Bakken Shale News

DOT Seeks New Rail Car Design and Bakken Crude Testing

DOT-111 and CPC-1232 Tank Cars Would Require Retrofitting Under New Rules
Oil Rail Car Image

Crude Oil Rail Car | Click to Enlarge

The US Department of Transportation (DOT) proposed new rules this week for the testing of Bakken crude and better designed rail cars.

Within two years, the DOT proposes phasing out older DOT-111 tank cars for the shipment of packing group I flammable liquids. Unless the current DOT-111 and CPC-1232 tank cars are retrofitted to comply with new tank car design standards, they would not be approved for use in the transport of Bakken crude, which falls into the group I flammable liquids category.

In addition to the new tank car standards, new operating procedures like braking controls and speed restrictions for trains classified as high-hazard flammable trains were proposed. Also included in the DOT’s recommendations, a new liquids and gas testing program to address the following:

  • frequency of sampling and testing;
  • sampling at various points along the supply chain;
  • sampling methods that ensure a representative sample of the entire mixture;
  • testing methods to enable better analysis, classification, and characterization of material;
  • statistical justification for sample frequencies; and,
  • duplicate samples for quality assurance.

PHMSA/FRA Report Finds Bakken Crude is More Volatile

In conjunction with the new proposed rules, the Pipeline and Hazardous Materials Safety Administration (PHMSA) released a report summarizing the analysis of Bakken crude oil data gathered by PHMSA and the Federal Railroad Administration (FRA) between August 2013 and May 2014.  According to the report, data show that crude oil from the Bakken region in North Dakota tends to be more volatile and flammable than other crude oils.

By contrast, in May of 2014, The American Fuel & Petrochemical Manufacturers (AFPM), an industry trade association, released findings from a study that examined the characteristics of Bakken crude oil. In their report, the AFPM claims Bakken crude is within the safety standards for current rail car designs (DOT 111 tank cars), and is comparable to other light crudes.

Read more: AFPM Study Finds Bakken Crude Meets Current Safety Standards for Rail Car Design

Read more at dot.gov

Lightning a Threat to Salt Water Disposal Tanks

Tanks are Constructed of Fiberglass
Bakken Oil Well

Bakken Oil Well | Click to Enlarge

As a result of Bakken development, a number of salt water disposal facilities have popped up throughout North Dakota and Montana.

Highly saline water or brine is a byproduct of the drilling process, and must be disposed of properly.

Lightning a Threat to Salt Water Disposal Tanks

At disposal facilities, brine and oil residue are stored in tanks, where the oil is skimmed off the top, and then brine is injected into the ground. This necessary practice has come under fire – literally – from lightning strikes. Since the Bakken boom began, lightning has been linked to the cause of multiple fires involving salt water disposal tanks, according to officials.

Experts say, salt water disposal tanks, which are generally constructed of fiberglass, are more prone to catching fire if struck by lightning. The main reasons tanks catch fire are because of the volatile gasses that collect in them from the oil residue mixed in with the brine and their construction components.

What’s the Solution?

The logical answer it seems would be to build the tanks out of more lightning resistant material, however, industry experts caution that isn’t cost effective. For instance, steel tanks, which would be better suited to a lightning strike, are subject to the corrosive nature of the brine. Fiberglass tanks are much better suited to corrosion, and last longer.

Another more cost effective solution is to fortify the fiberglass tanks to make them resistant to lightning strikes. These fortifications are costly, but not nearly as costly compared to the damage caused by a direct hit from a lightning strike.

Despite the risk, some companies in the Bakken oil patch are willing to hedge their bets that a lightning strike will not hit their storage tank. But the simple truth is lightning wins the match every time when it hits a susceptible tank.

