Monday, June 4, 2012

CarpeDiem Energy Links

North Dakota unemployment drops to 0.7%.

Abundant shale gas sparking resurgence in US manufacturing.

Too Bad It's No Longer a Scientific Argument -- Fracking

Link here to Rigzone.
Methane emissions from hydraulically fractured wells are 50 percent lower than estimates found in a 2010 study by the U.S. Environmental Protection Agency (EPA), according to survey results released Monday by the American Petroleum Institute (API) and America's Natural Gas Alliance (ANGA).

The API-ANGA study found the venting of methane into the atmosphere during liquids unloading – a technique to remove water and other liquids from the wellbore to improve the flow of natural gas -- is 86 percent lower than EPA's estimates.

EPA had estimated that liquids unloading accounted for 51 percent of EPA's total "Natural Gas Systems" methane emissions in the 2010 inventory. Applying emission factors based on ANGA/API data reduces the calculated emissions for this source by 86 percent, from 4.5 million metric tons to 637,766 metric tons of methane.

Idle Chatter on EOG Permits for Six Wells in Spotted Horn -- The Bakken, North Dakota, USA

A long, long time ago, I remember "cocktail chatter" on this blog and elsewhere trying to sort out the nomenclature for EOG wells. Here we go again. Permits for these six wells in today's daily active report.  It appears that one well will be sited in section 20 and end in section 17; and an additional three wells will be sited in section 17 and end in section 8.  These are in Spotted Horn field; will be a mixture of middle Bakken and Three Forks wells. I believe 2-digit numbers represent middle Bakken, and 3-digit numbers represent Three Forks, but I could be wrong. Folks will either tell me or we will know in a year. Helis has had some very, very nice wells in Spotted Horn.
  • 23061, Bear Den 23-2019H 
  • 23062, Bear Den 101-2019H 
  • 23063, Bear Den 100-2017H 
  • 23064, Bear Den 108-1708H 
  • 23065, Bear Den 20-1708H 
  • 23066, Bear Den 102-1708H 
EOG already has two wells in this area:
  • 19157, 1,476, EOG, Bear Den 04-20H, t3/11; cum 117K 4/12; hardly a year old, >100K bbls;
  • 19170, 1,882, EOG, Bear Den 07-17H, t1/11; cum 119K 4/12; a little more than a yr old, >100K bbls;
I posted this video a long time ago:

Driving Down Into the Bear Den

In the big scheme of things there are very few videos taken by workers in the field and posted on the internet; some day these will be "rarities" that folks will enjoy looking back on.

Wow, I haven't looked at that video in a long time? Is it not simply incredible footage, incredible views?

Nice Pipeline Gathering Graphic for Oasis' West Williston Prospect

For those interested, Oasis has a nice graphic, slide 17, in its most recent corporate presentation.

I've updated the Oasis "snapshot" based on this presentation. Bakken oil company snapshots are updated here. The biggest change is the number of rigs Oasis plans to operate in the Bakken in 2012: 10. A year ago they had planned to have 12 operated rigs in the Bakken. I doubt it will make any difference in end-of-the-year projections based on effectiveness of rigs and crews.

With regard to costs, slide 20 is particularly interesting.

Again, this is not an investment site; see disclaimer and welcome. This is not a recommendation to buy, sell, or hold shares in Oasis. With the pullback in prices I may actually buy some shares in some Bakken oil companies sometime this month, but it won't be in the next 72 hours. 

New SandRidge Presentation -- Not a Bakken Story

SandRidge has a new presentation out.

It's not a Bakken operator, but there have been a number of stories posted on the site regarding Sandridge and the Mississippi Lime, so posted for those who are interested.

For Investors Only -- IRET -- SeekingAlpha -- The Bakken Connection

Link here.

Announcement: Event -- Liquified Natural Gas-Fueled Drilling and Fracturing

A reader sent me the following with an announcement at the end for an event regarding liquefied natural gas for drilling rigs and fracturing operations.

Regardless of your interest in the "event" announced at the end of this post, there are some items in the body of the note that might of interest.

I received this note unsolicited and have no relationship with the folks who sent it to me, but it may be of interest to readers.

