More On The CLR-Springer Oil Formation -- September 21, 2014

This is actually a pretty good article shedding more light on the Springer and CLR. Quite a story. OilandGas360 is reporting:

At the Analyst Day, Will Parker, Senior Exploration Geologist, said CLR published a list of six stealth plays in 2012. “Using our expertise, we have turned a stealth play into a reality,” he said.

Continental’s find is the Springer Shale, in the heart of the SCOOP play.

The company’s first discovery well, named the Wilkerson 1-20H, was completed in January 2013. The well returned an initial production (IP) rate of 2,038 boepd.

Continental responded by drilling two more wells in the Springer’s oil window. The Ball 1-19H, a stepout well drilled 25 miles to the southeast, served as a delineation test and returned an IP rate of 1,037 boepd. The Birt 1-13H was drilled near the Wilkerson and produced an IP rate of 793.

CLR opted to go stealth, keeping quiet on its find and making land acquisition its priority. Since 2012, the company has boosted its SCOOP acreage by 540% and now holds 195,000 net acres. A total of 11 wells have been completed to date, with the highest IP registering at 2,133 boepd. The 11 Springer wells, on average, are returning IPs of 700 boepd and a type curve of 940 MBOE – sufficient for a 100% rate of return at costs of $9.7 million per well. The Wilkerson has produced a cumulative total of 300 MBOE in its first 20 months of production.

Additional well results are coming: three are on flowback and two will be completed before the end of the month.

Since the Springer Shale is above the Woodford, all previously drilled Woodford wells provide a “free look” into the Springer, according to CLR management. Additionally, the company can list two formations as held-by-production with a single wellbore. “We got a two-for-one,” said Parker. “We bought one shale and got another one for free.”

Bakken or Springer?

The company is adopting a wait-and-see approach on SCOOP expenditures, but do expect 25% of 2014 capital to be directed to the play. That number will increase to 30% by 2015.

The Bakken will command the majority of CLR’s budget in the near term.

However, competitor Newfield Exploration believes Oklahoma does have one benefit over the Bakken, and that is: “Location, Location, Location.” In an interview with the American Association of Petroleum Geologists, Steve Campbell, Newfield’s Vice President of Investor Relations, mentioned the state’s established procedures, favorable laws and extensive infrastructure, which offer “a distinct advantage.”

More at the linked article. The Springer is linked at the sidebar at the right.

Big, Big End To Renewable Energy Week In NYC; 40 Million German Households Now Pay More For Electricity Than Anyone In Europe Except The Danes; Their Gift To The World -- September 21, 2014

[Seakhawks beat Broncos 26 - 20 in overtime.]

Bloomberg is reporting:

When Germany kicked off its journey toward a system harnessing energy from wind and sun back in 2000, the goal was to protect the environment and build out climate-friendly power generation.

More than a decade later, Europe’s biggest economy is on course to miss its 2020 climate targets and greenhouse-gas emissions from power plants are virtually unchanged.

Germany used coal, the dirtiest fuel, to generate 45 percent of its power last year, the highest level since 2007, as Chancellor Angela Merkel is phasing out nuclear in the wake of the Fukushima atomic accident in Japan three years ago.

The transition, dubbed the Energiewende, has so far added more than 100 billion euros ($134 billion) to the power bills of households, shop owners and small factories as renewable energy met a record 25 percent of demand last year.

RWE AG, the nation’s biggest power producer, last year reported its first loss since 1949 as utility margins are getting squeezed because laws give green power priority to the grids.

“Despite the massive expansion of renewable energies, achieving key targets for the energy transition and climate protection by 2020 is no longer realistic,” said Thomas Vahlenkamp, a director at McKinsey & Co. in Dusseldorf, Germany, and an adviser to the industry for 21 years. “The government needs to improve the Energiewende so that the current disappointment doesn’t lead to permanent failure.”

