Blame Game: California Refiners Blame Others For High Gasoline Prices; From Denver, The Kennedy Clan Can Head To Cheyenne -- December 16, 2016

Updates

December 17, 2015: Wow! After the Kennedy clan leaves Denver, and then after departing Cheyenne, they can complete their western Ski Swing by heading up to Mount Baker outside of Seattle, WA. Tweeting now, these two tweets:

• Mt. Baker snow depth 80". Same time last year, it was 6". Could be triple digit by the weekend.  
• If models are correct, nearly every western WA mountain snowfall reporting location could have over 100% of normal snowfall by weekend.

Original Post 

The blame game:  Oil refiners blame California regulations, import issues and refinery closure for high gas prices. The Los Angeles Times is reporting:

California's stubbornly high gasoline prices in 2015 resulted from state regulations, trouble with imports and an outage at a major refinery.

Speaking to the state Petroleum Market Advisory Committee for the first time since expensive California gasoline brought huge profits to oil refineries this year, the Western States Petroleum Assn. said the unusually large gap between the state's average price for a gallon of regular gas and the national average involved matters out of the oil refinery industry's control.

Imports not sufficient:

No tankers were available in the Gulf Coast to bring fuel to California. Better deals were available to suppliers such as India, as global demand for gasoline this year has soared.

Regulations:

The average gas prices in California typically runs higher than the average for the rest of the nation because of the unique blend of environmentally friendly gas as well as state taxes and fees.

But this year, the gap was unusually wide, with the state average as much as 75 cents a gallon more than the national average. In the Los Angeles area, the gap was even greater — as much as $1.50 higher.

The refinery outage:

Blame for much of the disparity this year fell on the outage at Exxon Mobil's Torrance refinery. Exxon reduced output at the facility to less than 20% after an explosion in February destroyed a pollution control system.

Normally, Torrance accounts for 10% of the state's refined capacity and 20% of the capacity in Southern California.

Oil industry experts thought the plant would return to service by July, even if only with a temporary fix. Then it was expected that perhaps by year's end, Exxon would increase production.

Neither happened. And now the plant isn't expected to return to full capacity until February, just in time for Exxon to sell the facility to contracted buyer PBF Energy, a Parsippany, NJ-based firm.

But even as inventories in California have increased from summer lows, gas prices in the L.A. region and across the state remain out of step with the rest of the country.

Read the rest of the story at the link.  

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Usually It's Just Hot Air, But ... 

An Algore Cold Front Is Moving In From The West

Breaking news: Cheyenne, WY, broke 123-year-old snowfall record with 6.7 inches; old record was 3.3 inches in 1892.

After Denver, the Kennedy clan can head for Cheyenne. Algore is probably already there testing out his new SUV.

But look at that in Cheyenne. Again, it was not simply beating the record by a tenth of an inch, but the old record was absolutely crushed. More than twice as much snow fell as the previous record.

From I Hate The Media, back in 2010:

The pathetically unprophetic Robert F. Kennedy, Jr. wrote a column last year in which he bemoaned global warming and suggested that children of the future might never see snow again.

Meanwhile out in southern California:

National Weather Service reports record low temperature of 40 degrees set at Los Angeles airport, tying record set in 1971.

Wasn't there a global warming conference or something in Paris or Vienna or Bowman just last week?

About That NDIC Spreadsheet Error -- Maybe Not So Fast -- December 16, 2015

This post is done somewhat tongue-in-cheek.

Earlier today there was a story that the NDIC recently discovered an error in their "master" spreadsheet. The spreadsheet had calculated that the Fort Berthold Reservation accounted for "30%" of all oil produced by the Bakken in North Dakota. In fact that was an error. Corrected, the reservation apparently accounts for 17% of all oil produced by the Bakken in North Dakota. The story is at The Dickinson Press.

Among the many prolific oil fields in the reservation are Clarks Creek oil field and the Antelope oil field.

EOG's Hawkeye wells in Clarks Creek and the Antelope oil fields have, pretty much, all surpassed the 500,000 bbls of oil (cumulative) of the Hawkeye wells that have been drilled. It might be hard to find a "family" of wells that have produced so much.

Tomorrow, we're going to see what EOG's Riverview wells are capable of producing in these two oil fields. (Riverview wells in Antelope oil field; Riverview wells in Clarks Creek oil field.)

Based on the production that is now being produced in these two fields in the reservation and the severe cut-back in oil production throughout much of the rest of the Bakken (due to the slump in oil prices), it may turn out that the reservation in the not too distant future does account for 30% of all Bakken oil produced in North Dakota.

Now that would be "funny."

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A Note to the Granddaughters

That reminds me of a story. Many, many years ago, maybe 20, 25 years ago, now, I forget. My brother-in-law worked in a grocery store out in California, Ralph's to be precise. One of his responsibilities was to order bottled water that was sold by that particular Ralph's. I don't know how he did it, but one day he made a significant error, and ordered on the magnitude of 10x more bottled water than what was usually ordered, 10x more than necessary.

When the pallets and pallets of bottled water arrived, the error was considered so "bad," that despite years of good service, it appeared he might be fired.

