Eco-Trade Corp., an independent oil and gas exploration company, said on Monday that it has signed a Letter of Intent to purchase the South Bakken Prospect in Montana in an area that has the potential to produce between 80 and 120 million of barrels of oil recoverable.

Eco-Trade will have the rights to the exploration, drilling and production rights on a property in Lewis & Clark County in Montana, near Great Falls, totaling over 5,800 acres called the South Bakken Prospect.

The property is located in the southern part of the Alberta Bakken Fairway, which is at least 175 miles long (north-south) and 50 miles wide (east-west), and which extends from Alberta southwards through Montana’s Glacier, Toole, Pondera, Teton and Lewis & Clark counties.

The Alberta Bakken Fairway is time-equivalent to the Bakken Petroleum System of the Williston Basin, and is considered a proven play with production and DST hydrocarbon recoveries from the Bakken, and Exshaw Formation in Canada. While management believes that the letter of intent and subsequent agreement may conclude successfully, the company cannot warranty or guarantee success.

In October, Eco-Trade said it had begun an internal review of its business model and is exploring options in new businesses ventures and industries. The company is also studying its options for raising capital and is in discussions with various groups in that regard. This was quickly followed by a company announcement on Nov. 1 to enter the petroleum industry in Montana Bakken.

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

By Lynn Helms – NDIC Department of Mineral Resources

Jul Oil 20,963,713 barrels = 676,249 barrels/day
Aug Oil 21,735,166 barrels = 701,134 barrels/day (preliminary)(NEW all-time high)

Jul Gas 22,295,369 MCF = 719,205 MCF/day
Aug Gas 23,616,598 MCF = 761,826 MCF/day (preliminary)(NEW all-time high)

Jul Producing Wells = 7,467
Aug Producing Wells = 7,701 (preliminary)(NEW all-time high)

Jul Permitting: 183 drilling and 0 seismic
Aug Permitting: 261 drilling and 1 seismic
Sep Permitting: 273 drilling and 0 seismic (NEW all-time high)

Jul Sweet Crude Price = $71.13/barrel
Aug Sweet Crude Price = $80.65/barrel
Sep Sweet Crude Price = $84.98/barrel
Today Sweet Crude Price = $89.50/barrel ND (all-time high was $136.29 July 3, 2008)

Jul rig count 211
Aug rig count 198
Sep rig count 190
Today’s rig count is 186 (all-time high was 218 on May 29, 2012)

Comments:
August weather was great for drilling and hydraulic fracturing resulting in a 3.7% oil production increase from July to August. A combination of several factors has led to lower stable drilling activity, but continued rapid production growth. Rig count has stabilized at around 190 as operators transition to higher efficiency rigs and implement cost cutting measures. The idle well count decreased significantly indicating an estimated 300 wells (a 25% decrease) waiting on fracturing services. Rapidly escalating well costs that consumed capital spending budgets faster than many companies anticipated and uncertainty surrounding future federal policies on hydraulic fracturing are impacting capital investment decisions. Over 95% of drilling still targets the Bakken and Three Forks formations.

Crude oil take away via pipeline is now 43% of daily production, but transportation by rail at 46% and truck at 2% plus Tesoro refining 9% are adequate to keep up with near term production projections.

Rig count in the Williston basin is stable. Utilization rate for rigs capable of +20,000 feet is stable at about 90%, but for shallow well rigs that drill to 7,000 feet or less utilization remains about 60%.
Drilling permit activity has increased to accommodate more multi-well pads and the need to build locations before winter weather comes.

The number of rigs actively drilling on federal surface in the Dakota Prairie Grasslands is up to 7.

The number of rigs drilling on the Fort Berthold Reservation has dropped to 27 with 0 on fee lands and 27 on trust lands.
There are now 706 wells (101 on trust lands & 605 on fee lands)
Producing 119,644 barrels of oil per day (7,309 from trust lands & 112,925 from fee lands)
139 wells are waiting on completion
259 approved drilling permits (244 on trust lands & 15 on fee lands)
1,566 additional potential future wells (1,426 on trust lands & 140 on fee lands)

Seismic remains busy with 7 surveys active/recording, 1 remediating, 0 suspended, and 6 permitted.

North Dakota leasing activity is much slower, mostly renewals and top leases in the Bakken – Three Forks area.

Daily natural gas production is increasing slightly faster than oil production. This indicates that gas oil ratios may be increasing and more gathering and processing capacity will be needed. Construction of processing plants and gathering systems is in full swing due to the dry summer weather. US natural gas storage has dropped to 8% above the five-year average but this still indicates low prices for the foreseeable future. North Dakota shallow gas exploration is not economic at near term gas prices.

Natural gas delivered to Northern Border at Watford City is up to $2.96/MCF. This results in a current oil to gas price ratio of 30 to 1, but the high liquids content makes gathering and processing of Bakken gas economic. Additions to gathering and processing capacity are helping and the percentage of gas flared dropped to 29%. The historical high was 36% in September 2011.
Draft BLM regulations for hydraulic fracturing on federal lands were published in the Federal Register. The comment period closed at 5pm EDT on September 10, 2012. BLM has given no indication of when a final rule will be published.

Draft EPA Guidance for permitting hydraulic fracturing using diesel fuel has been published. The comment period closed at 5pm EDT on August 23, 2012. There is no indication from EPA of when a final guidance document will be published.

(HELENA) The State of Montana will offer detailed training on a range of topics that includes air quality and discharge permitting, compliance requirements, and best business practices for contractors, opencut mining, materials processors, and the oil and gas industry.

The trainings will be in Sidney on October 1 – 3 at the Mondak Heritage Center, 120 3rd Ave SE,  and will be conducted by representatives of the Departments of Environmental Quality (DEQ) and Transportation (MDT). The trainings are free of charge and open to qualified registrants.

The three-day series is designed specifically to address practices surrounding opencut mining and associated development and growth seen in recent years throughout northeastern Montana.

“This training series provides valuable information that will save owner-operators and contractors time and money as they grow with the region,” said Darrick Turner, manager of DEQ’s Small Business Environmental Assistance Program. “Attendees will come away with a better understanding of the state’s environmental regulations and the permitting processes.”

Topics will include air quality and discharge permitting, and inspections. A full day is devoted to siting and compliance requirements and permitting for opencut operations. Enforcement and transportation issues will also be addressed.

Registration is available by calling 800-433-8773 or by emailing Darrick Turner at: dturner2@mt.gov.

By Lynn Helms – NDIC Department of Mineral Resources

• May Oil: 19,839,420 barrels = 639,277 barrels/day
• Jun Oil: 19,809,662 barrels = 660,332 barrels/day (preliminary) > NEW all-time high
• May Gas:  21,360,912 MCF = 689,062 MCF/day
• Jun Gas: 21,381,942 MCF = 712,7312 MCF/day (preliminary) > NEW all-time high
• May Producing Wells = 7,205
• Jun Producing Wells = 7,352 (preliminary) > NEW all-time high

May Permitting: 180 drilling and 2 seismic
Jun Permitting: 204 drilling and 0 seismic (all time high was 245 in Nov 2010)
May   Sweet Crude Price = $79.44/barrel
Jun   Sweet Crude Price = $72.58/barrel

Today Sweet Crude Price = $80.00/barrel ND (all-time high was $136.29 July 3, 2008)

• May rig count 211
• June rig count 213
• July rig count 211

Today’s rig count is 203 (all-time high was 218 on May 29, 2012)

Comments:

Great weather and additional crews resulted in increased hydraulic fracturing activity and increased production. Rig count has now decreased slightly to around 200-205 and rig efficiency continues to improve with the spud to TD time now averaging 20 days.  Daily production increased 3.3% from May to June. Over 95% of drilling still targets the Bakken and Three Forks formations. The idle well count stayed about the same indicating an estimated 347 wells waiting on fracturing services. This is expected to lead to significant production increases through the summer as additional fracturing crews are added.

Crude oil take away via pipeline is now less than 50% of daily production, but rail and truck transportation are adequate to keep up with near term production projections. The North Dakota Sweet posted price basis is now -14% to NYMEX-WTI and NYMEX-WTI basis is now -18% to Brent.  This is resulting in an increasing amount of North Dakota crude oil transported on rail so it can reach destinations that pay Brent price.

Mail: U.S. Department of the Interior, Director (630), Bureau of Land Management, Mail Stop 2134 LM, 1849 C St. NW., Washington, DC 20240, Attention: 1004-AE26.
Fax: Office of Management and Budget (OMB), Office of Information and Regulatory Affairs, Desk Officer for the Department of the Interior, fax 202-395- 5806.

There are a significant number of concerns with the rule as proposed, but the major points that should be commented on are as follows:

1)  This is a state’s rights issue.  States that have adopted hydraulic fracturing rules that include chemical disclosure, well construction, and well bore pressure testing should be exempted from the rule.

2)  The EPA study of potential hydraulic fracturing effects on ground water is not finished and there are currently no known environmental contamination incidents.

3)  As Chairman Hall has testified, the required consultation with the Three Affiliated Tribes has not occurred.

Draft EPA Guidance for permitting hydraulic fracturing using diesel fuel has been published.  The comment period has been extended to 5pm EDT on August 23, 2012.  I urge all of our readers to submit comments to the EPA as follows:

Submit your comments, identified by Docket ID No. EPA-HQ-OW-2011-1013 by one of the following methods: www.regulations.gov: Follow the on-line instructions for submitting comments. Email:OWDocket@epa.gov@epa.gov
Mail: Permitting Guidance for Oil and Gas Hydraulic Fracturing Activities Using Diesel Fuels—Draft, Environmental Protection Agency, Mailcode: 4606M, 1200 Pennsylvania Ave. NW, Washington, DC 20460.

There are a significant number of concerns with the guidance as proposed, but the major points that should be commented on are as follows:

1)  This is a state’s rights issue.  States that have adopted hydraulic fracturing rules that include chemical disclosure, well construction, and well bore pressure testing should be explicitly exempted from the guidance.

2)  The definition of diesel fuel is too broad because it includes six CASRNs as well as any materials referred to by one of these primary names or any associated common synonyms.

3)  EPA made no attempt to identify dangerous concentrations of these materials.

Hydraulic fracturing treatments that utilize concentrations of less than 10% of any material defined as diesel fuel should be exempt from permitting requirements.

4)  The guidance is written for Enhanced Oil Recovery wells or disposal wells completed with tubing and packer.  It shows a serious lack of understanding of the horizontal drilling-hydraulic fracturing process.  Most of the requirements will not work mechanically on wells completed with swell packers and fractured down the production casing.

“Director’s Cut.” By Lynn Helms – NDIC Department of Mineral Resources (2012-8-15). Retrieved 9-5-2012.

On May 18th +/- 1239.74 total mineral acres located in McCone County will be offered to the public on the auction block.  Montana private mineral ownership holdings have historically been leased and traded through private negotiations. Mineral ownership interests are real property but do not carry the burden of property taxes. There are no costs to owning the mineral interests, and they have the potential to generate income from leases and production. This event should prove to be very interesting to landowners and the oil & gas industry.  Once again the oil patch has another exciting twist!  The Public is invited to attend this event.  The sale will be conducted in Sidney, Montana at the Elks Club on Friday May 18th, 2012 at 7:00 PM (123 3rd Street SW).  Interested parties may contact Russell Pederson of Montana Land Auctions, Inc for more details.  (406) 939-2501 or go to www.montanalandauctions.com