Wednesday, July 18, 2012

Connecting the Dots: Cushing, Bakken, Rail

Don sent this article. Great article. Connects more dots.
Stubbornly high inventories at the Cushing, Oklahoma, .... are a ticking time bomb that could blow out the spread between WTI and Brent futures.

[The October spread] has jumped more than $3 a barrel since early July to hit $14 a barrel,....
Similarly the gap between the January 2013 contracts is only $12 a barrel, .....

With only seven weeks remaining in the summer peak refinery operations season, there is precious little time for the industry to pare back the overhang at Cushing before refinery turnaround season is upon the market.

Indeed, the dismal showing this summer at Cushing, where stocks have built since the start of May, portends a surge in inventories to a fresh record in the fall.
This is a great article; read the rest at the link at Reuters. 

"... portends a surge in inventories to a fresh record in the fall."

Two comments:
a) That's why rail is so important for the Bakken;
b) That's why Enbridge pipelines to the east are so important; and,
c) if "we" know it, certainly the operators know it, and maybe that's why there is a slowdown in oil activity in the Bakken -- if indeed there is a slowdown. The jury is still out on that, but we are down to 208 active rigs in North Dakota, down another 1 from yesterday, and down from the record high of 218.
Okay, three comments.

If you have a company, you didn't build it. Someone else did ...

... and if it was the federal government, it probably went broke. Yup, another federally-backed solar power company just called it quits.
The Amonix solar manufacturing plant in North Las Vegas, subsidized by federal tax credits and grants, has closed its 214,000-square-foot facility about a year after it opened. [Yup.]

Officials at Amonix headquarters in Seal Beach, Calif., have not responded to repeated calls for comment this week. The company began selling surplus equipment, from automated tooling systems to robotic welding cells, in an online auction Wednesday. [Did not answer the phone; so much for transparency.]

A designer and manufacturer of concentrated photovoltaic solar power systems, Amonix received $6 million in federal tax credits for the North Las Vegas plant and a $15.6 million grant from the U.S. Department of Energy in 2007 for research and development. [Tax credits and grants; not obstacles and EPA restrictions.]
I've lost count, but this probably the 4th major solar company to have filed for bankruptcy despite being backed by the deep pockets of the federal government.

No More Posting Until Later Tonight At The Earliest

"Takeaways" for today?

Chesapeake area southeast of Dickinson not yet encouraging.

Hints of slowdown in drilling in the Bakken until fracking costs come down.

Huge BR well in the Charlson -- is this for real? Two more wells nearby nearly complete -- we will see.

Both QEP and WPX now blowing out the numbers with number of permits in same section: in the reservation.

A reader had encouraging news on price of Bakken oil shipped by rail.

The President supports "safe" sex fracking. 

Another multi-acre development project in Williston.

Industrial revolution in the oil patch.

Shale gas secret in the WSJ.

Divide County keeps getting more interesting.

And all free.

This Is NOT an NDIC Typo


November 7, 2012: this post has been updated.

Original Post

The well file confirms that BR is reporting this as a 6,800-bbl IP.

Interestingly, BR doesn't label it as a "sand frack," but as "other," though it appears it was simply sand and ceramics. 5-stage fracture, short lateral in the Charlson.

There is an "old" vertical well in the immediate area that has targeted and produced from four payzones over the years; and has produced a cumulative of almost 400,000 bbls from non-Bakken "legacy" formations.

There is also another old Silurian vertical that has produced about 170,000 bbls of oil over the years, and is now producing oil from the Bakken. It is displayed as a vertical well with no horizontal leg on the NDIC GIS server map. Very, very fascinating.

The Charlson has always fascinated me.

If this IP "holds" -- I expect to see a bit of discussion regarding this one. Thank goodness for the Bakken Shale Discussion Group.

There are two more short lateral wells in the same section that are nearing completion.

#4: Compton, California, May File For Bankruptcy

Following Stockton, Mammoth Lakes, San Bernardino ...
The City of Compton, a city of 93,000 people located on the outskirts of Los Angeles, must decide by September 1 whether to seek bankruptcy, according to its two most senior financial officials. Such a move would see it join a growing number of deficit-hobbled California cities that have used the filing to restructure onerous debt loads.
Compton, which has anaccumulated $43 million deficit and has depleted what had been a $22 million reserve, will run out of cash to make its payroll on September 1 at its current cash consumption rate, city comptroller Steven Ajobiewe told the city council during a July 17 meeting.
I think we are seeing the trailer for the California movie to be released in early 2013, tentatively titled: "Too Big To Fail."

But at least we are starting to see how this will all end. 

Wow -- Another Development Project for Williston


August 15, 2012: a "process" mistake by the city means approval for this project will have to start all over gain. Something tells me ...
A snag in the process of development for Jonathan’s Landing – a new building plan close to the Tofte Bros. subdivision – will start the approval process over again.

A small crowd had gathered outside Tuesday night’s city council meeting, some prepared to discuss a building plan that has been under fire from neighbors. But the discovery of a snafu earlier in the process took that discussion off the agenda and back to its beginning.

