Tuesday, December 24, 2019

API Weekly Crude Oil Storage Data -- Let's Wait To See EIA Data At End Of Week -- December 24, 2019

Link here.
Crude inventories fell by 7.9 million barrels in the week to Dec. 20 to 444.1 million barrels, compared with analysts’ expectations for a draw of 1.83 million barrels.

Busy, Busy, Busy -- Random Update Of Oasis Activity In The Bakken -- December 24, 2019

Christmas Eve, 2019

No daily activity report today.

Active rigs:

Active Rigs5669534162

 WTI up almost 1% today. WTI back to $61.

Christmas Eve

What did Beto say, "I was born to be in it!" or something to that effect.

Well, I was born to be a curmudgeon.

The extended family is celebrating Christmas Eve at an upscale Chinese restaurant tonight; and, after dinner will come home -- their home, not my home -- to have dessert and exchange gifts.

I won't be joining them. I elected to stay home tonight. Relax. Light dinner. Music. Maybe a bit of ET on the "E" network.

And a little bit of time looking at the Bakken.

There is really only one day when everything, absolutely everything is closed down in the US, and that's Christmas Day. Maybe things have changed in some cities but it's been my experience that the loneliest day for a traveler in the US is Christmas Day. Nothing is open.

It must have been Christmas, 1985, or thereabouts. I was stationed in Germany with the United States Air Force. I held dual service codes: pediatrician and flight surgeon. I was notified a few days before Christmas that I would be the attending physician for a critically ill infant that was being flown from a US hospital in Germany to Walter Reed Medical Center in Washington, DC. It was my first medevac flight ever. And it was going to be a long C-5 (? -- or a C-141? I forget) -- flight across the Atlantic with an infant on a ventilator.

With little advance warning, I told my family (wife and two young daughters) that I would not be spending Christmas with them.
We landed at Andrews AFB, DC, on/about Christmas Eve. After getting the critically-ill infant to Walter Reed I was on my own. I found a place to stay and then waited until December 26 to start looking for a flight back to Germany. No, you don't just book a flight on United. One must look for USAF transportation.

Be that as it may, I spent, perhaps, the loneliest day in my life -- up to that point -- alone, in Washington, DC. It was then that I learned that nothing was open on Christmas. Including places to eat.


The next day, December the 26th, and everything was open again. Another few days in Washington, DC, and then back to Germany.

A Bakken Well With Multiple Jumps In Production -- BR, Kellogg, Elidah Oil Field -- December 24, 2019

Full production profile at this post

The well:
  • 16890, 321, BR, West Kellogg 24-31H, Elidah, t4/08; cum 312K 10/19;
After initial completion, back in 2008:

Then, in 2014, a huge jump in production, after a re-frack:

 And, now, another jump in production:

Should We Be Worried? -- December 24, 2019

There are two major "Santa trackers": NORAD and Google.

NORAD went down earlier today -- that was noted on Fox Business News. I checked and, yes, NORAD was down for about 30 minutes. It's back up now.

To the best of my knowledge, Google has not yet crashed.

Is this something the United States should be worried about -- that NORAD crashed tracking one -- repeat, one -- flying object? I don't know about you, but considering that North Korea is looking to launch a Christmas present in the next 24 hours, NORAD crashed.

Google didn't.

Concours d'Elegance, 2019

Natural Gas Hits $15 For New England Consumers -- December 24, 2019

From oilprice:
For those who grew up in New England, single-digit temperatures, snow squalls, and icy roads are nothing outside the ordinary.
With at least six days last year averaging colder than today’s forecast, it seemed almost impossible that gas prices would break last season’s record.
Accompanying this week’s cold was a combination of factors amounting to conditions that were far from normal. As the risks began to present themselves on the morning of Wednesday, December 18, AGT-CG (Non-G), New England’s largest natural gas hub, sold for as much as $15.25/MMBtu, the highest price observed since January 30, 2018.
So, what really caused natural gas prices to spike when they were so weak for the last six months? 
Natural gas for the rest of us is trading at $2.20 (see oilprice banner).

US Petroleum Consumption

A look back to EIA projections back in 2000 or thereabouts.

Since 2000, the population increased, income increased, yet demand for petroleum is lower than all projections.

Nip And Tuck

It was close but my portfolio closed in the green on Christmas Eve.

Notes From All Over, Part 2 -- December 24, 2019

The last time the markets did this well: 1998. Twenty-one years ago. For many years, a consistent them on this blog was the loss of two decades. See tag: lost decade. I haven't mentioned a "lost decade" since Donald J. Trump was elected president.

