Friday, July 17, 2015

Where Does North Dakota Stand On Permitting? Also, Comment On Oasis Completions; July 17, 2015


Later, 12:35 a.m., July 18, 2015: this is entirely coincidental. I posted the note below a few minutes ago. Then I checked the Discussion Group and saw a message pending. The reader provided this link with a look at permitting in North Dakota:
Since the start of 2015, there have been 1116 permits issued in the Bakken shale play, with a monthly high coming in January at 238 permits issued. This past week, there were 29 permits issued, a -53% decrease from the previous week which had 62 permits.
The top permitting county this past week was McKenzie with 14 permits, down -26% from the prior week, which had 19 permits. Other active counties include Mountrail with 6 permits, Williams with 5 permits, and Divide with 4 permits in the last week. Active drilling rigs are also declining but some operators are talking about adding rigs to core acreage.
In addition to their note on permitting, the authors also talk about Oasis completions: Oasis Improves Completions with High-Intensity Slickwater Fracs:
Oasis Petroleum has completed 167 frac jobs in the Williston since the beginning of 2014, pumping 200K tons of raw sand, 31K tons of resin, and 84K tons of ceramic.
They have used Nabors, Schlumberger, and Baker Hughes for the majority of their jobs in the Williston.
In a completion in Williams County, Oasis used a total of 11.7 million pounds of proppant using 7.8 million pounds of ceramic from Carbo Ceramics, and 3.9 million pounds of raw sand in 20/40 and 40/70 mesh sizes.
They also used the friction reducer WFR-6W from Nabors, which totaled 3,901 pounds or 0.007% of the total mass pumped. They have been testing a new completion design in the core of the Williston, going from 100% ceramic to 90% raw and 10% resin, with 50 stages (up from 36 when they were using the slickwater design).
Original Post
I track permitting projections at this site. As of today, July 17, 2015, North Dakota has issued 1,276 oil and gas permits in calendar year 2015, which calculates out to 2,426 by the end of the year. That's more than the number of permits issued in 2013 but less than the number issued in 2014. This is how 2015 looks to date:

Total permits. This is from my database. See disclaimer. I assume my numbers are different from those of the NDIC, but I also assume they are very close. These are only oil and gas permits, not salt water disposal permits. If this information is important to you, go to the source:
  • 2014: 3,012
  • 2013: 2,247
  • 2012: 2,187
  • 2011: 1,916
Real time (date, # of permits; projection to end of year)
  • July 17, 2015: 1,276, 2,426
  • February 10, 2015: 327, 2,911
  • January 29, 2015: 241, 3,033
  • January 28, 2015: 230, 2,998
  • January 23, 2015: 195, 3,095
  • January 16, 2015: 134, 3,057
  • January 15, 2015: 114, 2,896
  • January 14, 2015: 104, 2,738
  • January 13, 2015: 97, 2,723
  • January 12, 2015: 78, 2,373
  • January 9, 2015: 75, 3,042
  • January 8, 2015: 71, 3,239
  • January 7, 2015: 57, 2,972
  • January 2, 2015, 14: 2,555

Casualties In The Oil And Gas Industry; Look At The Brazilian Numbers -- Staggering -- July 17, 2015

This is really quite a remarkable story.

On June 1, 2015, I posted this:
With today's Wall Street Journal article on the slump in oil prices, I was reminded of the list I posted back in January.
Countries on the watch list with plummeting oil prices:
  • Venezuela
  • Russia
  • Jordan
  • Lebanon
  • Nigeria
  • Brazil 
One can add Argentina to that list.
One can add Columbia to the list.
Add Mexico to the list.
So, where do we stand? Bloomberg/Rigzone is reporting:
Eight months into OPEC’s plan to hit rival oil producers, the casualties are mounting.
Surprisingly, the most resilient may be the one that triggered the fight: the U.S.
Projections for combined daily output from Brazil, Canada, Russia, Mexico and Colombia by the end of the decade were cut by 2.8 million barrels since oil slumped last year, data from the countries and the International Energy Agency show.
In contrast, the U.S. Energy Department increased its estimate for crude output in 2020 by more than a million barrels.
Prices fell more than 45 percent in the past year after the Organization of Petroleum Exporting Countries refused to cut output, instead pressuring rival producers to eliminate a global supply glut.
While the number of active U.S. oil rigs has halved, production remains close to a three-decade high and is forecast to keep growing after a pause in the coming year.
Projects elsewhere will suffer more, according to Standard Chartered Plc and BNP Paribas SA.
“Some have misinterpreted OPEC’s strategy as targeting U.S. shale oil production,” said Harry Tchilinguirian, head of commodity-markets strategy at BNP Paribas in London.
But any attempt at shutting down U.S. shale oil will prove futile. Rather, OPEC has aimed at crowding out investment in higher cost and less efficient conventional basins.”
I'm not exactly sure how Bloomberg can say the "US triggered the fight." It's my understanding that back in October, 2014, with a glut of oil on the world market, the country (or organization) that has historically cut back on production to keep prices high, specifically said they were not going to cut production. In fact, Saudi Arabia suggested that they would be increasing their production.

