Seven (7) New Permits -- North Dakota -- July 15, 2015

The US has been the world's largest petroleum producer for 29 months in a row. -- AEI, link here. And the US president has not mentioned one word. No one in America knows this. Even I did not know this until a reader sent me this link.

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Note: there may be more typographical and factual errors than usual. The posts for the past 48 hours have been done quickly; the posts over the next 12 hours will be done even more quickly. If any of this information is important to you, go to the source. 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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Active rigs:

	7/15/2015	07/15/2014	07/15/2013	07/15/2012	07/15/2011
Active Rigs	74	194	186	215	178

Wells coming off the confidential list Thursday:

• 28964, 1,019, Hess, LK-Erickson-147-97-1102H-2, Little Knife, 35 stages, 2.4 million lbs, t5/15; cum 23K 5/15;
• 29963, drl, SHD, Magnum 36-12-MB2, Clarks Creek,
• 30216, drl/NC, XTO, Thompson 44X-20EXF, Blue Buttes,
• 30272, conf, SM Energy, Stenehjem 14X-9HB, Poe, SI/NC

Seven (7) new permits --

• Operators: BR (2), Whiting (2), SM Energy (2), CLR
• Fields: Elidah (McKenzie), Brooklyn (Williams), Moraine (Divide), Whiteaker (Divide), Sanish (Mountrail), Antelope (McKenzie), Juniper (McKenzie)
• Comments:

Crescent Point Energy canceled one permit, an Aldag permit in Divide County.

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Kinder Morgan On The Move, Raises Dividend

Reuters is reporting:

Kinder Morgan Inc said it would buy the 49 percent stake that it does not already own in natural gas joint venture Elba Liquefaction Co from Royal Dutch Shell Plc, and it raised its dividend.

Kinder Morgan said it expects to invest $630 million in Elba terminals, bringing its total investment in the project near Savannah, Georgia to $2.1 billion.

The deal shows the energy sector's appetite for fast-growing natural gas logistics and exports. Marathon Petroleum Corp bought natgas processor MarkWest Energy Partners LP in a $15.6 billion deal earlier this week.

Dividend also moving:

Kinder Morgan, which last year put all of its publicly traded partnerships into one corporate parent company, raised its quarterly divided by 14 percent to 49 cents per share.

The company said it continued to remain on track for 2015 dividend target of $2 per share.

All the recent natural gas deals tell me that:

a) in this country, coal is pretty much being taken off the grid as quickly as possible; and, 

b) wind and solar won't come close to making up the difference

In another article, Reuters reports that KMI profits drops almost 30% but still raises dividend. The dividend was raised minimally (14%) but the company says it's on track to keep raising dividend to previously announced level. With investors in oil and gas companies, raising the dividend was a very, very smart thing to do.

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CLR Completes A Mega-Frack

The "headline" of the article at the link below does the article an injustice. This is an incredible article that anyone interested in the Bakken needs to spend a lot of time on.  (Archived)

Mike Filloon provides this incredible interesting article over at Seeking Alpha:

• Continental Resources estimates production uplift of 25% to 45% per well using slickwater and hybrid well designs.
• Current well results point to better results due to well design and high-grading.
• Mega-fracs are not only improving well production, but also an uplift in production is being seen from adjacent locations.
• We believe that production increases will allow Continental to produce at a much lower realized oil price, but more importantly, decrease the number of completions and maintain production levels. 

From the article:

Continental has not only seen a 20% improvement in well costs from $9.6 million to $7.7 million, but also has increased EURs to 800 MBoe. For those unfamiliar, EURs are estimated ultimate recoveries. This is the estimate of total resource garnered over the life of the well. Estimates like this vary significantly by operator.

When modeling production, calculations of well life can be 30 or 40 years, and small deviations from this can translate to significant changes. EURs should be looked at as estimates. Since those estimates are over long time frames, its importance may not be great. The focus should be on immediate improvement.

EUR improvements can also be due to location. If more wells are drilled in the core, this will also affect production per well. We focus on one to two year production as this has a greater effect on stock prices. Horizontal production is heavy on the front end. 19% of total production occurs in the first year. Half of that number will occur somewhere between 3.5 and 4 years. We believe payback times are more important, as the sooner a well is paid for, the quicker revenues can be focused on new locations.

When I have some time, I might throw in my 2-cents worth on this EUR issue in the Bakken. Regular readers probably already know what I'm thinking.

