Primer On Natural Gas Liquids -- US Dept Of Energy -- December, 2017

Updates

February 22, 2018: be sure to watch comments. I can't bring them all to the main post (it would get too cluttered) but this one is too important to lose. From a reader:

The line to Alberta might well ship both ethane and propane either in batches or separated by pigs.

The huge cracker in India built by Reliance Industries is being fed by a virtual pipeline of brand new, built -for-purpose ethane carrying ships out of Morgan's Point.

Reliance said that even with transportation costs (halfway around the world), they are still profiting $300 million/year more rather than using naptha.

This shipping or liquefied ethane is a new industry entirely with Marcus Hook and Morgan's Point being the ports of origin. 

Original Post

 

For an understanding of natural gas liquids, a reader recommends this monograph: "Natural Gas Liquids Primer: With a Focus on the Appalachian Region" produced by the US Department of Energy, December, 2017.

Clicking on this link will result in a pdf that will load on your desktop, or you can click on this link which will lead you to the pdf link.

This link will also be found at the "Data Links" page tabbed at the top of the blog.

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And this blows me away.

The first thing I wanted to check: the volume of natural gas liquids produced in the Appalachian region, now that we know that number of North Dakota (posted earlier today or yesterday -- see below).

Hold your breath.

From the monograph linked above:

If I'm reading the graph correctly, and it's not a particularly difficult graph to read:

• in 2013, the Appalachian region was producing less than 250,000 bbls of NGL daily
• in 2016, production had jumped to 1.2 million bbls / day
• through 2049, production tends to level off at 1.2 million bbls daily

So? So what? What's the point?

The Appalachia (Marcellus/Utica) is a natural gas play. It's producing about 1 million bbls NGLs on a daily basis and is projected to level out at that level.

But yesterday, from this post:

• North Dakota produces more than 400,000 bbls of NGLs daily
• this NGL production will more than double by the 2030s -- ranging from from 800,000 to 1 million bbls daily

Okay, you can breathe now. I may be missing something or misreading something, but it seems fairly straightforward.

But there's more.

This is not as interesting, perhaps, but it certainly helps put things into perspective. This graph is from the same monograph:

This is annual production of natural gas in the Appalachian region, measured in trillions of cubic feet. Currently it looks like the region is producing around 8 trillion cubic feet annually but just a few years ago, half that much, about 4 trillion cubic feet. But just for the fun of it, let's call it 3.65 trillion cubic feet, divide by 365 and come up with 10 billion cubic feet / day.

North Dakota is producing 2 billion cubic feet / day. Yes, ten billion is 5x two billion -- a huge difference but it's not exponentially different.

I am simply blown away. The natural gas comparison might not be that remarkable, but the natural gas liquid comparison certainly caught my attention. It certainly helps explain why the NDIC and industry leaders in North Dakota have a sense of urgency about this issue. Even if there were no caps on flaring, what will the industry do with all this "by-product."

Disclaimer: especially for newcomers -- I often make simple arithmetic errors. I am inappropriately exuberant about the Bakken. I see things that may not exist. On many of the things I post I feel I am in a distinct minority. C'est la vie.

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A Summer Song

A Summer Song, Chad and Jeremy

Oasis Presentation -- January, 2017, Presentation

Wow, this is timely -- after all the recent posts about Oasis, natural gas processing, and pipelines, a reader just forwarded this Oasis January, 2017, presentation.

I posted much of this data when the presentation first came out but it's interesting to look at it again.

Data points, with emphasis on the Bakken; go to the linked presentation for more on the Delaware (Permian). Much of this was previously posted from a previous presentation, so much of it will not be repeated, (some personal comments):

• top tier assets: Permian and Bakken
• Williston:
• 518K net acres
• >90% held by production
• inventory substantially all operated; Williston, 100%; Permian, 90%
• 1,614 locations economic @$45 WTI and lower in the Williston Basin
• (1,614 locations at current max rate of drilling/completing: 14 years of inventory; but remember, these 1,614 locations are those that are economic at $45)
• core Bakken production continues to improve; >70 mboepd in October; 72 mboepd in November, already surpassing planned 2017 exit rate
• exit rate for 2018:
• Williston: 83+ mboepd
• Delaware (Permian): 5 mboepd
• 2018 development plan:
• Williston
• expect to drill and complete 100 - 120 operated wells 
• 5 rigs throughout the year
• wells costs about $7 million (less for 4mmlb; more for 10mmlb) 
• 120 wells x $7 million = $840 million
• Permian
• expect to drill 16 to 20 wells; complete 6 to 8 wells
• 1 rigs initially with potential to add a second in 2H18

