Monday, August 31, 2015

Monday Night, August 31, 2015

Tweeting now: US weekly gasoline price ($2.51/gal) lowest heading into a Labor Day in 11 years.

Who would have ever thought?

XTO's Propsed Five-Well JMB Pad In Capa Oil Field -- August 31, 2015

XTO has five new permits in Capa oil field, Williams County.

I'll come back to this later, but note the triple lateral about a mile away to the southeast. The Bakken never fails to surprise.

I already know how the roughnecks will refer to this 5-well pad. 

Alberta In Deep Doo-Doo -- August 31, 2015; Also, Steam-Assisted Gravity Drained Oil In Alberta

CTV news is reporting:
Alberta's finance minister says the province is on track for a record $5.9-billion deficit this year as the oil crunch hits families and businesses.
And Joe Ceci says the worst may not be over if low oil prices persist and the province continues in recession.
"If current conditions continue, the final deficit will be in the range of $6.5 billion," Ceci said Monday as he released first-quarter figures for the 2015-16 fiscal year which began April 1.
Opposition Wildrose finance critic Derek Fildebrandt calculated the hit to Alberta's treasury is actually $9 billion when $3 billion drained from the contingency fund and new borrowing for capital projects are added in.
"This is the largest hit that our province has taken to its net wealth in the history of the province, and that should be concerning," said Fildebrandt.
Monday's numbers are based on the budget introduced, but never passed, by former Progressive Conservative premier Jim Prentice's government before it was defeated by Rachel Notley and the NDP in May. That budget estimated a $5-billion deficit.
It looks like the Canadian dollar is now around 75 cents/dollar.

Some Good News Coming Out Of Alberta

This is really a great example of high-CAPEX projects that were started years ago, and despite the slump in oil prices, were allowed to be completed. Too much money had already been sunk in the project to cancel it.

At Seeking Alpha:
  • ConocoPhillips says it has safely delivered its first barrels of oil at its Surmont 2 in-situ oil sands facility in Canada that has been under construction for five years
  • COP says the project in northwestern Alberta will extract heavy oil buried too deep to mine using steam to heat up the thick crude to allow it to flow; the company says Surmont is the largest steam-assisted gravity drainage system in the world
  • It is COP's second and larger phase of a 50/50 joint venture in the Canadian oil sands with Total; the two projects combined are expected to bring up 150K bbl/day, with the second facility building up production to 118K bbl/day through 2017.
Of course, new projects are being delayed or canceled. It will be interesting to see if maintaining production is cost-effective.

EIA Update

The EIA sends this note:
With the release of today's Petroleum Supply Monthly, EIA is incorporating the first survey-based reporting of monthly U.S. crude oil production statistics.
Today's Petroleum Supply Monthly ( includes estimates for June 2015 crude oil production using new survey data for 13 states and the federal Gulf of Mexico, and revises figures previously reported for January through May 2015.
EIA estimates U.S. crude oil production in June 2015 at 9.3 million barrels per day, a decrease of approximately 100,000 barrels per day from the revised May 2015 figure.
"These survey-based estimates of U.S. oil production represent a significant improvement over our previous method of estimation" said EIA Administrator Adam Sieminski. "Domestic oil production has become an increasingly important part of energy supply in the United States, and this change in data collection gives the country a better way to assess the contribution of this resource."
Some comments later if I remember. 

Another Poll -- August 31, 2015

Results of the poll in which we asked whether President Obama would show any support for Alaska's economic lifeline, it's Trans-Alaskan Pipeline. To recap, the pipeline needs at least 300K bopd to remain operational. Without any change in production on the North Slope, it is likely that production will fall below that threshold by 2024. President Obama had already opened the Arctic to drilling, but could more be done? The answer appears to be "YES." He will commit to another military icebreaker to be working the Arctic by 2020, two years earlier than expected.

The poll results:
  • Yes: 5%
  • No: 24%
  • He will avoid the subject: 46%
  • If asked, he will waffle: 24%

September 3, 2015: the EIA tweeted -- Alaska had the largest decline in natural gas and crude oil  proved reserves in 2013.

Original Post

From Seeking Alpha:
  • President Obama - visiting Alaska this week - agreed earlier this month to allow Royal Dutch Shell to resume Arctic oil exploration, yet Alaska officials say it may not be enough to save the 800-mile Trans-Alaska Pipeline System, the state’s economic lifeline for the past 40 years.
  • Volume on the pipeline, which funnels crude to Valdez in the south from Prudhoe Bay in the north, has declined along with North Slope oil production during the past three decades; flows are dropping ~5%/year and slid to 513K bbl/day in 2014 from a peak of 2M in 1988.
  • Alaska projects North Slope crude production to fall to ~320K bbl/day by 2024, and officials say a drop below 300K would trigger a “fundamental change” in operations and perhaps make the pipeline unfeasible.
When it rains, it pours. This is a perfect opportunity for another poll. Will President Obama show any support for Alaska's economic lifeline, the Trans-Alaska Pipeline?

