Wednesday, February 1, 2017

More Gages For DAPL At The Reservation -- That Was Easy -- February 1, 2017

You mean that's it? A couple of extra gages and everyone's happy? You have got to be kidding. Reminds me of Roseanne Rossannadanna ("never mid") on NBC's "Saturday Night Live" many, many years ago.

A screen shot of the on-line "front-page" of The Bismarck Tribune:

For such a quick conclusion, the casino must have been losing a lot of money, as well as some charities for Native Americans.

CORRECTION: Most Likely A TYPO: EOG Reports A Huge Well In The Parshall -- February 1, 2017


February 6, 2017: see first comment. This is most likely a typo. Again, instead of re-typing everything -- read the first comment.
IP: Most Likely A Typo

Original Post

When you look at the first screenshot below, look how far east this well is and the IP. I've noticed a couple of EOG wells reporting huge initial production at the eastern edge of the Bakken. I remember early on in the boom, folks were saying that it was unlikely to get great wells this far east. Probably true, but it is nice to see a well with this IP this far east. Also note that it is a short lateral, although being sited in the adjacent section, it's a bit longer than the typical EOG short lateral, which makes the IP of 5,224 for crude oil even more impressive. All things being equal, one wonders what the IP would have been had the horizontal been a long lateral.

The well:
  • 29635, 5,224, EOG, Parshall 164-3332H, Parshall, s12/19/16; TD, 12/27/16; TD = 16,184 feet (short lateral); 1280-acre spacing; "Bakken, NOS"; middle Bakken; t12/16, cum 3K 12/16;
  • need to follow up on this: water, 5 bbls water, initial production; IP MCF, 250; no natural gas flared; all sold
  • API: 33-061-03346
  • FracFocus: 10/25/16 - 11/26/16; 3.340 million gallons of water; 21.83% sand by mass
  • one gallon of water weighs: 8.3454 lbs
  • 3.340 million gallons of water, 21.83% by weight sand, per FracFocus:
  • 78.7% of what =  27,871,224 pounds of water = 35,414,516 pounds total water + sand
  • 21.83% = 7,730,989 lbs of sand
  • a lot of sand for a relatively short lateral; equates to about 18 million lbs in a long lateral, I suppose

A neighboring well sited in the same section (need to follow-up in a few months):
  • 17621, IA/1,117, EOG, Parshall 17-33H, open hole, 8 stages, 700K lbs proppant "Bakken SS", 640-acre spacing, t8/09; cum 222K 11/16;

EOG Reports A Huge Well In The Parshall (Likely To Be A Typo) -- February 1, 2017

MDU: beat by 5 cents; misses on revenue.

Active rigs:

Active Rigs4045146192187

Three new permits:
  • Operator: Marathon
  • Field: Bailey (Dunn)
  • Comments: 
One well coming off confidential list Thursday:
  • 31514, 256, CLR, Topeka 10-12H, Brooklyn, 30 stages, 8.5 million lbs, t8/16; cum 33K 11/16;
Three producing wells completed:
  • 29635, 5,224, EOG, Parshall 164-3332H, Parshall, s12/19/16; TD, 12/27/16; TD = 16,184 feet (short lateral); 1280-acre spacing; "Bakken, NOS"; middle Bakken; t12/16, cum 3K 12/16; see this post; LIKELY TO BE A TYPO; more likely the IP was 524 bbls of oil; [THIS WAS A TYPO -- see EOG's file report at this link -- February 24, 2017.]
  • 30834, 326, XTO, TAT State Federal 14X-36D, Bear Creek, t12/16; cum --
  • 32767, 2,759 , Petroshale (US), Petroshale US 8H, Antelope, t1/17; cum 3K after 3 days; 

31514, see above, CLR, Topeka 10-12H, Brooklyn:

DatOil RunsMCF Sold

EV Sales For January Are Starting To Be Posted -- February 1, 2017

Link here.

The highlight: Chevrolet reported that the company sold four -- yes, four -- one, two , three, four -- Chevrolet Spark EVs. Truly amazing.

