Tuesday, November 20, 2012

An Interesting -- Very Interesting Read of the Marcellus

From Rigzone.com.
For a number of these companies seeking to cash in, the big payoff never came. Plummeting natural gas prices made acquiring acreage in a largely dry gas play much less appealing. Speculators caught up in the initial rush to the Marcellus found themselves saddled with overpriced leaseholdings that were not generating income.
In the view of one long-time observer of U.S. oil and gas industry trends, the "bubble" that characterized much of the activity in the Marcellus in recent years has not burst per se. Rather, Raymond Schmaus maintains the bubble has morphed into a more stable and predictable environment that favors the long-term investor. The president of the Pittsburgh-based oil and gas title abstract firm Armstrong Search Associates, Inc. welcomes this change, which he said favors operating companies looking to maintain a lasting presence in the Marcellus and the overlapping, liquids-rich Utica shale formations.
Transferable to the Bakken? It just keeps getting more and more interesting. Go to the link for an interesting read --

Montana Headlines: Coal Plant Shutting Down (?); Boom in Bakken Jobs


December 6, 2012: update on the Decker mine, layoffs, coal shipments, etc. 

November 21, 2012: see comments and the stand-alone post regarding the Decker coal mine story, as well as BNSF and the Bakken

Original Post
Link here to Montana Headlines.
While this may not be directly related to the war on coal that the Obama administration has waged, it certainly couldn't have helped: the Decker coal mine in southeastern Montana is laying off 75 workers.

The increased regulation laid on coal-burning electricity plants by the EPA have already cost a good number of workers in Billings their jobs at PPL's plant, now scheduled to be mothballed. And now, another set of workers in a major southeastern Montana coal mine. Many of them live in the Sheridan area, but as everyone knows, folks in Sheridan come to Billings all the time for shopping, medical care, and other services that are found here in the nearest "big city" to Sheridan and surrounds.
Don sent me the article on the Decker coal mine earlier but I didn't post it -- I was worried about getting too far afield of the Bakken but then I saw it posted at the link above. Couldn't resist posting it now. I was not aware that I was linked at the link. Ping pong.

But very nice to see. Thank you.

On Tap For Thanksgiving Eve -- Wells Coming Off Confidentail List Wednesday

Wells coming off confidential list, Wednesday, Thanksgiving eve --
  • 19604, drl, WPX, Mandaree 24-13HD, Reunion Bay, McKenzie,
  • 20390, 169, OXY USA, Bullinger Trust 1-18-19H-142-96, Dunn
  • 21698, drl, XTO, Flatland 11X-2F, McKenzie,
  • 22041, 1,084, Hess, SC-JW Hamilton-153-99-1314H-1, Williams
  • 22262, 352, OXY USA, Little Butte 1-21-28H-16-90, Burke,
  • 22595, 580, Hess, GO-Darryl-158-98-0904H-1, Williams
Random photo of the Bakken oil patch, sent by a reader, taken in October, 2012:

According to the photographer: Newfield rig drilling (derrick in middle of photo on horizon) on permit #23570 in the Keene field and the national grasslands, located in NW 1/4 of 26-153-96. The permit is for 23 & 14, 153-96 and the photo was taken +/- 3 miles north from the county road. The Bakken is producing twelve (12) percent of the nation's oil production.

Other links this evening that caught my eye:
San Francisco bans public nudity. I guess even they've had enough. I'm sure the ACLU will get this turned around. Lewd conduct, sure, but nudity?  The bill was precipitated by male nudity in some parts of the city. Mr Weiner introduced the bill. I cannot make this stuff up.

Israel warns journalists to stay away from Hamas. Okay. That sounds like good advice.

Detroit on suicide watch.

Remember that hotel that will go up in Alexander, North Dakota, in 90 days? Well, the Chinese are not going to let that pass without trying to do better: the Chinese to build the world's tallest building in 90 days. I remember the days when the US was setting records. Not so much any more. Except in national debt.

File under "You Have Got To Be Kidding!" -- Church of England votes to ban women from becoming bishops. In England! Next think you know, they will ban fracking. (The French already have.) [As has New York.]

CIA Closing Its Global Warming Office

Set up in 2009, the CIA -- under an Obama appointee (I can't make this stuff up) -- well, was an Obama appointee -- to monitor the interplay between a warming planet and intelligence and security challenges.

