According to the most recent NDIC Director's Cut, total North Dakota oil production increased four (4) percent month-over-month in September (2010). If this rate (4%) were to remain stable, total North Dakota production one year from now would be almost 550,000 bbls/day. (Production should exceed 4% increase month-over-month except for fact that infrastructure may not be able to keep up.)
To see the "official" takeaway capacity, click on the Continental Resource's presentations, then click on the Investor Day 2010 presentation (a PDF download), and go to slide 52 (of 79). Current (January, 2011) pipeline capacity is 340,000 barrels/day.
At the end of 2011, there will be an additional 50,000 bbls/day pipeline capacity, yielding a total of 390,000 bbls pipeline capacity, well below the 550,000 bbls/day of production that occurs with a 4% monthly increase between now and then. Truck traffic is now taking about six percent of oil to Canada, and I doubt that can be increased much; the roads can't take it. Railroad capacity is scalable, but evenso, 100,000 more barrels/day by train is no small deal. (Warren Buffett and his BNI acquisition keeps looking better and better.)
The big jump in pipeline capacity occurs in January, 2013, with the completion of the Keystone XL, but as noted earlier, this project is on hold. If the Keystone XL is delayed, pipeline capacity would be severely strained.
I'm not sure if the ONEOK and Enbridge initiatives are included in that slide. Regardless, there's going to be a lot of new pipeline being laid in North Dakota over the next few years.
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Monday, November 15, 2010
Incredible: Frac Fluids Fully From Food Industry
This is truly incredible:
Long recognized as the industry leader in advancing the science and engineering of the production enhancement technology known as hydraulic fracturing, Halliburton today announced the introduction of a first-of-its-kind fracture fluid system comprised of materials sourced entirely from the food industry.Nothing more to add, except to say the new system will be limited to the Marcellus for now.
EOG To Sell Some Natural Gas Assets in the Marcellus: Read the Fine Print (Newfield Doubles Its Footprint in the Marcellus)
Remember the shellacking EOG took for missing estimates this past quarter? In response, EOG said they would increase their focus on oil and sell some of their natural gas assets to help pay for oil exploration and production.
Today, EOG announced just that. They will sell some of their natural gas assets in the Marcellus.
Yes, it's a lot of cash, but it hardly represents a significant shift to oil. Just saying.
Meanwhile, Newfield doubles its footprint in the Marcellus. Hmmm. Very, very interesting.
Today, EOG announced just that. They will sell some of their natural gas assets in the Marcellus.
EOG announced the signing of a purchase and sale agreement with Newfield Exploration Company (NFX) for approximately 50,000 net acres in Bradford County, Pennsylvania. The transaction, valued at $405 million, is expected to close by year-end 2010.Comment: this is incredible -- this transaction, valued at $405 million, represents less than one-half of one percent of EOG's total North American production.
Representing less than one-half of one percent of EOG's total North American production, this Marcellus Shale acreage in northeastern Pennsylvania includes five producing natural gas wells with 7 million cubic feet per day of gross production. Following the close of the divestiture, EOG retains approximately 170,000 net acres in the Marcellus Shale in northwestern Pennsylvania.
With this transaction and others that EOG has signed or anticipates signing by year-end 2010, EOG estimates that the total proceeds from these asset sales will be approximately $1.0 billion.
Yes, it's a lot of cash, but it hardly represents a significant shift to oil. Just saying.
Meanwhile, Newfield doubles its footprint in the Marcellus. Hmmm. Very, very interesting.
Hess Has Another Six-Well Multi-Pad Permit
Hess was granted permits for a six-well multi-pad in the Manitou field in Mountrail County. The Manitou field is about 15 miles WSW from Stanley and about 15 miles WNW from the Sanish/Parshall fields.
The permit numbers and names of the wells when drilled:
See this link for update on these six wells and Manitou oil field.
The permit numbers and names of the wells when drilled:
- 19983, EN-Ruland A-155-94-1201H-1
- 19985, EN-Dobrovolny A-155-94-1324H-1
- 19987, EN-Ruland A-155-94-1201H-2
- 19988, EN-Dubrovolny A-155-94-1324H-2
- 19989, EN-Rualnd A-15-94-1201H-3
- 19990, EN-Dubrovolny A-155-94-1324H-3
See this link for update on these six wells and Manitou oil field.
Photograph of New Potash Well in North Central North Dakota
For those interested, here are the first photos of the potash well in north central North Dakota. I have to thank Rhys for alerting me to the photos.
Two More Bakken Investments -- Bakken, North Dakota, USA
I have to thank "Mike" for alerting me to these two stories. These are big stories.
For the past several weeks, I have been posting that I expect to see increased consolidation or acreage exchanges in 2011 - 2012. These two stories, besides being incredible in their own right, may be a foreshadowing of more to come. In the first case, this appears to be a very well-capitalized company acquiring acreage from one of the smaller players in the Bakken.
In the second story, a very large a publicly traded master limited partnership will purchase local/regional crude oil gathering and transportation assets -- again suggesting some consolidation. Of course, this stuff goes on all the time (deal-making) but we're seeing bigger and bigger players come into the area.
First from Bloomberg, November 15, 2010:
I've always thought of WMB as a pipeline company; somewhere along the way, they got involved with oil exploration and production, something I must have missed. Williams will have to update its webpage; the current map of operations includes nothing in the North Dakota Bakken. (Of course, some weeks from now, that will change.)
The seller is private and undisclosed.
Back-of-envelope calculations:
For the past several weeks, I have been posting that I expect to see increased consolidation or acreage exchanges in 2011 - 2012. These two stories, besides being incredible in their own right, may be a foreshadowing of more to come. In the first case, this appears to be a very well-capitalized company acquiring acreage from one of the smaller players in the Bakken.
In the second story, a very large a publicly traded master limited partnership will purchase local/regional crude oil gathering and transportation assets -- again suggesting some consolidation. Of course, this stuff goes on all the time (deal-making) but we're seeing bigger and bigger players come into the area.
First from Bloomberg, November 15, 2010:
Williams Cos, the fourth-largest U.S. pipeline operator by market value, agreed to purchase 85,800 net acres in North Dakota’s Bakken oil play for $925 million in cash as it seeks to expand its exploration and production business. The acreage is in the Fort Berthold Indian Reservation.An analyst calculates that Williams is paying about $8,000 a net acre when production is included, less than Enerplus Resources Fund agreed to pay in September for leases in the same area. See my posting regarding the Enerplus purchase.
The property has potential reserves equivalent to 185 million barrels of oil in the Middle Bakken and the Upper Three Forks formations, Williams said in a statement today. The property has 24 existing wells producing 3,300 barrels of oil a day, the company said.
I've always thought of WMB as a pipeline company; somewhere along the way, they got involved with oil exploration and production, something I must have missed. Williams will have to update its webpage; the current map of operations includes nothing in the North Dakota Bakken. (Of course, some weeks from now, that will change.)
The seller is private and undisclosed.
Back-of-envelope calculations:
- 185 million barrels * $50/bbl = $9.25 billion (remember, they paid about $1 billion in cash
- 185 million barrels/85,000 net acres = 2200 bbls/acre.
- 2200/acre x 640 acres = 1.4 million barrels/section
- Two wells/section = 700,000/well EUR
- In fact, WLL is getting up to three wells / section in the core Bakken (Sanish)
******
In a second story, from Yahoo!Finance, dated November 14, 2010, a company press release:Plains All American Pipeline, L.P., today announced that it has entered into a definitive agreement with Nexen Holdings U.S.A. Inc. to purchase entities that hold crude oil gathering and transportation assets that primarily service Bakken area producers. Total consideration is estimated at $210 million, including approximately $170 million for the business and physical assets and approximately $40 million for approximately 400,000 barrels of inventory and other working capital adjustments. Subject to regulatory approval, the transaction is scheduled to close by year-end 2010.
The assets are primarily located in Northwestern North Dakota and Northeastern Montana and include: a lease gathering business that currently handles approximately 55,000 barrels per day; the Robinson Lake pipeline, a FERC regulated 20-mile, 8-inch pipeline that currently handles approximately 18,000 barrels per day; 8 truck terminals and various other contractual rights.
Fourteen (14) New Permits -- Bakken, North Dakota, USA
Operators: Hess (6), Whiting (2), CLR (2), Slawson (2), Encore, and Petro-Hunt.
Fields: Manitou, Sanish, Charlson, Big Bend, Siverston, Stoneview, and one wildcat.
If you had not guessed, the six Hess permits are for a six-well pad in the Manitou field in Mountrail County. The Manitou field is about 15 miles WSW from Stanley and about 15 miles WNW from the Sanish/Parshall fields.
Both Whiting permits are in the Whiting "cash cow," the Sanish.
Fields: Manitou, Sanish, Charlson, Big Bend, Siverston, Stoneview, and one wildcat.
If you had not guessed, the six Hess permits are for a six-well pad in the Manitou field in Mountrail County. The Manitou field is about 15 miles WSW from Stanley and about 15 miles WNW from the Sanish/Parshall fields.
Both Whiting permits are in the Whiting "cash cow," the Sanish.
ObamaCare Waivers -- Not a Bakken Story
I was curious to see what companies have been approved waivers regarding ObamaCare regulations. At least 111 "entities" have been granted waivers, so far. The list is here. I use the term "entities" because the list includes names of companies most folks folks recognize, as well as insurance programs that most of us would not recognize, and private groups, such as unions.
It was my understanding that McDonald's got a waiver also, and they are not on the list.
Aha, when you google the McDonald's / ObamaCare story, it turns out that there's an entity, BCS Insurance Group, that covers McDonald's. And BCS Insurance Group is on the waiver list (affects 115,000 employees).
It is interesting to see so many health care companies on the list. Just the other day I mentioned that regardless of how the ObamaCare bill plays out, this was a once-in-a-lifetime opportunity for health care companies and health care insurers to "reset." Health care insurers could reset (raise) rates and blame it on Congress. They could eliminate costly programs that many beneficiaries relied upon, and again, blame it on Congress. Family health care plans and child-only health care plans come to mind.
I would assume it's only a matter of time before most "entities" apply for a waiver; if not, the company will be at a financial disadvantage, all things being equal. In fact, I would venture to say that it will become an issue for stockholders of any publicly held company that does not request a waiver.
It will be interesting to see if fossil fuel companies, especially coal companies, get waivers. Maybe they already have, through their unions.
"If a tree falls in a forest and no one is around to hear it, does it make a sound?"
If everyone gets a waiver from ObamaCare, is it still relevant?
February 2, 2011: On CNBC's Kudlow tonight, it was stated that the number of waivers has risen to 777.
November 16, 2010: Fargo city employees' health insurance premiums will increase 10 percent due to ObamaCare. Why is Fargo not applying for a waiver?
It was my understanding that McDonald's got a waiver also, and they are not on the list.
Aha, when you google the McDonald's / ObamaCare story, it turns out that there's an entity, BCS Insurance Group, that covers McDonald's. And BCS Insurance Group is on the waiver list (affects 115,000 employees).
It is interesting to see so many health care companies on the list. Just the other day I mentioned that regardless of how the ObamaCare bill plays out, this was a once-in-a-lifetime opportunity for health care companies and health care insurers to "reset." Health care insurers could reset (raise) rates and blame it on Congress. They could eliminate costly programs that many beneficiaries relied upon, and again, blame it on Congress. Family health care plans and child-only health care plans come to mind.
I would assume it's only a matter of time before most "entities" apply for a waiver; if not, the company will be at a financial disadvantage, all things being equal. In fact, I would venture to say that it will become an issue for stockholders of any publicly held company that does not request a waiver.
It will be interesting to see if fossil fuel companies, especially coal companies, get waivers. Maybe they already have, through their unions.
"If a tree falls in a forest and no one is around to hear it, does it make a sound?"
If everyone gets a waiver from ObamaCare, is it still relevant?
