Archives of Previous Commentaries

These are commentaries that have been removed. The date is the date the commentary was removed, not necessarily the date it was first posted.

Removed January 23, 2010

For a very interesting comment about maximizing a pad -- 6 wells, 12 laterals on one pad, see today's comment on the Eco-Pad page. December 16, 2009. 

I opined not too long ago that 2010 will be a watershed year for the North Dakota oil industry. Today's daily activity report suggests that the new year may have started a bit early.  Ten (10) well files were released from confidential status, including seven (7) by EOG. The average IP for the seven EOG wells was: 1,120 boepd.  They were all incredible wells based on their IPs.  In addition, five (5) new permits were granted, including another one for EOG, one for KOG, two for CLR, and one for Marathon. December 14, 2009.

Removed January 14, 2010 

BEXP announces another gusher! 3,807 bopd!!

Worse prediction of 2009? This links to an analyst's prediction on July 4, 2009.

MY HOME TOWN GETS A GUSHER!
Even California newspapers writing about the Bakken!
More wells in the Williston area! 
North Dakota production record (80 MM bbls in 2009) beats last year's record (62.8 MM bbls in 2008)!

Removed December 18, 2009

I continue to predict that 2010 will be another watershed year for the oil industry in North Dakota, if the price of oil stays above $70.

We should see close to 100 active drilling rigs by mid-2010. That is up from a low of 33 last autumn (2008); the number of active drilling rigs is currently 79 (December 2009).

Fracturing companies are going to be very, very busy. This past year we have seen the norm of one-stage fracturing jump to 18+ stages, and some are opining that we could see upwards of 60-stage fracturing. That seems crazy, but once you have the team and the sand/water on site, you might as well maximize the stages.  Most of the sand/water is recovered, so I assume the cost is mostly is propellant and additives, and man-hours while the team stays on the pad.

The Bismarck Tribune reported that oil companies are now targeting a "new" formation, the Birdbear formation. In fact, this is not "news"; it's always been there and there has been some production from this formation in the past. The difference this time is that companies are applying the new technology to this formation: horizontal drilling and fracture stimulation. The formation is very thin, but it is my understanding that horizontal drilling is so sensitive now that drillers can target these thin formations with success. Note: in Saskatchewan, the Birdbear formation is known as the Nisku.

Removed December 17, 2009

[For a very interesting comment about maximizing a pad -- 6 wells, 12 lateral on one pad, see today's comment on the Eco-Pad page. December 16, 2009.] 

I opined not too long ago that 2010 will be a watershed year for the North Dakota oil industry. Today's daily activity report suggests that the new year may have started a bit early.  Ten (10) well files were released from confidential status, including seven (7) by EOG. The average IP for the seven EOG wells was: 1120 boepd.  They were all incredible wells based on their IPs.  In addition, five (5) new permits were granted, including another one for EOG, one for KOG, two for CLR, and one for Marathon. December 14, 2009.

• This is why I'm excited about the Bakken.  (Click on the link.) 

•  500,000 barrels of oil in one month (October, 2009) from 43 EOG wells in one county.
• $100,000,000 wellhead production in three months from EOG/Hunt wells in Mountrail County.
  

• KOG just announced a nice well in the Fort Berthold Indian Reservation on December 6, and another nice one December 11, 2009.

• For those who have forgotten "recent history" regarding natural gas, this is a great article.
  

• XOM will buy XTO, a significant player in the Bakken. XOM is now in the Bakken. With one deal, there could be another huge cash infusion into the North Dakota oil industry with XTO having new capital to expedite drilling program. Even CNBC mentioned "the Bakken in North Dakota" right after this deal was announced.

December 8, 2009: I am accused of being inappropriately exuberant when it comes to the North Dakota oil industry, but who can blame me when you read the Whiting press release, dated December 8, 2009?  This is an incredible press release. Follow a discussion of this press release here.

1. WLL announced four wells with the following IPs: 1,970; 2,638; 2,223; and 2,140 boepd.

2. The purpose of the press release: one of the wells was a discovery (wildcat) well (1,970 boepd) targeting the Bakken. This was a re-entry well; a well that had been producing from the Birdbear formation as recently as July, 2009. WLL will drill ten wells in the area and will open up an entire new area for WLL and the Bakken.

3. WLL also announced completion of a new pipeline connecting ALL their wells in the Sanish-Parshall, taking one-third of truck traffic there off the road. This WLL pipeline connects with an Enbridge pipeline. This is a biggie, especially if you use the roads in Mountrail County.

4. The discovery well is  Federal 32-4HBKCE. My guess is that the letters stand for H (horizontal) BK (Bakken) CE (casing exit). 

December 14, 2009: Four dots in the Bakken to connect:

1. October, 2009: Several producers / investors in the Bakken (including BEXP, KOG, NOG) raised large amounts of cash through new share offerings. [In December, BEXP's partner, US Energy (USEG), also raised cash through new share offering.]

2. November, 2009: Record-setting North Dakota state land lease auction. Slawson particularly notable in its bids.

3. December, 2009: record-setting (?) docket on tap for December 17, 2009, North Dakota Industrial Commission hearing.

4. December, 2009: XOM is in the Bakken with its purchase of XTO. 

 ***** 

NEWS

*****

For those who have never visited North Dakota in person, this picture shows you why I love my state. Absolutely gorgeous. Only a white-out (blizzard) would make the picture more exciting!

 *****

BEXP looking good. See Bakken: BEXP. December 16, 2009.

WLL has another big well -- 2,250 bopd, the Rohde 44-1H in Mountrail County, November 27, 2009.

WLL now up to 8 rigs. Total number of active rigs in North Dakota now up to 77. December 16, 2009. 

*****

For those who have read the "welcome" to this site, you may want to skip directly to:

Do I Need to Curb My Enthusiasm? EOG -- 570 more wells in the Parshall?
Whiting's November corporate presentation.
The NEW presentation by Harold Hamm, CLR/CEO.
Things on my mind.
Trends in the North Dakota oil industry.
FAQs about the North Dakota oil industry.
Oil Wells Reporting.
Active rigs now up to 75. From a low of "about 33" summer of 2008.

...it is absolutely incredible how fast "they" can move these rigs in. In less than a week, four new rigs have been moved into North Dakota. Can you imagine how long it would take if this industry was run by the US government?

Removed December 8, 2009

Breaking News

It looks like a big day in the Bakken; it's going to take me awhile to update all the pages. Be patient.  Smile. December 8, 2009.

NOTE: Someone has posted a very nice comment about the Lodgepole, pointing out some inaccuracies in my posts and/or putting things into perspective. December 7, 2009.  

NOTE: Three oil companies are pursuing the Bakken as far west as the Rocky Mountains in Montana. December 7, 2009.  

NOTE: This might be one of the best Bakken news sites I've found in awhile. It's always been there; I've just never run across it. 



Posted November 25, 2009 (not yet removed):

I have no idea if this is a big deal or not. I have not followed "dockets" for the North Dakota Industrial Commission (NDIC) in the past so I have nothing with which to compare. But the NDIC has released the docket for December 17, 2009.

The December 17th docket is 19 pages long. Repeat: 19 pages long.

Let's look at one case, just one case from that 19-page docket. This is case 11939 from EOG:

1. EOG wants to extend the Parshall or Van Hook-Bakken Pool to include the following:
Sections 12, 13, 19 - 36 in 151N-90W (20 sections); and,
Sections 9, 16, 21 - 28, 34 - 36 in 151N-91W (13 sections); for a total of 33 more section.

2. EOG also wants permission to drill up to three horizontal wells for each 640-acre spacing unit (is that three wells in each section?) for the following:
Sections 1 - 36 in 151N-90W (36 sections); and,
Sections 1 - 36 in 152N-90W (36 sections); and, 
Sections 1 - 6, 8 - 17, and 19 - 36 in 153N-90W (34 sections); and,
Sections 1 - 36 in 154N-90W (36 sections); and,
Sections 25 - 28, 31 - 36 in 155N-90W (10 sections); and,
Sections 1, 10 - 15, 23 - 26, and 36 in 151N-91W (12 sections); and,
Sections 1, 2, 11 - 15, 22 - 26, 35, 36 in 152N-91W (14 sections); and,
Sections 5 - 8, 17 - 20, 29 - 32 in 153N-89W (12 sections).

Does this add up to  190 sections? And is EOG asking permission to drill three horizontal wells in each of these sections? If so, that's 570 wells and that's just one case (albeit, perhaps the biggest case).

I may have misread this, or may not understand it, but that seems to be what EOG is requesting.

You can access the full 19 pages of the December 17, 2009, docket at https://www.dmr.nd.gov/oilgas/dockets/2009/docket121709.pdf.

I suppose I need to curb my enthusiasm.


November 27, 2009 (removed):

I "tore down" my "old" Million Dollar Way site and am in the process of bringing up a new site, but events are moving along very, very quickly. First it was Denbury buying Encore, then nice wells being reported by BEXP with 28-stage fracturing, and now BNI being bought by Warren Buffett (announced November 3, 2009). I started buying BNI back in the 1980's. In fact, it was one of my first holdings ever; I have never sold it, only accumulated BNI over the years.

I first saw BNI hauling coal when I was having breakfast with my parents in a coffee shop in Grand Forks, ND, in 1982. I remember the year well. I was stationed at the air base in Grand Forks, and I would be moving to Bitburg Air Base, Germany, the following year. It was obvious to me that BNI was going to be hauling coal for a long, long time.I missed on EAC and EOG.

But there are a dozen ways to be involved in the Bakken, even for those who do not own mineral rights. I am convinced that Williston could be another "Tulsa." It won't be another "Tulsa" in terms of people -- the weather is too harsh and the region too remote, but in terms of storage, infrastructure, and production, I don't think I'm too far off. Some of the wells are generating $15 million in cash flow each year.

November 21, 2009 (removed):

Recent wells reporting initial production (IP) have been mediocre by some folks' standards, ranging between 500 and 900 bbls/day. For newbies, a bit of background. In the old days, a 100-bopd well was considered a very good well. Then with horizontal drilling and fracture stimulation, we got used to seeing 1,000 bopd-wells and the occasional 2,000 bopd wells, and the not infrequent 3,000 - 4,000 bopd wells. So, "we" no longer get excited with wells reporting less than 1,000 bopd on initial production. But IPs are beginning to mean less and less to those who have been following the Bakken for some time.

Wells reporting initial production of 500 - 900 bopd are very good wells by any standard.

If you don't believe me, look at the RS-Brady well: its IP was 194 bopd. Not even a year old yet, this well has produced 36,111 barrels of oil, and at $70/barrel, this is slightly more than $2.5 million. In less than a year. Bakken wells are said to cost $5 - $6 million each, but one company says their last Bakken development well was drilled in 16 days for a cost of $2.9 million.

And it is not just horizontal wells that are producing some great wells: a Lodgepole well spudded in 1996 that has produced in excess of 4 million barrels of oil so far is a vertical well, and it continues to produce about 7,500 barrels of oil per month (Dinsdale 2-4, Encore). At $70/bbl, that's $500,000 a month, and that well paid for itself years ago.