Tuesday, April 5, 2016

Update On Future Of US EOR -- April 5, 2016

On March 31, 2016 -- just a few days ago -- we had a nice update on Occidental's enhanced oil recovery experience in the Permian. Today, Rigzone is reporting that an analyst sees oil, gas companies adopting novel EOR technologies.
Tertiary methods such as thermal enhanced oil recovery (EOR), steam-assisted gravity drainage (SAGD), gas injection and chemical injection can help boost the North American thermal EOR market.
California’s heavy oil production and exploration frontiers such as Canada’s oil sands have created an expansive market for thermal EOR in North America. Frost & Sullivan reports that oil production from thermal EOR in North America was 2.53 million barrels per day in 2013, and expects to reach 4.64 million barrels per day in 2020. SAGD is expected to be the highest revenue contributor, followed by steam injection. Other thermal EOR methods are still nascent.
Thermal EOR in particular will find application in areas where oil is viscous and heavy; it currently accounts for 55 percent of the total EOR market in North America. Nearly 80 percent of oil sands can only be extracted through the SAGD method, which is more expensive versus other thermal EOR methods.

Wow! GDP Forecast Plummets -- Cut Almost In Half From Measly 0.7 To Near-Negative At 0.4 -- April 5, 2016

From GDP Now (a dynamic link):
The GDPNow model forecast for real GDP growth (seasonally adjusted annual rate) in the first quarter of 2016 is 0.4 percent on April 5, down from 0.7 percent on April 1.
After yesterday morning's light vehicle sales release from the U.S. Bureau of Economic Analysis and the manufacturing report from the U.S. Bureau of the Census, the forecast for real GDP growth declined from 0.7 percent to 0.4 percent due to declines in the forecasts for real consumer spending growth and real equipment investment growth. The forecast for real GDP growth remained at 0.4 percent after this morning's international trade report from the U.S. Census Bureau, as a slight decline in the forecast for real net exports was offset by a slight increase in the forecast of real equipment investment growth.
"Measly": contemptibly small or few.

Meanwhile, Yahoo!Finance has this headline: Olive Garden just confirmed an exciting trend underlying the job market.

The exciting trend: the percent of waiters/waitresses leaving Olive Garden jobs is increasing.

I can't make this stuff up. It's a sad commentary.

And then look at the numbers:
That report also noted that the total quits rate for the month also rose to 2.1%, up from the previous month’s 2.0%, which reflects increasing worker confidence
And that's the basis for the headline. What an incredibly lame story.  

The Kennedy Clan Won't Have Far To Go This Week To See Snow
Speaking of trends, IceAgeNow is reporting:
Sunday’s 6.6 inches of snowfall sets a new record for the snowiest April 3 ever in Syracuse, New York, more than doubling the previous record of 2.5 inches set in 1937.
Sunday also ranks as the fourth-snowiest day on record for the entire month of April in Syracuse. The most was 10.5 inches, on April 2, 2013.
The beginning of a trend? So, the snowiest April day on record occurred just three years ago, and now comes the 4th snowiest April day on record. Are we seeing the beginning of a trend here?
We probably are, but it will never be reported by the mainstream media. They are focused on the Olive Garden "quit rate," surging from 2.0% to 2.1% in one month.

For The Record

Once an avid Donald Trump supporter, I no longer support him. I don't support Ted Cruz either. At this point I've pretty much lost interest in the primaries, both parties.  I'll still tell my wife that I support the Donald just to drive her nuts.

From A Reader, Perhaps The Most "Poignant" Note Of The Day -- Happy Birthday, Clarence Iverson #1 Discovery Well -- April 5, 2016

From a reader:
Yesterday in ND oil history, April 4, 1951, 65 years ago: North Dakota's discovery well, Amerada Clarence Iverson #1 began flowing oil.
The famous reflection-pool picture of the rig and gas flare was taken by Bill Shemorry.
Bill took the famous picture late on the night of the 4th or early on the 5th. He then drove to Minot to have a photo-plate engraved which he brought back to Williston in time to make his newspaper deadline.
I met Bill Shemorry on two or three occasions while attending Williston High School. I don't think I have ever met anyone who worked so many hours. He was everywhere, all the time, documenting the history of western North Dakota.

