Sunday, April 13, 2008

Bakken Shale formation

WASHINGTON, April 11 - A shale rock formation that stretches across Montana and North Dakota could hold about 3.7 billion barrels of oil, the biggest single deposit in the United States except for Alaska, the U.S. Geological Survey said this week.

The new USGS study shows the biggest contiguous oil deposit in the Bakken Shale formation, located in the Williston Basin, which extends from the U.S.-Canada border down into Montana and the Dakotas.

The last time the USGS assessed the area in 1995, it found 151 million barrels of technically recoverable oil, but drilling technology advances allowed the 25-fold increase in its potential, said U.S. Sen. Byron Dorgan, the North Dakota Democrat who requested the study.

"The substantial amount of oil that it estimates is in the Bakken Shale should attract significant new investment to this region," Dorgan said.

The Bakken Shale, comprised of thin layers of rock about two miles down, holds about 3.65 billion barrels of technically recoverable oil, the USGS said. The Arctic National Wildlife Refuge (ANWR) in Alaska could hold more than 10 billion barrels of oil.

But while ANWR is off-limits due to a congressional drilling moratorium, Marathon Oil Corp, EOG Resources Inc and Continental Resources Inc are among the companies already producing oil in the Bakken Shale.

The area could also hold 1.85 trillion cubic feet of natural gas and 148 million barrels of natural gas liquids, the USGS said.

Bakken Shale Nort Dakota

The Williston Basin

The Williston Basin is in the north central United States, underlying much of North Dakota, eastern Montana, northwestern South Dakota, and southern Saskatchewan and Manitoba, Canada.

The current U.S. development activity in the Bakken Formation is located in Richland County, Montana,
and McKenzie, Golden Valley, and Billings Counties, North Dakota. The largest Bakken Shale Formation resources uncovered recently is the Elm Coulee Field of Richland County, Montana.

Saturday, April 12, 2008

bakken-shale-discussion...WOW Bakken Shale Largest Find Of Oil Ever in Lower 48 States

3.65 Billion BBLs, That's How Much

The USGS has estimated mean recoverable reserves of 3.65 billion bbls, and the estimate does not cover the Canadian portion of the Bakken. The assessment was based on geological elements that include: "(1) source rock distribution, thickness, organic richness, maturation petroleum generation, and migration; (2) reservoir rock type (conventional or continuous), distribution and quality; and (3) character of types and time of formation with respect to petroleum generation and migration. Detailed framework studies in stratigraphy and structural and the modeling of petroleum geochemistry, combined with historical exploration and production analyses" were also used.

The most important elements used in their geologic model were "(1) the geographic extent of the Bakken Formation oil generation window; (2) the occurrence and distribution of vertical and horizontal fractures; and (3) the matrix porosity within the middle sandstone member." Thus, it appears that the area where the Bakken has generated oil was divided into five separate assessment areas based on what appears to be somewhat comparable geologic characteristics of mainly the middle Bakken member. That consideration appears to be based on the fracturing and porosity present in those areas.

After challenging someone to show where there were more than one billion of recoverables in ND for months and getting no response, I feel pretty foolish for throwing out a 20 billion bbl number last night for the entire Bakken.

From the Dickinson Press:

Mike Armstrong, president of Dickinson-based Armstrong Corp., an oil and gas prospecting firm, said he was excited to hear the news but gave a skeptical reaction to the report. “How about this: Don’t over react,” Armstrong said. “A study is just that, it’s a study. There’s no guarantees.” Armstrong, who’s been in the oil business since 1975, said he thinks the report’s figure is an over-estimate. “I think they’re stretching it – a lot,” Armstrong said.

USGS Press Release

USGS Fact Sheet

USGS Interview (Audio)


Dickinson Press Article

New York Times Article

USGS Bakken study going to come up with?

So. . . How Much??

So, what is the imminent USGS Bakken study going to come up with? Supposedly, it pertains to projected recoverable oil from MT, ND and Canada (since when did the USGS start estimating what's in Canada?), and not to the amount of oil generated or in place.

There must be at least one savant out there that can predict this to within 10-15 million bbls, not? Unless someone wants to donate some mineral rights, I don't see there being any prize to the winner, except knowing that you probably should have instead picked some lottery numbers. (I don't see this contest going anywhere for some reason.)

I don't think we'll let Mr. Steece from SD play, as he isn't quite sure where the Bakken extends. (Hint: look at some logs of some wells in SD and see if you can find it -- you won't). The part that really cracks me up is the "not fully convinced" and "it would not be wise" parts.

From the 4/8 Sioux Falls Argus Leader:

Fred Steece, oil and gas supervisor for the state Department of Environment and Natural Resources, said its not clear how much of the formation reaches South Dakota and whether the parts that do contain recoverable oil reserves. “Geologically, were not fully convinced that the productive zone of the Bakken extends into South Dakota,” Steece said.

“Otherwise, Im sure there would be people in here. There would be leasing and test drilling.” Its possible South Dakota could benefit from a Bakken boom, Steece said, adding that it would not be wise to start planning on bountiful production estimates based on expansive reserves that could be difficult to extract.

North Dakota Oil Boom. I mean BOOOOM.

The Complex Quagmirey Predicament In T145N, R96W, Dunn Co.

The chickens have come home to roost, oil and water don't mix, too many cooks spoil the broth, you can't unscramble an egg. Yeah okay. Anyway. . .

A complex quagmire has become apparent in T145-R96 after 1280 acre spacing and drilling units were created from different directions and fields. And what happens when you get to the middle and want to join everything up . . . . well, maybe a few orphaned sections that won't fit into the prevailing spacing pattern.

The NDIC says enough of this nonsense and has put a 90 day stop to the madness while everything (apparently) is sorted out.

Bakken Shale Found Billions of Barrels In North Dakota.

Join The Discussion Board

Please join the new message board on Google Groups:

It's likely to be a learning experience for yours truly, so patience is the key. You will need to join the group to post a message, but not to read them.

It's apparent that this blog format isn't very handy for all the various topics people want to discuss.

Bakken Shale Oil Boom.

Continental And Helis Going For The Sanish Sand

In their recent presentation materials, Continental Res. has an informative cartoon representation of a Basin-wide Bakken cross-section, which also indicates generalized areas where the
Sanish Sand is expected to be encountered in the upper Three Forks Formation (think the excellent Petro-Hunt well in Charlson Field that has been mentioned here several times).

CLR recently mentioned that they were planning some Sanish exploration this year. In their materials,
the company indicates that they will be testing the zone in their Rocket prospect in west central Dunn Co., when I expected that it would occur further north in their McKenzie Co. holdings. Maybe the arrow is pointed to that area in an attempt to throw off schmucks like me. hmmm. Regardless, hopefully CLR will find that this zone has some great potential for additional reserves beyond those encountered in the mid-Bakken.

Meanwhile, Helis O&G has drilled two stacked lateral wells targeting the Upper Three Forks and the mid-Bakken, and is currently drilling a third in McKenzie Co. Information from the company's
Linseth well indicate that they did not encounter the preferred "sand" in the upper TF formation and found only carbonates. Neither of the drilled wells appear to be a barnburner production-wise (so far), but it would appear a lot of kinks have to worked out with these more complicated completions.

Bakken Shale Found Billions of Barrels

Austin 1-02H Production

The official completion info has been released on EOG's Austin discovery well in the "north" Parshall Field area. The IP was 781 bbls/day (mid Dec) and it has produced about 102K bbls for the period of Oct. to Jan.

The approved Parshall Field outline after incorporating the Austin 1-02H, and a now outdated projected decline curve for that well submitted last December.

Bakken Shale, North Dakota Oil Boom.

Decline Rates II

A reader left an excellent comment that I couldn't have written better myself and which deserves better prominence:

I am not a reservoir engineer but can offer some comments based on observing Williston Basin production over the last 50 years.

Initial production is always a good indication of performance, but there are great variances. One well which IP'd for 162 barrels per day has produced 1,463,000 barrels so far; it's still producing. Another with an IP of 480 barrels per day has produced 2,356,000 barrels to date and continues to produce. I believe this is the granddaddy of all North Dakota oil far. (Both of these are vertical Madison wells producing from relatively thin pay zones, 164-85.) Another extreme is a Nesson Anticline well with an IP over 1,000 barrels per day that was plugged after only a few months (vertical Interlake).

More to the point, I believe you need 18 to 24 months of production to get a good feel for what a well is going to ultimately produce. Since only a few horizontal Middle Bakken and Three Forks wells have more than a year of productive history, it is difficult for me to draw any firm conclusions. It appears that if you average the first 2 to 3 months of "flush production", the typical well might be producing 50% of this average amount in 10 months to a year. After 15 to 18 months in appears production has leveled off at a rate of about 25-30% of the first 3 month average (with little regard to the IP rate). Hopefully the decline from this point forward will hold at about 10%-15% per year.

The obvious exception to the scenario is the Petro-Hunt USA 2D in the Charlson area. It's reported IP was 700 barrels per day. It's 16 month total production is 378,536 barrels and the most recent month production was 1000 barrels per day! This was its best month ever; it is "inclining" not declining(?).

Other cautions on every well: did they stay "in zone" while drilling; did the zone get damaged while drilling; did the direction of the lateral section optimize natural fracturing, did the frac job get into the intended zones, and on and on. We'll all be wiser in a few years as this data base grows and learning curve goes higher.

