A Bakken Moment: This Is Kind Of Fun

If you don't have anything else better to do and want to see a fourteen (14) - well pad, you can see an aerial photograph of the Atlanta well pad southwest of Williston at the Rolfstad Presentation (a 138-slide PowerPoint Presentation), slide 43.

The narrative of this 14-well pad can be found here.

This is the layout of the pad, taken from the NDIC GIS server (a salt water disposal well on the pad, not shown, would be in the upper left) (the screen shot was taken May 13, 2013):

Train Wreck

Washington Examiner reports:

• Insurance premiums in general will increase 100%.
• Some insurance premiums will increase 400%.
• Internal memos from 17 of the nation's largest health insurer carriers.

Cue up Connie Francis.

Wells Coming Off The Confidential List Tuesday; WPX Has A Gusher

Active rigs: 188 (steady, trending up)

• 20503, drl, XTO, Wood 21X-25B, Truax,
• 22119, 1,563, WPX, Dora Smith 5-8HD, Van Hook, t2/13; cum 46K 3/13;
• 23775, 602, Triangle, Skedsvold Trust 151-101-32-29-3H, Ragged Butte, t3/13; cum 12K 3/13; 23821, drl, Hess, HA-State 152-95-1621H-3, Hawkeye, no production data;
• 23900, drl, Mountain Divide, LLC, Wigness 5-8-1H, wildcat,
• 24075, drl, Marathon, Hansen Ranch 34-10TFH, Bailey, no production data;

Comments: Mountain Divide has three permits; all wildcats; sections 3, 5, and 35 in T12N-R101W; far northwest corner of the state; if this hits, it will open a new area;

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

22119, see above, WPX, Dora Smith 5-8HD, Van Hook,

Date	Oil Runs	MCF Sold
3-2013	30432	0
2-2013	15484	0

23775, see above, Triangle, Skedsvold Trust 151-101-32-29-3H, Ragged Butte, 

Date	Oil Runs	MCF Sold
3-2013	11066	0

Networks Bleeding Viewers; Scrambling For New Shows

That (the subject line above) was the WSJ tweet about the death spiral the four major networks find themselves in:

With the 2012-13 season nearly over, all of the major English-language networks have so far lost prime-time viewers in the 18- to 49-year-old demographic that advertisers covet. Only top-rated CBS—which had the benefit of the Super Bowl this year—managed to add total viewers, and only by 1.5%.

A good tie-in to this article is James Gleick's book The Information. He defines "information" as a surprise.

For example, there will be no (new) information in this number sequence:

010101010101010101010101.... 

Everyone knows the next digit will be a "0." (Of course, if it isn't, that will be news.)

However, in this number sequence:

01110101000100010000100...

the next number will be information for the mathematician trying to determine the algorithm that defines the sequence.

Guess which letter comes next in the series of letters:

He was the bigges_

No surprise, no news, no information. I assume everyone guessed the next letter would be a "t."

James Gleick also notes that language is redundant. That's one of the tools code-breakers use to break codes. The following phrase is the quickest way to demonstrate what is meant by redundancy in language:

f u cn rd ths

The full sentence would be 20 digits, including the spaces, but the message could be sent with 13 digits, including spaces.

And that takes us to Twitter. 140 digits per message. Jam packed with infomation. Very little redundancy and unlikely if a few letters were removed folks could guess the next letter in many of the messages.

And that's the information world we live in. It's hard for television to compete with that. I don't have television right now, and have not had television since April 25 when I began this current bit of traveling. However, I do have a radio and I do have the internet. Yesterday I listened to the Spurs basketball game on the radio and watched Tiger Woods win the golf tournament on the internet. (The crispness/clarity of the computer monitor was incredible, and it was not even retinal quality.)

