Saturday, November 30, 2013

It's Gonna Get Cold In The Bakken (50 Degrees Below Freezing): Home Of Economy/Carthartt Is Gonna Be Busy; Maybe Time For A Little Bob Dylan?

The temperatures are going to keep falling through this next week. By Saturday, the temperature will be down to 17 degrees. Below zero. The mean for this time of the year is about 20 degrees. Above zero. 

 For newbies, this is "Fahrenheit." It freezes at 32 degrees Fahrenheit. So 17 degrees below zero is about 50 degrees below freezing. Before the wind. 

One almost wishes there was more flaring to warm the surrounding air. Wanna bet where deer and antelope are gonna be hanging out next weekend?

Great weather forecasts at this site, my favorite weather site for quick look at the current weather and the forecast. It will be interesting to see the new records set due to all this global warming.


A Note to The Granddaughters

I was listening to Ian and Sylvia's cover of This Wheel's on Fire, written and recorded by Bob Dylan in 1967, when I received a note from Don relating to the Vietnam War. I recalled the Julie Driscoll cover that became a hit a year later, 1968:

This Wheel's On Fire, Julie Driscoll & Brian Auger, Trinity

When I received Don's note, I was listening to the Ian and Sylvia album and reading a book review in yesterday's Wall Street Journal: Wil S. Hylton's Vanished: The Sixty-Year Search for the Missing Men of World of War II.

Not one thing, I suppose, would connect those three "things" (Dylan's song, a note from Don regarding the Vietnam War, and then the book review about finding final resting places of aircrews lost in the Pacific during WWII).

Except somehow all three "things" ended up co-located in one of my medial temporal lobes.

From the WSJ's book review:
Nearly 50 years before, on Sept. 1, 1944, the 11-man crew of a B-24 Liberator that would come to obsess Mr. Scannon tumbled from the Pacific sky over Palau, their heavy bomber's left wing blasted off by Japanese antiaircraft cannons.
Mr. Hylton's compelling "Vanished: The Sixty-Year Search for the Missing Men of World War II" tells the story of that B-24's crew and the six decades of anguish that MIA status inflicted on their families.
But it also relates the tale of Pat Scannon and the epiphany that changed him from a scientific squint into a committed "wreck chaser," infused with a sense of "duty and responsibility" to ferret out the stories of the lost men, find their crash sites and repatriate their remains. As Mr. Scannon wrote in his journal: "I am interested in how individual crews, albeit in a lesser campaign, came under intense fire, lost their lives, and have, by necessity, been forgotten. . . . It is time someone acknowledges their efforts and perhaps lays to rest the outcome for their family members."
Later:
Mr. Scannon came back from his first trip to Palau, Mr. Hylton writes, and "disappeared into his home office to pore over old mission reports that oozed from his fax," determined to understand the air fighting over Palau that spanned the last 18 months of the war. He would return to Palau in 1994 hoping to find the wreckage of three missing B-24s. Within 48 hours he had located two of his target aircraft. The third eluded him, and as he left Palau, he swore that "he would scour the [ocean floor] for as long as it took to find the last plane."
And finally:
It took him 10 more years to fulfill that promise. As he set about his task, he collected data from books, archives and veterans themselves, and he developed a fascination with the Palau missions of the B-24-equipped 307th Bomb Group, "the Long Rangers." (This was the same unit that Louis Zamperini, the hero of Laura Hillenbrand's best seller "Unbroken," served in.) The 307th suffered crushing losses while prosecuting their attacks against Palau. In just one week of missions, in the late summer of 1944, they lost five planes—and more than 50 men.
One of those was Jimmie Doyle, the 25-year-old Texan who was the tail gunner of Mr. Scannon's third B-24. Officially missing in action, Jimmie Doyle had left at home a young bride and son, Tommy, who was only 15 months old when his father went to war. The pain of that loss—and the cruel family rumor that the MIA tail gunner had survived the crash and was living in California with no interest in his Texas family—haunted Tommy Doyle's life. "Tommy pushed the questions down, but they were always there," Mr. Hylton writes. "The slightest mention of his dad would bring [him] to tears."
I assume there is no comparison, and somehow looking for final resting places of those who gave all for their country is much more noble than looking for oil, but I suppose, for me, Harold Hamm's success in the Bakken is due to the same passion and "sense of duty and responsibility" that Pat Scammon possessed.

I don't know. Maybe that's a bridge too far.

If your memory serves you well
We're going to meet again and wait.
So I'm going to unpack all my things
And sit before it gets too late.
No man alive will come to you
With another tale to tell,
And you know that we shall meet again
If your memory serves you well.
 -- Bob Dylan and Rick Danko

As good as anything Emily Dickinson ever wrote.

Harold Hamm Featured In Newsweek/NBC News; Enough OOIP To Meet The Nation's Needs For Hundreds Of Years

I don't often have articles that I consider must-read articles (maybe only ten/week), but this is one of them: Harold Hamm feature in Newsweek/NBC News.
In the history of oil, this fall is a tipping point, the moment America gurgles past Saudi Arabia and Russia to become the world’s petroleum king.
The man most responsible is Harold Hamm, 67, a drawling, blue-eyed billionaire, a sharecropper’s son who grew to be the richest energy mogul in America. He was the first to profitably “frack” North Dakota oil wells, leading a revolution in the way the nation coaxes energy from the earth and draining momentum from the search for cleaner fuel sources. His company, Continental Resources, has quintupled in value in a matter of years, emerging as a swaggering promoter of eco-friendly, effectively infinite oil — along with all the supposed good that flows from it.
And more:
Last month, when U.S. Department of Energy data projected that America had become the globe’s new fuel pump and fuse box, Texas remained the biggest producer of crude oil. North Dakota, however, showed the fastest growth, approaching a million barrels of oil a day, up from 10,000 barrels a day in 2003 — and powering the largest five-year petroleum increase in U.S. history.
“This is a new era,” the head of the U.S. Energy Information Administration said at the time, “that you wouldn’t in a million years have dreamed about.”
Hamm did more than just dream about it. He recognized the potential of North Dakota’s Bakken oil field, which now produces more crude than Alaska’s Prudhoe Bay, and his company remains the area’s largest lease holder.
This month Continental Resources told investors that the region contains enough recoverable oil to double the official count of U.S. reserves and enough "oil in place" to meet the nation’s needs for hundreds of years. While those claims have not been verified by regulators, Hamm’s track record makes them hard to doubt
Last week President Obama awarded sixteen men and women the Presidential Medal of Freedom. All sixteen are very, very deserving, but I can identify four in the following list that pale in comparison to what Harold Hamm has done for this country.

Here were the recipients:
Ernie Banks, Ben Bradlee, former President Bill Clinton, Daniel Inouye (posthumous), Daniel Kahneman, Richard Lugar, Loretta Lynn, Mario Molina, Sally Ride (posthumous), Bayard Rustin (posthumous), Arturo Sandoval, Dean Smith, Gloria Steinem, Cordy Tindell "C.T." Vivian, Patricia Wald, and Oprah Winfrey.
Politicians, artists, a talk show host, a minister, an athlete, a coach, a teacher, but no room for one "harold hamm." And so it goes.

Snapshot: Status Of the 2012 Permits -- As Of December 1, 2013

This will be updated on an irregular basis until all permits have been "executed" for 2012: either producing, canceled, or abandoned. Updated December 31, 2012.

