The Million Dollar Way (The Bakken Oil Blog): 09/23/19

Monday, September 23, 2019

October, 2019, Hearing Dockets

NDIC dockets and docket schedule here.

Dockets are tracked here.

October 8, 2019, Minot, ND:

27828: on a motion of the Commission to consider amendments to the "General Rules and Regulations for the Conservation of Crude Oil and Natural Gas" codified as Article 43-02 ND Administrative Code.

October 9, 2019, Williston, ND:

Same.

October 7, 2019, Dickinson, ND:

Same.

October 7, 2019, Bismarck, ND:

Same.

Saudi Attack + 9 Days -- Gasoline Shipments From Europe To The Mideast Surging -- September 23, 2019

Saudi attack: tea leaves / from twitter past twenty-four hours or so --

UK PM Boris Johnson says Iran was responsible; UK could join US-led military effort
the repair work is going to last a lot longer than "official" pronouncements suggested
consensus over the weekend, now that tours of the facility have been made: eight (8) months
Saudi's "sweet oil" was major casualty
Saudi will now try to replace "sweet oil" with "sour oil" -- my hunch: customers will object
Saudi will have to offer discounts on "sour oil"

But look at this, link here:

From Reuters, the linked article:

Gasoline exports from Europe to the Middle East and Asia are set to surge this week after recent attacks on Saudi Arabia’s oil facilities crippled output at the kingdom’s refineries.

Over 400,000 tonnes of gasoline and gasoline blending components have been booked in the past week for loading between Sept. 21 and Sept 26 out of northwest Europe with Mideast Gulf delivery options, shipping data shows. The flow is the equivalent of around 500,000 barrels per day. [Why didn't they say that to begin with; who in the ... measures gasoline in "tonnes"? I guess you do when loading a sea-going tanker. LOL.]

It is unclear where the cargoes will end up, but traders said that Saudi Arabia’s state-run oil company Aramco is seeking to buy large volumes of refined oil products.

Europe’s exports of gasoline and blending components to Saudi Arabia averaged 60,000 bpd in the first five months of the year, according to data analytics firm Vortexa.

One can opine / prognosticate all one wants on twitter, but when the actual data starts filtering in, then we can get serious. And this is serious. 500,000 bpd vs 60,000 bpd. Rounding, that's 10x.

So much for that Saudi Aramco IPO.

From the graphic at the linked article, these are Saudi's refineries, and capacity or throughput:

Heavy oil:

Satorp, 400,000 bpd
Yasref, 380,000 bpd
Yanbu, 220,000 bpd

Sub-total: 1,000,000bpd

Light oil:

Samref, 380,000 bpd
PetroRabigh, 380,000 bpd
Ras Tanura, 300,000 bpd
Sasref, 280,000 bpd
Riyadh, 110,00 bpd

Subtotal: 1,450,000 bpd

Total: 2.5 million bpd
The attack knocked out one million bpd capacity.

A Bakken Well Demonstrating A Second Jump In Production -- September 23, 2019

We've talked about this many times. Here's the first example. A well with a second jump in production.

The well:

27522, 4.207, Whiting, Flatland Federal 11-4TFHU, Twin Valley, t10/14; cum 541K 7/19; note production jump 10/16: second production jump, 3/19;

Recent production:

Pool	Date	Days	BBLS Oil	Runs	BBLS Water	MCF Prod	MCF Sold	Vent/Flare
BAKKEN	7-2019	31	8346	8109	3126	22387	19556	2769
BAKKEN	6-2019	30	8919	9092	4341	25222	25162	0
BAKKEN	5-2019	31	11257	11321	5854	31629	31044	523
BAKKEN	4-2019	30	13854	13850	7915	41074	41014	0
BAKKEN	3-2019	25	13063	13037	9185	41862	19262	22555
BAKKEN	2-2019	28	961	635	347	1460	668	766
BAKKEN	1-2019	9	160	103	136	262	248	0
BAKKEN	12-2018	29	2926	2926	391	8633	8578	0
BAKKEN	11-2018	30	3086	3133	375	9015	7016	1939
BAKKEN	10-2018	31	3189	3146	308	9459	8486	911
BAKKEN	9-2018	30	3109	3319	453	9626	9375	191
BAKKEN	8-2018	31	3372	3694	424	10588	10516	10
BAKKEN	7-2018	31	3623	3414	432	11409	11347	0

First jump in production back in 10/16, although not as dramatic:

BAKKEN	1-2017	30	5705	5408	1310	26064	25954	50
BAKKEN	12-2016	29	6153	8449	1372	27984	26459	1468
BAKKEN	11-2016	30	8190	5773	1104	36728	36629	39
BAKKEN	10-2016	26	11595	11638	1732	33719	32651	1016
BAKKEN	9-2016	0	0	0	0	0	0	0
BAKKEN	8-2016	0	0	0	0	0	0	0
BAKKEN	7-2016	11	2365	2523	366	11992	11899	71
BAKKEN	6-2016	30	6616	6506	1118	33196	33086	50
BAKKEN	5-2016	31	7174	7322	1235	37264	34724	2478
BAKKEN	4-2016	30	7460	7181	1430	40744	40454	230
BAKKEN	3-2016	31	8284	8371	1734	46732	46190	480

Another Well With Huge Jump In Production -- September 23, 2019

This page will not be updated; this well is tracked elsewhere.

The well;

22808, 4,439, Equinor/Statoil, Cheryl 17-20 4H, t2/13; cum 459K 7/19; off-line 2/18 but back on-line 3/18; off line again, but then back on line 11/18;

Production period of interest:

BAKKEN	12-2017	31	16040	16832	11854	45340	45295	14
BAKKEN	11-2017	19	8891	8057	9464	23274	23094	164
BAKKEN	10-2017	26	11709	11511	11578	28867	28624	218
BAKKEN	9-2017	16	5077	5234	5578	11964	11950	0
BAKKEN	8-2017	31	10663	10901	11776	30569	30479	59
BAKKEN	7-2017	31	16776	16619	15139	35450	33826	1593
BAKKEN	6-2017	27	16494	16059	20259	33466	30373	3066
BAKKEN	5-2017	0	0	0	0	0	0	0
BAKKEN	4-2017	0	0	0	0	0	0	0
BAKKEN	3-2017	1	1509	1797	0	0	0	0
BAKKEN	2-2017	0	0	0	0	0	0	0
BAKKEN	1-2017	31	30	436	0	0	0	0
BAKKEN	12-2016	11	2587	2936	4580	4722	4708	0
BAKKEN	11-2016	30	4018	3695	9898	7252	7221	1
BAKKEN	10-2016	31	3257	3242	10527	5403	5403	0
BAKKEN	9-2016	30	2894	2611	10589	4650	3857	793
BAKKEN	8-2016	1	138	0	686	32	32	0
BAKKEN	7-2016	0	0	0	0	0	0	0
BAKKEN	6-2016	0	0	0	0	0	0	0
BAKKEN	5-2016	0	0	0	0	0	0	0
BAKKEN	4-2016	0	0	356	0	131	131	0
BAKKEN	3-2016	31	2892	2873	2241	6119	6092	27
BAKKEN	2-2016	29	3413	3392	2391	8587	8547	40
BAKKEN	1-2016	31	4346	4504	2542	11422	11242	180

The Brooklyn Oil Field, An Update -- September 23, 2019

In the early days of the Bakken boom I never considered the Brooklyn oil field as a "Tier 1" oil field. I just considered it a "steady Eddy" field, in which CLR was systematically drilling it out. But, wow, my impression has changed.

The Brooklyn oil field is tracked here but it still needs a lot of updating.

Look at the production profile of a recent well:

34768, 1,395, CLR, Helena 8-7HSL1, Brooklyn oil field, t3/19; cum 101K 7/19;

Pool	Date	Days	BBLS Oil	Runs	BBLS Water	MCF Prod	MCF Sold	Vent/Flare
BAKKEN	7-2019	31	12419	12541	21476	34230	30026	3806
BAKKEN	6-2019	30	15264	14870	25021	32585	28219	3994
BAKKEN	5-2019	29	14771	14824	25561	27313	26760	176
BAKKEN	4-2019	30	18872	19087	30319	33719	33191	170
BAKKEN	3-2019	31	30678	30774	48916	47796	43088	4305
BAKKEN	2-2019	11	9031	8584	12273	9519	9355	164
BAKKEN	1-2019	0	0	0	0	0	0	0
BAKKEN	12-2018	3	252	252	320	0	0	0
BAKKEN	11-2018	2	0	0	462	0	0	0

Most Recent Legacy Fund Deposits Reported; CLR With Eight More Permits For The Long Creek Unit; A Milestone Of Sorts: Permit #37000 Issued -- September 23, 2019

Legacy fund deposit for September, 2019 (link here):

Note: the September, 2019, deposit exceeds the average of every calendar year since and including calendar year 2011 except for years 2013 and 2014.

