Idle Rambling While Watching Game 5 -- Takeaway Capacity -- The Bakken, North Dakota, USA

I don't know if folks have followed my thoughts regarding takeaway capacity or if I have adequately expressed them on my blog. Based on Lynn Helms' comments over the past year, and all the corporate slide presentations (WLL, BEXP, CLR) I thought the takeaway capacity was well ahead of production.

Then about two months ago, two dots connected. First, I started reading about more and more crude-by-rail (CBR) oil loading facilities; and, then, b) I started seeing these facilities being built in the local area. I started telling a friend who I bounce ideas off of, that something doesn't make sense. If takeaway capacity is more-than-adequate, and transporting by rail is a bit more expensive, why are they building all these CBR facilities?

Two explanations: a) either "they" like the flexibility of rail; or, b) there is going to be a lot more oil produced than we are being told.

I am beginning to think the latter and expressed that to several folks this past weekend in idle chatter.

I have now come across talking papers by at least two analysts that suggest pipeline capacity will be stretched/strained/come under pressure to keep up. There have been several articles in the past week or so that suggest the output from the Bakken could triple by 2015.

This is truly amazing. Who would have thought that takeaway capacity was going to be an issue at this stage?

Now, add this dot:

The Bakken Takeaway Conference in Denver, January 31-February 1, 2012.

If takeaway capacity was not going to be a problem, why schedule a conference on that very topic?

Something tells me we are going to see an explosion of production by this time next summer and perhaps takeaway capacity will become a bigger issue than any would have guessed.

If nothing else, the Bakken Takeaway conference in Denver in late January, 2012, could not have come at a better time.

Rumor: Harold Hamm To Visit Cyclone 28 Tuesday, October 25, 2011

The note was sent to me by a reader; a big thank you to RJ.

Cyclone 28 is located a few miles north of Killdeer as of today, according to RJ and the NDIC GIS map server. If NDIC is accurate, the well is Kate 2-19H, northwest of Killdeer, probably in some very beautiful country.

It gives me a chance to remind folks that Cyclone has an interactive map to track their rigs.  When you get there, click on "North Dakota," obviously, and as the red icons pop up, click on the one you are interested in.

Quite a nice site by Cyclone.

For Investors Only -- Some Links While Waiting for Reports

Motley Fool: What to expect in energy this earnings season. Note the emphasis on pipelines, something talked about frequently on the blog.

Motley Fool: Miss or not, Schlumberger packs a wallop. SLB is one of my favorite companies, and I accumulate SLB shares.

Wow: Wall Street analysts expect a rise in oil prices to help boost Exxon Mobil Corp.’s third-quarter profit by about 40 percent over last year, and Chevron Corp.’s earnings to widen by about 84 percent. I have told my story too many times about CVX to tell it again; needless to say, I "love" CVX.

Financial Times sneak peak on the majors.

Opportunity for Investing in Dome Housing in Watford City Area -- The Bakken, North Dakota, USA

Update

See first comment. We don't know if this is example of dome housing referenced in post below, but gives you some idea of dome housing.

Original Post

I received the following as a comment at an earlier post. Knowing that not all folks see the comments, and this individual is looking for widest audience, I will post his comment here:

Hi Bruce

Just read your pages and would like to post that I am from Boston via New Orleans, as Jarvis Green is.

I have started building Dome buildings in Watford City for the hundreds of "new" campers that soon face some cold months. I would appreciate a contact from any investors still interested in housing projects on my 200+ acres.

The domes can house workers, RVs, trailers, trucks; and, I have one or two that can create a four (4) story hotel site.

The structures are foam and concrete and can withstand high winds, as in category 4 storms.

Thank you for the opportunity to post,

My email is DakotaDome@Gmail.com

Ed D. 

No hidden agenda here. This is not a paid advertisement. Ed simply wrote me.

Nine (9) New Permits -- OXY USA With Two Nice Wells in Burke County -- The Bakken, North Dakota, USA

Daily activity report, October 24, 2011 --

6 of 13 wells reporting today actually reported an IP. 