Read more on this subject at oilpatchdispatch.areavoices.com

Bakken Shale Rig Count Increases by Five to 182

Whiting Petroleum Acquires Kodiak Oil & Gas - $3.8 Billion
Whiting Bakken Acreage Map

Whiting Bakken Acreage Map | Click to Enlarge

The Bakken-Three Forks rig count increased by five to 182 rigs running across our coverage area by the end of last week. The NDIC notes 196 rigs are active in North Dakota, but around 14 of those are in the process of moving in and rigging up.

In recent Bakken news, Whiting Petroleum announced on July 13, 2014, that it would acquire Kodiak Oil & Gas, in an all stock transaction, for $3.8 billion. The deal makes the combined company the largest Bakken/Three Forks producer, unseating Harold Hamm’s Continental Resources from the top spot.

Read moreWhiting Petroleum Acquires Kodiak Oil & Gas – $3.8 Billion

The U.S. rig count decreased by four to 1,871 rigs running by the end of last week. A total of 315 rigs were targeting natural gas (four more than the previous week) and 1,554 were targeting oil in the U.S. (nine less than the previous week). The remainder were drilling service wells (e.g. disposal wells, injection wells, etc.). 184 rigs are running in the Williston Basin across MT, ND, and SD. 178 are in ND alone.

Not all rigs counted in our census are drilling for the Bakken, but it’s close. The NDIC estimates 95% or more of activity in this region targets the Bakken and Three Forks formations.

Note: The NDIC reports 196 rigs are active in North Dakota. That is 12 more than Baker Hughes reports in the Bakken area, and 18 more than the company reports in North Dakota. The difference is likely accounted for in the number of rigs actually working, rigs that might not be serviced by Baker Hughes AND rigs in areas outside of the Bakken fairway. On any given week, a certain number of rigs are in route to the next well location or idle waiting to drill the next well. The NDIC notes that around 14 rigs are in the process of moving in and rigging up.

Bakken Oil & Gas Rigs

The number of oil rigs increased by five to 182 rigs running by the end of the week . WTI oil prices increased by ~$2 from the previous week, trading at $102.97/bbl on Friday afternoon. Williston Basin Sweet crude traded at $89.94/bbl on July 18th. The WTI-Brent closed up a bit, settling at ~$4 by the end of last week.

The natural gas rig count in the region held flat at zero. Natural gas futures (Henry Hub) were trading at $3.95/mmbtu by the end of last week. A little more than 10% of the production stream from the Bakken and Three Forks is attributable to natural gas and roughly half of that is NGLs.

McKenzie County continues to lead development with 66 rigs running. Dunn, Mountrail, and Williams counties are the only other counties with more than 20 rigs running each. View the full list below under the Bakken Drilling by County section.

Activity is dominated by horizontal drilling:

  • 171 rigs are drilling horizontal wells
  • 11 rigs are drilling directional wells
  • 0 rigs are drilling vertical wells

Bakken Oil & Gas News

Be sure to visit our Bakken Job Listings to search openings and come back weekly for updates or sign up for alerts - Daily or Weekly Email Alerts

Bakken Drilling by County


County State Previous Week Current Week County State Previous Week Current Week
MCKENZIE ND 63 66 DANIELS MT 0 0
WILLIAMS ND 33 32 DAWSON MT 0 0
MOUNTRAIL ND 30 30 FALLON MT 0 0
DUNN ND 23 23 SHERIDAN MT 0 0
DIVIDE ND 8 9 VALLEY MT 0 0
BURKE ND 5 7 WIBAUX MT 0 0
RICHLAND MT 5 4 GOLDEN VALLEY ND 0 0
BOTTINEAU ND 2 3 MCLEAN ND 0 0
ROOSEVELT MT 2 2 MERCER ND 0 0
BILLINGS ND 2 2 WARD ND 0 0
RENVILLE ND 2 2 MCHENRY ND 0 0
STARK ND 2 2

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.

