Monday, March 12, 2018

Random Update Of A Re-Fracked Older MRO Well In The Sanish Oil Field -- March 12, 2018; Another Wrinkle In The Bakken

MRO appears to continue it's aggressive re-fracking program.

Back on January 17, 2018, this DUC (#33290) was reported as completed:
  • 33290, 4,204, MRO, Lena USA 14-22H, Antelope, Sanish pool, t12/17; cum -- (#19144)
At the time I noted #19144 was in the immediate area and was curious what its production profile would look like once it was brought back on line. The well:
  • 19144, 952, MRO, TAT USA 34-22H, Antelope, Sanish pool, API - 33-053-03182, t3/11; cum 364K 1/18;
Here is the production profile:

PoolDateDaysBBLS OilRunsBBLS WaterMCF ProdMCF SoldVent/Flare

A production jump like that suggests that the well was re-fracked, and checking FracFocus, it turns out that yes, indeed, it was re-fracked in November, 2018.

I assume other operators are doing the same but I haven't found any consistent examples. But it seems to be a "regular occurrence" that when MRO is fracking "new" wells, MRO often re-fracks older wells in the immediate area at the same time.

But look at this. Look how little water and proppant was used to re-frack this well:
  • water : 90.6% of total proppant by weight
  • water: 1,759,603 gallons
  • sand: 8.9% by weight
  • a gallon of water weighs 8.345404 million pounds
  • 1.76 million gallons of water weighs 14.7 million pounds
  • 90.6% of what = 16.2 million lbs
  • 16.2 million lbs total proppant (sand+water+all that other stuff)
  • 8.9% of 16.2 = 1.44 million lbs of sand 
  • my numbers may be off a bit but 1.44 million lbs of sand is an extremely small amount of sand to be using when fracking wells in 2018
  • it doesn't take a rocket scientist to see the point that is being made
  • if I have this correct, this is very, very clever -- what MRO is doing; just one more interesting wrinkle in the Bakken

Random Update Of An Oasis Well That Has Just Been Brought Back On-Line -- March 12, 2018

We can close out another well that I've been waiting for -- to see the production data when it came back on line. Back in December, 2017, I put this well on the list of wells to follow up.
  • 18579, 2,006, Oasis, Jorgenson Federal 1-30H, Bear Den, t12/10; cum 500K 1/18; December 26, 2017: #18579, Oasis, 500K; off-line as of 8/17; neighboring well, #33547 just fracked on 8/17;
That well (#18579) is now back on line. Note the jump in production:
PoolDateDaysBBLS OilRunsBBLS WaterMCF ProdMCF SoldVent/Flare

Really? -- March 12, 2018


March 14, 2018 Apparently confirmed -- Kudlow will be named Trump's new economic advisor, replacing Gary Cohn. Dow falls 300 points -- said to be concerns over trade wars due to Trump's tariffs.

Original Post


Eight New Permits; Five Permits Renewed; Six DUCs Completed -- March 12, 2018

Active rigs:

Active Rigs604532111193

Eight new permits:
  • Operators: EOG (5); Statoil (3)
  • Fields: Clarks Creek (McKenzie); Todd (Williams)
  • Comments: EOG has permits for a 5-well Clarks Creek pad in SESE 7-151-94; Statoil has permits for a 3-well Jarold pad in NENE 25-155-101
Five permits renewed:
  • BR (2): a Cleetwood permit and a Rollacleetwood permit, both in McKenzie County
  • Enduro (2): an NSCU permit in Bottineau County; and, an LDCMU permit in Renville County
  • Whiting: an Armas permit in Mountrail County
One permit canceled: an Oasis Harbour permit in Williams County

