Permian Gas Flaring Hits Another High -- 752 Million Cubic Feet Per Day -- November 7, 2019

Updates

November 9, 2019: see first comment.

Unless I have my math wrong, I figure New Mexico's natural gas consumption to be 743 mcf / day, so the Permian is burning off enough natural gas to power the whole state..
https://www.eia.gov/dnav/ng/ng_cons_sum_dcu_SNM_a.htm

Original Post

I don't care much way or the other regarding flaring, but flaring provides a great proxy for "activity" in the shale plays. The Oil & Gas Journal link is here.

752 million cubic feet rounds to one billion cubic feet per day. The Bakken is producing ... drum roll ... about three billion cubic feet of natural per day. The Permian is flaring about one-third that amount. That sort of puts things into perspective. By the way, I'm missing a Thursday night NFL game streaming on Amazon Prime. Good luck to all.

From Rystad/twitter today:

Permian Pipeline Projects -- 3.5 Million BOPD To Be Added In 2019 -- May 29, 2019

The link for the graphic below is at this post.

From twitter today. This is simply amazing. New pipeline capacity for the Permian -- to put this in perspective, I believe the Keystone XL killed by President Obama would have brought 800,000 bopd from Canada to the US:

The projects:

• Gray Oak Pipeline -- Aneavor, Phillips 66 (note misspelling of "GRAY" in the tweet)
• Cactus II Pipeline -- Plains All American
• EPIC Crude Pipeline -- EPIC Pipeline
• Bayou Bridge Pipeline phase 2 -- Energy Transfer, Plains All American
• Matador Pipeline -- Anadarko, Magellan, Plains All American
• Seminole Red Pipeline conversion --Enterprise Products Partners
• Red Wolf Crude Connector -- Wolf Midstream
• Gray Wolf Crude Connector -- Wolf Midstream
• Seaway Pipeline expansion 2 -- Enbridge, Enterprise Products Partners
• Iron Horse Pipeline -- Tallgrass Energy, Silver Creek Midstream
• Midland-to-Sealy pipeline expansion --Enterprise Products Partners
• I believe RBN Energy has discussed many of these in detail.

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Breakfast At Tiffany's? Nope, At TutorTime

Reason #1 Why I Love To Blog -- A Reader Explains MRO's Lower Number Of Stages -- April 4, 2019

Earlier today I asked if anyone was paying attention? I was unable to explain why MRO is consistently fracking with fewer stages (and therefore [?] less sand).

A reader who has provided many insightful and helpful comments over the years sends this explanation.

Regarding MRO's lower stage count ... the March issue from American Oil and Gas Reporter (aogr.com) contains an outstanding piece targeting Oasis' Elkhorn Field in the Bakken for a look into cutting edge fracturing/completion practices. The full link: https://www.aogr.com/magazine/editors-choice/engineered-completions-key-to-economic-development-of-elkhorn-field.

I have read the uber wonky piece twice and will need further reading in attempting to 'get' what is occurring, but - essentially - operators are maintaining 1,500/2,000 psi pressure between the wellbore's 'edge' (entry point into the formation) and the ever-expanding fracture tip. 

This is accomplished by the precise placement and number of entry points (clusters) and employing diverters (temporary plugs) in order to contain the frac (vertically and horizontally) while maintaining a very high pressure.

The effective accomplishment produces a VERY rubbilized (sic) formation within a tightly constrained area.  This essentially is what Mark Papa has always sought.

Liberty Resources is a leading innovator in this regard and has some papers online discussing this approach.

Incredibly the full article is accessible without hitting a paywall. To be safe, I've archived it.

The buzz-phrase in the last six months has been the "problem" with "parent-child" interference. This article also addresses that issue.

This is an incredibly important article for those trying to better understand the Bakken.

A huge "thank you" to the reader for sending this. It truly made my day. Best article all day. All week? Maybe.

