Monday, June 25, 2018

The Market, Energy, And Political Page, T+25 -- June 25, 2018

We need some music, I think.

We talked about this years ago, it seems. When you take into consideration all the factors, EVs are not "greener' than ICE.

Now, again, the issue is raised. Reporting in the [London] Daily Mail: Teslas may be no greener than petrol and diesel cars despite being marketed as the world's most environmentally friendly vehicles.
  • energy used to build Teslas and generate electricity for them is equal to petrol 
  • battery-powered cars such as Teslas are charged with power station energy 
  • luxury Tesla Model S battery powered cars cost £66,730 each 
Analysts found the amount of greenhouse gas used in building a Tesla and generating the electricity to charge it was no different to petrol cars.

Wow, we talked about this years ago. Comes up again. Glad the Brits are on top of things even if Americans are not.

Saving The World

Green graph of the day, from JoanneNova:

Kennedy-Miles Wells Recently Fracked: New Data Should Be Reported Soon -- June 25, 2018

This page will not be updates. The wells are tracked at the link given below.

A reader writes me:
[The Kenney-Miles wells] are located on 150-96-6 and are spaced on a 2560 acre-section.  
I'm interested in the new wells. They are the Kennedy 5, 6, 7, 8 and the Miles 5, 6, 7, 8.  
The Kennedy 1, 2, 3, 4 and the Miles 1, 2, 3, 4 were all taken off line in the spring and were off for about 3 months.  
[There was] minimal production for a few of the older wells (Kennedy 1, 2 and Miles 1, 2) and they had one day of production in April.  
It will be interesting to see if the completion of the newer wells had any impact on the flow for the older ones.  I also know that Continental was waiting for an order to commingle the oil produced from the newer ones with some of the older ones.  That order was approved a month or so ago.  
Finally, the well files for the newer wells do show first record of sales, but they do not have any frac information or 24 hour IP information.
Since they are all still SI/NC, there would be no frack data in the file report. FracFocus might have that data and it does.
This gives me an opportunity to update the Kennedy-Miles wells which are tracked here. The Kennedy 5, 6, 7, and 8; and, the Miles 5, 6, 7, and 8:
  • 33220, SI/NC, Miles 8-6H1, Dimmick Lake, last checked 11/16; API: 33-053-07873;
  • 33221, SI/NC, Miles 7-6H, Dimmick Lake, last checked 11/16; API: 33-053-07874;
  • 33222, SI/NC, Miles 6-6H2, Dimmick Lake, last checked 11/16; API: 33-053-07875;
  • 33223, SI/NC, Miles 5-6H, Dimmick Lake, last checked 11/16; API: 33-053-07876;
  • 33224, SI/NC, Kennedy 8-31H1, Dimmick Lake, last checked 11/16; API: 33-053-07877;
  • 33225, SI/NC, Kennedy 7-31H, Dimmick Lake, last checked 11/16; API: 33-053-07878;
  • 33226, SI/NC, Kennedy 6-31H2, Dimmick Lake, last checked 11/16; API: 33-053-07879;
  • 33227, SI/NC, Kennedy 5-31H, Dimmick Lake, last checked 11/16; 33-053-0780;
Frac data from FracFocus:
  • 33220: fracked 3/26/2018 - 4/15/2018: 12.1 million gallons of water; 86% water;
  • 33221: fracked 3/26/2018 - 4/15/2018: 10.85 million gallons of water; 86.8% water;
  • 33222: didn't check
  • 33223: didn't check
  • 33224: fracked 2/14/2018 - 3/8/2018: 12.73 million gallons of water; 86.85% water;
  • 33225: fracked 2/14/2018 - 3/8/2018: 12.245 million gallons of water; 87.1% water;
  • 33226: fracked 1/21/2018 - 2/11/18: 8.92 million gallons of water; 87.8% water;
  • 33227: didn't check
Neighboring wells:
  • 29124, runs north, farthest to the west; off-line 1/18- 4/18; still off-line;
  • 29123, runs north; off-line 1/18- 4/18; still off-line;
  • 29122, runs south; off-line 1/18- 4/18; still off-line;
  • 29121, runs south, nearest to the west; off-line 1/18- 4/18; still off-line;

