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Sunday, March 18, 2018

Random Look At An Old EOG Short Lateral -- Coming Up On 600,000 Cumulative Bbls -- March 18, 2018

This is for newbies and for me, just for the fun of it. Seriously, I am just passing some time -- no need to really spend any time on this well. Maybe this would be a great time for a music video:

When I Get Low, I Get High, The Speakeasy Three

This is just an interesting example of a Bakken well. As far as I can tell it was fracked only once, back in 2010 with 17 stages, and using slightly less than 2 million lbs of sand. It is a short lateral. Look at the production profile. Fracked once but probably a number of "work-overs," pumps, neighboring wells, etc., which all affected production. The jump in production in 2017 was probably due to a neighboring well (#31206) being fracked. The continued good production in 2013 was probably due to another neighboring well (#24855) being fracked. This tells me this well (#18825) is a great candidate for a re-frack.

The well:
  • 18825, 951, EOG, Van Hook 8-36H, Van Hook, Bakken, 100K in 5 months -- whoo-hoo! t7/10; cum 577K 1/18;
PoolDateDaysBBLS OilRunsBBLS WaterMCF ProdMCF SoldVent/Flare
BAKKEN1-20183152185312215843323868212
BAKKEN12-2017315094511019863645333270
BAKKEN11-20173049324905225832822832206
BAKKEN10-201731509850572330335331010
BAKKEN9-201730474647832377275825140
BAKKEN8-2017315033506722932520222048
BAKKEN7-20173147054685245122301572407
BAKKEN6-20173036653573222517111141333
BAKKEN5-201726193720181982866514165
BAKKEN4-20170000000
BAKKEN3-201745534957100
BAKKEN2-2017271101630374219819820
BAKKEN1-20173116361636185322429720
BAKKEN12-201631190919162563793345586
BAKKEN11-201630212721324033913365118
BAKKEN10-20163122442251321425819852022
BAKKEN9-201630225122524254362402989
BAKKEN8-20163123902558496450442530
BAKKEN7-20163124832454433467044180
BAKKEN6-20162118291827433297828260
BAKKEN5-20163126493087319439441440
BAKKEN4-20163026732143475426040170
BAKKEN3-20163127032724459437841260
BAKKEN2-201629276427753364090379460
BAKKEN1-20163130132984496452442648
BAKKEN12-201531307131303984522425233
BAKKEN11-201530293729473354061375578
BAKKEN10-201531340233644574442417417
BAKKEN9-201530303030744154279398263
BAKKEN8-2015313466346840746983569877
BAKKEN7-20153137123721480504147890
BAKKEN6-20152937213724449454643190
BAKKEN5-20153144464463574469544430
BAKKEN4-20151426782578530228221680
BAKKEN3-20152329042898364276513341253
BAKKEN2-20152835123398440361133830
BAKKEN1-201527331134527423398314342
BAKKEN12-20142634193449536331131070
BAKKEN11-20143044214773569403237910
BAKKEN10-201431475446287194518422244
BAKKEN9-2014304836467573945473557751
BAKKEN8-2014315187555665842993297849
BAKKEN7-2014315857546883140333760118
BAKKEN6-20143063527211914287315111213
BAKKEN5-2014316958615196031052133819
BAKKEN4-2014307134701783034633147167
BAKKEN3-20143178298160974441429191340
BAKKEN2-2014286956661592049623882941
BAKKEN1-2014265879587982433982472802
BAKKEN12-20133179397972120343223261911
BAKKEN11-201330760777511513408117562179
BAKKEN10-201330762375891505415017162286
BAKKEN9-2013307038686820814105823877
BAKKEN8-2013217329621800
BAKKEN7-20130000000
BAKKEN6-20130000000
BAKKEN5-20132945114789327363634960
BAKKEN4-2013305335551259134633147167
BAKKEN3-20133153005109377403938840
BAKKEN2-20132847064690340365135110
BAKKEN1-20133155495562338427541200
BAKKEN12-20123157215718366437542200
BAKKEN11-20123058175820380443042810
BAKKEN10-2012316286630356252654750360
BAKKEN9-20123063196398390524051000
BAKKEN8-20123166266867504539852540
BAKKEN7-2012317019680457458575188515
BAKKEN6-201230719971965725463527440
BAKKEN5-20123175077520467604858960
BAKKEN4-20123078037817459552853790
BAKKEN3-20122565156455464437442550
BAKKEN2-20122971527277578537452360
BAKKEN1-20123185688439520650363490
BAKKEN12-20113192869325556703868860
BAKKEN11-20113098381013959876457278217
BAKKEN10-2011258776839570853164559637
BAKKEN9-20112993489502599668254031139
BAKKEN8-201131108441087066185087702653
BAKKEN7-20113112376123908101078310232403
BAKKEN6-201130128711285780392818406727
BAKKEN5-2011311423714177910939377551483
BAKKEN4-20112598309676643643546731643
BAKKEN3-201131169091725712131127310452668
BAKKEN2-2011281810817961135791258338647
BAKKEN1-2011312007619996156589448126663
BAKKEN12-201031106181060487948694366352
BAKKEN11-2010291660516806147282257957133
BAKKEN10-20102513959147542348509026982286
BAKKEN9-20103024267241622276754307393
BAKKEN8-20102939210378761748812953012808


