Thursday, April 14, 2011

Minnesotans Enjoy Higher Utility Rates -- Governor Vetoes Bill To Lower Utility Rates

Updates

May 27, 2011:  Yup, the governor vetoed the bill. Meanwhile, states on the East Coast are dropping out of "cap and trade" agreements. As long as residents enjoy paying higher utility costs, that's their choice. Meanwhile, one can expect that manufacturers with high electricity needs (like technology companies) will simply choose other states in which to locate (or relocate).


May 22, 2011: Well, so much for this "good" news. The governor will veto the bill. Back to square one. I personally have no dog in this fight; if Minnesota wants to pay higher utility costs, and their manufacturers move to North Dakota, that's fine with me. But in the big scheme of things, just "white noise."

Original Post

Link here. An update and more information here.

This is incredible! Apparently Minnesota has seen the future and the future is a) huge electric rate increases without coal-generated electricity; and, b) rolling brownouts without more electricity.
The Minnesota Senate has voted to lift restrictions on carbon dioxide emissions from coal production that critics say prevented both construction of new coal plants in the state, and purchase of energy from new coal plants in neighboring states.
The vote was overwhelming:
The Senate voted 42-18 in favor lifting the restrictions. They say the bill will allow the state to keep up with what's expected to be growing energy needs to keep up with economic growth.
For previous posts on same subject:
Google "Big Stone II":
All I can think about is the "Lost Decade."

Tesoro Logistics LP: Initial Public Offering

Link here.
The initial assets expected to be a part of Tesoro Logistics comprises Tesoro Corp’s crude oil gathering system in the Bakken Shale/Williston Basin area of North Dakota and Montana, eight refined products terminals in the Midwest and western U.S., a crude oil and refined products storage facility, and five related short-haul pipelines in Utah. However, San Antonio, Texas-based Tesoro Corp. will continue to own petroleum refineries and its network of convenience stores.

Canadian Oil Patch Hiring: No Work Yet But Companies Hiring Ahead of the Surge

Link here.
Canada’s oil patch is resorting to increasingly unusual measures to secure workers ahead of a coming labour shortage, with one company hiring engineers before work is available and another resorting to a province-wide electronic blitz.
From Carpe Diem, a very, very good site. 

Huge opportunities for those willing to work hard in Alberta, Wyoming/Colorado (D-J Basin/the Niobrara), eastern Montana/western North Dakota (the Bakken), and south Texas (the Eagle Ford).

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

Operators: Newfield, BEXP, EOG, OXY USA, Marathon, Whiting, Continental Resources, and Hunt.

Fields: South Tobacco Garden, Squires, Parshall, Dimond, Bailey, Sanish, Murphy Creek, and Werner.

The OXY USA #20350 permit, Ankenbauer 160-90-34-D-1H was canceled, also in Dimond oil field.

Change of operator, from Pogo Producing to URSA Resources Group:
  • 16404, Pegasus 1-17H, Williams County
  • 16405, Pegasus 2-17H, Williams County
Other than that, a very unremarkable daily activity report. 

No News in 24 Hours Regarding Samson's Earl in Stockyard Creek -- Bakken, North Dakota, USA

As of 5:30 p.m. EST, there has been no press release in the last 12 hours updating the results at the Samson Oil and Gas (SSN) well, Earl 13-1H, in Stockyard Creek.

Just saying.

The Permitorium Continues -- The Net Widens

Link here.
The US Bureau of Ocean Energy Management, Regulation, and Enforcement is considering an expansion of its regulatory reach beyond offshore oil and gas well operators to drilling contractors and service and supply companies, BOEMRE Director Michael R. Bromwich said on Apr. 12. The idea stems from lessons learned after the Macondo well accident and oil spill nearly a year ago, he and US Interior Sec. Ken Salazar told reporters.

Bromwich said the idea grew from resistance BOEMRE investigators encountered following the accident from companies working for BP PLC, Macondo’s operator. He said US Department of Interior lawyers subsequently told him that the agency’s reach applies only to operators, and that it could not compel drilling contractors and service and supply companies to cooperate.

“We’re very interested in moving aggressively and responsibly,” Bromwich said during a briefing at DOI headquarters, adding that legislative authorization may be needed. Salazar said BOEMRE also needs congressional approval to increase the 30-day offshore drilling permit approval time limit, which the 2005 Energy Policy Act established to 90 days
Good news for the Bakken.

Anything to destroy the domestic drilling industry.

Solar Power and California -- Nothing To Do With the Bakken

Having just posted a note regarding Enbridge's solar play, something else caught my eye.