  • 18541, runs south, nearest to the east; off-line 1/18 - 4/18; just came back on-line; one day in 4/18;
  • 18543, runs north; off-line 1/18 - 4/18; just came back on-line; one day in 4/18;
  • 18542, runs south; off-line 1/18 - 4/18; just came back on-line; one day in 4/18;
  • 18946, runs north, farthest to the east; off-line 1/18 - 4/18; just came back on-line; one day in 4/18;
I Drove All Night, Roy Orbison

Peak Oil? What Peak Oil? Now It's The Gulf Of Mexico Hitting New Records -- June 25, 2018

From Gulf of Mexico production expected to hit record high.

For newbies: look at production coming out of the Gulf of Mexico, and this is near an all-time record and look how far one has to read to find out the production record --
According to Wood Mackenzie, oil and gas production in deepwater Gulf of Mexico is expected to reach an all-time record high this year at 1.935 million boepd, of which 80 percent is oil—beating the previous record from 2009 by nearly 10 percent and representing 13-percent growth year over year.
Okay, that's 1.935 million boepd -- 80% is oil.

What did North Dakota produce according to the most recent Director's Cut? April, 2018, data: 1.599 million boepd. 

For North Dakota, the oil / natural gas ratio:
  • oil/total = 1,224,948 / 1,598,948 = 77%. That seems low; someone can check my figures. But if correct, that helps explain the flaring challenge.
And more from the linked article:
U.S. crude oil production in the Federal Gulf of Mexico increased slightly in 2017 to reach 1.65 million bpd, the highest annual level on record, the EIA said in April, adding that production is expected to continue growing this year and next, accounting for 16 percent of total U.S. crude oil production.
According to the EIA, a total of 10 deepwater Gulf of Mexico field starts are expected in 2018 and 2019.
So, now we're back to bpd -- 1.65 million bpd if that is not a typo. I should probably go to the EIA to fact-check the data. Maybe later.

Connecting The Dots

I wonder if anyone caught this? Remember, it's an open book test. These data points have all been posted in the past couple of weeks:
  • gasoline price set to soar despite OPEC+ deal (posted today)
  • US refineries running flat out -- at 97% operating capacity -- about as high as US refining capacity ever gets; when things are really slow, US refinery operations can drop to 89% capacity
  • there is clearly a glut of oil and has been for several years now
So, why will the price of gasoline soar? Let me suggest this:
We won't even get into all the clean air / summer formulation regulations.

What The Video Did Not Show -- June 25, 2018


Later, 7:28 p.m. CDT: a reader is as tenacious as a bulldog. "Nelson" has his own website.

Original Post

 As mentioned earlier, my grandfather raised sheep in northwestern South Dakota. I remember vividly the one time when I was able to "participate" (mostly watch) a sheep shearing event. It's quite a big deal and for a five-year-old it's a bit scary. The sheep are bleating like crazy, and I thought the sheep were being badly hurt. In fact, they were simply getting a haircut after a very long, colder winter, and now the bare skin would make the hot South Dakota summer that much more tolerable.

The sheep were initially rounded up and brought close to the shearing barn. Then they were "funneled" through a lane to the shearing pen -- eventually moving from a flock of sheep entering the wide end of the funnel (the mouth end) to a one-by-one (very noisy) "procession" into the shearing pen where the shearer grabbed one sheep and had her sheared within a minute or two.

The high fence on either side of the narrow lane only allowed one sheep into the shearing pen at a time.

Overnight a reader sent me a video that could not be resisted (you can see it below, so you don't have to click on the link). I posted it almost as soon as I saw it. I loved it. I watched it many, many times.

But throughout the day, mostly during the long drives back and forth with the granddaughters, something about the video bothered me.

And then an epiphany. Scott Adams, I think, would have noticed the same thing. He often talks about what a video does not show. (It's the same problem law enforcement officers have with body cameras or dash cams.)

What the video does not show is what came just before the filming began. Obviously those sheep did not move into one little flock on their own. They would have been quite spread out, eating the grass, not really paying attention to each other as the flock spread out and spread apart.

Someone or something or some dog that had to get them into that flock, that little group.

The only thing I see in that video that could have herded that flock of sheep was that dog.

