What They're Talking About In Williston -- October 21, 2015; Update On A New Madison Oil Field In North Dakota

They wouldn't be drilling if they weren't still making money, I don't suppose. Crescent Point reported an IP on a Bakken well (#29771) in Williams County, using a lot of stages (35) and a lot of proppant (5 million lbs)'; 1280-acre spacing.

Crescent Point started the kick-off point early in the morning (before sunrise, 4:00 a.m.) on April 27, 2015, and reached total depth just after midnight (0003) on May 14, 2015. Took awhile. The lateral is the tough drilling; reaching vertical depth should be fairly routine. This well was 27 miles north, 3.5 miles west of Williston. D and C facies of the middle Bakken; target was the 10' D & C facies. Max gas was 6,482 units.

The geologist's report was brutally honest: the horizontal well path did a poor job of following the formation dip. With the exception of one shale strike resulting in a sidetrack, 100% of the cased production well bore was drilled within the middle Bakken formation. 1.8% was drilled within the productive E facies rock of the middle Bakken formation. 26.9% was drilled within the productive D facies rock; 41.7% within the productive C facies rock; 16.2% was drilled within the less productive B facies rock of the middle Bakken formation; and, finally, 13.4% was drilled within the productive A facies rock of the middle Bakken. Ability to follow our 10' middle Bakken target zone fared poorly with 39.1% of the lateral being drilled within our 10' target window.

We've talked about that before.

And then nine more permits yesterday, four EOG, four BR, and then one by Berenergy. But I think folks are missing the big, big story right now -- how much oil is being stored underground. During the boom, frack spreads had trouble keeping up with the drilling and the fracklog was generally around 400, all for operational reasons.

Now with the low price of oil, operators are drilling to total depth but not completing the wells, and the state started using a new acronym (DUC) -- or at least new to me. The fracklog went from 400 to 800 fairly quickly. I think many of us thought it would plateau or peak at 800 and then start to drop again, with the one-year rule, but surprise, surprise, it hit 933 in the August data (Director's Cut, October, 2015). Every day I'm seeing more and more DUCs, it seems, and fewer and fewer of these DUCs being completed (the "producing wells completed" daily statistic).

By the way, getting back to that Berenergy / Chatfield oil field well. I could be wrong, but I think the Chatfield is a "new" Madison oil field in the Williston Basin. See this September 29, 2014, post. The field is 20 miles NNE of Minot.

Look at the Ballard wildcat that "discovered" the Chatfield (as far as I know):

• 27319, 600, Ballard Petroleum, Fines 24-19, t6/14; cum 66K 8/15;

This is a vertical well; would have cost very little to drill, compared to a Bakken; no fracking, and in the first year, 66,000 bbls and look at the production profile. I don't see much of a decline:

Pool	Date	Days	BBLS Oil	Runs	BBLS Water	MCF Prod	MCF Sold	Vent/Flare
MADISON	8-2015	31	4036	4001	413	250	0	250
MADISON	7-2015	31	4118	4114	427	247	0	247
MADISON	6-2015	30	4044	4135	430	248	0	0
MADISON	5-2015	31	4033	4054	433	240	0	240
MADISON	4-2015	30	4386	4447	436	239	0	239
MADISON	3-2015	31	4479	4383	473	205	0	205
MADISON	2-2015	28	4059	4078	439	149	0	0
MADISON	1-2015	31	4417	4615	478	203	0	150
MADISON	12-2014	31	4788	4420	494	0	0	0
MADISON	11-2014	30	4337	4514	462	0	0	0
MADISON	10-2014	31	4724	4718	528	0	0	0
MADISON	9-2014	30	4716	4810	510	0	0	0
MADISON	8-2014	31	5280	5164	557	0	0	0
MADISON	7-2014	31	5548	5607	586	0	0	0
MADISON	6-2014	13	3102	2839	438	0	0	0

The other Ballard well in the Chatfield:

• 29807, 352, Ballard, Nelson 34-19, Chatfield, a Madison well, t3/15; cum 39K 8/15; 

Production profile for #29807:

Pool	Date	Days	BBLS Oil	Runs	BBLS Water	MCF Prod	MCF Sold	Vent/Flare
MADISON	8-2015	31	6221	6144	1056	376	0	376
MADISON	7-2015	31	6118	6081	1106	384	0	384
MADISON	6-2015	30	5929	5924	1123	369	0	0
MADISON	5-2015	31	6453	6423	1194	353	0	353
MADISON	4-2015	30	6431	6492	1244	374	0	374
MADISON	3-2015	31	7761	7627	1557	582	0	582
MADISON	2-2015	1	0	0	240	0	0	0

 
See graphic below, to see where these two Ballard well are.

