Weekly Number Of Active Oil Rigs Meaningless -- June 7, 2019

Locator: 10010RIGS.

I've maintained for quite some time, probably since 2014 or thereabouts, that rig counts no longer matter (not to be taken out of context).

I was reminded of that when I saw this headline over at oilprice.

For the record:

• oil rigs fell by 11 (to 789; or a decrease of 1.375% -- big whoop!)
• natural gas rigs actually increased by 2 (to 186, or an increase of 1% -- another big whoop!)
• overall, a net decrease of 9 rigs (or a decrease of 0.9% -- not even a 1% decrease and that's the big headline -- wow -- completely missing the point)

Much more relevant: number of wells offline for operational reasons and wells drilled to depth but not completed (DUCs). I track that in the Bakken at this site. These are wells that could be brought on line within days in some cases, weeks in all cases, if necessary.

By my reckoning there are upwards of three-years worth of inactive wells/DUCs in the Bakken. Stop drilling in the Bakken today, and the state could clip along for three years just be bringing those wells into production.

And that doesn't even count the tens of thousands, perhaps twenty thousand wells that should be re-fracked in the Bakken with modern completion strategics and state-of-the-art technology.

I don't track the numbers in the Permian but my hunch is that at some point in the future, the similar data point in the Permian will be upwards of 10 times what it is in the Bakken.

I track the number of DUCs and inactive wells in North Dakota at this site.

One can also track posts on DUCs using this "search."

Related tags:

• DUCs
• Fracking backlog

Much more relevant than rig counts:

• number of DUCs
• fracking backlog
• drilling rig efficiency
• the EPA drilling reports (the "dashboards")

By the way, the "raw" number of rigs -- worldwide -- added or taken down is incredibly useless information. If one wants to consider the number of rigs as somewhat meaningful, we need to know:

• regionally, the rig numbers, not the global numbers; and, 
• rigs being added or taken down on a percentage basis

Even when the number of active rigs in North Dakota was hitting "modern" lows, North Dakota was still setting all-time production records.

Some oft-visited posts:

• Update regarding ND DUCs, June 29, 2019 
• DUCs -- It's Complicated, January 20, 2019
• DUCs in North Dakota continue to increase, August 17, 2018
• What's with all the DUCs? RBN Energy -- February 14, 2017
• Update on DUCs -- Rystad Energy, August 5, 2016
• Thoughts on DUCs? NY Times -- February 19, 2016
• DUCs -- Rigzone Analysis -- December 15, 2015

Bakken DUCs Rise To Nearly 1,000 -- July 25, 2016

The Emergent Group is reporting today that Bakken DUCs rise to nearly 1,000. See graph and data at this link. A reminder: CLR said fracking operations would resume when oil returned to $50 to $55. Not only is oil back in the mid-$40s, oil is a) now below $43; b) trending down; and, c) talk on the street suggesting the price of oil could go significantly lower (again).

The tea leaves certainly suggest we won't see $60 oil by the end of the year, and there is even question whether we will get into "CLR's fracking range."

In the July, 2016, Director's Cut (May, 2016, data), the NDIC reported that after falling a bit earlier this year, DUCs in the Bakken did increase slightly, by 39 from last report, up to 931.

**************************

LUCA: The Ancestor Of All Living Things

This story was a front page story over at the on-line edition of The New York Times. 

A surprisingly specific genetic portrait of the ancestor of all living things has been generated by scientists who say that the likeness sheds considerable light on the mystery of how life first emerged on Earth.

This venerable ancestor was a single-cell, bacterium-like organism. But it has a grand name, or at least an acronym. It is known as Luca, the Last Universal Common Ancestor, and is estimated to have lived some four billion years ago, when Earth was a mere 560 million years old.

Genes that do the same thing in a man and a mouse are generally related by common descent from an ancestral gene in the first mammal. So by comparing their sequence of DNA letters, genes can be arranged in evolutionary family trees, a property that enabled Dr. Martin and his colleagues to assign the six million genes to a much smaller number of gene families. Of these, only 355 met their criteria for having probably originated in Luca, the joint ancestor of bacteria and archaea.Genes are adapted to an organism’s environment. So Dr. Martin hoped that by pinpointing the genes likely to have been present in Luca, he would also get a glimpse of where and how Luca lived. “I was flabbergasted at the result, I couldn’t believe it,” he said.

The 355 genes pointed quite precisely to an organism that lived in the conditions found in deep sea vents, the gassy, metal-laden, intensely hot plumes caused by seawater interacting with magma erupting through the ocean floor.

Deep sea vents are surrounded by exotic life-forms and, with their extreme chemistry, have long seemed places where life might have originated. The 355 genes ascribable to Luca include some that metabolize hydrogen as a source of energy as well as a gene for an enzyme called reverse gyrase, found only in microbes that live at extremely high temperatures, Dr. Martin and colleagues reported in Monday’s issue of Nature Microbiology.

Until the book comes out (which I am sure will happen), this is a great book that will bring you up to speed regarding LUCA: The Vital Question: Energy, Evolution, and the Origins of Complex Life, Nick Lane, c. 2015. Bill Martin figures prominently in Nick Lane's book. 

Update On DUCs From 1Q15 -- March 28, 2016

The Saudis opened the spigot in the last quarter of 2014.

We started seeing DUCs shortly after that.

I last updated the wells released from the confidential list in 1Q15 back on February 29, 2016. Of the approximately three dozen DUCs at that time, four of them were fracked.

I went through the list again today. One more DUC was fracked:

• 28431, 293, Zavanna, Tomahawk 10-3 2TFH, t11/15; cum 10K 1/16;

Of the earlier 1Q15 DUCs fracked they were mostly (all?) Zavanna wells.

**************************

4Q14 DUCs

Reviewing the list of wells that came off the confidential list 4Q14 (the quarter that the Saudis opened the spigots) there are still about three (3) DUCs from 4Q14.


The following wells were DUCs but have been fracked since last reviewed:

• 28099, 174, Hess, EN-Dobrovolny A-155-94-2413H-7, Manitou, t1/16; cum --
• 26676, 630, Zavanna, Nelson 3-10 3TFH, Long Creek, t12/15; cum 29K after 48 days
• 26677, 695, Zavanna, Nelson 3-10 2TFH, Long Creek, t12/15; cum 34K after 47 days
• 27980, 462, Hess, BLSU E-406, Beaver Lodge, a Silurian well drilling unit, 9,760 acres; t5/15; cum 2K after about 40 days over 4 months; a vertical hole targeting H2S in the Interlake Formation (Silurian); a 180-foot core was also taken from the lower Stonewall Formation to the Red River Formation; 1-stage stimulation; 15% acid; no proppant; stimulated 6/20/2014; so it was drilled back in April, 2014; stimulated shortly thereafter, but not producing until a year later; spud April 12, 2014; drilling rig, May 26, 2014; cease drilling, June 16, 2014; TD, 13,000 feet; vertical; stratigraphic map of ND here; the pool is the Silurian pool; the bore went through the Interlake, the Stonewall, the Gunton member and the Stoughton member of the Stony Mtn formation, and landed in the Red River Formation which are in the Ordovician (below the Silurian) according to the stratigraphic map link. The target was the Interlake formation at 11,557 feet but core was taken all the way down to the Red River. This well will produce a fair amount of natural gas, I assume. If I recall, it was during this period that the Hess natural gas processing plant in Tioga was not at full capacity; maybe that was one reason why it was a year from spud to production. Just a thought.

CLR Has Just Released A New Presentation -- Dated March 22, 2016; Look At The Number Of DUCs Projected For Year-End 2016

Disclaimer: this was done quickly; there will be typographical and factual errors. I often use shorthand, round numbers, etc. Do not use this information on which to base decision-making. If this information is important to you, go to the source: http://phoenix.corporate-ir.net/phoenix.zhtml?c=197380&p=IROL-Presentations. This is the March 22, 2016, presentation.

Sixteen slides.

Some numbers rounded; ranges may differ.

Slide 3: emphasis on STACK/SCOOP

Slide 4:

• 2016 - CAPEX slightly less than $1 billion to maintain 200,000 BOEPD
• cash flow neutral at ~ $37 WTI
• $200 million cash flow impact +/- $5 move in WTI
• 19 operated drilling rigs (32% reduction from 2015 average)
• 2.5 completion crews in South; 0 to 1 in the Bakken

Slide 4, continued:

• over-pressured STACK shows 3X production uplift compared to normally-pressured wells
• enhanced completions in SCOOP generating 35% increase in 180-day IP rates
• Bakken DUCs provide catalyst for high ROR with lower incremental cost in 2017

Slide 5, non-acquisition CAPEX:

• Bakken drilling: $320 million
• SCOOP/STACK drilling: $400 million
• Slide 5, continued, DUCs:
• Bakken: 195 year-end 2016; compare to 135 year-end 2015
• Oklahoma: 50 year-end 2016; compare to 35 year-end 2015

Slide 6:

• Bakken: 1,045,000 acres
• Oklahoma: 850,000 acres
• Slide 13, the Bakken
• average EUR up 13% from 2015
• 2016 target average EUR: 900,000 boe/well
• 2015 target average EUR: 800,000 boe/well
• finding/development costs cut by 50% in 2015 (per boe)
• increasing DUC backlog (see above
• year-end DUC EUR average of 850,000 boe

Slide 14: costs and drill times

• company records:
• two-mile lateral drilled in 2.2 days
• three-mile lateral drilled in 4.7 days
• completion cost reductions
• fresh water: down 55%
• water handling: down 55%
• stimulation services: down 55%
• perforating: down 30%

Slide 15: balance sheet

• no near-term debt maturities
• earliest is $500 million 11/2018

Break-even costs as posted by CLR at the above presentation:

Nothing In This Article That Regular Readers Don't Already Know; How Drillers Protect Assets -- For The Archives -- March 9, 2016

Reuters is reporting (archived)

Something is awry in the beleaguered U.S. shale patch: older wells, which normally gush oil or natural gas in their first few months before rapidly depleting, are not petering out as quickly as they should.

When oil prices began falling a year and a half ago in the deepest rout in a generation, many analysts expected U.S. crude production, especially from fracking in the new shale plays that contributed to a global supply glut, to follow quickly.

Producers, such as Continental Resources Inc and Whiting Petroleum Corp, have slashed spending on almost everything, in some cases even leaving drilled wells unfinished to conserve cash and wait for a sustained turnaround in prices.

With oilfield activity suddenly contracting, production from a dwindling number of freshly fracked wells would be unable to compensate for the rapid depletion of older wells. Yet that long-anticipated turning point has only just begun to emerge - partly because producers had a couple more tricks in store.

There is nothing in this article that regular readers don't already know. The writers use some of the terms loosely, similarly to how I use them.

******************************

Le Burger

I've always wanted to post this clip but never had the reason/opportunity. That changed today. From The [London] Telegraph: 'Le burger' is now the top selling dish in French restaurants:

New figures suggest the decidedly un-French burger is served in 75 per cent of French eateries from the most humble fast food outlets to top-notch restaurant.

For the guardians of French gastronomy, the prospect of being served something as unsophisticated as a slab of mincemeat with a bap and slice of cheese would long have been considered sacrilegious.  

Today, however, the tables have turned. In a culinary revolution, three quarters of French restaurants now sell hamburgers and 80 per cent of these say it has become their top-selling dish, according to a new study.

"Le burger" – as the French dub the quintessentially American invention to the despair of linguistic purists of the Académie Française – has become a feature of even the most illustrious eateries.

Indeed, such is its success that sales are set to overtake those of the classic "jambon beurre" (ham and butter baguette), the nation's staple lunchtime sandwich.

Last year, the French chomped their way through 1.19 billion burgers, an 11 per cent rise on the previous year, while "le jambon beurre" fell to 1.23 billion. 

"Burger mania (in France) is unstoppable," declared Bernard Boutboul, head of Gira Conseil, the food consultancy behind the study.

"If it goes on like this, then one can assume that within two years sales of the jambon-beurre and burger will be neck and neck."

In truth, the French have long been lovers of burgers in fast-food outlets. France is McDonald's biggest market in the world outside of the US and was practically the only nation in the world where the chain posted a rise in sales last year.

However, Mr Boutboul said the reason for the burger's phenomenal success in France has been its spread from fast-food to more traditional sit-down restaurants, even top-tier ones. 

Did you note that the burger was not simply among the top dishes served in French restaurants, the burger is the #1 dish served in French restaurants. Along with Freedom Fries, no doubt. LOL.

********************************

Le Big Mac

Pulp Fiction

Reason #458 Why I Love To Blog: The London Telegraph Addresses The "Fracklog" -- February 22, 2016

If you have time to read just one article this week, read the linked article below. A huge thanks to a reader for sending it to me. This is for the archives; it will be interesting to look at this article five years from now.

Again, The [London] Telegraph does such a great job reporting, putting the US media to shame. Even Bloomberg doesn't report this well. The Telegraph is reporting (archived):

The current crash in oil prices is sowing the seeds of a powerful rebound and a potential supply crunch by the end of the decade, but the prize may go to the US shale industry rather Opec, the world's energy watchdog has predicted.

America's shale oil producers and Canada's oil sands will come roaring back from late 2017 onwards once the current brutal purge is over, a cycle it described as the "rise, fall and rise again" of the fracking industry.

"Anybody who believes the US revolution has stalled should think again. We have been very surprised at how resilient it is," said Neil Atkinson, head of oil markets at the International Energy Agency.

The IEA forecasts in its "medium-term" outlook for the next five years that US production will fall by 600,000 barrels per day (b/d) this year and 200,000 next year as the so-called "fracklog" of drilled wells is finally cleared and the global market works off a surplus of 1m b/d.

But shale will come back to life within six months - far more quickly than conventional mega-projects and offshore wells - once crude rebounds to $60. Shale output is expected to reach new highs of 5m b/d by 2021.

This will boost total US production of oil and liquids by 1.3m b/d to the once unthinkable level 14.4m b/d, widening the US lead over Saudi Arabia and Russia.

Fatih Birol, the IEA's executive director, said this alone will not be enough to avert the risk of a strategic oil crisis later in the decade, given the exhaustion of existing wells and the dangerously low levels of spare capacity in the world.

"Even if there were zero growth in demand, we would have to produce 3m b/d just to stand still," he said, speaking at the IHS CERAWeek summit of energy leaders in Texas.

Mr Birol said investment in oil exploration and production across the world has been cut to the bone, falling 24pc last year and an estimated 17pc this year. This is a drop from $520bn to $320bn a year, far below the minimum levels needed to keep up with future demand. 

I'm not sure what to make of this caption at the linked article:  

Abdalla el-Badri, secretary-general of Opec, says his group and US shale producers may not be able to 'live together'.

That sounds like a desperate fight to the finish coming from a country whose very existence depends on $100 oil.

I do know what this means:   

Opec has failed to stop US shale revolution admits energy watchdog 'This cycle is very nasty. It sets the seed for a very high price in the future,' said Opec's secretary-general.

Much, much more at the link.

In 2025, we will be asking why "we" focused on global warming when "we" should have been preparing for a relative shortage of oil.

this is so cool, by the way. I would like to think that Lynn Helms would get the credit for coining the word "fracklog." Whoever it was, as far as I'm concerned, the word "fracklog" originated in the Bakken. Hoo-wah!

Random Update Of Completed DUCs from 3Q15

I'm still trying to get a handle on whether DUCs are such a big deal or not. I really don't know. I struggled with that question back in December.

Last night, I updated the wells that came off the confidential list in 4Q15. One can scroll through that list and see how many wells are still SI/NC (DUCs).

This morning, I updated the DUCs that came off the confidential list in 3Q15. One can scroll through that list and see how many wells are still SI/NC (DUCs).

Since the last update (and I don't recall when that update was done), these are the DUCs that have been completed (I may have missed a few but, if so, I will pick them up next time):


30884, 1,097, XTO, Sorenson 31X-28G, Siverston, t12/15; cum 2K 4 days;
30682, 841, MRO, Bingo 24-10TFH, Reunion Bay, t1/16; cum 1K 2 days;
30681, 1,827, MRO, Marjorie 14-10H, Reunion Bay, t12/15; cum 14K 24 days;
29797, 2,084, BR, Morgan 24-21MBH, Pershing, t12/15; cum 15K 7 days
29796, 1,723, BR, Kirkland 24-21MBH, Pershing, no production data, t12/15; cum 16K 21 days;
29780, 745, Abraxas, Ravin 8H, North Fork, t11/15; cum 24K 46 days;
29795, 1,283, BR, Morgan 24-21TFH, Pershing, t1/16; cum 1K 38 days;
29779, 833, Abraxas, Sten-Rav 1H, North Fork, t11/15; cum 31K 12/15;
29579, 1,270, XTO, Satter 31X-1CXD, Sivertson, t12/15; cum 4K 8 days;
29990, 686, Abraxas, Stenehjem 5H, North Fork, t11/15; cum 28K 12/15;
29578, 1,479, XTO, Satter 31X-1G2, Sivertson, t12/15; cum 8K 12 days;
30453, 841, Hess, EN-D Cvancara S-154-93-0904H-9, Robinson Lake, t8/15; cum 50K half-months only;
30718, 1,030, Hess, EN-D Cvancara S-154-93-0904H-8, Robinson Lake, t9/15; cum 61K 12/15;
30787, 1,592, XTO, Rita 44X-34CXD, Tobacco Garden, t12/15; cum 4K 5 days;
30940, 2,405, BR, CCU Bison Point 34-34MBH, Corral Creek, t12/15; cum 7K 10 days;
30697, 2,044, MRO, Mikkelsen 11-14H, Reunion Bay, t12/15; cum 21K 21 days;
29389, 1,045, XTO, Johnsrud Federal 34X-14G, Bear Den, t10/15; cum 3K 4 days; no production last two months
29390, 1,067, XTO, Johnsrud Federal 34X-14C,  Bear Den, t10/15; cum 10k 15 days over three months;
29392, 614, XTO, Johnsrud Federal 34X-14D, Bear Den, t11/15; cum 9K 10 days over three months;
29433, 1,464b cum 23K 14 days over 2 months;
29517, 2,669, BR, LaCanyon 8-8-34MBH ULW, Blue Buttes, t8/15; cum 51K 12/15;
29577, 1,290, XTO, Satter 31X-1D, Siverston, t12/15; cum 1K 4 days;
29494, 274, XTO, Rita 44X-34H, Tobacco Garden, t1/16; no production data,
29493, 1,489, XTO, Rita 44X-34BXC, Tobacco Garden, t1/16; no production data, 
26774, 419, Zavanna, Double Down 24-13 4TFH, East Fork, t1/16; cum --  
26773, 687, Zavanna, Double Down 24-13 3TFH, East Fork, t1/16; cum 11 bbls 3 days
30454, 1,516, Statoil, Panzer 22-23 6H, Alger, t1/16; no production data,
29875, 1,483, BR, Morgan 41-28TFH ULW, Johnson Corner, t11/15; cum 19K 21 days over 2 months;
26772, 2,058, Zavanna, Double Down 24-13 2H, East Fork, t1/16; cum --
30455, 660, Statoil, Panzer 22-23 7TFH, Alger, t1/16; no production data,
29874, 2,004, BR, Morgan 41-28MBH, Pershing, t12/15; cum 19K 15 days over 2 months;
30361, 1,239, CLR, Patterson Federal 6-13H, Camp, t1/16; cum 647 bbls 3 days over 4 months
30057, 499b cum 6K 18 days;
29962, 142, SHD, Magnum 36-11-TF2, Clarks Creek, t11/15; cum 9K 42 days over 3 months
30056, 357, SM Energy, Jessica 3B-26HN, West Ambrose, t12/15; cum 5K 18 days
30055, 508, SM Energy, Ashley 3-26HS, West Ambrose, t12/15; cum 11K 27 days over 2 months;
30054, 281, SM Energy, Rilye 3B-26HS, West Ambrose, t12/15; cum 6K 18 days;        

Trends:

• even though these wells have been completed, look at how few days they have been on-line; they are completed and then "shut in" for many days each month 
• pad drilling
• big names like EOG, Statoil, not often seen 

Are Bakken DUCs A Big Deal? -- December 27, 2015

Disclaimer: in a long note like this, there will be typographical and factual errors. If this information is important to you, go to the source.

A couple of days ago I posted a poll asking whether "Bakken DUCs are a big deal?"

I had planned to write about DUCs awhile ago but have decided to put that discussion off. I feel I need at least one more month of data -- which we won't get until mid-January, 2016, when the next Director's Cut comes out, with the November, 2015. Production data should be available prior to the publication of the Director's Cut.

At that post I linked a New York Times article on DUCs.

Today, I'm just going to post some observations, keeping comments to a minimum:

Worksheet (explanation below the worksheet):

Month/Year	Producing Wells	Delta	Average	Bbls/Well	Average	Active Rigs
January 2013	5166	118		4048
	5318	152		3775
	5469	151		4093
	5621	152		3883
	5738	117		4034
	5900	162		3860
	6108	208		4111
	6308	200		4166
	6455	147		4040
	6657	202		4099
	6790	133	158	4034
December 2013	6840	50	149	3925	4006	187
January 2014	6944	104		3905
	7066	122		3527
	7250	184		3906
	7469	219		3771
	7685	216		3934
	7868	183		3919
	8064	196		4040
	8289	225		3994
	8500	231		3951
	8620	120		4021
November 2014	8730	110		3864
	8947	217	177	4032	3905	173
January 2015	9051	104		3865
	9168	117		3412
	9421	253		3716
	9529	108		3492
	9709	180		3645
	9912	203		3489
	10044	132		3549
August 2015	10115	71		3466
	10158	43		3268
	10298	140	135	3353	3526	62

This table includes only Bakken wells in North Dakota as defined by the NDIC 

• The most recent data available is October, 2015
• I believe the NDIC announced the one-year extension to complete wells was in November, 2014
• As of October, 2015, there were 10,298 Bakken producing wells 
• There are currently about 10,500 producing Bakken wells
• Average production per well, in round numbers, column 6:

• in 2013, Bakken wells produced on average 4,000 bbls/month
• in 2014, Bakken wells produced on average 3,900 bbls/month
• for most of 2015, Bakken wells averaged 3,500 bbls/month

• Average change in number of Bakken wells month-over-month, column 4: 

• 2013: 149
• 2014: 177
• 2015 to date: 135

The change in the number of producing wells is a combination of new wells coming on line (including previous wells taken off-line for some reason) and older wells being taken off-line. 

Note: in column 4, the averages are for the calendar year. For 2013, there are two averages provided. For the first 11 months, the average change in the number of wells month-over-month was 158 (December, with only 50 new wells was an anomaly, so I wanted to see the average without December's data; the average for the year -- all 12 months, including December -- was 149 more wells on average month-over-month).

When looking at the monthly production/well, remember this incredibly important point: in 2013, they were drilling across the entire Bakken. In 2015, drilling had shifted to the best spots in the Bakken. Average production has decreased about 500 bbls/month/well in 2015 compared to 2013.

Some other observations:

• in 2013, when they were drilling "all-out," the average number of producing wells increased by about 150 wells month-over-month; the number of active rigs: 180
• in 2015, when the severe plunge in the price of crude oil had continued, the average number of producing wells increased by about 135; the number of active rigs: 65
• when one throws out the two anomalous months in 2015 (August and September), the average number of producing wells increased by about 155 wells month-over-month

Disclaimer: in a long note like this I may have made simple arithmetic errors. In addition, there may have been errors in transcribing data from the NDIC source to my worksheet. If mistakes are noted, they will be corrected. Do not use this information if this is important for you. If this is important for you, go to the source.

So, maybe one can add this information to the question whether DUCs are a big deal.

By the way, here's another look at DUCs. Take a look at Robinson oil field, a fairly active field over the past few years. The data goes back to 2010, and the list is up-to-date (although total production for all wells has not been updated).

One can quickly scroll down the list. IPs in bold blue are wells that are currently DUCs or were DUCs at one time, and have since been completed. Some DUCs will have been missed. When next month's data comes out, some (many? most?) of the wells currently on conf status will go to DUC status.

You might note the Sinclair well back in 2013 that is a DUC. What gives? 2013 was well before the November, 2014, date when an extension for well completion was approved. That Sinclair well was permitted in 2013, but was not spud until February 2, 2015; it reached total depth February 27, 2015, but it is now a DUC (has not been fracked). This will be a good well to follow. Although it is on DUC status, it will be interesting to see if the well is completed within a year of spud (February, 2016); if not, how soon after.

Another active field one can look at is MRO's Bailey field to get a feel of the prevalence of DUCs.