Now, that dog must have done something that sheep herding dogs seldom do, otherwise it would not have been uploaded to YouTube, nor would it have gone viral.

This is what the clever little dog did that other shepherding dogs do not do: get the sheep to run in single file and, not only that, but down a trail lined by trees on either side. Just like a narrow fenced-in funnel taking the sheep one-by-one to a shearing shed or to a truck to be loaded.

If you watch closely, about a third of the way into the video, it is obvious the little dog is not trying to herd the sheep back into a flock. He is looking them directly in the eye, challenging the alpha sheep to chase him (or her). And he does that over and over, stopping, looking back, staring them down, and then taking off, and before you know it, he has the sheep running in a single line. He can run them right up into a loading truck.

Here's the video again:

His method in impressively efficient. He doesn't have to keep running circles around the group or chase laggards. Eventually he just runs a straight line and they all follow. Like sheep do.

So, in summary, unlike most sheepdogs that have a single skill set -- shepherding sheep into a flock, this little dog has two skill sets: a) shepherding sheep into a flock (not seen on the video); and, b) getting the sheep to run in a single line -- either to be loaded unto a truck or into a shearing pen. 

XTO With Permits For A 7-Well Pad In Siverston Field -- June 25, 2018

Gasoline price: over at I did not read the article. The headline: "gasoline price set to soar despite OPEC+ deal."

Line 3: Minnesota PUC decision expected no later than June 28, 2018. 

Active rigs:

Active Rigs65583076193

Nine new permits:
  • Operators: XTO (7); Whiting (2)
  • Fields: Siverston (McKenzie); Glass Bluff (McKenzie)
  • Comments: XTO has permits for a 7-well Johnson Trust Federal pad in lot 3, section 6-150-97; and Whiting has permits for a two-well Lassey pad in NENW 27-152-103
Again, no DUCs reported as completed. This has been a very long stretch with few DUCs reported as completed.

Analyst Update On Whiting -- MarketRealist -- June 25, 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 what you think you may have read here. I post these reports to help me understand the Bakken better.

This was posted earlier but a stand-alone post is more appropriate for the archives.

MarketRealist has a huge report on Whiting. Link here -- data points --
  • 1Q18: production
    • Williston Basin: 103,100 boepd (81% of company's total production)
    • total production: 127,100 boepd
  • 1Q18: wells
    • drilled 24 in the Bakken; drilled none in it Redtail, DJ Basin, play
    • put 19 wells into production in the Bakken; six into production in the DJ Basin
    • future
  • focusing on the Bakken
    • may sell its Redtail assets
  • CAPEX budget of $600 million
  • Williston basin production is forecast to increase 14% year-over-year
  • efficiencies discussed at the link
    • CLR and WLL down to 8 - 10 days to reach TD after spud
  • completion costs
    • 2014: $9.1 billion
    • 2018: $6.8 billion
  • New:
    • DAPL a "game-changer"
    • it's the best destination to send crude from North Dakota
    • it gets to Texas and then goes to the LLS crude oil markets, which trade closer to the Brent
    • North Dakota's total production is about 1.2 million bopd and the pipeline by itself carries 1.4 million bopd
Much, much more at the link.

The Energy Page, T+25 -- June 25, 2018

I highly recommend folks who have not looked at these recent presentations / postings on the Permian to find time some time to look at them. The USGS surveys of the Permian are quite staggering. The recent posts include:

The USGS Assessment, 2018. Related posts about the same time:
The Permian is a monster, RBN Energy; Bloomberg, June 20, 2018.

Growing into the largest oil patch in the world, Bloomberg, April 24, 2018.

Natural gas production in the Permian to surge by 2020, WSJ, May 30, 2017.

Chevron owns its mineral acres outright in the Permian; no payment to landowners, April 6, 2017

Now The New Stuff

I received a very, very nice note from a geologist who is quite familiar with the Permian. He confirmed that, indeed, the recent USGS "Permian" survey was based only on the eastern basin, the Midland Basin and did not include the Delaware Basin (or the Central Basin for that matter).

I am always humbled/embarrassed/reminded of how little I know when I get notes from folks in the industry. I assume I know less than 1% of all that is going on regarding the US shale revolution.

