Oasis With Three New Permits; Rimrock Renews Nine Permits; BR Reports One Completed DUC On Its Cherry Pad In Haystack Butte -- February 9, 2022

Active rigs:

$89.66	2/9/2022	02/09/2021	02/09/2020	02/09/2019	02/09/2018
Active Rigs	33	15	54	63	58

Three new permits, #38780 - #38782, inclusive:

• Operator: Oasis
• Field: Todd (Williams)
• Comments:
• Oasis has permits for three Peregrine wells to be sited on Lot 2 section 24-154-100;
• the wells will be sited 776 FSL and between 2430 FWL and 2364 FWL;
•  sections 13/24-154-101; 1280-acre spacing (#38780, #38781, #38782)
  

Nine permits renewed:

• Rimrock: four Two Shields Butte wells, and five Charging Eagle wells, all in Dunn County

One producing well (a DUC) reported as completed:

• 37636, 0 (no typo), BR, Cherry Claire 1Y MBH, Haystack Butte, no production data; flared over 19 days in 12/21;
• there are nine "Cherry" wells that have been drilled to depth; not sure if they've been fracked, except for the parent well
  
• the parent well was a pretty good well but abandoned a long time ago
• more on these wells later; these wells are tracked here but they have not been updated in a long time;
  

Update On Whiting's Expansion Plans In The Bakken -- February 9, 2022

Link here. Huge thanks to the reader who sent me the graphic and the article.

This deal was previously but more details were published in this article.

The article begins:  

Whiting Petroleum Corp. has two agreements in hand to expand its operated leasehold in the Bakken Shale, and it has raised its capital budget for 2022. 

More:

The assets span 14,563 net acres and should contribute about 4,500 boe/d net production (67% oil), the company said. The smaller transaction closed in late 2021 and the larger one is slated to close by the end of March.

The assets include 32 net undrilled locations, which Whiting plans to develop in the “near term,” management said.

Whiting also announced capital expenditure guidance of $360-400 million for 2022. 

The company plans to have two drilling rigs and one completions crew operating in the Williston for most of the year. The rigs would operate in North Dakota’s Mountrail, McKenzie and Williams counties.

“While the company has had success with three-mile laterals in its Sanish field, Whiting plans to drill additional three-mile laterals further west in McKenzie County, North Dakota during the year, which will help improve economics on additional inventory,” management said. “As oil prices have rebounded, the company is seeing increased non-operated activity from other operators and expects this trend to continue.”

Whiting expects production to average 91,000-95,000 boe/d for the year, including 52,000-55,000 b/d of oil output.

“The 2022 budget was designed with higher working interests and slightly greater activity,” management said. Whiting “encountered a delay on a five-well pad in January that will impact the timing of production until later in the year.”

Management said even though it “has shifted operations to the Sanish field, the company’s continued focus on sustainability through increasing its high gas capture percentage will result in production volumes not entirely replacing those lost by the delay.” The firm noted that low double-digit inflation has been built into its projections for the year.

Grayson Mill Taking Action On A Lousy Five-Well Pad Northeast Of Williston -- February 9, 2022

This is pretty cool for some mom-and-pop mineral owners. 

This well is absolutely lousy, but it might be getting better:

•  31699, 133, Grayson Mill/Equinor, Shorty 4-9F 4TFH, Stony Creek, t3/18; cum 62K 12/21;

Full production can be found here. 

This well is on a five-well pad northeast of Williston. For a big company like Equinor, this pad was easily forgotten / ignored. But now, Equinor has sold its Bakken assets to Grayson Mill. Whether Grayson Mill plans to grow in the Bakken over the long term or whether Grayson Mill is looking to see what they might have before "flipping" their Bakken assets will only be known over time.

But it certainly looks like they went back to this pad and said, "we can do better." Look how much better this well is doing. The other four wells on this five-well pad also seem much improved. 

So, again, no big deal but nice for mom-and-pop mineral owners in this area. 

 ********************************
The Book Page

Again, if interested in origin of solar system, earth, fossil fuel, origin of life, this is currently the best new book on the market right now for armchair/amateur biologists, geologists, fossil fuel aficionados. 

