Wednesday, August 8, 2018

Twenty-Five Permits Renewed; WTI Plummets 4% During The Day; Recovers A Bit By End Of Day -- August 8, 2018

Fast and furious:

Back to the Bakken

Active rigs:

Active Rigs65563473193

Eight new permits:
  • Operators: WPX (6); BR (2)
  • Fields: Squaw Creek (McKenzie); Corral Creek (Dunn)
  • Comments: WPX has permits for a 6-well Minot Grady pad in SESE 23-149-94 (see below); BR has permits for a 2-well Prairie Roas/Meriwether pad in Lot 2/section 30-147-95;
Twenty-five permits renewed:
  • Crescent Point Energy (8): four CPEUSC Jean permits; four CPEUSC Tami permits in Williams County
  • BR (4): four Ivan permits in McKenzie County
  • Hess (3): three BL-Myrtrice permits in Williams County
  • Statoil (3): three Martin permits Williams County 
  • Petro-Hunt (2): two Noonan Federal permits in McKenzie County
  • Resource Eenrgy: one Marshall permit in Divide County
  • MRO: one Jan permit in Mountrail County
  • Zavanna: one Raven permit in McKenzie County
  • BTA Oil: one Audrey permit in Golden Valley County
  • Denbury Onshore: one CHSU permit in Bowman County
Three producing wells (DUCs) reported as completed:
  • 33743, n/d, Bartelson Federal 44-31-4H, Sanish, t-- ; cum --
  • 33745, n/d, Bartelson Federal 44-31-3TFH, Sanish, t-- ; cum --
  • 34106, 2,051, Whiting, Ellis 24-31-2H, Epping, t7/18; cum -- 
The Minot Grady Permits In Squaw Creek

In that section, there are only three wells:
  • 21301, 1,086, Enerplus, Pointer 149-94-23AH, Squaw Creek, t9/17; cum 173K 6/18;
  • 21300, conf, Enerplus, Terrier 149-94-23AH-TF, Squaw Creek,
  • 19881, conf, Enerplus, Hall 23-21H, Squaw Creek,
PoolDateDaysBBLS OilRunsBBLS WaterMCF ProdMCF SoldVent/Flare

But, WPX is drilling these horizontals into sections 26/35 to the south. These are the wells in that drilling unit:
  • 35011, conf, WPX, Spotted Horn 26-35HD, Squaw Creek,
  • 35012, conf, WPX, Spotted Horn 26-35HA, Squaw Creek,
  • 35013, conf, WPX, Spotted Horn 26-35HW, Squaw Creek,
  • 35014, conf, WPX, Spotted Horn 26-35HB, Squaw Creek,
  • 20238, 180, WPX, SPottedHorn 26-35H, Squaw Creek, t1/12; cum 186K 6/18;
  • 35240, conf, WPX, Spotted Horn 26-35HUL, 
The new permits are "Minot Grady" permits -- a google search of "Minot Grady" -- suggests a nice backstory. 

The Market, Energy, And Political Page, T+69 -- August 8, 2018

Saudi Arabia turns up the heat: Canadian - Saudi "spat": makes Trump's trade wars look like child's play; Trudeau can't get a break; couldn't happen to a nicer guy; and, at Financial Times, Saudi Arabia turns up the heat:
Saudi Arabia is selling Canadian assets as the kingdom escalates its response to Ottawa’s criticism of the arrest of a female activist.
The Saudi central bank and state pension funds have instructed their overseas asset managers to dispose of their Canadian equities, bonds and cash holdings “no matter the cost”.
Third-party managers are estimated to be mandated to invest more than $100bn of Saudi funds in global markets. While the proportion of that figure invested in Canadian holdings would be “fairly small in absolute terms”, the asset sale sent a strong message.
The sell-off began on Tuesday and underlines how the Gulf monarchy is flexing its financial and political muscle to warn foreign powers against what it regards as interference in its sovereign affairs.
“This is severe stuff,” said one banker.
To repeat: severe.

Meanwhile, Canadians have started a "boycott America" movement. #CPM -- Canadian Products Matter.