Cadillac? Three -- yes, three -- one, two, three -- Cadillac ELRs.

I think we've turned the corner. 

Off The Net For Awhile; Tongue-In-Cheek; Not To Be Taken Seriously -- At Least Not Yet -- February 1, 2017

I'm consistently amazed how inefficient Mother Nature is. Or perhaps, how efficient Bakken tight shale operators are in comparison to Mother Nature.

It has been said that any well taken off-line for any significant period of time will show an increase in production once it's brought back on status. ("Significant period of time" in the oil patch is defined as about 3 - 8 months for purpose of this discussion.)

Here's an example of Mother Nature's inefficiency.

Note the peak production of this well after being fracked in the month of May, 2009: 11,976 bbls, which works out to 14,279 barrels for the full 31 days of the month (in fact, it would have been slightly less due to the severe decline rate of the Bakken).

After being fracked in 2009, after Mother Nature "shut-in" this well for a gazillion years, it's production was about 14,000 bbls in that first month, after which its production plunged to 2,000 bbls/month only six or seven months later.

However, a few years later, this well was taken off-line (not for a gazillion years as Mother Nature had done earlier) but for only a few months -- about six months in fact. After being taken off-line for only six months, look at the production in May, 2013: 14,798 bbls (for a 31-day month that would extrapolate to 15,291 bbls of crude oil.
[Just for the fun of it, boe:
May, 2009: 2,365 + 14,279 = 16,644 boe
May, 2013: 5,002 + 15,291 = 20,293 boe]
After being fracked in early 2009, this well was down to about 2,000 bbl of crude oil/month by the seventh month.

Note, after this well was taken off-line for six months, it's production surged, and remained well above 2,000 bbls of crude oil/month for the next two years, in fact jumping to over 4,000 bbls in two consecutive months. 

For newbies: this is all done with tongue in cheek. Pay no attention to this. It was just something that caught my attention: how much production in a Bakken well can improve by just taking it off-line for a few months. Of course, it begs a question. In fact, it begs a lot of questions.

Monthly Production Data:
PoolDateDaysBBLS OilRunsBBLS WaterMCF ProdMCF SoldVent/Flare

For future reference, the well:
  • 17755, 543, Statoil, Roscoe 2H-8, Banks, t5/09; cum 186K 11/16; 

US Refinery Throughput -- A Snapshot In Time -- February 1, 2017

You will read that the US imported more crude oil last week than the previous week, to about the tuen of 500,000 bopd, now up to a little more than 8 million bopd.

There are two reasons the US imports oil:
  • Saudi Arabia needs about a million bopd to source its refinery on the US gulf coast 
  • US refineries were configured for heavy oil (Canadian, Venezuelan); US oil is mostly light oil; US refineries can manage with a blend of heavy-light oil
From John Kemp, via Twitter:

If I read the graph correctly, compared to last year, the US refinery throughput has increased about 350,000 bopd.

Compared to the 10-year average, US refinery throughput has increased about 1.5 million bopd. Where is all this gasoline (and other refined products) going? That's a rhetorical question; please don't reply.

A Note To The Granddaughters

I've always wondered why it was important to the ancient Babylonians that they understood the Pythagorean Theorem, you know:

a² + b² = c²

It had to with measuring wealth. A farmer's prosperity was seen as dependent on the amount of grain he was able to produce, which, in turn, depended on the area that was available to the farmer. Area was known to be length x width, and when those two were equal, the area was equal to a-squared, and in this sense, wealth was a "squared quantity."

Babylonians wanted to know when such squares of whole numbers could be partitioned into other squares of whole numbers. A farmer who owned 25 square units of land could swap it for two square parcels of land, one measuring 16 square units, and one measuring 9 square units.

I assume I'm the only person who did not intuitively see that when learning the Pythagorean Theorem but there you have it. 

This graphic will help:

From Fermat's Last Theorum: Unlocking the Secret of an Ancient Mathematical Problem, Amir D. Aczel, c. 1996; DDS 512.74 ACZ.

