Industry Clips from the Montana Petroleum Association, Inc.

Study of state’s renewable‐power mandate has support of environmentalists, utility companies (Jan. 17, Helena IR)Utility companies and environmental groups alike Thursday spoke in favor of a proposed legislative study of Montana’s nearly 8‐year‐old mandate for utilities to produce renewable power, saying it’s time to evaluate its impacts on industry, consumers and the state.

Sen. Alan Olson, R‐Roundup, the sponsor of Senate Joint Resolution 6, which calls for the study, said there’s been much discussion about the mandate, pro and con, since it began. A legislative study over the next 18 months can help “make a determination, one way or the other” on its effects, he said. It will “give us a firm, good grasp on where we’ve been and where we’re going,” Olson said.

Montana’s Unemployment Rate Falls, Flathead’s Ticks Up (Jan. 18, Flathead Beacon)Northwest Montana continues to have some of the highest jobless rates in the state, with Lincoln County leading
the way at 14.8 percent, followed by Sanders County at 14.1 percent. (A link within the article pulls up a report showing the lowest unemployment rate in Eastern Montana)

DRIESSEN: Obama’s wishful thinking on green energy (Jan. 18, Washington Times) Fracking translates into competitive advantages and more jobs, economic productivity and tax revenues. IHS Global Insight calculates that this revolutionary technology has already created 1.7 million new jobs, pumped hundreds of billions of dollars into the U.S. economy and generated more than $60 billion in federal, state and local tax receipts during 2012 alone. By 2035, it could create another 2 million jobs, rejuvenate American manufacturing, inject more than $5 trillion in cumulative capital expenditures into the U.S. economy, and generate $2.5 trillion in additional government revenues.

Obama’s Second‐Term Energy And Climate Agenda Taking Shape (Jan. 18, Huffington Post)The natural gas boom “puts the administration in an interesting position. They can be aggressive and look at natural gas for the possibilities it brings, or they can bow to the environmental community, which is not interested in more natural gas drilling,” said Frank Maisano, a Washington spokesman for a range of energy producers from coal to wind. The emergence of cheap, plentiful natural gas in particular poses a dilemma for Obama, who supports gas development as a cleaner alternative to fossil fuels that trigger global warming.

‘FrackNation’ documentary exposing the truth about fracking in the U.S. set for release next week (Jan. 18, Red Alert Politics)McAleer considers fracking to be a human rights issue more than anything else. That is why he focuses on the human aspects of fracking, such as the hardships that many farmers face financially if they aren’t allowed to lease out their land to oil companies. According to McAleer, there is a “mass movement for fracking” more so than there is a mass movement against it.

The inaugural Rocky Mountain Oil & Gas Awards will be held in Denver on Tuesday 12 March 2013 at the Grand Hyatt Hotel.

The senior industry executives judging the Oil & Gas Awards have had a busy December reviewing almost 300 entries from around 200 different companies and casting their votes.

The awards celebrate the achievements of upstream & midstream companies, service providers and suppliers, twinned with the industry’s commitment to H&S, Environmental Stewardship and Corporate Social Responsibility.

Congratulations to the following companies that have been voted as finalists in the 2012 Rocky Mountain Oil & Gas Awards:

• A&W Water Service, Inc.
• AbTech Industries, Inc.
• Ames Savage Water Solutions
• Antea Group
• Aon Corporation
• Aqua-Pure Ventures
• BeneTerra
• Black Hills Exploration and Production, Inc.
• Bonanza Creek Energy, Inc.
• Bradsby Group
• Brady Trucking, Inc.
• Burleson LLP
• Carrizo Oil & Gas, Inc.
• Cobra Manufacturing & Sales LLC
• Coldsweep Inc.
• Davis Graham & Stubbs LLP
• Davis & Davis Company
• ECO AFS
• Ecocion, Inc.
• Encana Corporation
• Enviro Voraxial® Technology, Inc.
• Frank Henry Equipment USA, LLC
• FTS International
• Gold Spur Trucking
• Herbrick Agency
• High Sierra Energy, LP
• Honeywell Analytics
• IMA, Inc.
• KLJ
• Marquis Alliance Energy Group
• McPherson & McVey
• Nexus Staffing Solutions, LLC
• ONEOK, Inc.
• Precision Placement Services, Inc.
• Produced Water Solutions, Inc.
• PTI Group USA
• QEP Resources, Inc.
• Questar Pipeline Company
• Ryckman Creek Resources, LLC
• Savage
• Spartan Engineering Inc.
• Stellar Recruitment
• Target Logistics
• TaxOps LLC
• TEEMCO, LLC
• TETRA Technologies, Inc.
• Vacuworx® Global
• Venoco, Inc.
• Westcon, Inc.
• Zavanna, LLC

