Monday, February 4, 2013

Lost Bridge Oil Field Has Been Updated

Some minor updates at the Lost Bridge oil field; nothing particularly interesting.

Bakken Strengthens With Shipment to Delaware; It Looks Like One Unit Train/Day From The Bakken; Another East Coast Refinery Railing in Bakken Oil

Link to Bloomberg.

Earlier today I noted that the spread between WTI/Bakken had narrowed to $3.15 at Clearbrook, MN. Note this article regarding pricing:
Bakken oil on the spot market strengthened to its narrowest discount to the U.S. benchmark crude in six weeks as PBF Energy Inc. expects to receive its first rail shipment from North Dakota at its Delaware refinery.
PBF finished construction on the second train unloading terminal at its 182,800-barrel-a-day Delaware City refinery, the company said in a statement. PBF expects to unload its first unit train of Bakken oil this week, with 17 more scheduled to arrive in the next two weeks.
Bakken oil priced in Clearbrook, Minnesota, narrowed its discount to West Texas Intermediate in Cushing, Oklahoma, by 15 cents, to $3.10 a barrel at 12:13 p.m. New York time, according to data compiled by Bloomberg. The spread between the two oils changed for the first time in two weeks and is the smallest since Dec. 20. 
Meanwhile, at the linked article, Western Canada Select (WCS), a mixture of heavy crudes from Alberta, is selling at a $30 discount to WTI. 

The article says that the Seaway expanded to 400,000 bbls/day but I thought that had been delayed until 4Q13; more to follow.
The spread began growing last week after Bill Ordemann, a vice president for Enterprise Product Partners LP, said restrictions at the Seaway pipeline’s Jones Creek terminal in Texas would last until a new pipeline lateral is finished in late 2013. 
Light Louisiana Sweet oil is selling at a premium of about $20 to WTI.

Another Oil Play That Could Be Bigger Than The Bakken: The Canol


May 28, 2015: first assessment.  
The first assessment of the unconventional resource potential of two shales in the Canadian Northwest Territories has shown large amounts of petroleum resources. The assessment of the Bluefish and the Canol Shales, carried out jointly by The National Energy Board (NEB) and Northwest Territories Geological Survey (NTGS) assessed the resources at an impressive 191 billion barrels.
The assessment of the two shales, carried out jointly by The National Energy Board  and Northwest Territories Geological Survey showed that the volume of oil-in-place for the Canol Shale is estimated to be 145 billion barrels; the thinner Bluefish Shale is expected to contain 46 billion barrels of oil-in-place.
The amount of recoverable oil was not estimated because well-test results are not yet publicly available and there is still uncertainty about whether the shales are capable of production. However, if only one percent of the in-place resource was recovered from the Canol Shale, it would represent a marketable resource of 1.45 billion barrels.
So, it appears they are suggesting about 200 billion bbls OOIP with a recovery rate of 1% providing about 1.45 billion bbls. To put that in perspective, most "everyone" agrees that the Williston Basin Bakken boasts 500 billion bbls OOIP and operators are currently easily getting 3% recovery, and maybe much more. Of course, the official surveys (USGS) do not agree with 500 billion bbls OOIP in the Williston Basin, so it's possible that the Canol Shale / Bluefish Shale is similar in size to the Williston Bakken. 

June 3, 2014: update. Includes notes on the Bluefish in the same play

February 5, 2013: MGM Energy spuds exploratory well in the Canol

Original Post

From, an update on the Canol Basin, in the far north of Canada. The writer posted an introduction to the Canol oil shale last month.
The emerging Canol oil shale is poised to challenge the Bakken and Eagle Ford plays as one of North America's largest oil shale deposits when the super majors unveil their significant positions this winter. The Canol is a high quality shale reservoir which covers a larger area than the Eagle Ford and has better reservoir parameters than either of its southern rivals. This oil play in Canada's North West Territories (NWT) offers risk tolerant investors the possibility of a high impact investment opportunity which has not shown up on investors' radar screens because the majors who control the play are not as prone to self promotion as junior and mid-sized companies. As a result, the potential value of the play may not be reflected in their stock prices.
Today, the update
This play potentially exceeds the Bakken and Eagle Ford, but is unusual in that it is controlled by the major oil companies with only one small company involved. Very little information has been released to base an evaluation upon as companies were competing to accumulate land positions. That is about to change, as the play is now in the de-risking stage of development with five wells presently being drilled and/or tested.

Testing the Lower Benches of the Three Forks North Of Williston, Divide County, The Tangsrud Wells


February 8, 2013: I received this comment from a reader earlier. In case some folks don't read comments, I am re-posting part of it here:
I just talked our land man in ND and he told me that the 14 wells or "more" that is happening especially with CLR will become the norm. It seems that the Hamlet field along with others are all being talked about for multiple wells everywhere. The Milton wells have three, plus the Rosenquist will have three starting shortly. They may become 14 or more wells in the future. All the oil companies are talking about it. I think the Milton wells come off conf next week. And that might determine how many more.
February 8, 2013: Mike Filloon on EURs for the Three Benches; this is a "cut and paste" from an earlier post:
From Filloon on KOG, May 20, 2012:
Kodiak Bakken EURs in this area are 800 to 900 MBoe. Upper Three Forks EURs are 700 to 800 MBoe, plus there is possible upside to additional benches. Continental and Burlington Resources have both tested the second bench successfully in areas very close to the Koala Prospect. Whiting is also testing the second bench of the Three Forks. There are also two benches below, for a total of four Three Forks benches. Continental has stated the second has been consistent throughout its acreage, but the third and fourth benches have hot spots throughout the Williston Basin.
February 8, 2013: the Tangsrud wells have been re-arranged on this post based on formation that is being targeted, so that one can easily compare the Tangsrud wells with the Wahpeton wells.

February 7, 2013: on the daily activity report, four CLR Tangsrud wells, which will be added to those in the original posting. CLR now had 12 new permits for wells in section 1-160-96, Hayland oil field.

Original Post (updated with the new permits)

[Note: this is one of the very few "original posts" that is being updated to reflect significant changes.]
On May 13, 2013: there is a 6-well pad, two 2-well pads (both very close together, almost a 4-well pad), four single wells.

It looks like CLR is testing the lower benches of the Three Forks north of Williston in Divide County; four were added on the February 7, 2013 daily activity report:
  • 17649, 922, CLR, Tangsrud 1-1H, t7/09; Dolphin, cum 123K 3/13; lateral runs south in Hayland, but NDIC says they are in Dolphin field (cannot be correct)
  • 19107, 488, CLR, Tangsrud 2-1H, t11/10; Dolphin, cum 87K 3/13; lateral runs south in Hayland, but NDIC says they are in Dolphin field (cannot be correct)
  • 24924, conf, Tangsrud 14-1H, Hayland, rig-on-site, May, 2013;
  • 24965, conf, Tangsrud 5-1H, Hayland,
  • 24967, conf, Tangsrud 9-1H, Hayland,
  • 24928, conf, Tangsrud 11-1H1, Hayland, rig-on-site, May, 2013;
  • 24936, conf, Tangsrud 8-1H1, Hayland,
  • 24924, conf, Tangsrud 3-1H2, Hayland,
  • 24930, conf, Tangsrud 13-1H2, Hayland,
  • 24964, conf, Tangsrud 6-1H2, Hayland, 
  • 24966, conf, Tangsrud 10-1H2, Hayland,
  • 24929, conf, Tangsrud 12-1H3, Hayland,
  • 24934, conf, Tangsrud 4-1H3, Hayland, rig-on-site, May, 2013;
  • 24935, conf, Tangsrud 7-1H3, Hayland, rig-on-site, May, 2013;
I assume the "H" designation: middle Bakken; "H1" the TF1; the "H2" the TF2; and, the "H3" designation, the TF3. With the four additional wells added February 7, 2013, there are five wells with the "H" designation; there are two wells with the H1 designation; four wells with the H2 designation; and, three wells with the H3 designation.

  • 5 wells: middle Bakken
  • 2 wells: TF1
  • 4 wells: TF2
  • 3 wells: TF3
Hayland oil field is a two-section oil field in the far southeast corner of Divide County. It looks like the field is about 20 miles due north of Tioga, the oil capital of North Dakota. There are already two long lateral Bakken wells in this oil field, and one older Madison well.

