Tuesday, January 15, 2013

Wells Coming Off Confidential List Wednesday

Active rigs: 185 (steady, but gradually increasing)

22986, 613, CLR, Alfsvaag 1-31H, Crazy Man Creek, t10/12; cum 34K 11/12;
22800, drl, Hess, LK-Obrigewitch 146-97-3427H-3, Little Knife,

Note: #22800 is a well on a six-well pad; that pad still has a rig on site; and thus the "DRL" status of other wells on the same pad.

However, in that same section with the six-well pad:
  • 18227, 116, Hess/Tracker, Obrigewitch 34-1H, Little Knife, t10/09; cum 108K 11/12;
And in the section just to the south:
  • 17980, 292, Hess/Tracker, Dukart 3-1H, Little Knife, t6/09; cum 41K 11/12;

Freezing Weather Frustrates Faux Environmentalists; High Tide Fails To Materialize; Global Warming Not Enough To Overcome Atmospheric High Pressure; Weather and Climate Are Two Different Things -- Spokesperson

[References to "Olympia" below are to Olympia, Washington, the state capital.]

No one will believe me, but I had planned to go a whole day without talking about global warming or the debt ceiling or something, but just keep to the Bakken. And then I'm sent this story on global warming.

And even so, I would not have posted the story except it actually mentions the Bakken which makes it perfect for the blog -- all roads used to lead to Rome, now all fracking leads back to the Bakken, I guess.

Here's the lede to the linked story:
Freezing weather with light snow flurries greeted about 200 climate activists gathered on the steps of the state Capitol noon Monday to demand the state Legislature get serious about climate change. [Get Serious!]
The climate rally unfolded four hours after the highest predicted tide of 2013 in Budd Inlet. Climate activists draw attention to the winter high tides, calling them a precursor of a future shoreline under siege from sea-level rise. [Under Seige!]
The irony of Monday’s cold weather compared to a global climate that is heating due to a carbon dioxide buildup in the atmosphere was not lost on the crowd, or some of the speakers. [Global Heating!]
“Climate and weather are two different things,” Olympia-area environmentalist Paul Pickett was quick to remind the bundled-up crowd. Climate is long term and weather is what happens daily, he said. [Different things!]
Well, I'm glad that was pointed out: that climate and weather are two different things. The other difference, of course, is that we can't predict the weather, but we can predict climate change.

By the way, the "high winter tide" failed to reach "high tide" (as predicted):
Turns out the Monday high tide of 16.9 feet fell about a foot short because of the high pressure system parked over South Sound. 
As my daughter would text, LOL.

Oh, that part about the Bakken? Near the end, this bizarre bit:
Look no further than the Port of Olympia, he told the climate activists. One of the port’s newest commodities is a type of ceramic sand shipped from China, unloaded in Olympia, then moved by rail to oil drilling sites in North Dakota. It’s used to prop up or “frack” the earth deep underground to release the oil.
Again, the devil made me do this (post this). I was really hoping to go a whole day without a story on global warming.

Read more here: http://www.bellinghamherald.com/2013/01/15/2838322/high-tide-hits-as-ral

Read more here: http://www.bellinghamherald.com/2013/01/15/2838322/high-tide-hits-as-rally-calls.html#storylink=cpy

Read more here: http://www.bellinghamherald.com/2013/01/15/2838322/high-tide-hits-as-rally-calls.html#storylink=c

Nine (9) New Permits -- The Williston Basin, North Dakota, USA

Nine (9) new permits --
  • Operators: CLR (4), Enerplus (3), True Oil,  BEXP 
  • Fields: Bowline (McKenzie), South Fork (Dunn), Hamlet (Divide), Briar Creek (Williams)
  • Comment: someone just wrote in about Hamlet oil field; I updated Divide County based on the Hamlet just a few days ago; and here we have four (4) more CLR Hamlet oil field permits
Oil wells coming off the confidential list were reported earlier; see sidebar at the right.

Five permits canceled (will be posted later):
  • 20125, PNC, Newfield, Garaas 159...1H, Williams,
  • 20477, PNC, Newfield, Larson 159...1H, Williams,
  • 20443, PNC, Newfield, Fischer 159...1H, Williams,
  • 23626, PNC, Helis, Henderson Johnson 13-33/4/9H, McKenzie,
  • 23922, PNC, Helis, Henderson Johnson 5-25/26H, McKenzie,

Using Natural Gas To Power Rigs in the Bakken

Anyone following the Bakken boom know the challenge of powering the rigs. Here's an alternative: natural gas, being tried in Oklahoma.
SandRidge has agreed to let Green Field Energy Services Inc. provide power to a well in northern Oklahoma's Mississippian formation from natural gas being produced there.

