Results: North Dakota Oil and Gas Lease Results -- May 1, 2012

Link here.

In most cases, the max bonus was an outlier; most bonuses in each county were much lower than the max bonus.  Most parcels were 80 acres.

Billings County

• 11 parcels
• Max bonus: $4,700/acre

Burke County

• 5 parcels
• Max bonus: $375/acre

Divide County

• 37 parcels
• Max bonus: $4,700/acre

Dunn County

• 12 parcels
• Max bonus: $550/acre

Golden Valley County

• 4 parcels
• Max bonus: $200/acre

McKenzie County

• 14 parcels
• Max bonus: $10,500/acre; Empire Oil; Whiting has one horizontal in this section;

Mountrail County

• 2 parcels
• Max bonus: $2,200/acre

Slope County

• 16 parcels
• Max bonus: $22/acre (not a typo)

Stark County

• 22 parcels
• Max bonus: $2,750/acre

Ward County

• 10 parcels
• Max bonus: $12/acre (not a typo)

Big Butte Oil Field Update; Triangle Petroleum Update -- The Williston Basin, North Dakota, USA

Big Butte Oil Field updated -- IPs for about six wells added, along with cumulative oil production. Nothing particularly remarkable, but all nice wells.

Also, unrelated, Triangle Petroleum data updated; no results have been posted, but the wells have been listed by field. Triangle has some nice acreage. 

IPs for Two Wells Along Hess #1711 Reported -- The Bakken, North Dakota, USA

Link here.

The following two wells reported IPs recently:

• 19226, 275, Hess, EN-Wefald-156-94-1324H-2; t9/11; t44K 3/12;
• 19227, 723, Hess, EN-Wefald-156-94-1324H-3, 31K the first month! t6/11; cum 124K 3/12;

Should We Be Concerned? After Only Three Years --> Water Injection, The Bakken, North Dakota, USA

In today's daily activity report:

• 16986, 1,347, EOG, Parshall 20-03H, Bakken, Parshall field; t5/08; cum 221K 3/12; averaging about 2,200 bbls/month; 

My hunch: a study.

Putting Things Into Perspective -- the Bakken vs the Gulf

This is the headline: BP To Invest $4 Billion In The Gulf of Mexico This Year

The Gulf is a huge geographic area.

The scuttlebutt: the oil industry is investing $4 billion in the Bakken every month!

200 rigs in the Bakken; 200+ wells being drilled each month; each well, $10 million -- just in drilling: 200 x $10 million --> $2 billion. The support services, the housing, everything else, another $1 billion to $2 billion/month. ONEOK natural gas gathering is just part of that. Pipeline activity. Crude-by-rail activity. Incredible.

So, when you see a $4 billion investment headline in the Gulf, think of that amount of money going into a few counties in western North Dakota.

BEXP Has Permits For A 4-Well Pad Within Viewing Distance of Mercy Hospital, Williston, North Dakota, USA

I could be wrong, but the legal description of the permits for four wells issued to BEXP today for Todd oil field suggests the wells will be on one pad, running west-to-east just west of the bypass, northwest of the hospital or somewhere in that general location. Based on the GIS map, they will be just inside Williston city limits, 500 feet south of 52nd Street NW/26th Street West:

• 22872, loc, BEXP, Pyramid 15-22 4TFH, Todd,
• 22873, loc, BEXP, Pyramid 15-22 3H, Todd, 
• 22874, loc, BEXP, Pyramid 15-22 2TFH, Todd,  
• 22875, loc, BEXP, Pyramid 15-22 1H, Todd,

BEXP Reports Another Nice Well -- A Wildcat With an IP of 4,368 -- The Williston Basin, North Dakota, USA

Technically, it may be a wildcat, but certainly in my mind, not a "true" wildcat. It's practically in the bull's eye of the Bakken, two miles south of the prolific Camp oil field and barely seven miles southwest of the Banks oil field:

• 21245, 4,368, BEXP, Heinz 18-19 1H, wildcat, Bakken; t4/12; no production data yet; I did not see frack data yet at the well file report.

