Thursday, March 22, 2018

Oasis With Permits For Yet Another Multi-Well Nordeng / Mildred Nelson Pad In Banks Oil Field, NENW 25-152-98 -- March 22, 2018


March 23, 2018: note the halo effect of a McCoy well in this general area where Oasis has permits for two Nordeng / Mildrend Nelson multi-well pads.

Original Post

Active rigs:

Active Rigs604832107198

Five new permits:
  • Operator: Oasis
  • Fields: Banks (McKenzie); Elidah (McKenzie)
  • Comments: Oasis has permits for a 5-well Nordeng/Mildred Nelson pad in NENW 25-152-98; Oasis had permits for a 6-well Nordeng/Mildren Nelson pad in NENW 25-152-98 yesterday also; see graphic below
Eight permits renewed:
  • EOG (3): three Liberty LR permits in Mountrail County
  • Rimrock (3): three MC MHA permits in Dunn County
  • Enerplus (2): an Acadia permit and a Glacier permit, both in Dunn County
Proposed Oasis Multi-Well Pads in Elidah Oil Field

Unexplained Jump In Production For An Old Slawson Vagabond Well in Van Hook Oil Field -- March 22, 2018

The well:
  • 19207, 613, Slawson, Vagabond 1-27H, Van Hook, t4/11; cum 358K 1/18; 
Neither FracFocus nor the sundry forms suggest this well was re-fracked in 2014, but the data certainly suggests it was:

PoolDateDaysBBLS OilRunsBBLS WaterMCF ProdMCF SoldVent/Flare

The Political Page, T+22 -- March 22, 2018

From a site that is blocked by the "":
Vermont is famously liberal, home to fiery politicians like Howard Dean and Democratic socialists like Bernie Sanders.
But it now has another distinction that’s making liberals in the Green Mountain State cringe: it is now the only state in the country that never has sent a woman to Congress.
This became official Wednesday, when Governor Phil Bryant of Mississippi appointed Republican Cindy Hyde-Smith to the seat left vacant by retiring GOP member Thad Cochran. Hyde-Smith is the first woman sent by Mississippi to Congress.
Up in Vermont, the state’s first female governor, Madeleine Kunin, called it “a little embarrassing to be beaten out by Mississippi.”
Making America Great Again

Gartman: The Biggest Threat To Big Oil Is Uber? Nope. The BIggest Threat To "Transit" Is Uber -- March 22, 2018

This is too good not to re-post, from this post just a couple of days ago:


March 22, 2018: also this -- a reader reminded me of this -- airport parking structures are losing money due to Uber. In The WSJ. DFW just spent a gazillion dollars on expanding / upgrading parking structures; local news articles already talking about DFW losing money due to Uber:
For many air travelers, getting to and from the airport has long been part of the whole miserable experience. Do they drive and park in some distant lot? Take mass transit or a taxi? Deal with a rental car?
Ride-hailing services like Uber and Lyft are quickly changing those calculations. That has meant a bit less angst for travelers.
But that’s not the case for airports. Travelers’ changing habits, in fact, have begun to shake the airports’ financial underpinnings.
Fewer people are parking cars at airports, using taxis or renting cars, according to a recent report from the National Academies Press.
Those trend lines are hurting airports, which depend on fees from parking lots, rental car companies and taxis as their biggest source of revenue other than the fees paid by the airlines. The money they currently collect from ride-hailing services do not compensate for the lower revenues from the other sources.
March 22, 2018: they must be reading Carpe Diem or the blog over at The Washington Post --
Falling transit ridership poses an ‘emergency’ for cities, experts fear.
Transit ridership fell in 31 of 35 major metropolitan areas in the U.S. last year, including each of the seven cities that serve the majority of riders, with losses largely stemming from buses, but punctuated by reliability issues on systems like Metro, according to an annual overview of public transit usage.
The analysis by the New York-based TransitCenter advocacy group, using data from the U.S. Department of Transportation’s National Transit Database, raises alarm about the state of “legacy” public transit systems in the Northeast and Midwest and rising vehicle ownership and car-based commuting in cities nationwide.
Researchers concluded that factors such as lower fuel costs, increased teleworking, higher car ownership and the rise of alternatives such as Uber and Lyft are pulling people off trains and buses at record levels.
Original Post

 This still remains one of my favorite posts. From March 29, 2016, with updates -- "Uber is top threat to oil  -- Dennis Gartman. "

Hold that thought.

