Wednesday, February 8, 2012

Huge Three Forks Well for Hess -- Mogen #2 -- Hawkeye Field -- Three Forks May Be >200 Feet Thick in Central Bakken -- The Williston Basin, North Dakota, USA


Updates

April 27, 2017: #20738 and #16694 have been off-line since 12/16.

April 27, 2017: #16694 is an interesting well. It was originally drilled in 2007 as HA-Mogen-152-95-0805H-1. In 2014, the company requested the name be changed to HA-Mogen-152-95-0805H-1 ST2, to re-enter the well and drill a sidetrack lateral. See graphic below.
 One can see the production profile at this post



The HA-Mogen Wells

The wells:
27815, 1,257, Hess, HA-Mogen-LE-152-95-0805H-1, Hawkeye, t11/14; cum 192K 3/17;
27801, 1,081, Hess, HA-Mogen-152-95-0805H-9, Hawkeye, t11/14; cum 150K 3/17;
27800, 1,489, Hess, HA-Mogen-152-95-0805H-8, Hawkeye, t11/14; cum 193K 3/17;
27799, 1,206, Hess, HA-Mogen-152-95-0805H-7, Hawkeye, t11/14; cum 176K 3/17;
25146, 764, Hess, HA-Mogen-152-95-0805H-6, Hawkeye, t1/14; cum 158K 3/17;
25145, 1,053, Hess, HA-Mogen-152-95-0805H-5, Hawkeye, t1/14; cum 272K 3/17;
25144, 892, Hess, HA-Mogen-152-95-0508H-4, Hawkeye, t12/13; cum 179K 3/17;
23071, 1,224, Hess, HA-Mogen-152-95-0805H-3, Hawkeye, t12/12; cum 391K 3/17;
20738, 1,496, Hess, HA-Mogen-152-95-0805H-2, Hawkeye, t12/11; cum 579K 3/17;
16694, 348, Hess, HA-Mogen-152-95-0805H-1 ST2, Hawkeye, t12/07; cum 310K 3/17;

Original Post 
Elsewhere they're talking about a Hess gusher:
  • 20738, 1,496, Hess, HA-Mogen-152-95-0805H-2, Hawkeye, Bakken; s7/11; t12/11; F; cum 440K 3/14; producing 44K in its first full month of production; 38 stages; 3.7 million lbs including 3.5 million pounds ceramics (Econoprop); Three Forks;
This is the Hawkeye oil field, right in the bull's eye of the Bakken. It is offset, by about 150 feet, from:
  • 16694, AB/348, Hess, HA-Mogen-152-95-0805H-1, Hawkeye, Bakken, s9/07/t 12/07; F; cum 143K 12/11;
Update on the Hawkeye field is linked here.
Case No. 16110: Application of Hess Corp. for an order amending the applicable orders for the Hawkeye-Bakken Pool to allow up to six horizontal wells and up to eight vertical wells to be drilled in a 1280-acre spacing unit described as Sections 18 and 19, T.152N., R.95W., McKenzie County, ND, and such other relief as is appropriate.
By the way, in this very same section (as the two wells noted above), these Madison wells (among others):
  • 1596, 303/SI/PA, Hess, Hawkeye-Madison Unit F-618 HR, s11/57; t12/57; cum 788,158 bbls 12/11;
  • 1555, 211/PNA, Hess, Hawkeye-Madison Uit G-617, s10/58; t12/58; cum 302K bbls 12/1969
For newbies, this is simply incredible -- this single section has had several very successful Madison wells; and now they go back in and drill a Bakken and a Three Forks, and look at that Three Forks well -- 44K in first full month of production; 64K at end of first two months; right in the heart of the Bakken.

And this is why I remain excited about the Bakken. Just think: up to 6 horizontal wells and 8 vertical wells in one 1280-acre spacing unit! And EURs are unaffected by neighboring wells. In the core Bakken horizontal Bakken/Three Forks wells are going to have EURs of a million.

Back to the very first link at the top of the post: this is what else they are saying:
  • Helis has completed at least one well in the south Blue Buttes area for over 47,000 bbls, Three Forks
  • writer "believes" several Bakken wells north of Parshall had early months with production > 50,000 bbls
  • several other Three Forks producers in the Hawkeye/Charlson with very strong wells; the best is the Petro-Hunt Federal which has produced >1.2 million bbls and has not yet been fracked
  • the Mogen well had about 23 feet of Sanish sand below the Bakken shale; the lateral was drilled in the dolomite just below that sandstone
  • writer feels the Sanish sand is contributing to the high rate of production
  • some say the Three Forks is over 200 feet thick in the central Bakken

    Statoil To Spend $3 Billion on 40 Wells in 2012

    Statoil bought BEXP in 2011.

