Something Is Happenin' Here But I Don't Know What It Is -- October 23, 2019

Too tired to go into this now, and I probably won't go into tomorrow, either, because it's not really a Bakken thing, but the twitter arena had a couple of interesting threads today.

One thread had to do with the weekly crude oil inventories. There were indications, based on trades between yesterday and today, that someone leaked the EIA numbers before they were publicly released (I assumed that was true and had always been true -- shocked, shocked, I say, to think that someone would leak "secrets" in Washington, DC). It seems many folks agree that API numbers are bandied about before being publicly released but EIA numbers are sacrosanct until released. I had not seen these discussions before; that suggests to me that some strange trading activity must have been going on for the past 24 hours. Remember: API showed a fairly significant "build" yesterday, whereas the EIA showed a fairly significant "draw" today. No one expected a draw today. Such a situation lends itself to a bit of skulduggery. [How many 'l's' in skullduggery/skulduggery?] Rick Perry, you had one job to do .... LOL.

The other thread -- and this I find most interesting because it addresses exactly what I mentioned yesterday (or the day before) -- where the price of crude oil was headed next July -- July, 2020. Some analysts are dead-sure that the combination of US shale production and non-shale, non-OPEC production will grow so fast that the price of oil will plummet by next summer. They argue that OPEC (i.e., Saudi Arabia) will have its hands full trying to maintain the price of oil.

Whether or not this comes to pass, regardless of the price of oil next summer, the entire issue is an existential issue for Saudi Arabia. For many (most) of us, "oil" is simply an investment; if the sector does badly (or if we think it's going to do badly) we move out of the sector and invest elsewhere. For OPEC, it's all they have.

I'm absolutely convinced that OPEC (i.e., Saudi Arabia) can read the tea leaves as well as the rest of us and they don't like what they see.

Idle rambling. I generally don't post nonsensical "stuff" like this but the energy sector right now (2014 - 2024) looks very, very interesting, to say the least.

Ballad of a Thin Man, Bob Dylan

In All The Tesla Excitement Today, I Almost MIssed This One .... October 23, 2019

.... I only caught it because while reading an article on Tesla, an analyst said that Edwards Lifesciences (EW) was one of five companies with "action today" that suggested a buying opportunity. So I was curious.

Screenshot from today:

I don't hold any EW directly. I do have a family member (not my wife) that has EW. It's a long story. It's another one I missed. LOL.

Disclaimer: this is not an investment site.  Do not make any investment, financial, job, career, travel, or relationship decisions based on what you read here or think you may have read here.

Tesla -- Idle Comments -- October 23, 2019

I am really, really impressed with Tesla/Elon Musk following Tesla's earnings report today.

One hopes that an "audit" of the earnings of $1.86/share doesn't show anything. If not, if Tesla really pulled this off, an incredibly good quarter, one really has to hand it to Tesla/Elon Musk. Unless something "strange" shows up, I am really, really impressed.

And, of course, that leads to the second thing: how could the analysts get it so wrong? Tesla has to be one of the most watched companies in the world. Yet every analyst forecast a loss; it was only a matter of how big that loss would be. And some analysts forecast a pretty big loss; the best forecast I saw was a loss of only 24 cents/share.

It will be interesting to see what an "audit" of the books reveals.

If this is "real," one really has to ask what the rest of the automotive world is (was) doing.

Just as amazing is how audacious/cavalier Elon Musk has been, "playing" with the SEC and getting away with it for the most part.

See a Bloomberg article here. I'm sure the comments will be most interesting.

Gasoline Demand -- "Recession Is Right Around The Corner" -- October 23, 2019

Link here.

If I was allowed only one metric to follow the US economy, I would choose gasoline demand. This is not the chart for "recession is just around the corner."

