The Million Dollar Way (The Bakken Oil Blog): 08/29/18

Wednesday, August 29, 2018

Mexico To Join OPEC? -- August 29, 2018

Saudi Aramco is to Saudi Arabia as PEMEX is to Mexico.

Mexico would leave the IEA and "move closer" to OPEC.

A Reader Has A Question About The Confidential List -- August 29, 2018

Updates

August 30, 2018: a reader provided this link to the NDIC that might help answer the question --
https://www.dmr.nd.gov/oilgas/webhelpfaq.asp.

All information furnished to the director on permits, except the operator name, well name, location, permit date, confidentiality period, spacing or drilling unit description, spud date, rig contractor, central tank battery number, any production runs, or volumes injected into an injection well, shall be kept confidential for not more than six months if requested by the operator in writing. The six-month period shall commence on the date the well is completed or the date the written request is received, whichever is earlier. If the written request accompanies the application for permit to drill or is filed after permitting but prior to spudding, the six-month period shall commence on the date the well is spudded.

Original Post

A reader noted that two wells that came off the confidential list (after being SI/NC) and were producing (albeit very little) were now back on confidential list.

The reader asked:

Why does a well suddenly go on confidential status?
The Kennedy 5-8 and Miles 5-8 are all confidential as of today.

My reply, not ready for prime time:

1. In fact all of these wells are now on confidential status. They were once on the SI/NC list but are now back on the confidential list:

33220, 1,111, Miles 8-6H1, Dimmick Lake, t7/18; cum --
33221, 1,696, Miles 7-6H, Dimmick Lake, t7/18; cum --
33222, 1,173, Miles 6-6H2, Dimmick Lake, t8/18; cum --
33223, IA, Miles 5-6H, Dimmick Lake, t--;
33224, 1,133, Kennedy 8-31H1, Dimmick Lake, t7/18; cum --
33225, 1,592, Kennedy 7-31H, Dimmick Lake, t8/18; cum --
33226, 962, Kennedy 6-31H2, Dimmick Lake, t8/18; cum --
33227, A, Kennedy 5-31H, Dimmick Lake, t--; cum --

2. One can still access the information for all these wells that was previously published, so all the old information is still there but any new information after today is now confidential.

3. I didn't check them all, but #33223 and #33227 did not yet publish their frack data; I think the rest did.

4. So my hunch is that CLR put all these wells back on confidential while before releasing frack data on the last two wells (#33223 and #33227). It's been my experience that this is quite common. Wells can only be on the confidential list for 6 months. In the old days when they drilled and completed all at once, the wells were usually on confidential from time of spud to time of completion because they could get everything done within 6 months.

5. Now, with the new rule that companies have two years to complete a well after first spud, they find it more important to put the wells on confidential list when they are getting ready to frack. There's not much information that is new to anyone with regard to drilling. However, everyone is trying different ways to frack, and it now makes sense to put the wells on confidential (or back on confidential) once they start fracking.

6. The rules regarding when the clock starts ticking may have changed with the other rule change (two years to complete) -- I don't follow the rules that closely. But I've seen this often and in fact, I have many examples on the blog where a well was confidential, then went to SI/NC, and then back to confidential.

7. "Teague" once said that wells couldn't do this but that was before the 2-year rule. That was just before I was voted off the island.

8. So, my hunch is that the last two wells being fracked (or already fracked -- I'll check FracFocus later -- I bet they are already fracked) are now on confidential, not wanting others to know what the completion strategy was. [Yes, I just checked FracFocus: #33227 was indeed fracked, 1/21/18 - 2/11/18. I assume #33223 has also been fracked.]

WTI Had A Great Day; Slawson Getting Active Again In The Bakken -- August 29, 2018

WTI: wow, up 1.7% today, up $1.16, and closed trading at about $69.69.