But I have trouble agreeing that the US started this fight.

Also, note that the Red Queen is still on the treadmill. From the article: "While the number of active U.S. oil rigs has halved, production remains close to a three-decade high and is forecast to keep growing after a pause in the coming year."

To the list above, Mexico needs to be added.

Memo to self: another note to Jane Nielson.

More at the linked story:
Brazil and Canada are among those “most in the firing line” at current prices, Paul Horsnell, the head of commodities research at Standard Chartered in London, said July 13.
Brazil’s so-called pre-salt offshore fields, and Canada’s tar sands are “frontier” oil provinces where costs are higher because of their technical complexity or remoteness, he said.
Petroleo Brasileiro SA cut its 2020 production target by 1.4 million barrels a day to 2.8 million, reducing planned capital expenditures through 2019 by a third, the Rio de Janeiro-based company said June 29.
The Canadian Association of Petroleum Producers reduced its 2020 oil production forecast by 270,000 barrels a day to 4.64 million on June 9.
The IEA pared its 2019 production estimates for a range of non-OPEC nations on Feb. 10. Its forecast for Russia was cut by 5.4 percent to 10.45 million a day while Mexican output was projected at 2.67 million, 8.9 percent lower than previously.
“U.S. production is going to continue to tick up over the next few years,” said Standard Chartered’s Horsnell. “Non- shale, non-OPEC is going to struggle.”

Entering The 21st Year WIthout Any Statistically Significant Warming Trend -- The Daily Caller, July 17, 2015


July 18, 2015: this is interesting. Shortly after posting the note below, a reader reminded me that NOAA had admitted to "fudging its data." I had forgotten all about that, and did not read the entire article linked below which reminded us of that fact.

Back on Jun4 , 2015, I posted:
Wow, talk about incredible. A US government agency "fixing" the data. The Daily Caller is reporting:All that work and we're talking 0.012 degrees.

National Oceanic and Atmospheric Administration scientists have found a solution to the 15-year “pause” in global warming: They “adjusted” the hiatus in warming out of the temperature record.
New climate data by NOAA scientists doubles the warming trend since the late 1990s by adjusting pre-hiatus temperatures downward and inflating temperatures in more recent years. “Newly corrected and updated global surface temperature data from NOAA’s [National Centers for Environmental Information] do not support the notion of a global warming ‘hiatus,'” wrote NOAA scientists in their study presenting newly adjusted climate data.
To increase the rate in warming, NOAA scientists put more weight on certain ocean buoy arrays, adjusted ship-based temperature readings upward, and slightly raised land-based temperatures as well.
Scientists said adjusted ship-based temperature data “had the largest impact on trends for the 2000-2014 time period, accounting for 0.030°C of the 0.064°C trend difference.” They added that the “buoy offset correction contributed 0.014°C… to the difference, and the additional weight given to the buoys because of their greater accuracy contributed 0.012°C.”
This is the note in the linked article belwo about fudging the data:
“Newly corrected and updated global surface temperature data from NOAA’s [National Centers for Environmental Information] do not support the notion of a global warming ‘hiatus,’” wrote NOAA scientists in their study.
The study was highly criticized for inflating the temperature record since the late 1990s to show vastly more global warming than was shown in older data. The warming “hiatus” was eliminated and the warming trend over the period was more than doubled.
“There’s been so much criticism of NOAA’s alteration of the sea surface temperature that we are really just going to have to use the University of East Anglia data,” Pat Michaels, a climate scientist with the libertarian Cato Institute, told The Daily Caller News Foundation.
“I don’t think that’s going to stand the test of time,” Michaels said of NOAA’s recent adjustments.
Original Post
The 2015 graduate students, college graduates and high school graduates have never experienced any global warming. The Daily Caller is reporting:
After September of this year, the Earth will be entering its 21st year without statistically significant warming trend, according to satellite-derived temperature data.
Since September 1994, University of Alabama in Huntsville’s satellite temperature data has shown no statistically significant global warming trend. For over 20 years there’s been no warming trend apparent in the satellite records and will soon be entering into year 21 with no warming trend apparent in satellite data — which examines the lowest few miles of the Earth’s atmosphere.
Satellite data from the Remote Sensing Systems (RSS) group also shows a prolonged “hiatus” in global warming. After November of this year, RSS data will be in its 21st year without warming.  Ironically, the so-called “hiatus” in warming started when then vice President Al Gore and environmental groups touted RSS satellite data as evidence a slight warming trend since 1979.

