Friday, August 31, 2012

Buffalo Wild Wings Coming To Williston

According to the Williston Wire.

Will break ground September 4, 2012.  To open sometime around February 1, 2013.

Will be located south of Herman Oil Convenience Store.

Lukoil, Russia's Biggest Independent Oil Producer Reports Decreasing Production

The story at the link emphasizes the financial side of the story.

I think the bigger story is yet another large producer reporting decreasing oil production.
Lukoil Holdings, Russia's biggest independent oil producer, expects to reverse falling output and start increasing hydrocarbon production from 2013 or 2014, the company's vice president said Friday.

Lukoil has long been fighting output decline, but has now managed to stabilize production in its main region of West Siberia. Output in the region grew 0.5% in the first half of 2012 compared with the same period for last year due to the introduction of new drilling technology, Mr. Fedun said.

Lukoil, Russia's second-biggest producer, said total hydrocarbon production was down 0.8% on the year in the second quarter to 2.14 million barrels of oil equivalent per day. Crude output was down 1.9%.
Just a random data point to ponder. 

Chesapeake Squeezes Mineral Owners -- Cash Crunch

Link here to Bloomberg.

I blogged about transportation costs a very long time ago related to another story. I doubt I can find that link again. It had to do with natural gas royalties in the Haynesville, if I remember correctly, or it might have been the Barnett. ... Ah, yes, here it is .. I found it on the first "blog search." I'm impressed with the search engine! Back on August 11, 2011 -- more than a year ago -- I blogged about it! Yes, nothing new under the sun.

But here's another reminder for mineral rights owners and transportation costs associated with "their oil."
As gas prices were heading toward a 10-year low in April, Chesapeake began reinterpreting in its favor thousands of contracts with landowners from Pennsylvania to Texas that own the 1 trillion cubic feet of gas the company produced last year, according to interviews and documents reviewed by Bloomberg. Chesapeake, arguing that other contract language allows for cost deductions, is fighting more than a dozen lawsuits.
I posted my initial thoughts at the second link above.

I guess that's the good news for North Dakota folks who have leases with Chesapeake: for the most part they are not paying transportation costs for oil. If they are, it can't be much. 

Update on Schlumberger Fracking Technology: Hiway

Link here.

I talked about Schlumberger Hiway fracking a long time ago.  That posting has been one of my most visited sites; this should be of interest to those looking for an update.
So how does Hiway work?

Hodenfield, who grew up in North Dakota where the Bakken field is at the centre of the U.S. shale gas boom, brightens at the opportunity to explain a process that adds a proprietary fiber to the traditional sand and fluid mix, and uses a "pulsing" system to send globs of the fiber in between each injection.

The dissolvable fiber globs create more effective channels for the gas to flow, and the pulsing rhythm can be made to match the geological structure of the rock, also pushing the sand deeper into the cracks and resulting in more effective openings that conduct gas better for every liter pumped in.
Hiway is not the only new technique on the scene as oil companies look to use fracking to reach more lucrative oil as well as gas.

Schlumberger and other innovators are also using sophisticated seismic techniques, combined with data from pilot wells, to reduce the number of fracks along a drill pipe and target only the "sweet spots" in the field.
This is one of the better articles on fracking I have seen in a long, long time, updating the technology now being used, in a language I can understand.

Go to the link; there's a lot more information there.

A huge "thank you" to a reader for sending me this link.

Australian Government Suspends Fracking -- "Moratorium" Is The Exact Word Used

Link here to Oil and Gas Journal.
The Victorian government imposed a moratorium on hydraulic fracturing pending legislative changes to implement new standards for the oil and gas industry.

The ban is not expected to impact any current leaseholders.

Victorian Resources Minister Michael O’Brien said the hold would remain effective until implementation of a national regulatory framework for regulating coal seam gas and fracing.
The ban is not expected to impact any current leaseholders. We are from the federal government. We are here to help.

Twenty (20) New Permits; WPX With Permits for Seven Wells In One Section; KOG With Permits for Two 3-Well Pads -- The Bakken, North Dakota, USA

Oil moved up nicely today, up about 1.5% -- for whatever reason. I know RBN Energy said Isaac hit oil harder than natural gas, but with recent news, I did not expect oil to move up today. 

Active drilling permits: 192

One producing well was reported as completed:
  • 19796, 563, CLR, Magnuson 1-19H,
No wells came off the confidential list today, but a lot of new permits. It is not often that it takes two pages for all the permits, but this time, they had to start a second page.

Twenty (20) new permits
  • Operators: WPX (7),  Hess, OXY USA, BEXP (2), KOG (6), BR (3)
  • Fields: Blue Buttes (McKenzie), Poe (McKenzie), Alger (Mountrail), Murphy Creek (Dunn), Lone Tree Lake (Williams) Mandaree (Dunn)
All seven WPX permits are for the same section; it looks like KOG has permits for two 3-well pads.

Two Random Data Points Regarding Apple -- Absolutely Nothing To Do With the Bakken

First, the bad news: component delays are complicating Apple's timed roll-out schedule. A speed bump.

Second data point: Apple's desktop computer penetration is probably about six (6) percent -- I've long lost the bubble on that. But in the mobile device market, Apple is king. So it was shocking (at least to me) to see that shortages of 27-inch iMacs are hitting Apple retail stores.
Our survey of Apple's retail stores shows that 120 out of the 249 U.S. locations are currently out of stock of the base 27-inch iMac model, with 135 locations being out of stock of the high-end configuration. Most of the stores are quoting a pickup date in the range of September 4-7, indicating that Apple will be able to deliver new orders for pickup fairly quickly, although some locations are quoting availability for as far out as September 11.

As with the shortages seen so far at resellers, Apple's shortages appear to be limited to the 27-inch models, with the 21.5-inch iMac continuing to be widely available at the company's retail stores. In our survey, we found only seven Apple retail store locations currently out of stock of the base 21.5-inch iMac model, all of which could offer pickup in the range of September 4-7. 
It's possible that Apple is holding back on production, pending an update of this desktop computer.  Be that as it may, this is why I find it interesting: everything I read suggests the economy is doing poorly. I disagree: compared to what?

I've argued that the gap between the haves and the have-nots is widening. I've also argued that many analysts have not adjusted to the "new" economy. the economy is doing poorly for some; not so poorly for others.

The desktop iMac comes in two sizes, the 21.5-inch and the 27-inch.  The 21.5 inch is very, very inexpensive at just $1200, which the "haves" will pay off in less than six months, many paying in full the day they buy it. But Apple retail stores do not have any shortage of these less expensive models.

The 27-inch is significantly more important, and doesn't offer much more than the lower-priced iMacs except for the hugely insane bigger screen. The "haves" are willing to pay almost double for the larger screen, at $2,000.

That surely is not evidence that the economy is doing poorly, at least for Apple.

Hyperbole Or Some Legitimacy To This Unbridled Enthusiasm?

Link here.
“We’re starting to see the evidence of real oil wells,” he said. “The reservoir is flowing oil in commercial quantities.”

Based on the early results from Marlboro Township, drilling in eastern Ohio’s Utica shale formation might surpass the much-touted Eagle Ford shale in Texas, Houser said.

“The Frank well actually looks better than very early stage Eagle Ford wells,” he said.

Until recently, Carroll and Harrison counties were Ohio’s Utica shale drilling hot spots for natural-gas liquids. Now drillers are looking a little farther west in a search that probably will bring increasing interest in an area, called a window, under the ground of Stark, Tuscarawas, Guernsey and Noble counties.
This is in Stark County, Ohio.  Not to be confused with Stark County in North Dakota.

A big "thank you" to "anon 1" for alerting me to this link.

My hunch: thinking Buckeyes won't want to ban fracking. And they won't want the Feds butting in.


For Newbies: A Quick Look Where the Bakken Is Headed: S T A G G E R I N G

Link here.  (regional links break early and break often)

How many wells in a 1280-acre spacing unit: the number could be in the teens -- Director, NDIC.
In fact, Helms says the state just issued a permit for the largest drilling pad in the state history - a pad to allow many wells at one site.

