Tuesday, March 18, 2008

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.

48 comments:

dkwilk said...

thanks for the informative bolg.

Anonymous said...

Helis Oil has completed two Three
Forks wells in the South Blue Buttes area of McKenzie County. Their Levang well flowed more than 500 barrels of oil per day from the Three Forks in the fall of 2007. The Linseth was also productive in the Three Forks. Later in 2007, Helis attempted to drill a second lateral in the Middle Bakken in both of these wells and dual complete. The Levang Bakken lateral only made about 2200 feet before drilling was haulted due to gas and oil flows. The Linseth, 3 miles south of the Levang, also had problems drilling the Middle Bakken and only got about half the planned length. Helis has now spudded the Jones, one mile east of the Levang. No word if this well is also targeting both the Three Forks and the Bakken. Helis
has several other locations in this same general area. This
information is from the well files at the ND Oil and Gas Division.

Teegue said...

Very interesting. Looks like Helis has been flying under the radar. I'll have to look this stuff over.

Anonymous said...

Sorry if this is off topic but does anyone know the time frame that should be given from signing a Oil and Gas lease to receiving the Bonus check.
(Any legal time at all here)

Anonymous said...

I see Slawson has a permit now in 152N 90W Section 36. They now have four permits in that area. I am curious to why they get permits then don't use them?

Anonymous said...

DO NOT SIGN A LEASE UNTIL YOU AT LEAST HAVE A VALID SIGHT DRAFT IN HAND, IT WILL SAY THE DAYS LENGTH OF THE DRAFT. AND GET IT TO YOUR BANK ASAP, BECAUSE THE TIME IT RUNS IS FROM THE DATE OF YOUR DEPOSIT, NOT THE DATE OF YOUR CHECK. ( THE DRAFT CAN BE FROM 30 TO 90 DAYS, COMPANIES CHOOSING), OR NEGOTIATE IT WITH THEM.

ndroy said...

Anon, you are in a position to negotiate. Those companies that offer you 90 days and more, tell them no thanks. Work those ones that offer 30 - 45 days. Most common terms that I been offered have been that. It's the dollar figure and length of lease that makes it fun. Don't be afraid to call someone else and search the internet for that lease that you will feel comfortable with.

Anonymous said...

This was on the news here in rapid city yesterday.. http://www.kevn.com/NewsStories.aspx?StoryID=8769

Teegue said...

Regarding that news report from Rapid City, WOW! what a mess that is. They may want to alert the geological community that they know something contrary to what has been thought to be fact for fifty years: that there is no Bakken underlying southwestern ND and northwestern SD.

Yes the Willison Basin underlies part of SD but they mistakenly think that therefore the Bakken does also (they showed a map of the aerial extent of the WB and not a map of the Bakken).

They are going to be waiting quit awhile for all those refineries and pipelines to appear unless it results from Red River development. They need to do a lot more homework before going on air with something like that.

I won't even comment here again on the whole 500 billion bbl thing.

Anonymous said...

South Dakota may not be waiting a long time after all for a refinery.. http://www.nacbe.com/articles/sd_new_refinery.html

David said...

I think we are all anxious to see whether there is indeed an April '08 report by the USGS containing updated estimates as to the potential reserves in the Bakken. As with any nonrenewable resource, the reserves are not a fixed number independent of the market price of oil, and just as oil at $50 a bbl is consistent with smaller reserves number than with oil at $100 a bbl, then too an assumption of oil at $200 a bbl will result in more reserves than $100 a bbl as technologies that were not economic at the lower prices suddenly become feasible and economic at the new higher price.

