Saturday, September 22, 2012

Bentek Study: Williston Basin Bakken -- Oil Production to 2.2 Million BOPD; Natural Gas to 3.0 BCFPD By 2022

Back on July 25, 2012, MDW linked a Bismarck Tribune story citing a Bentek study suggesting that the Bakken could produce as much as 2.0 million bopd by 2025.

Shortly after that a reader sent me the Bentek briefing that provided much more background. I don't think the briefing has a date on it, but my understanding is that it is current as of August 14, 2012.

I apologize for the delay in getting this posted.

This is a most incredible briefing.

The presentation focuses on the natural gas play in the Williston Basin due to the Bakken boom.

Slide 3: strong drilling economics, a rising gas-to-oil ratio and greater efficiency will increase the future output from the Williston Basin. Under BENTEK's Base Case Scenario, oil production will climb to 2.2 million bopd and gross gas production will top top 3.0 billion cubic feet per day by the end of 2022.

In bullet form:
  • strong drilling economics
  • a rising gas-to-oil ratio (also, see slide 16)
  • greater efficiency
Most interesting is the "rising gas-to-oil ratio" -- an observation noted in the most recent Director's Cut.

North Dakota gross gas production will start rising significantly in 2013 and will continue rising through 2025 before leveling off (slide 26). The slide is quite remarkable. Natural gas gathering and processing is well behind the curve (slide 28) and will require significant infrastructure investment.

A huge "thank you" to the reader sending me this briefing. Don't ask me why it took so long to get it posted. Smile.

XOM and Russia

Link here to SeekingAlpha.com.
Russia is home to immense quantities of natural resources, and that includes a lot of oil and natural gas. From the troubled Caucasian region to the Arctic region in the north, Russia as a country probably has the largest amount of undiscovered oil and natural gas in the world. 
Under Soviet rule, oil discovery and drilling was exclusively carried out by nationalized oil companies, which were not really the most efficient entities in the world. Meanwhile, Exxon Mobil Corporation (XOM) has cozied up to Kremlin and Rosneft, making most of us shake our heads in disbelief. 
As is often the case, the comments are more interesting than the article. In this case, one individual points out that Russia appears to have an energy policy, something the US does not have.

Pension Crisis Looms -- WSJ; Other WSJ Links

Now it's expensive, electric motorcycles that are stalling; recalled. I can't make this stuff up. It never quits. One would think an electric engine would be about as simple as it could get.

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Google pension crisis looms despite cuts. This story is the front page, weekend edition, top-of-the-fold story -- that's how big this story is. North Dakota is in very enviable position.
Almost every state in the U.S. has made cuts to its public-employee pensions, seeking to dig out from the economic downturn, but so far the measures have fallen well short of bridging a nearly $1 trillion funding gap.  
Since 2009, 45 states have rolled back pension benefits for teachers, police, firefighters and other public workers, including cuts by Michigan and California this month. Next week, Republican Ohio Gov. John Kasich is expected to sign legislation requiring, for example, that certain teachers work longer and pay more toward their pensions.  
The state measures show how economic forces are reshaping traditional rivalries, convincing lawmakers and labor leaders that past public pension plans are unsustainable. In Ohio and elsewhere, politically potent unions have locked arms with state officials over the pension cuts.
Ironically, many of the states mentioned and many of the unions (perhaps all of the unions) would benefit if the states' leaders would promote growth across the board, and embrace the oil and gas industry. The 21st century oil and gas industry is a whole lot different than that of the 20th century. Wind and solar are great niches for some investors, but for the vast majority of folks, oil and gas has a lot more to offer. California, New York, Pennsylvania, Ohio could all benefit.

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Golf, life, and coming of age: Some of the best writing one might see today: google how mom plays the game; a must-read for everyone
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Harley Davidson embraces flexible production; google Hog maker harley gets lean; I don't think the article references that under the ObamaCare legislation, a 30-hour work week is now considered full-time. If that stands (the 30-hour work week), companies will figure out ways to get around it; part-time workers will work even fewer hours. Unintended consequences.

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Great article on Harold Hamm, CLR/CEO, p. B1 -- one of the better stories on Harold Hamm, in fact. Google wildcatter hunts his next gusher. Focus on the Three Forks;

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For investors only: google borrowing against yourself. Up until this year, I never bought on margin. Times are changing. Minimal risk if disciplined.

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The whole "Review" section of today's WSJ is simply outstanding. Print edition.

Week 38: September 16, 2012 -- September 22, 2012

Deal of the week: XOM buys DNR Bakken acreage
The Deal
Serendipity or planned all along?
$15,000/acre?

Economic Development in the Oil Patch
Master-planned community for north side of Minot; 3,000 residential units
Williston Wire updates:
703 residential units north of Williston; Alaska developer to open office in Williston; Baker Hughes grand opening and starts construction on new complex; Peterbilt dealership in Williston to open; Buffalo Hills subdivision in Watford City
WSJ with long article on nationwide hotel construction; Williston stands out
Delta adds MSP-Williston service; pricing;
Retail moving out to the highways

Bakken Operations
Shortage of truck drivers in the Bakken oil patch

Human interest stories about the Bakken
Outstanding photo-journalism story

Mergers, Acquisitions, Buyouts
International energy services company buys Mitchell's Oil Field Services; $135 million

Increasing permitting activity?
New permitting hits all-time high; latest Director's Cut
Sept 21: 19 new permits
Sept 20: 22 new permits

Non-Bakken Operations
Williston Exploration hits oil in the Tyler formation southwest of Dickinson
Update on the Spearfish north of Minot

Pricing
Bakken selling at premium to WTI due to CBR
Bakken premium to WTI should last into 2013
Data links for pricing

State Budget
Estimates revised upwards; staggering

Master-Planned Community for North Side of Minot

Link here to Minot Daily News.
Additional homes soon will be going up in north Minot in what is slated to become the city's first master-planned community. 
The $400 million Northern Lights Development will provide more than 3,000 residential units once built out, which is expected to take four or five years. The first of the homes will be available in November. A master-planned community is a community within a community. 
Northern Lights will offer residential, retail and office developments, a school and park. Erik Ramstad School is being constructed in what will be the middle of the 323-acre project located between 31st and 36th avenues northwest and between Broadway and the U.S. Highway 83 Bypass.
Go to the linked story; there is a lot more about this company. It has a project in Williston and is planning projects for Fargo, Jamestown, and Bismarck-Mandan.

I thought I had posted this story/this link earlier, but I can't find it. But it's a big enough story to merit posting again, if that's the case. But 3,000 residential units over four to five years.