Wednesday, May 9, 2012

COP Announces Dividend Unchanged Despite Spin-Off of PSX

Link here.
ConocoPhillips announced a quarterly dividend of 66 cents per share, payable June 1, 2012, to stockholders of record at the close of business on May 21, 2012.
This dividend is unchanged from previous quarters, and it comes after COP has spun off PSX.

EOG: First CBR Bakken Oil to St James, Louisiana Terminal -- The Bakken, North Dakota, USA

Link here.
EOG Resources said on Wednesday it received  its first crude from the Bakken shale oil fields in North Dakota at  the St. James, Louisiana terminal on April 15.

The terminal will have capacity to handle 50,000 barrels-per-day (bpd) of crude in June and 70,000 bpd by year end, the company said in its first-quarter earnings call. 
From the conference call:
I'll now address 2 other EOG key differentiators: Crude-by-rail and sand plants. Our St. James crude-by-rail facility received its first Bakken crude oil shipment on April 15, allowing us to begin capturing the current $15 Bakken in LLS price uplift. We now have the capability to move our Bakken, Eagle Ford and Wolfcamp crude to either Cushing or St. James.

Based on current differentials, the best NPV for our rail tanker fleet is to move our EOG Bakken oil to St. James and sell our Eagle Ford in the Houston and Corpus Christi markets. We expect our St. James facility to handle 50,000 barrels a day by June, increasing to 70,000 barrels a day by year end. We've provided guidance on our U.S. oil differentials relative to WTI for the second quarter in yesterday's press release.

For those modeling this net back benefit, remember that May will be a debugging month while we iron out the startup kinks, though likely to facility will run at intermittent capacity. We will not have the St. James facility fully operational for the entire second quarter, and not all of EOG's oil production will be sold to St. James. As market conditions and differentials change, we have great flexibility and can rapidly revise where we sell our production and how we get our production to market.

Pipeline Activity in the Oil Patch -- Current Trends -- The Bakken, North Dakota, USA

Link here to an absolutely excellent article. Simply one of the best articles this week (year?).
In the winter of 2012 a mostly snowless and relatively warm Bakken Shale play in northwest North Dakota was trucking about 70% of its oil supplies in the gathering and processing phase as production continued at an all-time record clip averaging 546,000 bpd in January. New midstream infrastructure construction was limited to intrastate shipments within an under-developed gathering and processing system.

In various ways this scenario is being repeated in many of the shale plays as production of oil, natural gas liquids and gas continues to outpace the development of midstream infrastructure. As a result, many of the exploration and production (E&P) operators are increasingly getting involved in takeaway infrastructure.

“I think there is a trend, although you will probably get different philosophies on the subject,” said David Lundberg, a New York City-based analyst with Standard & Poor’s Ratings Services (S&P). “It is particularly evident in certain shale plays where the infrastructure is not well built out, such as the Bakken.” 
The data points are endless in this long (4-page) article. 

Federal Fracking Rules Will Hurt Development in the Reservation -- The Bakken, North Dakota, USA

BLM fracking rules will hurt development in the reservation -- link here.

Eleven (11) New Permits -- The Williston Basin, North Dakota, USA

Daily activity report, May 9, 2012 --

Operators: MRO (3), BR (2),  OXY (2), BEXP (2), Triangle, Hess
Fields: Big Bend (Mountrail), Sand Creek (McKenzie), Bull Butte (Williams), Alger (Mountrail), Cabernet (Dunn), South Tobacco Garden (McKenzie)

MRO has a wildcat for a well in McLean County.

Hunt oil cancels #22502, Bear Butte 1-2-11H, McKenzie County.

Three (3) wells were released from "tight hole" status:
  • 19476, DRL, ERF, Buffalo Run 5-24H, Dunn
  • 21587, DRL, Hess, EN-Binger 157-94-1201H-1, Mountrail
  • 22502, PNC, Hunt, Bear Butte 1-2-11H, McKenzie
Samson is changing the name of two wells suggesting new target:
  • 21363, loc, Samson Resources, Biscayne ...04TFH (was ...99H)
  • 22809, loc, Samson Resources, Baja ...04TFH (was 99H)

Random Update of Permits Issued in 2007 -- The Williston Basin, North Dakota, USA

Periodically I like to see how older wells are doing now that we are into the fifth year of the North Dakota Bakken boom.

From my database for permits issued in 2007, I looked at the 20 wells with the highest IPs. I also looked at the 20 wells with the lowest IPs (with a minimum of 10 bbls).  Since BEXP did not have any of the highest IPs, nor any of the lowest, I also looked at ALL of the BEXP permits issued in 2007.

These are the results.

