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VIDEO: John Oliver Urges Us to Wake Up to How Big Oil Is Killing People and Destroying North Dakota

VIDEO: John Oliver Urges Us to Wake Up to How Big Oil Is Killing People and Destroying North Dakota

In another informative and funny segment of HBO’s “Last Week Tonight,” John Oliver explores what has happened to North Dakota since the starts of its oil boom.

 

‘Blood & Oil’, North Dakota, and dreams not exactly fulfilled

‘Blood & Oil’, North Dakota, and dreams not exactly fulfilled

Last week a new television series set amidst the North Dakota oil boom debuted. Blood & Oil tells the story of locals and newcomers striking it rich in The Bakken, an oil formation that has been heralded as containing more oil than Saudi Arabia–a wildly misleading* but understandably alluring slogan.

Based on the first episode we can conclude that this program is not actually a contemporary drama, but rather a period piece–specifically the period when North Dakota was booming from about, say, 2009 to sometime in mid-2014. And, therein lies the story. For Blood & Oil, above all, must be a tragedy of broken dreams if it is to live up to its realism credentials.

We must look beyond the fact that the show is shot in Utah to the substance of the series. When we do, we see the ever-present gambler’s mentality that dominates the American mind. It did not go unnoticed that America was a land of plenty from the very beginning of European settlement. One of the first European explorers and founder of the first permanent English settlement, Capt. John Smith, observed:

And in diverse places that abundance, of fish lying so thick with their heads above the water [that] as for want of nets (our barge driving among them) we attempted to catch them with a frying pan, but we found it a bad instrument to catch fish with. Neither better fish, more plenty, nor more variety for small fish had any of us ever seen in any place so swimming in the water…

Even though Smith’s gamble of starting over in the New World got off to a rough start for him and his fellow settlers at Jamestown, those who came after did find the promised riches of land, forests, minerals and animals unimagined in the Europe of that day.

…click on the above link to read the rest of the article…

First State Approves Drones with Rubber Bullets, Tasers, Pepper Spray, Tear Gas, Sound Cannons for Domestic Use

First State Approves Drones with Rubber Bullets, Tasers, Pepper Spray, Tear Gas, Sound Cannons for Domestic Use

North Dakota has become the first state to approve government use of drones equipped with “less than lethal weapons”, including “rubber bullets, pepper spray, tear gas, sound cannons, and Tasers”.

The bill passsed largely due to the inherent corruption of the US political system, as the wording was modified to allow for weaponized drones and approved “thanks to a last-minute push by a … lobbyist representing law enforcement—tight with a booming drone industry”.

The Republican who originally proposed the bill had written it to ban all weaponization of drones, and he was dismayed that it ultaimately passed in a form that allows non-lethal weaponization.

Police claim the drones will only be used in “non-criminal” situations, such as surveilance, but did not mention that they have already been used in at least one criminal situation, or that the claim is dubious at best given the ultra-militarized and brutal state of policing in the US, which many, particularly those in ethnic minority groups, liken to military occupation.

A police deputy, explaining why he opposed requiring search warrants for use of drones, told Daily Beast that “you don’t want things that would potentially have a chilling effect on [drone] manufacturers”.

“It’s really all about the commercial development,” said Republican rep. Gary Paur.

As Daily Beast puts it, “In other words, limit civil liberties so Big Drone can spread its wings.”

Of course, there is a bit more to it than that, as numerous US crackdowns on pro-democracy protesters, including mass arrests of civilians and journalists, demonstrate.

 

Jean Laherrere’s Bakken Update

Jean Laherrere’s Bakken Update

Jean Laherrere sent me the below charts the other day. I had planned on posting them with more Bakken data. But my schedule has been busy so I am posting them alone.

Jean’s interpretation for ND is as follows
Bakken ultimate = 3 Gb
Non Bakken ultimate = 2.2 Gb
ND ultimate 5.2 Gb
Detail
Quite symmetrical like the EIA drilling productivity data, but in contrary to EIA/AEO2015 with a peak in 2020
It will be interesting to see the evolution in the next few months

Jean 1

The Hubbert Linearization puts the Bakken about half way to the end.

Jean 2

The rest of North Dakota, less the Bakken, is just about finished.

Jean 3

With this chart Jean puts North Dakota production right at the peak.

…click on the above link to read the rest of the article…

 

 

Oil Shipments by Rail Declining

Oil Shipments by Rail Declining

Weekly oil shipments by rail can be found on the web at Weekly Carload Reports. And a summation of that data with charts can be found at Association of American Railroads  Freight Rail Traffic Data.

