Wednesday, October 16, 2013

Why The Skeptics Were Wrong -- London Reporting

I have maintained for quite some time that unconventional oil exploration, drilling, and production REALLY is very different. [I make a special note of that because I have the impression that some seasoned oil workers do not agree.]

I was therefore thrilled to see this article, being reported by Reuters via Rigzone:
LONDON, Oct 16 (Reuters) - North Dakota's rapidly rising oil output continues to defy the sceptics, who have predicted that production would stop growing as declining output from existing wells offsets extra production from new drilling.
Oil production soared to 911,000 barrels per day in August, up more than 200,000 bpd compared with the same month last year, the state's Department of Mineral Resources (DMR) said this week.
Production is on course to hit 1 million bpd by the end of the year or early 2014, according to the DMR.
By the end of August, 9,452 wells were in production. But another 450 had been drilled and were awaiting fracturing and completion.
Completions are running at about 1.5 times the threshold needed to maintain production, the DMR wrote in its monthly statement, which implies output will continue rising in the next few months as crews work through the backlog.
This is a five-page internet report well worth reading. 

The article goes on:
Shale sceptics have been confidently predicting since at least 2010, when output was below 300,000 bpd, that production would peak.
Only the DMR has struck a defiant and lonely optimistic note. In 2012 DMR projected output would plateau somewhere between 700,000 and 1.2 million bpd between 2015 and 2025, based on a total of up to 40,000 wells in the thermally mature part of the shale play.
And more:
In practice, the shale sceptics have proved wrong on every point, revealing a fundamental lack of understanding about the geology, economics and technology of shale production.
With more experience of horizontal drilling and fracturing and more knowledge about the play, drilling and pumping crews have been able to drill deeper wells and longer laterals, reaching total depth more quickly and applying more fracturing treatments per well as well as learning to target only the most productive parts of the formation.
"In 2007, the average treatment number, or stage count, in Bakken wells was three. By the end of 2011, that number was nearly 30, and some wells had more than 40 stages in a single lateral," according to oilfield-services specialist Schlumberger. ("Multistage Stimulation in Liquid-Rich Unconventional Formations" 2013)
Rather than increasing relentlessly, the number of drilling rigs operating in the Bakken has fallen from over 200 in early 2012 to just over 180 in October 2013.
Bakken accounts for just 10 percent of the rigs drilling for oil and gas in the United States, according to basin-by-basin data published by another oilfield services company, Baker Hughes. Rising Bakken output is not putting pressure on the domestic rig market. Rig rates remain soft.
I would like to provide the full article, but obviously that would be inappropriate. Go to the link for the full story. It even addresses the Red Queen. 

Montana Update; What Does The Fox Say?

The Fairfield SunTimes is reporting:
Richland County, two Bakken wells, CLR:
  • Marla-Hill 4HSU, 20,110 TD; 216
  • Audrey-Elaine 4HSU, 20,310 TD, 287 
Roosevelt County, two Bakken wells, Statoil:
  • Crusch Ranch 6-7 1H, 21,050 TD, 922
  • Christopher 25-36 1H, 19,640 TD, 1,556
*********************************
A Note To The Granddaughters

Our older granddaughter will definitely remember why I posted this video. For the rest, if I have time, I will tell the story later this week. Maybe.

What does the fox say?

What Does The Fox Say, Ylvis

The Tea Party Gave It Their Best Shot; Congress And The President Own It

Disclaimer: except for the CNBC link, the rest of the post is entirely opinion. It's my understanding of ObamaCare and I could be completely wrong. But I doubt it. At least not completely.

CNBC is reporting: 99.6% of those who visit, do not enroll. Of those who enroll, the vast majority will NOT purchase an insurance plan. Remember: if one's income is TOO low, they will not qualify for government subsidies, something that was not well advertised. Of those who do purchase insurance, most will have cancer, AIDS, or AIDS-equivalent medical expenses. Of those who are healthy and do purchase an insurance program, most will drop out after two or three months because of high co-pays or high deductibles.

The most interesting wrinkle: income verification. If that is in the compromise, that will further delay the process. 

Insurers cannot survive if the only purchasers are those with cancer, AIDS, or with AIDS-equivalent medical expenses. It has been reported that many (most?) of the big insurers bailed out of the Federal exchanges; it is my understanding that most (all?) of the insurers underwriting the Federal exchanges are small, undercapitalized companies. It is a different story for state-run exchanges where, it appears, the insurers already working in those states simply put their plans on-line.

My hunch is that if nothing is changed over the next few months, we will start seeing stories of insurers underwriting the Federal program going broke by next July (2014), just in time for the November election.

Trainwreck.

Seven (7) New Permits -- The Williston Basin, North Dakota USA; Oasis Reports 13 New Wells; Oasis Reports Four Huge Wells

Active rigs: 184

Seven (7) new permits --
  • Operators: CLR (3), SM Energy (2), Murex, Samson Resources
  • Fields: Gooseneck (Divide), Siverston (McKenzie), Charlie Bob (McKenzie), Alexandria (Divide), Brooklyn (Williams), Ambrose (Divide)
  • Comments: these are the first new Brooklyn field oil permits since December 10, 2012
Wells coming off the confidential list were posted earlier; see sidebar at the right.

