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.
Here’s one summary to pull together the following five articles:
4/7 – Million Dollar Way – How Much Longer Can OPEC Hold Out? – Mr. Oksol points out the pressures on Saudi Arabia are growing. He previously pointed out that their fight with Yemen is costing a lot. They are buying lots of new F-15s and using up a lot of bombs. You can buy a lot more planes at $100 a barrel instead of $50.
His summary: Continue reading “How soon will Saudi Arabia blink? (dropping oil prices #14)”
The Energy Information Administration says the increase in crude oil production (counting lease condensate also) during 2014 was 1.2M bopd. That is the largest increase since 1900, when record keeping started. The percentage increase is 16.2%, which is the largest percentage increase since 1940.
Is the cratering of crude oil prices going to crater oil production as OPEC wants to make happen? Not quite.
EIA expects crude oil will increase by these amounts:
What Peak Oil?
Continue reading “Crude production increase in 2014 is largest in 100 years. What Peak Oil – #38”
A few articles on the shale revolution: scale of layoffs, improving efficiencies by drilling companies, and China scraps a shale gas project.
3/16 – Forbes – Itemizing the Oil Bust: 75,000 Layoffs and Counting – Article reports on a tally given the author by an insider of the known layoffs in the oil & gas industry. Insiders tell him that stacking a rig costs 40 jobs. Based on the rest of the article, I think that is direct jobs.
Total estimated job loss is 75,000 in an industry with 600,000 jobs. By sector that is estimated at Continue reading “More good stuff on the energy revolution – 3/30”
Here’s a few quick notes on interesting news from the northern side of Cowboyistan:
3/19 – Reuters Media at Dickinson Press – Some come late to the oil party: Companies more selective after low prices slows boom – Article tells story of a guy and gal who drove to Williston.
Arrived with no skills, no money, no housing, and no job.
Continue reading “More good stuff on the Bakken – two perspectives on the local economy – 3/24”
Petroleum Industry’s Economic Contribution to North Dakota in 2013 is the current update to a bi-annual analysis of how much the oil and gas industry contributes to the state’s economy. You can find the report at the previous link or here. The research was conducted by Dean A. Bangsund and Nancy M. Hodur, profs at North Dakota State University.
The executive summary provides a great overview of the petroleum industry and the economic activity in the state. Worth reading for the overall background, a general intro to the energy industry, and what’s going on in Bakken.
I read most of the report. In addition to historical information on average cost to drill and complete a well which is summarized in the graph above, here are some of the highlights that caught my eye:
(photo by James Ulvog)
Yesterday the EPA released their long-awaited rules for fracking wells on public land. Since a minimal percentage of new wells are drilled on federal land, the direct impact will be minor and the indirect impact remains to be determined. Here’s a few articles that start to give preliminary details along with a few of my thoughts.
3/20 – Wall Street Journal – Fracking Rules Unveiled by Obama Administration – Fascinating issue is that the states with most of the drilling already have substantial rules in place for fracking.
Federal estimates are the cost to comply with the new rules will be $11,400 per well, or $32M industry wide per year. I’m struggling with the validity of that $11K estimate.
Article says Texas and North Dakota already ban the use of open-pit storage of wastewater. More on that in a moment.
3/20 – Dickinson Press – Final fracking rule released for federal, Indian lands: With regulations already in place, ND may enter into memorandum of understanding – Article has one tidbit that I think explains the real goal of the regulations: the rules are 395 pages long.
Continue reading “Initial thoughts on newly released EPA rules on fracking”
Here’s a few quick notes on interesting news that I won’t cover in a separate post. I’ll come back to the first article later this week.
3/15 – Bismarck Tribune – Oil adds $43 billion to economy, study say – Research by North Dakota State University profs calculate that oil and gas add $43B to the state’s economy. In 2013, they calculated the energy industry added 55,000 direct jobs and another 26,000 indirectly. Report is available here.
Entertaining contrast of two articles I saw on Friday. Each points to a different future. Which world view will make life better for more people all over the planet? Which energy source will provide prosperity for the most people?
Here’s a hint:
(From Carpe Diem. Used with permission.)
3/13 – Matt Ridley at Wall Street Journal – Fossil Fuels Will Save the World (Really) / There are problems with oil, gas and coal, but their benefits for people—and the planet—are beyond dispute
Article was feature on front page of the Review section on Saturday.
I will talk about this article a lot. In the meantime, here’s my paraphrase of just a few major points: Continue reading “What energy will provide the power to keep our prosperous lives prosperous? Fossil fuels or wind & solar?”
(Photo by James Ulvog.)
A variety of articles suggest that even with the drop in crude prices and rigs being stacked, the economic opportunities are better in North Dakota than elsewhere. Also, drug busts as an indication why residents are justifiably concerned about the growth in recent years.
3-13 – Wall Street Journal –
Crude-Oil Price Collapse Takes Toll on Williston /
North Dakota town was a magnet for job seekers, but now work is scarce
Headline covered the e n t i r e w i d t h of page B1 above the fold.
Oh, woe is me! The economy in Williston has utterly collapsed! The bust is here and Williston is a ghost town!
Or, maybe not. Your conclusion depends on whether you read the headline or the article.
Multiple comments I’ve seen by Million Dollar Way and others, including Mr. Lynn Helms, indicate that drillers in North Dakota are holding off on completing their wells.
This is for two reasons. First, to conserve cash since completion is a huge portion of the total cost. Second, to wait for a price recovery before opening up the surge in production in the first year and especially first few months of a new well’s life.
Here are some graphs that help me understand what is going on.
Here is the rig count:
Quite a rapid drop in the last few months.
Drillers are stacking their rigs quickly, as expected. Keep in mind that hasn’t had a dramatic impact on production yet.
The 111 number in mid-March is below the estimated count of 115 that Mr. Helms thinks is needed to maintain production levels at 1.2M bopd.
Here is the amazing part. Look at the estimated number of wells waiting for completion:
Wow. The count was on a plateau for most of 2011. That runup in late 2011 corresponds to a big increase in rig count. Also corresponds to increased use of pad drilling, as pointed out by Million Dollar Way. That means multiple wells are drilled on one site with completion of all the wells waiting until all the others are drilled. So it makes sense the backlog would increase.
Look what’s happened since the fall. Here are the numbers:
That is a 125 jump in November, 25 drop in December, and 75 runup in January. Up about 200 in 3 months. Drillers are banking those wells waiting for price to go up.
When prices recover, there will be a rush to complete which will generate a big jump in production. May take many months for them to all come on-line, but there will be a surge.
Previous posts on January production data:
Dollar value of the crude oil produced in North Dakota each month is down from about $3B last summer to about $1.2B in January. That is a drop of about 61%.
I have accumulated the average monthly sweet crude price mentioned in the monthly Directors Cut and combined that with the total production for the month.
Here is what I calculated for the monthly value of production.
That is based on the monthly production in the previous post, combined with the average price shown here: Continue reading “Value of oil production in North Dakota is plummeting”
Average daily output in North Dakota declined to 1,190,511 bopd, down 3.0% from the slightly revised December record high of 1,227,483. When I say slightly, I mean the December average was increased by 139 bopd, or one-hundredth of one percent.
That brings production down to just over the amount in November. January is the third highest average.
This month I graphed the monthly value of oil production. More on that tomorrow.
First, my two graphs on monthly production:
Next, a shorter time horizon with the Bakken-only data. Continue reading “Oil output in North Dakota drops slightly in January.”
Here are a few recent articles that help me understand what is happening in the open frontier of energy. Two articles on the damage from ethanol and a view of Cowboyistan. Also cool pictures of North Dakota.
3/10 – Robert Bryce at New York Times – End the Ethanol Rip-Off – In addition to the environmental damage from tearing up grasslands, harm to poor people world-wide, damage to small engines at 10%, and damage to most car engines at 15%, burning corn to power cars is wasteful economically.
Continue reading “More good stuff on the open frontier of energy – 3/12”
Here are a few recent articles that help me understand what is happening in the open frontier of energy:
On pipelines and Crude By Rail
2/17 – Dickinson Press – Train that derailed in West Virginia hauled newer-model cars, officials say – Continue reading “More good stuff on the open frontier of the energy revolution – 3/5”
New frontiers are rough and tumble places. The energy revolution is proving to be no exception.
A few recent articles about crude oil and natural gas which I found interesting:
2/19 – Nature – Study finds relatively low emissions of methane from major US gas fields / After a series of alarming reports, scientists estimate leak rate of about 1% for three major US gas formations – Study by team from University of Colorado Boulder estimates that methane emissions in three major gas fields, (Haynesville, Fayetteville, and Marcellus) averages about 1% of gas that is produced. Range is from 0.18%-0.41% in Marcellus to 2.1% in Haynesville and 2.8% in Fayetteville. Average of 1% is in line with industry and EPA estimates and dramatically less than the 1.5% many critics claim.
2/9 – Wall Street Journal – Oil-Price rebound Predicted – Continue reading “More good stuff on the open frontier of energy – 2/25”