What We Will Be Talking About Friday; Wells Coming Off Confidential List

Oil futures up almost $2.00 [Friday, 6:30 a.m]. The hypocrisy is glaring: if "speculators" push the price of oil up, the media is all over the issue; but let the Fed do it by printing more money, and no one seems to mind. I suppose this is the difference: no one knows how the "speculators" are manipulating the market; but it's easy for everyone to understand why the price of oil jumped with the recent Fed action. On another note, for investors, one of the oldest adages in investing: don't fight the Fed.

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Without question, the #1 topic will be whether we will see profit taking Friday, but at the moment, oil is up about two dollars [Friday, 6:30 am], in futures, but as my daughter says, "futures mean squat."

************************* The growth of the rail industry in North Dakota: story at Minot Daily News:

• crude unit train facilities are served by BNSF at the following stations: Stanley, Tioga, Dore, Eland, Epping, Trenton, Republic and Manitou;  two more should be fully operational by end of 2012 -- Fryburg, Berthold
• see CBR at the "Top Ten" lists at the sidebar at the right
• here are apparently two facilities at Berthold, one north of the station; one south of the station. The Enbridge CBR facility is south of the station; a Sand Source Services operation is north of US Highway 2.
• a Canadian Pacific Railway CBR facility is up and running near Van Hook
• it's not just CBR but also frack sand-by-rail (FSBR)

************************ Wells coming off the confidential list Friday:

• 8317, 109 (Red River), Encore Energy, Wegman 11-30, Horse Creek; this is an old Red River well that has already produced a total of 274K bbls of oil, and is still producing about 300 bbls/month from the Red River; it is located in Horse Creek, and is located about 16 miles east of the Montana border, and two miles north of the South Dakota border; on March 18, 2012, Encore applied to re-enter said well and drill a short lateral; I don't see any new information; the most recent production is still only from the Red River and probably relates to the "old" vertical well;
• 21335, 466, MRO, Marky Sveet 34-21H, Strandahl, t6/12; cum 6K 7/12; 
• 22238, 878, ERF, Knucke 149-92-19C-18H, Heart Butte, t7/12; cum 115K 4/13;
• 22374, 320, Whiting, Quale 21-30, wildcat; a Red River well; t6/12; cum 29K 4/13; (not bad for a directional Red River well)

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Others are saying the same thing:

• in the long term, what the Fed is doing could very possibly end up creating a financial disaster; but,
• right now, the 1%-ers, the wealthy, are doing very, very well; investors are seeing their assets grow in value; paper profits; but, 
• the "man-on-the-street" will see the price of gasoline and groceries rise
• the gap between the haves and the have-nots will simply increase (so, what else is new?)
• someone once said in a financial crisis, either the investors will win or the "savers" will win; right now, investors are winning; "savers" are losing

Pretty simplistic? See welcome/disclaimer for this blog. You know, this seems a lot like "trickle-down" economics.

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For investors only:

• OAS and KOG: SeekingAlpha.com; and this was written before today's wild ride; 
• Several Bakken-related stocks, including HK which is of significant interest right now; 
• Many stories easily found and many more with QE3 driving share prices of gold and oil higher

For newbies only:

• Horizontal drilling and fracking overview: RBN Energy.

A Completely Random Thought Which I Will Probably Remove Later ...

... or not...

Anyway, we all know that the Secretary of Energy has stated his goal during his tenure was to raise the price of gasoline in this country to match that of Europe (or so the myth goes).

Today's Federal Reserve action pushed the price of oil higher --> gasoline price to follow --> Secretary of Energy is smiling.

But we're only halfway there; with gasoline about $4/gallon here in the states, we're still well under the $8 overseas (or so I've heard).

But the president has said a number of times, he needs another four years to get the job done, to get the things completed that he started. So it's starting to come together.

Now, the price of gasoline spiking just as we go into the final stretch of the election, when folks are actually starting to pay attention (as evidenced by the fact that the president is scheduled to be on the David Letterman show), the price of gasoline spiking just as we go into the final stretch of the election, as I was saying, Gertrude Stein-style, can't be good for the incumbents. So, tomorrow, just after the news cycle for the week ends, say, about 6:00 p.m. EST, we should be getting word that the president has released oil from the Strategic Petroleum Reserve, also known as the SPR.

I have no inside information and if this actually happens, I won't remove this post. Otherwise, I may in fact put it in "DRAFT" form to be hidden "forever," or at least for a very long time, whichever comes first.

By the way, Spain is a very gentle country. The Spanish government has asked "oil firms" to cap their prices.

Spain's energy minister said he would urge oil companies on Wednesday to cap petrol prices at the pump to help efforts to control inflation in the country. 

