Rigzone Is Reporting First Major Oil Spill In Remote Oil Field In North Dakota

Rigzone is reporting (this was also reported in The Bismarck Tribune today):

A Tesoro Logistics LP pipeline has spilled more than 20,000 barrels of crude oil into a North Dakota wheat field, the biggest leak in the state since it became a major U.S. producer.

The six-inch pipeline was carrying crude oil from the Bakken shale play to the Stampede rail facility outside Columbus, North Dakota. The affected part of the line has been shut down, Tesoro said.

Farmer Steven Jensen discovered the leak on Sept. 29 while harvesting wheat on his 1,800-acre farm, about nine miles northeast of Tioga, North Dakota.

Oil was gushing from the pipeline "like a faucet, 4 to 6 inches spewing out," said Jensen, who added that nearby wheat plants were ruined.

The leak did not pose an immediate threat to groundwater sources, Kris Roberts, who leads the environmental response team at the state Department of Health told Reuters.

At an estimated 20,600 barrels, it ranks among the biggest U.S. spills in recent years. It is the biggest oil leak on U.S. land since March, when the rupture of an Exxon Mobil pipeline in Mayflower, Arkansas spilled 5,000 to 7,000 barrels of heavy Canadian crude.

A fair amount of additional information is provided at the link.

Reminder: As Many As 48 Wells/Spacing Unit Might Be Necessary

Based on comments I am receiving, recent news stories, and the October, 2013, NDIC hearing dockets, it might be a good time to remind folks of this post back in June, 2013:

Lynn Helms had said that in the better Bakken, it might take 48 wells per spacing unit. I had not seen the source for that statement.

Another reader was gracious enough to provide the link (see below). This is an incredible briefing provided back in January, 2013. I am amazed that the regional print media did not pick up on this. If any of them did, I missed it. Forty-eight wells/spacing unit in the better Bakken is simply staggering, and when this does not get a headline in the regional media it speaks volumes about local coverage of the Bakken. It really does appear that most folks are focused on that 10-minute wait for a waitress to meet and greet them at a coffee shop. 

In addition, for newbies, the "FAQ" page provides a lot of information that will help get you up to speed regarding the Bakken. 

State Approves Another Wind Farm; Exceeds State's Renewable Goal; No Customer For The Electricity But Other Than That Makes Sense ... I Guess

Updates

October 31, 2013: MDU signs agreement to purchase power from this wind project. 
 

Original Post

The Dickinson Press is reporting, these data points for the Thunder Spirit Wind LLC wind project:

• 75 turbine-wind-farm near Hettinger
• $300 million project
• one commissioner cited 2007 ND legislation mandating 10% of state's energy production from renewable sources (such as wind) by 2015
• one commissioner noted that the 10% mandate had been surpassed
• no customer for electricity from this wind farm yet
• one commissioner suggested the oil patch might benefit from the electricity

Fourteen (14) New Permits -- The Williston Basin, North Dakota, USA; Hess Reports A Huge Well

Active rigs: 185 (up 1, nice)

Fourteen (14) new permits --

• Operators: Hess (47), Emerald (3), Hunt (2), Corinthian (2),
• Fields: Little Tank (McKenzie), Sandrocks (McKenzie), North Souris (Bottineau), Foreman Butte (McKenzie), Alger (Mountrail).
• Comments: Emerald seems to be getting a bit active

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

Twenty-two (22) permits were renewed, including:

• Six Statoil locations
• Four KOG Skunk Creek locations
• Four Marathon locations
• Three HRC Fort Berthold locations

Samson Resources cancelled two permits, both in Divide County, section 21-162-96:

• 22426, PNC, Samson Resources, Flicker 28....
• 22427, PNC, Samson Resources, Flameback 21....

Three producing wells were completed:

• 25636, 363, Whiting, Carl Kannianen 13-7XH,
• 24655, 838, SM Energy, Hartel 1X-26H,
• 24656, 882, SM Energy, Hartel 1-26HB,  

Four fairly recent wells were transferred from Sanson Oil and Gas to Slawson, all in Williams County:

• 26019, Coopers 2-15-14HBK,
• 26020, Tooheys 4-15-HBK,
• 24793, Duckstein 1-13-14HTF,
• 24795, Sail and Anchor 4-13-14HBK,
• 24796, Blackdog 3-13-14HTF,  

Wells coming off the confidential list Friday:

• 23445, 1,127, Hess, En-Pederson 154-94-0409H-5, Alkali Creek, t8/13; cum 35K 8/13;
• 23739, drl, BR, Bryce 34-8TFH, Westberg, no production data,
• 24144, drl, Statoil, Raymond 17-20 7TFH, Ragged Butte, no production data,
• 24269, 121, Samson Resources, Titan 3625-5TFH, Ambrose, t8/13; cum 2K 8/13;
• 24546, 485, Triangle Petroleum, Dwyer 150-101-35-26-1H, Rawson, t5/13; cum 42k 8/13;

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

23445, see above, Hess, En-Pederson 154-94-0409H-5, Alkali Creek:

Date	Oil Runs	MCF Sold
8-2013	24999	0
7-2013	10118	0

 24546, see above, Triangle Petroleum, Dwyer 150-101-35-26-1H, Rawson:

Date	Oil Runs	MCF Sold
8-2013	5474	5607
7-2013	7392	0
6-2013	9585	0
5-2013	10897	0
4-2013	8137	0

Two Stories Side-By-Side

Updates

October 11, 2013: with regard to the first story below, at the original post -- when anyone talks about the Red Queen phenomenon and the Bakken, remember this, from the September, 2013, Director's Cut:

"The drilling rig count decreased slightly from June to July, but the number of well completions jumped 102 to 251, resulting in a 6.4% increase in oil production. That number of completions is almost three (3) times the threshold needed to maintain production." 

Original Post

I am rushed for time so I will do this quickly. I wish I could post these stories side-by-side, but I don't have the "know-how" so they will be top story and bottom story.  I will post/link them now, and I won't make many comments. Maybe I will come back to these two stories.

I wasn't going to post the "top" story until this weekend when I got caught up. I saw a similar story within the past few days so it appears this story is making the rounds. So, here's the first story, posted by friend of President Obama, BloombergBusinessweek:

Chesapeake Energy’s Serenity 1-3H well near Oklahoma City came in as a gusher in 2009, pumping more than 1,200 barrels of oil a day and kicking off a rush to drill that extended into Kansas. Now the well produces less than 100 barrels a day, state records show. Serenity’s swift decline sheds light on a dirty secret of the oil boom: It may not last. Shale wells start strong and fade fast, and producers are drilling at a breakneck pace to hold output steady. In the fields, this incessant need to drill is known as the Red Queen, after the character in Through the Looking-Glass who tells Alice, “It takes all the running you can do, to keep in the same place.”

The U.S. is producing 7.8 million barrels of oil a day, more than it has in a quarter-century. Crude from shale formations has cut reliance on imports and put the U.S. closer to energy independence than it’s been since 1989. The International Energy Agency predicted last year that the U.S. would overtake Saudi Arabia by 2020 as the world’s largest producer.

Whether current production can hold up is the subject of debate. David Hughes, a geoscientist and president of Global Sustainability Research, has examined the life span of shale wells. “The Red Queen syndrome just gets worse and worse and worse,” he says. “The higher production goes, the more wells you need to offset the decline.” 

The U.S. Energy Information Administration estimates that about 29 percent of U.S. oil production today comes from so-called tight oil formations. These dense layers of rock and shale are cracked open by blasting water, sand, and chemicals deep underground, creating fissures that allow the oil to flow into horizontal pipes, some of them thousands of feet long.

Production from wells bored into these formations declines by 60 percent to 70 percent in the first year alone, says Allen Gilmer, chairman and chief executive officer of Drillinginfo, which tracks the performance of U.S. wells.

Traditional wells take two years to slide 50 percent to 55 percent, and they can keep pumping for 20 years or more.

In North Dakota’s Bakken shale, a well formally known as Robert Heuer 1-17R put out 2,358 barrels in May 2004, when it went live. The output proved there was money to be made drilling in the Bakken and kicked off an oil rush in North Dakota. Continental Resources, the well’s operator, built a monument to it.

Production declined 69 percent in the first year.

“I look at shale as more of a retirement party than a revolution,” says Art Berman, a petroleum geologist who spent 20 years with what was then Amoco and now runs his own firm, Labyrinth Consulting Services, in Sugar Land, Tex. “It’s the last gasp.”

 Now, the second story. This one is from Reuters.

Pipeline operators Regency Energy Partners LP and Crestwood Midstream Partners LP announced plans to buy peers to expand their pipe networks as infrastructure companies seek bigger stakes in the U.S. shale oil and gas boom.

Regency Energy, controlled by billionaire Kelcy Warren's Energy Transfer Equity LP, agreed to buy PVR Partners LP for about $3.8 billion. Crestwood Midstream is buying privately held Arrow Midstream Holdings for $750 million.

Burgeoning production has left the United States awash in cheap oil and gas but a shortage of pipelines has put a premium on the infrastructure that moves production to refining hubs.

Pipeline companies have also been attracting investors as they are mostly structured as master limited partnerships (MLPs). They pay virtually no corporate taxes and have a lower cost of capital, giving them the opportunity to hunt for less attractively valued assets.

"It's a seller's market for MLP-qualifying assets. The market's desire for MLP-qualifying assets is enormous," said Robert W. Baird & Co analyst Ethan Bellamy.

The deals announced on Thursday come a few months after Crestwood, Inergy LP and Inergy Midstream LP merged to form a $7 billion entity to cater to a spurt in Bakken shale production, which has made North Dakota the most prolific oil-producing state after Texas.

Other partnerships such as Southcross Energy Partners LP and Eagle Rock Energy Partners LP could also benefit from deals, Bellamy said.

In North Dakota's Bakken shale field, Crestwood Midstream will process about 18 percent of crude oil output after it buys Arrow Midstream, making it one of the largest pipeline and storage providers in the lucrative shale formation.

"This is a perfect example of how we are going to aggressively commercially develop and look for bolt-on opportunities ... ," Crestwood Chief Executive Robert Phillips said on a conference call with analysts.

There are a lot of story lines in these two articles. Maybe I will "attack" them this weekend.

Off The Net For Awhile

New comment at the discussion group won't be posted until later tonight.

Anyone can submit comments; no registration required.

Comments will be heavily moderated. The discussion group site will be an adjunct to the blog.

By The Numbers

BY THE NUMBERS

December 6, 2014

Previous update: October 8, 2014

Rigs:

• Active Rigs in ND: 190 (high: 218)
• Post-Record Low: 174

WTI oil: too low -- I don't want to look.
Bakken spot
ND production: #2 in USA

Confidential wells, December 5, 2014: 2,302

• Previous high: 2,287 (September 29, 2014)
• Previous high: 2,177 (December 20, 2013)
• Previous high: 2,137 (October 10, 2013; May 19, 2014)

• July 2012 confidential wells: 151
• August 2012 confidential wells: 156
• October 2012: 147
• November 2012: 181 (record, previous 166)
• December 2012 : 179
• January, 2013: 152 --> 154
• February 2013: 154 --> 175
• March 2013: 180
• April 2013: 173
• May 2013: 168
• June 2013: 152
• July 2013: 152
• August 2013: 158
• September 2013: 186 (record, previous 181)
• October 2013: 199 (record, previous 195)
• November 2013: 153
• December 2013: 170
• January 2014: 217 (this might be a record)
• February 2014: 142
• March 2014: 190
• April 2014: 171
• May 2014: 179
• June 2014: 160
• July 2014: 177
• August 2014: 164
• September 2014: 173
• October 2014: 179
• November 2014: 206
• December 2014: 207
• January 2015: 211
• February 2015: 193
• March 2015:

Permits:

• Permits Issued To Date This Year: 3,000 (December 5, 2014)
• Projected Permits for 2014: 2,964
• Projected Permits for 2013: 2,296
• Total permits in 2013: 2,666; ~ 30 cancelled
• Total Permits in 2012: 2,521; ~ 30 cancelled
• Total Permits in 2011: 1,926

"Whether or not IPs are exaggerated, all things being equal I would prefer my well to have an IP of 5,133 boepd rather than zer0 boepd." -- Mark Twain

Around The Horn -- Day 10 Of The Government Shutdown

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. 

