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 ndenergy.org, 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

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Back to the Bakken

Active rigs:

$65.90↑↑	3/23/2018	03/23/2017	03/23/2016	03/23/2015	03/23/2014
Active Rigs	60	49	32	104	198

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:

Comments:

• 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
• total: 22 horizontals
• 32-well arrays have been discussed before (see tag at bottom of blog)
• 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:

#19207:

BAKKEN	3-2015	31	9644	9314	7059	5883	5254	474
BAKKEN	2-2015	28	9381	9762	8155	6295	5451	704
BAKKEN	1-2015	19	8758	7868	4968	5836	4026	1715
BAKKEN	12-2014	3	1339	2014	921	986	565	406
BAKKEN	11-2014	30	17335	17369	12822	11662	9789	1723
BAKKEN	10-2014	31	18232	18017	15075	12391	9245	2991
BAKKEN	9-2014	13	6327	5886	4603	2744	1598	1081
BAKKEN	8-2014	17	939	1287	289	619	534	0
BAKKEN	7-2014	31	1849	1592	707	982	827	0

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

BAKKEN	3-2015	19	7576	6951	3350	4186	3249	842
BAKKEN	2-2015	8	3295	4212	2196	1836	1416	380
BAKKEN	1-2015	19	9877	8965	4968	5371	4384	892
BAKKEN	12-2014	3	1167	1751	921	700	441	244
BAKKEN	11-2014	30	15352	15323	12822	8435	6677	1608
BAKKEN	10-2014	31	14497	14448	15075	7051	5019	1877
BAKKEN	9-2014	14	6879	6397	5826	3518	2742	706
BAKKEN	8-2014	21	8423	9491	2951	5004	4899	0
BAKKEN	7-2014	31	13241	12513	8830	4439	4284	0
BAKKEN	6-2014	3	699	307	1120	211	196	0
BAKKEN	5-2014	6	312	463	126	230	200	0
BAKKEN	4-2014	30	2135	2502	916	1367	1217	0

Finally, production profile most recently:

#19207:

Pool	Date	Days	BBLS Oil	Runs	BBLS Water	MCF Prod	MCF Sold	Vent/Flare
BAKKEN	1-2018	31	2988	2138	1446	3193	2723	0
BAKKEN	12-2017	30	3467	3776	1558	3990	3473	0
BAKKEN	11-2017	30	3672	3479	2033	4039	3448	47
BAKKEN	10-2017	26	3085	2976	1519	2882	2228	197
BAKKEN	9-2017	30	3170	3780	1658	2661	1662	503
BAKKEN	8-2017	31	3973	3914	1719	3498	2819	96
BAKKEN	7-2017	31	4232	3780	1616	3204	2507	85

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

Pool	Date	Days	BBLS Oil	Runs	BBLS Water	MCF Prod	MCF Sold	Vent/Flare
BAKKEN	1-2018	31	2920	2221	1446	2348	1877	8
BAKKEN	12-2017	23	2159	2477	1288	1621	1274	5
BAKKEN	11-2017	30	3836	3564	2033	2999	2383	54
BAKKEN	10-2017	31	3970	4039	2192	2676	1489	609
BAKKEN	9-2017	30	3969	4556	1921	2594	1186	826
BAKKEN	8-2017	31	3241	3426	1719	2505	2001	0
BAKKEN	7-2017	27	2704	1934	1569	1976	1485	67

Side-by-side, total production over last seven months -- almost identical, although varies significantly some months:

Month	19207: MB	19208: TF/MB
1/18	2988	2920
12/17	3467	2159
11/17	3672	3836
10/17	3085	3970
9/17	3170	3969
8/17	3973	3241
7/17	4232	2704
Total (bbls)	24587	22799

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:

$64.63↓	3/23/2018	03/23/2017	03/23/2016	03/23/2015	03/23/2014
Active Rigs	60	49	32	104	198

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