Week 41: October 11, 2015 -- October 17, 2015

Perhaps the biggest Bakken story of the week was the announcement that OXY sold its North Dakota acreage to Lime Rock Resources.  It appears Lime Rock got a great deal; Whiting, CLR, and others missed a great opportunity.

The other big story may be a wildcat natural gas well east of the Bakken that has produced one million boe in the past three years. The other big story, of course, is that despite record low activity in the Bakken (since the boom began in 2007) daily production in August, 2015, exceeded that of daily production one year earlier (linked below). Along that line, the Bakken fracklog hits a new record (linked below).

North Dakota received some nice national exposure in Forbes, which suggested that the state, due to a diversified economy, is poised to thrive.

Operations
32 wells to be sited in one section 
Transfer of 50 older wells from Whiting to White Rock
Rig count: post-boom record low (66)
Record low activity in the Bakken; production increases year-over-year
CLR reports another huge Three Forks well; this one in Chimney Butte oil field

Fracking
Large frack sand mining operation north of the Bakken
Fracklog hits record
No evidence of groundwater contamination from fracking -- NPR

Pipelines
$80 million NST Express pipeline from Alexander to Fairview approved

Bakken economy
$150 million trucker reliever route around northwest side of Williston is officially completed
A new 36-unit development has opened

Miscellaneous
Another look at the Niobrara in North Dakota
Northrop Grumman coming to Grand Forks -- big drone story

Compare these top stories with the "top five" stories at Bakken.com: http://bakken.com/news/id/246291/top-5-bakken-stories-of-the-week-33/. I like my selection better.  Just saying. It's hard to believe the OXY story did not make the Top 5 at that site but an HBO comedy video did.

In The Heart Of The Texas Oil Patch, It's Natural Gas That's Taking Off -- Rigzone -- October 17, 2015

Bloomberg/Rigzone is reporting:

The oiliest county in Texas has seen its new natural gas production capacity more than double as drillers hone in on their most profitable acreage.

The peak output rate from new gas wells in Karnes County has surged 134 percent since January, estimates from Drillinginfo show. The only other county in Texas’s Eagle Ford shale patch where new gas capacity’s gaining is Live Oak, about 50 miles (80 kilometers) southwest of Karnes, the Austin-based energy data provider said.

Gas producers are focusing on the most prolific parts of their plays as they grapple with the worst price collapse since 2008, and Karnes County has long been a sweet spot in Texas’s Eagle Ford shale. The 20,000-square-mile shale formation supplies about one-sixth of the nation’s crude.

Karnes County, southeast of San Antonio, is home to “top- tier acreage," Chris Smith, senior research analyst at Drillinginfo. "In this pricing environment, a lot of the rigs still active would be moving toward that core area."

The retreat to core fields, known as high-grading, is occurring in oil and gas fields across the U.S. Drillers are eager to cut costs amid low prices and focus their rigs on sweet spots that produce the most.

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"Full-Blown Ice-Age" In Great Britain's Immediate Future?
It's Just The Weather

The [London] Express is reporting:

Crippling blizzards, snowstorms and sub-zero temperatures threaten a yearly dose of Arctic misery for the next FIFTY YEARS at least - and possibly decades more. Climate experts warn a rare pattern of water cooling in the north Atlantic will trigger a chain reaction of events leading to a “fully-blown ice age”.

Britain faces an 'all but unprecedented' situation thanks to a cocktail of climatic changes all happening at once to affect the weather.

The northern Atlantic has been cooling steadily over the past few months leading to a colossal area of icy water to form off the UK coast.

This is thought to be the result of changes in wind flow and salinity and could lead to lower than average temperatures in Britain all year round.

The phenomenon has already raised fears this winter will be un usually brutal with months of sub-zero temperatures and heavy snow on the way.

Long-term accumulative effects could be that parts of northern Europe, including Britain, will cool dramatically.

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Martha Gellhorn

I am enjoying Selected Letters of Martha Gellhorn, edited by Caroline Moorehead, c. 2006.

Written from Cuba, shortly after being married to Ernest Hemingway (his third wife), this is a portion of a letter Martha Gellhorn (wartime correspondent) wrote to a friend, a literary critic. The letter mentions Igor Cassini (1916 - 2002), a journalist and gossip columnist, who wrote for the Hearst newspaper chain under the name of Cholly Knickerbocker. In the late 1950s Cassini claimed a readership of almost 20 million. Here is the excerpt:

However, as a philosopher (this morning) I think parties are really the last refuge of the empty and shrivelled brain, and are more destructive to the body than cocaine and more destructive to the spirit than jail. I have such a good time during them for a while, going about showing off in the cheapest and most repugnant manner, shocking citizens whose emotions (whether of shock or otherwise) surely should not concern me, and making a kind of belligerent tough-joking conversation which is found amusing only by the maker.