His collection is here.

I've posted a few notes about the Clarence Iverson #1 well (#25 - Beaver Lodge-Devonian Unit G-307) over the years. Here are a couple of links:
From that second link:
From an Amerada letter dated April 9, 1951, to North Dakota's state geologist:
Since our letter to your office of 4-2-51, we have set oil and gas separator between well and test tank. The well flowed 307 bbl oil and 25 bbl mud & water in 17 hours, ending at 6:00 a.m. 4-5-51. Well was flowing through 3/4" adjustable choke with the pressure of 315# and casing pressure of 1100# at 6:00 am. Well flowed 159 bbls oil through 3/4" adjustable choice from 6:00 a.m. to 7:30 p.m. 4-5-51 at which time it was shut in for tank room. The tubing pressure was 350# and casing pressure was 1000# when oil well was shut in. The well had 3300# Tbg pressure and 3400# casing pressure at 6:00 a.m. 4-8-51 whnen we started to kill the well.

Oasis Announces "Open Season" For Johnson's Corner Pipeline Project -- April 5, 2016

From an Oasis Petroleum press release (this is not the entire press release):
Oasis Petroleum Inc. today announced that Oasis Midstream Services LLC, a wholly-owned subsidiary of Oasis, is commencing a binding open season for the Johnson's Corner Pipeline Project, a new crude oil pipeline to be constructed in McKenzie County, North Dakota. The Project is a 19-mile, 10-inch diameter pipeline connecting the Wild Basin field development with Johnson's Corner. The Project has an anticipated operating capacity of 50,000 barrels per day.

MDU Finalizes Sale Of Its Last Marketed Oil And Natural Gas Production Property -- April 5, 2016


April 6, 2016: Zacks on the MDU sale. The narrative appears to simply be the MDU press release.
Original Post
From the MDU press release (not the entire press release):
MDU Resources Group, Inc. announced today that it has finalized the sale of its last marketed oil and natural gas production property. This completes the sale of the oil and natural gas assets marketed by subsidiary Fidelity Exploration & Production Company. Fidelity’s offices, headquartered in Denver, are expected to be closed by mid-year.

Since late 2015, MDU Resources has sold its oil and natural gas production and lease assets under several agreements, including its Bakken assets in North Dakota; its Baker and Bowdoin assets, primarily in Montana; its Powder River Basin assets in Wyoming; its Greater Gulf Coast assets, primarily in Texas; its Cedar Creek Anticline assets in Montana; and its Paradox Basin assets in Utah.

The company, in aggregate, recognized proceeds and tax benefits of approximately $500 million from the oil and natural gas asset sales. MDU Resources is using the proceeds primarily to repay debt associated with Fidelity. The company expects to reinvest proceeds in excess of debt repayments into its other business units, including the utility operations’ $1.5 billion, five-year capital expenditure program.
According to Yahoo!Finance, MDU has slightly less than $2 billion in debt. 

At the sidebar at the right, there is a "section" that links to "deals in the Bakken." The deals in 2015 are consolidated here.

In the Bakken, the primary benefactor of Fidelity's oil and gas wells appears to be Kaiser-Francis.

