Friday, March 23, 2018

Rigs Continue To Rise In US; Plunging In Canada; WTI Moves Up Nicely -- March 23, 2018

FWIW, North American oil and gas rigs:
  • US: gained four to 804, which is 152 more than last year at this time
  • Canada: lost 58 (after losing 54 last week, losing 29 the week before that); now down to 161 rigs, or 84 fewer rigs than one year ago
  • did I hear someone say "ouch"?
Big North Dakota energy stories this past week, from, briefly:
  • DAPL adding $10 million / month to ND coffers; DAPL alone would have paid for schools in Williston in less than a year
  • Baby boom: Bakken communities are experiencing a baby boom
    • The number of children born in McKenzie County, located at the heart of the Bakken, has more than quadrupled, from just 60 births reported in 2007, to 245 babies born in 2016. Birth rates in other parts of western North Dakota have more than doubled since the oil boom began. There were 712 babies born in Williams County in 2016, compared to only 306 in 2007. Stark County saw 549 births in 2016, compared to 290 in 2007.
    • too bad we're not going to have the necessary school rooms
  • Natural gas processing expansion: Dunn County supports ONEOK plant expansion; Bear Creek Plant expansion would increase capacity from 80 million to 175 million cf/d
  • New refinery: Meridian's Belfield refinery, 45-day comment period
    • more than 11,000 comments
    • of those, 10,068 were form letters via e-mail; none with relevant comments
    • of all comments, 22% received from the west coast, specifically Oregon, Washington, and California
    • 1.8% of the comments were from North Dakota respondents
Back to the Bakken

Active rigs:

Active Rigs604932104198

Four new permits:
  • Operator: Kraken Operating 
  • Field: Squires (Williams )
  • Comments: Kraken has permits for a 4-well Anseth/Anseth-Sukut pad in NENE 29-155-103;
Another day with no producing wells (DUCs) reported as completed.

No permits canceled.

Three permits renewed:
  • Whiting: a Pronghorn State Federal permit (Billings County); a Niemitalo permit (Mountrail County); and a Crosby Creek permit (Dunn County)

Trouble In Paradise -- How's That Renewable Energy Working Out? -- March 23, 2018

Inquiring minds want to know:
  • why is the California PUC not directing solar energy companies to start storing solar energy to prepare for this summer's grid demands?
  • why is Governor Moonbeam not asking the sun to extend its summer hours?
  • why is the California PUC not directing wind turbines to start spinning faster in anticipation of grid demands this summer?
  • where is Elon Musk when you really need him?
  • where are those batteries?
The EIA graphic that leads to those questions:

From Forbes, 2016:
Besides having the most expensive electricity west of the Mississippi River in the continental U.S., California already has the least reliable electricity. California easily leads the nation with nearly 470 power outages a year, compared to 160 for second place Texas, which is really amazing because Texas produces 125% MORE electricity! California's reliability problems will be multiplied as more wind and solar enter the power mix, intermittent resources located in remote areas that cannot be so easily transported to cities via the grid.
It's crucial to remember that drought and less hydropower available in the Northwest was a determining factor in California's "2000-2001 Power Crisis" that cost the state $50 billion in added energy costs, illustrating the problems of California's over-reliance on outside energy (California also unsustainably imports over 90% of its natural gas, the nation's fastest growing major fuel, and the source that other states will increasingly lean upon most to meet the Clean Power Plan).
For the archives. It's March. Three months to June. 

Random Look At Two Slawson Wells -- Part III -- March 23, 2018

Disclaimer: in a long note like this one, as well as the long notes in Part I and Part II, 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.

Part I here.

Part II here.

The wells under discussion:
  • 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;
The graphics:

  • the two wells under discussion would be very inexpensive to drill / complete today (using same amount of sand)
    • they were short laterals
    • they used small amounts of sand
  • the two wells were mediocre at best when originally drilled
  • neighboring wells drilled / completed -- these wells went from mediocre to pretty good wells
  • data suggests these wells are great candidates for mini-re-fracks and full re-fracks at a later date
  • it's impossible to say whether new wells are "compromising" production from older wells, but in this case, it certainly appears the newer wells had a positive effect on the older, shorter laterals; whether or not new wells are "compromising" older wells across the Bakken is hard to tell; analysts much smarter than I suggest that this is happening
  • there are 7 horizontal wells in this 1280-acre unit (technically 7.5) and only the middle Bakken and the upper bench of the Three Forks have been targeted
  • it's not a stretch to suggest:
    • six middle Bakken horizontals
    • six TF 1 horizontals
    • four TF 2 horizontals
    • four TF 3 horizontals
    • two TF 4 horizontals
  • some suggest we could see eight middle Bakken and eight TF 1 and eight TF 3 horizontals in the same spacing, or 24 wells, which does not include TF 2 or TF 4 horizontals
  • new wells in spacing units (held by production) require no new leasing; most infrastructure is already in place; geologists can practically forecast likely production for new wells
Bottom line:
  • two Bakken wells
  • 58,998 more Bakken wells before it's all over
Disclaimer: I am inappropriately exuberant about the Bakken. Some analysts suggest the Bakken is pretty much "done."

