Wow, It Never Quits -- Another North Dakota Story -- CO2-EOR

Link to Rigzone.com.

The link will take you to an article that, except for one or two readers, will cause your eyes to glaze over.

I probably would have never read it, except a) if I hadn't, Don would have sent it to me anyway; and, b) it's Friday night and not much going on. So, with nothing else to do I read it.

It's about enhanced oil recovery (EOR) using CO2. See: your eyes are already starting to glaze over.

This is how it starts:

As oil has become increasingly difficult to find and harder to get to in recent years, attention has turned to developing ways to ensure the reservoirs that are found are exploited as fully as possible.

When it comes to boosting oil recovery from North Sea fields, no one currently beats Norway, especially Norwegian oil major Statoil, which announced in August its intension to improve the rate of recovery of oil from its field on the Norwegian Continental Shelf to 60 percent. But the UK is making an effort to catch up by using an enhanced oil recovery technology that has long been in use across the Atlantic.

Enhanced oil recovery using carbon dioxide (CO2-EOR) is a process that involves injected CO2 gas into oilfields deep beneath the seabed in order to force out additional volumes of oil.

And then it only gets "worse." Your eyes are now definitely glazed over. 

And then this, halfway through the article:

"Most of the CO2 which is used at the moment comes from natural accumulations of CO2 which are ultimately from volcanoes, so they are naturally trapped in structures below ground in the southern U.S. or in the Colorado plateau. The main exception is a project based around a power plant in North Dakota which gasifies lignite (brown coal) and strips off the CO2 from that and sends that CO2 for enhanced oil recovery into Saskatchewan, Canada through a pipeline," Haszeldine explained.

Did you catch that? You have got to be kidding. An article on CO2-EOR in Yorkshire, England, and Norway, and then all of a sudden, from out of nowhere:

The main exception is a project based around a power plant in North Dakota which gasifies lignite (brown coal) and strips off the CO2 from that and sends that CO2 for enhanced oil recovery into Saskatchewan, Canada through a pipeline."

Wow, do I love to blog. I never know where I'm going to end up.

By the way, Hess/North Dakota is also shipping ethane by pipeline to Alberta for polyethylene production [this was corrected from original post; see comment below].

By the way, did you see the recovery rate Statoil is seeking in the North Sea? Sixty percent. In the Bakken, the USGS's estimates are based on about 3 percent recovery. There are indications that some Bakken operators are getting up to 8 percent (primary) recovery. Yes, it's only beginning in the Bakken. 

Friday Night Ramblings -- The Bakken, But Nothing New

CarpeDiem.com regularly posts uplifting updates regarding the Bakken and just as regularly there is one informationally-challenged individual who never fails to comment. I can't even succinctly summarize his/her arguments/comments because they ... well, they just don't reflect reality.

One of the more interesting arguments is that all the good wells have been drilled, all the sweet spots have been found. The reality is, if nothing else, it appears most operators have been getting better at completing Bakken wells. As time goes on, we will see more and more data validating that observation.

Back in November, 2009, Hess drilled EN-State B-155-93-1609H-1 in section 16-155-93, Alger field. It was a very long lateral, almost 21,000 feet, and Hess reached total depth in 18 days. And that was back in late 2009. The IP was a moderately impressive 531 bbls/24 hours. To date that well has produced 137,876 bbls of oil. Although wells are increasing in cost, at the time this well was drilled, the general consensus was that wells were well on their way to recovering costs when 100,000 bbls had been produced. Yes, the decline rate is horrendous, but this well is still producing about 2,500 bbls/month (at $50/bbl --> ~ $125,000/month and at very little cost.

[Most natural gas from this well is being sold, but a bit is still being flared. This naturally begs the question whether the well is producing at maximum rate. The NDIC has rules about flaring and production.]

[In addition, I was unable to find the frack data for this well; it may be there, but if it is, I missed it. But back in 2009 they were fracking with less proppant and fewer stages than in 2012. All things being equal geologically, the wells should be even better going forward.]

So, back in 2009, Hess drilled the State B well in section 16, which has now produced almost 150,000 bbls (remember, this figure is only through September; it is now almost the end of November).

And today, Hess was issued permits for four more wells in this section: #2, #3, #4, and #5 in the EN-State B-155-93-1609H-1 series of wells.  So, we will get to see if, as some have suggested, "they" have drilled all the good wells in the Bakken. I can hardly wait to see how these four wells compare with the "original" well in this section.

That 2009 well is expected to produce oil for 39 years -- that's the average lifetime projected for a Bakken well. But the lifetime of a well is inconsequential. The total recovery is the key, and the period of time it takes to reach total recovery. Regardless how long a Bakken well produces, the estimated ultimate recovery (EUR) is what is important, and whether it can produce that total in a reasonable length of time. I don't know what the average EUR is/was for a legacy formation, such as Red River, or Madison, but it appears that 150,000 to 250,000 bbls is about as good as they get, and the average is well below that, and it takes 30 years to reach those totals. A Bakken well reaches 150,000 in under two years in most cases. EURs are estimated to range from 400,000 to one million bbls for Bakken wells, the latter in the best Bakken locations.

Check out "monster wells" to get some idea of the potential of the Bakken as well as other formations. 

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Some folks might have noticed this announcement earlier today:

KOG announced that it has completed its offer to exchange $800 million aggregate principal amount of its unregistered 8.125% Senior Notes due 2019 for $800 million aggregate principal amount of its outstanding 8.125% Senior Notes due 2019. 

$800 million. Hey, folks, in my book that's $1 billion.  Don reminded me that just a few years ago one could have bought a share of KOG for 60 cents.  Not too shabby. And except for a few fields, most sections still have just one well in them. The Bakken is just beginning.

They say it will take at least 48,000 wells to drill out the Bakken (that number has been increasing, and will probably continue to increase). I suppose about 5,000 total Bakken wells have been drilled to date.  Through December 31, 2011, according to the NDIC, 3,578 Bakken wells had been drilled.  Close to 2,000 more Bakken wells will be drilled this year. North Dakota now produces more oil than California with less than 8,000 active wells; someone has said that California has about 60,000 active wells.

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A new hotel is going up in Alexander, North Dakota, right in the center of one of the sweet spots in the Bakken. They are putting that hotel up in 90 days. Modular concept. It is designed to be in place "permanently." But it can be moved if necessary. This is the kind of entrepreneurial thinking that makes the Bakken so exciting.

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It seems like just the other day that we read the announcement that Love's was putting a truck stop in north of Williston. That truck stop opened this past week.  A year ago folks were clamoring for a truck reliever route, or another bypass around Williston. Some weeks ago, that bypass was being used. Not perfect, but infrastructure keeps moving along.

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Crude-by-rail? Who would have thought? CBR has completely changed the way we think about moving oil in a fast-moving economy.

SandRidge Considering Sale Of Its Permian Assets...

... to pay for developing the Mississippi lime.

Link to Oil & Gas Journal.

Eight (8) New Permits; A Nice Whiting Well; Active Rigs Decreasing Again

Bakken Operations

Active rigs: 187, decreasing from a recent 191;

Eight (8) new permits

• Operators: SM Energy (4); Hess (4)
• Fields: Alger (Mountrail), Siverston (McKenzie), Colgan (Divide)
• Comments: Again, another day with no OXY USA or Newfield permit

Wells coming off confidential list were posted earlier; see sidebar at the right.

Five producing wells completed:

• 22076, 248, Cornerstone,
• 22042, 107, Cornerstone,
• 22882, 1,533, Whiting,
• 23358, 920, Whiting,
• 21202, 978, KOG,

Kinder Morgan (El Paso) Pipeline, Tucson to Mexico; Update

Link to Oil & Gas Journal.

Parts of this story were first posted back in October, 2012.

Data points:

• El Paso Natural Gas Co., LLC, affiliate Sasabe Pipeline Co will build a 60-mile, 200-million cubic feet/day capacity pipeline from existing pipelines near Tucson, AZ, to the US-Mex border at Sasabe, AZ
• Sasabe Pipeline will connect with Sempra International in Mexico
• requires cross-border presidential permit (here we go again)
• Mexico awarded Sempra a contract to build and operate a 500-mile, $1 billion project connecting northwestern states of Sonora and Sinaloa
• the Sempra pipeline will supply natural gas for power plants for the next 15 years
• permit applied for in April, 2012; hope to get approval in earl 2013 (a full year)
• hope to start construction first quarter 2014; September, 2014, in-service date
• Kinder Morgan owns EPNG (posted recently)
• 25-year transportation agreement; $200 million project