Crude-By-Rail -- A Random Note

Comment/reply at recent Mike Filloon article on the Bakken:

Here's the comment:

Do you know much about the rail services in the region? I'm wondering if UNP or KSU (or CNI or CP) stand to benefit the most. I suppose this is mostly a short-term situation for the rails, but it would be interesting to see if any new rail is being laid, as well. Personally, I don't see this new crude going away anytime soon... 

And Mike's reply:

I am not real sure which stands to benefit the most, but I do know [crude-by-rail] is not a short term situation. Midstream companies wont put in pipelines until they know they have enough production to fill it. I believe that the rails will continue this for several years at least, but a more likely situation will be at least a decade. This only holds true if WTI trades at a decent discount to Brent which I also believe will continue. 

More Happening In North Dakota Than Just the Oil Patch

A big "thank you" to a reader for sending this in.

Grand Forks Herald reporting there is activity across the state:

According to North Dakota Tourism Division, 57 new hotels with 4,900 rooms have opened in the state since 2008, and 39 hotels with 3,600 rooms are under construction or development. New construction is even happening in small towns outside the Oil Patch, such as Langdon, Harvey and Carrington, all in the eastern half of the state.

If someone with a hotel franchise is building in one part of the state, they are likely to look at other markets, Ausmus said.

Charles Hayes, who has built hotels in Fargo and western North Dakota, said he has plans to start construction on a Grand Forks La Quinta this year but has not chosen a location. 

The Canadian traffic is particularly noteworthy:

“Seven hundred thousand people live two hours north who love to come to North Dakota,” said Leslie, whose Fargo-based company has a stake in the new Staybridge Suites next to the Alerus Center.

Changes to import duties last year, allowing Canadians to bring home more goods tax free, gave shoppers from Manitoba and other provinces more incentive to spend in the states, as has the continued strength of the their dollar.

Nice story. I'm glad to see Grand Forks doing well; the city always seemed to be overshadowed by Fargo.

Wells Coming Off The Confidential List Over the Weekend, Monday -- Baytex Reports Two Very Nice Wells

This page will not be update. I moved the entire page to a "higher" position in the blog. But I can't delete this page without deleting comments. So it will stay here for now. 

Normally I don't post this until later in the weekend, but it feels like Sunday night. No sports; so might as well post this now before I forget.

Look at the two Baytex wells below. For this operator (Baytex) and these fields, these are very nice wells. 

Monday, February 11, 2013
21337, conf, XTO, Deborah 14-20SEH, Arnegard,
21802, conf, Petro-Hunt, Fort Berthold 152-93-9C-10-3H, Four Bears, 18 first full month;
22113, conf, MRO, Baker USA 11-18H, Van Hook, see below
22738, conf, Petro-Hunt, Blikre 158-93-6A-7-1H, East Tioga,

Sunday, February 10, 2013
21797, conf, CLR, Black Federal 1-28H, Oliver, see below
22833, conf, XTO, GV 44-32NH, Siverston,
22942, conf, BEXP, Sullivan WMA 35-2 1H, Briar Creek, no production data;
23090, conf, BEXP, Jarold 25-36 2TFH, Todd, no production data;
23283, conf, Hess, EN-Belik 156-93-0607H-2, see below
23401, conf, XTO, FBIR Smith 11X-10E, Heart Butte, no production data;

Saturday, February 9, 2013
21355, conf, Oasis, Thornburgh 6092 44-15H, Cottonwood; an "okay" well;
22019, conf, Baytex, Judith Olson 27-34-162-98H 1XN, Whiteaker, see below
22020, conf, Baytex, Judith Olson 22-15-162-98H 1NC, Blooming Prairie, see below
22452, conf, MRO, Brent Kerr 21-17H, Lake Ilo, no production data;
22542, conf, Fidelity, Kevin 24-9H, Stanley, a nice well;
22716, conf, Samson Resources, Rutherford 24-25-161-93H, Foothills; early production not good;
22842, conf, Oasis, Arlyss 5601 14-26T, Tyrone, initial production dropped off significantly;
22901, conf, BEXP, Samson 29-32 3H, no production data;


22113, conf, MRO, Baker USA 11-18H, Van Hook:

Date	Oil Runs	MCF Sold
12-2012	19190	0
11-2012	17836	0

21797, conf, CLR, Black Federal 1-28H, Oliver:

Date	Oil Runs	MCF Sold
12-2012	14008	13088

 23283, conf, Hess, EN-Belik 156-93-0607H-2, Big Butte:

Date	Oil Runs	MCF Sold
12-2012	18554	19994
11-2012	25710	24374

 22019, conf, Baytex, Judith Olson 27-34-162-98H 1XN, Whiteaker:

Date	Oil Runs	MCF Sold
12-2012	6412	0
11-2012	6668	0
10-2012	10700	0
9-2012	13927	0
8-2012	18292	0

 22020, conf, Baytex, Judith Olson 22-15-162-98H 1NC, Blooming Prairie:

Date	Oil Runs	MCF Sold
12-2012	5223	0
11-2012	4075	0
10-2012	8747	0
9-2012	11692	0
8-2012	10854	0

Siverston Field Has Been Updated

Looking at the NDIC GIS map server there is a string of wells on confidential status east of Watford City: SM is putting in as many as nine (9) wells in a spacing unit in Siverston field. Many of these wells are on 3-well pads.