But as of December 31, 2012, some random data points for the 2012 permits.  [A tally of the 2011 permits can be found here.]

Permits from January 2, 2012 to December 31, 2012:
Permits: #22171 - #24692
2,521 total oil and gas permits (this does not include salt water disposal well permits)
  • 1,781 wells have a reported "IP" -- initial production 
  • 368 wells are on confidential status; generally that means the wells have at least been spudded
  • 144 permits are shown as PNC -- "permit now canceled"
  • 88 wells are on "DRL" status: generally that means the wells have reached total depth, and waiting to be fracked; we will be seeing more and more of this with multi-well pad drilling
  • 66 wells are "LOC" -- permitted, but no further action
  • 47 permits are shown as producing wells, but still on the confidential list
  • 18 wells were reported as "DRY"
  • 5 wells are listed as "WI" -- water injected
  • 4 wells were TA (2), PA (1), or IA (1) (often IA wells come back on-line) [temporarily abandoned, permanently abandoned, inactive]
(Adds up to 2,521 permits.)

Note: there may be errors in the tabulations (obviously there is at least one). It is based on my database taken from NDIC daily activity reports. In addition, this was done in between helping the granddaughters with Thanksgiving centerpieces. 

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Of the 2,521 permits, 143 permits were canceled by the operator

Of the 2,521 permits, 70 locations still show no activity; permits only.

Not all 2,521 permits were Bakken wells. I suppose about 30 were non-Bakken/Three Forks wells (e.g., Madison, Red River, Spearfish).

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

The IPs ranged from a high of 5,417 bbls to a low of 5 bbls (a Madison well).

Of the top 20 "IP" wells: Statoil/BEXP (11); Whiting (4), Oasis (3), Murex (1), BR (1).

IPs:
  • Greater than 5,000 bbls: 3 wells
  • 4,000 to 4,999 bbls: 14
  • 3,000 to 3,999 bbls: 51
  • 2,000 to 2,999 bbls: 252
  • 1,000 to 1,999 bbls: 422
  • 750 to 999 bbls: 237
  • 500 to 749 bbls: 306
  • 250 to 499 bbls:  274
**********************************
So,
  • 420 wells are still on confidential status
  • 96 wells are still on "DRL" status
  • 70 wells are still "LOC"
  • 63 permits are currently shown as producing wells, but still on the confidential list
.... adds up to 649 wells yet to report IPs for permits issued in 2012

(Obviously, these numbers will change over the weekend but this gives us some idea where things stand.)

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

Of the original 2,521 permits, 143 permits were canceled (5.7%).

The 649 wells yet to report IPs represents (25.7%).

So, we are almost to the end of calendar year 2013, and almost a quarter of permitted wells (not including PNC) have yet to report.

Wal-Mart: Most Successful Black Friday in Walmart's History

Wal-Mart issues statement on Black Friday events: 'most successful Black Friday in Walmart's history':
Co also stated, "For our part, we want to be absolutely clear about our jobs, the pay and benefits we offer our associates, and the role retail jobs play in the U.S. economy. Walmart provides wages on the higher end of the retail average with full-time and part-time associates making, on average, close to $12.00 an hour. The majority of our workforce is full-time, and our average full-time hourly pay is $12.81 an hour. We are also proud of the benefits we offer our associates, including affordable health care, performance-based bonuses, education benefits, and access to a 401K."
Compare this with the minimum wage, the federal wage, in Washington, DC, high cost area where most Wal-Mart employees do not work (thank goodness): $7.25. Source: WSJ. Other than a questionable $15/hour minimum wage in SeaTac, the highest minimum wage comes nowhere close to Wal-Mart's average of $12.00 an hour + benefits.

Bakken Pricing Rises, Firms -- Refinery Maintenance Completed; $11 Discount To WTI; LSS Sells At $3.45 Premium; Alaskan At $13 Premium

Update

November 30, 2013: a reader says that his royalty checks reflect nothing less than $96/bbl for the past three months. I find that very, very interesting, and why it is very, very difficult for analysts to sort out future earnings for operators. The discrepancy reflects:
  • the "TV crawler" and Bloomberg data below are daily spot prices and futures
  • operators contracted six months ago on current deliveries
  • operators contract with hedges, collars, floors, ceilings which have been previously discussed
  • price of Bakken oil is priced at Clearbrook (I believe); it varies at other locations
You have no idea how much I appreciate getting data from readers on prices they are getting for their Bakken oil. It is very, very helpful.
 
Original Post

An $11 discount to WTI may make some folks unhappy, but Canadian oil sands is priced at $30 to $40 discount to WTI, and Canadian oil sands runs $20 to $40 more to produce. Maybe more. [Those are all "my" numbers; others will disagree.]

Bloomberg is reporting:
Bakken light crude strengthened on the spot market as refineries ramped up operation after seasonal maintenance.
The grade reached a four-week high against the benchmark West Texas Intermediate. Refinery utilization rates in PADD 2, or the U.S. Midwest, rose by 2.6 percentage points to 96.1 percent of capacity last week, according to data released today by the Energy Information Administration. The rates typically decline seasonally as plants perform maintenance before the start of winter.
Bakken crude delivered in Clearbrook, Minnesota, strengthened by $1 a barrel to an $11.50 discount to WTI, according to data compiled by Bloomberg at 3:03 p.m. New York time. Bakken crude production in North Dakota reached 867,240 barrels a day at the end of September.
Other pricing at the link:
WTI crude oil on the New York Mercantile Exchange fell $1.38, or 1.5 percent, to settle at $92.30 a barrel on the New York Mercantile Exchange.
Other spot market grades also strengthened. Light Louisiana Sweet oil gained 30 cents to a $3.45 premium to WTI, while Alaska North Slope crude strengthened for a fifth straight day, by 25 cents to a $13 premium. Southern Green Canyon gained 90 cents, narrowing its discount to WTI to $3.70 a barrel.
For newbies: Bakken has two disadvantages -- a) landlocked/transportation/takeaway/location; and, b) sweet oil.

Saturday Morning: Just The Wall Street Journal -- Nothing On The Bakken

The Wall Street Journal

Health site likely to miss Saturday deadline. That's the least of their problems.

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Local minimum wage laws creates a patchwork across the nation; time for the Feds to intervene?
Some examples:
Colorado: $7.78
Florida: $7.79
Arizona, Montana: $7.80
 How do lawmakers even come up with these numbers?

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

OPEC rift developing over Iraq output; possible return of Iranian production; never mind US shale.

In Appalachia, coal struggles to compete with natural gas.

CNOOC seeks to export LNG from Canada's Pacific Coast. Good luck.

