Monday, February 20, 2017

Too Early To Tell How Long The "Bump" Will Last -- February 20, 2017

Two wells on the same pad; these were older wells.

The first one off-line for less than two months (10 - 11/2016): "bump" was four-fold, from 500 bbls to 2400 bbls:

Monthly Production Data:
PoolDateDaysBBLS OilRunsBBLS WaterMCF ProdMCF SoldVent/Flare

The second one was off-line during the same two months: "bump" was similar, about four-to-five fold, from 2,000 bbls to 10,000 bbls:

Monthly Production Data:
PoolDateDaysBBLS OilRunsBBLS WaterMCF ProdMCF SoldVent/Flare

I'll follow up on these wells in a few months to see how long the increased "bump" in production lasted.

The wells are #19651 and #19301, both Whiting Koala wells in Poe oil field.

The Closer, T+31 -- Futures Are Up Almost 50 Points -- After A 3-Day Weekend -- February 20, 2017

US shale oil production: US shale oil production could surge by 3.5 million bopd over next five years -- Bank of America.
  • the story doesn't go into specifics, but to grow by 3.5 million bopd, one could opine
    • 1.5 million bopd increase in the Permian
    • 0.75 million bopd increase in the Bakken
    • 0.50 million bopd increase in the Eagle Ford
    • 0.50 million bopd increase in STACK/SCOOP
    • 0.25 million bopd increase in the Niobrara
  • when you break it down like that, one could see an increase in production greater then 3.5 million bopd five years from now
Iran "finds" 2 billion bbls shale oil in its western province, Reuters, data points:
  • two billion bbls of original oil in place (OOIP)
  • compare to 500 billion bbls OOIP in place in the Bakken
  • light oil; Bakken oil is also light oil
  • Iran's proven oil reserves: 160 billion bbls, about 10% of the world's total; ranks it fourth among petroleum-rich countries (among US states it would be third or fourth)
  • with proven reserves of 160 billion bbls, another 2 billion bbls is a rounding error
Market after 3-day weekend: futures mean squat ... but right now, Dow futures are up 46 points. The market must be thrilled with:
  • the Boeing 787 Dreamliner rollout
  • the Florida rally
  • the Swedish incident clarified
  • the appointment of a new National Security advisor
  • that Hillary is not president
  • that term limits prevented Obama from running again
Other indices: NASDAQ futures up 14 points; S&P up almost 6 points.

Apple: this is what I'm waiting for -- the new iPad Pro lineup -- to be announced in March. I'm looking at the new 10.5 inch, edge-to-edge iPad Pro. Apple is firing on all cylinders right now.


Brenda Buttner: Perhaps the saddest story of the day. Just another reminder to live life to the fullest. From Fox News:
  • Brenda Buttner, 1961 - 2017; ten to twenty years younger than most of my readers
  • succumbs to cancer
  • Fox News "Bulls and Bears"
  • CBNC "The Money Club"
  • CNBC's Washington correspondent
  • BA in social studies: Harvard University
  • Rhodes Scholar, Oxford University; graduating with high honors in politics and economics
  • KT McFarland and Brenda Buttner at this clip 
Trail of Tears: Casino On The Rocks

Link here. Data points:
  • Prairie Knights Casino on Standing Rock Reservation
  • $6 million shortfall ... and growing
  • tribal council has "supplemented" a portion of the income lost from the casino with $3.2 million in donations raised from its NoDAPL  (sic) -- "GoFundMe" -- account
How Irrelevant Has Mainstream Media Become?

A reader sent me the link to this article in Newsweek earlier today. I thought it was pretty good; might have had some comments, but debated whether it was worth posting. I went back to the article a few minutes ago, still debating whether to post it. I decided to see what others thought about the article. Comments: zero.  Nada. Zilch. Goose Egg. Nil. [February 21, 2017, 7:51 a.m. Central Time -- still no comments. Truly amazing.]

This article was published over 12 hours ago in a national media outlet on a topic one would think would be quite thought-provoking. And here it is, 12 hours later, and not one comment.

I remember back in the late 60's and all through the 70's Newsweek  was among the top three news periodicals. Now it's not even available in hard copy, only digitally. [The cheesy, trashy ads, and the very, very slow re-fresh also suggests how really badly the digital Newsweek is doing.]