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

Daily Activity Report

Active rigs:

$58.47	9/23/2019	09/23/2018	09/23/2017	09/23/2016	09/23/2015
Active Rigs	59	66	57	33	69

Eight new permits, #36995 - #37002, inclusive:

Operator: CLR
Field: Long Creek (Williams)
Comments:

CLR has permits for eight more wells in the Long Creek Unit; four new Ralph Federal permits; and, four new Reckitt Federal permits; the Long Creek Unit is tracked here; with these eight, it appears CLR has about 38 active permits; goal: 60 wells in this unit to be drilled with two rigs;

Four permits renewed:

EOG (3): three Austin permits in Mountrail County
Liberty Resources: a Keller permit in Burke County

Three producing wells (DUCs) reported as completed:

35824, 1,483, CLR, Gjorven Federal 6-21H, Brooklyn, t9/19; cum --; one of my favorite fields, the Brooklyn oil field is tracked here;
31806, 1,316, EOG, Riverview 24-3031H, Clarks Creek, t8/19; cum --; #22199, #22200 -- both offline since 2/19; #22486, #22487 both off line since 5/19; #19247 just coming back on line;
34289, 158 (no typo), FBIR Walker 31X-36HXE, Heart Butte, t6/19; cum --; numerous neighboring wells off line;

Bakken Phenomena: Inter-Formation-Uplift; New Lease On Life -- September 23, 2019

I've quit posting parent-child uplift data for the most part; only when it interests me. It's so common in the Bakken, it's no longer news.

However, it should be noted, that for a number of reasons (which should be obvious) the parent-child uplift data generally involves parent wells and daughter/child wells targeting the same formation. In the Bakken, this is generally the middle Bakken.

Without comment or hypothesizing or explanation or anything else, there is another Bakken phenomenon: parent-child uplift involving different formations.

First example that I have specifically pointed out is at this post, a middle Bakken parent well and a Three Forks second bench well.

There have been numerous examples of similar results involving the middle Bakken and the Three Forks, first bench, and I guess I have pointed them out, but not as clearly as I'm pointing it out now. I need a new tag for this phenomenon, perhaps, "parent-child-inter-formation-uplift."

There's also another phenomenon for which I need a tag. Often, an older well is starting to show its age; the decline rate has leveled off and one gets the feeling that the well is beginning to "peter out." Then a neighboring well(s) is (are) completed, and the parent well gets an "extension." There is no significant jump in production (if there is a jump, it is subtle and folks would suggest something else is going on) but the decline rate is extended. The result: the EUR increases. Tag for now, "parent-well-new-lease-on-life" is way too long but I need a placeholder. Maybe "EUR_extended" or "EUR_EXT."

I suppose I could call all these Bakken phenomena, the Bakken gods smile on Harold Hamm. LOL. They may not be enough to move the needle for the operators, but mom-and-pop mineral owners love them and I'm sure the Slawson brothers get a chuckle out of them (or out of my naiveté ).

CLR Has Completed Angus Federal 6-16H2; Older Well Back On Status; Small Jump In Production

A neighboring well has just been completed and is producing:

33965, SI/NC, CLR, Angus Federal 6-16H2, Elm Creek, 26,729 feet; producing as of 5/19; three Forks, second bench; t5/19; cum 568K 1/24;

The well:

20804, 329, CLR, Angus 1-9H, 30 stages; 2.7 million lbs, t2/13; cum 310K 7/19; offline as of 12/18; still offline 4/19; back on line as of 5/19; a middle Bakken well; cum 401K 1/24;

Recent production; small jump in production:

Pool	Date	Days	BBLS Oil	Runs	BBLS Water	MCF Prod	MCF Sold	Vent/Flare
BAKKEN	7-2019	31	4482	4166	3802	6872	3605	2877
BAKKEN	6-2019	27	3536	3840	3573	5553	2115	3149
BAKKEN	5-2019	9	1315	806	640	729	62	628
BAKKEN	4-2019	0	0	0	0	0	0	0
BAKKEN	3-2019	0	0	0	0	0	0	0
BAKKEN	2-2019	0	0	0	0	0	0	0
BAKKEN	1-2019	1	0	187	22	0	0	0
BAKKEN	12-2018	25	1625	1687	548	4847	4437	75
BAKKEN	11-2018	30	1952	2054	666	4360	3428	538

Notes From All Over, Part 2 -- September 23, 2019

Opportunities: if anyone has noticed, the US rig counts continue to drop. My hunch is that day rates for drilling have come way down. Those with rigs: the last thing they want to do is "lay them down." They will rent at lower prices to keep them active. Break-even costs in the Bakken, earlier this year. In Mountrail County, $8/bbl is the break-even price.

