Thursday, May 24, 2012

Chesapeake To Sell Southern DJ Assets

Link here to Rigzone.
Chesapeake Energy will sell approximately 500,000 net leasehold acres and 29 operated and producing wells in the southern portion of the Denver-Julesberg (DJ) Basin in Colorado....

The company considers the area to be highly prospective, but no longer core to the company's operations....

The acreage for sale encompasses all of Chesapeake's holdings in northeastern Colorado, and will allow Chesapeake to concentrate on developing its 500,000 net acres of Niobrara leasehold in the Powder River Basin in east central Wyoming.

Chesapeake will continue to exit from non-core operations as it focuses on 10 areas it considers core, the spokesperson said. The sale will not impact the company's joint venture with CNOOC because all Niobrara drilling has been refocused into Powder River.
Note: this story says Chesapeake will focus on 10 areas it considers core. If readers remember, in its earnings call, Chesapeake said it was focusing on 11 core areas:
In fact, we think it's the best in the industry. We've now established #1 position in the Utica, Mississippi Lime, Granite Wash, Cleveland, Tonkawa, Powder River in the Niobrara, Marcellus, Haynesville and Bossier plays. In addition, we have established #2 positions in the Eagle Ford and the Barnett. No one else in the industry has assembled anything close to this scale and quality of an asset portfolio. In short, we've built a very strong foundation of 11 #1 and #2 positions in the nation's best plays.
So, either he misspoke saying 10 core areas, or they've eliminated another core asset. The Powder River was one of the "original" 11. Maybe I'm misreading this.

Montana Oil Report -- May 22 -- External Link

I can't remember if I've already posted this; I need to do a better job of keeping track of these things, I guess.

Regardless, here is the Montana Oil Report -- an external link -- for May 22, 2012.

Enbridge: How the Bakken Has Changed Things

Link here to the Bismarck Tribune.
Enbridge’s Bakken pipeline projects will add 145,000 barrels per day of capacity from North Dakota into Enbridge’s main line, said Perry Schuldhaus, Enbridge vice president of regional business development.

Once constructed, the Beaver Lodge Loop project will add up to 148,500 barrels per day of pipeline capacity into Enbridge’s Berthold station in North Dakota. The company has reversed the Seaway Pipeline flow and will expand the 150,000-barrel-a-day pipeline’s capacity to 400,000 barrels a day in the first quarter of 2013.

The company plans to reverse Line 9A from Sarnia, Ontario, to Westover, Ontario, and Line 9B from Westover to Montreal to serve refineries in Quebec.
This article is chock full of data points. A huge thanks to the Bismarck Tribune folks. Great reporting.

Go to the link.

Some of the data points -- 

From Williston Basin to ultimate destination 
  • 56 percent: pipeline 
  • 28 percent: rail 
  • 10 percent: to the Tesoro refinery in Mandan, North Dakota 
  • 6 percent: trucked to Canada 
  • 74 percent transported by truck from wells to rail or pipelines 
  • 26 percent into pipeline at the wellhead 
  • Dunn County: 78 truck/22 pipeline 
  • Mountrail County: 55 truck/45 pipeline 
  • Williams County: 95 truck/5 pipeline 
  • McKenzie County: 89 truck/11 percent 
Can anyone say "low-hanging fruit"? Shovel-ready jobs? This is one more reason why more workers needed in state; the oil companies want trucks off the roads as much as the citizens and faux enviromentalists. 

Some random comments:
  • look at the "out-of-state" destination numbers. It takes awhile to put in interstate pipeline, and yet oil production is increasing at the rate of 3 - 5 percent month-over-month; expect to see rail increase (on a percentage basis and a raw number basis) in the near term
  • the Keystone XL 2.0N could carry a lot of Bakken oil, but if it's mixed with Canadian oil sands oil, producers won't put it in the Keystone; I don't think the original plan included separate pipeline for Canadian oil and Bakken oil going down the Keystone (but I don't know)
  • look at the deltas between the various counties
I still find it incredible the Boss killed the Keystone XL.

Five (5) New Permits --

Daily activity report, May 24, 2012 --

Operators: Samson Resources (3), SM Energy, and Denbury Onshore
Fields: Siverston (McKenzie), Murphy Creek (Dunn), West Ambrose (Divide)

Two producing wells completed:
  • 20105, 737, Zavanna, Crescent Farm 7-2 1H,
  • 20255, 892, EOG, Liberty LR 15-26H, 
Three well files released from confidential status:
  • 21675, 845, Hess, GO-Jarland-156-98-1102H-1,
  • 21719, DRL, G3 Operating, Hought 1-1-12H,
  • 21779, 314, CLR, Ingebret 1-8H, 
Eight wells plugged or producing.

There were nine well name changes, none of them particularly noteworthy except for this one:
  • 21702, conf, XTO, Nygaard Federal 13X-5A (was Nygaard Federal 13X-5)

Whiting Looking at the Three Forks Formation in Montana's Williston Basin

Earlier I posted a note pointing out that Investopedia had overlooked Whiting when talking about E&P companies interested in the Three Forks formation.

A reader sent in a great comment which deserves a stand-alone post for those who may otherwise miss the comment:
Whiting is also moving into Montana looking at the Three Forks there more than the Bakken.

They have spudded one Three Forks well, (Elvsaas 21-4TFH ; API 25085218550000), in T30N - R57 E section 4.

They have permitted one more in that township and also one more in the township south.

3 more are permitted and another 2 are spudded in the township west of the Elvsaas 21-4TFH well.

Plus to the southeast of Elvsaas there is a producing TF Whiting well and another permitted.

All of these wells are Three Forks except one.

Whiting makes it easy with their TFH at the end of each well name.

Except that the producing well; French 21-30TFH API 25085217940000, lists the formation as Bakken on the producing table posted on the Montana site. Maybe they don't think much of the TF in the Montana State Office.

This well shows 92 barrels per day for the first 4 months of producing days.
Great comment. If I find time, and remember, I will come back and make a couple of additional points.

Housing Available For Sale in Burlington, North Dakota -- West of Minot

If I remember I will be posting this on and off for the next few days. 

Burlington, ND, area, new building for housing available for sale

New building, 120' x 70'

28 dorm-style rooms

"Top-of-the-line" new building

Current parking pad is three (3) acres; possible to add  more

Burlington, ND, is about 5 miles west of Minot's city limits, on US Highway 2

If interested, e-mail at address provided.

Individual is a "local." Owns a business in the Bakken.

Willing to consider "flexible terms."

E-mail him at this address if interested:

New Shuttle Service Between Williston and the Twin Cities -- Minneapolis/St Paul (Not Watford CIty/Alexander)


May 27, 2012: the shuttle service is delayed until June 3, 2012, according to the Williston Herald.

Original Post

Williston Herald has a story in its on-line edition today that new motor coach (bus?) between Williston and Minneapolis/St Paul to begin this next week.

Via Stanley, Minot, Bismark, and Fargo.

$100 one-way; by reservation only.

A KOG Endorsement From MotleyFool

It took awhile but MotleyFool finally weighed in on KOG's 1Q12; perhaps they wrote something earlier. It seems they did, but I forget. Regardless, here's their current comments on KOG.

Disclaimer: again, this is not an investment site. This is not a recommendation to buy, sell, hold, or do anything else with KOG. I explain in my "welcome" blogs and disclaimers why I post investment stories on the Bakken.

Three Forks Gaining Momentum -- Investopedia

Link here to Investopedia.

Companies mentioned: MRO, EOG, DNR, CLR, MUR.

Any article that talks about the Three Forks and doesn't mention Whiting is suspect. Unless I'm missing something, Whiting has taken the lead on drilling the Three Forks. CLR was one of the earliest, if not the first, to start talking about additional benches in the Three Forks, but Whiting is drilling the heck out of the Sanish oil field, first the middle Bakken, and now targeting the Three Forks.

