Rigzone: Musings on Shale Oil Energy Revolution

Begins with the Bakken.

PwC begins its report with a brief review of the history to date of shale oil and shale gas in the United States. The economists point out that shale oil production has grown from 111,000 barrels per day (b/d) in 2004 to 553,000 b/d in 2011, or an annual growth rate of 26%, albeit starting from a very small base. We know shale oil production increased further in 2012.

The oil production increase in North Dakota alone, where the Bakken tight oil formation dominates the output, rose by 233,805 b/d last year. Furthermore, the Energy Information Administration, in its supplemental information supporting its latest Short Term Energy Outlook, is calling for an increase in tight oil output between November 2012 and December 2014 of 1.13 million b/d, or nearly all of the projected total U.S. crude oil production increase during this period of 1.26 million b/d.

For Investors Only: Look For Increased Dividends In The Oil Patch

MarketPlace is reporting:

Halliburton Co. late Wednesday increased its quarterly dividend 39% to 12.5 cents a share, adding it wants future yearly cash dividends to represent at least 15% to 20% of net income.

The last time Halliburton had raised dividends was May 2007. The company’s goal implies a potential dividend increase of 30% to 35% next year, analysts at Simmons & Co said.

UBS analysts, for their part, said the Halliburton move could lead others to follow suit later this year, particularly U.K.-based offshore driller Ensco PLC. Ensco’s dividend increase could be announced in the first quarter.

Ensco currently pays $1.50 a share, but could raise it to $2 or $2.50 a share, they added.

Schlumberger Ltd.  increased dividends in January by 14%.

“Schlumberger will also seek to regularly raise their dividends in coming years as free cash flows grows substantially,” UBS said.

Disclaimer: this is not an investment site. Do not make any investment decisions based on what you read at this site.

Random Update: The Red River Formation

The Dickinson Press is reporting:

Emails between Lynn Helms, Department of Mineral Resources, Oil and Gas Division director, and Debra Walworth, executive director of Prairie West Development and point person for Golden Valley County for the Vision West steering committee, show that Colorado-based Whiting Oil and Gas are drilling with one rig in the Red River formation.

“Their best estimate for now is somewhere between 50 and 150 wells,” Helms wrote in the email. “One rig is enough to drill out the 50 wells, if some of the concepts they are testing result in the well count going to 100 they will add a second rig and if it goes to 150 possible a 3rd.”

Information Helms had previously shared with the Golden Valley County Vision West steering committee had only shown development in the Bakken and Three Forks formations in the county, Walworth said.

Adding Red River formation projections changes the growth outlook for Beach and Golden Valley County, she said.

“It made a big difference in the oil field jobs that would be out here,” Walworth said. “I think 2013 to 2015 will be interesting.”

Beach, like many western North Dakota cities, is already struggling with housing, Walworth said. But its need is not as great as cities like Dickinson or Watford City.

It just never quits, does it?

In the "Top Stories of 2012" I mentioned that the Red River is the "other" formation in the Williston Basin, right now.

Wow! And Washington State Is Worried About Coal Shipments! Nuclear Waste Storage Tanks Leaking; No Worry -- Governor -- It Will Take A Few Years For Radioactive Waste To Reach Groundwater -- But Heaven Forbid -- No Coal Shipments

CBS News is reporting:

Six underground tanks that hold a brew of radioactive and toxic waste at the nation's most contaminated nuclear site are leaking, federal and state officials said Friday.

Washington Gov. Jay Inslee said the leaking material poses no immediate risk to public safety or the environment because it would take a while — perhaps years — to reach groundwater.

But the leaking tanks raise new concerns about delays for emptying them and strike another blow to federal efforts to clean up south-central Washington's Hanford nuclear reservation, where successes often are overshadowed by delays, budget overruns and technological challenges.

Department of Energy spokeswoman Lindsey Geisler said there was no immediate health risk and said federal officials would work with Washington state to address the matter.

State officials just last week announced that one of Hanford's 177 underground tanks was leaking 150 to 300 gallons a year, posing a risk to groundwater and rivers. So far, nearby monitoring wells haven't detected higher radioactivity levels.

This is really quite incredible: "...no immediate risk to public safety or the environment because it would take a while — perhaps years — to reach groundwater."

The radioactive waste has already leaked; one can't put it back into the tanks. Something tells me bottled water has a huge future in Washington State.

Unless I missed it, the EPA was not mentioned in the article. Too busy measuring methane in that one well in Wyoming, I guess.

No Keystone? No Worry? Rail Making Up The Difference

Slate is reporting:

The Keystone XL is designed to transport 830,000 barrels per day. Over the past two years or so, domestic railroads have increased their transport capacity by an amount equal to about 55 percent of what Keystone is supposed to provide.

There’s nothing new in moving oil by rail. In the late 1860s, John D. Rockefeller began investing in railroad tanker cars, a move that saved him the cost of building barrels to hold his product. The oil baron’s control over the Cleveland-area refining market allowed him to negotiate favorable shipping rates with the railroads.

U.S. and Canadian oil producers aren’t waiting for the Keystone XL or other pipelines; they are building rail-car terminals so they can ship their product to market. In North Dakota alone, oil producers have built rail terminals capable of handling nearly 1 million barrels of oil per day. Refineries are also building rail terminals.

Last month, Delek U.S. Holdings, a subsidiary of the Israeli energy company Delek Group, announced that it will begin refining 15,000 barrels of Canadian crude at its El Dorado, Ark., refinery. All of that oil is being shipped in by rail. A refinery in Delaware, owned by PBF Energy, recently completed a rail terminal that will allow it to take up to 110,000 barrels of crude oil per day. The Sunoco refinery in South Philadelphia as well as a Phillips 66 refinery in Bayway, N.J., are also ramping up their ability to accept more crude by rail.

Earlier this month, Sandy Fielden, an analyst for energy consulting firm RBN Energy LLC, reported that about 1 million barrels per day of new rail-unloading capacity is being built or planned in the United States. Fielden says that “the crude-by-rail express came from nowhere on the radar screen” to become one of the biggest energy stories of 2012. And Fielden says that railroads have shown themselves to be “faster and more flexible than traditional pipeline development.”

Long article. Great article.

Fracking the Bakken also "came from nowhere on the radar screen."

But back to crude-by-rail: one could argue that crude-by-rail began with EOG's terminal in Stanley back in 2009. From RBN Energy, earlier today:

EOG was the pioneer of the crude-by-rail resurgence in North America, building the first unit train facility in the Bakken – in service during December 2009. While much of the industry thought EOG was grasping at an antiquated technology, EOG ignored the disparagement and succeeded in redefining the economics of crude oil transportation. EOG’s terminal in Stanley, ND (Montrail County) is dedicated to the company’s proprietary production and additional crude that the company purchases.