Big Gulch Oil Field

Big Gulch oil field:

• eight sections
• tucked among Lost Bridge (to the north); Little Knife (to the west); Rattlesnake Point (a very prolific field; to the south) and Cedar Coulee and Bear Creek (both to the east)
• in the daily active report, October 23, 2019 -- CLR with permits for five Kate wells -- lot 1/section 19-147-96

Most active section: section 18-147-96:

• 17585, 853, CLR, Roger 1-18H, Big Gulch, t6/10; cum 269K 8/19; steady Eddie;

• 28587, 906, Hess, LK-A Qtr Cir-147-96-1807H-4, Big Gulch, t3/15; cum 203K 8/19;
• 28586, 914, Hess, LK-A Qtr Cir.... 5, Big Gulch, t3/15; cum 172K 8/19;
• 28585, 700, Hess, LK-A Qtr Cir.... 6, Big Gulch, t3/15; cum 175K 8/19;
• 28584, 819, Hess, LK-A Qtr Cir.... 7, Big Gulch, t3/15; cum 134K 8/19;

• 30502, 791, Hess, LK-A Qtr Cir.... 8, Big Gulch, t8/15; cum 179K 8/19;
• 30501, 1,021, Hess, LK-A Qtr Cir.... 9, Big Gulch, t7/15; cum 219K 8/19;
• 30500, 929, Hess, LK-A Qtr Cir.... 10, Big Gulch, t8/15; cum 209K 8/19;
• 30499, 1,086, Hess, LK-A Qtr Cir.... 11, Big Gulch, t7/15; cum 245K 8/19;

North Dakota Active Rig Count Suddenly Drops To 56 -- October 23, 2019

Active rigs:

$55.83	10/23/2019	10/23/2018	10/23/2017	10/23/2016	10/23/2015
Active Rigs	56	70	54	34	68

Five new permits, #37112 - #37116, inclusive:

• Operator: CLR
• Field: Big Gulch (Dunn County)
• Comments: 
• CLR has permits for a 5-well Kate pad in lot 1/section 19-147-96, Big Gulch oil field

One permit renewed:

• Bruin: an FB Leviathan permit in McKenzie County

Two producing wells completed:

• 36266, 4,318, MRO, Dashu USA 44-11H, Chimney Butte, 45 stages, 8.2 million lbs, t8/19; cum 35K over 22 days; (#16908 -- Marlin -- off line since 5/19;  #16180 -- Marlin -- off line since 5/19; #28415 -- Karmen -- off line since 6/19; #28416 -- Johnny USA -- off line since 7/19)
• 36265, 5,929, MRO, Dorothy 14-12TFH,  Chimney Butte, 45 stages; 6.4 million lbs, t8/19; cum 61K over 29 days; at 6.5 million lbs this is not a big frack;
  

Record IPs are tracked here.

"California's EV Dream Is Turning Into A Nightmare" -- Oilprice -- October 23, 2019

Is there a new sheriff in town? I never expected to see this headline over at oilprice.com: "California's electric vehicle dream is turning into a nightmare." Link here.

California might be blazing a trail with getting a large number of electric vehicles on the road, but the only trail California is currently blazing is the wildfire/PG&E fiasco that could once again plunge millions of Californians into the dark in the next wave of blackouts, expected today, the likes of which could sour investor confidence in purchasing a vehicle that relies on sketchy power sources.

 It’s windy in dry California, and apparently that’s enough to trigger another preemptive blackout for PG&E customers. For starters, PG&E will cut power to 179,000 residents on Wednesday.

But it’s not just PG&E. Other utilities, too, such as Edison International and Sempra, are also expected to cut off power to hundreds of thousands of Californians who are in an area that is notoriously dry, with winds expected to combine with those dry conditions to create too much of a fire risk.

Meanwhile, Governor Newsom has asked for an investigation into the high price of gasoline in his state of California.  As lieutenant governor, Newsom supported higher gasoline taxes and the public went along with him, voting to raise taxes on gasoline.

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Water, Coal, and Fracking

Golf courses are not mentioned. We've discussed this before.

CLR Reports A Huge Frack: 83 Stages; 20 Million Lbs Of Sand; Neighboring Well With 10-Fold Jump In Production -- Middle Bakken -- October 23, 2019

Completion strategies since 2018 are tracked here. 

