Thursday, October 22, 2015

Random Update Of A CLR Polk Well In Banks Oil Field -- October 22, 2015


September 11, 2016: we now know why this well went inactive.  
Original Post
A reader was interested in this Polk well. The well went inactive July, 2015.
  • 21733, IA/1,1118, CLR, Polk 1-33H, Banks, 30 stages, 2.9 million lbs, t3/14; cum 142K 8/15; 
There is nothing in the file report to suggest why the well went inactive. There is some activity nearby but other wells in the are are not inactive. I'll put this on my list of wells to follow up on at a later date.
Production profile (talk about very sporadic production):

PoolDateDaysBBLS OilRunsBBLS WaterMCF ProdMCF SoldVent/Flare

XOM Sells Troubled Torrance Refinery -- October 22, 2015

For the archives. The Daily Breeze is reporting:
ExxonMobil Corp., hounded by regulatory investigations into its safety record since a February explosion tore through the company’s Torrance refinery, confirmed Wednesday it has sold the crippled plant for $537.5 million to independent refiner PBF Energy.
“The sale results from a strategic assessment of the site and how it fits with our refining portfolio,” Jerry Wascom, president of ExxonMobil Refining & Supply Co., said in a statement.“ExxonMobil regularly adjusts its portfolio through investment, restructuring or divestment consistent with overall global and regional business strategies.” [Incredibly tactful. From the Hillary Clinton school of public relations.]
The announcement Wednesday afternoon comes a year to the day after industry sources confirmed to the Daily Breeze that the refinery was on the block. That would-be buyer turned out to be New Jersey-based PBF, which will become the fifth largest independent refiner in the United States once the sale of the Torrance refinery closes.
ExxonMobil’s 700 employees, including about 600 at the 750-acre refinery itself, were informed of the sale shortly after 1 p.m. All were offered jobs with PBF.
Another 700 contract workers also are expected to continue working at the refinery.
The deal will close the second quarter of 2016. Keep that date in mind -- 2Q16 -- when you read the following from The Los Angeles Times, dated September 23, 2015, before the sale of the refinery was announced:
Just when Southern California motorists were expecting to see some relief from high gasoline prices in the next few weeks, they now may have to wait well into next winter — at least.
Exxon Mobil Corp., still at loggerheads with air quality regulators over a short-term fix for the company's damaged Torrance refinery, appears poised to build a new pollution-control system that meets antipollution specifications, several experts briefed on the matter said.
One of them, oil industry analyst Bob van der Valk, said he learned this week from people who knew about the plans that Exxon has decided to abandon short-term repairs and pursue a longer-term approach that would bring the plant back to full capacity in mid-February.
"They're dead in the water for gasoline," Van der Valk said. "They took everybody off the [short-term] project."
Exxon executives would not comment except to say the company has been working with all agencies and will continue to work with the air quality regulators.
Since an explosion damaged the refinery in February, Exxon has been proposing to use an old pollution-control device, one that doesn't meet air quality standards, to get the plant operating while it worked on a permanent repair.
I assume XOM will have no interest in working with the state on getting this refinery back into full operation -- the article says as much -- the project is "dead in the water." Meanwhile, I doubt XOM will have much interest in letting the new buyer start any work while XOM still owns the refinery -- and, of course, the sale could still be delayed. 

New Tortoise Species Found In The Galapagos 

Despite global warming and the threat of all those species extinctions, lo and behold, a new tortoise species is found in / on the Galapagos archipelago. FoxNews, fair and balanced, is reporting:
Thanks to DNA testing from tortoise bones that were almost a century old and found in museums in Wisconsin, the United Kingdom and Galapagos, an international team writing in the journal PLOS One this week has identified a second species on the island.
They concluded that a few hundred giant tortoises living on the eastern side of Santa Cruz are distinct from a second, larger population living less than 6.2 miles away on the western side. The new species, C. donfaustoi, is named after a retiring park ranger who spent decades protecting the tortoises.

