Eleven New Permits; Seismic Event Halts Fracking In Great Britain Temporarily -- October 26, 2018

Fitzsimmons: COP hits a grand slam. See this post for more.

• ConocoPhillips' Q3 EPS report was proof positive its strategic plan is working to perfection
• led by the company's leading Eagle Ford position, it earned over half-a-billion bucks in the Lower 48 segment
• the Alaska segment also was very strong, delivering net income of $427 million, up more than 4x yoy
• COP is one of the highest quality global E&P companies in the energy sector and is a free cash flow cow at current oil and gas prices
• for those keeping track - after another $900 million of share buybacks during the quarter - COP's outstanding share count at the end of the quarter was 1.172 billion, down 4% from year-end 2017. That means COP generated an estimated $1.62/share in free cash flow during Q3 alone. Even with another 7% increase in the quarterly dividend in the last month to $0.305/share, the quarterly dividend equates to only 18% of the free cash flow the company generated during the quarter. Point is, COP's biggest problem these days is what to do with all the cash it's generating. Answer: Share buybacks and proof that the company was not joking when in July it announced it was expanding the 2018 planned share repurchases by 50% to $3 billion and increased the total share repurchase authorization from $6 billion to $15 billion. Simply put, COP is a cash cow at current global and domestic oil and gas prices.

Also, from the Fitzsimmons contribution at SeekingAlpha, this was notable:

In responding to a question on the Q3 conference call about when Eagle Ford production would start to top-out and level off, Al Hirshberg - EVP of Production & Drilling - said:

So, there's still more room for us to run there and more room for us to grow .... we're not in the flattening out mode like we have talked about in the Bakken where we were looking to kind of hold steady. The Eagle Ford is going to continue to grow for quite some period of time. It's not the – the flat spot on is not in sight. It's not something that's going to happen next year.

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

Breaking news: at last count, the Germans had zero (0) horizontal oil wells; the French had zero (0) horizontal wells; and the Brits had two (2) new horizontal wells permitted. Earlier this week, while the first of two UK wells was being hydraulically fractured, a micro-seismic event (0.4 on the Richter scale) was noted; the operator was alerted to proceed with "all due caution." Sometime in the last twenty-four hours, another seismic event was noted; this time, the event registered 0.76  the Richter scale. Well, let Tsvetana tell the story:

Less than two weeks after Cuadrilla resumed hydraulic fracturing in the UK for the first time in seven years, the company paused fracking at its drilling site in northwest England on Friday morning after a 0.76 on the Richter scale micro seismic event was recorded, the latest of some dozen seismic events since fracking started, but one that was above the 0.5 threshold requiring a halt.

According to regulations, in case of micro seismic events of 0.50 on the Richter scale or higher, fracking must temporarily be halted and pressure in the well reduced.

On Friday morning, a 0.76 on the Richter scale event was recorded, in an event classed as “red” in the traffic light monitoring system regulated by the Oil and Gas Authority, Cuadrilla said today, adding that “All the relevant regulators were informed without delay and we have verified that the well integrity is intact.”

Work will now pause for at least 18 hours and is expected to resume in the morning on Saturday, October 27, the company said.

Comment: I assume if much more of this goes on, the Brits will join the French and the Germans with zero (0) new horizontal wells.

This is interesting. In the US, most of us like to believe that seismic events associatied with fracking are due to injecting produced water / brine produced from fracked wells back into salt water disposal wells. It has been my understanding that fracking itself was not associated with seismic events. I believe Oklahoma has had the most experience with this issue.

If I recall correctly, at least one seismic event has been associated with oil and gas activity in North Dakota but I thought it was believed to be associated with injecting produced water into a salt water disposal well. I've long forgotten the specifics. I think it's been over a year since I've read any articles coming out of Oklahoma regarding seismic events. However, the first hit returned by a google search just now was to a Business Insider article dated February 2, 2018, and yes, the correlation was with disposing produced water into saltwater disposal wells and not due to fracking directly.