Whiting Reports Some Huge Wells -- April 5, 2016

Active rigs:

Active Rigs2994192187208

Four (4) new oil and gas permits --
  • Operators: Abraxas
  • Fields: North Fork (McKenzie)
  • Comments:
Six (6) permits renewed:
  • Triangle (3), one Erickson, one Lynn, one Simpson permit; two in Williams; one in McKenzie County
  • EOG, a Van Hook permit in Mountrail County
  • SHD, a Maya permit in McLean County 
One (1) producing well completed:
  • 31218, 594, XTO, FBIR Reese 43X-33F, Heart Butte, ICO, t3/16; cum -- 
Wells coming off confidential list Wednesday:
  • 30688, 1,392, Whiting, Flatland Federal 11-4-2TFH, Twin Valley, 35 stages, 4.2 million lbs, t10/15; cum 108K 2/16; not even full months of production since coming on line;
  • 30774, 1,844, Whiting, Flatland Federal 22-4-5TFH, Twin Valley, 35 stages, 5.8 million lbs, t10/15; cum 214K 2/16; not even full months of production since coming on line;
  • 30775, 175, Whiting, Flatland Federal 11-4-4THF, Twin Valley, 31 stages, 4.5 million lbs, t10/15; cum -- ; 7 days of production back in 10/15; none since;
  • 31172, SI/NC, WPX, Peterson 6-5-4 HQ, Van Hook, no production data,
  • 31236, 1,172, Whiting, Carscallen 31-14-1TFH, Truax, spud August 15, 2015; cease drilling, August 29, 2016; t10/15; cum 51K; production cut way back past two months;
  • 31238, 2,744, Whiting, Carscallen 31-14-3TFH, Truax, spud July 30, 2015; cease drilling, August 12, 2015; 10/15; cum 110K 2/16; not even full months of production since coming on line;
  • 31541, SI/NC, Hess, CA-Russell Smith-155-96-2425H-3, Capa, no production data,

 31238, see above, Whiting, Carscallen 31-14-3TFH, Truax:

DateOil RunsMCF Sold

31236, see above, Whiting, Carscallen 31-14-1TFH, Truax:

DateOil RunsMCF Sold

 30774, see above, Whiting, Flatland Federal 22-4-5TFH, Twin Valley:

DateOil RunsMCF Sold

 30688, see above, Whiting, Flatland Federal 11-4-2TFH,  Twin Valley:

DateOil RunsMCF Sold

Whiting Will Report A Bakken Well Wednesday That Has Produced >210,000 Bbls In < 5 Months

 30774, see above, Whiting, Flatland Federal 22-4-5TFH, Twin Valley:

DateOil RunsMCF Sold

Postcards From The Edge -- April 5, 2016

I'm sure California can "up" the energy provided by wind / solar to make up the difference caused by lack of natural gas this summer. From SeekingAlpha:
  • The partial shutdown of Sempra energy's Aliso Canyon storage field near Los Angeles could lead to blackouts this summer unless energy providers take steps including removing natural gas from the site
  • Without tapping the site, power plants may not have enough access to natural gas on as many as 14 days to produce electricity in southern California during certain peak-use times, according to a draft report issued by several state agencies, which also encourages customers to conserve use during the hottest summer days
  • The Aliso Canyon leak spewed the equivalent of a year’s worth of greenhouse gas emissions before the leak was plugged in February
No one said it would be easy, no one promised anyone a rose garden:

I Never Promised You A Rose Garden, Lynn Anderson

The Word For The Day: Wobbe Kenobi -- April 5, 2016

A huge shout out to RBN Energy for introducing me to a new word: Wobbe. I guess the word is spelled with an upper case (or as we used to say when I was in second grade with Ms Priebe as my teacher: a capital letter) "W."

Wobbe is a standard measure of the heating value of a volume of natural gas flowing through a hole of a given size over a given length of time. Okay. It seems confusing, but the formula to calculate the Wobbe number is very simple:
Divide the gross caloric value of the gas in Btu/cf by the square root of the gas’s specific gravity with respect to air; overseas, the units of measure are megajoules/cubic meter at a standard temperature of 15 centigrade or MJ/Scm.
Yup, that's all there is to it. LOL. They had me at "Btu/cf."

When talking "international," stick with MJ/Scm."

That's the basic idea. After that it gets, well, dare I saw, more complicated?

Bottom line: the higher the Wobbe, the richer or hotter the gas or LNG.

Japan and South Korea standards call for gas that is rich and hot.

