GMX Resources Spud First Williston Basin Well -- Bakken, North Dakota, USA

Link here, from Rigzone.com:

GMX has begun drilling its first well in the Williston Basin.

The Company has spudded its first Williston Basin well in Stark County, North Dakota. The Wock 21-2-1H is a Three Forks well being drilled in Township 140N, Range 98W. The Company expects the well to be completed in the third quarter of 2011.

Eleven (11) New Permits -- Bakken, North Dakota, USA

Daily activity report, July 7, 2011 --

Operators: Hess (3), BEXP (2), QEP, Zenergy, Marathon, XTO, Slawson, and CLR; in addition there was another CLR permit left off a daily activity report some weeks ago

Fields: Deep Water Creek Bay, Little Knife, Assiniboine, Bailey, Heart Butte, Big Bend, Hawkeye, Ray, Indian Hill, Bull Butte, and Oliver

The two BEXP permits will be wells on the same pad, Bull Butte, Williams County.

Four wells came off the confidential list but no data provided for three of them (backlog in fracking, no doubt). The fourth:

• 19969, 356, Newfield, Larson 159-102-29-32-1H

The number of active drilling rigs dropped to a recent low today: 166.

Seven Blue Chip Mega Caps With Bullish Indicators -- SeekingAlpha

Two of them are energy companies, CVX and XOM, and one of them is trading near its 52-week high.

Link here.

Of course, my favorite company, Apple, leads the list. I don't own any shares in AAPL.

The seven companies: AAPL, CVX, XOM, T, ORCL, IBM, and PM. A very interesting list.

With regard to CVX, this is noteworthy:

CVX has outstripped the S&P’s 52-week return by approximately 148%. In Colombia, cross-company collaboration is helping.

Chevron bridge the gap between the nation's natural gas fields and its driving public. "Colombia is an international model for the development of the natural gas vehicle (NGV) market," said Damon Echevarria, Americas Products area manager for Colombia and Central America.

In the last six years, NGV consumption has grown more than 800% and now represents nearly 10% of Colombia's national gas usage.

Innovative Proposal for New Housing Subdivision in Arnegard (near Watford City) -- Bakken, North Dakota, USA

Link here (regional link will break early).

The city of Arnegard could very well be on the brink of seeing the biggest population boom that it has ever seen within the next few months. But that boom is contingent on the Arnegard City Council approving a zoning change request by Phil Moen to change the zoning of 22 acres of property he owns within the city limits of Arnegard from agriculture to residential.

If the city council approves the zoning change, as well as conditional use permit on the property at its July 13 meeting, Moen will lease the property to Capital Lodging of Round Rock, Texas, which intends to construct a whole new concept in work force housing on the property.

Data points:

• Housing for 280 people
• 24-hour security monitored, gated subdivision
• 13 three- to four-bedroom manufactured homes for Local Infrastructure Support Personnel
• Additional executive style lodging for 200 oilfield workers
• 24/7 dining facility for oilfield workers
• Shuttle service for oilfield workers
• Targeted groups: teachers, law enforcement, others who need "affordable" housing but aren't being paid oilfield salaries
• Movie theater, domed recreation center to include swimming pool and hot tubs
• Waste water lagoon for the entire city of Arnegard
• Upgrading the county and township roads leading to the new subdivision
• New park

Update of the Bakken Pipeline Situation -- North Dakota, USA

Link here (regional link will break soon).

Personalities:

• Kesley Myhre, Enbridge spokesperson
• Justin Kringstad, Director, North Dakota Pipeline Authority

North Dakota Pipeline Authority, mission:

The North Dakota Pipeline Authority works with the companies to help them understand the oil play, as well as offer support through the state and federal government. The North Dakota Pipeline Authority is a state agency that started in 2007.

Current status: three major options for pipelines in the Bakken

• Enbridge system: 210,000 bbls/day
• Tesoro pipeline: 58,000 bbls/day 
• Butte Pipeline: 118,000 bbls from eastern Montana to Wyoming

Currently, maybe 60,000 to 70,000 bopd transported by rail

Four additional projects being proposed or underway:

• TransCanada Bakken MarketLine: expected to start mid- to late-2013; 100,000 bopd from Williston Basin to major hubs in Oklahoma and Texas
• True Company 'Baker 300': 118,000 bopd now; by the end of 2011, that oil flow will increase to 150,000 bopd; and in 2012, increase to 200,000 bopd
• Plains Bakken: will ship up to 75,000 bopd from western North Dakota (100 miles from Trenton) to an existing pipeline along the Canadian and Montana border
• Enbridge Bakken Expansion Program: currently shipping 210,000 bopd; by the end of 2013, the company expects to add another 120,000 bopd capacity

Enbridge projects under construction:

• The Beaver Lodge Loop project: loop an existing pipeline or place another pipeline adjacent ot existing pipeline system; from Enbridge's Beaver Lodge Station through Stanley to Berthold Station
• The Bakken Expansion Project: replace 11 miles of a newly reactivated pipeline, from Berthold to the Canadian border; a new pump station at Lignite, ND, and a new pump station at Kenaston, ND; cost o the US side is $370 million; the expansion work on the Canadian side is $190 million

Overview of the Western Area Water Supply (WAWS) Authority

WAWS

Overview

Locations

• West 2nd street, west side of Williston; congested; hard to make left turn when heading back onto highway toward Montana, Watford City
• US-85 north of Williston, truck bypass, County Road 6; at Love's Truck Stop (to be built in 2012)

Updates

December 18, 2012: from the Dickinson Press

• original authority: $110 million; will be repaid through sales
• another $40 million in loans will be requested in the next legislative session
• and another $80 million will be requested after that due to huge growth
• by 2025, expected to serve more than 80,000 people (about $3,000/person; and it's a renewable resource) 

May 14, 2012: groundbreaking, Crosby to Wildrose water pipeline

The Western Area Water Supply Authority will be breaking ground on a water pipeline between Crosby and Wildrose Tuesday.

The new pipeline will carry treated drinking water from the Missouri River to Burke, Divide, McKenzie, Mountrail, and Williams counties. By the end of this year, Ray, Tioga, Stanley, Ross, Wildrose, Crosby, Columbus, Fortuna, Ambrose, and Watford City will have access to Western Area Water Supply Project water. [Comment: I remember independent water suppliers fighting WAWS, but to the best of my knowledge, the indies had no plans to provide water for cities for the long term. From the little I know, WAWS looks like a brilliant decision in hindsight.]

May 9, 2012: see comment this date, important. 
March 29, 2012: the state Water Commission is debating benefits of WAWS and the case brought against it by the Independent Water Providers Group. Story in the Bismarck Tribune.  The IWPG says WAWS was grossly overbuilt (which I find interesting). WAWS will provide drinking water to towns throughout the oil patch long after the oil industry is done fracking; the IWPG does not provide drinking water to these communities. The IWPG argues that WAWS is unfair competition paid for by the state.

Original Post

Overview

Link here (this link will break soon).

WAWS Authority: the City of Williston, McKenzie County Rural Water District, Williams Rural Water District, R&T Rural Water Association, and the legislative-appointed BDW Rural Water System, will own and operate the supply and transmission system. The WAWS will make direct sales to different entities, who in turn will sell water to individual homeowners and businesses.

Background: Earlier this year, the North Dakota State Legislature passed a law that would fund $110 million of the total project. A water treatment plant, that is headquartered in Williston, ND, currently has a 10 million gallons a day water capacity and will have additional filter systems added that will increase that to 14 million gallons a day in the next two years. Future projections are that the project could produce 28 million gallons of water a day.

Project designer: AE2S, Grand Forks.

Status of project: AE2S is currently designing the project.

Time line: The project is expected to start later this year and be completed in 2012. It will include pipelines that will transport water to the communities of Williston, Watford City, Stanley, Tioga, Wildrose, Ray, Crosby, and Alexander.

Funding: The project is being funded from the State Water Commission, State General Fund, and the Bank of North Dakota. Water sales to the oil industry are expected to pay for 80 percent of the project.

