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Monday, September 17, 2018

XTO Fenton Federal With Huge Jump In Production -- September 17, 2018

See graphic at this link: http://themilliondollarway.blogspot.com/2018/09/for-newbies-this-is-happening-all-over.html.

Check out recent production:

PoolDateDaysBBLS OilRunsBBLS WaterMCF ProdMCF SoldVent/Flare
BAKKEN7-201831143191391940157220509621539
BAKKEN6-201830463040633323571187216068
BAKKEN5-2018188020351370129
BAKKEN4-20180000000
BAKKEN3-20180000000
BAKKEN2-20180000000
BAKKEN1-201842102432323282780
BAKKEN12-20173116481881767277623960
BAKKEN11-20173017711670591225919130
BAKKEN10-2017311745160972627831623776

Three Forks, stimulated June 25, 2010: 905K lbs sand (that's less than a million lbs of sand).
  • no sundry form to suggest it was re-fracked
  • FracFocus with no data to suggest it was re-fracked
Taken off-line for a few months; production jumps from 2,000 bbls/month to 14,000 bbls/month.

There are thousands of Bakken wells that will go through this cycle before it's all over.


The well:
  • 17407, 1,273, XTO, Fenton Federal 11X-20, Lost Bridge, t6/09; cum 228K 7/18; 
This one has a great story, but too late tonight. If I remember, I will post the story tomorrow.

Watford City Posts Largest Jump In School Enrollment In History -- Apparently Those Stories Of The End Of The Bakken Boom Were Highly Exaggerated And Premature -- September 17, 2018

Watford City, from myndnow:
"We had to add another section in kindergarten, we have about 191 kindergartners."
"We had to get a bit creative and move the third graders out of our elementary school, so it's a K-2 building now with a 3-6 building along with a 7-12."
All of this has been caused by the biggest-ever single year student population increase in Watford City's history this fall - a jump of almost 300.
 "We're looking at about 1830 students right now. We have capacity of about 1900-2000, so with another good growth year like this year we would definitely have a space situation."
The district is well down the path to adding another building - with plans for a new elementary school expected to be finalized soon. Holen, who is starting his 14th year at the helm of Watford City's schools, has seen student numbers balloon from 512 in 2008, to the 1830 today.
Elenore, The Turtles

Quick! Pop Quiz? -- September 17, 2018

Name the #4 producer in the North Dakota Bakken.


Hint: It's not Fidelity.

For Newbies: Another Example Of The Life-Cycle Of A Bakken Well --

The last sundry form for this well was received by the NDIC on December 21, 2017, reporting a small fire in the surrounding pasture due to a "low-pressure" flare issue. Prior to that, the previous sundry form was received by the NDIC on October 2, 2015.

FracFocus has no data that this well was re-fracked.

The well:
  • 20856, 1,349, Whiting, King 3-8H, Traux, t1/12; cum 305K 7/18; 
See if you can spot the "anomaly". LOL. Recent production:
PoolDateDaysBBLS OilRunsBBLS WaterMCF ProdMCF SoldVent/Flare
BAKKEN7-20183185408546747123987853215362
BAKKEN6-2018301001299878389276911371913882
BAKKEN5-201831124731250310112298941958810213
BAKKEN4-201830153561526012567342842274111453
BAKKEN3-201831174831773813003316911858013018
BAKKEN2-201828209682066015989320621078421194
BAKKEN1-20183125285253132583422321724714982
BAKKEN12-20173127369274094831817428104646872
BAKKEN11-2017114202382317704681546262158
BAKKEN10-20170000000
BAKKEN9-2017248991004454186217873
BAKKEN8-20173113271351583265725640
BAKKEN7-20173110891009589263625430

Production data after initial (and only frack):
BAKKEN8-201231579760003716923769142232
BAKKEN7-2012215932423331780231
BAKKEN6-2012306043605131601431787755452
BAKKEN5-2012225884623131021234246537623
BAKKEN4-2012216807581952971375045379150
BAKKEN3-201214359639402390786519915832
BAKKEN2-20122915195150891262031430626925074
BAKKEN1-20122528023748310828

The graphic:


Other wells in this graphic:
  • I might come back to this later.
There are tens of thousands of these wells yet to be reported.

