Thursday, February 23, 2017

Canadian Oil Sands Leave US Majors Struggling; The Myth Of Peak Oil -- Bloomberg -- February 23, 2017

As a lead-in to this next post, I was looking for a "Canadian song." Funny how things turn out. I did not know this. Judy Collins' most famous song (?) Some Day Soon was written by Ian Tyson -- one half of the Canadian duo Ian and Sylvia.

Someday Soon, Judy Collins

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I posted another note about this very same story just a few days ago. But that was before XOM wrote of its entire western Canadian investment. Wow, wow, wow.

From Bloomberg: Canada's Fading Oil Promise Leaves US Majors Struggling.
Oil-sands investments in Western Canada that gobbled tens of billions of dollars over the past decade are proving an Achilles heel for some of the world’s biggest energy producers.
Exxon Mobil Corp. slashed proved reserves the most in its modern history after removing the entire $16 billion, 3.5-billion-barrel Kearl oil-sands project from its books on Wednesday.
That followed ConocoPhillips’ announcement a day earlier that erased 1.15 billion oil-sands barrels, plunging its reserves to a 15-year low.
While prolific shale plays in Texas and Oklahoma are going through an investment boom with oil above $50 a barrel, the oil sands have fallen out of favor. Current investments in the region amount mostly to long-planned expansions by large Canadian producers like Suncor Energy Inc., while majors like Statoil ASA have sold assets. Suncor, which took over Canadian Oil Sands Ltd. less than a year ago, is down more than 3 percent this year in Toronto.
The oil-sands operations in northern Alberta are among the costliest types of petroleum projects to develop because the raw bitumen extracted from the region must be processed and converted to a thick, synthetic crude oil.
In addition, Canadian crude sells for less than benchmark U.S. crude because of the added cost to ship it to American refineries and an abundance of competing supplies from shale fields. That’s why the oil sands have been particularly hard hit by the worst oil slump in a generation.
The combined 4.65 billion barrels of oil-sands crude removed from Exxon’s and Conoco’s books are worth $183 billion, based on current prices for the Western Canada Select benchmark. The revisions hit as both U.S. companies, along with the rest of the oil industry, strove to recover from a 2 1/2-year market slump that collapsed cash flows, wiped out hundreds of thousands of jobs and prompted many explorers to cancel their most ambitious drilling programs.
Much, much more at the link.

Of course, now that production is dropping -- and dropping precipitously -- in western Canada, "peak theorists" will tell us that, yes, indeed, another sign of peak oil, as oil production is falling, just as predicted by M. King Hubbert predicted.

Peak oil? What peak oil?

Quickie: Bump In Production After Being Shut-In -- February 23, 2017

For this well,
  • 16875, 351, MRO, Trotter 14-23H, Bailey, t2/08; cum 200K 12/16; API: 33-025-00684; according to FracFocus, not a re-frack; 
Monthly production for past few months:
BAKKEN1-20163133003278115821985191140
BAKKEN12-201531331134311071211701577
BAKKEN11-2015303169309494020773591206
BAKKEN10-20153136213648115223902611558
BAKKEN9-20153038773864127024703201556
BAKKEN8-20153140193986143626047261268
BAKKEN7-20153137103720123025181074861
BAKKEN6-20153038073818136424525601305
BAKKEN5-20153135013489147222896451085
BAKKEN4-201515874899119456145341
BAKKEN3-20150000000
BAKKEN2-20150000000
BAKKEN1-20150000000
BAKKEN12-20141117001200
BAKKEN11-20140000000
BAKKEN10-20141637023836451823292361616
BAKKEN9-20140000000
BAKKEN8-20147138230451367411
BAKKEN7-201431901904222695239174
BAKKEN6-20143086668422678242191

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"It was a sad smile just the same." One of the best lines in song-writing ever.

Taxi, Henry Chapin

Random Look At NDIC Oil & Gas Permits So Far This Year -- February 23, 2017

A random look at the NDIC permits so far this year.

121 permits so far, through February 23, 2017.

As of the same date in 2016, there were 120 permits. 

