Friday, June 26, 2020

BR To Create Two 3200-Acre Units, To Place Sixteen Wells On Each Unit -- June 26, 2020

From the July, 2020, NDIC hearing dockets, link here
  • Case 28516, BR, two overlapping 3200-acre units, each with sixrteen wells, Jim Creek and/or Murphy Creek-Bakken. These are quite interesting 3200-acre drilling units: these are two "stand-up" units, running north to south; five 640-acre sections, from north to south. Graphics pending.
First 3200-acre unit:
  • 35-146-96
  • 2/11/14/23-145-96
Second 3200-acre unit:
  • 36-146-96,
  • 1/12/13/24-145-96
3200/16 = 200-acre spacing, though these will be targeting at least two different formations.

The graphic:

MRO Looking To Drill Twenty-Three Wells In One Unit -- McGregory Buttes -- June 26, 2020

From the July, 2020, NDIC hearing dockets, link here.  

NDIC Hearing Dockets
Wednesday, July 29, 2020

Case, not a permit:
  • 28515, MRO, McGregory Buttes, i) 23 wells on a 2560-acre unit; sections 14/15/22/23-147-94; ii) confirm spacing; iii) address the lease status of the Little Missouri Riverbed in said sections; Dunn County;
  • 2560/23 = 111-acre spacing, except that these wells will be targeting at least two different formations;
Wells currently in that drilling unit, or related unit:
  • 37621, scout ticket does not exist, , conf, MRO, Sophia USA 11-14TFH, McGregory Buttes,
  • 24316, 394, MRO, Hopkins USA 15-2H, McGregory Buttes, t3/13; cum 145K 4/20;
  • 24315, conf, MRO, Hopkins USA 15-11TFH, McGregory Buttes,
  • 24314, conf, MRO, Hopkins USA 15-4H, McGregory Buttes,

Hearing Dockets -- July, 2020

The NDIC hearing dockets are tracked here.

Link here.

The usual disclaimer applies. As usual this is done very quickly and using shorthand for my benefit. There will be factual and typographical errors on this page. Do not quote me on any of this. It's for my personal use to help me better understand the Bakken. Do not read it. If you do happen to read it, do not make any investment, financial, job, relationship, or travel plans based on anything you read here or think you may have read here. If this stuff is important to you, and I doubt that it is, but if it is, go to the source.

Highlights in bold.

Wednesday, July 22, 2020
Two Continued Cases

Wednesday, July 29, 2020
Three Pages 

The cases, not permits:
  • 28515, MRO, McGregory Buttes, i) 23 wells on a 2560-acre unit; sections 14/15/22/23-147-94; ii) confirm spacing; iii) address the lease status of the Little Missouri Riverbed in said sections; Dunn County;
  • 28516, BR, Jim Creek and/or Murphy Creek, establish two overlapping 3200-acre units; section 35-146-96 and sections 2/11/14/23-145-96 and section 36-146-96, and sections 1/12/13 and 24-145-96; sixteen wells on each unit; Dunn County
  • 28517, Petro-Hunt, establisha standup 1280-acre unit, three wells; sections 4/9-144-98; Billings;
  • 28518, Hess, commingling,
  • 28519, Hess, commingling,
  • 28520, BR, pooling,
  • 28521, Oasis, SWD, Dimmick Lake Field;
Thursday, July 30, 2020 
Six Pages 
"Nothing Going On" 
Mostly Continued Cases

The cases, not permits:
  • 28522, NDIC, temporary abandoned well, status, Scout Energy, #4919, Dickinson-Heath-Sand Unit; Dickinson Field, Stark County
  • 28523,CLR, amend order regarding four wells for the Cedar Coulee-Bakken; Dunn County;
  • 28524, XTO, Heart Butte-Bakken, i) establish three overlapping 1600-acre units; one well one each unit; ii) establish an overlapping 3200-acre unit, one well; Mountrail, Dunn counties; see this post for sections;
  • 28525, XTO, Haystack Butte-Bakken, establish an overlapping 3840-acre unit, section 20/21/28/29/32/33-148-97; one well, Dunn County;
  • 28526, CLR, pooling,
  • 28527, XTO, commingling,
  • 28528, XTO, commingling,
  • 28529, XTO, commingling,
Friday, July 31, 2020
A Single Case

The case, not a permit:
  • 28530, NDIC: to consider the confiscation of all .... equipment .... at certain abandoned wells, certain produced water underground gathering systems, and certain treating plants .... at [eleven western ND] counties.

Headline Of The Week -- June 26, 2020

We've been talking about this for at least a couple of years:

I do not recall a similar headline before the "shale era." Do we need new metrics? One suggestion, which I'm starting to see reported periodically: number of frack stages completed per week.