Federal Income Taxes -- Looking Ahead To 2018

In 2017, our standard deduction was $15,200 and our "exemption" was $8,100. It is my understanding that in 2018, our standard deduction will go to 24,000, plus an additional $1,300 for each spouse over the age of 65 or blind, but the "exemption" will "go away."

$23,300 (2017) vs $26,600 (2018).  What's not to like. Thank you, Mr Trump.

I'm not going to compare the new tax brackets; let me be surprised. LOL.

One can download draft examples of the new "1040." It is' almost postcard-size. LOL.


If the Dems take both houses of Congress this autumn, one can assume the tax form will get much, much simpler. The Dems will eliminate all that nonsense between "list your income" and "how much you owe us."

Wheel, Jerry Jeff Walker

A Huge, Huge Thank You To The Crude OIl Pipeline Protestors! -- September 17, 2018; CNI Is Going To Need Some UNP Help

Disclaimer: this is not an investment site. Do not make any financial, investment, travel, job, or relationship decisions based on anything you read here or think you may have read here.

I began buying UNP about a year ago, long before I knew who Ms Why-own-a LaDuke? was. It was a very, very alert reader who identified her for me.

It's a long, long story why I started accumulating UNP, but suffice it to say, Ms Why-own-a LaDuke? has moved this stock much farther along than I ever would have anticipated. Better lucky than good.

Making America great. Another open-book test.

UNP profits grew almost 30% in the last quarter (2Q18) but the CEO is not happy --
Union Pacific's second-quarter profit grew 29 percent to $1.51 billion, but rail executives said at the time that the results could have been better if not for some operational problems.


LNG, KBR, COP -- September 17, 2018

This is staggering if I'm reading it correctly, two companies accounting for this much LNG processing. From SeekingAlpha:
  • KBR says it is pursuing a new phase of joint development with ConocoPhillips , as the companies plan to complete a front-end engineering and design quality reference design for a mid-scale capacity liquefied natural gas train
  • the companies say the integrated design approach, utilizing COP's Optimized Cascade process technology and constructed with integrated modularized construction, is expected to be available for new LNG projects starting in 2019
  • KBR says it has delivered about a third of the world's current LNG production capacity, and COP's Optimized Cascade process is utilized in LNG plants producing ~23% of the world's LNG supply

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The Book Page
 
My book of consequence this week: Sea of Dangers: Captain Cook and His Rivals in the South Pacific, Geoffrey Blainey, c. 2009.

I'm in my ocean-going phase, I guess. This must be the third or fourth book along this line.

I really don't know much about "Captain Cook." I actually feel "much more comfortable" with Ferdinand Magellan. Even more so than Christopher Columbus, of all things.

Paging through the book quickly, I think the references to England, and specifically, Yorkshire or northern England was what caught my interest in the book and convinced me to check it out at the library. I don't care for the cover, but I love the gravitas of the book, the pitch, font, etc.

So, we'll see.

An example:
James Cook was born on October 27, 1728, -- so this is slightly more than a hundred years after William Shakespeare, and half a century before the US Revolutionary War -- in the Yorkshire village of Marton-in-Cleveland, about fifteen miles from the North Sea. His mother was from Yorkshire, his father from Scotland. To be born in Scotland was an advantage, for the Scots were probably the most literate people in the world at that time, it is almost certain that Cook's father could read and write.
Let me digress for a moment.

If that intrigued you -- that the "Scots were probably the most literate people in the world at that time," you will be enjoy reading a most compelling book on the subject, How The Scots Invented The Modern World, The True Story of How Western Europe's Poorest Nation Created Our World & Everything in It, Arthur Herman, c. 2002. I've read it twice and parts of it many more times than that: the takeaway: the church, the law, the university.

Back to the book.

Cook's first voyage from Whitby (a most wonderful city on the cost, northern Yorkshire) was in the Freelove, a brand-new collier, or coal ship, buit at Great Yarmouth and carrying a crew of nineteen, of whom ten were apprentices or "servants."

I haven't yet decided whether to take notes while reading the book like I usually do, or to simply enjoy the book.

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

By the age of 17,  James Cook was living and working in the small fishing port of Staithes, about fifteen miles from his birthplace.

Staithes is to the north of Whitby.

