Three Forks vs Sanish Discusson: Very Esoteric

Since I suspect a lot of folks don't read all the comments, I'm going to post a comment here as it was sent into me.

It has to do with a posting regarding the evolving definition of the Three Forks / Sanish formation.

I've talked about the Three Forks / Sanish nomenclature several different places on the blog, and I won't link them again. One can find them by checking out the "Geology" tab at the top or the  sidebar at the right.

Here's the comment sent into me regarding the Sanish nomenclature, a posting which I very much appreciated:

This was my original post:

"During the "Bakken boom," there seems to be confusion with "Three Forks Sanish." Early on, that was how it was referred to: the "Three Forks Sanish." Over time, the "Sanish" was dropped, and it was simply "Three Forks." But on file reports, especially Whiting file reports, one sees "Sanish" standing alone. According to the "Petroleum Geology of North Dakota's Williston Basin (linked above also), "Sanish" was another name for the Bakken formation (Table 1, 1977). Further down in the article, it states that the Three Forks overlies the Birdbear formation; and, in turn, the Three Forks overlies the Bakken. (So, there is still a bit of confusion between the geologists and the NDIC administrative nomenclature.) According to the report at the link, the "Sanish" is an "informal unit," Sanish sandstone which overlies the Sanish itself. "

Here was what a reader sent into me (and again, I appreciate it):

If there was confusion it has been cleared up. The Sanish or Sanish Sand to some geologists is a member of the Three Forks formation and I think there are something like 7 or 8 members now (increased because of the increase in well data and core). The Sanish represents a lateral change in the depositional environment which I think was sea to beach or near shore, but I don't remember off hand. Last year there was a thesis from Colorado school of mines published on the Three Forks, but it has been awhile since I read it.

I think the NDIC fixed the wording of the post regarding the bakken and three forks with respect to each-other now reads:

"The Bakken Formation conformably overlies the Three Forks Formation in the basin center, and unconformably...

I will eventually write a geology section for thebakkenformation, but I haven't had time to work on the site at all lately.

This was how I responded to that comment:

1. With 7 or 8 members, the "Sanish" potentially becomes more confusing.

2. It appears that there is still differences in how producers classify things; how NDIC administratively classifies things; and how to update past logs (which I don't think will happen).

3. Whiting consistently calls it the Sanish (at least that's what I see), and CLR consistently refers to it as the Three Forks. The company geologists may disagree with me but that's my perception and among laymen, I probably follow this discussion as much as anyone. In my mind, I have a good feeling for what's going on (even if I'm wrong, I have my own "picture").

4. The problem I have is how to explain this in a 30-second soundbite to newbies before their eyes glaze over.

5. My own site has evolved over the past two years, and it might be smart of me to delete some of the old posts which might confuse things.

6. Please write to correct me when I make glaring errors on the geology. We all learn that way. I accept that kind of criticism very well. Other criticism, maybe not so well. Smile.

By the way, for those interested, there is a nice collection of articles/internet sources on the Bakken at this link: Discovery GeoServices Corporation.

KOG: Remember -- Earnings After Market Close -- Thursday, March 3

Just a reminder.

Voyager Update

I've been asked to update information on Voyager. To the best of my knowledge I have not seen anything more than what I last posted about a month ago.

Sometimes for smaller companies, I will only update information at the page I have devoted to these small companies. At the sidebar on the right I have a list of companies that participate in the Bakken.

The top list provides mostly production news unrelated stock market activity. The lower list provides information that pertains more to the stock market and these companies.

Bakken
Voyager Oil and Gas has 24,000 net acres in the Bakken/Three Forks according to its website.

Niobrara
Very, very interesting, Voyager has partnered with Slawson to develop Voyager acreage in the Niobrara in Wyoming-Colorado, in the D-J Basin.

Voyager announced the 48,000 net acre Niobrara development program with Slawson Exploration on June 28, 2010. Voyager is participating on a heads-up basis for a 50% working interest in Slawson's 48,000 acre position. Since that announcement, Slawson has commenced drilling operations on the Bushwacker 24-11-67 well targeting the Niobrara formation. The Bushwacker is the first in a series of three test wells planned for 2010 and the first of 60 wells planned through 2011.

Tiger Ridge in Central Montana
Large natural gas field; controls 65,000 net acres.

Montana Heath
33,500 net acres in the Montana Heath. The Heath formation, I believe, is also known as the Tyler formation in North Dakota. It is similar to the Bakken and will probably be developed like the Bakken.

Tying Up Some Loose Ends Regarding Recent Bakken Segment on "Mad Money"

Tying up some loose ends regarding the recent Bakken segment on Jim Cramer's "Mad Money":

First, the ticker symbols for two companies mentioned in that post:

• Carbo Ceramics: CRR
• Helmerich and Payne: HP.

HP makes the FlexRig. This is quite an incredible story, August, 2007:

• A decade ago, Helmerich & Payne Inc. took a chance on a ground-up rig design based on a simple premise -- that an efficient and safe drilling rig would create value for its customers.
• H&P began designing what the company calls a FlexRig, a computerized drilling unit that allows the operator to punch a hole in the ground and move quickly between drilling locations.
• "We were highly criticized," Juan Pablo Tardio, a company spokesman, said of the early FlexRigs. "But no one had seen the efficiency we were able to achieve."
• The Tulsa-based contract drilling company built the first 50 FlexRigs on speculation and a belief that the industry needed a rig that could reach shallow targets between depths of 8,000 and 18,000 feet.

For Investors: Another Small Company to Consider

A couple of folks have written and asked why I haven't posted anything on Arsenal Energy.

I completely missed that one. Arsenal Energy is another small company operating in the Bakken. Click here for the company's website.

This is the company's most recent press release (December 9, 2010):

Arsenal Energy Inc: At Stanley North Dakota, the EOG operated Burke 31-20 (31% WI) well targeting the Bakken has reached total depth. The well encountered good shows while drilling. It is anticipated that the well will be completed and placed on production over the next two months.

Also at Stanley North Dakota, Arsenal as operator has spud the Brenlee one mile horizontal Bakken well. Arsenal has acquired an additional 27% in the well increasing its working interest to 73%. After the Brenlee well the drilling rig will move directly to the Amy Elizabeth (62% WI) two mile horizontal Bakken location.

Most of Arsenals assets are in Canada.

The company appears to control sixteen (16) sections in the Bakken, around the Stanley, North Dakota, area, which is, like they say, the "heart of the Bakken."  Sixteen sections works out to 10,240 acres.

Another Acquisition by American Standard -- Bakken, North Dakota, USA

Link here.

Ticker symbol: ASEN.OB

This is not the first time I have mentioned American Standard; this is the link to an earlier post.

This acquisition was also in Rigzone:

American Standard has acquired 10,147.66 acres located within eight (8) counties of North Dakota (the "Bakken") from Geronimo Holding Corporation (the "Seller"). ASEN acquired the property for approximately $7,418,000 in cash and Company stock making the average price between $700 and $750 per acre, which is below the current market per-acre price for prolific Bakken minerals.

The acquisition represents the single largest Bakken acquisition to date for the Company and increases its Bakken holdings by more than 160% bringing its total land holdings in the Bakken to over 16,000 acres.

The location of the acreage places the Company near or adjacent to signification operations within each of the counties represented in the acquisition including Mountrail, Williams, Southern Burke and McKenzie Counties.

I have said several times that I expect 2011 to be the year of consolidation in the Bakken. It is getting too expensive for marginal players to continue. They can either sell out now or sit on property worth millions and not have anything to show for it.

I am also impressed with the price paid for this acreage. I would love to know more about the location of this acreage, and eventually we may know more.

The Steven Chu Effect

The amount of news to read / review is overwhelming during earnings season. In addition, I am getting a lot of comments regarding current events and current price of oil.

In recent postings, I have touched upon the "Perfect Storm for an Oil Price Spike" and have received some interesting feedback.

It seems I have missed one huge component of this perfect storm, although I touched upon it earlier today, the Steven Chu effect.

Thanks to the internet and to folks who have sent in comments, we are now about to see the consequences of a "perfect storm" made worse by ideology.

My thesis for the "Perfect Storm" was this: once the global economy turns, the demand for oil will more closely match supply. Anything that disrupts supply, and threatens that demand/supply match (or appears to threaten that demand/supply), there will be a spike in the price of oil.

Never in a million years did I think that just after four months of positing that "perfect storm" did I think that the supply/demand disruption would begin with demand for human rights in Tunisia. But now we are there.

Somewhere on this blog, and I can't locate it now, I wrote that at some point the lack of energy policy or the wrong-headed policy of the current administration would aggravate the problem.

Some of you probably remember what I wrote: as long as the global economy had not turned, and supply of oil still exceeded demand, the administration could shut down oil drilling in the Gulf; the administration could advocate for no more drilling in Alaska (coincidentally "helped" by the leak in the Alaska pipeline); and, the administration could delay permits for onshore drilling, all without significant effects on the economy. The average consumer would not even notice, as long as price of oil remained manageable.

