Friday, June 20, 2014

Curiouser And Curiouser -- Getting Closer And Closer: The "Sleeping Giant" -- The Natural Gas Play In North Dakota (No, This Is Not The Bakken) -- June, 2014

I track the Strata-X wells here

Operations have commenced, according to the company's press release:
  • Drilling operations on the Rohweder #1-11 well anticipated to start within a week.
  • First test of Company's 120,000 net acre shallow gas project.
  • Release of the Sleeping Giant Primer Presentation
The directors and management of Strata-X Energy Ltd. are pleased to announce that the Company started operations on the vertical Rohweder #1-11 well located in Emmons County, North Dakota, USA. 
Final location work is currently being completed with the rig mobilization anticipated to begin on or around June 20, 2014. The Rohweder #1-11 well is the Company's first appraisal well in the Sleeping Giant Gas Project

Strata-X is the operator of the well and retains a 100% working interest in it. Overall, the Company has acquired exploration rights to 120,000 mostly contiguous net acres in the Sleeping Giant Gas Project.
Back on December 11, 2013, just a few months ago I posted a link to this story: the "Sleeping Giant" in North Dakota, east of the Bakken.

"Anon 1," who hasn't sent a comment in a long time, alerted me to the company's most recent presentation. At the link, there are two presentations: the "USA" presentation has the "Sleeping Giant" update.

A huge thank you to "Anon 1."

More from the linked press release:
The Sleeping Giant Gas Project is targeting biogenic natural gas from the prolific Upper Cretaceous Niobrara formation in the Williston Basin, North Dakota. The Niobrara Formation is a significant petroleum system in the USA and has produced over 1 TCF of natural gas from shallow accumulations including the project's geologic analogue, the Beecher Island field in the Denver-Julesburg Basin (Colorado, USA). 
To date, Beecher Island field has produced over 101 Bcf of natural gas and is expected to ultimately produce 157 Bcf within an area spanning approximately 32 square miles. A field analysis done by Walt King shows that reserves per well average 650,000 Mcf on 160 acre spacing in the Beecher Island Gas Field. It is expected that the Sleeping Giant Gas Project could yield similar economic resources per well due to similar geologic conditions. 
There has been relatively little drilling in the Sleeping Giant Gas Project area to date, with most wells targeting the deeper Cretaceous and Paleozoic targets. Sub-commercial natural gas has been produced outside the mapped closure on the large structures in the project area, with the crestal regions of the structures remaining untested within the targeted zone. The Rohweder 1-11 well will test the Beaver Creek Prospect structure, which is just one of the 26 prospects and leads that have been identified in the Sleeping Giant Gas Project.
The Company anticipates that drilling and casing operations on the Rohweder #1-11 well will be completed by early next week. Thereafter, information obtained during the drilling of the well will be used to design and optimize a completion stimulation of the well. The drilling permit for the Rohweder #1-11 well is one of four permits granted to Strata-X by the North Dakota Industrial Commission. The other drilling permits held by Strata-X on the Sleeping Giant Gas Project are the Aberle #1-31 and Just #1-24 wells located in McIntosh County and the Hoff #1-32 well located in Emmons County, North Dakota.

Solar Energy For EOR In The Oil Patch; WTI Crude Oil Closes At $107 At Iraqi Refinery Rages

Necessity if the moth of invention, they say.

Rigzone is reporting:
U.S.-based Glass Point Solar Inc.’s solar-powered enhanced oil recovery technology, the Enclosed Trough solar field, completed at the end of January its first year of operation at a field in southern Oman for Petroleum Development Oman (PDO).
The 7 MW pilot project, which began operations in December 2012, generates emission-free steam that feeds into existing thermal enhanced oil recovery operations at the Amal West oil field.
The unit exceeded all the targets set for its first year of operation – while experiencing all kinds of conditions at the site — including above contract energy output and availability, and achieving uptime of 99.8 percent
The corrosive atmosphere and sandstorms in the Middle East present unique challenges for the oilfield environment. These challenges have previously made it difficult for solar energy to play a role in such an environment.
Pretty interesting, huh?

