Bakken – Page 10 – Outrun Change

North Dakota’s “big trigger” tax reduction not going to get pulled

(Poorly focused photo by James Ulvog. Workover rig, one pumpjack ready to go, and three not yet complete. Gonna’ be lots of wells on that pad.)

Big drop in tax on produced oil in North Dakota won’t happen. Also a recap of the tax rates on oil.

5/29 – Associated Press at Bakken.com – Oil price increase means North Dakota tax trigger won’t hit – If crude oil prices are below a certain threshold, currently $55.09 for five consecutive months there would be a dramatic reduction in the tax on oil produced in the state.

Prices have been running below that cut off for January through April. During May the key index has been above the cutoff.

Continue reading “North Dakota’s “big trigger” tax reduction not going to get pulled”

More on the revolution in energy, specifically shale oil

It is astounding to watch what is happening in the energy arena. U.S. petroprenuers have kicked off an energy revolution.

The staggering idea is this whole shale thing could just be getting started. Consider the following:

5/26 – Mark Perry at Investors Business Daily – Saudis’ Drive to Kill U.S. Shale Has Backfired – Prof. Perry points out the Saudis have now acknowledged their goal was to take out shale production. They think they have substantially succeeded based on the drop in recount.

I think the conceptual error is to assume there is a direct correlation between rig count and production. There are so many fallacies in that concept.

The ironic thing is there is a huge fracklog of wells drilled but are awaiting completion. As soon as prices come up a bit (exact point we may soon find out) there are a lot of wells for which it will be economic to finish. In North Dakota there are around 800 wells that just need to be fracked and they can come on the market. For context that’s just under half a years worth of new drilling.

One of the highly unintended consequences is to accelerate efficiencies and technological innovation. The article calls attention to those factors.

Continue reading “More on the revolution in energy, specifically shale oil”

More good stuff on the Bakken – 5/27

Here’s a few quick notes on interesting news from the North Dakota oil fields:

Rig counts actually going up –

5/20 – Million Dollar Way – Another Post-Boom Low — 80 Active Rigs; Eleven (11) New Permits; Slawson Proposing A 11-Well Pad In Big Bend Oil Field – 80 rigs

5/22 – Million Dollar Way – Eleven (11) New Permits – Count of rigs is up to 82.

5/26 – Million Dollar Way – Five (5) New Permits – Rig count up to 84.

I wonder if the drilling is now in a plateau. A few more articles on point:

Continue reading “More good stuff on the Bakken – 5/27”

More good stuff on the Bakken oil field – 5/18

A few articles on what’s going on in Bakken:

5/5 – Dickinson Press – Stark County wind energy permit rejected – Previously mentioned 87 slice-and-dicers operated by Dickinson Wind LLC, a sub of NextEra Energy were moving toward construction. Project has a buyer for the electricity, which I’m slowly learning is one of the biggest hurdles to clear.

With one abstention, the Stark County Commissioners unanimously denied a conditional use permit. An outpouring of public complaints persuaded the commissioners to vote down the application.

5/5 – Bismarck Tribune – Communities continue to expand in and around the oil patch – Continue reading “More good stuff on the Bakken oil field – 5/18”

March oil production in North Dakota increases 12K bopd

The preliminary March production info is in – average daily production increased to 1,190,538 bopd from a very slightly revised 1,170,082 bopd in February. That increase of 12,501 bopd essentially offsets the decrease of 13,116 bopd in February.

Here is a graph of current production on a long-term perspective:

The peak in December 2014 was 1,227,529 bopd. March 2015 production is a drop of 36,946 bopd.

Last few months look kinda’ sorta’ like a plateau, doesn’t it?

Take a look at the following production graph. Do you suppose that is the change that OPEC wanted to see when they decided to maintain production in order to crush the American shale sector?

Continue reading “March oil production in North Dakota increases 12K bopd”

More good stuff from the wide open energy frontier – 5/8

Some articles on the amazing things going on in the energy world: oil factories, fracklog, greener fracking and calculating the Saudi cash burn rate.

5/6 – Russell Gold at Wall Street Journal – What the Future of Oil Drilling Will Look Like – think “oil factory”. Liberty resources is developing a 10,000 acre complex that will have 96 wells when complete. It will be called Stomping Horse.

A pipeline corridor will link all the drill sites to each other allowing oil and natural gas to be gathered to one location. Freshwater can be pumped from a central location and saltwater gathered by pipe at the disposal well.

Continue reading “More good stuff from the wide open energy frontier – 5/8”

More good stuff on the Bakken – 5/4

Here’s some fun notes on interesting news around the Bakken. Big change on the oil tax. Slowdown is drilling is having some interesting impacts on the housing market. Also, tracking the rig count.

5/1 – Dickinson Press – North Dakota still on track for oil tax break – Oil prices in April were below the level which will trigger the “big trigger” tax reduction on oil. If West Texas Intermediate is below a threshold, currently $52.29, for five consecutive months the 6.5% oil extraction tax is waived for two years on wells started after the trigger is pulled. One more month below the cut off will trigger the drop.

Continue reading “More good stuff on the Bakken – 5/4”

Dropping oil prices slow down North Dakota economy from previous breakneck speed

Rapid drop in drilling activity is backing off the economy in the Bakken oil patch from crazy out of control growth to merely the level of economic boom most places in the country would love to have seen anytime in the last 5 years.

