For Investors Only: CVX Expects Higher Earnings for 4Q10

Link here.

Well, I would certainly hope so.

U.S. crude oil realizations for the first two months of the fourth quarter increased $5.58 to $77.77 per barrel. International liquids realizations also increased $7.44 to $77.11 per barrel.

Stockyard Creek Oil Field Update -- Bakken, North Dakota, USA

Because of interest in Zavanna and interest in Stockyard Creek oil field which is just east of Williston, where I grew up, and spent much time along the river, I have posted a fairly robust update of Stockyard Creek.

For such a small field, it's very active, and I think we're just seeing the beginning.

Alaska Pipeline: Updates

Updates

May 30, 2021: why President Biden approved COP's giant Willow Field in Alaska. It was all about saving the TAPS -- a national security issue. 

September 29, 2015: the original post was in response to the 2011 leak in the Alaska pipeline but discussed the very viability of that pipeline. With Shell calling it quits in the Arctic -- just a few days ago -- where they drilled was uneconomical for more drilling -- raises the specter of the very viability of the Alaska pipeline. 

Original Post

 

I'm posting updates of the Alaska pipeline situation (the 2011 BP leak) where I originally posted the information.

This has been on the news several times today on CNBC today (January 12, 2011). I think there's a bigger story than the media is reporting: if production of oil can't keep the pipeline full, the pipeline will have to be shut down. Under best scenario (which includes no new drilling which the American people / administration want) the pipeline will shut down within ten years.

Under worse situation, it could shut down within a couple of years.

And folks still wonder if North Dakota could surpass Alaska's production?

Here's the CNBC story: [comments those of the blog's author]

The four-day shutdown of the Trans Alaska Pipeline, which sent a jolt through world energy markets, pushing the price of oil up $4 a barrel in two trading days, could be a sign of things to come, according to officials

That's because the 33-year-old pipeline could outlive its usefulness, unless new sources of oil are developed in northern Alaska. [Not gonna happen under this administration.]

The flow of oil through the 800-mile pipeline was partially restored late Tuesday. Officials hope to have it fully restored in a matter of days, with another brief shutdown to install a bypass around a leak at a pumping station that led to the initial shutdown. The pipeline is now running at a rate of around 400,000 barrels per day.

But even at full strength, currently around 650,000 barrels per day, the flow is a fraction of what it once was. At its peak in the late 1980s, the pipeline carried more than 2 million barrels per day. It was designed to carry 1.5 million per day, according to Alyeska Pipeline Service Company, the consortium that owns and operates the line.

With the flow decreasing by around 5 percent a year, officials say it could soon become impractical to operate the system, both because of engineering and economics.

Eco-Pad Results -- Bonneville - Bridger -- North Dakota, USA

In today's (January 12, 2011) daily activity report: results of CLR's Eco-Pad in Rattlesnake oil field:

• 19009, Bonneville 3-23H, 651
• 19011, Bridger 3-14H, 725
• 19012, Bonneville 2023H, 365
• 19013, Bridger 2-14H, 399

Eight (8) New Permits -- North Dakota, USA

Producers: Anschutz (2), Whiting (2), EOG (2), Petro-Hunt, and Hess

Fields: Ray, Mountrail, Stockyeard Creek, Alger, Sanish, Manning

None of those wells are on the same pad.

In today's daily activity report, BEXP's Domaskin 30-31 1H, #19057, with an IP of 4,106 was reported.  Folks have been eager to hear what BEXP did there; it's an Alger oil field well. That well produced 50K of oil in the first month of operation.

Global Oil Productivity Actually Fell Despite Increasing Price of Oil: What's Wrong With That Picture?

This is an interesting tidbit, if accurate:

EIA just released in the last hour the latest International Petroleum Monthly report. It shows global production falling in October from 73.542 mbpd to 73.064 mbpd. But more to the point of our discussion, this is the last IPM report that EIA will produce. Starting with the next issue, the data will be "aggregated" into one of the EIA's DataBrowsers. 

This is from a comment to a story on "Peak Oil" reported today, January 12, 2011.

Comment: the article is very good, but the comment above is very, very interesting. I just posted my thoughts about the ability of OPEC to increase production. The observation (comment) supports my hypothesis: even as the price of oil was reaching new highs, and projections were for the price to breach $100/barrel, global production actually fell. What's wrong with that picture?

Nothing New -- Hearing This For Past Year -- Global Crude Oil Supplies Will Tighten

Link here.

