Wednesday, August 28, 2013

Fifteen (15) New Permits -- The Williston Basin, North Dakota, USA;

Active rigs: 182 (down from 186 earlier today)

Fifteen (15) new permits --
  • Operators: QEP (5), XTO (3), Hess (3), Whiting (2), American Eagle, Newfield
  • Fields: Grail (McKenzie), Siverston (McKenzie),  Big Gulch (Dunn), Little Knife (Dunn), Big Stick (Billings); Grinnell (Williams)
  • Comments: American Eagle has a permit for a wildcat in the Big Dipper (Divide County);
Wells coming off the confidential list were posted earlier; see sidebar at the right. 

There are no more wells on the confidential list for the month of August, 2013. The next date that wells come off the confidential list is September 1, 2013, which due to the holiday will be reported on Tuesday, September 2, 2013. It is going to be a long, depressing weekend for me. Sad face.  

Wednesday Evening Links, News, And Views

Wow, it looks like it was a cool, rainy day in Washington, DC, today, August 28, 2013 -- another fine global warming day. I think it was about 78 degrees, maybe 80 degrees, at 10:00 am, the beginning of MLK festivities on the mall.

Wow, nation's ONLY African-American senator NOT invited to the MLK festivities. Talk about feeling left out. Amazing. Carter, Reagan, Clinton, Bush (I or II) would not have been so petty, nor so insecure.

It's being reported that the attendance at yesterday's "rally" on the mall was far less than expected. I thought the same when I saw the photos. I thought about that earlier: I don't think people really care any more -- especially when you look at the headliners at the memorial -- Carter, Clinton, Michelle, and Barry. They actually look a bit pathetic. I appreciate Bill Clinton a lot more than most people would think, but he has become a bit tiring. Whatever your thoughts about George (I and II), at least they left the stage when they left office. Bill just lingers, and lingers. It will be interesting to see what becomes of Barry when he leaves office. I think he becomes a dot.

Wow, I just looked at the linked article. It was estimated that 20,000 folks left work in the middle of the week to attend this political rally. 20,000. To put this in perspective, that's about how many show up for Williston, North Dakota's, annual Band Day Parade every spring -- huge thanks to Virgil Syverson who was instrumental in this event. RIP. 20,000 in attendance. They had expected 100,000. Twenty-thousand. I wonder how many folks "naturally" are on the mall on any given summer day? Probably more if the White House was still giving tours. It's hard to believe that the "people's house" is still closed to Americans. Petty.

Following In The Footsteps Of Bodmer And Maximilian

Link here to Bodmer and Maximilian, mid-1800s.

The Bismarck Tribune is reporting on a modern day Bodmer-Maximilian:
A German photographer is capturing the Bakken through an artist’s eyes.
Andy Scholz, an art photography faculty member from Regensburg University in Germany, is spending several weeks in North Dakota working on a project about the oil boom.
The project is a cultural exchange funded by the German Consulate.

Bismarck-Mandan's Rail Loading/Unloading Facility At City-Owned Industrial Park Sold To Energy Tubular

The City of Bismarck will sell the rail loading/unloading facility/property for the Northern Plains Commerce Centre to Energy Tubular for about $2 million:
The Bismarck City Commission approved the sale of the rail loading/unloading facility property for the Northern Plains Commerce Centre on Tuesday for $1.67 million to Energy Tubular.
Energy Tubular is one of the partners of the Tubular Transport & Logistics, which now operates the facility through a two-year lease with the city.
NPCC is a city-owned industrial park.

Energy Tubular Inc has an interesting and informative webpage.

For additional background and previous posts:

Poll Suggested By A Reader: Who Do You Think Sold 17,000 Acres To Whiting?


Later, 6:21 pm: see first comment. We are being told it was Petro-Hunt, LLC, that was the seller. That certainly fits. I completely forgot about Petro-Hunt; my bad. They were involved in the Halcon deal last October.  

So, everyone should just ignore the post below.

Original Post

Disclaimer: this is simply pure speculation. A reader asked me an opinion, and like Roger Rabbit, I can't resist. This is nothing more than idle chatter on a Wednesday afternoon. Don't take any more than that from it. In fact, as more data rolls in, I might change my mind.
Awhile back there was a news story or a press release or a rumor or a friend of a friend who had a cousin that worked in a bar in Williston who heard that Zenergy was shopping some of their Bakken assets.

With regard to the deal announced yesterday, that Whiting had announced it was going to purchase about 17,000 net acres in the Bakken: I had not thought of doing this but someone asked the question: who do you think the seller was?

Whiting provided a very detailed location of their newly acquired acreage with a map at the link to their press release (which can be found at that link).

So, going to the NDIC GIS map server and zooming in on the area long the North Dakota/Montana border, on both sides of the river, but more to the southeast of the river, one comes up with a lot of short horizontal wells. Remember, Whiting said the area "includes 13 operated 1,280-acre Bakken/Three Forks drilling spacing units." To me, "13 operated units" suggests 13 active wells. I wasn't in the mood to count the wells, so I picked a centrally-located township -- 151-104 -- and then (later) went to NDIC's well-search page, and submitted "Zenergy" and then scrolled down to that area (151-104). Wow, Zenergy has a lot of permits in that area.

When one zooms in on the GIS map server in this area -- and again, I wasn't in the mood to spend much time on it, so I only did it once -- the first well I hit was an old Zavanna well. The next well was a Statoil well. So, I thought it was Zavanna. But then I remembered that Zenergy story at the very first link above, so I clicked on a third well. Lo and behold, it was a Zenergy well.

That's when I went to the NDIC well-search page to see if there were enough Zenergy wells in the area to total at least 13. Way more.

The original story suggested Zenergy might have a billion dollar deal, but this Whiting deal was for only $260 million, a far cry from a billion. But if Zenergy was having difficulty selling all its property maybe this was the best they could do for now.

A billion dollars is a pretty good deal, so one would assume that the seller had some good property.

Just for the fun of it. In this area:
  • 22991, 1,056, Zenergy, Reidle 18-7HTF, Nohly Lake, t5/13; cum 7K:
PoolDateDaysBBLS OilRunsBBLS WaterMCF ProdMCF SoldVent/Flare

 You know, Whiting likes the Three Forks.

Energy Links -- Around The Board -- Enbridge Increasing Capacity By One Million BOPD; Cap And Trade Gets Less Expensive In California

Weekly EIA report: US crude oil production rose 91,000 b/d to 7.61 million b/d last week, highest since 7.64 million b/d in October 1989. -- Platts tweet.

Harold Hamm: Keystone XL no longer 'critical." It was probably never critical.  Regardless of whether it was once critical or not, it is now a) only a political issue; and, b) a strategic signal to our closest ally and biggest trading partner. TransCanada's Energy East will do what the Keystone XL was going to do -- get Canadian oil sand to the coast, albeit the wrong coast.

Huge wells in the Bakken -- Motley Fool.
Of course variations do exist. However, holding large reserves that can be developed at a comparatively cheaper rate translates into superior returns. Houston-based EOG Resources has done exactly that. An early mover in the U.S. shale oil revolution, EOG's Eagle Ford exposure has ensured the best returns for a U.S. oil company this year. The company's estimated net reserves in the Eagle Ford are in the range of 1.6 billion-2.2 billion barrels of oil equivalent. The best thing about this shale play is that as the lateral (horizontal) length of the fracked well increases, production rate goes up. According to the company's latest investor presentation, average initial production rate per well has progressively climbed to 1,226 barrels per day in 2013 from a lowly 483 bpd in 2009. Well costs are also falling with an average $5.8 million per completed well in 2013 -- a far cry from the $9.1 million spent per well in 2009.
The company's Bakken wells are superior to even those of Statoil and Continental Resources. The four highest producing wells in this region belong to EOG Resources with production ranging between 2,271 bpd and 1,846 bpd. However, Continental has set the benchmark in well economics in the Bakken by averaging $8.2 million in completed well costs. In comparison, EOG Resources completes a Bakken well for an average $9.5 million. With more than 4,900 drilling locations yet to complete in the Eagle Ford, as well as a 12-year drilling inventory in the Bakken, EOG is expected to have the best in class crude oil growth for the next few years.
Pad drilling -- Motley Fool.
Pad drilling is proving itself very useful in places such as North Dakota, where there are multiple layers of shale over a single site. Continental Resources has indicated that some of its drilling operations are completing as many as 14 wells per pad to target both the Bakken and Three Forks formations simultaneously, and it's looking to bump that number to above 20 for certain sites.
For producers such as Continental, the results of pad drilling are easy to see in the bottom line. A year ago, a single completed well for the company cost $9.3 million. Contrast that with the average cost of a completed well in that same region, which is expected to be below $8 million by the end of the year. With a drilling plan of 110 net wells in 2013, the savings of about $140 million per year means fewer capital expenditures for each barrel of oil. So exploration and production companies can either ramp up their drilling programs to increase production faster, or enjoy the higher margins.

With so much more activity occurring at a single site all at once, exploration and production companies are requiring less equipment and contractors to get the job done. Despite a large uptick in oil production between the middle of last year and today, total rigs drilling for oil have remained relatively flat.
KOG hits a new high.

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. 

Is Nuverra going to go under? -- Motley Fool
First, there is a reason that Nuverra has missed its numbers of late. The weather has been plaguing it all year. In the first quarter it missed the equivalent of 15 working days, while the second quarter wasn't all that better. In fact, the weather is one of the reasons why there are 500 wells in the Bakken just waiting to be completed.
This backlog of completions held back at a lot of companies including Oasis Petroleum, which had been growing production by triple digits annually, but had flat production in the second quarter. The company had 37 wells drilled but not completed. Bottom line, it expects to complete almost as many wells next quarter as it had in the first half of the year, which will lead to a 10% production boost next quarter.
Clearly, the potential is there for the back half of the year to be more heavily weighted for Nuverra's business as well. This is why CEO Mark Johnsrud said on the company's last conference call that the weather issue "is not specific to Nuverra and has had similar impact on other competitors in the region. We believe this revenue is delayed, not lost." If this turns out to be the case, it could lead to a better than expected improvement in its second half earnings.
Is production in the Bakken about to explode? -- Motley Fool
Genscape, which is a leading provider of energy information, recently estimated that June's Bakken daily oil production would skyrocket by 54,000 barrels of oil per day. That would have shattered the the previous record monthly gain of 41,000 barrels of oil per day set in February.
It turned out that Genscape was way off as production only grew by 10,000 barrels per day. However, the gusher it predicted could still come real soon.
There are currently just over 9,000 wells in North Dakota producing a little more than 821,000 barrels per day. However, due to the conversion to pad drilling as well as persistent wet weather, it has created a backlog of nearly 500 wells waiting to be completed. As the industry works off that backlog it has the potential to unleash a massive amount of initial oil production.
Looking at Bakken producers last quarter, there was a fairly consistent theme of production being held back by this backlog. For example, Oasis Petroleum noted that its production was virtually flat last quarter at 30,171 barrels of oil equivalent per day.
However, the company sees its production jumping by 10% next quarter as more wells come online. Oasis had 37 wells drilled but not completed and its sees completions next quarter in a range of 40-45 after just completing 51 wells in the first half of the year.
Oasis is not alone. ConocoPhillips also noted that its production was held back by the wet weather. The company saw just a measly 3% growth quarter-over-quarter to an average of 30,000 barrels of oil per day. However, looking ahead the company has plans to grow its production by at least 50% to 45,000 barrels of oil per day by 2017. Now that the weather has cleared, more of Conoco's newly drilled wells can start coming online and boosting its production.
ENB increasing capacity by a million bopd -- Motley Fool.
Meanwhile Enbridge responsible for transporting two thirds of Canadian oil exports to the United States, has been silently expanding its capacity. Some of the company's major initiatives include twinning its Seaway and Spearhead pipelines, eliminating bottlenecks in the Chicago area, and reversing its Line 9 route. Management projects that these efforts will boost Canadian oil exports by more than one million barrels per day by 2015. 
And while pipeline routes appear blocked to the west and the south, TransCanada announced earlier this month that it will proceed with its Energy East proposal. If approved, the pipeline will ship 1.1 million barrels per day from terminals in Alberta to refineries on the Canadian east coast by 2018. The project already has the support of oil producers but still needs approval from the National Energy Board and several provincial governments. But if given the green-light, Energy East will single handedly replace the controversial Keystone XL pipeline.
Norway to start drilling the East Arctic -- Reuters.
Norway invited oil and gas firms on Wednesday to bid for the first licences to drill in the eastern part of its Arctic waters, three years after it settled a border dispute with Russia.
With oil production on course to fall to a 25-year low this year, Norway is looking to tap reserves further into the Arctic as it runs out of prospects in the North Sea.
The US will continue to remain a spectator.