North Dakota “Man-Rush”

Male Population in North Dakota Soars since Beginning of Boom
Bakken Oil Workers

Bakken Oil Workers | Click to Enlarge

The so-called “Man-Rush” is on in North Dakota, thanks to the development of the Bakken Shale formation.

Since the beginning of the boom in 2009, the number of men in North Dakota has jumped 14% (46,000), according to the U.S. Census Bureau. Overall, the state’s population has grown 12% during the same time frame, but men have accounted for two-thirds of that growth. The population of women has grown as well, but only by 9% (30,000).

Most North Dakota Jobs in Oil & Gas Industry Held by Men

Most of the Jobs in North Dakota’s burgeoning oil and gas industry are held by men. The primary reason for that is because much of the work involves hard manual labor jobs traditionally held by men (i.e. deckhand, roughneck, roustabout, pipe-fitter, etc.).

Loding Options Catered to Men

Some Lodging options are even referred to as Man Camps, which are specifically designed to host large numbers of oilfield workers. Recently, Target Logistics, a Boston-based builder and operator of housing projects primarily for the energy industry, secured a 30-million contract to provide lodging for Bakken Shale oilfield workers over the next three years.

Read more: New Bakken Man Camp Coming Soon

To read more about the North Dakota “Man-Rush”, and see how it compares to other booms, Click Here to view a study released by the Pew Research Center.

Whiting Petroleum Acquires Kodiak Oil & Gas – $3.8 Billion

Transaction Creates Largest Bakken Producer
Whiting Bakken Acreage Map

Whiting Bakken Acreage Map | Click to Enlarge

Whiting Petroleum announced on July 13, 2014, that it would acquire Kodiak Oil & Gas, in an all stock transaction, for $3.8 billion. The deal makes the combined company the largest Bakken/Three Forks producer, unseating Harold Hamm’s Continental Resources from the top spot.

Next to the Eagle Ford Shale in South Texas, the Bakken Shale is the most prolific shale play in the world, with daily oil production exceeding 1-million b/d. With Whiting’s acquisition of Kodiak, the company is positioning itself to be an even more formidable force in the Bakken.

In the first-quarter of 2014, Whiting and Kodiak had combined production of 107,000 boe/d, and officials indicate total 2014 production will be 152,000 boe/d. The combined company has 855,000 net acres and an inventory of 3,460 net drilling locations.

“The addition of Kodiak’s complementary acreage position (approx. 173,000 net acres) and substantial inventory of high return drilling locations will provide the opportunity to drive significant value growth for both Whiting and Kodiak shareholders through an acceleration in drilling and increase in operational efficiencies,” said Whiting CEO James Voulkner.
Kodiak Bakken Acreage Map

Kodiak Bakken Acreage Map | Click to Enlarge

Whiting officials said the deal is valued at $6 billion when Kodiak’s net debt of $2.2 billion is absorbed.

Kodiak shareholders will receive 0.177 share of Whiting stock in exchange for each of Kodiak common stock they hold, representing a value of $13.90 per share based on the closing price of Whiting shares on July 11, 2014.

The transaction is expected to close in the fourth quarter of 2014.

 

Read more at whiting.com

Bakken Shale Rig Count Increases by One to 177

Baytex Energy May Sell Bakken Assets
Baytex Energy Bakken Assets

Baytex Energy Bakken Assets | Click to Enlarge

The Bakken-Three Forks rig count increased by one to 177 rigs running across our coverage area by the end of last week. The NDIC notes 190 rigs are active in North Dakota, but around 18 of those are in the process of moving in and rigging up.

In recent Bakken news, Calgary-based Baytex Energy appears to be on the verge of divesting some of its assets, and the company’s Bakken acreage may soon be on the auction block. Baytex officials say the company conducted a portfolio review of assets late in the second quarter in response to a recent $2.8 billion acquisition in the Eagle Ford Shale. During that process certain assets were earmarked for divestment, which officials say would be used to pay down debt.

Read more: Baytex Energy May Sell Bakken Assets

The U.S. rig count increased by one to 1,875 rigs running by the end of last week. A total of 311 rigs were targeting natural gas (flat from the previous week) and 1,563 were targeting oil in the U.S. (one more than the previous week). The remainder were drilling service wells (e.g. disposal wells, injection wells, etc.). 179 rigs are running in the Williston Basin across MT, ND, and SD. 172 are in ND alone.

Not all rigs counted in our census are drilling for the Bakken, but it’s close. The NDIC estimates 95% or more of activity in this region targets the Bakken and Three Forks formations.

Note: The NDIC reports 190 rigs are active in North Dakota. That is 11 more than Baker Hughes reports in the Bakken area, and 18 more than the company reports in North Dakota. The difference is likely accounted for in the number of rigs actually working, rigs that might not be serviced by Baker Hughes AND rigs in areas outside of the Bakken fairway. On any given week, a certain number of rigs are in route to the next well location or idle waiting to drill the next well. The NDIC notes that around 18 rigs are in the process of moving in and rigging up.

Bakken Oil & Gas Rigs

The number of oil rigs increased by one to 177 rigs running by the end of the week . WTI oil prices decreased by ~$3 from the previous week, trading at $100.76/bbl on Friday afternoon. Williston Basin Sweet crude traded at $87.44/bbl on July 11th. The WTI-Brent closed up a bit, settling at ~$6 by the end of last week.

The natural gas rig count in the region held flat at zero. Natural gas futures (Henry Hub) were trading at $4.14/mmbtu by the end of last week. A little more than 10% of the production stream from the Bakken and Three Forks is attributable to natural gas and roughly half of that is NGLs.

McKenzie County continues to lead development with 63 rigs running. Dunn, Mountrail, and Williams counties are the only other counties with more than 23 rigs running each. View the full list below under the Bakken Drilling by County section.

Activity is dominated by horizontal drilling:

  • 164 rigs are drilling horizontal wells
  • 13 rigs are drilling directional wells
  • 0 rigs are drilling vertical wells

Bakken Oil & Gas News

Be sure to visit our Bakken Job Listings to search openings and come back weekly for updates or sign up for alerts - Daily or Weekly Email Alerts

Bakken Drilling by County


County State Previous Week Current Week County State Previous Week Current Week
MCKENZIE ND 64 63 DANIELS MT 0 0
WILLIAMS ND 32 33 DAWSON MT 0 0
MOUNTRAIL ND 30 30 FALLON MT 0 0
DUNN ND 23 23 SHERIDAN MT 0 0
DIVIDE ND 8 8 VALLEY MT 0 0
RICHLAND MT 5 5 WIBAUX MT 0 0
BURKE ND 5 5 GOLDEN VALLEY ND 0 0
ROOSEVELT MT 2 2 MCLEAN ND 0 0
BILLINGS ND 1 2 MERCER ND 0 0
BOTTINEAU ND 2 2 WARD ND 0 0
RENVILLE ND 1 2 MCHENRY ND 0 0
STARK ND 3 2

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 and/or Smith Service Co’s (Schlumberger) Smith Rig Count.

U.S. Leads World-Wide Oil Production

Bakken Contributes to Nearly 10% of U.S. Production
U.S. Oil Production

U.S. Oil Production | Click to Enlarge

The U.S. is now the world’s largest producer of oil, surpassing Russia and Saudi Arabia, according to Bank of America Corp. (BAC), as reported in Bloomberg.

U.S. crude oil output in the first quarter surpassed 11-million b/d, which was the highest volume produced by the country in 24 years. The U.S. is expected to hold the top spot through the end of the year, BAC officials said.

Most of that production is coming from North Dakota and Texas, which produced nearly half (48%) of all U.S. oil in April of 2014, according to the Energy Information Administration (EIA). Recently, the state of North Dakota hit the 1-million b/d mark for oil, nearly tripling its production over a three year period. The increase in production is directly related to the development of the Bakken Shale. Since April of 2011, production from the Bakken increased 19,000 b/d on average each month, according to the EIA.

