News From the Oil Patch: Housing, Infrastructure

Three news articles from the past couple of days highlight the boom and the problems associated with the boom:

New businesses in Watford City. McKenzie County Farmer, March 31, 2010.

Op-ed: "once-in-a-state's-lifetime" opportunity to maximize growth. The Bismarck Tribune, March 30, 2010.The North Dakota State Bank has received plenty of kudos in the past for how well it has delivered; it will be interesting to see if the bank has any interest in helping out.

Infrastructure stress in the oil patch: it's all about housing. The Bismarck Tribune, March 29, 2010.

I'm sure these links will be broken or will incur a fee to access some time down the road so I have included the media source, and the date.

Solar Energy

Cost of solar-generated electricity for residential customers: 34 cents/kwh.

Cost of "conventionally-generated" electricity for residential customers: 8 cents/kwh.

This is from a site that promotes solar energy.

When you go to this site, you will see that they track solar energy costs on a monthly basis and their data goes back to 2000. They no longer publish the cost of "conventionally-generated" electricity; I assume it is because "conventionally-generated" electricity is so inexpensive, and may be getting less expensive relative to the rest of general living expenses (such as health care).

Also, note, that after eight years of promoting solar electricity and significant governmental incentives to promote solar electricity, the cost of solar electricity has not come down much. Solar-generated electricity costs have come down from about 37 cents/kwh to 34 cents vs 8 cents for conventionally-generated electricity.

Los Angeles city council is now voting to raise residential and commercial electric utility rates by as much as 28% to pay for green energy, despite the fact that the cost of natural gas is at historic lows and the US is literally awash in natural gas.

Slawson Snake Eyes

Someone else noted this elsewhere and posted it today; I noted it back in December, 2009: Slawson is putting two wells on one pad in Big Bend oil field. I call them "Slawson Snake Eyes." But unlike craps, where "snake eyes" is a loser for the shooter, the Slawson snake eyes have been big winners.

Slawson was granted another permit today (March 29, 2010), #18865, Silencer 1-29H, which will pair with an earlier permit, #18574, Mole 1-20H. One lateral will go north; one lateral will go south. Here are the results of other "Slawson Snake Eyes."

[Note: if I remember, I will continue to update this page when I see more Slawson "snake eyes."]

So, far these are all Big Bend or Van Hook.

Slawson snake eyes (IPs in red):

17864, Jughead 1-35H (was Thompson 1-35H with Windsor), 1,255
18416, Wizard 1-35H, 849

18287, Skybolt 1-24H, 911
18363, Howitzer 1-25H, 1,156 (1,290)

18207, Machete 1-19H, 1,215
18195, Cougar Federal 1-30H, 1,264

18211, Minx 1-29H, 923
18239, Bazooka 1-20H, 1,042

18312, Whirlwind 1-31H, 902
18589, Sniper Federal 1-6-7H (rig on site, Mar 29, 2010)

18364, Zephyr 1-36H, 1,245
18180, Stallion 1-1-12H, 2,735

17801, Jericho 1-5H, 750
18220, Coyote 1-32H, 846

18574, Mole 1-20H, xxx
18865, Silencer 1-29H, xxx

18619, Crusader 1-16H, 84 -- not a typo; reported Oct 22, 2010
18621, Diamondback 1-21H, 753

18870, Moray Federal 1-10H, 1,371
18871, Neptune 1-15H, 1,394

18924, Vixen Federal 1-19-30H, 19-152-91
18925, Phoenix 1-18H, 19-152-91, 1,521

19000, Goblin 1-26H, 26-151-92
19047, Revolver 1-35H, 26-151-93

19207, Vagabond 1-27H, 27-151-92
19208,  Moccasin 1-34H, 27-151-92

19485, Loon Federal 1-24-25H
19486, Genesis 2-13H

19664, Mamba 2-20H
19665, Bandit 2-29H

Of all producers, Slawson has the best names for their wells.

Summer in North Dakota.

The Birdbear: Just a Reminder

The problem with this site is that there is way too much information and I don't know how to best organize it.

Everyone is focused on the Bakken pool (Upper, Middle and Lower Bakken formations, as wells the Upper Three Forks Sanish and the Lower Three Forks Sanish) but there are several other oil-producing formations out there. Two of them, the Spearfish and the Birdbear are getting a new look.  EOG is putting in some nice $1.5 million Spearfish wells along the Canadian-North Dakota border vs their $5.5 million Bakken wells in Mountrail County.

For those who may have missed it the first time, this is a nice link. When you get there you can download a PDF which will provide better clarity and a nice hard copy if you want to print it.

But note where the Spearfish is active and where the Birdbear is active.

Something A Bit Different

This has nothing to do with oil but it's pretty cool. It's an animated video of the international space station being put together over the past ten (10) years.

http://i.usatoday.net/tech/graphics/iss_timeline/flash.htm

Biggest Bakken Stories of the Past Week

Week 12, 2010 (Mar 22 - Mar 29, 2010)

1.  Utah company will build facility in Dickinson to build trailers for roughnecks.

2. Oasis Petroleum will go public.

3. North Dakota oil production increasing; Alaska's North Slope on the decline.

4. New milestone: 105 active rigs in North Dakota.

5. 2009: Staggering Statistics. 

6. Hess does it again: six wells on one site.

Around the Oil Patch

Utah company to build facility in Dickinson to build temporary housing for roughnecks.

From the Oil Patch Hotline (full article available only by subscription):

Minot is becoming the "go-to" city for new oil and oil service companies, partly because of housing shortages in Dickinson and Williston. New companies are moving to Minot after Hess Corporation moved its regional headquarters to Minot. Oil service companies want to work with a multi-national company.The Oil Patch Hotline there are 17 new companies with more than 500 employees that have come to Minot after Hess moved there:

Hess: 100 - 300 employees in North Dakota.
Power Fuels: building a facility on a 20-acre site off highway 2 across from the Cenex tank farm.
Enseco Energy Services: well testing and flowback services; 40 employees and 8 trucks
Badger Daylighting of North Dakota: operates hydro vac trucks to clean out silt, sand, other debris from mud tanks.
Pure Energy: a new $20 million office and truck bay facility; provides production testing and cased wireline hole services. It joins Pumpco Magnum Trucking at the new 130-acre industrial park built by the city.
A new 90-acre Northern Plains Energy Park with city water, sewer and three-phase power connections.

Minot, the fourth-largest city in North Dakota, has a few more amenities than Williston, including the crowd favorite, the annual Scandinavian Hostfest. 

For those who missed it, here's the link to some Whiting corporate videos; whether you like the presentation or not, the scenery is spectacular. Enjoy.

NOG Presentation

This is the Conference Presentation, Mar 2010.

Note the cost of finding and extraction for a barrel of oil on slide #12.

March Madness: Fertile 37-07

Updates

May 13, 2013:

• 22091, 537, EOG, Fertile 51-0410H, Parshall, t11/12; cum 88K 3/13;
  

Original Post

Fertile 37-07 is in the most prolific oil field in the current boom, the Parshall field. It is in Fertile Township, section 7-T151N-R90W, just a mile from another very prolific field, the Van Hook.

I mention this, not because I know anything special about Fertile 37-07, but because the question of its location piqued my interest to revisit this township.

I provided an update to the Parshall oil field not too long ago, but I was blown away by what is going on there at this very moment. To summarize: in this township of 36 sections, there are --

Two (2) drilling rigs on site;
Another six (6) wells being drilled;
Twelve (12) wells producing;
Three (3) wells on the confidential list; and,
Seven (7) additional sections with permits yet to be acted upon.

This is clearly one of the more active townships right now. What surprised me most is all the "green" circles on the GIS Map Server -- I can't recall this many wells being drilled at one time in such close proximity in a long time. I assume they are all EOG wells. The drillers can now drill a well in less than 25 days; the completion may take longer to wait for fracking.

I opined sometime ago that activity inside the Fort Berthold Indian Reservation was two years behind that of the rest of the Parshall and Sanish due to bureaucratic red tape, and that we would see FBIR "catch up" in 2010. It's only March and "we" are well on our way.

Oasis Went Public in Early 2010

Data Links 

Corporate presentation

3Q10 Summary

NEWS

SeekingAlpha on Oasis: highly recommended.

Company presentation, 2011 CAPEX, 2010 Summary, January, 2011.

Investopedia update, January 3, 2011.

Robust 2011 Outlook; December 18, 2010.

IPO

IPO: $350 million.  Prospectus at time of IPO.

• Price per share and date of IPO yet to be announced.
• How much ya wanna bet it will be over-subscribed?

