Monday, February 11, 2013

Random Update of Two Hess Hawkeye Wells -- The Bakken, North Dakota, USA

Elsewhere, someone asked about production figures for:
  • 23071, 1,224, Hess, HA-Mogen152-95-0805H-3, Hawkeye, middle Bakken, 30 stages; 1.5 million lbs; t12/12; cum 39K 12/12;
  • 23072, 1,089, Hess, HA-Dahl 152-05-0706H-3, Hawkeye, 30 stages, 1.6 million lbs; t12/12; cum 39K 12/12; 
For newbies, this is a relatively small amount of proppant. Rule of thumb: 100,000K/stage; generally 30 stages --> 3 million pounds.

Wow, there are some good wells in this area:
  • 20738, 1,496, Hess, HA-Mogen-152-95-0805H-2, Hawkeye, t12/11; cum 302K 12/12. Note: 300,000 bbls in one year. Takeaway constrained. Plus 82,000 boe.

BEXP Has Another Huge Well; Wells Coming Off the Confidential List Tuesday; Three of Four Wells --> DRL Status

22902, drl, BEXP, Topaz 20-17 4TFH, Banks, 4-well pad; three wells on DRL status;
23034, 2,850, BEXP, Allison 34-14 1H, East Fork, 4-well pad; another one also producing (#23033; 2,888, Jennifer)
23335, drl, QEP, MHA 2-03-35H-150-92, Heart Butte, t11/12; cum 18K 12/12; two 5-well pads;
23390, drl, KOG, P Bibler 155-99-15-31-7-15H3, Stockyard Creek, 4-well pad; another on DRL status;

Note: 3 of 4 wells to DRL status; most likely due to pad drilling; not likely due to weather or frack scheduling


23034, conf, BEXP, Allison 34-14 1H, East Fork, on a natural gas pipeline:

DateOil RunsMCF Sold

The P Bibler well is on a 4-well pad; two of those wells will run north into the Epping oil field; two will run south into Stockyard Creek.

Two wells in the immediate vicinity:
  • 19576, 1,223, KOG/BTA, 20711 Erickson 3130 1H, t 5/11; cum 155K 12/12;
  • 19329, 1,261, KOG/BTA, 20711 Bibler 67 1H, t6/11; cum 153K 12/12;
I assume this KOG Bibler well will go to DRL status; there are other wells on the pad that need to be completed.

Of interest: the Erickson well is severely constrained with regard to natural gas. It has been flaring all natural gas since June, 2012, and before that, much of the natural gas was flared. The well was on-line for only two days in December. Here is the production record:

PoolDateDaysBBLS OilRunsBBLS WaterMCF ProdMCF SoldVent/Flare

The story is very similar to the Bibler well (#19329).

Two other wells to the east have similar profiles: 150,000 bbls in 18 months; most natural gas being flare.

Gasoline At Historic Highs -- Christian Science Monitor

Don't write me .. write the White House or the Christian Science Monitor .. I'm just passing along the story.

The Christian Science Monitor is reporting that US gas prices have hit an historic high. Cue up Connie Francis. Gee, just a week ago or so, the administration telegraphs that is has no plans to approve the Keystone XL.

I didn't know this until recently, but it is my understanding that different US refineries use two different types of crude oil: heavy and light, but most (?) US refineries use heavy oil. Heavy oil is imported from Canada, Venezuela, Saudi Arabia. So, killing the Keystone XL, means heavy oil deficit will be made up through imports from Venezuela and the rest of OPEC.

Canadian oil is selling at a $30 discount to Brent but killing the Keystone XL ....

If the Keystone XL had been approved two years ago, I wonder how far along it would be by now ...

I digress... back to the CSM story:
A combination of high crude prices, refinery shutdowns, and early speculation has sent gas prices soaring to seasonal highs earlier than usual this year, with no signs of prices at the pump falling until spring, according to recent estimates.
Higher crude prices. This rise, especially overseas, has pushed up prices at the pump, says Michael Green, a spokesman at AAA. [Fact check: "higher crude prices, especially overseas" -- Canadian oil is selling at a $30+ discount and this administration telegraphs no desire to increase Canadian oil imports.]
“This year oil prices are rising with expectations that the global economy will continue to improve,” says Mr. Green. “Gas prices are intimately connected to oil prices, [which are] very much connected to what is going on in other parts of the world. Events overseas have a big effect on prices American motorists pay at the pump.” [Fact check: domestic politics also have a big effect on price American motorists pay at the pump: killing the Keystone, fracking regulation uncertainty.]
In fact, crude oil prices have risen 10 percent during the past two months, and the price of crude accounts for almost 70 percent of the cost of a gallon of gas, according to the US Energy Information Administration. [Fact check: "crude oil prices have risen 10%" - Canadian oil sands oil is selling at a $30+ discount.]
And the second page of the internet story mentions "speculators" -- something we have not seen/read/heard about for the past year or so.