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Back to the Bakken

Active rigs:

$67.49↑	10/26/2018	10/26/2017	10/26/2016	10/26/2015	10/26/2014
Active Rigs	67	53	36	68	194

Eleven new permits:

• Operators: WPX (6); Kraken Operating (3); Lime Rock Resources (2)
• Fields: Spotted Horn (McKenzie); Lone Tree Lake (Williams); Murphy Creek (Dunn)
• Comments: WPX has permits for a six-well Bird Bear / Hackberry pad in 35-150-94; Kraken Operating has permits for a three-well Ruffing pad in 22-157-99; and Lime Rock Resources has permits for a 2-well a "Twist and Neal" pad in lot 2, section 4-143-95; 

Thirteen permits renewed:

• EOG (6): six Hawkeye permits in McKenzie County
• Bruin E&P Operating (5): two Johnson permits; one Sylte permit, two Helstad permits, all in Williams County
• QEP (2): two Vegas permits, both in McKenzie County

Two permits canceled:

• Oasis: a Hendricks permit, and a McFarland Federal permit, both in Williams County

Six producing wells (DUCs) reported as completed:

• 33795, 138, Crescent Point Energy, CPEUSC Nelson 8-30-31-157N-99W TFH, Lone Tree Lake, t9/18; cum 5K after 14 days;
• 33789, 385, Crescent Point Energy, CPEUSC Nelson 5-30-31-157N-99W MBH, Lone Tree Lake, t9/18; cum 9K after 14 days;
• 33793, 158, Crescent Point Energy, CPEUSC Nelson 4-30-31-157N-99W MBH, Lone Tree Lake, t9/18; cum 8K after 14 days;
• 31419, 2,009, Rimrock Oil & Gas, Moccasin Creek 16-26-27-13H, Moccasin Creek, t6/18; cum 64K 8/18;
• 31420, 1,396, Rimrock Oil & Gas, Moccasin Creek 16-26-27-12H3, Moccasin Creek, t6/18; cum 70K 8/18;
• 32630, 2,018, Rimrock Oil & Gas, Moccasin Creek 16-26-27-13H3U, Moccasin Creek , t6/18; cum 69K 8/18; ("H3" suggests a "third bench" well, but in fact this is a Three Forks first bench; the earlier Moccasin Creek wells were KOG permits; this was a Whiting permit)
• Note: #22462, a middle Bakken well, is on this same 4-well pad; it is back on-line; no jump in production; 

The Market, Energy, And Political Page, Part 2, T+67 -- October 26, 2018

The Deep State: Let's see. In less than a week, "they" can capture the guy who apparently has been sending hoax mail bombs, but yet, two years later, with thousands of high-profile, high-paid lawyers, and the full weight of multiple government agencies, no smoking gun reported regarding Russian collu.......gotta go.

Good luck to all.

The Energizer bunny: Never sleeps and excels at multi-tasking despite his young age:

The president was probably 1) getting the briefing on the bomber, 2) reviewing the notes for his next meeting, and then ... 3) takes the time to tweet.

Spam: due to spam, the "comments" section has been turned off. I plan to turn "comments" capability back on next week.

The Manchin-Collins defense: from CNN --

Senator Joe Manchin, a West Virginia Democrat, and Senator Susan Collins, a Republican from Maine, said they believed Ford when she said she had been sexually assaulted but that they didn't think there was corroboration to prove it was Kavanaugh. 

That will likely be the MbS defense: the Saudis will admit that the Khashoggi murder was premeditated but they will argue there is not enough evidence to prove the Crown Prince was involved. Good. That's cleared up.  

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Snarky

If one can ignore four really "bad" things about this film, it's a great film:

Breakfast At Tiffany's

Follow-Up On Natural Gas Prices In Pacific Northwest After Pipeline Explosion -- October 26, 2018

See this link:

• BC asks TransCanada for help;

At the link, I asked:

• One wonders if there could be a domino effect on US west coast. 

And, now, just days later, we have the answer:

The map:

It's Not Over Until It's Over -- The "Ordinary High Water Mark" Study -- October 26, 2018

Link at The Bismarck Tribune.

The Board of University and School Lands voted unanimously Thursday to contract with an engineering firm to do additional work related to a study of the Missouri River boundary, a process expected to take several months.

A new study of the ordinary high water mark of the Missouri River will require the North Dakota Department of Trust Lands to issue refunds or adjustments to bonus and royalty payments.

But Land Commissioner Jodi Smith said the study adopted last month by the North Dakota Industrial Commission does not give the commission enough information to proceed with those payments. The report does not allocate acreage above or below the ordinary high water mark.

Sounds like probate court, just at a higher level. 

I don't have a tag for this story. I never thought there would be so many articles on this.

Riparian. I do have a tag for "riparian." LOL.

The Hanford Glass Plant -- Now I Understand -- October 26, 2018

Link here. A regional (?) story picked up by the British tabloids.