Wells coming off the confidential list on Thursday:
  • 23350, drl, Oasis, Gramma Federal 5300 41-31T, Baker, no production data,
  • 23935, 663, Oasis, Craig Federal 5892 31-28H, Cottonwood, t5/13; cum 21K 8/13;
  • 23989, 148, Oasis, Domalakes 6092 44-16H, Cottonwood, t5/13; cum 13K 8/13;
  • 24114, 1,243, Oasis, Stim 5504 42-2H, Hebron, t5/13; cum 23K 8/13;
  • 24166, 3,188, Oasis, Travel 5393 14-12T, Sanish, t5/13; cum 62K 8/13;
  • 24194, 3,518, Oasis, Lite 5393 11-11B, Sanish, 36 stages; 4.1 million lbs (sand/ceramic); middle Bakken; up to 2,000 units gas, t6/13; cum 53K 8/13;
  • 24310, drl, HRC, Fort Berthold 148-94-29A-32-5H, no production data,
  • 24328, 434, Oasis, Dolores 5892 42-23H, Cottonwood, t5/13; cum 13K 8/13;
  • 24415, 1,770, Oasis, Knaebel 5693 41-11T,  Alger, t6/13; cum 32K 8/13;
  • 24428, 830, Oasis, Torgerson RR 5604 31-27H, Bull Butte, t7/13; cum 11K 8/13;
  • 24569, 3,142, Oasis, Inigo 5200 43-20B, Camp, 36 stages; 3.8 million lbs (sand/ceramic); middle Bakken; up to 5,000 units gas; t8/13; cum 29K 8/13;
  • 24643, 2,920, Oasis, Sherman 5200 41-20T, Camp, t8/13; cum 21K 8/13;
  • 24747, 1,511, Newfield, Anderson Federal 152-96-9-4-10H, Westberg, t8/13; cum 12K 8/13;
  • 24760, 1,654, Oasis, Knox 5393 44-4T, Sanish, t7/13; cum 18K 8/13;
  • 24923, 759, Oasis, Warren Federal 5893 42-23H, Cottonwood, middle Bakken; 36 stages; 3.4 million lbs (all sand); gas as high as 1,500  units, t5/13; cum 24K 8/13;
  • 25178, drl, KOG, P Wood 154-98-4-26-35-13H3, Truax, no production data,
**********************************

24166, see above, Oasis, Travel 5393 14-12T, Sanish (a huge well):

DateOil RunsMCF Sold
8-20131443414269
7-2013168233431
6-2013215600
5-201382780

24194, see above, Oasis, Lite 5393 11-11B, Sanish (a huge well):

DateOil RunsMCF Sold
8-20131271612628
7-20131644915461
6-2013231153348

24415, conf, Oasis, Knaebel 5693 41-11T,  Alger, (a huge well):

DateOil RunsMCF Sold
8-2013158594658
7-2013120321954
6-201339800

24569, see below, Oasis, Inigo 5200 43-20B, Camp (a huge well):

DateOil RunsMCF Sold
8-20132788816988
7-2013597732

Cats With Nine Lives; Landing On One's Feet

Those who have followed the blog for the past year probably recognize this name: Lisa Jackson.

Former EPA chief.

Former.

So, where did Lisa end up after leaving Washington, DC? On the West Coast.

On the West Coast working for Algore?

Nope.

Working for Tim Cook.

As in Apple Inc.

Here's the link:
Former EPA chief Lisa Jackson, hired earlier this year to head up Apple's environmental efforts, told a sustainability conference that she plans to get Apple to use energy more efficiently and with cleaner power in the company's data centers and other buildings.
GigaOm says Jackson's team currently counts 17 people and she is responsible for recruiting more environmentally conscious employees from within the company to help with Apple's sustainability projects, including getting feedback on how to cut wasteful energy use.
I cannot make this stuff up. 

"Things To Follow Up On"



I've tried different methods as reminders; nothing has worked very well. Maybe this will work.
******************************

August 19, 2019: #17658, s short lateral; off line most of 6/19; 34398, 3,347, WPX, Lion 18-19HX, Mandaree, t7/19; cum --;

August 11, 2019: 15167 -- a re-entered well to target the Bakken; Billings County. See this post.

