Tuesday, February 20, 2018

The Bakken Does Not Quit -- February 20, 2017

Wow, I'm in a great mood.

I think what put me into such a great mood was The Williston Herald story that a reader sent me. The more I think about it, the more excited I get.

If the national media was following this story, this would be the headline: "Bakken Surges! State Activates Emergency Task Force." And then lead with this image:
The sub: "$13 billion not enough! North Dakota needs another $11 billion in infrastructure."

Wow. The Bakken simply does not quit.

Memo to self: send notes to:
  • Art Berman
  • Jane Nielson
  • M King Hubbert's executor
  • Flo (Stephanie Courtney)
Lookin' Out My Back Door, CCR

North Dakota Natural Gas Production Is Again Becoming An Issue For The State -- February 20, 2018


February 21, 2018: see first comment.

Original Post
A reader sent me this story (thank you, again). I was not going to post it -- it sounded a bit "excessive," shall we say? A little bit of hyperbole? I thought maybe the writer mis-heard or mis-wrote.

The lede in This Williston Herald story:
North Dakota’s oil and gas industry has invested more than $13 billion in gas gathering and processing infrastructure to date, but it needs at least another $11 billion to meet the state’s more stringent gas capture targets that begin in November.
I replied that I must be missing something because the most recent Director's Cut seems to suggest North Dakota is close to the target, and the most recent data is December, 2017, data. We still have almost a year to go (the more stringent target goes into effect in November, 2018) -- from the most recent Director's Cut, with December, 2018, data:
  • statewide: 87% (previous -- 86% [trend has improved)
  • FBIR: 80% (much improved; previous -- 75%) 
  • 88% target becomes effective November, 2018
  • 88% through October 31, 2020; then 91%
At 87%, the state is very close to the 88% target.

But then look at that second paragraph in the linked story:
So far, an additional 800 mcf of gathering and processing capacity has been proposed for 2018 and 2019, but these are not nearly enough to get there, according to projections by North Dakota Pipeline Authority Justin Kringstad.
I assume the "800 mcf" is 800 million cubic feet because 800,000 cubic feet would make no sense. Crestwood, for example, announced one December 6, 2017, that it was commissioning Phase 1 of the Bear Den natural gas processing plan in Watford City, which would add another 30 million cf/d. 

But having thought it through and looking at this graphic from the NDIC site, I thought it was a great story to post. North Dakota is producing about 2.1 billion cubic day:
But I still find that absolutely incredible:
  • already, $13 billion in natural gas gathering and processing, and, yet,
  • another $11 billion in more natural gas gathering and processing needed
  • the time-frame was not stated
The writer wondered whether there might be a possibility of a "cracker" somewhere in the state. Some links regarding crackers:

Four New Permits; Nine Permits Renewed; Four DUCs Completed -- February 20, 2018

Active rigs:

Active Rigs564038127183

Four new permits:
  • Operator:  Slawson
  • Field: Elm Tree (McKenzie)
  • Comments: Slawson has permits for a 4-well Wolverine Federal pad -- most interesting, the targets: two wells will target the TF2; one well will target the TF3; and one well will target the midddle Bakken, based on the names of the wells
Nine permits renewed:
  • Bruin E&P (4): four Berg Trust Federal permits in McKenzie County
  • EOG (3): three Wayzetta permits in Mountrail County
  • Texakota (2): a Hemsing permit and a Borstad permit, both in Williams County
Four producing wells (DUCs) reported as completed:
  • 30159, 2,609, CLR, Chicago 6-26H1, Banks, t2/18; cum 2K after 2 days; (#19590) (#22375 -- see below) (#23048, #23049)
  • 32304, 2,491, XTO, Lund 41X-17C, Siverston, t1/18; cum --
  • 32306, 2,488, Lund 41X-17D, Siverston, t1/18; cum --
  • 32980, 116, Dodge 2B MBH, Dimmick Lake, t 1/18; cum -- 
Jump in production related to wells reporting today:

The well:
  • 22375, 814, CLR, Chicago 2-26H, t6/12; cum 220K 12/17; recent production; note: the 8,453 bbls was over 18 days which extrapolates to 18,000 bbls over 30 days; no evidence of refrac at FracFocus; API - 33-053-03972;
PoolDateDaysBBLS OilRunsBBLS WaterMCF ProdMCF SoldVent/Flare

The well:
  • 23048, 606, CLR, Chicago 3-26H, t5/13; cum 236K 12/17; no evidence of refrac at FracFocus; API - 33-053-04166; recent production:
PoolDateDaysBBLS OilRunsBBLS WaterMCF ProdMCF SoldVent/Flare

The well:
  • 23049, IA/334, CLR, Chicago 4-26H, t5/13; cum 193K 12/17; no evidence of refrac at FracFocus; API - 33-053-04167; recent production -- currently off-line.

Gasoline Demand -- February 20, 2018

This was released last week but I forgot to post it.

The price of gasoline is trending down in north Texas. One can easily "regular" at $2.07/gallon. I doubt we will go below $2 / gallon but $2.07 is almost there.

Global Warming Hits North Texas -- February 20, 2018

Wow, it's incredible out there right now and in a few minutes I will be picking Sophia up from Tutor Time. The rainfall is quite incredible. I think I heard that north Texas was under drought conditions last week; it looks like this will change things.

It was fairly mild earlier today; I was able to go biking despite a bit of rain, but it's getting colder and the rest of the week is going to be very, very cold.

But look at this, just to the northwest of us (DFW airport) there is already ice and snow. I assume this is heading our way.

US: Top Ten Industries With Fastest Job Growth

The Bismarck Tribune has an interesting "top ten" list: industries with fastest job growth.

1. Support activities for mining
  • difference from national average: a whopping 14x
  • annual growth rate: a whopping 21%
  • this sector added 52,500 new jobs, bringing its total employment number to 307,000 – a whopping increase of 20.6%
  • includes extraction of oil and gas
  • subset of the larger "Mining and Logging Industry"
  • at an annual growth rate of 21% and a whopping 14x difference from the national average, it is so far ahead of the crowd, it hardly matters to show the rest of the list, but here they are. Also, overall, this sector probably has the best paying jobs compared to the rest of the list
  • typical of a boom and bust industry
2. Other information services
  • difference from national average: 4x
  • annual growth: 6%
  • a subset of the larger "Information" industry: includes news syndicates; libraries, archives; Web search portals
3. Nonstore retailers
  • difference from national average: 4x
  • annual growth: 5%
  • mail-order houses, vending machine operators, home delivery sales, street vendors, e-commerce shopping
  • comment: it seems e-commerce shopping needs to be separated out or moved to information services but something needs to be done -- e-commerce shopping and street vendors don't need to be in same category
4. Couriers and messengers
  • difference from national average: 3x
  • annual growth: 5%
  • a subset of the larger "Transportation and Warehousing" industry
  • this ensures the typical millenial will always have a job
  • Uber in this category? 
5.  Heavy and civil engineering construction
  • difference from national average: 3x
  • annual growth: 5%
  • highways, dams -- all that infrastructure stuff the federal government talks about every four years
6. Residential specialty trade contractors
  • difference from national average: 3x
  • annual growth: 5%
  • subset of the larger "Construction" industry; plumbing, electrical, etc.; we're certainly seeing this in north Texas
7. Miscellaneous nondurable goods manufacturing
  • difference from national average: 3x
  • annual growth: 4%
  • subset of the larger "Nondurable Goods" industry; diverse industry -- clothing, sporting goods, toys, jewelry and medical products
8. Administrative and support services
  • difference from national average: 2x
  • annual growth: 3%
  • includes general management, personal administration, clerical and cleaning activity
9. Warehousing and storage
  • difference from national average: 2x
  • annual growth: 3%
10. Ambulatory health care services
  • difference from national average: 2x
  • annual growth: 3%
  • physicians, dentists, home care workers, others

Global Warming -- We're All Doomed -- Again, The Washington Post Blames President Trump -- Reality Is Quite Different -- February 20, 2018

Another country that gets a free pass when it comes to CO2 emissions: South Africa. From Twitter:

Off the net for a bit -- getting ready for a bike ride -- warm but a bit wet:

Global Warming? What Global Warming?