Mark Perry doesn't miss much when it comes to statistics and charts, but it looks like a reader spotted something he missed.

Go to the link at the top of the page for the rest of the post.

How Two Wells in Wyoming Explain the Natural-Gas Glut -- WSJ -- March 22, 2018

From The Wall Street Journal today: How Two Wells in Wyoming Explain the Natural-Gas Glut. Demand is growing, but so are the troves of gas being unearthed by prospectors. With 154 comments.

I don't think this article adds much to the discussion but it's interesting nonetheless.

From the lede:
Fuel prices are depressed. A pair of wells in southwest Wyoming helps explain why.
This winter, Ultra Petroleum Corp., just months after emerging from bankruptcy, completed two huge wells in the state, drilling down more than two miles and then sideways for another two. Each have produced enough gas to fuel every household in Wyoming.
Ultra’s wells—whose initial flows have been among the largest ever in the U.S.—show how prospectors continue to unearth huge troves of gas.
That output is offsetting increases in the fuel’s use and keeping a lid on prices.
Repeat: each well has already produced enough gas to fuel every household in Wyoming.

The other nice thing about the article -- because of the blog I was able to a) understand it; and, b) put it in perspective.

"Two miles down and then sideways for another two miles": identical to what's going on in the Bakken.

From the article:
In April 2016, Ultra filed for bankruptcy protection after low gas prices pushed its earnings relative to debt below thresholds spelled out in agreements with creditors. When the Houston company emerged from bankruptcy protection a year later, it embarked on a plan to drill horizontal wells.
A horizontal well in 2016 was a flop. But this time, Ultra drilled a gusher, which maxed out at the equivalent of 51 million cubic feet a day. A third well was far less prolific.
For the fourth well, begun in January, the company went back to the more successful well design, which involved pumping 281,000 barrels of water and 12.4 million pounds of sand beneath the surface. This attempt was even better than the preceding one, producing as much as the equivalent of 54.5 million cubic feet a day. It cost about $9 million.
 281,000 bbls of water? What's that? Converts to 11 million gallons of water.

Sand: about 11%.

Water, sand, percentage: about the same we are seeing in the big fracks in the Bakken. Ultra may have gotten the "ink" today, but operators in the Bakken have been doing this for the past ten (10) years. And for less money in many cases.

Wow, What A Treat -- The Myths Of Shale -- Richard Zeits -- March 22, 2018

One of the reasons I went into such depth on two Slawson wells was to eventually get to Part III: observations and comments regarding the myths of shale. So, what a treat to see Richard Zeits continue his series on the myths of shale oil.

Today, over at SeekingAlpha, the shale oil myth, "it is too light and no good." [The blog has talked about his often.]

Summary by Zeits:
  • shale oil skeptics claim that the global crude supply is turning alarmingly light due to the growth of shale production
  • the world is facing acute shortages of heavy and medium grades, the argument goes, and shale oil is of little help in meeting that demand
  • market data indicate that the claim is without merit
  • shale growth has been perfectly well accommodated by the global refining system
  • shale oil is fully "sold out" and trades at premiums to heavy grades
Hubbert and Peak Oil folks never saw this graphic coming:

Observations from Richard Zeits:
Is the shortage of heavier crude grades acute? We would argue, not more so than the shortage of all other grades. While global demand for distillates has been on the rise, demand growth for lighter products - gasoline and naphtha - has also been quite strong. Light crudes have been sold out just as much as heavier crudes.
The global refining industry has proven very capable of using all available crude grades to meet demand for products and we do not see this changing anytime soon.
Amazingly, and coincidentally, Zeits has a great graph on the very day that John Kemp noted over on twitter that the delta between WTI and Brent was narrowing, almost nil.

I'll post that graph elsewhere.

More from Zeits:
On a per degree of gravity basis, the narrowing is ~$1/barrel per 10 degrees API for the Middle East and West Africa baskets. For the Gulf of Mexico example, the narrowing was more pronounced, roughly twice as great.
In percentage terms, the differentials narrowed by ~20% for the Middle East basket and ~30% for the Gulf of Mexico basket.
This is the measure of Mr. Market's reaction to what one might think of as a "perfect storm" for the global light/heavy supply mix. In other words, the impact of the lighter global supply slate on prices has been minimal.
In our interpretation, this market data disprove the claim that the global supply mix is significantly out of balance and the world is facing acute shortages of heavier crudes.
Much, much more at the link.

