No New Permits; Twelve Permits Renewed; Two Permits Canceled -- November 12, 2021

Active rigs:

$80.79	11/12/2021	11/12/2020	11/12/2019	11/12/2018	11/12/2017
Active Rigs	32	15	54	66	52

No new permits.

Twelve permits renewed:

• MRO (5): an Elizabeth USA permit, a Felix USA permit, both in Dunn County; a Merwin USA permit, a Foote USA permit, and an Avallon USA permit, all three in McLean County;
• Hess (3): three EN-Davenport permits, all in Mountrail County
• BR (2); two State Docge permits in McKenzic County
• QEP (2): two MHA permits, both in Dunn County

Two permits canceled:

• Kraken: an Anna permit and a Wilder permit, both in Williams County.

Thirty-three active rigs: a quick look suggests suggests they are all oil and gas permits.

The thirty-three active rigs. Note: it looks like 32 active rigs. See CLR H&P 492.

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

• Koda, 
• Cyclone-35, Stout, 37796;
• CLR (9)
  
• H&P 454, Flint Chips, 38151;
• Nabors B1, Thorp Federal, 38518;
• Nabors B6, Whitman, 38533;
• Nabors B27, Charolais South Federal, 37906 
• H&P 456, LCU Reckitt Federal, 37001;
• H&P 492, LCU Ralph, 37014, 1244 FSL 1180 FWL;
  
• H&P 492, LCU Ralph, 37015; 1244 FSL 1135 FWL
  
• Patterson 901, Rolf Federal; 38298;
• AES 4, Springfield, 38363;
  
• MRO (3)
  
• H&P 640, Hunt, Halliday, 38535,
• H&P 535, Cody, 38587;
• Nabors X-10, Phillip, 37797;
  
• Bowline, 
• T&S Drilling 2, Lee, 35625,
• Enerplus
• True 40, FB Leviathan, 35718;
• Petroshale
• Stoneham 16, Lewis Federal, 36890;
• Hess (4)
  
• Nabors X28, BW-Rolfson, 37141;
• Noble 1, EN-J Horst, 38400; 
• Nabors X27, BL-S Ramberg, 36643;
• Nabors X24, CA-E Burdick, 38004;
  
• True
• True Drilling 39, Northern State, 37495;
• Oasis (2)
  
• Nabors B 13, Soto, 38334 
• Nabors B26, Swenson Federal, 38382,
• Iron Oil, 
• Nabors B18, Antelope, 38459;
• Sinclair
• Unit 411, Grasslands Federal, 38493,
• Ovintiv, 
• H&P 516, Wisness State, 38545
• Whiting (2)
  
• Patterson 808, Kannianen, 38410
• Patterson 806, Miller, 37411
  
• Slawson
• Unit 414, Rainmaker Federal, 38454,
• Crescent Point
• Nabors B21, CPEUSC Pankake 38557;
  
• Kraken
• Nabors B22, Maddie, 38558,

Huge Tease -- This Weekend I Will Post The Definitive Answer To The Week's Most Pressing Question -- November 5, 2021

The question: 

If you were fully invested in CLR (financially or emotionally or however you want to define "fully invested") would you have been happy with this breaking development, that CLR invested in the Permian, in this way, to this degree.

The blog has a reader and correspondent whose credentials are unsurpassed by anyone when it comes to shale oil.  

The individual has provided one of the longest original epistles I have ever received on any subject. The correspondent weighs in on CLR's entry into the Permian.

It will take me awhile to digest his/her comments. But once I have (digested it), I will post my answer to the above question. 

Which gives me an idea, time for a new poll.

Closing out the current poll in which I asked how many rigs you think there will be in North Dakota a year from now (August 22, 2022)?

• 40 - 49: 38%
• 30 - 39: 34%
• <30: 12%
• 50 - 60: 9%
• over 60 active rigs: 7%

********************************
Taking A Break

Active Rigs In North Dakota -- Anticipation -- September 24, 2021

From a reader, the following will be added to the post were I now follow active rigs in North Dakota. 

September 24, 2021: a reader provided additional information that can be added to previously posted information -- with these additions, one could argue that the number of active rigs in North Dakota might trend toward 40 in early 2022; drillers drill throughout the year in North Dakota, but due to severe winters, some of this could be delayed to 2Q22. Fracking really slows down in the first quarter due to weather. 

• Crescent Point has B21 running now. 
• Oasis has picked up B26 from Liberty. 
• Hess: rumors that it will be picking up X25 in beginning of 22; 
• Greyson Mill will start a drilling program in 22 (rumor from reader, "I have heard...". 
• Whiting to add 1,
• Ovintiv possibly add 1, 
• Iron Oil and Gas add 1,
• Koda Resources to add 1 rig for a 4-hole pad,
• Continental to add 1 more,,
• Sinclair to add 1 rig for a single well. 
• Reader "wouldn’t be surprised if the operators that add continue extending contract term length as oil prices stay above $65." 

