Friday, March 30, 2018

Hands Down, The Bakken Beats All Other Oily Plays -- Production / Rig -- But On BOE/Rig? The Eagle Ford


April 3, 2018: see this post for an update on this subject.  

Original Post 

From a May 17, 2014, post, production per rig:
It's been a long time since I've looked at this metric.

A huge thanks to a reader for a note that made me think of doing this.

So, in January, 2014, productivity per rig, based on the chart above:
  • the Bakken: around 500 bbls/rig
  • the Eagle Ford: about 475 bbls/rig
  • the Niobrara: about 350 bbls/rig
  • the Permian: not even 150 bbls/rig
So, how have things changed in four year? From the EIA (a dynamic link), the Bakken still leads all four major oily plays:
  • the Bakken: around 1,450 bbls/rig -- almost 3x greater than 4 years ago
  • the Eagle Ford: about 1,400 bbls/rig -- ditto, and very close to the Bakken (on a "boe" basis, the Eagle Ford would probably beat the Bakken -- but it would be close and might vary month-to-month)
  • the Niobrara: about 1,200 bbls/rig -- about 3.5x better than 4 years ago
  • the Permian: about 600 bbls/rig -- 4x better than 4 years ago -- but the Bakken is about 2.5x better than the Permian

Tesla Watch -- March 30, 2018 -- When It Rains, It Pours


March 31, 2018:

Later, 9:15 p.m. Central Time:

Later, 8:54 p.m. Central Time: it's being reported Friday night, just before a 3-day holiday weekend that:
Later, 8:27 p.m. Central Time: from ZeroHedge --

Original Post

Based on open sources from across the net, but mostly from "@TeslaCharts" over at twitter, this is my 30-second, elevator speech on Tesla's first quarter, 2018:
The "final" numbers are in because it's Easter Friday and no more deliveries for the month (March) will be made by Tesla.

Based on VIN registration numbers, Bloomberg and "Tesla Charts" (twitter) has the estimates for 1Q18.

It appears that Tesla "smashed" records for delivery in the last two weeks of the quarter, which will result in total numbers for first quarter 2018 being "respectable."  Those who love Tesla will say this proves Tesla is doing very, very well; those who hate Tesla will have the numbers to prove their point. The SEC filing only said they would "reach" 2,500/week by the end of the quarter, not "sustain 2,500" week after week after week. So, technically, it's possible Tesla will have reached 2,500/week by the end of the quarter because of the last two weeks of delivery but averaging over the entire 12 weeks, it will be far less.

This explains (at least for me) why Musk waited to announce a capital raise. If the numbers are as good as the estimates suggest, he will have more fire power going to the banks and the venture capitalists to get more cash or a better deal.

All eyes will be on deliveries to Norway.
From "@TeslaCharts," this chart is going to blow away Tesla bulls (and the rest of us). Nissan Leaf is clearly the global winner:
But there's an even bigger story here, actually two bigger stories here:
  • Tesla does not have a moat when it comes to EVs; lots and lots of competition
  • Nissan Leaf might not be seen as a Tesla competitor, but certainly VW and BMW are 
And see below, BMW has no plans to even ramp up until 2020 -- and they are still out-selling Tesla in Norway.  

BMW will not mass produce electric cars until 2020 because its current technology is not profitable enough to scale up for volume production, the chief executive said on Thursday.  
It's hard for me to believe that a car company like BMW feels their EVs won't be profitable until 2020 and the impression I get from Elon Musk is that he feels his cars already are profitable (I'm probably wrong on that).
With regard to Model 3, from twitter:
Wasn't Model 3 the Tesla for the rest of us?

US Crude Oil Production -- Hubbert Peak Oil Theory Revisited -- March 30, 2018

US crude oil production. 

Link here.

I find it incredible such "authoritative" sources as Wikipedia have not updated their "Hubbert Peak Theory" post. Hubbert Peak Theory describes a bell-shaped curve, not "twin peaks."

US Saudi Crude Oil Imports Hit 32-Year Low For Month Of January -- Have To Go All The Way Back To 1986 -- March 30, 2018

Link here. And the difference between January, 2017, and January, 2018, is not subtle. Ouch.