The silence is deafening.

So, Now We Switch To Coal-Powered Cars In Europe -- February 20, 2017

See also: the global warming scam. 

President Trump has a voracious appetite for current events. He says he gets most of his news from Fox News. In print media, my hunch is he gets much of his news from The Wall Street Journal. This article will be filed under "Global Warming" by Steve Bannon and placed on the president's desk. The article is a Holman W Jenkins, Jr, op-ed in TWSJ earlier this week.

I don't know if folks recall but recently Paris, and I think London, also, had poorer air quality than Beijing (China). It was either Paris or London or both.

The reason:
Contrary to usual practice, we’ll begin with the punch-line: less than 4/1,000ths of a degree Celsius.
That’s how much warming might be spared half a century from now thanks to Europe’s decision, starting after the Kyoto treaty in the late 1990s, to switch more than 50% of its passenger cars to diesel.
For this negligible result, Europe got significantly dirtier air. Paris, on some days, suffers worse smog than Beijing. Though his methodology may be questionable, a U.K. government scientist estimates that thousands of citizens die each year because of increased nitrogen oxide and soot emissions.
The word “microcosm” was invented for Europe’s diesel snafu—a microcosm of the governance failures that are breeding political revolt in much of the advanced industrial world. Europe has gone overnight from pushing and subsidizing citizens to adopt diesel vehicles, to punishing them with taxes and excluding them from downtown areas. Britain is contemplating a scheme to pay owners to scrap their diesel cars.
And a bit more.
Europe’s entire auto industry was led down the primrose lane of adopting a technology that now appears to be a commercial and regulatory dead-end. More than 70% of BMW and Daimler cars made for the European market last year were diesel. When honestly tested, one study shows the latest “Euro 6 Standard” vehicles miss their pollution targets by a whopping 400%.
Virtually everyone agrees Europe’s “dash for diesel” was a monstrous policy error, not to mention the proximate cause of the emissions-cheating scandal that has engulfed Volkswagen and other auto makers.
Yet the overarching imperative today is to vilify the car companies and insist they do better at achieving meaningless reductions in CO 2 emissions, now by forcing them to build electric cars that customers must be bribed and pressured into buying. Not to be questioned, though, is the green agenda or the competence of Europe’s political class.
We'll stop there. I think we get the picture. As smoggy as it is.

Via Twitter -- New National Security Advisor -- February 20, 2017

Just named General H.R. McMaster National Security Advisor -- @realDonaldTrump.

From The New York Times:
General McMaster is seen as one of the Army’s leading intellectuals, first making a name for himself with a searing critique of the Joint Chiefs of Staff for their performance during the Vietnam War and later criticizing the way President George W. Bush’s administration went to war in Iraq.
As a commander, he was credited with demonstrating how a different counterterrorism strategy could defeat insurgents in Iraq, providing the basis for the change in approach that Gen. David H. Petraeus adopted to shift momentum in a war that the United States was on the verge of losing.
General McMaster’s challenge now will be to take over a rattled and demoralized National Security Council apparatus that bristled at Mr. Flynn’s leadership and remains uncertain about its place in the White House given the foreign policy interests of Stephen K. Bannon, the former Breitbart News chairman who is the president’s chief strategist.
It will be interesting to see how Fox News rewrites that third paragraph. LOL. 

With regard to the others:
Keith Kellogg, another retired lieutenant general, will remain as the N.S.C. chief of staff. Mr. Kellogg has been acting national security adviser since Mr. Flynn’s resignation a week ago and one of the four candidates interviewed by Mr. Trump on Sunday for the permanent job. Mr. Trump made no mention of K.T. McFarland, the top deputy national security adviser, and whether she would stay.

