WSJ: Gas drilling boom brings jobs, but how many?
The Wall Street Journal tried to nail down the number of jobs the natural gas drilling boom brings to an area, specifically Pennsylvania.
But tallying up the jobs isn’t as easy as it sounds:
“All sides agree that natural-gas development in the state has produced new jobs for laborers at well sites, truck drivers to haul equipment and waste water, and even engineers and accountants. But there is less agreement about how to count and just who to count when it comes to Marcellus-related job creation, so estimates vary widely.
Matt Pitzarella, a spokesman for gas producer Range Resources Corp., said a precise statewide count is tough because many of the new jobs are scattered across construction, trucking and other companies that serve the gas industry.”
While the article looks at Pennsylvania, the same can be said about Texas. How many jobs are being created by the natural gas boom?
Monday, August 8, 2011
Report: Bakken boom highlights U.S. potential of oil shales
Report: Bakken boom highlights U.S. potential of oil shales - 8/3/2011
The recent sharp rise in crude production from Bakken shale in the northern U.S. underscores the potential of emerging oil shale plays to increase domestic energy supplies, much in the same way natural gas shales from Texas to New York have boosted output, says a new report by an oil industry-backed group.
Oil production in North Dakota, which accounts for about 75 percent of Bakken output, has more than doubled since 2008 and now hovers around 350,000 barrels per day. The increase has made North Dakota the nation’s fourth-largest oil-producing state, representing about 6 percent of U.S. oil output, the report by the non-profit Energy Policy Research Foundation said.
With investment and drilling rising, Bakken production could surpass 700,000 barrels per day within a few years and top 10 percent of domestic crude output, the report said.
The U.S. Geological Survey estimates 4.3 billion barrels of oil can be recovered using today’s technology in the Bakken shale, which extends beyond North Dakota into eastern Montana and neighboring territories of Saskatchewan and Manitoba in Canada. But producers and local officials believe the estimate is low and that recoverable resources could be more than double that amount.
The report says the success in the Bakken holds promise for other emerging shale oil plays in the U.S., including the Niobrara play in Colorado and Wyoming and the Eagle Ford play in south Texas.
But it also notes challenges in oil shale expansion, including rising well development costs and environmental issues such as the large quantities of water required to extract oil from the tight rock formations.
The recent sharp rise in crude production from Bakken shale in the northern U.S. underscores the potential of emerging oil shale plays to increase domestic energy supplies, much in the same way natural gas shales from Texas to New York have boosted output, says a new report by an oil industry-backed group.
Oil production in North Dakota, which accounts for about 75 percent of Bakken output, has more than doubled since 2008 and now hovers around 350,000 barrels per day. The increase has made North Dakota the nation’s fourth-largest oil-producing state, representing about 6 percent of U.S. oil output, the report by the non-profit Energy Policy Research Foundation said.
With investment and drilling rising, Bakken production could surpass 700,000 barrels per day within a few years and top 10 percent of domestic crude output, the report said.
The U.S. Geological Survey estimates 4.3 billion barrels of oil can be recovered using today’s technology in the Bakken shale, which extends beyond North Dakota into eastern Montana and neighboring territories of Saskatchewan and Manitoba in Canada. But producers and local officials believe the estimate is low and that recoverable resources could be more than double that amount.
The report says the success in the Bakken holds promise for other emerging shale oil plays in the U.S., including the Niobrara play in Colorado and Wyoming and the Eagle Ford play in south Texas.
But it also notes challenges in oil shale expansion, including rising well development costs and environmental issues such as the large quantities of water required to extract oil from the tight rock formations.
How Large, New Shale Oil Formations around the Globe Are Estimated
How Large, New Shale Oil Formations around the Globe Are Estimated
by Keith Schaefer on March 17, 2011
How much oil is there in newly economic shale oil deposits around the world?
We won’t know that for 50 years or more, but it’s not stopping energy companies from publicizing some extremely large prospective resource estimates – like, tens of billions of barrels of oil – with almost no data to back it up, and only one similar play on earth with any operating history. A prospective resource is an estimate of the amount of oil that might be the recoverable volume of oil in an area.
Investors have certainly made tens of billions of dollars in profits on that one (and only producing) shale oil play – the Bakken in North Dakota/Saskatchewan.
And investors need to understand the risks that goes along with the big numbers they read, says Robin Bertram, Vice President at AJM Petroleum Consultants, one of the Big 4 reservoir engineering companies in Canada.