But this shouldn't be too surprising. Canada withdrew from the Kyoto protocol almost exactly one year ago.  The EU has given up on trying to lower CO2 emissions, using coal in lieu of natural gas. We won't even talk about China or the Sudan. And the Brits say global warming ended sixteen (16) years ago. Sweet 16.

Sweet 16, Neil Sedaka
Wow, I hope I get to play this song when my granddaughters turn 16.

Eight (8) New Permits; Active Rigs Dropping; BEXP With Some Nice Wells In Both The Three Forks and the Middle Bakken Near Williston

Bakken Operations

Active rigs: 181 (significant drop; this is a post-high low; the previous low was 182 set back in October, 2012; some time ago it was suggested that "we" would see 175 rigs)

Eight (8) new permits --
  • Operators: BEXP (3), MRO (2), XTO, SM Energy, North Plains
  • Fields: Smoky Butte (Divide), Wolf Bay (Dunn), Poe (McKenzie), Colgan (Divide), Briar Creek (Williams)
  • Comments: --
Wells coming off the confidential list:
  • 21210, 1,650, Whiting, Johnson 34-33H, McKenzie,
  • 22762, 599, CLR, Jefferson 2-17H, Williams,
Producing wells completed:
  • 23398, 673, Liberty Resources, Lassey 152-103-22-15-1H, Glass Bluff, t10/12; cum --
  • 23510, A, Whiting, Brueni 11-28PH, Green River, t10/12; said to be flowing; no IP provided; spudded August 25, 2012; total depth of 20,000 feet on September 6, 2012 (12 days); Three Forks; Green River is part of Whiting's Pronghorn Sand prospect;
  • 23149, 1,568, Whiting, Fladeland 11-1H, Sanish, 18 days to total depth; 5' flares; no frack data yet; t10/12; cum --
  • 23237, 523, Whiting, Britany TTT 13-26TFH,  Sanish, t10/12; cum --
  • 23236, 1,662, Whiting,  Matt TTT 13-26H, Sanish, t10/12; cum --
  • 22623, 2,766, BEXP, Heen 26-35 3TFH, Todd; t10/12; cum --; 25 days to reach total depth; a long lateral; background gas approached 1,500 units; a Three Forks well;
  • 22057, 2,561, BEXP, Wagenman 29-32 1H, Todd, t9/12; cum 5K 9/12;

Director's Cut Is Out: What Slowdown? Permitting At All-Time High By a Huge Margin; With Ten Less Rigs --> Production Up By Almost 4 Percent; Growth Exceeding Capacity to Capture Natural Gas


Later, 12:31 pm: a closer look at permitting. Mr Helms says that the pace of permitting has increased due to a) multi-well pads; and, b) winter coming. The record number of permits, 245, set in November, 2010, was beat by a new permitting record this past summer, July, 2012, with 266 permits. In October, that record was shattered (see below): the new record for permitting in North Dakota was set in October, 2012, with 370 permits. This new record of 370 absolutely shatters all previous records, just as the pace of permitting has increased significantly over the past six months.

Original Post
Link here.

  • Sept: 728,494 bopd (preliminary, all-time high)
  • Aug: 701,409 bopd
Producing wells
  • Sept: 7,798 (preliminary, all-time high) --> 93 bbls/well/day might be a record high, also
  • Aug: 7,701
  • Oct: 370 (new all-time high) -- 36% increase over September
  • Sept: 273
  • Aug: 261
  • Oct: $87/bbl
  • Sept: $85/bbl
  • Aug: $81/bbl
Rig count
  • Oct: 188
  • Sept: 190
  • Aug: 198
Same comment regarding fracking as usual: "...uncertainty surrounding future federal policies on hydraulic fracturing are impacting capital investment decisions."

Additions to gathering and processing capacity are helping but the percentage of gas flared rose slightly to 30%. The historical high as 36% in September, 2011 (again, flaring is a red herring). "Gas/oil ratios are increasing and confirms the need for more gathering and processing capacity. Construction of processing plants and gathering systems will not be affected by weather."

The NDIC approved (YESTERDAY) funding for researching flared gas to anhydrous ammonia fertilizer. Other research projects being considered.

Takeaway: 40% (rounded) by pipeline; 50% by rail; truck 2%; and Tesoro refinery, 8%.