***** 
Ramblings Before the IPO Was Announced
My Thoughts

September 30, 2010: Focus on Oasis as an investment. 

The Form S-1, March 4, 2010. Page 58 may be the most informative. Be sure to read the small print.

The small print is where I think the "money will be." The big print: the number of wells are the initial Bakken (formation) wells on 1280-acre spacing. The small print: the net acreage does not include infill wells and does not include Three Forks Sanish. In other words: the big print allows the company to keep drilling, to remain solvent; the small print provides the upside potential. Generally, small print means "bad news"; in this case, the small print is good news.

Four companies that are pure play in the Bakken and can be compared head-to-head:

KOG (Kodiak Oil and Gas)
NOG (Northern Oil and Gas)
OASIS
AEZ (American Energy)[Sold to Hess in 2010]

Data for KOG and NOG is available.
Data for AEZ not yet available; American Energy recently announced it will sell all Wyoming assets (Powder River Basin) for approximately $44 million and become a Bakken pure play company.

NOG is a "$14 stock."    40 million shares outstanding (rounded)
KOG is a "$3 stock."    120 million shares outstanding (rounded)

My back of the envelope calculations suggest a "fair" IPO based on NOG and KOG would be 30 million shares at $12/share. That seems high -- a "$12 share" company so they might have to go to 60 million shares for $6.00/share.

If a "better buy" than 60 million shares for $6.00/share, it might be an interesting play.

And don't forget: it only takes one monster well to be a "game-changer" for these small companies.

North Slope, Alaska, vs North Dakota: 2010

Average daily production from North Dakota in 2010 is about 250,000 bbls/day. Analysts expect that number will exceed 300,000 bbls/day and will be increasing by the end of the year. Analysts expect that maximum daily production in North Dakota will plateau around 400,000 bbls/day within several years.

For comparison's sake, oil production from the North Slope, Alaska, is 665,000 bbls/day and falling.

USGS Website

I feel remiss in not having alerted readers to this site earlier, the USGS website. It is now interactive and very, very good.

It appears to me that the Bakken is already exceeding the USGS' conservative estimates. It should also be noted for those new to the Bakken that the 2008 USGS survey of the Bakken was just that: a survey of the Bakken pool (the Bakken formations and the Three Forks Sanish formations) and did not include the eleven or twelve other formations in the Williston Basin that produce oil.

Another reminder: the Bakken is a huge, huge deal for those living and working in North Dakota. It may or may not be a big deal to the rest of the world. Time will tell, but already North Dakota is now the fourth largest oil producing state in the United States, and the producing area represents only a small area of North Dakota.

Another Orion Belt: Hess in Alger Field

For those keeping track of multi-well pads, here's one I neglected to mention a few days ago. The permits were granted March 22, 2010. This is in Alger field, just west of Stanley, and west of the prolific Sanish and Parshall oil fields.

This "Orion Belt" is owned by Hess. These will be three long laterals, all starting in section 30-155-93 and going north into section 19. Will these three wells target three formations (MB, UTF, or LTF) or is one of these a monitoring well? 

18838, EN-Abrahamson-155-93-3019H-1
18839, EN-Abrahamson-155-93-3019H-2
18840, EN-Abrahamson-155-93-3019H-3

Another CLR Eco-Pad; Dunn County

March 26, 2010: Eco-Pad permitted in Dunn County, SESW 26-147N-96W
Four wells #18858, #18859, #18860, #18861

Morris 3-26H
Carson Peak 3-35H
Morris 2-26H
Carson Peak 2-35H 

Two wells going north; two going south, all on the same pad. 

Update on Three Wells Per Section in the Parshall Oil Field (EOG)

This is a "cut and paste" from the "Parshall Field Update." Folks are starting to notice that EOG will be putting three wells in almost every section in the Parshall field, something this armchair amateur first reported almost six months ago.

March 25, 2010:  See EOG news below, dated March 15, 2010. EOG was granted two more permits for a section in the Parshall that already has a producing well: #18850 and #18767, in section 8-153N-90W. The first well was # 17127. The #17127 is in the NWNW corner; the #18767 is in the NENW corner; and, the #18850 is in the SWSE corner. The #17127 had an IP of almost 2,000 bopd. The names of the three wells, Wayzetta 11-08H; Wayzetta 108-08H; and, Wayzetta 129-08H.


March 21, 2010: Update on Fertile Township, Parshall Oil Field, FBIR


March 15, 2010: This blog was one of the first by an armchair amateur, if not the first, to point out that EOG plans to drill three wells in almost every section in the Parshall. It's starting:  EOG was granted two permits, both in section 30, 153-90. There is already a producing well in that section (17129, IP - 610), and all adjoining sections have producing wells. Are these two more Middle Bakken (MB) wells? Unlikely. More likely an Upper TFS well and a Lower TFS well; or, one of the two new ones will be a "monitoring well" while the other targets the Three Forks Sanish.

March 2, 2010: There is a backlog of wells that still need to be fracked in Fertile township.

105

A new record: 105 active rigs in North Dakota.

For more, click here.

Yup. Here It Comes: Angelinos Stunned

Business leaders in Los Angeles "stunned" at the proposed 22% increase in electricity rates to pay for "green energy."

This is a surprise?

And yet the US is swimming in natural gas currently selling at historically low prices.

Whatever.

I posted the above on the morning of March 25, 2010. The following was posted later that same afternoon by the Washington Times:

Gasoline prices have risen $1 since just after President Obama took office in January 2009 and are now closing in on the $3 mark, prompting an evaluation of the administration's energy record and calls for the White House to open more U.S. land for oil exploration.

The average price per gallon across the U.S. hit $2.81 this week, according to the Energy Information Administration. That was up from $1.81 the week of Jan. 26, 2009, just after the inauguration, and marks the highest price since Oct. 20, 2008. 

Just saying.

March 29, 2010: Update. Los Angeles city council supports 22% increase in utility rates on business -- just spread it out a bit. However, they do it, it's still a 22% increase in utility rates to pay for green energy, a solution to a problem that does not exist.  France knows that. And now Germany knows that.

March 30, 2010: Update. The Los Angeles city council proposed a 4.5% increase instead of the 22% increase. The mayor says he is concerned about the city utility being able to pay its bills without a bigger increase. The reporter says, without attribution, "A significant concern is the fluctuating cost of coal, which makes up 44% of the DWP's power." Yup. The cost of coal fluctuates between four (4) cents and eight (8) cents for a given amount of energy compared to 36 cents for same amount of energy generated by solar power, and who knows how much more wind energy costs, even if it were readily available. Yeah, that fluctuating cost of coal is a real problem. The only reason for such a steep increase is the crazy notion of "green energy."

And this is only the first step: "Tuesday's showdown is considered the first act in a series of electric rate hikes the mayor is proposing, which would increase residential bills anywhere from 9% to 28% over a 12-month period."

April 2, 2010: It's only getting worse.  But council members are asking the wrong question. They are fighting over rate increase between 4.5% vs 5.7% over three months (25% annual rate) instead of asking why the rate increase has to be so huge.

April 6, 2010: It continues to get worse. Mayor of Los Angeles plans to shut city agencies (except for police and safety) two days a week starting April 12, 2010. The city's department of water and power (DWP) refusing to hand over $73 million in cash as originally published.

April 7, 2010: Fever pitch?

Staggering Statistics

The Bakken keeps rockin'.

See also, Crazy Numbers, Part 2.  One well in this current boom will soon surpass one (1) million barrels of oil produced; four others have surpassed 500,000 barrels each.

I keep going back to re-read the Rocky Mountain Oil Journal front page story, February 26, 2010 - March 4, 2010, on the record North Dakota oil production in 2009. See earlier post.

Here are some phrases from that story:

"North Dakota shatters oil production record..."
"The horizontal Bakken has again been the impetus for the meteoric rise..."
"This remarkable increase...for the second year running, the largest oil producing state in the Rocky Mountain region."
"...the most active area for drilling..."

These are pretty powerful phrases from a matter-of-fact source.

I was happy to note that my database was right on target. I recorded 626 new permits in my 2009 database; the RMOJ said there were 623. Not bad for an amateur who compiled data from daily activity reports and not agency-compiled totals.

There are so many tidbits of interesting information in that article and the numbers are staggering. For example:

1. The breakdown of the data, in some cases, does not include production from wells still on the confidential list that began producing in 2009. The numbers are already phenomenal, and to think that not all of the production was captured in some areas. (My understanding is that "total production" was captured, but the breakdown of the data by county or field might not have been available because some wells were still confidential.)

