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North Dakota blues: The legacy of fracking

North Dakota blues: The legacy of fracking

When oil drillers descended on North Dakota en masse a decade ago, state officials and residents generally welcomed them with open arms. A new form of hydraulic fracturing, or “fracking” for short, would allow an estimated 3 to 4 billion barrels of so-called shale oil to be extracted from the Bakken Formation, some 2 miles below the surface.

The boom that ensued has now turned to bust as oil prices sagged in 2019 and then went into free fall with the spread of the coronavirus pandemic. The financial fragility of the industry had long been hidden by the willingness of investors to hand over money to drillers in hopes of getting in on the next big energy play. Months before the coronavirus appeared, one former oil CEO calculated that the shale oil and gas industry has destroyed 80 percent of the capital entrusted to it since 2008. Not long after that the capital markets were almost entirely closed to the industry as investor sentiment finally shifted in the wake of financial realities.

The collapse of oil demand in 2020 due to a huge contraction in the world economy associated with the pandemic has increased the pace of bankruptcies. Oil output has also collapsed as the number of new wells needed to keep total production from these short-lived wells from shrinking has declined dramatically as well. Operating rotary rigs in North Dakota plummeted from an average of 48 in August 2019 to just 11 this month.

Oil production in the state has dropped from an all-time high of 1.46 million barrels per day in October 2019 to 850,000 as of June, the latest month for which figures are available. Even one of the most ardent oil industry promoters of shale oil and gas development said earlier this year that North Dakota’s most productive days are over. CEO John Hess of the eponymous Hess Corporation is taking cash flow from his wells in North Dakota and investing it elsewhere.

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

Did North Dakota Regulators Hide an Oil and Gas Industry Spill Larger Than Exxon Valdez?

Did North Dakota Regulators Hide an Oil and Gas Industry Spill Larger Than Exxon Valdez?

Exxon Valdez

In July 2015 workers at the Garden Creek I Gas Processing Plant, in Watford City, North Dakota, noticed a leak in a pipeline and reported a spill to the North Dakota Department of Health that remains officially listed as 10 gallons, the size of two bottled water delivery jugs.

But a whistle-blower has revealed to DeSmog the incident is actually on par with the 1989 Exxon Valdez oil spill in Alaska, which released roughly 11 million gallons of thick crude.

The Garden Creek spill “is in fact over 11 million gallons of condensate that leaked through a crack in a pipeline for over 3 years,” says the whistle-blower, who has expertise in environmental science but refused to be named or give other background information for fear of losing their job. They provided to DeSmog a document that details remediation efforts and verifies the spill’s monstrous size.

“Up to 5,500,000 gallons” of hydrocarbons have been removed from the site, the 2018 document states, “based upon an…estimate of approximately 11 million gallons released.”

Garden Creek is operated by the Oklahoma-based oil and gas service company, ONEOK Partners, and processes natural gas and natural gas liquids, also called natural gas condensate, brought to the facility via pipeline from Bakken wells.

Neither the National Oceanic and Atmospheric Administration (NOAA), which monitors coastal spills, nor the Environmental Protection Agency (EPA) could provide records to put the spill’s size in context, but according to available reports, if the 11-million-gallon figure is accurate, the Garden Creek spill appears to be among the largest recorded oil and gas industry spills in the history of the United States.

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

TROUBLE AT THE BAKKEN: Oil Production Finally Peaking?

TROUBLE AT THE BAKKEN: Oil Production Finally Peaking?

Is the mighty Bakken Shale Oil Field finally peaking?  Well, according to the data from the folks at the North Dakota Department of Mineral Resources, oil production in the Bakken has been flat for the past six months.  And, to make matters worse, production has been flat even though oil prices increased from a low of $42 in January to the mid $60’s in April.

So, something seriously wrong is going on in North Dakota.  What a difference in the Bakken’s recent oil supply compared to the field’s heyday when production surged from 300,000 barrels per day in 2011 to over 1.1 million barrels per day in 2014.  Furthermore, the oil price the shale companies in the Bakken are receiving is now $48 a barrel versus the West Texas Intermediate price of $57.

If we look at the past seven months, the North Dakota Bakken has only added 36,000 barrels per day (bd) of new oil production compared to 114,000 bd during the same period last year:

As we can see in the chart above, the output from Sep 2017 to Apr 2018 enjoyed an upward trend, while the Sep 2018-Apr 2019 has been flat.  You can see this better in Enno Peters chart from ShaleProfile.com.  I highly recommend followers check out his site as he provides updates on the top shale oil and gas fields in the United States using state data from over 100,000 wells.

These charts from ShaleProfile.com show the annual change production by different colors.  Here we can see that Bakken oil production increased steadily from 2011 to 2014, plateaued in late 2014 and 2015, declined in 2016, raised in 2017-2018, and has plateaued once again in 2019. The likely culprit for the plateau in Bakken oil production has to do with the lower oil price and the reduction of investment funds available to the shale companies that continue to spend more money than they make.

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

Crop Catastrophe In The Midwest – Latest USDA Crop Progress Report Indicates That A Nightmare Scenario Is Upon Us

Crop Catastrophe In The Midwest – Latest USDA Crop Progress Report Indicates That A Nightmare Scenario Is Upon Us

The last 12 months have been the wettest in all of U.S. history, and this has created absolutely horrific conditions for U.S. farmers.  Thanks to endless rain and historic flooding that has stretched on for months, many farmers have not been able to plant crops at all, and a lot of the crops that have actually been planted are deeply struggling.  What this means is that U.S. agricultural production is going to be way, way down this year.  The numbers that I am about to share with you are deeply alarming, and they should serve as a wake up call for all of us.  The food that each one of us eats every day is produced by our farmers, and right now our farmers are truly facing a nightmare scenario.

You can view the latest USDA crop progress report right here.  According to that report, corn and soybean production is way behind expectations.

Last year, 78 percent of all corn acreage had been planted by now.  This year, that number is sitting at just 49 percent.

And the percentage of corn that has emerged from the ground is at a paltry 19 percent compared to 47 percent at this time last year.

We see similar numbers when we look at soybeans.

Last year, 53 percent of all soybean acreage had been planted by now.  This year, that number has fallen to 19 percent.

And the percentage of soybeans that have emerged from the ground is just 5 percent compared to 24 percent at this time last year.

In other words, we are going to have a whole lot less corn and soybeans this year.

Farmers in the middle of the country desperately need conditions to dry out for an extended period of time, but so far that has not happened.

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

Total Catastrophe For U.S. Corn Production: Only 30% Of U.S. Corn Fields Have Been Planted – 5 Year Average Is 66%

Total Catastrophe For U.S. Corn Production: Only 30% Of U.S. Corn Fields Have Been Planted – 5 Year Average Is 66%

2019 is turning out to be a nightmare that never ends for the agriculture industry.  Thanks to endless rain and unprecedented flooding, fields all over the middle part of the country are absolutely soaked right now, and this has prevented many farmers from getting their crops in the ground.  I knew that this was a problem, but when I heard that only 30 percent of U.S. corn fields had been planted as of Sunday, I had a really hard time believing it.  But it turns out that number is 100 percent accurate.  And at this point corn farmers are up against a wall because crop insurance final planting dates have either already passed or are coming up very quickly.  In addition, for every day after May 15th that corn is not in the ground, farmers lose approximately 2 percent of their yield.  Unfortunately, more rain is on the way, and it looks like thousands of corn farmers will not be able to plant corn at all this year.  It is no exaggeration to say that what we are facing is a true national catastrophe.

According to the Department of Agriculture, over the past five years an average of 66 percent of all corn fields were already planted by now…

U.S. farmers seeded 30% of the U.S. 2019 corn crop by Sunday, the government said, lagging the five-year average of 66%. The soybean crop was 9% planted, behind the five-year average of 29%.

Soybean farmers have more time to recover, but they are facing a unique problem of their own which we will talk about later in the article.

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

US Crude plus Condensate and Tight Oil, Jan 2018 Update

US Crude plus Condensate and Tight Oil, Jan 2018 Update

chart

From Dec 2016 to Dec 2017 US Tight oil output has increased by 975 kb/d based on US tight oil output data from the EIA.

For the entire US we only have EIA monthly output estimates through Oct 2017. Over the Dec 2016 to Oct 2017 period US output has increased by 866 kb/d and the OLS trend has a slope of 821 kb/d.

chart/

Note that the 866 kb/d increase in US output over 10 months would be a 1040 kb/d increase over a 12 month period.

Most of the increase in US output has been from increased LTO output. The forecasts by several agencies (EIA, IEA, and OPEC) of more than a 1000 kb/d increase in US output in 2018 may assume that the recently increased oil price level will lead to increased investment in the oil sector.

Much of the increase in LTO output has been in the Permian basin and several factors may slow down the recent rapid growth. Among these are limited fracking crews, inadequate pipeline capacity for natural gas, which will limit output as flaring limits are reached, and potential water shortages.

Longer term the various LTO plays will run out of space to drill more wells in the tier one areas (the so-called sweet-spots) and this will limit the rate of increase within 2 or 3 years. It is likely that the Eagle Ford is close to this point, the Bakken might reach that point by 2019, and the Permian basin perhaps by 2021.

For US C+C output, I expect about a 600+/-100 kb/d increase in 2018.

Bakken Production Down, OPEC Production Up

Bakken Production Down, OPEC Production Up

bakken-bpd

Bakken production was down 46,433 barrels per day to 930,931 bod, All North Dakota was down 48,695 bpd to 981,039 bpd. This is first time North Dakota has been below 1 million barrels per day since March of 2014.

bakken-bpd-per-well

Bakken barrels per day per well dropped by 4 to 97 while all North Dakota bpd per well dropped by 3 to 76.

From the Director’s Cut

Oil Production

July           31,921,757 barrels = 1,029,734 barrels/day
August      30,412,200 barrels =   981,039 barrels/day (preliminary)(all-time high was Dec 2014 at 1,227,483 barrels/day)

Producing Wells

July           13,265
August      13,289 (preliminary)(all-time high)

Permitting

July           86 drilling and 0 seismic
August      99 drilling and 1 seismic September   63 drilling and 1 seismic (all time high was                    370 in 10/2012)

ND Sweet Crude Price

July               $35.57/barrel
August          $33.73/barrel
September   $32.98/barrel Today     $39.75/barrel (all-time high was $136.29 7/3/2008)

 Rig Count

July             31
August        32
September   34 Today’s rig count is 33     (all-time high was 218 on 5/29/2012)

Comments:

The drilling rig count increased one from July to August, then increased two from August to September, and is down one more from September to today.  Operators remain committed to running the minimum number of rigs while oil prices remain below $60/barrel WTI.  The number of well completions rose from 44(final) in July to 59(preliminary) in August.  Oil price weakness is the primary reason for the slow-down and is now anticipated to last into at least the fourth quarter of this year and perhaps into the second quarter of 2017.  There were no significant precipitation events, 11 days with wind speeds in excess of 35 mph (too high for completion work), and no days with temperatures below -10F.

The new October OPEC Monthly Oil Market Report is out with crude only production numbers for September 2016. All charts are in thousand barrels per day.

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

 

Dakota Pipeline Struggle Between the ‘People’ and the ‘Powerful’ Remains Underreported

Dakota Pipeline Struggle Between the ‘People’ and the ‘Powerful’ Remains Underreported 

    Angela Miracle Gladue, a member of the Frog Lake First Nations, a Cree community in Edmonton, Canada, attends a rally in support of the Standing Rock Sioux Tribe and in opposition to the Dakota Access oil pipeline. The event was in Lafayette Park near the White House in mid-September. (Jacquelyn Martin / AP)

A David and Goliath story is unfolding in North Dakota with a familiar theme: The “people” (who seek to do good for the planet) versus the “powerful” (who want to pursue evil that destroys the lives of the people and earth).

The colossal struggle around the extraction of the earth’s diminishing natural resources has been mounting since the Keystone XL pipeline proposal was commissioned in 2010. At that point, the Rosebud Sioux Nation in South Dakota and other native nations declared the pipeline construction “an act of war” that violates tribal sovereignty and abrogates treaty rights. The villainy continued when Bank of America became the lead financier of the lofty-sounding Plains All American Red River II pipeline that violated the same rights of the native peoples of Oklahoma.

This undeclared war continues in Canada with the controversial Kinder Morgan tar sands pipeline and export terminal facility. That proposal seeks to plow new pipelines and shipping lanes through the pristine wilds of Canada and its Salish Sea in order to transport some 890,000 barrels daily of Alberta tar sand liquid bitumen through areas inhabited by indigenous and non-indigenous peoples, as well as plants and animals.

Kinder Morgan, the largest pipeline company in the U.S., was founded by Richard Kinder, who took over from Jeffrey Skilling, the former CEO of Enron, now serving 24 years in prison for fraud and insider trading. Called “the luckiest ex-Enron employee” by The Wall Street Journal, Kinder is the 110th richest man alive, with a net worth of $8.2 billion.

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

THE DEATH OF THE BAKKEN FIELD HAS BEGUN: Means Big Trouble For The U.S.

THE DEATH OF THE BAKKEN FIELD HAS BEGUN: Means Big Trouble For The U.S.

The Death of the Great Bakken Oil Field has begun and very few Americans understand the significance.  Just a few years ago, the U.S. Energy Industry and Mainstream media were gloating that the United States was on its way to “Energy Independence.”

Unfortunately for most Americans, they believed the hype and are now back to driving BIG SUV’s and trucks that get lousy fuel mileage.  And why not?  Americans now think the price of gasoline will continue to decline because the U.S. oil industry is able to produce its “supposed” massive shale oil reserves for a fraction of the cost, due to the new wonders of technological improvement.

I actually hear this all the time when I travel and talk to family, friends and strangers.  I gather they have no clue that the Great Bakken Oil Field is now down a stunning 25% from its peak in just a little more than a year and half ago:

bakken-field-oil-production-sept-2016

The mighty Bakken oil field located in North Dakota reached peak production in December 2014 at 1.26 million barrels per day (mbd) and is now down to 942,000 bd.  This decline is no surprise to me or to my readers who have been following my work for the past several years.

I wrote about the upcoming crash of the Bakken oil field in my article (click on image to read article)– Published, NOV. 2013:

the-coming-bust-of-the-great-bakken-oil-field

I ended the article with these sobering words:

There are only so many drilling locations available and once they run out, the Great Bakken Field will become a BUST as the high decline rates will push overall oil production down the very same way it came up.

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

 

Bakken July Production Data

Bakken July Production Data

bakken-bpd

The EIA’s Drilling Productivity Report missed it for July. They will make the correction next month.

bakken-bpd-per-well

Barrels per day per well held steady in July, 91 for the Bakken and 79 for all North Dakota.

bakken-monthly-change

The trend is down in spite of the slight increase in July.

From the Director’s Cut

Oil Production

June 30,813,924 barrels = 1,027,131 barrels/day
July 31,914,711 barrels = 1,029,507 barrels/day (preliminary)(all time high was Dec 2014 at 1,227,483 barrels/day)
977,342 barrels per day or 95% from Bakken and Three Forks
52,165 barrels per day or 5% from legacy conventional pools

Producing Wells

June 13,248
July 13,255 (preliminary)(all time high) 11,168 wells or 84% are now unconventional Bakken Three forks wells 2,087 wells or 16% produce from legacy conventional pools

Permitting

June 65 drilling and 0 seismic
July 86 drilling and 0 seismic
August 99 drilling and 1 seismic (all time high was 370 in 10/2012)

ND Sweet Crude Price

June $38.75/barrel
July $35.57/barrel
August $33.73/barrel
Today $32.00/barrel (all time high was $136.29 7/3/2008)

Rig Count

June 28
July 31
August 32
Today’s rig count is 33 (all time high was 218 on 5/29/2012)

Comments:

The drilling rig count increased three from June to July, then increased one from July to August, and increased one more from August to today. Operators remain committed to running the minimum number of rigs while oil prices remain below $60/barrel WTI. The number of well completions dropped from 45(final) in June to 41(preliminary) in July. Oil price weakness is the primary reason for the slow down and is now anticipated to last into at least the fourth quarter of this year and perhaps into the second quarter of 2017. There was one significant precipitation event, 12 days with wind speeds in excess of 35 mph (too high for completion work), and no days with temperatures below 10F.

Over 98% of drilling now targets the Bakken and Three Forks formations.

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

North Dakota down over 70,000 bpd in April

North Dakota down over 70,000 bpd in April

Bakken & ND Amplified

Largest drop ever in North Dakota production. The Bakken is now under one million barrels per day.

Bakken Change

This gives you some idea of the erratic nature of North Dakota production. But as you can see, the decline is accelerating.

Bakken DPR Compare

The EIA’s Drilling Productivity Report gives past Bakken production numbers, which includes the Montana portion, and future estimates for the next couple of months. The average difference between North Dakota production and total Bakken production has been about 27,500 bpd. However for April the difference is almost 63,000 barrels. So it looks like for once the DPR estimate is way too conservative. The DPR estimate is through July while the north Dakota data is only through April.

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

North Dakota Oil Production Declining But Slowly

North Dakota Oil Production Declining But Slowly

North Dakota BPD

Bakken crude oil production was down 7,743 bpd in March while all North Dakota production was down 9,846 barrels per day.

From the Director’s Cut:

Producing Wells 
February    13,017 
March       13,024 (preliminary) (all-time high was Oct 2015 13,190) 
Permitting
February    70 drilling and 1 seismic 
March       56 drilling and 4 seismic
April       66 drilling and 0 seismic (all time high was 370 in 10/2012) 

ND Sweet Crude Price
February    $18.07/barrel 
March       $26.62/barrel 
April       $26.87/barrel 
Today       $33.00/barrel (all-time high was $136.29 7/3/2008) 

Rig Count 
February    40 
March     32
April       29 
Today’s rig count is 27 (lowest since July 2005 when it was 27)(all-time high was 218 on 5/29/2012) 

Comments: 

The drilling rig count fell 8 from February to March, 3 from March to April, and 2 more from April to today.  Operators remain committed to running the minimum number of rigs while oil prices remain below $60/barrel WTI.  The number of well completions fell from 64(final) in February to 59(preliminary) in March.  Oil price weakness is the primary reason for the slow-down and is now anticipated to last into at least the third quarter of this year and perhaps into the second quarter of 2017.  There were no significant precipitation events, 4 days with wind speeds in excess of 35 mph (too high for completion work), and no days with temperatures below -10F.

Over 98% of drilling now targets the Bakken and Three Forks formations.

Estimated wells waiting on completion services is 920, up 13 from the end of February to the end of March. Estimated inactive well count is 1,523, up 84 from the end of February to the end of March. 

Bakken Bpd 2

Looking at the longer term chart we can see that the increase in production beginning in around 2011 was very steep while the decline has been less dramatic.
Bakken Change

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

 

Bakken(ND) Light Tight Oil – Update with Sep – 15 NDIC Data

Bakken(ND) Light Tight Oil – Update with Sep – 15 NDIC Data

After years of following developments in extraction of light tight oil (LTO) in the Bakken, the oil price, studying actual well production data from the North Dakota Industrial Commission (NDIC) and the SEC 10-Q/Ks filings for several companies heavily exposed to the Bakken, a quote from Shakespeare’s Macbeth comes to the fore of my mind:

All causes shall give way: I am in blood

Stepp’d in so far that, should I wade no more,

Returning were as tedious as go o’er:

                                              (Macbeth: Act III, Scene IV)

For me the Macbeth quote very much sums up the predicament many Bakken LTO operators now find themselves in.

Figure 01: The above chart shows developments by vintage in LTO extraction from the Middle Bakken/ Three Forks/Sanish formations in Bakken (ND) as of January 2008 and of September 2015 [right hand scale]. The color grading shows extraction by month. Development in the oil price (WTI) black line is shown versus the left hand scale.

What this study/update present:

  • With the decline in the oil price the average well as from the 2012 vintage will struggle to reach payout and become profitable.
    (The oil price decline reduces the portion of the more recent wells that are on trajectories to reach payout and become profitable.)
  • The 2015 vintage follows the 2014 vintage closely, suggesting that around 20% of the wells of 2015 vintage are on a trajectory to reach payout and become profitable.
  • The underlying decline from the legacy wells is strong. The extraction from all the wells started between Jan 2008 and Dec 2014 declined by close to 440 kb (or about 41%) from Dec 2014 to Sep 2015.
  • Some of the early wells (2008 vintage) have been restimulated (refracked) and the effects are short lived and the economics of this looks questionable, at best.

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

Bakken Big Decline in September

Bakken Big Decline in September

The NDIC has published their monthly update for Bakken Oil Productin and all North Dakota Oil Production.

Bakken & North Dakota

Bakken production was down 24,424 barrels per day while all North Dakota was down 25,378 bpd.

Bakken & ND Amplified

Here is an amplified version of the last 15 months of North Dakota production. September 2015 production is now below September 2014 production so the 12 month average has now turned negative.

ND & Bakken BPW

Even though producing rigs in North Dakota declined in September, barrels per day per well declined also from 94 to 92. Bakken bpd per well declined from 112 to 109.

ND & Bakken BPF LT

This is a long term view of Bakken and North Dakota barrels per well.

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

Bakken Production Down plus IEA Predictions

Bakken Production Down plus IEA Predictions

The Bakken and North Dakota production data is in.

ND & Bakken

Bakken production was down 19,502 bpd in August while all North Dakota was down 20,552 bpd.


ND & Bakkwn Amplified

Here is an amplified chart of Bakken and all North Dakota production.

ND & Bakken BPW

Bakken barrels per well per day is now 112 while all North Dakota gets 94 barrels per well per day.

North Dakota Change in BPD

This chart shows the monthly change in North Dakota production. It is likely that by next month the 12 month average change in production will be negative.

Bakken wells producing increased by 69 and ND wells producing increased by 65.

From the Director’s Cut

July Permitting: 233 drilling and 0 seismic
Aug Permitting: 153 drilling and 1 seismic
Sep Permitting: 154 drilling and 1 seismic

July Sweet Crude Price1 = $39.41/barrel
Aug Sweet Crude Price = $29.52/barrel
Sep Sweet Crude Price = $31.17/barrel
Today’s Sweet Crude Price = $35.00/barrel
(low-point since Bakken play began was $22.00 in Dec 2008)
(all-time high was $136.29 7/3/2008)

July rig count 73
Aug rig count 74
Sep rig count 71
Today’s rig count is 67
(in November 2009 it was 63)(all-time high was 218 on 5/29/2012)

Comments: The drilling rig count increased 1 from July to August, decreased 3 from August to September, and dropped 4 more this month. Operators are now committed to running fewer rigs than their planned 2015 minimum as drill times and efficiencies continue to improve and oil prices continue to fall. This has resulted in a current active drilling rig count of 10 to 15 rigs below what operators indicated would be their 2015 average if oil price remained below $65/barrel. The number of well completions fell from 119(final) in July to 115(preliminary) in August. Oil price weakness now anticipated to last well into next year is the main reason for the continued slow-down. There was one significant precipitation event in the Minot area, 6 days with wind speeds in excess of 35 mph (too high for completion work), and no days with temperatures below -10F.

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

Olduvai IV: Courage
In progress...

Olduvai II: Exodus
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