Saturday, December 28, 2013

Top Stories Of 2013

This is "final" but it could be updated.

Top Story of the Year:
ONEOK to invest almost $1 billion in the Bakken in new natural gas gathering, processing

The world:
Great Britain lifts ban on fracking to exploit shale gas reserves

The nation:
US oil production surges to highest levels since 1989, almost 25 years ago -- CarpeDiem

North Dakota:
New four-lane bridge across Missouri southwest of Williston announced
$70 million, 5-year construction project, Minneapolis, MN, to support the Bakken -- biggest story of the week

Most exciting operator in the Bakken in 2013:
  • revolutionary completion techniques (60+ stages; 12 million lbs sand)
  • owns own sand resources
  • ramps up in Parshall (from one rig to seven rigs)
  • payback in less than 12 months: wells in both the Bakken and Eagle Ford
  • operates in top three US plays: Bakken, Eagle Ford, Permian
  • predicted to be be largest producer in continental US by 2018 
Most surprising story of 2013:
Harold Hamm, CLR/CEO, divorce proceedings; affair in 2010

The deals:
See sidebar
The KOG - Liberty Resources deal has closed; a bit pricier than originally reported 

Record price per acre:

Bakken Operations:
Increased well density

Most exciting production prediction:
The Bakken potential; heading for 2 million bopd -- Goldman Sachs

Bakken oil field story of the year:
July dockets posted: XTO to drill another 300 wells in Siverston oil field

Biggest story in takeaway capacity:
90% of Bakken oil could go by rail in 2014

Investment story of the year:
The KOG-Liberty Resources deal

The "Other" Williston Basin formations
Random update of a Red River re-entry well

The Williston Wire's Top Ten Stories of 2013 -- My Thoughts
CNBC broadcasts from Williston
Number of North Dakota millionaires nearly doubles
Reservation royalties surge on tax agreement
$100 million event center for Dickinson?
Williston Planning/Zoning Commission approves 535-acre residential/commercial development
Fuddruckers, Acme Tool, Famous Dave's, Outlaw Grill, Home of Economy expanding -- Williston
Hertz Equipment Rental moves into spacious facility on 5-acre lot
Second Tractor & Equipment Store to open in Williston
Menard's to build concept store in Williston, 18 acres of shopping pleasure 
A 624-room Bakken Inn to be built in Parshall

The Williston Wire's Top Ten Stories of 2013 -- Their Pick

  • Williston named fastest growing micropolitan. Again.
  • Glut of job openings; more than 700 in Williams County
  • Williston experienced a baby boom
  • New restaurants poured into Williston: Buffalo Wild Wings, Famous Dave's BBQ, Fuddruckers, Doc Hollidays, The Williston Brewing Company, Basil Sushi Bar & Asian Fusion just to name a few
  • Williston City Commission approved an unprecedented annexation of 4,888 acres, increasing the geographical size of Williston to 20.3 square miles
  • Apartment construction boomed in 2013
  • Sloulin Field continued to break enplanement records
  • Babe Ruth World Series drew large crowds and praise
  • Williston State College won the National Junior College Hockey Championship
  • Williston State College saw major transformation

Expanded List of Top Stories of 2013
The Short List

The nation:
EPA says final report on fracking won't be ready until 2016 -- biggest story of the week
US fuel exports surge

The Bakken: production
Whiting's Sanish wells model to 2 million bbls EUR
The Bakken potential; heading for 2 million bopd -- Goldman Sachs
NDIC expects surge in crude oil production this summer

The Bakken: fields
Statoil's Beaux-tiful wells in the Banks oil field
EOG's Parshall field on track to generate revenues in excess of $100 million -- Filloon
July dockets posted: XTO to drill another 300 wells in Siverston oil field
Re-entering/re-completed wells in the Spotted Horn oil field
QEP to unitize the Helis Grail-Bakken oil field14 wells on each 1280-acre spacing unit in Brooklyn-Bakken oil field -- CLR 

The Bakken: formations
The Three Forks potential -- in some areas Three Forks wells are five times better than middle Bakken well

The Bakken: wells
EOG 3-mile long horizontal; 213,000 bbls in less than 5 months
Zenergy's Omlid well: a TF3 headliner
EOG's monster wells
CLR with the "deepest" horizontal well in Williams County
Three CLR Hawkinson wells with total cumulative production over 1 million bbls

The Bakken: well density
Fourteen wells sited in one section in Truax oil field
CLR's Atlanta wells; 14 wells in Baker field
48 wells/spacing unit in the better Bakken -- Lynn Helms
Fourteen wells in one section in Antelope oil field
The downspacing revolution in the Bakken -- Richard Zeits
WPX with eleven wells in one spacing unit
KOG, XTO leading the way on density well drilling
What the success of CLR's Hawkinson wells means for the Bakken
CLR's graphic of 34 wells in one spacing unit
34 wells on a spacing unit -- EOG

The Bakken: operators
Is something going on with Oasis?