2. "Everybody" talks about the Bakken, but few realize that the Bakken pool includes at least three oil-producing formations, and maybe as many as five.

3. The most prolific formation in 2009 was the Bakken pool, but that doesn't mean other formations are inconsequential. Production from the Red River B formation dropped 19 percent, year-over-year (2009-2008), not because there is less oil to be extracted from that formation, but rather the tremendous interest in the Bakken pool. At the current price of oil, I can bet that if the Bakken were to go away tomorrow, the operators would turn to historical formations like the Red River B in a heartbeat. They are returning to the Lodgepole, and they are re-entering old Birdbear wells. Right now, there's a race on to see what the fields have and what wildcats might find; it will take hundreds, if not thousands of wells to sort the Bakken pool out, and "we" still have a dozen other formations to attack and re-attack. And those are "old" formations. With wells costing a fraction of a Bakken well, EOG and others are now going into yet another formation, the Spearfish.

4. My hunch regarding the Red River B is validated by the fact that the primary targets for seismographic study in 2009 were the Bakken, the Three Forks Sanish, AND THE RED RIVER.

5. Only three states out-produced North Dakota last year: Alaska, California, and Texas. But when "they" say "North Dakota," we're only talking about the northwest, the far west, and a bit of the southwest areas of North Dakota. It's not like "they're" drilling in the whole state. I don't think it's even one-third of the state. Granted, that's also true of AK, CA, and TX but it would be interesting to compare total acreage involved in oil production in the four states.

6. The RMOJ estimates that total footage for JUST the horizontal portion of the wells drilled in North Dakota was equivalent to 693 miles. Laterals are either one mile long (short laterals) or two miles long (long laterals), whereas each well to the Bakken goes down about two miles before going horizontal. Thus, conservatively, one can double the number of miles that have been drilled in 2009: that's a lot of steel and a lot of cement. And a lot of manhours. (Are we still allowed to say "manhours"?) 1400 miles: that's 2 1/2 round trips between Fargo and Dickinson. And we're not even talking about all the pipeline laid to move the oil once it's been brought to the surface. And that's just one year.

7. Folks keep second-guessing "how good" these wells are and whether the operators/drillers are getting better. Well, if one does the math on the numbers provided in the second paragraph of the RMOJ story, the average Bakken well produced an average of 101 bopd in 2009 vs 84 bopd in 2008.  That's an increase of 20% and the cost of the wells has actually decreased over the past year by some calculations. The average EOG well in the Parshall produced 288 bopd in December, 2009.

8. Oh, by the way, how did these Bakken wells compare to Red River B wells in 2009? The average Red River B produced 119 bopd -- 19% more than the average Bakken well.

9. The majority of oil produced by the second-largest producer, Burlington Resources, was still from the Red River B in 2009 but that should change over time as BR aggressively targets the Middle Bakken.

10. And again, one-third of the oil produced by Continental Resources, the #3 producer in North Dakota comes from horizontal Bakken pool wells; two-thirds of their production still came from the Red River.

11. Whiting jumped to number four in North Dakota production. How much did its average well produce in 2009? 310 bopd.  Whiting is primarily in the Sanish oil field.

12. I've opined often that Hess' wells seem to be lackluster compared to other producers and the numbers bear this out. Hess dropped to fifth place. Without knowing the number of wells Hess has, I cannot determine the average Hess well's daily production. But get this: before Hess went horizontal into the Bakken pool, it concentrated on vertical wells in other formations. How many formations do you think Hess targeted with these vertical wells? One? Two? Three? Four? Five? Try eleven: Deadwood, Devonian, Duperow, Heath, Madison, Ordovician, Red River, Sanish, Silurian, Spearfish/Charles, and Stonewall. The Lodgepole was not mentioned. And the Lodgepole holds the record for the best well ever in North Dakota. Yeah, there are a few formations yet to fully exploit.

13. Something tells me the numbers will be even more staggering one year from now.

14. "They" say the Bakken will continue to be drilled until 2031 at which time the Bakken will be completely drilled, but production, obviously declining over the years, will continue until 2100.That's just the Bakken.

Oh, one last thing. Here's a very, very average Bakken well, the Charlson 44-32H. It's IP was an unimpressive 512 bopd, before "they" changed their methods for calculating IPs. At exactly one year the Charlson 44-32H produced an unimpressive 60,000 barrels. But at $80/barrel, that works out to $4.8 million at the wellhead, about the cost of the well. Some of these wells are going to keep on producing for twenty years, although they may get down to 25 barrels/day. But once the well is paid for, even 25 bbls/day at $80/bbl works out to 3/4 of a million dollars per year. If the average Bakken well produced 84 bbls of oil per day in 2008, and the new wells were producing thousands of barrels/day in the first couple of days, you know that there are a lot of low-volume wells in North Dakota that keep chugging along. "Stripper wells" in Pennsylvania and Texas are economically viable producing less than 10 bopd.  Some stripper wells can be active for decades.

I still maintain that fracking extends out only 400 feet from the borehole (dual-lateral tests tend to support that reasoning), meaning that for optimum recovery, drillers may be able to put in as many as six wells in a 640-acre spaced unit. And drillers are already re-fracking wells that are less than ten years old.  And we haven't even begun talking about enhanced oil recovery.

Yes, I remain inappropriately excessively exuberant.

Oh, I can't help myself, one more thought. All it takes is one monster well to change everything. Maybe the 557 horizontal wells drilled in North Dakota last year were put in for one reason only: to keep the cash flow coming, to drill the next well, hoping it might be the "really big one." Something tells me oilmen don't look back; they keep looking for that next big one. Good luck to all.

2009 Summary of North Dakota Oil Production

I am often accused of being inappropriately enthusiastic about the Bakken; I won't disagree. I am talking about the oil industry in North Dakota; I am not talking about investing; in that arena I am much more cautious. Producing oil and making money are two different things.

The gold standard for oil and natural gas reporting in the Rocky Mountain region is the Rocky Mountain Oil Journal. A link has now been provided by the Bakken Shale Discussion Group for the RMOG's 2009 Summary of North Dakota oil production. I feel vindicated with regard to my inappropriate enthusiasm. The first paragraph in this story uses the word "incredible" to describe the oil industry in North Dakota for 2009.

The BakkenBlog also links this story.

Here's the link.

Note that it is a PDF document and is 20 pages long, plenty of information to pore through. Enjoy. But check out the Bakken Shale Discussion Group for other interesting notes and commentary.

Tong Trust, AEZ, IP: 1,421 (24-hour flowback)

From press release: 18050, AEZ, 1,421, Tong Trust 1-20H, 25-frac stage stimulation; Ray field, 6 tanks on pad, good flare; importance of well: would open up a new area that is currently not very active; also see AEZ, when you get there, scroll down to item #6.

This well was on my "wells to watch" list. The flow will decline significantly over the next month, but this is a good well in a relatively new area for horizontal drilling in the Bakken pool.

Oops! Hess Does It Again. Round 2.

Last time I featured Hess in an "Oops! Hess Does It Again," Hess had been granted six (6) wells on one site, three long laterals running north, and three long laterals running south. This time it's not six wells, but it's still exciting: three permits granted for three wells in section 30-155N-93W in the Alger field. They will be an Orion Belt, spaced at 125 intervals with long laterals running south-north from section 30 to section 19. Three wells? Middle Bakken, Upper TFS, and Lower TFS is my guess. These are the EN-Abrahamson-155-93- 3019H wells, # 1, #2, and #3.

For those tracking the official permits, these are file #'s: 18838, 18839, and 18840 on the March 22, 2010, daily activity report. By the way, according to the GIS map server, these three wells are in the Robinson Lake oil field, just one section away from the Alger. #18838 is already posted on the map, but the other two are not there yet.

Once the drilling is underway, folks from Williston can drive east on State Highway 1804 for about 50 miles east and see these three wells being drilled. The wells will be 435 feet from the road. Shortly after passing these wells, you will swing south and will be headed directly for New Town. If you get to the casino, return home via Watford City and stop at the steak house/restaurant there. Should be exciting.

Update on DKRW

April 9, 2010: Still no response from DKRW.

March 21, 2010: Update: I have not heard back from DKRW after asking about their outlook for natural gas which is the first thing one sees on their home page:

"The most conservative estimates of North American natural gas supply demonstrate a serious shortfall in production for the foreseeable future. With short supply driving prices higher, we are now seeing some of the highest natural gas prices in the world here in the Southwestern United States and Mexico. With so much of our energy infrastructure and industry tied directly to natural gas, it is necessary to identify and deliver more competitive supply options in order for the US and Mexican economies to grow."

