Hess Sees Tripling of Bakken Shale Output by 2015

HOUSTON—Hess Corp.'s oil production in North Dakota's prolific Bakken Shale will triple by 2015 as the oil company increases drilling activity in the area, Chief Executive John Hess said Wednesday.

Hess's net output, currently at 39,000 barrels of oil equivalent per day, will reach 60,000 barrels of oil equivalent in 2012 and 120,000 barrels of oil equivalent in 2015, the executive said in an earnings call.

Hess, a large U.S. oil company with large offshore and international operations, has been aggressively expanding its presence in North American oil shale fields. In addition to the Bakken, the company has spent nearly $1 billion acquiring acreage in Ohio's Utica Shale, an emerging play; appraisal activity there will commence in the fourth quarter, Hess said.

These Utica acquisitions, as well as other purchases in the North Sea, account for a $1 billion increase in the company's forecast capital spending for 2011 to $7.2 billion, Hess said.

Source: Wall Street Journal

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The Fastest-Growing Bakken Player

"Luck is what happens when preparation meets opportunity" -- so goes the first-century Roman proverb. Twenty centuries later, it still holds good.

While shale plays like Bakken are always in the news and grab investors' attention, not all companies operating here necessarily do well. Opportunity must be backed by sound business models. Bakken player Brigham Exploration(Nasdaq: BEXP  ) seems to be getting better at this job.

The rule of thumb...When oil and natural gas companies report a rise in revenues and profits, it should always be taken with a grain of salt. If profits are being driven up simply because of higher energy prices, investors should consider it red flag. A simple rule of thumb that I follow for energy companies: Look for ones that have managed to ramp up production coupled with increased capital spending.

Source: Motley Fool 

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CEO: 24 Billion Barrells of Oil in Bakken Shale

There are 24 billion barrels of oil in the Bakken shale, Harold Hamm, chairman and CEO of Continental Resources told Cramer Wednesday. And most of that is untapped.

Hamm downplayed talk of naysayers who think the shale’s production is only a drop in the bucket and that the US is not producing enough oil[CLCV1  88.73    -0.08  (-0.09%)  ] to compete with foreign countries.

The Bakken was just slow to catch on because of technology, he said.

“It took some time to do it, over ten years or so,” the CEO added. “It’s there now, and everybody’s coming to the conclusion it’s as big as we’re saying—24 billion barrels.”

The shale is over nine million acres, he said. And about 85 percent of the drilling is yet to be done.

Continental Resources [CLR  55.89    -0.57  (-1.01%)   ] is the largest producer in the area, with 23 rigs working overtime. According to Hamm, each rig brings in about $120 million a year.

With numbers like that, the “Mad Money” host thinks things are looking good for this oil and gas name.

“You’ve got a growth stock unrivaled even by Apple or Google,” Cramer said, “yet it trades like just another slow growing industrial.”

Source: Mad Money

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Halliburton Introduces Technology Advancements for Horizontal Completions

 HalliburtonHAL +4.45% has deployed the most recent addition to its horizontal completion portfolio. The new RapidFrac(TM) completion system allows operators to set new standards for fracture completion efficiency and post-fracture production.

This innovative horizontal sliding sleeve completion system is a differentiating technology that allows for enhanced reservoir contact. In a changing landscape where operators are drilling longer laterals that require increasingly complex completions, the RapidFrac system delivers several unique differences from the "plug and perforate" system and other similar techniques.

The RapidFrac system uses a metering process that enables a single ball to open multiple sleeves isolated within an interval by swellable packers. Each RapidFrac sleeve can be tailored to specific fracture requirements along a horizontal wellbore so as to enhance post-frac production. Up to 90 sleeves can be incorporated into any one horizontal completion, ensuring maximized stimulated reservoir volume. By facilitating continuous pumping, the RapidFrac system reduces stimulation cycle time from days to hours and reduces the volume of water consumed.

"The RapidFrac system allows operators to optimize completion design, reduce operational risk, and materially reduce the time to first hydrocarbons," said Marc Edwards, senior vice president, Halliburton Completion and Production Division. "This technology also enables Halliburton to increase the utilization of its unconventional asset fleet."

Although initial system deployments have occurred in the Bakken Shale with Brigham Exploration and Williams Production Company, this technology has application for shale developments on a global basis.

"Brigham's success in the Bakken has been driven by its early adoption of game-changing technologies," said Lance Langford, executive vice president, Brigham Exploration. "We believe our industry is in the very early stage of developing tools and techniques to optimally exploit the Bakken and working with Halliburton to successfully launch its RapidFrac system is an example of what can be done in this world class resource."

Source: Business Wire 

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Report: Bakken boom highlights U.S. potential of oil shales

The recent sharp rise in crude production from Bakken shale in the northern U.S. underscores the potential of emerging oil shale plays to increase domestic energy supplies, much in the same way natural gas shales from Texas to New York have boosted output, says a new report by an oil industry-backed group.

Oil production in North Dakota, which accounts for about 75 percent of Bakken output, has more than doubled since 2008 and now hovers around 350,000 barrels per day. The increase has made North Dakota the nation’s fourth-largest oil-producing state, representing about 6 percent of U.S. oil output, the report by the non-profit Energy Policy Research Foundation said.

With investment and drilling rising, Bakken production could surpass 700,000 barrels per day within a few years and top 10 percent of domestic crude output, the report said.

The U.S. Geological Survey estimates 4.3 billion barrels of oil can be recovered using today’s technology in the Bakken shale, which extends beyond North Dakota into eastern Montana and neighboring territories of Saskatchewan and Manitoba in Canada. But producers and local officials believe the estimate is low and that recoverable resources could be more than double that amount.

Source: Fuel Fix 

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US Firms plan rail expansion to profit from oil spread

NEW YORK, Aug 4 (Reuters) - Logistics firms are accelerating plans to build crude-by-rail terminals in the United States as shippers look to transport more oil on railroads to capture massive oil price spreads between the country's northern and southern regions.

Logistics firm Musket said on Thursday it would build capacity to ship 70,000 barrels a day of oil by railroad from North Dakota's Bakken region, and competitor Plains All American (PAA.N) said it is also boosting crude-by-rail capacity.

Oil traders and shipping companies are building rail terminals in the booming Bakken shale and other northern or mid-continent locations in a race to move crude south due to a dearth of pipelines to do the job. Pipeline tariffs remain cheaper than rail, but the boom period for crude-by-rail could last until at least 2013, when new pipelines between the Midwest and Gulf Coast regions enter into play.

The unusually large price spread of more than $20 per barrel between crudes in Cushing, Oklahoma, or further north, and those traded in the U.S. southern Gulf Coast region is providing huge economic incentives to move crude south.

Source: Reuters 

For Bakken Projects or Oil News Updates

Leaving Bakken for emerging shale oil, Anschutz Exploration exits Williston Basin

The Anschutz Exploration Corp. (AEC) closed the sale of its remaining operated and non-operated producing properties and undeveloped acreage in the Williston Basin of Montana and North Dakota to an undisclosed Canadian oil company for $115 million.

The assets consist of current oil and gas production and undeveloped acres. Bill Miller, president of the privately held company, said “With this sale, AEC has now exited the Williston Basin after a successful Bakken and Mission Canyon program that began in 2004. Our continuing focus is on emerging shale oil plays in the US on AEC leasehold of over one million net acres, located primarily in Texas, Montana, Colorado and New York.”

In December 2010, Anschutz sold its principal Dunn County acreage position in the Williston Basin to Oxy USA for $1.4 billion. The 180,000 net contiguous acres in North Dakota held Bakken production and are prospective in the Three Forks formation. At the time of the transaction, the assets were producing approximately 5,500 boe/d. 

Anschutz then sold its Appalachian Basin position in Ohio and Pennsylvania to Chesapeake Energy Corp. for $850 million, and retained its acreage and production in New York.

Source: Penn Energy.

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VAALCO Acquires Stake In Montana Bakken Shale Acreage

VAALCO Energy, Inc. (NYSE:EGY) signed a letter of intent with Magellan Petroleum Corporation  (NASDAQ:MPET) to acquire and develop an operating working interest in approximately 23,000 net mineral acres of oil, gas and mineral leases covering the Bakken and deeper formations in the East Poplar Unit and the Northwest Poplar Field in Roosevelt County, Montana. 