ND State Senator Asks For Updated Study Of Fossil Fuel Reserves In Western North Dakota -- October 22, 2015

The Dickinson Press is reporting:
U.S. Sen.  John Hoeven, R-N.D., has asked the U.S. Geological Survey to update the agency’s study of recoverable reserves of oil and natural gas in the Williston Basin.
At Hoeven’s request, USGS released the study of recoverable oil reserves in April 2013 that found there are approximately 7.4 billion barrels of technically recoverable oil, more than twice the previous estimate in the Williston Basin. The report also estimates there is 6.7 trillion cubic feet of natural gas.
If you do the math, add the natural gas (boe) to the crude oil, and then divide that number into the natural gas (boe), the number suggests 13% of the crude oil / natural gas mix is natural gas.  

President Obama Vetoes Defense Appropriations Bill
Bill Had Unprecedented Bipartison Support
Extremely Rare For A President To Veto a Defense Appropriations Bill
Vetoed Over Two Minor Issues, All-Political 

The House of the Rising Sun, The Animals

NDIC Gives Operators An Extra Year To Bring Their DUCs On-Line; Flexibility On Flaring Also Announced -- October 22, 2015

It is "funny" (as in coincidental) how things turn out ... just the other day I mentioned the "one-year-rule" for bringing North Dakota wells on line. And here we are today, it's just announced that North Dakota will extend the deadline by a year. From Seeking Alpha:
  • North Dakota regulators approve a plan to give oil producers an extra year to bring a new well online, Reuters reports, in an attempt to give the energy industry breathing room during the oil price downturn.
  • Companies will now have up to two years to frack drilled but uncompleted wells under changes approved by the North Dakota Industrial Commission, which means the oil industry will not be forced to spend billions of dollars to frack an estimated 1,000 DUCs, most of which will hit their previous one-year deadlines in December.
Also, in The Dickinson Press link below:
In December through March (2016), about 100 wells per month will reach the one-year deadline.
Under the policy approved Thursday, operators can apply to have those wells put on temporarily abandoned status, giving them another year to store the oil in the ground. Royalty owners, land owners and nonoperating interest owners would have the opportunity to object.
Helms said he expects about 500 wells will be put on temporarily abandoned status, which will prompt a gradual decline in oil production from 1.19 million barrels per day to 1.1 million barrels per day at the end of the biennium in June 2017.
Most experts anticipate that oil prices will recover in 2017, Helms said.
“The state would prefer to tax the oil at a higher price at some point in the not-too-distant future as opposed to taxing it today at low oil prices,” Helms said.
In addition, the NDIC granted some interesting flexibility on the issue of flaring. The Dickinson Press reports:
The North Dakota Industrial Commission adopted new policies Thursday to reward oil companies that exceed their gas capture goals and to allow producers to store oil in the ground until prices recover.
Companies that exceed gas capture goals for 90 days can bank credits for volumes of gas captured and apply them to future months if they fall below the benchmarks.
Helms, who recommended approval of the policy, said credits can only be used if a company encounters extenuating circumstances, such as delays getting right-of-way approval for pipelines or if a gas processing facility is down for maintenance.
The policy aims to motivate companies that are barely making the gas capture target, which is currently 77 percent, to raise the bar so they get credits in the bank, Helms said.
The credits expire after three months and they can’t be transferred to another company.
The policy, which originated as a request from an industry task force, takes effect Nov. 1.
Helms said he anticipates companies to take advantage of the program in the winter, when maintenance issues are more common.
And more:
Last month the Industrial Commission adopted revised gas capture goals that gave the industry an additional 10 months to meet the 85 percent gas capture goal.
In addition, commissioners voted unanimously to grant another six-month exemption from the natural gas flaring policy to XTO Energy for 102 wells, primarily in Dunn County. The commission granted an exemption to those wells in April after a pipeline project failed to move forward. (We've talked about this before.)
The Bear Creek natural gas processing plant under construction by ONEOK will serve those wells and is expected to be complete in fall of 2016.
For me this is the big story: again, operators, royalty owners, surface owners, and the state are working together during a very, very tough time. Good for them; I'm proud of the state.