The US Energy Information Administration anticipates that global crude oil markets will tighten over the next 2 years as annual consumption grows by an average 1.5 million b/d and growth in supplies outside the Organization of Petroleum Exporting Countries increases less than 100,000 b/d yearly, EIA said in its latest Short-Term Energy Outlook. 

To summarize:

• Consumption grows by 1.5 million bopd
• Supplies grow by less than 100,000 bopd
• OPEC needs to increase production by 1.4 million bopd

EIA expects the market will rely on both inventories and significant increases in production of crude oil and non-crude liquids in OPEC member countries to meet world demand growth.

OPEC produces about 28 million bopd (has varied from 24 to 28 million bopd over the past few years)

Two comments: 

• Inventories: okay; that's not more oil, folks, just what's already there.
• Production increases: there are folks who argue that OPEC has maxed out production 

Two more comments:

• Any "significant increase" in OPEC production will be offset by moratoria in US drilling (unless something significant changes within the Department of Interior; I'm not holding my breath)
• OPEC can increase production at the wellhead, but the infrastructure is not there to deliver oil to the US

Last comment:

• Most folks think I'm nuts with regard to previous comment. That's fine. If I have time, I will try to find a link to support my view. 
• This is not the link I was looking for, but it will do for now. And it's very current: December 20, 2010.
• This author says worldwide oil production will hit a ceiling at 74 million bopd, the record set back in 2008, and which we closing in on once again

 

Credo Petroleum Update -- Press Release, January 11, 2011

Home page here. And article in Rigzone here.

Press releases here. Archived press releases are not at this link; the link is dynamic, with press releases changing.

Credo Petroleum has some nice acreage in the Fort Berthold Indian Reservation, and has working interesting in a number of wells in the Bakken. According to their webpage:

Credo has assembled approximately 8,000 gross and 6,000 net acres on the Fort Berthold Indian Reservation south and west of Parshall Field. The acreage contains approximately 50 drillable spacing units. The company expects that more than one well will be drilled on many spacing units. The project targets horizontal drilling for the Bakken and Three Forks formations.

Press release of January 11, 2011: Update on Credo's first five wells (working interesting only) in the Bakken.

Credo's first Bakken well, 10% working interest:

• 18094, 1,474, Fort Berthold 148-94-17D-08-1H, Eagle Nest field, FBIR
• 20/64" choke; cumulative: 87K in 11 months
• "...appears to be one of the best wells in the area."

Credo's second Bakken well, 6.25% WI

• 18955, 2,278, Weisz 11-14 1-H
• IP based on 48/64" choke; 52K in four months
• Painted Woods oil field (northwest of Williston)
• BEXP says the spacing unit could include 2 addition Bakken well and up to 3 Three Forks wells

Credo's third "high-rate" Bakken well, 18.75 % WI (and reason for the press release):

• 18458, 1,367, Fort Berthold 147-94-3A-10-1H, McGregory Buttes field, FBI
• Long lateral, 25 stages; IP based on restricted rate (18/64")
• Well drill last year (2010) but completion was delayed due to shortages of frac equipment
• Four miles southeast of Credo's first well, 18094 (above)

Credo's four and fifth wells with small participation, drilling complete, waiting to frac

• 18963, 1.56%, Zenergy, Dakota-3 Spotted Rabbit 14-23H, Van Hook, inside FBIR
• 18886, 3.57%, Questar, MHA 1-32-31H-150-90, Deep Water Creek, FBIR

Week 1: January 1 - January 7, 2011

Highlights of the first week in 2011: producers increase CAPEX plans for North Dakota; they're talking about super-long laterals (3-mile long); folks are not enamored with the Spearfish formation right now but lots of interest in the Tyler formation; and Three Forks wells are starting to report.

Hess Eager To Spend $5.6 Billion in the Bakken

Investopedia: New Year's Article on the Booming Bakken

Oasis Update: Current Presentation

KOG Update: Operations Update

A First for KOG? Three Wells on a Single Pad

Whiting's String of Three Forks Wells

A Three Forks Gusher

Heart of the Bakken (Williston, North Dakota) Revenue Doubles in 2010

Williston Passes Bismarck in Sales Receipts

North Dakota Budget: $9.3 Billion; $1 Billion Surplus

Super-Long Laterals in the Bakken

Japan's Oil Imports Rise 11 Percent In November, 2010

North Dakota Could Surpass Alaska in Oil Production ; Also Here

It's Official: Record Number of Permits Issued In North Dakota in 2010 -- 1,676

EOG Hits A Dry Hole (Not a Bakken Well; A Spearfish Well)

Red River Formation Still in Play

Eco-Pad Results: Raymo-Glasoe

The Tyler Formation

The North Dakota Problem: The Atlantic Monthly -- Not a Bakken Story

This is way too good to pass up. The article was a headline story on Yahoo!Financial News today (January 12, 2011).