BR With Two More Nice Wells -- The Bakken, North Dakota, USA

Coincidentally, I just happened to mention yesterday that BR typically puts their wells on SI status and then some time later completes them and reports an IP. Today, two more examples, and both very good wells, typical of BR:

• 20930, 2,700, BR, Colton 21-30H, Haystack Butte, t12/11; cum 20K 3/12;
• 21298, 1,803, BR, Elizabeth Stroh 34-7MBH, Cabernet, t3/12; cum 3K 3/12; 

Note: the "Stroh" name; it's been awhile. See tags/labels for "Stroh" if interested. It brings back memories of the early days of this blog. 

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

 Note: several very interesting items in today's daily activity report; will expand upon them in stand-alone posts, and updates in other posts where appropriate

Daily activity report, May 2, 2012 --

Operators: BEXP (4), Whiting (2), XTO (2), Hess, KOG

Fields: Sanish (Mountrail), Sand Creek (McKenzie), Epping (Williams), Todd (Williams), Dollar Joe (Williams)

The four permits by BEXP are for Todd oil field in/around the town of Williston.

Permit re-entry:

• 11502, conf, Encore, Wegman 2-30, Bowman; Red River B (not a Bakken); Horse Creek; originally spud in 1985; produced around 5,000 bbls the first year and that was about all;

Converted to water injection:

• 16986, 1,347, EOG, Parshall 20-03H, Bakken, Parshall field; t5/08; cum 221K 3/12; averaging about 2,200 bbls/month;

Only one well released from "tight hole" status:

• 20603, 416, WPX, Plenty Sweet Grass 18-19HC, 

Six producing wells completed:

• 20375, 1,011, Zavanna, Niels 32-29 1, Stockyard Creek, t4/12; no production data reported yet;
• 20930, 2,700, BR, Colton 21-30H, Haystack Butte, t12/11; cum 20K 3/12;
• 21168, conf, Oasis, Hillstead 5603 13-29H, Bull Butte; about 6K/month;
• 21245, 4,368, BEXP, Heinz 18-19 1H, wildcat, Bakken; t4/12; no production data yet;
• 21298, 1,803, BR, Elizabeth Stroh 34-7MBH, Cabernet, t3/12; cum 3K 3/12;
• 21378, 663, EOG, Wayzetta 124-3334H, Parshall; t3/12; cum 5K 3/12;

Thirteen wells reported as plugged or producing.

Natural Gas: The Argument for Exports -- Carpe Diem

This is really quite incredible:

If there is one conclusion that should be drawn from the boom in U.S. natural gas production, it is that supplies are so abundant that it makes economic sense to export some of our gas to countries overseas.

No one could have imagined that possibility even a few years ago when the United States was actually importing natural gas, with much of it arriving on LNG tanker ships.

Today America is completely self-sufficient in natural gas. In fact, we produce more gas than we can use, and soon we will not have enough room to store the surplus gas.  Even now, some of the gas produced as a byproduct of oil drilling must be burned off or “flared” as a waste product until customers can be found to buy it. 

Link here at CarpeDiem.com for much more, including graphs.

I've blogged about that before: soon the US won't have enough storage capacity for all the natural gas it is producing. Even as natural gas companies say they are cutting production, oil companies are producing more and more natural gas as a by-product of their drilling.

There are several solutions, one I haven't seen mentioned yet: more LNG tankers storing natural gas off-shore.

Folks say the bottom may have been reached with regard to price for natural gas, but if the US runs out of storage space it's hard to see how natural gas has hit bottom, especially when a lot of production is coming as a by-product.

Wind, solar, coal, nuclear, biofuels, algae. 

North Dakota Land Lease Auction Should Be Going On "As We Speak"

Link here for calendar.

Link here for results later today.

Burlington Resources Reported Another Nice Well Yesterday -- The Bakken, North Dakota, USA

At the end of the 6-month confidential period, BR seems to have a lot of its wells placed on "shut-in" (SI) status, or at least that's my impression. And then when they do report, they invariably have some good wells (based on IPs).

