Tuesday, August 22, 2017

Update On Alaska's North Slope -- August 22, 2017

While the mainstream media is focused on GOP's internecine fights, this is an example of just some of the "real" business that is going on behind the scenes. From Rigzone:
Following an executive order from U.S. Secretary of the Interior Ryan Zinke, the U.S. Geological Survey (USGS) is in the process of generating updated assessments of the oil and gas resources on Alaska’s North Slope in what could be the precursor to an exploration and development boom on federal lands that have mostly been off-limits to the industry.

The May 31 executive order has renewed a sense of hope for opening currently off-limit areas of the National Petroleum Reserve – Alaska (NPRA), and opening the 1002 Area of the Arctic National Wildlife Refuge (ANWR), which has been tightly closed to the industry since the 1980s, to exploration.

As older oilfields such as Prudhoe Bay, the Kuparuk River and the Alpine have long since reached their production peaks, the state of Alaska has been anxiously watching the steady decline of oil through the Trans-Alaska Pipeline System (TAPS) over the last three decades – peaking in 1988 at 2.1 million barrels of oil per day to today’s roughly 500,000 barrels.

While it has long been speculated that off-limit areas in NPRA and the 1002 Area in ANWR have the potential for major discoveries of hundreds of millions or billions of barrels of oil, decades of legislation and land management policies have kept them closed to the industry to varying degrees, said David Houseknecht, USGS senior research geologist who is overseeing the North Slope assessments, to Rigzone.

Yet recent, headline-making discoveries on the North Slope by Armstrong Oil & Gas, Inc., ConocoPhillips Alaska and Caelus Energy Alaska have sparked excitement in the Last Frontier State. All lie within a major fairway stretching from the Colville River Delta to the western coast of Smith Bay. If areas that are currently off-limits to leasing near Teshekpuk Lake in NPRA open up, that could be the catalyst to the next energy boom in Alaska, Houseknecht said.
Did President Trump need to get involved? Who cares. This is how it really happened:
Earlier this year, Murkowski introduced a bill to the House and the Senate calling for the opening of ANRW to exploration.
And then a few phone calls to the Secretary of the Interior.

The "good guys" have less than four years to get these projects moving. There's no guarantee President Trump will be re-elected. A four-year window of opportunity.

Making America great. Again.

You're Fired

My wife and I mentioned this to each other this morning -- time to sack the 7th Fleet admiral. I guess it's finally happening.

From Navy Times:
The head of U.S. Forces Pacific is preparing to sack the head of the three-star U.S. 7th Fleet after a string of mishaps among the Japan-based ships that have rocked the Navy to its core.
Adm. Scott Swift is traveling to Japan and plans to remove Vice Adm. Joseph Aucoin for a loss of confidence in his leadership there, two U.S. officials confirmed.
The Wall Street Journal first reported the pending firing.

Seven New Permits; BR Renews Six Permits; Nine DUCs Completed -- August 22, 2017

Active rigs:

Active Rigs523276193184

Seven new permits:
  • Operators: Oasis
    Fields: Alkali Creek (Mountrail)
    Comments: Oasis has has permits for a 7-well Dawson pad in SESW 12-165-94
Six permits renewed:
  • BR (6): three Chuckwagon and three Renegade permits, all in McKenzie County
Nine producing wells (DUCs) reported as completed:
  • 30829, 1,221, XTO, TAT State Federal 14X-36A, Bear Creek, t7/17; cum --
  • 31996, 943, Hess, CA-Stangeland-155-95-2128H-8, Capa, t8/17; cum --
  • 31998, 971, Hess, CA-Stangeland-155-95-2128H-10, Capa, t8/17; cum --
  • 32217, 812, XTO, Little Pete Federal 41X-3G2, Bear Creek, t7/17; cum --
  • 32218, 888, XTO, Little Pete Federal 41X-3D, Bear Creek, t7/17; cum --
  • 32219, 816, XTO, Little Pete Federal 41X-3H, Bear Creek, t7/17; cum --
  • 32220, 1,080, XTO, Little Pete Federal 41X-3DXA, Bear Creek, t7/17; cum --
  • 32221, 962, XTO, Little Pete Federal 41X-3HXE2, Bear Creek, t7/17; cum --
  • 32545, 2,814, Whiting, Koala Federal 31-25HU, Camp, t8/17; cum --
Oasis: Proposed Dawson Pad (see above)

Other wells:
  • 19846, 1,271, Oasis, Dawson 5494 13-1H, Alkali Creek, cased hole, 4.5 million lbs, t10/11; cum 285K 6/17;
  • 18857, 2,023, Oasis, Berry 5493 11-6H, Robinson Lake, cased hole, 3.7 million lbs,  t8/10; cum 277K 6/17;

So Much For That Sell-Off -- The Market And Energy Page, T+214 -- August 22, 2017


Later, 9:21 p.m. Central Time: this was posted earlier but with mentioning Sempra below, I thought I would bring this Sempra post up here for the archives:
Sempra said to have the inside track for Oncor; $9.3 billion. Let's see if Warren refuses to get into a bidding war; he said his $9 billion offer was as high as he would goReuters wonders. A contributor over at SeekingAlpha explains how Sempra and Oncor are a good fit.
Original Post

FWIW: the Spratley wells have been updated; many went from loc to drl. Several DUCs. The original Spratley well is pushing toward 500,00 bbls.
  • 19946, 1,474, Oasis, Spratley 5494 34-13H, Alkali Creek, cased hole, 4.4 million lbs (sand + ceramic), t10/11; cum 491K 6/17; still producing at 3,000 bbls/month (6/17)
Trump rally. CNBC was quick to put the blame on Trump when the market "fell" on Friday. CNBC has not been so fast to give any credit to Trump for the rally since November 9, 2016. Even today, I don't think anyone on CNBC gave any credit to Trump after his remarkable speech last night, the speech in which he said "we were in it to win." No red lines; no time lines. Simply in it to win.

The close: the market (Dow 30) was up 200 points just before the close. Whether it holds or not ... it looks like we are just shy --- about 197 points.

Blue Apron: "temporary" hiring freeze. For whatever reason, of the 100s of thousands of public companies out there, CNBC seems fixated on Blue Apron. Whatever.

There's Growth And Then There's Growth

Take a look at this graph. It's a bit hard to say for sure, but it appears that the pink - dark pink -light red "areas" of the graph have shown the most growth between 2010 and 2016.

The greatest growth seems to be in northwest Mexico and perhaps all along the north. This would be the border area, of course, and the northwest would be along Arizona and California, west of Texas.

One has to ask: if this is accurate, is there a reason? My first question would be where is trade between the states and Mexico taking place and/or where it is easiest to move back and forth across the border?

Whether it can be backed with statistics or not, I don't know, but the "word on the street" seems to be that it is getting increasingly difficult to cross the border into Texas, and relatively easier to cross into California and Arizona. California has gone so far as to encourage sanctuary cities (and all that follows); Texas has taken the opposite path.

Regardless of how that plays out or if it's even accurate, the first thing I thought of when I saw the graph: Sempra.

Disclaimer: this is not an investment site. Do not make any investment, financial, travel, job, or relationship decisions based on anything you might have read here or think you may have read here.  

Making America Great -- First US LNG Shipment To Lithuania -- August 22, 2017

From Reuters via Rigzone: Lithuania receives first LNG from the US. Data points:
  • first spot shipment of LNG from the US to Lithuania
  • result of a deal to reduce dependence on Russia, yada, yada, yada
  • Lithuania will import half its required LNG; most from Norway (Statoil)
  • US firm: Cheniere Energy; LNG tanker from Sabine Pass
  • LNG for clients in Lithuania, Latvia, and Estonia
Europe's future.
 Ford-Zotye In Joint Venture To Build Coal-Powered Cars

Link at Reuters. This is huge. The biggest market for EVs in the next decade, 2030 - 2040, will be China. That's a given. The Chinese government mandates it. The Chinese government has established a virtual waiting list for its citizens to buy an automobile. The list is very, very long and many Chinese will wait years to get to the front of the line. However, China will move car buyers to the head of the line if they buy coal-powered cars.

My hunch it will be China, not the US, that will become the coal-powered car center of the universe.

This is a huge, huge deal for coal, of which China has a lot. And if they don't have enough, Wyoming does.
Preaching to The Choir -- Again

I don't want to post the link to this story, but if I don't, I will be deluged with notes from readers asking if I saw this story: new study -- earth was warmer during medieval times.  The only thing "new" is that this is a "new" study. Doing a google search reveals that almost everyone (except Algore) knew of "Medieval Warm Times" or the "Medieval Warm Period."

By the way, just to remind folks like Algore, the "Medieval Period" preceded the Industrial Revolution by some centuries.

By the way, just for the record, a "CO2 blanket" works both ways. It reflects heat from the earth, back to the earth. It also reflects sunlight (heat), back -- away from the earth. Just saying. Manmade greenhouses are enclosed with glass. Venus is a tad closer to the sun. Did you all note how fast the temperature of the place you were standing fell yesterday if you were in the path of totality of the August 21, 2017, solar eclipse? As much as 5 to 10 degrees. Sort of like being in the shade. Just saying.

American Whisky, Bourbon, and Rye
A Guide To The Nation's Favorite Spirit
Clay Risen
DDS 641.2RIS
1st edition, 2013
Apparently a second edition was published in 2015 

In his history of American history, Clay Risen writes, p. 2,  --
Canadian distilleries, which had done quite well during Prohibition as one of the few sources of quality whiskey, retained a sizable share of American market. The writers of Mad Men have Don Draper drinking Canadian Club for a reason" that's what everyone drank.
On page 214, Risen continues --
Best known these days as the rye whiskey of choice for Mad Men's Don Draper, Old Overholt (Straight Rye Whiskey) is one of the last brands left from the old days of Pennsylvania rye distilling -- though its recipe has long since changed and its no longer made in Pennsylvania.

The whiskey has its roots in early nineteenth-century southwestern Pennsylvania. It was produced at the time by A. Overholt & Co. at the Broad Ford Distillery (originally called simply Overholt, the "Old" was added in the late nineteenth century to honor the company's founder, Abraham Overholt).

The distillery fell into the hands of the industrialist Henry Clay Frick, who later sold it to his younger business partner Andrew Mellon. His ownership of the distillery during Prohibition, when it continued to produce whisky for "medicinal' purposes, caused some amount of scandal during the 1920s.

Mellonw was for a time secretary of the Treasury and thus officially, in charge of enforcing the ban on liquor production. (Old Overholt also plays a recurring role in HBO's Boardwalk Empire, with Mellon played by James Cromwell.
Further history of Old Overholt:
  • like many medicinal whiskeys during Prohibition, Old Overholt ended up in the ownership of the American Medicinal Spirits Co
  • the latter evolved into National Distillers after Repeal
  • in 1987, National becamse a part of the Jim Beam portfolio under Fortune Brands, which split into Beam, Inc
  • along the way, production shifted to Kentucky, and today it is produced at Beam's plant in Clermont
Today, according to Risen, Old Overholt is indistinguishable from the generic ryes on the market -- he says it is largely the same as the standard Jim Beam Rye.

Random Update Of Three MRO Wells That Could See Jump In Production In Next Year Or So -- August 22, 2017

Update of three nice MRO wells that might jump in production in the next year or so.

First the graphic:

The wells:
  • 18514,672, MRO, Howard USA 11-1H, Reunion Bay, 15 stages, 2.5 million lbs, t6/10; cum 466K 6/17; still producing 3,000+ bbls/month;
  • 21458, 1,597, MRO, Tara Jo USA 34-12H, Reunion Bay, 30 stages, 2 million lbs, t1/13; cum 411K 6/17; still producing 2,500 bbls/month;
  • 23176, 1,490, MRO, Tara Jo USA 34-12TFH, Reunion Bay, 30 stages, 1.8 million lbs, t1/13; cum 350K 6/17; still producing almost 3,000 bbls/month;
For newbies:
  • look at the incredible production of these three wells; two of them four years old; one, seven years old and approaching the 500K mark (yes, #23176 has a way to go)
  • MRO has (had?) an aggressive re-fracking program
  • depending which way the confidential wells run, could be great impact on these wells 
  • all three meet conditions for re-fracking
    • all in the 4 - 10 year window since the original frack
    • located in a "good" oil field in the Bakken
    • all were fracked with relatively small amounts of sand
    • in one case, number of stages very low for a long lateral; the other two with "moderate" number of stages 
    • great wells to begin with
  • could neighboring multiple, high-intensity fracks negate need for re-fracks?
  • might MRO go with mini-re-fracks during a work-over?

The Market And Energy Page, T+214 -- August 22, 2017


Later, 1:33 p.m. Central Time: the Trump rally continues. Over the past two days, the market has jumped 210 points?

