Reality Bites: Natural Gas, Renewable Energy, Coal And The Philippines -- November 24, 2015

I consider myself somewhat well-read, and somewhat cognizant of what's going on around the rest of the world, and then I come across an article and realize how little I really know. Take this Reuters article in Rigzone for example about the Philippines:

• 100 million people, one of the world's fastest growing economies
• aims to double its power generation capacity by 2030
• daily blackouts; in the 1990's these blackouts crippled its economy
• electricity is currently generated by local gas supplies

But:

• local natural gas supplies are fast running out 
• their gas field is expected to be depleted by 2024

The country is set to import LNG for the first time next year, but cheap coal is a strong competitor.

Reuters writes:

But despite government support for gas, a rash of approvals for coal-fired plants is already set to push coal's share of power generation up sharply to over 50 percent by that time, while gas' share may fade slightly to 15 percent.

A Philippines lawmaker conceded it is too early to say when legislators will call time on new coal plants.

"It presents a great challenge, especially for us in Congress," said Reynaldo Umali, who heads the committee on energy at the House of Representatives.

This type of dilemma is echoed throughout Asia, where more than 500 coal-fired plants are on the drawing board, spurred by coal's low cost and availability, while LNG needs billions of dollars for infrastructure to receive and store imported gas.

Despite increased emphasis on natural gas,

... the Philippines accepts that rejecting cheap coal is not an option as its economy develops, with more than 40 new power plants in the pipeline, including projects still seeking financing.

"The Philippine electricity market is very competitive, so to be able to make sure that we can sell the power capacity to be generated by our power plants, it has to be cheap," said Lito Lantin, senior vice president at Meralco Power Gen Corp, which plans to build three coal-fired plants over five years.

A related story on the Philippines was posted on November 7, 2015. 

Random Update Of Three Murex Wells, First Drilled 2006; Re-Drilled Back In 2010 With A New Lateral -- November 24, 2015

Note: in long notes like this, there will be factual and typographical errors. The very, very brief summaries are to give me an overview of these three wells to better understand the Bakken. This should be read only for interest and not as a source document. If this information or these wells are important to you, go to the source.

For the archives.

16186, 439, Murex, Angie Marie 13-24H, Beaver Lodge, t7/06; cum 383K 9/15;
16284, 412, Murex, Amy Lynette 13-23H, Beaver Lodge, t9/06; cum 264K 9/15;
16358, 439, Murex, Megan Brooke 15-22H, Beaver Lodge, t12/06; cum 192K 9/15;

All three wells drilled in 2006. Stimulated with HCL but no evidence of any further frack/stimulation.  In 2010, all three wells were re-drilled. In one file report, it was stated that the well was re-drilled due to pressure depletion in the original well. In each case, the well bore followed the original hole to about 8,000 feet at which point a new lateral was drilled. The new laterals were fracked.

Production profiles during the period of the re-drill / frack which occurred in2010:

16186, 439, Murex, Angie Marie 13-24H:

BAKKEN	12-2010	30	7253	6853	1871	9468	9468	0
BAKKEN	11-2010	30	8105	8205	1731	10158	10158	0
BAKKEN	10-2010	31	10634	10784	2299	11530	11530	0
BAKKEN	9-2010	18	3213	2650	532	3247	3247	0
BAKKEN	8-2010	26	5207	5881	1602	6304	6304	0
BAKKEN	7-2010	31	16127	15707	6809	18434	18434	0
BAKKEN	6-2010	30	4800	4734	773	4839	4839	0
BAKKEN	5-2010	31	0	0	0	0	0	0
BAKKEN	4-2010	30	965	1273	116	1123	1123	0
BAKKEN	3-2010	31	2342	2500	278	2609	2609	0
BAKKEN	2-2010	28	2175	1856	265	2314	2314	0

16284, 412, Murex, Amy Lynette 13-23H:

BAKKEN	10-2010	31	5511	5604	1758	7548	7548	0
BAKKEN	9-2010	30	6159	6258	1945	8253	8253	0
BAKKEN	8-2010	28	7568	7001	2520	8734	8734	0
BAKKEN	7-2010	27	6929	7260	3277	4585	4585	0
BAKKEN	6-2010	27	6256	5911	3422	4673	4673	0
BAKKEN	5-2010	31	0	0	0	0	0	0
BAKKEN	4-2010	0	0	0	0	0	0	0
BAKKEN	3-2010	31	1366	1584	448	2274	2274	0
BAKKEN	2-2010	25	1936	1582	519	3137	3137	0
BAKKEN	1-2010	31	1145	1837	156	1219	1219	0
BAKKEN	12-2009	31	1213	696	123	1244	1244	0

