On The Road

I'm heading out early today.

I will be on the road later this evening. My blogging will occur during coffee breaks at McDonald's and Starbucks I find along the way. I will be driving cross-country over the next several days.

I will not post as often.

I definitely won't get to my e-mail as often.

I won't be able to manage/post/moderate/answer comments at "The Bakken Shake Discussion Group."

I expect the worse, with regard to blogging, over the next two weeks, but things generally turn out better than expected.

Good luck to all.

Hitchhikers should watch for a 2012 Honda Civic heading north out of Dallas.

If you have not read the Reuters/Rigzone article on the Bakken explaining why the skeptics were wrong, I highly recommend you read it now, before the source archives it, takes it off the net. It validates everything the milliondollarway has been talking about since 2007. It's one of the best articles on the Bakken I have ever seen.

Is Something Going On With Oasis?

I have been blogging since 2007.

Sometime in 2009, I deleted the "original" MillionDollarWay in a fit of insanity, and started over.

In all those years, I have not seen anything like this, the daily activity report yesterday with this lineup:

• 23350, drl, Oasis, Gramma Federal 5300 41-31T, Baker, no production data,
• 23935, 663, Oasis, Craig Federal 5892 31-28H, Cottonwood, t5/13; cum 21K 8/13;
• 23989, 148, Oasis, Domalakes 6092 44-16H, Cottonwood, t5/13; cum 13K 8/13;
• 24114, 1,243, Oasis, Stim 5504 42-2H, Hebron, t5/13; cum 23K 8/13;
• 24166, 3,188, Oasis, Travel 5393 14-12T, Sanish, t5/13; cum 62K 8/13;
• 24194, 3,518, Oasis, Lite 5393 11-11B, Sanish, t6/13; cum 53K 8/13;
• 24310, drl, HRC, Fort Berthold 148-94-29A-32-5H, no production data,
• 24328, 434, Oasis, Dolores 5892 42-23H, Cottonwood, t5/13; cum 13K 8/13;
• 24415, 1,770, Oasis, Knaebel 5693 41-11T,  Alger, t6/13; cum 32K 8/13;
• 24428, 830, Oasis, Torgerson RR 5604 31-27H, Bull Butte, t7/13; cum 11K 8/13;
• 24569, 3,142, Oasis, Inigo 5200 43-20B, Camp, t8/13; cum 29K 8/13;
• 24643, 2,920, Oasis, Sherman 5200 41-20T, Camp, t8/13; cum 21K 8/13;
• 24747, 1,511, Newfield, Anderson Federal 152-96-9-4-10H, Westberg, t8/13; cum 12K 8/13;
• 24760, 1,654, Oasis, Knox 5393 44-4T, Sanish, t7/13; cum 18K 8/13;
• 24923, 759, Oasis, Warren Federal 5893 42-23H, Cottonwood, t5/13; cum 24K 8/13;
• 25178, drl, KOG, P Wood 154-98-4-26-35-13H3, Truax, no production data, 

September 24, 2013, I posted: is something going on with Oasis?

Generally (except over a weekend), about six wells come off the confidential list on any given day. Of those six, generally there are three to six operators. Occasionally, we will see a handful of wells drilled by the same operator. I expect to see this more often starting next year when mega-pads (6 wells and more become the norm).

But, this list of Oasis wells is not due to pad drilling, nor is even one field getting all the attention. Oasis reported results from several fields: the Cottonwood, the Baker, the Hebron, the Sanish, the Alger, the Bull Butte, and the Camp. These fields range from mediocre (Hebron) to okay (Cottonwood) to very, very good (the Camp).

Also, note the reported IPs. Four wells made the "high IP" list and other wells were close.

It looks like Oasis is routinely using 36-stage fracks, and sand/ceramic in better fields; sand only in other fields (but this is based on just a couple of wells). The 36-stage frack completion looks like the Oasis standard.

NOG: 3rd Quarter Production And Operations Update

Press release here.

• production to average 13,000 bopd (3Q13)
• sequential increase of almost 20%
• average net realized price/bbl = $82 

Average daily production, from "Snapshot":

• 2008: 140 bbls
• 2009: 800 bbls
• 2010: 2,500 bbls
• 2011: 5,000 bbls
• 4Q12: 10,000 boepd

Thursday -- 17th Day Of The Government Shutdown; Should Be The Last Day; Workers to Return To Work Today; Corporate Germany Looking Overseas Where Energy Is Less Expensive -- How's That Solar Energy Working Out?

Active rigs: 184

RBN Energy: the golden age of natural gas -- history, recap, and looking forward --

All of this natural gas regulatory stuff can be complex (and boring) enough to be confined to the interested and the nerdy.  But here’s all you really need to know in just one paragraph. 

In the first period (1954-70) prices were legally held too low to bring enough gas to market.  That cheap gas caused a lot of demand to grow, especially after the Clean Air Act got a lot of coal plants to switch to natural gas, but the nation ran out of gas. 

In the second period (1970-79), end-users were legally told whether or not they could use gas, having to go to Washington to get permission.  You can imagine how well that worked out.  

Then in the third period (1979-93), Congress tried to fix things, didn’t quite know what they were doing, and ended up with a huge, complicated, subsidized pricing structure.  And the way pipelines bought gas under that structure led to an artificial oversupply (a lot of gas had been developed because a legal tilt of the playing field let it be sold for much more than it was really worth).  We called that the gas bubble.  

Then, as the government/legal side of things got fixed finally, in the early 1990s, the market took advantage of that oversupply without recognizing that the oversupply depended on the tilted pricing structure that didn't exist anymore--so supply wasn't being replenished.  Basically, it was like living on savings instead of income, and predictably it ran out.  That’s when we had the price run-up and volatility everyone remembers in the early 2000s.  

The world is completely different now.  Today we have a demand market that is free to use gas to the extent it wants, at a given price.  We have producers who are free to develop more by drilling and completing as the demand market asks for it, enabled by technology (shale development) to do so in a smoother, more immediate response than was possible in the days of the monster offshore fields.

 The Wall Street Journal

The shutdown is over; everyone won a little something. I'm thrilled how it all turned out.

Cancer: same mutations tied to 12 cancers.

Since about 1960, some very smart folks have kept copyrights on names to be used for marketing marijuana once it became legal. That day has come, at least in Washington State, and some folks will begin to cash in on those copyright names.

The ObamaPhone folks just got slapped in Georgia. Georgia has become the first state to charge a fee to low-income people who receive free cellphone service through the federal Lifeline program, saying the move would combat fraud.

Rich countries see long-term joblessness continue to increase.

Asylum-seeking man says "it's here": A Pacific island man told a court on Wednesday that rising seas and environmental risks caused by global warming made it too dangerous to return to his homeland of Kiribati.

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Huge story: corporate Germany looking to invest overseas -- not at home -- after you get through all the preamble:

Feeble investment in Germany by the country's own business sector is one of the biggest economic headaches facing Chancellor Angela Merkel as she forms a new coalition government for her third term, following last month's elections.

Companies' anemic appetite for investing at home has been puzzling German officials and economists this year. Many hoped that investment would pick up once the outcome of September's election was clear. But a Wall Street Journal survey of German blue-chip companies indicates that the problem runs deeper.

Lack of sales growth in Germany and Europe, now and in companies' expectations for coming years, is deterring many corporations from increasing their investment spending in Germany, where capital expenditure has sunk to near-historic lows as a share of gross domestic product.

You find the reason:

High production costs—especially high energy prices in Germany compared with the U.S. and some European or emerging economies—and lingering uncertainty about the longer-term cohesion of the euro zone are also commonly cited reasons for holding back on domestic investment.

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This was predictable: Apple hoped to broaden its appeal with a cheaper version of the iPhone. But that effort appears to be faltering after a few weeks. Fanboys knew "cheap" iPhones would fail. Years ago I told my wife that Apple was a fashion company, much like Gucci. Gucci doesn't sell cheap leather goods to attract a lower socioeconomic customer.

How orchids got so cheap: The once-rare orchid has become a mass-market commodity. Behind the shift are Taiwan entrepreneurs, who have brought to orchid-breeding the energy and methods applied to making consumer electronics like iPads. I posted this because my granddaughter loves flowers, and particularly enjoys orchids. 

US wheat climbs as exports surge. The US has shipped 40% more wheat abroad this season than a year earlier, fueled by surging demand from Brazil and China. Winners: North Dakota farmers, and Warren Buffett (owns BNSF).

Yellen + government shutdown: the combo ends talk of Fed's plan to taper. What's not to like?

Overheard on the street: getting data on crude oil supply and demand is not getting any easier.  

Why The Skeptics Were Wrong -- London Reporting

I have maintained for quite some time that unconventional oil exploration, drilling, and production REALLY is very different. [I make a special note of that because I have the impression that some seasoned oil workers do not agree.]

I was therefore thrilled to see this article, being reported by Reuters via Rigzone:

LONDON, Oct 16 (Reuters) - North Dakota's rapidly rising oil output continues to defy the sceptics, who have predicted that production would stop growing as declining output from existing wells offsets extra production from new drilling.

Oil production soared to 911,000 barrels per day in August, up more than 200,000 bpd compared with the same month last year, the state's Department of Mineral Resources (DMR) said this week.

Production is on course to hit 1 million bpd by the end of the year or early 2014, according to the DMR.

By the end of August, 9,452 wells were in production. But another 450 had been drilled and were awaiting fracturing and completion.

Completions are running at about 1.5 times the threshold needed to maintain production, the DMR wrote in its monthly statement, which implies output will continue rising in the next few months as crews work through the backlog.

This is a five-page internet report well worth reading. 

The article goes on:

Shale sceptics have been confidently predicting since at least 2010, when output was below 300,000 bpd, that production would peak.

Only the DMR has struck a defiant and lonely optimistic note. In 2012 DMR projected output would plateau somewhere between 700,000 and 1.2 million bpd between 2015 and 2025, based on a total of up to 40,000 wells in the thermally mature part of the shale play.

And more:

In practice, the shale sceptics have proved wrong on every point, revealing a fundamental lack of understanding about the geology, economics and technology of shale production.
With more experience of horizontal drilling and fracturing and more knowledge about the play, drilling and pumping crews have been able to drill deeper wells and longer laterals, reaching total depth more quickly and applying more fracturing treatments per well as well as learning to target only the most productive parts of the formation.

"In 2007, the average treatment number, or stage count, in Bakken wells was three. By the end of 2011, that number was nearly 30, and some wells had more than 40 stages in a single lateral," according to oilfield-services specialist Schlumberger. ("Multistage Stimulation in Liquid-Rich Unconventional Formations" 2013)

Rather than increasing relentlessly, the number of drilling rigs operating in the Bakken has fallen from over 200 in early 2012 to just over 180 in October 2013.

Bakken accounts for just 10 percent of the rigs drilling for oil and gas in the United States, according to basin-by-basin data published by another oilfield services company, Baker Hughes. Rising Bakken output is not putting pressure on the domestic rig market. Rig rates remain soft.

I would like to provide the full article, but obviously that would be inappropriate. Go to the link for the full story. It even addresses the Red Queen.