Wednesday, December 20, 2017

Newfield With Seven Huge DUCs; Rigs Down To 51 But WTI Over $58; Two New Permits -- December 20, 2017

Active rigs:

Active Rigs514164182192

Two new permits:
  • Operator: Kraken Operating
  • Field: New Home (Williams County)
  • Comments:
Thirty-four permits canceled:
  • EOG (33):  eighteen Riverview permits, eleven Hawkeye permits, all in McKenzie County; and four Austin permits in Mountrail County
  • MRO: one Sheldon permit in McKenzie County
Ten permits renewed:
  • Hess (4): four EN-Madisyn permits in Mountrail County
  • Lime Rock Resources(2): one Kary permit and one State permit, both in Dunn County
  • MRO (2): a Bobby Less USA permit and a Coburn USA permit, both in McKenzie County
  • Slawson (2): two Atlantis Federal permits in Mountrail County
Seven producing wells (DUCs) reported at completed:
  • 31136, 1,391, Newfield, Jorgenson Federal 148-96-10-15-11H, Lost Bridge, t6/17; cum 79K 10/17;
  • 31137, 2,579, Newfield, Jorgenson Federal 148-96-10-15-1H, Lost Bridge, t5/17; cum 138K 10/17;
  • 31138, 2,944, Newfield, Jorgenson Federal 148-96-10-15-4HLW, Lost Bridge, t5/17; cum 145K 10/17;
  • 31635, 3,449, Newfield, Jorgenson Federal 148-96-10-15-10H, Lost Bridge, t5/17; cum 145K 10/17;
  • 31870, 1,940, Newfield, Malm 149-98-11-2-6H, Pembroke, t7/17; cum 119K 10/17;
  • 31871, 2,898, Newfield, Malm 149-98-14-23-4H. Pembroke, t7/17; cum 115K 10/17;
  • 33420, 1,876, Newfield, Malm 149-98-14-23-5H, Pembroke, t7/17; cum 109K 10/17;
Crews "Just Keeping" Up With Rig Activity

From The Williston Herald:
Oil production is continuing a gentle rise, but that hasn’t translated into fewer drilled but uncompleted wells or inactive wells.
North Dakota’s Director of Mineral Resources Lynn Helms said he believes the trend might be due in part to prices, but also to lack of workforce, and warned it could become the new normal if the labor crunch continues.
“The ideal frack to rig crew ratio is three to five,” Helms said, “so three frack crews can keep up with five rigs. And that is where we are now. We are just keeping up.”

Gasoline Demand -- Just Barely Ahead Of Last Year -- December 20, 2017; Another Endangered Species?

Link here:

Let The Celebrations Begin -- Just In Time For Christmas

Global Warming? Another Endangered Species

From Axios: it looks like cashiers are soon to be an endangered species.
Walmart's NYC-based innovation center is experimenting with a cashier-less store concept called Project Kepler, which "aims to reimagine the in-store shopping experience with the help of technologies like computer vision.
Project Kepler is in part aimed at creating a store that would feature no checkout lines or cashiers, but use computer vision to detect which products customers leave the store with and then charge their accounts accordingly.
Amazon is also experimenting without cashiers, while roughly 3.5 million Americans operate cash registers for a living.
Walmart's new start-up subsidiary, called Code 8, is experimenting with "high personalised, one-to-one shopping experiences," that will be marketed to "busy NYC moms."
The Katie Ledecky Page

Is Katie Ledecky beatable in her domain events? -- Swimming World, December 11, 2017.
In a report recently from The Straits Times, Chinese rising star Li Bingjie said she had her eyes set on catching American superstar Katie Ledecky in the 400 and 800 freestyle events.

She has been dubbed the “female Sun Yang” and has already won a silver (800 free) and a bronze medal (400 free) at the World Championship level, and yet she is still only 15.

Her rapid rise to the top has many people reminiscing Ledecky’s rise to the top when she won the 800 at the London Olympics in 2012 when she too was only 15.
Li’s times are not far off of Ledecky’s either, as she swam an 8:15.46 and a 4:03.25 in the finals in Budapest while Ledecky was a 4:04.34 and an 8:14.63 in her events at the London Olympics at the same age. So Li is not far off at this point. But is it possible we could see a similar four year run from Li that Ledecky had from London to the Rio Olympics in 2016?

In the history of women’s swimming, there have been three women (Mary T. Meagher, Janet Evans and Krisztina Egerszegi) that were generations ahead of their time during their careers. Meagher held her 200 fly record from 1981-2000. Evans held her 800 free world record from 1989-2008 and Egerszegi held her 200 back world record from 1991-2008, averaging about 18 years to hold a world record.