Random Look At Two Slawson Wells -- Part II -- March 23, 2018

Part I is here.

This is Part II.

Part III is here.

Disclaimer: in a long note like this and the one in Part I, 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.

The wells under discussion:
  • 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;
In Part I, we discussed these wells "in a vacuum" -- not a Dyson vacuum but in a vacuum in the sense that we did not discuss what occurred when Slawson drilled and fracked six long horizontals that ran alongside these two short laterals.

Here are the graphics:

Three of the long laterals (#23769, #21453, and #23768) are farther to the west of the short laterals under discussion I will ignore them in this post.

Test dates for the other three long laterals (#27240, #27238, and #27237) were in November, 2014 (11/14) which means they were fracked shortly before then.

Let's look at production profiles for the short laterals during this period:


#19208 (stacked lateral -- TF/MB):

Finally, production profile most recently:

PoolDateDaysBBLS OilRunsBBLS WaterMCF ProdMCF SoldVent/Flare

#19208 (stacked lateral -- TF/MB):
PoolDateDaysBBLS OilRunsBBLS WaterMCF ProdMCF SoldVent/Flare

Side-by-side, total production over last seven months -- almost identical, although varies significantly some months:
19207: MB
19208: TF/MB
Total (bbls)

The Political Page, T+23 -- March 23, 2018

Disclaimer: this is not an investment site. Do not make any investment, financial, job, travel, or relationship decisions based on what you read here or think you may have read here.

TSLA: the floor was $310. Apparently there was some law written in stone that Tesla share price would not drop below $310. Well, we have a buying opportunity. TSLA is currently down another $5 and is trading for about $304. [Later: could TSLA drop below $300/share today? It's very possible; the market has again turned lower.]

Short-changed: $1.3 trillion spending bill and the president gets funding for all of 33 miles of his wall. There are reports that Trump might veto the spending bill (he won't) -- the fact that Senator Schumer likes the bill and says the "era of austerity is over" is all I need to know. [Later: I was correct: Trump did not veto the spending bill. This pretty much seals Trump's fate: one and done. Assuming he's not out of office before 2020.]

Varying Amounts Of Proppant Being Used Across The Bakken; Some Spectacular Wells Being Reported -- March 23, 2018

If there was not a typo (and I'm sure there was not) on the sundry from, note how little proppant Oasis used on this 50-stage well:
  • 32617, 1,157, Oasis, Oyloe 5199 14-26 12TX, North Tobacco Garden, 4 sections, 50 stages; 4 million lbs, mesh/large/medium, t10/17; cum 125K 1/18; a huge well; 100K+ in first four full months;
A reader noted the same thing in a comment earlier this week regarding the Johnsrud Federal wells and the Oyloe wells:
The Johnsrud has made 377,000 bbls after 20 months of production. It appears the Rolfson 11BX (#31486) in the next unit east is doing even better with 364,000 after 17 months; it should be well over 400k in it's 20th month. 
It is interesting to note, the Rolfsons had only a 4 million lbs of frack sand vs 20 million on the Johnsrud. Both wells had 50 stage fracs. Apparently natural fracking in the reservoir is playing an important factor in this part of the basin along with much improved fracking techniques.
For newbies: when we first started blogging about the Bakken, estimated ultimate returns (EURs) were often in the 350,000-bbl range. Operators are now routinely showing EUR type curves with 1.5 million bbls, and hitting the 350,000-bbl mark in two to three years. See a summary of a recent Oasis presentation at this post.

More Global Warming Hits The Bakken -- Just In From The Williston Herald -- Things Shutting Down Due To Deteriorating Weather -- March 23, 2018

From The Williston Herald via twitter:
Due to deteriorating weather and road conditions, Williston State College will close today at 10 a.m. The Teton Grill will remain open for breakfast until 10 a.m. and reopen for dinner at 4 p.m. TrainND will continue regular operations.

Exxon's Gulf Coast Refinery Investments Underpin US Expansion -- RBN Energy -- March 23, 108

Hope springs eternal: Shell "closing in" on final investment decision for a $31 billion-west-Canadian coast (Kitimat, BC) LNG export terminal. Link at Bloomberg. Partnership: China, South Korea, Mitsubishi, and Shell. Potential to ship 25% of what western Canada produces. Trump's tariffs will increase the cost of export terminals along US gulf coast, giving pricing "advantage" to western Canadian projects. Now, if Trudeau can just get the environmentalists to step back a bit.

FWIW: it's being reported that global CO2 emissions rise for the first time in three years. No link. The story is probably everywhere. We'll see the "official" monthly data in a couple of weeks. Whatever. The higher CO2 emissions, apparently, have been associated with some of the coldest winters in modern time. And the world has not come to an end. And the Kennedy clan has seen a lot of snow this winter.

Back To The Bakken

Active rigs:

Active Rigs604932104198

RBN Energy: Exxon's Gulf Cost refinery investments underpin US expansion.