Friday, August 24, 2018

Whiting Bucks Trend: Reducing Proppant In The Bakken; Bakken Holds On To Top Spot Among IRRs -- Platts -- August 24, 2018

If I had time to read only one Bakken story today, this would be it. A huge thanks to Geoff Simon for spotting it and sending it on.

Link here. Data points:
  • Whiting reduces frack sand by 30% per well
  • reduces capex by about $400K per well
  • Bakken holds on to top spot among IRRs -- "So, what don't you want." Link here.
But, wow, look at this:
Whiting is one of the largest producers in North Dakota's Bakken Shale where it holds more than 400,000 acres. In the company's Hidden Bench play, located in the core of the Bakken in McKenzie County, it has been able to reduce proppant by about 50% and still maintain similar rates of production. It discovered that it could achieve the same production levels on new wells using 7.3 million pounds of sand as it did with 15.2 million pounds.
If the only thing you have is a hammer, everything looks like a nail.

If you "work smart," you may not need a hammer.

This is an incredibly good article. Archived. 

Geoff Simon's Top North Dakota Energy Stories This Past Week -- August 24, 2018

Bakken longevity study: decades to go. If oil prices remain around the $60 per barrel mark, North Dakota can expect drilling activity to continue a few more decades based on today's drilling economics. If you click on this link, a PDF will download on your desktop. The numbers are quite staggering.

Production surge this fall -- Lynn Helms. It's all about natural gas.
Click here to listen to Helms' comments.
Click here and advance to the 28:30 mark to listen to the full interview with Lynn Helms. At this link, go to the "audio" and click on the "go arrow" and "manually" advance to the 28:30 mark.
Bakken gas production to keep growing. he rich natural gas from Three Forks and Bakken plays is producing substantial investment in natural gas production and processing plants in western North Dakota. 
Processed gas produced in the Bakken yields a bounty of natural gas liquids, amounting to 400,000 barrels of NGLs per day.

“There's a lot of value in Bakken and Three Forks natural gas -- it's better quality," said ND Pipeline Authority Director Justin Kringstad. "It takes years to develop the system. Investments in technology (over the last several years) are one reason midstream companies are coming on line this year.”

Kringstad said two plants are coming on line in 2018, and four more will be completed next year. And he said "in 2020 we may see more development.”

Department of Mineral Resources Director Lynn Helms said production and processing will continue to grow as obstacles on the Fort Berthold Indian Reservation are solved.
Click here to read about steady rig numbers in US natural gas plays.

Click here to see the Energy Information Administration charts on August Bakken oil and gas.
Regional chool enrollment takes big jump.
  • Williston:
    • more than 250 new students joined the school district this fall
    • preliminary figures show about 4,370 students are enrolled in this fall
    • last spring: 4,100 students
  • Watford City
    • this fall: 1,813 students
    • last spring: 1,531 students
  • Alexander:
    • student enrollment jumped nearly 10%
    • this fall: 257
    • last spring: 238
    • biggest increase in the elementary grades
  • Killdeer:
    • this fall: 558
    • last spring: 485

Whiting With Three New Permits -- August 24, 2018

Active rigs:

$68.638/24/201808/24/201708/24/201608/24/201508/24/2014
Active Rigs62543174192

Three new permits:
  • Operator: Whiting, Windridge (first mentioned on the blog June 30, 2017)
  • Field: Pembroke (McKenzie); Portal (Burke)
  • Comments: Whiting has permits for another 3-well Knut Berg Trust pad in NENE 28-149-98 (see graphic below); Windridge has permits for a 2-well Mallard pad (middle Bakken) in Lot 3/5-163-92;
Name change: this is interesting --
  • #31249, EOG, was "West Clark 201-01SWD" is now West Clark 105-0136H; my hunch is that EOG wells in the 2xx series are SWD wells; in the 1xx series, Three Forks; this well was drilled/tested back in mid-2016; didn't produce much and taken off-line; this was given a waiver to lay idle while EOG decided what to do with the well; in a July 17, 2018, letter, the NDIC told EOG it had to come up with a detailed plan for this well by August 15, 2108, and the well must be brought into compliance by November 1, 2018, or the NDIC will begin proceedings to have this well P & A. Update, TA, no production.
*****************************
General Location For Whiting's Proposed Knut Berg Trust Wells