16358, 439, Murex, Megan Brooke 15-22H:

BAKKEN	10-2010	28	7694	7305	4468	4613	4613	0
BAKKEN	9-2010	22	2998	3267	2270	2237	2237	0
BAKKEN	8-2010	31	8745	8723	4219	3966	3966	0
BAKKEN	7-2010	3	1619	1349	0	3238	0	3238
BAKKEN	6-2010	0	0	0	0	8	8	0
BAKKEN	5-2010	31	315	454	127	655	655	0
BAKKEN	4-2010	30	914	807	301	1604	1604	0
BAKKEN	3-2010	31	932	1143	407	1691	1691	0
BAKKEN	2-2010	28	913	668	332	1721	1721	0
BAKKEN	1-2010	31	1118	1410	398	2137	2137	0
BAKKEN	12-2009	31	839	698	286	2098	2098	0

The screenshot showing the locations of these three wells.

Proposed Devils Lake Refinery On Hold -- November 24, 2015

The Grand Forks Herald is reporting:

Lagging oil prices have postponed plans for a proposed diesel oil refinery in Devils Lake.

About a year ago, Eagles Ledge Energy, based in Vancouver, B.C., had announced plans to build a $200 million, 20,000-barrel-per-day clean fuels oil refinery in Devils Lake.

The refinery, operating under the name of American Dakota Refinery, is proposed to convert crude oil from the Bakken Formation in western North Dakota into off-road diesel fuel for use in farm and construction equipment.

However, the project currently is on hold, as oil prices have plummeted from more than $100 per barrel in September 2013 to the low $40-$50 range in recent months.

Low Oil Prices And US Driving Data, And Again, Why Is The Price Of Gasoline So High In California? -- November 24, 2015

Earlier this morning, I posted these Jack Kemp tweets:

• US traffic volumes have grown 3.5% over last 12 months, compared to prior 12-month period, fastest gain since 1997
• US traffic surged 4.3% in September compared with prior-year, according to Federal Highway Administration

I didn't really pause to think about that ... I was moving along quickly to get things posted, but those data points are incredible. The 4.3% increase year-over-year is one thing, but the fact that traffic volume growth has shown the fastest gain since 1997.

Since 1997 ... that's almost twenty years ago.

The current oil price slump began one year, October, 2014. The growth would have been even greater had the state with the most miles driven, California, shared in the low oil prices.  

Energy Institute at Haas posted this note and graph on September 28, 2015:

While oil prices have been falling across the country, the gap between California gas prices and the rest of the U.S. has climbed to higher levels for a longer stretch than at any time in the last 20 years.

 

[I'm surprised EIA did not include a fourth trend line: "US average price for gasoline in 47 states -- excluding Hawaii, Alaska, and California."]

The Institute (at Berkeley, California, cannot provide the answer, but it runs through the history and it's very interesting.

It's a good piece of analysis and a good column until the last few paragraphs when the writer got off topic.

But back to the analysis. I think the writer comes very close to the answer when he writes:

With prices very sensitive to even a slight shortage, and with two companies producing about half the state’s CARB gasoline supply, it seems quite possible that firms might be able to make more money by making less CARB gasoline.  This could be particularly true when a supply shock like a large refinery fire has already tightened the market.  

The problem with that argument is that there are no signs that any individual gas station or any chain has ever shown any outward sign of coming close to running out of gasoline on any given day or any given week. It's hard for me to believe that each and every gas station in California is cutting it so close to "empty" at the end of the day or the end of the week and that hasn't been noticed by investigators or researchers.

But maybe we will know more when the Torrance refinery is brought back on line, sometime in late 2016, I suppose (the refinery has been by Exxon to PBF Energy, a New Jersey company.

