Tuesday, April 3, 2012

Chesapeake "Optimistic" About The Utica

This is about the Utica, not the Bakken, but somehow a couple of us got into a discussion about the merits of Chesapeake and the Utica vs Chesapeake and the Bakken.

Rigzone has an update with regard to Chesapeake and the company's "thoughts" about the Utica.

Some data points:
  • Recoverable oil in the Bakken, USGS: 3 - 4 billion bbls; CLR/CEO says as much as 24 billion
  • Recoverable oil in the Utica: 1.3 to 5.5 billion
  • Chesapeake: number of rigs in North Dakota -- 1 active one today, I believe (if I'm wrong, someone will tell me)
  • Chesapeake plans to have 20 rigs in Ohio by the end of the year (2012)
  • Currently, Chesapeake has five Utica shale wells (operated by subsidiary Chesapeake Appalachia): these five produced 45,513 bbls of oil and 2.5 million cubic feet of gas in 2011 (an "average" Bakken well should be able to produce 50,000 bbls in first six months; just a rule of thumb for me; others will have their own "rule of thumb")
I don't have a dog in this fight one way or the other. I just wish all good luck whatever their endeavors in the oil patch.

Economart and Coborn's (St Cloud, Minnesota) Partner

Link here to the Williston Herald.

Wind Power: No Wind, No Electricity

Link here to the Las Vegas Sun.
In a startling example, the city of Reno’s wind turbines — for which the city received more than $150,000 in rate-payer funded rebates — produced dramatically less electricity than the manufacturers of its turbines promised.

As first reported by the Reno Gazette-Journal, one turbine that cost the city $21,000 to install saved the city $4 on its energy bill. Overall, $416,000 worth of turbines have netted the city $2,800 in energy savings.

Not all of the city’s turbines performed so poorly. But on average, the small wind turbines installed statewide through NV Energy’s program have yielded disappointing results.
And so it goes.

Lesson learned, as noted in the article:
“A generator can claim to put out 100 kilowatt hours, but that’s based on an assumption that there’s a certain amount of wind. If you don’t have the wind, you won’t have the output.”
Don't even get me started.

GMXR Reports a Nice Bakken Well -- North Daota, USA

Link to press release:
GMXR today announces that the Company has successfully drilled and completed its fourth operated horizontal Bakken well, the Lange 11-30-1H, 89% working interest, located in Sections 30-31 T147N-R 99W in McKenzie County, North Dakota. The Lange 11-30-1H was drilled to a measured depth of 20,519' with a lateral length of 9,348'. It was completed as a 32 stage frac Middle Bakken producer achieving a peak rate of 2,549 boepd @1,500 psi flowing casing pressure.
This well is pretty far south in McKenzie County, a fairly inactive area; the well was a wildcat. 

Six (6) New Permits -- The Williston Basin, North Dakota, USA

Daily activity report, April 3, 2012 --

Operators: SM Energy, EOG, Silver Oak Energy, and American Eagle

Fields: Colgan (Divide), Charlson (McKenzie), Cedar Hills (Slope), Parshall (Mountrail)

After just posting a fairly long note regarding American Eagle yesterday, it is with some pleasure to see another American Eagle permit.

Four wells were released from "tight hole" status; two were completed/fracked, including:
  • 21084, 1,497, Denbury, Satter 24-35SEH, McKenzie
Seven wells on DRL status reported IPs, including:
  • 16882, 59, Denbury, TRMU 13X-22H, Billings, a Madison well
  • 19981, 1,003, Zavanna, Gust 2-11 1H, Williams

Japan's Oil Imports From Kuwait Surge 36% Year-Over-Year in February, 2012

Link here to PennEnergy
Kuwait's crude oil exports to Japan surged by 36.3% y/y in February 2012 to 8.24mn barrels, or 284,000 barrels per day (bpd)... 
Imports from the following countries into Japan, February, 2012
  • Saudi Arabia: 1.13 million
  • UAE: 719,000 bopd
  • Qatar: 426,000 bopd 
  • Iran: 306, 000 bopd
  • Kuwait: 284,000 bopd
For archival purposes, in 2001: Japan imported 238,000 bopd from Kuwait

If Japan abides by the sanctions on Iran, one can do the math.

211: New Record -- Total Active Drilling Rigs in North Dakota

Dynamic link here.

For Investors Only: AAPL Will Hit a New High Today

The shares of my favorite company will hit a new high -- again -- today.

Simply idle chatter. I don't own any shares in AAPL, never have, never plan to buy any shares. This is just simply idle chatter while waiting for the day to get started.

Remember the back and forth between XOM and Apple for bragging rights as company with largest market cap? AAPL is now firmly in lead.

More Passing Lanes Between Williston and Watford City -- $8.5 Million

Link here to Dickinson Press.

Further evidence that activity is moving to northeast corner of McKenzie County (Watford City area).

Base of operations is west Williston.

Secretary of Interior Tours Man-Camp -- No Body Guards; Supports Water Fracking

Link to Dickinson Press here.
Throughout the tour, [Ken] Salazar walked about without bodyguards, and with North Dakota Sens. John Hoeven and Kent Conrad and Congressman Rick Berg while discussing whether the Lodge should be referred to as a “crew camp,” considering men are not the only ones who reside there.
The Dickinson Press expected something else? I think it gets back to that fear of men living together.