The winners will be announced at the Rocky Mountain Oil & Gas Awards gala dinner ceremony at the Grand Hyatt Hotel in Denver on Tuesday 12 March.

The list of all finalist companies can be found at www.oilandgasawards.com as well as information about table bookings for each gala event. For information on sponsorship opportunities and to reserve your table for what will be a fantastic night of celebration please call Marc Bridgen on +1 (210) 591 8475 or email marc@oilandgasawards.com.

by North Dakota Housing & Finance Agency

The Industrial Commission of North Dakota has reported that more than 600 private investors have successfully capitalized the $15 million state Housing Incentive Fund (HIF).

“Thanks to North Dakota citizens and our business community, the Housing Incentive Fund is fully capitalized and available to move forward on affordable housing projects in western North Dakota and across the state,” members of the Industrial Commission said in a joint statement. “With legislative approval, we will continue to utilize the Housing Incentive Fund to encourage even greater affordable housing development.”

The Industrial Commission, consisting of Governor Jack Dalrymple as chairman, Agriculture Commissioner Doug Goehring and Attorney General Wayne Stenehjem, oversees the North Dakota Housing Finance Agency, which administers HIF.

Created by the 2011 Legislature, HIF is used to develop affordable multifamily housing. Contributors to the fund receive a dollar-for-dollar state income tax credit for their contributions. Dollars given can be targeted to a specific project or community.

Ninety percent of the contributions were by individuals who contributed an average of $10,021. The largest corporate supporter was Marathon Oil Co., contributing $3 million. Gate City Bank contributed $1.25 million, the most by a financial institution.

“Developer interest in the program was strong from the start, with all of the available financing spoken for in less than a year,” said Mike Anderson, NDHFA executive director.

NDHFA has conditionally committed HIF dollars to 26 projects to create 739 new units in Beach, Belfield, Bowman, Crosby, Devils Lake, Dickinson, Grand Forks, Kenmare, Killdeer, Kulm, Mandan, Minot, Parshall, Ray, Watford City and Williston. Total construction cost for the projects is $104 million.

“Our greatest challenge was getting the word to taxpayers that they could direct their tax dollars to affordable housing development,” said Anderson. “We are grateful for assistance from our housing partners, business groups and the media in reaching this goal.”

Governor Dalrymple has proposed transferring $30 million from the state general fund for direct investment in HIF for the 2013-15 biennium. An additional $20 million in tax credits would bring the total fund to $50 million. The proposed legislation has been pre-filed as House Bill 1029.

For more information on HIF, contact NDHFA at (701) 328-8080, (800) 292-8621 orwww.ndhousingincentivefund.org.

Posted on 1/3/2013. Retrieved January 10, 2013.

Harold Hamm is a big advocate of the potential of the Bakken field and it appears his confidence in the play is well placed. Continental Resources has increased its estimates by 57%, to the tune of 903 billion barrels of original oil in place. There’s been no word on what the recoverable rate would increase to with this new data.

Earlier this year, Continental estimated the Bakken holds 24 billion Boe of recoverable reserves. With the US Geological Survey slated to complete its reassessment of the Bakken in 2013, it seems these numbers will only go up if the trend continues.

OKLAHOMA CITY, Dec. 3, 2012 – Continental Resources, Inc. (NYSE: CLR) announced today it successfully completed the Charlotte 3-22H (91% WI), the first horizontal well to test the third bench (TF3) of the Three Forks zone in the Bakken field of North Dakota and Montana.

The Charlotte 3-22H flowed 953 barrels of oil equivalent per day (Boepd) at 1700 psi on a 28/64 choke in its initial one-day test period. Located in McKenzie County, North Dakota, it was drilled to a total depth of 21,324 feet, including a 9,701-foot lateral section, and was completed with Continental’s standard 30-stage fracture stimulation design.

