Tuesday, October 16, 2012

Earthquake in Maine: 4.5


Later, 8:58 pm: I just mentioned the earthquake to my wife. She feels "vindicated." Right after dinner, after I had left the dining room, my wife asked our daughter, "Do/did you feel that?" Our daughter had not. But my wife, a Californian, I guess, and hyper-sensitive to the earth's movements, had felt it. Hmmmm. I'm impressed. Comments to one story said it was felt as far south as Plymouth, MA, and Connecticut. 

Original Post

I did not know they were fracking in Maine.

Said to have been felt in Boston. I didn't feel it.

Fourteen (14) New Permits; BEXP and Whiting -- Two Wells, Each > 3,000 IP

Bakken Operations

Active rigs: 187 (down)

New permits:
  • Operators: Petro-Hunt (4), BEXP (3), Zenergy, Oasis, Newfield, BR, SM Energy, Legacy, Whiting
  • Fields: Trenton (Williams), Sanish (Mountrail), Four Bears (McKenzie), Alger (Mountrail), Westberg (McKenzie), Colgan (Divide),  Sioux (McKenzie)
Comments: Newfield has a permit for a wildcat in Williams County; Legacy has a permit for a wildcat in Bottineau County;

Wells coming off confidential list tomorrow, Wednesday:
  • 21801, drl, Petro-Hunt, Fort Berthold 152-93-9C-10-2H, Four Bears,
  • 22129, 196, WPX, Mason 2-11HA, Van Hook, t7/12; cum 4K 9/12; there are 24 tanks on this pad: 20 oil and 4 water tanks, I believe; 400 bbl capacity each; 2-well pad; a neighboring well, 100 feet away, #22131, also has 24 tanks on the pad: 20 oil and 4 water tanks. An incredible sight (and site).
  • 22137, 739, Whiting, Hoover 13-1TFX, Sanish, t4/12; cum 24K 9/12; 30 stages; 2 million pounds
  • 22138, 523, Whiting, Hoover 14-1TFX, Sanish, t4/12; cum 28K 9/12; 30 stages; 2 million lbs
  • 22331, A, Slawson, Atlas 1-16-21H, Ellsworth, t--; cum 23K 9/12; 32 stages; 2.5 million lbs with ceramic;
  • 22395, 660, Hess, EN-Dakota N-155-94-211609H-1, Manitou, t8/12; cum 14K 9/12; 34 stages; 2.3 million lbs; all sand;
  • 22402, 324, Hunt, Halliday 2-15-22H, Lake Ilo, t7/12; cum 22K 9/12; 24 stages; 3.1 million lbs;
  • 22435, drl, CLR, Rodney 3-29H, Cedar Coulee,
  • 22514, 1,023, XTO, Thaxton 24X-35B, West Capa, t6/12; cum 23K 9/12; 30 stages; 2.7 million lbs;
Two permits cancelled:
  • 22743, PNC, True Oil, True Federal 21-6 31-30H,
  • 22843, PNC, EOG, Shell 100-3125H,
Producing wells completed:
  • 21508, 3,288, BEXP, Maston 34-27 1H, Banks, t9/12; cum 10K 9/12;
  • 22174, 3,126, Whiting, Kannianen 22-32XH, Sanish, t9/12; cum --
  • 22545, 993, G3 Operating, J Haugen 1-9-4H, Climax, t8/12; cum 9K 9/12;
In addition, another nine wells reported as producing or plugged.

OXY Down To Four (4) Active Rigs Today

The number of active rigs fluctuates from moment to moment. So, any number posted can change five minutes later, but right now, according to the NDIC website, the number of OXY USA active rigs in North Dakota is four (4). 

"Cut and paste" from my FAQs page:
OXY USA: 15 rigs, January, 2012; 13 rigs, February, 2012, but company says it expects to have 6 rigs by end of 2012;
Newfield has three (3) active rigs at the moment, in North Dakota.  That is in line with their June presentation when they said they would operate a 2 - 4 rig program in the Bakken.

Newfield is down to about 100,000 net acres in the Bakken. OXY USA has somewhere between 275,000 and 300,000 net acres in North Dakota, to the best of my knowledge.

File Under: I Can't Make This Stuff Up -- Nothing To Do With The Bakken

Link to Wall Street Cheat Sheet:

The #1 fan (?) of the Chevy Volt, after just 14,000 miles, has traded it in for a .... Ford.