Gasoline demand, link here:

Active rigs:

$69.69↑↑	8/29/2018	08/29/2017	08/29/2016	08/29/2015	08/29/2014
Active Rigs	61	53	30	76	194

Five new permits: pending

Operator: CLR
Fields: Haystack Butte (McKenzie)
Comments: wow, CLR is on a tear -- permits for another 5-well Palmer pad in NWNW 25-149-98;

Nine permits renewed:

Slawson: one Wizard Federal; one Jugard Federal, four Vixen Federal; two Phatkat Federal; and, one Phoenix Federal permit -- all in Mountrail County

Five producing wells (DUCs) reported as completed:

33264, 2,510, Whiting, Wold Federal 44-7-6XH, Banks, t8/18; cum --
33265, 1,997, Whiting, Wold Federal 44-7-7H, Banks, t8/18; cum --
33261, 1,091, Whiting, Wold Federal 44-7-3H, Banks, t8/18; cum --
23556, 920, Slawson, Gabriel 1-36-25H, t7/18; cum 12K after 22 days;
24519, 1,358, Slawson, Gabriel 5-36-25TFH, t7/18; cum --

Idle Rambling -- Looking At Price Of Oil -- August 29, 2018

Graph from this link:

If the graphic is hard to read:

From 2014 to 2016: "Saudi Surge: Saudi's Trillion-Dollar Mistake"

From 2016 to 2017: Saudis aggressive effort to re-set

From 2017 to present day: Trading range for WTI '' "Goldilocks"

Going forward:

current trading range: "Goldilocks"
trending toward $90: bullish for oil sector investors; little negative harm to overall economy
trending over $90 (in 2018 dollars): could negatively impact the economy
below current trading range but above $50: oil companies will survive, perhaps thrive, but investors will be disappointed

Governor Cuomo: Your Long Island Constituents Are Paying Upwards Of $600/MWH Vs $30/MWH With Conventional Power Sources -- August 29, 2018

Link here.

If I am misreading the chart, I apologize.

If the graph is hard to read, click on it and will be a bit larger. Or go to the link.

Oasis Starting To Frack The Lite Wells In The Sanish -- August 29, 2018

Oasis is starting to frack the Lite wells.

EOG's Riverview Wells In Clarks Creek Oil Field

This page will not be updated. The EOG Riverview wells in Clarks Creek oil field are tracked here.

There appears to be an interesting story here. EOG originally permitted about ten wells in the south, running north, and doing the same thing in the north, permitting ten wells in the north and running south. They then PNC'd ten to fifteen permits with plans to have, it appears about half the wells running north to south, and the other half running south to north, heel-to-toe/toe-to-heel in this drilling unit.

Look at the production data for #20513. Pretty nice.

The wells, from the north, running south:

31813, conf, EOG, Riverview
31814, conf, EOG, Riverview
31815, conf, EOG, Riverview
22200, 528, EOG, Riverview4-3031H, Clarks Creek, t7/12; cum 448K 6/18;
22199, 1,088, EOG, Riverview 100-3031H, Clarks Creek, t6/12; cum 470K 6/18;
31808, conf, EOG, Riverview
31807, conf, EOG, Riverview
31806, conf, EOG, Riverview
31805, conf, EOG, Riverview
31804, conf, EOG, Riverview

The wells, from the south, running north:

20513, 2,365, EOG, Riverview 3-3130H, Clarks Creek, 49 stages; 9.8 million lbs, t3/13; cum 696K 6/18;
32647, conf, EOG, Riverview
32646, conf, EOG, Riverview
32645, conf, EOG, Riverview

BR's Lovaas Wells In Blue Buttes Oil Field

The BR Lovaas wells:

14399, in the section to the east; about a mile to the east of the other Lovaas wells; a Winnipeg/Deadwood well; now inactive;
32903, 595, BR, Lovaas 5-8-12 UTFH, Blue Buttes, t11/17; cum 143K 6/18;
32904, 897, BR, Lovaas 6-8-12 MBH, Blue Buttes, t11/17; cum 176K 6/18;
23250, 2,806, BR, Lovaas 11-1MBH, Blue Buttes, t12/12; cum 307K 6/18;
23249, 2,946, BR, Lovaas 11-1tFH, Blue Buttes, t12/12; cum 238K 6/18;
20468, 2,976, BR, Lovaas 7-1-1UTFH, 2 sections, Blue Buttes, 26 stages; 7.1 million lbs (large to small); required a lateral; target was 29' thick, t1/16; cum 381K 6/18:
30203, 348, BR, Lovaas 8-1-1MBH, Blue Buttes, t1/16; cum 411K 6/18;
16531: a dual lateral, crossing the Lovaas wells -- struggling now; was a good well; did show a jump in production several years ago; 608, BR, Brown 44-1H, t6/07; cum 216K 6/18;

****************************************

It looks like it's time to start tracking the BR Lovaas wells in Blue Buttes. To start, look at the phenomenal production of this well:

20468, 2,976, BR, Lovaas 7-1-1UTFH, 2 sections, Blue Buttes, 26 stages; 7.1 million lbs (large to small); required a lateral; target was 29' thick, t1/16; cum 381K 6/18:

Pool	Date	Days	BBLS Oil	Runs	BBLS Water	MCF Prod	MCF Sold	Vent/Flare
BAKKEN	6-2018	30	9904	9957	2399	11979	11905	0
BAKKEN	5-2018	31	11742	11666	3074	14298	14221	0
BAKKEN	4-2018	30	10401	10515	2786	12764	11335	1355
BAKKEN	3-2018	31	11075	10951	2425	11983	11906	0
BAKKEN	2-2018	28	11417	11354	1975	13541	13471	0
BAKKEN	1-2018	31	11676	11598	2166	12325	12135	113
BAKKEN	12-2017	31	12660	12637	2105	14990	14913	0
BAKKEN	11-2017	30	13591	13909	1883	15669	15595	0
BAKKEN	10-2017	16	4989	4519	1345	5359	1961	3358
BAKKEN	9-2017	1	0	0	0	2	0	0
BAKKEN	8-2017	0	0	0	0	0	0	0
BAKKEN	7-2017	0	0	0	0	0	0	0
BAKKEN	6-2017	24	7061	7482	2394	20175	20117	0
BAKKEN	5-2017	31	10627	10687	3337	28541	28048	416
BAKKEN	4-2017	30	11737	11612	5430	32398	32324	0
BAKKEN	3-2017	31	12783	12957	4349	42398	42321	0
BAKKEN	2-2017	28	16612	16819	5384	45268	45198	0
BAKKEN	1-2017	26	16320	15840	2918	10923	9239	1619
BAKKEN	12-2016	15	8056	8421	1240	8114	8077	0
BAKKEN	11-2016	30	21591	21544	5043	35120	34561	485
BAKKEN	10-2016	31	24029	24012	4296	39062	38985	0
BAKKEN	9-2016	29	20566	19966	3690	27702	27639	0
BAKKEN	8-2016	31	24433	25031	4678	34272	34195	0
BAKKEN	7-2016	31	26007	26007	5103	36695	36618	0
BAKKEN	6-2016	30	24690	25232	4820	29721	26553	3093
BAKKEN	5-2016	31	23238	22500	4640	29403	29326	0
BAKKEN	4-2016	19	12511	12437	2469	14937	14889	0
BAKKEN	3-2016	17	15109	14575	2718	17613	17571	0
BAKKEN	2-2016	0	0	0	0	0	0	0
BAKKEN	1-2016	14	8424	8424	2756	11798	0	11763

For Newbies: Incredible Oasis Lawler Wells In North Tobacco Garden -- August 29, 2018

This page will not be updated. The Oasis Lawlar wells are tracked here.

But for newbies, look at the production data for these wells -- 300,000 bbls/well in one year:

20459, 1,443, Oasis, Lawlar 23-14H, t9/11; cum 216K 6/18; off-line for most of 2017; off-line, again as of 3/18;
20460, 1,195, Oasis, Lawlar 26-35H, 26 stages, 2.1 million lbs, t9/11; cum 341K 6/18; back on-line 9/17; off-line for most of 2017; huge bump in 9/17 and 10/17; according to FracFocus this well has not been refacked; full production data at this post;
31629, 2,208, Oasis, Lawlar N 5199 41-23 2B, North Tobacco Garden, t7/17; cum 324K 6/18;
31630, 1,497, Oasis, Lawlar N 5199 41-23 3T, North Tobacco Garden, t7/17; cum 201K 6/18;
31631, 2,083, Oasis, Lawlar N 5199 42-23 4B, North Tobacco Garden, t7/17; cum 263K 6/18;
31632, 1,762, Oasis, Lawlar N 5199 42-23 5T, North Tobacco Garden, t7/17; cum 214K 6/18;
31633, 2,078, Oasis, Lawlar N 5199 42-23 6B, North Tobacco Garden, t7/17; cum 248K 6/18;
31634, 1,058, Oasis, Lawlar N 5199 42-23 7T, North Tobacco Garden, t7/17; cum 223K 6/18;
31640, 1,042, Oasis, Lawlar N 5199 43-23 8T, North Tobacco Garden, t8/17; cum 259K 6/18;
31642, 1,368, Oasis, Lawlar N 5199 43-23 9B, North Tobacco Garden, t10/17; cum 216K6/18;
31643, 960, Oasis, Lawlar N 5199 44-23 10T, North Tobacco Garden, t8/17; cum 158K 6/18;
31644, 1,126, Oasis, Lawlar N 5199 44-23 11BX, North Tobacco Garden, t8/17; cum 200K 6/18;
31645, 548, Oasis, Lawlar N 5199 44-23 12TX, North Tobacco Garden, t8/17; cum 181K 6/18;

