Sunday, November 15, 2015

Week 45: November 8, 2015 -- November 14, 2015

The top story of the week: oil nears $40/bbl.

I think this is the most under-talked about story in the Bakken right now, the fracklog. Everyone is concentrating on the "number," when, in fact, that's just a small part of the overall story. Here some things to keep in mind when thinking about these 1,000+ wells waiting to be fracked:
  • they are all in the sweet spots of the Bakken
  • operators have spent 7+ years perfecting completion techniques, resulting in huge 90-day production, and then 1-year production profiles
  • every well in the Bakken -- especially in the sweet spots -- will create a halo effect on neighboring wells 
  • the infrastructure is most robust in the sweet spots of the Bakken
  • 3 - 5 days to frack; once decision is made to frack, oil will moving fairly quickly after that

Operations
Spectacular production! 
Water-flooding the Bakken 
The Red Queen has not fallen off the treadmill; it will take awhile for the Red Queen to fall off her treadmill;

Fracking
Fracklog at 1000+ -- SeekingAlpha
Halo effect 
Increased volumes of fracking sand being ordered from suppliers
Halo effect?
Fracking led to a lot of jobs

Refining
Update on the Dickinson refinery 

Miscellaneous
Keystone XL analysts need to be looking west, not east
Number of North Dakota millionaires jump
Random fallout from the Keystone TKO

I Would Love To Point Something Out, But My Opinion + $1.98 Will Get You A Starbucks Coffee -- November 15, 2015

The Wall Street Journal is reporting:
The world’s biggest energy companies have doubled down on their promise to protect dividends, despite a precipitous drop in profits this year, driven by a steep decline in oil prices.

In the first nine months of the year, the four oil companies known as the supermajors— Royal Dutch Shell PLC, Exxon Mobil Corp. , Chevron Corp. and BP PLC—have seen their collective earnings fall by more than 70% from a year earlier. Over the same period, they have handed out nearly $28 billion to their shareholders, a roughly 10% increase from the 2014 period.

“The dividends and payouts to shareholders have no reason to be as volatile as the oil price,” said Patrick Pouyann√©, chief executive of France’s Total SA, the world’s fourth-largest oil company by production, at a conference in Abu Dhabi this week.

He added that it would be a “terrible mistake” to remove dividends and a sign that “we aren’t good at our business.”

Oil prices are currently trading slightly above $40 a barrel—their lowest levels since August—and more investment banks, energy companies and analysts don’t see the price rising above $60 a barrel until 2017. The International Energy Agency said Tuesday oil prices would slowly rise to $80 a barrel by 2020, but also outlined a scenario in which they stayed at $50 a barrel.

This has raised questions on a potential cash crunch at oil companies, a problem the firms acknowledge and say they are taking steps to address. The companies say they retain robust balance sheets that give them flexibility to raise more funds to help cover costs when needed.
Much more at the link.

And the usual disclaimer. Yada, yada, yada.

The Wall Street Journal is also reporting that things don't look so rosy for Houston's pensions:
Houston is weathering a prolonged plunge in oil prices, but the city may have an even bigger problem: its pensions.
Though economic growth has only slowed, not stalled, in Texas’ largest city, its finances are showing what several investors and analysts describe as warning signs.
Those include a rapidly growing gap in funding its retirement plans for public workers and a limit on its revenue-raising capabilities imposed by a voter-approved cap on property taxes.
The $3.2 billion pension-funding gap is threatening Houston’s Aa2 credit rating from Moody’s Investors Service, hurting demand for its debt and emerging as an issue in the city’s mayoral race.
Moody’s this summer warned it may downgrade the city’s debt if Houston fails to address its pensions, noting the cap limits the city’s financial flexibility.
Much more at the link.

Peak Oil? What Peak Oil? -- November 15, 2015: It's Pretty Impressive To Do With 70 Rigs What It Used To Take 200 Rigs And With 1,019 Wells Drilled To Depth But Not Fracked

This year, September, 2015:
  • rig count: 71
  • producing wells: 13,025
  • 1,162,253 bopd
  • October, 2015 permitting: 152
One year ago, September, 2014:
  • rig count: 193
  • producing wells: 11,741
  • 1,184,635 bopd
  • October, 2014, permitting: 328
Delta: 1,184,635 - 1,162,253 = 22,382 / 1,184,635 = a whopping 1.9% increase, year-over-year.

