North Dakota – Page 7 – Outrun Change

Bakken entering ‘manufacturing’ stage? Also, count of oil rigs in field.

Out of focus photo by James Ulvog (yeah, yeah, don't give up my day job) — Out of focus photo of drilling rig and four not-yet-in-production wells by James Ulvog (yeah, yeah, I know – don’t give up my day job.)

Bruce Oksol wonders whether Bakken oil production is entering the manufacturing phase after a frantic construction phase.

2/3 – The Million Dollar Way – Idle Chatter on DUCs and Related Data Points – Before a big factory or electrical plant or other major project begins production there is a massive construction effort. The number of jobs to run the facility is a fraction of the number of workers needed to construct the thing. When completed, the number of jobs at the facility drops off.

Mr. Oksol uses the illustration of a natural gas plant being built. During construction there will be around 2,000 temporary jobs. When that gas is turned into electricity, the plant will employ 45. That’s 2,000 temporary and 45 permanent jobs.

He wonders if Bakken is like that, having finished the ‘construction’ and now moving into manufacturing.

Continue reading “Bakken entering ‘manufacturing’ stage? Also, count of oil rigs in field.”

Update on news around Williston

A few articles of interest to me over the last two months: baby deliveries increase, airline boardings down, adjustments to low prices continue.

1/15 – Amy Dalrymple at Oil Patch Dispatch – While oil boom has slowed, births still booming – number of births in Williston and my not word a record number last year. The count at Williston’s Mercy Medical Center:

Continue reading “Update on news around Williston”

Oil prices – Trends don’t continue in a straight line forever

Thousands of wells can come on line when prices edge up. Photo of two wells about to start production by James Ulvog. — Thousands of wells can quickly be drilled and come on line when prices edge up. Three wells in 9/15 about to start production. Photo by James Ulvog.

Here are three very different articles on the future of crude oil prices.

One of the memorable things I learned in grad school was the idea that you can’t project the current trend of something into the future forever.

Keep in mind that West Texas Intermediate price was somewhere in the region of $100 a barrel in mid ’14. WTI is now about $26. Let me round off some calculations for simplicity. Let’s call that a current price of $30. Let’s call that a year and a half.

So we see a drop of about $70 in 1.5 years. A straight line projection would calculate out as another $45/bbl in another year. Thus, by 12/31/16 WTI price will be $30 minus $45, or a negative $15. Yes, you read that right. A straight line projection means that oil producers will be paying refineries $15 for every barrel the refiners agree to take off the producer’s hands. Gas prices will consist only of the refining costs, a humongous list of taxes, with an offset for the negative cost of raw material.

You can’t do straight line projections forever.

Here are three superb articles that help me understand what is going on in the world of crude oil…

After the Carnage, Shale Will Rise Again
Helms predicts oil prices to rise again in foreseeable future
Rumors Swirl Around the Saudi Throne

1/18 – Mark P. Mills at The Wall Street Journal – After the Carnage, Shale Will Rise Again / Vast swaths of shale will be profitable with oil at about $40 a barrel, and the nimble industry is ready – If you actually pay attention to my blog, Mr. Mills’ article is a must-read.

Oil prices are quite cyclical. He points out there have been six extremes since the’73-’74 oil embargo. The extremes create turmoil. At the moment we are in the carnage stage of the cyclical extremes.

Continue reading “Oil prices – Trends don’t continue in a straight line forever”

More graphs showing North Dakota oil production – 1/18

Workover rig on a 3-well pad in city limits of Willison. Photo by James Ulvog. — Workover rig on a 3-well pad located inside the city limits of Williston. Photo by James Ulvog.

Mentioned Saturday there was a small increase in oil production during November. Here are a few more graphs.

Value of the production is dropping fast due to the world-wide drop in prices. These reflect the discount to allow for transportation costs to the Gulf, East, or West coast.

Continue reading “More graphs showing North Dakota oil production – 1/18”

Oil production in North Dakota increases about half a percent in November ’15

Many more wells will be on that site when all the drilling is done. Slight flaring as photo taken by James Ulvog.

Production information was released for North Dakota yesterday. In November, production increased to 1,176,314 bopd (prelim) from 1,171,119 bopd (revised). That is an increase of 5,195 bopd, up for a second month. Percentage change is up 0.44%.

A few graphs today and a few more Monday. Here is what the state-wide and Bakken-only production looks like, along with a what-if guess based on average increases having continued.

Sort of looks like a plateau.

Here is the long-term picture of state-wide production:

Continue reading “Oil production in North Dakota increases about half a percent in November ’15”

Do conditions in Williston look like a collapse or return to normal growth?

I estimate there are 42 storage tanks on this pad. There will be far more than 6 wells by the time all the drilling is done here. Photo in September 2015 by James Ulvog. — I estimate there are 42 storage tanks on this pad. There will be far more than 6 wells at this site by the time all the drilling is done. Photo in September 2015 by James Ulvog.

The Wall Street Journal has a great article on 1/14: North Dakota Cities Use Oil to Regroup / Williston, which saw its population so during the energy boom, sees a chance to catch up after Catholic growth, plan for the future – It highlights all levels of governments are using the slowdown as a time to play catch-up.

Take a look at these indicators of what is going on in the state. Does this look like a collapse to you? Or does this look like a return to something that resembles a normal growth market?

Continue reading “Do conditions in Williston look like a collapse or return to normal growth?”