"We just permitted for Contininental Resources the largest oil pad we've permitted so far just outside of Williston, it's got 14 wells and will extract the oil from the Missouri River bottoms where there was flooding last year."
A bit of inconvenience for awhile:
He admits that for the people living along a road where there once was one well and will someday be a dozen or more are going to be unhappy with the thousands of trucks that'll have to travel that road. But he says the bigger picture is that the state will be able to keep multiplying its oil production while keeping the adverse impact on the countryside as small as possible.
This is from today's posting of what operators are asking to drill in the future:
  • 18670, CLR, Oakdale-Bakken, 18 wells on each existing 1280-acre unit; Dunn
  • 18671, CLR, Elm Tree-Bakken, 18 wells on each existing 1280-acre unit; McKenzie
  • 18672, CLR, Antelope-Sanish, 18 wells on an existing 1280-acre unit; McKenzie
  • 18621, Hess, Alkali Creek-Bakken, 10 wells on each 1280-acre unit, and 20 wells on each 2560-acre; McKenzie, Mountrail, Williams
  • 18622, Hess, Robinson Lake-Bakken, 10 wells on each 1280-acre unit, and 20 wells on each 2560-acre; McKenzie, Mountrail
  • 18623, Hess, Alger-Bakken, 10 wells on each 1280-acre unit, and 20 wells on each 2560-acre; McKenzie, Mountrail
  • 18624, Hess, Manitou-Bakken, 10 wells on each 1280-acre unit; Mountrail, Williams
  • 18625, Hess, Big Butte-Bakken, 10 wells on each 1280-acre unit; Mountrail
  • 18626, Hess, Baskin-Bakken, 10 wells on each 1280-acre unit; Mountrail
  • 18627, Hess, Beaver Lodge-Bakken, 10 wells on each 1280-acre unit;  Williams
  • 18628, Hess, Capa-Bakken, 10 wells on each 1280-acre unit; Williams18629, Hess, Hofflund-Bakken, 10 wells on each 1280-acre unit; Williams, McKenzie 
  • 18781, EOG, Squaw Creek-Bakken, 3 wells on each existing 320-acre unit; McKenzie; this translates to 6 wells on a section -- remember, at one time, folks in Williston were talking about one (1) well in each section would be exciting
By the way, I've argued that larger spacing units are good for everyone. When I took a poll, I was in the minority. Maybe some day I will get around to explaining why larger spacing units are good for everyone. My assumption is that over time, folks will figure it out for themselves.

The Permitorium Continues

Updates

September 3, 2012: EPA grants "relief" to Shell; diesel engines on boat being used in the Arctic won't face fines. Shell still needs the permit to drill "the 4,000 feet."

Original Post
The federal government grants permits to drill one exploratory well in pieces: a permit for 1,400 feet; a permit for 4,000 feet, and so on.

The theater of the absurd.
Royal Dutch Shell Plc said it will be difficult to complete an exploratory well in the Chukchi Sea off Alaska this year even after the company received a permit to begin limited preparatory work.  
Shell will be allowed to drill 1,400 feet under the seabed with the permit granted yesterday by the U.S. Interior Department.  
The company still needs U.S. Coast Guard approval for a spill-containment barge before a permit can be issued to drill about 4,000 feet deeper, into oil reservoirs.  
For the company that spent $4.5 billion to explore the Chukchi and Beaufort seas time is running out -- it takes at least 20 days to complete a well and Shell has to stop drilling in the oil-bearing zone in theChukchi Sea by Sept. 24.  
The company asked for an extension, a request the Interior Department said it is still considering. Completing a well in the Chukchi “will be very, very difficult without the extension,” Pete Slaiby, Shell’s head of Alaska operations, told reporters during a conference call from Anchorage yesterday.
Can you imagine if North Dakota required a permit for the vertical hole, another permit for the curve, a third permit for the horizontal leg, and then a fourth permit for fracking? One could then add a permit for flaring; a permit for putting up porta-potties: one for men; one for women; one for undecided.

Ayn Rand would shrug if she were alive.

Hearing Dockets, September, 2012 -- NDIC -- North Dakota

POSTED BUT NOT PROOFREAD

I assume there are typographical errors.


Wednesday, September 26, 2012

18576, Hess, et al, Ellsworth-Bakken, proper spacing, McKenzie
18577, Crescent Point, et al, Wheelock-Bakken, proper spacing, Williams
18578, Hess, Banks-Bakken, establish 2 1280-acre units; 6 wells each; 12 total, Mckenzie, Williams
14935, cont'd
16890, cont'd
18579, Whiting, establish a 320-acre unit; 1 vertical well; Golden Valley
18580, Whiting, Ash Coulee-Bakken, establish 2 1280-acre units; 4 wells each; 8 total; Billings
18581, Whiting, Camel Hump-Red River, establish 1 320-acre unit, 1 vertical well; establish 1 480-acre unit, one horizontal well; 2 total; Golden Valley
18582, Enerplus, et al, South Fork-Bakken, proper spacing, Dunn
18583, KOG, Twin Buttes-Bakken, designate 4 1280-acre units as separate units, allowing 4 hz wells each; 16 total; Dunn
18584, Liberty Resources, et al, Tyrone-Bakken, proper spacing, Williams
18216, cont'd
18585, BR, Sand Creek Pool, establish 2 2560-acre units; 14 wells each; 28 wells subtotal; establish 2 overlapping 2560-acre units, 1 well each, 2 subtotal; 30 wells each but option for more
17778, cont'd
18218, cont'd
18220, cont'd
18221, cont'd
18223, cont'd
18586, MRO, Reunion Bay-Bakken, establish a 2560-acre unit, 11 additional wells; Mountrail, McKenzie
18587, MRO, McGregory Buttes-Bakken, establish 1 spacing unit, 2665.81 acres more or less, 3 hz wells; or alternate option; Dunn
17358, cont'd
17779, contend
18034, cont'd
15676, cont'd
16125, contend
18588, Grit Industries, to allow a boiler to be located closer than 150 feet to oil tanks
18589, TD Services, to operate mobile treating plants
18590, Marquis Alliance, construct an oil treating and oilfield waste treating/processing facility in Divide County
18591, Marquis Alliance, construct an oil treating and oilfield waste treating/processing facility in Williams County
18592, Marquis Alliance, construct an oil treating and oilfield waste treating/processing facility in McKenzie County
18593, Marquis Energy, SWD, Wickum SWD 1, Tyrone Field, Williams
18594, Cornerstone, SWD
18595- 18606, Petro-Hunt, pooling
18607 - 18611, MRO, pooling
18612, Hess, Lone Tree Lake-Bakken, 2 wells on a 1280-acre unit; Williams
18613, Hess, Elm Tree-Bakken, 8 wells on a 1280-acre unit; McKenzie
18614, Hess, Westberg-Bakken, 8 wells on 2 1280-acre units; 16 total; McKenzie
18615, Hess, Antelope-Sanish, 8 wells on a 1280-acre unit, McKenzie
18616, Hess, Siverston-Bakken, 8 wells on a 1280-acre unit, McKenzie
18617, Hess, BlueButtes-Bakken, 8 wells on a 1280-acre unit, McKenzie
18618, Hess, Little Knife-Bakken, 8 wells on 4 1280-acre units; 32 total, Dunn
18619, Hess, Lake Ilo-Bakken, 6 wells on a 1280-acre unit; Dunn
18620, Hess, Saxon-Bakken, 2 wells on a 1280-acre unit; Dunn
18621, Hess, Alkali Creek-Bakken, 10 wells on each 1280-acre unit, and 20 wells on each 2560-acre; total: too many to count; McKenzie, Mountrail, Williams
18622, Hess, Robinson Lake-Bakken, 10 wells on each 1280-acre unit, and 20 wells on each 2560-acre; total: too many to count; McKenzie, Mountrail
18623, Hess, Alger-Bakken, 10 wells on each 1280-acre unit, and 20 wells on each 2560-acre; total: too many to count; McKenzie, Mountrail
18624, Hess, Manitou-Bakken, 10 wells on each 1280-acre unit; total: too many to count; Mountrail, Williams
18625, Hess, Big Butte-Bakken, 10 wells on each 1280-acre unit; total: too many to count; Mountrail
18626, Hess, Baskin-Bakken, 10 wells on each 1280-acre unit; total: too many to count; Mountrail
18627, Hess, Beaver Lodge-Bakken, 10 wells on each 1280-acre unit; total: too many to count; Williams
18628, Hess, Capa-Bakken, 10 wells on each 1280-acre unit; total: too many to count; Williams
18629, Hess, Hofflund-Bakken, 10 wells on each 1280-acre unit; total: too many to count, Williams, McKenzie
18630 - 18634, Hess, pooling
18635, Murex, Rawson-Bakken, 4 wells on 1 1280-acre unit; McKenzie
18636 - 18639, OXY, pooling
18640, Oasis, Painted Woods-Bakken, 8 wells on each 1280-acre unit; 6 wells on each 960-acre unit; Williams
18641, Oasis, Bull Butte-Bakken (Kalil field), 8 wells on each 1280-acre unit; Williams
18642, Oasis, Todd-Bakken (Williston field), 8 wells on each 1280-acre unit; McKenzie, Williams
18643, Oasis, Eightmile-Bakken, 8 wells on each 1280-acre unit, McKenzie, Williams
18644, Oasis, Camp-Bakken, 8 wells on each 1280-acre unit and each 1600-acre unit, McKenzie, Williams
18645, Oasis, Indian Hill-Bakken, 8 wells on each 1280-acre unit; McKenzie, Williams

Thursday, September 27, 2012

18646, NDIC, establish or alter spacing units in the Bakken Pool for selected sections/townships in McKenzie County
18647, legalese, risk penalty involving several Midnight Run wells; McKenzie
18648, Clean Energy, construct a treating plan, McKenzie
18649, GADECO, Epping-Bakken, 6 wells in a 1280-acre unit, Williams
17830, cont'd, a QEP case; lots of activity
18650, Triangle, revoke a Zenergy permit
18651, Triangle, revoke a Zenergy permit
18652, Triangel, Bull Butte-Bakken (Kalil field), establish a 1280-acre unit; and, establish a 640-acre unit, unspecified number of wells;
18653, Triangle, to establish temporary spacing for development of an oil pool discovered by the Dwyer well; McKenzie
18473, cont'd
18654, Oasis, et al, Black Slough-Bakken, proper spacing, Burke
18692, cont'd
18655, BEXP, Briar Creek-Bakken, proper spacing, McKenzie, Williams
18656, BEXP, et al, East Fork-Bakken, redefine field limits; Williams
18657, BEXP, Williston-Bakken, flaring, Williams
18658, BEXP, Cheryl well; exceptions to field rules, McKenzie
18659, BEXP, Elk-Bakken, establish an overlapping 1280-acre unit, 1 well; McKenzie
18660, BR, et al, Cabernet-Bakken, redefine field limits; Dunn
18661, CLR, Edge-Bakken, redefine field limits; McKenzie
18662, CLR, et al, Lindahl-Bakken, redefine field limits, Williams
18663, CLR, Northwest McGregor-Bakken, redefine field limits, Williams
18664, CLR, et al, Oliver-Bakken, redefine field units; Williams
18665, CLR, establish temporary spacing for development of an oil field discovered by the Berlain well, McKenzie
18666, CLR, Hebron-Bakken, alter definition of the Stratigraphic limits of the pool, Williams
18667, CLR, Squires-Bakken, alter the definition of the Stratigraphic limits of the pool, Williams
18668, CLR, Hamlet-Bakken, alter the definition of the Stratigraphic limits of the pool, Divide, Williams
18669, CLR, Oakdale-Bakken, alter the definition of the Stratigraphic limits of the pool, Dunn,
18670, CLR, Oakdale-Bakken, 18 wells on each existing 1280-acre unit; Dunn
18671, CLR, Elm Tree-Bakken, 18 wells on each existing 1280-acre unit; McKenzie
18672, CLR, Antelope-Sanish, 18 wells on an existing 1280-acre unit; McKenzie
18673, CLR, Rattlesnake-Bakken, establish an overlapping 1920-acre unit, 6 wells; Dunn
18674, CLR, Jim Creek-Bakken and/or Rattlesnake Point; establish an overlapping 1920-acre unit; 6 wells; Dunn
18675, CLR, Indian Hill-Bakken, flaring, Williams, McKenzie
18450, cont'd
18452, cont'd
15524, cont'd
18676, Slawson, Big Bend-Bakken, establish an overlapping 1280-acre unit, 5 wells; Mountrail
18677, Slawson, Sanish or Van Hook-Bakken, establish an overlapping 1280-acre unit, 5 wells; Mountrail
18678, Slawson, Sanish or Van Hook-Bakken, establish 2 overlapping units (approx 924 acres, and 919 acres); 5 wells; Mountrail
18679, Slawson, Big Bend-Bakken, exception to field rules for the Coyote well
18680, Flatirons Resources, South Pleasant-Madison, redefine field limits, Renville County
18681, Hunt, Wolf Bay-Bakken, proper spacing, Dunn
18682, Zenergy, Pronghorn-Bakken, establish 2 1280-acre units; 1 well each, McKenzie
18683, Ballantyne, file for bonds, Revile
18684, Behm, create a 320-acre unit, Mackenzie
18685, Corinthian, Northeast Landa-Spearfish/Madison; establish several 320-acre units; establish several 160-acre units; multiple horizontal wells on each unit; Bottineau
18686, Fidelity, New Hradec-Bakken, flaring, Stark
18687, Fidelity, Green River-Bakken, flaring, Stark
18688, G3 Operating, Pembroke or Haystack-Bakken, establish a 1280-acre unit; 1 well; McKenzie
18724, contend
18309, cont'd
18689, GMXR, Big Stick and/or Tree Top-Bakken, create 3 1280-acre units; 4 wells each; Billings
18690, Chesapeake, recomplete Olson 12-139-104 A 1H, Fryburg formation; Golden Valley
17551, cont'd
17848, cont'd
17849, cont'd
18312, cont'd
18313, cont'd
18305, cont'd
18475, cont'd
18476, cont'd
18477, cont'd
18478, cont'd
18479, cont'd
18480, cont'd
18482, cont'd
18483, cont'd
18484, cont'd
18485, cont'd
18486, cont'd
18487, cont'd
18488, cont'd
18489, cont'd
18490, cont'd
18491, cont'd
18492, cont'd
18493, cont'd
18494, cont'd
18495, cont'd
18496, cont'd
18497, cont'd
18498, cont'd
18499, cont'd
18691 - 18694, QEP, pooling
18695, KOG, risk penalty legalese, Banks-Bakken, McKenzie
18696, KOG, risk penalty legalese, Corinth-Bakken, Williams
18697, KOG, risk penalty legalese, Truax-Bakken, Williams
18698, Fidelity, Dickinson-Bakken, 4 wells on each existing 1280-acre unit, Stark
18699, Fidelity, pooling
18700, Fidelity, risk penalty legalese, Heart River-Bakken, Stark
18701, Samson Resources, Blooming Prairie-Bakken, 7 wells on an existing 1280-acre unit, Divide
18702 -18704, Samson Resources, pooling
18705, Samson Resources, Bluffton-Bakken, 7 wells on an existing 1280-acre unit, Divide
18706, Samson Resources, Foothills-Bakken, 7 wells on an existing 1280-acre unit, Burke
18351, cont'd
18352, cont'd
18353, cont'd
18354, cont'd
18355, cont'd
18707, XTO, West Bank-Bakken, 8 wells on an existing 1280-acre unit, Williams
18708, XTO, Banks-Bakken, 8 wells on an existing 1280-acre unit, McKenzie, Williams
18709, XTO, Little Knife-Bakken, 8 wells on an existing 1280-acre unit, Dunn
18710, XTO, Charlson-Bakken, 8 wells on an existing 1280-acre unit, Williams, McKenzie
18711, XTO, Lost Bridge-Bakken, 8 wells on several existing 1280-acre units, Dunn
18515, cont'd
18712 - 18716, Newfield, pooling
17036, cont'd
18289, cont'd
18717 - 18724, Baytex, pooling
18725, Baytex, risk penalty legalese, Skabo-Bakken, Divide
17883, cont'd
17884, cont'd
17885, cont'd
18726, CLR, poolin, East Fork-Bakken, Williams
18727, CLR, risk penalty legalese, Crazy Man Creek-Bakken, Willimas
18728, CLR, Hebron-Bakken, 7 wells on an existing 1280-acre unit, Williams
18508, cont'd
18729, Denbury, risk penalty legalese, Siverston-Bakken, McKenzie
18730, Denbury, risk penalty legalese, Siverston-Bakken, McKenzie
18731, Triangle, pooling
18732, Triangle, risk penalty legalese, Otter-Bakken, Williams
18733, Triangle, risk penalty legalese, Ellsworth-Bakken, McKenzie
18734, Triangle, Ellsworth-Bakken, 8 wells on an existing 1280-acre unit, McKenzie
18735 - 18739, Zenergy, pooling
18740, Citation 2002, pooling
18741 - 18745, GMXR, pooling
18746 - 18780, EOG, pooling
18781, EOG, Squaw Creek-Bakken, 3 wells on each existing 320-acre unit; McKenzie
18555, cont'd
18782, Slawson, risk penalty legalese, North Tobacco Garden-Bakken, McKenzie
18783, Slawson, risk penalty legalese, field to be determined, McKenzie
18784, WPX, Missouri Basin, SWD, Gooseneck Field, Divide
18785, WPX, Squaw Creek-Bakken, 8 wells on an existing 1280-acre unit, McKenzie
18542, cont'd
18543, cont'd
18108, cont'd

POSTED BUT NOT PROOFREAD

I assume there are typographical errors.

Friday Morning Energy Links; Huge Error at "The Street";

Disclaimer: this is not an investment site. Links are provided to stories to inform, educate, and entertain, not necessarily in that order.

RBN Energy: Isaac hit oil harder than natural gas.

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

This is a great link (despite the huge error), by-line, Williston, ND: oil industry's biggest winners? pipeline builders?
A daylong tour of North Dakota's Bakken oil shale region, the nation's fastest-growing oil field, makes it obvious that the greatest need here is for infrastructure of all kinds, but especially for pipelines to transport crude oil to refineries.

North Dakota, now the nation's fourth-largest onshore oil producer, is on pace to double its oil production by 2015 to more than 1 million barrels a day, which will soon vault it up those rankings and close to the leader, Texas.

Currently, about a quarter of North Dakota's daily oil production is shipped by rail, according to the state-run North Dakota Pipeline Authority. Truck hauling follows in terms of volume shipped, but that means oil is hauled great distances out of the region to rail service, where it is sent to Gulf Coast refineries.
Fourth-largest? When was this article written? And folks take investment advice from these folks?

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

CLR ahead of schedule to triple production -- Mike Filloon.

Bakken buyout candidates for rest of 2012: OAS and KOG -- Mike Filloon. My thoughts: nope.

The rise of the Three Forks -- Motley Fool.

Bakken activity continues to heat up -- Motley Fool.

QEP Management Resources shares Bakken M&A insights -- SeekingAlpha.

KOG is no bear -- Motley Fool.

Is NOG a buy? -- Motley Fool

Thursday, August 30, 2012

Housekeeping: Cumulatives Of Some 1Q11 Wells Updated

Periodically I go back and update production data.  I went back and updated some of the data for wells that reported IPs in 1Q11

Here were a few wells that caught my attention (again, this is simply some housekeeping; nothing new or particularly important):
  • 18625, 368, Whiting, BSMU 3604, Big Stick, Madison well, not a Bakken; t8/10; cum 155K 6/12;  very nice for a Madison well;
  • 18973, 2,579, Helis, State 1-16/21H, Blue Buttes, Bakken, Blue Buttes field is west of Spotted Horn and Antelope (in the reservation; Blue Buttes is outside the reservation); 90K in first 2 months; t10/10; cum 337K 6/12;  
  • 16186, 439, Murex, Angie Marie 13-24H, Beaver Lodge, Bakken (Beaver Lodge is the field where oil was first discovered in North Dakota, in 1951; this well was originally spud in 2006 (that's the date of the IP); re-entered 5/10; it's production recently tripled -- re-frac'd?; t7/06; cum 294K 6/12;  
  • 18507, 1,946, WLL, Lahti 24-22H, Sanish, Bakken, t6/10; cum 273K 6/12;  
  • 18579, 2,006, SM, Jorgenson 1-30H, Bear Den, Bakken, tested 12/10; 120K by 6/11; cum 240K 6/12; 

Connecting the Dots: Seemingly Unrelated Stories -- and How the Bakken Inserts Itself -- The Antrim Shale, Michigan

Link here.
Once one of the major natural gas sources in the US, Michigan's Antrim shale is losing the interest of some of the country's big oil and gas companies as investors move to exploit more productive locations, ...

Production in the shale stood at 131 billion cubic feet (Bcf) in 2008, but this figure has been steadily declining, only reaching 85 Bcf last year. By 2020, GlobalData predicts this figure will continue to fall and stabilize at approximately 62 Bcf.

As a result of the shale's maturation, major oil and gas firms have divested their stakes and moved to acquire resources in newer shale plays with greater potential. From a total of 1,446 in 2006, the number of permits issued for Antrim Shale development dropped dramatically in 2011 to just 43, as major oil and gas players have increasingly redirected capital expenditure to more promising locations, such as the Barnett Shale, Bakken Shale, Marcellus Shale, Niobrara Shale and Haynesville Shale.
And only one of those five "shales" seems to be getting more exciting each day.

Even as "we" worry about operators moving out of the Bakken to "greener pastures" (or should we say, "blacker shales"), other operators are eyeing North Dakota.

North Dakota: #1 -- Top State For Young Adults

Link here.
North Dakota tops the rankings in MoneyRates.com’s list of 10 States Where Youth Rules, a study that compared a number of key factors across U.S. states to determine which ones offer the best conditions for young adults. The nine economic and lifestyle factors used in determining the rankings include: employment for young people, insurance costs for young drivers, college costs, affordability of housing, youth-oriented retailing, nightlife, healthfulness, the state’s youthfulness and housing availability.

The 10 best states for young adults, as determined by MoneyRates.com, include:
1. North Dakota
2. South Dakota
3. Iowa
4. Montana
5. Nebraska
6. Delaware
7. Vermont
8. Alaska
9. Utah
10. New Hampshire
Comment: With perhaps the exception of Alaska, none of the other states are known for its oil economy. Certainly South Dakota (#2) and Iowa (#3) are not, so one could argue that North Dakota earned #1 spot despite the housing availability and affordability of housing in the oil patch.  The state's oil patch would have lost points for those two parameters. The survey speaks well, then, for Minot, Bismarck, Jamestown, Devils Lake, Grand Forks, Fargo, and Glen Ullin.

Permit for Charlotte 3 (CLR) -- Daily Activity Report -- Ten (10) New Permits -- The Williston Basin, North Dakota, USA

Active rigs: 192 (3 more than the recent low)

Ten (10) new permits:
  • Operators: Denbury (4), CLR (3), Hunt, GMXR, EOG
  • Fields: Frazier (Divide), Siverston (McKenzie), Beicegel Creek (McKenzie), Painted Woods (Williams), Border (Divide), Banks (McKenzie)
These wells came off the confidential list: None.
No producing wells reported any completions.

The Four Benches: An Update

Regular readers know that CLR is testing five zones in the Bakken Pool (the first operator to have done when it is complete): middle Bakken, TF1 (bench #1, upper Three Forks); TF2 (second bench in the Three Forks); TF3 (third bench in the Three Forks); TF4 (fourth bench in the Three Forks). And note: all four benches are part of the Three Forks formation, and the middle Bakken and TF1 have source rock from the upper and lower Bakken shale.  

In today's daily activity report, the fifth of the five permits was issued for the Charlotte wells:
  • 23664, loc, CLR, Charlotte 3-22H, SESE 22-152N-99W, Banks, McKenzie,
Now, you're up to date. Like that will last an hour.

************************
A Note For My Granddaughters
Johnny Carson

I'm back where I can watch television. Nothing is on that interests me. I see PBS must be fund raising again; I see another showing of the Johnny Carson retrospective. I've never seen much of this retrospective, always catching the end. It's a difficult show to watch. I can easily tear up watching it; there are only a few movies or television shows that can affect me that much.
Some months ago, when I saw it for the first time, I reflected back on it, asking why Johnny Carson could affect me in such a strong way. This may be why: "The Tonight Show" was the one constant in my life during my formative years, during my coming of age. No matter how things were going in my life, thirty minutes at the end of the day with Johnny Carson was all I needed.

And The Winner Is .... Pittsburgh!

Remember that story about Shell looking for the right site to put a $2 billion ethane cracker unit? Shell was looking at sites in Ohio, Pennsylvania, and West Virginia.

Two of the three states are miffed.
Royal Dutch Shell PLC selected Pennsylvania over Ohio and West Virginia as the site for a $2 billion petrochemical plant expected to generate thousands of permanent jobs and draw from the region's massive deposits of natural gas, ...

Shell said it signed a land-option agreement to evaluate a site in Beaver County about 35 miles north of Pittsburgh for the plant, which will use natural gas as a primary feedstock. The company said it wanted an area close to natural-gas production that also provided water, road and rail transportation.
 
The plant, known as an ethane cracker, will be located in a faded industrial area once busy with steel mills along the Ohio River. The plant is expected to create 10,000 construction jobs, according to a Shell estimate. A study by the American Chemistry Council said the plant would create 10,000 permanent jobs in chemical and supplier industries. Unemployment in Beaver County was 6.8%, according to the Bureau of Labor Statistics.
Something tells me another 10,000 construction workers won't be voting to ban fracking in Pennsylvania. 

This story was first published back in July, 2012; I missed, but a reader alerted me to it. 

Update on SandRidge: SeekingAlpha

Link here.
The Mississippian and the Permian wells are solidly profitable. The Mississippian wells cost an average of $3.2 million per well. They have a PV-10 value of about $5 million per well on average, and the PV-10 value is often a very conservative estimate (an underestimate). They have an average EUR of 456,000 boe, of which about 45% is crude oil. The Permian wells cost an average of $643,000 per well. They have a PV-10 value of $627,000 per well. They have an average EUR of 58,000 boe per well, of which about 78% is crude oil. Clearly these are not as profitable as the Mississippian wells. However, the PV-10 value is usually an underestimate of real value. SD estimates the NAV of its Permian holdings is $7.2 billion.
The standard disclaimer: this is not an investment site. This provides a comparison view with Bakken wells that can cost over $10 million to drill; have EURs of 500,000 to 1,000,000; and are, mostly oil. This is posted for information, education, and entertainment, but not for investment decision making.

The Permian

The 2018 USGS assessment: link here.

Graphics


General

The USGS Assessment, 2018. Related posts about the same time:
The Permian is a monster, RBN Energy; Bloomberg, June 20, 2018.

Growing into the largest oil patch in the world, Bloomberg, April 24, 2018.

Natural gas production in the Permian to surge by 2020, WSJ, May 30, 2017.

Chevron owns its mineral acres outright in the Permian; no payment to landowners, April 6, 2017

Investment article, FANG in the Permian, April 3, 2017. 

Permian, Parsley, $40,000 / acre. February 12, 2017.

The importance of the Permian, Pioneer Natural Resources, September 2, 2016.

