Bakken Shale News

Keystone Bill Hits Another Snag

Heitkamp Expresses Disappointment
Heitkamp votes on keystone

U.S. Senator Heidi Heitkamp (ND)

Republican senators attempted to wind down debate on the construction of the Keystone XL pipeline Monday, but the effort failed to receive the necessary support.

Republicans needed 60 votes in order to advance approval of the bill and end filibusters, but bad weather and absenteeism were blamed on the final tally of 53-39.

U.S. senator Heidi Heitkamp (ND), a long time advocate for the pipeline, authored five amendments to this piece of legislation last week. She believes the construction of Keystone is critical for the nation’s energy infrastructure. After yesterday’s vote Heitkamp expressed her extreme disappointment in the process

In a press release, Heitkamp said, “For years I have said we need to approve the construction of the Keystone XL pipeline so that we can build our energy infrastructure, increase our energy independence, and move our country closer to a true all of-the-above energy strategy…I’m still disappointed in the process that got us to this point. Congress needs to work together, which includes robust debate, calling up amendments, and voting.”

In the following video, Senator Heitkamp speaks on the senate floor and urges colleagues to find common ground.

Related: How the Keystone XL Pipeline Would Impact the Bakken

Read more at Senator Heitkamp’s website

photo credit: ruralhome cc


Bakken Play Rig Count Declines by 11

Williston Basin Sees Lowest Numbers Since 2011
Williston Basin Rig Map

Williston Basin Rig Map in 2013

The Bakken-Three Forks rig count decreased by eleven to 152 rigs running across our coverage area by the end of last week. In their weekly rig update, Baker Hughes reported that the Bakken’s decline is part of the overall plunge in U.S. oil and gas rig counts that are down by 49 to 1633.

Declines were seen in all rig types:

DIRECTIONAL 6 (-6)
HORIZONTAL 144 (-8)
VERTICAL 1 (-2)

Most alarming to our readers is that Williston saw the biggest drop in the entire country and is showing the lowest numbers in four years.

James Williams Williams, president of energy consulting company WTRG Economics commented to Bloomberg that,  “The Bakken was late to join the others leaving the party. It’s a high-cost producer with some of the lowest oil prices in the country.”

 

State Previous Wk Current Wk
SHERIDAN MT 1 1
BILLINGS MT 1 1
ROOSEVELT MT 6 5
DANIELS MT 0 0
DAWSON MT 0 0
FALLON MT 0 0
RICHLAND MT 0 0
VALLEY MT 1 0
WIBAUX MT 0 0
BOTTINEAU ND 1 1
BURKE ND 2 1
RENVILLE ND 1 1
STARK ND 1 1
DIVIDE ND 3 3
DUNN ND 23 23
MOUNTRAIL ND 27 27
WILLIAMS ND 33 31
MCKENZIE ND 62 56
GOLDEN VALLEY ND 0 0
MCLEAN ND 0 0
MERCER ND 0 0
WARD ND 0 0
MCHENRY ND 0 0
162 151

 

This news is a result of the continued free-fall in crude prices, which dipped again today to $45.14. As expected, major Bakken operators are responding by continuing to slash their budgets for 2015.

Read more: Halcón Resources Reduces 2015 Budget

Read more: More Budget Cuts for Continental Resources

What is the Rig Count?

The Bakken Shale Rig Count is an index of the total number of oil & gas drilling rigs running across Montana and North Dakota. The rigs referred to in this article are for ALL drilling reported by Baker Hughes and not solely wells targeting the Bakken formation. All land rigs and onshore rig data shown here are based upon industry estimates provided by the Baker Hughes Rig Count.

Read more at BakerHughes.com

 


Bakken Rig Count Decreases to 163

Budget Cuts and Layoffs Mark Crisis in Region
rig count bakken

Rig Count Sharply Declines in Bakken

The Bakken-Three Forks rig count decreased sharply over the past month, ending last week with a total of 163 rigs across our coverage area. This represents a drop of seven from last week and a startling 17 from only one month ago, according to the weekly report from Baker Hughes.

WTI crude prices have decreased by ~$9.59 since December 19th, trading at $55.99/bbl on Monday morning. As oil prices continue to drop, reports of deeper budget cuts and layoffs are now daily news.

Related: Energy Giants Announce Layoffs

Related: Halcón Resources Reduces 2015 Budget

The Bakken isn’t the only region to see a decline. The U.S. rig count decreased to 1,676 rigs running by the end of last week with a total of 310 rigs targeting natural gas (down 28 from December) and 1,366 targeting oil in the U.S. (down 170 since December). 165 rigs are running in the Williston Basin across MT, ND, and SD. 156 are in ND alone.

County State Previous Week Current Week
MCKENZIE ND 62 62
WILLIAMS ND 35 33
MOUNTRAIL ND 28 27
DUNN ND 26 23
RICHLAND MT 6 6
DIVIDE ND 3 3
BURKE ND 2 2
ROOSEVELT MT 1 1
SHERIDAN MT 1 1
WIBAUX MT 1 1
BILLINGS ND 2 1
BOTTINEAU ND 1 1
RENVILLE ND 2 1
STARK ND 0 1

 

Activity in the Bakken continues to be dominated by horizontal drilling:

  • 152 rigs are drilling horizontal wells
  • 8 rigs are drilling directional wells
  • 3 rigs are drilling vertical wells

What is the Rig Count?

The Bakken Shale Rig Count is an index of the total number of oil & gas drilling rigs running across Montana and North Dakota. The rigs referred to in this article are for ALL drilling reported by Baker Hughes and not solely wells targeting the Bakken formation. All land rigs and onshore rig data shown here are based upon industry estimates provided by the Baker Hughes Rig Count.

Read more at BakerHughes.com


Energy Giants Announce Layoffs

Cheap Oil to Blame for Job Cuts in Several Sectors
oil prices and layoffs

Energy Workers Face Layoffs

Lower crude prices are a double edged sword. The average consumer may enjoy the benefits as cheap fuel reduces the costs of goods and services, but for those whose livelihood relies on the energy industry, the extra cash will be of little solice if they no longer have a job. It has taken some time for the reality of the low oil prices to finally trickle down, but after months of plummeting crude, the boom will become bust for the many who will soon face a pink slip.

Related: Low Oil Prices Offer Uneven Effect

Since November, one company after another announced massive reductions in their 2015 budgets as they have scrambled to cope with the dramatic 50% drop in crude prices since the summer. The next predictable step began last week as companies announced layoffs and prepare to scale back drilling operations.

Amidst the happy refrains from people who are enjoying lower gasoline prices, there is the occasional cynical comment that suggests the only ones who are hurt by low crude prices are the nameless, faceless, deep pockets of the energy companies. This represents a short-sighted and narrow view of the current reality facing workers, families and local economies.

Not only do layoffs affect workers directly, but a report authored by Dr. Robert W. “Bill” Gilmer for U.H.’s Bauer School of Business estimates that with each new energy job created/eliminated, there are three – four other jobs that are also create/eliminated.

Discussing the impact on Houston, Gilmer predicts that “These cuts will be felt from Houston’s machine shops and factories to its office towers. The question becomes how this strange mix of good news and bad balances out to affect Houston’s economic prospects in 2015 and beyond. 

Since January 1st, a handful of companies have announced layoffs and it is only a matter of time before others follow. Some analysts predict things could get very ugly as the layoffs extend to local governments, small business and energy-supporting industries. Highlighted below are several giants who recently announced layoffs for early 2015.

Schlumberger: reported layoffs of a staggering 9000 workers more

Halliburton: recently laid off workers in Houston, but declined to give a specific number more

Apache: Also laid off an undisclosed number of workers worldwide more

U.S. Steel: Over 700 expected to be let go starting in march more


Supply Chain Initiative Launched for Bakken

Manufacturing and Logistics Conference to Kick of Initiative
ManLog

Williston State College to Host ManLog

Williston Economic Development (WED) has joined with DAWA Solutions Group to produce the 1st Annual Manufacturing and Logistics Conference (ManLog) to jumpstart its Enhanced Bakken Supply Chain Initiative. The event, scheduled for March 25-26, 2015 in Williston, ND is designed to connect the oil industry with other energy-related stakeholders in order to explore the opportunities they have in common.

Shawn Wenko, Executive Director of Williston Economic Development said that, “One of our goals in 2015 is to help more of our regional manufacturing firms get connected to the oil and gas industry,” said Wenko. “Given the magnitude and expected duration of this $30 billion industry, now is the time to grow and diversify our economy throughout the region.”
President of DAWA Solutions Group, Jeff Xarling explains further that “We need to start connecting those dots with regional manufacturers that can deliver more cost-effective products and services. The end result is a win-win with reduced costs for operators and economic development and diversification for companies and communities throughout the region.”

