Ten Of Sixteen Wells Coming Off Confidential List Monday Have No Production Data; EOG Austin Well Should Be A Big Well -- July 6, 2014

By the way, the EIA tracks this metric also: new-well oil / gas production per rig, by region. At the time of this posting (July 6, 2014), the Bakken led all regions for oil, even beating out the Eagle Ford, although just barely (if I am not misreading the graphs).  [Again, another "thank you" to Don for finding this link; it's something I never would have thought of looking up. It appears the EIA has only been tracking this metric since October, 2013, which also speaks volumes about how things are changing in the US oil patch.]

Monday, July 7, 2014

• 26269, 188, Whiting, McDonald Family Trust Federal 31-3PH, Roosevelt, t3/14; cum 8K 5/15;
• 26710, drl, Hess, BW-Arnegard State-151-100-3625H-4, Sandrocks, no production data,
• 26822, drl, XTO, Boe State 31X-16H, Beaver Lodge, no production data,
• 27337, drl, Slawson, Hunter 8-8-17TF2H, Big Bend, no production data,

Sunday, July 6, 2014

• 24476, drl, Statoil, M. Olson 20-29 6H, Painted Woods, no production data,
• 24508, drl, CLR, Norfolk 4-1H, North Tobacco Garden, no production data,
• 24831, 910, Petro-Hunt, Dolezal 145-97-20C-17-1H, Little Knife, t5/14; cum 3K 5/15;
• 25898, drl, MRO, Azure USA 31-15H, Moccasin Creek, producing,
• 26243, drl, KOG, Koala 16-32-29-2H3, Poe, no production data,
• 26324, 480, EOG, Austin 77-1708H, Parshall, t2/14; cum 40K 5/14;
• 26947, conf, XTO, Lucy 14X-32B, Siverston, producing,
• 27091, conf, Hess, GN-Alice-158-97-1324H-1, New Home, no production data,

Saturday, July 5, 2014

• 27096, drl, BR, Ole Boe 44-14MBH-ULW, Haystack Butte, no production data,

Friday, July 4, 2014

• 26492, 26, Corinthian Exploration, Corinthian Berg 16-32 1H, Northeast Landa, a Spearfish/Madison well; t3/14; cum --
• 26853, drl, SM Energy, Bonner 9X-12HB, Poe, no production data,
• 27074, drl, MRO, Adamson 14-24TFH, Chimney Butte, no production data,

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26324, see above, EOG, Austin 77-1708H, Parshall:

Date	Oil Runs	MCF Sold
5-2014	12329	0
4-2014	6524	0
3-2014	926	0
2-2014	18983	0

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The McDonald Family Trust Whiting well in Roosevelt oil field should be an interesting well to watch. This well is on the southern fringes of the middle Bakken. There is one other horizontal well in this section. The Whiting Short Fee 31-3 well tested the Bakken in 1989, was minimally productive, and now PNA. The well was re-entered and tested the Birdbear in 2005, is still active:

• 12495, 248, Whiting, Short Fee 31-3 (no "H" designation); Roosevelt, a Birdbear well (Nisku "A"), t4/05; cum 111K 5/14; vertical depth around 11,000 feet; TD - 15,350 feet; a sundry form suggests the Bakken was a vertical well only, and not a horizontal; although this Bakken was PNA, the geologist's report suggest this well should be conducive to stimulation; they were optimistic about the Bakken in this area with this well back in 1989. 

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The Great Gatsby -- Again

Tonight, for whatever reason, I'm in my "Great Gatsby" phase, watching the Baz Luhrmann movie. 

Young and Beautiful, Lana Del Rey

A good companion piece is the 2014 history: Supreme City: How Jazz Age Manhattan Gave Birth to Modern American. (Of course, it should go without saying, the F. Scott Fitzgerald novels would come first, as it were.)

For Investors Only -- July 6, 2014 -- "Sell In May, Stay Away" -- Perhaps Not So Much This Year

Two stories of interest, perhaps, for investors. The first is another forecast/speech by IMF's Christine Lagarde:

International Monetary Fund Managing Director Christine Lagarde signaled a cut in the institution’s global growth forecasts as investment remains weak.

“The global economy is gathering speed, though the pace may be a bit less than we previously predicted because the growth potential is lower and investment” spending remains lackluster, Lagarde told the Cercle des Economistes conference in Aix-en-Provence, France.

The remarks underline the risks to global economic growth at a time when the U.S. Federal Reserve is trimming stimulus and the European Central Bank is fighting inflation that is less than half its targeted level. The IMF is preparing to update its economic forecasts this month after predicting April 8 that the global economy will expand 3.6 percent this year and 3.9 percent in 2015.

The second is a more interesting article from The Wall Street Journal in which it as noted that when the Dow hit 17,000, that was the seventh-fastest 1000-point gain in the history of the blue-chip index:

The stock market is rolling into the second half of the year in stronger shape than many investors dared to hope in January.

The widely followed S&P 500 index has gained 7.4% for the year so far, building on last year's 30% spike.

The more concentrated Dow Jones Industrial Average is up 3%, after pushing through 17000 for the first time on Thursday.

The Dow's move came just 153 trading sessions since it first closed above 16000 on Nov. 21, 2013, making it the seventh-fastest 1000-point gain in the blue-chip barometer's history.

With signs that the U.S. economy is recovering from a winter contraction and the Federal Reserve expected to keep interest rates low for at least another year, many investors are betting the five-year bull market has more room to run. They are reluctant bulls, seeing few alternatives to equities.

The jobs data largely put to rest concerns among investors about the health of the economy, after U.S. gross domestic product fell at a seasonally adjusted annual rate of 2.9% in the first quarter, the fastest rate of decline since the recession. The S&P 500 eked out a 1.3% gain in the first quarter, the smallest quarterly increase by stocks since a decline in the fourth quarter of 2012.

By the way, the expectation that the Federal Reserve may "keep interest rates low for at least another year" is quite incredible. 

Disclaimer: this is not an investment site. Do not make any investment decisions based on what you read here or what you think you may have read here.

There is an article elsewhere in which Bill Gross of Pimco fame thinks low interest rates are the "new norm." 

CBR

There were three interesting stories in the last couple of days regarding CBR. First, the excellent RBN Energy post on gradual shift from CBR to pipeline in the Bakken. "Shift" might be too strong a word; "gradual shift" is closer to reality perhaps, but even that might suggest to some that CBR is waning more than one might imagine. Unless new flaring rules change things, I think the Bakken will need all the rail / pipeline they can finance.

The second story was a Bloomberg story sent to me by Don the other day:

When Aurora Mayor Tom Weisner sees rail cars full of crude oil rumble down the tracks that criss-cross his Chicago-area town, he often thinks about the derailment that killed 47 people almost a year ago in Canada.

The disaster focused attention on the design of the oil tankers, yet two-thirds of the tank cars in use today are still older models that safety experts say are vulnerable to puncture. The July 6 derailment last year in Quebec and seven other major ones in the U.S. and Canada since then have spilled more than 3 million gallons of oil, with some cars catching fire or exploding.

“You can see tanker car after tanker car go by on that rail constantly,” said Weisner, whose city is 40 miles (64 kilometers) southwest of Chicago and second to it in population in Illinois. [Tanker car after tanker car go by on that rail constantly: a hat tip to the environmentalists who apparently prefer rail to pipe.]

It's a very, very long Bloomberg story and well worth the read. 

Note to newbies: when news organizations report on spills, they often report the size of the spill in terms of gallons rather than barrels (gallons make the spill appear 42-times bigger than it really is). Three million gallons of oil = 70,000 bbls.

The three million gallons of spilled oil works out to about 85 cars, less than one unit train. Four accidents accounted for almost the entire amount including one spill of low-volatility western Canadian oil. [Spoiler alert: perhaps I'm overly sensitive, but that wiki-entry has a hint of anti-CBR bias.]

As long as I'm digressing, it's important to note that news articles tend not to provide denominators. For example, according to the article, in the past year, 3 million gallons of oil have been spilled by CBR. There is no number given for how much oil is shipped by rail. Remember, that 3 million gallons (70,000 bbls) is for an entire year in BOTH the US and Canada. To put that in perspective, the US alone is producing upwards of 9 million bbls/day, and importing about 6 million bbls (from memory; could be very wrong on exact amounts. That's per day. Seventy-thousand bbls represents and infinitesimal amount of the total amount of oil moving across the US and Canada each day. My hunch is that parking lots across the entire US see more dripping oil than that. [Disclaimer: I often make simply arithmetic errors.]

Finally the third article was in the July 4, 2014, issue of The Wall Street Journal:

LAC-MÉGANTIC, Quebec—A year after an oil-train explosion killed 47 people in this small town, residents are waking up to a new reality: The oil trains are probably coming back.

That upsets many of the town's 6,000 residents, who lost family, friends and neighbors when a 74-car train carrying crude derailed in the early morning of July 6.

But Lac-Mégantic probably has no choice.

Businesses here depend on the railroad; the railroad depends on crude. The region's sawmills and farms don't provide enough business for the railroad to be viable if it isn't also carrying lucrative crude oil, town officials say.

In mid-June, trains carrying nonhazardous cargo began travel through town on rebuilt track eastbound to the U.S. In all likelihood, service including crude will resume in January 2016, when a moratorium on carrying it through town expires. Lac-Mégantic wants to build an 8-mile-long detour to skirt the town and still serve regional businesses. But the chance that it will be finished in time is slim, if it gets built at all.

"We are working very hard to move this track but we are not in control," says Town Councilor André Desjardins. "If we don't have the train here, forget it, 1,000 employees will be without jobs." [Again, the town's population: 6,000.]

And so it goes. 

"Without The Bakken, Prices At The Pump Would Be Completely Unaffordable" -- EIA

This is truly an incredible story that some of us have been reporting on for quite some time. Bloomberg is reporting:

The U.S. will remain the world’s biggest oil producer this year after overtaking Saudi Arabia and Russia as extraction of energy from shale rock spurs the nation’s economic recovery, Bank of America Corp. said.

U.S. production of crude oil, along with liquids separated from natural gas, surpassed all other countries this year with daily output exceeding 11 million barrels in the first quarter, the bank said in a report today. The country became the world’s largest natural gas producer in 2010. The International Energy Agency said in June that the U.S. was the biggest producer of oil and natural gas liquids.

“The shale boom is playing a key role in the U.S. recovery. If the U.S. didn’t have this energy supply, prices at the pump would be completely unaffordable.”

Oil extraction is soaring at shale formations in Texas and North Dakota as companies split rocks using high-pressure liquid, a process known as hydraulic fracturing, or fracking. The surge in supply combined with restrictions on exporting crude is curbing the price of West Texas Intermediate, America’s oil benchmark. The U.S., the world’s largest oil consumer, still imported an average of 7.5 million barrels a day of crude in April, according to the Department of Energy’s statistical arm. 

U.S. oil output will surge to 13.1 million barrels a day in 2019 and plateau thereafter, according to the IEA, a Paris-based adviser to 29 nations. The country will lose its top-producer ranking at the start of the 2030s. [We will?]

Rebuttal To "Bakken Well Efficiency Has Topped Out"

[Another related link: the EIA tracks this metric also: new-well oil / gas production per rig, by region. At the time of this posting (July 6, 2014), the Bakken led all regions for oil, even beating out the Eagle Ford, although just barely (if I am not misreading the graphs).  [Again, another "thank you" to Don for finding this link; it's something I never would have thought of looking up. It appears the EIA has only been tracking this metric since October, 2013, which also speaks volumes about how things are changing in the US oil patch.]

Readers couldn't help but notice that headline yesterday, "Bakken well efficiency has topped out."

I either laughed out loud or did a double-take, as they say, when I saw that headline. I don't remember what my reaction was. Most likely, it was simply a look of disbelief. Everything I've read suggests Bakken wells are getting better. I suppose the time frame is important. Perhaps the writer who suggests that Bakken well efficiency has topped out is comparing last week's wells with wells from two weeks ago.

A huge "thank you" to a reader who caught my sarcasm when I agreed to agree that petroleum engineers and drillers, in just four or five years, had learned all the secrets to drilling out the Bakken. Coffeeguyzz provided a nice rebuttal in a comment but I brought it up here where it is easier to access and google:

As regards "well efficiency topping out" in the Bakken" ... the phrase alone should demonstrate the most profound ignorance of the writer. Along with your blog (and daily reads of Zero Hedge), I have become a keenly interested observer of the shale revolution on a world-wide, daily basis, and I can most emphatically state that the technological breakthroughs have barely begun. 

Remember that 60-stage frac that Whiting disclosed a few weeks ago? The company that makes the BHA tool - NCS Energy Services - just announced a few days back that they did a 92-stage frac in the Eagle Ford. Both their website and Baker Hughes Optiport BHA videos show clearly and concisely how revolutionary this technique/hardware may prove to be ... especially in the multiple, economical re-fracs that this process will enable operators to perform in years to come.

The precision of the latest generation RSS hardware and software is allowing 4-mile total depth wells to be drilled with one-foot deviation in both vertical and horizontal planes. 

The early research on EOR - particularly in regards to CO2 usage - shows potential recovery rates that are absolutely mind-blowing.

With regard to "one-foot deviation in both vertical and horizontal planes," I have seen the same thing in the geologist's reports and the driller's report: they are drilling some great wells in some very, very narrow seams, some as thin as four-feet vertically.

This is just the Bakken. My understanding is that "they" have yet to reach the same "efficiency" in such large basins as the Tuscaloosa Marine Shale. That, too, will happen. And, of course, the Permian, once thought to be on its last legs, may end up being the biggest oil producer in the country due to Bakken technology.

One of the problems with arm-chair analysis of well efficiency in the Bakken based on production is the fact that none of us outside the industry know to what extent wells are being choked back. Some wells are being choked back, I assume, due to market conditions (supply and demand), and it's possible that some wells are being choked back due to lack of adequate infrastructure.

Anyway, be that as it may, I strongly doubt that Bakken well efficiency has topped out.

By the way, Coffeeguyzz said that he, too, was watching the global shale revolution on a daily basis. I've said that before: by blogging day-in / day-out, I've gotten a feel for the Bakken. I have not kept up with the technology and I don't understand it all, but I think I have a pretty good feel for what is going on. As Coffeeguyzz has implied, checking in on the oil industry every few months just doesn't provide adequate insight to really understand the shale revolution. I watch it daily and I still can't keep up.

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EIA Tracks Oil Production Per Rig, By Region

By the way, the EIA tracks this metric also: new-well oil / gas production per rig, by region. At the time of this posting (July 6, 2014), the Bakken led all regions for oil.

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From St Elsewhere

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Snow In Maine, July 5, 2014

2014 C.E.

22 A.G. 

For those who missed it, there is report of snow in Maine at the lower-upper elevations in the 22nd year of Algore.