Commercial Interruption -- Christmas Gifts -- The Bakken, North Dakota, USA

Updates

December 23, 2013: Faces of the Bakken -- Chuck Wilder, Owner, Books on Broadway. 

Independent bookstore owner Chuck Wilder noticed a change in business four years ago when guys in Halliburton coveralls started coming into his shop.

Books on Broadway started getting new customers, including a more educated set of oilfield workers than previous oil booms had brought to Williston.

“These guys, they all have engineering degrees and they’re readers,” Wilder said.
The oil boom has been good for business in the downtown shop. Holiday sales are up this year, and the store can’t keep its top seller, “The Frackers” by Gregory Zuckerman, in stock. 

Original Post

For those living and working in the heart of the Bakken: remember Home of Economy, Williston, North Dakota, for all kinds of great Christmas ideas. Also, great Holiday gifts. They do have gift cards.

In Williston, your Carhartt product won't stand out, but it will keep you very, very warm. In Boston, where I am for the moment, the Carhartt is relatively unique, and it keeps me very, very warm. I was pleasantly surprised. Unlike many "winter" jackets, it feels very "substantial."

And for those living anywhere in the world where things are still mailed, remember Bakkenduds. In the Boston area there are 25 colleges or universities. The Bakken University hoodie fits right in. And they have a new product: the "Frack!" baseball cap.

And, either at Home of Economy, or on-line, I remain very, very impressed with Sorel. I love my autumn ankle-high boots; they are extremely warm and very, very comfortable. I think the sole is about an inch or so thick, so it makes me feel a bit taller and the rubber-like material puts a bit of spring in one's step, or it could just be "feelin' good about the Bakken."  As mentioned earlier about Sorel, I think I got my pair of Sorel autumn boots at a slightly lower price at Home of Economy than on-line, although the actual products might be slightly different. I don't know if Sorel on-line offers free shipping.

As long as I'm rambling, here's a very nice Christmas suggestion for Willistonites with parents still living in the area. With all the activity, it can be a real hassle shopping for tires. Dad needed new tires on his car while I was there. We stopped at four different locations in Williston, including Wal-Mart, to compare availability and prices. The prices were all about the same. You can shop on price, but you will be wasting a bit of time (at least that's my opinion, but I am fortunate enough to be able not to worry about an extra few bucks here and there; not all folks may be so fortunate; so look around just in case).

Anyway, I digress. I finally went with Home of Economy. This is most important: go in when they might not be so busy, say Tuesday or Thursday afternoon. Bring in a big white piece of paper with all your information (name, phone, tire size, etc) and then schedule a time to have the tires put on your car. So who cares if it takes a week? It's worth the wait if you can come in at an appointed time.  I would recommend an 8:00 a.m. appointment. Drop off the car and walk back home or walk to work. Unless your work place is outside city limits, I don't think it takes more than an hour to walk anywhere in Williston. Or have a friend take you.

Oh, why do I recommend a big white piece of paper with all your information when you go to Home of Economy? One can't see the writing on black paper. No, it bugs me when folks take your information down on a scrap of paper which you just know is going to get lost. Also, I think CSRs (customer service representatives) appreciate you taking the time to write things down; it suggests you put some thought into this buying experience. 

The reason I prefer Home of Economy over the other tire stores: while waiting, one can shop in the rest of the store. Not much to do at the other tire stores except wait in line, looking at tires. Wal-Mart offers that same in-store waiting/shoppig opportunity, but it seems to be a bit more nerve-wracking: noisier, groups of people congregating at the service desk, phones ringing and being answered; customers in line seem to take back seat to the phone. But that too is just an opinion. I also don't know how much experience the folks have with tires, although that has never seemed to be a problem.  It's a very long walk from the parking lot to the  front of the store, and then an even longer walk back to the tire department. Home of Economy still had a bit of that "home" feeling I was used to; Wal-Mart, not so much. And there is almost no walking when it comes to Home of Economy. But I have no complaints with Wal-Mart. It may be Wal-Mart but it's staffed by folks that live next to you in Williston (or in the general area).