By the time Ledecky’s career is done, she may have surpassed all three of them. Heck, she may have passed them already. But one thing that Krisztina, Janet and Mary T. have in common is that they were all beaten in their third Olympics. Mary T finished third in the 200 fly in 1988, some five seconds off her world record from seven years prior. (Yes, she only swam in two Olympics, but her time from the Olympic Trials in 1980 would have won the Moscow final by four seconds).
Much more at the link.

The Political Page, T+333 -- December 20, 2017

I generally don't watch television any more, but I guess during the past few days, I've been tuning into CNBC more often than usual. I noticed a new commercial on network programming: a 30-second spot (I suppose) with about eight to twelve men (possibly a woman or two, but it seems like all men) of various religions wishing everyone "happy holidays." I don't know if the Muslims are represented, but I think they are. Certainly a number of non-Christian religions were not represented. I'm pretty sure no Wiccans were represented.Which, I guess is unfortunate, for those who worship the Moon Goddess and the Horned God.

But this is a great example of Christian clergymen being co-opted by non-Christians. It's a feel-good commercial and who can complain about any group of men wishing us all a happy holiday season?

But this holiday season is a Christian celebration; of course, it's been co-opted long before now, with other religions finding their own minor holidays to celebrate at this time of the year, and some secular groups coming up with their made-up holidays (e.g., Festivus for the rest-of-us).

I'm reminded of my years in the US Air Force: as a commander I was expected to celebrate a secular festivity that I won't mention by name. If I had not, I was pretty much assured that my career would be over. 

[Speaking of which, while in the US Air Force I was also told to contribute/donate a certain amount of money to the annual "United Way Drive." Anybody failing to donate/contribute a certain minimum amount was brought to the attention of his/her commander. Failure to donate "appropriately" was duly noted in one's annual "performance report." But I digress.]

But getting back to that "happy holidays" commercial: I'm curious if the Wiccans were asked to be part of the commercial (and they refused) or if they simply were not asked. Again, I may be mistaken. Perhaps a Wiccan does appear; I change stations as soon as the commercial comes on.

Speaking of which, it's my understanding that the networks no longer televise the national anthem proceedings for the NFL games. I don't know. I don't watch the NFL any more, but occasionally I tune in during the lead-in to see whether the national anthem is televised, and I no longer see it. I don't see the usual F-16s or B-1B bomber(s) flying overhead. I wonder if the the national anthem will be televised during the Super Bowl.

CNN and the GOP Tax Bill

It is agreed that 1981 was the last time there was a significant cut in US taxes (Ronald Reagan). That was 36 years ago.

This was the headline over at CNN today after the tax bill was passed by Congress (not yet signed by Trump:

The tax bill was not meant to stimulate the economy. The writers of the bill have been working on it for 30+ years. This has nothing to do with stimulating the economy; it's all about changing direction, changing tax policy; and a whole bunch more. 

The question one needs to ask CNN: if not now, when? It's been almost 40 years.

On the other hand, in the middle of the Great Recession, that was the "right time" to introduce the most expensive tax bill in US history, "ObamaCare"? What am I missing here?

Roy Moore And Al Franken

It certainly looks like Al Franken has no intention of leaving the US Senate any time soon. It is now quite clear he was waiting for the Roy Moore outcome. Had Alabama elected Moore, one could almost be assured that Al Franked would have had a new speech -- that as long as the US Senate allowed Roy Moore to be seated, he would feel "he had every right to remain seated until Minnesota voters decided otherwise." My hunch: his Democratic colleagues would have given him a pass. After all, every last Democratic Congressman and Senator gave President Clinton "a pass" when the president was convicted of perjury, a felony, and subsequently disbarred.

Roy Moore not getting elected may have been the best thing that ever happened to the GOP. We won't have long to wait. The new Congress convenes January 3, 2018, and I expect Tina Smith will be in DC. It will be interesting if she has her photograph taken with AL.

Which brings us to a new poll. Will Al Franken resign on/before January 3, 2018?

Update: the poll should be a no-brainer. But I will leave the poll up for now. Link here. This came out after I posted the poll.

