Thursday, June 14, 2012

GMXR Completes Sixth Bakken Well; Operational Update

Link here to

Data points: some numbers rounded.

Sixth well:
  • Johnston 31-4-1H, 55% working interest, McKenzie County; 21,000 feet; 34-stage frack; middle Bakken; peak production rate: 1,500 boepd
Seventh well:
  • Fairfield State 21-16-1H; 96% WI; Billings County; 21,000 feet; not yet fracked; Three Forks well;
Eighth well:
  • Basaraba 23-35-1H, 50% WI; Billings County; expect to spud June, 2012

Biggest Story of the Day? Apache

Link here to

Data points (some numbers rounded)
  • huge shift to oil
  • currently producing 770,000 bbls of oil equivalent/day
  • shooting for 1 million bbls by 2016
  • has quietly been accumulating acreage for the past 2.5 years; now ready to develop it
  • 300,000 acres in Daniels County, Montana; part of the Williston Basin Bakken; not de-risked
  • 580,000 acres in the emerging Mississippi Lime in the central US (particularly Kansas)
  • has a central natural gas position in Liard Basin where the company has drilled what is perhaps the most prolific gas well ever drilled in North America 
Not just the most prolific for Apache, but the most prolific ever drilled in North America.
.... that single well from 2009, which produced 21 million cubic feet per day during its first month, after being “fracked” – a technique used to free shale gas – six times. In other shale gas reservoirs, companies use 18 fracks – and more – to cause even more gas to flow.

The overall estimates are early, and geologists cautioned against placing too much stock in numbers generated from relatively scant data. And though Apache said it believes wells in the Liard could be profitable at a well-head price of $2.57 (U.S.) per thousand cubic feet – not far from the current price of natural gas in the central U.S. – others said those predictions could prove optimistic. A single Liard well costs $35-million to drill and complete.
Now if the folks in Washington would just recognize the new North American reality in energy, perhaps they could turn the economy around.

That's not political; that's reality.

By the way, 21 million cubic feet of natural gas equates to 3,500 bbls of oil -- that's 3,500 bbls of oil per day for the first month, i.e., 105,000 bbls the first month.

Peak oil? What peak oil.

Random Look at a Haystack Butte Well in the Bakken, Williston Basin, North Dakota, USA

The Bakken never ceases to amaze. BR reported a nice well in Haystack Butte today, so I was a bit curious about the field.

Look at the production history for a Haystack Butte well that is a couple of years old:

PoolDateDaysBBLS OilRunsBBLS WaterMCF ProdMCF SoldVent/Flare

The was originally a Burlington Resources well but it was transferred to Continental Resources in November, 2011. The Bakken is known for its horrendous decline rate, but look at the production history for this well. I don't see much of a decline; I see a lot of variability. What's with 10,000 bbls of oil produced in two days in April, 2012? And almost 9,000 bbls in just 14 days in February, 2012?

Note that the well is hooked up to a natural gas pipeline and is no longer flaring.

This is:
  • 18615, 480, CLR/BR, Jorgenson Federal 44-9H, Haystack Butte, t7/10; cum 216K 4/12;

Bismarck Tribune/Minneapolis StarTribune Articles on Overview of Pipeline Takeaway Capacity in North Dakota Bakken -- Enbridge's Sandpiper -- ONEOK's First NG Products Pipeline Out of the Bakken


February 7, 2014: the Sandpiper will "deviate" around Devils Lake in North Dakota, because...
Mark Curwin of Enbridge Energy said, "Well there's a large water body there and it makes sense frankly as your route pipelines to try and stay away from population centers as well as significant natural resources." 
November 26, 2013: Marathon to become biggest shipper on Sandpiper.

March 22, 2013: US regulatory agency (FERC) denied ENB permit for Sandpiper. Sounds like competitors and users were able to convince the FERC not acceptable; ENB said later it would not slow down completion of Sandpiper; apparently plans to renew permit request to meet objections of users, competitors (rails).

December 6, 2012: update on Sandpiper, Enbridge's North Dakota feeder system project
.... light crude production in North Dakota’s Bakken shale play has climbed 250 percent to 700,000 barrels per day, and could grow to as much as 1.2 million barrels per day in five years.
Enbridge’s future North Dakota feeder system project, known as the Sandpiper Project, will cost $2.5 billion and is expected to be in service in early 2016. The company said it expects the light crude takeaway capacity at the Bakken play to grow from 225,000 barrels per day to 580,000 barrels per day.
The 24-inch diameter pipeline will expand 600 miles from North Dakota to a mainline system terminal in Wisconsin.
November 4, 2012: The Dickinson Press has an update on the Sandpiper pipeline, proposed pipeline from Tioga, ND, to Superior, WI, but I don't see anything new in the article.

The route is yet to planned but will probably parallel Enbridge's main line in the area.
Enbridge is in the early planning stages for the Sandpiper Pipeline, which could transport about 225,000 barrels per day, said Katie Haarsager, community relations adviser for Enbridge.
Enbridge’s current capacity in North Dakota is 275,000 barrels per day.
By the first quarter of 2013, it’s expected to expand to 425,000 barrels per day with the completion of the Bakken Expansion Program.
The Sandpiper Pipeline would be Enbridge’s largest project in North Dakota, but its size is not uncommon when compared to other Enbridge projects nationwide, Steede said.
Original Post
Link to Bismarck Tribune.

Link to Minneapolis StarTribune, which is a better story and has a much better photograph. 

Some data points:
  • one six-inch pipeline can eliminate 70 trucks/day
  • $3 billion in private money allocated to laying pipeline
  • 75% of oil is now trucked from well-heads in North Dakota
  • eight pipeline companies in the Bakken
The story mentions Enbridge's Sandpiper which I noted a few weeks ago in a posting.
One large project, called Sandpiper, described by Mike Moeller, director of Enbridge's North Dakota operations, would ship Bakken oil into a terminal at Clearbrook, Minn., 90 miles east of Grand Forks, and then pipe it on to Superior, Wis., where it would connect to other pipelines heading east and south.
And this is new to me:
Yet another proposed pipeline costing up to $1.8 billion would transport Bakken crude 1,300 miles south to Cushing, Okla., another major terminal. The builder, OneOk, also plans a separate line that would be the first out of the Bakken field dedicated to carrying the valuable liquid components stripped out of natural gas.
Link here to InsideClimate News/Dickinson Press

Wow! PGA's US Open -- Tiger Woods Tied at #2 -- For The Bakken, Skip and Scroll

McIlroy: missed the cut
Mickelson: will just make the cut

McIlroy: tied at 86, nine strokes back.
Mickelson: tied at 108; ten strokes back.

Bill Dwyer at the LA Times.

Seven (7) New Permits -- The Williston Basin, North Dakota, USA

Daily activity report, June 14, 2012 --
  • Operators: Whiting (2), KOG (2), CLR, Zenergy, Slawson
  • Fields: Sanish (Mountrail), Todd (Williams), Bully (McKenzie), Park (Billings), Banks (McKenzie), Corinth (Williams)
Four wells released from "tight hole" status:
  • 19416, 256, Whiting, Teddy 44-2TFH, Billings,
  • 20339, 314, Petro-Hunt, State of North Dakota 154-99-16A-1H, Williams,
  • 21409, 2,993, BR, Neil 24-19MBH, McKenzie, Haystack Butte (east-central McKenzie),
  • 21818, no data, Hess, BL-A Iverson-155-96-1213H-2, Williams
Permit canceled:
  • 19241, PNC, Petro Harvester, Earl Chrest Jr 2H, Burke,
One producing well completed:
  • 20694, 227, Fidelity, Parker 29-32H, Stark County, Bakken, 
Well name change that could signify a new target/clarify the target:
  • 23029, loc, Whiting, Talkington 41-26PH, 
EOG has temporarily abandoned this well:
  • 18338, TA, EOG, Fertile 28-26H, Mountrail, 

For Investors Only: Four Energy Stocks to Buy

This is not an investment site. This is not a recommendation to buy or sell shares in any company mentioned at the link.

Link to

Three Bakken-related companies mentioned: EOG, CLR, HAL.

The writer of the linked article does not mention the overriding reason, in my mind, for the volatility of the price of oil between $80 and $85: relative strength of the dollar vs the Euro.

New Poll: Probate Your Minerals?

Time for a  new poll.

Results of the current poll: whether you own minerals or not, if you did, this is who you would prefer drill them (rounding):
  • Whiting: 29%
  • Continental Resources: 23%
  • BEXP: 17%
  • KOG: 8%
  • Oasis: 6%
  • Slawson: 4%
  • Burlington Resources: 2%
  • Other: 11%
Now time for a new poll. It has to do with a recent posting regarding probate and mineral rights.

First, we all agree that "everyone" should have a will. (A person with no heirs and no property may not need a will but a lawyer may disagree.)

Having said that, this is the poll. If you had minerals, would you want to pass them on to your heirs through the probate process?   (For some reason, "poll daddy" won't let me get rid of that fourth choice ("other"), but maybe there is another option than "yes, no, it depends." But I can't imagine what.)

Fracking Companies in North Dakota


Later, 8:30 p.m.: this came in as a comment but did not want folks to miss it --
Triangle Petro is going to have their own frac crew, don't forget about Liberty Resources - They frac Zavanna's wells.. 
Original Post

This is one of my most-visited posts: fracking companies in North Dakota.

I posted that some months ago, at a time when I was pretty close to the Bakken geographically, and was pretty comfortable with the list based on comments I received.

The list may need updating; I don't know.

If there are errors in the list, please let readers know.


This is a "cut and paste" from another post. It is not well articulated, but I think it gets the message across.
Do whatever it takes to get your property to whom you want it to go before you die. If at all possible, don't let anything go through probate. Probate will tie things up for quite some time but that's a minor problem compared to the bigger problem. Having done title searches I can tell you it will take hundreds of hours to sort out who owns what minerals, and for lawyers those are billable hours. After three generations of North Dakotans, oil rights have been spread out among thousands, and the proportions have grown smaller and smaller. In many cases, one can almost guarantee that any potential for mineral rights will be lost in probate. You might as well assume most of your oil money will be lost in probate if you area a small player. Many would recommend a family trust. 
It is in the best interests of lawyers to have you put everything into a will. In fact, anything in a will is probated, to the best of my knowledge. And that's why lawyers tell you to make sure you have a will. You do not want your property to go through probate. One can find a way to transfer property to heirs without going through probate in almost every case. Most interesting is this: there is a way to have one's equities go to your designated heirs without going through probate.

I have not read much of the article at this link; I am not connected to that site in any manner, no hidden agenda.

I am not a lawyer; I have no legal training. This is simply my 2-cents worth of idle chatter among friends.

Note: based on the first comment below, some folks may have misconstrued what I wrote. Let me be clear: everyone should have a will. A will goes through probate.  A lawyer can help arrange for property to be passed on to heirs without going through probate. Financial advisers can also help arrange for property to be passed on to heirs without going through probate. Based on all I know about minerals, I would prefer minerals not go through probate.

CNBC: Natural Gas Exploding to the Upside


Good luck to all.

CNBC Talking Head on Petrobras


August 6, 2012: Petrobras plunges; breaks 13-year streak of increasing profits.

June 15, 2012: How coincidental. Yesterday I posted the story below. This morning, page C10 of the WSJ: "Tomorrow Never Dies for Petrobras Investors."

I haven't read the story yet, but the headline suggests where it is going. So, notes while I read it for the first time; let's see how it compares to my post yesterday.

"Despite huge strides, Brazil still has an image of always being the country of tomorrow. Its national oil company, Petroleo Brasileiro, increasingly suffers in the same way."

Data points (some numbers rounded):
  • new investment plan confirms a worrying trend
  • plans to increase CAPEX by 5% between 2012 and 2016
  • projected output in 2020 has been cut 11% to 6 million bopd
  • the company carries the extra baggage that comes with being a state-controlled national champion
  • the government may see PBR as a countercyclical investment; if so, investors will be waiting a long time for good news
Original Post
Talking head on CNBC on Petrobas. Share price down 45% this past year.

This is actually a great story ("great" -- in terms of many story lines; many lessons to be learned; much to talk about; not great as an investment story).

The CNBC talking head suggested that the drop in Petrobras is related to what is going on in Europe. In fact, the share price of Petrobras started falling well before the worst news was coming out of Europe.

I think he completely missed the story.

I bought shares in Petrobras a long time ago; maybe two years ago, I forget when. But I quickly got out when it was clear the Brazilian environmentalists would be calling the shots, and when it became clear that .... well, let me do it this way, three bullets
  • Brazilian environmentalists will be calling the shots going forward
  • it turns out that it will become more expensive to drill off-shore Brazil than originally expected
  • the price of oil has fallen significantly; a global recession could prolong the pain
The off-shore Brazilian spill was the canary in the mine for me. Based on the government's reaction to this relatively small spill -- and in fact, may not be a spill so much as natural leakage (although I haven't followed the story in some time) -- I knew the Brazilian government was not going to let anything happen to their pristine sandy beaches (that I remember so well from a USAF trip to the area many years ago) before they host the summer Olympic games (2016).

Those are the reasons for the fall in share price of Petrobras; global events play a role, but there unique issues facing Petrobras. 

Disclaimer: this is not an investment site. This is not a recommendation to sell or buy shares in Petrobras -- I don't even recall the ticker symbol at the moment (PBR -- thank you). This is just idle chatter among friends.

A Note for the Granddaughters


Later, 12:30 p.m.: How interesting. I posted the original note below about 11:00 a.m. this morning. I just got back from picking up the granddaughters, and checked in on CNBC. After the break they will be doing a story on a rare blue lobster caught off Nova Scotia. Some weeks ago, the granddaughters and I saw three blue lobsters at the Boston Aquarium including one that weighed 16 pounds (?).  The blue lobster is rare, but it's not new.

Original Post 

I was not going to post another story for the granddaughters today but I got several requests to post more (comments not posted). 

This is their last day of school for the school year. I will be leaving in a few minutes to pick them up. I will be off-line then.

I had hoped to take them whale watching today, but the weather is not cooperating. But then I was reminded: they have swimming lessons out at Hanscome AFB this afternoon. So, everything worked out perfectly. (Actually cooler, rainy weather might be a boon: fewer people on the boat and if dressed appropriately not a problem. In fact, it provides the grandchildren a better sense of what the ocean can be like. But I digress.)

The weather is supposed to be a lot nicer tomorrow. There are several options for whale watching out of Boston Harbor. Boston Aquarium members probably get the best deal: $38 for adults and $28 for children. The "going price" for walk-up in general is about $45/$35.

Up in Provincetown, at the tip of Cape Cod, we were told that this is one of the best years for whale watching due to generally warmer weather, as in global warming.

WSJ Wrap-Up for Thursday, June 14, 2012

Note: I read (present tense) the fourth section first and then work my way back toward the front section, saving the best for last, the editorials.

Note: if you want to see the story on-line, you can generally just "cut and paste" the headline inside the quotes into the URL -- you don't even have to go through Google. Try it. Copy the following inside the quote "GM's Opel To Close Car Factory in Germany"; add a new tab or open a new window; and, paste the copied phrase into the URL. 

"Dollars Become Scare as Argentina Cries Peso," p. C1.

So much for global warming: "Colder Forecasts Sink Gas Futures," p. C4.

Wow, wow, wow -- I remember blogging about this new joint refinery some weeks ago -- "Woes Hit Top US Refinery: After $10 Billion Upgrade, Falure Idles New Sections of Shell and Saudi Venture," p. B3. This is the on-line story posted yesterday.
The outage helped spur Gulf Coast spot-market prices for wholesale regular gasoline to $2.73 a gallon on Wednesday, up five cents from Friday. It also added support to gasoline prices at the New York Mercantile Exchange, which closed at $2.66 a gallon Wednesday, down from $2.69 Friday amid economic worries but on the rebound since Monday because of signs U.S. fuel demand is increasing, said Gene McGillian, a broker at Tradition Energy.

Meanwhile, Saudi Aramco is reviewing what to do with the huge amounts of so-called sour crude oil it has shipped to the refinery, said a person familiar with the company. The Saudis had agreed to supply Motiva with all the sour crude it needed for several months while it tested its expansion, because using only one type of oil made the start-up easier. Now the specter of millions of barrels of excess unrefined crude is having an impact on local oil prices in the U.S. Gulf Coast, one trader said.
"GM's Opel To Close Car Factory in Germany," p. B9. This story was getting a lot of coverage earlier this year. Now it's a small story buried in the WSJ. After you read the story: any wonder why unions are failing in the US?
The decision marks a critical step in GM's efforts to turn around its chronically money-losing European business, which has become the U.S. auto maker's biggest albatross since it emerged from bankruptcy three years ago. Opel is under intense pressure to slash excess capacity to help staunch its losses in the region's overcrowded and largely unprofitable auto market. Bochum, one of Opel's oldest and costliest sites, has long been viewed as a prime target for closure.

But the move to halt production in Bochum won't come as quickly as GM officials had hoped. As part of its negotiations with Germany's powerful labor unions, the auto maker said it was discussing holding off any compulsory layoffs in Germany until 2016, two years longer than its current labor agreement provides. GM could still pursue layoffs though negotiations with the union.
Despite tariffs: "US Solar-Panel Demand Expected to Double," p. B9.

"Asian Start-Up Acquires Saab Auto," p. B9. Some weeks ago I blogged about our Saab experience in Europe and Asia.

Product placement: huge Apple MacBook Pro in unrelated photo, p. B10. Apple's product placement is incredible. Most of it is not paid for by Apple.

I have no idea why new allegations against Lance Armstrong merits front page coverage, but there you have it. Lance is the George Bush of the sporting world.

Energy Independent America? -- Motley Fool

Link here.

I mentioned that in passing back on June 7, 2012.

Fracking For Growth in the Williston Basin

It looks like we are about to see a series of great stories coming out of the Bakken at

A reporter from Milwaukee is on a cross-country drive to Williston to see for himself what all the excitement is about. He said that he had trouble finding a hotel room in Jamestown which is nowhere near the Williston Basin, in one sense. Jamestown is in North Dakota, but that's about all.
Intriguing to me is that there is downtown real estate still available in Jamestown, only about a mile from the college. In talking to the very sweet Cathy at the front desk, of the very comfortable Gladstone Inn & Suite's where I am staying, it is apparent that Jamestown is going through some changes. Located along Interstate 94, within a few hours of a major oil boom, a few other nearby job catalysts and with a charming downtown, the Buffalo City appears to be a town on the come. 

While eating dinner at Grizzley's, I had the opportunity to talk to a few truckers. Each of them made the point that Williston was a little wild right now, but that the money was flowing. One gentleman hauled fracking mud from Michigan, which he described as being used to water proof the piping used in the drilling process. He was quite knowledgeable about the process and believed that, from an environmental standpoint, the drilling companies were being very diligent about protecting the ground water, if nothing else to protect their golden goose. 
This is going to be fun. Stay tuned. And go to the link. 

Oh, No! Unemployment -- First Time Claims -- Rise Again -- Previous Week's Numbers Revised Upward -- Foreclosures Up First Time in 27 Months -- Private Sector Is Doing Just Fine

Remember: the magic number is 400,000

First time claims benefits rise to 386,000.
The Labor Department said Thursday that weekly unemployment benefit applications rose 6,000 to a seasonally adjusted 386,000, an increase from an upwardly revised 380,000 the previous week. 
The refrain -- actually two refrains repeat:
  • first time claims rise
  • previous week's numbers revised upward

This is interesting. A while back ago I got the "magic number" wrong and was taken to task for that -- a well deserved thrashing. At that time, the number was "400,000."

Now, without question, the magic number has been changed:
Weekly applications are a measure of the pace of layoffs. When they drop below 375,000, it typically suggests hiring is strong enough to reduce the unemployment rate
I will stick with 400,000 --  it's easier to remember and gives a bit better cushion going forward.

The magic number for new hires: 200,000

And there's more:
... hiring has slowed, raising concerns about the pace of the recovery. Employers added an average of only 96,000 jobs per month in the past three months. That's down from an average of 252,000 in the previous three months.
At fair and balanced C-Span:

The private sector is doing just fine, President Obama, June 8, 2012

Lest we forget

Near the end of the article:
The United States has regained less than 3.8 million, or 43 percent, of the 8.8 million jobs lost during and immediately after the recession. 

Meanwhile, DrudgeReport links to this story, and it's not even a headline story any more: foreclosures rise for first time in 27 months.
By moving houses out of the so-called "shadow inventory" and onto the market, the increase in foreclosures could be a drag on the fragile U.S. housing recovery.
The private sector is doing just fine.

Coulda. Woulda. Shoulda.

Natural Gas Differentials on Same Pipeline -- The Marcellus Effect --- RBN Energy

Link to RBN Energy.

A Note For The Granddaughters

I cannot count the number of times we have visited Disneyland, Anaheim, California.  The first time was in 1969. I visited it several times while still in school, several times when we were raising our own family and visiting family in San Pedro, California, and are now visiting the park annually with our granddaughters.

I can't take it any more. Smile.

We will be visiting southern California later this summer. I had a talk with the the 5-year-old and the 8-year-old and asked them if they would mind skipping Disneyland this year. Both said that would be fine. I was somewhat surprised, but we agreed: skip Disneyland this year.

Yesterday I noted that California Adventure, Disneyland's co-located park, will be opening the long-awaited Cars Land adventure ride this summer; in fact, it's "grand opening" was last night (along with a 4.1 earthquake).

Just out of curiosity, I checked ticket prices. A 3-day hopper (allowing one to visit both parks on any three days within a two-week period) costs $250/person. But, Disney has extended the military offer through September 12, 2012, offering active duty and retired military the same tickets for $99 each. A military-ID-card-holder can buy up to twelve tickets, I believe. The park is also offering discounted room rates at their resort hotels there, also.

This is an incredible offer. I had my wife re-consider our decision to skip Disneyland this year.

As long as I'm rambling: a couple years ago, I enjoyed my Disneyland visit in an entirely different way. The majority of folks visiting Disneyland rush to all the "good" rides when the park first opens, and pretty much skip Main Street. By the end of the day, folks are exhausted, and Main Street restaurants and shops fill up. Taking advantage of this, I let the family go on without me. I stopped at one of the Main Street cafes, ordered coffee, a chocolate croissant, and read the Wall Street Journal. It was one of the best visits to Disneyland I have ever experienced. If we take the 3-day hopper this year, I will do the same thing.

P.S. Please, don't tell the granddaughters. Even at $99 for three days, I'm not sure I can take Disneyland again this year. Smile.

Energy Links at Independent Stock Analysis

Link to ISA here.