COP Gets Permit To Drill Off-Shore Alaska

And then get this, COP wins a permit to drill off-shore Alaska, also at Seeking Alpha:
  • ConocoPhillips' plan to build the first-ever oil production facilities at a federal reserve in Alaska is approved by the U.S. Bureau of Land Management, FuelFix reports, allowing COP to construct an 11.8-acre drilling pad and related infrastructure inside the reserve.
  • The project offers Alaska the hope of adding new oil to the 800-mile-long Trans-Alaska Pipeline System, which was originally built to ferry 2M bbl/day of crude away from North Slope oil fields; it now carries about a quarter of that amount as nearby production declines, leading to slower flows.
  • But with low oil prices, it is unclear when or if COP would proceed with its broader Greater Mooses Tooth project, which ultimately could involve drilling up to 33 wells in the National Petroleum Reserve-Alaska.

Burning Wood In Europe Is Considered Carbon Neutral -- October 22, 2015


October 27, 2015: Business Insider reports on this also
Original Post
These were some earlier posts on this ridiculous subject. It almost makes me think the Europeans are going back to the Dark Ages, burning wood chips to keep warm:
I bring this up (again), because, apparently The New York Times has even figured this scam out. Don sent me this link with this headline: Flawed Carbon Accounting Drives Boom in Burning U.S. Forests in E.U. Power Plants. Here's the story:
Forestry, done in the right place the right way and for the right reasons, can be an important source of materials, jobs and wildlife habitat.
But are forests an appropriate fuel source for power plants? *
After five months of reporting, John Upton and others at Climate Central have put together a compelling and infuriating package on the growing flow of wood pellets from the Southeast, many from hardwood forests, to European power plants, where the result is touted as carbon-neutral energy and helps country’s meet emissions targets — at least on paper.
But the atmosphere isn’t noticing, according to the analysis. This passage in part three of Climate Central’s “Pulp Fiction” series describes the core issue with the European approach:
Through a loophole in its clean energy regulations, all wood energy is treated as if it releases no carbon dioxide. That accounting trick is allowing European national governments and their energy sectors to pump tens of millions of tons of greenhouse gases into the air every year — without accounting for it. That helps them keep that pollution off their books, but not out of the atmosphere.
Part one explains the loophole:
That loophole treats electricity generated by burning wood as a “carbon neutral” or “zero emissions” energy source — the same as solar panels or wind turbines. When power plants in major European countries burn wood, the only carbon dioxide pollution they report is from the burning of fossil fuels needed to manufacture and transport the woody fuel. European law assumes climate pollution released directly by burning fuel made from trees doesn’t matter, because it will be re-absorbed by trees that grow to replace them. [lol]
The assumption is convenient, but wrong. Climate science has been rejecting it for more than 20 years. It ignores the decades it can take for a replacement forest to grow to be as big as one that was chopped down for energy— or the possibility that it won’t regrow at all. The assumption also ignores the loss of a tree’s ability to absorb carbon dioxide after it gets cut down, pelletized and vaporized.
Much, much more at the link, with some cool graphs. By 2030, we should finally be reading some stories in the NYT about the entire global warming scam. 

One or two millenia ago, humans burned all the trees in Turkey and today -- Turkey is pretty much treeless. I know at one time the NYT was upset about loss of rain forests, but I guess not so much any more, at least in the southeastern US.

Ever So Slowly, The Active Rig Count Is Creeping Up; Eight (8) New Permits -- October 22, 2015

Active rigs:

Active Rigs69192182185195

Wells coming off confidential list Friday:
  • 28529, 1,106, Hess, LK-Trotter-146-97-3625H-3, Little Knife, drilling rig, June 19; TD, June 29; a 10' window 19' feet into the middle Bakken; gas as high as 9,272 units; lateral drilled in 5 days, two bits; 35 stages, 2.4 million lbs, t9/15; cum 2K 1 day;
  • 30856, SI/NC, EOG, Shell 29-2820H, Parshall, no production data,
Eight (8) new permits --
  • Operators: CLR (4), HRC (3), XTO
  • Fields: Elm Tree (McKenzie), Antelope (McKenzie), Siverston (McKenzie)
  • Comments: of course, permits for multi-well pads
Several permit renewals:
  • Zavanna, 4 Galloway permits, all in Williams County
  • Enerplus, 2 permits, a Cheetah and a Hyena permit, both in Dunn County
  • XTO, with one renewal, a Nygaard Federal in Dunn County
Normally, I wouldn't comment on this, but in the context of recent posts:
And again, for those keeping score at home, zero, nada, zilch, none, no producing wells reported as completed (in other words, no DUCs reported as completed today).