See this note for background.

A CLR Hereford Federal well came off the confidential list yesterday. The well is located in one of the best fields in the Bakken and seems to respond nicely to new fracks, and neighboring fracks.

With a new Hereford Federal well coming off the confidential list yesterday, I was curious how one of its neighboring wells was doing.

First, the newly fracked Hereford Federal well:

• 33026, 2,362, CLR, Hereford Federal 11-17H, Elm Tree, t9/19; cum --; the well produced 2,000 bbls over six days upon completion and then the well was immediately shut in for operational reasons; the frack: holy mackerel -- or as Sophia would say, "sweet mother monkey milk": 83 stages and 20 million lbs of sand; let's see what FracFocus says: fracked 12/23/18 - 1/13/09; 14.4 million gallons of water, 84% by mass; sand, 14% by mass; 

Now, the neighboring well:

• 19503, 275, CLR, Simmental 2-21H, Elm Tree, t12/10; cum 337K 8/19; from 2,100 bbls/month to 21,000 bbls/month, that's about a 10-fold jump. Recent production:

Pool	Date	Days	BBLS Oil	Runs	BBLS Water	MCF Prod	MCF Sold	Vent/Flare
BAKKEN	8-2019	31	17295	17233	10207	28200	19491	8290
BAKKEN	7-2019	31	18099	18407	12471	27833	0	27436
BAKKEN	6-2019	30	21289	21587	15054	32623	713	31505
BAKKEN	5-2019	15	9243	8490	6833	15591	438	14990
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	0	0	247	0	0	0	0
BAKKEN	12-2018	25	1794	1903	865	3017	2618	75
BAKKEN	11-2018	30	2386	2110	1431	3319	2835	90

Notes From All Over, Part 3 -- China's Challenges -- October 23, 2019

Anyone following the "China story" know that Trump's tariffs/sanctions have really, really hurt. We've discussed it often on the blog -- I said we would know how bad it was when Chinese bankers started jumping out of windows.

Well, this is pretty close to bankers jumping out of windows.

"China is struggling to offload foreign assets, from yachts to pizza." -- Bloomberg. Link here.

China Inc. is struggling to offload overseas businesses and the accompanying debt in an increasingly volatile market.

In just a few weeks, companies from yacht makers to luxury clothing and pizza outlets -- acquired by Chinese firms in recent years -- have either scrapped planned initial public offerings or sought alternatives to reduce their debt piles.

Chinese firms started selling off assets two years ago when the government tightened curbs on capital outflows and stepped up scrutiny on foreign acquisitions. Geopolitical factors from the U.S.-China trade war to Brexit and protests in Hong Kong and Chile are hurting sentiment in dealmaking on uncertain outlook.

Natural Gas -- North Dakota -- Production -- Processing -- Platts -- October 23, 2019

STAMPED: NOT TRIVIAL!!!!

Natural gas processing plants in North Dakota are tracked here.

From S&P Global, Platts (huge thanks to a reader for spotting this article) :analysis -- Bakken looks to add 445 million cf/d of natural gas processing before year's end.

... as production increased 69 MMcf/d month over month to more than 3 Bcf/d in August, operators lowered flaring to 577 MMcf/d. The startup of the Little Missouri IV processing plant likely led to the decline in flaring, according to S&P Global Platts Analytics. Flaring was still high at 19% for the month, well above the state's 12% mandate.

The drop in flared volumes is a sharp divergence from the prior three months when flaring increased each month. The increase in processed volumes from Little Missouri IV has allowed the Bakken to take an all-time high share of Northern Border Pipeline at the expense of Western Canada imports flowing to the Midwest.

Total Bakken deliveries to the pipeline are at an all-time high so far this month at 1.64 Bcf/d. Western Canadian volumes delivered to the pipeline are currently at 875 MMcf/d, just 10 MMcf/d more than the all-time low set in April, which was due in part to maintenance issues ...

The graphs are staggering:

• the Bakken is an oil play, not a natural gas play
• Canadians hate fossil fuel, doing what they can to destroy that part of their economy -- look at the west Canadian production vs little ol' North Dakota -- all of four counties, and mostly just two or three in the big scheme of things, and much of that natural gas production was flared off

Stamped: not trivial:

Unexpected Drop In US Crude Oil Inventories -- October 23, 2019

Updates

Disclaimer: this is not an investment site.  Do not make any investment, financial, job, career, travel, or relationship decisions based on what you read here or think you may have read here.  However, having said that, if I had a sudden influx of cash, I know exactly where I would invest it. As it is, I'm fully invested but there are some incredible opportunities out there right now. I don't know what Warren Buffett is doing (the SEC allows him to delay his trading) but if he doesn't take advantage of these opportunities I'll be very, very disappointed. No, I'm not talking about the Saudi IPO. I'm talking about a Permian operator who recently added significantly more Permian acreage; is trading at a huge discount (based on P/E average for the industry; and, pays a very nice dividend which is probably "safe."


Later, 1:17 p.m. CT: this really is quite incredible. Oilprice.com has still not reported the drop in US crude oil inventories and the subsequent jump in price in WTI. With huge builds, they practically report the story before the official data is released. It must be taking a little long than usual to figure out how to spin this story. By the way, someone noted that the huge build last week was due to a mismatch in dates before crude oil inventory data being reported and tanker traffic being reported. Very, very prescient. Very, very clever.

Original Post 

Link here.

• US weekly crude oil inventory change: decreased by 1.7 million bbls -- wow -- that was not expected!
• US weekly crude oil inventories: 433.2 million bbls; at the five-year average;
• refinery operating capacity, US: operating at 85.2% of operable capacity; about what we've been seeing for the past month; but well on the low side;
• WTI immediately after the report was released: up almost 2%; up almost a buck; now trading at $54.45; oilprice, always quick to headline "huge-build" stories hasn't reported this yet; are you kidding? 
• gasoline and distillate fuel supplied unremarkable but jet fuel product supplied was up almost 6% compared with the same four-week period last year -- must be driving faux environmentalists nuts; must be driving the elitists nuts who think they should be the only ones allowed to fly; 

Re-balancing (to keep spreadsheet manageable, lines 8 - 28, inclusive, are hidden):

Week	Week Ending	Change	Million Bbls Storage
Week 0	November 21, 2018	4.9	446.9
Week 1	November 28, 2018	3.6	450.5
Week 2	December 6, 2018	-7.3	443.2
Week 3	December 12, 2018	-1.2	442.0
Week 4	December 19, 2018	-0.5	441.5
Week 5	December 28, 2018	0.0	441.4
Week 6	January 4, 2019	0.0	441.4
Week 7	January 9, 2019	-1.7	439.7
Week 29	June 12, 2019	2.2	485.5
Week 30	June 19, 2019	-3.1	482.4
Week 31	June 26, 2019	-12.8	469.6
Week 32	July 3, 2019	-1.1	468.5
Week 33	July 10, 2019	-9.5	459.0
Week 34	July 17, 2019	-3.1	455.9
Week 35	July 24, 2019	-10.8	445.1
Week 36	July 31, 2019	-8.5	436.5
Week 37	August 7, 2019	2.4	438.9
Week 38	August 14, 2019	1.6	440.5
Week 29	August 21, 2019	-2.7	437.8
Week 30	August 28, 2019	-10.0	427.8
Week 31	September 5, 2019	-4.8	423.0
Week 32	September 11, 2019	-6.9	416.1
Week 33	September 18, 2019	1.1	417.1
Week 34	September 26, 2019	2.4	419.5
Week 35	October 2, 2019	3.1	422.6
Week 36	October 9, 2019	2.9	425.6
Week 37	October 17, 2019	9.3	434.9
Week 38	October 23, 2019	-1.7	433.2

Slawson's Dual Laterals

Purpose of the blog: to see some innovative drilling by Slawson. Other operators may be doing the same thing, but if so, I've not seen any examples (to the best of my recollection). I've talked before about some of the innovative things Slawson is doing in the Bakken.

