Monday, September 21, 2020

No New Permits: Twelve Permits Renewed; One DUC Reported As Completed -- September 21, 2020

Syria and Russia: Link here. Archived.

Syria is crucial to Russia for three key reasons. 
First, it is currently the principal Western point of the Shia crescent of power that stretches from Syria and Lebanon through Iraq and Iran and then south into Yemen that Moscow has been cultivating for years as a counterpoint to the U.S.’s own sphere of influence centred on Saudi Arabia. 
Second, it offers a long Mediterranean coastline from which it can send oil and gas products (its own or those of its allies, notably Iran) for export either into major oil and gas hubs in Greece and Italy or into northern, western and eastern Africa. 
Third, it is a vital military hub, with one major naval port (Tartus), one major air force base (Latakia) and one major listening station (just outside Latakia).

The sports page: no sports announcer, any sport, any source, excels Brandlee Chamblee. Period. Dot. I've always enjoyed him. 
I think he came close to becoming emotional during the post-US Open banter (yesterday) among the golfchannel panel. He was in awe of how Bryson DeChambeau may have changed the "course" of golf. 
Another on the panel challenged him, suggesting that Bryson has "ruined the game," comparing Bryson's style and physique with the graceful, fluid, ballet-like style of Payne Stewart. Brandlee came back with a passionate argument using Moneyball as the basis of his argument. 

Back To The Bakken

Active rigs

Active Rigs1158665733

No new permits today.

One producing well (a DUC) reported as completed:

  • 37193, drl/A, CLR, Wiley 14-25HSL, Pershing; FracFocus, fracked 3/9/20 - 3/18/20; 9.4 million gallons of water; water, 88.6% water by mass; from the file report:
    • primary rig spud date: 1790' @ 1637 hrs on January 10, 2020 using a 12.25" bit
    • TD 12.25" hole: 1650 hours, 1/10/2020 @ 1,801' : 13 minutes; reached KOP in 183 minutes; total drilling time from spud to KOP: 196 minutes or 3.3 hours;
    • KOP: 10,298' MD / 10,220' TVD reached 1833 hrs 1/13/20; begin curve 0538 hrs 1/14/20;
      • TD'D curve: 11,099' MD  /10,701' TVD; 1637 hours on January 14, 2020; 1,099 minutes or 18.32 hours;
    • began lateral: 11,009' MD / 10,701' TVD; 0350 hours on January 17, 2020;
      • TD: 20,915' MD, 10,770.7' TVD, 1715 hours on January 19, 2020; 70.75 hours or 2.95 days
    • the well is about 12 air miles east of Watford City,
    • target: middle Bakken:
    • this well is one of two wells on the same pad; the first lateral drilled from this pad
    • from primary spud until TD, the well was completed using six bottom hole assemblies (BHAs) and took a total of 106.26 drilling hours (or 1.771 days drilling time)
      • average penetration rate of 180.0' per hour
    • gas units in the middle Bakken: averaged 500 units; a peak of 2,892 units;
    • the wellbore was in target for 63.3% of the lateral
    • only comment: 63.3% of the lateral in target? 
      • I assume the expectation is 96% +

Twelve permits renewed:

  • QEP (9): nine MHA permits in Mountrail County; all nine sited in SENE 28-150-92;
  • Nine Point Energy (2): two Gibbins permits in Williams County
  • Slawson: an Armada Federal permit in Mountrail County

A Closer Look At A Nine Point Energy Well In Eightmile Oil Field; Huge Frack -- September 21, 2020

Nine Point Energy's Missouri wells are tracked here.  Graphics at that post.

Bakken completion strategies: are tracked here.

The well:

  • 34786, drl/A, Nine Point Energy, Missouri 152-103-4-2-2H, Eightmile, producing, 54K over 4.5 months; API: 33-105-04758, FracFocus: fracked, 2/18/2020 - 3/18/2020; 10.313 million gallons of water (a huge frack); 86.4% water by mass;
PoolDateDaysBBLS OilRunsBBLS WaterMCF ProdMCF SoldVent/Flare

From the file report:

  • spacing unit: 1600 acres
  • spud date: October 25, 2019
  • TD: December 10, 2019
  • TD: 23,826'
  • date completed: 3/21/20
  • lateral:
    • average ROP: 222 ft/hr
    • average gas: 2,250 units
    • max gas: 8,902 units

You Mean China Is Still Using Coal? I Didn't Know That -- September 21, 2020

This pretty much tells me all I need to know about fossil fuel.