March 16, 2010: I sent my inquiry to DKRW on March 15, 2010. On that same date they acknowledged receipt; to date no response.

 
Hangin' On the Telephone, Blondie / ABBA

*****

Is it just me or do others find this opening statement at their home page by DKRW confusing?

"The most conservative estimates of North American natural gas supply demonstrate a serious shortfall in production for the foreseeable future. With short supply driving prices higher, we are now seeing some of the highest natural gas prices in the world here in the Southwestern United States ..."

Everything I read suggests just the opposite, specifically: North America is swimming in natural gas; and, the price of natural gas continues to deteriorate.

Just after I posted the above, I came across this link: energy companies moving away from natural gas.

Van Hook Field Update

Van Hook Field 
(News at bottom)

Original Post (results updated)

This field is just a few miles south of New Town and entirely within the Fort Berthold Indian Reservation.

The Van Hook field is nestled among some great producing fields: it shares borders with the Parshall to the east; the Sanish to the north; and the Big Bend to the west. Heart Butte is on the south. The field is "owned" by EOG with some very impressive Slawson wells and a couple of Marathon wells. Based on the number of permits canceled, new operators, name changes, permits lost/gained by competing operators suggests this has been a very dynamic field.

The Van Hook field is a rectangular field with a bit missing (under the river) and a bit added. The rectangle has four quadrants: NW (T152N-92W); NE (T152N-91W); SE (T151N-91W), and SW (T151N-92W).  The bit added is the northwest quadrant of T150N-92W. In all, Van Hook has exactly 100 sections.  Most of the sections have "long lateral" access to mineral rights under the river.

Based on rig count, the Van Hook may be the one of the most active fields right now. There are six (6) rigs on site in this field, with at least one rig in all quadrants except the southeast quadrant.

Here's the breakdown with comments:

NE (Van Hook Township; 152N-91W): 12 producing wells; 1 rig on site; 2 wells almost complete (#18432, rig off site; 18504, rig off site); and four (4) confidential wells, all multi-well pads. These are all EOG, Slawson and Whiting wells.

NW: 6 producing wells (NR; 1,274; 599; 290; 1,208; 825); 1 rig on site (#18595); 4 confidential wells; #18199 (290 bopd, going north) is on same pad as #17748 (1,208 bopd, going south).  #18407, Slawson, Ripper 1-22H, 2,369 is in this quadrant, still confidential.

SW: 1 producing well (309 bopd); 7 confidential wells, several multi-well pads; 4 rigs on site.

SE (Liberty Township, 151N-91W): 2 wells being drilled (rigs off-site); 2 rigs on site in this quadrant; 2 confidential wells; and four permits (#17992, #18038 and most interesting of all, the "Liberty" wells, #18827 and #18828).  These two (18827/18828 are on the same pad. Permit 18877 is on same pad as 17992. 18884 is new permit, on same pad as 18066, being drilled.The SE quadrant is along the east edge of the river, and the horizontals will start to go under the river in this area.

The addition to the rectangle: 5 confidential wells, 1 rig on site (#18630, Zenergy).

For the wells that I have IP data, EOG unless otherwise indicated (some have been added since original posting:

• 17280, 1,080, EOG, Van Hook 5-11H, s10/08;  t--; cum 371K 9/12; 
• 17349, 929, EOG, Marathon,Voyager 1-28H, t11/08; cum 169K 9/12; 
• 17463, 825 , EOG,  Van Hook 3-24H, t7/09; cum 306K 9/12; 
• 17613, 690, EOG, Van Hook 2-24H, t7/09; cum 385K 9/12;
• 17619, 1,571, EOG, Van Hook 6-14H,  t12/08; cum 438K 9/12;  
• 18220, 846, Slawson, Coyote 1-32H,  t9/09; cum 149K 9/12;
• 18251, 1,390, EOG, Van Hook 100-15H, 20k in first two months, TFS,  t11/09; cum 352K 9/12;
• 18327, 898, Slawson, Tarantula 1-16H, t3/10; cum 131K 9/12;
• 18407, 2,369, Slawson, Ripper 1-22H, t2/10; cum 164K 9/12;
• 18595, 1,131, Slawson, Atlantis Federal 1-34-35H, t7/10; cum 246K 9/12;
  

Ripper is in section 22-152-92, the northwest quadrant of the field. Needless to say, there is a lot of activity in that area right now. The Van Hook 6-14H in the northeast quadrant. The Van Hook 5-11H well was listed as a Van Hook well but is sited just inside the Parshall oil field and is a horizontal entirely within the Parshall. The Voyager 1-28H is a short lateral going directly south in section 28; there is a rig on site at #18495, Voyager 2-28H, but according to the GIS map server, it actually sits inside section 33 just on the south side of section 28. A more proper name would be Voyager 1-33H.

There are no hamlets, villages, or towns in this field; the field is just a few miles south of New Town.

NEWS

August 1, 2010: Spotted Hawk Development bringing excitement to the Van Hook.

May 19, 2010: New permit: #19047, Slawson, Revolver 1-35H.

May 6, 2010: New permit: #19000, Slawson, Goblin 1-26H.

April 30, 2010: [Update: PNC] One  new permits: #18979, EOG, Liberty LR 14-23H. According to this message board, Liberty LR 14-23H is on a 1600-acre spacing unit. This will require a 2.5 mile horizontal lateral. It looks like it will be spudded in late summer/autumn, 2010.


April 29, 2010: Two new permits: #18970, Slawson, Pike Federal 1-3-2H; #18971, EOG, Liberty 09-23H.

April 27, 2010: New permit, #18963, Zenergy, Dakota-3 Spotted Rabbit 14-23H (I guess Zenergy is competing with Slawson for best oil well names).

April 26, 2010: New permit, #18954, Slawson, Nightcrawler 2-17H, SESW 17-152N-91W.

April 6, 2010: Another Liberty well permit: #18884, Liberty 21-12H, SESE 12-151N-91W.

April 1, 2010: Another Liberty well (see March 18, 2010, entry): #18877, Liberty 103-13H, NWNW 13-151N-91W.

March 18, 2010: The EOG Liberty wells on one pad, section 36-151N-91W; interesting nomenclature for the EOG wells.


Updated: partial update, October 19, 2012

Bakken Stories of the Week

Week 15, 2010: April 13 - April 19, 2010

Week 14, 2010: April 6 - April 12, 2010

Week 13, 2010: March 30 - April 5, 2010

Week 12, 2010: March 23 -- March 30, 2010

Week 11, 2010: March 15 -- March 22, 2010

Week 10, 2010: March 7 -- March 14, 2020

Week 9, 2010: February 28, -- March 6, 2010

Activity in Fertile Township, Parshall Oil Field

I opined some time ago that due to bureaucratic red tape inside the Fort Berthold Indian Reservation (FBIR) resulted in about a 2-year delay in bringing the drilling inside the FBIR up to speed. I also opined that it appears 2010 will be the year that drilling in the FBIR will catch up with the rest of the Bakken.

To see how that prediction is playing out, one has only to look at Fertile Township, T151N-90W, entirely within the FBIR, and entirely within the prolific Parshall oil field, "owned" by EOG.

According to the NDIC GIS map server, there are four wells being drilled (two of them almost complete) in Fertile Township. In addition, there are three rigs currently on-site in Fertile Township. Another four (4) wells are on the confidential list, and there are another seven (7) permits yet to be acted upon. In other words, out of 36 sections, there is activity in eleven (11) sections.

EOG has put in as many as three wells in some of the sections in the Wayzetta Township, 153-90, also part of the Parshall field, so it is only logical to assume EOG will do the same in Fertile. EOG has just been granted permit #18800, the second file  number in section 20 of 151-90.  Both of these permits in section 20 have "simple" EOG nomenclature, so I assume they are simply development wells, both going into the Bakken pool. Perhaps one will target the Middle Bakken (MB) and the other will target the Three Forks Sanish, coming from opposite directions.

Fargo and Bismarck With Lowest Unemployment Nationally

This posting will eventually be moved to "I Can't Make This Stuff Up," but it points out how fortunate North Dakotans are.

This was published by the Associated Press on Friday, March 19, 2010: the four cities that best weathered the recession.

The four cities: Buffalo, NY; Rochester, NY; Oklahoma City; and, Mineeapolis.

Why? Because their jobless rate had the smallest increases over the past two years among cities with at least 1 million people.

Minneapolis: jobless rate, only 7.7%. The medical equipment industry in Minneapolis is credited with this "success."

