WTI Hits $54 And Brent To $60 -- October 27, 2017

Active rigs:

$54.19↑↑	10/27/2017	10/27/2016	10/27/2015	10/27/2014	10/27/2013
Active Rigs	53	35	68	195	182

Eight (8) new permits:

• Operators: QEP (4); Whiting (4)
• Fields: Spotted Horn (McKenzie); Dollar Joe (Williams) 
• Comments: Whiting has permits for a Olson/Periot 4-well pad in SESE 20-156-96, Dollar Joe; and, QEP has permits for a 2-well pad in 24-15-95; and, permits for a 2-well pad in NENE 12-149-95;

And that was all.

The Energy And Market Page, T+279 -- October 27, 2017 -- Update On Sabine LNG Terminal -- Keeping America Great

Updates

October 29, 2017: CNBC notes that US oil producers are moving into the Asian market.

• in a shakeup to the established order, U.S. crude oil exporters are moving more cargoes toward Asia
• exports from U.S. "tight oil" extracted from shale formations alone may swell to over 3 million barrels a day by 2022 — with a third of that volume absorbed by Asia, said one economist
• all of this change was kicked off when the Obama administration lifted a 40-year-old ban on exporting domestic oil in December 2015 [and, of course, this being CNBC, no mention of Trump

 Original Post

Graph: if WTI hits $100, that production number will surge. Just saying. 

WTI. Wow, an 8-month high, up over 2% and now almost touching $54.

Markets. Nasdaq on a tear -- up 142 points, up over 2%. Dow up a bit but essentially flat.

NYSE, 172 new highs, including BAX (whoo-hoo); Deere; Marathon Petroleum; UNP; non-DOW new highs Amazon, Alphabet, Microsoft; Jeff Bezos again the richest man in the world, with $90 billion in assets;

• new lows: 74

TSLA: on a day that the Nasdaq surges, sets a new record, TSLA trades lower, down $5, down 1.6%. Just saying. 

*******************************

Sabine LNG Export Update

Link here. 

The recently announced expansion of the Sabine Pass liquefied natural gas (LNG) terminal in Cameron Parish, Louisiana, will add to the rapid growth expected in LNG export capacity for the United States under construction through 2019.

The fourth natural gas liquefaction unit—referred to in the industry as a train—at the Sabine Pass LNG terminal is substantially completed.

Train 4 has the capacity to liquefy 0.7 billion cubic feet of natural gas per day (Bcf/d). Cheniere expects to begin commercial deliveries from Train 4 in March 2018. All of Train 4’s capacity has been contracted under 20-year long-term contracts: 0.5 Bcf/d to India’s state-run natural gas company, GAIL (India) Limited, and the remaining volumes to Shell and Cheniere’s global portfolios for trading in the spot LNG markets. GAIL is one of India’s largest LNG importers, with 1.1 Bcf/d of LNG imports in 2017 (44% of India’s total LNG imports). 

Much more at the link.

Track LNG export terminals here. Mind-boggling. Remember -- this is about two years old.  

Rig Counts In The Bakken -- Commentary -- Not Ready For Prime Time -- October 27, 2017

Updates

Later, 3:31 p.m. Central Time: to the list below add this -- even with only 53 rigs in the Bakken, there are currently 2,400 wells either shut in (completed and not producing for operational reasons or economic reasons) or drilled but not completed (DUCs). Putting that in context, in the "biggest" year of the Bakken boom, less than 2,400 wells were drilled. I don't know the current rate of drilling wells, but my hunch is that 1,000 new wells will be drilled in 2017. I will sort that out later. So, when folks tell me that at some point the DUCs are completed (I add in the shut-in wells) I see at least two more years of simply bringing these wells (back) on line, even if all rigs were shut down today. My hunch: one week to bring a shut-in well back on line; two weeks to complete a DUC and get oil into the pipeline.

Original Post 

A reader asked me this question in the comment section from an earlier post:

What is the 2013 or 2014 equivelent rigs to our current 53. Can we get as much done with 53 as 105 did in 2014? Is there anyone using number of holes drilled to display industry momentum? Just curious. 

Interestingly enough, another reader sent me a link to an article that raised this same issue. I will post that link, that article, and my comments when I have more time.  However, this was my off-the-cuff, not-ready-for-prime-time response regarding his comments about rig counts in the Bakken.

Do not take this out of context and do not quote me on this.

I have not had time to polish this to the usual high standards of The Million Dollar Way. LOL.

Thank you, K--------.

Sometimes I think you are one of the very few people who really understands the Bakken. Folks jut don't get it. They keep counting rigs. I keep reporting rigs on a daily basis because everyone thinks the number of rigs tells us something. But you are absolutely correct, and I've mentioned it on the blog numerous times: the number of rigs is irrelevant.

Of course, that can't be taken out of context. It depends on what one is measuring when counting rigs.

The number of rigs is important for at least two reasons.

One, the number of rigs gives one an idea of the activity in the Bakken: the more rigs, the more roughnecks, the more truck drivers, the more money being spent at restaurants and gas stations when workers get off work. The number of rigs is important to the economy.

