Friday, February 17, 2012

No Evidence of Groundwater Contamination From Fracking -- University of Texas --

Link here to Rigzone.com.
No direct connection has been found between hydraulic fracturing and reports of groundwater contamination, according to a study released Thursday by the Energy Institute at The University of Texas of Austin.

The study found that many of the problems linked to hydraulic fracturing are related to common oil and gas drilling operations such as casing failures or poor cement jobs.

Researchers also concluded that many reports of contamination can be traced to above-ground split or other mishandling of wastewater produced from shale gas drilling, rather than hydraulic fracturing per se, said Charles "Chip" Groat, an Energy Institute associate director who led the project.

"These problems are not unique to hydraulic fracturing," Groat said in a statement.

After You've Gone, Rhythm Sophie

Week 7: February 12, 2012 -- February 18, 2012

Hofmeister: $5 gasoline. It's now $4.00 gasoline in Los Angeles -- record high for this weekend.

CO2 injection for the Bakken?

A new fracking company in the Bakken: RockPile Energy Services; subsidiary of Triangle Petroleum. 

New pipeline proposed -- Bakken to Clearbrook, MN -- Saddle Butte Pipeline/High Prairie Pipeline

Several very nice Oasis wells announced.

DNR's "lost 66,000 acres."

Active rigs plummet to 195; recover to 197.

Ballard Petroleum has a rig on site

Keystone XL pushed back to 2015.

WTI-NYMEX closes at $104.05 for the long Presidents' Day weekend.

300 apartment units in South Heart, North Dakota?

Luxury apartments in Williston - an update.

EOG: 320-acre spacing in the Bakken.

Aerial photos of the Bakken.

From Yahoo!InPlay -- Keystone XL Vital To America's Economic Recovery -- American Iron and Steel Institute

No link because the link is dynamic and won't be there tomorrow.
TransCanada confirmed the vast majority of the pipe for Keystone XL would be manufactured in North America. In addition, the company intends to purchase approximately 90 per cent of all other goods for the $7.6 billion project from companies on the continent.

"Seventy-five per cent of the pipe used to build Keystone XL in the U.S. would come from North American mills, including half made by U.S. workers in Arkansas," said Alex Pourbaix, TransCanada's president, Energy and Oil Pipelines. "In addition, we have already sourced goods for the pipeline valued at approximately $800 million from U.S. manufacturers."

Pourbaix points out that the American Iron and Steel Institute recently sent a letter to the U.S House of Representatives and Senate stating its support of Keystone XL, describing it as vital to the national economic recovery.
Well, that's pretty audacious.

For Investors Only: Motley Fools' Take on KOG -- The Bakken, North Dakota, USA

From the Motley Fool:
Evaluating a company with headwinds this strong can be difficult. Kodiak's trailing P/E of 50.6 looks inflated until forward expectations come into play. With a forward P/E of 9.3 and anticipated sales growth this upcoming quarter clocking in over 800% higher (full-year estimates peg Kodiak's 2012 revenue growing 425%), it's little wonder that most analysts still view the company as a good buy.

Other Bakken players are also expecting major growth, although few have either the specific estimates or the lofty expectations of Kodiak. Samson Oil & Gas doubled its revenue last fiscal year and has a price target of $6, but has only one analyst on its tail compared to the nearly 20 following Kodiak. Whiting Petroleum is expected to grow sales by only 17% this year, and Bakken behemoth Continental Resources may grow only 28%. They both look positively anemic next to Kodiak.
Based on today's IP announcements, Motley Fool might have added Oasis to the mix.

Note disclaimer at the sidebar at the right. This is not an investment site. I am not buying or selling any shares in any company any time soon.

Mitsubishi and EnCana Form a Natural Gas Partnership in British Columbia -- Absolutely Nothing To Do With the Bakken -- February 17, 2012


Updates

June 7, 2019: update on the Montney -- RBN Energy

May 12, 2019: recent headlines from  naturalgasintelligence - Montney:
  • Encana's well costs have dropped $1 million/well after merger with Newfield Exploration in February, 2019
  • Montney's unconventional potential of almost 2,000 trillion cubic feet (333 billion boe?) said to be barely tapped
  • Duvernay, Monteny growth requires natural gas pipeline expansion
  • links between fracking, earthquakes remain elusive, Canadian report
  • Encana adds Anadarko Basin to "core three" with Montney, Permian
April 6, 2018: COP announces acquisition in Montney. 

January 29, 2018: update on Montney.

September 27, 2017: update on Montney.

August 7, 2017: canceled LNG project casts shadow over Canada's biggest shale play.
Petronas' decision to cancel its Pacific NorthWest LNG project is a blow to the growth outlook for Canada's largest shale play, eliminating a potentially huge source of future gas demand.
Gas from the Montney shale play in western Canada would have supplied the C$36 billion ($28.7 billion) project in northern British Columbia. The project, majority-owned by Malaysia's Petronas, would then have shipped 12 megatonnes per year of liquefied natural gas to Asia.
Instead, state-owned Petroliam Nasional Bhd (Petronas) subsidiary Progress Energy will keep developing and selling gas from its vast Montney position into a North American market where prices have been languishing at historically low levels.

May 20, 2017: as a natural gas play, Montney, "Permian of the North" is back

March 13, 2016: competing with the Marcellus for eastern Canada

March 3, 2016: update on polyethylene cracker in North Dakota; the tsunami will include the natural gas from Montney.  

Original Post

Asia Continues to Buy North American Assets

Link here.
Mitsubishi Corp. agreed to acquire a partnership with EnCana Corp. to develop Cutbank Ridge undeveloped lands in northeastern British Columbia. Terms call for Mitshbishi to invest $2.9 billion (Can.) for a 40% interest.

The partnership holds 409,000 net acres of Encana’s undeveloped Montney formation gas assets in the Cutbank Ridge play. Encana will operate the partnership and be the managing partner with 60% interest in the partnership.

Randy Eresman, Encana president and chief executive officer, said Encana began nearly a decade ago to assemble its land position in the Cutbank Ridge in the foothills of the Canadian Rockies.

Eleven (11) New Permits -- The Bakken, North Dakota, USA

Daily activity report, February 17, 2012 --

Operators: MRO (4), BEXP (2), G3 Operating, OXY USA, Petro-Hunt, Whiting, Zavanna

Fields: Murphy Creek, Bailey, Lake Ilo, Last Chance, Reunion Bay, Dublin, Timber Creek, Foreman Butte.

G3 Operating has a wildcat in Williams.

Interesting to see another permit for Dublin oil field; a small field with lots of activity.

Two wells on DRL status reported IPs, including this nice one:
  • 20454, 1,593, MRO, Goodbird USA 34-7H, McLean, in Deep Water Creek Bay, south of the Parshall oil field. Parshall oil field and Deep Water Creek Bay oil fields are right on the west-east line -- it appears that these two fields have an imaginary line running north-south cutting the fields in half; west of the line, nice wells; east of the line, not so good, or non-existent.
Another nice MRO well in this area:
  • 20274, 1,253, MRO, One Feather USA 11-17H, Deep Water Creek Bay; s3/11; t11/11; F; cum 36K 12/11
  • 19957, 1,379, MRO, Torgerson USA 14-8H, Deep Water Creek Bay; s1/11; t10/11; F; cum 28K 12/11

EnCana To Cut Natural Gas Production

The story that producers will cut natural gas production was just reported on CNBC.

Here is another corroborating story: EnCana to cut natural gas production.
EnCana, Canada's biggest natural-gas producer, will scale back investment and cut output to reduce North American supplies by as much as 600 million cubic feet a day in a bid to boost prices for the heating and power-plant fuel.

The company will immediately halt 250 million cubic feet a day from wells, Chief Executive Officer Randy Eresman said in a statement today. Spending for 2012 will drop about 37 percent to $2.9 billion, reducing output by another 250 million cubic feet a day from last year. The remaining cut is in the form of gas used as royalties, the Calgary-based company said.

Encana’s reductions come on the heels of similar moves by North American competitors. Chesapeake Energy Corp. (CHK) said on Jan. 23 it would idle drilling rigs and reduce spending in gas fields by 70 percent. EQT Corp.  announced three days earlier that it will suspend drilling in its Huron Field in Kentucky.

Hofmeister -- Supports My Myth -- Wow, Already: LA's February Holiday's Highest Price Ever

Updates

February 17, 2012: $4.00 gasoline in Los Angeles.
Just in time for Presidents Day: get ready for the long holiday weekend's highest prices ever in Southern California as $4 gasoline is expected to arrive in Los Angeles, Long Beach, and probably Orange County, too.

That's what energy analysts are predicting as the average price of a gallon of gasoline in the Los Angeles-Long Beach area reached $3.996 a gallon overnight, up nearly 2 cents since Thursday. That was also a jump of 15.9 cents a gallon since last week.
Original Post

Former Shell oil CEO Hofmeister just on CNBC. Video here.

His comments support my myth.

Perfect storm:
  • This administration and previous administration: "business as usual"
  • Iran looking to drive oil prices up; strategy: drive Western economies into recession
  • oil spill in Gulf --> moratorium in Gulf
  • the west never anticipated the huge growth by China
Fracking?
  • In the big picture, oil from fracking represents just a trickle of overall supply. The trickle of oil coming from fracking doesn't impact the loss of oil from the Gulf due to the (continuing) moratorium
Killing the Keystone?
  • Horrendous decision; part of the "business as usual" policy (or lack of energy policy)
$5 gasoline?
  • In 2010, "they" were predicting $5 gasoline in 2012
Conundrum for policy makers and impossible to understand by Americans:
  • demand of gasoline continues to decrease (down 6% in past year) and yet price of gasoline keeps going up; go back up to "perfect storm" 
Recession in the west?
  • It's already considered "a given" for the Europeans
  • Will it spread to the US?
Something tells me we will be seeing and hearing a lot more from Hofmeister this year, so he gets his own tag/label at the bottom of the blog.

Several Nice Oasis Wells -- The Bakken, North Dakota, USA

There were some nice IPs reported today, including these (note the Oasis wells):
  • 19992, 1,181, Whiting, Marmon 11-18TFH, Sanish - Three Forks, Bakken,
  • 21121, 1,231, Slawson, Spyder 1-17H, Big Bend, Bakken,17 stages; 1.6 million lbs; no ceramics
  • 20872, 3,694, Oasis, Borden Federal 5300 24-34H, Willow Creek, Bakken, cased hole; 4.55 million lbs; 2.8 lbs ceramics
  • 20410, 1,187, Oasis, Ross 5603 42-10H, Bull Butte, Bakken,
  • 20409, 1,247, Oasis, Emerald 5603 42-10H, Bull Butte, Bakken, cased hole; 4.3 million lbs; 2.6 lbs ceramics
  • 20314, 3,365, Oasis, Lewis Federal 5300 31-31H, Wildcat, Bakken, cased hole; 4.5 million lbs; 2.8 ceramics
  • 21250, 2,568, Slawson, Gabriel 3036-25H, North Tobacco Garden, Bakken, 40 stages; 2.9 million lbs; no ceramics
  • 21062, 2,943, BEXP, Rose 12-13 1H, Avoca, Bakken, 
This is a pretty good day, by any measure. Several other wells reported nice IPs also, and are reported elsewhere. 

The Oasis wildcat is one mile east of Indian Hill oil field, just a bit west of the bull's eye of the Bakken. This is going to be an incredible area for the likes of Oasis.

Enbridge Reports 4Q11 and Full Year Numbers

At top end of projection; increases dividend; increases wind energy investment

Link here.

--  Fourth quarter earnings were $335 million; earnings for the full year
    were $991 million
--  Fourth quarter adjusted earnings were $0.37 per common share, or $275
    million
--  Full year adjusted earnings were $1.48 per common share, an 11% increase
--  Enbridge acquired a 50% joint venture interest in the Seaway Pipeline
    for a total anticipated investment of US$1.5 billion, including reversal
    and a new lateral extension
--  Enbridge to proceed with US$1.9 billion Flanagan South Pipeline
    component of its Gulf Coast Access initiative
--  Enbridge entered Canadian midstream natural gas sector with securement
    of a 71% interest in the Cabin Gas Plant development, with an expected
    total investment of $1.1 billion
--  Enbridge secured a 50% interest in development of the 300-MW Lac Alfred
    Wind Project at an anticipated investment of $0.3 billion bringing
    renewable and alternative energy interests close to 1,000 MW
--  Enbridge named one of Global 100 Most Sustainable Corporations in the
    World for 4th consecutive year
--  Guidance for 2012 adjusted earnings of $1.58 to $1.74 per common share
--  Quarterly dividend increased by 15% to $0.2825 per common share
    effective March 1, 2012

Let's Put the "Talked About" Gasoline Price Increase in Perspective -- US Post Office Now Wants To Raise First Class Postage By More Than 10 Percent

US Postal Service wants to raise first class postage a full nickel. 

Ten percent is well beyond inflation.
Mired in red ink, the United States Postal Service is warning it will lose as much as $18.2 billion a year by 2015 unless Congress grants it leeway to eliminate Saturday delivery, slow first-class mail by one day and raise the price of a postage stamp by as much as 5 cents.

In a letter to Congress, Patrick Donahoe, the postmaster general, described an updated five-year cost-cutting plan put together in coordination with a Wall Street adviser, Evercore Partners. It reiterates many of the mail agency’s proposals to switch to a five-day delivery schedule, raise stamp prices and close about 252 mail-processing centers and 3,700 local post offices.
And the interesting thing is that the rate increase and service increase will affect folks least able to afford it. 

And again, note: the 5-cent increase comes on top of the service cuts. This certainly suggests the US Postal Service is in bigger trouble than the average American is led to believe. And, of course, this is a 5-year plan, so perhaps it's only a penny increase/year over five years. 

I suppose if we cut the payroll tax cut a bit more, "we" can offset the cost of postage with the tax cut. 

5/45 --> 11% and remember, the postage was already raised one cent just last month. And I forget. Is first class one ounce letter stamp now 45 cents?

PetroBakken to Sell Non-Core Saskatchewan Assets to Crescent Point -- The Williston Basin, But Not North Dakota, USA


This appears not to affect assets in the North Dakota Bakken, but they do describe it as "Bakken light oil."

Currently producing 2,900 boepd; 20,360 net acres.

At $75/bbl, that 2,900 boepd might represent about $80 million/year.

$300 million/20,360 net acres --> $15,000 acre.

This is what PetroBakken says:
  • $147,250 per flowing boe (January 2012 field estimate)
  • $40.50 per boe of gross proved plus probable reserves (excluding future development capital of
    $67 million)
  • 7 times annualized current cash flow
  • 5.5% of December 2011 Company production
And this:
The Bakken Business Unit will continue to represent a significant portion of our corporate asset base as this sale represents only 7% of the Business Unit’s land holdings and approximately 12% of its production. Assuming successful completion of this Transaction, our average working interest in our remaining Bakken Business Unit lands will increase from 82% to 86% and we will continue to have over 700 net drilling locations in the Business Unit, representing approximately 10 years of drilling inventory.
 I find the "flowing boe" value most interesting: $150,000/flowing bbl.

Active Rigs in North Dakota Plummet to 195

Record was 205

Link here (it's a dynamic link and the number will change over time).

Chesapeake said earlier they were reconsidering its activity in North Dakota.

OXY USA said it was redeploying rigs from North Dakota to California.

DNR took 66,000 net acres off their books.

One Canadian oil sands company halted operations temporarily due to oil glut at receiving terminals.

Could we see, in the next Director's Cut, the first time in many months an actual decrease in production month-over-month? Will North Dakota fail to jump to #2 in oil production among the states? Or are the operators getting more efficient with multi-well pads and shorter drilling times? Can they do more with less?

Stay tuned.

Remember: the record number of rigs was 205.  I assume if the decline continues, we will see an in-depth story in The Dickinson Press.

Are The Saudis Sleeping In?

Spot price closed at $104.05 going into the long weekend.

Original Post
Spot Price of WTI-NYMEX Up $1.07; Over $103/Bbl

Wasn't it just a week ago that the Saudi prince reassured us his country would not let oil go over $100.

As I've posted many times, Saudi has the capability to increase the price of oil but it no longer has the same degree of clout it once had in lowering the price of oil.

And why would they, really?

Saudi's ability to flood the market with oil -- especially the "right" kind of oil -- is a myth.

The President's Numbers Are Exactly Right -- Payroll Tax Cut Will Cover the Gasoline Price Increase -- Exactly

Updates

One hour later: after posting the note below, Yahoo News has an article saying exactly the same thing -- gasoline price increase wipes out the payroll tax cut. 

Original Post

Amazing how law of big numbers works out again!

San Diego: gasoline at $3.99.

Flashback: the president predicts significantly higher gasoline prices this year.

Today: inflation at its "fastest clip" in four months -- due to energy prices.

The president, in the first link above, said that the payroll tax cut will offset the increase in the price of gasoline (which he described as "significant").

Everyone I knows tells their insurance company they drive their automobile 12,000 miles per year.

Assuming one's vehicle gets 24 miles per gallon, here are the calculations for one year's expense for gasoline at $5.00/gallon vs $3.00/gallon.
  • 12,000 / 24 --> 500 gallons of gasoline @ $5.00/gallon --> $2,500/year in gasoline --> $96 / 2 wks
  • 12,000 / 24 --> 500 gallons of gasoline @ $3.00/gallon --> $1,500/year in gasoline --> $58 / 2 wks
The difference between $96 and $58 is about $40, exactly the amount that the average worker will "get" with the payroll tax cut extension. Amazing how these things work out.

If you rush out and buy a Volt today, you can cut that gasoline bill even more, though you will have a $400 monthly payment with insurance.

I often make errors in arithmetic, so let me know if the numbers are wrong.

A family of four at McDonald's: about $28.

300 Apartment Units in the Offing for South Heart, North Dakota? -- The Bakken, North Dakota, USA


South Heart is 13 miles west of Dickinson, almost a direct shot on I-94.

Juxtapose these two comments in the story:
  • Hurt told The Press more apartments would be good for South Heart “because permanent structures are always much better than temporary.”
  • After going through the last oil boom, Andrus said there was overdevelopment, and then the “boom bubble burst overnight.”
Permanent structures are ... well, permanent. It looks like folks feel this boom won't end.

Japan: Doomsday Debt

Link here. $10 trillion.

You can add: Doomsday -- US states.

You can add: Doomsday -- US cities.

And, of course, the US in general, for which I have no link because the debt overhang is reported almost daily somewhere.

EOG Earnings Conference Call -- 8:00 A.M. CST Today

Link here -- scroll to bottom of article for link to conference call.

This is a big day for EOG investors.

InPlay: EOG Resources beats by $0.28, beats on revs; increases Eagle Ford reserve potential to 1.6 billion boe from 900 million; increases dividend by 6.25% to $0.17/share.