What Saudi has now done:
  • begun a sell-off of Canadian holdings 
  • expelled the country’s ambassador 
  • frozen new trade and investment with Ottawa 
  • suspended a student exchange programme to Canada 
  • halted Saudi Arabian Airlines flights to Canada 
  • ended all medical treatment programmes in Canada 
Missing In Action

A few weeks ago, the mainstream media was working overtime, it seemed, to plant stories that Melania was "missing in action." No one had seen her in weeks, they said.

The "story" continues but a little bit differently. On CNBC today, there was a short snippet of video of President Trump holding a dinner/meeting with business CEOs last night. At the end of the video and very briefly, a shot of FLOTUS standing up, nodding, suggesting she had just been introduced to the attendees.

Sort of takes a bit of wind out that "MIA" sail. There was no reason Melania had to be there, but she was. 

Another EOG Well -- Drilled Just Five Years Ago -- Has Gone Over One Million Bbls Of Crude Oil Production -- August 8, 2018

Following up on this well, previously posted:
  • January 13, 2018: #25374; watch this one go over 1 million bbls; still no pump;  as of 2/18: still no pump; 1.033307 million bbls; 2/19;
PoolDateDaysBBLS OilRunsBBLS WaterMCF ProdMCF SoldVent/Flare
PoolDateDaysBBLS OilRunsBBLS WaterMCF ProdMCF SoldVent/Flare

The graphic:

The wells:
  • 17122, 581, EOG, Austin 23-32H, Parshall, a short lateral, t8/09; cum 663K 2/19;
  • 25374, 1,414, EOG, Austin 39-3204H, Parshall, an extended long lateral, 60 stages; 14.6 million lbs, t9/13; cum 999K 6/18;

Follow-Up On A Samson Gas Proposal For An Enhanced Oil Recovery Project Targeting The Madison Formation -- August 8, 2018

I was simply curious what was going on with Case #25899 from the NDIC hearing dockets.

Previously posted:
  • June, 2, 2017: June, 2017, hearing dockets; Case 25899, Samson Oil and Gas, Foreman Butte-Madison, establish an overlapping 1280-acre unit to facilitate an enhanced oil recovery pilot operation; sections 20/29-150-102, McKenzie.
What's going on in sections 20/29-150-102? Apparently nothing with regard to an enhanced oil recovery pilot project targeting the Madison.

The graphic:

The wells:

15646, a Madison well, IA; t12/04; last produced 9/16; cum 41K
15666, a Madison well, AB; t3/05; last produced 3/14 (except for one day in 3/15); cum 39K

20414, 682, Zavanna, Larsen 32-29 1H, Foreman Butte, t6/12; cum 202K 6/18; 

31863, conf, Zavanna, Hunter 29-17 2H, Foreman Butte, will run north;
31860, conf, Zavanna, Hunter 29-17 8TFH, Foreman Butte, will run north;
31866, conf, Zavanna, Hunter 29-32 5TFH, Foreman Butte, will run south;

An Old Short Lateral EOG Well In The Parshall Goes Over One Million Bbs -- August 8, 2018

This well has now produced in excess of one million bbls.

It was one of the early wells.

It's a short lateral.

Posted earlier at the blog, at the  date noted below (obviously I update the production data as well as other pertinent data):
November 27, 2016: 17120, EOG, Austin 10-34H; t8/08; 999K 6/18; a short lateral; 24 days in 3/16; check reason for bump up in 9/16; was off-line during the summer; [update: it was taken off-line while neighboring wells were being fracked. Yes, neighboring frack positively impacted this well.] A graphic of this area has been completed; posted for a few minutes and then placed in draft status.  Brought back up. I'm keeping this one here until it hits 1 million bbls; will be awhile.
The first twelve months of production:

The ninth year of production at the time there was a small bump in production after neighboring wells fracked:

Last three months of production:
PoolDateDaysBBLS OilRunsBBLS WaterMCF ProdMCF SoldVent/Flare

WTI Plunges 4% -- Where's All That Talk That Said Oil Was Headed Higher? -- August 8, 2018

WTI down 4%; down $2.77; trading at $66.40.

Gasoline demand: maybe this is the reason? Link here.

