Friday, May 16, 2014

Week 20: May 11, 2014 -- May 17, 2014

Top story of the week
North Dakota oil production likely hit one million bopd milestone in April
Director's Cut: another production record for North Dakota
Bakken production to hit 1.1 million BOPD in June -- EIA
Anschutz resurfaces in North Dakota; targeting the Tyler?
Random look at the Moberg wells in the Grail oil field
Triangle Petroleum acquires 46,100 Bakken acreage
Another huge EOG well in Parshall oil field
Another huge EOG well in Parshall oil field
Another huge EOG well in Parshall oil field
QEP has a huge well in Grail oil field
Stockyard Creek oil field infill density: 16 wells/drilling unit -- Samson Oil & Gas
Twenty-four (24) permits issued on one day
Well control incident at Ron Burgundy well northwest of Tioga; under control in less than 72 hours
SM Energy sells some non-core Bakken acreage
Number of active rigs in North Dakota continues to inch up
Random look at busy section in the Sanish
Result of North Dakota state oil leases

Bakken economy
Direct Williston-to-Houston, United Airlines
Construction for underpass under Williston bypass about ready to begin
Update on Northstar Center in Williston
The expanding Williston footprint

Human interest story: Bakken crude to East Coast refineries
What 1% increase in Bakken production means for EURs
Oil production in Mountrail & McKenzie counties exceeds total production from California or total production from Alaska

For investors only
National Oilwell Varco raises dividend 77%
Baker Hughes raises dividend; first time since 2008
CLR announces a private placement of $1.7 billion in unsecured notes
Three random observations from EOG's earnings conference call

Eight (8) New Permits -- The Williston Basin, North Dakota, USA

Price of oil at the crawler: $102.18

Increased dividends: National Oilwell Varco, from 26 cents to 46 cents/share; ups dividend by 77%; share price up over 1%. From Zack's:
National Oilwell’s management stated that this increase reflects the company’s confidence in its financial condition and future cash flow growth. As of Mar 31, 2014, the company had $3.7 billion in cash. Management believes that this strong cash flow position enabled it to declare the latest increase in payout. 

Notably, this is the second major dividend hike by the company. Last year, National Oilwell had doubled its payout to 26 cents. Such increases, if continued, would make National Oilwell a lucrative choice for value investors.
NOV has a huge complex west of Williston along US Highway 2.

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

Active rigs:

Active Rigs190190211172114

Eight (8) new permits --
  • Operators: EOG (4), Whiting (2), Enduro, CLR
  • Fields: Parshall (Mountrail), Lonesome (McKenzie), Mouse River Park (Renville), Indian Hill (McKenzie
  • Comments:
Wells coming off the confidential list were posted earlier; see sidebar at the right.

 SM Energy plugged two Madison/Duperow wells in the Grassy Butte that had been drilled back in 1986.

Fracking, The New Wunderkind

Wunderkind, noun: wunderkind; plural noun: wunderkinds; plural noun: wunderkinder
1. a person who achieves great success when relatively young. 
Fracking is not exactly young, having been around for more than 60 years, I guess, but it has achieved success beyond one's wildest dreams.

There will be a lot of articles written about the supposed risks of fracking and politicians will get a lot of money and support from activists trying to slow/stop fracking, but that will all be on the margins.

It turns out, surprisingly enough, fracking is sort of like a bell curve. Seventy-five percent of fracking is about the current oil and natural gas boom in the US. To the left of the middle of that bell curve are the activists who are trying to shut the boom down.

The question is, what is at the right? It turns out that forces even much more powerful (and surprising) than the activists to the far left are the innovators and entrepreneurs at the far right.

From Scientific American, July, 2013 (it was in the August, 2013, print edition), an overlooked, short, little article, it turns out that the US Department of Energy is looking into using fracking to unleash geothermal energy.

Cool. Ah, yes, the war is won; fill my glass high, the time has come ...

Yellow River, Christie
Generally speaking, Bakken crude oil shipped by rail does not erupt into balls of fire if the tank cars don't leave the rails....


May 20, 2014: again the obvious:
  • Bakken crude oil is similar to other North American light, sweet grades and does not pose a greater rail transportation risk than other transportation fuels, according to a report compiled for a North Dakota energy producers lobby group.
  • The study shows Bakken crude is more volatile than heavier oils such as from Canada’s tar sands, but is similar to light crudes produced elsewhere in the U.S., with characteristics that fall well within the margin of safety for the current tank car fleet.
  • The oil producers' study follows a report with similar results issued last week by a refining industry group.
The reason for increased explosions? Increased derailments. The reason for increased derailments? Increased CBR.

Original Post

Confirming the obvious, and something I've point out from the beginning, SeekingAlpha is reporting:
Oil and refining companies say it's mostly the railroads that are at fault: a probe into the derailment and explosion of a train in Lac-Megantic last year found that brakes weren’t applied correctly; a train that exploded in North Dakota in December crashed into a train that had derailed across the tracks; and the April explosion of a train carrying Bakken crude through Lynchburg, VA, may have been caused because sections of the track bed had been washed away by heavy rains.
By the way, whenever the mainstream media talks about this issue, they use boilerplate "... series of recent accidents..." and then can only come up with three CBR mishaps over the course of several years (since 2009 when CBR first began in the Bakken), and deaths due to CBR in only one case -- when the engineer failed to set the brake. I could be wrong, but I believe CBR is less dangerous than chlorine shipments. Even Ted Kennedy learned that bad things happen when you don't brake at the end of a bridge.

Random Look At Two Moberg Wells In Grail Field -- The Bakken, North Dakota

The Moberg Wells

The wells:
  • 32554, loc, QEP, Moberg 2-18T2HD, Grail, 
  • 32553, loc, QEP, Moberg 2-18T3HD, Grail, 
  • 32552, loc, QEP, Moberg 5-18BHD, Grail,
  • 32551, loc, QEP, Moberg -18T2HD, Grail,
  • 29451, 2,028, QEP, Moberg 20-21-29-28LL, Bear Den, t3/15; cum 350K 12/18;
  • 29450, 2,251, QEP, Moberg 17-19-18LL, Bear Den, t3/15; cum 415K 12/18;
  • 28622, 2,545, QEP, Moberg 18-13LL, Grail, t8/14; cum 251K 12/18;
  • 28131, 1,546, QEP, Moberg 2-18BH, Grail, t8/14; cum 273K 12/18;
  • 28130, 2,318, QEP, Moberg 1-18BH, Grail, t8/14; cum 330K 12/18;
  • 28006, 2,188, QEP, Moberg 17-16-21LL, Grail, t8/14; cum 378K 12/18;
  • 27993, 2,620, QEP, Moberg 1-20-21BH, Grail, t8/14; cum 424K 12/18;
  • 27985, PNC, Petro-Hunt, Moberg 159-94-20A-19-1HS, North Tioga, no production data,
  • 27984, PNC, Petro-Hunt, Moberg 159-94-20A-28-1HS, North Tioga, no production data,
  • 27823, 620, Petro-Hunt, Moberg 159-94-20B-29-1HS, North Tioga, t11/14; cum 156K 11/18;
  • 27649, 2,262, QEP, Moberg 2-17-16TH, Grail, t7/14; cum 368K 12/18;
  • 27143, 1,417, QEP, Moberg 1-22-15BH, Grail, t7/14; cum 327K 12/18;
  • 26234, 2,524, QEP, Moberg 2-18TH, Grail, one section, t11/13; cum 244K 12/18;
  • 22194, 1,248, QEP, Moberg 13-17/16H, Grail, t2/13; cum 473K 12/18;
  • 21052, IA/1,684, QEP, Moberg 15-22/15H, Grail, t12/11; cum 304K 5/18;
  • 19678, 2,186, QEP, Moberg 15-18H, Croff, t5/12; cum 385K 12/18;
  • 17924, 936, Newfield, Moberg 1-29H, Bear Den, t5/09; cum 259K 11/18;
Original Post
Maybe "they've" been doing this for quite some time, but I just noticed it in the past month or so: file reports providing narratives for drilling more than one well in the same file report. Obviously, these are wells on the same pad.

Here is another example:
  • 26234, 2,524, QEP, Moberg 2-18TH, Grail, one section, t11/13; cum 68K 3/14;
According to the narrative in the file report, Moberg 3-18BH and Moberg 2-18TH, located approximately 21 miles east of Watford City, are situated in Grail field. The intended targeted reservoir is the Middle Bakken Sandstone and the Three Forks Dolomite reservoirs of Grail field in the Williston Basin.

Moberg 3-18BH was spud September 17, 2013. TVD accomplished in 65.1 bit hours.
Moberg 2-18TH was spud October 1, 2013. TVD was accomplished in 87.5 hours.

Moberg 3-18BH: drilling of the curve began on September 13, 2013 (sic).
Moberg 2-18TH: drilling of the curve began on October 8, 2013.
My hunch: the typographical error should correct with a curve beginning on September 23 for Moberg 3-18BH.

Moberg 3-18BH: lateral operations began October 23; TD reached October 24 (sic). The lateral took 28.6 bit hours.
Moberg 2-18TH: lateral operations began October 14th; TD reached October 17; 51 bit ours.

Both horizontals were short laterals.

Result of the Three Forks Moberg well? Huge. Remember: this is a short lateral, something we don't see much of any more in the Bakken:
  • 26234, 2,524, QEP, Moberg 2-18TH, Grail, one section, t11/13; cum 68K 3/14;

 This is going to be an incredible field before it's all over. Many of the wells in this screen shot are "Moberg" wells.

I used to track "Families" of wells but I'm not sure how useful that will be going forward; it is simply overwhelming. However, until I decide whether to continue tracking "Families" of wells, I will add "Moberg" to the list.

Friday, May 16, 2014; OPEC Needs To Increase Ooutput; Natural Gas Stockpiles Depleting? Housing Stats Bullish; Oil Trades (Again) Over $102

Peak oil? Global recovery? OPEC needs to boost output. According to an agency watchdog, OPEC needs to boost output. The views are in contrast with concerns just a few months ago that OPEC may be overproducing and risked facing an oil glut. Specifically, recent forecasts "call for a significant rise in OPEC production from current levels for the second half of the year." This comes on top of a recent rebound in Iraqi and Saudi production. One word: China. Second word: Interesting.

Natural-gas prices jumped more than 2% on data that showed producers added less gas than expected to stockpiles. A reminder: the Chinese-Russian natural gas pipeline deal could have Russian delivering almost twice as much natural gas to China EACH YEAR for the next 30 years (beginning in 2018) as the US has in ALL its natural gas stores. Reported previously. Sanctions working out pretty good well, huh?

More global warming? Snowed in Illinois overnight; could see a bit of snow in Chicago this weekend. 

Another tough day on Wall Street for bulls, but oil traded over $102 (again) and WMB traded at a new high. 


Active rigs:

Active Rigs190190211172114

RBN Energy: Marcellus/Utica pipelines.
Many of the largest pipeline/midstream players are involved in this latest build-out of Marcellus/Utica gas pipeline capacity. They include REX co-owners Tallgrass Energy Partners, Sempra US Gas & Power and Phillips 66, which recently (May 7) closed an open season soliciting interest in moving up to 1.2 Bcf/d of Marcellus/Utica gas east-to-west through REX’s Zone 3 (eastern Ohio to eastern Missouri) starting in June 2015.
Others include TransCanada, Kinder Morgan, Dominion Transmission, Spectra Energy, Boardwalk Pipeline Partners, and Williams. Taken together, their projects—most slated for completion in the 2015-17 period—will provide more than 9 Bcf/d of new take-away capacity, ease constraints that have hampered gas-production growth in the Marcellus/Utica, and open big, new, long-term markets hundreds of miles away.
In the next episode of this series, we will begin an in-depth look at the new round of pipeline projects, and consider how they will help take Marcellus/Utica gas production to the next level.
The Wall Street Journal

The chess game continues. When Putin touches down in China next week, it will signal the beginning of the global power shift. All under Obama's watch. All due to dithering. 

Big, bad Wal-Mart does not oppose hike in minimum wage. Meanwhile Government Motors recalls
another 2.8 million vehicles.

Housing Starts In April

USA Today is reporting:
Home building surged in April as warmer weather helped builders break ground on new homes at the fastest pace this year.
Housing starts rose to a seasonally adjusted annual rate of 1.07 million, up from 947,000 in March, the Census Bureau said Friday.
Economists had predicted a rate of 980,000, according to the median forecast in Action Economics' survey.
The gains came largely from multi-family construction, where starts rose almost 40% from March. Single-family starts were up 0.8% to a annual rate of 649,000.
Building permits issued for home construction, a gauge of future activity, rose 8% to a seasonally adjusted annual rate of 1.08 million. April was the third month in a row for permits have topped a 1 million annual rate. But permits for single-family homes were only up 0.3% to an annual pace of 602,000 last month.
Housing starts improved from March in every region.
A reader noted my error in a comment I made regarding this post (thank you to the reader). Note: there are two metrics being tracked in this news story: housing starts and permits. Two different metrics.