Another Motley Fool Article on KOG -- Bakken, North Dakota, USA

Link here.

When exploration and production companies sense that they are doing well, they go for the kill through expansion efforts. Kodiak, for its part, is planning on doing precisely that. The company plans to increase its acreage position in Williston Basin by 36%. Clearly, the company sees lots of opportunity ahead. 

The Denver-based company will acquire 25,000 net mineral acres in McKenzie County, North Dakota for $85.5 million in cash and stock. As a result, the company will also acquire working interest in two active wells, which are currently producing 200 net barrels of oil equivalent per day. However, that's just the small picture.

At the end of the first quarter this year, Kodiak had a two-rig drilling program in the Williston Basin. Today, the company is currently mobilizing its third rig, and has contracted for a fourth. Now, with the completion of this transaction, a fifth rig gets added to the company's arsenal.

When I first blogged this story, I did not do the math. A thirty-six percent increase in Bakken holdings is huge. Huge. And going from two rigs to five rigs is a pretty big jump, also. Now, they need to get a dedicated frack crew, unless they have one, and I missed it (or forgot).

Goldman Forecasts -- Again, and Again, and Again

Wasn't it a Goldman Sachs forecast that started the freefall in WTI oil prices from $115 to $95 recently?

I honestly forget. It is impossible for me to keep up with Goldman Sachs forecasts, but like the weather, their predictions will eventually come true. Just wait long enough. This was back on May 24th (2011).

Oil also got a boost from reports by Goldman Sachs, J.P. Morgan and Morgan Stanley that said prices will almost certainly be higher later this year. The investment banks said the recent 15 percent drop was only a brief pause in what will likely be a long-term rise to near-record levels.

Goldman Sachs expects WTI to hit $135 per barrel by the end of 2012. Morgan Stanley predicts Brent will average $120 per barrel in 2011 while J.P. Morgan said Brent should hit $130 per barrel in the third quarter.

I believe Bank of America is targeting $140 oil

Nine (9) New Permits -- Bakken, North Dakota, USA

Updates

March 12, 2012: the first well for Silver Oak reported an IP today --

• 20950, 55, Silver Oak Energy, Rankin 1-35H, Cedar Hills, Red River B (not a Bakken), s9/11; t2/12; cum 1,566 bbls 1/12

This is their only permit in North Dakota, at least under this operator's name.

Original Post

Daily activity report:

Drillers: EOG (2), Petro-Hunt (2), Hunt, SM Energy, CLR, BR, and Silver Oak, LLC.

Fields: Cedar Hills, Kittleson Slough, North Tioga, Ray, Haystack Butte, West Ambrose, and two wildcats.

Petro-Hunt has a wildcat permit in Williams County, and Hunt Oil has a wildcat permit in McKenzie County.

This is the first time I had heard of Silver Oak, LLC. It has a permit in Slope County. Armstrong Corporation picked up 640 acres in Slope County for $30/acre from the state in the most recent auction (May, 2011, ND lease auction). This is the very first permit ever for Silver Oak, LLC, in the state of North Dakota.

The only other interesting information on today's report was the Newfield Helsingborg well with an IP of 2,862 in McKenzie County (Sand Creek oil field, right next to the interesting Charlson field).

If I Were TransCanada, I Would Just Lock It Up With China

Updates

August 16, 2011: I think this is a dead issue, but to humor the TransCanada folks, I will link the story. The story is about TransCanada's plan to ensafety the pipeline.

August 15, 2011: long, long story in PennEnergy about the pressure on Obama to support the Keystone XL pipeline. Links to PennEnergy, others, usually occur early. This is a gut check for Obama. I can see it going either way and can argue either side.

August 8, 2011: well, this reassures me. Ms Hillary Clinton tells Canada not to worry; US wants Keystone XL. Yup. Sure. 

July 27, 2011: House passes bill requiring Obama administration to make Keystone XL decision by November 1, 2011. Needs to be passed by the Senate. Won't happen. Even if it does, Obama will ignore it.

July 26, 2011: Another casualty of the Keystone XL. Developers wanting to build the nation's first new refinery since 1976 want to delay construction by 18 months from the date a final permit is issued. The article does not say why the Texas company wants to delay construction but one can speculate it has to do with the XL. The refinery will process heavy oil from the Canadian oil sands.

July 20, 2011: Looks like just a matter of time before Keystone XL lost. It may end up being a win-win for all.

July 11, 2011: The recent XOM spill in the Yellowstone, as inconsequential as it will ultimately be environmentally, will be one more nail in the Keystone XL pipeline. Meanwhile, this shovel-ready job sits ready to go.

