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Monday, December 11, 2017

Huge News! USGS To Reassess The Bakken -- December 11, 2017

Data points from The Bismarck Tribune:
  • ND leaders pressed for reassessment
  • that was the headline but a few "ifs" and "buts"
  • last assessment was in 2013; at that time:
    • the Three Forks crude oil formation was deemed recoverable, bringing future resources to be tapped in the Williston Basin up from 3.7 billion barrels to 7.4 billion barrels of oil
    • possible natural gas production also rose from 1.9 trillion cubic feet to 6.7 trillion cubic feet
    • the 2013 survey is linked at the sidebar at the right; here's the link:http://themilliondollarway.blogspot.com/2013/04/usgs-doubles-estimate-of-bakken-74.html
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Electricity, Spot Prices Elsewhere

New England: spiking to $60/MWh
Australia:
  • South Austrailia: will spike to $350/MWh
  • Victoria: will spike to $290/MWh
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Whiting Butte With Eight Permits In Clarks Creek -- December 11, 2017

Breaking news, Jim Cramer:
  • number of rigs does not matter; 
  • amount of oil stored does not matter;
  • what matters: the amount of crude oil being exported by the US
Active rigs:

$58.02*12/11/201712/11/201612/11/201512/11/201412/11/2013
Active Rigs524065186192

*Why WTI jumped a bit: WTI jumped  a bit today on news that a major Brent oil pipeline will be taken off-line for three weeks for repairs. This is a a one-time event which may or may not amount to anything.

Eight new permits:
  • Operator: White Butte
  • Field: Clarks Creek (McKenzie)
  • Comments: it appears White Butte Oil Operations has permits for an 8-well Jore-Federal pad in Clarks Creek, 12-151-95 (all 275' from the north line, and between 1,946 feet from the west line and 2,598 feet from the east line; see graphic below; the section the wells will be sited in is spaced for 640 acres;
No DUCs reported as completed; no permits cancelled; and, no permits renewed.

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



The other wells in that section:
  • 28747, 2,592, Slawson, Jore Federal 2-12H, Clarks Creek, one section, 21 stages 4.8 million lbs, t9/14; cum 188K 10/17; shut in most of 6/17 - 10/17; probably due to neighboring wells being fracked?
  • 31194, conf, Slawson, Jore Federal 1-12H, no production data,
  • 31193, conf, Slawson, Jore Federal 13-12TF2H, no production data,
  • 31192, conf, Slawson, Jore Federal 6-12TFH, no production data,
  • 31191, conf, Slawson, Jore Federal 24-12TF3H, no production data,
  • 31190, conf, Slawson, Jore Federal 14-12TF2H, no production data, 
The new permits:
  • 34372, 23-12TF3H,
  • 34373, 11-12TFH,
  • 34374, 15-12TF2H,
  • 34375, 3-12H,
  • 34376, 22-12TF3H,
  • 34377, 10-12TFH
  • 34378, 4-12H,
  • 34379, 16-12TF2H 
So far: 14 wells planned for this one section
  • middle Bakken: 4 wells 
  • TF, 1st bench: 3 wells 
  • TF, 2nd bench: 4 wells 
  • TF, 3rd bench: 3 well 
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Permian Acreage Still Selling For Almost $50,000 / Acre -- Oasis To Sell Non-Core Assets In Williston Basis For $500 Million -- December 11, 2017

Updates

December 12, 2017: my thoughts on this deal.

December 12, 2017: Oasis will issue 32 million shares of common stock to raise $300 million to help pay for this $50,000/acreage in the Permian. Investors appear to be thrilled: shares are down about 6% in pre-market trading on this announcement. Some are saying:
  • with a lot of North Dakota acreage selling for less than $100/acre, Oasis could have bought a lot of Bakken acreage for one billion dollars
  • that the term "non-core" is being used very, very loosely 
Original Post
 
Link here.
Oasis Petroleum Inc. today announced it has entered into a definitive purchase and sale agreement with Forge Energy, LLC   to acquire 20,300 net acres in the Delaware Basin for approximately $946 million, consisting of approximately $483 million in cash and 46 million shares of the Company's common stock valued at approximately $463 million as of the close of trading on December 8, 2017.

The Acquisition will be funded through a combination of the OAS Shares issued to the Seller, a draw on the Company's revolving credit facility, and/or capital markets transactions, depending on market conditions. Additionally, Oasis expects to divest non-core Williston Basin acreage up to $500 million in 2018.
I've not downloaded the slides yet, but a reader says Oasis already has a slide presentation on this at this link (a pdf): https://www.oasispetroleum.com/wp-content/uploads/2017/12/2017.12_OAS-MA-presentation_vF.pdf.
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2% Pop In Brent Prices -- Due To Major Brent Pipeline Llink --- Carries 40% Of Brent Output -- 80 Platforms Shutdown For Three Weeks -- BBC -- December 11, 2017

It's amazing that one pipeline carries 40% of all North Sea crude oil, and it services 80 platforms. 

