page Statoil hits 14th top IP well 8 in 22 weeks Vol. 2, No. 35 • www.PetroleumNewsBakken.com A weekly newspaper for industry and government Week of December 15, 2013 • $2.50 l NATURAL GAS Producing amid the windrows Finishing touches NDPC flaring task force to submit recommendations to NDIC in January By MAXINE HERR “The nature of this business is that VERN WHITTEN PHOTOGRAPHY For Petroleum News Bakken drillers drill, operators operate, and they he North Dakota Petroleum Council, NDPC, sign a long-term contract with a gas Tflaring task force is putting finishing touch- processing company and they walk es on its recommendations to reduce flaring in the away.” —Department of Mineral Resources Director state. Lynn Helms In September, Gov. Jack Dalrymple requested the development of a task force to study the prob- Wells pumping on a Hess Corporation pad in the Traux field subcommittee has some recommendations that southeast of Williston in southern Williams County, N.D. lem and provide some solid solutions to the North needed further review. Dakota Industrial Commission. The task force “We want to give it a good review and make will present its findings at the Jan. 29 commission sure membership and everyone’s ready,” Dille ND operators increasing well meeting. said. “We want to get it as good as we can. As far Task force Chairman Eric Dille of EOG densities to even higher levels as recommendations on flaring, goals, and crite- Resources told Petroleum News Bakken that the ria, we have developed some targets we think we North Dakota operators continue to increase well densi- task force had hoped to present at the Dec. 19 ties on Bakken petroleum system spacing units. In applica- Industrial Commission meeting, but the technical see FLARING TASK FORCE page 15 tions that the North Dakota Industrial Commission will con- sider during hearings on Dec. 18 and 19, numerous operators l are seeking authority from the commission to drill up to 30 GOVERNMENT wells on existing 2,560-acre spacing units, up to 16 wells on existing 1,280-acre units, and up to four wells on existing 320-acre units. Those infill efforts will result in spacing unit Wardner on the interim densities of one well for every 85.3 acres in the 2,560s and an even higher spacing unit density of one well for every 80 A look at North Dakota O&G-related legislative issues midway between sessions acres in the 1,280- and 320-acre units. These are some of the highest spacing unit densities that the commission has ever By MIKE ELLERD all facets of energy in North Dakota. considered. Petroleum News Bakken Wardner recently shared with Petroleum News Bakken some of his see WELL DENSITIES page 14 ew people have a better understand- views on oil and gas-related issues the Fing of energy policy issues in North state is facing during the legislative TransCanada begins filling XL Dakota than Rich Wardner. In addition interim and what might be ahead in the southern leg as prep for startup to serving in the North Dakota House of next full legislative session. Representatives from 1991 to 1997 and TransCanada said its new Gulf Coast pipeline, designed in the Senate since 1999, he served as Petroleum News Bakken: First, do as the southern leg of Keystone XL, began line filling activ- Senate President Pro Tempore in the RICH WARDNER you think the oil and gas-related bills ities on Dec. 7 in preparation for commercial crude shipping 2011 session and as majority leader in passed during the 2013 legislative ses- from Cushing, Okla., to Port Arthur, Texas, scheduled to the 2012 session. Wardner is also a member of the sion are effectively addressing the issues they begin by mid- to late-January. state’s Emergency Commission and five interim were intended to address? The $2.3 billion Gulf Coast project will initially carry committees, including the Energy Development Wardner: It is too early to tell if the legislation 700,000 barrels per day of crude from U.S. and Canadian and Transmission Committee, which he chairs. to decrease flaring and the use of the Department fields, notably the Bakken, and is expandable to 830,000 That committee studies comprehensive policy for see WARDNER Q&A page 16 bpd. TransCanada spokesman Shawn Howard told Petroleum News that once line fill is completed “we will safely ramp up l MOVING HYDROCARBONS the flow rates” of crude moving through the pipeline to Gulf see XL SOUTHERN LEG page 13 Bullish CBR perspectives With a spotlight on flaring, Railroads confident about long-term crude-by-rail service to coastal markets operators request more exemptions By GARY PARK Most refiners and railroads say current The number of applications for flaring exemptions in For Petroleum News Bakken North Dakota is up two to three times what is typical for the quarter pricing differentials have month, according to Lynn Helms, director of the state gnore a spate