Tuesday, September 27, 2011

Mountrail County Joins Williams County: Moratorium on Man-Camps -- Bakken, North Dakota, USA

Link here.

Some data points:
  • For newbies, the North Dakota Bakken is concentrated in four counties: Williams, Mountrail, McKenzie, and Dunn.
  • Williams County announced a six-month moratorium on new man-camps starting this month (September, 2011). 
  • Mountrail County announced an 18-month moratorium on new man-camps effective immediately (September, 2011). 
  • The fracking backlog appears to be getting worse, not better.
  • Most motels in Williston contract out the entire motel to a specific oil or oil service company. One of the few motels that still offered rooms on a reservation basis will now contract out the entire motel to an oil service company beginning November 1, 2011. 
For every action there is an equal and opposite reaction.

Chaos is self-organizing.

BEXP, Whiting, CLR -- Motley Fool

Link here.

Whiting and BEXP have some very nice gross, operating, and net margins.

Nine (9) New Permits -- Bakken, North Dakota, USA

Daily activity report, September 27, 2011 --

Operators: CLR (4), Denbury Onshore (2), Slawson (2), Zenergy

Fields: Assiniboine, Big Bend, Demores, Siverston, St Demetrius, North Tobacco Garden, and Elk.

Slawson has permits for a 2-well pad.

Three wells were released from confidential status; none reported an IP and all went on the DRL list. The fracking backlog continues. Three wells, and not one completed.

The Dusty Streets Of Williston - Bakken, North Dakota, USA

Today was an absolutely beautiful day in the Bakken. One could not ask for a nicer day.

It was the perfect day to take photos of the busiest street in Williston. There may be roads just outside Williston and on the edges of Williston that are busier, but there is no street in Williston busier than 2nd Street West on the southwest side of town.

All trucks leaving this side of town, must bypass through the grain elevator industrial park area, and then make a left turn onto 2nd Street West, before heading west out of town and toward Montana. It's a clear shot, but unfortunately it requires one more left turn on the busy bypass to get on the highway.

Be that as it may, it leaves 2nd Street West as the busiest street in Williston. So I thought I would take some photos of the street. The photos below were taken at 5:30 p.m. just as the evening traffic begins to get heavy.

One photo is looking west, one looking east. Absolutely gorgeous photos except for the dust.

Yup, this is the busiest street in the busiest town in the Bakken at 5:30 p.m. on a Tuesday. 

[The bypass / Million Dollar Way intersection north of town is much busier, but it is an intersection of two highways, and not a "street" in Williston.]

It reminds me of the streets of Laredo:

NOG -- IPAA Presentation -- September, 2011 -- Bakken, North Dakota, USA

Link here (even if you don't get the audio, you can review the slides). I doubt the slides will stay up long, but they will most likely be available at NOG's website.

Some data points (some numbers rounded):
  • Increased net acreage from 147,407 acres to 155,000 acres; analyst's estimate at end of 2010: 130,000 net acres
  • Participated in >650 gross Bakken/TFS wells; extensive knowledge of the Bakken for a non-driller
  • Net well inventory at 3 MB / 3 TFS wells/spacing unit: 726 net
  • Acquired 12,700 net acres at $1,995/acre in 2Q11
  • No debt
  • Reserves: 120% increase since 12/31/10
  • PV10: 200% increase since 12/31/10
  • Conservative estimates
  • Estimating 30 - 40 percent production growth 3Q11 over 2Q11
  • Average cost per well: $6.5 million (compare with $9.5 million for KOG)
Unique business plan as I have noted many, many times

Three Recent TFS Stories -- Whiting's Record TFS Well -- Huge Story -- Bakken, North Dakota, USA -- September 27, 2011

This is kind of interesting and predicted some time ago.

Just as drilling in the Bakken formation is entering the "manufacturing stage," we are now seeing increased activity in the Three Forks formation, as evidenced by the recent Oasis presentation (just posted), the BEXP "record" TFS well, and now a story in Rigzone about Whiting's "record" TFS well.
In the Whiting's Pronghorn area of the Lewis & Clark prospect, Whiting completed the Smith 34-12TFH in the Sanish Sand formation flowing 2,446 barrels of oil and 2,959 Mcf of gas (2,939 boe) per day on September 15, 2011. The well was tested on a 48/64-inch choke with a flowing casing pressure of 875 psi.
The Smith well, which was drilled on the southeast side of the prospect in Stark County, North Dakota, was fracture stimulated in a total of 30 stages. The Smith 34-12TFH was drilled about a mile northwest of the Whiting-operated Hecker 21-18TFH, which posted the highest initial production rate for any Three Forks well drilled in the Williston Basin at 3,612 boe per day.
The Pronghorn area comprises 123,500 gross (114,700 net) acres, which is approximately 15% larger than the Company's Sanish field. Whiting holds a controlling interest in 75 1,280-acre spacing units at Pronghorn.
It should be noted that the article, which might have been a press release from WLL suggested that the Pronghorn is part of the Lewis & Clark prospect. They are in close proximity, sharing a very small piece of their borders, but still separate prospects, at least according to the corporate presentations.

Dickinson't is the county seat for Stark County.

This is really quite an incredible story. Two data points:
  • Whiting's Sanish field has been spectacular for Whiting; they are easily going to put in 7 to 8 wells in each spacing unit in that field
  • Whiting's Pronghorn prospect is 15 percent larger than its Sanish field

Oh, by the way, BEXP's "record" TFS well:
  • 20640, 2,906 boe, BEXP, Irgens 27-34 2H, East Fork field, Bakken

Williston Covered by a Ball of Dust -- Dickinson -- Stark County Development Corporation Executive Vice President


January 3, 2013: plain old saltwater may be best alternative to cutting down road dust. Link at The Bismarck Tribune. Magnesium chloride; now, looking at well brine water. Salt water will cost $5,000/one mile of application. Three applications close in time "stop" dust for about one year. 

December 22, 2011: Dickinson again says "no."  To everything.

December 2, 2011: Looks like Dickinson will see a bit of dust next summer -- plans afoot to build a 5-lane highway north of Dickinson.

November 29, 2011: reminder -- Dickinson will consider widening the 2-lane highway north of town to a 5-lane highway; public meeting December 1, 2011. I am watching this one closely. 

November 21, 2011: I was taken to task by several folks after I wrote another disparaging post about Dickinson's perceived anti-growth stance. Dickinson gained that reputation after the comments made about Williston by Stark County Development Executive Vice President (see below) and Dickinson's subsequent denial of a well-thought-out/professionally run man-camp. Because I was taken to task, I said that I would refrain from further negative comments about Dickinson. However, I will continue to follow Dickinson's pro-growth/anti-growth stories and will post them here. Readers can make up their own minds. Fair and balanced.
Original Post 
Link here (regional links break early and break often).
“If you have approached Williston or Watford City lately in the daytime, there is a ball of dust that just rests over their communities,” Stark Development Corporation Executive Vice President Gaylon Baker said. “We don’t want to see that happen here.”
I've been in Williston for several weeks, and drove to Dickinson and back last night, and there was no "ball of dust resting" over either Williston or Watford City. Yes, there is a lot of dust in the countryside, and it is miserable for the farmers, but if your city has asphalt roads, you don't have (much) dust. But maybe some cities don't have asphalt or cement roads.

The drive from Williston to Dickinson is 130 miles, exactly.

The drive from Watford City to Dickinson is 85 miles. And not much in between except incredibly beautiful countryside.

But there are some interesting opportunities for Target.

Oasis -- September 2011 Presentation -- IPAA

Link here.

Combination of quick notes from slides and oral presentation.

1. Acreage remains the same as previously presented.

2. 1,303 gross drilling locations; 537 net.

3. Production
  • 1Q10: 3,300 bopd
  • 1Q11: 8,000 bopd
  • 2Q11: 7,900 bopd (horrendous spring flooding)
  • 3Q11: 11,000 bopd (estimate) (could be as high as 12,500)
4. Sanish: Proven TFS infill potential in the Sanish; moving from 2 wells to 3 wells/spacing unit

5. West Williston: Hebron wells in Montana are within typical ND Bakken range; Indian Hills acreage is the deepest and IPs coming in at the middle-to-high-end of the Bakken range; TFS looks encouraging; 3 wells/formation in each spacing unit yields 10 - 15 percent of oil in place (remember when "we" were talking about 2 to 5 percent?)

6. Frack stages: 30 percent increase in frack stages leads to 20 to 30 percent increase in EURs (BEXP was first to champion this); cost per stage: $120,000; recovery per stage: 12,000 to 25,000 bbls

7. Frack stages, two examples: 28-stage yielded 44,000 bbls in first 60 days; 36-stage yielded 62,000 bbls in first 60 days

8. Well costs: $9 million; 36-stage; plug and perf

9. Rigs: operating 7; working towards 9 in 2H11

10. Frack crews: 3 dedicated (third crew operational in June 2011)

11. Discussed Oasis Well Services (OWS) -- one frack spread initially; in-house; save $1 million/well on 20 net wells/year

Not on the slides, but in the oral presentation, at about 14 minutes into the presentation:
Discussion regarding number of rigs in North Dakota: stopped at 200. The costs are geting too high and everyone is gun shy about a oil price down turn. Some of the bullishness is being quieted. Fracking costs are growing faster than drilling costs.
I blogged about this earlier.