The other producing well in this field is an old Madison well that was re-entered in 2003 targeting the Bakken (as a vertical well), at which time the Madison was taken off-line. Only the Bakken in this well is currently producing, maybe a 100 bbls/month. 

Wells Coming Off Confidential List Tuesday; MDU Reports Earnings Tuesday

RBN Energyupdate on Marcellus gas flowing into Canada; reversing flow of pipelines;

MDU earnings call today: for 2012, lost a penny, versus earning $1.12 for 2011. Adjusted earnings were $1.15 vs $1.19. Total-after-tax-write-downs for the year were $246.8 million. The write-downs were largely driven by the lower natural gas price environment in 2012.

Wells coming off the confidential list, Tuesday:
  • 22965, drl, BR, CCU Golden Creek 34-23MBH, Corral Creek, BR wells usually go to DRL status;
  • 23041, 932, XTO, Gilbertson 41-16SEH, Siverston, t11/12; cum 15K 12/12;
  • 23042, 499, XTO, Gilbertson 41-16SH, Siverston, t11/12; cum 11K 12/12;
  • 23162, 1,339, MRO, Bear Den 42-5TFH, Lost Bridge; t11/12; cum 37K 12/12;
  • 23170, 322, Hunt Oil, Bear Butte 1-11-2H, Bear Butte, t12/12; cum 13K 12/12;
  • 23180, drl, CLR, Buddy 1-27H, East Fork, no production data;
  • 23342, drl, Samson Resources, Los Gatos 11-2-161-92H, Black Slough; no production data yet;

23162, 1,339, MRO, Bear Den 42-5TFH, Lost Bridge; not hooked up to a natural gas pipeline:

DateOil RunsMCF Sold

Eighteen (18) New Permits -- The Williston Basin, North Dakota, USA

Active rigs: 184 (steady)

Eighteen (18) new permits --
  • Operators: Continental (8), OXY USA (3), XTO (2), Emerald Oil (2), Oasis (2), Whiting
  • Fields: Boxcar Butte (McKenzie), Cottonwood (Mountrail), Robinson Lake (Mountrail), Murphy Creek (Dunn), Willow (Williams), Hayland (Divide), Siverston (McKenzie), Saxon (Dunn)
  • Comments: This brings Emerald's total number of permits to three
Wells coming off the confidential list over the weekend and today were posted earlier; see sidebar at the right.

Producing wells completed:
  • 15167, 106, Petro Uno Resources Ltd, Beta Race Federal 22-6, t4/02; cum 71K from the Red River which is now PNA; re-entered the Duperow in early 2010; now flowing, producing about 50 - 100 bbls/month;
  • 21519, 726, CLR, Omar 5-12H, North Tioga, t1/13; cum --
Transfer of operator:
Remember the XOM - Denbury Onshore deal of a few months ago? In today's daily activity report, the names of the wells that were transferred from DNR to XTO were named. There were about 104 wells transferred; almost all of them were in McKenzie County.

Some Important Posts In the Past 24 Hours

I will be off the net for a short period.

Some important posts today or yesterday:

How Coincidental: Several Pipeline Stories Today -- Now This

I have posted several notes on pipelines this morning.

Now, Don alerts me to this Bloomberg story: Land Battles Rise as U.S. Eyes 450,000 Miles of New Pipe.
Typically, pipeline companies negotiate 95 percent of right-of-way agreements, Santa said. About 5 percent require some type of court proceeding, in which the company invokes its eminent domain power and asks a court to set a fair price for the land it needs.
Because eminent domain laws vary from state to state, no central clearing house tracks the number of eminent domain cases.
Private companies have had eminent domain power since at least the 1800s. Most state and federal law allows private property to be taken for “common carriers,” meaning projects that serve the public by carrying power or providing transportation for all customers.
The U.S. Federal Energy Regulatory Commission holds hearings to determine the routes for interstate gas pipelines. Most other eminent domain disputes, including disputed interstate oil and liquids pipelines, are handled in local courts under state law.
The headline says "450,00 miles of new pipe."

In fact, much of the story has to to with above-ground transmission lines for wind farms. 

A bit of irony: the "political correctness of renewable energy" requiring new transmission corridors will make it easier (legally) for necessary pipeline easements. The federal government and, often, state governments, were going to rule in favor of the energy companies building wind farms that needed new transmission corridors, overriding interests of private landowners.

Connecting Dots Quickly -- Reversing Pipeline Flows

This morning I posted the link to today's RBN Energy article noting that the expected narrowing of the Brent/WTI spread would be evident by now with the reversal of the Seaway pipeline, that runs between the Gulf Coast and Cushing, OK.

The reversal of the Seaway was completed, but the expansion from 150,000 bbls/d to 400,000 bbls/d was delayed until 4Q13 (although there are hints that the expansion may be back on track sooner).

It now appears that even with the Seaway reversal, the glut will persist. Remember: there are at least three major fields now in production contributing to the glut: the Permian (west Texas), the Eagle Ford (south/southeast Texas), and the Bakken. Not far behind (?): the Niobrara and the Mississippi Lime.

The operators of the nation's largest pipeline, the Capline, running from Louisiana to Illinois, have announced they will reverse the flow of this pipeline. They had originally planned not to reverse the flow when it was announced the flow of the Seaway pipeline would be reversed.

Today, at Bloomberg:
  • WTI: $96
  • Brent: $115
Spread: $19 -- about as high as it's been in recent history

The Bakken/WTI spread at Clearbrook, MN, has narrowed from $3.25 to $3.15. [WTI at $96, means Bakken at Clearbrook is about $93.]

I tried connecting the decision to reverse the flow of the Capline (this is a reversal in itself) with the reality that the Keystone XL is not likely to be approved, but I can't connect the two. But as long as I've mentioned it, I might as well complete the thought: killing the Keystone XL will be seen as a plus for the domestic US oil industry. There is so much oil coming out of the mid-continent, any more oil from Canada just couldn't be handled right now. At least that's my two cents worth. So, why are we still importing oil if there is so much oil being produced by the US? Part of the reason has to do with the type of oil US refineries are configured to use. Again, I'm way beyond my understanding of the oil industry, but that's my two cents worth. 

Operators Will Reverse Flow of the Nation's Largest Pipeline

This is really, really cool (for me personally -- connecting dots of earlier posts).

First, this link, "diluent central", posted September 14, 2012:

  • tracks the Mississippi River from Louisiana to Patoka, IL
  • largest continental US pipeline
  • at 1/6th capacity; only pumping every other day due to glut from north
  • if Utica shale pans out; under-utilization even worse
  • shipping diluent back to Canada from as far away as the Eagle Ford
  • Eagle Ford --> St James --> Capline --> Southern Lights (Enbridge)--> Alberta (Rusty Braziel, RBN Energy)
  • considering increasing the flow of diluent to fill its empty pipes
  • Capline had planned to reverse its north-south pipeline to south-north, BUT a reversal less likely now that Enbridge/EPD said they would double capacity of the competing Seaway Pipeline
That was then: the decision to reverse the flow of the nation's largest pipeline is now.

Now, over the weekend: the decision to reverse the flow:
Independent oil refiner and marketer Marathon Petroleum Corporation (MPC) is planning to reverse the Capline pipeline to transport oil from the Midwest to the Gulf Coast refining belt. The reversal will help in draining the excess crude oil from increased drilling in the Midcontinent.

The 1.2 million barrel-a-day Capline pipeline is currently operated by Shell Pipeline, a subsidiary of Royal Dutch Shell plc (RDS.A). Marathon owns 32.6% of the same and at present, the pipeline delivers crude oil from Louisiana to Illinois.

Marathon is expected to start operating the 630-mile pipeline from Sep 2013. Other details of the deal are yet to be disclosed by the company.

This will be the second key pipeline reversal following the Seaway pipeline. Enbridge Inc. and Enterprise Products Partners have plans to convert the Seaway pipeline in a month and increase its capacity to 400,000 barrels a day by 2013.
The second linked article is dated February 1, 2013. I thought the Seaway had already been converted; but a delay in expanding the capacity to 400,000 bbls to 4Q13. Time will tell.