Spanish consumer prices rose 2.7 percent in August after 2.2 percent rise in July, due mainly to higher gasoline prices. Consumer prices are likely to rise again in September after a recent 3-percentage-point hike in value-added tax.

Wow, two comments:

• maybe the government should cap taxes for awhile -- a 3 percentage point hike in the VAT? Wow!; and, 
• fortunately the Federal Reserve sees no inflationary pressure in our own United States

What a great country!

Just idle chatter waiting for next event. And, yes, this whole post probably won't stand the test of time.

Fourteen (14) New Permits; ND Oil Production Tops 20 Million Bbls/Month -- New Record; Out-Produced Alaska By 60%

Wells coming off confidential list were reported earlier; results can be accessed at the link near the top in the sidebar at the right.

In addition, these producing wells were completed:

• 21965, 3,000, BR, Ole Boe 41-14MBH, McKenzie, Haystack Butte, t7/12; cum 4K 7/12; 
• 22156, 1,766, Whiting, Joy TTT 42-30XH, Mountrail, Sanish, t8/12; cum 00
• 20386, 999, Murex, David Roger 18-19H, McKenzie, Glass Bluff, t12/11; cum 21K 7/12; 
• 21778, 328, CLR, Cass 1-9H, Williams, Oliver, t7/12; cum 14K 7/12; 

Comment: unlike the CLR well that had an error in its IP the other day, I can almost guarantee that the 3,000-bbl IP reported by BR is NOT an error. BR is known for some great wells.

Fourteen (14) new permits were issued:

• Operators: CLR (4), Triangle (4), Whiting (2), WPX, Petro-Hunt, Fidelity, Hess
• Fields: Big Butte (Mountrail), Ragged Butte (McKenzie), Wolf Bay (Dunn), Pleasant Hill (McKenzie), North Tioga (Burke), Heart River (Stark), Corral Creek (Dunn)

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Another Record

Has Out-Produced Alaska For Five Consecutive Months

Out-Produced Alaska by > 60% in July

The graph is pretty spectacular at the link -- North Dakota produces 20 million bbls in July -- sets new monthly record. 

North Dakota produced 62% more oil than Alaska in July, marking the fifth consecutive month that North Dakota has out-produced Alaska. The Peace Garden State surpassed Alaska’s oil production for the first time in March to become the country’s new No. 2 oil state, behind only Texas now.  

The number of oil wells in North Dakota increased to 7,303 in July establishing a new state record for active wells. Over the last year through July, an average of almost seven new oil wells were put into production every business day, and each of those new wells is the equivalent of adding a new $8-10 million business to the state’s economy, see recent CD post for more details. 

I love it.

Overlapping Spacing Units

This seems to be the hot topic for enquiring minds.

I am probably missing something but this seems pretty straight forward: "each well is its own well." Each well is its own industry.

An existing well on 1280-acre spacing will remain a well on 1280-acre spacing regardless of future wells, future spacing.

That's all one needs to know, assuming it is accurate. I don't own minerals and haven't read the rules and the definitions, but that seems to be the gist of what I am hearing, reading elsewhere.

Having said that (that's all one needs to know), it begs the question: can there be multiple spacing units affecting the same acre. For example, we have seen 1280-acre spacing on top of 640-acre spacing. A year from now, could we see 2560-acre spacing on top of the 1280-acre spacing? I don't know why not. I would assume there needs to be a way to identify which spacing unit a proposed well will be defined. For example, assume there is an overlapping 1280-acre unit on a 640-acre unit, and a new operator wants to drill a new well in that section. Will there be a way to identify a well based on its name / legal description whether it's a 640-, 1280-, or a 2560-acre well, or something else?

I Almost Missed This .....

Stunningly bad jobs report --> Fed now has to act --> inflationary pressure --> hedge --> oil spikes (now up over a buck; flirting with $100 again).

Watching the Fed is beginning to look a lot like watching Apple events: leaks/expectations --> hype/lots of talk --> the event --> less than expected --> disappointment.

As noted before, I hope the Fed acts: I'm curious to see what it has left in its quiver. [Later: so that was it! $40 billion/month to buy mortgages. Hmmm. I honestly don't get it. I assume most folks need a job before they can buy a house, but again, that's just me. I don't think this makes it easier for anyone to buy a house; mostly just allows some more re-financing and keeps more people from losing their homes. But the immediate effect, it seems is this: commodities rise significantly. Oil jumped in price --> price of gasoline and diesel will increase --> hurt employers buying gasoline for their drivers (who care not how they drive company vehicles) and hurts individuals filling up their own tanks. So, we go into a period of increasing the price of gasoline?]