Throw in what I wrote earlier about about spinning the news and The Death of the American Dream and folks in Los Angeles and New York wonder why they are losing their television audience:

• the way we receive information is changing
• people don't need television to be entertained
• the honesty and integrity (real or not) of Edward R. Murrow and Walter Cronkite have been replaced by the spin of talking heads who report what Art Carney tells them

One piece of trivia that I don't think the media will talk about: how long it takes for a news story one sees on the internet to be reported on the evening news of one of the three major networks. I am sure everyone is aware that when they watch the evening news, they've read most of the stories two or three days earlier on the internet. I'm talking about the fluff that makes up 75% of the half hour news, not necessarily the headline news or breaking news. But for the rest of the fluff, before a story is reported on network television it is vetted, confirmed, passed through various editors, fact-checked, and re-written several times. I find nothing unusual about the fact that the Susan-Rice-Benghazi-story was re-written twelve times (it was the lies that were concerning)). I would assume most federal government policy statements and talking points are edited and re-written dozens of times before they are released.

The point is this: the all-important 18- to 49-year-old demographic is getting his/her information from a 140-digit tweet that has not been vetted: simply a piece of information. Entertainment is not sitting in front of a non-interactive monitor.

It will be interesting to see how much information the next generation will be able to send in 140 digits. I have some thoughts, but I doubt if anyone has read this far. So, time to quit.

Thirteen (13) New Permits -- The Williston Basin, North Dakota, USA

Active rigs: 187

Thirteen (13) new permits --

• Operators: WPX (5), QEP (4), Whiting (2), Fidelity, Murex
• Fields: Sanish (Mountrail), Fortuna (Divide), Grail (McKenzie), Reunion Bay (Mountrail), Sanish (Mountrail)
• Comments: QEP has those permits in the Helis Grail (smile)

Wells coming off confidential list were reported earlier; see sidebar at the right.

Bobcat In Bismarck: Investing $350 Million in Addition/Renovation In Bismarck; Steffes Expands In Grand Forks; Menard's Looking At Manufacturing Site in Bismarck

Updates

May 21, 2013: The Bismarck Tribune is reporting that Menard's, a Minnesota company is looking at building a manufacturing plant in western North Dakota.

Midwest Manufacturing, a Menard Inc. subsidiary, would use the facility to manufacture trusses and paving stone, said Russ Staiger, president of the Bismarck-Mandan Development Association.

Staiger said the BMDA helped Midwest Manufacturing find the location at the corner of Highway 10 and 249th Street in Burleigh County. He said the company looked at a variety of locations, including the Northern Plains Commerce Centre in Bismarck.
“They wanted a rural location,” he said.

Staiger added that the company also wanted rail access and didn’t want to pay higher prices associated with land around Bismarck had any lots been available there.

The company is still exploring opportunities; it is not committed to the location or a ND manufacturing plant. 

Again, fits with my thinking that companies need to be looking at Fargo and Bismarck, Minot and Grand Forks if they want to participate in the Bakken boom.
 

May 21, 2013: North Dakota Oil Can is reporting --

In 2012, our city welcomed the Grand Forks expansion of Steffes Corp., a long-time Dickinson, N.D.-based manufacturer of residential off-peak, oil field and renewable energy products.

Soon after, Grafton, N.D., welcomed Diverse Energy Systems, a company with rapid expansion plans for their area.

These investments into our region revealed that the boom of the Williston Basin is unique opportunity to further grow the economy of northeast North Dakota.

To better identify and grow our opportunities in the energy industry, the “Access the Bakken” campaign was launched. It’s a collaborative initiative of Grand Forks, Grand Forks County, Grand Forks Region Economic Development Corp., The Chamber of Grand Forks and East Grand Forks, the Greater Grand Forks Convention and Visitors Bureau and more than a dozen private businesses.

Exactly what I've been saying. Companies supporting the oil patch might do better looking at opportunities in Bismark, Grand Forks, Minot, and Fargo.
 

Original Post

The Dickinson Press is reporting:

Bobcat Co. is investing $35 million in an expansion and renovations in Bismarck, about 3 ½ years after closing its manufacturing plant and laying off nearly 500 workers.

The compact construction equipment maker broke ground Monday on a $20 million research-and-development facility at its existing site at the Northern Plains Commerce Centre. Construction is expected to be done in about a year. The company is spending another $15 million on renovations to the existing facility, which had served as a warehouse.

Bobcat has hired an additional 135 people for the expanded facility, bringing its workforce in Bismarck to 625. 

West Fargo-based Bobcat bills itself as North Dakota's largest manufacturer, and also has sites in Fargo, Gwinner and Wahpeton. It closed its manufacturing plant in Bismarck in December 2009 but later opened a support center in the city and announced plans for the new facility, dubbed the Acceleration Center.  

For the past few days, I've been posting about the need for investors in the Bakken to think outside the Bakken, and invest in Fargo, Bismarck, Minot, and Grand Forks, and in that order.

Good on you, Bobcat. Thank you. You've created a lot more jobs than a lot of other folks I could name.

Crescent Point's CEO Calls North Dakota's Growth Into Question

Updates

May 14, 2013: Compare the IEA's prediction with the comments of the CEO, Crescent Point, in the original post. North American shale revolution is displacing OPEC. Bloomberg is reporting:

The U.S. shale boom will send “shockwaves” through the global oil trade over the next five years, benefiting the nation’s refiners and displacing OPEC as the driver of supply growth, the IEA said.

North America will provide 40 percent of new supplies to 2018 through the development of light, tight oil and oil sands, while the contribution from the Organization of Petroleum Exporting Countries will slip to 30 percent, according to the International Energy Agency. The IEA trimmed global fuel demand estimates for the next four years, and predicted that consumption in emerging economies may overtake developed nations this year.

“The supply shock created by a surge in North American oil production will be as transformative to the market over the next five years as was the rise of Chinese demand over the last 15,” the Paris-based adviser to 28 oil-consuming nations said in its medium-term market report today.

The development of U.S. shale resources, enabling the nation’s highest level of energy independence in two decades, is creating a “chain reaction” in the global transportation, processing and storage of oil that may escalate as other countries try to replicate the American oil boom, according to the IEA. Crude futures for settlement in 2018 are trading at a discount to current prices, signaling expectations for increasing supplies and constrained demand.

Original Post

The Globe and Mail is reporting:

North Dakota is an oil hot spot. Its production has climbed every year since 2003, with annual output growing by five times between 2003 and 2011. If optimists are right, it will be a huge help in the United States’ dream of shunning foreign oil. But this growth put enormous pressure on the continent’s pipeline network.

Scott Saxberg, Crescent Point Energy Corp.’s chief executive, thinks North Dakota’s prospects are overblown – a scenario which, if correct, will ease the pipeline conundrum.

“A lot of the growth projections are overstated in the U.S., in North Dakota in particular,” he said in an interview Wednesday. “You’ll see change of slope of the growth of North Dakota over the next years that won’t, obviously, be as great as the previous years when it was sort of the gold rush era.”

Growth, Mr. Saxberg said, is waning because companies no longer have to drill to secure land tenures. Further, the land is now held by big oil and gas companies rather than smaller outfits or private equity.

“We’re past the gold rush stage,” he said. Crescent Point holds leases in North Dakota, Saskatchewan, Alberta, Manitoba, and Utah. It is best known for its work in Saskatchewan.

I certainly wouldn't argue with the CEO of an oil company drilling in the Bakken. I know less than 1% of what is going on.

But to make sure readers are clear on this: the CEO is saying that the SLOPE of growth over the next years (PLURAL) won't be as great as the previous years.

This goes along with the Rolfstad presentation. I don't think the Crescent Point CEO is saying anything new. 

All things being equal, the SLOPE, or as I would prefer to say, the RATE of growth should start leveling off. 

He is not saying that the USGS 2013 Survey of the Bakken/Three Forks is overblown, or that the estimates of some operators are overblown. He is just saying the RATE of growth won't be as great as it was.

I am not sure what "overblown prospects" he is referring to.

However, having said that, a couple of things.

I think the argument that operators will slow down now that they hold their leases by production is an overblown argument. To date there is no evidence that drilling has slowed down in the Bakken. The number of active rigs has remained stable for the past year, fluctuating around 185 rigs, day in and day out. In fact, it's been quite some time that the number of active rigs went down to the post-boom low of 179. In fact, the number of rigs has jumped on one occasion to 191. Where operators drill depend on a lot of factors, and HBP certainly makes that part of the decision easier.

Crescent Point Energy is a Canadian company with a lot more drilling locations in Canada than in North Dakota, but some Bakken-centric companies have nowhere else to go. Think KOG. As far as I know, they are only in North Dakota.