I believe Mark Papa (former CEO of EOG) is now CEO of Centennial Resource Development:

Centennial Resource Development, Inc., an independent oil and natural gas company, focuses on the development of unconventional oil and associated liquids-rich natural gas reserves in the United States.

The company’s assets primarily focus on the Delaware Basin, a sub-basin of the Permian Basin. Its properties consist of acreage blocks primarily in Reeves County in West Texas and Lea County in New Mexico. As of December 31, 2018, it leased or acquired approximately 80,223 net acres; and owned 1,597 net mineral acres in the Delaware Basin. The company was formerly known as Silver Run Acquisition Corporation and changed its name to Centennial Resource Development, Inc. in October 2016.

From Bloomberg:

Mr. Mark G. Papa has been the Chief Executive Officer at Centennial Resource Development, Inc., (Formerly, Silver Run Acquisition Corporation) since November 2015 and has been its Chairman since October 12, 2016. 

More On Apache -- February 8, 2019

Over at SeekingAlpha -- see also this link about Apache, earlier.

Subdued Permian oil growth indicates that a large portion of its domestic upstream growth is likely to be represented by natural gas and natural gas liquids, which is consistent with past trends. In Q3 2018, Apache’s Permian production rose by 38% year over year to 222,000 BOE/d while its oil output rose by just 16% during that period. During that quarter, Apache's Permian production mix was 41% oil, 21% NGLs, and 38% natural gas.

Keep in mind that international output declines may be represented more so by crude oil than natural gas, particularly as its North Sea and Egyptian operations are primarily oil producers (crude represented 63% of its Egyptian output and 84% of its North Sea output in Q3 2018).

It will be interesting to see how Apache’s Alpine High strategy turns out over the long haul. By November 2018, the firm was pumping 55,000 BOE/d out of the area with eight rigs actively developing the play, up from a minimal amount of output in late-2016. Apache had drilled 180 wells and placed 125 wells online in the Alpine High area as of November 2018, giving it a large enough slate of well data to gauge how economical developing the region will actually be (in theory, expected well returns are strong enough to justify stepping up the pace of its development activity). Major midstream investments are being made to support this growth trajectory.

Generally speaking, the most lucrative parts of unconventional liquids-oriented plays (such as the Eagle Ford, Bakken, Permian, SCOOP, STACK, Powder River Basin, DJ Basin and others) are the most liquids-rich regions within those plays, regions that can bring wells online with high oil, condensate, and natural gas liquids cuts. Domestic natural gas prices in America have been and continue to be very low, a paradigm that is unlikely to change anytime soon. So unless these gassier wells can achieve the kind of performance seen at the Marcellus or Haynesville gas plays in terms of estimated ultimate recovery rates, it will be up to Apache to make sure it can maximize its natural gas liquids and condensate output as best it can from its Alpine High drilling inventory.

Disclaimer: again, this is not an investment site. Do not make any investment, financial, job, travel, or relationship decisions based on what you read here or what you think you may have read here.

For The Archives -- "That" WSJ Article -- January 28, 2019

Re-posting for the archives, the argument that that Permian is not / will not produce as much as some folks have said it will:

• from the blog, January 2, 2019
• the big sleep, January 19, 2019
• fracking's secret problem -- oil wells are not producing as much as forecast, WSJ, January 2, 2019

The headline caught folks' attention, but look at the data:

Two-thirds of projections made by the fracking companies between 2014 and 2017 in America’s four hottest drilling regions appear to have been overly optimistic, according to the analysis of some 16,000 wells operated by 29 of the biggest producers in oil basins in Texas and North Dakota.

Collectively, the companies that made projections are on track to pump nearly 10% less oil and gas than they forecast for those areas, according to the analysis of data from Rystad Energy AS, an energy consulting firm. That is the equivalent of almost one billion barrels of oil and gas over 30 years, worth more than $30 billion at current prices. Some companies are off track by more than 50% in certain regions. 

