Opponents of England’s first planned
potash mine in 40 years can thank Russian billionaire Suleiman Kerimov for helping their cause.
A decision by OAO Uralkali to withdraw from a powerful
marketing venture has upended the world’s $20 billion potash
industry and is set to slash prices. The news reverberated in
the seaside town of Whitby this week, where a former Citigroup
Inc. banker wants to spend $1.9 billion tunneling beneath a
national park and the North Sea to unearth the commodity.
If folks are interested in the North Dakota potash story, I have a link at the bottom of the blog, "potash."
The story mentioned Whitby, Yorkshire, England. Back in 2002 (or thereabouts) I walked the English seaside coast from Robin Hood's Bay to Whitby. That was one of the toughest slogs I've ever hiked but my traveling companion made it all worth it. Great memories.
A New Orleans developer has begun site work in Columbus on a residential and commercial project that could add 400 homes and between 480 and 576 apartment units over the next three to five years.
"We are going to try to recreate Columbus with an old-town feel," said Allan Hegquist, partner in Holms Development Corp.
Holms Development, the oversight company, and its green building affiliate, HCI of North Dakota, plan to start construction in early September on the first 12 homes and 24-unit apartment building, with completion of the houses in late November and apartments by early February.
The population of Columbus, North Dakota, was 133 in the most recent census.
Bidding begins at 10:00 a.m. CST. There are 51 tracts covering 3,906.2 net mineral acres available for lease from the state of North Dakota.
Click here for an earlier posting on North Dakota potash, or use the labels at the bottom of the blog to find other potash postings. One can also "search" potash on the site using the browser application at the top of the blog.
I don't follow potash very closely so what is posted is about all I know about it.
Further to the announcement of 19 October 2010, the Directors of Sirius Minerals Plc, the potash mining group, are pleased to announce that drilling has commenced on its North Dakota property.
Through the drilling programme being carried out by Schlumberger Water Services USA Inc ("Schlumberger") and North Rim Exploration Ltd ("NREL") a single exploratory hole is being drilled to a total depth of approximately 8,990ft (approximately 2,740meters). The drill core will then be sent to NREL's core facility in Saskatoon for detailed core descriptions and geochemical sample selection. The samples will then be sent to and analysed at the Saskatchewan Research Council laboratory in Saskatoon. It is anticipated that the drilling, core logging and analysis will take approximately two months to complete.
October 21, 2012: quiet, but not quite dead; Sirius Minerals writes down investment in North Dakota; no plans to drill in the near future August 13, 2011: Based on e-mail correspondence from a state representative, it is estimated that it will be at least another 3 - 5 years before potash development begins in North Dakota.
This story has international interest. Since posting this story early Sunday morning (October 24, 2010), I have had an unprecedented number of "hits" from England and Scotland.
England Swings, Roger Miller
The drive for potash, as a fertilizer, is being driven by the Chinese.
A small portion of North Dakota sits on 33% of all the known potash reserves in the world.
It is the same basin that allows Saskatchewan to produce 90% of all potash produced in North America.
Dakota Salts LLC, a subsidiary of Sirius Minerals, London, England, got the first permit in decades to drill for potash in North Dakota.
Sirius Minerals shares are considered a "penny stock." Shares have tripled in price in the past few weeks (see comments below).
The funding is being provided by a Chinese company.
Schlumberger will drill the well. Spudding is expected to commence during the first week in November, 2010.
The rig is being brought up from Mexico. There are a record number of rigs in North Dakota but they are all contracted to drill Bakken oil.
The potash well will be a deep well (3000 meters) near Lignite, ND; to see aerial imagery, click here. (When you get to the link, draw a square around Burke County, upper left county in North Dakota. If you do it right, the town of Lignite will jump right out at you. To see aerial imagery, click on the "show layers" tab sitting at the very center on the far right; otherwise, everything should make sense; there is a tutorial if needed. You won't see the well, yet, but you're going to see how close the railroad is!)
Once brought to the surface, best way to ship potash: railroad. Warren Buffett's railroad, the Burlington Northern Santa Fe, runs right through the middle of Lignite.
Drilling for potash will use the same technology as drilling for Bakken oil (except no fracturing).
Links for everything noted above will be found in the original blog below.
Most incredible dots:
Schlumberger will do the drilling; and,
Warren Buffett's railroad is right in the middle of this story.
