Saturday, October 22, 2011


I almost hate to post this, because it seems so basic, but it might be of interest to some folks. It certainly cleared up things for me.

Finally, I can post what I thought about proppants, but confusing well files earlier made me unsure.

Once wells are completed, the operator provides data to the NDIC including data regarding fracking. It seems to me that the reporting has been uneven, but tonight I see that the file reports for two wells on a pad northwest of Williston answered my question.

It seemed that some reports to the NDIC suggested that when fracking, some companies did not include sand as proppant; sand was sand and ceramic proppant was the proppant. I was probably reading the reports incorrectly but it was confusing. It's possible the reporting was uneven to make it difficult to determine exactly how much ceramic proppant was used.

Tonight, two nice reports by BEXP made it very clear that in the box labeled "Proppants" the box is to include sand plus ceramic proppants. That's what I would have thought, but there have been reports when the amount of sand plus the amount of ceramic proppants did not add up to total proppant used.

This probably sounds confusing, but these two BEXP file reports will clear it up.

On well with file # 19584, the Dave Arnson 8-5 1H well, was fracked with 32 stages, using a total of 3,796,700 pounds of proppant of which 1,467,840 pounds was sand; the rest was ceramic.

On well with file # 19829, the O'Neill 17-20 1H well, was fracked with 33 stages, using a total of 4,103,460 pounds of proppant of which 1,616,380 pounds was sand; the rest was ceramic.

This was pretty basic stuff, and I always thought sand was classified as proppant, but as noted, some file reports made it unclear, suggesting some companies were reporting only the ceramic as proppant, assuming that, of course, sand was used in the mix.

By the way, just for the record, here are the wells:

  • 19584, 2,192, BEXP, Dave Arnson 8-5 1H, t5/24/11; cumulative: 47,656 bbls
  • 19829, 2,965, BEXP, O'Neill 17-20 1H, t5/29/11; cumulative: 51,730 bbls
Rumors from roughnecks in the field suggest that ceramic proppants, though much more expensive, are not any better than sand. If true, it suggests that other rumors suggesting that lack of fracking sand is part of the reason for the fracking backlog. If ceramic proppants cost four times more than sand, and isn't much better, it doesn't make sense to use so much ceramic proppant -- unless the operators are unable to get enough sand. 

If this turns out to be true, maybe someday, the Chinese will be shipping fracking sand to the US rather than ceramic proppants (assuming the Chinese have fracking sand). 

Sometimes, in the Eye of a Hurricane ...

About two years ago, I suppose, I made a comment that when you are in the eye of the hurricane, where it is very calm, you may not be aware of all the activity that is swirling around you. I think that's true for a lot of Willistonites. Of course, most of us living in Williston are aware of increased activity due to the traffic, but after seeing the new industrial park west of Williston tonight, the new ONEOK cryo natural gas processing plant west of Williston (being built by Linde), and now learning from a reader of yet another industrial park north of Williston, I am absolutely convinced there are very few Willistonites aware of the totality of it all, and/or how fast things are changing.

This is just idle rambling; everything in this posting has been posted earlier today or yesterday, but now I'm trying to synthesize what I've seen.

Three New Industrial Parks

First, the industrial parks. The Bakken Industrial Park, being developed by Granite Peak Development, is four miles north of Williston, at the Epping turn-off, and at the terminus of the proposed Truck Reliever Route, a new bypass to the northwest of Williston.

But now there is a new industrial park that I have just become aware of, thanks to a reader letting me know. It's the Missouri Ridge Retail Center five miles north of Williston, or one mile north of the Bakken Industrial Park.

And now a third industrial park, this one west of Williston and quite far along. I hope to have photos of it posted by Monday. I think this industrial park is about 640 acres. It is much bigger than any of us had imagined, I think.

Three New Cryo Natural Gas Processing Plants

Linde is building three new natural gas processing plants, each nearly the size of the Hess plant at Tioga. These three plants will almost double the state's capacity to process natural gas. The value of these three plants is probably in the $550 million ballpark. These three plants will be owned and operated by ONEOK: Garden Creek, northwest of Watford City; Stateline I, and Stateline II, both northwest of Williston.

