Tuesday, October 14, 2014

KOG's P Bibler Wells Have Been Updated -- October 14, 2014

Link here.

Rig Counts For 3Q14

From Baker Hughes via Bakken.com:
Well counts increased most in the Williston basin, up 45 wells or seven percent since the second quarter. Also seeing increases are the Denver Julesburg-Niobrara and Cana Woodford basins. Decreases in well counts were seen in the Eagle Ford, Ardmore Woodford and Mississippian basins. 
Also from Bakken.com -- top six Williston restaurants (poll)
  • Basil Sushi Bar and Asian Fusion
  • Three Amigos Restaurant
  • Williston Brewing Company
  • Wildcat Pizzeria
  • The Williston Restaurant
  • Bunny's Burger and Brew
Let the comments begin. I can't argue with that selection. For a sushi restaurant to be #1 -- pretty impressive. Buffalo Wings, Chili's, Fuddruckers didn't make the short list which is surprising in itself; Willistonites have very, very good taste.

A Credible Source Suggests The Site Selected For The $4 Billion Plastics Plant Is "Bismarck"

I just got a very, very nice note suggesting that the site the company has selected for the new plastics plant is "Bismarck." The note included a link to the source for the information.

I'll let folks think about this awhile, and then post the source later. There's a reason to this madness, the way I do this.

A huge thank-you to the reader for sending me the note.

I will be off the net for awhile; taking my granddaughter swimming but I can usually get a wi-fi connection there.

Twenty (20) New Permits; MRO Will Report A Nice Well Wednesday; OXY USA Cancels Five Permits In North Dakota; EOG Submits Record Number Of Permits In Wyoming -- October 15, 2014

Wells coming off confidential list Wednesday:
  • 23587, drl, XTO, Kristensen 24X-9B, Temple, no production data,
  • 27558, 1,749, MRO, Samann 34-24H, Chimney Butte, t7/14; cum 24K 8/14;
  • 27680, drl, Hess, EN-Pederson-LW-154-94-0408H-2, Alkali Creek, no production data,
  • 27904, 214, American Eagle, Richard 2-13N-163-101, Colgan, t7/14; cum 11K 8/14;
  • 27918, drl, Hunt, Sioux Trail 160-101-14-23H-1, Charlson, no production data,
Wells coming off confidential list today were posted earlier; see sidebar at the right.

Twenty (20) new permits --
  • Operators: KOG (8), Emerald Oil (6), Hess (5), Armstrong Operating,
  • Fields: Stockyard Creek (4), Epping (4), Boxcar Butte (McKenzie), Truax (Williams), 
  • Comments:  Armstrong has a permit for a wildcat in Stark County; the permit is for a well just to the southwest of Dickinson, near city limits; where Armstrong has a producing Lodgepole well (t9/09; F; cum 580K 8/14;) and a Lodgepole well on DRL status, s7/14;); it looks like it may be very close to an old Bakken well (9/97) and re-entered 4/04 -- dry both times) - the scout ticket says Bakken but the well file suggests the target was the Lodgepole, which makes more sense. The Lodgepole can be referred to as part of the Bakken pool.
OXY USA cancels five permits:
  • 24125, Thomas Sletteland in Dunn County
  • 23171, Tomahawk in Stark County
  • 24151, Wannemacher in Dunn County
  • 23819, Federal Otto Boehler in Dunn County
  • 23687, Willis Downs in Dunn County

Active rigs:

Active Rigs190183192195153

Speaking Of Permits

Casper Star-Tribune is reporting:
EOG filed about 200 drilling applications in Laramie County during the last two weeks, a significant spike signaling rising competition among the companies seeking to unlock the area's rich reserves.
The move is aimed at protecting EOG Resources Inc.'s growing assets in the capital region, industry observers said. Multiple companies often own a stake in one well, but the first to file a drilling permit wins the right to operate it. The operator of the well decides when and how that well will be drilled
The flood of permits represents a significant increase in drilling applications. Oil companies submitted 65 applications to drill in Laramie County during August. In September, that number was 484, by far the most applications ever filed in the county. Before that, the number of applications crested above 100 in only two months -- April and May of this year. 
EOG has indicated it plans to submit about 400 permits this month.  
"They don’t plan on drilling on these all in one year. The permit is good for one year, but they can continually renew them," Watson said. "They are going to do this over a four- or five-year period."
EOG has become increasingly bullish on the Denver Basin around Cheyenne, with much of the company's efforts targeting the Codell sandstone formation.
EOG executives dedicated much of their first-quarter earnings call to the potential of the area, saying it boasted a net reserve potential equivalent to 85 billion barrels of oil.
Company officials said EOG controlled 85,000 acres in the region and had plans to drill 39 wells this year.
EOG did something very, very similar in the Bakken at the beginning of the boom.

Halloween Horror 

If president Obama is canceling golf to meet with so-called "partners" regarding ISIS, you know ... well, as VP Biden would say, "This is a big freakin' deal." FoxNews is reporting:
President Obama acknowledged setbacks Tuesday in the war against the Islamic State, to the backdrop of fierce fighting for control of a Syrian border town and fresh concerns over Turkey’s cooperation.
I wonder if it wasn't Joe Biden that started this in the first place with his "joke." (Previously reported.)

Another Pipeline Sale Pending -- October 14, 2014

Bloomberg is reporting:
Morgan Stanley Infrastructure Partners could begin an auction of Southern Star as soon as the end of the year, with a potential sale expected in early 2015.
The fund acquired 40 percent of Southern Star in 2010, and acquired the rest of the company in 2012, according to company statements. The Owensboro, Kentucky-based company is the holding company for Southern Star Central Gas Pipeline Inc., which operates a 6,000-mile natural gas transmission system throughout the Midwestern U.S.
Takeovers of companies that help move and process oil and gas have increased this year, as buyers including Targa Resources Corp. and Williams Partners LP seek to increase their scale amid a pickup in U.S. energy production. There have been more than $100 billion in such deals so far this year, a nearly three-fold increase from a year earlier.
The fund took full ownership just two years ago (2012); I vaguely remember that but it doesn't appear I posted that story. Targa was in the news just the other day

WTI Crude Oil Price Collapse -- Closing In On $80 -- Lowest Since June, 2012 -- October 14, 2014

Link here.
Crude oil futures settled down 4.6 percent at $81.84 a barrel, the biggest percentage drop since November 2012 and the lowest settlement since June 28, 2012.
It's too bad The Oil Drum (peak oil) is not around any more. We will run out of oil some day (or simply move to an alternative before we run out of oil) but not in my investing lifetime and not in my physical lifetime. Not in my daughters' investing/physical lifetimes either. I'm not even sure our granddaughters will have to worry about "peak oil."

For Newbies, The Silurian -- Just For The Fun Of It -- October 14, 2014

Reminder: in a long post, I make many typographical and factual errors. If this information is important to you, go to the source (generally the NDIC website).

I don't know if any of the newbies caught this one, reported just a couple of days ago, October 12, 2014:
  • 27980, drl, Hess, BLSU E-406, Beaver Lodge, Silurian, no production data, 
The "Silurian" is so far off my radar it's not even at the sidebar on the right where all the other plays are linked. Memo to self: add the "Silurian" to the sidebar at the right.

Also, I track "monster wells" here

On my list of things to follow up on is a Silurian well. So here's the update:
  • 7571, 482, Hess, Reitsch NCT-2 4, Blue Buttes, a Silurian well, 40-acre spacing, from the well report, "On 4-6-84 the well was acid fractured ....", t4/81; cum 999,798 bbls 8/14
This well was taken off-line sometime late last year or early this year (going to "inactive" status), most likely while activity on other wells was proceeding or this well was being re-worked. Based on production numbers, it looks like the well was re-worked. See below.

PoolDateDaysBBLS OilRunsBBLS WaterMCF ProdMCF SoldVent/Flare

Until the Bakken came along, the Blue Buttes field was predominantly a Madison formation field. But there were "several" Siilurian wells drilled in Blue Buttes. 