Rail Oil Carloads 3

Crude oil by rail basically started with the shale boom. Prior to that almost all oil was shipped by pipeline. Of course a lot of oil was trucked to the pipelines. The EIA says in the first seven months of 2014 8 percent of all us crude and refined products was shipped by rail. It looks like that percentage was increased somewhat in the second half of 2014.

Rail Oil Carloads

Oil by rail, for the entire USA, peaked in August, September and October of 2014 and has declined since.

Daily Oil by Rail 2

I have converted the weekly carloads to daily then converted carloads to barrels. There are about 700 barrels per carload. That gives us the average barrels per day by rail.

Daily Oil by Rail

I have converted the weekly “daily average” to monthly “daily average” and plotted it against the North Dakota production. The EIA says: Between 60% and 70% of the more than 1 million barrels per day of oil produced in the state has been transported to refineries by rail each month in the first half of 2014, according to the North Dakota Pipeline Authority.

Rail Oil ND 1

As we can see from this chart the volume of oil shipped by rail changes from month to month. The chart is barrels per day per month. The peak, for North Dakota, is December 2014. Oil by rail for the USA peaked about three months earlier.

 

 

…click on the above link to read the rest of the article…

Bakken April Production Data

Bakken April Production Data

Bakken Production

Eight month of flat to down production from the Bakken.

Bakken Amplified

I have shortened the data to 16 months here to give a better picture of what is really happening. North Dakota reached an 8 month low. North Dakota, in April, was 17,631 barrels per day below their September 2014 production. The Bakken was only 11,024 below September 2014 so conventional wells seem to be dropping off pretty fast.

The Baken is 54,599 bpd below their peak in December and all North Dakota is 59,385 bpd below their December Peak.

As usual there was very little adjustments in the previous months data. Bakken March production was adjusted down by 114 barrels per day while North Dakota production was adjusted down by 81 barrels per day.

Bakken BPD Per Well

Bakken BPD per well has been dropping for four months now. Bakken bpd per well now stands at 116, down 4 from March. All North Dakota bpd per well is now 96, down 3 while conventional wells bpd per well is 23, down 1 from March.

Bakken Wells Producing

Bakken wells producing increased by 107 while North Dakota wells producing increased by 101.

The North Dakota rig count now stands at 75, down 7 since Wednesday.

…click on the above link to read the rest of the article…

 

The Bakken ”Red Queen” is restrained with more credit

The Bakken ”Red Queen” is restrained with more credit

This post is an update on Light Tight Oil (LTO) extraction in Bakken based upon published data from the North Dakota Industrial Commission (NDIC) as per March 2015.

Extraction developments of LTO from Bakken may be followed by county, formation, vintage of wells, and one important source to understand the developments are coming from studying the developments by companies. Holding this up with companies’ financial statements (10-K and 10-Q) is an invaluable source about the companies, their financial capabilities and their strategies. This information is paramount to understand the developments in LTO extraction from Bakken and provides valuable insights into what to expect of future developments.

To get some understanding of what will drive future developments, it is helpful to look at individual companies.

Amongst all the companies operating in Bakken I selected for this post to present a closer look at 3 of the biggest companies in Bakken; Continental Resources, EOG Resources and Whiting Petroleum.

These 3 companies were found to be representative for several of the companies with regard to a range of variation in quality of wells, development strategies, use of debt, asset sales and not least what their responses to oil price changes may reveal.

  1. For Q1 – 15 the companies involved in LTO extraction in Bakken used an estimated $4 Billion(CAPEX) for well manufacturing and an estimated $2.3 Billion was from external sources, primarily from equity and asset sales and assuming more debt.
    The “average” well with around 90 kb [90,000 barrels] of flow in its first year is estimated to have an undiscounted point forward break even (that is a nominal break even with 0% return for the well)at around $60/Bbl (WTI).
  2. The break even price increases with increases in the return requirement.
  3. This analysis shows that the companies have deployed different strategies as responses to the decline in the oil price, which will affect future developments in LTO extraction.

 

…click on the above link to read the rest of the article…

Bakken Decline Rates Worrying For Drillers

Bakken Decline Rates Worrying For Drillers

I have been supplied an Excel spreadsheet of all North Dakota wells back to 2006, thanks to Enno Peters and Dennis Coyne. I only used the data back to 2007 however. This is a wealth of information if we want to know how many wells came on line in a given month, we simply count them. We are given the monthly production data for each month. And since we have the monthly production data we can very easily figure the decline rate of each well, or any group of wells for any month or year.

A note on the data. The first month’s data was almost always for a partial month. Sometimes the well came on line near the first of the month and sometimes near the end of the month. To get around this problem I have started with the second month, which is the first full month, and used that month as the first month of all my data. All data and charts below include all North Dakota wells, not just the Bakken.

DeclineRateAllWells

Production per well has gradually increased each year. 2014 was the highest first month production but also the highest decline rate. Note that on the first month 2014 production is 29 barrels per day above 2013 1st month and 131 barrels per day above 2008 1st month. But the 2014 10th month was 7 bpd below the 2013 10th month. And by the 2013 only 7 barrels per day separated the 2008 data and the 2013 data.

 

…click on the above link to read the rest of the article…

12 Signs That The Economy Is Really Starting To Bleed Oil Patch Jobs

12 Signs That The Economy Is Really Starting To Bleed Oil Patch Jobs

The gravy train is over for oil workers.  All over North America, people that felt very secure about their jobs just a few weeks ago are now getting pink slips.  There are even some people that I know personally that this has happened to.  The economy is really starting to bleed oil patch jobs, and as long as the price of oil stays down at this level the job losses are going to continue.  But this is what happens when a “boom” turns into a “bust”.  Since 2003, drilling and extraction jobs in the United States have doubled.  And these jobs typically pay very well.  It is not uncommon for oil patch workers to make well over $100,000 a year, and these are precisely the types of jobs that we cannot afford to be losing.  The middle class is struggling mightily as it is.  And just like we witnessed in 2008, oil industry layoffs usually come before a downturn in employment for the overall economy.  So if you think that it is tough to find a good job in America right now, you definitely will not like what comes next.

At one time, I encouraged those that were desperate for employment to check out states like North Dakota and Texas that were experiencing an oil boom.  Unfortunately, the tremendous expansion that we witnessed is now reversing

In states like North Dakota, Oklahoma and Texas, which have reaped the benefits of a domestic oil boom, the retrenchment is beginning.

“Drilling budgets are being slashed across the board,” said Ron Ness, president of the North Dakota Petroleum Council, which represents more than 500 companies working in the state’s Bakken oil patch.

Smaller budgets and less extraction activity means less jobs.

 

…click on the above link to read the rest of the article…

North Dakota county feels Bakken boom ebb away as oil falls

North Dakota county feels Bakken boom ebb away as oil falls

(Reuters) – Just over a decade ago, this sleepy farming community on the fringe of North Dakota’s Bakken shale formation hosted the state’s first horizontal oil well to be hydraulically fractured, or fracked, helping set in motion an economic revolution that shook the world.

Today, Divide County may be another vanguard for the state, this time ominous, as the first to feel the full effect of a collapse in prices that has lopped more than 50 percent off the price of oil since the summer.

Only five oil rigs were drilling in Divide County this week, down from 12 last August, according to state data. While those only account for a handful of the more than 162 rigs still drilling in North Dakota, the drop has been much steeper than elsewhere in the state and could signal trouble across the No. 2 U.S. oil producer behind Texas if prices continue to slide.

A “Coming Soon” sign still marks the spot on a patch of fallow farmland just outside of Crosby, the county seat, where a 200-person “man camp” to house oil workers was set to be built. Late last fall, Timberline Construction Group, an Alabama-based contractor, put the project on hold after an oil company pulled out of a housing contract.

…click on the above link to read the rest of the article…

 

Are The Bakken’s Sweet Spots Past Their Prime?

Are The Bakken’s Sweet Spots Past Their Prime?

This post is an update on total Light Tight Oil (LTO) extraction from Bakken in North Dakota based upon actual data as of October 2014 from North Dakota Industrial Commission (NDIC). It further presents a statistical analysis on developments of well productivity with a detailed look at developments in Parshall, Reunion Bay and Sanish.

• There were general improvements in LTO well productivity in Bakken during 2013.

• Present trends in LTO well productivity for Mountrail’s sweet spots (Alger, Parshall, Reunion Bay, Sanish and Van Hook) suggests these are past their prime.

• Figure 29 in this post shows development in well productivity for Alger and Van Hook and figures 06, 08 and 10 for Parshall, Reunion Bay and Sanish. A common feature for Parshall, Reunion Bay, Sanish, and Van Hook is that these reached new highs in well productivity for wells started in 2013.
Alger has been in general decline since 2011.

• LTO extraction in recent years may be viewed as a source for global swing production for oil.

BakkenChart1

Figure 01The chart above shows development in Light Tight Oil (LTO) extraction from January 2009 and as of October 2014 in Bakken North Dakota [green area, right hand scale]. The top black line is the price of Western Texas Intermediate (WTI), red middle line the Bakken LTO price (sweet) as published by the Director for NDIC and bottom orange line the spread between WTI and Bakken LTO wellhead all left hand scale.

…click on the above link to read the rest of the article…

 

 

North Dakota Mineral Resources Dept Admits Half Its Shale Regions Below Breakeven

North Dakota Mineral Resources Dept Admits Half Its Shale Regions Below Breakeven

While talking heads and TV personalities reassure the investing public that low oil prices are “unambiguously awesome” for everyone, it seems the cracks in this narrative are starting to show. From falling wages, surging job cuts, plunging rig counts, and crashing capex, it’s becoming a lot harder to ‘pretend’ that everything’s fine. One wonders, when the companies themselves are slashing workweeks and cutting rig counts, when will ‘investors’ believe… perhaps now that Lynn Helms, Director of the North Dakota Department of Mineral Resources explains to the House Appropriations Committee that at least half of its shale regions are already below breakeven.

 

From a 12 page presentation…

 

The following shale regions are below breakevens (at which new drilling would cease)…

…click on the above link to read the rest of the article…

Bakken, Let’s Do The Math

Bakken, Let’s Do The Math

There has been considerable dispute over how many new wells required to keep production flat in the Bakken and Eagle Ford. One college professor posted, over on Seeking Alpha, figures that it would take 114 rigs in the Bakken and 175 in Eagle Ford to keep production flat. He bases his analysis on David Hughes’ estimate that the legacy decline rate fir Bakken wells is 45% and 35% for Eagle Ford wells. And he says a rig can drill 18 wells a year, or about one well every 20.3 days.

The EIA has comes up with different numbers. The data for the chart below was taken from the EIA’sDrilling Productivity Report.

Legacy Decline

The EIA has current legacy decline at about 6.3% per month for Bakken wells and about 7.7% per month for Eagle Ford wells. That works out to be about 54% per year for the Bakken and 62% per year for Eagle Ford. I believe the EIA’s estimate of legacy decline, in this case, is fairly accurate. For instance last month Mountrail County had over 30 new wells completed yet still declined by 6.4%. And in December 2013 North Dakota declined by 5.22% yet had 119 new well completions.

 

…click on the above link to read the rest of the article…

Guest Post: Calculating The Breakeven Price For The Median Bakken Shale Well | Zero Hedge

Guest Post: Calculating The Breakeven Price For The Median Bakken Shale Well | Zero Hedge.

A lot of data has been thrown around recently concerning the Bakken shale wells of North Dakota in an attempt to figure out the necessary oil price required to break even on the investment.  In order to get a clearer picture of the financial situation in Bakken, it is necessary to develop a financial model of the median Bakken well (attached).

The median Bakken well has the following attributes:

With a discount rate of 15%, the median well has a profitability index of 1.02 (after federal income tax) if $66 per barrel is used  (A profitability index of 1.0 indicates a break even situation at the discount rate that was used in the model).  This means that at $66 per barrel, half the wells are uneconomic.  If oil prices settle out at this price it can be expected that the number of wells drilled should be reduced by about half.

…click on the above link to read the rest of the article…

Where Oil and Politics Mix – NYTimes.com

Where Oil and Politics Mix – NYTimes.com.

TIOGA, N.D. — In late June, as black and gold balloons bobbed above black and gold tables with oil-rig centerpieces, the theme song from “Dallas” warmed up the crowd for the “One Million Barrels, One Million Thanks” celebration.

The mood was giddy. Halliburton served barbecued crawfish from Louisiana. A commemorative firearms dealer hawked a “one-million barrel” shotgun emblazoned with the slogan “Oil Can!” Mrs. North Dakota, in banner and crown, posed for pictures. The Texas Flying Legends performed an airshow backlit by a leaping flare of burning gas. And Gov. Jack Dalrymple was the featured guest.

Traveling through the “economically struggling” nation, Mr. Dalrymple told the crowd, he encountered many people who asked, “Jack, what the heck are you doing out there in North Dakota?” to create the fastest-growing economy, lowest unemployment rate and (according to one survey) happiest population.

…click on the above link to read the rest of the article…

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