BR With Four New Permits -- June 24, 2020

OPEC basket: $39.85.

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Back to the Bakken

Active rigs:

$37.89	6/24/2020	06/24/2019	06/24/2018	06/24/2017	06/24/2016
Active Rigs	10	62	65	58	30

Four new permits, #37664 - #37667, inclusive --

• Operator: BR
• Field: Elidah (McKenzie)
• Comments: 
• BR has permits for two Kellogg Ranch wells and two Nordeng wells, all on one pad in SWSE 32-152-97, Elidah oil field
• the wells will all be 790' FSL and about 2200' FEL
• sited in section 32, the Nordeng wells will run south; the Kellogg Ranch wells will run north;

Notes From All Over -- The "GNC Files" Edition -- June 24, 2020

Mall-ware: GNC files for bankruptcy. Plans to close 1,200 stores. $1 billion in debt. I could be wrong, but it seems GNC is a mall-based store. This is a proxy for malls. GNC is the tip of the iceberg.

Moldy: Chuck E. Cheese files for bankruptcy.

Re-Fracking In The Bakken -- Idle Rambling -- June 24, 2020

Updates

June 25, 2020: from a reader with history of working in the Bakken fracking sector --

Keeping this very general sense, I guess I'll say I generally agree with your take, although I will add that there may be more re-frac activity than you think, and I think it will only continue to increase.

You're absolutely correct that infill drilling has been the priority for most operators, but of course there are some major issues when spacing continues to get tighter (frac hits).

Not every frac hit is negative, and in the Bakken I believe that approximately 60% of frac hits are considered "positive", but it is still a major concern (note: positive and negative from an overall production standpoint. Pressuring up offset wells during frac operations is almost universally seen as a negative).

It will be interesting to see what operators decide to do, especially with the current market conditions.

Original Post

A pet theme of mine on the blog: re-fracking (tagged: re-fracking or refracking). Recently a reader engaged me on this issue, in a very general sense. My comment back to the reader, not ready for prime time:

It's my impression that we've not seen much re-fracking in the Bakken. There is one exception: MRO in the Bailey oil field, or at least that's my impression.

Even in the Brooklyn oil field, where CLR is systematically drilling out the entire field, I've not seen any re-fracks.

I find it quite interesting we have not seen much re-fracking. That suggests to me the operators are not ready to start re-fracking on a general basis. If accurate, that suggests to me that operators prefer to maximize the number of middle Bakken and Three Forks infill wells before going back in and re-fracking.

If so, the operators must have some "feelings" or data suggesting that re-fracks will work best when maximum number of initial fracks have been accomplished in any given location.

But re-fracks seem to be such a no-brainer that when I see so few re-fracks, there must be a reason.

Note that "re-fracking" and "MRO_refracking" are tags. Generally speaking these tags also involve re-fracking:

• advantaged_oil;
• fracking_halo_effect:
• post_shut_in_production_jump;
• post_shut_in_production_jump_second;

Note the new tag with this post: frack_hits.

For more on "frac-hits," see this article over at mrt.

With all those wells vying for space, “frac hits” occur when hydraulic treatment from one well -- the active or child well -- communicates with another well -- the passive or parent well.

“A lot of companies are focused on infill drilling, and they have to figure out how close is too close,” said Reece Roberts, owner of Permian Petrolink and chairman of the Permian Basin section, Society of Petroleum Engineer’s Completions and Operations Study Group.

The consequences of a frac hit are loss of production and mechanical, physical or chemical damage to offset wells that may or not be immediately apparent in production, King said.

Schlumberger is in the process of studying the issue. The oil field services company amassed case studies of wells in the Eagle Ford and 4,000 each in the Barnett and Bakken shales, said panelist Jason Baihly, commercial and risk assessment manager. He said Schlumberger also is gathering case studies from Permian Basin wells.

“We’re in the early innings of understanding parent-child well interaction over a year’s time,” Baihly said. “(That’s) the biggest issue in unconventionals long-term or even mid-term: trying to get more production out of the child wells,” he said.

So: my enthusiasm for increased production in daughter wells due to new fracking, initially seen as a positive, could be a problem down the road.

From April, 2017.

A frac hit is typically described as an interwell communication event where an offset well, often termed a parent well in this setting, is affected by the pumping of a hydraulic fracturing treatment in a new well, called the child well. As the name suggests, frac hits can be a violent affair as they are known to be strong enough to damage production tubing, casing, and even wellheads.

Claudio Virues, a senior reservoir engineer with CNOOC Nexen, said frac hits have become a top concern in the shale business because they can affect several wells on a pad, along with those on nearby pads too. Based on his experiences in Canada and in south Texas, the question is no longer if a frac hit will happen, but how bad will it be.
“You usually have two scenarios,” he said. “One may be that you have a temporary loss of production, but you will recover to the trend that you had before. The other will be really bad for your production and reserves.”