I "predicted" CLR, Whiting might add a rig; that CPEUSC would have a rig (apparently they do). I forgot about Koda Resources and Iron Oil and Gas. I actually thought about Iron Oil and Gas last night -- this is nice to see.

Active Rigs In North Dakota -- September 23, 2021

Updates

September 24, 2021: a reader provides additional information that can be added to information below -- with these additions, one could argue that the number of active rigs in North Dakota might trend toward 40 in early 2022; drillers drill throughout the year in North Dakota, but due to severe winters, some of this could be delayed to 2Q22. Fracking really slows down in 1Q22 due to weather. 

• Crescent Point has B21 running now. 
• Oasis has picked up B26 from Liberty. 
• Hess: rumors that it will be picking up X25 in beginning of 22; 
• Greyson Mill will start a drilling program in 22 (rumor from reader, "I have heard...". 
• Whiting to add 1
• Ovintiv possibly add 1, 
• Iron Oil and Gas add 1,
• Koda Resources to add 1 rig for a 4-hole pad
• Continental to add 1 more
• Sinclair to add 1 rig for a single well. 
• Reader "wouldn’t be surprised if the operators that add continue extending contract term length as oil prices stay above $65." 

I "predicted" CLR, Whiting might add a rig; that CPEUSC would have a rig (apparently they do). I forget about Koda Resources and Iron Oil and Gas. I actually thought about Iron Oil and Gas last night -- this is nice to see.

Original Post

The NDIC no longer provides "active rig" data in the Bakken. 

Based on NDIC reports when that data was last provided and new data from readers this is what I see. These are active oil and gas rigs. In addition, there may be two rigs drilling salt water disposal wells:

• CLR: 9
• Hess: 4
• MRO: 2
• Slawson: 1
  
• Oasis: 1
  
• Rimrock: 1
  
• Petro-Hunt: 1
  
• Kraken: 1
  
• Ovintiv: 1
  
• Whiting: 1
  
• PetroShale: 1
  
• Bruin: 1
  
• Hunt: 1
• BR; perhaps their first active rig next month (October) and a total of two rigs in 1Q22
• WPX: 1, 1Q22
• Sinclair: 1 "soon"

That works out to twenty-nine (29) active rigs going into 1Q22. 

Missing in the list above and operators I would expect to add a rig:

• Zavanna
• Crescent Point Energy
• True Oil
• Whiting: from one to two, maybe three
• WPX: from one to two

I don't think they need to, but I wouldn't be surprised if CLR actually added another rig.

Privately-Held Shale Drillers Could Create Havoc For OPEC --World Oil -- March 13, 2021

The data points in this article are absolutely mind-boggling. A huge "thank you" to the reader who sent me this: privately-held shale drillers poised to create headaches for OPEC, worldoil.com, March 1, 2021.

The battered and bruised U.S. shale industry is finding a resurgence in one of the most unlikely places: private operators most investors have never heard of. Take the case of little known, closely held DoublePoint Energy. It’s now running more rigs in the Permian Basin than giant Chevron Corp. Meanwhile, family-owned Mewbourne Oil Co. has about the same number of rigs as Exxon Mobil Corp.

That’s emblematic of what’s happening across the industry. Once minor players, private drillers held half the share of the horizontal rig count as of December. It’s the first time in the modern shale era that they have risen to the level of the supermajors.

Again, repeating: Once minor players, private drillers held half the share of the horizontal rig count as of December. It’s the first time in the modern shale era that they have risen to the level of the supermajors.

Look at this:

“It’s amazing on both fronts: private companies are getting so much bigger than we ever thought they would and the publics are drilling so much less than we ever thought they would,” said Wil Vanloh, co-founder of the private equity firm Quantum Energy Partners, whose portfolio companies have combined for 18 rigs, trailing only EOG Resources Inc. for most in the nation. 

The other day I said that NOG was the most fascinating small "player" in the Bakken.  One almost get the feeling that NOG could become a major player before this is all over. If not "NOG," then perhaps another "NOG."  The linked article continues:

With oil prices up close to 30% in the past two months, traders and analysts are watching shale producers closely for signs that they’re opening the spigots. 

Most big publicly traded explorers are listening to investors’ pleas and planning to keep production flat. 

But the contrast in output strategy from the private companies underscores just how anarchic the oil market is. 

