Saturday, September 28, 2013

Who's Got The Best Bakken Wells -- Richard Zeits -- WPX, Slawson, Statoil, Whiting, KOG, Newfield, And The List Goes On -- Without CLR

I wasn't going to post this until I had a chance to read it, study it, but I'm just too busy.

So, I will post it, link it, and then maybe come back to it later.

Richard Zeits is posting at SeekingAlpha:
With over eight thousand horizontal wells drilled to date in the Middle Bakken and Three Forks formations of the Williston Basin, the data set of drilling results and production histories would seem more than sufficient to draw conclusions with regard to expected drilling economics and investment returns in the play. Still, establishing a meaningful economic model for the Bakken often proves to be a challenging task. Three major factors contribute.
The article has a lot of nice basic information.

IRR is the key according to Richard Zeits. We should be seeing a lot more about IRR in corporate presentations going forward; investors and laymen are getting smarter. 

I noted that 23 operators are "ranked" on the graph provided by WPX, and CLR is not even listed. CLR is the "face of the Bakken" and probably has the most Bakken acreage. CLR was not even mentioned in the body of the article. I did a work search: "Continental Resources" comes up once: in the comments. Zeits says he has an article on CLR coming up soon. Apparently many of the wells analyzed were "CLR" wells but operated by others. It's very, very difficult to try to sort out which operator has the best wells.

When I first started blogging, I noted that Slawson really seemed to have great wells; it was borne out in this article: Slawson ranked #2.

A lot of enquiring folks elsewhere have said that Statoil hyped their IPs, and that their wells weren't all that good. In this article, Statoil ranked #3.

Whiting ranks #4: no doubt due to the Sanish.

KOG ranks #5, and could certainly move up with its new wells.

Most disappointing was where Oasis stood, but one must remember where Oasis got started.

It will be fun to look at this list in 10 years.

The delta between #1 WPX and #2 Slawson certainly raises questions with how things are measured.

Anyway, as noted, I haven't had time to really read the article.

Maybe more later.

For investors, I use something entirely different for evaluating the prospects of a Bakken operator.

For investors, the most important data point is where one thinks "we" are in the Bakken: if we are in the first inning of a nine-inning game, things look a lot different than if one feels we are in the bottom of the 7th inning in the Bakken.

I think we are in the 2nd inning.

Week 39: September 22, 2013 -- September 28, 2013

North Dakota ranks #2 in business climate -- Forbes

Statoil reports a record IP
34 wells on a spacing unit -- EOG
14 wells on each 1280-acre spacing unit in Brooklyn-Bakken oil field -- CLR 
Highlights, October NDIC hearing dockets
Water necessary for better well maintenance -- new wrinkle in the Bakken

WLL has standing "rule" not to drill federal land in North Dakota; too expensive to get Federal permit
The Bakken potential; heading for 2 million bopd -- Goldman Sachs
Shares of Bakken operators jump with Goldman Sachs report
The Bakken potential -- RBN Energy
The Three Forks potential -- in some areas Three Forks wells are five times better than middle Bakken wells

Other formations
MRO targeting the Tyler formation in southwest North Dakota

Best States For Business; Other Williston Wire Highlights

North Dakota has moved to the #2 spot, well ahead of Texas, #7. I was surprised that North Dakota beat out North Carolina. I don't quite agree that Virginia, ranking #22 in business costs vs #3 for North Dakota deserves to be in the top spot. Virginia is #4 vs North Dakota, #19, in quality of life -- that is entirely subjective. How does one even begin to measure that?

It's hard to believe that North Dakota is #17 in regulatory environment and Virginia is #1. But I guess I shouldn't complain. North Dakota has been moving up the list for the past several years. I never thought it would get this high.

Other highlights from The Williston Wire (no links; it is easy to subscribe to The Williston Wire):

The Williston Brewing Company has opened to big crowds. It's quite a story: Angel Cervantes and Dennis Pacifico from Phoenix.

Famous Dave's will open in Williston in December, 2013. Where are all these eateries finding employees?

Parshall welcomes a new Mexican restaurant.

The new Wild Bison Travel Center opened southwest of Alexander. I guess it was Jack's Store; now Wild Bison Travel Center. Very early in the blog I have a photograph of the sign for Jack's Store announcing its future site. This has gone from a 3,000-square foot building to a 13,500-square foot travel center. Southwest of Alexander. The city that will soon be getting a crude oil storage center. Huge things happening in Alexander.

Construction begins on Watford City bypass. This will be southwest of the city. It is interesting that in the three cities in the heart of the Bakken (Williston, Watford City, Alexander): it is the southwest side of the cities that is experiencing the oil traffic.

The North Dakota Highway Patrol will add 15 new officers after Thanksgiving.

Ray, North Dakota, is looking to have its own police department, something they have not had in years.

Missouri Meadows, four miles east of Williston's Wal-Mart, is now open for business: 109 one-acre lots.

A Massachusetts developer plans 162 new housing units for Crosby.

Now that the county has nixed Christ's mission for the homeless, the city of Williston will study what to do next for the homeless. WWJD?

Would Federal Permitting Stop The Bakken?

Federal permitting has stopped drilling in one of the sweet spots in the Bakken. KXNews is reporting:
An area of western North Dakota, that's proven to be a hot spot in the Bakken, is pretty much being ignored.
Oil companies say the federal government and their rules are to blame.
There are zero wells drilling in the National Grasslands in the state.
The reason, it takes too long for oil companies to get federal drilling permits.
It takes at least 180 days to drill on federal land, versus 10 days on state land.
One of the top producing wells in the state was drilled on federal land.
Jack Ekstrom with Whiting Petroleum says the federal government is forgoing potential revenue by creating a difficult situation for oil companies.
Ekstrom says, "We have a stated charge in Whiting to avoid federal acreage at all costs. Because you can't afford the delays in permits that take a year."

A Re-Look At The New North Dakota Law On Flaring

North Dakota amended state law on flaring:
House Bill No. 1134 maintains North Dakota's one year flaring grace period, but upon the expiration of the grace period, increased the permitted activities to include a compression collection system that intakes at least seventy-five percent (75.00%) of the gas and natural gas liquids volume for beneficial consumption by various means.  This provision also includes any well equipped with other value-added processes as approved by the North Dakota Industrial Commission, which reduces the volume or intensity of the flair by more than sixty percent (60.00%).  Additionally, if the gas is collected and/or used by one of these optional systems, the gas is granted an exemption from gross production taxation for a period of two (2) years and thirty (30) days from the time of first production.
I mention this because of this observation regarding the October NDIC hearing dockets: there were only two cases in which an operator asked for permission to continue flaring at max crude oil production. Generally, there are many, many more cases. For example, on the June, 2013, agenda, there were 34 cases in which operators asked flaring be allowed past the "grace period."  There have been other months in which there were few or no cases regarding flaring, but with all the activity in the Bakken this past summer, one would think there would be more requests for flaring.

There are four possibilities:
a) the amended North Dakota on flaring, especially the "60%" rule really made a difference;
b) takeaway capacity for natural gas has improved significantly;
c) operators are choking back oil production for a number of reason; or
d) a combination of all three.
I doubt takeaway capacity has increased that much in the past two months, or even since the law was amended.

I have some hunches but would be interested if anyone has any insight on this. Thank you.

Peak Oil? What Peak Oil? A Privileged Planet And It's Crying Time Again

Rigzone/Reuters is reporting:
Statoil's announcement this week of a major oil find off Canada's Atlantic coast offers a refreshing reminder that new technology and high prices are helping uncover new oil supplies far beyond U.S. shale and the Alberta oil sands.
Statoil says its discovery in the deep-sea Bay du Nord may contain up to 600 million barrels of recoverable oil, making it the third-largest find in Atlantic Canada and rejuvenating hope for an offshore region that was forecast to be in decline for the next several decades.
Situated in an area known as the Flemish Pass basin, 500 kilometres (300 miles) off the coast of Newfoundland and Labrador, the discovery opens up a new frontier, one that oil majors Chevron and Royal Dutch Shell are also poised to probe.
Peak oil? What peak oil? As regular readers know, The Oil Drum, a "peak oil" blog, threw in the towel this summer. It's last live post was this past week; the archives are still available to read. 

A Note To The Granddaughters

I am reading a most fascinating book: A Privileged Planet: How Our Place in the Cosmos is Designed for Discovery, by Guillermo Gonzalez and Jay Richards, c. 2004. The book talks about climate change and fossil fuels. Absolutely fascinating. I did not bring the copy with me this morning so I can't provide any direct quotes, but will do so at a later date. Suffice to say Richard Dawkins won't be recommending this book. I doubt he will even read it. If he does, I can already hear the arguments, but he would be missing the point.

How slow is the news today -- at least the news out of Washington? It can't get much worse than this -- is reporting that the White House will be cut to skeleton staff (just in time for Halloween) if there's a government shutdown -- and what's so bad about that, she asked.


Well, it's crying time again:

It's Crying Time Agian, Ray Charles and Glen Campbell

Global Freezing: Deliveries Of The Hard Copy UN Report On Global Warming Will Be Delayed

What a great way to start the weekend. I only have a few minutes this morning, and then I will be off to soccer and swimming. It's a busy, busy day.

But, what a great way to start the weekend.

Sixteen feet of snow possible on Mt Rainier over next four days. Sixteen feet. And this is still September. The climatologists were correct. We're entering an extended period of global cooling freezing.

And it gets better: winter arrived in Oregon a month early.
Crater Lake, Oregon, received “a record-smashing 8 inches (20.3 cm) of snow in 24 hours” Tuesday into Wednesday, the National Weather Service reported.
More than one month ahead of schedule, the frosty blanket made its earliest appearance since 1986, when snow fell a week earlier on Sept. 18. Before that, the earliest appearance of a winter wonderland at Crater Lake was Sept. 24, 1948.
Now the irony. Because of the snow the USPS announced that deliveries of the hard copy of the UN study on global warming will be delayed in some areas of Oregon.