The Market, Energy, And Political Page, T+15 -- August 29, 2018

Canada, late in the day: wow, Trudeau is spooked! After US-Mexico come to "broad" agreement (announced just two days ago), Trudeau who has not had a good year so far, says Canada could have a deal with the US by the end of the week.

Trudeau's country has become known as the country that can't "close a deal." Four pipeline attempts: four strike outs -- Northern Gateway (killed by Trudeau); Keystone XL (killed by Trudeau's close friend Barack Obama); Enbridge Line #3 in deep trouble in Minnesota (arguing over one or two miles of route); and, TransMountain Pipeline expansion (Trudeau had to buy it and all hinges on court decision expected to be announced tomorrow).

Weekly EIA petroleum report: link --

a decrease of 2.6 million bbls; now at 405.8 million bbls; my "threshold" is 400 million bbls (below 400 million bbls, very, very bullish)
refineries at 96.3% capacity; down from recent record highs of early 100%
gasoline production (10.2) and distallate (5.2) unremarkable
imports coming down a bit
jet fuel supplied is still up significantly year-over-year
is air travel impacting gasoline demand? It's hard to believe but one has to start considering that
gasoline demand will be posted later this afternoon

Markets:

three of four indices could hit new records at close; only Dow yet to set a new record high
Nasdaq could set all-time record; in doing so, Nasdaq will have the best August gain in 18 years!
so much for "Sell in May, go away."

Disclaimer: this is not an investment site.

WTI: $69.14 (will struggle to stay above $69 today, it appears).

Market, mid-morning trading --

Dow, irrelevant: flat; Nasdaq, up 10 point; and the all-important, S&P 500 -- flat, right at 2,900
AAPL: and there it is, a new all-time record -- up $1.78, now trading at $221.49 -- the previous all-time high was $220.54 (intraday -- it looks like the previous record close was $220.47)
EOG: up slightly, at $118.96
CVX: up very slightly; $120.50; well off it's all-time high of $133
BRK-B: down slightly; owns too many regional newspapers;
COP: nice; up almost 2%;
T: down about a percent;
UNP: flat, slightly positive;
XLNX: up about 3/4 percent;
OAS: up about 1.6%;
NOG: up about 1.6%;
PLUG; challenges; trading at $2.00;
YUMC: up another 5% today;

Out to save the world - EVs, gasoline demand, Norway: as is well known, of global electric car sales, Norway has the highest market share --- but that's only due to --

tax credits; tariffs; government incentives for folks to go "electric"
incredibly wealthy nation that can afford pricey cars

It will be decades, if ever, where other countries can emulate Norway. Having said that, reality sucks - Rystad Energy analysis --

Despite the fact that electric vehicle sales constituted 48% of all new car sales in Norway in the first quarter of 2018, Rystad Energy has not observed a significant change in transport fuel consumption at the country-level.

From Q1 2013 to Q1 2018, demand for motor transport fuel remained roughly unchanged at 56,000 bpd. we estimate that electric vehicle sales lowered gasoline and diesel consumption in the country by 3% in 2016 and 4% in 2017, but we believe that the effect of electric vehicles on total fuel consumption was masked due to persistent conventional vehicle sales: over 40,000 diesel and gasoline vehicles, or 42% of total new car sales, were sold in Norway during the first half of 2018.

Comment: Norway -- annual car sales, 150,000; it appears North Dakota accounts for about 25,000 bbls gasoline / day

Missed It By A Day; I Thought WTI Would Hit $69/Bbl Yesterday; Hit That Mark This A.M. -- August 29, 2018

GDP, link here:

consensus: 3.8% to 4.2%
prior: 4.1%
today, the second estimate: 4.2% -- wow, at the high end of consensus
Dow: had been positive in pre-market trading; now drops 13 points; I assume this number makes it more likely the Fed will raise rates at least one more time this year (pretty much baked in) but could the Fed actually squeeze in a second rate hike before the end of the year?