America’s oil production currently stands at about 9.7 million barrels a day, about 3 million barrels a day less than a year ago before prices collapsed, according to the Department of Energy. 

That means the U.S. lost production equivalent to Iran and Angola combined, or two Gulf of Mexicos, in just 12 months. 

The question is where does it go from here. A Bloomberg survey of major forecasters including Enverus and Rystad Energy showed a variance of 700,000 barrels a day, more than half of Nigeria’s production, indicating how much uncertainty surrounds large, private producers whose plans are mostly shielded from public view. 

If private drillers keep expanding at their current pace, it could eventually mean that U.S. production ends up on the higher end of analyst forecasts. And that, of course, could weigh on prices.

It appears that $60-WTI (in today's dollars) is the magic number. I still think it's going to be very interesting to see whether US shale "can turn on a dime."

I think US shale can ("turn on a dime") and will if WTI stays above $60.  

And I would assume most of those small players are in the Permian, west Texas and New Mexico, where the pipeline infrastructure is well-enough developed to handle any increased oil production, unlike ND which risks closure of the DAPL.

Back To Rig Counts -- February 9, 2021

And we've come full circle. Back to the future. The Red Queen. 

Link here. At link, click on the graphics for enlargement.

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

North Dakota Oil Well Productivity

Daily Oil Per Well

• Historical monthly oil production statistics

****************************************
Back to Body Counts

Is The Bakken Back? February 2, 2021

Active rigs in North Dakota as reported by the NDIC: 14

Rigs by operator:

• MRO: 4
• CLR: 2
• WPX: 1
• Slawson: 1
• Whiting: 1
• Petro-Hunt: 1
• Oasis: 1
• Hess: 1
• Ovintiv: 1
• BR: 1

Using a 1:4 ratio: this equates to 64 active rigs during the boom ten years ago. 

Five of those rigs are in the reservation. Only 12 rigs are seen on the map.

If I have time, I will sort this out later.  

Rig	Operator	Well Name and Number	Current Location	County	File No	Start Date
H & P 454	CONTINENTAL RESOURCES, INC.	Rodney 5-29H	NENW 32-147N-96W	DUN	37376	1/26/2021
CYCLONE 38	CONTINENTAL RESOURCES, INC.	Gale 8-32H1	NWNE 32-147N-96W	DUN	37399	1/31/2021
NABORS B27	WPX ENERGY WILLISTON, LLC	Dakota 1-36HUL	SWSE 1-149N-93W	DUN	37830	1/28/2021
H & P 516	Ovintiv Production Inc.	KESTREL 154-96-33-28-10H	SESE 32-154N-96W	MCK	34333	1/17/2021
NABORS B6	BURLINGTON RESOURCES OIL & GAS COMPANY LP	F JORGENSON 1E TFH	SESW 11-151N-97W	MCK	37479	1/18/2021
UNIT 414	SLAWSON EXPLORATION COMPANY, INC.	ZEPHYR FEDERAL 3-36H	LOT3 1-151N-93W	MTL	36121	1/24/2021
PATTERSON 808	WHITING OIL AND GAS CORPORATION	Littlefield 41-2HU	LOT1 2-152N-92W	MTL	37599	2/1/2021
H & P 492	MARATHON OIL COMPANY	Herman USA 24-31TFH	SWSE 31-151N-93W	MTL	37673	1/27/2021
H & P 259	MARATHON OIL COMPANY	Perry USA 41-6TFH	LOT1 6-150N-93W	MTL	37773	1/30/2021
NABORS X10	MARATHON OIL COMPANY	Norman USA 11-5H	SWSW 32-151N-93W	MTL	37778	1/31/2021
T&S DRILLING 1	MARATHON OIL COMPANY	Kulland USA 41-4TFH	LOT1 4-150N-93W	MTL	37790	2/1/2021
H & P 515	PETRO-HUNT, L.L.C.	State 158-91-16C-9-3H	SESW 16-158N-91W	MTL	37889	1/31/2021
NABORS B13	OASIS PETROLEUM NORTH AMERICA LLC	Borden Federal 5300 34-36 8B	NESE 36-153N-100W	WIL	34234	1/29/2021
NABORS X28	HESS BAKKEN INVESTMENTS II, LLC	CA-RUSSELL SMITH- 155-96-2425H-10	NWNE 24-155N-96W	WIL	36768	1/25/2021

 

Rigs Matter -- January 9, 2021

Link here. 

I've long lost the bubble on this one -- the importance of drilling for Saudi Arabia, i.e., the importance of the number of active rigs for Saudi Arabia. I remember a lot of interesting posts some years ago regarding how important it was for Saudi Arabia to keep drilling.

