Sunday, February 3, 2013

Halliburton Develops Non-Toxic, Environmentally-Friendly Fracking Fluids

Link here to AP/Yahoo News.
The oil and gas industry is trying to ease environmental concerns by developing nontoxic fluids for the drilling process known as fracking, but it's not clear whether the new product will be widely embraced by drilling companies.
Houston-based energy giant Halliburton Inc. has developed a product called CleanStim, which uses only food-industry ingredients. Other companies have developed nontoxic fluids as well.

Environmental groups say they welcome the development but still have questions.
The chemicals in fracking fluids aren't the only environmental concern, said George Jugovic, president of PennFuture. He said there is also concern about the large volumes of naturally occurring but exceptionally salty wastewater and air pollution.
And, so it goes. A thank you to a reader for alerting me to the story. 

Related posts:

Three Oil-Service Companies Moving to Bismarck-Mandan To Support the Bakken

Link to The Bismarck Tribune.

BOS Solutions, a Calgary, Alberta-based company, is planning to rent a building across from Cloverdale in Mandan once construction is complete. It will have 6,600 square feet of shop space and 2,200 square feet of office space.The company conditions drilling fluid for reuse and offers storage options to reduce environmental impact.
A Mandan location was the choice of Intertek’s sole North Dakota employee. Intertek, an oil testing company, left it up to North Dakota native Rick Willoughby to pick a town for its Bakken shop, said Jeffrey Kaylor, a company vice president.
Intertek’s 1,800-square-foot shop on 40th Avenue Southeast is where Willoughby comes to ship out samples he has gathered from well sites to Intertek’s labs in other states.
Datalog offers geological evaluations of wells being drilled in the Bakken. As pipe is sent down a well, Datalog’s equipment gathers data for geologists to determine how to make the well most productive. Larson said Datalog employs eight people in North Dakota.
Bismarck-Mandan has the airport, the government seat and more infrastructure, making parts easier to ship, and it is easier to find property here, Leroux and Pilsner said.

The Wall Street Transcript: The Williston, Permian and Eagle Ford Basins Move to the Next Resource Phase; "Tremendous" Amount of Capital Into The Basins; Early Winners Will Benefit

I can't afford to buy the report but the introduction and the companies mentioned is intriguing nonetheless.

Disclaimer: this is not an investment site. Don't make any investment decisions based on what you read at this site.

This week's issue of The Wall Street Transcript: Williston, Permian and Eagle Ford Basins Move to Next Resource Phase: an Exclusive Interview with Eli Kantor, Senior E&P Equity Research Analyst with IBERIA Capital Partners.

Bakken-centric companies covered: CLR, KOG, Whiting, COP, SM Energy, others.

Note the opening:
Mr. Kantor: I currently cover nine publicly traded E&P companies, with a focus on independent E&Ps with meaningful exposure to the Williston and Permian basins. My plan is to ramp up to between 15 and 20 names over the next few months. 
TWST: Why those two basins
Mr. Kantor: I chose the Williston and Permian because there is going to be a tremendous amount of capital investment in each area over the next few years. They represent two of the three largest onshore oil shale discoveries in the U.S.
Then this:
As far as trends go in 2013 and beyond, the E&P industry is at the beginning of a new and unfortunately less-exciting stage in its life cycle. The previous stage lasted from 2005 through 2012, and was characterized by a renaissance in resource capture.
The advent of horizontal drilling activity and the improvement in completion design resulted in the discovery of dozens of highly prolific unconventional resource plays. It started with the Barnett shale in Texas and may potentially conclude with the Utica shale in eastern Ohio and western Pennsylvania. 
This next in the E&P industry's life cycle is going to be focused on the development of these new plays, commodity price volatility and the ability for midstream companies to facilitate producer's needs in getting newly discovered resources to market in an efficient and low-cost manner
TWST: What kind of companies, broadly speaking, do you see doing well in that new environment?
Mr. Kantor: Stocks that should perform best are those that won the resource capture phase. Those are companies that have meaningful exposure to oil-centric basins like the Williston, Permian, Eagle Ford and potentially the Utica, depending upon how the exploration of that play pans out.
A couple of things jump out:
  • Mr Kantor seems to be focused on natural gas early in the interview, saying the advent of horizontal drilling activity....began with the Barnett. But the interview will accentuate the oily Permian and the Bakken (interestingly, not the Eagle Ford, so much)
  • Mr Kantor says the next phase will be on the ability for midstream companies to facilitate getting product to the market; it is interesting that Enbridge and Oneok were not mentioned in the lead-in 
  • the companies that will do best in the next phase: those that "won the resource capture phase"; based on the lead-in, it looks like he favors KOG, CLR, WLL, SM, COP in the Bakken.  I would add Oasis.
But this is what jumps out at me the most. I already thought a lot of money had poured into the Bakken. But Mr Kantor says this: "I chose the Williston and Permian because there is going to be a tremendous amount of capital investment in each area over the next few years."