August 8, 2019: Case 27809, Newfield, Siverston-Bakken; 14 wells on each of two existing 1280-acre units; 6/7-150-98; and, 30/31-151-98, McKenzie; already 6 wells on each of these units; this will make it 20 wells in each of these 1280-acre units;

Augsut 5, 2019: the CLR Steele wells in Banks oil field, #31520 - #31523, inclusive; #27550; #27551;

August 5, 2019: activity in the QEP Grail/Blue Buttes, Levang and Jones wells: #35255 - #35260, inclusive; older wells: #16960, #16652, #20591, #29329, and #29326; 

August 5, 2019: two EOG wells off line in Clarks Creek; #22487; #22486; 

July 23, 2019: #16131, 119, Hess, BLMU Q-20H, Beaver Lodge; intersects the BL-Domy wells; t9/06; cum 107K 11/18; 

July 23, 2019: neighboring wells fracked: #21104, 228, WPX, Delores Sand 29-32H, Antelope-Sanish, t4/12; cum 410K 12/18;

June 30, 2019: #27177; off line since 9/18; back on line 4/19; 2,500 bbls over 5 days; 

June 13, 2019: huge number of Nygaard wells recently fracked; look at these two neighboring wells: #17397; #17424 after 6/19;

June 5, 2019: huge, neighboring well recently fracked; check on these two wells:
  • 23209, 2,009, MRO, William USA 31-2TFH, Reunion Bay, t7/13; cum 294K 1/19;
  • 21466, 2,448, MRO, William USA 31-2H, Reunion Bay, t713; cum 464K 6/19;
June 5, 2019: check on #20777; 32923, 181, BR, Chuckwagon 31-15MBH, Sand Creek, t12/18; cum 106K 4/19; neighboring well, #20777 still off line (6/19);

June 4, 2019: #19390, 175, Oasis/SM, Broderson 13-35H, Siverston, Bakken, t2/11; cum 403K 6/19; just came off line 3/19; back on line as of 5/19;

June 4, 2019: #19189, IA/1,213, Hess, T R Slette 18-1H, Truax, t2/11; cum 286K 11/18; off line as of 11/18; remains off line 6/19;

May 31, 2019, from the June, 2019, dockets: Case 27626, New Horizon Resources, LLC; re-completion of the Harold Haugen 25-1 well (#6900) into the Gunton Formation (Red River) (see below) at a location approx 500 feet FSL and 2140 feet FWL of section 25-161-103, Divide County

May 29, 2019:
  • 34486, 1,244, XTO, Nelson Federal 21X-5BXC, Antelope-Sanish, t3/19; cum 91K 6/19;
  • 34487, 857, XTO, Nelson Federal 21X-5FXG2, Antelope-Sanish, t5/19; cum 41K 6/19
    • neighboring wells
      • 28184, 2,171, off line since 10/18; t11/15; cum 252K 6/19; active as of 4/19;
      • 28185, 2,712, off line since 10/18; t11/15; cum 261K 6/19; did have one day of production in 3/19; back on line as of 5/19;
      • 28183, 2,459, off line since 10/18; t11/15; cum 327K 6/19; did have one day of production in 3/19; back on line as of 5/19;
      • 28255, 2,513, off line since 9/18; t10/15; cum 281K 6/19; produced water three days in 3/19, but no oil production;
      • 18435, 2,376, off line since 10/18; t3/11; cum 304K 6/19; active as of 4/19;
      • 28256, 1,804, off line since 10/18; t10/15; cum 198K 6/19; active as of 4/19;
      • 28257, 2,59, off line since 10/18; t10/15; cum 277K 6/19; active as of 4/19;

May 27, 2019: these wells all off line as of 2/19 due to fracking activity in the area (#30911), probably others: #34055, 34056,  34058,  34059. See this link. Look at #16792 among others.

May 23, 2019Three producing wells (DUCs) reported as completed, see this post:
  • 33027, n/d, CLR, Hereford Federal 12-17H2, Elm Tree, 4/19 producing small amount;
  • 33026, n/d, CLR, Hereford Federal 12-17H, Elm Tree, 4/19 producing small amount;
  • 33025, n/d, CLR, Hereford Federal 12-17H1, Elm Tree, 4/19 producing small amount;
    • neighboring wells
      • to the east, running same direction
        • 18138, nice jump in production;
        • 19503, remains off line as of 3/19;
      • to the west, running same direction, south to north
        • 19397, remains off line as of 3/19;
      • to the north, running same direction, south to north
        • 20804, remains off line as of 3/19;
        • 24473, back on line for 13 days; too early to say if any production jump; 3/19;
        • 20805, back on line for 11 days; too early to say if any production jump; 3/19;

May 20, 2019: several wells in the area recently fracked; this one still offline --
  • 23176, 1,490, MRO, Tara Jo USA 34-12TFH, Reunion Bay, t1/13; cum 396K 6/19; offline 11/18; still offline 3/19; inactive; back on status 5/19; possibly a small jump in production; need to follow through 10/19;
May 20, 2019: this well a bit far to the east but it was taken offline when other wells fracked --
  • 19887, AN-Dinwoodie-153-94-2833H-1, t7/11; cum 251K 1/19; off line as of 1/19; back on line as of 4/19 (one day); off line since 1/19;
May 19, 2019: on 320-acre spacing; these are the only two wells on this drilling unit; they both went inactive 1/19; remain inactive 3/19:
  • 20307, in the west half, IA/1,328, EOG, Clarks Creek 103-17H, Antelope, Sanish pool, t11/11; cum 153K 12/18; only 1,000 bbls/month; off line as of 1/19; still inactive, 6/19;
  • 19693, in the east half, 722, Enerplus, Danks 17-44H, Antelope, Sanish pool, t7/11; cum 250K 6/19; only 1,000 bbls/month; off line as of 1/19; still inactive, 3/19; active as of 4/19 but only producing one day/month? see this note. And here.