Operator
  • Whiting: 46
  • EOG: 21
  • MRO: 12
  • XTO: 7
  • QEP: 7
  • WPX: 5
  • BR: 3
  • Oasis: 3 
  • Kraken Operating: 3
  • CLR: 2
  • Hess: 2
  • Armstrong Operating: 2
  • HRC: 2
  • NP Resources: 2
  • Liberty Resources:2
  • CPEUSC: 1
  • Enerplus: 1
County
  • McKenzie: 60
  • Williams: 34
  • Dunn: 11
  • Mountrail: 8
  • Stark: 4
  • Billings: 2
  • Divide: 1
  • Renville: 1
Field
  • Banks (McKenzie): 18
  • Spotted Horn (McKenzie): 18 
  • Truax (Williams): 15
  • East Fork (Williams): 11
  • Antelope (McKenzie): 9
  • Bear Den (McKenzie): 7
  • Grail (McKenzie): 7
  • Spotted Horn (Dunn): 4
  • Oliver (Williams): 4 
  • Reunion Bay (Mountrail): 3
  • Alkali Creek (Mountrail): 3
  • Bailey (Dunn): 3
  • Bell (Stark): 3
  • Dimmick Lake (McKenzie): 3
  • Big Bend (Mountrail): 2 
  • Tyrone (Williams): 2
  • Ray (Williams): 2
  • Moccasin Creek (Dunn): 2
  • Chimney Butte (Dunn): 2
  • Elkhorn Ranch (Billings): 2
  • West Ambrose (Divide): 1
  • Newporte (Renville): 1
  • Elm Tree (McKenzie): 1
  • Eagle Nest (McKenzie): 1
  • Wildcat (Stark): 1

Active Rigs Fluctuating At Low 40s -- February 23, 2017

Active rigs:


2/23/201702/23/201602/23/201502/23/201402/23/2013
Active Rigs4139126187181

No wells coming off confidential list Friday.

Two new permits:
  • Operator: Whiting
  • Field: Moccasin Creek (Dunn County)
  • Comments: SESE section 3-147-93; see screenshot below.
Two permits canceled:
  • Whiting (2): a Two Shields Butte permit and a Skunk Creek permit, both in Dunn County
Three permits renewed:
  • Enerplus (3): a Jupiter permit, a Carp permit, and, a Beans permit, all in Dunn County
No producing wells (DUCs) reported as completed.

A fairly quiet report.

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Proposed Location For Whiting's Moccasin Creek Wells

Why I Love To Blog -- Reason #364 -- No Evidence This Huge Well Was Re-Fracked -- February 23, 2017

Actually this could also be reason #1, why I love to blog: the "things" my readers send me.

Years and years ago, during Bakken 1.0, I opined about the virtues of heel-to-toe horizontals being drilled alongside toe-to-heel wells (if that makes sense). At that time, early in the Bakken boom, operators were only drilling one well in each drilling unit (to get production to hold the lease) and no one was talking about heel-to-toe and toe-to-heel neighbors.

Then the slowdown in drilling so we didn't get many examples. But today a reader sent me a great example of what I'm talking about.

The well:
  • #19889, 1,678, XTO, Sand Creek 21-10SH, Sand Creek oil field, section 10-153-96, t5/11; cum 427K 12/16; in its sixth year of production; 
For full production data as of this date, see this post.

No evidence of re-frack at FracFocus: 33-053-03348. FracFocus.

This well is in its sixth year of production. By now, it should have been well past the "dreaded Bakken decline" and past its most productive years, but look at this well's production in the past six montths -- again, this well is an "old" Bakken well -- it should be on its last legs. We'll come back to it later.

Recent production:
PoolDateDaysBBLS OilRunsBBLS WaterMCF ProdMCF SoldVent/Flare
BAKKEN12-201622173481710851473407032848486
BAKKEN11-20163021723217611030942107392882010
BAKKEN10-201631295172936812447549104306011010
BAKKEN9-201627271972711511042476203154515717
BAKKEN8-20163128192280741083453086511581737
BAKKEN7-20162422225222571725235045250109907

Note: in case you missed it, these are six consecutive months of 20,000+ bbls of production, and close to 30,000 bbls each month.

The best this well did back in 2011 when it was first fracked: 16,103 bbls in 29 days, and it hit the "dreaded Bakken decline" in nine months, dropping to less than 9,000 bbls/month and then quickly dropping to less than 5,000 bbls/month.

The graphic:


Idle Rambling On The Recently Discussed Van Hise Wells In Charlson Oil Field -- February 23, 2017

The wells:
  • 19845,1,084, Petro-Hunt, Van Hise Trust 153-95-28C-21-1H, Charlson, t8/11; cum 593K 91/9; updated here;
  • 21716, 943, Petro-Hunt, Van Hise Trsut 153-95-28C-21-2H, t12/12; cum 524K 91/9; updated here;
  • 29978, 1,209, Petro-Hunt, Van Hise Trust 153-95-28C-21-3H, Charlson, t8/18; cum 294K 91/9;
  • 34121, 752, Petro-Hunt, Van Hise Trust 153-95-28C-27-1HS, 4 sections, Charlson, t8/18; cum 214K 91/9;