US and UK standards call for "lean" gas with a low Btu/cf.

And, of course, the EU: "a wide range of standards."

Lean, medium, rich:
  • Russia: natural gas is "lean"; nearly pure methane (C1); relative low Btu/cf; low Wobbe
  • North Sea: gas is "medium"; mostly all methane but some ethane (C2) and a tiny percentage of other natural gas liquids like propane (C3) and butane (C4)
  • rich: more ethane and other NGLs); high Wobbe
  • pure methane: a Wobbe of 1,363 units using the Btu/cf approach / 50.7 using the Mj/Scm approach
Sources/Wobbe (Mj/Smc)
  • Alaska: 50.2
  • Norway: 52
  • Qatar: 52.5
  • Australia NWS: 53.5
A significant number of LNG import terminals around the world have Wobbe "correction facilities of one sort or another to either "enrich" or "derich" gas immediately after it is offloaded from LNG vessels and regasified -- and before the gas is fed into the receiving country's pipeline system. == RBN Energy.

So, let's see what googling Bakken gas Wobbe reveals. And here it is, from Midwestern News, not much, but the first hit that includes all three terms:
  • For example, the Wobbe Index of the associated from the Three Forks area is on the high side.
Aha! This looks like the mother lode (or at least one mother lode): Gas Enhanced Membrane Fuel Gas Conditioning Solutions for Compressor Stations with Ultra High BTU Gases in Oil-Rich Shale Plays (a PDF, industry journal article):

Let's run through that paper just for the fun of it. It's undated but the more recent reference is from a December, 2010, journal article, so at least we can assume it was written after Bakken boom reached its stride.

From the abstract:
  • in condensate-rich shale-gas plays such as Utica, Bakken, Niobrara, Marcellus, Eagle Ford [and I assume the Utica could be added], the raw shale gas is super rich in heavy hydrocarbons
  • these raw gases do not meet the methane number, Wobbe index requirements for fuel gas
  • problems include pre-detonation, de-rates, emissions issues
Page 12
the ethane content goes up from 12% in Eagle Ford shale to approximately 23% in the Bakken shale along with a considerable increase in the amount of C3+ components as well.
Page  13, this table (the data is dynamic; the comparison between the various plays may be relevant):

Magazines -- The Next Big Thing -- Nothing About The Bakken -- April 5, 2016

You know things are slow when I start blogging about magazines. LOL. I happened to come across a couple of interesting articles yesterday and then observed something on the newstand.

First, the article on The New Yorker which I blogged about earlier: The New Yorker will test how much subscribers are willing to pay for their magazine -- their readers appear to be "addicted" to the magazine and will renew regardless of the price.

Second, from The Wall Street Journal two days ago: Prevention Magazine Takes Radical Step: No Print Ads. CEO opts to raise newsstand, subscription prices and slash costs by eliminating ad pages --
Facing hard times at her family’s magazine company, publishing heiress Maria Rodale recently made a radical decision. Prevention magazine, once Rodale Inc.’s flagship title, will no longer accept print advertising starting with its July issue.
Prevention, which focuses on nutrition, fitness and weight loss, sold 707 ad pages in 2015—8.3% more than the prior year. But the revenue from those ads was less than in 2014, when the magazine had a much larger circulation and commanded a higher rate.
The newsstand price for Prevention, which made its debut in 1950, has immediately increased to $4.99 from $3.99, while annual subscriptions will double to $48 starting with the July issue.
Ms. Rodale said she expects Prevention’s circulation to eventually stabilize at around 500,000 compared with today’s guaranteed circulation of 1.5 million. Printing one million fewer copies each month, together with reducing the size of the magazine to 96 editorial pages from about 140, including ads, will save money on production and raw materials. The magazine is also cutting 13 ad sales jobs, leaving three employees to handle ads on Prevention.com.
The cutbacks will reduce Prevention’s operating expenses by more than 50%, Ms. Rodale said.
And finally this, from the news stand at the local grocery store, I noted this month's Rolling Stone wow, it has gotten slim over the past year. The magazine has shrunk in size over the years but I've never noticed how slim it has become. It was incredibly thin but very, very glossy. Maybe they are taking a page from Apple, making their product thinner will increase sales. LOL.


