Saturday, December 7, 2019

Whiting Canceled Seventeen Permits -- Another Look — December 7, 2019

From the December 5, 2019, NDIC daily activity report in which it was reported that Whiting canceled seventeen permits. The permits:
  • 34211, Olson 41-29TFH, Williams County, Dollar Joe,
  • 34212, Olson 31-29TFH, Williams County, Dollar Joe,
  • 33704, Jackman 11-11-1HM, Williams County, East Fork,  
  • 30847, P Lynch 155-99-14-33-28-3H3A, Williams County, Epping, 
  • 30849, P Lynch 155-99-14-33-28-3H3, Williams County, Epping, renewed, February, 2018; then canceled; Three Forks B1; 
  • 31683, P Bibler 154-99-3-5-29-2H3, Williams County, Epping, renewed in July, 2019, then canceled; Three Forks B1;
  • 35002, Larson 44-12-2TFH, Williams County, Corinth,
  • 35003, Larson 44-12-3H, Williams County, Corinth,
  • 34981, Schilke 24-21-1TFH, Williams County, Big Stone, 
  • 34982,  Schilke 24-21-2H, Williams County, Big Stone,
  • 34983, Schilke 24-21-2TFH, Williams County, Big Stone,
  • 31624, Wright 44-34-2H, Williams County, Juniper,
  • 29295, Koppinger 21-13PH, Stark County,
  • 29296, Koppinger 41-13PH, Stark County,
  • 28799, Tomchuk 41-30PH, Stark County,
  • 29149, Solberg 44-12PH, Stark County,
  • 29152, Dietz 11-17PH, Stark County,
At first I thought it fairly disconcerting. It's still a little bothersome but most of the locations were in tier 2, maybe tier 3 locations ... having said that, the Epping, East Fork, and Dollar Joe locations were not all that bad, but hard to say.  It is interesting that most of these permits seem to be Three Forks/Pronghorn.

So, we'll see. The good news? Whiting is still plugging away in the Bakken.

Without The Blog, Without Readers I Would Have Missed This One

And Here's The Problem With EVs -- The Series Continues -- December 7, 2019

This is the problem with tethered vehicles, posted earlier. Even the Australians got a kick out of the California Tesla conga line.

From Tyler Durden:
There are now around 400,000 Teslas on the roads of the U.S. and the company’s commitment to hoarding its cash by any means necessary, including not paying bills and not investing in its Supercharger network, could finally be coming back to bite its owners in pronounced fashion.
Now, this, just a couple of days later: car makers rushing to copy Tesla lack one thing -- buyers.

From WSJ.
Electric vehicles cost more than their gasoline counterparts, are cumbersome to charge and sell fewer in the U.S. than the Toyota Camry. For every eight pickups sold in America there is one pure-plug-in vehicle sold (many so-called electrics use a conventional engine as well as a battery).
Still, companies are preparing for the electric age by cutting workers. This is partly to save money needed for development, but it is primarily to prepare for a vehicle design-and-production process that will be, as they say in Silicon Valley, “asset light.”
Let’s be honest. Even the smartest auto executive doesn’t have a clue when the EV revolution will happen. Could be 2025, or it could be 2050. To date, the customer’s appetite for big trucks and SUVs running on cheap gasoline has ruled the market. The roar of an engine and the convenience of a gas station has won out over regulators and environmentalists telling us the world will melt if we don’t go electric.
The question for automotive executives: If you fire the people who know how to make what people want to buy, what are you left with? Only people who make stuff no one wants to buy

Most interesting observation about this graphic? Which region (China, US, EU) is most "nuts" about global warming; CO2 emissions? Which region (China, US, EU) has shortest driving distances between destination points?  Which region (China, US, EU) seems most suited for EVs? Which region has 330 million people (EU or US)? Which region has 750 million people (EU or US)? Which region is lagging in EV sales by a huge margin?