May 18, 2019: see this record-breaking well; these neighboring wells should report soon: #31447, #31449, #31444 (PNC):  #31448, 31450,

May 17, 2019: this well is back off line again, as of 11/18, and it's a great well; returns to production, 6/19;
  • 23108, 767, Slawson Exploration, Wolverine Federal 5-31-30H, Elm Tree, t9/13; cum 469K 6/19;
May 16, 2019, see this post --
  • 34046, 3,091, MRO, Two Bar 34-55H, Bailey, t4/19; cum 66K 6/19; section 35-146-94;
    • neighboring wells:
      • 16736, just returned to production; see recent production profile below; huge production jump;
      • 25484, off line; just came back on line, 6/19; worth looking at again in 7/19;
      • 25482, off line; four days in 4/19; back on line, no change in production profile;
May 14, 2019, #20212. See this post.
October 3, 2016: a great well taken off line in August, 2016: 20210, 803, CLR, Whitman 2-34H, Oakdale, Bakken, s1/11; t9/11; AL; cum 1.672864 million bbls 6/19; 24 stages; 2.4 million lbs; middle Bakken; runs south; 4 section spacing; this is an incredible well; still 19,000 bbls in October, 2015; off-line all of 8/16; back on-line September, 2016; updated here; see this post, 3/19; something doesn't add up. Very interesting profile;
May 13, 2019: #16357, struggling; strange profile; a Veeder well in Blue Buttes, BR;

May 12, 2019: These two wells have come off line recently; no other information, see this post:
  • 25329, 2,275, MRO, LBM Tuhy USA 41-4H, Murphy Creek, t9/13; cum 189K 6/19; off line as of 1/19; back on line for fourteen days, 4/19;
  • 25328, 2,034, MRO, Judy Tuhy USA 31-4H, Murphy Creek, t9/13; cum 172K 6/19; off line as of 2/19; back on line for twelve days, 4/19;

May 12, 2019: These wells about a mile to the west have been off line for one to two months, and are still off line, link here:
  • 18948, runs south, IA/1,912, WPX, Kyw 27-34H, Spotted Horn, t10/10; cum 335K 1/19;
  • 22629, runs north, 180, WPX, Sweet Grass Woman 22-15HB, Spotted Horn, t7/12; cum 399K 6/19; back on line as of 4/19;
May 6, 2019: #18249, a Lundeen well; diagonal across huge Aagvik well; need to see if any halo effect; need to follow another month or so; back on line as of 5/19, thirteen days with nice production; follow a couple of more months; then remove, 6/19/


April 4, 2019: a reader thinks this well is "broken." #34763. Post here

April 3, 2019: check on the wells in parentheses that are off line:
  • 35291, 1,760, Whiting, Berg Trust Federal 34-22TFHU, Pembroke, t3/19; cum --;  (#20516 off line; #20596 -- off line); both #20516 and #20596 are now back on line, 4/19; nice wells; (#20516 with nice jump in production; needs stand-alone post update)
  • 35290, 2,317, Whiting, Berg Trust Federal 34-22H, Pembroke, t3/19; cum 109K 5/19 (huge well); (#26943 -- off line, #25361 -- off line); both coming back on line, 4/19;
March 14, 2019: #34758 (conf), #36167; link here; is Meredith (#36167) a replacement well for a failed Tercek well (#34758)? #36167, SI/NC, 6/19;

February 24, 2019: #26015, 2,438, MRO, Rebecca 31-26, Killdeer, t4/14; cum 249K 12/18; off line as of 11/18; remains off line 4/19; coming back on line, 5/19; back off line 6/19;

February 3, 2019, 28704. Remains off line, 6/19; 

January 19, 2019: #32339, Carscallen, Whiting, a lousy well taken off line 11/17; still off line as of 6/19; IA;

January 14, 2019: #16975; many wells to the north were just fracked; this one off line for two months; still off line in 2/19; two days of production, 3/19; remains off line 5/19; coming back on line slowly, 6/19; watch next month;

January 10, 2019: #30090, #30091, #30092; neighboring well recently fracked. Still off line as of 6/19;

****************January 6, 2019: #29752, #29753,  #29754, 29755, 29962; ; off-line much of 2018; still off line as of 6/19. SHD Oil & Gas;

************************

December 1, 2018: #20026, off line as of 9/18; lots of new activity in the area; remains IA 6/19;

December 1, 2018; #18066, still active; went inactive 6/18; remains IA 6/19;