In addition, Whiting has a huge, perhaps the leading, presence in Three Forks activity in southwestern North Dakota where the Three Forks pinches out from the Bakken. Again, I don't delve deeply into the numbers; I could be way off, but just following the permits, the results, the conference calls gives me a gut feeling that Whiting has the edge on the Three Forks.

North Dakota to Texas Renaissance Zone -- Kansas -- A Second Bakken? -- CarpeDiem

Link here to interesting note on the Kansas oil boom. Something tells me this will be another state that will be watching the fracking EPA story closely, along with North Dakota, Montana, Wyoming, Ohio, Pennsylvania, Oklahoma, Texas, Utah, and others.

Initial Jobless Claims Unchanged -- Nothing To Do With the Bakken

Remember: the magic number is 400,000; the lower the better 

Like the forgotten soldiers, airmen, and sailors in Afghanistan, it appears the jobless are starting to be forgotten as we move toward November.

I wasn't tuned into CNBC when the numbers came out, so I don't know if much was made of it, but nothing all day regarding the jobless as far as I can tell on CNBC. When I went to Yahoo!Finance, the story was buried quite deeply. Initial jobless claims appear to be stuck around 270,000 and even the talking heads appear to have gotten bored with reporting the same thing each week.
Claims have barely budged in the past four weeks indicating a marginal improvement in the pace of job creation after April's disappointing 115,000 gain in nonfarm payrolls.

Link to Bakken Conference In Bismarck Going On Now


Later, 3:30 p.m.: See first comment: a reader suggests that the Bakken is (again?) being hyped. I replied, asking for "specifics."

One of the reasons I started this blog was because other sites were suggesting that the Bakken was being hyped. I agreed from the beginning that the Bakken would not solve the world's energy challenges, but it would prove to be quite a boon to local residents. Wow, was that an understatement.

These are facts:
  • from almost out of nowhere, North Dakota moved from 7th in the nation to 2nd in the nation in oil production due to the Bakken (technology and reserves)
  • North Dakota moved to 2nd in oil production, passing Alaska (now 3rd) almost a year earlier than originally expected
  • conservative UND analysis suggests that drilling the Bakken will continue through 2030, and that the Bakken will continue to produce through 2100; that is an old report based on old estimates and does not include formations outside the Bakken Pool
  • "everyone" agrees that at least 5,000 more housing units are needed right now in Williston, despite all the building that has gone on for the past two years; [for purposes of this post ignore the following: some say 7,000 more unis are needed right now; and others suggest 24,000 new units will be needed over the next two years -- proposed by developers putting private money at risk; not public officials)
  • a publicly traded company, not any state official, is estimating that the Bakken Pool has original oil in place that greatly exceeds earlier estimates; their new estimates are staggering; comparable to Saudi Arabia
  • Bakken light, sweet oil is the best oil in the world: light and sweet
The list goes on and on, but you get the idea. Not one item above is state-generated hype. Several of the bullets are already fact; one of the bullets is from a conservative university-related study; the second-to-last bullet is not hyped by the state, but being used by the oil industry for planning purposes.

It is understandable why the USGS is not going to re-accomplish a new study any time soon.

And, of course, a state official at the conference recognized that about the only thing that will stop the energy juggernaut (a term used by the API to describe North Dakota) is a permitorium by the EPA. That concern is also not being "hyped."

Original Post

Link to the Bakken conference going on now in Bismarck, ND.

Thank you to a reader for alerting me to the story.

Local Television Video on the Bakken

Link here. These regional links generally break early.
Helms says, "If first and second bench Three Forks are productive, which they have been proven productive, it would take enough wells to keep a rig fleet of 225 busy for 16 years to fully develop middle Bakken and first and second bench of the Three Forks."

Helms says his estimate is very conservative -- it could take up to 20 years to get to the oil in North Dakota's patch -- which he figures is now around 14 billion barrels.
Thank you to a reader for alerting me to this.

WSJ Articles Yet To Be Read -- Energy Related

"Will Truckers Ditch Diesel?"

"Chesapeake Raises Big Bet in Ohio"

"Why Oil Prices Keep Falling" -- op ed

If you have time to read only one article, start with the third. It is a very, very bullish Bakken op-ed.


A Note To and About The Granddaughters

One of the reasons I enjoy blogging is the history and trivia I come across.

Back on November 21, 2010, I posted a story about the Shell oil company and murex shells.

Yesterday, the granddaughters (ages 8 and 5) and I spent the day at the Boston Aquarium. It was an outing of the "Birding Club" so our focus was on the penguins at the aquarium. We put together a mnemonic to remember the 18 breeds of penguins, including the Emperor, the King, the Royal, the Macaroni, the Northern and Southern Rockhoppers, and twelve more.

For the past few weeks I have been reading Richard Fortey's Horseshoe Crabs and Velvet Worms. The book is a bit challenging to read because of the author's writing style, but his chapter on horseshoe crabs is outstanding. I have always been curious about the horseshoe crab and now feel comfortable with it. Unbeknownst to us, the aquarium was having a "special" on horseshoe crabs yesterday. First of all, in the touch tank there was a horseshoe crab which we picked up and turned over to see the Edward Scissorhands' prototype. Then we went back downstairs where one of the aquarium staff members was showing and describing the horseshoe crab. The grandchildren already knew much about the crab and asked some very good questions. The younger granddaughter spent 30 minutes engaged in conversation with the marine biologist talking about the "crab." She was impressed with the way the tail acted as a lever to turn the crab over if it ended up on its back.

Instead of taking the subway directly home, we walked back to the Boston Commons, passing a bookstore of used/rare books. I cannot pass a bookstore without stopping. We were only there ten minutes because I don't want to bore the granddaughters. The older one stopped in front of a section titled "Earth's Disaster." The younger one joined her, and I came by to see what they were up to.

The younger one, at that very moment, happened to spy a book at eye level that captured her interest. It was thin, like a child's book, and it had a unique red cover with no title on the binding. She said she wanted that book. She had not looked inside the book and did not know what it was about. Nor did I.

But to humor her, I pulled it out. Wow! Fate! I don't follow horoscopes or believe in such stuff, but this made me wonder all over again. Thousands of books in this little bookstore, maybe tens of thousands, and the 5-year-old points to a red book with no title, and says that's the one she wants. That was the only one she pointed at, and she was quite adamant that she wanted it, even before we pulled it off the shelf. Only the spine of the book was showing.

The book? The Scallop: Studies of a Shell and Its Influences on Humankind. Wow. Published in 1957, and something I will probably never see again (interestingly, it is available at The cost: $10. Bought.

From the foreward:
On 18 October 1917, The 'Shell' Transport and Trading Company, Limited will celebrate the sixtieth year of its existence. A Diamond Jubilee, marking as it does the passing of two generations, cannot but give pause for reflection...

Ten years ago, on the occasion of the Company's Golden Jubilee, the story of Shell's progress and expansion was the subject of a booklet ...

In the chapters which follow, each by a distinguished author on the topic he has chosen, there are revealed some of the lesser-known aspects of the story of the scallop shell, of its uses in ancient times, as a symbol in heraldry, in art ...

The preface to a book of this nature would, I feel, be incomplete without some reference to the reasons which inspired Marcus Samuel, who with his brother Samuel Samuel (no typo) founded our Company and became its first Chairman, to select a shell as the Company's badge and title. There can be no doubt that he drew his inspiration from the ornaments decorated with sea-shells which were sold by his father Marcus the elder, in Victorian days.
So, pure serendipity. The five-year-old loves sea shells and many of her paintings include shells and sea scenes.

But it was a book on the scallop shell commissioned by the chairman of Shell Oil Company, the "Rt Hon. Lord Godber, Chairman, The "Shell" Transport and Trading Company, Limited as part of a Shell company anniversary. Incredible.

We had an incredible day at the Boston Aquarium, and came home with a most unexpected piece of memorabilia.

P.S. The book is outstanding. I did not know the scallop was one of the better marine swimmers, and that it had up to 100 eyes, each well developed with its own lens and retina.

Swimming scallops

Permitorium in North Dakota? Don't Worry, Be Happy


December 9, 2012: fracking is doomed, story posted July 27, 2012, at CNBC.  I don't know if fracking is doomed, but if anyone thinks solar and wind is going to replace oil and gas anytime in the next ten years hasn't followed the news. Or done the math.  We need to follow this up in 2030. 

Later, 9:00 p.m.: this article may help resolve some of the confusion regarding mineral oil, fracking, and several other issues. It's been linked before at this blog, but I had forgotten. A lot of information in this story but it explains a lot, and, to me suggests several options (all with good outcomes). 

Later, 7:40 p.m.:  See first comment. It almost sounds like diesel is no longer an issue. If so, diesel is another Hitchcockian McGuffin, or a "red herring."

Don't Worry, Be Happy, Bobby McFerrin

Original Post

Link here to Bismarck Tribune.
Helms said the permitorium, while better than a moratorium, could delay each oil well permit at least 45 days compared to the 15 days it takes now for a state permit.

“The activity level will be hugely impacted,” Helms said.

All but one well driller in North Dakota use diesel in fracking, where it activates certain chemicals and makes the frack fluid thick and slippery in the formation.

Helms said even 45 days to hold hearings and test water sources is a “best case scenario.
This will tie it up in red tape.”
Tripling the time needed for a federal permit is the "best case scenario." We've seen this movie before. It was the (non)-development of oil in the reservation about then-Senator Dorgan stepped in and got the BLM to streamline the process.

Not good news.

One step forward, two steps back. 

And just the other day someone sent me a comment telling me not to worry about the EPA. I didn't post it; it added nothing to the conversation. Whoever sent it was clearly "out of the loop."

What crazy science! The faux environmentalists are worried about a few bbls of diesel going down a pipe that will eventually produce 900,000 bbls of oil coming up that same pipe.

Two Three Four Five questions:
  • if diesel is not used, will that allow the driller to avoid the EPA permitorium?
  • how is that one operator that does not use diesel doing?
  • can operators use Newman's Own Salad Oil instead of diesel? 
  • what about Willie Nelson Biodiesel?  -- if you have not heard of this company, it's not too late
  • could sunflower oil be used instead of diesel? This is a great initiative for the man who gave ND, SD, and IA farmers ethanol (then-Senator-turned-lobbyist Daschle). Wow, what an opportunity!

215 Active Drilling Rigs in North Dakota -- New Record


Later: at 11:30 a.m., the number was back to 214. For newbies, the number of active drilling rigs will fluctuate, and can fluctuate significantly in a matter of hours. 

Original Post
For newbies, this is incredible. I will link the reason why I say that later. Right now, too busy getting caught up with breaking news.

This is another huge day for the Bakken.

Newbies should also see my note on Tuesday, earlier this week, regarding the number of rigs in North Dakota. 

Thursday Morning Ramblings -- Absolutely Nothing To Do With the Bakken -- Some Political -- Read At Own Risk

1. I was out and about yesterday from about 1:00 p.m. to 6:00 p.m. so I didn't see any news on CNBC. When I got home, I watched the Boston-Philadelphia basketball game, so didn't see any news after dinner either. But I got to thinking. (Yes, I know its dangerous.) My hunch: the Euro is in much deeper trouble than folks are letting on. One reason this is much more dangerous than folks realize: this is completely uncharted territory -- how will this all play out. No precedent. Perhaps vaguely reminiscent of the break-up of the Soviet Union.

Maybe they will kick this can down the road once again, but the problem is not going to go away. What I don't understand is how a country with a GDP of about $300 billion is causing such a headache. That's about the same as the state of Maryland (2010 -- wiki). Including Maryland, the US has about 15 states each with a GDP greater than Greece.

2. Drudge links a story stating "The Amateur" is will debut #1 on the NY Times book list.  Wow.

3. Wow, I love this. Drudge has the link to a story that says a Florida judge says one has a constitutional right to flash headlights as a "speed trap" warning. Good.

4. H-P to lay off 26,000 in restructuring. I thought I had posted something regarding H-P once upon a time: here it is.  H-P CEO says her company will be introducing a Windows 8 tablet for "back-to-school" crowd.  Two words: too late. I take the bus into Boston or Cambridge almost every day. It is amazing to see the number of folks using Apple products. Last week, at the rear of the bus three of us were using our iPads. Yesterday a middle-age gentleman was scrolling through his Shuffle -- I hadn't seen a shuffle in months. Later, he took out his iPhone. I assume at home he has an Apple computer, and will be getting an iPad if he doesn't already have one. At Starbucks at Harvard Square, it appears that 7 out of 10 laptops are Apples. Many use the old white MacBook -- the current workhorse of the Apple line up (no longer produced); and many more MacAirs than I would have expected. According to some of the folks sending me notes regarding my blog, it's only a matter of time before Apple attaches little wind turbines to each laptop to charge the batteries. I don't post those comments.

5. Former Senator calls retirees "greedy geezers" for wanting their promised social security benefits. Wow.  Something tells me his government pension is not up for discussion.

6. Back to the EU. Reading this story suggests two things: a) Germans feel it's time for Greece to go; b) more importantly, they want to send message to rest of PFIIGS that Germany is serious about demand that countries honor commitments to change their behavior. It's my understanding that Greece has reneged on promises to implement necessary austerity measures in return for financial aid from EU. I could be wrong on that, but I seem to recall something along that line.

7. For newbies: the US is experiencing an energy revolution. The only folks not participating are those in the Federal government.

8. On CNBC, they are quoting a story suggesting Greece will leave the EU on January 1, 2013, and the drachma will be devalued 60%. I guess it's from a Citi report.

9. I was thinking this yesterday and then forgot to post it. Romney has one job as far as I know: running for presidency. Obama has two jobs: a) running the country; and, b) running for re-election. And now he's running late.

North Dakota -- An Energy Juggernaut -- American Petroleum Institute -- Federal Leases "Head Fake"

Link to PennEnergy.
Energy production on state and private lands in North Dakota and elsewhere is leading the energy and economic boom across the country, according to API. But oil and natural gas leasing and permitting is down on federal lands onshore as well as offshore. The number of new federal oil and natural gas leases in the western states was down 44 percent in 2009/2010 compared to the previous two year period. The same trends have developed for drilling permits and the number of new wells drilled on federal land. 
Repeat: The number of new federal oil and natural gas leases in the western states was down 44 percent in 2009/2010 compared to the previous two year period.


I've posted this information before. It's being picked up by the mainstream media.

Link to Bismarck Tribune here.
Stark said his company believes there are more than 900 billion barrels of oil in place, but only between 3 percent and 5 percent is actually recoverable with today’s technology.

Chinese Response to Solar Panel Tariffs -- Nothing To Do With the Bakken

LDK Solar responds to US Department of Commerce's preliminary decision on antidumping tariffs for Chinese solar cells and modules: According to the decision, Chinese producers/exporters selling solar cells and modules in the US will be assessed dumping margins ranging from 31.14% to 249.96%. Co will be part of the separate rates group, subject to a preliminary antidumping tariff rate of 31.18%. WIth regard to this, co states: "...this decision will not change our strategy in developing markets worldwide. LDK Solar reaffirms its commitment to be one of the industry's top tier companies in the US and global markets now and in the future by creating consistent value for our customers." The rulings announced recently by the DOC are preliminary findings. The tariff decision is expected to be finalized by the fall of 2012.

EU Austerity -- Nothing To Do With The Bakken

Later this morning I will post my Thursday morning ramblings. I have a couple of comments in that post regarding the EU. It's interesting that, coincidentally, Independent Stock Analysis has a very, very interesting/humorous piece on Portugal which confirms the point I will make in my ramblings that the EU is in much deeper trouble than folks might realize.

Can Natural Gas Price Rise Hold? -- RBN Energy

Link here.

A Trade Industry Update on Williston Housing -- The Heart of the Bakken

Link here.