Active Rig Count Up To 28 Going Into The Weekend; Seventeen (17) Permits Renewed -- June 10, 2016

Well, this is nice -- we finish the week on a high note -- active rigs are at 28:

	6/10/2016	06/10/2015	06/10/2014	06/10/2013	06/10/2012
Active Rigs	28	82	190	187	213

Three new permits:

• Operators: Enerplus (2), Oasis
• Fields: Eagle Nest (Dunn), North Tobacco Garden (McKenzie)
• Comments:

 
I Can't Forget, Leonard Cohen, Jarvis Cocker
Seventeen (17) permits renewed --

• EOG (15), fifteen West Clark permits in McKenzie County
• BR (2), a Glacier and a Glacierson permit in McKennzie County
• Comment: at this post, there are four graphics; the last graphic at the bottom -- click on it to enlarge it -- and you can see where the seventeen EOG permits are that were renewed. 

Apache, Hank Marvin

American Wealth Sets New Record -- June 10, 2016; GDP Now Forecast For 2Q16 Unchanged At 2.5%

From The Wall Street Journal:

The wealth of Americans reached a record of $88.1 trillion in the first quarter, with rising home values offsetting stock-market wobbles at the start of the year.

The boost to wealth was driven by a $498 billion increase in residential real-estate values around the U.S., while the overall value of equities declined by $160 billion, according to a Federal Reserve report released on Thursday.

The new data underscores just how much American fortunes have changed since the recession that began in 2007, and occurred along with a housing and stock market crash.

U.S. households lost more than $12 trillion during that period, with net worth bottoming at $55 trillion in 2009. Since then, wealth has risen by more than $33 trillion.

The figures aren’t adjusted for inflation, but with inflation generally low in recent years, wealth has rapidly outpaced inflation.

This comes on top of the recent reports (the past three or four years) in which the US has led the entire world in "change in total wealth."

Speaking of which, the most recent GDP Now forecast, June 9, 2016:

The GDPNow model forecast for real GDP growth (seasonally adjusted annual rate) in the second quarter of 2016 is 2.5 percent on June 9, unchanged from June 3. After this morning's wholesale trade release from the U.S. Census Bureau, the forecast for the contribution of inventory investment to second-quarter real GDP growth ticked up from -0.27 percentage points to -0.23 percentage points.

Meanwhile, over in Great Britain, driving records are driving record gasoline consumption. Reuters is reporting these data points from John Kemp:

• road fuel consumption in Great Britain as fastest pace in more than a decade
• increased fuel consumption reflects a growing economy, increasing employment, and rising household incomes
• much of the increase cannot be explained on decrease in prices since taxes account for so much of the overall price
• the meme that fuel consumption had peaked in industrial economies proved to be temporary
• Great Britain's road fuel consumption accounts for only 1.6 percent of the global total but even that small amount puts it in 15th place

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Gun Rights

This is quite fascinating. With today's ruling on concealed guns, we now see the importance of well-written laws and state intentions.

The 2nd Amendment may guarantee the right to "keep and bear" firearms, but that may not mean that there is a right to carry them in public. It's actually quite fascinating. I guess it comes down to what it means to "bear" arms: when, where, why? And exactly what it means to "infringe" on that right to keep and bear arms.

"A well regulated Militia, being necessary to the security of a free State, the right of the people to keep and bear Arms, shall not be infringed."

I think the language is pretty clear, but I've discovered many people don't think the same way I do on this issue, including my wife, and 7 out of 11 judges on the Ninth US Circuit Court of Appeals.

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Hypocrisy

The GOP establishment has much to fear. From the staunch Hillary camp in the March 14, 2016, issue of The New Yorker:

The question remains why the Trump phenomenon has proved so buoyant and impregnable. Some have earnestly ascribed it to broad social and economic forces, particularly the "new normal" of stagnating wages, underemployment, and corporate "offshoring" and "inversion." Yet these factors were at least as pronounced in the last election cycle -- and Republicans chose as their nominee the father of comprehensive health care in Massachusetts.

The socioeconomic forces are real, but Trump is also the beneficiary of a long process of Republican intellectual decadence. Paul Ryan denounced Trump but not the Tea Party rhetoric that propelled his own political ascent. John McCain holds Trump in contempt, but selected as his running mate Sarah Palin, the Know-Nothing of Wasilla, one of Trump's most vivid forerunners and supporters. Mitt Romney last week righteously slammed Trump as a "phony" and a misogynist, and yet in 2012 he embraced Trump's endorsement and praised his "extraordinary" understanding of economics.

Something tells me the likes of Paul Ryan are very, very concerned for their own political future. [Later, this story appeared which suggests to me Paul Ryan is in  deep trouble. The unfortunate thing is that Paul Ryan still has some integrity; the likes of Mitt Romney and Meg Whitman do not.]

On another note, if I had to name one person right now who I have really come to disrespect: Mitt Romney. Although he was not on stage when GOP presidential contenders were asked to raise their hands "swearing" to support whomever the GOP candidate turned out to be, one can surmise he would have raised his hand along with Jeb Bush, Marco Rubio, Ted Cruz, and all the rest, and now Mitt is going out of his way to tell us that he won't vote for either Trump nor Hillary in the fall. What a  chump. What a RINO. 

I wonder whom Colin Powell will be supporting? LOL. Or Barbara Bush, for that matter -- I wonder whom she will support? LOL.

Tesla Has A Problem -- A Fair Amount Of Obfuscation -- June 10, 2016

With all the recent notes about natural gas, I thought I would check in on the four Strata-X wells, targeting the shallow Niobrara natural gas formation in Emmons County (east of the Bakken play). Three of the four wells (permits) had been PNC'd. The fourth was TA'd for one year; that status ends, with no option to extend, in just a few weeks, July 1, 2016.

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Updates

July 1, 2016: Tesla has a problem. Now it's the "morality" issue. In a few days this story will require a subscription over at SeekingAlpha. It has to do with Tesla's obfuscation regarding the fatality (Model S) and its failed "autopilot" software (does not use LIDAR).

June 10, 2016: CNN Money also has the story. 

Later, 11:01 a.m. Central Time: just to clarify. I don't know if my position has changed on this issue or not. As much "grief" as I give Tesla, I truly hope the Tesla Model 3 succeeds. If the Model 3 succeeds (and by success, I mean that it meets its target sales within 24 months of its original target date; in other words, even if it doesn't meet its target sales until "two years late" I would still consider that a success). This would be a huge feather in the cap of the American entrepreneurial spirit; the incredible talent of the American engineers; the awesome ability of American workers to go from start to finish on what appears to be an incredible luxury vehicle in only a few years -- regardless of the source of money. Looking at purely the technology aspect of all of this, it would be quite impressive. 

Original Post

 
At the moment, there are a fair number of stories being reported regarding Tesla. They all seem to have one thing in common: obfuscation.

This is the one that caught my attention: the reason that Tesla has lowered its entry price for the Model S. Tesla says:

Tesla said on Thursday it is discontinuing the 70-kwh version and offering the new model to appeal to people interested in the brand but unable to afford the longer-range versions. 

"Unable to afford the longer-range versions"?

The two versions:

• The previous long range version: 250+ miles, $72,500, 70-kw battery.
• The new version: 200 miles, $66,000, a 75-kw battery but software will cap the range at 200 miles; a software change can increase the mileage.

After that, the linked article simply becomes too confusing with too many price entry points, too many battery options, too many basic options.

It's almost as if we might soon see a Model S priced for a 3-wheel version with an option to pay "a bit extra" for the fourth wheel. Or maybe a software patch to turn on the headlights for driving at night.

Why in the world would one "cap" the range on a perfectly good luxury car with a simple software patch? [Except of course to raise badly needed cash.]

I understand the opportunity to pay extra for leather seats or a "custom sports package," but pay extra for a software patch to increase range from 200 miles to 250 miles. It almost seems parsimonious (Scroogelike, penny-pinching, evil).

But this is the real question: sticker shock for those who can afford a $70,000 vehicle? I'm curious who those folks are who differentiate between a $66,000 luxury vehicle and a $72,500 luxury vehicle. It must be the $69,9999 vs $70,000 psychological threshold. "Gee, Margaret, we can afford the $69,000 vehicle, but we can't afford the $70,000 vehicle."

At zero percent interest, the additional (72,500 - 66,000) over 72 months = $90/month. About $1,000/month vs $910/month. And these folks are not buying the EV as their only car. My hunch is that the average household that has one EV has two conventional ICE automobiles. And probably high end at that.

A google search for "obfuscation" brings me to this link: http://www.wsj.com/articles/u-s-regulators-begin-looking-at-suspensions-in-teslas-model-s-1465508937.

Random Update Of The Marcellus - Utica -- June 10, 2016

This post is added to put the Piceance Basin in western Colorado in perspective. See this link to the Piceance, June 9, 2016.

Utica:

• EIA produces new maps of the Utica shale, May 2, 2016. Some data points:
• the Utica includes two formations: the Utica formation and the deeper Point Pleasant formation
• 60,000 square miles: Ohio, West Virginia, Pennsylvania, New York
•  the deeper Point Pleasant is more often targeted right now, more productive
• most of the most productive Point Pleasant in eastern Ohio, western Pennsylvania
• Point Pleasant deepest in SW Pennsylvania; depths more than 13,000 feet
• most productive wells in the Utica formation: 5,000 to 11,000 feet
• Utica: as thick as 200 - 300 feet in northwest Pennsylvania
• Point Pleasant: more than 200 feet thick in central Pennsylvania
• 2012, USGS survey: 38 trillion cubic feet; 940 million bbls oil technically recoverable
• From a July, 2015, West Virginia study: 
• original gas-in-place (OGIP): 3,192 trillion cubic feet
• original oil-in-place (OOIP): 82,903 million bbls (sic)
• current technology, recovery factor:
• gas: 28%
• oil: 3%
• technically recoverable
• gas: 782 trillion cubic ft (vs USGS estimate of 38 trillion cubic feet)
• oil: 1.96 billion bo (vs USGS 940 million bo)

Marcellus:

• EIA map of the Marcellus, includes production wells from 2003 - 2014 
• not as deep, not as thick as the Utica
• the most recent USGS Marcellus survey was done back in 2011
• technically recoverable:
• gas: 84 trillion cubic feet
• NGLs: 3.4 billion bbls
• Previous USGS estimate, 2002:
• gas: 2 trillion cubic feet
• NGLs: 0.01 billion bbls 

Burket/Geneseo:

• or, "the upper Devonian Burket/Geneseo shale" 
• first posted at the blog here
• Ohio Oil & Gas Journal, May 14, 2015
• Appalachia's 3rd resource lay 
• probably not as big as the other two, but likely to be significant as a stacked play
• liquids-rich; possibly with flat decline curves
• Burket: all of West Virginia, most of Pennsylvania
• Geneseo: northwest Pennsylvania, New York state
• thickness: from a few feet to 150 feet in central Pennsylvania
• early indications: significantly over-pressured; significant geo-steering problems
• gas: 2 trillion cubic feet
• NGLs: 0.01 billion bbls

June 10, 2016

A shortage in oil workers? I'm always a bit cautious with oilprice stories, but with that caveat:

There could be a growing shortage of skilled workers in the oil industry.

That may seem counterintuitive in an industry that has been rapidly shedding workers, with more than 350,000 people laid off in the oil and gas industry worldwide.

Texas is one place feeling the pain. Around 99,000 direct and indirect jobs in the Lone Star state have been eliminated since prices collapsed two years ago, or about one third of the entire industry. In April alone there were about 6,300 people in oil and gas and supporting services that were handed pink slips. Employment in Texas’ oil sector is close to levels not seen since the aftermath of the financial crisis in 2009.

But the damage to the oil industry’s workforce could be exactly why companies could face a skills shortage in the months and years ahead. 

North Dakota had nearly 1,000 drilled but uncompleted wells as of March, and more companies are showing some signs that they might step up completions now that oil prices are above $50 per barrel. But they might find it difficult to ramp up the rate of completions if they cannot field enough workers. There are only about eight fracking crews left in the state, down from 45 two years ago.

A recent survey of oil companies in the Bakken revealed concerns from the industry about the dismantling of fracking crews. “Even if prices went to $100 per barrel of oil, you don’t have any frack crews available to complete all the wells that need fracking."

We've heard these stories before. It's quite amazing how fast companies can ramp back up. 

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Active rigs:

	6/10/2016	06/10/2015	06/10/2014	06/10/2013	06/10/2012
Active Rigs	27	82	190	187	213

RBN Energy: a look at STACK's over-pressured hot spot.

The STACK shale play west/northwest of Oklahoma City has quickly emerged as one of the hottest hot spots, and two “sweet-spot” counties in the heart of the play rank near the top nationwide in drilling activity.  For now, the primary focus of the small group of producers active in STACK isn’t on production, it’s on gaining a more complete understanding of the play’s complex geology, which offers (as acronym luck would have it) a bona fide stack of hydrocarbon production layers (including the particularly promising Meramec) that together may offer off-the-chart volumes. Today, we consider a play that can provide some producers a 75% rate of return at $45/bbl oil and $2.25/MMBtu natural gas—that is, at prices 11% to 13% lower than they are today.

We’ve blogged extensively about how the collapse in oil prices that started two years ago spurred shale producers to focus their drilling-and-completion dollars on the plays—or, more specifically, the counties (and parts of counties) within the plays—where they could quickly produce sufficient oil, natural gas and/or natural gas liquids (NGLs) to recoup their capital investments and help pay the bills. Profitability (and, in some cases, corporate survival) depended on successful execution of this “flight to quality”. As we described in our The Good, the Bad, and the Ugly blog series and Drill Down Report, producers in the Eagle Ford in South Texas zeroed in on the counties with the highest initial production rates on a barrels-of-oil-equivalent (boe) basis. Then, in our May 18 (2016) webcast for Backstage Pass subscribers, we noted that two-thirds of the active drilling rigs in the U.S. are now doing their thing in only 20 counties, another sign that producers are focusing on the sweetest sweet spots. As it turns out, 10 of those counties are in the Permian Basin, two are in the Eagle Ford, and two (Blaine and Kingfisher) are in STACK—which until recently was far less known than its Texas counterparts.