Tuesday Morning -- Catching Up. Top Cover for President Obama to Deny Keystone XL Permit; Statoil Business Plan For The Bakken; CBR Update in the Gulf; CLR's Third Bench In The TFS A Success -- How It Changes The Bakken

Updates

Later, 11:03 pm: wow, I love blogging. See this post and an earlier post. In both cases I posted the LA Times story and suggested it will give "top cover" to President Obama to kill the Keystone XL. Bloomberg is now reporting the very same thing, and using the same terminology:

Keystone XL critics said they amassed more than 1 million comments against the pipeline to carry oil from Canada, showing what they called grassroots opposition to the $5.3 billion project across six U.S. states. 

The department collected comments through yesterday on its draft environmental analysis that is seen favoring project supporters. Keystone foes said the level of opposition should give President Barack Obama cover to reject TransCanada Corp.’s pipeline, which is backed by oil companies and labor groups as a source of jobs and greater U.S. energy security.

I can almost hear the chuckle in Warren Buffett's voice when he phones the president and reminds him that the president needs to pay attention to those one million comments. Warren owns the railroad taking oil out of the Bakken.

My only comment: if the president kills the Keystone based on these one million comments, the inmates are running the asylum. The good news: all things being equal, the price of oil does not continue to fall.

A big "thank you" to a reader for sending me this link with a photograph of the faces of the "pipeline fighters."

Original Post

Active rigs: 187

There were two big stories linked overnight. I will post them again here so that folks don't miss them.

• First: a long article in Petroleum News on the Statoil's long-term business plan. It appears Statoil will balance drilling activities in the Bakken with several other on-shore plays around the world.

• Second: a very disturbing article in the LA Times regarding the Keystone XL. The EPA has released a scathing report on the Keystone XL. This gives the president top cover for denying a permit for the pipeline. It is interesting that I have not yet seen this story elsewhere: perhaps I am overreacting to the importance of this article. But a) this many years out; b) re-jiggering the route to appease activist environmentalists; and, c) now Nebraskans support, the timing of the release of this document is interesting .... and, concerning. 

RBN Energy: CBR, Gulf Coast Destinations

By the end of 2014 an additional 1.7 MMb/d of pipeline capacity will open up from the Midwest and the Permian basin – bringing crude into the Texas Gulf Coast region. A good deal of that crude will pass through pipelines and/or storage in the Houston Ship Channel area. Ordinarily all that pipeline capacity should trump crude-by-rail due to lower transport costs. But the onslaught of rail could change the game, as over 200 Mb/d of new rail capacity is being built in the Channel area Today we discuss the logic of crude-by-rail in Houston.

An excerpt:

With all the pipelines being built into the Gulf Coast region, there must be reasons other than the need for additional crude unloading capacity for companies to build new dedicated rail unloading terminals in the Houston Ship Channel (HSC).

In the short term it makes sense for any HSC terminal to have the ability to unload incoming crude from rail tank cars. In that way HSC terminals can provide a service to their refinery customers by supplying advantaged crude from the Midwest and West Texas before it is available by pipeline.

Until the Cushing logjam unwinds and teething problems at the Houston end of the Seaway pipeline are cleared up the ability to offer barrels by rail in this capacity has value. That explains companies like BOSTCO and LBC Terminals are not ruling out crude-by-rail as a sideline alongside their main business.

Longer-term however, Mercuria’s strategy for the new KW Express 210 Mb/d dedicated rail-unloading terminal may not be obvious to the casual observer.   Surely pipelines will make this terminal redundant before it is running at full capacity?  Right?  Not necessarily.

The article then goes on to explain why CBR has long-term viability even when pipeline "catch up."

******************

And then this, the story on CLR's recent success drilling into the 3rd bench of the Three Forks.  KXNET is reporting. I'm a bit confused by the story, and when confused, I'm usually wrong. So, go to the source articles. But this is my confusion. Generally speaking, stories posted on the net by television stations are generally "old" news -- not real old, but often two or three days old. This story has to do with CLR's successful drilling into the third bench of the Three Forks. They highlight Charlotte 2-22H as the well that drilled into the third bench. But the Charlotte 2-22H reported out quite some time ago; this is not news.

• 21128, 692, Charlotte 2-22H, Banks, TF2, SWSW 22-152-99; 30 stages; 2.3 million lbs; t10/11; cum 74K 10/12; total depth: 21,358 feet; 

Note that Charlotte 2-22H was completed/tested back in late 2011 (November, 2011). I always thought the Charlotte 2-22H was a second bench well.

On the other hand, Charlotte 3-22H seems a much more likely candidate for the KXNET linked story:

• 23664, 657, Charlotte 3-22H, Banks, TF1, SESE 22-152N-99W, t11/12; cum 30K 2/13

And the well file confirms that. I'll post details later.
 
But 23612 confuses the story for me, also. At one time it was listed as "A", but today I see it is on DRL status, and it has begun releasing production runs. 

• 23612, A-->DRL, Charlotte 4-22H, TF3, Banks, [Update: see press release, December 3, 2012]

One can easily search the MDW to see all the posts about the Charlotte wells. Some examples:

• it's official: the Bakken is a trillion-barrel reservoir
• the Bakken: 45 billion bbls recoverable?
• the Charlotte wells and drilling the lower benches of the Three Forks

Time for another stand-alone post to sort this out.