First, the Chevy Volt's #1 fan's street cred:
Dr. Lyle Dennis founded GM-Volt.com and was perhaps the single most influential fan of the Chevy Volt. Dr. Dennis earned a spot on GM’s Volt Consumer Advisory board in part thanks to his advocacy and the fact that he put together a buyer list of 54,632 people in 97 countries that helped convince General Motors that the Volt was viable.
But now, reality, after just 14,000 miles, Dr Dennis is trading in his Chevy Volt for a Ford C-Max Energi.
Dr. Dennis cites the fact that the Volt only has 4 seats, whereas the C-Max Energi has 5. With a wife and three kids, the Volt is just not realistic for his family — an underwhelming reason to switch for such a strong advocate, and losing a vocal supporter could hurt GM. 
In a blog post on GM-Volt.com covering Dr. Dennis’ transition, he is quoted as saying: “I am grateful to GM for launching the plug-in revolution, and I have enjoyed my two years of Volt driving. Change however is an inevitable fact of life.” He continues to mention that several key players who pushed for the Volt have since left GM, in some cases for competitors like Fisker.
The Ford alternative:
Continuing with its Ford C-MAX Energi’s fuel-efficiency figures, FoMoCo announced today that the plug-in hybrid MPV gets an EPA-rated 620 mile range on a single tank and a single charge. It tops its closest competitors the Toyota Prius Plug-in Hybrid and the Chevrolet Volt, each of which return 540 miles and 380 miles respectively. 
And seats five, apparently.

Forbes Update on Eagle Ford in Texas -- Again, Compared With The Bakken; Synonym Used to Describe the Bakken -- MASSIVE

Link to Forbes.com.
Oil insiders now count the four-year-old field as one of the big three US oilfields, alongside the Grandaddy Permian Basin in West Texas and North Dakota’s massive Bakken field. The first North America shale play, the Barnett Shale west of Fort Worth, took 19 years to develop into a broad commercial success.
Otherwise, not much more than an article one might find in a blog. 

Solazyme: "Green" Fracking

Link here to SeekingAlpha.com.
Hydraulic fracturing is a drilling practice that is growing exponentially. It has been credited with the discovery of large pools of previously unreachable resources. It often involves the injection of large amounts of hazardous chemicals into the ground. As a result, it has led to widespread fear and accusation of environmental contamination to water reservoirs. Solazyme's application describes a cost-efficient, biodegradable additive that can be used in the production for greener alternatives.
It's my understanding that the single fracking fluid of most concern is diesel. The linked article does not specifically state if this additive replaces diesel, if it works in very cold temperatures, and/or if it addresses all EPA concerns with regard to chemicals.

Obviously, it does not address concerns of earthquakes.

It Is What It Is, Worried Or Not --

Some worried that there is overbuilding in Dickinson: the city has 17 motels/hotels, with ten (10) more planned.
After August’s discussion, some were worried the Commission would put restrictions on hotels coming into the city and obstruct free enterprise. “Do you start limiting just hotels?” asked Comfort Inn Manager Melissa Johnson.
“Or are there other businesses you’re concerned about over-growing as well?” Data compiled for the meeting showed that Dickinson has 17 hotels with 1,332 rooms with another 10 in various stages of planning that would add more than 1,000 rooms.
Other Midwest cities studied by the city in the 30,000 to 50,000 population range had four to 18 hotels in with 166 to 1,600 rooms. Dickinson at the 2010 Census clocked in at 17,787 people. The city believes it has surpassed 20,000 based on billings and other data, and is projected to hit 40,000 in the coming years.
It would be interesting to see the list of "other Midwest cities" that were studied.

Random Look At Section 22-152-96, Clear Creek; Three (3) Rigs In One Section

This has to be an interesting area for the locals to be watching: three rigs in one section, all on a line along the section's south line.

23295: on a single well pad; rig on site; conf,  BR, Mesa Verde 14-22TFH, Clear Creek;

18442: on a single well pad; 2,348, BR, Mesa Verde 24-22H, t3/10; cum 254K 9/12;

23293: on a two-well pad; conf, BR, Mesa Verde 24-22TFH,
23294: 2,962, on a two-well pad; BR, Mesa Verde 34-22MBH, 2-section spacing, t2/13; cum --

23261: on a three-well pad; rig on site; conf, BR, Mesa Verde 24-22TFH,
23262: on a three-well pad; conf, BR, Mesa Verde 44-22MBH,
23263: on a three well pad; conf, BR, Mesa Verde 44-22TFH,

Idle chatter: one almost wonders what the hurry is. Why three rigs in one section? The leases are held by production. My hunch: much eagerness to see what the Three Forks can do in this area, where the Bakken is already well-proved. But still: three rigs? Wow. I am not sure if there is any other section in the Williston Basin with three rigs on site.