Marginal Production In US Shale Will Set The Floor In Oil Prices -- Mike Filloon -- February 20, 2017

I was beginning to wonder "where" Mike was. Not to worry. Over at SeekingAlpha, an update on the Permian:
  • there is no doubt that newer well designs in the Permian continue to decrease breakevens, which should improve US production as OPEC production cuts are applied
  • although Permian production will continue to increase, at today's prices this production will not totally offset cuts
  • as Permian breakevens lower, the same could be said about other plays which could spur production higher in other states
  • as the marginal producer, US shale will not increase significantly as a whole, but the Permian should continue its upward momentum
I was hoping Mike Filloon would see the recent article by, and respond to it. I would have liked to have responded to that article, but I could be nowhere near as articulate as Mike. Mike pretty much says it all early in the article:
Play breakevens continue lower. Higher oil prices will spur oil production increases in the US. The Permian should realize the greatest increases. Some have said US unconventional oil is a Ponzi scheme. Those who surmise this rob Peter to pay Paul conspiracy, may not understand the complex realities of oil exploration and production.
It's a different type of investment. Oil production has high initial costs. Some operators pay high acreage prices to get into plays late. D&C costs can be high initially, but as with most businesses, costs decrease. LOEs are also key, as those costs are stripped from revenues from the well head.
This complicated industry has become more so through unconventional designs.
The Peak Oil theorists were wrong, as unconventional production was great enough to effect the world's supply and demand balance. It took time, and high oil prices, but US producers got the job done. It may have gotten the job done too well.
Conventional wells contrast horizontals with respect to production. Production begins and declines at a relatively low pace month over month. Horizontals produce an immense volume of resource in the first month, followed by a higher decline rate. While conventional production declines are easily calculated, it takes an engineering degree to estimate unconventional curves. The decline is not constant. Decline rates are exponential over several years then change. Initial horizontal production is created through induced fracs and the interconnected natural fracturing within the interval.
After 3 to 7 years, induced frac's stop producing, and we enter matrix production. Although a simplistic explanation, it is what many bears get wrong. Matrix production declines are much like a conventional well. Estimates vary at 3% to 5%. So if a horizontal is modeled to decline exponentially, and matrix production is not accounted for, one could model that well to zero in a shorter time.
There is another difference between conventional and unconventional production profiles, something that has not yet been addressed by many but will become more obvious in the out-years. This has to do with re-fracking unconventional wells and re-working unconventional / conventional wells.

Unconventional oil: "After 3 to 7 years, induced frac's stop producing, and we enter matrix production." When we enter matrix production, the jury is out whether a re-frack will change the production profile for all fracked wells. A re-frack will certainly change the production profile on a poorly fracked well, or a fracked well using "old" completion techniques.

Conventional oil: "re-working" a conventional well, will, at best, maintain the predicted production profile. 

Mike goes on to discuss EURs and models.

He also suggests that the upcoming "driving season" in the US could push WTI to $60/bbl. 

Maybe that will be the new 30-second soundbite for the Bakken: "$50-oil, 50 active rigs in the Bakken; $60-oil, 60 active rigs in the Bakken; $100-oil, 100 active rigs in the Bakken."

LNG Import Demand -- 2010 - 2013 -- Shell -- February 20, 2017

Source: Shell.

The most interesting data point at the source: EGYPT will overtake India in demand growth.

Economic growth:
  • Area A: fairly stagnant compared to rest of world
  • Area B: economic growth driven by China
  • Area C: economic growth driven by India
  • Area D: this entire segment is "northwest Europe" -- economic stagnation (maybe even "decline") relative to rest of world
  • Area E: driven by mandate for ships to switch to "clean fuel"
Area B: a most interesting grouping of regions -- US, Mexico, Canada, China, eastern Europe, Mediterranean (north Africa, southern Europe)

  • look at the x-axis: from 100 to 450 -- that's huge -- only 30 years on the y-axis
  • LNG imports doubled in the most recent decade, 2000 - 2010, from 100 to 200, majority in western world, and China
  • Area C will be the big driver for the next two decades (think India, Indonesia, Malaysia)
  • it looks like the world, based on LNG, is being divided into three regions:
    • the west + China: Area B
    • the Far East (excluding China): Area A
    • the Near East and the Indian subcontinent: Area C
Note: The most interesting data point at the linked source: EGYPT will overtake India in demand growth.

Other sites:

Turkey: it seems that Turkey is completed dependent on foreign LNG, mostly Russian:

Turkey: from Reuters, February 22, 2017:
Turkey must increase its energy production from domestic sources to above 50 percent this year and above two thirds within a decade, Energy Minister Berat Albayrak said on Wednesday at an industry event.

Turkey is largely dependent on imports for its energy needs.