First this story: California's supreme court threw out an environmental lawsuit against development of a solar farm near Barstow, California. The court threw out the lawsuit without comment; the Sierra Club did not even get its day in court.

One can argue that a solar farm footprint is greater and more damaging to the environment than an oil well. I'm not talking about carbon footprint. I'm talking about the physical footprint. These solar farms are going to cover acres of surface area, making the surface unusable for anything else, wherever the panels are. And the panels never go away; they are there forever.

On the other hand, once a well is in, it takes up very little space comparatively and the area around it is still available for farming, recreation, or other development. In southern California, there are pumpers sitting between homes in Los Angeles suburbs. And the wells eventually go away. But enough of that.

The court throwing out an environmental suit makes it more difficult going forward for environmentalists to take on other energy companies when they want to develop projects, particularly wind and solar. Again, this was the California supreme court, and lower courts in California will now have a precedent to follow. Interesting.

The linked story above does not say how big the project was. When I went to look that up, some very interesting things came up. First, the size of the farm: 850 MW. That's huge.

But then this (December 30, 2010 -- just 3.5 months ago):
K Road Sun acquired the Calico Solar Project near Barstow, California, from Tessera Solar North America after a power purchase agreement with Southern California Edison (SCE) fell through.
The Calico project was approved by the California Energy Commission at the beginning of December and has an interconnection agreement to supply 850MW to the state’s power grid.

But SCE unexpectedly withdrew its offer to buy power from the project earlier this week.
I wonder if SCE will have to go back and re-think its position now that California is going to mandate 33% renewable energy sources by 2020. 
It was thought Tessera found itself unable to finance the project after SCE withdrew. The total capital investment required is estimated at $3.0 billion.
Memo to California electricity users (electric vehicles, anyone?): your rates are going to go up. Way up.

In addition:
Tessera had planned the for the entire Calico development to use concentrated solar technology developed by its parent company Stirling Energy Systems (SES).

But K Road said it will stick to more mature photovoltaic technology for the bulk of the project, reducing financing risk.
A lot of moving parts to this story. It may be worthy for the start of an entirely new solar energy blog. But not for me.

Enbridge, Solar Farms, and The New California Renewable Energy Mandate

California utilities will be required to draw 33 percent of their power from solar panels, windmills, landfills gases, small hydroelectric power plants, and similar renewable sources by 2020 under a new law passed in April, 2011. That is an increase from the current 20 percent mandate by 2020.

Understanding that I doubt the California utilities will be able to do that without a significant increase in rates for all consumers, there is an interesting side story.

(Significant rate increases -- double digit percent increases -- have been seen throughout the western states, much of it due to government mandates to increase the amount of energy coming from renewable sources.)

Enbridge: Diversifying Into the Solar Energy Sector


Interestingly enough a "fossil fuel company" may have seen this coming. From "Enbridge: Putting the Pieces Together."

Solar Farms -- Enbridge owns the following:
I find this very, very interesting that a oil and natural gas pipeline company saw the opportunity to diversify into solar energy, and to do it in California. How prescient.

New Continental Resources (CLR) Presentation -- Bakken, North Dakota, USA

Link here: then click on April 14, 2011, presentation titled,  "OIPA Wildcatters Luncheon."

Some data points:

Slide 15
Bakken production growth between 2004 and 2010 was "insane." In case the link breaks, production in 2004 was 10,000 bopd; at the end of 2010, it was approaching 350,000 bopd. That's six years and includes both Montana and North Dakota. North Dakota's Bakken boom began in 2007. At the end of 2007, daily Bakken production was 75,000 bopd. That was just when single leg horizontal/liner/multi-stage fracturing began.
Slide 19
Variations of slide 19, development of a spacing unit, are starting to pop up all over. I can't remember where I first saw this slide (CLR, WLL, BEXP, others).

Well before this slide was ever published publicly I opined on this blog that the radius of fracturing appeared to extend out only 500 feet (laterally, 360 degrees). I picked up on that based on how close some horizontals were being placed.

With "tight" shale, it's all about fracturing.
Slide 19
This slide clears up some terminology for me: spacing vs development. The two terms are driven by two different sets of parameters or factors. Spacing is associated more with economics or the finances of a designated field. Development, on the other hand, is associated more with how close together wells can be placed in a designated field or area. (I am a layman with no formal training with regard to oil industry, so I assume there are better ways to articulate that.)

On a 1280-acre spacing unit in the core Bakken, CLR suggests they can place 8 wells, or what is referred to as "320-acre development of the Bakken and Three Forks."

At approximately 500K EUR, this means as much as 4 million bbls EUR per 1280-acre spacing unit, or 2 million bbls/section, or about 3,000 bbls/acre. At $50/bbl, one can see why folks are paying $5,000/acre in the core Bakken.

It should be noted, that slide 19 only references two pay zones, the middle Bakken and the Three Forks. There may be other pay zones in some of these areas.
Slide 21
CLR suggests that the Williston Basin could be producing as much as 1 million bopd with 200 rigs
Slide 22
The United States is now producing more than 50% of the oil that it consumes. I doubt most Americans know that. The lines crossed in the second half of 2010. It's interesting that we don't see more written about that in the mainstream media.
One can argue that with conservation, improved efficiencies in transportation, alternate energy for transportation, and continued growth in fossil fuel production in the US, "we" really could be energy independent. Certainly, with Canada to the north, Mexico and Brazil to the south, "we" could be completely independent of the Middle East in the not too distant future. (My hunch is that it won't happen in my lifetime. Maybe I will opine on that sometime.)
Slide 23
The relationship between oil production and jobs is "insane." It's too bad we don't hear more about this in the mainstream media. I keep thinking of the "lost decade."

A Look at Red Wing Creek Oil Field, South of Arnegard, North Dakota

Updates

April 16, 2019:
  • 35030, 164, Williston Basin State 42-36 36-1H, Red Wing Creek, t2/19; cum 16K 8/19; target: Madison pool; producing 2,600 bbls/month, 6/19;
May 10, 2013:
  • 24118, 670, True Oil, Gravos 42-13 13-14H, Red Wing Creek, Bakken, t3/13; cum 95K 8/19;
Another interesting link regarding the Red Wing Creek oil field.
What the Red Wing Creek Field, located within North Dakota’s oil-rich Williston Basin, has been doing since its discovery in 1972 is not the story.

In fact, the nine-kilometer diameter creek structure has been producing oil – lots of it, approximately 17 million barrels, most of it in the Mission Canyon and Charles formations.

This story, though, isn’t just how much more is down there, but how we see it. Literally.
Original Post

Red Wing Creek is a 20-section oil field about 13 miles south-southwest of Arnegard or about 15 miles southwest of Watford City. [See also wiki's discussion of the Red Wing crater.]

In two of the sections, there is a cluster of vertical wells, some with short or very short laterals, mostly drilled back in the 70's. These are Madison formation wells.

From RMOJ, "Red Wing Creek Field, what was discovered and is operated by True, is one of North Dakota's most unusal oil pools in the sense that the trap created in this reservoir is believed to be the result of an astrobleme, or meteror impact. Producing from essentially vertical beds in the Madison, this field has produced more than 18 million bbls of oil following its discovery in 1972. It has also been reported that some of the wells in this field could produce thousands of barrels of oil per day but are restricted because of mechanical constraints. The reservoir is currently averaging approximately 15,000 bbls of oil per month rom 21 active wells." -- September 16, 2011.

Data points below -- file number, date: production to date; recent production

In section 28-148-101:
  • 4062, 1972: PA/210,664 bbls; 4/13; producing less than 5 bbls/month, Madison
  • 5322, 1973: IA/53,795; 5/19; bbls to date; producing about 50 bbls/month, Madison
  • 15465, 2004, short horizontal: A/64K 8/19; producing about 200 bbls/month, Madison
  • 5527, 1975: IA/162,000 bbls; 4/12; last month produced 32 bbls, Madison
  • 15774, 2006, short horizontal: AB/29K 4/13; last produced 6/08, Madison
  • 5359, 1974: AB/18,000 bbls to date; last produced, August, 2010, 38 bbls
In section 27-148-101:
  • 5212, 1972: IA/653,000 bbls to date; erratic production; last production, 9/16;
  • 15456, 2003, short horizontal: IA/188K 8/14; very erratic; last production, 1/17;
  • 15769, 2006; AB, short horizontal: 511 bbls total to date (not a typo); last month produced 10 bbls
  • 5235, 1974; AB: 2,833,232 bbls; 9/12; erratic production;
  • 5323, 1973; IA: 3,289,134 bbls; 8/14; erratic production;
  • 13590, 1994: 255,044 bbls to date; produced one day, 5/17;
  • 11564, 1985: 552,238 bbls to date; producing a bbl or so every few months;
  • 15420, 2003, very short lateral: IA/521,374 bbls to date; pretty much ended production in 2014;
  • 15507, 2004, short lateral: IA/153,744 bbls to date; pretty much ended production in 2012;
  • 5286, 1974: 3,012,610; 6/19; inactive as of 8/15; but then produced 2,102 bbls over 6 days, 5/17; 2019 -- back on line consistently; appears to be back on line; 
  • 5335, 1974: IA/1,092,318; 8/14; pretty much inactive as of 3/14;
  • 5260, 1974: IA/3,499,865; 8/14; pretty much inactive as of 4/14; but did produce a bit as recently as 5/19;
  • 15417, 2003: 214,842; 8/19; erratic production; last three months -- 1,452; 1867; 388; produced 2,500 bbls in 5/19; and 6/19 after being offline for several years; producing 3,000 bbls/month, 5/19 - 8/19;
  • 5182, 1972; AB: 382,141 bbls to date; last produced in 1981; June, 1981 -- 14,255 bbls; July, 1981 --- 13,522 bbls; August, 1981 -- 9,245 bbls and then nothing since
In section 1-147-101:
  • 15617, TA/11, True, Burlington Resources 11-1H, a bbl a day; 1,800 cumulative, s8/7/2004; 12/21/205
In section 13-148-101:
  • 20502, TA/1,272, True, Hagen 23-13H; the third horizontal well targeting the Madison in this field; t6/11; cum 14K 5/13;
  • 21532, 108, True, Anderson 41-26-26-35H; this will be on 480-acre spacing (sections 26/35); horizontal Madison, 2/12; cum 141K 6/19;
In section 36:
  • 20240, 706, True, Williston Basin 42-36H, a Madison well; long lateral, from section 36 through section 1; the Madison interval from 10,000 feet to 14,500 feet (numbers rounded). The vertical section of the Madison was from 9,726 feet to 9,782 feet -- all of 56 feet thick. This is the second horizontal Madison well in this field; the first was True's Burlington Resources 11-1H well. This was a very poor well, a stripper well from the beginning, and is currently averaging about 2 bopd; then, all of a sudden -- update, producing 6,000 bbls/months recently, 6/19;6,427 bbls in 8/19;
Sometimes it is interesting to look back and see what the Madison wells from the 1970's produced. Of the 20 wells above, five of them have produced more than a million bbls to date and are still active.

Two have produced more than 3 million bbls to date and are still active.

I think we have a long time to wait to see what the Bakken wells will do. Remember, many of the Bakken wells are being held back in production for various reasons.

In those two sections, only one well has been plugged and abandoned. There have only been four dry holes. I think I have captured all of the others; could have missed one, I suppose.

Adding up the totals to date of the wells noted above: 16.8 million barrels.

Divide that 16.8 million by 24 wells (including the four dry holes): 700,098 bbls/well to date on average. If today, they plugged all those wells and never went back, the "EUR" average would be about what the average EUR is estimated to be in the core Bakken.

I did not double check the math or the original data. Some numbers rounded. All wells, except one, as noted, are still producing. The 1972 well has been active for almost 40 years. (The field was discovered in 1972.)

Finally, Back to 174 Active Drilling Rigs in North Dakota

Link here.

174 is still the record for number of active drilling rigs in North Dakota.

AP: Increase in Unemployment Benefit Applications But Jobs Market Improving

Link here.
"Applications [for unemployment benefits] near 375,000 are consistent with a sustained increase in hiring."
The AP did not sound surprised or concerned: after all, it could be worse (and has been).

Reuters, along with the AP, noted that a one-month data point is not as important as the trend. Here are two trends:
  • The four-week moving average of unemployment claims -- a better measure of underlying trends - climbed 5,500 to 395,750.
  • The rise in claims interrupted a downward trend that had kept them below the 400,000 threshold for four weeks. That level is normally associated with steady job growth. Despite last week's rise, the four-week average held below the 400,000 mark for a seventh straight week.
Perhaps if things were going well and "more normal," 395,750 claims for unemployment benefits represents a sustained increase in hiring, but considering the hole that "we" are in with regard to unemployment, this is not good news, no matter how one spins it.

From Carpe Diem: How Natural Gas Snuck Up on Beltway Elites -- Sounds Like the Bakken

Mark Perry, author of Carpe Diem, has a very interesting take on the natural gas industry in the United States. One could almost substitute "shale oil" for "shale natural gas" in this article.

Link here.

This is the paragraph that requires close reading:
"One remarkable aspect of the shale gas revolution is that it was not the product of an energy policy edict from Washington, or the result of a bruising political battle to open up public lands and offshore waters for new exploration. Although the Halliburtons of the world are now big in the field, its pioneers were mostly smaller risk-taking entrepreneurs and technological innovators. George P. Mitchell, an independent producer based in Houston, is widely credited as being the prime mover in shale gas, pushing the idea against skeptics. The technology was mainly deployed on existing oil and gas leaseholds or on private land beyond the reach of bureaucrats (for the time being, anyway)."
There's much more in the article that seems to be right on target.