Tuesday, January 3, 2012

Whiting's Multi-Well Pad (Permits) in the Sanish -- The Bakken, North Dakota, USA

In today's daily activity report, NDIC reports permits for a Whiting 3-well pad in the Sanish oil field.

Whiting has provided graphics of how they planned to drill their cash cow, the Sanish oil field, in their corporate presentations over the past year. They have never shown a multi-well pad in those graphics, unless they have shown this in a new corporate presentation that I have not seen.

A multi-well pad in the Sanish is rare, but this is not the first.

Whiting is already putting five to six wells in some sections (1280-acre spacing) but this is a rare multi-well pad for them in the Sanish.

I was surprised to hear today that folks are still unaware that there are areas in the Bakken in which there are more than one or two wells in a section. Whiting has been putting in four to six wells in individual sections (1280-acre spacing) for quite some time now.

The permits for this multi-well pad are:
  • 22173, 1,180, Whiting, Carl Kannianen 22-32TFX, section 32-154-91; t9/12; cum 182K 3/17;
  • 22174, 3,126, Whiting, Kannianen 22-32XH, section 32-154-91; t9/12; cum 354K 3/17;
  • 22175, 1,249, Whiting, Kannianen 22-32TFX, section 32-154-91; t9/12; cum 198K 3/17;
These three will be on one pad; the pad will lie on a northwest to southeast line.

There are already two horizontals in this section:
  • 18298,  3,422, Whiting, Kannianen 44-33H, Sanish; t1/10; cum 664K 3/17; 10K/month in May 2012; the well was taken off-line in September, 2011, and did not produce again until 11/11 when it was active for 2 days, producing 960 bbls in November, 2011; when active it produces 15,000 bbls/month
  • 19174, 2,090, Whiting, Kannianen 43-33H, Sanish; s7/10; t10/10; cum 365K 3/17; 1,300 bbls in May, 2012; the well was taken off-line in September, 2011, and did not produce until 11/11 when it produced 754 bbls over 9 days; prior to that, it was producing 12,000 bbls/month

*************
There is another Whiting 3-well pad in the Sanish, very similar nomenclature:
  • 21988, A , Whiting, Tiisto 44-7TFX, section 7-154-91; t5/12; cum 150K 3/17;
  • 21989, 2,480, Whiting, Tiisto 44-7XH, section 7-154-91; t5/12; cum 346K 3/17;
  • 21990, 688, Whiting, Tiisto 43-7TFX, section 7-154-91; t4/12; cum 133K 3/17;

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

Daily activity report, first one for the new year, January 3, 2012 --

Operators: Whiting (4), OXY USA (2), Murex, BEXP, True Oil, Oasis

Fields: Manning, Sanish, Dutch Henry Butte, Dimond, Briar Creek, Gros Ventre

Murex has a wildcat in McKenzie; True Oil has a wildcat in McKenzie.

Thirteen (13) wells released from "tight status." Five of those not completed/not fracked.

The eight wells completed, included:
  • 19876, 2,879, BEXP, Enderud 9-4 1H, McKenzie
  • 20036, 2,331, XTO, FBIR Smith 11X-10, Dunn
  • 20059, 1,357, Whiting, Waldock 14-4XH, Mountrail
  • 20588, 1,492, BEXP, Mrachek Trust 22-15 1H, McKenzie
  • 20629, 929, CLR, Patterson 1-13H, McKenzie
True Oil's wildcat is "in name" only a wildcat; only due to the strict definition of a wildcat is this permit for a wildcat. In fact, the permit is for a location one section away from all the rest of True Oil's huge wells in Red Wing Creek oil field. This permit is also for a location in Red Wing Creek oil field.

The Murex wildcat is on the Montana state line in the far southwest corner of Williams County. This is definitely a wildcat. This one looks like it will be a Bakken with 640-acre spacing.

    A Ray Of Common Sense -- California's Low Carbon Standard Unconstitutional

    Link here.

    Implications for Minnesota and North Dakota.

    Enbridge -- Crude-By-Rail -- The Bakken, North Dakota, USA

    Update

    January 5, 2011: see comments near end of the original. One day after posting the information below, we get the reason why Enbridge entered the crude-by-rail industry.

    The US government continues to tighten controls on fossil fuel pipelines.

    Original Post 
    This story was reported back on December 7, 2011, but was in today's monthly Oil and Gas Journal update.
    Enbridge Energy Partners LP will expand its Berthold rail terminal capacity in the Bakken shale by 80,000 b/d and include a rail car loading facility to accommodate the additional volume.