While new supplies sent wholesale power prices to their lowest level in nine years, consumer rates are soaring to fund the new plants. Germany’s 40 million households now pay more for electricity than any other country in Europe except Denmark, according to Eurostat in Brussels. A decade ago, Belgium, the Netherlands and Italy all had higher bills than Germany.

“Politicians are often trying to kid us,” Claudia Fabinger, a 65-year-old self-employed marketing manager, said in between shopping for groceries on Leipziger Strasse in Frankfurt. “Our power bills keep rising and rising to fund clean energies; on the other hand, we are still polluting the air with old coal plants.” 

The entire article is a must-read. Go to the link to read the full article. As you read the article, remember: Germany accounts for 2.4% of all the CO2 emitted into the atmosphere. A lot of pain for making absolutely no difference. And now it seems, they don't even feel good about it.

The story above ... well, what can I say? It can't be much worse. But, actually it is. Just a few weeks ago, the Germans said this sacrifice was their gift to the world (at the linked post, scroll down to "tilting at windmills") (I can't make this stuff up):

I'm posting this for the archives. I assume no one will read the entirety of the linked article over at The New York Times. The article is on Germany's transition to renewable energy. It is costing the average German a lot of money, and there are questions whether the transition will even succeed. The article concludes:

“Indeed, the German people are paying significant money,” said Markus Steigenberger, an analyst at Agora, the think tank. “But in Germany, we can afford this — we are a rich country. It’s a gift to the world.”

I wonder if the average German is aware how little their efforts will result in anything meaningful. I wonder if the average German has looked at the graphic at the bottom of this article. Because it's always possible that the graphic will disappear some day, here are the data points.

Unrelated, but the thousands of folks who attended today's global warming march in NYC arrived in 500 diesel-burning buses. Not natural gas buses, or propane buses, or electric buses. But diesel buses.

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Siemens: Renewable Energy Fossil Fuel Energy

I used to equate Siemens with renewable energy, but apparently they've seen the light. It looks like Siemens will buy Dresser-Rand for $7.6 billion an an all-cash deal. Regardless of who bought Dresser-Rand, I see this as a huge deal for the fossil fuel industry (and reality). I always equated Siemens with wind energy -- looks like they've seen the light also: a) Europe is a drag on their profits (so they are coming to the US); b) the future is in fossil fuel, not renewables. 

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Irony

Is it just me or does anyone else see the irony in this? President Obama closes the White House to the public, and then Omar, a Iraqi war veteran "with plenty of fire power" simply walks into the first family's residence with a knife. I can't make this stuff up.

How Soon Does An Operator Frack A Well After Reaching Total Depth? -- September 21, 2014

At the top of the blog, across the top, there are several tabs, including one labeled, "FAQ," frequently asked questions. At the FAQ page there is a Q/A regarding how soon an operator fracks a well after it has reached total depth (vertical depth + the horizontal). The original answer needed to be updated with pad drilling.

This is how I would answer the question now. 

22. How soon does a company stimulate a well after completion of drilling?

Update, posted September 21, 2014: prior to pad drilling, fracking was subject to availability of frack spreads (to include personnel, equipment, and proppant), winter weather, and road restrictions, but that was about it. With pad drilling, everything has changed. Generally speaking the same pre-pad-drilling constraints still exist. But now, "operational constraints" come into play. Generally, operators will not frack a well that has reached total depth (vertical plus horizontal) on a given pad until all wells on that pad have reached total depth. The first-best example might have been CLR's 14-well Atlanta pad in Baker oil field southwest of Williston in 2013 - 2014 time period. That pad was watched closely, and it seemed to take forever to get the wells on that pad completed/fracked. It may have been a full 18 months from the time the first well was spud on that well until the 14th well was fracked.