By the way compare the Oasis drilling plan with that of Hess:

• Hess Corporation will spend $900 million to drill 120 wells with six drilling rigs and completing 85 wells in 2018 in the Bakken

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Faces In The Crowd

Five New Permits; One Producing Well Completed -- February 21, 2018

Active rigs:

$61.68↓	2/21/2018	02/21/2017	02/21/2016	02/21/2015	02/21/2014
Active Rigs	55	42	38	127	182

Five new permits:

• Operators: Newfield (3), Petro-Hunt (2)
• Fields: South Tobacco Garden (McKenzie); Charlson (McKenzie)
• Comments:

One permit renewed: an Oasis permit for a McCauley well in Williams County

Two permits canceled:

• Whiting: two P Earl Rennerfeldt permits in Williams County

One producing well completed:

• 32279, 2 (no typo), XTO, FBIR Blackmedicine 24X-21G, Heart Butte; API - 33-025-03068; t10/17; cum -- ; my hunch: more data to follow; from the geologist's report: Three Forks well; expands the existing Heart Butte field; background gas not remarkable, fluctuating between 50 and 700 units; however, the highest gas value recorded was 2,520 units at 15,781 feet; the ideal target zone was defined as an 18-foot interval, initially set at 10,088 feet TVD, 20 feet below the base of the Pronghorn formation. FracFocus shows the well was fracked 2/2417 - 3/21/17: total water, 8.8 million gallons; water, 86.8590% by mass; proppant, 11.24325% by mass;

• 8.35 lbs x 8.8 million gallons = 73.48 million lbs
• 0.868590 of x = 73.48 million lbs; therefore, total mass: 84.5969 million lbs
• 11.24325% of 84.5969 million lbs = 9.5 million lbs of sand

• there are twelve wells on this pad; the oldest one is #20600 (see below)
• the other eleven wells have permits with the numbers #32XXX
• 20600, 1,831, XTO, FBIR Blackmedicine 24X-21B, Heart Butte, 30 stages; 3.1 million lbs, t6/12; cum 279K 12/17; recent production:

Pool	Date	Days	BBLS Oil	Runs	BBLS Water	MCF Prod	MCF Sold	Vent/Flare
BAKKEN	12-2017	22	8169	7371	12287	4280	289	3829
BAKKEN	11-2017	8	1340	1530	3870	688	107	566
BAKKEN	10-2017	31	9071	9266	13613	5310	1826	3409
BAKKEN	9-2017	30	5755	5734	5749	4283	664	3577
BAKKEN	8-2017	15	3698	3286	1024	2534	1484	1010
BAKKEN	7-2017	0	0	0	0	0	0	0
BAKKEN	6-2017	0	0	0	0	0	0	0
BAKKEN	5-2017	0	0	0	0	0	0	0

The well has been off-line since 1/16 (until 8/17). The months leading up to 1/16:

BAKKEN	1-2016	0	0	0	0	0	0	0
BAKKEN	12-2015	15	1852	2077	1137	1083	199	701
BAKKEN	11-2015	30	3945	3924	1880	2457	1968	116
BAKKEN	10-2015	31	4240	4252	2050	2690	2278	12
BAKKEN	9-2015	30	4142	4237	1998	2511	2126	100
BAKKEN	8-2015	31	4350	4213	2189	2674	2329	52
BAKKEN	7-2015	31	4431	4405	2281	2647	2255	100
BAKKEN	6-2015	30	4541	4581	2262	2610	2300	18
BAKKEN	5-2015	31	4935	5224	2507	2693	2365	26
BAKKEN	4-2015	30	4871	4775	2437	2527	2235	0
BAKKEN	3-2015	31	4918	4915	2480	2562	2158	11
BAKKEN	2-2015	28	4461	4581	2253	2475	1805	316

Initial production and first nine months:

BAKKEN	1-2013	31	8113	7966	3575	11636	3274	8300
BAKKEN	12-2012	31	9013	9235	3906	6651	5309	1280
BAKKEN	11-2012	24	10482	10287	4480	13174	0	13127
BAKKEN	10-2012	22	5971	6218	1790	6253	779	5413
BAKKEN	9-2012	30	9458	9744	3850	3954	3044	850
BAKKEN	8-2012	26	13486	13316	5936	5176	5176	0
BAKKEN	7-2012	31	14304	21199	7831	16442	343	16099
BAKKEN	6-2012	30	7463	0	12349	9330	0	9330
BAKKEN	5-2012	0	0	0	0	0	0	0

Wow, It Never Quits, Does It? -- February 21, 2018

After all the "noise" the past couple of days regarding NGL infrastructure and natural gas/flaring, there seems to have been quite a response.

Now, this, sent to me by a reader (another "huge thank you") -- from a press release: ONEOK will invest $2.3 billion by 2020 to construct:

• a new 400,000-barrel per day (bpd) natural gas liquids (NGL) pipeline – the Arbuckle II Pipeline – that will create additional NGL transportation capacity between ONEOK's extensive Mid-Continent infrastructure in Oklahoma and the company's existing NGL facilities in Mont Belvieu, Texas;
• a new 125,000 bpd NGL fractionator – MB-4 – in Mont Belvieu, Texas, and related infrastructure; and, 
• a new 200-million cubic feet per day (MMcf/d) natural gas processing facility – the Demicks Lake plant and related infrastructure – in the Williston Basin. 

This is on top of more than $4 billion in announced capital-growth projects since 2017.

Note: Oasis is building the largest NG processing facility in North Dakota:

The Bismarck Tribune (http://bit.ly/2tFJeuB ) reports that Oasis Midstream wants to expand the Wild Basin Gas Plant in McKenzie County to make it the largest natural gas processing complex in the state.

The plant currently processes about 80 million cubic feet of natural gas per day. The expansion would add a new complex next to the existing plant, which would allow the plant to process an additional 265 million cubic feet per day.

So, if I read that correctly, a 345-million-cubic-feet natural gas processing plant. This is the plant that Andeavor will source with a new 44-mile pipeline to supply its Belfield logistics hub. 

Reason #3 Why I Love To Blog -- February 21, 2018

On December 22, 2017, I stumbled across a spectacular MRO well. There was a method to my madness but at the end of the day it was still a surprise when I found it. Here's part of that post:

Why I love to blog and never get tired of the Bakken. I'm always surprised: I thought this was going to simply be a "same-old, same-old" post. And then, surprise, surprise. In addition to a "record" (or "near-record) IP being reported, look at this (down below): an existing well was re-fracked at the same time the DUC was completed. And it was a Marathon well. Marathon took the lead in a re-frack program and it looks they are trying something different. Wow, I simply love it. It seems every operator is "bringing something different to the Bakken table."

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The DUC

Reported today, this DUC:

• 32888, 6,278, MRO, Forsman USA 44-22H, Antelope, Sanish, 45 stages; 15 million lbs, t12/17; cum --

That's a huge IP for oil; 6,278. It may be a record IP for crude oil alone (see below). For BOE, is it a record?

• IP oil: 6,278 (oil only; this may be a Bakken record)
• IP mcf: 6,989 = 1,164 boe
• IP total boe: 7,442 boepd

So, nope it's not a record but it's certainly very close. Note: I have not captured every IP of every well in the Bakken so I may have missed the record well, but does it really matter? Whether this well set a record or not, it's a huge well. See graphic below for the location of this well.

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In fact, according to the company, it did set a record for the Bakken: it set the 30-day IP record for a Bakken well according to its operator, MRO, in its 4Q17 earnings call, slide 15 of 32.

The production data:

Pool	Date	Days	BBLS Oil	Runs	BBLS Water	MCF Prod	MCF Sold	Vent/Flare
SANISH	12-2017	31	80868	79866	12403	102879	13858	80117

• 30 days oil: 78,259 bbls = 2,608/day for 30 days
• 30 days mcf: 99,560 mcf = 16,593 boe
• 30-day IP total boe: 94,852 boe

According to the slide, the company reported a 30-day crude oil IP of 3,005 bopd (not boepd). So perhaps there is more data yet to come.

Disclaimer: I often make simple arithmetic errors. In addition, I did this quickly; have not rechecked the numbers. If this is important to you, go to the source.