Disclaimer: in a long note like this, there will typographical and factual errors. The purpose of the post is to give me an idea of what Slawson is doing in the Bakken. Errors will be corrected when found but errors should not detract from the purpose of the post.

Comment: I particularly enjoyed the common sense solution to a problem encountered by Slawson (see below).

Slawson dual laterals -- transferred White Butte:

• Three White Butte/Slawson Panzer wells.

Screenshot from October 22, 2019 -- Slawson dual-laterals.

29471, 1,423, Wolf 2-4MLH, Big Bend, t3/15; cum 289K 8/19; a good well, not a great well;

• lateral #2, middle Bakken: 17 stages; 1.8 million lbs (no typo); 15,095' measured depth;
• lateral #1, middle Bakken: 21 stages; 3.0 million lbs (no typo); 14,570' measured depth;
  

19993, IA/1,242, no production since 8/18; Hunter 2-8-17H, Big Bend, t11/11; cum 285K 8/18;

• a good well, but off line for the past year, concerning; local oil spill discovered 6/22/19; frack data, middle Bakken, 10/25/11, 28 stages; 2.6 million lbs; open hole;
  

30074, 981 (two sundry forms; see below; 981/238),  Slawson, Howo 2-4-33MLH, Big Bend, t4/15;  cum 521K 7/19;

• huge well; came off line 7/19; remains off line 8/19; 
• lateral 2, IP = 238: middle Bakken, 31 stages; 4.5 million lbs; 4/18/15;
• lateral 1, IP = 981: middle Bakken, 25 stages; 4.7 million lbs; 7/25/16;
• both laterals completed during same time period, March 18, 2015;
• spud date, February 10, 2015
• vertical, big rig, began on/about February 17, 2017
• the curve was begun February 19, 2015, and completed February 21, 2015
• lateral 1: completed March 4
• lateral 2: began, March 8, 2015; completed March 18, 2015, although in the "conclusion," the geologist states the well was completed march 8, 2015 (which makes more sense); challenges with completing the lateral

30540, SI/NC, Slawson, Jeriyote 8-5-32MLH, Big Bend, no production data,

• FracFocus shows the well fracked 10/2/2019 - 10/11/2019; 11.4 million gallons of water (a big frack); 91% water by mass; sand, 8.7% by mass; only one lateral on the initial permit, but a sundry form in autumn, 2018, with a request for an additional lateral;
• lateral 1 BHL: 200' FNL & 1320' FEL, 32-152-92
• lateral 2 BHL: 200' FNL & 2640' FEL, 32-152-92
• so, the "big frack" if divided between two laterals, relatively modest fracks

30763, SI/NC, Slawson, Hunter 5-8-17MLH, Big Bend, no production data, was to be a dual lateral;

• then February 20, 2016, permit was canceled for economic reasons (sundry form); sundry form, August 17, 2018, request for name change to Hunter 5-8-17MLH; 
• then, of all things, a Jun 23, 2019, sundry form, "Slawson is submitting a drill plan change for a 3rd lateral due to technical issues on previous two laterals. Please see attached plan ...." 
  
  
  
  
• to sort this out, I'll wait for the frack data
  

30764, PNC, Slawson, Hunter 10-8-17TF2H, Big Bend,

• sundry form, received October 23, 2014, mentions that #18792 was drilled with a Triple Combo open hole log suite
• sundry form, received February 2, 2016, permit canceled for economic reasons
  

32276, link here or see below the fold:

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

Re-Posting

A Slawson Dual Lateral 

Three Forks

First Bench / Second Bench

The well:

• 32276, 433, Slawson, Gobbler Federal 4-26-35MLH, Big Bend, t6/19; cum 8K 8/19;

The graphics:

Frack data:

• western lateral, first bench, Three Forks: 46 stages; 9.62 million lbs;
• eastern lateral, second bench, Three Forks: 46 stages; 9.78 million lbs;