Original: This varies. Buried deep in this site (that link is broken, unfortunately) one learns that EOG spudded a well on January 19, 2009, but did not plan to fracture stimulate it until July, 2009. EOG does not frack wells between November and March. [Update: I believe this was based on a comment from an EOG earnings transcript back in 2009; since things things may have changed.]  I assume that most wells are ideally fractured within a month of when drilling is completed but I do not know. However, due to the increased number of rigs in North Dakota and the increased pace of drilling, fracking has become the bottleneck to completing a well. In early 2010, a wait of six months was being reported to have a fracking crew in place after the well had been drilled. Halliburton announced in early 2010 that is fracking crews would now be working 24 hours/day to try to minimize the backlog.

EOG talked about this in August, 2014:

• pad completions 
• a lot of offset wells are taken off-line
• wells take longer to flow back as new wells are brought on-line
• production growth can be lumpy rather than linear

Sinclair Will Report A Nice Well Monday -- September 22, 2014

Monday, September 22, 2014

• 26684, drl, Zavanna, Angus 3-10 3TFH, Long Creek, no production data,
• 26831, drl, XTO, Rolfson 14X-34A, Siverston, no production data,
• 27471, drl, Petro-Hunt, Moddy 159-94-15B-22H-2H, North Tioga, no production data,
• 27571, drl, Hess, EN-Jeffrey A-155-94-2734H-6, Alkali Creek, no production data,
• 27623, drl, SM Energy, Carol 12-35H, Camp, no production data,

Sunday, September 21, 2014

• 24568, 1,805, Sinclair, Yauch 03-04-1H, Lone Butte, t6/14, cum 23K 7/14;
• 26830, drl, XTO, Rolfson 14X-34E, Siverston, no production data,
• 27228, drl, Hess, BW-R Peterson-149-99-1102H-2, Cherry Creek, no production data,
• 27630, 1,231, CLR, Brogger 6-4H1,  Crazy Man Creek, t7/14; cum 14K 7/14;

Saturday, September 20, 2014

• 26654, 2,331, Whiting, Thurlow-Williams 11-18-2H, Lonesome, one of the most detailed geology reports I have ever seen in a file; gas units early on averaged 600 to 1,000; near the end 1,200 and then jumped to 2,500 in the last 1,000 feet; if the frack report was there, I missed it; I assume it was similar to #26760 on the same pad; t3/14; cum 47K 7/14;
• 26760, 2,239, Whiting, Thurlow Williams 11-18H, Lonesome, middle Bakken; 28 stages; 2.5 million lbs sand/ceramic; t3/14; cum 48K 7/14;
• 26685, drl, Zavanna, Angus 3-10 5H, Long Creek, no production data,
• 27373, 172, American Eagle, Warren 4-2-163-101, Colgan, a Bakken well, t5/14; cum 16K 7/14;
• 27622, drl, SM Energy, Donna 12X-35H,  Camp, no production data,

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24568, see below, Sinclair, Yauch 03-04-1H, Lone Butte, a nice well, Lone Butte is a fairly quiet field straddling the northwest corner of Dunn County and southeast McKenzie County; fairly quiet because of its location in/near government-administered "grasslands," I suppose.

Date	Oil Runs	MCF Sold
7-2014	17602	0
6-2014	4362	0

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There's A Reason We're Not Hearing Much About ObamaCare Right Now

I "track" ObamaCare here.  USA Today is reporting: the IRS will "cut" refunds in 2015 for those who lied about their income status when applying for ObamaCare and the subsidies.

And, remember, by executive order, most of the ObamaCare mandates were waived or delayed until 2015 or 2016.

One year ago, September, 2013, I wrote:

It took two to five years for the DOE-backed "Solyndra" companies ("the list of 38") to go bankrupt. We will see the same thing with the "on-line exchanges."  A lot of federal money will be provided these small, under-capitalized companies, but over time, they will run into financial difficulties, and gradually disappear.  [September 16, 2014: CNBC is reporting -- exactly what happened in Minnesota.

PreferredOne, the insurer that sold nearly 60 percent of all private health plans on Minnesota's Obamacare exchange, on Tuesday said it would leave that marketplace. PreferredOne's plans were the lowest-cost options on that exchange, known as MNSure.

PreferredOne cited the costs of doing business on MNSure as the reason for its surprising decision, saying that selling plans is "not administratively and financially sustainable going forward." In other words: bankrupt.]

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A Note to the Granddaughters

A little gem, it appears, prominently displayed over at Barnes and Noble: a glossy little bargain-priced book, first published in 1994, and most recent copyright in 2009 -- The Beatles: A Hard Day's Write: The Stories Behind Every Song, Steve Turner.

When I went to pay for it, the cashier said it was surprising to her how many of these little books had sold, and I think she was not just saying that. The stack of such books is generally quite high or quite deep, but in this case, there were only four (now three) left.

I mentioned to the cashier that this is exactly the kind of book one does not need: one can get all the information off the internet, and perhaps even more. But the cashier noted that there are some books that folks just enjoy having ... for whatever reason.

And it turns out it's a pretty good book.

The other book may or may not be as good. I was looking for a new "science" book but nothing jumped out at me. I happened to see "quantum theory" in the sub-title of a book, picked it up, and paged through out. My granddaughter and I are having a great time "exploring" the periodic table.  So, I was thrilled to see a chapter titled, "Many Electron Atoms and the Periodic Table of Elements." Wow. And then, icing on the cake: "The Hydrogen Atom: Quantum Theory." One of my favorite physics books is Hydrogen: The Essential Element, John S. Rigden, c. 2003.

The book: Absolutely Small: How Quantum Theory Explains Our Everyday World, Michael D. Fayer, c. 2010. I don't care for the font or the "feel" of the book but the content seems very, very good. The publisher/publishing house explains the font/feel, I guess, something called Amacom: American Management Association.

One of the things that intrigues me about the book is that it was written by a scientist who seems interested in writing scholarly books (he is the author of Elements of Quantum Mechanics) and who has not become a pop-author writing about physics for monetary gain.

Only Part Of The Story Is Being Reported ... Again -- September 21, 2014

AFP is reporting:

US corn and soybean crops could break records this year, but for farmers the bounty has a dark side: falling prices and a logistics nightmare getting crops to market.

The US Department of Agriculture is forecasting record crops this year for corn and soybeans, the two largest US crops in terms of production. Unless there is a devastating freeze or torrential rains before the harvest ends, corn production is projected at 366 million tonnes and soybeans at 106.5 million tonnes. 

Handling all this production will be complicated. According to Arthur Neal, a USDA transportation and marketing official, about 3.5 percent of the crops, equivalent to 762,600 truck loads, cannot be kept in permanent storage structures like silos -- the highest share since 2010.

That does not bother Reifsteck, who says he will rely largely on field storage.

What bothers him more is transportation.

"It is harder than a few years ago to find and keep truck drivers with proper records. We may have to use two or three more weeks to harvest," he said.

Rail problems also have affected grain shippers, especially in several northern states on the Canadian border.

An exceptionally severe winter snarled transportation, and the growing volume of shale oil produced in North Dakota being transported by train has weighed on freight service to grain shippers.

Since October 2013, the rail freight service for grain "has been inadequate, characterized by long delays, missed shipments, burgeoning backlogs, and higher costs," Neal told a Senate hearing earlier in September.

Back to "the growing volume of shale oil."

Do a word search of the article for "pipeline" or "Keystone." Check the status of pipeline permits being held up by Minnesota and Iowa farmers. The Keystone, by the way, as an agreement for approval, was required to handle up to 100,000 bopd from the Bakken. Not happening. President Obama killed the Keystone. Check out 350.org rallying cry. 

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Glabal Warming

400 ppm

By the way, speaking of 350.org, apparently 350.org showed up in 500 diesel-burning buses instead of natural gas buses or electric buses for the global warming march in NYC. I can't make this stuff up.