Story here. Data points:
  • one of the UK's most important oil pipelines will be closed for about three weeks for repairs
  • discovered in Aberdeenshire
  • the Forties pipeline carries about 40% of North Sea crude oil
  • more than 80 platforms will have to be shut down
My hunch: OPEC and Russia can close the gap.

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Saudi To Slash Oil Exports To Asia By 100,000 BOPD

Story at oilprice.
  • January, 2018: 100,000 bopd less than the previous month, December, 2017
  • for December, 2017, Saudis cut:
    • total crude oil exports by 120,000 bopd, from just above 7 million bopd in November
    • cut exports to all regions of the world, including a 10-percent reduction of oil exports to the US
    • Saudis also raising the official selling price (OSP) to the region for January
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Mexico Cancels GOM Project -- Mexico Blames It On Brazil -- December 11, 2017

From Reuters via Rigzone, data points:
  • the Nobilis-Maximino project, a joint venture with Pemex, scuttled
  • potentially lucrative deepwater GOM project
  • reserves estimated to be 500 million bbls, mostly crude (less than two years of Bakken production)
  • lack of interest by investors
  • Mexico blames it on "low oil prices" and recent Brazil auction
  • recent Brazil auction: six of eight blocks in Brazil were award to majors in late October
  • huge setback for Mexico (see article)
*********************************
Back To The Future

Mexico loses more than $1 billion in fuel theft -- Argus Media. Data points:
  • much of the theft is attributed to well-organized bands of thieves tapping into pipelines
  • solution: fuel-by-rail (FBR)
  • joint venture between Bravo and USD
    • Bravo: based out of Newport Beach, CA
    • USD: a subsidiary of USD, based out of Houston, TX
  • destination: Queretaro, Mexico -- booming area
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Conoco Has Upside In 2018 -- One Of Its Best Leaseholds Is North Dakota -- Filloon -- December 11, 2017

Link over at SeekingAlpha:
  • COP 2016-2017 locations produce 29% more oil than in 2015
  • increased oil production has some to do with better well design, but improved geology in the Permian is also a contributing factor
  • Like most other US unconventional operators, COP is improving oil production per foot
"Improved geology" or "better understanding of the geology"?

Whatever.

From the article:
2017 has shown gains in oil production per foot across the US unconventional oil industry. Better stimulation in concert with increased sand and fluids usage continues to decrease payback times. Operators can complete fewer horizontals to increase production. As the marginal producer, E&Ps can increase production quickly at higher prices and reduce the number of completions when WTI pulls back. This may cap oil prices in the short term, but provides flexibility during periods of volatility. West Texas Intermediate and the US Oil ETF continue to head higher, and we expect this to continue through next year.
Conoco continues to improve design. It has excellent Eagle Ford acreage, where both EOG and Devon have seen a number of monster wells. In 2012, COP was using 3.5 million lbs of sand and 70 clusters. In 2017, it uses over 15.5 million lbs and 300 clusters. The Delaware could have the most upside of its plays, as the economics continue to show promise. It has one of the best leaseholds in North Dakota [through BR].

From the article, based on 178 Conoco horizontals completed after January of 2016. Ninety-nine locations are in Texas, 73 in North Dakota and 6 in New Mexico. New Mexico has the best oil curve, producing 278 KBO in 17 months. North Dakota and Texas are 2nd and 3rd:

DeWitt (52) had the greatest number of completions. McKenzie (43), Dunn (30), and Karnes (23) round out the top four by number. 

These four counties account for more than three-fourths of the total. Eddy has the best oil curve, producing 326 KBO in 13 months. McKenzie, Ector, Lea, Karnes, DeWitt, and Dunn are the next best oil producing counties.

The average COP location produces 178 KBO and 422 MMcf in 16 months.
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Active Rigs In North Dakota Trending Back Toward 50 As We Approach Winter -- December 11, 2017

Active rigs:

$57.56→12/11/201712/11/201612/11/201512/11/201412/11/2013
Active Rigs524065186192