ORIGINAL BLOG
The "potash well" you've been reading about in local newspapers should be spudded within the next couple of weeks.
If you are at all interested in another potentially huge story for the Williston Basin, take a look at these sites:
Bloomberg Businessweek, August 16, 2010: ND Issues First Potash Permit in Decades
Similar stories in the Fresnobee (Fresno, CA); The Street; The (London) Telegraph; San Francisco Chronicle, and others. This story obviously has international interest.
Click here for a "source document" titled Potash in North Dakota by C. G. Carlson and S. B. Anderson, North Dakota Geologic Survey, 1966.
At the time of this report, the US led the world in potash production with 90 percent of domestic production coming from Carlsbad, New Mexico
The authors predicted that as the potash production declined in New Mexico, interest would move to Saskatchewan if potash industry did not develop in North Dakota (this prediction back in 1966 turned out to be right on target)
Canada is now the world's number 1 producer of potash, producing 90% of North American production (another source)
Canadian potash deposits are the highest grade known potash deposits in the world
In North Dakota, the thinnest seams of potash are most shallow; the thickest seams are deeper
Shallowest seams of potash are found in northeastern Renville and western Bottineau counties (5,800 to 6,200 feet)
A thicker potash seam is deeper in Burke County; the seam will be thicker but cost of drilling will be greater
The Divide County seam of potash is probably similar to that in Burke County
Burke, Renville, and Bottineau counties border Saskatchewan, and run west-to-east (Burke is westernmost, directly north of Mountrail County (home of the prolific Sanish and Parshall oil fields). Renville and Bottineau counties may be familiar to you -- this is where EOG is drilling into the Spearfish formation for oil.
North Dakota may hold up to 33 percent of world's reserve of potash
North Dakota may hold 50 billion tons of potash
Dakota Salts LLC first exploratory well will be in Burke County, near Lignite, North Dakota. According to the press release, the first well will target a seam 34 feet thick at 8980 feet. The funding will be provided by the Chinese (whatever that means). Other than that link, I can't find additional background to the Chinese connection, and that link will not download this morning.
Dakota Salts, LLC, is interested in drilling in Renville, Bottineau and Burke counties. From their website:
North Dakota salt beds are estimated to contain 50 billion tons of potash
The Prairie Evaporate Formation in the Williston Basin yields over 33% of the world's potash supply
Depth to potash: 3,000 feet at Saskatoon; 4,800 feet near Regina; and 9,000 feet in North Dakota
Potash drilling is greatly benefited by the oil industry -- how closely related these two industries are is very, very interesting
Following extraction of potash, Dakota Salts LLC is exploring the possibility of creating caverns for the storage of natural gas and other hydrocarbons or the storage of compressed air for electricity generation
Dakota Salts LLC is busy buying up potash mineral rights in North Dakota. When this story first broke, DS said it had 6,000 net acres; now it has 7,425 acres.
More trivia: for the past few days, I have had a number of stories involving Schlumberger. Well, here's another dot to connect. Dakota Salts LLC will drill their first exploratory potash well in North Dakota with Saskatchewan-based North Rim Exploration Ltd. (NREL) and Schlumberger Water Services USA. I have accumulated shares in SLB for three decades, and remains one of my favorite holdings. Yes, I do fall in love with some of the companies in which I invest, breaking a cardinal rule in investing. Smile.
Schlumberger will act as the contractor responsible for the execution and completion of the well drilling.
NREL will serve as the overall project manager: site preparation, interface with SLB, and provide well-site geologist.
It is expected the drilling rig will arrive on site during the week beginning November 1, 2010; drilling and core logging is expected to take two months to complete.
The core will be sent to NREL's lab in Saskatoon for analysis.
Dakota Salts holds in excess of 7,425 net mineral acres in the Williston Basin in North Dakota
From other sources:
A rig is being moved from Mexico to drill the potash well. According to the AP, "spare rigs are scare in North Dakota, where a record 153 rigs were drilling on Wednesday."
For investors:
Sirius Minerals, a penny stock headquartered in London; share price has more than tripled in the past few weeks (see comments below). I don't invest in speculative or penny stocks.
SLB: the first well is being drilled by Schlumberger; if successful, SLB has inside track to develop Dakota Salts LLC acreage in North Dakota. You think?