I had a fairly pleasant interlude last night with a little man named Igor Cassini who earns his living writing poisonous and painful things about fashionable or famous people in some second-rate Washington paper. He is a little man with a mouth which I like to think looks like a hog's ass in fly-time though I never saw that phenomenon but only imagined it. He has a great deal of matted waving hair and a little short doughy body and perfectly flat black little eyes, calculating and about as warm as ball-bearings.

He has also a wife who looks like a Russian mannequin formerly employed by Patou until she opens her mouth and then I do not know exactly where she comes from as I do not get around much but she asked me if I was American and was terribly surprised to find I was.

I went to this party with Bumbi, Ernest's oldest boy who is four days this side of the army. Bumbi is blonde and very good to look at and 18 and sweet and six feet and one inch tall. (Ernest, canny to the last, put himself to bed before the party with a sore throat; he seems fine today.)

So I told Igor Cassini [gossip columnist] that Bumbi was my son and that I had him when I was twelve, an act which had startled the medical world internationally and been very painful but rewarding for me. I also said that of course the boy had not been legal at the time but we had since given him a name. Igor was horrified to hear anyone breezing skeletons around like that (he evidently thought I was Bohemian and knew no better) and the little ball bearing eyes gleamed with pleasure at this item. So I was happy for a bit.

Her writing on the wars she covered was much more serious, of course.

Salvatore, Lana Del Rey

From The Williston Wire -- October 16, 2015

Another housing project completed:

WILLISTON, ND – Mountain Plains Equity Group (MPEG) celebrated the completion of ParkRidge Townhomes today. The 36-unit development received support from the state’s Housing Incentive Fund (HIF) to ensure the availability of affordable housing in Williston for essential service workers.

“This project has truly been a concerted group effort, with a number of players here that deserve a lot of credit. By working together, this type of public-private partnership has produced a great housing option in Williston – and at a much more affordable price,” said Don Sterhan, MPEG president and CEO.

Eighteen of ParkRidge’s two-bedroom units are rented for $1,000 per month to law enforcement, education and medical facility staff and local and state government employees. To qualify for these units, primary household income must come from such employment. The remaining units in the development rent at market-rate.

Somehow, government incentives to ensure the availability of affordable housing for essential service workers makes more sense than $25,000 tax credits for the wealthy buying $125,000 Teslas. But then, that's just one man's opinion.

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2015 Bakken Oil Product & Service Show 

Williston – Best Show Ever Williston , ND, October 14, 2015 – The booths are packed up and the results are in.

Despite a slowdown in oil and gas activity, exhibitors and visitors describe BOPSS 2015 as the best show ever.

Expanded hours, discounted safety training, door prizes, and a Tailgate Cook - Off competition raising money for charity were all welcomed additions to the event. The pull back in craziness allowed over 1,000 people to attend and connect at the event, an increase of more than 25% from 2014.

While some companies are clawing their way through the downturn , some have closed up shop and others are taking market share from competitors, one thing is for certain: the oil and gas business in the Williston Basin is alive and kickin’ and here to stay.

Another Great Example Of State, Pipeline Operators, Surface Owners Working Together To Get Something Done; Talk Of A Bakken Bust Seems Premature; Another $80 Million Project -- Ho, Hum -- October 16, 2015

This story sent to me by a reader. Thank you.

The Bismarck Tribune is reporting:

A year from now up to 100,000 barrels per day of more Bakken crude oil will be moving through pipelines to refineries across the country.

The crude’s movement by pipeline in McKenzie County became a reality Wednesday by a vote of the North Dakota Public Service Commission.

NST Express LLC, which is part of The Woodlands, Texas-based NorthStar Midstream, plans to build a 12-inch diameter crude oil pipeline in McKenzie County. The company’s application was submitted in May. [Submitted in May; approved in October; under a river; four months to review and approve]

“This is a 23-mile pipeline in the heart of the Bakken,” commission chairwoman Julie Fedorchak said. “Everything was pretty straightforward so we were able to turn it around pretty quickly.”

Fedorchak said the pipeline would have a maximum capacity of 100,000 barrels per day of crude oil.

Oil would be transported from a new gathering facility called the NST Express Alexander Facility about 9 miles north of Alexander to its NST Transload East Fairview Facility a half-mile north of East Fairview, near the Montana state line.

Other data points:

• at 23 miles and a million dollars/mile, I estimated the cost at $25 million; in fact, it will be $60 to $80 million
• will go under the Yellowstone River; will be at least 50 feet below the river
• six pipeline interconnects
• four offload skids for trucks
• a pump station
• three crude storage tanks with a capacity of 50,000 bbls each (150,000 bbls total) 

I apologize for being so inappropriately exuberant about the Bakken, but here's another little Bakken project -- only 23 miles long, only 12 inches in diameter, but it's going to move 100,000 bopd out of the Bakken. Not trivial. And it's another $80 million project. When I was growing up in Williston a project this size would have been a big, big deal. In western North Dakota, it's just another footnote.

