Bakken Entrepreneur

Until you start driving around the Bakken, you have no idea how dirty your vehicle gets. It is amazing how many pickups one sees that are so covered with dirt and dust, that the only clear part of the window is where the wiper blades reach.

Which someone else noticed and will probably be one of the richest men in the Bakken before it's all over.

Motel - Hotel Building Activity -- Williston, North Dakota -- Bakken, USA

Updates

October 1, 2016: two hotels to close -- the Marquis and the Missouri Flats.
 

Original Post

 

Some random photos of the Williston hotel/motel complex just a five-minute walk from Sloulin Field, Williston International Airport.

Two of these motels were built during the last boom. Five of the motels/hotels were build in the last couple of years, and two more motels/hotels are under construction. I believe the Microtel opened today. And then, of course, one of the motels is adding 84 additional rooms.

Here are the photos, in no particular order:

Missouri Flats

On "2 & 85" north of Williston, just east of the city airport

Missouri Flats

West of Williston on the west side of the bypass, near Grandma Sharon's, across the road from the hospital

Except for the Marquis Hotel, all of the above hotels/motels are within about five-minutes walking distance from the airport.

The International Inn was built during the last boom.

Built earlier in this boom: the Marquis.

Others up and running: HomStay, Missouri Flats, and Candlewood.

Microtel opened this week.

Two more being built. See comments below: the motel under construction in the photos above will be the Holiday Inn Express. Apparently, the hospital hotel will be a Hampton Inns. See comments below.

International Inn being added on to.

Does that make about eight motels/hotels within walking distance of the airport?

The Marquis is just up the road on the west side of the bypass.

The hospital will be building its own hotel, the Hampton Inn and Suites.

The reason the parking lots look relatively empty is because these photos were taken during the day when oil workers are out in the field. 

The El Rancho is the iconic motel in Williston; it is located at the head of the "Million Dollar Way." It is clearly one of the nicer motels in Williston and may be the only one that still takes reservations on a daily basis. Most (if not all the rest) are completely contracted out to oil companies or oil-service companies.

Another motel going up is a Motel 6 which will not be near the airport. It is on the bypass near Herman oil. Not everyone is happy with this location but apparently it will be built. Link here.

Click here for website for the new Williston Hampton Inn and Suites.

Is This Why Natural Gas Continues to Rise in Price? -- Not a Bakken Story

Link here.

Two new EPA pollution regulations will slam the coal industry so hard that hundreds of thousands of jobs will be lost, and electric rates will skyrocket 11 percent to over 23 percent, according to a new study based on government data.

Overall, the rules aimed at making the air cleaner could cost the coal-fired power plant industry $180 billion, warns a trade group.

I don't know why this is such a big story for US News; the president said as much when he was a senator from Illinois:



President Obama on Bankrupting Coal-Powered Utilities

Meanwhile China will keep burning coal.

Huge Gulf of Mexico Discovery for XOM -- Not a Bakken Story

Link here.

ExxonMobil Corp. has a natural gas discovery and two oil discoveries in the deepwater Gulf of Mexico, one of which is among the largest gulf discoveries in the past decade.

The company estimated more than 700 million bbl of oil equivalent, more than 85% oil, to be recoverable on Keathley Canyon blocks 919 and 918 about 250 miles southwest of New Orleans and 90 miles north of Mexican waters.

Ten (10) New Permits -- Bakken, North Dakota, USA

Wow -- a huge day for the daily activity report. It will take a bit of time to cover it all. I will post and edit, post and edit.

Drillers: Petro-Hunt (4), Sinclair, BR, Newfield, Dakota-3 (WMB), EOG and Zenergy

Fields: Clear Creek, Willmen, Parshall, Epping, Sanish, Squaw Creek, Painted Woods, and two wildcats.

Petro-Hunt has the two wildcats, both in Williams County.

EOG has another one in the Sanish.

It's probably been reported elsewhere, but BEXP reported:

• 19085, 2,172, BEXP, Brad Olson 9-16 3H, Williams County

Others released from confidential status that caught my eye:

• 18735, 1,936, Dakota-3 (WMB), Dakota-3 State of ND 10-3H, Mountrail
• 19750, 2,338, BR, Devils Backbone 21-14H, McKenzie

Of the 17 wells that came off the confidential list, six were still not completed.

Is this the third recent BR well that had a great IP recently? Regardless, BR seems to be reporting some good wells lately.

In addition, 32 wells were listed as changing hands: from Peak North Dakota to Enerplus Resources (USA). Based on names of wells, and counties, I wouldn't be surprised if almost all of them aren't in the reservation. So, there's another acquisition by a listed company making it easier to follow.

New Presentations -- BEXP, CLR, and KOG -- Bakken, North Dakota, USA

BEXP, some data points:

• Slide 4: compare number of well completions/qtr (BEXP, CLR, WLL) -- remember, BEXP has less than 10 rigs; CLR has 22 rigs -- maybe more on this later
• Slide 6: cumulative totals/time keeps increasing -- and it's not insignificant
• Slide 12: decline rate; still pumping 30 boepd 16 years out
• Slide 22: net acreage in Williston Basin for "all" operators; agrees with my site almost across the board

Continental Resources, CLR, some data points:

• Slide 10: finally some good numbers on spacing (feet) between laterals and fracking; every time I see this slide, I pat myself on the back; I believe I was the first layperson to point out that fracking appeared to have an effective radius of 500 feet; that, and 90 cents will buy a cup of coffee
• Slide 19: $20.08/bbl --> total cash costs for a Bakken bbl of oil

 KOG, some data points:

• Slide 5: average boed in 1Q11 --> 2,000 boepd; average in 2011 --> 6,000 boepd; not insignificant
• Slide 8: nice map of prospects
• Slide 9: 5 to 7 wells on each 1280-acre spacing unit depending on prospect
• Slide 10: $8.5 to $9.0 million to complete a well; seems a bit on the high side compared to others
• Slide 12: By all parameters, wells have improved immensely since 2009; learning curve steep

There is way too much for me to cover in a short period of time, so I appreciate anything from readers that pops out at them regarding these new presentations. Comment below anonymously. 

Off-Topic: Apple, Inc

I know very few of you have time, but if you can find time, especially investors, you should look at Steve Jobs vision.

At this link there are a number of videos and some reporting. But the best part, is the transcript of Steve Jobs, reminiscing about getting started, and his vision for the future.

Steve is often called one of the world's best marketers, and that's true, but he's a great marketer because he:

• tells a great story,
• talks in a language we can all understand
• can articulate his vision like few others

I enjoy listening to him speak.

I own no shares in Apple, Inc, but I have grown up with Apple and have never been disappointed in any of their products.

China Overtakes US As Biggest Consumer of Energy -- and Even More Coal

Update

Oil rises $2.32 after OPEC decides not to raise production. 

At the link below in the original post, this statement:

That moved China ahead of the United States as the world's biggest consumer of energy, accounting for 20.3 percent of global demand compared with 19 percent for the U.S., the report said.

Now, compare that statement with a November, 2010, article in the New York Times, several data points:

The growth in Chinese energy consumption has already been breathtaking, according to the report. Over the last decade, China’s energy demand has doubled. While China used only half as much energy as the United States in 2000, it actually surpassed the United States in 2009 as the world’s largest energy user.

With China and its 1.3 billion people as a primary engine, the energy agency predicted that world energy demand should grow by more than a third over the next 25 years, [even] as new oil supplies became harder to find.

It also predicted that oil prices would rise to $113 a barrel in 2035, in current dollars, a rise of nearly $30. The agency also predicted that fossil fuels — oil, natural gas and coal — would remain primary sources of energy for the world, though renewable energy sources and conservation efforts would increase in importance. [Comment: $113/bbl in 2035! We hit $113 some time ago, although I assume this report means the annual average, not periodic spikes, but clearly we will be at $113 well before 2035.]

The analysts predicted that Chinese energy demand would soar 75 percent by 2035, accounting for more than a third of the growth in global consumption. While China today accounts for 17 percent of world demand for energy, it should account for 22 percent in 25 years. [Comment: in the article today, June, 8, 2011, just a few months from the November, 2010 report, China is already at 20 percent. I have trouble believing that it will take 25 more years for China to get from 20 percent to 22 percent.]

And this is why I am bullish on oil.

With 1.3 billion people, a one-child limit, Chinese favoring male children (i.e., boys), and a burgeoning number of unemployed, hormone-driven, young male adults, something tells me the Chinese have bigger concerns than "cap and trade."

Original Post

I didn't think China was projected to surpass the US for a couple of more years.

Link here.

China uses 48 percent of the world's coal.

US uses about 20 percent of world's output of oil -- and you know? That sounds about right. I would have thought it even more. China uses about 10 percent of the world's oil output.

But this is the headline:

China's consumption rose by 11.2 percent last year compared with 3.7 percent in the United States. China's surge led a 5.6 percent increase in global energy demand, the biggest one-year jump since 1973.

Well, That Was a Quick Turn in Oil Futures

So, I woke up this morning with oil futures down about 50 cents, maybe less; and, now, all of a sudden I see oil futures have spiked $1.40.

OPEC announced no plans to hike production.

I still maintain, in the near term:

• $60 - $80: supply and demand, cost of production, classical business models, fundamentals
• $80 - $100: strength of dollar, risk of inflation
• $100 - $120: "more speculative," based on sudden changes in world events, wars, shortages

Whether they are being truthful or not, Saudi seems to be saying they like oil in the $80 - $100 range; at least one OPEC member said $100 - $120 was more appropriate.

Stark County Denies Tax Benefits to New Business -- Bakken, North Dakota, USA

Link here.

Stark County Commission members denied the first-ever oil-related company request for a property tax exemption during a meeting at the Stark County Courthouse Tuesday.

Stark County Tax Director Diane Brines said after the meeting that the exemption would have allowed for more than $250,000 each year for the next five years.

Commissioners said they did not want to set a standard of giving exemptions to oil companies.

I don't know any more than this, what was printed in the paper. But my first thought is that the Stark County commissioners are doing the right thing. And not just because "the oil companies are doing so well right now." I run the risk of getting a lot of e-mail saying I don't know what I'm talking about, but taking that risk, here is my 2 cent worth: if you can't make it in the Bakken without help from the government, you ... well, I'll let others finish the thought. 

When I first read about this story some time ago (it was either the initial story or a similar story involving a different company), I felt that the company really didn't need the tax exemption, but was simply and appropriately taking advantage of all opportunities.

This might be a big headline story for Stark County pundits, but in the big scheme of things I doubt it amounts to much.

Oasis Comments on Recent Weather-Related Challenges -- Bakken, North Dakota, USA

Data points:

• Flooding and road restrictions make it difficult to meet 2Q production targets
• Should be able to work through completion inventory in 2H11
• Have continued to move forward with its capital program
• Although OAS had some delays in moving equipment, OAS does not expect a meaningful impact to drilling and completion
• OAS is making progress on securing eighth and ninth rigs for 2H11
• OAS has lined up a third frac crew; they should begin completions in July, 2011

Update at Oasis website. 

Two observations, okay, make it three:

• no matter how bad the weather is, the roughnecks would prefer this to the winter, I assume
• no matter how bad the challenges in the Bakken are, they do not compare to Iraq, Iran, Libya, etc
• I am impressed with how optimistic, how focused, how outcome-oriented these companies are

I have great respect for all these folks and always wish them the best.

Wow! How Time Passes! The First Post-Moratorium Well in the Gulf On-Line

Link here.

BHP Billiton Petroleum announced that it is the first company in the deepwater Gulf of Mexico to bring a newly drilled well into production since the moratorium was enacted in May 2010. The well was brought into production on 30 May 2011 on the BHP Billiton operated Shenzi field.

The SB-201 well was drilled to a total measured depth of 25,126 feet and is currently producing approximately 17,000 barrels of oil per day. This is the eleventh producing well within the Shenzi field and our ongoing development program will ensure that this operated tension-leg platform (TLP) remains a significant contributor to BHP Billiton's high value, Gulf of Mexico production.

I guess the story of more turtles than ever after the gulf spill was the tipping point in making decision to go ahead with drilling.

Or maybe the administration didn't like the idea of $5.00 gasoline and stories of the continued permitorium in the Gulf.