Updates
February 2, 2011: On CNBC's Kudlow tonight, it was stated that the number of waivers has risen to 777.
November 16, 2010: Fargo city employees' health insurance premiums will increase 10 percent due to ObamaCare. Why is Fargo not applying for a waiver?
New Wells Reporting -- Bakken, North Dakota, USA
I normally post these on my "New Wells Reporting" page, but there are so many today, I thought this would be a great day to show the "newbies" what is going on in the Bakken. This is incredible, not so much because of the IPs, but because the number of wells that came off the confidential list over the weekend:
18573, 448, XTO, Nelson 34X-19, Midway, Bakken
18799, DRL, Oasis, Stowers 5502 43-8H, Squires, Bakken
18722, 582, Anschutz, State -1-36-25H-143-97, Fayette, Bakken
18679, 1,371, CLR, Medicine Hole 2-27H, Jim Creek, Bakken
18788, 620, CLR, Uxbridge 1-9H, Stoneview, Bakken
18829, 116, Cornerstone, Jorgensen 4-4H, Customs, Midale/Nesson Pool (not a Bakken)
18118, 285, EOG, Ross 12-06H, Alger, Bakken
18403, 963, EOG, Burke 26-18H, Stanley, Bakken
18519, 106, EOG, Sidonia 13-08H, Clear Water, Bakken
18535, 689, EOG, Sidonia 8-26H, Clear Water, Bakken
18786, 271, Peak Grasslands, Wisness 21-34H, Pembroke, Bakken
18902, 2 (not a typo), Sagebrush, Busch 10-5, Portal field, Madison Pool (not a Bakken)
18500, 1,073, Whiting, Marmon 12-18TFH, Sanish, Bakken
18507, 1,946, Whiting, Lahti 24-22H, Sanish, Bakken
18553, 1,776, Whiting, Kannianen 43-31H, Sanish, Bakken
18639, 1,579, Whiting, Iverson 21-14H, Sanish, Bakken
18724, 1,188, Whiting, Foreman 11-4TFH, Sanish, Bakken
18548, 871, Fidelity, Harstad 44-9H, Stanley, Bakken
18385, 349, MRO, Bernhardt 14-7H, Lake Ilo, Bakken
18925, 1,521, Slawson, Phoenix 1-18H, Van Hook, Bakken
Comment: it is clear that Whiting has a "cash cow" in the Sanish which will help it finance its work in the Lewis and Clark prospect in southwestern North Dakota. Note the nice Three Forks wells. Again, most of the numbers in red are "24-hour flowback" results which will decline significantly. The poor results in some cases make one wonder whether they have been fracked, or how the fracking was done. The Clear Water field which has interested me from "day one" has been a relative disappointment. Wells in the Alger usually "do better." I have no idea what to say about the Sagebrush well in the Portal field, targeting the Madison Pool (Red River formations, etc).
18573, 448, XTO, Nelson 34X-19, Midway, Bakken
18799, DRL, Oasis, Stowers 5502 43-8H, Squires, Bakken
18722, 582, Anschutz, State -1-36-25H-143-97, Fayette, Bakken
18679, 1,371, CLR, Medicine Hole 2-27H, Jim Creek, Bakken
18788, 620, CLR, Uxbridge 1-9H, Stoneview, Bakken
18829, 116, Cornerstone, Jorgensen 4-4H, Customs, Midale/Nesson Pool (not a Bakken)
18118, 285, EOG, Ross 12-06H, Alger, Bakken
18403, 963, EOG, Burke 26-18H, Stanley, Bakken
18519, 106, EOG, Sidonia 13-08H, Clear Water, Bakken
18535, 689, EOG, Sidonia 8-26H, Clear Water, Bakken
18786, 271, Peak Grasslands, Wisness 21-34H, Pembroke, Bakken
18902, 2 (not a typo), Sagebrush, Busch 10-5, Portal field, Madison Pool (not a Bakken)
18500, 1,073, Whiting, Marmon 12-18TFH, Sanish, Bakken
18507, 1,946, Whiting, Lahti 24-22H, Sanish, Bakken
18553, 1,776, Whiting, Kannianen 43-31H, Sanish, Bakken
18639, 1,579, Whiting, Iverson 21-14H, Sanish, Bakken
18724, 1,188, Whiting, Foreman 11-4TFH, Sanish, Bakken
18548, 871, Fidelity, Harstad 44-9H, Stanley, Bakken
18385, 349, MRO, Bernhardt 14-7H, Lake Ilo, Bakken
18925, 1,521, Slawson, Phoenix 1-18H, Van Hook, Bakken
Comment: it is clear that Whiting has a "cash cow" in the Sanish which will help it finance its work in the Lewis and Clark prospect in southwestern North Dakota. Note the nice Three Forks wells. Again, most of the numbers in red are "24-hour flowback" results which will decline significantly. The poor results in some cases make one wonder whether they have been fracked, or how the fracking was done. The Clear Water field which has interested me from "day one" has been a relative disappointment. Wells in the Alger usually "do better." I have no idea what to say about the Sagebrush well in the Portal field, targeting the Madison Pool (Red River formations, etc).
