Tuesday, August 15, 2017

The Market And Energy Page, T+207 -- August 15, 2017

Just randomly noted (source):

Diclaimer: this is not an investment site. Do not make any investment, financial, travel, job, or relationship decisions based on anything you read here or think you may have read here. If this is important to you, go to the source.

Huge Production Reporting Mistake Over At NDIC -- August 15, 2017

September 14, 2017: HUGE MISTAKE BY SOMEONE AT NDIC OR AT BR -- Remember this well -- said to have produced 90,000 bbls in one month. I see that the production profile has been corrected at NDIC. The update shows that there was a huge error in production numbers reported. Here's the production  profile now that it's been corrected (I guess one can ignore the entire note below; it's just another well in the Bakken, nothing special:

PoolDateDaysBBLS OilRunsBBLS WaterMCF ProdMCF SoldVent/Flare


Disclaimer: once before, I came across a well with production that seemed impossible. I posted it; later we learned it was a commingling error. It was either that case or another case, I forget, that was later corrected by the NDIC. [Later: that case ws an example of a typographical error on an IP which was later corrected by the NDIC.]  In this case, 90,000 bbls of oil after a re-frack just seems very, very hard to believe, but that's what is being reported right now. So, I'll post what I see and then wait to see if someone has "the rest of the story" or if NDIC corrects the data.



August 16, 2017: see first comment; reader says he sees the same thing; he notes that the well is "now flowing, not on a pump."

Original Post
Now, back to the well.

A reader alerted me to this well. Here was his note:
This well was first drilled in 2008. It had been producing for about seven years before being taken off-line. Then, re-entered and re-fracked, this well almost doubled its cumulative production in June, in just a single month, to close to 250 kbo.
It achieved an average daily production rate of over 3,000 bo/d, the highest monthly rate of any well in the history of North Dakota. It was refracked in the end of 2016, and just put back on production.
Here's the monthly production data for the past 12 months:
PoolDateDaysBBLS OilRunsBBLS WaterMCF ProdMCF SoldVent/Flare

Here's the monthly production data for the first 12 months:

The well:
  • 17106, 361, BR, CCU Bison Point 14-34H, Corral Creek, t7/08; cum 241K 6/17
  • original frack back in 2008
  • a refrack in early 2017: IP of 672; 26 stages; 5 million lbs (mesh and large; no small proppant)
  • when re-entered, the well was extended (if I read it correctly, by 385 feet); the drilling target zone was 20 feet thick, with the top of the target window set 8 feet below the top of the middle Bakken.
Re-entry, drilling target results:
  • above drilling target footage (%): 165' (43%)
  • in drilling target footage (%): 220' (57%)
  • below drilling target footage: 0' (0%)
  • in this side-track lateral: average background gas, 430 units; max daily gas, 3,282 units
The original well, when drilled in 2008:
  • in target zone, 8,292' (92%)
  • above target zone, 716; (8%)
  • open hole frack, 1.05 million lbs, 20-40 sand
Production profile, graphically (source, search: ):

NDIC map of the area:

Note: Mike Filloon shows a number of similar production profiles of wells in the Permian, and I have pointed them out, suggesting those are the wells I'm interested in.  

Random Look At What Operators Are Doing In The Madison, Williston Basin -- August 15, 2017

A huge "thank you" to a reader for suggesting a look at these two wells.

In a long note like this, there will be typographical and factual errors. If this information is important to you, go to the source.

In today's daily activity report there were two wells transferred from one operator to another operator, from Trendwell Energy Corp to Windridge Operating LL:
  • 16220, 250, Windridge/Trendwell, Nelson Unit 1, Lignite, t6/06; cum 66K 6/17;
  • 19947, see below
Windridge: I had not heard of Windridge (or if I had, I have forgotten). According to the NDIC, these are the only two wells/permits that Windridge has (as of August 15, 2017).
From this site, Windridge Operating LLC filed as a Domestic Limited Liability Company (LLC) in the State of Texas on Friday, May 5, 2017 and is approximately three months old, according to public records filed with Texas Secretary of State.
16220, a refracked Madison well: 
The past year or so, monthly production profile
PoolDateDaysBBLS OilRunsBBLS WaterMCF ProdMCF SoldVent/Flare

From the file report prior to initial drilling in May, 2006, and FracFocus:
  • initial entry into the packstone porosity, and subsequent bounce off the bottom of zone verified the top and bottom of the zone to be at 5,942’ TVD and 5,947’ TVD, respectively;
  • the kickoff point for the northern leg was 6,252’ MD (5,945’ TVD). The well bore kicked off within the primary Nesson porosity and dropped out of zone for 85’ between 6,155’ MD and 6,260’ MD. 
  • there was no re-entry or re-frac sundry form
  • according to FracFocus, it was re-entered and fracked 11/3 - 5/2016 by Trendwell Energy Corp
  • 1.7 million gallons of water; 7% sand by weight
The Second Well

Same well, originally a middle Bakken; re-entered the Madison later:
  • 19947, PNA/208, Windridge/Trendwell, Matter State 3-17H, Woburn, middle Bakken, t3/12; cum 25K 2/17
  • 19947, 14, Windridge/Trendwell, Matter State 3-17H, Woburn, Madison, t2/17; cum --
From the file report, in 2016, "abandon the Bakken completion and recomplete to Midale (Madison reservoir) by exiting 7" casing and drilling approximately 4,000 feet of lateral south from existing wellbore within the Midale reservoir."

The frack report is included in the file report:
  • Stimulated: 11/25 and 11/26 - 2016; 14 stages; 958K lbs sand
  • Stimulated: 11/12/11, middle Bakken; 1 stage, 80K lbs sand &1/30/12, 17 stages, 1.3 million lbs sand 
The past year or so, monthly production profile:
PoolDateDaysBBLS OilRunsBBLS WaterMCF ProdMCF SoldVent/Flare

It will be interesting to see how the well does over time. Many, many story lines -- but I have to go pick up the middle granddaughter from soccer.

Twenty-Two (22) Permits Renewed -- August 15, 2017

Active rigs:

Active Rigs563174194185

Two new permits:
  • Operators: Oasis, BR
  • Fields: Banks (McKenzie); Sand Creek (McKenzie)
  • Comments:
Twentytwo (22) permits renewed:
  • EOG: twelve (12) Riverview permits; McKenzie County
  • Whiting (5): one Crane Creek State permit, Mountrail County; one Dietz permit, Stark County; one Solberg permit, Stark County; two Zalesky permits, Stark County
  • HRC (2) : two Fort Berthold permits, Dunn County
    Slawson: one Atlantis Federal permit, Mountrail County
  • Enerplus: one Terrier permit, McKenzie County
  • Sinclair: one Uran permit, Mountrail County

The graph tells me:
  • the Bakken does not need the Keystone XL (but the Bakken never did need the Keystone XL)
The graph does not tell me but these are the facts:
  • US refineries along the coast would love to have heavy oil from Canada
  • Canada would love if western sands oil had additional access to US refineries along the US coast
  • Venezuelan heavy oil = Canadian sands heavy oil  
  • actually, the Bakken would benefit a bit; Canada sands uses Bakken oil to help carry bitumen down a pipeline
Never Marry A Railroad Man, Shocking Blue

Greater Agricultural Yields Right Around The Corner

Warmists tell us two things:
  • atmospheric CO2 will rise
  • increased precipitation in temperate zones
I was reminded of those two facts by the article at this link: http://instituteforenergyresearch.org/analysis/climate-optimism-energy-realism-next-generation/.

Decades ago, as a college biology student, I spent one summer on the North Slope, Alaska, looking for ways to increase agricultural return on grasses in South Dakota.

It appears the answer was staring us in the face all these years (see linked article).

Netflix Wins One, Taking on ABC -- August 15, 2017

Worried about the US running out of money? Not to worry! Simply sell crude oil from "emergency reserve." LOL. Reuters reports, data points:
  • US will sell 14 million bbls of crude oil from the SPR in late August
  • represents 14 days of production from the Bakken or less than 7 days from the Permian
  • the sales are required by law signed by President Obama
  • the reserve currently holds 680 million bbls of oil, far more than required by international supply agreements
Over To Netflix

Netflix: wow, score a huge win for Netflix over ABC. The Los Angeles Times is reporting:
The ABC network three years ago handed its most lucrative night of the week — Thursday — to its most prolific producer, Shonda Rhimes. ABC grouped three Rhimes-produced shows together and promoted the bloc as “Thank God It’s Thursday.”

The network has long thanked its lucky stars for Rhimes, who rose to prominence in 2005 with her breakout hit “Grey’s Anatomy.” She followed up with “Scandal,” “Private Practice” and “How to Get Away with Murder,” helping create a female-friendly vibe that distinguished ABC from other networks.

So Netflix’s announcement late Sunday that Rhimes would be moving her Shondaland production company to the streaming service was a gut punch to ABC. The network has raked in hundreds of millions of dollars over the years in advertising revenue and foreign distribution fees from the sale of Rhimes’ shows.

ABC on Monday sought to contain the damage, noting it would not be losing “Grey’s Anatomy” and other shows that made Rhimes famous. The existing shows will remain on ABC.

“With the launch of a new season upon us, fans can rest assured that TGIT remains intact and will be as buzzed about as ever,” Channing Dungey, ABC’s entertainment president, said in a statement referencing the Thursday block.
But the loss of ABC’s most prominent writer-executive producer, known in the TV industry as a show runner, comes at an inopportune time for Walt Disney Co. Its television networks have been struggling to contain costs at a time when viewers were already fleeing in droves for services such as Netflix, Hulu and Amazon.com.

Rhimes, in a statement, said she decided to leave ABC for Netflix because the streaming service offered “unique creative freedom and instantaneous global reach.”

Perhaps The Biggest Story Of The Week -- EIA Adds The Anadarko In Weekly Production Report -- The Natural Gas Was Just Too Much To Ignore -- Making America Great Again -- T+207 -- August 15, 2017

I am completely blown away by the US natural gas story. So many things coming together all in the same decade:
  • better technology in the oil and gas sector
  • oil plays, as they mature, produce more natural gas
  • the Marcellus and the Utica are elephants
  • the Anadarko now joins the list
  • even the oiliest of oil plays, the Bakken, is producing more and more natural gas
  • LNG export facilities reviving local economies 
  • Panama Canal expansion
  • business-friendly administration; energy-friendly administration (Obama-Hillary might have done all they could to ban fracking -- Hillary said she would ban fracking)
  • EPA and courts less aggressive on regulating oil and gas
  • nuclear facilities being shut down around the world
The Anadarko is this week's poster child for the US energy revolution.

The Keystone XL: I think it's only a news story if it's approved. If it's denied (again), it's simply more of the same ol', same ol'. 

Freeport LNG Export Terminal, 1 - Sierra Club, 0

From the Oil & Gas Journal:
A federal appeals court in Washington rejected the Sierra Club’s contention that US Department of Energy authorizations for the Freeport, Tex., liquefied natural gas project’s plans to export LNG inadequately considered environmental consequences. Oil and gas groups immediately welcomed the US Appeals Court for the District of Columbia’s Aug. 15 decision.

The organization argued that DOE should have considered indirect environmental consequences under the National Environmental Policy Act from the production and use of the gas that would be liquefied and exported. It also said that DOE should have considered additional variables when it authorized Freeport LNG’s exports to countries not having a free trade agreement with the US under the Natural Gas Act.

The court ruled otherwise in both instances in a decision written by Judge Robert L. Wilkins. He essentially affirmed earlier court findings that the Federal Energy Regulatory Commission was the lead agency in conducting NEPA environmental reviews for LNG export projects and said the additional analysis the Sierra Club sought from DOE would be impractical and unduly expensive.
EPA Moves To Remove Another Obama War-On-Coal Regulation

From PennEnergy:
The Environmental Protection Agency says it plans to scrap an Obama-era measure limiting water pollution from coal-fired power plants.

A letter from EPA Administrator Scott Pruitt released Monday as part of a legal appeal said he will seek to revise the 2015 guidelines mandating increased treatment for wastewater from steam electric power-generating plants.

Acting at the behest of electric utilities who opposed the stricter standards, Pruitt first moved in April to delay implementation of the new guidelines. The wastewater flushed from the coal-fired plants into rivers and lakes typically contains traces of such highly toxic heavy metals as lead, arsenic, mercury and selenium.

Whiting To Sell Some Assets In Fort Berthold Area -- Reuters -- August 15, 2017

From BusinessInsider, data points:
  • $500 million
  • Fort Berthold area assets
  • 29,637 net acres
  • 29 non-operated; 17 operated spacing units
Back-of-the-envelope: $500 million / 29,637 acres = $17,000 / mineral acre.

Making America Great Again, T+207 -- August 15, 2017

US retail sales soar! Link here. Data points:
  • 7-month high (wow, coincides with President Trump's 7th month in office)
  • strong retail sales aided by strong demand for new autos and Amazon's Prime Day specials
  • forecast: a 0.4% increase; actual: 0.6% increase
  • sales rose 1.2% at auto dealers
  • even retail sales increased 1%
How did futures react? 
  • Dow 30 before the retail sales number: +40 - +42
  • Dow 30 after the retail sales number: +47 
EIA regional production data. Note how EIA has changed definition of regions --
  • new: Appalachia (combines Marcellus and Utica
  • new: adds Anadarko (western Oklahoma)
  • graphic below: number of active rigs
  • amazing: Bakken producing more than 1 million bopd with so few rigs (800 DUCs; and 1,500 shut-in wells)

Bloomberg talks more about shale production and "re-mapping" by the EIA.
Oil output from major U.S. shale plays is poised to reach a fresh record next month, further complicating OPEC’s efforts to support prices.
The Energy Information Administration expanded its monthly forecasts to include the Anadarko shale region spanning 24 Oklahoma and five Texas counties. The region, a well-established oil and gas producing area, has seen an uptick in improved drilling and completion technology. 
The U.S. shale production gain is being led by the oil-rich Permian basin of New Mexico and Texas, where production has risen steadily over the past two years. The agency projects Permian output to rise by 64,000 barrels in September, reaching a record of 2.6 million barrels a day. [Memo to self: update wiki's Hubbert Peak Theory entry, see below.]
The forecast comes just as Saudi Arabia and Iraq, the two biggest producers of the Organization of Petroleum Exporting Countries promised to strengthen their commitment to cutting production.
Crude output in the U.S. meanwhile has climbed in nine of the last 10 months. Prices declined to a three-week low Monday amid global glut concerns. Non-OPEC supply is set to expand over the next five years, while growth in total oil demand will slow.
The EIA report also made another change to reflect shifts in oil and gas production: The agency consolidated data from the Marcellus and Utica areas, known for their natural gas production, and classified it as a single Appalachia region.
Why? Why did the EIA add the Anadarko. The agency could no longer ignore the huge amount of  natural gas coming out of this oily play. From Bloomberg,
America’s shale gas production is about to surge 12 percent. Sort of.
The Energy Department issued a report Monday estimating that the nation’s prolific shale formations will yield 59.4 billion cubic feet a day in September, a massive jump from the roughly 53 billion projected for August.
The difference: The agency began including the more than 6 billion cubic feet a day of gas flowing out of the Anadarko basin of Oklahoma and Texas.
The addition of the Anadarko is testament to the flood of gas flowing out of shale formations known better for their oil riches. Almost half of the country’s shale gas is now being produced in crude plays, pulled out of oil wells as a byproduct.
These supplies, known as associated gas, threaten to quash any meaningful recovery in an already-glutted market.

Number Of Active Rigs Trending Down In North Dakota -- August 15, 2017

Active rigs:

Active Rigs563174194185

RBN Energy: an update of Sabine Pass LNG exports.
Natural gas deliveries for export via Cheniere Energy’s Sabine Pass LNG terminal in Louisiana reached a record in late July, topping 2.5 Bcf/d. In the first seven months of 2017, exports have added an average of 1.5 Bcf/d — or more than 300 Bcf total — of baseload gas demand year on year. Thus far, the terminal has been operating with three liquefaction trains. Now the fourth train, which would bring on another 650-MMcf/d of potential export demand, is nearing completion. The incremental gas deliveries are scheduled to come just as winter heating season is kicking off and likely will tighten the gas market. Today, we look at the latest developments at the terminal.
As Cheniere pointed out last week in its second-quarter earnings call, its Sabine Pass liquefaction terminal — the first U.S. Lower-48 LNG export facility — has quickly become the biggest single-use recipient of natural gas in the U.S. The rising tide of liquefied natural gas (LNG) exports from the U.S. began with a ripple in February 2016, when the first LNG cargo left Sabine's dock.
Since then, the latest numbers from Genscape’s North American LNG Supply & Demand data show that Sabine Pass has exported 156 cargoes from the first three of its six planned liquefaction trains, the equivalent of about 520 Bcf of natural gas, assuming all cargoes were loaded to capacity. Nearly a fourth of the shipped cargoes (37) went to Mexico. Another 34 cargoes, or 22%, went to Asia, primarily to South Korea, Japan and China.
The third-largest destination was South America, with 31 cargoes (20%) received to date, mostly by Chile. The Middle East and Europe have received about 20 cargoes (14%) each. Another nine (6%) went to India; and the remaining cargoes were one- and two-offs to Egypt and the Dominican Republic, respectively. Cheniere kicked off its 20-year sale and purchase agreement (SPA) with Korea Gas Corp. (KOGAS) for Train 3 production in June 2017, and as of this month, it had also delivered its first commercially contracted volumes from Train 2 to Gas Natural Fenosa and BG Gulf Coast LNG.
Glut? US shale output seen posting 9th straight monthly rise.
U.S. shale oil production for September which includes a new regional data input, is forecast to rise by 117,000 barrels per day to 6.15 million bpd, its ninth consecutive monthly rise -- EIA.
The total forecast figure has expanded to include the Anadarko region, a growing and prolific shale play that has the second-most operating rigs, at 129, after the Permian's 373, according to the EIA's monthly drilling productivity report.
The EIA added that the region has become "the target of many producers using improved drilling and completion technology to this already well-established oil and gas producing basin."
Meanwhile, the EIA is combining the Marcellus and Utica regions into a new Appalachia region to help the precision of its productivity estimates.
Without the addition, total shale output for September would have been forecast to rise by 106,000 bpd to 5.69 million bpd.
In the Permian Basin, oil output is set to rise by 64,000 bpd to 2.6 million bpd. In the Eagle Ford, oil output is forecast to rise by 14,000 bpd to 1.39 million bpd.
In North Dakota's Bakken, oil production is expected to rise by 10,000 bpd to 1.05 million bpd. [Memo to self: send note to Art Berman.]
DUCs in the Permian: according to John Kemp over at Twitter, 485 wells drilled in the Permian in July, but only 350 were completed. The number of DUCs in the Permian now stand at 2,330, compared to about 900 in the Bakken. If the ratio of DUCs to shut-in wells in the Permian is similar to the ratio in the Bakken, there could be as many as 4,000 shut-in wells in the Permian. This is not good news for US shale companies, but is terrifying news for the Saudis.