SandRidge, which has struggled to get electricity to its well sites in rural Oklahoma and Kansas, also is using 43 natural gas generators to reduce its diesel usage, Dewey said.
Green Field is teaming with GE Oil and Gas to bring cheaper, cleaner power generation options to the oil field, the Louisiana-based company announced this week. SandRidge and Houston-based Apache Corp. will test the equipment in their operations.
Green Field announced this week it had signed a global supplier agreement with GE, which last year partnered with Oklahoma City-based Chesapeake Energy Corp. to promote natural gas as a transportation fuel.
Chesapeake subsidiary Peake Fuel Solutions is marketing GE's modular “CNG in a Box” units to ease the spread of fueling infrastructure.
Go to the link for additional information.

Link to NewsOK.com.

It's a two-age internet article; near the end of the second page, third paragraph from the end, this paragraph:
Continental Resources Inc. has used natural gas to power a couple of its rigs in North Dakota, which helped cut fuel costs by about a third, said Rick Muncrief, the company's senior vice president of operations.
More at Green Field Energy services website.

Canadian Oil In A World Of Pain -- Think What Could Have Been


Below: a flurry of articles regarding the Albert oil sands. After reading these articles and thinking about geopolitical events, these are my thoughts: 

I think Canada, specifically Alberta, is in deep trouble. Their own government is hesitant about taking on environmental groups to build a pipeline to their coast to send Canadian oil to Asia. And this despite the fact that Canada is learning the lesson of relying on one customer (the US).

Whether or not they say it outright, everything depends on approval of Keystone XL. "Everybody" suggests this is a slam-dunk. Some have even gone so far to suggest that EPA director Lisa Jackson resigned over the likelihood that President Obama will approve the pipeline this summer. In fact, he can't approve it until the State Department approves it, and that can't happen until John Kerry is sworn in as the new SecState, and he just doesn't strike me as someone who will simply approve the pipeline without his own "research." 

Below, at least one Canadian oil spokesman/optimist feels that the oil sands prices will improve in 2014. I assume he, too, is betting on approval of the Keystone XL. Assuming he is correct, two things jump out at me:
a) the WTI/WCS spread is almost $40; unsustainable; the oil sands price will have to jump significantly to narrow that spread; can the Keystone XL do that?
b) assuming WCS will increase in price, even those optimistic say it won't happen until 2014 -- that's a year away; the question: can Alberta wait that long?
If the Canadians cut back on production, all things being equal, this should be good news for the Bakken.

January 16, 2013: part of the reason for the further drop in price of WCS was due to a fire at a US refinery using Canadian oil; that refinery will be back on-line shortly (if it's not already back on line)

January 16, 2013: Can Alberta survive to 2014? Huge bet on Keykstone XL.

The extremely low price for bitumen, which is currently sapping Alberta government revenues, should rise in 2014, according to the former chief executive of Suncor Energy.
But the “serious” situation should remind Albertans about the dangers of having basically one customer for your product, Rick George said during the Edmonton Economic Development Corporation’s annual luncheon on Tuesday at the Shaw Conference Centre.
“This differential (the spread between prices for Alberta’s bitumen and U.S. oil) is serious and it goes back to the fact that we need more export capacity and we need more markets than the U.S.,” he said.
George expects the northern segment of the Keystone XL pipeline, the section proposed to run between Hardisty and Nebraska, to be approved by the U.S., as well as the Line 9 reversal which will bring Western and U.S. light crude to the Montreal refinery. These two projects will be important factors in getting the differential gap to shrink. But export markets outside the U.S. are vital.
January 16, 2013: Canadians need to win on the Keystone XL.
“Overall, the U.S. gulf coast is a huge crude oil market – nearly equivalent to all of China today,” says the IHS report, written by a team of three experts including the company’s global oil director, Jackie Forrest. “Consequently, the U.S. gulf coast will be a critical part of the future for oilsands, particularly for bitumen blends.”
University of Calgary energy economist Michael Moore says the IHS report suggests the province should be focused on getting approval to build the Keystone XL pipeline to get oilsands products to the Texas gulf coast.
January 16, 2013: Suncor weighing decision to cut expansion in the oil sands
Suncor Energy Inc. is considering making an C$11.6 billion ($11.8 billion) oil-sands project the first major spending reduction among Alberta energy producers as the region’s crude prices sink to the lowest in the world.
The oil-sands benchmark, West Canada Select, traded at a record $42.50 a barrel less than U.S. crude on Dec. 14.
Canadian companies are forgoing about C$2.5 billion a month because of the lower prices, according to an estimate by Houston-based investment bank PPHB Securities LP. The discount has helped erode Canadian oil profits and hurt companies’ shares.
Original Post

