Monday, December 21, 2020
With numbers like these, one has to ask: does anyone really think Japan is going to open its doors to thousands of foreign athletes and tens of thousands of foreign spectators for the 2020ne Olympics?
Some years ago, well before Covid, folks were asking about the relevancy of the Olympics. With the huge carbon footprint of the Olympics, the question was being asked again. Now with the pandemic, is it finally time to say "sayonara" to the Olympics?
If You're Going To Use A Big Word To Impress Someone,
At Least Spell It Correctly
Lan-yap. Emphasis on second syllable.
This From The NY Times -- A Type Of Story Normally Seen At Internet Tabloids -- But In The NY Times? Note The Reference To "Record Cold" -- December 21, 2020
Global warming? What global warming? The impact "going green" is having on China.
Wow, this is the kind of story I would expect to see over at Breitbart or ZeroHedge, but here it is, in the NY Times: China running out of energy. The whole city was dark. China rations electricity for millions.
[It should be noted that there have been similar headlines coming out of California the past years.]
I was also surprised, that for some reason, despite this story being behind a paywall, I was able to access it directly without a password. Archived.
From The NY Times (this link will likely be blocked by a paywall):
In the city of Yiwu in eastern China, the authorities turned off streetlights for several days and ordered factories to open only part-time. In coastal Wenzhou, the government ordered some companies not to heat their offices unless temperatures are close to freezing. In southern Hunan Province, workers have reported climbing dozens of flights of stairs after elevators were shut down.
Large swaths of China are scrambling to restrict electricity use this winter, as the country’s rapid economic recovery from the coronavirus pandemic and unexpectedly frigid temperatures have sent demand for power surging. Officials in at least three provinces — where a total of more than 150 million people live — have issued orders limiting energy use, warning of potential coal shortages.
Demand for coal is so high in the mining hub of Henan Province that buyers have been lining up in trucks at the gates of coal mines, jostling for access, according to a recent report in the state-run news media.
Chinese officials have sought to remind citizens of the country’s ambitious environmental goals while reassuring them that there is plenty of energy to keep people warm and the economy humming.
“In general, please believe that our ability to ensure stable energy supply is not a problem,” Zhao Chenxin, secretary general of the National Development and Reform Commission, which steers energy policy, said on Monday.
But the drastic measures point to potential longer-term problems in China’s energy universe, as leaders juggle competing priorities.
Perhaps I will post more of the story later. It's quite fascinating.
With regard to locations mentioned in this story, see the "one-of-a-kind" China map at this post.
Daily Activity Report Posted But Mis-Labeled; No New Permits; MRO With A Re-Entry Permit -- December 21, 2020
From Tsvetana Paraskova:
Cushing, the home of the ‘black gold rush’ and the world’s largest onshore oil storage hub is once again reducing its oil stockpiles as an increase in demand looks set to continue into 2021.
In November, reports suggested that oil was once again being stockpiled in Cushing, Oklahoma. Commercial stocks increased to 61.1 million barrels in mid-November, once again reaching April levels; when oil was experiencing its lowest demand. This figure stood at over 1 million more than the previous week and 39.3 percent higher than the same week in 2019.
However, by the end of November the outlook was brighter as demand started to increase. Stocks dropped to around 60 million barrels, once again heading towards normal levels. This reflects the gradual strengthening of the market to the pre-Covid period, as optimism around the vaccine and the new year drive demand up.
Back to the Bakken
No new permits.
One re-entry permit:
- 17553, 681, MRO, Lil J. Reiss 34-9H, Killdeer, t2/10; cum 264K 10/20;
- 17553, 681, MRO, Lil J. Reiss 34-9H, Killdeer, t2/10; cum 264K 10/20; recent production;
|Pool||Date||Days||BBLS Oil||Runs||BBLS Water||MCF Prod||MCF Sold||Vent/Flare|
- Initial production:
Sundry forms of interest:
- Approved: to re-enter; unit spacing consisting of sections 4/9-145-94; the Killdeer-Bakken pool is defined as that interval from 50 feet from above the top of the Bakken formation to 100 feet below the top of the Three Forks formation. Can drill no closer than the 150' setback from the south boundary and 50' setback from the north boundary and 500' setback from the east and west boundaries.
- MRO plans to re-frack this well; originally an open hole completion in 2009 and drilled when the setbacks were 500' from the respective section line.
- MRO plans to put a drilling rig on this well, clean out the existing lateral to TD and extend/sidetrack the lateral at the last good survey on original lateral at a depth of 19,805.
- MRO plans to drills an approximate 400' extension (north) to a BHL of 20,260' MD, approx 175' FNL of section 4, followed by a 45-stage frack.