RBN Energy: Algonquin, Transco Pipeline xxpansions feed more Marcellus gas to New England, New York markets.
Several large-scale gas pipeline expansions targeting the New England and New York City markets have been sidelined in the past year, either due to insufficient financial backing or the challenges of regulatory rigmarole in the region. But in recent weeks, a couple of smaller-scale projects along existing rights-of-way have managed to cross the finish line, allowing incremental gas supplies to trickle into the region. The new pipeline capacity will provide natural gas utilities and power generators in the region with greater access to additional gas supplies from the nearby Marcellus Shale this winter. Today, we look at recent capacity additions and their potential impacts.
The last time the U.S. Northeast had exceptionally cold weather — during the Polar Vortex winter of 2013-14 — natural gas prices in New England spiked to nearly $25/MMBtu. That’s a long way from the $80-$100 premiums the region used to see prior to the Shale Revolution, but still an impressive premium, considering Marcellus/Utica shale gas production had reached upwards of 14 Bcf/d by then. So why the high prices? Well, there simply wasn’t enough transportation capacity to get the gas to the utilities serving those densely populated markets.
Since then, Northeast gas production has nearly doubled, and the New England-New York region has been adding new gas-fired generating capacity, driven by a big push to reduce emissions. Additionally, nuclear, coal and older oil-fired power plants are aggressively being shuttered.
In other words, the New England-New York region has become increasingly dependent on gas-fired power. But pipeline capacity additions to bridge gas supply and demand have been slower to come. That’s not to say there haven’t been some meaningful additions.
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Bakken Economic Activity Shifts Farther West -- Grand Forks Herald -- December 11, 2017

This story caught two readers' attention; sent me the link. I had not seen the article; much appreciated.

Williston, Watford City, Minot economy during the Bakken "manufacturing" stage, from The Grand Forks Herald. Data points:
  • Minot: commercial activity steady, but activity moving west (to Williston and Watford City)
  • Minot: 2017 was a good year; 2018 should be better
  • real estate returns in western North Dakota higher than most of the country
  • most Minot investment coming from out-of-state
  • during the boom, Minot was the economic center; farther west did not have the infrastructure in place to support workers
  • Williston: now the economic center for the Bakken
  • Watford City: the center of activity in the Bakken
  • Minot: as above
  • Dickinson: probably the least activity of the four Bakken cities
  • construction on new hospital in southwest Minot should commence next spring
This will drive a lot of economic activity over the next few years: natural gas processing plants. Previously posted:
From The Bismarck Tribune:
A significant expansion announced last week for a new McKenzie County natural gas processing plant aims to reduce gas flaring in the region.
Crestwood Equity Partners proposes to expand the Arrow Bear Den gas processing plant near Watford City, adding another 120 million cubic feet per day of processing capacity.
That’s in addition to phase one of the plant, which just came online last week and added 30 million cubic feet per day of processing capacity.
Ron Ness, president of the North Dakota Petroleum Council, said he suspects more companies will make similar announcements to keep up with the expected growth in natural gas production.
The state produces 1.9 billion cubic feet per day of natural gas, a figure the North Dakota Pipeline Authority projects will exceed 3 billion cubic feet per day by 2030.
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Huge Fracks -- Random Note -- December 11, 2017

Note the large amount of proppant and/or the large number of stages on several wells that came off confidential the last three days. This page will not be updated.

Tuesday, December 12, 2017: 49 for the month; 159 for the quarter
31629, 2,208, Oasis, Lawlar N 5199 41-23 2B, North Tobacco Garden, 70 stages; 10.2 million lbs; t7/17; cum 182K 10/17;

Monday, December 11, 2017: 47 for the month; 157 for the quarter
32316, 674, EOG, Van Hook 71-1411H, Parshall, 35 stages; 13.1 million lbs, t6/17; cum 105K 10/17;
31630, 1,497, Oasis, Lawlar N 5199 41-23 3T, North Tobacco Garden, Three Forks, 70 stages, 10 million lbs, t7/17; cum 110K 10/17;

 Sunday, December 10, 2017: 43 for the month; 153 for the quarter
32315, 615, EOG, Van Hook 70-1411HX, Parshall, 28 stages; 10.6 million lbs; t6/17; cum 106K 10/17;

 Saturday, December 9, 2017: 40 for the month; 150 for the quarter
33050, 1,703, EOG, Clarks Creek 75-0719HX, Clarks Creek, 4 sections, 57 stages, 15.1 million lbs; t6/17; cum 230K 10/17;
32794, 2,382, Clarks Creek 74-0719H, Clarks Creek, 4 sections, 59 stages, 17 million lbs, t6/17; cum 230K 10/17;
31836, 1,827, Whiting, Evitt 34-12H, Truax, 4 sections 43 stages; 11 million lbs, t6/17; cum 148K 10/17;
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Updating Natural Gas Processing Plants In North Dakota -- December 11, 2017

Crestwood Arrow Bear Den natural gas processing plant:
Crestwood also announced December 6, 2017, the commissioning of Phase 1 of the Bear Den gas processing plant in Watford City, ND, adding 30 million cubic feet per day of processing capacity to support increasing gas volumes on Crestwood’s Arrow gathering system located on the Fort Berthold Indian Reservation. Additionally, Crestwood announced it has reached final investment decision to proceed with Phase 2 expansion of the Bear Den gas processing plant with the addition of a new 120 MMcf/d cryogenic gas processing plant.
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North Dakota Natural Gas Processing Plants

The NDIC site tracks the natural gas plants in North Dakota. When I find the link again, I will post it.

