Photo by Travis W. Cooksey

BISMARCK, N.D. – The North Dakota Petroleum Council (NDPC) today released the final report detailing the results, research methodology and comparative analysis of the Bakken Crude Characteristics Study conducted this spring. The preliminary results of the study, which concluded Bakken crude is similar to other North American light, sweet crudes and does not pose a greater risk to transport by rail than other crudes and transportation fuels, were presented in May during the Williston Basin Petroleum Conference.

“This study provides the most thorough and comprehensive analysis of crude oil quality from a tight oil production basin to date,” said John Auers, executive vice president of Turner, Mason & Company, the engineering firm commissioned to conduct the study. “The study provides conclusive and consistent scientific data about Bakken crude that will help regulators, operators, shippers and other key stakeholders properly classify and monitor Bakken crude in the future.”

In addition to reinforcing the preliminary findings presented in May, the final report also outlined Field Operations Recommended Best Practices to ensure consistent operation of field treating equipment, Bakken crude oil quality and testing procedures and shipping classification. Some of the best recommended practices include (but are not limited to):

· Maintaining all fired treating equipment at a temperature between 90 degrees and 120 degrees Fahrenheit year round to help minimize light end components in crude and create a consistent industry standard to ensure optimal separation of water and gas from the crude oil stream;
· Providing maximum tank settling time possible prior to shipment;
· Reducing stock tank pressure to the lowest pressure possible to maintain vapor collection equipment (engineered flare, vapor recovery, etc.) operational integrity;
· Testing each unit train loading or tank shipment batch to ensure crude is within the established typical Bakken specifications;
· Classifying all Bakken crude as a Class III, Packing Group I hazardous material even if current testing methods would classify a shipment as Packing Group II.

“The study helped establish a baseline for Bakken crude characteristics, and by implementing the recommended best practices outlined in the report, we will ensure Bakken crude remains consistent to those properties,” said Kari Cutting, vice president of the NDPC. “Our members have already begun implementing many of those best practices, further emphasizing our commitment to safety, including in the movement of this valuable resource by rail.”

In addition to outlining recommended best practices and providing in-depth analysis of the final results from sampling and testing, the final report also compares analysis from other studies on Bakken crude, including a study commissioned by the American Fuel & Petrochemical Manufacturers (AFPM) and the U.S. Department of Transportation Pipeline and Hazardous Materials Safety Administration (PHMSA).

“The test results from this study are consistent with scientific data reported by the AFPM and PHMSA,” said Cutting. “All of this data does not support the speculation that Bakken crude is more volatile or flammable than other light, sweet crudes. We look forward to using this information to continue our work with regulators and rail companies to develop and implement standards that will ensure all flammable liquids, particularly crude oils that are safely transported by rail.”

Turner, Mason & Company will present the findings of the final report to the North Dakota Industrial Commission on Wednesday, August 6 at 11 a.m. The study was completed by Turner, Mason & Company and SGS Laboratories at a cost of approximately $400,000. The full report may be downloaded at www.ndoil.org/resources/BKN.

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 500 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.

BISMARCK, N.D. – The petroleum industry, the state and communities will come together on Wednesday, June 25 in Tioga, N.D., to celebrate North Dakota’s climb to one million barrels of oil production per day and to show appreciation for the many hard-working men and women who have supported western communities and the industry during the past decade of growth.

The celebration will include remarks from Gov. Jack Dalrymple, Ron Ness, president of the NDPC and Kathy Neset, president of Neset Consulting Service, which is hosting the event at their location. Speakers, a mini museum and tours to the first oil well will highlight North Dakota’s oil and gas history, as well as the state’s role as a top producer of energy for the world and its positive influence on national security.

“We are thrilled to be hosting this celebration and to recognize this remarkable milestone,” said Neset. “One million barrels per day is an impressive level of production. The Bakken – along with other oil resources around the country – have lifted the United States to a more secure level on the global stage of security and independence by providing a safe and reliable source of energy for our country.”

What: One Million Barrels – One Million Thanks Celebration

Where: Neset Consulting Service, 6844 Highway 40, Tioga, ND
When: Wednesday, June 25, 2014
11 a.m. Welcome – Ron Ness, NDPC
North Dakota Governor Jack Dalrymple
11:15 a.m. Kathy Neset, Neset Consulting Service
11 a.m. – 3 p.m. ND Oil & Gas Industry Mini-Museum Open
11:30 a.m. Ribbon cutting, airshow and flyby by the Texas Flying Legends
12-2 p.m. Community BBQ
12 – 3 p.m. Bus tours to Clarence Iverson No. 1 Well
12 – 3 p.m. Air tours of the Tioga area
12 – 3 p.m. Live music by the Tin Star Band

More Info: The event is free and open to the public and media. Parking and shuttle services will be available at the Tioga Farm Festival Building. For more information about the celebration, visit www.ndoil.org/events.

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Aaron Flint is the host of the popular statewide talk radio show “Voices of Montana.” In addition, he serves as the editor of the daily online news and commentary blog “The Flint Report,” recognized by The Washington Post as “one of the best state-based political blogs.” Aaron has also been listed by The Washington Post as one of the best state based political reporters. His work has been featured nationally by the Fox Business Network, The Drudge Report, Huffington Post, Politico and others.

He has deep Montana roots, since his father’s family homesteaded near Flathead Lake, and his mother’s family goes back four generations in Glasgow. While in fourth grade Aaron recalls stuffing newspapers for The Glasgow Courier, which for years was published and edited by his grandparents, Ron and Joan Helland.

As an officer in Montana’s Army National Guard, Aaron served three military tours overseas, in 2005-06 as an Infantry Platoon Leader in Ramadi, Iraq, and later in 2008-09 as an embedded advisor with the Afghan National Police at COP Wilderness in Afghanistan. Most recently, he deployed to the Horn of Africa.

Flint’s journalistic experience began as a journalism student at Howard University. He later received a BA degree in Broadcast Journalism from the University of Montana where he served as President of the Associated Students. He also worked for two years as a Policy Advisor on the Washington staff of U.S. Senator Conrad Burns. Flint’s broadcast career includes work with Montana Public Radio, a runner for the NBC News “Today” show at the 2004 National Political Conventions, an internship with Bloomberg TV and Radio in Washington, DC, and as Executive Producer and Reporter with KTVQ-2 Television (CBS) in Billings.

Flint enjoys combining his real world background and Montana roots, with a love for journalism, saying, “Every day, I hope to take a wide range of experiences to show audiences the bigger picture, or to give them a side of the story they won’t get anywhere else”.

Aaron and his wife Jessica have two young boys, and a baby girl born during his recent deployment overseas.

The Bakken Oil Business Journal is a Silver Level Sponsor for this event. See you there!

We, at the Bakken Oil Business Journal, offer our unambiguous support of a project important to meeting American energy needs, the Keystone XL Pipeline.

The Keystone XL Pipeline is a proposed 1,179 mile, 36-inch-diameter crude oil pipeline that goes through a number of states and provinces on its route south, including Alberta and Saskatchewan in Canada, and Montana, South Dakota and Nebraska in the U.S. Along with transporting crude oil from Canada, the Keystone XL Pipeline will transport oil from producers in Texas, Oklahoma, Montana and North Dakota.

Building awareness of the need for smart policy about our land and waters and how drilling impacts them isn’t an easy sell in a state whose residents continue to derive so much personal financial benefit from the oil and gas industry.

In the matter of Keystone, the environmental lobby is just plain wrong, as it is a safe and needed addition to America’s network of pipelines that gets oil to market. And there is precious little evidence to the contrary.

Until alternative fuel sources become competitive in availability and cost with our existing carbon-based mainstream supply, we have little choice but to rely on fossil fuels. This pesky fact just can’t be denied. Surely, we hope that time will come sooner rather than later, and we heartily support government funding of innovation to speed arrival of that day. But even the most knowledgeable and enthusiastic of environmentalists know that day is not right around the corner.