Three New Major Facilities/Complexes

The BHI SuperSite complex; the Schlumberger complex; and, the McCody Concrete complex, all west of Williston, are just three of many new buildings going up, but these three are most noticeable.

Three New Hotels

Motel 6 (bypass), Holiday Inn Express (airport), and Hampton Inn and Suites (hospital). These are in addition to all the others that have gone up in Williston in the past two years.

Three New Wells Inside or Nearly Inside City Limits

Lucy Hanson, quite a ways east, but a huge well.

The new Oasis well inside city limits currently being drilled

A two-well pad on the northwest side of town; the Dave Arnson-O'Neil wells.

Natural Gas Processing Plants West of Williston -- The Bakken, North Dakota, USA


January 22, 2012: when I posted the story below I understood very little about the natural gas processing in the Bakken. Since then it has become much clearer. For updates, click on the ONEOK tag/label at the bottom of the blog and then read the more recent articles on the new natural gas processing plants being built in the area.

It's my understanding that ONEOK has (will have) will have four natural gas processing plants in the region by the end of 2013. Grasslands was the first to be built; Garden Creek just went on line (January, 2012); Stateline I is under construction; and, Stateline II will be completed by the end of 2013. Each of these four plants are ONEOK plants, built by Linde. Total investment for these four projects, as well as pipelines feeding them and transporting finished products is estimated to be $1.5 to $1.8 billion --- rounding, a $2 billion investment. When completed, each facility will employ about 15 - 20 full time employees.

Original Post

I don't understand the natural gas business (I'm not sure I understand the oil business), so read the following with caution. It's how I interpret what is going on.

Thanks to "anonymous" who asked about the new Linde CRYO natural gas processing plant going up west of Williston, I looked up the capacity of the natural gas processing plant at Tioga, North Dakota (Hess).

One can find the capacity of natural gas processing plants in the state of North Dakota at this site (a PDF). It is an annual report summarizing activity as of June 30, 2010.

The Hess plant at Tioga has a capacity of 120 million cubic feet day, if I read the PDF correctly at the link above. The facility at Bear Paw/ONEOK, Grasslands, McKenzie County, has a capacity of 100 mmcfd. There is a 100-mmcfd facility at Stanley, but other than that, nothing else comes close to this capacity in North Dakota.

This is the history of Linde's natural gas processing plant activity: note three plants west of Williston; one being built now; two to be built in 2012. 

So, now it looks like Linde is putting in three new facilities, each nearly with capacity of what Hess has at Tioga. According to the Stanley link, that facility exchanged hands for $185 million. I would assume it costs about that much to build a new facility. So, three new facilities could cost about $550 million. The state says there is $1 billion to $3 billion in natural gas infrastructure projects on the books.

If I read all this correctly, once these three new plants are on-line, Linde will have practically doubled the state's capacity to process natural gas.

Huge Industrial Park West of Williston -- Heart of the Bakken, North Dakota, USA

I was out to the new industrial park west of Williston this afternoon. About two weeks ago a reader mentioned that new buildings were going up out there. I don't think many have any idea how huge this is. I think it might be a full section, 640 acres.

I know some folks think the development in the Williston area is chaotic but when you actually look at what is going on, one is quite impressed. It's interesting how this has all worked out.

There was room to expand east of Williston but the roads were much better west of Williston -- a divided four-lane highway already in place with a two-lane frontage road on the south side. On the other hand, it was only a two lane highway east of Williston. So, it only made sense that the development was mostly on the west.

Interestingly enough, the general consensus is that Bakken activity is headed to McKenzie County next summer. The industrial park west of Williston is in a perfect location. It's a direct shot from the park to McKenzie County with no intervening built-up area: no towns, nothing.

The new residential subdivisions are going up on the west side so oil field works will be on the same side of town as their work. The new Sand Creek Retail Center will also be on the west side, and it appears there will be a nice network of roads.

