The Bakken is one of North America’s largest oil-rich shale plays. Longer horizontal well bores and widespread use of hydraulic fracturing spurred soaring production. North Dakota now ranks second among U.S. oil-producing states – and a large portion of the domestic drilling rig fleet will be retrofitted to walking or skidding systems by year-end. More than 70% of Bakken oil moves by rail tank car, giving crude-by-rail the leading role for getting Bakken production to market. Economic impacts are seen state-wide as North Dakota proudly claims the nation’s lowest unemployment and a per-person gross domestic output significantly higher than the national average.

The Burgeoning Bakken, to learn more about the Bakken shale play and whats happening in the different shale plays visit the Unconventional Oil and Gas Center, a Hart Energy publication.

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
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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.

On November 6th 2013, Eagles Landing hosted an International Trade Mission in the Bakken Energy Basin of Sidney, Montana. The event was a joint effort of the World Trade Centre Winnipeg and the Montana World Trade Center. With over 200 business and government leaders from across Western Canada and the state of Montana attending, the event was a huge success!

Here is a short video link to recap the day’s events: http://vimeo.com/79463005
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For more information, please contact:
Troy R. Selland, 5.19 Sales and Marketing
Founder and Chief Executive
+1-321.614.1907 (work)
+1-855.758.1797 (toll -free)
troy@five-nineteen.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

Current slate of locations skips coal country altogether

HELENA – Today, Montana Attorney General Tim Fox asked U.S. Environmental Protection Agency (EPA) Administrator Gina McCarthy to add Montana to the agency’s listening sessions on coal regulations. Yesterday, the EPA began its series of listening sessions scheduled to take place in large urban centers: New York City, Atlanta, Denver, Kansas City, Boston, San Francisco, Washington DC, Dallas, Seattle, Philadelphia, and Chicago.

“Montanans care about proposed federal regulations impacting their livelihood, their public schools, their utility rates, their communities, and their environment, and they deserve to be heard on this,” Attorney General Tim Fox said. “It’s mind boggling that the EPA isn’t holding a single session in a state that relies directly on coal for affordable energy, family-wage jobs, and economic development. It’s as if the regulators don’t want to hear from the hardworking folks who will suffer most under the onerous regulations they’re considering. The EPA needs to come here to Montana – to a place like Colstrip or Billings – and listen to what our citizens have to say.”

The listening sessions are designed to gather public input on the agency’s implementation of Rule 111(d) of the Clean Air Act to regulate emissions from power plants. The proposed regulations are targeted at the very coal-fired power generation that provides Montanans with reliable, affordable electricity. Since Montana has more recoverable coal reserves than any other state, the regulations could be all the more devastating.

“The EPA shouldn’t be afraid of listening to viewpoints they won’t hear in New York City,” Fox said.

In his letter to EPA Administrator McCarthy, Attorney General Fox echoed President Obama and members of his administration in calling for an “all of the above” approach to energy policy. “EPA’s recently announced proposals run contrary to a balanced energy approach,” Fox told McCarthy.

Read Attorney General Fox’s letter to EPA Administrator McCarthy here.

-END-
Contact: John Barnes
406-444-2031 | johnbarnes@mt.gov

Industry representatives will work to find solutions to infrastructure needs

Bismarck, N.D. – The North Dakota Petroleum Council (NDPC) members have formed a task force to spearhead the industry’s efforts to significantly reduce natural gas flaring in the state’s Bakken oilfields.

“We recognize that natural gas is an efficient, clean and valuable resource, and that’s why the industry has invested more than $6 billion in new pipelines, processing plants and other infrastructure to move it from the wellhead to the marketplace,” said Terry Kovacevich, NDPC chairman and regional vice president for Marathon Oil. “This is a significant investment, but we are committed to making North Dakota the model of a modern, efficient and technology-driven oilfield.”

Since 2007, when the Bakken was confirmed to be a prolific and world-class resource, gas plant capacity has increased by 340 percent from 227 million cubic feet per day to more than 1 billion cubic feet per day. Despite this significant growth, production continues to outpace capacity due partly to challenges in building appropriate infrastructure and partly because it was not until recently that experts began to fully comprehend the volume and composition of natural gas trapped in the Bakken.

