I wasn't going to link this story but after reading near the end of the letter Senator Conrad wrote regarding water issues in North Dakota, it was too good to pass up.
Talk about irony and audacity.
As most readers know, the Garrison Dam / Lake Sakakawea displaced Native Americans living on the Fort Berthold Indian Reservation. Some of them moved to a new town, appropriately named New Town, with the flooding of their land.
Most readers also know the story of the lake and the plans to use a trivial amount of water from that lake to frack oil wells in the immediate area, i.e., the wells on the reservation.
After losing the specious argument that there wasn't enough water in the Missouri River / Lake Sakakawea for fracking, the US Army Corps of Engineers agreed to release the water (more than ten times as much as possibly needed) for fracking but for a fee. (The Corps is willing to release enough water to frack 10,000 wells per year; about 1,000 wells are being drilled annually right now.)
Yes, the US Army Corps of Engineers want to charge Native Americans to use the water that flooded their land.
Talk about irony and audacity.
It should be noted that the water the Native Americans would be taking out of the lake would be equal to about the amount that runs off their land in the first place into the lake. So, not only are they going to be charged (if the Corps gets its way) for water that flooded their ancestral homes, they will be charged for their own water.
Talk about a double dose of irony and audacity.
Friday, February 4, 2011
Denbury To Raise $400 Million Through Senior Notes
Link here.
Continues the trend.
These 6 3/8ths notes will replace 7 1/2% notes coming due in 2013 and 2015.
I've always said the "business of business" is where companies make money, and saving a percent on their debt probably saves a few bucks. I know folks would prefer a 5% note on their new home rather than a 6% note.
Continues the trend.
These 6 3/8ths notes will replace 7 1/2% notes coming due in 2013 and 2015.
I've always said the "business of business" is where companies make money, and saving a percent on their debt probably saves a few bucks. I know folks would prefer a 5% note on their new home rather than a 6% note.
What Is the Significance of the Confidential List?
In the past couple of days, I have referenced the "confidential list" on two occasions:
I'm going out on a limb because I am an amateur when it comes to the oil industry, and I probably know only one percent of all there is to know (if that much), so take what I present as facts with a grain of salt and check with experts if this issue is important enough to you.
My understanding of the process is this.
First, the oil company only has to request that the well be held in confidential status and that request will be automatically granted.
The period of the confidential status in North Dakota is six months. That is a fact. The question is when does the clock start ticking.
My understanding is that when the permit is requested, the oil company requests that the file/well be designated a "tight hole." That indicates that the well will be on the confidential list when the well is spudded.
This was taken from a reliable source and sounds "legal" enough to suggest it is accurate:
The obvious reason why producers want their wells to be confidential is to prevent a run-up in the cost of leases if the well was successful, or for other producers to flock to the a new area. Even if a producer has a lease, another producer can come in "top lease."
About a year ago, someone questioned the need for the "confidentiality" of these wells now that "everyone" knew productive the Bakken was. My knee-jerk reaction was to agree. But now that I see the various estimates of how much recoverable oil is in the Bakken, I now understand the continued need for confidentiality. It is also obvious that some fields are better than others, and in large fields, some areas may be better than others.
One of NDIC's mandates is to maximize oil production and efficiency since the state has a vested interest. The state and surface owners would like to minimize the number of wells required in any given area. Producers would like to maximize oil production from each well. Producers are continually working to improve their techniques: the optimum number of fracture stages, the best mix of proppants, the length of the laterals, and so forth.
When oil companies do not share this information, common sense tells me that opportunities are being missed.
Great strides have been made in medicine because medical researchers publish results of medical studies, ultimately leading to better diagnostic and therapeutic modalities.
Somehow, it seems that the NDIC should require "best practices" and it's hard to do that without sharing information. The oil companies will argue that it is in their best interest to use "best practices" but without sharing information how does one know what works best. I am not advocating the public disclosure of proprietary information but I think there are ways that "best practices" could be shared without breaching that confidentiality.
But in the big scheme of things, the confidentiality list seems to be doing what it was intended to do.
By the way, North Dakota requires core samples of all wells being drilled to be sent to the NDIC library, which I believe is at the University of North Dakota. This library is one of the reasons why the Bakken was able to be developed so quickly. So much information on the geology of the Williston Basin was already known when the current boom began, eliminating the need for additional exploratory wells. It is incredible that one seldom sees an exploratory well being drilled in North Dakota (I don't include "wildcats" targeting the Bakken or Three Forks as "exploratory").
