New NDIC Presentation With Emphasis On Inactive Wells, DUCs; Future Of The Bakken At Various Price Points -- June 27, 2016

A reader notes a new presentation from NDIC, dated June 24, 2016. The presentation provided information on "inactive wells" and proposed changes to give operators sufficient either to restore production or plug and reclaim the well. Some data points:

• as of the end of April, there were 1,590 inactive wells (on top of the 900 or so DUCs)
• estimated price point for those wells to return to production: $40 - $45 / bbl WTI
• as of the end of April, there were 890 DUCs
• estimated price point for DUCs to be completed: $50 - $60 / bbl WTI

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

Sea of Heartbreak

Someone said:

Don Gibson wrote "Oh, Lonesome Me" and "Sea of Heartbreak" on the same day. There can't be more than a handful of songwriters in history to write two great hits in just a single day.  

In addition, his "I Can't Stop Loving You" was the B-side of "Oh, Lonesome Me." Not fact-checked.

Brexit: a "sea of heartbreak." 

Sea of Heartbreak, Don Gibson

Daily Activity Report Almost Blank -- No New Permits; No Completed DUCs; One Permit Renewal And That Was It -- For Those Minimally Interested In The Bakken, Perhaps Time To Move On -- June 27, 2016; Breaking News On Katie Ledecky

Active rigs:

	6/27/2016	06/27/2015	06/27/2014	06/27/2013	06/27/2012
Active Rigs	30	75	193	187	217

The daily activity report was almost blank:

• two wells released from the confidential list (posted earlier this morning)
• one Oasis permit renewal, a Kaitlin Federal permit in Mountrail County

... and that was it.

For folks to stay interested in the Bakken and the milliondollarway blog is going to take some doing.

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

The Katie Ledecky Page

Katie Ledecky "cruises into 400 free final at US swim trials." Reported just four hours ago --

After waiting around a day, Katie Ledecky got in her first swim of the U.S. Olympic trials.

It was an easy one, too.

She cruised into the 400-meter freestyle final on Monday, finishing a whopping 0.52 seconds faster than anyone else despite slowing down over the final lap. The Maryland teenager won her heat in 4 minutes, 2.62 seconds, finishing two body lengths ahead of the nearest competition.

She said later:

"I just had to get those first-swim jitters out of the way," Ledecky said. "I'll just have to manage the energy a little better.

Reporting eight hours ago, SwimSwam has even more.

From USA Today, "Katie Ledecky is dominant force in swimming."

Ledecky, 19, is entered in five events here at trials after deciding to scratch Sunday’s 400-meter individual medley. She’s entered in all the freestyle events, from the 50-meter to the 800-meter, the event in which she won gold in London in 2012.

Some NBA professional basketball players -- who would probably never get near a mosquito in Rio -- have decided not to participate in the Olympics this year. It appears Katie Ledecky will be going. Good for her. Take lots of mosquito repellent.

Even a feature story in The New York Times: "In chasing a legent, Katie Ledecky discovers a buoyant ally."

To those who have watched her swim circles around the competition, Katie Ledecky appears to have no peers in the pool. Ledecky, however, knows better.

At a meet outside Phoenix in April, she spotted Debbie Meyer, the woman she will probably be chasing at the Summer Olympics in Rio de Janeiro in August, and trundled over to say hello. Meyer greeted her with a hug and exclaimed: “You’re great! Two, four, eight. Do it this summer!”

At the 1968 trials ahead of the Olympics in Mexico City, Meyer set world records in the 200, 400 and 800 freestyles. Two months after turning 16, she swept her events at the Summer Games to become the first swimmer to win three individual Olympic gold medals. No Olympian since has matched Meyer’s 200-400-800 string of gold (the men contest the 1,500 meters instead of the 800).

Ledecky, 19, may be the one to finally match the feat.

Google "Katie Ledecky June 2016" without the quotes and find even more stories.

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

The Amazon.Com Page

At the Southlake library this morning, I came across a book that really intrigued me. I immediately bought it and another book by the same author, ordering them at Amazon.com. That was this morning, about 10:30 a.m. By e-mail, I was just notified that the two books had been shipped. I will receive them tomorrow or Wednesday. No shipping charges. "Shipping charges" hidden in the annual Prime membership "fee" of about $100 annually which I accidentally subscribed to some weeks ago. But I'm already hooked.

Hawaii 5-O, The Ventures

How Big A Deal Is The Expanded Panama Canal For The US? Huge -- June 27, 2017

How big a deal is the "new and improved" Panama Canal for the US? Huge.  

By 2018 US exports of LPG will likely equal those of Qatar and the United Arab Emirates combined.

See the update the original post.

China is already the biggest single customer for US propane and second-biggest for LPG and the ability to move these volumes more efficiently will likely only increase that flow. 

