Think about this:
- a short lateral
- 12 million lbs sand
- 90,000 bbls of crude oil in one month
Tuesday, March 7, 2017
Flashback: A Short Lateral Produced 90,000 Bbls In One Month -- March 7, 2017
I've posted this one as a link at the featured blog at the sidebar at the right.
Think about this:
Think about this:
"Asian Privilege" -- March 7, 2017
Dropping faster than Senator Schumer's credibility: the cost of an online equity trade. These trades were $9.99 "forever." Then last month, they suddenly dropped to $6.95, and now down to $4.95. Schwab is almost giving them away for free.
The Bakken: From Mark Perry's Carpe Diem today:
My wife is Hispanic-Japanese. Our closest friends out in Los Angeles are Chinese and Japanese. My wife graduated with an advanced degree from UCLA. Anyone who "knows" UCLA knows that the Asians are pretty much the most visible, most successful, and the second largest, if not the largest, ethnic group at UCLA. So when one talks about "white privilege," I think that one is coming from a Washington, DC / NYC / Boston perspective. "White privilege" out in California is more likely "Asian privilege." So that's what I was thinking about earlier today.
Then a reader sends me this link from Mark Perry's Carpe Diem (same link as above) with the nation's SAT math and reading scores.
There must be a gazillion things one could say about those two graphs, but all I will say right now, that at least for math, it appears it's all about "Asian privilege."
*******************************
Now, Back to The Important Stuff
The Bakken: From Mark Perry's Carpe Diem today:
America’s Shale Revolution is Alive and Well: a) “A Fit U.S. Shale Industry Challenges OPEC Once Again,” b) “U.S. Oil Industry Becomes Refiner to World as Exports Boom,” and c) “As the Bakken heats up again, Williston prepares for more growth.”Two of the three, if not all three, links were posted on this blog in the last couple of days.
***********************************
"Asian Privilege"
Grossly Unfair
My wife is Hispanic-Japanese. Our closest friends out in Los Angeles are Chinese and Japanese. My wife graduated with an advanced degree from UCLA. Anyone who "knows" UCLA knows that the Asians are pretty much the most visible, most successful, and the second largest, if not the largest, ethnic group at UCLA. So when one talks about "white privilege," I think that one is coming from a Washington, DC / NYC / Boston perspective. "White privilege" out in California is more likely "Asian privilege." So that's what I was thinking about earlier today.
Then a reader sends me this link from Mark Perry's Carpe Diem (same link as above) with the nation's SAT math and reading scores.
There must be a gazillion things one could say about those two graphs, but all I will say right now, that at least for math, it appears it's all about "Asian privilege."
Why I Love To Blog -- Reason #25 -- March 7, 2017
In an earlier post that I updated about 5:30 p.m. earlier today I wrote, putting in bold red now which will relate to a SeekingAlpha article linked below:
But for the Saudis: "ConocoPhillips CEO Ryan Lance says the company is planning for oil in the low $50s for the next couple of years." Really, really, really bad news.
Down: both the Dow and WTI closed down a bit by the end of the day. The Dow down 30 points (inconsequential); WTI down 40 cents, again, below $53 -- which is really bad news for Saudi Arabia: a) the actual price; b) the "stubborness" of the price to move; and, c) the trend (down).After writing that, I closed the computer, picked up our oldest granddaughter and drove her to water polo practice. At 7:10 p.m. I got back on the computer, only to find this over at SeekingAlpha:
The Permian: on that note, those companies paying $40,000/mineral acre in the Permian were also betting on a better price / better trend with regard to WTI. I'm not so sure folks are going to look back on some of those deals and wonder "what in the world were they thinking?" Even at $100 oil, one wonders if one can make the math work at $40,000/acre; and, at $50 -- well, I've said all I should say.
- ConocoPhillips CEO Ryan Lance says the company is planning for oil in the low $50s for the next couple of years, and says it can "not only survive but thrive in those kind of prices" since the company now boasts some of the lowest breakeven costs in the business
- "We're thinking lower for longer and we're thinking with a lot of volatility, so we've got to be prepared," Lance tells the CERAWeek energy conference. "We may see $70, $80 in the next couple years [but] if we do, we're going to see $40 on the back end of it."
- Lance says COP's standard on new projects is that hey must be able to generate a 10% return at $50/bbl for Brent crude
- the CEO also is surprised that companies are rushing so quickly to increase production out of the red-hot Permian Basin when he says much about the geology of the play still needs to be understood, making mistakes and less productive wells likely
Amazing.
A couple of hours ago I thought about the craziness of $40,000/Permian acre and then this from the CEO over at ConocoPhillips / SeekingAlpha.
I know readers disagree with me but a few days ago (or was it yesterday) that I even questioned Exxon's "doubling down" in the Permian.
But for the Saudis: "ConocoPhillips CEO Ryan Lance says the company is planning for oil in the low $50s for the next couple of years." Really, really, really bad news.
Whiting To Report Another Nice Rolla Federal Well Wednesday -- March 7, 2017
Active rigs:
No new permits; only one permit renewed and that was for a SWD well.
