Friday, March 11, 2016; Delay In Reporting Wells Coming Off Confidential List

Top Bakken story of the week: Iowa Utilities Board approves Bakken pipeline. 

Active rigs:

	3/11/2016	03/11/2015	03/11/2014	03/11/2013	03/11/2012
Active Rigs	33	112	192	187	206

RBN Energy: The Challenges of Making LNG the Go-to Bunker Fuel.

In January 2015 new international regulations came into force that reduced the permitted sulfur content in ships “bunker” fuel in Northern European and North American coastal regions. So far, international shipping companies and cruise lines have been responding to these rules primarily by switching to marine gasoil (MGO), burning lower-sulfur fuel oil, or sticking with higher-sulfur fuel oil and adding “scrubbers” to capture most of the sulfur being emitted by their ships’ engines. More recently, though, some of the shipping sector’s biggest players have unveiled plans to boost the use of liquefied natural gas (LNG) as a bunker fuel, figuring that LNG bunkering will not only help them meet existing regulations but the tougher rules likely to be implemented over the next few years. Today, we begin a short series on the opportunities and challenges associated with shifting ships from fuel oil to LNG.

Besides death and taxes, another certainty in today’s world is that the rules governing emissions from fossil-fired power plants, industrial boilers, and engines of just about every size and type will be tightened, and then tightened again. The same holds true, of course, for fuels used in ship engines (known as bunkers). The International Maritime Organization (IMO), which governs such things, in recent years has been implementing rules that gradually reduce emissions of sulfur (sulphur for many of our non-American readers). In January 2012, the “global” cap on sulfur content in marine fuel was reduced to 3.5% (from the old 4.5%), and in January 2020 it will likely be reduced to a much stiffer 0.5% (more on that in a bit). There are even tougher standards in place in the IMO’s “Sulphur Emission Control Areas” (SECAs, or sometimes ECAs), which include Europe’s Baltic and North seas and (more recently) areas within 200 nautical miles of the U.S. and Canadian coasts. In July 2010, the SECA sulfur limit in marine fuel was reduced to 1% (from the old 1.5%), and January 2015 the limit was ratcheted down again, this time to a very stringent 0.1%. Ships that ply SECA waters have the option of continuing to use higher-sulfur fuel oil and meeting the emission standards by installing post-combustion scrubbers that, as their names suggest, remove enough sulfur from the emissions to meet regulatory limits. (And, we should also point out, if a ship makes a run from, say, the non-SECA waters of Asia to the U.S. West Coast, it only needs to meet the SECA requirements during the last 200 miles of its journey—that is, it can switch from higher-sulfur to lower-sulfur fuel during the final part of its trip.)

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Reminder

This will be one of several QEP wells that should come off the confidential list today:

• 29324, 1,963, QEP, Jones 3-15-23TH, Grail, t9/15; cum 130K 1/16; only 8 days in 12/15:

Date	Oil Runs	MCF Sold
1-2016	40850	52135
12-2015	8264	12295
11-2015	44907	60942
10-2015	33824	35292
9-2015	1366	851

While we are waiting, some data points from the well file regarding this well:

• API: 33-053-06233
• according to FracFocus, fracked 9/13 - 18/2015: 5.3 million gallons of water; almost 19%, by weight, sand; works out to 44,22,900 pounds of water; 81% of what = 44,229,900 pounds = 54.6 million lbs proppant x 19% sand = 10.3 million lbs of sand (so, we'll see); no frack report yet; geologist's report not there yet
• a Three Forks well, first bench
• kick-off point, Lodgepole M 1; 10,350feet
• kick-off / curve: about 400 linear feet
• target zone: about 10,700 feet
• permit was revised to change bottom hole location to avoid "collision issues with a nearby well"
• spacing unit: 2560 acres

As of 9:50 a.m. Central Time, these wells have not been taken down from the confidential list. [Update: 3:50 p.m. -- these wells have finally been posted.]

29324	33053062330000	QEP ENERGY COMPANY	JONES 3-15-23TH	NWNW 15-T150N-R95W	3/11/2016
29325	33053062340000	QEP ENERGY COMPANY	JONES 5-15-22TH	NWNW 15-T150N-R95W	3/11/2016
29326	33053062350000	QEP ENERGY COMPANY	JONES 3-15-22BH	NWNW 15-T150N-R95W	3/11/2016
29327	33053062360000	QEP ENERGY COMPANY	JONES 6-15-22TH	NWNW 15-T150N-R95W	3/11/2016
29328	33053062370000	QEP ENERGY COMPANY	JONES 4-15-22BH	NWNW 15-T150N-R95W	3/11/2016
29329	33053062380000	QEP ENERGY COMPANY	JONES 15-22-16-21LL	NWNW 15-T150N-R95W	3/11/2016

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Zeits Over At Seeking Alpha

From Seeking Alpha:

• Significant restrictions on re-injected water volumes now apply over the majority of the Miss Lime play.
• Regulatory action in central Oklahoma impacts 54 of Devon’s wastewater disposal wells.
• Asset values in the Miss Lime may be impacted due to significant operational and “seismicity liability” exposure.
• The STACK play is not affected but is now part of the area closely monitored by the regulators.
• The seismicity may be disruptive to operating plans due to the “blanket” nature of potential future regulatory actions.

See map at link. The article covers several issues, begins with this:

On March 7, the Oklahoma oil and gas regulator expanded restrictions on the re-injection of wastewater in western and central Oklahoma. The restriction area now covers essentially the entire Miss Lime play. The wastewater is co-produced from oil and gas wells and is believed to be the cause of the spike in the seismicity in the area. In the areas subject to restriction, over 2.5 million barrels per day of wastewater was re-injected in 2015 by the oil and gas industry.

The decision follows several notable quakes recorded this year, including the 5.1 magnitude quake reported on Feb. 13 near Fairview, Oklahoma.

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Bakken Economy

Press release from Investors Real Estate Trust:

Investors Real Estate Trust, a self-administered, equity real estate investment trust investing in income-producing properties located primarily in the upper Midwest, today reported its financial and operating results for the quarter and year to date ended January 31, 2016.

From a reader from the press release:

Occupancy rates in housing in Minot is 86 % and Williston is 75 %. All other areas in the 92-96 % full range.

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Bakken Economy -- For The Archives

CNBC is reporting:

There is perhaps no place where the transformation is so stark as North Dakota. The state's oil production grew tenfold over the past decade as it built a thriving industry virtually from scratch, driving unemployment to a national low and filling government coffers with surging tax revenue.