Sharp Decline In Bakken Production In April, 2016, Due To Temporary Conditions -- Rystad Energy; Gasoline Stocks Along The East Coast Soaring -- July 6, 2016

From the Director's Cut for April, 2016, data and my comment:

Crude oil production:

• April, 2016: 1,041,007 bopd
• March, 2016: 1,111,421 bopd
• Month-over-month change: a decrease of 70,414 bopd.
• Month-over-month change: a decrease of 6%.
• Comment: that's as big a decrease as I can remember.

I don't know if folks were surprised by that or not. I took it in stride but did not think much about it. I missed the analysis by Rystad Energy which was posted June 23, 2016:

Rystad Energy expects horizontal oil completion activity in the US Shale to outpace drilling operations by 30% in 2H16, resulting in the contraction of DUC inventory by 800 wells.

These additional completions will support total US oil output by providing an additional 300,000 -350,000 bopd to the exit-2016 rate.

The additional output will be more than sufficient to balance the base production decline. The inventory of 4,000 drilled but uncompleted oil wells (DUCs) is estimated to hold close to 2 billion barrels of oil reserves.

“Research shows that operators are now starting to complete wells that have previously been put on hold deliberately. This comes as more than 90% of the accumulated oil DUC inventory can be commercially completed at a WTI of 50 USD/bbl,” says Artem Abramov, Senior Analyst and product manager at Rystad Energy.

The recent extreme production decline - among the key crude producing states, North Dakota suffered from an all-time high historical decline rate of 70,000 bopd in April 2016 - fell far outside a natural 10,000 - 20,000 bopd range, which one would expect as a result of current completion activity and mature base production.

The significant decline acceleration appears to have come from older “low decline” wells brought on-line before 2016.

“It is not the first time such temporary shifts in base decline are observed, and they were caused by road restrictions imposed by the state over the month. This trend is unlikely to persist and should not be extrapolated to the US Shale industry in general,” says Abramov.

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Where Is All This Gasoline Going To Go? 

Someone Is Going To Wake-Up To A Half-Billion Dollar Surprise -- KFYR-TV -- July 6, 2016

Someone will be surprised when they find that the project is not one-half million dollars but one-half billion dollars.

It looks like the project is already costing more than originally estimated.

But first the news that will shock someone when they find out how much this is really going to cost.

KFYR-TV is reporting:

The July 3 storm destroyed a big part of a half million dollar project (sic): the start of a fertilizer plant for farmers and ranchers at Dakota Gasification Company, near Beulah.

That's what was reported on the news or in the transcription: one-half million dollars.

In fact, it's a half-billion dollar project: $500,000,000 with a "b" and eight (8) zeroes, not $500,000 with an "m" and only five (5) zeroes.

But at least the headline writer got it right. The screenshot of the on-line story:

The project was initially estimated to be a $402 million project but they're now calling it a $500 million project (at least in the headlines).

Two comments:

• possibly the headline writers simply rounded the number, something I often do; even at $402 million, I might round to $500 million 
• I'll give the reporter a break; I make many, many typographical errors -- some I catch, some I don't

A much bigger question, seriously, though, is how much this will set the project back. It was supposed to be completed by next spring. 

We Start The Day At 31 Active Rigs In North Dakota -- Wednesday, July 6, 2016

Active rigs:

	7/6/2016	07/06/2015	07/06/2014	07/06/2013	07/06/2012
Active Rigs	31	76	191	188	213

RBN Energy: update on natural gas pricing, being driven by supply/demand.

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The Food Page

"Sorted Food" (or "SORTEDfood"/sortedfood.com) was recently featured in The Wall Street Journal. I've only seen a few episodes so I can't say for sure whether I will subscribe or continue to follow but if you are a foodie or interested in recipes, this might be something you want to try.

Here's an example:

Ultimate Grilled Cheese Sandwich Recipe  

Bread

• 4 cups flour
• yeast
• salt, tsp
• 1.5 hour to rise
• punch down, in bread pan for another 1 hour
• in oven with tray of water on bottom of stove 
• 15 minutes at 425; 25 minutes at 350

Grilled cheese

• a bit of mustard inside (fiery English)
• Gruyere/cheddar
• oregano -- a pinch
• black pepper -- a bit
• butter on outside (do not pan fry in oil or butter)
• low heat to allow cheese to ooze before bread finishes
• for last minute, cover pan -- will make it crispier

Average 2016 Crude Oil Price Well Below What OPEC Nations Need To Meet National Budgets -- July 6, 2016

OPEC countries need oil to average"around $100/bbl" for the year to meet their national budgets. Some countries may need slightly less than $100-oil; many need significantly more. Saudi Arabia is said to require an annual average of about $100/bbl.

The prices for oil this year are noted below. At the end of each month, I update the price for the most recent month -- just a rough number of what seemed to be the "average" price of WTI for that month.

There is nothing new here or unexpected. I started this little exercise at the beginning of the year, coming up with different "scenarios" just to see how the year plays out. At the beginning of the year I put an estimate in for each month (that's why one sees $45-oil for July) under five different scenarios. The scenario below is the one that now seems most likely.

For the first six months the number is the approximate price for WTI that I posted at the end of the indicated month. The last six months of the year, obviously, are estimates based on what's being forecast by different agencies, different bloggers.

I haven't seen anything to suggest we will get much above $50/bbl for the rest of the year, though some optimistically say we should see $60-oil this autumn.

But right now, the average for the 2016 calendar year looks like it is going to come in at about $45, way below what Saudi Arabia and the rest of OPEC need to maintain their budgets.

January	35
February	35
March	35
April	45
May	47
June	50
July	45
August	50
September	50
October	50
November	50
December	50
2016 Average	45

Atmospheric CO2 Data For June, 2016, Posted -- July 6, 2016

Down a bit from last month, 407.70 in May:

Atmospheric CO2 is tracked here, CO2 Now.

Atmospheric CO2 varies seasonally, so one cannot necessarily compare month-after-month. It is best to compare year-over-year. Atmospheric CO2 tends to peak in the spring (May) and then fall steadily through the summer, reaching its low point for the year around September, at which time it starts to rise again, rising during the winter months (northern hemisphere) and peaking around May, where the cycle starts all over again.

One can follow daily atmospheric CO2 readings here. For example, the most recent data available is from July 4, 2016, just a couple of days ago, an the reading was 405.70. The monthly average for July, 2015, last year, was about 402; for June, last year, about 403.