Two producing wells (DUCs) reported as completed:
27596, see above, Petro-Hunt, Marinenko 145-97-31D-30-2H, Little Knife:
| 3/7/2017 | 03/07/2016 | 03/07/2015 | 03/07/2014 | 03/07/2013 | |
|---|---|---|---|---|---|
| Active Rigs | 44 | 35 | 114 | 191 | 186 |
No new permits; only one permit renewed and that was for a SWD well.
Two producing wells (DUCs) reported as completed:
- 31150, 2,802, Whiting, Loomer 44-33TFHU, Banks, t2/17; cum --
- 32264, 2,024, Whiting, Koala 44-31TFH, Poe, 35 stages, 7.3 million lbs, t2/17; cum --
- 25409, SI/NC, QEP, MHA 3-10-14H-149-91, Heart Butte, no production data,
- 27596, 509, Petro-Hunt, Marinenko 145-97-31D-30-2H, Little Knife, 50 stages, 4.8 million lbs, t12/16; cum 30K 1/17;
- 31708, 3,101, Whiting, Rolla Federal 31-31H, Twin Valley, 35 stages, 6.9 million lbs, t9/16; cum 116K 1/17;
- 32119, SI/NC, EOG, Van Hook 39-3526H, Parshall, no production data,
- 32457, SI/NC, Hess, BB-Federal 151-95-1708H-9, Blue Buttes, no production data,
- 32462, SI/NC, SM Energy, Hank Katie 15-20HN, Ambrose, no production data,
**************************************
31708, see below, Whiting, Rolla Federal 31-31H, Twin Valley:| Date | Oil Runs | MCF Sold |
|---|---|---|
| 1-2017 | 25136 | 82148 |
| 12-2016 | 28509 | 78138 |
| 11-2016 | 30603 | 84670 |
| 10-2016 | 20775 | 48118 |
| 9-2016 | 10721 | 22636 |
27596, see above, Petro-Hunt, Marinenko 145-97-31D-30-2H, Little Knife:
| Date | Oil Runs | MCF Sold |
|---|---|---|
| 1-2017 | 12337 | 10520 |
| 12-2016 | 17086 | 15253 |
That OPEC Cut? I'm Not Seeing It -- March 7, 2017
Updates
Later, 10:40 p.m. Central Time: see first comment. To make it goggle-searchable --
All that comes from Tables 7 & 8 of today's report, where there's a couple hundred line items listed: https://www.bea.gov/newsreleases/international/trade/2017/pdf/trad0117.pdf.
This is the point: we should really net out our oil & product imports and exports for the complete picture.
Bill McBride has a monthly chart that does just that:
https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjT1IIKyFwYJ5wkqIO0dzXfhMfFKMdGHIKeqTYqbJWfDK29O9q13OevffUHS3Vd6ZIrK33oEwtWf-20jKeLOFTpGNJD8_x9AJuVxbXrmU71BzPAkXknHjY3P0ftnG34G8P2by4D_rlAQ2Eu/s1600/TradeDeficitJan2017.PNG.
The black graph is the petroleum deficit, red is everything else, and blue is the total. From this, one can see that oil & oil products aren't nearly as big a part of the trade deficit as they were 5 years ago, because as our imports rose, our exports rose even faster.
Original Post
The other day I mentioned that with regard to all that talk about OPEC and non-OPEC crude oil cuts, I wasn't seeing it. Now, today, Reuters is reporting that US imports of crude oil have actually increased the US trade deficit to near five-year high. Link here in The Dickinson Press.
The U.S. trade deficit jumped to a near five-year high in January as rising oil prices helped to push up the import bill, pointing to slower economic growth in the first quarter and posing a challenge for the Trump administration.
President Donald Trump took office with a pledge to boost annual economic growth to 4 percent and renegotiate trade deals in favor of the United States. Trump blames U.S. trade policy for the loss of American factory jobs and the import-driven surge in the trade gap could intensify the debate on a cross-border tax.The article mentions "rising" oil prices and yet, from my perspective, oil is pretty cheap, unless they are comparing today's $50-oil to 2014's $100-oil.
And I guess that's what they are doing. Near the bottom of the article;
The price of imported oil averaged $43.94 per barrel in January, the highest since August 2015. That pushed the value of petroleum imports to a two-year high. Imports of cell phones and other household goods rose $1.0 billion, while those of automobiles hit a record high.A "five-year" high takes us back to 2012. Between February, 2012, and July, 2014, WTI averaged around $100, starting with $114 in February, 2012.
I-98 Closed West Of Devils Lake -- Overnight Snow In The Bakken -- March 7, 2017
********************************
White House Opened To The Public Again
It's amazing that there is so little fanfare over this! Or perhaps i's wonderful that "we're" finally getting back to normal.
It still amazes me that Michelle "closed" the White House to the public and so little was made of that. I can only imagine the outcry had Ronald Reagan or George W. Bush "closed" the White House. But with the Obamas, the media gave them another "pass."
Whatever.
The White House is now "open" for public tours.
Impact Of Rolla Federal Pad, #31704 - #31708 Inclusive -- March 7, 2017
This could turn into one of those long, involved notes.
To bring you up to speed, take a look at the earlier note on the Rolla Federal Wells; some of the newer wells are just starting to come off the confidential list. They are all going to be huge wells.
The first to be reported was this one, reported earlier today:
Again, to repeat, all five wells on the 5-well pad (the pad with #31704) are going to be huge wells. For example, look at the initial production of #31704, again, a Three Forks second bench well.