It is amazing how inter-related the oil industry and the potash industry are. They both use the same geologic information and North Dakota is unique in having one of the best, if not THE best, geologic information library in the world regarding its mineral resource. In addition, look at how they plan to produce the potash:
"They plan to drill horizontal wells into the potash formation, use waste oil-field water, dissolve the potash, bring it to the surface, take it out of the water, put it in rail cars and ship it to the West Coast," according to Lynn Helms, director, state Department of Mineral Resources.
There is no mention of fracturing. Wouldn't this be a hoot if the EPA stepped in to regulate fracturing, putting the oil industry on hold for two years: all those oil rigs would be used to drill for potash.
Addendum
Disclaimer: The information in this addendum has not been verified, and I have not done the research to sort it out. I say that because a very reliable source (see comments below) has questioned some of the information in this addendum. I will update the addendum as more information comes in. I have removed some of the original information that was sent in, trying to minimize unknowns.
The original addendum: I was sent a very nice note about how the potash industry is different than the oil industry. Here's a summary of that note.
There will be two (2) holes drilled per every 12-20 townships (basically a whole county). One hole will be used to pump salt water in, the other hole will be used to collect the “brine.”
The brine will then be filtered/refined to extrapolate only the potash. The location that the brine will come up at will be a very large location (20+ acres with full filtering capabilities, etc.) whereas each OIL well site is typically only four (4) acres. Royalties are generally two percent of the final product. It is not clear to me exactly who is due the royalties: surface owners, mineral rights owners, etc.
Thus, my statement about "all those rigs" was hyperbole. There will be far fewer potash rigs; perhaps a handful or so, if the above is accurate.
"Exact" location: near the seven mile corner of Highway 52 (near Lignite). The site is one mile east on the north side of the road. Seven mile corner is the junction of State Highway 52 and 84th Avenue NW; location is just prior to 83rd Avenue NW on north side of Highway 52.
Project status: Burke County Tribune: project status, November 4, 2010.
Sometime ago I posted a note about Dakota Salts, LLC, being granted a permit to mine potash in North Dakota. The permit was granted for a test well near the town of Lignite; the permit was issued back in August, 2010.
Dakota Salts, LLC, will begin exploratory work during the first week of November, and will take about two months, as reported in the Dickinson Press.
Dakota Salts, LLC, is a subsidiary of London-based Sirius Exploration which also has mining interests in China and Australia.
Updates
Update, October 22, 2010: More on how they do it and who is drilling for potash -- from the Minot Daily News --
"They plan to drill horizontal wells into the potash formation, use waste oil-field water, dissolve the potash, bring it to the surface, take it out of the water, put it in rail cars and ship it to the West Coast," according to Lynn Helms, director, state Department of Mineral Resources.
"The company that is actively leasing in Burke and Renville counties is funded by Chinese money through a London corporation. Potash is largely used to grow rice so it's Asia that is extremely hungry for potash," he said.
Comment: what's not to like? They use horizontal technology developed by the oil industry; they use waste water from oil fields; they use the railroad which has already expanded in North Dakota due to oil business; and it's funded by the Chinese; working through an English-speaking company.
Ninety-four (94) percent of all potash produced in North America comes from Canada. However, it was recently announced that the state of North Dakota granted a permit for a potash mine. This is the first potash mine permit issued by the state in three decades (specifically, since 1976). North Dakota's potash reserves are in the Bakken area.
Connecting the dots results in a lop-sided hexagon.
Oh, back to Warren Buffett. BHP accepted proposals from Burlington Northern Santa Fe and Canadian Pacific to carry potash to the port terminal. Who knew that Warren Buffett bought BNI for carrying potash to Vancouver?
Not yet, but someday North Dakota might claim another first.
Ninety (90) percent of potash used in America comes from mines in western Canada.
It turns out that North Dakota may have 50 billion tons of potash in the same area as the current oil boom, the northwestern corner of the state. These deposits are less than 150 miles south of the potash mines in Canada.
Yesterday, August 18, 2010, the Williston Herald reported that a Denver-based company was granted a permit to mine potash in North Dakota. This is the first potash permit granted in more than 30 years. This story was in the print edition of the Herald; I couldn't find an on-line source to link.
Dakota Salts LLC has also received a grant to study whether it is feasible to store compressed air for electricity-generating wind farms once the potash is removed.
The company will also explore the possibility of storing carbon dioxide in these mines.
It's a long way off, but if 90 percent of potash used in the US comes from Canada, there can't be many other states mining potash.
Wouldn't it be interesting if North Dakota could add another first to its list of firsts?
