Bakken Production Held Back By Flaring

(You know it's a quiet day in the oil patch if I'm reporting on flaring. Smile.)

If I remember correctly, NDIC put in restrictions on producers to limit production if they were flaring gas. ( I believe that had to do with MDU's request to designate the Cottonwood Field a year or so ago: as part of the agreement, only so much oil could be produced in that field pending natural gas pipelines being put in.) North Dakota has one of the highest rates of flaring gas at the time I posted that, and NDIC wanted the flaring to be minimized.

There's an interesting thread at the Bakken Discussion Group : there is still a delay in getting natural gas lines put in. I have no idea if this is having a material effect on oil production, but my assumption is that in some areas, production may be held back until natural gas lines are in.

The Bismarck Tribune reported on the issue of flaring one year ago. At that time, North Dakota was burning off one-third of its natural gas compared to 1 percent nationwide and 3 percent worldwide.

In May of this year (2010), the Williston Basin Interstate Pipeline Company announced plans to increase its capacity by 33 percent.

Additional background can be found here.



Temporary Flaring in Dunn County, North Dakota (USA)

Newfield Directional Wells in Utah Being Drilled in 2.8 Days

Transcript here.
Newfield website here.
Yahoo!Financial: NFX

According to the 2Q, 2010, earnings conference call, Newfield set a company record drilling a directional well in 2.8 days, in their Monument Butte play in Utah. They have a 5-rig, 375 well/year program.

Our drilling team in Monument Butte continues to impress and set a recent drilling record of 2.8 days. That’s rig up to rig release and it was on a 20-acre directional well. Our improved drilling efficiencies are allowing us to drill an estimated 375 wells this year, with a five-rig program. It really puts it in perspective when you realize that we are turning a new oil well to sales every day now. This is the essence of a resource play and we are fortunate to have won this oil.

See the rest of the transcript here.

From their mid-year operational update:

Increasing production [in Monument Butte] is primarily attributable to improved drilling efficiencies. The Company recently set a drilling record (rig-up to rig-release) of 2.8 days on a 20-acre directional well. This compares to a 2009 average of 5.5 days and an average of approximately 6.5 days when Newfield acquired the field in 2004. Year-to-date average performance is 4.5 days. Recent gross well costs in Monument Butte range from $700,000 – $900,000. The Company is operating five rigs today and expects to drill about 375 wells in 2010. 

Now, back to the Bakken:

I’ll move on now to the Williston Basin. Our production in this region is the head of original plans and has nearly doubled since the beginning of the year. That production today is more than 4,000 barrels of oil equivalent. We added a fourth operating rig to our program last week and expect that our net production at year end 2010 will be about 6,500 barrels per day in this region.

We have about 160,000 net acres under active development along the Nissan and west of the Nissan, and year-to-date we expect to drill 25 or so wells in the full-year of 2010 cycle. Most of our producing wells to date have had lateral lengths around 4,000 feet, we expect in the second half that half of these wells we will drill, will have extended lateral lengths up to as long as 9,000 feet.

We continue to involve our completion designs to achieve the best results. In our operations release we detail recent well results and you can see several of the wells of initial production rates in excess of 3,000 barrels of oil equivalent per day and 30 day averages of a 1,000 barrels of oil equivalent per day or more.

In our Westberg development area on the Nesson Anticline, our recent Garvey Federal 1-29 well is our best to date and had an initial production rate of more than 3,800 barrels of oil equivalent per day from a 3,900-foot lateral.

We’re also seeing good results in our new assessment areas west of the Nesson in the Aquarium/Watford are a Bluefin well had an IP of about 2,500 barrels of oil equivalent per day and was our first Bakken well on this acreage area. More than half of remaining 120 wells this year will have lateral lengths of approximately 9,000 feet.

As a result of our improved drilling and completions we’re now seeing increased UR’s in the range of 500,000 to 750,000 barrels. Recent drilling complete cost for the Williston wells range from $6 to $8 million, gross.

In Q & A:

• 14 - 16 fracture stages
• Fracture: "We’re pumping sand for a bulk of the job and tailing with ceramics."

The question that is still not clear in my mind:

• NDGS estimates 200,000 - 300,000 bbls EUR in each section in the major Bakken counties
• Companies estimate 500,000 - 750,000 bbls EUR/well
• If there is only one long lateral, that about makes sense
• In the Sanish and the Parshall, we are seeing well in excess of one well/section
• So, are we comparing apples and oranges? The companies look at EUR/well; the state looks at EUR/acreage

Low-Hanging Fruit in the Energy Sector

Americans have a habit of being wasteful because so much of what we have is inexpensive and/or easy to replace.

Energy is no exception. For decades energy has been relatively inexpensive in the United States and it was easy to ignore some of the inefficiencies in the energy sector. But with energy becoming more expensive, and/or the government putting in place new energy regulations, it is my contention that there is some "low-hanging fruit" in the energy arena in which to make a bit of money.

This is a "cut and paste" note from a longer note I sent my son-in-law. We had been discussing my contention, that within the energy sector, there must be some "low-hanging fruit."  This note should probably be cleaned up because it talks about much more than just "low-hanging fruit," but I hate re-writing.

Whatever.

Those interested in investing in Enbridge should find it very interesting:

So, here goes:

*****

Someone who reads my blog passed on to me that Enbridge (parent company of EEP) just bought a huge wind farm in Colorado; I remembered that Enbridge had bought a solar farm in Ontario and that brought me back to one our discussions some time ago.

I mentioned that with energy becoming more expensive, and the fact that energy in America (both the US and Canada)  has historically been quite "cheap," there must be a lot of "low-hanging fruit" -- or a lot of inefficiencies that could be transformed easily into money-paying ventures.