In the meantime, regardless of the worldwide climate crisis in which we’re fully engaged, it’s in our collective interest to facilitate America’s relentless need for the oil that runs our cars, heats and cools our homes and powers our factories. The Keystone will facilitate this by getting oil extracted from the buried sands of our friendly Canadian neighbor, down to our U.S. refineries to be converted to gasoline and related products.

Recent, objective studies show Keystone to be the safest, most environmentally secure and least expensive means to get the product to market. And now that the U.S. State Department has announced it found no major basis to oppose the project after an intensive and long-awaited review, it’s time for President Obama to provide his needed seal of approval.

North Dakota Director’s Cut Newsletter – January 2014
NDIC Department of Mineral Resources – Lynn Helms

January 2014 – Total Crude Oil Production 28,926,977 barrels = 933,128 barrels/day.  The all-time high was 976,453 barrels in November 2013.

871,672 barrels per day or 93% were from Bakken and Three Forks Formations.
There are over 100 wells shut in for the Tioga gas plant conversion in an attempt to minimize flaring, but the biggest production impact story continues to be the weather. January temperatures were only 6 degrees below normal with only 3 days too cold for fracturing work, and there were no major snow events with 12 days of sustained wind chill speeds too high for well completion work.

Over 95% of drilling still targets the Bakken and Three Forks formations. At the end of January 2014 there were about 660 wells waiting on completion services, an increase of 25.

Crude oil take away capacity is expected remain adequate as long as rail deliveries to coastal refineries keep growing.

READ MORE.

For reasons of efficiency the Department of State is encouraging electronic submittal of comments through the federal government’s eRulemaking Portal. To submit comments electronically, visit this link: http://www.regulations.gov/#!documentDetail;D=DOS-2014-0003-0001

This is a 30-day public comment period and the deadline date is Friday, March 7th at 11:59 p.m. (EST).

Download Letter 1
Download Letter 2

Jobs:

• During construction, the report suggests that the project would support about 42,000 direct/indirect jobs, approximately $2 billion of earnings throughout the United States, and contribute about $3.4 billion to US GDP.

GHG:

• The Final SEIS finds if this project goes ahead, we will see fewer spills, fewer injuries, and fewer fatalities when compared to the alternative of transporting crude oil by rail. On top of that, this project will result in lower GHG emissions; the Final SEIS finds that under any of the alternative scenarios where the project is denied, you will see greater GHG emissions from the movement of this oil.
  • The updated analysis in the Final SEIS concludes that the proposed Project is unlikely to significantly affect the rate of extraction in the oil sands.

• The Final SEIS states that under any of the scenarios where the project is denied, GHG emissions from the movement of this oil would actually increase – 28 per cent more GHGs if all the oil is railed to the Gulf Coast, 42 per cent higher GHGs if a combination of rail and new pipelines is used.

Energy Security:

• The Keystone XL Pipeline will increase energy security, and with the growth of domestic production in the U.S. and Canada, connecting the third largest resource of oil in the world to the largest refining center in the world can do nothing but increase energy security.

• As the Final SEIS points out, the demand persists for imported heavy crude oil by U.S. refineries optimized to process heavy crude. As Canadian production of bitumen from the oil sands continues to grow, the vast majority is currently exported to the United States to be processed by U.S. refineries.
  • The U.S. is a net importer of crude oil. The International Energy Agency and US Energy Information Administration (EIA) have both forecast that the U.S. will still need to import oil to meet its domestic demand for decades, despite growing oil production in the U.S. Today, the United States consumes 15 million barrels of oil per day and imports eight million barrels. The EIA forecast in 2012 stated that the U.S. will continue to import 7.5 million barrels of oil per day into 2035 to meet its needs.

Safety:

• As a Company, we are committed to doing the very best and we will continue to operate Keystone XL, once complete, in the safest and most efficient way that we can. It’s our commitment to the public, it’s our commitment to our customers, and it’s a commitment we take very seriously.
  • As stated in the Final SEIS, the U.S. Department of State, in consultation with PHMSA, has determined that incorporation of the 59 conditions would result in a Project that would have a degree of safety over any other typically constructed domestic oil pipeline system under current code.

Export:

• Keystone XL is not an export pipeline. The U.S. consumes 15 million barrels of oil a day and imports seven to eight million barrels. Both the U.S. Energy Information Administration and the International Energy Agency predict America will continue to import millions of barrels of oil each day until at least 2040.

• So what we are really talking about is a choice – a choice made all that more relevant with the recent unrest in Syria and Egypt – do Americans want their crude oil from a friendly partner in Canada or will they continue to rely on unstable regions such as Venezuela and the Middle East? Based on consistent polls since 2011, the findings prove that the majority of Americans continue to support our project.

By: Chris Sutton
Picture taken by Kyle Jerome. Derrickhand with Sun Well Service in North Dakota

The nature of the energy industry can bring frequent changes resulting in professionals reentering the work seeking world.  Some of these changes are beneficial for oil and gas companies.  For example, acquisitions and divestitures (A&D’s) are a part of the asset allocation strategy for oil and gas companies and are constantly evaluated on both a short and long-term basis.

Operators look for assets where geological knowledge of formations is available, and where technical expertise in specific plays can be leveraged for higher margin recovery. Companies divest assets to raise funding for existing asset development or to acquire new assets more closely aligned with long-term strategic goals.

In a survey conducted by Ernst & Young, when Oil & Gas companies were asked to disclose the main causes for an acquisition, the majority of the respondents listed their top two reasons were to gain shares in existing markets and gain shares in new markets.

Although A&D’s are typically beneficial, they can still impact the workforce on either side of the transaction.  Other workforce changes are less beneficial – but still somewhat common in the volatile oil industry.  For example, if an exploration and production company loses a major project, they will likely have to downsize their workforce by laying off the contractors hired for that project.

Of course, downsizing also occurs for other reasons, such as shifting resources internally and changing company goals.  Following are some common scenarios for professionals during company changes, as well as tips for preparing to reenter the workforce.

What do workforce changes mean for oil and gas professionals?

When a company divests an asset, several things can happen to a professional’s job position.  Often, the professional will be asked to move with the assets to the acquiring company.  Moving to the new company sometimes means relocating, so some professionals will turn down the offer and start by searching for a new job in their area.  The divesting company usually encourages current employees to go to the new company if they have the option, because they will be laid off if they stay.  Higher-level employees may have the option to accept a retirement package instead of relocating.

In other situations, some professionals might be told the asset is being sold and they’re not being offered a new position at the acquiring company.  These professionals are often laid off because they are no longer being used on a project.  This scenario is similar to E&P companies losing a major project –some contractors may be asked to join another project or assignment, but usually there isn’t enough work available to avoid downsizing.

What should oil and gas professionals do?

Because the scenarios above are commonplace in the oil and gas industry, professionals in this field should always be ready with a plan of action.  Luckily, in the case of A&D’s, professionals are usually given several months of notice before a company divests the asset  at which they work and they will know shortly afterwards whether or not they will get an offer from the acquiring company.

Unfortunately, many people don’t start looking for a job until after transitioning out of their role.  And in the case of Exploration & Production (E&P) oil companies losing a project, or other downsizing scenarios, professionals may even have less time to ready for a change in employment.  This causes laid off and retired employees to enter the job searching market at once including those who do not accept an offer from the acquiring company as well as professionals from the acquiring company who quit.  Competition for jobs will be fierce and offered pay may be lower.  Our first tip is to begin looking for a job as soon as you know you’ll need one.

Our second tip is to check location.  Location can be a deal breaker for professionals who are offered a position at the acquiring company.  If you get an offer from the acquiring company, find out if they require relocation.  Do some research into the area and decide early whether or not you are willing to move and find affordable housing.

Thirdly, professionals with a lot of experience should consider taking the exit offer and reentering the workforce as a highly compensated, knowledge-based consultant.  Taking a retirement offer doesn’t necessarily mean the end of your career.

Lastly, it’s important to continuously network with industry professionals and get to know about projects in your area. This way you will be able to forge meaningful relationships with contacts that can get you in front of hiring managers.  Information gained from networking can lead to an easier job transition during a company downsizing or similar situations.

Preparation makes for an easier transition.

Workforce changes are inevitable in the oil and gas industry, and most professionals who work on oil production will switch companies at least once during their career.  Preparing for this transition can make finding a new job easier and might even result in a higher paycheck.  You can prepare for any possible layoff by learning about companies involved in deals affecting you and by networking with industry professionals, who may be willing to help you quickly transition to a new project.

Good luck and good hunting.

Chris Sutton is a Partner at Clover Global Solutions, LP.  He can be contacted at: Chris.S@clovergs.com

By:  Bob van der Valk

Since October 16, 2013 West Texas Intermediate (WTI) crude oil decreased in price from $102.49 to $94.11 a barrel, for an 8.2 percent loss, with more to come on the horizon.  Good news for consumers with oil companies having enough on hand in cash reserves to make it through yet another pricing adjustment as happened in July 2008.

The question on the Oil Producing Export Countries (OPEC) controlling the world’s energy market has been resolved.  It has been exactly 40 years since Saudi Arabia and other members of OPEC imposed an embargo on exports of crude oil.  Since 1973 US consumers have seen gasoline prices go from $.369 to almost $5 per gallon.

Crude oil has rallied back up over to $100 a barrel since the early days of 2009 when West Texas Intermediate crude oil bottomed out at $32 a barrel.  Since then the price has been influenced by wars and rumors of wars as well as being threatened by domestic terrorist attacks such as the Boston Marathon bombing earlier this year.

More downside should be expected for crude oil and the dive is just beginning now. Major technical support lies at $60-$62, and oil may not bottom until it falls to as low as $40

The weekly Department of Energy inventory report shows a rise for seven straight weeks.  Last week, they rose 5.2 million barrels. Over the past four weeks, inventories have risen by 22 million barrels, the second largest increase since February 2009.

DOE Statistics for the Week Ending November 1, 2013:

Table covers crude oil and principal products.  Other products, including residual fuel oil and “other oils” are not shown, and changes in the stocks of these products are reflected in “Total Petroleum Products”. Statistics Source: Energy Information Administration “Weekly Petroleum Status Report” available at www.eia.doe.gov

With domestic oil production on the rise, the good news is North America will become energy secure by the end of 2014. OPEC has slowly been losing control on pricing the world’s crude oil requirements.

Bob van der Valk lives in Terry, Montana and is the Senior Editor of the Bakken Oil Business Journal as well as Fuel-pricing Analyst for US petroleum distributors and retail station owners. He can be contacted at:  editor@bakkenoilbiz.com

Foul Play Suspected in Valentine’s Day Disappearance

HELENA – On February 14, 2013, Nicole Waller left Fairview, Montana to return home to her three young children in Kalispell.  When Waller, 32, didn’t return, family members reported her missing; Waller’s vehicle, a maroon 1999 Ford Expedition, was eventually found on the side of Highway 2 outside of Poplar.  Although an extensive search was conducted, Waller was never found.  Nearly ten months later, Waller has still not been located, and investigators are asking anyone with information to contact them.

“Mothers traditionally don’t abandon their children,” noted Agent Mark Hilyard of the Montana Department of Justice’s Division of Criminal Investigation.  “This is clearly not normal behavior and has every indication of a homicide.”

Although law enforcement won’t go into details of the investigation, a number of factors point to foul play.  Agent Hilyard references Waller’s abandoned car as an example.  “Someone witnessed suspicious activity taking place. It also appeared odd that her children’s pet guinea pigs were still in the vehicle when it was recovered,” Agent Hilyard said.  He urged the public for assistance with the missing woman’s disappearance, pointing out that often a single observation that someone may consider unimportant can break a case open.

Agent Hilyard added, “There are three children and a family looking for some closure to their loved one’s disappearance.  And there’s someone out there who knows the truth.”

Anyone with information regarding Nicole Waller’s disappearance may anonymously contact Agent Mark Hilyard in the Division of Criminal Investigation at the Montana Department of Justice by calling (406) 791-2709 or the Flathead County Sheriff’s Office at (406) 758-5600.

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Contact:  Anastasia Burton
406-444-9869 | aburton@mt.gov