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 is a recap of the North Dakota rig count, all from Million Dollar Way. Also, an article quantifying the impact on employment from the drop in rig count.
Some older data repeated for recent context: Continue reading “Continued drop in count of working oil rigs in North Dakota”
Additional coverage of Mr. McClendon and preliminary results of the investigation.
3/5 – Holman Jenkins at Wall Street Journal – Death of a Fracker – Subtitle is
“Drill, baby, drill.” Aubrey McClendon did, and left America stronger, richer and safer as a result.
Article says that whatever bit of economic growth the US has seen in for several years (I’m thinking about maybe for the last five years) is largely due to the frackers, of whom Mr. McClendon was a leading player. Author labels his risk tolerance as out there in the lunatic range.
The increase in DUCs, or drilled but uncompleted wells, in North Dakota is getting to be old news. The new word of fracklog has emerged to describe and quantify the number of wells waiting to be fracked before they go into production. Two recent articles and then a graph of the fracklog.
Big headlines recently announced two companies have stopped fracking. This is neither a big story nor a new story.
Previously mentioned the following article which says Whiting Petroleum will stop fracking its wells in the second quarter. This means they will keep drilling but not frack & complete any wells.
Continue reading “The slowdown in North Dakota well completions. AKA fracklog.”
An article explaining why Peak Oilers are in hiding prompted me to graph worldwide oil production.
Peak Oil doctrine was wrong when announced by Dr. Hubbert. It was wrong at the turn of the century before the energy revolution was kicked off by technology that was unimaginable 50 years ago. Peak Oil doctrine is still wrong. It will continue to be wrong.
Check out my graph to see a visual explanation of the foolishness.
1/21 – Hit and Run blog at Reason – Where Have All the Peak Oilers Gone? – Article points out that four of the most visible Peak Oilers are in hiding. Another one of them is still speaking out. In addition, he wrote a new forward in 2010 to his 2007 book proclaiming yet again oil production will go into an irreversible, inevitable slide.
Two data points that provide more proof of the foolishness of Peak Oil doctrine: Continue reading “Peak oil doctrine is still false. Please point out to me on my graph the irreversible decline in production after 1970. #45”
A few more articles on Aubrey McClendon. He will be well-remembered as a key player in the world-shaking energy revolution in the U.S.
For background on Mr. McClendon and how he played a massive role in the energy revolution check out:
3/4 – Russell Gold at the Wall Street Journal – How Aubrey McClendon Led Today’s Energy Revolution – Article calls him not just an advocate but the chief apostle of hydraulic fracturing. He took the lead in fracking and grabbing lots of land to explore.
Continue reading “More on Aubrey McClendon and his powerful legacy”
May God pour out peace on the family and friends of Aubrey McClendon, former CEO of Chesapeake Energy, who died yesterday in an automobile crash.
I hope his family and friends will work through their tragic loss and find peace at the end of the journey.
Mr. McClendon was a pioneer in the radical transformation of the energy industry in the U.S., having been a leading entrepreneur in extracting natural gas and crude oil from rock that was untouchable before the 1990s.
In December 2015, crude oil production in North Dakota dropped from a slightly revised 1,181,786 bopd in November to 1,152,280 bopd in December, for a 2.50% decline.
Completed well count was 76, which is a substantial drop from the 119 to 123 range in July through September. From August 2011 through December 2014 there were anywhere from 180 up to 213 rigs running. During that time, the average rig count was 192, by my calculations.
Fracklog is 945 at the end of December, which is a drop from the count during August through November but is higher than any month before that. This is the estimated tally of wells that have been drilled to total depth but have not yet been fracked & completed. As a result these are wells essentially held in inventory pending a price increase of oil.
The February Director’s Cut report indicated oil prices continue to drop, hitting $16.50 a barrel, yes under 17 bucks in February. The director’s expectation is for low oil prices to continue through the third quarter of 2016 with further drop in number of rigs in operation.
As you would expect with the dramatic drop in prices, exploration & production companies are cutting back operations. Today’s news making that point:
[youtube:https://www.youtube.com/watch?v=6JJDXcu9KNM]
Lots of news lately on what is going on with crude oil. Here are a few articles of particular value for me: zombies appearing in the oil patch, low prices are due to worldwide oversupply and thus will likely continue a while, increased production and thus competition by producers will likely keep prices low.
12/10 – Reuters – Zombies appear in US oil fields as crude plums new lows – Here is a phrase that will make OPEC happy: zombies, in the context of the energy industry. That refers to a drilling company with such poor income that it is using all its cash to cover interest payments. That leaves no cash for drilling new wells.
Two previous posts discussed OPEC’s decision to maintain production and some of the implications. Here are a few more articles on the impact of low prices. Also, great illustrations of how the assets will be bought up by stronger players at bargain prices.
12/4 – Reuters media at Dickinson Press – Shares of Bakken Shale oil producers plummet after OPEC decision – Lack of a production cut and realization that OPEC production will actually exceed their announced limit combined with Iran ready to jump into the market pushed oil prices down. That in turn pushed down stock prices of North Dakota producers.