There are a lot of implications. This, I think, is the biggest one: Californians, with the exception of Hawaiians, are paying the highest price for gasoline of anyone in the United States. The high price in California is not trivial, either; the price Californians pay for gasoline is quite significant, almost twice what some are paying elsewhere in America.

California relies heavily on imported foreign oil and oil from Alaska. It obtains some oil from the Bakken but that source is problematic due to logistics. Survival of the Trans-Alaska Pipeline is critical for Alaska and critical for California. It was also a technological marvel and the loss of that pipeline would speak volumes.

To remain ideologically consistent, killing the Keystone XL, requires that he also kill the TAP. It will be an interesting story to follow.

Eight (8) New Permits -- North Dakota; XTO Reports High-IP Well; Notes High Background Gas

Active rigs:

Active Rigs76194185192201

Eight (8) new permits --
No wells coming off confidential list over the weekend or today.

Two (2) producing wells completed:
  • 29054, 613, EOG, Van Hook 34-1319H, Parshall, t8/15; cum --
  • 30216, 2,195, XTO, Thompson 44X-20EXF, Three Forks, expanded the Blue Buttes oil field, Blue Buttes, gas units max at 10,000 units, target was 20 feet thick; t8/15: cum --
Halcon and Restructuring The Debt

Richard Zeits over at Seeking Alpha

Monday, August 31, 2015 -- Part II; WPX Monetizing Some Of Their Midstream Assets In The Bakken; Another New Natural Gas Discovery Overseas; Quantum Tunneling Explains Everything

Press release, Ares Management, LP, will acquire the Van Hook Gathering System in North Dakota in an agreement with WPX, for $185 million:
Ares Management, L.P. announced today that a fund managed by its Ares EIF Group has entered into a definitive agreement with WPX Energy, to acquire the Van Hook Gathering System in North Dakota in a transaction valued at $185 million
The acquisition consists of pipeline systems that currently gather approximately 11,000 barrels of oil, 6,500 million cubic feet of natural gas, and 5,000 barrels of water per day from WPX Energy’s Bakken shale oil assets.
WPX Energy will continue to operate the Van Hook Gathering System.
More Natural Gas
This Time Off-Shore Great Britain

Last week, ENI announces a "supergiant" natural gas field off-shore Egypt. Today, it's Britain's turn. Penn Energy is reporting:
The offshore development of the largest new field discovered in the UK North Sea for a decade has been approved by the UK Oil & Gas Authority. The Maersk Oil operated high pressure, high temperature (HPHT) Culzean field in the UK Central North Sea is expected to produce enough gas to meet 5% of total UK demand at peak production in 2020/21. Culzean is also the largest gas field sanctioned since East Brae in 1990.
Discovered in 2008 by Maersk Oil and its co-venturers, the gas condensate field has resources estimated at 250-300 million barrels of oil equivalent. Production is expected to start in 2019 and continue for at least 13 years, with plateau production of 60,000-90,000 barrels of oil equivalent per day.
Maersk Oil and its co-venturers, JX Nippon and BP (Britoil) are investing around USD 4.5 bn in the development, with more than 50% committed to investments in the UK.
The Culzean field aligns with the UK’s commitment to increased gas-fired electricity generation and is expected to support an estimated 6,000 UK jobs and create more than 400 direct jobs.
Again, the numbers are staggering, but let's see what we can do. Somewhere between 20 trillion and 30 trillion cubic feet defines a "superfield," apparently.

If this article mentioned "trillion cubic feet," I missed it. The only number I saw was "boe."

Working backwards from 250- 300 million boe, we get 1.7 trillion cubic feet of natural gas.  That sounds about right considering production is expected to last only about 15 years.

Something tells me intermittent energy, particularly wind energy, is dead in Great Britain, except for niche projects.

Notes to the Granddaughters

It was on page 51 of Nick Lane's book, The Vital Question: Energy, Evolution, and The Origins of Complex Life, that I finally had an epiphany: bacteria don't have species.

All that taxonomy I learned in high school and college is wrong. Bacteria, like all other life forms, are given genus/species names, but by definition, bacteria can't be separated into species.

From page 51 of Nick Lane's book:
Yet [eukaryocytes] did not accrue this complexity in an obviously predictable way: they came up with a whole series of traits, from sex and ageing (sic) to speciation, none of which have ever been seen in bacteria or archaea.
Googling bacteria do not have species reveals a paucity of links -- only one in fact in the first few pages, and for some reason that link did not download last week for me. Finally today the link downloads:
Googling among bacteria species do not exist, the hits are not much better, but there two:
Unfortunately, the method of naming bacteria is too entrenched -- as Lynn Margulis says in the article at the first link -- to change now, so you, our granddaughters, will be learning the "species" of bacteria just as we did 40 years ago.

