Friday, July 16, 2010

Global Warming and Flooding Not Fair and Balanced

Scientists discover that global warming is causing an uneven effect of flooding around the world. Scientists find that sea-level increases may be worse in some areas than others.

It turns out that those places closer to the ocean are more likely to flood.

I can't make this stuff up.

Where Is Price of Oil Headed?

Idle rambling on a quiet Friday night.

From one analyst:
We remain positively biased towards energy supply and demand fundamentals (i.e., oil prices trending higher).

Let me start first with demand side. As you know from our past discussions, our primary focus on the demand side has been growing demand from the developing nations in the world, China and India in particular, as opposed to the developed or OECD nations. In fact, we have predicted for some time now that we would see flat if not declining demand in the OECD nations of the world, certainly Europe and the United States, and that has generally been the case. So, while we have to take concerns about the US economy and now the European economy into consideration, we think global energy demand will continue to grow given the inexorable link between global GDP growth and energy demand growth.

On the supply side, we actually view the supply challenges, and decline rates in particular, as a more compelling factor than the growth in demand. Decline rates in the Gulf of Mexico, especially deepwater, are very high, on the order of 30 to 40% (and even greater in some instances) post peak production. Globally decline rates are in excess of 6% per year, which means the world has to bring online roughly 5 million barrels a day of new production every year simply to keep supply flat. In addition, the recent incident in the Gulf of Mexico is another example of the existing the supply challenges and more evidence that the era of cheap, easy to access oil is truly over.

On a specific note, one of the interesting dynamics at play today is that the deepwater Gulf of Mexico represents a very important part of US domestic production. 
Does the comment on the horrific decline rate remind you of, say, the Bakken?

Deep Water Drilling Disease -- Contagious

Now it's the European Union that might place a moratorium on deep water drilling.

This whole deep water drilling thing is getting contagious.

Let's see what that does to the price of oil.

On a day the market took a huge beating (down 2.5%) EEP was up over 1%. I didn't check, but I assume most of the oil companies followed the market down, along with the price of oil. If so, another buying opportunity to accumulate shares in some good companies.

Update On Stark County Wells (North Dakota/USA)

Update

Status of permits for wells in Stark County from 2009

Original Post

Three more permits for Stark County wells were issued today, two for Fidelity and one for Oil For America. I associate Stark County with Lodgepole wells. Fidelity is a subsidiary/division of MDU.

(Note: the Lodgepole formation is part of the Madison group. The Madison group has produced the most oil in the state of North Dakota since discovery of the Williston Basin.)

So, here's where we stand with regard to Stark County, North Dakota (USA) wells (updated January 20, 2012), for a map of some of these wells, click here:
  • 19264, 595, Fidelity, Kostelecky 31-6H, 6-139-97, Heart River, s10/10; t2/11; cum 48K 11/11
  • 19275, 193, Fidelity, Wock 14-11H, 11-140-97, wildcat, s12/10; t5/11; cum 40K 11/11
  • 19277, 118, Fidelity, Oukrop 34-34H, 34-139-97, wildcat, s11/10; t2/11; cum 17K 11/11
  • 19258, IA,  For America, Zastoupil 22-1, 22-139-97, wildcat
  • 19272, SI,  Oil For America, Wolf 29-1, 29-139-95, wildcat
  • 19337, 772, Whiting, Mann21-18TFH, 18-140-99, North Creek, s8/10; t12/10; cum 54K 11/11
  • 19415, PNC, Wesco, Gruman 41-18, Eland, 18-139-96, Lodgepole
  • 19444, 3,106, Whiting, Hecker 21-18TFH, 18-140-99, Bell, s11/10; t3/11; cum 186K 11/11; F
  • 19562, 412, Whiting/Tracker, Brueni 28-1H, 28-140-98, Green River, s10/10; t3/11; cum 44K 11/11
  • 19601, DRL, Oil For America, Wieglenda 23-1, 23-139-96, wildcat
  • 19623, 1,057, Whiting, Obrigewitch 21-17TFH, 17-140-99, Bell, s11/10; t4/11; cum 153K 11/11
  • 18833, 1,832, Whiting, Froehlich 44-9TFH, 9-139-99, Zenith, s5/10; t9/10; cum 123K 11/11
We have four that look like Bakken wells (the "H" designation means "horizontal" wells), four that might be conventional (vertical) Lodgepole wells, and four that will target the Three Forks Sanish.

