Oil Discoveries At Lowest Point Since The 1940s -- Oilprice -- December 21, 2017

I told the reader who sent me this article:

I don't like posting these kinds of articles for the very reason you mention: not only does the author not understand the shale revolution, the author does not understand the oil industry -- at least that's what I get from this article.

But I am posting it because it will be great for the archives, something to look back on 10 years from now.

The story over at oilprice.com. 

The oil industry discovered the least amount of oil in 2017 in almost eight decades, breaking the previous record low set in 2016.

The global oil industry has discovered less than seven billion barrels of oil equivalent so far this year—a drop-off from the 8 billion boe discovered last year. Last year’s total was the lowest since the 1940s. The 2017 figure is down by more than half from the 15 billion boe discovered in 2014-2015, and down sharply from the 30 billion boe discovered in 2012.

The plunge is the result of a third consecutive year of relatively low upstream exploration budgets. So many oil companies slashed their spending on exploration when the market downturn began in 2014, and they have yet to restore that spending to anything close to pre-2014 levels.

So many story lines, but not worth the effort.

My only comment: I'm not worried. 

From an earlier post:

US Crude Oil Production Forecast

 
With all the talk about the Permian recently, let's see what the EIA forecasts. Today, via Twitter, from 
EIA:

In addition, the following graphic was posted by the EIA earlier this year, August 22, 2016:

Note the amount of dark blue (Bakken) vs the Wolfcamp (blue).

Bridger / Bonneville Wells Updated; Two Wells With Jump In Production; Not Re-Fracked -- December 21, 2017

Disclaimer: in a long note like this, there will be typographical and factual errors. If this information is important to you, go to the source.

Updates

December, 22, 2017: a reader noted I had the wrong production chart for one of the wells; that has been corrected. More important were his comments regarding these wells:

Original frac job required 660 days of production to produce 68,150 BBL of oil. In approximately 90 days (Aug, Sept, Oct) the well has produced 67,857.

FYI in November it produced 16,900 BBL. So in approx 126 days of production since refrac has produced 87,400. June-November.

Not bad for 4 months from a well that was put on production almost 9 years ago and had produced a total of 138,952 BBLs in that life  span if I am reading this correctly. [I've posted the full production history for this well at this post: note the production after the original frack and the huge amount of production after the re-frack.]

The reader asks:

So how much potential is out there with old wells that can be re-fracked? [A rhetorical question.]

The reader goes on:

The Bakken has a lot of negatives based on the northern climate work environment and the distance to markets compared to southern US Basins. But on the other hand it looks like the updated frac jobs are using a lot of water. And the Bakken is sitting in the middle of a large lake on the Missouri River. It will take some effort to put in an underground distribution system with pumping plants on the lake to provide water for frac jobs and water flood secondary production but I bet in the coming years we will see that.

Original Post

 

For newbies: this is an important post to help understand the the potential of the Bakken. I'm not going to go into it again but important concepts that are not being talked about by analysts with regard to the Bakken: total organic content (TOC); original oil in place (OOIP); multiple formations in the "Bakken": primary production; life history of Bakken wells that will produce for 30+ years (workovers; mini-re-fracks; neighboring fracks; re-fracks; microseismic arrays)

This well came off the confidential list today:

• 31845, 879, CLR, Bridger 7-14H2,Three Forks 2nd bench, t8/17; cum 52K 10/17;

Bridger/Bonneville wells have been updated.

Many updates, including name changes (change in formation targets) with the Bridger/Bonneville wells. Regardless of whether wells were re-fracked or not, the important point to note is that many older Bridger wells have had a significant jump in production.  

According to FracFocus this well was not re-fracked:

• 17088, 267, CLR, Bonneville 41-23H, Rattlesnake Point, t4/08; cum 160K 10/17;

Monthly Production Data for #17088:

Pool	Date	Days	BBLS Oil	Runs	BBLS Water	MCF Prod	MCF Sold	Vent/Flare
BAKKEN	10-2017	17	3774	4049	1885	3599	247	3352
BAKKEN	9-2017	26	6780	6783	4591	4680	347	4333
BAKKEN	8-2017	31	11708	11926	12906	9448	9158	290
BAKKEN	7-2017	20	10614	10283	15486	8109	6652	1457
BAKKEN	6-2017	0	0	0	0	0	0	0
BAKKEN	5-2017	10	106	235	22	39	39	0
BAKKEN	4-2017	30	330	232	92	115	115	0
BAKKEN	3-2017	31	359	222	117	135	135	0

However, this well was re-fracked 4/17:

• 17089, 400, CLR, Bridger 44-14H, t4/08; cum 169K 8/17 and then back on confidential; re-fracked 4/17;

Monthly Production Data for #17089:

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

Likewise, this well showed a jump in production, but no evidence that it was re-fracked:

• 19012, 365, CLR, Bonneville 2-23H, Three Forks, 24 stages, 2.5 million lbs; 4 sections, t12/10; cum 171K 10/17; huge bump in production 6/17; not re-fracked according to FracFocus;