Making the Bahamas great: remember that story and pictures of that huge petroleum products terminal in the Bahamas before, during, and after Hurricane Dorian? Today, Rigzone is reporting:

Buckeye Partners, L.P. reported Friday that it has resumed full operations at its Buckeye Bahamas Hub.

Buckeye stated that BBH – the largest petroleum products terminal in the Western Hemisphere – sustained only minor damage from Hurricane Dorian, which devastated part of The Bahamas early this month.

The company added that its has completed inspections and repairs and that it found no indications of product release or environmental threats. Last week, Buckeye restored partial operations at BBH.

“On behalf of the entire company, I want to thank the Buckeye emergency response teams and al of our employees in The Bahamas for their dedicated work to safely restore operations at our Buckeye Bahamas Hub,” Khalid A. Muslih, executive vice president and president of Buckeye’s Global Marine Terminals unit, said in a written statement emailed to Rigzone.

Buckeye also stated that the company and its employees have been contributing to various relief and recovery efforts in the wake of Dorian.

Hyperbole, Mideast: whenever anyone says this -- the 2019 attack on Abqaiq -- was the biggest disruption in "oil" supplies in the history of the universe, I remind them of a) the Suez Crisis of 1958; and, b) the OPEC embargo in 1973. There were many, many more repercussions from those two events than what has occurred so far from "Abqaiq-2019."

Hyperbole, Texas: everyone said Imelda, September, 2019, barely a tropical storm according to DFW radio news outlet, was several times worse than Hurricane Harvey. Exxon shut down the largest refinery along the Gulf Coast. After Hurricane Harvey: massive shortages of gasoline in Texas; long lines; service stations running out of gasoline. After Imelda, the price of gasoline hardly rose, if at all, and there were certainly no shortages. Any rise in the price of gasoline was probably from "Abqaiq-2019" and even those increases were minimal.

Hyperbole: some said the attack on Abqaiq would cause price of gasoline to skyrocket, resulting in ... yes, the recession that is right around the corner.

Mea culpa: I'm not immune fro criticism. I thought the price of oil would jump much more than it did. But I'm still convinced, "the numbers don't add up."

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

Corky

I hope Corky, seemingly ageless, will visit me when I'm in a nursing home.

The Permian Vs The Bakken -- Side-By-Side -- Mana A Mano -- September 23, 2019

I don't know if folks like to put windows side-by-side. I know it's a pain, sometimes impossible on a mobile device (phone, tablet) but on a laptop or desktop very, very easy.

Bring up this site and place it on the right half of your screen. It's the EIA production report for the Permian for September / October, 2019.

Place the following in the first window on the left side of the screen. Then compare what you see on the right with what you see below (link here):

Several other comments / observations:

Oasis says it is using free cash flow from the Bakken to pay for its operations in the Permian
as a basin, the Permian is beating out the Bakken, but they are in the same ballpark: the former is trending toward 5 million bopd (will hit 8 million bopd) and the latter is trending toward 2 million bopd, where it will probably max out
wells are still more expensive to drill in the Permian compared to the Bakken (by half again as much in some cases)
rigs

the Permian with 400+ rigs
the Bakken with 50 rigs

income / royalties

mom-and-pop mineral owners are loving the Bakken
the mid-size operators who got into the Permian early are loving the Permian, as is COP
folks late to the Permian game may have overpaid --whether they did or not, they certainly paid a log

density

operators in the Bakken seem to have figured out optimum density and optimum completion strategies, though those will continue to improve
stories are still coming out of the Permian that density is an issue

due to the way the basins were cut up, the norm for the Bakken is two-mile, 1280-acre spacing; in the Permian spacing, and length of laterals varies considerably
natural gas production (MMCF) : crude oi production (bopd)

Bakken: 3,000 : 1,500
Permian: 15,000 : 5,000

Notes From All Over, Part 1 -- September 23, 2019

EVs: two stories --

after $5 billion in losses, Nio (also referred to as China's "Tesla") fight to survive -- September 23 2019, Bloomberg
from one year ago -- Warren Buffett has made a killing off China's biggest electric car maker, BYD Co. -- traded on the Hong Kong exchange -- Fortune, September 26, 2018

Global warming: St Greta spreads the climate gospel -- op-ed, WSJ -- September 20, 2019

The High Church of Environmentalism has acquired many of the characteristics of its ecclesiastical predecessor. An apocalyptic eschatology warns that we will all be consumed by fire if we don’t follow the ordained rules. The notion that it is our sinful nature that has brought us to mortal peril—from the Original Sin of a carbon-unleashing industrial revolution to daily transgressions with plastic bottles and long-haul flights—is as central to its message as it was to the Catholic Church’s. But repentance is near. A gospel of redemption emphasizes that salvation lies in reducing our carbon footprint, with reusable shopping bags and bike-sharing. The secular authorities preach the virtues of abstinence. Meatless Fridays are no longer just for Lenten observance.

