Thursday, May 31, 2012

China, Coal, and Absolutely Nothing About the Bakken

Don sent me this article. He said to look at the comments regarding electric usage. I did. That impressed me, but so did the picture. It appears the road leading to the bottom of the coal pit is more than a mile long. China burns 17 of these giant coal pits every year.

China's coal imports were up nearly 70% over last year for the first four months of the year.

70%.

[You know, this is getting awful close to 100% which means they would have doubled their imports year-over-year. So either they front-loaded their imports or their coal usage is increasing beyond imagination. I have to think some of the increase was due to front-loading the annual imports.]

But I digress. What does all that coal get you?

In China: 4.7 trillion KWH, slightly more than what the US used last year. That averages out to about 380 watts per Chinese, about equal to using a light bulb and a computer at the same time, let alone anything else.

Another interesting comment from the link:
China consumes nearly 4 billion tons of coal a year. In energy equivalence one ton of coal equals to 4 barrels of oil. To replace the coal demand China will need 44M extra barrels of oil a day, on top of the 12M barrels of oil a day China is already consuming. That total of 56M barrels of oil a day is way beyond what the world can supply, with 85M barrels a day global oil production and USA alone consumes 21M barrels a day. 

Great Story on Dakota Outerwear Catering to Bakken Oil Companies

Link to Minot Daily News here.
All the clothing is designed by the staff in Minot, and then manufactured in Minnesota. Roe said they have contacts with all the major oil companies operating in North Dakota and the response has been wonderful. They've set up a couple of dealers and continue to look for more people who might be interested.

Roe is counting on the same business practices that made them so successful with the Air Force working with the oil fields, as well. While the quality of the clothing is top-notch, it's the superior customer service Dakota Outerwear offers that Roe believes will bring in more and more customers from the Bakken.

Parsing Politicians' Pablum -- "All-The-Above-Energy" Solutions

I guess the "all-the-above-energy" solution talk was to be taken in a literal sense: "above ground" energy -- wind, solar, nuclear, and hydroelectric, but NOT fossil fuel ("below ground"):
The Obama administration’s stated all-of-the-above energy strategy favors alternative and renewable sources and discourages fossil fuels, a US House committee chairman charged.
“It’s actually simple: Any energy made above ground counts. Any made underground doesn’t,” Oversight and Government Reform Committee Chairman Darrell E. Issa (R-Calif.) said as the committee began a May 31 hearing on the administration’s energy strategy.

“An all-of-the-above energy strategy can’t succeed on its own,” he maintained. “We need to have an all-of-the-below strategy too.”
I can't make this stuff up. 

Fifteen (15) New Permits -- The Williston Basin, North Dakota, USA

2nd day in a row with 15 new permits -- daily activity report, May 31, 2012--
  • Operators: BEXP (4), Whiting (3), Petro-Hunt (3), OXY USA (2), Newfield, BR, Hunt
  • Fields: Westberg (McKenzie), Nameless (McKenzie), Parshall (Mountrail), Fayette (Dunn), Park (Billings), Haystack Butte (McKenzie), North Creek (Stark), East Fork (Williams)
I was not familiar with Nameless oil field: it's a six-section oil field two miles directly west of Alexander.

Whiting has permits for a 2-well pad in North Creek, Stark County. North Creek is an 8-section oil field between New Hradec and Bell fields, smack dab in the heart of Whiting's Pronghorn Prospect. For such a small field, it is a fairly active field and has a string of Whiting wells which I've talked about before (in more than one posting). The names of both permits has the "P" designation meaning they are targeting the Pronghorn Sand. The third Whiting permit in this daily active report is in Park field, also in the Pronghorn Prospect and also has the "P" designation.

BEXP's permits for a 4-well pad is in East Fork, a field at the 13-mile corner north of Williston; it is east of US Highway 2/85, on both sides of the highway where it turns east at the corner. By the way, someone commented there is a sign at the 13-mile corner suggesting another industrial park will be built here.

Several Oil-Related Articles From CarpeDiem -- No More Blogging Until This Evening

Gasoline drops to $3/gallon.

US oil production in March at highest level since 1998.

Oil prosperity update for Eagle Ford in Texas.

More later; I have granddaughter-related activities for the rest of the afternoon, early evening.

NBA playoffs continue tonight, I assume.

Just How Good Is the Bakken? The Alberta Basin Bakken, In This Case

Remember this post? Just How Good Is The Bakken?

TOC of typical source rock is 1% or less.

The Williston Basin Bakken has a TOC of 11%.

There is a Bakken that has a TOC of 17%.
Routine core analysis has been completed on four of the six wells to-date. Porosity up to 10.4% and non-fractured permeability up to 0.3mD (millidarcy) have been reported. Geochemical analyses have been completed on select samples with additional analysis in progress. Sample analyses indicate a thermally mature Bakken System source rock in the oil window, with some zones where TOC (total organic content) reaches up to 17%.
And where would that Bakken be, you ask?

The Southern Alberta Basin Bakken Fairway in NW Montana.

I posted this link some time ago, but had not paid attention to this particular story until Don sent it to me a few minutes ago. Thank you.

"Eco-Cars Not Worth The Money -- MSNBC

Link here to MSNBC.
Hoping to squeeze every last mile out of a gallon of gas?  Automakers have been launching a flood of new “eco” models designed to do just that.  But a new report warns that the minimal extra mileage isn’t worth the hefty price tag – which in some cases would require as much as 38 years of driving to recover in terms of lower fuel costs.
The new study by Consumer Reports raises questions about a variety of conventionally powered Eco models, such as Ford Focus SFE, Chevrolet Cruze Eco and Honda Civic HF. But it was also skeptical of the benefits promised by some hybrid models, such as the new Toyota Prius C which, it declares, “is fuel efficient, but not a deal.”
Wow, when MSNBC starts reporting these stories, you know it's all over. Especially when the price of oil continues to drop significantly. 
Even the Prius is of questionable value. Let me know if the article talks about resale value (the most costly piece of an electric vehicle as a relatively short life-span), and there is no standard charging station deployed, meaning that most folks with these coal-powered cars, need to charge their cars at home.

A huge "thank you" to a reader for sending me this article. I don't visit the MSNBC website.

A Bit of North Dakota Oil History Trivia

In an article on a proposed new MDU-South Heart refinery, it was noted that if completed, it would be the first refinery built in North Dakota in 60 years.

My understanding is that there is a refinery farther along in the process near Trenton, North Dakota, if that project is still moving along. I haven't heard much about that refinery in quite some time. It will also be a diesel refinery.

Now, some trivia. The linked article said this:
There hasn't been a new refinery in North Dakota since the Tesoro refinery came on line in 1954, just after oil was discovered in North Dakota.
Oil was discovered April 4, 1951.

There were three refineries built in 1954: the Amoco refinery in Mandan; the Westland refinery in Williston; and, the Queen City refinery in Dickinson. Source:  NDGS/DMR.





$1 Billion Per Year For Five Years Needed For Infrastructure in North Dakota's Oil Patch

 Updates

Later, 11:30 p.m.:  (numbers rounded) the state has awarded nearly $17 million in impact money to three cities: Williston ($10 million); Dickinson ($6 million); Minot ($1.5 million). These cities previously awarded $21 million in Energy Impact Grants. The link takes you to the Bismarck Tribune.
 
Original Post
Wishful thinking.
The state should invest up to $5 billion in northwest North Dakota communities with the most oil activity, the president of the North Dakota Petroleum Council said Wednesday.
Ron Ness, while testifying to a group of legislators meeting in Williston, said communities need significant resources to do long-range planning, but the state’s grant program for those areas is only helping them react.
Ness called for a five-year plan with $800 million to $1 billion per year invested in schools, roads and infrastructure for communities in the core areas of the Bakken.
This has been said by numerous folks over the past couple of years. Won't happen. Funding may come in spurts, but not as part of any coordinated planning effort. Speaking of planning, I wonder whatever came of the story in which Minot denied BHI's request for starting some operations at BHI's new complex.

Sequel To Solyndra Released Just in Time for Summer

Splashed across the top of the fold on page B1 of the WSJ: Car battery start-ups fizzle, with this subtext: armed with $1.26 billion in US grants, firms opened nine factories; jobs and production lag goals.

This is the link.

$1.26 billion in US grants -- not tax credits, not tax incentives, but outright grants.
Since 2009, the Obama administration has awarded more than $1 billion to American companies to make advanced batteries for electric vehicles. Halfway to a six-year goal of producing one million electric and plug-in hybrid vehicles, auto makers are barely at 50,000 cars.
The Department of Energy, which oversees the administration's advanced battery grants, says it is too early to judge the effort, and believes it will bear fruit when electric cars become a regular sight on American highways.
Believe. Hope and change.

The Hatfield-McCoy Feud -- A Modern Day Morality Play

Updates


June 3, 2012: Here's an update in the Minneapolis-St Paul StarTribune.
June 1, 2012: this is quite a coincidence. Tonight, while reading the LA Times on-line, I came across this story: 'Hatfields and McCoys' is a History-Changing Success. When I wrote the "story" below, I had no idea that the History channel is currently showing a miniseries based on the feud. Purely coincidental that this post was written and posted at this time.

Original Post

Once upon a time there were two feuding families, let's call them the Hatfields and the McCoys.

The McCoys had a huge amount of oil on their side of the border. It was a thick, sludgy, dirty oil but they had lots of it. What they needed was a pipeline to get it where it could be refined into useful products.

Meanwhile the Hatfields had the refineries and the demand for these useful products. There was even a shovel-ready plan to lay an extra large pipeline through Hatfield's territory, where it would provide thousands of jobs for the Hatfields at a time when the Hatfields were desperate for jobs.

But for some reason the Hatfields did not want the McCoys thick, sludgy, dirty oil. The Hatfields told the McCoys to "pound dirt," i.e., the Hatfields said "no" to the McCoy extra large pipeline.

The Hatfields had their own light, sweet oil. They were producing so much of this wonderful oil they couldn't keep up with shipping it. They were shipping it any way they could: truck, pipeline, rail, barge, and the occasional mule. Finally, the Hatfields came up with an idea similar to the McCoys pipeline: the Hatfields would build an additional pipeline, called the Huge Pipeline, that would take all this wonderful oil to another terminal in their territory. How fortuitous: there was already an oil receiving terminal on their side of the border.

But, that terminal -- funny how things work out, and the reason for the story --  belonged to the McCoys. Yes, the very McCoys who had all that thick, sludgy, dirty oil, but no place to take it.

Now, the McCoys may not be the sharpest knives in the drawer, but they have a pretty good memory. And a pretty good memory was all that was needed. After all, it was just a few weeks earlier that the Hatfields refused to let the McCoys build a pipeline through Hatfields' territory.

The decision seemed petty to the McCoys.

The McCoys were understandably miffed when they were told they could not build their pipeline. So when the Hatfields asked to connect their proposed pipeline to the McCoys' terminal, what do you think they said?

Yup: no deal. That terminal, the McCoys said, is reserved for the thick, sludgy, dirty oil from the McCoys' own oil field. Which is kind of funny, because up until now, everyone thought that terminal was taking light, sweet, oil from the Hatfields.

The Hatfield-McCoy feud may be a myth, but apparently there is a true-life story which sounds vaguely familiar playing itself out in court.

Incredible! First Time Claims for Unemployment Benefits -- 5-Week High

Remember: the magic number is 400,000.

Link here to Yahoo/AP story.

Let's see how they spin this story. I haven't read it yet, but here goes:
Weekly applications for unemployment benefits rise to 383,000, a 5-week high.
That's the entire story.

I'm sure more will be written about this later, but I have to agree. What more needs to be said when we've thrown a trillion dollars into the economy, kill the Keystone XL, and slow-roll the industry that hires a boat-load of union workers.

What was not noted: this was not a trivial jump -- it was up 10,000 from the previous week. Worse, according to Bloomberg, the number was expected to decrease, not go up. In a Bloomberg News survey of economists, the number was expected to drop to 370,000.

Also, the AP article doesn't note what CNBC also noted: 1Q12 GDP was revised downward to 1.9% from 2.2%.

Here's Santelli's take (Santelli is about the only CNBC analyst I trust. I trust Jim Cramer, also, but for different reasons. Smile.)

Looking more and more like we will see QE3.

Thursday Morning Ramblings -- Looking for the Bakken? Skip This Post -- Scroll Down

Wow, wow, I apologize. Normally I hold this in draft for awhile before posting so that newbies coming to the site aren't surprised to find stories unrelated to the Bakken, but the first story is too good to delay posting. For those coming here on a Google search looking for the Bakken, skip this post, and scroll down.

1. The other day in my ramblings I commented on how much I enjoyed watching the San Antonio Spurs in the playoffs. I wasn't alone. The WSJ has a great story on exactly that topic in today's edition (and this is why I subscribe to the WSJ -- for the writing, not the business).
The best 10 minutes of the entire NBA Season? -- WSJ.
Midway through the third, four Spurs drove the length of the court on three Thunder players. Tony Parker, the Spurs' point guard, threw an underhanded pass to Manu Ginobili on the right wing. Ginobili could have taken the shot but with the Thunder's James Harden closing fast, he took one dribble to his left and drew Harden away. The result: Parker was alone in the far-right corner. After taking a behind-the-back pass from Ginobili, Parker sized up his three-point shot like a free throw -- he had that much timer. Swish, 78 - 58 Spurs, timeout Thunder.
The Spurs aren't revolutionizing basketball. They're just playing it better than anyone.
2. I was a great fan of Erin Burnett on CNBC -- a great fan. I will leave it at that. She left about a year ago to host her own show at CNN, which I have never seen. I think I may have caught a few minutes of it some months ago, but I honestly don't remember, and if I did catch it, I was not impressed. Her resume up to and including her morning CNBC co-anchor job was very impressive. I have no idea why she left unless she was using the CNN evening slot as a stepping stone.

It looks like her timing could not have been worse.
The news just went from bad to worse at CNN. After the cable news network delivered its lowest-rated month in total viewers in over a decade in April, May became CNN's worse month in primetime among total viewers over 20 years of age. 
At 7 p.m., Erin Burnett, another relative CNN newcomer, had the lowest 25 - 54 demo numbers in 20 years in the time slot for the network and the second lowest after June, 2001, in two decades in terms of total viewership.
I think my blog has better numbers. Certainly better "viewers." Smile.

3. I remember vividly the day/night the Berlin Wall came down. We were stationed at Bitburg AB, Germany, at the time. The plan was for the gates to be opened only for a short period of time to allow relatives on either side of the wall to freely visit each other. The excitement was palpable, and I remember saying to myself that once the gates were opened, there was no way they would be able to close them again. The rest is history. Pandemonium erupted and East German guards left their posts. Within 24 hours the Berlin Wall was down. It was incredible to watch history in the making.

I say all this because I get the distinct feeling we may be seeing history being made again, this time in the EU as it starts to implode. No one "wants" to see Greece leave the EU because of the symbolism it would represent, but Germany is not going to send "the laziest, most incompetent country" [The Atlantic] any more money. Euro bonds are still being talked about but will be just another opportunity to kick the can down the road. It's hard to believe Greece will exit the EU, but one gets the feeling that train has already left the station. Spain is on the ropes; we may see a run on the banks this week, next week. And then Italy. Even if bureaucrats come up with a way to "save" Greece and the EU, Spaniards and Italians are "voting" with their feet, with a visit to their banks.

This may all be hyperbole; the crisis may be resolved, but a lot of folks had the same feeling about the Berlin Wall. Until 24 hours later.

[June 1, 2012: this article expresses my feelings exactly. I have no opinion on what the options are, but I think there has already been a silent run on the banks in Greece, Italy, and Spain. The big question is: to what other countries has the bank run begun, and has it begun in Germany or France?]

4. Speaking of an implosion. This is incredible.
“On the specifics, I have regularly criticized an agenda that would punish businesses and job creators with more taxes just as they are trying to thrive again,” he said. “I have taken issue with an administration that has lapsed into a bloc by bloc appeal to group grievances when the country is already too fractured: frankly, the symbolism of Barack Obama winning has not given us the substance of a united country.”  -- The first member of congress outside of Illinois to endorse then-Senator Obama's 2008 presidential bid. And it was Davis who seconded the official nomination of Obama at the 2008 Democratic National Convention. 
I wonder what the straw was that "broke the camel's back"?

5. Without Drudge, would anyone see these nuggets buried by the mainstream media?
Despite Mr Obama's longtime disdain for corporate jets and corporate jet owners, the bill includes $1 billion in subsidies for corporate jet manufacturers, which have experienced a steep decline in demand for the jets [ever since the president stomped on Big Business for using corporate jets to get around the country].
The president enthusiastically signed this bill. It's very possible Michelle will need a private corporate jet after January 20, 2013.

But government subsidies for corporate jet manufacturers! I must be missing something.

6. The tea leaves suggest oil will not have to be released from the strategic petroleum reserve this summer. Bad news for the Iranians. Worse news for the president who was hoping for a deus ex machina ending to this Greek tragedy.

7. For North Dakota Bakken oil millionaires, here's the website for the President's "Runway to Win" high-end fashion design on-line catalogue. A re-usable grocery store bag goes for $85.

Sionix To Expand Multi-Year Project in the Williston Basin

Link here to PennEnergy.

Sionix will expand their multi-year project to treat drilling fluids in the Williston Basin. The expansion will result in an effluent significantly cleaner than required under the original treatment conditions, according to a spokesman. According to the press release, recovery and reuse constitutes a significant economic benefit to operators/drillers in the Williston Basin as well as in other drilling operations in all of the shale formations in the continental United States.

Seaway Reversal: No Impact on WTI-Brent Spread

Great article from RBN Energy.
So in the short term, despite the hoopla and trading strategies, the Seaway reversal is too small to make an impact. It certainly is dwarfed by the kind of macro-economic sentiments that moved crude prices yesterday.
Link to original post about the poll on this question.

Selected Links to Articles on Oil -- Independent Stock Analysis

Link here to Independent Stock Analysis.

Wednesday, May 30, 2012

More Lodging To Break Ground --- Radisson Hotel, Country Inn and Suites; Update on Crowne Point Lodge

Minnesota-based Complete Hospitality Management, link here:
  • working with Granite Peak Development to build a 160-room Radisson Hotel at Sand Creek Town Centre
  • working with Granite Peak Development to build a 240-room Country Inn and Suites at the Bakken Industrial Park; will include a restaurant specializing in buffalo wings
  • partnering with Annabelle Homes in Tioga to manage the 240-room Crowne Point Lodge and Suites; Annabelle will break ground June 1; 38 rooms will be left open for tourists;
  • considering locations at 13-mile corner north of Williston and in Ray
Lodging investments are being paid off in about 32 months instead of the industry norm of six to 15 years.

Fifteen (15) New Permits -- The Williston Basin, North Dakota, USA

Daily activity report, May 30, 2012 --
  • Operators: CLR (6), Whiting (2), Hess (2), Oasis (2), WPX, XTO, Zavanna
  • Fields: East Fork (Williams), Hofflund (Williams), Hawkeye (McKenzie), Sanish (Mountrail), Brooklyn (Williams), Willow Creek (Williams), Mandaree (Dunn)
The list includes six more permits for the Brooklyn oil field northeast of Williston. This may simply be the most interesting field to watch be developed. There is one rig on this field and it just keeps on truckin'.

Keep on Truckin', Hot Tuna


Five (5) wells released from confidential status (which reminds me: about a week ago, NDIC went back from using "tight well" to using "confidential"):
  • 20300, 488, OXY USA, Lillian Sadowsky 1-15-22H-142-96, Manning; Bakken;
  • 20414, DRL, Zavanna, Larsen 32-29 1H,
  • 21123, 388, Hess, GO-Ron Anderson-157-97-13H-1, Ray; Bakken; 
  • 21446, DRL, Samson Resources, Pigeon 30-31-162-96H, Juno, Bakken, 
  • 21715, 564, CLR, Garner 1-32H, Rainbow, Bakken; t2/12; cum 13K 3/12;
The permits for the 2-well Whiting pad will be in the same section that already has:
  • 17895, 2,250, Whiting, Rohde 4-1H, t6/09; cum 266K 3/12; (yes, not even three years old, a quarter of a million bbls cumulative)
  • 18399, 2,685, Whiting, Rohde 43-1H, t4/10; cum 192K 3/12;
  • 20641, 843, Whiting, Rohde 43-1TFH, t9/11; cum 21K; 

Six More Brooklyn Oil Field Permits

From the daily activity report, May 30, 2012 --

CLR has permits for six more wells in Brooklyn oil field -- this is quite a field.
  • 23013, loc, CLR, Sacramento Federal 4-10H,
  • 23014, loc, CLR, Sacramento Federal 5-10H,
  • 23015, loc, CLR, Sacramento Federal 6-10H,
  • 23016, loc, CLR, Sacramento Federal 7-10H,
  • 23019, loc, CLR, Sacramento 3-10H,
  • 23020, loc, CLR, Sacramento 2-10H,
These six wells will all be in the same section where there is already a Sacramento well; this 2-section spacing unit will have 7 wells with these three 2-well pads. 

Housekeeping: CLR Acquires Operator Status of Some Newfield Wells

In a posting yesterday it was noted that Newfield's Bratlien well was now being operated by Continental Resources.

In a Notice of Transfer of Oil and Gas Wells, dated March 12, and received by NDIC on March 19, 2012, the following Newfield wells were transferred to CLR. These were reported in the May 16, 2012, daily activity report:

  • 19931, 1,257, 1-H Breitling 23-14, East Fork, t9/11; cum 56K 3/12;
  • 21845, DRL, Bratlien 154-100-33-28-1H; Last Chance; gas levels reached 4,000 units with an intermittent 1 - 5' flare; it took 24 days from spud to total depth;
  • 20993, DRL, Chrome 155-99-18-19-1H, Epping;
  • 19428, DRL, 1- Lila 8-5, Epping;
  • 19429, DRL, 1-H Hunter 17-20, Epping;
  • 21047, DRL, Sodbuster 155-99-6-7-1H, Epping;
  • 21295, DRL, Peterson 156-99-29-32-1H, East Fork;
  • 12108, Backen 42-33 SWD,
  • 12144, Holdredge 43-33 SWD,
  • 14514, 14, Jackson 1-35H, Last Chance, a Madison well; cum 27K 3/12;
  • 10194, 66, Bratlien 4 24-33, Last Chance, a Madison well; cum 118K 3/12;
  • 14638, 141, Bratlien 13-24, Last Chance, a Madison well; cum 42K 3/12;
  • 9693, 110, Bratlien 2 22-33, t1/83; Last Chance, a Madison well; cum 173: 3/12;
  • 9417, 81, Bratlien 1 41-33, t6/82; Last Chance, a Madison well; cum 87K 3/12;
  • 9718, 87, Bratlien 5 14-27, t9/83; Last Chance, a Madison well; cum 174K 3/12;
  • 9855, 237, Burdick 1-12-28, t3/83; Last Chance, a Madison well; cum 171K 3/12;
  • 9864, 216, Burdick 3 24-20, t6/83; Catwalk, a Madison well; cum 159K 3/12;
  • 19087, 1,395, 1-H Sandhill 25-36, Wildcat, Bakken; cum 69K 3/12;
  • 19202, 1,010, 1-H Manolo 21-16, t3/1; East Fork, Bakken; cum 50K 3/12;
  • 18581, 755, Caliente 1-9H, t4/11; East Fork, Bakken, cum 40K 3/12; 
  • 18413, 1,071, Heidi 1-4H, t4/10; East Fork, Bakken, cum 56K 3/12; 
  • 20944, PNC, Vandeberg 156-99-26-35-3H, East Fork, Bakken, 
  • 19090, DRL, 1-H Osmond 3-10, East Fork, Bakken, 
  • 18226, 540, Chanel 1-33H, t11/09;  Last Chance, Bakken, cum 36K 3/12; 
I don't recall any press release about the original offering or the deal, but perhaps it was related to this announcement

Nigeria Exporting Less Oil To US -- Due to Bakken/Eagle Ford

A reader sent me this article regarding Nigeria crude oil and the effect Bakken/Eagle Ford oil was having on that country's oil industry.
There is growing concern that Nigeria is losing the United States as its biggest oil customer amid surging output and refinery closures in North America.

According to shipping records, the recent U.S. purchases of Nigerian crude fell to a 5-year low in February, leading the country to slide to sixth position from her former fifth position among suppliers to the U.S, the world's largest oil consumer.

However, industry experts said that Nigeria was set to offset the trend as she is taking her cargoes to Asia, where refiners are increasing imports from Nigeria starting from next month.
When I got the article, I vaguely remembered reading that a major oil company was selling its Nigerian assets, but a quick google search found it: COP.  That article was published earlier this month and was a hint that things were changing.
U.S. oil major Conocophillips is selling all of its Nigerian assets including on-shore and off-shore oil and gas fields and a stake in its LNG Brass facility, sources familiar with the situation told Reuters.
... could help Conocophillips raise several billions of dollars.
*****************

Note this data point from the article linked above (the first article):
Boosted by drilling in shale-rock formations such as North Dakota's Bakken and Texas' Eagle Ford, crude production in the U.S. rose to 6.24 million barrels a day in the week ended May 18, the highest level since 1999.
This does not jive with the January 1, 2011, data from the CIA World Factbooks 18 December 2003 to 28 March 2011, this link, in which US oil production is said to be around 9 million bbls/day

Random Note RE: Denbury's TRMU 22X-16H

Status: confidential (May 29, 2012)
File number: 16906
Field: T.R. (southwest North Dakota)
Target: Madison Pool
Spacing: 7,680 acres

Compare to:
16870, active, Denbury, TRMU 44X-15H, T.R., s3/08; cum 44K 3/12
Field: T.R.
Target: Madison Pool
Spacing: 7,760 acres

Compare to:
15823, 13, Denbury, TRMU 41-22H, T.R., t9/05; cum 159K 3/12
Field: T.R.
Target: Madison Pool
Spacing: N/A

Compare to:
15834, 355, Denbury, TRMU 14-4H, T.R., t11/06; cum 155K 3/12
Field: T.R.
Target: Madison Pool
Spacing: N/A


Compare to:  34-year-old vertical Madison well with > 1 million bbls cumulative
6618, 132, Denbury, Franks Creek State 1-22, T.R., t10/78; cum 1.18 million bbls;  3/12; still producing 1,000 bbls/month
Field: T.R.
Target: Madison Pool
Spacing: 320 acres in lease, vertical well

Major UK Refinery Likely To Shut Down -- Not Making Money

Link here.

Data points:
  • supplies 20 percent of London's fuel requirements
  • employs 800 folks
  • authorities: it won't be missed -- except by 800 families

Construction on Highway 22 Out of Dickinson Has Begun

The link to the Dickinson Press  says the five-lane highway will extend from Dickinson to the Stark County/Dunn County line, a distance of five miles. Price tag: $9 million. About the cost of one Bakken well.

EPA Out of Touch With Reality -- API

Well, duh.

Wednesday Morning Ramblings

1. There is a great editorial in the WSJ today about electric vehicles.  (Remember: most folks on the commission working issues regarding electric vehicles work in Washington, DC, either do not own their own car; have government-issued cars; or drive mostly for pleasure.) The editorial raises issues that have been raised before on this blog. The following are my thoughts based on arguments made in the editorial.

First: the most expensive feature of an electric vehicle is the battery which has a finite life. Electric vehicles have little resale value after three years.

Second: the grid can't handle very many electric vehicles. As it stands, Los Angeles County could not handle 5% of all vehicles charging at one time; based on the numbers provided in the editorial, I doubt if the grid could handle 2%.

Not mentioned in this article but pointed out in an article elsewhere in WSJ today was an article that EV developers have not agreed upon a standard recharging station/receptacle, meaning that recharging may not occur "on the road" but only at home. Bummer. 

2. This is truly incredible: the IMF chief pays no income tax on a salary greatly exceeding one-half million dollars because of her diplomatic status. She has been a constant critic of Greeks cheating on their taxes. (There is a difference between cheating on taxes and not paying taxes not owed: this is known as the Warren Buffet Law.) To their credit the president and vice-president pay their fair share of taxes. In fact, the vice president doesn't take advantage of maximizing charity giving to lower his taxes.

3. There is a great story of New Yorkers and Pennsylvanians moving to Florida, where there is no income tax, no estate tax, no inheritance tax. But, at the article stated:
“Many of these New York and Pennsylvania residents no doubt moved to Florida for the warm weather,”.... sure.
4.  Speaking of tax avoidance, remember that story of John Kerry parking his boat in Rhode Island to avoid Massachusetts taxes? Well, apparently this issue has come up again. When you get to the link, read the last paragraph: I must be missing something. The taxes amount to ... drum roll ... $100. Two thoughts: the multi-millionaire heir (through his wife) is quibbling over a $100 tax bill; and, b) multimillionaires are paying $100 taxes on a yacht? The annual fee to renew the registration for my wife's minivan, payable to a Texas county tax assessor's office, is $65. Blue book value is about $10,000. I suppose the value of the minivan is somewhat less than the Kerry yacht but I don't know for sure because I've never owned a yacht.

5. Wow, the Spurs franchise has put together a strong team. I'm impressed. Two things: they kept the core all these years: Duncan, Parker, Ginobili; Bonner still there; and then the new guys, Leonard and Splitter. Inside the paint, 3-point plays, fast ball handling, -- it really is impressive. Fun to watch. After last night's convincing win, Spurs lead the series 2-0.

6. Eight more states -- bringing total to 19 -- have been granted waivers from no-child-left-behind law: the newest eight: Connecticut, Delaware, Louisiana, Maryland, New York, North Carolina, Ohio, and Rhode Island.  In addition, 17 additional states (and DC) have waiver requests in for review. Let's see: 19 + 17 --> 36 states will likely have waivers by the end of this school year. When is a law not a law. Sort of like ObamaCare in which any union of any size, and many states, have ObamaCare waivers. This is the official government list:
Twenty-six new states and the District of Columbia have formally submitted requests to the U.S. Department of Education for waivers from key provisions of No Child Left Behind. This adds to the 11 states that the Obama Administration announced earlier this month had developed and agreed to implement bold education reforms in exchange for relief from burdensome federal mandates.
The latest 26 states—Arkansas, Arizona, Connecticut, Delaware, Iowa, Idaho, Illinois, Kansas, Louisiana, Maryland, Michigan, Missouri, Mississippi, North Carolina, Nevada, New York, Ohio, Oregon, Rhode Island, South Carolina, South Dakota, Utah, Vermont, Virginia, Washington and Wisconsin—along with D.C., have all proposed plans to raise standards, improve accountability, and support reforms to improve principal and teacher effectiveness.

Colorado, Florida, Georgia, Indiana, Kentucky, Massachusetts, Minnesota, New Jersey, New Mexico, Oklahoma and Tennessee have already received flexibility from NCLB based on their locally designed plans to spur education reform. 
Using this list I count 37 states and DC. It appears the only states left are the states with historically high success rates on the SAT and ACT, like North Dakota, Minnesota, and Iowa. I remember taking the Iowa Basic Skill Tests while going to school in Williston, North Dakota. At the time I never understood why we were taking Iowa tests.

I wonder if the EPA will grant waivers for states requesting relief from duplicative fracking rules?

7. The President's Polish Problem. Three thoughts:
a) product of public education
b) president's comment about 57 states
c) no wonder waivers for education law are needed (and freely given, it appears)

Oasis Is Increasing Production in The Bakken -- Filloon

Link here to SeekingAlpha.com.
There are big changes occurring in the Bakken. Many of the producers have a good portion of acreage held by production. This allows for a ramp up of drilling in the best areas. To decrease time drilling and completing wells, pad drilling is be used. Oil companies are also getting comfortable in the play, which is translating to better IP rates. Some of the best IP rates have come from Kodiak. Brigham is using a large number of stages, and allows initial production to run freely. Brigham's results are not as good as Kodiak, but still better than the majority of Bakken operators. Whiting has had some fantastic results in the Pronghorn, but these have been sporadic. I would suspect results will be more consistent going forward.
Oasis: "standard frack recipe" -- 36 stages; 4.5 million lbs proppant.

The first sentence in the article is the most interesting:
Bakken producers continue to improve initial production which will equate to higher EURs.
Yup.

I remember all the discussions about "hyped" IPs and how that story evolved. 

Note: Filloon says that "Brigham's results are not as good as Kodiak, but still better than the majority of Bakken operators."

I believe Filloon bases this statement on the first 90-days initial production average. One can look at the high initial production numbers at this post, scrolling down, and making own conclusions.

Again, the IP is only one data point. 

Nice Selection of Links Regarding Natural Gas

From Independent Stock Analysis.

Tuesday, May 29, 2012

A Fracking Revolution

Back in 2008 some web sites were saying the Bakken was over-hyped. They said that daily production from the Bakken would never amount to much, on  a percent basis of total daily global consumption. They were missing the bigger story: the Bakken as a laboratory.

Proving the point:
Conservative estimates are that oil and natural gas produced through “fracking,” as the process is better known, could amount to 3 million barrels a day by 2020. “We have a revolution here,” said Larry Goldstein, director of the Energy Policy Research Foundation in New York. 'In 47 years in this business, I’ve never seen anything like this. This is the equivalent of a Category 5 hurricane.'
From the Washington Times via Carpe Diem.com

Incidentally, doesn't that 3 million bbls/day sound a bit low? Some predict the Bakken will be producing 1 million bbls/day by then, and the Eagle Ford slightly more. That's more than 2 million bbls/day -- just those two basins.

Hey, on another note, something you can use as cocktail chatter at your next social event. Remember the "Dead Cow" formation? See this post, November, 2011. It turns out that the "Dead Cow" formation in Argentina is mentioned in the Washington Times article.
But the prize for energy companies is potentially huge. Repsol estimated this year that a cross section of the vast Dead Cow formation here in Neuquen province could hold nearly 23 billion barrels of gas and oil. That followed a U.S. Energy Information Administration report that said Argentina possibly has the third-largest shale gas resources after China and the United States.

“All the top-of-the-line companies are here,” said Guillermo Coco, energy minister of Neuquen province, including ExxonMobil, Chevron and Royal Dutch Shell. Although only about 200 wells have been drilled, Coco said companies here talk of drilling 10,000 or more in the next 15 years.
To put this in perspective, some are predicting for the Bakken, 50,000 wells over 20 years

Housekeeping: Another Brooklyn Field Well Reported An IP

21053, 764, CLR, Richmond 1-26H, cum 26K 3/12;

For the entire Brooklyn field list, click here

Heel-To-Toe Siting of Wells -- Whiting in the Sanish

A long time ago I blogged about the radial effectiveness of horizontal drilling -- about a 500-foot radius and blogged about the fact that there was room for 4 to 5 wells across one mile (across one section). That was when "they" were only drilling one well per section. It was the BEXP Olson wells that first got me to blogging about that. To the best of my knowledge, I was the only one publicly blogging about that -- the radial effectiveness -- at that time. Since then, corporate presentations have verified that.

Along that same line, some time ago, I suggested that we would start seeing well siting heel-to-toe and toe-to-heel. I based this on an observation that the frack stages two miles away from the vertical pipe must be quite a challenge, suggesting that production from the distal end of the horizontal was not as good as that more proximal.  Even if fracking is as effective distally as proximally, it just seems the farther one gets away from the vertical, the less effective the "drainage." Tonight I see an example of this heel-to-toe, toe-to-heel siting. There are probably other examples, but this is the first example I've run across.

Go to the Sanish field on the NDIC GIS map server. Then to sections 25-154-92  and 30-154-91. In the former section, there are three wells sited on the far west, and running in a southeasterly direction. Then, something I had not seen before but something I suggested we would see at some point. In the latter section, at the far east are three wells running in a northwesterly direction.

With the scores of Whiting wells in the Sanish I am sure one can find other such examples, but for the most part this is a new phenomenon.

Assuming it is more cost effective to put all wells together on one pad, there must be some reason that Whiting is trying the heel-to-toe, toe-to-heel siting. 

If you search by well name on the NDIC GIS map server:
  • 22156, 1,766, Whiting, Joy TTT 42-30XH, Sanish, t8/12; cum 321K 12/16;
  • 22157, 1,110, Whiting, Theresa TTT 41-30TFX, Sanish, t8/12; cum 126K 12/16;
  • 22500, 483, Whiting, Ben TTT 42-30TFX, Sanish, t6/12; cum 168K 12/16;

Bison Could Be Named National Mammal

Link here to LA Times.
The designation would be strictly symbolic, adding the buffalo to the bald eagle, the rose and the oak tree as official national symbols.

The bipartisan legislation was introduced at the request of the Wildlife Conservation Society,  the National Bison Assn., made up of meat producers, and the Intertribal Buffalo Council as a way to raise public awareness of  the "important cultural, economical and ecological role of the bison,’’ said John Calvelli, executive vice president of public affairs of the Wildlife Conservation Society.
The only "big name" not on the list was Ted Turner, who has probably done more than anyone to popularize bison-burgers. 

Ten (10) New Permits -- The Williston Basin, North Dakota, USA

An unusual daily activity report, today, May 29, 2012 --

Major typographical on the daily activity report. Incorrectly stated that 16 wells sought/approved confidential status, when in fact the 16 wells reported, had just come off the confidential list. It is also interesting to note that just after the most recent Director's Cut suggested "they" were catching up with fracking/completing wells, 8 of the 16 wells (50 percent), were not completed:
  • 19509, 625, KOG, East Grizzly Federal 3-25-36-15H,
  • 20363, 668, CLR, Edward 1-23H
  • 20714, DRL, BEXP, Johnston 7-6 1H,
  • 20180, DRL, Petro-Hunt, Fort Berthold 148-04-30A-31-2H,
  • 21304, DRL, Samson Resources, Stanley 28-21-156-91H,
  • 21397, DRL, Slawson, Wolverine Federal 1-31-30H,
  • 21438, 370, Whiting, Lahti 14-22TFH,
  • 21546, 537, Whiting, Lahti 12-22TFH,
  • 21598, 1,570, Denbury, Johnson 24-31NEH,
  • 21634, 108, Crescent Point, CPEUSC Austin 17-20-158N-99W,
  • 21641, 682, CLR, Rixey 1-28H,
  • 21681, DRL, Chesapeake, Kostenko 30-138-97 A 1H,
  • 21783, DRL, ERF, Rhino 148-04-03A-10-3H,
  • 21824, 814, QEP, MHA 5-05-06H-149-90,
  • 21845, DRL, CLR/Newfield, Bratlien 154-100-33-28-1H: Newfield was the original operator; CLR is now the operator. File report: gas measured up to 4,000 units; no frac data yet;
  • 21932, DRL, Hess, GO-Biwer-157-98-2635H-1,
Ten (10) new permits:
  • Operators: CLR (5), BEXP (3), OXY USA, MRO
  • Fields: Ranch Creek (McKenzie), Alger (Mountrail), Werner (Dunn), Cedar Coulee (Dunn), Banks (McKenzie)
OXY USA has a permit for a wildcat in Dunn County.

Continental Resources has a permits in Ranch Creek, a field of which I am not familiar.
BEXP has permits for a two-well pad in Banks oil field, the heart of the Bakken.
CLR has permits for an Eco-Pad in Cedar Coulee in southwest McKenzie County, a small field with a small amount of activity. There is currently a 2-horizontal lateral-well in this section:
  • 16605, 418, CRL/BR, Dennis 44-8H, Cedar Coulee, t7/07; cum 58K 3/12;

Some Folks Think Bakken Wells Are Expensive ...

First, there are "no" dry holes in the Bakken.

Second, on average, a Bakken well runs about $8 million.

Cuba off-shore?

$100 million.

Dry.

Priceless.

COP In North Dakota: 626,000 Acres; 9 - 10 Rigs

I believe this article was published in a regional newspaper recently (Bismack Tribune?). I don't know if I linked it at the time. I missed some subtleties in the article and need to post it.
ConocoPhillips has 626,000 net acres in the Williston basin with Bakken potential. Plans for 2012 include having 9-10 rigs under contract in the Bakken/Three Forks by yearend, Carroll said. The company has reduced horizontal drilling time by developing new methods and best practices.
First, my data base shows only 460,000 net acres for COP in North Dakota. I update this data base whenever I see acquisitions or divestitures. It's hard to believe I missed COP's growth from 460,000 net acres to over 600,000 net acres.

Also, when North Dakota hit a new record of 217 active drilling rigs, Burlington Resources (the wholly owned subsidiary of COP) showed 8 rigs. The link above says COP intends to move toward 9 - 10 rigs.

Finally, the other subtlety: the spokesman and the article only referenced "COP," and did not mention "Burlington Resources." It is subtle and may mean nothing, or it may mean something significant that will become apparent sometime down the road. But that jump from 460,000 to 626,000 net acres is very, very interesting.

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

P.S. It is very possible there has been no change in COP's acreage in the Williston Basin. Note this at the COP website today:

Williston Basin
The company’s position in the Williston Basin is comprised of 460,000 net acres in Bakken, 183,000 net acres in Cedar Creek Anticline and 4 million net acres in other mineral positions, for a total of 4.6 million net acres in western North Dakota and eastern Montana. The company’s 2010 net production from the basin averaged 31 MBD of liquids and 15 MMCFD of natural gas. Plans for 2011 include an increase in total wells by utilizing five drilling rigs for the full year. The company has successfully reduced drilling time by developing and implementing innovative new methods and best practices.
It is possible that COP now considers the Cedar Creek Anticline as a Bakken play (which I thought it was), which has historically been seen as a Red River play.

A most interesting note regarding the Cedar Creek Anticline is found at this link regarding Encore.

This has also led me to an interesting note here, at the website for Family Tree Corporation:
Oil was first found in the Williston Basin along the Cedar Creek Anticline in southeastern Montana, in the 1920s and 1930s. The basin did not become a major oil province until the 1950s when large fields were discovered in North Dakota. Production peaked in 1986, but in the early 2000s significant increases in production began because of application of horizontal drilling techniques.
A more recent story, April 18, 2012:
In addition to Belle Creek, further north is the Cedar Creek Anticline, which Dover called a "monster field." [Denbury] plans to invest $2.5 billion to recover some 200 million barrels of oil. Cedar Creek Anticline is four miles wide and 100 miles long, "and saturated with oil," said Dover. At its peak, the field will produce 40,000 barrels of oil a day.
Finally, one last link. Note this article was originally published in 2010, but an interesting clarification at the very beginning of the story.  This was back in 2010:
Even though it hovers at the western edge of the Bakken, Baker, Montana is being focused upon as “the hub of the Williston Basin.” Baker is where oil companies are headquartering and where pipelines are intersecting.


Inmates Running the Asylum?

If ever there was a better story ... link here:
Greco said the Clean Air Act requires EPA to determine the mandated volume of cellulosic biofuels each year at “the projected volume available.” However, in 2011 EPA required refineries to use 6.6 million gal of cellulosic biofuels even though, according to EPA’s own records, none were commercially available, Greco said.

US Highway 85 Traffic Increased 124% Year-Over-Year

Link to Dickinson Press.

For newbies, US Highway 85 is the main north-south artery through the Bakken. As active as the traffic is west of Dickinson, it must be even more active in the heart of the Bakken, between Williston and Watford City, farther north.

Random Data Points on The Bakken From the State Via The Dickinson Press

Update

Later, 2:25 p.m.:  This is now a front-page headline, along with Facebook implosion, at Yahoo!Finance front page. The link is dynamic.  Here's the AP story.

Original Post

Link here.

The average Bakken/Three Forks well in North Dakota (some numbers rounded; see link for their data):
  • costs $8 million
  • will produce 540,000 bbls of oil 
  • will produce for 30 years 
  • net profit: $20 million 
  • in taxes: $4.5 million 
  • royalties: $7.5 million 
I remember when I started this blog: many folks said the Bakken was "hyped."

I assume these numbers, if coming from the state, are conservative and based on USGS estimates of 4 billion bbls of recoverable oil. Some oil companies now estimate more than 24 billion bbls of recoverable oil from the Bakken Pool.

South Heart Eyes 200-Unit Crew Camp -- Near The Heart of Whiting's Pronghorn Prospect

Link here to Dickinson Press.
The city has given the go-ahead for construction of a 200-unit crew camp, but the company interested in the project has yet to find a place to build it.

South Heart City Council members unanimously decided May 9 that Texas-based Ameri-Tech Industries, LLC may build the facility.
On the south side of the interstate, South Heart is inside the Zenith oil field

KOG Wells Better Than BEXP -- Filloon -- SeekingAlpha

Link here to SeekingAlpha.

I've never seen a significant error in a Filloon posting, but the subject line doesn't seem to fit the story at the link above. Maybe I'm missing something. The headline suggests a comparison with KOG and BEXP but only BEXP wells are shown. Perhaps one needs to go back to an article on KOG. But the linked article in this story goes back to a BEXP story.

I must be mis-reading the story.

Monterey Shale Near Santa Barbara, California

Link here to Oil & Gas Journal

Several things attracted me to this story, not least of which I enjoyed many wonderful weekend outings with some nice southern California women -- ah, but that was a long time ago, in another galaxy, far, far away.
Underground Energy Corp., Santa Barbara, Calif., will attempt to complete the Monterey shale at the Chamberlin 3-2 well on the 7,750-acre Chamberlin lease in its Zaca field extension project in Santa Barbara County, Calif.
Some data points:
  • Depth: 7,685 feet (somewhat shallower than the Bakken, in general)
  • Cost: budgeted for $2.4 million (well below the $7 million to $10 million for Bakken wells)
  • Payzone in offset well: 1,700 feet (huge); more than 1,200 feet of continuous Monterey oil
  • Typical payzone in this area: 1,100 feet (huge -- the middle Bakken, I believe, is 50 - 100 feet)
  • Original Zaca field: 10-acre spacing; 61 wells
  • Original Zaca field: average IP -- 200 bopd; EURs > 540,000
Another rig in the area will drill to 4,350 feet (much shallower than the Bakken; and will offset two other wells have produced more than 500,000 bbls of oil.

A bit of competition for the Bakken, it appears, and suggests why some operators, like OXY say they have better prospects in California than North Dakota.

Note: I have no formal training in the oil and gas industry; no formal training in geology; I don't follow California oil industry; and I may have misread the story. Check out the link if you plan to make any investment decisions after reading this post.  I am well-known to make errors. This is presented, again, for my benefit and benefit of readers to try to sort out the Bakken.

******************
A Note for the Granddaughters

And speaking of long ago, far away:

Buffy, piaknowguy


A Long Time Ago, Waylon Jennings
And then he met Jessi:

Storms Never Last, Jessi and Waylon
I'm Looking for Blue Eyes, Jessi Colter

Bullish Article on CLR -- SeekingAlpha

Link here to SeekingAlpha.
In other words US expectations this week are set up to be met or beaten. Such an occurrence could allow oil to rally. On top of the above the overall market in general and oil specifically are near over sold levels. They are set up to rally if given half a chance.Big Bakken producer Continental Resources stands to be one of the biggest beneficiaries if such a rally does occur. 
Disclaimer: this is not an investment site. This is not a recommendation to buy, sell, or hold CLR.

Back-of-envelope calculations (numbers rounded); personal use only; absolutely not recommended to be used by anyone else, but as noted in my "Welcome" and "Disclaimer": I use this site for personal notes to try to keep track of things; again this is not to be used by others in making investment decisions; there are way too many fallacies in the numbers. See first comment below to see the first major mistake I made when doing this (even more reason not to pay attention to these numbers (smile):
CLR's market cap: $14 billion
CLR's Bakken acreage: slightly < 1,000,000 acres
Per Acreage/evaluation: $15,000/acre (CLR has significant interests outside the Bakken)

WLL's market cap: $5 billion
WLL's Bakken acreage: 700,000 acres
Per acreage/evaluation: $7000/acre (Whiting has significant interests outside the Bakken)

OAS' market cap: $2.6 billion
OAS' Bakken acreage: 300,000 acres
Per acreage/evaluation: $8,700/acre

KOG's market cap: $2.3 billion
KOG's Bakken acreage: 155,000 acres
Per acreage/evaluation: $15,000/acre

BEXP at time of sale
110 million shares @$36.50/share (?) --> $4 billion (?) -- I don't remember specifics
375,000 Bakken acres
Per acreage/evaluation: $11,000/acre

Twinkies and Fracking

Another great article from PennEnergy.
That wasn’t always the case. Nitrilotriethanol, for instance, is not a compound most people are familiar with. Without a specific reason to be concerned about it, the chemical can be written off in the public consciousness as easily as thiamine mononitrate. It’s just another big word that’s probably not worth worrying about. Of course, one of those big words is used in fracking fluids. The other is an ingredient in Twinkies. But on paper, they’re both big, complex words seemingly uninteresting to the average person. That unfamiliarity and un-interestingness could have kept people from concerning themselves with fracking. Then somebody’s tap water caught fire, and everything changed. 
It's a great article but unfortunately one needs an eighth-grade education to be able to read it to the finish and understand it. 

Tuesday Morning Ramblings -- Absolutely Nothing To Do With The Bakken -- Political Comment

1. Yahoo!Autos had a piece over the weekend about thirteen models that won't be coming back in 2013. For Saab, it will be more than just one model that is not coming back. GM is retiring the entire company. It's not mentioned in the article, but I would not be surprised that the drawdown of US military in Germany and England played at least a small role in the demise of Saab. Both Saab and Volvo had a marketing program targeting active duty personnel stationed in Europe. In addition to bargain prices, buyers of Saab and Volvo could take delivery in Sweden at the expense of the manufacturer. But with the huge drawdown in US military in Germany and England, I imagine Saab lost a lot of dedicated Saab owners.

I bought two Saabs while stationed in England, and ended up driving them both to our next assignment in Germany.

Wow, I loved those cars. We sold one in Germany before we were transferred to Turkey, but brought one Saab with us to Turkey.  The US military would ship American-made cars back to the US, but not foreign-made cars. Saab and Volvo had a similar incentive, if I remember correctly, but there was something in the small print that precluded sending our second and last Saab back to the states.

By the time I got back to the states, the "basic" Saab model had changed so much it hardly reminded me of the Saab I knew, and I no longer had any interest in another Saab. In addition, way too expensive in the states.

2. You know things can't be all that bad in the world when an on-line "front page" article in the Bismarck Tribune notes that the price of party balloons and graduation balloons has almost doubled due to high price of helium.

3. One word: sad. This tells me this guy has no idea what camaraderie is; no idea what "semper fidelis" means; no idea what "hero" means. Men and women who earned these medals for heroism did not think of themselves as heroes, and I doubt any of them were thinking of getting themselves killed, maimed, or injured to insure our freedom. All of them were thinking about one thing: saving the lives of their fellow soldiers, airmen, marines, and sailors. And in most cases, it was probably done instinctively and altruistically.  Anyone who has trouble calling someone a hero who falls on a grenade to save his buddies is incredible naive. Sad.

By the way, Darwinism and the "selfish gene" has great difficulty explaining altruism. 

4. Four words: this doesn't surprise me. Thank goodness for the Drudge Report.

5. It seems so long ago. When the iPad first came out I blogged about all the uses one could find for an iPad. Here's a great story connecting two of my favorite things: Apple and NASCAR.  A lot of great apps are mentioned. Enjoy.

6. Twenty-five (25) people killed overnight in Chicago and it is not widely reported. Am I missing something or do people simply not care about this many people being shot or knifed in one night?

Speaking of being shot and knifed: some stories. In another life I rode with the Los Angeles County (city?) ambulances for a period of time. I remember that we launched as fast as we could when we got the call, but enroute, if learning it was a gunshot injury, the driver immediately slowed down. He wanted the police to arrive first. Smile. Once in the emergency room, the first question the attending/treating emergency room physician asked the gunshot/knifing victim was not a medical question but "how many more casualties were coming in?" The physician was getting ready to triage victims. Relatively less threatening conditions such as appendicitis were given lower priority than gunshot victims. At that time, most gunshot/knifing cases were part of gang-related activity. I remember gang members providing protection to their buddies when the latter were convalescing on the units. I wonder if any of this has changed.

7. I think the refs in the NBA playoffs are getting tired. The technical fouls called in last evening's NBA game between Miami and the Boston Celtics were ridiculous.

8. I've talked about this numerous times: the after-spill actions taken by the government caused much more economic damage than the spill itself. The story will also be linked here

9. Midwest manufacturing booming! From CarpeDiem.

10. Finally, in print, what we've all been thinking: Greece is the laziest, most incompetent nation in the Eurozone

218 -- A New Record -- Active Drilling Rigs in North Dakota

Updates

Later, 2:10 p.m.: 218

Original Post: 217

This is really quite incredible. I would not have expected it. I know "experts" in the field are talking about 225, maybe more, but the "tea leaves" suggested we would be leveling off at 210.

I wonder if the activity in southwestern North Dakota is having an effect?

The link is dynamic.

Selected operators (when the # was 217):
  • Continental Resources: 24
  • Hess: 19
  • BEXP: 18
  • Whiting: 15
  • OXY: 13
  • Petro-Hunt LLC: 13
  • Burlington Resources: 8 
  • KOG: 8
  • Oasis: 7
  • EOG: 7
  • XTO: 7
  • WPX: 6
  • Slawson: 5
  • Fidelity: 4
  • Zenergy: 4
Flashback
added when "we" went to 218

Note: this is what I wrote about the number of active wells in North Dakota a few days ago:

For newbies: the number of active rigs is only one data point reflecting activity in the Bakken.

If the number of active rigs increases, it speaks volumes about activity in the Bakken. All things being equal, we should start seeing a decrease in the number of rigs in the Williston Basin:

  • more operators are going to multiple well pads, decreasing the need for rigs
  • when this all started, it was not unusual for an operator to take 45 days to reach total depth; now, if it takes longer than 25 days, there's a problem (this is for a Bakken horizontal well; non-Bakken vertical wells will reach total depth in a matter of a few days)
  • when this all started, operators were predominantly drilling short laterals, thus two wells for every two sections; now routinely, they are drilling long laterals (one well for every two sections)
  • several major operators have announced they will reduce the number of rigs in the Bakken
  • some operators are moving their rigs across the state line to Montana (not counted in my total)
  • some operators have to get their rigs to other plays, such as the Eagle Ford in Texas, to save their leases; most (?) of the leases in North Dakota are now held by production and drilling in some areas would not be needed to hold leases
At the end of the day, it's not the number of rigs that is important, it is the number of bbls produced.

However, each rig is said to represent about $10 million in drilling and completing, much of which goes toward personnel costs, and much of which stays within the state.

China Buying Up Oil Assets In the Americas -- CNN

Link here to CNNMoney.

Regular readers are well aware of this activity. But this is a nice article providing an update.
Much of China's energy and natural resource buys have been in unstable places -- Southeast Asia, the Middle East, Africa.

The Americas region is arguably much more stable than any of those regions. That's an attractive prospect for a country that relies on a steady flow of resources.

The Americas are also in the midst of an energy boom. From oil sands production in Canada to shale gas in the United States to promising deepwater finds off Brazil, the Americas are quickly becoming an energy powerhouse.

NGLs, Petrochemicals and Cracking -- RBN Energy

Link here to RBN Energy, Part I.

Part II.  

Link here to RBN Energy, Part III.  

Part IV

Part V.

Monday, May 28, 2012

New Poll: Which Company Would You Like to Drill Your Well?

Results of the most recent poll: with regard to the news that Enbridge will reverse the Seaway, slightly more than 60% felt this was good news for "WTI/Bakken."  Twenty percent said it would have no effect; and slightly less than 20 percent said they did not know what the reversal was all about when they voted. In other words, folks who knew about the Seaway reversal thought this was good for WTI/Bakken -- overwhelmingly so.

The reversal has hardly begun, but to the best of my knowledge, there has not yet been much change, but it's probably too early to judge. We'll check back on this in six months or so, if I remember.

I am really excited about the new poll. Whether or not you own mineral rights, I'm curious about this: if you had mineral rights to lease, which company would you prefer to drill "your" well? There are some "nuances" here -- it's not as straightforward as one might think.

216 Active Rigs in North Dakota -- New Record -- Happy Memorial Day

Quite astounding, 216 active rigs.

I would not have predicted much above 210 even as recently as a few weeks ago. I've talked about that before.

Huge "thank you" to a reader. I might have missed it.

216 rigs. So much for all that concern about drilling slowing down in the Bakken.  Note: the SeekingAlpha article linked at that site is about two months old.

At the end of the day, the number of rigs is simply one data point. A more important data point is the total monthly production. 

Sunday, May 27, 2012

Gathering and Processing Bakken Gas Economic

Director's Cut for May, 2012, is now on-line.

Is this first time I've seen the following posted in the Director's Cut? "The high liquids content makes gathering and processing of Bakken gas economic."

Director's Cut: May 25, 2012 -- Bakken Gas Economic

Link here.

First time I've seen this comment in the Director's Cut: "The high liquids content makes gathering and processing of Bakken gas economic."

Production hits all-time high in North Dakota (again):
  • Feb, 2012, oil: 558,558 bopd 
  • Mar, 2012, oil: 575,490 (NEW all-time high)
  • Feb, 2012, producing wells: 6,726 
  • Mar, 2012, producing wells: 6,921 (NEW all-time high)
Permitting
  • Feb, 2012: 168
  • Mar, 2012: 181 (all time high: 245, 2 Nov 10)
Pricing
  • Mar, 2012: sweet crude,  $76.29
  • Feb, 2012: sweet crude, $83.26
  • Jan, 2012: sweet crude, $88.09
  • Dec, 2011: sweet crude, $88.75
  • Nov, 2011: sweet crude, $88.54
Director's comments:
The 6.5 minute horizontal drilling/hydraulic fracturing video used in the Bakken Basics presentations is available for free at http://www.voyageroil.com/drilling (requires Real Player)
EPA
Lengthy comments on federal regulation of fracking. See linked document.

When Did They Know? and, What Did They Know?

Back in April, 2011, I posted a story about the record bonuses being paid for leases in the Belfield, North Dakota, area. At the time, I opined it was the Tyler they were interested in along with the Three Forks. At the time state officials were talking about the huge number of rigs that would eventually target the Tyler. Now those same officials and others are talking about 500 wells between Belfield and Dickinson targeting another formation, along with the Three Forks formation.

We now know about Whiting's Pronghorn Prospect in this area, and the Pronghorn Sand which could be the best payzone in the Bakken

One has to wonder whether the Whiting folks knew about the Pronghorn Sand back in April, 2011, when lease bonuses were setting records.  It takes awhile to put a "prospect" together, I would assume. Something tells me the Whiting folks knew they were sitting on something huge. It certainly explains the record amounts paid for the leases.

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

With no activity reports to review over the 3-day weekend, I had a bit of free time to study more closely the area between  Dickinson and Belfield, the area of Whiting's Pronghorn Prospect. I don't have any significant news, just idle chatter. It is amazing how many wells have been drilled and permits pending about 15 miles northwest of Dickinson where I first noted an interesting string of Whiting wells, and first blogged about them in January, 2011, almost a year-and-a-half-ago.  A lot has happened in the meantime. It now explains why Target Logistics wanted to place a man-camp in that area (the one that was denied by local officials and caught my attention). It now explains why there is talk of one of the largest (if not the largest) crew camps in North Dakota going up in the Dickinson area. It is interesting that MDU and Whiting have partnered on an oil and gas gathering system in the area. It suggests that the gathering system is going to be quite huge, considering that two major players have partnered.

Whiting's annual report mentioned that the company, in January, 2012, had completed a 7-mile oil pipeline connecting the Pronghorn Prospect with the Bridger Four Bears system. Regardless of whether they specifically knew this was a "new" formation, this suggests to me they knew they were sitting on something big.

I have said often that the center of activity for 2012 will be northeastern McKenzie (moving west from EOG's Parshall field and Whiting's Sanish field). But in 2013, the center of activity is going to be the area between Belfield and Dickinson. It is simply amazing to watch this all develop.

Reminder: The NDIC Oil Fields Inside Whiting's Pronghorn Prospect

For newbies: think of Whiting's Pronghorn Prospect as the company's "new Sanish" in the southwest. The prospect is located on either side of the interstate between Dickinson and Belfield.

The Pronghorn Sand is a formation which is between the middle Bakken and the Three Forks formations.

I assume the oil journals have articles on the Pronghorn Sand. If Ifind any articles, I will link them.

Whiting's most recent corporate presentation says they are targeting the Pronghorn Sand in their Pronghorn Prospect (not mentioning the Three Forks), but yet a number of Pronhhorn Prospect wells were said to have targeted the Three Forks.  Because I am not a geologist, I won't add my thoughts.

Whiting now designates middle Bakken wells with a simple "H"; the Three Forks wells with "TFH"; and, Pronghorn Sand wells are designated with a "PH."

These are the oil fields inside Whiting's Pronghorn Prospect (my best guess; will be updated as new information flows), but consider the area between Dickinson and Belfield, especially north of the interstate as the area of the Pronghorn Prospect:
Pronghorn Prospect, north of I-94, between Dickinson and Belfield
  • Whiskey Joe -- nw of Park, Park west of Bell
  • Bell -- north of Belfield
  • Park -- east of Bell
  • North Creek -- between Bell and New Hradec
  • New Hradec -- east of Bell, ne of Zenith
  • Dutch Henry Butte -- east of New Hradec
  • Green River -- east of Belfield, north of Zenith, north of I-94; west of Dickinson
Pronghorn Prospect, south of I-94, west of Dickinson
  • South Heart -- south of Dutch Henry Butte -- south of I-94; west of Dickinson
  • Zenith -- south of Bell, east of Belfield; west of South Heart; south of I-94; west of Dickinson
  • Gaylord -- south of Belfield; south of the interstate; west of Zenith
  • Fryburg -- sw of  Belfield; west of Gaylord
  • Davis Creek -- sw of Belfield; south of Fryburg; southwest of Gaylord oil field
 **********************

A Note For and About the Granddaughters

In 2004 I began an aggressive reading program. I had not read for pleasure since college but in 2004, near the end of my Air Force career, when I thought I was done with traveling, I was sent overseas to a remote air base.

The commander set me up in a very nice room on base and the first thing I did to combat the loneliness was to start reading. I remember the commander walking into my room shortly after I had arrived; he was shocked to see a stack of books about four feet high. On the weekends I walked many, many miles in the countryside, but during the week I read books in the evening for pleasure.

That aggressive reading program has continued. You can see a small part of my library at one of my other blogs. I go through different phases. I went through a Virginia Woolf phase, and then an Anaïs Nin phase, a James Joyce phase, and eventually an Ernest Hemingway phase. I had never appreciated Hemingway; in fact, I don't ever recall reading anything of his until recently. Of all the biographies involving Hemingway, the one I enjoyed the most was the one written by his third wife, Martha Gellhorn. I am thrilled to see that someone else was intrigued by the relationship and has produced a movie, Hemingway and Gellhorn, to be shown on HBO sometime later this month. We don't 'get" HBO and I won't see the movie when it first comes out (if I ever see it) but that's fine. I have my own "myth" of those two and don't want to have a movie disrupt/distort it.

I am thrilled that the older granddaughter, age 8, is a voracious reader and retains "everything" she reads. The five-year-old is just beginning to read and one gets the feeling she will pick up reading even more quickly than the first one did and become just as much a reader. We all spend a lot of time reading together, and as they get older, the group reading becomes even more enjoyable.

Canadian Oil Production Could Reach 6 Million BOPD by 2020

Independent Stock Analysis alerted me to this story: Canadian oil production could hig 6 million bopd by 2020.

For comparison, in round numbers, Saudi Arabia currently produces about 10 million bopd.  Russia, slightly more, and the US slightly less (than Saudi Arabia). A nice quick reference here.

Saturday, May 26, 2012

Kostelecky: The Rest of The Story -- And It's a Great Story -- The Bakken, North Dakota, USA

Remember these wells? A photo op here.
  • 19264, 595, Fidelity, Kostelecky 31-6H, near South Heart, west of Dickinson; 
  • 19685, conf, Fidelity, Kostelecky 5-8H, Heart River, Stark County, 15,000 bbls in April, 2012; unknown number of days of production; waiting to report IP;
Joe Kostelecky has quite a story to tell. I would assume the wells are named for a family member.

The Bismarck Tribune has a wonderful story on Mr Kostelecky.

My hunch is we will see a lot of these kinds of stories over the next fifty years.

OPEC Spare Capacity in 1Q12: Lowest Since 2008

Updates

May 26, 2013: Internal clash in OPEC over American shale oil production. Nigeria has a huge concern. 

October 7, 2012: it is now generally agreed that Venezuela has passed Saudi Arabia in proven reserves; if accurate Venezuela is now #1 in the world for proven reserves;
According to studies, Venezuela has overtaken Saudi Arabia to become number one in the world for proven oil reserves, largely thanks to the heavy crude found in this vast alluvial plain.
According to a report this year by BP, Venezuela has reserves of 296.5 billionbarrels, about 10% more than Saudi Arabia and 18% of the global total. At the country's current levels of production, this would last about 100 years.  
Original Post
Independent Stock Analysis alerted me to this little gem.
The U.S. Energy Information Administration (EIA) estimates that global spare crude oil production capacity averaged about 2.4 million barrels per day (bbl/d) during the first quarter of 2012, down about 1.3 million bbl/d from the same period in 2011 (see chart above). The world's spare crude oil production capacity is held by member countries of the Organization of the Petroleum Exporting Countries (OPEC). There is little or no spare capacity outside of the OPEC member countries.

Spare crude oil production capacity is now less than 3% of total world crude oil consumption—the lowest proportion since the fourth quarter of 2008—based on EIA estimates. 
Link here to the full story

Regular readers know this fits my worldview. See Forbes/Sosnoff one year ago. Shell's John Hofmeister may not get the exact price point, but he's got the right trend, the right worldview.

There may be a reason Saudi is stockpiling 80 million bbls of crude offshore

Huge thanks to ISA.

Friday, May 25, 2012

Week 21: May 20 -- May 26, 2012

How important was the Bakken? --> energy independence for the US

API: North Dakota is an energy juggernaut; federal leases down

EURs in the Bakken -- Filloon

Filloon Updates BEXP wells in 1Q12 and talks about IPs

Key Energy Services to build $5 million complex in Williston

Mainstream media: yes, it could be 900 billion bbls OOIP

Whiting's Pronghorn Sand could be best payzone in the Williston Basin

Chesapeake to see southern DJ assets

Housing growth in Willison, Minot, photos, great article

Target Logistics to add more units in the Bakken; mostly in Williams County

Billings County (southwest North Dakota) to get is first crew camp 

Growth in Divide County -- northwestern North Dakota -- explosive

Permitorium in North Dakota -- just a matter of time

New record: 215 active rigs in North Dakota

Update, case 16110: ten wells in one spacing unit

Commentary: why each additional rig speaks volumes for oil activity in the Bakken

Commentary: Yes! Let's duplicate fracking regulations now

Commentary: coal is the new "alternative" energy 

Commentary: the price of oil, Canada, and another perfect storm

Photos of TransCanada XL Pipeline Stacked at Gascoyne, ND; hints of another crude-by-rail terminal

North Dakota oil production could match that of Texas -- in the short term; unlikely, but possible

Staggering statistics from the Bismarck Bakken Conference

Magnum Hunter to buy Baytex' Nonoperated assets in North Dakota

Billions of dollars in shovel-ready jobs -- if only.....

It's Kinder Morgan's Trans Mountain Pipeline -- not the TransCanada Keystone XL -- the markets aren't waiting for the US to act

MDU subsidiary buys half of Whitings gathering system in southwest North Dakota 

Takeaway capacity in the Bakken: breakdown by rail, pipeline, truck 

Crude-by-rail: Crescent Point Energy

Oil flowing from Cushing to the gulf via the Seaway

Full-cost accounting vs successful-efforts accounting in the oil industry

Data points from Bismarck oil conference

Link to site for those seeking jobs in the Bakken

Permitorium in the Bakken: if the EPA gets its way

Japanese line up for American shale gas 

OPEC 1Q12 spare capacity lowest since 2008