EIA data show trade to both China and Japan having already accelerated before the canal expansion’s opening. LPG shipments to Japan more than tripled to 166,000 b/d in the first 3 months of 2016 from 49,000 b/d for the same period last year. Shipments to China jumped to 161,000 b/d from 66,000 b/d in the same window.

December 31, 2018, is less than 3 years from now; the second full year of Hillary's presidency. Things are moving very, very quickly.

As a reminder, the difference between propane and LPG:

Propane is a byproduct of natural gas processing and petroleum refining. Before propane is used, it exists in one of two forms, liquid or gas (or vapor). Both liquid propane and gas are usable but cannot be used interchangeably. In other words, a propane system designed to use gas can’t utilize propane in its liquid form and vice-versa. Additionally, the characteristics of propane liquid and propane gas are so different that the primary properties we are concerned with are as different as night and day. With propane liquid, temperature is the primary factor whereas weight is the main concern regarding propane vapor. Think of it this way, water is liquid and steam is water vapor. The same holds true for propane and is explained in detail below.

Also:

Propane is classified as LPG, along with butane, isobutane and mixtures of these gases. 

This looks like a pretty good source for sorting this out. 

The Brexit? It's only "make-believe."

It's Only Make Believe, Conway Twitty

Natural Gas Storage Hits A Record For First Week In June; The Bakken Turns Out To Be A Significant Contributor

This is really quite incredible when you think about it.

For newbies: the Bakken is considered an "oil" play. Somewhere between 93% and 95% of all hydrocarbon produced from the Bakken is oil; throw in condensates and "we" might be "pert near" 97%, leaving only about 3% of hydrocarbon production in the Bakken to be natural gas.

On the other hand, the Woodford, Haynesville, and Barnett are all considered natural gas plays.

I mention that because the amount of natural gas produced in the Bakken is in the same "ball park" as that produced in Woodford and Barnett. And compared to the overwhelming production in the Marcellus (and eventually the Utica), one can even argue that natural gas production in the Bakken is in the same "ball park" as that produced by the Haynesville.

I don't think that's hyperbole, considering how much the Bakken has been "choked back" with:

• fewer rigs (30 now, versus 200+ during the boom)
• fewer permits (maybe 50% less compared to the boom)
• less drilling (much less, compared to the boom)
• producing wells choked back and taken off-line for short periods each month
• inactive wells (around 1,500)
• DUCs (around 900)

The link: http://www.eia.gov/naturalgas/weekly/archive/2016/06_23/index.cfm. For the "Natural Gas Weekly Update" report released June 22, 2016.

Some data points from that release:

• working natural gas stocks hit a new record for the first week in June: over the 3 trillion cubic foot mark -- that's storage! -- storage hit 3 Tcf during the first week in June -- earlier in the refill season (April 1- October 31) than ever before
• the record set back in 2012 was erased 
• comparable to 2012, working gas stocks entered the refill season this year (2016) at a record high level, totaling 2.492 Tcf on March 31, 2016. That was 19 Bcf above the record set in 2012
• the EIA uses the phrase "considerably higher" to say where we are now compared to 2012 (the previous record year)
• despite this huge injection, total natural gas demand during this same period has exceeded both year-ago and 2012 levels -- a trend driven by power-sector consumption
• power burn: 26 Bcf/d; 10% greater than a year ago; 5% greater than 2012
• exports: to Mexico have more than doubled since 2012 to 4 Bcf/d; LNG up to 0.5 Bcf/d from negligible in 2012
• natural gas production has slowed in all seven of the shale-producing regions
• natural gas spot prices rose faster than futures contracts prices for next winter

Much, much more at the link.  

The War On Coal -- The Chinese Perspective -- And Poland, India, Australia, Indonesia -- June 27, 2016

Link here.

The graph at the link is ... mind-boggling -- the pink/red represents "over-supply," not consumption.

With regard to oil, natural gas, and coal, I think the most unreported story is Indonesia. With regard to coal, watch: China, India, and Indonesia. The population of Indonesia: 250 million. The US: about 320 million.

Perhaps more on this later. I'll be off the net for awhile. Going biking. It's already 87 degrees. Feels like 95 degrees. High will be slightly less than 100 degrees today. "Real feel" on the way home will be 110 degrees.

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

A Note For The Granddaughters

The Lewis Chessmen

A most interesting book to read: Ivory Vikings: The Mystery of the Most Famous Chessmen in the World and the Woman Who Made Them, Nancy Marie Brown, c. 2015.

This book is to chess, I think, at least on some level, what Brenda James book is to "the real Shakespeare."

The limited evidence favors Trondheim, but Margret the Adroit of Iceland is on equal footing: all that is needed is evidence of an ivory workshop at Skalholt (Iceland).

The book explains why the historic chess match between Boris Spassky and Bobby Fischer in 1972 was played in Raykjavik. Wow.

