Chinese Oil Industry Asset Acquisition Has Been Intense

I have been watching the Chinese oil companies acquire oil assets this past year. I have some strong feelings about how I see the US president approach our energy needs and how the Chinese seem to approach their energy needs but because I am often accused of being too political in some of my comments, I won't say anything more.

This is an interesting, and objective, analysis of what the Chinese have done this past year.

Okay, I couldn't resist.

A New Denbury Presentation

For those interested, here's a webcast/iPodcast for Denbury which recently acquired Encore.

The presentation starts out with this note: Denbury is not "big" in the shale oil/natural gas business. It picked up a bit of shale oil in the Bakken with its acquisition of Encore, but its core competency is enhanced oil recovery (EOR).

It's a 30-minute presentation, but what I do is listen to this in the background while a) surfing the net; b) updating my blog; c) answering National Geographic questions that my six-year-old granddaughter asks; and, d) watching the US Open either on television or on the internet.

Another article on same topic, June 29, 2010:

CO2 enhanced oil recovery is a strategy that has already been used to stem Wyoming’s decades-long oil production slide and created hundreds of new jobs in the state. The largest such project is Anadarko Petroleum’s CO2 project at the historic Salt Creek field north of Casper.

George Peridas, a scientist at the Natural Resource Defense Council’s Climate Center, is an advocate because of the many environmental benefits: There’s a net gain in curbing CO2 emissions, and the industry doesn’t have to drill in new and sensitive areas offshore or onshore.

But convincing the oil industry to support climate change legislation for the benefit of enhanced oil recovery is a hard sell.

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BEXP With New Corporate Presentation: Accelerates Drilling Program

BEXP has a new corporate presentation.  (Note: the abbreviation on slide 3, "HBP," stands for "held by production." A lease is generally good for three-to-five years; if no wells are drilled, or if wells are dry, the leases expire at the end of the stated period. However, if there is production from a well affected by a certain lease, the terms of that lease last as long as the well is productive.)

I went through the slides pretty quickly and will look at them more closely later on.  However, two things jump out me, both on slide 9 (of 35 slides).

On slide 9, BEXP says it will accelerate its drilling program by doubling the number of rigs it has in the Bakken. BEXP said it added a rig in May, 2010, and would add another rig every four (4) months after that. The slide then shows how this will accelerate their drilling program.

The second thing that jumps out at you, again on the same slide: even with a doubling of rigs (up to eight rigs), BEXP will still be drilling wells in the Bakken through 2020 -- that's ten years from now! That jibes with the "Basic Analysis of the Bakken," in which the authors state it will take until 2030 to complete all the drilling. Slide 5 of the BEXP presentation says its wells have an economic lifespan of 35 to 39 years. 

It should be noted that this "analysis" was for the Bakken formation only, and did not include other formations.

I know I am way too optimistic about all this, but unless one thinks "we" will no longer be using oil in the near future, I feel more and more strongly that one could put together a very good portfolio to last a lifetime focusing on companies in the Bakken. "Legacy" wells keep producing -- for how long, we don't yet know; and, there is one-to-two decades of drilling yet.

Some wells drilled decades ago continue to produce, which I assume will also be true for some Bakken wells. A "monster well," the Dinsdale well was drilled in 1996 and is still producing as just one example.

MDU and the Nation's Electrical Transmission Grid

This month's issue (July, 2010) of National Geographic has a great overview of the nation's electricity grid. There is a fold-out of the North America (US and Canadian) grid which is very, very  interesting. Two things jump out at you from right away if you are from North Dakota:

• one of the very few conglomerations of power plants on the Great Plains is centered around Bismarck; and,
• there are only four long-distance DC lines in the US: two of them from Bismarck to Minnesota (one to Duluth; one to Minneapolis); and, two from out-of-state to California

According to the National Geographic, only 1.9% of all transmission lines in North America carry DC, and two of those transmission lines, as noted, begin in/near Bismarck.

The Oregon-southern California DC link is the largest single transmission line in the US.

The fourth DC line is from Utah to southern California.

DC is more expensive (apparently) to generate but it loses less power over long distances than AC.  DC is therefore used for long-distance (>400 miles) transmission.

I've been hard on MDU on this blog with regard to success of their oil exploration and production arm (Fidelity) in the Bakken, but I have to admit, the conglomeration of power plants around Bismarck tells another part of the MDU story. MDU is also invested with power plants in the upper northwest (Oregon/Washington), another area with a number of power plants.

I can't find a good link on the internet to show the grid highlighting the DC lines, etc., so if you can, check out this month's issue of National Geographic. The foldout will be easy to find.  [Well, that wasn't hard to find: here's one interactive link to America's power grid.]

When (and if) the economy ever recovers, MDU should do very, very well. For a long-term investor, this might be a good time to start

Optimized for 27" iMac

I don't have the 27-inch iMac so whenever I'm near an Apple store I pop in and do two things: 1) view my blog on a 27-inch iMac; and, b) put the blog bookmark in the toolbar for the next lucky customer. 

But it is incredible how impressive a website looks on the Apple 27-inch iMac. Absolutely incredible. 

I'm at the Boylston Street Apple store in Boston today.

OAS Cancels Two Permits, Gets a New One

I'm only posting this because OAS is in the news with its recent IPO.

In yesterday's (June 18, 2010) daily activity report, it was noted that OAS canceled two permits:

• 18914, Ellis 5602 42-8H, Williams County, SESW 8-156N-102W
• 18915, Somerset 5602 42-8H, Williams County, SESW 8-156N-102W

Based on the legal description, these two wells would have sat on the same pad. Often a cancellation doesn't mean anything. The operator still controls the acreage and may have plans to seek a new permit with new parameters (different pay zone, slightly different drilling location, etc). These wells would have been wildcats but they were just east of the Bull Butte field (according to the GIS map server) where BEXP has reported a good well. (The permits said they were in Bull Butte field.)

and was granted a new one:

• 19152, Mountrail County, wildcat, Hagen 5792 44-31H, SESE 31-157N-92W

This one is permitted as a wildcat but it sits in a section that is bordered by three fields: the Sorkness, the Cottonwood, and the Alger. I know nothing about the Sorkness (a small field with five producers and two confidential wells). The Cottonwood has not been all that impressive, though the south end (where this well sits) has been better than the north end; and the  Alger, which has had some good wells. If it produces oil, the Cottonwood field would probably be extended to include this section, as well as section 30, just north.

Samson With Another Permit

For all my Australian readers: Samson was granted another permit in the North Dakota (USA) Bakken: #19149, Hanson 17-20-163-98H, in the Blooming Prairie field. This is the fourth permit Samson has in this field. Although their first well in this field reported a lackluster 75 bopd as an initial production number, Samson must feel optimistic about this area to continue with permitting.