The Trump Daily Thought

The Trump Presidency
The Second 30 Days 
The First 30 Days

Between Election And Inauguration
The Third 10 Days
The First 30 Days

March 21, 2017, T+60: Ivanka moves into West Wing and the mainstream press doesn't know how to handle this. Can you imagine if a disbarred lawyer running a "pay for play" foundation were in the West Wing? My hunch is that it would not even be a news story. 

March 20, 2017, T+59: NSA has some 'splainin' to do. Documents reveal that Trump family was indeed under surveillance by at least one US intelligence agency.

Marh 19, 2017, T+58: the week that guaranteed Trump's re-election. The Congressional Budget Office "marked up" the TrumpCare bill. This is key: Democrats tried to focus on the CBO's guestimate as to how many Americans would choose to buy Obamacare insurance without the threat of fines and taxes. Answer: very few. This speaks to how unattractive Obamacare insurance products were and are. One could have added: how many folks will actually lose access to medical care under TrumpCare? Answer: even fewer.

March 18, 2017, T+57: anyone who doesn't think the Trump Tower wasn't "under surveillance" by US intelligence agencies is either naive or brain dead. Just ask Angela Merkel what she thinks.

March 17, 2017, T+56: Trump has his mojo back. Earlier this week he said he would drop "climate change" from environmental reviews. Today it's being reported he will pull back EPA's fuel efficiency determination, "opening the door for reduced standards."

March 16, T+55: President Trump needs to let tech industry know they can either support better vetting of "immigrants" from unstable governments or expect massive slowdown in work permits; this is not rocket science.

March 15, T+54: getting back into his groove; will drop "climate change" from environmental reviews. President Trump needs to keep doing similar things to regain momentum.

March 14, T+53: it appears the "smart" Republicans don't want their name attached to any healthcare bill unless it's clearly titled "The Bill That Repeals ObamaCare" and means what it says. Right now, it looks like ObamaCare will simply wither on the vine. But stranger things have happened.

March 13, 2017, T+52: all remaining US attorneys general asked to resign or be fired -- fake news. It's nothing new. 

March 12, 2017, T+51: moving into the second half of the first 100 days. The Senate remains on track to confirm the President's cabinet by President Pence's first term. NYT says it's the slowest transition in the nation's history. And the president's own party is in charge. The Senate is in session eight days in April. It's amazing the government can keep functioning with so few key players in place. Can you say "Deep State"?

March 11, 2017, T+50: overnight, it seems, the conversation has changed. Now it's all about the former administration wire-tapping the opponent during the campaign, and the current surveillance of Americans by national intelligence agencies, whether or not either are true, it really doesn't matter does it? The important thing is the narrative.

March 10, 2017, T+49: fight is on. US Marines on the ground in Syria, attacking Raqqa, the ISIS capital.

March 9, 2017, T+48: this is really, really cool. Why would the FBI director, Comey, "ask" Jeff Sessions the Attorney General to not investigate allegations of wiretapping Trump Towers? The answer: Comey knows where the investigation would lead. Two facts (at least as we know them, and as reported by The New York Times):
  • one of Trump's aides was wiretapped
  • that aide did indeed work out of Trump Towers where he would have been wiretapped
A third fact:
  • anyone using the same phone (or phones) that were used and wiretapped by that aide would also have had their conversations "tapped" by the "tapping organization" (the FBI, in this case)
And there you have it.

By the way, doesn't Comey work for Jeff Sessions? Yes, but Comey wears two hats, and it is his "second hat" that is requesting that the Justice Department not investigate.

March 8, 2017, T+47: from elsewhere --  
"If you like your doctor you can keep your doctor, period."
"Your insurance premiums will go down by $2,500."
"There is not a smidgen of truth my IRS targeted conservative non profits."
"My AJ and Bill Clinton only met on the tarmac to talk about grand kids."
"I did not order Trump Towers bugged."
March 7, 2017, T+46: one has to laugh. With regard to the Trump Towers wire-tap, the Los Angeles Times says Trump makes the claim with NO proof; sort of like the alt-left saying, without proof, that the Russians influenced the 2016 US election. I can't make this stuff up.

March 6, 2017, T+45:
Trump says Trump Towers was wire-tapped during the 2016 campaign.
Obama says no.