Paris Climate Promises:
Reduce Global Temperature By Just 0.05 Degrees Celsius in 2100

Link here.
  • the climate impact of all Paris INDC promises is minuscule: if we measure the impact of every nation fulfilling every promise by 2030, the total temperature reduction will be 0.048°C (0.086°F) by 2100
  • even if we assume that these promises would be extended for another 70 years, there is still little impact: if every nation fulfills every promise by 2030, and continues to fulfill these promises faithfully until the end of the century, and there is no ‘CO₂ leakage’ to non-committed nations, the entirety of the Paris promises will reduce temperature rises by just 0.17°C (0.306°F) by 2100
  • US climate policies, in the most optimistic circumstances, fully achieved and adhered to throughout the century, will reduce global temperatures by 0.031°C (0.057°F) by 2100
  • EU climate policies, in the most optimistic circumstances, fully achieved and adhered to throughout the century, will reduce global temperatures by 0.053°C (0.096°F) by 2100
  • China climate policies, in the most optimistic circumstances, fully achieved and adhered to throughout the century, will reduce global temperatures by 0.048°C (0.086°F) by 2100
  • the rest of the world’s climate policies, in the most optimistic circumstances, fully achieved and adhered to throughout the century, will reduce global temperatures by 0.036°C (0.064°F) by 2100

"If You Can't Beat 'Em, Join 'Em" -- December 20, 2017; ATT To Pay "Every" Employee A $1,000 Special Bonus Because The Tax Bill Passed

Saudi Arabia reportedly looking at US shale assets to diversity Aramco. Link here. And, here, at The Wall Street Journal.
Saudi Arabia is reportedly looking at natural-gas assets in Texas shale basins and is in talks with a U.S. liquefied natgas producer as it looks to break into U.S. shale.
Saudi Arabia is reportedly looking at natural-gas assets in Texas shale basins and is in talks with a U.S. liquefied natgas producer as it looks to break into U.S. shale.

State-run oil giant Saudi Aramco is in early negotiations with Tellurian to buy a stake or some of its natural gas. The report also said Armaco has asked about assets in the Permian and Eagle Ford shale formations.

If the company starts production in the U.S., it would be the first time it had any output from outside the kingdom. It also would come after three years of struggles to cool shale's growth, which has upended markets that Saudi Arabia once swayed as the swing producer.

But the kingdom's domestic energy needs may be prompting an embrace of its U.S. rivals. Investing in shale would give Saudi Arabia access to the U.S. industry's ability to quickly start and stop production projects and use that knowledge back at home.

"Saudi Arabia has a lot of shale, a lot of tight gas," said Jim Krane, an energy analyst at Rice University's Baker Institute for Public Policy. "Aramco needs to get to the gas because Saudi Arabia is very short on natural gas. The only way to get to it without imports is to tap into shale."

Saudi Aramco won't be the first Middle Eastern country to invest in U.S. shale; the UAE's Mubadala sovereign fund has invested in a private equity firm in U.S. shale, the report said.
Much, much more at the linked article.

The linked WSJ article is the better of the two articles:
Using hydraulic fracturing techniques to unlock oil and gas from shale formations, the U.S. has become the world’s largest producer of oil and gas combined and is starting to export its energy abundance. Saudi oil shipments—once the dominant source of crude for America—in September hit their lowest levels to the U.S. in 30 years.
“From a historical standpoint, it’s striking,” said Jason Bordoff, director of Columbia University’s Center on Global Energy Policy. It is “a reminder of how dramatic the impact of the shale revolution has been,” he said.
The changes have helped accelerate a transformation in Saudi society orchestrated by 32-year-old Crown Prince Mohammed bin Salman.
I think residents of New York state need to be asking their governor why US shale looks so good to Saudi Arabia and their state government bans fracking. I think the adage, "cut off your nose to spite your face" fits in this particularly circumstance.

By the way: I wonder if Jane Nelson is still following the Bakken?

The Road To Germany 
(Re-Posting From October 26, 2017)

One could devote a whole blog to Germany's energy problems. A reader has sent me a number of links to various articles showing how bad things really are (and getting worse) in Germany. I read a fair amount of material on Germany's energy challenges late last night. But this data point jumped out at me, buried in a very technical journal touting the success Germany is having with its renewable energy program (wink, wink):

About 90% of hard coal was imported, in comparison with 98% import dependence for oil and 90% for natural gas.
Imagine if Hillary had been elected, and then served two full terms, and banned fracking as she promised during her campaign, and put a lot of miners out of work, as she also promised -- what would the US look like if US energy needs were those of Germany? What would the US look like if the US imported 98% of its oil, 90% of its natural gas, 90% of its hard coal?