FWIW, the rig count, from Rigzone:
Year on year, the U.S. count is down 701 rigs from last year's 967, with oil rigs down 600, gas rigs down 102, and miscellaneous rigs up one to two. [Down 73% oil and gas rigs year-over-year.]
The U.S. Offshore rig count is down 2 rigs at 11 and down 13 year-over-year, according to Baker Hughes.
Meanwhile, in Canada the rig count is down four rigs from last week to 17, with oil rigs down two to five and gas rigs down two at 12. The region is down 102 rigs from last year's 119, with oil rigs down 75 and gas rigs down 27.
Shale production in the Bakken: we've been in the "manufacturing stage" for several years now. The "manufacturing stage" followed the boom. Name another manufacturing industry in which the number of production units decreases by 73% and production continues to set new records. This is what scares Saudi Arabia.

OPEC basket: down 6.7%. Down $2.67. Trading at $37.18. Spokesperson: Russia is happy with $50 oil. As if. LOL. Russia would be happy with $50 oil.

Bakken vs Permian: from Bloomberg this week --
As Covid-19 shock waves reverberate across U.S. oil towns, perhaps nowhere is their speed and severity more apparent than in America’s newest shale powerhouse.
Just months ago, New Mexico, the third-biggest producer of U.S. oil, approved the state’s largest budget ever, paid for by an oil boom that made up 40% of the state’s revenues in 2019. Now that plan has been slashed by more than $600 million, affecting everything from pay raises for state workers to a program designed to provide free community college to state residents.
Oil-producing states across the U.S. are facing a double whammy with both drilling and overall consumer spending cut back by the pandemic. New Mexico, meanwhile, stands as exhibit A of this boom-to-bust dynamic, with the state’s revenue forecasts plunging and more than 4,600 workers in mining, most of which is oil and gas-related, claiming unemployment insurance in the week ended June 13.
“We were just starting to stand on two legs,” said Reilly White, a finance professor at the University of New Mexico. “All of that stuff that passed, and that we were expecting this year, oil was a big part of that. The rug has just been swept out from under us.”
Companies with operations in New Mexico, including Concho Resources Inc., Occidental Petroleum Corp. and Matador Resources Co., have all decreased the number of rigs they plan to run in the state this year. And many producers have also taken the unprecedented step of curtailing significant portions of their existing output.

Notes From All Over -- Why Apple Is Important -- June 26, 2020

When I get back from early morning Uber-granddaughter driving:
  • weekly crude oil supply estimates, days, EIA: link here; down from a high of 42.0 days to 39.9 days;
  • ISO-New England: link here; renewable energy? supplies 6% of total demand; 92% natural gas and nuclear;
  • drop in wages for government works; hits all-time high (?):
And, of course, the market.

Other than ZeroHedge, is anyone else reporting this -- Tesla posts abysmal score in JD Power's initial quality study for 2020? Link here.
Aside from a new NHTSA investigation into its Model S touchscreens, a litany of Model Y quality issues and a report out yesterday that Tesla may have knowingly allowed Model S vehicles to roll off its production line with a flaw that could cause them to go up in flames, it's been an otherwise tame week for Tesla.
Oh, wait. There is just one other thing: J.D. Power finally included Tesla in its Initial Quality Survey for 2020 and the brand scored an abysmal 250, placing it below literally dozens of other manufacturers, including names like Land Rover and Audi, in terms of reliability.
The survey has been put out annually for the last 34 years and works by asking buyers of new cars of the current model year what problems they have had within the first 90 days of owning a vehicle. The score is based on the number of problems experienced within those 90 days per 100 vehicles.
Infotainment was the worst scoring category on the survey this year, as people experienced issues with their voice recognition, Bluetooth, GPS and Android/iOS pairing capabilities.
Just yesterday, the NHTSA launched a preliminary evaluation into Tesla's touchscreens on its Model S vehicles.
Personal savings rate plummets: why would anyone be surprised? US savings rate dropped from a record 32% to 23% as government benefits shrank:

Shutting it down: a reader recently asked if I had seen (m)any stories regarding all the retail stores that must be closing. At the time, I said I had not. Today, MarketWatch has a story: almost half of businesses closed on Yelp have shut down for good during the coronavirus pandemic.  But it's pretty much clickbait: only about a couple of restaurants closing its doors in NYC. Happens all the time. Restaurants open; restaurants close. A lot of fake news in the article, like this:
“Restaurants are complicated beasts,” he said in an interview published Thursday. “You have to order food and supplies. You have to make sure you’ve prepped the kitchen and service areas to be easily disinfected.” What’s more, it can be difficult to hire people to work in such a customer-facing position — especially when their unemployment benefits and stimulus payments may give them more stable income than they might get from their hourly wages and tips.
A lot of people are making $1,200 a week doing nothing,” he said. “That’s good pay.” 
And speaking of shutting it down, it's worse in these seven states, according to United Van Lines via, again, ZeroHedge, ranked in order, #1 to #7.
  • New Jersey, blue
  • Illinois, blue
  • New York, blue
  • Connecticut, blue
  • Kansas, blue
  • Ohio, red
  • California, blue
This puts the Bakken in perspective: they say eighteen million bbls of sanctioned Venezuelan crude oil is stuck at sea --
...which represents two months of Venezuelan production at current rates. Two counties in North Dakota, maybe three, at most four, are producing upwards of one million bbls of oil per day
This is why Apple is important: they are not the first to innovate but they make the innovations so seamless, a caveman can use it. From Yahoo!Finance:
Apple isn't the first to use the browser technology -- it's already available in Firefox, Chrome and Microsoft Edge, for example.
Apple's adoption, however, could push forward the larger biometrics movement.
This is due, in part, to Apple's way of making complicated technology consumer-friendly and taking on the work of user education. Apple also has a sizable community of developers who get excited to roll out Apple's latest technology.
The new system will be, by default, multifactor in nature.
Apple's platform authenticator uses the secure enclave of the iPhone or iPad to provide the private keys, and guarantees they can't leave the device. It also verifies the user by either their fingerprint or facial recognition. That makes it multifactor, as it combines something you have -- the iPhone -- with something you are -- your biometrics information.

Heavy Oil. Urals. Why? -- June 26, 2020

Europe and Urals: Urals, heavy and sour, trades in northwestern Europe at a premium of about $2.35 per barrel against Brent, highest since September, 1994. This has been the story for quite some time now; not getting much analysis; this might help:
The Literature Page

Wow, wow, wow. Enemies of Promise, Cyril Connolly, c. 1983; new foreword, 2008.

Pure literature. And very difficult slogging for me. Will help fill the hours when TCM disappoints.

I was in my Out of Africa phase when a reader mentioned White Mischief which I read, and am now re-reading, taking notes, which led me to Cyril Connolly.

Connolly explores the literature of the 1920's and the 1930's: organizing his analysis around two newly coined categories: the Vernacular (pared down documentary writing that directly engages the contemporary world ) and the Mandarin (stylized writing that is committed above all to its own formal or verbal elegance). The Vernacular: think Ernest Hemingway (later). For the Mandarins, the trophy goes to Henry James. See this book review. I've actually got that book on my shelves, or did so at one time. I may have donated it. I've long forgotten.

I'll re-read Henry James some day. The Ambassadors. Washington Square. So many great memories. The Portrait of a Lady. Turn of the Screw, which I had to read more than once to understand. And finally, perhaps my favorite, The Beast in the Jungle, from wiki:
Almost universally considered one of James' finest short narratives, this story treats appropriately universal themes: loneliness, fate, love and death. The parable of John Marcher and his peculiar destiny has spoken to many readers who have speculated on the worth and meaning of human life.

New Argus Quotes. Natural Gas Records. Where Are All Those Peak Oil Stories? Looking Bleak For Saudi Arabia. New Oil Man On Campus? -- June 26, 2020

First things first: kudos to the reader who pointed out that a hedge fund, Apollo, has been involved with GNC since 2008. See comments at this link. That was also pointed out in the comments at this article over at Yahoo!Finance, the harsh reasons behind GNC's adn JC Penney's death (sic).

What (who) sells basketball shoes? The NBA. Just now: Nike reports a "billion-dollar" plunge in sales for 4Q19. Not quite a billion dollars but rounding. Actual number being reported: $790 million. Yeah, it's all about the NBA.

Quick! Who's the major advertiser for the MLB? For the NFL?

ZeroHedge: I've finally added ZeroHedge to my twitter scroll. How did I ever miss this one?

Herd immunity: we're not even close.

China and oil: record Saudi imports -- Saudi oil imports surge in May to an all-time high. Being reported by Reuters. Link here.

Europe and Urals: Urals, heavy and sour, trades in northwestern Europe at a premium of about $2.35 per barrel against Brent, highest since September, 1994. This has been the story for quite some time now; not getting much analysis; this might help:
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.

The market, futures, before economic numbers posted for Friday: should be an interesting day. Dow down slightly in pre-market trading and yet individual stocks of interest appear to be telling a different story:
  • AAPL: up in pre-market trading
  • the four airlines (UAL, DAL, LUV, and AAL): all up in pre-market trading
The market, futures, after economic numbers posted for Friday: should be an interesting day. Dow down a bit more in pre-market trading and yet individual stocks of interest appear to be telling a different story:
  • AAPL: changes direction; drops slightly;
  • the four airlines (UAL, DAL, LUV, and AAL): all up in pre-market trading, but may be not quite as much
  • OXY: it was up; now down about a percent
Oil story of the day: OXY and Warren Buffett. He's getting paid in OXY stock, not cash. Big deal. Story here; be sure to read comments. I think it's hard to say how Buffett will make out on this deal but the consensus among those commenting is that he will do quite well. In pre-market trading, OXY is up about half a percent.

