Tyler Formation: Correction

For newbies: EUR is "estimated ultimate recovery." This is the estimate (in barrels of production) that a given well will produce in the well's lifetime. Some (many? most?) of the wells in North Dakota will last for decades.

Stephan Nordeng, a Department of Mineral Resources geologist, says more than 100 wells have been drilled into the Tyler formation and have produced more than 200 million barrels of oil to date.

By my calculations, that works out to a EUR of 2 million barrels/well.

What's the "party line" for the Bakken? 700,000?

SPOILER ALERT ----  SPOILER ALERT ---- SPOILER ALERT

I have been told that the "200 millions of oil to date" is incorrect and should have been 20 million bbls; see first comment below.

The 20 million figure appears correct, according to the NDIC website. But even 20 million is too high; it's closer to 17 million, so for rounding 20 is okay, but it is still significantly on the high side. One could have rounded to 15 and been closer.

There are three possibilities to explain the "200 bbls" figure: a) he misspoke (possible); b) typo by the newspaper (most likely); or, c) not sure what he is including in the "Tyler." If one includes the Heath formation which is directly below the Tyler, one can add another 65 million cumulative barrels, but 17 plust 65 is still less than 200.

However, doing that does not jive with the number of wells drilled.  There have been 87 wells drilled into Tyler and Tyler A, and 197 wells drilled into the Heath.

17 million / 87 wells = a more reasonable 200,000 bbls/well -- old wells, old technology.

By the way, the quote that more than 100 wells have produced more than 200 million barrels of oil was carried in at least two regional newspapers, the Billings Gazette and the Dickinson Press. I would assume a correction has been published but I have not seen it.

Leasing Question Regarding Tyler Formation

Someone writes to tell me that their family has not seen leasing activity in 15 years but with the recent news on the Tyler formation and with Bakken activity in general, they are now getting lots of leasing requests. He/she asked for help with how to proceed.

This blog is not good for that kind of thing, but I directed him/her to the Bakken Shale Discussion Group saying there were lots of folks there who have that kind of experience.

(The only advice I can offer is don't sell your mineral rights. No.Matter.How.Good.The.Offer.Sounds.)

I don't own any mineral rights but this has to be very, very exciting. Good luck to all.

Mainstream Media Throwing in the Towel on Renewables?

They say you can't fight the Fed, and it seems you can't fight fossil fuels, either. Even The New York Times realizes this (by the way, Jim Cramer on Fast Money said something to this effect earlier this week or last week -- I was quite surprised).  A perfect storm? a) President Obama desperately needs jobs; b) price of oil trending upwards; c) mainstream media throwing in the towel on renewables; d) GOP control of the House with a strong message from the people -- they won't stay there if they don't follow through.

Here are the headline stories on the front page of the Business Day / Energy Section of today's issue of The New York Times:

• There Will Be Fuel: Recent discoveries of oil and natural gas fields and new mining technology have combined to help increase the world's supply of energy for decades to come. Repeat: decades to come. Peak oil theory, anyone?
• In the Heartland, Still Investing in Coal: Despite calls to cut greenhouse gases, numerous coal plats under construction today are likely to be pumping out carbon dioxide until at least 2050.
• Diesel, Cleaner, Is Set to Make a Comeback: With advances in diesel engineering and heightened interest in fuel economy, cars with diesel-powered engines are starting to sell again in the United States.
• When Uranium Outshines Gold: Nuclear power projects worldwide, especially in China, are driving up prices for uranium earlier than industry insiders expected.
• Solar Storm Risks Bring Disaster Plans: The growth of the transmission network in the United States has increased the risk that a severe solar storm will cause crippling damage.
• GOP Gains on Capitol Hill May Not Advance Nuclear Power: Many Republicans support building more nuclear reactors, but several factors make the outlook for new plants mixed at best.
• Some Exceptions to the Rule, but Pipelines are Safer: Oil and gas industry expers say that despite several major accidents this year, pipelines are getting safer as technology improves.
• Concerns as Solar Installations Join a Desert Ecosystem: With solar projects approved that would cover 42 square miles of California desert, environmentalists rear the impact of industrialization of the desert.

Comments:

• There Will Be Fuel: Proves my assertion that US wasted a decade on renewables
• Still Investing in Coal: North Dakota at the center of new coal technology; and coal ain't gonna go away
• Diesel Is Set to Make a Comeback: It will be interesting to see how many more diesel cars are sold than the GM Volt and the Nissan Leaf combined
• When Uranium Outshines Gold: Everywhere but in the US; but if they need it, North Dakota has uranium, too, but it won't be mined in ND in my investing lifetime
• Pipelines Are Safer: But you can bet the mainstream media will highlight every spill, no matter how small
• Solar Installations Join a Desert Ecosystem: Now, when a oil company wants to drill in the desert, all it has to do is copy what the solar folks did; oil takes up a much smaller surface footprint. Love it. 

The whole New Yorks Times Energy section sounds like it was taken from latest issue of Journal of Oil and Gas. 

I'm really looking forward to stats on diesel cars vs hybrids five years from now.

Fourteen (14) New Permits -- North Dakota, USA

Operators: Whiting (3), American (2), Encore, Cornerstone, Newfield, Oasis, KOG, Anschutz, BEXP, SM, and Hunt.

Fields: Siverston, Catwalk, Big Stick, Carter, Bull Butte, Ray, Poe, Sanish, Murphy Creek, Parshall, and two wildcats.

Both wildcats are in McKenzie County.

Whiting, of course, is in the Sanish field, but surprisingly, it was Hunt in the Parshall field.

On track for 1,658 permits in North Dakota in calendar year 2011.

New Record, Sort Of: 159

159 active drilling rigs in North Dakota according to the NDIC website.

However, it should be noted that Rory sent me the active rig list (from the NDIC website) that clearly showed 159 active rigs on November 15, 2010, despite the NDIC saying there were still 158 active rigs.

Now, see comment below, I've been told that there were 160 active rigs on November 17, 2010, which in fact may be correct. If so, I missed it.

I'll wait for additional feedback before going to 160 as the record. The Director's Cut in December should clear it up. As noted below, on any given day there are rigs taken off the active list because they are in the process of moving, etc., so there's not question that if the "official" count is 159 rigs, in fact, the list could be longer by two or three.

Week 45: November 8 - 14, 2010

QEP setting up shop in Parshall.

Commentary: Fossil Fuel vs Renewable Fuels.

Ramblings on American Oil and Gas.

Director's Cut, November 12, 2010.

New active rig record: 158.

Commentary: Moratorium in the gulf and $100 oil.

China has 16 days supply of oil; US has 26.

Potash well spudded.

Chevron buys largest natural gas company in the Marcellus.

For Investors Only: NOG Share Offering: $20.25 -- Awesome

UPDATE, November 19, 2010: The size of the offering has been increased from the previously-announced 8,000,000 shares of common stock to 8,950,000 shares of common stock at a price to the public of $20.25 per share. Northern Oil has granted the underwriters a 30-day option to purchase up to an additional 1,342,500 shares from the Company to cover over-allotments, if any.  The offering prospectus.

ORIGINAL BLOG

Previously reported, NOG will be issuing more common stock, almost as much as 20% of their current outstanding shares. NOG made the announcement one minute after the market closed yesterday. Today, we see how the market feels about this.

I can almost guess.

Once we get through this rough patch, and I think it will be very, very rough, the good news is that NOG will be doubling their 2011 CAPEX program from that of 2010.  The only risk: "bang for your buck" as acreage becomes more dear.

Update: 10:30 EST, November 17, 2010 -- the market has now been open long enough for folks to digest the NOG news, as well as to note that oil continues to drop in price -- but NOG is holding up very, very well. Investors should not complain. Great opportunity to buy more, and long term holders should look forward to a very interesting year next year.

More Clarity on Determining Type of Fracturing and Number of Stages -- Bakken, North Dakota, USA

For those interested in fracking, click here, and go down to question four.  It takes you to a link on my "FAQ" page.

If you already know something about fracking, click here, and scroll down to "Degas." Again, "Degas" has done us a great service by providing us more clarity on fracture stimulation.  Great, great posting on his part. Thank you, "Degas."

He also provides you a bit of background to the "office gnomes" who make the decision. 

Coin flips come to mind.

Leasing Starts on the Tyler Formation -- North Dakota, USA

Updates

Comment: As noted in a subsequent post, the quote "more than 100 wells have been drilled into the Tyler producing more than 200 million barrels of oil" is obviously incorrect. The correct figure is closer to 20 million barrels of oil, giving a EUR of 200,000/well.

Comment: "Infrequently used drilling method."  -- does the reporter mean that vertical wells are infrequent in North Dakota in the current boom; or that horizontal wells are infrequently used prior to current boom; or what is the reporter trying to say? That's a rhetorical question; I don't expect an answer. Bottom line: I think we will see vertical stratigraphic wells first, and then horizontal wells.

Comment: I was told that the geology of the area is more complicated than the Bakken in that is the Tyler reservoir could be meandering. That is, they could strike oil in one location, but half-a-mile away, no oil, but then they would strike oil another half-a-mile away.  With vertical wells, one could completely miss a reservoir; with a two mile lateral, only one mile of the lateral might actually go through the reservoir, if I understand the geology as sent to me.

Original Post

Wow, wow, wow.

Leasing begins on the Tyler formation.

Here we go.

