Tuesday, February 28, 2012

The Arvid Anderson Wells -- The Very, Very Busy Alger Field -- The Bakken, North Dakota, USA

Elsewhere they are talking about the Arvid Anderson wells. This gives newbies some idea of the infill / development of the Bakken.
  • 19198, 2,834, Statoil/BEXP, Arvid Anderson 14-11 1H, Alger, t11/10; cum 408K 10/16;
  • 22291, conf, Statoil/BEXP, Arvid Anderson 14-11 3H, Alger, t9/12; cum 190K 10/16;
  • 22292, conf, Statoil/BEXP, Arvid Anderson 14-11 2H, Alger, t9/12; cum 139K 10/16;
  • 22317, conf, Statoil/BEXP, Arvid Anderson 14-11 4H, Alger, t6/12; cum 167K 10/16;
Speaking of the Alger, talk about a busy, busy field. Some of the Bakken wells with the highest IPs are located in the Alger field. The following wells are all being drilled, on confidential status, and run in a west-to-east line, no more than about six miles long. They are all multi-well pads, in sections that already have producing wells. Of the six multi-well pads noted below, five have rigs on site (ros).
  • 21769, 3,603, Statoil/BEXP, Domaskin 30-31 3H, Alger, t10/12; cum 212K 10/16;
  • 21770, 4,790, Statoil/BEXP, Domaskin 30-31 2H, Alger, t11/12; cum 266K 10/16;
  • 21771, 3,080, Statoil/BEXP, Jack Cvancara 19 18 2H, Alger, t11/13; cum 256K 10/16;
  • 21772, 2,994, Statoil/BEXP, Jack Cvancara 19 18 3TFH, Alger, t10/12; cum 228K 10/16;
  • 21952, 4,293, Statoil/BEXP, Sorenson 29-32 3H, Alger, t9/12; cum 297K 10/16;
  • 21953, 2,790, Statoil/BEXP, Cvancara 20-17 2TFH, Alger, t9/12; cum 195K 10/16;
  • 21954, 3,078, Statoil/BEXP, Sorenson 29-32 4H, Alger, t9/12; cum 259K 10/16;
  • 21955, 2,972, Statoil/BEXP, Cvancara 20-17 3H, Alger, t9/12; cum 237K 10/16;
  • 21957, 1,779, Statoil/BEXP, Cvancara 20-17 4TFH, Alger, t7/14; cum 116K 10/16;
  • 22061, 1,837, Statoil/BEXP, Anderson 28-33 2TFH, Alger, t6/12; cum 198K 10/16;
  • 22062, 3,371, BStatoil/EXP, Anderson 28-33 3H, Alger, t6/12; cum 276K 10/16;
  • 22007, 2,700, Statoil/BEXP, Panzer 22-23 1H, Alger, t6/12; cum 209K 10/16;
  • 22266, 1,207, Statoil/BEXP, Panzer 22-23 2H, Alger, t1/13;cum 129K 10/16;
  • 21621, 2,551, Statoil/BEXP, Strobeck 27-34 6H, Alger, t7/12; cum 255K 10/16;
  • 21623, 2.071, Statoil/BEXP, Strobeck 27-34 8TFH, Alger, t7/12; cum 177K 10/16;
  • 22034, 2,944, Statoil/BEXP, Strobeck 27-34 2H, Alger, t7/12; cum 228K 10/16;
  • 22035, 1,962, Statoil/BEXP, Strobeck 27-34 3TFH, Alger, t7/12; cum 146K 10/16;
  • 22036, 1,904, Statoil/BEXP, Strobeck 27-34 4H, Alger, t8/12;cum 199K 10/16;
  • 22037, 2,026, Statoil/BEXP, Strobeck 27-34 5TFH, Alger, t7/12; cum 176K 10/16;

EIA Sees More Price Pressure in the Northeast if Another Refinery Shuts Down -- February 28, 2012

Updates

March 26, 2017: WTI at $48.

December 9, 2015: WTI at $37. 

November 27, 2012: well, oil prices haven't gone much higher ... yet. 

Later, later: oil prices could go much higher -- senior energy analyst at Oppenheimer. The video is actually pretty good.

Later: Long Island, New York,  gas station -- $5/gallon; new worry -- $6/gallon (reference to Hofmeister)

 Original Post

Link here here to Oil & Gas Journal.