Anyway, regardless of Williston Basin history, the future looks extremely bright! The Bakken play has been nothing but fantastic. Also, we have to remember, this is a play brought on by technology: horizontal drilling and fracing. Both of these will only get better and we've just scratched the surface of the Middle-Bakken potential. Who knows where the Three Forks will take us.

Continental is planning some upper Three Forks wells in the near term so by the end of the year we should have a little better idea of the potential of that zone.

Join The Bakken Shale Rush. North Dakota Oil Country

The following is a spreadsheet showing the IP and the first production for the wells. I based first production on the well producing at least 25 day during the first month it produced. If, for example, the well only produced 20 days in the first month, I then combined the first and secon month production.

Unless I am missing something there is not much correlation between IP and the production in the ensuing month.

IP vs.

1st bbls
Well Name IP Date IP BBLS Days BOPD prod.

H. RICE 1-26H 11/22/06 20 2092 40 52.3 261.5%
ENGET 4-11H 7/14/06 46 974 26 37.5 81.4%
NELSON 14-33H 8/23/07 53 1244 25 49.8 93.9%
LALIM D. #34-11H 12/24/06 76 5478 47 116.6 153.4%
RICE 10B-2-1H 2/20/07 193 7621 48 158.8 82.3%
NELSON FARMS 11-19H 1/8/07 198 743 31 24.0 12.1%
JEAN NELSON 1-35H 11/1/07 266 6133 35 175.2 65.9%
PARSHALL 1-36H 6/6/06 463 9154 29 315.7 68.2%
GEVING 1-09H 8/12/07 783 31332 50 626.6 80.0%
ZACHER 1-24H 6/13/07 870 49822 49 1016.8 116.9%
PARSHALL 2-36H 9/27/06 883 16960 31 547.1 62.0%
EHLERT 1-35H 4/29/07 918 45079 33 1366.0 148.8%
C & B 1-31H 5/15/07 922 43149 47 918.1 99.6%
FLORENCE 1-04H 7/25/07 1015 35048 38 922.3 90.9%
PEERY STATE 11-25H 5/13/07 1081 24985 44 567.8 52.5%
N&D 1-05H 7/3/07 1285 33567 29 1157.5 90.1%
RALPH 1-32H 9/2/07 1329 27815 30 927.2 69.8%
PATTEN 1-02H 3/15/07 1487 14565 31 469.8 31.6%
WARBERG 1-25H 1/19/07 1553 26102 41 636.6 41.0%
WENCO 1-30H 9/23/07 1670 47696 39 1223.0 73.2%
HOFF 1-10H 6/24/07 1675 45721 38 1203.2 71.8%
BARTELSON 1-3H 11/17/06 1800 30195 45 671.0 37.3%

Brigham Hynek

142.0 24.3%
Brigham Bakke

310.0 81.6%
Brigham Bergstrom

119.0 58.9%

Update: Larry updated the IP decline chart to include cumulative production thru January 2008, which indicates that the data confirms the average production over a longer period is about 60% of what is produced in the first month.

1st bpod

Cum Cum
Well Name IP BBLS Days BOPD cum bpod

PARSHALL 1-36H 463 105933 579 183.0 58%
ENGET 4-11H 46 13272 573 23.2 62%
LALIM D. #34-11H 76 30554 487 62.7 54%
H. RICE 1-26H 20 8243 461 17.9 34%
PARSHALL 2-36H 883 132500 440 301.1 55%
BARTELSON 1-3H 1800 174373 404 431.6 64%
RICE 10B-2-1H 193 33217 349 95.2 60%
NELSON FARMS 11-19H 198 41604 346 120.2 502%
WARBERG 1-25H 1553 140613 331 424.8 67%
PATTEN 1-02H 1487 144251 303 476.1 101%
PEERY STATE 11-25H 1081 111261 289 385.0 68%
EHLERT 1-35H 918 156502 250 626.0 46%
ZACHER 1-24H 870 118415 217 545.7 54%
HOFF 1-10H 1675 126544 216 585.9 49%
C & B 1-31H 922 116437 210 554.5 60%
N&D 1-05H 1285 108570 183 593.3 51%
RALPH 1-32H 1329 91546 173 529.2 57%
FLORENCE 1-04H 1015 88919 168 529.3 57%
NELSON 14-33H 53 5895 163 36.2 73%
GEVING 1-09H 783 71715 160 448.2 72%
JEAN NELSON 1-35H 266 19043 127 149.9 86%
WENCO 1-30H 1670 97724 123 794.5 65%

February Scorecard For Mountrail Co.

Larry has provided his monthly update of activity in Mountrail County:

At month end there were 23 drilling rigs on location in Mountrail County. EOG 8 rigs; Hess 5 rigs; Whiting 4 rigs; Fidelity 2 rigs; Behm, Brigham, Hunt, Murex 1 rig each.