While in England many years ago, I hiked the coast from Robin Hood's Bay to Whitby. Robin Hood's Bay is south of Whitby. Had we taken the inland route, the highway, it would have been about a two-hour walk, 5.5 miles. But taking the very difficult and jagged coast, it took us six or seven hours, I think. I don't recall. But it was a very, very long hike, and very, very challenging. It would have been a tough hike for teenagers, and the two of us were each about 50 years old (both of us born in 1951 and this must have been in 2003).

I note that because in the book, the author describes Whitby which I recall vividly:
On a river estuary, at the foot of high cliffs, the cramped streets were bustling in daytime, and their little cottages housed families from which at least one person typically went to sea.
The river was the River Esk. The author fails to mention the great Whitby church. From wiki:
The Church of Saint Mary is an Anglican parish church serving the town of Whitby in North Yorkshire England.
It was founded around 1110, although its interior dates chiefly from the late 18th century. The church was designated a Grade I listed building on 23 February 1954.
It is situated on the town's east cliff, overlooking the mouth of the River Esk overlooking the town, close to the ruins of Whitby Abbey. Church Steps, a flight of 199 steps lead up the hill to the church from the streets below. The church graveyard is used as a setting in Bram Stoker's novel, Dracula
I remain a bit peeved with myself. I do not recall how much I knew of the Dracula connection when  I first visited Whitby. Suffice it to say, I would give almost anything to re-live that entire day. There would have been so much to explore. As it was, I was able to find a Christian cross on a necklace made of Whitby jet for our younger daughter, who went on to become a missionary for several summers, including one major trip to Uganda.

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I have read that the origin of "Dixie" is unknown -- the Dixie in "I Wish I Was In Dixie." I'm sure many will disagree with that, that the origin of the word is unknown. Be that as it may.

From the book, in the 18th century, a seaman could easily calculate latitude but longitude was a different story. It was nearly impossible. Captain Cook trained himself and "slowly learned to compute longitude with more accuracy, using a reflecting telescope, than most captains in the Royal Navy."
In London in 1768, the Admiralty were searching for a mariner capable of carrying out an unusual mission in the Pacific Ocean .... to track the transit of Venus. Multiple observations of the transit of Venus across the diameter of the sun from scattered parts of the world would provide the data necessary to calculate the exact distance of the sun from earth, a measurement that would prove vital for navigation and many other activities, according to Edmond Halley (of Halley's Comet fame). 
Seven years earlier:
Two ships left England in ample time to view the transit expected on June 6, 1761. On one of the two ships were two astronomers, Charles Mason and Jeremiah Dixon. They observed the transit of Venus from an observatory in Cape Town. Later they made a reputation in British North America by surveying the state boundary known as the Mason-Dixon line. Today the evocative musical word "Dixieland" commemorates the astronomer Dixon
But the measurements in 1761 were not as good as hoped for. The next transit of Venus would occur on June 3, 1769, but then after that, it would another 105 years before it happened again. Thus, the observations and measurements in 1769 had to be accurate; no failures accepted this time.
Captain Cook had already been chosen when Captain Samuel Wallis returned to England from his exploration in the South Pacific in the Dolphin late in May, 1768. Captain Wallis reported that he had found the ideal island in which to set up an observatory. It was King George III Island, now known as Tahiti. There, Captain Wallis confidently advised, the skies would be clear on the vital day, and moreover the native inhabitants, he explained with not quite the same confidence, were likely to be friendly. In June, the Royal Society accepted his advice.

Cook's timetable required him to be in Matavai Bay in Tahiti a couple of months before the transit of Venus occurred. After the transit, Captain Cook was to open his secret instructions. While the voyage to Tahiti was public knowledge, Cook's subsequent search for the missing continent was intended to be a secret. The competitive game of colonial expansion called for secrecy.