Oklahoma City: jobless rate, only 6.7%. One-fifth (20%) of city's workers are employed by the state or local government. And even during a recession, governments don't cut employees. In addition, Federal stimulus money saved the government's budget and avoid layoffs. That's hardly good news.

Buffalo: jobless rate, 9.2 percent but the reporter says, happily, that Buffalo's "rate is below the national rate of 9.7 percent."  If that isn't ludicrous on its own, the reporter goes on to say that Buffalo was in so much economic trouble before the recession, it couldn't go much lower during the recession: ""Buffalo's jobless rate rose only 2.9 percentage points during the recession."  The dollar's plummet in value also resulted in Canadian shoppers flooding into Buffalo to take advantage of the weak US dollar against the Canadian dollar. In addition, Buffalo diversified out of heavy manufacturing industries (in other words: factories closed) into areas like health care (where wages and salaries are significantly lower for non-college graduates, the majority of workers in the health care system (technical and vocational nurses, receptionists, clerks, orderlies, custodial, laboratory technicians. Even entry level nurses probably earn less than steel workers.).

And finally, Rochester: the jobless rate here only grew 3 percent to only 8.7 percent, again well below Buffalo's 9.2 unemployment rate and the national rate of 9.7 Its economy has also diversified: its largest employer is now the University of Rochester. No, the university did not grow as much as Kodiak, based in that city, shrunk.

These are just the unemployment rates; the reporter did not address underemployment.

The article concludes by saying the unemployment rose in nearly all 372 metropolitan areas in January, but among cities of all sizes, the lowest unemployment rates were in Fargo, ND, and Bismarck, ND, 4.8 and 4.9 percent, respectively.

Biggest Bakken Stories of the Past Week

Week 11, 2010 (Mar 15 - Mar 21, 2010)

1. Price of oil touches $83/bbl before dropping back to $80.

2. Bottineau County getting more press: Sagebrush in the Madison; EOG in the Spearfish.

3. API: February Gasoline Demand Breaks Record

4. BEXP's operational update with three big wells.

5. UN defeats proposal to help save the polar bear.

Overview and Background of the Oil Industry in North Dakota

Overview of the Petroleum Geology of the North Dakota Williston Basin, Thomas J. Heck, Richard D. LeFever, David W. Fischer, Julie LeFever, 1994. This is an excellent summary. Particularly well developed is the discussion of the four (4) cycles of oil exploratory drilling. The current boom is the fifth cycle and is not covered in this history.

Overview of the Bakken, current, North Dakota Geological Survey.

Geo News: North Dakota Department of Mineral Resources, January, 2010, Volume 31, Number 1.

Short history of the Bakken, undated, but appears to be September, 2004, by Julie LeFever. This is an important article since it was published just about the time the Bakken in Montana was reaching its peak and interest was moving to North Dakota Bakken. A great article (as all articles by Ms LeFever are).

*****

If one could turn back time!


If I Could Turn Back Time, Cher

I love the US Navy.

Kuroki Field Update

News

September 24, 2011: new permits (later than 18962) --

• 19062, AB/37, Petro Harvester, Wright 12-12H, Madison; s8/10;t8/10; cum 10K 6/12;
• 19194, PA/23, Petro Harvester, Lodoen 11-8H, Madison; s8/10; t8/10; cum 2K 6/12;
• 19229, AB/1, Petro Harvester, Cameron 1-14, Madison; s9/10; t11/10; cum 27 bbls 6/12;
• 19463, AB/11, Petro Harvester, Cameron 1-12, Madison; s9/10; t11/10; cum 197 bbls 6/12;
• 21279, AB/3, Petro Harvester, Wright 12-10, Madison; t11/11; cum 0 bbls 6/12;

April 27, 2010: #18962AB/55, Sagebrush, Lodoen 11-7H, new permit. [Update: this turned out to be a Madison well; current operator is Petro Harvester Operating Company, LLC; the IP was 55; spacing is unitized; s5/10; t6/10; cum 17K 6/12]


March 24, 2010: New permit granted in Kuroki Field -- PA/59, 18849, Sagebrush, Wright 12-4H, section 12. [Update: this turned out to be a Madison well; current operator is Petro Harvester Operating Company, LLC; the IP was 59; spacing is unitized; s4/10; t5/10; cum 15K 6/12.]

The Kuroki Field

The Kuroki oil field is one of the smallest fields in the Williston Basin; it is comprised of four sections (1, 2, 11, and 12) in township T163N-81R. It is located six miles northwest of West Hope, ND, population 533 in the 2000 census; it is probably a bit more now with the oil crews. The oil field is one mile south of the Canadian border. West Hope is six miles south of the Canadian border and almost directly north of Minot on US-83.

The Kuroki field is in Bottineau County which has become of increasing interest with EOG bringing horizontal/fracking experience from the Canadian side of the border to target the Spearfish formation. 

For being such a small field, it certainly is very active and very interesting.

Go to NDIC's GIS map server. Go to the left sidebar and click on "Find Field/Unit." Type in "Kuroki"; click on "Kuroki" and you will taken to this small field. The first thing you will notice are the chicken feet. There are currently six (6) chicken feet horizontal wells, all of them Sagebrush.

The file numbers, IP, # of toes, status, name of well (Madison wells except for #18764)

18264, AB/75, 5, Cameron 1-11H, 5,778 feet, t11/09; cum 18K 6/12;
17653, AB/160, 5, Cameron 1 HZ; t11/08; cum 29K 6/12;
17752, AB/32, 6, Rosendahl 4, t12/08; cum 19K 6/12;
17695, AB/111, 5, Rosendahl 7, t12/08; cum 33K 6/12;
17563, AB/240, 3, Wright 13-12H, t10/08; cum 38K 6/12;
17611, AB/107, 5, Stavens 1 HZ, t12/08; cum 39K 6/12;
18746, PA/563, CLR, Glinz 1-15H, at the end of the 4th toe of #17653; t7/10; cum 90K 6/12; 

All of these Sagebrush wells (except the CLR Glinz well)  have targeted the Madison formation. In this field, the depth of the Madison is about 3,600 feet, compared to about 9,000 feet in the oil fields back towards Williston and the Montana border.

The second thing you notice about this small oil field is the number of wells that have been drilled here. Outside this field, you have to go many miles to the next field, and it's a long drive to the more prolific Sanish and Parshall fields, but this little, lonely field has had more than 20 wells drilled over the years. Based on the file numbers, some must go back to the 1960's. Of all those wells, only two have been dry. Several old vertical wells are still producing, at least according to the GIS server map. These include file numbers:

1260, a Madison well, t10/56; cum 223K 6/12; 
5367, a Madison well, t11/73; cum 109K 6/12;
5393, a Madison well; t3/74; cum 61K 6/12;
9638, a Madison well; t8/82; cum 5K 6/12; problems with well; 
15464, a Madison well, t11/03; cum 19K 6/12; 
15643, a Madison well; t3/12; cum 16K 6/12;
15754, a Madison well; t7/05; cum 3,416 bbls 6/12; 
16294, a Madison well; t8/06; cum 9,145 bbls 6/12;

It is interesting to note the history of the study of the Madison formation. In a 1981 study out of Utah, the authors stated that because the Madison was so deep and there was so little oil in that formation, the Madison in North Dakota would unlikely be productive.

Fast forward to 1985. In a study published in September, 1985, by the PCO2R Parnership (the federal government's Energy and Environmental Research Center [EERC] and the University of North Dakota), the authors noted:

1. The Madison GSU (aquifer) underlies both the Williston and Powder River Basins. It has the potential to be a significant sequestration unit in the PCOR Partnership region.

2. In the Williston Basin, the Madison is given group status and divided into three formations, which in ascending order are the Lodgepole, Mission Canyon, and the Charles. The Lodgepole and Mission Canyon are carbonates and have porosity; the Charles Formation is dominated by [salts] and lacks permeability.

3. The Madison Group is the primary oil-producing interval in the Williston Basin.  Again, this report was published in 2005.

4. In the Powder River Basin, the Madison is not subdivided, and the equivalent stratigraphic unit is called the Madison limestone. 

Key members of the PCO2R partnership that contributed to this report include Julie A. LeFever, North Dakota Geological Survey; Richard D. LeFever, UND, Geology/Geological Engineering; Lynn D. Helms, North Dakota Industrial Commission; as well as Fischer, Smith, Peck, Sorensen, Steadman and Harju of the EERC.