UN and global warming, link here: https://www.foxnews.com/opinion/un-climate-change-save-the-world-meeting-daniel-turner.

Regardless of the science, or lack thereof, one thing is certain: in order to tackle climate change, the U.N. needs a lot of meetings.

"Time affluence": embracing "time affluence" can maximize vacation (or retirement) happiness -- wellandgood -- September 22, 2019. This is why I don't have bucket lists.

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

China Has Already Lost The Trade War

China and the trade war, a very interesting read.

Link: https://www.foxnews.com/opinion/helen-raleigh-china-lost-trade-war.

China exempted U.S. farm products, including soybean and pork, from additional tariffs, effective Sept. 17. This announcement was seen widely as a goodwill gesture ahead of the October trade talks between U.S. and China. But this seems to be a desperate, self-serving measure, because all the other pork exporting countries combined couldn't fill China's supply shortage. Simply put, China has a need of pork from the U.S., and its suspension from additional tariffs is, in essence, a tactical and indirect acknowledgment that it won’t be able to sustain this trade fight for much longer.

If China had hoped that it could simply wait until Trump loses the 2020 presidential election to get out of the trade war, it has to think again. At the most recent Democrat presidential debate, not a single candidate proposed to remove the trade tariffs Trump imposed on China. So even if Trump loses, China likely would not get someone friendlier in the White House.

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

Recession Is Right Around The Corner

Recession is just around the corner: stock market's eerie parallels to September 2007 should raise recession fears -- MarketWatch -- September 21, 2019. Talking us into recession.

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

US Crude Exports Set To Hit New High Into Year-End: HFIR

HFIR analysis of what the attack on Saudi means for oil. From a contributor to SeekingAlpha.

Summary:

The majority of the investment community following the Saudi news is fixated on the total production outage, but the more important issue is the crude quality issue.
What happens then is that the market will look for a replacement, and the only place in the world today with excess crude storage is the US.
US crude export arb signals very elevated US crude exports into year-end.
We are seeing ~3 to ~3.3 mb/d for US crude exports in October with an all-time high for November.
This now opens up the possibility US crude storage falls to ~350 mbbls by year-end widening our expected WTI forecast from $70 to $85/bbl.

Narrative:

Keep in mind that Arab light and Arab extra light have API gravity of 33 to 38. So the ultra-light US shale oil won't be a replacement, but rather the ~38 API gravity WTI will.
Now if you look at the crude export arb, US crude exports will hit an all-time high in November. What will the total volume be? We don't know just yet, but we know that October is going to range between ~3 to ~3.3 mb/d.

We are currently seeing 7 VLCCs waiting for loading in October (4 in the Gulf, 3 incoming).

This combined with Corpus Christi operating at max capacity filling Aframax leads us to believe that US crude exports will likely be closer to ~3.3 mb/d for October.

In the event that US crude exports do average that high and using a conservative refinery throughput figure, we have -4.86 mbbls for October US crude storage figures.

[As usual, "m" in this story equals million.]

North Dakota Active Rigs Drop To 58 -- September 23, 2019

Wells coming off the confidential list over the weekend, today --
Monday, September 23, 2019: 59 for the month; 191 for the quarter:

35413, conf, Crescent Point Energy, CPEUSC Austin 5-17-20-158N-99W TFH, Ellisville, no production data,
35037, SI/NC, Hess, BB-Charlie Loomer-150-95-0718H-4, Blue Buttes, no production data,
34820, SI/NC, XTO, Myrna Federal 21X-2EXH, Alkali Creek, no production data,

Sunday, September 22, 2019: 56 for the month; 188 for the quarter:

35702, SI/NC, Petroshale, Thunder Cloud 2MBH, McGregory Buttes, no production data,
35038, SI/NC, Hess, BB-Charlie Loomer-150-95-0718H-5, Blue Buttes, no production data,
34817, SI/NC, XTO, Myrna 21X-2B, Alkali Creek, no production data,

Saturday, September 21, 2019: 53 for the month; 185 for the quarter:

36003, 289, Hunt, Alexandria 161-100-22-15H 2, Alexandria, t8/19; cum --;
35039, SI/NC, Hess, BB-Charlier Loomer-150-95-0718H-6, Blue Buttes, no production data,