From Forbes, June 18, 2019, "why little Norway leads the world in EV usage."
  • the 25% import tax on cars is waived
  • tolls are waived (the tolls in Norway are huge)
  • allowed to us priority lanes, such as bus lanes
  • hydroelectricity dirt cheap
Sweden, on the other hand, does not have the electric grid infrastructure to handle (m)any more EVs, and that's why the Swedes do not "push" EVs. Poor Greta; something she did not know. From the same linked Forbes article:
As recently as 2010, Sweden had more new electric car registrations than Norway. Today, Norway’s numbers are ten times that of their Scandinavian neighbors. The Swedish government has attempted to kick-start sales through generous grants and has achieved some success. New sales numbered 6,694 in the first five months of the year, more than three times the figures of the previous yet. But there’s a problem. Demand for electricity in cities is increasing faster than the supply can keep up, especially in the capital Stockholm.
To solve the problem, industry group Power Circle suggests incentivizing EV owners to charge only at certain times of day, and even send power back to the grid during peak times. The theory then goes that instead of increasing sales of electric cars being the problem, it becomes the solution. “Electric cars can make or break the grid. When we are about to roll out the infrastructure why not be smart about it and use it to support the power networks?” Power Circle’s Johanna Lakso.
In the USAF I once took a course on human behavior and how decisions are made by bureaucracies.


Good News For The Incumbent President ...

.... but readers are not so sure this is good news for GM. At the link, see the comments.
"GM, LG CHem to build $2.3 billion Ohio battery plant." 
One comment:
GM will fail when all these electric vehicles fail to sell. Gone in less than 10 years.
And, No, I'm Not Getting Paid For This

Bourne Identity; Twenty-Two Permits Renewed; Six Producing Wells Completed; EOG With Five "LR" Permits -- December 6, 2019

Wow, I'm in a great mood.

Friday night.

All the driving for the week has been completed. Yes, lots of driving on the weekend, but the weekends are different. The weekdays are challenging coordinating schedules for three active granddaughters between the hours of 4:30 and 9:30 p.m.

It is 7:49 p.m. and I'm free. Free. Free. No driving until 8:30 a.m. tomorrow morning.

Not even sure I will do a typical Bakken blog tonight.


I questioned earlier whether EOG might be looking to exit the Bakken. Based on today's NDIC "daily activity report" it looks like EOG is sticking around for awhile. Oasis says it is using free cash flow from the Bakken to fund its operational expenses in the Permian. Interesting, huh?

I can't stand Anderson Cooper, but I think that's mostly because he's associated with CNN. I don't like him but he's too good to be on CNN. He needs to move to .... Fox ... LOL. See this link:

Also thirteen Bakken wells are reported as "producing or plugged." In the Bakken, that means they are all producing. Most of them are Continental Resources (CLR) wells; two are Whiting wells.

MRO re-surveyed a pad that will have five wells, section 34-152-94.

This information (today's daily activity report), and,
  • the EIA dashboards; and,
  • the $95,000/acre some operators paid for the Bakken
    • tell me all I need to know why operators are sticking around in the Bakken.
Best example of TDS in last six hours, see link at MarketWatch below the screenshot:

As if Trump could orchestrate the best jobs report in years! LOL. And after the jobs report, the Dow surges 330 points, one of the best days ever for the Dow. And Trump, according to MarketWatch orchestrated it all. And Sophia now has two unicorns in her stable. LOL. As if Trump could orchestrate a jobs report. I always thought Obama "manipulated" jobs reports but pundits at that time said presidents could not orchestrate such reports.

My biggest decision tonight: do I watch the Bourne Identity on PARHD or do I watch "Perry Mason" on Amazon Prime Video. "PARHD" is Paramount. Pay your money, take your chance. I won't watch any basketball tonight. Least favorite sport. Even baseball is better. Having said that, I won't watch soccer either, generally speaking.

Random data point: the US has 27 days of crude oil in inventory, not including SPR. Link here. It's been higher/longer, but 27 days is about a week too long if one is highly invested in oil.

For all the excitement about the market today, it essentially got back to where it was a week ago. Ovey.

I'm heading to bed. See you tomorrow. Goodnight and good luck to all. But first, today's daily activity report:

Five new permits:
  • Operator: EOG
  • Field: Parshall (Mountrail)
  • Comments: 
    • EOG has permits for a 5-well Liberty LR pad in section 14-151-91, Parshall oil field. 
    • See this post.
Thirteen wells added to the "plugged or producing" list:
  • CLR (9): six Uhlman Federal; three Pittsburgh wells, all in McKenzie County;
  • Whiting (2): a Fladeland well and a Niemitalo well, both in Mountrail County;
  • Hess (2): two EN-Weyrauch B wells in Mountrail County
Twenty-two permits renewed:
  • EOG (9): five Round Prairie permits in Williams County; four Parshall permits in Mountrail County;
  • MRO (5): one Whitney/Alvina/Stillwell/Coan/Mathias permit, all in Dunn County
  • Southwestern Production (3): three TMW permits in Billings County
  • Petro-Hunt (2): two Noonan Federal permits in McKenzie County 
  • Petro Harvester (2): two FLX2 permits in Burke County
  • Denbury: a CHSU permit in Bowman County 
Six producers abandoned, but very old file numbers:
  • 01350; 01571; 26008; 19046; 13735; and 13405;
Six producing wells completed:
  • 35518, 1,722, Hess, EN-Person-156-94-1102H-5, Big Butte, t10/19; cum 15K in 16 days;
  • 35517, 2,290, Hess, EN-Person-156-94-1102H-4, Big Butte, t10/19; cum 14K in 12 days;
  • 36299, 1,960, Newfield, Schneiderman 150-99-29-32-6H, South Tobacco Garden, t10/19; cum 42K in 12 days; extrapolates to 52K in a 30-day month;
  • 36300, 876, Newfield, Schneiderman 150-99-29-32-7H, South Tobacco Garden, t10/19; cum 19K in 19 days;
  • 36494, 2,472, Whiting, Irwin 41-25H, Foreman Butte, t10/19; cum 6K in 7 days; these two wells are almost wildcats by definition; far to the west in north McKenzie County; nearest well is #23901, drilled in 2013, cumulative of 207K, 10/19;
  • 36495, 2,256, Whiting, Irwin 41-25-2H, Foreman Bute, t10/19; cum 6K in 7 days;

Random Note Regarding EOG's Permits For Five "LR" Wells In The Parshall -- December 7, 2019

Disclaimer: all my "usual" disclaimers pertain. 

Permits from the NDIC December 6, 2019, daily activity report. I believe there is a backstory to these five wells, which takes us back to the June, 2019, NDIC hearing dockets, and a post that begins:
This takes us back to a comment from a reader and my reply to that comment over at the post on the June, 2019, hearing dockets
I could be wrong and if I'm wrong, I'm pretty sure some eagle-eyed reader will contact me. These are EOG permits in the Parshall, sited on the east side of the river, and will end under the river:

  • 37252, 1600-acre spacing unit, ltr dtd December 6, 2019; sections 15, 16 & W/2 14-151-91, Three Forks B1; BHL: SWSW 16-151-91;
  • 37253, 1600-acre spacing unit, ltr dtd December 6, 2019; sections 15, 16 & W/2 14-151-91, middle Bakken; BHL: SWSW 16-151-91;
  • 37254, 1600-acre spacing unit, ltr dtd December 6, 2019; sections 15, 16 & W/2 14-151-91, middle Bakken; BHL: SWNW 16-151-91;
  • 37255, 1600-acre spacing unit, ltr dtd December 6, 2019; sections 15, 16 & W/2 14-151-91, Three Forks B1; BHL: NWSW 16-151-91;
  • 37256 1600-acre spacing unit, ltr dtd December 6, 2019; sections 15, 16 & W/2 14-151-91, middle Bakken; BHL: NWNW 16-151-91;
Graphics to follow.

See existing graphic at this site.

Wow, I love it when a story comes together and the dots connect.

Top Stories Of The Week -- Week 49 -- The Narrative -- December 7, 2019


Later: a reader provides better data regarding Bakken wells and cumulative production (see first comment):
  • Total number of wells: 14,306 -- 100%
  • 1.5 million bbls crude oil: 2 wells; 0.01%
  • 1.0 million bbls crude oil: 8 wells; 0.1%
  • 0.9 million bbls crude oil: 13 wells; 0.1%
  • 0.8 million bbls crude oil: 29 wells; 0.2%
  • 0.7 million bbls crude oil: 70; 0..5%
  • 0.6 million bbls crude oil: 151; 1.1%
  • 0.5 million bbls crude oil: 335; 2.3%
  • 0.4 million bbls crude oil: 980; 6.9%
  • 0.3 million bbls crude oil: 2,795; 19.5%
  • 0.2 million bbls crude oil: 7,011; 49.0%
  • 0.1 million bbls crude oil: 12,493: 87.3%
  • less than 0.1 million bbls crude oil: 1,813; 12.7%
Note: This is based on data, as of the September, 2019, NDIC report. It is restricted to include only ND wells, only hz wells, only those from 2005 or later, and only those designated as Middle Bakken or Three Forks (i.e. Red River not included).

This will be a nice metric going forward.

Original Post

These are the things on my mind after having just completed the top stories of the week.