Parsing that statement: a) "a tremendous amount of capital investment"; and, b) "over the next few years."

To me, "few" is more than a "couple."

My two cents worth: the tea leaves suggest that CAPEX for drilling has been telegraphed; the number of rigs in the Bakken seems to have stabilized. I don't see rigs/drilling as the area where one will see a "tremendous amount of NEW capital investment."

There is now enough data for analysts to project how much oil is going to be produced in the Bakken. The snippet suggests that the "tremendous amount of capital investment" is going to go into midstream infrastructure. But yet Enbridge and Oneok were not mentioned as the companies covered, whereas the Bakken-centric operators were (CLR, WLL, KOG, COP, SM).

So, I think Mr Kantor was going to talk not about the midstream companies per se but rather about the operators that would benefit from the infrastructure the midstream companies would add going forward. Remember: there is a lot of pressure on operators to resolve the natural gas flaring issue.

If a "tremendous amount of capital investment" is put into midstream (pipeline and rail), these Bakken-centric operators will benefit because their takeaway capacity will not be constrained.

And, I think that's the nut of Mr Kantor's interview: those who "won the resource capture phase" (CLR, WLL, KOG, SM Energy, COP) are going to be the winners in the next phase. 

How did they win?
  • CLR: most acreage - 1.1 million acres in the Bakken
  • WLL: northern and southern ops; Sanish (perhaps the best sweet spot; the Pronghorn Prospect)
  • KOG: the best of the best sweet spots; a fair amount of acreage (155K net acres)
  • COP: although it has dropped down the list recently, COP is the #1 ND producer; lots of leverage; evidence of partnering with CLR in some areas of the Bakken
  • SM: I don't know much about SM; but when you go to its current presentation, the first play: Eagle Ford; the second, the Bakken, the third, the Mississippi Lime; SM does not have much acreage in the Bakken but 87K of its net acreage is in the sweet spot of the Bakken
It would be interesting to know what Mr Kantor says about SM; that company seems to be the outlier in the group mentioned.

Again, one could add a few others, notably Oasis, but that's what I see in that most minimal of information. 

Global Coal -- Nothing To Do With The Bakken -- For Archival Purposes


February 11, 2013: coal exports hit record.
Last year the U.S. broke its coal export record reaching 120 millions tons, doubling its 2009 exports.
However, the rapid increases in coal exports are being supported by Europe and other emerging energy hungry nations. England’s coal demand was up 50% in Q3 and they are only a small contributor to the $13.8 billion worth of coal that was exported in the U.S. during the first 11 months of 2012. Coal should also see a boost in countries such as Germany as nuclear-power plants are starting to be shut down. Over the next 5 years, global coal demand is expected to increase by over one billion tons.
Original Post 

Global consumption of coal at The Oil Drum.

India uses less than China but India imports more: India imports about 120 million tons; China, about 100 million pounds.

The world consumes about 4 billion tons of coals excluding China. China will consume about 4 billion tons of coal this year.

How Much Is The Bakken Affecting the National GDP?

Just when I think I've seen it all and can't say much more about the Bakken, someone sends me a new presentation.

A reader just sent me this Professional Logistics Group presentation focusing on the impact the Bakken is having on the national transportation network. The presentation was prepared for Northwestern University Transportation Center.

You think a lot of trucks aren't needed? See slide 5. I forget now, but I believe the number of truck trips into each Bakken well site is 2,000. And each truck has to eventually leave: 2,000 round trips, or 4,000 one-way truck trips, generally from Williston to points north, south, east, and west.

Slide 12: fracking sand handled by railroad, by operator. I was surprised. I thought BNSF would be #1. It's not. It's Union Pacific Railroad.

Notice slide 13: the nation's sandbox.

Multiple slides on rail.

Not Good News For Those Riparian Landowners -- The Bakken


December 28, 2013: the state wins

Original Post

Remember that controversy about who owns the "shore zone" -- that area between the ordinary high and low watermarks of navigable waterways?

I don't recall posting this, but it's hard to imagine I missed it. Be that as it may.

But here comes the judge, from Petroleum News: the mineral rights along/under the shore line belong to the State of North Dakota; this "public title excludes ownership and any proprietary interest by riparian landowners.
Drew Combs of Minerals Management division of Trust Lands said it is important for people understate the state’s position. “We’re not trying to make a land grab here,” Combs said, “We have a responsibility to the State of North Dakota.”
There is enough conflicting legal code to suggest this will be going to the US ND Supreme Court (corrected; I had "US Supreme Court"; meant ND Supreme Court; "anon 1" caught it.)

From Laugh In

Wells Coming Off The Confidential List On Monday

Wells coming off the confidential list today and over the weekend:

Monday, February 4, 21013:
  • 22280, 1.062, Petro-Hunt, Jonsrud 151-96-3B-10-4H, Clear Creek, t11/12; cum 25K 12/12;
  • 22468, 1,448, KOG, Skunk Creek 12-7-8-8H, Heart Butte, t10/12; cum 26K 12/12;
  • 23238, 523, Samson Resources, Border Farms 3130-2TFH, West Ambrose, t12/12; cum 9K 12/12;
  • 23341, drl, Samson Resources, Michael Joyce 14-23-161-92H, Foothills, no production data;
Sunday, February 3, 2013:
  • 20604, 649, Zenergy, Santa 23-14H, Marmon, t11/12; cum 13K 12/12;
  • 22522, 522, Liberty Resources, Nelson 156-100-17-20-1H, East Fork, t8/12; cum 79K 12/12;
  • 22924, 624, Hess, LK-Alwin 147-97-1324H-2, Little Knife, t12/12; cum 19K 12/12;
  • 23070, 777, CLR, Selmer 1-35H, Frazier, t10/12; cum 17K 12/12;
  • 23252, 373, G3 Operating, Andre 1-34-27H, Climax, t11/12; cum 5K 12/12;
  • 23263, drl, BR, Mesa Verde 44-22TFH; Clear Creek; most BR wells go to DRL status;
  • 23393, drl, XTO, FBIR Baker 34X-25F, Heart Butte; no production data;
Saturday, February 2, 2013:
  • 22961, 558, American Eagle Energy, Elizabeth 3-4N-163-101, Colgan, t9/12; cum 27K 12/12;
  • 23168, 1,257, Hess, BB-Sivertson (sic) 151-95-2019H-2, Blue Buttes, t11/12; cu 58K 12/12; F;
  • 23253, 417, G3 Operating; Pasternak 1-3-10H, t10/12; cum 7K 12/12;
  • 23279, 767, CLR, Anna 1-27H, Last Chance; t11/12; cum 12K 12/12;
Production data from selected wells noted above.

22280, 1.062, Petro-Hunt, Jonsrud 151-96-3B-10-4H, Clear Creek, not a natural gas pipeline:

DateOil RunsMCF Sold

22468, 1,448, KOG, Skunk Creek 12-7-8-8H, Heart Butte:

DateOil RunsMCF Sold

22522, 522, Liberty Resources, Nelson 156-100-17-20-1H, a nice well, already hooked up on a natural gas line:

DateOil RunsMCF Sold

22961, 558, American Eagle Energy, Elizabeth 3-4N-163-101, Colgan, a nice well for the Colgan field; not hooked up to a natural gas pipeline:

DateOil RunsMCF Sold

23168, 1,257, Hess, BB-Sivertson (sic) 151-95-2019H-2, another huge well in Blue Buttes; not hooked up to a natural gas pipeline; takeaway constrained:

DateOil RunsMCF Sold

All You Need Is A Gun -- Absolutely Nothing To Do With The Bakken

All you need is a gun:

Be Very, Very Quiet, I'm Hunting Wabbits
The soundtrack is actually pretty good.

And, I'm shooting skeets:

And I'm shooting capitalists:

And it will keep getting better.

Virus Alert

Some months ago (a year or so ago?) I had a problem with spurious notices popping up suggesting this site was "not secure" and warned folks to access the site at their own risk. I took the site down, opening it only by invitation. Doing that became problematic and unwieldy; I brought the site back up over a very long weekend. The problem went away.

Some days later, there was a short article in The Bismarck Tribune about a problem they had had which sounded very similar. I link a lot of posts to The Bismarck Tribune and other sites and I thought that might have explained the problem. The Bismarck Tribune reported they had resolved the issue; since then no problems.

Until today. A few minutes ago I received a note from a reader saying that he gets a notice of some type making it difficult to log onto this blog. That was the first (and only) note so far.

I am not changing the site or taking it down or requiring passwords or anything (yet). We'll just see how it plays out. If it gets to be a real problem, I will quit linking articles directly and simply highlight the key words and folks can google the articles for themselves.

Ring of Fire, Johnny Cash

Random Update of Blue Buttes Oil Field

Blue Buttes oil field is an incredible Bakken field; if you have access to the NDIC GIS map server take a look at section 5-150-95: there are two 4-well pads back-to-back, the Hess Budahn wells. They are all on confidential status with one rig on site. These wells are just a mile or so away from the incredible Kummer well, producing 20,000 bbls of oil per month; I was told through an "anonymous" comment that production was flat due to takeaway constraints. One word: wow.

As one example, the Hess BB-Budahn...0403H-1 well was tested in January, 2012; by the end of April, 2012, it had produced more than 109,000 bbls of oil. As noted above: production in some (all?) areas of Blue Buttes oil field is constrained by lack of takeaway capacity.
  • 19737, 1,341, Hess, BB-Budahn A-150-95-0403H-1, t1/12; cum 109K as of 4/12; cum 194K 12/12;
These two 4-well pads, by the way, are less than a 160 feet from a very nice Madison well that is now plugged and abandoned:
  • 2518, PA, Hess, Blue Buttes-Madison Unit K-405, t4/60; cum 312K 5/77; it was still producing 300 bbls/month when it was taken off-line; produced for 17 years;
A similar Madison well is about a mile away in the opposite direction:
  • 1931, PA, Hess, Blue Blue Buttes-Madison Unit L-104, t12/58; cum 329K 11/86; produced for 28 years;
Just some idle rambling, and a bit of updating another field in the Bakken. 

A Huge Thank You to "Anonymous"

Earlier today "anonymous" sent me a comment regarding one of my longer posts yesterday regarding the Bakken decline rate and how I misinterpreted some data.

I am completely blown away by the data point "anonymous" sent me. It is one of those "aha moments" for me regarding the Bakken. It certainly explains why Slawson would pay $19,500/acre in the recent BLM auction.

I will expand on it later, perhaps, but in this case, "anonymous" knows who I am talking about and what I am talking about. He/she deserves a "huge thank you." I have said several times I had two main reasons for the blog, and getting a better understanding of the Bakken was one of them.

That comment sent in overnight regarding the Bakken decline rate was worth the entire weekend of blogging. A huge thank you.  (Actually there were two comments sent in regarding that post; they were both important, but I am referring to the second comment.)

Thank you.

[I keep thinking back to another individual who wrote in suggesting that, like the Eagle Ford, takeaway capacity was overbuilt in the Bakken. Not. The flaring of natural gas alone would argue against that statement.]

Capitalism and Marxism in The Bakken

I was not going to post this story. Don sent me three stories this morning and I have posted two of the three. I had not planned to post this one, the third. It was a "human interest" story, a "dog-bites-man" story, and I was rushed to move on to other stories.

But then, the story struck a chord, especially in light of my reading (almost finishing) David Graeber's Debt: The First 5,000 Years, c. 2011.

I have posted a few passages from that book in earlier posts, so regular readers will know what I'm talking about. "Surf-by" readers won't care.

But the following from the story in The Dickinson Press would warm the cockles of David Graeber's heart.
Pomerleau, a Richfield, Minn., native, lives in one of eight apartments the school district owns to provide affordable housing for teachers.
While most two-bedroom apartments rent for $2,500 a month in Williston, Pomerleau and her roommate, a first-year math teacher from Chicago, share rent of $850.
The teachers who live in the apartments support each other and have game nights and social activities as a group.
“It’s a community feeling,” said Pomerleau, 23. “It’s a great place to start out.”
I think it's a wonderful story. Good for Williston. Good for the school district. 

A Note To The Granddaughters

This is what I wrote last night. In view of the story above, I may pick a different passage from David Graeber's book for this note. We'll see. For now, the note below was written independently of the story above; do not link the two.

David Graeber is moving faster now. It seems in just a few pages we have moved from the Medieval Ages to the Tulip Bubbles to the bubble of 2008. One can feel the energy, the angst, or maybe it's Stevie Nicks and Rhiannon in the background. So, at page 357 of 391 pages of narrative; reaching a tipping point; the climax as it were ...
If there's something to be learned here ... Capitalism is a system that enshrines the gambler as an essential part of its operation, in away that no other [system] ever has; yet at the same time, capitalism seems to be uniquely incapable of its own eternity. [Wow!]
I should be more precise here. It's not entirely true that capitalism is incapable of conceiving of its own eternity. On the one hand, its exponents do often feel obliged to present it as eternal, because they insist that it is the only possible viable economic system: one that, as they still sometimes like to say, "has existed for five thousand years and will exist for five thousand more."

On the other hand, it does seem that the moment a significant portion of the population begins to actually believe this, and particularly, starts treating credit institutions as if they really will be around forever, everything goes haywire.

Much of this seems to turn on the nature of national deficits and credit money. The national debt is, as politicians have complained practically since these things first appeared, money borrowed from future generations. Still, the effects have always been strangely double-edged. On the one hand, deficit spending is a way of putting even more military power in the hands of princes, generals, and politicians; on the other, it suggests that government owes something to those it governs.


One could go further: the moment that the fear of imminent social revolution no longer seemed plausible, by the end of World War II, we were immediately presented with the specter of nuclear holocaust. Then, when that no longer seemed plausible, we discovered global warming. This is not to say that these threats were not, and are not, real. Yet it does seem strange that capitalism feels the constant need to imagine, or to actually manufacture, the means of its own imminent extinction. It's in dramatic contrast to the behavior of the leaders of socialist regimes, from Cuba to Albania, who, when they came to power, immediately began acting as if their system would be around forever -- ironically enough, considering they in fact turned out to be something of an historical blip.

Perhaps the reason is because what was true in 1710 is still true. Presented with the prospect of its own eternity, capitalism -- or anyway, financial capitalism -- simply explodes. 

Agriculture: Solar, Wind, Oil and the "Honey Spread"

I've long maintained that solar and wind turbine farms preclude dual-use of the land, unlike the Bakken in North Dakota.

We now have a story from The Dickinson Press.
There’s a land rush of sorts going on across the nation’s most productive farming region, but these buyers don’t want to grow crops. They want to plant solar farms.
With California mandating that 33 percent of electricity be generated from renewables by the end of the decade, there are 227 proposed solar projects in the pipeline statewide. Coupled with wind and other renewables they would generate enough electricity to meet 100 percent of California’s power needs on an average summer day, the California Independent System Operator says.
And new applications for projects keep arriving.
Developers are flocking to flat farmland near power transmission lines, but agriculture interests, environmental groups and even the state are concerned that there is no official accounting of how much of this important agricultural region’s farmland is being taken out of production.
North Dakota is #1 in honey production, well ahead of California which is #2. Taking a bit more farmland out of production in California will widen the "honey spread."

I will not be tracking the "honey spread."

To the best of my knowledge, the amount of farmland taken out of production due to the oil industry in the entire state of North Dakota is minimal. The operators in the current boom are minimizing the footprint by putting multiple wells on one pad, minimizing the pad footprint, and minimizing the number of roads needed to get to the pad.

It is interesting that elsewhere - at other web sites -- there have been folks in North Dakota who have argued loudly that wells should be placed evenly throughout each section rather than bunching them up on pads. That would be an option.

Update On Two Proposed Refineries in the Bakken

Link from The Bismarck Tribune.
When Dakota Oil Processing applied for an air quality permit for a refinery to extract diesel from Bakken crude oil, not one person made a comment to air quality regulators.
So far, that exact same number of zero has commented on yet another diesel refinery in North Dakota, this one planned by a partnership of MDU Resources and Calumet Specialty Products.
Dakota Oil Processing now has a permit for a facility near Trenton, south of Williston, and the public comment period for a MDU-Calumet refinery permit near Dickinson ends at the close of day Monday.
Craig Thorstenson, environmental engineer for the state Health Department’s Division of Air Quality, said one person inquired, but no one had yet commented on the refinery’s air quality permit application late Thursday.
Two of the state’s high profile environmental groups say it’s not likely they will, either.