Sunday, August 6, 2017

The Staggering Bakken -- It Never Quits -- August 6, 2017

Updates

September 3, 2017: this well has been updated at this post; includes the full production profile up to this date.

Original Post 

From a reader, another example of a jump in production after being shut-in for quite some time. I am too busy to complete this post so will come back to it later.

The well:
  • 21786, 1,494, XTO, Rink 12-4ESH, Garden, t4/12; cum 162K 7/17;
For now, the note from a reader (much, much appreciated for this example):
Another example: the Rink SE (#21786) was shut-in for about two years while other wells were drilled from this pad. The original frack zone had a chance to re-charge in addition to the recent fracking halo of nearby wells. In June, this well produced over 24,000 barrels of oil. It’s best month when completed in 2012 was less than half this volume. This is a Three-Forks 1st bench well in the Garden Field north of Watford City. 
The graphic:



There are a number of stories here; when I come back to this post, hopefully I will remember those thoughts.
  • This well was originally fracked in 2012; considered uneconomic in 2015 and shut in. All indications this well was not re-fracked: the reader suggests that it was not re-fracked;
  • the sundry forms suggest this well was not re-fracked; and,
  • no data at FracFocus to suggest any re-frac.
If this production holds (not a mistake, due to commingling reporting), this is quite remarkable.

For now, I only have time to post the production profile for the index well (#21786) since February, 2015 (production profile for other wells in the graphic at this post):

Monthly Production Data, #21786:
PoolDateDaysBBLS OilRunsBBLS WaterMCF ProdMCF SoldVent/Flare
BAKKEN6-201730242072592032714555143603719356
BAKKEN5-201713371819361063913269114381695
BAKKEN4-20170000000
BAKKEN3-20170000000
BAKKEN2-20170000000
BAKKEN1-20170000000
BAKKEN12-20160000000
BAKKEN11-20160000000
BAKKEN10-20160000000
BAKKEN9-20160000000
BAKKEN8-20160000000
BAKKEN7-20160000000
BAKKEN6-20160000000
BAKKEN5-20160000000
BAKKEN4-20160000000
BAKKEN3-20160000000
BAKKEN2-20160000000
BAKKEN1-20160000000
BAKKEN12-20150000000
BAKKEN11-20150000000
BAKKEN10-20150000000
BAKKEN9-20150000000
BAKKEN8-20150000000
BAKKEN7-20150000000
BAKKEN6-20150000000
BAKKEN5-20150000000
BAKKEN4-201585521235735178817180
BAKKEN3-20153132833144244377427087254
BAKKEN2-20152825522105232246293878420

Initial production following the original frack:
BAKKEN9-20123056615719346914113141076
BAKKEN8-201231649763973813154021538517
BAKKEN7-20123164446618383915897264513252
BAKKEN6-20123080037612420121458021458
BAKKEN5-2012311139311654700130865030865
BAKKEN4-201217743068021077515236015236


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US Hitting On All Cylinders -- 3Q17 GDP Forecast Near 4% -- GDP Now -- August 6, 2017

Latest forecast: 3.7 percent — August 4, 2017
The GDPNow model forecast for real GDP growth (seasonally adjusted annual rate) in the third quarter of 2017 is 3.7 percent on August 4, down from 4.0 percent on August 3.
The forecasts of third-quarter real consumer spending growth and real fixed investment growth declined from 3.0 percent and 5.2 percent to 2.8 percent and 4.1 percent, respectively, after this morning's employment report from the U.S. Bureau of Labor Statistics.
The model's estimate of the dynamic factor for July—normalized to have mean 0 and standard deviation 1 and used to forecast yet-to-be released monthly GDP source data—decreased from 0.64 to 0.27 after the report.
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QEP Will Report A Couple Of Nice Foreman Wells Later This Week -- August 6, 2017

The QEP Foreman wells are tracked here.

Flashback, two years ago -- The Atlantic Monthly article at this link: https://www.theatlantic.com/business/archive/2015/06/north-dakota-oil-boom-bust/396620/.

Friday, August 11, 2017
31475, conf, MRO, Lacey USA 11-5H, Van Hook, no production data,
31531, see below, QEP, Foreman 3-2-1TH, Spotted Horn, producing,
31536, see below, QEP, Foreman 3-2-1BHR, Spotted Horn, producing,

Thursday, August 10, 2017
  • 31476, SI/NC, MRO, Moline 14-32H, Big Bend, no production data,
  • 31529, SI/NC, Hess, EN-Skabo Trust-155-93-0631H-7, Alger, no production data, 
Wednesday, August 9, 2017
None.

Tuesday, August 8, 2017
  • 26835, 1,993, WPX, Wolf Chief 27-34HW, Mandaree, Three Forks, 41 stages, 6.1 million lbs, t5/17; cum 81K 7/17;
Monday, August 7, 2017
  • 26839, 2,253, WPX, Wolf Chief 27-34HD, Mandaree, 41 stages, 6.1 million lbs, t4/17; cum 97K 6/17;
  • 33290, SI/NC, MRO, Lena USA 14-22H, Antelope, no production data, 
Sunday, August 6, 2017
None.

Saturday, August 5, 2017
None.

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

31531, see above, QEP, Foreman 3-2-1TH, Spotted Horn:

DateOil RunsMCF Sold
6-20171180316798
5-20171440519447
4-20171004513470
3-20172115624321
2-20171755720196

 31536, see above, QEP, Foreman 3-2-1BHR, Spotted Horn:

DateOil RunsMCF Sold
6-20171142027771
5-20171521334264
4-20171740727371
3-20172578932364
2-20171812317143

26835, see above, WPX, Wolf Chief 27-34HW, Mandaree:

DateOil RunsMCF Sold
6-20172757025839
5-20173871829478
4-2017146267837

 26839, see above, WPX, Wolf Chief 27-34HD, Mandaree:

DateOil RunsMCF Sold
6-20173558924755
5-20174639219016
4-2017143393277
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The Crude Oil Market Still Needs Another 18 Months To Re-Balance -- August 6, 2017

I'm not going to look for the posts, but I've always suggested that the prices operators paid to get into the Permian were a bit excessive, to put it mildly. The data seems to bear that out -- see this Bloomberg story at Rigzone. The story was not particularly noteworthy, but the last line of the article is in line with my own calculations regarding time to "re-balance." From the linked article:
"The market still needs about another year and a half for demand to catch up."
There may be subtle differences between "re-balancing" and the phrase "for demand to catch up." I don't know. It seems they are saying about the same thing.

I define "re-balancing" based on historical "days of crude oil supply." For the longest time, 22 days of US crude oil supply seemed to be the "norm." We last saw 22 days of US crude oil supply back in 2014. See graph below. It's hard to believe: we actually hit16.5 days on January 23, 2004.

I believe the high is 34.2 days (February, 2017 -- just a few months ago). Currently the number is around 28 days of supply, during the heavy summer driving season.

It will be interesting to see the figure in October when the driving season is over. By the way, here is another post that is interesting to read in hindsight.

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Smoke And Mirrors -- August 6, 2017

Updates

August 11, 2017: OPEC compliance is estimated to be 75%.

August 6, 2017: see comments. Link brought up here for easier access: https://www.platts.com/news-feature/2017/oil/opec-guide/prod_targets. 

Original Post 

If I recall correctly, and I probably don't, OPEC set "the cut" at 1.2 million bopd. [Later: I did not: the article says OPEC and non-OPEC partners agreed to cut 1.8 million bopd.]

Headline from Platts: OPEC July oil outputs hits high of 32.82 million bopd on Libya recover. OPEC is about 1 million bopd above ceiling.

Now the smoke and mirrors: Platts says "not including Libya and Nigeria, compliance among OPEC's 12 members ...remains robust at 114%, down slightly from 116% in June, based on an average of January through July output."

Compliance is 114% but yet OPEC production "hits high of 32.82 million bopd." Wow. 

If that's accurate, that the compliance rate is 114% based on a six-month average, it appears that more recent data suggests some members are increasing production. Let's see. From the linked article:
  • Libya: exempt from OPEC cuts, averaged 990,000 bopd in July; up 180,000 bopd from June
  • Nigeria: exempt, averaged 1.8a million bopd, up 30,000 bopd
  • Saudi Arabia: averaged 10.05 million bopd in July; June data not provided
  • Iraq: second largest OPEC producer; production grew to 4.48 million bopd; quota is 4.35 million
  • Iran: third largest OPEC producer: production grew to 3.82 million bopd; quota is 3.80 million
  • UAE: production rose to 2.89 million bopd; above its quota of 2.87 million bopd
  • Ecuador: openly defied OPEC; discontinued goal to cut production; production rose to 530,000 bopd, also above its quota of 520,000 bopd
More: look again at the bottom line number -- 32.82 million bopd. Then look where that falls on the graph posted in May, 2017.  Prior to the "Saudi Surge," OPEC was producing just slightly above 30 million bopd. Now, after the surge, OPEC is producing above 32 million bodp. I assume most folks thought OPEC was going to cut below their pre-surge production. Nope, OPEC surged production to almost 34 million bopd and then agreed to a 2-million bopd cut, which would put them at 32 million bopd, or 2 million bopd above their pre-surge production.

One can see how global crude oil flows were sustained at robust levels even during the cuts with the graph at this post.

Having said that, if the numbers are accurate, Saudi Arabia is taking the brunt of the cut. The linked Platts article said Saudi's production in July was at 10.05 million bopd. If accurate, that is about what Saudi produced back in 2009. An old graphic, frequently posted:

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