Cap-and-trade gets cheaper -- Reuters
California's largest greenhouse gas-emitting businesses paid $12.22 per metric tonne (1.1 tons) for the right to release carbon this year, lower than expected and down almost 13 percent from the previous sale in May, the state said on Wednesday.
Oil refineries, utilities and market speculators were among those that purchased all 13.87 million current year permits offered at the state's fourth quarterly auction, according to the program's regulator, the California Air Resources Board.
For the first time, the state also sold all future-year permits it put up for sale. All 9.56 million allowances it offered to cover emissions in 2016 sold for $11.10 each at the auction, which was held on Aug. 16.

Tuesday Morning Links, News, And Views -- Part III; NYMEX Oil Solidly Above $110; Market Recovers A Bit

Wow, the oil price link at Yahoo! Finance is still broken; it's been a week, I think. CNBC is reporting that NYMEX oil is up another $1.28 and now solidly over $110.  It will be interesting to see if Iran tries to close the strait if the Great Satan launches missiles. My hunch: no. And looking around Starbucks it appears no would care one way or the other. And so it goes.

Oil and Gas Journal is reporting:
Weekend inventory reports showed crude stockpiles rising after having fallen for 7 of the last 8 weeks. The American Petroleum Institute reported Aug. 27 that oil inventories increased 2.5 million bbl for the week ended Aug. 23.
In its weekly oil inventory report released Aug. 28, EIA said US commercial crude oil inventories, excluding the Strategic Petroleum Reserve, increased by 3 million bbl to 362 million bbl, which is near the upper limit of the average range for this time of year.
Crude import averaged 8.4 million b/d, up by 423,000 b/d. Over the last 4 weeks, crude oil imports averaged over 8 million b/d, some 723,000 b/d below the same 4-week period last year.
The IPs for the wells coming off the confidential list have been posted.
WSJ Links

Didn't we just report this yesterday: the war plans for Syria? The WSJ is reporting that Mr Assad can relax: the bombing will be brief and it will be limited.

Oil hits an 18-month high and that's saying a lot, considering how high oil has been for such a long time. By the way, for newbies, if producers have trouble getting their product to market, it's going to be very, very expensive to buy oil on the spot market to meet their contracts.

Heard on the street: Syria is the oil market's crisis du jour but:
But supplies are there, ultimately, to meet demand or, in the context of a potential war, replace net imports. On that basis, rising U.S. domestic oil supply and weak demand growth have changed the equation profoundly. The U.S. has inventories of crude oil and refined products, including the Strategic Petroleum Reserve, to cover 269 days of net imports, based on a rolling 12-month average. That is up from 150 days five years ago.
Now, consider that a big chunk of U.S. oil imports come from Canada, where any supply constraints are more likely to result from weather or U.S. domestic politics. Excluding those barrels, the U.S. had enough oil stored to cover 415 days of other net imports, as at the end of May, up from 179 days five years before.
I find that somewhat amazing: the US has essentially a year and a half of oil stored to cover imports, up six months from five years earlier. I could say something, but I won't.

Global warming: 400 new coal-fired plants in China and France is worried about a/c units in cars -- 
Air conditioning units in Mercedes-Benz cars are blowing an ill wind into European environmental policy—and into relations between France and Germany, the euro zone's two largest economies.
France's highest administrative court Tuesday struck down a three-month-old French ban on new Mercedes-Benz cars using R-134a, an air-conditioning coolant regarded as a potent greenhouse gas, the latest twist in a dispute that mashes together protectionism, climate politics and European bureaucracy.
The ruling hands a temporary victory to Daimler AG, which has suffered from France's ban. A final decision on whether Daimler continues to use the controversial coolant will fall largely to the European Commission, the bloc's executive body. 

France wants tighter overall emissions standards, a stance that effectively favors small cars made by French manufacturers. Germany by contrast has fought to delay some emission targets for fear they will hurt domestic heavyweights like Daimler and BMW AG, which make fuel-thirsty cars. Both countries have labored to turn European rules to their ends.
"It is more political arm-wrestling than anything else," Carlos da Silva, an analyst at IHS Automotive, said of the dispute over the air coolant. "Mercedes is in a way the scapegoat in an affair that is about a bigger issue."
 Wal-Mart to offer health benefits to domestic partners: retailer creates nationwide policy to avoid state-by-state differences. Awesome.
The extension of health benefits marks a major change for the country's largest private employer of 1.3 million U.S. workers, which has been targeted by gay-rights advocacy groups for failing to do so.
Previously, Wal-Mart had offered benefits to the domestic partners of employees in states that required the retailer to do so by law.
Rather than go state by state, the Bentonville, Ark., retailer decided to adopt a companywide approach to ensure consistent treatment of its employees, spokesman Randy Hargrove said.
The move comes on the heels of the U.S. Supreme Court decision in June to strike down the Defense of Marriage Act, which had denied federal benefits to gay couples married under state law. Earlier this month, the Pentagon unveiled plans to extend the full range of benefits given to opposite-sex spouses to married same-sex couples starting in September and said it would allow military personnel to take "non-chargeable leave" to travel to states where same-sex marriage is allowed.
Previously reported, Vermont's Yankee Nuclear Power Station will close. Can you say "cheap natural gas"?

This is an incredible story, the outbreak of measles 30 miles north of Ft Worth, TX. It was all preventable.
  • the most preventable of all diseases
  • the vaccine has been used since the 1960s (fifty years plus)
  • the local church fell for claims that the measles vaccine was linked with autism
  • measles is miserable; pneumonia; deafness; rarely death -- all preventable
The church is about 30 miles west of where I am currently having Starbucks coffee.

Note To The Granddaughters

While hanging out in Starbucks I meet some of the most interesting people. I ran into "Tony" some weeks ago, when I first got to the Grapevine, Texas, area. I asked him today how he always seems to look so bright-eyed and bushy-tailed since it appears he has no time for sleep. I was at Starbucks at 7:50 a.m. and he was already through his first large cup having driven up from Ft Worth earlier this morning. He says he was up by 4:30 and I believe him. Putting the story together from bits and pieces he raises his younger children by himself and manages a pretty big trucking business as a contractor. I asked him if there was anyone in the Ft Worth area that he did not know or did not know him. He laughed. And agreed. He knows most everybody. He says he's been in the area for about 14 years, having come here with his dad from New York City, first generation Italian.

He says "hi" to Chelsea and Levi and Levi's younger brother -- they also have a full day scheduled, and again, so incredibly friendly. They've lived their entire lives in this area except for two years out-of-state for work-related travel, but the dad decided no more traveling and now works in the area.

I told Chelsea my story and she asked what I did when I was not taking care of our granddaughters. I mentioned that I love to read and enjoy blogging. It was coincidental that I would mention reading while doing the WSJ Links. I see The Journal has a great book review on a Ring Lardner biography. I didn't even know who Ring Lardner was several years ago; my wife knew him well, and enjoyed him. But I didn't. Another reading gap. But I've read "around him." From the review:
Nothing ages less gracefully than American vernacular humor. Mark Twain's "Huckleberry Finn" is still read in American high schools resistant to political correctness, but George Ade, Will Rogers and even the later, more sophisticated S.J. Perelman are dusty relics. Ring Lardner, a luminary of the Jazz Age, lives on as a couple of titles—"Alibi Ike" and "You Know Me Al," and a deathless throwaway line, "Shut up he explained."
Starting out as an itinerant sportswriter in the Midwest, Lardner (1885-1933) wound up palling around in Paris with Scott and Zelda Fitzgerald and playing golf with President Harding. He wrote short stories, comic novels and plays and spawned sons who made their own names as magazine writers and left-wing firebrands. He died at 48 of a heart attack complicated by alcoholism and tuberculosis. Now the Library of America has put out a conscientious 961-page selection of Lardner's work that showcases both his distinct gifts and his flaws.
Wow. A 961-page book on Ring Lardner. A Christmas gift. (Don't get it for me. I've ordered it.)

Tuesday Morning News, Views, And Links -- Part II

Housing stumbles
Contracts to purchase previously owned U.S. homes fell for the second straight month in July, a sign that rising mortgage rates are taking the steam out of America's housing market recovery.

The National Association of Realtors said on Wednesday its Pending Homes Sales Index, based on contracts signed last month, decreased 1.3 percent to 109.5.
That was a steeper decline than most analysts had expected, and could provoke added caution at the U.S. Federal Reserve over plans to reduce a bond-buying economic stimulus program.
O'BamaCare stumbles.

The Reuters headline is a bit misleading suggesting that yet another O'BamaCare milestone is being delayed. However, my hunch is that the writer is suggesting that this short delay is just a prelude to a much longer delay.

Much of the O'BamaCare program has already been scuttled or delayed already. The cornerstone of what is left of O'BamaCare is/are the much-talked-about-but-seldom-seen internet health exchanges.

Today Reuters is announcing that the O'Bama Administration has officially delayed this laying of this cornerstone:
The Obama administration has delayed a step crucial to the launch of the new healthcare law, the signing of final agreements with insurance plans to be sold on federal health insurance exchanges starting October 1.
The U.S. Department of Health and Human Services (HHS) notified insurance companies on Tuesday that it would not sign final agreements with the plans between September 5 and 9, as originally anticipated, but would wait until mid-September instead, according to insurance industry sources.
Nevertheless, Joanne Peters, a spokeswoman for HHS, said the department remains "on track to open" the marketplaces on time on October 1.
So, we'll see.  I don't think it (the delay) really matters. It's gonna be a train wreck regardless.

Natural Gas From The Marcellus To Octuple (8X) Current Production -- Part I

Active rigs: 186

RBN Energy: Another must-read essay on ethane production coming out of the Marcellus/Utica. I simply cannot "get may arms around" the energy revolution in this country, or more accurately, North America. I already thought we were pretty much awash in natural gas, and that there was already a lot of ethane rejection, but then to read this in the first paragraph:
Over the next three years, the production of natural gas liquids (NGLs) from the Marcellus/Utica could octuple (8X) to more than 650 Mb/d.  Nothing like that has ever happened in the NGL business before.  It has already started.  Last month MarkWest officially inaugurated the Appalachian ethane business. From 5 Mb/d today we could see 200 Mb/d by this time next year if the economics to move that much ethane made sense.  But they won’t.  Because there is nowhere for the additional ethane to go.  Already up to 250 Mb/d of U.S. ethane is being rejected – pushed back into natural gas in the Rockies, Midcontinent, and other regions.  That number will be getting a lot bigger.  Today we will begin an examination of the ethane tsunami and what it means for NGL markets in the Northeast and in the center of the NGL universe – Mont Belvieu, TX.
There must be a dozen dozen story lines in that paragraph, and the RBN Energy folks discuss many of them. But they didn't mention the impact on the Bakken, at least directly, as far as I could tell.  Again:
Already up to 250 Mb/d of U.S. ethane is being rejected – pushed back into natural gas in the Rockies, Midcontinent, and other regions.  That number will be getting a lot bigger.
It certainly makes it more difficult to see the economics bringing on additional natural gas gathering and processing plants in North Dakota. Maybe that's the reason we haven't seen more activity in this area.

Unrelated, but it almost makes the discussion in New York state on whether to allow fracking moot.

Here in Texas, it sounds like the folks in Dallas don't even want to see any more natural gas drilling inside the city. And from what I can see, the natural gas tsunami is yet to hit.


I thought it was very, very lucrative for oil companies in the Mideast. Maybe not. Rigzone is reporting (Reuters):
Iraq has offered investors more lucrative terms to tap a large oilfield and build a refinery, while blaming Royal Dutch Shell for underproducing billions of dollars' worth of crude.
The Nasiriya oilfield holds reserves of more than 4 billion barrels and could contribute to Baghdad's plan to treble output by the end of this decade with the help of foreign companies.
But Iraq's output has slowed this year and companies have complained about their slim margins on existing service contracts. Some have angered Baghdad by signing contracts with the semi-autonomous northern Kurdistan region in search of better terms.