More Trump Enthusiasm As Former President / Michelle Vacate White House -- Mideast Mainstream Meda Headline? -- February 1, 2017


Later, 4:55 p.m. Central Time: "calm down" the NY Times tells us! The NY Times who warned us about the natural gas scam in the Marcellus and the likely failure of the Panama Canal expansion, now tells us the "bacon shortage" story is a "fake story." LOL. Glad to see The NY Times on top of this.

Later, 1:55 p.m. Central Time: Forbes yells -- the looming disaster -- yes, DISASTER -- of a US bacon shortage -- this has got to be a "first world problem" -- LOL -- I need to go out to the barn and bring in my comfort pony, and my motivational meerkat. And then folks wonder why I don't subscribe to Forbes any more. A "disaster." A US bacon shortage. LOL. Stock up now.
Original Post

Nation's bacon -- yes, bacon -- reserves hit 50-year low.

Over at USA Today.
  • not yet being reported by CNBC
  • is it a supply problem or a demand problem?
  • demand is outpacing supply
  • December, 2016: inventory totaled 17.8 million lbs; lowest level since 1957
Fast facts:

This is actually kind of a funny story. If it weren't for the calories I would eat a lot more bacon. As it is, I've never really kept bacon in the refrigerator. Until last November. I now buy a packet of the best bacon available, regardless of price, bring it home, and divide it up into three strips in each little zip-lock bag, to freeze, keeping one little zip-lock bag in the refrigerator at all times, and generally having one strip of bacon with one little Mickey Mouse waffle once every week. The one Mickey Mouse waffle almost every day, but only one slice of bacon once a week.

Trump Excitement! January Payrolls Crush Estimates -- ADP -- February 1, 2017

ADP: up 246,000! Forecast: private sector to add 160,000 jobs.

Saudi Oil Imports

Previous posted data here.

For November, 2016:

  • second lowest November in history (November, 2009, global recession)
  • almost 20% lower year-over-year
  • cut in OPEC production not yet in place; to begin late December, 2016 -- official start January, 2017; to last six months
  • compare November, 2016, Saudi imports with March, 2016 -- a 25% drop
  • look at November in years 2008, 2009, and 2016

Today's Finance Headlines -- February 1, 2017

WTI: $53.19.

Gasoline demand: corner turned? We'll see the graph Thursday. Today John Kemp tweets:
US gasoline consumption averaged 9.243 million bopd in November, up 1.44% compared with prior year; equal to previous seasonal record set in 2006.
Disclaimer: this is not an investment site. Do not make any investment, financial, travel, job, or relationship decisions based on what you read here or think you may have read here. This is also not a music site or a dance site. 

ONEOK: Oneok to buy the rest of Oneok Partners it doesn't own --
  • $9.3 billion deal
  • OKE: up almost 3%
  • OKS: up almost 30%
  • implied price for OKS: $54 vs $43 closing price
  • Oneok expects to raise its quarterly dividend by 21% to 74.5 cents/share
MRO: moving sharply higher. Easily beats estimates; attributed to refining. Forecast, 26 cents; actual: 43 cents. 

The Apple, Inc, story continues:
  • #1 camera maker in the world;
  • services growing 18% year-over-year;
  • app store growing 40% year-over-year; and,
  • cash grows to $246 billion 
  • AAPL will hit 52-week high today; still an "Abe Lincoln" short of an all-time high
  • AAPL: pays about 2%
ADP: up 246,000! December payrolls revised downward, 2,000 to 151,000. Forecast: private sector to add 160,000 jobs. Remember the "magic numbers":
The Magic Numbers (change with Trump administration)
First time claims, unemployment benefits: 275,000 (> 250,000: economic stagnation)
New jobs: 150.000 (< 150,000 new jobs: economic stagnation)
Economists estimate the labor market needs to create about 125,000 jobs a month to keep the unemployment rate steady, though estimates vary -- Reuters.
Next big thingUPS is toast. Discussed yesterday. What the heck just happened? -- Barrons. Data points:
  • EPS: forecast, $1.69; actual, $1.63
  • revenue: forecast, $17 billion; actual $16.93 billion
  • guidance: $5.80 too $6.10 for 2017; Street consensus for $6.15
  • shares: dropped more than 6% on a down-day for the market; Amazon had dropped 1.2%
  • comment: the most ubiquitous truck in our neighborhood (other than landscapers, waste management, and black-and-white police department SUVs) is the brown truck
Difficulty finding "guests"? MSNBC "Morning Joe" was on a roll, really, really good ... until .... they brought on the Reverend Al Sharpton. What were they thinking? I immediately switched stations; completely forgot about "Joe" -- when I remembered, I returned only to find NYC mayor De Blasio explaining why NYC is a sanctuary city. Back to CNBC.

