Hess Capital Budget for 2014 Flat in Bakken at $2.2 Billion

January 28, 2014 Kirk Eggleston

Hess plans on committing nearly half of its $5.8 billion capital budget to unconventional shale resources in 2014, with $2.2 billion slated for development of the Bakken. That's the same figure Hess earmarked for development spending in the formation for 2013, but the company's strategic focus is slightly different this year as shale costs shrink.

Although overall investments in infrastructure are down slightly, Hess still plans on allotting $350 million for completing the expansion of the Tioga Gas Plant and associated pipeline and compression projects.

Also read:Alliance Pipeline's Tioga Lateral Is Online & Moving Gas Onto Its Mainline System

“Greg Hill, President and COO, said, “as a result of lower well costs and decreased investments in infrastructure projects we plan to operate 17 rigs versus 14 last year and to bring 225 new operated wells online in 2014 compared to 168 in 2013.”

The other nearly 10% of Hess's capital budget for unconventional shale resources will be in the Utica Shale in Ohio, with $550 million for drilling approximately 35 wells targeting the wet gas window. That's up $95 million from the company's investment in the area last year, but that does not necessarily mean that the company's focus is shifting away from the Bakken. It does indicate however that Hess is diversifying its interests in unconventional shale resources.

Read the full release at hess.com

Bakken Rig Count 176 - Koch Cancels Bakken Pipeline - Jan 24, 2014

January 27, 2014 R.T. Dukes

The Bakken-Three Forks rig count increased by one to 176 running over the past week. The NDIC notes around 187 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, Koch cancelled its proposed "Dakota Express Pipeline." The Koch cancellation is surprising considering there are more than 500,000 b/d of oil moving by rail out of the basin per day at current estimates. Read more here: Koch Cancels Proposed Bakken Pipeline

The U.S. rig count stayed flat at 1,777 running over the past week. A total of 356 rigs are targeting natural gas (9 less than last week) and 1,416 are targeting oil in the U.S. (8 more than last week). The remainder are drilling service wells (e.g. disposal wells, injection wells, etc.). 179 rigs are running in the Williston Basin across MT, ND, and SD. That's up one from last week.

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 187 rigs are active in North Dakota. That is 11 more than Baker Hughes reports in the Bakken area. 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 Crime Causes Feud Between Senators

January 24, 2014 Kirk Eggleston

Does it seem like North Dakota and Montana have turned into the wild West over the past several years? Some folks may claim that it has, especially as crime rates continue to rise in both states. Drug offenses and a slew of other illicit activities remain an issue of great concern. In July of 2013, 2 FBI agents and an agency intelligence specialist were posted in Sidney, MT, approximately forty-five miles away from where they were originally to be posted in Williston, ND, due to a housing shortage.

Now, there is a battle brewing between senators from both North Dakota and Montana, because of the possibility that the FBI agents could be moved back to Williston. In a joint letter to FBI Director, James Covey, Senators John Hoeven and Heitkamp, requested that the agents return to Williston. Senator Jon Tester of Montana did not agree, and said the following in his letter to Covey:

“Moving agents from eastern Montana to western North Dakota is not an effective response to our region’s growing problems.”

— Senator Jon Tester

In 2008 when oil prices skyrocketed, cities like Williston, North Dakota and Sidney, Montana, changed overnight, as advanced drilling technologies (i.e. horizontal drilling) allowed oil companies to access the oil rich Bakken Shale. Over time, motorhomes and man camps have become a regular sight, as thousands of people have flocked to the area in search of well-paying jobs.

There's no doubt that cities like Williston, ND and Sidney, MT could easily be characterized as a boomtowns. Webster's Dictionary simply defines this as "a town that experiences a sudden growth in business and population." When that happens, what follows is generally an increase in crime-related activity.

It remains to be seen where the federal agents will be permanently posted, but one thing is certain, and that is a federal presence will continue to be necessary in the region.

Stallion's $2.6 Million Temporary Housing Fine Reduced

January 17, 2014 R.T. Dukes

The Williams County Commission moved on Tuesday to approve a settlement agreement with Stallion Oilfield Services Ltd., over a proposed $2.6 million fine for temporary housing permit violations. The agreement comes after Stallion took legal action to dispute what the company considered an excessive penalty. According to Stallion representatives, the fine will now be reduced to $26,000.

The original conditional use permit, which accounts for temporary housing, was granted to Stallion in September of 2013, and allowed for twenty-five (25) housing units. The fine was levied by the commission due to conflicting definitions of what makes up a housing unit. The company considered connected units as one unit, but the county disagreed.

“The real difference is in the counting.”

— Stallion Attorney, Levi Anders

Stallion claims that no improper actions were taken in its implementation of its temporary housing units. The conditional use permit was reinstated for the company until May 1, 2014.

Bakken Permitting on BLM Lands Should Pick Up in 2014

January 16, 2014 R.T. Dukes

Legislation aimed at improving the permitting process in the Bakken will now be in full effect, after being signed by President Barack Obama and passing approval in the US House and Senate.

The Bureau of Land Management Streamlining Act, authored by North Dakota Senators, Heidi Heitkamp and John Hoeven, will expand the service area of the Miles City, Montana office to process oil and gas production permits in western North Dakota.

The Impact on Permitting in the Bakken

“The legislation is about helping to cut red tape and making the federal permitting process more timely and efficient.”

— Senator Hoeven

It currently takes anywhere between 6 - 9 months to receive a permit on Bureau of Land Management (BLM) lands; however, on private lands it takes on average only 10 days. As of December 2013, 525 permits were awaiting approval on BLM lands. With the new legislation, anticipated efficiency and economic benefits are expected for both operators in the area and the State of North Dakota.