Sunday, October 23, 2016

Bakken Update: Contributing To The Oil Glut -- 31% Production Increase, Average EURs of Almost 1 Million BOE -- October 23, 2016

Over at SeekingAlpha:

  • US unconventional wells continue to improve with production increases seen across all plays
  • Increased production per foot continues to stress oil prices as new wells are completed in the best core areas
  • The Bakken core has seen consistent production increases per well regardless of interval
  • Bakken/Three Forks core wells model to an EUR of 875 MBOE
Obviously a must read. It may one of his best, and he has had many, many excellent columns.

By the way, this column by Filloon, at least for me, supports my contention that we are now in the beginning stages of Bakken 2.0.

Links Over At Carpe Diem

Excellent, as usual.  

Box Seats -- Bass Hall -- Ft Worth 
Phantom of the Opera

I expect several more photos from our daughter tomorrow, but these will have to do this evening. This was a big, big deal.

My wife treated our daughter and our two older granddaughters to box seats in Bass Hall to see Phantom of the Opera. May, of course, joined them -- the four -- girls' night out.

Our oldest granddaughter:

Blurry, our middle granddaughter and her mother (our daughter).

Meanwhile I had Sophia, the youngest granddaughter all evening. And Sophia and I had a grand, grand time.  

Decades ago, May and I were stationed in England, not far from London. We were there for three years and we saw every stage play imaginable, several more than once. We always took our two daughters. The ones I remember: Phantom of the Opera, Les Miserables, Cats, Saigon, Me and My Girl, Starlight Express.

We saw Phantom of the Opera at least twice, and Les Miserables at least three times.

ObamaCare Death Spiral; Sunday Sports -- Another Great Day -- October 23, 2016

The hefty increases Pennsylvania has approved for next year's individual health plans provide new fodder for Obamacare critics who say the federal law's insurance marketplace is bound to fail.
The state's Insurance Department last week approved increases averaging 32.5 percent for the 2017 plans, making Pennsylvania one of 14 states so far to increase individual rates by an average of more than 30 percent.
The increases have renewed debate about whether the market is heading toward what experts call a “death spiral,” a scenario in which high premiums cause all but the sickest people to leave the market, necessitating even larger increases to cover insurers' costs until insurance becomes unaffordable.
“I think we're in it [an ObamaCare death spiral]. I just think it's slow,” said Jeffrey Anderson, a senior fellow at the Hudson Institute, a conservative Washington, D.C.-based think tank.
Sports Day -- Sunday

NFL: Wow, talk about a tough choice -- North Dakota's Carson Wentz (Philadelphia Eagles) or the Minnesota Vikings (only undefeated NFL team)? Boy, by a hair, I guess I'm "going for the" Vikings, but I would be just as thrilled if Wentz wins. Nah, at the end of the day, I would like to see Vikings keep their streak going. (Later, it looks like the Eagles will win -- 5 minutes left in the 4th; 21 - 3; good for Carson Wentz; makes my day.)

Later: if I were the coach, general manager, or owner of either the Seattle Seahawks or the Arizona Cardinals, I would fire the field goal kicker -- before midnight. Missing chip shots in a tie game in overtime -- no excuse. 

NASCAR: And then there's the big Talladega race later this afternoon. And why is this huge race on NBCSN? No wonder NASCAR is losing viewers. Fortunately we get NBCSN, so it's not a big deal for me, but still? Talladega will determine which of the twelve will move to the round of eight -- four will be cut.

Right now, Jimmie Johnson and Kevin Havick have each clinched a spot in the round of 8.  The others in the chase (the round of 12): #20 - Matt Kenseth; #18 - Kyle Busch, #41 - Kurt Busch, #19 - Carl Edwards, #2 - Brad Keselowski, #78 - Martin Truex, Jr., #3 - Austin Dillon, #22 - Joey Logano, #11 - Denny Hamlin, and #24 - Chase Elliott.

Possible scenarios here. The following will clinch a spot even if they lead no laps, as long as they finish "high" (finish required to clinch a spot without leading any laps):
  • #20 - Kenseth (28)
  • #18 - Kyle Busch (26)
  • #19 - Edwards (23)
  • #41 -Kurt Busch (16)
  • #78 - Truex (12)
It's hard to believe those five can't do at least that well (unless, "bad luck" = wreck; DNF).
So, that leaves only one other driver to make the round of 8.

On points, it goes to  #3-Dillon, but it's hard to believe #2 - Keselowski won't find a way to get into the round of 8.
NASCAR Updates

Joey Logano wins. and now with Jimmie Johnson and Kevin Harvick. Rounding out the top 8: Matt Kenseth, Carl Edwards, Denny Hamlin, Kurt and Kyle Busch.

Keselowski also blew an engine, eliminating him. But he led a race-high 90 laps. Pretty amazing.

Lap ~ 42 : #78 - Martin Truex, Jr., off the course, with blown engine? Wow, that changes everything. Later: Truex is out of the race; ends his "chase."
Another Global Warming Regressive Tax

The new refrigerant will cost $80 vs the $4 we currently pay.

A reader tells me that "his heating man" and his employee were talking about this, this summer when they put in a new furnace. They had to replace the coil in furnace for the cooling part of the a/c. They said a new type of refrigerant was going to be coming out in a year or two and they estimated the cost increase to replace/ or install an air conditioner was going to add  $200- $ 300 per job.

Years ago, my father had a few multi-unit rentals, including some small apartment complexes. He often talked about the expense of putting in new furnaces.  

Of course, this will also affect the automobile industry.

Ah, yes, the Obama legacy.

Oasis, Halcon To Report Wells Monday -- October 23, 2016

Monday, October 24, 2016
  • 31122, 811, Oasis, Hysted 5200 12-30 11T, Three Forks 1st bench, Camp, 36 stages, 4 million lbs, t4/16; cum 25K 8/16;
  • 32557, SI/NC, SM Energy, Russell 2B-4HS, Burg, no production data,
Sunday, October 23, 2016
  • 32170, SI/NC, Petro-Hunt, Dolezal 146-97-31D-30-1H, Little Knife, no production data,
Saturday, October 22, 2016
  • 27417, 2,558, HRC, Fort Berthold 148-95-25B-36-3H, Eagle Nest, 33 stages, 5 million lbs, t5/16; cum 3K after four days;
  • 32002, SI/NC, BR, CCU Zephyr 34-34 MBH, Corral Creek, no production data,
  • 32614, 380, SM Energy, Lystad 1-25HS, a Three Forks well, 20 stages, 2.7 million lbs, Ambrose, t9/16; cum --

27417, see above, HRC, Fort Berthold 148-95-25B-36-3H, Eagle Nest:

DateOil RunsMCF Sold

31122, see above, Oasis, Hysted 5200 12-30 11T, Camp:

DateOil RunsMCF Sold

Painting Poinsettias

Sophia, age 2 years 3.5 months

WAWSA Celebrates Its Five-Year Anniversary -- October 23, 2016

From The [Crosby] Journal:
Many rural families in Divide County are now served by the Western Area Water Supply Project (WAWSP), which will have the capacity to serve as many as 125,000 people by 2038.
WAWSP celebrates its fifth anniversary this year with approximately 1,200 miles of pipeline installed.
The project is managed by the Western Area Water Supply Authority (WAWSA), which has another 650 miles of pipeline planned.
“Every day we are getting more users connected and getting more water infrastructure built,” says Jaret Wirtz, WAWSA’s executive director.
WAWSP, which is a public-private partnership, delivers water to Columbus, Crosby, Fortuna, Noonan, Ray, Ross, Stanley, Tioga, Watford City, Wildrose and Williston.
The partnership also serves rural residents throughout Burke, Divide, McKenzie, Mountrail and Williams Counties.
The authority takes water from the Missouri River and treats it at the Williston Regional Water Treatment Plant. The Williston plant serves as the primary supplier; the R & T Water Treatment Plant near Ray offers a supplemental supply source.
WAWSA has increased the Williston plant’s capacity to 21 million gallons per day and has built and/or upgraded two water towers, 10 reservoirs and 10 pump stations. The authority plans to construct and upgrade an additional tower, as well as four more pump stations and one more reservoir.
I remember folks discussing this project/authority when it was first proposed many years ago. 

Williston To Begin Open Comment On Draft Comprehensive Plans For City And County -- October 23, 2016

From the City of Williston, North Dakota:
In January 2015 the City of Williston, Williams County and the North Dakota Department of Transportation began a joint project updating the comprehensive plan.
The comprehensive plan addresses the City of Williston and the surrounding area in Williams County.
The study area boundary is approximately one mile west and north of the Williston NW Bypass (US 85), and one mile east of County Highway 9 on the east side of the study area. The southern boundary of the study area consists of the Missouri River.
The plan is referred to as the Williston and Williams County Regional Plan Update. This plan consists of a comprehensive land use plan, transportation plan and corridor studies on portions of US Highway 2 and a portion of State Route 1804.
Study areas:
  • west: one mile west and north of the Williston NW Bypass (US 85): new airport in this area 
  • east: one mile east of County Highway 9 on the east side of the study area: least developed 
  • south to include the Missouri River: new four lane bridge 
  • Transportation Corridor A: from 4-mile corner west of Williston to the 6-mile corner north of Williston 
  • Transportation Corridor B: from the Montana state line to the 4-mile corner west of Williston
  • Transportation Corridor C: from the 6-mile corner north of Williston, north to the 13-mle corner 
  • Transportation Corridor D: ND State Highway 1804 from the Little Muddy River crossing west (sic) to 123rd Ave/County Road 42) 
  • Transportation Corridor E: ND State Highway 1804 from US 2/85 west (sic) to the Little Muddy River crossing
The project is at the full draft public review and comment stage. The next step following this is the public hearing process where there will be additional opportunity for public comment.

There are seven draft documents at the linked site.

The comprehensive plan (draft) is 263 pages long (the internet PDF). The future airport and the existing airport sites are discussed starting on page 117. A map of the new airport site is fond on page 261. The transportation plan (draft)is 135 pages long. (Note: the hard copy is numbered differently than the internet PDF that downloads.)

Another Geico Award Nominee -- October 23, 2016


Later, 7:36 p.m. Central Time:  see first comment below. I brought it up here to make it browser-searchable.
WSJ seems to be forecasting something that's already happening...aggregate DUCS over the 4 oil basins (ie the Bakken, Niobrara, Permian, and Eagle Ford) have now been lower in each of the last 6 months, as oil well completions started picking up when oil prices first started rising in the spring, while the DUC count in the natural gas regions (the Marcellus, Utica, and the Haynesville) has generally slowly declined since December 2013, as new natural gas drilling fell to record low levels...
Original Post
From the linked article below, the new nominee:  Tim Rezvan.
Tim Rezvan, managing director of Americas research at Mizuho Securities USA Inc., said that while the untapped wells represent a large resource, it will take time to begin pumping them.
“You can’t get those turned on overnight,” Mr. Rezvan said.
I don't know what he means by "overnight," but he's obviously not reading the MillionDollarWay blog. LOL. The production from any DUC completed in the Bakken will show up within 30 days, in the next Director's Cut. In the oil industry, production from a well within 30 days is pretty much "overnight."

From spud to production in the Bakken, we are talking a couple of weeks if the price is right.

From The Wall Street Journal:
U.S. oil and gas companies have drilled thousands of wells they have yet to tap, creating a ready reserve of fuel that could surge onto the market when energy prices recover.
As producers report quarterly earnings over the next few weeks, a question looms: When will they start exploiting these “drilled but uncompleted” wells?
While the industry often has an inventory of drilled wells awaiting completion, the backlog has grown significantly over the past two years as companies like Continental Resources Inc. and EOG Resources Inc. deliberately delayed tapping wells to wait for higher energy prices.
Federal estimates show the number of such wells in the nation’s seven most prolific drilling regions stood at 5,069 in September, up from 3,768 in January 2014, before oil prices began falling.
Because companies have already spent the money to drill the wells, known in the industry as DUCs, bringing on the supply they hold is cheaper than drilling and fracking a new well. That means DUCs are an economic proposition for many companies, especially with U.S. crude now trading at around $50 a barrel.
Ryan Duman, a senior analyst at energy consulting firm Wood Mackenzie, said he expects to see companies completing many of the delayed wells in the next 18 months.
“You’re at a point where pretty much every DUC that’s sitting out there is in the money,” Mr. Duman said.
Wood Mackenzie estimates that the industry has about 2,000 more wells awaiting completion than it normally would. Those extra DUCs are capable of producing more than 250,000 barrels a day of crude and 4 billion cubic feet of natural gas a day, the firm estimates. That is equal to roughly half of California’s daily oil output in July and West Virginia’s daily gas production the same month.
Mr. Duman called the untapped resources contained in the DUCs a “meaningful amount of supply” that would have “some implications on commodity prices.”
Many of the DUCs, he added, are located in the Marcellus drilling region of Pennsylvania and the Bakken in North Dakota.
You can see all Geico Award 2016 nominees at the link at the sidebar at the right. Obama would most likely win the 2016 award, but previous winners cannot be repeat winners; they can be nominated.

In the "Radicalized Muslim Terror" category, President Obama was nominated for his under-estimation of the JV team; went golfing; would get the intel briefing on the 15th tee. That nomination was made quite some time ago.

Today, in The WSJ we read that the JV team has struck Kirkuk, even as the allies move in on Mosul.  Having withdrawn 99% of US troops from Iraq, the US no longer has the capability of fighting the JV team in two different cities. Whatever.

$10,000 Per Turbine Each Year -- Farmers In The Midwest -- October 23, 2016

From Bloomberg: wind is the new corn for struggling farmers.
Wind energy, the fastest-growing source of electricity in the U.S., is transforming low-income rural areas in ways not seen since the federal government gave land to homesteaders 150 years ago. As commodity prices threaten to reach decade lows and farmers struggle to meet debt payments, wind has become the newest cash crop, saving family farms across a wide swath of the heartland.
The money Richard Wilson earns from leasing his land for about 35 turbines run by the Golden West Wind Energy Center outside Colorado Springs has kept him from having to sell off pieces of the 6,000-acre cattle and wheat ranch his family has owned since 1948.
“We weren’t making enough money to sustain ourselves,” he says. “Now we’re in a position where we can operate our farm for another generation at least.”
For others, turbines spin off six-figure incomes that have allowed them to retire from farming altogether.
“One turbine has changed my life,” says Ed Woolsey, a fifth-generation Iowa farmer and a principal with Crosswinds Energy Project, a community collective that manages 10 turbines and sells the power they generate to rural electric cooperatives.
“Before, I raised corn and soybeans and cattle. Now I don’t. I’m a wind farmer.” Woolsey leases his farm to others to cultivate. Neither he nor Wilson would disclose how much he earns, but landowners who sign lease agreements with wind companies typically get between $7,000 and $10,000 per turbine each year.
It's likely it's just a matter of time before venture capitalists buy farmland simply for wind farms. 

In North Dakota:
  • farm subsidies for corn
  • corn for ethanol
  • wind energy
  • royalties from oil
  • easements for pipelines 
  • payments for surface rights -- pads and roads
I guess about the only thing we're waiting on: solar farms.