Wednesday, October 28, 2015

Nearly Half Of All Non-Profit Insurance Plans Created Under ObamaCare In 2011 Will Close -- Loss? $2.4 Billion -- Whatever -- October 28, 2015; Will This Story Have Legs?

Updates

July 13, 2016: add Land of Lincoln Health to this list of failed co-ops. 

November 5, 2015: Health Co-Ops' Failures Spur Finger-Pointing; nonprofits' financial squeeze causes consumers to lose coverage -- WSJ:
From the beginning, the co-ops faced opposition from commercial insurers, while some Republicans opposed programs set up under the law to help offset financial losses by insurers such as co-ops, saying that amounted to a bailout. Actuaries said the co-ops would need $10 billion in funding, but they received $2.4 billion in loans.
That seed money also came with strings. The co-ops couldn’t use federal funds on marketing: One in Colorado drummed up business by having scantily clad people walk around with signs saying “Get Covered.”
Another concern were programs aimed at offsetting insurers’ financial losses on the exchanges. The Obama administration sought to spread out risks through special cost-sharing programs. The first, known as risk adjustment, distributed money from plans with healthier and younger enrollees to plans with older and sicker customers. Here, co-op officials said the formula used to determine payments left the co-ops at a disadvantage compared with larger insurers, in part due to their small market share and scarce data on enrollees’ health status from prior years.
The second setback came from a program known as risk corridors where insurers pay money into a sort of joint savings account based on their estimates of how much they would lose or make. If claims were a lot more than projected, the fund would cover much of the gap.
The hitch: Insurers sought more than they paid in, requesting $2.87 billion to cover losses but receiving only $362 million. All insurers got a fraction of what they requested, but unlike the larger companies, the co-ops and smaller insurers have little cushion to close the gap.
November 5, 2015: "Collapsing ObamaCare Co-OPs Signal Big Trouble to Come," -- The Fiscal Times:
A key piece of the Obama administration’s plan to control the health insurance market is in a state of collapse. With it will go the philosophical underpinning of big government solutions to private-sector problems--and that will pose a core question for voters in the upcoming national elections.

In the original plan for the Affordable Care Act (ACA), better known as Obamacare, Democrats wanted to include a “public option” in the health insurance exchanges – a government-run plan that advocates claimed would guarantee affordable access. To critics and consumers, it looked like an end run to a single-payer health care system.
When it became clear that the public option would be a non-starter, Barack Obama and Democrats in Congress settled on a compromise: health insurance co-ops. These non-profit entities would operate under consumer control, providing an option outside of for-profit insurer plans that would focus entirely on patient care. The ACA provided for a significant amount of backing from the federal government, both in loans and in the so-called “risk corridor” funding that gave the Obama administration the option of covering losses for insurers in the first few years of Obamacare.
That backstop was necessary, advocates insisted, as insurers and especially the co-ops needed time to adjust for unknown utilization patterns, premium pricing, and the proper level of deductibles. The co-ops remained an important component for advocates of the government-controlled system, both as a check on for-profit insurers and as a proof of concept for excluding profit-based coverage entirely at some point.
Eventually, the Obama administration managed to get 23 co-ops in operation by the time of the October 2013 rollout of the Obamacare exchanges. Thanks to the risk corridor and reinsurance provisions within the ACA, those co-ops survived the first two full years of the program, albeit with the same premium pricing issues that other insurers experienced. However, the so-called “cromnibus” bill that resolved the FY2015 budget restricted HHS’ risk-corridor funding only to monies collected for that purpose, rather than through the agency’s budget or other revenue source.
As it turns out, the non-profit co-op model for health insurance turns out to be unsustainable without government subsidies. More than half of the co-ops have been shut down this year, and nine of the 12 have shut down since October 1, either by HHS or by the states in which they operate. Over a billion dollars in loans and and backstop payments have been lost.
The latest failure to be announced was in Michigan, where Consumers Mutual Insurance announced Tuesday that it would not sell insurance for 2016. The failure of these dozen co-ops has left nearly 750,000 consumers in the cold, looking for a plan from a traditional insurer at a higher price.
What happened? Predictably, the financial model that critics warned would lead to a death spiral for insurers hit the co-ops first. “They were low-cost alternatives,” Kaiser Health’s Mary Agnes Carey told PBS anchor Judy Woodruff. “If they were the lower price point, that tended to attract sicker beneficiaries. That would drive up their costs.”
More at the link.
Original Post
 
