Monday, December 5, 2011

Silent Industry Soaring in the US -- Bakken Farmers Have Even More To Cheer About

Link here.
The boom times for US agriculture in 2011 have focused on soaring land and crop prices, bumper harvests and biofuels, but a recent deal has spotlighted a quiet industry that's booming: grain storage.
Agco, the world's third-largest farm equipment manufacturer, this week finalized its purchase of grain storage manufacturer GSI Holdings for $928 million.
Analysts estimate annual revenue of the global grain storage sector at $3.5 billion.
Some other data points:

  • In recent years some big investors have begun playing in the grain storage business. Gavilon of Omaha, NE, has bought grain storage facilities from Oregon to Ontario ...
  • US grain storage capacity has expanded 12 per cent since 2005, coinciding with the jump in ethanol. 

Native American Group Takes Ownership State in Enbridge's Northern Gateway Pipeline Project

Link here.
Enbridge Inc.'s $5.5 billion Northern Gateway pipeline project,  hammered by criticism from aboriginal and environmental groups this week, got a major backer Friday when the Gitxsan First Nation announced it is taking an ownership stake in the project.
The Gitxsan First Nation, one of BC's best-known aboriginal communities due to its role in a landmark land rights court ruling, said it expects to generate at least $7 million in net profits from the joint agreement.
"Over time we have established a relationship of trust with Enbridge, we have examined and assessed this project, and we believe it can be built and operated safely," said Hereditary Chief Elmer Derrick in a news release was released "on behalf of the Gitxsan Hereditary Chiefs."
The Hazelson, BC-based First Nation's announcement, involving a community with a population estimated by Enbridge at 13,000, represents a blow to environmental and aboriginal groups who have vehemently opposed the project.
A little of bit of sanity. A little bit of sunshine.

Seven (7) New Permits -- The Bakken, North Dakota, USA

Daily activity report, December 5, 2011 --

Operators: Petro-Hunt (3), Cornerstone (2), BEXP, and Crescent Point Energy

Fields: Alger, North Tioga, Flaxton, and Coteau

Petro-Hunt has permits for a 3-well pad in North Tioga field.

Crescent Point Energy has a permit for a wildcat in Williams County.

Of five wells coming off the confidential list today, four were completed/fracked, and two of them were very, very good wells:
  • 19589, 2,655, KOG, Skunk Creek 12-10-11-9H, Dunn
  • 20740, 1,637, Denbury Onshore, Swenson 41-33SEH, McKenzie 
Two producing wells (on DRL status) reported IPs today; one was particularly good:
  • 21250, 1,080, Slawson, Cannonball Federal 2-27-34H, Mountrail
Fourteen old wells, some of them very old, were transferred from Dakota Crude to Layline Petroleum. LLC.

KOG Reports a Great Well -- 2,655 -- The Bakken, North Dakota, USA

Link here.

Also, Denbury reports a nice well, link here.

And Dufus strikes again. Dufus told someone any hint of advertising not allowed on "Teague's" board. Well, that didn't last long. The entire thread was pulled. Disregard the link. The familial squabbles are more fun to read than the "content." Dufus, however, can advertise Mike Filloon and Enjoy the link while you can. I assume the thread will be pulled, also, once folks realize the thread is crass advertising for an investment site. Wow! Now Dufus links another article, this one with a book to sell, Dufus says. Check the link quickly; it's likely to be pulled soon unless all of Teegue's rules have been suspended.

US Exports Record Amount of Gasoline -- Drudge Report

Link here.
The United States is awash in gasoline. So much so, in fact, that the country is exporting a record amount of it.
The country exported 430,000 more bbls of gasoline a day than it imported in September ....
There is an interesting link tucked into that story, corroborating what I have said earlier about the center of hydrocarbon center of gravity moving from the Mideast to the Americas.

Link here.

This is one of the few stories that I cannot "cut and paste" a summary. There is too much obfuscation. One needs to read the entire story to understand what is being said. If this is a straight news story, fine. But if Steve is trying to infuse some analysis into it, he misread the information coming out of the Mideast.

The takeaways from this article and one linked within the article:

  • The Saudis technology to bring oil to the surface and to ship it is very, very inefficient
  • The Saudis generate 50% of their electricity from burning oil (oil: $100/bbl; natural gas: significantly less expensive)
  • Saudi oil used for local consumption: accounts for up to 12 percent of their total oil output
  • Saudi's oil consumption could double by 2020
  • Saudi could be a non-exporter of oil within 20 years
The Mideast folks are not  switching to solar because they believe in global warming. Moving to solar energy by Mideast countries suggest they know how much oil they really have. 

Wow, Wow, Wow -- The Harry Stroh Well -- Fayette Field Update -- The Bakken, North Dakota, USA


1 Jan 12: Production figures for this well; still flowing; no pump
  • Cumulative: 85,446 bbls
  • 11/11; 30 days; 30,588 bbls
  • 10/11; 14 days; 33,295 bbls
  • 9/11; 28 days; 11,659 bbls
  • 8/11; 14 days; 9,904 bbls
Well file data: no additional information / no new forms submitted since I originally looked at this well file (see original post below).