Employees at a nuclear plant (sic) have been told to "take cover immediately" following an incident involving plutonium and uranium tunnels. 

A text message was sent to workers at the Hanford Vit Plant in Washington around 6am local time - or around 2pm in the UK. 

The message reportedly read: "WTP Alert: The WTP Site is in Take Cover. Go to the closest Take Cover facility now. Avoid eating or drinking until further notice." "Await further instructions." –– ADVERTISEMENT –– NBC reported the warning was issued as a precaution to workers in the 200 East Area of Hanford after steam was observed coming from Plutonium/Uranium Extraction Facility (PUREX) Tunnel 2 during a tunnel filling operations. 

There was no indication of a release of hazardous material.

A nuclear plant? Yes, but not exactly what I was thinking. A nuclear waste treatment plant. See this link.

In southeastern Washington state, Bechtel National, Inc. is designing, constructing, and commissioning the world’s largest radioactive waste treatment plant for the U.S. Department of Energy (DOE).

When complete, the Hanford Tank Waste Treatment and Immobilization Plant, also known as the Vit Plant, will process and stabilize million gallons of radioactive and chemical waste currently stored at the Hanford Site.

The 56 million gallons of waste are a byproduct of national defense plutonium-production efforts during World War II and the Cold War era. It resides in 177 aging underground tanks. Of these, more than 60 have leaked, contaminating the subsurface and threatening the nearby Columbia River.

The plant will use vitrification technology to stabilize the waste. Vitrification involves blending the waste with glass-forming materials and heating it to 2,100 degrees Fahrenheit (1,149 degrees Celsius). The molten mixture is poured into stainless steel canisters to cool and solidify. In this glass form, the waste is stable and impervious to the environment, and its radioactivity will safely dissipate over hundreds to thousands of years.

The vitrification process has been used successfully at other radioactive waste clean-up sites. But it has never been attempted at the scale of or on waste as complex as that stored at Hanford. The Vit Plant is a feat of engineering and construction at an unprecedented level. It is the largest undertaking of its kind and one of DOE’s most technically challenging clean-up projects.

The Vit Plant is the first nuclear facility to be built in the U.S. in decades. The construction site spans 65 acres and includes four major nuclear facilities – Pretreatment, Low-Activity Waste Vitrification, High-Level Waste Vitrification and the Analytical Laboratory. The largest of the structures is the Pretreatment Facility. It has a footprint equivalent to 1.5 football fields and will be 12 stories tall. Operations, maintenance and infrastructure facilities complete the complex. Overall, the Vit Plant requires more than 260,000 cubic yards of concrete, 40,000 tons of structural steel, and nearly 1 million feet of piping.

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Dallas Museum Of Art

Vitrine.

See this post for this link:

• the Wittgenstein Vitrine at the Dallas Museum of Art, February 26, 2016

Why I Love To Blog: The Bakken Never Ceases To Amaze Me -- Another Incredible Story -- Read Between The Lines -- October 26, 2018

This is one of those stories that can't help but catch your attention if you've been following the Bakken closely. Spend some time reading between the lines. At The Bismarck Tribune: North Dakota regulators plan review of natural gas flaring rules.

See this post to see natural gas production as percent of total boe (crude oil + natural gas produced in North Dakota). 


Archived.  

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Proposition 112 in Colorado

See this note. All of a sudden, I'm starting to get interested in this story. But as much as I would like to write the "tale of two states" I will control my maniacal tendencies.

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Stories That Fascinate Me Right Now

The top three energy stories that fascinate me right now

• Proposition 112 in Colorado
• Saudi Arabia -- the Crown Prince's recent investment conference was a dud
• News today that the NDIC is raising the flaring issue once again

Flaring issue in the Bakken

• Texas Permian has the same problem -- oilprice.com
• better data at DallasNews 
• fluff piece from Forbes
• mentions 0.5% flaring, Houston Public Media
• the flaring eased and leveled off during the "Saudi Surge"
• perhaps we should stop development in the reservation until flaring there is "under control"
• perhaps we should encourage Saudi Arabia to flood the world with oil 

Wow, look at the increase in natural gas production in the Permian. Incredible.

• EIA pdf, Bakken: https://www.eia.gov/petroleum/drilling/pdf/bakken.pdf. 

• EIA, pdf, Permian: https://www.eia.gov/petroleum/drilling/pdf/permian.pdf.

1% waste in the Permian? I wish state governments and especially the federal government were so efficient with our tax dollars. 1% waste in the Texas Permian .... and the industry is responding ...