The Magnitude of the GOP Tax Bill

A "never Trumper" sent me an e-mail:
Still hard for me to wrap my head around the fact that either party can write major legislation in secret with no input from the other party. Yes, I know the democrats do this, too, but it just doesn’t seem right.
My "not-ready-for-prime-time" reply:
You have no idea how many times the GOP asked the Democrats to come on board, in general.
Specifically, they targeted six Democratic senators up for re-election but those Democratic senators refused to come to the meetings. Afraid of Schumer.
One of the targeted individuals was Heidi Heitkamp of ND -- this was a huge bill for all those North Dakota millionaires due to oil and she refused to get involved. I talked about that in my blog. She had an opportunity to get her own chapter in "Profiles in Courage" to do what was good for North Dakota, but she was afraid of Schumer.
Just after that exchange, I happened to hear a five-minute interview with Paul Ryan on the Rush Limbaugh radio show. This is what stood out:
  • "never-Trumpers" will listen to Rachel Maddow's "take" on the tax bill but these same "never-Trumpers" won't listen to the originators of the bill (e.g., Paul Ryan) who know it best or read the tax bill for themselves;
  • this is a huge bill, much bigger than anyone can imagine -- can you imagine if your tax bill went from 35% to 21% overnight? think about that;
  • the average corporate tax rate in the industrialized world is 21.5% which means that some countries have rates lower than 21% -- but the US is now at the average corporate tax rate in the industrialized world; companies will no longer re-locate overseas simply to take advantage of lower tax rates
  • the tax cut bill is very much unlike ObamaCare which was a) a huge drag on the economy; b) seen as a "train wreck" by Dems who actually voted for it; c) a huge tax on every American; d) a huge disruptor of the American health sector; and,which was e) taking America down the road to socialism (vis-a-vis Canada, the EU, Russia)
  • the tax cut bill is completely different: as far as I can tell, no one will be sending more money to Washington, DC; it opens up ANWR (Alaska) for drilling; it pretty much ends ObamaCare as we know it
  • I have no idea why anyone is upset about the corporate tax rate cut; DC has a spending problem, not a revenue problem 
  • Congress and senators listened to the public; they got rid of that crazy, crazy FIFO idea
  • Paul Ryan has been working on this bill for decades; folks who suggest this was rushed are the same folks who would suggest the Beatles were an overnight sensation; the Beatles worked their asses off from 1957 to 1962 in clubs in Germany and England; their first album was not recorded until 1963
  • a bill that has been worked on for decades and is several hundred pages long is going to have a lot in it of which none of us are even aware (by the way, look up the history of the IRA)
  • much of it is too technical for any of us to understand but "bean-counters in green visors in the back offices" will spend the next several months figuring it out; 
  • the Affordable Care Act quickly became known as ObamaCare; even its #1 apologist knew that it was not affordable; over time ObamaCare was seen as a disparaging term for the healthcare program; so far, the alt-left and "never-Trumpers" have not been able to come up with a disparaging name for this bill (though, over time, they may succeed); "Tax Cut Bill For Millionaires" does not have the snappy soundbite that ObamaCare has; "Trumponomics" -- currently favored by CNBC won't last; Reaganomics  worked; "Trumponomics" won't
  • as I noted above, Heidi Heitkamp did North Dakota no favors by not trying to get something in this bill that would have helped her state; anyone can offer amendments; if she thought this bill was going to pass, she should have gotten something for her state (having said that, North Dakota did have a strong US senator and he certainly watched out for our interests); by stepping out from under the Schumer shadow she could have had her own chapter in Profiles in Courage
One-Two Punch

The first punch: see the short note on Germany's energy needs above.

The second punch: America's 21% corporate tax rate.

ATT Will Pay "Every" Employee A $1,000 Special Bonus
 -- Simply Because The Tax Bill Passed

Link here:
Today, Congress approved legislation representing the first comprehensive tax reform in a generation. The President is expected to sign the bill in the coming days.
Once tax reform is signed into law, AT&T* plans to invest an additional $1 billion in the United States in 2018 and pay a special $1,000 bonus to more than 200,000 AT&T U.S. employees — all union-represented, non-management and front-line managers. If the President signs the bill before Christmas, employees will receive the bonus over the holidays.
“Congress, working closely with the President, took a monumental step to bring taxes paid by U.S. businesses in line with the rest of the industrialized world,” said Randall Stephenson, AT&T chairman and CEO. “This tax reform will drive economic growth and create good-paying jobs. In fact, we will increase our U.S. investment and pay a special bonus to our U.S. employees.”
You can bet they are going to earn a lot more just from all the overtime pay that comes with $1 billion in CAPEX -- and the bonus, if paid in 2018, will be at a lower tax rate than if it is paid this year.


Fifth Third Bank: will raise minimum hourly wage to $15; will distribute a $1,000 special bonus to employees.