  • 26265, 2,168, Petro-Hunt, Van Hise Trsut 153-95-28D-21-4H, Charlson, Three Forks, 34 stages; 4 million lbs, t9/14; cum 379K 91/9;
  • 26266, 2,476, Petro-Hunt, Van Hise Trsut 153-95-28D-21-4H, Charlson, middle Bakken, 34 stages; 4 million lbs, t9/14; cum 434K 91/9;
  • 26267, 1,672, Petro-Hunt, Van Hise Trsut 153-95-28D-21-6H, Charlson, Three Forks, 34 stages; 4 million lbs, t9/14; cum 454K 91/9;

  • 27055, 1,306, Petro-Hunt, Van Hise Trsut 153-95-28D-21-1HS, 4 sections, Charlson, middle Bakken, 36 stages; 4.1 million lbs, t9/14; cum 486K9/19; jump in production 12/18;
  • 27056, 1,803, Petro-Hunt, Van Hise Trsut 153-95-28D-21-2HS, 4 sections, Charlson, Three Forks, 34 stages; 3.9 million lbs, t9/14; cum 375K 9/19; jump in production, 8/18;
The graphic:


Original Post

This is pretty cool. Earlier I posted a note on a Van Hise well. Today I got a nice note from a reader who is familiar with the area and the wells. He wrote:
Thanks for the post on the Van Hise wells in section 28, 153-95. The 1H & 2H wells have been the  "steady eddies" in production and the 1H is approaching 500k barrels.
Petro Hunt has another permit for this pad (3H), which is on confidential and Petro-Hunt is waiting for approval to permit a "laydown" 2560 (27, 28, 33 & 34).
That information is all in the public domain.

The reader reminded me of a photograph that he sent me years ago of the early wells, a Newfield Skaar Federal well. I don't recall if I ever posted that photo, but here it is:


There are days I wish I could be back hiking in/on this prairie. Today is one of them.

Some thoughts:
  • Petro-Hunt is getting very, very active
  • I know nothing about Petro-Hunt, but it's almost as if they hung in there long enough to buy some great property at cheap prices, once Bakken 1.0 (the original boom died down); they seem to be doing an impressive job in the Bakken (see below)
  • it is amazing to think that this well is less than five years old and is approaching 500,000 bbls of oil
  • 437,550 bbls of oil and 891,745 MCF gas = 586,174 boe (oil/NG split = 75% / 25%) -- that split is quite interesting; the Bakken is said to be 93% oil and 7% natural gas
  • in my early days of blogging I "blew off" the natural gas story; I was incredibly wrong
  • it will be very interesting to see a laydown in this area; compare it to how the "standups" have been doing (and some other thoughts)
  • back to this 5-year-old well; these wells will produce for 30 years; the consensus is 50% of production will be achieved within the first few years; I'm not convinced
  • another random thought: the middle Bakken is very thin, as is the Three Forks; many folks seem to think that a "thin" payzone is less valuable than a thick payzone -- I think this is incredibly inaccurate, and very counter-intuitive. I would love to discuss my thoughts on this but better to be assumed an idiot than to be proved an idiot, or however that saying goes. LOL. I'm not talking about "multiple" payzones across different basins; I'm talking about comparing a one thin payzone with one thick payzone.
This is the area under discussion:



From my "Bakken Operators" post:
Petro-Hunt

Insane -- February 23, 2017

Crude oil reserves in US (from John Kemp via Twitter):



After tremendous builds the past two weeks (14 million and 9 million, consecutively) the build this past week was 0.6 million, essentially flat. Crude oil imports were down significantly. I guess that's why WTI is trending up today. US gasoline demand rose but still well below last year at this time.

Bakken 2.0: Twenty-Six Permits Renewed; Petro-Hunt's EOX/VOG Permits -- Daily Activity Report Summary From Wednesday -- Delayed Posting -- February 23, 2017

Three new permits:
  • Operator: Whiting
  • Field: Truax (Williams)
  • Comments: SESW 7-154-97; I assume the new wells will run north; 
    • 19405, 919, Whiting, Kirby 9-7H, t11/11; cum 151K 12/16;
    • 32732, drl/ros, Whiting, Keeling 31-13-2H, 
    • anyone want to hazard a guess on whether #20518 had a bump in production in late 2015?



One well came off the confidential list:
  • 30575, PNC, Hess, BB-Federal-LE-151-95-0817H-1PNC, 
Petro-Hunt has five wells approved for "tight hole" status.