June 26, 2011: Looks like China is ready to take Canadian oil / Keystone XL if the US doesn't want it.

June 24, 201l: US House Committee on Energy and Commerce Committee passed a bill to place pressure on Obama administration to make decision regarding the Keystone XL pipeline. I'm not holding my breath. This is the same administration who denies any hostilities going on in Libya.

The US House Energy and Commerce Committee on June 23 passed legislation aimed at pressuring the Obama administration to reach a decision on the Keystone XL crude oil pipeline project’s cross-border permit application. The full committee passed HR 1238 by 33 to 13 votes after its Energy and Power Subcommittee approved the bill on June 15.

The measure would require the US Department of State to reach a decision on the proposal by Nov. 1. The project would expand shipments from Canada of oil produced from Alberta oil sands by 1.3 million b/d. “This project has been delayed long enough,” committee chairman Fred Upton (R-Mich.) said following the vote. “It’s time to make a decision, and this bipartisan bill will make it happen.”

June 16, 2011: Good news: Federal panel approves fast-track approval for Keystone XL. Bad news: this panel is so far down the food chain, this vote means nothing. This is a subcommittee of a larger committee in the US House. TransCanada needs someone to pass a law fast-tracking fast-track legislation. This bill won't see the light of day in my investing lifetime.

The US House Energy and Commerce Subcommittee on Energy and Power Wednesday approved a bill to help fast-track the construction of Transcanada's proposed Keystone XL Pipeline.

The North American-Made Energy Security Act (H.R. 1938) requires the Obama administration to issue a final order by Nov. 1, 2011, on whether the Keystone XL Pipeline can be built to transport oil from Western Canada to Texas. The bipartisan bill will now move to the full Energy and Commerce Committee for consideration.

Original Post

Link here.

A dispute over a plan to send oil from western Canada to the Texas Gulf Coast moved to Capitol Hill on Monday, where a House panel debated whether to speed a decision by the Obama administration.

Republicans on the House Energy and Commerce Committee are backing a bill that would set a Nov. 1 deadline for the State Department to decide on the $7 billion project. A Canadian company wants to build a 1,900-mile pipeline to carry crude oil extracted from tar sands in Alberta, Canada, to refineries in Texas.

Rep. Fred Upton, R-Mich., who chairs the energy panel, said it makes sense to pursue reliable and affordable energy in North America. The proposed Keystone XL pipeline would create thousands of jobs and help cut $4-a-gallon prices at the pump, Upton said.

"We need to act soon as China is very interested in pursuing the same resources," Upton said. "If we don't say yes soon, China will lock it up."

I personally don't understand TransCanada's reluctance to put in a pipeline to the west coast of Canada and ship their total production to China. I must be missing something.

Why an IP is Just One Data Point -- One Well With An IP of 33 --> 140,000 Bbls To Date

Permits/Wells

• 25133, loc, Whiting, Jurgens 41-13PH,
• 23165, loc, Whiting, Duletski 41-13PH,
• 22954, loc, Whiting, Dietz 11-18PH,
• 22120, A, Whiting, Duletski 41-18PH, cum 22K 1/13;
• 21975, 781, Whiting, Duletski 11-13PH, t3/12; cum 43K 1/13;
• 21259, 270, Whiting, Duletski 21-13TFH, t7/12; cum 29K 1/13;
• 20960, 476, Whiting, Kessel 41-17TFH, t1/12; cum 42K 1/13;
• 20912, 653, Whiting, Duletski 11-16TFH, t5/12; cum 29K 1/13;
• 20060, 258, Whiting, Binstock 21-30TFH, t7/11; cum 21K 1/13;
• 20028, 707, Whiting, Duletski 21-16TFH, t6/11; cum 72K 1/13;
• 19820, 843, Whiting, Dietz 21-17TFH, t3/11; cum 85K 1/13;
• 19816, 202, Whiting, Paluck 21-28TFH, t4/11; cum 30K 1/13;
• 19810, 741, Whiting, Dietz 21-18TFH, t7/11; cum 53K 1/13;
• 19809, 222, Whiting, Arthaud 21-29TFH, t5/11; cum 26K 1/13;

Original Post

A reader recently alerted me to a couple of new permits in the Gaylord oil field.  The Gaylord oil field is a small field, located next to the very interesting Bell and Zenith oil fields near Belfield, North Dakota, in the southwest part of that state.

As noted, Gaylord is very small, not even one whole township; it is perfectly square -- four sections by four sections for a total of 16 sections. For such a small field, it is currently quite active with two rigs on site, and a third well nearing completion.

Two wells were spud in the Gaylord oil field in 2001 and 2002, both Madison wells:

• 15134, 33, short lateral, Denbury Encore, Hanson 41-19, Madison formation, t8/01; cum 165K 1/13; still active, 1,000 bbls/month; and, 
• 15302, 67; short lateral, Whiting, Hanson 41-24H, Madison formation, 20K bbls; permanently abandoned; test date 8/2002.

Something tells me Whiting will eventually go back to that Hanson 41-24H well.

Update on Expansion of Hess Natural Gas Plant Near Tioga -- Bakken, North Dakota, USA

Link here.

Mustang, a Wood Group company, has been awarded detailed design and procurement services by Hess Corporation for the expansion of its Tioga natural gas plant in the Bakken oil play in northwestern North Dakota. The project will expand the facility's capacity from approximately 110 MMSFD gas to 250 MMSCFD. The cryogenic gas plant will be designed for ethane recovery, full fractionation and sales of natural gas liquids (NGL).

Great Idea: Eliminating Open Oil Waste Pits -- Bakken, North Dakota, USA

Link here.

North Dakota is mulling a ban of oil waste pits amid a spate of toxic drilling discharges and an increasing number of migrating birds that have died by mistaking the polluted ponds for fresh water.

Lynn Helms, the director of the state Department of Mineral Resources, said Thursday that regulations may be changed requiring oil companies to recycle liquid drilling wastes instead of dumping them in open pits.

The so-called closed loop system that would allow only dry material to be stored on site may be cheaper for companies in the long run, Helms said.

For investors, there are opportunities.

EU Waiving Ban on Some Toxic Chemicals -- Good News for Big Oil

Right now, this is a great story for First Solar and solar panel manufacturers, in general, but industries across the board will end up using these toxic chemicals in myriad ways. It's the law of unintended consequences.

EU ministers voted on Friday to exempt solar panels from a ban on toxic substances in electrical goods, enabling leading maker First Solar to keep selling its products in the industry's biggest market.


The revised European Union law generally bans the use of six hazardous substances in electrical and electronic equipment, including cadmium, which is used by U.S.-based First Solar -- the world's No. 1 solar company by market share -- in its panels.

This sort of reminds me of the story about California regulators allowing huge solar farm in area where desert tortoises are threatened. Ya gotta love it.

The New Norm

This is incredible! I posted this story back on May 9, 2011. The Wall Street Journal must have picked up my story and ran with it.

Another big "thank you" to Don for sending me the link. The Wall Street Journal did not ask for my opinion.

For Investors Only: Interested In Both the Bakken and The Eagle Ford (Texas) -- EOG

Link here. This SeekingAlpha story has five companies, including EOG, that could soar in the Texas Eagle Ford.

Some are calling it the most revolutionary energy find since the Spindletop gushers sparked the Texas oil boom of 1901. Others are going even further, claiming it could be the single most significant economic development in the history of the Lone Star State. Any way you look at it, the Eagle Ford shale, spanning 14 counties across south Texas, has huge potential to make an impact on the fossil fuel industry.

The under-hyped Eagle Ford shale covers over 6 million acres, with some experts suggesting that the reserves could eventually yield in excess of 10 billion barrels of oil. The number of drilling permits issued has skyrocketed in the past year and a half, from a total of 94 issued in 2009 to well over 1,000 in 2010. The area’s high percentage of carbonate shale means that more oil can potentially be produced than natural gas, and technological advancements like horizontal drilling will help exploit the area’s resources to the fullest extent. 

For comparison, the Bakken may hold up to 24 billion barrels of recoverable oil. 

Bureaucratic Reporting As Required by the Obama Administration -- MDU

Printed in its entirety; link here.

This report is being filed in accordance with section 1503 of the "Dodd-Frank Wall Street Reform and Consumer Protection Act." On May 24, 2011, Connolly-Pacific Co., an indirect subsidiary of MDU Resources Group, Inc., received an imminent danger order issued by the Mine Safety and Health Administration under section 107(a) of the Federal Mine Safety and Health Act of 1977 at the Pebbly Beach Quarry on Catalina Island, California. The order was issued upon the observation of rock loading near a high wall that was deemed unsafe. A berm has been erected and signage placed to prevent access to the area while the company considers further action to address the matter. 

And then folks wonder why some of us dislike federal regulations. 

I wonder if the sign needs to be written in eighteen different languages. I doubt the sign absolves MDU of any litigation if someone ignores the sign and falls off the rock.

For similar filing, click here. 

Incredible Story From the Drudge Report -- Not a Bakken Story -- 22-Year-Old Student Solves One of Physics' Most Perplexing Problems -- And The Student Is A "She" -- Good for Amelia

And what are you doing during your summer break?

A 22-year-old Australian university student has solved a problem which has puzzled astrophysicists for decades, discovering part of the so-called "missing mass" of the universe during her summer break.


Undergraduate Amelia Fraser-McKelvie made the breakthrough during a holiday internship with a team at Monash University's School of Physics, locating the mystery material within vast structures called "filaments of galaxies."

Link here. 

More Global Warming Hits Colorado -- 25 Feet of Snow On Highways

We will see this turn to more flooding later this spring/summer.

Link here.

Update: Snow is deeper in Aspen, Colorado, on Memorial Day than it was New Year's Day.

Nice Newfield Well Off Confidential List -- Bakken, North Dakota, USA

19096, 2,862, Newfield, Helsingborg 1-22H, Sand Creek, Bakken

Click on Sand Creek for update that was posted some time ago. The Sand Creek oil field is in a fairly non-descript area of the Basin. It is located a bit farther east of the Stockyard Creek oil field and is on the south side of the river (the Stockyard Creek is on the north side).  It is immediately west of the very nice Charlson field.

First Observations In Williston, Heart of the Bakken -- North Dakota, USA

First observations in Williston:

1. Restaurants are very, very short of help. Some restaurants are closed some days of the week.  Gramma Sharon's, for example, one of the city's favorites, closes every Wednesday due to lack of staff; they have a sign upon entry: "Please be patient; we are short of staff." McDonald's closes restaurant early but keeps drive-through open. For one of the busiest times of the day, breakfast, one person serving inside with at least ten people -- all oil men, it appears -- on way to work. Two lanes of traffic in drive-through with at least fifteen vehicles -- mostly pick-up trucks -- in line(s).

2. North, west, and east of Williston -- just on edge or outside city limits everywhere new industrial buildings going up. I did not see any what-we-called in the Air Force "quality-of-life" activities -- no new restaurants, parks, schools, roads, etc. The city is probably overwhelmed just trying  afloat with current demands. New dormitory going up at local college. New Schlumberger site going up west of Williston.

3. Water, water, water everywhere. All my years of growing up in Williston, I never even thought there was an issue with flooding locally. Now the water is five feet below flood stage on the dikes south of Williston. Much of low-lying areas east and northeast of Williston now under water. Amtrak rails almost under water; water up to the "ballast" -- the rocks on either side of the tracks holding the trackbed in place. Amtrak trains creep down the tracks into Williston. Some say the wheels actually in water; others say it didn't actually go over the track. The story is that due to the huge amount of snow (global warming) in the Rocky Mountains, they will be releasing more water from Ft Peck Dam upstream (as I write this); that water will flow towards Williston. If more water from Garrison Dam near Bismarck is not released, then there will be more flooding in the Williston area. And, of course, if more water is released from Garrison Dam in North Dakota, more water will flood Mississippi, Louisiana, points south. More in regional papers, including Bismarck. Also here, about oil wells in Williston area under water.

5. US Army Corps of Engineers has public viewing site southeast of Williston; usually open to traffic for public to drive in and park, walk up the steps on the dike to look at the Missouri River. Now, signs posted keeping traffic out, closing parking lot due to "emergency situation." We drove in; very, very polite gentleman said we could park long enough to go up and look at the Missouri River. We there about five minutes; others followed us in to take a look.

6. Having nothing to do with snow pack in Montana, or flooding, there is also just too much water still in the fields from the past winter (snow; global warming). Farmers are unable to get their machinery in the fields to plant seed. They have until June 5, 2011, to get the seed in; they cannot buy crop insurance after June 5. And farmers won't plant without crop insurance. "Most" farmers have insurance bought last year that pays them this year if they can't get their crop in this year. Of course, with rising price of commodities, they won't get nearly that much in insurance that they would have gotten from actual production. [Note: the June 5th date varies by crop, and there is a sliding scale after that date. Some dates passed in late May.]

7. Oil-related trucks, of course, everywhere.

8. Coming into Williston on Amtrak, from Minot, passed Stanley, Tioga (where oil was first discovered in North Dakota, in 1951): lots of new rail sidings, new rail spurs going into oil-loading facilities. New pipeline being laid everywhere. Until you see the actual process of laying pipeline, I don't think one realizes how big a project it really is. For the larger diameter pipe, it looks like the right-of-way is about the width of two railroad lines, maybe twenty yards across.

9. At McDonald's today, I heard no one speaking Norwegian, German, or Russian, but I heard a fair amount of Chinese being spoken -- by the customers, not the staff. Those speaking Chinese were all under 25 years of age, or so it appeared.

More later.