If there is a shortcoming in his essay today (and far be it for me to come up with anything negative with regard to Zeits, a "shale demi-god") it would have to be that he did not mention the reason behind and the importance of the Keystone XL. Although not treasonous to have stopped it, but ... I consider "killing" the Keystone XL right up there with the Continental Congress refusing to fund George Washington's troops so they afford parkas and water-proof boots.

Memo To The Kennedy Clan: Head To NYC Central Park; Take The Grandchildren And Their Sleds; It's Spring; We Haven't Seen This In 130 Years -- March 22, 2018

This was never forecast two months ago, nor was it forecast 20 years ago, but we know to the hundredth decimal point the global temperature in 2118 (57.82 degrees Fahrenheit).

The Market

On another note, TSLA crashes through the $310 floor. Late last week the CNBC "Fast Money" folks heartily recommended TSLA. Whatever.

Notes to the Granddaughters

From Convergence: The Idea At The Heart of Science, Peter Watson, c. 2016

I think this is my third entry regarding this book. One can do a search for the other entries. 

This note will be from Chapter 3: Beneath the Pattern of the Elements

Arianna (the oldest granddaughter) and I have spent a lot of time together on the periodic table. She knows it as well as anyone her age.

"Atomic weight" is now a historical term. Relative atomic mass is preferred these days.

A raft of priority disputes: who first noticed the periodicity of the natural elements; the intervals appeared to recur at multiples of eight of hydrogen.

  • Mendeleyev: born in Siberia Russia; mother and son moved to Moscow, then to St Petersburg
    • 1855: qualified as a teacher; took gold medal for the best student of his year
    • government grant to Paris, to study under Henri Regnault, the man who first established that absolute zero was -273 degrees Celsius
    • then to Heidelberg, where he worked with Robert Bunsen (of Bunsen burner fame) and Gustav Kirchhoff (who between them [Kirchhoff and Bunsen] developed spectroscopy, using a prism to refract light) -- when an element is heated, the light it emitted produced its own characteristic spectrum of colors
    • returned to St Petersburg in 1861 (about the time of the US civil war); realized he was virtually alone in Russia in being up to data on discoveries in chemistry
    • while writing his textbook, noted the periodicity while putting some notes on the back of an envelope (true, no apocryphal)
    • worked three days, three nights without sleeping; fell asleep; dream led to the Periodic Table of Elements
    • two bold claims
      • where atomic weight of elements did not place them where their properties indicated they should go, he said the atomic weights had been predicted wrongly
      • he left gaps where no atomic weights were know, predicting that the gaps would be filled in later
    • he also noted that elements in the same group all had the same valency, the same affinity for other elements (measured by the number of hydrogen atoms they typically combined with); this tended to confirm that valency was related to chemical properties
      • [valency/electrons: chemical properties; nuclear: physical properties of the element]
    • Mendeleyev was the man who really first understood the layout of the periodic table and its significance
    • chemistry came of age: alongside Newton's in physics and Darwin's in biology
    • 1955: element 101 was named mendelevium
  • now, on to physics
    • Heinrich Hertz, b. 1857
      • Hertzian waves = radio waves
      • Guglielmo Marconi read the paper; rushed home to see whether Hertz's spark oscillator might be used for signaling
      • Hertz left experimental physics for theoretical physics; died of bone disease at age 37
      • quickly the rest of the chapter:
    • a new form of energy: cathode rays; Rontgen; accidentally put his hand in between the cathode-ray tube and a screen (the rest is history); Becquerel (another accident) discovered "fluorescing" (naturally occurring radioactivity
    • the discovery of radioactivity: Marie Curie; thorium, 150x more active than uranium; an "element" 330x more active than uranium (turned out to be two elements: polonium and radium)
    • the discovery of the electron: Cavendish Laboratory; James Clerk Maxwell, d. 1879; laboratory only five years old; then Lord Rayleigh, short director-ship; then 28-y/o Joseph John (J. J.) Thomson -- like Mary Somerville before him, could use mathematics to bring order to physics; Thomson called them "corpuscles"; others called them "protyles"); today they are called electrons, a name first proposed by the Anglo-Irish physicist and astronomer George Johnstone Stoney; discovery quickly dwarfed by that of the quantum
    • the discovery of the quantum: Max Planck, 1900, 42 years old, two years younger than JJ Thomson; University of Berlin; 1897: the year Thomson discovered electrons; Plank began work on the project that was to take his name; sketched an equation to explain the behavior of radiation in a black body -- electromagnetic radiation was not continuous, as classical physics had claimed, but could only be emitted in packets of a definite size
    • the organization of the atom: Ernest Rutherford, March 7, 1911; notes taken by James Chadwick, a student at the time, in Manchester; alpha radiation; alpha particles (helium atoms); beta radiation; electrons with a negative charge [a third type of radiation, similar to X-rays, was discovered in 1900 by French physicist Paul Ulrich Villard; the most penetrating radiation of all, being stopped only by lead, called gamma radiation -- so, we had alpha, beta, gamma]
    • the unification of JJ, Planck, and Rutherford: Niels Bohr -- "On the Constitution of Atoms and Molecules," the collective title of Bohr's three papers on the subject ("The Trilogy," became a classic, and after three years in Manchester, offered a professorship in his home city of Copenhagen)
Then on to Chapter 4: the unification of space and time, and of mass and energy.