The author notes the etymology of "Permian." 

Words:

• netsuke (I think I've seen this word elsewhere, recently): a carved buttonlike ornament, especially of ivory or wood, formerly worn in Japan to suspend articles from the sash of a kimono
• cist: an ancient coffin or burial chamber made from stone or a hollowed tree
• chasuble: a sleeveless outer vestment worn by a Catholic or High Anglican priest when celebrating Mass, typically ornate and having a simple hole for the head
• crozier: a hooked staff carried by a bishop as a symbol of pastoral office; ceremonial shepherd's crook
• fey: having supernatural powers of clairvoyance
• rook: from Arabic rukh, means "chariot"
• berserk: warriors of Odin; wore no armor; berserks -- bear-shirts or bare-shirts; mad as dogs or wolves; Harold's Lay is the earliest known mention of berserks; no other culture claims shield-biters; they are going berserk
• valkyrie: a battle goddess; mythological, legendary, and (perhaps) historical
• gambesons: long leather coats, worn by the Lewis rooks
• pawn: the French word for our "peon"
• reeve: a local official, in particular the chief magistrate of a town or district in Anglo-Saxon England(think "shire-reeve" -- "shire-reef"' -- sheriff)
• vizier: a high official in some Muslim countries, especially in Turkey under Ottoman rule; originally a vizier was in the modern queen's place

Geography:

• Hebridean beach
• Isle of Lewis in westernmost Scotland
• Trondheim, Norway (my grandfather's childhood home)
• Saint Olav's church, Trondheim 

The chess pieces. First the rooks.

Then the bishops. None is an archbishop: none is wearing a pallium -- the bejeweled and embroidered ribbon an archbishop wore draped around his shoulders and dangling down front and back. An archbishop would carry a cross, as well, not a crozier.

The author suggests that it may have been the Norse that introduced the bishop to the board (obviously the Indians and the Arabians would not have). And, if so, it could have been the bishop of Trondheim back in the 12th century.

Peter Abelard: considered today to be the first modern thinker; his ideas led to the founding of the University of Paris in 1215. Abelard is best known for his treatise Sicet Non, arriving at the truth of an idea by arguing pro and con. In the thirteenth century, Abelard's idea would be made orthodox by Thomas Aquinas.

Then the queens. The queen began as the weakest piece on the board, but by 1497, the queen was the strongest piece, any number of spaces, any direction. She had gone "mad." Some say she may have been patterned after Isabella of Castille, the ruler of Spain.

The kings.

The knights. These are the last pieces to be put on the chessboard; they were not known in the North in the twelfth century.

The author ends with the Pawns, in the "chapter" of acknowledgments at the end of the book.

Under The Radar: The US Gun Story -- June 27, 2016; It Looks Like "Both Sides" Are Arming

Earlier this morning, I took a screen shot from The Drudge Report. I was going to save it until the "appropriate time."

Just moments ago, a reader sent me this link: there are now more US bureaucrats with guns than US marines.

There are now more non-military government employees who carry guns than there are U.S. Marines, according to a new report.

Open the Books, a taxpayer watchdog group, released a study Wednesday that finds domestic government agencies continue to grow their stockpiles of military-style weapons, as Democrats sat on the House floor calling for more restrictions on what guns American citizens can buy.

The “Militarization of America” report found civilian agencies spent $1.48 billion on guns, ammunition, and military-style equipment between 2006 and 2014. Examples include IRS agents with AR-15s, and EPA bureaucrats wearing camouflage.

Much, much more at the link.

What Is Prince Salman Up To? OPEC's Pain Is Only Getting Worse As Revenues Continue To Fall -- Oilprice.com -- June 27, 2016

Updates

Later, 11:59 a.m. Central Time: see first comment. Brought up here so the comment be searched by the browser:

Re: diesel consumption ...

I believe there is a much bigger story unfolding here, with the government/environmental forces only playing a minor role.

CNG versus diesel for transportation needs, with the commercial sector leading the way, is apt to become more mainstream in a decade's time.

If an OTR trucking firm can save a thousand bucks or two - and they can - on a round trip cross country run, they will have a huge competitive advantage in the marketplace.

Many retail CNG prices, according to online sources, sell a GGE (gallon of gas equivalent) for $1.50 or less.

Retail infrastructure build-out for CNG continues and, in a self - reinforcing way - is accelerating.

Engine manufactures, both big and small, are researching and rolling out products fueled by CNG.

With an energy equivalence of 6 to 1, the price of natgas should be $9/MMcfd or, conversely, oil should run $18/bbl.

This economic/energy arbitrage poses enormous potential for those able to take advantage.

Original Post

 

The tea leaves are swirling. What is Prince Salman up to?