The Midland Basin, part of the Permian Basin, will be followed at this post, first posted August 16, 2016.

Cool story on the Permian, May 11, 2016.

Geography and stratigraphy of the Permian, Filloon, October 16, 2015.

Midland vs the Permian, understanding the geology, a 3-part series -- December 27, 2014.

Huge update, The Wall Street Journal, November 20, 2013

Introduction to the Permian, Market Realist, July, 2013

Thickness of the Midland Permian: from 1,375 to 1,825 feet thick (Laredo Petroleum corporate presentation, February, 2013)
  • Wolfcamp, upper: 400 feet
  • Wolfcamp, middle: 400 feet
  • Wolfcamp, lower: 500 feet
  • Cline: 300 feet
Updates

April 13, 2019: CVX makes offer for Anadarko: here; and, here


September 10, 2018: boom -- Federal auction brings $95,001 / acre.

April 24, 2018: biggest oil patch in the world --
April 5, 2018: too much crude oil; too much natural gas; not enough pipeline. Biggest story in the US energy sector right now

June 11, 2017: best in the US -- Filloon. 

April 23, 2017: Permian's economics.

March 9, 2017: Marathon buys 70,000 net acres in prime Permian; at $14,000/acre

February 13, 2017: Filloon on the Permian; Hartstreet Oil

February 11, 2017: at $60,000/acre, the Permian is getting a bit pricey -- Bloomberg.

January 10, 2017: update on Permian valuation, Midland, Southern Delaware = $26,000 / acre.

December 14, 2016: new operator to pay about $40,000 / acre in the Permian (Wolfcamp, Bone Spring).

December 14, 2016: one of the few plays in which the proved reserves increased in 2015 -- Wolfcamp and Bone Spring. 

November 28, 2016: EOG's ex-CEO buying Permian acreage for $11,000 / acre

November 27, 2016: Delaware Basin adds to oil glut, part 4 in a series, Mike Filloon. 

November 21, 2016: Concho buys 16,400 acres for $430 million ($25,000/acre) in Red Hills play in northern Delaware Basin. 

October 20, 2016: RSP Permian's Silver Hill acquisition, Filloon update.

October 14, 2016: Delaware Basin still attracting $61,000/acre offers.

September 16, 2016: pricing the Permian

August 30 2016: update on Shell in the Permian;

August 16, 2016: Has the Eagle Ford fallen out of favor? SeekingAlpha, August 16, 2016.

August 8, 2016: SM Energy acquires Rock Oil Holdings, LLC; 24,000 acres in the Permian, west Texas, for about $1 billion or about $40,000/acre

July 16, 2016: Short update of the Permian and its five top operators, Motley Fool.

March 31, 2016: huge update on the Permian

April 22, 2015: Conoco and the Permian

April 6, 2015: Chevron and the Permian.

February 16, 2015: update, Rigzone

September 22, 2014: just how big is the Permian? It has the most rigs of any region in the entire known universe.

July 22, 2014: random update on the Permian.

July 13, 2014: Rigzone update on the Permian. An important article. 

June 10, 2014: the Permian at $40,000 / acre.

May 19, 2014: RBN update

April 22, 2014: the Permian -- the largest shale oil field in the US, according to EIA.

February 21, 2014: Permian Wolfcamp valued at $61,600/acre.

February 8, 2014: update on XOM/XTO entering the Permian.

November 21, 2013: update on the Permian, SeekingAlpha.

October 14, 2013: production from the Permian is enormous -- SeekingAlpha.

October 14, 2013: Devon in the Permian; a 1,000 places to drill -- The Motley Fool.

October 8, 2013: from CarpeDiem, five jaw-dropping facts about the Bakken

October 3, 2013: Rosetta Resources in the Permian, as much as 10 million bbls recoverable/section, compared to 3 million to 6 million (or more) in the best Bakken.

October 2, 2013: an update. Also, Mike Filloon has another look at a portion of the Permian.

August 26, 2013: nice map. Mike Filloon on the Permian.

From The Globe and Mail, April 17, 2013. 

Part III, Mike Filloon, SeekingAlpha, February 19, 2013. Nice graphic, multiple targets in the Permian.
Part II; introduction to the Permian, Mike Filloon, SeekingAlpha, February 15, 2013.
Part I: overview of / introduction to the Permian, Mike Filloon, SeekingAlpha, February 13, 2013.

Index of Permian articles at RBN Energy, January 8, 2013.

RBN Energy: part II of the article on the Permian, September 25, 2012.

RBN Energy: outstanding article on the Permian, September 17, 2012.

Link here to an article updating activity in the Permian, May, 2012.

Great Comment From An Amtrak Traveler Through the Bakken

This was sent to me as a comment. It's too good to be missed by those who might not read the comments.
Last month, ONEOK announced capital spending of over $100 mill on natural gas collection lines in Divide County. The intended gas plant for Divide County gas is Stateline II. 
With Hess's large expansion of their Tioga Plant, the new Plains All American Plant near Ross, the Whiting/MDU plant north of Belfield, there remains big areas of the oil patch that don't have easy access to a plant. Most of the pre-2006 gas plants are tiny - even the new Whiting / MDU plant is relatively small at 35 mill ft3/day. 
Dunn, Divide, Stark, and the Fort Berthold reservation all have limited natural gas processing. Typically, a natural gas plant needs rail access for produced NGLs or a NGL pipeline. What's interesting is that Garden Creek I and II don't have rail access in McKenzie County, so the profitablity of those plants are highly dependent on the NGL pipeline that is proposed through Wyoming. Once that pipeline is built, locating in natural gas plants in areas without rail becomes much more profitable. 
Recently passed through the Bakken on Amtrak. Noticed a lot of natural gas liquids moving through the rail system from the Hess plant. With the volumes of propane and butane generated in these plants, unit trains seen for oil aren't really feasible. Once the ONEOK NGL and oil pipelines are built, ONEOK profits should increase substantially. 
Going through Mountrail and Williams County on Amtrak, one could just feel the "energy." Seemed like rail construction was going on everywhere. Fracking sand, open cars of piping, natural gas liquid cars, and oil unit trains seemed to be passed continuously where there were double tracks. Oil pipelines to loading facilities and nat gas lines seemed to going in at a number of locales.

We're Still Talking About .... The One Promise He Kept

Yes, this is an energy story. It just happens to be from Politico.

But Bloomberg had a related story today, also, saying that Americans have it easy with regard to the price of gasoline: it's 63% less than what Norwegians pay for gasoline in their country.

In that story from Bloomberg (the second link), one analyst:
If you look at just buying one gallon of gas, it really doesn't hurt us at all, but the problem is a lot of US consumers are buying multiple gallons of gas every single day. It's hard to cut back. You still have to drive to work and you still have to take your kids to school.
That's an analyst who makes investment recommendations. Wow! Read that again: "If you look at just buying one gallon of gas, it really doesn't hurt us at all."

I guess what hurts us is when we have to start buying two gallons. Or more. I can't believe that was what he said: "If you look at just buying one gallon of gas, it really doesn't hurt us at all." I'm still LOL. For other great quotes, see "quote of the day."

From the first link (from Politico, which may or may not be fair and balanced; I honestly don't know):
Of course, cap and trade is long dead. But coal-fired power plants are powering down nationwide, and they are blaming the Obama Environmental Protection Agency. The president's critics say proposed greenhouse gas regulations for future power plants are designed to cripple the coal industry.
Flashback:

And just like with another 2008 quote -- Energy Secretary Steven Chu's famed call to "figure out how to boost the price of gasoline to the levels in Europe" -- Republicans say the Chronicle clip shows what's really in the president's heart, that high electricity prices and the death of coal have always been Obama's goal.
The secretary does not deny that he said that: to raise the price of gasoline to the levels in Europe:


I don't quite get the "Republican" angle. Anyone who can understand plain English, should be able to understand this. It's pretty straightforward:
  • "So if someone wants to build a coal-powered plant, they can. It's just that it will bankrupt them..."
  • "...figure out how to boost the price of gasoline to the levels in Europe."
I don't see any partisanship in one's interpretation of those quotes. Heck, you don't even have to "interpret" them. Just listen to them. Straight talking. As straight talking as Harry Callahan.
I know what you're thinking. Did he fire six shots or only five? Well, to tell you the truth, in all this excitement, I've kinda lost track myself.
Anyway, I have to go. I need to go out and buy one gallon of gasoline.

Mystery of the Week: OXY's #22544 -- Two Long Laterals From Same Wellhead

Updates

September 20, 2012: the sundry forms and reports are finally catching up with what's going on with this well. OXY re-entered the well on August 4, 2012, to "redrill the lateral due to complications of running production liner after the first lateral was drilled." On September 1, 2012, the operator's engineer phoned, "can not get liner into sidetrack. Plan to TA well and evaluate for plans."

Original Post

This will involve bringing up the NDIC GIS map server.

If you do that, zoom in on section 24-144-97
  • 22544, TA, OXY USA, Kary 2-24-13H-144-97, Cabernet; see note of September 20, 2012, above.

Clearly there are two horizontals running north from this well, and both are almost the full length one would expect of a long lateral, but one is a bit shorter.

When one reads the file report, there is no mention of the second lateral. There is hint of a problem at about 12,000 feet (or thereabouts) but no mention of a second lateral. In fact, when one reads the file report one almost gets the feeling that the file report belongs to a different well. I assumed that when they ran into difficulty in the horizontal, they drilled a side track, but there is no mention of this in the file. It reads as if there were minimal problems drilling, and simply one long horizontal.

I can only assume, being an amateur, I am missing something, but clearly there are two horizontal legs.

The scout ticket also references two horizontals:

  • Lateral 1 Start coordinates 29 N 76 E from wellhead, end coordinates 9567 N 1W from wellhead
  • Side Track 1 Start coordinates 792 N 239 W from well head, end coordinates 10584 N 108 W from wellhead. Even the little graphic on the scout ticket clearly shows two long laterals.

A reader sent this in to me. Enquiring minds want to know.

Jobless Claims Unchanged From Last Week; Trend Worsens

Remember: the magic number is 400,000

Unchanged: 374,000.

It will be interesting to see the spin this time. I haven't seen the written report yet, just the CNBC crawler (yes, I am watching CNBC for a few minutes this a.m.).

With jobless claims increasing the past few weeks, pundits said the silver lining was that the four-week moving average, a better indicator, was improving. It appears that the four-week moving average has increased by a teensie-weensie amount, about 1,500. Insignificant. But the wrong direction.

So, we will wait for the spin.
The spin

From Reuters, the lede:
The number of Americans filing new claims for jobless benefits was unchanged last week, pointing to a labor market that was treading water. Initial claims for state unemployment benefits were a seasonally adjusted 374,000, the Labor Department said on Thursday.  
The prior week's figure was revised up to show 2,000 more applications than previously reported.
And, again, the prior week's figure was revised up to show 2,000 more than previously reported. Had the prior week not been revised upward (it was already up from the prior week), this week would have also shown a rise. Amazing how they can massage these figures and these headlines.

The article goes on to say that economists polled by Reuters had forecast claims dipping to 370,000, and noted that "the average for new claims, a better measure of labor market trends, rose 1,500 to 370,250.  The comment that usually follows was not there; the silence is deafening. I would assume the writer did not want to re-emphasize that the "better measure of labor market trends" was going in the wrong direction. Smile.

The fact they can get these stories written and posted within minutes of the announcement suggests they have the story written with blanks to be filled in before the numbers are announced, thus explaining the headline and even some of the jargon that may not mesh with the released numbers.

According to Reuters, jobless claims have risen by 10,000 in August, suggesting some moderation in the pace of job growth this month after payrolls increased 163,000 in July from 64,000 in June (summer hiring which will go away in September when folks return to school).

The report did not say anything about the automobile summer vacation schedules affecting this week's number.

Human Interest Story: One Individual Is Said To Have Accumulated > 300,000 Mineral Acres in North Dakota

A "thank you" to the reader who sent me this link. (I assume this link will break relatively soon.)
When Bavendick was 35, he decided to begin laying a foundation for his family’s future. So, on Feb. 16, 1965, he bought 10 acres of mineral rights in Renville County for $25 per acre – the first in a long string of investments that led to his fortune.  
When Bavendick bought his second batch of mineral rights later that year, he began another tradition – philanthropy. He secured the mineral rights on 735 acres just south of Watford City for $2.21 per acre from a family that had sold their farm and contacted Bavendick to see if he would buy the mineral rights. As soon as Bavendick struck the deal, he gave half of the mineral rights to Bismarck Junior College and UND.  
“Now they’re drilling big oil wells on it,” he said. “They’re worth about $10,000 an acre now.”
Great story.

Absolutely Crazy...the Activity: Statoil (BEXP) To Lease 1,000 Train Cars to East Bottleneck; Also -- Misc Energy Links

From the print edition of the WSJ, p. B7.

"Statoil Using Rails to Ease Bottleneck"

Again, a fairly long article, about a sixth of the page devoted to a North Dakota Bakken story.

Regular readers know the story: not enough pipeline takeaway capacity. Statoil (bought BEXP) will lease more than 1,000 railroad cars to "overcome pipeline bottlenecks that plague the booming oil-producing region."

The writer is a bit behind the times, though, talking about the Bakken -- still talking about 639,000 bopd in May, when the most recent figures are 660,000 bopd reported in June.

Data points:
  • starting in September: Statoil will have long-term rail leases to ship 45,000 bopd
  • more than enough to handle ALL of BEXP's production coming out of North Dakota
  • no price disclosed; carrier not disclosed
  • 14 to 15 days for a round trip from the Bakken to the terminal
  • discounts, due to bottlenecks, range from $5 to $20/barrel
Other data points
  • Phillips 66 recently bought 2,000 rail cars for same purpose
  • Tesoro will ship Bakken oil to its Anacortes, WA, refinery by train starting in September
  • Marathon ships about 14% of its Bakken oil by rail
Last data point
  • Statoil produced about 100,000 boepd in 2011; plans to move that to 500,000 by 2020 (North American production which includes Bakken, Eagle Ford, Marcellus
**********************
RBN Energy: more on NGL distribution

Wednesday, August 29, 2012

That Fertilizer Plant Talked About Earlier? Jamestown, North Dakota

A big "thank you" to a reader or readers for sending me several links regarding this story.

I posted this back in early July:
New billion-dollar fertilizer plant being proposed, from the Grand Forks Herald: 
The North Dakota Corn Growers Association announced Monday that a feasibility study has been completed for the plant, with the steering committee of corn growers and fertilizer industry consultants looking at building the facility in North Dakota, South Dakota or Minnesota. 
The North Dakota Corn Growers Association announced Monday that a feasibility study has been completed for the plant, with the steering committee of corn growers and fertilizer industry consultants looking at building the facility in North Dakota, South Dakota or Minnesota.
Plans are moving along for a $1 billion nitrogen fertilizer plant that could make use of the natural gas now being flared off in western North Dakota’s Oil Patch.
It looks like they might have chosen a site, data points:
  • Jamestown, North Dakota; $1.3 billion fertilizer plant; using natural gas from the Bakken
  • a capacity of 750,000 tons of anhydrous ammonia/year
  • North Dakota Corn Growers Association spearheading the effort
  • need to raise $300 million in equity from the farmers; minimum investment: $35 - $50,000/individual
  • construction could begin in April, 2015; production a year later
  • plant could be paid off in five years
For another interesting story about this site, read the comments below, and go to this link:

Twelve (12) New Permits; XTO Has a Nice Well

Active rigs: 190

Twelve (12) new permits:
  • Operators: BR (6), Hess (3), Whiting (2), and Liberty Resources
  • Fields: Truax (Williams), Johnson Corner (McKenzie), Blue Buttes (McKenzie), Dutch Henry Butte (Stark)
Liberty Resources has a permit for a wildcat in McKenzie County. Folks might recognize Blue Buttes: it's just north of the Helis Grail.

Meanwhile, the following wells were released from the confidential list:
  • 21567, 471, Hunt, Quill 2-10-3H, Bailey, t5/12; cum 25K 6/12;
  • 22205, DRY, Ballard, Haskins 11-27, a Madison well, wildcat, completed 3/12;
And two producing wells were completed:
  • 22263, 28, Crescent Point, CPEUSC McQuarters 14-23-158N-101W, Little Muddy, t4/12; 
  • 20417, 1,730, XTO, FBIR Goeseverywhere 31X-11, Heart Butte, t5/12; cum 27K 6/12;

ONEOK Will Build a Fifth Natural Gas Processing Plant

Link here. Same size as others, it appears.
The ONEOK says the plant will cost $160 million and be able to process 100 million cubic feet of natural gas each day. Oneok is based in Tulsa, Okla. It already operates two natural gas processing factories in western North Dakota and is building two others.
The article does not say where, but on a ND PSC agenda Don sent me ONEOK has an application for "Garden Creek #2. If this is related, then maybe this fifth natural gas processing plant will be northeast of Watford City. 

For those keeping track:
  • the first ONEOK natural gas processing plant: Grasslands
    the second: Garden Creek (#1) -- northeast of Watford City
  • the third: Stateline #1 -- northwest of Williston
  • the fourth: Stateline #2 -- northwest of Williston
  • the fifth: Garden Creek #2 -- northeast of Watford City, most likely

Dickinson's New Fracking Water Plant ..

...or better known as a waste water plant.

Link here to The Bismarck Tribune.

Data points:
  • $30 million project
  • south of the Heart River
  • water to be sold for industrial uses, including fracking and farming
  • capacity to support a population of 35,000; Dickinson's current population estimated at 23,000
  • two years to complete

Oasis Moving To Pad Drilling -- SeekingAlpha; In Support of Less Ceramics

Link here.
In particular, the company has sought to decrease the company's use of ceramic proppant, which tends to cost more than sand and doesn't necessarily produce superior results. Management estimates that a well with a 36-stage lateral that uses sand as a proppant costs about $0.8 million less to complete than a development than one that relies on a mix of sand and ceramic material. That being said, the firm continues to use a full load of proppant when targeting thicker formations that exhibit relatively low levels of water saturation.
The article is about "all" of Oasis, but I just wanted to pick out one point that I will be discussing later.