But the chapter that will probably interest me the most, Chapter 12: "A Biography of Earth: The Unified Chronology of Geology, Botany, Linguistics, and Archaeology."

Random Look At Two Slawson Wells -- Part I -- March 22, 2018

This is Part I.

Part 11 is here.

Part III is here.

Disclaimer: in a long note like this, there will be typographical and factual errors. Facts, comments, and opinions are interspersed and hard to separate or discern. There are a lot of digressions. There is no hidden agenda and no "fake news" -- at least no attempt to post "fake news." I appreciate any fact checking. If this is important to you, go to the source.

For newbies: This is an interesting area to walk through -- sections 27/34-151-92, Van Hook / Big Bend (the NDIC map clearly shows this section in Big Bend oil field, but the scout tickets identify this drilling unit in Van Hook oil field).

This is a Slawson drilling unit; these are Slawson wells. Slawson always seems to have something a little bit different than the other operators.

Let's digress for a second. I talked about this a long, long time ago.
  • CLR; the "face" of the Bakken; most acres; most drilling; "damn the torpedoes, full speed ahead" -- or in this case, "forget hedging, let's just drill"
  • Whiting: years ago, wanted to exit the Bakken, or change its focus, and now appears to be the most active operator in the Bakken -- although the CLR folks might disagree with me (and I might be wrong)
  • Slawson: always a surprise; liked stacked laterals; like re-entries; of the operators in this short list, Slawson is the only one not "publicly traded"
  • MRO: most aggressive re-frack program, especially in fields like the Bailey oil field
  • WPX: 7% of the Fort Berthold Indian Reservation
  • XTO: prominent player but not much to say about them
  • Oasis: one of the most interesting to watch over the years; got "their break" through MDU
  • QEP: simply methodically drilling out the Helis Grail
Okay, now back to the Slawson wells in section 27/34-151-92.

The first two wells in this drilling unit were #19207 and #19208. They were both short laterals, one running north, one running south.
  • 19207, 613, Slawson, Vagabond 1-27H, Van Hook, t4/11; cum 358K 1/18;
  • 19208, 800, Slawson, Water Moccasin 4-34-TFH, Van Hook, t4/11; cum 324K 1/18;
They were both drilled at the same time, back in 2011. This would be in the late days of the boom, about the middle of Bakken 1.0. (Bakken 1.5 was during the Saudi Surge, 2014 - 2016; Bakken 2.0 began in 2016).

The well that ran north (#19207) was a middle Bakken well; the well that ran south (#19208) was a Three Forks, upper bench, well; Slawson specifically said that this well, #19208, was a "continuation" of their program to develop the Three Forks.

On the graphic, you will notice two laterals for #19208. Generally, when one sees that in the Bakken, it is because there was a problem with the first lateral, and the operator went back in and drilled a parallel lateral to get "around" the problem. Initially I thought this was the case for #19208.