By 2016 this well was down to 2,000 bbls/month -- still a nice well, but clearly declining. And then in 2017, back up to 5,000 bbls/month.

And the Bakken is filled with these kinds of wells, and that's why it's so difficult to predict how all this will play out.

Spend Some Time On This Graph -- Many, Many Story Lines -- Big Implications -- March 18, 2018

Two data points not seen in the graphic below:
  • Mexico will elect a leftist/socialist for their next president this summer
  • Trump has just named Larry "drill, baby, drill" Kudlow as his national economic advisor
But spend some time on the graphic.

There are many, many story lines and the implications are profound.

The graphic:


Some initial comments (beware: these are dollar amounts -- not volume):
  • it is staggering to see how little oil the US actually imports from Mexico now, and how fast those imports have dropped in less than four years (measured in dollars); for volumes, see this link
  • the US no longer imports any natural gas from Mexico; in fact, Mexico is importing ever more natural gas from the US -- that is really quite amazing when one thinks about that -- on so many levels; and,
  • then, of course, look at the refined petroleum products exported/imported (again, measured in dollars)
Clearly, one of the big stories this decade will be Mexico, the US, and energy.

Steffes To Expand Dickinson Manufacturing Facility -- Dickinson Press -- March 18, 2018

The Dickinson Press is reporting:
Steffes, one of Dickinson's largest employers, will be expanding its manufacturing facility located four miles north of Dickinson on North Dakota Highway 22, the company announced in a recent press release.
From the press release:
The 36,000 square foot expansion will provide space for additional manufacturing, new product development and offices to allow Steffes to better serve growing customer needs," the company said in a statement. "Committed to creating jobs and positive local economic impacts, Steffes hired GT Architecture of Dickinson to design a state of the art facility."
The structure will have 42-foot sidewalls, high capacity crane hoists and incorporate a modern three story office, conference and employee breakroom structure, the release stated. Local contractors Tooz Construction and Winn Construction will participate in the project which is estimated to take eight months.
Steffes will be making investments in the building infrastructure, equipment and personnel with an estimated completion date of November 2018. The company said the expansion will create more than 30 new jobs over the next two years.
*********************************
Bicycling In The WSJ

From this weekend's edition of The WSJ: David Byrne on traveling the world by bicycle -- and getting lost.  
The former Talking Heads frontman, who’s touring the world for his album ’American Utopia,’ on his penchant for two-wheeled exploration, losing his way in a Swedish forest and his devotion to leftovers.
This spring summer, you may notice a familiar-looking figure pedaling along your local cycling path, and you may ask yourself: “Is that David Byrne, the former frontman of Talking Heads?”
It could well be. Mr. Byrne has just embarked on a world tour—taking him to more than 90 cities, from Santiago, Chile, this Friday, to Brooklyn, N.Y., on Sept. 17—to promote his new album, “American Utopia,” and he’s bringing his bike.
Though this is his first solo record since 2004, these last 14 years haven’t been idle ones. Mr. Byrne has racked up countless miles, and he has the projects to show for it. His cycling habit led to his 2009 book “Bicycle Diaries,” a collection of essays drawn from his two-wheeled excursions in cities such as Istanbul, Buenos Aires, Pittsburgh and New York, where he lives, as well as Manila, in the Philippines, where he found inspiration for “Here Lies Love,” the 2010 disco-musical about Imelda Marcos he created in collaboration with Fatboy Slim.
Mr. Byrne’s worldly expeditions informed another recent project, called “Reasons to be Cheerful,” a collection of pioneering initiatives in wide-ranging fields, from transportation to energy production, all cataloged on a website of the same name. His observations on these initiatives gave rise to a TED Talk-like presentation, which he’s given recently in New York, London, Amsterdam and Berlin.

Bakken Reality Check -- 2015 -- March 18, 2018

Note: I'm not sure if this is ready for prime time. I will post it anyway. Don't quote me on any of this. I'm still working through it. The reason for doing this was the developing meme that North Dakota has to add 157 net new wells month-over-month to maintain production at 1.2 million bopd.  It was my impression that North Dakota has not come close to 157 wells/month (1,884 per year) and yet the state has increased production year-over-year in the past eight months.

