Wednesday, September 21, 2011

Peak Oil Theorists/Proponents Have Moved the Goalpost

Link here.
On September 17, The Wall Street Journal published a fascinating article on "peak oil," "There Will Be Oil," written by Daniel Yergin, chairman of IHS Cambridge Energy Research Associates, an energy research and consulting firm and deserved recipient of Pulitzer Prize for his 1991 book, The Prize: The Epic Quest for Oil, Money and Power.

According to The Wall Street Journal, "There Will Be Oil" "is adapted from his new book, The Quest: Energy, Security and the Remaking of the Modern World.

The essay will doubtless have widespread influence amongst prosperous The Wall Street Journal readers, but in his glib dismissal of "peak oil" theory advocates, Yergin glosses or ignores a number of issues fundamental to the larger picture, for whatever reason, and these oversights should be considered in any evaluation of the piece and the peak oil "specter."
After going through the same old arguments, the author ends with:
Accordingly, it is inexpensive oil that is in terminal decline, a development viewed positively by Yergin, who writes, "Activity goes up when prices go up; activity goes down when prices go down. Higher prices stimulate innovation and encourage people to figure out ingenious new ways to increase supply."
Peak oil theorists / proponents used to say we were running out of oil; now they simply say we're running out of cheap oil. Okay.

I remember a few years ago when the price of natural was spiking well over $8. Now they're finding so much, some argue, natural gas producers can't make money with natural gas under $4.00.

Wow, Wow, Wow -- Twenty (20) New Permits -- Ten of Them On One Pad (?) -- Bakken, North Dakota, USA

First, of all, go to this link for more on those ten permits on one pad (?).

Operators: QEP (10), Whiting (2), G3 Operating (2), CLR (2), Helis, Hunt, Legacy, and BEXP.

Fields: Dutch Henry Butte, Sioux, Strandahl, Heart Butte, Climax, Todd, Haystack Butte, Blue Buttes, Ellsworth, Elk, and a wildcat.

Legacy has the wildcat in Bottineau County.

It's too bad the 10 wells on one pad weren't in Climax oil field; they are in Heart Butte.

Other reports in today's daily activity report: As reported elsewhere, four wells came off confidential status, and three of the four were placed on DRL status (not completed; waiting to be fracked).

Other than that, a quiet day. Yup. Except for twenty new permits, and ten of them on one pad.

How Exciting Is the Bakken? How About This: Ten (10) Wells on One Pad? -- Bakken, North Dakota, USA

They just went on the confidential list today:
  • 21551 QEP ENERGY COMPANY MHA 3-31-25H-150-92 SESE 31-T150N-R91W
  • 21552 QEP ENERGY COMPANY MHA 2-31-25H-150-92 SESE 31-T150N-R91W  
  • 21553 QEP ENERGY COMPANY MHA 4-31-25H-150-92 SESE 31-T150N-R91W  
  • 21554 QEP ENERGY COMPANY MHA 1-31-30H-150-91 SESE 31-T150N-R91W  
  • 21556 QEP ENERGY COMPANY MHA 3-31-30H-150-91 SESE 31-T150N-R91W  
  • 21557 QEP ENERGY COMPANY MHA 1-31-36H-150-92 SESE 31-T150N-R91W
  • 21558 QEP ENERGY COMPANY MHA 3-31-36H-150-92 SESE 31-T150N-R91W
  • 21559 QEP ENERGY COMPANY MHA 5-31-25H-150-92 SESE 31-T150N-R91W
  • 21560 QEP ENERGY COMPANY MHA 7-31-25H-150-92 SESE 31-T150N-R91W
  • 21561 QEP ENERGY COMPANY MHA 1-31-25H-150-92 SESE 31-T150N-R91W
When I started blogging about the Bakken three years go, the general consensus was "we" would see one Bakken well on each section.

Then it was noted that the fracking was effective only about 500 feet from the well bore, meaning that at least 5 wells could be placed in one section targeting one formation.
Earlier this month, I noted that Denbury Onshore would be requesting permission to drill up to seven wells on 640-acre spacing units and 1280-acre spacing units.
And now today, "anonymous" alerted me to this: ten wells in one section, although the horizontals will play out in adjoining sections.

They are all located in the SESE corner of section 31, so I assume they are on one pad, or very nearly all together. I would assume that the horizontals will go into adjoining sections, so "we" aren't going to see 10 horizontals in one section. The names of the wells suggest horizontals going adjoining townships (150-91 and 150-92).

The location is in Heart Butte oil field very near the water.  Here is what I wrote earlier about the Heart Butte field:
  • February 9, 2011: With more permits in the Heart Butte field, this is a good time to remind folks that the Arrow pipeline is in the Heart Butte field.
  • February 5, 2011: The Heart Butte field is getting a bit more active, perhaps after the report of the two nice Questar wells each reported IPs of 1,300 bbls. Two more Heart Butte permits were granted on February 4, 2011 -- these to XTO, now owned by XOM.
  • August 1, 2010: Spotted Hawk Development bringing excitement to the Van Hook.
  • April 18, 2010: Arrow Midstream has signed an agreement to provide pipeline support for XTO in the Heart Butte oil field.
  • April 18, 2010: Questar has a pair of snake eyes in the north, #18665 and #18666, MHA 1-06-01H-149-92 and MHA 2-06-01H-149-92, respectively. #18665 reports an IP of 1,271 barrels with a cumulative of 63K barrels in the first five months. Meanwhile, #18666 reports an IP of 1,309 barrels with a cumulative of 31K barrels in the first three months.  
You can see the new permits on today's daily activity report.

For Investors: Motley Fool Focuses on Whiting -- Bakken, North Dakota, USA

Link here.
Based on the aggregated intelligence of 180,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, oil and gas company Whiting Petroleum has earned a coveted five-star ranking.

On CAPS, 98% of the 660 members who have rated Whiting believe the stock will outperform the S&P 500 going forward. These bulls include All-Star Keekers44 and canofwhupass.
Earlier this month, Keekers44 tapped Whiting as a particularly potent energy pick:

WLL was the second largest oil producer in North Dakota in 2010 and has 680,100 net acres in the Bakken. WLL has an aggressive ... drilling schedule. Another good Bakken play.

Not a Good Report: Of the Four Wells That Came Off Confidential List Today, Three Were Not Completed -- Bakken, North Dakota, USA

The number of active drilling rigs in North Dakota is still at 194, down from a record 201 not too long ago.

There is not enough drilling in Montana to account for that difference, especially when just weeks ago, NDIC suggested that 225 was in sight.

I assume it is just an anomaly, "one of those things," but one has to wonder.

Today, four wells came off the confidential list, and three of them were placed on DRL status, meaning that they were not completed with the six-month time frame. Again, until I see a change (up) in the number of active drilling rigs, I can't help thinking about the huge backlog of wells waiting to be fracked.

Here are the wells that came off the confidential list today (the list is linked at the sidebar on the right, near the top):
  • 19376, DRL, XTO ENERGY INC. DAKOTA 42X-36 SENE 36-T149N-R96W 9/21/2011
  • 19501, DRL, HUNT OIL COMPANY CLEARWATER 1-24-25H 1 NWNW 24-T157N-R90W 9/21/2011
  • 19986, 172, CONTINENTAL RESOURCES, INC. UXBRIDGE 2-9H SWSW 9-T160N-R95W 9/21/2011
  •  20287, DRL, MARATHON OIL COMPANY JOHNSON 44-32H SESE 32-T151N-R93W 9/21/2011




Global Warming -- Sea Level -- Hmmm, Hmmm, Hmmm

Link here.
Earlier this month, the European Space Agency's Envisat monitoring, global sea level revealed a “two year long decline [in sea level] was continuing, at a rate of 5mm per year.”
In August 2011, NASA announced that global sea level was dropping and was “a quarter of an inch lower than last summer.” See: NASA: 'Global sea level this summer is a quarter of an inch lower than last summer'

The global drop in sea level followed NASA's announcement that sea level around the U.S. was declining in February 2011.

Most surprising, despite the fact that Obama only said he would only “slow” the rise of the oceans, his presidency has presided over what some scientists are terming an “historic decline" in global sea levels.
Wonders never cease. I wonder if Al Gore will be updating his PowerPoint presentation. Say what?

Good, Bad, or Indifferent: Dickinson Says "NO" to 600-Bed Man-Camp

Link here.
Dickinson Planning and Zoning Commission members unanimously opposed a request by Target Logistics for a man camp near State Avenue and 21st West this morning.

About 50 people attended the early-morning meeting at City Hall and about half a dozen residents spoke against the proposed 600-person man camp’s location. No one spoke in favor.

This Nails It

This one is making the rounds; comes from Scotland, my favorite country to visit; lots of fond memories.

Permits by County -- 2010 -- 2011 -- Bakken, North Dakota, USA

Elsewhere someone was wondering how many permits have been issued by county in North Dakota. Here is the 2010 data [2011 data through September 13]:
  • Billings: 17 [24]
  • Bottineau: 60 [13]
  • Bowman: 10 [3]
  • Burke: 63 [53]
  • Divide: 98 [88]
  • Dunn: 248 [194]
  • Golden Valley 5 [6]
  • McKenzie: 331 [347]
  • McLean: 12 [15]
  • Mountrail: 429 [233]
  • Renville: 11 [3]
  • Slope: 2 [1]
  • Stark: 44 [26]
  • Ward: 1 [2]
  • Williams: 339 [247]
My data may be slightly different than official NDIC data because of transcribing errors I make, but I bet my numbers are pretty close.

Utica Shale -- Ohio -- The Bakken -- Lessons Learned

Link here (these links break early and eventually require subscription).
The Utica projections focus on five specific economic elements — jobs, personal income, royalties, tax revenues and gross state product (GSP) — from 2011 until 2015. According to the study, Ohio’s natural gas and crude oil industry could help create and support more than 200,000 Ohio-based jobs from the leasing, royalties, exploration, drilling, production and pipeline construction activities for the Utica shale reserve. The state could experience an overall wage and personal-income boost of $12 billion by 2015 from industry spending.

The study also projects royalty payments to landowners, schools, businesses and communities could increase to as much as $1.6 billion by 2015 — a number that exceeds the total amount of royalties distributed by Ohio’s natural gas and crude oil industry in the last decade.

Total tax revenue from oil and gas exploration and development in the Utica shale formation from 2011 until 2015, including severance, commercial activity, ad valorem (property), federal, state and local taxes, is projected to be approximately $479 billion. Industry expenditures related to Utica shale development could generate approximately $12.3 billion in gross state product and result in a statewide output or sales of more than $23 billion.
These numbers surprised me:
In 2010, the natural gas and crude oil industry paid $32.7 million in taxes, including severance, commercial activity, ad valorem (property), federal, state and local taxes, and generated $988 million in gross state product and statewide output or sales of $1.7 billion. The industry also reinvested approximately $238 million for oil and gas exploration and development in Ohio.

Currently, there are more than 64,000 active wells throughout 49 counties in Ohio. To date, more than 274,000 wells have been drilled in 76 of the state’s 88 counties. Ohio remains a leader in total number of wells drilled, which is surpassed only by Pennsylvania, Oklahoma and Texas.

Since 1860, Ohio’s natural gas and crude oil industry as produced more than 8 trillion cubic feet of natural gas and more than 1 billion barrels of crude oil.