There are at least two story lines here. First, it certainly appears ad pages are decreasing in many magazines. I assume ad pages for The New Yorker haven't changed much over the past couple of years, but one wonders with the increasing subscription and news stand prices if The New Yorker might be moving toward fewer ad pages. With The Rolling Page as thin as it is, it certainly has to have cut down on ad pages.

The other story is the "addiction" to certain magazines, as noted by The WSJ with regard to The New Yorker.  I will probably re-new my subscription to The New Yorker regardless how much they charge. To pay for that "luxury" or indulgence, I have discontinued my subscription to The National Geographic (I still pay for a subscription for the granddaughters); I will not renew Texas Monthly (the font is too hard to read, and there are way too many ad pages (bucking the trend regarding ads). In addition, I will not renew my one-year introductory subscription to The London Review of Books which pales in comparison to The New York Review of Books. And, I think I mentioned this before, I will not renew my one-year introductory subscription to The Smithsonian (too cluttered with ads -- again, bucking the trend). I discontinued my subscription to BloombergBusinessweek some time ago and blogged about that decision several times.

By the way, I discontinued my National Geographic subscription because of the cover photograph of the Statue of Liberty going underwater due to rising seas. That's when I knew the National Geographic had lost its objectivity.

EV Sales For March, 2016; And Full 1Q16 Sales -- April 5, 2016

Tesla misses own forecast:
Tesla Motors Inc. shipped fewer electric cars than it forecast in the first quarter, hurt by a new line of sport utility vehicles that was both short on parts and long on technology “hubris.”
The automaker said it sold 14,820 Model S cars and Model X SUVs in the first quarter, short of the 16,000 it had predicted in February. Shares fell in late trading, giving back some of the gains Tesla had made since Thursday by exceeding all expectations on orders for a new, lower-cost car that will be available next year.
According to the table below, for 1Q16: :
  • Tesla Model S: 6,390
  • Tesla Mode X: 2,400
Total: somewhat less than what Tesla reported above (maybe we're talking different quarters; I don't know).

EV sales surged in March, 2016:
The surge is quite impressive (except, of course, for VW e-Golf).

Norway Has Bigger Problems Than $40 Oil -- The Saga Continues -- April 5, 2016

The original post was here.

Then we had the National Oilwell Varco story.

Now this: Shell pulls out of Arctic-focused exploration licensing round in Norway.
Oil major Royal Dutch Shell has pulled its application from Norway's Arctic-focused oil licensing round, the firm said on Monday, in a blow to the Nordic country's ambitions to explore for oil and gas in its northern offshore areas.

In December the Norwegian oil ministry said Shell was among the companies that had applied for drilling permissions in the so-called 23rd round, a licensing round set to move the search for hydrocarbons closer to the country's border with Russia.

As recently as last month, the head of Shell's business in Norway had told Reuters the firm had hoped that it could begin drilling in 2017 if it won licenses in the 23rd licensing round.
There is a lot of spin in this article, but no matter how "they" try to spin it, it's bad news when Shell pulls out.

Reuters is reporting that Russia and Saudi Arabia may meet before the April 17, 2016, meeting. Okay.

