Wednesday, July 13, 2016

Random Update Of A 62-Stage Frack In Deep Water Creek Bay -- July 1, 2016


April 16, 2017: three more wells are on this pad --
  • 31109,
  • 31110,
  • 31111,
Original Post
The well, as of 2/17, show that it is still flowing / not on a pump (paperwork may lag activity in the field):
  • 19296, 2,388, SHD, Golden 22-31H, Deep Water Creek Bay, TF Bench 1, 62 stages, 15 million lbs, t3/15; cum 365K 5/16;
Monthly Production Data:
PoolDateDaysBBLS OilRunsBBLS WaterMCF ProdMCF SoldVent/Flare

And This Is The Way It Is -- Wednesday Night, July 13, 2016

This is a quick walk-through of The Wall Street Journal that is posted on-line right now, with some of my comments.

US electric grid could easily go down due to minimal terrorist activity.

All that talk about "walking back" the Brexit? The new UK leader, Ms Theresa May, is already assembling her "Brexit Team." The new prime minister has already chosen David Davis to lead the team: Davis is a senior figure from the more free-market or Thatcherite wing of Britain's ruling Conservative Party. He is know for being tough, and somewhat difficult to work with.

Many, many stories on bonds, money, yields:
  • in a first, Germany sells 10-year bonds with a negative yield
  • US sells 30-year bonds at record low level
  • the Dow, meanwhile, setting new records (with dividends); eked out another record today
  • 35-year-old bond bull is on its last legs
  • "there is a limit to how far negative yields can go before money becomes meaningless" -- James Mackintosh
  • behind the bond-stock divide is a big and risky bet on central banks
  • why ultralow interest rates are here to stay
  • "sorry: you are just going to have to save more money" -- bonds pay borrowers while lenders earn nothing; stocks soar to all-time highs; the financial world is probably NOT QUITE as crazy as it seems -- but you better lower your expectations for investment returns
  • US budget deficit widens to near two-year high in June
  • US pension funding levels to deteriorate -- Moody's

Settlement of Syrian refugees in US accelerates; with high birth rate, and failure to integrate, we will see in 2050 how badly this will all play out.

Aleppo, Syria: running out of food, medicine.

Drone kill: a US drone strike killed the mastermind of a 2014 Pakistani Taliban school massacre that left more than 130 children dead. Dead: Taliban leader Omar Mansoor.

Oil glut: simply worsens. Here in north Texas, gasoline is again below $2.00/gallon; it's gonna get a lot cheaper.

CSX revenue falls 12% as coal shipments continue to slip.

Honda Ridgeline: will take a bite out of the Chevrolet Colorado, the GMC Canyon, the Toyota Tacoma, and the Nissan Frontier (this pickup segment totals about 350,000 units/year).


Link here.
The GDPNow model forecast for real GDP growth (seasonally adjusted annual rate) in the second quarter of 2016 is 2.3 percent on July 12, down from 2.4 percent on July 6. The forecast of the contribution of inventory investment to second-quarter real GDP growth ticked down from -0.50 percentage points to -0.55 percentage points after this morning's wholesale trade report from the U.S. Census Bureau.

Possible Halo Effect Of A Horizontal Well On Very Old Vertical Wells -- July 13, 2016

Hang on buckaroos. This certainly looks interesting. There may be other explanations but I'll post it and see what folks think.