Here's a bit of irony. It may very well be that it will be Saudi Arabia that will "save" the US shale operators. Say what? It's a given that Saudi Arabia cannot survive on $60 Brent or $50 WTI. I'm not even convinced that Saudi Arabia will do well with Brent at anything below $80. Saudi Arabia will "do what it takes" to keep the price of oil "up." A cartel might be able to enforce production discipline unlike a free market. A free market can also result in production discipline but to do it, may be very, very painful. A lot of story lines, and a lot of irony.

On another note, without question this has been a most incredible week: we ended the week on one of the most incredibly uplifting stories ever for the US economy and it's hard to deny that President Trump played a role. Meanwhile, the US House is now preparing articles of impeachment. So, I guess there is some irony here, also. The economy is doing incredibly well (both on Main Street and Wall Street) and the president's Christmas present is impeachment.

The US is not at war; the US economy is doing quite well; unemployment is at a 50-year low; African-American unemployment is at record lows; labor force participation is at record highs; no wage inflation; in fact, the Fed is trying to get the inflation number up a bit, closer to 2%. The 10-year bond ended the week with a return of about 1.85%. Pundits at one time said the world as know it would come to an end if the "10-year went under 2%." Well, there you have it. The world as I know it did end: AAPL ended the week on a new all-time high.

Back to oil. Not more than two or three years ago I opined that $50- to $55-WTI was the sweet spot. Oil operators could make money while still keeping gasoline prices low for US consumers. But one sure gets the impression that operators are struggling on $55 oil. What changed? I still feel that operators really, really overpaid for the Permian. There will be a bow wave of pain lasting three to five  years for operators to get through that mistake; many will not survive. It appears that 2019 was the first year of pain. If several years is defined as three to five years, then look for 2022 for US oil companies to start looking really, really good again.

Like him or hate him, it's hard to think of many things that President Trump has said that hasn't been accurate. Most of what he has tweeted has proved to be true. The one thing that concerns me most -- and I'm flip-flopping on this: southern border "immigration." Some time ago I posted on the blog that I had no concerns about the southern border "immigration" issue. The US was capable of "absorbing" these new immigrants.

But things have changed.

By the way, DACA is now being "decided" by the US Supreme Court.

This is the nightmare: Mexico appears to be following the "Venezuela model." It certainly appears that AMLO is setting himself up for "president for life." When Mexico implodes, it won't be caravans of 1,000's of gate-crashers streaming across our southern border; it won't even be 10's of thousands. The flood will be measured in "El-Paso units" or perhaps "Beto units" or something similar. One "Beto unit" (or whatever the name becomes) will equate to 100,000 people streaming across the southern border; 500,000 people = 5 Beto units. Headline, Wall Street Journal, March 15, 2029, "three Beto caravans came through the El Paso area yesterday."

See southern border immigration in five charts. The population of Mexico is 130 million.

See the coming implosion of Mexico, at The Wall Street Journal. That story is behind a paywall, but I will post excerpts later at a separate post.

Back to the Bakken. Back in 2018 I opined that starting in 2019 we were going to start seeing a lot of Bakken wells pass the 500,000-bbl-cumulative threshold. Through August of this year I had not noted many examples, and I was perplexed. I thought I had gotten ahead of my headlights, but here it. We're now starting to see more and more half-million-bbl wells. Many of these are older wells; but many of them are relatively new. Several years ago Michael Filloon (and others) started talking about EURs of 1 million bbls and 1.2 million bbls. Not much talk since then, but we will see it in the quarterly reports and quarterly presentations. It appears that for the time-being (maybe forever?) we've seen EURs in the Bakken max out at 1 million bbls. Time will tell, but the wells coming off the confidential list this past year have been incredible. I've now added a new metric: production in the first full month. For example:
  • 35611, 1,596, Hess, RS-Flickertail-156-91-1720H-4, Ross, t6/19; cum 81K 10/19; 23K month; 
  • 35536, 675, Oasis, Om Erickson 5501 11-18 4B, Missouri Ridge, t6/19; cum 94K 10/19; 21K month;
In both those examples, the last data point is the largest production in any one of the first six months after the well is completed and tested. So, for #35536, the highest production in any of the first six months of this well after being completed/tested was 21,000 bbls.

Not common, but not rare, we are seeing many "45K-months" and enough "70K-months" to suggest that we've entered a new phase of the Bakken, at least as far as initial six-month production.

Week 49: December 1, 2019 -- December 7, 2019

This day in history: Pearl Harbor, December 7, 1941.

Top international non-energy story:
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:
  • Williams County denies TENORM permit;
  • Non-oilfield jobs in high demand across the state;
  • North Dakota ponders spending Legacy Fund earnings;
Bakken economy
Tethered vehicles: