Saturday, February 22, 2014

Williston Exploration Assumes Operator Responsibility For Chesapeake Hutzenbiler Well In Stark County, Will Target The Tyler Formation; Update On Barnes & Noble (Bookstore, Not A Well)

A reader noted that Chesapeake transferred operating responsibility for its Hutzenbiler well in Stark County to Williston Exploration. The reader's thoughts from various sources:
Chesapeake cored the Tyler and then left North Dakota. Williston Exploration cut a deal with Chesapeake and is going for a Tyler well. No indication yet whether it is a horizontal or a vertical. The well is about 8 miles north of the Rundle Trust location.
It looks like the reader is correct. Look at the ticket:
NDIC File No: 22223     API No: 33-089-00680-00-00     CTB No: 122223
Well Type: OG     Well Status: AB    Status Date: 6/10/2012    Wellbore type: Horizontal
Location: SWSW 9-137-99  
Current Well Name: HUTZENBILER 9-137-99 A 1H
Total Depth:       Field: WILDCAT
Spud Date(s):  2/16/2012
Casing String(s): 9.625" 2620'   7" 9796'  
Completion Data
   Pool: MADISON     Perfs: 9796-13950     Comp: 6/10/2012     Status: F     Date: 6/14/2012     Spacing: W2
   Pool: THREE FORKS     Status: PNC     Date: 6/10/2012
   Pool: TYLER     Status: AR     Date: 2/21/2014
Cumulative Production Data
   Pool: MADISON     Cum Oil: 419     Cum MCF Gas: 1403     Cum Water: 62116
Production Test Data
   IP Test Date: 6/14/2012     Pool: MADISON     IP Oil: 0     IP MCF: 0     IP Water: 471
Summary: from the well file, it looks like this was an exploration well for Chesapeake, drilling vertically about 10,000 feet which means the Three Forks was the target; the drilling took place February/March 2012 and declared PNC on 6/10/2012; at the same time, the well appears to have been re-entered and the Madison tested. A small amount of oil was recovered from the Madison but placed on the AB list about that same time.  Fast forward to February 21, 2014 (yesterday) and the well's status is AR (re-entry) and the target is the Tyler. It looks like the reader's sources were correct: it will be a re-entry targeting the Tyler. The Tyler formation is not as deep as the Bakken. In fact, the Tyler was the kick-off point for the curve when CHK was drilling to the Three Forks horizontal. Disclaimer: this is all beyond my comfort zone, but this is how I interpret what I am seeing. I may be way wrong on some of this.
Barnes & Noble

At the beginning of the year I posted a very long note which included my advice for Barnes and Noble (yes, pretty presumptuous of me, considering I have no degree in business). At this link, scroll down for my advice. It is interesting to see that someone sees value in Barnes and Noble.
Private investment management firm G Asset Management said on Friday it has made a proposal to acquire a 51-percent stake in either Barnes & Noble or in the Nook digital business. 
The proposal for Barnes & Noble would be for $22 a share, which would value the chain at $1.32 billion. The current offer is a sweetened version from G Asset Management's proposal in November, which valued the bookstore chain at $20 a share.
Alternatively, G Asset Management has proposed to acquire 51 percent of the Nook segment, valuing the segment at $5 per share. 
I don't get the alternative, 51 percent of the Nook segment.  I get the 51-percent stake in Barnes & Noble itself; there are several possibilities: a) the investor sees opportunity to upgrade the brand; b) the investor sees how "badly" discounted the last big box bookstore in America is; c) the property alone is worth more than the brand. Convert all the stores to a discount women's clothing store, for example, like they did with Border's or sell to Apple for new retail stores.


 Oven-baked flour clay bunny. -- Olivia, age 7

The Road To New England

For background to "the road to New England," go to the bottom of the blog, and click on the tag, "Road_To_New_England."

