Sunday, May 26, 2019

Travel Notes -- Nothing About The Bakken -- May 26, 2019

Thrice blessed.

The youngest granddaughter was at the Perot Museum in Dallas today. Her grandmother took her; apparently an incredibly good day, not that crowded and the traffic to and from Dallas was light.

Meanwhile the middle granddaughter with her parents in Denver, CO, is one win from being in the finals.

And, here I am -- sitting on the twelfth (?) row up in an outside bleacher of 16 rows waiting for the last water polo game to be played by our oldest granddaughter. We are just off Loop 1604 on the northwest side of San Antonio. A nice breeze and it feels less warm than yesterday. San Antonio is greatly influenced by the "wet/dry" line. If the "wet/dry" line is east of the city, we get the dry heat from New Mexico. If the "wet/dry" line is west of the city, we get the incredibly miserable humid weather from Houston.

Today, the "wet/dry" line is probably just slightly to the east of the city.

Tonight, leaving about 5:00 p.m. we will head back to Grapevine, TX (the DFW area). We will get home about 11:00 p.m. I suppose.

I look forward to the trip.

We will take the "back roads," as we did coming down. The traffic should be very, very light -- it's the middle of the weekend, and it will be late at night. Should be relatively cool.

Without question, one of the best break bakeries / coffee shops in this area is the "Great Harvest Bread Co." Highly recommended. We had lunch there both days we were here for the water polo tournament. Can't say enough about it. Arianna "discovered" it on Yelp!

I have incredibly good thoughts about what I saw in San Antonio. The city is apparently the second-fastest growing city in the US -- previously posted -- second only to Phoenix. The city is doing a fantastic job keeping the Riverwalk safe and clean and fun. I'm impressed. I would assume the police on bikes have a lot to do with that. Rental bikes and scooters everywhere. Ample parking -- at least when there are no events in town. I used to think parking at $15/two hours or $20/eight hours was expensive but now that I've seen parking constraints and parking costs in Boston, no complaints.

Meals on the Riverwalk were very nicely priced.

As hot as it is, I would enjoy playing water polo right now. LOL.

The Book Page

Washington Crossing, David Hackett Fischer, c. 2004.

Page 128:
While British forces assembled for the Rhode Island expedition, Washington's army continued its retreat through New Jersey. On the west side of the Passaic river they turned southward and marched down the Passaic Valley toward Newark. This town had been settled by New England Puritans who had names it the New Ark of the Covenant. 
They were strong supporters of the rebels.

Permian Natural Gas Pipeline Expansion -- What Will The Faux Environmentalists Complain About Next? -- May 26, 2019

Remember this back on May 15, 2019? A Permian pipeline bubble?

Hold that thought.

North Dakota flares about 15% of the natural gas it produces. Bakken flaring was a huge story years ago; that story has pretty much gone away. Environmentalists are now going after the Permian and flaring. Google it.

So, I was curious. How much natural gas is being flared in the Permian? I think we discussed this before. There are two numbers. An "older" number is 4.4%; a newer number is 5.8%. Whatever. I find both numbers incredibly small considering what is going on in the Permian. Remember, unlike the Bakken, the Permian has a lot of natural gas along with its crude oil. From my perspective the operators and the state have done a great job keeping flaring to about 5% of total natural gas production.

But, now look at this. From, March 4, 2019:
The proposed pipeline capacity expected to come online in the Permian Basin over the next three years is vastly greater than the estimated volumes of flared gas, according to a Texans for Natural Gas analysis. Recent media reports have called attention to flaring levels in the Permian as production has increased, with one environmental group even suggesting that the market can’t solve the issue. But the new pipeline capacity being added over the next few years appears to contradict that claim.
A TNG review found an estimated 14 billion cubic feet per day (Bcf/d) in additional natural gas pipeline capacity set to come online in the Permian by the end of 2022. This equates to more than five trillion cubic feet of natural gas annually.
I don't know what that means. Is "14 billion cf/d in additional natural gas pipeline capacity" anything to get excited about?

Answer:  That proposed capacity is about 93 times larger than the current flaring levels, according to data from the Texas Railroad Commission.

Comment: private enterprise tends not to like to "over-build." If proposed capacity is 93 times larger than the current flaring levels, that speaks volumes. No pun intended.

If they are over-building, they will cut back.

If they are not over-building, there will be a huge surge in natural gas production over the new few years.

14 billion cubic feet = 2.3 million bbls boe. Per day. That's in addition to whatever is already being produced. 

Newly Added Shale Plays -- May 26, 2019

EIA added new shale plays to their database earlier this year. For now they will be linked at the sidebar as "Emerging Shale Plays."

Link here.
EIA recently updated its methodology and production volume estimates for U.S. shale gas and tight oil plays to include seven additional plays, increasing the share of shale gas by about 9% and tight oil by 8% compared with previously estimated shale production volumes.
The update captures increasing production from new, emerging plays as well as from older plays that had been in decline but are rebounding because of advancements in horizontal drilling and hydraulic fracturing. The selected plays are identified by examining the reservoir names reported by operators to state agencies. EIA uses the third party data source, Drillinginfo, which collects and distributes well level data gathered by the states.
Hubbert's peak oil theory: "... had been in decline but are rebounding."

The most productive of the newly added plays is the Mississippian formation, which is located mainly in Oklahoma within the Anadarko Basin. The mainly carbonate rock type lies above the Woodford play and has produced liquids and natural gas for some time, but newer completion techniques have driven recent production gains.
The remaining six plays are smaller and are included in the rest of U.S. tight oil and shale gas categories.
  • The Burket and Geneseo formations in the Appalachian Basin of Pennsylvania and West Virginia increased production in recent years. These dry shale gas formations lie above the Marcellus Shale but are thinner and do not cover as large an area as the Marcellus.
  • The Uteland Butte member of the Green River Formation in the Uinta Basin of Utah is composed primarily of limestone, dolostone, and organic rich mudstones and siltstones.
  • The Turner, Frontier, Sussex-Shannon, and Teapot-Parkman formations are located in the Powder River Basin of Wyoming and lie below and above the Niobrara formation, the basin’s primary hydrocarbon-bearing formation. They are mainly fine-grained sandstone with interbedded silt and shale

Again, Second Week In A Row With Most Wells Coming Off Confidential List Reported As DUCs -- May 26, 2019

Of the 21 wells coming off the confidential list this next week, only four have reported production, and one of those was reporting minimal production:

34698, conf, CLR, Rolf 3-17H1, Brooklyn, minimal production reported

35096, conf, Liberty Resources Management Company, LLC, Stanley W 158-91-30-6-1MBHX,  Kittleson Slough,

DateOil RunsMCF Sold

34803, conf, Nine Point Energy, Erickson 155-102-26-25-6H, Squires,

DateOil RunsMCF Sold

34043, conf, Lime Rock Resources III-A, L.P., Harstad 44-9-2H, Stanley oil field,

DateOil RunsMCF Sold

And This Is The Problem With Global Warming -- Too Much Snow And Then Historic Avalanches -- May 26, 2019

Thank you to a reader for alerting me to the stories. One new, one a re-posting.

California, re-posting:

US Shale Boom -- A Seismic Event -- CNBC -- May 26, 2019


May 28, 2019: see first comment --
1. You are right to think OPEC/SA increase volatility. Look at 1950-1970 for instance. Before any effective market power was exerted.

2. Discussion of SA/OPEC smoothing volatility is a charade. INstead they want to raise prices above natural competitive balance, by constricting supply. This moves price into naturally unstable area. The reason why they say this is because they don't want to admit what they really want to do--to raise price so they get more money. Any econ book will show this is what monopolies want/try to do. And SA is a dominant player--a partial monopolist.

3. Morris Adelman, classical microeconomist and OPEC historian explained this well.

4. Even if prices were more stable wit OPEC than without it, and they're not, consumers are better off with volatile prices at lower averages than higher prices that are stable. Airfare prices is simplest example. But common sense applies as well. Of course the opposite applies for producers, who benefit by having a cartel raise prices.  
Google "Morris Adelman." 
Original Post

 This was posted by CNBC back in March, 2019.
  • The US is now the world’s largest oil producer, surpassing Saudi Arabia and Russia, and that has made the crude market more volatile. [What a doofus; see below.]
  • The policies of President Donald Trump and sanctions on two OPEC members, Venezuela and Iran, also have been key factors in price swings. [Really? Iran and Venezuela are entirely irrelevant and have been for several years.]
  • The US is now producing more than 12 million barrels a day and is on pace to become a net exporter within a few years, a growth story that is a ‘seismic event’ for the economy, according to IHS Markit vice chairman Daniel Yergin.
Say what? "... making the crude market more volatile."


Fact check. Link here.

You want to see volatility? Go back to the days when OPEC was in control. Go back to the days of the peanut farmer. Go back to the OPEC embargo when Richard Nixon was president. You want to see volatility? Get woke.