Today: NASDAQ hits an all-time high. S&P 500 down 0.02%; Dow down 0.13%. 

What's next?

USMCA passed.

China - US trade tariffs relaxed.

No more Fed rate increases for at least a year.

Biggest retail day in US history over the weekend/

US consumers account for two-thirds of the GDP.

No wage inflation.

No inflation at all, for that matter.

Unemployment at record low levels.

Work force participation at record high levels. Particularly noteworthy for minorities.

Politics: with US House considering additional articles of impeachment, and Nancy Pelosi not sending current articles of impeachment to the US Senate until her demands are met, It appears that Mitch is no longer in control of his own calendar ... unless he gets his act together. Most recent controversy: federal appeals court may rule on case; the losing side will appeal to the US Supreme Court. McConnell needs to make it clear that he will table the "impeachment trial" if more important business requires US Senate action.

Doofus-In-Chief Revisited -- December 24, 2019

From the WSJ, December 17, 2019:
Ten years ago (80% of which Obama was president), the U.S. ranked third in global oil production, trailing Saudi Arabia and Russia.
A decade later (20% of which Trump was president), the US leads the world in oil as well as natural-gas output, having more than doubled the amount of crude it pumps while raising gas production by roughly two-thirds, according to federal data.
There is a simple reason for the surge: fracking. Horizontal drilling and hydraulic fracturing techniques spurred a historic U.S. production boom during the decade that has driven down consumer prices, buoyed the national economy and reshaped geopolitics.
Though some of these methods had existed for years, they were successfully applied to dense rock formations only about two decades ago as technologies improved, allowing companies to unlock vast amounts of oil and gas.
Drillers first targeted natural gas in the Barnett Shale of North Texas, and later unleashed a trove of the fuel in Appalachia. Further advances allowed them to release heavier oil molecules from shale formations. That led to a renaissance of one of America’s most venerable oil fields, the Permian Basin of Texas and New Mexico.
A decade ago, drilling and fracking in tight rock formations such as shale produced less than one million barrels of oil a day in the U.S., according to data from the Energy Information Administration. Today that figure is roughly eight million barrels a day.
In fact, the WSJ has that wrong: fracking was only partly responsible. Takeaway capacity -- either CBR or pipelines -- was absolutely critical. But there were many, many other factors, such as government regulations (or lack of regulations). But to say this was 100% due to fracking is completely missing the real story. 

President Obama's core competencies:
  • appearing presidential
  • killing pipelines
  • explaining drilling to Americans

XTO's Enhanced Oil Recovery Project -- Bear Creek Field -- December 24, 2019

Previously report, but in case  you missed it:

From Geoff Simon's top stories:
The ND Industrial Commission gave its blessing this week to a project proposed by XTO Energy aimed at coaxing additional crude oil out of nine existing wells by injecting produced natural gas from the surrounding formation. The project is in the Bear Creek Field in northern Dunn County.
DMR Director Lynn Helms said it's similar to an unsuccessful Liberty Resources enhanced oil recovery project in Williams County that failed to develop pressure in the formation. But Helms said the XTO project may have a better chance of success because it will have plenty of gas to inject.

Barron's Top Ten List For 2020 -- December 24, 2019

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

Barron's ten top stocks for 2020, a list Barron's has published for the past decade. This year Barron's says the list takes "a tilt toward value":
  • BRK.A (with Robinhood one can now actually buy BRK.A, I assume)
  • Comcast (CMCSA)
  • Royal Dutch Shell (RDS.B)
  • Pfizer (PFE)
  • ViacomCBS (VIAC)
  • Anthem(ANTM)
  • Dell Technologies (DELL)
  • Google parent, Alphabet (GOOGL)
  • U-Haul owner, Amerco (UHAL)
  • United Technologies (UTX):
Last year:

I was surprised to see, on the 2019 list from last year:
  • two of the ten were energy companies (CVX, ET)
  • Daimler on the list
This year, note:
  • one energy company on the list
  • two streaming content companies
  • Berkshire Hathaway
  • U-Haul (continued migration California to Texas? migration from northeast to Florida, Texas?) 
  • AAPL taken off the list

