Why Does This Not Surprise Me?

I know nothing more than what is in this article at Reuters, but I can read between the lines. Others will interpret it differently, I'm sure. No need to comment. 

Chesapeake uses a road to get to one of its sites. 

The road is in need of repair. It is full of potholes and, in general, one big mess, especially when it rains. 

Chesapeake improves the road by covering it with gravel. 

The government notes that because the road is subject to flooding, one needs a permit from the US Army Corps of Engineers before making any improvements to the road. 

Chesapeake is fined $600,000. 

Chesapeake restores the road to its original condition, full of potholes, and, in general, one big mess, especially when it rains. 

Anything to harass the oil and gas industry. [We will learn later that with global warming and the drought, the road has not flooded in the last ten years.]

I would not have even seen the article, much less linked it, had it not been front page news for Yahoo!Finance. Even those editors can recognize craziness and harassment. And that's why I feel comfortable that there will be duplicative federal and state fracking regulations by the end of 2016. Anything to harass the oil and gas industry.

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Now, to escape this craziness (posted just a few days ago, but....):
Do I Love You, Hillbilly Moon Explosion

API Concerned About Duplicative Fracking Regulations -- Cites "North Dakota Miracle"

Link here to Oil and Gas Journal.

Policymakers across all levels of US government must guard against unnecessary or duplicative regulations that could impede investments in unconventional oil and gas plays, which already created jobs and boosted revenues for some states, American Petroleum Institute Chief Economist John Felmy said. 

Speaking with reporters during a conference call from Washington, DC, Felmy affirmed API believes that strong state regulations and safety practices already are in place for shale development and hydraulic fracturing. “In recent years, the application of horizontal drilling has allowed hydraulic fracturing to access enormous, previously unreachable supplies of oil and natural gas—and to do so safely and responsibly,” Felmy said. 

“It was these technological achievements that led to what is known as the ‘North Dakota Miracle,’ which has transformed that state into our nation’s No. 2 oil producer, reduced unemployment there to 3%, and driven incomes up sharply,” he said. 

These same technologies were used to tap unconventional reserves, create jobs, and boost state revenues in Pennsylvania, Texas, Arkansas, Louisiana, Ohio, and other states, he added.

Also at the link regarding the New York state frack ban -- this quote says it all:

A New York Times article dated June 13 quoted sources close to Gov. Andrew Cuomo saying the state might pursue a plan “to limit the practice to several struggling counties along the Pennsylvania border, only in towns that approve the technology.” 

If accurate, it suggests that the governor considers....ah, why go on? I've got better things to do.

But back to that earlier quote:

“It was these technological achievements that led to what is known as the ‘North Dakota Miracle,’ which has transformed that state into our nation’s No. 2 oil producer, reduced unemployment there to 3%, and driven incomes up sharply,” he said. 

I've always maintained that there are two important things about the Bakken: a) what it has done for North Dakota; and, b) more broadly, as a laboratory, pretty much unfettered by federal regulation, what the Bakken has done for the nation.

My hunch: we will have duplicative federal and state regulations by 2016.

Random Update on Production of Three Ross Field Wells

Elsewhere someone asked for production information on the following wells, all long laterals.

• 19888, 681, EOG, Clearwater 25-3202H, Ross, t1/12; cum 83K 8/12; F; 21 stages; 4 mil lbs
• 20260, 288, EOG, Clearwater 16-3301H, Ross, t1/12; cum 116K 8/12; F; 31 stages; 4 mil lbs
• 20583, 128, EOG, Clearwater 27-3102H, Ross, t4/12; cum 74K 8/12; F; 41 stages; 4.2 mil lbs

Notice the continued strong production after eight months. 

The Ross oil field is interesting for two additional reasons: 

a) it was back in January, 2010, that EOG applied to NDIC for 2560-acre spacing units in this field (wow, that seems like a long time ago); and reminds us that 2560-acre spacing has been around for quite awhile; and,  

b) this is where one of the first, if not the first CBR oil terminals was built; built by EOG. 

EOG also has its own sand mines in Wisconsin. This company is taking care of numero uno, and not relying on others if they don't have to. It is really enjoyable to watch the strategies of the various players in the Bakken. 

For 19888:

Pool	Date	Days	BBLS Oil	Runs	BBLS Water	MCF Prod	MCF Sold	Vent/Flare
BAKKEN	8-2012	31	11855	11587	6724	7206	5869	1182
BAKKEN	7-2012	30	12630	11911	7083	7655	5477	2029
BAKKEN	6-2012	27	13064	13486	6824	7773	6693	945
BAKKEN	5-2012	23	10654	10196	6486	5798	4878	810
BAKKEN	4-2012	1	138	0	208	49	0	45
BAKKEN	3-2012	21	5217	5755	3218	1813	0	1708
BAKKEN	2-2012	29	10066	10254	6387	3386	0	3241
BAKKEN	1-2012	31	18415	18285	17284	7633	0	7480
BAKKEN	12-2011	2	885	0	7388	364	0	354

For 20260:

Pool	Date	Days	BBLS Oil	Runs	BBLS Water	MCF Prod	MCF Sold	Vent/Flare
BAKKEN	8-2012	31	13810	14195	7574	9468	8080	1235
BAKKEN	7-2012	30	14043	13104	7961	8536	7426	960
BAKKEN	6-2012	27	19257	20097	9678	10573	7036	3402
BAKKEN	5-2012	28	15728	15137	8508	8849	3787	4922
BAKKEN	4-2012	22	11519	11624	6987	6502	0	6401
BAKKEN	3-2012	31	11120	10925	5473	6306	0	6151
BAKKEN	2-2012	29	14611	14718	7748	7883	0	7738
BAKKEN	1-2012	26	15484	14609	22367	8640	0	8510

For 20583:

Pool	Date	Days	BBLS Oil	Runs	BBLS Water	MCF Prod	MCF Sold	Vent/Flare
BAKKEN	8-2012	31	13296	12668	8693	11164	5338	5671
BAKKEN	7-2012	31	14839	14707	10013	11512	4847	6511
BAKKEN	6-2012	28	13929	14375	9405	8763	3169	5461
BAKKEN	5-2012	25	14178	14164	10558	7788	3175	4490
BAKKEN	4-2012	27	18231	17153	19669	11123	0	10989

Twenty-Two (22) More Permits -- The Williston Basin, North Dakota, USA

Number of active rigs: 190, steady, but up one

Twenty-two (22) new permits:

• Operators: SM Energy (6), CLR (4), Triangle (3), XTO (2), Fidelity (2), Hess, Enerplus, Armstrong, Whiting, Baytex
• Fields: Heart Butte (Dunn), Davis Buttes (Stark), Antelope Creek (McKenzie), Bluffton (Divide), Heart River (Stark), Dutch Henry Butte (Whiting), Dollar Joe (Williams), Heart Butte (Dunn)

Comments: Armstrong Operating has a permit for a wildcat in Bottineau County;

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Note to the Granddaughters

Tomorrow the older granddaughter will be participating in her first swim meet. The venue is at a technical school/swimming pool where we have not been before. I decided to take a ride out to see what it looked like, to make sure we knew the route to take tomorrow when we go. It's fourteen miles from where the granddaughters live. I biked it and it took exactly two hours. I'm now on my way back. About half-way back I stopped for a drink at McDonald's, and to check the news, and to post the permitting activity (which I just did above). McDonald's never fails: always a wi-fe connection.

Checking the news I am absolutely amazed how quickly the price of gasoline shot up in California. Folks need to realize that hardly anything out of the ordinary occurred: a couple of small refinery fires (on opposite coasts?) -- and that was about it, as far as I know. Everything else is either regulatory or calendar-based (also regulatory) -- for example, the switchover from "summer" gas to "winter" gas in California. If this is all it takes to drive the price of gasoline up another full dollar per gallon and, in some cases, result in spot shortages, can you imagine what would happen in a "real" situation?

It really surprises me that this is all it takes. In fact I wonder if there might be some individual service stations taking advantage of minimal shortages.  There's a whole story line here but I don't have time (nor the interest) to develop it.

Although the spike in the price of gasoline will be short-lived, perhaps two weeks at most, it does give economists, analysts, and talking heads data with regard to what Americas are willing or able to pay for their gasoline. It's an important data point.  [How prescient: five minutes after writing this, this report, that the spike is already easing: http://af.reuters.com/article/energyOilNews/idAFL1E8L59K920121005. It will be interesting to see where this settles out. If the price of gasoline comes down far enough it will make it easier to pay those increased taxes the Californians vote on themselves.]

But as I've stated over and over, the Californians, and I assume most Americans, are content/satisfied with how things are going in the country right now. They are content/satisfied with how their elected leaders are doing. Most incumbents will be re-elected. I don't see any ground swell developing to throw anyone out. In fact, in California, they are so content/satisfied with how things are going, they are voting to increase taxes on themselves.

I have probably never felt so comfortable going into any election than I feel going into this election. Polling suggests four more years.

California: Shell-Shocked

Link to Bloomberg (posted earlier).

...“We’re really sort of shell-shocked,” said Tom Robinson, president of Santa Clara, California-based Robinson Oil Corp., which operates 34 Rotten Robbie convenience stores. “If you’ve been in California long enough, you know how volatile our market can be. But to see prices go up $1 a gallon since Monday -- I’ve never seen that before.”

A perfect storm? Efforts to move to renewables -- EPA mandates -- summer-to-winter gasoline formulation switching -- small refinery fires -- lack of flexibility.

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On another note, same subject: some months ago I remember folks saying I was absolutely "off my rocker" (or words to that effect) to suggest that gasoline would go to $5.00 or even $6.00 by the end of the year.