.
  • Time to do the math: the linked article says California's gasoline costs, on average, 70 cents more per gallon than the rest of the US.
  • average annual mileage (at least what we tell our insurance companies): 12,000 miles
  • average mpg: 30 mpg (anything less is a personal problem; there are plenty of great mileage cars out there)
  • 12,000 / 30 mpg = 400 gallons of gasoline annually
  • 0.70 X 400 = $280 extra / year that Californians pay on average
  • $280 / 300 days =  93 cents/day; let's call it a dollar. Starbucks' least expensive cup of coffee: $1.75.
  • $280 / 52 weeks =  $5.38 / week -- less than a Big Mac meal per week.
Knock the state tax on gasoline down by 20 cents, and the delta becomes even less.

The real issue is not that Californians are paying 70 cents more per gallon than the US average, but why is gasoline so expensive nationwide considering Bakken oil is priced as low as $40 / bbl?

You Belong To The City, Glenn Frey

A Bit Of Bakken Trivia -- July 6, 2015

Initial production data for wells coming off confidential list Monday, long weekend, have been posted. 

Just A Bit Of Trivia

I'm not saying everything's perfect, but if one wants to see how closely the NDIC regulates the oil and gas industry, perhaps file #29659 is as good as any.

First, a screenshot of the request:

Then, the screenshot of the diagram depicting the requested change:


Black Eyed Peas vs. The Ventures - Pump It Hawaii Five-0 v2

Monday, July 6, 2015 -- Call It A Night, The Party's Over -- The Day Greece Collapsed; The EU Collapsed: Asian Stock Markets Crashed; And The Usual Big Daytona 500 Crash

Active rigs:

Active Rigs76191188213168

RBN Energy: don't expect any increase in the price of crude oil any time soon.
U.S refiners have been processing a lot of crude so far this summer and utilization rates remain high. Crude production has leveled off and is expected by the Energy Information Administration’s (EIA) Short Term Energy Outlook to decline slightly during the second half of 2015. But the early summer market sentiment that drove crude prices up to $60/Bbl on the back of these fundamentals appears to have lost steam. Today we conclude our analysis of short term crude price prospects.
In the first part of this two-part series (see Why Are WTI Prices Stuck at $60/Bbl?) we looked at the evolution of crude prices for domestic benchmark West Texas Intermediate (WTI) since they began falling a year ago from a high over $107/Bbl in June 2014 to a low under $44/Bbl on March 17, 2015 – recovering since then to the $60/Bbl range in May and June.  
Last October falling crude prices set in motion a market condition known as contango where future prices are expected to be higher than spot prices today – encouraging the use of storage to “save” cheap crude today for use when prices recover (see Skipping The Crude Contango). This contango incentive led to a huge build up in crude oil inventory – especially at the Cushing, OK trading hub (where CME/NYMEX WTI futures contracts are delivered) as well as in the Gulf Coast region. Our analysis showed that since March 2015 – as the contango spread has narrowed – demand for crude has picked up as high margins encouraged refiners to process more oil nationwide.
Higher demand for oil contributed to an end to the crude inventory build and a stock drawdown at Cushing and the Gulf Coast since April. With demand higher and an inventory drawdown combined with a narrowing contango - some analysts expected the WTI crude price “rehab” to $60/Bbl in April to continue towards $70 or even $75/Bbl. But prices have remained range bound close to $60/Bbl over the past two months amid continued concerns about an overall supply surplus versus demand.
Regular readers know what is coming next:

The Party's Over, Willie Nelson

The Daytona 500 crash described as vicious. Dale Earnhardt wins. Early crash ends hope for several drivers.
This time we look at crude production as well as imports to understand the demand for crude versus available supply and then relate these changing fundamentals back to prospects for a further crude price “rehab” this year.
Willie Nelson Trivia

From wiki:
In 1956, Nelson moved from Fort Worth, Texas to Portland, Oregon. He soon found a job on KVAN, in Vancouver, Washington, hosting the show The Western Express. Nelson became a popular DJ, while he continued to make live performances. During this time he wrote "The Party's Over".
When he moved to Houston, Texas, Nelson stopped by the Esquire Ballroom to sell his original songs to house band singer Larry Butler. Butler refused to purchase the songs, and instead signed Nelson to his band.
Butler would at the end of the show let Nelson sing solo "The Party's Over" as a closer.
During his time in Fort Worth, Nelson was signed by Pappy Daily to D Records. While in Houston, he recorded sides for the label. Nelson was also hired by guitar instructor Paul Buskirk to work as an instructor in his school.
Released in 1967, I would have been in high school; I don't recall if I heard Willie Nelson singing this at the time. I didn't really start listening to music until I got to college, and even then, I really didn't start listening to music until I got my first car.