Pricing:
  • Last year, spot price, November 14, 2014: $58.75
  • This year, spot price, November 13, 2015: $31.25

Reporters With Blind Spots -- November 15, 2015; Cheap Gas Means One Meal Out/Month For Family Of Four -- Big Deal

Another example of a reporter (or reporters) having a blind spot):
Headline in yesterday’s WSJ, November 14, 2015, front page, below the fold: “Cheaper Oil Fails to Yield Holiday Cheer for Retailers.”
The writers note that the protracted slide in oil prices is delivering little of the expected benefit to US retailers. There are two points to make here. First, the price of oil, which we’ve talked about many times before. Second, the blind spot, which we've also talked about before.

12,000 miles per year — at least that’s what everyone tells their insurance company. At 30 mpg that works out to about 400 gallons of gasoline / year. At $3.59 / gallon that works out to $1,436. At $1.89 / gallon that works out to $756. The delta is $680 or $60 / month or $2 / day, exactly the cost of a tall Starbucks coffee. Sixty bucks is one meal for a family of four at Applebee’s. Inexpensive gas is not the issue.

By the way, with gas so inexpensive, people are driving more, so let’s say that 12,000 miles/year becomes 14,000 miles / year. That works out to 467 gallons / year or $882 (at $1.89/gallon). $1,436 - $882 = $550 / year extra, even less than the $680 quoted above.

Bottom line: analysts are putting too much emphasis on the price of gasoline. I can guarantee you that the savings in energy won’t trickle down to how much you pay for a bag of potato chips.

What surprises me is that even the Wall Street Journal misses the bigger story. Let’s say that retailers are not seeing the benefits of cheaper gasoline. Why? One word: ObamaCare.
Almost everyone who puts 12,000 miles on their SUV are also seeing a $500 increase in their ObamaCare monthly premiums.
Another example of East Coast reporters, young, no families, no experience running a business and completely missing the impact ObamaCare has on middle America. A blindspot.

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OPEC: A Sham

We are now seeing that OPEC was a sham ever since it was created; it is run by Saudi and Saudi alone.

When "OPEC" controlled things, the various members produced well beyond their quotas and Saudi simply looked the other way; they were making so much money, anyway.

Now that we have a real glut and every last OPEC country wants quotas / production cut way back, there's only one country -- Saudi Arabia -- saying they won't cut production.

It was always obvious to anyone paying attention, but it's now obvious to even those who don't pay attention, there is no OPEC. Simply Saudi Arabia.

Venezuela. Tick, tick, tick.

Eleven Wells Came Off The Confidential List Saturday; QEP With Four High-IP Wells; Liberty Resources With Two Nice Wells; CLR With One Nice Bakken Well -- November 15, 2015

Monday, November 16, 2015
  • 31099, SI/NC, Hess, BL-Iverson C-155-96-1423H-4, Beaver Lodge, no production data,
Sunday, November 15, 2015
  • 29277, SI/NC, Hess, BL-Iverson C-155-96-1423H-3, Beaver Lodge, no production data,
  • 31065, SI/NC, SM Energy, Stever 1-16H, Poe, no production data,
Saturday, November 14, 2015 (considering the current environment, this is fairly noteworthy)
  • 20929, 639, CLR, Foster 1-28H, Crazy Man Creek, t8/15; cum 20K 9/15;
  • 28579, SI/NC, Petro-Hunt, Dolezal 145-97-7D-6-1H, Little Knife, no production data,
  • 28820, 755, Triangle Petroleum, Simpson 151-102-5-8-10TFH, Elk, t5/15; cum 28K 9/15;
  • 29310, 1,015, Liberty Resources, ND State 158-95-21-28-2MBH, McGregor, t6/15 cum 81K 9/15;
  • 29313, 527, Liberty Resources, ND State 158-95-21-28-1MBH, McGregor, t5/15; cum 43K 9/15;
  • 29714, 2,014, QEP, MHA 8-06-01H-149-92, Heart Butte, t6/15; cum 53K 9/15;
  • 29715, 1,624, QEP, MHA 6-01-01H-149-92, Heart Butte, t6/15; cum 54K 9/15;
  • 29716, 1,910, QEP, MHA 6-32-29H-150-91, Heart Butte, t6/15; cum 58K 9/15;
  • 29717, 800, QEP, MHA 8-32-29H-150-91, Heart Butte, t6/15; cum 42K 9/15;
  • 31066, SI/NC, SM Energy, Rini 1X-16HB, Poe, no production data,
  • 31098, SI/NC, Hess, BL-Iverson C-155-96-1423H-2, Beaver Lodge, no production data,
******************************************

29717, see above, QEP, MHA 8-32-29H-150-91, Heart Butte:

DateOil RunsMCF Sold
9-20152032410127
8-2015156128214
7-201512550
6-201543100

29716, see above, QEP, MHA 6-32-29H-150-91, Heart Butte:

DateOil RunsMCF Sold
9-20152134911379
8-20151996512740
7-2015101890
6-201566230

 29715, see above, QEP, MHA 6-01-01H-149-92, Heart Butte:

DateOil RunsMCF Sold
9-2015137917406
8-2015160837998
7-2015201700
6-201540070

29714, see above, QEP, MHA 8-06-01H-149-92, Heart Butte

DateOil RunsMCF Sold
9-2015173569763
8-2015184179688
7-2015171970

29313, see above, Liberty Resources, ND State 158-95-21-28-1MBH, McGregor:

DateOil RunsMCF Sold
9-201575338176
8-2015106682539
7-20151248114726
6-2015683410307
5-201544781643

29310, see above, Liberty Resources, ND State 158-95-21-28-2MBH, McGregor:

DateOil RunsMCF Sold
9-20151563511580
8-2015143771408
7-20151571120461
6-20152599633096
5-201580045502

28820, see above, Triangle Petroleum, Simpson 151-102-5-8-10TFH, Elk:

DateOil RunsMCF Sold
9-201548170
8-201557340
7-201582830
6-201525990
5-201561570

20929, see above, CLR, Foster 1-28H, Crazy Man Creek:

DateOil RunsMCF Sold
9-2015101600
8-201585310
7-20154250

Nothing About The Bakken -- For The Bakken, Scroll Down Or To The Sidebar At The Right

There will be errors on this page, factual and typographical. I am new to the sport. I think most of this is accurate. It is very, very easy to google specifics for those interested.

Updates

November 15, 2015: we just got back from the tournament. For the girls, Santa Barbara 805 took the championsip in a very, very close game, perhaps the best game of the tournament. SoCal A (Huntington Beach, et al) went ahead 2 - 0 and I thought it was going to be a blow-out, but SB 805 came back. Tied at 5 - 5. And then SB 805 took the lead at 7 - 5, and it appeared the momentum had shifted. SoCal A looked like a slightly better team in the first half, and their players were clearly much bigger, but the SB 805 were fast, wiry, and aggressive. It was 9 - 8 when SoCal A was charged with a penalty -- the only penalty throw of the game, and SB 805 went ahead 10 - 8. With 26 seconds to go it was 10 - 9; it was a real fight to maintain possession of the ball; SoCal A took a wild shot with 8 seconds to go and that was it. SB 805 wins; the photo is already on Twitter. I am being told that Jewel Roemer, SB 805, is someone to watch at the collegiate level in a few years.

Original Post
 
This is why there has been almost no blogging for the past two days and there won't be much today, either, unfortunately. From my journal notes yesterday regarding the USA Water Polo Champions Cup, Lewisville, TX:
I haven’t had so much fun in a long time. I wasn’t looking forward to this weekend — three full days of water polo, and it looked like I was going to be trapped for all three days in a natatorium watching 14-and-under play water polo.


Wow, was I surprised. This is the most fun I’ve had in a long time. I couldn’t wait to return to Day 2. This is the USA Water Polo TYR Champions Cup, with 17 teams represented from all over the United States. Most brought both a girls team and a boys team, but not all. There is one local team, our team from South Lake (sort of local): ten teams from California, two teams from Chicago: one team from Seattle: and one team from Hawaii. I’ll have to check where the other teams are from.

The southern California teams include: Rose Bowl, SoCal (A), SoCal (B), San Diego, and Santa Barbara. From the Bay area, Diablo, Lamorinda, CC United, and 680.

Southern California is clearly the capital of water polo. They crushed the competition yesterday. Absolutely crushed the competition. I’m told that whereas our team practices one or two hours two or three times a week, the California teams practice three hours a day, five days a week. But the really big deal is the size of the SoCal team -- be sure to click on their website.

Our granddaughter’s team was one of those crushed by the southern California teams but our girls were not upset. It’s all about the sport. More on that later (see below). The great news: our granddaughter was thrilled to hear that her nemesis, the Houston Viper Pigeons, were also crushed by SoCal. The other team’s nemesis, St Marks in Dallas did not participate. I like to think they were afraid of taking on the buff SoCal boys.

I enjoy people watching. Yesterday I stood on the second landing overlooking the entry way down on the first floor. It was the perfect vantage point to watch the teams arrive. The southern California boys were right out of Hollywood casting: buff, beach blond, sunglasses, some with hoodies, all looking very cool — it looked like the LA Lakers had arrived. The girls — I hate to call them that — they are young women — just as the “boys” are young men — were much more diverse. A lot of Asian, but more specific than that, I couldn’t say. They were probably a mix of Hispanic and Asian, but it was really hard to say. My wife is Japanese-Hispanic; our closest friends in Los Angeles are Japanese and Chinese, so I have a pretty good eye for identifying Asian ethnicities but in this case I was flummoxed yesterday. Maybe Hawaiian mix. I don’t know.