KMI, Suggesting Canada Is Closed For Business, To Sell All Canadian Assets -- September 17, 2018

Minor note: Cheniere signs 15-year LNG deal with commodity trader Vitol.
  • 0.7 million tons of LNG annually beginning this year
  • free on board (FOG) basis (spot price, essentially)
  • four LNG trading firms getting bigger: Trafigura, Vitol, Gunvor, Glencore
KMI: to sell all its Canadian assets; says Canada is closed for business;

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

Active rigs:

$69.549/17/201809/17/201709/17/201609/17/201509/17/2014
Active Rigs66563267198

Four new permits:
  • Operator: Whiting
  • Field: Alger (Mountrail), Cherry Creek (McKenzie)
  • Comments: Whiting has permits for a 3-well Lapica pad in SWSE 23-155-93; and one Stenehje Federal permit in Cherry Creek, SESW 7-149-98
One permit canceled: a Thunderbird Little Missouri Federal permit in Billings County

Seven permits renewed:
  • Oasis (3): three Seattle Federal permits in McKenzie County
  • Petro-Hunt (2): two Klevmoen Trust permits in McKenzie County
  • Kaiser-Francis Oil: a Huskha permit in Stark County
  • Resource Energy Can-Am: an Adeline permit in Divide County
Four producing wells (DUCs) reported as completed:
  • 33607, 1,479, Hess, SC-Gene-154-98-0805H-6, Truax, t8/18; cum --
  • 31966, 1,803, XTO, George Federal 21X-19F2, Lost Bridge, t7/18; cum 18K after 20 days;
  • 31964, 2,823, XTO, George Federal 21X-19E, Lost Bridge, t7/18; cum 16K after 8 days; extrapolates to over 60K for one full month;
  • 31963, 2,596, XTO, Bang Federal 21X-19AXB, Lost Bridge, t8/18; cum --

Canada: Closed For Business -- The Market, Energy, And Political Page, T+35 -- September 17, 2018

Fallout from the Boston gas explosions: the road-to-New-England. Link here.

Trans news today:


Judges went every which way on critical pipeline decision. No, they didn't. Followed precedent.

A few days away from making major announcement. We'll see.

Liberals' own bill could kill pipeline. Ya think? We've seen this movie before. From the linked article:
What would you call a government that pays $4.5 billion for a pipeline, then passes a law that stops it from getting built? You’d probably call that government a pack of idiots.
And you’d be right.
But this is actually a possibility, now that Bill C-69 is about to advance to second reading in the Senate. This bill, whose horrors are vividly described in Friday’s column by Licia Corbella, is widely condemned as a confusing mess that will ensure no major project is ever built in Canada again.
“If this passes, Canada will have a sign in the window saying ‘Closed for business,’” Alberta Senator Doug Black says. “We might as well turn out the lights, because investment will avoid Canada, period.” In a report to be released soon, the Canada West Foundation says: “Today, our reputation as a place to invest is in tatters, and Bill C-69 is poised to make things worse.”
The report notes that since 2015, Canada’s oil, gas and mining investment has declined 32 per cent. That’s before Bill C-69 takes effect. The bill not only revises and complicates rules for project approvals, inserting criteria up to and including gender issues, but creates an entirely new energy regulator to replace the National Energy Board.
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The Fashion Page

We've seen this several times. It really is incredible. Amazing that it ended up in Dallas. Featured in the weekend edition of The WSJ.



Elsewhere.

http://www.nybooks.com/articles/2016/04/07/brilliant-troubled-dorothy-parker/

Edith Wharton: 1862 - 1937
Coco Chanel: 1883 - 1971
Dorothy Parker: 1893 -  1967

Ernest Hemingway: 1899 - 1961
Ayn Rand: 1905 - 1982

The Algonquin Hotel threesome: Dorothy Parker, Robert Benchley, Robert Sherwood.

Algonquin Round Table
Volney Hotel, in later years

Mineral Owners, Rejoice! But North Dakota Flaring Is Getting Worse -- September 17, 2018