Expect to start seeing more stories about "speculation" going forward.

I did not post the story a reader sent to me yesterday, but folks in Washington want to increase taxes on gasoline / crude oil to pay for more Federal spending -- my hunch is that increasing taxes on gasoline / crude oil will drive up the cost at the pump a lot higher and a lot faster than any of the reasons that the CSM mentions for the current rise in the price of gasoline.  Watch for code phrases/code words for increased taxes on gasoline in the State of the Union Address tomorrow night.

Burlington Northern Update -- Staggering



Think: a) huge shipping volumes; b) mainline along US Highway 2; c) natural gas processing and refueling station at the Minot BNSF yard; d) a petrochemical plant in Minot because BNSF is there to transport finished products. 


June 7, 2013: if the BNSF natural gas test is a success, it would be very interesting to see if BNSF might locate a natural gas processing plant at the Minot yard for refueling. It's very possible BNSF could become a much bigger entity in North Dakota before this is all over. So much of this is dependent on an adequate work force, and as jobs become available, fewer young people will leave the state for greener pastures elsewhere.

June 7, 2013: there is talk that Burlington Northern will upgrade its track along US-2 (Williston - Minot - Fargo - Minneapolis - Chicago) to a mainline track. Personal communication. No link.

However, this story in ConstructionEquipmentGuide provides some interesting data points, dated December 22, 2013:
An increase in growth and traffic numbers in Minot, N.D., have made it necessary to create a bypass on the northeast corner of the city starting at County Road 12, just north of Highway 2, an east/west route, and continuing to U.S. Highway 83, a main thoroughfare and north/south route.
The project also includes the construction of an overpass over the Burlington Northern Santa Fe Railroad tracks on Highway 55 between Highway 2 and County Road 12, on the south end of the project.
The project was developed five years ago with the intention to keep major traffic out of the downtown area, said Jeff McElwain, project engineer of Ackerman-Eastvold Engineering, the project coordinator.

Original Post

I grew up with Burlington Northern. I remember "racing" my car through the rail yards / grain elevators on the south side of Williston, to evade ... whatever needed evading.... but that was long ago, in a faraway place ... but I grew up with Burlington Northern ... Great Northern before that... and it was one of the first companies I invested in when I first started buying shares in individual companies back in 1984 .... I'm glad to see BNSF continues to put out press releases.

Don sent me two.

BNSF Railway's economic development team worked with customers and state and local economic development organizations to locate hundreds of new or expanded facilities in communities across BNSF's network in 2012, generating approximately $1.8 billion in new investment and over 6,200 new U.S. jobs in 23 states.
The 194 new and expanding facilities located on BNSF in 2012 included signature rail equipment manufacturing projects in Fort Worth, Texas and Rochelle, Illinois. Efforts in 2012 also included 44 projects to support the agricultural industry in 12 states, including 10 new grain shuttle facilities.
The expanding unconventional oil and gas industry continued as a major source of economic development projects for BNSF. As demand for crude oil from the various U.S. shale formations continues to rise, so do investments in new rail facilities. In response to this demand, last year the BNSF economic development team assisted customers in locating and completing five new crude oil unit train terminals in North Dakota and Montana. In addition, several new destination crude oil facilities were located in Washington, Missouri, Texas and Florida. These investments surpassed $300 million.
“2012 was a record year for BNSF economic development efforts. We broke our all-time job creation and project completion records and attained the second highest level of customer investment in our service territory.
And the second press release:
BNSF Railway Company (BNSF) today announced a planned 2013 capital commitment program of approximately $4.1 billion, approximately a $450 million increase over its 2012 capital spend of $3.6 billion.
The largest component of the capital plan is spending $2.3 billion on BNSF's core network and related assets. BNSF also plans to spend approximately $1 billion on locomotive, freight car and other equipment acquisitions. In addition, the program includes about $250 million for continued installation of federally mandated positive train control (PTC) and $550 million for terminal, line and intermodal expansion and efficiency projects. BNSF's expansion and efficiency projects will be primarily focused on capacity expansion to accommodate Bakken Shale related industrial products growth, intermodal terminal expansion, such as the completion of BNSF's Kansas City Intermodal Facility, and other terminal improvements to enhance productivity and velocity.
“This record capital plan continues our long-term focus on ensuring our network is prepared for the growing U.S. demand for freight rail,” said Matthew K. Rose, chairman and chief executive officer. “We are focused on investing to meet our customers' expectations and to expand capacity where growth is occurring. Given the importance of our low cost supply chain to the U.S. economy, our privately funded rail infrastructure is well positioned to ensure the U.S. ability to compete in global markets.”
Pretty incredible.

Twelve (12) New Permits -- The Williston Basin, North Dakota, USA

Bakken Operations

Active rigs: 183 (steady)

Twelve (12) new permits --
  • Operators: BEXP (6), BR (4), Fidelity (2)
  • Fields: Corral Creek (Dunn), Alger (Mountrail), Dickinson (Stark)
  • Comments: all multi-well pads; three operators, 12 permits
Wells coming off the confidential list were posted earlier; see sidebar at the right.

A producing well was completed:
  • 23689, 846, Whiting, Ella Fladeland 12-12TFH, Sanish, t12/12; cum 1K 12/12;

International Cereal Company Building in Sioux Falls, SD

Outside the oil patch, there are two cities in the Dakotas that have always impressed me: Fargo, and Sioux Falls. I have strong ties to both.

Don sends me this little bit of trivia as reported by the Rapid City Journal:
Glanbia Nutritionals, a division of of Kilkenny, Ireland-based Glanbia, a $4.2 billion company with operations in 14 countries and exports to 130 countries, is going to build a 40,000-square-foot cereal ingredient processing facility in Sioux Falls.
In the big scheme of things, maybe not that big a deal, but for the folks who get jobs, a huge deal. Good for Sioux Falls. I'm impressed.

And, of course, the grain will be brought in by Warren Buffett's railroad, I suppose. 

Oil, fracking sand, grains, corn, ... it never quits.... coal....pipe...

For All Practical Purposes: WTI and Bakken Reach Parity

There was a big move today at Clearbrook, MN: the spread narrowed another $2.00. WTI/Bakken are just a dollar apart at Clearbrook. This is a dynamic link and will change over time. It was accurate at the time it was posted.

Data Points From The Bakken: Subsidies, Water, Future of Montana Bakken (Williston Basin)

A big "thank you" to a reader for sending me this article. Bill Whittsett, public affairs vice president for Devon Energy, spoke at the Great Falls Ad Club last week. The Great Falls Tribune is reporting some nice data points Mr Whittsett provided.

Regular readers have seen these same data points previously reported, but it's nice to see them again, all in one place.

So, here are some 30-second bites you can use at your next cocktail party.
  • fracking does use chemicals, but the pipes are encased in concrete and steel
  • each frack can consume about as much water as used to irrigate a large golf course each day (4 million gallons)
  • subsidies for energy: 
    • drilling: 64 cents/megawatt-hour -- tax deductions
    • wind: $56/megawatt-hour -- tax credits
    • solar: $775/megawatt-hour -- tax credits 
I assume folks know the difference between tax deductions and tax credits.

Other comments from Mr Whittsett:
  • Devon Energy pioneered the combination of horizontal drilling hydraulic fracturing, or cracking hard, impermeable rock containing oil and natural gas with a high pressure blast of water, salt and chemicals. Before that the industry relied on vertical oil drilling started in 1859 to find small traps of oil or gas
  • the change has led to a fivefold increase in natural gas production and led to the Bakken development, which he called the biggest oil play in North America. While North Dakota’s portion has six times as much favorable rock as Montana’s, Montana’s development will be huge 

Happy Days Are Here Again: US Debt Problem Solved -- Done As Much As We Need -- The President

The Washington Post is reporting that the administration feels, paraphrasing now, that the US debt problem is nearly behind us, assuming a few more "i's are dotted and t's are crossed."

It appears that working the US debt problem will soon be in our rear view mirror.

Happy days are here again.

And then the earlier story that the secular bear market may be ending, in Section C of today's WSJ.

Happier days are here again.

Oil is up about $1.20 on the CNBC television crawler. Up about $1.16 at Yahoo!Financial. And the WTI/Bakken spread at Clearbrook really, really improved: narrowed to $2.00.

Happiest days are here again.

Good luck to all.

And, on top of all this, US coal exports set a new record, doubling the amount exported in 2009.

Yes, happy days are here again:

Happy Days Are Here Again, Ben Selvin and the Crooners

WSJ And Other Links

Active rigs in North Dakota: 183 (steady, down a bit)

Wells coming off confidential list have been posted; scroll down.