“They need to know what a lot of the contingencies are in shales and unconventional plays, and not just get excited about big volumes. When we talk about prospective resources we have to point out that even though the numbers look big and promising, you could end up with significantly less than the estimate.”
All that Bakken wealth creation has both the industry and investors very excited about finding huge new shale oil plays around the globe now.
And they are being found.
TAG Oil (TAO-TSXv) has an independent report that says the “best case” resource estimate on their shale oil play in New Zealand could be 12 billion barrels of oil with a “high case” of 37 billion barrels – and that’s only on a fraction of their land. There are three historical drill holes here. Oh, and geologically it looks just like the Bakken, and they plan to drill it this year.
The “best case” is also called “P50,” or oil resources that have a 50% chance of actually being in place.
Toreador Resources (TRGL-NASD) has an independent report that says the Paris Basin in France where it is operating has generated 100 billion barrels of oil, 12 billion of which could be on their property. There are 22 drill holes of consequence here. Oh, and geologically it looks like the Bakken, and they plan to drill it this year.
PetroFrontier (PFC-TSX) has an independent report that says it could have 26.4 billion barrels of oil in its “best case” at the Arthur Creek shale play in Australia. There are 15 historical wells which may show the oil charged shale. Oh, and geologically it looks just like the Bakken, and they plan to drill it this year.
Do you see a theme developing in how companies are promoting their early stage projects?
Analysts are getting in on the big numbers too: one analyst said TAG, then $5, could have a Net Asset Value (NAV) of $224 a share in an “unrisked” valuation, which means if they hit oil on 100% of their wells. Another analyst said PetroFrontier could have an NAV of $168/share “unrisked.” Most intermediate sized oil producers in this energy bull market trade at 1X NAV or a bit better. None of these analysts expect anything close to 100% success, but it’s a figure that shows the size potential of the play.
All these big numbers – in potential resources and potential stock values – is causing some large speculative premiums to enter these stocks. Toreador was trading as high as 6x its NAV recently; TAG trades at least twice its NAV and PetroFrontier is trading just under 3x its NAV.
Now, I own TAG and Toreador, and I don’t want readers to think I’m being negative – I just want everyone to understand what they’re reading. I WANT to invest in juniors that have an unrisked NAV many times higher than the current stock price. That means if they hit on their exploration, the stock is likely to go A LOT higher.
Independent evaluators like AJM take many data points into calculating prospective resource estimates in the early days of a play – mostly from historical drill hole data and any core, that may be available. There is the obvious estimated length and width, or aerial extent of the formation, and the “pay” thickness – how thick is the formation, and the Total Organic Content, which makes up the oil or gas, and the porosity of the formations – how much room is there between the grains of sand or rock.
All this data and more is given to the evaluator, and they also look at what other geologically similar deposits have produced (in these cases, there is ONLY the Bakken), and how much oil was actually recovered out of these deposits (the Bakken) to come up with an early stage prediction of the resource potential of the shale formation.
“Early in the development of a petroleum reservoir we could expect to see a very broad range of estimates of the volume(s) within the reservoir,” Bertram writes. “Understanding that there is a high level of uncertainty in the early life of a reservoir, it would make sense that companies have large volumes in their resource estimates. But investors need to be equally aware of what the minimum volumes could be, as those volumes are just as possible as the high volumes in the early life of a reservoir.”
Bertram says one of the questions that all evaluators wrestle with is – how far can you extend a discovered resource from a drill hole? While these shale plays have shown themselves to be very consistent over tens of kilometres, they can also be patchy and it’s just a statistical guess that will get more refined each passing year with more data. (Geostaticians in the mining sector do the same thing – how far can you extend the grade of the mineral around a drill hole.)
Remember, the very first shale play was the Barnett in Texas, and that only started producing about 12 years ago. Getting oil and gas out of rock is the single largest and most important advancement in the energy industry since the age of oil began 150 years ago, and it’s still in its infancy.
What’s more, the technology that is liberating all the oil and gas from the shale – hydraulic fracturing, or fracking – is still being improved upon every year. So that creates a moving target for evaluators trying to guess a prospective resource.
by Keith Schaefer on March 17, 2011
How much oil is there in newly economic shale oil deposits around the world?
