Tuesday, November 6, 2018

Holy Inventory, Batman! -- November 6, 2018

US crude oil inventories: up an astounding, whopping 7.83 million bbls. On top of 5.7 million bbls the week before. And wasn't it something like 9 million bbls the week before? I've long forgotten.

Link here. One wonders how the "peak oil" folks are explaining all this. Peak Oil Barrel last posted a note on October 31, 2018.

By the way, on another note, more confirmation that all that talk about Iranian sanctions was background noise. The only thing that matters when it comes to global crude oil production is that produced by Saudi Arabia, Russian, and the US. Everything else is simply background noise. See this post, well played, Mr Trump.

I quit following the weekly inventory figures earlier this year: this was one of the last, if not the last, spreadsheet that I posted. 

Weeks to RB
Week 0
Apr 26, 2017
Week 24
October 12, 2017
Week 25
October 18, 2017
Week 26
October 25, 2017
Week 27
November 1, 2017
Week 28
November 8, 2017
Week 29
November 15, 2017
Week 30
November 22, 2017
Week 31
November 29, 2017
Week 32
December 6, 2017
Week 33
December 13, 2017
Week 34
December 20, 2017
Week 35
December 28, 2017
Week 36
January 4, 2018
Week 37
January 10, 2018
Week 38
January 18, 2018
Week 39
January 24, 2018
Week 40
January 31, 2018
Week 41
February 7, 2018
Week 42
February 14, 2018
Week 43
February 21, 2018
Week 44
February 28, 2018
Week 45
March 7, 2018
Week 46
March 14, 2018

It looks like it might be worthwhile to press on following this.

Week 40, January 30, 2018: a gain of 6.8 million bbls
Week 46, March 14, 2018: a gain of 5.0 million bbls

These are EIA figures.

The most current EIA figures will be released tomorrow.

So much for all that re-balancing.

Peak Oil? I Don't Think So -- Staggering -- November 6, 2018

I don't know if folks remember this graphic from January, 2013.

Six wells in each formation, middle Bakken and three benches of the Three Forks = 24 wells in each 1280-acre drilling unit.

The graphic above actually shows eight wells targeting each of the four formations, or 32 wells.

A bit outrageous?

Look at this, from the November, 2018, Oasis corporate presentation:

The Permian.

Peak oil? I don't think so.

Oasis -- November, 2018, Corporate Presentation

Link herePresentations.

Things the caught my eye.

November, 2018, presentation: 26 slides.
  • Bakken: added Painted Woods to core inventory in February; initial well results are outperforming company's expectations
  • net acres
    • Williston: 418,000
    • Delaware: 23,000
  • Gross operated core and extended core:
    • Williston: 1,432
    • Delaware: 601
  • Rigs:
    • Williston: 4 - 5 (will add 5th rig, December, 2018)
    • Delaware: 1 - 2 (will add 3rd rig, summer, 2019)
  • Production (3Q18) (Mboepd)
    • Williston: 81
    • Delaware: 5
  • LOE: $6.18 (almost identical to that reported by CLR)
  • Williston core:
    • Wild Basin
    • Indian Hills
    • Painted Woods (recently added)
    • Alger
  • Williston extended core
    • Red Bank
    • Montana
  • Williston other
    • Cottonwood
    • State line
  • Oasis' MLP midstream: 2nd largest gas processor in the Williston Basin
    • two OWS spreads running in Williston
  • Slide 23
    • Alger and Wild Basin: exceeding 1.5-million-bbl boe EUR type curve 
    • even CLR doesn't show a 1.5 million-bbl boe EUR type curve

Help Requested From Our Scandinavian Readers -- Nothing About The Bakken -- November 6, 2018

The back story is too long to go into, so we will cut to the chase.

In Dore, ND, there is/was a Finsaas family (featured in The Williston Herald) in 2012.

When I was growing up, when my mom worked the swing shift at the hospital, we had an older woman watch over us at the house. We knew her as Mrs. Romsaas.