Seven (7) New Permits -- November 24, 2015

Active rigs:

	11/24/2015	11/24/2014	11/24/2013	11/24/2012	11/24/2011
Active Rigs	65	191	185	183	202

Seven (7) new permits --

• Operators: XTO (6), BR
• Fields: Heart Butte (Dunn), Siverston (McKenzie)
• Comments: I haven't seen a permit for a new salt water disposal well in a very long time; today, there were three permits for new salt water disposal wells (Antelope oil field, Corral Creek, and Bear Den); Ragged Butte has been updated;

Whiting canceled one permit, a Kuykendall permit in McKenzie County.

Three (3) producing wells completed:

• 28064, 1,476, Oasis, Helling Trust Federal 5494 43-22 4B, Alkali Creek, t11/15; cum 12K 9/15; 9 days production,
• 28857, 1,035, Oasis, Helling Trust Federal 5494 41-22 2B, Alkali Creek, t10/15; cum --
• 28856, 2,574, Oasis, Helling Trust Federal 5494 41-22 11T2, Alkali Creek, t10/15; cum --

Wells coming off the confidential list Wednesday:

• 29994, 804, Triangle Petroleum, Lee 151-101-8-5-2H, 31 stages, 4 million lbs, Ragged Butte, t6/15; cum 71K 9/15;
• 30164, SI/NC, Hess, AN-Prosser-152-95-1102H-7, Antelope, no production data,
• 30399, 1,448, Newfield, Johnsrud 151-98-30-31-4H, Siverston, in the middle Bakken for 100% of the time; 59.6% drilled in 15-foot target zone; 38.1% in Middle Bakken "B" facies; and 2.3% in the Middle Bakken "A" facies; an alternate interpretation that had them in the 15-foot primary middle Bakken target for 88.15% of the time; t9/15; cum 12K over nine days;
• 30814, SI/NC, XTO, Klamm 34X-9D, Siverston, no production data,
• 31139, SI/NC, Statoil, Cheryl 17-20 6TFH, Banks, no production data,

*******************************

30399, see above, Newfield, Johnsrud 151-98-30-31-4H, Siverston:

Date	Oil Runs	MCF Sold
9-2015	11813	2201

29994, see above, Triangle Petroleum, Lee 151-101-8-5-2H, Ragged Butte:

Date	Oil Runs	MCF Sold
9-2015	12581	0
8-2015	18552	0
7-2015	9965	0
6-2015	20831	0
5-2015	9142	0

Memo To Self: Send Note To Jane Nielson -- November 24, 2015

This DOE graphic pretty much says it all -- the observation that the US is among the top ten countries when ranked for oil reserves. They made the list in 2014, seven years after the Bakken boom began in North Dakota.

But know what amazes me most? How a country like Venezuela can completely screw up their God-given fortune. Not only does it have a lot of oil, it has the "right" kind of oil -- the kind of oil the US needs.

I suppose the other thing that catches my eye: the one continent that doesn't make the list is Europe. And the one oil-producing country that doesn't make the list: Mexico.

Miscellaneous Notes, November 24, 2015; Could Apple Watch Be Black Friday's Top Gift?

On November 18, 2015, I posted a short blurb on Xilinx, a computer chip company that has nothing to do with the Bakken. But the technology has always impressed me, just as Sprint technology impressed me.

Now today, Motley Fool has a long piece on Xilinx suggesting that Qualcomm and IBM like this company. There's also a close relationship between Apple and IBM.

Disclaimer: this is not an investment site. Do not make any investment or financial decisions based on anything you read here or think you might have read here. 

*****************************

The Apple Page

Yahoo!Finance is reporting that Apple's iPhone and AppleWatch sales might surprise us.

This year there's a new contender, as IBM decided to throw the mighty weight of its Watson data analytics software service at the holiday prognistication problem.

Data scientists at IBM have set Watson loose reading millions of posts on thousands of social networks, blogs and web sites ahead of Black Friday in an effort to predict the hottest gifts of this gift-giving season. The big surprise so far? The top gift by far appears to be not a cute Star Wars robot or a talking Barbie doll but the Apple Watch, left for dead by analysts and panned by most reviewers.

If Watson is correct, Apple's holiday quarter could be a lot better than Wall Street expects. Analysts see Apple selling 76.5 million iPhones, up a paltry 3% from last year, along with an almost irrelevant 6 million of the new Apple watches, according to FactSet. At that level, the watch, which starts at $349, would bring in only about $2 billion to $3 billion, or maybe 5% of total revenue for the quarter.

One of the "things" about Apple users: after a few months, maybe six months, of buying a new Apple product, Apple users start looking for other hardware that links with, or is built specifically, for their new Apple product. "Everyone" now has a smartphone and watches are the next obvious piece of hardware to link with smartphones. At $349 for a basic watch, it is a product that is not out of reach for almost anyone able to afford a smartphone. Laptops/tablets are not in the same sphere as the smartphone, but smartphones and watches are joined at the hip, literally and figuratively. 

Traffic Volumes Increase This Past Year -- November 24, 2015; Stein's Law --

John Kemp tweets:

• US traffic volumes have grown 3.5% over last 12 months, compared to prior 12-month period, fastest gain since 1997
• US traffic surged 4.3% in September compared with prior-year, according to Federal Highway Administration

John Kemp had a great piece yesterday on Stein's Law:

"If something cannot go on forever, it will stop," according to Herbert Stein, former chief economist to U.S. President Richard Nixon.

Stein's law is one of the most simple but important statements in economic theory, yet it is remarkable how often it is forgotten.

Stein's law explains why oil prices crashed from the middle of 2014 after spending more than three years over $100 per barrel.

Most commentators now accept a price of $100 was unsustainable (though at the time there were plenty who predicted prices would remain at that level forever).

High prices were encouraging too much new production, especially from U.S. shale, while causing consumption to fall in the advanced economies and slow in emerging markets.

The emerging supply-demand imbalance could only be resolved by a sharp price fall which was triggered in July 2014 after Islamic State fighters failed to seize Kurdistan's oilfields and Libya resumed oil exports.

In retrospect, all this is obvious, but the clues were there at the time for anyone who tracked data on stagnant consumption and accelerating U.S. oil production.

Now that prices are low?

Stein's law cannot predict when an unsustainable trend will reverse, only that it must do so eventually, and that the worse the disequilibrium becomes the bigger the correction is likely to be.

If Stein's law was relevant when oil prices were unsustainably high in 2012-2014 it is also relevant in 2015 now oil prices are unsustainably low.

There are plenty of signs that oil prices have now fallen to a level that cannot continue over the medium and long term.

But it may get worse before it gets better. Much worse.

The question is when rather than if the market must eventually move higher. 

The problem is that disequilibria can persist, and even get worse, for a considerable period of time before the inevitable correction occurs.

**************************

All Bleeding Stops

I don't know who coined the phrase and I don't know if it's a "named" law, but we often said while working in the emergency room, "all bleeding stops." Maybe it was Murphy.

Sounds a lot like Stein's Law. 

EOG Shell Pads In Parshall Oil Field, Mountrail County -- November 24, 2015

Pad locations of the EOG Shell pads in Parshall oil field, Mountrail County.

19-153-89, Lot 1
16628, AB/IA/1,259, EOG, Paul 1-19H, 8 stages, 625K sand, t6/09; cum 408K 11/19; off-line as of 3/15; back on-line 10/15; then off-line 8/16 - 10/16; off line 11/19; remains off line 8/20;
30880, IA/423, EOG, Shell 4-1930H, t10/16; cum 257K 9/20; remains off line 12/20; back on line 1/21; cum 271K 7/21;
31030, 1,197, EOG, Shell 52-1930H, t9/16; cum 201K 12/20; off line 1/19; remains off line 2/20; back on line 3/20; cum 211K 7/21;
31031, IA/1,038, EOG, Shell 6-1930H, t9/16; cum 200K 10/20; off line 2/20; back on line for 11 days in 8/20; offline again, remains offline 12/20; back on line 3/21; cum 202K 7/21;

31032, IA/910, EOG, Shell 5-1930H, t9/16; cum 109K 9/19; remains off line 2/20; remains off line 12/20;

***************

28-153-89, SESW

30781, A/IA/1,211, EOG, Shell 23-2820H, t10/16 cum 291K 2/20; off line 2/20; remains off line 8/20; said to be active again; but no production reported;
30469, 1,203, EOG, Shell 22-2819H, 4 sections, t10/16; cum 216K 12/20; cum 229K 7/21;
30470, PNC, EOG, Shell 21-2819H,

30471, PNC, EOG, Shell 20-2819H,
30472, PNC, EOG, Shell 19-2819H,

28-153-89, SESE

30856, 774, EOG, Shell 29-2820H, t10/16; cum 202K 9/20; ; off line 1/20; remains off line 2/20; back on line 6/20; off line 10/20; remains off line 12/20; ten days in 7/21;

30855, 1,086, EOG, Shell 30-2820H, t10/16; cum 351K 11/20;  at 5,000 bbls/month for extended period of time; off line 12/20; erratic production; cum 367K 7/21;

28-153-89, SWSW
30444, IA/407, EOG, Shell 15-2819H, t10/16; cum 180K 10/20; remains off line 12/20; back on line, 3/21; cum 188K 7/21;
30443, PNC, EOG, Shell 16-2819H,
30442, AB/1,135, EOG, Shell 17-2819H, t10/16; cum 251K 2/19; remains off line 12/20;

*************** 

30-153-89, SWSE

30491, PNC, EOG, Shell 9-3019H,

30490, PNC, EOG, Shell 8-3019H,

30489, PNC, EOG, Shell 7-3019H,

*************** 

32-153-89, SENE
31010, IA/1,344, EOG, Shell 46-3229H, t9/16; cum 197K 8/20; remains off line 12/20;
31009, IA/828, EOG, Shell 44-3229H, t9/16; cum 93K 10/19; -- lousy well -- needs to be re-fracked; offline 9/19; back on line 8/20; off line, again, 4/21; cum 95K 3/21;

32-153-89, SWSE

31022, PNC, EOG, Shell 48-3231H,

31021, PNC, EOG, Shell 49-3231H,

 

32-153-89, SESE

31019, IA/835, EOG, Shell 42-3229H, t9/16; cum 160K 8/20; but off line 8/20;

31018, 973, EOG, Shell 40-3229H, t9/16; cum 252K 12/20; cum 255K 7/21;

32-153-89, SESW

30782, IA/424, EOG, Shell 11-3225H, 59 stages, 15 million lbs, t9/15; cum 184K 12/20; off line, 1/21;
30446, 604, EOG, Shell 12-3225H, 57 stages, 15 million lbs, t9/15; cum 329K 12/20; cum 338K 7/21;
30445, 881, EOG, Shell 13-3225H, t9/15; cum 241K 12/20; cum 243K 7/21;
30444, 407, EOG, Shell 15-2819H, t10/16; cum 180K 12/20; cum 188K 7/21;
30443, PNC, EOG, Shell 16-2819H,
30442, AB/1,135, EOG, Shell17-2819H, t10/16; cum 251K 2/19; off line 2/19; remains off line 12/20;

30854, AB/836, EOG, Shell 14-3225H, t9/15; cum 316K 12/19; off line 12/19; remains off line 12/20;

Hess Finishes Recent Work On Its Tioga Natural Gas Plant -- November 24, 2015

The Dickinson Press is reporting:

Crews completed maintenance work at the Hess Tioga Gas Plant over the weekend after days of significant natural gas flaring in the region.

North Dakota’s largest natural gas processing plant restarted Sunday afternoon, Hess Corp. said Monday. The maintenance remedies a problem that was causing noticeable flaring at the plant.

The plant shut down last Wednesday and caused more flaring at the plant, along with flaring near Tioga, Ray, Ross and Keene.

The shutdown required the plant to flare an estimated 50 million cubic feet of natural gas per day, according to an email Hess sent to state regulators. Another 88 million cubic feet per day of natural gas was estimated to be flared at six compressor stations.

Tesla Sets Price On Novel Model X SUV - $80K -- November 24, 2015

USA Today is reporting:

Tesla Motor's long-awaited Model X, an electric-powered, long-range crossover with upward-opening second-row doors, has been priced at $80,000 before delivery charges.
That puts it $5,000 more than the lowest priced version of the breakthrough sedan that turned Tesla into one of the most closely watched tech companies, the Model S.

Pricing was released Monday in conjunction with a "configurator" for those who have ordered to let them choose their options.

As one might expect since it is larger, the base version of the Model X will be slightly slower than the Model S when it comes to performance. The SUV, which comes with all wheel drive, will clock in at zero to 60 miles per hour in 6 seconds, vs. 5.2 seconds for Model S. And because it's bigger, it won't quite have the same range, 220 miles per charge compared to 240 miles.