A Shout-Out To Some Excellent Bloggers -- July 17, 2015

Without question, I think the two best contributors on the Bakken are Michael Filloon and Richard Zeits. I have a tag for both of them at the bottom of the blog, but it's always possible I missed a few.

Mark Perry, who started out with his own blog, Carpe Diem, and is now part of AEI, is probably the best blogger on the US economy. Period. Dot. He is linked at the side bar at the right (Carpe Diem) as a "featured blog."

For "Energy_101" there is no better source than RBN Energy. The RBN energy seems to have started as a simple e-mail newsletter about the time the Bakken boomed and has since turned into an "energy institute of higher learning." I don't think I have a specific link or tag for RBN Energy but it is linked almost every business day (Monday - Friday) in the blog.

Coyote Blog is another one of the featured blogs linked at the sidebar at the right. I can't put my finger on, but for some reason, the blog resonates with me and remains a featured blog all these years.

Thirteen (13) New Permts -- North Dakota; Zeits On Halcon In The Eagle Ford, July 17, 2015

Active rigs:

Active Rigs73196189209178

Thirteen (13) new permits --
  • Operators: Oasis (7), XTO (3), Newfield, BR, Hess
  • Fields: North Tobacco Garden (McKenzie), Siverston (McKenzie), Lost Bridge (Dunn), Sand Creek (McKenzie), Robinson Lake (Mountrail)
  • Comments: the Oasis permits look like three distinct pads in section 23-151-99 (two 2-well pads, and one 3-well pad);
Slawson cancels two permits: one Ironbank well in Williams County and one Howo well in Mountrail County
Evidence of changing a target to a better payoff during period of low prices: CLR with a name change; new name: Alpha 5-14H; was Alpha 5-14H2;

The Gold Standard Is Still The Bakken

From Richard Zeits on Halcon's El Halcón in the Eagle Ford, Texas, over at Seeking Alpha today:
HK estimated that its type well in El Halcón generates ~17% well-level IRR, using 452 type curve, the current $7.5 million AFE and mid-May strip pricing. The economics should become more compelling once the company implements additional costs savings and completes its lease capture program.
Assuming those additional savings are achieved, the play should be viable at the project level at oil prices above ~$60-$65 per barrel. However, El Halcón still remains a distant second in terms of well productivity per dollar invested relative to the company's core acreage in the Bakken on the Fort Berthold Indian Reservation.
The El Halcón is not just behind the Bakken, but is "a distant second."

From Richard Zeits in one of his comments at the linked article: "The reality is that HK has the best track record in the play and competition has subsided lately." I assume he means the entire Eagle Ford play. Considering EOG is also there, that's quite a statement.

Well, That Was Easy: Iran's First VLCC Steaming Toward Asia One Day After Nuclear Deal "Signed" -- July 17, 2015

This is pretty cool; should make Valerie Jarrett happy. Platts is reporting:
The first VLCC to leave Iran's floating storage flotilla since a nuclear deal was reached with world powers earlier this week in Vienna is currently sailing in South Asia, Platts vessel tracking tool cFlow showed Friday.

The National Iranian Tanker Company's Starla, which had been anchored at Kharg Island in the Persian Gulf for 216 days, is the first ship to leave Iran's floating storage fleet since the landmark deal Tuesday.