Wells with highest IPs; all Bakken. Note that none are actually five years old yet. The oldest were drilled in December, 2007:
  • 16990, 3,744, EOG, Austin 5-14H, Parshall, t5/08; cum 540K 3/12;
  • 16954, 3,633, EOG, Austin 6-15H, Parshall, t4/08; cum 668K 3/12;
  • 16885, 3,070, EOG, Austin 8-26H, Parshall, t2/08; cum 618K 3/12;
  • 16977, 2,625, Whiting, Lee State 44-16H, Parshall; t5/08; cum 387K 3/12;
  • 16780, 2,247, Whiting, Liffrig 11-27H, Sanish, t1/08; cum 393K 3/12;
  • 16902, 2,192, Whiting, Lacey 11-1H, Sanish, t7/08; cum 296K 3/12;
  • 16781, 1,923, Whiting, Maynard Uran Trust 11-24H, Sanish, t4/08; cum 376K 3/12;
  • 16972, 1,833, EOG, Austin 7-23H, Parshall;  t7/08; cum 498K 3/12;
  • 16934, 1,768, Whiting, Fladeland 11-12H, Sanish; t5/09; cum 220K 3/12;
  • 16852, 1,765, Whiting, Abbott 11-18H, Sanish, t6/08; cum 327K 3/12;
  • 16846, 1,721, EOG, School 1-16H, Parshall; t3/08; cum 338K 3/12;
  • 16949, 1,704, Oasis, Schmitz Federal 44-34H-2, Eightmile; t9/10; cum 95K 3/12
  • 16871, 1,567, Whiting, Locken 14-28H, Sanish, t5/08; cum 270K 3/12;
  • 16784, 1,565, EOG, Wayzetta 3-15H, Parshall, t5/08; cum 386K 3/12;
  • 16997, 1,520, EOG, Van Hook 1-13H, Van Hook, t6/08; cum 449K 3/12;
  • 16795, 1,519, EOG, Austin 4-09H, Parshall; t12/07; cum 522K 3/12;
  • 16639, 1,510, EOG, Jordet 1-11H, Parshall, t3/08; cum 320K 3/12;
  • 16970, 1,496, EOG, Barbara 1-12h, Parshall, t7/09; cum 272K 3/12;
  • 16950, 1,466, EOG, Bergstrom 1-21H, Parshall, t6/08; cum 260K 3/12;
  • 16768, 1,441, EOG, Austin 2-03H, Parshall, t12/07; cum 513K 3/12;
 Wells with lowest IPs (at least 10 bbls); various formations:
  • 16697, 10, Taqa North USA, Price 5H, Grenora, a Madison well; t10/07; cum 4K 3/12;
  • 16655, 11, Hess, BLDU B-305, Beaver Lodge, a Devonian well; t10/07; cum 10K 3/12;
  • 16865, 15, Murex, Joseph Fate 1, Mouse River Park, a Madison well; t1/08; cum 5K 3/12;
  • 16983, 15, BR, Mathistad 1-35H, Blue Buttes, a Bakken well; t6/08; cum 171K 3/12;
  • 16643, 17, Zenergy, Pvt. Labiche 20-19H, Briar Creek; Madison; t4/08; cum 2K 3/12;
  • 16712, 17, Hess, NSCU P-715AH, Newburg; Spearfish/Charles; t10/07; cum 24K 3/12;
  • 16796, 19, Eagle Op, E-M Cleone 29-5, wildcat, Madison; t11/07; cum 132 bbls; 3/12
  • 16506, 20, Whiting, NERU 2806H, NE Ranch, Madison; t6/07; cum 927 bbls; 3/12;
  • 16651, 20, Murex, Schmitz 8, Mouse River Park, a Madison well; t9/07; cum 8K 3/12;
  • 16519, 25, Panamerican, S.E. 1, Dry Creek, a Madison well; t4/07; cum 21K 3/12;
  • 16641, 25, CLR, Jorgensen 21-4NH, Medicine Pole Hills, Red River; t8/07; cum 43K 3/12;
  • 16551, 27, Summitt, Gap Federal 1-27H, Squaw Gap, Bakken, t7/10; cum 24K 3/12;
  • 16789, 26, Zargon, ZMB 2HZ 11-16, Mackobee Coulee, Madison; t11/07 cum 43K 3/12;
  • 16989, 30, Oxy USA, Meyer 1-4, Willmen, a Madison well; t5/08; cum 20K 3/12;
  • 16545, 32, Baytex, Ingvald Mork Trust 17B-2-1H, Burg, Bakken, t8/07; cum 10K 3/12;
  • 16601, 32, Zavanna, Sakakawea 1-21H, Briar Creek, Madison; t2/08; cum 19K 3/12;
  • 16692, 21, Sequel, 20401 JV-P Gohrick 43-17, McGregor, W'gosis; t9/07; cum 35K 3/12
  • 17000, 32, CLR, Harry 42-15NH, Cedar Hills, Red River B well; t1/09; cum 130K 3/12;
  • 16688, 34, Hess, NSCU M-717AH, Newburg, Spearfish/Charles; t10/07; cum 12K 3/12;
  • 16609, 38, CLR, Jost 1-20H, Charlie Bob, Bakken, t12/07; cum 21K; 3/12;
  • 16617, 38; Hess, BL-Heen-156-95 2227H-1, t10/07; cum 18K 3/12;
  • 16745, 40, Hess, NSCU M-711AH, Newburg, t10/07; cum 49K 3/12;
BEXP was issued four permits in 2007, all Bakken wells:
  • 16978, 274, BEXP, Hallingstad 27 1H, Parshall, t3/08; cum 80K 3/12;
  • 16840, 277, BEXP, Bergstrom Family Trust 26 1-H, Parshall, t1/08; cum 43K 3/12;
  • 16898, 282, BEXP, Hynek 2 1H, Alger, t1/08; cum 52K 3/12;
  • 16893, 368, BEXP, Bakke 23 1-H (no typo); Alger, t2/08; cum 73K 3/12

Absolutely Nothing To Do With The Bakken: Colorado Fails to "Set Standard for Driving While Stoned"

I cannot make this stuff up.

According to the Denver Post, the state legislature failed to pass a bill that would have "set a standard for driving while stoned."
" the process of making sure civil unions died on the calendar, a slew of other bills became casualties too.

Among the bills ensnared in the tug-of-war in the House: $20 million worth of water projects statewide and a bill that sets a standard for driving while stoned.
We need a standard for that?

One Toke Over the Line, Fear And Loathing in Las Vegas
Brewer and Shipley, Johnny Depp, Hunter S Thompson
Or if you prefer, from the Lawrence Welk show, introduced by Roslyn, South Dakota, native, Myron Floren:

One Toke Over the Line, Lawrence Welk Show

Massachusetts Representative Calls For More Natural Gas Pipelines

Link here
In a three-page letter to federal energy Secretary Steven Chu, Markey questioned whether the [New England] region should import liquefied natural gas from Yemen when domestic gas production is booming because of drilling [and fracking] in shale formations across the country, including in Pennsylvania.

“These natural gas supply problems highlight the importance of developing the domestic infrastructure that would allow all Americans to benefit from the low-price, abundant, and secure supplies of natural gas now being produced in the United States,’’ wrote Markey, a Malden Democrat and ranking member of the House Natural Resources Committee.
In an interview, Markey said he would “seriously consider’’ supporting a proposal by Spectra Energy Corp. of Houston to expand the Algonquin Gas Transmission pipeline that delivers natural gas to New England.
Slowly, drip by drip, folks are beginning to understand the scale of oily resources in North America.

Unrelated, but for the record:

The Congressman was an early supporter of the Cape Wind off-shore project, which is a high-cost, abundant, and renewable source of energy. 

The Congressman is adamantly opposed to importing oil from the Canadian oil sands into the United States.

Question Regarding WAWS, Heating Water -- The Bakken, North Dakota, USA

NOTE: I have a number of posts already written and ready to post but I am waiting for responses to the post below regarding WAWS. I will leave this post up until later this evening. After 7:00 p.m. EST I will post the posts I have already posted.

For investors in energy: everything I've seen over the last couple of days is good news for those holding shares in the oil and gas industry, particularly in the Bakken. The story right now is the "surge" in the price of natural gas. It's up another ten cents today. Disclaimer: this is not an investment site. This has nothing to do with buy, sell, or hold recommendations. It is simply idle chatter that one might hear at the Economart in Williston.


At this link, an overview of WAWS, a reader has asked several questions that I cannot answer. Perhaps others can.

There are rumors that WAWS will be adding several (four?) water depots north of the river. True? Locations?

Does anyone know the background of the company operating the WAWS water depot on Second Street West, Williston, ND. Is it Armstrong Hot Water Depots? Will this company assume operating responsibility for the entire WAWS system?

Will all WAWS depots in the future provide heated water?

Is the Bakken/industry moving toward heated water?

Should independents provide heated water?

Is this to allow fracking year-round? See comments below: all water is heated for fracking, to about 80 degrees.

Bakken Airports to Grow -- North Dakota, USA

Link here.
Dickinson City Commissioner Joe Frenzel reported at a city commission meeting Monday that the Dickinson airport, Sloulin Field International Airport in Williston and the Minot International Airport will need $400 million in the next five to ten years to operate.

Dickinson may need to expand its runways and build a terminal, Remynse said. Williston may have to move its airport while Minot builds another terminal and parking lot, Frenzel added.

Later. Added after receiving the comment:

"Anon 1" provided the following from the article, see comments:
"Frenzel added the airport could reach 26,000, but limited flights, capacity restrictions and availability of crew members holds back its full potential.

“The suggestion was that what is keeping Dickinson from 50,000 is simply we don’t have the aircraft,” he said.

The news was disturbing yet interesting, the commissioner said. The lack of airlines and extra crews could be a problem for the growing town.

“We can’t grow with that kind of service,” he said."
Truly incredible. One really has to wonder about their thinking. Dickinson can't grow because of inadequate air service? As "anon 1" points out: expand the airport. Oh, that's right. There's a housing problem.

Filloon on Denbury in the Bakken

Link here.
One issue of note is Denbury plans to decrease its rig count to 4 from a high of 7 in 2011. This could be due to several Bakken issues. Lower Bakken crude prices and higher costs could both be reasons, as Denbury has always done a very good job with its EOR projects, in keeping costs down and hitting production numbers. This is a variable we will need to monitor in upcoming quarters.

Denbury has stated it has reduced the number of rigs it has had under contract because it would like to only use efficient flex drilling rigs. These rigs are very efficient in pad drilling, which is why it only will need four as it progresses into an aggressive pad drilling program.
Filloon is absolutely correct. Folks who have not kept up with the Bakken may not be aware that when this all began, it was taking 30 - 45 days for a well to reach total depth. Now, it should be under a month, and some records have been set, down to 16 days if I recall.

In addition, pad drilling minimizes time needed to move a rig from one drilling location to the next.

The number of rigs in North Dakota is an interesting data point, but as a single data point, minor changes in the overall count don't have much relevance. My hunch is that going from seven to four will result in a huge savings without much loss in capability.

Whiting's Current Corporate Presentation

Link here, a pdf.

Sent to me by a reader, here were his comments:
Here's Whiting's latest. I like page 11, shooting for the sweet spots. Pages 12-15, dividing bakken/sanish/pronghorn. Page 16 Whiting rules the chart.
Slide 11:  note the size of the Lewis & Clark prospect; geographically larger than the Sanish; the Three Forks may be thicker than the middle Bakken for much of the prospect

Slide 12: I like the multiple payzones demonstrated

Slide 15: Whiting still shows 600,000 as the average EUR; I think that is conservative; remember no "dry" holes in the Bakken to pull the average down, unlike other plays in the past

Slide 21: Denbury is not the only one involved with EOR in the Permian

Bakken Companies -- Wylie Bice and RM -- Acquired by Quality Distribution -- North Dakota, USA

Link here. Big "thank you" to a reader for sending me the link.
Quality Distribution, Inc. today announced that certain of its wholly-owned subsidiaries have entered into definitive agreements to acquire the operating assets of Wylie Bice Trucking, LLC, and the operating assets and rights of RM Resources, LLC, for an aggregate purchase price of $79.3 million, plus potential additional consideration of $19.0 million, if certain future operating and financial performance criteria are satisfied. The transactions are expected to close by the end of the second quarter, subject to customary closing conditions.

Headquartered in Killdeer, ND, Bice is a leading provider of transportation services to the unconventional oil and gas industry within the Bakken shale region, primarily hauling fresh water, flowback and production water, and oil for numerous energy customers. The flowback and production water Bice hauls is primarily disposed of utilizing four existing salt water injection wells owned and operated by RM.

"The Bice and RM operations are top-tier transportation and disposal well providers in the fast growing Bakken shale region, and we are confident that we can build on their already solid platform. This transaction also supports our strategy to broaden our reach into key oil-rich shales. When we combine this Bakken acquisition with our existing Eagle Ford shale presence, Quality's energy logistics business will be more diversified and balanced between oil producing fields and our predominantly gas producing presence in the Marcellus shale."
Part of the North Dakota to Texas renaissance zone. Hoo-ah.

Plains All American: Overview of Operations in the Bakken -- RBN Energy

Link here
In the Bakken proper, the Plains system is built around a package of Bakken midstream assets acquired from Nexen in 2010 including a lease gathering business maintaining about 55 Mb/d, the Robinson Lake pipeline, a 20-mile pipeline that currently handles about 18 Mb/d, and eight truck terminals. Today the system includes the Trenton Gathering system that moves barrels into Trenton (Williams Co.) from the southwest, the Bakken north pipeline that moves barrels to Trenton from the northwest, and a couple of pipelines in the Ross/Stanley area (Mountrail County).
This is a very nice summary of huge oil and gas transportation network. The story at the link provides summary overview of Plains All American in the Bakken.