Operators: BEXP (4), Whiting (2), Eternal Energy, Oasis, SM

Fields: Sanish, Alger, and Ash Coulee

Eternal Energy has a permit for another wildcat (is this #3 in the past few days?).

BEXP has permits for four wells on one pad, Alger field.

Some great wells were reported today:

• 20208, 960, CLR, Hawkinson 2-27H, Dunn
• 20288, 1,377, MRO, Fisher USA 41-5H, Mountrail
• 20196, 1,592, OXY USA, Sorlie 160-98-18-P-1H, Burke
• 20317, 1,462, OXY USA, Swenson 160-91-11-P[1H, Burke
• 20403, 1,391, Slawson, Jaguar 2-32H, Mountrail

Only 6 of 13 wells that reported today were completed/fracked. That's less than half.

Napoleon, ND -- Southeast of Bismarck -- Mini-Boom AND No Oil -- Two Words: Community Pride

No link yet; on-line Williston Herald only; I assume it will be released to general public in day or two.

Napoleon, ND. Population 800.

Spokesperson says the town "leads the world in per capita construction."  Lots of building and/or renovation going on in this small rural town, southeast of Bismarck.

No oil.

Explanation for building:

• Progressive business community
• Strong crop prices over the past few years
• Cycle of improvement; one business upgrades, others follow (sort of the opposite of urban decay)
• "Generational turn" -- younger generation staying to take over parents' farm, ranch, or business
• More people, especially with young children, are attracted to small-town lifestyles

Williston Herald's Poll on the Bakken Oil Boom -- Tied at 50 Percent Each

Love it: 1,014 total votes (50%)
Hate it: 1,034 total votes (50%)

Too close to call. Hanging chads, anyone?

Obviously this is a dynamic link and the numbers will change.

Updating Some Completed Wells -- The Bakken, North Dakota, USA

Some of the producing wells that are now completed, updated at "new wells reporting, 3Q11"; selected wells:

• 19533, 1,342, North Plains Energy, LLC, Hellandsaas 16-8H, Banks, Bakken
• 19293, 1,537, XTO, FBIR Walker 34X-25, Heart Butte, Bakken
• 19500, 1,006, Hess, Knudson 15-20H, Dollar Joe, Bakken 
• 19883, 1,603, BR, Abercrombie 44-12H, Elidah, Bakken  
• 19833, 1,458, MRO, Shirley Pennington USA 14-22H, Reunion Bay, Bakken 
• 19321, 1,274, MRO, Danks USA 11-3H, Antelope, Sanish  
• 19287, 1,872, BR, Rising Sun 11-1TF-2NH, Clear Creek, Bakken

 

World Energy Power Swings Back to the US -- The (London) Telegraph

I buried this story in an earlier posting; on second thought, it needs a post of its own. 

This London-based newspaper mentions the Bakken near the top:

Less known is that the technology of hydraulic fracturing - breaking rocks with jets of water - will also bring a quantum leap in shale oil supply, mostly from the Bakken fields in North Dakota, Eagle Ford in Texas, and other reserves across the Mid-West.

"The US was the single largest contributor to global oil supply growth last year, with a net 395,000 barrels per day (b/d)," said Francisco Blanch from Bank of America, comparing the Dakota fields to a new North Sea.

Total US shale output is "set to expand dramatically" as fresh sources come on stream, possibly reaching 5.5m b/d by mid-decade. This is a tenfold rise since 2009.

And I remember folks saying the Bakken was hyped which was one of the reasons I started this blog. 

Total US shale output is "set to expand dramatically" as fresh sources come on stream, possibly reaching 5.5m b/d by mid-decade. This is a tenfold rise since 2009.

To put that into perspective, the US currently produces 5.5 million bopd, and imports 9 million bopd.

PennEnergy With a Nice InfoGraphic: Who Exports Oil, Who Buys It, How Much Does It Cost

Link here.