It appears Enbridge (a natural gas company has done just that).

1. WASTE HEAT RECOVERY FACILITIES: Enbridge has one of the longest natural gas pipelines (if not the longest) in North America, from NW Canada to Illinois. The compressor stations can take waste heat and generate enough electricity for 5,000 homes.

Enbridge operates four non-regulated waste heat recovery facilities located in Saskatchewan along the Alliance Pipeline.

Electricity is generated by harnessing the waste heat produced by Alliance Canada's gas turbines at its compressor stations and converting it to electrical energy. Each of the four units produce approximately 5 megawatts (MW) of power – enough energy to power the equivalent of approximately 5,000 homes.

Investors can invest in that project through the Enbridge Income Fund (ENF.UT).

2. HYBRID FUEL CELL: Enbridge put a hybrid fuel cell in its headquaraters parking lot to generate electricity from unused waste heat. The parking lot (22 parking spaces) generates enough electricity for 1,700 homes.

In 2008, Enbridge officially launched the world’s first hybrid fuel cell power plant that is designed for gas utility pressure reduction stations.

The plant converts unused pipeline energy, a byproduct of distributing natural gas to customers, into ultra-clean electricity. Built on approximately 22 parking spots in the company’s parking lot, the fuel cell operates without burning any fuel to produce about 2.2 megawatts of environmentally preferred, near zero-emissions electricity, enough to serve about 1,700 Ontario homes.

Enbridge has exclusive North American distribution rights for the hybrid fuel cell technology. We plan to replicate the plant throughout our distribution network in Ontario and market the hybrid fuel cell to other natural gas pipeline companies in North America.

3. So, this natural gas pipeline company has found some low-hanging fruit and converting it to money-making ventures.

4. Solar energy: But then, this natural gas pipeline company does something I never thought it would do -- it bought the Solar Farm in Ontaria, Canada from First Solar. I never thought anything of it at the time, but it is the world's largest solar cell farm -- yes, in the world -- of all places, it's located in Canada. It's a 40-MW farm, and now they will double it to 80 MW, and will be remain the largest in the world by far, until a 125-MW farm in Australia comes on line in 2012.

5. And Enbridge just bought its seventh (7th) wind farm -- this one is 75 miles west of Denver.

*****

That's it. There are more Enbridge stories below this one, posted within the last couple of days.

Enbridge reports earnings this week, July 28. Enbridge Energy Partners, L.C., reported earnings yesterday, blowing through estimates, reporting income 14 cents higher than forecast.

Fidelity Reports a Nice Well in the Sanish

Fidelity reports a nice well in the Sanish, an oil field mostly controlled by WLL:

• 18345, 996, Fidelity, Deadwood Canyon Ranch 44-33H, Sanish

Head-to-head: these three wells are all on adjacent sections in the Sanish. They each had a rig on site on December 16, 2009. Adding more interest to this head-to-head competition is the fact that the Fladeland 12-15H-22 is in the same section as Fidelity's #16953. The latter reported an IP of 440 bbls/day on the July 9, 2009, NDIC daily activity report.

• 18318, 1,929, WLL, Fladeland 11-10H, Sanish
• 18302, 555, Fidelity, Fladeland 12-15H-22, Sanish
• 18347, 2,301, WLL, Fladeland 44-9H, Sanish

These are two more Fidelity wells right in the "WLL-owned" Sanish:

• 18346, 777, Fidelity, Deadwood Canyon Ranch 11-33H, Sanish -- among WLL wells with 1,500 boepd IPs
• 18345, 996, Fidelity, Deadwood Canyon Ranch 44-33H, Sanish -- among WLL wells with 1,500 boepd IPs (again, the method for calculating IPs may be different; the NDIC reports might show these wells closer together in production)

Oasis Reports a Nice Well Northwest of Williston

It looks like Oasis is reporting a nice well:

• 18567, 1,835, Oasis, Njos Federal 5602 11-13H, Wildcat (156-102) 

In addition, Oasis has reported that the sister well on the same pad is plugged or producing.

• 18418, DRL, Sandaker 5602 11-13H

These wells are about ten (10) miles north of the BEXP Olson wells which were among the first really great wells in this area. 

From the nomenclature for an Oasis well it is easy to determine where the well is located: the first four digits, in this case "5602" refers to T156N-102W. The last one/two numbers preceding the "H" (in most cases) is the section number. 

I believe Oasis has a fair amount of leased acreage in this area. These are the permits that Oasis has in the local area of this most recent well northwest of Williston (as of July 23, 2010):

• 18623, Odin Jorgenson 5502 44-8H, Wildcat
• 18799, Stowers 5502 43-8H, Squires
• 18801, Contreras 5502 42-7H, Squires
• 18802, Vuki 5502 42-7H, Squires
• 18817, Kjos 5502 44-24H, Squires
• Andre 5501 13-4H, Missouri Ridge
• 19046, McFarland 5502 44-12H, Squires
• 19097, Merritt 5693 11-24H, Alger
• 19131, Somerset 5602 12-17H, Bull Butte
• 19132, Ellis 5602 12-17H, Bull Butte
• 19267, Holmes 5601 44-32H, Wildcat
• 19235, Dixon 5602 44-34H, Wildcat
• 19282, Bean 5703 42-34H, Bull Butte
• 19307, Devon 5601 12-17H, Wildcat
• 19308, Glover 5601 12-17H, Wildcat

These permits, in the same general area, have been canceled (no big deal: simply moved across the section line from section 8 to section 17 in the same township, same oil field, which by the way, has a rig on site):

• 18914, Ellis 5602 42-8H, Bull Butte
• 18915, Somerset 5602 42-8H, Bull Butte