Random Observation -- Statoil Seems To Be Picking Up The Pace -- September 22, 2018

I am currently going through all the "21XXX" permits -- one thousand permits for wells that were pretty much drilled back in 2012. I don't have the time or resources to do a really good statistical study, but it certainly seems that Statoil is starting to pick up the pace. A lot of their older wells, are showing better production all of a sudden, not enough to suggest re-fracking, but more likely re-working. Maybe a reader knows more about this than I do. Enquiring minds would like to know.

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For Those Who Have Already Forgotten All Their Names

A Random Note On Statoil's Patent Gate / Heinz Wells In Sakakawea Oil Field -- September 22, 2018

When I first started blogging about the Bakken over a decade ago, I said that if "you had one well," you would eventually have four, maybe eight, possibly twelve, and possibly many more than that." I never even thought about the life cycle of the Bakken well at that time, but that adds a whole new dimension for mineral owners. 

Statoil bringing wells back on line that have been off line for up to two years of more. Two examples, so far:

• 21244, 3,201, Statoil, Patent Gate 7-6 1H, Sakakawea, t4/12; cu 219K 7/18; went offline 4/16 at 1500 bbls/month; back online 4/18 at 6000 bbls/month, then 10,000 bbls/month in 6518; offline again 7/18;
  
• 21245, 4,378, Statoil, Heinz 18-19 1H, Patent Gate, t4/12; cum 212K 7/18; went offline 3/16 at 1500 bbls/month; back online 5/18 at 6000 bbls/month, then 10,000 bbls/month in 6/18; offline again 7/18;
  

A 14-well pad:

The wells:

• 32709,
• 32710,
• 29561,
• 29558,
• 32711,
• 29560, see below,
• 21244, see above,
• 21245, see above,
• 32712,
• 29556,
• 29559,
• 29557,
• 32713,
• 32714,

One example:

• 29560, 330, Statoil, Patent Gate 7-6 3H, Sakakawea, t1/18; cum 60K 7/18; full production to date:

Pool	Date	Days	BBLS Oil	Runs	BBLS Water	MCF Prod	MCF Sold	Vent/Flare
BAKKEN	7-2018	21	15080	15030	25877	19904	13008	6896
BAKKEN	6-2018	12	7567	7585	11955	10054	6670	3384
BAKKEN	5-2018	12	8396	8440	11852	10850	6336	4514
BAKKEN	4-2018	30	20684	20871	33252	22991	12547	10444
BAKKEN	3-2018	10	7505	7150	12956	16047	15679	368
BAKKEN	2-2018	1	1	116	0	0	0	0
BAKKEN	1-2018	3	769	654	12689	329	163	166

 

Flashback: EOG's Wayzetta 156-3329H, #21239 -- September 22, 2018

Flashback from 2012 (production data updated, as I always do):

The IPs for Tuesday, August 22, 2012, have been posted.

• 21239, 1,315, EOG, Wayzetta 156-3329H, Parshall, t3/12; cum 832K 7/18; some can check the well file and tell me if I'm wrong, but it appears they used over 9 million pounds to frack in 42 stages; wow; and "holy mackerel," the gas units averaged 1,931 units and almost hit 9,000 units at the max; the original paperwork suggested this was to be a Three Forks well, but the report says it ended up targeting the middle Bakken; crossing from spud site in section 33, through northeast corner of section 32, and ending in section 29, this is slightly longer than a typical short lateral, at least from what I can tell (for newbies: I am an amateur at all this, and could be quite wrong). This well, already at 116,000 bbls cumulative, is on its way to being paid for; and, in less than three months. 

Recent production profile:

Pool	Date	Days	BBLS Oil	Runs	BBLS Water	MCF Prod	MCF Sold	Vent/Flare
BAKKEN	7-2018	31	3022	3032	161	7509	7081	180
BAKKEN	6-2018	30	3049	3051	161	7811	7571	0
BAKKEN	5-2018	31	3219	3219	145	8059	7802	7
BAKKEN	4-2018	30	3363	3370	166	7794	7539	14
BAKKEN	3-2018	31	3617	3614	185	8038	7436	350
BAKKEN	2-2018	28	3390	3360	188	7106	6840	38
BAKKEN	1-2018	31	3636	3632	372	7709	7373	98
BAKKEN	12-2017	31	3889	3974	198	7852	6592	1009
BAKKEN	11-2017	30	3846	3846	183	7586	4873	2471
BAKKEN	10-2017	31	4191	4280	209	8480	7364	864
BAKKEN	9-2017	30	4185	4097	200	8682	2954	5487
BAKKEN	8-2017	27	4197	4126	157	8078	1192	6673
BAKKEN	7-2017	19	2521	2588	148	4944	839	3956
BAKKEN	6-2017	30	4182	4192	204	8107	2716	5147

Mark Perry: Another Economist That Does Not Support Free Trade -- September 22, 2018

Updates

Later, 10:44 a.m. CDT: from a reader ..

Re: your blog bit about shopping at Walmart.

 

In our area, the impact of the tariffs on shopping volumes seems to be…….zero. Nada. On Thursday shopping trip to Wenatchee, Costco, Walmart, Fred Meyers. The stores were packed. Checkout lines full. If the tariffs are having an impact on shopping volume. Thank God. The lines would otherwise be impossible.

 

Just thought you would like to know.

Another reader noted that milk at Walmart costs less than bottled water.

Original Post

 
Of all people, I would have expected Mark Perry to be a "free trader," but apparently he supports:

• Canadian tariffs of 375% on US dairy products
• huge Chinese tariffs on American products
• Chinese banning of US beef

On another note, I have not noticed any price increases of consequence at Walmart. I wonder if Mark shops at Walmart? I can't imagine. "Innocent" Americans ... whatever that means.

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Getting Ready For Saturday Morning Gymnastics ....

..... with her new toothbrush.

Idle Rambling On A Rainy Saturday Morning -- September 22, 2018

Peak oil? Maybe. Two stories coming out this past week. Russia may be facing peak oil production. Then the second story: Saudi Arabia -- Saudi Arabia worries that it may not be able to supply enough of the "right type" of oil.

The Saudi Arabia story is an interesting story. First, we've talked about this before. I said that if there is a shortage of oil with the Iranian sanctions it will be a shortage of the "right" kind of oil and because the story is too complicated to sort out for most traders, it seems, if the price of the "right oil" increases, it will pull the price of "all" oil higher.

The second reason the Saudi story is interesting: it gives the lie to Saudi's claims that it has inexhaustible spare capacity. Hardly. And look at the current production number: 10.4 million bopd -- that's basically where Saudi has been for years.10.4. And the US: easily at 11 million bopd, link here. I guess the all-time record was set last June at 10.7 million bopd. From Forbes, more recently:

We also know that weekly U.S. crude production has averaged an all-time record 11 million b/d for the past two weeks, a 16% boom since early-January. We've passed Russia to become the largest crude oil producer in the world, yet at over 13 million b/d, we have been the "largest oil producer" for years now. Although a very large one, "crude" is only a subset of "oil."

Indeed, the future shines even brighter for the U.S. oil industry: the International Energy Agency just reported: "the shale sector as a whole is on track to achieve, for the first time in its history, positive free cash flow in 2018." Investments were up 60% last year and are expected to be up another 20-25% in 2018.

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$30 Trillion

US household net worth: exceeds $100 trillion. Specifically, $107 trillion in 2Q18. But look at this, two quarters earlier, 4Q18: "only 98.7 trillion." I assume we are comparing apples to apples. If we are, that's incredible -- from less than $99 trillion to almost $107 trillion in six months. Inflation has been tame; inflation does not account for this increase. Home values do not account for this increase.

On another note, I guess it depends which movie you are watching, even if both movies are on the same (CNBC) network:

• From earlier this summer: $30 trillion is about to change hands in the US. There's a lot of money about to change hands in the U.S. — $30 trillion to be exact. Baby boomers are the wealthiest generation in American history — and they're about to pass down those riches over the next few decades. It's the so-called great wealth transfer. Link here to CNBC. That was in July, 2018.

• Earlier in the year, in May, 2018, "That $30 trillion great wealth transfer is a myth" -- link to CNBC.

So, what's the story?

The $30 trillion is accurate. But some argue that those with the $30 trillion are living longer and will spend it on themselves. Mostly for healthcare, I assume. And perhaps a trip around the moon. But does it matter whether $30 trillion is spent by the generation that "built it" or their heirs. It's still $30 trillion going into (mostly) the US economy.

Having said that, I attended a Schwab luncheon this past week and the financial advisors are all over this $30 trillion "wealth transfer."

It should be noted: under Trump, $22 million, per couple, is exempt from the death tax. Per person, $11 million. But note: this "sunsets" in 2025 and goes to zero.

My hunch: US congressmen and women are aware of the $30 trillion and anxious to get their hands on it. Under the next administration, regardless of party, things to watch:

• the death tax exemption will be scaled back significantly, perhaps back to as slow at $5 million
• if Congress dawdles, the stars could align in such a matter that the death tax exemption will go to zero for one full year
• Roth IRAs will be taxed; possibly eliminated
• increased SALT deductions will be restored for wealthy -- the New York -- Connecticut -- California coalition
• the standard deduction might be rolled back slightly, but exemptions will be restored
• tax brackets re-configured again, especially at the top level
• consideration of a universal basic income

From dqydj.com. I don't know about you, but a jump from $8 million in 2013 to over $10 million in 2016 seems significant.

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 The Park

My expectations every time I visit the "north unit":

The largest buffalo herd I've seen at the park's "north unit" was about twenty head.

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The Book Page

Give People Money: How a Universal Basic Income Would End Poverty, yada, yada, yada ....., Annie Lowrey, c. 2018.

 

I paged through this book very, very quickly last night at Barnes and Noble. For some inexplicable reason it was shelved near the dinosaur books.

The author used examples from all over the world, and then settled on the idea that the ideal universal basic income (UBI) for the United States would be ..... drum roll ... $1,000 for each adult.

So, we have four 21-year-old milleninals living in a $1,000-rental unit with untaxed income of $48,000 / year. And legalized marijuana. What could possibly go wrong?

It appears that a household earning $60,000 has take home income of around $48,000 after federal and state income taxes, so in effect a UBI of $48,000 equates to about $56,000 or more for those earning that amount. Throw in free healthcare, and that $48,000 for four millennials quickly becomes $65,000 or more.

Of course, those on UBI would get free healthcare, so the UBI will be significantly "more valuable" than $1,000 / month.

Whether the writer addressed the issue of cost of living in NYC vs Jamestown, ND, I don't know, but I doubt it.

But the big question for me: how was $1,000 / month determined? Why not $500 / month? Or $10,000 / month? Of course we know how $1,000 was picked. It was the "Goldilocks" number that would play well on NPR, and it has a nice ring to it. $500 seems skimpy; $10,000 seems beyond the pale -- at least for some, I suppose.

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What Condition My Condition Is In