20,000 Wells In The Bakken? Nope 48,000 -- North Dakota, USA

Update

Remember this post, just a few days ago. Just moments ago I was alerted to a PowerPoint presentation was inserted into a North Dakota business meeting, the Bismarck-Mandan Development Association, where CLR/CEO spoke. In his remarks, Harold Hamm said:

The magnitude of the current oil play, quite frankly, is staggering.  Mr. Hamm made it very clear that this is not a short two or three year oil boom and then a big bust.  His projections would see drilling activities continuing in excess of 20 years, followed by years of supporting production activities.  Mr. Hamm suggested that there will be some 48,000 wells drilled in North Dakota’s western oil patch in that period of time.

My hunch is that the 48,000 represents more than just the Bakken Pool.

Original Post

That was posted back on April 27, 2010. In the lead paragraph in a Minot Daily News story on April 27, 2010:

"The head of the state department that oversees mineral resources in North Dakota says it will take 10,000 to 20,000 wells to fully develop the Bakken-Three Forks Formations."

The four major oil counties in North Dakota comprise 9,032 square miles: Mountrail (1,941 square miles); Williams (2,148 square miles); Dunn (2,082 square miles); and, McKenzie (2,861 square miles).

Coming out of the Enercom Conference and recent corporate presentations elsewhere suggests that four (4) wells per section will be the norm in the future. BEXP has already proved 4.5 wells/spacing unit is possible; BEXP has announced a pilot program testing 5.5 wells/spacing unit. CLR says 8 wells/spacing unit should be the norm.

The math works out. At 4 wells/spacing unit, one can come up with about 18,000 wells in those four counties. It's remarkable how close the figures come, 18,000 vs 20,000. If CLR is correct, closer to 8 wells/spacing unit, we get to an astounding 36,000 wells in those four counties.

This does not include Divide County, smaller, not as productive; Burke County, fairly good in the south; and the excitement in the southwestern part of the state right now: Golden Valley, Billings, and Stark Counties.

At a 1,000 wells/year, this works out to a minimum of  20 years of drilling, again, a number consistent with past estimates.

ESER Currently Does Not Require Password

To the best of my knowledge, ESER.org requires no password. Link remains at right. Apparently an issue elsewhere, regarding whether a password is needed.

For newbies: eser.org is an excellent site, lots of fun. It does appear to disappear from the net periodically, and a password may be required at some future date. If typing in the URL, be sure to note the domain, ".org."

Alaska Missing Out Due To High Taxes -- Yes, This Is A Bakken Story

Alaska governor wants to cut taxes to encourage oil production. The senate disagrees.

Parnell's bill, which the Department of Revenue estimated could result in more than $8 billion in lost production tax revenue to the state over the next five years, passed the Alaska House of Representatives this spring. But state senators resisted and the bill didn't make it very far in the Senate.

Parnell's plan still has little support in the Senate. Some senators cite Alaska Department of Labor employment figures that show oil industry employment up around record levels.

The Senate Finance Committee has paid for a review of what is happening with oil employment in Alaska, including data showing nearly half the North Slope jobs go to nonresidents. The review, by the McDowell Group of Juneau, is supposed to be turned in to the Legislature in December.

Advocates for lowering Alaska's tax attribute the increased jobs to maintenance, rather than production, and say Alaska is missing out on the kind of drilling boom enjoyed by North Dakota.

The North Dakota legislature should take note.

Chesapeake: Value of Shale Gas Is In the Eye of the Beholder -- Not a Bakken Story

As a rule I don't follow natural gas, but I do have a page devoted to it for a number of reasons which I won't go into now.

But with the recent New York Times article and the recent announcement that Barnett shale royalties may be cut by as much as 25 per cent, I've gotten a bit more interested.

I said from the beginning that natural gas would have to get above $5.00 before it became worthwhile for a retail investor like me.

Now, with this most recent article from a very credible source, it looks like my original comment remains valid.

Management suggests that its land position, given the superior reservoir potential of the Utica shale, could be worth between 75% and 101% of the company's total market capitalization. Using the values suggested in the earnings release, Chesapeake estimates its land position is worth between $12,000 and $16,000 per acrem. That seems high, especially after we reviewed an investment analyst's report on another E&P company with meaningful exposure to the Utica shale, including acreage it owns in partnership with Chesapeake.