Random Observation: Close Working Relationship Between CLR and BR -- The Multi-Year-Multi-Well Three Forks Study

Midnight Run wells: CLR and BR.

CLR mentions BR's Sunline 11-1TF well as part of the multi-year, multi-well Three Forks study.

For newbies: BR is a wholly-owned subsidiary of COP. Flashback:
On the evening of December 12, 2005, ConocoPhillips and Burlington Resources Inc. announced they had signed a definitive agreement under which ConocoPhillips would acquire Burlington Resources Inc. The transaction has a preliminary value of $33.9 billion.
This transaction is expected to close on March 31, 2006, subject to approval by Burlington Resources shareholders at a special meeting set for March 30, 2006. Under the terms of the agreement, Burlington Resources shareholders will receive $46.50 in cash and 0.7214 shares of ConocoPhillips common stock for each Burlington Resources share they own. This represents a transaction value of $92 per share, based on the closing of ConocoPhillips shares on Friday, December 9, 2005, the last unaffected day of trading prior to the announcement.
COP is one of Warren Buffett's ten largest holdings in Berkshire Hathaway. 

Earlier this year, COP spun off Phillips 66, creating the newest independent US refiner.

CLR, market cap: $14 billion.

COP, market cap: $70 billion; cash on hand: $1 billion; operating cash flow: $18 billion.

PSX, from Motley Fool:
Last summer, Berkshire Hathaway purchased shares of Phillips 66 stock over and above what it received when the company was spun off from Conoco. Since the spin-off, Phillips has outperformed its former parent company and major indexes. Since mid-July, Phillips has gone from around $32 per share to today's $45.15. In addition to refineries, the company conducts many of the marketing operations for Conoco, including the branded "76" gas stations.
So far, Phillips 66 looks like another win for the Berkshire money managers and further evidence that they have what it takes to deliver shareholder value.
PSX shares are rising significantly today. [Disclaimer: this is not an investment site; make no investment decisions based on what you read at this blog.]

Interesting observation from Motley Fool, again, today, regarding COP:
ConocoPhillips, meanwhile, is Buffett’s ninth most bullish investment, as it accounts for a little over $1.6 billion of his 13F portfolio. Since its split, the upstream portion of the company has traded in tight range of $56-$57, as its second quarter net income fell year-over-year.
Conoco has also reportedly ended its operations in the Caspian Sea, which was expected to have between 9 and 16 billion barrels of oil, whilst selling its stake in LUKoil. While it appears that investors don’t like the company’s new streamlined look, bargain-hunters – Buffett included – may find it attractive.
A significant element of share price of an oil company is its proved reserves.

Four-Well Pad: Part of the CLR Three Forks Study

As part of the CLR-multi-year-multi-well Three Forks study, the BR Sunline well was mentioned.

This is a bit more of the story.  That particular well is one of four wells on a multi-well pad, 2560-acre spacing:
  • 19283, 1,524, BR, Sunline 11-1MB-3SH, Clear Creek, t5/11; cum 75K 9/12; 4-section;
  • 19285, 2,325, BR, Rising Sun 11-1MB-3NH, Clear Creek, t7/11; cum 112K 9/12; 4-section; 21 stages; 2.3 million lbs proppants (both on low end of what is often seen in the Bakken);
  • 19286, 1,464, BR, Sunline 11-1TF-2SH, Clear Creek, t5/11; cum 63K 9/12; 4-section;
  • 19287, 1,872, BR, Rising Run 11-1TF-2NH, Clear Creek, t7/11; cum 58K 9/12; 4-section;
See comment below; I made an error on original data point; it's been corrected.

Another One Bites The Dust


October 26, 2012: Another one bites the dust -- Al gore's Current TV is up for sale!

Original Post
Link here to Bloomberg.com.
A123 Systems Inc. (AONE), the electric car battery maker that received a $249 million federal grant, filed for bankruptcy protection after failing to make a debt payment that was due yesterday.
The filing may fuel further political debate over government financing of alternative-energy and transportation businesses. Federal grants and loans to companies including A123, Fisker Automotive Inc. and Tesla Motors Inc. have drawn scrutiny from congressional Republicans following the September 2011 bankruptcy filing of solar-panel maker Solyndra LLC two years after it received a $535 million loan guarantee from the U.S. Energy Department.
The company's automobile business assets were sold to Johnson Controls, I believe. 

In the Summertime, Mungo Jerry

CLR: Five-Year Plan -- Testing the Three Forks -- Three Separate Multi-Year, Multi-Well Tests

For additional background, regarding this post, click here

Introduction: CLR's experience in early exploration of the Three Forks

TF1: upper Three Forks; the majority (99%) of all current Three Forks wells
TF2: CLR's Charlotte 2-22H; 10-months of production; 5,000 boe/month; EUR: 561 million boe
TF2: BR's Sunline 11-1TF, #19286, 7,000 boe/month; EUR - 696K boe
  • 19286, 1,464, BR, Sunline 11-1TF-2SH, Clear Creek; t5/11; cum 63K 8/12;
Continental Resources: moving ahead with three (3) separate full-scale pilots that will test the simultaneous productivity of the four intervals: the middle Bakken, TF1, TF2, and TF3

The three (3) separate plans: each test will involve three or four wells per zone; the two bigger plots will consist of 14 wells each; the smaller test will consist of 11 wells

1) lower TF exploration and appraisal
  • 2013 - 2014
  • CAPEX: $70 million for 11 wells
2) pilot 320-acre development
  • four (4) wells per zone per 1280-acre unit
  • four wells x 4 zones: 16 wells
  • 2013 - 2014
  • CAPEX: $212 million for 14 wells
  • November, 2012 -- February, 2014
  • 4 MB, 3 TF2, 4TF2, 3TF3
  • micro-seismic monitoring
  • 68 feet between TF1 and TF2
  • 1,320 feet between wells in same zone; 68 feet vertical separation between TF1 and TF2 wells; 660 feet lateral separation between wells in TF1 and TF2
3) pilot 160-acre development
  • eight (8) wells per zone per 1280-acre unit
  • eight wells x 4 zones potential: 32 wells
  • March, 2013 - March, 2014
  • CAPEX: $55 million for 14 wells
  • CLR sees very little interference between wells drilled with a 320-acre density; conclusion based both on CLR's analysis of 156 well pairs (CLR's and non-operated wells); so now, CLR will be tesitng 160-acre down spacing
  • 660 feet lateral separation between wells in same zone; 320 feet lateral separation between wells in different zones
In the SeekingAlpha.com link, the following comment was made: "In its presentation, CLR shared results of a computer simulation prepared by Ryder Scott for a hypothetical 160-acre down spacing. According to CLR, the model was based on a relatively high permeability assumption (which should translate in conservative estimates)." I assume they mean a "high permeability" between zones. If the permeability is actually lower, the interference between wells in different zones should be even higher.

In sweet spots, the closer the well separation (the greater density) the more oil recovered; less "wasted" by lack of horizontal drilling. In "other-than-sweet spots," down spacing to 160 acres may be less (or non-) economical.

In a sweet spot: the first well could generate 1 million bbls EUR; each of the 8 additional wells could generate 700K bbls each or 5.6 million bbls total.  As I understand it, these eight additional wells would be in two neighboring zones, such as TF1 and TF2. There is still TF3, and possible TF4 to consider, it appears.

CLR: Testing the Three Forks

For newbies, there was an excellent article at SeekingAlpha.com regarding Continental Resources' plan for testing/evaluating the potential of the Three Forks formation and the "four benches" of this formation.

It is a long article. In an attempt to break it into bite-size pieces, I posted several short postings, each of which is a stand-alone.

First, the stratigraphy of the Bakken Pool (the Bakken formation and the Three Forks formation).

Second, Continental Resources' background in testing the Three Forks and current status.

Third, a very short post on the time-frame for when the results of these tests should be known.

Finally, a more detailed look at the three separate, multi-year, multi-well tests that CLR has planned.

One test will involve 14 wells on one 1280-acre spacing unit. One reader has already noted that CLR has at least three fields identified in which the company looks to drill 18 wells on each 1280-acre spacing units. Two of the fields are in the heart of the Bakken (northeast McKenzie County). The other field is a bit farther south, along the McKenzie/Dunn county line. 

CLR: Five-Year Plan -- Testing the Three Forks Play


Testing the Three Forks

According to its presentation, CLR:
  • has drilled one-fourth of all Three Forks wells
  • proved separation of the middle Bakken from the upper Three Forks (TF1)
  • has a 10-well coring program to study the Three Forks formation
  • the 10-well coring program shows oil in TF2, TF3, and TF4
  • has redefined the "Bakken Petroleum System" -- see October hearing dockets; earlier posts: September dockets and October dockets;
  • TF1 extensively drilled
  • TF2 drilled and producing (CLR completed the first TF2 producer)
  • TF3: first test well drilled; waiting completion
  • TF4: first test well scheduled

CLR: Testing The Three Forks -- Time Frame

CLR has announced three separate plans to test the Three Forks.

The last of the plans will be executed between March, 2013, and March, 2014. Although we will get some indication of the potential of the lower Three Forks benches once the IPs are reported, it will probably take up to a year to determine the EURs of these lower bench Three Forks wells.

At the 2012 conference in which these three plans were announced, CLR also said they planned to increase production 3-fold by 2017, and to triple proved reserves by 2017.

There's a lot of talk that Bakken-centric operators are entering the manufacturing stage in the Williston Basin. For some operators, that may be true. For others, it appears, they are still in the exploration phase, though cash flow will obviously be generated by a manufacturing/mining phase/segment.

For more background to this post, click here.

Human Interest / Update on the Niobrara in Wyoming/Colorado

Link here to the Casper Wyoming Star Tribune.
After several years of booming, oil development in the Bakken oilfield in North Dakota is leveling off. Plus, constant advances in drilling technology have prompted oil companies, including Anadarko and Devon Energy and servicing companies such as Schlumberger, to turn their attention to Converse County, giving some who left the area for work elsewhere an opportunity to return home.
“A friend of mine who used to work for Schlumberger now works for a company out of Buffalo and he is out in North Dakota. And he heard that they are going to try to bring him back for [Powder River Basin], so he’s hoping to come home. Supply companies like that have been beginning to move back from North Dakota to the PRB,” Kristiansen said.
A big "thank you" to a reader for sending this link. 

Tuesday Links

From Yahoo!Financial In-Play: Murphy Oil announces plan to separate U.S. Downstream Business into independent co and authorization of a $2.50/share special dividend and $1 bln share buyback program: Co announced that its Board of Directors has approved a plan to spin off to its stockholders its U.S. downstream subsidiary, Murphy Oil USA, into an independent and separately traded co, and has also authorized a special dividend of $2.50 per share for a total dividend of ~$500 million and a share buyback program of up to $1 billion of the company's shares of common stock. 

Best natural gas play may be WMB. [Disclaimer: this is not an investment site; do not make any investment decisions on anything you read at this site.]

RBN Energy: a look at the economics of natural gas processing plants
Natural gas processing plants are being built or expanded at a feverish pace.  At least 90 projects are in the works around the U.S., expected to add more than 15 Bcf/d of capacity according to the latest Bentek NGL Facilities Databank numbers. 
How do the economics of these investments work? We know that it is a lot more complicated than a simple frac spread.  But does that mean the calculations must be exclusively the purview of engineers armed with gas plant optimization models? 
Heck no.  Anybody, even an MBA with a spreadsheet, a few standard factors and a gas analysis can figure out how a gas processing plant makes money.  So to prove that point today we’ll dive one more time into natural gas processing economics to understand how the composition of an inlet gas stream is converted to outlet streams of natural gas liquids and residue gas.
WSJ, p. A17: Infostructure is the new infrastructure. Excellent piece of writing.
In today's economy there are three big problems with the conventional case for infrastructure spending ...
... the first is that nothing is shovel-ready any more ... NIMBY ... by the time a project is approved, the recession is ancient history...
.... the second problem ... government contracts are gold-plated ... drives the cost ... to levels at which potentially sensible projects make no sense ....
... and third problem is more fundamental ... the challenge isn't to move more meat; it is to move more information more effectively, and to re-engineer business practices and social organization to take full advantage of the extraordinary efficiencies that the Internet affords...
... Gov Jerry Brown defends California's indefensible high-speed rail boondoggle by arguing that without it, increased demand for travel along the Los Angeles-San Francisco corridor will lead to choked highways and hopelessly congested air corridors.
That's not where the 21st century is taking us. The faux-environmentalists in California should have defeated this boondoggle; the money would have been better spent on info-infrastructure.