If another refinery in the northeast shuts down, one can expect an increase in the price of gasoline. Well, duh.
PBF Energy Co. LLC’s October 2011 startup of a previously idled Delaware City, Del., refinery has helped the New England oil products market respond to closures of ConocoPhillips’s Trainer refinery in September and Sunoco Inc.’s Marcus Hook facility in December, the US Energy Information Administration said. But Sunoco’s plans to close its remaining Philadelphia refinery in July could change the situation, EIA warned has warned.

The 335,000-b/d facility accounts for nearly a quarter of the East Coast’s total refining capacity, EIA said. “If the Sunoco Philadelphia refinery shuts down in July 2012, suppliers may need to find 240,000 b/d of gasoline and 180,000 b/d of [ultra-low sulfur diesel fuel] by 2013 in addition to the amounts that have been supplied historically,” it said.

The ULSD gap won’t simply result from lost refining capacity, EIA added. It said New York State plans to require that heating oil meet the same low-sulfur rules as ULSD starting in July, effectively increasing ULSD demand by 70,000 b/d and annual ULSD demand in the Northeast by 20% on average, although the heaviest pressure will occur during the winter heating season.
The entire article is worth reading in its entirety.

Two comments: if this happens it will come in the middle of the driving season AND the national presidential campaign.

Second comment: a phenomenon that I've observed over the years that makes no sense will probably follow if another refinery in the northeast shuts down. This is the phenomenon: if there is a shortage of gasoline, regardless of the reason, the price of oil generally goes up. This, of course, makes no sense, if all things being equal, the reason for the shortage of gasoline has to do with refinery under-utilization, then oil is not the problem. In fact, there would be a relative excess of oil. But still, if there's a shortage of gasoline, generally oil rises in price, regardless of the reason for the shortage of gasoline.

So, if another refinery shuts down in the northeast look for the price of gasoline to go up AND the price of oil to go up.

Ten (10) New Permits -- The Williston Basin, North Dakota, USA

Daily activity report, February 28, 2012 --

Operators: Petro-Hunt (3), Newfield (2), Crescent Point Energy (2), Liberty Resources, Oasis, Whiting

Fields: Clear Creek, South Tobacco Garden, Tyrone, West Ambrose, Missouri Ridge, and Sanish

Absolutely nothing else was reported. 

Another Feel-Good Article on the Bakken -- SeekingAlpha

Don sent me the link regarding China's insatiable need for oil and pointed out the 8th paragraph:
A little-known story that came out within the last couple of weeks is that China, a nation with a voracious appetite for energy of all sorts (from nuclear to coal to natural gas and oil, etc.) has postponed any plans for tapping its shale hydrocarbons for at least a decade. It turns out their shale deposits, which six months ago were believed to be among the most potentially productive deposits in the world, on closer examination are now considered to represent an extremely complex challenge. So far we don’t know the details of China’s decision on this, but if you told us that water was part of the calculation, we wouldn’t be surprised. For the process of hydraulic fracturing requires huge amounts of water. And if there’s anything that could defeat China long-term, it’s much more likely to involve H2O than hydrocarbons.
The writer doesn't cite the source for that "little-known story" but it doesn't surprise me. 

For newbies, water is not an issue for fracking in North Dakota.

Don didn't have to point out this paragraph. Most of us already knew this:
The real promise in this area, and we’ve made this point before and continue to believe it’s true, involves oil fracking. It’s not just gas that’s found in those shale formations; there’s also oil. The major difference between oil fracking and gas fracking is that oil remains an international, not domestic, commodity. As a result, oil prices are many times higher than those for natural gas. And of course, high capital expenditures are much more easily rationalized for higher-priced than lower-priced commodities or products. This is the biggest difference between oil and gas, and it’s a huge one. And it explains why one of our recommendations, Continental Resources, has been soaring and why Whiting Petroleum Company and EOG Resources have also been climbing.
And the closing paragraphs:
But it’s undeniable that more oil and more gas are coming on stream. And in addition to those engaged in oil fracking, other clear beneficiaries here will be those companies which transport and deliver these valuable energy resources. Here we would mention an Income Portfolio recommendation, a master limited partnership ONEOK Partners LP; we also have other recommendations in The Complete Investor that might benefit even more.

And yes, there will be some oil service companies that do well, too. We won’t stray too far out on a limb here in recommending, as we have in the past, Schlumberger Ltd.

Fidelity Has A Nice Well in the Sanish -- The Bakken, North Dakota, USA

21280, 1,165, Fidelity, Arnold 11-14H, Sanish, Bakken,

I post new results here

A Query for Readers: Crude-By-Rail Facilities Around Ross, North Dakota

Back in October I blogged that there was a crude-by-rail facility at Ross, North Dakota.

A reader has sent me a note suggesting there are two oil-loading facilities in/near Ross. If I were in the Bakken I would take a drive out there and check it out, but I'm not. I'm curious if any reader knows if there is more than one oil-loading facility in/near Ross, and if so, where they are located.

Thank you in advance.

Reuters provides a FactBox on crude-by-rail terminals at this link. The first one mentioned:
COMPANY: Plains All American
PROJECT: Build rail-loading facility in Ross, North Dakota
COMPLETION DATE: Fourth quarter 2012
CAPACITY: First phase 20,000 barrels per day of crude and 8,500 bpd of natural gas liquids. Second phase will increase capacity to 65,000 bpd of crude. 
If you do a google search "Ross "North Dakota" crude oil terminals" the third hit down will take you to a PDF (I can't link it) at the NDIC website that will show you where all the current and all the planned terminals are. There is only one CBR terminal at Ross noted in this presentation. 

KOG's Earnings Are Out

Updates

February 29, 2012: Motley Fool's first note after the 4Q11 KOG earnings debacle
Talk about your fast growth rates. Kodiak Oil & Gas generated 10 times the revenue in 2011 that it did just two years ago, buoyed by rising oil prices and a hard-charging expansion strategy that's starting to pay off. Although it missed analyst estimates, Kodiak has been growing so quickly that it should be expected to keep smashing through prior high-water marks throughout 2012 and beyond.
Let's look at the reported numbers, including future estimates, to figure out just how much potential is left for a stock that's jumped more than 3,000% since the end of 2008.
Tale of the tape 
Kodiak's grown tremendously since those dark days, and a lot of it's been fueled by stock issuance, as shares outstanding almost have doubled over that time frame. That's something to keep an eye on as the company continues to drill new wells in the Bakken, but growth has a great way of making dilutive offerings seem less important.
Click on the link to see the numbers that impress Motley Fool.

Later, later: just before earnings were released, The Street picked KOG as one of five companies to "soar" after earnings release. Very, very interesting. 

Later, same evening: for investors only -- Reuters is reporting that most analysts expected a 9-cent profit; instead the company reports a 15-cent loss.  If folks see this as "seed corn" -- growing fast; additional rigs, fine, but a basic tenet on Wall Street is not to surprise the analysts. If KOG had an idea that their report would be significantly different than what analysts were expecting, the company needed to provide more information to the analysts.

Original Post

Press release here.

Some data points:
  • 2011 sales, $120 million vs $31 million in 2010
  • 2011 avg production of 3,922 boepd vs 1,259 ave boepd in 2010
  • 2011 net income, 2 cents/share identical to previous calendar year
  • And again, the derivative loss resulted in a loss of 8 cents/share
Of note:
The largest component of lease operating expense (LOE) in the Williston Basin operations is the disposal of water used in the well completion operations, the majority of which has been transported by truck to third-party disposal facilities.  The Company is actively addressing water disposal costs by connecting wells to third-party pipelines, drilling water disposal wells in producing areas and constructing water gathering systems where appropriate.  As existing and future wells are connected to water gathering systems, LOE is projected to decrease on a per-unit basis.
Earnings conference call tomorrow.

Donald Trump on US Energy Policy -- CNBC

Earlier this morning Donald Trump was on CNBC. His views on US energy policy dovetailed nicely with mine.

You can see a summary of his interview at this link.
The United States is "the Saudi Arabia of natural gas" and has no business buying pricey oil from OPEC producing-nations, says real estate mogul and one-time presidential hopeful Donald Trump.

Supply issues stemming from Middle East unrest coupled with refinery closures in the United States have lifted gasoline prices to a nationwide average of more than $3.70 a gallon, with most experts predicting that figure will easily top $4 a gallon.

The United States shouldn't be in this situation, Trump told CNBC.

The country has ample energy reserves at home, although excessive regulations under the Obama administration are preventing companies from producing oil and natural gas.

"I think it's devastating and much more OPEC than anybody else or anything else. They're sitting around the table and setting the price of oil and laughing at us because we have no leadership," Trump tells CNBC.

President Barack Obama never prioritized energy as an agenda and today, the country is suffering, Trump says.

Interestingly enough the article does not quote Trump on wind. Trump says the same thing I've blogged about wind: there is not one redeeming thing one can say about wind energy; and Europeans are now pulling the plug on wind (including The Netherlands and Spain).

He mentioned that the effect these wind turbines will have on birds is of concern. It was said in passing; I doubt Trump gets really, really excited about birds. But I get very excited about birds.

I am a member of the Massachusetts chapter of the Audobon Society (MassAudubon: Bird Conservation Programs).

I just received from MassAudubon a huge glossy and the "State of the Birds" in Massachusetts.

Here's the blurb on long-distance migratory birds, quoted in full:
Long-distance migratory birds such as the Wilson's Warbler now have to contend not only with the natural hazards of flying thousands of miles to reach nesting and wintering areas, but also with human-caused hazards such as pollution and high-rise buildings.
That's the full quote. What's missing?

Here's the blurb on migratory shorebirds:
In late summer and fall, some beaches and tidal flats harbor thousands of sandpoipers and plovers of many species. Despite significant concentrations, the populations of many of these migratory shorebirds are decreasing.
That's the full quote. What's missing?

The glossy is about 24 inches by 36 inches, full color, with about a dozen photos of colorful birds, and a map of the state of Massachusetts.

There is not one picture of the number one enemy of migratory birds, and not one picture of the enemy: the wind turbines.

And that's the problem I have with a lot of these organizations. I don't think Massachusetts has much of an oil industry, but faux environmentalists in the state have lots of problems with the oil industry. On the other hand, Massachusetts wants to be a lead in wind energy and yet no mention of the problems associated with the entire concept, not the least of which is a) the cost to the consumer; and, b) the cost to migratory birds.

The society points out "high-rise buildings" but never mentions wind turbines, the 800-lb gorilla in the room as far as risk to migratory birds go. So, the society will fight to slow development in Massachusetts, unless it's wind energy, I suppose, at least based on the glossy.

Update on Enbridge's Sanish PIpeline Project: From Tioga Area To Rest of World -- The Bakken, North Dakota, USA

Enbridge launches binding Open Season for Sanish pipeline project and Bakken expansion program: Enbridge Energy Partners (EEP) and Enbridge Income Fund, affiliates of Enbridge, announced a second Open Season for the Bakken Expansion Program in conjunction with an Open Season for EEP's proposed Sanish Pipeline. The Sanish Pipeline will transport crude oil production from Johnson's Corner to Beaver Lodge, North Dakota. The Bakken Expansion Program Open Season will offer pipeline capacity on Enbridge's system from Beaver Lodge into Enbridge's terminal at Cromer, Manitoba where it connects with the Enbridge Mainline System, which offers access to refineries throughout the Upper Midwest, eastern Canada, Mid-Continent and as far as the U.S. Gulf Coast.

From Yahoo!InPlay. No link. 

Schumer on CNBC This A.M. Pleading With Saudi to Produce More Oil

Yes, pleading.

He also made big push for nuclear energy -- saying it was non-polluting. I wonder if he's been to northern Japan lately?

I didn't catch the whole interview, but what I did catch I did not hear the word fracking, which I believe has been banned in his state.

Solid Waste Site Proposed for Dickinson Area -- The Bakken, North Dakota, USA

Link here.

Eighty acres seven miles south of Belfield on US 85.

I could be wrong, but I believe I saw a similarly-sized solid waste "facility" going up south of Williston when I was up in the Bakken last autumn.

For Investors Only: Beware the End Of February

This article reads like an advertisement for an expensive newsletter, but it's kind of fun,

First, it suggests that if history is a guide, investors should beware leap day.

Second, of all the companies it could have mentioned, most of the ink went to CLR. Kind of fun to read.

Note: this is not an investment site. See disclaimer at sidebar at the right. I do not own shares in any company mentioned in the linked story and won't be buying any shares in the near future.