Citigroup, on the other hand:

"Given that the Utica Shale is an emerging play, there are very few transaction comparables available to use as an anchor for our valuation. Even so, according to our research, over the past twelve months, transactions in the Utica Shale have been completed for an average of $2,200/acre ranging between $1,500 and $3,600/acre (i.e. most recent transaction implies $3,600 per acre; announced in 3Q11). In comparison, CHK indicated that its 1.25 million net leasehold acres in the Utica Shale could be worth $15 to $20 billion, which implies a value of $12,000 to $16,000 per acre."

One caveat: analysts have been very wrong, most notably in the Bakken.

If the analysts are wrong here, it is in their under-estimation of the oil play in the Utica. Anyone who doubts that just needs to see how much a Bakken acre has appreciated in the past couple of years.

Three Additional Pay Zones Below the Upper Three Forks? -- CLR -- Bakken, North Dakota, USA

Link here.

Continental Resources has been alluding to this for the past month or so: there may be some additional pay zones below the upper Three Forks.

For newbies, there are five formations recognized by the NDIC in the "Bakken Pool": upper, middle, and lower Bakken; upper and lower Three Forks.

At the link above, go to slide nine.

CLR suggests there may be three additional payzones -- which they call "benches" -- below the upper Three Forks.

If this pans out, this is yet another game changer. Already CLR is suggesting eight horizontals (8 wells) in one spacing unit (four middle Bakken and 4 upper Three Forks). CLR refers to the "upper Three Forks" as the "1st bench."

CLR is already testing the "2nd bench and will test the 3rd and 4th bench sometime in the future.

The Nisku lies below the Three Forks and is known by the Birdbear in the Williston Basin; the Birdbear is known to be a payzone in some areas of the Williston Basin.

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

Daily activity report, August 16, 2011 --

Operators: Denbury Onshore (2), Baytex, Dakota-3 (WMB), Leagcy, Petro-Hunt

Fields: Smoky Butte, Reunion Bay, Arnegard, Dublin, and a wildcat.

Legacy has the wildcat in Bottineau County.

Denbury has a 2-well pad permit in Arnegard; should be good.

Of six wells that came off confidential list, three reported IPs, and two of them were very nice:

• 19741, 1,234, Zenergy, Johnson 12-1H, Bakken, McKenzie
• 19995, 1,620, Denbury ONshore, Lee 24-31NWH, Bakken, McKenzie

This well needs some 'splainin' to do:

• 19383, 2 (not a typo), Prima Exploration, Gunnison 44-24H, Burke, Bakken

The Americas, Not the Middle East Will be World Capital of Energy -- Foreign PolicyForeign Policy

Link here.

By the 2020s, the capital of energy will likely have shifted back to the Western Hemisphere, where it was prior to the ascendancy of Middle Eastern megasuppliers such as Saudi Arabia and Kuwait in the 1960s. The reasons for this shift are partly technological and partly political. Geologists have long known that the Americas are home to plentiful hydrocarbons trapped in hard-to-reach offshore deposits, on-land shale rock, oil sands, and heavy oil formations. The U.S. endowment of unconventional oil is more than 2 trillion barrels, with another 2.4 trillion in Canada and 2 trillion-plus in South America -- compared with conventional Middle Eastern and North African oil resources of 1.2 trillion. The problem was always how to unlock them economically.

Look at my "Top Ten List, Trending, #5" which I posted well before this Foreign Policy article. 

Looks Like Judges in the Western States Want To Hold On To Their Jobs

This story is getting into the weeds, a lot more than I prefer, and to be honest, I don't understand the issue completely, but overturning BLM orders and hearing this from the energy industry, suggests this is going in the right direction:

A US district judge overturned two federal agencies’ 2010 orders limiting the use of categorical exclusions (CXs) for environmental reviews on federally managed lands. The court took the nationwide view on the basis that the instructions by the US Bureau of Land Management and US Forest Service “constitute legislative rules adopted contrary to public notice and comment procedures required by law,” Nancy D. Freudenthal, chief judge for US District Court for Wyoming, said in her Aug. 12 decision.
“The judge’s ruling is a victory for responsible American energy development, and holds the promise of new jobs and economic growth,” Kathleen Sgamma, WEA’s government and public affairs director, said on Aug. 15. “With this nationwide injunction, we hope the government will return to using categorical exclusions to encourage domestic oil and natural gas production and cease requiring redundant environmental analysis that slows economic activity.”

Now, maybe we can get back to those shovel-ready jobs the president promised us.

Enbridge Buys Embattled Montana Power Transmission Line

Link here.

A Canadian energy company is buying an embattled Montana power transmission line project that has seen its plans of shipping wind energy across the border become mired in landowner disputes.