Other Silurian wells in Blue Buttes:
  • 13412, IA/482, Hess, C. Lovaas 9, t11/92, cum 324K 10/13;
  • 12810, PA/28, Amerada Hess, C. M. Loomer 17, t7/90; cum 9K
  • 10957, PA/507, Hess, C. Lovaas (NCT-1) 7HR, t10/84; cum 257K
  • 10947, PA/225, Hess, J. S. Rice 1HR (Bakken), t9/84; cum 147K
  • 10363, PA/48, Texaco, C. Lovaas NCT-2 1, t1/84; cum 6K
  • 10247, PA/140, Hess, Wheeler 10-23H, t10/83; cum 23K
  • 10132, PA/20, Hess, Blue Buttes-Madison Unit L-309X, multiple formations, t9/83; cum 82K
  • 9944, PA/285, Amerada Hess, E. C. Olson 3, multiple formations, t3/83; cum 257K
  • 9871, PNC,
  • 9870, PNC,
  • 9737, PA/202, Hess, R. L. Olson 11, t11/82; cum 51K
  • 9562, PA/265, Texaco, G. V. Levang B 1, t7/82; cum 84K
  • 9558, PA/481, Hess, C. M. Loomer 5, t8/82; cum 757K 10/08
  • 9414, 310, Hess, R. L. Olson 10, t5/82; cum 418K
  • 9192, PA/225, Hess, Elisabet Siverstson A 2, t5/82; cum 182K
  • 9185, AB/193, Hess, G. V. Levang 1 HR, multiple formations, t4/82; cum 245K
  • 9069, PA/992, Hess, R. L. Olson 9, t1/82/ cum 647K
  • 8997, 497, Ranch Oil, Ellestad 9-35, t9/82, cum 273K 8/14;
  • 8632, dry,
  • 8489, PNC,
  • 8339, IA/385, Hess, Johnson 3, multiple formations, t8/81; cum 262K 3/90;
  • 8301, AB/532, Hess, O. J. Anderson 4, t6/81; cum 1.1 million 8/11;
  • 8269, 211, Hess, C. M. Loomer 14, t4/81; cum 861K 8/14;
  • 8229, 449, Hess, C. M. Loomer 13, multiple formations, t6/82; cum 797K
  • 8163, SWD/78, Ranch Oil, State 13-36 (SWD), t6/81; cum 36K
  • 8083, PA/250, Hess, Mosholder 4, t5/81; cum 275K
  • 8008, dry,
  • 7993, dry,
  • 7874, PA/556, Hess, Blue Buttes-madison Unit L-206, multiple formations, t11/80; cum 36K
  • 7810, IA/603, Hess, C. M. Loomer II, t9/80; cum 1.4 million 4/13;
  • 7566, IA/682, Hess, T. P. Riggs 15-31, t2/81; cum 860K 7/11
  • 7192, 483, Hess, C. Lovaas NCT-1 5, t2/80; cum 1.4 million 8/14;
One can make a case had the Bakken not come along, once WTI hit $100/bbl, there was a very good chance that there would have been a resurgence of the oil industry in North Dakota. Not necessarily a boom, but certainly a resurgence. These are vertical wells, very inexpensive to drill, and 40-acre spacing. 

Why I Love To Blog -- We Now Have 435 Reasons Why The Models Are Off -- October 14, 2014

I honestly don't know if it's 435 reasons. Maybe it's only 235 reasons. IceAgeNow or ClimateDepot (both at the sidebar at the right) would have the answer.

But sometime ago I recall the number was triple-digit, something like 245 reasons why the global warming models are wrong, or 245 reasons to explain why the global warming models are wrong.

The "best" reason: the ocean was a "heat sink."

Then no one could find any evidence that the ocean was any warmer than before. Not only that, Antarctic sea ice has hit all-time records in recorded history. So, back to square one.

This is probably the funniest story of all. And it comes from BBC. This is something one would expect from Fox News.

The latest (and greatest) theory: Global climate models have underestimated the amount of CO2 being absorbed by plants, according to new research.
Scientists say that between 1901 and 2010, living things absorbed 16% more of the gas than previously thought.
The authors say it explains why models consistently overestimated the growth rate of carbon in the atmosphere.
But experts believe the new calculation is unlikely to make a difference to global warming predictions.
This theory, of course, won't hold up either.

