Tuesday, February 7, 2012

How Much Does It Cost to Drill/Complete a Well in the Williston Basin?

From Yahoo!InPlay; no link. The link would be dynamic and not there tomorrow.
Earthstone Energy reported that it has concluded drilling operations on its horizontal Ratcliffe well, the Federal #1-5H, in Sheridan County, Montana: The well horizontally penetrated ~ 5,000 ft of Ratcliffe with encouraging results before drilling operations were concluded. The co expects to begin completion operations within the next two weeks.

The Company estimates that its 7.5% share of drilling and completion costs for the two wells will be ~ $1.0 mln. Co plans to fund all the above efforts with existing cash, its cash flow from operations, and/or proceeds from its recent sale of Colorado properties. 
By my calculations, 7.5% of $13 million is about $1 million.  So about $6.5 million/well. If I did the calculations correctly. 5,000-ft lateral would suggest a short lateral. I don't follow Montana activity so I could be wrong on some of this. I believe the Ratcliffe formation is part of the Madison group, not the Bakken. 

Credo Provides Bakken Update

Long, long story here at Rigzone. com

Maybe some data points from this article later.


No link; from Yahoo!InPlay which is dynamic and the link will be gone tomorrow.
Credo Petroleum updates Bakken and Three Forks activity; co stated 'We will build further momentum in fiscal 2012 by setting new drilling records, with 85 gross (37 net) oil wells currently on our drilling schedule. 

The Petro-Hunt 148-94-17D-08-2H located in Dunn County, North Dakota, was completed in the Three Forks formation and produced at a 24 hour flowing rate of 1,700 BOEPD. The well is operated by Petro-Hunt and Credo owns a 10% working interest in both the well and the 1,280 acre spacing unit.

To date, the Company has completed 12 Bakken and Three Forks wells, all high rate producers, with cumulative gross production from the wells nearing 1.2 million BOE. The Company's average working interest in the wells is 7.5%. Drilling activity is escalating on the Reservation, and the Company currently projects that it will drill at least 20 Bakken and Three Forks wells in fiscal 2012, with an average working interest of 10%. Seven of the 20 wells are currently in various stages of being drilled or completed. Three of the wells target the Three Forks formation and four target the Bakken formation.

KOG Reports Sixth Rig in North Dakota -- To Eliminate Lease Expiring Issues

No link; this is from Yahoo!InPlay which is dynamic and will be gone by tomorrow. This is the totality of the announcement, a press release from the company:
Kodiak Oil & Gas reported that the co assumed its sixth operated rig; All of KOG's operated drilling rigs are presently drilling ahead on wells in North Dakota: All of co's operated drilling rigs are presently drilling ahead on wells in North Dakota, with one rig in Dunn County, two rigs in southern Williams County and three rigs in McKenzie County.

Furthermore, the co has an approximate 50% working interest in lands being drilled by two non-operated drilling rigs as part of its Dunn County Area of Mutual Interest.

Co has entered into a contract for a seventh operated rig, a new build rig, which is scheduled for second quarter 2012 delivery.  As the year progresses, Kodiak  plans to operate one to three rigs in Dunn County, two to three rigs in McKenzie County and three to four rigs in Williams County.

The 2012 to 2013 drilling program is designed so that Kodiak is positioned to have nearly all of its acreage held by production by mid-2013, eliminating leasehold expiry across much of its 155,000 net acre position in the Williston Basin.

Must Watch TV

9:00 p.m. EST tonight. It may be on at 8:00 p.m. CST. I don't know. But don't miss it.

9: 10 p.m.: the show lives up to its billing! Wow, I have fear of heights; I could never do this. Great respect for all involved. Great to see that North Dakota was the 50th state of 50 featured. Wow.

9:39: now a rainstorm approaching when they are at the top of the tower. Great photography.

9:46: I don't know who this guy reminds me of, but he is good. Very, very good. Great video; great story.

Demand Destruction of Gasoline -- Graph Worth 10,000 Words --

Don sent me this. I have not followed US gasoline consumption in quite some time.

This graph (linked) blows me away.