Because of the ideology of the current administration with regard to fossil fuel and renewable energy, there was no plan for a crisis involving interruption of the world's oil supply, even a small amount of interruption. I have no inside information and no one to corroborate that there was no planning by the Department of Energy or the administration, but there are only so many hours in the day and only so many people working on policy. If they were all directed to think about renewable energy, and how to orchestrate the demise of the oil and gas industry over time, there was no time for any other planning. If anything precipitous happened, there was no Plan B.

As long as supply met demand, and there was no real or perceived interruption in oil supply, having no Plan B was fine.

But now, there is a real or a perceived interruption in the global supply of oil, and the administration has no Plan B.

So, the US is forced to react to events. It cannot execute Plan B. Plan B does not exist. There is no Plan B because it is now clear that this was part of Steve Chu's grand plan: a major spike in the price of oil and/or gasoline was needed to force a change in America's use: a transition from fossil fuel to wind and solar.

There is still a surplus of oil in the US and no need for tapping the strategic petroleum reserve. The folks driving the price of oil up know this. That's why there is no call for tapping the SPR.  But oil traders also know that there is no Plan B. The strategic petroleum reserve would get the US through a short term crisis but was not designed for a long term crisis. Ideological policies (no drilling in Alaska, no drilling in the Gulf, delay drilling on shore, frustrate use of fossils through EPA regulations) have long term effects. It takes years to get drilling back on track, if that was even in the plan, and as noted, there is no such plan. There is no Plan B.

The Steve Chu effect is the result of Plan A: take advantage of any crisis to drive the price of oil higher, forcing America to invest in renewable energy. The problem is a) such a transition would take decades; and, b) wind and solar can never come close to meeting the needs of America, much less the entire world.

So, if folks ask me what's causing the price of oil to spike over $100 even though there are ample supplies of oil at Cushing, Oklahoma; the Libyan shortfall is a piddly 1.5 million bopd which can be met by Saudi Arabia (it is said); and, the global recovery is not yet in full gear, this is my answer: there is no Plan B. For those who follow current events closely enough, I would add that it is the Steven Chu effect: Plan A is Steven Chu's plan.

[By the way, when former Vice President Cheney does not address this issue, there is a reason. There is no need for him to explain to the American public what is happening. It's only a matter of time before the fallacy of Plan A and its consequences become obvious. Vice President Cheney knows he does not have to point it out to us. It will soon be obvious to anyone who drives an automobile, or even worse, who drives an F-150. By the way, last week I saw a Cadillac Escalade with an Obama sticker on it -- from the 2010 election; it was priceless.]

Enterprise Products Partners To Convert CO2 Line to Crude Oil Pipeline -- Not a Bakken Story

This is not a Bakken story but it demonstrates how fast the oil industry is moving.

Enterprise Products Partners is converting a CO2 pipeline to a crude oil pipeline connecting fields in west Texas and east New Mexico.

Kinder Morgan Energy Partners to Enter the Bakken -- North Dakota, USA

Yes, for me, this is another huge story.

Another entrant into the Bakken.

Remember, folks, the growth has been exponential in the Bakken. Just when one thought no new BIG names could enter the Bakken, another name sneaks up on me. I did not see this in the local, regional news, but it showed up today in the Oil and Gas Journal.

Kinder Morgan Energy Partners LP (KMEP) and Watco Cos. LLC will build and operate several rail facilities in key markets for loading and unloading crude oil, along with other commodities and products tied to the oil and gas industry.

The network will include Dore and Stanley, ND.

The Dore facility will include Pioneer Oil LLC and have more than 10,000 ft of track in Phase I along with warehousing for inside storage.

The other locations are still in design phase and will be operational first-quarter 2012.

Burlington Northern Santa Fe Railway Co. will provide rail services for the project. BNSF also is serving Rangeland Energy LLC’s North Dakota oil terminal, COLT Connector, set to enter service by December.

Warren Buffett buying BNI looks smarter and smarter every day. Wow, what a coup by Buffett.

But, back to the original point. Did I miss this in the regional newspapers.com? This is the first time I saw this.

Again, it's this kind of infrastructure that will be needed to get to 1 million bopd by 2015.

Quiet Day in North Dakota -- Only Three (3) New Permits -- North Dakota, USA

Producers: EOG (2) and North Plains.

Oil fields: Parshall, Ross, and Truax.