Who are you gonna believe?
March 5, 2017, T+44: looking forward to alt-left scandal-du-jour.

March 4, 2017, T+43: I find Senator Schumer small, trivial, mean, ... I would call him a worm, but I find worms, at least earthworms more pleasant. Perhaps I could call him a tapeworm. 

March 3, 2017, T+42: it may be time for the attorney general to appoint an independent counsel to look into a) the money President Obama gave Kenya on the last day he was in office; and, b) the Clinton Foundation.

March 2, 2017, T+41: time to start thinking BIG -- President Trump, February 28, 2017.

March 1, 2017, T+40: whatever happened to the Ukraine, the Crimean, the Baltic states, Syria, Iran, North Korea, Brexit, Greece implosion, Venezuela implosion, Mexico?

February 28, 2107, T+39: the Trump rally is a "huge indictment" of the Obama administration, how absolutely abysmal that administration really was. It explains why the alt-left is working so hard to delegitimize this administration.

February 27, 2017,T+38: elitists vs populists. Very interesting phenomenon.

February 26, 2017, T+37: Trump says he won't attend annual White House Correspondents' Dinner. Good for him. I wouldn't either. He takes the presidency all too seriously.

February 25, 2017, T+36: from what little I get from the press, I'm led to believe that Trump's instincts are better than the generals he appointed to his inner circle. He was correct: politically, he knows more than the generals. Exactly what he said. 

February 24, 2017, T+35: is it just me or are we seeing fewer media attacks on Trump?

February 23, 2017, T+34: this is pretty remarkable. Trump, in one toss-away sentence has boxed Sweden into a bad, bad corner. Everyone knows that Sweden has an immigration problem, not least of which, Sweden. But now, because of Sweden's reaction (necessitated by mainstream media), Sweden cannot take any action, repeat, any action, that would seem to be anti-immigration of illegal aliens or anti-immigration of anyone who has no plans to assimilate into Sweden's culture. I find that very, very remarkable. Sweden has been boxed into a corner by a single toss-away sentence uttered by the US president during a typical Trump rally. [Update, February 24, 2017: The New York Times has a huge article on Sweden struggling with immigration issues. Link here.]

February 22, 2017, T+33: maybe it's just me, but we haven't heard from Kellyanne Conway in a long time. In addition to everything else, she looked exhausted. I truly hope she is taking some time off to spend with her children. Seriously.

February 21, 2017, T+32: even many Dems say they are happy with Trump's choice for National Security Advisor. But why wouldn't they? The position does not need Senate confirmation.

February 20, 2017, T+31: Trump changes the conversation. Again. And, of course, he's right. Again.

The Energy And Market Page, T+31 -- February 20, 2017

Platts overhauls Brent crude benchmark for first time in a decade, adds Troll field. Reuters.
  • to address falling supplies of the crude oil grades underpinning the benchmark that prices most of the world's oil
  • a decline in supply from North Sea fields has led to concerns that physical volumes could become too thin; could be accumulated in the hands of just a few plays; vulnerable to manipulation
  • Platts will add Norway's Troll to the basket of four British and Norwegian crude grades which is already uses to assess dated Brent from January 1, 2018
  • this will join Brent, Forties, Oseberg, Ekofisk, or BFOE as they are known
  • Troll had the most support to be added
  • Troll: a light, sweet crude; operated by Statoil (also contributes to the Oseberg, Statfjord, Gullfaks, Grane and Asgard streams)
  • supply of the current four BFOE grades: 1 million bopd, just over 1% of world output

Oil rises, but swelling US output caps rally. Over at Reuters. probably sees this as "fake news."

Deadline looms for DAPL protest camp. Over at Bloomberg. Formal eviction letter for a specific individual at this site; sent to me by a reader. Wow, it must have taken quite a bit of Sherlocking sleuthing to find this one. On another note, I am being told that the $3 million raised for the DAPL protestors through a "GoFundMe" site will be transferred to "general operating funds for the Standing Rock Reservation. Much, much more to the story but I will leave it at that for now.

After OPEC cuts heavy oil, China teapot refiners pull US supply to Asia. At Reuters. probably sees this as "fake news" also.