You know, if that Chatfield well works out, it brings us full circle. Shortly after starting the blog, I received a number of notes from readers -- no, that's not true -- I first heard it from a "hot shot" operator while I was visiting Williston. I was turning around on the road in front of his office, and actually got out of the Honda Civic to take a photo of the new Baker Hughes building west of Williston, and he came out and we talked, and he told me of the rumor of a "river" of oil NNE of Minot. I did not post that at the time for any number of reason. Mostly I didn't want to get him into trouble. Or me.

Sometimes I feel like I'm just beginning to see the light.

Beginning To See The Light, Velvet Underground

CNBC Finally Reports That Dirty Little Secret: Why Unemployment Rate Has Dropped From 10% to 5% -- October 21, 2015

The secret is out. 

I guess now that the Obama administration is winding down, mainstream media can start writing stories that had been previously ignored or distorted. I never thought I would see this article by CNBC:

If some economists are right, it's going to take a whole lot less progress in the jobs market to get the unemployment rate to keep falling.

Anyone following the steady decline in the jobless figure knows that the reasons for the move are complex and not just about more people finding work. Some of the reasons, in fact, are not particularly positive signs pointing to real economic progress.

Much of the decline has been about people simply leaving the workforce. A record 94.7 million Americans are considered out of the labor force, pushing the participation rate to its lowest level since October 1977.

If someone is not actively looking for employment, they simply aren't counted in the headline number. That's been a big reason the rate has declined from 10 percent in 2009 to 5.1 percent currently.

It simply doesn't take as much job creation as it used to in order to get the unemployment rate to drop. The current employment to population ratio of 59.2 percent is about the same as it was when the unemployment rate was 9.6 percent.

Much more at the link, but it doesn't add much to what we already knew.

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The Sun Came Up In The East This Morning

Dog Bites Man

Another Cop Shot

CNBC / Market Realist is reporting: US horizontal rig count lowest since January, 2010.

Grand Forks' UND EERC WIth Three-Year, $3.5 Million Methanol Research Project; The North Dakota Two-Step -- October 21, 2015

Wow, wow, and wow. The things one finds in the most unexpected places. Over at Rigzone, I almost skipped this article, and probably would have except for the fact I'm all caught up and had some time to look around. This was the headline that I almost ignored: lowering the bar to methanol production.

I went to the link because I vaguely recall reading about methanol a long time ago but had completely forgotten all about it, but I thought maybe it would help me understand the Bakken better.

Wow, was I surprised. The story had a North Dakota connection, right there in the third paragraph:

Methanol is a key chemical ingredient for the production of liquid fuels, solvents, resins and polymers. A common method for producing the compound, steam methane reforming (SMR), entails applying high-temperature (approximately 1,500 to 1,800 degrees Fahrenheit) steam to natural gas or another methane-rich feedstock to produce "syngas." Next, impurities are removed from the syngas and a catalyst is applied to yield liquid methanol.

SMR is not without its drawbacks, however, according to a Connecticut-based manufacturer of stationary fuel cell power plants, FuelCell Energy (FCE).

"Steam reforming to generate methanol is highly energy-intensive, with a substantial carbon footprint," noted Kurt Goddard, vice president of investor relations with FuelCell Energy, Inc. (FCE). It "generates criteria pollutants such as smog-producing nitrogen oxides (NOx) and particulate matter that can cause public health issues."

SMR's complexity, which stems from its reliance on high temperatures through multiple steps, limits its practical application to large plants that can achieve a commercially viable economy of scale, added Ted Aulich, principal process chemist for fuels and chemicals with the University of North Dakota Energy and Environmental Research Center (EERC).

Aulich and his team at EERC recently embarked on a three-year project led by FCE to develop a simpler, less cost-prohibitive alternative to the two-step SMR process. Their goal is to develop a fuel cell capable of converting natural gas and other methane-rich gas into methanol.

Through the course of the $3.5 million project, which received funding from the U.S. Department of Energy's Advanced Research Projects Agency (ARPA-E) and the North Dakota Department of Commerce, EERC will work to improve the performance and economics of an "anode catalyst," which Aulich explained is a critical component of EC-GTL.

Much more at the link. I thnk the whole AGW scam is a scam, but, hey, if the "they" want to shower money on North Dakota, to lower CO2 emissions, I'm all for it. It looks like Grand Forks and Fargo are on a roll.

What is methanol used for? A lot of stuff. 

Mony, Mony, Billy Idol

North Dakota #1 In Nation For Economic Development -- US Chamber Of Commerce -- October 21, 2015

Wow, I'm in a great mood. I finished Catcher in the Rye; I'm having a grand time with re-reading a book on physics. I have no idea what I fiction I will read next; I haven't read Woolf in a long time, or perhaps Joseph Conrad. We'll see.

First two thoughts I had when nearing end of the book:

• huge difference from the writing of Virginia Woolf in Mrs Dalloway
• was this the 1950 version of Diary of a Wimpy Kid? 

I remember the thrill I felt when I recognized the climax in The Great Gatsby. I think it was a lot easier, a lot more obvious, recognizing the climax in The Catcher.

Gas is less than $2.00/gallon here in Texas. It's $2.09 almost everywhere, but there is a station a couple of miles away selling regular for $1.85. They say it will go down in price next week.

We're going to get drenched in north Texas starting tomorrow night and going through Sunday. I will believe it when I see it, but when it rains here, it really rains here.

And then several stories Don sent me last night that had to wait until this morning to get posted. We had an unusual soccer game last night -- unusual only in the fact it was on a Tuesday night. Soccer is generally on the weekends. It was a recreational game so not critically important; we lost 4 - 2. For me, the highlight was the spectacular goal our granddaughter scored off her left foot, from the far left side of the field, putting it into the far right corner of the goal, tying the game 2 - 2, after trailing 2 - 0 most of the game. This team beat us 8 - 0 so it was a better game this year.

Now for the stories Don sent me.

This was clearly the most incredible. The US Chamber of Commerce voted North Dakota #1 in the nation for economic performance. The Bismarck Tribune is reporting:

North Dakota has been ranked first in the nation on its economic performance and the talent in its pipeline by the U.S. Chamber of Commerce Foundation. 

In addition, the state was ranked sixth in overall business climate, according to the foundation's sixth annual "Enterprising States: States Innovate" study released Tuesday.
The study highlights the states best poised for the science, technology, engineering and math (STEM) focused economy.

North Dakota is at the top in STEM job growth but is still low in the actual number of STEM jobs per capita, according to the study.

Much, much more at the link.

How's the Bakken bust affect employment in the state? The Dickinson Press is reporting that North Dakota's unemployment rate dropped in September. Yup, dropped. I assume that puts us back in the #1 spot for that category also. The story:

North Dakota experienced a dip in its unemployment rate in September, down 0.3 percent statewide from August.

Job Service North Dakota reported Tuesday that the 2.2 percent September rate is unchanged from 2014. The seasonally-adjusted unemployment rate, which takes external factors like weather and daylight into account, puts the unemployment rate at 2.8 percent, well below the 5.1 percent national average.

I always like that "seasonal adjustment" stuff.  I assume a lot of the riff raff will take the first Amtrak out once it starts getting cold, which usually happens Halloween Eve, give or take a few days. The Geographic Discovery fakomentories on all the crime in North Dakota will keep more of the riff raff out of the state, now that they know we're unto them, and the 12-member Fort Berthold Indian Reservation has things under control. Assuming two have to be in the station to man the phones, and there are three shifts, it leaves about one law enforcement officer on the road at all times in that huge area, about the size of Manhattan, I suppose. In this case, though, the Indians got to keep that land about the size of Manhattan.

Don also sent a link to a Seeking Alpha story. This one was on railcars. Four bullets at the link. These are the two links that caught my eye. 

