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 tag “energy independence”

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:

Read more…

Crude production in North Dakota rises to 1.08 million barrels a day in August 2017

Based on the number of storage tanks on that pad, I’ll guess there will be a lot more than 2 wells operating on that site in a few years. Photo by James Ulvog.

Production of crude oil in the state rose to 1,085,690 bopd in August, an increase of 36,591 bopd from the updated production of 1,048,099 bopd in July. That is a 3.49% increase.

For context, that is the highest daily production since March 2016. On the front end of the boom, production did not rise to that level until June 2014.

The Williston Herald reports comments from Mr. Helms: Rigs moving away from Bakken’s core, but gas production still hits new high. Rigs are being deployed outside the core area of Bakken, away from the best sweet spots. I’m not sure what that means, but will guess it is an indication that drillers are more confident that prices will stay roughly where they are now or better.

Here is a graph of crude produced in the state and from the Bakken formation (along with Three Forks):

Read more…

Energy update

Five more reasons Saudi Arabia is in a jam and American pipelines are overfull. There will be many more reasons on that site before all the drilling is done. Oh, check out that gorgeous sky. Photo by James Ulvog.

A few articles that caught my interest over the last months on energy issues:

  • Another new field with one and half or two billion barrels of oil that not even the energy wizards were sure was there – Oh yeah, what Peak Oil?
  • Saudi Arabia cracks down
  • Two billion a year is consumed for lifestyle support stipends paid to every descendant of the house of Saud
  • Pipeline capacity is constraint for otherwise expanding shale production
  • US hit crude export level of 1 million barrels a day this past summer

What Peak Oil?

7/12/17 – Houston Chronicle – Houston’s Talos Energy makes ‘significant’ find in Mexico’s waters – Two years ago the Mexican government allowed private companies to start exploring for oil in the country. The improved freedom for private companies to do what private companies do is paying off.

On 7/12 Talos Energy announced the “Zama-1” exploratory well has confirmed a new find which is estimated to hold between 1.4 billion and 2.0 billion barrels of oil-in-place.

Oil that can now be pulled from under the ocean to provide energy to a fuel-hungry world.

Read more…

Scratching my head at the geopolitical impact of fracking

That little ol’ thing, along with 500 similar contraptions, is changing the world of oil production. Photo by James Ulvog.

Looks like we are in the midst of radical change in regional and world politics caused by the technological revolution in oil and gas production. I keep trying to wrap my little brain around what is going on. Here are a few articles that may stretch your brain too.

  • Brain stretcher on the shift in geopolitics due to increased US oil production
  • Speculation why the Saudi government’s plan to re-engineer their country’s economy isn’t going to work
  • Three articles on the rapidly increased US shale production undercutting the OPEC production cut

3/12/17 – PJ Media – The Problem of Success – Article raises the unsettling idea that nobody has figured out the impact of dramatically increased production in the US.

Neither the previous US administration, the current US administration, leadership in Saudi Arabia, leadership elsewhere in the Middle East, nor even pundits for that matter, have figured out how geopolitics will change as Saudi Arabia loses its role as dominant oil producer and the decentralized American drillers gain the swing producer role.

It stretches my brain even to understand there is an issue.

American frackers used the dramatic run up in oil prices to $100 as an opportunity to figure out how to frack oil where it could never have been touched before. They then used the collapse in prices as an opportunity to figure out how to frack far more efficiently, far more effectively, with far higher production output from every well. As a result, the break-even price for U.S. shale has shrunk.

The vast network of independent producers are responding to price changes far faster than OPEC could handle or the majors could ever dream of. Prices go up somewhat and in about three months US production is surging.

Read more…

If you like having gas for your car, food in the stores, and turning lights on after dark, here’s good news: Outlook for energy looking brighter.

Gonna' be seeing more of those in North Dakota soon. Photo by James Ulvog.

Gonna’ be seeing more of those in North Dakota soon. Photo by James Ulvog.

Outlook for energy production in the US is getting better and better. Might want to get out your sunglasses.

