Saturday, October 5, 2019

The Bakken Magic -- The "Halo Effect" -- And A Nod To Steve Jobs Who Died Eight Years Ago Today -- October 5, 2019

A reader who has followed this story (see below) very, very closely was referring to the following comment I made at this post earlier today:
Until we get Bakken 3.0, I think the "Bakken 2.5" theme is the jump in production seen in many older Bakken wells seven years out; the jumps in production are due to any number of reasons; often we do not know why there are huge jumps in production but the operators know.
After reading that the reader wrote: 
I had planned on further research before e-mailing you, but your comment re: Bakken 2.5 prompted this early stage comment.
Reading the September 1, 2019 article from the JPT titled "Right Sized Fractures ... Robust Monitoring ..." [Archived] ...  some pertinent info ... [In addition to that JPT article, see also, the September 1, 2018, JPT article, "Extreme Limited-Entry Perforating Enchances Bakken Completions."]
The numerous iterations of 'frac hits' have prompted industry pros to adopt precise terminology to more effectively describe this stuff, now described as "fracture derived interactions". 
The "water hits" are events wherein only frac fluid (essentially water) impacts with older offsets (aka 'parents/aunts/cousins/whatevuh').
One small operator recently said at a conference that water pressure increased shut in wellbore pressure 2 to 3 thousand psi in older, offset wells (that's a lot) before bleeding down over a several week period.
Some quotes ... 
"It was pretty eye opening", "... bumps in production and drops in GOR - every single time, without fail".
His (small Texas operator engineer) working theory is that frac fluid pushes gas back into solution producing a stronger drive, meaning more oil.
"Oil banking" (increased oil production) was found in 14% of 70 wells that had "water hits".
These Texas guys should [take another look at the Bakken and specifically what CLR, MRO, XTO, etc., are doing].
Bakken operators are WAY ahead of the curve in all of this.
Some might argue that the "halo effect" will come to be recognized as an early inning observation of an exceptionally significant process in this shale revolution.

There is much to take away from this.

First, I need to subscribe to JPT. LOL.

Second, the shale revolution will generate a jargon of its own and it may take awhile for terms and definitions to be agreed upon / accepted.

It was only a few months ago we referred to "parent/child uplift" as one example of the "halo effect."

Back on June 10, 2019, I had a post on "Jargon 101 -- the Bakken Revolution." It looks I have to update that post and link it at the sidebar at the right.

Anyway, I will use the terminology I've been using, "halo effect," "jump-in-production," parent/child uplift" but will now add "the Bakken magic."

Apple's Steve Jobs would have called it that. From that link, one of the comments:
Back in Steve's day everything was a "miracle."
Pretty funny.
On Another Note
In conventional plays, the "thickness" of the play was deemed important. Many (most) have suggested that is also true of shale.

I have never bought into that -- that thickness of the play is the be-all and end-all. I would argue quite the opposite (again, not to be taken out of context).

 A thought experiment, particularly in light of the JPT articles linked above.

Assume there are two shale plays.

Assume both of them are estimated to have the same amount of original oil in place, or the same amount of recoverable reserves.

Assume both plays are identical with regard to geographic footprint, i.e., both are same size in surface area measured in square miles.

The only variable is this: one play is 40 feet thick; the other play is 400 feet thick.

Which unconventional play would you rather own? The one that is 40 feet thick, or the one that is 400 feet thick?

Saudi Reserve Assets -- August, 2019 Data

Link here. For the archives: the attack on Saudi Arabia was 4:00 a.m. September 14, 2019. The chart below does not reflect production / cash reserves in September, 2019.

US imports from Saudi Arabia, link here (I can't recall if this has been previously posted):

Why I Love The Bakken -- "The Bakken Magic" -- October 5, 2019

I don't know when I last checked this well and I don't know when I wrote this comment about this well but it was probably in 2017:
  • 17100 -- CLR, IA; still active; off-line; a lousy well so far;
So, I was curious. How is this well doing now?