Other Bakken-centric companies have other places to go (CLR to Oklahoma, for example) but there are few other areas as exciting as the Bakken right now for some of them. In addition, there is some excitement right now to see how good the lower benches of the Three Forks might be.

The RATE of growth: 

On February 22, 2010, there were 95 active rigs in North Dakota (which tied a previous record). One year later, February 17, 2011, there were almost twice that many rigs: 170.

And one year later, February 1, 2012, there were 205 active rigs. The record of 218 rigs was on May 29, 2012. 

Today, as noted above, almost as many, with 187 rigs.  And these 187 rigs, for the most part, are bigger, more effective than the 95 rigs that were here in 2010. In addition, they are reaching total depth sooner. They are spending less time between wells (pad drilling). The completion techniques are much, much better, and the wells are getting better.

Rule of thumb: Bakken oil production has been increasing about 3% month-over-month.

By the way, just after getting this story about drilling slowing down in North Dakota, I was alerted by a reader about the four CLR rigs in one section north of Williston, in a section with permits for 14 Bakken wells. This spacing unit is held by production (twice -- two wells already there) and yet, CLR has four rigs in this one section.

We're Starting To See A Pattern -- Non-Bakken Story

The Wall Street Journal is reporting:

The Justice Department secretly obtained two months of telephone records of reporters and editors for the Associated Press in what the news cooperative's top executive called a "massive and unprecedented intrusion" into how news organizations gather the news.

The records obtained by the Justice Department listed outgoing calls for the work and personal phone numbers of individual reporters, general AP office numbers in New York, Washington and Hartford, Conn., and the main number for AP reporters in the House of Representatives press gallery, according to attorneys for the AP. It was not clear if the records also included incoming calls or the duration of calls.

In all, the government seized the records for more than 20 separate telephone lines assigned to AP and its journalists in April and May of 2012. The exact number of journalists who used the phone lines during that period is unknown but more than 100 journalists work in the offices where phone records were targeted, on a wide array of stories about government and other matters.

In a letter of protest sent to Attorney General Eric Holder on Monday, AP President and Chief Executive Officer Gary Pruitt said the government sought and obtained information far beyond anything that could be justified by any specific investigation. He demanded the return of the phone records and destruction of all copies.

"There can be no possible justification for such an overbroad collection of the telephone communications of the Associated Press and its reporters...."

If this was in a tabloid, it might not be news, but this is being reported in The Wall Street Journal, and it's not some right-wing tabloid complaining of invasion of privacy but the AP.

So:

• broad invasion of privacy of a news organization
• the Benghazi scandal
• the IRS audits

Gonna be a long, hot summer. 

Continental Resources With Four Active Rigs In One Section In Divide County; Testing The Lower Benches Of The Three Forks

A reader alerted me to this; I had missed it. A big "thank you" to the reader.

I talked about these wells on February 4, 2013, but had forgotten about them. 

In Hayland oil field, in Divide County, north of Williston, in section 1-160-96, there are two wells actively producing and 12 wells on confidential list. There are currently four rigs actively drilling in that section.

Instead of re-writing everything, just go to the link. I will note this in summary; those in bold, with rigs-on-sit:

Two older wells: #17649, #19107, both running south.

Six-well pad with one rig: #'s 24928, 24929, 24930, 24931, 24966, 24967

Two-well pad with one rig: #'s 24935, 24936

Two-well pad: #'s 24964, 24965

Single well with rig: #24934

Single well with rig: #24924 

The two two-well pads are close enough to almost be one pad. 

Urgent: Takeaway Capacity For Alberta's Oil Sands Crude Oil

Oil & Gas Journal is reporting:

Bitumen will claim an increased share of sharply higher oil production in Alberta over the next 10 years, ....

In an annual outlook, [the Alberta provincial government] projects an increase in supply of crude oil and equivalent to 4.2 million b/d in 2022 from 2.5 million b/d in 2012.

In 2012, bitumen production from in situ projects exceeded that from mines for the first time. The trend is expected to continue.

The Death Of The American Dream; Minnesota Will Pass The Almost-Perfect Solar Energy Bill; Other Non-Bakken News

Updates

May 25, 2013: Minnesota passes the solar energy bill

• 1.5 percent of power from solar energy by 2020 [1.5% amounts to a "feel-good" bill]
• a "goal" of 10 percent by 2030
• current law: 25% of MN electricity must come from renewable sources by 2025

Original Post 

Active rigs: 187 (up slightly).

Nothing about the Bakken follows.

"We live in a communications society where image is more important than truth and spinning is our great new growth industry; even television reporters now have their own personal public relations people, the better, if not to spin their viewers and the ever admiring celebrity magazines, then at least to spin themselves on the value of what they do." -- David Halberstam, August 9, 2000 in the forward to Hunter S Thompson's Fear and Loathing in America: The Brutal Odyssey of an Outlaw Journalist, Volume II, 1968 - 1976.

I think HST would be appalled, but not surprised, that his party had sicced the IRS on American citizens. His opus was to be The Death of the American Dream. I think with the latest revelations we have seen it.

The president's reaction: "Outrageous." I'm not sure which meaning he would use but probably #2: "being well beyond the bounds of good taste." It's very likely that someone's wrist over at the IRS might be slapped. The operative word: "might." It will take the president a year or so to make a decision based on his ability to tackle the Keystone.

In lighter news, Art Carney is now being compared to Baghdad Bob. George Will says Art Carney's "usefulness to this administration is diminishing rapidly." Too knowledgeable too fire? A kiss and tell book coming out just before the mid-term elections would not be good; don't look for Art Carney to be fired before it would be too late to get a book published by August, 2014.

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

This is a most interesting technology story, coming on the heels of my reading the memoirs of Freeman Dyson; James Gleick's The Information; and, George Dyson's Turing's Cathedral: The Wall Street Journal  is reporting that Samsung has developed 5G technology that would download send super-high-definition movie files in a matter of seconds.

The technology won't be available until 2020. Many networks still employ 3G technology; others are transitioning as fast as they can to 4G. An interim solution might be 4.5.

I believe my Samsung/Sprint clam shell cell phone is 1G.

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

 The almost-perfect solar energy bill.

Oh, I almost forgot. The Minnesota legislature is looking to pass the "almost-perfect" solar energy bill. The Fargo Forum is reporting: 

The Senate version requires large utility companies to generate 1 percent of power from the sun by 2025. The House version requires 4 percent, in addition to the 25 percent renewable energy requirement passed in 2007.

Both bills exempt taconite operations, recycled iron ore mining operations and wood products plants from any rate increase attributed to the solar mandate.

The Duluth News Tribune says the House bill also exempts rural electric cooperatives and municipal utilities. Together, the bill would exempt nearly a third of the state.

A more-perfect solar energy bill:

• would require 1 percent of power from the sun by 2045
• include the same manufacturing exemptions, but add 3M, and any other manufacturing company that employs more than 5 people
• include the exemptions for rural and municipal utilities currently in the bill; but add exemptions for all state utilities
• aim for exempting 22/23rds of the state

The bill has nothing to do with global warming: it's all about legislators telling their low-information constituents they are cognizant (wow, that's a big word) of the ManBearPig and are doing something about it. The high-information constituents will see through this. One percent by 2025. You are joking, aren't you? A twelve-year-old with a 4-inch magnifying glass on July 20, 2024, should meet that requirement.

Monday Morning: The Sun Came Up; Despite Greenhouse Gases At 400 Parts/Million It Appears We Are All Still Here

Monday, Monday....

Monday, Monday, The Mamas and The Papas

Active rigs: 185 (steady)

RBN Energy: Crude by rail -- 154 operating terminals; Burlington Northern is dominant player.
I opined sometime in the last 48 hours that in the "political arena," not approving the Keystone XL is ludicrous (for lack of a better word until I wake up) but in the "investment arena," I hope the Keystone XL is never approved. One of my biggest holdings was BNI (Burlington Northern Santa Fe) until it was bought by Warren Buffett; now BRK-B is one of my largest holdings. If I recall, his BNSF profits increased 15% this past year. A huge "thank you" to the activist environmentalists; keep up the good work.