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Book review:  Queen Anne by Anne Somerset
Queen Anne, who reigned over England from 1702 to 1714, was not the stupidest of the Stuart monarchs—that was her father, James II—but she was certainly not of sparkling intelligence. Nor was she in any way glamorous. In many respects, her life was wretched. By 40, she could scarcely walk. She had endured at least 15 pregnancies, and perhaps a couple of phantom ones, but only one of her children survived infancy, and he died just after his 11th birthday. Anne Somerset, in her biography of Anne, suggests that she was suffering from Hughes syndrome, which is linked to disseminated lupus erythematosus, an autoimmune disease.
Yet Anne was indeed not only a sovereign but one who attended to business diligently and whose opinions were never discounted by her ministers. Though she has now little in the way of a public reputation—certainly as compared with Elizabeth I or Victoria—her reign was one of the most momentous in English and British history. 
For the first time since the Middle Ages, English armies were consistently successful on the Continent. The Duke of Marlborough's four great victories—Blenheim, Ramillies, Oudenarde and Malplaquet—broke the power of Louis XIV's France. It was in Anne's reign, moreover, that the United Kingdom came into being, as a result of the Treaty of Union between England and Scotland. The crowns had been united since James VI & I inherited the English throne in 1603, but, though sharing a monarch, the two states had remained formally independent of each other. 
If Anne could claim no credit for the success of her armies, apart from the support she gave to Marlborough, she was a prime mover in the accomplishment of the union, something she had called for in her first speech from the throne.
****************************************

Friday, November 29, 2013

Week 48: November 24, 2013 -- November 30, 2013

Operations
Random: two more spectacular EOG wells
Random: update of a KOG well east of Williston
North Dakota rig count jumps to 193
Musings on the North Dakota rig count
EOG set to become largest producer in lower 48
Random look at KOG case before the NDIC; 16 wells on two 1280-acre units
Random update of two Pyramid wells northwest of Williston; note variability of production
Trends noted in the December hearing dockets
NDIC hearing docket agenda, December, 2013

CBR
Marathon to be main shipper on Enbridge's Sandpiper

Flaring
It appears the reservation (BLM) is main source of flaring in the Bakken

Economy
Stark County approves new rail transloading facility

Pricing
Western Canadian sands oil trading at $40 discount to WTI

Miscellaneous
For the archives: several articles on the shale revolution
North Dakota leads region in federal oil, gas leases
US refineries reaching capacity; will lead to pricing volatility

Global Sea Ice Is At Its Highest In 25 Years; Sixth-Highest On Record

ClimateDepot is reporting:
Global sea ice is highest in 25 years; sixth-highest ever recorded.
All this talk about global warming gets a bit tedious, does it not?

Something tells me the graphic at the link will not end up in the Algore PowerPoint presentation.

ClimateDepot also notes these records in the past few days:

Via: http://iceagenow.info/2013/11/1000-record-max-temps-17-record-high-temps/
  • Almost 1000 record low max temps vs 17 record high temps
  • Records in the last 7 days
  • 205 snowfall records
  • 969 low max; 203 low temps
  • 17 high temps
  • 61 high minimum

Pleasant Hill

Permits
2015
30466, conf, Whiting, Cherry State 31-16-3H, 

2014
No new permits as of March 1, 2014

2013 (permit list complete)
27082, conf, Whiting, Johnson 34-8-2H,
27050, loc, Whiting, Mork Trust 21-17-6H,
26568, drl -- > conf, Whiting, Cherry State 21-16-2H,
26484, drl -- > conf, Whiting, Cherry State 31-16-2H,
26483, drl --> conf, Whiting, Cherry State 31-16H, 
26297, drl, Whiting, Schilke 14-33RH, a nice well,
26296, drl, Whiting, Schilke 14-33-2RH, a nice well, 
26039, conf, Whiting, Johnson 31-4-2H, huge well, 
26024, drl, Whiting, Mork Farm 24-8H,
26023, drl, Whiting, Mork Farm 24-8-2H,
25942, drl, Whiting, Johnson 34-33-2H, producing,
25930, drl, Whiting, Schilke 34-32-2H, producing,
25795, PNC, Whiting, Schilke 14-33H,
25794, PNC, Whiting, Schilke 14-33-2H,
25357, drl, Whiting, Mork Trust 21-17-2H, producing,
25356, drl, Whiting, Mork Trust 21-17-3H, producing,
25355, drl, Whiting, Mork Trust 21-17-4H, producing,
25354, drl, Whiting, Mork Trust 21-17-5H, producing
25139, 1,319, Whiting, Tifft 21-18-2H, t7/13; cum 50K 12/13;
24976, conf, Whiting, Kummer 14-32-2H, 23K first two months,
24975, conf, Whiting, Kummer 14-32H, 14K first two months

2012
24589, 1,941, Whiting, Olson 41-18-2H, t7/13; cum 53K 12/13;
24460, 2,030, Whiting, Rud 11-4-2H, t5/13; cum 50K 10/13;
24459, 1,448, Whiting, Olson 41-18H, t7/13; cum 62K 12/13;
24450, 1,528, Whiting, Kummer 34-31-2H, t6/13; cum 43K 12/13;
24274, 1,405, Whiting, Kummer 14-31-2H, t6/13; cum 51K 12/13;
24273, 1,473, Whiting, Kummer 14-31H, t6/13; cum 48K 12/13;
23780, 513, Whiting, Rud 11-4TFH, t5/13; cum 16K 10/13;
23779, 2,078, Whiting, Rud 11-4H, t5/13; cum 44K 10/13;
22723, 489, Whiting, Cherry State 21-16TFH, t12/12; cum 18K 10/13;

2011
22066, 1,329, Whiting, Mork Trust, t5/12; cum 88K 10/13;
21186, PNC, Whiting, Mork Trust 21-17HEXP;

Pleasant Hill

I had a bit of trouble telling for sure, whether the Pleasant Hill oil field was in Whiting's Tarpon Prospect or in Whiting's Hidden Bench prospect. A reader, elsewhere, suggests it is in Whiting's Hidden Bench prospect, and he is correct. One can pull up a Whiting presentation here and compare their graphics with the NDIC GIS map server. It looks like Pleasant Hill is on the northeast edge of Whiting's rather large Hidden Bench prospect, McKenzie County, just to the southwest of Watford City. The reader is correct; the Tarpon Prospect is farther to the northeast, closer to the river.

Pleasant Hill has become a bit more active recently. It is a relatively small-to-medium size field for the Bakken, 18 sections, perfectly rectangular, 3 x 6 sections.

The center of the field is particularly active with two rigs on site and several 2-well pads and one 4-well pad:
  • 25354, drl, Whiting, Mork Trust 21-17-5H,
  • 25355, drl, Whiting, Mork Trust 21-17-4H,
  • 25356, drl, Whiting, Mork Trust 21-17-3H,
  • 25357, drl, Whiting, Mork Trust 21-17-2H,
 The 2-well pads:
  • 26023, rig on site, Whiting, Mork Farm 24-8-2H,
  • 26024, drl, Whiting, Mork Farm 24-8H,
  • 26483, rig on site, Whiting, Cherry State 31-16H,
  • 26484, drl, Whiting, Cherry State 31-16-2H,
  • 21257, 2,057, Whiting, Cherry State 21-16H, t12/12; cum 68K 10/13;
  • 22723, 489, Whiting, Cherry State 21-16TFH, 29 stages; 2 million lbs; t12/12; cum 18K 10/13;
  • 26568, drl, Whiting, Cherry State 21-16-2H,
Two older, producing/active wells in this immediate area:
  • 19847, 886, Whiting, Johnson 34-8H, t10/11; cum 69K 10/13;
  • 22066, 1,329, Whiting, Mork Trust 21-17H, t5/12; cum 88K 10/13;
And one permitted location:
  • 27082, see above, Whiting, Johnson 34-8-2H, 

The Tea Leaves Suggest This Administration Will Limit LNG Exports -- But Is This News?

Platts is reporting:
In an interview with Platts, Freeport CEO Michael Smith said he was “quite disappointed” in the order, claiming that DOE was “arbitrarily” limiting what it can export to non-FTA nations.
“There is nothing in the regulations that allow this,” he said. “We filed for 1.4 Bcf/d, and unless all of it isn’t in the public interest, they are required to approve our filing. Once someone else is approved for any more, they have no argument that our application wasn’t in the public interest.”
Under a provision of the US Natural Gas Act, the DOE must issue an order to export to non-FTA countries unless it finds such exports “will not be consistent with the public interest.”
“This provision creates a rebuttable presumption that a proposed export of natural gas is in the public interest,” DOE wrote in its Freeport order. The agency “must grant such an application unless opponents of the application overcome that presumption by making an affirmative showing of inconsistency with the public interest.”
Essentially, what that means is this: DOE has to approve an LNG export application unless it can prove exporting that gas would not be in the public interest.
Platts describes the issue as clearly as one could expect. This does not bode well for the pro-LNG export crowd.

But then, this is not news for this administration whose decisions are capricious to begin with. 

The article continues:
This gets into some double-negative wording territory which makes English majors cringe, but, under the statute, the DOE must prove that the LNG export proposal is not in the public interest to reject it. Most simply, DOE does not have to prove that the exports would be in the public interest.
Which brings us to the Freeport order: did DOE cut the export request by 1 Bcf/d because it believed exports at that level would not be in the public interest? In other words: was the Freeport request reduced by 1 Bcf/d because DOE believes that an additional 1 Bcf/d would not be in the public interest?
It does not appear so, since throughout the order DOE claims that opponents of the Freeport proposal failed to prove that 1.4 Bcf/d of LNG exports was not in the public interest.
But DOE’s decision to cut the request by 1 Bcf/d could ultimately be extremely problematic for future approvals for Gulf Coast LNG export projects. If the DOE can prevent Freeport from shipping another 1 Bcf/d from its Texas facility it would stand to reason that it could also limit shipping 1.7 Bcf/d from Cameron LNG’s facility in Louisiana or even more from other pending export proposals. Cameron LNG is the next export project in line for DOE approval.
And:
Pro-LNG export sources claim that DOE seems to be overstepping their legal bounds here and taking on more than it may be allowed under the Natural Gas Act. And DOE has offered little explanation on why it limited the Freeport order.
William Gibbons, a DOE spokesman, declined to comment, but in the Freeport order DOE says it limited the Freeport approval to “the extent of the liquefaction capacity” of the project. Freeport has told the Federal Energy Regulatory Commission that the project would have a liquefaction capacity of 1.8 Bcf/d, not the 2.8 Bcf/d total it requested in its two export applications.
Much more at the link. Some readers may want to take an extra Valium. 

Eleven (11) New Permits -- The Williston Basin, North Dakota, USA;

Active rigs:

11/29/201311/29/201211/29/201111/29/201011/29/2009
Active Rigs19118219816467


Eleven (11) new permits --
  • Operators: BR (4), HRC (3), EOG (2), KOG, American Eagle
  • Fields: Truax (Williams), Parshall (Mountrail), Eagle Nest (Dunn), Corral Creek (Dunn)
  • Comments: American Eagle has a permit for a wildcat in Divide County
Wells coming off the confidential list were posted earlier; see sidebar at the right.

Four producing wells were completed:
  • 25030, 1,048, Hess, EN-Sorenson A 154-94-0211H-4, Alkali Creek, t10/13; cum 16K 10/13;
  • 25351, 1,064, Hess, BW-Spring Creek 149-99-1201H-2, Cherry Creek, t11/13; cum 6K 10/13;
  • 24262, 2,984, BR, Glacier 41-4TFH, Clear Creek, t11/13; cum --
  • 26141, 523, OXY USA, Walter Cooke 1-9-4H-143-98, Little Knife, t11/13; cum --
Chesapeake plugged four non-confidential wells: the two Grenz wells (#22153, #21885), the Zent (#21139), and the Kostenko (#21681). 

OXY USA plugged the Spring Creek 1-20-141-93 (#21949) in Dunn County.

The Sorenson Wells, Union Center, 13/24-152-96

The Sorenson wells in Union Center, 13/24-152-96:
  • 2903, 186/PA, Petro-Hunt, CCMU 05, a Madison well, t6/61; cum 539K 6/92
  • 6168, 500/PA, Panther Creek, Brenna 13-13, a Madison well, t8/77; cum 241K 6/2000
  • 6529, 160/PA, Quanterra Alpha, Sorenson 22-13, a Madison well, t10/78; cum 8K 4/81
  • 6737, DRY, Terra Energy, Matheisen 31-13, a Madison well
  • 8266, IA/486, Legacy Reserves, Sorenson 11-13, a Madison well, t4/81; cum 256K 9/14;
  • 18308, 1,562, Petro-Hunt, Sorenson 152-96-13B-24-1H, Bakken, t1/10; cum 316K 1/15;
  • 19359, TA/91, Petro-Hunt, Sorenson 152-96-24C-13-2H, Bakken, t9/11; cum 32K 4/14;
  • 20476, 840, Petro-Hunt, Sorenson 152-96-24C-13-3H, Bakken, t3/13; cum 228K 1/15;
  • 21714, 1,626, Petro-Hunt, Sorenson 152-96-24C-13-4H, Bakken, t4/12; cum 243K 1/15;
  • 24438, 527, Petro-Hunt, Sorenson 152-96-24D-13-5H, Bakken, t8/13;cum 132K 1/15;
  • 24439, 1,733, Petro-Hunt, Sorenson 152-96-24D-13-6H, t8/13; cum 124K 1/15;
  • 25048, 1,759, Petro-Hunt, Sorenson 152-96-24D-13-7H, t8/13; cum 138K 1/15;
For newbies, note: it took a Madison well 32 years to reach 255,000 bbls of production. Petro-Hunt has three Bakken wells that have reached a similar amount of production in the same area. One well reached 280,000 bbls in about four years; another reached almost 180,000 bbls in less than a year; and the third well that reached more than 200,000 bbls in less than two years. Although production will vary significantly over the next decades, Bakken wells are expected to go on producing for 39 years. Obviously all Bakken wells won't produce that long, but that's the expectation going in. At least one operator opines that the average EUR for Bakken wells will be 603,000 bbls.

*******************************
A Note To The Granddaughters

It is interesting how things work out. About once a year we get a duck for a holiday meal, generally Thanksgiving or during the long Christmas / New Year's. This year we bought a "King Cole Duck," a Canadian (Toronto?) company. It was incredible. It was the best duck we have ever had and we have had many ducks over the years, including mallards shot in North Dakota (while assigned to Grand Forks AFB, ND, in another life) and at 5-star restaurants in San Francisco (while assigned to Travis AFB, CA, also in another life, and far, far away).  [Actually thinking back now, the mallard duck in North Dakota might have been better. Whatever.]

The King Cole duck was to have had a orange sauce package but it was missing. My wife was quite upset; that's the most important part of a duck meal, duck à l'orange. But my wife is quite clever and made her own duck sauce which was also the best we had ever had. Most duck sauces are way too thick/syrup. Hers was a very thin sauce, perfect for soaking into the meat. I was quite impressed.