Another "River of Opportunity -- in Oklahoma -- Not A Bakken Story

Link here.
A mighty Mississippi is starting to flow in the middle of Oklahoma's resurgent oil and gas industry. This potential river of oil occupies what is called the Mississippi Lime - porous limestone formations in northern Oklahoma and southern Kansas. The liquids-rich region, considered tapped out by vertical drilling decades ago, has been yielding reservoirs to horizontal operators such as SandRidge, Chesapeake, Devon and Tulsa-based Eagle Energy LLC during the past two years. "I think it's probably the hottest play going in the country," Eagle CEO Steve Antry said.
The play relies less on fracturing than unconventional plays.

I Was Wrong -- Bakken, North Dakota, USA

I've been blogging for some time about the passing lanes being put in south of Williston on US-85.  I've said that for all intents and purposes, the project would make US-85 a four-lane undivided highway. I was wrong.

I just came back from a round trip from Williston to Dickinson this evening.  The passing lanes will alternate down the highway and except for Indian Hill, will result in three lanes much of the way. Two lanes one way (one a passing lane) and the third lane coming the opposite way, and then alternating up and down the highway, if that makes sense.

I must say that in the passing lane at 70 miles an hour, it is a bit unnerving meeting a truck coming at you in oncoming lane going just as fast.  Again, tonight, whenever I got into a passing lane, I moved into the slow lane if a truck was behind me to him it pass. I was touring; the trucker was working. 

It's 2:19 a.m. I have to be up at 6:00 a.m. to be back in the Bakken, so going to bed now. More later.

What a beautiful road. Wow, it was a beautiful drive. If anyone has the time, I would highly recommend taking the drive but I would start out in the early evening. The traffic will still be heavy but not as bad as it would be during the day. We stopped at a service station on the west side of Watford to get a cola, and the station was filled with trucks. It was a hoot maneuvering in and among the trucks. When I come back in another life, I hope part of it is as a truck driver.

The passing lanes will be between Williston and Watford City, it appears.

South of Watford City, through the Badlands, the highway is finished and beautiful.

Between Watford City and Alexander, the new passing lane work looks complete.

From Alexander north toward Williston, the work is in various stages of completion.

The road is in great shape regardless of the weather.

I say that because unrelated to the passing lane project, there is a huge road project at the top of the hill going down into the turnoff into the North Unit of the park. This is where the landslide was earlier this summer that completely closed the road (US 85) for awhile.

The road is now open but all dirt for about a half mile. There is heavy equipment on site, and it is absolutely sporty to take the drive through this half mile. If it rains, it will be a mess, and I assume the road will become impassable for automobiles. It does not look like they can complete the road before the end of the year, but maybe they can. I am absolutely impressed how fast these contractors are working. I am really, really impressed with how much money and how much work is going on with regard to roads in North Dakota.

But I can't say enough how pretty the drive was between Williston and Dickinson. Exactly 130 miles from Four-Mile Corner (Williston) to Exit 61, Dickinson. The traffic was a bit heavy at 8:00 p.m. but on the return trip at midnight, almost no traffic. If the weather is bad or if the traffic is heavy during the middle of the day, I can imagine the trip taking a lot longer than anticipated.

We did not see any bighorn sheep crossing US 85 in the five-mile stretch of bighorn sheep crossing, but we did see one meteor. (I mention that because meteors are important in my life; bighorn sheep not so much. We did not see any moose either, south of Williston, which had been spotted earlier this spring/summer.)

There's a spirit of pioneer camaraderie in the truckstops. I wish we had a Mark Twain or a Hunter S. Thompson to write about it; it's history in the making, good, bad, or indifferent. Mark Twain would compare it to the gold rush he participated in. Hunter S Thompson would think we are all nuts.


While posting this, someone sent me the following: if you can't afford a doctor, go to the airport where you can get a free x-ray and breast exam. And if you mention Al Qaeda, you will get a free colonoscopy. Yup.

Flaring -- The New York Times

Link here.

This is an old story. I've blogged about it before, so I probably won't blog about it again. It's a non-story, in my opinion, but am glad the NY Times finds it interesting. Tells me volumes about their understanding of flaring.

If you want to increase risk of blow-outs, stop all flaring.