"Drilling permit activity has increased dramatically to accommodate more multi-well pads and the need to build locations before winter."

The permitorium continues: "The number of rigs actively drilling on federal surface in the Dakota Prairie Grasslands is down to 5."

These are the concerns with the draft EPA proposal regarding diesel and fracking:
There are a significant number of concerns with the guidance as proposed, but the major points that should be commented on are as follows:
  • This is a state’s rights issue. States that have adopted hydraulic fracturing rules that include chemical disclosure, well construction, and well bore pressure testing should be explicitly exempted from the guidance. 
  • The definition of diesel fuel is too broad because it includes six CASRNs as well as any materials referred to by one of these primary names or any associated common synonyms. [Remember: the EPA re-defined "diesel" to include Newman's Own Salad Dressing, if I recall correctly, but I could be mistaken on this.]
  • EPA made no attempt to identify dangerous concentrations of these materials. Hydraulic fracturing treatments that utilize concentrations of less than 10% of any material defined as diesel fuel should be exempt from permitting requirements. 
  • The guidance is written for Enhanced Oil Recovery wells or disposal wells completed with tubing and packer. It shows a serious lack of understanding of the horizontal drilling-hydraulic fracturing process. Most of the requirements will not work mechanically on wells completed with swell packers and fractured down the production casing.

Tuesday's Links: Mostly Trivia; No Bakken

Based on my daily informal survey of the number of Apple computers and tablets used on any given day at Starbucks, I agree: PC users are jumping ship to Apple products.
Anti-virus company Avast conducted a survey of Windows-based PC users the day before Windows 8 was released.
The results were devastating for Microsoft and non-Apple PC makers.
They were excellent, meanwhile, for Apple.
This is very, very interesting. Somewhat counterintuitive. A lot of folks, especially at Microsoft, would have thought that PC users were anxiously awaiting to upgrade their systems. In fact, the opposite happened. PC users now had an agonizing choice: upgrade their PCs (their old PCs could not make use of Windows 8) or switch to Apple. Many PC users already had Apple iPhones or iPods. It appears, if the data is correct, PC users felt this was a good time to upgrade/switch to Apple. Very, very interesting.

Trivia for tonight's cocktail party from one of the best sports pages in the print media, the WSJ: quarterbacks speak fluent gibberish:
In the last year, however, there has been a development that is unprecedented in the long history of quarterback signal calling. Thanks to a change in the way television broadcast microphones are positioned on the field, these strings of code that quarterbacks and linemen shout out before the snap are being relayed directly to the ears of millions of fans—and all of the team's future opponents.

Realizing their code languages may be compromised week to week, quarterbacks have taken the only avenue available to them: speaking total gibberish. To camouflage what they're trying to do, all of the NFL's biggest-name quarterbacks are employing a string of random, nonsensical shouts that make them sound, at times, like 1-year olds. 
Prior to the 2011 season, NFL umpires, who wore microphones and doubled as the network's boom operators, captured on-field sounds from their convenient position behind the linebackers. But when the officials were repositioned for safety reasons, the league needed to preserve its close-to-the-action sound. The easiest solution was to place microphones on offensive linemen. Today, all starting guards or centers now must wear a microphone, and all the once-muted pre-snap chatter has become public knowledge, whether teams like it or not.
What a great country. Car manufactures designing, building, and shipping cars that no one will buy: California spurs electric cars
Chrysler Group LLC next week plans to unveil an unusual automobile—an electric car that doesn't stand a chance soon of turning a profit and is unlikely to draw many customers.
So why is the company making it? It has to. California requires it. 
Nice.  The California law says the cars must be "sold." Not "given away."

I had lost the bubble on this, but there must be an epidemic that I am unaware of. A government health panel for the first time recommends testing for HIV for all -- repeat, all -- Americans aged 15 to 65, in an effort to show its spread. I'm in that age group, and somehow I don't feel the need. I assume this would not include foreign tourists, illegal immigrants, Hollywood elites, or space aliens.

Oil industry renews push for drilling in the Atlantic. As I noted yesterday with regard to all the oil under Santa Barbara, CA, oil off-shore North and South Carolina, and Florida, might as well be oil on the moon. I won't see it; my children won't see it; my grandchildren ... might. But there's a nice map at the linked article.