In the last ten (10) weeks, there was only one week in which "gasoline demand" this year (2018) was greater than the comparable week last year (2017):

Weekly Petroleum Report -- August 8, 2018

Link here.
  • yesterday, the API reported a 6-million-bbl draw, surpassing an expected 3.3-million-bbl draw
  • today, the EIA reports a build of 3.8 million bbls (someone will have to explain to me why the API and EIA are so consistently so far apart in their estimates; they must be watching different movies)
  • refineries are operating at a 96.1% operating capacity, about the same as last week
  • gasoline production: 10.5 million bopd (identical to last week?)
  • distillate production: 5.2 million bpd (about the same as last week)
The gasoline demand graph will be posted later.

The Market, Energy, And The Political Page, T+69 -- August 8, 2018

NOG: will report 2Q18 earnings tomorrow, Thursday, before market open. Earnings call later. Should be fascinating. 

WTI: lots of talk; little action. The preponderance of stories, it seems, suggests that the price of oil is headed up, and yet, here we are, at the height of driving season, sanctions on Iran, Venezuela imploding, Canada unable to get its oil to market, and the price of WTI falls again. This morning, I see, WTI is down about 1.5%. 

Never mind: first we are told that Saudi production dropped in July, and then we are told Saudi reported record high production in July, and now this headline from oilprice: why Saudi oil production suddenly dropped. Apparently even Tsvetana is confused -- in her opening paragraph ... "as if oil market participants haven't had enough conflict market forces to digest ...."
Reports that Saudi Arabia’s crude oil production surprisingly dropped in July by around 200,000 bpd from June further confounded the market and sent oil prices rising on Monday.
Last week, several surveys of OPEC’s crude oil production in July showed that the cartel is pumping at high rates, and Saudi Arabia is nearing its production record. But on Friday, Saudi sources and OPEC sources told news agencies that the Saudi oil production was not even close to record figures—and it actually dropped last month compared to June.
The Saudis pumped 10.29 million bpd in July, Saudi sources told S&P Global Platts on Friday. On the same day, two OPEC sources told Reuters that Saudi Arabia’s crude oil production in July was 10.29 million bpd.
According to OPEC’s secondary sources, the ones the cartel uses to calculate quotas and compliance, Saudi Arabia’s oil production had jumped in June by 405,400 bpd compared to May, to reach 10.420 million bpd.
According to a Reuters survey from last week, Saudi Arabia’s production in July was 10.65 million bpd, but exports were close to June’s levels because the Saudis increased domestic use at power plants and refineries. OPEC’s crude oil production jumped by 340,000 bpd in July from June, as Saudi Arabia pumped near-record volumes, the S&P Global Platts survey showed on Friday.
The explanation at the link is as good as any, but does it matter?

But this is really a cool story. Confirms what we've been saying at the blog with regard to Saudi Arabia:
  • production gets the headline; the real story is exports
  • figures coming out of the Mideast are seldom reliable
  • Saudi Arabia needs to increase production in the summer (air conditioning drives electricity demand)
  • Vision 2030 will increase domestic consumption
  • Iran sanctions? whatever
  • when it comes to crude oil, only three producers are relevant: Saudi Arabia, Russia, and Texas
Crockett's Them, Jan Hammer 
Note: this 12-minute version last 5:50.

Amazon Prime

I'm getting closer and closer to "cutting the cord": discontinuing cable television. I would miss NASCAR and the PGA. And that would be it. May now gets most of her television viewing over Amazon Prime -- it's truly incredible how much "free" content is available. But inertia is such I probably won't get around to it for another year. For significantly less money/month, I get significantly more enjoyment out of my iPhone (and I'm paying for two lines) than anything I get from cable television.

Points on credit cards really, really build up. I switch among three credit cards -- but only use cards with points. It's amazing how fast the points build up. On the Amazon card -- which I use for most purchases -- gasoline, groceries, airline -- I have enough points that I doubt I will ever have to pay for a book again. I'm not buying many books any more -- I have literally run out of shelf space and am now giving away books by the box full to one of the local schools.

I try holding off from buying more books but I finally gave in to Darwin's Fossils: The Collection That Shaped The Theory Of Evolution, Adrian Lister, c. 2018. the glossy monograph belies how incredibly good this book is. It's the kind of book (soft-cover) one might find in natural history museum bookstores.