    EEP has contractual commitments for 70% of the rail loading capacity and anticipates it will soon finalize agreements for the remaining capacity.

    The Berthold Rail Project includes construction of a double-loop unit-train facility, crude oil tankage, and other terminal facilities adjacent to its existing facilities near Berthold, ND. The project will have capacity to stage three unit-trains at Berthold at any given time. After an initial 10,000 b/d Phase I start-up in July 2012, the full 80,000 b/d of rail export capacity will enter service in early 2013.

    EEP described the $145 million project as complementing its Bakken Expansion Program, integrating gathering pipeline capacity in western North Dakota and eastern Montana with increased North Dakota export capacity.

    EEP expects Bakken Expansion, announced August 2010, to add 145,000 b/d of takeaway capacity from the Bakken and Three Forks formations in Montana, North Dakota, and southeast Saskatchewan, 25,000 b/d of which is already available.

    The company expects the remaining 120,000 b/d to enter service by early 2013, a slight delay from initial predictions of late 2012. The Bakken Expansion will cost roughly $370 million for the US projects and $190 million (Can.) for the Canadian projects.
    Data points and comments:
    • Enbridge positions itself as as a transporter of oil, not a pipeline company (I've talked about that before; the analogy -- the railroads saw themselves as transportation companies, not railroads -- huge difference)
    • Enbridge pipelines: Bakken sweet, light oil only
    • Enbridge unit trains: flexible product; flexible destination
    • The double-loop unit-train configuration looks like the standard in the Bakken; I saw three other such facilities 4Q11; such a configuration can stage three unit-trains at any given time
    The crude-by-rail was absolutely essential for Enbridge if it wanted to be as the "go-to" oil transporter in the Williston Basin. I assume a lot of operators were discouraged when Enbridge would not take their sour oil (Madison, Spearfish).

    Everyone is aware of the Spearfish activity north of Minot. My hunch is that the Madison will be the next big story once the takeaway capacity is there.

    But the biggest reason, Enbridge got into CBR in the short term? If there is an pipeline oil spill, no matter how small, a) the media blows it our of proportion; b) the EPA shuts down ALL the pipelines that might be related; c) pipelines are not re-opened until the government gives its okay; d) the government won't give its okay until the mainstream media accepts the decision (internal political polling); and, e) a pipeline company can come to a complete stop, affecting a financial quarter's bottom line.

    Now, if the government shuts down an Enbridge pipeline, it can still meets it contractual arrangements with its customers. This is not rocket science.

    Long term: Enbridge realizes that there may simply not be enough pipeline capacity ten years from now.

    Chinese Company Buys American Oil Assets -- Again

    Link here.

    Sinopec, Devon, $2.2 billion.
    Devon Energy Corp said on Tuesday China's Sinopec will invest $2.2 billion for a third of the U.S. oil and natural gas producer's interest in five developing fields as part of a long-term partnership.

    Foreign companies like Sinopec, hungry for the know-how to produce oil and gas from shale and other unconventional basins, have invested heavily in North American acreage. Chesapeake Energy announced a similar $2.3 billion deal on Tuesday with French oil company Total SA.

    Huge Day -- Oil Up $4.24

    Link here.
    Oil prices soared Tuesday as tensions grow over key Persian Gulf oil shipments.

    In midday trading benchmark crude jumped $3.55, or 3.6 percent, to $102.38 per barrel in New York. Brent crude, which is used to price foreign oil varieties that are imported by U.S. refineries, rose $3.26, or 3 percent, to $110.64 per barrel in London.

    Prices shot up as exchanges opened for the first day of 2012 trading. Commodity prices tend to rise at the beginning of January as investors start the new year with a fresh round of trading. This year prices were driven by heightened concerns that Iran might try to close the Strait of Hormuz in the Persian Gulf to oil tankers, if Western nations impose new sanctions
    .

    North Dakota To Surpass Alaskan Oil Production in 2012? We'll See -- The Bakken, North Dakota, USA

    From the WSJ via Carpe Diem:
    North Dakota will likely produce more oil than Prudhoe Bay in 2012.
    It's possible we are already there; the most recent figures are two months old.

    Actually, it will probably be in 2012 if the trajectories don't change.

    North Dakotans fueling real estate boom in Arizona -- Perfect Storm

    From USA via Carpe Diem:
    Bakken fueling real estate boom in Arizona.
    Tell me again the Bakken is inconsequential, which I heard over and over back in 2007, 2008, and 2009.

    This is the USA Today link.
    Flush with cash from an oil boom and plentiful jobs, North Dakotans are snapping up homes 1,500 miles away in balmy Arizona, where prices have plunged since the real estate bubble burst.

    "It boils down to the weather and taking advantage of the market," says real estate agent Rocky Parra of HomeSmart Realty in Gilbert, Ariz., a Phoenix suburb.

    He and wife Beverly, a native of Minot, N.D., have sold eight homes to North Dakotans in recent months. Parra is heading to North Dakota this month to meet with possible buyers.

    "A lot of people have struck it rich," he says. "Oil companies are coming in and buying businesses and land. They're selling up there at the peak and buying down here at the bottom."
    Can you imagine how robust the US economy would be if we had a) a pro-growth president; and, b) a non-activist EPA?

    The oil boom in North Dakota is but one very small area in the entire United States. There is tight oil, tight gas reserves in a dozen other states, and then there is off-shore conventional reserves.

    Too bad we don't have a "morning-in-America-Reaganesque" president. As big as the energy industry was in 2011, does anyone remember one positive statement made by the president regarding this industry? I don't.

    But for NoDaks -- not only are some making a lot of money, but they are buying great property at severely depressed prices and best mortgage rates in history. 

    By the way, when you go to the link, read about Blaine Bjella -- he made his money not in royalties, or oil directly, but ... well, go to the link. Some of it was being in the right place at the right time, but most of it was due to hard work.

    Question for Those With Experience With Mineral Rights

    I received this query from a reader this morning:
    I notice you have a toolbar on mineral rights. I have a question that maybe you or your well-qualified bloggers can answer. I have three (3) mineral acres under a well south of Tioga. The well is about a year old and royalties have been running about 50 bucks a month. Two years ago a mineral acquisition firm offered to buy for $500 per acre. One year ago they upped to $ 1,100. Now they have offered $3,000 per acre.This is about 15 years of royalty and I don't understand its worth. Is it possible that a pooling or unitization plan for the Bakken in the future would make these minerals more valuable?
    Let me know what you think.

    My 2 cents worth: never sell minerals unless you really, really need the money or have another investment opportunity with that cash. Lease, yes; sell no. But I am inexperienced in this arena.

    In addition, the area south of Tioga is "huge." I think bonuses of $7,000 could be expected in this area based on what I've seen in recent auctions. Possibly more. I think south of Tioga is better than southwest ND and the record in auction was $14,000/acre in southwest North Dakota, if I remember correctly.

    Embargo -- Gasoline To $5 A Gallon?

    Some weeks ago I was taken to task by a reader when I mentioned the word "embargo" with regard to Mideast oil.

    For time-date stamp purposes: 9:24 a.m. EST, CNBC talking head says the sharp jump in the price of oil is due to .... well the crawler said: "Iran oil embargo."

    Hmmmm.......

    This could drive gasoline to $5.00/gallon.

    Whether it does or not is open to speculation, but two certainties:
    -- at $4.50/gallon, the EPA ain't gonna shut down fracking
    -- at $5.50/gallon, we'll see a new president in 2013 (and a recession, if not a depression)

    Fourth New Dorm To Be Constructed At Minot AFB --

    I have to thank Don for forwarding me this link.

    Some time ago I was taken to task by another reader suggesting that the economic impact of the two air bases in North Dakota was relatively inconsequential in the big picture. Maybe, I don't know. I suppose it's in the eye(s) of the beholder.

    At the link:
    Congress has approved more than $134 million in federal funds for Minot AFB construction. That amount includes the new dormitory.
    This is the fourth new dorm to be built: two have been recently completed; one is under construction, and this will be the fourth new dorm.

    In a military drawdown / contraction; the bases that "survive," not only "survive," but thrive. And grow. Remaining bases take on new missions, taking on missions from bases that closed.

    A Big Number -- The Bakken, North Dakota, USA

    Link here.
    The North Dakota Highway Patrol reported 43,000 more wide-load permits in 2011 than the previous year.

    ....permits for semis that are overweight that cannot be taken apart have increased by more than 14,000 over last year. Permits for loads that can be taken apart have increased by almost 29,000 this year. [14 + 29 = 43]
    I don't know what the number was for last year; if it was in the article, I missed it.

    I also don't know if a wide-load permit is good for one day, one job, one year, on state highways .... but ...
    Weight restrictions depend on the roads traveled. For example, semis can weigh up to 80,000 pounds on interstates without being permitted. Drivers are required to pay $20 for a 72-hour permit. Drivers can also get annual permits.
    I would assume most of these additional permits are for trucks operating in about six western North Dakota counties. 

    Northwestern South Dakota Feeling Impact of the Bakken -- The Bakken, North Dakota, USA

    Link here.