• How The Mountains Grew
• John Dvorak
• c. 2021
• Pegasus Books, August 2021

If I were introducing students to this subject, I would present this as a 15-minute introductory "lecture." One of the things that frustrated me most in college was that professors seemed not to put things in context when first introducing the subject. Then during the four-month course, professors could have really improved things by going back over what had been covered, and where the subject was headed.

I've never been able to follow the early history of the earth. But here is my understanding. Over time, this will be edited and updated, but it's how I now understand the early earth.

Geologic history: there are four eons --

• Phanerzoic: "visible life"
  
• Proterozoic: first life
• Archean: "the beginning"; the formation of earth, no life (?)
• Hadean: "the unseen"; the formation of the solar system; CAIs.

Rocks and formations:

CAIs: when looking for the oldest rocks in the solar system (earth and the Moon), scientists are looking for calcium-aluminum inclusions. 

Although called rocks, they are minute (a mm or smaller in size) embedded in other rocks; but when one finds a CAI -- a calcium-aluminum inclusion -- one is in the Hadean 

Hadean: birth of the solar system, 4.568 billion years ago, Hadean:

• oldest CAIs: 4.568 billion years ago, and the age of the Solar System
• oldest lunar rock is only a bit younger than 4.568 billion years old
• Hadean eon: birth and development of the Solar System

Archean: formation, development, and final form of Earth

• first Earth: all water, no land;
• controversies still continue how Earth became a "water-planet"
• how Earth became a "water-planet" seems to be the first big unsolved mystery
• the second big unsolved mystery: how land first appeared out of the water
• but land did arise: 4.030 billion years ago
• theories exist to explain first land; all theories attempt to explain "the Super Event"
• "Super Event": formation of continental crust; land
• for the "Super Event" to occur, it required enormous amounts of water
• water + mantle led to granite-like molten rock that solidified into much of the continental crust we see today -- molten granite that solidified; two oldest famous granite rocks: gneiss -- the Acasta Geniss, 4,030 billion year ago;
• one-half of all the continental crust we see today appeared at that time
• so, if the Hadean, was the birth and development of the Solar System, the Archean was the birth and development of Earth
• by the end of the Archean Eon, the Earth was pretty much just as it is today with regard to water and crust
• the tectonic plates were yet to become active and the land masses were not yet in their current configuration
• we now have the third big unsolved mystery: the impact of Theia, which occurred shortly into the Archean Eon
• "First Snowball Earth" was the end of the Archean Eon

Proterozoic:

• coming out of First Snowball Earth, first signs of life identified
• but, for the most part, almost nothing
• life appeared about this time, 2.1 billion years ago: the simple, and very, very small Grypania
• and then nothing for one billion years years; nothing from 2.1 billion years ago to 1.1 billion years ago
• geologists call this "the Boring Billion" -- nothing happened as far as life was concerned
• then, everything died out again
• the Proterozoic was on the precipice of history, life, but then everything died out
• the Proterozoic ended with the "Second Snowball Earth"; 541 million years ago;

Phanerzoic: the age of "visible" life

• first eon with eras:
• Paleozoic Era: old life
• Mesozoic Era: middle life
• Cenozoic Era: modern life
• coming out of the "Second Snowball Earth," life exploded
• the famous Burgess Shale; and the Cambrian.
• the Phanerzoic begins with the explosion of life in the Cambrian
• the Phanerzoic ends with the "Great Dying", the Permian
• in between the Cambrian and the Permian
• Ordovician:
• Silurian: preamble to the next period
• Devonian: the Age of Fish
• Carboniferous: coal
• the Great Dying, the Permian, ends the Paleozoic Era
• the next era: the Mesozoic Era, the Age of Dinosaurs

One last item regarding the eons:

• proposal: new eon and redefine current "early": eons
• new eon: the Chaotian eon, proto-earth
• the eon of CAIs
• starts with first CAIs
• ends with impact of Theia
• Hadean eon, Ur-earth
• begins when earth begins to evolve after impact of Theia
• ends with present size / present mass of earth
• Hadean as an eon is secure
• end of Hadean remains: earliest known crustal rock
• Acasta Gneiss

The Land Masses

Supercontinents

• the landmasses, the supercontinents, the earth as it is today

Cratons:

There were three supercontinents:

• to be defined as a supercontinent, the landmass must contain all (or nearly all) landmasses on earth in one large super-mass or supercontinent
• as big as Gwondana was, it was not a supercontinent
• the first thing to do is try to associate the time periods of the supercontinents 
• only three supercontinents
  
• Colombia
• Rodinia: Russian "to begat"
• Pangea

The Super Event: created first land masses; accounted for about half of all land mass we see today

• The Super Event -- 2.7 billion years ago
• Colombia: 1.8 bya
• Rodinia 1.1 bya
• [Gondwana: 0.6 bya]
• Pangea: 0.3 bya

The "Boring Billion": approximately 2.1 bya to 1.1 bya

• so, in fact, the Boring Billion overlapped with the supercontinent Colombia
• Colombia / Rodinia one large supercontinent 
• even as Rodinia was coming together it was breaking apart
  
• land masses that big (for reasons explained elsewhere) are dry, hot deserts -- not favorable for life
• when Rodinia broke up, the landmasses being much smaller were wet, humid and bacteria began to proliferate
• bacteria resulted in atmospheric CO2 dropping, and the planet cooling
• during Rodinia, the CO2 dropped so severely, the planet froze, and we had the Second Snowball Earth
• life dies, CO2 rose; earth became warm again; glaciers receded
• the breakup of Rodinia -- through cold and hot cycles -- finally life began again
• Rodinia "begat" life on earth again; the "Boring Billion" comes to an end

The Proterozoic begins and ends with "Snowball Earth" (first and second snowball earth)

• Colombia
• Rodinia

So, earlier we had three big unsolved questions:

• how Earth came to become a "water-planet"
• the Super Event: what was the event that created upwards of 50% of all continental crust that we exists today;
• the impact of Theia

We're up to the end of the Proterozoic -- in fact, we are still in the Proterozoic but near the very end, just before the Cambrian.

Ediacara.

Oil Experts In White House Weigh In On Price Of Oil -- Apparently They're Happy With Price Of Oil -- Hope To See More Drilling -- -- February 9, 2022

With the S&P 500 up 50 points in late morning trading, a 10:1 ratio would push the Dow up 500 points. The Dow is currently up about 256 points.

The ten-year Treasury is yielding 1.923%. 

Fed rate hikes: not too long ago, "they" were talking about four rate hikes this year. Then, last week, "they" started talking about seven rate hikes this year. All of a sudden, "they" are talking about far fewer, maybe three rate hikes, and now "they" are saying that regardless of how many rate hikes there are this year, at the end of the year, we might have a Fed rate that is still a "so what" rate. 

WTI: $89.40. 

Idle Chatter -- Tracking Aircraft -- February 9, 2022

I was up much of the night (2:30 a.m. CT - 4:30 a.m CT) tracking aircraft -- mostly US military aircraft -- over Great Britain and Europe.

Generally, military aircraft turn off their "open" transponders and are not tracked by flightradar24, but occasionally US military aircraft are tracked. 

Of interest last night:

• I tracked three F-15's flying out of RAF Lakenheath, England, northeast of London, on training missions to eastern Yorkshire and Scotland and then over the open ocean between eastern Scotland and Norway.
• of the three F-15s two were a pair; one was a singleton. It's unusual (unheard of?) for a singleton F-15 on a training mission; I assume the wingman had his/her transponder turned off
• I tracked a KC-135 refueling plane leave RAF Mildenhall, England, and then follow a refueling track over north-central Europe; I didn't pay close attention, but I believe it was over northern Germany
• more interesting was a KC-135 refueling aircraft also departing RAF Mildenhall some six to eight hours earlier and flying southeast over Europe, across Ukraine and then follow a refueling track for what appeared to be about an hour over the Black Sea; at the time I "caught" this particular KC-135 it was over the east coast of southeastern England on its way back to RAF Mildenhall; the transponder was turned off about fifteen minutes out of RAF Mildenhall;
• but the most fun I had was not what I found overnight but what a reader sent me two (?) mornings ago; screenshot below:
• this is a super-secret RC-135 spy plane; it was about the only active a/c I may not have flown in during my USAF career; even as a flight surgeon I was not allowed on this a/c -- I say "may not have flown" because I honestly cannot remember if I ever had one flight. 
• I "know" the internal layout very, very well but don't know if that's because of the literature I've read or if I had one training flight mission. I guess I could take a look at my flight history but that would take "forever," assuming I could even find it; it's in deep storage. LOL.
  
• anyway, the call sign for this particular RC-135 was "JAKE-ONE-ONE" based on the screen shot below. Note that it also flew out of RAF Mildenhall and then flew a reconnaissance track well inside Ukraine west of the Russian border. 
• note the length of that mission: it was still over the area of operation having departed RAF Mildenhall over seven hours earlier. It will be several hours back to RAF Mildenhall when it departs Ukraine, unless it lands at a USAF base in Germany. 
• this was a particularly bittersweet screenshot for me: I remember working with and knowing many, many crewmembers assigned to RC-135s during my many years in the USAF. Very fond memories but bittersweet because I really, really miss working with and seeing those folks. Had life been different, I might have volunteered my services in retirement to be close to these folks and these missionst
• it was truly incredible what these young folks -- and they were young -- many directly out of high school with two-to-three years of training before their first real-world mission. 
• "Rivet Joint" refers to all aircraft, all personnel, all missions associated with this aircraft. Note the registration: 62-4134, a Boeing C-135 that came off the assembly line in 1962.
• I can come up with any number of reasons why the transponder was "open." 
• the KC-135 I tracked last night had flown a refueling track over the Black Sea just south of the RC-135 in the screenshot below; a KC-135 doesn't doesn't fly that long a distance to refuel one or two aircraft.
  

Weekly EIA Petroleum Report -- February 9, 2022

Weekly EIA petroleum report:

• US crude oil in storage decreased by a pretty significant 4.8 million bbls from the previous week
• WTI: with release of EIA data -- up 0.4%; up 34 cents; trading at $89.70
• WTI: later in the morning as things start to "sink in," WTI went above $90 again; trading at $90.18;
  
• US crude oil in storage now stands at 410.4 million bbls; 11% below the five-year average
• this "deficit" is ahead of expectations of soaring demand as early as two months from now
• "escape from Fauci" will happen much more quickly than analysts seem to pencil in
  
• US imported 6.4 million bbls of crude oil/day; decreased by 0.7 million bopd; but imports averaged  6.6 million bopd, 13% more than the corresponding four-week period last year;
• those who argue "quality of oil" doesn't matter, need to explain why the US imports so much crude oil;
  
• refiners are operating at 88.2% of their operable capacity; pretty much unchanged;
• US distillate fuel decreased by 0.9 million bbls last week; the distillate fuel deficit worsens; the deficit is now 19% below five-year average; 
• along with tighter supplies of fertilizer, farmers watching closely; consumers could be surprised this summer;
• jet fuel supplied was up 30.4% compared with same four-week period last year;

************************************
US Crude Oil Inventories

Updates

Later, 10:55 a.m. CT: literally, less than an hour or so of writing the note below, a contributor over at Seeking Alpha had an article with this subject heading: "Running Out Of Oil? DOE Inventories Falling Fast." Link here. 

The lede:

The Department of Energy provides weekly updates on the world's largest observable inventory of oil and oil products; those stocks are falling at a near record pace in 2022. Each oil market strategist has their own preferred metric, and the weekly reports are volatile, but when combining all the metrics (commercial oil, strategic reserves, oil products, etc.) and observing trends over several reports, it's clear inventories are falling fast. In the first five weeks of the year, the US normally builds several million barrels of inventory ahead of the summer driving season; this year, inventories have fallen by almost a million barrels a day.

More:

In a break from recent history, there doesn't appear to be a strong supply response to rising prices and declining inventories.

When Chevron reported Q4 results two weeks ago, the Company guided the street to flay YoY production in 2022.

Exxon did the same, as did BP and Conoco.

Bakken producer Whiting announced they plan to increase capex 55% in 2022 and acquire assets to generate only ~3% production growth.

Driller Nabors  reported earnings Tuesday and indicated they don't expect to add any rigs outside the US in Q1.

Although the inability of OPEC+ to hit increased production targets has become consensus, there's some debate on the US's ability to meet growing demand.

This week Citi oil strategist Ed Morse advised clients to short the oil market, while famed oil investor Pierre Andurand suggested inflation-adjusted oil prices are relatively low by historic standards (the 2008 high of $147/b would equate to $222/b today).

The Biden administration for their part has indicated "all options are on the table" for managing energy prices. Spokesperson Psaki said yesterday the White House is talking with oil-producing countries about production increases, and oil consuming countries about strategic reserves releases. Neither tactic has done much to control prices in recent months.

Although a White House agreement with Iran to allow for additional exports would create incremental supply.

With US E&Ps set to report earnings, the market is sure to be focused on the allocation of cash flow between shareholder returns and production growth.

The prospect of accelerating US production would have been considered a bearish indicator only a few weeks, but may become considered healthy given current market conditions. It will be interesting to see if DOE forecasts for oil surpluses are adjusted after seeing production plans from US E&Ps in coming weeks.

Original Post

For the archives: global crude oil inventories.

• two schools of thought
• one school: demand will exceed supply through the end of this year; OPEC has no spare capacity;
• the other school of thought: things will work out just fine; OPEC has enough spare capacity to keep crude oil / gasoline prices from going ballistic

• Biden White House 
• publicly is in the second school of thought: adequate crude oil available; producing countries simply need to produce more oil
• apparently the White House has a long list of producing countries; but at the end of the day, there are only three:
• US, Saudi Arabia, and Russia
  

• those who feel OPEC+ has no spare capacity point to the data; everyone else believes in unicorns
  

• For investors: does it matter?
• if OPEC+ lacks spare capacity, oil bulls should do very well;
• if OPEC+ has spare capacity but prefer to "manage" their assets, oil bulls will also do well
• in either scenario oil bulls should do well as far out as the eye can see -- about eight months

• US consumers:
• should know more when the driving season begins in about four months;
• interestingly enough, if demand accelerates starting March, 2022, with "end" of Covid-19, we might have more tea leaves to interpret before the actual driving season begins
  

• Historically: higher prices have led to increased production; groups to watch as oil trends toward $90 / bbl:
• first tier:
• US
  
• US shale operators
• US offshore (ex: Guyana)
• Russia
• Saudi Arabia
• second tier:
• OPEC - some Africa (outside Saudi Arabia, Russia, Libya)
• Iran: in second tier only if one believes Biden will lift sanctions
  
• Mexico: I'm being generous not moving Mexico to background noise
  
• Canada: without Keystone XL and adequate seaports, pretty much flat-lined production;
  
• background noise:
• Ecuador -- not OPEC
• some Africa including Libya  -- OPEC
  

No Wells Coming Off Confidential Status -- February 9, 2022

Fauci: says it's over.

Ottawa: I can watch this video at the link over and over and over. By the way, this occurred when Ottawa police started confiscating truckers' fuel. 

Since then, a Canadian judge ruled that unlawful theft and ruled that the fuel must be returned to the truckers. There is not video of Canadian police returning that illegally confiscated fuel back to the truckers. 

Meanwhile, the city "ordered" its contracted towing companies to start towing parked trucks out of downtown Ottawa. Every Ottawa towing company said, "no." The city then contacted towing companies outside of metropolitan Ottawa and the city has found no takers. The only "win" for the city: a single judge has ruled that honking in downtown Ottawa is now illegal. I'm not sure judges can do that: make their own laws -- I assume he was using some law with regard to "unnecessary noise" or causing a nuisance. 

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

Active rigs:

$89.46	2/9/2022	02/09/2021	02/09/2020	02/09/2019	02/09/2018
Active Rigs	34	15	54	63	58

No wells coming off confidential list.

RBN Energy: energy transition slams into energy reality. 

The illusion of a smooth energy transition was swept away in 2021, with the drive toward decarbonization running headlong into the reality of energy markets. It is now clear that the transition and its effects are permeating all aspects of supply and demand, from the chaos in European natural gas, to producer capital restraint in the oil patch, to the rising impact of renewable fuels and, of course, the escalating roadblocks to pipeline construction. Gone are the days when traditional energy markets operated independently of the energy transition. 

Today the markets for crude oil, natural gas, and NGLs are inextricably tied to renewables, decarbonization, and sustainability. It’s simply impossible to understand energy market behavior without having a solid grasp of how these factors are tied together. That is what School of Energy Spring 2022 is all about! In today’s RBN blog — a blatant advertorial — we’ll highlight how our upcoming conference integrates existing market dynamics with prospects for the energy transition.