Two, a company like Whiting can do with three rigs what it used to do with 10 rigs, so if the rig count drops from 10 to 3 by Whiting, that does not concern me. But if a new operator comes in and drills with one rig, that speaks volumes. We now have a new operator and a new rig. If two new operators come in and they each have one rig, we now have two rigs. And we have three companies drilling instead of just one (in this example).

I'm out and about right now, so I will post the WLL data later, but also, did you see the EUR type curve: 1.5 million bbls/well? This means that the CEO is not going to okay a request by his geologists or his board to drill a well if they can't convince him the payoff is relatively quick and the EUR is 1 million bbls or more.

When the Bakken boom began, folks were excited with EURs of 375,000 bbls. Then Mike Filloon was the first to note EOG with EURs of 1 million bbls. No one commented on that; deafening silence. As if folks were not paying attention. And now we see EURs of 1.5 million bbls. That's incredible.

Thanks for the note. It made my day.

What? Me Worry? --- The Apple iPhone X Sells Out In Minutes -- October 27, 2017

Wow, I love these stories. I remember all the hand-wringing by the talking heads over at CNBC these past few weeks about a) Apple; b) iPhone 8; c) iPhone X; d) Tim Cook; e) life; f) sex; g) black holes; h) dwarf stars; i) the hurricanes. The big question no one has yet asked: has Kim Jong-Un ordered his Apple iPhone X.

Link here.

Apple’s most expensive smartphone, the iPhone X, sold out in less than 10 minutes upon being made available for pre-order this morning.

The iPhone X – officially pronounced “10” – costs from £999 with 64GB of storage, topping out at £1149 with 256GB of storage, which is higher than the starting cost of three of Apple’s fully fledged computers.

Despite the price tag, demand is high. The company’s online shop experienced server issues in the minutes immediately following the launch of pre-orders, and the initial allocation of devices, due to arrive on 3 November, had completely sold out by 8:10am in the UK. Less than an hour later, the waiting list had extended to cover the entire first month.

The iPhone X rapidly selling out may not be entirely good news for Apple. The company has reportedly been concerned it will face severe supply constraints for the iPhone X, with a story in Nikkei Asian Review claiming its annual output was expected to be just 20m units, half of what it had initially planned. Another report, from Bloomberg, claimed that Apple was forced to remove some quality control elements from its production line in order to increase output to an acceptable level. In an unusual move, Apple specifically denied that report, saying the claim “that Apple has reduced the accuracy spec for Face ID is completely false”.

From the article: The iPhone X rapidly selling out may not be entirely good news for Apple. Comment: wow, do analysts/journals ever give up on trying to find negative news about everything?

AAPL shares surge:

Enerplus Wells In Spotted Horn -- October 27, 2017

A reader asked about the Enerplus wells in Spotted Horn oil field. My observations:

• the Spotted Horn field is one of the best fields in the Bakken
• Enerplus is one of the best operators in the Bakken
• Enerplus is now on their "third-generation wells"
• the first generation wells were drilled early in the boom, back in 2010; poor to mediocre wells
• Enerplus began drilling second generation wells in late 2014 and 2015 and will produce 500,000+ bbls by 2018; these are huge wells by any definition of the word "huge"
• Enerplus began drilling third generation wells in 2017; common sense tells me they will be even better than second generation wells but too early to tell

Disclaimer: this was done quickly; not double-checked. If this information is important to you go to the source at NDIC. 

Here are the wells, listed in most recent file number to oldest file number.