Data points: 
214-mile transmission line
Enbridge will buy Tonbridge Power, Inc: main business is the Montana-Alberta Tie Line power transmission project
ENB to pay $70 million; incur outstanding debt; ultimate cost about $300 million

The MATL line has been the focus of high-profile legal and legislative battles in Montana. Some landowners are refusing to sell rights of way to the company, leading to bitter eminent domain claims.

Slawson Reports A Great Well -- Bakken, North Dakota, USA

20346, Slawson, Diamondback 2-21H,Van Hook, Bakken; 1,000 bbls/day for first four (4) days.

Of the six wells coming off the confidential list, only two reported an IP, continued evidence of severe fracking backlog.

I have updated the "New Wells Reporting" for the past two days.

Green Jobs -- Another Success Story -- Not A Bakken Story

Update

"Anonymous" suggested I link a similar story regarding military spending waste.

Will do:  President Barack Obama, winner of the Nobel peace prize, authorized 112 cruise missile launches against 20 coastal Libyan targets earlier this spring (March, 2011). Each cruise missile costs, conservatively, $600,000 (total --> $67 million. One night of fireworks. This does not include personnel costs or the pro-rated operating costs of the launch systems. Fighting over/in Libya continues. I believe this is number four of six wars we are currently waging in the Mideast. Depends on what one counts as a war, and in what order, I guess. I have lost track.

Original Post

$20 million federal grant for weatherization of city homes.

Three homes weatherized.

Fourteen (14) jobs.

"The jobs haven't surfaced yet," said Michael Woo, director of Got Green, a Seattle community organizing group focused on the environment and social justice.

Well, duh.

The only downside: most of the jobs were administrative.

Link here.

Stop here.

I can't make this stuff up. Remember, this was a grant. $1.5 million/job.

And folks get upset with depletion allowances and/or the US Navy spending $600 on toilets.

By the way, Seattle is about as temperate a climate one can find in the continental U.S. It would have been nice to weatherize homes in North Dakota. But not many votes in North Dakota, I guess.

Weatherford Hopes To Consolidate To One Location -- Williston -- Bakken, North Dakota, USA

Updates

August 24, 2011: decision tabled again after two hours discussion. 

Original Post

Link here.

The Williston Planning and Zoning Commission voted Monday to recommend approval of a proposed zone change that would allow an oil company facility to be built near a school. 

A proposal was brought forward by Weatherford. The company was asking for a zone change on acreage in the city's one mile extraterritorial area from agricultural and R-5 Mobile Home Court zoning to M-2 Heavy Industrial. 

Williston Planning and Zoning Director Kent Jarcik explained that Weatherford was looking to place an office building on 80 acres of a 160-acre site along 133rd Avenue Northwest. 

Jarcik added that the proposed site is near Stony Creek Elementary School.

I love that last line: it almost sounds as if Weatherford and Ken Jarcik conspired (a very strong word, I know) to not tell the whole story, but then, unable to contain himself, Jarcik "added" that, oh, yes, the proposed site is near an elementary school.  A headquarters building near an elementary school is starting to mix commercial with residential, but the story goes on to say that the Weatherford site would also be a place for parking 18-wheelers and storing pipe. So, now we get residential mixed with commercial mixed with industrial.

When I first wrote this, I said "the story is not so important. I post it only to remind folks that Weatherford is located in the Bakken." Maybe I was wrong.


I believe they frack. See first comment: apparently Weatherford is not fracking in North Dakota yet. It's an international company that, like, RIG, re-located to Switzerland for predictable tax policy. I'm doing this from memory so there may be errors.

So, several issues here.

For Investors -- Fantastic Buying Opportunity -- Motley Fool

I'm sure I've posted this before, but in case you missed it.

Traveling; fewer posts, more typos.

For Investors -- KOG

Motley Fool -- exciting.

Operations grew phenomenally in the second quarter. Reflected by record production and sales, adjusted EBITDA rose a whopping 377% to $13.7 million when compared to the year-ago quarter. This metric, though a non-GAAP measure, gives an indication of how core operations fared during this period. Obviously, they look good.

Revenues for the quarter rose to $22.1 million -- again, a massive 261% improvement over last year’s second quarter. While higher oil price realizations did play a part, higher sales and higher production were responsible for this impressive show.

Traveling; less blogging. Risk of more typos.

For Investors --Oasis

Upgraded to buy.

OAS.

Limited posting today due to traveling. Typos more likely.

Traveling -- So, A Lot Fewer Postings

Lots of information at the Enercom Conference linked at the top of the sidebar at the right.