No Keystone XL. Where Does That Leave The Canadians? Playing Catch-Up With CBR; And We Will See It This Year

Reuters is reporting:

For the last three years, Canada has lagged the United States in using its rail system to haul crude oil, hindered by a lack of loading terminals and a shortage of specially built rail cars that reheat viscous oil sands crude.

Now it's on the brink of catching up. Over the next 12 months, producers like Cenovus Energy Inc  and logistics firms like Gibson Energy Inc will load up mile-long dedicated trains with ultra-heavy bitumen oil and move them thousands of miles in heated and coiled rail cars that eliminate the need to dilute the crude for pipeline shipments.

Yet they are opening up a new phase in the oil-by-rail boom at a moment of deepening uncertainty. An oil-train derailment that killed 50 people in Quebec has cast a shadow over the controversial practice and could raise new hurdles.

For the moment, the handful of new projects to potentially quadruple the amount of oil sands crude shipped by rail are moving ahead. Exports could soon rival U.S. shale oil rail shipments, currently three times greater than Canada's.

James Cairns, vice president of petroleum and chemicals at Canadian National Railway Co, said in Calgary this week that companies were moving at "breakneck speed" to overcome nationwide shortages of both infrastructure and rolling stock.

"In my 26 years in the rail business I have never seen this much massive investment in CN lines by our customers to get their products onto our railways," Cairns said. CN, the nation's largest carrier, expects to more than double last year's 30,000 carloads of raw bitumen and crude this year.

North Dakota Coal Plants Given Top Grade By Environmentalists

The Dickinson Press is reporting:

A report issued Tuesday highlighting the harmful effects coal-powered plants have on natural water resources found that North Dakota’s six coal plants do not pose a serious risk to the state’s rivers and lakes.

A nationwide coalition of environmental and clean water groups issued “Closing the floodgates: How the coal industry is poisoning our water and how we can stop it,” which details the water permits for the 386 coal plants across the country.

The report highlights the plants in Mercer, Oliver and Morton counties, saying none of them has impaired any natural water resource with toxic byproducts such as arsenic, mercury and lead.

The article leads me to believe there was absolutely nothing the coalition could find with regard to the North Dakota coal plants that bothered them even a little bit. Otherwise we would have heard from them. It appears activist environmentalists have only two categories for coal plants:

• the coal plant DOES pose a serious risk to a state's rivers and lakes
• the coal plant DOES NOT pose a serious risk to a state's rivers and lakes

Wells Coming Off Confidential List Wednesday -- Emerald Reports A Nice Well -- Its First Completion; BR Reports A Huge Well In Blue Buttes

I can't say for sure that the Emerald well below is the company's first company-operated completion, but it is the first to report an IP. Pretty nice.  Emerald has another six wells on DRL status. Emerald, of course, is the old VOG, now a two-rig company, I believe.

• 23245, 721, CLR, Richmond 3-26H, Brooklyn, t6/13; cum 2K 5/13;
• 23501, drl, Hess, BB-Burk-151-95-00718H-4, Blue Buttes, no data,
• 23554, drl, HRC, Fort Berthold 152-94-14D-11-4H, Antelope, no data,
• 23988, 1,209, Oasis, Dale 5601 14-26B,  Tyrone, t1/13; cum 31K 5/13;
• 24121, 2,886, BR, Blegen 44-24MBH, Blue Buttes, t6/13;
• 24438, drl, Petro-Hunt, Sorenson 152-96-24D-13-5H, Union Center, no data,
• 24668, 1,579, Emerald, Pirate 1-2-11H, Foreman Butte, t3/13; cum 39K 5/13;

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

23988, see above, Oasis, Dale 5601 14-26B,  Tyrone:

Date	Oil Runs	MCF Sold
5-2013	4975	3894
4-2013	4539	2756
3-2013	5276	3567
2-2013	12942	10241
1-2013	3123	805

24668, see above, Emerald, Pirate 1-2-11H, Foreman Butte:

Date	Oil Runs	MCF Sold
5-2013	14771	0
4-2013	22415	0

Fifteen (15) New Permits -- The Williston Basin, North Dakota, USA; As Noted Earlier, Halcon Had A Very Nice Well

Active rigs: 188 (steady, up 2)

Fifteen (15) new rigs --

• Operators: Marathon (4), Hess (3), BR (2), Whiting (2), Samson Oil And Gas (2), Newfield (1), Enduro (1),
• Fields: Stockyard Creek (Williams), Charlson (McKenzie), Siverston (McKenzie), Ellsworth (McKenzie), Hawkeye (McKenzie), Mouse River Park (Renville), Bailey (Dunn)
• Comments: Whiting has a permit for a wildcat in Golden Valley County, 11-142-105

The one well coming off the confidential list today was reported earlier; see sidebar at the right.