“We have to remember that the Bakken is still a very young play, and this is just one factor in why production has outpaced our ability to build the infrastructure needed. Furthermore, the Bakken is unlike any other play in the world and requires solutions specifically tailored to its geology, climate, landscape and resources,” said Kovacevich.

Members of the task force will pool the knowledge and experience of companies operating in the Bakken and identify solutions to better optimize the resource at the wellhead and increase and improve existing infrastructure to transport gas for processing elsewhere. The group will also focus on educating the public and working collaboratively across stakeholder groups, including government agencies, the Three Affiliated Tribes, researchers, landowners and key industry players.

The Flaring Task Force will address the North Dakota Industry Commission (NDIC) at 1:15 p.m. on Oct. 22, 2013, and will present a report to the NDIC later this year with recommendations for a collaborative effort to reduce flaring.

“This is a very complex issue without any single simple solution,” said John Paganis, commercial director for Murex Petroleum and co-chair for the Task Force. “Our task force will offer balanced, effective solutions for policy makers and regulators to ensure we keep oil development on pace while making the investments in infrastructure and new technologies to capture more of our natural gas.”

“The member companies of the NDPC want to responsibly develop the natural resources in North Dakota and America.  We also want to optimize the development of our oil and natural gas resources in North Dakota, but this will take significant investments of time and money and will require collaborative efforts between the industry, landowners, government agencies and a number of other key stakeholders,” said Kovacevich. “North Dakotans have a long history of sitting down and working together to find solutions that will meet the needs of all. We are confident that with time, all of the key stakeholders can work together to reach our goals of reducing flaring.”

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.

Contact:  Tessa Sandstrom, Communications Manager, North Dakota Petroleum Council
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North Dakota has pumped up its crude production in August to 914,617 b/d, about 1.1% higher than the revised July output of 904,927 b/d, according to the North Dakota Industrial Commission.

The preliminary July crude output published last month was at 871,459 b/d.

June output was 821,596 b/d, and May production was at 811,262 b/d.

The Bakken crude output makes up more than 90% of North Dakota’s total oil production.

The number of producing wells in August rose to 9,452 from 9,324 in July and 9,096 in June.

North Dakota is the second-largest oil producer in the U.S., with Texas holding on to the No. 1 spot and Alaska third. Bakken crude is playing a growing role in the U.S. coastal refineries’ crude slate as pipelines, rail and ships offer delivery solutions to the once-landlocked crude output.

–Edgar Ang, eang@opisnet.com, www.opisnet.com
Originally published by Oil Price Information Service (OPIS), Gaithersburg, MD. Additional reproduction is strictly prohibited. For more information on other news, contact Scott Berhang, +1 301.287.2332.

The recent “discovery” of the giant Bakken oil field, described as the “largest continuous oil accumulation ever assessed by the US Geological Survey,” bodes fundamental changes for western North Dakota and eastern Montana. Lots of people are coming! Western North Dakota now faces a daunting challenge: building infrastructure that supports a new way of life and culture.

Just ask Don Nickell, president and COO of Nakota Development, LLC. The morning Nakota opened their two Value Place extended-stay hotels in Williston in September 2012, “we had people sitting in their cars in the parking lot, waiting for us to open the doors,” said Nickell.

Since then, Williston Value Place hotels have achieved enviable occupancy rates (>95 percent in August). They have also exceeded their competitors’ occupancy % for the past four months, which is a significant achievement given they have 248 rooms versus their competitor’s properties which average only 90-100 rooms.

Nickell is confident more customers are waiting. He’s in good company. Lynn Helms, director of North Dakota’s Department of Mineral Resources, told an audience at the 2012 North Dakota Association of Oil and Gas Producing Counties that western North Dakota can expect about 250,000 additional people settling west of Highway 83 to help produce oil and natural gas.

It’s more than just about oil and gas, however.  Housing and lodging are of particular concern. Mike Anderson, director of the North Dakota Housing Finance Agency expects population growth to continue in the state for at least the next 15 to 20 years.