We won’t know that for 50 years or more, but it’s not stopping energy companies from publicizing some extremely large prospective resource estimates – like, tens of billions of barrels of oil – with almost no data to back it up, and only one similar play on earth with any operating history. A prospective resource is an estimate of the amount of oil that might be the recoverable volume of oil in an area.
Investors have certainly made tens of billions of dollars in profits on that one (and only producing) shale oil play – the Bakken in North Dakota/Saskatchewan.
And investors need to understand the risks that goes along with the big numbers they read, says Robin Bertram, Vice President at AJM Petroleum Consultants, one of the Big 4 reservoir engineering companies in Canada.
“They need to know what a lot of the contingencies are in shales and unconventional plays, and not just get excited about big volumes. When we talk about prospective resources we have to point out that even though the numbers look big and promising, you could end up with significantly less than the estimate.”
All that Bakken wealth creation has both the industry and investors very excited about finding huge new shale oil plays around the globe now.
And they are being found.
TAG Oil (TAO-TSXv) has an independent report that says the “best case” resource estimate on their shale oil play in New Zealand could be 12 billion barrels of oil with a “high case” of 37 billion barrels – and that’s only on a fraction of their land. There are three historical drill holes here. Oh, and geologically it looks just like the Bakken, and they plan to drill it this year.
The “best case” is also called “P50,” or oil resources that have a 50% chance of actually being in place.
Toreador Resources (TRGL-NASD) has an independent report that says the Paris Basin in France where it is operating has generated 100 billion barrels of oil, 12 billion of which could be on their property. There are 22 drill holes of consequence here. Oh, and geologically it looks like the Bakken, and they plan to drill it this year.
PetroFrontier (PFC-TSX) has an independent report that says it could have 26.4 billion barrels of oil in its “best case” at the Arthur Creek shale play in Australia. There are 15 historical wells which may show the oil charged shale. Oh, and geologically it looks just like the Bakken, and they plan to drill it this year.
Do you see a theme developing in how companies are promoting their early stage projects?
Analysts are getting in on the big numbers too: one analyst said TAG, then $5, could have a Net Asset Value (NAV) of $224 a share in an “unrisked” valuation, which means if they hit oil on 100% of their wells. Another analyst said PetroFrontier could have an NAV of $168/share “unrisked.” Most intermediate sized oil producers in this energy bull market trade at 1X NAV or a bit better. None of these analysts expect anything close to 100% success, but it’s a figure that shows the size potential of the play.
All these big numbers – in potential resources and potential stock values – is causing some large speculative premiums to enter these stocks. Toreador was trading as high as 6x its NAV recently; TAG trades at least twice its NAV and PetroFrontier is trading just under 3x its NAV.
Now, I own TAG and Toreador, and I don’t want readers to think I’m being negative – I just want everyone to understand what they’re reading. I WANT to invest in juniors that have an unrisked NAV many times higher than the current stock price. That means if they hit on their exploration, the stock is likely to go A LOT higher.
Independent evaluators like AJM take many data points into calculating prospective resource estimates in the early days of a play – mostly from historical drill hole data and any core, that may be available. There is the obvious estimated length and width, or aerial extent of the formation, and the “pay” thickness – how thick is the formation, and the Total Organic Content, which makes up the oil or gas, and the porosity of the formations – how much room is there between the grains of sand or rock.
All this data and more is given to the evaluator, and they also look at what other geologically similar deposits have produced (in these cases, there is ONLY the Bakken), and how much oil was actually recovered out of these deposits (the Bakken) to come up with an early stage prediction of the resource potential of the shale formation.
“Early in the development of a petroleum reservoir we could expect to see a very broad range of estimates of the volume(s) within the reservoir,” Bertram writes. “Understanding that there is a high level of uncertainty in the early life of a reservoir, it would make sense that companies have large volumes in their resource estimates. But investors need to be equally aware of what the minimum volumes could be, as those volumes are just as possible as the high volumes in the early life of a reservoir.”
Bertram says one of the questions that all evaluators wrestle with is – how far can you extend a discovered resource from a drill hole? While these shale plays have shown themselves to be very consistent over tens of kilometres, they can also be patchy and it’s just a statistical guess that will get more refined each passing year with more data. (Geostaticians in the mining sector do the same thing – how far can you extend the grade of the mineral around a drill hole.)