December 1, 2018: off-line again; #18060, steady Eddy; off-line for two years; back on-line 12/16; MRO; not re-fracked? 200K; now off line again as of 10/18; remains IA 6/19;

October 23, 2018:  #18250 parallels the wells coming from this 5-well pad; still off line; #33737 is on a 5-well pad; this one was the first to report; the others are SI/NC, but I believe they have all been fracked; will soon report; #18250 is IA; 1/91 -- now back on A status; three day so production in 2/19; still off line as of 4/19; back on line 5/19 but no production; no production, 6/19;

October 21, 2018: #17254; a nice QEP Henderson well taken off line 3/18; neighboring wells fracked and are huge; still off line as of 12/18 and on IA status; goes to AB 5/19;

October 3, 2018: #16276, A; active as of 10/17; struggling, but holding in there, 5/18; back off-line as of 6/18; back on line 10/18; off line 1/19; active as of 4/19 but no production; minimal production, 6/19;

September 29, 2018: #17086; great well but taken off-line 4/18; suggesting other activity in the area; remains IA 4/19; AB, 5/19;



August 1, 2018: #30312; still confidential; sits between two million-bbl wells; Amber Renee was only 800K but it was shut down for some reason; #30312 is Sophia Drake -- eager to see how this one does; remains on conf 6/19;

January 17, 2018: #17222, EOG -- soon to go over 1 million bbls; Parshall; short lateral; cum 977K 6/19;


November 23, 2017: a Lodgepole well producing 4,000 bbls/months; watch it go over 1,000,000 bbls soon --
  • 18190, 463, Armstrong, Laurine Engel 1, conventional, Dickinson, Lodgepole; 61,000 barrels in first five months (at $60 = $3.6 million and this is a conventional well); cum 875K 6/19; F;

June 12, 2017: an older well, #16730 (API: 33-053-02815) runs right next to two recently fracked wells; new production data not yet available; check production data in a couple of months; still off-line as of 5/19; the other two wells (see this post). One day of production for #16730 in 6/18; one day of production, 2/19; still off line 6/19;
  • 32635, 476, BR, Anderson Ranch 3A-MBH, Camel Butte, t5/17; cum 390K 6/19; -- just went off line 7/18; back on line 8/18; huge well; (#16730 -- still off-line)
  • 32628, 540, BR, Anderson Ranch 3B-TFH, Camel Butte, t5/17; cum 462K 6/19; (#16730 -- still off-line); huge well -- deserves a stand-alone post sometime;
March 28, 2017: #18218; check up on production in next few months; neighboring wells recently fracked; noted that 2/17 extrapolates to 8,000 bbls/month, much more than the 2,000 to 3,000 bbls/month prior to neighboring wells being fracked. After 6/17, not much of a well; struggling; 12/17; hmmm...2/18 -- coming back? cum 385K 11/18; jump in production / halo; off-line as of 10/18 with intermittent production; off-line 1/19; remains off-line 4/19; in 5/19, 3 days of production for 76 bbls; remains off line 6/19;




*******October 11, 2016: #17158; bump in production after neighboring well fracked; note how little time this well was taken off-status while neighboring well was fracked; see if this well goes 1 million bbls without being put on a pump; 973K 6/19; F;
  • 17158, 4,148, Whiting, Richardson Federal 11-9H,s8/08; t10/08; 971K 4/19; F;
September 11, 2016: check on production profile #21733 when the following four wells are fracked: #32412 - #32415, inclusive. 

April 11, 2016: two Anschutz wells, now Lime Rock Resources wells, were never fracked; now Lime Rock Resources has two new locations on the same pad; it will be interesting to see if they frack these wells. As of 8/18, the two new wells were still LOC; #18644 was updated. Not much change as of 6/17.
  • 30467, loc, Lime Rock Resources, State 4-25-36H-144-97, API: 33-025-02818, Cabernet,
  • 30468, loc, Lime Rock Resources, Kary 6-24-13H-144-97, API: 33-025-02819, Cabernet,
November 26, 2015: Oasis requested permission to drill 21 wells on a 640-acre unit (one section); currently has 12 horizontals in that section. Curious if any halo effect but most recent wells drilled to depth but now fracked (SI/NC). No new data as of 8/18; production data updated, nothing remarkable, 8/18;

September 21, 2015: why did this on go inactive - 
  • 18177, IA/AB/IA/1,844, BR, Bryce 31, Westberg field, t10/09; cum 255K 4/14. Update, October 17, 2016 sundry form -- a stuck coil tubing; cut at 9,855 feet. Low commodity prices make fishing uneconomical. Will follow yearly until commodity prices recover. [Active again as of 5/17, but just for one day; active for just one day 12/17.][Active again: 1 day in 1/18. Back off-line the entire month of 2/18] No change, 2/19; off line. On line for one day, 5/19, but no production; 6/19 -- remains offline;



**********************************

CLOSED

Wells that have been removed from this page, starting July 23, 2019, are now at this page (page #12)

Wells that have been removed from this page, starting March 29, 2019, are now at this page (page #11)

Wells that have been removed from this page, starting January 3, 2019, are now at this page (page #10)

Wells that have been removed from this page, starting September 14, 2018, are now at this page (page #9).

