Friday, December 28, 2018

Williston Earns International Honor -- Another First -- December 28, 2018

From The Williston Herald:
The Williston Economic Development Office has been recognized for excellence by an international organization.
The city’s Economic Development office has earned accreditation from the International Economic Development Council, and becomes one of 62 economic development organizations to be given the accolade and be recognized as an Accredited Economic Development Organization.
Executive Director Shawn Wenko said Williston's Economic Development office is the first in the state to receive an accreditation from the council.
Earning accreditation is not an easy process. Wenko said his office began back in late May (2018).
The program is quite comprehensive and involves a two-phase peer review process to determine an organization's eligibility. The phases are a documentation review and a site visit.
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The Book Page

I'm ready for three days of relaxing and reading. We're in the Los Alamos area. I've read many, many books on J. Robert Oppenheimer and many books on the Manhattan Project, but I picked up several more from the museum gift shop today:
  • Trinity: A Graphic History of the First Atomic Bomb, Jonathan Fetter-Vorm, c. 2012;
  • The Los Alamos Primer, Robert Serber, c. 1992,
  • 109 East Palace: Robert Oppenheimer and the Secret City of Los Alamos, Jennet Conant, c. 2005;
  • Man of the Hour: James B. Conant, Warrior Scientist, Jennet Conant, c. 2017;
  • The Los Alamos Primer, Robert Serber, very thin pamphlet; from Los Alamos museum; no copyright

Natural Gas Processing In North Dakota Gets Platts' Attention -- December 28, 2018

New Bakken natural gas processing plant caught the attention of Platts. High points:
  • field set new high of 527 mcfpd of flaring in October, 2018
  • processing, gathering investment tops $3 billion
From the linked article:
Although natural gas flaring in the Bakken Shale set records in 2018, those levels are starting to fall as the first of one of several processing plants planned for the play is now online, part of over $3 billion in investment activity expected in the coming year.
A processing plant expansion pushed Bakken Shale dry gas production to a record 2 Bcf/d over the past week.
Bakken Shale production has been on the rise in 2018, although it failed to increase significantly in recent months due to processing and flaring constraints.
After closing out 2017 at just under 1.7 Bcf/d, Bakken Shale production pushed above 1.8 Bcf/d for the first time in August, but then hovered around 1.8 Bcf/d to 1.9 Bcf/d, as the region awaited additional processing capacity. The vanguard of said capacity is now online, with Oasis Midstream's Wild Basin plant posting record high deliveries of about 120 MMcf/d to its interconnect with WBI over the past week.
Oasis confirmed to S&P Global Platts the plant was online.
The plant delivered an average of 73 MMcf/d in 2018 up until this point, and never exceeded 103 MMcf on any day.
Wild Basin's expansion from 80 MMcf/d to 260 MMcf/d was completed in November and it is now online. The extra Bakken Shale production is expected to make its way toward Chicago on the Northern Border Pipeline system at the expense of imports from Canada.
Several processing plants and pipeline projects were announced or initiated construction in 2018, representing a combined investment of more than $3 billion, Justin Kringstad, director of the North Dakota Pipeline Authority, said during a December 21 conference call.
Four large-scale processing plants are expected to be completed in 2019, adding a combined 690 MMcf/d of capacity, which is more than the volume currently being flared.
However, construction of most of the projects is not expected to be completed until the middle of 2019 or at the end of year.
"Getting through winter and getting through the first quarter, things are going to remain likely challenging from the gas capture perspective," Kringstad said.
By the end of 2019, Kringstad projects North Dakota will produce 2.9 Bcf/d of gas and 1.49 million b/d of oil.
More at the link.

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The Book Page

As part of our 14-day ski trip and tour of northern New Mexico, we are spending three or four days in Los Alamos. Part of our son-in-law's resume includes: nuclear engineer and US naval submarine officer. He is looking forward to touring the Los Alamos area with his daughters.

We arrived a day early and have scouted the area and visited "the museum." Maybe more on that later.

In the meantime I am re-reading The Triumph and Tragedy of J. Robert Oppenheimer: American Prometheus, Kai Bird and Martin J. Sherwin, c. 2005. I've read it once before -- several years ago -- but I was eager to re-read the last half of the book.

Lots of politics after WWII. What happened to Oppenheimer, politically, after the war, makes this whole dust-up between President Trump and the US Congress regarding the wall look incredibly petty.

What little I've learned about Oppenheimer re-reading Bird and Sherwin, suggests that Oppenheimer, politically, may have been quite naive, but he was certainly a gentleman, a scholar, and a human being of the first order.

The Number Of Active Rigs Trending Down -- December 28, 2018

Updates

January 2, 2019: see the natural gas "withdrawal" data below. A reader who knows much, much more about this than I do, provided this analysis ... his entire analysis was way too long for the blog, but here are the data points I thought important --
  • the natural gas storage report for the week ending December 21st from the EIA showed that the quantity of natural gas in storage in the US fell by 48 billion cubic feet to 2,725 billion cubic feet over the week, which left our gas supplies 623 billion cubic feet, or 18.6% below the 3,348 billion cubic feet that were in storage on December 22nd of last year, and 647 billion cubic feet, or 19.2% below the five-year average of 3,372 billion cubic feet of natural gas that are typically in storage after the third week of December
  • this week's 48 billion cubic feet withdrawal from US natural gas supplies was just about what most analysts had been expecting, but it was well below the average of 121 billion cubic feet of natural gas that have been withdrawn from US gas storage during the third week of December in recent years
  • natural gas storage facilities in the Eastern US saw a 16 billion cubic feet draw from their supplies over the week, half of their average withdrawal over the past five years, as the region's gas supply deficit was reduced to 14.4% below normal for this time of year, while natural gas supplies in the Midwest fell by 23 billion cubic feet, in contrast to the normal 40 billion cubic feet pull, as their supply deficit was reduced to 12.2% below the normal for the third weekend of December
  • the South Central region only saw a 2 billion cubic feet drop in their supplies, in contrast to their normal 30 billion cubic foot withdrawal, as their natural gas storage deficit was reduced to 25.5% below their five-year average for this time of year
  • at the same time, 3 billion cubic feet were pulled out of natural gas supplies in the sparsely populated Mountain region, which normally pulls out 7 billion cubic feet for the week, as their deficit from normal fell to 21.9%, while 4 billion cubic feet were withdrawn from storage in the Pacific region, vs 12 billion cubic feet normally withdrawn, and their natural gas supply deficit fell to 27.4% below normal for this time of year
  • so, we've just seen our weekly withdrawal drop from 141 billion cubic feet during the week ending December 14th to just 48 billion cubic feet during the current reporting week ending December 21st
  • as we've mentioned several times, natural gas demand and hence withdrawal of gas from storage is largely driven by changes in temperature, relatively steady industrial and export demand notwithstanding 
  • temperatures for the heavily populated East, Midwest and South Central regions were generally below normal over the period from December 8th thru December 14th, with the temperatures in the East, which accounts more than a third of the population, consistently averaging in the mid-30s, while temperatures in the Midwest saw average temperatures in the 20s for four days to start the period
  • that colder than normal period, which included 3 days that were 5 to 9 degrees colder than normal for each of those regions, is what resulted in the 141 billion cubic feet withdrawal from our natural gas supplies over the week ending December 14th, just modestly above the 5 year average withdrawal of 136 billion cubic feet
  • but the period from December 15th thru December 21st, representing the dates of this week's report; not only were the temperatures in the East, Midwest and South Central regions above normal for each day during the period, but temperatures for all 5 regions were above normal for every day during the period, with temperatures in the East averaging in the mid-40s, and temperatures in the Midwest averaging in the upper 30s over the period
  • in fact, except for a few counties on the Gulf Coast, the entire US saw above normal temperatures during the week, with the broad area from the northern Rockies to the Great Lakes all more than 10 degrees above normal, as you can see on the map below, also from the natural gas storage dashboard
  • overall, we can estimate that temperatures for the lower 48 averaged at least 7 degrees warmer during the week ending December 21st than they were during the week ending December 14th 
  • as a result, the daily production of 87.2 billion cubic feet was nearly adequate to meet the country's needs, and hence only 48 billion cubic feet, or about 7 billion cubic feet per day, needed to be withdrawn from storage during the week 
  • furthermore, if we look at the daily regional average temperatures over the 6 days beginning December 22, they too are all above normal, with the small exception of the 30 degree average on December 27th for the mountain states
  • that means that the coming week's report for the week ending December 28th will again show a withdrawal from storage much below normal, also serving to alleviate the natural gas deficit which had been running 20% below normal nationally in recent weeks