• U.S. rail carloads fell 1.6% in the quarter on lower demand for coal, crude oil and metals.
• Railcar makers still enjoy a backlog of more than 122K units, although that is down from a record of 142K at the end of last year.

With all the headwinds in the oil and gas industry, a decrease of 1.6% in rail carloads is hardly noteworthy. And with a backlog of 122,000 units I doubt Trinity Industries or Greenbrier will run out of things to do before the economy turns for the better.

And the famous Texas kid that lives just down the street from us will be moving to Qatar with his family where they will, no doubt, begin a clock-manufacturing business. It will be interesting to see if some of those clocks show up in northern Iraq before it's all over. I'm betting the family is back in the US before 2020. And the way Putin is putting his kingdom back together, they could, for all we know, be back in the USSR.

By the way, speaking of back to the future, it is "back to the future" day today. Everywhere. 

Back in the USA, Linda Ronstadt

Wednesday, October 21, 2015

Active rigs:

	10/21/2015	10/21/2014	10/21/2013	10/21/2012	10/21/2011
Active Rigs	68	191	182	186	195

RBN Energy: how flow data provides transparency into natural gas production, part 3.

In all sorts of commodity markets, buyers and sellers would give their eye-teeth to have access to accurate daily supply and demand data.  Access to such data would provide insight into the utilization of transportation assets, transportation patterns and ultimately --- the holy grail of commodity markets – price.  What if there was a commodity market where you could know supply and demand on a daily basis?  Well there is.  And it is the natural gas market.  Gas market analysts have access to the luxury of pipeline flow data that (in the right hands) provides reasonably accurate estimates of daily supply (including production) and demand. In today’s blog, we explain how the natural gas industry uses flow data to track gas production trends in real time.

Recap
In Part 1 of this series, we compared the pros and cons of U.S. gas production data from the Energy Information Administration (EIA): the Natural Gas Monthly (NGM), and two forward-looking reports, the Short-Term Energy Outlook (STEO) and the Drilling Productivity Report (DPR). The EIA historical production data is considered the benchmark and for good reason. But the big downside of this data is that it is lagged by two months so the latest NGM, for instance, only provides actual estimates through July 2015. The STEO and DPR data provide projections largely based on history, to extrapolate that data forward. However current market dynamics of rapidly improving productivity and a disconnect between drilling rigs and production render such backward looking projections somewhat moot. Another way to look at gas supply (and demand) in more real-time that we introduced in Part 2 – is pipeline flow data. Using daily, real-time flow data from our friends at Genscape, we showed that production from the Marcellus and Utica basins combined has continued to grow since July. Today we’ll show you how we built the Appalachia production flows using Genscape’s natural gas flow database.
First a brief primer on what flow data is, where it comes from and some of its pitfalls (because no one data source is perfect).

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Taken Longer Than Folks Thought

From Bloomberg/Rigzone:

After a year suffering the economic consequences of the oil price slump, OPEC is finally on the cusp of choking off growth in U.S. crude output.

The nation’s production is almost back down to the level pumped in November, when the Organization of Petroleum Exporting Countries switched its strategy to focus on battering competitors and reclaiming market share. As the U.S. wilts, demand for OPEC’s crude will grow in 2015, ending two years of retreat, the International Energy Agency estimates.

While cratering prices and historic cutbacks in drilling have taken their toll on the U.S., OPEC members have also paid a heavy price.

A year of plunging government revenues, growing budget deficits and slumping currencies has left several members grappling with severe economic problems. The fact that the U.S. oil boom kept going for about six months after the group’s November decision also means OPEC has so far succeeded only in bringing the market back to where it started.

“It’s taken a hell of a long time and it will continue to take a long time -- U.S. oil production has been more resilient than people thought,” said Mike Wittner, head of oil markets research at Societe Generale SA in London.

“The bottom line is the re-balancing has begun.”

OPEC abandoned its traditional role of paring production to prevent oversupply last November as a tide of new oil from the U.S. eroded its share of world markets. The group chose instead to keep pumping, allowing the subsequent price slump to squeeze competitors with higher costs. Its representatives will meet in Vienna Wednesday with non-member countries including Russia for technical talks.