Wednesday, May 30, 2012

More Lodging To Break Ground --- Radisson Hotel, Country Inn and Suites; Update on Crowne Point Lodge

Minnesota-based Complete Hospitality Management, link here:
  • working with Granite Peak Development to build a 160-room Radisson Hotel at Sand Creek Town Centre
  • working with Granite Peak Development to build a 240-room Country Inn and Suites at the Bakken Industrial Park; will include a restaurant specializing in buffalo wings
  • partnering with Annabelle Homes in Tioga to manage the 240-room Crowne Point Lodge and Suites; Annabelle will break ground June 1; 38 rooms will be left open for tourists;
  • considering locations at 13-mile corner north of Williston and in Ray
Lodging investments are being paid off in about 32 months instead of the industry norm of six to 15 years.

Fifteen (15) New Permits -- The Williston Basin, North Dakota, USA

Daily activity report, May 30, 2012 --
  • Operators: CLR (6), Whiting (2), Hess (2), Oasis (2), WPX, XTO, Zavanna
  • Fields: East Fork (Williams), Hofflund (Williams), Hawkeye (McKenzie), Sanish (Mountrail), Brooklyn (Williams), Willow Creek (Williams), Mandaree (Dunn)
The list includes six more permits for the Brooklyn oil field northeast of Williston. This may simply be the most interesting field to watch be developed. There is one rig on this field and it just keeps on truckin'.

Keep on Truckin', Hot Tuna

Five (5) wells released from confidential status (which reminds me: about a week ago, NDIC went back from using "tight well" to using "confidential"):
  • 20300, 488, OXY USA, Lillian Sadowsky 1-15-22H-142-96, Manning; Bakken;
  • 20414, DRL, Zavanna, Larsen 32-29 1H,
  • 21123, 388, Hess, GO-Ron Anderson-157-97-13H-1, Ray; Bakken; 
  • 21446, DRL, Samson Resources, Pigeon 30-31-162-96H, Juno, Bakken, 
  • 21715, 564, CLR, Garner 1-32H, Rainbow, Bakken; t2/12; cum 13K 3/12;
The permits for the 2-well Whiting pad will be in the same section that already has:
  • 17895, 2,250, Whiting, Rohde 4-1H, t6/09; cum 266K 3/12; (yes, not even three years old, a quarter of a million bbls cumulative)
  • 18399, 2,685, Whiting, Rohde 43-1H, t4/10; cum 192K 3/12;
  • 20641, 843, Whiting, Rohde 43-1TFH, t9/11; cum 21K; 

Six More Brooklyn Oil Field Permits

From the daily activity report, May 30, 2012 --

CLR has permits for six more wells in Brooklyn oil field -- this is quite a field.
  • 23013, loc, CLR, Sacramento Federal 4-10H,
  • 23014, loc, CLR, Sacramento Federal 5-10H,
  • 23015, loc, CLR, Sacramento Federal 6-10H,
  • 23016, loc, CLR, Sacramento Federal 7-10H,
  • 23019, loc, CLR, Sacramento 3-10H,
  • 23020, loc, CLR, Sacramento 2-10H,
These six wells will all be in the same section where there is already a Sacramento well; this 2-section spacing unit will have 7 wells with these three 2-well pads. 

Housekeeping: CLR Acquires Operator Status of Some Newfield Wells

In a posting yesterday it was noted that Newfield's Bratlien well was now being operated by Continental Resources.

In a Notice of Transfer of Oil and Gas Wells, dated March 12, and received by NDIC on March 19, 2012, the following Newfield wells were transferred to CLR. These were reported in the May 16, 2012, daily activity report:

  • 19931, 1,257, 1-H Breitling 23-14, East Fork, t9/11; cum 56K 3/12;
  • 21845, DRL, Bratlien 154-100-33-28-1H; Last Chance; gas levels reached 4,000 units with an intermittent 1 - 5' flare; it took 24 days from spud to total depth;
  • 20993, DRL, Chrome 155-99-18-19-1H, Epping;
  • 19428, DRL, 1- Lila 8-5, Epping;
  • 19429, DRL, 1-H Hunter 17-20, Epping;
  • 21047, DRL, Sodbuster 155-99-6-7-1H, Epping;
  • 21295, DRL, Peterson 156-99-29-32-1H, East Fork;
  • 12108, Backen 42-33 SWD,
  • 12144, Holdredge 43-33 SWD,
  • 14514, 14, Jackson 1-35H, Last Chance, a Madison well; cum 27K 3/12;
  • 10194, 66, Bratlien 4 24-33, Last Chance, a Madison well; cum 118K 3/12;
  • 14638, 141, Bratlien 13-24, Last Chance, a Madison well; cum 42K 3/12;
  • 9693, 110, Bratlien 2 22-33, t1/83; Last Chance, a Madison well; cum 173: 3/12;
  • 9417, 81, Bratlien 1 41-33, t6/82; Last Chance, a Madison well; cum 87K 3/12;
  • 9718, 87, Bratlien 5 14-27, t9/83; Last Chance, a Madison well; cum 174K 3/12;
  • 9855, 237, Burdick 1-12-28, t3/83; Last Chance, a Madison well; cum 171K 3/12;
  • 9864, 216, Burdick 3 24-20, t6/83; Catwalk, a Madison well; cum 159K 3/12;
  • 19087, 1,395, 1-H Sandhill 25-36, Wildcat, Bakken; cum 69K 3/12;
  • 19202, 1,010, 1-H Manolo 21-16, t3/1; East Fork, Bakken; cum 50K 3/12;
  • 18581, 755, Caliente 1-9H, t4/11; East Fork, Bakken, cum 40K 3/12; 
  • 18413, 1,071, Heidi 1-4H, t4/10; East Fork, Bakken, cum 56K 3/12; 
  • 20944, PNC, Vandeberg 156-99-26-35-3H, East Fork, Bakken, 
  • 19090, DRL, 1-H Osmond 3-10, East Fork, Bakken, 
  • 18226, 540, Chanel 1-33H, t11/09;  Last Chance, Bakken, cum 36K 3/12; 
I don't recall any press release about the original offering or the deal, but perhaps it was related to this announcement

Nigeria Exporting Less Oil To US -- Due to Bakken/Eagle Ford

A reader sent me this article regarding Nigeria crude oil and the effect Bakken/Eagle Ford oil was having on that country's oil industry.
There is growing concern that Nigeria is losing the United States as its biggest oil customer amid surging output and refinery closures in North America.

According to shipping records, the recent U.S. purchases of Nigerian crude fell to a 5-year low in February, leading the country to slide to sixth position from her former fifth position among suppliers to the U.S, the world's largest oil consumer.

However, industry experts said that Nigeria was set to offset the trend as she is taking her cargoes to Asia, where refiners are increasing imports from Nigeria starting from next month.
When I got the article, I vaguely remembered reading that a major oil company was selling its Nigerian assets, but a quick google search found it: COP.  That article was published earlier this month and was a hint that things were changing.
U.S. oil major Conocophillips is selling all of its Nigerian assets including on-shore and off-shore oil and gas fields and a stake in its LNG Brass facility, sources familiar with the situation told Reuters.
... could help Conocophillips raise several billions of dollars.

Note this data point from the article linked above (the first article):
Boosted by drilling in shale-rock formations such as North Dakota's Bakken and Texas' Eagle Ford, crude production in the U.S. rose to 6.24 million barrels a day in the week ended May 18, the highest level since 1999.
This does not jive with the January 1, 2011, data from the CIA World Factbooks 18 December 2003 to 28 March 2011, this link, in which US oil production is said to be around 9 million bbls/day

Random Note RE: Denbury's TRMU 22X-16H

Status: confidential (May 29, 2012)
File number: 16906
Field: T.R. (southwest North Dakota)
Target: Madison Pool
Spacing: 7,680 acres

Compare to:
16870, active, Denbury, TRMU 44X-15H, T.R., s3/08; cum 44K 3/12
Field: T.R.
Target: Madison Pool
Spacing: 7,760 acres

Compare to:
15823, 13, Denbury, TRMU 41-22H, T.R., t9/05; cum 159K 3/12
Field: T.R.
Target: Madison Pool
Spacing: N/A

Compare to:
15834, 355, Denbury, TRMU 14-4H, T.R., t11/06; cum 155K 3/12
Field: T.R.
Target: Madison Pool
Spacing: N/A

Compare to:  34-year-old vertical Madison well with > 1 million bbls cumulative
6618, 132, Denbury, Franks Creek State 1-22, T.R., t10/78; cum 1.18 million bbls;  3/12; still producing 1,000 bbls/month
Field: T.R.
Target: Madison Pool
Spacing: 320 acres in lease, vertical well

Major UK Refinery Likely To Shut Down -- Not Making Money

Link here.

Data points:
  • supplies 20 percent of London's fuel requirements
  • employs 800 folks
  • authorities: it won't be missed -- except by 800 families

Construction on Highway 22 Out of Dickinson Has Begun

The link to the Dickinson Press  says the five-lane highway will extend from Dickinson to the Stark County/Dunn County line, a distance of five miles. Price tag: $9 million. About the cost of one Bakken well.

EPA Out of Touch With Reality -- API

Well, duh.

Wednesday Morning Ramblings

1. There is a great editorial in the WSJ today about electric vehicles.  (Remember: most folks on the commission working issues regarding electric vehicles work in Washington, DC, either do not own their own car; have government-issued cars; or drive mostly for pleasure.) The editorial raises issues that have been raised before on this blog. The following are my thoughts based on arguments made in the editorial.

First: the most expensive feature of an electric vehicle is the battery which has a finite life. Electric vehicles have little resale value after three years.

Second: the grid can't handle very many electric vehicles. As it stands, Los Angeles County could not handle 5% of all vehicles charging at one time; based on the numbers provided in the editorial, I doubt if the grid could handle 2%.

Not mentioned in this article but pointed out in an article elsewhere in WSJ today was an article that EV developers have not agreed upon a standard recharging station/receptacle, meaning that recharging may not occur "on the road" but only at home. Bummer. 

2. This is truly incredible: the IMF chief pays no income tax on a salary greatly exceeding one-half million dollars because of her diplomatic status. She has been a constant critic of Greeks cheating on their taxes. (There is a difference between cheating on taxes and not paying taxes not owed: this is known as the Warren Buffet Law.) To their credit the president and vice-president pay their fair share of taxes. In fact, the vice president doesn't take advantage of maximizing charity giving to lower his taxes.

3. There is a great story of New Yorkers and Pennsylvanians moving to Florida, where there is no income tax, no estate tax, no inheritance tax. But, at the article stated:
“Many of these New York and Pennsylvania residents no doubt moved to Florida for the warm weather,”.... sure.
4.  Speaking of tax avoidance, remember that story of John Kerry parking his boat in Rhode Island to avoid Massachusetts taxes? Well, apparently this issue has come up again. When you get to the link, read the last paragraph: I must be missing something. The taxes amount to ... drum roll ... $100. Two thoughts: the multi-millionaire heir (through his wife) is quibbling over a $100 tax bill; and, b) multimillionaires are paying $100 taxes on a yacht? The annual fee to renew the registration for my wife's minivan, payable to a Texas county tax assessor's office, is $65. Blue book value is about $10,000. I suppose the value of the minivan is somewhat less than the Kerry yacht but I don't know for sure because I've never owned a yacht.

5. Wow, the Spurs franchise has put together a strong team. I'm impressed. Two things: they kept the core all these years: Duncan, Parker, Ginobili; Bonner still there; and then the new guys, Leonard and Splitter. Inside the paint, 3-point plays, fast ball handling, -- it really is impressive. Fun to watch. After last night's convincing win, Spurs lead the series 2-0.

6. Eight more states -- bringing total to 19 -- have been granted waivers from no-child-left-behind law: the newest eight: Connecticut, Delaware, Louisiana, Maryland, New York, North Carolina, Ohio, and Rhode Island.  In addition, 17 additional states (and DC) have waiver requests in for review. Let's see: 19 + 17 --> 36 states will likely have waivers by the end of this school year. When is a law not a law. Sort of like ObamaCare in which any union of any size, and many states, have ObamaCare waivers. This is the official government list:
Twenty-six new states and the District of Columbia have formally submitted requests to the U.S. Department of Education for waivers from key provisions of No Child Left Behind. This adds to the 11 states that the Obama Administration announced earlier this month had developed and agreed to implement bold education reforms in exchange for relief from burdensome federal mandates.
The latest 26 states—Arkansas, Arizona, Connecticut, Delaware, Iowa, Idaho, Illinois, Kansas, Louisiana, Maryland, Michigan, Missouri, Mississippi, North Carolina, Nevada, New York, Ohio, Oregon, Rhode Island, South Carolina, South Dakota, Utah, Vermont, Virginia, Washington and Wisconsin—along with D.C., have all proposed plans to raise standards, improve accountability, and support reforms to improve principal and teacher effectiveness.

Colorado, Florida, Georgia, Indiana, Kentucky, Massachusetts, Minnesota, New Jersey, New Mexico, Oklahoma and Tennessee have already received flexibility from NCLB based on their locally designed plans to spur education reform. 
Using this list I count 37 states and DC. It appears the only states left are the states with historically high success rates on the SAT and ACT, like North Dakota, Minnesota, and Iowa. I remember taking the Iowa Basic Skill Tests while going to school in Williston, North Dakota. At the time I never understood why we were taking Iowa tests.

I wonder if the EPA will grant waivers for states requesting relief from duplicative fracking rules?

7. The President's Polish Problem. Three thoughts:
a) product of public education
b) president's comment about 57 states
c) no wonder waivers for education law are needed (and freely given, it appears)

Oasis Is Increasing Production in The Bakken -- Filloon

Link here to
There are big changes occurring in the Bakken. Many of the producers have a good portion of acreage held by production. This allows for a ramp up of drilling in the best areas. To decrease time drilling and completing wells, pad drilling is be used. Oil companies are also getting comfortable in the play, which is translating to better IP rates. Some of the best IP rates have come from Kodiak. Brigham is using a large number of stages, and allows initial production to run freely. Brigham's results are not as good as Kodiak, but still better than the majority of Bakken operators. Whiting has had some fantastic results in the Pronghorn, but these have been sporadic. I would suspect results will be more consistent going forward.
Oasis: "standard frack recipe" -- 36 stages; 4.5 million lbs proppant.

The first sentence in the article is the most interesting:
Bakken producers continue to improve initial production which will equate to higher EURs.

I remember all the discussions about "hyped" IPs and how that story evolved. 

Note: Filloon says that "Brigham's results are not as good as Kodiak, but still better than the majority of Bakken operators."

I believe Filloon bases this statement on the first 90-days initial production average. One can look at the high initial production numbers at this post, scrolling down, and making own conclusions.

Again, the IP is only one data point. 

Nice Selection of Links Regarding Natural Gas

From Independent Stock Analysis.