This is the data base I have. I can no longer vouch for its accuracy.

Owner Company
Facility
County
2006
2008
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
North Dakota














ONEOK/Bear Paw
Lignite
Burke
6
6
6
6
6
6
6
6
6
6


ONEOK/Bear Paw
Marmath
Slope
7.5
7.5
7.5
7.5
7.5
7.5
7.5
7.5
7.5
7.5


ONEOK
Grasslands
McKenzie
63
100
100
100
100
100
100
100
100
100


ONEOK
Stateline I
Williams
NA
NA
NA
NA
100
100
100
100
100
100


ONEOK
Stateline II
Williams
NA
NA
NA
NA
NA
100
100
100
100
100


ONEOK
Garden Creek I
McKenzie
NA
NA
NA
100
100
100
100
100
100
100


ONEOK
Garden Creek II
McKenzie
NA
NA
NA
NA
NA
NA
100
100
100
100


ONEOK
Garden Creek III
McKenzie
NA
NA
NA
NA
NA
NA
NA
120*
120
120


ONEOK
Lonesome Creek
McKenzie
NA
NA
NA
NA
NA
NA
NA
200
200
200


ONEOK
Demicks Lake
McKenzie
NA
NA
NA
NA
NA
NA
NA
NA
200*
Suspended: Feb 24, 2015


ONEOK
Bear Creek
Dunn
NA
NA
NA
NA
NA
NA
NA
NA
80*
80
80
175*
Petro Hunt
Little Knife
Billings
32
32
32
32
32
32
32
32
32
32


True Oil
Red Wing Creek
McKenzie
4
4
4
4
4
10
10
10
10
10


Sterling Energy
Ambrose
Divide
0.5
0.5
0.5
0.5
0.5
0.5
0.5
0.5
0.5
0.5


EOG Resources
Stanley
Mountrail
NA
20
0*
0*
0*
0*
0*
0*
0*
0


Whiting Oil & Gas
Robinson Lake
Mountrail
NA
30
45
90
90
90
110
110
110
110


Whiting Oil & Gas
Ray
Stark
NA
10
NA
NA
NA
NA
10
10
10
10


Whiting Oil & Gas
Belfield
Williams
NA
NA
NA
30
30
35
35
35
35
35


XTO - Nesson
Ray
Williams
NA
10
10
10
10
10
10
10
10
10


Hess
Tioga
Williams
110
110
110
110
110
110
250
250
250
250


Hiland Partners
Badlands
Bowman
4
40
40
40
40
40
40
40
40
40


Hiland Partners
Norse
Divide
NA
NA
25
25
25
25
25
25
25
25


Hiland Partners
Watford City
McKenzie
NA
NA
NA
50
90
90
90
90
90
90


Summit Resources
Knutson
Billings
NA**
NA**
NA**
NA**
NA**
NA**
NA**
NA**
NA**



Targa Resources
Badlands
McKenzie
NA
NA
NA
45
45
45
45
45
45
45


Targa Resources
Badlands
McKenzie
NA
NA
NA
NA
NA
NA
NA
200
200*
200


USG Midstream Bakken
DeWitt
Divide
NA
NA
NA
NA
NA
3
3
3
3
3


Caliber Midstream
Caliber Midstream
McKenzie
NA
NA
NA
NA
NA
10
10
10
10
10


Plains
Ross
Mountrail
NA
NA
NA
NA
NA
NA
75
75
175
175


Oasis
Wild Basin
McKenzie








80
80


Liberty Resources
Tioga
Williams








20
20


AUX Sable - Chicago, IL














AUX Sable - Chicago, IL
Prairies Ross
Mountrail
NA
NA
110
110
110
110
110
110
110
110


Crestwood 
Arrow Bear Den
McKenzie
NA
NA
NA
NA
NA
NA
NA
NA
NA
30

150*



227
370
490
760
900
1024
1369
1769
1889
2199

















NOTE: the Plains facilty in Ross is rated 50 - 75.














NOTE: Garden Creek III was originally planned to be 100 MMCF facility; in July 30, 2014, announcement, increased to 120 MMCF; ahead of schedule; will be completed 4Q14.














NOTE: Demicks Lake announced July 30, 2014














Note: Garden Creek II completed; announced August 26, 2014.














Note: Bear Creek announced September 22, 2014.














Note: Targa Badlands 200 for 2015 announced october 6, 2014.














Note: Crestwood Arrow Bear Den: upon completion of 30 MCF Phase 1, announced Phase 2: 120 MCF
















*February 20, 2018: ONEOK asked in January, 2018, to expand its Bear Creek plant from 80 to 175 million cf/d. Link here.
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