Friday, June 18, 2021

The Elmore Madison Unit

Elmore Madison Unit:

  • about a 4-section oil field, right along the Canadian border; unitized; targets the Madison formation;
  • east-to-west, pretty near dead center of Renville County;
  • producing wells in that field, posted June 18, 2021, unitized spacing:
    • 8524, IA/65, Murex, Harkness A 1-R, Elmore, t12/70; cum 175K 3/18; target: Madison; the "R" is not new; it has been there since at least 1971; it refers to a "replacement" well;
    • 3049, 125, Murex, Harkness 4-27, Elmore, t12/62; cum 435K 4/21; target: Madison;
    • 12235, 108, Murex, Harkness 3-27, Elmore, t3/88; cum 130K 4/21; target: Madison;
    • 3016, 80, Murex, Harkness B 2, Elmore, t10/61; cum 418K 4/21; target: Madison;
    • 10261, 108, Murex, Harkness B-3, Elmore, t9/83; cum 111K 4/21; target: Madison;
    • 3108, 135, Murex, T. P. Clifford 1-A, Elmore, t3/62; cum 354K 4/21; target: Madison;
    • 9791, 12, Murex, Burrell 3-B34, Elmore, t1/83; cum 153K 4/21; target: Madison;
    • 3164, 209, Murex, C. F. Burrell 2, Elmore, t5/62; cum 319K 4/21; target: Madison;
    • 10314, 10, Murex, Mott A 3, Elmore, t9/83; cum 55K 4/21; target: Madison;
    • 3170, 112, Murex, Mott A 1, Elmore, t6/62; cum 122K 4/21; target: Madison;
    • 8108, 105, Murex, Keith 23-35, Elmore, t1/81; cum 95K 4/21; target: Madison;
    • 8989, 27, Murex, State of North Dakota 1-36, Elmore, t11/81; cum 53K 3/20; target: Madison;

Gasoline Tax To Pay For That Trillion-Dollar Green Energy Infrastructure Bill? June 18, 2021

Have the Dems finally found a tax they don’t like?

From Charles Kennedy:
Democrats in Washington have become opponents of a possible gas tax increase to pay for the infrastructure bill as the Biden Administration is vowing not to raise the tax burden on households earning less than $400,000 annually.

"When you have Jeff Bezos making as much money as he is, it is not fair for us to then raise the gas tax," Congressmember Pramila Jayapal of Washington state told The Hill.

Progressive politicians and environmental campaigners want the U.S. to "tax the rich" and not burden the working Americans further with taxes such as a gasoline tax.

Jayapal tweeted last week, "There's NO reason why billionaires like Jeff Bezos should be paying LESS in taxes than working Americans — or paying NOTHING at all. We're going to pass a wealth tax, level the playing field, and make sure the ultra-rich pay their fair share."

Many lawmakers in Washington have realized that increasing the gas tax to pay for the infrastructure plan is not the right course or right decision now, according to The Hill.

"Now"? Is increasing the national gasoline tax ever the right thing to do when the richest folks are not paying federal income tax and are now buying federally-incentivized EVs which pay no road tax at all.

"The ultra-rich"? That would be a start. But how about the simply "rich" also paying their "fair share"?

"Democrats" are becoming opponents of a possible gasoline tax increase to pay for this infrastructure bill. I'm curious: do the Republicans support an increased federal gasoline tax? Asking for a friend.

It's being reported that eight famous US billionaires paid no federal income taxes...

In 2018, Tesla founder Elon Musk, the second-richest person in the world, also paid no federal income taxes. Michael Bloomberg managed to do the same in recent years. Billionaire investor Carl Icahn did it twice. George Soros paid no federal income tax three years in a row. The list includes Warren Buffett, Bill Gates, Rupert Murdoch and Mark Zuckerberg.

We already have a wealth tax on middle class investors. It's called RMDs.