For the record: it is 12 degrees below zero in the Grand Canyon today. It was fortunate that President Obama, through an executive order, ordered the Grand Canyon to be CO2-free by 2016:

Harsh Winter In Canada Delaying Crude Oil Shipments From Alberta

Link here to oilprice.com:
Canadian oil producers can’t get a break. First it was the pipelines — there are not enough of them to carry the crude from Alberta’s oil sands to export markets. This pipeline capacity problem has been forcing producers to pay higher rates for railway transportation, which has naturally hurt their margins in no small way. Now, there is a shortage of rail cars as well.
The situation is going from bad to worse for Canadian producers who can’t seem to catch a break. Canadian railway operators are fighting harsh winter weather and finding it hard to supply enough cars to move both crude oil from Alberta and grain from the Prairies.
The harsh weather is just the latest factor, however.
Before that, there was the 45-percent surge in demand for rail cars from the oil industry, Bloomberg reports, citing Canadian National Railway. The surge happened in the third quarter of last year, and Canadian National’s chief executive Ghislain Houle says that it took the company “a little bit by surprise.” This surprise has led to “pinch points” on the railway operator’s network, further aggravating an already bad situation.
RBN Energy continues to report on this problem; earlier today it released part 4 of a continuing series on west Canada's crude oil takeaway crisis. 

The Sky Is Falling, The Sky Is Falling -- We're All Doomed

Even though common sense and reality seem to paint a different picture (see stories above), a faxed press release seems to have been worthy enough for printing by The Washington Post. 

From The Washington Post [personal comments in brackets]:
Barely two years ago, after weeks of intense bargaining in Paris, leaders from 195 countries announced a global agreement that once had seemed impossible. [Signing a piece of paper with no intention of enforcing the guidelines is "hardly" impossible.]
For the first time, the nations of the world would band together [like one big tribe] to reduce humanity’s reliance on fossil fuels in an effort to hold off the most devastating effects of climate change. [The most devastating: the loss of Tuvalu, which has since then grown much bigger.]
“History will remember this day,” the secretary general of the United Nations, Ban Ki-moon, said amid a backdrop of diplomats cheering and hugging. [#MeToo]
Two years later, the euphoria of Paris is colliding with the reality of the present.
Global emissions of carbon dioxide are rising again after several years of remaining flat.
The United States, under President Trump, is planning to withdraw from the Paris accord and is expected to see emissions increase by 1.8 percent this year, after a three-year string of declines. Other countries, too, are showing signs they might fail to live up to the pledges they made in Paris.
In short, the world is off target.
The story fails to mention that NOAA has been found to be fudging the current data.

But, The Washington Post clearly tells us we are already doomed, if anyone is really paying attention to these graphs (and I don't think they are):

But this is key. This is the only paragraph in the story that calls out names:
Brazil has struggled to rein in deforestation, which fuels greenhouse gas emissions. In Turkey, Indonesia and other countries with growing economies, new coal plants are being planned to meet the demand for electricity. In the United States, the federal government has scaled back its support for clean energy and ramped up support for fossil fuels.
  • Does anyone see the 100-kg elephant in the room? India
  • Does anyone see the 50-kg panda in the room? China
  • Does anyone see the country returning to coal? Germany
  • others? Mexico, South Korea, Japan (closing down nuclear reactors, returning to fossil fuel); and the list goes on and on and on
In fact, the US moving to natural gas, is actually doing more than the aforementioned. 