- The well will be completed with offset wells to the west are scheduled to frack late 2020.
The wells to the west (still permit only, not drilled):
There is one producing well a bit farther to the west:
- 17314, 431, MRO, Brown 24-9H, Killdeer, t8/08; cum 445K 10/20; this well had a large jump in production 10/14; this well was re-fracked/stimulated 9/21/14 with 1.34 million lbs proppant over 30 stages ( a very small re-frack).
BAKKEN 6-2015 30 6375 6480 2345 5019 3068 1089 BAKKEN 5-2015 31 6800 6672 2633 4905 820 3175 BAKKEN 4-2015 30 6918 7133 2730 5270 1631 2721 BAKKEN 3-2015 31 7670 7408 3390 5486 1320 3159 BAKKEN 2-2015 28 7375 7316 3206 5831 2406 2468 BAKKEN 1-2015 31 10114 10144 5408 7407 4226 1914 BAKKEN 12-2014 17 8699 8735 5160 5689 3033 1627 BAKKEN 11-2014 18 4062 4068 1995 2443 1133 772 BAKKEN 10-2014 29 10727 10682 6558 6850 3832 1699 BAKKEN 9-2014 0 0 0 0 0 0 0 BAKKEN 8-2014 4 219 230 9 154 23 101 BAKKEN 7-2014 31 1109 1099 200 894 516 77 BAKKEN 6-2014 30 1102 902 260 867 473 96 BAKKEN 5-2014 31 1120 1360 231 913 588 19 BAKKEN 4-2014 30 1115 1102 245 912 559 54 BAKKEN 3-2014 31 1153 1136 242 942 577 56 BAKKEN 2-2014 28 1088 950 230 869 526 59 BAKKEN 1-2014 31 1192 1161 236 956 522 124
- lots of work left to be done in the Bakken;
- one reason why I've never been overly worried about the decline rate;
December 22, 2020: a reader asked about "synthetic limestone." From this site, June 4, 2019:
This carbon dioxide removal technology is spearheaded by Blue Planet Rather than have CO2 excess gas from industry be let into the air, it’s captured from the air or industrial exhaust and then turned into a carbonate in solution. (Carbonate is CO2 with an extra molecule of oxygen.) This is combined with either calcium from waste material (another industrial process) or rocks. In the process, limestone forms – calcium carbonate.
Blue Planet breaks this down into pebbles that are used in construction as aggregate – small, coarse stone material added to water and cement to make concrete.
Energy usage: According to Blue Planet, this is a low cost and low energy carbon capture method. Constraints on purity are not that high because the reaction between the carbonate and calcium is itself a kind of extraction that takes care of impurities, serving essentially as another round of extraction.
Goal: Have synthetic limestone used in all concrete projects.
Cost: $ per ton of CO2 removed? Unknown. Per Blue Planet, their process does not add too much of an extra cost; usage depends mostly on willingness to manufacture this way.
Reading through the Blue Planet website, there seemed to be a bit of smoke and mirrors and obfuscation, or perhaps gilding the lily. As soon as a company mentions LifeCycle Carbon Analyses (LCA), I get a bit suspicious of the data. And even more suspicious when Leonardo DiCaprio is a huge financial backer.
Specifics not provided at the press release.
Knife River Corporation today announced it is investing in Blue Planet Systems Corporation to pursue a commercial means of creating and marketing synthetic limestone.
The limestone would be produced using sequestered carbon dioxide.
With Blue Planet's proprietary technology and Knife River providing expertise in construction aggregates, the companies are working together to develop construction-grade rock and ultimately concrete that would have a net-zero or net-negative carbon footprint – while maintaining the strength for which concrete is known.
Knife River is the construction materials subsidiary of MDU Resources Group, Inc.
David C. Barney, president and CEO of Knife River, has joined the five-member Board of Directors at Blue Planet.
Chinese Flu Watch
North Dakota, as of December 21, 2020,
The December, 2020, Legacy Fund deposits posted: about $30 million.
Died This Past Year: July 6, 2020
Silent night, silent night. A US military build-up in the Iranian Gulf? If so, hopefully they all come home safely.
My daughter tells me that the line outside the Target store near her home, earlier today, stretched around the "block" -- around the store in this case -- folks waiting their turn to get in .... social distancing.
Instead of waiting to get into Target, she says she came home and ordered from Amazon Fresh ("free" delivery with Amazon Prime) and will get the items she was going to buy at Target from Amazon. The grocery items will arrive within two hours.
Meanwhile, I just bought a gift for a family friend in Grapevine, TX
-- "clicked" it at 1:03 p.m. today, Monday and will be at their
doorstep, in two days, Wednesday, December 23, 2020.