Remember, the very first shale play was the Barnett in Texas, and that only started producing about 12 years ago. Getting oil and gas out of rock is the single largest and most important advancement in the energy industry since the age of oil began 150 years ago, and it’s still in its infancy.
What’s more, the technology that is liberating all the oil and gas from the shale – hydraulic fracturing, or fracking – is still being improved upon every year. So that creates a moving target for evaluators trying to guess a prospective resource.
Sunday, August 7, 2011
Oil creates 'overnight millionaires' in N.D.
Oil creates 'overnight millionaires' in N.D.
Wealth brings bling to the prairie, but folks vow to stay true to their roots
The Associated Press
updated 6:54 p.m. PT, Mon., June. 30, 2008
BEULAH, N.D. - Oscar Stohler was raised in a sod house in western North Dakota and ranched there for nearly seven decades. He never gave much thought to what lay below the grass that fattened his cattle.
When oilmen wanted to drill there last year, Stohler, 83, doubted oil would be found two miles underground on his property. He even joked about it.
"I told them if they hit oil, I was going to buy a Cadillac convertible and put those big horns on the front and wear a 10-gallon hat," Stohler recalled.
He still drives his old pickup and wears a mesh farm cap — but it's by choice.
In less than a year, Stohler and his wife, Lorene, 82, have become millionaires from the production of one well on their land near Dunn Center, a mile or so from the sod home where Oscar grew up. A second well has begun producing on their property and another is being drilled — all aimed at the Bakken shale formation, a rich deposit that the U.S. Geological Survey calls the largest continuous oil accumulation it has ever assessed.
‘Overnight millionaires’
Landowners in western North Dakota have a much better chance of striking it rich from oil than they do playing the lottery, say the Stohlers. Some of their neighbors in the town of about 120, from bar tenders to Tupperware salespeople, have become "overnight millionaires" from oil royalty payments.
"It's the easiest money we've ever made," said Lorene Stohler, who worked for decades as a sales clerk at a small department store.
State and industry officials say North Dakota is on pace to set a state oil-production record this year, surpassing the 52.6 million barrels produced in 1984. A record number of drill rigs are piercing the prairie and North Dakota has nearly 4,000 active oil wells.
The drilling frenzy has led companies to search for oil using horizontal drilling beneath Parshall, a town of about 980 in Mountrail County, and under Lake Sakakawea, 180-mile-long reservoir on the Missouri River.
"I have heard, anecdotally, that there is a millionaire a day being created in North Dakota," said Ron Ness, president of the North Dakota Petroleum Council.
Kathy Strombeck, a state Tax Department analyst, said the number of "income millionaires" in North Dakota is rising.
The number of taxpayers reporting adjusted gross income of more than $1 million in North Dakota rose from 266 in 2005 to 388 in 2006, Strombeck said. The 2007 numbers won't be known until October, she said.
Incomes on the upswing
Bruce Gjovig, director of the University of North Dakota's Center for Innovation, said his informal survey estimates the number of new millionaires in Mountrail County, one of the biggest drilling areas of the Bakken, may be as many as 2,000 — or nearly a third of the county's population — in the next three to five years.
North Dakota's per capita income in 2007 was $36,846, ranking the state 30th in the nation and up from 42nd in 1997, said Richard Rathge, the state Data Center director and North Dakota demographer.
"The two main drivers are energy and agriculture income," Rathge said. The increasing wealth in the state from oil should push the average annual wage in North Dakota, he said.
The oil boom has spurred several "Jed Clampett-like" tales of ordinary folks getting rich, said Tom Rolfstad, the economic development director for the city of Williston.
Rolfstad said he hasn't spotted any Ferraris or Rolls Royces in town, though several people can afford them now.
"I'm seeing a lot more big, shiny gas-guzzling pickups," he said.
Staying true to their roots
Several homes that cost more than a million dollars also are being built in Williston, he said. The community of about 12,500 people is perhaps best known as the hometown of NBA coach Phil Jackson.
Most people "don't want people to know how much money they got and they don't want to be tagged with being wealthy — they want to be themselves," Rolfstad said.
Oscar and Lorene Stohler said their newly found wealth hasn't changed them.
"We still know what tough times are," Oscar said. "We grew up in the Dirty '30s."
"We put our kids through college without that oil money," Lorene said.
The couple moved a few miles east to Beulah and paid cash for their new home, the first one they have owned. They have established trust accounts for their four children.