That evening, overnight, a severe earthquake hit southern California. The one thing everyone needed that next morning was lots of bottled water.

Overnight, my brother-in-law went from being the village idiot to being a local hero.

Five (5) New Permits -- North Dakota, December 16, 2015; EOG To Report Huge Well Thursday -- 90,000 Bbls In One Month; 250K In < 5 Full Months

For the archives: NDIC accounting error overstated the reservation's contribution to total North Dakota production. The error goes back several years; the NDIC noted it in a footnote.

Wells coming off the confidential list Thursday:

• 30286, 1,974, EOG, Riverview 102-32H, Antelope, 23 stages, 12.8 million lbs, t6/15; cum 248K 10/15;
• 30369, SI/NC, Petro-Hunt, Thompson 153-95-8D-6-3H, Charlson, no production data,
• 31144, SI/NC, XTO, Ryan 14X-9A, Siverston, no production data,
• 31243, SI/NC, SM Energy, Smokey 14B-9HN, West Ambrose, no production,

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

30286, see above, EOG, Riverview 102-32H, Antelope, t - pending; cum 247K 10/15;

Date	Oil Runs	MCF Sold
10-2015	39182	53058
9-2015	45278	56321
8-2015	39590	10574
7-2015	87531	0
6-2015	35152	0

EOG will rock you!

We Will Rock You, Queen

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Five (5) new permits --

• Operators: CLR (3), Whiting (2)
• Fields: Alkali Creek (Mountrail), Bell (Stark)
• Comments: 

HRC renewed four permits, all Fort Berthold permits, in section 7-152-93.

Four (4) producing wells were completed:

• 30068, 313, SM Energy, Helen 1B-26HN, West Ambrose, t12/15; cum --
• 30067, 298, SM Energy, Gertrude 1-26HN, West Ambrose, t12/15; cum --
• 30065, 401, SM Energy, Bud 1-26HS, West Ambrose, t12/15; cum --
• 30163, 989, Hess, AN-Prosser-152-95-1102H-6, Sanish, t11/15; cum --

Strike Oil's Artz well (#17606) was abandoned.

How About 90,000 Bbls In One Month In A Short Lateral, 320-Acre Spacing, Antelope Oil Field, The Bakken, North Dakota -- December 16, 2015

Note: I track the EOG Riverview wells in the Antelope oil field at this post. It is confusing because there are also EOG Riverview wells in Clarks Creek, just to the west. I track those wells here, as well as the Antelope oil field Riverview wells.

Updates

March 7, 2017: a well of interest.

Later, 7:19 p.m. Central Time: see first comment below.

On slide 10 of EOG's 3Qtr presentation, they graphically depict the 4,000+ micro seismic events (fractures) per 1,000' that occur with these high density fracs. This is almost a tenfold increase from frac jobs of just a few years ago. 

What is more significant, however, is that they can contain the frac radius fairly close to the wellbore, thus enabling the placement of far more laterals per DSU.

EOG increased their estimated recovery Bakken wide as a consequence of the Riverview's output. 

Other operators will be sure to follow. 

This is the graphic the reader refers to:

Original Post

 

Hold on to your hat. I can't wait to see the frack data on this well; it should be available tomorrow.

Remember: this is a short lateral. The spacing unit: 320 acres according to the permit application.

Spud date: 3/6/15
Cease drilling: 3/20/15

Total depth: 15,564 feet
Total vertical depth: 10,523 feet

Note: almost 90,000 bbls in one month -- rounding up......

We talked about this well several months ago. See this post. Also here. And in a meandering note.

At the links, note the location of this well, and its relationship to Clarks Creek. 

By the way, this is another good example of a well being on the confidential list, then coming off the confidential list and going to SI/NC list, and then going back on confidential list before being fracked. Some years ago, T----- stated that wells don't come on and off and then back on the confidential list.

30286, 1,974, EOG, Riverview 102-32H, Antelope, 23 stages, 12.8 million lbs in a short lateral:

Monthly production data:

Pool	Date	Days	BBLS Oil	Runs	BBLS Water	MCF Prod	MCF Sold	Vent/Flare
SANISH	1-2017	31	10612	10569	5452	40777	35662	1298
SANISH	12-2016	31	11111	11195	6329	39017	34624	576
SANISH	11-2016	23	7861	7952	5220	24272	20841	671
SANISH	10-2016	27	8043	8359	4823	41155	33927	3914
SANISH	9-2016	30	9652	9189	5461	47459	43710	55
SANISH	8-2016	31	10869	10872	5701	49787	45956	14
SANISH	7-2016	31	11733	11779	5967	50360	46226	317
SANISH	6-2016	30	12463	12419	6193	50799	45306	1891
SANISH	5-2016	31	14855	14878	6857	57395	46190	7388
SANISH	4-2016	30	16350	16456	6965	58878	53689	1376
SANISH	3-2016	31	19902	19715	7669	70289	63240	2229
SANISH	2-2016	29	22669	22750	7780	69119	56213	9381
SANISH	1-2016	31	19102	19750	6541	22936	16813	2306
SANISH	12-2015	27	20327	19712	7534	44279	0	41153
SANISH	11-2015	22	23234	24173	7765	67426	0	64716
SANISH	10-2015	31	39211	39182	10746	82984	53058	26345
SANISH	9-2015	30	45634	45278	11980	81474	56321	21521
SANISH	8-2015	23	39587	39590	11087	81021	10574	67872
SANISH	7-2015	31	86924	87533	22132	181681	0	177874
SANISH	6-2015	22	36619	35152	11454	62522	0	59880

It's going to be interesting to see the frack/completion data tomorrow.