US News: 20 Best High-Yield Dividend Stocks For 2020 -- December 24, 2019

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

From US News, the 20 best high-yield dividend stocks for 2020:
  • AB
  • Bain Capital Specialty Finance (BCSF); 
    • 8%; currently trading at $20; target: $19.50; 52-week range, $16 - $21
  • EPD:
    • largest public MLP in the world
    • Analyst says about $3.1 billion of Enterprise's $9.1 billion project backlog through 2023 is set to go into service within the next six months; pays 6.6%; trading at $28; target, $35;
  • ET: 10.3% yield; deserves a premium valuation according to one analyst
  • F:
  • HMLP (Hoegh LNG Partners): 11.4%; MLP
  • MBT (Mobile Telesystems): 
    • largest wireline telecom company in Russia; see link; special dividend;
  • MPLX:
  • PAA:
  • Plains GP Holdings (PAGP):
  • Altria Group (MO):
  • Royal Dutch Shell (RDS.A), but also RDS.B: 
    • by reducing the stock's share count via buybacks by 25% through 2025 and nearly 50% through 2030, one analyst says Shell can grow its dividend per share by 4% annually without increasing its total annual distributions. Shell already pays a 6.5% dividend. Bank of America has a "buy" rating and $73 price target for RDS.A stock.
  • China Petroleum & Chemical (SNP):
  • OXY:
  • WMB:
  • Vermilion Energy (VET): global oil exploration and production;
  • Telefonica Brasil (VIV):
  • Westlake Chemical Partners (WLKP): MLP, ethylene production;
  • Western Asset Mortgage Capital Corp (WMC): 
  • Fortress Transportation and Infrastructure (FTAI): global transportation
Personal observation and comments at the link.
  • This comment is interesting: "all these stocks are duds" and there may be some truth to that based on a number of factors; 
  • Also: what ETF fund is this? Seems an investor has a friend at USNews and is trying to market their portfolio.
  • This would not be a diversified portfolio; way too heavy in energy. 
Clickbait: another site, five best dividend stocks now, over at Investor's Business Daily. The article also provides a nerdy definition of a definition. If you need to know the definition of a dividend, you probably shouldn't be searching for articles recommending dividend-paying stocks. I do it for this reason: the more time certain stocks are recommended at these sites, there might be a reason. In this story, the five "best" dividend stocks now: Altria; ENB, Philip Morris, T, and AbbVie. Two cigarette companies and a pharmaceutical that will someday, if it doesn't already, market chemotherapy drugs to fight lung cancer.

ENB: that ticker symbol, that company, is popping up a lot this year.

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

ISO New England. Down at the moment. "ISO Australia" is "up."  Unremarkable today.

Notes from Alaska: Jones Act leave New England out of the LNG boom.
Western Canada, the U.S. Gulf Coast, West Texas and Appalachia are all overflowing with natural gas. So much so that prices are down and occasionally have turned negative in some areas, when producers actually had to pay someone to take their gas.
Too bad there is no easy way to move more of that gas to the U.S. East Coast, New England and Canada’s Maritimes provinces, where natural gas customers are paying the highest prices in North America.
The obstacles are by land and by sea.
There is not enough pipeline capacity to reach the Eastern Seaboard. And a 99-year-old federal law, the Jones Act, requires that only U.S.-built and U.S.-flagged ships can move cargo between U.S. ports. The problem is, no such liquefied natural gas carriers exist.
Examples of too much supply in gas-producing regions and too little of it reaching the gas-consuming coast are economically painful.
Next-day natural gas prices at the Waha hub in the Permian Basin in West Texas tumbled to their lowest on record Nov. 27 because of limits on the amount of gas that could move out of the region by pipeline, Reuters reported. Prices fell to an average of 25 cents per million Btu that day. Even worse than a measly quarter, traders said small amounts of fuel were sold at negative prices as producers struggled to get rid of their gas.
That compares to the U.S. benchmark price at Henry Hub, Louisiana, which averaged about $4 per million Btu in November.
The imbalance is just as noticeable in Canada, where last May 3 spot prices at Alberta’s AECO pricing hub closed at just 5 cents per million Btu, about $2.50 less than the U.S. benchmark price that day.
Then in October, gas prices in Western Canada went into a freefall as a ruptured pipeline limited producers’ ability to get their gas to market. With one less conduit to move Canadian gas to customers south of the border, spot prices at Alberta’s AECO trading hub fell to 8 cents per million Btu on Oct. 19.
At the other end of the price spectrum in November, gas prices at the New England trading hub rose to $13.70 per million Btu for Nov. 21, about triple the year-to-date average, Reuters reported.
And when gas costs more, so does electricity. Next-day power prices in New England on Nov. 21 were about four times the national average.
When winter hits New England, power and gas prices can spike quickly because most consumers use gas to heat their homes and businesses, and most of the region’s electricity usually comes from gas-fired power plants.

Kraken Bigfoot Wells Are Extended Lateral Wells In The Sanish; Huge Wells -- December 24, 2019

The Kraken Bigfoot wells are still on confidential list; they are going to be huge wells. I was curious whether these would be extended long laterals. It appears they are. See this link for initial production data.

Let's look at one of the wells.

The well:
  • 36012, conf, Kraken, Bigfoot 23-11 3H, Sanish, t--; cum --; in less than four months, crude oil runs have totaled nearly 175,000 bbls or crude oil;
Runs to date:

DateOil RunsMCF Sold

From the file report --

  • the Bigfoot 23-11 3H well is a north facing lateral wildcat well in the middle Bakken
  • Mountrail County
  • on a 4-well pad
  • goal: to land 20' below the base of the upper Bakken shale
  • the lateral section was drilled to a depth of 26,188 feet measured depth, 10,237' total vertical depth
  • the target formation was 56' thick
Additional data
  • spud date: April 4, 2019
  • TD date: April 13, 2019
  • a triple section lateral targeting the lower middle Bakken formation in the Sanish field
  • the goal of the build section was to land in a 10' thick zone with the top of the target zone 24' below the base of the upper Bakken shale;
  • lateral portion began in the early evening, April 8, 2019
  • TD reached at 26:30 on April 13, 2019 (sic)
  • From the permit:
  • proposed TD for lateral 1: 26,192 feet
  • actual TD: 26,188 feet
The Global Warming Page

As mentioned early, the main purpose of reading this book was to get a better understanding of the geography and waterways around New York City.

From The Battle For New York: The City At The Heart Of The American Revolution, Barnet Schecter, c.2002, pp. 5 - 6.
The unique topography of the New York (city) area also played a decisive role in shaping the strategy and tactics of both sides.

The entire area was then, and remains, an archipelago, its islands and peninsulas, rivers, channels and straits, creeks and inlets formed by the advance and retreat of a glacier. The underside of the thick, heavy ice sheet raked the flat terrain some 50,000 years ago, carrying rocks and soil forward while leaving behind new troughs and valleys. When the glacier stopper, it deposited the rocks and soil and created a terminal moraine -- a line of hills that run lengthwise across the middle of Long Island and continues on the southern part of Staten Island. The portion of this ridge at the western end of Long Island includes the hills of today's Prospect Park and was called Gowanus Heights.

When the climate became warmer, about 17,000 years ago, these hills trapped the melting ice, and the New York area was submerged under glacial lakes.

Several thousand years later, the water broke through the hills, creating the Narrows (between State Island and Brooklyn -- the strait now spanned by the Verrazano Narrows Bridge) and draining the landscape.

However, as temperatures increased, approximately 9,000 years ago, rising sea levels sent water coursing back up through the Narrows, flowing into the depressions that the glacier had excavated and establishing New York's waterways: Upper New York Bay, the Arthur Kill, the East River, the Harlem River, Long Island Sound, and numerous smaller creeks and inlets. 
Below the Narrows, the Lower Bay connected to the Atlantic Ocean through the gap between Coney Island and Sandy Hook. A wide sandbar between these two points ...
The only other access to New York from the Atlantic was farther north, though Long Island Sound. Here, too, ships had to pass through a narrow strait -- Hell Gate -- an aptly named, rocky passage at the western end of the Sound where it meets the East River ...

Notes From The File Report For The XTO Three Forks Well, The HBU Boucher #21 -- Dececmber 24, 2019

The well (link here):
  • 17147, 2,101, XTO, HBU Boucher 41X-21, a Three Forks well, Hofflund, t4/09; cum 911K 10/19;
From the file report:
  • Williams County
  • Three Forks; other formations evaluated during the drilling
  • the middle Bakken was evaluated while building the curve section, prior to landing in the Three Forks
  • spud December 10, 2008 
  • vertical drilled to 9,345' where the curve build was kicked off
  • subsequently drilled to a measured depth of 10,041 feet; drilled into the Three Forks
  • due to the high volume of gas cutting the mud weight, the salt water was replaced with CaCl water ,at a measured depth of approx 15,500 feet, and then heavier CaBr water, before converting back to a diesel invert mud stystem at 17,428 feet
  • the lateral was drilled from the casing points; total measured depth of 21,030 feet; 
  • middle Bakken: 3' thick; well defined target zone approx 9' below the base of the upper Bakken shale, from 9,665' to 9,668'
  • Three Forks:
    • gas readings were initially 125 to 150 points; gradually increased to 750 to 10,000 units (sic) as the lateral approached the top of the target
    • measured depth of 10,013' and a TVD of 9,764';
  • for most of the lateral, the high volume of gas required the mud to be diverted through the gas buster, resulting in consistently strong flares
    • extremely strong flares, at time exceeding 50' (sic) were observed with trip gas and downtime gas kicks
    • difficulty in controlling the gas during trips eventually resulted in changing back to a diesel invert mud system at 17,428' in order to be able to keep the mud weight above 13 ppg
    • from approx 19,000' to TD, mud weights ranging from 13.5 to 13.8 ppg were needed to keep the well from flowing while drilling, and trips after 20,000' required at least 16 ppg kill mud in the vertical section to maintain control of the gas

File Report For The Oasis Nordeng Well -- 8B -- December 24, 2019

Since we're not getting any data on wells coming off the confidential list so far this week, let's look at one of those wells that released data before it was put back on the confidential list.

The well:
  • 34746, conf, Oasis, Nordeng 5298 13-25 8B, Banks oil field;
From the file report:
  • 12 miles northeast of Watford City, in McKenzie County
  • fifth of six wells to be drilled on the Mildred Nelson / Nordeng 5298 13-25 pad
  • will drill into sections 24/13-152-98;
  • spud July 30, 2018; cemented to 2,142 feet
  • re-entered on October 26, 2018 (same rig: Nabors B21)
  • curve successfully landed at 11,527' measured depth; 11,112' total vertical depth, 21' below the upper Bakken shale;
  • the lateral reached a total depth of 21,525' on November 3, 2018
  • October 26 - November 3: about eight days
  • upper Bakken shale: several gas sows exceeding 4,000 units
  • middle Bakken member (Mississippian-Devonian): entered at 11,345' MD, 11,091' TVD
    • background gases ranged from 500 to 3,500 units while several shows exceeded 5,000 units
    • wellbore remained with the target interval for "much" of the length of the lateral; to be exact, the wellbore was completed 98% withing the target interval;
    • chromatography of the middle Bakken revealed typical concentrations of methane, ethane, and propane characteristic of the middle Bakken
  • summary
    • drilled from surface casing to total depth in eight days
    • wellbore within desired target interval for 98% of the lateral; opening 10,015' for potentially productive reservoir rock
    • no side-tracks and no shale strikes

Possible BTU Restrctions On Northern Border Gas Pipeline -- December 24, 2019

Possible BTU restrictions on the all-important Northern Border gas pipeline was mentioned by RBN Energy  in its daily blog.

Other links:
From the RBN Energy post:
What’s behind the possible shift at Northern Border? Rising production of associated gas in the Williston Basin, combined with more gas processing capacity there, has increased the volumes of basin-sourced gas flowing into Northern Border, and also squeezed out more gas from Western Canada, which generally has less rejected ethane in it and therefore has a lower Btu content. Thus, as the volumes of Williston Basin gas received by Northern Border have increased, so has the overall weighted-average Btu content of the gas flowing on the big gas pipe. Our understanding is that while Northern Border doesn’t necessarily mandate a maximum Btu content, if the Btu content were to get high enough to cause problems for the utilities and other end-use customers it serves, Btu restrictions on the pipeline may need to be put in place.
I'm not going to explain it because I'll probably screw it up again, but when you read the paragraphs from the EIA below, note:
  • BTU or heat content of methane vs ethane and propane
  • heat content desired by end user
  • ethane rejection
From the EIA report linked above:
The primary constituent of natural gas is methane, which has a heat content of 1,010 British thermal units per cubic foot (Btu/cf) at standard temperature and pressure. 
In July 2014, the heat content of natural gas in the United States was around 1,030 Btu/cf, or almost 2% more heat content than pure methane, reflecting the composition of the gases in the natural gas stream.
Natural gas requires a certain fuel-to-oxygen mix to burn properly, so stoves and other gas-fueled appliances typically require natural gas to be within a certain range of Btu content.
Pipelines also have a range of acceptable Btu content for natural gas going through their systems, which can vary from one pipeline to another.
High-Btu natural gas contains higher concentrations of natural gas liquids (mostly ethane and some propane) that have higher heat content than methane.
Pure ethane has a heat content of 1,770 Btu/cf and pure propane 2,516 Btu/cf.
Natural gas liquids are often removed during natural gas processing. However, because of the low price of ethane, many natural gas processors are choosing to leave ethane in the natural gas stream, a practice known as ethane rejection, rather than remove it for sale as a distinct product. A relatively high Btu content in a given state may be indicative of ethane rejection.