With all the good news about the economy, the unemployment rate dropping, and the price of oil, I never would have expected this.

When you get to the link, scroll to the bottom of the page to see gasoline consumption in the US since March, 2010.

This is a very troubling graphic. This is not indicative of a recovering economy. It is not indicative of an improving employment picture. The drop-off is not due to all those Volts being sold.

If this is due at all to the price of gasoline going up another 20 cents or so, I hate to think what the graph will look like when gasoline goes up another 60 cents this spring as predicted by some pundits. It will be interesting to see if CarpeDiem.com comments on this graph.

Probably The Best Commentary on the Bakken, Change, and Community -- My Hunch We're Gonna See This Again -- Reason #1 Why I Love Blogging

Link here.

Had I not been blogging about the Bakken, I may never have seen this. It was sent to me by a reader. What an incredible piece of writing. The photography is stunning.

This is as good a piece of writing as one will see anywhere. It would be great to see this end up in The New Yorker.

A huge "thank you" to Gary who sent it to me.

Reason #1 why I love blogging: one never knows what one will find in the blogosphere. And the linked blog article is a perfect example.

This is her opening:
I interrupt the regular programming of walking the hills, chasing Little Man, scolding the pug and cooking with my husband to  talk for a moment about community. I want to talk about belonging somewhere, calling it home, embracing its flaws and standing up for a place…taking care of it.

No matter where you live in this country you’ve probably caught bits and pieces about the changes that are occurring in Western North Dakota due to new technology that allows us to extract oil from the Bakken and other large reservoirs that lay 10,000 feet below the surface of the land…the land where our roads wind, our children run, our farmers cultivate, our schools and shops sit. The land we call community. The land we call home.

Nine (9) New Permits -- The Williston Basin, North Dakota, USA

Daily activity report, February 7, 2012 --

Operators: Whiting (3), Hess (2), BEXP, OXY USA, CLR, Helis

Fields: Hawkeye, Alger, Murphy Creek, Grail, Bell

CLR has a wildcat in Billings County; Whiting has a wildcat in Golden Valley.

Three wells released from "tight hole" status; two were completed:
  • 20374, 980, Whiting, Troy TTT 12-6TFH, Mountrail
  • 20797, 1,208, CLR, Entzel 1-26H, Dunn
Six wells on DRL status reported IPs, including:
  • 20516, 50 (no typo), KOG, Smokey 15-22-15-2H, McKenzie
  • 20802, 1,106, CLR, Pletan 3-18H, Dunn

XOM, Weatherford Develop Sand-Control Technology

Link here.

I understand frack sand flowing back into the well bore is a problem but this article does not state whether this technology was developed to be used in conjunction with hydraulic fracturing. It certainly sounds that this is what the technology was developed for.

Weatherford has a huge operation in the Williston Basin, with five locations in Williston, which they are in the process of consolidating in one complex east of town.

No Connection Between $5.00 Gasoline and the Keystone XL -- Obama Re-Election

Link here.

Gasoline prices this spring are expected to increase by 60 cents/gallon. This is still well below $5.00/gallon, but in some metropolitan areas on the East Coast, it won't be that far away.

Whatever the price of gasoline is this spring, it will have nothing to do with the president killing the Keystone XL, but if his detractors don't demagogue this issue, I would be quite surprised.

But one can safely say that the price of gasoline in this country is affected greatly by regulations and slow-rolling the industry on drilling for oil wherever possible. And, of course, the EPA sickle continues to hang over the fracking industry.

Fortunately for the US consumer, a Saudi prince says "Saudi won't let oil go above $100/bbl." I see oil is up about $1.40 today, to $98. And as far as I can tell, the US dollar is stronger, and the Mideast is relatively quiet.

In my simple mind, we are just another headline away from $105 oil. Or $75 oil, which the pundits on CNBC say is a fair price based on market supply and demand. So, we'll see.

A Few More Acquisitions By the Chinese and The Keystone XL Won't Be Needed Anyway

Link here.

PetroChina to buy 20% of Shell's Canadian shale gas assets.

