Six (6) New Permits -- The Williston Basin, North Dakota, USA; Whiting Will Convert A Nice Red River Well Into A Salt Water Disposal Well; Seven WPX Well Sites In Mountrail To Be Re-Surveyed

Active rigs: 189 (steady for several days now)

Six (6) new permits --

• Operators: Hess (3), HRC (2), Whiting
• Fields: Bonnie View (Golden Valley), Robinson Lake (Mountrail), Eagle Nest (Dunn)
• Comments: HRC is a subsidiary of Halcon, I believe

Results of wells coming off the confidential list have been posted; see sidebar at the right.

Temporarily abandoned:

• 16581, TA/108, Whiting, Curl 23-14NESW 14-149N-100W, Red River, 10/08 cum 41K 12/12;; I don't understand this one. This seemed to be a good Red River well producing about 1,800 to 2,500 bbls of oil/month during its short lifetime, 10/08/ to 7/10. In 29 days in July, 2010, it produced 1,785 bbls of oil; in August it was on-line for one day and then taken off-line through 5/13, except for short periods of time. One almost gets the feeling during some subsequent work on the well, they ran into a problem that could not be fixed, and they decided it was just better to abandon the well. The file report says the well will be turned over to a third party and converted to a salt water disposal well. This Red River well is right in the heart of the Bakken, but seems to be a pretty good Red River well. I've seen a lot of Red River wells that produced significantly less but remained on-line, so I don't understand this one. There was a spill at the site in 2009, but the well was back on line in 2009 and producing nicely.

Five (5) producing wells were completed:

• 25337, 1,053, Whiting, Sterling TTT 21-6H, Sanish, t7/13; cum --
• 25105, 843, Whiting, Rohde 13-6TFX, t6/13; Sanish, cum --
• 25181, no IP , Whiting, Doug Kinnoin 11-14H, Sanish, no production data
• 24390, 819, Hess, EN-Uran A 154-93-1522H-4, Robinson Lake, t6/13; cum --
• 23820, 50, Hess, HA-State 152-95-1621H-4, Hawkeye, t7/12; cum -- ; if frack data was reported, I missed it; I did not see that data at the well file

We'll see if the NDIC corrects #25101 in the next day or two. No frack data was available.

Federal Fracking Regulations

I've been out all day -- out and about in southern California, so  it will take a bit of time to get caught up.

While waiting to read whatever pithy comments I might (or might not write), you may enjoy parsing this statement from the new SecInterior as reported in the Oil & Gas Journal:

Federal regulations on hydraulic fracturing would provide a necessary baseline for states where onshore unconventional oil and gas development has not taken place yet but will soon, US Sec. of the Interior Sally Jewell said. Interior also would possibly accept more-stringent requirements than some states have enacted already, she told the US House Natural Resources Committee.

Parsing:

• federal regulations (BLM land only; all land, state, private?)
• provide a necessary baseline (baseline only? not on-going?)
• for states (some states, not all states; which states?)
• where onshore (onshore only, not offshore?)
• unconventional oil and gas development
• has not yet taken place
• but will soon (would that include a state like New York which has banned fracking?)
• stricter requirements than some states have enacted already (some exemptions; examples?)

Oil Deliveries By Rail, Truck, Barge Up 57% in 2012 -- EIA

The Oil & Gas Journal is reporting:

Increased US crude oil production has spurred the use of rail, truck, and barge to deliver oil to refineries, the US Energy Information Administration reported in its recently released Refinery Capacity Report.

More than 1 million b/d of oil was received by refineries across the nation by rail, truck, and barge in 2012, up 57% from 2011, according to EIA.

These increased receipts vary by region, EIA said, with the Gulf Coast (PADD 3) region accounting for most of the growth.

“PADD 3, where rail, truck, and barge receipts nearly doubled in 2012, is increasingly dependent on rail and truck to move crude production out of the Eagle Ford and Permian basins to refineries in the area until pipelines are built,” EIA said.

Following a decrease in 2011 in part due to refinery closures, East Coast (PADD 1) receipts by rail, truck, and barge increased by 18% in 2012 as a number of refiners put in rail facilities to receive discounted crude from the Bakken and other tight oil formations.

In the Rocky Mountain region (PADD 4), US truck and pipeline imports of Canadian oil continue to increase as US pipeline receipts have stayed flat.

Again, these numbers are staggering. Is there any other industry growing by 60% year-over-year (other than Wall Street hedge funds and banks)?

Natural Gas Is Losing Market Share to Coal -- Market Realist

Updates

July 17, 2013: a reader noted, and I agree -- great comment:

Peaking plants will be fired up to meet AC loads. Plus natural gas has to "idle" when wind and solar are available. It's too expensive to build coal plants but when they are up and running they can compete with $4 gas.... 

Original Post

Is that a typo in the headline? Nope.

Natural gas is losing market share to coal.

I don't get it:

At the linked article:

For most of 2012, natural gas gained significant market share (mostly against coal) for use in power generation. However, in 2013, natural gas prices have risen relative to coal, causing natural gas to lose some market share in the power generation sector.

But, it may be only temporary:

Despite the recent decline in market share on a year-over-year basis, many expect that coal-to-gas switching will continue to be a long-term trend. For example, the government agency known as the Energy Information Administration (EIA) noted in a report from December 2012 that in its forecast, coal remains the largest energy source for energy generation, but “its share of total generation declines from 42 percent in 2011 to 35 percent in 2040.” The EIA also stated that market concerns about greenhouse gas emissions continue to dampen the expansion of coal-fired capacity in its forecasts.

Again, look at that graph above. Last year, natural gas accounted for 32% of US power generation; this year, only 26%. Who wudda thought?

I'm not sure why the MarketRealist put the money of May twice into the graph above.  And no February. If that's a DOE graph, it makes sense, but I wouldn't expect MarketRealist to make such a glaring mistake.

KOG Just Went Over $9.00; Everything Seems To Be Going Right For Oasis -- SeekingAlpha

Disclaimer: this is not an investment site. Do not make any investment decisions based on what you read here or what you think you might have read here.

KOG up almost 6% right now.

Headlines:

Suntrust: upgrades KOG from neutral to buy.
Time to take profits in the Bakken? -- SeekingAlpha
Everything seems to be going right for Oasis -- SeekingAlpha

In OAS' case pipeline transportation is now available for almost all of its production. In fact 85% of its oil production was flowing through gathering pipelines at the end of Q1 2013. OAS expects its cheaper delivery costs due to pipelines to increase its realized oil prices by $3-$5/barrel in 2013 and there may be still more future upside.

Keep in mind that OAS may also benefit from the confluence of WTI and Brent pricing by approximately +$10/barrel. This should mean quite an increase to both OAS' top and bottom lines over the long term.

On top of this OAS drove down its capital cost per well by 5% to $8.4 million. Its Oil Well Services subsidiary is a key factor in this. OAS' 2013 year end target is an $8.0 million capital cost per well.

This will amount to a -23% decrease in capital cost per well from 1H 2012. PAD drilling has been a key factor in this improvement. OAS' Salt Water Disposal subsidiary (Oasis Midstream Services) further adds to savings on lease operating expenses.

And that's just the start of a very interesting article.