of accidents, tighter regulations regained the norm of recent years, Department of Minerals Resources Oil and Gas Division. Iand competitive elements, the use of rail to supporting CBR from the Bakken to Most of the flaring-related applications that the North move crude is here for the long term, speakers price-disadvantaged refineries on both Dakota Industrial Commission will consider in hearings told the RailTrends 2013 conference in New York coasts. scheduled for Dec. 18 and 19 are for flaring natural gas from late in November. wells that are not yet connected to gathering infrastructure They offered their bullish outlook against a ic made the option more economic for some and the operators want to continue producing oil at maxi- backdrop of increasing rail shipments in the cur- refiners, especially those on the West and East mum rates beyond the 60 days of unrestricted production rent quarter after a flattening off in the previous coasts, to modify crude slates. allowed under state rules. That comes as no surprise to three months as several railroads and refiners Anthony Galio, a rail analyst with Wells Fargo, Helms since the commission has been issuing these types of noted in the quarterly reports that there has been said that “crude differentials will influence the exemptions for six months at a time and many are due to a rebound in crude pricing that underpins the degree to which CBR volume growth exceeds see FLARING EXEMPTIONS page 16 crude-by-rail, or CBR, sector. Refiners said a third-quarter change in dynam- see CBR PERSPECTIVES page 12 2 PETROLEUM NEWS BAKKEN • WEEK OF DECEMBER 15, 2013 contents Petroleum News Bakken SIGNIFICANT OPERATED PRODUCTION AND RESERVES GROWTH ON THE COVER NET SOLD PRODUCTION VOLUMES (BOEPD) 10,000 FY2014 Avg. Daily Production Guidance(1) 10 4,750 5,350 Boepd Consensus estimated Finishing touches Ȯ average of ~6,600 Boepd(2) 8,500 8,000 8 Operated Rig Count 6,804 Caliber generates first 6,000 revenues 6 7,500 NDPC flaring task force to submit Completed first RockPile completed 4,287 operated well May 2012 first well August 2012 4,000 2,714 4 recommendations to NDIC in January 2,098 696 1,120 1,389 2,000 2 616 Net Sales Volumes (Boepd) Volumes Net Sales Wardner on the interim 0 0 Q4 FY'12 Q1 FY'13 Q2 FY'13 Q3 FY'13 Q4 FY'13 Q1 FY'14 Q2 FY'14 Q3 FY'14 Q4 FY'14E Exit Revised (3) Actual Production Guidance Low Case Guidance High Case Avg. Rig Count A look at North Dakota O&G-related PROVED RESERVES (MBOE) OPERATED VS. NON-OPERATED VOLUMES legislative issues midway between sessions 5 Taking one step back, two steps forward Bullish CBR perspectives Triangle petroleum focusing on both production Railroads confident about long-term crude-by-rail service to coastal markets and building infrastructure as output continues upward amid a North Dakota winter ND operators increasing well densities to even higher levels 6 Saskatchewan tops Crescent Point capex TransCanada begins filling Calgary-based independent sets 2014 spending XL southern leg as prep for startup at C$1.7 billion with C$781 earmarked for Viewfield Bakken and Flat Lake plays With a spotlight on flaring, 11 Conoco betting on unconventionals operators request more exemptions 13 Marathon to boost Bakken rig activity by 20% BAKKEN STATS DRILLING & COMPLETION 7 Commentary: Statoil hits 14th top IP well in 22 weeks 3 Continental leading spacing unit apps 7 Montana well permits and completions, Nov. 29-Dec. 5 December spacing unit applications extend 7 Bakken producers’ stock prices from the Canadian border down to the South 8 IPs for ND Bakken wells. Dec. 3-Dec. 9 Dakota border in western North Dakota SIDEBAR, Page 8: Top 10 Bakken wells by IP rate 8 North Dakota oil permit activity, Dec. 3-Dec. 9 EXPLORATION 13 ND gas exploration moving east 9 North Dakota well operator transfers, Nov. 9-Dec. 6 COMPANY UPDATE NATURAL GAS 4 Abraxas plans to redeploy Texas assets 11 Tribes seek own solutions to flaring Reservation forms task force to streamline permitting, $73M sale agreed for WyCross Eagle Ford interests; also seeking funds for bridge project proceeds earmarked for Bakken and other to transport gas across Lake Sakakawea Eagle Ford lease blocks www.tremcar.com UNITS AVAILABLE FOR IMMEDIATE DELIVERY For more details please contact Jason Hugo Tel. : 306-551-8265 [email protected] Ted Meyer MEYER INDUSTRIES LLC 4310 Simms St., Dickinson, ND 58601 ALUMINUM DOT-407 DC Tel. : 701-225-7145 10500 USG CRUDE OIL TRAILER [email protected] PETROLEUM NEWS BAKKEN • WEEK OF DECEMBER 15, 2013 3 l DRILLING & COMPLETION Continental leading spacing unit apps December spacing unit applications extend from the Canadian border down to the South Dakota border in western North Dakota By MIKE ELLERD 1,280-acre units in five separate fields in which lies in northeast Dunn County but Divide County apps Dunn, McKenzie and Williams counties.