***********

On a separate issue, a short story on the Southwest Water Authority can be found here.

Aerial Photos and Video of Flooding South of Williston -- Bakken, North Dakota, USA

Link here.

There was a story yesterday that the flooding is receding and likelihood of flooding in the city of Williston has lessened.

Image #24 is of the Halliburton Vancouver Olympics Housing Unit east of Williston, along the Little Muddy River.

Images #16 - #21 are of White Bridge northeast of Williston. When I visited, the road was open again; the flooding over the road probably comes and goes, but should be resolved by now.

Video of flooding south of Williston along US-85 found on YouTube:

Flooding south of Williston, North Dakota, on US-85

For Investors: News of the Day With Oil Heading Back to $100 -- Bakken, North Dakota, USA

Analysts upgrade four stocks, including KOG.

Analyst: oil will hit $150 despite IEA release of SPR oil, this year due to unrest in Africa.

The Street: "oil prices roar on bullish reports."

Enbridge thinks about shipping oil to eastern Canada -- again.

Enbridge Inc is in talks with refiners and Western Canadian oil producers about establishing new pipeline access to Eastern refineries in a revamp of a concept it floated three years ago, an executive said on Wednesday.

The idea is to ship light crude oil to refineries in Quebec and beyond, which pay higher crude costs due to the wide pricing spread between oil on the Atlantic Coast compared with Western Canadian supply, said Richard Bird, Enbridge's chief financial officer.

Comment:  this story plus the IEA's recent panic-release of the SPR suggests refiners are having more and more difficulty getting enough of the "right kind" of oil to their sites.

H&P To Build Twelve (12) New Land Rigs -- Bakken, North Dakota, USA

Link here.

The story has been out for several days, I just didn't have time to post. This is a very interesting story.

Helmerich & Payne has entered into agreements to build and operate 12 additional FlexRigs.

These rigs will be built under multi-year term contracts with eight exploration and production companies, and are scheduled to be completed and begin operations in the US during fiscal 2012.

President and CEO Hans Helmerich commented, "After a severe industry downturn in recent years, it is satisfying to report that since March 2010 we have now announced a total of 57 new builds, representing a 30 percent increase in the number of FlexRigs in our fleet. Given the increasing challenges and level of complexity related to drilling oil and gas wells today, demand for new and highly capable land rigs in the US continues to grow and our FlexRigs continue to lead the way."

Some of these rigs are already in the Bakken; I assume more are on their way.

It's Official: France Bans Fracking -- Risk To Environment -- Bombing Libya To Replace "Lost" French Oil Apparently Not Damaging to Environment

Link here.

Lawmakers in France voted to officially ban the use of hydraulic fracturing as a completion method to develop shale oil and gas formations in the country.

The French Senate followed the National Assembly in voting to ban the use of hydraulic fracturing in the country.

France is the first country to ban the use of hydraulic fracturing, as the oil and gas development method has come under fire recently across the globe.

I find France's decision to ban fracking about as short-sighted and ill-conceived as the Minnesota government shutdown.

Bottom line: France won't develop its own resources, but yet calls on US to go to war with Libya to open oil fields that provide the oil France needs for its own economy. Okay. We saw this movie before.

Headline Story Today: Crude Oil Supplies in US Drop for Second Week In a Row

Link here.

I did not post my observation yesterday that the mainstream media failed to report what I thought was the biggest unreported story of the day: the increase in oil price yesterday -- I thought it remarkable that oil was up as much as it was yesterday after a recent run-up, despite the SPR release, and yet mainstream media did not report yesterday's price increase as a headline news story. It looked to me like mainstream media was missing a big story yesterday.

Today, another price increase, related to drawdown in US crude oil supplies, and now it's a headline story. One has to assume the President was provided this outlook when he made the decision to open the SPR.

The American Petroleum Institute said late Wednesday that crude inventories fell 3.2 million barrels last week while analysts surveyed by Platts, the energy information arm of McGraw-Hill Cos., had predicted a drop of 2.5 million barrels.

Inventories of gasoline dropped 1.9 million barrels last week while distillates decreased 1.6 million barrels, the API said.

I believe that crude supplies in US remain at historical highs, however.

This is what I found most interesting in the article:

Some analysts said falling U.S. supplies will likely spark crude producers to boost output, cutting into extra production capacity and supporting prices.

"We expect inventory draws will prompt OPEC to increase production, at the expense of spare capacity," Morgan Stanley said in a report. "We remain bullish oil, particularly in the second half."

Translation: OPEC has little to no spare capacity. 

Interactve Map May Make My Blog Redundant -- Incredible Website -- Bakken, North Dakota, USA

I do not know if I have seen this site before and have forgotten, or if this is the first time I have seen it, but it is incredible.

This is an interactive map developed by UND-EERC. A big thank you to Don for alerting me to it and to Jay for posting it.

The UND-EERC interactive map and the sister site, the UND-EERC's Bakken Decision Support System  makes me wonder if my site is even needed any more. Smile.

For now, I will press on. Keeps me out of trouble.

Another Rail Oil-Loading Facility On Track Despite No Tax Breaks -- Stark County -- Bakken, North Dakota, USA

Link here.

This story was reported earlier.

After being denied a tax exemption earlier, EDOG Logistics of Wichita, Kansas, applied again for "any kind" of tax exemption for their $1.3 million construction project that will eventually have a full-time staff of about 13 employees with a combined salary of about $780,000. The county denied the second request.

Stark County Commission members made it clear they will not be giving tax breaks in the oil patch after they rejected a second request from an oil-based business Tuesday morning.

EDOG Logistics, LLC, of Wichita, Kan., had submitted a request in June for a 100-percent five-year tax exemption which was denied. At Tuesday’s meeting the company was looking for any available incentive.

“When you start up a business, it doesn’t take off like an airplane,” EDOG Project Manager John C. Wadsworth said, adding the business did not expect 100 percent exemption, and would appreciate any break to get the $20 million project started.

Stark County Tax Director Diane Brines said the company would be expected to pay more than $250,000 per year in taxes.

When I initially posted this story, I believe I said I had no trouble with the county commissioners' decision. But I can't remember. I can be schizoid on these things.

I don't know how they get from a $1.3 million construction project and less than $1 million salary and calling it a $20 million project. Be that as it may, $250,000 x 5 years = $1.25 million.

$1.25 million represents 6% of $20 million. Six percent doesn't seem out of line, and it will be a tax deduction. And that 6 percent is spread out over five years if I understand the article correctly.

EPA Drafts New Air Quality Rules Regarding Ice-Breaking Vessel in Alaska

Do folks remember this story? At the time I found the whole story incredible. The EPA was going to shut down an operation in which billions had been spent in the understanding that the oil industry was meeting all requirements, but then, out of nowhere, it seemed the EPA had established new standards.

Now, out of the blue, it appears EPA is about to reverse its decision.

Shell previously received permits from EPA in March and April of 2010, but environmental and other organizations appealed the decision to the agency’s independent Environmental Appeals Board, which overturned them in December.

The permits are required under the Clean Air Act because the Discoverer drillship and supporting vessels are expected to emit more than 250 tons/year of pollutants, which would be limited under the permits, EPA said.

It noted that EPA’s Region 10 office revised the draft permits to address issues raised in the appeal. These include reductions by more than 50% of most key pollutants from levels allowed in the 2010 permits, largely due to a new nitrogen dioxide standard which went into effect after EPA issued the original permits.

“Many years of work have gone into achieving these permits, and the support from Alaska to Washington, DC, has been tremendous,” the Shell spokesman said. “We believe the work we have done to further modify and reduce our air emissions to meet new standards meets the goal of having no impact on the environment or coastal villages.”

Even a positive ruling from the EPA will not be the end of the story. 

The EPA permits assure compliance with air quality regulations, but do not in and of themselves authorize drilling, the air quality regulator emphasized. That decision must come from the US Department of the Interior’s Bureau of Ocean Energy Management, Regulation, and Enforcement.

The permitorium continues. Be sure to read the story linked at the beginning of this post to get the full story. An ice-breaking vessel was at the center of the storm; given enough global warming and delay by the EPA, the ice-breaking vessel may not be needed.

For Investors: Analysts -- Oil Headed For $100, Probably Higher Later in Year; Mentions Bakken Companies Favored

Link here.

Their recommendations:

MLV's Pacanovsky ignores speculative swings in oil and instead focuses on longer-term trends in evaluating oil stocks. Right now, she likes Kodiak Oil & Gas because of its big leverage to oil and sizeable position in the Bakken shale, and Magnum Hunter Resources, which has a presence in three of the "hottest" shale basins in the United States: the Bakken, Eagle Ford and Marcellus.

Youngberg of Edward Jones likes Chevron and Royal Dutch Shell for their strong growth outlook and attractive dividend yields of 3% and 4.7%, respectively. 

He also thinks that Hess Corp. is undervalued and operational improvements should help its share price relative to peers. 

My two cents worth with regard to KOG. Include CLR, WLL, and BEXP and you have a pretty good Bakken portfolio.

(On another note, note the phrase "speculative swings in oil" in the linked article above -- again, I haven't seen "speculative swings" in quite some time. The price of oil seems to be moving as one might expect based on world events and the strength of the dollar. I still see oil priced the next six months based on these ranges or bands:

• $60 - $80: supply and demand, fundamentals; cost to produce last barrel of oil
• $80 - $100: weakness, strength of the dollar
• >$100: unexpected shocks in the industry

When oil is trading between $80 and $100, I expect most movement to be based on strength of dollar, and to some extent, global economic news.

When there is sudden movement from one band to the next, it is due to tectonic shifts.

For example, moving from the current band ($80 - $100) to the lower band ($60 - $80) would mean there has been a sudden change (tectonic shift) somewhere; likewise a sudden jump from the middle band to $110 or higher would suggest a sudden change (tectonic shift) somewhere.

For example, if Kadafi were to negotiate an exit, and the rebels re-establish full Libyan oil export potential while oil is still being released from the strategic reserves, I could see oil in free fall to $70.

Instead of "speculative" swings, I wish the analyst had used the phrase "wild swings" or even "large swings."

All things being equal, and if there is no double-dip recession, the supply/demand story suggests the bands will gradually shift up in 2012.)

Williams County Commissioners Discuss Man-Camps -- Bakken, North Dakota, USA

Link here (regional link will break early).

It certainly sounds like the commissioners are doing their best to work with the local community and the oil industry on a very thorny problem.

This is part of the reasoning:

He said if more people were to bring their families, the shortage of workers in non-oilfield jobs could be addressed locally. Commission Chairman Dan Kalil questioned the possibility of that being a requirement.

But in addition, it is my understanding that many crews work two weeks on, two weeks off. During the two weeks off, the workers fly back to their families in Texas. When it comes time to return to North Dakota, some prefer to stay home in Texas and not return to the oil patch in the Williston Basin. A drilling crew needs a full complement of workers, an experienced team, and when one member does not show up Monday for the beginning of the next two-week shift, significant challenges face the operator trying to stay on schedule.

Sounds like "they" need a focus group of man-camp residents to see what they might suggest.

Williston McDonald's Manager Sets the Record Straight --

Link here.

Update on the Nine (9) Wells Along the Hess Long Lateral #17117

Do you remember this story?

That post started out with:

Looking at the GIS map server this morning I see that there are now nine (9) wells alongside the Hess long lateral #17117. I first talked about six monitoring wells along this long lateral back on March 18, 2011.

The original six wells all had "observation" in their names. The newest three wells no longer have "observation" in their names and are located immediately around the original well site of Hess #17117: EN-Person-156-94-1102H-1.  Based on their names, these three new wells will not be monitoring #17117 but will be production wells. Note that the most recent permit (#20772) is the odd-man out of these four wells. #20772 is not a "Person" well but an "Enger" well and it will be going south, where the other three are going north.

• 17117, 345, Hess, EN-Person-156-94-1102H-1, Big Butte, Bakken, cum 123K 11/17;

Here are the nine (9) wells:

• 20500, SI/Monitroing; EN-Person Observation 11-33, east side of the lateral, Three Forks
• 20315, EN-Person Observation 11-22, west side of the lateral (rig on site), Duperow
• 20442, EN-Person Observation 2-24, west side of the lateral, Three Forks
• 20361, EN-Person Observation 11-31, west side of the lateral, Three Forks
• 20539, PNC, EN-Person Observation 2-32, east side of the lateral
• 20599, EN-Person Observation 2-43, east side of the lateral (rig on site), Three Forks
• 20669, 601, EN-Person-156-94-1102H-2, at the wellhead, east side, 38 stages, 4.2 million lbs, t1/12; cum 178K 11/17;
• 20670, 635, EN-Person-156-94-11-2H-3, at the wellhead, west side, t1/12; cum 165K 11/17;
• 20772, 1,181, EN-Enger-156-94-1423H-1at the wellhead, south side, 38 stages; 4 million lbs, t12/11; cum 252K 11/17;

Go to the link above for more about these wells.

All wells remain on the confidential list, but there are currently two rigs on site, one for permit 20599, and one for 20670.

There is one long lateral, producing, well one mile to the east (one section over) to the 17117:

• 17852, PA/374, Hess, EN-Hein-156-94-0112H-1, spudded 2/18/09; 97,000 bbls as of June, 2011;  producing about 2,000 bbls/month; cum 147K 8/14;

Four (4) New Permits-- Bakken, North Dakota, USA

Daily activity report, July 6, 2011 --

• Operators: Hess (3), and Marathon
• Fields: Baskin and Big Bend

Hess will be putting three wells on one pad in the Baskin oil field.

Wells reported today:

• 19761, 1,074, Zenergy, Martell 36-25H, McKenzie County; t6/12; cum 98K 3/14;
• 19333, 1,193, Whiting, Miller 44-11H, Williams; t1/11; cum 68K 3/14;

In addition, ten (10) wells on the confidential list reported as producing or plugged, which is a pretty good number of wells; only two were CLR; Whiting and EOG both had two, also.

The Baskin oil field is one of the smallest fields in the Williston Basin: it is all of six sections, squeezed in between the Alger and the Big Butte oil fields.

There is an "old" Hess well there, spudded 1/6/2006, and now inactive. It produced very little oil. Hess has another well in that field, almost complete, and in DRL status. It must be a good well for Hess to plan to put three wells on one pad in this small field.

This is the Hess well:

• 20148, 925, Hess, EN-Chamley-156-93-0508H-1, t8/11; cum 172K 3/14; 

No New Electric Service Lines To Be Placed in the Reservation by McKenzie Electric?

This was buried in the last paragraph of an update from McKenzie Electric Cooperative:

“Because of new regulations and rules by the Tribe and the BIA, we are no longer building new service lines on the reservation,” stated Skurupey. “This is a sad situation because there are  homes and wells on the reservation that are going to be without power.”

I have no idea what that's all about. It's the first time I heard about this. Maybe someone can enlighten us. I would assume there are other options. I can't believe no new electric lines in the reservation. The fact that this came at the end of the article and was not the main point, suggests there is more to the story.

Here is the crux of the story from McKenzie Electric Cooperative's 66th annual meeting held in Watford City, June 21, 2011:

According to the board chairman, the cooperative has seen its monthly sales of electricity grow from $1 million to nearly $3 million and has seen its annual revenues increase from $22.8 million in 2009 to just under $29 million in 2010. 

But in order to meet the demand for more power, the cooperative has also been forced to take on new debt. 

“McKenzie Electric has taken out four short-term loans totalling $12 million to build new lines to serve the oil field’s growth needs,” stated Thompson. “The last time the cooperative took out a loan was in 1983 to meet the oil demands at that time.”

This is a regional link and will break soon.