Yesterday was another example (I don't recall if it was SI before it reported, but it was on the "producing well completed" list yesterday which suggests it was either DRL or SI before announcing an IP):

• 20841, 2,005, BR, Taylor 31-1H, Bully oil field, t12/11; Bully oil field is located in east central McKenzie; I don't see frac report at the well file report; middle Bakken formation.

For a look at some other great BR wells, click here.

Idle Chatter, Thoughts On Four Operators In The Bakken, North Dakota, USA

I'm not in the mood to re-write this, so I will simply cut and paste a note I sent to a friend yesterday after noting the IP of a CLR Bakken (Three Forks formation) well near the Canadian border north of Tioga; (30 stages; 4 million lbs sand and ceramics).

Consider this idle chatter, the kind of talk one might hear at the Economart in Williston, nothing more, nothing less, and not very sophisticated.

So, here goes at great risk to my credibility (smile):

Even before your question about geographical location of CLR's Running well that had an IP of 42, I was thinking about the following.

Some idle chatter about the four companies I "know" most about (which probably isn't very much):

1. CLR may have the most acreage, and most wells, but a lot of "wildcatting" (not in the strict definition), still sorting out what they got. Short term, not stellar, but long term they will have a boatload of producing wells. It almost seems like CLR has a very long-term outlook; almost as much research-oriented as business-oriented.

2. WLL -- using their Sanish as a cash cow. Drilling the heck out of the Sanish -- 4 - 6 wells in each section; way more than what others are doing elsewhere at this point. Maxing cash flow now; using cash to wildcat/explore the edges of the Three Forks in southwest North Dakota.

3. OAS:  also like WLL -- they seem to be maxing out their good property -- drilling the heck out of the best acreage they have. I think it's going to be even more obvious this year.

4. KOG: would like to do what OAS is doing but I just don't get the feeling that they can execute the way OAS is executing, and I wonder if OAS lucked out with better acreage, despite the incredibly good KOG acreage in the reservation.

CLR seems to be willing to spend money looking for new areas; WLL is spending cash it gets from the Sanish to see what it has in the Three Forks; OAS is not wasting money looking for what they might have; they are just drilling the heck out of their good property. KOG, I don't know.

I could have added this. I assume CLR is looking for the edges of the Three Forks with its Running well near the Canadian border, but that was an expensive  look. 

North Dakota: On Track For Nearly 2,100 New Permits in 2012

With 686 new permits issued through April 1, 2012, North Dakota is on track to issue 2,086 new permits this year.

My database showed the following number of permits (may or may not include salt water disposal wells):

• 2012: 2,086 (estimate)
• 2011: 1,940
• 2010: 1,684 
• 2009: 629
• 2008: 956
• 2007: 497
• 2006: 422

Prior data. Numbers vary due to errors on my part. My numbers will be at slight variance with the NDIC because I occasionally miss a well, and salt water disposal wells may or may not be included. I don't know how the NDIC "counts" permits canceled shortly after they've been issued.

• 2011: 1,940
• 2010: 1,682
• 2009: 628
• 2008: 953
• 2007: 497
• 2006: 422

A Note to the Granddaughters

I think I mentioned earlier how much I am enjoying The Campaigns of Alexander: The Landmark Arrian, edited by James Romm, c. 2010.

I don't recall ever reading this much about Alexander the Great until reading this book. And until now, I've never really had a great appreciation for Alexander. His "greatness" and successes cannot be overstated. It is interesting to see why he succeeded.

Some disjointed, miscellaneous thoughts:

1. Mano o mano was in his blood. 

2. For Alexander, it was all about another conquest.

3. He was fast, but not brash, not rash. Of all his tactical military skills, his lightning speed stands out the most. His organization and employment of his cavalry and infantry is incredible, and I see the long green line from his methods to those used by the US Army today (as I learned in Air War College, USAF). He was most adept at deploying his units in new and unconventional ways. See number 9 below.