Six producing wells (DUCs) reported as completed:
  • 31612, 419, BR, He 3-8-20UTFH, Elidah, t2/18; cum --
  • 33354, 1,416, Whiting, Jackman 44-10-3H, East Fork, t3/18; cum 71K 5/18; (#20748, #20736)
  • 33355, 1,135, Whiting, Jackman 44-10-2TFH, East Fork t3/18; cum 53K 5/18;
  • 33357, 1,532, Whiting, Jackman 44-10-1TFH, East Fork, t2/18; cum 54K 5/18;
  • 33358, 1,910, Whiting, Jackman 44-10-2H, East Fork, t2/18; cum 90K 5/18;
  • 33461, 840, Enerplus, Mesa 152-94-16A-21H, Sanish, t3/18; cum 79K 5/18;

Reason #56 Why I Love To Blog -- March 12, 2018

I have said that I doubt we will ever see a Saudi Aramco IPO. I haven't been able to find (m)any folks in the public arena that agree with me. The IPO launch has already been delayed. It turns out there is an "international oil economist" that argues the same -- that we will  never see a Saudi Aramco IP. From a comment to an article today:
Saudi Arabia’s oil price of $70 is only a starting point. They need a minimum price of $70 or even higher for a successful IPO of Saudi Aramco though I have been the only oil expert in the world suggesting for quite a while that Saudi Arabia is going to withdraw the IPO altogether.
There are three obstacles that make a listing on the NYSE unlikely:
  • SEC rules and regulations that Saudi Arabia cannot live with
  • the kingdom would have "to open their books" to the public, something a super-secret government would never be able to do
  • the kingdom won't get the valuation they want (need) -- $2 trillion for 5% of their assets
Dr Salameh also notes that it doesn't matter how "cheaply" Saudi can lift oil out of the ground, their budget requires significantly more than $70/bbl. For Saudi Arabia, the price of oil is an existential issue.

Whether or not the OPEC-Russia production cut deal falls apart this summer is anybody's guess. But Saudi Arabia already made that mistake once -- the $1 trillion mistake -- from which they are years if not decades away from recovering -- see graphic below.

It's hard for me to believe that Saudi will support any action that drives the price of oil toward $40 again.

Another Nail In The Coffin: The Hubbert Peak Oil Theory -- March 12, 2018 -- Peak Oil? What Peak Oil?

From Bloomberg via Rigzone:
Bob Dudley, in his 38 years in the oil industry, has never seen anything like what happened with BP Plc’s old fields last year: They gushed more crude. [Under the Hubbert peak oil theory this is not supposed to happen.]
I cannot remember ever in my career having seen a negative decline rate,” the British oil-giant’s chief executive officer said in an interview on the sidelines of the CERAWeek by IHS Markit energy conference in Houston. 
The fact that Dudley isn’t alone in seeing mature fields dwindling less than expected -- and in BP’s case surprisingly increasing -- means the Organization of Petroleum Exporting Countries has one more thing to worry about. As if the shale boom wasn’t enough of a headache.
Better results from legacy fields, also observed by producers like Royal Dutch Shell Plc and countries like Norway, further complicate efforts by petro-states like Saudi Arabia to push prices higher by curbing supplies.
Across the industry, the results weren’t as spectacular as BP’s, but still impressive, executives and officials at CERAWeek said. According to the International Energy Agency, production from mature oil fields dropped last year by about 5.7 percent, the least in data going back one decade. 
And remember all that talk about operators cutting back on CAPEX in deepwater these past few years?
That comes as a huge surprise because the oil industry cut spending dramatically during the three-year downturn it’s just started to emerge from, and managing deep-water fields to arrest their demise can be a multibillion-dollar affair. So, OPEC was hoping thriftier times would lead to faster declines from mature wells that still account for more than half of the world’s output.
But the need to stretch each dollar spent is exactly why Big Oil is getting more from those fields, according to Wael Sawan, executive vice-president for deep water at Shell. The lower decline rates are part of the response to low oil prices.
Or put another way: necessity is the mother of invention.

What a doofus:

What a Doofus
Tell Me Again Why Trump's Tariffs Were Wrong For The Country

I think most folks would agree that the politician pictured above was of the party that aligned itself with the unions. And yet, despite eight years of opportunity and much lobbying from the unions, President Obama never did a thing about China dumping cheap aluminum and steel on the US.