Here was part of his note in which he said he was quite eager to see the results of the USGS survey of the rest of the Permian:
I believe the Delaware resource is the grand daddy of all resources in this country and will rival some of the best on this planet. If I had to take a wild guess at this point, it would not shock me if the first USGS Delaware assessment numbers are [well above those of the Midland.]

[Based on my background] - the Delaware Basin resource is unlike any other I've come across - the stacked pay-zone potential is truly astounding!!
Note: the geologist who wrote me was not Art Berman, unless he was using an alias.

The Bakken

See this post from about a year ago, August, 2017:
This is probably as good a "look-back" as I've seen, from The [London] Telegraph. Archived.

Remember: this article is from a year ago, during the early stages of the "depression."

It's a long article and covers many areas, so let's go through some of the data points with my comments thrown in.

Most remarkable prognostication from the article, from Mark Papa, "a legendary figure in the shale fraternity and now at Riverstone Holdings": 
“I can see a case where US shale is the biggest supplier of oil in the world by 2020. We could turn the whole thing on its ear, producing 13-14m b/d. But it will be really ugly getting through this valley,” he said. 
Most interesting comment from the article, also from Mark Papa:
Mr Papa said it will not be long before engineers work out how to double the efficiency of shale extraction to the 50 percent levels seen in conventional oil wells. "It'll probably come in the next ten years. That's the next big break-through," he said.
For newbies, as I understand it, Mr Papa is talking about "primary production" and does not include enhanced oil recovery using waterflooding or CO2 injection.
I've done this several times over the past ten years, but unable to find the posts (I didn't look too hard) and it really doesn't matter, except for historical purposes.

But time to look at amount of recoverable oil in the best part of the Bakken. Disclaimer: I'm inappropriately exuberant when it comes to the Bakken.

It's getting easier to do these calculations, and you can fill in any number you want to get your own estimates.
  • one 1280-acre drilling unit = 2 sections 
  • 12 wells on each 1280-acre drilling unit
  • EURs of 750,000 bbls (CLR now has 1.1 million BOE EUR type curves for all of its optimized completions)
  • 12 wells x 750,000 (2 sections) = 4.5 million BOE/section
  • 24 wells x 1.1 million (2 sections) = 13.2 million BOE/section
The reason I'm doing this now is because the numbers I'm seeing coming out of the Permian are staggering. I may want to compare those numbers with the Bakken at a later date.

For newbies, be careful: folks will talk about bbls of crude oil (bo) and bbls of crude equivalent (boe). The latter is the crude oil/natural gas liquids + the natural gas (the latter converted to boe). Note: the 1.1 million boe EUR type curves are BOE (bbls equivalent).

The Market, Energy, Political Page, T+25 -- June 25, 2018

Best Video Of The Day 


Later, 6:59 p.m. CDT: see this post.

Original Post

 A reader sent me this. It could not have been more timely. My youngest sister's family recently acquired a Corgi (with papers?). It was a puppy not long ago and is now pretty well grown. Corgis are natural herders, and their Corgi is constantly herding all the folks who visit the house. It's quite humorous to watch Tucker, the Corgi, herd humans and he does herding much, much better than this one.

My grandfather raised sheep in northwestern South Dakota and I spent a fair amount of time on his land. I do not recall sheep ever "attacking" or "chasing" anything. I've already watched this video several times and have not yet gotten tired of it.

Goats? Completely different. They will definitely chase you. 


As good an article as any on the whereabouts of former President Obama. I have no idea how much is true and how much is relevant (probably very little) but's an interesting read