The Starla, which has a capacity of 2.1 million barrels, is currently voyaging off the coast of Pakistan and destined for Singapore.
Wiki has a very nice graphic showing the various sizes and classes of ocean-going oil tankers. The graphic does not include the New Panamax which will become operational in 2016 or 2017 with the widening of the Panama Canal. New Panamax will include ships up to 120,000 DWT. This would put the New Panamax at the lowest end of the Suezmax and still won't accommodate VLCC (200,000 to 320,000 DWT) or the ULCC (320,000 to 550,000 DWT), at least as described in those two linked articles.

Not Easy

Looks like Tiger Woods could miss another cut, this time in Scotland, at the British Open. Currently tied at about 131st place, and dropped another stroke in the early going today.

Hold Onto Your Texas Hats

Texas Monthly's cover story this month: "The Secrets Behind Your Favorite Texas Songs."

An amazing, amazing list. The writers chose the "top" 25 Texas songs, and although the introduction does not say they were put in any particular order, they are numbered one to 25, suggesting that there was some sort of ordering going on.

I had not heard of song #1 so I was a bit confused / concerned. But then I knew the list was credible / authentic:
#8: Pretty Paper, Willie Nelson
#11: Wasted Days and Wasted Nights, Freddy Fender
#12: Redneck Mother, Jerry Jeff Walker, recorded; written by Ray Wylie Hubbard
#15: New San Antonio Rose, Bob Wills
#23: L.A. Freeway, Jerry Jeff Walker, recorded; written by Guy Clark
#24: Last Kiss, J Frank Wilson and the Cavaliers, recorded; written by Wayne Cochran
#25: London Homesick Blues, Garry P Nunn with Jerry Jeff Walker, records; written by Garry P. Nunn
You know the list was legitimate when it includes a song by the Dixie Chicks (Travelin' Soldier) and the pop song by J Frank Wilson (Last Kiss) and only song by Willie Nelson. But the killer song is #1, Tighten Up, Archie Bell and the Drells.

Remember, this is a Texas list, not a Rolling Stones list. After watching #1 on YouTube, I was blown away by the number of songs Jerry Jeff Walker on this list of 25: no less than 3. There will be lot of letters to the editor:
  • only one Willie Nelson song? You gotta be kidding
  • Willie Nelson had as many songs on the list as the Dixie Chicks? I'm canceling my subscription
  • no songs by Waylon Jennings: WTF?
But any list that includes Freddy Fender's Wasted Dasy and Wasted Nights is hard to ignore.

US Construction Handcuffed By Lack Of Skilled Laborers -- CNBC, July 17, 2015

I've seen variations of this same story some years ago, or maybe it was last year.

This is an important story, assuming that it's accurate. It says much about the current state of affairs in the United States. I've maintained that 8% unemployment is the new "full employment number" versus the historical definition of "full employment" being 4%. There are at least three data points that make 4% unemployment in 1950 a lot different than 8% unemployment in 2015:
  • the safety net is so much better in 2015
  • tectonic shifts in productivity gains due to technology has greatly changed the employment landscape
  • the underground, unreported "Greek" economy in the US
So, here's the story that got me thinking about this again. CNBC is reporting that homebuilders are having difficulty finding laborers:
Single-family home construction fell to a three-month low in June, which is usually the busiest time for homebuilding. Even building permits are not showing signs of robust growth. Builders claim there is good demand, but they complain they're handcuffed by a lack of skilled labor to build new homes.
The builders' industry trade group calls the incidence of labor shortages nationwide "surprisingly high," given the fact that homebuilding has barely recovered from its 2008 crash.
"In fact, the 9-trade shortage is now substantially higher than it was at the peak of the 2004-2005 boom, when annual starts were averaging around 2 million, compared to current rates of about one million," economist Paul Emrath of the National Association of Home Builders wrote in a recent report.
Nine-trade refers to the various skills required for homebuilding, such as concrete pouring and carpentry.
"The last time builder-reported labor shortages were as widespread as now was just before 2001 during a prolonged period of strong GDP growth with overall unemployment as low as 4 percent," he added.
Unemployment in the construction industry fell in June to the lowest level since 2001. That's because contractors are having a hard time finding enough qualified workers to meet growing demand
The article goes on with explanations for the labor shortage:
  • undocumented immigrant laborers nowhere to be found
  • all that government money spent on training and education in high schools has been ineffective
But if one reads closely, the labor shortage sounds regional.