In addition several wells reported or released from confidential status

• 18414, 2,861, Newfield, Sand Creek Federal 1-27HA, reported elsewhere
• 18965, 1,264, Whiting, Satterthwaite 13-7H, Sanish, Bakken, reported elsewhere
• 18402, 641, Petro-Hunt, Fort Berthold 152-94-22D-15-1H, Antelope, Sanish (Three Forks). From well file I could not find if this well has been fracked. See note regarding Horob below. This was originally going to be a Middle Bakken well but was changed to a Three Forks (Sanish) well.
• 18737, 1,034, Zenergy, Dakota-3 Mason 2-11H, Van Hook, Bakken; spudded August, was not fracked until January (four month delay)
• 18901, 640, CLR, Horob 1-14H, Hebron,  Bakken

Horob is in the small Hebron field which I've blogged about before; several people have been waiting to see results on this one. According to the well file, "the Horob 1-14H spacing unit contains E/2 W/2 and E/2 of sections 11 and 14 of 155N-104W. This adds up to 960 acres." This jibes with the GIS map server which shows this part of the Hebron oil field with 960-acre spacing. The well file is very thin (30 pages) and there is no indication that it has been fracked, although I could have missed it, or the paperwork may not be there yet. With an IP test date, one would assume that it's been fracked but I don't know.

WLL Reports a Series of Incredible Wells -- Bakken, North Dakota, USA

Link here.

These Whiting wells have been previously reported at this site, but they were taken from a corporate presentation. Many folks would not have seen the results at that time. Now they are off the confidential list, and a broader audience will see them.

Folks, these are very, very good wells.

CLR asserts that higher IPs result in improved EURs and BEXP says higher IPs result in wells being paid off more quickly. 

Here are the Whiting wells that came off the confidential list today:

• 19174, 2,090, WLL, Kannianen 43-33H, Sanish, Bakken
• 19029, 2,411, WLL, Heiple 11-3H, Sanish, Bakken
• 19025, 1,361, WLL,  Moore 11-7H, Sanish, Bakken
• 18965, 1,264, WLL, Satterthwaite 13-7H, Sanish, Bakken
• 18943, 2,169, WLL, Locken 14-9XH, Sanish, Bakken
• 18869, 947, WLL, Smith 44-26H, Sanish, Bakken

Perfect Storm Revisited: Spike in Price of Oil

This was written in October, 2010, regarding the "perfect storm" for a spike in oil prices.

Today, we learn that supplies of domestic oil dropped a bit, despite analysts expecting an increase in supply.

Interesting.

After a significant surge in oil prices the past two weeks, oil is up a bit again today. The price appears to be quite volatile, moving between an increase of 70 cents and $1.14.

Prices of shares in Bakken market basket and blue chip oil and oil service companies are mixed, but slightly more green than red.

It should be noted that In 2008, while the head of the Lawrence Berkeley National Laboratory in California, Steven Chu, the administration's energy secretary, told The Wall Street Journal that energy prices were the lynchpin to an energy overhaul.

The dots are easy to connect.

The Mideast

Update

March 18, 2011: When I wrote the original note below, I implied that despots and dictators in the Mideast learned a lot when they saw what happened to Mubarak in Egypt and how Libyan strongman Kadafi handled a similar situation. Now, others are reporting the same thing.

Kadafi has ruled this country for four decades using tools also at the disposal of other Arab leaders. He shrouded his dirty deeds in nationalist ideology. He tactically doled out the country's oil money. He kept tabs on his enemies here and abroad.

But in the end, it was Kadafi's willingness to use brute force and the tools of his police state that has helped him so far avoid the fate of neighboring autocrats in Tunisia and Egypt who were swallowed up by popular revolutions.

Regimes in Bahrain, Saudi Arabia, Yemen, and Syria appear to have taken note, confronting their uprisings with a hard wall of state-sponsored violence.

If the people rise up against Saudi royalty, I wonder if President Obama will side with the rebels? If not, it's interesting how he picks which countries should become democratic. Apparently those with minimal / no oil such as Libya and Egypt get freedom. Those with oil, won't. 

Original Post

I can't comment on the situation in Tunisia, except to say it is a constitutional republic.

No one has any idea how "this" will end in the Mideast, but there are already lessons to be learned, and observations.

It is interesting to note that the countries with the most Western-oriented (with one exception: Morocco), liberal thinking, well-educated were the first to be engulfed in conflict.

Tunisia first, and as I've said, I don't know it well enough to comment further except to say that is is a constitutional republic.

Then, Egypt, perhaps the longest ally of the west, working closely with the west to hammer out peace treaties with Israel, was the second. It's young people may be the best educated among the Mideast countries, and they are probably the most traveled, particularly to London. Their government, outside of Israel, of course, was the most progressive among the countries with Sunni- or Shia-dominated populations.

Then Libya. Of course, there is a madman in control, but his 38-year-old son was well-educated and well-traveled. The expectation was that he would succeed his father with plans to bring Libya closer to the western world.

The westernised 38-year-old, who studied at the London School of Economics and enjoys close friendships with senior British politicians and financiers, has become the focal point of the conflict now threatening to rip Libya apart.
Whereas Gaddafi senior has always been seen in the west as a dictator – albeit one brought back into the fold – Saif, a trained architect who established a medical charity and was considered his father's heir apparent, held out the promise of a new dawn.
As far back as 2002, Saif told an interviewer that Libya needed democracy. "It's policy number one for us. First thing democracy, second thing democracy, third thing democracy," Saif said, using a rhetorical technique he was to repeat last week to far more sinister effect.

Another link here regarding the son's ties to London.

Bahrain was next; and that appears to be settled. Sort of. For now.

Saudi Arabia and Iran have both stomped on initial efforts of protesters.

Obviously, Iraq is a special case, but had Saddam still been in charge, I doubt there would have been any long-lasting or successful uprising.

My hunch: the leaders (despots as some would call them) in the more hard-line countries like Saudi Arabia and Iran are learning a lesson: they need to improve things for their folks but democracy is not something they are going to be interested in any time soon, now that they have seen where it leads.

Longest Horizontal To Date Appears to Have Reached Total Depth -- March 2, 2011

Based on data at NDIC, EOG should have reached TD for the longest horizontal to date in the Bakken by now: #20037, Liberty LR 17-11H, officially = 24,390 feet, with extended long lateral under the river.

Updates

January 28, 2014: longer extended laterals, and these are now being drilled because they are under the river. Also, note:


March 28, 2011: A couple days ago, I got into a conversation with "anonymous" over the fact that the operator had lost contact with the gamma detector, and decided to press on anyway. My hunch is that this is not all that unusual. I just happened to look at the file report for the Murex Ventura 11-2H well (#19196). From the report: "A tool failure rendered gamma data unreliable and a decision was made to continue drilling the remainder of the lateral without this information." Gamma was lost at 19,460 feet; TD was 20,420 feet.

March 26, 2011: For an update on this well, go to this site, and look at the first two comments.  An alert reader noted that "they" lost contact with the gamma detector at about 21,884 feet but pressed on anyway, without the gamma detector, and reached TD.

GM: Today's Shares Prices Less Than IPO, After Initial Surge

I assume share price is based on rational analysis of the company.

But it is interesting that the share price reversed itself after the government/union-owned company gave all employees an average $4,000 bonus.

Just saying.

Here It Is: NOG Earnings: 4Q10 and Full -- Bakken, North Dakota, USA

Most important thing on this page: a) NOG has acquired more acreage at reasonable prices; and, b) they plan to drill 6 wells per 960-acre average spacing unit. (One well per 160 acres -- something I've talked about for quite some time in general at this blog.)

Link here.

Misses by $0.02. Misses on revenues. Reiterates outlook for 2011.

2010 reserve replacement of 1,183%; 2010 reserve growth of 158%

Quarter-over-quarter production increased 36%; oil and gas sales increased 54%

Earnings: 93 cents vs 29 cents/share for full  year, 2010, 2009

Northern Oil's Adjusted EBITDA for fiscal year 2010 was $47.1 million, or $0.93 per diluted share, which represents a 338% increase over Adjusted EBITDA of $10.7 million, or $0.29 per diluted share, for fiscal year 2009. Northern Oil's Adjusted EBITDA for the fourth quarter of 2010 was $18.2 million, or $0.32 per diluted share, which represents a 43% increase over Adjusted EBITDA of $12.7 million, or $0.24 per diluted share, for the third quarter of 2010.

My thoughts: it's still a growth company.

Other notes:
NOG increased net acreage in the Bakken since last report. I have NOG controlling 120,000 net acres in the Bakken; this report, NOG says they control 147,407 net acres, a 23% increase.

Acreage Update:
In 2010, Northern Oil acquired aggregate of 56,858 net mineral acres for an average of $1,043 per net acre in its key prospect areas. In the fourth quarter of 2010, Northern Oil acquired approximately 18,029 net mineral acres for an average of $954 per net acre in all of its key prospect areas in the form of both effective leases and top-leases spanning across the counties of Billings, Burke, Divide, Dunn, Golden Valley, McKenzie, Mountrail, Stark and Williams, North Dakota and Richland and Roosevelt, Montana.

During the first quarter of 2011 through March 1, 2011, NOG acquired 7,191 net acres at an average price of $1,956 per acre.

NOG's current Bakken and Three Forks prospective acreage position will allow it to drill approximately 921 net wells based on six net wells per 960-acre average spacing unit.