  • Low oil prices have spurred innovation amongst US drillers; file this under unintended consequences for OPEC.
  • Breakeven prices in US shale approaching that of OPEC producers; ponder that the breakeven price for Saudi Aramco is not the same as breakeven price for the Saudi government.
  • Overview of news in 2016 for oil & gas; good news for companies that survived the year.

12/2 – Tyler Morning Telegraph – Saudis awakened a sleeping giant when they declared war on fracking – Editorial says the Saudis made a serious mistake waking up the slumbering giant of fracking land. The artificially high prices allowed the frackers to get started. The artificially low prices forced them to innovate, cut costs, and start producing at breakeven points competitive to the OPEC giants. Not a good move.

Wouldn’t it be grand if that paragraph was the four-sentence history of fracking?

Production costs are half what they were two years ago.

Read more…

Another 20 billion barrels of oil. What Peak Oil? – #49

We are gonna' see a whole lot more of those things in Texas over the next few decades. Photo by James Ulvog.

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.

Read more…

Timeline of Bakken oil production

ave daily production since 1990

For long-term archive purposes, here is a timeframe for the Bakken boom.

6/28 – The Million Dollar Way – The Bakken Is In Its Manufacturing Stage – Bruce Oksol provides a useful long-term perspective on how Bakken production has developed:

  • 2000: the Bakken boom begins in Montana
  • 2007: the Bakken boom begins in North Dakota
  • 2012: the Bakken hits its stride
  • early 2014: the Bakken setting new records, almost every month
  • late 2014: the Saudi Surge
  • 2015: the Bakken re-trenches
  • 1Q16 taxable sales 50% greater than 1Q10
  • mid-2016: the Bakken bottoms out — at least that is what the tea leaves suggest

For more perspective, here is the average daily production for each of the above years. I calculated the following from data pulled from the state website: Read more…

Oil prices edging up and OPEC won’t cap production, so how soon will shale drilling increase?

How soon do you suppose these things will again blossom on the plains of North Dakota? Photo by James Ulvog.

How soon do you suppose these things will again blossom on the plains of North Dakota? Photo by James Ulvog.

Oil prices are moving up and OPEC isn’t planning to do anything to hold down production. Completions appear to be slowly increasing. What price will it take for drilling to increase? Price drop has forced improvements in shale oil and the technical knowledge will not go away when drilling increases.

5/31 – Energy Media Group at Bakken.com – Oil prices set for fourth-straight monthly gain – Oil prices have been moving up slowly for several months. Currently oil is in the range of $50.

6/2 – AP at Bakken.com – OPEC states fail to reach deal on production – At the scheduled meeting on 6/2, OPEC members did not reach an agreement to cap production.

Copying a line out of an old Monty Python skit, the secretary-general insisted that OPEC isn’t dead yet.

6/1 – Daily Caller – US Fracking Poised for Comeback, OPEC Continues to Flounder – Speculation of different  people is fracking to take off again when oil is above $50, others think it will take around $60 for sustained increase in drilling.

Read more…

Guesses on long term impact of shale revolution

Just one of many thousands of reasons OPEC is in distress. Photo by James Ulvog.

Just one of many thousands of reasons OPEC is in distress. Photo by James Ulvog.

A guess on what price will keep the shale revolution going in the very short-term. Background discussions of the impact from the shale revolution:  cheap oil era is upon us, oil prices won’t hit $100 again, and OPEC has lost its pricing power. Interview with Daniel Yergin is a must read.

4/28 – The Million Dollar Way – Lifeline for Oil Companies – Here is a guess on the framework for oil pricing, courtesy of Rigzone:

  • $40 – lifeline for US shale oil
  • $50 – most shale companies survive
  • $60 – all thrive

5/4 – Reuters at Dickingson Press – DUCs in a row: Oilfield servicers to gain as more wells completed – Halliburton and Baker Hughes expect a number of Drilled but UnCompleted wells (DUC) to be fracked now that prices have recovered somewhat. They expect the gross number of DUCs to decline.

5/3 – Scientific American – The Age of Cheap Oil and Natural Gas is Just Beginning – Authors see two revolutions that will continue to spread.

Read more…

Update on OPEC strategy

Image courtesy of DollarPhotoClub.com

Image courtesy of DollarPhotoClub.com

Fascinating to watch news in February about OPEC’s strategy. First, IEA sees a drop of US shale oil in 2016 and 2017 with strong growth in output over the following four years.

I have quite a backlog of lot of articles on energy to discuss. Will try to get caught up. Here goes…

Article at the end of January indicated OPEC is publicly claiming things are going swimmingly well. Then Saudi Arabia and Russia agreed to freeze their production at the January level, which is near record level of output for both countries. Then the end of February OPEC’s secretary-general acknowledged that the intentional goal was to wage a price war against US shale. Also acknowledged the price war hasn’t worked like they planned.

I don’t think that crippling the Russian, Saudi Arabian, and Venezuelan national budgets by dropping prices about 60% with no near-term expectation of recovery is quite what they had in mind.

2/22 – IEA sees oil market rebalancing in 2017; US production at record high by 2021 – The IEA forecasts that US production of light tight oil will fall 600k bopd in 2016 with another drop of 200k bopd next year. Forecast predicts an increase of 1.3M bopd over 2015 levels by 2021.

Read more…

Crude production increase in 2014 is largest in 100 years. What Peak Oil – #38

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:

  • +8.1% – increase in 2015
  • +1.5% – increase in 2016

What Peak Oil?

Read more…

More good stuff on the open frontier of the energy revolution – 3/5

 

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 sayRead more…

What Peak Oil? – #35

Update:  Some commenters on the ‘net did not agree with a graph that combines gas and oil. Fair point. I’ll redraw the graph to include only crude oil.

The new graph does not change any comment made in this post. It stands as is.

Peak oil is still a failed concept.

Here is the new graph:

barrels by year 1949-2013

 

Again, here is the main question: Where is the inverted V drop after the peak that mirrors the runup to the high point?

Answer: It isn’t there.

2nd Update:  I appreciate folks pointing out the error of my ways. Further research produced the above graph which makes the point yet again. I also looked at natural gas production.

The fail of Dr. Hubbert’s theories is even more extremely illustrated by graphing natural gas production. Comparing actual to his predictions is staggering. Another post on Monday.

Two busted Hubbert theories from one post. Peak Gas is even more of a fail than Peak Oil.

3rd update:  Further discussion of the Peak Oil graph on the following post.

Original post:

Saw a graph containing production of oil and gas in the U.S. since 1950. Since that one is copyrighted, decided to make my own.

Check out this graph of the amount of crude oil, natural gas (dry), and NGPL from 1949 through 2013:

 oil and gas by year 1949 2013

Now, please look for the permanent, inevitable decline trending to zero after the never-to-be-achieved-again peak oil point of 1970. Also look for the inverted-V shaped drop after the peak that mirrors the runup.

Read more…

Background on Bakken and Harold Hamm

Forbes has a superb article on the shale revolution in North Dakota and one of the drivers of said revolution: Harold Hamm: The Billionaire Oilman Fueling America’s Recovery.

For some great background why the Bakken field is producing nine times more oil than five years ago, check out the article.

There is great discussion of Harold Hamm and his role in creating the oil boom.

What has the shale boom done for the US?

Check out the benefits to the US of the shale oil boom: Read more…

The shale revolution. Or, what Peak Oil? #33

The change in oil production in the last few years is astounding. For perspective, look at the following two charts by Prof. Mark Perry, from his Carpe Diem blog. Both graphs used with permission:

Oil production in Texas:

 TexasOil 2013 carpe diem

From The remarkable rise of Texas crude oil: The state produced nearly one billion barrels last year, and 34.5% of all US crude. Just under a billion barrels. That’s around a third of US production.

Oil production in North Dakota took off in 2008: Read more…

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