Lots of easy-to-read data here -- quick look recommended.

Louisiana Now Requires Disclosure of Fracking Fluid

Link here.

The Louisiana Department of Natural Resources (DNR) Office of Conservation adopted a new rule requiring oil and gas operators to obtain a work permit and disclose the types of fluids used in the hydraulic fracturing process of wells in Louisiana.

Operators are required to disclose the composition of the fracturing fluids and volumes used after completing the well to the Office of Conservation or to a public registry, such as FracFocus, which was developed by the national Ground Water Protection Council and the Interstate Oil and Gas Compact Commission.

I actually have FracFocus linked at my "Data Links" tab at the top of the blog. If you go there, it's the very last link at the bottom of the page.

Update on the Permitorium in the Gulf

Update

I guess they got the "final" permit. Good to go.

Original Post

Link here.

I'm really not all that interested in this story any more; the story has run its course, but it is interesting that after more than a year after the spill, the first permit for BP has been issued. I guess the politics had to run its course.

I say that because:

This is the 44th plan that has been approved following the completion of a site-specific EA since stronger regulations were implemented in June 2010.

But it appears, that at least for BP, the permitorium continues:

Prior to any drilling under the plan, BP must obtain drilling permits from the Bureau of Safety and Environmental Enforcement (BSEE), which will continue to assess the information that is necessary to allow specific activities.

This is the first EP that BP has had approved since the 2010 Deepwater Horizon explosion and subsequent oil spill.

TCOP Up Over $3.00 At The Moment -- The Bakken, North Dakota, USA

The price of oil is up about $3.00 today on the television crawlers.

Basic Review of The Bakken, North Dakota, USA

Link here.

This will take you back to a very nice post dated July 20, 2010.

This helps explain why the Bakken activity is moving to McKenzie County.

At the presentation linked at that posting, one will see that the Bakken "bull's-eye" is  northeastern McKenzie Count and southwestern Williams County. It was fortuitous that the land west of Williston was best suited for oil-related industrial parks -- this location is a straight shot to the core of the Bakken. 

In earlier postings I have voiced concern about the Truck Reliever Route emphasizing a north-south corridor when my natural instincts were to advocate an east-west corridor.

Looking back at the presentation, and seeing the activity northwest of Williston, I need to re-think my position. It may be that thinking about the Truck Reliever Route as a "bypass" around Williston is the wrong paradigm. I'm thinking that the correct paradigm is to think of the TRR as a north-south road (from the prolific area north and northwest of Williston) to the very prolific McKenzie County. It just happens that the Williston industrial parks west of Williston sit right in the middle of this thoroughfare. How incredibly fortuitous. As noted before, highway engineers need to concentrate on the interchange at four-mile corner.

Updates on the Stedman and the Kari Wells Northwest of Williston -- The Bakken, North Dakota, USA

Elsewhere folks are talking about two wells I highlighted some months ago:

• 18742, 735, CLR, Kari 1-19H, Squires (northwest of Williston); s5/10; t9/10; cum 67K; 3,800 bbls/month currently; flowing, not on a pump;
• 18614, 880, CLR, Stedman 1-24H, Hebron (northwest of Williston); s2/10; t4/10; cum 72K; 2,000 bbls/month; flowing, not on a pump

The Stedman was one of my favorite -- the "gold standard" among medical dictionaries is "Stedman's." And Kari was the name of one of the most attractive women I knew in college. A twin sister, just as cute.

Notice that both were fracked within the confidential period; both are still flowing; both have probably paid for themselves at the wellhead.

Here We Go -- Another Energy Merger -- The Bakken, North Dakota, USA

Plains All American Pipeline to buy SemGroup Corporation.

And, yes, Plains All American is in North Dakota. I did not know this: Don tells me -- PAA has a CBR oil loading facility at Ross, ND.

