Sunday, April 22, 2012

North Dakota State Oil and Gas Lease Sale -- May 1, 2012

Link here to North Dakota Department of Trust Lands.

Data points:
  • almost 12,000 acres up for sale; 10 counties
  • Divide County: county with greatest amount of acreage up for sale -- almost 3,000 acres
  • Stark County: county with second greatest amount of acreage -- a little over 2,000 ares
  • major players in Divide County: Baytex, CLR, Crescent Point Energy, Newfield, Samson, and SM Energy
Results of the sale are released the day of the sale; if I forget to post results, someone should send me a note to remind me to do so.

This is a very small amount of land up for lease; in February, almost 70,000 acres were sold. Average bonus paid in February: $1,200. Highest bonus: $21,000/acre; paid by Wildcat Oil and Gas out of Bismarck, ND; 0.2 acres inside the city limits of Stanley, ND.


A Note to the Granddaughters
See "Library."

It all works out, the law of averages.

I started a very aggressive reading program in 2004. I think I've mentioned that before. The Air Force sent me to a remote assignment at a time when the last thing I wanted to do was to travel. I was tired of being away from home. Actually, I was more tired of traveling. I used the opportunity to start recreational reading again, a habit I had been forced to give up thirty years earlier. There wasn't much else to do. I remember taking a photograph of a stack of books about three feet tall, my library for the four months I was "there." I recall re-reading Giants in the Earth by Rolvaag.

That started an obsession with reading. I hate to buy books at full price, so I frequent used book stores. No matter where I go I visit the local libraries and the local bookstores.

This past weekend we spent several days in Cape Cod, between Chatham, at the elbow, and Provincetown, at the fist. I mention that because I think one of the best bookstores I have ever found is the Yellow Umbrella Bookstore in Chatham.  This was our second time there, and the primary reason for wanting to return to Chatham was to visit this bookstore. It is not a used bookstore; they do have used books for discount prices, but in general one can expect to pay full price.

I worry about bookstores becoming a thing of the past because of Amazon. I love to browse. It's not easy to browse for books on Amazon. I think the majority of my purchases have come from browsing.

I don't care for Borders or Barnes and Noble. Every time I walk in I feel overwhelmed. I don't know where to begin. I feel that I have to wade through tons of books I have no interest in to find a book I might enjoy.

But Yellow Umbrella Bookstore has done all that for me. The store, I suppose, is about 20 feet of store front, and maybe 60 feet deep, a small, a very small store. Bookshelves on two opposite facing walls, and a bookshelf down the center of the store, and that's it. And it's exactly the books that interest me. It's as if Yellow Umbrella has already done the hard work: found the best ten percent of the books that a Borders or a Barnes and Noble has to offer and that's where I start.

So, I found three wonderful books, two hard covers and a soft cover: The Emperor of All Maladies: A Biography of Cancer, by Siddhartha Mukherjee, a Pulitzer Prize winning book, c. 2010; On Rare Birds, by Anita Albus, translated from the German, c. 2011; and, Horseshoe Crabs and Velvet Worms, by Richard Fortey, c. 2011. I was not at all familiar with two of the three. The Fortey book was reviewed in both the Boston Globe and the Wall Street Journal, and that's probably why I ended up spotting it in the first place. It bothered me, only slightly, to pay full price, knowing I could save significantly by going through Amazon, but I also want to support these small stores.

But it all evens out, the prices I pay for books. At Provincetown, May found a great used bookstore, the kind where I start sneezing when I walk in due to the mold and mildew. There, for $5.00 I found Leon Edel's editing of Henry James notebooks and journals. There's a long story to my interest in Henry James, and maybe I'll talk about it here some day, but not tonight. Suffice it to say, his The Beast in the Jungle still haunts me.

I asked the owner of the bookstore -- I'm sure the bookstore had a name, but I don't recall seeing it. There was a rough "BookStore" sign and a similar "Open" sign at the end of a long narrow wooden board walk. It must have been a 20-yard walk down that narrow walkway to get to the old bookstore. Oh, yeah, I asked the owner of the bookstore what he liked to read, and by the end of the visit I had bought a $2.00 soft cover copy of Emile Zola's Theresa Ranquin. If the rest of the book holds my attention like the first chapter, I'm going to really enjoy it.

The owner mentioned that he pretty much only reads "dead authors" -- same with me. We both had a similar reason: we have only so much time to read, and we want to make sure that what we read has stood the test of time. About the only exception are several of Tim O'Brien's books (If I Die in a Combat Zone; The Things They Carried; and, Going After Cacciato). Tim O'Brien is a contemporary; we both got lottery numbers for the Vietnam War. He was a bit older and went; by the time I graduated from college, things were pretty much winding down. Regardless, I ended up in the Air Force later on.