Fiscal Times is reporting:
Nearly half of the 23 non-profit insurance plans created under Obamacare in 2011 at a cost of $2.4 billion have announced they will close by the end of the year.
Utah’s Arches Health Plan on Tuesday became the 10th health insurance co-op to announce that it was closing its doors.
The move comes soon after the Obama administration’s decision on Oct. 1 to provide just 12.6 percent of the $2.87 billion that insurers were seeking to offset losses caused by unexpectedly high coverage costs.
That decision -- to decimate funding of a “risk corridor” program designed to reimburse insurers hammered by excessive losses due to a disproportionate share of very sick or elderly enrollees -- is triggering a mass exit of these co-ops from the market.
With a new Affordable Care Act enrollment period beginning on Sunday, many of the co-ops on shaky financial ground must decide before then whether to remain in business or shut their doors.
At least thus far, the Republican-controlled Congress has proven indifferent to their plight and officials in the Department of Health and Human Services have been unwilling to intervene. As a result it is likely that other co-ops will announce they are going out of business by the end of this week. GOP lawmakers say the only solution to the problem is to scrap Obamacare and start over.
Does anybody even care any more? The third paragraph above suggests that even the White House no longer cares.

There seems to be a bit of irony in this story. The GOP, who wanted to defund ObamaCare couldn't do it. But, here, now we have the architect of the eponymous plan, President Barack Obama himself defunding the ObamaCare co-ops. 

Random Update Of A BR Hammerhead Well In Sand Creek -- October 28, 2015

Updates

May 25, 2017: production profile is erratic, but nothing of note to report. 

Original Post

Random update of this well:
  • 28779, 1,443, BR, Hammerhead 11-26TFH, Sand Creek, a Weatherford operation, 1280-acre spacing, Three Forks B1, very low gas units, 35 stages, 7.3 million lbs, t6/15; cum 125K 5/17;
Production profile:

PoolDateDaysBBLS OilRunsBBLS WaterMCF ProdMCF SoldVent/Flare
BAKKEN5-20173145214484543497199397245
BAKKEN4-201724558653585724101279457639
BAKKEN3-20170030000
BAKKEN2-2017266269691581530
BAKKEN1-201731424741385387492328252021
BAKKEN12-201619219822102650115511080
BAKKEN11-201630268426673649382737530
BAKKEN10-201631274327444185430542280
BAKKEN9-201630269226254080360935350
BAKKEN8-2016877782311806606400
BAKKEN7-201630262926443644485247780
BAKKEN6-201630350734916317528552110
BAKKEN5-2016312196219540242589242290
BAKKEN4-20162025772651508713523134730
BAKKEN3-20163174127420911840261401840
BAKKEN2-20162987688752894836108360360
BAKKEN1-2016311223212204144623668336482124
BAKKEN12-2015311259612579127623180731520211
BAKKEN11-20152598919884734126628265660
BAKKEN10-20153114219142191395937714376370
BAKKEN9-20153089738890843023018229440
BAKKEN8-2015368683662822750
BAKKEN7-20150000000
BAKKEN6-201514144971449715267374192072616658
BAKKEN5-20150000000
BAKKEN4-20150000000

This is not particularly out of the norm for BR wells early on in this area of the Bakken (Sand Creek) but it is interesting enough to follow. The file report noted that "a last minute change in the proposed completion optimization, the 4 1/2" 13.5# liner which we ran to 20915' MD was cemented in place with 590 sxs Class G cmt. This would modify the proposed stimulation to a plug and perf with 35 stages."

Because of limited time, I'm only going to post this much and then come back to this one later if I remember.

But note the production profile.

Note the amount of proppant: over 7 million lbs with fairly typical number of stages for Bakken wells in 2015.