Might Iraq Be The Weak Link In OPEC's Pipeline? -- October 22, 2015 is reporting:
Iraq is one of the major reasons why OPEC has been able to increase oil production over the past year, even as oil prices have dropped to six-year lows.

The war-torn country averaged 3.2 million barrels per day of production in 2014. But despite the onslaught from ISIS and the collapse in oil prices, Iraq succeeded in achieving steady gains in output, surpassing 4.1 million bopd n September.
Along with Saudi Arabia’s increase of around 600,000 barrels per day since 2014, Iraq has accounted for a majority of OPEC’s production gains over the past year, allowing the cartel to produce more than 31.5 mb/d – well in excess of its stated production target of 30 mb/d.
But at the link, why things aren't looking good.

However, the most interesting data point is the note about Saudi Arabia's increase in oil production since 2014.

Finally, Some Common Sense: Slicers And Dicers Put On Hold Due To Nesting Bald Eagles -- October 22, 2015

The Bismarck Tribune is reporting: multiple bald eagle nests inside proposed wind turbine farm footprint. If the wind turbines win this one, it will speak volumes about the Audubon Society, Greenpeace, the Sierra Club, the US Department of Interior, Ducks Unlimited, to name just a few. The story:
Bald eagles have put the brakes on a proposed wind farm in North Dakota as state regulators seek input on how the towers with their spinning blades could impact the national bird.
Rolette Power Development LLC applied to the state Public Service Commission in March for a site permit for a $175 million, 100.4-megawatt wind farm with up to 59 turbines about three miles south of Rolette in north-central North Dakota.
After a public hearing June 29, the U.S. Fish and Wildlife Service notified the developer of a documented bald eagle nest within the project’s study boundary and several other bald eagle nests in proximity to the 14,720-acre project area.
Project consultant KLJ checked the eagle nest database maintained by the state Game and Fish Department – which hadn’t mentioned any nests in its response to a consultation letter in May – and verified that there are two active eagle nests about 2.4 miles and 4.5 miles from the project area boundary.

Jobs Number Today: Background Noise -- October 22, 2015; Housing Numbers Superb


Later, 9:31 a.m. Central Time: housing -- superb numbers --
Americans snapped up more homes in September, suggesting that the U.S. housing sector remains insulated from global economic turmoil. The National Association of Realtors said Thursday that sales of existing homes jumped 4.7 percent last month to a seasonally adjusted annual rate of 5.55 million. Buying activity rebounded after slipping in August, indicating that demand for housing continues despite a series of recent economic hits.
Later, 9:24 a.m. Central Time: ESPN to cut 4% of its workforce. Millennials cutting the cord (to cable television. ESPN is the "highest paid" cable network - $6 from each cable subscriber. Typically, cable networks may get 50 cents per subscriber. I've never subscribed to any cable package that included ESPN.

Later, 8:42 a.m. Central Time: Bloomberg is throwing some cold water on these "exciting" jobs numbers -- the economist concludes that "we are not in uber-boom mode," and that the spread between the breakeven level and initial claims is consistent with payroll growth of about 180,000.

And 180,000 is well below the 200,000 -- the "magic number" associated with a growing economy.

The Magic Numbers
First time claims, unemployment benefits: 400,000 (> 400,000: economic stagnation)
New jobs: 200,000 (< 200,000 new jobs: economic stagnation)
Economists estimate the labor market needs to create about 125,000 jobs a month to keep the unemployment rate steady, though estimates vary -- Reuters.
I don't recall when I first posted "the magic numbers" but it was near the beginning of the Obama administration when it became evident that the government was manipulating numbers, and indications were that the mainstream media would move the goalposts -- which they did.

