Tuesday, May 30, 2017

It Just Never Quits -- May 30, 2017 -- Gas Production From The Permian Basin Is Likely To Triple By 2020

From The Wall Street Journal: The oil play that could flood the natural-gas market.

Gas output from the Permian basin is likely to surge by 2020, rivaling production from Appalachian Marcellus.
The oil-rich Permian Basin is emerging as a major source of new natural gas, a development that could deepen an existing glut and pressure gas prices for years.

The West Texas region has become the most prolific spot for horizontal oil drilling and fracking. The new oil wells also produce natural gas, making it a nearly free byproduct that energy companies can then sell on top of the more-sought-after crude.

Gas production in the Permian Basin is likely to triple by 2020 from its 2010 levels, analysts say. The region is poised to rival new gas output from the Appalachian Marcellus Shale, the U.S.’s biggest gas-producing region.
The numbers:
Gas production in the Permian is expected to increase by 5.5 billion cubic feet a day from the end of last year to reach 12.5 billion cubic feet by the end of 2020, according to energy investment bank Tudor Pickering Holt & Co. in Houston.

The Marcellus, which has long been the fastest-expanding gas field, is likely to add 6.1 billion cubic feet during the same period, not much more than the Permian, though its total production will be two times that of Permian by 2020.
Two thoughts come to mind as I ponder the story and the graph:
  • the demise of solar/wind as a viable economic alternative
  • US exports
From wiki:
According to the International Energy Agency, the top 10 natural gas producers in 2013 produce two thirds of the total world production of 3,479 billion cubic meters.
In billion cubic meters (percent of global production):
  • US: 689 (19.8%)
  • Russia: 671 (19.3%)
  • Iran: 255 (5.9%)
  • Qatar: 161 (4.6%)
  • Canada: 155 (4.5%)
  • China: 115 (3.3%)
  • Norway: 109 (3.1%)
  • Netherlands: 86 (2.5%) -- see 2015 production numbers below
  • Saudi Arabia: 84 (2.4%)
  • Algeria: 80 (2.3%)
That was back in 2013 -- which seems like a lifetime ago, and things have changed greatly since then. 

Compare this with a pretty sophisticated analyst's view back in 2013 (which has now been archived). I linked it at this post, "Exhibit A." The comments, as usual, are priceless.

BP's natural gas production statistics for 2015 are here.
North America (+3.9%) recorded the largest growth increment, driven by continued strong increases in US output, while production in Europe & Eurasia declined by 0.7%, with large declines in the Netherlands and Russia. The Netherlands (-22.8%) recording the world’s largest decline. Large volumetric declines were also seen in Russia (-1.5%) and Yemen (-71.5%).
EIA's 2016 assessment here.

PeakOil's top eight, May 24, 2016. Comments are priceless.

They Come In Threes -- May 30, 2017

Scott Pelley out at CBS Evening News. May 30, 2017.
Kathy Griffin fired from just about everything. June 2, 2017.
Theresa May down at Downing Street, but not out. June 8, 2017.

Hess With Ten New Permits -- May 30, 2017

Active rigs:

Active Rigs502980188186

Ten new permits:
  • Operator: Hess
  • Fieldw: Truax (Williams); Antelope (McKenzie)
  • Comments: eight in SESW 8-154-98 (Truax); two in Lot 4 12-152-95 (Antelope)
6 Million Hits On Norwegian Television

From Michael Booth's The Almost Nearly Perfect People, c. 2014, page 200:
In fact, Danish -- in particular what the Swedes and Norwegians claim is its declining intelligibility, with the Danes apparently slurring and swallowing even more of their words, and employing even more glottal stops as time passes -- in increasingly the butt of jokes throughout Scandinavia. As improbable as this may sound, one of the funniest TV comedy sketches I have ever seen featured two Norwegian comedians from the show Uti var Hage pretending to be Danes trying to communicate with each other.

It's good the first time; great, the second time; and, perhaps the best thing I've seen in years after watching it a third time. A little Finlandia while watching it will make it even funnier.

