Heitkamp Reacts to Methane Ruling

September 8, 2015 Elizabeth Alford

North Dakota senator, Heidi Heitkamp, pushes back against the latest federal mandate to reduce methane emissions.

President Obama revealed a plan last month that would require oil and gas companies to cut methane pollution from drilling sites, distribution systems and in other areas of operation. This ruling is part of the President’s broad and aggressive plan to fight climate change, and many believe it would literally transform the energy industry.

The EPA said the proposed standards will reduce 340,000 to 400,000 short tons of methane in 2025, the equivalent of reducing 7.7 to 9 million metric tons of CO2. The agency estimates the rule will yield net climate benefits of $120-150 million in 2025.

Senator Henkamp is proposing bipartisan, “commonsense solutions” to reduce methane emissions including speeding up the permit approval process for gas-gathering lines and pipeline projects to reduce flaring.

“Heitkamp commented, “Energy production and clean air through reduced greenhouse gas emissions are not competing ideals, and efforts to reduce emissions don’t have to hurt our energy industry.”

Critics charged the administration with wanting to sabotage the industry and the jobs it has created. Oil and gas producers are already fatigued from months of low crude prices and adding potentially costly regulations at this time could have a dire impact on the jobs that depend on it. The EPA estimates that the ruling might cost the industry as much as $420 million.

Methane is the key component of natural gas and has a high impact on global warming — up to 25 times that of carbon dioxide. In April, a nationwide study showed that methane emissions across the United States had dropped significantly in the past two decades and are much lower than current Environmental Protection Agency estimates. Read more

Former Bakken Operator Pleads Not-Guilty

September 1, 2015 Elizabeth Alford

A Southlake, Texas man charged with illegally injecting saltwater into a disposal well in North Dakota pled not guilty to federal charges last week in federal court.

Jason Halek, a former operator of a saltwater well in southwest North Dakota, was indicted on 13 federal counts and fined a record $1.5 million in 2013 for putting drinking water at risk by illegally dumping more than 800,000 gallons of salty, oilfield wastewater into a former oil well in Stark County. He entered not guilty pleas to all charges including violating the Safe Drinking Water Act, making false statements and obstructing grand jury proceedings.

“The indictment claims Halik conspired to hinder by “craft, trickery, deceit, and dishonest means the lawful and legitimate functions of the EPA, in enforcing federal laws relating to the requirements of the North Dakota underground injection control program.”

Saltwater is considered an environmental hazard that can easily kill vegetation. Companies commonly dispose of the oil production byproducts by injecting them into an approved underground facility.

The EPA has been working for years to analyze the available scientific data to determine whether fracturing for oil and gas changes the quality or quantity of drinking water resources. New findings, released June 6th, reveal there are certain fracking activities that have the potential to impact drinking water resources including,

Water withdrawals in times of, or in areas with, low water availability
Spills of hydraulic fracturing fluids and produced water
Fracturing directly into underground drinking water resources
Below ground migration of liquids and gases
Inadequate treatment and discharge of wastewater

Bakken Oil Production Up Slightly

August 25, 2015 Elizabeth Alford

Crude Plunges to Six Year Low — Bakken Production

North Dakota saw increased production in July after slipping for two months.

In April, the EIA predicted that production had peaked across the U.S. at 9.7 million barrels per day, the highest level since 1971. This proved to be true as production fell in May by 50,000 barrels per day and in June, Bakken shale month-over-month crude oil production dipped 1.3%.

This week, Bentek Energy reported a slight increase in oil production for North Dakota in July, saying that the Bakken formation follows closely behind the Eagle Ford Basin in terms of efficiency gains and internal rates of return. Drill times in the Bakken dropped from about 15 days per well in late 2014 to about 13 days per well during the second quarter of this year.

“Bentek analyst, Sami Yahya, explained “Substantial cost savings protocols alongside reduced drill times have kept internal rates of return in the Bakken shale formation among the best in the country. Current rates of return in the Bakken shale formation are around 15%, which is comparable to the 18% found in the Eagle Ford Basin.”

