What We Will Be Talking About Thursday; Wells Coming Off Confidential List; China To Build 400 MW Power Plant Near Odessa, Texas; Will Build an Adjacent Coal Gasification Plant

New record: 674,000 bopd.

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Google household income sinks to '95 level, and based on polls, no one seems to care:

Annual household income fell in 2011 for the fourth straight year to an inflation-adjusted $50,054. Median annual household income—the figure at which half are above and half below—now stands 8.9% below its all-time peak of $54,932 in 1999, at the end of the 1990s economic expansion.   

It's not worth looking up, but I've seen the phrase "for the fourth straight" too many times to count this past year. 

But everyone seems content; the gap widens; and life goes on.  But everyone seems content, this is what I mean: it's a close Senate race in Massachusetts AND North Dakota; California is likely to vote to increase taxes on themselves; California elite say they should pay more taxes. As does Warren. 

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Google weather woes sow worry on wheat and look at the graphic. 

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RBN Energy: need for new natural gas processing plants will spur preparation sooner than later

Significant increased natural gas demand for power generation will require not just the operational and scheduling coordination that the FERC discussions are spearheading, but also infrastructure changes to supply new generating facilities. The conclusions of the MISO study, although preliminary, provide useful insight into issues that will be faced by utilities across the country as lower gas prices and coal plant retirement increase dependence on gas supplies for power generation. Given the time it takes to plan, permit and develop new infrastructure, the MISO study appears to indicate that preparation to hookup the next generation of gas fired plants should be happening sooner rather than later.

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Speaking of clean-coal power plants, which we weren't, take a look at this. Google China takes big role in Texas plant: Sinopec, that would be a Chinese company will manage construction of a critical portion of a new clean coal power plant near Odessa, Texas, and ALL funding will come from a Chinese bank. 

The changes mean that China will take a leading role in the project, which underscores the country's ambition to invest more heavily in the U.S. energy sector and play a direct—and more visible—role in managing technically challenging projects. The undertaking near Odessa, Texas, includes a 400-megawatt power plant and an adjacent chemical facility where coal will be turned into a clean, combustible gas to reduce pollution when the gas is burned to generate electricity at the power plant.

The trend continues: everyone is looking east. China looks east to North America. The US looks east to Yemen.

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Heckmann shares jump almost 10% today. No explanation. (Disclaimer: this is not an investment site.)

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Harold Hamm will be testifying (I would prefer to use the word "presenting," in this case) at the House Energy and Commerce Committee on Thursday. A snippet of his prepared remarks are here; his full testimony will be available later.

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Wells coming off confidential list on Thursday.
20298, 514, OXY USA, David Sadowsky 1-11-14H-142-96, Manning oil field; t3/12; cum 31K 7/12;
22159, 655, Hess, BW-Hedstrom-149-100-1201H-1, Ellsworth, t6/12; cum 30K 7/12;
22230, 560, SM Energy, Torgeson 2-30HNB, West Ambrose, t5/12; cum 29K 7/12;
22325, drl, XTO, Wallace 21X-2B, West Capa, cum 26K 7/12; no IP yet;

The XTO well:

Pool	Date	Days	BBLS Oil	Runs	BBLS Water	MCF Prod	MCF Sold	Vent/Flare
BAKKEN	7-2012	31	7563	7629	6090	8790	7205	1523
BAKKEN	6-2012	30	10635	10707	10343	13933	0	13873
BAKKEN	5-2012	31	2804	2109	12417	3541	0	3523

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Portland to Fluoridate Water

Portland is the largest US city not to fluoridate water. The council voted 5-0 to fluoridate water by 2014. This is my favorite line:

Fluoridation has been a touchy issue for decades, with opponents contending that the chemical is linked to lower intelligence in children ....

I have spent a a fair amount of time in Portland over the past few years; it's where my younger daughter lives. Based on what I've seen in Portland, the lack of fluoridation might be associated with lower intelligence in adolescents. "Keep Portland weird" is not just a motto for this city. Having said that, Portland has the best bookstore in the country: Powell's.

20,896,049/31 --> 674,066 BOPD -- The Williston Basin, North Dakota USA,

CRC was watching the data, and got to it before I did; I'm impressed, but then again, I always forget to check the raw data, instead waiting for the "Director's Cut."

Anyway, 660K bopd in June; 674K in July.

That's only a 2 percent increase, compared to usual 3 - 5% increase month-over-month, if I remember correctly.

Again, assuming I did the math correctly on all the above. I often make simple arithmetic errors, but the "20,896,049 bbls" is the number for "preliminary oil production in bbls for July" as reported by the NDIC.

And, so another record.

Huge Story for Those With Chesapeake Leases

Updates

September 15, 2012: as promised. As soon as the Dickinson Press/InsideClimate News published a story about leaseholders suing Chesapeake, I would post the link. Here it is.

Original Post

This is a huge bit of news for enquiring minds. The story is over at Chesapeake on the sidebar at the right. Right now, the link will take them to Bloomberg; when it shows up in the Dickinson News/InsideClimate News, I'll try to remember to post it/link it.

Eighteen (18) New Permits; Three Nice Wells Including Two Strobecks; A Notable Madison Well Permanently Abandoned

Wells that came off the confidential list today were reported earlier and can be quickly accessed at the sidebar at the right, if you don't want to scroll down for the original post.

In addition, three producing wells were completed:

• 22035, 1,962, BEXP, Strobeck 27-34 3TFH,
• 22034, 2,944, BEXP, Strobeck 27-34 2H,
• 22311, 2,779, XTO, Thompson 44X-20E, Blue Buttes, t5/12; cum 60K 7/12; 

Regular readers will know what I'm talking about: as suspected, that CLR well reported by NDIC to have had an IP of 8,231 or whatever it was, wildly inaccurate -- the NDIC corrected it today, saying that the IP was a more believable 823 bbls.

The eighteen (18) new permits:

• Operators: EOG (4), Hess (3), Slawson (3), XTO (3), Oasis (2), Arsenal (2), True Oil, Whiting, 
• Fields: Little Knife (Dunn), Red Wing Creek (McKenzie), Stanley (Mountrail), Indian Hill (McKenzie), Parshall (Mountrail), Lucy (Burke), Alger (Mountrail), Grinnell (Williams), Van Hook (Mountrail), Foreman Butte (McKenzie), Davis Buttes (Stark), Sanish (Mountrail), 

Comments: one of EOG's permits was for a SWD

And say "good-bye" to an old friend:

• 6979, PNA/520, Encore, Kordon 4-5, Four Eyes oil field; a Madison well; t6/79; cum 739K 7/12;

This well is now permanently abandoned; it was spud in May, 1979. It hasn't produced any oil since mid-2010 but that's 31 years of production. It was a huge well during its first few months. And despite producing over 3/4 million bbls of well, I can't decide whether to add it to the list of "Monster Wells."

Others Are Using Unique Format For Reporting Wells; File This Under Flattered

I see someone snuck in one of my posts elsewhere! Lots of fun.

Enquiring minds were interested in more detailed production data for:

• 22151, 1,538, Denbury, Tobacco Garden 41-18SH, Tobacco Garden, t6/12; cum 34K 7/12

Either that (copying and pasting my data to BSDG) or others are using my unique format: file number; IP in bold/red; oil field; test date followed by cumulative production as of the state date.  I'm looking for this format to be used as a crawler on Bloomberg someday. Hooah!

Anyway, here's the more detailed production numbers for this well:

Completion Data    Pool: BAKKEN     Perfs: 12027-18712     Comp: 5/22/2012     Status: F     Date: 6/3/2012     Spacing: 2SEC Cumulative Production Data    Pool: BAKKEN     Cum Oil: 34033     Cum MCF Gas: 31377     Cum Water: 12480 Production Test Data    IP Test Date: 6/3/2012     Pool: BAKKEN     IP Oil: 1538     IP MCF: 2123     IP Water: 697

Monthly Production Data Pool Date Days BBLS Oil Runs BBLS Water MCF Prod MCF Sold Vent/Flare BAKKEN 7-2012 31 15488 15553 3443 13492 12348 1144 BAKKEN 6-2012 28 14425 14112 5501 17885 9274 8611 BAKKEN 5-2012 8 4120 3830 3536 0 0 0

The CHK - Shell/CVX Deal For the Permian

This is a "cut and paste" from another posting, so that it is not lost among the other stories.

This will be the focal post for this deal as it plays out.

From Yahoo! In Play

Chesapeake Energy to sell permian, midstream and certain other assets for net proceeds of ~$6.9 bln; Chevron and Royal Dutch Shell buyers in deal; co will repay $4 bln in loans during Q4: Co announced it has entered into multiple agreements to sell the vast majority of its Permian properties, substantially all of its midstream assets and certain noncore leasehold for total net cash proceeds of ~$6.9 bln. The company will use a portion of the proceeds from these asset sales to fully repay its $4.0 bln of term loans during the 2012 fourth quarter. Chesapeake has entered into purchase and sale agreements with three companies covering the vast majority of its Permian Basin assets for total net proceeds of ~$3.3 bln. The Permian Basin assets being sold produced ~21,000 barrels of liquids and 90 mln cubic feet of natural gas per day during the 2012 second quarter, or ~5.7% of Chesapeake's production during the quarter. Chesapeake has entered into a purchase and sale agreement to sell its assets in the southern Delaware Basin portion of the Permian Basin to SWEPI, a subsidiary of Royal Dutch Shell. Additionally, Chesapeake has entered into a purchase and sale agreement to sell its assets in the northern Delaware Basin portion of the Permian Basin to Chevron U.S.A. Inc., a subsidiary of Chevron Corporation. Following these transactions, Chesapeake will continue to own ~1.3 mln net acres of leasehold in the Utica Shale, in which its cost basis, net of various sales and its joint venture with Total, will be ~$200 per net acre (including all drilling carries in the Total joint venture).

Royal Dutch Shell confirms it acquired acreage in Texas from Chesapeake Energy (CHK) for $1.935 bln. 

It looks like all Permian assets, not Eagle Ford (see below: undisclosed amount of Utica acreage).

This is the Bloomberg link and data points:

• Chevron, Shell, and EnerVest: will buy Permian Basin acreage for $3.3 billion (CVX has at least $20 billion in cash as reported elsewhere)
• "The Permian Basin holdings were the most-valuable of several assets...[that were] put up for sale this year to raise cash, avoid a credit-rating downgrade, ...
• Global Infrastructure Partners will pay $2.7 billion for most of Chesapeake's pipeline and processing operations
• two unnamed companies will buy additional oil-gathering pipelines in the Eagle Ford for $300 million
• Chesapeake is also selling Utica shale acreage to an undisclosed buyer for $600 million 

WSJ also reports same story.

Another WSJ story on this deal; hints abound that one might see Shell in the Bakken before this is all over.

Shell, one of the European oil firms to have most heavily invested in U.S. shale gas, said in February that it plans to produce about a quarter of a million barrels of oil equivalent from oil-rich shale by 2017. 

Analysts said the Wednesday's deal, an unexpected addition to Shell's previously flagged capital spending, appeared to be an opportunistic response to Chesapeake's asset sale. 

The deal showed "the check book is out," said Investec's Stuart Joyner. "It's probably part of a growing acquisition trend that will cap the dividend," he added. [RDS is listed both as RDS-A and RDS-B, each with its own market cap, so I'm not sure what the real market cap is for RDS, but I assume it's around $225 billion, almost identical to that of CVX, but I could be way wrong.]

MarketWatch link.

MDW comments. 

And Then There Were Two: Idle Chatter Regarding the CHK Asset Sale Announced Today

Updates

September 13, 2012: here it is. I thought I recalled something that suggested CHK was still trying to make something work in North Dakota. A new case, not a continued case:

• 18690, Chesapeake, recomplete Olson 12-139-104 A 1H, Fryburg formation; Golden Valley

This on the agenda for this month's hearing docket at the NDIC.

September 13, 2012: see comment below. Link will take you this lede from the Dickinson Press:

Chesapeake Energy, a major oil company with work sites south of Dickinson, is uprooting two rigs and could possibly move out of North Dakota, said Kelsey Campbell, coordinator of corporate development and government relations for the company.

Original Post

In light of today's news about asset sale by Chesapeake, a reader notes that it may be less interesting what CHK sold, and more interesting what they didn't sell.

Hold that thought, and recall the recent comments by EOG's Papa: there are only four relevant plays (Eagle Ford, Bakken, Permian, and Barnett) and then more recently, the same EOG/Papa said there were only two relevant (maybe he used the word "significant") plays: the Eagle Ford and the Bakken.

Permian? Utica? (relevant in light of today's announced CHK asset sale.)

Now recall this cryptic exchange from CHK's McClendon in an earning's conference call. Any insight about CHK's plans for  the Bakken was "cut off" by Mr McClendon during the Q & A, this is back in May, 2011, I believe:

Brian Singer - Goldman Sachs Group Inc.: Can you provide a little more color on your Williston position and activities there. I may be recollecting incorrectly, but I believe you've mentioned in the past that you're testing more new concepts as opposed to the Three Forks/Bakken, but I think you mentioned the Three Forks/Bakken here. Can you just give us an update on what you're seeing there? 

Aubrey McClendon: Yes. We actually haven't started to drill there yet, Brian, so I can't update you but I can just confirm that we have around 200,000 acres in the play and I think we'll end up in the 250,000 to 300,000 range. And probably we'll look for a partner during the course of the year, but that's all that we have mentioned about the Williston at this point.  

Brian Singer - Goldman Sachs Group Inc.: Okay. Are these new concepts or is this the same kind of Bakken/Three Forks that others are pursuing?  

Aubrey McClendon: We just need to limit it to conversation about the Williston if I can at this point.

Maybe that exchange is no longer relevant, but ....

I can't keep up with everything in the Bakken, but the archives are full of interesting notes. The archives are maintained at the sidebar at the right, particularly the oil field updates in the Bakken, as well as the Bakken-centric operators (and others).

I'm not going to look for it now, but I recently posted a link about CHK and another permit in North Dakota, suggesting that, although CHK may not be very active in the Williston Basin, the company is still trying to get "it to work." Or so it seems.

Wednesday Morning Links; Details -- Shell, Chevron Buy Chesapeake's Permian Assets; Coal-Fired Plants Mothballed

Off To Vegas! Mideast spiraling out of control (not to suggest that it's ever been in control)? and hardly a ripple in the oil price. At least for the moment (9:56 am). Ambassador to Libya suffocated to death; no indication the president attended any security/intelligence briefing the prior week; the president condemns the attack; body paraded; Egyptians storm US-evacuated embassy; same folks who are being promised $1 billion bailout from US; Israel on its own or so it appears; will he or won't he? [links provided to non-headline stories]

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From Yahoo! In Play

Chesapeake Energy to sell permian, midstream and certain other assets for net proceeds of ~$6.9 bln; Chevron and Royal Dutch Shell buyers in deal; co will repay $4 bln in loans during Q4: Co announced it has entered into multiple agreements to sell the vast majority of its Permian properties, substantially all of its midstream assets and certain noncore leasehold for total net cash proceeds of ~$6.9 bln. The company will use a portion of the proceeds from these asset sales to fully repay its $4.0 bln of term loans during the 2012 fourth quarter. Chesapeake has entered into purchase and sale agreements with three companies covering the vast majority of its Permian Basin assets for total net proceeds of ~$3.3 bln. The Permian Basin assets being sold produced ~21,000 barrels of liquids and 90 mln cubic feet of natural gas per day during the 2012 second quarter, or ~5.7% of Chesapeake's production during the quarter. Chesapeake has entered into a purchase and sale agreement to sell its assets in the southern Delaware Basin portion of the Permian Basin to SWEPI, a subsidiary of Royal Dutch Shell. Additionally, Chesapeake has entered into a purchase and sale agreement to sell its assets in the northern Delaware Basin portion of the Permian Basin to Chevron U.S.A. Inc., a subsidiary of Chevron Corporation. Following these transactions, Chesapeake will continue to own ~1.3 mln net acres of leasehold in the Utica Shale, in which its cost basis, net of various sales and its joint venture with Total, will be ~$200 per net acre (including all drilling carries in the Total joint venture).

Royal Dutch Shell confirms it acquired acreage in Texas from Chesapeake Energy (CHK) for $1.935 bln. 

It looks like all Permian assets, not Eagle Ford (see below: undisclosed amount of Utica acreage).

This is the Bloomberg link and data points:

• Chevron, Shell, and EnerVest: will buy Permian Basin acreage for $3.3 billion (CVX has at least $20 billion in cash as reported elsewhere)
• "The Permian Basin holdings were the most-valuable of several assets...[that were] put up for sale this year to raise cash, avoid a credit-rating downgrade, ...
• Global Infrastructure Partners will pay $2.7 billion for most of Chesapeake's pipeline and processing operations
• two unnamed companies will buy additional oil-gathering pipelines in the Eagle Ford for $300 million
• Chesapeake is also selling Utica shale acreage to an undisclosed buyer for $600 million 

WSJ also reports same story.

Another WSJ story on this deal; hints abound that one might see Shell in the Bakken before this is all over.

MDW comments. 

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Americans paid more for imported oil in July; first time in five months the price has gone up. Despite all the American shale oil. Hmmm.... can only be seen as good news for Bakken-centric companies. Go Bakken! Related: "Bulls ousting commodity bears in fastest turnaround since 2008..." [Disclaimer: this is not an investment site; make no financial decisions based on what you read here.]

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Google coal-fired plants mothballed by gas glut for WSJ story, p. B1.

Coal has been losing ground to natural gas ever since a boost in shale-gas production sent the price of natural gas tumbling four years ago. But now the natural-gas price advantage is beginning toaffect the coal units that seemed most protected from the shift. Many of these plants have the latest environmental upgrades and are often close to coal deposits.  

The reason: with natural gas priced below $3 per million  British therman units, down from about $8 in 2008, many gas-fueld plants an make electricity for about two cents a kilowatt hour less than half what it costs to run many coal units....

Google how public unions became so powerful, WSJ, op-ed, p. A15.

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Recession? What recession?

I try to get to Starbucks up the street, here in Belmont, at Cushing Square by 8:30 (or earlier if possible). There's always a short line, but manageable. Today, at 9:05 the line stretches to the door, and it's a fairly large Starbucks, perhaps one of the larger ones of which I am aware (the Starbucks at Cambridge/Harvard Square is larger but that's because of its upper floor. The space on the first floor is actually smaller than this Starbucks on Cushing Square. A Starbucks line stretching to the door: about 1 of every 15 door-openers turns around and leaves when he/she sees they line. But it is amazing how fast the line moves; Dunkin' Donuts csannot move a line this quickly. Starbucks has it down to a science, and it's the manager that keeps the line moving this quickly. It's really something.