Meanwhile, US crude oil exports hit an all-time high for the month of January, going back to when records were first kept. Link here.

"Drill, baby, drill." Making American great again.

Spot price of WTI (at Cushing), rounded, link here:
  • end of March, 2018: a "solid" $65
  • end of March, 2017 (one year ago): a "less than solid" $50; closer to $47 - $49 
That's really quite remarkable. 15/50 = a 30% jump. And many operators have been able to cut costs over the past year. If oil companies were "evaluated" like analysts "evaluate" Tesla, we would all be gazillionaires.

Random Update Of An Old EOG Short Lateral In Parshall Oil Field -- March 30, 2018

For newbies: Some folks keep talking about newer wells in the Bakken affecting older wells in a negative manner. That's possible. I don't know. I just see a lot of these examples, where there is a jump in production in an older well when neighboring wells are fracked.

In the production profile below, between early 2015 and early 2013, just two years:
  • a jump in production from 2,000 bbls/month to 7,000 bbls/month, November, 2013
  • a jump in production from 5,000 bbls/month to 8,000 bbls/month in October, 2014
Not only is there a jump in production for a month or two, but the affect lasts several months, extending the period in which there is higher production, affecting a) the decline rate; and, b) the EUR.

Note: prior to neighboring wells being fracked, this well (#16543) was down to 2,000 bbls/month, arguably a very mediocre well. That was back in March, 2013. After neighboring wells were completed, not only was there a significant jump in production on two occasions, but the baseline production was up to 4,000 bbls/month.

A Bakken trope/meme (I don't know if it's a myth): new wells will result in less production from older wells. Example after example proves this is not the case.

The well, a single section EOG well in Parshall oil field:
  • 16543, 1,015, EOG, Florence 1-04H, Parshall, t7/07; cum 511K 1/18;
Earlier production:

The neighboring wells and the test dates of those wells:
  • 25254, EOG, t11/13;
  • 27042, EOG, t8/14
Remember, the index well is a short lateral. Had this been a long lateral, one can argue that total production would have been double what we see here.

A Graphic Worth 10,000 Words -- March 30, 2018

It would be interesting to have a similar graph with two natural gas exporters superimposed / compared: the US and Qater. Or the US and Russia. Or the US and anyone else.

Update On Another Whiting Tri-Lateral Horizontal -- Maynard Uran #16781 -- March 30, 2018

This post with another Whiting tri-lateral horizontal.

This well:
  • 16781, 1,923, Whiting, Maynard Uran Trust 11-24H, Sanish, t4/08; cum 624K 1/18;
Recent production:
PoolDateDaysBBLS OilRunsBBLS WaterMCF ProdMCF SoldVent/Flare

Note jump in production in June, 2015. Also note that during this time, this well was taken off-lien for about 40 days:

During that period, two neighboring wells were fracked near the tri-lateral (#16781).

The graphic:;

Whiting Gets The Peery State (#16463) Back Into Production -- March 30, 2018

The well:
  • 16463, 1,081, Whiting, Peery State 11-25H, Sanish, t5/0; 385K as of 9/15; now 397K 1/8; very little production after 2014; ... until mid-2017
I had not updated this well since September, 2015. That's about 2.5 years ago. I've gone through all the 16XXX wells, the 17XXX wells, the 18XXX wells, and am working through the 19XXX wells -- and there are thousands of Bakken wells drilled between 2007 and 2011 that are "lousy" wells.

So, going through all these thousands of wells, here's what can happen in the Bakken, something we don't see in conventional plays.

In October, 2013, for all practical purposes this well was taken off-line; occasionally there was some production.

Here's an example of the production in CY 2014:

Here's an example of the production from this well in CY 2016:

Maybe someone smarter than I can see the incredible difference in production between 2015 and 2016. I can't.

But prior to 2014, it was a pretty good well:

So, pretty much a dead well after 2015? Apparently not.

Look at the production starting in June, 2017:
PoolDateDaysBBLS OilRunsBBLS WaterMCF ProdMCF SoldVent/Flare

So, what happened?

