This guy follows energy? Tells me all I need to know about his understanding of US shale: Randy Brown at SpotMonthEnergy said,
"I was at a party Saturday night in Dallas and an engineer was telling me that one of the major drilling in the Permian can drill 10,000 feet down and two miles horizontally in ten days, "spud to TD." Randy commented: "That seems impressive."
This is scary that someone who follows US oil did not know this. Oil companies have been doing that for several years in the Bakken and I've been reporting it all that time; in fact, now I'm beginning to think I was among the first outside the industry that spotted it.
And, oh, by the way, the gold standard is now five to seven days, spud to TD: one day for the vertical; one day for the curve; and three days for the lateral. Randy is definitely a nominee for the 2021 Geico Rock Award.
How low can you go? China's oil stockpile is as "low as it can go" ahead of OPEC+ meeting. Giovanni. Direct to Bloomberg. From Alexander Stahel, "we covered this last week. China's low crude stock will require substantial buying in the coming weeks and months. Link here.
Focus on Fracking, Halloween edition: posted. Lede:
- gasoline supplies fall to a 47-month low;
- distillate supplies to an 18-month low;
WTI: flirting with $84, again.
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Back to the Bakken
Active rigs:
| $83.97 | 11/1/2021 | 11/01/2020 | 11/01/2019 | 11/01/2018 | 11/01/2017 |
|---|---|---|---|---|---|
| Active Rigs | 31 | 14 | 57 | 68 | 53 |
Three wells coming off confidential list --
Monday, November 1, 2021: 3 for the month, 3 for the quarter, 254 for the year:
- 36772, conf, Hess, BL-A Iverson-155-96-1312H-10, Beaver Lodge,
| Date | Oil Runs | MCF Sold |
|---|---|---|
| 9-2021 | 16523 | 0 |
| 8-2021 | 14399 | 10811 |
| 7-2021 | 20373 | 14051 |
| 6-2021 | 8887 | 14211 |
| 5-2021 | 18246 | 27764 |
| 4-2021 | 5 | 812 |
- 36069, conf, Enerplus, Gabbro 147-93-16B-21H, Moccasin Creek,
| Date | Oil Runs | MCF Sold |
|---|---|---|
| 8-2021 | 31795 | 21165 |
| 7-2021 | 27800 | 19030 |
| 6-2021 | 30927 | 20890 |
| 5-2021 | 28213 | 12767 |
- 36066, conf, Enerplus, Pumice 147-93-16B-21H, Moccasin Creek,
| Date | Oil Runs | MCF Sold |
|---|---|---|
| 8-2021 | 17349 | 11524 |
| 7-2021 | 18884 | 12879 |
| 6-2021 | 15655 | 10574 |
| 5-2021 | 9677 | 4332 |
| 4-2021 | 2773 | 1476 |
Sunday, October 31, 2021: 28 for the month, 28 for the quarter, 251 for the year:
- None.
Saturday, October 30, 2021: 28 for the month, 28 for the quarter, 251 for the year:
- None.
RBN Energy: midstream conundrum threatens gas production growth long term.
The U.S. natural gas market is primed for supply growth. The Lower 48 supply-demand balance is the most bullish it has been in years. Exports are at record levels and poised to increase with additional terminal expansions on the horizon, while international prices have recently notched record highs. Henry Hub gas futures prices are at the highest in over a decade. So, producers will unleash a torrent of natural gas, triggering a midstream build-out like we’ve seen in the past, right? Not so fast. The world has changed. For additional capacity to be built, you need producers or utilities to commit to use it. But Wall Street has drawn a hard line when it comes to capital and environmental discipline in the energy industry and regulatory approvals can also be an uphill battle. Therein lies the conundrum. More midstream capacity is needed for production to grow, but it’s harder than ever for that infrastructure to get built, which means constraints for some period of time are all but a certainty. Natural gas may not be as constrained as crude oil, but it is already butting up against capacity in parts of the Permian and Marcellus/Utica. And in the crude-focused Permian, those gas constraints will also cascade to crude production. In today’s RBN blog, we consider the implications of the new world order.
It used to be that higher prices meant higher production. If production outgrew transportation capacity and constraints trapped supply in the basin, then supply prices cratered and price spreads to downstream markets blew out, providing the economic incentives for midstream developers to swoop in and expand or build pipeline capacity to increase connectivity and balance the market again. Unable to grow volumes, producers were resigned to pay up for firm, long-term capacity to get the pipelines built. We saw this play out again and again over the past several decades, and during the Shale Revolution, midstream expansions were one of the stars of the show. During this time, the master limited partnership (MLP) model, in particular, became the mainstay of midstream infrastructure development for its ability to provide access to lower-cost capital and a great acquisition vehicle, primarily due to its tax benefits.
As shale drilling and production activity ramped up, it called for dramatic changes in the natural gas infrastructure. MLPs mushroomed and accelerated midstream development across the shale landscape, including the Haynesville and later the Marcellus/Utica shales, which, in the latter case, drove the Great Flow Reversal — a mid-decade phenomenon that flipped gas flow patterns across just about every legacy long-haul pipeline in the eastern U.S. Without this midstream renaissance, Lower 48 gas production volumes would be nowhere near where they are today.
I agree that it's old news that we get faster at drilling. Been reading for years about the increased rig productivity. Heck EIA has published the drilling productivity report since OCT13. And companies have hyped productivity increases in their press releases and IR Powerpoints for years before that.
ReplyDeleteI'm not sure if you are exactly outside the industry or first to write about it, but I've seen stuff on Seeking Alpha for a decade+ (especially if you look at shale gas) or in the Wall Street Journal or Houston Chronicle. I.e. popular press.
I do think one has to be careful about looking at a record well completion and equating it to the average. Average well will be slower than record because of luck on drill bit changeouts and the like. Also, to really understand average rig productivity, one needs to include the moving time (intra and inter pad moves).