But wow. Look at the timing. I don't think one can cut the number of rigs by this degree overnight without a bit of planning and that doesn't even take into effect the time to physically bring down the rigs. Link here. 

Interestingly enough the mainstream media posts this data after Saudi Arabia "surprises" everyone by agreeing to cut production. Prince MBS played the mainstream media like a fiddle.

This next year, July, 2021 - June 2022, could be particularly interesting for those watching global drilling. 

There's a huge difference among the Supermajors, the NOCs and US shale producers. See this post. 

Back to the Bakken:

Saudi Arabia does not have DUCs. A well drilled is a well completed. I don't know the rules in the Permian, but I assume they are similar to those in the Bakken. In the Bakken, oil operators are allowed two years to complete a well after it has been spud. And even then, waivers can be granted to extend that two-year deadline.  

In the Bakken (this does not include any Permian data):

DUCs tag.

Inactive wells in North Dakota.

In the last quarter of the year, 4Q20, the number of wells reported as completed. Many of these wells in fact were still carried as "not completed":

43 for the month (December, 2020); 99 for the quarter (Oct - Dec, 2020), 764 for the year (calendar year 2020).

Number of wells in North Dakota that are off-line for operational reasons, most recent data, October, 2020:

• DUCs: 724
• completed, but inactive: 2,934
• total off line for operational reasons: 3,658
• producing: 15,512
• total off line for operational reasons (most recent data) / number of wells reported as completed (CY2020): 3,658 / 764 = 4.79, rounded = five years inventory; this is a combination of:
• new wells that will set IP records:
• new wells that will not set records but will be incredible wells, nonetheless
• new wells that are "average"
• good wells that can be better through asset management
• good wells that need to be re-fracked with small re-fracks
• good wells that need to be re-fracked with large re-fracks
• all wells off line but not scheduled to be abandoned that need to be re-fracked 
• lousy wells that will never get better; many will be permanently abandoned
  

Fast And Furious -- Fifteen Minutes -- Rigs Matter; Rig Counts Not So Much- August 21, 2020

Note: I am inappropriately exuberant about the Bakken.

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

Investing: I would never, never recommend anyone invest in energy companies, nor would I recommend anyone invest in anything. Everyone's situation is different. 

***********************************
Rigs Matter; Rig Counts Not So Much

This has to do with production, not price of oil.

Of course rigs matter, but when any analyst or reader mentions the number of active rigs on any give day, my eyes glaze over (or roll). The "rig count" is a legacy metric held over from conventional and off-shore drilling. It has a diminished role in unconventional drilling or shale.

Unconventional drilling or shale? They can drill all the holes they want, but if they don't complete them, they don't mean squat. Except for a lot of wasted money, drilling the wells and not completing them.

Across the US shale basins, the important metric is the number of newly completed wells on any given day or any given week.

In the Bakken, specifically, much more important than the rig count, pretty much in this order:

• price of oil;
• cost of drilling/completing a well;
  
• takeaway capacity;
• form and cost of takeaway capacity;
  
• rules and regulations; spills; flaring; siting; BLM;
  
• number of frack spreads;
• completions;
• number of DUCs
  
• halo effect;
• weather;

After that, maybe the number of rigs. But probably not. I've probably forgotten something in that list of ten items.

The number of rigs are important in other respects, mostly in terms of measuring activity and providing jobs for roughnecks, geologists, and oil services companies. And that's incredibly important but that's not the issue here. And quit calling me Shirley.

In the Bakken, if all remaining twelve rigs were to quit drilling today and operators focused on completing all DUCs, and opening all shut-in wells, Bakken production would do just fine: link here. 

If the state banned fracking today, Bakken production would fall precipitously. 

This next February, watch the production, as fracking comes to a standstill.

Pre-Covid, there were about 2,500 wells off-line each month in the Bakken for operational reasons. That's more than twice the number of wells that will be drilled and completed this year.

In the past two months, the number of wells off-line in North Dakota:

• June, 2020: 5,113
• May, 2020: 7,070

Think about that, 7,070 wells off line in May, 2020. A terrible, terrible month. And yet, the state still saw a $10-million Legacy Fund deposit. How much money does the state really need?

************************************
What Is The Optimum Number Of Rigs In North Dakota?

26.

That's it. Twenty-six. Twenty-six active rigs.  

In the early days of the boom, the number of days for a single rig to spud one well, drill to total depth, and then move to spud the next well was 60 days.

Now? Six days. 

