Wednesday, June 20, 2012

Nice Update on Coal: Global Realities

Link here to Institute for Energy Research.

Despite the war on coal,
The BP Statistical Review of World Energy shows coal to be the fastest growing fossil fuel worldwide, garnering a 30 percent share of world supplies in 2011, the highest share since 1969.
The linked article was published June 19, 2012; it is not an old article.

Rapid City, SD, Six Hours South of Williston: Participating in the Bakken Boom

Rapid City, SD, four hours south of Dickinson, and/or six hours of Williston, is participating in the Bakken building boom. Good for them. Link to Rapid City Journal.

Four New High-Rise Hotels To Be Built Northside I-94, Dickinson, North Dakota

Link to InsideClimate News/Dickinson Press.

At the link, it is reported that there were 12 hotels/motels in Dickinson a year ago when it was announced five more would be built. It was not clear whether these four were in addition to the previous five, but I assume so.

Random Note On A New Natural Gas Well In The Williston Basin

Updates

Later, 7:30 p.m.: See first comment:
The BTA Sharon well locates five miles southeast of a vertical hole Oxy USA drilled in January 2012 #21949, and 2 1/2 miles southeast of a newly permitted Oxy well (just yesterday 5-18-2012) the Tomahawk 28-141-93, #23171; a  horizontal hole which will drill through sections 28 and 33 of that township. [I am bringing the comment up to the body of the post, so the information is searchable. Comments are not readily searchable.] And then this, another comment: Four miles west of the Spring Creek #21949 OXY USA vertical hole, OXY USA has also permited the Thunderbird #22997 on May 29 2012 in 15-141-94. OXY has shown an inordinate amount of interest in this area after drilling this vertical hole and taking core samples.
So, all of a sudden, we have one of the largest, if not the largest, crew camp in North Dakota going up in the Dickinson area; we have a successful BTA natural gas well (how successful, yet to be determined), and at least a couple more OXY wells in the immediate area. OXY has suggested they have better prospects outside North Dakota in their conference calls. Tantalizing.

Original Post

It's funny how things work out.

For the past few days I have had a lot of posts regarding natural gas, wet and dry. I never understood the natural gas industry (not that I understand the oil industry -- smile) and no matter how hard I tried, I never seemed to get a handle on it. Then a reader sent me a note yesterday (?) explaining it in simple terms that even I could understand. At least on some level, it now makes sense to me. Hold that thought.

Earlier this morning I posted the results of the wells that came off the confidential list today. One of those wells was BTA's Sharon well:
  • 21235, 0, BTA Oil, Sharon 1, Winnipeg pool, wildcat, t2/12; cum 0 4/12; (no typos) - more to follow.
From the notes: "(no typos) - more to follow" it was obvious I was surprised by a "dry" well, and an unusual formation.

Fortunately, a reader wrote to tell me this is a vertical, natural gas well:
... it was a vertical gas well. A huge gas flare lit up the sky for many days here, and rumor is that its being hooked up to an MDU gas pipeline.
This well is located 4 miles north of Taylor, North Dakota, population 148 in 2010 census. It is It is part of the Dickinson Micropolitan Statistical Area. The well is about 15 miles northeast of Dickinson. Interestingly there is almost no activity in this area except two other vertical wells:
  • 20061, drl (don't hold your breath), Oil for America's Lodgepole well, Dohrmann 13-1, spud 12/2/10
  • 20195, drl (don't hold your breath), Oil for America's Lodgepole well, Dohrmann 14-1, spud 12/22/10
Unless I'm missing something, this well is, perhaps, opening up another play in the Williston Basin.

The Bakken is not often thought to be a "gas field," but rather an oilfield. [I could be wrong, but I believe Montana has a number of oil fields where MDU is very, very active. It seems I recall that is where the majority of their natural gas assets are. But I digress.] So, it never crossed my mind that this was a natural gas well. Then, tie this into the fact that most feel natural gas is not economical at this point.

It turns out that the Bakken is relatively wet liquid rich, and that is economical.

At this point, it might be helpful to refer back to two earlier posts:
The first link will link to a couple of other links.

The second link will take you to a story about a Canadian gas field that seems completely unrelated to the Bakken. Read that post, but forget about the Canadian aspect of the post. Read about the remarks concerning dry gas, wet gas, and condensates. This will help explain the BTA Sharon well.

Production of the Sharon well to date per the NDIC site:

PoolDateDaysBBLS OilRunsBBLS WaterMCF ProdMCF SoldVent/Flare
WINNIPEG4-20120000000
WINNIPEG3-20121000163601636
WINNIPEG2-2012500020509020509

Note that the well is no longer flaring. Two points to make. Obviously if this was a natural gas well, they would have had a pipeline in place, ready to go, or other method on-site to capture the gas (although I can't imagine what).

Second point: More and more often I am noting how quickly even oil wells report no flaring; the operators are working hard to get their wells attached to a natural gas pipeline as quickly as possibly. When looking at these NDIC production tables, "0" in the last column is a good news. However, "0" in the fourth column for an oil well is not good news.

As long as I'm rambling, the second clue that this was not an oil well, there was no water returned. Most oil wells will have some water and fracked wells will have a huge amount of water the first month as the frack water is vomited back to the surface. For oil wells, water needs to be trucked away and that's an added cost; the less water produced by an oil well, the better. Hopefully, I'm not confusing folks talking about natural gas, water, and oil, in the same paragraph.

For All The Williston Folks: Results of the Oasis Well Along The Frontage Road, Southwest Williston

Results reported here. This is a very nice well.

Thirteen Wells Come Off Confidential List Today -- An Important GMXR Well; The "Williston Oasis" Well a Gusher; OXY USA Surprises

Updates

Later, 7:00 p.m.: Five (5) new permits --
  • Operators: CLR (3), Sinclair, Whiting
  • Fields: North Creek (Stark), Stoneview (Divide), Long Creek (Williams), Parshall (Mountrail)
In addition, one permit was canceled:
  • 21512, PNC, Petro-Hunt, USA 153-95-1C-7-3H, McKenzie,
Two producing wells completed, both unremarkable
Later, 2:10 p.m.: See 3rd comment below (I believe it will be the third comment; may change over time), but the comment regarding the Sharon well below:
  • 21235, 0, BTA Oil, Sharon 1, Winnipeg pool, wildcat, t2/12; cum 0 4/12. 
This was a vertical well drilled as a natural gas well. That speaks volumes, as far as I'm concerned, considering all that I have posted regarding natural gas the last few days, and the price of natural gas, dry and wet. I will have stand-alone post on this. But a huge "thank you" to "anonymous" for providing background regarding this well. At the stand-alone post, I will include the production figures so far provided.

Original Post 

These are the wells that will likely be reported on today's daily activity report. Note: this might be a record -- every well reported an IP/all completed! I am impressed. Oasis has a very nice well, in Todd oil field which includes part of the city of Williston. The Cottonwood oil field continues to show poor to mediocre results.  GMXR reports a nice well based on IP, but likely to be a very good but not great well. And, most surprising: OXY USA reports a nice IP in the Fayette field.

  • 19422, 1,536, OXY USA, Beatrice Kubischta 1-15-22H-143-96, Fayette, t12/11; cum 54K 4/12;
  • 20617, 1,196, Oasis, Anvers Federal 5602 13-18H, Bull Butte, t2/12; cum 21K 4/12;
  • 20942, 32, Baytex, Knudsvig 12-1-160-100H 1PB, Smoky Butte, t12/11; cum 1K 4/12; (no typos)
  • 21147, 16, Baytex, Olson 15-22-162-100H 1CN, West Ambrose, t12/11; cum 9K 4/12; (no typos)
  • 21150, 3,021, Oasis, Kestrel Federal 5401 43-22H, Todd, t1/12; cum 67K 4/12;
  • 21235, 0, BTA Oil, Sharon 1, Winnipeg pool, wildcat, t2/12; cum 0 4/12; (no typos) - more to follow
  • 21256, 47, Baytex, Edna 14-23-162-100H 1CN, West Ambrose, t12/11; cum 25K 4/12;
  • 21321, 236, Baytex, Johnson 25-36-160-100H-1BP, Smoky Butte, t1/12; cum 16K 4/12;
  • 21388, 267, Oasis, Fraser Federal 5300 24-34H, Willow Creek, t3/12; cum 3K 4/12; (no typos)
  • 21414, 1,244, Oasis, O M Erickson 55-1 42-19H, Missouri Ridge, t1/12; cum 24K 4/12;
  • 21582, 2,285, GMXR, Lange 11-30-1H, Bennett Creek, t4/12; cum 17K 4/12;
  • 21633, 291, Hess, LK-State A-145-98-0136H-1, Little Knife, t4/12; cum 11K 4/12;
  • 21671, 285, Oasis, R W Clark 6092 43-9H, Cottonwood, t1/12; cum 7K 4/12;
The GMXR well was particularly important, it was a wildcat, about 18 miles ssw of Watford City. This area is almost devoid of any active oil activity, old or new. This is the first horizontal well in this field and in the immediate area even outside the field. I assume the success of this well de-risks this area for drilling. 32-stage frack; 2.7 million lbs sand frack. They reached vertical depth in 15 days; a total of 56 days to reach total depth. The Lodgepole was noted to be severely fractured (tectonic activity) with a gas show of > 1640 units.  Gas show in the False Bakken was 860 units. Gas shows in the upper Bakken was 1500 units (1600 - 1900). With regard to the Lower Bakken Shale: "The shale is also very petroliferous in nature suggesting that it is one of the source rocks for the Middle Bakken/Three Forks oil play of the Williston Basin. Gas shows in the Lower Bakken Shale averaged between 700 - 900 units." Regarding the lateral in the Middle Bakken: "...in this area is at its maximum up to 26' thick, making steering...very difficult." At one point, gas shows spiked to 3,133 units with a trip flare of 15 - 20 feet. A later trip gas was reported at 3,431 units. Later, 2,728 units with a 15 - 25' flare. The photos of the flare accompanying the report are quite spectacular. It must have been quite an exiting well for those involved.

The Oasis Kestrel well is the well that attracted so much attention when it was sited; it is located in the southwest corner of Williston (I'm not sure if it actually sits inside city limits; the GIS map server says it does not). It is on the south side of tracks south of the frontage road along the bypass, just before entering Williston. It is sited in section 22, but I believe the lateral runs south into sections 27 and 34.  From the file report, it looks like they reached vertical depth in about 14 days; they reached total depth in about 31 days. I don't see the frack data yet. Regarding the False Bakken: "Fracture porosity was indicated by a gas spike of up to 4,000 units, which is typical of the False Bakken." Regarding the Middle Bakken: a five-foot porosity  zone. "Toward the end of the lateral, background gas increased to an excess of 3,000 units with shows in excess of 5,000 units. The highest peak value observed was nearly 6,000 units at 19,000 feet measured depth. A noticeable increase in hydrocarbon presence was witnessed upon entry into the porosity zone near 15,100' measured depth. Greenish brown oil was observed....

Oasis Kestrel, 21150, Todd field:
PoolDateDaysBBLS OilRunsBBLS WaterMCF ProdMCF SoldVent/Flare
BAKKEN4-201223831279405129817808178
BAKKEN3-2012311543115518900515154015154
BAKKEN2-20122920107206461358519746019746
BAKKEN1-20121622980220682762427127027127

The daily activity report will be posted about 6:00 p.m. EST this evening (as usual).

CLR has a well (#21933, Plano 1-28H) about one mile southwest of the Oasis Kestrel well and is already producing nicely. It remains on the confidential list.

Random Note On Statoil

I don't know if folks have noticed, but of the international oil companies, the one that seems to be in the news most often is Statoil.

This a.m. CNBC had a guest on talking about the tanker business, TK Corporation. Whether he mentioned it or not, the dialogue box under the video said that Statoil was TK's biggest customer.

A few minutes ago, Jim Cramer said his guest on his show (Mad Money) tonight would be the CEO, Statoil. Cramer wants to know why Statoil is the most aggressive foreign oil company investing in US shale. A big "thank you" to a reader for sending in the link for the video.

Random Notes on Casedhole Solutions -- The Bakken, North Dakota, USA

A huge "thank you" to readers who send me notes on what's going on in the Bakken, I would miss a lot if folks did not send me updates.

I had completely missed the "Casedhole Solutions" stories. The link takes you to the company's news pages.

Here are some very interesting recent developments at that link:

Casedhole Solutions acquired by C&J Energy Services
  • effective June 7, 2012
  • C&J: leading provider of hydraulic fracking, pressure pumping, and coiled tubing services
  • Casedhole will continue to operate independently as a division
Casedhole Solutions opens new operations in Dickinson, North Dakota
  • the linked subject heading says it all
Casedhole Solutions deploys pressure pumping services to North Dakota
  • pressure pumping services will be deployed from Casedhole Solutions already located in Williston, North Dakota, March 18, 2012
Casedhole Solutions enters the non-frac pressure pumping
  • the company has taken delivery of several 2500 hp tractor trailer mounted pumping units
See also "top fracking companies in the Bakken."

WSJ Wrap-Up -- Wednesday

Section four. Not too much today.

Section three. Another story on cotton and China, "Cotton Picking on Shorts"

"Microsoft's Surface Raises Tension"

Overheard, p. C14: If you had to describe the perfect nightmare for solar- and wind- enthusiasts, a fossil-fuel-burning power plant that cuts it's carbon emissions and helps produce more oil would probably be it.

Second section.

"Beneath Microsoft's Surface"

"Barnes's Nook Seeks Niche"

"Steelmakers Gird for a Downturn": Sparrows Point steel mill, Maryland shuts down; RG Steel files for bankruptcy. I have no idea if the Keystone XL would have used it's steel, but it couldn't have hurt. More jobs lost.

"Apple's Data-Gulping App": FaceTime --> higher phone bills.

Spotify plans free radio service for mobile devices; pressures Pandora.

"Facebook Gains Two Big Advertisers' Support": Ford and

Great book review: "The Gamble That Failed": A bridge too far; Operation Market-Garden.

Farm Program op-ed. I can't make this stuff up. No link; I read it in the print edition.

For Investors Only: SRE at Seeking Alpha

Updates

August 23, 2012: already the largest natural gas storage company in the US, it is adding more storage. From In-Play today:
Sempra Energy subsidiary adds new underground natural gas storage capacity in Gulf Coast: Sempra U.S. Gas & Power, a subsidiary of Sempra Energy, announced that it has received authorization from the Federal Energy Regulatory Commission to place a second underground natural gas storage cavern into service at its Mississippi Hub Storage facility located in Simpson County, Miss.

Original Post
Link here to SeekingAlpha.com.
Sempra Energy (SRE) is a $16.3 billion energy services holding company whose subsidiaries provide natural gas and power to customers. It is also the largest natural gas storage company in the United States. The company pays a dividend yield of 3.6% on a payout ratio of 43%. The company's peers PG&E Corp. (PCG), AGL Resources (GAS), and Enbridge (ENB) pay dividends yielding 4.0%, 4.8%, and 2.9%, respectively. Sempra Energy's stock is hovering around its 52-week high of $68.01 a share and is up 23.7% from the beginning of the year.
That one random data point: SRE is the largest natural gas storage company in the US. I did not know that.

Disclaimer: this is not an investment site. This is not a recommendation to buy or sell shares in SRE. It is simply a link to a story that helps me understand better the natural gas industry.

Can "We" Handle The Flood? -- RBN Energy

Yesterday "anon 1" wrote: Prepare for the liquid flood.

Today, coincidentally, RBN Energy begins a series, asking the question "Can Mont Belvieu Handle the NGL Supply Surge, Part I?"

The Duvernay Shale In Canada -- A Huge New Field

Updates

January 29, 2018: update on the Duvernay

March 3, 2016: update on polyethylene cracker in North Dakota; the tsunami will include the natural gas from Duvernay. 

October 6, 2014: Kuwait buys into the Duvernay

August 30, 2013 The Calgary Herald is reporting:
Alberta’s early stage Duvernay resource play has already absorbed $6 billion of investment and promises to be the subject of much more, analysts say, judging by recent activity and promising results.
“The Duvernay is arguably the most exciting emerging resource play in Canada,” says a research report from TD Securities published Monday.
“We estimate that over $6 billion has been spent on the play to date: $3 billion at land sales, $2 billion of corporate acquisition and divestitures ... and $1 billion in drilling activity.”
The Duvernay was the main driver of the record $3.2 billion spent at Alberta Crown drilling rights auctions in fiscal 2011-12.
The shale marine formation is believed to be the oil and gas source rock for many adjacent conventional Devonian formations that have already been extensively drained. It is found 2,800 to 3,600 meters underground, in thicknesses of 35 to 60 meters and extends over 400 kilometres from northwest to southeast Alberta.

November 29, 2012: Athabasca Oil Corp reports strong Dubernay results, Oil & Gas Journal.  

Original Post

This is quite exciting for me.

If you haven't read the note I posted yesterday regarding natural gas liquids sent in by "anon 1," you really need to read that, especially investors (unless you already understand this stuff; I didn't until yesterday).

Because of that info from "anon 1," the article about the Duvernay shale made complete sense.
At the linked article: But it’s deep, and expensive to drill. The Duvernay needs very good to great results to be economic. That means liquid rich gas with at least 60 barrels of condensate per million cubic feet of gas—if not 90. (Condensate is more like a light oil that gets better than oil pricing.)
The purpose of reading the linked article about the Duvernay is not to learn about the Duvernay, but to understand better the "richness" of the Bakken.

Brent-WTI Spread Continues To Narrow

Link here.

A big "thank you" to ISA.

Particularly Good Links at ISA Today

Maybe the links and the stories are always this good at Independent Stock Analysis, but today they seem particularly good. Any investor coming to the Million Dollar Way today, should look at the ISA links today. I may use some of them as stand-alone posts.