Speaking Of Pinocchio -- February 1, 2017


Later, 9:19 a.m. Central Time: if the writer over at the Financial Times says there is no "swing  producer" for crude oil, Reuters' John Kemp begs to differ:
  • Saudi Arabia has been forced to return to the role of swing producer in the oil market, despite the country's insistence for three decades it would never play that role again
  • Saudi Arabia and its allies in the Gulf Cooperation Council account for the majority of production cuts made so far (the "Willie" Sutton analogy: why did he rob banks? because that was where the money was)
  • by cutting their own output deeply, Saudi Arabia and its allies have masked the low level of compliance from the rest of the organization
  • outside OPEC, Russia, so far, has delivered only about a third of its promised cut of 300,000 bopd
  • as a swing provider, Saudi was formally given that role in March, 1983
  • Saudi Arabia is the only producer that exports enough crude oil and has the centralized control to exercise some degree of market power in the oil market
One wonders if John Kemp (above) and the Financial Times (below) are looking at two sides of the same coin. Saudi is the only producer that can quickly cut production to support/raise global prices; the US shale operators can fairly quickly offset any cut in Saudi production, but really can't do much about "flooding" the market to bring the price down.

I guess it depends on the definition of "swing producer."

Original Post
Why I love to blog: I've always questioned the notion that US shale was the "swing producer." Now, from the Financial Times: for the first time in years, the global oil market has no swing producer.  The article is a nice overview of how we got where we are, and where we are headed; an article worthy to be archived (an op-ed by a consulting firm exec; a former senior director on the White House National Security Council, yada, yada, yada.
Some believe recent pledges by OPEC and Russia to restrain production mark the return of supply management.
Hardly. Since these producers began talking about restraint last February, they added around 1.4m barrels per day to the glut.
Their recent pledges to trim production from historically high levels resemble ad hoc, collective supply restraint agreements that sprang up occasionally since oil’s earliest days by producers spooked by price busts. They sometimes enjoyed temporary success but invariably fell apart due to supply growth outside and cheating within members’ ranks.
OPEC's own analysts, and those at the US Energy Information Administration, project these pledges will not dent the towering inventory glut.

From The Wall Street Journal: the Saudi oil minister praises Trump's energy policy, welcomes increased US production. Minister says Saudi Arabi could increase its US oil-industry investments.

Saudi Aramco needs strong US market for successful IPO.

From the article:
Mr. Falih dismissed any suggestion that OPEC was a “foe” of U.S. energy interests.
“We’re not the foes,” he said. “People are recognizing that OPEC is a force for good.”
Okay.  Pinocchio.

India Plans To Form A Big, Huge, Giant National Oil Company

From Ruters/Rigzone, data points:
  • India imports 80% of the oil it needs
  • wants to cut that number to 67% 
  • India has about a doze state-run oil and gas companies: separately not big enough to take on a global role
  • will look to combine some (all?) of them
  • on another note, India will cut the import tax for LNG in half: from 5% to 2.5%

Active Rigs Steady At 40 -- February 1, 2017

Active rigs:

Active Rigs4045146192187

RBN Energy: midstream is on the upswing, but hidden risks remain below the surface.

Scott Adams' blog: is President Trump doing management wrong?

Apple, Inc, execs; Trumpers: sultans of swing.

Sultans of Swing, Dire Straits, Drum Cover by Sina