FracFocus: no evidence that this well has been re-fracked. No evidence that this has anything to do with neighboring wells.

But, then there's a sundry formed received by the NDIC, June 2, 2017, for work completed May 23 2017: "Due to a tight spot found at ~8,180' in the HCL-80 casing, Whiting Petroleum set a 5.5" permanent packer at 8700' with 2500' of 5.5", 23 ppf scab liner above it with liner top packer."

An attached19-page diagram suggests work was begun April 11, 2017. The total AFE was $950,000. With the work-over, how is the well doing?

PoolDateDaysBBLS OilRunsBBLS WaterMCF ProdMCF SoldVent/Flare

This well, #16463, was a tri-lateral horizontal. See graphic below. None of the neighboring wells were taken off-line while this well was being re-worked.

Random Note About Enerplus Wells in Spotted Horn -- March 30, 2018

Some Enerplus wells in Spotted Horn are coming back on line and neighboring wells are now showing production runs, but still on confidential list. This post will not be updated. The wells in question are posted at this site. That site is not updated; I am still waiting to see the IP and production data of the wells on SI/NC status -- they should be reporting soon.

Showing Some Life? Slawson's Matilda Bay, #27635 -- March 30, 2018

September 12, 2014: a failed frack; will it be re-fracked?
  • 27635, IA/137, Slawson, Matilda Bay 1-15H, Stockyard Creek, 8 stages; planned for 24, mechanical problems; 600,000 pounds proppant; single section spacing, fracked May 22 -23, 2014, according to FracFocus; t6/14; cum 44K 11/16; went off-line middle of July, 2014; then began producing again 10/14; production up markedly, November, 2014 through January, 2015; as of 9/16, no new frack; API 33-105-03404; off-line as of 9/17; 
Update, March 30, 2018 -- nothing in the file report and nothing at FracFocus, but after being off-line for almost a year, this well was back on-line for 23 days in February, 2018:

PoolDateDaysBBLS OilRunsBBLS WaterMCF ProdMCF SoldVent/Flare

How The DAPL Impacts Guernsey -- RBN -- March 30, 2018

Canadian blues: Canada's GDP contracted 0.1% in January The WSJ
The Canadian economy contracted slightly in January, falling short of expectations as tougher mortgage-lending rules contributed to the biggest decline in real-estate agents and brokers’ output in more than nine years.
Lower output of nonconventional oil extraction also contributed to the overall decline in January.
Back to the Bakken

Natural gas pipeline update, from The Bismarck Tribune:
Alliance Pipeline is seeking commitments to expand a natural gas transmission pipeline that runs through North Dakota.
The company's announcement this week comes as North Dakota oil and gas regulators are encouraging new infrastructure investment to handle growing volumes of natural gas production.
The Alliance Pipeline enters North Dakota in Renville County and travels southeast through the state to Richland County.
If the expansion receives regulatory approval, it would require an additional three compressor stations in North Dakota located near Maxbass, Munster and Lisbon, said Alan Roth, a spokesman for Alliance. The expansion is proposed to be in service by the end of 2021.

Active rigs:

Active Rigs60493196194

RBN Energy: what happened to crude oil flows and prices at Guernsey Hub?
With crude prices in the $60s, oil-producing basins other than the Permian are finally seeing signs of life, and that includes the Rockies. But volumes flowing through the most important Rockies crude oil hub — at Guernsey, WY — are down.
Moreover, the price of oil at Guernsey is up, trading at least flat and sometimes at a premium to the downstream market at Cushing, OK, suggesting that committed shippers are having to bid up the price at Guernsey to secure barrels for their downstream pipeline commitments.
What about production from the nearby Powder River Basin? Well, Powder River oil production is up, and the rig count there is double what it was this time last year, so you might think there would be more than enough barrels at Guernsey. But not so. Who’s to blame?
We need to look no further than the Bakken and the Dakota Access Pipeline (DAPL) to discover our culprits. Today, we check in on the market at Guernsey and consider the impact of DAPL, the implications for Rockies crude oil outflows, and what it all means for Guernsey price differentials.