By the way, the linked Washington Post story appears to be a faxed press release supplied by the Tyndall Center for Climate Change Research and edited for publication. I doubt any reporter was sent to the Tyndall Center to get the story.

BHP Update -- Buy HIgh -- Sell Low -- February 20, 2018

Posted elsewhere as an update, but re-posting here so the item is not buried. This post will not be updated; BHP and US shale will be tracked at the linked post. From August 22, 2017:


February 20, 2018: from Bloomberg -- 
  • accelerating plans to exit its $10 billion US shale unit; deals could be announced before the end of the year
  • Fayetteville field; and others to be announced
  • as many as seven packages, including three in the Permian
  • might consider a swap of onshore US acreage for offshore wells in the Gulf of Mexico
  • working on Plan B if this doesn't pan out
Original Post

Bubble: it's been a recurrent theme on the blog -- $60,000/acre in the Permian might have been a tad expensive. Today we learn that Australia mining giant BHP Billiton's full-year profit soared 450% but still missed estimates. It will triple its "final" dividend (43 cents at the end of the year, vs 14 cents one year ago). But here's the biggest news: BHP will sell its US shale assets. The company is being pressured to spin off its US oil and gas operations. BHP spent $20 billion in 2011 on US shale oil and gas assets ... and we know how that worked out. I see the headline -- "maybe BHP Billiton's $20 billion fracking bet wasn't a blunder after all" -- Forbes, June 3, 2014 -- let's see who wrote that and why: Christopher Helman --
In 2011, the Australian mining giant BHP Billiton made a surprise entry to the North American shale game by spending $20 billion to snap up some 1.5 million acres.
It bought Petrohawk Energy for $15 billion (including assumed debt) to get at its primo positions in the Eagle Ford, Permian basin and Haynesville shale. And it shelled out $4.75 billion to Chesapeake Energy for its interest in the Fayetteville shale.
The move was met with surprise by BHP investors, who had only just gotten accustomed to their company's forays into deepwater drilling in the Gulf of Mexico. The company had never "fracked" a single well.
"Our skill set was clearly offshore deepwater," says Rod Skaufel, president of shale operations for BHP Billiton Petroleum. "The first year was tough."
Costs were too high, because BHP didn't yet know what it was doing. Then natural gas prices plunged to lows not seen in a decade. Suddenly this big acquisition began to look like a big folly.
$20 billion / 1.5 million acres = $13,000 / acre.

WTI Flirting With A 62-Dollar-Handle -- February 20, 2018

$62? Flashback to a September 7, 2016 post -- LOL.

Price of oil (WTI), sweet spot: from a post dated September 7, 2016 --

Early this morning, well before the article [at the linked post] was posted, I mentioned that I'm completely content with $45 oil. In fact, I argue that the sweet spot for WTI pricing right now is $46 to $52. I used $60 as the high end of the sweet spot. I find it interesting that this Bloomberg article (at the link above) chose exactly the same numbers.  

Now, Back to the Present
Active rigs:

Active Rigs564038127183

RBN Energy: Rising Canadian production, takeaway constraints and WCS price discounts, part 4.
With Western Canadian crude oil production rising, available pipeline takeaway capacity shrinking and crude-by-rail volumes rebounding, midstream companies are ramping up their efforts to get long-planned pipeline projects built. But that’s no easy task. Virtually every plan to add new takeaway capacity out of Alberta — Canada’s #1 energy-producing province — continues to face regulatory hurdles, and it remains to be seen which of the pipeline projects will be completed, and when.
We can’t just throw up our hands, though, and say, “Who knows?” With pipeline constraints out of Western Canada worsening by the month and having profound negative effects on the price of Western Canadian Select (WCS), there’s real value in reviewing in some detail what these pipeline projects are up against. Today, we discuss what’s being planned on the takeaway front and where these projects stand.