Regardless of what plants absorb or don't absorb, the fact is the atmosphere has already crossed the dreaded threshold of 400 ppm of CO2.

Note that the article conveniently does not mention that fact. Do a word/number/acronym search of the article (I didn't find "ppm" or "400" but I could have missed either).

But if the paper does not mention that the atmosphere has already crossed the dreaded threshold of 400 ppm of CO2, the scientists have failed to explain why the earth continues to cool (or at least show no sign of warming for 18 years despite CO2 concentrations rising at an alarming rate -- like one or two ppm per decade or whatever it is).

The best they have come up with it that plants absorb a lot more CO2 that previously thought.

Atmospheric CO2 exceeds the magic threshold of "no return," i.e., 400 ppm.

Richard Zeits: Have We Seen The "Capitulation" Yet -- October 14, 2014

Over at Seeking Alpha, have we seen the "capitulation" yet?

A reminder: Seeking Alpha articles often "disappear," requiring a subscription to access at a later date.

A reminder: this is not an investment site. Do not make any investment, financial, or relationship decisions based on anything you read here or think you may have read here.

  • The lack of obvious current imbalance between global oil supply and demand puts in question the thesis that lower oil prices are economically required.
  • Having said that, shale oil has grown to become a significant supply factor and its impact on oil price needs to be anticipated.
  • The recent rapid decline in crude oil and, particularly, Oil & Gas stock prices appear exaggerated at this point.
  • However, forced position liquidations make individual price moves wide and erratic.
  • The article provides detailed correction scorecards by stock and by group versus commodities. 
The Market

EPD raises its dividend, albeit not very much.

Johnson & Johnson beats by 6 cents; revenues in line; raises FY14 guidance.

Domino's Pizza beats by 2 cents; beats on revenues.

JPMorgan misses by 3 cents; beats on revenues.

Wells Fargo hits estimates.

Citigroup tops forecasts; beats by 3 cents.

Details, Details

The Los Angeles Times is reporting: California to cancel 10,000 ObamaCare policies due to lack of citizenship. The list will grow.
California's health insurance exchange is canceling Obamacare coverage for 10,474 people who failed to prove their citizenship or legal residency in the U.S.
Covered California, the state-run insurance exchange, enrolled more than 1.2 million people during the rollout of the Affordable Care Act this year. For most consumers, the exchange said, it could verify citizenship or immigration status instantly with a federal data hub.
But more than 148,000 enrollees were lacking proof of eligibility and needed to submit documentation. People living in the U.S. illegally aren't eligible for health law coverage.
Covered California began sending notices to affected individuals last month.
The exchange said 130,105 people submitted proof of legal status.
Covered California said it's still reviewing information related to 7,629 people who sent in paperwork.

Tuesday -- October 14, 2014

Happy 20th Birthday

Pulp Fiction was released twenty years ago, October 14, 2014.

Pulp Fiction, Dance Scene


Active rigs:

Active Rigs188183192195153

RBN Energy: a continuation of the Panama Canal expansion series.
The Panama Canal expansion, set for a January 2016 debut, will slash the travel time for larger ships ferrying U.S.-sourced LNG and LPGs from the Gulf Coast (or East Coast) to Japanese and other Asian buyers. And—no surprise here--for ship charterers, time is money, and the ability to make three roundtrips instead of two every three months is a big deal. Being able to use ships with larger, “New Panamax” dimensions is welcome news to Asian utilities awaiting delivery of American LNG, and to Asian petrochemical manufacturers seeking to diversify their LPG sourcing and/or shift from naphtha to LPGs as their preferred feedstock. In today’s blog, we continue our look at what longer, wider and deeper canal locks mean for U.S. hydrocarbon exports.
The Wall Street Journal

Ebola responses strain hospitals.

CDC Director calls for new approach on Ebola control.

In mid-term elections: Dems have lost edge on economic, foreign policy. What else is there? Oh, yes, entitlements, environment. 

A bit late? I use the same tag, "Lost Decade." Germany and France ask economists for advice to avoid "Lost Decade." Perhaps the headline writer forgot one word. Rewriting the headline -- "Germany and France ask economists for advice to avoid another Lost Decade."

Syrian class jolts Turkish peace talks. The siege by ISIS of the Syrian Kurdish city of Kobani has roiled Turkey's push to end its own three-decade Kurdish insurgency, as Ankara put forward a new peace plan on Monday.  [Wow, I just mentioned that in an e-mail yesterday, how ISIL has changed Turkey's Kurdish "problem."] [Elsewhere, in Foreign Policy, the problem with the coalition: it doesn't exist.]

A bridge too far: Canadian Pacific's proposed merger with CSX is still being pushed.

Battery fires on planes remain an issue. I thought this issue had pretty much burned itself out.

Targa to buy Atlas Pipeline. Previously reported.

US stocks (equities) continue to drop.

Global glut pressures oil prices.

The Los Angeles Times

CDC: error in Dallas probably exposed others to EbolaFortunately, Ebola transmission is difficult, at least according to the president. Previously reported. UN medical worker infected with Ebola has died according to a German hospital.

Love Field (Dallas) restrictions expire; Southwest Airlines launches new routes.

Oil price drop threatens to hit Russian, Iran harder than sanctions.

What's Wrong With This Picture

In case you forgot, the New York Waldorf Hotel --
  • serves as home to the American ambassador to the United Nations
  • hosts the US president during the annual UN General Assembly
  • hosts hundreds of US diplomats during the annual UN General Assembly
  • makes a great salad
"China" bought the New York Waldorf Hotel and will spend hundreds of millions of dollars for a "major renovation" of the hotel. Oh, really?

Keeping The Bakken In Perspective

Occasionally the New York Times or similar newspapers run stories about the "first profession" in the Bakken. I keep several written journals, and regularly transcribe them. I am currently transcribing one journal that I was writing back in 2008. No editing, here's what I wrote on March 11, 2008:
Governor Spitzer of NY – who so many hate for his ego, etc – was caught up in high-price, high-class prostitution ring. Has to be devastating for the family – but he hasn’t resigned yet – will he, like Clinton, try to ride it out? The difference between Clinton and Spitzer: a) he’s not Clinton; b) doesn’t have ground swell of support like Clinton had; c) only a governor and not a president, etc, etc. Hard to believe that he can survive politically. $1,000 to $5,000 for one hour – prostitution – just tells you how much money is out there – wow.
By March 13, 2008, he had resigned. 

Oil And The US Economy -- Fox News -- October 14, 2014

Link here.
In North Dakota, the Bakken Formation produced one million barrels per day in April and May of 2014. The site’s remarkable success rate, according to the EIA, is based on its “low thickness and low permeability” of the reserves, which makes routine search-and-find exercises for new wells more accurate and more efficient.
But will a buyers’ market for energy prices remain sustainable into 2015?
Kloza said there is no reason to think otherwise. On average, he said over the next year the expectation is for gas prices to move between six and 10 cents lower than prices from the previous year.
Robert Ambs, a professional engineering recruiter in South Texas, said several projects in the Bakken aren’t expected to reach peak production until 2025. And companies in the petrochemical industry are adjusting asset expansion plans to accommodate the refining potential brought about by the increase in crude oil and natural gas in America.

IEA, Slump In Oil Price, And North American Energy Revolution -- October 14, 2014


October 17, 2014: the NY Times on the slump in oil prices.  My feelings, exactly, in general. 

October 14, 2014: readers can compare my "pain" list (at the bottom of the original post) with the Financial Times story published today:  
Saudi Arabia needed an oil price of $89 a barrel in 2013 to balance the budget, up from a “fiscal break-even” of $78 a barrel in 2012, according to the International Monetary Fund.
But Riyadh’s regional political rivals, such as Iran and Iraq, as well as other OPEC members such as Venezuela, have much higher fiscal break-evens.
Original Post

Note: in posts this long, there will be typographical and factual errors. If this information is important to you, go to the source.

Rigzone has a number of interesting articles today. The first one is the most important.

Rigzone is reporting:
The vast majority of shale oil in the United States is produced at costs far below the current price of crude, the head of the west's energy watchdog said, which means U.S. projects can withstand the market slump squeezing other producers. [Not just "below," but "far below."]
Brent oil stands at around $88 per barrel, down more than 23 percent from the year's peak above $115 in June, raising concern that some shale oil projects will become un-economic.
However Maria van der Hoeven, executive director of the International Energy Agency said that only a tiny minority of shale oil production would be affected by the slump in prices to near-four-year lows.
"Some 98 percent of crude oil and condensates from the United States have a breakeven price of below $80 and 82 percent had a breakeven price of $60 or lower," she told Reuters in an interview on the sidelines of the launch of the Africa Energy Outlook publication.
About a month ago or thereabouts I posted a note suggesting that folks would be surprised by the break-even price of oil in the Bakken, particularly in northeastern McKenzie County. The break-even price is so low that I do not post it; I don't need all the pushback. However, it's readily available in corporate presentations.

In addition to the above linked Rigzone article, John Kemp has an article concerning Saudi Arabia and the slump in prices
Ultimately, Saudi Arabia and OPEC would end up with a combination of lower market share and lower prices, the worst of all outcomes, just as they did in 1985. The best strategy for the Saudis, indeed the only effective one, is to allow prices to fall until the market rebalances naturally, with slower growth in shale and bigger increases in demand. 
In general, I am in full agreement with Kemp's analysis: Saudi Arabia is simply along for the ride as is the rest of the oil industry.

And finally this article on Russia and shift in focus, also in Rigzone:
Russia is diverting more of its crude oil east with deliveries to China hitting a new record last month at the expense of Europe as geopolitical tensions between Moscow and the West dictate the latest shift in flows.
As Russia's relations with the West deteriorated over the Ukraine crisis, the European Union and United States imposed wide-ranging sanctions on Russian firms, including oil and gas producers, leaving Moscow trying to forge closer ties with energy-hungry China.
Russia's energy ministry says crude oil supplies to China surged in January-September by almost 45 percent year-on-year, to 16.8 million tonnes (450,000 barrels per day), while shipments from the Baltic Sea port of Primorsk plunged almost 20 percent to 33 million tonnes.
Oil product exports to Europe have been rising and plans for state-owned monopoly Transneft to use crude oil pipelines for exports of diesel show the trend will likely continue.
The decline in Russian crude oil exports comes as increasing volumes of crude oil are being processed at domestic refineries, reaching a post-Soviet high of almost 6 million tonnes in August as plants undergo a huge $55 billion modernisation programme.
"By diverting crude to Asia and cutting exports of straight-run fuel oil and vacuum gasoil, Russia will deprive European refiners of feedstock. By exporting growing amounts of ultra low-sulphur diesel, Russia will hammer refining margins (in Europe). Really, the candle is burning at both ends for Europe," said Andrew Reed, an analyst from the U.S.-based ESAI Energy consultancy.
Geo-Politics And Other Things

All of this is going to get very, very interesting. Based on comments and e-mail I am receiving, I get the feeling that folks think that the Bakken is the only "play" that is affected by the "slump" in oil prices.

Before I go on, one data point: Saudi Arabia requires $89-oil to finance their annual budget. Prices in the past year have been so high for so long that Saudi Arabia can go for several months at prices as low as $39/bbl. So, we've gotten that out of the way. I agree with John Kemp's analysis of Saudi Arabia, in general, as noted above.

Back to what I was saying: I get the feeling that folks think the Bakken is the only "play" that is affected by the "slump" in oil prices.


In order of pain: those at the top are feeling the most pain; those at the bottom, the least pain.

OPEC, outside of Saudi Arabia. Venezuela is in deep trouble, for example.

Russia. The ruble is crashing; Russian companies scrambling to come up with dollars for expenses.

Iran. On top of sanctions.


Iraq. Isis.

Mexico. Price slump couldn't come at a worse time as country tries to privatize oil industry.


Great Britain.


Off-shore oil.

American shale plays outside of the Bakken, Permian, and Eagle Ford.


Eagle Ford.


Saudi Arabia.