Thursday, August 30, 2012

Housekeeping: Cumulatives Of Some 1Q11 Wells Updated

Periodically I go back and update production data.  I went back and updated some of the data for wells that reported IPs in 1Q11

Here were a few wells that caught my attention (again, this is simply some housekeeping; nothing new or particularly important):
  • 18625, 368, Whiting, BSMU 3604, Big Stick, Madison well, not a Bakken; t8/10; cum 155K 6/12;  very nice for a Madison well;
  • 18973, 2,579, Helis, State 1-16/21H, Blue Buttes, Bakken, Blue Buttes field is west of Spotted Horn and Antelope (in the reservation; Blue Buttes is outside the reservation); 90K in first 2 months; t10/10; cum 337K 6/12;  
  • 16186, 439, Murex, Angie Marie 13-24H, Beaver Lodge, Bakken (Beaver Lodge is the field where oil was first discovered in North Dakota, in 1951; this well was originally spud in 2006 (that's the date of the IP); re-entered 5/10; it's production recently tripled -- re-frac'd?; t7/06; cum 294K 6/12;  
  • 18507, 1,946, WLL, Lahti 24-22H, Sanish, Bakken, t6/10; cum 273K 6/12;  
  • 18579, 2,006, SM, Jorgenson 1-30H, Bear Den, Bakken, tested 12/10; 120K by 6/11; cum 240K 6/12; 

Connecting the Dots: Seemingly Unrelated Stories -- and How the Bakken Inserts Itself -- The Antrim Shale, Michigan

Link here.
Once one of the major natural gas sources in the US, Michigan's Antrim shale is losing the interest of some of the country's big oil and gas companies as investors move to exploit more productive locations, ...

Production in the shale stood at 131 billion cubic feet (Bcf) in 2008, but this figure has been steadily declining, only reaching 85 Bcf last year. By 2020, GlobalData predicts this figure will continue to fall and stabilize at approximately 62 Bcf.

As a result of the shale's maturation, major oil and gas firms have divested their stakes and moved to acquire resources in newer shale plays with greater potential. From a total of 1,446 in 2006, the number of permits issued for Antrim Shale development dropped dramatically in 2011 to just 43, as major oil and gas players have increasingly redirected capital expenditure to more promising locations, such as the Barnett Shale, Bakken Shale, Marcellus Shale, Niobrara Shale and Haynesville Shale.
And only one of those five "shales" seems to be getting more exciting each day.

Even as "we" worry about operators moving out of the Bakken to "greener pastures" (or should we say, "blacker shales"), other operators are eyeing North Dakota.

North Dakota: #1 -- Top State For Young Adults

Link here.
North Dakota tops the rankings in MoneyRates.com’s list of 10 States Where Youth Rules, a study that compared a number of key factors across U.S. states to determine which ones offer the best conditions for young adults. The nine economic and lifestyle factors used in determining the rankings include: employment for young people, insurance costs for young drivers, college costs, affordability of housing, youth-oriented retailing, nightlife, healthfulness, the state’s youthfulness and housing availability.

The 10 best states for young adults, as determined by MoneyRates.com, include:
1. North Dakota
2. South Dakota
3. Iowa
4. Montana
5. Nebraska
6. Delaware
7. Vermont
8. Alaska
9. Utah
10. New Hampshire
Comment: With perhaps the exception of Alaska, none of the other states are known for its oil economy. Certainly South Dakota (#2) and Iowa (#3) are not, so one could argue that North Dakota earned #1 spot despite the housing availability and affordability of housing in the oil patch.  The state's oil patch would have lost points for those two parameters. The survey speaks well, then, for Minot, Bismarck, Jamestown, Devils Lake, Grand Forks, Fargo, and Glen Ullin.

Permit for Charlotte 3 (CLR) -- Daily Activity Report -- Ten (10) New Permits -- The Williston Basin, North Dakota, USA

Active rigs: 192 (3 more than the recent low)

Ten (10) new permits:
  • Operators: Denbury (4), CLR (3), Hunt, GMXR, EOG
  • Fields: Frazier (Divide), Siverston (McKenzie), Beicegel Creek (McKenzie), Painted Woods (Williams), Border (Divide), Banks (McKenzie)
These wells came off the confidential list: None.
No producing wells reported any completions.

The Four Benches: An Update

Regular readers know that CLR is testing five zones in the Bakken Pool (the first operator to have done when it is complete): middle Bakken, TF1 (bench #1, upper Three Forks); TF2 (second bench in the Three Forks); TF3 (third bench in the Three Forks); TF4 (fourth bench in the Three Forks). And note: all four benches are part of the Three Forks formation, and the middle Bakken and TF1 have source rock from the upper and lower Bakken shale.  

In today's daily activity report, the fifth of the five permits was issued for the Charlotte wells:
  • 23664, loc, CLR, Charlotte 3-22H, SESE 22-152N-99W, Banks, McKenzie,
Now, you're up to date. Like that will last an hour.

************************
A Note For My Granddaughters
Johnny Carson

I'm back where I can watch television. Nothing is on that interests me. I see PBS must be fund raising again; I see another showing of the Johnny Carson retrospective. I've never seen much of this retrospective, always catching the end. It's a difficult show to watch. I can easily tear up watching it; there are only a few movies or television shows that can affect me that much.
Some months ago, when I saw it for the first time, I reflected back on it, asking why Johnny Carson could affect me in such a strong way. This may be why: "The Tonight Show" was the one constant in my life during my formative years, during my coming of age. No matter how things were going in my life, thirty minutes at the end of the day with Johnny Carson was all I needed.

And The Winner Is .... Pittsburgh!

Remember that story about Shell looking for the right site to put a $2 billion ethane cracker unit? Shell was looking at sites in Ohio, Pennsylvania, and West Virginia.

Two of the three states are miffed.
Royal Dutch Shell PLC selected Pennsylvania over Ohio and West Virginia as the site for a $2 billion petrochemical plant expected to generate thousands of permanent jobs and draw from the region's massive deposits of natural gas, ...

Shell said it signed a land-option agreement to evaluate a site in Beaver County about 35 miles north of Pittsburgh for the plant, which will use natural gas as a primary feedstock. The company said it wanted an area close to natural-gas production that also provided water, road and rail transportation.
 
The plant, known as an ethane cracker, will be located in a faded industrial area once busy with steel mills along the Ohio River. The plant is expected to create 10,000 construction jobs, according to a Shell estimate. A study by the American Chemistry Council said the plant would create 10,000 permanent jobs in chemical and supplier industries. Unemployment in Beaver County was 6.8%, according to the Bureau of Labor Statistics.
Something tells me another 10,000 construction workers won't be voting to ban fracking in Pennsylvania. 

This story was first published back in July, 2012; I missed, but a reader alerted me to it. 

Update on SandRidge: SeekingAlpha

Link here.
The Mississippian and the Permian wells are solidly profitable. The Mississippian wells cost an average of $3.2 million per well. They have a PV-10 value of about $5 million per well on average, and the PV-10 value is often a very conservative estimate (an underestimate). They have an average EUR of 456,000 boe, of which about 45% is crude oil. The Permian wells cost an average of $643,000 per well. They have a PV-10 value of $627,000 per well. They have an average EUR of 58,000 boe per well, of which about 78% is crude oil. Clearly these are not as profitable as the Mississippian wells. However, the PV-10 value is usually an underestimate of real value. SD estimates the NAV of its Permian holdings is $7.2 billion.
The standard disclaimer: this is not an investment site. This provides a comparison view with Bakken wells that can cost over $10 million to drill; have EURs of 500,000 to 1,000,000; and are, mostly oil. This is posted for information, education, and entertainment, but not for investment decision making.

The Permian

The 2018 USGS assessment: link here.

Graphics


General

The USGS Assessment, 2018. Related posts about the same time:
The Permian is a monster, RBN Energy; Bloomberg, June 20, 2018.

Growing into the largest oil patch in the world, Bloomberg, April 24, 2018.

Natural gas production in the Permian to surge by 2020, WSJ, May 30, 2017.

Chevron owns its mineral acres outright in the Permian; no payment to landowners, April 6, 2017

Investment article, FANG in the Permian, April 3, 2017. 

Permian, Parsley, $40,000 / acre. February 12, 2017.

The importance of the Permian, Pioneer Natural Resources, September 2, 2016.

The Midland Basin, part of the Permian Basin, will be followed at this post, first posted August 16, 2016.

Cool story on the Permian, May 11, 2016.

Geography and stratigraphy of the Permian, Filloon, October 16, 2015.

Midland vs the Permian, understanding the geology, a 3-part series -- December 27, 2014.

Huge update, The Wall Street Journal, November 20, 2013

Introduction to the Permian, Market Realist, July, 2013

Thickness of the Midland Permian: from 1,375 to 1,825 feet thick (Laredo Petroleum corporate presentation, February, 2013)
  • Wolfcamp, upper: 400 feet
  • Wolfcamp, middle: 400 feet
  • Wolfcamp, lower: 500 feet
  • Cline: 300 feet
Updates

April 13, 2019: CVX makes offer for Anadarko: here; and, here


September 10, 2018: boom -- Federal auction brings $95,001 / acre.

April 24, 2018: biggest oil patch in the world --
April 5, 2018: too much crude oil; too much natural gas; not enough pipeline. Biggest story in the US energy sector right now

June 11, 2017: best in the US -- Filloon. 

April 23, 2017: Permian's economics.

March 9, 2017: Marathon buys 70,000 net acres in prime Permian; at $14,000/acre

February 13, 2017: Filloon on the Permian; Hartstreet Oil

February 11, 2017: at $60,000/acre, the Permian is getting a bit pricey -- Bloomberg.

January 10, 2017: update on Permian valuation, Midland, Southern Delaware = $26,000 / acre.

December 14, 2016: new operator to pay about $40,000 / acre in the Permian (Wolfcamp, Bone Spring).

December 14, 2016: one of the few plays in which the proved reserves increased in 2015 -- Wolfcamp and Bone Spring. 

November 28, 2016: EOG's ex-CEO buying Permian acreage for $11,000 / acre

November 27, 2016: Delaware Basin adds to oil glut, part 4 in a series, Mike Filloon. 

November 21, 2016: Concho buys 16,400 acres for $430 million ($25,000/acre) in Red Hills play in northern Delaware Basin. 

October 20, 2016: RSP Permian's Silver Hill acquisition, Filloon update.

October 14, 2016: Delaware Basin still attracting $61,000/acre offers.

September 16, 2016: pricing the Permian

August 30 2016: update on Shell in the Permian;

August 16, 2016: Has the Eagle Ford fallen out of favor? SeekingAlpha, August 16, 2016.

August 8, 2016: SM Energy acquires Rock Oil Holdings, LLC; 24,000 acres in the Permian, west Texas, for about $1 billion or about $40,000/acre

July 16, 2016: Short update of the Permian and its five top operators, Motley Fool.

March 31, 2016: huge update on the Permian

April 22, 2015: Conoco and the Permian

April 6, 2015: Chevron and the Permian.

February 16, 2015: update, Rigzone

September 22, 2014: just how big is the Permian? It has the most rigs of any region in the entire known universe.

July 22, 2014: random update on the Permian.

July 13, 2014: Rigzone update on the Permian. An important article. 

June 10, 2014: the Permian at $40,000 / acre.

May 19, 2014: RBN update

April 22, 2014: the Permian -- the largest shale oil field in the US, according to EIA.

February 21, 2014: Permian Wolfcamp valued at $61,600/acre.

February 8, 2014: update on XOM/XTO entering the Permian.

November 21, 2013: update on the Permian, SeekingAlpha.

October 14, 2013: production from the Permian is enormous -- SeekingAlpha.

October 14, 2013: Devon in the Permian; a 1,000 places to drill -- The Motley Fool.

October 8, 2013: from CarpeDiem, five jaw-dropping facts about the Bakken

October 3, 2013: Rosetta Resources in the Permian, as much as 10 million bbls recoverable/section, compared to 3 million to 6 million (or more) in the best Bakken.

October 2, 2013: an update. Also, Mike Filloon has another look at a portion of the Permian.

August 26, 2013: nice map. Mike Filloon on the Permian.

From The Globe and Mail, April 17, 2013. 

Part III, Mike Filloon, SeekingAlpha, February 19, 2013. Nice graphic, multiple targets in the Permian.
Part II; introduction to the Permian, Mike Filloon, SeekingAlpha, February 15, 2013.
Part I: overview of / introduction to the Permian, Mike Filloon, SeekingAlpha, February 13, 2013.

Index of Permian articles at RBN Energy, January 8, 2013.

RBN Energy: part II of the article on the Permian, September 25, 2012.

RBN Energy: outstanding article on the Permian, September 17, 2012.

Link here to an article updating activity in the Permian, May, 2012.

Great Comment From An Amtrak Traveler Through the Bakken

This was sent to me as a comment. It's too good to be missed by those who might not read the comments.
Last month, ONEOK announced capital spending of over $100 mill on natural gas collection lines in Divide County. The intended gas plant for Divide County gas is Stateline II. 
With Hess's large expansion of their Tioga Plant, the new Plains All American Plant near Ross, the Whiting/MDU plant north of Belfield, there remains big areas of the oil patch that don't have easy access to a plant. Most of the pre-2006 gas plants are tiny - even the new Whiting / MDU plant is relatively small at 35 mill ft3/day. 
Dunn, Divide, Stark, and the Fort Berthold reservation all have limited natural gas processing. Typically, a natural gas plant needs rail access for produced NGLs or a NGL pipeline. What's interesting is that Garden Creek I and II don't have rail access in McKenzie County, so the profitablity of those plants are highly dependent on the NGL pipeline that is proposed through Wyoming. Once that pipeline is built, locating in natural gas plants in areas without rail becomes much more profitable. 
Recently passed through the Bakken on Amtrak. Noticed a lot of natural gas liquids moving through the rail system from the Hess plant. With the volumes of propane and butane generated in these plants, unit trains seen for oil aren't really feasible. Once the ONEOK NGL and oil pipelines are built, ONEOK profits should increase substantially. 
Going through Mountrail and Williams County on Amtrak, one could just feel the "energy." Seemed like rail construction was going on everywhere. Fracking sand, open cars of piping, natural gas liquid cars, and oil unit trains seemed to be passed continuously where there were double tracks. Oil pipelines to loading facilities and nat gas lines seemed to going in at a number of locales.

We're Still Talking About .... The One Promise He Kept

Yes, this is an energy story. It just happens to be from Politico.

But Bloomberg had a related story today, also, saying that Americans have it easy with regard to the price of gasoline: it's 63% less than what Norwegians pay for gasoline in their country.

In that story from Bloomberg (the second link), one analyst:
If you look at just buying one gallon of gas, it really doesn't hurt us at all, but the problem is a lot of US consumers are buying multiple gallons of gas every single day. It's hard to cut back. You still have to drive to work and you still have to take your kids to school.
That's an analyst who makes investment recommendations. Wow! Read that again: "If you look at just buying one gallon of gas, it really doesn't hurt us at all."

I guess what hurts us is when we have to start buying two gallons. Or more. I can't believe that was what he said: "If you look at just buying one gallon of gas, it really doesn't hurt us at all." I'm still LOL. For other great quotes, see "quote of the day."

From the first link (from Politico, which may or may not be fair and balanced; I honestly don't know):
Of course, cap and trade is long dead. But coal-fired power plants are powering down nationwide, and they are blaming the Obama Environmental Protection Agency. The president's critics say proposed greenhouse gas regulations for future power plants are designed to cripple the coal industry.
Flashback:

And just like with another 2008 quote -- Energy Secretary Steven Chu's famed call to "figure out how to boost the price of gasoline to the levels in Europe" -- Republicans say the Chronicle clip shows what's really in the president's heart, that high electricity prices and the death of coal have always been Obama's goal.
The secretary does not deny that he said that: to raise the price of gasoline to the levels in Europe:


I don't quite get the "Republican" angle. Anyone who can understand plain English, should be able to understand this. It's pretty straightforward:
  • "So if someone wants to build a coal-powered plant, they can. It's just that it will bankrupt them..."
  • "...figure out how to boost the price of gasoline to the levels in Europe."
I don't see any partisanship in one's interpretation of those quotes. Heck, you don't even have to "interpret" them. Just listen to them. Straight talking. As straight talking as Harry Callahan.
I know what you're thinking. Did he fire six shots or only five? Well, to tell you the truth, in all this excitement, I've kinda lost track myself.
Anyway, I have to go. I need to go out and buy one gallon of gasoline.

Mystery of the Week: OXY's #22544 -- Two Long Laterals From Same Wellhead

Updates

September 20, 2012: the sundry forms and reports are finally catching up with what's going on with this well. OXY re-entered the well on August 4, 2012, to "redrill the lateral due to complications of running production liner after the first lateral was drilled." On September 1, 2012, the operator's engineer phoned, "can not get liner into sidetrack. Plan to TA well and evaluate for plans."

Original Post

This will involve bringing up the NDIC GIS map server.

If you do that, zoom in on section 24-144-97
  • 22544, TA, OXY USA, Kary 2-24-13H-144-97, Cabernet; see note of September 20, 2012, above.

Clearly there are two horizontals running north from this well, and both are almost the full length one would expect of a long lateral, but one is a bit shorter.

When one reads the file report, there is no mention of the second lateral. There is hint of a problem at about 12,000 feet (or thereabouts) but no mention of a second lateral. In fact, when one reads the file report one almost gets the feeling that the file report belongs to a different well. I assumed that when they ran into difficulty in the horizontal, they drilled a side track, but there is no mention of this in the file. It reads as if there were minimal problems drilling, and simply one long horizontal.

I can only assume, being an amateur, I am missing something, but clearly there are two horizontal legs.

The scout ticket also references two horizontals:

  • Lateral 1 Start coordinates 29 N 76 E from wellhead, end coordinates 9567 N 1W from wellhead
  • Side Track 1 Start coordinates 792 N 239 W from well head, end coordinates 10584 N 108 W from wellhead. Even the little graphic on the scout ticket clearly shows two long laterals.

A reader sent this in to me. Enquiring minds want to know.

Jobless Claims Unchanged From Last Week; Trend Worsens

Remember: the magic number is 400,000

Unchanged: 374,000.

It will be interesting to see the spin this time. I haven't seen the written report yet, just the CNBC crawler (yes, I am watching CNBC for a few minutes this a.m.).

With jobless claims increasing the past few weeks, pundits said the silver lining was that the four-week moving average, a better indicator, was improving. It appears that the four-week moving average has increased by a teensie-weensie amount, about 1,500. Insignificant. But the wrong direction.

So, we will wait for the spin.
The spin

From Reuters, the lede:
The number of Americans filing new claims for jobless benefits was unchanged last week, pointing to a labor market that was treading water. Initial claims for state unemployment benefits were a seasonally adjusted 374,000, the Labor Department said on Thursday.  
The prior week's figure was revised up to show 2,000 more applications than previously reported.
And, again, the prior week's figure was revised up to show 2,000 more than previously reported. Had the prior week not been revised upward (it was already up from the prior week), this week would have also shown a rise. Amazing how they can massage these figures and these headlines.

The article goes on to say that economists polled by Reuters had forecast claims dipping to 370,000, and noted that "the average for new claims, a better measure of labor market trends, rose 1,500 to 370,250.  The comment that usually follows was not there; the silence is deafening. I would assume the writer did not want to re-emphasize that the "better measure of labor market trends" was going in the wrong direction. Smile.

The fact they can get these stories written and posted within minutes of the announcement suggests they have the story written with blanks to be filled in before the numbers are announced, thus explaining the headline and even some of the jargon that may not mesh with the released numbers.

According to Reuters, jobless claims have risen by 10,000 in August, suggesting some moderation in the pace of job growth this month after payrolls increased 163,000 in July from 64,000 in June (summer hiring which will go away in September when folks return to school).

The report did not say anything about the automobile summer vacation schedules affecting this week's number.

Human Interest Story: One Individual Is Said To Have Accumulated > 300,000 Mineral Acres in North Dakota

A "thank you" to the reader who sent me this link. (I assume this link will break relatively soon.)
When Bavendick was 35, he decided to begin laying a foundation for his family’s future. So, on Feb. 16, 1965, he bought 10 acres of mineral rights in Renville County for $25 per acre – the first in a long string of investments that led to his fortune.  
When Bavendick bought his second batch of mineral rights later that year, he began another tradition – philanthropy. He secured the mineral rights on 735 acres just south of Watford City for $2.21 per acre from a family that had sold their farm and contacted Bavendick to see if he would buy the mineral rights. As soon as Bavendick struck the deal, he gave half of the mineral rights to Bismarck Junior College and UND.  
“Now they’re drilling big oil wells on it,” he said. “They’re worth about $10,000 an acre now.”
Great story.

Absolutely Crazy...the Activity: Statoil (BEXP) To Lease 1,000 Train Cars to East Bottleneck; Also -- Misc Energy Links

From the print edition of the WSJ, p. B7.

"Statoil Using Rails to Ease Bottleneck"

Again, a fairly long article, about a sixth of the page devoted to a North Dakota Bakken story.

Regular readers know the story: not enough pipeline takeaway capacity. Statoil (bought BEXP) will lease more than 1,000 railroad cars to "overcome pipeline bottlenecks that plague the booming oil-producing region."

The writer is a bit behind the times, though, talking about the Bakken -- still talking about 639,000 bopd in May, when the most recent figures are 660,000 bopd reported in June.

Data points:
  • starting in September: Statoil will have long-term rail leases to ship 45,000 bopd
  • more than enough to handle ALL of BEXP's production coming out of North Dakota
  • no price disclosed; carrier not disclosed
  • 14 to 15 days for a round trip from the Bakken to the terminal
  • discounts, due to bottlenecks, range from $5 to $20/barrel
Other data points
  • Phillips 66 recently bought 2,000 rail cars for same purpose
  • Tesoro will ship Bakken oil to its Anacortes, WA, refinery by train starting in September
  • Marathon ships about 14% of its Bakken oil by rail
Last data point
  • Statoil produced about 100,000 boepd in 2011; plans to move that to 500,000 by 2020 (North American production which includes Bakken, Eagle Ford, Marcellus
**********************
RBN Energy: more on NGL distribution