31704, a Three Forks second bench well, monthly production data:
Look at the production of these wells (and others) at this post (four of the five are still on the confidential list but will be coming off soon). All of these five wells have been completed.
What interests me is this: how did the completion of these five have wells affect the other five wells in the vicinity as noted in the graphic above?
The wells on the 5-well pad were fracked in August, 2016 (see FrackFocus).
What did the production look like for the five wells to the east during this period which encompasses either side of the frack dates of the wells on that 5-well pad? The wells are listed below, in order of nearest to farthest from #31704.
The distance from the 5-well pad is as much as 0.35 mile (1,850 feet) from the horizontal that is farthest away (#27283)
22386:
22387 (note: 11,000 bbls in 12 days extrapolates to 30,000 bbls):
27284:
22388:
27283 (even the well farthest away showed some increase in production):
To bring you up to speed, take a look at the earlier note on the Rolla Federal Wells; some of the newer wells are just starting to come off the confidential list. They are all going to be huge wells.
The first to be reported was this one, reported earlier today:
- 31704, 3,271, Whiting, Rolla Federal 31-3-1TFH, Three Forks 2nd Bench, 35 stages; 6.7 million lbs; Twin Valley, t9/16; cum 120K in four months;
Again, to repeat, all five wells on the 5-well pad (the pad with #31704) are going to be huge wells. For example, look at the initial production of #31704, again, a Three Forks second bench well.
31704, a Three Forks second bench well, monthly production data:
| Pool | Date | Days | BBLS Oil | Runs | BBLS Water | MCF Prod | MCF Sold | Vent/Flare |
|---|---|---|---|---|---|---|---|---|
| BAKKEN | 1-2017 | 31 | 15563 | 15786 | 4991 | 46532 | 46251 | 227 |
| BAKKEN | 12-2016 | 31 | 19601 | 19901 | 7201 | 55996 | 53845 | 2097 |
| BAKKEN | 11-2016 | 30 | 28923 | 28773 | 11670 | 77924 | 76775 | 1096 |
| BAKKEN | 10-2016 | 28 | 46915 | 46463 | 28302 | 103605 | 102339 | 1219 |
| BAKKEN | 9-2016 | 8 | 8926 | 8793 | 0 | 12140 | 12121 | 13 |
Look at the production of these wells (and others) at this post (four of the five are still on the confidential list but will be coming off soon). All of these five wells have been completed.
What interests me is this: how did the completion of these five have wells affect the other five wells in the vicinity as noted in the graphic above?
The wells on the 5-well pad were fracked in August, 2016 (see FrackFocus).
What did the production look like for the five wells to the east during this period which encompasses either side of the frack dates of the wells on that 5-well pad? The wells are listed below, in order of nearest to farthest from #31704.
The distance from the 5-well pad is as much as 0.35 mile (1,850 feet) from the horizontal that is farthest away (#27283)
22386:
| Pool | Date | Days | BBLS Oil | Runs | BBLS Water | MCF Prod | MCF Sold | Vent/Flare |
|---|---|---|---|---|---|---|---|---|
| BAKKEN | 1-2017 | 31 | 11695 | 11703 | 8702 | 33977 | 33646 | 269 |
| BAKKEN | 12-2016 | 31 | 13826 | 13810 | 9064 | 36050 | 34013 | 1975 |
| BAKKEN | 11-2016 | 29 | 19153 | 19054 | 17976 | 40535 | 38339 | 2139 |
| BAKKEN | 10-2016 | 4 | 10925 | 10728 | 19323 | 20940 | 11938 | 8994 |
| BAKKEN | 9-2016 | 0 | 0 | 67 | 0 | 0 | 0 | 0 |
| BAKKEN | 8-2016 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| BAKKEN | 7-2016 | 8 | 1491 | 1630 | 242 | 4042 | 3999 | 28 |
| BAKKEN | 6-2016 | 30 | 7938 | 8146 | 898 | 14821 | 14595 | 167 |
| BAKKEN | 5-2016 | 18 | 6932 | 6712 | 584 | 10272 | 9000 | 1237 |
| BAKKEN | 4-2016 | 30 | 8874 | 8699 | 1695 | 13185 | 13099 | 26 |
| BAKKEN | 3-2016 | 3 | 448 | 446 | 313 | 1070 | 1039 | 26 |
22387 (note: 11,000 bbls in 12 days extrapolates to 30,000 bbls):
| Pool | Date | Days | BBLS Oil | Runs | BBLS Water | MCF Prod | MCF Sold | Vent/Flare |
|---|---|---|---|---|---|---|---|---|
| BAKKEN | 1-2017 | 31 | 11842 | 11766 | 5798 | 39030 | 38659 | 309 |
| BAKKEN | 12-2016 | 24 | 10283 | 10190 | 4861 | 30136 | 28437 | 1651 |
| BAKKEN | 11-2016 | 17 | 8998 | 8883 | 4280 | 23776 | 22488 | 1255 |
| BAKKEN | 10-2016 | 5 | 1315 | 1861 | 121 | 2413 | 1372 | 1034 |
| BAKKEN | 9-2016 | 12 | 11287 | 10800 | 8265 | 17645 | 13016 | 4614 |
| BAKKEN | 8-2016 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| BAKKEN | 7-2016 | 12 | 1855 | 1904 | 216 | 5274 | 5213 | 37 |
| BAKKEN | 6-2016 | 30 | 5081 | 5164 | 520 | 12953 | 12747 | 146 |
| BAKKEN | 5-2016 | 18 | 3595 | 3491 | 259 | 9667 | 8469 | 1164 |
| BAKKEN | 4-2016 | 30 | 5072 | 5138 | 517 | 13507 | 13420 | 27 |
| BAKKEN | 3-2016 | 24 | 4074 | 4031 | 443 | 10374 | 10073 | 256 |
27284:
| Pool | Date | Days | BBLS Oil | Runs | BBLS Water | MCF Prod | MCF Sold | Vent/Flare |
|---|---|---|---|---|---|---|---|---|
| BAKKEN | 1-2017 | 31 | 12013 | 12100 | 5377 | 28761 | 28471 | 228 |
| BAKKEN | 12-2016 | 31 | 17695 | 17611 | 7316 | 40116 | 37856 | 2198 |
| BAKKEN | 11-2016 | 30 | 20360 | 20104 | 8503 | 42476 | 40176 | 2241 |
| BAKKEN | 10-2016 | 6 | 3255 | 3196 | 895 | 4945 | 2816 | 2121 |
| BAKKEN | 9-2016 | 0 | 0 | 99 | 0 | 0 | 0 | 0 |
| BAKKEN | 8-2016 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| BAKKEN | 7-2016 | 8 | 2211 | 2299 | 421 | 5271 | 5220 | 37 |
| BAKKEN | 6-2016 | 27 | 7211 | 7086 | 972 | 17914 | 17659 | 202 |
| BAKKEN | 5-2016 | 5 | 1036 | 1086 | 112 | 3441 | 3018 | 415 |
| BAKKEN | 4-2016 | 25 | 5117 | 5336 | 672 | 16041 | 15961 | 32 |
| BAKKEN | 3-2016 | 31 | 7628 | 7470 | 792 | 20797 | 20221 | 514 |
22388:
| Pool | Date | Days | BBLS Oil | Runs | BBLS Water | MCF Prod | MCF Sold | Vent/Flare |
|---|---|---|---|---|---|---|---|---|
| BAKKEN | 1-2017 | 31 | 10318 | 10326 | 6482 | 28796 | 28506 | 228 |
| BAKKEN | 12-2016 | 31 | 12237 | 12174 | 7535 | 27766 | 26184 | 1520 |
| BAKKEN | 11-2016 | 29 | 13783 | 13590 | 8743 | 28809 | 27233 | 1519 |
| BAKKEN | 10-2016 | 4 | 1106 | 1086 | 236 | 1817 | 1032 | 778 |
| BAKKEN | 9-2016 | 0 | 0 | 28 | 0 | 0 | 0 | 0 |
| BAKKEN | 8-2016 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| BAKKEN | 7-2016 | 5 | 631 | 732 | 93 | 1630 | 1609 | 11 |
| BAKKEN | 6-2016 | 30 | 4988 | 5056 | 1044 | 12297 | 12098 | 139 |
| BAKKEN | 5-2016 | 18 | 3301 | 3197 | 422 | 8112 | 7102 | 976 |
| BAKKEN | 4-2016 | 30 | 4258 | 4374 | 460 | 9648 | 9569 | 19 |
| BAKKEN | 3-2016 | 31 | 4823 | 4740 | 532 | 10221 | 9907 | 252 |
27283 (even the well farthest away showed some increase in production):
| Pool | Date | Days | BBLS Oil | Runs | BBLS Water | MCF Prod | MCF Sold | Vent/Flare |
|---|---|---|---|---|---|---|---|---|
| BAKKEN | 1-2017 | 31 | 6831 | 6918 | 2186 | 17266 | 11061 | 6143 |
| BAKKEN | 12-2016 | 31 | 8072 | 7965 | 2933 | 19186 | 4172 | 14952 |
| BAKKEN | 11-2016 | 30 | 9286 | 8948 | 4775 | 19418 | 5212 | 14149 |
| BAKKEN | 10-2016 | 1 | 70 | 70 | 0 | 0 | 0 | 0 |
| BAKKEN | 9-2016 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| BAKKEN | 8-2016 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| BAKKEN | 7-2016 | 8 | 1173 | 1243 | 368 | 3949 | 3879 | 56 |
| BAKKEN | 6-2016 | 29 | 5516 | 5571 | 1956 | 15180 | 7471 | 7652 |
| BAKKEN | 5-2016 | 21 | 3176 | 3233 | 801 | 9071 | 2273 | 6758 |
| BAKKEN | 4-2016 | 30 | 4711 | 4555 | 1437 | 14245 | 10750 | 3441 |
| BAKKEN | 3-2016 | 31 | 5286 | 5350 | 876 | 15286 | 15191 | 33 |
Sign Of Relief -- Here Come De Judge, Here Come De Judge -- March 7, 2017
Link to pdf. [https://ecf.dcd.uscourts.gov/cgi-bin/show_public_doc?2016cv1534-158]
The court denies the native American motion for preliminary injunction (regarding DAPL).
It will take awhile to read the 38-page document. The most important item, from my point of view, is that the judge did not set a new precedent / "invent' new law with regard to water rights and religion.