BR Permitted For Re-Entry Of A Sun Notch Well In Sand Creek, The Bakken, North Dakota -- New Poll

Updates

October 8, 2016: this is really cool. The well was re-entered, re-fracked (May, 2016), and a new IP provided:
  • ORIGINAL: 20336, re-entry/1,162, BR, Sun Notch 43-32H, Sand Creek, McKenzie County, 20 stages, 2.1 million lbs; target zone, 20-feet; ; t9/11; cum 37K 8/15;
  • UPDATE: 20336, re-entry/2,204, BR, Sun Notch 43-32H-R, Sand Creek, McKenzie County, 32 stages, 4.4 million lbs; target zone, 20-feet; ; t5/16; cum 314K 3/19; a really nice well, though production is now falling off again, 3/19;
Production profile:
PoolDateDaysBBLS OilRunsBBLS WaterMCF ProdMCF SoldVent/Flare
BAKKEN12-2016291424413785365926735267350
BAKKEN11-2016301535715489372629642296420
BAKKEN10-2016311550415314352541641416410
BAKKEN9-2016301469614187411826688266880
BAKKEN8-2016201117812114310622273222730
BAKKEN7-2016311916618639669836095360950
BAKKEN6-2016108807821229001521193365875
BAKKEN5-20160000000
BAKKEN4-20160000000
BAKKEN3-20160000000

Original Post 

A Burlington Resources well was permitted for re-entry:
  • 20336, re-entry/1,162, BR, Sun Notch 43-32H, Sand Creek, McKenzie County, 20 stages, 2.1 million lbs; target zone, 20-feet; ; t9/11; cum 37K 8/15;
Comments:   
  • I track the Sand Creek oil field here;  
  • of interest, this well, #20336, was the very first permit I posted following the original post, back in 2011
  • note: this well is still listed as having no pump; on "F" status 
  • note: this well's status is now LOC;
  • there is nothing in the file report that suggests there was any specific problem with drilling or fracking and yet this is a very, very poor well
  • it was originally fracked with 20 stages; 2.1 million lbs proppant
  • I assume they are going back into re-frack, possibly target a different zone, but I don't think a permit is needed for simple "re-working" (although I don't know)
  • I will track this well at "things to follow up on" 
  • this is getting way in the weeds, but maybe an interesting poll question to come out of this one 
NDIC File No: 20336    
Well Type: OG     Well Status: A     Status Date: 9/18/2011     Wellbore type: Horizontal
Location: NESE 32-153-96     Footages: 1320 FSL 275 FEL
Latitude: 48.027371     Longitude: -103.044524
Current Operator: BURLINGTON RESOURCES OIL & GAS COMPANY LP
Current Well Name: SUN NOTCH 43-32H
Elevation(s): 2378 KB   2352 GR   2352 GL     Total Depth: 20457     Field: SAND CREEK
Spud Date(s):  3/13/2011
Completion Data
   Pool: BAKKEN     Perfs: 10889-20457     Comp: 9/18/2011     Status: F     Date: 9/20/2011     Spacing: 2SEC
   Pool: BAKKEN     Status: LOC     Date: 10/28/2015
Cumulative Production Data
   Pool: BAKKEN     Cum Oil: 36676     Cum MCF Gas: 50940     Cum Water: 23839
Production Test Data
   IP Test Date: 9/20/2011     Pool: BAKKEN     IP Oil: 1162     IP MCF: 393     IP Water: 451

Monthly Production Data for past year:
PoolDateDaysBBLS OilRunsBBLS WaterMCF ProdMCF SoldVent/Flare
BAKKEN8-201519574422540706463243
BAKKEN7-201522687951657880663217
BAKKEN6-201525576432645967538429
BAKKEN5-20153188496487615831130453
BAKKEN4-201520673564567740549191
BAKKEN3-20152687781485419151562353
BAKKEN2-2015281225147714261109986124
BAKKEN1-2015144184556824070407
BAKKEN12-20140000000
BAKKEN11-20144163002470247
BAKKEN10-2014122683552133703700
BAKKEN9-201430794782726672047

First six months production:
BAKKEN2-2012720700407152254
BAKKEN1-201224302830390495104951
BAKKEN12-201111314401900190
BAKKEN11-2011296197790000
BAKKEN10-20110000000
BAKKEN9-201113152012631220402204

