This is Fidelity's Kostelecky well, permit 19264, Kostelecky 31-6H, Lot 2 6-139N-97W. This is a wildcat near South Heart. You can see the town of South Heart off in the distance: the water tower is off to the left.
Earlier this month we spudded the Kostelecky 31-6 well, this is our first well in the Heart River project, targeting the Three Forks Formation. We plan to drill a total of three wells on this acreage this year. We were pleased to see another producer in adjacent acreage report strong results from two recent wells, approximately 2,000 barrel of oil equivalence in the initial production, per day, per well.
The drilling rig is Nabors 108. The cylindrical containers have been painted in autumn colors as part of North Dakota's goal to attract tourists from Minnesota before the cold Minnesota winter sets in. Few people realize how wonderfully temperate northwestern North Dakota is during the winter. My dad refers to it as the "banana belt" of the north.
Four and a half miles west of this well is another Fidelity well, permit 19688 the Wagner 11-4 well, in the Zenith oil field. The pad has been completed, but there is no metal on the pad yet.
Two miles straight north of the well in the photo is a Whiting well, permit 19562, Brueni 28-1H, with a rig in place, ready to start drilling.
South Heart is exactly midway between Dickinson to the east and Belfield to the west. State highway 85 intersects I-94 at Belfield.
On a completely different note, there are new traffic light signals just a half-mile north of Belfield on state highway 85; there are rumors that Whiting is putting in a local operations center there.
Click on photos to see them enlarged. Yes, that is snow in the ditch in the top photo.
Wow, isn't that North Dakota scenery pretty? You have no idea how much I enjoy looking at photographs of North Dakota. And, no, oil wells and natural gas gathering facilities do not spoil the view for me. Photographs of unemployed folks in run-down homes in dying towns bother me, however.
At times, the flare was higher than the neighboring tanks.
******************************** Mashed Potatoes
three large potatoes: diced and boiled for 15 minutes 1/2 cup milk 3 tbs butter 1/4 tsp salt 1/2 tsp pepper
There is an article in today's Bismarck Tribune: The numbers are in! The first wells to report from the Niobrara in southeast Wyoming are promising but not earthshattering.
There has been a lot of talk over the past two years regarding initial production numbers from the Bakken wells.
It has been said that some companies are more interested in high initial production numbers even if that means less ultimate recovery. Common sense seems to suggest that high production numbers will attract investors. I won't argue one way or the other; I think we are still a long way off sorting out the debate whether high IPs affect long term EURs.
Having said that, I do think the high IPs that were reported in the early Bakken boom attracted a lot of interest, and was one of six reasons why the Bakken developed as quickly as it did.
Hearing that the first numbers coming out of southeastern Wyoming are "promising but not earthshattering" may cause some operators to put their focus back on the Bakken. As a reminder, some have opined that it will take a lot longer, even under the best of circumstances, to develop the Niobrara than it took to develop the Bakken in North Dakota. American Oil (AEZ) was one of the first to act on that, by selling all their assets in the Niobrara and becoming a pure-Bakken play. It has since been bought by Hess.
Note: one thing that the Bismarck Tribune article failed to discuss was the cost of the wells in southeastern Wyoming. If they are not as deep as those in the North Dakota Bakken, they may not cost as much. There is a lot more to this than just the production numbers. The cost of the wells, the regulatory ease of drilling, and EURs mean a lot more than initial production numbers, to include the first several months of production.
November 29, 2015: on eve of Paris global warming conference, BBC had a piece on India. Some data points:
unlike virtually every other country attending the conference, India has not set a future cap on emissions, let alone proposed cuts
India proposes to treble CO2 emissions within the next 15 years
china plans to open a gigantic coal mine every single month until 2020 as part of its strategy to double coal output to a billion tonnes a year
India can maintain that output for the next 300 years; the county has 301 billion tonnes of accesible coal
total global emissions since 1850: India accounts for just 3% to data; the US is responsible for a third; Europe and other developed nations account for 45%
India with second greatest population; hundreds of millions still live in terrible poverty
average Indian: 1.6 tonnes of CO2 every year; an average American - 16.4 tonnes; the Japanese, 10.4 tonnes; and the average European, 7.4 tonnes
Coal will become more in demand than oil by 2020 driven by growth in China and India, despite campaigns to reduce carbon emissions across the globe, a new report reveals.
Marking a return to an era reminiscent of Britain's industrial revolution, the rapidly expanding economies in the East are turning to coal since it is cheaper and more reliable than oil or renewable energy sources, energy consultancy firm Wood Mackenzie said on Monday.
Rising demand in China and India will push coal past oil as the two Asian powerhouses will need to rely on the comparatively cheaper fuel to power their economies.
Coal demand in the United States, Europe and the rest of Asia will hold steady.'China's demand for coal will almost single-handedly propel the growth of coal as the dominant global fuel,' said William Durbin, president of global markets at Woodmac.
'Unlike alternatives, it is plentiful and affordable.'
China - already the top consumer - will drive two-thirds of the growth in global coal use this decade. Half of China's power generation capacity to be built between 2012 and 2020 will be coal-fired, said Woodmac.
July 8, 2012: KMP to ship more coal through Gulf-friendly states; west coast environmentalists putting kabosh on shipping coal from the west coast. January 9, 2012: a fourth extension; waiting to see if Obama administration is more favorable to the coal industry; not gonna happen; will have to wait for change in administration 'cause it doesn't look like hell will freeze over this winter; very, very warm in North Dakota this winter
The state Industrial Commission in 2006 committed up to $10 million in state aid from coal tax collections to help weigh the project's potential. About $1.3 million has been used so far.
Notes In General
This is a summary of coal plants in Montana and North Dakota with regard to "haze" in the national parks:
Three big coal plants in Coalstrip, Montana, 140 miles southwest from Bowman, ND
Small coal generator in Glendive, Montana (MDU); so small, it is used only as a back-up unit
All other coal power plants are well east of the parks, in Mandan, Center, Beulah, and Underwood, ND; and the wind generally blows west to east; these coal plants are not the cause of haze in the parks
Original Post
With all the attention being given to the oil industry in western North Dakota, it is easy to forget that there is also a thriving coal industry in the state.
The coal benefication process removes water and contaminants like mercury and sulfur from the lignite; compresses them into briquets which makes it much easier to ship and much more energy efficient for electric power plants.
I would never have thought this process would have worked. Over the years a lot of money has been sunk into this project requiring the partnership of private investors, a lignite cooperative, and government agencies, including the federal government. This did not happen overnight. It took decades.
And it is a real success story, at least based on what I am reading about it today. Engineers from around the world, as far away as China, are coming to see the Creek Coal Station, owned and managed by a consortium called Great River Energy.
As I was reading that story it reminded me of a recent article in a national newspaper in which President Obama expounded on the (few) jobs that that wind energy industry had created under his watch. In fact, the wind energy programs had been in the works for years and begun and promoted under the auspices of the Bush administration. It took years just to get the environmental impact statements completed, resolve the legal disputes (in court), obtain the rights-of-way, and fund the projects. Erecting the towers was the easy part, and that was all done under the previous administration. President Obama did not give credit where credit was due.
This is what caught my attention in today's article:
In 2002, Great River Energy received funding help from North Dakota's Lignite Energy Council to establish a pilot project using a 2.5-ton-an-hour fluidized-bed dryer. When the coal bubbled across the dryer, as if in an old-time coffee percolator, the agitation caused denser material to fall to the bottom of the dryer. The process separated material containing a high percentage of sulfur and mercury from the lignite fuel.
The results of the study led the the U.S. Department of Energy and Great River Energy to enter a collaborative agreement for another phase of testing. The $31.5 million project was managed by the department's National Energy Technology Laboratory with support from Lehigh University, Electric Power Research Institute and several companies.
Let's say this project was still in its infancy in 2008. Would this project have gone forward under the Obama administration? Is it likely that the Obama administration would have been interested in a fly-over state doing research on the dirtiest and least efficient coal in the world (that would be lignite)? I was not even convinced this could work. There's no way the Obama administration would have been interested.
It is being said in more and more venues: President Obama is anti-business. It began as a partisan mantra, but is becoming mainstream. He is definitely anti-coal.
I am reminded of a quote often attributed to Robert F. Kennedy:
"Some people see things as they are and say why? I dream things that never were and say why not?" (I don't have a clip of the actual speech. Sorry.)
Somehow I just don't see anyone in the current administration asking, "Why not? Why isn't the government more interested in promoting business? Why can't we make one of our nation's greatest resources (coal) clean and efficient?" The Chinese must have translated Robert F. Kennedy's speech for their schoolchildren.
This is all the more perplexing during a economic slump with an unemployment rate at 10% and worse in some areas of the country.
Anyway, I digress. Congratulations to all the folks who have persevered in the coal industry under great odds favoring failure.
December 1, 2010:PSC denies South Heart Coal's application to strip mine. Company remains optimistic, "getting closer." The state mining permit covers 4,581 acres near South Heart. The mine would fuel a proposed hydrogen-to-electricity factory that is expected to cost more than $1 billion.
November 5, 2010:South Heart Coal will re-submit its bid to strip mine coal three miles west of South Heart. South Heart Coal is jointly owned by Great Northern Project Development and Allied Syngas Corporation. There are indications that the coal will be used to power a new power plant similar to the Creek Coal Station using coal beneficiation technology.
The land plan described in the application has been designed to provide coal to a commercial scale gasification plant to be located adjacent to the mine, Deutsch said. GTLE has a coal beneficiation plant project less than a half a mile away from GNPD’s proposed project. “Yes there still is (sic) plans to build a beneficiation plant,” Southwick said. “It will be the same process that GTLE uses, in fact we’ll license GTL’s process, but it’ll be a much larger facility than GTL’s.” Southwick said a plant is planned for the property’s south end where the extracted and beneficiated coal would be gasified to make hydrogen to drive a turbine producing electricity. “Our plan is to still build that power plant,” Southwick said.
It's still a bit confusing to me, but it sounds like South Heart Coal will dry the coal and then use that coal for coal gasification.
This is raw data taken directly from the NDIC website; the graph charts the yearly average in barrels of oil per day per well in North Dakota.
It is a graph of the average number of barrels of well produced per well in North Dakota for each year since 1951 when there was one well. There is one exception: the last two data points are January, 2010, and June, 2010.
So, "1" on the horizontal axis = 1951 and "56" = 2007. The last data points are 2010.
Average BOPD/North Dakota well
"1" = 1951
During earnings season, many of the oil companies operating in North Dakota update their presentations. As usual, we see the huge decline rate in Bakken wells. A typical Bakken graph will show an initial production of 1,000 barrels of oil in 24 hours, but it will decline rapidly and stabilize at 200 barrels of oil.
On January 1, there were 4,391 wells, and average daily amount of oil produced in January, 2010, was 236,175 barrels of oil. In June, 2010, there were 4,751 wells, and the average daily amount of oil produced in June was 314,602 barrels of oil.
The graph speaks for itself.
I was curious how the 200 bopd stacked up against historical averages, so I put the NDIC data into a graph.
The price of oil is not set by the cost of producing the first barrel (about $5/barrel in Saudi Arabia); the price of oil is set by the cost of producing the last barrel (about $60/barrel for Canadian oil sands). That puts the price of oil in a trading range between $60 and $80 based on the strength of the dollar.
Chevron, Exxon, Royal Dutch Shell are willing to endure the additional time to secure permits and extra costs that will result from new government regulations because they've come to depend on deepwater drilling to replenish their reserves.
These big oil and gas companies know the geology of the Gulf much better than other parts of the world.
Wells in the Gulf can be very profitable. Drilling projects there typically break even when oil sells for $50 to $60 per barrel. It's currently trading near $82 per barrel.
Yup, it's the last barrel of oil produced that drives the price of oil. With increased government oversight and regulations, the cost to produce oil in the GoM will probably increase.
By the way, most of the Bakken companies say it costs $14 - $20 to produce a barrel of Bakken oil. This may or may not include the $6 - 8 discount from West Texas Intermediate, the benchmark, and the cost of shipping the oil to the refinery. Reading "tea leaves" suggests the Niobrara cost may be less, at least in some areas.
