Samson has been notified that the frac jobs for the Rodney #1-14H and Earl #1-13H wells have been delayed due to the scarcity of available frac crews.I have opined that the difficulty in completing wells due to lack of fracking crews and the increasing cost of acreage will likely result in significant consolidation in the Bakken. The moat is getting wider. One can almost predict what is going to happen.
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Wednesday, November 24, 2010
Delay in Completing Wells Due to Lack of Fracking Crews -- Rodney 1-14H and Earl 1-13H -- Bakken, North Dakota, USA
Anyone who has followed the Bakken knows that there is a shortage of fracking crews. Some of the larger operators have contracted dedicated fracking crews to deal with the problem. The smaller operators, of course, have more difficulty in contracting dedicated fracking crews and / or scheduling fracking crews. I have talked about the latter on numerous occasions. Here is an example:
For Investors: Motley Fool Notices Bakken Activity -- Bakken, North Dakota, USA
Motley Fool mentions three geographic areas that have captured the attention of oil and gas investors. One of the three areas is the Bakken, and the Motley Fool information is old news for all who have been following the Bakken activity closely, but it's still neat to see it capture the fools.
Heavy Sands Oil Discount to West Texas Intermediate -- Enbridge
First of all, a little rockabilly for all the Swedes in the Bakken (this has nothing to with the post itself; I just like to listen to music while reading and posting):
Swedish Film
Enbridge Energy Partners will be re-opening line 6B, the line that was closed following the pipeline spill earlier this year.
This story (the one linked above) gets into details I generally don't follow closely and would never think to post, except it provides a nice overview of several topics including a) various pipeline routes; b) discounts on Canadian oil sands heavy oil; and, c) restrictions placed on some pipelines limiting amount of oil that can be shipped.
It's a complicated story, and I don't know if I have it completely correct, but putting high quality Bakken oil into the Enbridge 6B pipeline will result in a discount for the Bakken oil also, despite it being much higher quality. This is why: at the end of the pipeline, the refiner pays for the quality of the oil that comes out of the pipeline. The refiner does not know what quality of oil went into the pipeline along the way; all he/she knows is the quality of the oil that comes out of the end of the pipeline into his/her refinery. The lower the quality, the lower he/she will pay for the oil. Obviously the more Bakken oil, the higher the quality and the higher the price.
Unfortunately, mixing all that lower-quality Canadian sands oil into the pipeline lowers the quality of the oil that comes out the other end. So, I assume there's a complicated formula to determine how much Enbridge discounts high-quality Bakken oil when it enters the pipe.
On the other hand, there is no discount taken on high-quality Bakken oil when it is shipped by rail, since it ends up at the refinery as high-quality oil. However, it costs more to ship by oil.
As more and more railroad oil loading facilities come on line and more and more oil is shipped by rail, the unit (or "per barrel") cost probably comes down. It is my understanding that the difference in price paid for oil carried by pipeline and that carried by rail is becoming narrower and narrower (but rail is still more costly).
On another note, opening of line 6B is very, very important to the Bakken companies. I believe I read some months ago that Whiting said they would miss their third-quarter production targets due to the two oil spills that closed the pipelines. EEP paid a markedly lower distribution in the third quarter as a result of that. I assume, if there are no further problems, Whiting should meet their fourth quarter production targets and the distribution should come back nicely. We'll see.
Enbridge Energy Partners will be re-opening line 6B, the line that was closed following the pipeline spill earlier this year.
This story (the one linked above) gets into details I generally don't follow closely and would never think to post, except it provides a nice overview of several topics including a) various pipeline routes; b) discounts on Canadian oil sands heavy oil; and, c) restrictions placed on some pipelines limiting amount of oil that can be shipped.
It's a complicated story, and I don't know if I have it completely correct, but putting high quality Bakken oil into the Enbridge 6B pipeline will result in a discount for the Bakken oil also, despite it being much higher quality. This is why: at the end of the pipeline, the refiner pays for the quality of the oil that comes out of the pipeline. The refiner does not know what quality of oil went into the pipeline along the way; all he/she knows is the quality of the oil that comes out of the end of the pipeline into his/her refinery. The lower the quality, the lower he/she will pay for the oil. Obviously the more Bakken oil, the higher the quality and the higher the price.
Unfortunately, mixing all that lower-quality Canadian sands oil into the pipeline lowers the quality of the oil that comes out the other end. So, I assume there's a complicated formula to determine how much Enbridge discounts high-quality Bakken oil when it enters the pipe.
On the other hand, there is no discount taken on high-quality Bakken oil when it is shipped by rail, since it ends up at the refinery as high-quality oil. However, it costs more to ship by oil.
As more and more railroad oil loading facilities come on line and more and more oil is shipped by rail, the unit (or "per barrel") cost probably comes down. It is my understanding that the difference in price paid for oil carried by pipeline and that carried by rail is becoming narrower and narrower (but rail is still more costly).
On another note, opening of line 6B is very, very important to the Bakken companies. I believe I read some months ago that Whiting said they would miss their third-quarter production targets due to the two oil spills that closed the pipelines. EEP paid a markedly lower distribution in the third quarter as a result of that. I assume, if there are no further problems, Whiting should meet their fourth quarter production targets and the distribution should come back nicely. We'll see.
Another Stroh Well; Three Great Whiting Wells -- Bakken, North Dakota, USA
A very, very nice well:
- Anschutz Exploration, Raphael Stroh, 13-143N-97W, Dunn County, 2,405.
- Whiting, Bartleson 12-18H, 18-153N-92W, Mountrail County, 1,667.
- Whiting, Ness 43-21H, 21-154N-91W, Mountrail County, 2,686.
- Whiting, Jones 12-8H, 8-154N-91W, Mountrail County, 2,746.
- Whiting, Mallard State 44-16TFH, Mountrail, 474.
Nine (9) New Permits in North Dakota -- USA
Operators: Burlington Resources (3), Anschutz (3), Newfield, EOG, Whiting.
Fields: Thompson Lake, Haystack Butte, Manning, Murphy Creek, Sand Creek and one wildcat.
Two of the Murphy Creek permits belong to Burlington Resources and will be on one pad. The other Murphy Creek permit belongs to Anschutz.
And continuing its streak, Whiting has another permit in Stark County, a wildcat.
Fields: Thompson Lake, Haystack Butte, Manning, Murphy Creek, Sand Creek and one wildcat.
Two of the Murphy Creek permits belong to Burlington Resources and will be on one pad. The other Murphy Creek permit belongs to Anschutz.
And continuing its streak, Whiting has another permit in Stark County, a wildcat.
Price of Crude Up Nearly Three Percent Today
CNBC "Fast Money" (November 24, 2010)
Strength of dollar and price of oil diverged today (November 24, 2010). Despite dollar strengthening today (with Irish question), price of crude oil rose three percent. "Fast Money" talking head feels price of crude oil is now more closely related to supply and demand, based on what he is seeing in China (and something I have reported earlier on this blog).
Counter-views: another talking head, whose specialty is commodities, specifically crude oil. Disagrees. Says China wants commodities to come down in price, and he feels China will get its way.
So, we'll see.
With regard to rise in price of crude oil, click here.
Strength of dollar and price of oil diverged today (November 24, 2010). Despite dollar strengthening today (with Irish question), price of crude oil rose three percent. "Fast Money" talking head feels price of crude oil is now more closely related to supply and demand, based on what he is seeing in China (and something I have reported earlier on this blog).
Counter-views: another talking head, whose specialty is commodities, specifically crude oil. Disagrees. Says China wants commodities to come down in price, and he feels China will get its way.
So, we'll see.
With regard to rise in price of crude oil, click here.
Highlights of the Casper, Wyoming Town Meeting
Highlights:
Speaker: Robert Coskey, owner of Rose Exploration
- "250 miles long, 50 miles wide, and worth maybe $80-billion dollars"
- "Way bigger than the Bakken in Montana and North Dakota"
- Exploration phase could take five to ten years
- Drilling and development phase could last twenty years
- Work-overs, re-fracs change things: one well, costing over $3 million to drill, was reported to be producing only 20 bbls per day; sold; under new owner, well is producing 650 bbls per day
- Leases going for $6,000 / acre in Colorado
- Leases going for $3,200 / acre in Wyoming
- Lack of infrastructure (pipeline takeaway capacity)
- Suggested portable "skid mounted" refineries
- Mentioned multi-well pads: 6 - 8 wells off one pad
- Long laterals (2 miles)
- Fracturing extends out about 200 feet laterally (this is very, very interesting. This blog was one of the first places to note that fracturing seemed to be very, very local. I first noted that fracturing appeared to reach laterally less than 400 feet. Since I first noted that, others are reporting the same.)
- The Niobrara formation lies about 6,000 feet below ground, well below the water aquifers, but not as deep as the Bakken in North Dakota which is about 8,000 to 9,000 feet down
- Wyoming was first state that required frackers to list their chemical formulas
- Noted that Halliburton posted its list of ingredients on line last week
Speaker: Robert Coskey, owner of Rose Exploration
NOG Raises $200 Million; 10 Million New Shares; Share Price Up
Subject heading says it all; here's the link.
162 Active Rigs -- How It Breaks Down Among Operators -- North Dakota, USA
Here was the breakdown of rigs by operator when we hit a record 157. At 162, here is the breakdown by operator:
CLR: 22
WLL: 15
HES: 11
EOG: 10
OAS: 7
Petro-Hunt: 7
MRO: 6
BEXP: 5
XTO: 5
BR: 5
Slawson: 5
Compared to the "157" list, it was notable that BEXP and EOG were each down one (1) today, which means there really could be 164 active rigs today.
Most notable (at least to me): Oasis is now up to 7 rigs (one more than earlier). Whiting and Oasis seem to be moving out the most quickly, although the "face" of the Bakken, CLR, is also at a new high, 22.
MRO is also up one (1) today.
CLR: 22
WLL: 15
HES: 11
EOG: 10
OAS: 7
Petro-Hunt: 7
MRO: 6
BEXP: 5
XTO: 5
BR: 5
Slawson: 5
Compared to the "157" list, it was notable that BEXP and EOG were each down one (1) today, which means there really could be 164 active rigs today.
Most notable (at least to me): Oasis is now up to 7 rigs (one more than earlier). Whiting and Oasis seem to be moving out the most quickly, although the "face" of the Bakken, CLR, is also at a new high, 22.
MRO is also up one (1) today.
New Record: 162 Active Rigs in North Dakota
Someone beat me to it, alerting me to 162 active rigs in North Dakota. I had just checked, not more than ten minutes earlier.
This truly is incredible.
On other posts, I do talk about the ability for the infrastructure to keep up and the turmoil this activity is putting on surface owners, county roads, etc.
But it is what it is, and I'm just tracking the active rigs as one of many data points on this site.
I thought "we" would top out at 145 rigs this past summer simply because the infrastructure could not support more, but I was really, really wrong.
This truly is incredible.
On other posts, I do talk about the ability for the infrastructure to keep up and the turmoil this activity is putting on surface owners, county roads, etc.
But it is what it is, and I'm just tracking the active rigs as one of many data points on this site.
I thought "we" would top out at 145 rigs this past summer simply because the infrastructure could not support more, but I was really, really wrong.
Stockyard Creek, Zavanna, Gary 1-24H -- Bakken, North Dakota, USA
18824, 855, Zavanna, Gary 1-24H, Stockyard Creek, Bakken
This is not a big story in the big picture but there was a lot of interest from readers of this blog, so a stand-alone post for those folks regarding Gary 1-24H, east of Williston.
(For newbies, note, two links above: one link for the well itself; one link for Stockyard Creek.)
This is not a big story in the big picture but there was a lot of interest from readers of this blog, so a stand-alone post for those folks regarding Gary 1-24H, east of Williston.
(For newbies, note, two links above: one link for the well itself; one link for Stockyard Creek.)
Sagebrush Vertical Well into the Madison Comes Off Confidential List -- North Dakota, USA
18986, DRL, Sagebrush, Johnston 1-22, Columbus field, Madison (not the Bakken), Vertical
From production runs, the IP looks on the order of 40 bbls.
This is of significant interest coming on the heels of a recently reported horizontal well into the Madison by Sagebrush.
The Columbus field is about the same latitude as the Renville field where the other Sagebrush Madison wells are (that were recently featured at the link above) but much farther west, and pretty much north of the Sanish.
From production runs, the IP looks on the order of 40 bbls.
This is of significant interest coming on the heels of a recently reported horizontal well into the Madison by Sagebrush.
The Columbus field is about the same latitude as the Renville field where the other Sagebrush Madison wells are (that were recently featured at the link above) but much farther west, and pretty much north of the Sanish.
Notes From All Over -- Not a Bakken Story
Do not worry; this posting will disappear soon but I make some notes for archival purposes. I will get back to the Bakken shortly.
Hybrid autos: consumer purchases of hybrids are headed for their third consecutive decline. The current administration has bought one-fourth of the Ford and GM hybrid vehicles sold since the current president took office, accelerating federal purchases as consumer demand wanes. Global sales are projected to be 2.2% of all passenger vehicles sold worldwide. Bloomberg News, November 24, 2010.
Cost of green energy: Rocky Mountain Power seeks rate increase of 17 percent. This comes on recent rate increases of 5.1 percent this past July (2010) and a 1.9 percent in February 2011. The new rate increase, if granted, would become effective September 22, 2011. Wind energy, new transmission lines associated with those wind projects, and additional environmental controls account for part of the reason for the increase.