My point is this: if many of the folks who are unemployed really, really wanted to work, there are many, many opportunities. I doubt it takes more than 6 months for minimum training for some of those "9-trade" skills to get to at least an apprentice level. If you doubt me, watch the "oilmen" video posted on July 15, 2015 -- just two days ago. When you get to the "oilmen" video at the bottom of the post, scroll forward to 2:30 (2 minutes, 30 seconds) to find out how much training is required when the job needs to get done.

Best Joke Of The Day -- The Dickinson Press -- July 17, 2015

I missed this the other day. This may be the funniest thing any reader has sent me in quite some time.

This was my original link regarding this story, quoting a Bismarck Tribune story.

I had to go back and re-read the Bismark Tribune article just to make sure I had not missed something; I had not.

Now this. A reader sent me the link to The Dickinson Press story with the same story.  If you are not sitting down now, I highly recommend you sit down before reading further. If you are sitting down on a bar stool, I would recommend you hang on to the counter, or stand up momentarily while reading The Dickinson Press story on the same subject. This is the very first paragraph:
As part of President Barack Obama’s all-of-the-above strategy to continue to expand safe and responsible domestic energy production, the Bureau of Land Management sold six federal leases on Tuesday. 
As part of President Obama's "all-of-the-above" energy strategy for the United States. LOL. 

That BLM netted less than $40,000. 

Apparently the BLM was so ecstatic with this sale, they've scheduled another sale about six months from now, although the year was not specified in the article:
The next Montana/Dakotas federal oil and gas lease sale is scheduled for Jan. 26 at BLM’s Montana State Office.
It appears President Obama's "all-of-the-above" energy strategy certainly does not include coal, Canadian oil (he killed the Keystone XL), or nuclear energy

Keep an eye on that Abby Kessler, a future community organizer. 

[Moments later, it just dawned on me that the article was a press release disguised as a genuine news article. It was obviously a press release from the office of the BLM in Washington, DC. Credit to The Bismarck Tribune to stick to the facts.]

Friday, Part II, July 17, 2015

AEI continues to find some of the most interesting data points and then depicts them graphically. Today, look at the comparison between the amount of money Americans spend on groceries versus the amount of money they spend on restaurant meals. I assume it will be even more dramatic when we look at the graph ten years from now.

Friday, July 17, 2015

Note: this is not an investment site.

Bloomberg is reporting:
New-home construction in the U.S. climbed in June to the second-highest level since November 2007 as builders stepped up work on apartment projects.
Of course, Bloomberg is the same group of folks who blame the US high school male dropouts on fracking. I can't make this stuff up. By the way, I was curious. Google "fracking high school dropouts" and you will see what I mean.

But I digress:
Housing starts rose 9.8 percent to a 1.17 million annualized rate from a revised 1.07 million in May that was stronger than previously estimated. The median estimate of economists surveyed by Bloomberg was a 1.11 million rate. Ground-breaking on multifamily dwellings jumped 29.4 percent.

Ford F-150 Sales

USA Today is reporting:
In a move that sometimes spells sales trouble, Ford is offering discounts of up to $10,479 for its most important vehicle, the F-150 pickup.
The discounts are featured this week on Ford's website, and vary by region. The highest discounts were found in places including Washington, D.C., but even pickup havens like California were seeing discounts of more than $7,000. They appeared to apply to only the larger, more deluxe versions that often carry higher price tags.
The discounting is unusual because the highly revised 2015 F-150 is relatively new in the market. The current version has an aluminum body to save weight, and thus fuel. Not only is the F-150 the nation's best-selling vehicle, but it's also considered one of the most profitable, at least compared to cars.
But sales were down 8.9% last month and at 55,171 in sales, F Series only outsold perrennial No. 2 pickup Chevrolet Silverado by about 4,000 vehicles. Silverado gained 18.4% in sales for the month. Ford officials have blamed tight supplies for the sales droop, but analysts aren't so sure.
These guys know about this a lot more than I do, but discounting on pick-ups is hardly new. I see it all the time. In addition, maintaining market share is incredibly important for Ford; bragging rights to being #1 is worth every penny. Even Saudi Arabia knows how important market share is, even if it has to give its oil away.