In Another Life

I apologize. I won't do this often, but it's a Friday night, relatively quiet in the Bakken, and my thoughts begin to wander to a different life:


Great video, great music


Short video clip

In another life:


Highway Fever, Slim Dusty

Finally: The Number of Wells are Increasing

From the McKenzie County Farmer:

In October 1981, the active rig count hit a record high of 146 rigs, and even though the current number is still far from the all-time high, the oil industry is still producing more than those 146 rigs did in 1981.

“From what I hear, we can expect the rig count to increase by 25 percent by late summer [125],” according to Ron Ness, president of the North Dakota Petroleum Council. “Nobody knows how high the rig count will get, but I doubt that we have the infrastructure or manpower to support activity near the all-time high for too long. However, we have to remember that today’s drilling rig does what eight rigs could do back in 1982, does it in one-third of the time and is much safer. Therefore, in terms of drilling wells and productivity, we have already surpassed the 1981 level. The technology is truly amazing.”

For the longest time (about six months) the number of wells coming off confidential status has been in the 45 - 55 / month range.

Finally, in August we will see upwards of 67 wells coming off the confidential list.  Here are the numbers this year, so far:

53 wells came off the confidential list in January, 2010.
55 wells came off the confidential list in February, 2010.
65 wells come off the confidential list in March, 2010.
42 wells come off the confidential list in April, 2010.
49 wells come off the confidential list in May, 2010.
50 wells come off the list in June, 2010.

It has been opined that the increase in wells coming off the confidential list early in 2010 was due to number of EOG wells that would have been reported earlier, but were delayed due to delay in fracking.

54 wells come off the confidential list in July, 2010.

I'm surprised we're not yet seeing a jump in number of wells coming off confidential list. In October, 2009, there were only 56 active rigs; in January, 2010, the number of rigs approached 90 rigs, and yet, the number of wells coming off confidential list in January, 2010, was 54, and the number of wells coming off confidential list in July, 2010, is 49. 

67 wells come off the confidential list in August, 2010.

Finally, we see the jump I have been expecting.

Incidentally, with 265 new permits granted in 2010 (as of March 19, 2010), North Dakota is on track to grant 1240 permits in 2010, well above the 626 granted in 2009, and even the 953 granted in 2008, the best year in the current boom.

Canceled Permits

BEXP canceled a couple of permits today, both in the Alger field, one in section 11 and one in section 5, both T155-N-92W.  Go to the Alger field link to read more about these cancellations; it looks like there is more to the story. We'll probably never know the whole story but something tells me it required adjudication by the NDIC.

This is a cut and paste from my "wells to watch" page because I'm too busy right now to clean it up:

Special Circumstances: the Alger Excitement

18647 (C): Fidelity, Anderson 11-13H 

17392 (C): BEXP, Anderson 1-11H, is in section 11. PERMIT CANCELED, MARCH 19, 2010. WOW, that's an interesting turn of events.  11-155-92.  A companion permit, Olson 5-6-1-H, 5-155-92, was also canceled same day. The Olson 5-6 1-H well was a permit that was originally granted to Lario.

Comment: the reason these two wells are so important -- an entity called the Irish Oil and Gas Company has just paid the equivalent of $4.7 million for 640 acres, by paying $7300/acre for 120 acres in sections 11, 12, and 13, T155N-92W, Alger Field. This is a better-than-average field but not THAT remarkable. What might be going on? For those who do not follow these things, acres in the township north of this location were going for as little as $600/acre (which "in the old days" was a nice price).

18712 (P): Slawson, Athena 1-36H, SESW 36-155N-92W

CLR also canceled a permit: 18661, Rosenquist 1-13H, Hamlet field, Divide County.

Parlor Game #34214: Two New EOG Permits

UPDATES

November 28, 2010: Status of EOG wells in 151-91, Van Hook field updated; see below.

April 1, 2010: Another "Liberty" well; #18877, Liberty 103-13H, NWNW 13-151N-91W.  Liberty is the name of the township.

ORIGINAL POST

It's a quiet news day (for the moment), so I will join the discussion guessing what EOG plans to do with two permits granted yesterday.

The two permits under discussion are in the Van Hook oil field, in a section adjoining the prolific Parshall oil field. The two wells will be on the same pad, 100 feet apart from each other in the northwest quadrant of the northwest quadrant of section 36:

18827, Liberty 10-36H, 36-151N-91W, short lateral
18828, Liberty LR 16-36H, 36-151-91W, long lateral

These two wells will be on the same pad, and will be in the section closest to the river to allow drilling under the river.

April 30, 2010: new permit with "LR" designation -- #18979, EOG, Liberty LR 14-23H; section 23 close enough to river to drill horizontal under it

My opinion: the short lateral will go southwest and remain in section 36. The long lateral will go directly west and drill into sections 34 and 35.

The simple nomenclature for 18827 (10-36H) is shorthand for a "development" well.

I have not seen "LR" before and not sure what it means. Since most, if not all, of the EOG wells in the Parshall to date have been short laterals, I think the "L" in "LR" refers to long lateral. Does the "R" mean under the river? If so, why would that matter? Because #18828 is simple nomenclature (no 100, no 101, etc.) suggests to me this is also considered a development well in the Middle Bakken.

Township T151N-91R is Liberty Township.
Township T152N-91R is Van Hook Township.

Because of the river, there are only twelve (12) sections on which a pad could be placed: 1, 2, 11, 12, 13, 14, 23, 24, 25, 26, 35, and 36. In addition, six (6) additional sections under the river could be reached with long laterals, and it appears section 34 will be the first such section under the river to be reached.

With the two permits under discussion (above), EOG will not be putting a pad on section 35. That leaves eleven (11) pads.

Looking at the GIS map server (and including the two newest permits), EOG has at least one permit in each Section of 151-91 that is not under the river. All are short laterals unless otherwise stated: (current status in red, updated Nov 28, 2010)
Section 1: 18365, 1,379, Liberty 8-01H, s3/10; t7/10; cum 140K 10/11
Section 1:  19122, Liberty 102-01H
Section 2: 18750, 439, Slawson well,
Section 11: 18101, 209, Liberty 2-11H,
Section 12: 18066, 515, Liberty 101-12H, 
Section 12: 18884, 625, Liberty 23-12, 

Section 12: 99188 (natural gas or SWD)

Section 13: 17992, 711, Liberty 4-13H, 
Section 13: 18877, Liberty 103-13H, 541
Section 14: 19231, Liberty LR 13-14H
Section 14: 19802, 1,215, EOG, Liberty LR 18-14H
Section 14: 19210, Liberty 3-14H, nearly complete
Section 23: 19720, 510, Liberty LR 13-23H 
Seciton 23, 18979, 894, Liberty LR 14-23H
Section 23: 19721, 1,063, Liberty LR 19-23H, s10/10; t3/11; cum 110K 10/11
Section 23: 18971, 894, Liberty 09-23H, plugged or producing
Section 24: 18038, 806, Liberty 5-24H, plugged or producing
Section 25: 17997, Liberty 6-24H, 1,191; s1/10; t5/10; cum 138K 10/11
Section 26: 18065, short lateral, Liberty 100-26H, 369
Section 26: 19360, PNC, Liberty LR 15-26H
Section 35 18827, 732, short lateral, Liberty 10-36H; s6/10; t2/11; cum 120K 10/11
Section 36: 18828, 1,066, long lateral -- 34/35, under the river, Liberty LR 16-36H; s8/10; t2/11; cum 124K 10/11,

Section 36: 19919, Liberty LR 21-36H
Opinion: look for permits in sections 14 and 23 to be long laterals, with names: Liberty LR XX-14H and Liberty LR XX-23H, unless the acreage belongs to someone other than EOG (e.g., Slawson).

Now switching gears (this has nothing to do with drilling under the river in the Van Hook/Parshall fields):

Look at the December 17, 2009, docket, specifically case 11939, a request for 99 more wells.  EOG requested that the Van Hook or the Parshall pool be extended by a total of 33 more sections. In 151-91, EOG wanted to add sections 9, 16, 21 - 28, 34 - 36, a total of 13 more sections, which are all under the river. In addition, EOG wanted to drill up to three (3) wells in each of these sections with 640-acre unit spacing.  Again, I have opined that the "three" refers to three formations: the Middle Bakken, the Upper TFS, and the Lower TFS; more likely, now, two into the middle Bakken and one into the TFS.