Crude oil dropped below $40 this week, adding strain to a difficult situation. Second quarter earnings for many companies showed signs that they are shifting their priorities from growth to survival.

Shell: Profits fell sharply, resulting in cuts to company’s capital investment and an elimination 6,500 jobs
Chevron: Its upstream businesses were particularly hard hit and they will lay off roughly 2% of its global workforce
ExxonMobil: Profits fell 52% and company announced it is taking steps to mitigate the harsh climate for oil and gas majors and capital expenditures were cut 16% last quarter
BP: Revenue and profits were all lower than expected and company announced it is positioning itself for a period of weaker prices

Can Bakken Break Even at $30?

August 19, 2015 Elizabeth Alford

Crude oil has fallen to a six year low in recent weeks, but even at the current price of around $43, analysts speculate the Bakken will remain strong.

Related: Oil Plunges to Six Year Low

West Texas Intermediate crude is now down more than 30% in just the last few months after a 50% rebound earlier this spring. Bloomberg reported this week that a lower profitability point from producers has allowed U.S. oil production to remain near a 40-year high.

“Bloomberg Analyst, William Foile said, “A single break-even price doesn’t actually exist. Rather, what the model indicates is that at a realized oil price of $29.42, half of wells will generate returns exceeding 10%. This price is considerably lower than the $70 breakeven estimated by industry watchers at the start of the oil price slump.”

In McKenzie County, North Dakota, one estimate is that the median breakeven price is a little more than $29 a barrel. Producers are verifying this low price point including EOG Resources Inc., who says it can make a 30 percent after-tax return on $50 oil and Whiting Petroleum Corp., the largest Bakken producer, said it’s preparing to be able to grow production at $40 to $50 prices.

The federal Energy Information Administration (EIA) announced that it had lowered its 2016 forecast price for U.S. benchmark oil (Brent) by $8 to $54 per barrel in 2016 and its 2015 forecast by $6 to $49 per barrel. The agency said it expects Brent to average about $59 per barrel in 2016 and about $54 per barrel in 2015.

Continental Resources: Excellent Q2

August 11, 2015 Elizabeth Alford

EOG Releases 2015 Q1 Report — Continental Resources: 2015 Q2

The second quarter of 2015 delivered “excellent results” for Continental Resources, especially in light of the prevailing low crude prices.

Continental reported a Q2 net income of $0.4 million and anet production of 20.6 million Boe, or 226,547 Boe per day, a sequential increase of 10% from first quarter 2015 and 35% higher than second quarter 2014. This included 149,897 barrels of oil per day (66% of production) and 459.9 million cubic feet (MMcf) of natural gas per day (34% of production).

“Jack H. Stark, COntinental’s President & Chief Operating Officer said, “Looking to the second half of 2015, we expect production will decline slightly in the third quarter and level off in the fourth quarter, reflecting a lower level spend that we have planned. Our year-end 2015 exit rate is projected to be 210,000 barrels to 215,000 barrels of oil per day and there may be some upside to this number as efficiencies continued to build.”

Bakken Q2 Highlights Continental’s Bakken drilling program is focused on core leasehold in Williams, McKenzie, Mountrail and Dunn counties, targeting an average estimated ultimate recovery (EUR) of approximately 800,000 Boe per well. Other highlights include:

Production averaged 140,988 Boe per day an increase of 4% compared with first quarter 2015 and an increase of 30% compared with second quarter 2014.
Completed 56 net (159 gross) Middle Bakken and Three Forks wells
Operated an average of 10 rigs and three completion crews in the Bakken
The company estimates it has at least 10 years of drilling inventory, with wells averaging 775,000 Boe per well in EUR, in the core of the Bakken.
95 gross operated Bakken wells drilled and waiting on first production, compared to 115 at the end of first quarter 2015