Wednesday, February 15, 2012

Documentary Movie on Fracking

I got a note this evening regarding a documentary (movie) on fracking. Apparently it's a shoe-string effort depending on small donations to get the movie completed.

I have no connection with the movie and knew nothing of it until I got the message.

This is the note I got:
"There is a possible movie being made with a focus on the truth about fracking (not the usual fear and panic) that I hope will be made. Yes, this is a site looking for money for the production of it but nonetheless it looks interesting to me (I have no association with them)
The website is interesting.

Again, I just post it with no hidden agenda.

T Boone Pickens -- CNBC -- February 15, 2012

Bottom line for this short interview: US industry is literally blessed to have such cheap energy (natural gas) but price difference between US oil and Brent will eventually narrow.  T Boone couldn't be more clear that US manufacturing has huge advantage vis a vis the rest of the world, especially in energy-intensive industries.

Video with CNBC / T Boone Pickens -- 

US -- Bakken -- cheapest oil in the world at $70/bbl -- compare with North Sea; compare with Brent

US -- natural gas also cheapest in US; $2.50 in US; $13 - $16 overseas

Cheap energy in US is great for US manufacturers.

[Some time ago I wrote that US industry coming back to the US due to low energy for which "anonymous" said I was wrong; nice to see T. Boone pick up on this.]

CNBC: "Are you saying we can't drill our way out of this!" T Boone seems astounded this question would be asked. Someone at CNBC is not getting this.

Keystone XL: temporary politics, or really halted? Not declaring disaster; we'll be stupid if we don't take Canadian oil; otherwise will go to China.

US has just left Iraq. We have no control over where Iraqi oil will go.

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

Daily activity report, February 15, 2012 --

Let's see -- there were 14 new permits on the 14th of February, now 15 new permits on the 15th.

I can hardly wait for the 29th of February.

Operators: CLR (6), Dakota-3 (3), Samson Resources (2), Oasis, Fidelity, Whiting, Slawson

Fields: Banks, Ellsworth, Juno, Camp, Sanish, Moccasin Creek, Cedar Coulee, and Saxon

Fifteen new permits and no wildcats. Interesting.

One well on DRL status reported an IP:
  • 20318, 727, SM Energy, Leiseth 16-13H, McKenzie, Bakken,
Ten wells were reported as plugged or producing (in the Bakken, they will all be producers. There are "no" dry holes in the Bakken).

Hess canceled a brand new permit:
  • 22308, Hess, MC-Sickler 144-95-1423H-1PNC, Dunn County.

CO2 For Secondary Production in the Bakken? -- Will Be Studied -- The Bakken, North Dakota, USA

Great article sent to me by Rick. Thank you.
For the first time, researchers will study whether carbon dioxide can be used to enhance oil recovered from wells in the Bakken formation.

The Environmental and Energy Research Center at Grand Forks will get $475,000 from the state’s Oil and Gas Research program to probe the question.

It’s expected the study will take 15 months and cost more than $1.3 million.
Other data points:
  • EERC says only 3 - 5 percent of original oil in place (OOIP) can be recovered through primary production (not all agree with that; that seems low)
  • Marathon Oil, Denbury Resources, and TAQA North will finance the study
  • in conventional oil plays, waterflooding is secondary production; most say that waterflooding will not work in tight shale, such as the Bakken
  • CO2 injection is generally considered enhanced oil recovery (EOR; tertiary production) but would be secondary production in the Bakken if waterflooding does not work
  • a spokesman says that CO2 has a high potential to work

New Pipeline Proposed -- From the Bakken to Clearbrook, Minnesota

Link here to Oil and Gas Journal.

Data points:
  • Alexander, ND, to Clearbook, MN.
  • 450 miles; 16-inch main pipeline
  • To be built by Durango, CO - based Saddle Butte Pipeline LLC
  • To be operated by High Prairie Pipeline LLC, a subsidiary of Saddle Butte Pipeline
  • Two laterals proposed: a) 17 miles between Johnson's Corner, ND, and proposed new pipeline; and, b) 8 miles between Robinson Lake, ND, and the new pipeline.
  • Capacity: 150,000 b/d
  • Sources cite Bakken production to double to 1 million bbls by 2020
The Alexander terminus is going to be the western edge of main activity this summer.

Johnson's Corner is just east of Watford City, ND; a few miles southwest of the new ONEOK Garden Creek natural gas gathering and processing plant.

Except for Robinson Lake, which is in Mountrail County, these locations are all in McKenzie County, where I think the focus of Bakken activity will be in 2012. 

Glenburn Oil Field Update -- The Williston Basin, North Dakota, USA

This small field, about 12 sections, is located mostly in the Renville County panhandle between Bottineau County and Ward County, northeast of Minot, North Dakota. A few sections of the oil field are located in Bottineau County.

This is a Madison field. The wells are all vertical wells.

In very general terms, there about 10 wells per section, one-half to three-quarters are abandoned, leaving one-fourth to one-half still producing. The wells range from very low producers to some incredible wells, including the earliest wells:
  • 2350, spud 5/59; PNA in 1970; 11 years; cum 81K bbls
  • 2453, spud 9/59; WI, 2005; 46 years; cum 197K bbls
  • 2513, spud 11/59; still producing; 53 years; cum 595K bbls
  • 2603, spud 2/60; PNA, 1985; 25 years; cum 26K bbls
  • 2604, spud 3/60; WI, 2007; 47 years; cum 729K bbls
  • 2619, spud 3/60; PNA, 1979; 19 years; cum 278K bbls
  • 2627, spud 4/60; PNA, 1985; 25 years; cum 168K bbls
  • 2660, spud 5/60; still producing; 52 years; cum 543K bbls
  • 2663, spud 5/60; PNA, 1989; 29 years; cum 98K bbls
  • 2686, spud 7/60; WI, 2007; 47 years; cum 232K bbls
Ballard Petroleum has two new permits for wildcats west of Glenburn, including this one:
  • 22051, ROS, Ballard Petroleum Backes 23-4, wildcat, just west of the Glenburn oil field, north of Minot, North Dakota; ROS = rig on site, as of February, 2012

Ballard Petroleum Has a Rig On Site -- The Williston Basin, North Dakota, USA

Ballard has a rig on site

  • 22051, ROS, Ballard Petroleum Backes 23-4, wildcat, just west of the Glenburn oil field, north of Minot, North Dakota;

Well, This Was Exciting For 30 Seconds -- The Bakken, North Dakota, USA

NDIC reports a well with an IP of 12,419. Unfortunately it's an error. If one goes to the well file, one will see that the company's reported IP was a much more credible 1,419:
  • 20683, 1,419, Denbury Onshore, Satter 31-1SWH, Siverston, Three Forks, t11/11; cum 51K 3/12
But, it was exciting for 30 seconds.

Random Snapshot of Frack Details -- The Bakken, North Dakota, USA

Some random frack data.

This is the frack data from the wells that have reported IPs in the last couple of days.

I'm always wary of reports which do not provide details of the frack; when they say a "sand frack" without data, one can assume no ceramics, but I don't know for sure. Caveat: this was done quickly; there may be data errors; there may be typos.

  • 20709, 773, BEXP, Enns 28-21 1H, Kittleson Slough, Bakken, 33 stages; 3.8 million lbs total; 2.3 million lbs ceramics
  • 20393, 618, Whiting, Lacey 12-10TFH, Sanish, Bakken, 25 stages; 1.6 million lbs total; all sand
  • 20043, 200, Whiting, Peplinski 34-9, Wildcat, Red River (not a Bakken), no frack report;
  • 20495, 1,413, MRO, Pennington USA 31-4H, Reunion Bay, Bakken, 30 stages; 2.3 million lbs total; sand frac; no details
  • 20112, 237, EOG, Hardscrabble 10-2536H, Eightmile, Bakken, I did not see a frack report
  • 20835, 780, Denbury Onshore, Sorenson 31-28SWH, Siverston, Bakken, 22 stages; 2.2 million lbs total; sand frack; no details
  • 20722, 215, OXY USA, Ankenbauer 160-90-34-P-1H, Dimond, Bakken, 21 stages, 2.8 million lbs total; sand frac; no details;
  • 20974, 730, MRO, Boy Chief USA 11-15TFH, Moccasin Creek, Bakken, I did not see frack report;
  • 21015, 740, CLR, Juneau 1-2H, Brooklyn, Bakken, 30 stages; 2.5 million lbs total; sand frack; no details
  • 20966, 3,082, BEXP, William 25-36 1H, Camp, Bakken, 39 stages; 4 million lbs total; 2.4 million lbs ceramics
  • 20587, 97, Baytex, Colby 23-14-160-99H, Burg, Three Forks, 20 stages; 1.9 million lbs; sand frack; no details
  • 19133, 39, Baytex, Redfield 25-36-157-99H, wildcat, Bakken, 20 stages; 1.9 million lbs; sand frack; no details
  • 20613, 1,780, Whiting, Lacey 14-3XH, Sanish, Bakken, 30 stages; 2.1 million lbs total; all sand;

For Investors Only -- KOG, WLL, NOG, VOG, Magnum Hunter, Triangle Petroleum, AAPL, Others