From RBN Energy today:
There is more evidence that mayhem is afoot when we look at NGL price relationships. In fact, ethane tells a big part of the story.
Since mid-May 2018, the price of Mont Belvieu ethane has more than doubled, from 25 c/gal to 55 c/gal on Friday (September 14).  All measures of ethane value that we monitor here at RBN are back to levels not seen since 2012.
Ethane is now three times the price of natural gas on a per-Btu basis. The last time we saw that was May 2, 2012. The ethane price is up to 34% of West Texas Intermediate (WTI) crude oil. Last year at this time, it was 20%. The frac spread, where ethane is a big component, is up to $8/MMBtu, the highest level since crude prices crashed in 2014.
Two things are driving this dizzying ascent of ethane prices.
First is increasing ethane demand from all the new U.S. ethane-only crackers coming online plus growing ethane exports. The second factor is the focus of this blog: the fractionation capacity constraint. Maxed-out fractionation capacity caps ethane production.
Ethane can’t be delivered to petchem plants or export docks until it has been fractionated. But not only does fractionation capacity cap ethane production, there is a more nefarious process at work. Even though ethane prices are now three times natural gas prices, ethane rejection (the sale of ethane as natural gas) is on the rise.
That is because processors are rejecting ethane to make room for the fractionation of propane and the heavier NGLs.
There are all sorts of quirks that happen when rejection is driven by fractionation capacity constraints instead of natural gas-versus-ethane value economics, not the least of which is that lowering the ethane content of incoming y-grade actually reduces the effective capacity of the fractionator (more on that math in an upcoming blog). But regardless of the math, the net result is lower ethane supply just when ethane demand is cranking up. No surprise that ethane prices are skyrocketing.
Talk about a conundrum. The price of ethane is going up. But North Dakota doesn't have the infrastructure to process all of the ethane it is producing. And even if North Dakota had the necessary infrastructure it sounds like the US doesn't have the necessary capacity to handle all of it.

On top of all this, look at the NG fill rate.

If you are having trouble following the pricing / measuring of LNG, you are not the only one. See this post.

Last week, it's all about LNG.

More from the RBN Energy link:
So what happens if production continues to outpace fractionation capacity? Presumably, at some point, there is no more storage capacity for y-grade. How about exporting the surplus? That’s what happens with purity products like ethane and propane. While theoretically possible, exports of y-grade are extremely problematic — there are no appropriately configured docks or ships. Consequently, if storage is full, production must be curtailed. But here’s the catch: Y-grade gets produced as a byproduct along with associated and “wet” gas production. The only way to dial down y-grade production is to dial down the production of associated gas (which means pulling back on crude oil production), or to reduce wet gas production — or both. That would be an unprecedented market development.
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Treasure Every Moment

Fractionation: Keeping America Great -- September 17, 2018

Must read: today's RBN Energy post on NGL fractionation. See below. It starts with ethane. Over the weekend a reader sent me the link to a 3-part series in the Houston Chronicle on fractionation. One is allowed three free articles/month over at the Chronicle. Hopefully, you still have three free articles. The link to part 3 will get you to all three parts in the series. If you get to the articles, don't close the window; if you open it again, it will count against your free articles. I've archived all three.

RBN Energy: far-reaching impact of the unprecedented shortfallin NGL fractionation capacity.
Y-grade, welcome to the Hotel Fractionation. You can check in any time you like, but you can never leave!  OK, so that’s a bit of an overstatement. But there is no doubt that the U.S. NGL market has entered a period of disruption unlike anything seen in recent memory. Mont Belvieu fractionation capacity is, for all intents and purposes, maxed out. Production of purity NGL products is constrained to what can be fractionated, and with ethane demand ramping up alongside new petchem plants coming online, ethane prices are soaring. But that’s only a symptom of the problem. Production of y-grade — that mix of NGLs produced from gas processing plants — continues to increase in the Permian and around the country. Sooo … If you can’t fractionate any more y-grade, what happens to those incremental y-grade barrels being produced?  How much can the industry sock away in underground storage caverns?  Does it make economic sense to put large volumes of y-grade into storage if it will be years before it can be withdrawn? — i.e., “you can never leave.” And what happens if y-grade storage capacity fills up? Today, we begin a blog series to consider these issues and how they might impact not only NGL markets, but the markets for natural gas and crude oil as well. 
Fractionation, the process of splitting natural gas liquids (NGLs) into purity products — ethane, propane, butanes and natural gasoline — is as important to the NGL market as refining is to the crude and products markets. In fact, the functions are quite similar — take a raw material with no direct use and transform it into usable products. 
In the past, we considered the implications of a tight fractionation market, but did not get the NGL heebie-jeebies. So what has changed? The answer is mostly one of magnitude. The situation is quickly becoming more dire. Fractionation capacity in Mont Belvieu, the rest of Texas and Louisiana is running at or near full capacity. Railcars of “x-grade” NGLs (mixed NGLs with less ethane than y-grade that can be transported by rail) are fanning out across the country looking for open fractionator space.  Marcellus/Utica fractionators are being inundated with barrels from as far away as the Permian. Some midstream companies that move y-grade from the Permian through Mont Belvieu fractionation are said to be charging between 70 and 80 c/gal for spot transportation and fractionation fees (T&F), up from 15 c/gal before all this started. 

OPEC Basket Tanking -- So Much For All That "We Can't Survive Without Iranian Oil" -- September 17, 2018

Feinstein: well-played. [Question: when should have Mitch McConnell seen things unraveling?]

Must read: today's RBN Energy post on NGL fractionation. See below. It starts with ethane. Over the weekend a reader sent me the link to a 3-part series in the Houston Chronicle on fractionation. One is allowed three free articles/month over at the Chronicle. Hopefully, you still have three free articles. The link to part 3 will get you to all three parts in the series. If you get to the articles, don't close the window; if you open it again, it will count against your free articles. I've archived all three.

Bakken redux: Permian highways desperate for traffic relief. Link here.

Tanking? Okay, I agree. That was uncalled for. OPEC basket is not tanking. But it is down almost 1% in pre-market trading whereas the rest of the oil market, generally, is up.

Iran sanctions: the general consensus is the world can't go on without Iranian sanctions. No link. Story everywhere. Yawn. If accurate, OPEC basket should also be spiking.

WTI, Brent, OPEC basket: up 0.74%; up 0.58%; down 0.91%.

Venezuela: more oil presence for China ... but no mention of any new funds from China. Several story lines in that article. The first story line coming up shortly --- from The WSJ.

China: from The WSJ -- Chinese shares, rattled by trade impasse, hit lowest level since 2014.
The Shanghai Composite Index closed at 2651.79, its lowest since November 2014. That was in the early days of what proved to be a spectacular boom and bust cycle, in which the index almost doubled by mid-2015 before falling back sharply in the following months.
Trading volume has tumbled in both Shanghai and Shenzhen. On Monday, the value of shares changing hands reached a combined 245 billion yuan ($35.7 billion)—half the daily average of 500 billion yuan seen at the start of this year, and a fraction of the record 2.4 trillion yuan ($349.20 billion) just before the 2015 market crash. 
Time for the US Congress to say "enough is enough" and bail the Chinese out.
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Back to the Bakken

Wells coming off the confidential list over the weekend, Monday:

Monday, September 17, 2018
  • 34358, SI/NC, XTO, Bobcat Federal 14X-35EXH, Bear Creek, no production data, 
  • 34245, 2,535, WPX, Otter Woman 35-36HU, Mandaree, 51 stages; 8.5 million lbs, t8/18; cum --
  • 33738, SI/NC, Hess, BB-Federal B-151-95-2122H-7, Blue Buttes, no production data,
  • 32130, 895 CRL, Burr Federal 4-26H, Sanish, 62 stages; 9.9 million lbs, a nice well, t6/18; cum 40K 7/18;
DateOil RunsMCF Sold
7-20182935421012
6-201868944608

Sunday, September 16, 2018
  • 34563, SI/NC, Abraxas, Ravin 9H, North Fork, no production data,
  • 33737, SI/NC, Hess, BB-Federal B-151-95-2122H-7, Blue Buttes, no production data,
  • 33561, 1,861, CLR, Mountain Gap 12-10H, Rattlesnake Point, a huge well, 64 stages; 15.3 million lbs, t6/18; cum 57K 7/18; Mountain Gap wells are tracked here;
DateOil RunsMCF Sold
7-20182420622550
6-20183174935547
3-20188710

  • 32962, 827, Oasis, Ceynar 5198 12-5 7T, Banks, a huge well, 50 stages; 4 million lbs, t3/18; cum 92K 7/18;
DateOil RunsMCF Sold
7-201816159
6-20182811984867
5-20182066759256
4-20183346477041
3-2018932217046


Saturday, September 15, 2018
  • 34357, SI/NC, XTO, Bobcat Federal 14X-35AXB, Bear Creek, no production data,
  • 34246, 2,913, WPX, Otter Woman 35-36HG, Mandaree, a nice well, 51 stages; 8.5 million lbs; t7/18; cum 11K 7/18;
  • 33736, SI/NC, Hess, BB-Federal B-151-95-2122H-9, Blue Buttes, no production data,
  • 31516, IA/320, CLR, Lansing 5-25H1, Banks, producing, 4 stages; 488K lbs, t3/18; cum --; a liner failure before stage 5; will repair and finish stim at a later date;

Records: the Bismarck Tribune  -- ND oil, gas production returns to record levels (by the way,  technically that headline is incorrect). The big story line: 60 years of more drilling. Not 60 years of more production but 60 years of more drilling based on 1,600 new wells per year.