Sure, a bit of hyperbole on both ends, but not much. Does anyone actually think there can be much improvement in the time it takes to drill a Bakken well:

• the vertical section (two miles down): one day (24 hours);
  
• the curve: twelve hours;
• the lateral: two days;
  

Those are the best I've seen. Probably the expectation going in:

• the vertical section (two miles down): three days (72 hours);
  
• the curve: twelve hours;
• the lateral: four days;

******************************
Quality Of The Wells

Staggering.

See the EIA's July, 2020, dashboard. 

Remember: some years ago, several operators opined that they would not drill a Bakken well if the crude oil EUR was not a million bbls. In the early days of the Bakken, the EURs averaged about 350,000 bbls crude oil.

***************************
The Bakken: An Oil Play

The Bakken is an oil play and yet its new wells are outproducing the Permian even with natural gas. Again, see the dashboards.

***************************************
Parent-Daughter Well Argument

The daughter wells in the Bakken are doing exponentially better than the parent wells. I can't speak to the Permian because I do not follow the Permian. Or the Eagle Ford, for that matter. 

******************************
Finally: Proof in the Pudding

We've been at twelve active rigs for the past year (?) and production has gone from 1.5 million bbls to 800,000 bbls, and my hunch is that the number of active rigs will remain between 10 and 20 in the Bakken through the end of the year and production will gradually move up (unless Saudi Arabia floods the world with oil again and/or demand destruction worsens). But if the economy improves; oil demand improves; oil price improves, the number of active rigs in the Bakken will move very little, if any, and production will increase significantly.

So, we'll see.

Three Wells Coming Off The Confidential List -- July 24, 2020

BRK: contributor over at SeekingAlpha. Monthly update of dividend-paying stocks held by Berkshire Hathaway. I have not read of the article, mostly the summary, and even not much of that.

AAPL: profit-taking. Contributor over at SeekingAlpha. I have not read the entire article.

VZ: beats estimates; EPS, $1.13 per share, vs $0.95 per share a year earlier.

SLB: revenue tumbles 35%; falls short of estimates; to cut 21,000 jobs, 20% of total workforce.

Trucks: Nikola pilot plant to speed electric truck production. EV trucks are being tracked here, for now.

Boeing:

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

Coffee: consumers shifting to cheaper coffee beans. The Arabica (Starbucks) / Robusta (others) ratio. 

The shift in coffee demand is bad news for Starbucks, that's why it announced, last month, over 400 stores will be closing in the next 18 months. The world's largest coffeehouse must shrink its corporate footprint as the economy evolves to where workers are staying home and are reducing costs to weather the economic storm.

The shift in demand is being seen in surging Robusta coffee prices on ICE. In the last 19 sessions, September contracts have gone parabolic, up 19%, hitting 1,363 on Thursday morning (July 23, 2020), or a six month high.

The latest upswing in prices is because the virus-induced recession is "prompting a shift in consumption toward cheaper, instant coffee blends," reported Reuters.  

Equinor: 2Q20 Johan Sverdrup update.

Profits soared for some oil majors who bet on storage. Link here. 

Well, that didn't work out. Saudis gain nothing in first month after price war ends. Bloomberg via Rigzone.

Saudi Arabia gained no financial reward in the first full month after ending its oil-price war with Russia. The kingdom earned 23.9 billion riyals ($6.4 billion) from oil exports in May, the Riyadh-based General Authority for Statistics said Thursday (July 23, 2020). [One riyal = $0.26778 or about 25 cents.]

That was even less than the previous month, when the price war was at its height, and down more than 60% from last year’s monthly average of $16.8 billion.

The government slashed exports to 6.2 million barrels a day in May from a record 9.3 million in April as it came under pressure from world leaders, including U.S. President Donald Trump, to change tack and rebalance an energy market battered by the coronavirus pandemic. 

US crude oil supply, days: 37.7 days; pretty much unchanged week-over-week;

OPEC basket, link here: $44.24.

Bird-watching: Swainson's hawks are still flying over Grapevine/DFW area, but seeing fewer of them. Two juveniles, based on lighter color than adults, were spotted on Wednesday, July 23, 2020. 

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

Back to the Bakken

Active rigs:

$41.30	7/24/2020	07/24/2019	07/24/2018	07/24/2017	07/24/2016
Active Rigs	13	58	66	59	32

Operators with active rigs:

• BR (2) -- baseline
• CLR (2) -- baseline
• WPX (2) -- baseline
• MRO (1) -- baseline
• Petro-Hunt (1) -- baseline
• Hess (2) -- up one
• Slawson (2) -- baseline
• XTO (1) -- baseline

Three wells coming off confidential list -- Friday, July 24, 2020: 63 for the month; 63 for the quarter, 509 for the year:

• 37069, loc/NC, WPX, Wolverine 21-22HD, South Fork, no production data,
• 35874, SI/A, Whiting, Fladeland 12-10HU, Sanish, t--; cum 86K 5/20; a 27K month;
• 33425, loc/NC, Sinclair Oil, Crosby Creek 6-5H, Little Knife, no production data;

RBN Energy: the ongoing build-out of MPLX's NGL/condensate pipeline network in the midwest. Archived.

