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

Daily activity report, June 21, 2011 --

Drillers: Samson Resources (2), Newfield, Oasis, North Plains, and Helis Oil and Gas.

Fields: Epping, Alger, Ray, Black Slough, Foothills, and Grail.

XTO and CLR each had one well come off the confidential list. Not particularly exciting; as usual, they will be posted elsewhere.

Link to Maps / Data Regarding Nationwide Flooding

Link here.

NOAA link.

Clicking on interactive icons will provide real-time data regarding river crests, etc.

$4 Million for Oil Field Training -- Williston, North Dakota, USA -- The Bakken

Earlier this year, the state legislature approved $2.2 million for increased oil field training for students attending Williston State College. The Budget Section has increased the spending limit to $3.9 million.

The  money is raised through fees paid by the oil industry operating in North Dakota.

Link here, but it is a regional link and will break early.

North Dakota lawmakers have given Williston State College permission to expand a new training center for oil workers.

The Legislature this year approved $2.2 million for the project. On Tuesday the Legislature's interim Budget Section said Williston State may spend up to $3.9 million on the training center.

Below are photographs of a new residence hall at the Williston State College campus on University Avenue, the east side of Williston, North Dakota.

 

The Budget Section also endorsed added spending on a new Williston State residence hall and some new features for the front of the campus. The money is being provided by donations.

The Oil Fields of the Nesson Anticline -- North Dakota, USA

This is for my benefit only.

I'm trying to sort out the Nesson anticline in North Dakota.

These are the major oil fields that run north to south over the Nesson anticline in the Williston Oil Basin:

• Stoneview oil field
• North Tioga oil field
• Tioga oil field (long, slender field)
• Beaver Lodge oil field (location of the Iverson discovery well in 1951)
• Capa oil field
• Hofflund oil field (just north of the river, and under the river)
• Charlson oil field (just south of the river, and under the river)
• Hawkeye oil field -- Antelope oil field (the Hawkeye is right under the anticline; the Antelope runs off to the southeast (the Antelope is the only oil field on this list that is inside the reservation)
• Blue Buttes oil field

More Global Warming -- This Will Be Flowing Into Lake Sakawea Behind the Garrison Dam

These pictures were sent to me June 21, 2011, from Burgess Junction, Wyoming.

They were taken last Friday, June 17, 2011 -- I believe they were delayed getting to me due to dogs having to rest each evening before the dog sled could continue its daily journey.

According to the photographer, Burgess Junction is on the north side of the Big Horns, south of Sheridan, Wyoming. Burgess Junction is kind of on the divide between the Tongue River and Little Big Horn drainages.

This global warming snowpack will be coming down the Tongue shortly into Lake Sakakawea behind Garrison Dam.

A big "thank you" to Don for forwarding me these pictures.

I understand how the driver of the third vehicle knows where to go, but I'm kinda wondering about the driver of the first vehicle. The guy in the third vehicle just follows the highway's yellow stripe, but the lead driver must be following a St Bernard.

Flashback: The Day XTO Bought Into the Bakken

Link here.  (Note: this is from 2008.)

Flashback: this is a re-look at the announcement in which XTO bought Headington Oil back in 2008. I was interested in some Nesson Anticline information, and ran across this gem. I thought others might enjoy reading about it again.

XTO bought Headington Oil in 2008, and XOM bought XTO in 2010.

Data points:

• Conference call date announcing the deal, publication date: May 28, 2008
• Acquisition: XTO buys privately held Headington Oil for $1.85 billion in cash in XTO common share
• Proved reserves + production + 215,000 net undeveloped unacreage = value of acquisition
• Deal effective: May 1, 2008
• Proved reserves (est): 68 million boe
• Production costs: $3/boe (not a typo --> $3/boe)
• Production growth (est): 12 - 15% per year going forward
• 352,000 net acres; 215,000 undeveloped
• [Note: XOM acquired XTO; XOM has 410,000 net acres in the Bakken]
• XTO first bought in the Bakken back in 1987; a horizontal well --> a "500,000 boe type well"
• Acquisition should put XTO into top three producers in the basin
• Plans to add to this position

Comments:

• XTO had been looking at the Bakken for past couple of years; Headington put together a ice position
• Most of acreage in Nesson Anticline
• Believed there was about 3 billion bbls of oil in place
• If only 10% recoverable, and get only half, looking at 150 million bbls in this acquisition; believes currently it is about 68 million bbls; thus, XTO sees a "double"
• Wells are "getting much better"
• There is a trend of drilling wells into the Sanish in Three Forks (the zone below the Bakken)
• This is one of the few acquisitions that XTO will get 12 - 15% annual growth with the third of the cash flow (based on current oil prices)

Trends:

• Back to single laterals (problems with dual and multiple laterals)
• Single stage fracks (that has changed)
• Oil is light (43 gravity)
• Natural gas is rich (1,500 BTUs)
• EOG has been successful east of the Nesson Anticline
• XTO may be drilling 320-acre infills in Elm Coulee; belies down spacing will occur over time
• Expects technology to improve recoveries
• CLR was looking at CO2, small pilot, CO2 project in Elm Coulee
• Believes there may be some potential for some additional secondary, tertiary recovery

Question and Answer:

• We expect a lot of refracking (yes, that's how the publication spelled it)
• Will drill tighter spacing --> resulting in increased recovery (seen in other shales)
• CAPEX: $130 - $140 million/year (represents about one-third of the cash flow "on the strip"
• Hess has been active on the northern part of the anticline
• CLR: active on the northern and southern end of the anticline
• BR, MRO: active on the southern end
• Murex: "another little independent that's been very successful drilling wells on the top of the anticline"

New Director's Cut -- June 20, 2011

Link here.

Production down in April, due to spring flooding, I believe:

• March, 2011, oil: 360,279 bopd
• April, 2011, oil: 351,183 bopd
• Record oil production remains at 360,279, March, 2011)
• March producing wells: 5,439
• April producing wells: 5,536 (all time high)

Permitting

• March, 2011: 149
• April, 2011: 125 (all time high: 245, 2 Nov 10)

Pricing

• March, 2011: sweet crude, $95.51
• April, 2011: sweet crude, $103.91
• Back of envelope calculations: March, 360,279 x 95.51 = $34.410 million; April, 351,183 x 103.91 = $36.491 million.

Director's comments:

Decreased production due to wet spring weather likely to last through June. The idle well count dropped to 757 but is still near record highs. There continues to be surplus crude take away capacity with pipeline, rail and truck all included. Leasing remains focused on renewals and top leases in the Bakken - Three Forks, but there is significant activity south of Dickinson to the South Dakota border. Flaring his a new record, 28.5%. Significant new natural gas plant and gathering pipeline expansions have been announced but have to wait for drier weather.

Rigs

• 20,000-foot capable rigs: over 90% utilization rates
• 7,000 or less-capable rigs: less than 50% utilization rates

Reminder: Another Bakken Blog -- DrillingInfo -- Comment About Hess

I'm not sure if I've mentioned this "blog" before, but it may be another nice site to follow activity in the Bakken.

I've placed it in the sidebar at the right, far down under "external links."

The blog did a nice synopsis of Hess' strategy in the Bakken to "hold by production" their leases:

One other very interesting point which was discussed is the shift away from dual laterals.  Hess has been touting the same dual lateral stats for over a year.  $10-$11MM/dual lateral, 1 MMBOE / dual lateral EUR.  According to Hess, they are moving towards single laterals for HBP purposes.  This will go on for about 18 months.


Single lateral stats with an 18-22 stage job are as follows: $7-$7.5MM per, 550 MBO per, 30-Day IP of 700-750 bbl/D.

Rig Utililization in the Bakken -- North Dakota, USA,

There is an interesting graphic in Whiting's recent corporate presentation.

I noted some time ago that for all the rigs CLR has in the Williston Basin, it seems other drillers are completing wells at a similar rate despite having fewer rigs. It was just a "feeling."

Look at slide 26 of Whiting's most recent corporate presentation (June, 2011), in which Whiting lists about 35 drillers working in the Bakken, number of wells drilled, and six-month total production (MBOE 10); these are wells drilled since January, 2009 (I may be misreading the slide, but this is what is seems to say.) (The number of rigs is my estimate over time; subject to correction)(a select few):

• WLL: 15 rigs; 72 wells drilled; 7,221 mboe 10 -- 6 months total production; 100k/well
• EOG: 8 rigs (varies; bought AEZ); 119 wells drilled; 7,134 mboe 10; 60k/well
• CLR: 22 rigs; 69 wells drilled; 4,145 mboe 10; 60k/well
  
• BEXP: 6 rigs; 20 wells drilled; 1,628 mboe 10; 81k/well
• BR: x rigs; 44 wells drilled; 2,847 mboe 10; 65k/well
• Slawson: x rigs; 35 wells drilled; 2,613 mboe 10; 75k/well 
• MRO: x rigs; 60 wells drilled; 2,187 mboe 10; 36k/well
• XTO: x rigs; 49 wells drilled; 1,950 mboe 10; 40k/well
• KOG: 2 rigs; 10 wells drilled; 571 mboe 10; 57k/well
• Hess: x rigs; 43 wells drilled; 2,148 mboe 10; 50k/well

MRO and XTO stand out. 

It's possible that one rig/Eco-Pad, and the delay in completing the fourth well, is skewing CLR's results.

WLL's impressive 6-month production results are due to the impressive wells it has in the Sanish, and the way WLL is executing its Bakken strategy: at least one Sanish well for every other well it drills.

The graphic on that page lists the drillers in order of average production/well over the last six months:

• WLL: 100k/well
• Murex: 89k/well
• BEXP: 81k/well
• Hunt: 79k/well
• Slawson: 75k/well
• American: 72k/well
• Questar: 71k/well
• SHD: 68k/well
• Zavanna: 65k/well
• BR: 65k/well
• Petro-Hunt: 62k/well
• CLR: 60k/well
• EOG: 60k/well
• Fidelity (MDU): 57k/well
• KOG: 57k/well
• Anschutz (OXY): 57k/well
• SM: 54k/well
• Newfield: 53k/well
• Zenergy: 51k/well
• Hess: 50k/well
• Tracker (Hess): 49k/well
• Oasis: 46k/well
• Peak: 46k/well
• Encore (Denbury): 45k/well
• Sinclair: 44k/well
• XTO: 40k/well
• Lario: 40k/well
• MRO: 36k/well
• Baytex: 32k/well
• Cirque: 30k/well
• Samson Resources: 29k/well
• PDC: 27k/well
• Panther: 21k/well
• Sagebrush: 16k/well

Again, XTO and MRO stand out. One can argue that WLL is an outlier due to its "sweet spot" in the Sanish, but it's hard to defend XTO and MRO. Even companies like Newfield in the Bakken are somewhat disappointing when one looks at this data.

Hopefully, WLL updates this data a year from now.

How Fast Are Things Moving In Williston? -- Heart of the Bakken, North Dakota, USA

Williston-based Grizzly Wire purchased by a Texas oil services company.

Williston-based Grizzly Wire has had a long and distinguished presence in Williston. It opened its doors in 2007.

Link here.

Kind of reminds me of "Buck" Scheele who started his roughnecking days in the Williston Basin back in 1952, built up a highly successful oil services company, and sold out in 2011.

Yup, things are moving really, really fast in the heart of the Bakken.

Since the link is a regional link that will break, here's the crux of the story:

Williston company Grizzly Wire Rope and Chain was acquired last week by Delta Rigging and Tools, Inc. of Pearland, Texas.

Delta Rigging and Tools is the largest U.S. provider of lifting products and services, providing items including hoists, winches, and wire ropes.

Delta R&T was founded in early 2008, and has 12 sales and services facilities and two distribution centers around the country.

Grizzly Wire Rope and Chain opened in 2007. The company will become part of Delta R& T, and employees will remain on the job.  Steward Vachal was the primary shareholder in Grizzly Wire Rope and Chain. Wow, what a great name.

When Southwestern Bell (San Antonio, TX) bought ATT, the former chose to take the "old" ATT name. I sorta wish Delta would have taken the "Grizzly" name. There's a lot in a name. My dental insurer is Delta Dental, for example. Somehow, I wouldn't want Grizzly Dental to take care of my teeth.

Solar Short Sell in A Shovel-Ready World

This morning at 10:35 a.m. (June 21, 2011) there was a short piece on CNBC about solar energy being in the doldrums, and being in the doldrums for a variety of reasons.

Case in point: FSLR. Down today in an "up" market, and down to 125 from its yearly high of 175. Meanwhile Arch Coal (ACI) is up 4 percent today. Just saying. But I digress.

I had written a post on the CNBC story, about solar being in the doldrums, but then decided to cancel it; it wasn't much of a story, and perhaps was only serving my personal agenda, and not of much interest to readers.

Now, some hours later, I ran across this story: the administration's promise last year to put solar panels on the White House roof have not yet materialized. The reason: federal contract rules too complex. Wow, talk about shovel-ready jobs and even the White House doesn't have sufficient clout to maneuver through the federal maze of contracts. I love it when I get one link with two stories: a) challenges of solar energy; and, b) federal contracting in a shovel-ready world.

I can't make this stuff up.

Link here.

Last October, the Obama administration announced plans to install solar panels on the roof of the White House by the spring of this year, returning the power of the sun to the pinnacle of prominence a quarter-century after Jimmy Carter's pioneering system was taken down.

Spring has come and gone, and the promised panels have yet to see the light of day.

Administration officials blame the complexities of the contracting process, and say the solar project is still an active one. But they can't say when it'll be complete. [That was 1979 when Jimmy Carter put them up. Ten years after we put a man on the moon. I guess federal contracting rules have changed significantly since then. And may explain the economic malaise we're in.]

Environmental groups say the symbolism is telling _ and disappointing.

The environmentalists, in the article, lament that yet one more summer will go by with all that summer sun wasted. Why worry? My understanding is that it will be at least a century before we see "results" of global warming, the reason "we" are pushing solar energy. 

Speaking of climate forecasts, the weather forecasters predicted a less-than-beautiful Saturday here in Boston just a couple days ago. It turned out to be a great day. A two-day forecast. Hmmm.

As with other posts of this nature, comments won't be posted unless presented with factual data, or the comments add something to the discussion.

Top of the Middle Column -- Drudge Report -- Minot Flood Worse Than Ever

Link here to Minot Daily News, a regional link which will break soon.

Disastrous. Unstoppable. Historic. Unprecedented.

All words used to describe what city, county and state officials warn is an imminent assault on all residents of the Souris River Valley.

The highest flows ever recorded on the Souris are approaching a city whose defenses are destined to be over run. Can the city hold?

Dikes currently in place, recently improved greatly to combat high flows, are now expected to disappear under the traveling torrent. The amount of water flowing with a vengeance down the Souris River Valley is forecast to inundate Minot to a level seven to eight feet higher than the catastrophic and benchmark flood of 1969.

Saddened with that horrific knowledge, officials announced during a late afternoon press conference Monday that very little can be done to stop the powerful onslaught. Massive secondary dikes that were built by the U.S. Army Corps of Engineers to save much of the town from the previous high on the Souris this year fall far short of defending against the impending and rapid rise of the Souris.

I remember the 1969 flood very, very well. To imagine this one is worse, is incredible. And that's why Amtrak is not running in North Dakota.

And more:

"It's pretty easy to get to 23,000 cfs, which is bearing down on Sherwood as we speak," said Alan Schlag, Monday. Schlag is a hydrologist for the National Weather Service in Bismarck.

For comparison purposes, the previous peak flow at Sherwood this year, one which caused great concern at all points downstream, was a mere 8,860 cfs.

"Basically, Canada is pouring the coals to releases from dams. Rafferty is wide open, Alameda upped to 1,800 Monday and Boundary was at about 5,000 cfs," said Schlag.

Dalrymple, who conversed with Saskatchewan Premier Brad Wall on Monday, said he received assurances from the Canadians that all that could be done to prevent high flows was done.

Additionally, said Dalrymple, the citizens of Estevan are already enduring flooding hardships that may soon be experienced in Minot as well.

Supreme Court Rules in Favor of Utilities -- Real Money

Link here.

Yesterday, the Supreme Court handed down a number of decisions. Many commentators are talking about the Wal-Mart case, but the big decision was the American Electric Power case. Specifically, it was American Electric Power Co., Inc., et al. v. Connecticut et al., and the decision was unanimous. This case involved some of the nation's largest utilities. AEP was joined by Southern Energy , Tennessee Valley Authority, Xcel Energy and Cinergy, a subsidiary of Duke Energy . Siding with AEP and other coal-burning utilities was the Obama administration. 

And from bijournals/morning call:

The nation’s high court in an opinion written by Justice Ruth Bader Ginsburg ruled 8-0 that the EPA is better equipped than a federal court to handle carbon emissions standards tackled in the six-state suit against the utilities. The companies, whose coal-fired plants account for a quarter of all emissions from domestic electricity, were sued by a group of states in 2004 on grounds that their carbon emissions violate public nuisance law in contributing to global warming. Claiming the EPA hasn’t acted enough to cut emissions from the companies’ plants, the states were pushing for court-imposed restrictions.

In the opinion, Ginsburg wrote that the federal Clear (sic) Air Act and the EPA actions it authorizes “displace any federal common law right to seek abatement of carbon dioxide emissions from fossil-fuel fired power plants.”

Note: the decision was unanimous.

XTO Reported A Nice Well Yesterday -- Wardner -- 1,060 IP

19626, 1,060, MRO, Wardner 24-35H, Bailey, Bakken

Remember: all wells coming off the confidential list (as well as others occasionally gleaned from corporate presentations or press releases) are reported at the link.

Note: The Bailey field, a moderately sized field, is "owned" by Marathon Oil. The IPs of the Marathon wells are consistently in the 350 - 500 barrels range.

The Bailey is a prototypical Bakken field. Except for one outlier, file # 12927, a Missouri River Royalty Corporation well, with a status date of 2002, all of the permits in this field were issued during the current boom, and to the best of my knowledge, all wells target the Bakken Pool.