From the well file:

• spud date: July 28, 2018 (small rig)
• cease drilling: September 5, 2018 
• first bench:
• 20,708' TD
• 10,196.20' TVD
• 11,54796' VS
• second bench:
• 20,900' MD
• 10,241.89 TVD
• 11,602.89 VS
• dates:
• spudded July 28, 2019
• lateral 1 reached TD on August 25, 2018
• lateral 2 began at 10,659' MD on August 31, 2018, and reached TD on September 5, 2018
• drilling hours:
• vertical: drilled in 59.5 hours in two runs
• curve: drilled in 15.7 hours in two runs
• lateral 1, first bench, 55.82 drilling hours in a single run; 100% in zone;
• lateral 2, second bench, 80.1 drilling hours in a single run; 100% in zone; gas between 246 and 5,895 units;

Spend Some Time On This Graphic --- October 23, 2019

From twitter today:

This graphic is worth a thousand words, but let me add 250 or so more words.

Disclaimer: this is not an investment site.  Do not make any investment, financial, job, career, travel, or relationship decisions based on what you read here or think you may have read here.

Disclaimer: I know almost nothing about natural gas. I have a pretty good feeling for the oil sector in the Bakken, and perhaps a pretty good feeling for the oil sector in the US, but I have no clue what's really going on in the Permian and I doubt anyone really knows what's going on in Saudi Arabia, OPEC, the Mideast except perhaps Prince MBS, and I'm not sure he even knows, and if he does, his power is significantly constrained by others.

So, with that, back to the graphic.

Later, October 30, 2019, IEA data:

• Southeast Asia: energy demand, population growing faster than domestic supply
• Southeast Asia on its way to becoming net importer of energy (will join Europe and the Antarctic)
• over-reliance on wind, solar won't help situation
• energy imports for Southeast Asia: by 2040, an annual energy bill of $200 billion -- that's billion with a "b"; 
• quick, pop quiz: this report (at the link) covers ten countries in ASEAN. Which one of the following four countries is NOT a part of ASEAN? China, South Korea, Japan, Taiwan.

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

Original Post

Background, observations, comments:

Chinese population,  animation:


Chinese energy:

• nuclear: I have no idea where China is going with nuclear, but the tea leaves suggest it's not a factor 
• coal: huge smog; health problems; not a global warming issue for China
• natural gas: China moving as quickly as possible to close coal plants; only real replacement is natural gas

Graphic above, natural gas:

• domestic production growth practically stagnant over time
• natural gas imports via pipeline grew significantly between 2010 and 2014, but then leveled off (which makes sense)
• natural gas imports LNG growth took off in 2015 but really soared in 2018 (most recent data provided)

Recent headlines:

• out-years: China is going to need much more natural gas
• near term: 2019 - 2020 winter is expected to be a huge challenge for China; pipeline is not easily scalable; tankers are very, very scalable;

Waste Water Recycling -- Williston, ND -- October 23, 2019

Waste water recycling, link here, posted by a familiar name:

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

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.

UAW: entering 6th week of strike; does one get the sense that the "union" is showing no sense of urgency, whereas the "rank and file" must really be hurting .... or .... 

Boeing: too big to fail. Boeing misses 3Q19 expectations as 737 MAX woes mount -- Yahoo!Finance. Huge, huge miss on EPS but investors unfazed:

• revenue: $20 billion vs $19.65 billion expected
• EPS: $1.45/share vs $2.17/share
• but look at that: BA up 1.8% yesterday and surges again, today, up 1.5%. Hope springs eternal.

AAPL: up another $1.44 in pre-market trading

Fed: I don't understand the "repo" issue at all but those in the know, seem concerned. No links but easy to find.

China: tea leaves suggest the masses are getting itchy. Over at twitter: China's State Council -- the country must increase imports of goods, including agricultural, consumer products -- can you say, "make America great"?

China: China adds incentives for domestic natural gas production as imports increase. Corroborates earlier story that China is concerned about a challenging winter. Global warming? Not in China.