Tuesday, June 12, 2012

Housekeeping: Not Much New Information But East Fork Field Has Been Updated

Link here to East Fork field.

Fine art in the way of Monet, from the younger granddaughter:

The original.

North Dakota Measure 2 -- Eliminate Property Tax -- Results: Fails To Pass -- NOT EVEN CLOSE!

The measure to end property tax in North Dakota fails.

At least I hope I'm interpreting the results correctly.

The legislature should tweak the property tax law but to completely eliminate it would have been a potential disaster on so many levels. 

Rangeland Ships First Bakken Crude From Rail Terminal

Link to Oil & Gas Journal.

Data points
  • Sugar Land, TX, - based Rangeland Energy
  • 120-car unit train from its COLT open-access crude oil  terminal in North Dakota
  • COLT has a 21-mile bidirectional COLT Connector pipeline -- connects with Tesoro and Enbridge
  • Enbridge: building an 80,000 bopd terminal at Berthold, ND (west of Minot); in-service 1Q13
  • Rangeland to have total ND takeaway capacity of 475,000 bopd by 2013
  • Rangeland's COLT is sited in Williams County, ND; can store 720,000 bbls of oil
  • BNSF provides rail transportation; capacity 120,000 bopd
  • in addition to site in Williams County, Rangeland has a tank at its Dry Fork terminal, near Tioga, ND, where its bidirectional pipeline connects with Tesoro and Enbridge
It seems like I first wrote about this planned terminal "years" ago -- it's amazing how much is happening and how much is yet to happen in the Bakken.

One operation (Rangeland) with 475,000 bopd takeaway capacity by end of next year. Hmmm.

Pickens on CNBC Today

For a few more hours you might be able to catch his interview at CNBC. If the video is still there, it will be in the upper right corner at the link.

If not, here were the high points:

1. Saudi doesn't have much spare capacity; they've hit 10.5 million three times in its history; not sustainable; supply and demand much tighter than folks realize
2. Very bullish on oil; of all the dozens of oil companies, he mentions only two; he mentions CLR first
3. Natural gas rigs down from 800 to 500 rigs over the past year
4. $3.00+ on natural gas next year.
5. Gasoline: 50% price advantage; natural gas 20% price advantage; oil 15% price advantage for the US -- if the US can't win with this hand ...
6. Completely out of Chesapeake; moved money elsewhere
7. XOM needs to increase dividend if it wants share price to move; discovering more oil doesn't move XOM's share price; the company is too big
8. Natural gas: utilities switching over; minor transortation uptick; production coming down fast

Daily Production In North Dakota Now Over 609,000 Barrels

A reader alerted me to new production figures released by NDIC at their website. I believe I have typed these numbers correctly, but they could be in error. Also, Carpe Diem has this story as well.

Month - daily average - number of wells - avg bbls/well/mo -- avg bbls/day/well
Feb - 558,585 - 6,447 -- 2,513 -- 87
Mar - 577,478 - 6,641 -- 2,696 -- 87
Apr - 609,373 - 6,734 -- 2,715 -- 90
Some of these numbers vary from previously reported numbers.
Delta, February --> March: 18,893 (3.3% increase)
Delta, March --> April: 31,895 (5.5% increase)
Thank goodness those feared April showers did not materialize to slow down production.

The last time North Dakota wells averaged more than 90 bbls/well/day was back in April, 1953, when there were 152 active wells in the state. There have been only 21 months in which production exceeded 90 bbls/well/day, and all before April, 1953, inclusive.