Don sent me this link: recent PAA presentation. Pay particular attention to slide 41 (goes along with a Carpe Diem.com story earlier this a.m), and with slides 60 - 62, specifically about the Bakken. Also, slide 74, 75, 78. When I look at this presentation, and others, and then reflect on what I'm seeing here in Williston, particularly all the industrial parks still in infancy, and outside Williston, particularly the number of CBR oil loading facilities, I am really getting the impression the oil companies said as much as they could to get the investors to invest in the Bakken, but were careful not to say how huge this play really is. Perhaps Harold Hamm is the only one who has nailed it: 24 billion bbls from the Bakken/TF. It just seems that if the potential is only what the USGS says it is, we have all the oil service companies and infrastructure in place that we need. But yet, the growth continues, much more than one would expect. At least to a layperson's eyes. When you look at the PAA presentation, remember that natural gas (PAA's focus) represents only four percent of the economic activity in the Bakken.

This blog posted a story on PAA back in November, 2010: the Bakken North Project -- a pipeline from Trenton, ND, to Regina, Saskatchewan, Canada.

Plains All American announced plans to acquire Bakken Gathering and Transportation for $210 million earlier this year.

Plains All American Pipeline, LP, is a publicly traded master limited partnership -- I've always considered PAA with a heavier role in natural gas transportation, rather than crude oil, but they do both. I believe SemGroup is predominantly a transporter of natural gas in the United States, though it does have crude oil storage facilities in the UK.

Put this story and the stories about the ONEOK CRYO plants west of Williston together, and we're talking some serious natural gas investment in the Bakken -- and the Bakken is an "oil" field, not a natural gas field. The natural gas coming out of the Bakken accounts for four (4) percent of the economic value of production coming from the Bakken. Four percent.

Santa Claus' Reindeer in the Bakken -- The Bakken, North Dakota, USA

For newbies: I don't know how many of you know this, but Santa and the missus summer in South Dakota (no state income tax), but after spending as much time with his reindeer as they do, they drop off the reindeer in North Dakota for the off-season.

This is a very short clip of Santa's reindeer just northwest of Williston, North Dakota.

One is not allowed to photograph the barn in which Rudolph has quarters, but if you watch closely, in the corner of one of the frames, you can just barely make out a red building in the background. That's where Rudolph is staying. He comes out occasionally during the day, but too many truckers are stopping to take photographs that he prefers to stay indoors.

I understand that if you bring carrots, you might entice him to come to the fence.




For those who want a photo:

Inland Sea -- The Bakken, North Dakota, USA

Of course this is counter to another theory on the formation of oil, but it's a nice map, and I hate to let a good photo go to waste:

This is taken from one of the displays at the new Dinosaur wing at the Natural History Museum in Los Angeles. The wing opened this past summer. I have been to museums around the world, and this is second to none -- it is absolutely incredible.

The living T. rex is particularly impressive. Just kidding. It's just a skeleton; not alive.

Note in the photo above: the sea did extend as far east as Minot.

Three Links From Carpe Diem Today -- And a Link To London Newspaper -- What a Treat for Readers -- The Bakken, North Dakota, USA

Update

See first comment regarding need to replace batteries in the hybrids and all-electric vehicles. It is not just the cost of the new battery, but the interior of the car must be completely gutted to replace the battery.

Original Post

My favorite site: Carpe Diem.com.

Three links to warm the cockles of my heart:

• Shale gas boom igniting (perhaps a poor choice of words -- using "boom," "igniting," and "gas" all in one phrase) a pipeline construction boom
• Even with $8,000 subsidies, one does not sell more electric cars
• OWS (Occupy Wall Street) complains about lack of jobs and economic opportunity): hey guys, there's a labor shortage in western North Dakota 

The pipeline construction story, of course, is the most interesting.

I might as well add this story while I'm at it. The gist of this story has been posted before. I expect to see more of these stories (the US is now exporting liquid natural gas -- can you believe it -- exporting a fossil fuel that isn't coal! -- wow): world power swings back to America.