Lorene said the only thriftless purchase was an automatic sprinkler system for her flowers that surround the couple's new home. And Oscar bought a $1,000 ring for his wife to celebrate their 60th wedding anniversary.
"We got enough now to buy new stuff," Lorene said, "but we like our old stuff."
Wealth brings bling to the prairie, but folks vow to stay true to their roots
The Associated Press
updated 6:54 p.m. PT, Mon., June. 30, 2008
BEULAH, N.D. - Oscar Stohler was raised in a sod house in western North Dakota and ranched there for nearly seven decades. He never gave much thought to what lay below the grass that fattened his cattle.
When oilmen wanted to drill there last year, Stohler, 83, doubted oil would be found two miles underground on his property. He even joked about it.
"I told them if they hit oil, I was going to buy a Cadillac convertible and put those big horns on the front and wear a 10-gallon hat," Stohler recalled.
He still drives his old pickup and wears a mesh farm cap — but it's by choice.
In less than a year, Stohler and his wife, Lorene, 82, have become millionaires from the production of one well on their land near Dunn Center, a mile or so from the sod home where Oscar grew up. A second well has begun producing on their property and another is being drilled — all aimed at the Bakken shale formation, a rich deposit that the U.S. Geological Survey calls the largest continuous oil accumulation it has ever assessed.
‘Overnight millionaires’
Landowners in western North Dakota have a much better chance of striking it rich from oil than they do playing the lottery, say the Stohlers. Some of their neighbors in the town of about 120, from bar tenders to Tupperware salespeople, have become "overnight millionaires" from oil royalty payments.
"It's the easiest money we've ever made," said Lorene Stohler, who worked for decades as a sales clerk at a small department store.
State and industry officials say North Dakota is on pace to set a state oil-production record this year, surpassing the 52.6 million barrels produced in 1984. A record number of drill rigs are piercing the prairie and North Dakota has nearly 4,000 active oil wells.
The drilling frenzy has led companies to search for oil using horizontal drilling beneath Parshall, a town of about 980 in Mountrail County, and under Lake Sakakawea, 180-mile-long reservoir on the Missouri River.
"I have heard, anecdotally, that there is a millionaire a day being created in North Dakota," said Ron Ness, president of the North Dakota Petroleum Council.
Kathy Strombeck, a state Tax Department analyst, said the number of "income millionaires" in North Dakota is rising.
The number of taxpayers reporting adjusted gross income of more than $1 million in North Dakota rose from 266 in 2005 to 388 in 2006, Strombeck said. The 2007 numbers won't be known until October, she said.
Incomes on the upswing
Bruce Gjovig, director of the University of North Dakota's Center for Innovation, said his informal survey estimates the number of new millionaires in Mountrail County, one of the biggest drilling areas of the Bakken, may be as many as 2,000 — or nearly a third of the county's population — in the next three to five years.
North Dakota's per capita income in 2007 was $36,846, ranking the state 30th in the nation and up from 42nd in 1997, said Richard Rathge, the state Data Center director and North Dakota demographer.
"The two main drivers are energy and agriculture income," Rathge said. The increasing wealth in the state from oil should push the average annual wage in North Dakota, he said.
The oil boom has spurred several "Jed Clampett-like" tales of ordinary folks getting rich, said Tom Rolfstad, the economic development director for the city of Williston.
Rolfstad said he hasn't spotted any Ferraris or Rolls Royces in town, though several people can afford them now.
"I'm seeing a lot more big, shiny gas-guzzling pickups," he said.
Staying true to their roots
Several homes that cost more than a million dollars also are being built in Williston, he said. The community of about 12,500 people is perhaps best known as the hometown of NBA coach Phil Jackson.
Most people "don't want people to know how much money they got and they don't want to be tagged with being wealthy — they want to be themselves," Rolfstad said.
Oscar and Lorene Stohler said their newly found wealth hasn't changed them.
"We still know what tough times are," Oscar said. "We grew up in the Dirty '30s."
"We put our kids through college without that oil money," Lorene said.
The couple moved a few miles east to Beulah and paid cash for their new home, the first one they have owned. They have established trust accounts for their four children.
Lorene said the only thriftless purchase was an automatic sprinkler system for her flowers that surround the couple's new home. And Oscar bought a $1,000 ring for his wife to celebrate their 60th wedding anniversary.
"We got enough now to buy new stuff," Lorene said, "but we like our old stuff."
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