Read more: North Dakota & Texas Make Up Half of U.S. Oil Production

According to the International Energy Agency (IEA), U.S. oil output will increase to 13.1 million b/d in 2019 and plateau. Most analysts agree the Bakken and Eagle Ford Shale plays, which are largely responsible for production in Texas and North Dakota, will peak around this time, and begin to decline.

Baytex Energy May Sell Bakken Assets

Analysts Say $375 Million Could Be Gained from Sale
Baytex Energy Bakken Assets

Baytex Energy Bakken Assets | Click to Enlarge

Calgary-based Baytex Energy appears to be on the verge of divesting some of its assets, and the company’s Bakken assets may soon be on the auction block.

Recently, Baytex added 22,200 net contiguous acres in South Texas’ Eagle Ford Shale through its $2.8 billion acquisition of Aurora Oil & Gas, which closed in June of 2014. Baytex officials say the company conducted a portfolio review of assets late in the second quarter in response to the Eagle Ford acquisition. During that process certain assets were earmarked for divestment, which officials say would be used to pay down debt.

Read more: Baytex Energy – Aurora Deal for Eagle Ford Assets – ~$2.6 Billion

Baytex has not disclosed any official word as to which assets, if any, may be divested from its portfolio. However, the Bakken assets may be a good candidate considering they make up only ~4% of the company’s current production. According to analyst commentary in a recent Bloomberg article, Baytex could generate $375 million from the sale of its Bakken assets.

At the end of 2013, the company commissioned contingent resource assessments for some of its assets, including the Bakken. The results revealed the Bakken had the lowest number of contingent resources compared to some of the company’s other assets.

Baytex’s Bakeen assets are located mostly in Divide County. By the end of 2014, the company plans to drill 15 (9.6 net) wells in the area.

Read more at baytexenergy.com

Bakken Shale Rig Count Stays Flat at 176

EIA Says North Dakota & Texas Make Up Nearly Half of U.S. Oil Production
U.S. Oil Production

U.S. Oil Production | Click to Enlarge

The Bakken-Three Forks rig count remained flat at 176 rigs running across our coverage area by the end of last week. The NDIC notes 190 rigs are active in North Dakota, but around 20 of those are in the process of moving in and rigging up.

In recent Bakken news, combined production from North Dakota and Texas made up nearly half of U.S. oil production according to the Energy Information Administration (EIA) in April of 2013.

Recently, the state of North Dakota hit the 1-million b/d mark for oil, nearly tripling its production over a three year period. The increase in production is directly related to the development of the Bakken Shale. Since April of 2011, production from the Bakken increased 19,000 b/d on average each month, according to the EIA.

Read more: North Dakota & Texas Make Up Half of U.S. Oil Production

The U.S. rig count increased by one to 1,874 rigs running by the end of last week. A total of 311 rigs were targeting natural gas (three less than the previous week) and 1,562 were targeting oil in the U.S. (four more than the previous week). The remainder were drilling service wells (e.g. disposal wells, injection wells, etc.). 178 rigs are running in the Williston Basin across MT, ND, and SD. 171 are in ND alone.

Not all rigs counted in our census are drilling for the Bakken, but it’s close. The NDIC estimates 95% or more of activity in this region targets the Bakken and Three Forks formations.

Note: The NDIC reports 190 rigs are active in North Dakota. That is 12 more than Baker Hughes reports in the Bakken area, and 19 more than the company reports in North Dakota. The difference is likely accounted for in the number of rigs actually working, rigs that might not be serviced by Baker Hughes AND rigs in areas outside of the Bakken fairway. On any given week, a certain number of rigs are in route to the next well location or idle waiting to drill the next well. The NDIC notes that around 20 rigs are in the process of moving in and rigging up.