Case No. 11939, Dec 17, 2009:   Application of EOG Resources, Inc. for an order extending the field boundaries for the Parshall or Van Hook-Bakken Pool to include the following lands: Sections 12, 13, 19, 20, 21, 22, 23, 24, 25, 26, 27, 28, 29, 30, 31, 32, 33, 34, 35 and 36, T.151N., R.90W.; Sections 9, 16, 21, 22, 23, 24, 25, 26, 27, 28, 34, 35 and 36, T.151N., R.91W., Mountrail County, ND; further amending the field rules to allow the drilling of up to three horizontal wells for each 640-acre spacing unit on the following lands: Sections 1 through 36, T.151N., R.90W.; Sections 1 through 36, T.152N., R.90W.; Sections 1, 2, 3, 4, 5, 6, 8, 9, 10, 11, 12, 13, 14, 15, 16, 17, and 19 through 36, T.153N., R.90W., Sections 1 through 36, T.154N., R.90W.; Sections 25, 26, 27, 28, 31, 32, 33, 34, 35, and 36, T.155N., R.90W.; Sections 1, 10, 11, 12, 13, 14, 15, 23, 24, 25, 26, and 36, T.151N., R.91W., Sections 1, 2, 11, 12, 13, 14, 15, 22, 23, 24, 25, 26, 35, and 36, T.152N., R.91W.; Sections 5, 6, 7, 8, 17, 18, 19, 20, 29, 30, 31, and 32, T.153N., R.89W., Mountrail County, ND, and further redefining the pool limits for the Parshall-Bakken Pool and such other relief as is appropriate.

API: February Gasoline Demand Broke Records

I missed this (reported yesterday, March 17, 2010): The American Petroleum Institute says that the US demand for gasoline broke records in February.

I thought the winter storms had brought everything to a halt. I clearly remember hearing that the continuing high unemployment numbers were because of all the people that lost their jobs due to the winter storms in February.

But there it is: the API says that the US demand for gasoline broke records in February, and it was not by a small margin. It was significant.

And they say this is the worst recession ever for the US. My heart goes out for those who are unemployed or underemployed and looking for employment or better employment, but from a macro-economic point of view, this simply does not make sense. To be told this is the worse recession in US history and then learn the US demand for gasoline in February broke records a) when gasoline prices were high; and, b) when storms put everyone out of work, makes no sense whatsoever.

The entire article is very bullish for oil.

EOG and the Niobrara

Someone came to this site looking to see where EOG is drilling its Niobrara wells. EOG is drilling the Niobrara in northern Colorado, but EOG will not release additional information according to this story. It's been about a month since that story ran so there are probably some people in northern Colorado who can shed more light on this. Other than these occasional snippets, this blog will remain focused on the North Dakota oil industry. I do touch on the Niobrara occasionally and have a link in the sidebar on the right.

I Can't Make This Stuff Up

After all the hype about global warming bringing the polar bear closer to extinction, the UN defeated a proposal to ban the international trade of polar bear skins, teeth, and claws, saying that such a ban would impact the economies of indigenous people. Enuf said.

See more at "I Can't Make This Stuff Up."

(Yes, it's a slow moment in the Bakken.)

Beautiful Bakken Drive in North Dakota

When I get a free moment, I want to write a bit about one of the prettiest drives in the world: state highway 23 from New Town, ND, to Watford City, ND.  (This posting may be a bit disjointed; I've added bits and pieces during free moments.)

You can start the day in "the" casino and then drive west through some of the best Bakken country in North Dakota and have dinner in one of the nicest restaurants in North Dakota.

I don't know how fast I will get back to update this note, so I at least want to include one link.

If you live in Williston, you can take state highway 1804 east to New Town, and then return via "23" and Watford City.

This is the link to the restaurant in Watford City.  This is "Outlaws," the most interesting, exciting restaurant in the Bakken. The restaurant is inside a building complex that seems to take up a city block; it is certainly the largest structure in downtown Watford. The restaurant is part of a bank-movie theater-show-hall-restaurant complex. The link to the bank is here. This link will take you to a "Google satellite" picture of the complex. It's worth the drive from Williston.

The Route from New Town to Watford City

Briefly, you will drive over the newest bridge in North Dakota, crossing from the east (New Town side of the river) and driving west towards the "casino" and Four Bears village. On the New Town side of the river you will be in the Big Bend oil field.

If it's late afternoon and a clear summer day, you are in for a real treat heading into the west, watching the changing horizon of pink clouds and blue skies.

From Four Bears Casino, you will continue west through Four Bears oil field on state highway 23, and into Antelope oil field. Shortly after entering Antelope field you will turn south toward Keene, staying on highway 23. Going south you will enter Spotted Horn oil field from the north and exit Spotted Horn by turning right (west) toward Watford City. (You will come to an intersection but the county road continuing south will alert you to fact you need to turn east or west. Turn west.)

From Spotted Horn oil field you will drive through Blue Buttes oil field, Johnson Corner oil field, Pershing oil field, and finally Siverston field before entering the town of Watford City. Interestingly enough, Watford City, surrounded by oil fields, is not yet situated in a named field. I bet that changes before the current boom is over.

Reuters on the Bakken and the Niobrara

This is an interesting article from Reuters. This is nothing new; everyone following this blog is well aware of all the details in that article, but it is interesting to see the "play" it is getting in Reuters. Notice the journalist's comments on BEXP and KOG.

Bakken/Three Forks Pool

I assume this is not the first time that a well coming off the confidential list in North Dakota has reported the pool as "Bakken/Three Forks."  But, with the Everglades 11-3H coming off the confidential list today, this is the first time I noted this.

I have talked about this elsewhere, but the USGS and the NDIC has historically considered the "Bakken Pool" an administrative term including all geologic formations within the Bakken formation and the Three Forks formation.

On the other hand, the geologists, the drillers, and the producers, study the specific oil-producing formations. In the "Bakken" pool there are five formations: the Upper Bakken, the Middle Bakken, the Lower Bakken, the Upper Three Forks Sanish, and the Lower Three Forks Sanish.

Until recently, I  had noted "Bakken Pool" when wells came off the confidential list under the "Pool" heading.

But with file #18210, Everglades 11-3H, a Burlington Resources well in the Keene field, we now see the pool designation as "BAKKEN/THREE FORKS."  Perforations occurred all the way from 10,530 feet to 20,765 feet.

This whole issue of pool designation and multiple laterals from one site will continue to evolve.

Utility Bills to Rise Significantly In Los Angeles for "Green Energy"

At a time when natural gas could not get much less expensive and at a time when North America seems to be drowning in natural gas supplies, the folks in Los Angeles will see their utility bills rise 8% to 28% to pay for the increased costs of using "green energy": wind and solar.

On my "old" blog I had a whole section devoted to this topic but it detracted from my main interest (the Bakken), so I got rid of it. But at that "old" blog it was pointed out numerous times that utility bills would rise about 25% for the opportunity to "go green."

For comparison purposes, a unit of energy provided by coal costs about six (6) cents; that same unit of energy costs about 30 cents for solar energy.  Natural gas, to provide for that same amount of energy, would cost about ten (10) cents. Due to the vagaries of wind generation, it is very difficult to determine the cost of providing "wind-generated" energy, but folks in Los Angeles will get a chance to figure it out.

MDU/Fidelity Announces Acreage Purchases: Bakken, Niobrara, Green River Basin

Fidelity (a subsidiary of MDU) is acquiring acreage in the Bakken, the Niobrara and Green River Basin. The Bakken acquisition results in an additional 40,000 net acres, increasing their total Bakken pool to 56,000 net acres. The Niobrara deal will result in an additional 27,000 acres.

The Bakken acreage is in western North Dakota; approximately 40,000 net acres with the Three Forks Sanish play as the primary target.

The Niobrara is an emerging oil shale play located in southeastern Wyoming and north-central Colorado.

The Green River Basin is in southwestern Wyoming. This is a natural gas play. MDU is the largest natural gas producer in Montana.


You can find full press releases at the MDU web site.

EOG Nomenclature

EOG appears to have at least seven (7) series of wells in the Parshall field in North Dakota: the 100 series, the 101 series, the 102 series, the 108 series, the 111 series, the 129 series, and the 142 series.  Maybe they are not "series" of wells, but simply some type of chronological numbering system. And maybe they are just there to confuse us.

More to follow as "we" begin to sort this out.

More hints:

April 30, 2010: Another Liberty "LR" well, #18979, EOG, Liberty LR 14-23H ("R" under the river?)

March 18, 2010: EOG has a new abbreviation ("LR")  for one of its wells in the Van Hook -- Liberty LR 16-36H.

It appears every "simple" named well in the Parshall for EOG, is a development well, such as Van Hook 8-36H, or Liberty 10-36H.  Within the same township (151-91) EOG has two names for their wells, "Van Hook" and "Liberty." Are they targeting different formations?

Examples
Examples of 108, 111, 129, and 142
18767, EOG, Wayzetta 108-08H, Mar 3, 2010
18807, EOG. Wayzetta 111-30H, Mar 15, 2010
18808, EOG, Wayzetta 142-30H, Mar 15, 2010
18850, EOG, Wayzetta 129-08H
Note: 18807 and 18808 are in same section but with different series, 111 and 142. Likewise, 18767 and 18850 are in same section (8) but one has a 108 number and the other a 129 number. My understanding was that producers had to number their wells chronologically but I can't believe there are going to be 142 wells in Wayzetta.

BEXP With Operational Update

In a press release today, BEXP announces that it has purchased 10,000 net acres in the Rough Rider Project Area. The RRPA is in the area north and west of Williston and going into Montana. The CEO says that he expects BEXP to purchase additional acreage.

BEXP also announced three "additional high initial rate completions."

18547, Jerome Anderson 15-10 #1H, Ross project area, 3,115, Alger Field, 30 frac stages
18522, Papineau Trust 17-20 #1H, RRPA, 3,042, 29 frac stages
18456, Kalil 25-36 #1H, RRPA, 1,586, 30 frac stages

BEXP says it "has  now completed 16 consecutive long lateral high frac stage Bakken and Three Forks wells with an average 24 hour peak rate of approximately 2,417 boepd."

The Jerome Anderson: highest IP for BEXP in the Ross area

The Papineau well: first BEXP well in McKenzie with more than 19 frac stages

Going to 30 stages from 19 stages has significantly increased IPs (61% in the Papineau-over-Figaro comparison). What was left unsaid was the significant decline rate in Bakken wells after the initial month of production. 

Additional Acreage

The "additional acreage adds over 23 net potential Bakken drilling locations assuming 1280-acre spacing and 3 wells per spacing unit....BEXP plans to drill its first operated Rough Rider Three Forks well during the second quarter of 2010, and, if successful....adds over 23 net potential Three Forks locations to BEXP's inventory."

The 10,000 acre-purchase could mean 46 more wells, half in the Middle Bakken and half in the Three Forks Sanish.

To see the press release, go to BEXP news release page and click on press releases.

Biggest Bakken Stories of the Past Week

Week 10, 2010 (Mar 7 - Mar 14, 2010)

1. We're starting to see more Dakota Candles and Orion Belts: multiple-well sites.

2. We hit a new record in number of active rigs in North Dakota: 104 on March 12 2010.

3. North Dakota puts forth plan to draw water from Missouri River for fracking.

4. More stories on horizontal drilling in the Spearfish formation. EOG is bringing their Canadian experience targeting the Spearfish to Bottineau County in North Dakota.

5. Slawson and NOG announce another test to see if Bakken and TFS communicate.

6. American Oil and Gas (AEZ) sold all its holdings in the Powder River Basin, Wyoming, to become a pure play in the Bakken.

7. North Dakota stomps California in honey production. North Dakota retains its number one position; South Dakota leaps to second place, pushing California to third.

8. The Birdbear formation gets acknowledged as another oil producing target in this boom.

9. March 8, 2010: the century mark! 100 active rigs in North Dakota.

10. February state lease sale second highest in history.

.... and, of course, folks could begin ordering the Apple iPad for home delivery, April 3, 2010.

DKRW and North American Natural Gas Shortage

September 1, 2010: I have not heard back from DKRW after asking about their outlook for natural gas which is the first thing one sees on their home page:

"The most conservative estimates of North American natural gas supply demonstrate a serious shortfall in production for the foreseeable future. With short supply driving prices higher, we are now seeing some of the highest natural gas prices in the world here in the Southwestern United States and Mexico. With so much of our energy infrastructure and industry tied directly to natural gas, it is necessary to identify and deliver more competitive supply options in order for the US and Mexican economies to grow."

Fact: "we" are swimming in natural gas, more is being found every day, and price of natural gas is at or near historic lows.

March 21, 2010: Update: I have not heard back from DKRW after asking about their outlook for natural gas which is the first thing one sees on their home page:

"The most conservative estimates of North American natural gas supply demonstrate a serious shortfall in production for the foreseeable future. With short supply driving prices higher, we are now seeing some of the highest natural gas prices in the world here in the Southwestern United States and Mexico. With so much of our energy infrastructure and industry tied directly to natural gas, it is necessary to identify and deliver more competitive supply options in order for the US and Mexican economies to grow."

March 16, 2010: I sent my inquiry to DKRW on March 15, 2010. On that same date they acknowledged receipt; to date no response.

*****

Is it just me or do others find this opening statement at their home page by DKRW confusing, or worse?

"The most conservative estimates of North American natural gas supply demonstrate a serious shortfall in production for the foreseeable future. With short supply driving prices higher, we are now seeing some of the highest natural gas prices in the world here in the Southwestern United States ..."

Everything I read suggests just the opposite, specifically: North America is swimming in natural gas; and, the price of natural gas continues to deteriorate.

Just after I posted the above, I came across this link: energy companies moving away from natural gas.

Clear Water Field Update

 News

April 27, 2010: #18961, EOG, Kandiyohi 5-30H, new permit.

April 14, 2020: Perhaps this is a non-story, that EOG is simply going to apply for a new lease with slightly different parameters. But on the other hand, the Clearwater has not been stellar and maybe EOG's cancellation of Clearwater 11-18H, #18597, suggests EOG issues with the Clearwater.

March 21, 2010: The Bakken pool (Bakken/Three Forks Sanish) is the play in Clear Water field, but it should be noted that the field, "owned" by EOG along with some Hess wells, is relatively close to Bottineau County where there is a huge interest in the Spearfish formation. 

March 20, 2010: Sidonia Township (T158N-90W) Update; also see comment section at that same link for update on Clear Water Township (T157N-90W update.

Permits
2015
30592, loc, EOG, Sidonia 56-2932H,
30591, loc, EOG, Sidonia 110-2932H,
30589, loc, EOG, Sidonia 104-2932H,
30588, loc, EOG, Sidonia 105-2932H,
30587, loc, EOG, Sidonia 52-2932H,
30586, loc, EOG, Sidonia 53-2932H,

2014
None

2013
None

2012
22932, 334, EOG, Redmond 28-2917, t4/13; cum 152K 11/14;
22931, 142, EOG, Redmond 27-2932H, t4/14; cum 157K 11/14;
22208, 823, EOG, Sidonia 45-0409H, t8/12; cum 114K 11/14;

2011
21430, EOG,
21362, Hunt
21171,
20972, Petro-Hunt,
20873, Hess,
20836, Hess
20598, EOG,
20471, EOG,
20448, EOG,
20445, EOG,
20440, EOG,
20432, EOG,
20430, EOG,

 

Clear Water Field

The Clear Water field is another interesting field due to its location. It is about as far east and as far north in the North Dakota Bakken that has been found to be productive. And, again, it appears that it was EOG who quietly but aggressively went into the area signing a huge number of leases in late 2009. I was so surprised how quickly and aggressively EOG moved into this area, that I put most of these wells on my "Wells to Watch" list. For that same reason, I posted a pretty good summary of what was going on in the Sidonia Township (Clear Water field) on February 21, 2010.

To date, based on IPs, the wells have not been exciting. Certainly these IPs, in the 400 bbl range, are nothing compared to the EOG wells in the Parshall, where 1,000 bbl-IPs were the norm.

The Clear Water field is also referred to as the "Corridor 50" because ND State Highway 50 runs east-west through the northern boundary of the field.  The Clear Water is immediately north of the small town of Palermo (although Palermo itself is inside the Ross oil field).

The Clear Water is a relatively small field, composed of two townships, and about half of a third township. The townships, south to north are: Clearwater (157-90); Sidonia (158-90); Kandiyohi (159-90). In addition, there are eleven and twelve sections respectively in 157-89, and 158-89.

After getting those permits and signing those leases, EOG has quickly moved into the Clear Water. Two new wells are almost complete -- the big rigs have been moved off -- and there are currently five rigs on site inside the Clear Water (March 15 ,2010), as well as a sixth rig, a wildcat, just on the north edge of the Clear Water field (20-159-90).

There are about 27 new permits. There are ten (10) producing wells, two of those are long laterals, and eight are short laterals. With a few exceptions, there is a permit/well in every section of the Clear Water. The exceptions are in the far north and the east. 

Something else to put into perspective: EOG's activity in the Clear Water field is 25 miles directly south of their (EOG) Bottineau wells and their (EOG) wells in southwest Manitoba where EOG is going horizontally into the Spearfish formation.

Going forward, the Bakken Shale Discussion Group might follow this activity at this thread.