Saturday, June 30, 2018

US Natural Gas Production Hits All-Time Record In April -- EIA -- Argus Media -- June 30, 2018 -- So The Magic Number Is 90 BCFPD

From ArgusMedia:
US natural gas output hit a record high in April above 89 Bcf/d (2.5bn m³/d) as production rose in Texas, Louisiana and Oklahoma.
Gross gas production from the lower-48 states rose in April to 89.1 Bcf/d, up by 0.3pc, or 252mn cf/d from March, the US Energy Information Administration (EIA) said today in its monthly production report. April output has surged by 12pc from a year earlier as new infrastructure allowed more northeast gas to reach market and as producers continued to shore up fresh oil supplies from places like the Permian basin. 
Rising gas production and expectations for future supply growth has put downward pressure on prices this year.
Natural gas futures so far this summer have failed to sustain a rally above $3/mmBtu, despite low inventories and hot weather, a sign of confidence in continued growth.

Some People Are Suggesting Next OPEC Meeting Needs To Be Held In D.C. -- June 30, 2018

From twitter today:


Current OPEC+ increase: I believe it's about 750,000 bopd. That won't amount to nearly enough to offset all the curtailments worldwide.

Two million bopd is a start. The big question: can Saudi Arabia increase output by that much and export that much to the US? Right now, Saudi Arabia is exporting about 800,000 bopd to the US. The US has imported 2 million bopd from Saudi Arabia on only a couple of occasions, back in 2003.

We'll see Monday what traders think of this. Futures will start trading 6:00 p.m. EDT, Sunday evening.

CLR Wants To Put 23 Wells In One Drilling Unit In Haystack Butte -- June 30, 2018

Updates

October 22, 2019:



Original Post  

From the July, 2018, NDIC hearing dockets. Note this is a case, not a permit:
  • Case #26772, CLR, Haystack Butte-Bakken, establish an overlapping 2560-acre unit; twenty-three (23) wells on that unit; Dunn County; the unit: sections 4/5/8/9-148-97
This sounds like a lot, but the density works out to only six wells / section.
 
Graphic:


Wells in that area:
  • 16683, 224, CLR, Federal Jorgenson 14-5H, Haystack Butte, API 33-025-00639, t12/07; cum 61K 5/18; recently off line;
  • 18615, 480, CLR, Jorgenson Federal 44-9H, Haystack Butte, API 33-025-01029, t7/10; cum 494K 5/18;

The Hearing Docket Agenda For July, 2018 Has Been Posted -- Summer

The NDIC hearing dockets for July, 2018, have been posted. Link here.

Dockets are posted at the NDIC site here.

Dockets are tracked here

The usual disclaimer applies. As usual this is done very quickly and using shorthand for my benefit. There will be factual and typographical errors on this page. Do not quote me on any of this. It's for my personal use to help me better understand the Bakken. Do not read it. If you do happen to read it, do not make any investment, financial, job, relationship, or travel plans based on anything you read here or think you may have read here. If this stuff is important to you, and I doubt that it is, but if it is, go to the source.

Highlights in bold.

Wednesday, July 25, 2018
  • 26749, True Oil, Bowline-Red River, establish two 320-acre units; one vertical well on each; McKenzie County
  • 26750, True, North Branch-Red River, establish a 320-acre unit; one vertical well; McKenzie
  • 26751, Whiting, Sanish-Bakken, exception to orders for a particular well; McKenzie, Mountrail
  • 26752, Whiting, Sanish, Alger, and/or Robinson Lake-Bakken, i) establish five overlapping 2560-acre units; ii) establish two overlapping 3840-acre units; two wells on each unit; iii) establish two overlapping 1920-acre units; two wells on each; Mountrail
  • 26753, Whiting, Sanish, Alger, and/or Stanley-Bakken, i) establish three overlapping 2560-acre units, two wells each; ii) establish one overlapping 1920-acre unit; two wells; Mountrail;
  • 26754, Whiting, Sanish and/or Big Bend-Bakken, establish three overlapping 2560-acre units; two wells each; Mountrail
  • 26755, Whiting, Sanish and/or Big Bend-Bakken; i) establish four overlapping 2560-acre units; two wells each; ii) establish two overlapping 3840-acre units; two wells each; iii) terminate three overlapping 2560-acre units; Mountrail and McKenzie
  • 26756, Whiting, Sanish, Big Bend and/or Parshall-Bakken; amend, i) establish three overlapping 2560-acre units, two wells each; establish one overlapping 1280-acre unit; two wells; Mountrail
  • 26757, Whiting, Sanish, Big Bend, and/or Four Bears-Bakken; i) terminate an overlapping 2560-acre unit; establish an overlapping 3840-acre unit, two wells; McKenzie
  • 26578, Whiting, Sanish-Bakken, i) establish two overlapping 2560-acre units, two wells; ii) establish two overlapping 3840-acre units, two wells on each, Mountrail
  • 26759, Whiting, Sanish-Bakken, i) establish an overlapping 1280-acre unit; two wells; establish an overlapping 2560-acre units; two wells; iii) establish an overlapping3200-acre unit; two wells; Mountrail
  • 26760, Kraken Operating, pooling
  • 26761, Kraken Operating, pooling
  • 26762, Petro-Hunt, pooling
  • 26763, Oasis, flaring waiver
  • 26764, Oasis, flaring waiver
  • 26765, Oasis, flaring waiver
  • 26766, Oasis, flaring waiver
  • 26767, Hydra, SWD
Thursday, July 26, 2018
  • 26768, XTO, NDIC commission, consider appropriate spacing for wells completed in the Morgan Draw-Bakken in the 2560-acre unit; Billings County
  • 26769, CLR, Beaver Lodge and/or Pleasant Valley-Bakken; establish an overlapping 3840-acre units; one well; Williams County
  • 26770, CLR, Chimney Butte-Bakken, establish an overlapping 5120-acre unit; four wells; Dunn County
  • 26771, CLR, Banks-Bakken, establish a 3200-acre unit; two wells; Williams, McKenzie
  • 26772, CLR, Haystack Butte-Bakken, establish an overlapping 2560-acre unit; twenty-three (23) wells on that unit; Dunn County; the unit: sections 4/5/8/9-148-97; see this post;
  • 26773, RimRock, Moccasin Creek-Bakken; establish an overlapping 2560-acre unit; one well, Dunn County;  
  • 26774, Liberty Resources, Gros Ventre-Bakken, establish an overlapping 1920-acre unit; eight wells; Burke County'
  • 26775, Liberty Resources, Cottonwood-Bakken, establish an overlapping 1920-acre unit; eight wells; Burke County
  • 26776, Enerplus, Eagle Nest-Bakken, establish an overlapping 2560-acre unit; one well; DunnCounty
  • 26777, Enerplus, Mandaree-Bakken, establish an overlapping 2560-acre unit; one well; Dunn County
  • 26778, Hydroil Solutions, SWD,
  • 26779, Hydroil Solutiosn, SWD
  • 26780, Liberty Resources, pooling
  • 26781, Liberty Resources, pooling
  • 26782, Liberty Resources, pooling
  • 26783, Liberty Resources, Gros Ventre-Bakken, 8 wells on an existing 1280-acre unit; Burke County
  • 26784, Slawson, pooling
  • 26785, WPX, pooling
  • 26786, WPX, commingling
  • 26787, RimRock, Mandaree-Bakken; two wells along unit lines; Dunn County
  • 26788, RimRock, Moccasin Creek-Bakken; three wells on an existing 640-acre unit, section 10-147-93; Dunn County
  • 26789, CLR, pooling
  • 26790, CLR, pooling
  • 26791, CLR, pooling
  • 26792, CLR, pooling
  • 26793, CLR, St Demetrius-Bakken; four wells on an existing unit; Billings County
  • 26794, CLR, SWD
  • 26795, CLR, SWD
  • 26796, BNN ND, SWD
  • 26797, BNN ND, SWD
  • 26798, McKenzie Energy Partners, SWD