At Home of Economy I spoke directly with the tire-putter-on (I forget his name, shame on me).  I made some suggestions and he pleasantly told me I was full of bunk, reading too many tree-hugger websites. He had lived and breathed tires since he was 8 years old, seen it all, and knew what he was doing. The front desk folks concurred. He was right in his suggestions. And lots of fun to chat with, but best not to start a conversation; he may not get to your tires before lunch if you engage in chit chat.

Note: no one has asked me to put these notes up; I receive nothing for putting these notes up; purely something I enjoy doing.

I would also recommend the coffee-internet shop on Main Street in Williston, though they can be a bit slow. If you go there, go there to relax.

The Scenic Sports Shop east of Williston on 1804 is interesting.

I visited a mom-and-pop bookstore in the very, very touristy town of Rockport, Massachusetts, north of Boston, and was sorely disappointed. You folks have no idea how good the Books On Broadway store is in Williston. Chuck's regional selection was so much better than what they had at Rockport; Rockport did not have one book on the Bakken. Chuck's contemporary / non-regional stuff is superb. Even if you buy books from Amazon, support your local bookseller for some of your items. Chuck can offer great advice; I've always felt part of the buying experience is the buying experience. And Books on Broadway is not just books; lots of great Christmas idea. Lots.

Okay, enough of this. I could go on. Maybe later I will.

Elsewhere, Folks Continue to See How Far They Can Push the Envelope

I have long lost interest in this story (Wyoming, fracking, contamination, EPA) because I have been told by Teegue that there is absolutely nothing to worry about, but it is fun to see how far folks will go before she pulls the plug on any further discussion of this issue at the Bakken Shale Discussion Group.

It could turn out to be a great betting game: everyone ante into the pot; folks place their bets when the plug is pulled on this thread, and the winner takes all when the referee steps in and stops all discussion.

I give it three more posts.

Big Bakken Piece in the Wall Street Journal Today -- The Bakken, North Dakota, USA

WSJ link here. These links are tricky; it may or may not be there, and/or you may been a subscription. Carpe Diem alerted me to the link.

The article is another great article, but nothing that regular readers of this blog don't already know. But there are other reasons to read it.

The Bakken is mentioned in the article as just one example of tight oil, but remember three things: a) as far as I'm concerned, the Bakken is where "this" (tight oil boom) started, and it was in the Elm Coulee, Montana; and then to Parshall, North Dakota, 2000 and 2004 (or was it 2007?), respectively; b) everything the rest of the world accomplishes in tight oil was worked out in the laboratories of the Bakken; and, c) the Bakken still has the highest TOC of them all (it's the best source rock in the world).

Some data points from the WSJ article today:

• U.S. petroleum imports, on a net basis, reached their peak—60%—of domestic consumption in 2005. Since then, they have been going in the other direction. They are now down to 46%. [And I think none of the US imports come from the Mideast; if so, negligible amount.]
• U.S. oil consumption reached what might be called "peak demand" in 2005 and has since declined. [But Asian demand has not peaked.]
• U.S. crude oil output has risen by 18% since 2008. Some of that has come from an increase in deep-water output, although after last year's Deepwater Horizon oil spill the pace of future growth is more uncertain. The big surprise is onshore, where the United States is experiencing an oil boom.
• Thanks to tight oil, North Dakota is now America's fourth largest oil-producing state after Texas, Alaska and California. It may well move up to third or even second place.
• North Dakota also has the lowest unemployment rate in the nation at 3.5%. The shale oil boom generates jobs in the oil fields, but it also has a long supply chain, fostering manufacturing jobs in states like Ohio and information technology jobs in California.

Those jobs in other states created by the Bakken cannot be underestimated. I would assume the railroad tanker manufacturers and truck manufacturers are staying open because of the Bakken. 

Yergin says the US is down to importing 46% of its oil. Based on this article, what I know about tight oil in the US, the Keystone debacle, the Gulf permitorium, off-shore drilling bans, etc., the US could either be self-sufficient, or require only imports from Canada in the future.

What a great country.

Balmy Day in Boston; I'd Rather Be In The Bakken

It's a beautiful day in Boston; it's 28 degrees, no wind. I thought it was close to 35 or even 40, it felt so warm without the wind. Clear skies.

They continue to tear up the street outside the house; the city or someone is replacing natural gas pipes that were put in place in 1925. It is interesting. It is more difficult to get around this neighborhood due to street/under-street repairs than it was in Williston, the heart of the Bakken. There were a couple of miserable left-hand turns in Williston, but one quickly learned to avoid them.

I see the price of oil is down this morning; struggling to stay above $98.

Talking heads last week on CNBC said there would be a pullback in the near term, actually some difficulty for oil, and then back to the upward trend. But, of course, one can hear almost anything from talking heads regarding the price of oil.

The one constant: the price of oil will trend up over the long term.

There really isn't much news to talk about in the Bakken. I have appreciated all the positive comments after "turning on" the comments section again. I was surprised how many wrote to say "thanks." There must have been a dozen such very nice comments.

Not one negative comment, until mid-day yesterday, maybe earlier. I forget. I don't post the comments that have any hint of obscenity or blasphemy, i.e.,  negativity about the great state of North Dakota. Lots of jealousy out there.

I posted for a few minutes a story the FT.com ran yesterday concerning unemployment and compared it to the experience a Minnesota manufacturing icon has had. I posted it for a few minutes to get it in the queue but then took it down temporarily. I try to keep Bakken stories at the top, especially for newbies. That story will be re-posted later today after I post some Bakken stories.

Okay, since I'm rambling, what do I have for newbies?

First, this. Someone took issue with a spokesman (not me) who said Minot's population could double from 50,000 to 100,000 over the next four to five years. I find it hard to believe that Minot could reach 100,000 ever, but if the local communities, and the state and federal governments remain supportive of the oil industry in the Williston Basin, there is a good chance Minot will become much bigger.

Regarding Minot: activity in the Spearfish formation does not even appear to be in the first inning yet; it's almost as if they are in training camp, waiting for the season to begin. There's no hurry. As oil trends higher, it makes the Spearfish that much more exciting.

Also, I have alluded to a story I have heard more than once: there are at least two streams of the Bakken running east of Minot. It's all speculative, but the amount of oil services support activity in Minot suggests something big is going on that oil companies are keeping very close hold. It's hard to believe that all that activity there is to support the Spearfish, and it's certainly not there to support the operations around Dickinson.

Second, a recap of the "sweet" spots in the Williston Basin Bakken:

• Parshall oil field: "owned" by EOG; big excitement back in 2007 - 2008; has waned; 640-acre
• Sanish oil field: "owned" by Whiting; turns out to be one of the most exciting stories in the Bakken; it will be interesting to see how long it takes Whiting to complete all drilling in this oil field; that will give us an idea what might happen in the rest of the Bakken; 1,280-acre
• Williams County, northwest, north, and northeast of Williston: surprisingly good; a big thanks to BEXP to de-risking this area; Oasis following fast and furiously
• McKenzie County: Indian Hill to Alexander to Watford City -- the bull's eye of the Bakken; this is where the activity is headed in 2012; pro-growth folks there; this is going to be very, very exciting to watch
• Dunn County, reservation: steady production, but less exciting only because we've seen so much of it; the melting pot of companies working the region is most interesting; every once in awhile I get nervous about the pro-faux-environmental stance of the native Americans there, and then remember the MHA; not to worry
• Southern ops: Whiting and Chesapeake will duke it out for bragging rights in the southwestern part of the state. Whiting has the unquestionable lead; we're all waiting for some great news from Chesapeake in North Dakota

Third, a recap of the formations:

• The Bakken Pool: without question, this is where the action is; nothing else comes close. Again, "no" dry wells in the Bakken; operators trying to control costs, so we will see a change in fracking; perhaps the same number of stages (24 - 36), but mostly sand, less ceramics; near-term sand vs ceramics doesn't make a difference in production; long term the jury is still out the most economical way to go
• The Bakken Pool, cont'd: there are so many pay zones in the Bakken pool, it is becoming difficult to manage: three sub-formations in the Bakken formation (upper, middle, lower; but it is the middle Bakken sub-formation that is the target); the Three Forks with several deeper "benches" -- maybe as many as four; CLR has targeted the upper bench which sits under the Three Forks; the Pronghorn (Sand[s]) sub-formation atop the Three Forks which may/may not be the same as the Sanish elsewhere. I think the Sanish is the Three Forks in a different geographic area, but may be wrong; perhaps the Sanish is a specific upper layer of the Three Forks, like the Pronghorn elsewhere; in both cases (Sanish and Pronghorn), they "belong" to Whiting; and, of course, there is the Lodgepose, of which, see below.
• The Madison: if these wells don't need to be fracked, my hunch is that "we" have a backup plan if permitting is slowed in the Bakken
• The Lodgepole: I haven't seen anyone talk about it, but it's probably there somewhere in the NDIC geology sites, this: I think there are two Lodgepoles: the huge pools that are very, very hard to find in the Dickinson area, and then the new Lodgepole wells north of Williston. No one is talking about these wells yet publicly -- at least I haven't seen anything, but if three new Lodgepole wells north of Williston are even mediocre wells, this formation could be a game changer
• The Red River: I believe Whiting devotes one rig to targeting the Red River in their southwest operations; minor in the whole scheme of things, but noteworthy

Fourth: a recap of the operators:

• Continental Resources' Harold Hamm remains the face of the Bakken; his wells are everywhere; I think someone once noted he operates or participates in 1 out of every 6 wells in the Williston Basin; I'm glad Harold Hamm had a face-to-face meeting with President Obama to learn firsthand the president's thoughts on oil
• Whiting: this is the company that excites me (as an operator; not from an investment point of view; this is not an investment site; see disclaimer); a well-defined strategy; seems to be hitting on all cylinders -- four cylinders in the north; four cylinders in the south
• KOG: Oasis or KOG could have been in the third spot; hard to say which is more exciting; KOG moved to a new level this past year; I think they started the year without 50,000 net acres; now they have 155,000 net acres, and their most recent acquisition was incredible. They added a significant amount of acreage to their contiguous plays and it puts them right in the bull's eye of the Bakken; I wasn't too impressed with the acreage north of Williston, but it may prove to be better than I realize in the hands of the right operator; if things have not changed, they have only one dedicated frack team; they will have 12 rigs by the end of 2012; they need more dedicated frack teams
• Oasis: great, great company; building new operations building west of Williston; they also seem to know how to complete a well

Fifth: DNR -- the sleeper. I don't follow it closely; but it has a unique business strategy and a unique tool in its toolbox; for investors, I keep seeing DNR on the list of Bakken stocks to own, but I don't consider it a "Bakken" player as such; it is huge elsewhere. I don't own any shares of DNR but based on what I read, I am missing a great opportunity.

Sixth: Others --

• XTO hitting some good wells; a subsidiary of XOM, and of course anything XTO does in the Bakken will be a line item, if that, in XOM's annual report
• Slawson: not in the news so much any more; history of great wells; privately held; great coup if a public-owned company could buy their Bakken assets
• Dakota-3: a subsidiary of Williams Cos; all, or most, of their operations in the reservations; again, won't move the needle for Williams
• GMXR: a very small piece of the action in the Bakken, but I mention them because they are much more active than I thought they would be
• I wonder if it won't be a year of buyouts and mergers in the Bakken in 2012; lots of pressure to do so

More later.

Turkey, Kurdistan, Iraq, and XOM

PennEnergy link here.

XOM steps in to fill the void as the US military leaves Iraq.

I don't expect those interested in the Bakken to be necessarily interested in this story, but I spent a fair amount of time in this region in a previous life. I find this development not unexpected.