Completed wells of interest in the area:
  • 21443, 2,036, Whiting, Smokey 14-21-33-14H, Pembroke, t11/12; cum 216K 6/18;
  • 21440, 1,404, Whiting, Smokey 14-21-33-14H3, Pembroke, t11/12; cum 139K 6/18;
  • 20596, 101 (no typo), Whiting, Smokey 15-22-34-15H, Pembroke, t1/12; cum 233K 6/18;
  • 20516: a failed frack the first time around (2011); a second lateral drilled and re-fracked (2013)

Williston's Weekly Economic Report -- August 24, 2018

Booming, from myndnow:
Oil and gas production is near record levels and the economy is showing impressive strength as well. 
Is this the dawn of a new oil boom in North Dakota? Jim Olson set out to find the answer in Williston.  "Things have definitely picked up for us," said John Lisle of S&B Drilling. "In 2015 we had three employees. In 2016 we had 12. And now we're up to 20 employees." It's the same story for Katie Kringen. 
"We turn two in the fall and we have 14 therapists here," said Kringen. That's up from 2016 when she started her pediatric therapy office as the only employee. 
Airport opening on track, from myndnow:
The new, quarter-billion dollar Willilston Basin International Airport is going to be open by the target date of October 10 of 2019. "It's difficult but we've got a good team and they're making good decisions and we've got good contractors that are working hard out there and we're not going to fail, we're going to get this project done," said Klug. The $230M to $250M project is being paid by federal (50%), state (25%), and local governments (25%).
NG plants: previously reported, but now from NPR:
More natural gas processing plants are coming on-line in the Bakken.
State pipeline authority director Justin Kringstad said two are being completed this year, and four others are scheduled next year. The two plants in 2018 are scheduled to come on-line in the September-October time frame," Kringstad said. "They will add 400 million cubic feet (mcf) of gas processing." Kringstad said the total investment in those two facilities is $300 million. "The additional four plants (in 2019) will bring that total to 965 mcf for all six plants," Kringstad said. "The total investment is $1.3 billion." 
Oil #1 in North Dakota, from 24/7 Wall Street:
Due to new horizontal drilling methods used in North Dakota's Bakken shale formation, the region has fueled historic economic growth in the state. In the last five years, North Dakota's oil and gas extraction industry has grown by over 150%. Over the same period, North Dakota's total GDP shot up 24.1%, the strongest economic growth of any state and more than double the GDP growth of 10.5% nationwide.

Enbridge To Buy Spectra Energy Partners -- August 24, 2018

This seems like "old news" or "predictable news."

Click here for previous posts that mentioned "Spectra Energy."

Today's "news", from MarketWatch, Enbridge to buy Spectra Energy Partners in a $3.3 billion stock deal.
Enbridge Inc. ENB, said today it will buy the pipeline master limited partnership Spectra Energy Partners LB SEP, in a stock deal valued at $3.3 billion.
Under terms of the deal, Enbridge will exchange 1.111 of its common shares for each Spectra share.
Based on Thursday's stock closing prices, that values Spectra shares at $40.00 each, or a 5.6% premium. The deal is expected to close in the fourth quarter of 2018.
Flashback, back to 2010: See this note from July 19, 2010, comparing Spectra and MDU:

Spectra Buys More Storage 
Now, today same song, different verse: Spectra Energy will buy Bobcat Gas Storage from two partners, including GE Energy Financial Services, for $540 million. In addition to the purchase price, Spectra will invest another $400 - $450 million to fully develop the facility by the end of 2015. The facility with 46 bcf of gas storage capacity is located in southeastern Louisiana.

This will bring Spectra's total storage capacity to about 340 bcf.
Spectra vs MDU
MDU's total storage capacity is about 353 bcf. (I do not know if this includes the expansion of the Baker storage facility. I assume it does.)

My understanding is that Spectra is a pure-play natural gas production and distribution company, compared to MDU in which natural gas production and distribution is but one division.

The market cap for Spectra is: $14 billion
The market cap for MDU is: $3.6 billion (that was in 2010; today -- 2018 -- MDU's market cap is $5.8 billion).

The Market, Energy, And Political Page, T+10 -- August 24, 2018

WTI: surges 2%.

Disclaimer: this is not an investment site.

The market -- some new records will be set today. In early morning trading:
  • DOW, completely irrelevant: up 122 points
  • NASDAQ, up 65 points -- wow.
  • S&P 500, completely relevant: up 15 points -- another record to be set today.
  • SRE: flat, up slightly;
  • UNP: up about half a percent;
  • AAPL: up a bit; unremarkable;
  • WTER: up 1.6%;
  • OAS: up 2.3%
  • NOG: up 2.11%
  • EOG: up 2%
  • ENB: down 1.65%
  • BRK-B: flat, slightly up;
  • RDS-B: up almost 2%
  • COP: up 1.6%
  • CVX: up 1.2%

Wow, What A Great Way To Start The Day: An Update On The Bakken -- Mike Filloon Over At Seeking Alpha -- August 24, 2018

Link here.