Since the mid-2010s, MPLX has been developing a far-reaching pipeline system for delivering heavier natural gas liquids and field condensate from the Utica and “wet” Marcellus plays to Midwest refineries for gasoline blending and refining, and to the Alberta oil sands for use as diluent.

The multi-year, multi-project effort, which has involved the construction of new pipelines, the repurposing of existing pipes, and the development of new storage capacity, will reach another milestone next month, when MPLX starts batching normal butane and isobutane through most of the pipeline system. And further enhancements are on the horizon. Today, we provide an update on the master limited partnership’s long-running strategy for moving Marcellus/Utica-sourced liquids to market more efficiently and at a lower per-barrel cost.

Moving the increasing volumes of NGLs and other hydrocarbon liquids produced in eastern Ohio, southwestern Pennsylvania, and northern West Virginia to market has been a major midstream challenge — the region hadn’t been a major producer of NGL-rich gas until the start of the Shale Era, and the pipelines in place to handle the resulting flows were few and far between.

For midstreamers, a need is an opportunity, and a number of companies stepped up.

Between 2013 and early 2020, Enterprise Products Partners developed the Appalachia-to-Texas Express (ATEX) pipeline to transport ethane to Mont Belvieu, TX; Energy Transfer built out both the Mariner West pipeline to move ethane to Sarnia, ON, and the Mariner East system to pipe ethane, propane, and normal butane to the company’s Marcus Hook, PA, marine terminal near Philadelphia; and Kinder Morgan brought online the Utopia Pipeline to send ethane to Windsor, ON. Also, Shell is building the Falcon pipeline system to transport ethane to the company's planned steam cracker in western Pennsylvania. 

Oil, Gas Drilling To Hit 20-Year Low -- July 14, 2020

Link here.

The number of drilled wells globally is expected to reach around 55,350 this year, said Rystad Energy, the lowest level since at least the beginning of the century as oil and gas activity, including the drilling market both in terms of wells drilled and related demand for drilling equipment, has been stymied by the COVID-19 pandemic.

The decline is a staggering 23% fall from 2019’s number of 71,946 wells. Rystad Energy’s forecast, which extends to 2025, does not expect last year’s number to be met or exceeded within the considered timeframe.

Drilled wells are expected to partly recover to just above 61,000 in 2021, as governments ease travel restrictions, boosting oil demand and prices. Then numbers will rise further to just above 65,000 in 2022 and remain just below 69,000 until the end of 2025.

North America is likely to be most affected, with the country’s rig count already down to historic lows just a few months into the downturn. Although modest recovery is possible in second-half 2020, drilling activity will remain more than 50% below the levels seen at the same time last year.

It should be remembered that Saudi was feeling the "heat" well before Covid-19 became a thing. Saudi Arabia announced their attempt to "break" shale just before Covid-19 destroyed demand.

Like "types" of oil (heavy, light, sweet, sour), wells are not created equally (off-shore, on-shore, conventional, tight, vertical, horizontal). Nor can we compare production from wells drilled by rigs with 1981 technology with rigs being used in 2021. And so much more. We need better metrics. 

Vertical Wells -- July 11, 2020

A reader writes, wondering if five weeks is long enough to establish a trend:

With low prices for oil & natural gas, it appears there has been an ongoing shift from expensive horizontal drilling to the less sophisticated conventional vertical drilling.

Recall that in the Dallas Fed energy survey of a couple months ago, of the 157 oil executives responding, none could profitably drill a new well in any US shale basin at an oil price below $30 a barrel, but at least one company thought they could profit with oil at $15 a barrel by drilling a vertical well.

On June 5th, there were 253 horizontal rigs, 24 directional rigs, and 7 vertical rigs deployed; but as we have just reported, by July 10th horizontal rigs had fallen by 33 to 220 rigs, directional rigs had fallen by 5 to 19 rigs, but vertical rig activity had increased by 12 rigs to 19 vertical rigs.

My sense is that some of this is taking place in the Permian basin, as horizontal rigs are being shut down in Permian Delaware, while vertical rigs are starting up in the Permian Midland, but to establish that, one would have to locate the individual well records on the North America Rotary Rig Count Pivot Table, and I don't have the patience for that tedious endeavor.

Nor do I.

From Xinhuanet:

The number of active drilling rigs in the United States decreased by 5 to 258 this week, down by 700 year on year, according to .... Baker Hughes.