So, that brings you up to date with my current reading list. I am re-reading The Celts by Gerhard Herm which I've been carrying around with me now for the past several weeks. Interestingly enough, a section in Mukherjee's cancer biography crossed paths with a section in The Celts. That happens a lot, where I come across something in one book which proves useful in understanding something in another book, and both books have nothing in common, not even the genre.

Just One More Dot To Connect --


April 23, 2012: Saudi Arabia needs CO2 for EOR in its old, declining fields. See first comment below. 

Original Post
Link here to Minyanville.

Minyanville asks the question: which refinery in the US is about to become the biggest refinery -- within the next month?

Data points:
  • Trainer, COP -- about to close
  • Girard Point, Sunoco -- about to close
  • Marcus Hook, Sunoco -- about to close
  • Port Arthur, Saudi Refining/Shell -- about to become the biggest in US; among 10 largest in the world
How did this happen? First, increased oil production
  • Eagle Ford
  • Permian Basin
  • Bakken 
  • Athabasca Oil Sands near Alberta, Canada
Second, Seaway Pipeline reversal (Enbridge and Enterprise Products Partners)
Port Arthur, Sabine, Texas
  • undergoing massive expansion
  • capacity will more than double to 600,000 bopd
  • will become largest in US; surpass XOM's Baytown by approx 40,000 bopd
  • world's largest: Jamnagar, Gujarat, India: 1.24 bopd 
  • Port Arthur expansion: joint venture between Saudi Refining and Shell
  • Saudi Refining: a subsidiary of the Saudi Arabian national oil company, Saudi Aramco
Serendipity, the third dot
  • expansion plans drawn up 6 years ago
  • completion will coincide with Seaway Pipeline reversal
Other implications
  • imports of crude oil into the Gulf Coast region expected to plummet by 40% by 2016
  • imports will decrease almost 2 million bopd to 5 million bopd
  • that will take a lot of crude oil tankers off the high seas

Of all the refiners in the world (XOM, COP, Total, Shell, Saudi, CVX), I find it so interesting that one of the joint partners at Port Arthur is Aramco. Who wudda thought?

    For Investors Only: COP, XOM, and CVX Report This Week

    Earnings Central here

    COP: Monday
    XOM: Thursday
    CVX: Friday

    I think. You may want to confirm. Also before or after market opens, closes, not noted above.

    Keystone XL May Not Be Needed After All -- For the Bakken

    Reality: it never was needed for the Bakken

    Keystone XL may not be needed for the Bakken.
    Several pipeline proposals that are in the works diminish the importance of the controversial Keystone XL Pipeline for North Dakota, according to the state’s public service commissioner.

    .... projects such as the Bakken Crude Express Pipeline proposed earlier this month by Oneok Partners LP ....

    That project is one of six pipelines proposed to increase the pipeline capacity out of North Dakota.

    Cramer said that while many pipelines have somewhat circuitous routes, he considers the Bakken Crude Express to be the first “bullet line” with a direct route.
    Note:  it should be noted that the speaker was talking about the Keystone XL's importance for the Bakken. This is still an important pipeline for Canadian oil and the company proposing it.

    It was always my understanding that the Keystone XL was never a major player with regard to the Bakken. TransCanada did not want to include the Bakken in its original plans, and it was only the perseverance of the Montana governor that prompted TransCanada to change its mind. The governor said he would not all the XL pipeline through his state if there was not an "on-ramp" for Bakken oil.

    So, in a sense this article does not add anything to the conversation regarding the TransCanada XL or Bakken takeaway capacity for those folks are regularly read the blog, but for others, it helps put things into perspective.

    Random Note on Whiting's Big Island Prospect in Southwestern North Dakota

    Link here to see summary of Whiting's prospects in North Dakota. At link, scroll down to Whiting.

    Whiting has five wells in close proximity in this prospect, one with rig on site. These are all wildcats:
    • 19921, 55, Foundation Energy/Whiting, Brookhart 11-14; a Red River well; t2/12; cum 11K 9/16;
    • 20043, 200, Foundation Energy/Whiting, Peplinski 34-9, Red River Pool; t11/11; cum 36K 9/16;
    • 20969, dry, Foundation Energy/Whiting, Nistler 21-25H, Three Forks Pool; t12/12; cum 0K 2/12; SWD;
    • 22374, 320, Foundation Energy/Whiting, Quale 21-30, a Red River well; Delhi, t6/12; cum 60K 9/16; see this post.
    • 22569, 272, Foundation Energy/Whiting, Stecker 22-3; Hoot Owl field; t7/12; cum 53K 9/16;
    In its corporate presentation, Whiting says they are targeting several different formations in their Big Island prospect.

    Encore Well Near South Dakota Border -- The Williston Basin, North Dakota, USA

    Southwestern-most well in North Dakota:
    • 8317, 109/PDH,  Red River/ Red River B; Encore Energy, Wegman 11-30, Horse Creek field (was Wegman 22-30; a Red River well drilled March, 1981). The well is less than 2 miles from the South Dakota state line, and less than 15 miles from the extreme southwest corner of North Dakota; Bowman County; the Red River well is IA; had a cumulative of 274K; now re-entering Red River B (I don't know what "PDH" means).

    Random Look At a Sinclair Well in Little Knife Oil Field -- The Bakken, North Dakota, USA


    December 18, 2016: seems to be a "steady Eddy" now.

    PoolDateDaysBBLS OilRunsBBLS WaterMCF ProdMCF SoldVent/Flare

    September 2, 2012: maybe it started out as a good well, but it sure has been erratic. On-line 10 days May, 2012 (2K bbls); off-line all of June, 2012; back on line for 20 days in July, 2012 (4K bbls).

    Original Post 
    While looking at the new permits in Little Knife oil field, I had a chance to look at one of the better wells:
    • 19269, 410, Sinclair, Porcupine 1-19H, middle Bakken, Little Knife;  t9/11; cum 212K 12/19; off line 1/20;

    PoolDateDaysBBLS OilRunsBBLS WaterMCF ProdMCF SoldVent/Flare

    Six New Permits for Hess in Little Knife Oil Field; Another 6-Well Pad -- The Bakken, North Dakota, USA

    I've been wanting to write this note for a long, long time, but there hasn't been a good opportunity. Well, finally a great opportunity plus the time to blog.

    Based on questions and comments elsewhere (no link on purpose) some folks have missed the memo that the "norm" going forward in the Bakken is a minimum of four wells/spacing unit and at least eight wells/spacing unit in the "better" Bakken. The NDIC hearing dockets provide the background.

    Friday's daily activity report provided another example. This will be a six-well pad, with three wells running south (the "Dukart" wells) and three running north (the "Obrigewitch" wells):
    • 22798, loc, Hess, LK-Obrigewitch 146-97-3427H-2
    • 22799, loc, Hess, LK-Dukart 145-97-0310H-2
    • 22800, loc, Hess, LK-Obrigewitch 146-97-3427H-3
    • 22802, loc, Hess, LK-Dukart 145-97-0310H-3
    • 22803, loc, Hess, LK-Obrigewitch 146-97-3427H-4
    • 22804, loc, Hess, LK-Dukart 145-97-0310H-4
    There are already two wells in these two spacing units
    • 17980, 292, Hess, Dukart 3-1H, Little Knife, Bakken, s2/09; t6/09; cum 37K 2/12;
    • 18227, 116, Hess, Obrigewitch 34-1H, Little Knife, Bakken, s9/09; t10/09; cum 86K 2/12; 
    The question is which will be middle Bakken wells and which will be Three Forks wells.

    Recompletion Wells -- Inaugural Post -- Denbury Enters the Tyler


    May 24, 2014:
    • 14713: producing again from the Madison, about 400 bbls/month; nothing from the Tyler it appears, now PNA (Tyler)
    • 13453: still producing only from the Madision, about 1,300 bbls/month; Tyler, PNA
    May 4, 2013: 
    • 14713: no production from either formation in past 8 months
    • 13453: producing only from the Madison, 1,300 bbls/month; Madison, t4/07; cum 128K 3/13; 
    December 19, 2012:
    • 14713: In October, no production from either formation. Cum 79K 10/12 from the Madison. 0 from the Tyler.
    • 13453: In October, no production from the Tyler. Cum 521K 4/07, from the Tyler; cum 122K 10/12 from the Madison; the Madison is producing at 1,300 bbls/month.
    Original Post

    This is the inaugural entry for "recompletion wells" which are occasionally on daily activity reports.

    April 19, 2012
    • 14713, 30 (Madison), Denbury Onshore, South Fryburg 40-26, Fryburg Field, Billings County; s11/97; cum 78K 2/12 Madison Pool ; re-complete 4/12, Tyler Pool;
    Spud date: 11/2/1997; Madison Pool; cum 78K 2/12
    Re-complete date: 4/19/2012; Tyler Pool;
    So this well was originally drilled back in 1997; has produced 78,000 bbls to date; a vertical well with one section spacing; now they are going back in to target the Tyler. This well is about 9 miles southwest of Belfield, in the southwest part of the state where the Tyler is being targeted.

    A random example of another Madison / Heath well in this immediate area:
    • 13453, 93 (Madison); 203 (Heath); Hess, Fryburg Heath-Madison Unit J-806HR, Fryburg field; t1993 (Heath); t2007 (Madison); cum 521K 2/12 (Heath); cum 110K (Madison) 2/12; the Heath last produced in 2007; the Madison is producing about 1,800 bbls/month.

      Random Update of Recent Automobile Stories Coming Out of China

      GM making huge investment in China
      Last year, Chinese consumers bought 16.6 million cars -- 5 million more than the number sold in the entire U.S., according to J.D. Power and Associates.
      Volvo to double its production in  China
      Volvo Car Corp., the Swedish carmaker owned by China’s Zhejiang Geely Holding Group Co., said it plans to more than double its number of models to compete with Volkswagen AG’s Audi and BMW AG in the world’s largest automobile market.

      Volvo, which currently sells 6 models in China, is planning to introduce 10 new ones in the country within six years, including “bigger and more luxury high end” vehicles ...

      Volvo, ranked fifth in luxury-car sales in China, intends to invest as much as $11 billion globally by 2016 to meet its expansion plans....
      Ford to quadruple SUV offerings in China over next year
      Ford Motor Co, seeking to tap into China's growing appetite for brawny sport utility vehicles, will quadruple its offerings in that segment over the next year.

      The U.S. automaker, a latecomer in the world's largest automotive market, will add the Kuga, the Chinese version of the Escape, and EcoSport small SUVs, and the larger Explorer to its sparse China SUV portfolio, Ford Asia chief Joe Hinrichs said on Sunday.
      Ford's announces third huge new Chinese plant in six weeks
      Ford Motor has chosen China for its largest factory expansion program in a half century, announcing on Thursday that it would build a $760 million assembly plant in Hangzhou, two weeks after announcing another $600 million plan to expand an assembly plant in Chongqing and less than six weeks after completing a third assembly plant in Chongqing.
      Same story, different source
      Ford Motor Co., playing catch up in China, plans to build a $760 million assembly plant in Hangzhou that will double its Chinese output to 1.2 million vehicles annually. 

      Ford and joint venture partner Changan Ford Mazda Automobile Co. will start construction later this year and the plant will open in 2015, initially producing 250,000 vehicles a year, the Dearborn, Michigan-based automaker said today in an e- mailed statement.

      The new factory, which follows other capacity expansions, brings Ford’s total investment in China to $4.9 billion, the automaker said.
      GM sets sales record in China in 2011
      General Motors and its joint ventures sold a record 2,547,171 vehicles in China in 2011, an average of one car or truck every 12 seconds in its largest global market. GM’s sales were up 8.3 percent from the previous high of 2,351,610 vehicles sold in 2010.

      GM’s Shanghai GM and SAIC-GM-Wuling joint ventures along with all of its passenger car brands experienced record domestic demand, enabling GM to remain the sales leader among global automakers in China for the seventh consecutive year.
      And a reminder regarding "gasoline demand destruction" in the United States: click here and scroll to the bottom of the page, look at the last graph on the page, and pay attention to the "red dot graph" and repeat to yourself: "demand destruction."

      Headed For The Supreme Court?

      Link here to Minot Daily News.
      The chairman of the Three Affiliated Tribes questions whether the Bureau of Land Management has authority to regulate hydraulic fracturing on Indian reservations.

      "Although the BLM has jurisdiction to regulate activities on 'public lands,' Indian lands are not public lands," Hall said. "Indian reservations are set aside and reserved for the exclusive use and benefit of Indian tribes. Neither the Federal Land Policy and Management Act of 1976 nor the Department of Interior's Departmental Manual provide BLM with direct or delegated authority over Indian lands."

      The BLM is proposing regulations on hydraulic fracturing, also known as fracking, used in oil and gas development.
      Whether it has legal jurisdiction or not, unfortunately, precedent suggests that BLM does, in fact, manage tribal land.
      Senator Dorgan said he pressed the Interior Department for months to process the payments, which were being held in escrow by oil companies. The Interior Department's Bureau of Indian Affairs and Bureau of Land Management manage oil and gas activities on tribal land.
      I am way out of my depth on this issue, but I've always wondered why, in the modern age, the native Americans have not been given complete autonomy of the land they were "given" by the Federal government.

      My hunch: if the BLM regulates fracking, the TAT will threaten to take this to the Supreme Court. If the federal government thinks they might lose this case, the administration might tell the BLM/EPA to back off.