Original Post

Holiday sales: see link --
  • last year (2017)
    • a record $598 billion dollars — up $33 billion from last year; up 6%
  • this year (2018)
    • a record $850 billion dollars — up $252 billion from last year; up 42%.
Bull moose, Mohall, North Dakota, link here.


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Weekly Energy Picture

Gasoline demand, link here:



EIA weekly petroleum report
, link here:

  • weekly crude oil inventories: unchanged
  • weekly crude oil inventories: 441.4 million bbls
  • weekly crude oil inventories: still 75 above the five-year average for this time of the year
  • refineries operating at 95% of capacity
  • gasoline supplied about the same as this time last year
  • distillate fuel was up almost 8% from same period last year 
  • time to re-balance -- at this rate, never --
    Week
    Date
    Change w-o-w
    In Storage
    Weeks to RB to 350 Million Bbls
    Week 0
    November 21, 2018
    4.9
    446.90
    N/A
    Week 1
    November 28, 2018
    3.6
    450.50
    N/A
    Week 2
    December 6, 2018
    -7.3
    443.20
    N/A
    Week 3
    December 12, 2018
    -1.2
    442.00
    Never
    Week 4
    December 19, 2018
    -0.5
    441.50
    Never at this rate
    Week 5
    December 28, 2018
    0
    441.40
    Never at this rate
Natural gas drawdown, link here:



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Back to the Bakken
Active rigs:

$45.3312/28/201812/28/201712/28/201612/28/201512/28/2014
Active Rigs66503861173

Three new permits
:
  • Operator: Slawson
  • Field: Big Bend (McKenzie)
  • Comments: Slawson has three permits for a Slasher Federal pad in 34-152-92;
Five permits renewed
:
  • BR (3): two Boxcar permits and one Audubon permit, all in Dunn County
  • Petro Harvester Operating Company (2), two FLX2 permits, both in Burke County
Four producing wells (DUCs) reported as completed (more on these later)
:
  • 12337, 302, Foundation Energy Management, Lynne 43-2, Madison well;
  • 12233, 382, Foundation Energy Management, Lynne 34-2, Madison well;
  • 12391, 244, Foundation Energy Management, Lynne 32-2, Madison well;
  • 12354, 196, Foundation Energy Management, Fjeldahl 23-2, a Madison well,

The Enerplus Tungsten Well In Moccasin Creek -- December 28, 2018

This page won't be updated.

The Enerplus "heavy metal" pad is tracked here

The well:
  • 33970, 2,038, Enerplus, Tungsten 147-93-16A-21H, 33 stages; 13.4 million bbls small sand, runs south, Moccasin Creek, t7/18; cum 113K 10/18;
PoolDateDaysBBLS OilRunsBBLS WaterMCF ProdMCF SoldVent/Flare
BAKKEN10-20182820804207592375423926807014704
BAKKEN9-201829259972618929128311971209018002
BAKKEN8-20183147064476935021454124450449160
BAKKEN7-20181118750175342785221563450416599
BAKKEN6-201811000000
  • #33967, Cobalt, also runs south:
PoolDateDaysBBLS OilRunsBBLS WaterMCF ProdMCF SoldVent/Flare
BAKKEN10-20182724994253302029420460191070
BAKKEN9-20182928677284942392419858488713726
BAKKEN8-20183149882508114241833085265030435
BAKKEN7-20181224156226302966614960265012310
BAKKEN6-20181300000

An older permit in the area:
  • #20608, PNC
An older well in the same general area as #20608, parallel to #33970, running south, and a bit east of #33970:
  • 18790, 1,773, Enerplus, Henry Bad Gun 16B-21-1H, Moccasin Creek, t10/10; cum 461K 10/18:
PoolDateDaysBBLS OilRunsBBLS WaterMCF ProdMCF SoldVent/Flare
BAKKEN10-201831172817571438138201066
BAKKEN9-201818152015411624121601068
BAKKEN8-2018116401417551051
BAKKEN7-20180000000
BAKKEN6-20180000000
BAKKEN5-201821184920341061147901012
BAKKEN4-20183031213026215924971483547
BAKKEN3-201813978961731783201479
BAKKEN2-2018281973195110771579728484
BAKKEN1-2018291968194810881574828393
BAKKEN12-201731180817428881447614326
BAKKEN11-2017302261224010911809711669
BAKKEN10-2017312250230313361800930445

The Market, Energy, And Political News, T+53 -- December 28, 2018

Holiday sales: see link --
  • last year (2017)
    • a record $598 billion dollars — up $33 billion from last year; up 6%
  • this year (2018)
    • a record $850 billion dollars — up $252 billion from last year; up 42%. 
Holiday travel? records set. Low gasoline prices.

Disconnect: it was my understanding that gold and oil were inflation-hedge investments. Gold is trading at $1,200  -- well off it's recent high of $1,800 and trending lower. And oil? Well, we all know that story. But Fed is increasing rates.

Dems:
  • $5 billion: too expensive to complete US border wall
  • $10 billion: US sends Mexico to build their southern wall 
US deficit soars.

Bakken economy:
  • in North Dakota, only Fargo reported higher taxable sales and purchases than Williston in 3Q18
  • Williston reports higher taxable sales and purchases than Bismarck
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US Producers: Delivering a One-Two Punch To OPEC

From Bloomberg. The one-two pucnh?
  • one: more oil; way more oil
  • two: better oil; way better oil
The U.S. oil industry is delivering a one-two punch to Middle East producers already reeling from a collapse in prices.
A tussle is playing out in the market for so-called light oils, which have a lower sulfur content and are less dense than heavier varieties. When processed, these grades typically yield a higher amount of fuels like gasoline and naphtha. And now, American supplies are weighing on prices for such crudes as well as fuels made from them.
Light oil pumped in U.S. shale fields is increasingly making its way to Asia, undercutting sales by the likes of Saudi Arabia. Additionally, America is exporting a record amount of refined fuel, contributing to a global glut in gasoline and naphtha. That’s hurting some of the biggest members of the Organization of Petroleum Exporting Countries as they prepare to curb crude output in a bid to stabilize the market.
Middle East producers -- still the dominant suppliers to Asia -- are being forced to tackle American crude competition by lowering their oil pricing to defend their market share. The refiners, meanwhile, are contending with booming U.S. fuel shipments dragging down their returns from making processed products.
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Miscellaneous

Out-produce:
  • It's being reported that by 2025 the US will produce more than production from Russia and Saudi Arabia combined.
Canadian oil sands, 2019: down, but not out.

Nothing But Good News -- December 28, 2018

Holiday sales: see link --
  • last year (2017)
    • a record $598 billion dollars — up $33 billion from last year; up 6%
  • this year (2018)
    • a record $850 billion dollars — up $252 billion from last year; up 42%. 
Holiday travel? records set. Low gasoline prices.

Disconnect: it was my understanding that gold and oil were inflation-hedge investments. Gold is trading at $1,200  -- well off it's recent high of $1,800 and trending lower. And oil? Well, we all know that story.

API, weekly crude oil inventory -- an unexpected build -- EIA data to report later today (Friday -- two-day delay due to holiday); API data:
  • forecast: a draw of 2.9 million bbls
  • actual API data: a build of 6.9 million bbls
*********************************
Back to the Bakken

Wells coming off confidential list today -- Friday, December 28, 2018 --
  • 33970, 2,038, Enerplus, Tungsten 147-93-16A-21H, 33 stages; 13.4 million bls small sand, Moccasin Creek, t7/18; cum 113K 10/18;
  • 33692, 955, Oasis, Lite Federal 5393 41-11 13BX, 50 stages; 9.8 million lbs, small/medium/large/ceramic, Sanish, t7/18; cum 105K 10/18;
  • 32276, drl, Slawson, Gobbler Federal 4-26-35MLH, Big Bend, no production data,
Active rigs:

$45.4812/28/201812/28/201712/28/201612/28/201512/28/2014
Active Rigs67503861173

RBN Energy: part 5, Niobrara production gains spur build-out of NGL pipelines.
Production of natural gas liquids in the Rockies has increased by half since the end of 2012, with the bulk of the output — and those gains — coming from the greater Niobrara play in Colorado and Wyoming. As a result, a number of NGL pipelines out of the Rockies are now running full or close to it, and midstream companies are planning a mix of new pipelines, pipeline expansions and pipeline conversions with the aim of easing takeaway constraints by the latter half of 2019. But, with crude oil prices tanking and crude-focused producers reevaluating their drilling and completion plans, could the Niobrara be headed for an NGL takeaway over-build? In today’s blog, we continue our series with a look at existing and planned NGL pipes out of the Denver-Julesburg (D-J) and Powder River basins.

The Market, Energy, And Political Page, T+52 -- December 27, 2018

Maria Energy, current position, Mediterranean Sea, east of Malta, south of Sardinia; site says destination arrival is scheduled for December 30, 2018, but destination still not confirmed. Tracking here. Original story here. Destination: TBC (to be confirmed).

Bias: sometime ago I suggested to a reader that that stock market volatility is very, very suspicious. I think I may have even mentioned that on the blog. I understand that there can be wild gyrations on the stock market, bu they usually seem to be somewhat explainable. In this case, nothing explains the wild gyrations. But I digress. This is what I find very strange. How do we go from talking about 4% to 6% GDP growth to talk of a recession in less than six months. Perhaps this is why. See this link

EPA preparing to shut down; due to "partial government shutdown." Link here

Marathon Petroleum donates $35,000 to Mandan, ND, public schools. From The Bismarck Tribune. Donation to support a welding and agriculture mechanics program at Mandan High School.

Disconnect: it was my understanding that gold and oil were inflation-hedge investments. Gold is trading at $1,200  -- well off it's recent high of $1,800 and trending lower. And oil? Well, well all know that story.

LNG import records set by China: link here. Data points:
  • cold weather and China's gasification efforts pushed LNG imports to a record high
  • NE Asia: China, Taiwan, Japan, South Korea
  • 20.5 million tons since the start of December
  • previous record set last January, 2018: 19.5 millions tons
  • China: 6.5 million tons, up 6% from November
  • China: November, 2018, vs November, 2017, y-o-y increase of almost 50%
  • China: first 11 months of this year: LNG increased by 44% year-over-year
  • China: on course to easily beat the full-year LNG import record of 38 million tons (2017)
Record US production: daily US LNG production hits record high of 5.28 Bcf in Christmas week -- from twitter. See this from SeekingAlpha.
  • the approaching 2019 will be the most significant year ever for the U.S. liquefied natural gas export business 
  • global gas demand will continue to soar, perhaps surpassing oil to become the world's main fuel within 10 years
  • Next year really is: "the beginning of the boom."
    The U.S. is poised to triple export capacity to around 10 Bcf/d by the end of next year, and we could be on our way to be the world's largest exporter before 2025. And in a "second wave" of activity, federal regulators will decide the fate of an additional 13 pending projects by the end of 2019.
    For an industry that just started in February 2016, U.S. LNG has quickly been extending to all corners of the globe. Yet, neighbor and friend Mexico has received 20% of all U.S. LNG exports, with South Korea second at 19%. At some point though, Mexico's primary position will slide because the country wants to produce more of its own gas and build more pipelines to gain greater access to cheaper U.S. piped gas. For example, piped U.S. supply to Mexico has averaged $3.18 per MMBtu so far this year, compared to $4.59 for U.S. LNG to Mexico.
Holiday sales: see link above
  • last year (2017)
    • a record $598 billion dollars — up $33 billion from last year; up 6%
  • this year (2018)
    • a record $850 billion dollars — up $252 billion from last year; up 42%.