Two years ago -- production from 12/16 to 6/17 -- fourth column over is barrels of oil produced in that given month - in this example, this well produced a measly 171 bbls over 22 days in 6/17, or a measly 8 bbls/day:


Pretty grim, huh?

Well, it became even more grim:


But then, "the Bakken magic" (in May, 2018, 26,682 bbls over 17 days extrapolates to 47,000 bbls over 30 days):


This was the best this well did when it was originally completed:


Pretty lousy. And it remained a lousy well for ten years. But apparently CLR just had too many other things to do and never got around to doing something about this lousy well ... until now.

And there you have it.

In May, 2008, drilled and a lousy well.

In May, 2018, ten years later, to the month, a huge well, and a "50K+ well in June, 2018. I wonder if Hubbert had any 10-year-old wells that jumped from 400 bbls/month to 50,000 bbls/month (let's see, 50,000 / 400 = 125x jump in production).

People talk all about the "dreaded decline rate" in the Bakken. I have yet to hear much about these second time 'round wells, which are about as inexpensive as one can imagine. At worse, they have a break even cost of about $6/bbl; at best ... well, what do you get when you divide a number into zero?

The well:
  • 17100, 240, CLR, Mountain Gap 31-10H, Rattlesnake Point, t6/08; cum 429K 8/19.
If you've read this far, the Mountain Gap wells in Rattlesnake Point are tracked here. To the best of my knowledge, this is the first time I've highlighted this particular well. But look at that IP -- 240 -- who would have ever thought this would be a 50K+ well?

For more on "the Bakken magic," see this post.

A Kind Of Magic

Magic, Queen

A Nice Jump In Production For An Old EOG Austin Well In The Parshall Oil Field -- October 5, 2019

Later: Don pointed this out -- I had forgotten -- "this is a 640-spacing and is one of the wells that fired up the Bakken.. and it produced 3/4 of a million bbls of oil  back in the day of a 450K-EURs." Three-quarters of a million bbls of oil and still going strong. Thank you for pointing out that it was a short lateral; the standard lateral in the Bakken is 1,280 acres. They're not there yet in the Permian. 

The well:
  • 17075, 2,310, EOG, Austin 9-11H, Parshall, t6/08; cum 760K 8/19; [what was left out of the original post: this was a short lateral -- some would argue that this would extrapolate to 1,500K or 1. million bbls of crude oil at a time when EURs were 450K]
Period of production interest:

Week 40: September 29, 2019 -- October 5, 2019

Top international non-energy story:
  • Some members of US House have already "impeached" President Trump; the whole House still needs to vote;
Top international energy story:
Top national non-energy story:
Top national energy story:

Top North Dakota non-energy story:

Top North Dakota energy story:

Geoff Simon's top North Dakota energy stories: nothing worth posting

Bakken 2.5:
  • Until we get Bakken 3.0, I think the "Bakken 2.5" theme is the jump in production seen in many older Bakken wells seven years out; the jumps in production are due to any number of reasons; often we do not know why there are huge jumps in production but the operators know;
Second time 'round wells:
Bakken "halo" phenomenon:
Other formations:
Bakken Economy:

Off The Net For Awhile

I am heading out to watch Sophia's soccer game.

Her older sister's soccer team won their 8:00 a.m. game today, 6 - 1.

Back Home

If I ever really get rich, I'm going to support the Trump economy by buying (or renting) a three-bedroom house (home).

But that's another story for another time.

My book for the week: The Ancient Celts, second edition, c. 2018, Oxford University Press. It was hard to find. Through it looked like one could only get it through a third party and very expensive at that. The British copy that I have was priced at Ł20 or $24.67 at today's currency exchange rate and that does not include handling and postage or taxes.