Original Post
From Business Insider:
Initial jobless claims once again fell more than expected, with the prior period's print revised upwards.

Claims totaled 259,000 last week and were revised up by 1,000 to 256,000 for the prior period.

Economists had estimated that first-time unemployment insurance claims increased to 265,000 last week, according to Bloomberg.

The four-week moving average dropped 2,000 to the lowest level since 1973, at 263,250.
From YCharts:
US Initial Jobless Claims is at a current level of 259000.0, an increase of 3000.00 or 1.17% from last week. This is a decrease of 7000.00 or 2.63% from last year and is lower than the long term average of 360580.5.
From Reuters:
The number of Americans filing new applications for unemployment benefits rose less than expected last week, remaining at levels consistent with a fairly healthy labor market.
Initial claims for state unemployment benefits increased 3,000 to a seasonally adjusted 259,000 for the week ended Oct. 17, the Labor Department said on Thursday. They remained not too far from levels last seen in late 1973.

Solar Panel Pilot Project A Win-Win For Everyone -- October 22, 2015

For what it's worth, I think this is a win-win for everyone. Helena Independent Review is reporting:
Solar energy could help provide the way of the future for rural Montana.

Under a cloudy sky, NorthWestern Energy's first solar panels in Montana received a kick off on private property near Beck Hill Road about eight miles north of Deer Lodge Monday afternoon.

About 45 miles northwest of Butte, the panels will benefit 17 rural residents who all live nearby.

The pilot project, consisting of two rows of solar panels and a metal container storing large battery packs, is a test for the power company to see if it can help improve reliability in rural Montana.

The solar panels charge the batteries. When the batteries are full, the excess solar will be delivered to the 17 nearby customers.

But, in addition, when a power line goes down in that area, the batteries can provide backup power, so the residents can still have electricity even while a line is down.

The project cost NorthWestern Energy $600,000.

3Q15 Caterpillar profits tumble.

"Tons" of new emojis for your iPhone. Even more at Business Insider.

VW says cheating may be more widespread that previously thought; other engines may also be involved.

Seeds planted for slow oil recovery: Hess CEO.
Hess oversaw the $2.8 billion sale of Hess's downstream retail fuel business to a Marathon Petroleum (MRO) subsidiary in 2014, as well as a $2.7 billion deal earlier this year that offloaded a portion of its midstream processing and transportation units.
The company is now strategically focused on exploration and production in North Dakota's Bakken and Ohio's Utica Shale, the Gulf of Mexico, the North Sea, the Gulf of Thailand, and offshore West Africa.

Could Bakken Wells Generate An Additional $100K/Year Using Geothermal Energy? $1 Million / Yr With 10-Well Pad? -- October 22, 2015

OilPrice is reporting about the potential of geothermal energy in .... the Bakken. Wow, it never quits. I don't think much will come of this, for any number of reasons, but one never knows.
Every single barrel of oil also brings out close to seven barrels of boiling hot water which can be utilized to generate electricity through geothermal turbines.
"Oil- and gas-producing sedimentary basins in Colorado, Illinois, Michigan, and North Dakota contain formation waters of a temperature that is adequate for geothermal power production," said researchers Anna Crowell and Will Gosnold in a paper that appeared in Journal Geosphere.

The first thing I would want: fact check the 1:7::oil:water statistic for Bakken wells. Whatever. The article continues:
"Denver-Julesberg Basin (which spans Wyoming, Nebraska, and Colorado, and has a surface area of approx. 155,000 square kilometers) has the highest capacity for large-scale, economically feasible geothermal power production."
But when I see CLR / Harold Hamm, I have to at least think there may be some merit in the research:
A report released in April this year stated that Continental Resources and Hungary-based MOL group were testing a system that could generate electricity by using hot water that is present in the oil well. With close to 25 billion gallons of water used by U.S. drillers on an annual basis, this system (if developed commercially in the near future) could generate electricity, which would be the equivalent to three coal fired plants running 24 hours a day, thereby reducing overall costs.
Continental Resources is collaborating with the University of North Dakota for its geothermal project. The team connected the boiling waste water pipes to the geothermal generators to produce electricity that can be either sold to the grid or connected to the existing power lines. Although its actual commercial application is yet to be realized, according to an estimate made by the U.S. Department of Energy, a single 250 KW geothermal generator used by Continental Resources can generate an additional $100,000 per well on an annual basis. This shows that geothermal energy has the potential to be not only cost effective, but also generate additional revenues and employment for drilling companies.

