TGIF -- Last Friday Of 2016 -- December 30, 2016

This is pretty cool. Last week I noted a "$1 billion science project" okayed for Montana: a water reservoir that will be used to "store" wind-generated electricity when the wind is not blowing. Over at OutrumChange.com one can see how much this will cost utility customers. Great analysis.

Something I had not thought about when posting the original story: one would assume the reservoir will freeze during much of the winter. And I guess that's why it's a science project.

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Can't Make This Stuff Up

Why does this not surprise me? Headline over at Yahoo!Finance: Arkansas tight end suspended for Belk Bowl for shoplifting from Belk store. 

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Working Hard To Make A Mountain Out Of This Molehill

Following the election, I went back to watching television for the first time in years. I actually set the alarm to watch MSNBC "Morning Joe" and enjoyed the analysis. But after several weeks, I have grown tired of it. I now remember why I quit watching MSNBC in the first place. So, I switched to watching CNBC "Squawk Box." This morning Joe's opening discussion was on the White House response to "Russian Spygate - 2016."

Maybe it was just me but it certainly seemed like they were trying to make a mountain out of a molehill.

Russian diplomats spying in the US?! Tell me it ain't so! The White House response: "Russian diplomats are to leave immediately. The Russian compounds are closed until further notice. Clear the US immediately."

Where have I heard that before?  "Everybody is to leave here immediately. This cafe is closed until further notice. Clear the room at once."


I'm shocked, I'm shocked to find out Russian diplomats were hacking US e-mail. -- President Obama.

Why does one get the feeling that the President was watching Casablanca while on vacation?

The market's reaction? Yesterday immediately following the breathless announcement of US retaliation, the market did not even react.

Today, futures are up significantly.

Oh, I digressed. After watching MSNBC and CNBC for the past several weeks, I've now seen enough. I no longer watch "Morning Joe" (which means I don't watch MSNBC any more) and my tuning into "Squawk Box" will probably only happen when I can't sleep.

TGIF.

Meanwhile, via Twitter, Putin is sending a jet plane to pick up those 35 spies diplomats. Yes, you know where this is going:

Leaving On A Jet Plane, Peter, Paul, and Mary

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Back To The Bakken

Active rigs:

	12/30/2016	12/30/2015	12/30/2014	12/30/2013	12/30/2012
Active Rigs	39	61	170	187	187

RBN Energy: top 10 RBN Energy posts for the past year.

Diamondback In The Permian -- Filloon -- December 29, 2016

Diamondback in the Permian. Filloon at SeekingAlpha. Archived.

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Statoil's Beaux wells have been updated. 

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The Geo-Political Page

One of the interesting things coming out of the Kerry speech in which he tries to justify backstabbing the Israelis, is this factoid not often talked about in the mainstream press: up to 36% of Palestinians are willing to consider a one-state solution. Very, very interesting.  Kerry himself said: Israel can be Jewish or it can be Democratic, but it can't be both. I guess that's about where the US is in 2016: it can be Judeo-Christian or Democratic but it can't be both.

Dealing With North Dakota Snow; The Difficult We Do Immediately, The Impossible Takes A Little Longer -- December 29, 2016

I was curious how roughnecks are able to get out to the well sites with all that snow in North Dakota. A reader was kind enough to respond.

All in all, we honestly just had to sit it out for a day or two. It's a common maxim of all us local oil field guys is "in winter, things just take longer." Some of the higher-up guys in Texas just don't get it. But we know all to well.

Most operators have local roustabout/construction companies hired out to plow all the lease roads. Road grader with plow rig setup on front seems to be the most common for these private roads.

Secondarily for scooping up the big piles on location a payloader is usually employed. I have also seen a couple Bobcats with a hydraulic snowblower used to clear and widen paths near treaters and pumping units.

"In winter, things just take longer."

That sounds like the quote I often heard among US Army civil engineers when flying into bare base operations in northern Africa decades ago:

The difficult we do immediately, the impossible takes a little longer.

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Melancholy Evening

It's an incredibly melancholy evening for me. It's a personal thing. It will resolve in a day or two. Too many bittersweet memories swirling like a blizzard in my mind.

It's a good night to watch Tinker, Tailor, Soldier, Spy again -- if I've watched it once, I've watched it 150 times -- one of the greatest love stories ever. Seriously. I think I talked about that before.

I could pull myself out of this melancholy mood in a heartbeat by listening to Talking Heads on YouTube with my vintage Beats by Dr Dre head phones -- a Christmas gift from our older daughter.  But for some reason, I want to watch TTSS again.

Update On The Petro Harvester Wells Along The Canadian - North Dakota Border -- December 29, 2016

For background to this note, see the post of December 17, 2016, regarding Petro Harvester wells along the North Dakota - Canadian border.

A reader sent me this note regarding the activity up there:

Petro Harvester is doing some neat stuff up there on the border right now.

They are mainly experimenting with drilling these Midale/Nesson wells. They go down 6K, and do a lateral for about the same. Then a 10-13 stage frac.

They recently completed two more of these wells near Flaxton. They are doing initial flowback to see how these perform. They are using SSi Hydraulic pumping units (336" stroke) with a huge 3 3/4" tubing pump set at a depth of about 3000ft. to get a good well test.

They also will be completing two more wells just drilled near Portal early January. Old, old field in this area. Most of the wells surrounding these new ones were drilled in 1959/60!

If they all perform well, they will re-rig up the Precision rig they have hot stacked nearby and start going to town. If all goes to plan, look for 15 more wells in that area this year!

They are pretty tight-lipped about the production results at this time. They only thing I can get out of them as a contractor is that production is “good.”

The production engineers in Texas are pretty enthusiastic about these wells. We will see what happens!

Attached is a picture of the recently-completed FLX “D” and FLX “B” well pad for your interest.

Nine (9) New Permits -- December 29, 2016

Active rigs:

	12/29/2016	12/29/2015	12/29/2014	12/29/2013	12/29/2012
Active Rigs	39	60	172	187	187

Wells coming off confidential list Friday:

• 31332, 235 (no typo), Oasis, Johnsrud 5198 12-18 9B, Siverston, 36 stages, 4 million lbs, t6/16; cum 122K 10/16;
• 31892, 1,717, Hess, BB-Sivertson-151-95-2019H-6, Blue Buttes, 53 stages, 3.7 million lbs, t11/16; cum --
• 32629, 219, SM Energy, Selle 4B-4HN, West Ambrose, t9/16; cum 8K 10/16;

Nine (9) new permits:

• Operators: Hess (5), Oasis (4)
• Fields: Antelope (McKenzie), Banks (McKenzie)
• Comments:

One producing well (DUC) completed:
30430, 1,438, Statoil, Jack 21-16 8TFH, East Fork, t11/16; cum -- ; the file report has an excellent map of the area with surface owners; information regarding microseismic survey; very, very interesting

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31332, see above, Oasis, Johnsrud 5198 12-18 9B, Siverston:

Date	Oil Runs	MCF Sold
10-2016	32034	61837
9-2016	32204	44747
8-2016	27748	41866
7-2016	29638	44731
6-2016	821	128

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The AN-Dinwoodie Wells

Note: the AN-Dinwoodie wells will no longer be tracked here. They will be tracked elsewhere.
Proposed location for a 5-well Hess AN-Dinwoodie pad:

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The AN-Dinwoodie Wells

Note: the AN-Dinwoodie wells will no longer be tracked here. They will be tracked elsewhere.

The first one:

• 19887, 714, Hess, AN-Dinwoodie-153-94-2833H1, Antelope, Sanish pool, t7/11; cum 208K 10/16; from the file report, the geologist's notes: the Antelope field covers more than 76 square miles and produces from seven pools: Devonian, Madison, Red River, Sanish, Silurian, Stonewall, and Winnipeg/Deadwood. Sanish pool cumulative production totals from December 1953 through January 2011 is: 13,628,037 BO; 1,324,964 BW; and, 13,049,445 MCFG. Peak oil production occurred in 1966 with a maximum of 34 wells producing from the Sanish Pool during 1967 and 1968. Seventeen wells are currently producing from the Sanish pool in Antelope field.

The Devonian Three Forks formation and target zone: 11,262' MD (10,866' TVD). The top of the ideal preferred target zone is approximately 16' TST beneath the top of the Three Forks formation.

The target zone ... informally named "D" and "E" intervals...the lateral was drilled 100% within the upper portion of the Three Forks formation, with greater than 70% of the well bore to be completed within the ideal preferred target porosity. Drilled from re-entry to TD in 23.7 days; drilling along the the lateral was efficiently executed in two runs.

Then:

• 33238, conf, Hess, AN-Dinwoodie-153-94-2833H-8, Antelope, no production data,
• 33237, conf, Hess, AN-Dinwoodie-153-94-2833H-7, Antelope, no production data,
• 33236, rigon site (10/18), Hess, AN-Dinwoodie-153-94-2833H-6, Antelope, no production data,
• 33235, conf, Hess, AN-Dinwoodie-153-94-2833H-5, Antelope, no production data,
• 33234, conf, Hess, AN-Dinwoodie-153-94-2833H-4, Antelope, no production data,

• 32860, 2,708, Hess, AN-Dinwoodie-153-94-2833H-2, Antelope-Sanish, t10/17; cum 157K 10/18;
• 32861, 2,202, Hess, AN-Dinwoodie-153-94-2833H-3, Antelope-Sanish, t10/17; cum 196K 10/18;
• 32862, 1,952, Hess, AN-Dinwoodie-LE-153-94-2833H-8, Antelope-Sanish, t10/17; cum 200K 10/18;
• 19887, 714, Hess, AN-Dinwoodie-153-94-2833H-1, Antelope-Sanish, t7/11; cum 247K 10/18; no bump in production;
  

First Very Large Ethane Carrier (VLEC) Launches From Houston; En Route To India; Reason #345 Why I Love To Blog -- December 29, 2016

I have said many, many times I am inappropriately exuberant about the Bakken.

I am equally inappropriately exuberant about the US energy industry. I'm not convinced the average American is remotely aware of how incredible this story is likely to become over the next two decades.

That's why I tried to keep track of the US energy revolution ever since I started blogging, over at "The Big Stories." It looks like I'm going to have to add "ethane" to the list. Just some of the gazillion posts on ethane at the blog:

• first ethane shipment departs Texas, August 1, 2016
• update on ethane production in the Bakken, June 28, 2016
• Shell announces $2 billion ethane processing plant, January 7, 2012

But this is reason #345 why I love to blog. Just yesterday I posted an RBN energy story suggesting that ethane demand will surge. Today, a reader sends me a link to the Houston Business Journal: massive ethane shipment launches out of Houston.

Let's see if any of the data points have been foreshadowed or mentioned previously on the blog:

• Ethane Crystal: the carrier is the first of its kind to be classified as a VLEC, or a very large ethane carrier; can carry 3x the terminal's initial shipments
• first of six VLECs to be manufactured by South Korea's Samsung Heavy Industries Co;
• building these VLECs for India's Reliance Industries;
• Houston-based EPD terminal;
• Morgan's Point;

I'm curious how big the Ethane Crystal is and whether it will transit the Panama Canal (obviously it will).

• 228 meters long -- source
• 37 meters wide

From an RBN Energy post on the Panama Canal expansion:

Although the Panama Canal has remained a significant shipping route, its importance to energy markets has diminished as ship sizes have grown larger. 

Oil and petroleum products make up only about 20% of commodities passing through the canal.  Ultra Large Crude Carriers (ULCCs) are nearly five times larger than the maximum capacity of the current canal, and most other big crude vessels won’t fit. 

But even though the largest crude oil vessels still will not be able to use the expanded canal, a lot of other ships will.  Today size restrictions prevent more than 90% of the world’s fleet of LNG carriers from using the waterway.  In stark contrast, after the expansion only 10% of the LNG fleet will not fit.

In fact, the only LNG carriers that will not be able to use the canal because of their width are the Q-Flex (164 feet wide) and Q-Max (180 feet wide), vessels whose use was pioneered by Qatar Gas to move staggering volumes of LNG (up to about 157 metric tons or MT for the Q-Flex and about 193 MT for the Q-Max). And it’s possible (due in part to pressure from the Japanese government and others) that the Panama Canal Authority may eventually allow Q-Flex carriers through, once canal operators gain some experience with carriers 160 feet wide.

In summary, the expansion project will be a very big deal for LNG, LPG and petroleum product exports from the U.S. Gulf Coast, allowing these commodities cheaper and faster access to Asia/Pacific markets.  The canal expansion will be less significant for crude oil exports.  However, the improved economics of moving petroleum products to Asia/Pacific markets will likely improve margins for Gulf Coast refineries, and as a consequence support U.S. crude oil prices.  Bottom line – the Panama Canal expansion should provide a boost to natural gas, NGL and crude prices.  In the light of current price levels, it won’t stave off any creditors or put many rigs back to work.  But these days, every little bit helps.

FuelFix also posted a story on the Ethane Crystal yesterday:

• en route to India
• feedstock for plastics
• Morgan's Point: the world's largest ethane export terminal opened this fall
• Ethane Crystal was the first; Ethane Emerald, the second, completed in December
• can carry up to 87,000 cubi meters of ethane
• ethane used primary to make ethylene, the primary building block of most plastics
• the first vessels exporting ethane from Morgan's Point were called "dragon class ships": carried 27,500 cubic meters of ethan
• this year marked the first US natural gas was exported to Europe, both in ethane and in LNG form

It's quite amazing: the US LNG export market and the expansion of the Panama Canal coming together at the same time.

Despite the Obama administration keystoning three important crude oil pipelines the energy sector continues to make huge strides.

First Time Unemployment Claims Drop 10,000 -- December 29, 2016

Updates

Later, 2:42 p.m. Central Time: how lame is this lame duck? The president closes two "Russian compounds" (euphemism for spy operations) and expels 35 Russian "diplomats" (euphemism for spies), and the market's reaction: meh. Russia's reaction: psssh. And the media's reaction? They're all waiting for a PEOTUS tweet. It should be noted that the current administration noted that these two "compounds" and these 35 diplomats were "doing this" for ten years. So, I guess it took President Obama a lost election to finally make a decision.

Later, 12:08 p.m. Central Time: in the original post, I noted that first time unemployment claims dropped significantly. All things being equal, one would assume that if unemployment claims drop, the demand for gasoline should increase. So, let's look. Gasoline demand for the same period:

Original Post

Natural gas: huge draw in natural gas; 5x the normal. At 237 billion cubic feet did not quite break the record of 240 bcf (dynamic link here).

Active rigs:

	12/29/2016	12/29/2015	12/29/2014	12/29/2013	12/29/2012
Active Rigs	38	60	172	187	187

RBN Energy: Production headed higher in the latest EIA drilling productivity report.

Crude oil and natural gas production growth stalled in 2015 and has declined this year in some of the big shale basins.   But we may be seeing a turnaround.  The latest EIA Drilling Productivity Report, released on December 12, 2016, included upward revisions to its recent shale production estimates and also projects an increase in its one-month outlook for the first time in 21 months (since its March 2015 report).

DUCs by region. Slightly more than 800.

Jobs: First time unemployment claims -- down 10,000 to 265,000. At The WSJ: partly reversed the jump in the previous week. So, we should see gasoline demand up later today when the numbers are posted.

GDP now, 4Q16: latest forecast, December 22, 2016 -- 2.5%.

The GDPNow model forecast for real GDP growth (seasonally adjusted annual rate) in the fourth quarter of 2016 is 2.5 percent on December 22, down from 2.6 percent on December 16.

The forecasts of fourth-quarter real personal consumption expenditures and real intellectual property products investment growth increased modestly after this morning's GDP and personal income outlays reports from the U.S. Bureau of Economic Analysis (BEA).

These were offset by modest declines in the forecasted contributions to growth from residential, nonresidential equipment and inventory investment after the aforementioned BEA releases, this morning's advance manufacturing report from the U.S. Census Bureau, and yesterday's existing-home sales release from the National Association of Realtors.

The next GDP Now forecast is scheduled for January 3, 2017. See you next year.

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Salt, A World History

Mark Kurlansky

c. 2002

The Welsh Jungian psychologist Ernest Jones, friend of Sigmund Freud and a leading force in bringing psychoanalysis to Britain and the United States, argues that the human obsession with salt was a fixation he found irrational and subconsciously sexual, and from there had many, many examples to support his case. One example:

The Romans, Jones pointed out, called a man in love salax, in a salted state, which is the origin of the word salacious.

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Taurus, the Bull

The first time I ever came across the word "aurochs" was in Kurlansky's book on the history of salt. 

From wiki:

Taurine cattle (Bos taurus taurus), also called European cattle, are a subspecies of domesticated cattle originating in the Near East.

Both taurine cattle and indicine cattle (zebus) are descended from the aurochs.

Taurine cattle were originally considered a distinct species, but are now typically grouped with zebus and aurochs into one species, Bos taurus.

Most modern breeds of cattle are taurine cattle. Genetic research suggests the entire modern stock of taurine cattle may have arisen from as few as 80 aurochs tamed in the upper reaches of Mesopotamia about 10,500 years ago near the villages of Çayönü in southeastern Turkey and Dja'de el Mughara in northern Iraq.

The genome sequence of the Hereford breed of taurine cattle was published by the Bovine Genome Sequencing and Analysis Consortium in 2009.

Update, 7:14 p.m. Central Time: I posted the note about aurochs about 1:00 p.m. earlier today. I had never heard of aurochs. Now, I see Drudge links a story on aurochs. 

Top Bakken Stories Of 2016

Elevator speech: there were two stories that dominated the Bakken in 2016: a) Bakken 2.0; and, b) keystoning the DAPL as one of the President's last lame duck acts.

Internationally, the big stories:

• Saudi Arabia
• reverses production policy in an attempt to raise crude oil prices; an existential issue
• the Saudi Aramco IPO still being discussed
• widening of the Panama Canal: update on the Panama Canal expansion
• surge in US LNG exports
• another first: US shale LNG to Japan
• US LNG exports continue to surge  
• gasoline consumption: Mexico jumps to 4th place (huge story) (see commentary here, the December 29, 2016, entry)
• surge in steam cracker construction in the US; demand for ethane will increase significantly

Nationally the biggest story to affect the oil patch: without question, the election of Donald Trump as president

• make America great again: election slogan
• buy American, hire American: post-election slogan
• climate change denier: nominee to head the EPA
• business man:
• art of the deal:
• pragmatic:
• no love lost between him, the Mideast:

Nationally, the biggest story to affect the oil patch, runner-up: US crude oil exports begin to surge

• XOM ships its first cargo crude oil from the US after ban lifted

Bakken 2.0

• Get ready for "fast and furious" -- Lynn Helms
• Bakken 2.0: nine DUCs completed; most are high-IP wells; twenty-two permits renewed 
• Fewer rigs will establish new active rig baseline
• Mega-pads
• CLR wants to drill 25 wells on an existing 2560-acre unit in Elm Tree
• Mega-fracks
• high-intensity fracks
• DUCs
• Re-fracks
• Larger spacing units: 1280-acre drilling units remained the norm; but more 2560-acre drilling units, and a few 5120-acre units
• 5,120-acre spacing units in the Bakken; and, here
• EURs growing: up to 1.5 million boe in some cases
• EURs in the Bakken approaching one million boe

Dakota Access Pipeline

• Keystoned by President Obama in late 2016
  

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Top Stories Of 2016
By Category

Subject to Change

Top Story of The Year: Donald Trump elected President of the US

Runner-up: Shale revolution vs Saudi Arabia; OPEC agrees to cut production

• Operating costs: the Bakken vs Saudi Arabia

The world: Donald Trump elected President of the US

The US: Donald Trump elected President of the US

North Dakota, energy: President Obama keystoning the DAPL

North Dakota, technology: drones
Israelis testing drones in North Dakota

Most exciting small operator in the Bakken: Halcon

Most exciting large operator in the Bakken: EOG

Most surprising story of 2016: Donald Trump elected President of the US

The deals: not as many as expected
the list of 2016 deals

Record price per acre: N/A

Bakken operators, rigs: N/A
 
Bakken operations, production: recovers, after slump
statewide production falls below 1 million bopd; but recovers to over 1 million bopd the following month (October)

Bakken operations, density: CLR
CLR wants to drill 25 wells on an existing 2560-acre unit in Elm Tree

Top prediction for 2017: Lynn Helms says ND production will hit its low in late 2017

Biggest story in takeaway capacity: President Obama' keystoning the DAPL

CBR: fading
Update on Bakken CBR to the three coasts

Pipeline: President Obama's last illegal act keystoning the DAPL

Fracking: tale of two halves

• First half of the year: Whiting and CLR to stop fracking in the Bakken; EOG already had; Statoil already had
• Second half of the year:  high-intensity fracking increases

Flaring: North Dakota "hits" flaring target four (4) years early

Natural gas: processing plants
three more natural gas processing plants coming on line in North Dakota before end of year

Refining: Dickinson refinery sold to Tesoro Corp

• MDU sells Dickinson refinery to Tesoro Corp

Investment story of the year: "no" major bankruptcies in the Bakken

The "Other" Williston Basin formations: the Madison

Bakken economy (too many to list): decision on new Williston airport

• Williston High School Coyotes play last game in Phil Jackson Fieldhouse
• The $500 million fertilizer plant in western North Dakota is at the halfway mark
• Western Area Water Supply Authority -- a huge success story -- celebrates its fifth anniversary 

History: birthday story

• North Dakota's first oil well
• "Happy Birthday" to Clarence Iverson #1

Random Update On Future Of EVs -- WSJ -- December 29, 2016

From The WSJ, future bleak in near-term. Data points:

• Chevy Bolt in the show rooms
• Tesla Model 3 to be built in late 2017
• average price of EV: between industry average ($35,000) and luxury compat ($42,000): about $39,000
• Tesla: has posted a net loss of $550 million so far this year
• industry dependent on tax credits
• federal tax credit of $7,500 applies only to the maker's first 200,000 cars; fast running out for GM, Tesla
• federal tax credit important for GM Bolt which lists for $37,750
• quick charge: 20 minutes; assuming you can find charging station
• Tesla has 350 supercharger stations in the US; a few thousand overall vs about 100,000 gas stations

At best, EVs are an individual's or family's second or third car, except for those who never take a trip "away" from home.

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Holiday Retail

From The WSJ, US retailers on pace for best holiday season in years. Some chalk it up to US consumer confidence, best since 2001, following the November election.