Glass Point see potential for their technology in southern California
In 2011, Glass Point commissioned the world’s first EOR project at Berry Petroleum’s 21Z lease in Kern County, California, but shifted its focus on deploying its technology in the Middle East due to decline in U.S. natural gas prices due to the shale boom.
However, Glass Point is now in discussions with some operators to deploy its solar EOR technology, thanks to changes in the market and state regulations, John O’Donnell, vice president of business and operations for Glass Point, told Rigzone in an interview.
O’Donnell sees parallels between California and Oman, where it has successfully demonstrated its solar EOR technology. Approximately 45 percent of the crude oil consumed in California is produced in state. About half of California’s oil production comes from thermal EOR. Over 200 MMBtu are used each year to produce steam for EOR operations in California, which accounts for approximately 30 percent of California’s natural gas.
While Glass Point can’t replace 80 percent of the gas used in EOR as it can in Oman, it could replace more than 50 percent of the gas consumed in solar EOR in California under the right economic conditions. Under today’s market conditions, Glass Point’s solar steam cost corresponds to $.50/MMBtu of natural gas. O’Donnell noted that oil producers that adopt solar EOR in California can see an internal rate of return of more than 25 percent.

Meanwhile, in another part of the desert, Rigzone is reporting the battle for the refinery rages, and oil closes at $107.


Rigzone reports that Statoil continues to have a run of bad luck hitting a dry hole off-shore Norway. Sort of puts the Bakken in perspective.

Six (6) New Permits -- The Williston Basin, North Dakota; June 20, 2014; Burlington Resources With A Couple Of Nice Wells

Active rigs:

Active Rigs189187211173129

Six (6) new permits --
  • Operators: QEP (3), Oasis (2), Whiting
  • Fields: Blue Buttes (McKenzie), Grail (McKenzie), Robinson Lake (Mountrail), Park (Billings
  • Comments:
Wells coming off the confidential list today were posted earlier; see sidebar at the right.

Six (6) producing wells completed:
  • 25831, 1,872, BR, Sunline 21-1TFH-4SH, Clear Creek, 4 sections, t6/14; cum --
  • 25923, 803, Hess, EN-Jeffrey A 155-94-2734H-4, Alkali Creek, 4 sections, t5/14; cum --
  • 26091, 1,723, BR, Big Bend 21-2MBH, Camel Butte, t5/14; cum --
  • 26719, 777, Hess, EN-State C-156-93-1615H-5, Alger, 4 sections, t6/14; cum --
  • 27229, 734, Triangle, Rowe 150-101-1-12-5H, Rawson, t6/14; cum --
  • 27230, 898, Triangle, Rowe 150-101-1-12-6H,  Rawson, t6/14; cum --

It Looks Like Israel Got A Pretty Good Deal On That Kurdish Oil; Pain At The Pump

It looks like Israel got a pretty good deal on that Kurdish oil. A reader sent me the link. I replied:
Very, very interesting. Sometime ago I started a page on my blog for "The Big Stories" to track some of these major changes in alliances due to energy. This is a pretty big story: one might be starting to see a Kurdish-Turkish-Israeli alliance. Some time ago Turkey and Israel got a bit close diplomatically but the fundamentalists in Turkey will create problems for Israel-Turkey. The story points out that Israel is growing more distrustful of the US as President Obama seems to be drawing closer to Iran in the past few months.
Those sanctions? Really?

Meanwhile, $5 Gasoline

Yahoo!Finance is reporting:
There was a burst of media attention this week around the fact that today’s national average price of $3.69 per gallon for unleaded regular is the highest for this time of year since the grim economic days of 2008, as pump prices have edged higher with world oil prices amid violent unrest in Iraq. Yet better average gas mileage, higher wages and a dramatic decline in miles driven since 2008 means a further climb in gas prices probably wouldn’t pinch consumers noticeably unless it reached the new “pain point” of about $4.25 a gallon. 
[Of course, in many parts of the country prices already far exceed $4. This analysis is based on national average prices, which are the key to gauging broad economic effects.]
Jack Ablin, chief investment officer of BMO Private Bank in Chicago, attempts to integrate gas prices, fuel efficiency and prevailing wages to compare the impact of gasoline prices on households across the decades. To do so, he calculates how many miles of driving could be “bought” with the national median hourly wage. He estimates that, since the 1970s, gasoline prices have inflicted serious pain on consumers only when the average hourly wage can purchase fewer than 150 miles of driving. 
An hour’s work earned less than 150 miles on the road for much of 2007 and 2008, as the recession took hold amid record-high energy costs. From 1979 through 1982 – the classic “oil shock” years – things were considerably worse. At one point around 1980, an hour’s wages typically got you 100 miles (in a far thirstier vehicle) on the road. In the late ‘90s, the oil bust tax cut meant drivers “earned” up to 270 miles in an hour. 
As of this week, Ablin figures, “motorists can travel 168 miles” on the gross amount earned through an hour of work.  Assuming the median hourly wage today of $20.65 and typical light-vehicle gas mileage of 30 miles per gallon, that 150 mile threshold gas price sits at a national average price of $4.13 a gallon – or about 12% above current prices. This implies the U.S. economy still has a decent cushion against a substantial drag on consumer vitality – especially if recently emerging signs of wage growth carry forward.
The other thing to consider is the "delta" between $2.99 (okay, $3.00/gallon) and $4.00/gallon).