August 2011 Editor's Choice - Encana Initiative Underscores Environmental, Economic Benefits Of Powering Rigs On Natural Gas By David Hill - DENVER–The North American natural gas industry is in search of an environmental and economic solution to address significant fuel use. Because natural gas has potential for widespread applications, it is critical that early adopters within the industry help trigger greater use.

Also See - Event Overview - DATE: JUNE 14, 2012 LOCATION: Houston, TX
VENUE: The Magnolia Hotel 1100 Texas Street Houston, TX 77002
LNG-Fueled Drilling & Fracturing 2012 Seminar

A groundswell of projects are emerging to use liquefied natural gas as fuel for drilling rigs and soon fracturing operations. Less than two years of fuel savings can cover the cost of conversion, reports Encana Corp., one of North America's largest shale gas producers, which already has 16 rigs converted to gas. It is being joined by Chesapeake, Apache, and Anadarko.

Chesapeake aims to overtake Encana with more than 40 rigs running on dual-fuel gas and diesel by year end. The company is also committed to converting much of its rolling stock to natural gas. Meanwhile, Anadarko and Apache have just announced plans to look into gas-powered drilling rigs. Apache is in the process of converting its first rig to LNG.

With $4/gal diesel and $2/MMBtu gas, drilling contractors are scrambling to meet the demands of their clients. Gas, especially LNG, offers a cleaner, more economical fuel than diesel. For LNG fuel suppliers, drilling and fracturing is a rich market, where nearly 2,400 land units consume two million diesel gallons daily. Of all fuel-consumption markets, drilling is where LNG suppliers are achieving the fastest penetration.

This seminar will enable producers, contractors, equipment suppliers and investors to learn the latest with regard to LNG-fueled drilling and fracturing operations, building on conference conclusions from 2011. Join us for what promises to be an exciting and informative discussion.

June 4, 2012 6:20 pm EDT 

Twenty-Three (23) New Permits -- OXY USA Reports Another Well -- Helis Has a Nice Well -- The Williston Basin, North Dakota, USA

Daily activity report, June, 4, 2012:
  • Operators: CLR (10), EOG (6), Hess (4), OXY (2), Oasis (1)
  • Fields: Oliver (Williams), Gros Ventre (Burke), Dollar Joe (Williams), Banks (McKenzie), Lone Tree Lake (Williams), Fayette (Dunn), Manning (Dunn), Little Knife (Dunn), Spotted Horn (McKenzie)
Several multi-well pads. Lone Tree Lake is north of Williston, about midway between Williston and the Canadian border.

Hess canceled:
  • 19147, PNC, Hess, Edward 28-1H, Dunn
Eight producing wells complete, including:
  • 20591, 2,656, Helis, Jones 4-15/22H, McKenzie, t4/12; cum 48K 4/12; Blue Buttes;
I guess we're back to "tight hole" status. Ten wells released from "tight hole" status:
  • 18067, DRL, Zavanna, Williams,
  • 21018, 1,517, Whiting, Obrigewitch 11-17TFH, Stark,
  • 21273, 251, Whiting, Lahti 41-15TFX, Mountrail,
  • 21348, 312, Whiting, Lahti 31-15TFX Mountrail,
  • 21448, 82, OXY USA, Mogren 159-90-5-P-1H, Burke,
  • 21549, 99, Legacy, Legacy et al Berge 1-1H, Bottineau,
  • 21829, DRL, OXY USA, Elroy Kadrmas 2-10-3H-143-96, Dunn,
  • 21985, DRL, SM Energy, Kirkland 4-18H, McKenzie
So, 3/8 wells not completed.

The Blue Buttes oil field is an incredible field. The few Bakken wells that have been drilled there are reaching 200,000 bbls by two years. But there are many Madison wells still producing, such as this one:
1363, 432, Hess, North Dakota "I" 1, t3/57; cum 423K bbls; 4/12; although still listed as AL, it hasn't produced any oil since 2009 but that's still a well that produced for 52 years.

At Least We're Seeing Some Consistency ... and a Trend -- Nothing To Do With The Bakken -- For Bakken, Skip and Scroll

The trend: down.

The consistency: revising previous month's data down.

The consistency: surprised analysts.

From my earlier post on Monday morning ramblings: couple this story with the unemployment report of last Friday and things don't look too rosy:
New orders for U.S. factory goods fell in April for the third time in four months as demand slipped for everything from cars and machinery to computers, the latest worrisome sign for the economic recovery.

The Commerce Department said on Monday orders for manufactured goods dropped 0.6 percent during the month. The government also revised its estimate for new orders in March to show a steeper decline.

Economists had forecast orders rising 0.2 percent in April
The report showed broad weakness in a sector that has carried the economic recovery, adding to a growing body of soft economic data.
Memo to North Dakota's oil millionaires: go out and buy some thingamajigs. I can't make this stuff up. We need to go shopping.

A Note for the Granddaughters

It's been rewarding to watch the younger granddaughter learn to read. Literally, in the past two weeks, it appears she has broken the code about reading. I have to give the credit to her kindergarten teacher. We read to the granddaughters every night (and much more than that, of course, whenever there is free time) but it's really her kindergarten teacher in this case that gets the credit.

Up until two weeks ago, the 5 y/o really balked at trying to read. She refused to even try; I think she was stubborn, somewhat lazy, didn't want to do what her older sister was doing. But when she would try, she proved that she could read a bit. She had been "reading" Mat books for the past year. Mat books have about four words in each little booklet, and after one or two readings she had them memorized. I would cover the pictures, but she soon memorized the whole 6-page booklet and even covering the pictures didn't help. She still "read." (Her mother knew that she had the booklets memorized.)

Then this past week, she wanted to read. She wanted to show us what she could do. All of a sudden, it seemed, overnight, she jumped to the next level, to Dr Seuss books.

When she came to the word "play" on the first page of "The Cat in the Hat," she told us that "play" was a "high-frequency word, " which means, she told us, you see it everywhere. Play, play, play.

She also pointed out that "see" was a sight word which I thought was particularly insightful.

She is a master at context. I don't think she sounded out "house" -- a word that could be tough to sound out with that "e" on the end, and that "ou" in the middle. But she looked at the drawing and knew the kids were in the "house."

Walking through the mall yesterday she was reading words well beyond what I would have expected. "Love Culture" written in a column, in a very difficult way written on a huge vertical panel, she sounded out (or knew) "love" immediately. She got the "cul-" but the "-ture" was troublesome. We pointed out that along with "sight words," there are "sight syllables" and "-ture" is a "sight syllable."

But when a five-year-old tells you that "play" is a high-frequency word, you have to give credit to the kindergarten teacher.

Another high-frequency word she knows is "Bakken."

Is It Just Me, Or Did the Writer Miss Something? -- Oil and Gas, But Not The Bakken

The lede at the link:
First came the Barnett, followed by the Fayetteville and Woodford. Then came the Haynesville and Marcellus, followed by the Eagle Ford.

The big shale plays that transformed the onshore oil and gas sector after 2005 resemble a hydrocarbon musical parade of hits. 
Technically I guess they are correct, the Williston Basin Bakken boom started in 2000 on the Montana side of the border (before 2005). To the best of my knowledge, the first four mentioned are gas plays (for the most part) while the Eagle Ford is more like the Bakken, primarily an oil play (again to the best of my knowledge). If they are going to mention the Eagle Ford, they need to mention the Bakken. Just saying.

So, the three "new" fields under discussion in the linked article:
  • Mississippi Lime(stone) in Kansas
  • Niobrara in Colorado and Wyoming
  • Utica in Ohio, Pennsylvania, and New York (though New York seems to deny reality)
For regular readers, none of these are "new," except perhaps the Mississippi Lime which appears interestingly exciting, particularly compared to the Niobrara at the moment.
While the Niobrara is early in the delineation phase, operators face tough geological puzzles. The play features lower reservoir pressures and steep production declines, which are offset by lower well costs because of the shallow nature of the formation at 6,000 to 8,000 feet.

Higher oil prices are necessary to make the play work at this time. 
I don't get too excited about the "shallow nature" of the formation at 6,000 to 8,000 feet. Yes, the Bakken is about 9,000 to 10,000 feet but in the big scheme of things, I just can't get too excited about the delta. The experience of the geologists and the roughnecks, and the infrastructure, are much more important. 

At the end of the day, right now, the Eagle Ford is the Bakken's biggest competitor. I think the Kansas play will be very exciting to follow but I don't yet see it as a major competitor to the Bakken. We'll see.

Comment From a Reader -- Several Bakken Links

Sometimes a comment has too much good information and needs to be re-posted as a stand-alone post. This is one such case. 
The first thing I check on my daily visits to your informative Bakken blog site is the UND-EERC Archives. under your News & Conferences side-bar link. Thanx for adding the link. There is a ton of info there. For example:

1. Published June 01, 2012, 12:00 AM ENERGY: Moving oil to market N.D. needs more pipelines to keep pace with oil production By: Alan Van Ormer, Prairie Business Magazine

2. Boom will keep on rolling (Bismarck Tribune) 05/24/12 -

3. Powering Oil Rigs -Updated May 25, 2012
I haven't checked all the links yet.

And yes, the UND-EERC is a great site.

Chateau Field -- The Williston Basin, North Dakota, USA

From the NDIC June, 2012, hearing dockets:
  • Case 18021: Whiting, Chateau-Three Forks Pool, proper spacing for development of this field; Billings County
I recently commented on this case:
I don't understand this. It is my understanding that the Bakken Pool incorporates the three Bakken formations (upper, middle, and lower) and the multiple formations of the Three Forks. I don't know why NDIC is calling this the "Three Forks Pool." In this same hearing docket there is another case in which the NDIC refers to a "Sanish Pool."
The Chateau field is a small field, 12 sections, on the western edge of Billings County, pretty much in the center of the north-south boundary. I assume the field is in Whiting's Lewis & Clark prospect. The Billings County map is painful to look at, for two reasons: a) lack of roads; and, b) amount of federal land. It appears it is only a matter of time before the federal government imposes its own set of fracking rules.

There is currently one other Bakken boom well there:
  • 20388, 572, Whiting, Demores Federal 31-10TFH, t9/11; cum 37K 4/12;

Statoil's Home: $11/Gallon Gasoline --

A big "thank you" to a reader for leading me to this site: gasoline costs only $11/gallon in Norway, home of Statoil. Without my readers taking time to comment, I would miss a lot. Thank you.
“I remember when it seemed painful to pay more than NOK 10 per liter (about $7 per gallon at current exchange rates),” Kjetil Balke told newspaper Aftenposten as he pumped gasoline at a large Statoil station in Sandvika, west of Oslo, on Friday. “Now it’s completely wild, NOK 15.11 today. I’m doing what most everyone else is, closing my eyes while I fill up.”
I was fortunate to have visited Norway with my father and grandfather years ago. I cannot afford to return to visit now. 

Just How Bad Is The EU/Euro Crisis? Norway Turning to Pension Funds to Prop Up Oil Exploration


June 6, 2012: a reader sent this to me today. A huge "thanks." Some quotes from WSJ article:
Former Norwegian conglomerate head Fred Olsen talking about Norway's energy market and government overspending, some quotes:

What worries me is the age of gas, and the fact that gas exists everywhere. For Norway, this should worry us. I don't think very many understand this yet. The gas in the north [of Norway] doesn't necessarily have a market as liquefied natural gas now. So we need a gas pipeline to the continent. The question is how much gas the continent needs
Norway's booming petroleum sector has increased its demand for goods and services to 17% of mainland gross domestic production in 2011, according to Norges Bank, fueled by high prices. Mr Olsen advised his country to streamline public services and cut public spending, to avoid becoming like Greece. "We should cut back on our current excesses. We are laughing at the Greeks, but we are just as bad [on government spending]. We can't run such an ineffective public apparatus on all fronts. It's insane. It's getting worse every year, it's ridiculous. We should turn this around and try to improve public services year by year. It's incredible how much [of the public sector] is just moving around emails."
Later, 10:00 a.m.: Norway's banks are becoming safe havens for cash.

Original Post

Link here to PennEnergy.
As European banks struggle with an increasingly unstable situation, the Norwegian government hopes it can encourage pension funds in the country to help fund further offshore oil exploration, according to Reuters. 
Apparently the banks are unwilling/unable to provide funding. Hmmm. Private equity.

In addition, according to the article:
... a strike by government workers, which could cripple the country's transportation industry and is expected to expand dramatically in coming days.
See first comment. See also European Banking Federation at wiki.