OPEC basket, link here: wow, the trend is not looking good. Prince MbS is in deep doo-doo. For second day in a row OPEC basket slumps. Now trading at $37.18. This is going so badly for Saudi.

New oil quotes: "the Argus quote" will now add seven Gulf of Mexico locations:
  • Magellan Midstream Partners' East Houston terminal
  • EPD: three terminals
  • Houston: waterborne
  • Seabrook: waterborne
  • Texas City: wateroborne
And with that, a cup of Louisiana coffee. Off the net for a few minutes (6:52 a.m. to 7:15 a.m.)

I'm back (and it's only 7:02 a.m.) -- I'd still be waiting in line at Starbucks, LOL --
  • 425-gm can
    • rounded tablespoon: maybe 15 grams of coffee
    • 425/15 = 28 servings
    • based on what I just took out, I'm going to get a lot more than 28 servings out of this can but for argument's sake, let's say it will be 30 servings
    • $8.50 (includes tax) / 30 servings = 38 cents/serving
  • a K-cup, high end-Starbucks, on sale, Costco: $30/72 = 40 cents
  • a K-cup, low end, off brand, on sale, Costco: $30/120 = 25 cents
  • Starbucks: $3.00 (varies); refills: 50 cents;
  • McDonald's senior cup: 69 cents (varies); refills free
 Poor lighting: I will post a better photo later.

Back to the Bakken

Active rigs:

Active Rigs1062645930

Two wells coming off the confidential list today -- Friday, June 26, 2020: 63 for the month; 208 for the quarter, 435 for the year:
  • 37051, drl/drl, CLR, Simmental Federal 6-16H, Elm Tree,
  • 26415, drl/drl, Bruin, Wm Polar 157-101-25A-36-2B, -- look how old this permit is; Otter;
RBN Energy: natural gas futures plunge to record June lows; why now? Before reading the article, my observations:
  • the fill rate yesterday despite rig count plunging over the past couple of years; rig count in North Dakota is trending toward ... drum roll ... zero;
  • a/c use in US not accelerating; by the way, all those high-rise buildings in NYC with employers all working from home -- I doubt a/c is at normal demand ...
  • V-shape recovery in doubt
So, now back to RBN Energy:
The CME/NYMEX Henry Hub prompt contract settled at $1.482/MMBtu yesterday, down 11.5 cents (7%) from the previous day and the lowest settle that the market has ever seen during June trading. That’s also a 33-cent (18%) drop from just two weeks ago when prompt futures were around $1.80/MMBtu. The immediate rationale is the larger-than-expected and larger-than-normal storage build reported by the Energy Information Administration yesterday. But current price levels are also indicative of bigger problems looming for the gas market, namely that while gas production is down, total demand, including exports, has been exceptionally weak too. As a result, by mid-July, the storage inventory appears likely to reach record highs for that time of year — record highs that may well persist through the end of injection season in early November unless there is a substantial correction in the gas supply-demand balance. Moreover, it’s looking less and less likely that relief will come from the demand side. Today, we look at the drivers behind the latest gas market meltdown and implications for the balance of injection season.
So, why did prices fall through the floor now?
The short answer: time. In May and June, the market was still holding on to prospects of hot weather and the resulting gas demand for power generation to help offset, at least in part, the massive export demand losses. And as recently as last week, near-term forecasts for late June and early July were calling for well above-normal temperatures. Two weeks on, and with those hotter-than-normal weather forecasts moderating as the days tick by, those hopes are evaporating, and the market is running out of time to reverse the march of storage toward an all-time high by the end of injection season.
The 120-Bcf injection for the week ending June 19 was the highest we’ve seen for any week in June since 2010, and it brings the U.S. working gas inventory as of last week to 3,012 Bcf. That increases the surplus vs. last year to 710 Bcf (from 690 Bcf in the previous week) — the first weekly uptick in that surplus since early May.
It also increases the surplus to the five-year average to 452 Bcf (from about 400 Bcf in the weeks prior). Moreover, our storage model suggests the inventory is headed toward the five-year high by mid-July.
If we then take the five-year average net injection rate from mid-July through the first week of November and carry the inventory forward, we would reach a peak inventory of 4,234 Bcf. That would not only be a record high — the highest we’ve reached is 4,047 Bcf in November 2016 — but also would come perilously close to what EIA calls the “demonstrated peak working gas capacity,” or the sum of the largest volumes reported at individual fields (4,261 Bcf as of EIA’s November 2019 estimates).