  • Through the '80s, the average daily production per well was around 40 bbls/day.
  • Through the '90s, the average daily production per well was around 30 bbls/day.
  • In 2009, the average daily production per well jumped to the mid-50s.
  • In 2010, the avg daily production/well was in the mid-60s, hitting 70 bbls/day in November.
  • In June, 2011, the average hit 70 again, at 73 bbls/well/day.
  • In September, 2011: 80 bbls/well/day.
  • And as noted above, April, 2012, 90 bbls/well/day.
For a graphic display, click here

Fifteen (15) New Permits -- KOG Has a Gusher -- Previously Reported -- The Williston Basin, North Dakota, USA

Daily activity report, June 12, 2012 --
  • Operators: Hess (4), BR (3), Hunt (2), Petro-Hunt (2), SM Energy (2), Zavanna, Liberty Resources
  • Fields: Siverston (McKenzie), Eagle Nest (Dunn), East Fork (Williams), Truax (Williams), Corral Creek (Dunn)
Hunt has a permits for two wells in Divide County.

Hess has permits for a 4-well pad in Truax oil field.

BR has permits for a 3-well pad in Corral Creek.

Four wells were released from "tight hole" status:
  • 20053, no data, SM Energy, Nelson 15-11H, McKenzie
  • 20694, no data, Fidelity, Parker 29-32H, Stark County
  • 21401, 1,968, Newfield, Charlotte 150-98-17-20-2H, Siverston Field, McKenzie
  • 21730, no data, Hess, CA-Stangeland-155-95-2128H-1, Williams
Three out of four wells not completed/not fracked. It sure does not appear to me that we are making a lot of progress on catching up with the fracking backlog, unless wells are staying on DRL status for a shorter period of time. But three of four wells coming off "tight hole" list were not completed.

  • 23007, PNC, Zavanna, Double Down 24-13 1H Old, Williams
Four producing wells were completed, including:
  • 21822, 3,000, KOG, Thomas 154-98-15-33-23-2H, Truax field, Williams (this was reported back on May 14, 2012)

Housekeeping: Lost Bridge Oil Field Updated

Link here to Lost Bridge oil field.

For Investors Only: Motley Fool On Triangle Petroleum

Link here.

Disclaimer: this is not an investment site. This is not a recommendation to buy, sell, or hold shares in any company mentioned here or at the link.

On a regular basis, I check Yahoo!Finance headlines for CLR, WLL, OAS, and KOG, because these four of the better known/followed companies in the Bakken (BEXP, is no longer there, as a stand-alone ticker symbol).

For WLL headlines (or maybe CLR headlines, I forget), there was a Motley Fool headline story for Triangle Petroleum.

I don't think one can find a much smaller publicly traded Bakken play (market cap: $225 million) except perhaps for some "penny" stocks on the OTC market. So, that fact alone, that Motley Fool would even find it, is very, very interesting.

Motley Fool is positive about the company (see the linked article). There are three important points that need to be emphasized. Motley Fool address one point but (unless I missed them) did not address the other two points.

Motley Fool did seem to suggest that one well can have a significant affect on a small company. Of course, the same is true of a bad well. In the old days there was a fair chance of a dry well. There are "no" dry wells in the Bakken. The downside risk for a dry well is pretty low in the Bakken.

Now, the two points that Motley Fool did not mention.

First, location, location, location. Triangle Petroleum does not have many acres in the Bakken, but from what I can tell (based on where they have permits), their acreage is among the best in the Bakken. It appears they are in north-central and northeastern McKenzie County; the latter I consider the bull's eye of the Bakken.

Second, constraints. There are two major constraints in the Bakken: takeaway and fracking.

I can't comment much on takeaway in this area, but it's my hunch this area is as good as any has having takeaway infrastructure in place. Even if their oil has to be trucked out, it's not far to pipeline or rail terminals.

Of the two constraints, I consider fracking the much bigger constraint. The smaller companies are at the back of the queue arranging for/waiting for fracking spreads. (Remember the recent post from a reader regarding a Chesapeake well? The fracking team said they may not hang around for the next Chesapeake well -- or something to that effect; fracking teams are hard to come by -- almost a direct quote.)

So, Triangle Petroleum -- smallest of the small Bakken players. They must be at the end of the fracking queue. Hardly. They have their own in-house fracking spread. Not only that, it has been suggested that the team not only can keep up (for now) with its own wells, but can also frack other wells, generating another revenue stream.