Clearing Out The In-Box -- October 5, 2019

Jobs in America: record number employed; unemployment rate best in 50 years; folks are actually asking "how low can the unemployment rate go?" Mainstream media's headline: job growth slowing down. Well, duh. Unemployment:
  • for whites: 3.2%
  • adult men: 3.2%
  • adult women: 3.1% (will go lower if Biden's plan to bring 720 million women back into the workforce)
  • teenagers: 12.5%
  • Asians: 2.5% (no typo: 2.5%) -- I find that interesting that Asian unemployment is actually lower than "white" unemployment -- reverse discrimination? Harvard has a plan to stop that, I know.
  • Hispanics: at 3.9%, a record low; has never been this low; never;
  • African-Americans: maintains record low of 5.5% set in August
Less than a week away, 10/10/19:

Apple: strong demand for the new iPhone 11;
Pacific Northwest: looking forward to higher gasoline prices; link here at Platt's --

  • west coast refineries operating at just 78% of capacity
  • the lowest since November, 2016
  • almost 20% lower than this time last year
  • why: can't get enough crude oil
  • why: Pacific Northwest limiting CBR
  • much more at the linked site
Wind capacity in the US: EIA link here, September 27, 2019;

So, how do you interpret this headline (link here):

At the linked article:
  • 3,204 MW of solar gas canceled in ERCOT
  • 284 MW ok'd for operation -- 
  • yeah, that's what I thought; "284" is such a small number, I thought it was all wind/solar; wrong
  • I thought was solar
  • nope, here's the data:
  • fifteen projects (wind, solar, natural gas) were canceled in September
  • two projects went forward
    a 100-MW natural gas plant
  • a 184-MW wind farm (at 25% likely production, translates to 46 MW)
Later: regarding the ERCOT story above, I was "appalled" to the degree which the ERCOT folks would try to spin this story. Apparently another reader saw the very same thing; that reader wrote me:
The quotes trying to make this great news for solar seems to be a real stretch.
Of the 3,204 MW of generation canceled in September, 2,491 MW was solar and 713 MW was gas-fired. Manan Ahuja, S&P Global Platts Analytics manager of North American Power analytics, noted that the number of projects canceled was not unusual, exactly equal to last September's project cancellations.
I first saw that story at twitter:

Fake news: "jobs drying up in the Permian" -- read the story to see for yourself and if still confused, read the comments; first hint that it's fake news -- it's an "oil" story by Bloomberg

Social Security:
  • for all those folks who were worried that "Social Security" would run out of money, not gonna happen; need proof? 
    • politicians who make the Social Security laws are now looking at increasing benefits across the board
  • it's going to be hard for a senior to vote "against" Pocahontas when she promises an increase of $200/month for all Social Security recipients;
  • Paul Krugman: debt doesn't matter; 
  • the story is not in some left-leaning tabloid; it's in The Wall Street Journal;
Disclaimer: this is not an investment site.  Do not make any investment, financial, job, travel, career, or relationship decisions based on what you read here or think you may have read here.

Investing: will Enbridge (ENB) beat estimates again? Clickbait: the article doesn't give estimates for the 3Q19 report, unless I missed that, which is very possible. So, what are estimates for ENB this quarter?
  • mean estimate: 39 cents (EPS last quarter: 50 cents)
  • high: 42 cents
  • low: 30 cents
For the next fiscal year:
  • range: $1.60 to $2.15
  • mean estimate: $2.00
Do you really want to park your Tesla in your garage, attached to your McMansion? Unless you have a mother-in-law bedroom above the garage? Link here.
  • Close reading of the article suggests that "over-charging" the batteries is the problem. Tesla fixed that problem by over-the-air software updates to prevent over-charging. The updates reduced the range of the involved Teslas by 25 miles. 
  • Murphy's law of EVs: when you have but 20 miles range remaining, the map reveals the next EV charging station 25 miles away.

Best quote of the day, from a reader: "I hope Ruth Bader Ginsburg lives long enough to see Trup re-elected."

For The Granddaughters