*****

Tyler formation:

• Shallower than the Bakken.
• "Tight" formation, requiring similar drilling technology as used in the Bakken.
• Source rock and reservoir rock may be the same.
• Source rock is separate from the Bakken source rock (this is huge).
• The Tyler formation reserves may be half the size of the Bakken.
• Harold Hamm suggested the Bakken could hold as much as 10 billion recoverable barrels; does that mean the Tyler could hold upwards of 3 to 5 billion (just a rhetorical question; don't answer) 
• Spokesman says more than 100 wells have been drilled into the Tyler producing more than 200 million barrels of oil: that's a EUR of 2 million barrels

And then this cryptic sentence in the Dickinson Press article:

[Lynn] Helms [NDIC/Director] said no horizontal wells have been drilled in the Tyler, only vertical, an infrequently used drilling method.

Clean Coal Story -- North Dakota, USA

Summary:

The Bismarck Tribune is reporting today that Minnkota Power Cooperative is unveiling a state-of-the-art chimney at its Milton R. Young coal-fired power plant which will remove significant amounts of pollutants before reaching the atmosphere.

The story:

This is a huge story that the Tribune is reporting. It's too bad "they" don't have the space to really get into what this story means. There are three reasons for posting this story, even though it doesn't have anything to do with the Bakken.

First, it helps me better understand the "clean coal" initiatives in North Dakota.

I had never heard of "Coal Country" until today and I'm only beginning to piece it together. If I'm off-track, please let me know.  According to the 2005 "white paper":

The purpose of the Coal Country Development Initiative is to attract and develop new industry in North Dakota’s Coal Country, located northwest of Bismarck and south of Lake Sakakawea.

Broadening the industrial base of the area would create jobs and diversify the local economy. In support of the Initiative, this paper defines the potential of Coal Country’s material, energy, infrastructure and intellectual assets as levers for new business development. Marketing the region’s lignite energy resources as low cost industrial inputs, for example, may provide the necessary competitive advantage to attract new industrial development.

Trillium Planning & Development directed this project with the assistance of the Yale University Industrial Environmental Management Program. Mercer County Economic Development and the North Dakota Department of Commerce conceived of and funded the project. [For this report in its original PDF format, click here. This is a phenomenal report.]

Apparently there are three Coal Country power producers: Minnkota Power Cooperative, Great River Energy and Basin Electric Power Cooperative. According to the Bismarck Tribune, these three producers have together invested more than $1 billion to improve air quality in the past three years.

The Bismarck Tribune is reporting today that Minnkota is unveiling a state-of-the-art chimney at its Milton R. Young coal-fired power plant which will remove significant amounts of pollutants before reaching the atmosphere.

A new pollution control chimney at Minnkota Power Cooperative’s Milton R. Young coal-fired power plant near Center will finally be put into service next month.

Minnkota is one of three Coal Country power producers, along with Great River Energy and Basin Electric Power Cooperative, that have together invested more than $1 billion to improve air quality in the past three years.

The chimney shell was completed in 2009 and towers 550 feet high in Oliver County. It is the centerpiece of Minnkota’s pollution upgrade project that it says will remove nearly all the sulfur dioxide and more than half the nitrous oxide from plant emissions.

The power plant is located near Center, ND.

Great River Energy is based in Underwood, ND, and was the subject of an earlier posting regarding coal beneficiation / coal gasification. 

The second reason I have for posting this story: I am always impressed when the folks in North Dakota partner with academia in the energy arena. I have always maintained that one can argue about our public education, kindergarten through high school, but our nation's undergraduate and graduate programs across the nation are second to none.

The third reason has to do with my personal thoughts about renewable energy and fossil energy. Since most folks who read my blog on a regular basis can just about guess what I would write here, I will say no more.

*****

A geography lesson (for me, not my readers who probably know the map of North Dakota much better than I do):

The southern east-west route across North Dakota is I-94, stretching from Fargo on the east to Dickinson/Belfield/Beach/Montana border on the west. Midway along this highway is the capital of North Dakota, Bismarck.

About forty miles northwest of Bismarck, as the crow flies, is Center, North Dakota. Center is about 20 miles due north of the interstate. Driving 80 miles west on the interstate, one reaches Dickinson, one of the centers of the North Dakota oil industry.

And then ... drum roll, please ... you are in Bakken Country. South Heart is located about thirteen miles west of Dickinson. South Heart is in Stark County, and if you've been following the news, you know that Whiting is making a huge investment in Stark County, extending their Lewis and Clark prospect to the southeast from the Bicentennial Field.

Belfield, another twelve miles to the west of South Heart, is where Whiting is apparently putting in a new industrial park.

*****

This is really, really, very exciting. I keep thinking of what I'm not going to write in this blog regarding the third reason I posted this story.