Wells on Confidential List -- Bakken, North Dakota, USA
We're starting to see a significant increase in number of wells on the confidential list. One month ago, I had 1,115 such wells. Today, Rory writes to tell me that there are 1,154 wells on the confidential list.
Those with more than 20:
Comment: it's interesting to me that Anschutz and QEP don't break the "20" list.
Those with more than 20:
- Continental Resources: 155
- EOG; 98
- XTO: 66
- MRO: 52
- BEXP: 51
- Slawson: 49
- Petro-Hunt: 45
- Whiting: 43
- Newfield: 41
- Burlington Resources: 40
- Encore: 37
- Oasis: 26
- American Oil: 24
- Tracker: 24
- Hess: 23
- KOG: 23
- Zenergy: 23
- Samson: 22
- Zavanna: 21
- Hunt: 20
- Sagebrush: 20
Comment: it's interesting to me that Anschutz and QEP don't break the "20" list.
New Record: 159 Active Rigs -- Bakken, North Dakota, USA
Although the NDIC active drilling rig site shows 157 active rigs today, in fact, when Rory downloaded the data to an Excel spreadsheet, he got a total of 159 rigs. There's probably a delay in reporting, and possibly the commission does not count certain rigs if they are in the process of moving. Whatever.
If Rory gets 159 active rigs, that's good enough for me.
By operator, and number of rigs (my transcribing may have resulted in a few errors) [Update: on November 18, 2010, "we" hit 160 active rigs, a new record -- I put new data in brackets, and in red.]
Oasis, WLL and QEP are perhaps the most interesting at this moment.
If Rory gets 159 active rigs, that's good enough for me.
By operator, and number of rigs (my transcribing may have resulted in a few errors) [Update: on November 18, 2010, "we" hit 160 active rigs, a new record -- I put new data in brackets, and in red.]
- Continental Resources: 20
- Whiting: 14 [15]
- EOG: 11
- Hess: 11
- Slawson: 7 [6]
- Anschutz: 6 [5]
- BEXP: 6
- MRO: 6
- Oasis: 6
- Petro-Hunt: 6
- Burlington Resources: 5
- XTO: 5
- American Oil: 4
- Encore: 4
- Newfield: 4
- Tracker: 4
- Baytex: 3
- Hunt: 3
- Samson Resources: 3
- Zenergy: 3 [4]
- KOG: 2
- Murex: 2
- North Plains: 2
- QEP: 2
- Sinclair: 2
- SM: 2 [3]
- Abraxas: 1
- Berenergy: 1
- BTA: 1
- Cornerstone: 1
- Fidelity: 1
- G3:1
- Halek:1
- Helis: 1
- Oil for America: 1
- Oxy: 1
- Peak: 1
- Prima: 1
- URSA: 1
- Zargon: 1
- Zavanna: 1
Oasis, WLL and QEP are perhaps the most interesting at this moment.
- Oasis: growing rapidly
- QEP: a recent spin-off
- WLL: maximizing wells/section