“We are supporters of hydraulic fracturing,” he said. “The president’s position and mine on hydraulic fracturing has been that it is a technological positive that has allowed us to move forward with the kind of robust oil and gas development that we’re seeing all across the country.”
How safe?
“It has been done safely,” he said. “We know that that’s the case almost everywhere that it’s been done."

Slow-Rolling the Domestic Oil and Gas Industry, Slow-Rolling The American Public

There's a nice op-ed piece in current issue of Investor's Business Daily regarding the administration's war against fossil fuels:
It's true that total domestic oil production was higher in 2011 than in any year since 2002. But the production of fossil fuels (coal, oil and natural gas) on federal lands fell to a nine-year low in 2011, and crude oil production on federal lands actually fell by 14% in fiscal year 2011, the largest annual decrease in at least a decade.

In other words, the increases in oil production in recent years were largely from drilling on state and private lands, and happened in spite of Obama's restrictive energy policies, not because of them.

Domestic natural gas production has soared by more than 21% since 2005, but has fallen on federal lands by 24% over that period. Like oil, the increases in natural gas production have taken place on state and private lands and have happened because of the significant technological advances in drilling (hydraulic fracturing and horizontal drilling), and not because of the Obama administration.

Other actions taken by Obama, including rejecting the Keystone XL pipeline, cancelling millions of acres in offshore lease sales, and closing the majority of the Outer Continental Shelf to new energy production for the next five years — demonstrate an administration that is hostile to increasing domestic production of fossil fuels that are critical to America's energy and economic future.
The linked note regarding the Outer Continental Shelf is most interesting: the administration was particularly disingenuous when this "moratorium" was announced. I remember growing up with "Tricky Dick." There is an entirely different approach to political spin in the 21st century, and I think much of it is an outgrowth of lessons learned by urban youth in the 80's and 90's. Cynicism.

The data point regarding the decrease in crude oil production on federal lands is an extremely interesting data point. I do not know "who" first noticed this and first made it known to the American public. It was obviously a government agency that first collected the information (perhaps the EIA) but whether it released a press release or a talking paper on it, I do not know. I do know that I first heard this data point from Newt Gingrich during the GOP presidential nomination race late last year/early this year.

Eternal Not So Eternal -- Random Look at Activity Northwest Corner of North Dakota -- The Williston Basin, North Dakota, USA

Eternal not so .... well, er, eternal

When you look at the GIS map server, this jumps out at you: all the activity in northwestern North Dakota. Compared to the rest of the state it may not be all that much, but when this boom began there was very little activity this far north/west. Now a quick glance reveals no fewer than seven (7) rigs up in this area, and represented by multiple companies.  "ros" -- rig on site.
  • 22231, ros, SM Energy, Torgeson 2-30HNA, West Ambrose, Divide,
  • 22385, ros, Crescent Point, CPEC Elgaard 32-31-164N-100W, Colgan, Divide,
  • 21871, ros, American Eagle/Eternal Energy, Cody 15-11-163-101, Colgan, Divide,
  • 20802, ros, Samson Resources, Charger 7-6-162-98H, Ambrose, Divide,
  • 22053, ros, Baytex, Randy Olson 8-5-161-98H 1PB, Plumer, Divide,
  • 21948, ros, Baytex, Bentson 25-36-161-98H-1AP, Moraine, Divide,
  • 21364, ros, CLR, Nordness 1-18H, Wildrose, Divide
Eternal Energy has three permits in North Dakota -- or should one say -- had three permits in North Dakota. Their three permits -- all wildcats -- are all now permanently canceled (PNC).  It appears American Eagle picked up one of their permits/location and has two additional locations, also in Colgan field. When you gooogle "American Eagle Energy," you see "eternalenergy.com" as the "old" URL, so this may simply be a name change or some sort of "merger." When you go to the site, the company mentions that previous SEC documents will be found under "Eternal Energy." Ah, here it is, a December 20, 2011, press release announcing the merger between Eternal Energy and American Eagle Energy.

Data points re: American Eagle Energy
American Energy's mission statement from its website:
We are targeting energy resources in the North Dakota Bakken and Three Forks Formations; the Alberta Basin Bakken Source System located in Montana; and the Hardy Bakken Project located in Saskatchewan, Canada. American Eagle Energy's portfolio of properties, combined with management's expertise in the exploration, development and production of Bakken resources, will allow American Eagle Energy to quickly build stockholder value.
According to their website this date, the company has seven (7) horizontal wells that are either being drilled or planned for the near future; they will be operated by either American Eagle or another "key" operator in the area.

If you go to the website (which is a very good website), check out the Spyglass and West Spyglass prospects. Note that "EERG" refers to Eternal Energy well sites. It is quite amazing to see all the activity in this part of the Basin.

So, much more than I had expected to write, but sheds a little light on activities in this part of the state.

Again, there may be errors in information presented above but I've tried to be as accurate as possible based on publicly released information.

Mike Filloon, over at SeekingAlpha.com has discussed American Eagle on several occasions, including: July 24, 2011; October 24, 2011.