Sunday, November 17, 2013

A "Monster Well" Just Went Inactive

This well just went on inactive status after 50+ years of production.
  • 1987, 150/IA (9/13), CLR/Pan American/Prima, Woodrow Star "A" 1, Antelope field; the Sanish formation; t10/58; cum 1.1 million bbls; 5/13; a vertical well.
The NDIC ticket for this well/permit

NDIC File No: 1987     API No: 33-053-00363-00-00     CTB No: 101987
Well Type: OG     Well Status: IA     Status Date: 10/22/1958     Wellbore type: Vertical
Location: SWSE 21-152-94     Footages: 960 FSL 1980 FEL    
Current Well Name: WOODROW STAR "A" 1
Elevation(s): 2140 KB     Total Depth: 10546     Field: ANTELOPE
Spud Date(s):  8/27/1958
Completion Data
   Pool: SANISH     Perfs: 10516-10546     Comp: 10/22/1958     Status: AL     Date: 10/22/1958     Spacing: SE
Cumulative Production Data
   Pool: SANISH     Cum Oil: 1,063,973     Cum MCF Gas: 610765     Cum Water: 38077
Production Test Data
   IP Test Date: 10/22/1958     Pool: SANISH     IP Oil: 150     IP MCF: 0     IP Water: 0

Monthly Production Data

The last eleven months:

PoolDateDaysBBLS OilRunsBBLS WaterMCF ProdMCF SoldVent/Flare

The first fifteen months:


Random Example Of Increased EOG Activity In The Bakken

Early in the Bakken boom, EOG quickly drilled short laterals throughout the Parshall area.

And then EOG was fairly quiet in the Parshall area.

About the time things quieted down in the Parshall, EOG became very active in Eagle Ford. In fact, it was about this time that stories were coming out of south Texas that a new tight oil play had been discovered.

In their 2Q13 earnings call, EOG mentioned they were achieving 100% internal rate of return on their Eagle Ford wells and close to the same in the Bakken. Between their 2Q13 and 3Q13 earnings calls, it was noted that EOG had changed their completion techniques: a) a huge number of frack stages, upwards of 60; and, a huge amount of sand (all sand, no ceramics), upwards of 12 million pounds of sand.

in the 3Q13 earnings call EOG mentioned they were now achieving 100% rate of return on their Bakken wells (as well as their Eagle Ford wells) and they would be increasing activity in the Bakken.

For the longest time, EOG has had one short lateral/section in the area of the Parshall oil field. Now, we are starting to see increased activity by EOG in the Parshall area. Note:

Where there had been one short lateral in each section, we now see several two-well pads.

In the graphic above:
  • 17463, 825, EOG, Van Hook 3-25H, Parshall, t7/09; cum 343K 9/13;
  • 17522, 843, EOG, Parshall 9-30H, Parshall, t11/08; cum 285K 9/13; 
  • 17613, 690, EOG, Van Hook 2-24H, Van Hook, t7/09; cum 437K 9/13; 
The other six wells are on confidential status, one with a rig on site. 

Wells Coming Off The Confidential List Over The Weekend, Monday; Triangle With Two Huge Wells; EOG With Another Monster Well

Monday, November 18, 2013
  • 23367, drl, CLR, Atlanta Federal 6-6H, Baker, t5/13; cum -- 
  • 24462, 1,960, WPX, Adam Good Bear 15-22HY, Van Hook, t9/13; cum 35K 9/13;
  • 24750, drl, SM Energy, Mosser 2-30HNA, Colgan, t--
  • 25347, drl, Williston Exploration, Rocky Ridge-Fritz 1, Rocky Ridge, Heath, t--
Sunday, November 17, 2013
  • 23365, drl, CLR, Atlanta Federal 8-6H, Baker, t--
  • 23782, 901, Fidelity, Diamond J 21-16H, Heart River, t5/13; cum 40K 9/13;
  • 24813, drl, CLR, Rollefstad Federal 13-3H, Antelope, t--
  • 25061, drl, Hess, AN-Prosser-152-95-0211H-4, Antelope, t--
  • 25433, drl, Slawson, Mauser (Federal) 7-18-17H, North Fork, t--
Saturday, November 16, 2013
  • 23064, 459, EOG, Bear Den 108-1708H, Spotted Horn, t6/13; cum 74K 9/13;
  • 23340, drl, QEP, MHA 4-03-02H-149-92, Heart Butte, t--
  • 23603, 962, CLR, Jensen 3-8H,  Chimney Butte, t9/13; cum --
  • 23617, 634, Triangle, Rowe 150-101-1-12-2H, Rawson, t6/13; cum 59K 9/13;
  • 23619, 355, Triangle, Rowe 150-101-1-12-3H, Rawson, t6/13; cum 65K 9/13;
  • 23659, 715, EOG, Round Prairie 23-2833H, Painted Woods, t6/13; cum 51K 9/13;
  • 24393, 758, Fidelity, Rogstad 14-23H, Stanley, t5/13; cum 40K 9/13;
  • 24582, 2,119, EOG, Parshall 22-3032H, Parshall, t6/13; cum 138K 9/13;
  • 25025, drl, Oasis, Folda 5393 43-4T, Sanish, producing,
  • 25062, drl, Hess, AN-Prosser-152-95-0211H-3, Antelope, no production data,
  • 25283, drl, Hess, SC-Barney 154-98-1819H-2, Truax, no production data,
  • 25303, 103, Sinclair, Crosby Creek 3-5H, Little Knife, t91/3; cum -- 