The headline is based on this finding:

Collectively, the companies that made projections are on track to pump nearly 10% less oil and gas than they forecast for those areas.

I am inappropriately exuberant about the Bakken, but even so, missing targets by 10% in unconventional oil is hardly news.

Over thirty years, the article says, that would be worth more than $30 billion at current prices. Wow, over sixty years, the figure would be $60 billion. Over ninety years, $90 billion. Anybody want to do the calculations for $180 billion? LOL.

Meanwhile, the EURs in the Bakken have increased from 350,000 bbls in the Bakken at the beginning of the boom to 1.1 million bbls in Tier 1 sites. Based on the increase in EURs across the Williston Basin, the number of Tier 1 sites is increasing. One of many examples: MRO and the company's Ajax area of the Williston Basin.

Again, this is simply for the archives, since I'm sure the issue will come up again.

Meanwhile, from just earlier this month:

One year ago -- repeating, one year ago, the EIA saw American crude oil production averaging just less than 12 million bopd in 2042 -- 24 years from now (from 2018) -- this year, the EIA says "Never mind."

The US will likely produce 14 million bopd in 2020 -- next year. 

A year ago, January, 2018, the EIA forecast that the US would average 11.95 million bbls by 2042. By 2042. That's 20+ years from now. Now, one year later, January, 2019, the EIA forecasts the US will hit 14 billion bopd in 2022, and will top out at 14.53 million bopd in 2031. 

Boom! Permian Acres Sell For $95,001 -- September 10, 2018

Hold on to your hats. See "Permian auction" below -- under "fast and furious."

Disclaimer: this is not an investment site. Do not make any investment, financial, job, travel, or relationship decisions based on anything you read here or think you may have read here.

Opening remarks: I've been investing as a small investor since 1984. There have been some rough patches and I've "left a lot of money on the table," as they say. Ope! But in the big scheme of things, I've loved it; I've learned a lot; it kept me "involved"; and, I will leave the granddaughters a portfolio with which they should have some fun. I don't think I've ever seen a more exciting market and it's exciting for several reasons:

• a tectonic change in thinking in the White House
• millennials
• technology
• "open book" test every day -- so much information available
• numerous trading vehicles and instruments
• instantaneous trades
• tax changes favoring investors
• commissions on trades are going to zero (which, by the way, will have big implications for at least two well-known discount brokers)
• energy
• US will be a net exporter of energy this next century while the rest of the world, for the most part, will be net energy importers

The Perry Mason These (Park Avenue Beat, Royal Philharmonic
Fast and furious: the movie I'm watching --

• rabbit holes and Ope! -- 
• end of driving season, and the price of gasoline in our area has not dropped; if anything it has increased a bit
• supposedly, on threats from Trump, Saudi has increased oil exports to the US; link here;
• apparently the EIA did not get the memo; link here;
• Canadian crude prices plunge again; link here; 
• Dow, irrelevant, looks to open over 100 points higher
• WTI: holding, maybe up a little bit
• dead cat bounce? Maybe not. Last week I noted that Tesla was selling 10x the number of EVs as its nearest competitor; then Motley Fool noted it; today, I see TSLA should open higher

Boom: Permian auction doubles 2008 record, link here;

• near billion-dollar sale
• on the New Mexico side of the Permian Basin
• $95,001 / acre
• federal government auction
• a record high for North America's biggest oil field
• previous record: $40,001
• for newbies: there's a reason the bid ends in a single dollar
• two-day auction: 142 parcels
• raised almost one billion dollalrs
• total was more than the whole of 2017 and double the 2008 record
• Federal Abstract Co, Santa Fe, bids for a number of anonymous investors -- the record bidder -- a near-$400-million for 17 tracts
• the logical buyers: EOG, Devon, Exxon, and Chevron

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Back to the Bakken

Wells coming off the confidential list over the weekend, today --
Monday, September 10, 2018