Now, for the rest of the story -- with photographs. Here's the website for the Northstar Transload East Fairview Facility. When you see the BNSF locomotives, think Warren Buffett. And all those trains going through MSP if the state of Minnesota keystones the Sandpiper.

In case the link is ever broken, here is a snapshot of the transloading facility in East Fairview:

The NorthStar Transloading Bakken terminal is a 400-acre rail-and-truck transportation hub serving the oil and gas industry. It is located outside East Fairview, a town in North Dakota’s McKenzie County that sits on atop the Bakken Shale play. McKenzie is among the most productive oil-producing counties in the United States.

The inbound/outbound terminal receives and stores the crucial incoming dry goods needed for oil-drilling sites, including sand, cement and construction equipment. Abundant unload racks take in crude that has been brought in by trucks from nearby wells. That fuel is then stored in onsite tanks until it can be placed onto awaiting trains. The terminal’s outbound rail services then ships the fuel to market.

Key Services

• The terminal provides unit and manifest train switching and transloading services. It currently has 14 rail tracks feeding off the main BNSF line to handle all inbound and outbound operations.

• The terminal’s 12-station truck unloading facility removes fuel from tanker trucks and pipes it into onsite storage tanks.

• Five onsite storage tanks have a combined net capacity of 515,000 bopd.

• A planned on-site pipeline interconnect facility will gather fuel from the Alexander Hub, 20 miles away. After fuel is received via the interconnect, it will be transferred over to the terminal for rail shipment. [This is the press release above.]

• The facility includes abundant indoor and outdoor storage for railcars, sand and other needed materials.

Williston is about 35 miles to the northeast of Fairview. East Fairview is on the North Dakota side of the Montana-ND state line. By the way, the best pizza in the world -- I'm not kidding -- can be found at the Powder Keg in East Fairview. Soft serve ice cream for dessert is free (Facebook).  I had the opportunity to ride shotgun transporting sugar beets during harvesting season some years ago. From personal experience, I know how dangerous that intersection (seen below) is. [Later: see comment below: a reader suggests that this intersection will be re-designed as a large (truck-sized) round-about like the one they have in/near Killdeer -- which, for those interested, can be seen on the Google satellite map]:

Don't let me be misunderstood about my inappropriate exuberance for the Bakken:

Don't Let Me Be Misunderstood, The Animals

One Of The Largest Frack Sand Deposits Lies Just North Of The Bakken; Will Help Relieve Wisconsin's Frack Sand Mining Industry; May Cut Down On Frack Sand By Rail; Great News For Truckers -- October 16, 2015

This should make the NIMBYs in Wisconsin who oppose frack sand mining happy. The press release:

From North America Frac Sand Inc.: on September 9, 2015 we announced the acquisition of North America Frac Sand (CA) Ltd. and its 30,000 acres of leases that are estimated to contain 6.4 million tonnes of recoverable reserves of frac sand, and potential reserves of at least 66 million tonnes.

After the successful sale of their sand deposits in Lloydminster, Alberta; Ray and Dwight Newton began testing some optioned acreage approximately 30 miles east of Saskatoon Saskatchewan. Expenditures of approximately $3 million for exploration, drilling, and analysis later, the testing has proved out 6.4 million tonnes of recoverable reserves of frac sand. Subsequent testing, will prove out a substantial portion of the 100 million tonnes identified.

The three challenges of discovering new frac sand reserves are:

• meeting all of the API specification with respect to size and shape of the frac sand deposits. Our frac sand deposit contain the three most common sizes 20-40,30-50, 40-70 & 70-140 all of which meet API standards.
• sufficient contiguous volume and value to be economical. Our frac sand deposit is both of sufficient volume and quality to be economic. We have minimum overburden; we have our mining permits; we are ready to continue to prove up our resource, build our plant, and start shipping.
• in close proximity to either, oil and natural gas reservoirs, or at least to rail, for cost efficient transportation.
• are truck-able distance to the major Bakken reservoir in North Dakota, Montana, Alberta and Saskatchewan; as well as the Duvernay, Horn River, Montney, Viking and Cardium reservoirs of Western Canada. Annual requirements are in the millions of tonnes for new drilling and recompletions.

We are strategically located to replace a significant portion of the 70% of the frac sand currently being imported into Canada from Wisconsin.

By trucking directly to our customers, not only do we save 1,500 km shipping costs, we by-pass the current bottlenecks of the supply chain, which are rail car availability; lack of trans-loading facilities and sand storage infrastructure; and improving last mile deliveries.

Additionally, in this short term period of low price oil, we provide a cost efficient solution to deliver the frac sand exactly when and where the drillers require the frac sand.

For the Wisconsin folks who don't like mining in their state, this is exceptionally good news.