Sunday, June 7, 2020

Reminder: Focus On Fracking Should Be Posted Later Tonight -- June 7, 2020

Link here.

Notes From All Over -- Early Evening Edition -- June 7, 2020

Futures: late Friday night or early Saturday morning, I forget which, I posted that I felt a bit uneasy after all the giddiness of the 1000-point surge in the Dow on Friday, along with AAPL hitting an all-time high. It simply didn't feel "good" to me. I said to myself, "we'll see what Monday brings."
Well, futures are posted. Futures, of course, don't mean squat but they are what they are. And right now all three major indices are in the green, and not by just a little. Dow futures right now are up 186 points. CNBC actually shows Dow futures up over 200 points.
Crude oil prices: moving. Not yet making sense. WTI goes over $40.00 Sunday night, June 7, 2020. Based on fundamentals? Generally is, unlike much of the equity markets. But if so, are traders seeing a supply problem, or a jump in demand? Perhaps both. 

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.

Minneapolis police: someone sent me a note suggesting a number of Minneapolis police have quit or taken early retirement. That appears accurate. Google it.

Minneapolis city council: votes to dismantle police department. -- Twitter. No police department? Who's going to administer driver's license testing? Who's going to transport prisoners to court appearances? Who's going to respond to traffic accidents? Mayhem. If the police really aren't needed, what have "we" been doing all these years? I wonder who the police unions will support this autumn.

NYC: will de-fund police department.

Mitt Romney: marches with protesters.

More stimulus: three (?) US senators, including at least two former presidential candidates, Kamala Harris and Bernie Sanders, have introduced a bill to provide upwards of $120,000 / year to each American family; it would come in the form of $10,000 cash every month. I can't make this stuff up. Reported by CNBC

NASCAR: I wasn't really in the mood to watch NASCAR today. I did turn the television on, and I did watch the first stage. And then they interviewed one of the drivers, Daniel Suarez, and asked him about the rioting and looting. He said, in a fairly long-winded "speech," that he unequivocally supported the rioters and looters and said something had to be done to "stop" the police. That was it for me. I was done with NASCAR for the day. I turn to sports to get my mind off politics, other current events.

Ponzu sauce: both our daughter here in Grapevine, TX, and our other daughter in Portland, OR, said they were unable to find Ponzu sauce. No problem: Amazon. A few clicks. Done.

ISO New England -- A Follow-Up From Yesterday's Post -- June 7, 2020

Yesterday I posted these graphics from ISO New England but I had no idea what was going on. Note the high price of "spot" electricity yesterday in New England:

From Yesterday, ISO New England

ISO New England costs yesterday, link here (a dynamic link; the graphics will be different today):

So, how's all that renewable energy working out?  Note the sudden drop in nuclear energy beginning early in the a.m. in the graphic below. [I missed it; a reader pointed it out.] Natural gas still accounts for 63%:

The Denouement

A reader explained what happened yesterday:
The Millstone #3 nuclear plant (in Connecticut) seems to have abruptly gone offline [yesterday -- June 6, 2020]. 
This prompted the gas plants to rapidly mobilize to fill in the ~1,000 Megawatts that went bye bye. (The brief price spike reflected the incentive needed for a Combined Cycle Gas Plant to go full ramp ... probably 2 plants, actually). 
There have been several 'issues' with the 2 Millstone plants for several months. Could make for interesting situation during upcoming winter cold snaps.
So, let's see what the graphs look like today. Yup, "perfectly normal," just what one would predict if the reader's explanation was correct (and, of course, it was):

"Water Flooding" In The Bakken -- June 7, 2020

I forget when, but within the past year, I suppose, a reader started noting something strange about the water that returned to the surface in the first few months after a well was fracked.

Example: these two wells were both completed in December, 2019, and both were completed in the same oil field, the Sanish. It may or may not be important to note that one well was completed in the middle Bakken, the other in the Three Forks. I think it may be relevant.

Look at the amount of water returned after the wells were fracked.

In the first well, as much as 84,000 bbls in one month (the 3-day return of 9,510 bbls extrapolates to 95,100 bbls of water over thirty days) was returned.

Now look at the amount of water regurgitated in the second well in the same period of time right after the well was fracked.

First, this well:
  • 36754, 1,322, Kraken, Candace 15-22 1TFH
PoolDateDaysBBLS OilRunsBBLS WaterMCF ProdMCF SoldVent/Flare

Second, this well:
  • 36130, A, Whiting, Harvey TTT 41-4HU, Sanish, t--; cum 137K in five months:
PoolDateDaysBBLS OilRunsBBLS WaterMCF ProdMCF SoldVent/Flare

I may be seeing something that doesn't exist or reading more into it than the phenomenon deserves, but the amount of water being regurgitated among different wells is certainly fascinating. It has to be by design.