This is the first time I have seen "it" called "the North Dakota problem."

If it's a problem we need to have more such problems. Smile.

Here's the link.

Here's the paragraph in that story:

The North Dakota Problem

In December, the unemployment rate in North Dakota was just 3.8%. Meanwhile, in Vero Beach, Florida, the unemployment rate was above 14%. So why wouldn't these people flee to North Dakota? Well, because it's North Dakota.

Many of the states suffering from highest unemployment rates are in the South or West, which also happen to be very desirable areas for weather. That's why they were such big centers for the housing boom and now are suffering worse than most others. Meanwhile, some of the lowest unemployment rates happen to be in very undesirable areas to live, like the upper-Midwest. They often weren't as affected by the housing boom. Even if moving across country wasn't physically difficult and expensive, some people just don't want to deal with the climate-shock. The gleaming exception to this rule is Hawaii, which enjoys a 6.4% unemployment rate. 

And why won't people "flee to Hawaii? Well, because it's Hawaii."

"...very undesirable areas to live, like the upper-Midwest." I've always considered Chicago to be in the upper-Midwest. "Very undesirable area"? Elitist. I used to enjoy The Atlantic Monthly. Minneapolis? Fargo? Milwaukee?

By the way, this story speaks volumes of how the depression / recession of 2008 - 2009 - 2010 was different than the one in the 1930's. Back in the 1930's people would have flocked to any state if there was an opportunity for employment. But today, nah, as long as somebody is paying the bills, they're not going to move. The "somebody" paying those bills: grandparents, parents, children, the government (unemployment benefits), the government (social security), plastic (credit cards), spouse, ex-spouse, future spouse, significant other, retirement funds, and the occasional lottery winner. I'm sure folks can think of additional "payers."

Updating the Market Basket at the Sidebar

With regard to the Bakken market basket on the sidebar at the right, I have removed AEZ (American Oil and Gas) which is no longer trading having been bought out by Hess.

It has been replaced with TPLM (Triangle Petroleum). See recent TPLM recommendation for investors.

QEP has also been added to the market basket.

I will add Credo Petroleum if there is room. Both Credo and Triangle are micro-caps with market caps at about $120 million each.

Enbridge: Sweet Oil Only -- North Dakota, USA

From the Director's Cut, January 7, 2011:

"Production shipped by rail is growing and crude trucked to Canada is expected to increase when the Enbridge system goes to 100% sweet crude from Minot to  Clearbrook." In previous releases, it was thought that crude trucked to Canada might decrease with increasing rail and pipeline capacity.

This is huge. I will comment on this later if I remember. For now, I will let readers sort out what this means.

Director's Cut, January, 2011, Released

Source document here.

Production

• Oct Oil: 343,170 bopd
• Nov Oil: 355,038 bopd (new record)
• Oct Wells: 5,300
• Nov Wells: 5,331 (new record)
• Oct Permits: 232
• Nov Permits: 245 (new record)

Rigs

• Active Rig Count: high of 166, Dec 17 - 19, 2010; new record at that time. (In January, 2011, went to 167)
• There was a quote from the Director in a news article that 168 rigs was the high; that may have been a typo or a misquote, but I will continue to show it as the record, but will continue to track

Comments:

• 75 percent of oil is still being trucked from well site; weather impact likely.
• Takeaway capacity: with railroad shipments, takeaway capacity exceeds production. 
• This is new I think: "Production shipped by rail is growing and crude trucked to Canada is expected to increase when the Enbridge system goes to 100% sweet crude from Minot to  Clearbrook." In previous releases, it was thought that crude trucked to Canada might decrease with increasing rail and pipeline capacity.
• Natural gas production is rising and flaring remains well above normal, and thus interest in additional natural gas gathering and processing plants ($2.5 billion in expansions have been announced and/or approved by the state).

Personal Comment (blog author)

That Enbridge decision is a new wrinkle as far as I know. This is huge for those receiving royalties from mineral rights. Prior to this, sweet oil from North Dakota was being shipped with / mixed with heavy sands oil from Canada.

For more on Clearbrook pipeline, click here.

The Enbridge system gathers crude oil from production areas in eastern Montana and western North Dakota and transports that oil to Clearbrook, Minn., where the system interconnects with the Minnesota Pipeline and the Enbridge Partners Lakehead System. From the Lakehead System, shippers can access most of the major crude oil refinery markets along the Great Lakes and in the Midwest.