4/18 – Star Tribune – In wake of oil slump, watchful North Dakotans adjust expectations – Title could have been Williston backs down from crazy out of control growth to merely as wild as four years ago.

The state jobs service in Williston has twice as many openings as applicants. Continue reading “Dropping oil prices slow down North Dakota economy from previous breakneck speed”

North Dakota oil production drops 1.2% in February, or 14K barrels a day

Numbers are out for February 2014. Average production in February was 1,177,094, which is down 14,104 from the very slightly revised January amount.

Here is the production in graphs:

For a longer term perspective:

Using the average sweet price mentioned in the Director’s Cut, here is the value of monthly production.

Reason for the drop in value is the price per barrel:

That slight recovery in current month is good but not a lot of help. On the other hand, at least the price isn’t still falling.

More graphs for February production are here.

Rig count and wells waiting for completion in North Dakota – 4/14/15

For more depth behind the slowdown in production mentioned in the previous post and a hint of what is to come, consider the count of drilling rigs in the field and the backlog of drilled wells that need to be completed. After drilling, the wells need to be fracked and then they start producing.

The count of wells is dropping fast:

As you look at the graph of estimated number of wells waiting to be completed (i.e. fracked), keep in mind state regs only allow a site to sit for a year before it must be completed. Otherwise it has to be plugged. That means there will be a surge of wells getting completed late in 2015.

Speculation is that if the ‘big trigger’ is pulled, dropping the tax on production, the completion activity will take off fast. Continue reading “Rig count and wells waiting for completion in North Dakota – 4/14/15”

More good stuff on Bakken – 4/14

A few articles on what’s going on the Bakken oil patch. Williston keeps growing. Rig count falling. Neither a surprise.

3/16 – BakkenShale.com – Population Grows 20% in Williston – Researcher Nancy Hodur of NDSU has done a tally of the total number of people in Williston and Williams County. She started with the census numbers and added hotels, man camps, and RV parks. Her estimate:

2012 2014 % chg area
25,915 31,143 20% Williston
44,308 52,778 19% Williams County

4/3 – Reuters Media at Dickinson Press – Clock keeps ticking toward North Dakota oil tax break – Continue reading “More good stuff on Bakken – 4/14”

Impact of oil and gas industry on North Dakota economy. General insights on energy in the state.

Petroleum Industry’s Economic Contribution to North Dakota in 2013 is the current update to a bi-annual analysis of how much the oil and gas industry contributes to the state’s economy. You can find the report at the previous link or here. The research was conducted by Dean A. Bangsund and Nancy M. Hodur, profs at North Dakota State University.

The executive summary provides a great overview of the petroleum industry and the economic activity in the state. Worth reading for the overall background, a general intro to the energy industry, and what’s going on in Bakken.

I read most of the report. In addition to historical information on average cost to drill and complete a well which is summarized in the graph above, here are some of the highlights that caught my eye:

Continue reading “Impact of oil and gas industry on North Dakota economy. General insights on energy in the state.”

Initial thoughts on newly released EPA rules on fracking

(photo by James Ulvog)

Yesterday the EPA released their long-awaited rules for fracking wells on public land. Since a minimal percentage of new wells are drilled on federal land, the direct impact will be minor and the indirect impact remains to be determined. Here’s a few articles that start to give preliminary details along with a few of my thoughts.

3/20 – Wall Street Journal – Fracking Rules Unveiled by Obama Administration – Fascinating issue is that the states with most of the drilling already have substantial rules in place for fracking.

Federal estimates are the cost to comply with the new rules will be $11,400 per well, or $32M industry wide per year. I’m struggling with the validity of that $11K estimate.

Article says Texas and North Dakota already ban the use of open-pit storage of wastewater. More on that in a moment.

3/20 – Dickinson Press – Final fracking rule released for federal, Indian lands: With regulations already in place, ND may enter into memorandum of understanding – Article has one tidbit that I think explains the real goal of the regulations: the rules are 395 pages long.

Continue reading “Initial thoughts on newly released EPA rules on fracking”

More good stuff on the Bakken – 3/17

Here’s a few quick notes on interesting news that I won’t cover in a separate post. I’ll come back to the first article later this week.

3/15 – Bismarck Tribune – Oil adds $43 billion to economy, study say – Research by North Dakota State University profs calculate that oil and gas add $43B to the state’s economy. In 2013, they calculated the energy industry added 55,000 direct jobs and another 26,000 indirectly. Report is available here.

Continue reading “More good stuff on the Bakken – 3/17”

More good stuff on Bakken – 3/14

(Photo by James Ulvog.)

A variety of articles suggest that even with the drop in crude prices and rigs being stacked, the economic opportunities are better in North Dakota than elsewhere. Also, drug busts as an indication why residents are justifiably concerned about the growth in recent years.

3-13 – Wall Street Journal –

Crude-Oil Price Collapse Takes Toll on Williston /

North Dakota town was a magnet for job seekers, but now work is scarce

Headline covered the e n t i r e w i d t h of page B1 above the fold.

Oh, woe is me! The economy in Williston has utterly collapsed! The bust is here and Williston is a ghost town!

Or, maybe not. Your conclusion depends on whether you read the headline or the article.

Continue reading “More good stuff on Bakken – 3/14”