Peak Oil? What Peak Oil? NY Times Article on Monterey Shale Oil in California

Link here to the New York Times.
Comprising two-thirds of the United States’s total estimated shale oil reserves and covering 1,750 square miles from Southern to Central California, the Monterey Shale could turn California into the nation’s top oil-producing state and yield the kind of riches that far smaller shale oil deposits have showered on North Dakota and Texas.
For decades, oilmen have been unable to extricate the Monterey Shale’s crude because of its complex geological formation, which makes extraction quite expensive. But as the oil industry’s technological advances succeed in unlocking oil from increasingly difficult locations, there is heady talk that California could be in store for a new oil boom.
Established companies are expanding into the Monterey Shale, while newcomers are opening offices in Bakersfield, the capital of California’s oil industry, about 40 miles east of here. With oil prices remaining high, landmen are buying up leases on federal land, sometimes bidding more than a thousand dollars an acre in auctions that used to fetch the minimum of $2. 
Note that opening line: the Monterey Shale comprises two-thirds of the United States' total estimated shale oil reserves.  

Peak oil? What peak oil? 

A huge "thank you" to a reader for alerting me to the article. 

Nothing To Do With The Bakken -- America's Youngest Female Billionaire: 30 Years Old ...

... owning a piece of my favorite hamburger restaurant -- at least some days it is my favorite. Five Guys and Whataburger round out the top three.

Link here at Bloomberg.
Lunchtime at the flagship In-N-Out Burger restaurant in Baldwin Park, California, is a study in efficiency. As the order line swells, smiling workers swoop in to operate empty cash registers. Another staffer cleans tables, asking customers if they’re enjoying their hamburger. Outside, a woman armed with a hand-held ordering machine speeds up the drive-through line. 
Such service has helped In-N-Out create a rabid fan base -- and make Lynsi Torres, the chain’s 30-year-old owner and president, one of the youngest female billionaires on Earth. New store openings often resemble product releases from Apple Inc. (AAPL), with customers lined up hours in advance. City officials plead with the Irvine, California-based company to open restaurants in their municipalities. 
That is an absolutely accurate description. When it gets busy at In-N-Out just up the street from Miss Daisy''s family home in San Pedro, CA, a staffer is outside walking along the cars in the drive-through taking orders on her hand-held operating machine. There are days when the walk-in line stretches out the door.

At this particular restaurant, it is not unusual for the manager to come out and talk to guests when things slow down; that may be true at all the restaurants.

30 years old. America's youngest female billionaire. What a great country.  She was in the right place at the right time: a granddaughter of the founder when she became the sole surviving heir. And she loves drag racing.

Monday Morning

Production data for wells coming off the confidential list over the weekend and today have been posted.

I will be off the net for a short period of time while I ride my bike through the snow to get to the coffee shop.  Beautiful day out there with about 0.5" of new snow.

Remember the virus alert posted over the weekend.

RBN Energy: Brent/WTI spread didn't narrow all that much despite reversal of the Seaway. Apparently there are some operational issues affecting the full expansion; issues may not be resolved until 4Q13. Crude is "off a dollar" in pre-market trading.

CLR issued a press release overnight announcing a webcast. As a reminder, in that press release:
In October 2012 , the Company announced a new five-year plan to triple production and proved reserves by year-end 2017.

Maps with location of rigs in North Dakota and the United States can be found at "Data Links." Overnight "anon 1" sent another link for Nomac Drilling which has been added at that link, or go here directly.

Low rates are forcing companies to pour money into pension plans to shore them up.

Gun-related deaths on a rise in Massachusetts; a state with strict gun controls; Boston Globe;

WSJ Links

Section R (Retirement): investing, stocks, bonds, taxes; did not read.

Section C (Money & Investing): interest in investment clubs dwindles

Section B (Marketplace):
Tech titans clash in "cloud"; this is interesting phenomenon; yesterday Amazon let me know that all the CDs I had purchased from them over the years were now available in the "cloud" for free; that's really quite incredible when you think about it

Chrysler, Taco Bell win in ad bowl; Oreo's ad -- a fight breaking out in a library -- was among the favorites; one ad executive called the Oreo ad an 'epic' commercial;

Daimler boosts investment in China

Sports page: the night the lights went out in the Super Bowl

Section A:

Op-ed: Chuck Hagel's defenseless performance -- but he will be approved anyway

Op-ed: Ed Koch -- entertaining but no reformer; he saved NYC from an immediate fiscal crisis, but mortgaged its long-term future to public unions.


Something is happening here, buy you don't know what it is:

Ballad of a Thin Man, Bob Dylan
Classic Dylan