The city of Dickinson is partly in T140N-96W; the Patterson oil field is on the southwest side of Dickinson, T139-96W.  The Whiting well (Froehlich 44-99TFH) is the farthest west of these six wells, just southeast of Belfield where there has been a history of conventional wells over the years, but nothing recent.

Fidelity has been relatively quiet in the Bakken, so this sudden interest in the Dickinson area is interesting. It will be fun to follow.
Update

April 28, 2011: Due to mechanical difficulties at the Obrigewitch 21-17TFH, Whiting believes that only one or two frac stages of the well’s total 16 frac stages are contributing to current production. Despite these difficulties, the Obrigewitch well was completed flowing 1,189 BOE per day. Whiting holds a 96% working interest and a 77% net revenue interest in the well.

October 1, 2010: Tyler Formation in the Dickinson area drawing interest.

Sue Arizona; Deploy Troops in California: I Can't Make This Stuff Up

The administration will sue Arizona because it's new immigration law is seen as "profiling." California is boycotting Arizona over this law.

Meanwhile, the California governor is sending National Guard troops to the California/Mexican border due to broken immigration policies and programs.
The governor will order 224 California National Guard troops to the border with Mexico, fulfilling an earlier commitment to the president.

In May, the president launched a plan to deploy 1,200 National Guard troops to the southwest border, alarmed by a tide of smuggled drugs and immigrants and pummeled politically over illegal immigration.
Schwarzenegger earlier pledged California’s full cooperation with federal initiatives to secure the border and attack the narcotics trade.
The cover of "narcotics trade" makes this more palatable, I guess, to his support base. I assume the National Guard will not use any profiling while watching the border.

I can't make this stuff up.


Cruisin', Michael Nesmith -- yes, there is a tie-in to Arizona (but it's a stretch)

UPDATES

July 20, 2010: The US Forest Service classifies illegal aliens as displaced foreign travelers. I can't make this stuff up.

July 19, 2010: It appears the Palestinian-like suicide bombing across the border from El Paso, TX, has gotten the administration's attention. The administration will send in 1,000 National Guard troops, more than half of them going to the "volatile" Arizona-Mexican border. The administration has said it will sue Arizona's new immigration law which it says promotes profiling. I assume the National Guard will not be involved in profiling while protecting the border. Let's see: walking down the road is a shirtless male and driving down the road is a cowboy-hat wearing driver of a late model SUV along the border: who would you think most likely to be a misplaced foreign traveler.

July 17, 2010:  Once we have the first gang-related, drug-related, illegal-alien, explosive-laden vehicle blown up on our side of the border, the immigration issue is going to become "front and center" from here on out. Walking through airport security will be like a walk in the park compared to the security we will see at malls, post offices, police departments, and federal buildings in states along the border. More on that story here. Juarez is across the border from El Paso.

July 16, 2010, 11:20 p.m. EST: I posted the above note late in the afternoon on Friday, July 16, 2010. At 11:15 p.m. the same evening I checked the LA Times.com and this article appeared as the headline story: five other states are considering laws almost identical to the Arizona law. The five states are South Carolina, Pennsylvania, Minnesota, Rhode Island and Michigan. Minnesota is about as liberal as one gets, and certainly a few miles away from Mexico. Unless Minnesota is concerned about Canadians. If so, so much for profiling. I can't tell an American-Scandinavian apart from a Canadian-Scandinavian, except perhaps for the ubiquitous "eh?"

California Unemployment Down to 12.3%!

Yup, that's the headline: unemployment dropped slightly in California. From 12.4% the month before. I doubt the 0.1% is reproducible.

The bigger story is how long this misery has lasted in California: the unemployment rate for the state was 11.9% one year ago.

Last month the state lost another 27,600 jobs and jobless benefits for 400,000 unemployed ran out.

No end in sight.

But the administration says a) no one in the White House is satisfied with the nation's continuing employment situation; and, b) the White House has gotten us out of the mess it was confronted with when it came into office.

The unemployment rate has gotten worse since the election.

No end of denial.

Speaking of California. Here's Steve Jobs' answer to question about ATT improving its nationwide cellular neywork:
...when AT&T wants to add a cell tower in Texas, it takes about three weeks... when they want to add one in SF, it takes three years. That's the single biggest problem they're having. They're spending a lot expanding their networks, and our data rates are way better on the iPhone 4, but AT&T has to expand its network, and that's a long process. I know because we're constantly asking about it. They're trying really hard, and sometimes I think they should enlist the support of the users in the community. 
Amen.

Meanwhile, the President is on his seventh (7th) vacation in less than two (2) years, and has spent more than 200 hours [41 rounds] on the golf course.

The presidential tag line in all his speeches: "I will never stop working for you."

It is what it is.

Investor Comment: Market Down 2%; Opportunity to Accumulate

The market is down 2%. The "big boys" always look for opportunities to take profits and the "banking" news was that signal to take profits.

But it's a stock picker's market and some sectors continue to roll.

Re-Look at Bakken / TFS Definitions

It's a quiet day in the Bakken oil patch (July 16, 2010).

For newbies, you may find the commentary on the definition of the "Bakken Pool" and the Bakken and Three Forks formations of interest. It has some minor updates but nothing that seasoned viewers would be interested in.

A Re-Look at Crazy Numbers

It's a quiet Friday morning, July 16, 2010, in the Bakken oil patch.

For newbies, you might want to take a look at a commentary I posted some time ago regarding the "crazy numbers" in the Bakken.

My hunch in that commentary is validated by all the infill wells that Whiting will be placing in the Sanish, with most sections having four laterals, some with five, and it's even possible, some sections might have six laterals, at least to a very small degree. 

For those who have read it, I have added a couple of paragraphs regarding CLR's Bice 1-29H and Bice 2-29H testing communication between the Middle Bakken and the Three Forks Sanish (old news, but important). There is so much data out there, some of it is easy to be overlooked. In this case, everyone was excited to see that the two wells did not affect each other, but I had not paid attention to the fact that the second well, the Bakken well, produced 70 percent more oil in its first 21 days compared to the first Bice well, the Three Forks well. I like to think that part of the increase was due to better technology or a different process (more fracking stages) or understanding of the field.


August 21, 2010: update on the Bice wells.

Lodgepole: Idle Rambling

In recent daily activity reports, there has been an occasional permit for Stark County. I associate Stark County, North Dakota (USA) with the Lodgepole where most wells have been conventional vertical wells. [Since this was originally posted, some additional information is available at the discussion boards.]

The Lodgepole doesn't get much notice, being driven off the front page by the Bakken. However, maybe someone can check my numbers.

(Note: the Lodgepole formation is part of the Madison group. The Madison group has produced the most oil in the state of North Dakota since discovery of the Williston Basin.)

In a press release dated March 16, 2010, CLR noted that 41 wells in the Dickinson (Stark County) have produced 55 million barrels of oil since 1993. At $20/bbl that works out to $1.1 billion or $27 million/well at the wellhead. Notice: I used $20/bbl.  Someone should check my math.

In that press release, CLR reported its second Lodgepole discovery in Stark County: Gruman 18-3, 474. It's first discovery, the Laurine Engel #1, was completed in September, 2009, with an IP of 463, and a cumulative production of 76,000 bbls as of March, 2010.  Vertical wells are much less expensive than horizontal wells. At $40/bbl, the Laurine Engel #1 should be paid off. Armstrong Operating, Inc., of Dickinson, ND, is the operator for both these wells. The third partner is Tom Jordan, representing Jordan Oil and Gas Company of Healdsburg, California (USA), which, by the way, sits in the middle of Sonoma County, home of some of the finest Napa Valley wine.

A reminder: the Dinsdale 2-4, another Lodgepole in the Dickinson area, has produced more than 4.6 million bbls of oil as of October, 2009; that well was completed in 1996. That same link notes a new operator targeting the Lodgepole in Stark County, which says it has 18 Lodgepole prospects.

And, as long as I'm rambling, take another look at Teegue's blog dated June 2, 2009, for a bit more background regarding the Lodgepole.

Even Fidelity is looking at Stark County. Fidelity was granted a permit, #19264, July 14, 2010, for Kostelecky 31-6H, Lot 2, 6-139N-97W, west of Dickinson and just northeast of South Heart. With the "H" (horizontal designation), I assume this is not a Lodgepole well, but who knows? The successful Lodgepole wells were mounds/reefs and it was very hard to find them, many dry holes that were drilled directionally (not horizontally). Maybe the drillers are going to see if they have better luck with horizontal wells.