The Million Dollar Way (The Bakken Oil Blog): 09/01/10

Wednesday, September 1, 2010

1,000 Barrel Oil Spill in North Dakota, Near Killdeer. Contained.

I guess after the BP spill in the Gulf of Mexico, and then the Enbridge spill in Michigan, the "oil gods" in North Dakota were feeling left out.

It is being reported that officials are responding to a Denbury Onshore well near Killdeer with an estimated oil spill of 500 barrels. It appears that the spill has stopped; the oil has been contained; and further investigation is ongoing.

Update: September 7, 2010 -- water supplies appear to be safe.

Update: September 2, 2010 -- the initial effort to plug the well failed; the well continues to leak oil at the rate of about 100 bbls/day. The oil is contained and they expect to plug the well later today.

The New Director's Cut Has Been Posted

The most recent Director's Cut, dated August 25, 2010, has been posted.

Some data points follow.

Oil production:

June, 2010: 315,278 bbls/day (all-time record high)
May, 2010: 298,060 bbls/day

Producing wells:

June, 2010: 4,979 (all-time record high)
May, 2010: 4,893

The Good Stories Never Quit: New NG Facility -- Watford City

Bear Paw Energy, a subsidiary of ONEOK Partners, LP, anticipates construction to begin this month on a $150 million to $175 million natural gas processing project near Watford City. The facility would be capable of handling 100 million cubic feet per day and could be fully operational by the end of December, 2011. [Update, October 15, 2010: ground has been broken; the project is underway. The link to the source will probably be broken in a few weeks.]

This is another indication that the current boom is expected to last awhile. Folks aren't going to build a $175 million facility if they thought the Bakken was a short-lived phenomenon.

Interestingly enough, Investopedia has another story on ONEOK Partners, LP:

One major player on the infrastructure and processing side of the natural gas liquids market is Oneok Partners. Oneok Partners operates 549,000 barrels per day of fractionation capacity in the United States. The company has seen its volumes increase sharply over the last five years, from 313,000 barrels per day in 2006 to an estimated 529,000 barrels per day in 2010.

Oneok Partners is investing to add transport capacity in natural gas liquids, and plans to spend as much as $550 million to build a 525 mile natural gas liquids pipeline with a capacity of 60,000 barrels per day. The pipeline will be complete by 2013.

This is really quite phenomenal. Something tells me the restaurant at the First International Bank and Trust is going to get real busy real soon. This is my favorite restaurant in Watford City, and where I generally go to have dinner when eating in Watford.

Updates

October 28, 2010: project on hold. Public Service Commission wants to make sure all environmental and agricultural issues are addressed before approving.

Look At All Those Wildcats!

I generally don't follow the activity in Montana (I have enough trouble just keeping up with activity in North Dakota), but this I could not resist.

Look at all the wildcats in eastern Montana.

CLR and CNBC This Morning

Harold Hamm, CLR/CEO, on CNBC this morning.

When one remembers there are CEOs of XOM, COP, CVX, and others, it is amazing to think that the CEO of a relatively small company (CLR) is the richest oil man in the US. Hamm is a self-made billionaire with a high-school diploma.
When one sees those stones (shale), it's hard to believe they get any oil out of shale.
The "Bakken" may hold eight (8) billion bbls of recoverable oil; easily twice "official" estimates.
Oil at $50 is problematic. Bakken drillers are making money at $60/bbl.
In five (5) years or less, US will be importing less than 50% of its oil.
Many very strong comments about North Dakota.
Says economy in North Dakota is due to the oil; doesn't water down commentary by getting off-point (agriculture, strong work ethic, banking industry, fiscal conservatism).
Taking away tax incentives for oil industry: "It would be terrible."
Independents like CLR produce 90% of American oil.
Price of oil: range-bound between $75 and $90. It will take the economy to "get rolling" to get out of this range.

In addition, CLR made the top 15 list for insider buying this past week. The CEO, Harold Hamm, bought $391,200 worth of stock on August 25.

Solar Energy (Nothing To Do With The Bakken): Lots Of Talk; Little Action

The federal government sure talks a lot about solar energy but when it comes to execution, the federal government gets an "F" rating. My rant for the day.

Update on BR's "Eco-Pad"

Speaking of Eco-Pads, they don't call it an Eco-Pad, a term copyrighted (I believe) by CLR, but BR has four wells in an "Eco-Pad" configuration. They are currently all on the confidential list. From the original posting:

Here are the new BR permits on one pad:

19283, Sunline 11-1MB-3SH

19286, Sunline 11-1TF-2SH

19285, Rising Sun 11-1MB-3NH

19287, Rising Sun 11-1TF-2NH

These are the first permits granted in the Clear Creek field, so far, in 2010.

None of these wells have a confidential-release date yet suggesting they have not been completed; I am not even sure they have been drilled.

Don't you wish names of all oil wells were so explanatory?

Name Change

Earlier (original post was March 14, 2010, updated in August), I reported on CLR's Eco-Pad in the Little Knife oil field:

Note the "Orion Belt" of the four CLR wells in section 12 of T146N-97W, all four are confidential as of August 30, 2010, most likely all four are drilled:

18515 -- CLR, Hegler 1-13T, first of the four to be reported (August 30, 2010)
18513 -- CLR, Arthur 1-12T
18747 -- CLR, Hegler 2-13H, new permit, 23 Feb 10
18748 -- CLR, Arthur 2-12H, new permit, 23 Feb 10; rig was on site; now off
From east to west, the distance between the outside wells is 105 feet. From the nomenclature, one can see that two of these wells will be going south into section 13, and two wells will be going north into section 12. Two of the wells (Hegler 1-13T and Arthur 1-12T) will be targeting the TFS; the other two will be targeting the Middle Bakken. (It is interesting that the NDIC GIS map server does not use the "T" designation, but that is how the NDIC daily activity report reported it.

In addition, I have seen the designation of two of the wells as "M" wells (Hegler 2-13M and Arthur 2-12M) suggesting the Middle Bakken.

It now appears that all are known by the "H" designation, but historically this helps us keep track which formation is being targeted by which well. Some suggest that the reason that there was no data provided when the first of these four wells came off the confidential list was because all four wells were fracked at the same time, and that will delay reporting of how the wells are doing.

Quiet in the Oil Patch

It's quiet in the oil patch this morning.

I'll be away from my computer all day, so updates may be few during the day, but I will be back this evening.

For those who are concerned about the price of oil dropping $3.00 yesterday, you may want to listen to the Morgan Stanley analyst, taped yesterday. He feels the floor for the price of oil is around $74 and could see the price of oil rising to $95 by the end of the year. When pressed on that figure, it was unclear to me how committed he was to that figure, but he was adamant about the direction in the price of oil (up). He did say the price of oil will remain volatile.

It should also be noted, that for investors, the price of oil may have dropped significantly yesterday, but shares of many Bakken-related oil companies remained steady (some actually rose). There is a lot more to this than just the price of oil.

The Million Dollar Way (The Bakken Oil Blog)

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