Sunday, August 27, 2017

Oil Futures Flat -- Sunday Evening, August 27, 2017

Libya: two more oil fields cut off by militants; Libya has lost three oil fields in the past week, including its largest field.

Hurricane Harvey: shuts down oil movement along Texas coast. 

Crude oil futures: flat. At $47.95, up 0.17%. Dynamic link here.

Libya's Oil Disruptions Widen As Two More Fields Halt Output -- Militants -- August 27, 2017

A reader just alerted me to this story: Libya's oil disruptions widen as two more fields halt output.

My feelings about Libya? This is what I posted August 22, 2017, when the first oil field went out.
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. 
Of course, with this most recent Libyan story and now the Houston/Harvey Hurricane, all bets are off. We will know later this evening what this all means when we see futures at 6:00 p.m. ET. 

Back to Libya:
  • El Feel, or Elephant, stopped production, Wessam Al-Messmari, an office manager for the Petroleum Facilities Guard that is protecting the field, said Sunday by phone. State-run National Oil Corp. declared force majeure at the deposit, according to a person familiar with the situation who asked not to be identified because the information isn’t public.
  • The Hamada oil field will gradually stop pumping through Monday because of the pipeline closing, Arabian Gulf Oil Co. spokesman Omran al-Zwai said Sunday. Force majeure was also declared on Hamada, he said. 
  • An armed group closed the pipelines to Hamada and El Feel, according to a person familiar with the situation.

The Peculiarities Of The Bakken: A CLR Holstein Federal Well In Elm Tree -- August 27, 2017

I'm not smart enough to articulate succinctly what I'm seeing in the Bakken as I update wells in various fields.

But I am seeing a new phenomenon. In the past I've noted older wells that have shown a huge jump in production after they have been taken off-line for a few months while neighboring wells are fracked, and then are brought back on line. Sometimes the jump in production does not last very long; sometimes it lasts quite awhile. Sometimes the jump in production is not particularly meaningful; in some cases the jump in production in one month equals what the well would have produced in two years based on production data prior to when the well came off line.

But now I'm seeing another phenomenon. The jump in production is remarkable but it's coming much earlier in the cycle, completely interrupting the typical Bakken decline curve and extending the high production that was seen after the original frack, and delaying the typical Bakken decline. This delay is "free money" for the operator.

Here is an example. CLR has been doing a lot of work in the area of the Holstein Federal pads in Elm Tree. Note the well below, a well that was fracked in early 2015, and has not yet shown the typical Bakken decline rate, probable because of all the fracking being done in the local area. All I can call it is a "peculiarity" of the Bakken because it's not being talked about yet.

Maybe it's not that big a deal; maybe it won't be enough to move the needle, but in the aggregate, North Dakota crude oil production remains over one million bopd with only 50 rigs, a production level that we used to see with 200 rigs.

Maybe it's not a big deal; maybe it won't move the needle, but for mineral owners, I doubt they are complaining.

Which brings me to another issue. In the "good old days" (LOL - three years ago) mineral owners often complained that a new well being drilled in their neighborhood was going to "drain" away oil from their "own" well.

Something tells me, mineral owners are thrilled when new wells are being fracked near "their" older wells.

Reminder for newbies: oil companies do not drill a new well in the Bakken if it isn't projected to produce a EUR of at least 750,000 bbls. Some might argue that behind closed doors operators are talking about drilling wells only if they have EURs of one million bbls. I don't know. Just idle chatter.

But I digress.

Here's a good example of what I'm talking about with regard to the typical Bakken decline being delayed. (By the way, when I first started blogging about the Bakken I often blogged that all that talk about "the typical Bakken decline" was "overblown." But I never imagined this.)

This well was drilled/completed back in late 2014/early 2015, only two or three years ago, way too early to consider re-working; a mini re-frack; or, a new, major refrack. But look at how the production has been extended several months, due to what I'm calling the "peculiarities of the Bakken." Not even three years old, this well has now produced over 500,000 bbls of oil. I used to consider wells producing 500,000 bbls in the first few years of "life," "monster wells."