Monthly Production Data for #19012:

Pool	Date	Days	BBLS Oil	Runs	BBLS Water	MCF Prod	MCF Sold	Vent/Flare
BAKKEN	10-2017	31	2460	2679	8162	2455	1798	657
BAKKEN	9-2017	29	1386	1054	5442	963	672	291
BAKKEN	8-2017	28	1269	1651	3584	758	482	276
BAKKEN	7-2017	31	8117	8055	12997	7612	6782	830
BAKKEN	6-2017	15	5477	5116	18058	5429	5290	139
BAKKEN	5-2017	19	434	526	277	400	391	9
BAKKEN	4-2017	30	886	1121	533	771	771	0
BAKKEN	3-2017	31	881	909	528	760	760	0
BAKKEN	2-2017	27	822	591	472	700	700	0
BAKKEN	1-2017	31	909	883	520	772	755	17
BAKKEN	12-2016	31	942	901	569	817	787	30
BAKKEN	11-2016	30	951	1151	548	876	852	24

WTI Solidly Over $58; Active Rigs Stable At 52 -- Ten More Than A Year Ago -- Nine New Permits -- December 21, 2017; No Hits, No Errors, No DUCs

Active rigs:

$58.21↑	12/21/2017	12/21/2016	12/21/2015	12/21/2014	12/21/2013
Active Rigs	52	42	65	182	192

Nine new permits:

• Operators: NP Resources (6); Oasis (3)
• Fields: Roosevelt; Rosebud
• Comments:

No permits canceled.

No permits renewed.

No producing wells (DUCs) reported as completed:.

How Does The Los Angeles Times Deal With Trump's Huge Legislative Win; Clearly Besting Anything His Predecessor Acoomplsihed -- The Political Page, T+334 -- December 21, 2017

Does a tree falling in a forest make any noise if no one hears it? How does The Los Angeles Times handle the president's greatest legislative win? Ignore it. By now, one would expect a several-page analysis of the tax bill. The LA Times? Nothing.

One way to keep the government open a bit longer: POTUS has the authority to delay payment of foreign aid for a temporary period of time. He cannot completely cancel it but he can delay it. Foreign aid is part of the annual budget and is re-negotiated annually, as I understand it.

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

Now He Knows How The Deplorables Feel

This article was linked "high" on the Drudge Report. I really had no interest in clicking on it but I was curious why it had been placed in such a prominent position by Drudge.

Nearly a year into the Trump presidency, Univision anchor Jorge Ramos says he’s experiencing “the worst moment I’ve had in the 34 years I’ve been living in the United States.”

“With Donald Trump there, I have never been treated so badly. I have never been insulted so much. We’ve never been attacked so much. They have never tried to run us out as much as now,” Ramos vented in an interview.

Ramos, who proclaimed himself “if not an enemy, an opponent” of Trump in the interview, complained about the massive blowback he has received since deciding to use his media platforms to openly oppose the choice of over 62 million American voters in last year’s U.S. presidential election.

In the interview, Ramos continues to contend that Trump “was speaking about me” “he insulted me” along with the entire immigrant community in the U.S. on June 16, 2015 when during his presidential campaign announcement speech Trump slammed the lax border security that had permitted criminal elements from Mexico and other countries to illegally enter the United States.

Ramos might reflect on how 50% of Americans who voted, who supported Trump, feel about being called "deplorables" by Hillary.  And the "deplorables" Hillary was talking about were American citizens, not criminal elements coming across our open borders.

The Market And Energy Page, T+334 -- December 21, 2017

Not-ready-for-prime-time: e-mail to a reader earlier this morning --

1. The new tax bill is a $1.5 trillion package -- this is very much like a $1 trillion infrastructure bill that Trump has wanted. And unlike waiting for "shovel ready" projects (held up by CAVE dwellers), the $1.5 trillion starts getting disbursed as of January 1, 2018.

2. Remember when the US corporate tax was 35%, but everyone on CNBC said that the "real" rate paid by US corporations was significantly less due to loopholes? Well, CNBC has noted that again this morning: the new rate is 21% but one can imagine that US corporations will find ways to lower that tax rate, also. Just like the individual: I'm in a certain tax bracket but after deducting deductions/credits, etc., my effective tax rate is definitely lower.

• Steve Liesman says:
• current rate of 35% to drops to 21%
• effective tax rate, estimate: current effective tax rate of 23% to drops to 9%!!!
• the biggest winners, again, according to Steve Liesman:
• real estate/rental
• agricultural (think Deere)
• utilities
• health care/social assistance
• transportation/warehousing

Weekly jobs report: first time claims rise more than expected! Link here --

• forecast: 231,000
• actual: 245,000

3Q17 GDP: final reading -- 3.2% vs 3.3% expected. Link here.

$58-WTI: oil falls as UK North Sea pipeline moves closer to restart. And that was about it. Not much reason to read the story. The headline says it all.

Saudi budget: previously posted but this story has a slight bit more information. AP is reporting that Saudi Arabia heralds biggest spending plans yet amid deficit.