But it turns out that Slawson went back in, in 2014, re-entered the vertical, and launched another horizontal, this time in the middle Bakken.  (Interestingly, they re-entered, re-fracked #19208 just two months before they drilled / fracked three new long laterals running from the north to the south alongside these two older short laterals.)

Before we go too far in this story, let's look at the frack reports.
  • First, #19207, API - 33-061-01410: FracFocus has no frack data for this well which means that the original fracks occurred in 2012 or before. And no reports of any re-frack.
  • Second, #19208, API - 33-061-01411: FracFocus has two pdf fracking reports, they have different URL numbers suggesting one was the TF frack and the other was the MB frack. Again, the original frack does not show up on FracFocus; the frack report for 6/18/2014 - 6/21/2014 is for the completion of the middle Bakken horizontal, the re-entry / second lateral, and the re-frack (?) for the TF horizontal.
So, we will stop there, catch our breath. Give folks a chance to look at the graphic and imagine the drilling unit as of 2014: two wells, one going north with one lateral (middle Bakken); one going south with two laterals (a Three Forks, and then a middle Bakken); both short laterals. (Not mentioned yet, in fact, by the end of 2014, there were six more wells in this drilling unit -- but we will get to them later.)

Both were typical Bakken wells at the time; nothing great but they were what they were. 

Another digression, regarding fracking/completion:
Completion (frack) strategies vary significantly from well to well, or should we say, "can vary significantly from well to well."
  • But as a starting point, let's consider this pretty much a standard frack, for a long lateral
  • 10 million gallons of water = 83 million lbs of liquid
  • 8% proppant (sand/ceramic) by weight of the total frack mixture = 8 million lbs of solids
A note about fracking over the years:
[Going forward, 
  • before 2014: typical fracks with 4 million lbs of sand or less; BEXP/Statoil was the first to start using huge amounts of sand
  • after 2014: small initial fracks (4 million lbs of sand); typical initial fracks (10 million lbs of sand); humongous fracks (20 million lbs of sand)
  • after 2017: we started seeing re-fracks -- typical (4 - 8 million lbs of sand); mini-re-fracks of 2 million lbs of sand or less (and sometimes a lot less); work-overs don't include fracking or re-fracking]
Wow, lots of digressions. 

So, we are still looking at the two early wells, #19207 and #19208.

Frack data for the initial frack for these two wells:
  • 19207 MB: tested April 5, 2011; 19 stages; 1.85 million lbs sand (mesh/small) -- an incredibly small amount of sand, but about the "norm" back in 2011;
  • 19208, first lateral, TF: tested April 8, 2011; if it was fracked after it was first drilled, I don't see the frack data at the file report (I may have missed it; I assume it was fracked; I assume it was fracked similarly to what was used for #19207 at the same time)
  • 19208, second lateral, MB: there file report shows the schematic for the re-entry but does not provide a frack / completion report. Fortunately we have the FracFocus report: fracked (as noted above) -- 6/18/2014 - 6/21/2014:
    • 33-061-01411-00-00-6272014:
      • water: 1,646,501 gallons
      • sand: 19% by mass (assuming I'm reading the report correctly)
    • 33-061-01411-00-00-7112014:
      • water: 1,646,501 gallons
      • sand: 19% by mass (again, same assumption)
Note: these two reports -- except for the URL numbers appear to be identical, suggesting that the reports were accidentally duplicated (my original thought) but now it appears they used the very same "mix" to frack the MB and re-frack the TF. I could be very wrong on this. 

Production profiles at time of original completion, 2011, are very similar for both wells:



 Production profiles at time of the re-entry (19208); frack of the TF and re-frack of the MB; 2014:



This is where we stand at the end of 2014 in this drilling unit: history of two short laterals drilled in 2011.

Part 2 will look at what happened to these wells when newer long laterals were drilled and completed: three wells were completed in mid-2013 but were well west of these two short laterals; and three wells that were much closer to these two short laterals and completed just two months later, August, 2014. 

The graphics:

Thursday -- March 22, 2018

Jobs: first time unemployment claims --  
  • forecast: 226,000
  • actual: 229,000
Back to the Bakken

Active rigs:

Active Rigs594832107198

RBN Energy: as Mexico pipeline buildout inches forward, Santa Fe Gas sees opportunity.