Thursday, June 2, 2011

Another Oil For America Well Comes Off Confidential List -- and No Data

Only data for this well is the total depth reached:
  • 20061, TD = 9,615 feet, Oil for America, Dohrmann 13-1, Stark, Lodgepole formation
For those who have lost track or lost sight of "Oil for America" wells, click here for overview and updates. For newbies, the Lodgepole was going to be a huge new producer for Oil for America according to their CEO and geologist after having discovered a "sure-fire" way to tap into the Lodgepole reefs. So far, little news.

This is a surprise; NDIC says the status of the Zastoupil well is "IA" -- inactive or shut-in, but yet it is on the June docket for temporary spacing. I guess I will be learning something new:

June 2, 2011: On the docket for June, NDIC:

  • 14541: Oil for America, temporary spacing for Zastoupil 22-1, Stark; according to NDIC "Well Search" page, the status of this well is "IA" -- inactive or shut-in

    Five (5) New Permits -- Bakken, North Dakota, USA

    Daily activity report, June 2, 2011 --

    Drillers: Petro-Hunt (2), XTO, CLR, and MRO

    Fields: East Tioga, Clear Water, Indian Hill, North Tobacco Garden, and Moccasin Creek

    Some reporting wells of interest:
    • 19154, 1,883, BR, Crater Lake 21-14H, McKenzie
    • 19753, 1,300, BR, Glacier 31-4TFH, McKenzie
    • 20061, TD = 9,615 feet, Oil for America, Dohrmann 13-1, Stark, Lodgepole formation

    From PowerLine: Fossil Fuels Are the Future

    That's about all I need to know -- link here for Part I and link here for Part II
    You can imagine a world in which energy sources like solar, wind and biomass are the best and most efficient available. But here on planet Earth, fossil fuels are our best source of energy. Happily, as a recent Congressional Research Service report concluded, the country that has the largest total fossil fuel resources is not Russia or Saudi Arabia. It is the United States. In fact, the United States and the world have plenty of petroleum and coal to last more or less forever at what would be--absent atrocious government policies--declining prices.
     From Part II:
    Oil production in Canada, the largest supplier to the United States, is forecast to jump 68 percent to 4.7 million barrels per day by 2025....
    The rise in production from 2.8 billion barrels in 2010, largely in the Athabasca oil sands of Western Canada, reflects an improved investment climate, more robust commodity prices and increased market demand, the association said.

    Seeking Alpha on Whiting Trust -- Bakken, North Dakota, USA

    Link here.

    BOE estimate: 302,500
    BOE actual: 310,500

    Profits, estimate: $9.7 million
    Profits, actual: $11.5 million

    ... and this was the first quarter when we lost a month or so due to blizzards ... I still think 2H11 is going to be incredible for Bakken oil companies. 

    Encana To Add Oil to Its Inventory

    Link here.
    With natural gas making up 96% of its total production volumes and liquids prices commanding a stout premium over gas, Encana Corp. has begun to position itself to take more advantage of higher-value liquids plays.

    The company is directing $1 billion of its 2011 budget towards activities that will increase future liquids recovery in North America, Randy Eresman, president and chief executive officer, told investors on the first quarter conference call in mid-April.
    It might have been a year ago, I forget when I posted it, but I said that when natural gas hits $5.00, these natural gas companies will start to show some excitement. We are closing in on $5.00 natural gas. This is a dynamic link with commodity prices, and today natural gas is about $4.79, another recent high, I think.

    Vaalco Buys Montana Bakken Acreage

    Link here.
    Vaalco Energy Inc. is buying a 70% working interest in 5,214 acres of the Bakken play in Sheridan County, Mont., from a privately held company.

    The acreage adjoins Flat Lake field, which produces from the Middle Bakken formation.
    I assume this is part of the Williston Oil Basin, and not the Alberta Basin. Flat Lake oil field appears to be in the far northeast corner of Montana, just across the border from North Dakota and Canada. Flat Lake is near Westby, Montana, so this has to be the Williston Oil Basin Bakken. 

    Another Analyst: $150 Oil Before The Year Is Out

    Link here.

    Another analyst suggests $150 oil before the year is out. He is promoting his book, of course.

    These analysts predicting oil prices are getting to be like the mosquitoes in Williston, North Dakota: guaranteed to show up and very, very irritating.

    This may still be my favorite analyst regarding the price of gasoline.

    Legacy, Surge, and an Update on the Bottineau Spearfish Wells -- North Dakota, USA

    I still don't have the complete story, but here a few more dots to connect.

    First, a story from the Calgary Herald just a couple of days ago, May 30, 2011:
    Formation watchers have drawn a bead on the Manitoba Spearfish light oil formation, with a report from FirstEnergy Capital suggesting it may have twice the amount of original oil in place per acre as the storied Saskatchewan Bakken.

    "Drilling activity levels and play-wide production volumes have grown exponentially since the winter of 2008-09, with latest public data (current to January 2011) showing Spearfish production approaching the 15,000 barrel of oil equivalent per day range, and likely capable of much more today if it were not for an anomalously wet spring break-up this year," says the report.

    "In terms of resource potential, the regional extent of the Spearfish is still being delineated, however, in areas already shown to be prospective, reservoir parameters can suggest potential OOIP to be in the realm of 9.0 to 15.0 million barrels per section, which could represent 2-3 times what the southeastern Saskatchewan Bakken offers on average."

    The Spearfish attracted super-looking oilpatch newcomer Legacy Oil + Gas to invest $185 million to buy assets from Molopo Energy Canada Ltd. in February, paying $93 million in cash and issuing 6.18 million Legacy common shares.

    EOG Resources and Penn West Exploration are considered the leaders in the play but for maximum exposure, FirstEnergy likes Legacy or Surge Energy, who both have concentrated, low risk, development inventories.
    Then this comment sent in to me, and posted at this site:
    Looks like Surge energy may have purchased EOG's leases in Bottineau County Spearfish. Appears that Surge now claims a 329 low risk drilling inventory.
    http://surgeenergy.mediaroom.com/index.php?s=10448&item=39018
    Also check out their May 20 investor presentation and look at the spearfish land map page 14. The land position looks very similar to what EOG had shown in some of its reports. However I haven't seen any public record of sale by EOG? 
    The press release at that link says Surge's deal to acquire Spearfish assets in North Dakota has closed:
    CALGARY, May 16 /CNW/ - Surge Energy Inc. (SGY) is pleased to provide the results of its third horizontal multi-frac well at Valhalla South and to announce the closing of its previously announced light oil asset acquisition in North Dakota. Surge is also pleased to announce that it has syndicated its bank facility and increased its bank line from $90 million to $120 million.
    The press release goes on: 
    Surge is pleased to announce that it has closed its second light oil asset acquisition in North Dakota.  As previously disclosed, the first light oil asset acquisition in North Dakota closed on March 31, 2011. The assets from both acquisitions were acquired by Surge Energy USA Inc., a wholly owned subsidiary of Surge Energy Inc. 

    Through the two acquisitions, Surge acquired 100 bbl/d (2010 exit rate) of high quality, high netback, light oil production, 6,000 net acres of highly prospective land in the Spearfish light oil resource play and greater than 100,000 acres of high working interest, undeveloped land for total consideration of $21.5 million in cash. The acquisitions added an internally estimated 205 gross (120 net) horizontal Spearfish drilling locations and approximately 126 mmbbls gross DPIIP (discovered petroleum initially in place; similar to US companies "OOIP" -- original oil in place). 

    Surge now has approximately 329 gross (231 net) horizontal Spearfish drilling locations in southwest Manitoba and North Dakota and greater than 460 gross (350 net) oil drilling locations in the Company.
    For those who have forgotten what/who Legacy is:
    Legacy Oil + Gas Inc., an oil and natural gas company (from the BusinessWeek.com site) engages in the acquisition, development, exploration, and exploitation of oil and natural gas properties in Canada. It principally holds interests in various properties located in an area ranging from approximately 130 to 290 kilometers southeast of the city of Regina, Saskatchewan; the Turner Valley property situated in southern Alberta; and the Maxhamish property located in northern British Columbia. The company also owns interests in approximately 44,684 net acres of undeveloped land in Bottineau County, North Dakota; and a 50% working interest in 16,640 net acres of undeveloped land in southern Alberta. In addition, it invests in petroleum and natural gas gathering, processing, and transportation assets. The company was formerly known as Glamis Resources Ltd. and changed its name to Legacy Oil + Gas Inc. in November 2009. Legacy Oil + Gas Inc. was incorporated in 2005 and is headquartered in Calgary, Canada.
    So, bottom line: it looks like Surge, Legacy, and EOG have assets in Bottineau's Spearfish formation, but whether EOG sold most/all of its assets to Legacy and/or Surge is still an issue.

    Halliburton's Housing -- Photographs

    Back on April 14, 2010, I posted a story about Halliburton moving some portable housing that was used at the Vancouver 2010 Winter Olympics down to their industrial park east of Williston.

    I was finally able to take some photographs of the complex.



    From the press release:
    "...the complex will be placed at an industrial park in Williston, on about six acres of land that the company bought from the city for about $160,000.

    The company said in a statement that the 158-bedroom camp would include kitchen, dining, recreation and office areas.
    "The camp was used at this year's Winter Olympics in Vancouver, Canada, and will be demobilized and transported to Williston,'' the company's statement said."
    If you click on the top picture and zoom in on the sign you will see that the name of this "lodge" is the Halliburton Muddy River Lodge.

    If you zoom in on the bottom picture, you will see that these are "container modules" used to transport cargo on dry goods container ships, which can be transferred directly to tractor-trailers and hauled cross-country.

    To put this in perspective, this lodge is apparently 158-beds, according to the press release.

    In a story published yesterday, a developer will bring in 2,500 beds for a man-camp near Tioga. The project will be accomplished in four phases, each phase with 67 buildings. Each building will hold about 10 beds, if I did the math right. (4 x 67 = 268 buildings; 2,500/268 --> 9 beds, to be exact).

    Samson Oil and Gas Pays Off Credit Facility -- Carries No Debt on Balance Sheet -- Update on Two Bakken Wells -- North Dakota, USA

    Link here.
    Samson O&G has fully repaid its debt facility. After this final repayment of the facility, which once stood at US $21 million, Samson no longer has any debt on its balance sheet, and its current cash balance is approximately US $61.2 million.
    The link also provides update on two Samson oil wells east of Williston, North Dakota. 

    The Heart of the Bakken Is Shut Down -- Bakken, North Dakota, USA

    Williams County commissioners ordered all truck traffic, with farm equipment exceptions, to cease operations on county and township roads, effective today, June 2, 2011, at noon.
    Truck traffic is to cease at noon today on all county and township roads in Williams County, as lowered weight restrictions go into effect.

    The new road weight limit is set at 25,000 pounds.

    A driver can be given a $100 citation for driving on a road in an overweight vehicle. North Dakota Century Code Chapter 39-12-17 outlines what the fines are per 1,000 pounds over the weight limit a vehicle is found to be.

    It was passed unanimously by the Williams County Commission during a special meeting Wednesday morning.

    "The best we can do is stand by so we can repair them," Commission Chairman Dan Kalil said. Farm equipment, city, county and state vehicles will be the only exceptions to these new weight restrictions.
    There is simply too much mud.

    Divide County north of Williams County passed similar order earlier. I am not aware that Mountrail or Dunn counties have passed similar restrictions.

    Bismarck Tribune: Obama Backtracks on Wilderness Initiative

    Link here (regional links break early and break often).

    Even out here in the west where this is an important story, it was buried deep in the paper edition. And, of course, on the electronic site, no one would find it unless looking for it.
    Under pressure from Congress, the Obama administration is backing away from a plan to make millions of acres of undeveloped land in the West eligible for federal wilderness protection.
    Interior Secretary Ken Salazar said in a memo Wednesday that his agency will not designate any of those public lands as ``wild lands.'' Instead Salazar said officials will work with members of Congress to develop recommendations for managing millions of acres of undeveloped land in the West.

    ``The protection of America's wilderness for hunting, fishing and backcountry recreation should be a unifying issue that mobilizes us to a common purpose,'' Salazar said. ``We will focus our effort on building consensus around locally supported initiatives.''
    Salazar's decision reverses an order issued in December to restore eligibility for wilderness protection to millions of acres of public lands. That policy overturned a Bush-era approach that opened some Western lands to commercial development.
    Despite all the oil activity in North Dakota, the wildlife seems as robust as ever. Indeed, the harsh winter was much more devastating than anything the oil industry might have down with regard to wildlife.

    Elsewhere, despite the oil spill in the Gulf, the number of endangered turtles has never been higher (at least in the past three years).

    And so it goes.

    Cattle and Pumpers -- Bakken, North Dakota, USA

    This is not an unusual site, seeing cattle up close with pumpers.


    I do not understand the affinity that cattle have for pumpers, but it is interesting.

    This photograph was taken in southwestern North Dakota in the Bowman area, June 1, 2011. It is not copyrighted and can be used without permission.

    Long Laterals vs Short Laterals in the North Dakota Bakken

    There's a nice discussion comparing the effectiveness of long laterals vs short laterals in the Bakken at this link.

    The suggestion that there might be a significant heel-to-toe disparity could result in a change in drilling strategies.

    The heel-to-toe disparity: significant more oil being produced from the heel of the horizontal compared to the toe. The heel is near the "kick-off" point of the horizontal, where the horizontal leg leaves the vertical segment.

    More Turtles Than Ever After the Gulf Oil Spill

    Link here.

    The key sentence is buried in the story but here it is:
    "As of May 24, 2011, 155 Kemps ridley turtle nests had been spotted on Texas shores — more than in all of last year and more than had been counted by that day in 2009 and 2008. The same is true for some other sea turtle species,..."
    More turtle nests had been counted by May 24, 2011, than all of the three previous years. I cannot make this stuff up. 

    The rest of the article was gibberish about how we won't know the effect of the oil spill on these turtles for 20 years. Looks like life-long employment for at least one biologist: 20 years is about how long a career lasts these days.

    It should be noted that turtles, alligators, and crocodiles survived the meteor that hit the earth wiping out the dinosaurs.

    Just saying.

    New City To Go Up Near Tioga -- Bakken, North Dakota, USA

    When I was growing up Williston had a population of about 10,000. If the average US family had 3.5 members (one mom, one dad, and 1.5 children, then there would have been about 3,000 men in Williston when I was growing up. Those 3,000 would have been of all ages, and would have included many who were retired and/or beyond the age of working.

    Today, the local newspaper reports that Williams County commissioners had approved 4,500 more beds for man-camps in Williams County. 4,500 men is more men than we had in Williston when I was growing up, and certainly way more than those in the 18 to 35 age range which would probably be the average age range of those living in man-camps and working in the oil patch.

    And remember, this 4,500 comes on top of the already numerous man-camps in Williams County and then there are several new hotels/motels that are completely contracted out to oil companies.

    I don't think folks can comprehend how many men (and women) are now working in the oil patch in western North Dakota.

    Here is the link. Here are the data points:
    • Capital Oil Field Services of Round Rock, Texas: 2,500 beds; four phases; each phase with 67 buildings; near Tioga
    • Ameri-Tech Industries of Center, Texas; 800-bed camp built over three phases; 12 miles north of Williston (near the 13-mile corner)
    • Target Logistics of Boston, Massachusett; a 792-bed camp with an additional 100 RV hookups; along US Highway 2 near Tioga, next to its current 250-bed facility at that location
    • Dennis Nehring, local resident; a 350-bed camp on his property off US Highway in Round Prairie Township, across from Williams County Road 5; dormitory style housing for Superior Well Service employees
    All requests were approved by the Williams County commissioners.

    Cable television will be standard in all man-camps. It is my understanding that North Dakota public television will be showing the 1954 classic, "Seven Brides for Seven Brothers" continuously once the man-camps are opened. There is talk that Warner Brothers/Coen Brothers will shoot a sequel to that movie with Johnny Depp playing the lead role opposite Oprah Winfrey now that she has free time (last daytime show taped and aired).