Anyway, just a rambling note, but the focus of photos this next week will be on the industrial park west of Williston. Anyone who thinks the Bakken boom is short-lived should take a drive out to this new park.

Flashback: September, 2010 -- Minot Daily News -- The Bakken, North Dakota, USA

Link here.

One year ago, data points:
  • there are "no" dry holes in the Bakken (see below); it is not like the traditional oil play
  • North Dakota is #3 in drilling; overtaking Oklahoma in late July, 2010, as the third-most active state for drilling
  • 143 active rigs
  • Helms: expected to see active drilling rigs to peak at about 165 -- "the absolute peak"
  • Close to 20,000 people for 165 rigs
  • he did not think 165 active rigs would be sustained
  • 7,000 people had moved from out-of-state to North Dakota
  • in Bottineau, they will eventually have 24 wells/square mile; down each section (one mile) of road, expect to see four drilling pads on the right and four drilling pads on the left, and every pad will have three wells (Spearfish formation, a sulfur-containing formation)
  • Helms predicted a Bakken-style impact in the Souris area starting in 2012
With regard to my oft-stated "there are 'no' dry holes in the Bakken: From Lynn Helms, referring to a line through Parshall and Plaza: "Everything to the west line of drilling rigs that you see kind of running north and south through Parshall and Plaza everything west of that has a 99.9 percent probability of finding oil and 90-plus percent probability of making a 10 to 50 percent rate of return for its investors. And that's where they are focused."

Week 42: October 15 -- October 21, 2011

Another drum beat for the Tyler, Southwest North Dakota; AP Story on the Tyler

Conference Information -- Bakken Infrastructure -- October 24 - 26, 2011

Conference Information -- Bakken Products and Takeaway Capacity -- January 31 - February 1, 2012

Triangle Petroleum Drills Its First Operated Well

Update on the CRYO Plant West of Williston

Huge Piles of Fracking Sand in Minnesota

Crude-By-Rail Oil Loading Facilities Increasing; Three More: Zap, Dickinson, and Fryburg

Dunn County Approves Man-Camp Six Miles North Of Dickinson

Hess Activity in the Bakken Picking Up

Statoil Buys BEXP -- one of many posts

The Value of that Natural Gas Being Flared: $3 Billion Infrastructure Projects on the Books for ND

Comparing TOC of the Bakken With That of the Utica: No Comparison

Missouri Ridge Industrial Park Four Miles North of Williston -- Truck Reliever Route

A Huge Well: The Lucy Hanson East of Williston

Idle Ramblings on the Lodgepole

Understanding Answers to Questions in a Conference Call -- Like Reading Philosophy

From the Q&A portion of Schlumberger's 3Q11 conference call:
So again, I'm not saying that it's going to happen in the near future. I'm just saying that during the third quarter, we saw flattening of the liquids-rich basin pricing which we haven't seen in recent quarter -- quarters. And I'm also saying that there is a significant amount of horsepower coming into the market as we speak and also going into next year. So my concern on the North America outlook is what is going to happen to pressure pumping pricing.
The word "Bakken" was not mentioned in the conference call, unless I missed, but the phrase "North American" probably referred to the Bakken for the most part.

I don't understand all the financial jargon, and as it is with me for reading philosophy, it is best not to try to parse the phrases but rather press on, read the entire transcript, and try to sort out what was just read.

If I understand that "cut and paste" above, it suggests that SLB is concerned about two things: a) the price of WTI oil (going down this past quarter); and, b) a lot more fracking capacity is heading into the Bakken.

The latter point (more fracking capacity heading to the Bakken) is bad news for SLB, but great news for operators. As I've said many, many times, chaos is self organzing.

For newbies: "horsepower," "pumping pressure" are all related to pushing water, sand, and proppant into the well for fracking. At least as far as I know, but I'm at the edge of my envelope of understanding.