Twenty-six permits renewed:
  • Petro-Hunt (22): six Noonan permits; a Ty Weber permit; a Slugger permit; a Talon permit; a Joel Goodsen permit; two Arsenal Federal permits; three Mongoose permits; two Billy Ray Valentine permits; three Mortimer Duke permits, two D Annunzio permits; all in McKenzie County
  • Petro-Hunt (2): two Clark Griswold Federal permits in McKenzie County (these permits were originally Emerald Oil permits);
  • CLR (2): two Entzel permits in Dunn County
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The Short History Of Emerald Oil

From this site.
Emerald Oil (VOG acquires Emerald Oil, announced July 11, 2012)
VOG -- > Emerald Oil

The Market And Energy Page, T+34 -- February 23, 2017

Another sad note: Alan Colmes dead at 66. Very, very interesting background, family history. I vaguely remember watching him with Sean Hannity but I never enjoyed the show all that much. But so sad to see someone with so much vitality dying at age 66. Just one more reminder to live every day to its fullest. Cancer, again.

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

Will we have ten consecutive days of record setting Dow? One word: yup!

Who wudda ever guessed? Folks asking if Oklahoma has enough natural gas processing for all fossil fuel coming out STACK and SCOOP.

Movin' on up. Whiting Petroleum increases 2017 capital expenditures to $1.1 billion to drive significant growth.

Denbury Denbury Resources: Q4 EPS of a loss of $0.02 beats by $0.01. Revenue of $271.62M (+0.7% Y/Y) beats by $40.62M. In pre-market trading, DNR up over 6%.

WTI: up $1.28. Dennis Gartman turns bullish on oil. We closing in on $55.

Liquor: Amazon applies for liquor license in Seattle.

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Opening

Closing looks like the Dow will set another record-setting high; ten in a row; up 35 points; closes at 20,810.

NYSE:
  • new highs, 204: BAX (a huge whoop); BRK (another huge whoop); Dow Chemical;
  • new lows, 11
Late morning: market melting up; up about 30 points.
  • CVX, up, at $111
  • XOM, up, at $82; down for the 1-year, 2-year, and 5-year; but "green" for the 10-year graph
  • XLNX, down slightly;
  • SRE, up nicely; at $108
  • EOG, down slightly, at $97
  • T, flat, slightly positive 
  • DNR, down 2.4% after earnings report
  • TSLA: down over 5%; burning through cash; most expect more share dilution; Barclay's suggest a $2.5 billion stock offering;
  • FSLR: surges almost 10%; one can never understand the market
  • Sempra Energy (SRE) declares $0.8225/share quarterly dividend, 8.9% increase from prior dividend of $0.755. Forward yield 3.03%.

Up 50 points on opening? Actual -- up 42 points. The two top Dow winners -- XOM and CVX.  The S&P winners: EW, RIG, MRO, National Oilwell Varco.

Jobs report:  
  • prior: 239K
  • prior revised: 238K
  • consensus forecast: 244K
  • actual: right on target -- 244K -- a jump of 6K 
  • four-week average: 241K 

The Political Page, T+34 -- February 23, 2017

Separate but equal? Okay if #BlackLivesMatter.

More good news: Bernie Sanders cult taking over Democratic party.

Jobs: in 2009, President Obama promised a million new manufacturing jobs. BLS is reporting that from 2009 to the end of his term, the number of new manufacturing jobs? A net loss of 303,000

Impeachment: likely DNC chairman-select says there is now "enough" to impeach President Trump. This is all about dollars and donations.

Worth repeating, from an April 22, 2016, post:


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Earth Day, 1970: Predictions
Four predictions:
  • the civilized world would end in three decades -- Nobel laureate George Wald.
  • England would be hit by food shortage; civilization would collapse -- Paul Ehrlich, author of The Population Bomb
  • gas masks would be required in cities, due to pollution -- Life Magazine
  • the world's supply of oil would run out -- Kenneth Watt, an ecologist
I'm serious: was there any prediction in 1970 that panned out?

We need to jail global warming skeptics -- Bill Nye, the science guy.
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Global Warming


Snow? Kennedy klan to ski Squaw Valley, California, on July 4, 2017? The resort plans to be open on July 4, 2017:
The Tahoe-area resort has seen some 565 inches of accumulative snowfall this season. That's over 47 feet.
"In 2017 alone, since January 1, we've had 460 inches," said Sam Kieckhefer, a spokesperson for Squaw Valley Alpine Meadows. "Our season average is 450 inches. We received more snow since the start of 2017 than our average season."
Kieckhefer added: "We are 91 days into our season, and we're expecting to operate on July 4 and so that means we're not even halfway done with the season."

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Yes, there's a story behind all this. Maybe for a later date.

Active Rigs -- Movin' On Up, T+34 -- February 23, 2017

Active rigs, up 22% in last two weeks; up 13% since last year:


2/23/201702/23/201602/23/201502/23/201402/23/2013
Active Rigs4439126187181

RBN Energy: is there enough natural gas processing capacity in SCOOP / STACK? One word: wow!

Scott Adams: scariest thing you will see today.

Movin' On Up:

The Jefferson Theme Song