    I posted a note on this back on November 24, 2011.

    I don't think the Belle Fourche paper quantifies it, but I was told "they" were seeing 1,000 vehicles a day go through Belle Fourche. I would assume that before the boom, during the non-tourist season, one could count the number of vehicles coming from Texas going to North Dakota on one hand. 1,000 vehicles. Now. Per day. Incredible.

    And again, they need motels, restaurants, truck stops, and mechanics.

    The Bakken is the little engine driving a fairly significant portion of the economy.

    Samson Oil and Gas Provides Another Operational Update -- The Bakken, North Dakota, USA

    Link here.  Just for the fun of it. I don't think this has been posted here before, but it was dated Dec 30, 2011, so a bit dated.

    Everett #1-15H, Williams County, ND (SSN 26% working interest)

    Fracture stimulation operations have been completed to Stage 11 of 20 planned stages. However, Stage 11 was “screened out” and the sand in the well bore was not able to be flowed back. A coiled tubing unit is required to remove the sand in order to permit the remaining stages to be completed. Because of the holiday period, a coiled tubing unit was not immediately available but one will be mobilized early in 2012 to complete the stimulation of this well.

    WTI Futures Up Almost $3.00

    Too early (for me) to look for reasons.

    All I remember was an analyst (or two) last week suggesting there would be a pullback; even talk of going back to the mid-70's. Someone in passing asked if we could see it go all the way back to 35 (I think, although I forget; the analyst said not that far, but certainly back to 75. That was on CNBC; I don't recall the rationale.

    So we will see.

    Mixed Emotions -- Absolutely Nothing To Do With The Bakken

    Update

    Some time ago, I received in the mail some third class mail from Bank of America saying I qualified for "Premium Services."  I paid no attention; I don't pay attention to third class mailing but for some reason I saved the notice. At the bank the other day, the teller told me I qualified for "Premium Services" but I said I was not interested at the time, but it was enough to make me take a look at the mailing notice.

    It was intriguing. I ready to take Bank of America up on the offer.

    Then, today, this story in the Boston Globe: fees surge as banks look for revenue.
    Many bank customers have long felt nickeled-and-dimed by fees imposed by financial institutions. But now some banks are demanding much bigger denominations.
    The region’s largest banks are charging consumers as much as $50 a month if they do not maintain minimum balances or meet other requirements for certain high-end checking and savings accounts.
    Citizens Bank charges customers $50 a month when the balance in a top-end money market account slips below $1,000. Sovereign Bank imposes fees of up to $30 a month, and Bank of America and TD Bank each charge $25 a month whenever customers fall short of minimum balance and other qualifications for some premium checking accounts.
    One would think that Bank of America would treat their "high-end" customers a bit better, at least giving them a warning if they were at risk of getting hit with a penalty -- and giving them a grace period. After all, we're not talking about grievous lapses here.

    Nope, I'm staying away from these "opportunities." 

    Original Post
    Link here.

    There's not much love lost between banks and me.

    This article was just another in a long line of articles on banks that added to my "distaste" for banks in general, Bank of America specifically.

    And then I came to the end of the article:
    Kathleen Caid's Antique Artistry Studio in Glendale sells elaborately beaded, Victorian-style shades that she makes for lamps, chandeliers and sconces. She said she had understood that her $85,000 credit line would remain in place "as long as I wasn't in default," and she hadn't missed any payments.

    Caid and her husband, Tim Melchior, a video producer with a Burbank media company, insist they are not in serious financial trouble despite having laid off her eight full-time employees and downsized her business space by two-thirds during the recession.

    Yet Bank of America says that her credit-line debt, totaling $80,000, is due in May.

    "I wouldn't have run it up if I knew what was in store,"
    she said, adding that she would be speaking to an attorney and other banks about her options.
    This action by Bank of America is certainly at odds with its current advertising theme/message in which [supposedly] small business owners say BoA has stuck with them through thick and thin.

    But, pray tell, how would a regulator look at a maxed out credit line -- recently "run up" -- for a small business which has downsized significantly? Selling high-end period pieces during a recession? Note: the article doesn't say explicitly but certainly implies that she has laid off ALL her employees. Would you be nervous if you were the lender and noticed that? The company you are lending to has laid off all its employees? If an economic turnaround was in the cards, maybe, but this is California, and things don't appear to be turning around for some time. Certainly not for period accessories.

    And that's why the article results in mixed emotions, mixed thoughts. I know, if I were the lender, I would be nervous. And those regulators breathing down my neck.

    Do not take this out of context. I am not an apologist for Bank of America.