Two (2) producing wells were completed:

• 23612, 673, CLR, Charlotte 4-22H, Banks, Three Forks, no fracking data yet; 4 sections; no production data;
• 23795, 1,829, KOG, Smokey 3-30-18-3HA, Pembroke, no fracking data; t6/13; cum --

In the Smokey well file, #23795, there was a letter dated May 7, 2013, from KOG to NDIC explaining KOG's two well spacing programs and requesting extension of the confidentiality period.

The NDIC noted that the confidentiality period could not be administratively extended.

Excerpt of the KOG letter:

Kodiak Oil & Gas {USA), Inc. is currently developing two well spacing pilot programs. The Polar
Pilot Project is located in Williams County (sections 27 and 34, T154N-R98W) while the Smokey Pilot
Project is located in McKenzie County (sections 18 and 19, T149N-R98W). Each project will have 12 wells
within the drilling and spacing unit. Six wells will be in the middle Bakken, three wells will be in the
upper Three Forks and three wells will be in the middle Three Forks. These projects are designed to
determine the optimum spacing between wells. This determination will control the development
pattern for the entire Bakken-Three Forks play in the region west of the Nesson Anticline. ....

As of today, we have drilled 10 of the 12 wells at the Polar Project. Two rigs are currently
drilling the final wells in this project. We have drilled a salt water disposal well on one of the
three pads to minimize trucking when production begins. We will begin fracture stimulation on
the first four well pad in early June. The oil, gas and water gathering systems should be
operational by late summer. All three four well pads should be fracture stimulated by mid-July.

We will monitor the post fracture stimulation flow back and design the most effective
interference testing program at that time. The wireline logs and core analyses are continuing,
but due to the nature of the evaluations, these are slow processes. After we have collected all
the pertinent data including the interference tests, we will be able to formulate an
interpretation with valuable conclusions. We project these data should be fully collected by the
fourth quarter of 2013. The data integration will follow.

Kodiak Oil & Gas respectfully requests the North Dakota Industrial Commission grant an
extension of the confidentiality period on all the wells in the Polar Pilot Project until June 1,
2014. This will afford an opportunity to gather and interpret the extensive data set in this critical
project.

The Smokey Pilot Project is less extensive than the Polar Project. The Smokey Project
does not include a pilot hole, cores or advanced wireline logs. However, it is a twelve well test
on similar spacing as the Polar Project. We have currently drilled nine wells, two rigs are on
location to finish the last three wells by late June. Two of the wells were completed earlier,
three more are scheduled for completion in July. The last of the wells will be fracture stimulated
by late August. Production and interference testing will continue into the fourth quarter of
2013.

Kodiak Oil & Gas respectfully requests the North Dakota Industrial Commission extend
the confidentiality period for all wells in the Smokey Pilot Project until January 1, 2014.

Random Look At US Rail Traffic -- Week 28, Ending July 13, 2013 -- Lots Of Red

The link to the PDF.

Two story lines jump out:

• no evidence of any economic recovery; lots of red. A lot.
• if it weren't for "petroleum and petroleum products" more than just the rails would be in trouble

Cumulative, year-to-date:

• grain shipments were down almost 17%
• motor vehicles up 2.3% year-to-date, cumulative, but were down almost 20% this week vs same week one year ago

Cumulative, year-to-date, it was all red except for:

• forest products, up 2.3%
• motor vehicles and parts, up 2.6%
• nonmetallic minerals and products (fracking sand?), up 6.6%

Oh, one more sector was up, cumulative, year-to-date:

• petroleum and petroleum products: up 46% 

It's a pretty sad report. And it hasn't changed much in the past year.