From argusmedia

From the linked article:
China's Guangzhou and Fuzhou ports may be considering clearing some stockpiled imported coal because of tighter domestic supplies and higher prices. 
Authorities at Guangzhou and Fuzhou ports in south China's Guangdong and Fujian province respectively are looking at how much stockpiled imported coal is waiting for customs clearance at the ports, according to market participants. [Guangdong and Fujian provinces are in southeast China, on the Taiwan Strait, directly across from Taiwan. Guangdong abuts Hong Kong to the northeast.
The move could signal a possible relaxation of import restrictions, while Guangzhou port could clear 1.5mn t of imported stockpiled coal. Fuzhou and Guangzhou ports have exhausted their import quotas in early August, meaning only some local utilities could still buy small volumes using limited quotas.

Shell: Focused On Cutting Operating Costs To Pivot To Renewable Energy -- September 21, 2020


Less than two minutes after posting the original post: this, over on twitter:

Original Post 

A lot of folks are going to be very, very disappointed with the meager returns generated by renewable energy and the absolute need for government support to survive. One can easily infer from the articles being written that legacy companies and upstarts focused on renewable energy will show huge returns by 1Q21 when, in fact, after getting past the headlines and actually reading the articles, one sees this will be a long, difficult slog. 

We won't see returns on investment for years, maybe decades, and when we do, they will be meager.

GM is a great example. In an article linked yesterday, GM said it will take "years" to show a profit in their EV divisions. My hunch: when GM finally shows any profitability in their EV division it will be through creative accounting.

Now, we see Shell suggesting the same. It may all work out, but it certainly has the look of "groupthink." I first heard of "groupthink" maybe thirty years ago while in the USAF. I was taking a strategic planning course, or whatever it was called. At the time "groupthink" was all in vogue; since then, I haven't seen much written about it but it's certainly pervasive. We saw a great video that has stuck with me ever since. See wiki.

Groupthink is a psychological phenomenon that occurs within a group of people in which the desire for harmony or conformity in the group results in an irrational or dysfunctional decision-making outcome. 
Cohesiveness, or the desire for cohesiveness, in a group may produce a tendency among its members to agree at all costs. 
This causes the group to minimize conflict and reach a consensus decision without critical evaluation. 
Groupthink requires individuals to avoid raising controversial issues or alternative solutions, and there is loss of individual creativity, uniqueness and independent thinking. 
The dysfunctional group dynamics of the "ingroup" produces an "illusion of invulnerability" (an inflated certainty that the right decision has been made). Thus the "ingroup" significantly overrates its own abilities in decision-making and significantly underrates the abilities of its opponents (the "outgroup"). 
Furthermore, groupthink can produce dehumanizing actions against the "outgroup". 
Members of a group can often feel peer pressure to "go along with the crowd" in fear of rocking the boat or of what them speaking up will do to the overall to how their teammates perceive them. Group interactions tend to favor, clear and harmonious agreements and it can be a cause for concern when little to no new innovations or arguments for better policies, outcomes and structures are called to question. (McLeod). Groupthink can often be referred to as a group of “yes men” because group activities and group projects in general make it extremely easy to pass on not offering constructive opinions. 

 "Members of a group can often feel peer pressure to "go along with the crowd" in fear of rocking the boat or of what them speaking up will do to the overall to how their teammates perceive them." Worse than that, "rocking the boat" will likely lead one to be fired from the company.

Shell, at the linked article:

Royal Dutch Shell is looking to slash up to 40% off the cost of producing oil and gas in a major drive to save cash so it can overhaul its business and focus more on renewable energy and power markets.

Shell’s new cost-cutting review, known internally as Project Reshape and expected to be completed this year, will affect its three main divisions and any savings will come on top of a $4 billion target set in the wake of the COVID-19 crisis.

Reducing costs is vital for Shell’s plans to move into the power sector and renewables where margins are relatively low. Competition is also likely to intensify with utilities and rival oil firms including BP and Total all battling for market share as economies around the world go green.

Reading the article closely, the only way Shell cuts 40% off the cost of producing oil and gas is by cutting CAPEX. 

E&Ps' 3Q20 Results Seen Rebounding After A Memorable, Brutal Spring -- RBN Energy -- September 21, 2020

RBN Energy: link here.

No one in North America’s energy sector is likely to forget the second quarter of 2020 anytime soon. In those months — April, May, and June — the demand-destruction effects of the COVID-19 pandemic took root; the price of West Texas Intermediate (WTI) bottomed out, even going negative for a day; and crude oil-focused drillers in particular shut in vast numbers of wells. In late July and August, when exploration and production companies (E&Ps) announced their results for that train wreck of a quarter, it came as no surprise that the write-downs and losses were generally immense and, in many cases, record-shattering. But WTI prices have rebounded somewhat the past couple of months, as has production, suggesting that while E&Ps third-quarter results will be far from stellar, they’ll at least show an improvement and hopefully set the stage for further gains going forward. Today, we break down second-quarter results by producer peer group and discuss the positive trends that portend improved results for the third quarter.