RBN on the CBR facilities in the Bakken:

It will not be a surprise to anyone following our narrative that the Bakken has the most load terminals of any crude producing region. Since we last surveyed the terminals in North Dakota a new manifest terminal has been added at Boyle in Stark County, operated by Cenex Energy also known as CHS transport. This is a manifest terminal on the BNSF railroad. According to the BNSF interactive map we mentioned a minute ago, there are also 3 CHS manifest terminals across the State border in Montana. In all there are 22 terminals serving the Bakken on the US side with 13 able to load unit trains (100 rail tank cars or more). Many of the 11 terminals included in the “Canada Light/Medium Sour Crude” row of the table are loading crude from Bakken production on the Canadian side of the border.

The rapid build out of over 150 crude by rail terminals in the space of little more than two years has demonstrted the flexibility and ingenuity of US oil producers, refiners and midstream companies as well as the railroads. Many of the terminals started out small and many are still only moving a few rail tank cars at a time in manifest loads. However, forty percent of the load terminals are unit train operations that have required significant investment. The dominant railroad company is BNSF. They were in the right place at the right time but rapidly took advantage of the opportunity. Despite the recent narrowing of crude oil differentials that helped justify crude by rail transport costs over pipelines, we believe that crude by rail is here to stay. It offers great destination flexibility and requires less commitment than pipelines. Over the next two years the railroads and the pipelines will compete more directly for the crude shipping business leading to lower rail freight costs. Producers and refiners alike will benefit from lower transport costs and greater optionality.

That's nice. RBN Energy shows 19 CBR terminals in North Dakota. I have the exact same number.

Disclaimer: this is not an investment site; do not make any investment decisions based on what you read here or what you think you read here. 

The Arctic: has been in the news the past couple of days for any number of reasons. This article is quite interesting from an energy perspective. Note: one has to read well into the article to find out why the US is at a disadvantage vis a vis the other players. The US has no Arctic policy. The last policy "expired" in George Bush's last year of presidency, and despite five years to work on something, the Obama administration has nothing to show for it -- no Arctic policy. And all this time the Arctic was melting faster than Al Gore's ice cream cone. Bloomberg is reporting:

The U.S. is alone in not having ratified the UN Convention on the Law of the Sea, which gives states 10 years from the date of ratification to extend their claims on the continental shelf. Gaining sovereignty to more land that’s underwater will give them a jump-start when it comes to exploiting mineral-rich resources below the seabed. 

Like the Keystone XL, I suppose Mr Obama needs more time to study the issue. Cue up Connie Francis.

WSJ Links

Section R (Journal Report): 

Section C (Money & Investing):

• The cloudy logic of Europe's solar tariffs: 

But the EU may have acted too late for firms like SolarWorld. Last year, its losses increased 58% to €476 million ($618 million), and the firm blamed a 40% fall in panel prices due to Chinese competition. Chinese companies now account for 80% of European solar-panel sales.

And Europe's solar industry also relies on state help, such as guaranteed prices for solar power. These give an adequate return on what is still an expensive form of energy.

But with politicians now more sensitive to high energy bills, subsidies are slipping. Given that, the likes of SolarWorld might have to cut costs further to make their products competitive. Putting up barriers to Chinese rivals alone won't bring Europe's panel makers back into the sunlight.

If the Chinese move their manufacturing sites to Taiwan, they avoid the European tariffs.

Section B (Marketplace):

Section A:

• In Detroit, hints of big cuts, asset sales. I follow these stories here.

The emergency manager appointed to oversee this ailing city might make cuts to employee health care and pensions plans as well as sell municipal assets in a move to stave off financial collapse, according to a detailed report released Sunday.

The emergency manager, Kevyn Orr, hopes that cutting costs and restructuring debt will help the city avoid bankruptcy, though it remains an option, a spokesman for Mr. Orr said in an interview Sunday.

"No one should underestimate the severity of the financial crisis," Mr. Orr said in a written statement, adding that the path Detroit has followed for more than 40 years is "unsustainable" and "only a complete restructuring" of its finances and operations will allow it to return to a path of prosperity.

The report paints a picture of an aging industrial Midwestern city locked in a dire financial state by its junk-level credit rating and a chronic level of deficit spending that has forced it to borrow millions every year to fund basic services. The report, which was distributed to news organizations Sunday, is expected to be released by Mr. Orr Monday.