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Traders Doubt HAL-BHI Proposed Merger Will Be Closed By End Of Year

Regulators Scrutinizing Deal

Link here.

Not a bit surprising.

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Typhoon Update

Unless I'm missing something, the typhoon off western Mexico, south of Baja California seems not have moved much all day; still circling off shore. Dynamic link.

Reason #37 Why I Love To Blog -- July 15, 2015

Back on June 14, 2015, I had a long, long piece on the inefficiency of solar. Among many, many points brought up in that link, this was one of the most interesting:

Why is Ivanpah underpeforming. Get ready for obfuscation. First:

One big miscalculation was that the power plant requires far more steam to run smoothly and efficiently than originally thought, according to a document filed with the California Energy Commission. Instead of ramping up the plant each day before sunrise by burning one hour’s worth of natural gas to generate steam, Ivanpah needs more than four times that much help from fossil fuels to get the plant humming every morning.  

You, you read that correctly. This solar farm relies on natural gas to get it up and running each day; and it takes much longer than expected.

How was this missed? Either the engineers mis-calculated this (hard to believe; engineers are pretty smart folks) or the top floor brass refused to believe them. Or the top floor brass knew that including that fact in the original plans would have made it more difficult to sell the program, but I don't for a minute think the engineers missed this by this wide a margin. If so, some engineer needs to be held accountable. Don't hold your breath.

Now, look at this article posted today, the link sent to me by Don. From a GE Press Release:

GE announced today that it has secured 10 orders of its LMS100* aeroderivative gas turbine with two customers in North America in 2Q 2015. These recent successes have resulted in the backlog for LMS100 technology to be in excess of $450 million for GE Power & Water’s Distributed Power business.

The 10 units—five LMS100-PA gas turbine units and five LMS100-PA+ gas turbine units—have been ordered by two American customers. With up to 116 megawatts (MW) of total power output, the LMS100-PA+ is the latest model to be offered for customers. It provides more than 10 percent increased power output without any increase in emissions. In addition, the LMS100 turbine achieves simple-cycle efficiency of 44 percent, greater than any other gas turbine available today.

The units will be installed in the southwestern U.S. to support grid stability as new renewable energy is added, and they will replace older gas-fired steam turbine generator systems. The LMS100 was designed to provide flexible and reliable distributed power, in part to help offset grid fluctuations; it can ramp from zero to 50 MW of power in one minute and zero to full power in less than 10 minutes.

If the sun is unavailable about 12 hours/day (night, cloud, dust) and solar needs another four hours to ramp up in the morning, the natural gas back-up will be running up to 16 hours/day to support solar. Something tells me solar advocates don't include the cost of natural gas back-up in the price of solar.

Solar ain't free, even after the panels are installed.

By the way, there's another story out there today, that someone thinks they've found a better battery, a lithium-sulfur. When my son-in-law was in the battery technology business, he told me what they were looking for with regard to a better battery. He never mentioned sulfur, but it makes sense, the extra electrons in the outer shell.

Speaking of batteries, that solar-powered airplane that was to be the first to circle the earth was grounded in Hawaii yesterday, at least until April, 2016, and probably longer, because the batteries (needed for nocturnal flying) were destroyed by the heat. I wonder if these batteries were the Icarus-branded branded batteries, the ones that over-heat when flying too close to the sun.

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Worse Negotiator Ever

Everyone agrees that the president is perhaps the worse negotiator ever to hold public office. Five terrorists for a deserter. So many "red lines" with regard to Syria, we all lost count. Now, with the biggest foreign policy prize in his presidency, he fails to get four American hostages back from Iran.

I can't make this stuff up.

When Congress goes to debate this deal with Iran, Congress would be wise to start with: without the release of the four hostages, the deal is DOA. That would be supported by 99% of the US population. Even Hillary might agree.

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Extreme Weather Benign Beautiful Weather 

NOAA: record 117-month hurricane "drought" continues."

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I'm In

While driving cross-country, I caught this little gem: Apple's new iPod.

I'm in. I will be buying one, perhaps the top-of-the-line model. Plug it into the minivan's speaker system.

With wi-fi and Bluetooth, it will be incredible. I haven't updated my iPod in ten years, or whenever the first or second version came out.

Propane Stocks At New Record -- July 15, 2015

At twitter, John Kemp reports (one hour ago), US data:

• propane stocks rise to new record; distillates and residual fuel oil track normal seasonal levels
• gasoline stocks broadly unchanged last week and in line with prior-year and 10-year average
• gasoline consumption rose to almost 9.6 million bopd in last 4 weeks; +588K bopd above 2014, and +350K bopd over 10-year average
• refinery runs hit a record 16.8 million bopd last week; +1.2 million bopd above the 10-year average
• crude oil stocks fell 4.3 million bbls last week, resuming downtrend

I'm still betting the US go overs 10 million bopd in August, 2015.

At twitter, Platts is reporting:

• Iran unlikely to regain all European market share immediately, as competitors have owned these markets
• Iran sans crude oil output can rise by 500,000 bopd within one month; exports at 2.5 million bopd within 6 months of sanctions removal

Big loser with US-Iran deal: Saudi Arabia -- not only does Saudi have a new nuclear neighbor, the neighbor is going to get an immediate infusion of billions of dollars, and, oh, by the way, is going to flood the European and Asian market with oil. Saudi has also been told by President Obama that Saudi's security is no longer the responsibility of the US. But other than that, things are going well for Saudi.

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CBR

At twitter, EIA is reporting:

• in the Rocky Mountain region, significantly increased crude oil production is being shipped by pipeline; CBR appears fairly stable (flat) year-over-year;  

EIA "energy cookie:

Rail and pipeline shipments of crude oil from the Rocky Mountain region (Petroleum Administration for Defense District 4) have steadily increased as regional crude oil production has increased. The recently released Petroleum Supply Monthly, which contains data for April 2015, shows that 122,000 barrels per day (b/d) of crude oil was moved by rail from PADD 4 to other regions of the country, representing 19% of total crude shipments from the region. --- EIA

Denver Business Journal also had a story on same data.

Pipeline capacity out of the Rocky Mountain region has grown, but oil and gas companies — pressed by time and money — have increasingly turned to shipping the newly pumped crude oil to market by rail.

In raw numbers, the EIA said that in 2010 just 359 barrels per day of oil was shipped by rail out of the Rocky Mountain region — all of it heading for the Gulf Coast, according to the report. The four states in what’s known as “PADD 4” are Colorado, Wyoming, Utah, Montana and Idaho.

By April 2015, that number had jumped to 122,000 barrels per day leaving the region by rail, the EIA said.

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At twitter, John Kemp reminds us about California's gasoline prices:

• Angelenos angry, resigned about soaring gasoline prices -- LA Times
• California gasoline prices at near-record premium to rest of the country (premium in price, not necessarily quality)
• gasoline becoming very expensive in California -- back to an 11-month hgh of almost $4/gallon; actually  $4/gallon is a great price if you can find it in southern California

Oasis Reported Four (4) Nice Wells Today -- July 15, 2015

Note: two of the wells are in the Sanish and two of the wells are in the Tyrone oil field. The Tyrone oil field is just north of Williston. These are very, very good wells for the Tyrone. Also note the stages and amount of proppant used.

• 28881, 637, Oasis Langved 5393 42-10 4B, Sanish, 36 stages, 9.2 million lbs, t41/5; cum 38K 5/15;
• 28882, 644, Oasis, Langved 5393 42-10 5T, Sanish, 36 stages, 4.5 million lbs, t41/5; cum 81K 5/15;
• 28903, 1,284, Oasis, Harbour 5601 42-33 4B, Tyrone, 21 stages, 3.9 million lbs; gas peak at 3,991 units, t2/15; cum 45K 5/15;
• 28904, 1,061, Oasis, Harbour 5601 42-33 3T, Tyrone, 50 stages, 9.4 million lbs, t2/15; cum 34K 5/15; 

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#28881, in the Sanish:

Pool	Date	Days	BBLS Oil	Runs	BBLS Water	MCF Prod	MCF Sold	Vent/Flare
BAKKEN	5-2015	31	21889	21875	25556	21322	21322	0
BAKKEN	4-2015	30	12717	12759	15000	20230	20230	0
BAKKEN	3-2015	4	3781	3619	1124	3245	3245	0

#28882, in the Sanish:

Pool	Date	Days	BBLS Oil	Runs	BBLS Water	MCF Prod	MCF Sold	Vent/Flare
BAKKEN	5-2015	31	19765	20074	18077	19806	19806	0
BAKKEN	4-2015	30	46250	46447	104554	75339	75288	51
BAKKEN	3-2015	12	14766	14137	5444	15633	15633	0