Pocket Of Optimism: Silicon Valley
Or Irrational Exuberance

The WSJ  is reporting:
Many in Silicon Valley say it is just a matter of time before new innovations surface in salable products and goose the official productivity tally. First, though, businesses must harness the innovations to the products they sell. Driverless car technology, for example, won’t hit city streets for a while.
U.S. productivity, meanwhile, has hit the skids. From 1948 to 1973, it grew at an annual average of 2.8%. The rate through the 1980s slowed to half that, even as computers spread through the economy, driving everything from welding robots in auto plants to bank ATMs.
In 1987, during the last period of productivity hand-wringing, Nobel Prize winning economist Robert Solow quipped: “You can see the computer age everywhere but in the productivity statistics.”
From 1995 to 2004, it finally looked like the digital age was paying off: Productivity growth rates closed in on post-World War II highs of near 3%. Then average gains fell to 2% from 2005 to 2009; since 2010, they have dipped below 1%. 
The soundbite: the U.S. doesn’t have a productivity problem, it has a measurement problem.

The article is very, very interesting; worth reading, perhaps coming back to later.

Family Videos For The Archives

Friday, July 17, 2015 -- Update On Pipeline Activity In PADD 4 (MT, CO, UT, ID)

Active rigs:

Active Rigs74196189209178

RBN Energy: Impact of New EIA Natural Gas Storage Regions on Storage Predictions. See the new EIA natural gas "fill rate" regions at the link.
Analyst estimates for this week's Energy Information Administration (EIA) Weekly Natural Gas Storage Report before its release were rallying around an expectation of a 95-Bcf injection, according to the Wall Street Journal's survey of storage analysts. The actual number reported by EIA yesterday was a 99-Bcf injection, more or less in line with analyst expectations. But predictions may get a bit harder later this year. The EIA is preparing to redraw its US natural gas storage map and begin reporting inventory data in new regions later this year (2015). In August, prior to the launch of the revamped report, it will release a file with historical data for each of the new regions. The historical data will for the first time allow modelers to run their regressions and gather statistical information by which to rebuild their storage models designed to foretell the weekly EIA storage number. In the meantime, we did our own unscientific analysis of the regional breakdown and how it will change transparency in gas storage activity.

Update On Pipeline Activity In Rocky Mountain Region, PADD 4

A few days ago EIA posted CBR / pipeline shipments out of Rocky Mountain Region.

Today the Denver Business Journal posted a story on that data, as well as noted some pipeline activity in the region:
The region’s pipelines carry crude to customers in the Midwest and the Gulf Coast and those shipments have risen from 184,600 barrels per day in 2010 to 264,400 barrels per day in 2014.
And that figure is rising.
Through the first four months of 2014, crude oil shipments out of the Rocky Mountain region via pipeline have averaged 429,000 barrels per day — up 132 percent from 2010.
And several pipeline projects are underway to add capacity between the Rocky Mountains and Cushing, Oklahoma, a major pipeline and storage hub.
Among the projects, SemGroup Corp.’s White Cliff Pipeline will be expanded to a be able to handle up to 215,000 barrels per day. That project is expected to be finished in late 2015, the EIA said.
Also underway is the expansion of the Grand Mesa Pipeline, owned by NGL Energy Partners LP. That project will boost the pipeline’s capacity to a total of 200,000 barrels per day and is expected to be finished in the fourth quarter of 2016.
Finally, Tulsa-based Magellan Midstream Partners has its own project, the Saddlehorn Pipeline, which will have a capacity of 200,000 barrels per day. That project is expected to be done in the second quarter of 2016, the report said.
Three new (or expanded) pipelines mentioned: over 600,000 bopd out of PADD 4 --just four states -- Colorado, Wyoming, Utah, Montana and Idaho.

New Health Care Clinic Opens In Watford City

The Dickinson Press is reporting:
The health care picture in Watford City is improving with Sanford Health opening a 1,900-square-foot clinic and adding visiting specialists while a new hospital employee housing facility has been completed.
Starting Aug. 11, Sanford specialists will begin seeing patients at the new clinic at 116 8th St. NE offering cardiology, podiatry and orthopedics services along with free injury and sports medicine screenings.
More at the link. 

Update On Typhoon Off West Mexico / South of Baja California

 Spiraling out to sea.