The "Duck Curve" In California -- October 22, 2015

We may have DUCs in North Dakota, but California has a "Duck Curve," as reported by BloombergBusiness.

This is the "Duck Curve":

What's going on?
When the sun starts to set in California, there’s one thing you can count on: thousands of megawatts of natural gas-fired power plants quickly firing up to keep the state lit.
It’s a daily phenomenon that will become more pronounced than ever this winter as California’s ambitious clean energy goals have boosted the state’s use of renewables. The surge in intermittent solar power will test the statewide electricity grid because it exacerbates the need for alternative sources such as gas outside of daylight hours. Regulators have warned it’ll make California more vulnerable to price spikes and power disruptions.
It works like this: As the day begins to wane in the Golden State, generation from solar panels drops off. That occurs just when consumers returning home from work turn on appliances and flip on lights, driving up electricity consumption. Other power supplies are needed to fill the gap and the need is more urgent in winter when days are shorter.

The phenomenon known as the “duck curve” is so named for the resemblance of the demand slope to the profile of a water fowl. The California grid’s need to call on gas-fired plants to balance shifts in demand and supply shows the potential hazards of tying more renewable generation to power networks.
My hunch: we'll see some days when glitches in computer software upgrades lead to some interesting blackouts. Blackouts, not brownouts.

Thursday, October 22, 2015

Natural gas fill rate (dynamic link): 81. In the East Region, stocks were 12 Bcf below the 5-year average following net injections of 49 Bcf.

Gasoline demand (dynamic link): slight decrease; 9.068, 4-week average; compare to 8.896, 4-week average, one year ago: 172,000 bopd delta.

Weather forecast in north Texas: heavy rain starts tonight and will last through Sunday. Flash flood warnings are likely to begin tonight and could last through Sunday. Three to six inches of rain is pretty much a given over the next couple of days, and could come in at seven to ten inches. Weatherspark shows rain starting now and getting really heavy by 6:00 p.m. tonight. I just stepped outside to check my personal weather station: the rock is dry and not moving. No rain and no wind.

Active rigs:

Active Rigs68192182185195

RBN Energy: autumn borrowing base redeterminations for E & P companies subdued so far.
Although many industry observers predicted draconian cuts to the credit lines of North American E&Ps during the fall borrowing base redeterminations by their lenders, the average reduction for 17 companies disclosing the results to date is just 4%. Today we describe how these results may indicate that significantly lower industry costs and less dramatic reductions in long-term commodity price forecasts could be partially offsetting the negative factors used to determine borrowing capacity under secured and unsecured credit lines.
Secured loans provided by banks to exploration and production (E&P) companies use the value of the oil and gas reserves that an E&P owns as security or collateral. Banks typically determine “base” borrowing limits for these loans that are linked to the value of the collateral hydrocarbon reserves. These loans are important to E&P companies, particularly the smaller ones, because they allow them to borrow money more cheaply (i.e. at lower interest rates) and in larger amounts than they might be able to otherwise. Banks revisit or “redetermine” the terms of the loans twice a year, once in the spring and once in the fall. These are typically not very newsworthy events except when oil and gas prices have declined sharply since the value of the collateral declines as well.  There has been a lot of trepidation over the fall redetermination this year (2015) since, by all accounts, the spring redeterminations resulted in minimal changes to E&P borrowing bases despite the collapse in oil prices that started over a year ago.   Reductions in borrowing bases strap E&P companies for capital needed to reinvest in developing oil and gas reserves. Less capital available results in fewer wells drilled, lower cash flow and presumably lower production.
That sounds like good news. In fact, it's bad news for the industry: it suggests that we may not have seen the low in oil prices yet. On the other hand ...