Everyone, I mean everyone, in the 14-and-under group had an iPhone or a iPhone lookalike. I have nothing to base this on but my gut feeling is that many parents and children younger than 10 have a mix of Samsung and old iPhones, but those aged 12 to 22 years old in America predominantly have Apple iPhones. I cant’ imagine many 14-year-olds begging their parents for an Apple iPhone lookalike. A lot of the iPhone lookalikes with bumper pads look like Fischer toys.

Well, some of the boys from southern California have arrived. They are on the deck, bouncing their balls against the wall. Buff, beach blond, the sunglasses and hoodies are off and replaced with Speedos that are not much more than silk handkerchiefs. Small handkerchiefs. Alexander the Greek would have enjoyed watching water polo.
**************************************
The water polo tournament is for 14-and-under. It appears the SoCal girls — young women — are all fourteen years old and will have their 15th birthday the day after the tournament ends. They also have about 15 women on each team, giving them seven on the bench. The bench is incredibly important in a high-intensity sport like water polo.  The average age on our team is probably close to 12 years old. We have one 9-year-old who is not much taller than our 16-month-old granddaughter.

I mentioned above that our team was really, really impressed with the friendliness and fair play by the SoCal girls — top-rate all around. In the first game yesterday, they pulled out to 8 - 0 in the first period (of four periods). But they did not run up the score. By the end of the game they had 12 points. They easily could have hit 40. But this next little vignette almost brought tears to one mother’s eyes. When the score was 12 - 3 near the end of the game, our team’s 9-year-old threw a weak ball to the goal. It could have easily been stopped. The goalie missed it, letting it wash in. That little 9-year-old had scored her first goal in a national water polo tournament.
******************************************
Down in the lobby is a blond Californian, about 35 I would say. He appears to be a surfer. I didn’t ask. He was selling water polo jewelry — really classy stuff. He was here last year for the same tournament and was back again this year. His dad owns a jewelry store in the diamond district in downtown Los Angeles.

While here in the DFW area, he was staying with a family friend who had just moved from SoCal to the DFW area two months ago. Their families lived across the street from each other. She was the typical SoCal drop-dead beautiful blond, about 28 years old, I suppose. But she was not a Valley Girl. She was a joy to talk to. I had to laugh at her stories about how confusing it is to get around the DFW area. She sounded just like my daughter when she first got her a couple years ago. They both admitted to crying when they couldn’t get to where they wanted to go. Both of them said the same thing: they used GPS and on the freeway they could see the destination off to their right, but they couldn’t find the off-ramp, no matter how many times they “circled” the area.

I told her that it would take two years, but in two years, she would realize how incredibly good the road system is here in the DFW area. It’s incredible. I love it. There are some unique innovations the Texans have come up with. I think I’ve talked about them before: the frontage roads which add two to four lanes to all major highway systems; and, the “turn-arounds” which allow one to circle a two-mile area for days if lost, and never having to stop once. Except to refuel. For $1.37 / gallon (at least at one station in the area — no kidding — a local gasoline price war — which I doubt will last long — once their point is made).
Checking out the water polo tournament rosters, apparently surprised to see a team from Chicago, down here in Texas:


Clapping when our team scored!



Lamorinda -- California, Lafeyette, Moraga, Orinda
Greenwich -- Stamford, CT
Thunder -- Southlake, TX
Vanguard -- Huntington Beach, CA
Rose Bowl -- Pasadena, CA
West Sub -- Naperville & western suburbs of Chicago
CC United -- Lafeyette, CA
Mid Valley -- San Gabriel Valley, CA
Viper Pigeons -- Houston, TX
SD Shores -- San Diego, CA
SoCal -- scores of participating locations in southern California
NW Orcas -- Seattle, WA
680 -- Northern California
Chicago Park -- Chicago, IL
SB 805 -- Santa Barbara, CA
Diablo -- northern California, Diablo area, Bay Area
Island -- Hawaii

Water Flooding The Bakken -- November 16, 2015

A reader  noted these two cases in the November, 2015, hearing dockets:
  • 24634, EOG, temporary authority to rework #16986 as a water injection well to test the feasibility of water flooding the reservoir, Mountrail
  • 24635, EOG,  temporary authority to rework #17170 as a combined production/ injection well to test the feasibility of water flooding the reservoir, Mountrail
I track the dockets here.

[Note: for newbies, these are cases, not permits. Permits will follow.]

Both of these wells (#16986 and #17170) are followed here. Those posts will be updated later.