S&P revises outlook on Massachusetts credit rating. The Boston Globe is reporting:

A major Wall Street bond rating agency is expressing caution about the Commonwealth’s dwindling rainy day fund, lowering its outlook on Massachusetts bonds to negative from stable.

Standard & Poor’s Ratings Services maintained its AA+ rating for $20.3 billion in Massachusetts general obligation bonds but cited concerns about government spending and the use of emergency funds to plug holes in the state budget over several years.

Biggest news story of the week? Justin Bieber outsells One Direction. The Wall Street Journal is reporting:

In a recent head-to-head sales battle with One Direction, Justin Bieber came out way ahead of his boy-band rivals.

Both acts released albums on Nov. 13, but “Purpose” sold roughly 522,000 copies in the U.S. in its first week, while One Direction’s “Made in the A.M.” sold 402,000 copies during that time, according to Nielsen.

On the day “Purpose” came out, the pop singer performed three back-to-back acoustic shows at the Staples Center arena here. Fans could buy tickets to the event for $22—including a copy of the album and a brief question-and-answer session with the singer.

Fans snapped up 33,000 of the ticket-album combos; a live webcast of the shows likely contributed indirectly to many more sales of the album.

*******************************

A Note for the Granddaughters

About six or sever  years ago I was a "full-time" substitute teacher at a middle school in San Antonio. I did that for about three years and would still be doing it if I didn't three granddaughters to take care of.

It is impossible to articulate how obsessed some of the middle school female students were about Justin Bieber. They kept notebooks on him; they knew everything about him, including his shoe size and what he ate for breakfast.

I don't think I've ever consciously / knowingly heard a song by One Direction. I think I might have heard Justin Bieber on more than one occasion, but it would have just been the opening measures.

Tuesday, November 24, 2015; GDP Revised Upward -- 2.1% For 3Q15

Active rigs:

	11/24/2015	11/24/2014	11/24/2013	11/24/2012	11/24/2011
Active Rigs	66	191	185	183	202

RBN Energy: US - Mexico energy interactions.

Mexico has emerged as an important and growing market for U.S. natural gas producers, and for U.S. midstream companies scrambling to develop gas pipelines to serve Mexico’s gas consumers. Meanwhile, U.S. gasoline, diesel and liquefied petroleum gas (LPG) exports to Mexico are also up. Petróleos Mexicanos (Pemex)—the state-owned hydrocarbon giant, now in the midst of a major reboot—is on the hunt for private-sector partners to help revive Mexico’s sagging oil and gas production, and U.S. oil producers and Pemex are planning their first swaps of crude. Today we highlight RBN Energy’s latest Drill Down report examining the changing yins and yangs of cross-border energy relations.

The AP reports on the revised 3Q15  GDP -- now at 2.1%.

Ben Carson: if Russian planes violate a no-fly zone, "shoot them down." -- November 12, 2015, national network television.

US-backed Syrian rebels using US Tow missiles shoot down search and rescue helicopters. The [London] Mirror reports. The helicopters were searching for the Russian plane shot down by Turkey, a member of NATO.

Mystery: 5-Section Tract In The Bakken With No Oil Activity -- November 24, 2015

Updates

November 27, 2015: a reader suggests that this is part of the reservation that WPX owns outright and there is no need to drill a well hold these mineral rights. The multi-well pad to the east of these five undrilled sections is a WPX pad. 

Original Post
It's difficult to find a section of land in the Bakken that is not held by production. But there's a strip of land about five sections running north / south sitting right between Mandaree in the reservation and Johnson Corner east of Watford City, two areas of significant activity and production. The area under discussion is outlined in blue in the graphic below:

There must be a reason why this area has not been drilled yet. It's possible I even blogged about it before, but if so, I've forgotten. Looking at satellite views of the area, the area outlined in blue looks like the rest of the area, no obvious reasons why it can't be drilled. If one wants to take a look, the GPS coordinates of #21217 are: 47.717859, -102.785278 which can be plugged into Google maps. There's a similar area a few miles directly north but that area is a state park or preserve of some sort.

Section 24 in the rectangular area is the only section that has been spaced for drilling (640-acre spacing). None of the other sections are spaced for drilling.