For Investors Only: CarboCeramics and ONEOK Both Increased Dividends Recently -- Bakken, North Dakota, USA

Link here.

2,500-Bed Man-Camp Breaks Ground at Tioga -- Population: 1,230 -- Bakken, North Dakota, USA

Maybe the state reps from Minot will now understand why Tioga received $8 million in oil impact money from the state. See comment here. The population of Tioga in the 2010 census was 1,230. This man-camp alone will triple the size of the town. Other comments: here and here.

Link here. 

When it comes to a project, Managing Partner and Senior Project Manager Randy Baker of Capital Oilfield Services likes to think big.

Work on the largest man camp in Williams County, and perhaps the state, began Friday with a ceremonial groundbreaking at the future Capital Lodge site outside of Tioga.

Capital Lodge will have a maximum capacity of 2,500 upon completion. The lodge is expected to open Oct. 1.

This is a huge story with great graphics; too bad it's a regional link which is likely to break early.

In case the link is broken, I have included a snippet from one of the links above:

City officials from Dickinson, Williston and Minot each gave presentations Thursday to the Board of University and School Lands. All emphasized their need for help from the state and that their requests were a fraction of what the needs are.

Sen. Karen Krebsbach, R-Minot, said funding for the large cities should be distributed equally, not according to a “gentleman’s agreement” to give approximately 57 percent to Williston, 28 percent to Dickinson and 14 percent to Minot.

To me, this speaks volumes.

For Investors Only: Update on the Marathon Upstream / Downstream Split -- Effective July 1, 2011 -- Dividend Initiated -- Bakken, North Dakota, USA

The original story here, January 13, 2011.

Upstream: Marathon Oil. Stock ticker remains the same: MRO.

Downstream: Marathon Petroleum -- now the nation's 5th largest refiner. One share of the new company (Marathon Petroleum) for every two shares of Marathon Oil. Stock ticker: MPC. Began trading on the NYSE July 1, 2011. Rated a BUY by Citigroup right out of the chute. Initiates dividend of 20 cents, payable September 12, if held on August 19.

Marathon Oil would continue to hold the company's exploration and production business and its Canadian oil sands operations, while Marathon Petroleum Corp would include its six refining plants, pipeline transportation and the Speedway gas station chain.

Truck Manufacturers Ramping Up Production -- Bakken, North Dakota, USA

A truck manufacturer on the west coast is ramping up production. I don't have a link but a very reliable source says the company has told blue-collar workers to start expecting an opportunity for more overtime later this summer. In addition, the company just completed a recent new hire exercise. I can't provide the name of the company, but a truck manufacturer that fits the geographic location is here.

This was predicted back in November, 2010.

North American commercial truck production may climb as much as 56 percent in 2011 as owners refresh the oldest U.S. fleet in at least 31 years, boosting sales at Paccar Inc. and partsmakers such as Columbus-based Cummins Inc.

Output of Class 8 trucks, the workhorses of interstate hauling, may reach as many as 235,000 units in the U.S., Canada and Mexico next year from an estimated 151,000 in 2010, said Kenny Vieth, partner at market forecaster ACT Research Co.

Rising freight rates and volumes are helping rekindle demand after the worst recession since the Great Depression. A 2006 production surge to a record 376,448 units before new U.S. emissions rules took effect helped create a glut heading into the economic slump, leaving some trucks parked for two years.

Folks can come up with their own ideas why this is happening, but I think a significant reason has to do with mining and oil exploration in North America.

I cannot even begin to quantify the increase in trucks in the Bakken around Williston, but then multiply this by fields in the Marcellus, Niobrara (Colorado/Wyoming), the Mississippi Lime (Kansas/Oklahoma) and the Eagle Ford (south Texas).

I just completed a stand-along post on all the trucking that will be required when EOG's fracking sand plant in Wisconsin opens later this year.

Fracking Sand -- EOG -- Wisconson -- West Coast Truck Manufacturer Ramping Up Production -- Bakken, North Dakota, USA

Updates

April 10, 2013: a reader sent me this link, noting that a "Fracking Sand 101" conference was hosted in La Crosse, WI, yesterday. 