From FracFocus (link here): 

• it was fracked between 5/10/15 and 6/14/15 (inclusive)
• total volume water: 6,437,764 gallons = 53,725,744 pounds of water or about 54 million lbs of water
• by weight, the water + sand: 80.64% was water; 19.23% was sand

Working backwards, I get about 12 million lbs of sand. The most sand I recall used by EOG for a frack was 14 million lbs, although deep in the recesses of my mind, I vaguely recall there might have been a 19-million-lb frack. Ah, yes, it was 19 million lbs; here are some "monster wells" with upwards of 19 million lbs.

By the way look at the halo effect on the earlier well on the same pad. The names of these wells suggest the first well (#19247) is a middle Bakken well, and the newer well (#30286) is a Three Forks well:

• 19247, 1,692, EOG, Riverview 01-32H, Antelope, off-line much of 2015, short lateral, 320-acre spacing; 15 stages, 9.2 million lbs; t11/10; cum 207K 10/15;  

The halo effect may not be much, but there was a slight increase in the production (although, again, it could have been due to other factors than the fracking of neighboring well):

Pool	Date	Days	BBLS Oil	Runs	BBLS Water	MCF Prod	MCF Sold	Vent/Flare
SANISH	10-2015	31	2360	2276	786	4992	0	3841
SANISH	9-2015	30	2523	2431	629	5126	0	4020
SANISH	8-2015	31	3029	3047	607	5421	0	4270
SANISH	7-2015	20	2869	2589	687	4098	0	3366
SANISH	6-2015	0	0	0	0	0	0	0
SANISH	5-2015	0	0	0	0	0	0	0
SANISH	4-2015	0	0	0	0	0	0	0
SANISH	3-2015	0	0	0	0	0	0	0
SANISH	2-2015	2	114	784	117	235	0	170
SANISH	1-2015	31	1982	2113	384	4496	0	3348
SANISH	12-2014	31	1649	1828	440	3524	73	2303
SANISH	11-2014	30	1851	1836	487	3984	1134	1736
SANISH	10-2014	31	2110	1827	692	5783	641	3991
SANISH	9-2014	30	1752	1811	286	4925	18	3816
SANISH	8-2014	31	1944	2188	424	4309	315	3839
SANISH	7-2014	31	1921	1720	429	4244	693	340

Saudi Expanding As A Refiner -- December 16, 2015

This is really a cool story and helps explain why the US continues to import so much Saudi Arabian oil. Bloomberg is reporting:

Taking a controlling interest last year in South Korea’s third-largest refinery highlights the shifting dynamics of the oil business. With crude prices down by more than half in the past two years, the Saudis and other oil-rich countries are fighting to lock in customers. Asia, which now accounts for 70 percent of Saudi oil exports, is the primary battleground.

For Saudi Aramco, as the company is widely known, that means purchasing stakes in refineries, with contracts guaranteeing most of the oil will come from the kingdom. Aramco has invested in three processing facilities in Asia. As Iran prepares to boost its own exports, the Saudis are on the cusp of a dramatic increase in its commitment to the region, eyeing billions of dollars of projects in countries from Indonesia to Vietnam.
Owning refineries in Asia is “part of a long-term strategy to consolidate” the Saudi market share in a key region, said Mustafa Ansari, an analyst at the Arab Petroleum Investment Corp., a state-controlled development bank in Dammam, the city at the heart of Saudi oil country.

The Saudis pursued a similar path in the U.S. three decades ago to lock in sales as crude prices tumbled, buying into three oil-processing facilities in Texas and Louisiana since 1988. The strategy worked: Motiva Enterprises LLC, the U.S. refiner half-owned by Aramco, imported 65 million barrels of Saudi oil in the first eight months of 2015 -- more than triple what ExxonMobil Corp. got from the kingdom in that time, U.S. government data show.

More:

The push into Asia comes at a pivotal moment in Saudi Arabia. With oil revenue falling after crude slumped 34 percent this year, the kingdom is tightening its belt just as a new king ventures away from the kingdom’s traditionally conservative diplomacy. The International Monetary Fund predicts a budget deficit exceeding 20 percent of economic output this year. 

At Aramco, meanwhile, recently appointed Chief Executive Officer Amin Nasser is overseeing a plan to make the world’s biggest oil company a more integrated operation. Long focused on producing crude, Aramco plans to almost double its refining capacity by 2025 to 10 million barrels a day, equivalent to its current output of oil. That would put Aramco ahead of ExxonMobil as the world’s largest refiner.

Much, much more at the link.