Carpe Diem

Again, some great updates regarding US economy at Carpe Diem.com.

I recently had a very short dialogue with "anonymous" regarding university funding; I talked about bloated budgets at universities. I think this makes my case.

Reminder: CHK Earnings Conference Call Tuesday (May 3) Morning

I've been following the Chesapeake story with lots of interest.

CHK released its 1Q11 earnings report today. Tomorrow, 9:00 a.m. the conference call.

Since 2000, Chesapeake has built the largest combined inventories of onshore leasehold (14.3 million net acres) and 3-D seismic (28.3 million acres) in the U.S. The company has accumulated the largest inventory of U.S. natural gas shale play leasehold (2.5 million net acres) and now owns a leading position in 12 of the Top 13 unconventional liquids-rich plays in the U.S. – the Granite Wash, Cleveland, Tonkawa and Mississippian plays of the Anadarko Basin; the Avalon, Bone Spring, Wolfcamp and Wolfberry plays of the Permian Basin; the Eagle Ford Shale of South Texas; the Niobrara Shale in the Powder River and DJ basins; the Three Forks/Bakken in the Williston Basin; and the Utica Shale of the Appalachian Basin.

Interesting. 

From a comment, cut and paste:

Anonymous said...

CHK call is Tuesday. Monday CHK update says "Three Forks/Bakken" and suggests that it is significant, even for CHK. A rig in May may be mentioned Tuesday. But, TF/B may not be the whole story. CHK also says "Utica" and expands on Mississippian play. JV's planned. Big ones. New words and/or numbers. Many moving parts.

CHK says it will release specifics regarding a new million-acre play by the end of 2H11. Nothing to suggest that information will be forthcoming tomorrow but it's possible.

20-20 Hindsight

This site and the Director's Cut at the NDIC site reported throughout the first calendar quarter that winter weather was going to significantly impact oil production in North Dakota.

This was a February 27, 2011, posting, one among several such postings.

At least one reader who wrote found it interesting that to the best of his recollection, this is the first time Investopedia's regular contributor on the Bakken reported on the harsh realities of the North Dakota winter in the first calendar quarter.

First of Many Stories, I'm Sure, On the Bin Laden Mission -- Not a Bakken Story

In case you missed it, this is an incredible story. I'm sure it will be just one of many to start surfacing over the next few weeks and months. Another story here.

Again, kudos to all involved.

Truly Incredible How Fast MDU Can Get Power Restored -- North Dakota, USA

Perhaps biggest blizzard in decades for this time of year; knocked out electricity for most of western North Dakota.

Some residents did not expect electricity to return until later this week, but now it is being reported that most will have electricity restored by this evening.

Link here.

Williams and Mountrail counties, in North Dakota's northwest corner, were the hardest hit by the storm, Kalmbach said. Williams County had at least 300 poles down and Mountrail County had some 200 down, he said.

A statement issued by the North Dakota Emergency Services Department said about12,500 people in Williston still lacked power Monday. The city is serviced by Bismarck-based Montana-Dakota Utilities.

Jody Link, a spokeswoman for Gov. Jack Dalrymple, said the utility hoped to have power restored to Williston on Monday evening. About half of the outages reported in rural areas of North Dakota had been restored by Monday morning, she said.

Incredible what these linemen can do. Hats off to all of them. 

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Here's how bad the storm was, link here.

An electrical disaster hit North Dakota's oil patch early Saturday, when a blizzard driven by 60 mph winds took out all five major transmission systems serving the region.

More than 30,000 people and thousands of oil wells sites were without power in northwestern North Dakota and eastern Montana.

Dale Haugen, manager of Mountrail-Williams Electric Cooperative, headquartered in Williston, said not one meter of 10,000 was turning in the two-county region Saturday, a phenomenon he's never seen in his 31 years at the co-op. "We've never, never had all our meters out," he said.

The blackout abruptly stopped production at most oil wells in the region, since all but the newest wells run on grid-generated electricity, said Randy Samuelson, production superintendent for Brigham Oil and Gas, of Williston.