I mentioned earlier that I was frustrated that the Zastoupil (#19258) well has come off the confidential list but no production data was provided. It is possible that this is simply an administrative issue, and that we will see production runs a month from now when paperwork catches up with the NDIC. I can only imagine how busy they are.
- The current breakdown of wells on the confidential list (by producer)
- A Lodgepole well coming off the confidential list, but still no production information
I'm going out on a limb because I am an amateur when it comes to the oil industry, and I probably know only one percent of all there is to know (if that much), so take what I present as facts with a grain of salt and check with experts if this issue is important enough to you.
My understanding of the process is this.
First, the oil company only has to request that the well be held in confidential status and that request will be automatically granted.
The period of the confidential status in North Dakota is six months. That is a fact. The question is when does the clock start ticking.
My understanding is that when the permit is requested, the oil company requests that the file/well be designated a "tight hole." That indicates that the well will be on the confidential list when the well is spudded.
This was taken from a reliable source and sounds "legal" enough to suggest it is accurate:
"All information furnished to the director on new permits, except the operator name, well name, location, spacing or drilling unit description, spud date, rig contractor, and any production runs, shall be kept confidential for not more than six months if requested by the operator in writing. The six-month period shall commence on the date the well is completed or the date the written request is received, whichever is earlier. If the written request accompanies the application for permit to drill or is filed after permitting but prior to spudding, the six-month period shall commence on the date the well is spudded."Once the confidential period is up, the well will automatically come off the list six months later. There are no extensions. The producer can release information before the six months are up, but it is at the producer's discretion. I assume that if there are partners, the partners must not release information prematurely without the okay of the producer who filed the permit.
The obvious reason why producers want their wells to be confidential is to prevent a run-up in the cost of leases if the well was successful, or for other producers to flock to the a new area. Even if a producer has a lease, another producer can come in "top lease."
About a year ago, someone questioned the need for the "confidentiality" of these wells now that "everyone" knew productive the Bakken was. My knee-jerk reaction was to agree. But now that I see the various estimates of how much recoverable oil is in the Bakken, I now understand the continued need for confidentiality. It is also obvious that some fields are better than others, and in large fields, some areas may be better than others.
******
There are some things that remain confidential even when the wells come of the confidential list. The biggest secret, of course, is the use and make-up of proppants. One of NDIC's mandates is to maximize oil production and efficiency since the state has a vested interest. The state and surface owners would like to minimize the number of wells required in any given area. Producers would like to maximize oil production from each well. Producers are continually working to improve their techniques: the optimum number of fracture stages, the best mix of proppants, the length of the laterals, and so forth.
When oil companies do not share this information, common sense tells me that opportunities are being missed.
Great strides have been made in medicine because medical researchers publish results of medical studies, ultimately leading to better diagnostic and therapeutic modalities.
Somehow, it seems that the NDIC should require "best practices" and it's hard to do that without sharing information. The oil companies will argue that it is in their best interest to use "best practices" but without sharing information how does one know what works best. I am not advocating the public disclosure of proprietary information but I think there are ways that "best practices" could be shared without breaching that confidentiality.
But in the big scheme of things, the confidentiality list seems to be doing what it was intended to do.
By the way, North Dakota requires core samples of all wells being drilled to be sent to the NDIC library, which I believe is at the University of North Dakota. This library is one of the reasons why the Bakken was able to be developed so quickly. So much information on the geology of the Williston Basin was already known when the current boom began, eliminating the need for additional exploratory wells. It is incredible that one seldom sees an exploratory well being drilled in North Dakota (I don't include "wildcats" targeting the Bakken or Three Forks as "exploratory").
******
I mentioned earlier that I was frustrated that the Zastoupil (#19258) well has come off the confidential list but no production data was provided. It is possible that this is simply an administrative issue, and that we will see production runs a month from now when paperwork catches up with the NDIC. I can only imagine how busy they are.
Brent - North Dakota Sweet Oil - NYMEX Spread -- There May Be a Solution
This is really, really cool.
I had noted the increased number of oil loading terminals being built and the rumors that oil loadings were increasing.
I was also very aware of the reason for the Brent - NYMEX spread (something that some of the talking heads on CNBC have not figured out, by the way).
And I posted a story earlier that shipping by rail has been more expensive than by pipeline historically, but due to peculiarities of the process, shipping by rail is now competitive, or nearly competitive, with pipeline. I will try to find the link.
But I never connected all the dots.
According to a great Reuters story (sent to me by a reader), the producers are now increasing their rail loadings to ship highly sought after Bakken crude to points east and west to avoid Cushing, Oklahoma, where there is a glut. Highly sought after Bakken sweet oil? Enbridge announced recently it will ship only sweet oil going forward.
For a relatively short article, much of it was devoted to the Bakken:
I forgot (or did not know that EOG had two (2) crude-by-rail terminals.
Warren Buffett bought BNSF a couple years ago. He is either the smartest investor, the luckiest investor, or a little of both. I started buying shares in BNI in 1984 and accumulated shares for 30 years until Mr Buffett bought BNI. Drat.
Speaking of glut, could there be a short term huge sell-off of oil? I think a fair amount of price of oil must be do to expectations of global economic recovery. I'm just not seeing enough of the recovery yet to the extent necessary to take this excess oil off the market. Analysts are confused. For every talking head "long" on oil, there is a talking head "short" or neutral on oil.
By the way, there is a nice discussion of this very issue -- the Brent - WTI spread -- over at the Bakken Shale Discussion Group. It was nice to seem them reference this blog without stating outright.
I had noted the increased number of oil loading terminals being built and the rumors that oil loadings were increasing.
I was also very aware of the reason for the Brent - NYMEX spread (something that some of the talking heads on CNBC have not figured out, by the way).
And I posted a story earlier that shipping by rail has been more expensive than by pipeline historically, but due to peculiarities of the process, shipping by rail is now competitive, or nearly competitive, with pipeline. I will try to find the link.
But I never connected all the dots.
According to a great Reuters story (sent to me by a reader), the producers are now increasing their rail loadings to ship highly sought after Bakken crude to points east and west to avoid Cushing, Oklahoma, where there is a glut. Highly sought after Bakken sweet oil? Enbridge announced recently it will ship only sweet oil going forward.
For a relatively short article, much of it was devoted to the Bakken:
- Industry sources and government officials in North Dakota and Montana say that as many as 10 crude-by-rail terminals are planned in the Bakken area, adding to existing crude-by-rail capacity from the region of about 115,000 bpd.
- EOG Resources began early this year to ship crude between its two new crude-by-rail terminals in Bakken and Stroud, Oklahoma, near Cushing. The company has said the terminals will allow it to ship a unit train per day, or 60,000 barrels. The terminals segue into BNSF's railroad network.
I forgot (or did not know that EOG had two (2) crude-by-rail terminals.
Warren Buffett bought BNSF a couple years ago. He is either the smartest investor, the luckiest investor, or a little of both. I started buying shares in BNI in 1984 and accumulated shares for 30 years until Mr Buffett bought BNI. Drat.
Speaking of glut, could there be a short term huge sell-off of oil? I think a fair amount of price of oil must be do to expectations of global economic recovery. I'm just not seeing enough of the recovery yet to the extent necessary to take this excess oil off the market. Analysts are confused. For every talking head "long" on oil, there is a talking head "short" or neutral on oil.
By the way, there is a nice discussion of this very issue -- the Brent - WTI spread -- over at the Bakken Shale Discussion Group. It was nice to seem them reference this blog without stating outright.
EIght (8) New Permits -- Whiting Issued Three in the Southwest -- Stepping Out Smartly
Producers: Whiting (3), XTO (2), Slawson (2), and Anschutz
Fields: Bicentennial, Heart Butte, Beaver Creek, Big Bend, and Willmen
All three of the Whiting permits are in the southwest of North Dakota, in the Bicentennial Field in McKenzie County, and in the Beaver Creek field in Golden Valley, and all three are targeting the Three Forks formation.
The two Slawson wells will be on the same pad, in the Big Bend oil field; Slawson already has a two-well pad in this section. The new permits:
I began posting the new permits on a daily basis a few months ago. I don't really know why I did it, except I had some free time and am always curious where doing something new might lead me.
In this case, it has become a very interesting exercise. Instead of just noting the number of new permits, I now get a feeling of which producer is active, and where that producer is active. In some cases I get a better feeling for the company's business plan.
Today, what stands out is this:
Slawson is one of my favorite producers to follow; it is privately held. And, had I not spent a bit of time on this one, I would have missed the Slawon snake eyes.
I have posted elsewhere the other information on today's daily activity report, namely, the nice KOG well (#18988, 1,835, Two Shields Butte 14-21-33-15H) and Zastoupil (#19258) comes off the confidential list but provides no data despite the fact that the well reached total depth in August, 2010, six months ago.
Fields: Bicentennial, Heart Butte, Beaver Creek, Big Bend, and Willmen
*****
All three of the Whiting permits are in the southwest of North Dakota, in the Bicentennial Field in McKenzie County, and in the Beaver Creek field in Golden Valley, and all three are targeting the Three Forks formation.
*****
The two Slawson wells will be on the same pad, in the Big Bend oil field; Slawson already has a two-well pad in this section. The new permits:
- 20422, Howitzer 2-25H, SESE 24-152N-93W
- 20423, Skybolt 2-24H, SESE 24-152N-93W
- 18287, Skybolt 1-24H, SWSW 24-152-93, short lateral going south, section 25, 911 ; cumulative oil to date (completed December 30, 2009) - 106K
- 18363, Howitzer 1-25H, SESW 24-152-93, short lateral going north, section 24, 1,156 (1,290) (981 -- scout ticket); cumulative oil to date (completed January 16, 2010) - 106K
*****
I began posting the new permits on a daily basis a few months ago. I don't really know why I did it, except I had some free time and am always curious where doing something new might lead me.
In this case, it has become a very interesting exercise. Instead of just noting the number of new permits, I now get a feeling of which producer is active, and where that producer is active. In some cases I get a better feeling for the company's business plan.
Today, what stands out is this:
- I continue to see a lot of activity by two companies that have now been bought by a larger company; the acquiring company obviously wants to pay for their acquisition
- It is obvious that Whiting stands out among all the producers as the producer aggressively going after the Three Forks; three permits today in Three Forks area
*****
Slawson is one of my favorite producers to follow; it is privately held. And, had I not spent a bit of time on this one, I would have missed the Slawon snake eyes.
I have posted elsewhere the other information on today's daily activity report, namely, the nice KOG well (#18988, 1,835, Two Shields Butte 14-21-33-15H) and Zastoupil (#19258) comes off the confidential list but provides no data despite the fact that the well reached total depth in August, 2010, six months ago.
Request for Help: Recommendation of North Dakota Attorney Specializing in Oil and/or Mineral Rights Titles
"Jerry" sent me a comment asking if anyone could recommend a North Dakota attorney specializing in oil and/or mineral rights titles.
If you can help, he left his e-mail address in the first comment over at the Charlson field update.
If you can help, he left his e-mail address in the first comment over at the Charlson field update.
Week 5: January 29 -- February 4, 2011
What's Going On With Zastoupil and "Oil for America" -- I've Got a Secret?
Breakdown of the 1,180 Wells on the Confidential List in North Dakota
Breakdown of the 168 Active Rigs in North Dakota
Denbury Doubles Reserves in 2010
Kinder Morgan To Go Public
Four Hess Wells Come Off Confidential List (91, 345, 511, and 584)
More Data That North Dakota Will Surpass Alaska in Oil Production if Trend Continues
Some Selected Data Points in North Dakota: Oil Permits / Wells
Another Bulk Storage Plant and Loading Terminal in Western North Dakota -- Epping, ND
Enbridge and First Solar Strengthen Relationship
Warren Buffett: Buy What You Know. Thoughts On Enbridge, ONEOK, and Kinder Morgan
Breakdown of KOG's 70,000 Acres in the Bakken
Legacy To Extend Its Spearfish Play Into North Dakota
Siverston Field Update (Note all field updates are in the sidebar at the right)
Surprising Madison Well in North Dakota: Paid For Itself in Three Months?
China, Chesapeake, Eagle Ford and Now Niobrara
Hess Plans to Double Bakken Production by Year-End (2011)
USEG Announces a New Partnership and A Great Well
Breakdown of World Energy Consumption, by Fuel
Syrian-Lebanese in North Dakota
February, 2011, NDIC Hearing Dockets
Common Sense on Energy: the Swedish Experience
Breakdown of the 1,180 Wells on the Confidential List in North Dakota
Breakdown of the 168 Active Rigs in North Dakota
Denbury Doubles Reserves in 2010
Kinder Morgan To Go Public
Four Hess Wells Come Off Confidential List (91, 345, 511, and 584)
More Data That North Dakota Will Surpass Alaska in Oil Production if Trend Continues
Some Selected Data Points in North Dakota: Oil Permits / Wells
Another Bulk Storage Plant and Loading Terminal in Western North Dakota -- Epping, ND
Enbridge and First Solar Strengthen Relationship
Warren Buffett: Buy What You Know. Thoughts On Enbridge, ONEOK, and Kinder Morgan
Breakdown of KOG's 70,000 Acres in the Bakken
Legacy To Extend Its Spearfish Play Into North Dakota
Siverston Field Update (Note all field updates are in the sidebar at the right)
Surprising Madison Well in North Dakota: Paid For Itself in Three Months?