This is not the first story on the fall in price of Canadian heavy oil but it's one of the most recent, and most concerning for Canadian oil companies. A reader sent this to me:
Canadian heavy oil prices, pressured by a combination of tight pipeline capacity and delays in a U.S. refinery retooling, have fallen close to the trigger point for companies to begin shutting off some production, an analyst said on Tuesday.
Prices for Western Canada Select (WCS) heavy blend, a widely quoted grade, have fallen recently to around $50 a barrel, less than half the price of a barrel of international benchmark Brent, pressuring the bottom lines of producers.
With little in the way of new pipeline capacity expected in the coming months, the deep discount is expected to persist, said FirstEnergy Capital Corp analyst Martin King.
The first production that is likely to get shut down will be traditional heavy oil, in which low-volume wells pump crude without the aid of steam or other enhanced recovery, King said.
"You've got to think that the more conventional heavy is probably borderline right now," he told Reuters after speaking to an industry audience in Calgary.
He said such supplies are likely to require a price of $45-$50 a barrel to generate positive cash flow.
This all goes back to the killing of the Keystone XL. Amazing. This, of course, probably puts downward pressure on all North American oil ... until they stop producing producing completely. 

One can track WCS here.

However, according to analysts, the US still needs that Canadian oil:
The US will continue to need hydrocarbons from the oil sands of Canada despite its rising output of light oil from tight formations, which nevertheless are reshaping markets for heavy Canadian material, says IHS. 
Although production from tight formations in the US eclipsed that of output from the Canadian oil sands last year—2.2 million b/d vs. 1.7 million b/d—it does not eliminate the US need for imports, according to the IHS CERA Oil Sands Energy Dialogue report. If demand changes little and US conventional supply declines, tight oil can replace only about one third of US net oil imports by the end of the decade.
Expansion of tight oil supply has created transportation bottlenecks and glutted the US Midwest, destination of 80% of exports from the oil sands region, IHS points out.
Synthetic crude oil (SCO) from upgraders in Alberta, historically more than half the supply from the oil sands, now competes with tight oil. Most future supply from the oil sands will be blended bitumen, similar to heavy crude oils the US now imports.
So, we'll see. 

Random Look At Six New BEXP Permits In East Fork Oil Field

Closer look at six new BEXP permits:

PermitStatusOperatorNameCountyFieldTest DateCUMStatus Date
24754LOCBEXPMelissa 31-30 2HWmsEast Fork------
24755LOCBEXPMelissa 31-30 3TFHWmsEast Fork------
24756LOCBEXPMelissa 31-30 4HWmsEast Fork------
24757LOCBEXPMelissa 31-30 5TFHWmsEast Fork------
24758LOCBEXPMelissa 31-30 6HWmsEast Fork------
24759LOCBEXPMelissa 31-30 7TFHWmsEast Fork------

These six wells will be sited in the south end of section 31-156-100. There is already one well, active and producing, sited there:
  • 22005, 3,090, BEXP, Melissa 31-30 1H, East Fork, t5/12; cum 84K 11/12; F;

Off The Net For Awhile -- Good Luck To All

Biking in Boston in January. Who wudda thought?

Airlines AZ / ND: Random Update for North Dakota Snowbirds Roosting in Phoenix


December 1, 2015: Delta suspends its twice-a-day flights between Minneapolis and Dickinson.

January 22, 2015 (roundtrip):
  • Williston / Bismarck:  Delta, United, $1200
  • Williston / Denver: United, Delta, $720
  • Williston / Minneapolis: Delta, $640; United, $870
  • Williston / Houston, TX: United, $800; a non-stop United, $1,000
September 24, 2014:
Frontier Airlines will discontinue flights from Denver to Bismarck and Minot.

United Airlines has flights from Denver to Bismarck and Minot.

May 15, 2014: round trip, direct, Williston-to-Houston, beginning November, 2014, on United.

