Friday Active Rigs Hold Steady At 97 -- March 27, 2015

The Ultimate Hillary Re-Set: wiped her server clean on October 28, 2014.

“Secretary Clinton unilaterally decided to wipe her server clean and permanently delete all emails from her personal server. While it is not clear precisely when Secretary Clinton decided to permanently delete all emails from her server, it appears she made the decision after October 28, 2014, when the Department of State for the first time asked the Secretary to return her public record to the Department,” Gowdy said.

There is no law that says folks can't wipe their servers clean. And prior to wiping her servers clean, she said she handed over all pertinent information to those who asked for it. Time to move on; there's nothing to see here, as Rush would say. They can question her all they want, but there is no law and apparently "everyone" -- including Colin Powell -- had private e-mail accounts on which they were conducting the "people's business." It will be up to "the people" if this is the kind of person they want leading our country.

 ************************************
Can't Wait To Read The Summary

Breaking news, huge story, tweeting now:

Jury finds for Kleiner Perkins on all claims in Silicon Valley discrimination case filed by former employee Ellen Pao - @WSJbusiness 

 ************************************
 How To Balance A Budget: Drill, Baby, Drill

It looks like they've started fracking in Greece, tweeting now:

Earthquake with preliminary magnitude of 5.5 recorded 37 miles from Karpathos, Greece - USGS

 ************************************

The Bakken

Active rigs:

	3/27/2015	03/27/2014	03/27/2013	03/27/2012	03/27/2011
Active Rigs	97	196	185	206	170

Seven (7) new permits --

• Operators: EOG (4), Thunderbird Resources (3)
• Fields: Parshall (Mountrail), Ranch Creek (McKenzie),
• Comments: Thunderbird Resources is the "reorganized GMXR"

CBR Slowdown Worse Than Predicted -- Bloomberg -- March 27, 2015

Back on March 19, 2015, this was one of the top stories of the week: CBR plummets. That linked a Bloomberg story.

A week later, Bloomberg, again, is reporting:

The slowdown that North American railroad companies had been bracing for in crude oil shipments has turned into a rout, with volumes falling faster than executives had predicted.

With energy companies scaling back drilling after prices for the commodity fell about 50 percent since July, industry executives and analysts anticipated that demand for hauling crude and extraction materials such as frac sand and pipes would slow after a four-year surge. They didn’t expect it to slow this much this fast.

“The impact is occurring more quickly than the rails originally projected to investors,” said Matt Troy, an analyst with Nomura Securities International Inc. in New York. “The consensus view was that very high double-digit growth would moderate to low double digits, and as we have seen in recent weeks we’ve broken that floor and in some cases gone negative.”

Rail stocks and tank-car leasing are reflecting the dwindling traffic. The Standard & Poor’s 500 Railroads Index posted its biggest weekly decline since October and lessors’ rates for oil cars have fallen by about a third in the last six months. 

One would have hoped the economy, after a gazillion dollars in stimulus would have taken off by now to offset the slowdown in oil but that obviously isn't happening. About the only thing taking off right now is increasing violence in the Mideast. 

US Crude Oil Production, Number Of Oil Wells, And Hubbert's Curve -- March 27, 2015

Take a look at Wolf At The Door: The Beginner's Guide To Peak Oil. Right at the top, look at the bar graph curve and then a bit farther down a small table comparing the number of producing wells in the United States and the number of producing wells in Saudi Arabia. It appears that the data was from 2001; the source was dated 2002.

This is the bar graph with the current production noted by the "red" arrow:

Then, a bit further down, at The Wolf At The Door: A Beginner's Guide to Peak Oil, this item and this little table:

So, where do we stand today? For 2014, it was estimated that there were over 1.1 million producing wells in the US. From 240,000 to over 1.1 million, that's almost a 5-fold increase in just a few years.

Saudi Arabia? Back in 2001/2002, the source for the table above said about1,560 producing wells in Saudi Arabia, producing about 4,000 bbls/day/well.

It's hard to know exactly how many wells Saudi Arabia has today but it's probably about 4,000. Producing about 12 million bopd works about to about 3,000 bopd/well.

Disclaimer: I often make simple arithmetic errors. There may be factual or typographical errors in this post. If this information is important to you, go to the source.

The Big Story: The New Persian Empire

Updates

December 3, 2016: OPEC freezes production. 

April 10, 2015: the fractured legacy of the Mideast mapmakers. 

April 1, 2015: The Washington Times explains why President Obama is taking on the biggest risk of his presidency: negotiating with Iran. 

“With all this turmoil in the Arab world, you need a workable relationship with the other side,” said Shawn Brimley, a former director for strategic planning in the White House. “You can’t argue with Iran’s importance in the region. That’s why Obama is taking this extremely seriously.”

March 28, 2015, 8:50 p.m.: Iran's designs on the Middle East. 

Later, 3:13 p.m.: supporting the idea that Persia is rising, it is now being reported that Saudi Arabia also wants to go nuclear.  Another Obama legacy -- giving the green light to Iran to go nuclear with a) promise to let them develop their program unfettered; and, b) giving top cover to the mullahs by releasing details of Israel's nuclear program.
 

Original Post

At the link on the sidebar on the right I have something I call "The Big Story." I'm not sure I want to add "The New Persian Empire" to the list of "big stories" but the tea leaves suggest this is the new direction things are taking. The reason I hesitate is because this direction may only be temporary -- as long as this administration is in office. Things may change in two years, but right now it looks like "Persia Rising." I like to limit the "Big Stories" to those that have longevity.

For the archives, it looks like this will be the year that the sanctions on Iran ends. Iran will be able to develop its nuclear program unfettered. With the release of previously-classified US Department of Defense documents regarding Israel's nuclear program, this gives the Iranian mullahs the top cover they need to develop their own program. Iran seems to have successfully exported any internal terrorism to Yemen, Iraq, Syria, Libya, and now, possibly to Somalia. Even as Iraq seems to be imploding -- certainly Iraq's trajectory towards a stronger, safer, westernized nation is going ballistic -- Iran seems to be gathering itself, and preparing to become a major player on the global stage. Even now, which country carries more weight in the UN, Iraq or Iran? That's an open book question.

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

Bakken Rigs Continue To Fall

Active rigs: down to 97, a new low in the boom ...

	3/27/2015	03/27/2014	03/27/2013	03/27/2012	03/27/2011
Active Rigs	97	196	185	206	170

Amazon.Com Now Has One-Hour Delivery In Dallas -- March 27, 2015; "Bull Crap"

Two Amazon fulfillment (distribution) centers recently completed in the DFW area.

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

2017 For Sure; Maybe As Early As 2016

Regular readers know that I have been saying over and over that investors in the oil and gas industry should see an exciting 2017, if not an exciting 2016.

Apparently I'm not in the minority. Rigzone is reporting:

Drilling activity across the global oil and gas industry could return to 2014 levels next year, according to a new report from research firm Wood Mackenzie.

Wood Mac said Thursday that although the oil and gas industry is currently responding to the low oil price environment, with exploration budget cuts in 2015 expected to average 30 percent, drilling activity in 2016 is set to recover as many explorers seize their chance to drill at lower costs.

In its report "Upstream Cost Deflation: How Much Could Costs of Exploration Fall?", Wood Mackenzie noted that the industry is now addressing a longstanding cost inflation issue.

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

Jumping On The Bandwagon

Yahoo!Finance is jumping on the bandwagon -- how US frackers plan to beat OPEC:

Gary Evans, CEO of Houston-based energy firm Magnum Hunter Resources, has a blunt message for OPEC oil ministers hoping to force down prices and drive American competitors out of business. “OPEC is making a huge mistake,” he says. “We made a lot of money with oil at $100 (per barrel), and we’ll become more efficient and make a lot of money at $50.”

For now, the U.S. energy industry is reeling from oil prices that have plummeted from about $105 a barrel last summer to $50 or so now. The profits and stock prices of energy firms are plunging, with job losses beginning to mount. The global supply of oil has outstripped demand for several reasons, but a big one is the unexpected move by Saudi Arabia—lead member of the OPEC oil cartel—to keep pumping oil amid the glut, a change from its usual practice of curtailing production during soft spells to boost prices. Many analysts believe the Saudis are deliberately undercutting their new competitors in North America, who have been producing record amounts of oil thanks to new hydraulic fracturing technology, or fracking.

The Saudis are right when it comes to costs: Extracting so-called tight oil from shale deposits in America is considerably more expensive than Saudi Arabia’s own drilling costs, which by some estimates is as low as $10 per barrel. What the Saudis may not have counted on, however, is extreme cost-cutting underway at many drillers, which is making them far more efficient and pushing down the price at which they can turn a profit. The Saudis’ market-share move could even backfire, as U.S. frackers become more efficient competitors. “We will figure out how to operate in a lower price environment,” Evans says. “Anybody who thinks our costs are too high – that’s absolute bull crap.”

Much more at the link.

For newbies, just one example: when I first started blogging about the Bakken in 2007, it routinely took 45 - 60 days to drill one well and then they fracked it with 14 stages, and maybe 1 million lbs of proppant. Now, they drill these wells in less than 15 days (in as few as 9 - 10 days) and then routinely frack with 36 stages and over 4 million lbs of proppant. The drilling costs have come way down; fracking is now the big cost. 

And that's not "bull crap."