I'm pretty much musuem'd out. I've seen all the museums I need to see. I think. I'm travel'd out -- actually. But I have to admit, every once in awhile - like almost weekly -- I will look at a map and get the urge to travel -- but as soon as I start thinking about the hassle -- beginning with TSA at the airport -- the urge quickly dissipates. Having said that, most recently -- yesterday -- looking at a map that accompanies a "pipeline" story that a reader sent me -- I think it would be interesting to visit Niagara Falls. Not to see Niagara Falls specifically, but to explore the surrounding area. In my younger days I would have walked the old Erie Canal, from Albany to Buffalo -- if that's correct. 

High Cost Of Non-Dispatchable, Unreliable Energy -- August 8, 2018

From the EIA;

And promoters still tell rate-paying utility customers that wind and solar projects will bring down their utility rates. LOL.

Screenshot of the day:

The Modern Art Page

Notes to the Granddaughters

Olivia is taking a robot-building course this week. There are about a dozen in the class, some older than she; some younger.

So far, on the first two days, her robots have out-raced all other rivals.

It is absolutely fascinating to listen to her stories. Before building the robot, she studies very carefully the parameters, looking for the "secret": the one thing that is most crucial. Yesterday, the robot they were to build had to negotiate an eight-turn maze. She noted that the 5th curve was the "secret." If she could figure out the "trick" this curve presented, she would win the race.

They build their robots. She was the last to finish -- she was interrupted by an obnoxious adolescent male who was sure he would win and was stealing her parts (the instructor was unaware; he was helping someone else); and, Olivia took time away from her own project to help a younger student. By the time she got back to her project, the races were beginning.

She completed her robot.

The robots raced the maze one-at-a-time, being timed with a stop-watch. She raced last. And, wow, was she ecstatic. Some robots were unable to complete the maze, but among the robots that finished, she completed the 8-turn maze, taking first place. Second best: in the time Olivia's robot completed the 8-turn maze, the second-place robot had only completed the first five turns.

The fifth turn was a nearly-180-degree -- sharp switch-back, I guess. Olivia rightly figured out how the robot was programmed to turn before the "student engineers" tweaked the code to modify that turning. That was the trick: the robot would naturally make the 180-degree turn if she "pretty-much" left the program alone -- minor tweaking was all that was needed.

Meanwhile, the oldest granddaughter is "off the grid." She is up in Minnesota attending a Spanish camp. At time of registration, everyone had to 'turn in" their cell phones. Once a day, they hand-write a note which the camp typist then e-mails to parents. The parents can reply to the e-mail, but the camp recorder prints off the reply and gives the paper-reply to the student.

Arianna was at this camp last year for a week and was eagerly looking forward to returning this summer for two weeks. It's likely she will return next summer for a full three weeks if she can squeeze it in.

Sophia? Enjoying her new bicycle.

The Book Page

From Darwin's Fossils: The Collection That Shaped The Theory Of Evolution, Adrian Lister, c. 2018, page 184:
The Beagle had departed England 27 December 1831.
The Beagle docked at Falmouth in Cornwall on 2 October 1836 (two months short of a full-five-year voyage.

After visiting his family and rejoining the Beagle in London to unload the remainder of his belongings, Darwin took lodgings in Cambridge to consult with Henslow and, with the help of his Beagle servant Syms Covington, to unpack and sort his collections.

There were also important people to meet -- Sir Charles Lyell, whose Principles of Geology has been crucial to Darwin's work on the voyage, invited him a tea party on 29 October 1836, where he also met for the first time the anatomist Richard Owen of the Royal College of Surgeons, where Darwin's fossil bones had been sent.

Darwin subsequently visited Owen at the College on several occasions in December, 1836, and invited him to undertake research on the fossils.

Whereas William Clift, the curator, had received and prepared the specimens as they reached the College in 1833 and 1834, it was Owen who was now the rising star of comparative anatomy, having been elevated from his initial position as Clift's assistant to his recent appointment as Hunterian Professor.

While Owen's fame would undoubtedly have been assured by his later, seminal work on fossil reptiles, dinosaurs and much else besides, his study of Darwin's fossil mammals launched his career as a palaeontologist and did much to establish his reputation as the 'British Cuvier.'