There was an interesting piece over at SeekingAlpha today: twelve reasons why the sky-high price of natural gas won't last. Maybe, maybe not. But this is not reassuring. The government is now projecting, in a story dated February 14, 2014, that more coal-fired power plants will be retired by 2016 than have been scheduled

President Obama, in his war on coal, is putting the nation on track to be a nation more and more dependent on one source of fuel for electricity: natural gas.

Disclaimer: this is not an investment site. Do not make any investment decisions based on what you rad here or what you think you may have read here, but with extreme weather, as predicted by the warmists, resulting in colder winters (electric heaters) and hot summers (air conditioners), natural gas companies seem to be sitting really pretty. This is going to be very, very interesting, to watch this play out. 

At the linked story look at the rate of the projected cumulative retirements of coal-fired generating  capacity between 2013 and 2016. It is practically straight up.

For Americans this has to be absolutely scary; there is no way that alternative sources of energy can easily pick up the difference. Look at the rate, practically straight up. By the end of next year, it was originally projected that 30 gigawatts of coal-fired generating capacity would have been retired under the war on coal; now that has doubled to 60 gigawatts, the anticipated end state (where the line flattens out) in one two years, and the end state almost one and a half times the original projection. The US won't run short of electricity-generating capacity: it will simply be more expensive.

Again, this is not an investment site, but .... 

Way off topic, but I see three major Obama legacies:
  • a nuclear arms race in the Mideast
  • a US dependent on one fuel for electricity (natural gas)
  • a federally-defined 30-hour work week
China will find US coal relatively inexpensive and relatively accessible.

Did Bloomberg Get Snookered? Or Is This Bloomberg's New Source For Energy News?

I had not seen a reference to InsideClimate in the past two years, I don't think. When I first started blogging, I came across articles by InsideClimate  reporters fairly often. One or two of the North Dakota regional newspapers would print/re-print stories so often from InsideClimate I the reporters were of staff at all the newspapers. I wonder if folks remember this post: "?"

InsideClimate is written by activist environmentalists for the activist environmentalist community. So, Don was quite surprised to see this story under the Bloomberg banner. I am, too. I am somewhat dismayed if the truth be known. This does not instill confidence in Bloomberg.

Going Bananas Over Radiation


January 6, 2018: update. Still taking ND radioactive waste to eastern Montana.

March 31, 2014: it turns out that Montana allows facilities to accept waste with radioactivity levels up to 30 picocuries (six times that allowed by North Dakota). For that reason, a waste facility just across the state line is doing great business taking radioactive waste from the North Dakota Bakken. The is reporting:
While North Dakota figures out what to do with radioactive waste from oil production, a Montana operator hopes it doesn’t change a thing.
Ross Oakland, owner of Oaks Disposal northwest of Glendive, Mont., is doing pretty good business taking oil field waste from North Dakota, because his operation is handily located at the western edge of Bakken operations, and also because Montana’s rules allow his facility to take radioactive waste up to 30 picocuries per gram.
Because Oakland saw an opportunity ripe for the taking, he’s now the first operator to take advantage of Montana’s new low-level radioactive waste program.
See original post below: bananas "typically" have 520 picocuries per 150 grams (or 3.5 picocuries/gram). 

March 13, 2014: another story of illegal dumping of radioactive "socks" reported by ThinkProgress:
A heaping mound of black trash bags stuffed with radioactive nets that strain liquids during the oil production process — commonly known as “oil filter socks” — has been found in an abandoned North Dakota gas station, state officials confirmed Wednesday, in what may be the biggest instance of illegal oil socks dumping the state has ever seen.

Police last week discovered the illegally dumped oil socks piled throughout the old gas station building and attached mechanic garage in the small town of Noonan, state Waste Management Director Scott Radig told ThinkProgress. The bags were covered in a layer of dust, Radig said, meaning they had probably been sitting in the building for some time.
The 4,000-square-foot building is owned by a felony fugitive named Ken Ward, who Radig said likely did independent work for the state’s booming oil and gas industry.

North Dakotan soil has a limit of 5 picocuries (see original post) — the standard measure for the intensity of radioactivity — of radium per gram of soil in order to be considered not radioactive. The oil socks, Radig said, are typically in the range of 10-60 picocuries of radium per gram. Though the bags haven’t been taken to a laboratory for examination yet, Radig said an initial reading showed that the oil socks were “above background, so they are slightly radioactive.”
Original Post

The folks responsible for the mess in the picture accompanying a Bismarck Tribune story need to clean up their act, but the reporter needs to put things in perspective. I have no idea the significance of "5 picocuries."

But this should help:
A banana equivalent dose is a concept occasionally used by nuclear power proponents to place in scale the dangers of radiation by comparing exposures to the radiation generated by a common banana.
Many foods are naturally radioactive, and bananas are particularly so, due to the radioactive potassium-40 they contain.
The banana equivalent dose is the radiation exposure received by eating a single banana.
Radiation leaks from nuclear plants are often measured in extraordinarily small units (the picocurie, a millionth of a millionth of a curie, is typical).
By comparing the exposure from these events to a banana equivalent dose, a more intuitive assessment of the actual risk can sometimes be obtained.
The average radiologic profile of bananas is 3520 picocuries per kg, or roughly 520 picocuries per 150g banana.
The equivalent dose for 365 bananas (one per day for a year) is 3.6 millirems.
A chest x-ray is about 10 millirems.

According to the US government: in general, a yearly dose of 620 millirem from all radiation sources has not been shown to cause humans any harm.

Now that I have a bit of science behind all this, it puts the Bismarck Tribune story in perspective: it's inappropriate; the state will fine the guilty; and life will go on.
Brad Torgerson, with the state Health Department’s waste management division, said the team determined that radiation levels “do not appear to present any public health hazards.” He said the company, RP Services, of Riverton, Wyo., was told to put the waste in proper containers and submit a plan for cleanup.
The article doesn't seem to say how many picucuries were found in one of the representative containers (called a "sock") but did note this:
Schreiber said his operators have tested filter socks “so hot our meters are maxed out” at readings equivalent to 1,000 picocuries (the equivalent of two bananas).
"Maxed out" at readings equivalent to 1,000 picocuries. Remember that, the next time you buy a banana. A typical banana has 520 picocuries of radiation.

This is all beyond my comfort zone; I may have misunderstood something but if anything seems wrong to you, go to the linked sources. While chomping on a banana.

Week 8: February 16, 2014 -- February 22, 2014

Bakken production: one million bopd as of February 10, 2014

The Bakken is different, but we already knew that
Pad drilling in the Bakken
Impact of the unconventional oil revolution: comparing Texas and North Dakota

Temple oil field updated; Sequel Energy
Three more incredible EOG wells; one with 160K In Less Than Five Months
Random update on the seven rigs in Parshall oil field

Random update on the MRO wells targeting the Tyler
CLR's 14-well Atlanta pad should be reporting soon
Mike Filloon on Emerald Oil (same link as below)
Leasing in McKenzie County: $27,300/acre with a 22% royalty
OXY USA is targeting asset sales from North Dakota to the Persian Gulf

New completions techniques in the Bakken -- Mike Filloon (same link as above)

BNSF to buy its own fleet of 5,000 new crude oil tank cars with safety features that exceed stds

The farmers/ranchers understand the slippery slope of "extraordinary sites"

North Dakota polls #1 in "happiness" -- Gallup Poll
The price of oil melts up; near $104

Random photo of HRC's Berg trust Federal well
Aerial view of refinery west of Dickinson under construction -- previously posted
Oil field in California compared to oil field in North Dakota
Random photo of two KOG Smokey wells on one pad

For investors only
Enerplus recaps 2013
Motley Fool likes Oasis

Back to square one on the Nebraska Keystone
Enbridge's Alberta Clipper delayed by US government; State Dept wants a do-over

Episode 3: The Chase

Saturday Morning -- February 22, 2014 -- For Investors Only; Musings From Rigzone On Investing In The Oil Patch; Musings On The Keystone XL

This is a nice way to start out a Saturday morning -- a Rigzone essay on the restructuring activity going on in corporate oil and natural gas companies.

Some excerpts:
Rethinking the oil company business model is not a new phenomenon, and to a certain degree one can attribute some of the recent corporate moves to the growing and perceived success of the American shale revolution. In 2011, ConocoPhillips elected to split its company into an exploration and production-focused company and a downstream-focused company. The split was completed at the end of April 2012 and new management took over running the businesses. The split enabled the E&P business to focus its efforts on growing its liquids output following the company’s untimely investment in dry natural gas with its 2005 purchase of Burlington Resources. That deal boosted ConocoPhillips’s gas reserves by 88% and its gas production by 77%, making the company the second largest natural gas producer behind BP Ltd. At year-end 2013, ConocoPhillips reported that its organic oil and gas replacement ratio had reached 179% of last year’s production. It also highlighted that production in the Eagle Ford, Bakken and Permian, three attractive liquids-rich plays, had increased by 31% last year. These three areas are highly favored by investors who boost the value of companies active in the plays.
Three majors: XOM, Royal Dutch Shell, and CVX; two smaller majors: COP, and MRO.
Over the two-year period ending February 2, 2014, the Standard & Poor’s 500 Index produced the highest return to shareholders. While underperforming for most of the first half of 2013, ConocoPhillips actually matched the S&P 500 performance by the end of the year only to drop as we entered 2014. The two worst performing stocks for the entire period were Marathon and Royal Dutch Shell. Their performance convergence by early 2014 was due to the extended slide by Marathon from late fall and the rise in Shell’s share price toward the end of the year as shareholders turned more optimistic about the company’s future under its new leader. The shares of ExxonMobil and Chevron converged at the end of 2013 as ExxonMobil’s share price was boosted by the revelation of a significant new investment by Warren Buffett’s Berkshire Hathaway. Up until that revelation, Chevron had outperformed ExxonMobil for virtually all of 2013.
A mid-December Lex Column in the Financial Times asked the question “Why own shares of Big Oil?” The writer offered an explanation – the integrated model generates enormous amounts of cash, and implicitly attractive organic returns.
“What matters now is to rein in capex and start focusing on returns. This will happen in two ways. One is by asset disposals – 2014 could see a flood of oil and gas assets come on the market. The other is through a clampdown on capex and greater control of costs.” It is rapidly becoming clear that both of these strategies will be executed this year and likely for a while longer.

At the same site, there is a long analysis of what the recent Nebraska ruling means for TransCanada's Keystone XL 2.0 North: a) breathing room for President Obama; and, b) unlikely that the Nebraska PSC won't rule on the new route for at least seven (7) more months. Yes, seven more months.
Nebraska judge Stephanie Stacy struck down a state law on Wednesday that allowed Governor Dave Heineman to approve the Keystone pipeline's path through the state. TransCanada may now have to submit an application to the Nebraska Public Service Commission, and the agency's decision could take seven months or more. Stacy's ruling has also been appealed by the state's attorney general on behalf of Governor Dave Heineman, but it is uncertain how long the legal process will take.

There is nothing in the Nebraska ruling that prevents the State Department from continuing the 90-day national interest determination that is now in its third week. Eight federal agencies including the Departments of Defense, Commerce and Transportation and the Environmental Protection Agency are working with the State Department to determine whether Keystone would benefit the U.S. economy and energy security. Any delay by the Obama administration would more likely come after the agencies have made their assessment, analysts said. Secretary of State John Kerry is expected to make a recommendation toObama but has no firm deadline to do so.
Obviously the legal maneuvering will take longer than the 7-month waiting period for the PSC to act.