While many thousands of men are today living in temporary man camps, a gaping supply hole remains for those seeking lodging for the many two-to-four-month assignments typical in the Bakken and other shale oil regions.  There are thousands of geologists, landsmen, technicians, engineers, field and construction workers and service personnel in need of housing and lodging.

Nakota Development is already two steps ahead in the game; they acquired the Value Place franchise territory rights for North Dakota, Montana, and Wyoming.  They promptly built two hotels in Williston and recently completed a third in July in Dickinson.  Nakota has also purchased, or acquired options on additional land for future construction. Their construction of another Value Place recently began in Watford City and is expected to open in spring of 2014.

The master plan, according to Nakota CEO Art Cahoon, is to invest an estimated $200 million over the next five years in the development of twenty new extended stay hotels in the Bakken and other developing US shale oil regions. Nakota’s willingness to take the early equity risks and invest millions of their own money to build their first two hotels and complete them on schedule brought Nakota a rare commodity in the Bakken: CREDIBILITY.

Even today, with credit availability increasing, Nakota continues to invest significant equity in each of its hotels.  Despite the Bakken’s significant construction and operating challenges, including the scarcity of materials and high labor costs, Nakota has established itself as the gold standard developer and operator in the Bakken. “Current investors, which include all of Nakota’s senior management team, are enjoying very attractive returns on their investment,” said Cahoon.

Click to see Value Place in the Oct/Nov Issue of the Bakken Oil Business Journal.

Value Place is the largest economy extended stay franchise in America. The Value Place Brand comes from the management team that created and developed lodging brands such as Residence Inn (now owned by Marriott), Summerfield Suites (Hyatt) and Candlewood Suites (Intercontinental). In 2011, Value Place was recognized again as a Top 50 Franchise by the Franchise Business Review’s 2011 Franchisee Satisfaction Awards.  Value Place was also recognized in USA Today in 2010 as a recession-proof business.

By:  Bob van der Valk

Crude oil prices will continue to weaken regardless on whether the US raises the debt ceiling.  The connection between the value of dollar on the world market had become less of a consequence on commodity prices after the US oil production has been increasing at a fast rate.  WCS Canadian sour crude is being discounted between $25 and & $27 a barrel FOB Alberta as of today.

The importance of the EIA data is like the Federal government shutting down the NSA and not have the intelligence data gathering ability to keep us secure.  The same applies in the petroleum industry with the EIA-DOE report serving as our weekly intelligence report on which important oil and finished products trading and production decisions are made.  Without it we are back in the dark ages on gathering this type of information.  The API report has been a guide but not used in the same way at the weekly EIA-DOE report with the API report being mostly ignored by the big traders.

The weekly EIA-DOE inventory report has been very important and proven the API inventory numbers wrong numerous times.   The difference is in the methodology on gathering the data between the two reports.  The API is Garbage In; Garbage Out (GIGO) with the major oil companies “voluntarily” supplying data whereas the EIA-DOE requires and spells out mandatory figures to be submitted making it more accurate.  API also does not distribute the report without a paid subscription whereas EIA-DOE distributes theirs on their: http://www.eia.gov/ web site.

Traders use the EIA-DOE inventory report as the “Tale of the Tape” with any changes being taking into account by commodity traders in making their decisions.  They will now be dealing in the dark in making deals.  Any major refinery or pipeline glitches may result in price spikes with traders playing it safe by holding onto barrels they would otherwise be willing to sell.

Oil companies use the report to keep an eye in each other and the EIA-DOE report reveals important data about their competitors they would otherwise not be able to attain legally.  The EIA-DOE report is therefore the guide presenting facts putting rumors to rest on which some of the trades are made.  “Buy on rumors, sell on facts” is the oldest cliché in the trading circle and is alive and well.

During any extended government shutdown we will have more rumors circling around in the petroleum industry without our usual Wednesday morning verification.  Meanwhile the reporting entities are still required to submit their data and we may have an interim report once the shutdown ends.

Bob van der Valk is the Senior Editor of the Bakken Oil Business Journal and can be contacted at: editor@bakkenoilbiz.com