Tuesday, August 9, 2011

Legacy -- Spearfish -- Producing -- Press Release -- North Dakota, USA

Link here.

Of a dozen accomplishments highlighted by Legacy in their 2Q11 operations and financial results, this was the first item mentioned:
At Bottineau County, North Dakota, three of the five wells drilled and completed in late 2010/early 2011 are on production, with an average 60 day initial production rate of 100 Boe per day, per well. These wells have confirmed the presence of an emerging light oil resource play in the Spearfish Formation and proven the productive potential of a large portion of Legacy’s Bottineau County acreage.
 A big thanks to another "Bruce" alerting me to this. I would not have found it on my own.

Abraxas Update -- Bakken, North Dakota, USA

Link here.
In McKenzie County, North Dakota, Abraxas drilled the Stenehjem 27-34 1H to a total measured depth of 16,504 feet, including a 5,965 foot lateral in the middle Bakken formation, and completed the well with a 17-stage fracture stimulation. The well was placed on production in late June and in 44 days the well has produced (on a restricted choke) 20,000 barrels of oil.

In various counties in North Dakota and Montana, fourteen non-operated horizontal wells, targeting the Bakken or Three Forks formation, in which Abraxas owns a working interest are currently in progress or recently placed on-line.

In early July, Abraxas announced the purchase of a drilling rig that is in the process of being refurbished. After completion, the rig will be mobilized to McKenzie County, North Dakota and it is anticipated that the rig will begin drilling on the first pad site in October.
Yup, another active rig coming to the basin.


Stop the Presses: President Obama Wants More Drilling In Alaska -- Interior Secretary Salazar

Link here.
Interior Secretary Ken Salazar came to Anchorage on Monday and said the Obama administration supports more oil drilling in Alaska, potentially including offshore Arctic development.

Salazar joined Alaska Sen. Mark Begich and Rhode Island Sen. Jack Reed, both Democrats, for a meeting with Alaska businesspeople and said the president's feeling toward Arctic offshore drilling is "Let's take a look at what's up there and see what it is we can develop."
Oh, I knew it was too good to be true. This is a summary of the rest of his remarks:
But any Arctic oil development must be done carefully, he said. Salazar said the Arctic lacks needed infrastructure for responding to potential offshore oil spills and cited painful lessons from the Deepwater Horizon spill in the Gulf of Mexico last year.  
That's the end of that discussion. The permitorium lives on. Let's see. The Gulf spill was more than a year ago and we all now how that worked out.

Bull Moose 1X-15: A Vertical Well Producing Since 1981 -- 556,000 Bbls of Oil and Still Counting -- Bull Moose 23-43X -- 1.3 Million Bbls -- North Dakota,USA

In yesterday's daily activity report, the following permit was noted:
  • 21290, 1,068, BR, Red Wing 16-1H, Wildcat, t5/12; cum 12K 12/12;
It's unimportant why I was curious about this well, but something about it piqued my interest. I found the location on the NDIC GIS map server, though it has not yet been placed there on the map.

This Burlington Resources permit is out in the middle of nowhere. When I see that, it's always interesting to find the nearest well and see if there is any information that might be interesting to others.

In this case, Bull Moose 1X-15 (#7944), a conventional, vertical well, spud in 1981, is located one mile to the east from that new BR permitted location.

Bull Moose was spudded in 1980, and the Red River formation was targeted and tested. The IP was 437 and it turned out to be a good well, but finally petered out in 1999. The well was shut in from 1999 to 2002 when it was re-entered/re-spud. This time the target was the Madison, with an IP of 32.

How has the well done?
  • From the Red River, that well produced 501,902 bbls of oil (now PNA).
  • From the Madison, the well has produced 68,406 bbls (through December, 2012) and is still pumping about 300 bbls/month. 
  • Note: when they re-entered the Madison in 2002, they also tested the Birdbear, but that was DRY.
Again, just an exciting story in the North Dakota oil patch. This well has been producing since 1981 -- 30 years and is still pumping. Of course, the original formation was shut in back in 1999. It should be noted that the well was still pumping around 1,500 bbls/month from the Red River when it was shut in.

One understands why folks are talking about Red River and Madison EOR.

*********BREAK******BREAK***********BREAK**********BREAK***********

I swear on a stack of Bibles that I did not check this out ahead of time. I was truly curious about the wells noted above, and then just for the fun of it, thought I would look at one more well (and I might look at a couple more) in the same little field, the Bull Moose field.

One-half mile south of #7944, Bull Moose 1X-15 is:
  • 6718, Bull Moose 22-32F
This well has the following history:
  • Madison, spud/tested 3/30/1979 with an IP of 123
  • Red River, spud/tested 3/10/1981 with an IP of 486
  • Birdbear, spud/tested 4/25/2000 with an IP of 200
So, how has this well done?
  • From the Madison: 43,000 bbls
  • From the Red River: 1.3 million bbls (yup, million)
  • From the Birdbear: 136,000 bbls
It is now producing from the Birdbear, but it was still producing 1,200 bbls from the Madison, when they switched to the Red River. The Red River was still producing about 400 bbls when they switched to the Birdbear.

From the Birdbear, on a pump, starting in the year, 2000, it pumped 136,000 bbls of oil until 2008. The well has not been abandoned.

***********************

It looks like Sequel Energy, LLC, is going to see if there is some life still left in this old little field.
  • 19765, 55/19, Sequel, Bull Moose 22Y-32, Bull Moose field, Duperow/Red River; t9/11 and t10/11; cum 5K 12/12; and 290 bbls 12/12; (no typo)
The Winnepeg pool is as deep as you go in the Williston Basin. The Winnipeg formation is below the Red River formation, the deepest formation, as far as I know.

Oasis: Forms A New Company -- Oasis Wells Services -- Bakken, North Dakota, USA

One of the joys of hosting a blog on the oil patch is the education one receives in the process. [See also: manufacturing vs drilling.]

Earlier today I learned about "zipper fracks" for the first time and perhaps helps explain why BEXP has had the success it has been having in the Bakken.

Now we may be seeing something new in the oil patch. Chesapeake mentioned it earlier: setting up their own in-house oil services support. This time it has to do with Oasis. From  the Seeking Alpha.com transcript:
In June we formed a new company underneath Oasis Petroleum Inc., called Oasis Wells Services or OWS to provide pumping services to our operator wells. The crew is expected to begin operations in early 2012. The current operations team in our Williston office alone has over 100 combined years of experience in the frac business including experience with some of the larger providers as well as in pure start-up operations, most of that specifically in the Williston Basin.

So managing the hiring operations, consumables and logistics is nothing new to our team. The broader overall economics of this decision are quite compelling to us. In total completions make up anywhere from 45% to 60% of our well cost. Pressure pumping services alone comprise about 30% to 40% of our well cost. And there’s a relatively higher margin embedded in each job.

We’ll be able to capture that margin in the form of CapEx savings. So when we frac our own well, Oasis can save approximately $800,000 to $1 million per well gross, and that’s the way that you should think about modeling it. Additionally, we’ll earn a small profit margin on the services we provide to non-op partners, which would show up on our income statement and EBITDA in the neighborhood of about 300,000 per gross well-completed.
So, if I have that correctly, here are the data points:
  • Well completions account for half of the total cost of a Bakken horizontal well. Wow.
  • Pressure pumping services alone account for a third of the cost of the well. Wow.
  • So, Oasis says, why aren't we doing that ourselves? 
  • They did: they set up Oasis Wells Services?
  • Why a separate company? Why not just part of "OAS"?
  • Because other operators can contract with OWS; voila: another income stream.
  • Clever.
And that's why I love following the Bakken. It's about a lot more than just oil.