Hunt With Five New Permits; Sixteen Permits Renewed -- June 18, 2021

Active rigs:

$71,64
6/18/202106/18/202006/18/201906/18/201806/18/2017
Active Rigs2112626457

Five new permits:

  • Operator: Hunt
  • Field: Smoky Butte (Williams); Green Lake (Williams)
  • Comments:
    • Hunt has permits for two Blue Ridge wells and three Smoky Butte wells;
    • all five wells will be sited in lot 3 section 6-159-100
    • the wells will be sited between 265 FNL and 345 FNL and between 1375 FWL and 1460 FWL;

Sixteen permits renewed:

  • BR (7): two Shafer permits, two Sandie permits, and three West Kellogg permits, all in McKenzie County;
  • Murex (3): one EMU C permit; one Michael Douglas permit; and, one EMU A permit; the EMU permits in Renvillle County; the Michael Douglas permit in Williams County; I believe EMU refers to "Elmore Madison Unit." See this post.
  • Whiting (3): three Link permits, all in McKenzie County;
  • Petroshale (2): two Anderson  South permits in McKenzie County;
  • Rimrock: a Two Shields Butte permit in Dunn County;

Has anyone noticed how few DUCs are being reported?

Natural Gas Fill Rate; Gasoline Demand -- Mixed Pictures -- June 18, 2021

Apparently there was some re-classification of natural gas storage data yesterday which I understand not at all (maybe a reader can explain it to me) but be that as it may, here is the EIA data for the week:


Gasoline demand, link here:

Combining this graph with the jobs report yesterday, short term, it appears, things are not moving as quickly as the optimists had hoped, with regard to the US economy. Folks need to be reminded this is .... hellooooo ... summer ... things are going to be slow until / through October, 2021. The president's goal was for 70% of American to have at least one vaccination by July 1, 2021 and yet the world as a whole is running about 3%. Is that not amazing? The US is trending toward 70% and the rest of the world is trending toward 7%. 

And, if gasoline demand and the jobs report was not sobering enough, the Canadian announcement in the last 24 hours: cross-border movement between the US and Canada will be extended through July 21, 2021. 

Wow, the Canadians must really hate us. LOL. Why wouldn't they? Trump? Good, bad, or indifferent, Biden has been so much worse for Canada.

a


One Or Two Or Three E&P Companies Weren't Simply Lucky Finding The Best Spots In The Bakken -- June 18, 2021

This post is not ready for prime time. 

See this note from earlier today.

The reader's note allows me to post something I have thought about for years but have not previously posted. 

It is conventional wisdom there are sweet spots in the Bakken Basin. Years ago I posted those "heat maps" and they remain linked at the sidebar at the right. 

Sweet spots are determined by a host of factors, some theoretical, but at the end of the day, are confirmed by actual results. 

Exhibit A: we have great "heat maps" for the middle Bakken but not similarly great "heat maps" for the second or third bench of the Three Forks. We have "heat maps" for the first bench based on limited completed well information. 

The way the Bakken is administratively "organized," one often finds E&P operators drilling just one or two miles from each other and yet the results among operators can be incredibly variable. Across the basin, the results are fairly consistent for the same operator. If given the timeline, the IP, the first six months of production, and cumulative production after three years, it is generally possible to identify a BR well from a CLR well from an MRO well from a Petro-Hunt well. 

On that continuum, Slawson wells look more like MRO wells than CLR wells. Oasis wells look more like CLR wells than MRO wells. 

If, as a mineral holder, you disagree with me, ask yourself, whom would you rather have to drill "your" well in the Bakken: MRO, Petro-Hunt, CLR, Oasis, BR, Chesapeake, or OXY? 

I agree that some locations in the Bakken are (much) better than other locations in the Bakken. But I don't think the geology alone explains some of the huge differences we often see in the Bakken.

Break, break.

Most analyses and discussions about tight oil field are very similar to that of conventional oil fields. There's a huge different between shale/tight/unconventional field development and conventional oil field development. 

A lot of folks seem to think that the oil industry does not "learn" over time. These folks seem to think that E&P operators don't spend more on improving technology. There seems to be no talk about the expertise, experience, track record of the geologists and the guys and gals actually doing the drilling. 

Thesis.

I think the emphasis on "sweet spots" and "heat maps" is over-rated. 

My hunch is that over time as there is more consolidation in the Bakken, we will see more "Tier 3" and "Tier 2" drilling locations be re-classified as Tier 1 locations. The reclassification, of course, is based more on price of oil than anything else but if prices stay level or decrease, historically better operators acquiring "bolt-on" acreage will result in reclassification of these tiers. 

Exhibit A: if a well's production is simply based on the geology, why do wells re-drill right next to a well that is plugged and abandoned for economic reasons? 