One industry representative is quoted as saying OPEC’s goal is to
“… outlast {U.S.} shale oil exploration and production…”
Yeah, I think that’s the worldwide consensus on the OPEC, I mean Saudi, goal.
12/1 – Dickinson Press – US oil companies’ restructuring plans founder as prices plunge – Continue reading “More impact from low oil prices”
Previously discussed the decision by OPEC on 12/4/15 to maintain production. That will keep prices low and sustain the worldwide glut of oil. Also mentioned my opinion that OPEC is now the front for Saudi Arabia.
12/2 – Million Dollar Way – OPEC’s Pyrrhic victory – Post pointed me to the following two articles. The MDW post includes quotes of key paragraphs from both articles.
Pyrrhic victory?
11/30 – John Kemp at Reuters at Rigzone – OPEC Risks Pyrrhic Victory With Oil Policy – Article starts by explaining how King Pyrrhus won a big victory over the Romans but lost a huge number of men leaving him no reserves and also costing him most of his generals. The Romans merely advanced a few more legions and were ready to go again. King Pyrrhus? Not so. The two victories emptied his army.
Join with me as I learn more about that phrase. Wikipedia quotes Plutarch, who explains: Continue reading “Oil prices will remain low after OPEC, uh, I mean after Saudi decision. 2 of 2”
Oil prices will remain low after an OPEC decision on December 4 not to reduce production. Sure looks to me like OPEC is now essentially Saudi Arabia. What the Saudis decide is what OPEC will do. And what the Saudis have decided is to maintain production. Thus prices will continue at the current low level and the worldwide glut of oil will continue. In addition the OPEC producers will continue to burn up their foreign reserves.
12/4 – Wall Street Journal – OPEC Meeting Ends With No Production Cuts / Meeting marked by deep divisions; ‘shale is the new reality’ – Article points out a dramatic disagreement. Producers such as Iran and Venezuela want to maintain their production and have Saudi Arabia alone absorb enough of a production cut to balance the market.
Continue reading “Oil prices will remain low after OPEC, uh, I mean after Saudi decision. 1 of 2”
Doesn’t look like Saudi Arabia will be cutting back production anytime soon. Seems they want to keep crude prices low. Drillers are responding creatively to the price pressure.
10/2 – Bloomberg at Calgary Herald – Drillers taking it slow on shale wells in bid to squeeze out more oil – Drillers are intentionally slowing down initial output of shale wells. That is called choking back. Apparently this has the effect of keeping more frac sand in the ground instead of being flushed out with the high initial flow of oil. Article says drillers choking back are seeing higher total recoveries from their wells than other drillers.
In addition to increasing production, this defers some production to later, when prices are expected to be higher.
This also means that initial production amounts (IP) are not necessarily an indicator of the estimated ultimate production (EUP).
In addition, this suggests total production from Bakken and Eagle Ford won’t be dropping as quickly as you would expect by the drop in drilling rigs.
Finally, you can file this in the category of human ingenuity always increases production. Also, file this under Peak Oil Is Still Wrong.
11/8 – Financial Times – Saudi Arabia will not stop pumping to boost oil prices – Links to the paper indicate Saudi Arabia has no intentions of dropping their production. They intend to keep prices on the worldwide market very low.
Continue reading “Update on the oversupply of oil; Saudi plans”
One thing that struck me during my September 2015 visit to Williston is the number of well pads with lots of pumps. Two years ago I was impressed by two or four pumps on one site. This trip, I noticed a lot of pads with 6 working pumps and lots of pads that were far too large for the one or two pumps in place. Obviously there are plans to put more wells on each of those pads.
The most amazing sight for me was a pad with 15 wells. Yes, 15. There are three in a row on the west side of the pad, six in a middle row, and six more in a row on the east. Will have several more shots of the site included in this post. The pad is at the end of a private road so all the pictures I have were taken from the nearby public roads.
The EPA has proposed rules to require shale gas drillers to reduce leaked methane more than drillers have already accomplished.
8/21 – Mark Mills at Forbes – EPA’s Methane Policy: Statistically Trivial For The Planet and Terrible For The Economy – The EPA’s rules, if burdened on the economy, would be trivial in terms of reducing greenhouse gases. Methane is natural gas. Article emphasizes the natural part – there are a huge number of sources of methane occurring naturally. Cows, termites, landfills, wetlands, and agriculture all produce massive amounts of methane. Teenage and adult human males have even been known to produce some.
Continue reading “EPA’s rules on methane emissions would be a drag on economy”
Here’s a few quick notes on interesting news that I won’t cover in a separate post:
9/2 – Amy Dalrymple at Forum News Service – Oil patch economy settling into ‘new normal’ – Looks like the Bakken is resembling a merely solid growth economy instead of an exploding economy. The growth of 2010 through 2014 was not sustainable.
The 16 hotels completed since 2010 actually have lots of vacancies. Prices are high, but you can actually find a room.
Update to status of federal charges against Keith Graves: 8/19 – Dickinson Press – Graves indicted for third time, demands evidence from state’s attorney’s office – Mr. Graves was arraigned on the third superseding indictment on 8/19, as scheduled. He entered a not guilty plea.