Illinois: the state lost one resident every 4.3 minutes in 2017; dropped to 6th most populous state. Most populous states: CA, TX, FL, NY, Pennsylvania, and now Illinois. Retirement system of Illinois now on the hook for $120 billion. Illinois was the very first state noted by the blog facing doomsday; that first post was posted February 24, 2010. Some of the posts from that page:

• long story in Chicago Tribune today; homeowners fed up with property taxes; leaving the state; data points, posted September 30, 2017.
• unpaid bill backlog hits a record $16 billion. September 20, 2017. 
• needs a half year of taxes just to pay the bills -- June 27, 2017. Illinois is functionally bankrupt, and the only good news is that Illinois favorite son Barack Obama is no longer in the White House to bail them out. 
• Illinois' comptroller says the state is now in "massive crisis mode."
• could Illinois be the first state to file for bankruptcy? -- CBSNews.
• unable to reach a budget deal; credit rating lowered to just one notch above junk.
• dire. Reuters -- posted January, 2017
• unpaid bills could surpass $13 billion; currently $10.6 billion (late 2016)
• budget deficit could grow beyond $5 billion
• no 12-month operating budget for two years (since 2015)
• forecast: $7 billion deficit in 2018; $6.5 billion deficit in 2022
• unpaid bills could grow from $13.5 billion at end of fiscal 2017 to $47.1 billion by 2022 (five years from now) 
• despite huge tax increase, Chicago still faces a huge pension fund gap. November 10, 2015.  
• electricity may be shut off at state capitol; unpaid bills. October 1, 2015
• 2013 bill to "solve" the pension problem has been ruled unconstitutional by the Illinois Supreme Court. Things just got tougher in Illinois.
• applications for food stamps in Illinois is greater than its creation of jobs. September 16, 2014.
• Chicago workers protest as pension crisis brews. February 19, 2014.
• resumes bond sale as the worse-rated US state. April 2, 2013
• in a very rare move, Illinois "yanked" bonds after they realized expectations would not be met, January 31, 2013.
• first state to run out of money (pension fund), 2018. The next to fall: Connecticut (2019), Indiana (2019), New Jersey (2019), Hawaii (2020), Louisiana (2020), Oklahoma (2020), Colorado (2020), Kansas (2022), Kentucky (2022), New Hampshire (2022). The bill for Illinois the following year (2019): $14 billion; Connecticut (2020): $4.9 billion; and, Indiana (2020): $3.6 billion.
• worst off in the nation -- $12.1 billion deficit; $5.0 billion in bills it can't pay right now. It cannot grow itself out of its problem. This is the administration's home state. Can anyone spell "bailout"?
• poster child for pension liabilities. With financial year 2011 less than six weeks away, the pension arrears for Illinois look daunting. The state faces unfunded liabilities of about $78bn, the biggest pension hole in the US, and contributions of more than $4bn for 2011, the largest single element of its $13bn budget deficit. The state has a two-point plan for resolving the deficit: a) delay acting on the problem during an election year; and, b) asking for a Federal government bailout. Because Illinois is the president's home state, this seems as good a plan as any. May 20, 2010. 
• pending $12.8 billion deficit. Residents could be facing unprecedented personal income tax increases. February 24, 2010.

Thursday, December 21, 2017

Active rigs:

$57.97→	12/21/2017	12/21/2016	12/21/2015	12/21/2014	12/21/2013
Active Rigs	51	42	65	182	192

RBN Energy: EnLink builds out STACK, Permian infrastructure to offset Barnett declines.

EnLink Midstream Partners LP, seeking to offset declining natural gas production in the Barnett Shale — where the master limited partnership (MLP) has extensive midstream holdings — has been implementing a strategic plan focused on acquisitions and expansions in the burgeoning STACK play in central Oklahoma and in the Permian’s Midland and Delaware basins in West Texas. The level of investment the plan requires has prevented increases in the MLP’s distributions to unit holders for nine consecutive quarters, which in turn has left EnLink’s share price languishing at about half of its 2014 high. The MLP has reported promising signs of growth in Oklahoma and the Permian as well as increased utilization of its southern Louisiana infrastructure, which it says could lead to a higher distribution to unit holders in 2018.

• Texas: EnLink has natural gas gathering pipelines and a transmission pipeline, natural gas processing facilities, NGL fractionators and other midstream infrastructure assets serving the Barnett Shale in North Texas and the Permian’s Midland and Delaware basins in West Texas.
• Oklahoma: The MLP has natural gas gathering and processing systems primarily serving the STACK play.
• Louisiana: EnLink has natural gas gathering, processing, and transmission assets. It also owns liquids transportation pipelines, storage facilities and fractionation units.
• Crude and Condensate: The company owns crude oil and condensate pipelines, storage assets, a trucking transportation fleet, condensate stabilization units and natural gas compression stations. These assets are located in Louisiana, the Ohio River Valley, the Permian Basin, and along Texas’s Gulf Coast.