File	Status	Status Date	Location	Operator	name	Field	IP	Cumulative	Most Recent Month Production (bbls)
33486	Confidential		LOT4 4-149-94	ENERPLUS RESOURCES USA CORPORATION	CRANE 150-94-33C-28H	SPOTTED HORN
33670	LOC	6/13/2017	NWNW 5-150-94	ENERPLUS RESOURCES USA CORPORATION	BLOOMSBURY 150-94-05BH	SPOTTED HORN
33669	LOC	6/12/2017	NWNW 5-150-94	ENERPLUS RESOURCES USA CORPORATION	ARTSY 150-94-05BH TF	SPOTTED HORN
33663	LOC	6/12/2017	NWNW 5-150-94	ENERPLUS RESOURCES USA CORPORATION	SPEEDY 150-94-05BH TF	SPOTTED HORN
33662	LOC	6/12/2017	NWNW 5-150-94	ENERPLUS RESOURCES USA CORPORATION	BERKELEY 150-94-05BH	SPOTTED HORN
33487	Confidential		LOT4 4-149-94	ENERPLUS RESOURCES USA CORPORATION	WHOOPING 150-94-33C-28H-TF2	SPOTTED HORN
33291	NC	9/11/2017	SESW 32-150-94	ENERPLUS RESOURCES USA CORPORATION	FT. BERTHOLD 150-94-32C-29H	SPOTTED HORN
33193	NC	8/6/2017	SWSE 32-150-94	ENERPLUS RESOURCES USA CORPORATION	BEAR DEN 150-94-32D-29H	SPOTTED HORN
33192	NC	8/13/2017	SWSE 32-150-94	ENERPLUS RESOURCES USA CORPORATION	MHA 150-94-32D-29H TF	SPOTTED HORN
33135	NC	9/19/2017	SESW 32-150-94	ENERPLUS RESOURCES USA CORPORATION	MANDAREE 150-94-32C-29H TF	SPOTTED HORN
32887	A	7/31/2017	NWSW 11-150-94	ENERPLUS RESOURCES USA CORPORATION	WASP 150-94-11C-12H	SPOTTED HORN	1,531	49,758	38,579
32886	A	7/23/2017	NWSW 11-150-94	ENERPLUS RESOURCES USA CORPORATION	LADYBUG 150-94-11C-12H-TF	SPOTTED HORN	1,194	38,456	25,993
32885	A	7/23/2017	NWSW 11-150-94	ENERPLUS RESOURCES USA CORPORATION	BEETLE 150-94-11C-12H	SPOTTED HORN	946	32,767	24,689
30007	A	4/11/2017	NWNW 36-150-94	ENERPLUS RESOURCES USA CORPORATION	ARCTIC 150-94-36BH	SPOTTED HORN	2,106	120,185	18,602
29531	A	8/13/2016	SWSE 33-151-94	ENERPLUS RESOURCES USA CORPORATION	MINK 150-94-04B-09H TF	SPOTTED HORN	926	147,053	7,314
29530	A	4/1/2016	SWSE 33-151-94	ENERPLUS RESOURCES USA CORPORATION	RACCOON 150-94-04B-09H	SPOTTED HORN	2,478	277,683	9,556
29529	A	8/13/2016	SWSE 33-151-94	ENERPLUS RESOURCES USA CORPORATION	BADGER 150-94-04B-09H TF	SPOTTED HORN	1,177	139,908	5,150
29528	A	4/1/2016	SWSE 33-151-94	ENERPLUS RESOURCES USA CORPORATION	MUSKRAT 150-94-04B-09H	SPOTTED HORN	2,118	288,464	9,352
26609	A	9/23/2014	LOT2 6-150-94	ENERPLUS RESOURCES USA CORPORATION	PRIDE 150-94-06A-18H TF	SPOTTED HORN	1,703	411,991	5,831
26608	A	6/7/2014	LOT2 6-150-94	ENERPLUS RESOURCES USA CORPORATION	COURAGE 150-94-06A-18H	SPOTTED HORN	1,601	496,684	4,350
24753	A	9/15/2017	SWSE 33-151-94	ENERPLUS RESOURCES USA CORPORATION	FOX 150-94-04A-09H	SPOTTED HORN	1,589	433,051	5,571
24752	A	1/17/2014	SWSE 33-151-94	ENERPLUS RESOURCES USA CORPORATION	BOBCAT 150-94-04A-09H TF	SPOTTED HORN	1,377	225,049	3,568
23542	A	2/16/2013	LOT3 6-150-94	ENERPLUS RESOURCES USA CORPORATION	GRACE 150-94-06B-07H	SPOTTED HORN	1,007	295,409	2,653
23541	A	6/7/2014	LOT3 6-150-94	ENERPLUS RESOURCES USA CORPORATION	HONOR 150-94-06B-18H TF	SPOTTED HORN	1,545	524,171	7,986
23178	A	12/20/2013	SWSE 33-151-94	ENERPLUS RESOURCES USA CORPORATION	PRAIRIE DOG 150-94-04A-09H	SPOTTED HORN	1,812	414,636	1,353
21539	A	2/27/2015	SWSE 32-150-94	ENERPLUS RESOURCES USA CORPORATION	ARIKARA 150-94-32D-29H TF	SPOTTED HORN	1,852	380,002	7,623
21538	A	2/27/2015	SWSE 32-150-94	ENERPLUS RESOURCES USA CORPORATION	TAT 150-94-32D-29H	SPOTTED HORN	2,143	322,767	3,809
21537	A	2/11/2015	SESW 32-150-94	ENERPLUS RESOURCES USA CORPORATION	HIDATSA 150-94-32C-29H	SPOTTED HORN	1,522	343,267	4,603
21536	A	2/11/2015	SESW 32-150-94	ENERPLUS RESOURCES USA CORPORATION	MANDAN 150-94-32C-29H TF	SPOTTED HORN	1,348	324,101	4,644
20981	A	1/24/2014	LOT4 5-150-94	ENERPLUS RESOURCES USA CORPORATION	HALL #5-11H	SPOTTED HORN	1,048	264,139	2,977
19278	A	11/2/2010	NWNW 33-150-94	ENERPLUS RESOURCES USA CORPORATION	AUDREY RABBITHEAD HALL 33-11H	SPOTTED HORN	593	134,605	866
18281	A	11/2/2010	NWNW 33-150-94	ENERPLUS RESOURCES USA CORPORATION	RED TIPPED ARROW 33-11H	SPOTTED HORN	205	99,322	791