The Market, Energy, And Political Page, T+67 -- October 26, 2018

Making America great!

GDP: CNBC reports that the 3.5% growth is "faster than expected." Behind paywall at The Washington Post.

Disclaimer: this is not an investment site. Do not make any investment, financial, job, travel, or relationship decisions based on what you read here or think you may have read here. Having said that, they're having a sale on Wall Street.

Trump to address Future Farmers of America (FFA): Indianapolis, before the mid-terms. Link here. Wow, for a White House in chaos, the president sure gets a lot done. It was also reported that he was tweeting at 3:00 a.m. this morning. Does he ever sleep?

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A Note To The Granddaughters

Our middle granddaughter's "English/literature" class is reading Beowulf. They are literally reading the poem, line-by-line. One student reads aloud from the Seamus Heaney translation and then every so often the class takes a break and discusses what they have just read. The first quiz: five questions, short paragraph answers. The first question had to do with the Christian / pagan issues in the poem.

The poem has long fascinated me and I have read parts of the poem, including translations by Heaney and JRR Tolkien. It's a slog to get through and I admire anyone for sticking with it. Like so much literature, reading "about" it is often more interesting than "reading it."

To be prepared to talk with Olivia about Beowulf I picked up a small monograph of the poem by Harold Bloom and read much of it yesterday. Olivia and I talked about it to and from her soccer practice last night. She is absolutely enthralled by the poem. What upsets her most: some kids don't seem to take it as seriously and/or enjoy it as much as she does. LOL.

In his very short introduction, Harold Bloom immediately jumps into the Christian / pagan issue of Beowulf. He tends to suggest that too much has been made about that. I agree wholeheartedly but that's simply because I'm not a "close reader" of the poem. It was very, very difficult for me to read it (and I'm talking about the translations). Bloom ends his introduction with this:

Hence the dark conclusion, where the dragon and the hero expire together. All of the poem then is a beautiful fading away of Germanic origins, presumably into the light of a Christian common day. An even subtler reading is offered by Fred C. Robinson, who sees the poem as a blend of pagan heroism and Christian regret. This double perspective does seem to be a prominent feature of Beowulf and reminds me of the double perspective of the Aeneid, a poem at once Augstand and Epicurean.

Wow, it is so coincidental that I am in my Aenied phase and re-reading that poem ( Frederick Ahl's translation). I've enjoyed that translation so much that despite my lack of shelf space for any more books, I've ordered my own copy. LOL.

By the way, compared to both the Iliad and the Odyssey, the Aenied and Beowulf seem "less satisfactory" to me. One wonders if that is because the authors of the latter two were conflicted / unable to come to terms with that "double perspective." Almost as if the story took them where they had not planned to go; their stories took on a direction the poets had not intended. In Beowulf, the poet's hero dies; as for the Aenied, the poet was unable to finish the work, and it appears he had twenty years or so to work on it.

By the way, yesterday I did drop off a box of books from my own library to the high school where our oldest granddaughter is enrolled.

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Laura's Response

After reading the above, our younger daughter Laura, out in Oregon, sent me this note:

I arrived at my friend's house last night just as Jeopardy was nearing the "Final Jeopardy" question. 

The category was English Literature and the clue described a character.   

Instantly I knew who it was, but couldn't think of the name.  I knew the first letter... so I started saying random names out lout to see if I would hit on it, and I did.   

I finally settled on Grendel.  My friend's husband said Beowulf, and both my friend's 27-year-old daughter and I, said, "No, that's the book and that's the hero, this is the villain." 

 We were correct. See... I paid attention in high school English... 11th grade to be exact!

So imagine my surprise when I checked out your blog today and I saw the post about Beowulf.    :)

One more reason why I love to blog.

Great News For Investors In Big Oil -- Companies Showing Restraint -- October 26, 2018

Global warming celebration! Kennedy family plans family reunion -- will go skiing in New Hampshire -- the family notes "record early opening for New Hampshire ski resort!" I can't make this up. Okay, some of that was made up. A huge "thank you" to Don for sending me the link. From iceagenow:

Wildcat Mountain in Pinkham Notch, NH is having its earliest opening in its 61 year history,” says reader Kevin Koffenberger.  “It will open on Saturday, October 27, 2018, edging 2005’s opening by one day. ”

Ten inches of new snow Wednesday combined with ideal snowmaking conditions has allowed for the early opening.  Nearby Mt. Washington (literally across the street from the resort) reported 21.1” at the summit.

Usually Wildcat opens in early November with limited terrain.  Snowmaking requires several hours of sub 28F wet bulb temperatures at night, so it has been at least a little cool for a week or two to allow them to do this, and the outlook for that to continue (otherwise they don’t bother if it is just going to melt).

Comment: see more at the link -- especially choice words for AGW folks.

More global warming news for New England: powerful nor'easter forecast for New England this weekend. Link here. Is it just me or do most reportable weather events occur on the weekend -- after the weekly political cycle ends?

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

Missing the point: oil companies show restraint.

Forget "Drill, baby, drill!" The world’s biggest oil companies aren’t returning to their spendthrift ways, despite crude’s recovery.

Equinor ASA and ConocoPhillips kicked off the earnings season for the energy majors on Thursday with an emphasis on restraint despite reporting their highest profits in four years, a possible indication of what to expect from the rest of the industry.

Analysts are forecasting record cash flows for crude drillers after oil prices surged, prompting fears the industry would return to lavish spending. Morgan Stanley last week said that the 46 percent advance in international oil prices from the third quarter of 2017 will fuel the biggest profit jump since prices began to crash in 2014.

Equinor Chief Executive Officer Eldar Saetre pledged to keep a sharp focus on costs as the market recovers. His words were met by actions as the company trimmed its 2018 budget by 9.1 percent to $10 billion, even as cash flow surged.

ConocoPhillips, the largest independent explorer, disclosed results that trounced analysts’ estimates, but Chief Executive Officer Ryan Lance said on an earnings conference call it’s being "laser-focused on discipline."

Conoco raised its full-year spending estimate 1.7 percent to $6.1 billion, citing decisions outside the company’s control such as drilling partners expanding operations. The Houston-based explorer handed almost $1 billion back to shareholders, part of a $9 billion expansion of buybacks announced in July.

For 2019, Conoco expects capital spending to be roughly in line with this year’s drilling budget. Lance said that after years of cost-cutting and efficiency gains following the price crash, Conoco’s profits are back where they were in 2014, when Brent was closer to $100 a barrel. Brent traded at around $77 Thursday.

The Saudi Conference Was A Dud! TransCanada Plans Another Pipeline In Western Canada -- October 26, 2018

The beginning of the end? From twitter:

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Back to the Bakken

One well coming off confidential list today:

• 34451, SI/NC, MRO, Greybull USA 31-18TFH, Van Hook, no production data, 

Active rigs:

$66.57↓	10/26/2018	10/26/2017	10/26/2016	10/26/2015	10/26/2014
Active Rigs	68	53	36	68	194

RBN Energy: the low-cost gas supply driving the LNG Canada project, part 2.

LNG Canada, the newly sanctioned liquefaction/LNG export project in British Columbia, is an entirely different animal than its operational and under-construction counterparts in the U.S. The Shell-led LNG Canada project is being developed without any of the long-term offtake contracts that financed Sabine Pass, Cove Point and the projects now being built along the Louisiana and Texas coasts, and it requires the construction of a new, long-haul pipeline — Coastal GasLink. What’s also different is that the BC project’s co-owners have been developing their own gas reserves to supply the project, though they may also turn to the broader Montney and Duvernay markets for the gas they will need. Today, we conclude a two-part series with a look at how the project expects to undercut its U.S. competitors.

The initial phase of LNG Canada that achieved final investment decisions (FIDs) by Shell and its four project partners will consist of two 7-million-tonne-per-annum (MMtpa) liquefaction trains, each demanding about 900 MMcf/d of gas. The project site is near the mouth of the Douglas Channel in Kitimat, a town about 400 miles up the BC coast from Vancouver.

Natural gas to supply the liquefaction trains will be transported from northeastern BC via TransCanada’s planned 420-mile, 2.1-Bcf/d Coastal GasLink pipeline.

The LNG export project is a long-term boon to Western Canadian gas producers, but it won’t come online until at least 2023 or 2024. That’s an eternity for producers in the region’s Montney and Duvernay shale plays, who through much of 2018 have been enduring profit-crushing price discounts for their gas relative to Henry Hub. We’ve chronicled the challenges faced by these producers in a number of blogs; an overriding theme is that while producers in the Montney and Duvernay have competitively low production costs, they are being squeezed out of many of their traditional markets — especially the U.S. Northeast and Midwest, plus Eastern Canada — because of soaring gas output in the Marcellus/Utica.