Schlumberger's HiWAY Technology -- Update -- The Bakken, North Dakota, USA

Link here, from the 3Q11 conference call.
In the Reservoir Production Group, deployment of HiWAY technology in the pressure pumping market continues to grow. In North America, the number of customers using HiWAY had grown from 2 only a year ago to more than 20 today, and we completed over 800 stages during the quarter in this market alone. HiWAY continues to deliver higher gas and liquid production, while using significantly less water and proppant compared to conventional fracturing systems. This provides us with significant pricing and cost leverage versus our competitors, a factor that will become even more important when the North America pressure pumping market eventually become saturated with hydraulic horsepower. I would also add that HiWAY is starting to gain momentum in the international markets, including Russia, North Africa and the Middle East.
I blogged about the HiWAY technology back in May of this year.

There are so many aspects to fracking, I can only think that this whole area (fracking) will result in some very interesting developments over the next few years. They have been doing horizontal drilling for a very long time, and fracking for a long time, but the pace of horizontal fracking has taken off since 2008 and the Bakken has been the laboratory.

As a reminder, SLB is building a huge new complex west of Williston. I've posted photos of its progress. It's pretty much enclosed now so they can finish it indoors this winter. Who knows, maybe they will reconfigure it to house 10,000 HAL employees. The lone men's room and the lone women's room might be a problem, but SLB wouldn't tell HAL that until after the lease was signed. Smile.

Saudi Arabian Crown Prince Dies -- Successor to the Kingdom TBD

I am posting this only to help me keep things straight. I don't expect readers to pay any attention.

King Abdullah of Saudi Arabia was born in 1924, making him 87 years old. He is still alive and still king.

The next in line, Crown Prince Sultan, died this past week, age 80; reportedly incapacitated for quite some time.

The presumed next-in-line, but yet to be "confirmed" by the 34 voting members of the council that "elects" the next crown prince, is Prince Nayef, also spelled Naif. He is the half-brother of King Abdullah -- remember: this is the country of multiple wives. Prince Nayef was born in 1933, making him "only" 78 years old. He is said to be a conservative. In 1975, King Faisal's assassination made then-Minister of Interior Prince Fahd Crown Prince, and Nayef replaced Fahd as Minister of Interior.

In 2003, Senator Charles Schumer lobbied Prince Bandar, Saudi ambassador to the US, to remove Nayef as Minister of Interior.

Commentary on All That Newfield Hand-Wringing -- The Bakken, North Dakota, USA

With all of the hand-wringing over Newfield's talk about the cost of doing business in the Bakken, I thought it would be interesting to see what their wells are doing. This is not a rigorous analysis at all. I simple went to the NDIC site and looked at the data from the first 10 Newfield wells listed. I believe NDIC lists them in order of location of the township (I could be wrong on that).

For newbies, I use "100,000" bbls as the milestone to measure wells by -- how fast a well gets to a cumulative of 100,000 bbls. At $50/bbl, 100,000 bbls would pay for a short lateral. So, as you approach $100/bbl, it should start to pay for a long lateral, at the wellhead. Of course, there are so many other factors that make that not accurate. But I've been using that for two years and I haven't gotten a lot of negative feedback. I did post a long time ago a press release from an producer that said a specific well with a cumulative of 40,000 bbls had paid for itself.

For newbies, it often took 20 years for a legacy well in North Dakota (a Red River well, or a Madison well) to get to 100,000 bbls cumulative after 20 years of pumping. Bakken wells are getting to 100,000 bbls in 1.5 to 3 years. Wells in North Dakota are expected to flow for 20 years; many go much longer than that.

So, with all that in mind, here are the first 10 wells listed for Newfield.

The first column is file number, followed by well name, the date spud, and then cumulative in bold black and the IP in bold red.