China, Chesapeake, Eagle Ford and Now Niobrara
Hess Plans to Double Bakken Production by Year-End (2011)
USEG Announces a New Partnership and A Great Well
Breakdown of World Energy Consumption, by Fuel
Syrian-Lebanese in North Dakota
February, 2011, NDIC Hearing Dockets
Common Sense on Energy: the Swedish Experience
Week 4: January 22 -- January 28, 2011
XOM Sets Extended Reach Record -- In Asia -- Not a Bakken Story -- Lateral Reaches 8 Miles
Brent vs NYMEX Spread: Likely To Get Worse
Seven Great WLL Wells
Eight Great WLL Wells
GMX Resources Enters The Bakken, Update
BEXP Announces Record Year-End 2010 Proved Reserves; Four New High Production Wells
Five Great BEXP Wells
FlexRigs
Social Security Now Running a Deficit -- Not A Bakken Story
Hess 4Q10 Update
Zavanna Renews Four Permits
Super-Long Laterals in the Bakken -- BHI
Analysts: Bakken Should Hit 1.2 Million Bbls in 2015
A New Multi-Rail Terminal in Western North Dakota -- Trenton, North Dakota
SM Will Raise $250 Million Through Senior Notes
Oil Industry Impact on ND Economy: $3 Million / Each New Well
Compilation of Studies: How Much Oil Is There in the Bakken?
Throwing in the Towel on the Spearfish?
TransCanada's Keystone XL: Problems and Updates
Oasis to Raise $300 Million Through Senior Notes; Oasis Triples Reserves in 2010
Oasis Reports a Nice Wildcat (2,707)
HAL's Profits Double 4Q10
Eight Rigs-on-Site in the Dickinson, North Dakota, Area
Update on ONEOK's $500 Million Pipeline Project (Sidney, Montana); Another $1.5 Billion in the Bakken
Earnings Season 4Q10
Brent vs NYMEX Spread: Likely To Get Worse
Seven Great WLL Wells
Eight Great WLL Wells
GMX Resources Enters The Bakken, Update
BEXP Announces Record Year-End 2010 Proved Reserves; Four New High Production Wells
Five Great BEXP Wells
FlexRigs
Social Security Now Running a Deficit -- Not A Bakken Story
Hess 4Q10 Update
Zavanna Renews Four Permits
Super-Long Laterals in the Bakken -- BHI
Analysts: Bakken Should Hit 1.2 Million Bbls in 2015
A New Multi-Rail Terminal in Western North Dakota -- Trenton, North Dakota
SM Will Raise $250 Million Through Senior Notes
Oil Industry Impact on ND Economy: $3 Million / Each New Well
Compilation of Studies: How Much Oil Is There in the Bakken?
Throwing in the Towel on the Spearfish?
TransCanada's Keystone XL: Problems and Updates
Oasis to Raise $300 Million Through Senior Notes; Oasis Triples Reserves in 2010
Oasis Reports a Nice Wildcat (2,707)
HAL's Profits Double 4Q10
Eight Rigs-on-Site in the Dickinson, North Dakota, Area
Update on ONEOK's $500 Million Pipeline Project (Sidney, Montana); Another $1.5 Billion in the Bakken
Earnings Season 4Q10
Two Items of Interest -- Wells Coming Off the Confidential List Today -- North Dakota, USA
There were two items of interest with regard to the wells that came off the confidential list today.
The first item of interest was another nice KOG well:
"I've Got a Secret," Lucille Ball and Johnny Carson
The first item of interest was another nice KOG well:
- 18988, 1,835, KOG, Two Shields Butte 14-21-33-15H, Heart Butte, Bakken
- 19258, DRL, Oil for America, Zastoupil 22-1, Wildcat, Lodgepole
You Thought the Bakken Was Good? Look at Coal -- Not a Bakken Story
I posted this on my "coal" page, as it were, on January 31, 2011: I did not realize this, but according to Jim Cramer, CNBC, coal is the fastest-growing fuel in the world.
Profits for coal companies are going to be huge.
Profits for coal companies are going to be huge.
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