Considering Weather, MDU Has Surprisingly Good Report -- Bakken, North Dakota, USA

Great MDU 1Q11 earnings, considering the horrendous winter which affected oil E&P as well as construction. 

Remember: earnings reports and links to conference calls and annual reports at "Earnings Central," linked at the sidebar at the right and at the very top.

Twelve (12) New Permits -- Incredible Wells Being Reported -- Bakken, North Dakota, USA

Perhaps it is just one of those things, but the number of new permits these past two days is striking: eleven yesterday and now twelve today.

Drillers: Burlington Resources (4), Continental (4), Whiting (2), Slawson, Murex.

Fields: Big Bend, Haystack Butte, Sand Creek, Stoneview, Willmen, Sanish, Beaver Lodge, and Zenith.

The four CLR wells will be on an Eco-Pad in Stoneview field, Divide County. Stoneview is a most irregular (and fairly large) oil field about 18 miles north of Tioga; very active in previous booms, it has been "quietly" active in this boom.

Whiting's two permits follow a Whiting pattern: one permit in its cash cow, the Sanish oil field, and a second permit in one of their "new" areas, in this case, the Lewis and Clark prospect, the Zenith oil field which is turning out to be very, very interesting.

The Murex permit is in Beaver Lodge, the oldest oil field in the Williston Basin.

Along with these new permits, there were three huge wells (based on IPs) reported on today's daily activity report:

• 19110, 2,849, Newfield, Malm 149-98-14-23-1H,
• 19513, 4,661, BEXP, Sorenson 29-32-2-H,
• 19756, 1,269, Whiting, Guinn Trust 11-13TFH

The Sorenson 29-32-2-H was previously reported; it set a BEXP record, supplanting its sister well as the well with the largest IP. 

Energy Information Agency (EIA) Will Curtail Much Of What It Does

Link here.

Looks like the agency contracted out much of what it produced.

The agency's budget was cut 14 percent.

According to the agency, due to the cutbacks, the agency will:

• Not prepare or publish US oil and gas reserves data for 2011
• Curtail efforts to understand linkages between physical energy markets and financial trading (was a Justice Department Task Force just established to do this?)
• Suspend analysis of market impacts of planned refinery outages
• Suspend reporting on the market impacts of of planned refinery outages
• Suspend collection of monthly state-level data on wholesale prices of petroleum products
• Suspend dissemination of monthly state-level date on wholesale prices of petroleum products
• Halt preparation of annual petroleum marketing data report
• Halt publication of annual petroleum marketing data report
• Suspend auditing of data submitted by oil and gas companies
• Suspend reporting on 2010 financial performance of oil and gas companies
• Cut information data collection in electricity, renewables, and coal data 
• Cut consumption, efficiency and energy information activities
• Cut its energy analysis capacity
• Cut live telephone support at its customer contact center

These are just the initial steps.

The only question I have is: exactly what will the agency be doing? It is still budgeted at 86% of its historic levels.

Physicians and hospitals are generally reimbursed at a level less than this for Medicare patients.

Does the second item on the list, "curtail efforts to understand linkages between physical energy markets and financial trading" relate to recent task force set up to look into fraud and speculation regarding the price of oil? Something tells me it's one and the same. If these are the one and the same (one by the EIA and one by the Justice Department), it seems appropriate that both do not need to be funded. Based on previous studies, one can argue whether even another study is required but that discussion is for another day.

But again, when I look at this list, two things come to mind immediately: a) exactly what will the EIA be doing; and, b) how much of this is outsourced contract work and how much is accomplished by in-house government employees?

Wells Coming Off Confidential List Update -- Bakken, North Dakota, USA

Just a reminder: on the sidebar at the right, at the "New Wells Reporting" link, I post results of wells coming off the confidential list.

As a (another) reminder: I now break that list up by calendar quarter.

Round Prairie -- Very Active -- Bakken, North Dakota, USA

Updates

August 15, 2013:
Round Prairie is about a 20-section oil field west of Williston, right on the Montana state line. It is all prairie. It looks like the field is owned by EOG. The wells are mediocre but they were probably completed before EOG started using newer completion techniques. They should all hit 100,000 bbls in three or four years (some already have); some might take a bit longer. But they should all pay for themselves, and are all good enough to ensure more drilling in this area.  With the exception of one well, they are all producing between 1,000 and 6,000 bbls/month.

I think these are all middle Bakken, and Three Forks might be better in this area. 

Round Prairie Wells

• 20766, 502, EOG, Round Prairie 4-0805H, Round Prairie, t9/12; cum 191K 12/14;
• 20158, 775, EOG, Short Prairie 1-0302H, Round Prairie, t711/ cum 78K 12/14;
• 20152, 805, EOG, Short Prairie 4-2322H, Round Prairie, t1/12; cum 94K 12/14;
• 20150, 575, EOG, Short Prairie 5-2627H, Round Prairie, t9/11; cum 105K 12/14;
• 20128, 563, EOG, Short Prairie 3-1415H, Round Prairie, t8/11; cum 98K 12/14;
• 20113, 254, EOG, Short Prairie 2-1011H, Round Prairie, t2/12; cum 100K 12/14;
• 20069, 741, EOG, Round Prairie 3-0706H, Round Prairie, t9/11; cum 129K 12/14;
• 19928, 651, EOG, Short Prairie 7-1201H, Round Prairie, t7/11; cum 154K 12/14;
• 19927, 725, EOG, Short Prairie 8-1224H, Round Prairie, t11/12; cum 163K 12/14;
• 19478, 1,458, EOG, Round Prairie 10-1819H, Round Prairies, t1/11; cum 160K 12/14;; 31 stages; 3 million lbs;
• 18257, 267, EOG, Round Prairie 1-17H, Round Prairie, t1/10; cum 112K 12/14;
• 18668, 491, EOG, Round Prairie 2-20H, Round Prairie, t9/10; cum 73K 12/14;

February 26, 2013: all but two sections are now held by production. All horizontals are long horizontals, except for two short laterals. There are no rigs in the field at this time.

February 26, 2013: Nick H over at Teegue's Bakken Shale Discussion Group has noted that EOG has a great Short Prairie well:

• 19927, see above, EOG, Short Prairie 8-1224H, Round Prairie,

Date	Oil Runs	MCF Sold
12-2012	19207	1862
11-2012	14111	0

October 16, 2012: no rigs in this oil field this date

Original Post 

Note: IPs and production numbers will be updated above; most data points below will not not updated.

The Round Prairie oil field is very, very active right now: four rigs on site in this small field, about 20 sections. It is "owned" by EOG. The field is directly west of Williston, North Dakota, and abuts the Montana border. In fact, the sections along the border are only about half the size of a "normal" section.

There are currently four rigs on site:

• 19928, 651, EOG, Round Prairie 7-1201H, Round Prairie, Bakken, running north, t7/11; cum 106K 12/12;
• 20069, 741, EOG, Round Prairie 3-0706H, Round Prairie, Bakken, t9/11; cum 86K 12/12;
• 20128, 563, EOG, Short Prairie 3-1415H, Round Prairie, Bakken; t8/11; cum 68K 12/12;
• 20158, 775, EOG Short Prairie 1-0302H, Wildcat --> Round Prairie, t7/11; cum 55K 12/12;

Permits only:

• 19927, conf, EOG, Round Prairie 8-1224H, Round Prairie, Bakken, running south
• 20766, 502, EOG, Round Prairie 4-0805H, Round Prairie, Bakken, t9/12; cum 61K 12/12;
• 20152, 805, EOG, Short Prairie 4-2323H, Round Prairie, Bakken; t1/12; cum 58K 12/12;
• 20150, 575, EOG, Short Prairie 5-2627H, Round Prairie, Bakken; t9/11; cum 73K 12/12;
• 20113, 254, EOG, Short Prairie 2-1011H, Round Prairie, Bakken; t2/12; cum 61K 12/12;

Producing:

• 18257, 267, EOG, Round Prairie 1-17H, Round Prairie, Bakken; t1/10; cum 91K 12/12;
• 18668, 491, EOG, Round Prairie 2-20H, Round Prairie, Bakken; t9/10; cum 54K 12/12;

With WTI Oil at $113, The Onshore Permitorium Continues -- Includes Niobrara Plays

Link here.

The US Bureau of Land Management began its review of commercial oil sands and tar sands plans issued during President George W. Bush’s administration by publishing a notice of intent to prepare a programmatic environmental impact statement (PEIS) governing allocation of such resources in Colorado, Utah, and Wyoming. 

With the wording of intent, it's easy to see where this is headed.

It said BLM intends to take a hard look at whether it is appropriate to make this acreage available when “there are no economically viable ways yet known to extract and process oil shale for commercial purposes and Utah tar sands are not at present a proven commercially-viable energy source.” 

Several Bakken players have leases pending in or near the areas affected.  Whether they will be affected depends on the specific leases. 

It should go without saying that an entirely separate issue, the threatened sage grouse, is another consideration. 

The US Fish and Wildlife Service also published a notice in the Mar. 23 Federal Register of a petitioned finding to list the sage grouse as a threatened or endangered species, according to BLM’s latest notice. It said that the bird, which is found on some lands allocated for possible oil shale and tar sands leasing, was warranted for listing under applicable Endangered Species Act provisions, but the listing was precluded by higher priority listing actions. 

Apparently they will hold that one in their hip pocket if necessary. Yes, the on-shore permitorium continues. 

The desert tortoise issue was fast-tracked by the administration when it came to wind turbines. Just saying.  

Oil Price Volatility Following Killing of Osama Bin Laden

Announcement: 11:30 p.m. EST, Sunday night, May 1, 2011

Futures, immediately during/after announcement: down 75 cents

Monday morning, futures, 6:00 a.m. EST: down $2.60

Monday morning, futures, 7:00 a.m. EST: down $1.65

Pundit, CNBC, 7:20 a.m. EST:

• Price of oil has to break below $109 for move toward significant pullback
• If oil broke to below $109, then "real chance" that oil could pullback to $101 range

Monday morning, futures, 8:00 a.m. EST: down $1.50

Opening bell, Monday, 9:30 a.m. EST: up 10 cents, to $114.03
Closing bell, Monday, 4:00 p.m. EST: down 75 cents

North Dakota Budget: $4.1 Billion Over Two Years

North Dakota "General Fund" budget, 2011 - 2013

• Historically: about $2 - $3 billion/2-year budget
• Recently: $3.25 billion/2-year budget
• "Official" 2011 - 2013: $3.3 billion  -- an increase of 1.4% over "current levels" -- link here

Two expenses: "off-budget"

• $370 million for road repairs in western North Dakota
• $343 million in payments to local schools to offset reduction in property taxes

The one-time expenses were paid for by money from The Permanent Oil Tax Trust Fund which was ordered abolished by this legislature and transferred to the General Fund (so much for "permanent').

"Real" general fund budget,  2011 - 2013: $4.1 billion. Increase of more than 20% spending (general fund budget).

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Total state budget, 2011 - 2013, $9.92 billion, an increase of 12.2 percent

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The general fund is financed by state taxes on:

• Sales
• Personal income
• Business and corporate income
• Energy

The general fund does not include:

• Federal aid
• Revenues reserved for specific programs such as gasoline taxes and hunting license fees

Currently ND has slightly more than $1 billion in reserves

• Legacy Fund and Budget Stabilization Fund

Two new funds established by ND voters last year

• Legacy Fund: Repository for the state's oil tax revenues
• Budget Stabilization Fund: used only if state tax collections fall short

Budget Stabilization Fund:

• Should have about $386.4 million by June 2013
• Can be accessed if legislators change the rules for doing so

Legacy Fund:

• Should have about $620 million by June 2013
• Cannot be changed without voter approval; part of the ND State Constitution