30-second sound bite: oil continues to slide toward the $100 support. Bakken operators are significantly outperforming the majors. Sweet. Most Bakken stocks are surging after their recent pullback; following the general market; rumors of a thaw in the government shutdown showdown: our National Park Service at its finest, and memories of how the Obama administration treated military veterans and family of active duty killed in Afghanistan. Sad day for America.

KOG surges to a new high, up over 3%. I used to consider KOG the bellwether stock to track the Bakken. About a month ago (sometime in September, 2013), I began re-thinking this. I now consider HK the bellwether stock to track the Bakken.

HK is up about 1.5%; about $4.90.

Oasis surges, but still not back to its 52-week high. Reported a huge well today.

WLL surges 2%; not back to its 52-week high.

CLR is up almost 3% today; well off its 52-week high; has been on a tear past few weeks.

CVX, COP, XOM: CVX continues to slide; warned on 3Q13 earinings; COP surges 2%; and XOM down slightly.

EOG is up over 1%; near its all-time high.

CHK is up almost 2%; not back to its recent high.

SD is up almost 2%; in a trading range.

AMZG was back up to $2.00 earlier today ( a nice entry point); now down a nickel (a better entry point).

TPLM is up over 3%; near its 52-week high.

UNP is in its trading range well below its 52-week high. Up over 2% today.

I don't follow BNSF (BRK) much any more; BRK follows the market in general.

ENB, EEP are both in a trading range, well below their highs.

SRE continues to struggle. But paying 3%. I wonder if the Mexican economy can be seen as a proxy for SRE's prospects? Up a bit today.

TransCanada is up about half-a-percent, and well off its highs.

Oasis Reports A Huge Well In Camp Oil Field; Huge IP But Short Of A Bakken Record

24288, 4,489, Oasis, Sully 5200 11-30B, middle Bakken, Camp, t4/13; cum 52K 8/13;

36 stages; 3.7 million lbs (all sand?)

Total drilling days: 22.

I track the Camp oil field here. 

This is a huge IP, but not the record in the Bakken. This is the current record-holder in the Bakken:

• Statoil reported an IP of 5,417 on September 26, 2013: #23992, Beaux 18-19 7H, Banks oil field

I track record IPs at my "FAQ" page. 

ObamaCare Websites Only Designed For 50,000 Visitors/Day:

30 million uninsured/50,000 = 600 days.

It is mandatory that folks enroll by sometime early in 2014. Six hundred days is about two years. The government is setting "us" up to fail. Those who do not enroll and who do not have insurance elsewhere will be fined.

Trainwreck.

This is being reported by the US government.

The Second Nominee For The 2013 Geico Rock Award: Labor Department Analysts

We have our second nominee for the 2013 Geico Rock Award: the US Labor Department analysts.

Bloomberg is reporting:

Jobless claims surged by 66,000, the most since the aftermath of Superstorm Sandy in November, to 374,000 in the week ended Oct. 5, figures from the Labor Department showed today in Washington. The median forecast of 47 economists surveyed by Bloomberg called for a rise to 311,000.

Last week it was widely reported that the government shut down as of midnight/early morning of October 1, 2013. It was widely reported that 800,000 government workers would be furloughed. It was also widely reported that these government workers were eligible for unemployment benefits, and in fact, were overwhelming the "system" in Virginia, applying for their benefits.

With 800,000 government workers furloughed and eligible for unemployment, it boggles the imagination that the jobless claims "surged" by only 66,000, up to 374,000.

But this is what really boggles the mind: the median forecast of 47 economists surveyed by Bloomberg called for a rise to 311,000.

The group of 47, names unknown, will be our second nominee for the 2013 Geico Rock Award. Good luck to all nominees.

And then this:

The issues in California accounted for about half the jump in applications last week and the dismissal of non-federal employees after Congress failed to compromise on a budget accounted for about another 15,000, a Labor Department spokesman said as the data was released to the press. The effects of the gridlock in Washington may keep claims elevated as employers grow concerned about the economic outlook.  

It appears, the jobless claims (as I predicted) will NOT include furloughed government workers. In fact, that may be stated in the article; if so, I missed it, and I don't have time to follow this story any more. [Oh, yes, here it is: Any claims filed by furloughed federal workers will not show up in the figures in coming weeks, a Labor Department official said last week. They will be tallied in a separate category and will not influence the headline reading, though contractors’ furloughs will count.]

And more:

Economists’ estimates in the Bloomberg survey ranged from claims of 304,000 to 340,000. The jump pushed applications up to the highest level since March last week. The previous week’s figure was unrevised at 308,000.

The numbers are meaningless.

Thursday -- 10th Day Of The Government Shutdown; Crude Oil Barge Volumes Surging; Aubrey Ready To Drill The Utica

Active rigs: 184

RBN Energy: crude oil barge volumes continue to increase

Barge shipments of crude oil between the Midwest Petroleum Administration Defense District (PADD) 2 and the Gulf Coast PADD 3 regions reached 126 Mb/d in July 2013 - up 79 percent over the same month last year according to the Energy Information Administration (EIA).  The Port of Corpus Christi reported that coastal barge and tanker movements of crude from the Eagle Ford – mostly headed out of Corpus to Houston or St James, LA are up 37 percent so far this year (August) to 387 Mb/d. The crude tank barge trade is booming as producers continue to use waterborne transport to bypass pipeline congestion. Today we look at emerging waterborne crude routes to market.

Chesapeake lays off another 800 folks. 

Meanwhile, Statoil's fortunes have turned. Rigzone is reporting:

Statoil’s shift a decade ago towards focusing on high-risk, high-impact plays and early entrance with a large stake into new plays is clearly working, transforming Statoil from a relatively resource poor company to one with a solid resource base, Statoil CEO Helge Lund told reporters Monday at a media briefing in Houston.

Since revising its strategy, the company has added significant new acreage and resources to its portfolio, including acreage in Russia, Australia, the U.S. Gulf of Mexico and Brazil, and significant discoveries such as the Bay du Nord discovery offshore eastern Canada, Statoil’s third discovery in the Flemish Pass. Between 2011 and 2013, Statoil has added more than 3 billion barrels of oil equivalent to its portfolio.

As part of its strategy, the company has focused on three areas – the Norwegian Continental Shelf (NCS), North America onshore unconventional plays and four to six offshore oil and gas clusters outside Norway.

Oilman never give up -- Chesapeake's former CEO ready to drill the Utica:

An energy firm run by Aubrey McClendon, the former Chesapeake Energy Corp chief executive, has raised $1.7 billion to drill on shale acreage in Ohio's Utica Shale, the firm said on Wednesday.

Proceeds will initially be used to acquire and drill on about 110,000 acres in the southern portion of the Utica Shale.

The Wall Street Journal

Shutdown standoff shows signs of a thaw. Medical-device tax repeal gains new life. Is this what this stand-off all about? How sad. How pathetic.

Yellen new Fed head.

US allies fret over Egypt-aid shift. Egypt surprised by planned US aid cut. MDW noted this yesterday. Confirms President Obama's Islamist leanings. This is not rocket science.

Random Update On Confidential Well List

There are currently 2,137 wells on the confidential well list.

HRC has exactly 100 wells on the confidential well list.

Later, I will sort out the other operators. A reader asked about HRC so that's why that has appeared first.

For some reason, the "by the numbers" at the sidebar at the right is not letting me update data. I will sort it out later.

However, the 2,137 wells on the confidential well list has set a new record: the previous high was 2,117. [Disclaimer: I don't check in on the confidential well list very often, so these numbers will be off, but at least one gets an idea of how many wells are on the confidential list at any one time.]