4. Strategically and tactically he excelled.

5. It was amazing how fast he marched his troops, but he knew when to rest them. His men must have worshipped him as a god, doing anything he requested, no matter how impossible, how difficult.

6. He was extremely magnanimous, often rewarding his "enemy" if he had fought well.

7. I found it incredible how many serious injuries he suffered; survived. He was at the front of/with his men going into battle.

8. I found it incredible how he could command hundreds of thousands of troops. He used runners, fires, closely spaced "human radios."

9. In the battle with King Poros this jumped out: at one point, Alexander's army was in a bit of difficulty. Without his orders, his men -- and we're talking tens of thousands -- took it upon themselves to "fall back" (not retreat; but to take stock of the situation), and re-organize ("unity of command, delegation of authority"). Much more could be written about this.

If one had only enough time / interest to read one battle waged by Alexander, I would recommend his successful battle with King Poros, in the area of the modern day Punjab, Pakistan: pages 197 to 221, beginning with:

In the country Alexander invaded between the River Kophen and the Indus, a city known as Nysa was said to have been settled. The city was said to have been founded by Dionysos after he had subdued the Indians -- whoever that Dionysos may have been, and whenever and from wherever he made war on the Indians.

The writer (Arrian) talks about how Alexander had his men take apart their boats, and reconstruct them under cover of night in a new location; how incredibly clever their pontoon bridges were; how he floated men AND HORSES across a raging river on sewn hides filled with hay. Can you imagine the site of horses floating on hay-filled bags made of hide? He understood the fear horses have of elephants (Indian elephants in this case) and how he responded. In the end, the Indian elephants caused greater damage to his enemy than to Alexander. After a hard fought battle in which he was nearly fatally injured, Alexander was so impressed with his adversary's officership and ability as a war-fighting general, that he had his men catch up with King Poros. They were instructed to bring King Poros back to Alexander which he did.

Alexander spoke first and urged Poros to say what he hoped would befall him. Poros is said to have replied, "Treat me like a king, Alexander."

"Pleased with the response, Alexander said, "that will be done, Poros, on my own account. But on your account, say what would be to your liking."

Poros replied that everything was contained in that wish. And Alexander, even more pleased with this repsonse, granted Poros sovereignty over the very Indians he had been ruling and added another territory even more extensive than his former domain. Thus he had treated a brave man like a king, and thereafetr enjoyed the man's unswerving loyalty.

I have come to many forks in the roads of my life, and many, many coming-of-age experiences, but one of the most important for me was taking Latin from Mr Becker in eighth grade, or thereabouts. His enthusiasm was truly infectious; from that year on, I never forgot how much I enjoyed reading Greek and Roman history, and develop a love for philology, although I doubt many could have a more difficult time with languages than I have.

I hope you both get the chance to take a year of Latin from a "live" instructor, and not just on-line. Latin is not just the language, but the literature and the history. One needs an instructor bigger than life to bring Latin to life.

The "R" Word: From Minyanville, Some Interesting Stories -- Crude Oil on the Cusp

Updates

Later, 11:40 a.m.: I posted the original post a couple of hours ago; note the reference to a possible recession in the US -- mentioned by me, not others. Now I see this story: factory orders suffer largest drop in three years. It's already agreed that the housing industry won't turn around for years. Throw in the EU recession. And the unemployment numbers in the US. I don't think I was being premature in my use of the "R" word.

New orders for U.S. factory goods in March recorded their biggest decline in three years as demand for transportation equipment and a range of other goods slumped, government data showed on Wednesday.

The Commerce Department said orders for manufactured goods dropped 1.5 percent after a revised 1.1 percent rise in February.

Economists had forecast orders falling 1.6 percent after a previously reported 1.3 percent increase in February.

But the report is "complex" -- go to the link; it's hard to sort out all the data points. It's not clear cut.

Original Post

Crude oil on the cusp, from yesterday:

Tuesday’s open had already firmed up to fresh highs at the 105.25 buy signal. ISM’s surprise triggered a surge that eventually tested 106.40. Now a second consecutive higher close would confirm 112.00 in-play.

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

Unemployment:

There are some signs that the cleanest shirt in the European basket, Germany, is faltering. The biggest economy in Europe had its first drop in factory output this year in April, with PMI falling to a 33-month low of 46.2. German unemployment also unexpectedly rose by 19,000 last month.

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

Minyanville didn't report it, but are we going to start seeing stories on CNBC of the possibility of the US headed toward another recession? Talking heads on CNBC did start using the word "stagnation" throughout the day yesterday. (We lost cable after 3:00 p.m. yesterday and still don't have it so I won't be following CNBC for awhile.)

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

Why is Delta buying a refinery, really? That link will take you to another link, or you can go directly to the story at SeekingAlpha.com.  The summary at Minyanville (the first link) is shorter and to the point.

Delta Airlines' agreement to buy a ConocoPhilips refinery in Pennsylvania is all about Southwest Air.

Delta's ongoing battle with Southwest is about costs. Delta's hub-and-spoke system is inherently less efficient than Southwest's network of short flights that just go back-and-forth. But because Southwest has now been around for a generation and accepted unions, while Delta has always pushed back against workers, it may actually have an advantage in labor costs.

The deal is for a refinery near Philadelphia, plus pipelines and other assets that reach its New York hubs. There are $30 million in government incentives on the deal, and Delta has already made deals with BP and Phillips for sourcing oil and selling products other than jet fuel.

Delta figures it can handle 80% of its U.S. jet fuel needs through the deal, saving up to $300 million/year. Put those savings onto its bottom line and profits rise 15%.

There's much more at the second link.

Absolutely Nothing To Do With The Bakken -- Some Odds and Ends That Caught My Eye

The president a friend of the NRA? Microsoft XBox banned from Germany?

The president a friend of the NRA? Am I missing something here? Is this the most counter-intuitive story of the day? Front-page story in WSJ almost preempted the president's surprise visit to "the Stan." The president wants to increase US high-powered firearms exports.

U.S. homeland-security and law-enforcement agencies have objected to Obama administration proposals to relax export restrictions on high-powered firearms, threatening a centerpiece of the president's trade and national-security agenda.

The agencies, in internal memos viewed by The Wall Street Journal, warn the changes could help arm drug cartels and terrorists and make it harder for the U.S. to crack down on gun-trafficking.

The arms proposal is part of a broader overhaul of U.S. export rules sought by Mr. Obama, with the goal of helping domestic manufacturers compete in global markets, as well as improving U.S. national security by focusing controls on higher-risk items and enhancing the capabilities of allies. 

Who wudda thought? All I can say is that he must be looking for political contributions from gun advocates. Probably won't happen.

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

Phillips 66 will double fuel exports over the next two years -- no link, print edition of the WSJ, p. B9. PSX currently exports 100,000 bbls/day; should hit 200,000/day by 2014. PSX is now the number 2 independent US refiner behind Valero. 25% of PSX's refining capacity is in central US where Bakken is selling at a premium to Brent and WTI.

From the story: "Last year (2011) was the first year since 1949 that the US exported more gasoline, diesel and other fuels than it imported, at about 439,000 bbls per day (USEIA). By 2015, an additional 450,000 bbls per day of refined fuels could be exported -- research firm. US law prohibits the export of crude oil (with exceptions).

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

Comcast earnings surge 30% -- on ads from the Super Bowl, more broadband.

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

New RIM Blackberry phone with NO keyboard! Was it just a year ago that analysts said folks would not switch from Blackberry because they liked the tactile keyboard. This, too, surprised me. Apple's iPad keyboard is less preferable to the laptop keyboards, at least for me.

