Tuesday, April 17, 2012

Chesapeake Permits Their 15th Horizontal Wildcat in Stark County

Data points:
  • Burwick 17-137-98 A 1H
  • 16 miles southwest of Dickinson
  • all Chesapeake wells drilled in Stark County are still on confidential list

Seaway Pipeline Reversal Two Weeks Ahead of Schedule -- Should Start Delivering Crude Oil to Gulf Coast May, 2012

Link here to Rigzone.
The Seaway pipeline reversal, designed to help ease a supply glut in Cushing, Okla., that has been depressing U.S. prices, will begin delivering crude to the Gulf Coast refinery belt in a month, or two weeks earlier than expected.

Traders said the move will unlock the value of the landlocked U.S. benchmark, by making the crude available to Gulf Coast refineries. At the same time, the move cuts the value of the European benchmark, Brent crude, as competitive crudes become more plentiful in the region.
 Light sweet crude for May delivery on NY Mercantile Exchange: $104.20
ICE North Sea Brent: $118.78

The NYMEX-Brent spread at the lowest since February 1; now about $14.50; was nearly $21 two weeks ago.

MDU's Preliminary Guidance -- 1Q11

Data points from the press release (some numbers rounded):
  • pushing the upper range of their guidance
  • negatively impacted by warmed weather in eight-state region
  • negatively impacted by low realized natural gas prices
  • negatively impacted by widening of Bakken wellhead oil pricing spreads in March compared to WTI
  • April price has improved; forecasts further improvement through 2012
  • the recently announced $85 million 88-megawatt natural gas generation facility is a significant investment in the company's $915 million  5-year utility capital growth program
  • oil production should reach target of 20 to 30 percent increase over previous year
  • overall oil production approx 10,500 bopd; 20 percent from same period last year
  • 8 more rigs than a year ago; 10 rigs now
  • five rigs operating in the Bakken
  • Bakken: 124,000 net acres
  • will focus on oil; cut back on natural gas
  • annual earnings for remainder of 2012 reaffirmed in the range of $1.00 to $1.25, based on $2.50 natural gas and $100 oil

One (1) New Permit -- The Williston Basin, North Dakota, USA

Daily activity report, April 17, 2012 --

Operator: Whiting
Field: Bell (Stark County)

One (1) well released from "tight hole" status:
  • 21109, 1,008, Whiting, Curren 11-14TFH, Mountrail, Bakken,
Five producing wells were completed:
  • 19505, 2,252, KOG, Charging Eagle 15-14-11-4H, Dunn
  • 19696, 1,201, XTO, FBIR Walterpackswolf 31X-12, Dunn
  • 20484, 1,126, Zavanna, Thunderbird 25-36 1H, Williams County
  • 21050, 238, Samson Resources, Calistoga 18-7-161-92HOR, Burke County
  • 21521, 1,521, Helis, Dailey 4-12/13H, McKenzie County

Bobcat Company in Bismarck Expanding Operations

Back on August 8, 2011, the Bobcat Company was in the news.

Today, the Bismarck Tribune is reporting that the Bobcat Company in Bismarck is expanding.
Bobcat’s compact attachment production will be moved to the Manufacturing Support Center at 530 S. 26th St. in Bismarck, Laura Ness Owens, public relations manager, said.

Menlo Worldwide Logistics, a partner of Bobcat, currently prepares and kits engines for Bobcat in the MSC. Menlo will be adding 150 positions to handle the new production of the compact attachments, which include things like scoops, snowblowers and auggers, Ness Owens said.

Ness Owens said the move to Bismarck was sparked by increased demand for compact attachments. She said many companies are adding services and buying more equipment to do their business.
I wonder how much of this growth is due to activity in western North Dakota (the Bakken) and in Wyoming/Colorado (the Niobrara)?

UK Study on Seismic Activity and Fracking

A bunch of inconsequential tremors or wait for the "big one"?

Link here.
Cuadrilla commissioned the study under review, which found a high probability that hydraulic fracturing of its Preese Hall-1 well triggered seismic events last April and May. The well was completed in a Bowland basin shale, which Cuadrilla has said might hold 200 tcf of natural gas in place in its 437-sq-mile license area between Blackpool and Preston.

The Cuadrilla study said none of the seismic events caused structural damage. The largest event, in April 2011, had a magnitude of 2.3.

The study said the events resulted from a rare combination of geological conditions around the well.

For Investors Only, From Market Watch: Another Look at the Bakken

Link here.

Caught my eye:
By the end of the year, it is expected that Bakken oil production approaches total Alaskan production. With about 99% of drilled wells hitting oil and 90% profitable, the added rigs should add to company bottom lines by the end of the year, and quite possibly sooner.
About 99% of drilled wells hitting oil...

About 90% profitable ...

Overtake Alaska by the end of the year...

Great Article in the National Review on the Bakken

Kent sent me the link to this story about the Bakken, but I did not know at the time whether it was ready to be released, so I waited. I see now that another blogger who "lives in the Bakken" has posted the link, so here it is: the Bakken from the National Review perspective.

Great article.

Nothing Is "Conventional" For This Administration

Headline: Obama Forms Unconventional Working Group

Oh, never mind: it was an "unconventional gas" interagency working group.

Mild Winter: Sharp Increase in Oil and Gas Production


January 29, 2013: problem in the Arctic -- too many polar bears. It looks like the smart polar bears are hanging around humans; the "mentally challenged" polar bears are getting stranded on shrinking ice floes. I can't make this stuff up.

Original Post

Still looking for the downside of global warming

Link here to Reuters:
Oil and gas companies like Denbury Resources Inc and Oasis Petroleum Inc said a mild winter in the Dakotas helped them produce more liquids in the first quarter, as they continued to shift away from dry gas.

Oil producers and explorers are increasingly directing their spending towards liquids-rich fields including the Bakken in North Dakota and the Eagle Ford in Texas as low natural gas prices force companies to cut output.
By the way, speaking of "global warming," more than 1,300 new species of animals have been discovered in the past two decades:
  • Conservation International is celebrating two decades of its successful Rapid Assessment Program (RAP), which has led to the discovery of over 1,300 new species, by releasing a list of its 20 "RAP Stars" -- the new species that have become international sensations with nicknames like "Yoda bat," "Dinospider," "Walking shark," and "Pinocchio frog."
In addition: 
... and they claim the bear population is stable or on the rise in their own backyard. Polar bears may be on the decline in some areas, but during their frequent visits to Inuit towns and outposts they rarely decline an easy meal from the local dump or a poorly secured garbage can.

Harry Flaherty, chair of the Nunavut Wildlife Management Board in the capital of Iqaluit, says the polar bear population in the region, along the Davis Strait, has doubled during the past 10 years. He questions the official figures, which are based to a large extent on helicopter surveys.

Dr. Mitchell Taylor, a biologist who has been researching polar bear populations in Canada's Nunavut Territory for 35 years, seems to agree.
And that rising ocean? 657 new islands discovered in 2011:
Conducted with state-of-the-art technology, a new global survey uncovered 657 more barrier islands around the world than previously thought.

As OurAmazingPlanet.com is reporting, researchers from Duke University and Meredith College in Raleigh, N.C. identified a total of 2,149 barrier islands worldwide using satellite images, topographical maps and navigational charts. A similar survey, conducted without the aid satellite imagery, identified a mere 1,492 islands.

Ford's Electric Focus Sales in February and March: Zero

Link here.
Ford Motor Co. sold about 12 Focus Electrics in December and January to fleet customers — and none in February and March, said Erich Merkle, a Ford spokesman. The Dearborn automaker plans a slow ramp-up as it begins production this spring for retail sales; the New York area and California are the first markets.
I wonder if Ford will suspend production until supply catches up with demand as Chevy has done with the Volt.

A Note to the Granddaughters

By the way, the weather has been wonderful here in the Boston area. I believe the 91 degrees recorded on the car's exterior thermometer was a record. We drove down to Providence, Rhode Island, to drop off some family members at the Providence airport. Ticket prices to Florida are about $150/ticket cheaper from Providence than from Florida.

One of the things that crossed my mind while traveling down a very, very busy I-95: Americans love their cars. Folks may talk about demand destruction and the statistics are there to show it, and they may report that we may have seen the last of gasoline price hikes this year, but now that the weather has turned even nicer (following the "winter that wasn't" as they say here in Boston), "everybody" is going to be out and about, one way or another.

They say a man has given up when he buys a minivan, but I've driven Chrysler minivans since 1998 when we returned "home" from being overseas for fourteen years (I thought it was thirteen years, but my wife tells me it was fourteen. I have no idea where we spent that fourteenth year, but it must have been a humdinger of an assignment.)

We bought the third minivan sight unseen. Well, actually we did see it. While shopping for a new minivan in San Antonio, we spotted the color of a minivan that we liked. It was parked about a mile away. I told the agent that's the one we wanted. He really didn't want to walk that far, and he had dozens a lot closer; he said (except for the color) they were all the same. He was their salesman of the year for several years. He was Muslim. I can't remember if he was from Iran, originally; I believe so. He was my kind of salesman. He knew neither of us cared for cars except to get from point A to point B. I assume his faith was an important part of his life and he knew that his days at Chrysler would pale in comparison to paradise. So, he was pretty blunt but "adorable." He said, using different words, that at the end of the day we would be driving home in a new minivan and it really didn't matter what one to get. They were all the same. So, we got the color we liked. I had not planned to take it for a test drive. I honestly don't remember if we did. I assume we must have at least drove it once in the parking lot, but it was a mile away and while we were signing the paperwork the detailers were still walking over to the vehicle. 

I don't think we've cleaned the inside since we got it some years ago, but yesterday, to make room for all six of us and their luggage, I emptied it. I didn't know we had a dog. I was again surprised how a) functional it was; and, b) how much room even the short base Chrysler minivan had. It was not the under-the-floor stowaway model.

I think at 55 mph on the open road, and downhill, we can get close to 30 mpg. We can also get a lot of folks honking at and flashing their lights, especially if we are in the "fast lane." 
Certainly 26 mpg is the expected. And if you pay for your gasoline with a credit card and not look at the receipt, gasoline doesn't seem so expensive. Also, I've learned to top off the tank every time we get down to 3/4 tank full; paying for a fourth of a tank of gas isn't all that expensive. 

I see in the headlines that 2,100 folks were treated for heat stress and/or exhaustion yesterday at the Boston Marathon. I didn't see how many runners had to be treated.

No, there was no dog in the car; that was a joke.

Nothing About the Bakken -- Another Refinery Suspends Operations -- Citing Economics -- Valero, Aruba

Link here.

Random Production Numbers For Four Whiting Wells in the Sanish Oil Field

Elsewhere a reader is asking for production numbers for four Whiting wells in the Sanish:
  • 17134, 3,115, Whiting, Smith 11-20H, Sanish, s6/08; t11/08; cum 336K 2/12; currently producing about 5,000 bbls/month. I'm sure at this point, this well has paid for itself and continues to generate free cash flow of $250,000/month
  • 18531, 3,863, Whiting, Hansen 12-20H, Sanish, s3/10; t6/10; cum 233K 2/12;  currently producing about 5,000 bbls/month
  • 20283, 383, Whiting, Fladeland 12-20TFH, Sanish, s7/11; t10/11; cum 25K 2/12; producing about 5,000 bbls/month; cumulative skewed by very little production first few months; has not had a full month of production
  • 20209, 2,637, Whiting, Hansen 14-20XH, s6/11; t8/11; F; cum 122K 2/12; producing about 12,000 bbls a month but still in early decline phase

Two WSJ Notes: US Approves Natural Gas Export Facility; Chesapeake to Spin Off Oilfield Services

From print edition, no links.

Cheniere Energy received federal approval yesterday to construct what would be the first major natural gas export facility in the lower 48 US states, putting the company a step closer to shipping some of America's newly abundant natural gas abroad.
Second (some numbers rounded):
Chesapeake hopes to raise nearly $1 billion in an initial public offering of stock in its Chesapeake Oilfield Services. According to the story, CHK is the second largest natural-gas producer in the US (XOM must be first?) and spent about $13 billion last year to drill 1,662 wells (almost $8 million/well). 

Texas Within "Spitting Distance" of Saudi Arabia, Russia -- And the Bakken Isn't Too Shabby Either

From Rigzone:
Growing U.S. crude oil production has placed the nation within spitting distance of the world's largest producers, Saudi Arabia and Russia, and has made the U.S. more significant on the world energy stage than Iran, China, Iraq or Venezuela.

The state of Texas has a significant role to play in this growth, with production anticipated to reach 2 million barrels of oil per day (MMbopd) in the next few years, thanks to Eagle Ford shale, Permian Basin fields and other plays, said Texas Railroad Commissioner Barry Smitherman.
Remember: "word on the street" is that the Bakken will exceed 1 million bbls/day in the out years.

ONEOK, alone, announced plans for a new Bakken-to-Cushing pipeline with potential capacity of 900,000 bbls/day.

First Solar to Cut 30% of their Work Force In Response to European Conditions

30% is not trivial.

CNBC: "Operations in Europe no longer economically sustainable."

Shares halted in trading pending announcement. Will probably open higher.

For investors, CNBC says this stock sold at one time for $320/share; now around $20/share. Unless I misheard what they said.

Natural gas around $2.00.

President Obama Announces Initiative To "Curb" Oil Futures Speculation -- Needs Congressional Action

His proposal: larger government -- increase the oversight of the free market system

Earlier this a.m. oil was up about 80 cents, prior to the speech.

At noon, oil is up about $1.65, following the speech.

Talking heads on CNBC suggest, and I agree with this, "speculators" don't care what the absolute price is; they are looking for volatility. Take away the "speculators" and the volatility goes away, and price of oil would probably trend higher over time, with less volatility.

Investors and mineral owners would benefit. At least that's the 30-second soundbite from the CNBC talking heads. I don't know about all of that, but there's no question "speculators" want volatility; absolute price doesn't mean a whole lot to them.

Update On A Great Oasis Three Forks Well in the Sweet Spot of the Bakken

128,000 bbls in four full months of production
Sweet spot of the Bakken
A Three Forks well

  • 19946, 1,474, Oasis, Spratley 5494 34-13H, Alkali Creek, Three Forks, s5/11; t10/11; cum 128K 2/12; 4.4 million lbs sand/ceramic frac, cased hole.
This is a huge well.

Spud 5/11; tested/completed 10/11:   IP= 1,474

Cumulative: 127,518 bbls after only four full months. First month was 15 days of production. Something is going on with the well in February: on-line only 3 days, and production only a thousand bbls.
  • Oct, full month: 42,000 bbls
  • Nov, full month, 28,000 bbls
  • Dec, full month, 21,000 bbls
  • Jan, full month, 21,000 bbls
On a pump.

Located right in the sweet spot of the Bakken.

Huge well for a Three Forks.

I was somewhat surprised to see the amount of ceramic used: 2.7 million lbs ceramic; 1.7 million lbs sand. My understanding is that in the short term, not much difference between sand and ceramic in effectiveness; long term ceramic much better. 

Geologist's comment:
  • the lateral target zone of a ten (10) foot section of the Three Forks Formation situated 34 to 44 feet below the bottom of the Lower Shale of the Bakken Formation. The curve was landed .... approximately 34 feet below the Lower Shale of the Bakken Formation
  • total background gas levels averaged ~975 units with common peaks ranging from ~1,400 to 1,800 units with rare peaks ranging from ~2,050 to ~2,160 units for approximately first 4,750 feet of the lateral section. Total background gas levels elevated ~1,650 units with common peaks ranging from ~2,200 to ~2,500 units during the remainder of lateral section.

Denbury Provides Operations Update

Link here.
First quarter production estimates include 33,257 barrels per day of tertiary oil production, a 7% increase from that in the fourth quarter of 2011, and 15,114 BOE/d of Bakken production, a 29% increase from fourth quarter of 2011 levels. Sequential growth in tertiary oil production was primarily driven by new tertiary floods at the Oyster Bayou and Hastings fields, and a sooner than anticipated production response at Tinsley Field. By field, tertiary oil production estimates for the first quarter of 2012 are 877 Bbls/d at Oyster Bayou, 618 Bbls/d at Hastings and 7,297 Bbls/d at Tinsley. Bakken production growth was the result of the Company's drilling program and favorable winter operating conditions in that area. Updated information on individual Bakken well performance is provided in today's presentation.

RBN Energy: Where Is Price of Natural Gas Headed.

Link here (log in may be required).