During February 17 wells were spudded. EOG 6; Hess 4; Whiting 3; Behm 1; Brigham 1; Hunt 1; and Murex 1.

During February NDIC issued 24 new permits to drill. EOG 4 permits in Wayzetta, Austin, and Burke Townships. Whiting 5 permits in Crane Creek, Van Hook, and Sikes Townships. Hess 7 permits in 154-94, Myrtle, Idaho, Clearwater, and Powers Lake Townships. Fidelity 5 permits in Brookbank, Cottonwood, and Powers Townships. Slawson 1 permit in Palermo; Murex 1 permit in Sikes; and Brigham 1 permit in Lostwood.


"In the news" 2/13 post updated with article about record high oil prices in ND (thanks Roy).

The Bulls Catch EOG

EOG conference call today.

Its stock is up today almost $20 to about $125/share (almost 20%).

Presentation Slides from Rockies region


Murex Finds Strong Producer, Sanish/Parshall Area

A reader left the following comment concerning the NDIC hearing held today to determine temporary spacing for the Murex well in sec. 36, 154N-91W, Mountrail Co. The well is about 3-4 miles northwest of activity in the "south" Parshall Field area and about the same distance southwest of activity in the "Austin" area.

Hearing today, Feb 27,08 at the ND Oil and Gas ..the Murex Petroleum portion. You will all be interested in knowing that the Jacob Daniel, (Sec 36, 154-91) the last 45 days has averaged 785 bbl's of crude oil [per day]... the production chart per day (45 days)they presented is in a flat line.. this is without a frac job. They will do the frac later once the pressure drops some, but maybe not they said.

What is really interesting is that they could not drill the whole 2 mile leg, only about a 3/4 mile one, they just about lost the well, (blow out)so quit drilling and will go back and extend the leg when they feel it is safe to do so. [Ansbro had the same problem a couple years back, lost the rig in a blowout/rig fire and then couldn't finish the lateral with a different rig because of safety concerns: 7/11/07 post].

Some Parshall Completions, Mountrail Co.

Two EOG completions in the southern portion of Parshall Field are now available. On the west side of the field, the Risan 1-34H, sec. 34, 153N-90W, was completed at the end of Sept. for 817 bbls/day. Cumulative from Sept. to Dec. was about 67K bbls oil. About four miles to the SE, the Sampson 1-12H, sec. 12, 152N-90W, was completed at about the same time for 581 bbls/day. Cumulative from Aug. to Dec. was about 39K bbls oil.

Line of the week goes to geologist Paul Jeffcoat-Sacco on the Risan well: "A drill bit is a great tool for destroying a seismic map."

And we have breaking news from a May 1919 edition of the Parshall Leader (thanks Jerry):

Be sure and check out Larry's comment about Whiting's activities in Mountrail Co.

Also, the "In The News" February 12th post has been updated with an article forwarded by Larry from


The 02/12 "In The News" post has been updated with a Barron's article about the Bakken (thanks Nick).

RMOJ's ND Activity Summary For 2007

The Rocky Mountain Oil Journal has graciously allowed it's article from last weeks edition to be reposted here. It provides an excellent, comprehensive summary of activity in ND during 2007:

North Dakota Oil Production Jumps 12.8% in 2007

Bakken Output Increases 329% Compared to 2006

North Dakota’s 2007 oil production recorded a healthy leap compared to a year earlier. For the year 2007, the state reported that total oil produced was 45,057,874 bo, up an impressive 5,114,464 bo as opposed to the 39,943,410 produced in 2006. These production totals makes 2007 the seventh largest year on record since the oil was first discovered within North Dakota in 1951.

Of course one of the major factors in this increase in production is the Bakken formation. According to state figures, in 2007, the Bakken is credited with producing 7,382,025 bo, up an incredible 329% compared to the 2,245,411 extracted from the same formation in 2006. This increase of over 5 million barrels bespeaks of the technological advances in horizontal drilling and more importantly, the record levels of the price of oil. The current hotspot for those operators that are chasing the Bakken are in Mountrail and Dunn Counties. Presently, of the 59 rigs that are making hole in the state, 36 of them are within these two counties looking for another Parshall field, the states largest Bakken oil pool. This field, which is in Mountrail County, is currently producing over 278 k bo per month from 21 wells and is currently under aggressive exploitation. It’s also noteworthy to point out that production within these two counties has greatly increased. In 2006, Mountrail and Dunn counties produced 415,434 bo and 984,863 bo respectively. A year later, Mountrail County reported production of 1,960,091 bo while Dunn County increased their output to 1,913,598 bo.

It should be pointed out that in 2006, the Bakken accounted for 5.6% of the states total oil output from 300 active wells. In 2007, the Bakken represented 16.6% of the states output from 457 wells. The only other formations that had a higher percentage of oil produced during 2007 was the Madison and Red River “B”. It’s anticipated that the results for 2008 will show even greater numbers for the Bakken.

Although a great deal has been written about the Bakken play within the state, it should be remembered that the Ordovician Red River “B” is still king. This formation produced 16,722,579 bo or 37.6% of the states production in 2007. In 2006, the Red River “B” cumulated 15,706,913 bo. The source of this production is coming from the Greater Cedar Creek Anticline, primary the Cedar Hills South Unit (CHSU) in Bowman County. In fact, for the month of December 2007, the latest production figures that are currently available, the CHSU produced 1,072,933 bo from 136 horizontal wells.

Of the 161 operators reporting production within the state for 2007, Burlington Resources (BR) was far and away industry’s leader. Retaining their #1 spot, BR reported production of 12,690,287 bo, up 425,475 bo compared to a year earlier. This production by BR is over twice that of the second largest producer in the state. The vast majority of BR’s production is due to the company’s aggressive horizontal Red River “B” drilling program occurring in Bowman County, however the company is getting increasingly active in the horizontal Bakken play, and has numerous prospects planned in Dunn County.

Another company who is major actor in the Red River “B” play is Continental Resources (CR). CR was second largest producer in the state, having extracted 5,146,714 bo for the year, up 1,237,361 bo compared to 2006. Aside from their activity in the Red River “B” play, CR is also a large player in the Bakken play with prospects planned or drilled in Divide, Billings, McKenzie, Mountrail and Williams County.

Hess Corporation (Hess) maintained it’s third place standing in 2007 with a yearly production of 4,189,870 bo. The majority of Hess’s production is coming from the Nesson Anticline in Williams and McKenzie counties. In 2006, Hess produced 3,528,876 bo. Hess is another company who is getting more aggressive chasing the Bakken and currently has five rigs working in Mountrail County evaluating their holdings.

Encore Operating, by virtue of their purchase of Kerr-McGee’s properties in the state, ranked number 4 with a yearly production total of 3,259,711 bo. A year earlier, the company reported that they had produced 529,439 bo.

The states fifth largest producer was Whiting O&G (Whiting). Whiting is credited with extracting 2,298,580 bo in 2007, up 105,112 bo compared to 2006. Look for Whiting’s production to increase in 2008 as the company continues their Bakken program in Mountrail County, primarily that area north of the Sanish Field area.

A quick look at drilling statistics for the state in 2007 show that a total of 407 wells were spud for the year with Dunn County leading with 70 spuds, followed by Williams County with 61. Mountrail County had 60 wells initiated and Bowman County had 56.

The following list ranks the top oil producers in the state of North Dakota for the year 2007. Please note that the company rankings for oil and gas do not include confidential wells, skimmed oil, drip gas or other liquids extracted during gas processing.

(The following is only the top 50 producers. The other 100 or so can be found at

All content courtesy of the
Rocky Mountain Oil Journal.

Some Players in the Mountrail Parshall/Sanish/Austin Bakken and Adjacent Areas

David has forwarded this info he put together about some of the players:

It is interesting to look at some of the players in the development of the field from the perspective of their size, history and financials. I have chosen four of them. In looking at the company size in terms of market capitulation, keep in mind that Exxon-Mobil (XOM) a Dow Jones Industrial Average component and largest integrated oil company, has a market capitalization of $289 billion. Market capitalization is the product of the shares outstanding times the current stock price. I will discuss each of the publicly traded players in descending market capitalization

EOG resources (stock symbol EOG)

Market cap about 21 billion or about 14% the size of XOM

EOG resources was once known as Enron Oil and gas, but was spun off by Enron in 1999 to senior executives in the group as a separately traded company. This was a couple years prior to when Enron collapsed. Jeff Skilling and Ken Lay, running Enron at the time, and both later convicted in trials, were interested in dumping what they saw as old economy parts of the company to finance their “new economy” ventures, and to them, the oil and gas drilling unit was as old economy as it gets. When Enron collapsed, the completely separated drilling unit was a valuable company, but no longer any part of Enron. As a company EOG seems to be run very conservatively, with executives going overboard to make sure the company is not seen as being anything like the old Enron. More details of company history can be found at:

Currently running 7 rigs in the area—supposed to have 8 shortly. EOG’s most important financial contributor to company profit by far is their very successful Barnett gas field in Texas, but the relative importance of the Bakken to the company bottom line is moving up. Its stock currently trades at 80-$95 a share. The stock was trading in the low-mid $60 range as late as last summer, but the trading range popped about $10 after the third quarter earnings report last October, TIP: The stock price tends to move on a daily basis with the crude oil price, which moves around a lot day to day. Watch the price of crude oil and try to make purchases of EOG on days when the crude price is off.

Whiting Oil and Gas (stock symbol WLL)

Market cap 2.1 Billion or about 10 % the size of EOG. Company Web Site

If you study the company Web site, you will see that they do much the same thing EOG does, except that they are a much smaller company. For now, the Sanish field in not as significant a contributor to the Whiting bottom line as the Parshall field is for EOG. They have 3 rigs in the Sanish field.

New Whiting wells in the Sanish are done with what I call “birdsfoot” laterals. 1280 acre spacing with laterals going out three ways. This is technologically more complex than the 640 acre spacing and single diagonal EOG has had success with. Whiting swears that given where they are their approach is better than if they were to simply apply EOG’s approach of a single SE-NW lateral on 640 acres. The most recent birdsfoot lateral completion came in at over 2200 initial bopd, so they may have a case. With the bigger spacing and smaller number of rigs, Whiting will be drilling far fewer wells than EOG, and as a consequence the Sanish field will appear to be developing less rapidly than the Parshall field has developed.

Stock price moved up from $35 about the same time the EOG share price moved and as I write this it is at $51. It came close to breaking $60 a few weeks ago. Again, if you are interested in this stock, look for buying opportunities on days when the crude price is off.

Brigham Exploration (
Stock symbol BEXP)

Market capitalization 289 million, about 1/8th of the size of Whiting.
Company Web site:

Brigham has recent news releases claiming success in the Bakken which you will find highlighted on their company Web site. For the most part, the wells they have significant interest do not appear to be doing quite as well as the EOG wells near them. They have had small working interest in some EOG wells, for example 1.3% in Risan #1. The wells Brigham has primary interest in are producers, but initial production appears to be in the 300-550 bopd range not 750-2000 bopd.

The stock has been trading in the $6 to $7.50 range, on much smaller volumes. Because of its small size, this company will have the major working interest in a very small number of wells relative to Whiting or EOG. Stock price trades in a range between $6 and $7.50 or so, obviously more speculative than EOG Or Whiting. Current share price is $6.32

Northern Oil and Gas (
Stock symbol NOGS or perhaps NOGS.OB)

Market Cap ??? but small relative even to BEXP. Company Web site

Northern Oil and gas has a minority working interest in one of the Brigham wells recently completed. Their major asset is that they acquired a large number of yet undrilled leases in areas adjacent to but south of the Parshall and Sanish fields and to the NE of the main Parshall field. There have been very few wells drilled on these leases. As I read NOGS financials, they seem pretty shaky. It appears to me that the only way they can sink holes is to partner with someone that has more capital and wants leases. And how productive the leases are that they hold is highly speculative. The stock has been trading at around $6, expensive for a company with such shaky financials, but investors are speculating that all the leases they hold could prove to be very valuable.

Hunt Oil

Hunt Oil is privately held, not publicly traded, with some of the offspring of H. L. Hunt still being very actively involved. Hunt has been drilling and has had good success on a section just east of the EOG Parshall field—the so-called “Bowman” well in Shell Twp was drilled by Hunt not EOG. The oil industry has always attracted more than a fair share of colorful characters, and senior H.L. Hunt (who died in 1974) perhaps would be voted as the most colorful character in the industry ever.

Many of his traits had to have served as inspiration for the J.R. Ewing character on “Dallas.” The company Web site: There is a company history page that hits some of the high points, and includes some fascinating photos, but carefully circles around some of the more “colorful” details about HL’s personal life and public persona. A quick H.L. Hunt biography is at

In The News

It's a good thing that the newspapers are keeping things going when I'm to busy to write something.

03/03 update: An article from the Grand Forks Herald about record high oil prices in ND.

02/27 update: An article from Booming Oil Patch Lights Up North Dakota Rangeland

02/25 update: In Barron's, Kopin Tan has article about the Bakken from an investment prospective (starts in the middle of p. 2). It contains one of the best passages in recent memory: Exploration stocks are risky prospects. Booms can turn into busts, and oil found may not be easily extracted. Wait too long for data and shares would have already run up. Jump in too early and you're one sunburn away from that crazy guy combing the beach with a metal detector.

02/13 update: Another one today in the Bismarck Tribune about a huge turnout in Killdeer for an informational meeting.

The Bismarck Tribune has reported on the the state lease sale in Mercer Co.

In addition,the Bismarck Tribune had a story on the uneven effects of development.

Then the Minot Daily News has another "boom" article. However, I have yet to see anyone show where there is currently more than a half billion barrels of potentially recoverable reserves in ND, now yet 400 billion, or what's going to happen to all the acreage in the dead zone consisting of most of Williams and McKenzie Counties (or how much, or little, is going to be recovered from that huge area).

State Lease Sale Results For February

A lot of tracks this time on the fringe of the play in Mercer Co.

Only two tracks in Mountrail Co., both in sec. 19, 152N, 91W, and they both went for $3,650/acre and purchased by Rick Slagle.

Only one tract in McKenzie Co, sec 15, 151-96, went for $1,180/acre.

Six tracks in northern Dunn Co., in 146-93 to 148-95, went for about $600-800/acre.

A handful of tracts in McLean Co., all in 147-87, went for $1-6.

Mercer Co. had about 250 tracts with about half being in the $200-300 range and the rest in the under $100 range. The tracts went as far east as township 86W.

January Scorecard For Mountrail Co.

Larry put some statistics together for last month:

At month's end there were 19 drilling rigs on location in Mountrail County: EOG 7 rigs; Hess 4 rigs; Whiting 3 rigs; Fidelity 2 rigs; Brigham, Hunt, Murex 1 rig each.

During January there were 12 wells spudded: EOG 6; Hess 2; Whiting 2; Fidelity 2

During January NDIC issued 32 new permits to drill: EOG 15 permits in Model, Parshall, Wayzetta, and Austin Townships. Newcomer Behm Energy 7 permits in Osloe and Spring Coulee Townships. Whiting 3 permits in Crane Creek Township. Hess 3 permits in Banner, Idaho, and Ross Townships. Hunt 1 permit in Oakland; Murex 1 permit in Sikes; Fidelity 1 permit in Brookbank; and Brigham 1 permit in Manitou.

Whiting Hits It Big, Sanish Field, Mountrail Co.

Thanks to the reader for finding this Whiting press release. A surprising gas volume in that Liffrig well at 1.7 mmcfd.

BLM Sale Results

Thanks to Larry for digging this up for Mountrail Co. More detailed info later when I have more time.

Parcel 97711 is a 50% interest in 160 acres in Plaza Township: $520/acre, 80 net acres.

Parcel 97712 is a 50% interest in 320 acres in Osloe Township: $520/acre, 160 net acres.

Parcel 97713 is a 50% interest in 156 acres in Kickapoo Township: $387/acre,78 net acres

Parcel 97714 is a 50% interest in 160 acres in Redmond Township: $1,200/acre, 80 net acres.

Parcel 97716 is a 100% interest in 120 acres in Sikes Township: $3,225/acre, 120 net acres.

Parcel 97717 is a 50% interest in 149 acres in Osborn Township: $1,610/ acre, 74.5 net acres

Parshall Production And Maps

In December, Parshall Field produced about 156K bbls from 14 wells. Gas production for Nov. (Dec. is not in yet) was about 46 mmcfg. The highest gas production was in Aug. when 13 wells produced 70 mmcfg, which also had the highest oil production so far at 190K bbls.

David was kind enough to plot all the wells in the original Parshall Field area and the recent extended Austin area to the North so everyone could reference them.

It's The Fault's Fault

If you recall my discussion of the importance of faults in enhancing natural fracturing in the Murphy Creek area last May, it is theorized that faults serve as a conduit for fluids to migrate along the fault. Those fluids would then dissolve the salt deposits below the Bakken causing the overlying formations, including the Bakken to collapse, which obviously would greatly enhance the fractures.

I theorized (
along with probably untold others) that such a collapse area existed in the Murphy Creek area in west central Dunn Co. due to the presence of the Heart River Fault in the area (one of the few major faults in the Basin), and also because of the anomaly uncovered during the drilling of the Adobe Killdeer Federal wildcat well in 1981. That well almost blew out when it encountered what appeared to be a fracture in the lower Lodgepole.

This fracture system has apparently been confirmed by the first Marathon well to be drilled in the area, th
e Hecker 21-5H, sec. 5, 144N-96W in Dunn Co., which was drilled last year about a mile and a half west of the Adobe well. The Marathon well hit the same "fracture" in the lower Lodgepole at almost the same sub sea depth (6 ft. difference) as was found in the Adobe well. The company ran logs to see what was up with the huge increase in gas and oil shows, but they didn't show any comparable reservoir properties. It was then theorized that the shows were sourced from a "large fracture system below it." The Hecker well was completed for almost 400 bbls/day calculated as an average for seven days of production. Marathon has since drilled two other wells directly offsetting the Hecker well and has more planned.

Indications are that there may be some high volume producers in this area where the fracture system is more extensive or better developed. It's something worth watc
hing to see how it all pans out.

Nightline Tonight

Apparently there will be a ND oil-related topic on ABC's Nightline show tonight. Thanks to the reader who heard about it for passing along the info. ABC usually has an abbreviated version of the news stories they televise on their website if you miss it.

In other news (which most certainly won't be on Nightline ha.), today's Rocky Mountain Oil Journal is reporting that EOG has apparently plugged its McAlmond well about a half-dozen miles NE of the company's Austin wells in Mountrail Co.

Brigham Announces Three Discoveries, Mountrail Co.

Brigham announced three discoveries today, none of which appears to be a barnburner, but they certainly seem economically viable. In fact, they are more in line with an average well in Dunn Co.

NY Times Finds North Dakota

I guess it should be noted when the New York Times finds something of interest in the state, and particularly when it pertains to its oil patch.

Marathon Buys PDC Acreage

Marathon has purchased from PDC about 72K undeveloped acres and most of the company's Bakken wells for almost $35 million effective 12/31. The transaction brings Marathon's net acreage up to 320K acres. Fox News

PDC and Marathon had a AMI in a large part of Bailey Field in Dunn Co., where each was developi
ng their interests in a checkerboard pattern, but PDC hadn't been active in the area since last summer. Marathon is going to need a few more rigs besides the six it currently operates to hold a lot of its proven acreage, where the leases mostly expire in two years or less.

Speaking of Marathon, here are a few pictures of their operations in Bailey Field near Killdeer in Dunn Co.

It also appears that Billings, MT based Nance Pet. has sold most or all of their interest in ND to St. Marys Land & Exploration.

Some Reader Input

David expended some effort in writing some comments to a recent post that deserve some better exposure. He wrote:

EOG seems pretty confident that they can recover 750,000 bbls of oil from each section drilled in the Parshall/Bakken field almost irrespective of the initial bopd figure. According to Mark Papa in one of his responses during an analyst presentation, the Bartelson 1 well, one of the first completed which initially produced 1800 bopd, produced an average of 600 bopd over an entire year, but was at a little over 400 bopd rate 1 year out. The wells seem to pop off initially at quite variable rates, ranging from about 700 bopd to 2000+ bopd, but once the initial pressure is off, they all seem to move fairly quickly into a rate of 500-600 bopd, and then the rate of decline is much less rapid after that.

I've been trying to determine what assumption about well life EOG is using for the 750,000 barrels recovery from each 640 acre spacing--as near as I can tell that assumes a well life of about 5 years, possibly 6. EOG is experimenting right now drilling a third well on a 1280 acre spacing from the opposite corner across the Bartelson and Patten sections 1 and 2 of 152-90. If you listened to their request in Bismarck, they aren't really expecting this strategy to increase recovery on the two sections relative to what they are getting from the two existing wells(they think that the oil from the new well simply cuts production from the two older wells on the 640 acre spacing) However, this is an experiment (EOG's words) and there is a possibility that this will become a normal method to increase recovery rates, and a third well running crosswise of the laterals on two of the current 640 acre spacings may turn out to be the norm in the Parshall and Austin fields (those two fields will eventually be one).

The EOG economics are pretty simple: a very average well producing 500 bopd for 6 months generates over a million $ of oil a month at current prices and pretty much covers all their direct drilling costs of 5+ million $. As a capital budgeting project, this number is nothing short of fantastic, and EOG has been saying this over and over again in their reports to shareholders. What is pulled out after the 6 months is over less royalties and the cost of running and maintaining the pump goes straight to EOG's bottom line.

With oil around $90 a bbl, the economic incentive for EOG and others to experiment with new technologies to up the recovery rate on each section is huge. EOG seems pretty confident that there is 9 million bbl of oil under each section in the Parshall/Austin field, and that this first round of wells using the laterals, fracturing etc, is going to bring about 8 % of that to market. But if there is any way to pull more of the total 9 million bbls of oil out, the economic incentive to find that technology given what has already happened is huge. No doubt, 5 years from now EOG and others drilling the field will have further honed their techniques. EOG isn't going to walk away from a field that has been treating them this way from a purely capital budgeting standpoint. The only part of the puzzle I havent quite figured out is why the majors have not already landed. EOG is a big company, in the S&P 500, but small by the standards of a major oil company.

Does anyone have a number to toss out with respect to how much gas a typical well in the Parshall/Austin field might produce once the pipeline is in and the gas gets old rather than flared off? I have been guessing that the value of the gas might be 10-15% of the value of the crude oil produced each month, but this is only an uneducated hunch on my part.

I think the Feb-March date EOG is talking about corresponds to the date that the wells will be connected to the crude pipeline as well. At the moment the number of trucks needed just to haul off the oil from the 22 wells producing 500 bopd has been substantial--things should get a lot simpler with the pipeline in place.

How many barrels do each of those storage tanks hold? There are typically 8 or 9 set up on each well in the field. EOG is confident enough that the wells will come in that they set the tanks just as the wells are being started. [typically 400 bbls for the permanent tanks on location]

Here are some production histories from the Patten and Bartelson wells and projection for the infill well on the 1280.

And an earlier projection of production for the Warberg 1-25H well that indicates an EUR of about 400K bbls.

Another reader, Larry, sent along a graph plotting EOG's drilling permits and active rigs, indicating more rigs are likely to appear in the near future.