Summary:
  • the Bakken continues to push ahead benefiting from higher oil prices
  • Marathon has made positive changes and has the best oil production per location with its well design on completions from 6/2017 to 6/2018
  • MRO's design improvements have increased revenues by approximately $1.3 MM/well
  • MRO is beginning to see its core increase to the west, adding high end locations for future development
Archived.

Staggering. On an individual well basis, I don't think the Permian has anything that can compete with the Bakken. Note the EUR type curves at the linked article.

Disclaimer: I am inappropriately exuberant about the Bakken.

Note to self: memo to Art Berman and Janet Nielson.

This Is Really Cool: New England Shuns Marcellus; Yankees' Loss Is Dixie's Gain -- RBN Energy -- August 24, 2018

Blinked: China's Unipec to resume US oil purchases after tariff policy changes. LOL. Did anyone think otherwise? From oilprice:
The international trading arm of China’s refining major Sinopec, Unipec, will resume U.S. crude oil purchases from October.
The company had suspended crude oil imports from the United States amid the trade spat between Washington and Beijing in anticipation of crude oil making it onto the tariff list. When this did not happen, Unipec started buying U.S. crude again despite the trade dispute escalation that saw China slap 25-percent tariffs on U.S. oil products and coal.
Peak oil, what peak oil: analyst suggests Alaska's North Slope is an "arrested, late-emerging-phase 'super basin' rather than a mature basin."
  • analysis doe not provide "actionable" intel
  • data points of interest, remaining reserves:
    • 38 billion bbls boe
    • that figure includes 50 trillion cubic feet of natural gas
    • 28 billion bbls of oil
    • EUR of the North Slope: 55 billion boe (specifically the analyst suggests 54.8 billion boe, not 54.7 or 54.9 but 54.8 -- that's when you know ...)
    • 38 boe yet to be produced, combined with the 16.8 billion that has already been extracted
  • let's see what the divisor was
  • 38 billion boe - 28 billion = 10 billion NG boe 
  • 50 trillion / 10 billion NG boe = 5,000 (I've always used 6,001
  • compare the estimated natural gas reserves in the North Slope with other global reserves at this post: https://themilliondollarway.blogspot.com/2018/08/us-remains-natural-gas-king-oilprice.html
    • the US: 341 trillion cubic feet
    • although one source suggest the Marcellus-Utica could produce a quadrillion cubic feet (1,000 x trillion)
NG exports: will triple over the next 12 months (2019). Will account for 10% of US production.

WTI: trending toward $69. OPEC basket" $71.75.

Burnaby update: Canada's Supreme Court rules against Burnaby, for the pipeline. Time to start bringing in the sacred bulldozers.

Saudi Aramco IPO: in case folks have lost the bubble on the IPO -- bottom line, the Prince will shelve the Saudi Aramco IPO and take a stake in Sabic, becoming perhaps the world's largest petrochemical company?

*******************************************
Back to the Bakken

Only one well coming off the confidential list today --
  • 30524, 884, CLR, Burr Federal 23-26H2, Sanish, fracked 10/23/17 - 10/23/17 -- problem? only one day frack; 7.8 million gallons of water; 88% water; t5/18; cum 32K over 47 days; apparently no problem with the frack; Three Forks 2; 63 stages; 8.1 million lbs;
Active rigs:

$68.558/24/201808/24/201708/24/201608/24/201508/24/2014
Active Rigs62543174192

RBN Energy: northeast gas pulled south by Florida power plants and Sabal trail.
  • Florida’s increasing demand for natural gas for power generation isn’t new, but like a young alligator in the Everglades, its appetite is voracious and growing. More and more gas-fired power plants have been coming online, increasing gas demand and spurring the development of new gas pipeline capacity into the state. And, because of big shifts in where gas is being produced and where it’s flowing, the Sunshine State will soon be receiving an increasing share of its gas needs from the Marcellus region. Today, we begin a two-part look at how rising generation-sector demand for gas and a new pipeline are changing gas-flow dynamics in the U.S. Southeast.
One doesn't have to read much more to see who the winners are, who the losers are. As to paraphrase, the NY governor, NY never was that great. Certainly not when it comes to strategic planning.