From an earlier post:
SolarCity: An Albatross:
  • Tesla owns SolarCity
  • the $2 billion purchase came with almost $3 billion in debt
  • "huge chunk" of interest coming due soon
  • [again, typical article: "huge chunk" not defined; and date coming due was not provided] 
  • Tesla doesn't guarantee repayment; SolarCity does (this is called non-recourse debt for Tesla)
  • but, the SolarCity debt affects Tesla's overall credit rating and impacts borrowing costs
  • Tesla has $10 billion of total debt outstanding; $3 billion is non-recourse, mostly Solar City debt
  • without SolarCity, Tesla's borrowing ratings might be closer to 5.9% (single B rating)
  • with SolarCity rating, a B- rating/Caa1 rating, closer to 7.2%
  • story at Fortune through YahooFinance
This story has been previously posted, but more background at this linked story:
  • SolarCity acquired by Tesla in 2016 for $2.6 billion
  • Tesla will close 13 - 14 solar installation facilities in nine states (three regions)
  • CA, TX, AZ,
  • MD, NJ, DE
  • NY, CT, NH,
  • SolarCity will end its partnership with 800 Home Depot stores -- generated about half of the division's sales volume (wow)
  • in line with 9% workforce reduction that was announced last week
  • "We continue to expect that Tesla's solar and battery business will be the same size as automotive over the long term." -- Elon Musk
  • the company installed 76 MW of solar in 1Q18; a 64% decline from 214 MW installed two  years ago (1Q16)
  • more at the link

June 25, 2018 -- Morning Note

Kraft-Heinz: Campbell Soup shares surge after reports that Kraft Heinz Co might buy Campbell Soup. Knowing that Warren Buffett owns Kraft Heinz this rumor, if true, speaks volumes. It is exactly the kind of deal one expects from Buffett. He understands soup. Apple was a bit more complicated to understand.
Disclaimer: this is not an investment site.

Back to the Bakken
MarketRealist has a huge report on Whiting. Link here -- data points --
  • 1Q18: production
    • Williston Basin: 103,100 boepd (81% of company's total production)
    • total production: 127,100 boepd
  • 1Q18: wells
    • drilled 24 in the Bakken; drilled none in it Redtail, DJ Basin, play
    • put 19 wells into production in the Bakken; six into production in the DJ Basin
    • future
  • focusing on the Bakken
    • may sell its Redtail assets
  • capex budget of $600 million
  • Williston basin production is forecast to increase 14% year-over-year
  • efficiencies discussed at the link
    • CLR and WLL down to 8 - 10 days to reach TD after spud
  • completion costs
    • 2014: $9.1 billion
    • 2018: $6.8 billion
  • New:
    • DAPL a "game-changer"
    • it's the best destination to send crude from North Dakota
    • it gets to Texas and then goes to the LLS crude oil markets, which trade closer to the Brent
    • North Dakota's total production is about 1.2 million bopd and the pipeline by itself carries 1.4 million bopd
Much, much more at the link.

Active rigs:

Active Rigs65583076193

RBN Energy: a new reporting tying US natural gas and global LNG markets.
As U.S. LNG exports play an increasing role in the global market, the U.S. will not only be exporting its vast natural gas supplies but also to a degree its market realities — namely, the risks, opportunities and, at times, volatility of a highly liquid, fungible and economically-driven spot market.
The global LNG market also has shifted toward more flexible and spot-oriented trade, opening the window for some ad lib wheeling and dealing based on the prevailing economic conditions at any given time. These two factors together will come with significant implications across the supply chain — from the producing basins to the pipeline transport routes and from the export terminals to the destination markets they are serving. This month, with feedgas receipts at Sabine Pass LNG down and an explosion on a key supply route from Appalachia to Louisiana, we are starting to see how this integration of the U.S. and global markets is likely to play out.
To help you keep up with this complicated dynamic and extrapolate the big-picture impacts, today we introduce RBN’s new LNG Voyager Report, featuring a comprehensive, pipe-to-port-to-destination approach to understanding how U.S. LNG fits into the global market.
For years, we’ve been talking about the looming impact of U.S. exports on global LNG markets, and at the same time, contemplating what those exports will mean for the markets here, in North America.
Now, that’s a reality. In the past three years, U.S. LNG exports have gone from being non-existent to an average of 3.0 Bcf/d. In that time, the new demand source — currently from just five liquefaction trains, four at Cheniere Energy’s Sabine Pass LNG (SPL) in Cameron Parish, LA, and one at Dominion’s Cove Point LNG in Maryland — already has reconfigured pipeline flows all the way from the Northeast and Midwest to the Gulf Coast, as Appalachian and other gas suppliers look for ways to get their gas south, where the lion’s share of the export demand is happening. In fact, gas flows along entire corridors of pipeline routes that used to flow south-to-north have flipped direction and are flowing gas north-to-south.