WSJ Links

Only three sections today.

Section C (Money & Investing):

For investors only: is bull sprint becoming a marathon? This is a great article for newbies, explaining the difference between secular bear markets and shorter-term, or cyclical, bull and bear markets. 

Also for investors only: Time to reap what the oil barons sowed. Majors are having trouble financing the asset-buying spree over the past few years:
Little wonder, then, that the expansionist old guard such as Mr. McClendon is being shown the door. What comes next? Consolidation. This means, in part, fixing finances by selling assets and curbing spending. But it also means mergers and acquisitions. Even if all that hunting and gathering has left companies short of money, they do own a lot of potential resources that could be farmed by someone with more financial firepower.
Fourth-quarter results from the major integrated oil companies suggest that, if they haven't already retained the services of an investment banker, they soon will. Exxon Mobil and Royal Dutch Shell, in particular, are paying investors with dividends and buybacks to hold their stock in lieu of big growth. Buying a large exploration and production company offers one way of addressing this deficit while giving investors in the sector a chance to pick up takeover premiums.
Section B (Marketplace):

A long story on Tesla; more from the financial angle, as one would expect. See more of the Tesla at "not ready for prime time."

Sports page: "The Loopy Mess of LakerFail."

Section A: 

Front page, this is perhaps the biggest national story of the day -- In Medicaid, a New Health-Care Fight: it's a complicated story, and a quick post is prone to error, but having said that, this is how I read the article:
  • employers in several states -- especially the South -- are bracing for higher health care costs
  • governors, especially in southern states, are afraid they cannot financial afford expanding Medicaid
  • under the new law, lower-paid workers would qualify for national expansion of Medicaid set to begin in 2014
  • these low-paid employees would get their health care paid for by federal-state sharing dollars; employers would not pay
  • BUT: governors in many states feel they don't have the money to pay for this expansion
  • AND: governors have the option to "opt-out" of the program
  • companies in states which opt out of the expanded Medicaid program, now must pay for employee-health care under ObamaCare
  • these companies "will have to spend thousands of dollars to insure each full-time worker who can't enroll in the program, or pay fines starting at $2,000 a person."
This issue has been discussed before. Remember, the government now defines a full-time work as one who has a 30-hour workweek.

Another note regarding this story: it's not only the southern states that are opting out. Also opting out: IOWA, NEBRASKA, IDAHO, PENNSYLVANIA, MAINE.
Texas is opting out but I've never considered Texas as part of the "southern" bloc of states. NEW YORK/NEW JERSEY have not decided but are leaning to accept the national Medical expansion plan. 
Page 3: With fewer to lock up, prisons shut doors.

A cliff Congress may go over. It's already been discussed. My views have not changed: DOD is due for cuts if they can spend $16/gallon on bio-algae-diesel.

Op-ed: the wind power tax. Iowans paying dearly for wind farm transmission lines and have seen no benefit from wind-generated electricity. Iowa has bragged about being #1 in wind-generated capacity in the US. They can't have it both ways. Cue up Connie Francis.

Op-ed: it's easy to get confused over the good guys vs the bad guys in Syria, but these seem to be the data points --
  • bad guys: Syrian president, Syrian government
  • bad guys: Iran
  • bad guys: Iran throws support to Syrian government
  • good guys: Syrian rebels trying to overthrow bad guys in Syria
  • President Obama: refuses to help the rebels
Op-ed: despite their doubts, the Hagel democrats walk in lock-step with the President

Recently (was it last week?) I received a response to my comments regarding physician reimbursement under Medicare (physicians win, taxpayers lose). In today's WSJ, a nice letter to the editor suggesting an alternative.

Three must-read opinions: 

Good News for Methane? RBN Energy Link

RBN Energy: good news for methane?
Could the construction of new production capacity for one chemical product result in a 1.4 Bcf/d increase in natural gas demand?  Yes it could - if all the methanol plants that have been announced and are on the drawing board get built.  Of course, it is pretty unlikely that they will all get built, but even if only the best projects are completed, they will still consume a lot of gas.  Today we’ll lay out the new plant construction numbers.
 "Anon 1" sent several links overnight having re: carbon footprint and India:
Indian project could eliminate India's need to import coal in five years; India coal to provide Indian electricity; global warming? what global warming

US upset that India puts restrictions on importing solar imports from the US;

India falling behind in reducing carbon footprint;
Demand for Indian renewable-energy credits fell 16 percent in January from the previous month as the failure of regulators to enforce clean-energy targets prompted companies to abstain from trading.
India is a signatory to the Kyoto Protocol.