• 34632, 3,395, MRO, Lars 14-8H, Killdeer, 4 sections, 45 stages; 8.6 million lbs, t8/18; cum --
• 33521, 1,210, Enerplus, Vinson 148-95-12D-01H-TF, Eagle Nest, 39 stages; 9 million lbs, t3/18; cum 65K 7/18;

Sunday, September 9, 2018

• 33846, 3,642, WPX, Otter Woman 34-27HG, Mandaree, 51 stages; 8.6 million lbs, t8/18; cum -- 
• 32132, 1,104, CLR, Burr Federal 5-26H, Sanish, two sections, t7/18; cum 11K 8/18; constrained; no frack data; not fracked yet? FracFocus shows a one-day frack (7/29/2018)

Saturday, September 8, 2018

• 33522, 289, Enerplus, Evans 148-95-12D-01H, Eagle Nest,, 40 stages; 9.6 million lbs; t3/18; 72K 7/18;
• 33520, 315, Enerplus, Blanc 148-95-12D-01H, Eagle Nest, 36 stages; 8.5 million lbs, t3/18; cum 99K 7/18;
• 32963, 867, Oasis, Ceynar 5198 12-5 6B, Banks, 50 stages; 9.9 million lbs, t3/18; cum 141K 7/18;  the Ceynar wells are tracked here; #32963:

Date	Oil Runs	MCF Sold
7-2018	35587	94696
6-2018	26368	59803
5-2018	35941	86232
4-2018	32242	46343
3-2018	11110	19599

Active rigs:
 

$68.24↑	9/10/2018	09/10/2017	09/10/2016	09/10/2015	09/10/2014
Active Rigs	66	55	37	70	199

RBN Energy: local frack sand spreads to Eagle Ford and SCOOP/STACK.

The push to develop local sources of frac sand — and significantly reduce well-completion costs in the process — started in the Permian Basin, but it didn’t end there. A number of new sand mines are being opened and developed in the Eagle Ford in South Texas, and there are early signs the same is happening in the SCOOP/STACK in Oklahoma. With local sand eliminating the need for rail deliveries and rail-to-truck transloading terminals, sand and logistics companies are streamlining the delivery and management of frac sand by providing integrated mine-to-well-site proppant services. Today, we discuss recent developments on the frac sand front and what they mean for exploration and production companies in key plays.

Frac sand plays a critically important role in the Shale Era. Hydrocarbon production in shale and tight-oil plays is founded on a combination of horizontal drilling and hydraulic fracturing. Frac fluids and proppant (now primarily natural sand, but also a bit of ceramics and resin-coated sand), when forced out of the horizontal portion of wells at high pressure, fractures openings in the surrounding shale. When the pressure is released, the fractures attempt to close but the proppant contained in the fluids keeps them open, making a ready path for oil, gas and NGLs to flow into the well bore.

The significance of natural frac sand accessibility and cost has only increased in the past two years as E&Ps have ratcheted up their drilling activity, the volume of sand they use in each well completion as they have moved to slickwater designs and their efforts to rein in drilling and completion costs — and thereby trim their break-even prices and improve their bottom lines. We’ve discussed the frac sand issue in a number of blogs, beginning with our “Wipe Out!” series. Earlier we noted that the trends toward longer and longer laterals and higher-intensity completions are goosing efficiency and profitability and driving increased sand use. Later, we discussed the evolution of frac sand use, including shifts in the types of sand that were traditionally preferred and in the volume of sand being used in each well. Most recently we zeroed in on trends in frac sand demand and pricing, and on the development of regional and local frac sand mines (mostly in and around the Permian) to reduce transportation costs. We also put rising frac sand costs into an economic context, concluding that while those costs are a concern, they are usually outweighed by the oil-and-gas production gains (and resulting higher revenue) that result from using more sand. (That’s especially true lately, with crude oil prices north of $65/bbl.)