EOG, The Apple Of Unconventional Oil -- Filloon -- Part 2 -- May 30, 2017

Link here.

  • EOG's technological advances have made it the best operator in the United States
  • looking at what may be EOG's best asset, we are comparing other operator results to its most recent huge wells
  • Chevron underperformed the average of all wells in the area by a significant margin
Part I was posted May 28, 2017.

The Energy And Market Page -- May 30, 2017

On May 26, 2017, I wrote:
Mexican natural gas demand: No links but scrolling through Twitter suggests Mexico's demand for natural gas is going to significantly outpace domestic supply. Imports won't fill all the demands. That's why I'm following SRE.
Previously I've written that in a down market, it's always important to note what bucks the trend. SRE? SRE is up 1.48% today, about $1.69. A 52-week high.

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 what you think you may have read here. 

RBN Energy: continuing the series on pipelines to the Gulf Coast from the Marcellus/Utica. Archived.

Active rigs:

Active Rigs502980188186

Canada's Diesel Glut -- May 30, 2017

From Bloomberg via Twitter:
It seemed like a good idea at the time. When Canada’s government decided to fund the nation’s first new refinery in three decades in 2012, a diesel shortage had just caused some truckers to be turned away from filling stations, and demand was climbing. Oil-sands producers were ramping up output and crude prices topped $100 a barrel.

Fast forward to 2017, and North West Refining’s Sturgeon plant in Alberta is poised to add 40,000 barrels a day of diesel to an already-glutted market. Crude is hovering around $50 amid surging North American output, oil-sands producers have shelved expansions and Alberta has just emerged from a two-year recession. Diesel demand is lower than it was two years ago, and truck-fuel prices relative to crude oil are half their level from three years ago.

“Diesel demand is dropping in Alberta,” John Auers, executive vice president at energy consultant Turner Mason & Co., said by phone. “Any time you are adding more supply, you are going to impact the price negatively.”

The Sturgeon plant, Canada’s first new refinery since 1984, will begin turning oil-sands bitumen into diesel by the end of the year, according to Ian MacGregor, chairman of Northwest Redwater Partnership, which owns half the project in partnership with Canadian Natural Resource Ltd. Bitumen is a molasses-like substance extracted from oil sand that is so thick, it has to be blended with condensate or upgraded into synthetic oil to be processed.
Much more at the link. 

The Road To Germany -- An Update -- Electricty Now Considered A "Luxury" In Germany -- May 30, 2017


August 8, 2018: power worth less than zero spreads as green energy floods the grid. Wind and solar farms are glutting networks more frequently, prompting a market signal for coal plants to shut off. From Bloomberg.
Original Post 

Angela Merkel has recently turned incredibly vitriolic in her comments about the US. It appears she is running scared. All things being equal, the US will have a huge energy advantage compared to Germany (and the entire EU) for decades, maybe centuries. But all things are not equal. Germany bought into hook, line, and sinker on global warming, and worse, rashly and inexplicably she killed their nuclear industry after the Japanese tsunami debacle (not much risk of a tsunami in Berlin).

Electricity is now considered a "luxury" in Germany (see below). Merkel desperately needed to close the energy-cost-advantage/gap with the US, and the only way to do this was to convince Trump to saddle Americans with higher electricity prices by buying into solar and wind energy.

The first to feel Merkel's policies will be all the blue-collar workers not hired by new plants in Germany. Those losses will be invisible. The second to feel her policies will be all the blue-collar workers laid off by the closing of manufacturing plants that require huge amounts of electricity.

From The Wall Street Journal today: electricity for Germans is now a luxury.
Mrs. Merkel seemed especially miffed about Mr. Trump’s decision not to embrace the Paris climate accord that Mr. Obama signed in his final year as President. “The whole discussion about climate has been difficult, or rather very unsatisfactory,” Mrs. Merkel told reporters. “Here we have the situation that six members, or even seven if you want to add the [European Union], stand against one.’

But wait. Since when is a difference of opinion on climate policy a signal of U.S. retreat from Europe? And why is Mr. Trump’s reluctance to sign on to Paris—he says he’ll decide whether to leave the accord this week—a failure of leadership? Mrs. Merkel’s comments suggest that she is most upset because Mr. Trump declined to follow her lead on climate.

Mr. Trump should decline if he wants to fulfill his campaign promises to lift the U.S. economy. Mrs. Merkel’s embrace of green-energy dogmas has done enormous harm to the German economy. She reacted to the Fukushima meltdown by phasing out nuclear power, and her government has force-fed hundreds of billions of dollars into solar and wind power that have raised energy costs. As Der Spiegel once put it, electricity is now a “luxury good” in Germany.

It’s not surprising that Mrs. Merkel and the Europeans should want to shackle the U.S. with similarly high energy costs, and Mr. Obama was happy to oblige. But Mr. Trump was elected on a promise to raise middle-class incomes, and domestic energy production is essential to that effort. Mrs. Merkel doesn’t care if Mr. Obama committed the U.S. to Paris without any Congressional approval, but Mr. Trump has to take that into account.

The U.S. natural-gas fracking revolution also has the benefit of reducing fossil-fuel emissions by reducing reliance on coal. To the extent that U.S. energy production can supplant Russian natural-gas supplies to Europe and keep the price of oil low, it also undermines Vladimir Putin’s influence at home and abroad.

Previously Posted

Everything below this line was previously posted a little over a year ago, March 30, 2016:

Germany’s switch to renewable energy sources is a success story. [Yes, that's the first line -- Germany's switch to renewable energy sources is a success story. Now the article goes on to say how this appears to be a "trainwreck." If this is how Handelsblatt defines a "success story," I sure hope Germany does not have something they would call a failure. Oh, that's right; they do: open borders.]
Ever since the country dedicated itself to a transformation of its energy supply following Japan’s Fukushima nuclear disaster five years ago, renewables have been booming. Last year, they accounted for a third of the energy consumed in Germany.
But while this success goes far in protecting the climate and environment, it has an economic downside. The electricity market has come apart at the seams.
While wind and solar electricity are being fed into the grid at set prices on a priority basis, natural gas- and coal-fired power plants, and soon nuclear power plants, are being forced off the market.
The price of electricity on the wholesale market has been in freefall for five years, plunging from €60 ($67.37) per megawatt-hour to the current €20.
The situation poses an existential threat for German operators of conventional plants like E.ON and RWE.
According to Trendresearch, a marketing research institute commissioned by Handelsblatt, the use of conventional power plants will continue to decrease. The gas- and coal-fired power plants and the nuclear power plants that remain on the grid will produce around 435,000 gigawatt hours of electricity this year.
Although that’s about two-thirds of the total German electricity production, the power plants were designed for 521,000 gigawatt hours. This means the utilization of their capacity is lagging around 17 percent below what they were designed for. By 2020, the gap between capacity and production is likely to increase to 23 percent.
The plunge in price is putting the heads of E.ON and RWE, Johannes Teyssen and Peter Terium respectively, in a predicament. With prices of €20, restructuring is in danger. When Mr. Teyssen decided to spin off the ailing power plants in 2014, the megawatt-hour of electricity was still at €33.
At the moment, the two executives are watching as their business is virtually imploding. First gas-fired power plants were forced off the market, then the black coal plants, and now low-priced lignite and even nuclear energy is struggling against being shut down.
While consumers are being forced to pay rising prices for electricity because of constantly higher taxes, fees and levies, the quoted rates on the wholesale market for electricity from coal, gas and nuclear power plants have been heading in the other direction for years. In recent weeks, they reached a dramatic low point that no manager would have thought possible.
At times, the price of electricity broke below the €20 per megawatt-hour mark on the futures market. Five years ago, before Germany’s energy transition was stepped up, the price was sometimes over €60. Since then, the market has been flooded with expensive wind and solar electricity.
Much more at the linked article.

The question I have: how does this play out? It appears that Germany runs the risk of conventional power plants being taken off line past the point that intermittent energy (wind, solar) can make up the difference.

What we have is this:
  • German consumers are paying more and more for home electricity
  • their conventional power plants may have to be taken off-line; some conventional providers may go broke
  • at some point, too many conventional plants not on-line, but intermittent energy neither adequate/nor dependable --> brownouts or worse
I honestly don't know how this plays out.

This was the ORIGINAL POST
Flashback: this was posted September 21, 2014:
Bloomberg is reporting:
When Germany kicked off its journey toward a system harnessing energy from wind and sun back in 2000, the goal was to protect the environment and build out climate-friendly power generation.
More than a decade later, Europe’s biggest economy is on course to miss its 2020 climate targets and greenhouse-gas emissions from power plants are virtually unchanged.
Germany used coal, the dirtiest fuel, to generate 45 percent of its power last year, the highest level since 2007, as Chancellor Angela Merkel is phasing out nuclear in the wake of the Fukushima atomic accident in Japan three years ago.
The transition, dubbed the Energiewende, has so far added more than 100 billion euros ($134 billion) to the power bills of households, shop owners and small factories as renewable energy met a record 25 percent of demand last year.
RWE AG, the nation’s biggest power producer, last year reported its first loss since 1949 as utility margins are getting squeezed because laws give green power priority to the grids.
“Despite the massive expansion of renewable energies, achieving key targets for the energy transition and climate protection by 2020 is no longer realistic,” said Thomas Vahlenkamp, a director at McKinsey & Co. in Dusseldorf, Germany, and an adviser to the industry for 21 years. “The government needs to improve the Energiewende so that the current disappointment doesn’t lead to permanent failure.”
While new supplies sent wholesale power prices to their lowest level in nine years, consumer rates are soaring to fund the new plants. Germany’s 40 million households now pay more for electricity than any other country in Europe except Denmark, according to Eurostat in Brussels. A decade ago, Belgium, the Netherlands and Italy all had higher bills than Germany.
“Politicians are often trying to kid us,” Claudia Fabinger, a 65-year-old self-employed marketing manager, said in between shopping for groceries on Leipziger Strasse in Frankfurt. “Our power bills keep rising and rising to fund clean energies; on the other hand, we are still polluting the air with old coal plants.” 
The entire article is a must-read. Go to the link to read the full article. As you read the article, remember: Germany accounts for 2.4% of all the CO2 emitted into the atmosphere. A lot of pain for making absolutely no difference. And now it seems, they don't even feel good about it.

The story above ... well, what can I say? It can't be much worse. But, actually it is. Just a few weeks ago, the Germans said this sacrifice was their gift to the world (at the linked post, scroll down to "tilting at windmills") (I can't make this stuff up):
I'm posting this for the archives. I assume no one will read the entirety of the linked article over at The New York Times. The article is on Germany's transition to renewable energy. It is costing the average German a lot of money, and there are questions whether the transition will even succeed. The article concludes:
“Indeed, the German people are paying significant money,” said Markus Steigenberger, an analyst at Agora, the think tank. “But in Germany, we can afford this — we are a rich country. It’s a gift to the world.”
I wonder if the average German is aware how little their efforts will result in anything meaningful. I wonder if the average German has looked at the graphic at the bottom of this article. Because it's always possible that the graphic will disappear some day, here are the data points.
Unrelated, but the thousands of folks who attended today's global warming march in NYC arrived in 500 diesel-burning buses. Not natural gas buses, or propane buses, or electric buses. But diesel buses.

Random Update On Whiting Program Northwest Of Belfield -- May 30, 2017


August 1, 2018: reader asked question about drilling unit for #32301, see comments. Screenshot of permit application:

July 31, 2018: production data updated below.  Graphic as this area appears today:

June 23, 2018see update here

Original Post

This was done quickly. There are likely to be errors, typographical and factual. I will come back to this later and correct errors if anyone spots errors or if other corrections need to be made. In addition, if anyone has additional information on this area, I'm sure there will be readers that will be interested. I have no mineral rights and have no specific interest in this area more than any other area in the Bakken.

Whiting has proposed three new pads in this area northwest of Belfield:

In addition, I will update the various wells that are already producing. "Open circles" on the NDIC map indicate that at this point permits have been let, but the wells are not yet on confidential list nor has any drilling begun.

From a Whiting presentation (I should have included a marker on Belfield; Belfield is located just below the "date box" in the screenshot below; about 4 miles SSE of Smith 34-12TFH):

NDIC map screenshot today:

The nearest rig in the area is to the east, in Bell oil field, and according to NDIC, it is "undetermined" where this rig will go next.

The Wells In The Graphic Above
Note: see first comment below -- #32288 (Smith Federal 34-12-2PH, SESE 12-140-100) is being drilled (June 7, 2017) that was not added to the GIS map in section 12. Just like 41-15PHU and 44-10PHU are not on the map, but will be drilled. I wonder how that happens? How some are left off the map? And as I had hoped, they went from Bell to Park. Also, I hope someday they do refrack, would be interesting to see what happens.

24159, 1,195, Whiting, Pronghorn Federal 14-10PH, Park, t2/15; cum 132K 5/18; typical decline rate;
24158, 954, Whiting, Pronghorn Federal 11-15PH, Park, t2/15; cum 121K 5/18; typical decline rate;
24157, 1,179, Whiting, Pronghorn Federal 21-15PH, Park, t2/15; cum 132K 5/18; typical decline rate;

24160, 863, Whiting, Pronghorn Federal 34-10PH, Park, t7/13; cum 83K 5/18; not a particularly good well; will be interesting what neighboring fracks do; if re-fracked;
24161, 716, Whiting, Pronghorn Federal 41-15PH, Park, t7/13; cum 84K 5/18; not a particularly good well; will be interesting what neighboring fracks do; if re-fracked;
24162, 1,327, Whiting, Pronghorn Federal 44-10PH, Park, t7/13; cum 82K 5/18; not a particularly good well; will be interesting what neighboring fracks do; if re-fracked;

24821, 1,236, Whiting, Pronghorn Federal 14-11PH, Park, t7/14; cum 114K 5/18; a "so-so well'; will be interesting what neighboring fracks do; if re-fracked;
24541, 1,113, Whiting, Pronghorn Federal 24-14 Cl PH, Park, t7/14; cum 108K 5/18; a "so-so well'; will be interesting what neighboring fracks do; if re-fracked;
24542, 1,176, Whiting, Pronghorn Federal 11-14PH, Park, t7/14; cum 109K 5/18; a "so-so well'; will be interesting what neighboring fracks do; if re-fracked;
20404, 1,606, Whiting, Pronghorn Federal 21-14TFH, Park, t10/11;  cum 164K 5/18; will be interesting what neighboring fracks do; if re-fracked;

20131, 1,343, Whiting, Pronghorn Federal 34-11TFH, Park, t10/11; cum 170K 5/18; typical decline rate
24830, 2,542, Whiting, Pronghorn Federal 44-11PH, Park, t7/14; cum 241K 5/18; typical decline rate; but expect a better well than this;

32300, loc, Whiting, Pronghorn Federal 44-11PHU, Park,
32301, drl, Whiting, Pronghorn Federal 44-14PHU, Park, noted to be on drl status 5/18;

27691, 2,683, Whiting, Pronghorn Federal 34-11TFH, Park, t11/14; cum 317K 5/18; a nice well; typical decline rate; 
27692, 2,873, Whiting, Pronghorn Federal 14-12H, Park, t11/14; cum 374K 5/18; a nice well; typical decline rate; 
20504, 2,696, Whiting, Pronghorn Federal 21-13TFH, Park, t12/11; cum 284K 5/18; a nice well; typical decline rate; 

31779, SI/NC, Whiting, Pronghorn Federal 21-13-2PH, Park,
31780, SI/NC, Whiting, Pronghorn Federal 31-13PH, Park,
31781, SI/NC, Whiting, Pronghorn Federal 24-12PH, Park,

20526, 2.446, Whiting, Smith 34-12TFH, Park, t9/11; cum 378K 5/18; a nice well; typical decline rate;