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”

In July 2019, North Dakota oil production breaks record for second month in a row.

Four of the reasons oil prices are *not* completely crazy after the attack on Saudi Arabia’s processing facilities this past weekend. Photo by James Ulvog.

The Million Dollar Way blog points out With The July, 2019, Data, North Dakota Set Four New All-Time Records.

In July, the state energy wizards set four record levels of production:

  • Crude oil
  • Gas
  • Barrels of oil equivalent (converting gas into equivalent amount of oil and combining with crude production)
  • Number of producing wells

Breaking production records in North Dakota, New Mexico, and Texas is something to celebrate if you like being able to get gasoline for your car whenever you feel like doing so, or if you like having gas available at reasonable prices in spite of when, oh, say, someone drops a bunch of bombs on Saudi production facilities.

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Where is he now? Keith Graves, star of “The Overnighters” documentary

If you were reading my blog a few years ago, you recall lots of discussion of the documentary The Overnighters. The movie provides one perspective on the oil boom in Williston, North Dakota.

As you may recall, one of the main characters was a fellow by the name of Keith Graves. He was identified by the director as one of the individuals who “survived” the tumult seen during the time the movie was filmed. If you want to catch up on his story, check out this link.

Where is he now?

Federal prison.

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Two percent increase in North Dakota oil production in June 2019.

Photo by James Ulvog.

Oil production in the state increased 2.15% in June, growing an average of 30,004 bopd, from 1,394,648 bopd average in May (revised) to 1,424,652 in June (preliminary). That is after a lull from October 2018 through May 2019, when the average production increased a mere 648 bopd.

Before showing the production graph, a few comments about prices and rigs in operation.

Prices have declined substantially in the last couple of months:

  • Sweet crude in North Dakota
  • $48.00 March
  • $52.50 April
  • $50.50 May
  • $43.10 June

The drop, especially in June, shows up in the value of crude production:

The productivity of wells has increased over the years. The result is the count of completed wells is largely independent of the number of drilling rigs in operation.

Consider an overlay of the completed well count and the rig count:

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North Dakota oil production remains steady in May 2019.

Photo by James Ulvog.

Oil production in North Dakota increased slightly to average of 1,393,284 BOPD in May 2019 (preliminary), up 799 BOPD from April (revised).

Rig count has been flat, ranging from low of 61 to high of 67 during the last 12 months.

An odd factor this month is small increase in production (up 799 bopd/day, 0.06%) with increase in producing wells of 194 (+1.26%).

Lynn Helms is cited in article at Bismarck Tribune (7/16/19 –Oil Production steady in May, but transportation woes persist) suggesting this is due to old legacy wells that produce around 25 barrels a day being closed in for the winter and then brought on-line from late spring until fall.

Economic driver explaining this is the costs of plowing roads and hauling oil makes such wells uneconomical in the winter. Thus they are taken off line in the winter.

The number of inactive wells dropped by 69 in May.

The two month changes are:

  • 141 – drop in inactive wells
  • 185 – well completions
  • 337 – increase in producing well count

That leaves an increase of 11 producing wells that isn’t explained by drop in inactive wells and completions.

Here is what the average production looks like:

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North Dakota oil production expected to accelerate this year. Also two more new huge oil finds where oil wasn’t expected.

Photo by James Ulvog.

Latest guess, from someone who has a clue about such issues, on where production is going in North Dakota is somewhere around 1.5M or 1.6M barrels a day late this year or early next year.

Huge finds off coast of Guyana and in New Mexico/Texas.

Question needs to be asked again:  What Peak Oil?

 

The Million Dollar Way – 7/7/19 – ND Oil Production to Surge – Lynn Helms. Citing another source, the article says Lynn Helms, director of DMR, thinks production in North Dakota will surge later this year after gas infrastructure construction is done.

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US hits all time record high for oil production, is now net oil exporter, and is set to surpass Saudi Arabia in export of crude & oil products.

16 reasons US has been moving towards a net exporter of energy and finally hit that point. Well visible right of center with Missouri river in background. Williston, North Dakota. Photo by James Ulvog.

The changes in energy production over recent years is astounding.

My blogging has dropped off a lot over the last year or so due to distractions. Have a huge backlog of things to discuss, such as:

  • The US is a net oil exporter
  • Oil production in US is at all time record high
  • Sometime later this year the US will be exporting more oil product than Saudia Arabia

MSN – 12/7/18 – US ends its reliance on foreign oil for the first time in 75 years – In the last week of November 2018, the US exported more oil than we imported. The US is now a net exporter. Ponder that.

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Last 12 months are best ever for oil production in North Dakota. Oh, what peak oil?

Photo by David Ulvog. Used with permission.

Record high level of oil production in the state was 1,403,844 barrels of oil per day (bopd) in January 2019. April production averaged 1,391,188 bopd (preliminary).

Before the slump in prices and drilling, the record high was 1,229.572 bopd in December 2014.

Since production bottomed out at an average of 942,322 bopd in December 2016, production has been climbing.

Production in June 2018 and every month since then has been above the December 2014 level. Even with winter weather, production has been in the neighborhood of the 1.4M bopd level for the last eight months, apart from small drop in February.

Graph of average production in the state and Bakken formation since 2008:

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Guessing game is open again for when oil production in North Dakota will hit 2 million barrels a day

Five reasons North Dakota is second largest oil-producing state in the U.S. Photo by James Ulvog.