Now, here's where I need help. The internet is of limited help.

Is Romsaas  / Finsaas: Norwegian, Swedish, Danish, or other? Probably not Irish.

My internet search suggests Swedish.

"Saas" is clearly the anglicized "Sås" which in Swedish, according to an internet source on recipes, is "sauce."

Generally, when I found a recipe with "sås" on the internet it was for a fish sauce/fish recipe.

"Fin" apparently means "delicate" and is used in conjunction when describing a Hollandaise sauce for salmon.

"Rom," interestingly enough, is very likely "rum" -- again, it was used in conjunction with a rum sauce for some (fish?) dish.

My Norwegian father was always a bit biased against the Swedes, something he "took" from his father. I never thought about it much one way or the other.

But it fascinates me to think that my father's Norwegian children may have been watched over by a Swedish woman during their early impressionable years. If so, my dad would say it explains a lot how his children turned out.

WTI Drops Below $62 -- November 6, 2018

Active rigs:

Active Rigs66523764190

Seven new permits:
  • Operators: WPX (3); Whiting (3); Liberty Resources
  • Fields: Mandaree (Dunn); Grinnell (McKenzie); Banks (McKenzie); Enget Lake (Mountrail)
  • Comments: WPX has permits for a 3-well Nancy Dancing Bull in 12-149-93; Whiting has permits for a 3-well Renbarger pad in 34-154-97 (two will be Grinnell wells; one will be a Banks well)
One permit reinstated:
  • Slawson: a Muskrat Federal permit in Big Bend
Two producing wells (DUCs) reported as completed:
  • 34280, 1,926, Whiting, Thomas 13-3-3TFH, Truax, t10/18; cum --; (I thought I had discussed the Thomas wells recently, but apparently I haven't; maybe later)
  • 30221, 566, BR, Merton 41-15MBH, North Fork, t9/18; cum --;

Random Update Of Slawson's Vixen Federal 2 Well In Van Hook -- November 6, 2018

We'll take a look at this well in more depth later.
  • 22228, 2,228, Slawson, Vixen Federal 2-1930H, 33-061-02000, Van Hook, t3/15; cum 249K  9/18;
Full production profile at this post.

Not exactly a Hubbert peak oil curve.

Random Look At XTO's Lundin Wells In North Fork -- November 6, 2018

Re-posting a post from June 30, 2013 -- a little over five years ago:
Disclaimer: typographical errors may exist, and I may be interpreting the data incorrectly; refer to the source for accurate information. The source is at the NDIC website

20663, XTO, Siverston, complete 10 wells on a 640-acre unit, McKenzie: 4-149-97:

A look at the three wells in the graphic above:
  • 17629, 1,164, XTO, Lundin Federal 31X-9, North Fork, t6/10; cum 118K 4/13;
  • 18998, 2,208, XTO, Lundin 14-33NEH, Siverston, t12/10; cum 102K 4/13;
  • 22206, 878, XTO, Lundin 11-4SH, Siverston, t7/12; cum 37K 4/13; 
Fast forward, what has happened in that section since 2013? 

First, here's the graphic:

Now, look at recent production profile for #22206, which has not been re-fracked:
PoolDateDaysBBLS OilRunsBBLS WaterMCF ProdMCF SoldVent/Flare
So, #22206 looks pretty impressive with that jump in production.

Take a look at that graphic.

Which well jumps out at you?

Yup! #17629.

Let's see the production profile for #17629:
PoolDateDaysBBLS OilRunsBBLS WaterMCF ProdMCF SoldVent/Flare

And, no, this well has not been re-fracked either.

Well Played, Mr Trump -- Oil Tumbling -- Inexpensive Gasoline Just In Time For The Midterms -- November 6, 2018

This tells me how much influence/power a president has. In this case, the bully pulpit that moved the markets a few months ago; and then the power to grant waivers, completely disrupting the markets. Had this happened under the Obama administration, not a few of us would have been crying foul. LOL.

WTI is now below $62. Who would have ever thought? Crude oil is now trading in "bear market" territory.