“We’re very pleased with the initial performance of the Charlotte 3-22H,” said Harold Hamm, Chairman and Chief Executive Officer. “The well has been producing for 15 days and its performance compares favorably with other first bench (TF1) and second bench (TF2) producing Three Forks wells.”

Continental has been a pioneer in the discovery and development of the Three Forks reservoir in the Bakken field. The Company was the first to demonstrate incremental reserves from the TF1 in 2008 and the first to establish commercial production from the TF2 in 2011. Establishing production from the TF3 is yet another significant milestone in the growth of the Company’s assets in the world-class Bakken oil field. If the Charlotte 3-22H continues to perform in line with the second bench Charlotte 2-22H, it will be the first well to establish commercial production in the third bench.

“This could be a real game-changer,” Mr. Hamm said. “The Charlotte 3-22H is the first well in a 14-well program that we plan to complete by year-end 2013 to test productivity of the second, third and fourth benches of the Three Forks over a broad area of the play.”

The 1280-acre Charlotte unit is the first unit in the Bakken field to have wells producing from three separate horizons – the Middle Bakken, TF2 and TF3 zones.

Continental estimated in late 2010 that the Bakken field would eventually yield 24 billion barrels of oil equivalent (Boe), based on technology available at that time. This estimate included 20 billion barrels of oil and 4 billion Boe of natural gas, and assumed 577 billion barrels of original oil in place in the Bakken and TF1. With the addition of oil found in the lower Three Forks benches, which includes the TF2, TF3 and TF4, the Company now estimates the field has 903 billion barrels of original oil in place, a 57 percent increase.

“The successful completion of the Charlotte 3-22H is another step in our efforts to assess the productivity and reserve potential of the lower benches of the Three Forks which is one of the goals of our 2013 drilling program” said Jack Stark, Senior Vice President of Exploration. “The results are very encouraging and indicate there may be upside to our estimate of 24 billion Boe of recoverable reserves for the Bakken field.”

Retrieved 1-3-2013. Dakota Oil Jobs.

Dickinson, ND –

In 2012, North Dakota made oil headlines by taking over as the number two producer in the nation.

While production continues to ramp up daily, there is one part of western North Dakota were the excitement of oil has gone bust.

Chesapeake’s attempt to find the southern edge of the Bakken, is being described as the largest failure in drilling in the state since the 1980’s.

There are a few well sites in western North Dakota that look more like ghost towns than multi-million dollar holes.

Chesapeake secured leases in a large part of the state, south of I-94.

They drilled 8 wells, only 3 produced oil — but at minimal amounts.

So little that all holes have been shut in.

Director of Mineral Resources for the state of North Dakota, Lynn Helms, says “geologically, there were some surprises. We knew that there wouldn’t be any lower Bakken Shale in that area. What surprised us was to find out there’s no upper Bakken Shale in that area.”

Chesapeake’s wells, a bust.

It’s the largest failure in recent oil history in North Dakota.

“That pretty much condemns an area, if you don’t have Bakken present, the risk for finding oil goes way up and you need to have some structure,” says Helms.

The wells are scattered to the south of I-94 between Dickinson and Belfield.

Tanks are there, collecting nothing.

Well heads are in place, abandoned.

And at one site a pumping unit has been partially removed.

Helms says, “there’s only one well that’s made any measurable oil, and it’s about 10 percent oil at best, 90% water.”

Chesapeake was after the chance they may hit oil in this less developed area.

Helms says Chesapeake invested 60 million in the prospect of hitting oil.

That excludes money spent on leases.

“Because all the drilling had been taking place north of there and the geological risk was zero, it made it look too easy. So in terms of the technology of drilling and fracking, well prepared but in terms of geology probably not,” says Helms.

Chesapeake’s risk taking — provided large clues about where the Bakken ends. “It looks like 4-6 miles south of I-94 the Bakken Shale disappears,” says Helms.

Their experimental drilling will also provide answers about what else could be below.

Kathy Neset with Neset Consulting says, “they’re taking that information and they’re studying it. They are going to learn everything they can from those wells.”

Neset provides geology services to oil companies.

She says this is not the end of Chesapeake in North Dakota.