First guess I’ve seen since the price slump is for the state to pass the 2 million barrels a day threshold in 2030, according to the North Dakota Pipeline Authority. Reported by Inforum on 5/4/19: Bigger than some of OPEC: North Dakota on track to reach 2 million barrels of oil per day by 2030.

For quite some time I have dialed back my focus on Bakken, so there may be other estimates or guesses out there. This is the first one I’ve noticed.

North Dakota is the second largest oil-producing state in the U.S at 1.4M barrels of oil per day (bopd). Texas continues in first place at 3.49M bopd.

If North Dakota were somehow to join OPEC, Read more…

Oil production in North Dakota in January 2019 only a smidgeon below record level in prior month.

There is another pumpjack to the right of the most visible one. There are two more on the distant horizon. Photo by James Ulvog.

Preliminary production in January is 339 barrels a day below the revised amount for December. Here is how close January’s output came to the record high in December:

  • 1,402,741 – December 2018 – record high
  • 1,402,402 – January 2019 – preliminary

Production data usually changes in the month following initial release. The pattern I’ve noticed is a data for a well or three arrives after the cutoff for the monthly report. So, late reporting for a few wells could push the January 2019 data into record territory.

Before showing a graph of production, wanted to bring in some new data reported by the state regulator. The “Director’s Report” lists the average price for sweet crude in the state and has done so for many years. The report just started listing the average of West Texas Intermediate (WTI) pricing for the month.

There is a discount from the price realized in North Dakota compared to WTI because of the cost of transport. That spread, so I understand, has fallen since the DAPL was completed. Here is a revised graph of average price in ND to include an average of WTI:

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Volume of 2018 oil production in North Dakota hits another record; total value rising.

Photo by James Ulvog.

Total production of oil in North Dakota in 2018 set a record as did the average daily production.  Prices have recovered from their low which means the value of that production is going up but not yet close to setting a record.

All of the following data is from a spreadsheet I maintain, with the raw data pulled from various reports published by the North Dakota Department of Mineral Resources.

Average daily production rose to 1,249,049 bopd in 2018, up from 1,081,543 bopd in 2017. That is an increase of 167,505 bopd, or 15.5%. Previous record was 1,184,009 bopd in 2015.

Average daily production:

 

Total production for the year was 455,902,738 barrels, an increase of 61.1M barrels over the 394.8M produced in 2017.

Total production over the years:

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Well completions by year in North Dakota

Photo by James Ulvog.

While pulling together the graphs of oil production in North Dakota for 2018, I wondered what the trend of well completions might look like.

So, pulled a graph together. Primary source of my data is a spreadsheet I maintain of the monthly information released by the N.D. Department of Mineral Resources. Well completions is one of many data points accumulated on the spreadsheet.

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In 2018, North Dakota oil production broke record level of output 6 times during 8 months.

Two things to notice. Lots of space between pumpjacks means there will eventually be several more wells on that pad. Lack of any storage tanks means the pad is tied directly to an underground pipeline. Photo by James Ulvog.

Oil production in North Dakota hit an all time high of an average of 1,229,572 barrels of oil per day (bopd) back in December 2014.  The effort by Saudi Arabia to flood the market in order to drive down prices in order to collapse the US shale industry slowed production in North Dakota but didn’t succeed in killing the shale sector.

Output fell to a low of 942,322 bopd in December 2017. Output then started rising with a typical slowdown in winter of 2017/2018.  After the winter lull production again climbed.

In 2018, producers in North Dakota broke the record level of production six times in the last eight months. The record-breaking months:

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North Dakota oil production hits another record in December 2018

Photo by James Ulvog.

Average production of crude oil in North Dakota rose 1.79% in December 2018, setting yet another record. The production in December was 1,401,385 bopd (preliminary).

At the end of 2017, production was 1,182,836 ave bopd (final). In one year, that is an increase of 218,549 bopd, or a whopping 18.5%.

Statewide and Bakken shale production has been trending up sharply.  The rapid rise since last winter’s lull is clear.

 

For a longer term perspective, check out the average daily production since 1990:

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Drilling and completion results in North Dakota through October 2018

Drilling rig used for training by Nabors Drilling. Photo by James Ulvog.

For some details on the production effort behind the rise in oil production in North Dakota, check out the number of rigs in operation and some indications of the results.

Number of rigs has been trending up since late 2016. This is response to increasing oil prices. The rig count dropped dramatically in 2015, which was OPEC’s goal in dropping prices. The drastic increases in efficiency of drilling mean the count of rigs in 2012 through 2014 is not comparable to the current count. Probably should be in two different graphs.

 

With the recent drop in prices, a larger number of the drilled wells are not immediately completed. Instead they are put in the fracklog category, essentially placed on the shelf as inventory awaiting completion until prices rise.

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Estimated value of oil production in North Dakota through October 2018

Photo by James Ulvog.

Production of oil in North Dakota has been shooting up. Prices have dropped recently. What does that look like in terms of the value of oil produced?

Multiplying the monthly production by the average sweet prices in the state results in the following estimated value of monthly production in the state:

 

There is a discount in sweet crude prices in the state compared to West Texas Intermediate due to transportation cost.  The prices realized in North Dakota are:

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