Later, in February, 1838, Owen was delighted to receive the Geological Society's Wallaston Medal for his description of Toxodon, Darwin's most celebrated fossil find.
From page 81:
Toxodon platensis, the last of an endemic group of South American mammals. Initially described as a rhinoceros-sized rodent, it is now thought to be a distant relative of the rhinoceros itself.
Darwin's Toxodon fossil is among the treasured possessions of the Natural History Museum in London (p. 76).

The Race Is On -- Re-Posting The Big Story From Overnight -- August 8, 2018

This is not so much a race between Houston and Corpus Christi, as a race between Texas and Saudi Arabia.

From my perspective, this is the biggest story overnight -- Do you remember this story just a few weeks ago -- EPD to build massive crude oil export terminal off the coast of Houston?  Turns out the race is on to build Texas' first offshore oil export terminal -- HoustonChronicle --
The race is on to build Texas’ first offshore oil-exporting terminal that could accommodate the world’s largest crude-carrying vessels.
The global commodities trading firm Trafigura Group will announce Monday that it plans to build the Texas Gulf Terminals Project in the Gulf of Mexico, off the coast from Corpus Christi.
An offshore terminal would avoid port traffic and float in waters deep enough to handle the largest ships. Trafigura is unveiling the project almost three weeks after the Houston energy company Enterprise Products Partners said it plans to build an even larger offshore oil exporting terminal south of Galveston.
Corpus Christi and the Houston Ship Channel have led the nation in oil exports ever since Congress lifted the nation’s decades-old crude export ban at the end of 2015. The timing coincided with a boom in U.S. oil production, especially in West Texas’ Permian Basin, pushing crude volumes to record highs this summer. More of that oil is exported because domestic consumption remains relatively flat.
Just as there’s a rush to build pipelines hundreds of miles from the Permian to port and refining hubs near Houston and Corpus Christi, there’s also competition to construct oil exporting terminals to ship out the crude. The Port of Corpus Christi is expanding to handle the flood of oil, and several companies along the Houston Ship Channel are expanding terminals.
But the ports still aren’t able to handle the largest oil tankers, known as very large crude carriers, or VLCCs. Despite ongoing dredging efforts, the channels at Texas ports aren’t deep enough for the giant ships to leave the ports filled to capacity. Very large crude carriers can only fill up partially at Texas ports, and then receive the remaining oil volumes from another ship in deeper waters.
And more:
The Swiss commodities trading firm is no stranger to U.S. oil exports.
In early 2016, Trafigura chartered the ship for the first U.S. crude export shipment to Europe in more than 40 years, and Trafigura has continued as a leading exporter of crude and petroleum products from the Gulf Coast. Trafigura has offices in downtown Houston at the 5 Houston Center building.
More at the link.

The race is on.

The Race Is On, George Jones

And I suppose the loser will have this song, the lights in the harbor don't shine for me ...

Sea of Heartbreak, Don Gibson
No, both Houston and Corpus Christie will be winners.

Four Wells Coming Off Confidential List Today -- August 6, 2018

Fast and furious:
  • US natural gas output, demand seen rising to record highs in 2018 (that's this year) -- Reuters; around 13 million boepd -- compare with around 10 million bopd 
  • US cuts 2018 crude oil production growth forecast; Reuters; why? "... amid lower crude prices...." Story hardly worth reading: estimate cut to a growth of 1.31 million bopd vs original forecast of 1.44 million bopd ina n 11.7 - 11.8 million bopd environment -- 130,000 bopd less than last month's forecast; inconsequential; I doubt "they" can even actually be that precise on actual production data -- but it is what it is
  • Venezuela's oil sector continues to unravel -- Rigzone; headline says it all; not worth reading
  • US crude oil inventories: huge draw yesterday according to API; yawn; this morning, WTI is down
  • API data: forecast, a draw draw of 3.3 million bbls; actual: 6.0 million bbls 
  • Canadian - Saudi "spat": makes Trump's trade wars look like child's play; Trudeau can't get a break; couldn't happen to a nicer guy; and, at Financial Times, Saudi Arabia turns up the heat:
Faster and furious-er: remember this story just a few weeks ago -- EPD to build massive crude oil export terminal off the coast of Houston?  Turns out the race is on to build Texas' first offshore oil export terminal -- HoustonChronicle -- (more of the story here):
The race is on to build Texas’ first offshore oil-exporting terminal that could accommodate the world’s largest crude-carrying vessels.
The global commodities trading firm Trafigura Group will announce Monday that it plans to build the Texas Gulf Terminals Project in the Gulf of Mexico, off the coast from Corpus Christi. An offshore terminal would avoid port traffic and float in waters deep enough to handle the largest ships. Trafigura is unveiling the project almost three weeks after the Houston energy company Enterprise Products Partners said it plans to build an even larger offshore oil exporting terminal south of Galveston.
Disclaimer: this is not an investment site.
  • NOG: reduces debt; press release; will retire $77.2 million of its remaining notes, permanently reducing interest expenses by $6.2 million on an annual basis; NOG will start the day down one cent from the open yesterday, trading at $3.37; 52-week high of $3.45
  • CLR: 2Q18 -- beats on revenue and earnings; gets no respect; shares down after results released;
  • XOM vs CVX: Motley Fool
  • the majors: Motley Fool 
  • best story of the day? three companies with great dividend potential. Of the 50,000 or publicly traded companies, which three rise to the top? AAPL (Apple) -- whoo-hoo; Southwest Airlines; and, Hanesbrands 
Back to the Bakken