Winter Has Arrived: huge winter storms from the Pacific Coast and across the Midwest. Portland, Oregon, had snow yesterday; the last time Portland saw snow on that date was seven years ago. I don't know the final number but if Portland did not get above freezing (I don't know if it did) that would have set a record that held for 25 years. Now we see a huge winter storm moving across the Rockies and into North Dakota.
Winter Has Arrived: freezing temps in southern California poses worries for farmers and homeless.
Winter Has Arrived: According to CNBC weatherman, this is the coldest Thanksgiving he can remember. The whole western half of the US is experiencing record cold.
Hybrid autos: consumer purchases of hybrids are headed for their third consecutive decline. The current administration has bought one-fourth of the Ford and GM hybrid vehicles sold since the current president took office, accelerating federal purchases as consumer demand wanes. Global sales are projected to be 2.2% of all passenger vehicles sold worldwide. Bloomberg News, November 24, 2010.
Cost of green energy: Rocky Mountain Power seeks rate increase of 17 percent. This comes on recent rate increases of 5.1 percent this past July (2010) and a 1.9 percent in February 2011. The new rate increase, if granted, would become effective September 22, 2011. Wind energy, new transmission lines associated with those wind projects, and additional environmental controls account for part of the reason for the increase.
Winter Has Arrived: huge winter storms from the Pacific Coast and across the Midwest. Portland, Oregon, had snow yesterday; the last time Portland saw snow on that date was seven years ago. I don't know the final number but if Portland did not get above freezing (I don't know if it did) that would have set a record that held for 25 years. Now we see a huge winter storm moving across the Rockies and into North Dakota.
Winter Has Arrived: freezing temps in southern California poses worries for farmers and homeless.
Winter Has Arrived: According to CNBC weatherman, this is the coldest Thanksgiving he can remember. The whole western half of the US is experiencing record cold.
Companies Post Best Quarter Ever -- Not a Bakken Story
Do not worry; this post will disappear shortly, but I post some notes for personal and archival reasons. I will return to the Bakken shortly. If you don't want to read about this, I would highly recommend reading about the Lodgepole (posted a couple days ago for those who missed it).
I started this website as an educational website about the Bakken in North Dakota; it gradually morphed into covering the entire oil industry in North Dakota. Over time, I realized it was impossible to separate investing issues in the oil industry from the educational aspect of the Bakken. So, gradually, the site has morphed into about 45/45: educational / investing posts about the Bakken. I suppose, in a sense, one could argue that all posts about the oil industry ultimately lead back to investing.
The other 10 percent consists of investing in general, political comments, and miscellaneous trivia.
Today the New York Times is reporting that in terms of profits, US companies had their best quarter ever. I never, never would have guessed that with all the negative mainstream media news.
This is being reported as the best quarter ever. Not the best quarter since the current recession began; not the best quarter since the dot.com bubble; not the best quarter in a decade; not the best decade in fifty years; but in words no one can misunderstand: the best quarter ever.
Businesses earned profits at an annual rate of $1.659 trillion in the third quarter; that is the highest figure recorded since the government began keeping records more than 60 years ago (non-inflation-adjusted).
The next-highest annual corporate profits level on record was in the third quarter of 2006, $1.655 trillion.
I started this website as an educational website about the Bakken in North Dakota; it gradually morphed into covering the entire oil industry in North Dakota. Over time, I realized it was impossible to separate investing issues in the oil industry from the educational aspect of the Bakken. So, gradually, the site has morphed into about 45/45: educational / investing posts about the Bakken. I suppose, in a sense, one could argue that all posts about the oil industry ultimately lead back to investing.
The other 10 percent consists of investing in general, political comments, and miscellaneous trivia.
Today the New York Times is reporting that in terms of profits, US companies had their best quarter ever. I never, never would have guessed that with all the negative mainstream media news.
This is being reported as the best quarter ever. Not the best quarter since the current recession began; not the best quarter since the dot.com bubble; not the best quarter in a decade; not the best decade in fifty years; but in words no one can misunderstand: the best quarter ever.
Businesses earned profits at an annual rate of $1.659 trillion in the third quarter; that is the highest figure recorded since the government began keeping records more than 60 years ago (non-inflation-adjusted).
The next-highest annual corporate profits level on record was in the third quarter of 2006, $1.655 trillion.
Since their cyclical low in the fourth quarter of 2008, profits have grown for seven consecutive quarters, at some of the fasted rates in history.I recently posted that the Bakken has offered recurrent opportunities to invest. It appears that the opportunities exist in the general market.