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

And challenges for Microsoft:

A court in Mannheim ruled on Wednesday that Microsoft infringed Motorola Mobility's patents and ordered Microsoft to remove its popular Xbox 360 gaming consoles and Windows 7 operating system software from the German market.
However, Microsoft said that the ruling did not mean that its products would be taken off retailers' shelves because a U.S. district court in Seattle has granted Microsoft a preliminary injunction against Motorola to prevent the phone maker from enforcing any German court order.

Who has jurisdiction? I guess if Germany was defeated in WWII, the US district court in Seattle trumps a court in Mannheim, Germany. I certainly don't understand it.

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

High oil prices driving margins for crude and natural gas producers -- Reuters; well, duh. Don't bother going to the link -- that's all there was, that simply headline.

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

Pickens has a problem with Koch Industries:

Koch Industries, Inc., is an American multinational conglomerate corporation based in Wichita, Kansas, United States, with subsidiaries involved in manufacturing, trading and investments. Koch also owns Invista, Georgia-Pacific, Flint Hills Resources, Koch Pipeline, Koch Fertilizer, Koch Minerals and Matador Cattle Company. Koch companies are involved in core industries such as the manufacturing, refining and distribution of petroleum, chemicals, energy, fiber, intermediates and polymers, minerals, fertilizers, pulp and paper, chemical technology equipment, ranching, finance, commodities trading, as well as other ventures and investments. The firm employs 50,000 people in the United States and another 20,000 in 59 other countries.

In 2011, Forbes called it the second largest privately held company in the United States (after Cargill) with an annual revenue of about $98 billion, down from the largest in 2006. If Koch Industries were a public company in 2007, it would rank about 16 in the Fortune 500.

Any Thoughts How This Might Affect Brent?

It looks like China will compete with Europe for oil and natural gas from Russia.

Growing demand from China is expected to be one of the defining features of the energy market in coming years, as the country looks to continue its rapid expansion.....China has begun to increase its dealing with .... Russia....

While Russia is one of the world's largest energy exporters, including massive amounts of both oil and natural gas, much of its industry is focused westward where it trades with countries in Europe, and south toward central Asia.

China has begun to bridge the divide with the first natural gas pipeline between the eastern region of Siberia and China coming online earlier this year.

Thank goodness China did not have to contend with faux environmentalists and an aquifer.

 It looks like Russian and China just want to get things done.

Wow! Not Again! -- Job Watch

Remember: the magic number is 200,000

"...data showed U.S. private employers added far fewer jobs than expected in April."

Link here. 

A private survey [the same one that reports every week] shows U.S. businesses sharply reduced hiring in April, a troubling sign two days before the government reports on monthly job growth. Payroll provider ADP says that businesses added 119,000 jobs last month, far lower than a revised total of 201,000 jobs in March.

Meanwhile, unemployment in EU hits record high. 

Unemployment across the 17-member eurozone rose by 169,000 in March, official figures showed Wednesday, taking the rate up to 10.9 percent in March — its highest level since the euro was launched in 1999.

The rate was up from 10.8 percent in February and 9.9 percent a year ago, and reflects the downturn in the eurozone economy as governments pursue tough austerity measures to deal with their debts — nearly half the countries in the eurozone, including Spain and the Netherlands, are now officially in recession. 

And all this time I thought the global economy was recovery.

RBN Energy: Convering Natural Gas Pipelines To Carry Crude

Updates

May 3, 2012: Part II, same topic. 

Original Post

Link here.

On Monday, Energy Transfer kept the deals coming with the $5.3 billion acquisition of Sunoco.  This deal certainly launches ETP into the really big leagues, and makes it one of the most diversified players around.  And if you read the fine print, they plan to get more diversified by converting gas lines into crude oil lines.  The poster child is good ole Texoma pipeline, which was a crude pipe for years before it was converted sometime in the 80s to move natural gas.  ETP CEO Kelcy Warren says he has his eye on a few other gas pipeline candidates for conversion.  And don’t forget.  Up in the Guernsey, WY area Kinder Morgan is converting 500 miles of the Kinder Morgan Interstate Gas Pipeline system into the Pony Express Crude oil pipeline.

Much more at the link.