Update on KOG,
With the addition of the 7th rig, the 24-hour completion crew, and the resolution of the mechanical issues at several wells I find that KOG should be able to easily meet its production goal of 25,000 BOE/d. Using a very conservative 75% increase in BOE/d sales volume for fiscal 2012 we expect KOG to be able to sell approximately 6864 BOE/d. At a conservative selling price of around $70 per BOE we come to fiscal 2012 gross revenues of approximately $175.36M. Details are provided at the link.
Sell KOG,
Kodiak Oil & Gas Corp. is an independent energy company focused on the exploration, exploitation, acquisition and production of natural gas and crude oil in the United States. The smallest among those natural gas producers reviewed in this article with a market capitalization of $2.31 billion, Kodiak posted straight losses for the last five years. Kodiak's greatest disadvantage is that it has still undeveloped operations. Its price-to-sales ratio is 35 compared with competitors' less than 5. It will be years before Kodiak begins to cash in on its assets. I don't recommend speculating on Kodiak. Sell the stock. [Comment: this writer says to buy CHK.]
Reversal of fortune for the Bakken when the Seaway is reversed,
However, the reversal of fortune I mentioned in this article's title has to do with the reversal of the Seaway pipeline enabling it to send crude from Cushing, Okla. to the Gulf coast at Freeport, Texas (crude used to flow in the opposite direction). The Seaway pipeline, which COP recently sold to Enbridge, can carry up to 400,000 barrels of oil a day. This will greatly alleviate the glut at Cushing and make way for more Bakken crude to enter the system at higher prices. Last I heard, Seaway work is progressing nicely and the flow south should begin mid 2012. In this press release Enbridge says "the line could operate in reversed service with an initial capacity of 150,000 barrels per day by second quarter 2012." Also, currently additional pipeline capacity is being added in the Bakken region. [The link comes with a great pipeline map, also.]
IP rates in Dunn County, Filloon,

VOG: press release, new $150 million credit facility

Magnum Hunter and Triangle Petroleum profit from the Bakken. Well, duh. A press release.

AAPL up another $8 today. And just last night the CNBC talking heads said they recommend taking your AAPL profits. No link.

Note disclaimer at sidebar at the right. This is not an investment site. I own shares in three companies mentioned on this page; I have no intention of selling any of these shares in the near future nor do I plan to buy any shares in any of the companies listed on this page in the near future (i.e., the next six months).  All my discretionary cash is going a) to the IRS to pay taxes; b) to my granddaughters; and, c) to my younger daughter. And pretty much in that order.

IP Rates in Dunn County -- Filloon -- Parts I and II


Part I.

Part II.

For Investors Only -- Magnum Hunter -- Yahoo!In Play

No link to "In Play" due to the fact that the link is dynamic. This story will not be there tomorrow.
Magnum Hunger announced that the its borrowing base under its $350 mln Senior Bank Facility, which consists of a $250 mln Senior Revolving Credit Facility and a $100 mln Term Loan Facility, has been increased by $35 mln from $200 mln to $235 mln. The 17.5% increase in Magnum Hunter's borrowing base is entirely due to organic growth of the co's existing proved reserve base due to the successful drilling activities in its three unconventional resource plays. As previously announced, Magnum Hunter's proved reserves increased by 21% to 45 million BOE from Sep 30, 2011 to Dec 31, 2011.

Oil Futures: Up $1.30 -- But Dropping Back


Some minutes later: perhaps it is all about the Iranian situation. If Saudi production fields become a battleground, this will all be very interesting. Apparently, some of that is beginning.
Armored anti-riot vehicles cluster outside the police station in Awwamiya in Saudi Arabia’s oil- producing eastern region, where unrest is turning violent.

“We have enough police force to deal with any criminal or prohibited situation,” says Brigadier-General Yousef al-Qahtani as he drives through the town. In nearby al-Qatif, graffiti scrawled on a cemetery wall criticizes the Al Saud family, founders of the kingdom eight decades ago, and calls for the removal of their fellow Sunni Muslim monarchs in Bahrain. Black Shiite flags adorn religious centers in the back-alleys.

Clashes between police and armed Shiite protesters in the two towns have intensified since October, when 11 police were injured in an attack. Since then, seven Shiites have been killed by security forces, according to figures provided by Saudi Arabia’s Human Rights First Society.
Original Post
Oil futures don't mean squat, of course, but after the recent run-up, it's interesting to see futures where they are.

For newbies, these are the benchmarks I use:
  • <$60: concerning, recession, something significantly negative affecting the market
  • $60: supply and demand fundamentals
  • $60 - $80: general trading range; strength of the dollar; general market conditions; 
  • $80 - $100: appropriately bullish on oil; strength of the dollar; improving market conditions; 
  • >$100: concerning, traders see short-term supply/demand mismatch; something significantly concerning is affecting the market such as impending Mideast unrest; not due to strength of dollar
So, when I see oil trending solidly above $100, I ask myself what's new today? Why is it trending solidly above $100 today (as opposed to next week, last week, but why today?). I've lost the bubble on the Iranian story -- I see the headline in today's WSJ about the botched Iranian terrorist attack in Bangkok. Getting closer to significant problems in the Mideast, more than usual?

I know the refineries are switching over to their summer blends, but that should result in gradual melt-up if it has any effect at all.

Are economic numbers improving? Possibly; and, perhaps the price is just reflecting that but it seems to be moving too fast based just on economic numbers. Greek bailout story ending? Hardly? Congress extending payroll tax cut? At $20/week, doesn't amount to anything.

So, we'll have to see what transpires today: where oil finishes, and if continues to hold at $102 or higher, to see what the headlines bring.

And perhaps nothing: I see futures have dropped back to a more reasonable number.