To set the stage, let’s review those horrible second-quarter 2020 results. WTI oil prices fell 40% in the second quarter to an average of $28.17/bbl, from $46.60/bbl in the first quarter of 2020. Even that doesn’t fully reflect the extent of the misery; the 41 major U.S. producers we track realized just $13.89 for every barrel of oil equivalent (boe) they produced in the second quarter, nearly 50% below the previous quarter and the lowest realization in more than a decade. As shown in Figure 1, the E&Ps we follow reported a combined $23.8 billion in pre-tax operating losses in the second quarter (blue bar to far right, measured on the left axis), with $18 billion of that from largely price-related impairments of the value of oil and gas reserves. First-half 2020 losses for the companies totaled $83 billion after a combined $59 billion loss in the first quarter. (As a result of massive reserve write-downs, first-quarter losses dwarfed even those seen in the second quarter. 

Second-quarter cash flow for the group was a scant $5.9 billion (orange bar to far right), down 70% from $19.1 billion in the previous quarter and 79% lower than the $27 billion in the year-ago period.


Fast And Furious -- Fifteen Minutes -- Six Wells Coming Off The Confidential List -- September 21, 2020

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. 

NKLA: plummets 25%; founder unexpectedly resigns. 

Ronald Perelman: In "romance" the term is usually reserved for women. What does one call a male goldigger?

Beef: on sale. Once in short supply, now it's on sale. The WSJ. We noted that several weeks ago. Oh, well. 

Miranda: new British comedy on public television, late night Sunday. Looks like a winner. Crow Upstart also good but a bit, shall we say challenging, for US viewers. Wiki entry on Miranda here.

PGA: US Open -- incredible.

And that's it. Nine minutes

Back to Energy

Op-ed: worthless article, but for the archives. Some producers setting records.  Rig counts don't matter. It's all about the frack spreads, now.

The American Petroleum Institute’s August data report shows the drilling has dropped to the lowest level we’ve seen since Nov. 2001 – nearly two decades! But drilling productivity has been breaking records, which means that well-run producers continue to find ways to make margin at these price levels

OPEC basket, link here. Color me impressed. Staggering recovery. All the way back to .... $43 ... where it was June, 2020.

Back to the Bakken

Bakken refiner wins another court battle: link here.

The North Dakota Supreme Court has ruled in Meridian Energy Group, Inc.’s favor in the final litigation matter regarding the permitting for constructing the Davis Refinery near Belfield, N.D., Meridian reported Wednesday. The company explained the state’s highest court affirmed a lower court ruling upholding a North Dakota Public Service Commission (PSC) decision to dismiss a complaint on the refinery’s siting.

Meridian pointed out the final litigation milestone allows the company to proceed with the refinery project. It noted the ruling marks the latest court victory for the project, whose state Department of Environmental Quality air quality permit to construct was affirmed by the high court on June 30, 2020. The earlier decision clears a path for Meridian to complete engineering, procurement and financing for the Davis facility, the firm added.

Prices: "everything is up" except WTI

  • WTI: down 2%
  • OPEC basket: up 2%
  • Urals: up over 4% 
  • Louisiana light: up almost 1%

NOG: announces completion of 1-for-10 stock split.

Active rigs:

Active Rigs1158665733

Six wells coming off confidential list

Monday, September 21, 2020: 136 for the month; 207 for the quarter, 653 for the year

  • 36465, SI/A, Whiting, Joseph Verne 12-13-2H, Sanish, t--; cum 72K over 3.5 months;
  • 34788, drl/A, Nine Point Energy, Missouri 152-103-4-2-6H, Eightmile, no production data,
  • 34787, drl/A, Nine Point Energy, Missouri 152-103-4-2-5H, Eightmile, no production data,
  • 34786, drl/A, Nine Point Energy, Missouri 152-103-4-2-2H, Eightmile, producing, 54K over 4.5 months;

Sunday, September 20, 2020: 132 for the month; 203 for the quarter, 649 for the year

  • 36840, drl/A, Hess, TI-State-158-95-3635H-9, Tioga, producing, 66K over 3.5 months;
Saturday, September 19, 2020: 131 for the month; 202 for the quarter, 648 for the year
  • 36689, SI/A, Whiting, Iverson 41-14HU, Sanish,

Nine Point Energy's Missouri wells are tracked here

RBN Energy: today's note will be a stand-alone post. Still the best energy blog out there.