The American phoenix is slowly rising again. Within five years or so, the US will be well on its way to self-sufficiency in fuel and energy. Manufacturing will have closed the labor gap with China in a clutch of key industries. The current account might even be in surplus.

Don't tell Congress. They'll start spending now.

And this London-based newspaper mentions the Bakken near the top:

Less known is that the technology of hydraulic fracturing - breaking rocks with jets of water - will also bring a quantum leap in shale oil supply, mostly from the Bakken fields in North Dakota, Eagle Ford in Texas, and other reserves across the Mid-West.

"The US was the single largest contributor to global oil supply growth last year, with a net 395,000 barrels per day (b/d)," said Francisco Blanch from Bank of America, comparing the Dakota fields to a new North Sea.

Total US shale output is "set to expand dramatically" as fresh sources come on stream, possibly reaching 5.5m b/d by mid-decade. This is a tenfold rise since 2009.

And I remember folks saying the Bakken was hyped.

For Investors Only: Caterpillar Earnings Soar -- The Bakken, North Dakota USA

CAT earnings soar.

They're selling a lot of Caterpillar equipment out here in the Bakken. I assume the same in the Niobrara, the Eagle Ford, and Marcellus.

The Peoria, Ill. company says it earned $1.14 billion, or $1.71 per share, compared with $792 million, or $1.22 per share, in 2010.

Revenue surged 41 percent to $15.72 billion.

Analysts were expecting a profit of $1.63 per share on $14.84 billion in sales.

Industrial Parks -- Williston, North Dakota -- The Bakken

Highway 1804 heading east out of Williston

• Lined with oil service companies
• Halliburton, Sanjel, and Schlumberger all have operations at the far east end
• Major truck route heading out of town

2nd Street West, heading west out of Williston

• A few oil service companies; major truck route heading out of Williston
• MDU
• New Oasis well being drilled on south side of the highway, south of the frontage road, just across the tracks.

Highway 2 & 85, Million Dollar Way, north end of town

• Lined with oil service companies
• To the west and to the east, several blocks deep, more oil service companies

Highway 2 & 85, about two miles north of Williston

• Target Logistics man-camp
• New Sun Energy complex

Highway 2 & 85, four miles north of Williston, Epping turn-off, terminus of proposed Truck Reliever Route

• Granite Peak development, truck stop, Bakken Industrial Park

Highway 2 & 85, five miles north of Williston

• Missouri Ridge Commercial Center -- new

West of Million Dollar Way, about three miles

• The Oasis industrial park
  

Highway 2 & 85, west of town

• Along the four-lane divided highway, numerous oil service companies
• Numerous farm implement dealers
• Schlumberger along the highway, north side, about halfway between length of this stretch
• McCody Cement at far west end, at four-mile corner
• Plains All American: just west of the weigh scale near Pioneer Drilling
• SemCrude: across the four-lane highway from Schlumberger

North of Highway 2 & 85 west of Williston: at least three industrial parks, depending on how you count them
1) Industrial park just north of the highway, and well east of the four-mile corner

• Scores of oil service companies, including BHI SuperSite, new Schlumberger complex
• Cudd
• EnerMAX; formerly S&S Sales
• Stateline Services
• Hexom

2) Industrial park a bit farther north of the highway, north of four-mile corner; along the terminus of the south end of the Truck Reliever Route -- huge, perhaps 640 acres, certainly 320 acres; just going up now; video below

• Oil service facilities going up, but not yet identified

3) Proposed Truck Reliever Route, north of highway 2 west, about one mile west of four-mile corner, and heading north

• Nabors, has been here for a long time
• Most of the oil service companies are on the west side

The ONEOK natural gas processing and gathering facilities (3 sites) west of Williston. My hunch is these will turn into their own industrial parks.

********************

The video below is of the new industrial park identified as #2 above, north of the 4-mile corner. Turn down the volume so you don't hear all the wind.

Sorry for the sunlight "line" --