More on Williston: Jobs in the Bakken

More on Williston: Housing in the Bakken

ManLog will be held at The Well in Williston State College in Williston, ND. Conference participants can expect informative presentations, panel discussions and opportunities to network with others. There are several advertising opportunities for companies including a trade show component, where exhibitors can showcase their offerings.

Conference Topics:

– Product & Service Supply Chain in the Oil and Gas Industry
– Study: Cost Reduction through Supply Chain Enhancement in the Bakken
– Exploration & Production Company Perspectives (Oil Companies)
– Product & Service Development in the Bakken Region (Success Stories)
– Manufacturing in the Bakken
– Regional Manufacturing Capabilities
– Value-Added Energy Development (Downstream)
– North Dakota NGL Market Study – Presented by IHS
– Logistics – Materials Management & Transportation Opportunities

For more inforamtion about this conference, go to manlognd.com


Halcón Resources Reduces 2015 Budget

Plunging Oil Prices Blamed for Latest Adjustment
halcon bakken

Halcón Operations in Bakken

In a press release on January 8th, Halcón Resources executives announced that they will slash their drilling and production budget almost in half for 2015. The Houston-based company affirmed it will reduce operations in the Bakken to two rigs in the Fort Berthold area of North Dakota.

Read here for more about Halcón in the Bakken

This is the second round of cuts for the Bakken producer in less than two months due to the continued decline in oil prices. Projected spending for the company is set at between $375 – 425 million, which represent a steep decline from 2014 numbers of $950 million. Even with decreased spending for 2015, production is expected to increase to an average 40,000-45,000 barrels per day, compared to 43,554 b/d in the third quarter of 2014.

Halcon CEO Floyd Wilson says that, “Our plan is to deploy capital to assets where results indicate EURs and initial production rates higher than our published type curves. We are comfortable with our current liquidity position and we expect our strong hedge portfolio to continue generating income well into 2016. Although we are significantly hedged, the continued weakness in crude oil prices, combined with elevated service costs, calls for conservative planning. We expect to see these costs come down dramatically during 2015.”

Read the full report at halconresources.com.


Obama Threatens Another Veto for Pipeline

Keystone Pipeline Legislation Still in Trouble
President Obama to Veto Keystone Bill

President Obama Threatens Veto

On the very day that Congress reconvened, President Obama spoke out about his intentions to veto the latest version of the Keystone pipeline bill. This pronouncement escalates the standoff that has continued for over six years as lawmakers, divided along party line, have debated whether the benefits outweigh the potential risks of such a venture. The GOP has been very clear that this issue would be the first order of business for the 114th congress.

Related: Keystone Showdown Likely for New Year

Until now, the president has been vague about his intentions and as late as Monday was not speaking publicly about this. But that all changed on Tuesday when White House Press Secretary, Josh Earnest, announced that a veto is likely.

Earnest told USA Today that “I can confirm for you that if this bill passes this Congress, the president wouldn’t sign it either. And that’s because there is already a well established process in place to consider whether or not infrastructure projects like this are in the best interests of the country.”

Understandably, the President’s decision has been difficult and disappointing news for Republicans who had hoped that their newly elected majority status would change the outcome.

Sen. Mitch McConnell, R-Ky said that, “The president threatening to veto the first bipartisan infrastructure bill of the new Congress must come as a shock to the American people who spoke loudly in November in favor of bipartisan accomplishments. Once again the president is standing in the way of a shovel-ready jobs project that would help thousands of Americans find work.”


Read more in usatoday.com

photo credit: Barack Obama via photopin cc


Keystone Pipeline Set for Vote this Friday

GOP Majority Means Swift Passage of Latest Bill is Likely
Congress will Vote on Keystone Pipeline

Congress Votes on Keystone this Week

As Congress heads back into session, GOP leaders wasted no time in submitting the latest version of the bill that would approve additional construction on the Keystone pipeline. The bill should come to a vote in the House as early as Friday before heading to the Senate early next week.

With all the controversy surrounding this construction, it has been quite a battle to get to this point. The application for this disputed section of the pipeline was submitted over six years ago and has been approved by the house many times. The difference now is that with a newly elected Republican majority, the bill is expected to easily pass both houses. The White House continues to remain silent about whether President Obama will veto the bill, though he recently shared his skepticism about its value to American consumers.

Related: Keystone Showdown Likely for the New Year

The bill’s author, Rep. Kevin Cramer (R-N.D.), said in a statement that, “By passing this bill in the House and Senate with bipartisan votes, we can help provide the political muscle the president needs to finally approve this piece of critical transportation infrastructure, which will contribute thousands of jobs to the national economy and further our push toward national energy security.”

The construction of this pipeline is crucial to transport the record amounts of oil (830,000 b/d ) being produced in the Bakken region to the refineries on the Gulf Coast. Currently, just under 70% of all the oil produced in North Dakota is transported out of the state by rail.  The Keystone XL Pipeline could alleviate some of the rail congestion being caused by the transport of oil, which would free up the rail service in North Dakota and across the midwest for the transport of other goods, primarily agricultural.

Read more at wsj.com

photo credit: DHuiz cc


No Income Tax for North Dakota?

Key Funding Issues on the Table as ND Legislature Reconvenes
Dalrymple cuts state income tax

North Dakota’s Governor, Jack Dalrymple

In a few short days, the North Dakota legislature heads back into session. Expected to take center stage are several key funding issues recently made more crucial by the continued decline in oil prices

First is an initiative by GOP members that would effectively wipe out the state income tax. A new bill that is expected to be introduced early in the session will reduce the income tax rate to zero. This is a counter to Gov Dalrymple’s proposal for a 10% decrease in personal and corporate income tax that was made in an effort to draw more people to the region. This issue is highly contested since there is great concern over the potential lost revenue due to plummeting oil prices.

North Dakota’s state funding is tightly tied to taxes on oil and gas production and was responsible for more than half the state’s revenues for 2013. So as oil prices decline, legislators have reason to be nervous. In addition to expected lower production, there is a quirky law from 2001 that allows tax exemptions when oil hits a certain low price point. Though the formula is a bit complicated, basically if oil stays below $52.58 (2015) for five consecutive months, the percentage of tax decreases, potentially resulting in untold millions in lost revenue.

Reduced tax revenue brought on by low oil prices has already put many services at risk, so reducing state income tax is making many lawmakers nervous.

Senate Majority Leader Mac Sneider told a teh Jamestown Sun that “I think at a time when we’re seeing warning signs of not wanting our budget to be dependent on the price of a commodity, I think eliminating the income tax is shortsighted. We’ll be focusing on tax relief, but it’ll be on the tax that people are most concerned about, and that’s property tax.”

Another funding issue that ND legislators will be deciding is the way the state divides tax revenues. When Gov. Dalrymple rolled out his proposed budget, it included a change in the state’s oil production tax distribution formula that would shift the way funds are split and allow more money to be funneled back to the county level. Currently local governments receive 25 percent of these funds but this would increase that 60 percent, which would be vitally important to improve local infrastructure (including roads, water plants and housing) that has not caught up with the demand.

Read more at washingtonpost.com

(photo credit: North Dakota National Guard cc


Year in Review: Record Production

2014 Made the Bakken Region a Major International Player
Bakken has a great 2014

2014 Was a Record Year for Bakken

2014 was one for the record books as exploding production elevated the Bakken region to major-player status amongst the world’s energy leaders.

January began as North Dakota set several all-time highs including having over 10,000 producing wells averaging 973,045 b/d and natural gas at 1,086,571 MCF/day.

By June, the NDIC announced it had hit the 1 million b/d in production. This long anticipated goal was slowed a bit by difficult weather in the winter but by the time it happened, the U/S. was positioned as the worlds largest oil producer. Even as oil prices began to decline throughout the fall, production continued to break records and by September, production averaged 1.2 million b/d.

The latest numbers from the NDIC show that at the end of the year, the Bakken and Three Forks regions alone averaged 1,118,010 barrels per day and boasted two more all time high records for producing wells (11,892) and gas (44,317,381 MCF = 1,429,593 MCF/day).

Whether this volume of prodcution can be maintained with current price declines is unclear, but the EIA predicts that drilling will slow for 2015 due the uncertainty.

Read more at dmr.nd.gov


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