From an earlier post:

• October, 2015: Saudi's inventory at record levels; have since fallen almost 40 million bbls
• over same period, US crude oil inventories have increased by slightly over 60 million bbls

Saudi policy appears to be to continue inventory drawdowns for the foreseeable future.

Now we have this article from an oil hedge fund, oilprice.com: 

OPEC lost $349 billion in revenue last year because of low oil prices, cutting revenues almost in half from the year before.

A report from the EIA in mid-June estimated 2015 revenues for OPEC countries at $404 billion, down 46 percent from the $753 billion the member countries earned in 2014. Revenues last year fell to their lowest level in eleven years.

Worse still for OPEC is the fact that revenues could fall even further this year, as low oil prices sank to new depths, particularly in the first quarter of 2016. The EIA projects OPEC revenues this year to drop to $341 billion. That will result in per capita oil export revenues in OPEC countries falling from $606 in 2015 to $503 this year. 

Not only is the drop precipitous, it takes OPEC back to 2004 revenues.

Saudi Arabia? Net oil export revenues in 2014, $247 billion. In 2015, the first full year of the "Saudi Surge," $130 billion. Ouch.

For its part, OPEC put out a more dire assessment of its own finances, putting its losses last year at $438 billion, much higher than the $349 billion estimated by the EIA.

That came even though overall exports climbed by an average of 400,000 barrels per day, or a 1.7 percent increase, largely because of production gains in Iraq and Saudi Arabia. The plunging revenue led to OPEC members to post a current account deficit of $99.6 billion, the first deficit since 1998. That compared to the 2014 surplus of $238.1 billion.

With regards to my thoughts on Prince Salman, go back to the very first link at the top of the page.

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

EIA Moment

From the EIA today:

Proposed fuel economy and greenhouse gas emissions standards would increase fuel economy and reduce diesel consumption in medium- and heavy-duty vehicles.

Unlike light-duty vehicles, which have been subject to fuel economy standards since the 1970s, the first phase of medium- and heavy-duty vehicle standards was recently implemented, starting with model year 2014. The proposed Phase 2 standards—issued jointly by the U.S. Environmental Protection Agency and the National Highway Traffic Safety Administration—would take effect in model year 2021 for most medium- and heavy-duty vehicle classes and increase in stringency through model year 2027.

These standards are projected to reduce diesel consumption by 0.5 million barrels of oil equivalent per day by 2040. --- EIA 

One-half million bopd by 2040 -- hardly worth thinking about.

The estimated reduction in boe, of course, goes out the window, if more folks buy medium- and heavy-duty vehicles than projected, which is very, very possible.

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

Meanwhile, This Weekend --

The AP is reporting:

It's going to be a busy holiday weekend on the nation's highways.

A record 43 million Americans are expected to travel this Independence Day weekend.

Poll: In Germany, What Percent Of Automobiles Are EVs? -- June 27, 2016

From IER:

Electric car apologist websites were atwitter this week when it was misreported that Germany would mandate the sale of 100 percent electric vehicles by 2030.

A Germany official, Deputy Economy Minister Rainer Baake, said “Fact is there’s been no reduction at all in CO2 emissions by transport since 1990,” at a Tagesspiegel newspaper climate forum in Berlin.

“We don’t have any answers to cut truck emissions right now but we do have answers for cars.” Germany has pledged to cut carbon dioxide emissions by 80 to 95 percent by 2050 and it is discussing banning electric gas-powered vehicles and mandating all electric cars by 2030 to meet that goal. It takes about 20 years to turn over the vehicle fleet.

Other countries such as India, the Netherlands, and Norway also may be considering more aggressive electric car policies to try to reduce carbon dioxide emissions.

Last December, Germany joined the International Zero-Emission Vehicle Alliance, whose mission is to make passenger vehicles carbon dioxide emission-free by 2050.

Germany’s Environment Ministry stated that the country’s transport industry is lagging behind in its plan to reduce carbon dioxide emissions with current carbon dioxide emissions levels virtually unchanged from the 1990s. In order to conform, Germany announced a new program to accelerate the adoption of electric cars by providing a discount of €4,000 for electric vehicles with a starting price of less than €60,000 and 3,000 Euros for hybrids beginning mid-May 2016 for a total of 400,000 vehicles. The promotion will end in 2020.

For a total of 400,000 vehicles. Hmmm.

I was always under the impression that the Germans were really moving forward with cutting CO2 emissions -- but apparently their emissions rules have remained "virtually" unchanged since Algore first hit the "global warming" stage, 1994 or thereabouts.

The Germans love their automobiles. 

So, that begs the question. What percent of automobiles in Germany are EVs? See poll at the right. Answer is at the link. 

By the way, "20 years to turn over the vehicle fleet." It should be noted that when writers talk about human generations, a human generation is defined as "20 years" (at least according to one source). So, to vary the way writers discuss time, just as ten years can be referred to as a decade, twenty years can be referred to as one (human) generation.