Yes, this is gas, and not affected by the Keystone XL which will ship crude. But the dots will eventually connect.

Random Note Regarding The Blog

I got two questions today about the blog, suggesting others may also want to know.  Someone asked about where the data sources are for my blog, etc.

This is the unedited reply I sent. This may help new folks to my site.

1. At the sidebar at the right, about 1/3 of the way down is a section called "DATA."  Within this section is "New Wells Reporting" where I post all new wells reporting that day. Some wells have not been completed/not fracked, and they won't report an IP. They will be listed as DRL (for drilling, yet to be completed).

2. Periodically, maybe every three months or so, I go back and update all the DRL wells that have reported IPs, and/or production.

3. The source data is the NDIC website, much of which is free, but to get the production data on a monthly basis requires a $50 annual subscription. Well worth it for anyone serious about the Bakken. At the NDIC website here, go to the sidebar on the left and click on "Basic Services."  Follow the instructions how to fax your information to NDIC, pay the $50 and get the password to production numbers.

4. The GIS map server is free.

5. With regard to WTI and Brent, I have written about it often. At my "Data Links" page I have links for the spot price of various grades of oil. Futures and Commodity links are a little bit down on that page. In my simple mind, Brent oil is oil bought/sold for Europe; WTI oil is oil bought/sold in North America. WTI oil is a hop-skip-jump from the refineries on the Gulf Coast. Bakken oil is a long, long way from the Gulf coast and the transportation costs cut into Bakken oil price. In addition, there is the storage issue at Cushing.

Another Take On American Energy Independence -- You Have To Watch These Guys Like A Kestrel

I believe I referenced this study by BP earlier, that the US could be energy independent by 2030.

A reader sent me a link to a more expansive analysis of this study.

I love how it starts out:
Oil and gas company BP recently released its annual Energy Outlook and many of its projections should be viewed with concern.
That's the lede. I immediately tried to find out who wrote it; it's hard to tell; from Yahoo News, most likely a Harvard undergrad, sitting in Starbucks waiting for her next class to start.  As one gets into it, it certainly doesn't seem to have been read or proofed by an energy analyst.

Wall Street Journal editors would have led with "... and many of its projections will offer huge opportunities for entrepreneurs while improving the quality of life for Americas."

So some data points from the article:

Wind and solar will continue to contribute less than 10 percent of global energy output despite growing at least 8 percent a year between now and 2030. [Comment: I've made that point many, many times -- renewables have a niche, and a lot of folks will get very rich, but as far as making a significant global difference, it's not gonna happen. The numbers don't work. With the price of natural gas in free fall, one wonders if the "ten percent" estimate is too high. XOM first provided the data about six years -- saying the numbers don't add up for renewables.]

Carbon emissions will increase 28 percent by 2030 -- not 26 percent, not 31 percent, but 28 percent. I'm impressed they can get the numbers so exact. The writer says this is a dire forecast for those trying to reverse the effects of climate change. [Reverse the effects? Can anyone tell me what the effects have been to date? There has been no global warming for the past 15 years, not since 1997.]

China will import as much as 80 percent of its oil needs.

Euope will import as much as 94 percent of its oil needs. It should be noted that France, part of Europe, bans fracking. Its Paris Basin has been compared to the Bakken. And Europe will import 80 percent of its natural gas. Russia is lovin' it.

Meanwhile, the US could become almost entirely energy independent by 2030. [The writer actually says "... almost entirely energy dependent by 2030..." which begs the question, dependent on whom or what? That must have been a Freudian slip. And another clue the writer is not an energy analyst.

And then this crazy shorthand: "Natural gas production, otherwise known as 'fracking,' has come ...."

I did not know that "natural gas production" is now known as "fracking."  Fracking is a technology to produce natural gas, and oil, for that matter, but it certainly is not "natural gas production." And somehow the writer immediately follows "natural gas production" and "fracking" with this: "The Obama administration recently gave a stinging rebuke to the industry by rejecting the proposed Keystone XL Pipeline..." The Keystone XL has nothing to do with natural gas production OR fracking.

It was nice to see that the writer reaffirmed that the president said the US has a 100-year supply of natural gas (which is WAY incorrect) and would provide 600,000 jobs by the end of the decade, never mind the 20,000 jobs we won't see this year because of the stinging rebuke he gave to the industry by rejecting the proposed Keystone XL Pipeline.

As noted at the top, wow, you have watch these East Coast writers like a kestrel.

Short News Clip -- "Eye on Energy" -- Minot, North Dakota

Link here.

I doubt the link will be up long; these sorts of links break often.

The focus of this short clip is on the counties on the edge of the current boom.

This Says It All About North Dakota

Sent to me by Greg, link here, the story about the construction worker whose skull/brain was impaled with a 3.25 inch nail:
"Leave it in, it'll rust, and you'll die of infection. Pull it out and you'll bleed to death."

"Or you can go to St Paul."

"So we took the St Paul option, Luptak said. "Never got any painkiller -- didn't need it, didn't feel anything."
Something tells me the HMO would not have paid for the painkiller anyway.

Apple's iPhone ALONE > ALL of Microsoft -- Carpe Diem


Minutes later, from "anon 1": Halliburton to replace Blackberrys with iPhones for its employees.
... iPhones to help employees do their jobs more effectively in the field.

Halliburton will phase out 4,500 BlackBerrys, made by Research In Motion Ltd., over the coming two years, said Tara Mullee Agard, a spokeswoman for the Houston-based company. It’s switching because the iPhone does a better job of supporting company applications like Insite Anywhere, which displays information on well construction and completion, she said.
Original Post 
Link here to Business Insider article via CarpeDiem.com:
"Apple's iPhone business alone is now bigger than Microsoft. Not Windows. Not Office. Microsoft. Think about that. The iPhone did not exist five years ago. And now it's bigger than a company that, 15 years ago, was dragged into court and threatened with forcible break-up because it had amassed an unassailable and unthinkably profitable monopoly.

The iPhone also appears to be considerably more profitable than Microsoft. In the December quarter, Apple's iPhone business generated $24.4 billion of revenue. Microsoft's whole company, meanwhile, from Windows to Office to servers to XBox, generated $20.9 billion (see chart above).
That is not trivial.

Speaking of which, what does Microsoft have in the pipeline? I can't even begin to list what Apple has in the pipeline.

At the time, Microsoft was a monopoly. It is absolutely amazing what a small company like Apple has done, when at one time it's market share in computers was two (2) percent.

My wife has an iPhone. My older daughter has an iPhone. I don't. Last night I was looking at some photos on my wife's iPhone. I was completely blown away (again) how incredible that very small device was: telephone, camera (high quality), internet, texting, music, videos, Siri, apps.

And that's the primary reason I don't get one; I would be on it all the time.

For Investors and For Bakken Folks -- Canadian Pacific

Link here to Calgary Herald.

This about says it all:
The Calgary-based railway has seen a faster-than-expected increase in the demand for moving oil on rail, and in December said it would build a facility in Estevan to ship from the prolific Bakken formation.
The carrier has seen the number of carloads from the North Dakota Bakken increase from 500 to 13,000 over the past two years, with expectations that could climb to 70,000 down the road, with projected revenue of $140 million.

Last fall it reported its carloads from the Bakken were up 50 per cent over what was anticipated in June.

As pipeline capacity is stretched, rail becomes an increasingly viable option.
The most interesting observation I can make: NDIC and corporate presentations continue to say that takeaway capacity meets demand in the Bakken. This article suggests otherwise.

For Investors Only -- EPD Blows Past Estimates

Link here -- Zacks.
EPD reported record fourth quarter 2011 results, thanks to natural gas production growth in the Rocky Mountains, Haynesville and Eagle Ford shale plays as well as strong demand for natural gas liquids (NGLs) in the U.S. petrochemical industry and global markets.

Earnings per limited unit of 82 cents surpassed the Zacks Consensus Estimate of 56 cents and grew a whopping 148% from 33 cents a year ago.
Other updates at "Earnings Central."