Monday, August 17, 2015

Per Capita Spending At Wal-Mart; North Dakota Makes The Top Ten List -- August 17, 2015

This is cool: top ten (10) states where people spend the most money at Wal-Mart based on state sales taxes (four states not ranked because no sales tax in those four states). Based on per capita spending --

10: Tennessee (143 stores)
9. North Dakota (17 stores)
8. Missouri (154 stores)
7. Louisiana (130 stores)
6. Mississippi (82 stores)
5. Kansas (89 stores)
4. Alabama (139 stores)
3. Arkansas (132 stores)
2. South Dakota (16 stores)
1. Oklahoma (133 stores)

I would have thought North Dakota made the list because of the Williston store in the Bakken but seeing South Dakota at the #2 spot suggests it's more than the Bakken.

Five (5) New Permits; HRC To Report A Huge Well Tuesday -- August 17, 2015

Active rigs:

Active Rigs74194183199191

Wells coming off the confidential list Tuesday:
  • 20866, 3,236, HRC, Fort Berthold 148-95-23D-14-2H, Eagle Nest, 31 stages, 4.5 million lbs, t2/15; cum 116K 6/15;
  • 29169, drl, CLR, Kellogg Ranch Federal 3-32H, Elidah, no production data,
Five (5) new permits --
Three (3) producing wells completed:
  • 29430, 2,044, BR, Teton 6-8-10TFSH, Camel Butte, t7/15; cum --
  • 29731, 552, Hess, EN-Weyrauch B-LW-154-93-3031H-1, Alkali Creek, t7/15; cum --
  • 29739, 469, SM Energy, Karlberg 14-12HS, Burg, t7/15; cum --

20866, see above, HRC, Fort Berthold 148-95-23D-14-2H, Eagle News:

DateOil RunsMCF Sold

Bakken Update: High Grading -- It's Effect On US Oil Production -- Mike Filloon -- Seeking Alpha -- August 17, 2015

Link here. Archived.

  • high grading has improved the economics of U.S. unconventional oil wells, with production 200% to 700% better in some cases
  • operators have started the developmental phase of production, slowing exploration to get acreage held by production
  • pad drilling decreases costs, further providing a lower breakeven point. Rig numbers continue to increase as operators are running through core fracklog
  • the resilience of U.S. operators has kept production levels high, and might continue to push oil prices lower
The first graph at the linked site is incredible. US crude oil production:
  • 2011: 170 million bbls/month
  • 2015: almost 300 million bbls/month
US crude oil production almost doubled in four years, and it was all due to tight oil in the Bakken, the Permian, and the Eagle Ford (memo to self: send a note to Jane "it's all hype" Nielsen). During this period, oil production in Alaska and California was decreasing.

Miscellaneous comment from the post, something I have said from the beginning:
Lower well pressures produce less resource, so there is a slower decline. This is a misunderstood concept. While some focus on high rates of decline, total production is all that matters. Operators care less about an increased decline rate, especially if the well reaches payback sooner.
The article compares a few wells in the "fringe" with wells in the best of the Bakken.

It's another great article by Mike Filloon, but for regular readers I'm not sure it provides much new information. It re-emphasizes what most of us know.

Maybe Banning Fracking Wasn't Such A Good Idea After All -- August 17, 2015

Tweeting now:
Royal Dutch Shell granted final permit it needs from US federal government to drill for Arctic oil off Alaska's northwest coast for 1st time in more than 2 decades - @AP
I guess this proves that President Obama meant it when he said, "all of the above (except coal)."

Market Watch is reporting that New York area manufacturing has plummeted, falling to recession levels:
A reading of New York-area manufacturing conditions fell swiftly and brutally in August, one that could make the likelihood of an interest-rate hike next month — or even this year — more remote.
The Empire State general business conditions index nose-dived to a reading of negative 14.9, from positive 3.9 in July, marking the worst level since April 2009, the New York Fed said. The index, on a scale where any positive number indicates improving conditions, was far worse than the positive 4.5 forecast in a MarketWatch-compiled economist poll.

This Could Be A Game Changer -- August 17, 2015

Note: 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.

Spectra looking to buy all of Williams. Reuters is reporting:
Tulsa, Oklahoma-based Williams decided to put itself on the auction block after it rejected an all-stock acquisition proposal from rival Energy Transfer Equity LP in June.
At the time the bid was worth $53.1 billion including the assumption of debt; it was contingent upon Williams' canceling its plans to acquire the portion of its pipeline subsidiary Williams Partners LP that it does not already own for $14 billion.
Houston-based Kinder Morgan Inc is also interested in Williams, but would face potential antitrust issues if it proceeded with a bid, the people added.
It may be cheaper to buy than to build, and it's a whole lot faster.

The Dead Cow Looks Like ... well ... a dead cow....

Platts provides an update. Note the price of horizontal wells in the Bakken / Eagle Ford.
Argentina has drawn wide interest for its vast shale oil and natural gas production potential, but when it comes to committing investment to extract the resources, the hesitation is just as significant.
The potential is huge. The US Energy Information Administration estimates that the biggest play, Vaca Muerta, holds 16.2 billion barrels of oil resources and 308 Tcf of gas resources. That’s enough for the country to emulate the US shale boom.
ExxonMobil, Shell, Total, Wintershall and others have taken stakes in Vaca Muerta, but only Chevron has advanced into production in a partnership with state-run YPF. They are producing about 43,000 b/d of oil equivalent, the first shale oil extracted outside North America.
The others are moving toward pilots, a slow progression that is a sign of how hard it is to do business in Argentina and achieve what is most important for developing the play: getting drilling and completion costs down to profitable levels.
YPF is making a go of it. With Chevron, it has drilled 360 oil wells in Vaca Muerta and brought down drilling costs to $7 million per well for verticals this year from $11 million in 2011.
But that’s still shy of the $4-5 million target, or the cost of horizontal wells in the prolific Bakken and Eagle Ford Shales.
Without reaching these levels, “the wells won’t be profitable,” said Alex Fleming, a senior manager in oil and gas at EY Advisory, a US-based business advisory.
It’s a sort of chicken and egg dilemma. Without profits, the estimated $20 billion a year needed to develop the play won’t come. And without this investment in drilling tens of thousands of wells, the economies of scale won’t be reached on the fields to cut costs.
A reason not to rush into production — only 400 wells have been drilled — is that wells must be tested for up to two years to gauge the potential of the shale rock before a company will commit billions of dollars. This is especially the case now that low global oil prices have slimmed investment budgets for frontier plays.
 Much more at the link.

Monday, August 17, 2015

EOG, Halcon, and Whiting all report huge wells in the Bakken

Active rigs;

Active Rigs74194183199191

RBN Energy: LNG is a battlefield -- the prospects for US success in overseas markets.
This much seems very likely: In what’s becoming an increasingly liquid, competitive and lower-margin market, the most successful among natural gas producers and LNG exporters will be those who offer the full package: ample gas supplies, low-cost gas production, supportive pipeline infrastructure, competitive liquefaction costs, easy access to multiple markets, and destination flexibility. The U.S. gas/LNG sector appears to offer these benefits, as well as the bonus of LNG prices tied to the price of U.S. natural gas. (As we understand the situation, Canada’s LNG developers are not offering gas-indexing—at least so far.) The prospects for U.S. gas producers/LNG exporters therefore seem to stack up well against both Qatar (the biggest existing player in LNG supply) and Australia (which, with the U.S., is the other big up-and-comer). As always in a highly competitive market, though, success will depend to a significant degree on who’s more savvy, more responsive and more innovative. It will be an interesting few years.