Better Fill up today

[frawin]

I had heard about this in April and did quite a bit of research on the Bakken Formation and the Williston Basin.  Both areas are under current drilling.  Actually messaged Frank on this one because I wanted to buy stock in a couple of the companies that are doing extensive drilling.  Ended up picking up stock on two of the companies and it has done very well.

Problem is the oil is two miles deep, and also must be horizontally drilled.  A report on one of the companies I bought into estimated that each well drilled was running an average of 5 million dollars and they had drilled about 70 of them!!!  Takes money to make money.  Production has been good though, as in 22 months they have gotten over 5 million barrels off of the 72 wells.

Keep on pumping and drilling, my parachute car isn't built yet 

Dan, this article is about what you and I discussed sometime back, basically the pipelines are at capacity  and I don't think any of the Oil Companies want to spend Billions of Dollars  building a new mainline until they see who is going to win the election. If Obama wins and puts massive tax penalties on the industry projects like this will not get done. Hard to understand the Democrat Obama tax Philosyphy. Without additional pipeline capacity drilling will have to stop in this area and so will the movement of additional Canadian crude, I think this is a project that Sarah Palin could get going in the right direction.

N. Dakota oil pipeline capacity limited as production, imports climb

Nick Snow

Washington Editor

WASHINGTON, DC, Sept. 4 -- North Dakota crude oil production and imports from Canada exceed current pipeline capacity in the region, Federal Energy Regulatory Commission Chairman Joseph H. Kelliher told a US Senate subcommittee Sept. 3.

"Both domestic and Canadian crude oil production are increasing, exacerbating the competition for limited pipeline capacity. There have been additions to pipeline takeaway capacity in the region, not enough to limit constraints or accommodate future increases," he told the Senate Appropriations Committee's Energy and Water Subcommittee at a field hearing in Bismarck, ND.

FERC supports energy infrastructure development and has participated as a member of a crude oil market infrastructure task force that the Interstate Oil and Gas Compact Commission initially convened in 2006 to investigate Rocky Mountain crude oil market dynamics, Kelliher continued. "However, the parties themselves must resolve who will commit to support the development of new infrastructure and who is willing to pay for it," he said.

The subcommittee's chairman, Byron L. Dorgan (D-ND), said that he convened the hearing because he wanted to determine what steps will need to be taken to transport and refine the increasing amount of crude being produced from the Bakken Shale formation in western North Dakota.

"With the current infrastructure, it is a challenge to transport the oil from wellhead to refineries, both in and out of state, without experiencing a bottleneck. As this new oil is produced, we need to make sure the transportation infrastructure exists so that future oil production is not limited," he said.

Already increasing

Williston Basin oil production within the state and imports from Canada already put pressure on pipeline capacity, Kelliher said. North Dakota's oil production rose from 125,000 b/d in 2007 to 147,000 b/d in March, he noted. Existing pipelines are operating at full capacity, requiring that they apportion that capacity among shippers, he said.

Meanwhile, crude oil imports from Canada also have risen, according to Kelliher. Annual Alberta Basin oil production levels for 2007 published by the province's conservation board showed a 3% increase from 2006 to 1.86 million b/d, he said. "Significantly, Canadian imports are projected to reach 3.4 million b/d by 2017," he indicated.

He pointed out that imports from Canada currently comprise 20% of total US crude supplies and are the United States' largest foreign source. "We expect this trend to continue. These imports are reliable supplies from a friendly country and improve our energy security," Kelliher maintained.

"However, Canadian imports require space in the pipeline and can create bottlenecks in capacity that can limit the amount of crude oil that can be moved out of the North Dakota production region. Pipelines serving North Dakota are increasing their capacity; nevertheless, it is likely that with additional growth in North Dakota oil production and Canadian imports, the pipelines' proposed capacity increases still will not be adequate to transport North Dakota production without capacity prorationing among shippers seeking that capacity," he added.

Other scheduled witnesses at the hearing included Lynn D. Helms, director of the North Dakota Department of Mineral Resources; Harold G. Hamm, chairman and chief executive of Continental Resources Inc. in Enid, Okla.; Kevin Hatfield, regional director for Enbridge Pipelines Inc.'s North Dakota system, and State Rep. Shirley Meyer (D-Dickinson), co-chair of the Task Force to Establish a North Refinery.

[Diane Amberg]

When Sarah Palin was talking about her wish to get more drilling going in Alaska, she said the pipelines were only at half capacity and would actually flow better if there was more oil in them. Comment?

[frawin]

Diane, some areas of the line are insulated and buried , the insulation is required to keep the heated oil from defrosting or thawing the soil in the Tudra, some areas are elevated  due to the instability of the tundra. The line is at half or less capacity and I am sure all equipment will function more efficently, including the heating systems, pumps etc. at some optimum capacity that is more than half or less as it is operating now. Certainly a higher volume would reduce the fixed costs per barrel appreciably.  I am not sure how much infrastructure would be required to eventually move oil from the ANWR to the Alyeska System (yes that is the correct spelling for the system name, I think that was derived from an Alaskan Indian Native name), but I am sure it would be a very expensive project, the enviromental problems and requirements would be exstensive.

The 800-mile-long Trans Alaska Pipeline System is one of the largest pipeline systems in the world. Starting in Prudhoe Bay on Alaska's North Slope, TAPS stretches through rugged and beautiful terrain to Valdez, the northernmost ice-free port in North America. Since pipeline startup in 1977, Alyeska Pipeline Service Company, TAPS' operator, has successfully transported more than 15 billion barrels of oil.

TAPS Pipeline Reliability
July 100%

Year to Date 99.64%

There were no prorations during the month that impacted the reliability factor.
Barrels Pumped from Pump Station 1
July 20,144,458 BBLS *

Average
649,821 BPD **

Year to Date 150,646,173 BBLS *

YTD Average
  707,259 BPD ** 

[DanCookson]

Frank--I just did some reading on this earlier in the week when one of the companies I invested in suspended some of the new drilling they were planning because of pipeline restriction.  EOG is a big pumper up there (and everywhere for that matter).  They look to be on hold to see what plays out.

[frawin]

Dan, the EOG Management has been very sucessful in finding Natural Gas and are also doing very well finding Oil now. They should probably do a name change to get a better arms length from the old, now defunct parent, Enron. It is really a sad thing that projects like this are being delayed due to politics, I don't blame the investors for not wanting to invest if Obama is going to get elected. The Liberal left Democrats have never provided a comfortable investment climate for projects like this one.

[Diane Amberg]

Thanks Frank, I'm familiar with the Alyeska system. We drove part way up to Prudhoe Bay. It sure is beautiful wild and wooley country up there.

[dnalexander]

As of Saturday September 6 gas in Northern California dipped below $4.00 to $3.97. Basically down 70 cents over the last several weeks. Almost make you feel that gas is cheap.

David

[Dale Smith]

wow.... 3.97 in northern Cali.  I just paid $3.529 this morning in Atlanta.  It is a sad commentary when we think "Wow, only $3.529."  How quickly we get accustomed to the high prices.

[Diane Amberg]

We were $3.38 .9 this past week. "Getting used to it" was all part of the plan, unfortunately. Folks have to learn to redistribute their pieces of their own pie chart.

[srkruzich]

uhmm i'm not used to it!  I still bi*** and moan when i go to the pump, and i still voice my displeasure at the price when i go in to pay!