Original Post 

Yesterday morning (August 21, 2017) this story over at Yahoo!Finance, the screenshot:

Yesterday (Monday) the Dow 30 closed about 35 points higher than Friday and today the Dow was up at much as 130 points (now about 120 points) -- so up about 150 points after Yahoo!Finance told us the market was likely to continue its two-week drop.

New highs, NYSE: 56, including, Berkshire Hathaway B; Caterpillar (CAT).

The Norwegian Effect

Why I love to blog? Just minutes ago a reader sent me a "random" story on sovereign wealth of Norway.

Then, less than a minute ago -- literally while I'm reading the story -- CNBC has a segment on sovereign wealth funds with an emphasis on Norway. CNBC noted that Norway has announced it will increase its equity holdings in its sovereign fund from 60% to 70%.

With one trillion dollars in its sovereign fund, Norway might be having an effect on the market today -- announcing that it will significantly move into the market.

A screenshot from the CNBC story:

BHP To Sell Its US Shale -- Focused In The Eagle Ford, Permian -- August 22, 2017


February 20, 2018: from Bloomberg -- 
  • accelerating plans to exit its $10 billion US shale unit; deals could be announced before the end of the year
  • Fayetteville field; and others to be announced
  • as many as seven packages, including three in the Permian
  • might consider a swap of onshore US acreage for offshore wells in the Gulf of Mexico
  • working on Plan B if this doesn't pan out
Original Post

Bubble: it's been a recurrent theme on the blog -- $60,000/acre in the Permian might have been a tad expensive. Today we learn that Australia mining giant BHP Billiton's full-year profit soared 450% but still missed estimates. It will triple its "final" dividend (43 cents at the end of the year, vs 14 cents one year ago). But here's the biggest news: BHP will sell its US shale assets. The company is being pressured to spin off its US oil and gas operations. BHP spent $20 billion in 2011 on US shale oil and gas assets ... and we know how that worked out. I see the headline -- "maybe BHP Billiton's $20 billion fracking bet wasn't a blunder after all" -- Forbes, June 3, 2014 -- let's see who wrote that and why: Christopher Helman --
In 2011, the Australian mining giant BHP Billiton made a surprise entry to the North American shale game by spending $20 billion to snap up some 1.5 million acres.
It bought Petrohawk Energy for $15 billion (including assumed debt) to get at its primo positions in the Eagle Ford, Permian basin and Haynesville shale. And it shelled out $4.75 billion to Chesapeake Energy for its interest in the Fayetteville shale.
The move was met with surprise by BHP investors, who had only just gotten accustomed to their company's forays into deepwater drilling in the Gulf of Mexico. The company had never "fracked" a single well.
"Our skill set was clearly offshore deepwater," says Rod Skaufel, president of shale operations for BHP Billiton Petroleum. "The first year was tough."
Costs were too high, because BHP didn't yet know what it was doing. Then natural gas prices plunged to lows not seen in a decade. Suddenly this big acquisition began to look like a big folly.
$20 billion / 1.5 million acres = $13,000 / acre.

Where were the rigs?
  • focus of their efforts was clearly the Eagle Ford
  • of 25 US rigs, 17 of them were in the Eagle Ford
  • next most exciting: the Permian; BHP has 450,000 acres in the Permian
  • then "gassy" Haynesville (Louisiana) -- but even in 2014, the Hyanesville remains a dud
  • had partnered with Helmerich & Payne and Schlumberger
  • BHP said it was drilling Eagle Ford wells for $4 million / well -- 2014
Break, break. $4 million / well? Here's the rest of the story:
[The CEO] says BHP is now drilling its Eagle Ford wells for $4 million a piece.
Often when you hear oil companies talk about the costs of drilling wells, they lump together the drilling and the completion parts into one big number. BHP doesn't see it that way. He prefers to separate the raw drilling of the well from the process of completing (i.e. fracking) the well. It's the quality of the completions that makes all the difference.
And so we move on. If you want to buy some mineral acres in the Eagle Ford, opportunity may soon knock on your door.

From the blog, July 15, 2011:

Back To The Bakken

Active rigs:

Active Rigs523276193184

RBN Energy: FERC is back; what does it mean?

Libya? How important is Libya to the price of oil? Just a reminder: Libya has halted "loadings" from its biggest oil field (militants  again, I'm shocked, I'm shocked). That was announced yesterday; a force majeure. Change in the price of oil? Flat.