First, the production profile for this particular well which I will identify later on in the post. But first, some data.
  • an old CLR well
  • a vertical well (not a horizontal)
  • proposed:pay thickness: 5'; zone of interest, 10,652 to 10,660 feet (8 feet)
  • proposed:the pool targeted was the Sanish (Three Forks?); top of Three Forks at 10,648 ft; TD at 10,772 feet
  • actual: the Three Forks was entered at 10,648 feet; the Sanish was encountered at 10,655 feet; drill stem test #1 was conducted exclusively over the Sanish sand from 10,642' to 10,660' (18 feet)
  • actual: perforation record: 10,650' to 10,660'
  • this well has never produced more than about 800 bbls/month since it was first drilled back in 1990
  • exception: first full month: 2,363 bbls; and then quickly dropped to 700 bbls/month over the next few months; since then about 500 - 750 bbls/month for 15 years, day in, day out
  • then note: it was taken off line 6/15? Why? A neighboring horizontal was being fracked -- see graphic down below
  • note the spectacular jump in production for the next 8 months
  • also note the amount of water produced after it was placed back on line; after the neighboring well was fracked
  • again, this was an old, old vertical well -- probably met definition of a stripper well 
  • more recently it was taken off line again because of neighboring wells that were being fracked 
Monthly Production Data of an old vertical well, partial spreadsheet, only recent data:
PoolDateDaysBBLS OilRunsBBLS WaterMCF ProdMCF SoldVent/Flare

Okay, so what well was it?
  • 12979, 192, CLR, Gudbranson 1, Antelope, Sanish pool, vertical, t11/1990; cum 152K 5/16; 
Coming up: the screen shot of this area.  When you look at the screen shot, note: 
  • first, note the "index" well, a vertical well, #12979, drilled back in 1990
  • also, note three other vertical wells in the immediate area that are just as old (red arrows).
  • now, note how closely the horizontal from #28332 passes by the old vertical well, #12979

So, when was #28332 fracked? I'll answer that after we look at the production profile.

The production profile of #28332, the horizontal well:
PoolDateDaysBBLS OilRunsBBLS WaterMCF ProdMCF SoldVent/Flare

This well was fracked 6/6/2015, the very month that the Gudbranson vertical well was taken off-line and then the spectacular jump in production the very next month. 
  • 28332, 1,373, CLR, Salers Federal 4-27H1, Antelope, Sanish pool, 30 stages, 6.1 million lbs sand/ceramic, fracked 6/15; t10/15; cum 173K 5/15; 
Let's look at the production profile for the other vertical wells in the immediate area, but just for a few months of note. All wells are Antelop, Sanish pool vertical wells:

#4168, production profile, drilled in 1966, still active:

#12198, production profile, drilled in 1988, still active:

#12643, production profile, drilled in 1989, still active (blue bold is water):

I only looked at the data of one horizontal well; there are many other horizontal wells in the immediate area that were also fracked at various times. 

Note: in a long note like this, there will be typographical and factual errors. I may be seeing things that do not exist. I may be "over-reading" things. I may be misinterpreting data. I may be cherry picking data. If this information is important to you, go to the source.

In the big scheme of things, this is not a big deal. The increased production only lasts a few months, maybe up to a year. But if one has mineral rights, one might be surprised at a jump in one's "mailbox money." In addition, it helps me understand, or at least think about, water flooding in the middle Bakken and Three Forks (sandstone, dolomite, NOT shale).  One can also get a feel for how far -- radially -- fracking is effective. I continue to opine that fracking "only goes out about 500 feet radially." This helps one understand how close the horizontals can be / should be placed.

Note The MRO Well That Produced 52K Bbls In First 20 Days; Five New Permits -- July 13, 2016

Unfortunately, I have not kept track of "record" monthly production set by some wells. In the post below, note that #31058 produced 52,000 bbls in the first 20 days; that equates to about 78,000 bbls in 30 days. EOG has had some huge wells that might rival this one. I don't remember. The other problem, of course, is the length of the horizontal. The MRO well below was a long lateral. On the other hand, a short-lateral produced over 61,000 bbls over 31 days (see production profile at the link):
  • 27591, 2,079, Enerplus, Monarch 152-94-32D-29H, a short lateral (one section / 640 acres); t12/14; cum 259K 5/16; production profile first three months: 

 Another huge production over 31 days at this link: For others, click on the tag: "RecordIP."

Summary: Today's Daily Activity Report

Active rigs:

Active Rigs3072190186215

One well coming off confidential list Thursday:
  • 30783, 1,087, HRC, Fort Berthold 152-93-19D-18-12H, Four Bears, Three Forks, 56 stages, 4.8 million lbs; t1/16; cum 62K 5/16; this was a Three Forks well; it did not appear to have a "halo" effect on middle Bakken wells to the west or to the east
Five new permits:
  • Operators: BR (4), EOG
  • Fields: Corral Creek (Dunn), Stanley (Mountrail)
  • Comments:
Resource Energy Can-Am canceled on permit, a Lilly permit in Divide County.

Three (3) producing wells completed (there are 5 wells on this pad; the other two wells are yet to report):
  • 31057, 3,490, MRO, Chamaine USA 14-35TFH, Antelope, Sanish, t6/16; cum --
  • 31058, 3,661, MRO, Clarks Creek USA 14-35H, Antelope, Sanish, t5/16; cum 52K in the first 20 days; frack data not yet at the file report; spud 11/9/15; landed curve 1/16/16; TD 1/22/16; 75% in drilling target window; 100% in middle Bakken
  • 31061, 2,942, MRO, Juanita USA 13-35H, Antelope, Sanish, t7/16; cum -- 

30783, see above, HRC, Fort Berthold 152-93-19D-18-12H, Four Bears:

DateOil RunsMCF Sold

WTI Down Almost 4% Today -- July 13, 2016; On The Origin Of Pretzels

Active rigs in North Dakota back up to 30:

Active Rigs3072190186215

The Market At Midday 

At midday, the market is fairly flat (slightly negative) and WTI is down almost 4%. The crude oil and gasoline stocks continue to build.

On the NYSE, there are 184 new highs, including:
  • Baxter (it hit a new high yesterday also)
  • ONEOK Partners (OKS)
On the NYSE, there are only two issues hitting new lows:
  • CVR Refining (CVRR)
From "The History Of Little Things" Department

The other day I mentioned Dot's Pretzels.  A bit of cocktail trivia that will make you the life of any party. From
The pretzel has a deep spiritual meaning for Lent. In fact, it was the ancient Christian Lenten bread as far back as the fourth century. In the old Roman Empire, the faithful kept a very strict fast all through Lent: no milk, no butter, no cheese, no eggs, no cream and no meat.
They made small breads of water, flour and salt, to remind themselves that Lent was a time of prayer. They shaped these breads in the form of crossed arms for in those days they crossed their arms over the breast while praying. Therefore they called the breads "little arms" (bracellae). From this Latin word, the Germanic people later coined the term "pretzel." 
I would not have come across that had I not been reading a most delightful history of science book by Owen Gingerich on Copernicus: The Book Nobody Read: Chasing the Revolutions of Nicolaus Copernicus, c. 2004, from page 51:
Pretzels had their origin in southern Germany -- Kepler territory -- as Lenten favors for children.
That is not exactly correct. "Pretzels" had been around a lot longer than that, but it was the Germans who coined the word that we use today.

John Kemp's Weekly Energy Tweets -- July 13, 2016; Look At The Surge In US Gasoline Stocks, Especially On The East Coast

In our neighborhood in Grapevine, north Texas, west of DFW airport, the service station that sells gasoline at a price a bit higher than most others, was selling unleaded regular for $2.01/gallon yesterday. The data below suggests that gasoline in our neighborhood could easily go below $2.00 again. 

Note: on July 6, 2016, I asked, "where is all this gasoline going to go?" See data below. Gasoline stocks continue to grow and set new records.

I've been tracking this data for several years now, and these graphics are simply staggering. 

US crude imports slowed to 7.8 million bopd last week from 8.4 million bopd the prior week. This is well below what the US imported in the early 2000's and takes us back to about what we were importing in the mid- to late-1990's.

East Coast gasoline imports rose to 722,000 bopd last week compared with 634,000 bopd in same week last year. With stores of gasoline surging on the East Coast, I'm not sure what to make of this.

East Coast gasoline stock build still shows little or no sign of clearing.

East Coast gasoline stocks rose by 200,000 bbls to 72 million bbls and stocks are now 10 million bbls over the 2015 level.

US refinery throughput finally dropped below the 10-year high. Throughput was cut 140,000 bopd to 16.5 million bopd and 280,000 bopd below the 215 level.

US gasoline stocks are still above the 18 - 22 day range that I like to see. Adjusted for demand, stocks stood at almost 25 days of consumption, up form 23 in 2015 and above the 10-year average of 23.

US gasoline consumption averaged a seasonal record 9.7 million bopd over the last four weeks, up 160,000 bopd from 2015.

Midwest and Gulf gasoline stocks remain above the 10-year range and show no sign of reducing.

US gasoline stocks rose 1.2 million bbls to 240 million bbls last week and are now 22 million bbls over 2015:

US commercial crude oil stocks drew more slowly than 2015 and the 10-year average; year-over-year build is up from 58.6 to 60.3 million bbls. 

Update On Shell's Plan For A Marcellus/Utica Ethylene Plant -- RBN Energy -- July 13, 2016

Active rigs:

Active Rigs2972190186215

RBN Energy: update on Shell's plan for a Marcellus/Utica ethylene plant.
Whether or not Shell Chemicals follows through on its plan to build a $6 billion ethylene plant near Pittsburgh, PA –– and when that steam cracker comes online –– will have a significant impact on the U.S. ethane, ethylene and polyethylene markets. By consuming an estimated 90-100 Mb/d of ethane, the cracker’s operation would reduce the volume of ethane that needs to be moved out of the “wet” Marcellus/Utica production area, trim the amount of ethane available for export from marine terminals, and likely push ethane prices higher than they would otherwise be. Today, we examine what’s driving plans for the Northeast’s first cracker, and what effects the plant will have.
There’s an old story about two bear hunters, Roy and John, who hike deep into the forest to their hunting cabin. While Roy cleans up the cabin and puts away their gear, John goes outside to look for any signs of a bear. Not too much later, Roy hears John yelling “open the door, open the door!”  Roy looks out the window and sees that John is being chased by a huge bear, so he opens the door of the cabin. Just as John reaches the door, he jumps to the side and the bear charges into the cabin. John slams the door shut and yells at Roy, “I caught the bear, now you skin him.”
In many ways Shell Chemicals’ recent commitment to a new ethane-based ethylene facility near the heart of the natural gas liquids (NGLs) production area in western Pennsylvania is an enormous bear.  On June 7, 2016, Shell announced that it had made a Final Investment Decision (FID) to move forward with the $6 billion project to build a 1.5 million tonnes per annum (MTPA) ethylene plant and three polyethylene plants that will produce 1.6 MTPA of polyethylene. Polyethylene is used in many products, from food packaging and containers to automotive components.  This FID does not fully “guarantee” that Shell will proceed with the project, but it represents a major commitment, and given the plant’s ready access to locally sourced ethane and Shell’s “first-mover” status (several other crackers have been under consideration in the Marcellus/Utica area), it is reasonable to conclude that the plant is likely to become a reality by 2021 or 2022.  Construction of the cracker could begin as soon as late 2017 or early 2018.
I track the proposed $4 billion North Dakota plastics (ethane to ethylene, polyethylene) here.

Spectacular Panoramic View Of The Grand Canyon -- July 13, 2016; The Perils Of Forecasting The Price Of Oil

Following various links from this story led me to this post, an audio, panoramic view. It worked fine for me on Firefox.

This sort of puts everything into perspective. No pun intended.

Oil Price Forecasting Lessons From 2008

The Bakken boom began in eastern Montana in 2000, and in western North Dakota in 2007. The Bakken boom did not go boom until 2010 or thereabout and did not hit its stride until about 2012, at which point production records were being posted every month until the Saudi Surge, October, 2014.

On my calendar I have this note: "on August 1, 2008, a talking head on CNBC said we would see $200 oil before we saw $100 oil."

Well, we never saw $200 oil and we passed $100 so fast on the way down to $45 one can argue he may have been right. If he blinked, he did not see $100 oil on its way down to $45. LOL.

Forbes had a look back on the forecasting lessons from 2008 back in October, 2015.

First, the talking head who predicted $200 oil just as the Bakken was taking off:
But there was a section of the industry who steadfastly insisted the prices had not reached a peak. T. Boone Pickens, for example, when prices dropped close to $100 by late August insisted that “In two or three years, we’re going to be at $200 a barrel—could be $300 a barrel for oil.”
The late Matthew Simmons echoed Pickens’ price forecast at roughly the same time. The funny thing is that for several years, he had shown audiences a slide that had the famous Economist cover titled “Drowning in Oil” from 1998, in which the write-up predicted prices would remain at $12 or lower.
Next to it, he displayed the cover “We Wuz Wrong” produced after prices soared. His reward was a story about him, which appeared July 10, just two days before the price peaked.
What’s amazing is the extent to which some remain unflustered by past predictions. When Pickens was reminded last year that he had been wrong about peak oil by CNBC’s Joe Kiernan, he exclaimed, “I’m the expert!” and continued to insist that oil production had peaked in 2005—if you ignore US shale (and NGLs and biofuels, which he doesn’t mention). [Wow!]
Simmons had the same certainty, saying in September 2008, “I find it ironic that here we have the biggest industry on earth, and I’m one of the few people to figure out that we have a major problem.” Occam’s Razor would suggest that maybe he was wrong.
And the Forbes contributor dares to write that the Hubbert curve is an incorrect theory:
As I argued in my 1994 paper, “The Failure of Long Term Oil Market Forecasting,” the problem is not just the uncertainty about both fundamentals and geopolitical trends, but the tendency to embrace incorrect theories, from the Hotelling Principle to Hubbert curves. Avoiding such a trap might not yield an accurate forecast, but it should help you beat the other hikers.
I am aware of Hubert's theory but the Hotelling Principle is new to me:
This theory proposes that owners of non-renewable resources will only produce a supply of their product if it will yield more than instruments available to them in the markets - specifically bonds and other interest-bearing securities. This theory assumes that markets are efficient and that the owners of the non-renewable resources are motivated by profit. Hotelling's theory is used by economists to attempt to predict the price of oil and other nonrenewable resources, based on prevailing interest rates.
Much more information at wiki, as usual, but it will make your eyes glaze over.

Illinois Seeks To Shut Down ObamaCare Insurer
Another ObamaCare Non-Profit Health Insurer May Fail


July 15, 2016: from Forbes -- Land of Lincoln Health to liquidate -- not an ObamaCare problem but a co-op one. 
The answer being that it’s not true to say that there’s nothing wrong with the co op model. If there were nothing wrong and they also really did have that extra effect from worker of customer participation, then they would always out-compete capitalist firms. And this far along in the process, we wouldn’t have any capitalism, we’d only have a market of socialist enterprises. Thus there must be something wrong with co ops, some Achilles Heel. And there is–it’s the difficulty they have in gaining access to capital.
Here it’s that one specific payment which is the straw that breaks the camel’s back. But that one single payment alone isn’t enough, that’s just the latest and most specific problem. For the one thing that capitalists really do bring to an organization is capital. And that’s something you need to weather the vicissitudes of changing times and more especially the costs of getting an organization up and running. This is also the basic problem that many of those co ops set up under Obamacare’s face. As they don’t have shareholders, they can’t go to them to ask for more capital. If they were to ask their owners, those who buy health insurance, they’d just be shrinking the company even faster. That’s also why such co ops haven’t taken over the economy because they do just find it that much more difficult to gain access to capital.
July 13, 2016: from Americans for Tax Reform --

Sixteen Obamacare co-ops have now failed.
Illinois announced that Land of Lincoln Health, a taxpayer funded Obamacare co-op, would close its doors, leaving 49,000 without insurance.
The co-op now joins a list of 15 other Obamacare co-ops that have collapsed since Obamacare has been implemented. Failed co-ops have now cost taxpayers more than $1.7 billion in funds that may never be recovered.
Co-ops were hyped as not-for-profit alternatives to traditional insurance companies created under Obamacare. The Centers for Medicare and Medicaid Services (CMS) financed co-ops with startup and solvency loans, totaling more than $2.4 billion in taxpayer dollars.
They have failed to become sustainable with many collapsing amid the failure of Obamacare exchanges.
Since September, 13 Obamacare co-ops have collapsed, with only seven of the original 23 co-ops remaining. Illinois’ Land of Lincoln co-op faced losses of $90 million last year and is suing the federal government for the deficit caused by Obamacare. Co-ops across the country have struggled to operate in Obamacare exchanges, losing millions despite receiving enormous government subsidies.
Original Post
The Chicago Tribune reports. Data points:
  • Land of Lincoln Health
  • 49,000 people affected
  • LOLH: deteriorating financial condition; required to pay $31.8 million to other insurers "under a complex formula in the Affordable Care Act, which aims to keep premiums stable by balancing risks among insurers
  • LOLH: lost $90 million last year (2015)
  • federal Centers for Medicare/Medicaid Services refused to bailout LOLH
  • LOLH: one of 23 non-profit health insurers; $2.4 billion in Obama money to jump-start these 23 NPHI
  • the goal of the NPHI: an alternative to Big Health like BC/BS
Add LOLH to the other twelve or thirteen or fourteen of the original 23 NPHI that have failed.

Obama and Hillary now want to substitute a British-NHS-like "public option" instead of the NPHI. A federal US-NHS is gonna cost us a lot more than $2.4 billion. Say, $2.4 trillion? As a start?

By the way, a reader reminded me yesterday that BC/BS was exiting Minnesota (MNsure). I guess this would be a Blexit.

Random Update On Three Zavanna Wells East Of Williston; The Gust Wells -- July 13, 2016


April 20, 2018: #19981 updated. A nice case study.

Original Post 

On March 8, 2016, I wrote:
March 8, 2016: these three Zavana Gust wells in Long Creek east of Williston are going to be huge; they were taken off-line or placed on the SI/NC list during the Saudi Surge / Slump: #19981, #28885, and #28886. Update, #28886: PNC. #28885 went back on-line in 3/16 for 12 days; small amount of production in those 12 days;
So, let's see the production profiles of these three wells now that #19981 is back on line, and the other two are fracked.
  • 19981, 1,003, Zavanna, Gust 2-11 1H, Long Creek, t3/12; cum 455K 2/18; partial production profile:
Monthly Production Data
PoolDateDaysBBLS OilRunsBBLS WaterMCF ProdMCF SoldVent/Flare
  • 28885, 1,360, Zavanna, Gust 2-11 3TFH, 50 stages, 5.8 million lbs; Long Creek, t4/16; cum 84K 2/18: the frack report says that it was a 50-stage frack but a sundry form says stage 1 of the frack failed (the liner parted), but repairs were made, and it resulted in a successful 49-stage frack.
Monthly Production Data
PoolDateDaysBBLS OilRunsBBLS WaterMCF ProdMCF SoldVent/Flare
  • 28886, 2,342, Zavanna, Gust 2-11 2H, Long Creek, 50 stages, 5.8 million lbs, t5/16; cum 325K 2/18:
Monthly Production Data
PoolDateDaysBBLS OilRunsBBLS WaterMCF ProdMCF SoldVent/Flare