And, while I'm out of town, I had the mail held, but the USPS scans every bit of mail and I can see the front of everything mailed to us. In this case, two Christmas letters so we can reply even before returning home.
By the way, those banned plastic bags -- they're back in Portland. Can't use reusable bags any more due to Covid. What's wrong with that picture?
It may bear close watching to ascertain whether those extraordinarily low numbers for water to frac the Topaz wells are, indeed, accurate.
While you may well be correct that it is incomplete data, it actually MIGHT prove to be the actual numbers.If so, another step change/milestone will have been achieved in fracturing technology.Long story short (I am poor in explaining this stuff), the water used in fracturing is the medium by which elevated pressure 'opens up' the pre-existing microfissures. In addition, it transports the proppant (sand) which maintains the fissures in an open state.We all know this already.However, the incentive for years has been to accomplish these twin goals with as minimal amount of water as necessary.
The biggest reason - of many - is that the expanding 'tip' of the frac might encroach offset wells (horizontally) and/or potentially go 'out of zone' vertically which invites much higher volumes of unwanted produced water which is already in the rock.If operators - and the Bakken boys are absolutely out front - technology-wise in these matters - have been able to control/contain the fracture geometry to the extent only 2 and a half milluon gallons of water are needed, that would be an incredible achievement.Through the use of diverters (temporary blocking plugs), close real time monitoring of frac propagation, and precise pressure and volume management of the pumped water/frac fluid, these guys may have been able to maintain an elevated 'pressure bubble' of, say, >500 psi, by which the micro fissures will open but the fluid will NOT expand outside the desired geometry (horizontal and vertical) due to diverter/pressure/water volume being tightly and effectively used.Essentially, WPX may have been able to create an environment wherein a high degree of fracturing and proppant placement has occurred while avoiding a 'too big' an area where frac fluid/water has traveled.If this has taken place, it will be a HUGE advancement in field development.
Key will be observing future amounts of water used in completions.
The wells: file reports are not yet available.
- 37322, loc/A, WPX, Topaz 24HUL, Mandaree, t--; cum 24K over 14 days; fracked 9/26/20 - 9/30/20; and record low frack with 2.4 million gallons of water; 83% water by mass; my hunch is that this well was fracked two or three times in quick succession, and FracFocus only captured one of them as of December 21, 2020;
|Pool||Date||Days||BBLS Oil||Runs||BBLS Water||MCF Prod||MCF Sold||Vent/Flare|
- 37321, loc/A, WPX, Topaz 24HA, Mandaree, t--; cum 24K over 12 days; fracked, really, really, fast,9/26/20 - 9/29/20; and record low frack with 2.5 million gallons of water; 84% water by
mass; my hunch is that this well was fracked two or three times in quick
succession, and FracFocus only captured one of them as of December 21,
2020; 23,821 bbls over 12 days extrapolates to 60,000 bbls over 30 days;
|Pool||Date||Days||BBLS Oil||Runs||BBLS Water||MCF Prod||MCF Sold||Vent/Flare|
loc/A and Confidential Status
When wells come off the confidential list / off confidential status, the file report should be available over at the NDIC website. Interestingly enough that is not true for the spectacular WPX Topaz wells.
Not only are the well files not posted, but the "get well file" button is not even visible for these wells.
Someone's doing a good job of keeping data for these wells confidential. Interestingly enough, they are still listed as loc/A when other wells coming off the confidential list with production and no "IP," are generally listed as drl/A. I've talked about this before, about oil companies using the "small print" to extend the confidentiality of their wells.
I wonder how long it took for "them" to come up with this prioritized list?
- Phase 1: healthcare workers, first responders, and really, really, really old people in retirement homes;
- Phase 2: the rest of us.
To meet CDC standards, "they" divided phase 1 into:
- phase 1a: health care workers; politicians
- phase 1b: first responders and Amazon delivery truck drivers
- phase 1c: really, really, really old people in retirement homes
Phase 2 is just one big pool representing about 99% of the American population except those under the age of 16. So, remote learning will still be a thing!
I'm not sure about all of that. This has not been fact-checked.
Someone asked why politicians qualified for phase 1a. Technically, they did not, as politicians. But they qualified as "over 75 years of age living in long-term residential care." That put them in phase 1c but in their role as experts in heath care policy, they qualified as "healthcare workers."
At The Top
What Goes Up, Must Come Down
Remember when operators were paying upwards of $20,000 to $40,000 / acre in the Permian?
I was just curious.
The last time I updated QEP --that was years ago -- it appeared QEP had about 120,000 acres in the Bakken.
So, let's see what $2.2 billion / 100,000 acres is valued at: $22,000. And then getting the QEP Permian for $0. And it's an all-stock deal.
