Thursday, March 15, 2012

Another Basin To Challenge the Bakken, the Wolfcamp in West Texas


EIA update, February 26, 2018.

USGS report; 3x larger than the Bakken, November 16, 2016.

Cool story on the Permian, May 11, 2016.


November 16, 2018:

December 14, 2016: new operator to pay about $40,000 / acre in the Permian (Wolfcamp, Bone Spring). 

December 14, 2016: one of the few plays in which the proved reserves increased in 2015 -- Wolfcamp and Bone Spring.  

June 21, 2016: update on the Permian, Forbes
April 28, 2016: for Pioneer Natural Resources, cash costs down to $14/bbl

February 21, 2014: Permian Wolfcamp valued at $61,600/acre

August 26, 2013: Nice map. Mike Filloon on the Permian.

June 4, 2013: see February 5, 2013, story. Chinese have closed on the previously announced deal

February 5, 2013: Chinese company to buy assets in Wolfcamp.

January 30, 2013: the Cline Shale and the Wolfcamp overlap each other in the Midland, Texas, area.

May 22, 2012: Nice article on Cline Shale, the source rock for the Wolfcamp Formation (2nd page of a 3-page article.

Original Post
Link here.

I won't be following this on a regular reader, but readers may be interested in the "next big thing (?)."

The Wolfcamp.
Spanning numerous counties across West Texas, the Wolfcamp formation is located below the long-plied Spraberry field, which helped make Midland, Texas, oil-central starting in the early 1950s.

Its location in the Midland Basin is within the larger Permian Basin.

Sheffield and other oil experts say the Wolfcamp is probably the thickest of any onshore U.S. oil shale play, with up to 1,000 feet of potential payout across hundreds of thousands of acres.
The Wolfcamp has been mentioned twice before on this blog, first by Papa/EOG and second by CHK

The thickness of the Bakken varies throughout the Williston Basin, but its generally between ten and 200 feet thick. A thousand-foot payzone onshore is .... well, for me, unheard of.

Drill, drill, drill.

Best Video of the Week for Flat Earthers --

Plan B: Algae

Link to CNBC's interview with Harold Hamm, CLR/CEO on the Kudlow Report.
Responding to President Obama’s comments earlier in the day in which he called his critics part of “the Flat-Earth Society,” Hamm expressed surprise.

“The technology that’s out there today, what we’re doing with horizontal drilling, unlocking a virtual renaissance of new development of oil and gas in this country, I can’t believe the president would say anything like that,” he said. “We’ve obviously brought drilling into another realm, whole new paradigm.”
This is the same president who said he was going to kill the coal industry, so, yes, I believe, he would say that (about horizontal drilling). Not only say that, but believe it. I don't think the president needed a speechwriter to come up with that line about flat earthers.

The President's Plan B -- algae -- was not mentioned.


Background to "Plan B"

On March 2, 2011, I discussed "the Stephen Chu effect," in which I mentioned the administration had no "Plan B" if oil prices spiked. I was wrong then. It turns out the president always had a Plan B: algae.

I'm Doing All I Can To Lower Gasoline Prices -- President

Fossil fuel production on federal land drops to lowest level in 9 years
Lowest level since 2003
The Gingrich phenomenon

Link here via CarpeDiem.

It was Gingrich who first alerted me to this bit of trivia; it's now being picked up by others.

Yup, "we're doing everything we can to lower the price of gasoline."

There's always algae.

Thank goodness for conservation: gasoline demand in the US is down 8 percent year-over -year.

CO2 Shortage -- Impacting Oil Production

Link here.
Not only is the oil and gas industry booming in the Permian Basin, new technologies are emerging that will allow producers to get to oil that was otherwise inaccessible less than 20 years ago.

And these technologies, particularly the use of carbon dioxide to get to previously unattainable crude-oil reservoirs located in “residual oil zones,” could signal the next gold rush and keep the area booming for decades to come.
A very interesting link. 

Four (4) New Permits -- The Williston Basin, North Dakota, USA

Daily activity report, March 15, 2012 --

Operators: OXY USA (2), CLR, Petro-Hunt

Fields: Fayette, Wildrose, Dimond

Petro-Hunt has a wildcat in Williams County.

Six wells released from "tight hole" status; one was not completed; others reported an IP including:
  • 20908, 1,454, BEXP, Barstad 23-14 2TFH; Mountrail;
  • 21025, 1,197, Slawson, Taboo 1-25-36H; McKenzie;
One well on DRL status was completed:
  • 20381, 566, Daron William 28-33H, Bakken, McKenzie; 

New External Link: Zero Hedge

I've just added another external link at the sidebar at the right, at the very bottom:

The list is getting very long, but it serves a purpose. Someday you will thank me.

Showing My Ignorance But Always Willing to Learn (and Share)

I am aware of RSS but never really did much with it, and, until the other day, not even sure how to "do it."

But it turns out RSS offers quite a bit and is much more useful than I would have dreamed. It is particularly useful for sites like mine which continually update earlier posts.

If you "subscribe," the "blog" will appear in your Toolbar at the top of your browser. When you click on the tag in the toolbar, a drop-down menu will appear with about a dozen recent posts.

I highly recommend it. I tried it out for my own website and it turns out to be quite helpful.
If interested, at the bottom of every blog page, at the very, very bottom, you will see:

Apple -- Absolutely Nothing To Do With The Bakken

I don't own any shares of AAPL and have no plans to purchase any.

I grew up with Apple and as regular readers know, I am an Apple fanatic. One of my "anonymous" tags at another discussion board is "Fan_Boy_3." Some years ago, my younger daughter and I would go to the Apple store at one of the malls out in California before the store opened, and unroll our prayer rugs, and bow down in front of the Apple logo. Yeah, I'm not making that up. Okay, maybe my daughter didn't bow all the way, but....

So, I'm getting a kick out of watching Apple and AAPL. I see CNBC now puts the AAPL ticker symbol in the lower right corner along with DOW, NASDAQ, GOLD, and WTI. Who wudda thot?

The reviews for the iPad 3 are coming out and I am surprised at what "reasonably balanced, unbiased" critics are saying. They pretty much agree that the iPad 3 is "a new animal."  I thought it was just further refinement, nothing to get all that excited about, but apparently it is is quite something.

As big as that story is, there are Apple stories much bigger. Take this one for example: iTunes is so ubiquitous, no one even talks about it any more. As the Business Insider say, it is Apple's forgotten business.
In Apple's fiscal 2011, iTunes represented 6% of its net sales, coming in at $6.3 billion.

In the most recent holiday quarter, iTunes clocked $2 billion in revenues. To put that in comparison, in that same quarter, Facebook did $1.1 billion in revenue. Even Google overall only did $10 billion in revenues for the quarter.
And then this:
Although we think that the biggest issue shareholders want Apple management to consider now is issuing a dividend, imagine what happens when iTunes becomes a $30 billion business. 
What's the most interesting word in that last quote? 

My favorite concern that analysts bring up regarding Apple: will the iPad cannabalize Apple computers? Hello! iPads are computers. 

But to the point, it does not matter. Apple will build laptops and desktops so that supply meets demand. Just as GM/Chevy is matching the supply of Volts to demand, Apple will do the same with its computers. The only difference: Apple probably won't shut down production for five weeks.

How big is Apple? CNBC's talking head noted: the market cap of Apple exceeds the entire market cap of all companies in S&P's "MATERIALS" sector.  Apple exceeds the entire market cap of all companies in S&P's "UTILITIES" sector. And, Apple greatly exceeds the entire market cap of all companies in S&P's "TELECOM" sector.

Details Yet To Come -- Obama To Release Oil From SPR? -- Never Mind


March 19, 2012: beating a dead horse. Three more refineries, representing one-half of the refining capacity in the northeast, are slated to close this year. The pipelines are already full; the terminals at Cushing are full; and, now on top of this, three less refineries to ship crude to. All things being equal, this alone should lower the price of domestic crude oil (I see oil is up about 65 cents in futures today). So, opening the SPR, flooding the already-full pipelines to take crude where refineries no longer exist .... well, that makes a lot of sense. Based on price action of oil on Friday with the "announcement" that oil from the SPR would be released, one can expect that the price of domestic oil will drop from $107 to $104. Okay.

Later, 423 p.m.: I think Reuters got it just right. CNBC got it wrong by saying the SPR release was imminent, or certainly implying that. My hunch is that Washington and Great Britain have agreed in principle that if Brent oil and/or WTI oil hits a certain threshold, oil from emergency reserves will be released. My hunch is that this is the threshold: Obama's polling numbers drop below 39% favorable, er, I mean is Brent goes above $150, and/or WTI goes above $125. The US won't use those numbers as the official numbers, but provides a framework around which the UK can anticipate.

Later, 1:23 p.m.: I see oil just went green by a penny. Now 13 pennies. Now 17 cents. Ah, yes, the threat of algae.

Later, 12:20 p.m.: just moments after posting the note below, I had a thought which I will get to in a moment. But this first --  CNBC (12:20 p.m., March 15, 2012) is now reporting that a release from the SPR is inaccurate. Obama was consulting with the Brits on releasing oil from the SPR, but there was no decision made.  Does anyone else find it interesting that this trial balloon was released on this particular day?

Now back to my thought: think about this. If the president releases oil from the SPR, could one argue that things might be tighter (or will get tighter) than the administration is willing to admit? Why release oil now from the SPR based on recent comments from the administration? The president says oil always goes up this time of year; not to get excited; his task force will check into it; and, of course, there's always algae to fall back on. Everything he's been saying for the past few weeks: there is nothing to worry about.

Now, if all of a sudden, with no new news, no new developments, all of a sudden out of the blue, the Brits decide to release oil from emergency stocks, doesn't that suggest to a rational thinker that the Brits expect something to happen in the Mideast to result in sudden spike in the price of oil?

Very interesting to watch. My 2 cents worth: if the Brits release oil from their emergency stocks, something is up. If the US releases oil from the SPR, it's politics.

Original Post

With a glut of sweet oil at Cushing, releasing oil from the SPR should be a big help.

As I've noted many, many times, I don't get it.

For archival purposes, oil drops about $1.35 on the announcement, from $105 range to $104 range. I will tag this for follow-up in July, 2012, to see how this plays out.

At least we now know the SPR is a political slush pool to manipulate the price of oil.

I'll post the next presidential poll when it becomes available.

By the way, have you noticed? The US, since the Bush days, is no longer acting unilaterally on almost anything. We get at least one other country to join us so that the president has political cover. Gingrich, whether you like him or not (and I don't), was correct when he said his comments on the price of oil were "getting inside the President's head."
"So do not tell me that we're not drilling. We're drilling all over this country. There are a few spots we're not drilling. We're not drilling in the national mall. We're not drilling at your house." -- Link here.  What about algae?
I see now, crude oil has just recovered, almost back to where it was, down 49 cents. Well, that was short-lived. All in the time it took me to write this one post.

As noted above, I don't get it (the price of oil).

Talking head on CNBC, 12:05 p.m., March 15, 2012:
"I'm skeptical oil can remain above $100 for very long. I'm skeptical these prices are sustainable. But I'm not willing to put my money where my mouth is. I have no trade in oil. China is pulling back on its commodity purchases: cement, copper, aluminum. Oil has been the outlier. I don't think oil an remain above $100 for very long. At some point it will revert back toward the mean."

Except for The Price of Gasoline, Inflation Was Mostly Tame

Cost of living in the US "soared"last month -- biggest jump in 10 months -- Bloomberg

Link here.

The lede:
Higher gas costs drove U.S. wholesale prices up last month. But excluding the big jump in gas, inflation was mostly tame.
I know our family is excluding the big jump in the price of gasoline; if we ignore it, it really isn't there, is it? 

Well, except for the shooting, the play the Lincolns went to was pretty tame.

Except for the 800-pound gorilla in the living room, the house is pretty quiet.

Except for gasoline costing $4.35 in California, prices are pretty tame.

I think algae IS the answer. We've already pretty much got the conservation thing down, with gasoline demand in the US down 8 percent or something like that year-over-year.

Unemployment, New Claims -- 351,000

The magic number is 400,000. Anything below 400,000 is considered "good news."

351,000 is back to "four-year lows."
Initial claims for state unemployment benefits dropped 14,000 to a seasonally adjusted 351,000, the Labor Department said on Thursday. That took claims back to a four-year low reached in February.
 I see the market opened flat, to negative. Impressed?

Note to the Granddaughters

During the month of March, the granddaughters have early release from school on Wednesdays due to parent-teacher conferences. We had looked forward for quite some time to go birding at Mt Auburn Cemetery in Cambridge on one of those Wednesdays. Yesterday we went.

Mt Auburn Cemetery, consecrated in 1831, was the nation's first landscaped cemeteries. Prior to this one, most cemeteries were small plots of land inside city limits, usually next to, near, or on church grounds. Mt Auburn was entirely different. It's a park with memorials to entire families.

Visitors are welcome; at the chapel there is a small visitor's center where one can buy an $8 pamphlet on birding at the cemetery.

It turned out to be a cooler day than expected and the birds were huddled out of sight. We did see a flock of robins, maybe a cedar waxwing (according to my 8-year-old granddaughter) and a red-tailed hawk. I knew it was a hawk, but did not know what kind. The 8-year-old did; she says another red-tailed hawk spends a lot of time near her school, so I guess she would know.

So, we will go back again, on a nicer day to go birding.

But this was the big surprise. All the trees (ok, not all the trees, but the most I have seen in one place) in the cemetery have little plaques on them with their names and some background information. It was incredible: by the end of the day, we were identifying oak trees, sugar maple trees, magnolia trees, dogwood, fir, spruce, cedar, elm, walnut by the bark only because the leaves had not come out yet (of course, we quickly separated the trees with needles from those without). A new one for both of us was the incredible Kentucky coffee tree.

So, now, our next task is to figure out the taxonomy of trees. It turns out that the taxonomy of trees, at least for me, is more difficult than that for animals.

I can never remember the taxonomy levels of classification, so my granddaughter, an avid Brownie, and I came up with "King Philip carried off funny girl scouts" for kingdom, phylum, class, order, family, genus, and species.

Well, it turns out the classification for plants replaces "division" for "phylum." If I knew that at one time, I had forgotten, but I don't think I knew that. Hmmm.

Anyway, when I told my granddaughter that at breakfast this a.m. she immediately, without missing a beat, said, "King David carries off funny girl scouts. And King David was a real king."

I was impressed.

After two hours identifying trees and looking for birds, we walked to Harvard Square, walking down Brattle Street. The home was closed for the season, but the gardens were open, to the William Wadsworth Longfellow home on Brattle street about a half-mile from Harvard Square. This smallish McMansion was the headquarters for George Washingon, 1775 - 1776. Incredible. I never knew it was there, and I never knew General Washington had headquarters so close to where we walk so often.

This is getting long, so I will just say we had the most wonderful hot chocolate and chocolate-lemon cake at L. A. Burdick, Homemade Chocolates, Cambridge, Massachusetts. Sublime.

Magellan, Montana, and Multiple Potential Payzones -- The Bakken, Williston Basin, Montana, USA

I don't follow Montana oil activity, so I know nothing about this story except what is reported:
Magellan Petroleum Corporation reported several positive developments from its operations in the East Poplar Unit in the Williston Basin, Montana.

The Company, through the efforts of its contract partner, VAALCO Energy Inc. has successfully completed a vertical well (the EPU #120 well) in the deeper formations of the East Poplar Unit.

Data collected in the Bakken, Three Forks, Nisku, Red River, and Winnipeg formations suggests each of these formations may be prospective for commercial production.

VAALCO has also announced its intention to drill the second commitment well in the deeper formations of Poplar as a horizontal Bakken well in 2012.
Five potential payzones. Just saying.

Proposed New Pipeline Baker, Montana, to Billings, Montana, Taking Orders -- The Bakken, Montana, USA

The link:
Plains All Amer subsidiary announces open season for proposed Baker-to-Billings crude oil pipeline : Plains Pipeline, a subsidiary of Plains All American Pipeline, announced that it is conducting an open season for committed capacity on a proposed new crude oil pipeline from Baker, Montana to Billings, Montana. The proposed pipeline would originate at Plains' Baker, Montana station and provide an initial capacity of at least 50,000 barrels per day of light sweet crude oil to Billings, Montana.
At least  50,000 of light sweet crude oil (Bakken oil) to Billings. I always think of this area as natural gas, so Bakken crude moving in this direction is nice to see.

Man-Camps -- Still Needed in Western North Dakota

Back in 2010, I suppose, I don't really recall, but some time ago I opined that oil activity in the Bakken would level out at some point. I always thought it would be 2012, that we would see a leveling off of activity. With all the building I saw in Williston in the autumn of 2011, I thought "we" would have adequate housing going forward. But there were signs that I was wrong and that's why I posted the poll to see what readers thought about housing issue. The poll is still up -- at the sidebar at the right.

So, today, I was surprised when Debbie Downer ran a story emphasizing that there is no question among the experts and the folks following the boom, that more housing is needed. And lo and behold, someone finally gets it. The boom will end at some point, and temporary facilities can be taken down; permanent facilities will be, well, permanent, occupied or not.
“The communities don’t want to overbuild and have vacancies when the drilling phase is finished. The communities are trying to find that balance.”
They also noted that some "temporary" folks will stay. In fact, I was quite surprised by the number that eventually stayed. I opined early on that based on my experience in the military that families find a way to stay together even under the harshest of conditions, and that has happened in Williston. I knew it would happen; I just didn't expect the numbers. Look at the school enrollment.

The problem turned out to be the definition of "permanent." A one-year job turned into two years, and that turned into three years. When the job went from one year to two years, it was time for the family to join them, and that was the turning point, and we started to see it in 2010, I suppose (thought I missed it) but everyone saw it by the 2011 - 2012 school year. 

It's kind of interesting. I thought the boom would tend to level off by the time when max number of rigs that could be supported was reached. Yes, now that the max number of rigs that the region can support has been reached, one might think that activity would level off. But what I forgot was that the 200 wells drilled last month did not go away when the 200 wells drilled this month came on line. Those 200 wells from last month need takeaway -- pipelines and railroad terminals. The other thing I forgot was the support services still trying to catch up: suppliers supporting the 8 new motels; public laundries; more restaurants; new truck stops; more roads being built; old ones requiring more frequent attention. 

The conference was held in Dickinson. Hmmm.