Saudi Arabia, 2016, production. For the archives, over at Bloomberg --
  • set all-time records for oil exports and production in 2016
  • exports: 7.65 million bopd on average, 2016; 7.39 million bopd in 2015
  • production: 10.46 million bopd on average, 2016; 10.19 million bopd in 2015
  • remember all that talk about 12 million bopd?


With regard to the story on Chinese teapot refiners and US oil, this is from a post some months ago:


  • light crude oil for domestic U.S. oil as having an API gravity between 37° API and 42° API 
  • light crude oil for non-U.S. oil as being between 32° API  and 42° API
Canadian National Energy Board:
  • light crude oil as having a density API gravity greater than 30.1°
Alberta, government; Alberta process most of Canada's oil:
  • API gravity greater than 35° API
Pemex, Mexican state oil company:
  • light crude oil as being between 27° API and 38° API 
This variation in definition occurred because countries such as Canada and Mexico tend to have heavier crude oils than are commonly found in the United States, whose large oil fields historically produced lighter oils than are found in many other countries.


From wiki.

  • A wide variety of benchmark crude oils worldwide are considered to be light. The most prominent in North America is West Texas Intermediate (WTI):
  • API gravity of 39.6° API; lighter than Brent, but not by much
  • sulfur: 0.24% (sweet oil is defined as oil with sulfur content less than 0.5%)
Brent Crude
  • the most commonly referenced benchmark oil from Europe is Brent Crude, which is
  • 38.06° API
Dubai Crude
  • the third most commonly quoted benchmark is Dubai Crude, which is 31° API
  • this is considered light by Arabian standards but would not be considered light if produced in the U.S.

Saudia Arabia's Ghawar field:
  • the largest oil field in the world, Saudi Arabia's Ghawar field
  • light crude oils ranging from 33° API to 40° API
Alaska North Slope: from XOM -- 
  • 31.4°
  • sulfur: 0.96%
36 to 44 degrees API. The quality of this oil is excellent, almost identical to WTI. The benchmark crude oil is West Texas Intermediate, which is 40 degrees API sweet crude. It is the benchmark because it requires the least amount of processing in a modern refinery to make the most valuable products, unleaded gasoline and diesel fuel.
North Dakota Spearfish: 36°
Mexico: generally heavy to medium-light; sulfur content
  • Isthmus: 21.8°.3.3% sulfur
  • Maya: 33.4°; 1.35% sulfur
  • Olmeca: 37.3°; 0.84% sulfur
Iraqi: heavy oil
Crude oil found in Iraq varies significantly in quality, with API gravities generally ranging from 22° (heavy) to 35° (medium - light). Over 70% of national oil reserves are below 28° API  and the International Energy Agency (IEA) predicted in its 2012 report on Iraq that future production is likely to include a larger share of heavier crudes. However some of the crudes produced at the Taq Taq field in the norther semi-autonomous Kurdistan region are as light as 48° API, dubbed by Reuters as "champagne crude". 
California: heavy oil; pdf here -- old data, from 2004, but type of oil probably has not changed
  • Kern County: heavy oil with 1.2% sulfur; accounts for 75% of California's on-shore production
  • Los Angeles Basin: heavy oil; sulfur content 1.7% to 2.0%
  • Off-shore: intermediate for the most part, 18° (heavy) to 36° (medium-light)
Ecuador: heavy oil; 24.1°
Seeks low-sulphur, light oil, September 1, 2015:
Net crude exporter Petroecuador issued a tender to import 30 million barrels of light sweet crude over the course of a year in an attempt to maximize diesel and gasoline production when its Esmeraldas refinery comes back online in the fourth quarter, market sources said Tuesday.

Petroecuador is seeking 30 million barrels of low sulfur crude oil with an API gravity of 28 degrees to be delivered in a one-year period, according to a tender issued late Monday.

The state-owned oil company is seeking the barrels "in order to optimize the Esmeraldas refinery operations, once the revamping has been complete," the tender said. 
Venezuela: heavy oil, similar to Canadian oil sands. 

Paperwork That Made This Luxury Car Worthless -- Scott Adams -- February 20, 2017

Active rigs: at 40, we are two higher than last year at this time --

Active Rigs4038127183184

Scott Adams: the paperwork mistake that made my luxury car worthless.

Powder River ice going out. The spring melt begins.

Yes, this water is headed for the Bakken.

Powder River at wiki: