Outrun Change

We need to learn quickly to keep up with the massive change around us so we don't get run over. We need to outrun change.

Archive for the category “Energy”

The work effort driving the record levels of oil production in North Dakota.

Previous post showed a graph of the new records of oil production in North Dakota in recent months.

Let’s look at the drilling and completion work driving the rising levels of production.

Keep in mind that the drastic improvements in productivity has decoupled the number of drilling rigs from the number of wells drilled.

Also keep in mind the ‘fracklog’, or the number of wells in the backlog of wells that have been drilled but not yet completed. In essence, wells are drilled and then left in inventory. When the expectations of prices are right and there are completion crews available, production companies can quickly complete a well and get it into production.

The number of drilling rigs in the field dropped dramatically during 2015. Since the fall of 2016, the count has slowly risen, with a noticeable pickup in the last five months:

 

The number of wells awaiting completion, the ‘fracklog’, has been increasing slightly over the last year but dropped over the last two months:

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Oil production in August 2018 for North Dakota hits another record level

In August the crude oil production in the state hit an average of 1,291,496 barrels of oil per day (bopd). As always, that is the preliminary tally, which will change when a few late reports arrive.

The record high before a several year slump was an average 1,229,572 bopd in December 2014.

In the last five months there have been three record highs with two months barely under the 12/14 record.

Here is my graph of production state-wide and Bakken only (including Sanish, Three Forks, and Bakken/Three Forks levels). Notice the steady increase over the last few months and a strong rise since winter of ‘16/’17.

 

For a far longer perspective, look at the average production data since 1990.  I like this graph because it shows a pattern of explosive growth from about 2008 through late-2014, a drop until around the end of 2017 and a rapid growth since then. The longer view:

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Oil production in May 2018 for North Dakota hits new record level

Multiple pumpjacks on a well pad is a normal thing in North Dakota. Photo by James Ulvog.

In May the crude oil production in the state hit an average of 1,244,629 barrels of oil per day (bopd). As always, that is the preliminary tally, which will change a bit over the next two months as a few late reports arrive.

That is 15,057 bopd higher than the previous record of 1,229,572 bopd in December 2014.

Here is my graph of production state-wide and Bakken only (including Sanish, Three Forks, and Bakken/Three Forks levels):

For a longer term perspective, here is the total monthly production since 1990:

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Value of monthly oil production in North Dakota through April 2018

Fourteen wells are on that pad, which is on the south side of Williston near the Missouri River. Photo by James Ulvog.

Previously discussed the near-record level of oil production in the state during April. Here is the graph of average daily production since 2004:

What is the value of that oil? Multiply those average daily production levels by days in the month and then multiply by the following average sweet crude prices in the state:

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Oil production for April 2018 in North Dakota getting close to record level

There is space for more than 6 pumps on that site. Might be as many as a dozen when fully drilled. Photo by James Ulvog.

In April crude oil production in the state hit an average of 1,224,948 barrels of oil per day (bopd). That is the preliminary tally, which will change a bit in the next report as a few late reports arrive.

That is really close to the record high of an average 1,229,572 bopd in December 2014. Another 4,624 per day would get the state to a new record. That could be achieved for April by late reports from the field. Or, since production increased 42,112 bopd since December, the May data will likely break the record.

Here is my graph of production state-wide and Bakken only (including Sanish, Three Forks, and Bakken/Three Forks levels):

For more background, here is the total monthly production since 2004:

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Volume and value of 2017 oil production in North Dakota

Notice all the empty space on that pad? Notice the disproportionately high number of storage tanks for the number of pumpjacks on site? One day there will be a lot more wells in operation. Photo by James Ulvog.

Before showing the average daily production, annual production, and value of that production, just a note on December 2017 production.

Average daily production dropped from 1,196,976 bopd (revised) in November to 1,181,319 bopd (preliminary) in December, a decline of 15,657 bopd, or 1.31%.

Here is what the average daily production by year looks like. Notice the recovery in 2017?

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Oil production in North Dakota increases 1.0% in November 2017; getting close to record output

Production of crude oil increased 12,110 bopd in November, or 1.02%, going from 1,182,810 (revised October) to 1,194,920 (preliminary November).

The record high production was 1,227,529 average bopd in December 2014. Production in November 2017 is 32,609 bopd below the high in December 2014. It will only take another 2.7% increase in average production to clear the previous record. I’ll guess that will happen in December 2017 or January 2018, before the winter start to cut into production. (That is not a very bold prediction since Mr. Helms thinks the record production level will easily be surpassed regularly in later 2018.)

Above is a graph of average production in the state since 2004.

Check out the following graph for production from only Bakken formations and total for the state since 2008:

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Crude production during October 2017 in North Dakota rises 7%, to 1.18 million barrels a day

The big increase of 78,154 bopd to 1,185,499 bopd follows 4 months of over 1.5% increase each month. That is a 14.8% runup in fourth months.

The record high production was 1,211,330 bopd in June 2015. There have only been four months when the average daily production was higher than in October 2017.

Another 27K bopd increase would put the state at a new record for production. With November and December production stats to go before the weather turns really nasty, that level of increase is likely. (Notice how lame that prediction is? A forecast two months out that is a mere 2% increase, when 8 of the 13 months have seen greater than 1.5% increase and 5 months saw a decline.) For perspective, at mid-December the couple of snow falls received so far haven’t outlasted the sunshine.

In my next post I will scratch my head wondering why the production jumped so much in one month.

Here is the monthly production, with a breakout of oil from the Bakken formation (which also includes the Sanish, Three Forks, and Bakken/Three Forks Pools formations):

 

For a longer term perspective, here is the total production in the state since 1990:

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More updates on the purge in Saudi Arabia

Kingdom Tower in Riyadh, Saudi Arabia. Image courtesy of Adobe Stock.

As pointed out in the last article mentioned below, few articles on Saudi Arabia are going for the idea that the current wave of high-profile arrests is really about fighting corruption. There is a far deeper effort. Here are my comments on a number of articles from the last few days. Sort it out for yourself.

11/6/17 – Karen House at Wall Street Journal – The Strategy Behind the Saudi Strife   – Article provides a more nuanced background on the arrests. One entertaining point, which I mentioned in earlier post, is that with the widespread malfeasance, misfeasance, and flat-out corruption, every Prince and every official is vulnerable to charges of corruption. I’ll guess every person with any government or business power has created massive amounts of electronic evidence.

Article speculates this is a part of the effort to modernize by MBS. Going after a huge number of corrupt senior royals, high-level businessmen, and a wide variety of government officials not only sends a very powerful message that the corrupt old days are gone but puts fear into everyone that hasn’t been arrested yet. It won’t take long for realize that they either play along and keep quite or go to jail. Article says this will have the benefit of increasing his popularity with younger people.

More importantly, consider this in relation to the dramatic efforts for social change over the last year. Granted there needs to be humongous social change to catch up with the 20th century, but there has been a dramatic amount of change in the last year. If those efforts create individual freedom, the current anti-corruption campaign makes corruption a bad thing, and the social guard rails of the religious police go away, then there might be a chance, slim though it may be, that the country could actually modernize and move beyond its deadly addiction to oil.

All these pieces fit together as a crash course in modernization, according to Ms. House’s theory in the article. The main idea is that personal freedom could lead to financial responsibility which could lead to entrepreneurialism and a vibrant, expanding economy.

11/7/17 – The Guardian – “This is a revolution”: Saudi’s absorb Crown Prince’s rush to reform – Article also makes the point that the massive arrests are part of a major effort to transform the country. The super elite, who are untouchable until last weekend, will now be removed or warned to get out-of-the-way.

Article points out the changes so far this year have been radical. The religious police have lost much of their power. More social changes on the way. Another article mentioned below says a lot of clerics and activists got arrested in September.

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Mid-day update on turmoil in Saudi Arabia

Flag of Saudi Arabia on flagpole. Image courtesy of Adobe Stock.

I had been thinking that there might be enough news out of Saudi Arabia for an update every few days.

Silly me.

This is my second post of the day, my third since news of the crackdown broke on Saturday.

Another Saudi prince died over the weekend. During a gun fight. With government forces. While the government was trying to arrest him.

11/6/17 – Zero Hedge – Second Saudi Prince Confirmed Killed During Crackdown – A prince was killed during a firefight between his security team and the government. The government team (military? Security agency? Police?) was trying to arrest him.

This prince was the youngest son of King Fahad.

King Fahad ruled from 1982 through 2005. He was one of Ibn Saud’s 45 sons and the fourth of the six sons who ruled. Read more…

Goal of weekend arrests in Saudi Arabia is getting clearer

Flag of Saudi Arabia. Image courtesy of Adobe Stock.

The purpose of dozens of arrests on Saturday in Saudi Arabia is becoming clearer. It was not a coup attempt and not a counter-coup. Picture now emerging is of a purge, removing opposition.

For more background, check out post from Saturday night.

11/5/17 – Associated Press – Billionaire prince among dozens arrested in Saudi sweep – Article categorizes the arrests as a power consolidation, removing dissenting voices.

Article says Saudi Arabia was, up until this point, ruled by consensus with the king having final authority on decisions.

Article also says unnamed analysts have explained that the senior level princes were untouchable up until now, meaning they didn’t worry about having to follow the law.

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Counter coup, or power consolidation, or something else going on in Saudi Arabia

Image courtesy of Adobe Stock.

Looks like a coup. Oh, wait. A coup is when the out-of-power people toss out the in-power people. This is a case of the in-power people deposing a bunch of other in-power people because, um, I don’t know.

Maybe it is power consolidation. Maybe it is a counter-coup. Maybe I don’t have any idea what it is and neither does anyone else with a byline. Another option is purge.

11/4/17 – Wall Street Journal – Saudi Princes, Former Ministers Arrested in Apparent Power Consolidation – At least ten senior princes and over 20 (per article) cabinet members were arrested on corruption charges Saturday night.

One was Prince al-Waleed bin Talal, a billionaire, prominent investor in U.S., and often an interviewee on US TV business shows.

Read more…

More economic problems for wind and solar

Photo of wind turbines north of Tioga, N.D. by James Ulvog.

Lots of money is pouring in to construction wind and solar plants, but that will continue only if the massive subsidies stay in place.

7/25/17 – AP at Billings Gazette – Montana ruling casts shadow over future of solar farm – Montana state regulators approved a 80 GW solar plant with reported cost of about $100M.

The approval allows the output to be sold at only $20 per megawatt and that contract only runs for 10 years. Presumably after that time the company would have to sell whatever output is actually generated at market prices.

Company wants a 25 year contract at $43.50. Anything less than that makes it uneconomical.

Let me translate that.

The project will only be profitable if all of the following conditions are met:

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More economic and environmental fails from wind energy

Still about 4 or 5 miles away from the turbines. Many of the towers are visible from highway 2. Photo of wind turbines north of Tioga, N.D. by James Ulvog

The bad news from slicer-and-dicers just keeps rolling in.

  • Article describes lack of CO2 benefit while running up cost of electricity in Minnesota
  • Description of environmental cost of building a wind tower

10/15/17 – Powerline – “Green” Energy Fails Every Test – Minnesota is touted as a model of green energy. With around $15 billion poured into wind power, the state is a good example of the damage from green.

More wind is produced in spring and fall, which does not correlate to when more electricity is needed, which is summer and winter.

So how has that $15,000,000,000 dumped into bird chopping turbines turned out?

CO2 emissions from the state, according to a new study, have only declined slightly. The drop during 2 years was due to an accident that took a coal plant off-line. Other than that, the drop is CO2 has been minor; nothing like what was supposed to happen with all that wind power.

Main reason is wind is very unreliable. When those slice-and-dicers aren’t producing, the energy comes from backup coal plants. So when there is little wind and high demand in the summer and winter, where does the extra electricity come from?

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Additional graphs of North Dakota oil production in August 2017

Notice the large size of the nearest pad in relation to the wells in place and the number of storage tanks. There will be many more wells on that pad when it is finished. Photo by James Ulvog.

Here are more views of crude oil production in August. Previous post mentions the output hit 1.087M bopd in the month.

The 10/10/17 Director’s Cut says the DMR thinks the daily count of drilling rigs will drop if WTI goes below $45 for over 30 days. If WTI is above $55 for over 90 days, the rig count will increase.

That suggests price stability in the range of $45 to $55 will keep the rig count around the current level of 57.

The rig count has been in the high 50s for the last few months. It seems to have stabilized since spring 2017 and is up substantially from the low. Remember that the rig count today does not compare to the rig count a few years ago because drilling rigs today are far more productive than just two years ago.

Here is the view of monthly rig count:

What is the value of the crude produced at the average sweet price in the state? Check it out:

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