In the first linked article, Lynn Margulis also mentions Carl Woese and his contribution to the discussion. Nick Lane suggests there were "three major revolutions that have wracked our view of life in the past half century": a) Lynn Margulis' discovery; b) Carl Woese's discovery; and c) the third revolution currently going on trying to accommodate both Margulis and Woese because their theories seem to be at odds with each other, and not by just a little bit.

However, the fact that the way "we've" been teaching bacterial taxonomy all these years is wrong is really, really neat. We learn there is much more to explore behind this "closed door."

On the hand hand, the science of global warming is not to be discussed; it is complete; we understand it all. Don't question it; just believe it.


Fox News is reporting that authorities are perplexed how secret information from the federal government got on to Hillary's server because the two systems are/were not connected. The government's secret server was/is not connected to Hillary's server and yet information appears to have gotten from one system to the other.

This is not hard to understand. It happened the same way the Whitewater papers showed up in the White House bedroom after being "lost" for years.

The answer: tunneling.

More specifically, quantum tunneling:
Quantum tunneling refers to the quantum mechanical phenomenon where a particle tunnels through a barrier that it classically could not surmount.
Q: Did you wipe your server clean?"
A: With what, a cloth?

Q: How did classified information get on your private server?
A: Quantum tunneling.

Rumors From The Land Of The Ice And Snow

There are rumors that President Obama will announce a huge federally-funded solar farm project for Alaska's North Slope to offset the carbon footprint from his decision to okay Shell drilling in the Arctic.

The Alaskan Solar Set-Up (or ASS for short) would be active only during those times when the Arctic's sun does not set. According to the EIA, Alaska’s energy demand per person is the third-highest in the nation. President Obama will be able to announce that due to his ASS initiative, energy costs will be lowered for the average Alaskan. Living north of the Arctic circle. At least for a day or two.

There were plans to call the project the Alaskan Solar System but he thought folks might confuse that with the "original" solar system. 

The Immigrant Song,Karen O with Trent Reznor & Atticus Ross

Monday, August 31, 2015

I don't think there are any wells coming off the confidential list today.

RBN Energy: natural gas supply / demand balance keeps prices in a tight range.

Canadian Oil Sands Ltd halts crude oil production at oil-sands giant Syncrude: fire has damaged euqipmetn at is synthetic crude oil processing facility. According to the WSJ, the incident adds to the woes of a company that has struggled with unplanned equipment outages at Syncrude and a slide in crude oil prices to six-year lows.

Flashback! Clip from ABC's 2009 special in which it was predicted that the US would be a changed planet by 2015 due to global warming.  I wonder when this will be re-telecast? Maybe at the next DNC convention.

Another free market success. Grain trains in abundance. North Dakota grain crops may set new records. I wonder if there will headline stories in the nation's media how diversified North Dakota's economy is? BNSF should be publicly praised for what they have been able to do over the past few years. The Bismarck Tribune is reporting:
Just in time for what the U.S. Agriculture Department expects to be near-record corn and soybean harvests, grain train cars are in abundance. The reversal is attributed to unprecedented spending on track upgrades, political pressure from politicians in agriculture-rich states and a drastic decrease in trains hauling crude and freight to and from the oil patch.
"There had been some uncertainties, but it has gradually gotten better," said Josh Mardikian, grain manager at the South Central Grain Cooperative elevator in Sterling. As he spoke, a train was being loaded with 24 million pounds of spring wheat, much of which would be used for a national pizza chain's dough. Grain trains had been running late by as much as 45 days in the past 18 months, Mardikian said, but in the past week, mile-long, 110-car trains had shown up some four days earlier than expected.
Oil activity in North Dakota was partly to blame for the widespread shortage and backlog of rail cars from North Dakota and Montana down to Kansas and east into Illinois, National Farmers Union President Roger Johnson said.
NIMBYs In Dayton's Backyard

I would assume imposing moratoriums on solar farms in Minnesota would make them Neanderthals.

NIMBY's In Maine

Bangor Daily News is reporting:
Renewable power developer SunEdison has withdrawn plans for a wind farm in Hancock County, saying it needs more time to respond to issues raised by environmental regulators.
John Lamontagne, spokesman for SunEdison, wrote in an email to the Bangor Daily News that the company plans to refile the application for the 73-megawatt, 23-turbine project at some point in the future.
“We’re disappointed we won’t be moving forward with this project as soon as we’d like, but we remain confident that this is an excellent clean energy project,” Lamontagne wrote.
The Department of Inland Fisheries and Wildlife in June came out in opposition to the project out of concern it would kill migrating birds and bats.
Most likely SunEdison will look at wind farms in eastern North Dakota where regulators aren't as concerned about eagles or other birds.

Coming In Threes

Oliver Sacks.
Wes Craven.
Wayne Dyer.