May sent an e-mail note to the King Cole company about the missing sauce. We got an immediate response back, and an offer to refund us $15 if we gave them our mailing address. We responded that we could never accept the $15; the duck was too delicious. We recommended that on the outside of the package the company might note that orange sauce is included but "for those folks who like to prepare their own sauce, here is suggested recipe .... " That way there is something to fall back on if the cook does not have access to internet for a duck sauce recipe and it does not mention the real reason for including a suggested recipe on the back of the package.

Anyway, we were quite impressed overall.

Sunday, our Thanksgiving turkey dinner. No orange sauce.

Black Friday -- For Investors Only; Comet ISON Did Not Survive! Or Maybe It Did ---

Comet ISON did not survive its close encounter with the sun.
A new guest arrived just in time for Thanksgiving dinner, but apparently didn't survive the festivities.
The visitor, a pristine comet called ISON that left its home at least a million years ago, made its closest approach to the sun Thursday afternoon.
But based on images arriving from various spacecraft, the consensus among scientists appeared to be that ISON, like the mythical Icarus, didn't survive its close encounter with the sun.
Or maybe it did? http://www.isoncampaign.org/karl/a-trail-of-questions

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

More mundane news: six (6) companies announce increased dividends/distributions.

Disclaimer: this is not an investment site. Do not make any investment decisions based on anything you read here or what you think you may have read here. 

Wal-Mart announced record-breaking Black Friday results; More than 1 million customers took advantage of Walmart's One-Hour Guarantee:
Last year, Walmart served 22 million customers on Thanksgiving Day. This year, even more customers chose to shop Walmart: More than 1 million customers took advantage of Walmart's One-Hour Guarantee which was expanded from three items last year to 21 items this year. From 6 p.m. to 10 p.m., Walmart processed more than 10 million register transactions in its stores. Walmart.com processed nearly 400 million page views on Thanksgiving Day, including customers who used mobile devices and tablets.
The Wall Street Journal

Small-business delay is latest blow for ObamaCare.
The Obama administration's announcement of a one-year delay for small businesses to sign up for insurance policies using the troubled HealthCare.gov website comes as a blow for the administration, which had counted on the new online exchanges to create a competitive, transparent market for coverage.
Small firms, for their part, say they had figured they wouldn't be using the new exchange this year. Many of them are already making other plans for insuring their workers in 2014, often by renewing existing policies or working with an insurance agent.
Rami Essaid, chief executive of Distil Networks, a Web-security business in Arlington, Va., said he would soon renew his firm's health coverage early rather than face a rate increase of as much as 50% next year. "We definitely wanted to shop the exchange to get more selection in our plan," he says. The delays, he adds, "meant we couldn't shop around. It's eliminated my options."
On NPR now, they are interviewing a person that was able to sign up on-line. Can you imagine, NPR doing an interview with a person that was able to order an Apple computer on-line. Wow, this technology is incredible. It's almost as if NPR has discovered for the first time that one can order things on-line. But I digress. Back to the WSJ.

Speaking of ObamaCare, H-P replaces Verizon as host of website. Previously reported.

Payback: Colorado lawmaker quits; faced recall after supporting gun-control legislation

Black Friday -- The Propane Story Gets More And More Interesting; Interesting Shale Plays To Watch In 2014

Active rigs: 191

RBN Energy: Part 2 in the series on the propane shortage in the midwest for drying corn.
The northern corn-belt states are winding down from a very wet bumper crop of corn which has required a lot of grain drying, fired by propane.  That has translated into a shortage of propane supplies – so much so that seven governors recently issued emergency orders to expedite propane deliveries to their states. 
Now, with about three weeks left before the official onset of winter (and it feels like winter already), 2013 Midwestern propane problems should be behind us. 
But what about next year?  In 2014, Cochin pipeline – one of the most significant traditional sources of propane for the region goes away Kinder Morgan (current owner and operator of Cochin) is reversing the system and turning it into a diluent pipeline.  Volumes of propane previously delivered by Cochin must come from somewhere else.  Today we’ll continue our series looking at upper Midwest propane and how the region is likely to adjust in the post-Cochin market.
Over at Rigzone, long article on the shale plays to watch in 2014. For example:
The Eagle Ford unconventional play in South Texas has proven prolific in terms of oil production, but activity on other formations within the Eagle Ford area will expand. While the Pearsall shale will not likely be a huge play, Gilmer said DrillingInfo is seeing interesting things in the Buda formation.
Both the Pearsall and Buda plays are located below the Eagle Ford – the Buda located deeper than the Eagle Ford and Pearsall the deepest – varying in depth ranging from 7,000 feet to 12,500 feet. Buda exploration is occurring in the eastern portion of the Eagle Ford play area, while Pearsall development is taking place in the western half of the Eagle Ford.
 A couple of Buda wells have come online pretty strongly in the dead oil zone of the Eagle Ford proper, an area where companies had leased, hoping for oil, but not enough gas exists to make it mobile. But when operators started drilling deeper into the Buda, they “walked into a window of mobility, so it looks like a second life for a lot of those leases.”
SeekingAlpha has an article on ETP.  A nice map at the link.
The map depicts Energy Transfer Partners' asset footprint in the United States. ETP's assets are concentrated in the South of the US, especially in Texas. Energy Transfer Partners has a particular strong position in the Eagle Ford area and is massively adding to its processing capacity. In 2010, ETP had an Eagle Ford processing capacity of 120 Mbpd and expects to grow its capacity to 1,340 Mbpd in 2014. Eagle Ford is one of the highest-impact drilling areas in the US and the expansion of processing capacity will serve the company and its unitholders well in the future.
Disclaimer: this is not an investment site. Do not make any investment decisions on anything you read here or think you may have read here.

The Wall Street Journal would normally be placed here, but this post has already gotten pretty long, so I will go to a new post.

Thursday, November 28, 2013

Just A Random Note: Some Interesting WellsTo Follow

24666, conf, EOG, Van Hook 126-2523H, Parshall:

DateOil RunsMCF Sold
10-20135786326949
9-20134899325624
8-20134055522580
7-20133048612144


Based on the "126" I assume this is a Three Forks well.

For newbies: generally the first month is not a full month (though it could be). This well has already produced about 180,000 bbls of oil in the first four months.

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

 24667, conf, EOG, Van Hook 19-2523H, Parshall:

DateOil RunsMCF Sold
10-20135336030936
9-20135689129328
8-20135281527066
7-20132332211007


This well has produced more than 186,000 bbls of oil in the first three months.

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

24960, conf, EOG, Wayzetta 155-2536H, Parshall:

DateOil RunsMCF Sold
10-20134838314822
9-2013457698265
8-2013420624916
7-201389490



This well has produced more than 145,000 bbls of oil in the first four months.

Wells Coming Off Confidential List Thursday, Friday: HRC, Hess, MRO All Reporting Great Wells And All Hooked Up To Natural Gas System

Friday, November 29, 2013
  • 25298, 1,012, Hess, EN-Weyrauch 154-93-1918H-4, Robinson Lake, t9/13; cum 33K 10/13;
  • 25570, 997, HRC, Johnson 7-25-36H, Strandahl, t8/13; cum 17K 9/13;
Thursday, November 28, 2013
  • 25484, 2,071, MRO, Bluegrass 21-25TFH, Bailey, t10/13; cum 15K 10/13;
************************************

25298, see above, Hess, EN-Weyrauch 154-93-1918H-4, Robinson Lake:

DateOil RunsMCF Sold
10-20131261614470
9-20132062820986

 25570, see above, HRC, Johnson 7-25-36H, Strandahl:

DateOil RunsMCF Sold
9-201355494219
8-2013118527749

25484, see below, MRO, Bluegrass 21-25TFH, Bailey:

DateOil RunsMCF Sold
10-2013148656273

Exxon Sells Iraq Stake To PetroChina

Updates

November 30, 2013: Michael Fitzsimmons, over at SeekingAlpha, has a nice commentary on this deal.
4-traders.com reports a landmark multi-billion dollar energy deal has been struck between Turkey and Iraqi Kurdistan. The state-backed Turkish Energy Company has signed a contract to operate 13 exploration blocks in northern Iraq and is teaming up with Exxon Mobil in about half of them. After years of being bogged down in low margin Iraqi projects, this is a coup for Exxon and a positive catalyst going forward. The deal will likely benefit Chevron as well.
Back in January, I wrote Exxon And The KRG Need A Pipeline and explained why the only thing keeping the oil riches of Kurdistan from being exploited was a secure pipeline to world markets independent of the Baghdad government to the south. The existing pipeline (see map) used to carry 1.6 million bpd of Iraqi oil to the global market, earning nice transit fees for Turkey. At the time of the article, wars and saboteurs had left the Iraqi section of the pipeline in shambles. One of the two parallel pipelines was totally empty and the other was running at a small fraction of capacity.
Original Post
Yahoo!News/AFP is reporting:
American energy giant Exxon Mobil on Thursday sold part of its controversial stake in a massive Iraqi oilfield to PetroChina and Indonesia's Pertamina amid a long-running row with Baghdad.
The sale of the stake in the West Qurna-1 field in south Iraq, one of the country's largest, marks a key step towards resolving the dispute with the central government over Exxon's contracts with the autonomous Kurdish region.
"The agreement was signed for Exxon Mobil to sell part of its 60 percent stake," oil ministry spokesman Assem Jihad told AFP.
"Representatives of all the companies signed the deal today with the Iraqi government in the ministry."
PetroChina takes a 25 percent stake in the oilfield, while Pertamina will hold 10 percent, thereby reducing Exxon's share to 25 percent.
An earlier post, January 23, 2013, has a bit more, leading up to this.

Several Articles On The Shale Oil Boom -- For The Archives: How The Bakken Has Affected Global Oil Industry; The State Of Texas; And An Indian Reservation In North Dakota

A reader sent me two interesting articles on the "tight oil" revolution we're experiencing in the US. Both articles are quite long, particularly one of them, and there are so many more stories within the articles that it is hard to figure out how to capture all the issues, and all the data points.

For now, I will simply post the links with only a few comments.

First the links:

The impact of the US oil boom; global re-ordering.  

Texas oil boom: another oil boom that is changing everything.

The StarTribune has a story on the reservation

With regard to the actual boom, in Texas and in North Dakota, I don't think there's anything new for regular readers of the blog, in the big scheme of things.

From the second article:
Drilling and fracking are expensive, and shale wells tend to decline quickly, so new drilling is constant, according to a Harvard University study. Only the United States, with 60 percent of the world's supply of drilling rigs, most of which can do the horizontal drilling fracking requires, has the wherewithal to maintain the pace. For comparison, the Harvard study noted, the U.S. completed 45,468 oil and gas wells last year; the rest of the world outside of Canada completed just 3,921.
Also:
Wilson said he's noticed many of his fellow operators drilling wells closer and closer together at the major fields in Texas and North Dakota. That makes money quickly and satisfies shareholders. But then the wells start competing with one another for the same oil and decline quickly, he said.
I think the jury is still out but whenever I see comments about decline rates and well spacing it makes me think that some folks still have not adjusted to a new way of thinking: conventional vs unconventional oil. I don't think we've seen evidence in North Dakota that putting wells more closely together is hastening the decline rate.

However, remaining focused on the decline rate seems to be missing the bigger picture. Unless I'm missing something, EURs seem to be the more important metric. If the EURs of Bakken wells exceed the EURs of Madison wells, and Bakken wells pay for themselves in one to three years, who cares what the decline rate is. That's always been the problem in the oil and gas industry. Wells deplete.

Hitting a Bakken well or a great Madison well is sort of like hitting the lottery. With the Bakken, you take the winnings upfront; with the Madison, you have an annuity over a lifetime. [I used to say that with more conviction; now that we have moved into the manufacturing phase of the Bakken, anyone who has a well on his/her section, will have Bakken annuities (plural) that will easily last a lifetime.]

When I first started blogging, they were talking about recovering 1 - 3% of original oil in place; then it went to 3 - 8%. I believe I have seen numbers that are higher. The operators continue to explore new methods and new technologies. Completion methods being introduced by EOG and Whiting in North Dakota are resulting in significantly better wells.

The third article is on the challenge the Native Americans have "managing" their spiritual land:
Theodora Bird Bear and Corey Sanders are the unlikeliest of protesters.
She’s 62 and works as a bookkeeper at a Catholic church just up Bureau of Indian Affairs Road 12 from the simple brown house she shares with her sister.
He’s 44, similarly soft-spoken and ranches down BIA Road 14 with his brother, running cattle on dozens of hilly acres climbing from a creek-lined ravine.
“When you have roots buried deep here, there’s something intangible that really connects you to the earth,” said Bird Bear, who has spent her entire life on this arid terrain that’s now in a bull’s-eye for the next burst of oil extraction in North Dakota’s frenzied Bakken boom. “Yes, it’s rough and hard out here. But this is our land, darn it, this is what we’ve got left and we’ve got to fight for it.”
Some other comments:
Hudson, like many tribal members, inherited mineral rights. She and her siblings share a $10,000 check each month, royalties she calls “a real blessing” in tough economic times. But she’s been through earlier oil booms here and knows it might not last. “Oil is a fickle business; if they can find a cheaper way to produce it, they’ll pull out of here in a New York minute.”
Neighbor Lisa Deville, 39, a mother of five from Mandaree, is less torn, despite her husband’s royalty checks that helped them pay off $70,000 of their home mortgage.
“We’re supposed to be keepers of the earth,” she said. “We’re supposed to be the water that makes things grow. We’re losing that connection.”
For newbies, it is important to remember that the folks living on the reservation are divided on the issue, some even insisting that their tribal leaders were "cheated" in their leases -- referring to the WPX deal a couple years ago.

I doubt the folks on the reservation have problems all that different from other folks in the oil patch who do not live on the reservation.

By the way, anyone who is getting $10,000/month in royalties will eventually get ten times that amount, or $100,000/month in royalties, from the Bakken. The reservation appears to average one or two wells/section. Before the drilling is over, is very likely that the better Bakken (and much of the reservation is in the better Bakken) will support eight to sixteen wells/section.

The problem I have with the StarTribune story: a) we've heard this before and before and before; b) it's more of an op-ed than a news story; c) the journalist had an agenda -- the story was written to fit the thesis, and thus not objective, though it looks like an objective news story; and, d) there seems to be more than a bit of hypocrisy in the article. I think this quote will be the takeaway for me: "...a $10,000 check each month, royalties she calls “a real blessing” in tough economic times." The writer should have asked what their income was prior to the royalties and how the royalties have changed their life. Most importantly, is most or all (or even, any?) of the royalty being used to fuel the campaign stop the oil industry from drilling on the reservation?

Newbies may want to take a look at this post to see what the Native Americans are complaining about.

Alaska Oil Future


January 4, 2019: ENI to operate Alaska oil field.

March 15, 2017: Smith Bay, North Slope

March 10, 2017: Nanushuk Play; Pikka Area; North Slope; Repsol, Armstrong Energy, big discovery announced; 1.2 billion bbls of recoverable light oil; said to largest conventional onshore discovery in US in 30 years.

October 27, 2015: 88 Energy Limited has begun drilling horizontal shale on the North Slope This is just one of many links.

October 13, 2015: update on Kuparuk oil field, north slope, Alaska.

July 17, 2015: Alaska's North Shore production areas, EIA.  

Original Post
 
The Alaska oil story has always been difficult for me to understand. This article -- sent to me by a reader -- in The New Times brings us up to speed.

The NYT is reporting:
Ms. Palin was elected governor in 2006 on a pledge to clean house after revelations of oil-industry corruption in the State Legislature, and in 2007 oversaw a sweeping overhaul of policy that included big new taxes on oil profits.
But this year Gov. Sean Parnell — Ms. Palin’s lieutenant governor, and successor after her resignation in 2009 — led a drive in the Republican-controlled Legislature to repeal the Palin tax package, arguing that it discouraged new exploration. That is a big issue in Alaska, where oil taxes pay for 90 percent of the state’s general fund budget. 
And now the confusion due to strange bedfellows:
Supporters of the Parnell plan scoff that nostalgia for the Palin years is misguided hindsight. The old law, they said, created big disincentives for oil companies to explore and drill.
“People were angry at the oil industry, angry at the Republican Party, angry at the lawmakers who got caught in the scandal, and she channeled that,” said Andrew Halcro, the president of the Anchorage Chamber of Commerce, referring to Ms. Palin. “And so when she raised taxes, people were like, ‘All right, you go get ’em.’ But then the reality sunk in.” 
And that's why I was always so confused when I heard Alaska, oil, Palin, Tea Party, taxes, all in the same paragraph. 
She did the right thing. She put in a tax that was tough on the big guys,” said Jack Roderick, 87, a major public figure since Alaska’s early statehood as a lawyer, author, former Democratic mayor of Anchorage Borough — and now leader of the repeal drive
The Alaskans did not see the Bakken coming, nor did anyone else for that matter:
“In just the last five or six months, Alaskans are starting to see the benefit of a competitive tax regime,” he said in a telephone interview, pointing to new investment in oil drilling areas. He said that he gradually saw harmful effects in the ACES law he helped Ms. Palin pass and that Democrats, in “all of a sudden now raising her legacy,” were overlooking or ignoring the explosive rise of challengers in energy production since Ms. Palin’s time, notably North Dakota.
When will this be decided? 
The referendum on oil taxes will be in August. Mr. Parnell is aiming to seek a second full term in the general election two months later. The two races are now intertwined, Democrats said. 
This will be interesting to watch.

By the way, this helps me put into perspective North Dakota's approach to the oil patch.

Biggest Danger To Wildlife: President's Ethanol Program

This AP story is being reported "everywhere." I found the story in the Dallas Morning News hard copy (my wife sent me on an early morning errand to buy a 5-pound Thanksgiving issue: four pounds of ads, one pound of non-ad news, comics, editorials, etc. Online, one source is The Charlotte Observer (weightless):
SIOUX FALLS, S.D. Pheasants once drew hundreds of weekend hunters to Fairbury, Neb., each fall, filling the 45 rooms at Randy Brown's Capri Motel with sportsmen eager to bag their limits. But times have changed. The native grasslands and milo crops that used to dot surrounding Jefferson County have been overtaken by corn and soy crops.
Neither provides the shelter that wildlife once enjoyed. This year's opener drew just two rooms of out-of-state hunters to the Capri, one of many businesses indirectly affected as farmers move to meet the nation's demand for biofuel.
"We don't have the habitat we had 20 years ago," said Brown, owner of the motel near the Nebraska-Kansas border.
The U.S. Conservation Reserve Program, which pays landowners not to farm their property, has been a boon to wildlife. Since its creation in 1985, it has boosted populations of ducks, ring-necked pheasants, prairie chickens, Columbian sharp-tailed grouse and other wildlife by providing areas where they can feed and reproduce.
"Everything's against the pheasants right now." Since the government began requiring oil companies to add billions of gallons of ethanol to their gasoline each year, the states of Iowa, Kansas, Minnesota, North Dakota, South Dakota and Nebraska have lost 2.8 million acres from the conservation reserve program, as farmers planted nearly 10 million more acres of corn, the main feedstock used to produce ethanol.
About 5 million other acres are now included in other conservation programs, but nearly all that land is being actively farmed.
So, we have slicers and dicers killing golden eagles, red-tailed hawks, migratory ducks, and whooping cranes, and the ethanol program decimating pheasants, prairie chickens, and grouse. Where are the Poppers? Where is Jane Nielson? Where is the Sierra Club?

Stark County - Dickinson - Approves New Rail Transloading Facility

Updates

January 17, 2014: post with link to press release (PDF) providing more details

December 4, 2013: The Dickinson Press is reporting:
Stark County commissioners on Tuesday gave final approval to rezone a 686-acre plot for a rail terminal 5 miles west of South Heart, but not without a lengthy list of stipulations.
There was no reason to post this; the story / original post remains unchanged. However, the explanations why the county commissioners flip-flopped add a bit of hilarity to today's news.  One commissioner suggested that he knew how to run the railroad better than BSNF and that's why he originally denied the request. But, now, after two or three weeks of "RAILROAD 101" he understands how the railroad works. It turns out that the train occasionally has to stop to load and unload materiel. I cannot make this stuff up.
 
Original Post
The Dickinson Press is reporting:
On the second go around, Stark County Planning and Zoning Board members approved a 686-acre agricultural-to-industrial rezoning request on Wednesday from developers seeking to build a rail terminal 5 miles west of South Heart.
Developers want to create a transloading facility to receive loads of fracking proppants, aggregate, oilfield equipment, agricultural products and building products.
It doesn't really matter, and it doesn't add anything to the story, but I always enjoy trying to figure out where these proposed sites will be. 

It appears that based on the description in the article, the proposed site will be near the "A" in the graphics below:




Good Morning! Happy Thanksgiving!

I almost hate to be so mundane on such a wonderful day, but I'm off my meds, and OCD has kicked in, so I will sit here, listen to some classical music (per my wife's "suggestion" if I want coffee and fresh muffins), and check the e-mail. There are at least two stories that came to me via e-mail, both related to the Bakken so that should be nice.

The first story comes from SeekingAlpha. This one caught me completely by surprise. I had not looked at the market over the past two days, except for the Dow. I had no indication that PSX (Phillips 66) hit a new high. On November 20, 2013, PSX was said to be overvalued with respect to its peers, by at least one analyst.

Now, just a few days later, PSX hits a new high and Michael Fitzsimmons takes a look at it. Mr Fitzsimmons asks whether PSX might just be the "best play on domestic shale."

It looks like its previous high was $69.67, and is now comfortably at $71 and paying over 25. The two things that excite me about PSX: a) their $2 billion LPG export facility in Texas; and, b) their "investor-friendly" management.

Again the disclaimer: this is not an investment site. Do not make any investment decisions based on what you read here or what you think you may have read here.

Now, to get some coffee and some fresh muffins.

(The second story alluded to above regards the proposed rail transloading terminal near Dickinson.)


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

We really do have something to be thankful for in this arena. Can you imagine the state of the US economy if five years ago, the US had banned all fracking, and Great Britain (Scotland and northern England); France; and Poland had pressed "full steam ahead" with their own shale programs, instead of doing quite the opposite and putting most of their eggs into wind (Germany) and solar (Spain)? We would be sitting over here, wondering, "what just happened?" But the US is as close to energy independence as it has ever been since the President Carter days, and the refined products export market is about to take off.

Wednesday, November 27, 2013

Encana To Focus On San Juan Basin In 2014

A big "thank you" to a reader alerting me to this update.

Daily Times/Four Corners Business is reporting:
Encana Corporation announced earlier this month a new company strategy and vision, with much of that strategy being focused on the San Juan Basin where it plans to invest hundreds of millions of dollars in new oil and gas production beginning in 2014.
The announcement has prompted a flurry of speculation among those in the local oil and gas industry that the increased drilling will begin immediately after the first of the year.
In a Nov. 5 news release, the Calgary-based Encana outlined key points of its strategy, the first of which states that it will "focus its capital investment on five oil and liquids-rich resource plays in North America."
The release goes on to state that Encana will "invest approximately 75 percent of its 2014 capital into five high return oil and liquids-rich plays: the Montney, Duvernay, DJ Basin, San Juan Basin and Tuscaloosa Marine Shale."
Two years ago I had not heard of half these oil plays; now I have them all linked on the sidebar at the right. 

Random Update Of A KOG Well East Of Williston

For newbies, just another example of the relevancy of IPs:
  • 23423, 820, KOG, Northern 155-100-30-31-1H, Springbrook oil field, 35 stages; 4.1 million lbs; t12/12; cum 173K 9/13
This well had a very nice, but somewhat unremarkable -- for the Bakken -- IP of 820 bbls. And now, less than a year later, still flowing on its own (no pump noted at the NDIC website -- though reports are often delayed) this well has already produced almost 175,000 bbls of oil. Also note, that it has not been on-line every day most months, some days as few as 18 days pumping:

PoolDateDaysBBLS OilRunsBBLS WaterMCF ProdMCF SoldVent/Flare
BAKKEN9-2013309535920110563681106738
BAKKEN8-20132310222924210063733307273
BAKKEN7-20132513434139481257610784010711
BAKKEN6-20132213250132461272910709010709
BAKKEN5-201318712267237323536705367
BAKKEN4-20132413961140011389012146012146
BAKKEN3-20132914845145171677013341013341
BAKKEN2-20132818073181811678716268016268
BAKKEN1-20133119664195341916316966016966
BAKKEN12-20123123803236992381120375020375
BAKKEN11-20122229557287424433826010026010

One also notes that all natural gas is being flared due to lack of natural gas processing plant capacity. Even if KOG put in the pipeline, there would be no place for the natural gas to be processed.

I could be wrong, but I think I drove past this well a couple of weeks ago: it sits on the northwest corner of a huge sand and gravel pit, which is remarkable for all the temporary housing units co-located at the site. One gets a great satellite view on Google. Zoom in at the corner of 134th Avenue NW and 56th NW, northeast of Williston. Again, I could be wrong but it certainly seems to fit.

As Challenging As Ever -- The Williston Wire

The Bakken boom began in North Dakota in 2007 (in Montana in 2000). Many thought things would slow down a bit, start to level off by this time, but now The Williston Wire has several stories suggesting things are not slowing down:

US Postal Service workers are "burning out" in the Bakken oil patch due to the tremendous work demands.

Former governor, now Senator Hoeven says "Williston will settle down."Wi

Williston mayor appoints panel on affordable housing.

"Can For Can" Challenge is being initiated by Whiting Oil and Gas and IVM Construction to compete in the Bakken to raise canned and non-perishable items for local food pantries.

Hertz Equipment Rental moves into spacious facility in Williston, a 12,720 square-foot building situated on a 5-acre lot in the Missouri Ridge Commercial Park.

Complete Nutrition opened in the new Sand Creek Town Centre.

This is great news: Gaffaney's Total Office Source re-opens after a fire five months ago.

New wellness center opens in Crosby (Divide County), North Dakota.

New middle school will open in Minot next week, December 2, 2013.

North Dakota Leads Region In Federal Oil, Gas Leases

The Bismarck Tribune is reporting:
Developers have bought the oil and gas rights to about three-fourths of the available federal land in western North Dakota, pushing prices to record levels despite industry complaints that the federal permitting process is still too onerous to immediately develop the land.
Federal oil and gas lease sales in the Dakotas and Montana totaled $64.4 million in fiscal 2013, up from $50.1 million the year before, according to the Bureau of Land Management. North Dakota, which has led the three-state region in oil and gas leases for most of the past decade, accounted for the vast majority of sales — $61.4 million — which was up from $44.3 million in fiscal 2012.
Montana tallied $2.9 million in fiscal 2013, down from $4.5 million the year before, and South Dakota fetched about $67,660, down from about $1.3 million in fiscal 2012.
It's a great article. A lot of data points. Helps one interpret the tea leaves.

It confirms that it takes approximately 300 days to get a federal permit approved compared to a state permit of just 60 days.

And this: Despite the demand for the federal development rights, only two of the 187 rigs working in North Dakota's oil patch on Monday were drilling on federal, non-tribal land.

One wonders if there is some relationship between the glacial speed of the federal permitting process and the excessive flaring that occurs on BLM land compared to the rest of the oil patch

[The Williston Wire alerted readers to the story.]

Fourteen New Permits -- The Williston Basin, North Dakota, USA

Active rigs:191

Fourteen (14) new permits --
  • Operators: Oasis (7), EOG (3), BR (2), CLR (2)
  • Fields: Banks (McKenzie), Parshall (Mountrail), Border (Burke), Keene (McKenzie), Cedar Hills (Bowman)
  • Comments: all seven Oasis permits are for wells in section 31-152-98 where there is already a producig well (see below)
Wells coming off the confidential list were posted earlier; see sidebar at the right.

Above, it was noted that Oasis will be placing seven (7) wells in section 31-152-98, Banks oil field:
  • 20731, 1,598, Zenergy, Hagen 31-30H, t11/11; cum 154K 10/13;
It look like Oasis picked up these acres earlier this year in the $1.5 billion deal to acquire 160,000 acres from Zenergy.

Layoffs Easing

The Los Angeles Times is reporting:
Layoffs appear to be easing as the number of people who filed for unemployment claims last week dropped by 10,000 to 316,000, the U.S. Labor Department reported Wednesday. 
The number of initial unemployment claims has decreased in six of the last seven weeks, data show. The four-week moving average, a more reliable measure that irons out weekly volatility, fell by 7,500 to 331,750, the Labor Department said. 
A year ago, the four-week moving average was 401,000.
California recorded the largest drop in initial jobless claims. Not adjusted for seasonality, the data show that claims in the Golden State fell by 4,644, largely due to fewer layoffs in the service industry, state officials reported.