I am amused by those who claim that "the world is running out of oil." My first response, of course is "at what price?" Obviously if there are readily available alternative fuel sources such as alcohol from grains that can be made for less than $100 a bbl then we probably should be using those rather than exploring for oil that might cost $150 a bbl to produce. BUT we are learning that any fuel source has its down side--in the case of ethanol look at what has been happening in recent months to the price of any food item that uses grain in some way. Would we rather have only slightly cheaper gas (my colleagues are estimating this number to be 5-10 cents per gallon cheaper, if that) because of an increased ethanol availability but considerably more expensive food, or more expensive gasoline and moderate food prices? We all face policy choices like this.

Meanwhile look at what has happened to EOG's estimates of the reserves in just the Parshall field since mid 2006. This is just one company working an area only a few townships in size. What happens to reserve estimates if this scenario starts repeating iteself fairly regularly in other areas in the Bakken as more and more companies try to apply similar lateral drilling approaches and start to get some similar results with blockbuster wells no longer being that rare and uncommon? The USGS even in all their wisdom cannot forsee what could easily happen technology wise w/o drilling holes in the ground. So just as it is wise to not be too optimistic about potential reserves in the Bakken it is equally wise to not be overly pessimistic either.

As a source of fuel for powering motor vehicles at a reasonable price per gallon, I would rather place my bet with EOG and similar companies doing lateral drilling in the ND Bakken than with the corn growers trying to produce ethanol from corn made using Nitrogen fertilizer that was in turn made from natural gas!

EOG has been claiming that their direct drilling costs in the Parshall field are running about $20 a bbl given the average productivity of the wells and their assumptions about expected life. But oil sells for over $100 a bbl right now. As near as I can determine, EOG recovers its directr drilling costs on a Parshall field well in as little as 6-8 months, (average gross amount of oil typically a million $ a month per well, before taxes) and after that most of the rest goes to the bottom line. My question is "is there any other fuel source or location for drilling oil wells (foreign, domestic, on or off-shore) that is even close to EOG's $20 a bbl number from the Parshall field?" If there are other places in the world where energy can be produced at as low or lower direct cost than EOG is estimating from the Parshall field, I want to go there. Otherwise I think you have a good feel as to why there appears to be more than a little optimism right now in northwestern North Dakota.

Anonymous said...

Regarding Slawson. They have been waiting for rigs. They are currently drilling (Pioneer #44)their first well in Mountrail County at NW,NW sec 9 T152N-91W. I think this rig will move south to their other locations once it is fininshed. Slawson is a joint partner with Northern Oil and Gas in this area.

Anonymous said...

If I sign a lease and then don't accept the Draft or Monies in the usual time frame allowed, Is the leasing company still able to record the lease and am I liable for anything.

Anonymous said...

Does anyone have any information as to why the Permit for the Hunt Oil well on 1-30H, SWSE 30-154N-89W, in Mountrail Co. was cancelled today?

I have a personal interest in the section and am curious as to why the section was permitted and then canceled a few days later. Do you think this has anything to do with EOG owning the majority of the leases in the section.

Any info or direction on where to look for info would be much appreciated.

Anonymous said...

To Anon. 7:27 In all likelyhood EOG will permit and drill the well if they have controling interest, unless they farm it out to Hunt. Thats the way it works in the oilfield. Each will than share cost of drilling on the % of leases held, as well as production costs.

Anonymous said...

Just found your blog a couple of weeks ago, and enjoy it very much.

As a mineral rights shareholder in the Sanish field, reading this blog and the ND Oil and Gas daily reports is like shaking a Christmas present. You know there is something there, but you have no idea what it will turn out to be.

I hope one of you experts can enlighten me about a couple of things.

Question#1: When does the state update the progress of a well on their website? There was a rig adjacent to our property, but the state still shows it in drilling status, despite the rig being moved a couple of weeks ago. The website also shows a single short lateral, when it appears that Whiting usually drills three in that area. Is there a "normal" progression of showing status?

Question#2: How is a pooling agreement determined? Is it pre-determined by distance from the well, or does it make a difference in which direction the laterals are drilled?...or does it have something to do with the surface or mineral rights owner?

Thanks for the enlightenment.

Anonymous said...

i have a question..when the drilling rig has been removed, do they know what the well is flowing or do they have to wait for the completion rig to finish before they know.. thanks..

Larry said...

Re Anon question #2----

Pooling agreements are based upon the drilling unit for the well. Drilling units are one section or two sections.

The drillers relative interests in the drilling unit determine their pooling interest.

David said...

The units are set up to protect the interests of mineral acre owners in adjacent units so that these mineral owners do not get oil sucked out from under their property without getting royalty payments ...they do this with a minimum distance of the well and the lateral from the unit line, usually the section line, and laterals stay within the spacing.

Generally if the driller plans a single lateral running diagonally across a section, a single well will be drilled on each section and all owners of mineral interest on that section will share in the royalties from that well. This becomes a 640 acre drilling unit and mineral interest pool.
But, in the case of Whiting, they have been running still longer and sometimes three laterals under two sections from a single vertical drilling point, and the pooling unit there becomes 1280 acres.
In one instance I am aware of a driller planned to do a single lateral on a 640 acre spacing and filed papers with the dmr for that spacing. But in the process of drilling the well the driller was able to complete a lateral that was only half as long as originally intended because of technical completion problems, and the pooling request thus became for 320 acres not 640 acres. Needless to say the mineral owner on the remaining 320 acres who got left out was not happy, but no doubt another well was or will eventually be drilled on the remaining acreage.

Then you have the new well being drilled with a diagonal midway between the Patten and Bartelson wells on sections 2 and 3 of 152-90 with the lateral cutting across the section line dividing section 2 from section 3. There are already two wells, one on sections 2 and one on section 3, each with a 640 acre spacing/pooling unit. As I under stand it, this third well well have a 1280 acre spacing/pooling unit consisting of all the acres in sections 2 and 3, and all mineral owners with an interest on either sections 2 or 3 will get a share of the royalties. This is the fairest way to do it given that the new well may cause the production of the other two wells already producing to drop off faster than it otherwise would.

Bottom line: its possible to have larger spacing units placed over smaller spacing units as wells are added to a field. If a driler decides to add wells in an existing field that already has producing wells 1 per section on a 640 acre, it is likely that there will be many larger 1280 spacings over the top not a situation whereby the spacings become smaller such as new wells on 320 acre spacings representing only half a section.

It could be that what initially appears to be a "completed" field with 1 well per section all in production could eventually accommodate many more wells that way. Part of the puzzle is that as of this moment no one knows whether these new wells using larger spacings will add significantly to the total production or whether they simply take production away from the existing wells on the 640 acre section spacings.

Obviously if a driller believes that one well per section only is able to pull out 10 percent of the oil in the field, then its not going to be long before experiments are run with different spacings with the intention (hope) of pulling out more than 10% of what appears to be there. But in the process, every mineral interest owner needs to be protected. The experiment they are running on sections 2 and 3 of 152-90 is fascinating and if it works could set the stage for much more drilling in the field.

A related note: The Mountrail County record (aka "Parshall Paper") has a story this past week about how the drillers will be running laterals under lake Sakakawea w/o drilling even near to the lake. Pretty interesting stuff!

Anonymous said...

Thanks for the information...that clarified the situation a lot.

dkwilk said...

How many years before the Bakken formation will be infield drillled like the cedar hills field of SW ND. in many sections there are 3 and 4 wells, although some are used for injection of water or high pressure air..
I assume 5 years or so down the line this will start in the Montana Bakken ands then come to ND, or am i incorrect..

Steve said...

In the Richland County Bakken "fairway", most sections ( with either 640 or 1280 spacings ) have either 2 or 3 wells now. When you consider that the first Richland County Bakken horizontal Bakken wells were drilled in 2001, that's pretty quick high density drilling. I see in Enerplus's annual report for 2007 that they are going to complete their 3 wells per spacing unit program in 2008 and are looking into the viability of a 4th well per section along "lease lines"....which means 660feet from the section line in most cases. So companies will look at high density drilling once they have held their inventory under lease by production..I'm sure it's just a matter of time and rig availablility before the developmental drilling starts in ND.

Anonymous said...

I follow the area I call NW Killdeer closely. I am interested in the correlation between IP and first 3 months production. Generally, the correlation is not as close as you might expect. IP is not something to rely on as far as predicting well production. More on this later.

NDROY said...

WAYZATA, Minnesota, March 26 -- Northern Oil and Gas, Inc. (OTCBB: NOGS) (AMEX: NOG) -- an exploration and production company, announced that the Company commenced trading at 9:30 EST today on the American Stock Exchange under the symbol NOG.

Obviously, I missed something here. Anybody know what's going on? Just a week ago, they announced they were on the AMEX

dkwilk said...

you answered your own question. a week ago northern oil and gas made the announcement of moving to the amex and today that move was done.
just a paper work event.

ndroy said...

LOL, well color my hair blonde. I must have on another planet for asking.

Thanks dkwilk for pointing out the obvious and this is just a simple reminder, that we all need to think a little before wasting someone else's time.

Good thing my wife doesn't read this blog.

dkwilk said...

The second paragraph says a lot for future activity in the bakken play. this piece came from Whiting news on 3-28-08


NEW YORK (AP) -- Shares of Whiting Petroleum are up more than 2 percent after an analyst noted that a recent project at a site in North Dakota effectively expanded the oil and gas explorer's "highly" productive region.
RBC Capital analyst Scott Hanold says the company announced a new well in the state's Mountrail County that, while less productive than another major well, has "positive implications" for Denver-based Whiting.

Whiting now has four rigs operating in the region, and expects to have nine there by the end of the year.

"(Whiting) is taking a deliberate approach to maximizing the value of this play by holding acreage, targeting its highest working interest areas, and focusing on the sweet spots," Hanold says.

Anonymous said...

Anybody have any idea what an 80 acre lease would bring in T152N-92W in Mountrail County just South and adjacent to the Sanish field?

Larry said...

At the recent BLM sale a parcel in Osborn Township went for $1610 per net acre.


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

Anonymous said...

It seems that they are moving the rigs north and not venturing east. Are they drilling south of Niobe (northern Mountrail County) yet? What is the prognosis for Burke County?

Anonymous said...

There have been questions asked about northern Mountrail and southern Burke County drilling. Checkout the drilling permits issued sence the end of 2/08. permit no.s 17109,17110,17169,17185and 17187. They have been issued to St Mary Land and Exploration and Fidelity Exploration and Production Co. and are in T 158 and 159 Range 92W and are all Bakken 640 Horz.

Anonymous said...

Any new news on Ansbro. I have an interest in their expired permit for T142 R97 Sec3. Seems like their exploration has moved from Willman Field to Murphy Creek.

Anonymous said...

teegue, very informative post. Thank you, would like to discuss a consulting opportunity. what is the ebst way to get in touch?

Anonymous said...

Hey Teegue I also thank you for the site as I check it at least every other day. Is there any way you could add a message board to this site?? Just curious.
George

Teegue said...

I tried to create one about a month ago and google groups was having fits during that time and thereafter, so I had forgotten about it. But I set one up now.

http://groups.google.com/group/bakken-shale-discussion

Anonymous said...

Continental stock is having a big run up the last couple days. I wonder if they have an announcement coming soon.

dkwilk said...

Oil tax sharing agreement near between state, tribe

The Associated Press - Tuesday, April 01, 2008

BISMARCK, N.D.

The chairman of the Three Affiliated Tribes says an agreement is near to encourage oil production on tribal land.

Right now, privately owned fee land and tribal trust land on the Fort Berthold Indian Reservation have different oil tax rules.

State and tribal negotiators have been attempting to work out the differences.

Three Affiliated Tribes Chairman Marcus Wells Junior says an agreement is near. He says it should provide a big economic benefit to the tribe.

Oil exploration is going on around the reservation's boundaries, and companies are eager to prospect for oil on tribal land.

Anonymous said...

There have been a total of 10 drilling permits issued in southern burke county an northern mountrail county township 158 R92W and township 159 R92W. two at the end of Feb. and 8 from 3/28 to 3/31. All issued to St. Mary Land and Exploration and Fidelity Exploration & Production Co.'s.

They are in a very tight pattern And permit no.'s are 17109,17110,17169,17179,17185,17187,17191,17192,17193,17194. All are 640 acre horizontals. Anyone know what might be getting ready to happen?

dkwilk said...

i have also noticed this occurance. this area is a sesmic permit # 970141 , cottonwood 3d, with a client name of fidelity exp and production..
My question is has St. mary's land , and Fidelity E+P formed some type of alliance, or partnership.
I have not seen any announcement from either corporate office.

is this some type of mutual agreement like continental and conoco have?? any idea's?? thanks . don

Teegue said...

Short answer: companies like to show off a little and create some buzz. The turnaround between the submission of a application and the granting of a permit is short, so it's not like they might be held up a month down the road because they are waiting for a permit. How many rigs does Behm have going and how many permits did they get within a week or two a while back?

Anonymous said...

Teegue,
Don't know the answer to the Behm rig and permit responce of 4/1/09 but my reason for asking about the permit activity in 158 and 159 range 92 is my mother and father's parents homesteaded in that area and hold mineral rites in parts of four sections in question.

Teegue said...

I was being sarcastic (probably more like a smart@$$) about the Behm comment being the company got a bunch of permits and has no sustained drilling program.

Good luck with the family interests in that area!

dpaulson said...

Thanks for your input. I live in western CO. and don't know much about the oil fields but when EOG leased all of the family's mineral rites in October and I see St.Mary and Fidelity getting drilling permits on sections all around them including one of the 80 acre parcels it got my interest. They now have obtained 12 sence 3/24. Thanks again,
Dpaulson

Anonymous said...

Our family owns the mineral rights for 350+ acres in the following locations:
Section 24, Township 161 North Range 94 West, Burke County
Section 19, Township 161 North Range 93 West, Burke County
How do I find out if the minerals in those locations would be considered part of a pool that is already being drilled on and/or has a producing well?

Teegue said...

You can go to: https://www.dmr.nd.gov/oilgas/

and go to the GIS Map Server and zoom in on the area to see if there is any activity. You can also go to the daily activity reports and and do a search.

Anonymous said...

I'm trying to locate the expiration date of some mineral rights. Would the rights be listed by the owner's name of the rights or by the legal description. If I know the county they are located in, can the courthouse assist me if determing the dates and physical location.
GF082659

Anonymous said...

St.Mary continues to obtain drilling permits in T158 & 159N R 91 & 92W,(16 in 30 days). Fidelity now has rigs on Sec.9 T159N 92W and Sec.11 T157 R92W. They have also obtained permits to drill Sec. 22 T159 92W and Sec. 11&21 in T159 R92W. Hess has drilled both Sec 3&11 in T158 R93W and have moved their rig to Sec 20 in T158 R93W and Brigham has moved a rig on to Sec 33 T158 R91W.

I was told by a land man with Contex that EOG will be spudding Sec 14 T159 R91 W in May.

My family are mineral holders in the area but all live out of state so we are not up to date on what is happening in the area. Does it look as if the northern Mountail and southern Burke County lines may be starting to develope?

Thanks for your great web. site and any input you my have.

DPaulson

Anonymous said...

After posting my comment directly above I was reading a news release from Brigham from 3/3/08. Bud Brigham near the end of the release referred to the Johnson 33#1H which they would drill in April (NWNW33 T158N R 91W)as having many of the attributes in common with the Parshall /Austin area.