He is alluding to the fact that some wells impacted by frac hits never fully recover and, in the worst cases, permanently stop producing after taking frac hits. The frequency of these outcomes are unknown as there are no publicly available statistics. In a small minority of cases, and in select formation types, frac hits have been known to increase production in the impacted well, but this is unusual.

Notes From All Over -- The "Give It Up, Judge" Edition -- June 24, 2020

The wall: link here. North Dakota contractor will do the most difficult part of the wall.

The latest contract, valued at $1.3 billion, was awarded to Fisher Industries of Dickinson, North Dakota to build 42 miles of fencing through mountainous areas of Yuma County.

Appellate judge: give it up. Release Flynn from purgatory. Apparently, contrary to what's happening in autonomous zones and around statues, the US is still a "land of laws." I assume the case was dropped on the merits of the case, but the appellate judge acted quickly, I'm sure, because the court was beginning to look like a circus, and the one thing judges can't stand is being compared to clowns.

The grocery list: I just got back from shopping. Coincidentally, midwest reader sent me this flyer from Martin County, Minnesota.

These prices are incredible.

For comparison, I'm paying:

• $1.49 for a dozen eggs; $1.79 for a dozen super, duper eggs; flyer shows 77 cents for a dozen
• potato chips way more expensive in our local grocery store
• I can only imagine what they are being charged in downtown NYC

Sempra Energy announces $2.23 billion sale of Chilean assets.

Seattle bust: another huge business located in Seattle has announced it will move out of state. Buki clothing. Website here. News at The Epoch Times.

Pullback: I was hoping for an opportunity to add to my portfolio, but the 900-point drop in the Dow isn't helping my particular "wish list." I'll have to expand my list. LOL. PLUG is up 16%.

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.

EIA Weekly Petroleum Report -- June 24, 2020

Link here:

• US crude oil in storage: 540.7 million bbls; a whopping 16% above an already-fat level of storage; it was only 15% above the five-year average last week; trend not looking good;
• US crude oil in storage increased by a relatively small 1.4 million bbls from the previous week;
• refineries operating at 74.6% capacity; pretty much unchanged;
• jet fuel supplied was down 62.5% compared with same four-week period last year; again, pretty much unchanged
• US crude oil imports, at 6.5 million bpd, right at the four-week average of 6.6 million bpd
• WTI; immediate reading -- pretty much unchanged

Re-balancing:

Week	Date of Report=	Change	Million Bbls Storage	Percent Above 5-Year Average
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 71	April 8, 2020	15.2	484.4
Week 72	April 15, 2020	19.2	503.6
Week 72	April 22, 2020	15.0	518.6
Week 73	April 29, 2020	9.0	527.6
Week 74	May 6, 2020	4.6	532.2
Week 75	May 13, 2020	-0.7	531.5
Week 76	May 20, 2020	-5.0	526.5
Week 77	May 28, 2020	7.9	534.4
Week 78	June 3, 2020	-2.1	532.3
Week 79	June 10, 2020	5.7	538.1
Week 80	June 17, 2020	1.2	539.3	15%
Week 81	June 24, 2020	1.4	540.7	16%

Jet fuel delivered:

Jet Fuel Delivered, Change, Four-Week/Four-Week
Week	Date of Report	Change
Week 0	3/7/2020	-12.80%
Week 1	3/14/2020	-12.60%
Week 2	3/21/2020	-8.90%
Week 3	3/28/2020	-16.40%
Week 4	4/4/2020	-0.22%
Week 5	4/11/2020	-39.70%
Week 6	4/18/2020	-53.60%
Week 7	4/24/2020	-61.60%
Week 8	5/1/2020	-66.60%
Week 9	5/8/2020	-68.50%
Week 10	5/15/2020	-67.90%
Week 11	May 22, 2020	-66.60%
Week 12	June 3, 2020	-68.70%
Week 13	June 10, 2020	-63.70%
Week 14	June 17, 2020	-62.30%
Week 15	June 24, 2020	-62.50%

Imports:

Crude Oil Imports
Week (week-over-week)	Date of Report	Raw Data, millions of bbls	Change (millions of bbls)	Four-week period comparison
Week 0	March 11, 2029	6.4	0.174
Week 1	March 18, 2020	6.5	0.127
Week 2	March 25, 2020	6.1	-0.422
Week 3	April 1, 2020	6.0	-0.070
Week 4	April 8, 2020	5.9	-0.173
Week 5	April 15, 2020	5.7	-0.194
Week 6	April 22, 2020	5.6	-0.700
Week 7	April 29, 2020	5.3	0.365	-19.700%
Week 8	May 6, 2020	5.7	0.410
Week 9	May 13, 2020	5.4	-0.321	-26.100%
Week 10	May 20, 2020	5.2	-0.194
Week 11	May 28, 2020	7.2	2.000	-16.400%
Week 12	June 3, 2020	6.2	-1.000	-18.300%
Week 13	June 10, 2020	6.4	0.000	-13.300%
Week 14	June 17, 2020	6.6	-0.222	-10.000%
Week 15	June 24, 2020	6.5	-0.102	-11.600%