Fourteen (14) New Permits -- October 28, 2015; EOG With A Proposal For Another 10-Well Megapad

Active rigs:


10/28/201510/28/201410/28/201310/28/201210/28/2011
Active Rigs69191180186200

Wells coming off the confidential list Thursday:
  • 29803, SI/NC, BR, Morgan 14-21MBH, Pershing, no production data,
  • 30435, SI/NC, SM Energy, Anne 13B-19HS, Ambrose, no production data,
A Burlington Resources well was permitted for re-entry:
  • 20336, re-entry/1,162, BR, Sun Notch 43-32H, Sand Creek, McKenzie; t9/11; cum 37K 8/15;
Fourteen (14) new permits --
  • Operators: EOG (10), QEP (4)
  • Fields: Clarks Creek (McKenzie), Grail (McKenzie)
  • Comments: the QEP permits are for a 4-well pad; it looks like the EOG permits are for two neighboring pads -- one with 6 wells, one with 4 wells; close enough to be one large 10-well megapad; see this post for explanation of the graphic below which was posted earlier; all I've added in the graphic is the "new stuff" in green -- the new 10-well megapad proposed by EOG (disclaimer: I could be very, very wrong on all this. There's a lot going on and I don't always get things right the first time, and I can be wrong on even the second or third time. If this stuff is important to you, go to the source):



If a single well is equivalent to a small mom-and-pop convenience store, a 4-well pad is equivalent to the Little America Super Station on I-80 in Wyoming, and a 10-well pad is a small industrial park. A ten-well pad sitting next to another 10-well pad is ... well ... humongous.

How Irrelevant Is The Rig Count? Platts Tells You -- October 28, 2015

Tweeting now, from Platts:
Hess to halve Bakken Shale rig count in 2016 compared with 2015 levels, but oil and gas production to remain relatively flat.
In the Bakken, operators have gone from 240 rigs to 68 rigs and daily production is up slightly from a year ago.

******************************
Update On Four CLR Pasadena/Monroe Wells

A reader wrote moments ago that CLR has now completed these wells; the reader expects royalty checks from these four wells soon. Right now, they all show up as DUCs (SI/NC) or on DRL status.

Operators have 30 days after the last day of the month in which the wells were completed to report production or same period after first sales (something like that; I've forgotten the specifics). Bottom line: if the wells were completed sometime in October, the file reports over at the NDIC might not be updated until December.

The wells under discussion, first pad:
  • 23790, SI/NC, CLR, Pasadena 2-2H, Banks, no production data,
  • 23791, SI/NC, CLR, Pasadena 3-2H1,Banks, no production data,
  • 23792, SI/NC, CLR, Monroe 2-2H1, Banks, no production data,
  • 23793, SI/NC, CLR, Monroe 3-2H, Banks, no production data, 
Second pad:
  • 30251, drl, CLR, Monroe 7-2H, Banks, no production data,
  • 30252, drl, CLR, Monroe 9-2H, Banks, no production data,
  • 30253, drl, CLR, Monroe 6-2H, Banks, no production data,
  • 30254, drl, CLR, Monroe 8-2H, Banks,   no production data,
*************************
A Note To The Granddaughters

How about this? Can you imagine this?

One of your long-time neighbors visits another neighbor in your neighborhood for the first time. Your long-term neighbor is a meek, mild insurance agent. He just goes next door to meet his neighbor just to be social. The other neighbor is a bachelor, is very friendly; invites him in. The bachelor seems moderately well off, and it appears, based on the conversation, he apparently inherits money on a fairly predictable schedule.

While talking with his bachelor neighbor, your meek, mild insurance agent finds the the other man so creepy and the conversation becomes so strange, that he abruptly leaves, goes home, finds a shotgun he got from his father and has used only once for hunting, and then goes over to shoot and kill that bachelor neighbor.

The insurance agent subsequently disappears, last known to be holed up somewhere on the West Coast.

That's the story line for Edmund Wilson's "The Man Who Shot Snapping Turtles," the first short story in Memoirs of Hecate County. The story is so well written, it seems to be about a man who shot snapping turtles.

Another great ghost story writer was Henry James.