Six (6) New Permits -- Bakken, North Dakota, USA

Operators: BEXP (3), Zenergy (2), CLR.

Fields: Kittleson Slough, Twin Valley, Squaw Creek, Banks, and a wildcat.

The Zenergy wildcat is about 12 miles directly north of Williston.

Two of the BEXP wells will be on a single pad in Banks oil field.

The daily activity report had a nice Newfield well reported elsewhere.

• 19442, 2,606, Newfield, Staal 150-99-26-35-1H, South Tobacco Garden

Williston Herald Supplement: "Talkin' The Bakken" -- Bakken, North Dakota, USA

Link here. (PDF)

Lots of advertising, but that's actually half the fun when reading about the Bakken.

Notice how many hours these folks work in the oil patch: 90 - 100 hours/week.

1.5 million bbls/day by 2015 out of the Bakken? Before recent problems in Libya, that's how much they say Libya was producing.

An excellent supplement.

If I was a 20-something living in Detroit, looking for a job, I would be driving to the Bakken (North Dakota), Niobrara (Wyoming/Colorado), and or Eagle Ford (south Texas) as fast I could.

Peak Oil? What Peak Oil? Got Shale?

EIA: Shale Gas is a "Global Phenomenon."

Well, duh.

Link here.

$43/Month?

This deserves a longer post, and maybe I will come back to edit it.

I've been waiting for the linked article for quite some time now, and finally AP has come through: price of oil is starting to hurt the economy.

How long has it been since we last saw $85 oil?

But I digress.

The linked article says this:

Oil has topped $108 a barrel, the highest price since 2008. Regular unleaded gasoline now goes for an average $3.69 a gallon, according to AAA's daily fuel gauge survey, up 86 cents from a year ago.

Eighty-six cents from a year ago.

How many miles do you tell your insurance company you drive every year. Yup, 12,000 miles or 1,000 miles/month.

[If you are driving a car that gets less than 20 miles per gallon, this post does not apply to you. But then again, there's been plenty of time since 2008 to find a vehicle that gets 20 mpg. By the way, President Obama thinks it is something to laugh about if folks are still driving vehicles that get 8 mpg.

“If you’re complaining about the price of gas and you’re only getting 8 miles a gallon, you know,” Obama said laughingly. “You might want to think about a trade-in.” Let them eat cake.

As I've said so many times before, I can't make this stuff up.]

If you drive 1,000 miles/month (like you tell your insurance agent) and you get 20 mpg, that works out to 50 gallons of gasoline/month.

According to AAA, gasoline is up 86 cents/gallon. For fifty gallons, that's $43 extra per month in gasoline costs compared to 2008.

That's one meal out for two people at a moderately upscale restaurant. It's one meal for a family of four at McDonald's -- not quite, but close. Throw in a couple of Starbucks coffee that week, and you will hit $43 (the McDonald's family of four dinner plus a couple of Starbucks.

Now, tell me again, that 86 cents more per gallon is hurting the economy.

I've got a much longer post on just this subject, and I think my argument is pretty solid. But politicians will demagogue it and airlines, grocery stores, and taxis will take advantage of it.

Again, I am not alone on this. President Obama, in his energy security speech just a week ago (when oil was $104 or thereabouts) reassured us that a $10 increase in the price of oil/barrel translates to only 25 cents/gallon at the pump. He understands the demagoguery and reassured us that cutting imports by one-third by 2021 will solve our problems.

This is what's scary, folks. If there's the amount of inflation in the next six months that Wal-Mart is predicting, then we will have something to be concerned about. The good news: The Chairman of the Federal Reserve, Mr Bernanke says "he" can stop it (inflation).

Tectonic Shifts: The End of the Nuclear Industry and What It Means for Natural Gas

There is an interesting trend: increasingly more articles on the demise of the nuclear industry and what is means for the natural gas industry.

This deserves a long commentary, but I don't have time for it tonight.

Unfortunately, all I can do is link you to a couple of sites that are short term in outlook.

I am convinced that the events in Japan has resulted in a tectonic shift much bigger than we can imagine.

First of two links.

Two stories that tell us how big this story is:

• Germany, which used to be an exporter of electricity, is now importing electricity.
• Germany: talking green, but addicted to coal.

Yes, Germany is a signatory to the Kyoto Protocol.

Investors: Seven (7) Small Oil / Natural Gas Companies With More Upside Potential

This SeekingAlpha.com article is linked here.

Just How Good Is the Bakken? 700K For a Well Less Than 3 Years Old

This is just a completely random note. I took this from an earlier posting regarding a different subject, so you may think you are reading something you might have already seen. Yes, you are.

In a 4-mile square area, straddling the Parshall and the Sanish oil field, here are some of the wells:

• 19182, EOG: a new well, IP of 812, the Upper Bakken
• 17287, EOG: (same section as 19182, just a few hundred feet to the east): 1,137, spudded 10/08; tested 10/08; Upper Bakken; 572K as of 2/11
• 18912, EOG:  (one mile north): 422, spudded 5/10; tested 7/10; 17 stages; Three Forks; 34K as of 2/11
• 17500, EOG: (one mile north): 2,162, spudded 8/08; tested 11/08; Upper Bakken; 573K as of 2/11
• 18913: (one mile north: still confidential (all three -- 17287, 18912, and 17500 are in a line, in the same section)
• 17263, Murex:  3,124, Murex, Chandler James 25-36H, spudded 7/08; tested 10/08; 680K as of 2/11; Middle Bakken

It's hard for me to believe that only one to two miles apart, that in one field, that of the three Bakken formations, it is only the Middle Bakken that is a pay zone, or that only the Upper Bakken is the only pay zone. With that thought in mind, here you have a huge well in the Middle Bakken operated by Murex in the Sanish, just a mile or two away.

It's easy to connect the dots. Remember, folks, some operators are asking for as many as 13 wells in one Bakken Pool spacing unit.

Within a few miles of each other, five great wells: three Upper Bakken, one Middle Bakken, and one Three Forks.

It's hard to believe that the Chandler James, at almost 700K bbls to date, is less than three years old.

Clarification (For Me) on Confidential List

Update

I thought it strange how long it took for the results of this well to be reported. Had I read my own material correctly, I would have understood. I simply missed it or misunderstood.

Regardless, this clarifies for me the confidential period. I left the original post as I originally wrote it, but the first comment explains where I was wrong. The confidential period can begin after the well is spud. In this case, EOG requested this well be put on the confidential list sometime after it had already been spud.

Original Post

(By the way, I personally don't care why it took so long to come off the confidential list. I may have mis-read something. I'm just trying to understand how the process works. There is no hidden agenda here. I'm just trying to educate myself.)

There's not much to report yet from the Bakken, but this caught my eye. Why did it take so long for this well to come off the confidential list?

19182, 812, EOG, Austin 107-31H, Parshall, Bakken, spudded 7/10; tested 10/10; 27K in 4.5 months; why did it take this long to come off confidential list; it was spudded 719//10. 

Maybe it came off the confidential list and I just missed it.

Regardless, it is being reported today.

It is also interesting to note what information operators do not provide on the forms that are submitted to the NDIC. In this case, EOG notes that the well was fracture stimulated but does not state the number of stages, again, unless I missed it. But it was not on the well completion report where EOG noted that it was fracture stimulated.

The well was spudded 7/19/10; it should have come off the confidential list six months later: 1/19/11.  If the well is not completed (fractured) at the end of the six months, NDIC allows the well to remain on DRL status for 30 days after the well is fracked. The report does not say when the well was fractured but without exception (as far as I know), wells are tested and IPs are calculated after the well has been fractured.

The well was tested 10/08/10, clearly inside the six-month confidential period. So, the question remains, unless I missed it, why did it take until today for the well to be reported? No, I think I am correct. This well is still shown as a confidential well on the GIS map server.

How have other EOG wells done in the immediate area (Parshall oil field)?

• 19182: targeted the Upper Bakken
• 17287 (same section, just a few hundred feet to the east): 1,137, spudded 10/08; tested 10/08; Upper Bakken; 572K as of 2/11
• 18912 (one mile north): 422, spudded 5/10; tested 7/10; 17 stages; Three Forks; 34K as of 2/11
• 17500 (one mile north): 2,162, spudded 8/08; tested 11/08; Upper Bakken; 573K as of 2/11
• 18913 (one mile north: still confidential (all three -- 17287, 18912, and 17500 are in a line, in the same section)

Meanwhile, right next door, across the line into the Sanish oil field, sits the long lateral of Murex:

• 17263, 3,124, Murex, Chandler James 25-36H, spudded 7/08; tested 10/08; 680K as of 2/11

Oil Patch Royalty Checks and Revenue Streams

Someone asked me if the checks they receive from operators in the Bakken include sales of natural gas.

It has been my experience, that if one person asks, others have have the same question. Here's the answer:

Yes, there should be three revenue streams on royalty checks from the oil patch. (Obviously, sometimes those revenue streams go to "zero.")

"O" for oil. "G" for natural gas. "P" for plant products.  As the gas is processed and purified for transportation, by products like natural gas condensate, sulfur, ethane, and natural gas liquids like butane, propane, isobutane, and pentanes are produced and sold. Source.

This answer, and answers to many other frequently asked questions can be found at the tab at the top of the blog, FAQS.

Just In: OPEC Says It Can't Do Much to Bring Oil Prices Down

9:34 a.m. EST, CNBC: OPEC says it can't do much to bring oil prices down.

Hmmm.

WTI oil is now up another 20 cents on already record prices. And the market in general is up quite nicely.

10:02 a.m. EST, I missed it, but CNBC said WTI oil went over $109 for a moment; it's back under $109 right now. Again, President Obama has reassured Americans. When oil was at $107, he said during his energy security speech that another $10 in the price of oil/bbl translates to only 25 cents/gallon for gasoline. When gasoline is at $3.50, another $25 cents is manageable, at least according to the president.

Cost of Renewable Energy: Electric Rates Up Double-Digit Percent Across the West

Update

Economic Impact of Minnesota's Renewable Energy Mandate, April 11, 2011, White Paper, a PDF file

Original Post

Some numbers rounded. Link here. 

• Wyoming: Rocky Mountain Power seeks an average boost of 17 percent.
• Oregon: rates climbed 9% in January. The utility requested 13 percent. Wait another year.
• Utah: the utility has requested an overall average 14 percent rate increase
• Idaho: requested 14% in December; given 6 percent. Wait another year.
• Washington State: requested a whopping 21 percent but got 12 percent. Yup, wait until next year.
• Colorado: the state must have missed the memo -- renewable energy is going to push utility rates through the roof; Colorado mandates that utilities supplying electricity to Colorado must get 30% of their energy through renewable energy (euphemism for "wind");

Wyoming rate increases can be attributed to the state's fast rate of growth.

But that argument doesn't hold elsewhere.

And arguments that energy has gotten more expensive is really hard to swallow. Coal remains plentiful and relatively cheap, and natural gas has been in the pricing doldrums for years.

What do these states and the rate increases have in common?

Renewable energy. I figured that out as soon as I saw the headline. It wasn't until the 12th paragraph that the writer finally gets around to this:

Oregon has adopted requirements mandating 25 percent of its power will come from renewable sources by 2025, and some of those costs are just hitting home, regulators told the public after making the decision.

Minnesota has mandated that 25 percent of its power must come from renewable sources by2025, and specifically Xcel Energy is required to produce 30 percent of its power from renewable sources by 2030.

Xcel just reported that it is canceling a 150-MW wind farm project in southeastern North Dakota. I think folks can connect the dots.

By the way, this should be required reading for those who question my comment that Xcel did the cost analysis and came to the conclusion that wind power was not economically viable under current conditions. The author comes to this conclusion on the reliability of wind power:

The only words I can think of that fairly describe the variability of wind power in the BPA region are shocking, obscene, alarming and random.

The BPA (Bonneville Power Administration) operates in the Pacific Northwest, a region noted for its strong support for wind energy and a region noted for excellent wind energy opportunities.

**************

Another reason your electric rates are going up:

• Cost of utilities to discuss issues with environmentalists; those discussions are generally court-related where lawyers with billable hours at $150/hr (or more) are the real winners

Medical Compensation Story -- Not a Bakken Story

The Stark County Commission agreed to pay St Alexius hospital $25,000 toward the medical costs incurred in treating an Alabama-fugitive who was injured in a gun fight.

Stark County will pay St. Alexius Medical Center $25,000 to settle a $72,870 lawsuit over medical expenses for an Alabama fugitive, county commissioners announced Tuesday.

Link here.

Based on the story, it sounds like total costs incurred by St Alexius exceeded $75,000. St Alexius will absorb the rest of the cost.

This speaks volumes, at least to me, about the overwhelming support St Alexius has from the county.

Another Man-Camp -- Bakken, North Dakota, USA

This will be a 50-bed man-camp near Killdeer, North Dakota. They're now being called "person worker camps."

Dean Donelson, president and founder of Screamin’ Eagle Trucking & Excavating Inc., proposed at a March 24 Killdeer Zoning Commission meeting that a 9.65 acre tract outside of Killdeer be allowed a conditional use permit to build temporary housing and a large shop for the company.

The Colorado-based company is new to the Bakken.

Drought in Bighorn Basin May Be at Its End -- Wyoming, North Dakota

In addition to the end of the drought in southern California -- a huge story by the way -- we now have another story about another drought ending. This one in Bighorn Basin, Wyoming.

Climate change?

First Megaload Makes It Safely to Billings, Montana, Refinery

The first megaload has reached its destination: the Billings refinery site. Quite a story.

The Billings Gazette provides great story in today's news.

In addition, all the updates can be found here.

Stock Market Futures Up Huge Today -- Why? Oil at $108, Flat, But Appears Ready to Spike

The market never fails to surprise me. With all the bad news one would expect the market to fall, and fall significantly.  But that isn't happening.

But what happened between yesterday and today that might explain the fact that futures are up huge?

• The government is a step closer to shutting down, and this time around, Americans seem not concerned
• The Senate voted to rescind key components of ObamaCare that would have devastated small businesses

All things being equal, it was the Senate action on ObamaCare that moved the market. Whether one is for, against, or "no opinion" on ObamaCare, the fact is that there were some components of the bill that were going to wreak havoc on the business sector. Everyone knew the House would vote to remove the components, but there was doubt about what the Senate would do. These early Senate votes speak volumes and the market likes what it sees.

By the way, those who read tea leaves see this Senate vote as more than just about ObamaCare.

By the way, what's the most important word in the lead paragraph of the linked story?

Congress on Tuesday revoked the first significant parts of President Obama's health care initiative when the Senate voted overwhelmingly to eliminate a burdensome tax paperwork requirement the law imposes on businesses.

The most important word in that paragraph: overwhelmingly.

And that's why futures are up "huge" today.

*******

The market futures are up despite:

• Japanese nuclear disaster months from being controlled; meanwhile radioactive waste surging into ocean
• Libya seems to have turned into a drawn out civil war
• Price of oil in a $108 trading range, and America's driving season yet to begin
• Government shutdown more and more likely
• US deficit, budget, financial picture as bad as it's ever been and getting worse
• Housing market with no signs of life

UK, Saudi To Meet Over High Oil Prices

Link here.  From PennEnergy:

UK and Saudi are meeting regarding the high oil prices.

I have talked about the Saudi perspective several times since oil has risen above $100:

• Saudis might like what they're seeing
• Oil Falls to "Near" $104
• OPEC Can Increase Prices, Can't Decrease Them

The pundits initially said the price of oil spiked due to events in Libya, but everyone, including Saudi, said Saudi Arabia could make up the difference.

If the price of oil does not moderate significantly, that is, get back to $85 within six months, it will speak volumes about what Saudi can do, can't do, wants to do, doesn't want to do.

But "throwing Mubarak under the bus" certainly didn't help things.

**********

Update: you will note that the original post was 6:53 a.m. EST, April 6, 2011. Now it's being reported that Saudi is so unhappy with the Obama White House, they sent emissaries to China and Russia to enhance ties.

Reporting from Baghdad, Iraq yesterday, NBC’s Tom Brokaw said the Saudi Arabian monarchy is “so unhappy with the Obama administration for the way it pushed out President Mubarak of Egypt” that it has sent senior officials to the Peoples' Republic of China and Russia to seek expanded business opportunities with those countries.

I ran across this DrudgeReport link at 10:08 p.m. EST, April 6, 2011. Wow, even I'm impressed. My comment about Mubarak was an "add-on." I'm glad I decided to leave it in.

Globally: $45 Billion in Merger/Acquisition O &G Deals in 1Q11

Link here. From PennEnergy:

Globally, merger and acquisition deals in the upstream oil and gas sector reached US$45 billion in the first quarter of 2011, and unconventional resources, specifically shale resources, are still leading the way, according to data from Evaluate Energy.

And the driving force? Shale.

The $45 billion in 1Q11 is the higher than all but three quarters over the past three years according to the article.  The article specifically singles out the Bakken and the Eagle Ford -- and, remember, folks, PennEnergy looked at this from a global point of view, and despite all the activity in the Middle East, Indonesia, Alaska, Russia, North  Sea, only two geographic areas were mentioned: the Bakken and the Eagle Ford.