Some Random Statistics From The Williston Basin, August, 2012; Natural Gas Infrastructure Estimate at $8 Billion

There are over 7,300 active wells in North Dakota. As of June, 2012, the state was producing about 660,000 bopd.

There are 190 active rigs in North Dakota (down from a record of 218; up from recent low of 189)

The state has issued 1,464 oil, gas, and salt water disposal permits so far this year. That puts "us" on track for 2,236 new permits for calendar year 2012, a record for the current Bakken boom.

There are 1,872 wells on the confidential list today; that does not include those which came off the list today. The list includes about 35 salt water disposal wells.

In 2011, the natural gas infrastructure necessary to support the Bakken was estimated to be about $4 billion (10 natural gas processing plants, infrastructure to support those plants); in 2012, the estimate had risen to $8 billion (about 20 natural gas processing plants); the Bakken is an oil field, not a natural gas field.

On the confidential list, by selected operator:
  • BEXP: 158
  • Burlington Resources: 82
  • CLR: 243
  • Denbury: 45
  • Enerplus: 72
  • EOG: 35
  • Fidelity: 16
  • G3: 20
  • Helis: 12
  • Hess: 186
  • Hunt Oil: 23
  • KOG: 77
  • Marathon: 75
  • Newfield: 32
  • Oasis: 38
  • OXY: 34
  • Petro--Hunt, LLC: 126
  • QEP: 32
  • Samson Resources: 53
  • Slawson: 50
  • SM Energy: 30
  • Triangle: 15
  • Whiting: 79
  • WPX: 71
  • XTO: 56
  • Zavanna: 20
  • Zenergy: 33

Looking at the list may provide some clue why KOG seems to command a better share price than Oasis.

With 243/1,872, CLR has about 13% of the wells on the confidential list.

Petro-Hunt, LLC, is very, very active.

EOG has certainly dropped down the list in terms of active program in the Williston Basin.



Why WAWS Is Needed

Link here.
R&T Water Supply, which serves Ray, Tioga, Stanley, and Wildrose is coming off a long hot summer of water restrictions and earlier this month concluded it will wait as long as a year before allowing any new rural developers to hook up. 
Business manager Liz Suhr said three developers who want to build rural subdivisions outside Ray for up to a 1,600 population in each development will have to put their plans on hold unless they can come up with another source of water. 
The three proposed developments are the Southern Cactus Star, Dix Development, and Iron Horse-West Bank, she said. 
R& T water was so tight this summer that two large man camp developments near Tioga were shut off for a period and one of them -- a Target Logistics facility -- was just put back on the system on Friday, she said.

RBN Energy: Another Nice Analysis of Record Dry Natural Gas

Link here.
Natural gas power will continue to be a growing source of new gas demand. New demand will come at the expense of coal plant retirements over the next four years. Plant owners and operators ... plan to retire almost 27gigawatts of coal fired generation capacity between 2012 and 2016. That amounts to 8.5 percent of total 2011 coal-fired capacity..... 
US production will also continue to push out Canadian imports ... Another event for new demand is pipeline gas exports to Mexico already at 1.8 bcf/d and growing fast. An increase in industrial demand for natural gas is also expected to result from new reefing, petrochemical and processing infrastructure being built to handle increased natural gas, natural gas liquids and crude oil production in the US.
I have often said that much of the increased natural gas production (wet and dry) is the result of all the gas that accompanies the shale oil. RBN Energy says that is only partly the answer. In fact, operators are bringing back natural gas rigs which is absolutely counterintuitive.

The two data points about Canada and Mexico were very interesting.

Another great article by RBN Energy; go to the link to read the full story.

Savage Announces Completion of Its Trenton CBR Facility

Updates

September 3, 2012: a reader supplied another link to this story; trade journal.

Original Post
Link here.
Savage announces the completion of its terminal located near Trenton, ND, with direct connection to BNSF Railway’s main line track. The terminal is strategically located to gather crude oil from the Williston Basin and Bakken Shale and facilitate the transport of crude to key refinery markets. The terminal provides the oil industry with inbound gathering access through truck receiving stations, pipeline connections and crude oil tankage. Outbound delivery of crude oil is served by a double loop track capable of holding two 118 car unit trains.
Data points:
  • in operation on a manifest basis since December, 2011
  • inbound: truck
  • outbound: double loop; two 118-car unit trains
  • operate 24/7
  • capable of expansion
A big "thank you" to a reader for alerting me to the announcement.

Tuesday, August 28, 2012

The Bakken Pool: A Trillion Barrel Reserve; 45 Billion Recoverable Barrels? -- The August, 2012, CLR Corporate Presentation

Updates

September 21, 2014: looking at CLR's annual "Analyst and Investor Day" presentation, it appears that CLR has gone back to the 500-billion-bbl reservoir. Will provide a link later. 

August 17, 2013: from a reader on Bakken naysayers:
I chuckle when I read about folks saying the Bakken has peaked and is starting to fizzle.
One recent comment was the wells are becoming less productive because they are drilling further away from the sweet spots.
I like to look at Harold Hamm, the guy who came to the WB as a very small operator, picked up a bunch of production and leases on the SE end of the Cedar Creek Anticline because the majors thought it was played out and proceeded to create one of the largest onshore oil fields in the lower 48 by pioneering a combination of horizontal drilling and fire flood recovery in a continuous dolomite formation, the Red River.
CLR is now a pioneer in the Bakken, a continuous dolomite formation, where if you look at their recent presentation you can see they are working on pilot programs to see what will work the best for full fledged development regarding 320 acre or 160 acre spacing.
And that is for basically the MB and B1 of TF formations. A recent question and answer period I heard the comment that CLR feels that there are portions of the basin that will see development of 7 layers. The 4 benches of the TF, MB, Upper Bakken, and Lodgepole. Another comment I once heard was the secondary recovery methods used in the Red River will be a model for the Bakken. Do you suppose a technique that burns some of the oil in place that would produce heat, pressure, and a by product CO2 would work?
It will still be years before it is known where ALL of the SWEET SPOTS are located.
Once that is determined a full scale model for infrastructure can be developed. Gas lines, processing plants, oil pipeline gathering systems, fresh water provisions, disposal systems, and a beefed up system of all access roads to get the job done.
Dr Price predicted that there were maybe 450 Billion barrels in the Bakken system. He also felt that eventually 50% of that oil would be recovered. How long will that take? How many generations will it take to develop the technology far enough to get that done?
As Bakken production becomes sustained and more and more people are dependent on it and the support industries become well established, the technology will continue to evolve. In the last 10 years technology has advanced much in terms of getting more Bakken oil out of the ground. Let's see where we are 6 generations or 120 years from now. Will we be able to get 50% of that oil? If so 120 years of development and another 30 years of production means 50% of the oil in place will be produced. Let's say that Mr. Hamm with his knowledge and experience is right with the prediction that there is likely 900 billion barrels in place so if 50% of that is produced over 150 years or 450 billion divide by 150 equals 3 billion barrels per year. To divide by 365 days that would mean over  8 million barrels per day. For 150 years!
Where are we now? About 10% of that! Let's say Bakken production peaks in the neighborhood of Texas-sized production and the state produces 2 million barrels per day until 450 B are produced. 2 million x 365 = 730,000,000 barrels per year. 450 billion divided by 730 million = 616 years. To meet that goal would give the industry 586 years to develop the technology. The naysayers ain't seen nothin' yet!
December 6, 2012: the note below was written before we knew the results of CLR's plan to target the third bench of the Three Forks formation was known. Now we know.

Original Post

Don alerted me to the most recent CLR corporate presentation when it first came out; I was too busy to get to it at the time, but said I would eventually get to it. Then I forgot all about it. Fortunately, Brian, sent me a comment suggesting I should take a look. How fortuitous.

This is another corporate presentation that seems to have been missed by many of us. If Mike Filloon has mentioned it I missed it.

This stand-alone post should be filed under "How big is the Bakken?" The numbers are staggering.

As you go through this, remember, I often make mistakes, have no formal training in any of this, and am prone to misreading slides and presentations. But this is what I think I saw in CLR's most recent corporate presentation. 

First, some data points:
  • folks can correct me, but I believe the official estimate is that the Bakken has about 3 billion barrels of recoverable oil, based on a USGS survey back in 2008
  • CLR/CEO, Harold Hamm, stated some time ago his company's estimate is that the Bakken/Three Forks (middle Bakken and upper Three Forks) has about 24 billion barrels recoverable oil
  • The "original" Leigh Price paper, never published, estimated that there was 150 to 500 billion barrels of original oil in place (OOIP) in "the Bakken"
  • the consensus, if there is such a thing, suggests that OOIP is probably nearer the lower end of Leigh Price's estimates
  • the consensus, if there is such a thing, is that about 3% of OOIP is recoverable
  • 3% of 100 billion bbls OOIP --> 3 billion bbls
  • to some of us, it appears that operators are recovering about 8% of OOIP; if one accepts the middle of the Leigh Price estimate, let's say 300 billion barrels OOIP, then 8% of 300 --> 24 billion bbls of recoverable oil; one can argue only 6% is recoverable, but then take a higher Leigh Price estimate, say 400: 6% of 400 billion --> 24 billion bbls
So, we will stop there and catch our breath. I'm doing that all from memory, as it were, and my numbers and what I recall may be inaccurate; I will gladly correct/refine if necessary once the stand-alone post is up.

For those interested in the Leigh Price paper:

So, now, we've caught our breath. So far, we've been talking about only the middle Bakken and the upper Three Forks when we are talking about Harold Hamm's potential of 24 billion barrels of recoverable oil from "the Bakken." Hold that thought.

It turns out there may be additional payzones within the Three Forks formation/under the "upper" Three Forks that will affect these numbers. Continental Resources and others are referring to these "zones" or "sub-formations" that are part of the Bakken Pool, but deeper to the upper Three Forks as "benches. And to be clear: these "benches" are part of the Three Forks formation.

It's possible the "definition" of each of the "benches" has changed over time; Continental Resources has talked about these deeper benches for quite some time, and it's my impression that with the most recent CLR corporate presentation there is much more clarity.

Now would be a good time to pull up CLR's August 10, 2012, corporate presentation.

First, click here, a listing of recent CLR presentations.

Then, under Presentations, the very first presentation: Investor Update, August 13, 2012. It's a 3.0 MB PDF file and even on an old computer it seemed to load rather easily. It's dated August 10, 2012, so I assume the "August 13, 2012" date is the date it was posted on their presentation web page.

Go to slide 14.

The graphic will lay out the upper Bakken and lower Bakken shale (currently avoided for the most part), with the middle Bakken, between the upper and the lower Bakken shale.

Then, below the Bakken, one notes four yellow "sub-formations" or "zones" in yellow. These are the "benches" that folks are referring to. There are four benches: TF1, TF2, TF3, and TF4.  (The "TF" stands for Three Forks.)

Generally speaking, when folks talk about nice wells in the Three Forks, they are talking about the "upper" Three Forks, which seems to correspond to TF1. My hunch is that not all operators are differentiating the various benches and I don't know if all "Three Forks" wells have been in the upper or first bench or if some have gone lower.

Continental Resources is in the process of testing these four benches in something they call their "Charlotte Unit." CLR is drilling four wells into four different zones -- they say they are the first operator to have wellbores in four different zones.

CLR refers to these four wells as "Charlotte" wells. So far, according to the NDIC GIS map, only two of these Charlotte wells have permit numbers; I don't see permit numbers for two of the others.

Charlotte 1 and Charlotte 2 are in the heart of the Bakken, in Banks oil field, in north central/northeast McKenzie County, just south of the river; again, I don't see Charlotte 3 and Charlotte 4 yet with permit numbers. [Just after posting this, a reader pointed out that permits for Charlotte 4-22H and Charlotte 5-22H were just issued. There are two Charlotte wells in Siverston field, but they are Newfield wells; so ignore. Update: August 30, 2012 -- #23664 for Charlotte 3.] So, here are the "Charlotte unit wells, the targeted "zone" and the location;
  • 19918, 496, Charlotte 1-22H, middle Bakken, SWSE 22-152-99; Banks, 30 stages; 2.5 million lbs; t6/11; cum 150K 10/12; total depth: 21,090 feet;
  • 23664, conf, Charlotte 3-22H, Banks, TF1, SESE 22-152N-99W
  • 21128, 692, Charlotte 2-22H, Banks, TF2, SWSW 22-152-99; 30 stages; 2.3 million lbs; t10/11; cum 74K 10/12; total depth: 21,358 feet;
  • 23612, A, Charlotte 4-22H, TF3, Banks, [Update: see press release, December 3, 2012]
  • 23608, loc --> conf, Charlotte 5-22H, Banks, ?TF4
From the well files:
  • 19918, Charlotte 1-22H, middle Bakken geologic marker: 11,276 feet;
  • 21128, Charlotte 2-22H, TF2, Three Forks geologic marker: 11,273 feet;
The geologist stated in the well summary that the target zone for Charlotte 2-22H was the "lower Three Forks. That makes sense. Generally speaking, it's my understanding that when folks are talking about "Three Forks wells" they are talking about the upper Three Forks sub-formation. Below that would be the lower Three Forks. CLR feels the four zones are distinct, i.e., the four benches.

So, stopping again, to catch our breath. It appears to me that two of the four Charlotte wells in section 22-152-99 have been drilled and were completed last summer and late fall. The middle Bakken well (Charlotte 1) was completed in June, 2011, and had produced more than 125,000 bbls one year later (June, 2012).

Results for Charlotte 2 are noted above.

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Summary so far:

CLR is testing the hypothesis that in some areas of the Williston Basin, there are four, maybe five, payzones in the Bakken Pool (the middle Bakken, and three, maybe four, payzones in the Three Forks, which they call benches). 

CLR has drilled into the middle Bakken ("everyone" does that) and into the "lower Three Forks"/"second bench" (TF2) (something new?). Both wells were highly successful.

They will next drill into TF1 (the "upper Three Forks) and TF3. To the best of my knowledge those permits have not been issued; at least they are not indicated on the GIS map server yet.

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There is something else on slide 14 that is very, very interesting. One of the "concerns" or "complaints" about "the Bakken" is that it is not very thick. Seams are measured in tens of feet, whereas they say the Eagle Ford is measured in hundreds of feet (or so I believe).  If CLR is correct that there are four payzones in the Three Forks (at least in some areas of the Williston Basin), then we start to see much thicker payzone overall -- in this case, on slide 14: 310 feet

A "formation/pool" that is 310 feet thick is not trivial. 
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So, enough of that. What else does this mean? Are you holding that thought that I told you to hold some paragraphs above?  Here it is again:
So far, we've been talking about only the middle Bakken and the upper Three Forks when we are talking about Harold Hamm's potential of 24 billion barrels of recoverable oil from "the Bakken." 
When the USGS estimates there are 3 billion bbls of recoverable "Bakken" oil, the society is looking at only the middle Bakken and the upper Three Forks. Remember, CLR suggests that these two zones may have 24 billion bbls of recoverable oil.

The August 10, 2012, presentation has been significantly updated from previous presentations. I won't make you look at previous presentations, but in the past, CLR had a slide that showed in big, bold letters: 24 billion bbls of recoverable oil; and, then in small letters, marked with an asterisk, "lower zones should be additive."

In the August 10, 2012, CLR has a new slide, or at least is seems new to me: slide 12: expanding the Bakken vertically. 

Remember Leigh Price's paper, upwards of 500 billion bbls of OOIP? There, on slide 12, the middle Bakken and the "1st bench" (upper Three Forks), 577 billion bbls of OOIP, and note the qualifier: "revised estimate."

The 2nd, 3rd, and 4th bench are estimated to have 326 billion bbls of OOIP.

577 + 326 =  903 billion bbls. For a thirty-second sound bite, that's a trillion bbls OOIP. In just the Bakken Pool.

Assuming 5% recovery, which I think is conservative for the "easy zones/core Bakken," one gets 45 billion bbls of recoverable oil.

Now, unless I'm missing something, CLR has just raised their estimates of recoverable oil from the Bakken Pool from 24 billion bbls to 45 billion bbls and are estimating the Bakken Pool to be just shy of a trillion bbls of OOIP.  For all intents and purposes, CLR has doubled their estimate of recoverable oil from the Bakken Pool.

Time will tell. But I think slide 12 is new; and slide14 has been made clearer (compared with the August 8, 2011, corporate presentation, slide 9). The earlier slide 9 did not include the 310' marker for the Bakken Pool, again a number that is not trivial. 
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Earlier I said: As you go through this, remember, I often make mistakes, have no formal training in any of this, and am prone to misreading slides and presentations. But this is what I think I see in CLR's most recent corporate presentation. But if I am correct in what I think I see, and if CLR is even close to being accurate, it helps explain why QEP was willing to pay the price they did for the Helis et al acreage. That acreage is in the same general area, about 25 miles to the southeast (the "Helis Grail" is about 25 miles to the southeast of Banks oil field where the Charlotte wells are).

Again, unless I'm missing something or misinterpreting it, CLR has almost doubled Dr Price's original estimate of OOIP (by including lower benches which Dr Price was probably not aware of) and CLR has almost doubled their estimate of total recoverable oil.

The 30-second sound bite of a trillion-barrel reservoir, and 50 billion recoverable bbls seems about right.

I apologize ahead of time if I am "jumping the shark" on this.