Wells Fargo: will raise minimum hourly wage to $1/hour. No mention of any bonus. Says hourly rate will increase once the tax bill is signed.

Comcast: fourth company to announce. Will give employees a $1,000 bonus.

Oksol: announces that in addition to the three trips to Flathead Lake every year, he will now take four cross-country trips each year because the GOP tax bill passed. My first trip will be to Albuquerque, NM. Details pending.

Others overnight: Boeing, but less specific. 

The Bakken Strikes Back! -- Richard Zeits -- December 20, 2017

Let's see if Mr Zeits mentions the new record set by North Dakota.

Link here, over at SeekingAlpha. In case that link breaks, the story was re-printed by

  • October production data for the Bakken validates operators' claims of strong early-time well performance in the play's core
  • current prices provide a powerful growth stimulus not yet reflected in the volumes
  • Continental Resources has advertised 15-month payouts for its wells in the Bakken Core in a $50 per barrel WTI environment, which implies exceptional returns
Data points:
  • The preliminary data shows a ~76,000 barrel per day step up in October for production from the Bakken. This equates to ~7.2% growth - in one month. Previously posted.
This is so cool: I posted almost the same graph a month ago:

More, from the linked article:
The report gives fresh food for thought to those investors who have written the Bakken off as a play that is running out of prolific locations, is uneconomic at current oil prices and therefore is irrelevant as a contributor to supply growth unless oil prices rise significantly above the recent levels.

We assume the cost to drill, complete and connect a new well of $7.5 million. Such wells are likely to reach payout in less than three years. In our assessment, many new wells in the Bakken Core would fall within that category (excluding infill wells in existing drilling units on tight downspacing, which may fall short of this threshold).
No, I did not see it. No mention that North Dakota set an all-time BOE production record in October, 2017.

And, of course, no mention of "Peak Oil." "Peak Oil" doesn't work for individual wells in unconventional plays; doesn't work for oil fields; doesn't work for basins; doesn't work for nations; doesn't work globally.

Many, many graphs at the linked article. Will archive.

By the way, do you remember this headline article in Forbes: the beginning of the end for the Bakken shale play by Art Berman. Another doofus. The lede:
The decline in Bakken oil production that started in January 2015 is probably not reversible. New well performance has deteriorated, gas-oil ratios have increased and water cuts are rising. Much of the reservoir energy from gas expansion is depleted and decline rates should accelerate. More drilling may increase daily output for awhile but won't resolve the underlying problem of poorer well performance and declining per-well reserves.

The Political Page, T+333 -- December 20, 2017

Diamond and Silk, be sure to play the video: link here

I'm now following James Woods on Twitter, the only non-oil account I follow on Twitter.

Re-Balancing Down To 30 Weeks -- December 20, 2017

EIA announces a drawdown of 6.5 million bbls. US crude oil inventories now stand at 436.5 million bbls. Re-balancing is now down to 30 weeks. By the way, the drawdown was much greater than expected. Analysts expected a drawdown of  3.8 million bbls.
Other data from the weekly petroleum report:
  • refineries operated at 94.1% capacity, breaking the "94%" threshold for the first time in quite awhile
  • gasoline production still around 10 million bpd
  • distillate production still around 5 million bpd
  • total products supplied over last four-week period average just over 20 million bpd
  • we'll see the gasoline demand graph later today or tomorrow 

Weeks to RB
Week 0
Apr 26, 2017

Week 1
May 3, 2017
Week 2
May 10, 2017
Week 3
May 17, 2017
Week 4
May 24, 2017
Week 5
May 31, 2017
Week 6
June 7, 2017
Week 7
June 14, 2017
Week 8
June 21, 2017
Week 9
June 28, 2017
Week 10
July 6, 2017
Week 11
July 12, 2017
Week 12
July 19, 2017
Week 13
July 26, 2017
Week 14
August 2, 2017
Week 15
August 9, 2017
Week 16
August 16, 2017
Week 17
August 23, 2017
Week 18
August 30, 2017
Week 19
September 7, 2017
Week 20
September 13, 2017
Week 21
September 20, 2017
Week 22
September 27, 2017
Week 23
October 4, 2017
Week 24
October 12, 2017
Week 25
October 18, 2017
Week 26
October 25, 2017
Week 27
November 1, 2017
Week 28
November 8, 2017
Week 29
November 15, 2017
Week 30
November 22, 2017
Week 31
November 29, 2017
Week 32
December 6, 2017
Week 33
December 13, 2017
Week 34
December 20, 2017