“A public notification error was made for a land use amendment,” Mayor Ward Koeser explained.
First time in 18 years a mistake like this has been made. 

Original Post

Williston Herald is reporting: another step in the approval process for another project: a 10-acre mixed residential/commercial development at East Dakota Parkway and 26th Street West, Williston, ND. That's northeast of town, near Hillside Memory Gardens, at the curve -- it looks like it will kitty-corner from the cemetery, and if so, it will back up to the Little Muddy on the east. Subject to flooding?

Great Activity Update Regarding Divide County Area

For those who may not read the comments, there is a great comment/update regarding activity in Divide County border area -- Samson Resources, American Eagle.

So, We'll See

From the president (Oil and Gas Journal):
US President Barack Obama reiterated his support for developing natural gas resources with new technologies as long as it can be done safely and in an environmentally sound manner.

“This is something we should welcome,” he said in response to a question at a July 16 reelection campaign event in Cincinnati. “Not only are we blessed with incredible gas resources that are now accessible, but gas actually burns cleaner than other fuels, and is an ideal…energy source that we can potentially use for the next 100 years.”

Obama noted that some people or groups see a contradiction between environmental protection on one hand and economic development or energy production on the other. “The fact of the matter is that there are a lot of folks right now engaging in [hydraulic fracturing] who are doing it safely,” he said.
But it will be even safer if the Feds impose redundant fracking regulations. 

Will Climate Change Bring Seasonal Extremes in the US? Hot Summers/ Frigid Winters?

Link here to forecast for frigid winters. We've been through this before.

That Recent CLR Will WIth a Reported 4,991 Bbl-IP -- Never Mind

I just pulled up the well file for #21068 -- it was not posted earlier. The NDIC report is in error: CLR reports an IP of 491. By the way, this was a 40-stage frack with 3.8 million pounds sand/ceramics.

Back to Coal, Natural Gas -- So Much for the Kyoto Protocol

Link here to unrest in Japan. And a very scary photo.

Energy Links for Thursday, July 18 , 2012

RBN Energy: coal.

Related: Warren Buffett, Burlington Northern, coal, fracking in Bloomberg.  Nice article. Recommend. 

Independent Stock Analysis.

Another Great Bakken Article in the WSJ -- The US is #1 in Natural Gas Production -- Who Wudda Thought?

This link sent to me by Don, so I am gradually catching up with blogging. For newbies, you may want to scroll down quite a ways. I think I have posted half a dozen stories so far, and updated many older posts for the archives on the sidebar at the right.

"The Shale Gas Secret" in the WSJ is a great, great read. Early one the article mentions one man who decided to go "all-in" and built a huge business on shale gas. (The president would disagree: "If you have a business, you didn't build it. It was built by someone else." Harold Hamm must be apoplectic.)

But a great, great article.
We mention this because that blessing of American jurisprudence helps explain one of the few bright patches in the Obama economy—the booming production of shale gas and, increasingly, oil. The U.S. ranked 159th in GDP growth last year. But in natural gas production, it's now No. 1.

How did that happen? Partly it's the luck of geology, though plenty of other countries have abundant shale resources. Partly, too, it's American technological leadership in developing hydraulic fracturing (fracking) and horizontal drilling. But those techniques are now widely understood the world over.

Meantime, some of the property owners who leased their mineral rights to companies like Dvorin have received royalty checks, typically worth at least 12.5% of production value. That's encouraged further leasing and exploration, generated popular momentum for fracking, and brought development to previously depressed regions such as western Pennsylvania and the Bakken area of North Dakota.

Now compare this to Europe, which sits on an estimated 639 trillion cubic feet of shale gas yet remains heavily dependent on Russian imports. The governments of France and Bulgaria have banned fracking on dubious safety grounds, with nary any pushback from their publics. That might not be the case if French farmers, for example, were able to profit from the riches underneath their terroir.

Fracking Slowdown in North Dakota?

I've posted for the past year that it appears that about half the wells that come off the confidential list are not completed/fracked, but apparently the backlog is narrowing, based on the "Director's Cut," suggesting that although the wells may not be completed by the time they come off the confidential list, they are fracked shortly after that.

But then, yesterday, I received this note (with some editing -- original, unedited comment was posted):
I am wondering if anyone knows of a site or group more attuned to the oilfield workers.

We're wondering why absolutely NO fracking seems to be happening lately - can we assume we're just going through a slowdown and things will pick up or should we pack up and head to TX for work? Any feedback from the workers or a link to a site would be appreciated! Thank you!
Thoughts? I've heard similar stories over the past few weeks from truckers not hauling ceramics/sand.

CNBC and Spelling


Later, 10:22 a.m.: They corrected the spelling, but the nice thing about the internet -- you can't change/erase the URLs. I've learned the hard way. Smile.

Original Post

Unless it was done on purpose, and there was no indication that it was done on purpose, one more example of ....

Movie Studios: Gone the Way of Dinasours? Wow.

That was the headline (and the spelling) on the front page of the CNBC news page.

And speaking of "dinasours": Ben.  I haven't watched television (except for a snippet of NASCAR this past weekend) in about 10 days and haven't missed the talking heads on CNBC.

WTI-Brent-Bakken Spread -- Random Update

A reader asked about the WTI-Brent spread this week. This is the data I show for today. One can find almost any price for spot oil, but the links I use are provided:

North Dakota spot, sweet, light: $67

July 18, 2012: At Bloomberg energy, Brent - $105.95; WTI - $89.83 Spread: $16.
June 18, 2012: At Bloomberg energy, Brent - $95.78; WTI - $83.27 Spread: $12.
June 12, 2012: At Bloomberg energy, Brent - $97.21; WTI - $83.13 Spread: $14.

For recent history of Brent-WTI spread, click here.  

If someone has better links, different numbers, let me know.  Don't send any links I already post, though.

Just In Time For The NBC Olympics Coverage

I don't have time to do this great note the justice it deserves. I am so far behind. I will simply post the note in its entirety with the links (not read yet, nor checked to make sure they are not broken) and some minor editing:

From that article in case the article is ever "lost":

Come Aug. 2, along with the world, there will be a lot of eyes in Williston glued to television screens as 15-year-old swimmer Katie Gen Ledecky provides a local connection to the 2012 Olympics being held in London.
Katie Gen is the daughter of Mary Gen (Hagan) and David Ledecky, who make their home in Bethesda, Md.
Mary Gen is the daughter of Kathleen Hagan and the late E.J. “Bud” Hagan, a longtime Williston physician.
Having just turned 15 on the 17th of March, Katie Gen is being touted as one to watch in the swimming pool as she represents the USA.
At the age of 15, Katie Gen is said to be the youngest member of the US Olympic team, with the oldest entry being 54, and rides in the equestrian events.
At the recent Olympic trials held in Omaha, Neb., she swam the 200 free, the 400 free and the 800 free.
She placed third in the 400 free so she did not qualify for the Olympics, but her time of 4:05 set a new age group record.
It should be pointed out the previous record was held by Janet Evans and was set 24 years ago.
Orell Schmitz graduated from WHS in the late 60's/early 70's: his son, Todd Schmitz, is the coach of Missy Franklin, another top USA Olympic swimmer. Cathy and John were quoted in The New Yorker magazine about the Bakken some time ago.


Industrial Revolution in North Dakota

What a great way to start off the day.

I'm about three days behind in getting to my comments and e-mail regarding the Bakken. Sorry. Hopefully I can catch up today.

First, "anon 1" never fails to provide excellent links. I saw this note last night but was not able to reply on the iPad. Bummer.

But it was worth the wait: it's not just an oil boom, it's an industrial revolution.
Last week I had the opportunity to visit the Bakken oil fields north and west of Belfield with Ron Ness of the North Dakota Petroleum Council and Blaine Hoffman of the Whiting Oil and Gass Corporation. In the course of a long day we visited two oil rigs, a fracking operation at another site, a plant that collects the gasses that would otherwise have been flared at the well sites, and several Whiting properties in the Badlands that have been reclaimed after all oil extraction at the site has been concluded. It was an amazing, and amazingly generous, tour. I am immensely grateful to have had the opportunity to see the industrial profile of the oil boom through the eyes of such remarkable and dedicated professionals.
This is the first of several columns Clay Jenkinson will write for The Bismarck Tribune about his recent tour of the Bakken Oil Fields.

Hopefully, his series will be picked up by the national news media. Perhaps more on this later, but so much more to link. Enjoy this story.

Five (5) New Permits -- BR With Another Nice Charlson Well -- The Williston Basin, North Dakota, USA -- Daily Activity Report -- July 18, 2012

Daily activity report, July 18, 2012 --
New permits
Operators: : CLR (4), Oasis
Fields: Cottonwood, Hamlet  (all four CLR wells will be in section 14-160N-96W of Hamlet)
Off confidential list today:
  • 22236, no data, Fidelity, Hansen 18019H, Mountrail
  • 20104, 357, OXY USA/Anschutz, Elsie Dvorak 1-8-17H-141-96, St Anthony, t2/12; cum 14K 5/12;
  • 20117, 1,478, XTO, FBIR Youngbear 31X-9, Heart Butte, t5/12; cum 9K 5/12;
  • 20416, 489, OXY/Anschutz, Dvorak Trust 1-6-31H-142-96, Russian Creek, t1/12; cum 10K 5/12;
  • 20663, 240, EOG, Vanville 21-2635H, Robinson Lake, t2/12; cum 31K 5/12;
  • 22058, 549, CLR, Brooks 1-4H, Pembroke, t5/12; cum 1,700 bbls cum 5/12;
  • 22183, 196, OXY USA, Big Spring 1-22-27H-160-90, Dimond, t5/12; cum 5K 5/12;
Producing wells completed:
  • 20635, 2,477, BR, Frio 24-34H,  Charlson
  • 19428, 648, CLR, Lila 108H, Epping
  • 21735, 609, American Eagle, Christianson 15-12-163-101, Colgan, Divide
  • 21042,  1,204, KOG, 20711 Mildred 94 1H, Epping, Williams