WTI: $69.11

France: more on the resignation of the country's environment minister; sour grapes; in fact --

Despite Hulot’s public denouncement of France’s climate change efforts, electricity generation from renewable and nuclear power sources in France jumped in June, squeezing out fossil fuels such as coal, oil, and gas.

In what many considered a toothless grand gesture, French legislature passed a law late last year that prohibited all oil and gas exploration and production within its borders and territories by 2040, which is when some are expecting oil to reach its peak demand. The law called for no new licenses to be issued or renewed for the exploration of oil and gas.

France: leaving oil in the ground -- in 2010, the Paris Basin was estimated to have nearly 100 billion bbls of oil; with new technology and the right price, could that now be as much as 250 billion bbls? If so, would compare with the Bakken.

India: if France doesn't want fossil fuel, India will. And India will be a bigger player in the international fossil fuel market going forward than even China. Link here.

India will pass China as the country with the largest demand for oil by 2024, accounting for about 30 percent of total global oil demand growth.

The report added that if India can't find ways to produce its own gasoline, it will have to look to more imports. Countries with spare capacity are in the EU or the U.S., though Wood Mackenzie said the trade distances could create concerns for a growing India.

US refinery update: this is pretty cool. I noted this for about the last six weeks on the blog. Now, oilprice is picking up on it --

This summer, United States refineries operated just shy of record highs, running close to 100 percent utilization rates. Refineries reached a new record-high gross input value of 18.243 million bpd for the week ending August 10. The record-high run rate pushed utilization to 98.1 percent, the highest recorded since 2005, according to the U.S. Energy Information Administration (EIA) Weekly Petroleum Status Report. These peak run rates are a function of high summer demand and low crude oil pricing as midstream capacity constraints widen regional crude oil differentials.

Iran: some in the US want sanctions to push Iran exports to zero.

Regardless, it appears sanctions have resulted in a loss of about one million bbls crude oil / day export for Iran. The deadline doesn't begin until November 4, 2018, and exports are already plunging. At $50/bbl that's about $20 billion of loss revenue. What's Iran's annual budget? Apparently around $350 billion but that includes taxes, etc. According to the article, Iran will have sold $50 billion of oil from March, 2017, to March, 2018, (their fiscal year runs March to March). If that is revenue, there was some cost involved in production and shipping. If Iran loses one million bbls/day in export, that could be as much as $20 billion -- out of the $50 billion. And based on the linked article from Forbes, it looks like Iran's only "real" income comes from oil.

Bakken buy illustrates trend: from The Williston Herald -- a pleasant news story suggesting recent deals in the Bakken (all previously reported at the blog) portend good oil economy going forward.

No wells come off the confidential list today: there was no February 29 six months ago. Having said that, three "fun" stories posted overnight:

Active rigs:

$69.06↑	8/29/2018	08/29/2017	08/29/2016	08/29/2015	08/29/2014
Active Rigs	60	53	30	76	194

RBN Energy: the Northeast's changing role as US natural gas supplier.

The U.S. Northeast’s reign on natural gas supply growth has factored heavily into broader U.S. gas supply-demand dynamics ever since the Marcellus/Utica shales burst onto the production scene.

This year is no different.

Lower-48 gas production in 2018 to date has averaged 8 Bcf/d higher year-on-year.

Nearly 50% of that growth has come from the Northeast, and, what's more, the bulk of that incremental supply has flowed out of that region, flooding markets in neighboring areas.

Now, the Marcellus/Utica is in the midst of yet another major inflection point.

After years of perpetual pipeline constraints, pipeline utilization data indicates that some Northeast takeaway pipelines have a little bit of capacity to spare — a trend that has major implications for regional pricing relative to downstream markets. At the same time, more pipeline expansions are on the horizon that promise to bring on even more gas supply from Marcellus/Utica producers. (Just last Thursday, Energy Transfer’s Rover Pipeline was approved to begin service on its final two laterals — Majorsville and Burgettstown — and Williams’s Atlantic Sunrise expansion of Transco Pipeline is due for completion within weeks.)

What does this new reality look like and what does it mean for the broader U.S. gas market? Today, we begin a short series providing our latest analysis of the Northeast gas market, starting with how it fits into the current U.S. supply-demand picture.

The Million Dollar Way (The Bakken Oil Blog)

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