I assume the "peak oil" folks have an explanation for this, too. My hunch is they will tell us this has to do with "peak demand," not "peak oil/peak supply" and nothing to do with politics.

Either way, well played, Mr Trump, driving WTI to lowest levels since April, 2018, when folks were talking about $100-oil, or "worse."

In response to concerns about all the Iranian oil coming off the global market, it appears the US shale operators, Russia (hitting new production records) and Saudi Arabia all produced as much as they could.

And now this: not only did the US, Russia, and Saudi Arabia easily make up the "expected" Iranian shortfall, the US granted enough Iranian waivers to keep the VLCC's in high demand.

One thing not being talked about: a few months ago, it was said Trump would be talking to Saudi pressuring the kingdom to open the spigots so that gasoline would not be sky-high during the midterms. How much leverage did Trump have prior to October 2, 2018? Probably not much.

After October 2, 2018 - how much leverage did Trump have? Infinite. And Saudi Arabia opened the spigots.

Quick: what happened on/about October 2, 2018?

Getting High

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.

A reader requested I post this:

Life Is Like A Box Of Chocolates

Life is like opening a box of chocolates; one never knows what one is going to get. Forrest Gump.

Noq, from The New Journalism, Tom Wolfe, editor, c. 1973.

The Money Game, "Adam Smith," "The Cocoa Game," all about timing in the stock market.

From page 321:
The best chapter written on this problem of timing was done by an unknown second century author who wrote under the pen name of Koholeth, or the Preacher. What survives of Koholeth is not much, but it says all there is to say on the subject. (If ou seem to hear a faint rock beat behind what follows, it is because Pete Seeger made a song, "Turn, Turn, Turn," out of this passage of Koholeth and the Byrds made a hit record of it.) In later versions of the Old Testament, Koholeth appears as Ecclesiastes, so you have the best chapter on timing right there on your shelf already.
Ecclesiastes: a biography of "Kohelet" -- traditionally translated as "Preacher."

From wiki: "After the introduction come the words of Kohelet. As king he has experienced everything and done everything, but nothing is ultimately reliable. Death levels all."

That reminds me of Keynes: "In the long run we are all dead. Economists set themselves too easy, too useless a task, if in tempestuous seasons they can only tell us, that when the storm is long past, the ocean is flat again."

Something Blowin' In The Wind? -- Pipelines And The Bakken -- November 6, 2018

With the DAPL still being played out in two courts, the Voyager Pipeline news earlier this morning may be more than just another footnote in the history of the Bakken.

Tallgrass Energy.

Pony Express Pipeline. From the website:
The approximately 760-mile Pony Express (PXP) crude oil pipeline originates in Guernsey, Wyo., and runs through Colorado, Nebraska and Kansas, connecting with three refineries before terminating in Cushing, Oklahoma.
PXP sources oil from the Bakken, Denver Julesburg and Powder River plays, delivering five distinct common streams for our customers – Bakken Light Sweet, Mixed Sweet, Niobrara, Pony Express Light and Central Kansas Uplift – to the Cushing oil hub for distribution to markets across the country.
Placed in service in 2014, Pony Express has a design capacity of 320,000 barrels a day, and based on a number of factors has the capacity to transport additional barrels.
Answering producers’ call for more pipeline capacity out of the Bakken, Tallgrass built PXP and signed joint tariff agreements with two other pipelines to seamlessly deliver Bakken crude to Cushing, Okla., and points in between.
To meet the transportation needs of producers in both the Bakken and Rockies regions, Tallgrass converted a 430-mile natural gas pipeline and built another 260 miles of pipeline to extend PXP through southern Kansas into Oklahoma. The 70-mile Northeast Colorado Lateral (NECL) adds optionality for producers in the Niobrara Shale in Northeastern Colorado and Southeastern Wyoming, intersecting Pony Express east of Sterling, Colo. Before terminating in Cushing, PXP connects to Holly Frontier’s and CHS McPherson’s refining complexes in Kansas and to Phillips 66’s Ponca City, Okla., refinery.
Earlier this year, from SeekingAlpha, June 26, 2018:
  • Tallgrass Energy Partners LP and Tallgrass Energy GP announced that, the unitholders approved the stock-for-unit merger transaction
  • he merger transaction is expected to close on June 29, 2018 and be effective as of June 30, 2018
  • upon completion of the transaction, TEGP will change its name to Tallgrass Energy, LP, also TEGP’s Class A shares will trade on the NYSE under the ticker symbol “TGE” and TEP’s common units will no longer be publicly traded
Tallgrass Energy / PXP (Pony Express Pipeline): at this website.

The Double H Pipeline from Dove, ND, to Guernsey, Wyoming.

Kinder Morgan Hiland.

From a recent RBN Energy blog, November 1, 2018:
Kinder Morgan, on its third-quarter earnings call, briefly discussed additional capacity they could provide on their Double H pipeline. The Double H pipeline originates near Dore, ND, and carries crude to the Rockies trading hub in Guernsey, WY. There, the line connects with Tallgrass Energy’s Pony Express Pipeline for transport to Cushing, OK. Double H has a current capacity of 84 Mb/d but Kinder Morgan has said a small expansion is possible inside of six to eight months, likely increasing the pipeline’s capacity to about 110 Mb/d.
Meridian Energy is also working on completing the Davis Refinery in Belfield, ND, by 2020; it will be one of the few new U.S. refineries to be constructed in the last 45-plus years and will have a capacity of 49 Mb/d. All in, area producers could see an additional 175 Mb/d of capacity and in-region refining demand added if commitments go through on all of these projects.
Figure 2. Bakken Takeaway Pipelines and Davis Refinery. Source: RBN (Click to Enlarge)
In our supply/takeaway forecast, we have assumed that the DAPL and Double H pipeline expansions are completed in the next six months, and that the Davis Refinery comes on at the beginning of 2020. 
Assuming those things happen on time, we still forecast production to be running up against the maximum pipeline takeaway capacity near the beginning of 2019. 
For this analysis, we are using our price-based, middle-case growth scenario for the Bakken, which follows the forward curve prices into 2023. 
In this scenario, production in the Bakken grows from the EIA’s 1.34 MMb/d number for October 2018 to 1.70 MMb/d by the end of 2023. Because DAPL does not have a current end-date for its open season, and Double H has not formally announced its expansion yet, there’s a strong chance these projects will bleed further into 2019, extending the period of time that producers have to wait for additional space.
The Literature Page

From The New Journalism, edited by Tom Wolfe, c. 1973, page 26:
Truman Capote had spent five years researching [In Cold Blood] and interviewing the killers in prison, and so on...But in 1966 you started seeing feats of reporting that were extraordinary, spectacular. 
Here came a breed of journalists who somehow had the moxie to talk their way inside of any milieu, even closed societies, and hang on for dear life. A marvelous maniac names John Sack talked the Army into letting him join an infantry company of Fort Dix, M Company, 1st Advanced Infantry Training Brigade -- not as a recruit but as a reporter -- and go through training with them and then to Vietnam and into battle. The result was a book called M (appearing first in Esquire) a nonfiction Catch-22 and, for my money, still the finest book in any genre published about the war.
From page 292, by Tom Wolfe:
John Sack interviewed the soldiers of M Company about what had been going through their minds during certain adventures, then made these thoughts and feelings part of the action itself as he described it. Sometimes this took the form of brief interior monologues. M first ran in Esquire, and Esquire's lawyers threw their hands up over this use of other people's thoughts on the grounds that it opened the way to invasion-of-privacy suits unless Sack could get written consent from each soldier involved.
It is an indication of Sack's perseverance, not to mention his accuracy, that he thereupon backtracked and got in touch with every living soldier who was mentioned -- they were spread out from Maine to Vietnam -- showed them the manuscript and got their OKs. -- T.W. 
St Charles '76

St Charles '76, Jefferson Starship