#28903, middle Bakken, in the Tyrone, 21 stages:

Pool	Date	Days	BBLS Oil	Runs	BBLS Water	MCF Prod	MCF Sold	Vent/Flare
BAKKEN	5-2015	25	10169	10198	8867	6736	6736	0
BAKKEN	4-2015	28	11641	12024	21801	8295	8261	34
BAKKEN	3-2015	31	16874	16812	17187	12854	12002	852
BAKKEN	2-2015	11	6677	6276	5325	4564	4564	0

#28904, Three Forks, in the Tyrone, 50 stages:

Pool	Date	Days	BBLS Oil	Runs	BBLS Water	MCF Prod	MCF Sold	Vent/Flare
BAKKEN	5-2015	31	8675	8675	26116	6179	6179	0
BAKKEN	4-2015	18	6055	6390	14512	4113	4113	0
BAKKEN	3-2015	28	13779	13712	20435	10600	10433	167
BAKKEN	2-2015	6	5118	4811	5207	3363	3363	0

Wednesday, July 15, 2015

Active rigs:

	7/15/2015	07/15/2014	07/15/2013	07/15/2012	07/15/2011
Active Rigs	73	194	186	215	178

RBN Energy: Growing Crude-by-Barge Traffic on the Ohio River.

While Energy Information Administration (EIA) estimates of crude-by-barge traffic between the Midwest and the Gulf Coast have fallen sharply in the past 18 months, shipments down the Ohio River to Texas and Louisiana refineries have increased threefold – peaking at just under 70 Mb/d in May 2015. Growing barge shipments have been accompanied by midstream investment in barge dock facilities – especially in Ohio. Today we discuss increased shipments of ultra light crude condensate to Gulf Coast refineries on the Ohio River.

This series updates previous RBN Energy analysis of crude movements by barge – along the U.S. inland waterway system that includes the Mississippi River system and the Gulf Intracoastal Waterway (GIWW) between Texas and Louisiana. In Episode 1 we first recapped previous RBN coverage of the barge market - describing the 10 - 30 MBbl tank barges that are pushed up and down the river system in unit tows of 2-3 barges by “towboats”. We described how the use of barges to carry crude oil has increased significantly since U.S. crude production from shale took off in 2011. The nations crude pipeline distribution system became congested – particularly in the Midwest where new shale crude from North Dakota competed with oil sands crude from Canada to get to refineries in coastal locations. To bypass this congestion shippers turned to alternatives such as rail and/or inland barges to get their crude to market destinations where prices were higher. In many cases this “workaround” involved loading crude onto rail tank cars and then transshipping it onto barges to make the final leg of the journey to Gulf Coast refineries via the Mississippi River. Crude barge traffic between the Midwest and the Gulf Coast increased 10 fold between 2010 and 2013 – peaking in October 2013 at 158 Mb/d. Since then crude by barge volumes have fallen off just as rapidly – in response to new pipelines coming online to provide a more efficient route to market.

At the same time, crude price differentials that previously justified the higher cost of barge transport (subject to Jones Act regulations that increase shipping costs) narrowed during 2013 and have not recovered since. As a result barge traffic on the Midwest – Gulf Coast route was down to 27 Mb/d - 80% below its peak – by April 2015. In this episode we look at growing barge traffic on the Ohio River carrying lease condensate (categorized by EIA as crude oil) from the Ohio Utica.

The data tells us that total crude/condensate shipments increased steadily on the Ohio River from 3.5 Mb/d in January 2014 to 20 Mb/d in December 2014 – averaging 13 Mb/d during 2014. During the first half of 2015, however, average crude by barge movements increased threefold to 39 Mb/d – peaking at nearly 70 Mb/d in May. You can also see from the chart that the vast majority of these shipments were from West Virginia to Louisiana (light blue) and from Pennsylvania to Louisiana (purple). These two combinations represented 84% of the shipments by volume during 2014 – increasing to 92% in the first half of 2015. And the trend in this data is quite different to what we saw for Midwest (PADD II) to Gulf Coast (PADD III) barge shipments in Episode 1 - where volumes peaked in October 2013 and have been falling ever since as new pipeline capacity came online to compete with more expensive (rail and) barge transportation. Also of note – the peak shipments on the Ohio River this May represent just under half of the peak traffic volume seen between the Midwest and the Gulf Coast (158 Mb/d).