Triangle schedules 7 days for a frack. They are completing/fracking a well in three (3) days in some cases. 

So, again, for investors, if Motley Fool likes this company and did not address location or constraints, this is a bit more data to consider.

GE's MicroLNG Plant -- Would They Work for Refueling Service Stations?

Mike asks a great question? Would GE's micro-LNG plants work for refueling stations?

See yesterday's posting regarding expansion of the national interstate LNG refueling corridors.

Exactly How Important Is Europe to the US? The Third Dot to Connect Today -- For Investors Only

Little things one might miss if one's sole source of news was "Comedy Central."

From Bret Stephens' op-ed in today's WSJ: "A Presidency of Excuses."

One might think "Europe" was our number 2 trading partner after Canada with all the hand-wringing on CNBC. Maybe third, after Mexico.

"Europe is not our largest trading partner. Canada is. Followed by China. Followed by Mexico. Followed by Japan. 'Europe; only counts as America's largest trading partner in an aggregate sense. An honest apples-to-apples comparison would find that US trade with North America or East Asia dwarfs trade across the Atlantic. 
So, in the aggregate, "Europe" is huge for the US, but is dwarfed in an "honest apples-to-apples comparison.

Earlier I posted two dots that might merit connection. I think Bret Stephens' op-ed might be the third dot today. Things come in threes.

Random Look At Some Oasis Wells North of the River, Southeast of Williston -- Three Middle Bakken/Three TF Test

Crazy Man Creek, Section 12, T153N-R100W, brought to my attention by a reader. Not much information yet, but these should be some nice wells to follow:

  • 19638, running north, DRL, Oasis, Davis 5300 42-12H, s3/11; no frack data in well file as of 7/12
  • 19639, running south, 2,414, Oasis, Cook 5300 42-12H, t9/11; cum 126K 6/12; cased hole, 4.3 million pounds (1.7 sand; 2.6 ceramics)
  • 22225, running north, DRL -->CONF, Oasis, A K Stangeland 5300 43-12T, Crazy Man Creek, s3/12;
  • 22303, running north, DRL, Oasis, Thomas S 5300 41-12B, Crazy Man Creek, s3/12;
  • 22304, running north, DRL, Oasis, Celia S 5300 41-12T, Crazy Man Creek, s3/12; 
  • 23017, LOC, Oasis,  Ashlin 5300 44-12B, Crazy Man Creek,
  • 23018, LOC, Oasis, Andy 5300 44-12T, Crazy Man Creek,
  • 22347, DRL, Oasis, Basey 5300 44-12T, Crazy Man Creek, s5/12;
  • 22348, DRL, Oasis, Kovars 5300 44-12B, Crazy Man Creek, s5/12;
As noted at the link above:
Well files are available for:
  • 22303: middle Bakken well;
  • 22304: Three Forks well;
  • 19638: middle Bakken well;
  • 19639: middle Bakken well;
  • 22225: Three Forks well;
  • 22347: Three Forks well;
  • 22348: middle Bakken well;
The "B" designation in two of the wells (22348 and 22303): middle Bakken.
The "T" designation in two of the wells (22348 and 22304): Three Forks.
The lack of designation in some of the earlier wells (probably middle Bakken).
The "S" designation in two of the wells (22303 and 22304) -- on the same pad; probably family name.
 A bit more information on these wells from a reader (June 12, 2012):
  • in 153-100-12, permit #'s: 19638, 22225, 22303, 22304, 22347 and 22348 -- drill into 1/12
  • the other three permits are drilled into section 13
  • the six wells are listed by Oasis in their Investor’s Report as a “ 3 Bakken and 3 TFS Test”
  • #19638 was drilled a year ago and had problems with the liner.  It has been reworked and fracked according to the surface owner
  • #22303, 22304 are drilled and possibly fracked at this time
  • #22225 and 22347 currently have rigs on them and I’m assuming the rig on #22347 will move to 22348

Another One Bites the Dust -- Eurozone Bailouts -- Cyprus

From page A6 of today's WSJ: Cyprus becomes the fifth Euro-Zone nation seeking bailout.

The article doesn't mention the other four, but I am aware of Greece and Spain. The other two?

Spain was fourth (and coincidentally, Spain is the fourth largest economy in the Eurozone). Spain was also angry about the bailout. Talk about biting the hand that feeds you.

I guess Ireland was first. Ireland's problem, according to wiki, a property bubble.

Then, Portugal in the first half of 2011, was second, same link.

Greece, of course, preceded Spain, making it third.

C-PFIIGS ("see figs"): Cyprus,Portugal, France, Ireland, Italy, Greece, and Spain).
France lowered it retirement age to 60 this past month. The definition of insanity is doing the same thing over and over and expecting a different result.

The bad news: apparently Portugal was thought to have a number of things going for it, to prevent this calamity.

A Note for the Granddaughters

I happened to mention Dido and Aeneas a couple of times in recent blog postings. It's become a point of discussion for the granddaughters and me, lately.

Over the weekend, our older granddaughter received another (her nth) book on classical mythology which she is now reading. Her grandmother asked her yesterday if there were any stories of Dido and Aeneas in the book. Before she could answer, I spoke out of turn. I said the book was on mythology, the gods, and it would not include the heroes.

Our granddaughter disagreed. She said that, yes, it was about the gods, but there were some heroes mentioned, such as Heracles. So, there.

This morning, while we were still in bed, before getting up to take them to school, the older one came in with her new book on mythology. She said she was up to page 180 of the 188-page book (she started reading it three days ago; she received it on Saturday; this is Tuesday). She brought it in to me to show that, yes, indeed, on page 155, in a footnote, Aeneas is mentioned, and mentioned just that once, as far as we can tell. So, there.

Feel Good Story About the Hotel Boom in the Oil Patch

Link to InsideClimate News/The Dickinson Press:

Data points:
  • 322 hotels and motels in North Dakota
  • 37 new hotels and motels have been built since 2010; added about 2,300 rooms
  • 35 hotels and/or motels are currently being planned or under construction; will add about 3,000 rooms
A quiz: 70 percent of new hotels and motels are in (multiple choice quiz):
a) Fargo
b) Dickinson
c) Parshall
d) the oil-producing region of the state
When I was in school, one of the first things I learned was to how to take multiple choice tests. First, throw out the two that couldn't possibly be the right answer: in this case, it would be Parshall and Dickinson (for two different reasons). One is left with Fargo and the oil-producing region. This could be a toughie. 50/50. Call a friend? I suppose one could note that answer (d) is the only one that is not the name of a city, making it the likely answer. But it could be a trick question. Fall back on most important rule in multiple choice questions. The answer is seldom (a).

For Investors Only -- Two Dots to Connect -- Nothing (Specifically) To Do With The Bakken

Disclaimer: this is not an investment site.

This is simply idle chatter among friends.

Two dots to connect from the WSJ today:
There is nothing specific in those two stories about the Bakken, but it's not hard to see a connection. 

Another One Bites the Dust -- Now It's Ethanol

Page 3, as I mentioned yesterday is the second most important news page in the WSJ.

There is one article on that page today; it takes up the entire page except for an ad by Warren Buffett for his NetJets.

Link here to Ethanol's Long Boom Stalls.

Dateline: Walhalla, North Dakota.
For years, the biggest employer in this city of 1,000 people near the Canadian border was the ethanol plant on County Road 9, which pumped out the corn-based fuel additive to satisfy demand driven by federal mandates requiring its use in gasoline.

In April, plant owner Archer Daniels Midland Co. closed it, citing lackluster returns. The plant's 61 employees lost their jobs, and Walhalla lost its biggest source of tax revenue.

America's ethanol boom is stalling, and the effects are starting to spread across a Farm Belt that had grown accustomed to soaring growth. Annual U.S. production of ethanol more than tripled from 2005 to 2011, driving up crop prices and pumping money into rural communities from Nebraska to North Dakota.

Now, ethanol demand is topping out. The amount used in gasoline is near federal mandates, and gasoline consumption is declining. After 15 straight years of growth, ethanol production this year will fall slightly and will be roughly flat next year, according to the U.S. Energy Information Administration's May forecast. Updated output numbers will be released Tuesday.
Something tells me we won't be seeing this story on the nightly news tonight. Or any time in the near future.

Even with federal mandates, the numbers don't work. Same with solar. Same with wind.

[Again, that doesn't mean investors cannot do well in renewable energy. I am invested in solar. But at the macro level, the numbers don't add up.]

Bold Prediction -- The Bakken, North Dakota, USA

30-second sound bite:
  • Saudi Arabia: 10 million bopd
  • Russia: 10 million bopd
  • US: 9 million bopd (or 10 million bopd)
  • Canada: 3 million bopd
  • Bakken: 0.6 million bopd
If the price of oil goes to $60 by the end of the year and stays there for at least six months, at the end of six months (into next year):
  • Saudi Arabia: 9 million bopd
  • Russia: 9 million bopd
  • US: 9 million bopd
  • Canada: 0 million bopd
  • Bakken: 0.7 million bopd

Anschutz Wells vs OXY USA Wells -- Latest Example -- The Bakken, The Williston Basin, North Dakota, USA

To make up for my embarrassment for having missed this story yesterday, I will re-post it. An alert reader -- thank you very much -- pointed it out to me -- something I had harped on often but missed it when I could have had a great example. No excuses. I blew it.

Yesterday I missed the opportunity to show what a difference it can make with regard to those who have "cracked" the Bakken and those who haven't.

This was one of the fifteen wells released from "tight hole" status yesterday:
  • 19642, 42, Lime Rock/OXY USA, Darlene Dvorak 1-27-34H-143-95, Murphy Creek, a Bakken well, Dunn County; I don't know how OXY keeps doing it --; t12/11; cum 112K 1/17; no production in May, 2013
Two years ago, before Anschutz sold their acreage to OXY USA, Anschutz reported this well, exactly two miles to the west of #19642 and in the same field. 
  • 18395, 2,207, Lime Rock/OXY USA, Kathleen Stroh, 1-20-17H-143-95, Murphy Creek, t6/10; cum 2299K 1/17;
I've been thinking of an op-ed piece on this phenomenon; maybe it's time. 

Remember: the IP is only datapoint, and who knows? Maybe the new OXY USA well will end up being a monster well.

That California Deficit? It Could Be Worse -- I'm Shocked, Shocked

Link here to LA Times.
Hammering out a budget has been difficult because of rising deficit projections. Brown pegged the gap at $9.2 billion in January but said last month that it had grown to $15.7 billion.

The Legislative Analyst's Office, which provides nonpartisan financial advice to lawmakers, said the shortfall could be even higher because of miscalculations about redevelopment money and tax revenue.
For the  cynics out there, and I know there are one or two, the California legislature will actually pass a budget on time this year. Rule changes have made it easier to pass a budget AND legislators will start seeing their pay docked if a budget is not passed. 

View It While You Can -- It Won't Stay Long

View it before "refresh."

RBN Energy: Summer Months -- Coal, Natural Gas, and Power Plants

Another great article explaining the relationship between natural gas and coal plants.

ISA Energy Links

Energy links at Independent Stock Analysis.

At 1:30 A.M. Tuesday Morning -- HUGE Drudge Report Headine -- North Dakota: Eliminate Property Taxes

The link takes you to the NY Times story that was linked earlier.

The point here is that I have never seen a bigger headline on Drudge than this one.

No need to link it; everyone should have Drudge Report bookmarked, and it's dynamic so by tomorrow morning, it may be gone.