Under the terms of the acquisition, VAALCO expects to acquire a 65% working interest in the Bakken and deeper rights of the Poplar Field. VAALCO will operate its deep rights in the subject acreage in return for cash consideration at closing and its funding of 100% of the cost to drill three wells by the end of 2012, including one well by June 1, 2012, at a cost to VAALCO of approximately $5 million per well. 

Magellan will retain its current ownership for all formations above the Bakken, including the currently producing Charles and Tyler formations and will retain the remaining 35% of the Bakken and deeper rights in partnership with VAALCO.

VAALCO expects to complete the transaction during the next 60 days.

“We are very pleased to have this additional opportunity to prove up reserves in the Bakken formation and potentially in deeper formations, including the Three Forks, Nisku, and Red River formations,” said Robert Gerry, chairman and CEO of VAALCO. “We believe that this is a high quality prospect and we are optimistic that this will be a source of oil revenues to VAALCO over the next several years.” 


Source: Penn Energy
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How to make 25% return in energy over the next three months

Once production in the Bakken begins ramping up, these companies will soar from current levels

Companies operating in the Bakken have been crushed over the past three months... 

The Bakken is one of the most promising shale areas in the U.S. It covers 200,000 square miles across Montana, North Dakota, and Saskatchewan. Based on estimates by the U.S. Geological Survey, the Bakken is the largest oil field discovered in more than 40 years. 

The early players who set up shop in the Bakken have been printing money. But last quarter, companies with big exposure to the promising area reported horrible earnings results. Production estimates for the next quarter were significantly lowered. 

That's because the Bakken experienced what one oil and gas company called "the worst winter in 100 years." Roads were closed... Areas were flooded... Production came to a complete halt. 

After the disappointing earnings reports, most Bakken companies collapsed. For example, Whiting Petroleum, Magnum Hunter, and U.S. Energy pulled back roughly 20% to 30% in just three months. (For comparison, the S&P 500 is up about 1% in the same time frame.)

Source: Stockhouse

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Forbes Energy Services Plans Move Into Bakken Shale

 Canadian oilfield services provider Forbes Energy Services Ltd said it is looking to deploy its drilling rigs in the oil-rich Bakken shale in the United States, even as rig hours in June rose 21 percent.

The company, which deploys its drill rigs and trucks in oil fields across the United States and Mexico, said it bought equipment that was held under lease and rent contracts for $20 million last month, and now plans to deploy these assets in other geographies.

Total rig hours in June stood at 41,587, up 21 percent from a year ago. Total trucking hours rose 34 percent to 121,069.

"Oil and liquids directed activity in the Eagle Ford Shale and Permian Basin continue to drive growth," Chief Executive John Crisp said in a statement.

The Bakken shale, a more than 500,000 sq km formation beneath the U.S.-Canada border, has the highest crude oil content among the tight rock formations known as shales, making it a hotbed of M&A activity as gas prices slumped and oil prices began to rise. (Reporting by Abhiram Nandakumar in Bangalore; Editing by Sriraj Kalluvila)

Source: Reuters

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Railroads Bump Up Montana Transport Services to Support Growing Bakken Shale Oil Production

Growing Bakken Shale Production Spurs Infrastructure Developments

An emerging oil play for the US, increasing Bakken Shale production is largely stranded by limited midstream infrastructure. There are currently a number of pipeline and other transport projects under development to connect this oil production with the market.

Earlier this year, Savage Companies announced plans to construct, own and operate a large multi-user rail terminal in Trenton, North Dakota, to support increased oil production in the Bakken Formation, as well as transport drilling and development equipment to the region.

Additionally, ONEOK is currently working to build a more than 600-mile-long NGL pipeline in the region, whileEnbridge and Rangeland Energy are also building pipelines to transport Bakken Shale production. Plains All American Pipeline recently closed an acquisition of Nexen's Bakken gathering and transportation assets, as well.

Source: Penn Energy

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