Just got back from a visit to Williston to see family during Thanksgiving week. Had a delightful time. Even got to drive around the oil field a little bit.
Got lots of new photos. A lot!
I reeeeeeally lucked out and glanced out the window at just the right time. Got a bunch of photos of the wing-toasting facilities at Ivanpah.
For example:
Ivanpah Solar Electric Generating System. November 2016 photo by James Ulvog.
During the rain and overcast that start afternoon on Saturday and ran until around sundown on Sunday, the towers probably weren’t quite so bird-killing white-hot.
Drilling rigs
There is one rig in the city of Williston and two rigs a mile or two north of town.
Oil pump jacks in the desert of Bahrain, Middle East. Photo courtesy of Adobe Stock.
Keep in mind that U.S. shale drillers will be able to make a lot of money if oil prices go up to $60 as I describe the distress facing Saudi Arabia.
Four articles for your consideration:
Shale drillers likely to get busy if oil hit $60
Saudi Arabia still in distress in spite of successful bond issue
One Saudi official cautions bankruptcy could be a few years off if oil prices continue the way they are
Another article describing the distress in Saudi Arabia because of low oil prices
11/16 – Reuters – IEA expects US shale output rise if OPEC pushes oil to $60 – IEA expect there will be a lot more drilling and production coming out of shale fields in the US if prices go up to $60. If OPEC (meaning Saudi Arabia) reduces production sufficiently to drive up prices it will draw shale drillers back to work.
We’re gonna’ see a whole lot more of those things in Texas over the next few decades. Photo by James Ulvog.
Oh, by the way, the geology wizards just discovered another twenty billion barrels of recoverable oil where the wizards knew something existed but had no idea how much.
Twenty billion barrels. Billion, with a B.
11/15 – Star-Telegram – Permian’s Wolfcamp formation called biggest shale oil field in US – Estimate from USGS is the Wolfcamp formation in the Permian Basin holds 20 billion barrels of oil. There are four layers of shale that make up Wolfcamp. That puts this find somewhere in the range of three times the size of the entire Bakken formation in North Dakota.
I don’t know who owns those wells, but use this picture as a visual that shale companies in bankruptcy haven’t stopped pumping oil. Photo by James Ulvog.
The concept that one should not bet against human ingenuity is key to realizing we won’t run out of oil and there won’t be a sustained runup in prices anytime soon. A few articles showing why I say that. Articles also show the severity of the catastrophic mistake made by the Saudi government.
There is a difference cutoff for the breakeven price of the company Saudi Aramco and the country Saudi Arabia. US shale producers can crank out tons of oil at prices far below what the Saudi government needs to survive.
Huge Kashagan oil field in Kazakhstan starts producing
US shale producers in bankruptcy proceedings are producing almost as much oil as the they were before prices collapsed. They didn’t close in their wells.
10/17 – Gary Sernovitz in op-ed at Wall Street Journal – Trimming Oil Output Won’t Keep OPEC States Afloat – Main idea I draw from article is that if OPEC reaches a deal to cut production, and if they get Russia to go along, and if the cut is enough to push prices up the amount they want, and if none of the producers cheat, then it still won’t keep the petrostates funded at the level they need to keep all their social programs going.
That is a lot of ifs and even if they all happen, it won’t matter much.
Amongst the many reasons this is the case, two stand out to me.
First, for the history of oil production, the easiest and cheapest oil to come out of a field is the first drawn. After that, the oil gets more difficult and more expensive. The opposite is happening in the fracking fields. The breakeven price is lower today in Bakken, Permian, and elsewhere than two years ago and the breakeven price looks to be going lower. That means the frackers can keep functioning with low prices and thrive with moderate increases.
Yet another massive problem with wind and solar energy. You cannot turn it off and on. As in, provide electricity when people decide they want it. That feature is called dispatchable.
Previous post showed the oil production in North Dakota through August 2016. Here is some more info on production in the state. Data is extracted from the monthly “Director’s Report” and historical production data.
Average sweet crude prices for North Dakota oil. This reflects a discount from the West Texas Intermediate due to transportation costs.
Here is the value of monthly production based on actual output multiplied by the average sweet crude price rolled into the preceding graph:
Above graph shows the average daily production in North Dakota statewide and in the Bakken field. Output in August dropped from 1,029,734 barrels of oil per day (bopd) (revised) to 981,039 bopd (preliminary), a change of 48,695 bopd, or 4.73%.
This is the first month with average daily production below 1 million bopd since March 2014.
Here is the average daily production by month since 2004:
Workover rig in October 2014. Photo by James Ulvog.
In contrast to the horrible news mentioned yesterday from Venezuela, consider the the amazing news from the open frontier of energy production. The benefits produced by fracking just don’t seem to stop.
9/23 – The Million Dollar Way –Update On The Bakkan – Lynn Helms – A few highlights in the article from a radio interview I found particularly fascinating:
Production in North Dakota will drop below 1M bopd but Mr. Helms does not expected to go below 900K bopd.
Initial production rates had been 1100 bopd but are now running 1500 bopd.
Estimated Ultimate Recovery amounts have increased one-fourth.
There are somewhere between 8000 and 8500 wells that are good candidates for refracking because they are initially drilled with old technology.
This is astounding – a drilling rig today drills an average of 25 wells in a year compared to only 8 or 9 wells as recently as 2009. Imagine the improved IRR.
Drilling efficiencies have come from multi-well pads, new technology for bits, new technology promoters, and new technology for mud. Ponder the impact of technology.
After spending several years trying to get my little brain wrapped around energy issues, I’m to the point where I can interpret news reports and figure out for myself what to believe and what reports are just blowing smoke.
Consider the two following articles as illustrations of an article to believe and one that, um, well, ought to be taken with a large grain of salt.
10/2 – Wall Street Journal – An OPEC Output Cut Not Likely to Alter Oil Imbalance – Author cites “many” analysts who think that OPEC cutting production by a mere 700K bopd is not a large enough cut to resolve the oil oversupply, nor will the cut take place quick enough to have any impact.
Previous expectation was oil demand and supply would balance out by the end of 2016. Now the guessing is it will take until mid-2017.
The money quote is from Daniel Yergin (so you know my perspective, I have learned to pay close attention to him anytime he is mentioned):
Smith Bay drilling site. Image courtesy Caelus Energy LLC, used with permission.
There are two big finds in the last few weeks of fields with a few billion barrels of recoverable oil each where the petroleum engineers didn’t realize there were billions of barrels of oil.
Still needs to be a lot of work to develop the fields, but major point is the wizards know today there is somewhere around 5 billion more barrels of oil “we” can use to power our comfortable industrialized life than the wizards knew about a month ago.
Not that it is really necessary, but those two big finds prove yet again that Peak Oil is a busted, bankrupt, invalid theory.
10/5 – New York Times – Oil Glut? Here Comes Some More! – Author spends the first one-fifth of the article bemoaning the discovery of two new oil fields (yeah, I eye-balled the amount of pixels allocated to bemoaning).
The last thing the world needs is more oil and gas he points out, while typing at his coal-powered computer, which was constructed with plastic made from cracked natural gas, his words stored on a server farm powered by natural gas, his article delivered around the world at the speed of light, visible to me on my nuclear power driven monitor, which I read in my natural gas warmed office.
North Dakota oil pad. Based on the number of storage tanks, I’ll guess there are going to be a whole lot more than two wells on that site. Photo by James Ulvog.
Here are a few recent energy articles of interest.
Saudi government cuts back wages and benefits for government workers because government revenues are down because government drove down oil prices.
Tentative deal for OPEC to drop production and why it won’t matter.
Shale drillers in the U.S. are ready to increase production.
For those at “ministerial” level, pay will be cut 20%. After looking at a few articles, I’m not sure how many people are at the “ministerial” level.
Purpose seems to be psychological, specifically to tell the financial world that the government is serious about cutting costs.
9/29 – AP at Bakken.com – AP Explains: What does OPEC’s tentative deal mean for oil? – The OPEC producers agreed that they will in the near future agree to a production cut. No cut in sight but they agreed they need to pull back from maximum production by everyone.
Image courtesy of DollarPhotoClub before they merged into Adobe Stock.
Low oil prices continue to create distress for several governments in the Middle East who need high prices to provide enough goodies to keep the populace happy. Also, some background on the war in Yemen. Last article describes the exploitative labor system called kafala.
Iran (Shia) is backing the rebels, providing lots of smuggled munitions and supplies, including ballistic missiles. The vendors to the Saudis caution there is a chance that a ballistic missile could hit a target. Iran is providing propaganda support, which is effective. There is a lot of fighting.
September 2015 photo of remote man camp by James Ulvog
The city decided to approve a new set of rules to shut down all the crew camps. The operators are fighting back. Lots of news in the last few weeks with the September 1 deadline having arrived. Mayor proves in his public comments that he is engaged in protectionism, favoring two classes of housing providers over one other.
8/23 – Williston Herald – Commission is unanimous: Crew camps end Sept. 1– With the second reading, the law becomes official that crew camps within the reach of the Williston Commission must close by September 1, the buildings removed by May 2018, with the land reclaimed by August 2018.
Production possible only when there is no rain, or clouds, and if the wind isn’t blowing too strong. Tilt angle photo by James Ulvog.
In my learning about energy, I’ve picked up on a few more problems with concentrated solar power, which is the design of the wing-toasting facility at Ivanpah.
Keeping the molten salt melted
All those mirrors focus the sun on the top of the tower in order to superheat a liquid, which is then circulated to turbines, which spin, thus generating electricity. The liquid returns to the top of the tower for another superheating.
The liquid?
Molten salt.
The melting temperature of molten salt is in the range of 225° C or perhaps 260° C. Of course my accounting brain doesn’t think Celsius, so I translated those numbers, coming up with something in the range of 437° F or 500° F. Let’s just call that 400°.
My accounting brain can tell that is really hot.
Another thing I have learned is that once the sun goes down the molten salt is allowed to freeze. It would take a lot of energy to keep that much salt over 400 so that it stayed liquid. That means in the morning it is either sludge or solid and needs to be heated above the melting point so it will work.