Thoughts:

I have trouble believing that MRO and Slawson just "happened" to find the "best" areas in the Bakken. I think operators like MRO and Slawson are doing something others are not doing. Petro-Hunt in the Charlson may be an exception. The Charlson hseems really, really interesting, and Petro-Hunt doesn't drill many wells. But every Petro-Hunt well is watched with great anticipation.

Reader Comments On Consistently Spectacular MRO Wells And The Role Natural Gas Injection Is Playing -- June 18, 2021

See #37403 below and also look at the other wells on that pad (see link below). After posting that data below, a reader who knows this and follows this a lot better than I do, wrote:

Going over the production numbers from several of these MRO wells reveals some interesting data, specifically that gas lift is being used right at the outset
While there still seems limited info available online as to the 'nuts and bolts' of latest gas lift implementation, a few take aways may be of some interest ... 
Those MRO wells use about 135,000/145,000 cubic feet of gas per day that is not - originally - sold. 
This gas is being re-injected back down the wells to - at a minimum - boost the 2 mile vertical lift that the oil needs to make it to the surface. 
As this recovered gas is both counted as production and then re-injected downhole, it is essentially being recycled, not consumed. (I imagine much of the surface hardware is being powered by the natgas which, naturally, is being consumed).

Of interest, perhaps, is that well #37403 does not seem to have any of its own gas re-injected. However, two of the other wells show a differential of ~177,000 cubic feet per day, implying that some of 'their' gas is going down #37403. [Reader is referring to the wells at this link, also linked below.]

Some ripple effects from this gas-lift-from-the-start approach should be ...
  • slightly higher well costs to incorporate the 'jewelry' (hardware/valves that make up the gas lift system)
  • much higher initial oil recovery
  • much lower operating costs as expensive, chronic  ESP problems are eliminated
  • and, as seems to be the case with older gas lift wells, the combined use of the traditional pumpjacks with gas lift offers much better (aka shallower rate at a higher volume) production profiles.
All this (virtually ubiquitous gas re-injection) may pave the way for the Next Big Thing in the Shale Revolution ... EOR by way of natgas-induced formation pressure increase/miscible 'sweeping' that will simply rock the Peak Oilers on their collective butts.

 LOL. Well said.

Re-posting:

One well coming off the confidential list -- Thursday, April 1, 2021: 1 for the month, 1 for the quarter, 82 for the year:

  • 37403, A/AL, MRO, Standfest USA 42-8H, Reunion Bay, first production, t--; cum 190K 2/21; the "Standfest pad" wells are tracked here. Even the skeptics / cynics are admitting these are pretty awesome wells.
PoolDateDaysBBLS OilRunsBBLS WaterMCF ProdMCF SoldVent/Flare
BAKKEN2-20212837394373561814467384650892057
BAKKEN1-20213137512374861997547976456922077
BAKKEN12-20202130168301891773636569347450
BAKKEN11-20201125088251731969332424308710
BAKKEN10-20202059973595014953971840632575026

Two Wells Coming Off The Confidential List -- June 18, 2021

WTI: that didn't take long. After dropping to $70 in one day, back up to $71.88. We're being played, but it's okay. It gives us buying opportunities. I assume it's due to a tropical storm.

***************************************
Back to the Bakken

Active rigs:

$71.88
6/18/202106/18/202006/18/201906/18/201806/18/2017
Active Rigs2112626457

Two wells coming off the confidential list -- Friday, June 18, 2021: 70 for the month, 94 for the quarter, 172 for the year:

  • 37778, drl/NC, MRO, Norman USA 11-5H, Reunion Bay, no production data,
  • 34332, loc/NC, Ovintiv, Kestrel 154-96-33-28-2H, Grinnell, minimal production

RBN Energy: renewable natural gas doesn't stink.

With Environmental, Safety, and Governance (ESG) conscientiousness on the rise and the push to rein in greenhouse gas emissions gaining momentum by the day, many traditional players in the hydrocarbon sector are considering alternative energy sources to invest in. Two key questions they ask themselves when evaluating these options are: Does it make economic sense once you’ve factored in tax credits and other incentives, and can it be incorporated into North America’s existing energy infrastructure. Wind and solar power clearly fit the bill. So does renewable diesel, which also benefits from governmental programs and that it can be blended into petroleum-based diesel. Another alternative gaining traction is renewable natural gas, which is “produced” by capturing methane from landfills and wastewater treatment plants. Today, we discuss the potential and pitfalls of “the notorious RNG.”