Other information in the well file, offset wells:
  • 18822, 1,304, Anschutz Dennis Kadrmas 1-9-4H, one mile east of this well; drilled August, 2010; Fayette field, 22 stages; 1.7 million pounds proppant (sand); s6/10; t1/11; F; cum 123,539 bbls 11/11
  • 18424, 2,409, Anschutz,  Kenneth Stroh 1-12-1H-143-97, two miles west of this well; drilled June/July, 2010, Cabernet field, 19 stages; 1.4 million pounds proppant (sand); s 3/10; t9/10; F; cum 227,679 bbls 11/11
The Kenneth Stroh well has had production since September, 2010, but has been off-line for short stretches (2 - 3 weeks) periodically (Oct - Nov 2011; April 2011; August 2011)

The Dennis Kadrmas well has had production since January, 2011, and has also been off-life for short stretches (2 - 3 weeks) periodically (Feb - April 2011; Nov 2011). For example, in the month of November, 2011, this well was productive for only 12 days.

Original Post
I have always been fascinated by the Stroh wells and the Fayette field. I have a "Stroh" tag/label at the bottom of the blog. I first blogged about the Stroh wells and Fayette field back on March 4, 2010.

Now, elsewhere they're talking about something very, very interesting: how the Harry Stroh well jumped frm 12,000 bbls in almost a full month of production in September, 2011, to 33,000 bbls in only fourteen (14) days in October.
  • 18610, 877, OXY USA, Harry Stroh 1-8-5H-143-96
This well is very, very instructive for folks new to the Bakken. It may explain why Schlumberger and Baker Hughes are building new complexes much bigger than one might expect, even in the Bakken.

A recurring theme in this blog is that it's my impression that the oil companies are not telling us how rich the Bakken really is. Harold Hamm is one of the few who seems to be forthcoming, and there are not a lot of folks publicly supporting his estimates.

This well was choked back to less than half-an-inch when it was tested.

According to the well file:
  • January 18, 2011: spudded
  • April 4, 2011: reached total depth
  • October 12, 2011: tested, IP: 877
Then it gets interesting, page 3, well specific stimulations:
  • August 13, 2011: stimulated
  • Stages: 5
  • Proppant: sand
  • Total amount of proppant: 393,300 pounds
For newbies: routinely operators are now fracking 24 stages, generally a bit higher, and BEXP routines fracks 36 stages. Note: On August 13, 2011, this well was fracked with five (5) stages

For newbies: routinely, folks are using two- to 4-million pounds of sand/ceramics to frack a well; this well was fracked with 393,000 pounds, a tenth of the usual amount.

The well was off-line for 2 days in September and 14 days in October.

  • September, 28 days: 11,659 bbls
  • October, 14 days: 33,295 bbls
It's fairly obvious what happened here, but as usual I'm holding my thoughts until others chime in. I'm just a layperson in all this; I will let the experts chime in first. If I remember, I will come back with my hunch later this week.

Monday Morning -- Quiet Morning -- Oil Solidly Above $102 -- The Bakken, North Dakota, USA

Elsewhere folks in the Bakken are learning that there are two "Samsons" in the Williston Basin. For newbies, that might be a reasonable link to visit to learn about those two "Samsons." I would recommend this site instead ; when you get there, scroll down to the note in bold red; read the original post, and then read the "news."

This was my original post on the KKR/Samson Investment Co deal. At that site is a very interesting link, which included this observation:
"There's about to be a new boom time when it comes to oil and gas," Jake Dollarhide, who manages about $65 million at Longbow Asset Management Co. in Tulsa, said today in an interview. "It's going to take a lot of capital. Every company is looking to get bigger or looking for a partner."
Oil and gas looks good; the talking head just said that he doesn't think the price of oil is going higher (that's the nuance of what he said; he was more circumspect); meanwhile the TCOP is up $1.07 today, solidly over $102.

Earlier I think Squawk Box (CNBC) said that the volume of electric cars in the market was three percent and falling. I could be wrong; again, I caught that comment after missing the first part. I do know that the Chevy Volt is soon to go into free fall. Three things: a) even with the $7,500 ($10,000) tax benefit, the Volt remains very expensive; b) one can buy the Cruz for a lot less and get very, very good mileage; c) if the tax benefits go away, the electric cars are dead; and, d) exploding batteries don't help.

I can't remember if Don sent me this story (which I think he did) or if I stumbled upon it myself (through Drudge?). It doesn't matter. The story is very fascinating. You can find it at several locations; this is the Canada Free Press on-line site: graveyards of wind turbines hit America.
Literal beacons of the "green" energy movement, giant wind turbines have been one of the renewable energy sources of choice for the US government, which has spent billions of taxpayer dollars subsidizing their construction  and use across the country. But high maintenance costs, high rates of failure, and fluctuating weather conditions that affect energy production render wind turbines expensive and inefficient, which is why more than 14,000 of [these golden eagle and whooping crane killers] have since been abandoned. 
Meanwhile "we" start with 199 active rigs in North Dakota today. There is some suggestion that the number of North Dakota rigs will remain around this level; the number of rigs may increase in the Williston Basin but more are headed to the Montana said of the basin.

Better Late Than Never, I Suppose -- Only Four (4) New Permits -- Friday's Daily Activity Report -- The Bakken, North Dakota, USA

Daily activity report, December 2, 2011 --

Operators: Chesapeake (2), BEXP, and Hess

Fields: East Fork and Siverston

Chesapeake's two permits are for wildcats; one in Hettinger County; one in Stark County.

Hettinger County has been getting some press lately. From what I can tell there has never been a productive well reported in Hettinger County.

Hettinger County is located directly south of Stark County and northeast of Bowman County, the county in the southwest corner of the state. The wells in Hettinger County, have targeted the Madison and the Red River formations and have all been dry.

As noted elsewhere , seven wells came off the confidential list; six of those wells were Oasis wells and very, very good wells.