Later, 6:15 pm est: see first comment. Other airline options to Arizona:
Allegiant Air runs Minot to Mesa AZ for under $200. I paid ~$180 for my 2012 pheasant hunt at the end of October, returning to Mesa first week of November. You have to pick their flying days, of course, for the best rates.
These are the same guys who do the Vegas junkets from various cities.

Greyhound is $34 from there and takes 2:20, so just a stop in Stanley. 
The other reasonable rate to PHX to Billings on Delta, but you gotta still get to the basin from there.
Original Post
Link here to azcentral.com.
[Phoenix-area] nighttime temperatures have dropped below freezing, pushing the region into a four-day cold snap, the first of its kind in more than 24 years, experts say.
The unusually cold weather froze pipes at Valley homes, strained homeless charities and likely knocked out power, among other problems.
The "first of its kind in more than 24 years.'

Electricity is out in some areas. Apparently the wind turbines froze. 

And yes, it is my understanding that Phoenix is the #1 destination for North Dakota snowbirds. Round-trip, Williston to Phoenix, one connecting city, for $500.

Video Of Hauling Water for Fracking, Williston, North Dakota, The Bakken

More and more video of the oil patch in the Williston Basin. The data points provided by the video-journalist interests me as much as the actual video.

Hauling Frack Water for the Bakken

How Does One Get 34+ Wells On A 1280-Acre Spacing Unit in the Bakken?

From a Continental Resources exhibit. Sent in by a reader:

As long as that original well produces (and then, as long as any new well produces), no additional leasing is required for the proposed wells. However, the mineral rights owners will share in royalties from all the wells.
"TF1" through "TF4" are also known as the Three Forks benches. Such payzones do not exist in all areas of the Bakken.

A look at how one might place 14 wells on one pad:

Regardless of where one's ten acres of mineral rights are in any of these four sections, the mineral rights owner will share royalties in all 14 wells.

I remember doing a poll on small spacing units vs larger spacing units. Some of the comments spoke volumes about how folks understood the issue; hopefully "we've" come a long way over the past two years.

The Country's First Bookless Library Will Be in San Antonio, TX

My daughter sent me this link, knowing that I love Apple and now call San Antonio home.
A book-less library.
It sounds like an oxymoron, but come the fall of 2013, San Antonio's Bexar County is going to be home to the BiblioTech, the country's first book-less public library. Of course, there will be books -- just e-books, not physical books.
The 4,989 square-foot space will look like a modern library, Bexar County Judge Nelson Wolff, who was inspired to pursue the project after reading Walter Issacson's Steve Jobs biography, told ABC News. 
Instead of aisles and aisles of books there will be aisles and aisles of computers and gadgets. At the start, it will have 100 e-readers available for circulation and to take out, and then 50 e-readers for children, 50 computer stations, 25 laptops and 25 tablets on site.
Library goers will be able to take out books on any of the devices in the library, take out one of the 50 e-readers for a period of time or bring their own e-readers to the library and load books onto their own devices. The library will also be partnering with e-book providers or distributors to provide access to over 10,000 titles.
What a great country.

Tuesday Links

WSJ Journal

Section D (Personal Journal):
This is a must-read for Willistonites, and perhaps Catholics (when you read the article, you will see why I say that). The sports page is a full page on Missy Franklin, the Olympic Swimmer. There is a Williston connection. It's an incredible story. As you may recall, she won four gold medals at the Olympics last year at the age of 16 or 17. After winning, she decided to forgo an estimated $3 million a year in endorsements to remain amateur; she returned to her high school, where she is, of course, on her high school swim team. And wow, does that make the rival schools in Colorado really, really, really upset. Go to the first link. It's quite a story. Coincidentally, at Missy Franklin's wiki page, it is said her favorite swimmer is Natalie Coughlin. The "Coughlin" name is very, very familiar in Williston; I do not know if there is a connection. Probably too much to hope for.
More than just an oil patch. 

Williston, North Dakota, Swim and Dive Team, 2012

The best thing about this video: seeing my high school colors again, orange and black. Wow. Great memories. The Olympic-size indoor swimming pool was built long before the current boom. The Williston High School fieldhouse carries the name of Phil Jackson, the NBA basketball coach and WHS alum.

Section C (Money and Investing): nothing of interest to come back to.

Section B (Marketplace): nothing of interest to come back to.

Section A: nothing here. The op-eds are good, but I won't post the links. They are not that good. Looks like I'll be spending my time on Tolkien