WTI Up Almost 1% -- Why? -- November 17, 2017

Updates

November 17, 2017: see first comment about current production milestones, records.

Original Post

Two wells coming off confidential list today:

• 32977, SI/NC, BR, Dodge 3B MBH, Dimmick Lake, no production data,  
• 29090, SI/NC, Petro-Hunt, USA 153-95-23C-14-6H, no production data,

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

Story Of The Day

Artificial lift: this story deserves a stand-alone post of its own; will get around to it later. From Rigzone.  For newbies, one can look at three-legged stool regarding quality/success of a well:

• location
• location
• location.

Okay, just kidding. Here are the three "technology" pieces

• drilling
• completing (fracking, e.g.)
• lift (pump)

Rigzone looks at artificial lift.  From industry expert spokesman:

• Most often, lifting liquids from the well allows the gas to flow using its own energy, but today some methods can also aid in lifting the gas.
• Often 50 percent of the resource is left to be extracted after the high-rate initial flow period,” Scott said. “Companies that win in unconventionals are the companies that get artificial lift right. I like to use the term ‘artificial lift first

****************************************
Second Story Of The Day 

From The Williston Herald: production cleared 1.1 million bopd and more increases may be ahead.

For the eighth consecutive month, oil production in North Dakota hovered over the 1 million barrel per day mark, and incrementally climbed its way back to another milestone.

September production was 1.107 million barrels per day, up from August’s 1.089 million. It is the first time since March 2016 that North Dakota oil production exceeded 1.1 million.

That,  and the production of natural gas:

These production numbers put state revenues at 17 percent above forecasts, despite prices being a little lower than forecast.

“We are still 2 percent low on that,” Department of MIneral Resources Director Lynn Helms said. “If we project that through the biennium, production numbers will make up for it, but we are still lagging in terms of prices on revenue forecast.”

What's going on in the Bakken?

Longer lateral lines are part of what’s driving increased production, along with more sand and larger, slickwater hydraulic fracturing techniques. 

“One place that’s a standout is what Liberty is doing in northern Mountrail and southern Burke Counties,” Helms said. “I took a look at some of those extended lateral wells that are producing 2.5 to 3 times the initial production rate of the 2-mile laterals that were previously drilled in that area. That’s pretty encouraging, and it’s already affecting Mountrail numbers.”

Burke County numbers aren’t showing an effect yet, since some of the wells production statistics are still confidential.

These improvements are keeping the Bakken in the No. 1 and 2 place in terms of production per rig.

One reason why there is so much activity in the Permian vs the Bakken right now:

“We still have to compete with the fact that there’s a lot of leasehold to procure in the Permian and the Anadarko, but once those basins reach a similar level of maturity, you’d expect companies to bring their capital back here, where they make more money for every dollar invested.”

Long laterals:

• more of them, mostly in non-core areas
• NDIC has re-spaced some 1280-acre units to 1920-acre units to accomodate the need for longer laterals
• only three wells meeting these new parameters are presently producing
• a bump should occur when more of these long-lateral wells come on line
• when looking at month-over-month production increases of almost 20,000 barrels, that represents about one-sixth, one-seventh of that increase; a significant increase
• example: once Slawson is able to complete some of these in Van Hook, it looks like that one pad all by itself could potentially breach 20,000 barrels per day

Flaring problem? a one-time maintenance problem that has been fixed

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

WTI

WTI: up almost 1% in past 24 hours? Why? Was it the closure of the northern leg of the Keystone pipeline, major source of  heavy oil; US refineries optimized for heavy oil. Concerns that crude oil imports of heavy oil from Venezuela could fall? Or was it Harold Hamm's comments (see below). I don't know -- it will be interesting to watch price of oil for next few days as Keystone / Venezuela stories continue to unfold.

WTI: for a few dollars more --

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

Keystone Leak

Updates

November 19, 2017: story in local news, WJHL.

November 18, 2017: oil pipeline lead controlled, no threat to public.

Original Post 

Keystone XL lead. Data points from Reuters:

• location: Amherst, SD:
• Amherst, SD, about 10 miles south of North Dakota state line in northeastern South Dakota
• population unknown
• Amherst is an unincorporated community in Marshall County, South Dakota, United States. Although not tracked by the Census Bureau, Amherst has been assigned the ZIP code of 57421
• spill:
• 5,000 bbl (or 210,000 gallons as reported by most mainstream media outlets)
• contained at site
• cause: unknown
• implications:
• Nebraska regulators to release their decision on Keystone expansion on Monday, four days from now
• Nebraska regulators not allowed to use spill as factor in their decision since TransCanada has already obtained an approved environmental impact statement
• northern leg of system shut down (from Hardisty, Alberta, to Cushing, OK) and to Wood River and Patoka in Illinois
• southern leg remains open
• main economic concern for Canada: Canadian heavy crude differentials for DECEMBER delivery in Hardisty have widened to $14.65 per bbl below US crude from a discount of around $14.20/bbl the previous day
• for January (2018) delivery: widened to $15.50 below US crude
• for newbies: breakeven price for Canadian crude has always been significantly higher than US shale
• Canadian sell-off could worsen if pipeline is shut down for extended period of time
• for US refiners: possibly a double whammy if Venezuela delivers less heavy crude oil to the states

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

Other News

TSLA: shares could surge in an "up" market with news last night of a) truck; b) roadster

• Bloomberg gadly via The Washington Post  not impressed
• TSLA shareholders likely to go ga-ga
• critics will likely gag
• batteries alone cost $200,000+ for the truck
• conventional diesel trucks cost in range of $120,000
• truckers believe Tesla trucks would have to replace batteries every four or five years

Harold Hamm says folks like me are inappropriately exuberant about the Bakken
EIA's optimist forecasts are depressing US oil prices
 

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

Back To The Bakken

Active rigs:

$55.94↑	11/17/2017	11/17/2016	11/17/2015	11/17/2014	11/17/2013
Active Rigs	55	38	64	184	183

RBN Energy: Brent versus WTI differential, pipeline bottlenecks and crude oil exports. Great, great article. First in a series. Archived.