Any well over 100,000 bbls cumulative is free cash flow now (at least in my mind; those older wells were less expensive; and price of oil has been higher than it is now).
  • 17045, Jorgenson 1-10H, 2008, 103,675, 786
  • 16919, Jorgenson 1-4H, 2008, 82,678, 343
  • 17348, Lost Bridge Federal 16-9H, 2009, 168,572, 901
  • 17086, Jorgenson 1-15H, 2008, 107,002, 560
  • 18122, Arkadios 1-18H, 2010, 36,814, 1,203
  • 18425, Mukwa 1-17H, 2011, SI
  • 18497, Ursus 1-20H, 2010, 64,468, 1,878
  • 17924, Moberg 1-29H, 2009, 84,635, 936
  • 14583, State 1-36A, 1997, 191,160, 197
  • 19808, Malm 149-98-11-2-1H, 2011, 41,458, 2,461
  • 18689, Bluefin 1-13H, 2010, 55,586, 1,869 
  • 19110, Malm 149-98-14-23-1H, 2011, 78,901, 2,849
A couple of other points:
  • There are "no" dry holes in the Bakken (dry holes are very, very expensive and to be able to take these out of the equation, is tremendous)
  • Newfield's IPs have been increasing and are among the best in the Bakken
  • Don't let shut-in (SI) wells bother you; Burlington Resources routinely does this, and their IPs, when finally reported, are very, very good
  • There were some Newfield permits that were canceled among the list of 10 above, but I don't read anything into canceled permits in the Bakken
  • There was one abandoned Newfield well among that list, so that's equivalent to a dry hole in some folks finds, but they would have gotten some of their initial investment back, and their are tax write-offs, so it's not a complete loss.
Bottom line: I just can't get too concerned about Newfield's hand-wringing.

We will know more when CLR, WLL, and BEXP report.

Wow: It Just Gets Worse and Worse -- The Obama-Gore-Finnish-Coal-Powered Car -- Worse Mileage Than a SUV

Link here.
The Fisker Karma electric car, developed mainly with your tax money so that a bunch of rich VC’s wouldn’t have to risk any real money, has rolled out with an nominal EPA MPGe of 52 in all electric mode (we will ignore the gasoline engine for this analysis).

Not bad? Unfortunately, it’s a sham. This figure is calculated using the grossly flawed EPA process that substantially underestimates the amount of fossil fuels required to power the electric car, as I showed in great depth in an earlier article. In short, the EPA methodology leaves out, among other things, the conversion efficiency in generating the electricity from fossil fuels in the first place.
52 mpg! Wow, the 2012 Honda Civic I drove from Williston, ND, to Boston, MA non-stop averaged 49 mpg. (I stopped for gas and occasional cat-naps. The most expensive part of the trip was the highway tolls through Chicago.)

Wow, it's been a great year or two. Circuited the entire US 1.5 times on Amtrak in the past two years. 2012 Honda Civic cross-country. Bakken photos.

CNN Found North Dakota On the Map -- The Bakken, North Dakota, USA

CNN: America's Boomtown: Williston --

I guess with the US pulling out of Iraq, the war over in Libya, and peace breaking out around the world, CNN poked around for the next BIG story. A day late and a dollar short, but they found the Bakken. Wow. I cannot believe the number of folks who have sent me the link to this article, including my younger daughter, who got up 4:00 a.m. to send it to me. Wow, what a great daughter.

I hadn't planned to link it; it's old, old news, but when my younger daughter sends it, I guess I have to link it.

By the way, for the old folks who enjoyed Rod Stewart in the past and for the young folks who yearn for some Irish folk singers, just for you (below the song is the link to the Bakken story):

I Don't Want to Talk About It, Rod Stewart and Amy Belle
I get chills up my spine (almost) every time I watch this, during the sax solo. 

And now the CNN link (the link is now broken -- apparently one of the few non-fake stories by CNN):
They're pulling in fat paychecks, but now they're also homeless.

In the town of Williston, N.D., America's newest oil boomtown, more than 6,000 job seekers have come from every corner of the country looking for work. Yet, oil companies and other developers haven't been able to build housing units fast enough.

In the past year, only about 2,000 new housing units have been built, leaving many workers out in the cold.
"...only about 2,000 new housing units have been built...." Wow, if only that was happening all over the US.

By the way, the city could issue thousands of permits but there wouldn't be enough folks to process them or build the houses. As it is, Menard's in Minot cannot keep up with demand from Williston.

CNN says 6,000 workers have come to Williston in the past year, but only 2,000 new housing units have been built. Three-room houses and/or apartments will solve that that problem.

By the end of 2013, this, too, will be a non-story.