A basic introduction to everything frac sand mining was held in La Crosse Tuesday. It was Frac Sand 101 at the Radisson.
A community resource educator touched on the growing industry, what's drawing sand mine operations to the region, and some of the precautions that are in place.
Right now, there are several mining operations in the area while some counties have moratoriums and other protections in place to stop the expansion.

If anyone has any interesting "takeaways" from this conference, please feel free to send them in. 

Original Post

The site gets a lot of requests and a lot of searches regarding fracking sand.

Don alerted me to a BusinessWeek story that came out Friday, dated July 28, 2011, regarding EOG's fracking sand operations in Wisconsin.

Since Texas oil producer EOG Resources (EOG) arrived in Ken Schmitt’s Wisconsin farming community last year, the cattle breeder has marveled each time he drives by the company’s work site on his way into town. It’s not oil rigs that capture his attention. “They got one hellacious pile of sand out there,” he says.

The rolling hills surrounding Chippewa County (pop. 60,000) in the northwest part of the state sit atop a deep deposit of a type of pure quartz sand coveted by the oil industry. The sand is used as part of the water and chemical mixture injected under high pressure into wells to crack oil-infused shale rock in a process known as hydraulic fracturing, or fracking. The tiny grains of sand serve as wedges to prop the cracks open so oil and natural gas can flow up the well. With prices for frack sand soaring, oil companies such as EOG have begun mining their own in places such as rural Wisconsin.

The Chippewa Herald posts a very long update on this new plant; the story is dated yesterday, July 29, 2011.

The town of Howard has signed a developer’s agreement with EOG Resources LLC for operation of a sand mine.

The agreement, approved Wednesday by the town board, runs through Dec. 31, 2031.

The pact took 14 months of negotiations between Howard (Chippewa County) and the company, and has a property value guarantee for property owners near the mine.

And it includes a stipulation that no mining, blasting or hauling from the site will be done for nearly half of the year, from May 1 through Oct. 15.

The town said the agreement is the first of its kind for the operation of a non-metallic frac sand mine in Wisconsin.

Looks like another shovel-ready job. Every time I read these stories I think of the resource-rich country we live in. Fracking sand, by the way, is not likely to be outsourced overseas. In addition to the plant itself, this will generate many, many jobs for truck manufacturers and drivers.
Speaking of which, I heard from a reliable source that a truck manufacturing plant on the west coast is ramping up production. They've told their blue-collar workers to start expecting more overtime, and the company has just concluded a round of new hires.

And yes, we need to develop it appropriately so that we do not destroy our country's natural beauty nor endanger our quality of life.

Meanwhile, a second company is looking to open a fracking sand mine in Wisconsin. 

A second sand company is interested in opening a sand processing plant in New Auburn.

Another sand company, Superior Silica Sand, also wants a sand processing plant in New Auburn. It plans on mining in the town of Arland in Barron County.

The village of New Auburn is in both Chippewa and Barron counties.

Theme Song For The Federal Government -- Debt Ceiling Crisis -- Gnarls Barkley -- Crazy -- Just Knew Too Much -- Everybody Knows The Boat is Leaking -- Everybody Knows The Captain Lied -- Nothing To Do With The Bakken

Everybody Knows, Leonard Cohen

Everybody knows that the dice are loaded,
Everybody rolls with their fingers crossed,
Everybody knows that the war is over,
Everybody knows the good guys lost,
Everybody knows the fight was fixed,
The poor stay poor, the rich get rich,
That's how it goes.

Everybody knows the boat is leaking,
Everybody knows the captain lied,
Everybody knows this broken feeling,
Like their father or their dog just died.

Running commentary of the "debt crisis" can be found here.



Crazy, Gnarls Barkley

And when you are out there without care,
Yeah, I was out of touch.
But it wasn't because I didn't know enough,
I just knew too much.

But, does that make me crazy?

And I hope that you are
Having the time of your life.
But think twice,
That's my only advice.

Come on now, who  do you
Really think you are?
Bless your soul,
You really think you're in control.

Well, I think you're crazy,
I think you're crazy,
I think you're crazy,
Just like me.