This may be the most important essay in the journal in today's edition: why the Carlyle Group is investing in America, by the co-founder and the co-CEO of the Carlyle Group:
Nowhere on the globe can my firm invest in companies with as much confidence as we do in the U.S. And while we take comfort in the long-term safety of U.S. assets, we also see opportunities for growth. This is because of a combination of very low interest rates, a strengthening housing market and significant domestic energy discoveries.
Today we find ourselves in a world of no return. With government bonds paying next to nothing and the yield on high-grade corporate bonds at historic lows, investors are seeking safety in addition to growth. The United States offers a powerful combination of the two.
The U.S. is characterized by inherent attributes that are often taken for granted: freedom, the rule of law, confidence in regulatory agencies. America has admired universities, the deepest and most-liquid capital markets, peerless medical systems, and pockets of innovation such as Silicon Valley—all of which, though not perfect, are highly advanced and function smoothly.
Now that the election is over, we learn the FHA is insolvent

Israel's Iron Dome.What does this remind you of?
However Israel's latest war with Hamas ends, the Gaza conflict will long be remembered for images of a military feat in the skies above Israel. Israeli interceptors have eviscerated the Iranian-supplied Hamas missiles heading for population centers. Chalk up an important strategic and technological win for missile defense.
The Jewish state's Iron Dome system was conceived after the 2006 war with Lebanon, when nearly 4,000 Hezbollah missiles killed 44 civilians in northern Israel; it was deployed only last year. Missile defenses have had vocal doubters since Ronald Reagan championed them in the 1980s, and Israeli critics focused on the price—around $50,000 for each Tamir interceptor—and supposedly dubious reliability. The last week ends that debate.
Yes, the Battle of Britain.

The food police are routed at the ballot box.
As Americans tuck into their turkey and dressing on Thursday, they might add one little item to the list of things for which they give thanks: the defeat of California's Proposition 37 on Election Day. That initiative would have made the Golden State the first and only to require the labeling of genetically modified foods. And its demise marks the death throes of a self-proclaimed "food movement" that urges ever-greater government intrusion into the nation's grocery stores and kitchens.
On the same day that Californians statewide voted down Prop. 37, the residents of El Monte (near Los Angeles) and Richmond (near San Francisco) also voted down a "fat tax" that would have added one cent per ounce to the price of sugared sodas.
The food movement is in retreat overseas, too: In Denmark, the government this month rescinded its one-year-old tax on saturated fat because of consumer backlash and adverse economic impacts. 
And so it goes.

Wow, I bet Meg Whitman wishes she had never heard of H-P.  At least it was her predecessor that bought into the alleged fraud. A day later, in the WSJ, "Heard on the Street": another fine mess for Hewlett -Packard. As noted elsewhere, I give her two years to turn H-P around. [Update: just a couple of hours later, I happened to catch a talking head on CNBC: a) Ms Whitman was on the board of directors when H-P bought this company; and, b) the talking head is already talking that it is time for Ms Whitman to go. Wow.]

I see former president Jimmy "Malaise" Carter is writing under a pseudonym: it's time to ban Christmas presents. Bah! Humbug! [18,435 former union workers at Hostess most likely agree.]

Wow - A Perfect Way To Start the Bakken Day

RBN Energy: crude-by-rail in the Bakken.
Last week the latest set of Bakken crude production numbers showed another big increase to reach 728 Mb/d. The challenge all along for this prolific land locked basin has been one of finding a ready market for growing production. Meeting that challenge in the absence of quickly available pipeline capacity led to creative solutions and many new destinations. Today we contemplate what they are going to do with all that crude.
This new record production level for September 2012 is up another 27 Mb/d over August.   North Dakota now accounts for nearly 12 percent of total U.S. crude production, up from 1 percent less than five years ago. RBN Energy blog readers will be familiar with the reasons behind these production statistics. We recently covered overall US production increases from shale oil in the big three plays – the Bakken, Permian and Eagle Ford basins (see Will the Crude Production Boom Keep Running?).
The charts [at the linked article] show the pace of Bakken crude production since the start of 2008. [The data is for North Dakota but remember that there is also Bakken production in Montana (~50 Mb/d) and South Dakota (~5Mb/d)]. [One chart] shows actual monthly production in Mb/d. We added a trend projection (red dotted line) to [another chart] – following the period of most rapid growth from July 2011 and projecting forward until production hit 1 MMb/d during the fourth quarter of 2013.