Bakken Oil & Gas Rigs

The number of oil rigs remained flat at 176 rigs running by the end of the week . WTI oil prices decreased by ~$2 from the previous week, trading at $103.68/bbl on Friday afternoon. Williston Basin Sweet crude traded at $90.69/bbl on July 3rd. The WTI-Brent was about the same, settling at ~$7 by the end of last week.

The natural gas rig count in the region held flat at zero. Natural gas futures (Henry Hub) were trading at $4.29/mmbtu by the end of last week. A little more than 10% of the production stream from the Bakken and Three Forks is attributable to natural gas and roughly half of that is NGLs.

McKenzie County continues to lead development with 64 rigs running. Dunn, Mountrail, and Williams counties are the only other counties with more than 23 rigs running each. View the full list below under the Bakken Drilling by County section.

Activity is dominated by horizontal drilling:

  • 161 rigs are drilling horizontal wells
  • 15 rigs are drilling directional wells
  • 0 rigs are drilling vertical wells

Bakken Oil & Gas News

Be sure to visit our Bakken Job Listings to search openings and come back weekly for updates or sign up for alerts - Daily or Weekly Email Alerts

Bakken Drilling by County


County State Previous Week Current Week County State Previous Week Current Week
MCKENZIE ND 64 64 DANIELS MT 0 0
WILLIAMS ND 32 32 DAWSON MT 0 0
MOUNTRAIL ND 31 30 FALLON MT 0 0
DUNN ND 23 23 SHERIDAN MT 0 0
DIVIDE ND 8 8 VALLEY MT 0 0
RICHLAND MT 5 5 WIBAUX MT 0 0
BURKE ND 5 5 GOLDEN VALLEY ND 0 0
STARK ND 3 3 MCLEAN ND 0 0
ROOSEVELT MT 2 2 MERCER ND 0 0
BOTTINEAU ND 2 2 WARD ND 0 0
BILLINGS ND 1 1 MCHENRY ND 0 0
RENVILLE ND 0 1

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 and/or Smith Service Co’s (Schlumberger) Smith Rig Count.

Russian Hackers Mount Attacks on Western Oil & Gas Industry

Hackers Target Websites Viewed Often by Employees

The newest threat to the oil & gas industry could be hiding on one of your favorite web pages!

According to The New York Times, Russian hackers are using the web to gain access to the computer networks of hundreds of Western oil and gas companies to conduct industrial espionage. Attacks, which can come in the form of mass emails containing malicious links, are also hidden on web pages an employee views often. It’s called a “watering hole attack.” What happens is hackers infect a site with malicious software, and employees unknowingly download the malware when visiting the site, allowing hackers to gain access to the company’s computer network.

According to Symantec, a cyber security firm based in the U.S., the attackers known as “Dragonfly” or “Energetic Bear” have been around since 2011, and exhibit the hallmarks of a state-sponsored operation. In one of their attacks, the hackers hit a number of industrial control system (ICS) equipment providers, infecting their software with a remote access-type Trojan. This gave the hackers the means to mount sabotage operations against infected ICS computers, and even though no such action was taken, it represents a very real threat. For now, the primary goal of the hackers appears to be industrial espionage.

Russia’s Oil & Gas Industry

Russia’s industrial espionage campaign on the West is providing the country with valuable intelligence to further exploit their resources. According to the U.S. Energy Information Administration (EIA), Russia is the second-largest producer of dry natural gas and third-largest liquid fuels producer in the world. Russia’s economy is also highly dependent on its hydrocarbons, and oil and gas revenues, which account for more than 50% of the federal budget revenues.

Companies with operations in the Bakken Shale in North Dakota and the Eagle Ford Shale in South Texas could make excellent targets for Russian hackers. Over the past several years, technological advancements have abounded since development began in these plays began. It makes sense that the Russians would want to target these companies to gain access to privileged information.

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