North Dakota's Rig Count is Expected to be Choppy Going Forward

North Dakota's rig count will likely bounce up and down as oil prices oscilate around $80-90/bbl. Oil prices have recovered from below $80/bbl, but operated rig counts are showing a decline in activity in North Dakota.

"The largest drillers in the Bakken are all reducing their rig counts this month, although no one acknowledge a change in drilling plans," Sen said, citing a sharp drop in oil prices during June. That oil price drop cast doubts about the viability of shale production at prices below $80/bbl.

You can read more at ogj.com

Canadian Pacific - Smart Sand Partner to Supply Bakken Frack Sand

Canadian Pacific and Smart Sand are partnering to supply Northern White frac sand in the Bakken, Eagle Ford, Marcellus, and Utica shale plays. The first course of action being a transload facility in Makoti, ND, that will be in service early in 2013.

Smart Sand's primary facility, which opened in late June 2012 and is located on the CP rail line in Oakdale, Wisconsin, will supply premium Northern White frac sand in a broad range of mesh sizes to the new transload facility. Based on Smart Sand's initial processing capacity of more than one million tons per year, plus the company's extensive proven reserves, the facility will be able to quickly fulfill long- and short-term orders while providing direct rail access for unit trains.

Rangeland Energy's Bakken Shale COLT Rail Facility Open - June 11, 2012

Crude Oil Rail Car

The COLT (Crude Oil Loading Terminal) facility in North Dakota opened on June 11, 2012. COLT is operated by Rangeland Energy, LLC, and is the largest open access crude oil marketing terminal in the state. The facility provides marketing through unit trains and a 21-mile, 10-inch connector pipeline that ties into mulitple pipelines at Rangelands Dry Fork Terminal near Tioga. The pipeline provides direct access to both the Tesoro and Enbridge pipeline systems.

COLT's rail car loading facility is serviced by BNSF Railway. Storage and working capacity include:

• 720,000 barrels of working storage
• 120,000 barrels of tank storage
• Access to 120,000 barrels of tank storage at the Dry Fork Terminal
• Rail export capacity of 120,000 b/d
• Pipeline capacity to move 75,000 b/d

Rangeland has service agreements with both U.S. Oil Trading LLC (subsidiary of Astra Oil Trading N.V.) and Flint Hills Resources.

Read more about the company at rgldenergy.com

EOG Resources Planning 320 Acre Bakken Wells - Parshall Field

EOG Resources released a mixed bag of news for the Bakken in its year-end conference call. The company has successfully tested down-spacing to 320-acres in the Parshall Field of Mountrail County, but is also lowering its Bakken rig count to seven in 2012. EOG will drill 60 net wells in the Bakken and commence a secondary recovery pilot in its core area. The company reported 162 million boe of proved reserves in the Bakken/Three Forks at the end of 2011. It will be real interesting to see how secondary and even tertiary recovery will fair in the Bakken. Secondary recovery can as much as double the amount of hydrocarbon produced in traditional fields, but it could be much less in unconventional reservoirs like the Bakken.

During 2011, EOG continued infill drilling on its core acreage in the North Dakota Bakken Parshall Field, which it discovered in 2006. Although originally developed on 640-acre spacing, EOG has successfully tested 320-acre down-spacing in various areas and around the perimeters of the field. A recent well in Mountrail County, the Fertile 48-0905H, in which EOG has a 96 percent working interest, was completed at an initial rate of 1,324 Bopd. Also in Mountrail County, the Liberty 24-2531H and Liberty LR 20-26H were drilled on 320-acre spacing. The wells, in which EOG has 82 and 95 percent working interest, respectively, were turned to sales at initial crude oil rates of 1,507 and 1,165 Bopd, respectively. Over the course of 2012, EOG will continue its efforts to increase recovery of the oil-in-place on its Bakken acreage through further down-spacing tests and the initiation of a secondary recovery pilot project.

EOG simply hasn't been able to replicate the success of the Parshall Field in other areas of the play. Financial returns in other areas of the play might be great, but don't compare to wells in Mountrail County. In a year when e&p companies across the board have capital budgets that are pressured by low natural gas prices, the company has to focus on lease retention and the highest available returns across its portfolio.