Based on other documents, it appears that oil could start flowing as early as this week. Meanwhile, the clean-up continues; and, the costs of that clean-up continues to grow.
The court denies the native American motion for preliminary injunction (regarding DAPL).
It will take awhile to read the 38-page document. The most important item, from my point of view, is that the judge did not set a new precedent / "invent' new law with regard to water rights and religion.
Based on other documents, it appears that oil could start flowing as early as this week. Meanwhile, the clean-up continues; and, the costs of that clean-up continues to grow.
EIA's Short Term Outlook Posted; Peak Oil? What Peak Oil? King Coal Is Not Dead -- March 7, 2017
Oil Markets:
U.S. crude oil production is now expected to reach an all-time high in 2018, reflecting an increased forecast of domestic oil production growth.
Domestic oil output is expected increase to an average of 9.7 million barrels per day next year led by increased drilling in the Permian shale region of Texas and New Mexico and from rising production in the Gulf of Mexico, breaking the U.S. total annual production record set back in 1970.
Rising crude oil production from non-OPEC countries, especially from the United States, is expected to curb upward pressure on oil prices for much of 2017.
Crude oil prices are expected to remain stable over the coming months as the global oil market is forecast to be largely in balance during 2017. [Comment: if accurate, this is really, really bad news for Saudi Arabia. They won't even see $60 oil based on this, unless, of course, the EIA is suggesting that prices "melting" up to $75 in an orderly fashion is evidence of "stability. If we are already in balance globally -- or soon to be -- it sure didn't take much; there are reports out there today that there is/was only about a 60% compliance vs the nearly 100% compliance Saudi Arabia is suggesting.]
Gasoline/Refined Products:
High gasoline inventories put downward pressure on fuel prices at the pump during February, but the average gasoline price is expected to slowly climb and reach a monthly average of $2.51 a gallon in July as the summer driving season increases demand for gasoline and more-expensive summer-grade fuel blends are required. [Comment: will the US set an all-time gasoline demand record this summer despite the stricter CAFE standards and the EVs?]
Natural Gas:
This winter’s warm weather is cutting into U.S. natural gas demand, with natural gas consumption during February expected to be the lowest for the month in eight years.
Lower natural gas demand and above-average gas inventories are putting downward pressure on U.S. natural gas prices, as the average spot price for natural gas is now revised down 12% for 2017.
Electricity:
While U.S. total electricity generation is expected to decline almost 1% this year, the share of coal-fired generation is forecast to increase. [Comment: not just the amount, but the actual share will increase; and I thought it was all about solar / wind energy.]
Coal:
After declining for two years in a row, U.S. coal production is set to increase 4% during 2017 due in part to growth in coal-fired electricity generation.
Renewables:
Solar power is expected to be the largest growing renewable energy source, with total U.S. electricity generation capacity from solar more than doubling from the end of 2015 to the end of next year. [Comment: doubling 0% is still 0%.]
U.S. crude oil production is now expected to reach an all-time high in 2018, reflecting an increased forecast of domestic oil production growth.
Domestic oil output is expected increase to an average of 9.7 million barrels per day next year led by increased drilling in the Permian shale region of Texas and New Mexico and from rising production in the Gulf of Mexico, breaking the U.S. total annual production record set back in 1970.
Rising crude oil production from non-OPEC countries, especially from the United States, is expected to curb upward pressure on oil prices for much of 2017.
Crude oil prices are expected to remain stable over the coming months as the global oil market is forecast to be largely in balance during 2017. [Comment: if accurate, this is really, really bad news for Saudi Arabia. They won't even see $60 oil based on this, unless, of course, the EIA is suggesting that prices "melting" up to $75 in an orderly fashion is evidence of "stability. If we are already in balance globally -- or soon to be -- it sure didn't take much; there are reports out there today that there is/was only about a 60% compliance vs the nearly 100% compliance Saudi Arabia is suggesting.]
Gasoline/Refined Products:
High gasoline inventories put downward pressure on fuel prices at the pump during February, but the average gasoline price is expected to slowly climb and reach a monthly average of $2.51 a gallon in July as the summer driving season increases demand for gasoline and more-expensive summer-grade fuel blends are required. [Comment: will the US set an all-time gasoline demand record this summer despite the stricter CAFE standards and the EVs?]
Natural Gas:
This winter’s warm weather is cutting into U.S. natural gas demand, with natural gas consumption during February expected to be the lowest for the month in eight years.
Lower natural gas demand and above-average gas inventories are putting downward pressure on U.S. natural gas prices, as the average spot price for natural gas is now revised down 12% for 2017.
Electricity:
While U.S. total electricity generation is expected to decline almost 1% this year, the share of coal-fired generation is forecast to increase. [Comment: not just the amount, but the actual share will increase; and I thought it was all about solar / wind energy.]
Coal:
After declining for two years in a row, U.S. coal production is set to increase 4% during 2017 due in part to growth in coal-fired electricity generation.
Renewables:
Solar power is expected to be the largest growing renewable energy source, with total U.S. electricity generation capacity from solar more than doubling from the end of 2015 to the end of next year. [Comment: doubling 0% is still 0%.]
Cost Of Fracking Sand Rising -- Seeking Alpha -- March 7, 2017
Recently I posted:
Mike Filloon talked about the rising cost of frack sand some time ago.
It seems like the analysts are concerned about the cost of proppant. From my vantage point, the cost of sand is the least thing to be concerned about in the overall cost of the well (benefit vs cost analysis). The cost of resin-coated proppant may be a different story, but I still think the cost of sand is over-hyped. Just a personal opinion.Today, over at SeekingAlpha an article on the rising cost of sand.
- leading producers of sand used by oil and gas explorers such as U.S. Silica, Hi-Crush Partners, and Fairmount Santrol are soaring this year even after a recent selloff, but their gains are turning into oil producers’ pain and could affect the global energy market, WSJ's Spencer Jakab writes
- some analysts see demand for frack sand equaling or exceeding the 2014 peak even with drilling activity far lower; Raymond James analyst Praveen Narra estimates the amount used per foot of well depth last year was 40%-50% more than in 2014
- Tudor Pickering analysts say a typical Permian Basin well might have cost ~$6M to drill last year including $350K worth of sand, but that could reach $800K by late 2017 and conceivably top $1M if providers flex their pricing muscles
- the cost trend could hurt projected cash flows and means drillers would need higher breakeven prices to justify new investment, which Jakab concludes are "putting a smile on the faces of sand company shareholders but also should cheer people up in Riyadh and Moscow."
Bakken EOR Test Using Injected Hydrocarbon; Ross Oil Field; Hess -- March 7, 2017
Bottom line:
The wells:
32937 (V1), API: 33-061-03974; geologic summary --
32938 (V2), API: 33-061-03975; geologic summary --
32937, brief description of proposed injection program, pages 27 - 28 of the 126-page file report. Data points:
Additional sources:
"Huff and Puff, ResearchGate.com, 2014, 2015.
- Hess to test enhanced oil recovery using injected hydrocarbon gas. Two vertical wells in Ross oil field have been drilled for this test
- apparently EOG has been doing similar testing in the Eagle Ford for the past two or three years (see end of post)
The wells:
- 32937, IA/drl, Hess, RS-Nelson Farms-156-92-24V-1, Ross, a Birdbear well, no production data, PGI for the Bakken well; noted to be IA (posted January 24, 2018)
- 32938, SI/NC, RE-Nelson Farms-156-92-24V-2, Ross, drilled to Birdbear, below the Three Forks; still SI/NC, posted January 24, 2018;
*******************************
32937 (V1)
32937 (V1), API: 33-061-03974; geologic summary --
- spud: September 9, 2016
- cease drilling: September 14, 2016
- TD: 9,974.90' TVD
- drilled as part of a projected Hess's Enhanced Oil Recovery (EOR) group, RS-Nelson Farms 156-92-24V-1... vertical hole targeting the Middle Bakken and Three Forks Formation where a 210' core was taken
- the 210-foot core was taken from 9,587 feet MD, an estimated 10 feet below the False Bakken, to 9,797 feet MD in Three Forks Formation
- The False Bakken, the upper Bakken shale, the middle Bakken, the lower Bakken shale, and all four benches of the Three Forks are described in the file report, as well as the Birdbear
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32938 (V2)
32938 (V2), API: 33-061-03975; geologic summary --
"As part of a project by Hess's Enhanced Oil Recovery (EOR) group, RS-Nelson Farms-156-92-24V-2 was drilled as a vertical hole to monitor the RS-Nelson Farms-156-92-24V-1. The surface location ..... located in Mountrail County in the Ross Field.Disclaimer: in a long note like this there will be factual and typographical errors. I am doing this to help me better understand what is going on in the Bakken. Do not quote me on any of this. If this is important to you, go to the source.
"RS-Nelson Farms-156-92-24V-2 spud on September 21, 2016, and reached a total measured depth of 9,983' on September 24, 2016, at 5:00 a.m. CDT. This (#32938) was the second of two verticals drilled on this well pad.
"Thirty foot samples were caught from 7,470 feet through the end of the vertical section at 9,983 feet in the Birdbear Formation."
The False Bakken, the upper Bakken shale, the middle Bakken, the lower Bakken shale, and all four benches of the Three Forks are described in the file report, as well as the Birdbear.
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The Proposed Hydrocarbon Injection Test
32937, brief description of proposed injection program, pages 27 - 28 of the 126-page file report. Data points:
- "The objective of the proposed enhanced oil recovery (EOR) test is to demonstrate enhanced oil recovery through injection of a hydrocarbon fluid into the Middle Member of the Bakken Formation (Middle Bakken). The EOR test is planned in two phases:
- 1) cyclic production / injection test
- 2) injector-producer pair test
- two vertical wells
- 32937 (V1): a cyclic production / injection well
- 32938 (V2): a monitoring well in the first part of the EOR test
- 32937 (V1): middle Bakken; stimulated with a hydraulic, propped fracture to achieve sufficient well injectivity for the test; the test will begin with an initial production period in V1 well to establish a primary production baseline
- 32937 (V1): after initial production, the V1 well will be converted to an injection well
- 32937 (V1): a hydrocarbon fluid will be injected into the V1 well at rates up to 285 MSCFPD and surface pressures up to 4,500 psig. The injection pressures will not exceed the fracture pressure of the Middle Bakken.
- after the injection cycle is complete, the V1 well will be shut-in for a soak period; then, the well will be converted back to production and produced
- production after the injection/soak period will be compared with the primary production baseline to determine enchaned oil recovery
- 32938 (V2): will be completed in the Middle Bakken; a bottom-hole pressure temperature gauge will be installed in the well for monitoring during the production, injection, and soak cycles of V1;
- 32938 (V2) will not be produced during hte CP/IT
- the same two wells will be utilized
- V1 will be converted to an injection well
- V2 will be stimulated with a hydraulic, propped fracture prior to conversion to production
- a hydrocarbon fluid will be injected into the V1 well at rates up to 285 MSCFPD and surface pressures up to 4,500 psig. The injection pressures will not exceed the fracture pressure of the Middle Bakken. Production response to the hydrocarbon fluid injection will be monitored in the V2 well
- to be onsite, trucked in
- injection fluid will be purchased from the Tioga Gas Plant
- multiple injection, soak, and production cycles, would continue for a sufficient duration to study the impact of hydrocarbon fluid injection on oil recovery
- anticipated duration of the test is 1.5 - 2 years with total gas volume of 90 mmscf (million standard cubic feet)
- another Hess-operated well, Nelson Farms 1-24H is located about 1,000 feet from V1
- "due to localized reservoir depletion, a response in the Nelson Farms 1-24H could be expected during the EOR test. The Nelson Farms 1-24H will be monitored daily to detect changes in production. No detrimental impact to production in his well is anticipated because the injection fluid is a hdrocarbon.
- other Hess-operated wells outside the 640-acre RS-Nelson Farms DSU will be monitored for any effect:
- RS-Feldman 156-92-1423H-1 (#17696; middle Bakken)
- RS-State 156-92-3625H-1 (#16800; middle Bakken)
- RS-Lois Enander 156-91-3130H-1 (#17962; Three Forks)
- additionally, produced gas from the RS-Feldman 156-92-1423H-1 (#17696) will be analyzed to ensure that a response in this well could be detected. Due to the much great distance between these wells and the injector (2,800 - 4,000 feet) than the injector and the Nelson 1-24H, it is not anticipated thtat a response in any of these wells would occur. If a response does occur, the NDIC would be notified. Not detrimental impact to production in these wells would be anticipated in the unlikely outcome that a response occurred.
- test to use 90 million standard cubic feet of natural gas; compare:
- #16800, drilled in 2008, Ross oil field; production through 1/17: 64 million cubic feet of gas
- #24193, drilled in early 2013, Ross oil field, production through 1/17; 69 million cubic feet of gas
- #31000, Robinson Lake oil field, drilled in mid-2015; production through 1/17: 111 million cubic feet of gas
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Other Sources
Additional sources:
- EOG enhancing Eagle Ford oil recovery using novel natural gas injection system; Natural Gas Intel.com, May 10, 2016; archived.
- public access review of Natural Gas Intel story linked above; May 10, 2016; a must-read
"Huff and Puff, ResearchGate.com, 2014, 2015.
The Political Page, T+46 -- March 7, 2017
Democrat as much as admits that Trump was likely "bugged." This explains why FBI Comey does not want Justice Department to undertake a probe -- things are going to lead right back to him.
NOKO: the new "acronym" making the rounds. This will not be a good day for humanity if we ever see this headline in the British tabloids: NOKO NUKES SOKO.
Growing gap between jobless claims and job losses. Wall Street Journal. The comments may have exposed the "real" problem.
Water, water everywhere: it is being reported that California is running out of storage for all that water. Also in the The Wall Street Journal.
Governor Cuomo "cover up." New York regulators -- "at urging of Governor Cuomo" -- shot down plans to list on utility bills how much extra customers will pay under the state’s new Clean Energy Standard (CES). Link here. The total cost of the new green standard will be about $360 million during 2017 rising to $500 million the next year. New York State population, 20 million. The real question is how much more could utility prices come down if efforts were made to bring utility prices as low as possible. Electric rate comparison among states show New York around 41st, maybe dropping further, previously reported --
NOKO: the new "acronym" making the rounds. This will not be a good day for humanity if we ever see this headline in the British tabloids: NOKO NUKES SOKO.
Growing gap between jobless claims and job losses. Wall Street Journal. The comments may have exposed the "real" problem.
Water, water everywhere: it is being reported that California is running out of storage for all that water. Also in the The Wall Street Journal.
Governor Cuomo "cover up." New York regulators -- "at urging of Governor Cuomo" -- shot down plans to list on utility bills how much extra customers will pay under the state’s new Clean Energy Standard (CES). Link here. The total cost of the new green standard will be about $360 million during 2017 rising to $500 million the next year. New York State population, 20 million. The real question is how much more could utility prices come down if efforts were made to bring utility prices as low as possible. Electric rate comparison among states show New York around 41st, maybe dropping further, previously reported --
Nebraska.gov, data for 2015, all states; least expensive to most expensive, some examples:More taxes: by the way, Governor Cuomo could soon be signing a bill to tax purchases made on the internet even if seller not physically located in the state. Will affect Amazon, eBay. Of course, New Jersey would likely follow. It will be interesting to see if New Yorkers have enough fight in them to stop it.
EIA: average retail price, by state, January 17, 2017 (in the lower 48, only four states more expensive, including California which has no excuse):
- Washington, #1: 7.41
- Wyoming, #4: 7.95
- Iowa, #8: 8.47
- Texas, #10: 8.63
- North Dakota, #13: 8.85
- Nevada, #22: 9.48
- Minnesota, #26: 9.69
- National average, between #31 and #32: 10.42
- New York, #41: 15.28
- California, #42: 15.50 (all that free solar and wind energy helping to keep prices down)
- Massachusetts, #44: 16.86 (wow)
- Connecticut, #46: 17.76 (wow)
- Hawaii, #48 (dead last -- due to some ties among states, on 48 positions): 26.17
- US average: 10.41 cents
- North Dakota: 8.75
- California: 15.42
- Minnesota: 9.53
- Iowa: 8.35
- Arkansas: 8.19
- Louisiana: 7.65
- New York: 15.28
- California: 15.42
- New Hampshire: 16.02
- Rhode Island: 17.01
- Connecticut: 17.77
The Energy And Market Page, T+46 -- March 7, 2017
Closing
5:30 p.m.
Down: both the Dow and WTI closed down a bit by the end of the day. The Dow down 30 points (inconsequential); WTI down 40 cents, again, below $53 -- which is really bad news for Saudi Arabia: a) the actual price; b) the "stubborness" of the price to move; and, c) the trend (down).
The Permian: on that note, those companies paying $40,000/mineral acre in the Permian were also betting on a better price / better trend with regard to WTI. I'm not so sure folks are going to look back on some of those deals and wonder "what in the world were they thinking?" Even at $100 oil, one wonders if one can make the math work at $40,000/acre; and, at $50 -- well, I've said all I should say.
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Opening
Tea leaves: lots of talk coming out of the global oil conference being held in Houston this week. It sounds like Saudi Arabia is in a heap of financial trouble. Saudis seem to be admitting that cuts in OPEC / non-OPEC production (outside the US) have not resulted in price changes as fast as they would have liked (or possibly even predicted). They warning other countries not to take advantage of Saudi's cuts by increasing their own production, and that OPEC would meet again in May, 2017, to discuss the production cuts which are scheduled to end at the end of June, 2017. My hunch is that it will depend on the "mood" of the Saudi king (or the will of Allah) whether the cuts are extended. Saudi really, really, really doesn't want to extend the cuts (for any number of reasons, but they have little room to maneuver.
WTI: for some reason, oil is moving up a bit today in early trading. Up about 30 cents, to $53.50. Perhaps nothing more than traders staying within a narrow trading range.
Exxon Mobil: The big story today appears to be the ExxonMobil $20 billion investment along the Gulf Coast, previously reported. The Wall Street Journal reports. Talking head on Fox Business News suggests this plan had been under development for many years, but it was expanded and given the go-ahead when Trump was elected. Will create 45,000 jobs. This is a huge, huge story; will be under-reported by the mainstream media.
This naturally follows: US Oil Industry Becomes Refiner to World as Exports Boom -- from Bloomberg.
When PBF Energy Inc. scooped up a refinery from Exxon Mobil Corp. on the Mississippi River in 2015, it wasted no time sprucing up the plant with an eye toward quickly resuming lucrative fuel exports.
Within three months, PBF was ready to load its first tanker for shipment abroad.
By late last year, the New Jersey-based company was exporting 22,000 barrels a day of fuel, or 16 percent of that refinery’s output. Now, it wants to boost that to almost 25 percent.
PBF isn’t alone in this push. From major producers such as Chevron Corp. to specialized refiners including Valero Energy Corp., the U.S. refining industry has shifted its game over the last five years, taking advantage of gaps left by struggling refiners in Latin America, Africa and Asia. Along the way, it’s transforming what had long been a largely domestic business into a new global venture.
"U.S. refiners are now the refiners for the world," said Ivan Sandrea, head of Sierra Oil & Gas, which is planning to build infrastructure to import U.S. fuels into Mexico.
U.S. companies last year exported a record 3 million barrels a day of refined products, more than double the 1.3 million barrels a day shipped a decade ago, according to data from the Energy Information Administration.
Gasoline led the surge, with exports hitting an all-time high of almost 1 million barrels a day in December, up ten-fold from a decade ago.Pipeline: meanwhile, the pipeline story of the year (so far) is the Enbridge-Spectra Energy story but the DAPL may be close behind. A reader sent me a link to the court-mandated update. The company thinks oil will be flowing through the pipeline by mid-March. The court requires 48-hour notice before oil actually starts flowing, allowing the court time to make a "final" ruling on the case. The link will take you to a pdf: https://www.indianz.com/News/2017/03/06/04515967273.pdf.
Snap: Snapchat shares drop below offering price. The shares fell 12% in price yesterday and are down 4% in pre-trading today.
Tuesday, March 7, 2017
Active rigs:
RBN Energy: how new rules on bunker fuel sulfur content will impact refineries.
Scott Adams: his $1 million climate bet.
| 3/7/2017 | 03/07/2016 | 03/07/2015 | 03/07/2014 | 03/07/2013 | |
|---|---|---|---|---|---|
| Active Rigs | 44 | 35 | 114 | 191 | 186 |
RBN Energy: how new rules on bunker fuel sulfur content will impact refineries.
Scott Adams: his $1 million climate bet.