Sources suggest FANG will have 276,000 net surface acres in the Permian:
- following the QEP purchase: and,
- a Guidon Operating purhase announced at the same time
Back of the Envelope
- 40 wells / 1280 acres
- EUR 750,000 bbls/well
- 40 * 750,000 bbls = 30 million bbls
- 30 million bbls / 1280 acres = 20,000 bbls/acre
- 20,000 bbls / acre * 100,000 acres = 2 billion bbls
- $2.2 billion / 2 billion bbls = about a dollar.
- Diamondback Energy agrees to acquire QEP Resources in an all-stock deal valued at ~$2.2B, including QEP's $1.6B net debt as of Sept. 30.
- Consideration will consist of 0.05 shares of Diamondback common stock for each QEP shares, representing an implied value to each QEP stockholder of $2.29/share based on Friday's closing price.
- Crude oil futures are down 4% amid the risk off tone in worldwide markets.
- Diamondback says the deal is accretive on all relevant 2021 per share metrics including cash flow per share, free cash flow per share and leverage, before accounting for synergies, which it anticipates will total $60M-$80M/year.
- QEP's Q3 average production was 48.3K bbl/day, including 30.5K bbl/day in the Permian Basin.
- Diamondback says it also agrees to acquire all leasehold interests and related assets of Guidon Operating LLC for 10.63M shares and $375M of cash.
- Diamondback says the pending QEP acquisition, combined with the previously announced pending purchase of assets from Guidon Operating, will bring its total leasehold interests in the Midland Basin to 276K net surface acres.
- Other E&P stocks that could see elevated volatility as a result of the deal include Callon Petroleum, Centennial Resource Development.
- "Diamondback has the balance sheet and the low costs to begin recovering to normal operating levels in the current environment," Long Player writes in a bullish analysis posted recently on Seeking Alpha;
From The WSJ: Diamondback buys QEP, described as a "west Texas shale driller."
Travis Stice, Diamondback’s chief executive, said the company would shift spending to regions near assets in the northern Midland basin, part of the Permian. It considers QEP’s position in the Bakken Shale of North Dakota to be a “noncore” asset that may be sold.
Javier Blas is the chief energy correspondent at Bloomberg News, co-aurthor of the forthoming ooks, The World For Sale.
December Propane Exports Hit All-Time Highs; Seven Wells Coming Off The Confidential List; WPX Reports Four Huge Topaz Wells -- December 21, 2020
Fracking 101: The WSJ. December 21, 2020. This will be a great article to see how much Ms Jinjoo Lee really knows about fracking. I assume we will see lots of memes without analysis, such as high decline rate.
WTI: drops almost 4%; down $1.87.
QEP: Diamondback Energy will buy QEP; stock deal valued at $2.2 billion
Back to the Bakken
Seven wells coming off confidential list --
Monday, December 21, 2020:
- 37322, loc/A, WPX, Topaz 24HUL, Mandaree, t--; cum 24K over 14 days;
- 37321, loc/A, WPX, Topaz 24HA, Mandaree, t--; cum 24K over 12 days;
- 36683, loc/A, Hess, BL-Iverson C-155-96-2314H-8, Beaver Lodge, Beaver Lodge, t--; first production 6/20; cum 103K 10/20;
Sunday, December 20, 2020:
- 37320, loc/A, WPX, Topaz 24-13HZ, Mandaree, t--; first production, 10/10; cum 28K over 12 days;
- 30818, loc/NC, BR, Cleetwood 31-27MBH-A, Elidah, no production data,
- 37319, loc/A, WPX, Topaz 24-13HB, Mandaree, t--; first production 10/20; cum 24K over 8 days;
- 30817, loc/NC, BR, Phantom Ship 3C UTFH, Elidah, no production data,
It’s been a wild and woolly December in the U.S. propane market. The Mont Belvieu propane price is up by almost 40%, blasting past 70 c/gal on Friday — a level not seen since February 2019, when WTI at Cushing was trading at $57/bbl, $8/bbl above where that price sits today.
Is it simply cold weather goosing demand? Sure, that’s one factor. But it’s really all about exports. Just as 2020 cold weather finally arrived in U.S. propane country, exports hit the highest levels ever recorded. December Gulf Coast export volumes — 92% of the U.S. total — are up 21% over last month, and 39% above December 2019. So both international and domestic demand are pulling hard on supplies at the same time. No wonder propane prices are soaring.
We started this series on winter 2020-21 supply/demand in late November by suggesting that there could be a few gotchas still out there that were not being reflected in the forward propane market. Well, we’ve now seen one of those gotchas. But there’s a lot of winter left to go — in fact, the official start of winter is this morning! Today, we review what’s happened so far in propane markets, and what could be coming next.