At 12,000 miles/year divided by 30 mpg = 400 gallons. At $3.00 / gallon, we have $1,200. At $4.00 / gallon, we have $1,600 over 12 months or an extra $33/month in gasoline expenses. If one drives more than 12,000 miles / year and gets less than 30 mpg, that's one's choice in most cases. There are many folks in the big urban cities on the east coast that do not even own a car, or very seldom drive their car. 

Folks working minimum wage jobs should live close enough to work to minimize their driving expenses.

For Traders Only -- June 20, 2014; CVX And MRO Could Be A "Marriage Made In Frack Heaven" -- Motley Fool

Trading at new highs: APC, APA, BHI, BK, BCEI, CSX, CFN, CHK, CVX, COP, CLR, DVN, EOG, ETE, ERF, XOM, Gensee&Wyoming, HAL, HP, HES, KOG, MRO, NOV, NFX, NBL, NSC, OXY, PSX, SD, SLB, TSO, WPX, WLL.

Motley Fool had an interesting suggestion  earlier today: CVX and MRO could be a "marriage made in frack heaven." Not their exact words.

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. 

Whiting's Corporate Presentation, June 2014

I have not looked at  WLL corporate presentation in a long time; perhaps I have and have just forgotten. Whatever.


Let's compare WLL acreage in the Williston Basin according to their June, 2014, corporate presentation with their net acreage back in 2012.

June, 2014:
  • Net Bakken acreage (ND/MT): 683,804 
  • Sanish/Parshall Prospect: 82,445
  • Lewis and Clark: 117,590
  • Pronghorn: 125,630
  • Hidden Bench: 37,314
  • Tarpon: 6,265
  • Starbuck: 42,932
  • Missouri Breaks: 65,869
  • Cassandra: 13,949
  • Big Island: 137,559
Back in 2013 or as indicated:
  • Net Bakken acreage (ND/MT): 697,259, 2Q12
  • Sanish / Parshall Prospect: 82,400 in June, 2013
  • Lewis and Clark: 134,034, July, 2013
  • Pronghorn: 128,596, July, 2013
  • Hidden Bench: 28,832, June, 2013
  • Tarpon: 6,258, June, 2013
  • Starbuck (in Montana, west of Williston): 89,815, July, 2013
  • Missouri Breaks (in Montana, west of McKenzie County): 57,526, July, 2013
  • Cassandra: 13,951, July 2013
  • Big Island: 125,795, July, 2013
It appears Whiting sold a fair number of acres in Montana, Roosevelt County, west of Williams County in North Dakota (west of Williston)

  • Missouri Breaks, Montana: Skov 31-28-3H, 1,607 boepd (WLL Field Records) coiled tubing frack
  • Hidden Bench: cemented liner completions 15 wells; average IP: 2,643 boepd
  • Cassandra: Kaldohl 11-3H, 1,930 boepd (WLL Field Record); cemented liner
For newbies: remember when we got excited about IPs of 750 in the Bakken back in 2007?
Completion methods
  • older method, sliding sleeve, 30 stages, one frack per port = 30 potential entry points
  • newer method, cemented liner completion, 40 stages, 3 perforation clusters per stage = 120 potential entry points
Comparisons: the Skov pad in Missouri Breaks
  • all four wells in same drilling unit; parallel each other; same length
  • Skov 31-28-1H, open, sliding sleeve, 30 stages, 30 entry points: 927; cost: $7.90 million
  • Skov 31-28-2H, cemented, P&P - 3 clusters/stage, 30 stages; 90 entry points: 1,072; cost: $8.10
  • Skov 31-28-4H, cemented, P&P, 5 clusters/stage, 30 stages; 150 entry points, 1,219; cost: $8.10
  • Skov 31-28-3H, cemented, coiled tube, 60 stages + 5P&P; 85 entry points; 1,607; cost: $8.80
  • Missouri Breaks: 8 wells / drilling spacing unit
  • Cassandra: 12
  • Sanish: 15
  • Hidden Bench: 16
  • Pronghorn: 6
  • Tarpon: 12
In the Pronghorn, they currently are drilling three wells in that formation; high density infills is a possibilty, playing a horizontal between each existing horizontal for a total of 6 horizontal wells in the Pronghorn
  • 1Q14: $80.00/boe
  • 16: lease operating expense
  • 8%: production taxes
  • 5%: G&A
  • 3%: exploration expense
  • EBITDA: 68% ($54.31/boe)
  • 2009: $576 million
  • 2010: $1.016 billion
  • 2011: $1.315 billion
  • 2012: $1.472 billion
  • 2013: $1.863 billion

Why Schlumberger Is Up Almost 2% Today

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

XOM has started to pull some of its workers out of Iraq, but Schlumberger, according to news reports, has not....yet.

But that's not the story.

I see SLB is up almost 2% today, trading at a new high. There at least two things to consider.

First, there is no question that an uncivil war in Iraq just might possibly perhaps to some extent interfere with oil production from Iraq. It's possible by the end of the day the Sunnis and Shi'ites, with the ISIS mediating, will sit down on the banks of the Euphrates and call the whole thing off, and simply go with Mr Obama's suggestion to call for "early elections" which the mainstream mess is now referring to as "regime change." I think I read somewhere that Iraq used to account for up to 60% of OPEC's crude oil exports. Saudi Arabia, days before the horde from the north swept through Mosul and Tikrit, said SA had no plans to increase production (more accurately, OPEC would not increase production) despite the IEA suggesting the global demand for oil will increase by the end of the year; the IEA almost begged OPEC to increase production. This opens the door for increased drilling elsewhere in the world, and that opens the door for oil service companies like Schlumberger, and may account for SLB trading at new highs, up almost 2% in early trading.

The second thing to consider is this. If the uncivil war is the best last chance for the Kurds to "go rogue," they might just do it. The word on the Muslim street is to leave the Kurds alone. As unlikely as it seemed ten years ago, there are indications now that Turkey will ally with the Kurds (as long as the Kurds observe existing international borders with Turkey, at least to some extent) and a) give the Kurds a safe conduit for their oil; and, b) militarily provide the Kurks protection on their flanks (and rear). By the way, the Turkish/Kurdish border issue gets more ink than it probably deserves: has anyone really looked at the border area between Turkey and northern Iraq? It's the Swiss Alps without the trees, the tourism, and the banks. It does have the remains of Noah's Ark, but it's inaccessible to tourists, sitting near the top of some remote mountain.

The Kurds could use this opportunity to go flat out, "ears pinned back," as Harold Hamm would say, to develop their oil fields ... again with a lot of help from westerners, like Schlumberger.

And, why oh why would the Kurds need to increase their oil production? Fox News answered that question yesterday: Kurds, outgunned by fanatical ISIA, hope looming Baghdad battle buys time for weapons upgrade.

Maybe if we're lucky, we'll get an analysis from Motley Fool later today explaining why SLB is up today.

Hey, by the way: quick -- what religion "are" the Kurds? From wiki:
As a whole, the Kurdish people are adherents to a large number of different religions and creeds, perhaps constituting the most religiously diverse people of West Asia.
Traditionally, Kurds have been known to take great liberties with their practices. This sentiment is reflected in the saying "Compared to the unbeliever, the Kurd is a Muslim."
The religion of pragmatism.

Friday, June 20, 2014

Active rigs:

Active Rigs189187211173129

RBN Energy: making the case for US LNG exports to the UK.

The Wall Street Journal

Mr Obama okays "boots back on the ground"in Baghdad -- to protect the perimeter. This reminds me of siege warfare between King Stephen and the future Henry II back in the 12th century.

Kurd's takeover of Kirkuk strengthens hand for independence.

Extremists occupy Hussein's chemical weapons facility -- you know, the one CNBC, NPR, ABC, CBS, and a dozen other mainstream media outlets said did not exist.

Gold posts biggest daily gain in nine months.

The S&P eked out a second straight record yesterday. Today could make it a trifecta: the market is up about 30 points; oil up a bit.

The Los Angeles Times

This is the top story, front page today out on the west coast: "New Jersey (east coast) stumbles in post-Sandy recovery." What that has to do with California, I have no idea.

the next story, and I cannot make this stuff up: two mountain lion sightings in Burbank prompt police alert.

That's enough for me.