Active rigs:

$69.509/17/201809/17/201709/17/201609/17/201509/17/2014
Active Rigs65563267198

RBN Energy: far-reaching impact of the unprecedented shortfallin NGL fractionation capacity.
Y-grade, welcome to the Hotel Fractionation. You can check in any time you like, but you can never leave!  OK, so that’s a bit of an overstatement.
But there is no doubt that the U.S. NGL market has entered a period of disruption unlike anything seen in recent memory. Mont Belvieu fractionation capacity is, for all intents and purposes, maxed out.
Production of purity NGL products is constrained to what can be fractionated, and with ethane demand ramping up alongside new petchem plants coming online, ethane prices are soaring.
But that’s only a symptom of the problem. Production of y-grade — that mix of NGLs produced from gas processing plants — continues to increase in the Permian and around the country. Sooo … If you can’t fractionate any more y-grade, what happens to those incremental y-grade barrels being produced?  How much can the industry sock away in underground storage caverns?  Does it make economic sense to put large volumes of y-grade into storage if it will be years before it can be withdrawn? — i.e., “you can never leave.” And what happens if y-grade storage capacity fills up? Today, we begin a blog series to consider these issues and how they might impact not only NGL markets, but the markets for natural gas and crude oil as well.
Fractionation, the process of splitting natural gas liquids (NGLs) into purity products — ethane, propane, butanes and natural gasoline — is as important to the NGL market as refining is to the crude and products markets. In fact, the functions are quite similar — take a raw material with no direct use and transform it into usable products.
In the past, we considered the implications of a tight fractionation market, but did not get the NGL heebie-jeebies. So what has changed? The answer is mostly one of magnitude.
The situation is quickly becoming more dire. Fractionation capacity in Mont Belvieu, the rest of Texas and Louisiana is running at or near full capacity. Railcars of “x-grade” NGLs (mixed NGLs with less ethane than y-grade that can be transported by rail) are fanning out across the country looking for open fractionator space.  Marcellus/Utica fractionators are being inundated with barrels from as far away as the Permian. Some midstream companies that move y-grade from the Permian through Mont Belvieu fractionation are said to be charging between 70 and 80 c/gal for spot transportation and fractionation fees (T&F), up from 15 c/gal before all this started. 
I remember years ago, when I first started blogging, I had no clue about y-grade, ethane rejection, fractionation, etc., but thanks to readers I understand it a bit better.

Those receiving royalties from North Dakota operators may have noticed it also.

From the FAQ page:
39. With regard to proceeds on a royalty check, what do the letters "O," "G," and "P" stand for?
"O" for oil. "G" for natural gas. "P" for plant products.  As the gas is processed and purified for transportation, by products like natural gas condensate, sulfur, ethane, and natural gas liquids like butane, propane, isobutane, and pentanes are produced and sold. Source. On some royalty checks "P" will be abbreviated at "PPROD." The Bakken Shale Discussion Group has a nice discussion on "plant products" (this site is down).
57. Oil is generally "measured" in barrels (bbls). Is the volume of natural gas liquid (NGL) ("wet" natural gas) also expressed in bbls? No, NGLs are generally expressed in gallons, according to a comment sent in by a chemical engineer.  Incidentally, some think the "additional" "b" comes from "blue barrels." From RBN Energy:
There’s one more aspect of NGL markets that must have been designed to confuse outsiders, because it certainly does.  NGL quantities are quoted in barrels.  NGL prices are quoted in gallons.  Really.  So I’ll sell you 10,000 barrels of non-TET normal butane for $1.36 per gallon.  It never occurs to NGL people to convert either the quantity to gallons or the price to a per barrel number.  They think of everything multiplied by or divided by 42.  Go figure.  And BTW, propane retail people do think in gallons - but that’s another story.
58. What is meant by natural gas liquids? RBN provides a great primer on natural gas liquids, or wet natural gas. Briefly: Natural Gasoline  - C5s; Normal Butane – NC4, Isobutane  - IC4.