Produced Water Problem In The Permian -- June 30, 2018

There are many issues associated with produced water, everything from economics for a single well; to economics for a US shale producer; and, then, the environmental cost and the issue of injected-related earthquakes.

My takeaway from all this:
  • the Bakken is in much, much better shape compared to the Permian with regard to produced water
  • in fact, there may be no comparison
  • the Bakken has been dealing with this issue for the past ten years
  • the Bakken has nowhere near the amount of produced water that the Permian has
  • the Permian, in boom stage right now, will get worse before it gets better
  • the Bakken, in the "manufacturing stage," has probably been through the worst
  • Permian production (oil and water) is likely to increase significantly
  • Bakken production may be near steady-state levels
I don't know how many caught this from FracFocus yesterday. It was the first time I noticed it, but it's likely there are other examples that I simply missed.

Look at the frack data for this well, from FracFocus:
  • 17100, 240, CLR, Mountain Gap 31-10H, Rattlesnake Point, t6/08; cum 123K 5/18; 
  • original frack, May 30, 2008; open hole, 1.1 million lbs sand;
  • more recently, 17 days of 26,682 production extrapolates to 47,000 bbls over 30 days; API 33-025-00734; according to FracFocus, this well was fracked in Jan/Feb, 2018 (recently); 9.97 million lbs of water, but look at this:
    • water: 70.797%
    • sand: 11.85%
    • produced brine water: 4.85%
  • those percentages add up to 87.49%
  • I can't account for the other 12%
  • the chemical cocktail is very, very small, maybe a percent or two 
The reason I bring that up is the subject of the article in North American Shale. Data points:
  • produced water is becoming a significant problem in the Permian
  • what to do with it
  • people talk about the "produced water" problem in the Bakken, but look at this data, with regard to the ratio of produced water (to crude oil, I assume):
    • DJ (Basin): might be 1:1
    • Delaware Basin (the "most prolific basin" in the Permian):
      • generally, 4:1
      • extreme cases, 7:1
      • worst cases: 10: 1
  • the Permian operators are dealing with an unprecedented amount of produced water
  • could impact pricing by as much as $6/bbl
More:
What’s different now it that unconventional development in the Permian doesn’t allow for the same water management practices. By that I mean if you’re drilling conventional wells, most of the produced water can be reinjected for water floods or EOR (enhanced oil recovery). Whereas now, the operators, many are testing some of the tertiary recovery techniques, but nothing’s being done on a wide scale.
Note: it's my understanding that water flooding unconventional tight shale could end up turning the clay into gumbo -- i.e., a failed well. 

I've never tracked produced water in the Bakken, but a quick look at a few wells suggest the ratio is "never" worse than 1:1 (see below). Often, after the initial "regurgitation" after the initial frack, produced water drops off significantly, but then may increase as the well ages.

From BTU Analytics, 2014 . When you look at this graphic, remember, the Permian produced a whole less oil than it is producing today (one cannot say the same thing for the Bakken):



From researchgate:
  • Two graphics. The first graphic without any additional markings; the second graphic is the same with my annotations since it is hard to read. This is water to oil ratio during initial production; that often changes significantly after well matures:




For additional reading, the best one for the Permian is the "pubs - 7b02185" link below: