The SCOOP

Don sent me this link to a front-page story in The Dickinson Press about another huge shale play in the continental US. This one is in Oklahoma, known as the SCOOP, and some say could be bigger than the Bakken.

Read the story at the link, then come back to read the comments I made to Don regarding this story:

This is a very interesting article. I would love to know where this is coming from. The story was not written by a Dickinson Press reporter, although it may have been edited by The Dickinson Press: it was a news story that came off the fax (or electronically) from a huge stack of news stories released daily by Reuters Media.  

Perhaps this was the source: “We consider SCOOP one of the top emerging plays in the U.S,” said Andrew Byrne, director of energy equity research at IHS in Boston. It would be interesting to know the relationship between IHS, CLR, and other investors.

Be that as it may, let's continue.

Any news organization can subscribe to Reuters Media. They are then guaranteed a huge stack of news articles that they pick and choose from that would interest their readers. For example, this story would not interest folks reading the New York Times.

It appears that The Dickinson Press added some local facts about the Bakken to make it look like "their" story, like the number of active rigs in North Dakota.

It certainly looks like the story began with a press release from Harold Hamm to "someone" -- Reuters picked it up and then did some fact checking, talking to MRO and Newfield, both of whom had "no comment," it appears.

But this has Harold Hamm's marketing fingerprints all over it.  I was mesmerized until I got deep into the story and someone, probably Harold Hamm himself, had to admit that the SCOOP would result in 100,000 bopd by 2018 compared to the one million bopd in the Bakken. For all practical purposes, the Bakken went from nothing to a million between 2010 and 2013 (one can argue the "2010" starting date).

2018 is four to five years from now. How they can suggest the SCOOP might be bigger than the Bakken is beyond me.

Look at these two paragraphs buried deeply in the article:

Portillo sees SCOOP maxing out at about 100,000 bpd in 2018, around three times what it pumps now — versus nearly 1 million bpd from the Bakken or the Eagle Ford in Texas.

“The oil is fairly immaterial in terms of the production numbers,” Portillo said of current SCOOP output compared with other plays.

The first paragraph: 100,00 bopd by 2018. Inconsequential. 

The second paragraph: whoever Portillo is, he agrees: 100,000 bopd is fairly immaterial. 

The 100,000 bopd is NOT immaterial to Harold Hamm, but it is immaterial relative to US onshore production, to western Canadian heavy oil production, and needless to say, immaterial to global production.

My two cents worth.

I have to check the 168-rig count that The Dickinson Press provides.

Two other data points. The article suggests that the Bakken has 24 billion bbls of recoverable oil:

CLR calls SCOOP a “world class resource,” and estimates it could contain 70 billion barrels of oil.

By comparison, Continental estimates North Dakota’s Bakken shale oil play contains 24 billion barrels of recoverable oil.

In fact, that is a conservative estimate for the Bakken. The folks-in-the-know, including Harold Hamm, have suggested that the Bakken may be a trillion-barrel reservoir, and recovery rates are easily reaching 5 percent. That is still less than 70 billion bbls but if the recovery rate hits 8 percent in the Bakken it will exceed the current SCOOP estimates.

How much you wanna bet this story will be a footnote in the next CLR presentation or a comment in the next earnings conference call?