Week 48: November 24, 2013 -- November 30, 2013

Operations
Random: two more spectacular EOG wells
Random: update of a KOG well east of Williston
North Dakota rig count jumps to 193
Musings on the North Dakota rig count
EOG set to become largest producer in lower 48
Random look at KOG case before the NDIC; 16 wells on two 1280-acre units
Random update of two Pyramid wells northwest of Williston; note variability of production
Trends noted in the December hearing dockets
NDIC hearing docket agenda, December, 2013

CBR
Marathon to be main shipper on Enbridge's Sandpiper

Flaring
It appears the reservation (BLM) is main source of flaring in the Bakken

Economy
Stark County approves new rail transloading facility

Pricing
Western Canadian sands oil trading at $40 discount to WTI

Miscellaneous
For the archives: several articles on the shale revolution
North Dakota leads region in federal oil, gas leases
US refineries reaching capacity; will lead to pricing volatility

Global Sea Ice Is At Its Highest In 25 Years; Sixth-Highest On Record

ClimateDepot is reporting:

Global sea ice is highest in 25 years; sixth-highest ever recorded.

All this talk about global warming gets a bit tedious, does it not?

Something tells me the graphic at the link will not end up in the Algore PowerPoint presentation.

ClimateDepot also notes these records in the past few days:

Via: http://iceagenow.info/2013/11/1000-record-max-temps-17-record-high-temps/

• Almost 1000 record low max temps vs 17 record high temps
• Records in the last 7 days
• 205 snowfall records
• 969 low max; 203 low temps
• 17 high temps
• 61 high minimum

Pleasant Hill

Permits

2015
30466, conf, Whiting, Cherry State 31-16-3H, 

2014
No new permits as of March 1, 2014

2013 (permit list complete)
27082, conf, Whiting, Johnson 34-8-2H,
27050, loc, Whiting, Mork Trust 21-17-6H,
26568, drl -- > conf, Whiting, Cherry State 21-16-2H,
26484, drl -- > conf, Whiting, Cherry State 31-16-2H,
26483, drl --> conf, Whiting, Cherry State 31-16H, 
26297, drl, Whiting, Schilke 14-33RH, a nice well,
26296, drl, Whiting, Schilke 14-33-2RH, a nice well, 
26039, conf, Whiting, Johnson 31-4-2H, huge well, 
26024, drl, Whiting, Mork Farm 24-8H,
26023, drl, Whiting, Mork Farm 24-8-2H,
25942, drl, Whiting, Johnson 34-33-2H, producing,
25930, drl, Whiting, Schilke 34-32-2H, producing,
25795, PNC, Whiting, Schilke 14-33H,
25794, PNC, Whiting, Schilke 14-33-2H,
25357, drl, Whiting, Mork Trust 21-17-2H, producing,
25356, drl, Whiting, Mork Trust 21-17-3H, producing,
25355, drl, Whiting, Mork Trust 21-17-4H, producing,
25354, drl, Whiting, Mork Trust 21-17-5H, producing
25139, 1,319, Whiting, Tifft 21-18-2H, t7/13; cum 50K 12/13;
24976, conf, Whiting, Kummer 14-32-2H, 23K first two months,
24975, conf, Whiting, Kummer 14-32H, 14K first two months

2012
24589, 1,941, Whiting, Olson 41-18-2H, t7/13; cum 53K 12/13;
24460, 2,030, Whiting, Rud 11-4-2H, t5/13; cum 50K 10/13;
24459, 1,448, Whiting, Olson 41-18H, t7/13; cum 62K 12/13;
24450, 1,528, Whiting, Kummer 34-31-2H, t6/13; cum 43K 12/13;
24274, 1,405, Whiting, Kummer 14-31-2H, t6/13; cum 51K 12/13;
24273, 1,473, Whiting, Kummer 14-31H, t6/13; cum 48K 12/13;
23780, 513, Whiting, Rud 11-4TFH, t5/13; cum 16K 10/13;
23779, 2,078, Whiting, Rud 11-4H, t5/13; cum 44K 10/13;
22723, 489, Whiting, Cherry State 21-16TFH, t12/12; cum 18K 10/13;