Rig count in North Dakota, update through early January ’16

Workover rig in October 2014. Photo by James Ulvog.

Here is a recap of the North Dakota rig count, all from Million Dollar Way. Some older data repeated for context: Continue reading “Rig count in North Dakota, update through early January ’16”

Flat output from U.S. shale in last 12 months is not quite what OPEC had in mind

Pumpjacks about ready to come online in North Dakota. Photo in October 2015 by James Ulvog. Not what OPEC planned. — Pumpjacks in North Dakota about ready to start pumping. Photo in October 2015 by James Ulvog. Not what OPEC planned.

Production in the Bakken field of North Dakota dropped 4,140 bopd from October 2014 to October 2014. Going from average output of 1,118,070 bopd a year ago to 1,113,930 in 10/14 is a drop of 0.37%, or about one-third of one percent.

Overall production in North Dakota dropped 14,565 bopd, or 1.23% in the same time.

I don’t think flat production is what OPEC, I mean Saudi Arabia, had in mind when they went for maximum production.

Continue reading “Flat output from U.S. shale in last 12 months is not quite what OPEC had in mind”

Two wind farm projects approved in North Dakota

Birds that are at risk of finding out why turbines are called slice-and-dicers. Pictures courtesy of DollarPhotoClub.com. — Birds that are at risk of finding out why wind turbines should be called slice-and-dicers. Pictures courtesy of DollarPhotoClub.com.

Two slice-and-dice operations have received permission to move forward.

Continue reading “Two wind farm projects approved in North Dakota”

Minor followup on media discussion of Bakken

Actual productive effort in North Dakota. Photo by James Ulvog. — Actual productive effort in North Dakota. No spin here. Fuzzy photo by James Ulvog.

Two minor followups, first on the evening soap opera ‘Blood & Oil’ and then a documentary about Williston. Mentioned both of these previously.

In addition to getting the production run cut from 13 to 10 episodes, the drama “Blood & Oil” took a two-week vacation on the schedule during November. I was wondering if the show was even going to finish out the run of 10 episodes.

Well, according to Wikipedia the show finally made it through airing all of the reduced run. Ratings and share has stabilized in the basement with the number of viewers trending down.

Continue reading “Minor followup on media discussion of Bakken”

More signs the North Dakota infrastructure is catching up

If you let an economy function, market forces will create pressures to smooth things out. The forces of supply and demand have an amazing ability to balance a temporarily unbalanced marketplace. Several recent articles illustrate this concept in North Dakota.

11/17 – Amy Dalrymple at Dickinson Press – Pipelines now outpacing trucks for gathering Bakken oil – After oil is pulled on the ground it needs to be moved from the well pad to either a rail-loading terminal where it leaves the state by rail or it gets moved to a major transmission pipeline where it leaves the state by pipe.

The oil is initially moved by either trucks or underground pipes.

The number of small gathering pipelines to carry oil away from the wells is finally large enough that more oil is moved by gathering pipelines than by trucks.

Continue reading “More signs the North Dakota infrastructure is catching up”

Near-term forecast for Bakken production

Amy Dalrymple reports comments by Mr. Lynn Helms on what might happen in the Bakken oil patch over the next six months. Her article is at Dickinson Press on 12/9: Low oil prices for some drillers to sell; but new operators the opportunity.

First point in the article, which drives the headline, is a number of operators have sold 710 wells to operators moving into the state. Obviously the prices are based on what crude is going for now, which means these are long-term bets that prices will be substantially higher in a few years. If those bets are correct, the new players will score big. In the meantime cash-pressed operators are selling off peripheral assets so they can stay alive to focus on core assets.

General directions for 2016

Continue reading “Near-term forecast for Bakken production”

North Dakota oil production increases half a percent in October ‘15

Average daily production in the state increased from 1,162,159 average bopd in September to 1,168,950 bopd in October. That is an increase of 6,791 bopd, or 0.58%, just over half a percent.

Fracklog dropped from previously reported 1,091 to 975. That is still a huge amount of oil sitting on the shelf, just waiting for a frackjob to start producing.

Not quite what OPEC, I mean the Saudis, had planned when they adopted their plan to take out US shale.

Average price of sweet crude in the state is $27.00 now, was $32.16 in November, and $34.37 in September. That info from the Director’s Cut. That is really low.

That is perhaps what OPEC, err, the Saudis, were thinking.

Here are my regular basic production graphs. Won’t have the others this month.

Still looks sort of like a plateau.

Here is the long-term view:

Continue reading “North Dakota oil production increases half a percent in October ‘15”

More impact from low oil prices

Pumps on new wells being installed in 9/15. Not exactly a sign of a collapsed industry. Photo by James Ulvog. Check out that beautiful sky.

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”

Ban on crew camps in Williston moving forward with possible compromise. Maybe.

The Williston city commissioners have moved forward with their plan to shut down man camps and throw housing business to the hotels and apartments in town.

11/24 – Amy Dalrymple at Oil Patch Dispatch – Compromise possible for Williston crew camps – On 11/24 the commissioners held their ‘second reading’ and voted 3-2 to eliminate all crew camps within the city and their one-mile extraterritorial reach. That means all man camps they can touch will have to be closed by June 30, 2016.

Oil companies say they need temporary housing for workers that cycle in to the area for short or unknown lengths of time.

The mayor indicates there might be some room for some sort of compromise.

Continue reading “Ban on crew camps in Williston moving forward with possible compromise. Maybe.”