President Trump did that early in his second term. He probably would have gotten it done in his first term had Congress not placed obstacles in his path during his first term on virtually everything and making it challenging for Trump to get the things done that he promised to do during his campaign.

Today, ArgusMedia is reporting that an aluminum smelter is about to restart -- in direct response to President Trump's actions:
Glencore subsidiary Century Aluminum will restart all production at its largest US primary smelter in Hawesville, Kentucky, following new Section 232 tariffs on steel and aluminum.
The Hawesville smelter has five pot lines, three of which have been idled since 2015. A full restart would add 150,000 metric tonnes (t)/yr of production by mid/late-2019 at an estimated cost of $115mn. The smelter has a rated capacity of 252,000 t/yr.
"The restart of that curtailed capacity has been dependent on an effective trade remedy...and we strongly believe the president's proclamation achieves that objective," chief executive Michael Bless said today.
Late last week, President Donald Trump confirmed that 10pc tariffs on most aluminum products exported to the US would take effect on 23 March, but exempted Canada and Mexico. Australia said it also has been exempted.
In addition to restarting production at Hawesville, Century plans to reline all five reduction lines.
Tell me again that what Trump did was wrong. Yes, I know it will add one-half cent to the cost of each can of beer. So, settle for draft. Support your local bar.

Monday, March 12, 2018

A story I never thought I would see over at NPR (link here; sent by a reader, thank you very much): America's oil boom is fueled by a tech boom
The U.S. is on track to become the world's biggest oil producer [this is forecast to happen in the next year or so, during the Trump administration], pumping out more crude than at its peak nearly a half century ago. For decades, few expected such a comeback, and it's all the more remarkable because the price of a barrel of oil is nowhere near what it was during the last, recent boom.
"This is an incredible statement, but we're probably making more money at fifty dollars a barrel than a hundred," says Kirk Edwards, president of Latigo Petroleum in Midland, the de facto oil capitol of West Texas.
ConocoPhillips has even boasted that his company can now break even when the price of oil is below $40 a barrel.
The flat, khaki-colored plains outside Midland are crowded again with rigs and pump jacks. Tommy Taylor of Fasken Oil and Ranch shows me a fracking operation where water, sand and chemicals are injected into the earth to separate oil from rock. Inside an air conditioned control center, called a frack van, men can monitor information coming out of the well.
"Look at all the computer screens," Taylor says. "We used to frack jobs on the tailgate of a pickup, and so we've come a long ways."
Fracking has been around for years, but companies have managed to continually increase its speed and efficiency, a trend sometimes referred to as "fracking 2.0." Plus, Taylor says, companies are getting more oil than they used to thanks to expanded use of horizontal drilling. That means drilling down, through layers of oil rich shale formation, and then drilling across, sometimes for miles.
And then this -- due to efficiencies, technology, and robots, far fewer people are required -- and thus all those concerns about there not being enough workers may be unwarranted.
Much, much more at the link.

What a Doofus
Sand. All those concerns about adequate supplies of fracking sand seem to be dissipating. I remember one analyst -- some years ago -- suggesting the cost of sand would go parabolic. If it did (go parabolic), that lasted for a very, very short time. The other day I mentioned that the Permian operators will source this sand from in-basin, which puts much less pressure on Bakken operators for their sand sourced in Minnesota and Wisconsin.  Today, the Emergent Group used the phrase "dramatic shift" with regard to frack sand.
Not all the frac sand mines proposed for the Permian Basin are online yet, but some operators are already reporting plans to source their sand locally.
A study just released by Energent, an energy market research consultancy, supports that trend, predicting operators will increasingly turn to in-basin frac sand.
By doing so, they will be able to save 40 to 50 percent on the cost of sand. This will result in potential savings of $500,000 or 10 to 20 percent per well.
Active rigs:

Active Rigs594532111193

RBN Energy: midstream pay-to-play in the Permian's Delaware Basin.