Note: the spreadsheet below was created very, very quickly. There are likely to be typographical errors. The data was taken from the NDIC statistics site. I do not know why daily production data and number of producing wells at the NDIC statistics site varies slightly from the daily activity reports.

I was curious about comparing the change in the number of producing wells (third column), the annual change in the overall number of producing wells, and the change in production.

I was curious to see if comments/projections at "Bakken Reality Check" produced back in 2015 held true. Compare this table with the screenshot of Figure 5 from that linked "Bakken Reality Check" below the spreadsheet.

Month
# # of producing wells
Producing wells
Crude oil production (bopd)
Crude oil production (bopd)
Producing wells
Crude oil production (bopd)


Change From Previous Month
BOPD
Change From Previous Month
Change from one year ago
Change from one year earlier
Jan 18
14,002
-7
1,175,638
-5,681
1,014
141,470
Dec 17
14,009
-14
1,181,319
-15,657
990
238,997
Nov 17
14,023
52
1,196,976
13,166
815
162,492
Oct 17
13,971
78
1,183,810
76,465
817
140,117
Sept 17
13,893
130
1,107,345
18,027
834
135,600
Aug 17
13,763
102
1,089,318
41,219
783
106,873
Jul 17
13,661
53
1,048,099
15,226
702
18,255
Jun 17
13,608
47
1,032,873
-8,122
678
5,507
May 17
13,561
118
1,040,995
-9,481
705
-6,153
Apr 17
13,443
129
1,050,476
-154
703
8,438
Mar 17
13,314
115
1,050,630
16,382
566
-61,157
Feb 17
13,199
211
1,034,248
80
484
-85,389
Jan 17
12,988
-31
1,034,168
91,846
162
-87,460
Dec 16
13,019
-189
942,322
-92,162
269
-209,598
Nov 16
13,208
54
1,034,484
-9,209
436
-147,540
Oct 16
13,154
95
1,043,693
71,948
330
-129,327
Sep 16
13,059
79
971,745
-10,700
459
-189,998
Aug 16
12,980
21
982,445
-47,399
324
-205,437
Jul 16
12,959
29
1,029,844
2,478
371
-178,085
Jun 16
12,930
74
1,027,366
-19,782
454
-184,628
May 16
12,856
116
1,047,148
5,110
588
-157,166
Apr 16
12,740
-8
1,042,038
-69,749


Mar 16
12,748
33
1,111,787
-7,850


Feb 16
12,715
-111
1,119,637
-1,991


Jan 16
12,826
76
1,121,628
-30,292


Dec 15
12,750
-22
1,151,920
-30,104


Nov 15
12,772
-52
1,182,024
9,004


Oct 15
12,824
224
1,173,020
11,277


Sept 15
12,600
-56
1,161,743
-26,139


Aug 15
12,656
68
1,187,882
-20,047


Jul 15
12,588
112
1,207,929
-4,065


Jun 15
12,476
208
1,211,994
7,680


May 15
12,268
143
1,204,314
32,498


Apr 15
12,125

1,171,816




The screenshot from the "Bakken Reality Check" linked above:


"Bakken Reality Check" suggests that operators need to add 157 wells each month (1,884 per year) to maintain peak production at 1.2 million.

Between the autumn of 2015, when the Bakken Reality Check was published, and January, 2018, the most recent month for which data has been released:
  • due to the Saudi Surge (January 2015 - January 2017) and the severe decline in the price of WTI, North Dakota crude oil production dropped from 1,151,920 bopd (December, 2015) to a low of 942,322 bopd one year later (December, 2016)
  • however, after things "started to return to normal," North Dakota crude oil production actually rose to 1,196,976 bopd by November, 2017
  • from November, 2015, to November, 2016, there was an increase of 436 producing wells -- well below the 1,884 new wells / year that "Bakken Reality Check" suggested would be needed to "maintain" -- and one could argue, ND came close to "maintaining" production
  • from November, 2016, to November, 2017, there were only 815 additional producing wells, again, well below the 1,884 threshhold suggested by "Bakken Reality Check"
  • November, 2016 to November, 2017: production increased by 16% with number of additional producing wells well below the 1,884 threshhold
Again, I did this very quickly, and there are likely to be errors in my numbers, and my methodology, but I wanted to take a quick look at the "Bakken Reality Check" projections back in 2015 to what has happened since.

This is very much in line with an increasing number of analysts noting that there seems to be a "negative decline rate" developing in shale plays.

See the article by oilprice.com editor Nick Cunningham: "Can the oil industry continue to lower decline rates at mature fields?"

And this post from earlier this month:
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.