My heroes had the heart
To lose their lives out on a limb
But I think you're crazy,
Just like me.

Scallion Member of the Lodgepole Formation -- -- Whiting and Continental Both Have Interests -- Bakken, North Dakota, USA

Updates

March 13, 2012: Whiting testing the Scallion formation in the far southwest corner of North Dakota, just north of Beach. 

Original Post

In its 2Q11 conference call, Whiting mentioned the Scallion member of the Lodgepole formation, saying that they were interested in that play, and will be drilling additional exploratory wells targeting the Scallion.

Whiting also refers to the Scallion as the "false Bakken" or the "Scallion interval." I blogged about that almost exactly one year ago.

Back in January, 2010, Continental Resources announced a non-economic well in the Scallion, but felt the zone still had potential:

Continental Resources Inc., Enid, Okla., said an initial test of a horizontally drilled section of Scallion limestone in west-central North Dakota produced at an uneconomic 7-day rate of 65 b/d and plans no further drilling at present. 
 
Scallion, a lower member of the Lodgepole formation of Mississippian age, lies at 9,500 ft just above the Upper Bakken shale.

The company drilled one lateral in the Scallion leg with a multistage plug-perf style frac.
  
Continental Resources plans to monitor activity by other operators in this part of the play before drilling more test wells. Scallion has produced oil since the 1960s from about 2,000 ft in the North Virden pool in Manitoba. 

The Scallion has produced oil since the 1960's (mainly in Manitoba, about a 100 miles north of this area in North Dakota, but they've all been vertical (conventional) wells. Whiting now plans to test the Scallion with horizontal wells.

From the Q&A portion of the Whiting 2Q11 conference call regarding the Scallion:

[The Scallion is] definitely a resource play, you'll find it very similar to the Bakken. It's a great source rock by any standard. You can compare it to any of the other things that we're doing right now so. But it is a swing for the fence, there. What we're really trying to do is demonstrate the presence of reservoir rock and therefore, OOIP, and there's very little information out there. So we got a lot of what we call acorns in that part of the world, that kind of 2 or 3 county area that are all vertical wells that have produced oil out of the Scallion, and so that's one of the big things we go by. And so we're going to try it with a modern horizontal, and see how that works for us, and a lot of running room.

Week 30: July 23 -- July 29, 2011

H&P Rigs

Evidence That EOG Is Throwing In the Towel on the Spearfish

Chesapeake Ramping Up in Utica, Ohio, Huge Story

Chesapeake's Utica: Huge

Video of Oil Unit Train, Williston, North Dakota

Tidbits From Whiting's 2Q11 Conference Call

Samson Oil and Gas Closes on 20,000 Acres in Montana's Williston Bakken

Tioga Gets $8 Million in Impact Funds From the State

Video of Oil Truck Driving Into the Bear Den

Whiting's Huge 2Q11 -- Conference Call

Fracking: Backlog in the Bakken

Mountainview Adds Interest in the Bakken

Fertile Valley Oil Field Update

Photograph of Cyclone 18 Fire

Mishap on Cyclone 18

Hampton Inn and Suites To Build Across From Mercy Hospital, Williston, North Dakota

Enbridge's Beaver Lodge Loop Project Remains on Schedule

CO2 EOR In Wyoming

July's Director's Cut (NDIC)

CHK Conference Call -- Overview of Several Plays -- Oklahoma to Ohio; Very Candid About The Bakken

Note: the editors of the New York Times need to listen to the Chesapeake conference call -- the folks who said the natural gas industry in the US was a sham and set up for failure. They especially need to read about Buffalo Creek 1-17 (see below) which has paid for itself 37x over.

The Chesapeake conference call was one of the  more exciting and surprising conference calls I've heard in awhile -- this is how it started:

Because the quarter progressed quite smoothly, operationally and financially, I will focus my comments on providing an update on 4 of our best liquids plays, about which you haven't heard much from us until now. These 4 would be the Mississippi Lime play in northern Oklahoma and southern Kansas; the Cleveland and Tonkawa tight sand plays in the Anadarko Basin of western Oklahoma and last, but certainly not least, the Utica Shale play in eastern Ohio.

Some data points:

• Mississippi Lime: huge play in western Oklahoma, 1.1 million net acres; pedal to the metal in 1H12
• Cleveland / Tonkawa: also in the Anadarko Basin of western Oklahoma, 720,000 net acres; CHK has most of it to itself; discovered in 2008
• Buffalo Creek 1-17, one of the 6 most productive gas wells ever drilled in Oklahoma; has paid out its capital investment more than 37x since it was drilled
• CHK now operates 4 of the 6 largest gas wells every drilled in Oklahoma
• Anadarko and Permian are the two premier liquids-focused basins in the US at the present time; CHK owns > 2 million net acres of leasehold in the Anadarko; 720,000 acres prospective for the Cleveland/Tonkawa
• EURs: 600,000 bbls/well with development costs of ~ $12/barrels (you do the math)
• Currently 16 rigs in these plays; will increase to 25 - 30 in next few years; 160-acre spacing
• Therefore: up to 4,400 net Cleveland/Tonkawa wells; 2 billion bbls of unrisked oil equivalent
• These two plays (Cleveland/Tonkawa): primary drivers of CHK surging lease liquids production 
• Utica: confirmed market rumors that CHK has discovered a major new liquids-rich discovery in the Utica Shale of eastern Ohio

From the transcript:

Importantly, we're the only company that has drilled a producing horizontal Utica Shale well in Ohio.

Economically, the Utica looks similar, but is likely superior to the Eagle Ford Shale in South Texas. The similarity is that we expect the Utica to have 3 phases: a dry gas phase on the eastern side of the play, a wet gas phase in the middle and an oil phase on the western side. Their difference is that we believe the Utica will be economically superior to the Eagle Ford because of the quality of the rock and the location of the asset.

CHK estimates of the Utica: $15 to $20 billion for CHK shareholders

CHK was very, very candid about the Bakken -- and hints at what CHK might do in the Bakken -- see the transcript's Q&A

Chesapeake -- Drilling Cheaper WIth Own RIgs -- Others Noticing? -- Bakken, North Dakota, USA

From today's (July 29, 2011) conference call with Chesapeake:

Jeffrey Robertson - Barclays Capital
And then secondly, on the rig increases that you outlined, Aubrey. Can you talk about how much of that is or would be supplied by redirecting gas rigs you all currently own, or do you all need to build new rigs? Or do you have enough with Bronco to meet most of your needs in -- or -- over the next several years?
Aubrey McClendon
Yes, good question, Jeff. We typically set out to be able to meet about 2/3 of our drilling needs by our own fleet. So today -- Steve, we have 115? So we are at 115 and we're drilling with 168 rigs, 167, whatever the number is. So we're probably a little short of the 67% mark. So over time, we'll continue to add rigs as we have in the past, and I think we'll probably end up doing those organically. I think since we bought Bronco, the Rowan wet rigs went through much more than what we paid for the Bronco rigs, and we think probably, organically, it's the best way to do that. So we'll continue to add, but I don't think it's anything spectacular. But we do -- I would move you back to Nick's comment that on a recent analysis of our wells in the Eagle Ford, we can drill about 20% cheaper than others in the industry when we integrate our services. One other thing we haven't talked about this morning, but just to alert everybody, we will roll out, on October 1, the first parts of our initial 250,000-horsepower fracture pressure pumping fleet, and so we'll be pumping our first wells in the first couple of weeks of October. So another way we are addressing oilfield inflation, and we'll do that through additional rigs, we'll do it through more horsepower. Remember, we need about probably 1 million horsepower a day. And so that would give us the opportunity to build a pretty significant pressure pumping fleet over time.

That Q&A reminded me of this posting back in April, 2011, in which CHK announced that it had bought Bronco Drilling as part of its program noted above in the Q&A.

I normally wouldn't think much about that except for the fact that there are dots to connect with regard to Pride Energy -- Cyclone  -- Continental Resources.

When CHK says they drill about 20% cheaper than others in the industry when they integrate their services, Harold Hamm has to be listening. As well as other big producers in the Bakken.