Meanwhile, Iran says they plan to keep raising production

April 5, 2016

Active rigs:

Active Rigs2994192187208

RBN Energy: The Challenge of LNG/Gas Specification Compatibility.
As if the international market for liquefied natural gas weren’t complicated enough, add the facts that 1) the LNG shipped from various export terminals differs in chemical composition, and 2) the specifications for the natural gas consumed by various countries around the world differ too. In other words, you can’t assume that the heating value and other important characteristics of the super-cooled gas in the LNG shipped from exporting country A will align with the gas specs enforced in importing country B. That’s a big deal to LNG exporters and traders who would like to be able to ship their LNG to wherever it would make the most money, but who need to consider a lot more. Today, we look into the increasing significance of LNG/gas spec differences as the old rules of the LNG market break down.
We’ve been giving increasing attention to the international LNG market, mostly because the first liquefaction/LNG export facilities in the Lower 48 states are coming online (Train 1 at Cheniere Energy’s Sabine Pass is already up and running, and Train 2 is nearing completion) and because natural gas flows to these facilities are starting to affect U.S. gas markets.
Our Drill Down report LNG Is a Battlefield provided a big-picture view of things, and our Begin the Sabine and Commencing Countdown, Engines On series described the pipeline infrastructure feeding Sabine Pass and the initial gas flows to the liquefaction/LNG export facility.
More recently, in There Will Be an Answer, L-N-G and Southern Cross(ing), we looked at how a glut of LNG supply (mostly from new Australian and U.S. liquefaction/export facilities) continues to reshape the international LNG trade, and makes Europe and South America more likely recipients of U.S.-sourced LNG than many would have thought just a few months ago.
Her Reward For Cleaning The Oven

The before picture was here.

This is her reward -- Sophia loves chili on a baked potato at McAllister's.

Reuters: Gasoline Demand With Surprise Fall In January, 2016 -- April 5, 2016

Later, 2:46 p.m. Central Time: a huge "thank you" to a reader. See comments below. It turns out Reuters must have made a mistake posting that "gasoline demand" story. That same link now takes you to this headline:
Oil steady; Kuwait talks up output freeze plan before U.S. data
and this story:
Oil prices steadied on Tuesday after Kuwait said an output freeze by major oil producers would proceed without Iran, shoring up sentiment ahead of weekly data likely to show another record high in U.S. crude inventories.
Later, 7:56 a.m. Central Time: aha. Now I get it. The EIA data reported this morning by EIA and Reuters was the monthly data. I had been focusing on the weekly data. It now makes sense. I wouldn't give the Reuters article any more thought; time to move on.

Later, 7:14 Central Time: wow! talk about things moving fast. Moments after I posted the note below, I also tweeted the story and the link. I mentioned that John Kemp had not reported on it. Now, less than 30 seconds later, John Kemp has an article on this "supposed" news story: http://www.reuters.com/article/usa-gasoline-kemp-idUKL5N1782SS.

I still have no idea why Reuters is reporting January, 2016, data when data through early March is available and shows something entirely different.

Either Reuters has a) a hidden agenda; b) was trying to explain recent price drop; or, c) simply blew it. [Maybe the EIA data is revised monthly until a final report -- and maybe we finally got the final report -- I don't know.]
Original Post
This was posted by Reuters one hour ago:
Oil slipped to a one-month low on Tuesday after a surprise fall in gasoline demand in the United States, the world's largest oil consumer, and on doubts whether oil producers can agree an output freeze to dampen a global supply glut.
U.S. gasoline demand, one of the strongest pillars supporting oil consumption, fell in January for the first time in 14 months, U.S. Energy Information Administration data showed.
Something doesn't make sense. We have EIA data through early March -- see graph below. Yes, there was a huge drop-off in gasoline demand in January, 2016, but that was quite some time ago. Since then gasoline demand has been surging and is on glide path to set new records. Of course, I haven't seen the most recent data, but yet the Reuters article is referencing January, 2016, data which in this market is "old history." 

Also, where did that "for the first time in 14 months" come from? Gasoline demand  fell precipitously about six months earlier than January -- back in August / September (2016) time frame.

In addition, it does not appear that John Kemp has tweeted this "January decline in US gasoline demand" in the past 24 hours -- if that was accurate, John Kemp, I think, would be all over it. I must be missing something. 

But again, I must be missing something. The Reuters story is being reported all over the internet.

The most recent EIA gasoline demand data will be released tomorrow, and the graph should be available Thursday.

From this morning's John Kemp tweet: