Saturday, September 29, 2012

Random Look at Rigs Operating in North Dakota


September 30, 2012: a reader sent in the breakdown of active rigs by operator when the number of active rigs in North Dakota hit a record -- May 31, 2012. The CLR and the OXY USA numbers account for a huge percent of the recent decrease in active rigs. 

The smaller operators have almost no room to maneuver; with only one or two rigs, they can't cut much if they want to stay in the Bakken.

It is interesting that the low-cost driller has appeared to increase the number of active rigs.

BEXP and CLR, I believe, will be cutting one more rig each. With pad drilling, less rigs are needed. A random thought: CLR probably knows the Bakken as well as anyone, and may be moving into the "manufacturing" stage ahead of others, requiring significantly fewer rigs to meet internal targets. See long comment below dated September 30, 2012, -- some great thoughts.

Original Post

There's been a lot of talk this past year about drillers laying down rigs to save money/cut costs.

Here are some data points, taken from August 22, 2011, and September 28, 2012, one year later. On August 22, 2011, there were 195 active rigs in North Dakota, at a time when the number of rigs was still increasing and would eventually hit a high of 218 on May 29, 2012. Three months later, on August 7, 2012, it had dropped to 198. Dropping from 218 to 198 in less than three months seems precipitous but spread out over 20+ companies, it doesn't amount to much in the big scheme of things. Especially when one considers how much faster rigs are reaching total depth, pad drilling, and improved infrastructure (for "everything").

I wish I had a breakdown of wells when "we" were at a record (218) and it's possible I posted the distribution of rigs about that time, but I don't recall. For me, I just can't get too excited about the talk about "stacking" rigs. By the say, in its most recent update American Eagle said they had contracted for another rig (which might be reflected below) demonstrating that some companies will drop rigs, others will add rigs. And, oh by the way, there are new drillers in the Bakken.

Remember, these are snapshots in time, and on any given day, the number could change. Again, these are data points taken from August 22, 2011; May 31, 2012; and,  September 28, 2012, one year later. Remember: the record number of active rigs was at the end of May, 2012.

So, snapshot below: August 22, 2011 --> May 31, 2012 --> September 28, 2012 --> March 4, 2013
  • BEXP: 16 --> 18 --> 15 --> 12 (in Sept 2012, expected to see another rig stacked)
  • BR: 9 --> 8 --> 8 --> 9
  • CLR: 14 --> 24 --> 15  --> 18 (in Sept 2012, change in philosophy)
  • Enerplus: 2 --> 3 --> 3 --> 2
  • EOG: 7 --> 7 --> 5 --> 5
  • Fidelity: 4 --> 4 --> 5 --> 5
  • G3 Operating: 2 --> 1 --> 3 --> 2
  • Hess: 17 --> 19 --> 17 --> 16
  • Hunt: 2 --> 4 --> 3 --> 2
  • KOG: 8 --> 7 --> 8 --> 8
  • MRO: 6 --> 7 --> 7 --> 5
  • Newfield: 2 --> 2 --> 3 --> 3
  • Oasis: 8 --> 8 --> 8 --> 11
  • OXY USA: 6 --> 12 --> 6 --> 5
  • Petro-Hunt: 12 --> 13 -->  10 --> 12
  • Triangle: 2 --> 2 --> 3 --> 2
  • Whiting: 17 --> 15 --> 18 --> 17
  • WPX: 6 --> 6 --> 6 --> 4
  • XTO: 7 --> 7--> 5 --> 9
There are yet to be rigs "retired," and again this is just a snapshot on two given days.


And then there's this:

Johnny, Are You Gay, Hillbilly Moon Explosion

Quote of the Day

"“I am unable to have a cellphone and I need one for emergencies,” said Aliesa Azbill of Dayton, who is in a work training program at Community Action Partnership. She said the 250 free minutes she gets per month through SafeLink isn’t enough to use it for much more than emergencies." -- owner of an ObamaPhone. 
Wow, 250 minutes/month for emergencies -- and that's not enough talk time. Wow. I would love to listen in to some of those emergency calls: the only emergencies I can think of that would last 250 minutes:
  • hostage negotiation
  • 9/11 suicide intervention
  • coordinating emergency response to a Bakken blowout
  • LA County freeway SUV chase following a bank robbery or drug deal gone bad
  • calling a friend while part of a "rent-a-crowd" at an Obama speech

Faux-Environmentalists, Keystone XL, Bloomberg

Link to Bloomberg.

The story was posted September 25, 2012. I'm not sure why Bloomberg posted the story at this particular time; I'm not aware of anything new.

The president killed Keystone XL.

Keystone XL 2.0 S is tied up in Texas courts.

TransCanada has submitted a new application for Keystone XL 2.0 N, that portion running from the Canadian border (Montana) to Steele City, Nebraska, and from there one branch to Cushing, OK, and one branch to Patoka, IL.

But I digress.

This is the bigger story.
If the aim of opponents was to keep TransCanada from building the 1,600-mile Keystone line, then they have accomplished their mission.

But if the objective was to fight global carbon emissions by hindering the expansion of Alberta’s tar-sands production, then little has changed.

What’s more, a win for Nebraska’s farmers has now dramatically increased the risk to the pristine rainforests along the coast of British Columbia. [I didn't think it had anything to do with the farmers but ....]

Output from Canada’s tar sands, currently about 1.5 million barrels a day, is forecast to double by 2020. Until Keystone was tripped up by the Nebraska aquifer, the project looked like the best option for getting new production to world markets. In the long run, several new pipelines will be needed to handle the extra volume from the tar sands. But in the short term, the competition to build a new line looks like a horse race.

Keystone had the inside track, but the political delay has created an opening for a competitor, Enbridge Inc. (ENB)’s $5.5 billion Northern Gateway that could ship about 525,000 barrels of oil a day from Alberta to a terminus in Kitimat, British Columbia. Regardless of which pipeline gets the nod, once construction begins, the necessity for oil-sands producers to build the other line will be alleviated.

Right now, Canadian oil companies have a huge incentive to fast-track another pipeline out of Alberta. The bulk of the province’s tar-sands output currently ends up in refineries clustered throughout the U.S. Midwest. An increase in volume from the tar sands, combined with prolific production from so- called Bakken shales, a new oil play being exploited in North Dakota and Montana, has created a supply glut at those refineries. 
I can't make this stuff up.

Week 39: September 23, 2012 -- September 29, 2012

Economic Development
Fly into ND airports at your own risk -- FAA
Nitrogen production / storage facility to Dickinson
Journey Energy Services (Williston), Trinity Regional Eyecare (Williston), Oil Capital Laundromat (Tioga)
St Louis construction company opens shop in Killdeer
Update on activity at the 13-mile corner
Pilot Flying J Truck stop at 13-mile corner
Master-planned community north of Minot

General / Human Interest Stories
Northward Ho! -- National Oilwell Varco
North Dakota's "Legacy Fund" > $535 million
The Oil Drum dissing the Bakken
Encana: mobile LNG refueling stations

Bakken Operations
Permitting hits another record
Active rigs: location and operators
Cost of proppant
KOG acquires 80 acres in the heart of the Bakken; $7,000/acre
New Frontier Midstream: new pipeline from south Bakken to Fallon County, MT
Bentek study: Williston Basin -- 2.2 million bbls/day by 2025

Speaking of Wow! Today's WSJ "Review" Section Is Incredible

Print edition, of course.

I quit subscribing to print media some years ago. When I went cold turkey, I was subscribing to the Wall Street Journal, Forbes, The Atlantic (Monthly?), and The New Yorker, plus others I've long forgotten. I think I maxed out at seven periodicals. This does not include a multitude of professional journals and one investment news letter.

Forbes was one of the best for business writing. I think I lost interest when the founder died, his son took over, and ran for president. I no longer miss it, although I do miss some of the columnists.

For literature, The New Yorker was THE best. I still remember some articles that I read thirty years ago. One I remember vividly:
Calvin Tomkins, Profiles, “NEW PARADIGMS,” The New Yorker, January 5, 1976, p. 30. 
To see the article now, I need a subscription. Too bad. Wow, that was back in 1976 -- 36 years ago: about as long as some Williston Basin oil wells have been producing. (All Bakken All The Time.)

I always looked forward to articles by Woody Allen, but they generally seemed to come up short.

I don't what it was that caused me to lose interest in The Atlantic.

About four years ago, maybe longer, I tried the WSJ again, and have subscribed off and on since then. I look forward to it every day (except Sunday, of course). Occasionally there are days it lets me down -- nothing of interest -- but most days its excellent, and some days it is outstanding. Today was an "outstanding day."

The review section in today's WSJ is absolutely chock full of book reviews:
  • a book on atheism, which appears to be a trend this year (noted by the WSJ, not me): Religion for Atheists: A Non-Believer's Guide to the Uses of Religion, Alain de Botton
  • a book about the resurgence of Al Qaeda, all but defeated by 2008: The Endgame, Michael R. Gordon and Bernard E. Trainor
  • a book about Willy Sutton: Sutton, JR Moehringer; with a huge photograph -- a very dapper bank robber
  • a new biography of General US Grant: The Man Who Saved the Union, HW Brands; it is said that the greatest autobiography ever written -- all autobiographies, not just military men -- was Grant's; I've read it twice; it is outstanding
  • a biography of Hetty Green: The Richest Woman in America, Janet Wallach
  • a new novel by Michael Kimball, Big Ray -- "a story of a father so crude, cruel, perverse, tawdry and mean that he makes Pap Finn look like Atticus Finch"
  • a couple of reviews on the nuclear family in meltdown; review by Sam Sacks and then this little jewel buried in one of reviews:
  • "... is not abetted by suburban affluence but by a discriminatory justice system. In 1988, on an Ojibwe reservation in North Dakota -- the setting of most of Ms Erdrich's previous novels, including...."
  • an autobiography, Waging Heavy Peace, Neil Young (of Crosby, Stills, Nash and Young)
  • science of the body: The Spark of Life, Frances Ashcroft
  • AIDS: The Scientists, Marco Roth
  • five personal recommendations from John Kelly, author (more to follow)
More to follow. [Update: I never did get back to this. Sorry.]

The Wild, Wild, Wild West -- Fly Into North Dakota At Your Own RIsk -- FAA: And They Are

Oilmen don't get where they are by being timid.

And a warning from the FAA that "flying into North Dakota is at your own risk" is probably not going to deter them (I blogged about my personal experiences earlier).

So many story lines at this link:
At Killdeer’s airport — maintained by a retired farmer and mostly with his own money — planes ferrying oilmen, workers and supplies are taking off and landing in record numbers, despite pilots being told by the Federal Aviation Administration to do so at their own risk.
The $300 million that will be needed to upgrade the airports is a drop in the bucket compared to all the federal money flowing back to the states, and it is not enough to bump North Dakota from 7th to 6th, but it would be a start. Smile.

Until then, the ranchers will manage their own airfields, I guess. What a great country.