A reader commented on this:
Regarding 'novel water flood' in recent  wells ...
This is a brief rundown with what may be happening ...

1. One principal -- tied to Extreme Limited Entry perforations -- isolates individual stages that have rock which will 'open up' the pre-existing fissures within a range of pressure, say 1,500 psi. 
Another stage may have rock that will 'open up' at 1,000 psi. 
Another at, say, 2,000 psi.

These stages may vary from 120 feet in length to 350 feet, but the KEY component will be the point at which the needed pressure opens up the fissures. This characteristic is determined by several methods of measurement while drilling, along with years of experience.

2. The skillful use of 'far field' diverters temporarily blocks the horizontal spread of the fracturing. 
NOW, the operators are maintaining an 'open up' pressure in a 500 foot half length (from each side of the wellbore) while NOT having unwanted growth into the adjacent well's drainage.

Incorporating ultra tiny microproppants enhances the scouring/opening in this precise region of rock. This is where all that extra proppant has been going.

3. Final principle -- due to newest High Viscosity Friction Reducers (which do not damage formation when left 'in the ground' for many months) -- the artificially elevated formation pressure (akin to your 'water sweep'observation) now drives the oil which has come out of the rock (incredibly vast 'spider webby' fractures are now possible with aforementioned techniques) and produce high/very high oil production for many months.

4. Throw in the near ubiquitous use of gas-lift Artificial Lift, and this may explain some of the very high numbers from Continental, Kraken, Marathon, and others.

Most of the above is informed speculation, but it is probably a fairly accurate description of what is taking place.
I replied to the reader that I have a gut feeling of what is going on in the Bakken -- involving these "new" principles as well as additional factors -- but cannot articulate it as well as the reader does, and I certainly don't have the background or access to journal articles or papers which might support some of my thoughts. But literally reporting the IP and cumulative production of every well that comes off the confidential list, day in and day out, certainly gives one a feeling of the improvements that are being made. 

Notes From All Over -- Mid-Afternoon Edition -- June 7, 2020

Amazon: someone's not happy.

  • Link here. Important data points:
    • a brand-new warehouse; operated by a third party; it's not an Amazon distribution center;
    • assists Amazon in shipping large-size articles;
    • will not impact orders; Amazon has multiple fulfillment centers and superb tracking system;
  • local shortage of Ponzu sauce; regional/national shortage? unknown;
  • staple in Sophia's household (mostly for Sophia);
  • ordered from Amazon; will be here this week

Idle Rambling On The Bakken -- Early Sunday Morning -- June 7, 2020

Later today, if I don't get distracted, I'm going to post a pretty exciting note about "water flooding" in the Bakken sent to me by a reader.

I don't have time to post it now due to family commitments. I don't want to rush it. It's a great note and I want to make sure it's not buried.

After I got the note, I replied to the reader with this not-ready-for-prime-time reply:
I am very, very cognizant of the fact that the economics of the Bakken is/are going to get really, really ugly going forward. No matter how bad things get, even to the point of the end of US shale, that doesn't change how incredible the Bakken revolution is/was.

Again, I'm using "Bakken" in the general sense, to include the entire shale / unconventional oil story, not just the "geographical" Bakken.

In the big scheme of things, I'm more concerned for the "Bakken" and the US oil industry if a new administration in 2021 changes course than I am about a prolonged and severe slump in oil prices.
That is probably the same thing I should have said in reply to the reader with the first comment at this post.

A reminder: when I put the "Bakken" in quotation marks, as in the reply above, I am talking about my "definition of the Bakken," not just the geographical Bakken.

Just as some use "Wall Street" as the metonym for the US equity market, I often use the "Bakken" as a metonym for the US shale revolution, composed of three components: geography; geo-politics; and, the science/engineering involved.

On a completely different note, and I've said this more than once. I am fascinated by the "oilman." And "oilwoman."

Why do guys and gals like Harold Hamm and Vicki Hollub keep doing the things they do? They could walk away from oil any time they wanted, retire or go into some other line of business. But something in their blood keeps oil men and women looking for that next big gusher. It's fascinating to watch.

Again, the disclaimer: I am inappropriately exuberant about the Bakken.

Disclaimer: 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.

By the way, for all the mineral owners in North Dakota who might be concerned about the future of the Bakken, I  share that concern (but obviously for different reasons). But the Bakken has been incredibly good for many mineral owners. For many, it was a windfall, and that windfall offered them an opportunity few get, including starting their own businesses or becoming members of the investing class so that if/when the Bakken ceased to amaze they would not remain dependent on their royalty checks.

Can you imagine how a Bakken mineral owner would be doing today, if he/she put royalty money into AAPL as those monthly checks rolled in? Even a small mineral owner might be able to live off AAPL dividends by now.