Wells coming off the confidential list today --
  • 33979, SI/NC, BR, Kermit 4-8-32 MBH, Pershing, no production data,
  • 34329, 2,203, Newfield, Sorenson Federal 153-96-4-9-1H, Sand Creek, 62 stages; 9.9 million lbs, very nice well; 40K in first full month; the Newfield Sorenson Federal wells are tracked here; t4/18; cu 65K 6/18;
  • 33389, SI/NC, Crescent Point Energy, CPEUSC Paopao 6-35-26-158N-100W TFH, Dublin, no production data,
  • 28819, 761, Nine Point Energy, Simpson 151-102-5-8-3H, Elk, 50 stages; 9.9 millionbls, t2/18; cum 66K 6/18;
Active rigs:

Active Rigs65563473193

RBN Energy: the rollicking return of CBR in western Canada.
Rising crude oil production in Western Canada, filled-to-the-brim pipelines out of the region, and yet another blowout in the price spread between Western Canadian Select (WCS) and West Texas Intermediate (WTI) are combining to spur a genuine revival in crude-by-rail (CBR) shipments from Canada to the U.S. CBR has helped out Western Canadian producers before, moving increasing volumes south through 2011-14 until new pipeline capacity came online. But this time, the number of barrels being moved out of Western Canada by rail is already moving into record territory, and — with the addition of incremental pipeline capacity still at least a year away, and maybe more — railed volumes are likely to continue rising in the months to come. Today, we discuss recent developments and what producers, shippers and railroads see coming in the months ahead.
There’s a dance of sorts going on between producers and railroads. Producers don’t want to sign long-term CBR contracts because new pipeline capacity will eventually come online, and when it does the WCS-WTI spread would likely return to the $10-to-$15/bbl range (reflecting pipeline tariff costs of $9 or $10/bbl plus a quality-related cost adjustment), putting $20/bbl CBR way out of the money. Railroads won’t commit to adding capacity or service because they know from experience that as soon as new pipes get built, their business will subside. Both CP Rail and CN are pressing shippers to enter multiyear, “take-or-pay” contracts for rail services.
Cenovus, a major WCSB producer with a 100-Mb/d crude-loading terminal near Edmonton (the Bruderheim Energy Terminal), confirmed that activity at Bruderheim picked up in the second quarter and will be increasing further through the second half of 2018. Cenovus believes shippers and railroads will find a middle ground on commitment duration and rail fees that will enable the railroads to transport more crude by rail this year and next.
Pipeline constraints will be a fact of life in Western Canada for another year or more, which means we’re likely to see more $20/bbl-plus differentials between WCS and WTI,more restarts of long-idled rail terminal capacity and more take- or pay-deals with railroads.
It's That Time Of Year

Sophia absolutely loves beans and quinoa -- her favorite meal. If comfort food for "everyone" else is "mac and cheese," its beans and quinoa for Sophia.

But last night-- wow, she inhaled two half ears of corn and then a huge single ear of corn. And I have to admit: it really was very, very good corn. Must have come from Texas. I should have taken a picture of how big the ears were -- twice what I was used to when growing up in Williston.