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Sunday, June 24, 2012

Nine (9) New Permits -- Four Chesapeake Wells Updated -- BR With a Nice Well -- CLR With Another Williston Well -- The Williston Basin, North Dakota, USA

Daily activity report, June 25, 2012 --
  • Operators: CLR (3), WPX (2), Whiting, Zenergy, MRO, BR
  • Fields: Corral Creek (Dunn), Reunion Bay (Mountrail), Dore (McKenzie), East Fork (Williams), Chimney Butte (Dunn), Zenith (Stark), Squaw Creek (Williams)
I get a fair number of folks asking when production data is posted at the NDIC site. It should be noted that this is the last week of June, and the May data is not yet posted.

Coming off the confidential list on Monday's daily activity report:
  • 22734, no data, CLR, Glasoe 6-19H, Divide
  • 20989, 534, Petro-Hut, Pasternak Trust 157-100-18A-19-1H, Williams
  • 19888, 681, EOG, Clearwater 25-3202H, Ross, t1/12; cum 35K 4/12;
  • 20989, 534, Petro-Hunt, Pasternak Trust 157-100-18A-19-1H, Marmon, t5/12;
  • 21221, 239, Samson Resources, Prowler 23-14-163-97H, Paulson,  t5/12;
  • 21711, drl, BEXP, Rich 30-31-2H, Todd, s12/11;
  • 20618, 2,107, BR, Goldpoint 41-25TFH, Murphy Creek, t4/12; cum 3K 4/12;
  • 21316, 684, Denbury, Iverson 34-19NWH, Glass Bluff, t4/12; cum 10K 4/12;
  • 21933, 636, CLR, Plano 1-28H, Todd, t3/12; cum 21K 4/12;  this well is one mile southwest of the Oasis well in the southwest corner of Williston, just south of the frontage road: 21150, 3,021, Oasis, Kestrel Federal 5401 43-22H, Todd, t1/12; cum 67K 4/12; in other words, these are neighboring wells, and note the IPs; so we can follow 6-month, and 12-month production;
Producing wells that are now completed, including another nice Helis well:
  • 20780, 2,190, Helis, Henderson 1-28/33H, Grail, Bakken, t6/12; cum16K 4/12; Three Forks, gas shows as high as 5,000 units; frack data not yet posted as far as I could see;
Update status change of four Chesapeake wells; two now have an IP, and two went from CONF to DRL:
  • 21135, conf-->DRL, Chesapeake,  wildcat
  • 21139, 0, Chesapeake, Zent 30-138095 A 1H, Wildcat; Zent 30-138-95 A 1H, Wildcat, Bakken/Three Forks; t12/11; cum 1,633 bbls (no typo) 4/12;
  • 21143, 0, Chesapeake, Schoch 21-137-97 A 1H, Wildcat, t1211; cum 0 4/12;
  • 21681, conf-->DRL, Chesapeake, Kostenko 30-138-97 A 1H, Wildcat

For Newbies -- Including Me -- Natural Gas Liquids in the Bakken

Part of the reason I started the blog was to educate myself regarding the Bakken. I have concentrated on oil and feel comfortable with oil stories coming out of the Bakken.

It took me a long time to "understand" natural gas but because of the blog and a lot of comments from readers, I'm feeling a bit more comfortable with natural gas.

"Anon 1" alerted me to the Encana presentations accompanying their "Investors' Day" which sheds more light on the ethane story coming out of Tioga, North Dakota, the Bakken.  "Anon 1" alerts us to a new concept/definition, something I was not aware of:
Deep cut:  the processes which recover NGLs from natural gas in excess of amounts required for sales gas to meet pipeline specifications
A technical paper that seems fairly easy to read is here: http://digitalcommons.mcmaster.ca/esr/vol9/iss1/4/ : at the link, click on the title of the article and it will take you to a PDF

The presentations are quick and easy to open at the company's webite. I assume these presentations will be posted for a limited time.

When I review these slides, I am further convinced that as we go forward, natural gas liquids will become a bigger and bigger story as the Bakken matures. It is interesting that as the price of oil has come down recently, royalty owners may have noted an increase in their royalty checks from liquid natural gas. I don't know, but the natural gas liquids story seems to be getting bigger and bigger.

Here's another story about the importance of natural gas liquids (note particularly the price being paid for NGLs -- up to 80 to 90 percent what oil is getting).

Be sure to read this story also, poster earlier today. 

Urban Oil Story -- Nothing To Do With The Bakken -- West Los Angeles

Link here to LA Times. If the link breaks, google Inglewood oil field fracking land shift.

Something tells me this is a "lost cause." I think I would cut my losses now.

Tioga Hess Expansion Update -- From 260K to 2.5 Million Gallons/Day -- Ethane To Be Major Product

Updates

June 24, 2012: Here's another story about the importance of natural gas liquids (note particularly the price being paid for NGLs -- up to 80 to 90 percent what oil is getting).
June 24, 2012: I don't do this often, but this is a huge story or at least a great update. Normally I just update the story at the original post; if folks are interested they will find it. However, this is another huge story about the Bakken in general and Tioga Hess specifically, I brought it all forward.

As reported earlier, Tioga Hess is expanding. The data points from the Minot Daily News:
  • current capacity: 115 million cubic feet daily (115 mmcfd); or 260,000 gallons daily ( I believe a bbl is 42 gallons; thus equates to about 6,190 bbls which jibes with the "6001" I generally use)
  • product mix: propane (50%); butane (25%); natural gasoline (25%)
  • expands to: 250 mmcfd
  • expansion of "liquids processed" will increase from 260,000 gallons daily to 2.5 million gallons per day (no typos, at least from the article; I've checked it several times)
  • product mix: ethane (50%), propane (30%), butane (15%), natural gasoline (5%)
  • to be completed in 2013
Regular readers know that "wet gas" products provide a much higher return that "dry" natural gas; this mix is notable.

In addition to this expansion, reported earlier this week, North Dakota approved a new pipeline that will take ethane from this processing plant to a production plant in Calgary. The pipeline is 430 miles long; the portion in North Dakota is 80 miles (about the same length as the Keystone XL gap in Nebraska); and, requires US State Dept approval (don't hold your breath). That pipeline will carry 40,000 to 60,000 bbls of ethane daily.

The TiogaHess story is so big, I've added a new tag.

Other data points from earlier posts, regarding Hess in North Dakota, follow.

From March 18, 2011
  • Bakken -- "single biggest investment for Hess in their portfolio."
  • Hess North American budget: $3 billion; Bakken to get 25 percent of that
  • Main focus in 2010: acquire acreage
  • Total Hess Bakken acreage: 647,000 core acres
  • 18 rigs: enough work for next five years
  • Hess spokesman: "This is the most amazing oil I have seen in my 30-year career."
  • Hess concentrating on export infrastructure to minimize trucking and flaring
From February 27, 2011
  • One-third of Hess' entire corporate budget will be spent in the state of North Dakota
  • Hess Corp CAPEX for North Dakota for 2011 is $1.8 billion
  • Tioga Gas Plant will be expanded; will be doubled in size and completed in 2012
  • A new large rail terminal at Tioga will be completed by the end of the year
  • An oil stabilization facility, now being built, will allow oil to be conditioned before going on the rail
  • Hess will drill 180 wells this year; half targeting the Bakken, half the Three Forks formation
  • Hess currently controls 730,000 net acres, second to Continental Resources (in North Dakota)
  • Hess currently operates 248 Bakken wells and participates in 226 non-operated wells
  • Hess' Minot's regional headquarters will soon move into the IRET Corporate Plaza
  • The company currently has 90 employees in Minot; the new headquarters has room for 200 - speaks volumes
One other little data point that might be of interest: The Bakken is an oil field, not a "gas" field. When I first started this blog, the 30-second sound bite was that natural gas accounted for only 3 percent of the economic activity in the Bakken. I do not know if that figure has changed. But the fact remains: the Bakken is an oil field, not a gas field. This is why I've tagged this post "staggering." If there is this much activity surrounded a product that accounts for only 3 percent of the economic activity in the Bakken, can you imagine how much the activity in oil will continue to grow. Companies like BNSF aren't adding $200 million in maintenance and upgrades if they didn't see the need (earlier story). Likewise, this Hess story is incredible. At least to me. 

Original Post

The Minot Daily News provided an update of Hess Corp plans for 2011 and impact on North Dakota, and Minot. I don't think there is anything new here for those following Hess closely but for others, it's nice to see it in one spot.

The data points come from the finance manager for Hess Corp in North  Dakota:
  • One-third of Hess' entire corporate budget will be spent in the state of North Dakota
  • Hess Corp CAPEX for North Dakota for 2011 is $1.8 billion
  • Tioga Gas Plant will be expanded; will be doubled in size and completed in 2012
  • A new large rail terminal at Tioga will be completed by the end of the year
  • An oil stabilization facility, now being built, will allow oil to be conditioned before going on the rail
  • Hess will drill 180 wells this year; half targeting the Bakken, half the Three Forks formation
  • Hess currently controls 730,000 net acres, second to Continental Resources (in North Dakota)
  • Hess currently operates 248 Bakken wells and participates in 226 non-operated wells
  • Hess' Minot's regional headquarters will soon move into the IRET Corporate Plaza
  • The company currently has 90 employees in Minot; the new headquarters has room for 200 -- you do the math
And that's just one of many oil companies in North Dakota, albeit one of the bigger ones.

The most incredible data point for me:
  • One-third of Hess' entire corporate budget will be spent in the state of North Dakota. That's pretty incredible.
The most important data point for the state:
  • The continued emphasis on expanding natural gas gathering and processing in North Dakota; this may be the most important thing Hess could do for the state.
The most important data point for investors (comes from other sources):
  • Among natural gas focused companies, Hess is moving faster than any other oil and gas E&P company to convert from natural gas focused to oil focused. 
***********************

Because the numbers are so huge, I've provided a "cut and paste" from the Minot Daily News, June 23, 2012, regarding the expansion:
According to Emma Meade, Hess Corporation Communications in Houston, Texas, the current capacity of the Tioga plant is 115 million standard cubic feet per day. That equates to 260,000 gallons daily. Of that amount, 50 percent is propane, 25 percent butane and 25 percent natural gasoline. When the expansion goes on-line the processing capacity will increase to 250 million standard cubic feet per day.

The expansion is not scheduled for completion until sometime in 2013. When finished, the amount of liquids processed will increase from 260,000 gallons daily to 2.5 million gallons per day. Meade said the breakdown will be 50 percent ethane, 30 percent propane, 15 percent butane and five percent natural gasoline.