The Bakken: crude by rail (CBR)
90% of Bakken oil could go by rail in 2014
CBR expansion at New Town planned
BNSF to add second stretch of mainline track, Ray to Tioga, 12 miles
BNSF to invest $220 million in CAPEX in North Dakota in 2013
Two more terminals raise capacity to almost 500,000 bopd; capacity jumps 50% in June
New Frontier to build rail/industrial yard in Williston
Stark County approves new rail transloading facility 

The Bakken: takeaway capacity
Enbridge keeps adding to its $6 billion pipeline project

The deals:
See sidebar
Oasis acquires 161,000 net acres in the Bakken
Petro-Hunt sells 17,000 net acres to Whiting, $260 million cash; the deal
The KOG - Liberty Resources deal has closed; a bit pricier than originally reported 
Analysis of KOG-Liberty Resources deal
The KOG-Liberty Resources deal -- Mike Filloon (one of numerous stories on the deal)
Zenergy to sell Bakken assets; estimated at $1 billion 

The Bakken: investments
EOG drills well in western North Dakota with payback in six months
Hess increases dividend by 150%
Five Bakken wells with revenues over $17 million in less then two years - Filloon
KOG market cap passes US Steel
ONEOK to spin off ONE Gas
OXY USA to sell its position in the Bakken?

The Bakken: taxable sales receipts
Williston beats Fargo in taxable sales; 8th month in a row

The Bakken: fracking

EOG reports a 62-stage fracked well
EOG reports a 61-stage well; a 55-stage well; 12 million lbs sand
EOG monster wells: 49 stages and 10 million pounds of sand
SBR terminal to be built in New Town, North Dakota 
Refracking in the Bakken
Whiting's new completion technique
Statoil receives first permits to use high-salt produced water for fracking
Re-fracking the Bakken: an update on the MRO experience  

The Bakken: natural gas
ONEOK to add fifth natural gas gathering and processing unit; this one near Watford City
ONEOK to invest almost $1 billion in new natural gas gathering, processing

The Bakken: miscellaneous
The three biggest energy stories of 2013 (2 of 3 involve the Bakken) -- The Motley Fool 
The Bakken is a lot bigger than we thought 
Is economic value of Bakken natural gas four times greater than forecast?
If this were the Daytona 500, the Bakken is at "Mile 50"; 30 years of drilling yet to go
It appears the reservation (BLM) is main source of flaring in the Bakken
Update on EOG's waterflooding experience in the Bakken 

Williston will need $625 million/year for next six years for infrastructure
Five-lane highway, Williston to Watford City, announced
WAWS water at 13-mile corner, north of Williston
Bobcat, bigger than ever, back in Bismarck
Williston's Buffalo Wild Wings outsells all other BWWs in the nation
Growers to build $1 billion fertilizer factory near Grand Forks using Bakken natural gas
First new US refinery in almost 40 years; breaks ground in North Dakota
Native America refinery to break ground in August
New $12 million water treatment plant for Parshall  

The "other Williston Basin formations
Random update of a Red River re-entry well
MRO targeting the Tyler formation in southwest North Dakota
MRO permits another Tyler well in Slope County

Renewable energy meets reality:
Slicers and dicers given 30-year immunity re: bird kills

Commentaries, Resources

Nine States Declared Economic Winners For 2013 -- The Washington Post

A reader sent me this link earlier this morning, from The Washington Post. It's a fun article to scroll through.

North Dakota won in the following categories:
  • fastest job growth
  • fastest growing wages
  • average hourly earnings
  • average weekly earnings
  • tax collections
North Dakota could not compete in these categories for obvious reasons (year-over-year comparisons):
  • fastest decline in unemployment
  • most frugal states
  • fastest rebounding housing market
Safety: go to the link to see how North Dakota compares with South Dakota. Be sure to scroll over the state to get the actual number; the color of state is not particularly helpful.

The article concludes:
So, congratulations to top officials in Colorado, North Dakota, North Carolina, New Mexico, New Jersey, Texas, Hawaii, Nevada and the District of Columbia: You won 2013, in some form or another. 

Riparian Justice! North Dakota Is A Low-Water Mark State


November 23, 2015: like North Dakota, Missouri is a "low-water state." From a pdf at this link
Missouri is a riparian water law state. This means that each individual landowner is entitled to make use of the water found on his property.

The laws that address riparian rights are therefore restrictive, in that the landowner cannot make unlimited or unrestricted use of that water in any way that he chooses. The right of a private individual to use and manage the water on or beneath his land is a “natural right,” which arises from land ownership and coincides with “riparian rights.”

“Riparian lands,”as defined by the courts, include all lands above underground waters and beside surface waters.

The riparian owner is free to use the water flowing across or under  his land so long as his usage does not interfere with the rights of other riparians.

To fully grasp the riparian concept, one must understand that the act of merely using water does not in itself constitute the ownership of that water. The limits on permissible usage and what specifically constitutes unreasonable use of water or land are generally the common focus in court cases.

To the extent that Missouri courts have addressed water use, they have generally followed the approach that all uses are allowable unless specifically prohibited, restricted, unreasonable, infringe upon the rights of others, markedly decrease the quality or diminish the quantity of water, or conflict with existing treaties, statutes or case law precedents. The riparian’s right to use the water in the future is not invalidated by disuse.
On the other hand, Florida is a "high-water state."

New Jersey is a "high-water state" and has an excellent handbook on the subject.  

Original Post
For background,
The Bismarck Tribune is reporting:
A North Dakota Supreme Court decision releases millions in oil bonuses and royalties into the state coffers.
The high court said Thursday that the state owns minerals up to the ordinary high water mark on both sides of navigable rivers. Unless appealed to the U.S. Supreme Court, this ends a years’ long dispute while oil revenue that would normally have been paid out was withheld in special accounts.
The loser in this opinion are dozens of individuals, the city of Williston and Williams County who claimed minerals between the low- and high-water marks along the Missouri River in the Williston region, or what’s called the “shore zone” of the river.
Jan Conlin, the lead attorney for those individuals, said the ruling is disappointing and turns North Dakota’s own state law dating back to 1889 upside down.
She said at statehood states could choose to set themselves up as low- or high-water mark states and North Dakota, in a state law written 125 years ago, chose the low-water mark option.
“This sets North Dakota apart from all other states that set themselves up as a low-water state,” Conlin said.
I don't understand why Conlin would say this "turns North Dakota's own state law dating back to 1889 upside down." It sounds like she admits that at statehood, states could choose, and North Dakota chose to "think different."

I don't have a dog in this fight.
The decision means the state can allocate $135 million in lease bonuses that were set aside on the state Department of Trust Lands’ books and another $6.5 million in royalties that oil companies have been putting into escrow in the Bank of North Dakota since 2010.
Trust lands' director Lance Gaebe said prior to 2010, oil companies suspended royalty payments on river shore minerals claimed by both the state and private individuals rather than deposit them in escrow. He said companies weren’t required to report suspended payments so the total of those isn’t known.
He said the department will send notice to companies that the suspension ends with court’s ruling and the payments can be released to the department.
The dispute involves 150 wells so far.
A Very Short Note to the Granddaughters

With the original story, posted back almost a year ago, our 10-year-old granddaughter learned about a new biome, the riparian biome. She wants to become a marine biologist. This is right up her alley creek.

WWJD? It Gets Awful Cold To Sleep On A Park Bench In Williston In The Winter

For background:
Williston shuts down local church homeless shelter for men, September 12, 2013
The Williston Wire: the city ponders what to do next, September 28, 2013
Moratorium on housing permits; city shuts down homeless shelter for men, October 17, 2013
The Bismarck Tribune is reporting:
The city of Williston is considering allowing churches and other organizations to serve as temporary homeless shelters.
Commissioners approved the first reading of an ordinance Thursday that sets rules for organizations to apply for permits. A second reading for final approval is slated Jan. 16.

It gets awful cold to sleep on a park bench in Williston in the winter.

To Parallel State Highway 22, Killdeer To Dickinson; 16-Inch Crude Oil Pipeline; Would Connect Into Entire South Half Of Bakken Oil Patch


January 1, 2014: approved.

December 29, 2013: a reader provides the link and additional insight regarding this proposed pipeline. The site: the Bakken Oil Express.
The reader notes:
It appears the pipeline will have access to at least two other pipelines plus an additional one-half million barrels of rail transfer (in the works, maybe done).

Local folks noted two 30,000-bbl storage tanks being built two miles west of Killdeer, just north of the highway a couple of months ago. The pipeline story had not yet been reported.

It appears the capacity of the pipeline will be about 15% of what North Dakota will be producing by the time the pipeline is fully operational.
Currently the Hawkinson pad requires trucks to take out the oil (note: three Hawkinson wells have already produced a cumulative of over one million bbls of oil). BurlingtonResources also has a number of pad wells coming on line just to the east of Hawkinson.
In the graphic note the proliferation of wells in the region where this new pipeline will originate, two miles west of Killdeer. Apparently the oil from the highly successful Hawkinson pad is being trucked out. The Burlington Resources wells in Corral Creek are tracked here.

Later, 6:42 p.m. Pacific Time: a reader writes -- at google satellite views one can see activity two miles west of Killdeer that most likely is where this pipeline begins. I've checked it out and there appears to be a significant amount of industrial activity two miles west of Killdeer, on the north side of the highway.

Original Post

Sometimes I become "immune" to all the news coming out of the Bakken. When Don sent me this article earlier this morning, I thought, "another pipeline story."

But for whatever reason, I looked at some of the data points regarding this proposed pipeline which, if approved, should be in service in early 2014.
  • $14 million 
  • 38 miles long
  • from Killdeer to Dickinson
  • 16-inch pipeline, 165,000 bopd (the Keystone XL: 36-inch; 830,000 bopd)
  • would transport oil from a 60-mile radius centered on Killdeer
  • estimate: eliminate 825 tanker trucks per day
  • a Bakken Oil Express pipeline
A 16-inch pipeline is huge. I think it rivals the size of some urban water mains.

This is particularly intriguing:
The 16-inch-diameter line would store (sic) oil collected from wells in about a 60-mile radius around Killdeer.
A 60-mile radius with Killdeer at the center. To the south, Dickinson is thirty miles distant; to the east, 60 miles takes one outside the Bakken; to the west, it is almost exactly 60 miles to the Montana state line; and to the northwest, 60 miles almost takes one to Williston (65 miles as the crow flies). In other words, the pipeline could service the entire southern half of the Bakken.

There is a map at the link.  This is quite intriguing. The pipeline will end in the immediate vicinity of the CBR terminal, but even more interesting, this pipeline will end in the immediate vicinity of the new MDU-Calumet refinery.

At least that's how I see it. I may be misreading something, but the link will take you to source.

Post script: Don, after doing some calculations, that based on the size of this pipe, the cost to build it, and, the area it will affect, suggests the builder expects this pipeline to be moving oil for at least 40 to 50 years.

Week 52: December 22, 2013 -- December 28, 2013; The Colors Of Global Warming

Best link of the year: spot crude oil prices

Three CLR Hawkinson wells with total cumulative production over 1 million bbls 
Drilling has increased significantly in the Parshall oil field as EOG ramps up
Random update on OXY USA

Re-fracking the Bakken: an update on the MRO experience

Random update of a Red River re-entry well

Update on EOG's waterflooding experience in the Bakken

Bakken 101
How thick must a payzone be to be economically viable?

New four-lane bridge across Missouri southwest of Williston announced
Bakken hiring blitz begins: switch to manufacturing stage in full swing

Non-Bakken Formations
A huge Red River well in Camel Hump oil field, North Dakota
Whiting to drill near a monster Madison well in North Elkhorn Ranch

The Bakken as a trilogy: the EOG experience

Today's North Dakota weather warnings/advisories:

 It looks like a North Dakota blizzard with wind chill warnings across much of the state. In the Bakken oil patch, hardest hit, based on the color scheme, will be Williams, Mountrail, Divide counties, but I doubt truckers and rough necks will find much difference anywhere across the oil patch. Crosby, in Divide County, will get to 23 degrees below zero (before wind chill factored in); Williston down to about 17 degrees below zero.

Don alerted me to the weather map. Thank you.