Siverston field has been updated. Siverston is a superb field. For newbies, look at how many Siverston wells will have 100,000 bbls of crude oil within the first year.

There are five rigs in Siverston field, four of them in that string of SM wells east of Watford City.

EPA Certifies Ethanol Plant In Jamestown, ND; Will Allow New Coal Plant To Come On-Line

Updates

July 24, 2015: up and running. Huge story. 

June 25, 2014: The Jamestown Sun is reporting:

The North Dakota Department of Health issued an air pollution control permit to construct for the proposed CHS nitrogen fertilizer plant at Spiritwood on June 20.
the permit covers construction and operation of the plant but requires construction to begin within 18 months.

The proposed plant would utilize natural gas produced in western North Dakota to produce nitrogen fertilizer. The original cost estimates for the plant totaled about $1.2 billion but have increased to nearly $2 billion. The project would be the largest ever constructed in North Dakota, if built.

February 7, 2014: Construction begins on the Spiritwood ethanol plant.

February 11, 2013: The Bismark Tribune reporting the same story.  It appears that any project with the word "ethanol" in it will be approved by the EPA. Maybe the TransCanada folks should lay a parallel ethanol pipeline alongside the Keystone XL. The Bismarck Tribune does note that folks are starving overseas, and Californians are fueling their SUVs with foodstuff. The Tribune didn't say it exactly like that, but close enough.

Original Post

The Dickinson Press is reporting that the EPA has certified an ethanol plant in Jamestown (ND):

North Dakota’s congressional delegation applauded Friday the Environmental Protection Agency’s certification of a new ethanol plant planned for the Jamestown area.

The EPA’s Renewable Fuel Standard-2 certification for the plant clears the way for Great River Energy to begin seeking financing for the Dakota Spirit AgEnergy facility planned for the Spiritwood Energy Park about 10 miles east of Jamestown. The plant has a construction estimate of about $130 million and will convert 23 million bushels of corn into 65 million gallons of ethanol per year.

North Dakota: still on a roll.

Agree to disagree on ethanol, but as long as "they're" spending money on ethanol plants, they might as well build them in North Dakota. For newbies, Jamestown is not anywhere near the oil patch.

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

Also in that story:

Also planned for the Spiritwood Energy Park is the CHS Inc. nitrogen fertilizer plant. That $1.2 billion facility will produce anhydrous ammonia commonly used as a farm fertilizer. Construction completion of that plant is slated for 2016.

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

Background

A bit more background to the ethanol story, assuming I interpret everything correctly.

In the Jamestown area there is a 99-megawatt coal-fired power plant which has sat idle since completion of testing after construction in 2011. The plant is now scheduled to come online in January 2015.

When that coal-fired power plant (Spiritwood Station) comes on line, providing electricity, it will divert its waste steam to a) the ethanol plant mentioned above; and, b) the Cargill Malt plant in the area.

Approval for the ethanol plant was delayed because the processes proposed were at variance to "predefined pathways."

What A Bunch of Malarkey -- Energy Related But Not The Bakken

Updates

February 17, 2013: Another "scary sequester story": 

Soldiers deployed to Afghanistan next year may see their war tours extended because budget cuts will drastically limit training for brigades to replace them, the top Army general said Friday.

Gen. Raymond Odierno, the Army chief of staff, said the military will be able to fund training and operations for combat units in Afghanistan now and for those deploying in the summer and fall. But he says there will be delays in training for those deploying in 2014.

Maybe the US Army could borrow some US Navy money; the navy has enough money to fuel their boats with $16/gallon biofuel as a politically correct experiment instead of buying $4/gallon diesel.

Original Post

Malarkey according to wiktionary.

USNI is reporting that budget cuts are responsible for lack of cash to pay to refuel an aircraft carrier:

The U.S. Navy will delay the refueling of the aircraft carrier USS Abraham Lincoln (CVN-72) for an unknown period because of the uncertain fiscal environment due to the ongoing legislative struggle, the service told Congress in a Friday message obtained by USNI News. Lincoln was scheduled to be moved to Huntington Ingalls Industries’ (HII) Newport News Shipyard later this month to begin the 4-year refueling and complex overhaul (RCOH) of the ship.

“This delay is due to uncertainty in the Fiscal Year 2013 appropriations bill, both in the timing and funding level available for the first full year of the contract,” the message said. “CVN-72 will remain at Norfolk Naval Base where the ships force personnel will continue to conduct routine maintenance until sufficient funding is received for the initial execution of the RCOH.”

I didn't read any more of the story but something tells me this story was not mentioned, the story in which it was reported that the US Navy is now buying biofuel/diesel for $16/gallon when conventional diesel can be had for $4/gallon. 

So, "we're" short money for defense, but not too short to spend $16/gallon for diesel fuel to refuel US Navy ships:

This is going to help the Defense Department weather looming budget cuts, for sure.  Teaming up with the Department of Agriculture (which has a cheery Rotary Club ring to it), the Navy has purchased 450,000 gallons of biofuel for about $16 a gallon, or about 4 times the price of its standard marine fuel, JP-5, which has been going for under $4 a gallon.

You won’t be surprised to learn that a member of Obama’s presidential transition team, T. J. Glauthier, is a “strategic advisor” at Solazyme, the California company that is selling a portion of the biofuel to the Navy.  Glauthier worked – shock, shock – on the energy-sector portion of the 2009 stimulus bill.

The Navy sale isn’t Solazyme’s first trip to the public trough, of course.  The company got a $21.8 million grant from the 2009 stimulus package.

What a great way to start the weekend. 

Oh, one more thing. This is for a ship going in for major overhaul/refueling which is scheduled to take four years, but will probably take longer. Delaying this fueling for a month or two will hardly impact naval readiness. Of course, that's just an opinion. I really don't know but I would assume if this were really, really important, the president would step in and order barges using $16 diesel to tow the ship to the shipyard.

Week 6: February 3, 2013 -- February 9, 2013

This was done fairly quickly; there may be broken links, wrong links, typos

Presentations
Karen Harbert's presentation at IPAA archives
The Bakken and the national GDP

National economy
Fracking responsible for narrowing US trade deficit 

News without links that was mentioned on several posts this past week
The WTI/Brent spread continues to widen

New national standard
"Acceptable" for wind farms to kill up to 15 bald eagles annually for 30 years; no slack for oil companies: one migratory duck -- criminal offense

Crude-by-rail
Enbridge pipeline system underused; rail taking oil from pipelines
CNBC segment on crude-by-rail
Another crude-by-rail terminal in Louisiana
Bakken strengthens with crude-by-rail shipment to Delaware

Most fun
Roughnecks have called it a day

Bakken operations
CLR testing the lower benches of the Three Forks formation
Decline rates -- original post
Decline rates -- another post
Decline rates and EURs -- another post
Decline rates and EURs
Explanation for 1600-acre spacing unit
Random data points from Whiting corporate presentation
KOG with a nice well
Bakken oil reaching California; new link added: price for Chevron California spot

Pipeline
Bloomberg suggests as much as 450,000 new miles of pipeline needed for crude and natural gas
Update on the Seaway reversal
Operators change their minds: WILL reverse flow of crude oil in nation's largest pipeline, the Capline

Records
On track for 2,641 oil and gas permits this year, compared to a projection of 1,959 permits this time one year ago.
$13,000/acre in North Dakota state lease sales

For investors only
Is "OXY" a sleeper? For investors only
Emerald signs agreement with private equity New York firm
Wall Street Interview Transcript (lede only): on the Williston Basin and the Permian
Riparian minerals belong to the state

Economic development
MDU-Calumet announce joint venture for diesel refinery in Dickinson area; follows on footsteps of Dakota Oil Processing refinery project near Trenton; another link to same story here
New jet service to Dickinson (United Airlines)
Update on bypass around Dickinson on the west side

Fracking
Halliburton develops non-toxic, environmentally-friendly fracking fluid

Idle Rambling

That story in the Williston Wire about the Enbridge pipeline system being underused caught my attention.  It may be accurate, but one needs to consider the source of that comment. Bloomberg reports the story. I don't remember if I had posted the story earlier; Bloomberg posted it back in January 16, 2013.

The source of the comment is a refiner who presented testimony to the Federal Energy Regulatory Commission (FERC):

Flint Hills, which operates the 330,000-barrel-a-day Pine Bend refinery in Minnesota, filed the document with FERC as part of its opposition to a surcharge on the North Dakota system proposed by Enbridge.

The story also noted that BNSF plans to expand capacity to 700,000 bopd by the end of the year (2013), which has been previously reported.

In an earlier post, back in February, 2012, it was estimated there would be about 1.3 million bopd takeaway capacity by the end of 2013. It appears that expected increase did not include the current BNSF plans to increase capacity by 700K bopd.

From the linked Bloomberg article, about 50% of North Dakota crude is shipped by rail, and 40% shipped by pipeline. Enbridge can ship 210K bopd to its Clearbrook, MN, hub. Enbridge is constructing a new 225K bopd pipeline, the Sandpiper, to connect Bakken oil with its Mainline system in Superior, WI.