I don't plan on adding any more wells to the "monster wells" list if they've only produced 500,000 bbls in a short period of time. The new threshold will be 750,000 bbls.
  • 27564, 1,235, CLR, Holstein Federal 2-25H, Elm Tree, 40 stages, 4 million lbs; ceramic; small, and large sand; t2/15; cum 534K 6/17; API: 33-053-05653; 
Monthly production data:
PoolDateDaysBBLS OilRunsBBLS WaterMCF ProdMCF SoldVent/Flare

Between 1/17 when it came off line, to 6/17, two additional months of production, this well jumped from 484,665 bbls to 534,432 bbls. In just two months of new production, a 10% jump in total crude oil produced.

Peculiarity In The Bakken -- Post-Shut-In-Jump In Production: CLR's Hendrickson #18224

See this link.

Production has been updated at this link.

Six Wells Coming Off Confidential List This Week; All DUCs? -- August 27, 2017

Friday, September 1, 2017
  • 26921, SI/NC, Hess, AN-Gudbranson-153-94-2215H-4, Elm Tree, no production data, (#19538)
  • 31400, SI/NC, MRO, Stark 44-35TFH, Reunion Bay, no production data,
Thursday, August 31, 2017
  • None.
Wednesday, August 30, 2017
  • None.
Tuesday, August 29, 2017
  • None.
Monday, August 28, 2017
  • None.
Sunday, August 27, 2017
  • 26922, SI/NC, Hess, AN-Gudbranson-153-94-2215H-5, Elm Tree, no production data, (#19538)
  • 33345, SI/NC, MRO, Lund 44-35H, Reunion Bay, no production data,
Saturday, August 26, 2017
  • 26923, SI/NC, Hess, AN-Gudbranson-153-94-2215H-6, Elm Tree, no production data, (#19538)
  • 33346, SI/NC, MRO, Harley 14-36TFH, Reunion Bay, no production data,
Elm Tree Oil Field

Elm Tree oil field is tracked here. When one sees the number of wells that are being drilled (probably drilled to total depth by now) and the number of DUCs in this field, one can see why it is "easy" for operators to cut the number of rigs they have working in the Bakken. The backlog of wells will continue to grow with WTI at $45. One can start to see the "business plan" that some operators are using, how they are allocating their CAPEX, something we've talked about before. 

Sunday, August 27, 2017 -- Iraq Is No Longer A Priority For ISIS -- Mideast Expert

Active rigs:

Active Rigs553076194186
Tal Afar
I've posted this story elsewhere to keep the narrative flowing. From The Wall Street Journal. Iraqi Forces seize Tal Afar from Islamic State. Tal Afar was one of extremist group’s few remaining strongholds in the country.

For all intents and purposes in less than six months after taking office, President Trump has seen the defeat of ISIS in Iraq. [In fact, it was only since March 9, 2017, that the US Marines, under a new commander-in-chief, declared "Fight on!' See link above.]

That is a huge story, but what caught my eye is how one Mideast analyst saw the situation:
“It looks like Iraq isn’t [any longer] a priority [for Islamic State],” said Rasha al-Aqeedi, a researcher at Al Mesbar Studies and Research Center, a Dubai think tank focused on Islamic movements.
Apparently this is not new:
  • After the Greeks defeated the Persians in 480 B.C., the Persians returned home. One Persian analyst at the time said, "The Persians no longer consider Greece a priority."
  • After the North defeated the South in 1865, a Southern belle whispered, "Saving our way of life is no longer a priority." 
  • After the Germans surrendered in 1945, one German analyst commented, "Global conquest is no longer our priority."
Not that it matters, but am I missing something here?
“It looks like Iraq isn’t [any longer] a priority [for Islamic State],” said Rasha al-Aqeedi, a researcher at Al Mesbar Studies and Research Center, a Dubai think tank focused on Islamic movements.
It was the WSJ writer's decision to use that quote at the top of the story. I'm sure there were other quotes that could have been used. Maybe "mission accomplished"? In Iraq, perhaps.