Boxing Day, 2014

RBN Energy: company-by-company review of NGL takeaway in the Permian and Eagle Ford, a continuing series.

It remains to be seen to what extent the recent crash in oil prices--and the sympathetic decline in prices for natural gas liquids (NGLs) - will lead to major drilling and production pull-backs in some U.S. shale plays. What seems clear, though, is that the higher-grade, liquids-rich areas at the heart of the Eagle Ford and Permian Basin will continue to experience at least modest levels of drilling activity and still-strong production for some time to come.   That should provide considerable relief to the midstream companies that have been investing heavily in NGL infrastructure in the Eagle Ford and Permian the past few years. Today, we continue our company-by-company look at existing and planned natural gas processing plants, fractionators and NGL pipelines in two of the most productive plays in the U.S.

Active rigs:

	12/26/2014	12/26/2013	12/26/2012	12/26/2011	12/26/2010
Active Rigs	173	186	186	197	162

Flashback: To Hurt Putin (Over The Ukraine), Push The Price Of Oil To $60 -- December 25, 2014

I linked this story back on May 15, 2014 (note the date of the linked article and the linked post, May 14/15, 2014):

There is, however, another approach that would undermine Russia's (and like-minded oil autocracies') efforts at regional domination while strengthening Western economies. Russia's geopolitical influence in Europe derives in part from its hand on the natural-gas tap, but its Achilles' heel is the price of oil.

A successful effort to drive the price of oil down to, say, $60 a barrel—far below the $117 per barrel that Russia requires to balance its national budget—would benefit the West, as well as China and India. Neither of the latter two countries, on the other hand, is likely to cooperate with sanctioning major energy exporters. How can we reduce prices when the bulk of the world's low-marginal-cost oil supplies are held by the OPEC cartel, which has not increased production in 40 years? By opening the door to arbitrage among different energy commodities in the market for transportation fuel.

For the record, I was "way wrong" suggesting that the proposal to drive down the price of oil, "to, say, $60 a barrel" was ludicrous, DOA (dead on arrival). That's where we are now (by the way, there is an op-ed out there somewhere that I read, but did not link) suggesting exactly this: that the US (under Mr Obama's direction) and Saudi Arabia are/were in cahoots to drive down the price of oil to $60 to severely hurt Mr Putin. I don't buy into that (that the US and Saudi Arabia were in cahoots, but I don't doubt for a moment that Saudi had its eyes on Russia as much as its OPEC colleagues ...

It looks like the author's proposal for getting oil to $60/bbl was too complicated; Saudi Arabia managed to do it by "doing nothing."

There is another op-ed out that that I did link -- from The New York Times -- linked early this morning, sent to me by a reader late last night -- also saying exactly this: that $60 oil is a huge "win" for the US, and a huge "loss" for foreign producers (if you disagree, ask Venezuela).

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

A Note to the Granddaughters

This was one of the best Christmases I have had in awhile -- we are back in southern California; our granddaughters are skiing in Colorado with their mom and dad; our younger daughter and her husband are with us in southern California; and we had a wonderful Christmas dinner with one long-time friend, and my wife's brother/sister-in-law.

Along the way, a most incredible gift for my wife which I will blog about separately later; it's in draft now and I'm simply too tired to finish it and post it.

For me, several DVDs of classic movies and four wonderful books, three of which were on my Christmas list and one book a complete, and pleasant surprise:

• The Innovators: How A Group of Hackers, Geniuses, and Geeks Created The Digital Revolution, Walter Isaacson, c. 2014, Christmas gift
• Captain Gray In The Pacific Northwest: Captain Gray's Voyages of Discovery, 1787 - 1793, Francis E. Cross and Charles M. Parkin, Jr., c. 1987, Christmas gift
• Henry Neville and the Shakespeare Code, Brenda James, c. 2008, Christmas gift
• Ada's Algorithm: How Lord Bryon's Daughter Ada Lovelace Launched the Digital Age, James Essinger, c. 2014, Christmas gift

Japan No Longer A Saving Nation -- December 25, 2014; Back To Chess

I remember reading about this some time ago, but I can't remember if I actually blogged about it. Now I see it is being tweeted tonight:

Japan's household savings rate goes negative for 1st time since government started compiling comparable data in 1955, authorities say - @MarketWatch.  

More from the source:

Japan, long held up as a model of thrift and a “nation of savers,” is no longer saving, according to data cited Friday in the Nikkei Asian Review. For the fiscal year that ended in March, Japan’s household savings rate dropped to negative 1.3%, according to Cabinet Office statistics released Thursday. The result represented “the first time the ratio entered negative territory since the government started compiling comparable data in fiscal 1955.

I'm not exactly sure what to make of this, but I'm sure it connects with this dot: an aging Japanese population.

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

Slump In The Price Of Oil And Chess

This was a feature story today over at Yahoo!Finance. I understand the premise or the thesis, but I'm not sure I buy into that thesis .... yet. Time will tell. I do think that the current oil situation is a very interesting game of international chess. Like chess, the "game" will not end quickly; it will last for quite awhile and during that time the three major players will have ups and downs, gains and losses, and the outcome, like any game of chess, won't be known for quite some time.

The three major players: OPEC (mostly Saudi Arabia); the US oil industry (mostly unconventional); and, non-OPEC, non US (mostly Russia).  [Obviously, with more than two players, this is not a single chess game, but a number of chess games being played simultaneously.]

Yahoo!Finance is reporting:

Katusa believes that falling oil prices will eventually give Russia the upper hand and deeply injure the U.S. energy industry.

The falling ruble makes Russian oil less expensive and more desirable to other countries—Russia also produces oil quite cheaply while the American shale industry has a larger cost of operation. Russia is more than able to weather the current storm, Katusa says.

“They have a $200 billion a year trade surplus. They have over $400 billion in reserve currency. They’ve increased their gold reserve. They have much lower debt to their GDP than America. So yes there’s pain in the economy… [but] it's far from terminal.”

We'll see.

However, that part about "the falling ruble making Russian oil less expensive" is an interesting observation. Russia and Saudi Arabia are competing for the Asian market (the US is not involved because it cannot export oil). I believe Saudi oil is priced in dollars (very strong right now in relation to the ruble). Over the past couple of years there have been many stories about the growing Russian-Chinese hegemony, something I noted quite awhile ago and tracked as one of the "Big Stories."

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

Ethanol More "Polluting" Than Gasoline -- U of Minnesota Peer-Reviewed Study

Coal-Powered Cars Not Much Better, Either

CBS Local is reporting: 

One of the most surprising findings is that ethanol might actually be worse for air quality than conventional gasoline fueled transportation.

Researchers looked not only at the end result at the tailpipes but also took into account the full cycle of energy production. For instance, the authors calculated the entire pollutant stream, meaning everything generated from the growing of the corn to the process used to turn it into ethanol.

In addition, they extrapolated the pollutants of electric vehicles when the electricity used to recharge the batteries is generated by the burning of coal.

“And we found that some options available to us, like corn ethanol or electricity from coal used in electric vehicles, actually make the air much worse,” assistant professor Jason Hill said.

But, regular readers already knew that. Warmists won't discuss the article; in their view, the subject is closed. 

Several "Huge IP" Wells Coming Off The Confidential List Christmas Day And Boxing Day, December 25, 2014

As you go through the list below, think about this. Most of these wells were drilled six months ago, back in June, 2014. We still have July, August, September, and October, and probably November, and December (of 2014), to get through before the current slump in oil prices starting affecting things. Spread this observation across all the unconventional shale across the US and one can see the glut of oil isn't likely to slow down quickly. [It turns out this was said back on December 9, 2014:

It will take six months or so to whittle away the 1m barrels a day of excess oil on the market – with US crude falling to $50 - given that supply and demand are both “inelastic” in the short-run.]

I know I'm not saying that correctly, but hopefully you get the point. Mixing metaphors, I suppose: there are at least a year's worth of wells in the Bakken pipeline yet to come on line. Peak oil? LOL.

Richard Zeits talks about the "myth" of the oil glut, but RBN Energy suggests "we're" already maxing out with regard to storage sites in North America.

The wells reported here do not represent the response to the slump in oil prices; way too early to see that response.

Note the amount of proppant EOG used in that Wayzetta middle Bakken well, and also note the amount of proppant CLR is using.

Friday, December 26, 2014:

• 25747, 915, EOG, Wayzetta 29-1424H, Parshall, 43 stages; 13.6 million lbs sand; conditioning unit on site, s10/19; TD10/31, middle Bakken, 1920 acres, t4/14; cum 138K 11/14; 
• 27144, 2,256, QEP, Kirkland 2-23-14TH, Grail, t9/14; cum 57K 11/14; 
• 27145, 2,213, QEP, Kirkland 4-23-14BH, Grail, t9/14; cum 62K 11/14; 
• 27146, 2,172, QEP, Kirkland 3-23-14BH, Grail, t9/14; cum 63K 11/14; 
• 27430, 930, WPX, Roggenbuck 4-9HW, Van Hook, t11/14; cum --  
• 27705, 2,163, QEP, Kirkland 22-15-23-14LL, Grail, t9/14; cum 72K 11/14; 
• 27791, 2,096, QEP, TAT 1-33-28BH, Grail, t8/14; cum 70K 11/14;
• 27792, 1,664, QEP, TAT 2-33-28-BH, Grail, t8/14 cum 64K 11/14; 
• 27816, drl, QEP, TAT 33-28-34-27LL, Grail, s4/14; cum 63K 11/14; 
• 28084, drl, CLR, Holte 2-32H, Stoneview, no production data 
• 28099, drl, Hess, EN-Dobrovolny A-155-94-2413H-7, Manitou, no production data, 
• 28157, drl, MRO, Snow Bird USA 31-17TFH, Van Hook, no production data, 
• 28501, 370, Hunt, Alexandria 161-100-22-15H-1, Alexandria, t9/14; cum 11K 11/14;  

Thursday, December 25, 2014: 

• 26889, 704, Oasis, Brier 5200 44-22 4T2, Camp, t6/14; cum 37K 11/14; interesting production profile; 
• 27632, 514, OXY USA, Kary 3-24-13H-144-97, Cabernet, t6/14; cum 47K 11/14; interesting production profile;
•  27633, 519, OXY USA, Kary 4-24-13H-144-97, Cabernet, t6/14; cum 50K 11/14; interesting production profile; 
• 27941, drl, Hess, GN-Cambrian-159-98-2536H-2, Big Stone, no production data, 
• 28042, drl, SM Energy, Torgeson 2-15HS, West Ambrose, no production data, 
• 28085, drl, CLR, Holte 3-32H1, Stoneveiw, no production data, 
• 28098, drl, Hess, EN-Dobrovolny A-155-94-2413H-6, Manitou, no production data, 28238, 838, MRO, Hollingsworth 24-22TFH, Chimney Butte, t9/14; cum 17K 10/14; 
• 28357, drl, MRO, Davis 24-22H, Bailey, no production data, 28405, 980, CLR, Harrisburg 1-34H, Indian Hill, t10/14; cum 23K 10/14;  
• 28599, conf, Oasis, Chalmers 5301 44-24 3BR, Baker, no production data, 
  

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

25747, see above, EOG, Wayzetta 29-1424H, Parshall

Date	Oil Runs	MCF Sold
10-2014	10120	3848
9-2014	3431	806
8-2014	22561	3675
7-2014	26547	842
6-2014	26469	3736

27144, see above, QEP, Kirkland 2-23-14TH, Grail:

Date	Oil Runs	MCF Sold
11-2014	17334	13108
10-2014	21691	20544
9-2014	18114	9268

 27145, see above, QEP, Kirkland 4-23-14BH, Grail:

Date	Oil Runs	MCF Sold
11-2014	17238	14001
10-2014	20719	20893
9-2014	23512	12778

27146, see above, QEP, Kirkland 3-23-14BH, Grail:

Date	Oil Runs	MCF Sold
11-2014	18549	15021
10-2014	22166	24302
9-2014	21616	11244

27705, see above, QEP, Kirkland 22-15-23-14LL, Grail:

Date	Oil Runs	MCF Sold
11-2014	21285	26443
10-2014	24798	28261
9-2014	25536	7381

27791, see above, QEP, TAT 1-33-28BH, Grail:

Date	Oil Runs	MCF Sold
11-2014	11485	5444
10-2014	16658	17090
9-2014	24734	7703
8-2014	17182	5184

27792, see above, QEP, TAT 2-33-28-BH, Grail:

Date	Oil Runs	MCF Sold
11-2014	16042	8454
10-2014	21982	24637
9-2014	18716	5753
8-2014	6933	3269

27816, see above, QEP, TAT 33-28-34-27LL, Grail:

Date	Oil Runs	MCF Sold
11-2014	7665	1574
10-2014	16164	28072
9-2014	28123	2809
8-2014	11178	0

Merry Christmas, 2014 --

I wouldn't think I would have time to post something on Christmas morning, but there seems to be 90 seconds of free time between breakfast with out-of-town guests and opening gifts. Oh, add 20 seconds. The wifely unit just said she was going to make more coffee.

I will come back to this article later, but it's pretty good -- at least I thought it was when I read it last night after a reader sent it to me. The New York Times is reporting that oil's swift fall raises US fortunes abroad. It begins:

BRUSSELS — A plunge in oil prices has sent tremors through the global political and economic order, setting off an abrupt shift in fortunes that has bolstered the interests of the United States and pushed several big oil-exporting nations — particularly those hostile to the West, like Russia, Iran and Venezuela — to the brink of financial crisis.

The nearly 50 percent decline in oil prices since June has had the most conspicuous impact on the Russian economy and President Vladimir V. Putin. The former finance minister Aleksei L. Kudrin, a longtime friend of Mr. Putin’s, warned this week of a “full-blown economic crisis” and called for better relations with Europe and the United States.

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

Efforts To Improve Infrastructure Funding In Oil Patch On The Docket

The AP is reporting:

Relief could be on the horizon for strapped public services in the Northern Plains' booming oil patch, as elected leaders in Montana and North Dakota move to steer more money into the region during the states' upcoming legislative sessions.

Most drilling for oil and gas is in North Dakota. Yet the population growth from the boom has spilled over the border, and both states face rising pressures on infrastructure that are taxing the ability of local governments to keep pace.

In North Dakota, Gov. Jack Dalrymple is proposing to change the formula for oil and gas tax distributions so local governments get 60 percent, up from the current 25 percent.

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

Humor For The Day

The New York Times is reporting:

Germans have welcomed solar panels glinting on their rooftops and windmills looming over their fields, and they have even put up with a doubling of their electric bills. But enthusiasm for all things green appears to have reached a limit with a plan to string high-voltage transmission lines along the outskirts of cities like Fulda in the center of the country.

Dozens of protest groups have sprung up over the past year along the 500-mile path of the project, SuedLink, one of four high-voltage direct current lines that are to carry wind-generated power from north to south.

Businesses have been wary of the growing costs that the policies have imposed on them, but citizens have been largely stoic. They have protested when the government seemed to waver in its commitment, even as the cost of power for an average family of three has climbed to 85 euros a month, about $103, from 41 euros since 2000, according to government statistics.

“I have been following energy policy for 30 years and have gone along with everything,” said Mr. Lange, a self-employed music teacher from Fulda’s eastern Kämmerzell district. “The moment that I heard they wanted to build this behind my house, I thought, enough!”