    Link here, which mentions that acquisition.

    Can someone check my math: $3 billion/40 wells --> $75 million/well?

    Unless my decimal is off, a Bakken well for $7.5 million seems like a good deal in comparison.

    Again, my math could be wrong.

    Or, maybe their musical productions are just that expensive:

    Black Gold Hunters, Yes, This Is That Statoil

    And Yet Another Huge Article on the Bakken: Wall Street Journal

    Link here; may need paid subscription to get to original source, but I imagine it will be found free in a day or so by googling.

    The numbers are mind-boggling; the content staggering. This is much more than just about oil production in North Dakota.

    Minor Note on the Bakken

    I remember when I first started blogging about the Bakken. I got a lot of notes saying folks would not move to Williston: it was too remote, too cold, too desolate.

    I tended to agree until one astute reader reminded me there was a whole country north of Williston: Canada.

    How interesting, then to read that Canada is the fastest growing country in the G8. I thought the growth would have been in the urban centers along the US-Canadian border on the east. It turns out I was wrong.

    The growth in Canada has been in its remote, cold, and desolate regions: the Yukon and Alberta.

    And I don't need to remind folks that too many families with children have now moved to Williston despite being too remote, too cold, too desolate.

    (By the way, I blogged about the "family issue" maybe two years ago based on my 30+ year career in the US Air Force.)

    The lede in the linked article:
    Canada's population rose at a faster rate than any other G8 nation over the past decade, thanks to a wave of immigration and slightly higher fertility, census data showed on Wednesday.
    The population of Canada increased 5.9 percent between the 2006 and 2011 censuses to 33,476,688 people, compared with a 5.4 percent increase during the previous five-year period.

    Statistics Canada attributed two-thirds of the gains to immigration and the rest to a rise in the number of births.

    The largest increases were in gold-rich Yukon and Alberta, which boasts the third largest oil reserve in the world. Populations in the two regions increased more than 10 percent over the past five years.

    Dame Edna Interviews kd lang

    Ooooohhhhh -- This Is Getting Too Exciting ---

    Link here to CarpeDiem.com ---
    The "Economic Miracle State" of North Dakota pumped another record amount of oil during the month of December at a daily rate of almost 535,000 barrels, which was 55% above its output from a year earlier, and only the second time that the state's daily production exceeded 500,000 barrels (see chart above, data here). Oil production in the Peace Garden State has more than doubled from 246,000 barrels per day two years ago, and North Dakota is now producing enough oil to completely displace the imports of crude oil from Colombia (364,000 bpd) or Iraq (422,000 bpd).

    Production will likely pass Alaska and California within months.
    Again, the bragging rights could be short-lived, if California bumps up their drilling activity. Governor Brown is do everything he can to get things moving in California's oil patch. Alaska is a somewhat different story but it, too, could come roaring back.

    Regardless, it certainly puts into perspective the Bakken for those who in 2008 felt that the Bakken was being over-hyped.  No, the Bakken won't solve all of the energy challenges for the uS, but it certainly made an impact, including a huge WTI-NYMEX-Brent differential.

    For investors, through January, 2012, NOG had a better rate of return than AAPL over the past five years. And NOG has no rigs of its own.

    For All Those Naysayers and Those Depressed Over Chesapeake's Announcement -- The Williston Basin, North Dakota, USA

    Wow, have I been getting depressing comments from folks after the Chesapeake announcement!

    There really isn't any reason to post this note, but I decided to post it to try to cheer folks back up about the Bakken. I don't think the Bakken is going to go away any time soon.

    But this should cheer you up.

    Look at slide 12 (of 26 slides) of the most recent Abraxas presentation: 32 long laterals in 5,120 acres (four adjoining 1280-acre spacing units). Thirty-two long laterals, each with a EUR of 500K boe. On top of that, these wells are in or near the bull's eye of the Bakken, and I think the 500K boe is very, very conservative. The Bakken laterals probably have EURs closer to a million and the TF laterals perhaps 500K boe.

    Regardless of the EURs, that's 32 wells in an area where two years ago most were thinking maybe four wells at most. And we're still only five years into twenty years or so of drilling in the Bakken. The basic analysis of the Bakken suggested that active drilling would continue until 2030 and production would continue through 2100. Whiting says they have ten years of drilling inventory, as just one example, based on conservative spacing and de-risked locations.

    Inquiring Minds Want to Know: What Are Your Thoughts About the Recent State Lease Sale?

    A reader asked this question:
    Wondering about your thoughts on the low bonus amounts for Slope County at the State auction yesterday? Especially compared to bonus' paid at the Aug. 2011 auction.
    I replied to the comment but knowing that some folks may not read the comments, here is my unedited answer:
    With leases, two things: location, location, location; and, timing, timing, timing.

    First, timing, easier to explain: there are other reasons with regard to timing, but the CHK issue is foremost. Not much more needs to be said.

    Location: compare the location of the tracts in Slope County in this auction with the locations in the August, 2011, auction. The "high" bonuses in the August auction in Slope County were in tracts where seismic activity suggests high rate of success; the tracts in this auction, do not. (In both auctions, the tracts in Slope were outside of any designated fields.)

    Even within the same county, disparities in bonuses can be significant. Look at the bonuses paid in this auction in Mountrail County. In Mountrail County some tracts went for $10,000/acre; some went for as little as $50/acre. That alone is incredible: $50/acre in Mountrail County, one of the most prolific counties, but it is obvious the prospects are not good on the eastern half of Mountrail County.
    My unedited reply is open for discussion, if folks think I'm off base.

    One can easily see the results of the state lease sales at this link. Use the drop-down menu to supply the date and submit.

    Sorry -- Absolutely Nothing To Do With the Bakken

    I had not planned to post any stories about global warming, but this was just too much. The first story sent to me today about global warming I linked deep in the bowels of this blog for archival purposes but did not post it where it would be read by anyone. I truly did not want to post any global warming stories, trying to stay on the Bakken.

    But this was too much.

    First, this: the Himalayas and nearby peaks have not lost any ice in ten (10) years.
    The world's greatest snow-capped peaks, which run in a chain from the Himalayas to Tian Shan on the border of China and Kyrgyzstan, have lost no ice over the last decade, new research shows.
    Not only that, but the discovery has stunned scientists
    The discovery has stunned scientists, who had believed that around 50bn tonnes of meltwater were being shed each year and not being replaced by new snowfall.

    The study is the first to survey all the world's icecaps and glaciers and was made possible by the use of satellite data. Overall, the contribution of melting ice outside the two largest caps – Greenland and Antarctica – is much less then previously estimated, with the lack of ice loss in the Himalayas and the other high peaks of Asia responsible for most of the discrepancy.

    Bristol University glaciologist Prof Jonathan Bamber, who was not part of the research team, said: "The very unexpected result was the negligible mass loss from high mountain Asia, which is not significantly different from zero."
    By the way,  this is neither surprising nor unexpected. Some time ago (I will never be able to find the link on this site; it was too long ago, and probably not tagged), someone sent me a great article based on science that had a perfectly non-global-warming explanation for loss of glacier ice that has been reported the past twenty years.

    In addition, this story references, in passing, another study that revealed that the polar ice caps have melted much less than expected. The bad news was the the oceans around the world are rising at the rate of ... drum roll, please .... 0.06 inches/year.
    Ocean levels worldwide are rising about six hundredths of an inch per year, according to researcher John Wahr.
    Six-hundredths of an inch per year! Neither statistically significant nor reproducible. I guess that explains why we haven't seen any photo spread in National Geographic showing the ocean depth increasing by 0.06 inch this past year. Memo to self: take my granddaughter out to the beach and place some popsicle sticks in the sand this summer so we can measure the 0.06 inch increase in the high tide next year to compare to this year. Wow, it's gonna be hard finding a ruler with 0.01 inch divisions.

    I guess it also explains why we haven't seen any islands disappear in the past year (in fact, something like 200 new islands were identified in the past year or decade, whatever it was -- blogged about earlier).

    But it gets worse. Now we have an interview in Der Spiegel who was among the founders of the anthropogenic global warming movement. He feels duped and has withdrawn.
    SPIEGEL: You are an electric utility executive by profession. What prompted you to get involved in climatology?

    Vahrenholt: In my experience as an energy expert, I learned that the Intergovernmental Panel on Climate Change (IPCC) is more of a political than a scientific body. As a rapporteur on renewable energy, I witnessed how thin the factual basis is for predictions that are made at the IPCC. In one case, a Greenpeace activist's absurd claim that 80 percent of the world's energy supply could soon be coming from renewable sources was assumed without scrutiny. This prompted me to examine the IPCC report more carefully.

    SPIEGEL: And what was your conclusion?

    Vahrenholt: The long version of the IPCC report does mention natural causes of climate change, like the sun and oscillating ocean currents. But they no longer appear in the summary for politicians. They were simply edited out. To this day, many decision-makers don't know that new studies have seriously questioned the dominance of CO2. CO2 alone will never cause a warming of more than 2 degrees Celsius (3.6 degrees Fahrenheit) by the end of the century. Only with the help of supposed amplification effects, especially water vapor, do the computers arrive at a drastic temperature increase. I say that global warming will remain below two degrees by the end of the century. This is an eminently political message, but it's also good news.
    So, I truly apologize. I truly had no plans to post any global warming story at a stand-alone post today, but this is just too much, especially when posted in conjunction with the fact that there has been no global warming in the last 15 years.

    It sort of explains why Canada withdrew from the Kyoto Protocol in 2011 (the house of cards is starting to fall), and why the Chinese aren't exactly concerned about anthropogenic global warming.

    On top of this, I see that federal workers are being sent home early in anticipation of one inch of snow. One inch of snow. I hope the roughnecks in the Bakken don't see this story. It sort of explains why the EPA bureaucrats are so nervous about fracking. If an inch of snow scares 'em, imagine how they feel about 4 million pounds of proppant going down a Bakken well.

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

    Daily activity report, February 8, 2012 --

    Operators: BEXP (2), SM Energy (2), CLR, Helis, Whiting

    Fields: Banks, Croff, Grail, Timber Creek, Alger

    Only three wells released from "tight hole" status, and only one completed/fracked:
    • 21038, 454, Slawson, Cannonball Federal 3-27-34H, Mountrail, Bakken,

    ND Coal Industry -- Perfect Score -- Compliance Standards -- 2011

    Link to the Bismarck Tribune.
    North Dakota's four lignite coal mines achieved a year of no violations in 2011, the fourth time in mine history that the entire industry has earned a clean bill from the Public Service Commission.

    PSC Commissioner Kevin Cramer said he and the staff look at mine operations throughout the year and said the 2011 achievement was especially notable during one of the wettest years on record.

    Jim Deutsch, director of mine reclamation, said the good compliance record for the year is due to the longevity of many mine employees and their familiarity with both state and federal mine standards.
    And in the big scheme of things, the oil and gas industry had a pretty good year, also. 

    Another North Dakota Oil Record -- 153 Million Bbls in 2011

    Link here to the Bismarck Tribune.
    North Dakota oil drillers produced a record 152.9 million barrels of crude in 2011, up more than 35 percent and nearly 40 million more barrels than the previous record set a year earlier, the state Industrial Commission said Wednesday.

    State records show North Dakota also produced a record 155.9 billion cubic feet of natural gas in 2011, up from 113 billion cubic feet the year before.
    Kewl. 

    For round numbers, going forward, I will probably blog 150 million bbls in 2011.

    Reneging on Leases -- CHK - Southwestern North Dakota

    Link here to the Bismarck Tribune.
    Chesapeake Energy is not only pulling back to analyze results from six confidential oil wells in southwestern North Dakota, it also is sending notices to mineral owners in Hettinger and Stark counties that it won't honor lease agreements signed months ago.

    The company is being closely watched because it's one of few probing the far southwestern edges of the Bakken-Three Forks shale formations and a crucial bellwether for whether real development will move into the area.

    Amid rumors that it was pulling its two rigs out of North Dakota, a Chesapeake spokesman said it's studying results from the wells before deciding how to proceed. It has permits to drill another 12 wells, including one it obtained two weeks ago for a site in northern Hettinger County.

    Attorneys for mineral owners in Hettinger and Stark counties said they've recently been contacted by clients who have had lease agreements returned by Chesapeake, saying the company doesn't plan to honor the contract and is releasing the lease, or the clients are holding signed leases that are delinquent past when the company agreed to pay bonuses.

    Regent attorney Jim Gion said he has 15 or so clients with mineral acres in Hettinger and southern Stark counties who have been contacted in that manner.

    For Investors Only -- Three Oil and Gas E&P Companies for 2012 -- Seeking Alpha

    Link here to SeekingAlpha.com.

    The companies highlighted: CHK, Cabot, Whiting, El Paso, and Forest Oil.

    Yes, I count five, but the headline was three. Maybe two were not being recommended; maybe I missed something.

    Inquiring Minds Want to Know: Who Does Yates Petroleum Represent?

    Update

    See comment: "Yates Petroleum is a large ol and gas company in west Texas. Been around for a long time."

    Here's their website

    However, I don't think that answers the question. Yates is not an operator in North Dakota according to the NDIC website. Yates has been buying mineral acres in North Dakota going back to at least 2010. Most of the names, in fact, almost all the names, on the auction sales list are not known operators in North Dakota. They appear to either represent an oil E&P company or they are holding the acreage for themselves with working interest in wells drilled in their holdings. It appears from their website that Yates is a participant / working interest in wells drilled in their holdings, but that's just a guess.

    Original Post
    With regard to the North Dakota state land lease sales yesterday, a reader wrote me, curious who Yates Petroleum represents. Their query:
    I know Chesapeake uses various companies to bid their auctions.  I noticed in Billings County, that Blanca Peak Energy had many of the bids, and I know they're part of Chesapeake, but I am curious about Yates.
    Anyone know?

    Takeaway Capacity -- WLL Presentation -- February, 2012-- The Williston Basin, North Dakota, USA

    April 9, 2012: ONEOK announces the 1,300-mile Bakken Crude Express Pipeline from Stanley, North Dakota, vicinity, to Cushing, Oklahoma. [Update: the Bakken Crude Express Pipeline was canceled by ONEOK; not enough subscribers.]


    -->
    Updates
    Original Post

    Pipeline
    Existing 2011 Add 2012 Add 2013 Add Total
    Enbridge 185K 25K 145K 355K
    Bridger/Belle Fourche 120K 30K 50K 100K 300K
    Tesoro/Mandan 60K 60K
    EOG (rail) 60K 60K
    Plains 50K 50K
    Hess (rail) 60K 60K
    COLT (rail) 60K 60K
    BOE (Lario)(rail) 100K 100K 200K
    Savage (rail) 90K 90K
    Quintana (rail) 90K 90K
    Total 425K 155K 522K 190K 1,292K


    So, today with rail, about 580,000 bbls takeaway capacity. Some of these lines accept Bakken oil only, such as Enbridge.

    According to the slide from which I got this information, the Keystone pipeline goes through western North Dakota but has no connections to any pipeline inside the state. 

    I understand that Enbridge is adding rail capacity. I do not know if Enbridge rail capacity is included in the figures above. I doubt it.

    The above figures do not include the languishing Keystone XL which would go through western North Dakota, but certainly not earlier than 2013.

    The "big" Enbridge pipeline takes Bakken crude to Clearbrook, Minnesota.

    The Bridger/Belle Fourche is a huge pipeline, south from Tioga/Ray area, passes Dickinson on the west, and then angles southwest into Montana at the ND/SD line.

    The Quintana is a north-south pipeline, also, running passing Williston on the west, passing Dickinson the west (going through Whiting's Lewis & Clark prospect) and then angles southwest paralleling the Bridger/Belle Fourch. [The slide shows it as "rail" but I think it's a pipeline: Quintana Capital Group Pipeline: In June 2010, Quintana Capital Group announced plans to connect the major producing regions of the Williston Basin with TransCanada’s Keystone XL pipeline in Eastern Montana. The proposed $250 million project would have an initial capacity of 100,000 bpd and could be expanded to 120,000 bpd. The plans utilize 310 miles of new pipeline and would connect the heart of the Bakken play with the Keystone XL pipeline near Baker, MT in early 2013.]

    By the way, speaking of "takeaway," here's a commercial for a double-breasted chicken sandwich:


    Only in Australia

    Spot Price of Oil: $100.04 ---- Wasn't It Just Two Days Ago We Were Reassured That Saudi Would Not Let Oil Go Above $100?

    Dynamic link.

    The $100.04 spot price was noted at 9:46 a.m. EST, this date.

    I understand that prognostications over a week or so can be wrong, but two days? And all that publicity on CNBC for that reassurance.  Let me know if anyone at CNBC comments on this. I won't be watching this morning.

    Will have to check DrudgeReport to see "why."

    North Dakota State Land Lease Results -- February 7, 2012

    The full results of this sale are at this link (this is a new website for the ND Department of Trust Lands, so my old links won't work -- I will be updating them as I find them).

    Data points:
    • 70,000 acres in 14 western ND counties
    • average payment: almost $7,900 in McKenzie County
    • average payment: just over $1 in Grant County
    • proceeds go into trust funds for ND education
    • the largest trust fund has $1.6 billion for public schools
    • estimate going in: $60 to $100 milllion
    • actual: $85 million
    Results from the source (first link above):

    Divide County saw some hefty bonuses: $5,000/acre range.

    Golden Valley is still "cheap" at less than $350/acre.

    There were bonuses of almost $14,000/acre paid ($13,600 to be exact) in McKenzie County.

    One tract in Mountrail County went for $10,000/acre.

    Stark County saw several tracts go for $7,000/acre.

    It looks like you can buy Ward County for $5/acre (some exceptions).

    Williams is getting pricey at $11,000/acre, though some tracts went for as little as $200/acre.


      Whiting Corporate Presentation -- February 7, 2012 -- The Bakken, North Dakota, USA

      Raw notes taken while listening to the webcast. If I am alerted when the slides are available, this post could be updated. A reader has alerted me that the slides are now available for viewing at Whiting's home page.

      Data points below not checked for accuracy; typed quickly while listening to the audiocast.  Don't use any of the data points as your sole source for research. Feel free to correct me/add "color"

      Whiting audiocast: no slides available yet.

      Big takeaways for me on this presentation:
      • Multiple pay zones
      • Pronghorn Sands part of the Bakken formation, not the Three Sands
      • WLL location numbers very, very conservative
      • Low-cost driller
      • Reason for differential at Clearbrook
      • 10-year inventory of drilling
      • Vertical wells in the Red River, no fracking, almost a sure thing, $3 million each
      Data points:
      • Disclaimer: probable and possible reserves published unlike some other companies
      • De-risked: definition on the slide (which I don't have)
      • 86%, up from 83% last year; the percentage of oil will keep going up
      • Rocky Mountain (Bakken), Mid-Continental, Permian (EOR project -- 1 billion bbls)
      • Majority of production from the Bakken
      • Reserves: 305 boe to 345 boe/ 13% increase yoy
      • Per share value on reserves: $61
      • Debt: $10/share
      • Can get share value to $80/share
      • Completed their Belfield gas plant, late 2011; 10 million cfd
      • February 1: Lewis and Clark prospect, Pronghorn  -- via pipeline
      • $136 million budged for new acreage; could change significantly; that's where they are starting
      • Sanish is pretty much all booked; 70 locations not yet in proved 
      • > 1,000,000 gross acres; 680,000 net acres
      • Lewis & Clark: Three Forks; a bit of Pronghorn, but very limited in thickness
      • Pronghorn: much thicker Pronghhorn Sands
      • Pronghorn is definitely part of the Bakken formation, not the Three Forks
      • Sanish and Cassandra: B Zone of the middle Bakken; started leasing 6 years ago due to the
      • Tarpon, M: moved down one layer; down to the C Bench of the middle Bakken; looks more similar to conventional -- porosity and permeability; 
      • Hidden Bench: fully de-risked; numerous operators here; great area 
      • Tarpon: only one well -- 7,000 boepd, record; best well in the Bakken so far
      • Missouri Breaks: "de-risked" -- but Whiting had not drilled a well yet; very excited; similar to Hidden Bench and Missouri Breaks; in between Rough
      • Starbucks: JV this one; will perform well, EUR 350; just doesn't compete with our other prospects; if no JV, WLL will go it alone
      • Lewis & Clark, Pronghorn: middle Bakken doesn't exist; Three Forks and Pronghorn Sands (part of the Bakken formation)
      • Big Island: vertical Red River wells; scheduled to be drilled during the winter months; no fracking required; C Zone; $3 million cost; no hyperbolic decline; EUR 400K; the play is working because of 3-D seismic; drilled four; successful on three; first one was unsuccessful -- due to old seismic data  -- drill 49 locations; one rig
      • No inventory: WLL shows their de-risked locations -- 3+ years drilling in front of them
      • WLL gets lots of grief for no growth; "it's all Sanish";  WLL says look at wells for 1280 -- Hidden Bench WLL says 2 wells/1280 -- other operators say 4 - 8 wells/1280 -- if WLL went to 4 - 8 wells/1280 -- 10 year inventory for WLL; possibly 4 wells, but not 8 wells; WLL's location count is very, very conservative
      • Missouri Breaks/Starbucks: locations not listed yet; more growth
      • Sanish: 350 - 600 EUR boe
      • Sanish: 800 boe EUR
      • Most other prospects should be at the upper end; some prospects at 350 EUR (all boe)
      • 30-, 60-, 90- production: need to see the slides
      • This is the one he wants to talk about; a lot of grief about the Pronghorn; analysts say the Pronghorn not that good; WLL disagrees -- Pronghorn wells are very, very good; need to see the slides; Marsh well; Brunei well; they think they are getting great wells with the Pronghorn; they think it will compete with Sanish; most not yet producing for 30 days so no 60-day, 90-day production
      • Clearbrook capacity being increased to take ND Bakken
      • ND state November production:  >500,000 bopd
      • January and February: highest differentials at Clearbrook, -$13 from NYMEX; low demand this time of the year; refinery turnaround for this reason; west coast refineries turning around now; demand not there; differential will shrink in the spring
      Q&A:
      Q: WLL is low cost drill in the Bakken. How to improve?
      A: WLL plans to just focus on production big time. Costs: multi-well pads in the Sanish; Pronghorn -- half their rigs at the Pronghorn; many on multi-well pads; $8.8 million/well on multi-well pads -- remember, these are long laterals; the $8.8 million includes completion, buildings, etc. He says actual drilling costs for a WLL well is $6.4 vs $7 million average for others. 17 days to drill a well  in Sanish; 23 days outside of Sanish; so they can get six more days off the Pronghorn wells, for example

      Q: Opportunities for more acreage in the Bakken at good prices?
      A: No.

      From the slides: Pronghorn 4Q11 Completions, in BOEPD
      • Pronghorn Federal 34-11TFH, 1,645
      • Pronghorn Federal 21-14TFH, 1,849
      • Brueni 21-16TFH, 889
      • Mastel 41-18TFH, 3,218
      • Marsh 21-16TFH-R, 2,694
      • Obrigewitch 11-17TFH, 1,740
      • Pronghorn Federal 21-13TFH, 3,225
      • Pronghorn average: 2,184

        Takeaway Capacity -- Strained -- The Williston Basin, North Dakota, USA

        Update

        February 13, 2012: Bradaz has provided some nice data points for price of Bakken crude:
        Month     EOG NET     NYMEX     DIFF
        Jan 11     80.27             89.58           9.31
        Feb 11     80.19            89.74           9.55
        Mar 11     92.67          102.98        10.31
        Apr 11    105.33          110.04         4.71
        May 11    97.21           101.36        4.15
        Jun 11     92.67             96.29         3.62
        Jul 11      92.81             97.34         4.53
        Aug 11    81.85             86.34         4.49
        Sep 11    82.40              85.61         3.21
        Oct 11     83.18             86.43         3.25
        Nov 11    91.74             97.16         5.42
        Dec 11    89.93              98.58        8.65
        Not particularly concerning.

        February 9, 2012: A Canadian oil sands producer temporarily shuts down due to glut.

        Original Post

        Link here to Investors.com.  Article sent to me by a reader, thank you.
        Canadian oil production stocks took some hard hits on Tuesday, but Bakken producers seemed relatively immune after a week of plummeting prices for oil produced in Canada's tar sands and the U.S. Bakken shale.

        Bakken crude priced at Minnesota's Clearbrook terminal dropped 24% year-to-date to close at $72 per barrel Monday. Canadian heavy crude, also called syncrude, produced from tar sands fell 28% YTD, dropping 15% in the past week to close Monday at $61.

        The reason for the declines? Constraints in pipeline capacity.
        My understanding is that Canadian tar sands needs $60 oil.

        The Bakken "is robust at $40" -- said some  years ago, but with cost of drilling going up, that number may have shifted upwards.

        A lot of comments could be made -- especially about the administration killing the Keystone XL. The congestion will only get worse going forward.

        For investors: railroads and pipelines.