Map Time -- August 23, 2019

Remember that Pembina / Kinder Morgan story earlier this week? Quick: what was the most important "word" in that story? Hint: it was a hyphenated word. From the link:

Pembina Pipeline, based in Calgary, is snapping up Kinder’s Canadian assets and a cross-border pipeline in a $3.3 billion deal. For Houston-based Kinder, the deal completes an exit from a country that has frustrated more than a few companies -- from ConocoPhillips and Royal Dutch Shell to Marathon Oil.

Yup: cross-border. Those easements are nice to have.

Anyone wonder where that pipeline crosses the border? Look no further:

Buried in this Reuters article that no one is talking about:

The Cochin pipeline can carry 95,000 barrels per day of U.S. condensate - an ultra-light oil - into Alberta to dilute the heavy crude it produces. Reversing that pipeline would ease constraints on Canadian export pipelines, and Dilger said the company may consider that option. 

Wow, I love this blog.

Now to find that 44-mile pipeline carrying propane from a natural gas processing plant in central McKenzie County to "Andeavor/Belfield."

This is a map of the natural gas processing plants in North Dakota. The article said that the pipeline originated at a natural gas processing plant in "central McKenzie County." That's possible but there is no such plant "44 miles" from Belfield. However, there is a natural gas processing plant exactly "44 miles" from Belfield in central Dunn County.

It matters not at all. The exercise was undertaken to remind / re-acquaint readers of the location of natural gas processing plants in North Dakota.

By the way, where is the 60-well Long Creek Unit that CLR is developing?

Drillinginfo Is Now "Enverus" -- Energy, Veracity, And Us (Humanity) -- August 23, 2019

Drillinginfo changes its name to Enverus "to better reflect the company's identify." Link here.

Let's see.

"Drilling Info" suggests something to me.

"Enverus"? Not so much.

So, here it is:

• EN: the energy industry
• VER: clarity and truth
• US: partnership, collaboration, people, and humanity

I'm not sure what the difference is between people and humanity but then that's probably just me.

From the company:

“Our company’s purpose is to create the future of the energy industry together in collaboration with our customers and partners. This is a larger mission than we began with and represents our evolution to becoming Enverus,” Allen Gilmer, co-founder and visionary of the company, said in a release.

“This business was started by ‘oilpatch kids’ in 1999 when the industry was on the cusp of both a massive digital revolution and a once-in-a-lifetime disruption from unconventional oil and gas, Gilmer continued. “Over time, that team built a recognizable and iconic organization throughout the upstream oil and gas businesses…from the beginning, we have fueled ourselves by the power of our phenomenal people, and those people are now building the most important, integrated problem-solving platform across the world’s largest, most significant and impactful industry ever – energy.”

What I will be most interested in is whether the company can move beyond the metrics of conventional oil to the metrics of the shale revolution.

So far I've not seen any good examples of anyone moving beyond the old metrics. And the shale revolution is now at least 20 years old. 

Keystone XL -- Nebraska -- Hope Springs Eternal -- August 23, 2019

From twitter moments ago:

Later: see the "Seward jog" here.

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Another Bogus Story: The US Drowns The World In Oil

Nope, Virginia, the world is not going to be drowning in oil in 2029.

This might be as good a time as ever to re-look at that "US to drown the world in oil" story that went viral a few days ago.

Something didn't ring true about that article when I first read it, but I couldn't put my finger on it.

Remember, this was at an anti-oil, green energy site. Why would they post such a story? It's obvious they were posting the story to scare folks about how much oil (i.e., CO2 emissions] the US was going to produce over the next ten years, a "call to arms," as such, to keep this from happening. If I recall correctly the data for that article came from Rystad Energy.

This is what caught my attention. There were some interesting data points not mentioned in the article.

For example:

• total global supply
• total global demand

This is what also caught my attention.

Not one Mideast country is contributing any significant amount of new oil or natural gas to the global supply by 2029 (and perhaps earlier). By 2029, Saudi Arabia will be a net importer of oil.  By 2029, Russia will not be adding any more new oil and gas more than Ohio. One has to assume that if Russia's production is growing only  as much as Ohio, Russia's growth in exports will be similarly constrained; they will need it for themselves Mexico, Venezuela, Norway are not on the list.

Think about that. Assuming global growth pretty much matches global demand, if it were not for the US, the global shortfall would be huge.

That's the real take home message in the graphics at that post.

By 2029 the world is not going to be drowning in oil. The US won't be drowning the world in oil. In fact, the US will be the major source for new oil and gas in 2029, but supply will not exceed demand by much; there won't be anyone drowning in oil.

The flip side of all that hand-wringing by Global Witness is opportunity. For the US.

From a white paper published in 2018, looking out to 2035, McKinsey provided this reference case:

• We expect growth in oil supply to come from (1) OPEC, (2) US shale oil and (3) selected offshore basins e.g. Brazil that are breaking-even below USD75/bb; ample resource base and cost discipline keeps long term average prices at USD65-75/ bbl 
• The outlook is combined with a peak in demand growth in the early 2030s - driven by slower chemicals growth and peak transport demand as fuel economy, electrification, & reduced car ownership decreases oil consumption 
• By 2035, under our base case E&P companies need to add >40 MMb/d of new crude production from mainly offshore and shale unsanctioned projects to meet demand, and ~4- 5% of these new additions will come from YTF resources.

["YTF" = "yet to find."]

But think about that.

Today, Russia, Saudi Arabia, and the United States produce about 40 million bopd. An amount equal to that will need "to be found" (and the infrastructure to support it) to meet global demand by 2035.

McKinsey does provide an alternative scenario in which there is an accelerated transition away from fossil fuels. If that were to occur, McKinsey concludes:

• A radical disruption scenario in road transport and chemicals sectors brings peak oil demand before 2025, and a ~30 MMb/d decline by 2035 compared to the Reference Case
• Liquids demand disruptions reduce the need for unsanctioned projects by ~50%, driving project cancellations and delays mostly in offshore regions and oil sands
• The reduced supply stack leads the average global crude slate to become more sour 
• Lower oil demand could subsequently drive OFSE and refinery utilization down, with European refineries feeling the strongest impact; there could be further opportunities in decarbonization

The tea leaves do not suggest to me we will see that "accelerated transition" but even so, let's say we do, read the McKinsey summary very, very closely. If I'm reading that correctly, even in the Accelerated Transition case, global demand for liquids will increase by 10 million bpd by 2035.

Four Wells Come Off The Confidential List Today -- August 23, 2019

Wells coming off confidential list today -- Friday, August 23, 2019: 64 for the month; 111 for the quarter:

• 35978, SI/NC, Newfield, Sturgeon 150-99-18-19-2H, South Tobacco Garden, no production data,
• 35601, SI/NC, XTO, Cole 44X-32F, Siverston,
• 35042, drl, Hess, BB-Charlie Loomer-150-95-0718H-9, Blue Buttes,
• 32951, 79 (no typo), BR, State Dodge 2B MBH, Dimmick Lake, t5/19; cum 8K over 8 days;

Active rigs:

$54.03	8/23/2019	08/23/2018	08/23/2017	08/23/2016	08/23/2015
Active Rigs	64	62	53	31	76

RBN Energy: the push for more gas pipeline capacity from western Canada, part 4.

The rise in unconventional natural gas supplies in Western Canada has forced the region to again confront a dilemma that it faced in the 1990s and early 2000s: not enough export pipeline capacity to move all that gas to market. Although demand for natural gas has been growing in Alberta’s oil sands and power generation markets, it has not kept pace with provincial gas supply growth, leading to oversupply conditions and historically low gas prices. The need to export more of the gas to other parts of Canada and the U.S. is driving some pipeline expansions in the region. The question is, will they be enough? Today, we provide an update on the utilization of existing export routes, as well as the prospects (or lack thereof) for takeaway expansions, starting with Westcoast Energy Pipeline.

This is Part 4 of our series analyzing the Western Canadian gas market. Earlier, we discussed the most obvious signs of a gas market facing change and challenges: weakening gas prices at AECO — the national benchmark hub — both on an absolute basis and relative to U.S. benchmark Henry Hub. Specifically, growing gas supplies and pipeline constraints have created one of the weakest gas price environments in Western Canada in 20 years.

Later we explained why gas supplies in Western Canada have been rising, despite the weak gas pricing environment of the past few years: lower production costs in unconventional gas plays such as the Montney formation, and the growing share of production coming from plays where gas is more of a by-product of drilling for more economically attractive resources, namely NGLs.

Then we considered some of the local demand outlets for all of that gas supply growth and concluded that rising gas demand in Alberta — from gas use in oil-sands production and power generation — has the potential to absorb some, but not all, of the growing gas supplies in Western Canada. That leaves gas deliveries to more distant markets as the only other option for any incremental supply that can’t be consumed locally. The trouble is that, as we’ve discussed in previous blogs on the topic, Western Canadian gas producers face a combination of takeaway-capacity constraints and pushback from competing U.S. gas supplies.

Today, we take a closer look at how tight that takeaway capacity has been of late and any upcoming expansions that could provide some relief.

Terms From The Bakken -- North American Shale -- August 23, 2019

I assume I've posted this before, but don't rightly recall.

Here it is again, and archived.

In Terms of the Bakken.

Link.

The phrases, words and terms that reveal the evolution of the Bakken. From energy corridors to long-reach laterals, the Bakken shale play has fostered the growth and use of industry phrases that now define the U.S. These are the most important.

For example:

Energy Corridors. The North Dakota Department of Mineral Resources created the first-ever energy corridors.

The term was used to describe a top-surface geographic orientation that maximized industry’s access to well sites while minimizing their presence on the landscape.

Spacing units that once showed random wellbore lines running in all directions and at different lengths transformed into more unified images showing wells running in unison in a single direction.

North Dakota energy leaders utilized 1,280-acre spacing units to create a uniform pattern of development that helped with pipelines, electrical lines and traffic patterns.

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From The Archives

The largest US oil producers, from Motley Fool, one year ago, November 24, 2018.

EOG? Number 3 of 10.

CLR is not on the list of 10. 

The data is from 2017.

Based on 2Q19 production data, CLR, at 331,414 boepd, would be #6 on that list but I assume the others have also moved up.