Wells that have been removed from this page, starting April 11, 2018, are now at this page (page #8).

Wells that I followed and were closed after December 31, 2017, are at this page (page #7).

Wells that I followed and were closed after October 19, 2017, are at this page (page #6).

Wells that I followed and were closed after September 14, 2017, are at this page (page #5)

Wells that I followed and were closed after April 24, 2017, are at this page (page #4)

Wells that I followed and were closed after November 23, 2016, are at this page (page #3).

Wells that I followed and were closed after November 4, 2015, are at this page (page #2).

Wells that I followed and have now been closed as of November 4, 2015, have been moved to this page, page #1.

Folks Have Been Requesting Graphics Of 320- And 160-Acre Density Drilling In The Bakken -- Here They Are

This comes from the October 2, 2013, CLR presentation which can be found at the company's website.


I am really, really thrilled to see this (again). Long before anyone else outside the industry said anything about increased density, the MDW opined that fracking results suggested that we would be seeing 500-foot lateral spacing someday in the Bakken.

That "someday" is here.

Ramblings: The Center Of Gravity Has Shifted From The Mideast To The Midwest

I started blogging on the Bakken simply as a way to help me understand what the Bakken was all about. See "welcome/disclaimer." I owned no mineral rights, and although I enjoyed investing, the blog was never intended to have anything to do with investing.

After a few months of tracking the Bakken, it became obvious that one would not truly understand the Bakken without following the business side, which included following financial news, of the Bakken.

At the time I truly had no idea where the Bakken was headed. Within a year or two it was obvious that "the Bakken" was more than a geographical location. In addition to being a laboratory for testing new ideas in unconventional oil exploration and production, "the Bakken" has now come to mean, for me at least, anything that has to do with horizontal drilling and completion (generally fracking) in unconventional shale and oil deposits.

Some time ago, it became obvious to some of us, including CarpeDiem, that the center of gravity for energy had shifted from the Mideast to the Midwest.

If I had the time, I could ramble at length on this issue, but I will let this article from CNBC/Yahoo!News do it for me:
Developing a comprehensive plan to achieve U.S. energy independence is the "single biggest" way to boost the economy, FedEx Chairman and CEO Fred Smith told CNBC on Wednesday.
"Oil is at the center of everything we do," Smith said in a "Squawk Box" interview. "If we produce more in the U.S. and use less and develop alternatives ... you allow the United States within our economy a half a trillion dollars more in GDP."
Smith opened the OPEC Oil Embargo 40 summit, sponsored by Securing America's Future Energy, in Washington on Wednesday. He's the co-chair of the advocacy group's Energy Security Leadership Council of retired generals, admirals and CEOs of oil-using companies. 
The US will never develop a comprehensive energy independence plan. In fact, I don't even want the federal government involved at all in developing any plan.  It looks like we will become energy independent on the backs of the likes of Pioneer Natural Resources and Continental Resources.

Maybe we were lucky that the current administration did not know how much oil and natural gas the US had. The administration knew how much coal we had and we all know how that worked out.

There are many, many story lines here. The most important story line is that the energy revolution in the United States is just beginning.

I think I was among most folks who agreed that when the Bakken was discovered it would be the last "big" oil story.

Then, they discovered the Eagle Ford.

Then, they re-discovered the Permian.

This is not an investment site. The easy money has been made in the Bakken. But my advice to anyone investing: be diversified and follow the oil and gas industry very, very closely. It's never too late.

**************************

Just after posting the story above, I get this story:  German Power-Price Swings Threaten Growth Engine: Energy Markets --
The lack of clarity on Germany’s energy policy is creating the most volatile power prices in seven months, boosting costs for industry in Europe’s largest economy.
The 30-day historical volatility in the price of power for 2014 more than doubled in the past six weeks to the highest since March 4, data compiled by Bloomberg show. Prices are being whipsawed because Chancellor Angela Merkel, re-elected almost a month ago, has yet to give details on her pledge to amend the nation’s $750 billion solar and wind power program.
Price swings in Europe’s biggest power market, exacerbated by plunging fuel and carbon costs, are making it harder for industrial users to plan purchases. The volatility is boosting total costs and hindering investment in the $3.4 trillion economy.

Homesick Majors Returning To The US; Wall Street Finally Finds Oasis; Halcon Update

Disclaimer: this is not an investment site. Do not make any investment decisions based on what you read here or what you think you may have read here. 

EPD announces a slight increase in its dividend/distribution.

Oasis is building Bakken oil acreage as Wall Street gushes. -- Investors.com, Investors Business Daily. But the story they report is an old, old story. It sure takes a long time for some folks to see these things.

From The Motley Fool:
ConocoPhillips plans on investing $3 billion over the next five years in the Permian Basin. It has 1 million net acres with 800 million barrels of recoverable oil equivalent in the area.
Conoco plans on boosting production in the play by 40,000 boe/d through 2017 to help offset the decline of its older assets. Permian production growth won't be enough though, which is why it also set its sights up north.
In the Bakken play, Conoco plans on investing $4 billion over the next five years to explore its 626,000 net acre position in the area. The company sees 600 million barrels of recoverable oil equivalent in the area and estimates production will rise 45,000 boe/d by 2017.
Even that won't be enough to offset declining base output, so Conoco decided to pull out the big guns.
In the Eagle Ford, Conoco is betting big with $8 billion being spent to push up production over the next five years. It has 227,000 net acres in the play with 1.8 billion barrels of recoverable oil equivalent. All of that oil has given Conoco over 1,800 locations to drill and as such forecasts an increase of 130,000 boe/d in production by 2017.
At SeekingAlpha:
Halcon Resources has seen its shares remain strong and not retreat as we anticipated. There has not been any news out but with the shares so beaten up and underperforming recently it's fair to reason that shorts may be covering or the winnings from other trades in the sector are finding their way into Halcon. Either way up is up, and as shareholders we have to be pleased, although we would have preferred to have seen the shares retreat back into our buying area so we could make another purchase. The company will report November 5th, so we have a while for another pullback but we do think that with all of the events in the Utica that this name might very well rally into its conference call as investors search for names offering value heading into earnings season. 

Around The Horn -- The 16th Day Of The Government Shutdown

Disclaimer: this is not an investment site. Do not make any investment decisions based on what you read here or what you think you may have read here. 

30-second sound bite: oil continues to slide toward the $100 support. Bakken operators are significantly outperforming the majors. Sweet. In early trading, the market surges despite the impending government default. We all know the fix is in. [In the bracket, after market close. Oil recovered; up $1.04 for the day; I guess even oil traders were happy to see government getting back on track.]

KOG trading at a new high, up over 2%. I used to consider KOG the bellwether stock to track the Bakken. About a month ago (sometime in September, 2013), I began re-thinking this. I now consider HK the bellwether stock to track the Bakken. [Closes up 2.1%; new high, $13.10.]

HK is up about 3%; about $5.27. [Closes up over 4%.]

Oasis remains on a tear, up over 2.2%; up another dollar. [Closes up 3.2%; new high.]

WLL is up 2.35%; reaching a new 52-week high. [Closes up 2.58%; new high.]

CLR is up over 2%; trading at a new high. [Closes up over 3%; new high.]

CVX, COP, XOM: CVX is up 1%; COP is up 1.2% and trading at a new high; XOM is up but not quite as much. Both CVX and XOM are well off their highs.

EOG is up less than a percent; well off its 52-week high. [Closes up almost 1.3%; new high.]

CHK is up almost 2%; back near its 52-week high. [Closes up almost 4%; new high.

SD is up another 1.4%; breaking out of a trading range, but below its 52-week high. [Closes up 2.8%.]

AMZG is fourteen cents over a nice entry point of $2.00. [Some profit taking? Back down to $2.09.]

TPLM is up almost 3%; near its 52-week high. [On a tear; up 5%; new high.]

UNP is in its trading range well below its 52-week high. But, along with the rest of the market, is up today.

I don't follow BNSF (BRK) much any more; BRK follows the market in general.

ENB, EEP are both in a trading range, well below their highs.

SRE seems to have broken out of its slump -- up 1.5% today; about $2 below its high.

TransCanada is up slightly; well off its high.

The Midland, Texas, Folks Are Preparing For Another Boom

For newbies: active drilling will be necessary through 2030 to drill 48,000 wells to exhaust the Bakken (with today's technology and today's estimates). Production from the Bakken will continue through 2100.

The Permian is estimated to be several times bigger than the Bakken (although some will disagree with the "several times").

The Permian is just beginning. Production is enormous.

The oil and gas industry is well known to go through boom and bust cycles.

North Dakota reports a new record yesterday: > 900,000 bbls of crude oil being produced daily.

Read the following story, in that context, and note the byline (Midland, Texas), being reported by The Dickinson Press:
MIDLAND, Texas — In a faded West Texas town dotted with vacant buildings and potholed streets is a sparkling storefront window and a curious display: rows of diamond-studded Rolex watches, awaiting buyers whose pockets are packed with oil money.
The surge in oil drilling has drawn money and men like a magnet to run-down communities that haven’t seen a boom since the 1980s.
But leaders and residents here are increasingly mindful that the runaway riches tapped by hydraulic fracturing will eventually run out. And they are determined to live by a fondly remembered bumper sticker from the last bust: Please, God, give me another oil boom and I promise not to blow it. So some towns are taking steps to ensure they land softly rather than crash into economic ruin.
The Permian (Midland, Texas) is getting ready for another boom.

The US is now #1 in the world -- repeat, #1 in the world -- for producing oil and gas.

I believe the US is now out-producing Saudi Arabia, and will soon out-produce Russia in oil, making the US the #1 crude oil producer in the world.

With that in mind, recall our first nominee for the 2013 Geico Rock Award. The graph at this link might help put things into perspective.

Hyperbole

The number sounds big, but for North Dakota, it is trivial and insignificant.

The Dickinson Press is reporting:
The Bureau of Land Management’s North Dakota office is sitting on more than 500 oil and gas drilling permit applications, the White House told Sen. Heidi Heitkamp’s office this week.
The BLM, which processes permits to drill on federal land, has furloughed more than 10,000 employees since the government shut down Oct. 1.
Unless I missed it the article does not break down how many of these permits affect North Dakota; this is a national number. North Dakota alone will process almost 3,000 new permits this year.

According to yesterday's Director's Cut, there are no operators drilling in North Dakota's BLM-managed "grasslands."

I have blogged from the beginning that operators like XTO and KOG are heavily involved in the reservation, in Dunn County, and permits continue to be issued for fields in the reservation. 

Operators outside of North Dakota affected by this shutdown may, in fact, move their rigs to North Dakota. Except for the fact that the shutdown will be history by the end of the week.

Some Observations On The IPs Reported Today; Simply Rambling While Watching It Rain

Some observations on the IPs reported today:

OXY USA reports an OXY USA IP.

Slawson has a "high IP" well that makes the "high IP" list.

EOG reports another nice middle Bakken well in the Clearwater field using 48 stages, 10 million pounds of sand; IP was low, but production is outstanding. On the other hand, in Spotted Horn, EOG used 51 stages and 10 million pounds of sand in a Three Forks well, and early production is not particularly good. [See first comment: there may be a good explanation.]

A fairly inactive field in the Bakken, the Bully field south of Watford City, is showing some nice activity and some nice results.

Shell Pessimistic On Shale Oil And Gas Development Outside The US; National Review Feature Story On Harold Hamm

Reuters is reporting via the Rigzone:
Royal Dutch Shell CEO Peter Voser said it will take a longer time than expected for the company to reap benefits from its shale gas projects due to poor short-term results.
Weak U.S. shale liquids production contributed to a $2.2 billion charge Shell revealed in August and was a key factor in its decision to abandon its goal to deliver 4 million barrels a day of production by 2017.
"We didn't get the results which we were expecting to get in the shorter term and we will therefore have to develop this a little bit more before we can take benefits from it," Voser told reporters on the sidelines of the World Energy Congress. "It was clearly not as successful as thought."
Vast reserves of shale oil and gas are likely to make the United States the largest oil and gas producer in the world this year, according to the U.S. Energy Information Administration, but the rush to cash in on the shale bonanza has cost some latecomers to the market dearly.
Voser was also sceptical about the success of shale development elsewhere.
I believe the US EIA has already reported that the US is #1 in oil and natural gas (together), and I believe soon to be #1 in oil production, by itself, later this year. I forget the specifics. Hardly matters.

This speaks volumes about Harold Hamm being early in the Bakken. The National Review has a feature article on Harold Hamm, posted in the October 28, 2013, issue. A big "thank you" to a reader for sending me the link.

By the way, if I recall correctly, another reader pointed out that the company owned by Harold Hamm produces more oil on a daily basis than what the state of Oklahoma produces on a daily basis. Just saying.

It Could Be Close --

Reuters is reporting, via Rigzone
Oil production in North Dakota, home to the prolific Bakken formation, could hit 1 million barrels per day (bpd) as early as at the end of this year, the head of the state's Mineral Resources Department said on Tuesday.
Data issued by the department on Tuesday showed production rose 35,000 bpd in August to more than 910,000 bpd, a fresh all-time high that far exceeds an official forecast used by the state's budget of 850,000 bpd by the end of the year.
"We moved through 900,000 bpd in August. It was just in May that we hit 800,000 bpd. That tells us that at the end of this year or very early next year we will see 1 million barrels," Lynn Helms, head of the department, said on a conference call. Helms forecast "a fairly good-sized surge" in production in September because a number of wells that were to be completed had to be delayed from August due to drillers falling behind and rain.
It will take a great November report to get us to one million bbls of oil per day
Active rigs: 183

RBN Energy: the science behind shale exploration; Apache, CLR in the Anadarko -- a very nice article covering a lot of bases, including an update on the Kansas and Oklahoma Anadarko, the science behind the exploration, and an overview of some of the more prominent operators in the Anadarko --
The Anadarko basin is similar to the Permian Basin in that it contains multiple layers of oil-bearing formations that can be exploited by drilling at different depths  The Anadarko is not a “new” oil and gas basin but has already been extensively and successfully exploited for decades using conventional vertical drilling technology. Apache and other producers are now exploiting these proven assets using new horizontal drilling and hydraulic fracturing technology. But the effort is directed towards extracting known resources at the least cost in a systematic manner.