“They’re not going to say, we’re going to drill one well, if it doesn’t work, we are out of here. They have a very committed program in drilling and evaluating, I think we’ll see Chesapeake back here. They may be disappointed right now. But I think they’ll be back,” says Neset.

Maybe back and drilling in another formation.

Both Neset and Helms say there’s potential in the Tyler formation.

Helms says, “the area does lie between two producing Tyler fields and has mature Tyler source rock, so it’s not the end of the story by any means.”

Helms says Chesapeake will be forced to either reenter the well sites or to plug and abandon them soon.

The state only allows a non paying well to stay on the landscape for a year.

Retreived 1-2-2013. KX News.

BISMARCK, ND – Eighty-nine percent of North Dakotans statewide said they favor oil and gas development in state, and 55 percent said they strongly favor it according to a survey commissioned by the North Dakota Petroleum Council (NDPC) in November.

“North Dakotans continue to overwhelmingly support oil and gas development in the state because of the strong impact it has on growing our economy, creating tens of thousands of new, good-paying jobs, and in helping increase our nation’s energy security,” said Ron Ness, president of the NDPC. “We have seen an increase in the number of residents who strongly favor oil and gas development, and I believe that is an indication that the industry is developing these resources responsibly and with great consideration to the communities and landowners in western North Dakota.”

The survey is conducted annually to help the industry better gauge how North Dakotans feel about oil and gas development in the state and to identify key issues and challenges that the industry may work to address. The survey found that while a majority of North Dakotans favor oil development, more than 70 percent are concerned about truck traffic and cost and availability of housing. When asked about progress in these areas, however, 45 percent said progress was being made on roads and highways, 41 percent said progress was being made on availability of housing, and 60 percent said progress was being made on affordable housing.

Despite concerns for these and other areas, about the same number (71 percent) of North Dakotans believed that the benefits of oil development outweigh the risks. In fact, when asked if oil development should slow down on private land, 76 percent of North Dakotans said no, and 58 percent said development should not be slowed down on public lands.

“The industry recognizes that communities in western North Dakota are impacted by the rapid growth brought on by oil development, but this survey shows that we are making progress,” said Ness. “By and large, North Dakotans agree that while we do have challenges with our growth, these are good challenges to have, especially in light of high unemployment and a struggling economy nationwide.”

Since 1952, the Petroleum Council has been the primary voice of the oil and gas industry in North Dakota. The Petroleum Council represents more than 400 companies involved in all aspects of the oil and gas industry, including oil and gas production, refining, pipeline, mineral leasing, consulting, legal work, and oil field service activities in North Dakota, South Dakota, and the Rocky Mountain Region. For more information, go to www.ndoil.org.

View or Download the Survey here.

Continental Resources said that it plans to ship 65% of its Bakken oil production by rail in November.

Continental’s Bakken production was 62,453 barrels of oil equivalent per day (boe/d) for the third quarter of 2012, an 81% increase over the third quarter of 2011 and 17% higher than the second quarter of 2012.

Continental is the No. 1 leaseholder in the Bakken, with almost 1 million net acres. The company currently has 19 operated drilling rigs in the Bakken, including 15 operated rigs in North Dakota and four in Montana.

The company posted record production of 102,964 boe/d in the third quarter, 55% above production for the corresponding quarter in 2011 and 9% above second quarter 2012 production. September 2012 production was 105,874 boe/d.

“We’ve recently seen a significant improvement in Bakken oil price differentials, reflecting higher volumes being shipped by rail to the coasts and the anticipation of increased pipeline capacity,” said Rick Bott, president and chief operating officer.

“In mid-October, Continental was railing 21,000 b/d of operated production to the West Coast, a similar volume by rail to the Gulf coast, and 8,000 b/d to the East Coast,” he added.

This rail delivery volumes are for both Bakken and South Oklahoma output. Continental now has excess transportation capacity in both pipe and rail, and, with additional infrastructure projects in the planning and construction stages, capacity should remain ahead of Bakken production growth, Bott said.

The company’s primary focus is identifying the highest-value opportunities to market its oil to the refinery end-customer.

Third-quarter production and EBITDAX growth was driven by continued production increases in the Bakken play and the South Central Oklahoma Oil Province (SCOOP), the oil- and condensate-rich resource play unveiled at Continental’s 2012 Investors Day on Oct. 9.

Bakken production increased 81% compared with the third quarter of 2011, while SCOOP production was 327% higher than the third quarter last year.

On Oct. 8, Continental unveiled a new five-year growth plan to triple production and proved reserves by year-end 2017.

According to its strategic growth plan, Continental plans to generate average production of 300,000 boe/d in 2017. Seventy percent of the company’s third quarter 2012 production was oil, with the balance being natural gas and natural gas liquids. “We expect to achieve 2012 production growth guidance of 57% to 59%,” said Harold Hamm, chairman and chief executive officer. “Other positive trends we expect to continue are reduced drilling and completion cycle times and low production costs,” he said. Continental expects 30% to 35% production growth next year, the first year in its new five-year plan aimed at tripling production and proved reserves.

Continental reported net income of $44.1 million, or $0.24 per diluted share, for the third quarter of 2012. Adjusted earnings were $0.87 per diluted share for the quarter, excluding the combined effects of an unrealized loss on derivatives, property impairment charges and relocation expenses.

After-tax adjustments that reduced net income included a net non-cash unrealized loss on derivatives of $97.1 million, property impairment charges of $16.9 million, and $1.4 million in costs related to the company’s headquarters relocation to Oklahoma City.

For the third quarter of 2011, the company reported net income of $439.1 million, or $2.44 per diluted share. Last year’s third quarter net income, on an after-tax basis, was increased by a $332.5 million net non-cash unrealized gain on mark-to-market derivative instruments and reduced by a net charge of $16.3 million for property impairments.

Adjusted earnings for the third quarter of 2011 were $0.69 per diluted share, excluding the unrealized gain on derivatives and the property impairments.

Consequently, third quarter 2012 adjusted net income of $0.87 per share was  26% above adjusted net income for the third quarter of 2011 and a similar increase over adjusted net income for the second quarter of 2012.

–Edgar Ang, eang@opisnet.com  |  www.opisnet.com

Rangeland Energy LLC said that it has entered into a definitive agreement to sell the company to Inergy Midstream LP for $425 million. Rangeland is the owner and operator of the COLT system, the largest open-access crude oil distribution hub in North Dakota.

This could represent Inergy Midstream’s first move into the lucrative crude logistics business segment. Inergy is primarily involved in natural gas liquids and natural gas storage and transportation, according to the company’s website.

The COLT system includes a large crude oil rail loading terminal in Williams County, N.D., and related storage and pipeline assets. The transaction is expected to close in early December.

Founded in 2009, Rangeland is a midstream energy company led by a management team and backed by private equity commitments from EnCap Flatrock Midstream of  San Antonio. Rangeland’s management team will retain the company name and continue to pursue midstream development opportunities across North America.

The COLT system is located in the heart of the Bakken and Three Forks shale oil producing region. The system’s components include the COLT Hub, the COLT Connector and the Dry Fork Terminal.  The COLT Hub serves as a point of liquidity for the distribution of Bakken crude oil throughout North American markets by providing customers with crude oil storage and connectivity to BNSF Railway Company and various inbound and outbound pipeline systems.

The terminal was placed in service in early May 2012. The COLT Hub serves crude oil refiners, marketers and producers and has contracted aggregate volume commitments of approximately 150,000 b/d of crude.

The COLT Connector is a 21-mile bidirectional pipeline that connects the COLT Hub to the Enbridge and Tesoro pipelines at Rangeland’s terminal at Dry Fork near the Beaver Lodge/Ramberg junction, the Banner gathering system and a planned connection to the Bear Tracker Energy gathering system.

Construction of the COLT Hub began in May 2011. With six 120,000-bbl storage tanks and two 8,700-foot rail loops, the COLT Hub accommodates large 120-car unit trains.

Under terms of the agreement, all of the Rangeland employees working in North Dakota will be invited to work for Inergy.

–Edgar Ang, eang@opisnet.com  |  www.opisnet.com

The University of North Dakota today announced $14 million in private and public partnership funding that will greatly enhance UND’s efforts in petroleum geology and related fields. The announcement also included the naming of the Harold Hamm School of Geology and Geological Engineering in the UND College of Engineering and Mines.

The total project of $14,000,000 includes $10,000,000 provided as a gift from Harold Hamm and Continental Resources, Inc., which will create the Harold Hamm School of Geology and Geological Engineering. Another $4,000,000 from the Industrial Commission/Oil and Gas Research Program will fund the proposal entitled “Public-Private Partnership to Support Geology and Geological Engineering Education and Research at UND’s College of Engineering and Mines.”

“With the discovery of the world’s largest oil field in more than 40 years, Continental Resources and North Dakota are changing the world,” said Harold Hamm. “The Bakken Play is one of the primary fields making North American energy independence a reality, releasing us from the grip of foreign oil and serving as a model for unconventional oil production worldwide. Establishing the School of Geology and Geological Engineering is a vital commitment to continuing North Dakota’s national and global leadership in energy.”

North Dakota Governor Jack Dalrymple said, “We’re proud to be partnering with Harold Hamm and Continental Resources to provide funding through a private-public partnership for this major expansion of UND’s geology program. This is a perfect example of what can be done at our research institutions to enhance educational and employment opportunities for our state.”

UND President Robert Kelley said, “This is an exceptional day for the University of North Dakota. We are delighted to announce the naming of our School of Geology and Geological Engineering for Mr. Harold Hamm in honor of this very generous gift from Mr. Hamm and Continental Resources, Inc. This is the largest-ever gift to UND from someone who is not an alumnus of the University, and adds a significant dimension to North Dakota Spirit — The Campaign for UND.

“I also want to thank the North Dakota Industrial Commission for their very important portion of the private-public partnership,” said Kelley. “This is a perfect model of private dollars and public resources working together for maximum benefit. The combined funding will enhance the education of future petroleum geologists and engineers, which is key to the ongoing development of the Williston Basin and the nation’s petroleum resources.”

Said Hesham El-Rewini, dean of the UND College of Engineering and Mines, “As an essential part of the UND College of Engineering and Mines, the Harold Hamm School of Geology and Geological Engineering will highlight the importance of geology and geological engineering in the state, not only in terms of North Dakota’s financial well-being, but also in terms of employment within the state. The School will help attract high quality faculty members and the best and brightest students to North Dakota.”

“Our goal is to produce future generations of petroleum geologists and engineers who can contribute to building a better world through professional service and research for safe, reliable, and affordable energy production,” El-Rewini added. “We also aim to increase the research efforts currently conducted by faculty members and students in petroleum related fields, which will create new opportunities for collaboration with industry in North Dakota and elsewhere.”

“This generous funding will give students at the University of North Dakota access to technology and resources that will better prepare them for engineering and energy-related jobs here in North Dakota and around the world,” said Attorney General Wayne Stenehjem, a member of the North Dakota Industrial Commission. “It is our hope that this is only the beginning of what we can do, partnering with industry, to educate our future workforce.”

“We already have one of the best core libraries in the United States housed at the Wilson M. Laird Core Library on the UND campus. These dollars will help us leverage the information in that facility and improve the opportunities for students and others to better understand the geology of North Dakota’s natural resources,” said Agriculture Commissioner Doug Goehring, a member of the North Dakota Industrial Commission.

Gift from Harold Hamm and Continental Resources Inc.

The $10 million private gift from Harold Hamm and Continental Resources, Inc. will be made available over the next four years, and the endowment portion will continue to return funding on an ongoing basis. Designed to enhance education and research at the Harold Hamm School of Geology and Geological Engineering, the gift will have an impact on the entire College of Engineering and Mines for many years.

The gift has been designated as follows:

$3,750,000 – Endowed Professor of Petroleum Geology
$3,750,000 – Endowed Professor of Petroleum Engineering
$675,000 – Salary and benefits for the two Endowed Professor positions
$1,325,000 – Endowed Leadership Scholarships
$500,000 – Continental Resources High Resolution Virtual Core Library

Industrial Commission Oil and Gas Program Funding

The $4 million funding from the Industrial Commission Oil and Gas Research Program will be used as follows:

$1,500,000 – Equipment to establish Advanced Laboratories
$1,500,000 – Continental Resources High Resolution Virtual Core Library
$720,000 – Student scholarships and graduate assistantships
$280,000 – Students experience fund

–30–

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