These active drilling rigs included 181 oil rigs operating in the U.S. oil fields, down by four from the previous week; 75 gas drilling rigs, down by one from the previous week, and two miscellaneous rigs, unchanged from last week.

The 258 rigs included 246 land drilling rigs, down by five from the previous week, and 12 offshore drilling rigs, unchanged from the previous week. There was no inland waters drilling rig this week, same as last week.

Of the 258 land rigs, 19 were directional drilling rigs, 220 were horizontal drilling rigs and 19 were vertical drilling rigs.

I have not seen any new vertical well activity in the Bakken, so I tend to agree that it's most likely in the Permian where there might be new vertical drilling.

Rig Counts? Shale Needs New Metrics -- June 28, 2020

Updates

Later, 8:02 p.m. CDT: a reader sent me this note earlier today -- but I didn't have a chance to post it until now -- sorry for the delay --

About a year or so back, more and more operators were incorporating a 'stages per day' number in their presentations as a way of displaying increased productivity/efficiency in their operations.

Drilling footage per 24 hours is another commonly cited metric.

Seven [frac] stages per day is about the norm, with some touting 12 stages in a day as their record.

It is fairly routine for a frac spread to complete 3 to 5 wells simultaneously on a pad nowadays. At 40 stages per well, for illustration, a 4-well frac will be 160 stages over - maybe - 3 1/2 weeks. While this may be a more relevant criteria as regards near term future production, it is still but one of several factors.

Ultimately, price received (aka revenue) remains the dominant determining component.

Restricted output (choking back), temporary shut ins also figure into these projections.

Overall, it looks to me that this epochal, global Game of Chicken will greatly favor the US independent shale producers. Massive backlog of DUCS can be revenue producers fairly quickly at -relatively - minimal cost. Slashed CAPEX (new drilling) will greatly reduce ongoing expenses. Assets of the inefficient (Chesapeake kinda fits this slot) will be acquired by the better-run outfits, making them even stronger. Precarious times will not last, but the strong will certainly survive.

Comment: I agree completely that revenue is the dominant determining component. What I find  interesting is comparing conventional onshore vertical wells with tight, unconventional, horizontal wells. To the best of my knowledge -- this was going on before I started following the oil industry -- with onshore vertical drilling, once wells reached total depth they were brought on line fairly quickly. The industry really wasn't talking about DUCs. But with tight, unconventional horizontal wells, there were two components -- the vertical and the lateral. It didn't occur to a lot of folks early on that someday, horizontal wells might be drilled but not completed. That was a completely different twist. I find it quite fascinating.

Original Post

I don't want to say "rig counts don't matter" .... but ...

Just released by EIA today on twitter (same graph: one from twitter, one from EIA):

One suggestion I've heard: frack stages/month.

One has to admit, the "production" graphs placed opposite the "drilling/well count" graphs really defy "conventional" explanation. 

Looks Pretty Sparse Right Now, Ten Years After -- May 2, 2020

Link here.

History of active rigs in North Dakota at this post.

Graphics here.

Cornucopians: Maugheri was correct -- back in 2012 -- wow, incredibly prescient.

In 2005 investment banker Mathew Simmons predicted that Saudi Arabia could not increase its oil production. Since then its output has risen from nine million barrels a day to 10 million. Meanwhile, a recent report by oil executive Leonardo Maugheri, which was published by Harvard University, provides compelling evidence that a new oil boom has begun. If, like me, you are confused I am not surprised. One thing seems clear: we are not likely to run short of oil any time soon and one piece of good news is that at least some of the soothsayers now appear willing to own up to their faults.  

In a significant statement, leading environmentalist George Monbiot admits: “The facts have changed, now we must change too.” Much to his credit he admits that he and his colleagues made either vague or specific predictions and in all cases were wrong. In a rather rueful admission he ends by saying: “The problem we face is not that there is too little oil but that there is too much.”

Most interesting: back in 2005 and 2012, Permian shale was not on anyone's radar scope (at least publicly).

Ten years after:

I'd Love to Change the World, Ten Years Later, Alvin Lee
From The New York Times, March 6, 2013:

Alvin Lee, whose fire-fingered guitar playing drove the British blues-rock band Ten Years After to stardom in the 1960s and early ’70s, died on Wednesday in Spain. He was 68.

He died “after unforeseen complications following a routine surgical procedure,” according to a brief post by family members on his Web site. His manager, Ron Rainey, said that Mr. Lee had been living in southern Spain for some time.

Mr. Lee was not as well known as other emerging British guitar stars of the era, including Eric Clapton, Jimmy Page, Jeff Beck and perhaps even Albert Lee, with whom he was occasionally confused (and with whom he once recorded alongside Jerry Lee Lewis). But he was among the nimblest when it came to musicianship.

On his Gibson ES-335 Mr. Lee could shift instantly from speedy single-string leads to rhythmic riffs while doing his best to sing like his American blues heroes. He grew up listening to his father’s Big Bill Broonzy and Lonnie Johnson records in Nottingham, England.

Laying Down Rigs -- March 30, 2020

Currently:

	3/30/2020	03/30/2019	03/30/2018	03/30/2017	03/30/2016
Active Rigs	44	66	60	49	31

Nationwide, weekly report:

From Focus on Fracking, link here:

Continental Resources and Whiting Petroleum Corporation are among the latest operators with Bakken assets announcing sharp drops to capital expenditures in the wake of an ongoing price war between Russia and OPEC.

Continental said it will reduce its 2020 capital expenditures by 55 percent, dropping its 2020 capex to $1.2 billion.

Whiting will cut capex by 30 percent, or $185 million, dropping its total capital budget to between $400 to $435 million.

For Continental, this translates to a reduction of six rigs in the Bakken, dropping it from nine to three for 2020. Continental will also cut rigs in Oklahoma, going from 10.5 to about four rigs there.

Whiting, which had already made some cuts last year, said it will drop another rig and another completion crew within the next month.

Continental expects the revision to its capex to have slight impact on production statistics. It is projecting the drop in crude oil production will be less than 5 percent.

Whiting said its cuts will have “moderate impact” on 2020 crude oil production, but deferred specifics to more formal guidance that it will release during its first quarter earnings call.

Continental’s Chief Executive Officer Bill Berry said the company is also looking at cost-saving initiatives across its operations to remain free cash flow positive, and expects to remain cash flow neutral even under $30 per barrel WTI. 

Norway's Equinor is halting activity at its US shale assets as part of measures to slash spending in response to the oil price collapse, the company said Wednesday, March 25, 2020.

All drilling and well completion activities at Equinor's gas-focused US shale assets are being suspended to cut spending and "produce the volumes at a later period", the company said.

The majority of Equinor's US shale production comes from the eastern Marcellus gas play which is targeted at consumers in New York State.

The move, which followed an announcement to suspend share buybacks, is part of a wider 20% cut in organic capex for 2020 to around $8.5 billion from $10 billion-$11 billion , Equinor said. The company also said it will reduce planned exploration spending this year to $1 billion from around $1.4 billion and cut operating costs by around $700 million compared with original guidance.

Much, much more at the link.

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Before WWI

This is simply impossible to fathom. From Edmund de Waal's The Hare With The Amber Eyes, c. 2010:

"[In 1914] Victor (the author's great-grandfather) had become a subject of his Majesty Franz Josef, the eighty-four-year-old Emperor of Austria, King of Hungary and Bohemia, King of Lombardy-Venetia, of Dalmatia, Croatia, Slavonia, Galicia, Lodomeria and Illyria, Grand Duke of Tuscany, King of Jerusalem, and Duke of Auschwitz.

One can see traces of the Holy Roman Empire in this list of holdings.

I did not recognize Lodomeria and was wrong about Illyria.

• Illyria: much of the Balkan peninsula, think Macedonia in the south and then extending north;
• Lodomeria: the area currently straddling the borders of modern-day Poland, Ukraine and Belarus.

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The Movie Page

I watched "Citizen Kane" from beginning to end for the first time ever last night, on TCM. Superb. For its time. Fascinating and engaging.

Most disappointing: I did not feel any emotional attachment to any of the characters, save perhaps Joseph Cotten's Jedediah. I was particularly unimpressed  with Dorothy Comingore, but I am in the minority. From IMDB:

Dorothy Comingore earned a place in motion picture history for her role as the second Mrs. Kane (the Marion Davies to Orson Welles's William Randolph Hearst) in Citizen Kane (1941). It was an extraordinary performance, justifiably praised by critics and public alike. She was apparently slated to be on the short list for an Academy Award. However, there was to be no stardom in films for this talented actress.

I may have to re-watch the movie just to watch her more closely. But I can't imagine re-watching the movie any time soon. One wonders if the movie's biggest problem is this: the trailers / marketing stills are unable to "captur"e the movie. 

On another note, it is truly amazing that Ted Turner acquired this movie as part of the library he bought when establishing TCM. What an incredible bit of luck.

On the other hand, earlier in the day I watched The Heart Is A Lonely Hunter was superb, and I could easily imagine watching this movie several times a year. It won't quite make my top ten movie list but would probably be among the top twenty.