24462, see above, WPX, Adam Good Bear 15-22HY, Van Hook:

DateOil RunsMCF Sold

23064, see above, EOG, Bear Den 108-1708H, Spotted Horn:

DateOil RunsMCF Sold

23617, see above, Triangle, Rowe 150-101-1-12-2H, Rawson:

DateOil RunsMCF Sold

23619, see above, Triangle, Rowe 150-101-1-12-3H, Rawson:

DateOil RunsMCF Sold

23659, see above, EOG, Round Prairie 23-2833H, Painted Woods:

DateOil RunsMCF Sold

24582, see above, EOG, Parshall 22-3032H, Parshall:

DateOil RunsMCF Sold

Another Nice EOG Well Will Come Off The Confidential List Monday

24582, see above, EOG, Parshall 22-3032H, Parshall:

DateOil RunsMCF Sold

KOG: Polar Pilot 2.0 Project; Optimizing Ultimate Development


November 18, 2013: Richard Zeits, over at SeekingAlpha, has the same story.  

Original Post

A reader brought this to my attention; I would have missed it. A big "thank you" to the reader.

This is from KOG's November, 2013, corporation presentation.  (This is a dynamic link; it will change over time.)

On a 1280-acre spacing unit in Truax oil field:
  • four 4-well pads
  • eight middle Bakken wells: 600-foot spacing
  • six upper Three Forks wells: 600- and 700-foot lateral spacing
  • two lower Three Forks wells: 1,320-foot spacing
This is what the schematic looks like:

This is what the NDIC GIS map server currently shows for that area:

Specifically, the four 4-well pads will be in section 26. Currently this is what is in section 26:

This is what KOG is proposing:

The three offset wells in section 25-154-98:
  • 24233, 1,948, XTO, Wood 21X-25A, t4/13; cum 70K 9/113;
  • 24232, 1,678, XTO, Wood 21X-25AXB, t4/13; cum 71K 9/13;
  • 20503, 560, XTO, Wood 21X-25B, t4/13; cum 63K 9/13;
I remember well before anyone was talking about it, I blogged that fracking appeared to be effective to about 500' radially. Operators appear to have settled on 600' radial fracking. Cool. I first saw it with BEXP wells based on their spacing of two wells west of Williston.

Wow! Talk About A Disappointment -- Bloomberg Businessweek, Special Issue, November 18, 2013 - January 2, 2014

Yes, whining.

For some reason I am a subscriber to Bloomberg Businessweek. It's a long story; the story starts before the two publications merged. I thought my subscription had expired. I used to get a very, very thin issue every week in the mailbox. Then, "they" told me that they were switching to "front door" delivery, which would bring the magazine to my doorstep a day or two sooner than by mail. I got the first issue, and then missed a week or two before I got a second issue. Then many weeks passed; I assumed my subscription had expired. Then today, on a Sunday, of all days, I got the Special Issue, The Year Ahead: 2014.

Wow, talk about a disappointment.

First: "the special issue" seems to be all advertising (and maybe that's why it is "special"). The advertising does not meet the level of advertising one sees in Vanity Fair, or The Wall Street Journal Magazine. It is really bad advertising. I particularly dislike heavy paper advertising which makes for difficult page turning. I always rip those pages out, and toss them.

Then, the presentation: whoever "designed" this special edition must really like fonts. Maybe that's why it's "special"; for the fonts. It looks like something a middle schooler would do. Or maybe something from Mad Magazine. I think there are no less than 35 different gaudy fonts on the three pages devoted to contents.

One should be able to do the contents in one page, leaving two more pages for content/substance (or heaven forbid, more advertising).

And some of the items in the "table" of contents were simply links to a small graphic, like the "Bigger Panama Canal." That was simply a graphic of the new canal, without explaining the significance of the canal, except to say "bigger ships would be able to get through it." Well, duh.  It did note that the project was behind schedule, and the completion, originally scheduled from sometime in 2014 will now be moved to sometime in 2015. 

Finally, the big story. The lead story. What the issue is all about. First, a two-page spread with lots of fonts. Five pictures of world leaders and a "2014: A User's Guide." A user's guide for what? I guess that's the title of the lead story, explaining what the special issue was all about and "how to use it." Even the iPad doesn't come with a user's guide.

The names of the leaders were all placed horizontally, except for "OBAMA" and "LI" which were placed vertically. That was an unfortunate choice for "LI" because I seriously thought that was the page number. Page 51, perhaps.

After paging through the very unappealing layout of the entire magazine, I then went back to read the lead story, to see if the content (as in "substance") might make up for the presentation. Here is the opening sentence of the lead article for this special issue (I cannot make this stuff up):
On Jan. 1, 2013, Latvia will adopt the euro and its lats currency will be no more. 
Seriously? That's the opening sentence for the lead article for the special edition which will be on news stands until January 2, 2014. Latvia (for newbies: a European country whose claim to fame is its composer Arvo Part. Oh, no, that was Estonia) will give up its lats and adopt the euro. That's the opening sentence? I scanned the three-page article. Remember, this issue is "The Year Ahead: 2014." If ObamaCare was mentioned, I missed it. The big US story in "the year ahead" will be, without a doubt, bet the farm on it, ObamaCare.

And then a lot more advertising.

On the front cover, "The Top Performers: 600 Companies, 55 Industries."

I tried finding that section, "The Top Performers: 600 Companies, 55 Industries." I couldn't on the first two tries. I checked the table of contents; couldn't find it. Looked again. The list of top performers is found in "a special advertising section" that is very, very difficult to find, and very, very difficult to read. Forbes does an incredibly better job. Speaking of which: the Forbes family is considering selling the magazine. Perhaps BBW should consider buying it (and leaving it unchanged, including the name; with my luck we will soon see BloombergBusinessForbesNewsweek).

There is a piece of fluff -- a short article on Warren Buffett making gazillions of dollars on CBR, something we've blogged about for a year or so, I suppose. Any reader who was unaware of that story is probably ....

I am now back to the table of contents; I want to point out what was said about Buffett. I can't find the story; the fonts are too distracting. Ahhh...there it is, p. 132. From the article:
Is there a lurking threat that could stop the tanker car boom in its hot-rolled-steel tracks? Kostad says the greatest concern for rail car makers is that oil companies will decide to build refineries closer to shale fields or run pipelines from them.
Is he serious? Building new refineries (plural) in the Obama environment; not in a million years. Okay, then pipelines? Let's see; "we" can't even get the Keystone XL Northern Leg approved. The writer doesn't even mention the two huge CBR derailments/spills/explosions; one that wiped out one Canadian town and another that burned for days in western Alabama (a state in the southeast United States). My hunch is that there was no way anyone was going to tie these disasters to Warren. But the biggest worry, as stated by an expert, building refineries near the shale fields? Wow. Seriously? The biggest worry is the Obama transportation regulators coming down hard on CBR tank cars. 

There was a bright spot. However, p. 206, a graphic of sorts in pink (girls) and blue (boys) ranking "investments" based on risk. The "pinker" the sector, the riskier; the "bluer" the sector, the "safer." I honestly could not find "oil E&P" among the forty or fifty sectors listed. The sectors did include apparel design, managed care, REITS, telecom carriers, food retailers, local media, biotech, utilities, and so forth. But no "oil E&P" unless I missed it. Unlikely. I've been looking at the page for five minutes. I do find something called .... I can't find it now ... oh, there it is ... "oil and gas services."

Everything on that "risk" page is in some hue of blue or pink, except for six or so sectors. Those six or so sectors are "grey" or "gray." One of the six is "oil and gas services." I assume "oil and gas exploration and production" is subsumed by "oil and gas services." I can't imagine lumping them together. I'm a splitter in this case. For me, "oil and gas E&P" is separate from "oil and gas services."

Hank Hill, who sells propane in Arlen, Texas ("King of The Hill," the Fox network) is in "oil and gas services." Harold Hamm, the CEO of CLR is in the "oil and gas E&P" business.

And furthermore, "oil and gas E&P" needs to be split: "oil E&P" and "natural gas E&P."

Every "oil and gas E&P" company that plans to be around in 2016 (with some notable exceptions like Chesapeake but now I'm repeating myself) are all moving to "oil E&P" as fast as they can.

By the way, there is only one sector that is bright pink: the riskiest investment sector for "The Year Ahead: 2014."

Guess which sector is the brightest pink (actually red, in this case)?

The answer: Renewable energy.

I cannot make this stuff up.

Off The Net For Awhile

There will be a delay in posting comments. Moderating posts at the discussion group will also be delayed.

Musings On Oil Demand

Disclaimer: this is not an investment blog. Do not make any investment decisions based on anything you read here or think you may have read here.

Four data points:
Then, some minor points
  • The president's green energy adviser steps down this past week
  • EPA cuts back on ethanol mandate; back to 2007 levels
Earlier in the week, Don sent me the PDF/presentation that is linked above. I went through it quickly when I got it, but today I have a bit of time to go through it much more thoroughly. It's an incredible presentation. It's worth spending some time on every slide.

So, let's do that. This presentation is a continuation of the discussion on the global implications of shale oil and energy independence in the United States.

In the very first slide (of substance), there are two graphs: US oil production and North Dakota oil production. The presentation is dated October, 2013. The Eagle Ford has surpassed the Bakken daily production, and yet the graph selected to get one's attention: North Dakota production, 1997 to 2013.

The small print on the very next slide is the important takeaway: the implication of the Bakken was that there would be "an abundance of oil and gas supplies [going forward]; and, that [this abundance] would result in the widespread substitution of gas in the transportation sector which would lower demand for oil as well."

Skip ahead to slide #25 to see the reality. On that slide there are two graphs. The one on the left is most remarkable. Again, the small print is the takeaway: "While some substitution [of natural gas for diesel] in the trucking and rail fleet is likely, penetration into the auto sector will be extremely limited."

How limited? Look at the graph on the left hand side of slide #25, "US gas-fired transportation as percent." The curve, beginning in 2010, is absolutely flat, at less than 0.5%, and remains flat until 2024, well beyond my investing lifetime. It doesn't get to 1% until about 2028. It will be 2032 before US gas-fired transportation gets to 2% penetration. There are investment niches, but that's all: niches.

Back to the early slides.

Demand: slide #13 suggests that an increasing demand for oil in the US and Europe is now reality. Note: the bars represent changes year-over-year, so the spike in 2010 only reflects how bad the recession was in 2009.

The title of slide #15 is interesting: "Non-OPEC supplies: it is still all about shale." Again, these are year-over-year changes. Notice the increase in US oil production [shale] year-over-year, vs the significant decline year-over-year production in the rest of non-OPEC countries [non-shale].

Slide #15 is only half the story, though. Look at the very next slide. This is personal for me. I bought shares in a Brazilian oil company early on, but quickly sold them when it was noted that Brazil was experiencing significant difficulties in developing their off-shore industry. Reality struck home when the stars aligned badly for the Brazilian oil and gas industry: a) Brazil will host the 2016 summer Olympics; and, b) the Deepwater Horizon/Macondo gulf blowout in 2010. At that moment it was obvious the Brazilians were not going to risk their white sandy beaches to an oil spill.

So, slide #15 is only half the story for non-OPEC production. Look at slide #16. Look at the year-over-year change in production for Brazil and for the former Soviet Union states. The FSU is recovering, but look at the y-axis. At best we're talking about 200,000 bopd increase year-over-year. That's for the entire FSU (Russia, Azerbaijan, and Kazakhstan); compare that with five or six counties in western North Dakota producing 800,000 bopd.

Slide #17: OPEC is also under pressure. Look at the volatility.

I was under the impression that US oil stocks were significantly higher based on snippets of CNBC reporting over the past several months, but slide #18 suggests otherwise. We are well above the 5-year average (but most of those years were notable for the severe US recession). However, for the past few months, US crude oil stocks have actually been below the similar period in 2012. There is now an uptick. It would be interesting to see the graph a year from now.

But then, for the Bakken folks, look at slide #19. Look at Cushing crude oil stocks. Spend some time on the graph on this slide (the graph on the right). Spend a lot of time on that graph for two reasons:
  • First, this is where I'm going to stop.
  • Second, back to the graph. Look at that graph on the right hand side of slide #19. Look at the lines, and then look at the small print: "Cushing stocks will fall to levels below 30 million bbls by early November, when Keystone XL South requires line-fill." I posted that earlier this year
Note the "operational minimum" line:about 29 million bbls.

I will stop here. But again, every slide has something important to say.

If you don't believe me, look at the per capita consumption of oil, in bbls per person per year, slide #24, and compare the US with China. I can't imagine the bars decreasing much more for the US in the short term (in fact, I wouldn't be surprised if 2013 figures for the US were slightly higher than those for 2012). And when you look at the graph on the left side of that slide, remember: the population of the US is about 325 million; the population of China is about 1.35 billion.

Oh, one more thing: China is relaxing its one-child policy. That speaks volumes.

For Archival Purposes

Two stories that may be the top stories for 2014:
  • ObamaCare
  • China's new one-child policy
ObamaCare will play out in two arenas: a) political arena; b) dollars-and-cents arena. There will be winners and losers in both arenas.

China's new one-child policy has many story lines:
  • China concerned about its aging population (think Japan)
  • Chinese leaders feel comfortable; they have consolidated their power
  • Chinese leaders comfortable about their economy
  • Energy consumption will increase 
  • The US: 4 million births/year; China 15 million births/year (new policy will increase rate by 1 million new births/year (a quarter of the number of US births)