2011
22066, 1,329, Whiting, Mork Trust, t5/12; cum 88K 10/13;
21186, PNC, Whiting, Mork Trust 21-17HEXP;

Pleasant Hill

I had a bit of trouble telling for sure, whether the Pleasant Hill oil field was in Whiting's Tarpon Prospect or in Whiting's Hidden Bench prospect. A reader, elsewhere, suggests it is in Whiting's Hidden Bench prospect, and he is correct. One can pull up a Whiting presentation here and compare their graphics with the NDIC GIS map server. It looks like Pleasant Hill is on the northeast edge of Whiting's rather large Hidden Bench prospect, McKenzie County, just to the southwest of Watford City. The reader is correct; the Tarpon Prospect is farther to the northeast, closer to the river.

Pleasant Hill has become a bit more active recently. It is a relatively small-to-medium size field for the Bakken, 18 sections, perfectly rectangular, 3 x 6 sections.

The center of the field is particularly active with two rigs on site and several 2-well pads and one 4-well pad:

• 25354, drl, Whiting, Mork Trust 21-17-5H,
• 25355, drl, Whiting, Mork Trust 21-17-4H,
• 25356, drl, Whiting, Mork Trust 21-17-3H,
• 25357, drl, Whiting, Mork Trust 21-17-2H,

 The 2-well pads:

• 26023, rig on site, Whiting, Mork Farm 24-8-2H,
• 26024, drl, Whiting, Mork Farm 24-8H,

• 26483, rig on site, Whiting, Cherry State 31-16H,
• 26484, drl, Whiting, Cherry State 31-16-2H,

• 21257, 2,057, Whiting, Cherry State 21-16H, t12/12; cum 68K 10/13;
• 22723, 489, Whiting, Cherry State 21-16TFH, 29 stages; 2 million lbs; t12/12; cum 18K 10/13;
• 26568, drl, Whiting, Cherry State 21-16-2H,

Two older, producing/active wells in this immediate area:

• 19847, 886, Whiting, Johnson 34-8H, t10/11; cum 69K 10/13;
• 22066, 1,329, Whiting, Mork Trust 21-17H, t5/12; cum 88K 10/13;

And one permitted location:

• 27082, see above, Whiting, Johnson 34-8-2H, 

The Tea Leaves Suggest This Administration Will Limit LNG Exports -- But Is This News?

Platts is reporting:

In an interview with Platts, Freeport CEO Michael Smith said he was “quite disappointed” in the order, claiming that DOE was “arbitrarily” limiting what it can export to non-FTA nations.

“There is nothing in the regulations that allow this,” he said. “We filed for 1.4 Bcf/d, and unless all of it isn’t in the public interest, they are required to approve our filing. Once someone else is approved for any more, they have no argument that our application wasn’t in the public interest.”

Under a provision of the US Natural Gas Act, the DOE must issue an order to export to non-FTA countries unless it finds such exports “will not be consistent with the public interest.”

“This provision creates a rebuttable presumption that a proposed export of natural gas is in the public interest,” DOE wrote in its Freeport order. The agency “must grant such an application unless opponents of the application overcome that presumption by making an affirmative showing of inconsistency with the public interest.”

Essentially, what that means is this: DOE has to approve an LNG export application unless it can prove exporting that gas would not be in the public interest.

Platts describes the issue as clearly as one could expect. This does not bode well for the pro-LNG export crowd.

But then, this is not news for this administration whose decisions are capricious to begin with. 

The article continues:

This gets into some double-negative wording territory which makes English majors cringe, but, under the statute, the DOE must prove that the LNG export proposal is not in the public interest to reject it. Most simply, DOE does not have to prove that the exports would be in the public interest.

Which brings us to the Freeport order: did DOE cut the export request by 1 Bcf/d because it believed exports at that level would not be in the public interest? In other words: was the Freeport request reduced by 1 Bcf/d because DOE believes that an additional 1 Bcf/d would not be in the public interest?

It does not appear so, since throughout the order DOE claims that opponents of the Freeport proposal failed to prove that 1.4 Bcf/d of LNG exports was not in the public interest.

But DOE’s decision to cut the request by 1 Bcf/d could ultimately be extremely problematic for future approvals for Gulf Coast LNG export projects. If the DOE can prevent Freeport from shipping another 1 Bcf/d from its Texas facility it would stand to reason that it could also limit shipping 1.7 Bcf/d from Cameron LNG’s facility in Louisiana or even more from other pending export proposals. Cameron LNG is the next export project in line for DOE approval.

And:

Pro-LNG export sources claim that DOE seems to be overstepping their legal bounds here and taking on more than it may be allowed under the Natural Gas Act. And DOE has offered little explanation on why it limited the Freeport order.

William Gibbons, a DOE spokesman, declined to comment, but in the Freeport order DOE says it limited the Freeport approval to “the extent of the liquefaction capacity” of the project. Freeport has told the Federal Energy Regulatory Commission that the project would have a liquefaction capacity of 1.8 Bcf/d, not the 2.8 Bcf/d total it requested in its two export applications.

Much more at the link. Some readers may want to take an extra Valium. 

Eleven (11) New Permits -- The Williston Basin, North Dakota, USA;

Active rigs:

	11/29/2013	11/29/2012	11/29/2011	11/29/2010	11/29/2009
Active Rigs	191	182	198	164	67

Eleven (11) new permits --

• Operators: BR (4), HRC (3), EOG (2), KOG, American Eagle
• Fields: Truax (Williams), Parshall (Mountrail), Eagle Nest (Dunn), Corral Creek (Dunn)
• Comments: American Eagle has a permit for a wildcat in Divide County

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

Four producing wells were completed:

• 25030, 1,048, Hess, EN-Sorenson A 154-94-0211H-4, Alkali Creek, t10/13; cum 16K 10/13;
• 25351, 1,064, Hess, BW-Spring Creek 149-99-1201H-2, Cherry Creek, t11/13; cum 6K 10/13;
• 24262, 2,984, BR, Glacier 41-4TFH, Clear Creek, t11/13; cum --
• 26141, 523, OXY USA, Walter Cooke 1-9-4H-143-98, Little Knife, t11/13; cum --

Chesapeake plugged four non-confidential wells: the two Grenz wells (#22153, #21885), the Zent (#21139), and the Kostenko (#21681). 

OXY USA plugged the Spring Creek 1-20-141-93 (#21949) in Dunn County.

The Sorenson Wells, Union Center, 13/24-152-96

The Sorenson wells in Union Center, 13/24-152-96:

• 2903, 186/PA, Petro-Hunt, CCMU 05, a Madison well, t6/61; cum 539K 6/92
• 6168, 500/PA, Panther Creek, Brenna 13-13, a Madison well, t8/77; cum 241K 6/2000
• 6529, 160/PA, Quanterra Alpha, Sorenson 22-13, a Madison well, t10/78; cum 8K 4/81
• 6737, DRY, Terra Energy, Matheisen 31-13, a Madison well
• 8266, IA/486, Legacy Reserves, Sorenson 11-13, a Madison well, t4/81; cum 256K 9/14;
• 18308, 1,562, Petro-Hunt, Sorenson 152-96-13B-24-1H, Bakken, t1/10; cum 403K 12/20;
• 19359, PA/91, Petro-Hunt, Sorenson 152-96-24C-13-2H, Bakken, t9/11; cum 33K 4/14;
• 20476, 840, Petro-Hunt, Sorenson 152-96-24C-13-3H, Bakken, t3/13; cum 337K 12/20;
• 21714, 1,626, Petro-Hunt, Sorenson 152-96-24C-13-4H, Bakken, t4/12; cum 330K 12/20;
• 24438, 527, Petro-Hunt, Sorenson 152-96-24D-13-5H, Bakken, t8/13; cum 248K 12/20;
• 24439, 1,733, Petro-Hunt, Sorenson 152-96-24D-13-6H, t8/13; cum 245K 12/20;
• 25048, 1,759, Petro-Hunt, Sorenson 152-96-24D-13-7H, t8/13; cum 254K 12/20;

For newbies, note: it took a Madison well 32 years to reach 255,000 bbls of production. Petro-Hunt has three Bakken wells that have reached a similar amount of production in the same area. One well reached 280,000 bbls in about four years; another reached almost 180,000 bbls in less than a year; and the third well that reached more than 200,000 bbls in less than two years. Although production will vary significantly over the next decades, Bakken wells are expected to go on producing for 39 years. Obviously all Bakken wells won't produce that long, but that's the expectation going in. At least one operator opines that the average EUR for Bakken wells will be 603,000 bbls.

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A Note To The Granddaughters

It is interesting how things work out. About once a year we get a duck for a holiday meal, generally Thanksgiving or during the long Christmas / New Year's. This year we bought a "King Cole Duck," a Canadian (Toronto?) company. It was incredible. It was the best duck we have ever had and we have had many ducks over the years, including mallards shot in North Dakota (while assigned to Grand Forks AFB, ND, in another life) and at 5-star restaurants in San Francisco (while assigned to Travis AFB, CA, also in another life, and far, far away).  [Actually thinking back now, the mallard duck in North Dakota might have been better. Whatever.]

The King Cole duck was to have had a orange sauce package but it was missing. My wife was quite upset; that's the most important part of a duck meal, duck à l'orange. But my wife is quite clever and made her own duck sauce which was also the best we had ever had. Most duck sauces are way too thick/syrup. Hers was a very thin sauce, perfect for soaking into the meat. I was quite impressed.

May sent an e-mail note to the King Cole company about the missing sauce. We got an immediate response back, and an offer to refund us $15 if we gave them our mailing address. We responded that we could never accept the $15; the duck was too delicious. We recommended that on the outside of the package the company might note that orange sauce is included but "for those folks who like to prepare their own sauce, here is suggested recipe .... " That way there is something to fall back on if the cook does not have access to internet for a duck sauce recipe and it does not mention the real reason for including a suggested recipe on the back of the package.

Anyway, we were quite impressed overall.

Sunday, our Thanksgiving turkey dinner. No orange sauce.

Black Friday -- For Investors Only; Comet ISON Did Not Survive! Or Maybe It Did ---

Comet ISON did not survive its close encounter with the sun.

A new guest arrived just in time for Thanksgiving dinner, but apparently didn't survive the festivities.

The visitor, a pristine comet called ISON that left its home at least a million years ago, made its closest approach to the sun Thursday afternoon.

But based on images arriving from various spacecraft, the consensus among scientists appeared to be that ISON, like the mythical Icarus, didn't survive its close encounter with the sun.

Or maybe it did? http://www.isoncampaign.org/karl/a-trail-of-questions

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More mundane news: six (6) companies announce increased dividends/distributions.

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

Wal-Mart announced record-breaking Black Friday results; More than 1 million customers took advantage of Walmart's One-Hour Guarantee:

Last year, Walmart served 22 million customers on Thanksgiving Day. This year, even more customers chose to shop Walmart: More than 1 million customers took advantage of Walmart's One-Hour Guarantee which was expanded from three items last year to 21 items this year. From 6 p.m. to 10 p.m., Walmart processed more than 10 million register transactions in its stores. Walmart.com processed nearly 400 million page views on Thanksgiving Day, including customers who used mobile devices and tablets.

The Wall Street Journal

Small-business delay is latest blow for ObamaCare.

The Obama administration's announcement of a one-year delay for small businesses to sign up for insurance policies using the troubled HealthCare.gov website comes as a blow for the administration, which had counted on the new online exchanges to create a competitive, transparent market for coverage.

Small firms, for their part, say they had figured they wouldn't be using the new exchange this year. Many of them are already making other plans for insuring their workers in 2014, often by renewing existing policies or working with an insurance agent.

Rami Essaid, chief executive of Distil Networks, a Web-security business in Arlington, Va., said he would soon renew his firm's health coverage early rather than face a rate increase of as much as 50% next year. "We definitely wanted to shop the exchange to get more selection in our plan," he says. The delays, he adds, "meant we couldn't shop around. It's eliminated my options."

On NPR now, they are interviewing a person that was able to sign up on-line. Can you imagine, NPR doing an interview with a person that was able to order an Apple computer on-line. Wow, this technology is incredible. It's almost as if NPR has discovered for the first time that one can order things on-line. But I digress. Back to the WSJ.

Speaking of ObamaCare, H-P replaces Verizon as host of website. Previously reported.

Payback: Colorado lawmaker quits; faced recall after supporting gun-control legislation. 

Black Friday -- The Propane Story Gets More And More Interesting; Interesting Shale Plays To Watch In 2014

Active rigs: 191

RBN Energy: Part 2 in the series on the propane shortage in the midwest for drying corn.

The northern corn-belt states are winding down from a very wet bumper crop of corn which has required a lot of grain drying, fired by propane.  That has translated into a shortage of propane supplies – so much so that seven governors recently issued emergency orders to expedite propane deliveries to their states. 

Now, with about three weeks left before the official onset of winter (and it feels like winter already), 2013 Midwestern propane problems should be behind us. 

But what about next year?  In 2014, Cochin pipeline – one of the most significant traditional sources of propane for the region goes away.  Kinder Morgan (current owner and operator of Cochin) is reversing the system and turning it into a diluent pipeline.  Volumes of propane previously delivered by Cochin must come from somewhere else.  Today we’ll continue our series looking at upper Midwest propane and how the region is likely to adjust in the post-Cochin market.

Over at Rigzone, long article on the shale plays to watch in 2014. For example:

The Eagle Ford unconventional play in South Texas has proven prolific in terms of oil production, but activity on other formations within the Eagle Ford area will expand. While the Pearsall shale will not likely be a huge play, Gilmer said DrillingInfo is seeing interesting things in the Buda formation.

Both the Pearsall and Buda plays are located below the Eagle Ford – the Buda located deeper than the Eagle Ford and Pearsall the deepest – varying in depth ranging from 7,000 feet to 12,500 feet. Buda exploration is occurring in the eastern portion of the Eagle Ford play area, while Pearsall development is taking place in the western half of the Eagle Ford.

 A couple of Buda wells have come online pretty strongly in the dead oil zone of the Eagle Ford proper, an area where companies had leased, hoping for oil, but not enough gas exists to make it mobile. But when operators started drilling deeper into the Buda, they “walked into a window of mobility, so it looks like a second life for a lot of those leases.”

SeekingAlpha has an article on ETP.  A nice map at the link.

The map depicts Energy Transfer Partners' asset footprint in the United States. ETP's assets are concentrated in the South of the US, especially in Texas. Energy Transfer Partners has a particular strong position in the Eagle Ford area and is massively adding to its processing capacity. In 2010, ETP had an Eagle Ford processing capacity of 120 Mbpd and expects to grow its capacity to 1,340 Mbpd in 2014. Eagle Ford is one of the highest-impact drilling areas in the US and the expansion of processing capacity will serve the company and its unitholders well in the future.

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

The Wall Street Journal would normally be placed here, but this post has already gotten pretty long, so I will go to a new post.