Saturday, July 23, 2016

Late Saturday Night -- Nothing To Do With The Bakken -- Just Chillin' -- July 23, 2016

Such elitism. This guy has lost all credibility.

I wonder how cool he keeps his hotel rooms. I wonder how cool the conference rooms are kept. I wonder what his monthly air conditioning electricity bill from all his houses adds up to. 

Here in Texas, I don't think it's air conditioners as much as a) lawn care services; and, b) outdoor barbecuing. My hunch is that air conditioners in the states have gotten quite efficient and folks use them judiciously. On the other hand, the lawn mowers I see, the leaf blowers, the edgers, etc., seem to be about as inefficient as ever and way overused. I remember the good ol' days when the only noise caused by mowers was on a Saturday morning for a couple of hours. Now it seems, lawn care is all-day, every day. 

Thank goodness for YouTube to take my mind off nuts like the elitist above.

Surf Riders From The Swamp, Messer Chups

The Munsters theme by Messer Chups.
Surfer Joe Summer Festival, Livorno, Italy, 2015.

More Surfing

After watching The Endless Summer for the umpteenth time, this video means a lot more to me. I understand a whole lot better the whole "concept" of surfing. I still say it was a shame that The Endless Summer could not have been filmed in high definition.

Pipeline, The Chantays

Muscle Shoals

By the way, another "shout out" to the reader who introduced me to "Muscle Shoals." You have no idea how often I come across Muscle Shoals music. In a most obscure YouTube video (with all of 342 views), "Almost Persuaded" with this little gem: "For 46 years and two months, no #1 song matched the chart-topping longevity of "Almost Persuaded" until Taylor Swift's "We Are Never Ever Getting Back Together" notched its ninth week atop the Billboard Hot Country Songs chart the week of December 15, 2012." I think "Almost Persuaded" was a signature song of my coming-of-age years.

"Almost Persuaded" was written by Glenn Sutton and Muscle Shoals songwriter Billy Sherrill and first recorded by David Houston in 1966.

And that's why I love the United States: every locale in "America" has something to be proud of, something to be known for, and where anyone can "hit it big."

The Man Who Shot Liberty Valance

A huge "shout out" to John Boykin.

The Man Who Liberty Valance, Gene Pitney

Social Media

I think I've written about this before. A lot of folks don't like Twitter; a lot of folks don't understand Twitter. At one time I fell into both categories.

But, if one understands Twitter, it's an incredible tool. The most important thing, I think, for anyone with a life, is to minimize the number of hash tags one follows. But that doesn't mean staying in a rut. When something is trending, join in, and then when it falls off the radar scope, stop following. For example, right now, our Southlake, Texas, water polo teams (male and female) are participating in the National Junior Olympic competition in San Jose, CA. The boys left Friday and are out there playing now; the girls leave this next Wednesday.

To keep up with what is going on, the water polo team has a Twitter account. Photos and updates are incredible. And most important, the coach can easily remind players when and where to report. Every team member no doubt has a smart phone, and is following along on Twitter.

Notes To The Granddaughters
Speaking of Livorno, Italy

Your mom and your aunt had a number of trips to Italy when we were assigned to Germany. I do not recall if we ever made it to Livorno; if not, it was one of the few major destinations in Italy we did not visit.

We did so much while we were in Europe for thirteen consecutive years, 1983 - 1996. I can say unequivocally I do not regret having not done more. Having said that, I can think of a lot more things we could have done. But no regrets. 

Without question, the best family "trip" to Italy was when I was sent to Aviana, Italy, a small air base north of Venice, Italy, to provide medical coverage for a full month. It was the first time in my life, if I recall correctly, that I had "banker's" hours, and "no call" after the clinic closed for the day. The clinic closed precisely at 4:00 p.m. every day. The clinic was not open on weekends. It was July, and very, very hot.

Every day, for a full month, I rushed home at 4:00 p.m. and then we headed up into the Dolomite Mountains to cool off. I don't recall the names of any of the villages we visited in the Dolomites. All I remember was how incredibly cool the mountains were and how wonderful the food was. And inexpensive.

Generally when tasked to provide coverage in a temporary setting, families do not accompany the active duty member. But the air base was very accommodating. They provided us a "family suite" in temporary lodging on base. That must have been in 1986.

Nice Saturday Evening Photograph Of Fracking Sand Terminal, Richardton, ND -- July 23, 2016

Sent to me by a reader. Thank you, very much. A frack sand train at the Halliburton terminal near Richardton, North Dakota.

What I like best about this photo? The "Big Sky" look. Brings back great memories of western North Dakota.

Speaking of Sand

This is an incredible (and unexpected) upbeat story from Wisconsin
Despite a slump in the U.S. oil industry, Wisconsin frac sand producers are planning to spend millions of dollars on new plants and loading facilities as they seek to increase efficiency and sell their product in new markets.
According to documents filed with state officials, at least half a dozen companies have hatched plans to build mines or loading terminals along rail lines that provide an economical link to drilling operations in Texas, where the demand for silica sand remains strong, as well as other regions.
“We feel that from a longer-term prospective it’s still a good time to make some investments,” said Jack Mitchell, president of Wisconsin Proppants, which is planning a $23.5 million rail loading facility for its mine in Jackson County.
The number of permitted industrial sand mines and processors ballooned to nearly 130, but oil prices began falling in 2015, making North Dakota crude less competitive. As drills went idle, so did Wisconsin’s sand mines, which have laid off hundreds of workers in the past two years.
But even as producers have shuttered some mines, others are making big investments — or even preparing to open new mines — to meet the demands of a changing energy marketplace:
  • Meteor Timber, a Georgia investment company that has explored the possibility of mining in Jackson County’s public forests, has plans to build a $65 million sand mining operation in Jackson and Monroe counties.
  • Terracor Resources is proposing a combined mine, processing and loading facility between Black River Falls and Alma Center that could produce about 3 million tons of sand a year.
  • Hi-Crush Proppants is seeking to add three rail sidings at its 857-acre mine, processing and loading facility in Wyeville. Hi-Crush says it has idled a facility in Eau Claire County and is focusing on maximizing production and efficiency at the Monroe County site.
  • Smart Sand Inc. plans to build a rail terminal near Tomah to handle sand from the Texas company’s existing 1,118-acre mine in Oakdale, which is about four miles away and already has a loading facility on the Canadian Pacific railroad.
All of those operations, which would allow the loading and storage of multiple trains, are situated on the Union Pacific rail line. A fourth project, since shelved because of market prices, would have been sited on the Wisconsin Northern rail line in Chippewa County, which connects to Union Pacific’s track.
Unlike the Canadian Pacific and BNSF, two major U.S. rail lines that link Wisconsin to the Bakken basin, Union Pacific lines offer a direct route to Texas.
The article is from the LaCrosse Tribune, sent to me by a reader, thank you very much.

Although I posted quite a bit from the article above, there is so much more at the link. This is a very good article from a very unlikely source. I'm quite impressed. 

At the linked article, there is much more information about each of the companies listed above, interested in expanding frack sand operations. 

North Dakota Rancher To Be Featured On NBC Tonight For Those In North Dakota -- July 23, 2016


Later, 5:03 p.m. Central Time: see note below regarding Merle Clark. For those who won't see this on NBC North Dakota, one can find it at Vevo: start here and then search "Merle Clark" at the sidebar for any number of "Merle Clark" segments.
Original Post
Oh, my goodness. Don introduced me to Merle Clark a couple of years ago. I hope someone posts this on YouTube. I doubt I will catch NBC North Dakota down here in Texas.

Here's the link to a great, great story: Marmarth rancher will be featured tonight on NBC's "Special Cowboy Moments."

This was the saddle that Merle was re-furbishing when I met him in Bowman a couple of years ago. He was donating this to the Pioneer Trails Regional Museum in Bowman, North Dakota, perhaps one of the best little museums in the west.


Impressions, Merle Haggard

Update On "The Forgotten War" -- July 23, 2016


Later, 10:35 a.m. Central Time: what a hoot. This headline from The Los Angeles Times, June 22, 2014 -- "In devising a play for Iraq, President Obama looks to the "Yemen Model."" I can't make this stuff up.
As they plan their response to the crisis in Iraq, President Obama and his top aides are hoping to replicate elements of an often-overlooked and relatively successful U.S. military operation in another war-ravaged Middle East nation: Yemen.
We obviously missed a nominee for the 2014 Geico Rock Award: Kathleen Hennessey. I can't even imagine where she got her journalism degree. In fairness to her, I suppose, things in Yemen turned sour when the US declared victory, pulled out, and turned things over to that other superpower. 

Original Post
I saw a related story this past week, but as I told Don, I was either too tired or too frustrated with yet another Obama-failed story line to link it or post it. But I'm getting too many alerts now to ignore it. What now? The "forgotten war."

Well, actually one of several forgotten wars. Another war in which President Obama said was pretty much over, the "good guys" had won, and the "bad guys" were on the run.

Band on the Run, Wings

I went back and looked for an article to see if it was worth posting. And then I found this one posted back in April, 2016. It makes my point: the Saudis can't do much of anything without help from the outside. We'll get back to that later. No, we won't. Not worth the time.

The other story line: I haven't seen the word "quagmire" used since the Vietnam War. And here it is, "Saudi Arabia's increasing quagmire in Yemen's War." Even wiki sees this as a never-ending story with an entry devoted to the Saudi Arabian-led Intervention in Yemen.

I've long lost interest in this war, and I've even long lost interest in this story as another failed President Obama (aka Baghdad Bob) story. There are just too many of them. Only 181 more days. Oh, when will this nightmare ever end?

What caught my eye was this little one line entry, buried deep in the story, near the very bottom:
So far, the Saudi-led Coalition forces have been rather unimpressive and relatively weak, despite boasting the 3rd highest military expenditures in the world.
Third highest? Where does that put China? Fourth? The EU? Fifth? Scotland? The Fifth of Forth?

The last few paragraphs of the story are actually the best:
Yemen’s infrastructure has been reduced to rubble as a result of the Saudi airstrikes.
Millions of civilians have been displaced, with others facing starvation and dehydration.
This disastrous war has been mainly caused by the ambitious and overzealous Saudi deputy crown prince, Mohammed bin Salman, who wants to improve his family’s legacy to make Saudi Arabia a regional power in Middle East.
So far, the Saudi-led Coalition forces have been rather unimpressive and relatively weak, despite boasting the 3rd highest military expenditures in the world. According to the Saudi whistleblower @ Mujtahidd, Mohammed bin Salman is facing a moral dilemma because ending the war would appear like a victory for the Houthis.
With the quagmire becoming far more apparent in Yemen, bin Salman is desperate to find a respectful end to the Saudi war in Yemen.
Now, bin Salman has decided to completely abandoned the U.N sponsored ceasefire in favor of forcing the Houthis to surrender their weapons and cities to the Yemeni government.
The source stated that bin Salman’s campaign has cost the Saudis a large number of personnel, putting the death toll as high as 4,000 killed while battling the Yemeni forces.
And one might add, a lot of cash.

HAL, SLB: The Worst Is Over, Things Are Starting To Turn -- July 23, 2016

Anyone following earnings reports and conference calls are aware that both Halliburton and Schlumberger have said "we've" hit the bottom in the oil and gas industry, that things are starting to turn.

For the record, I don't buy it. I think HAL and SLB are both "talking their book" as the say. We'll see in January, 2017, when these companies report their 4Q16 earnings. 

There was an article, which I did not link, yesterday that said that despite HAL's and SLB's claims, in fact, the oil and gas industry was continuing to shed jobs.

Today, we get this headline: COP to trim 6% of its workforce.
ConocoPhillips will lay off approximately 6 percent of its global workforce, the exploration and production (E&P) company confirmed to Rigzone in an email.
ConocoPhillips, which has headquarters in Houston, has undertaken a series of cost-reduction measures over the last 18 months in response to the industry downturn.
Beaudo said ConocoPhillips has significantly reduced its capital activities and finished some major projects, leaving the company with “more organizational capacity” than it needs.
Much  more at the link, and it's not good news. 

Meanwhile, Bloomberg reports that Keppel, the world's largest builder of oil rigs, sees a prolonged dearth of oil-rig orders amid glut.
The company may consider reducing its workforce and mothballing some facilities in its rig-building operations because of excess capacity, the Singapore-based company said Thursday.
Keppel Offshore & Marine Ltd. has already shrunk its workforce by about 11,000 and subcontractor headcount by some 8,500 since 2015
Keppel sees a long, harsh "winter" in its rig-building business after net income fell 48 percent in the second quarter to S$205.8 million ($152 million). The company is among Asian shipyards that have cut jobs and are considering dock closures after oil prices more than halved in two years, leading to a slump in orders for offshore drilling and production, deferrals and cancellations.
The company has been hit by non-payments from one of its biggest clients, Sete Brasil Participacoes SA, which filed for bankruptcy protection in April.

Sophia and Friend

Mike Filloon's Update On The Bakken -- Part II, July 23, 2016


July 24, 2016: a reader (in comments below) also notes the advances in drilling to include monodiameter / monobore / one-run drilling now being used in the Niobrara.

July 24, 2016: follow-up from previous comment, and explanation of tripping -- see additional comments below; most recent one brought up here for easier browser searching:
When tripping, 3 30 foot sections of drill pipe are combined to make a "90 foot stand". When rigging down to move to a new drill site these 90 foot stands are broken down into 30 foot sections. When nearly 4 miles of pipe are out of the hole there about 220 90 foot stands racked in the derrick. 220 connections coming out and 220 back to the bottom. Rig crews pride themselves in making this "trip" as quickly and safely as possible.
Later, 11:28 p.m. Central Time: see first comment. In fact, I will bring it up here for easier browser searches. Note that in the original post I made a huge mistake  -- I said two (2) miles of pipe. In fact, "we're" talking four (4) miles of pipe in a long Bakken lateral. My bad; sorry. I'm glad a reader took time to write and note that. Here's the first comment:
Just some comments to support your idea that the problems with 3-mile horizontals is not generally "controlling the entire length".
Near the end of a two mile horizontal, drillers often experience a lot of drag on the drill string so lubrication methods need to be used to keep the drill pipe free.
Also, drillers can sometimes drill the entire two mile horizontal with just one bit. Near total depth this bit and motor are usually at life's end. Some operators choose to call total depth (TD) when a bit or motor fail just a few hundred feet from TD.
Tripping 4 miles of pipe (2 horiz and 2 vertical) often take 14 to 18 hours of rig time
If three mile holes are drilled you need a powerful rig that can handle 3 miles of drill pipe (and liner) as well as the 2 mile vertical section. These longer holes offer a new set of challenges. 
Original Post
Wow, it doesn't quit. Just days after President Obama said terrorist attacks were an indication that ISIS was losing, that it was on the run, we have the Munich mall massacre, and now "31 minutes ago" there are reports of another huge ISIS bombing Afghanistan.

Fathomless ignorance. Peggy Noonan no doubt would say it is neither "fathomless" nor "ignorance."

Making the social media rounds right now: Ted Cruz "told" us to "vote our conscience." Spoiler alert, Ted: we already voted our conscience. That's why you are not the nominee. It's hard for me to accept a Texan who doesn't keep his word. In hindsight, Cruz never should have made a pledge he could not keep.

Whatever. On to more interesting news. Mike Filloon has an update on the Bakken: with big changes afoot, a stronger industry could emerge long-term. He says this is part two in this series. If so, I believe part one is posted at this link, from July 16, 2016.

Summary of part two:
  • CLR has continued to keep costs very low, but moving to the STACK has improved economics significantly.
  • Costs in the Permian are down, but the Delaware Basin may hold more promise than Midland as newer plays have higher costs initially, so an operator can decrease costs more.
  • Enhanced completions may only cost $400K to $500K more, but can increase production by 35% to 65% so operators are motivated to move to this type of design.
  • We expect continued increases in costs, as well as in the number of wells in plays like the STACK and Permian.
As part two of this series, we continue to look at production increases and cost cuts in the unconventional oil industry. This is not limited to any play, although economics is considered the best in the Permian and STACK. Cost decreases have been seen through better oil service contracts, including frac sand and fluids prices. Water costs are down, as water depots are not as busy and most operators have or are putting pipe in the ground.
Operators continue to decrease drilling and completion times, while improving production. As efficiencies have improved, so has source rock stimulation. This is how the operator breaks or fracs the rock to release oil and natural gas. By doing this well, it increases production significantly. Operators are focusing on the best geology. Core operations produce more resource per foot. When coupled with better well designs performance increases. These are the reasons unconventional US well economics is improving.
Other data points:
  • CLR continues to improve production per dollar. Some of this is due to the STACK, but we are seeing better completions in North Dakota. EURs are up, but some of this is due to high-grading. If we look back to 2012, it [EURs?] is up over 300%. Well costs continue to improve.
  • Bakken well costs have seen improvements. Although it is highlighted here, we have seen this throughout all plays. There was a time when one-mile laterals in the Bakken were around $10 million, but now most operators are doing it for a little more than half that. The above slide shows well costs on an average two-mile lateral. This is the North Dakota average. Operators have tried three mile laterals but it is too difficult to control the entire length. On average, an operator does produce more per foot doing a one-mile lateral, but has to bear the cost of drilling twice as many holes. Now CLR can drill and complete a location for approximately $6 million.
  • We expect oil around $60 to $65/bbl by year end with the possibility of it occurring in 1Q17. We also expect oil prices to be below $50 through Q3. 
Another comment. I am not disagreeing with Mike Filloon on this one. He knows the Bakken a thousand-times better than I do, but I'm not sure I agree with his comment regarding the length of horizontals:
Operators have tried three mile laterals but it is too difficult to control the entire length. 
I've read a lot of "geologist summaries" in the file report, and it does not seem "controlling the entire length" is the long pole in the tepee. Rather, it seems that motor failure or gizmo failure is the biggest problem. The longer the drilling takes, the harder on the motors and the monitoring gizmos. They seem to routinely fail sometime into the second mile. Many well reports that I have read say that the decision to stop drilling just short of the planned bottom hole location was because a motor failed or a monitoring gizmo failed. I don't know if folks realize it, but to replace that motor or monitor, the entire string needs to be brought back up, one section at a time. Takes "forever" when there is two miles of pipeline in the ground. Talk about a lot of man-hours to bring up 2 miles of pipe, replace the motor, and then put back in 2 miles of pipe. 
For the record, I don't see $60 oil by the end of the year; I'm not even sure we will see it in 1Q17 -- and I mean sustained $60 oil, not a day or two of some spikes only to have it pull back.