Only Two Wells Coming Off The Confidential List Today -- February 21, 2020

Flaring: Texas unveils flaring criterion. 

• Flaring has increased significantly overall in Texas during the past decade, paralleling the state’s oil production levels. 
• The estimated range of 650,000 thousand cubic feet per day (Mcf/d) of total flare volumes for Texas oil and gas operators in 2018 ranks among the highest levels on record. 
• Among the world’s top oil-producing regions for 2018, the United States and Texas’ respective flaring intensity values fall below the international average. 

WTI price jumps on booming US exports. Link here.

• American oil exporters shipped the equivalent of more than one-fourth of the nation’s output to foreign buyers, a government report showed. Meanwhile, U.S. oil stockpiles rose by 415,000 barrels last week, well below the 3.2 million forecast by analysts.

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Back to the Bakken

Active rigs: 

$52.91	2/21/2020	02/21/2019	02/21/2018	02/21/2017	02/21/2016
Active Rigs	55	66	55	42	38

Two wells coming off the confidential list today:

Friday, February 21, 2020: 49 for the month; 156 for the quarter, 156 for the year:

• 36690, SI/NC, Petro Harvester, FTH1 27-34 161-92 B, Foothills, t--; cum 16K first full month of production; 13 miles north of Powers Lake, Burke County; sits on a pad with intentions of drilling a lateral through the Three Forks, first bench;
  
• 35945, 983, Whiting, White 43-33H, Sanish, t9/19; cum 82K 12/19;

RBN Energy: the changing composition of a US NGL barrel.

There is no such thing as a typical NGL barrel. For example, the composition of y-grade production out of the Marcellus is significantly different from y-grade out of most of the Permian. And it is not just gas processing engineers who care. The make-up of an NGL barrel is inextricably linked to the value of that barrel. The reason is pretty simple: there’s a big difference in the value of each of the five NGL products. These days, natural gasoline is worth nearly eight times as much per gallon as ethane. Normal butane is worth 1.6X as much as propane. Consequently, the more natural gasoline and normal butane in your barrel versus the amounts of ethane and propane, the more the barrel is worth. So it’s important to anyone trying to follow the value added by gas processing and related infrastructure to understand where these numbers come from and how much the composition of a barrel can vary from basin to basin, or for that matter, from well to well. In Part 2 of our series on gas processing, we turn our attention to the variability in the mix of NGL production and its implication for processing uplift.

Earlier we laid out a framework for the basic understanding of natural gas processing value creation, using the frac spread as the metric. Frac spread — the differential between the price of natural gas and the weighted average price of a typical barrel of NGLs on a dollars-per-Btu basis — is a rough-cut indication of the value added at gas processing plants by extracting NGLs out of the raw natural gas stream from the wellhead. We went through a frac spread history lesson to explain what the measure can tell us about cycles in the natural gas and NGL markets, and then we worked through an example using RBN’s basic frac spread Excel model. After touting all the exceptional insights that can be gleaned from looking at the frac spread over time, we then looked at the limitations of the frac spread model, including differences between the mix of NGL purity product components in the NGL barrel from one production area to another, and from one set of market conditions to another. Today, we’ll delve into the details of those issues, and along the way, we’ll point out some data quirks imbedded in the assessment of NGL production volumes.