NASCAR Today -- June 7, 2020

I thought I was the only one that noted the challenges of finding the start-times and the network televising NASCAR races. From SportingNews:
The TV channel for a NASCAR race is elusive enough in a normal season when Fox and FS1 trade broadcasts of Cup Series events through the first half of the schedule.
The challenges associated with the coronavirus pandemic make the "what channel is today's NASCAR race on" question even more understandable.
Today, for the third time since NASCAR returned to live racing last month, the race will broadcast live on Fox. The Folds of Honor QuikTrip 500 at Atlanta Motor Speedway, which was the first Cup Series race postponed when the outbreak reached the United States, will proceed on its new date with a start time of 3 p.m. ET.
Speaking of which, this past week, our two older granddaughters wanted to visit some antique shops. It's amazing how easy it is to find vintage Hot Wheels NASCAR models. I found a vintage Jeff Gordon, #24, model priced at $10, but marked down 50%. Pretty special. LOL. Over at eBay, $10 - $25 range.

The proprietor: an emigre from Persia. A delightful individual. Must have been in his late 50's. Came to the US via Frankfurt, Germany, and NYC, when he was about seventeen. That works about right:
Iranian immigration to the United States is a recent phenomenon and has taken place primarily since 1975. The Islamic fundamentalist revolution of the late 1970’s that transformed Iran into a theocratic state was a major world event that increased Iranian migration to the United States ...

...  In the 1970’s through the 1990’s, Iranian immigration shot up dramatically. Between 1970 and 1979, 33,763 Iranians immigrated legally to the United States. During the 1980’s, this figure went up to 98,141 and decreased only slightly, to 76,899, during 1990’s. Between 2000 and 2008, 67,915 new residents came from Iran.
I have a special spot in my heart for Persian-US immigrants. Two of my closest colleagues decades ago, back in 1984, were a Persian physician couple -- yes, both physicians; trained in Iran, and emigrated from Tehran to the US, and finding themselves in northwest Minnesota. Wow, what a wonderful couple.

The Money Page

The word "fiat" seems to be appearing more frequently in social media comments when it comes to the economy. I had not seen that word used in a long, long time.

From Investopedia, the definition of fiat:
What Is Fiat Money? Fiat money is government-issued currency that is not backed by a physical commodity, such as gold or silver, but rather by the government that issued it.
The value of fiat money is derived from the relationship between supply and demand and the stability of the issuing government, rather than the worth of a commodity backing it as is the case for commodity money. Most modern paper currencies are fiat currencies, including the U.S. dollar, the euro, and other major global currencies.
I get a kick out of how words are used. "Fiat," as used in these social media comments, generally have a derogatory tone when used to describe US currency, but in fact, well ... I'm repeating myself. 

My Sentiments Exactly -- June 7, 2020

Op-ed from  Bloomberg: Saudi Arabia lays down the law.
Calling out OPEC's laggards may help rescue the group's reputation. LOL
From the linked article:
Saudi Arabia called out the cheats at yesterday’s OPEC meeting — the countries that hadn’t fully reduced oil output in May as agreed — and extracted promises that they would compensate with even deeper reductions in the third quarter. Now the kingdom faces the group’s perennial problem of enforcing those promises.
The meetings of the Organization of Petroleum Exporting Countries and the bigger OPEC+ group, which includes Russia and nine other countries, were the shortest and least controversial since the latter collective was formed in 2016. It’s not that there was no drama; it just all took place in the days before the virtual gatherings.
The drama centered around the failure of key countries to make all the output cuts they had promised ....
When the May production estimates started coming in, however, it became abundantly clear that several countries hadn’t fulfilled their promises. That’s not unusual — but what followed was.
Saudi Arabia was done turning a blind eye to the cheats....

And I have a thousand acres of minerals in the Bakken.

 Much, much more at the linked article. 

Social media's response over on twitter:

Scandinavia Corona Virus

This is just the most peculiar virus.  Link here.

The virus seems to "disappear" on the weekend.

From Friday to Saturday, the number of cases in Sweden dropped, 10-fold, from slightly over one thousand on Friday, to 114 on Saturday, June 6, 2020.

Likewise, the number of deaths due to the virus plummeted from 77 on Friday to a mere 17 on Saturday.

I suspect the number of cases and the number of new deaths will fall again today, Sunday, June 7, 2020, if history is any guide.

BLM Protests Spread To Scotland -- June 7, 2020

Via twitter:

Initial Production Data For Wells Coming Off Confidential List This Next Week -- June 7, 2020

The wells:
  • 36879, conf, Equinor, Jack Cvancara 19-18 XE 1TFH, Alger, 
  • 36076, conf, BR, CCU Zephyr 14-29MBH, Corral Creek,
DateOil RunsMCF Sold
  • 37193, conf, CLR, Wiley 14-25HSL, Pershing,
DateOil RunsMCF Sold
  • 35959, conf, Whiting, Arndt 14-5-2XH, Sanish,
DateOil RunsMCF Sold
  • 37192, conf, CLR, Wiley 13-25HSL2, Pershing,
DateOil RunsMCF Sold
  • 36238, conf, Slawson, Periscope Federal 1SLH, Big Bend, no production data,
  • 35188, conf, XTO, Hoffmann 21X-6BXC, Siverston, no production data,  
  • 31791, conf, Petro-Hunt, Phelps Trust 153-94-6B-2-3H, Charlson, no production data, 
  • 36468, drl/NC, Slawson, Periscope Federal 3-10-11-12H, Big Bend, no production data, 
  • 36237, drl/NC, Slawson, Neptang 3-15-22H, Big Bend, no production data, 
  • 36473, drl/NC, Slawson, Periscope Federal 9-10-7TFH, Big Bend, no production data, 
  • 36454, drl/drl, BR, Glacierfill 1A, Clear Creek, no production data, 
  • 36362, drl/drl, Slawson, Gunslinger Federal l1-12-1H, Sand Creek, no production data, 
  • 35748, SI/NC, Zavanna, Usher 28-21 2TFH, Poe, t--; cum 78K 3/20; production profile below;
PoolDateDaysBBLS OilRunsBBLS WaterMCF ProdMCF SoldVent/Flare
  • 31790, drl/drl, Petro-Hunt, Phelps Trust 153-94-6B-2-2H, Charlson, no production data, 
  • 36455, drl/drl, BR, Glacierfill 1B, Clear Creek, no production data, 
  • 36360, drl/drl, Slawson, Gunslinger Federal 10-12-1TFH, Sand Creek, no production data,

It's Gonna Be A Slow, Slow Week For Wells Coming Off The Confidential List -- June 7, 2020

Wow. From Tuesday on, this week is incredibly slow. So what was going on six months earlier? Well, it was December 9, 2019 - December 15, 2019.

Lows for the day:
  • December 9, 2019: -13°F
  • December 10, 2019: -22°F
  • December 11, 2019: -13°F
  • December 12, 2019: 8.6°F
  • December 13, 2019: 10.4°F
  • December 14, 2019: -4.0°F
  • December 15, 2019: 6.8°F
Monday, June 15, 2020: 36 for the month; 181 for the quarter, 408 for the year:
36879, conf, Equinor, Jack Cvancara 19-18 XE 1TFH,
36076, conf, BR, CCU Zephyr 14-29MBH, 

Sunday, June 14, 2020: 34 for the month; 179 for the quarter, 406 for the year:

Saturday, June 13, 2020: 34 for the month; 179 for the quarter, 406 for the year:
37193, conf, CLR, Wiley 14-25HSL,
35959, conf, Whiting, Arndt 14-5-2XH,

Friday, June 12, 2020: 32 for the month; 177 for the quarter, 404 for the year:

Thursday, June 11, 2020: 32 for the month; 177 for the quarter, 404 for the year:
37192, conf, CLR, Wiley 13-25HSL2, 

Wednesday, June 10, 2020: 31 for the month; 176 for the quarter, 403 for the year:

Tuesday, June 9, 2020: 31 for the month; 176 for the quarter, 403 for the year:

Monday, June 8, 2020: 31 for the month; 176 for the quarter, 403 for the year:
36238, conf, Slawson, Periscope Federal 1SLH, 
35188, conf, XTO, Hoffmann 21X-6BXC, 
31791, conf, Petro-Hunt, Phelps Trust 153-94-6B-2-3H, 

Sunday, June 7, 2020: 28 for the month; 173 for the quarter, 400 for the year:
36468, conf, Slawson, Periscope Federal 3-10-11-12H, 
36237, conf, Slawson, Neptang 3-15-22H, 

Saturday, June 6, 2020: 26 for the month; 171 for the quarter, 398 for the year:
36473, conf, Slawson, Periscope Federal 9-10-7TFH,
36454, conf, BR, Glacierfill 1A, 
36362, conf, Slawson, Gunslinger Federal l1-12-1H, 
35748, conf, Zavanna, Usher 28-21 2TFH,  
31790, conf, Petro-Hunt, Phelps Trust 153-94-6B-2-2H, 

Friday, June 5, 2020: 21 for the month; 166 for the quarter, 393 for the year:
36455, conf, BR, Glacierfill 1B, 
36360, conf, Slawson, Gunslinger Federal 10-12-1TFH

The Day's Best Graphic -- So Far -- June 7, 2020