Apparently someone didn't get the memo. See this research report, why the price of crude oil will be "range-bound" for quite some time.

The magic numbers from November 7, 2016 --
The magic numbers:
  • $40 oil: a lifeline for the US oil industry; they may or may not hang on
  • $50 oil: they hang on and the US oil industry survives
  • $60 oil: the US oil industry thrives
WTI back in 2016 (and Bakken oil was selling for a lot less):
  • November, 2016: $52.36
  • February, 2016:  $36.38
Shale oil is the new "swing producer." Even Saudi Arabia cannot react as quickly as US shale. Saudi cannot react as quickly for at least two reasons:
  • Saudi sets their prices by committee, based on OPEC input/policies
  • Saudi does not have 5,000 DUCs / inactive wells
The Bakken alone has about 2,500 DUCs / inactive wells that can be brought back into production within weeks, if not days.

At $75-oil the US shale companies will be producing at maximum rates.

At one time, I was not convinced that the US was the "new" swing producer. In fact, I can't remember what I actually wrote at the time when folks were debating that exact point, whether the US was the "new" swing producer. But the tea leaves certainly suggest that for the foreseeable future the US is the "new" swing producer. In addition:
  • the US shale sector is market driven (not policy driven)
  • the US oil industry is much more transparent than OPEC and/or Russia
  • the US oil industry is much more flexible, dependable than OPEC and/or Russia
My hunch, all things being equal, global oil consumers would prefer working with US suppliers as opposed to working with either OPEC or Russia, but then I'm pretty crazy about the US.

Back to volatility. One might want to ask why the price of oil was incredibly stable (flat-line) from 1945 to 1970.

OPEC was formed in February, 1960, and followed immediately by a recession in the US. A decade later, the OPEC embargo and sky-rocking crude oil prices and long lines as the gas station.

Wells Coming Off The Confidential List This Next Week -- May 26, 2019

Six months ago it was the last week of November, the first week of December.

Monday, June 3, 2019: 5 for the month; 194 for the quarter --
34698, conf, CLR, Rolf 3-17H1,

Sunday, June 2, 2019: 4 for the month; 193 for the quarter --
35377, conf, Newfield, Skipjack 149-98-11-2-5H,

Saturday, June 1, 2019: 3 for the month; 192 for the quarter --
35737, conf, Newfield, Skipack 149-98-11-2-11H, 
35476, conf, Hess, SC-JCB-LE-154-98-1721H-2,
35241, conf, WPX, Badlands 4-33-28HA,

Friday, May 31, 2019: 95 for the month; 189 for the quarter --
None (there was no November 31)

Thursday, May 30, 2019: 95 for the month; 189 for the quarter --
35242, conf, WPX, Badlands 5-32-29HT

Wednesday, May 29, 2019: 94 for the month; 188 for the quarter --
35378, conf, Newfield, Skipjack 149-98-11-2-4H,
35096, conf, Liberty Resources Management Company, LLC, Stanley W 158-91-30-6-1MBHX, 
34907, conf, Hess, SC-JCB-LE-154-98-1720H-1, 
34803, conf, Nine Point Energy, Erickson 155-102-26-25-6H, 
30485, conf, BR, Jerome 14-10MBH, 

Tuesday, May 28, 2019: 89 for the month; 183 for the quarter --
35738, conf, Newfield, Skipjack 149-98-11-2-12H, 
35457, conf, WPX, Minot Grady 26-35HWL,
34043, conf, Lime Rock Resources III-A, L.P., Harstad 44-9-2H, 
30486, conf, BR, Merton 14-10MBH, 

Monday, May 27, 2019: 84 for the month; 179 for the quarter --
35296, conf, WPX, Minot Grady 2635HZ, 
30487, conf, BR, Merton 14-10TFH ULW,

Sunday, May 26, 2019: 82 for the month; 177 for the quarter --
35361, conf, Hunt, Halliday 146-92-19-18H-6, 

Saturday, May 25, 2019: 81 for the month; 176 for the quarter --
35298, conf, WPX, Minot Grady 26-35HD, 
35297, conf, WPX, Minot Grady 26-35HZ, 
34906, conf, Hess, SC-JCB-154-98-1720H-9,

Best Price For Gasoline I've Seen In San Antonio -- Valero -- $2.33 -- Memorial Day Weekend -- 2019

Loop 1604, on north side of San Antonio, Valero service stations with unleaded gasoline, least expensive grade, selling between $2.47 and $2.33 / gallon.