Bill Barrett Corporation Gets Permit For Toole County Well: Weekly Oil Report

A rig drilling along the Eastern Slope. Sun Times photo by Darryl L. Flowers

Simmes Ranch 41-11-36-3WH to target “Exshaw Shale”

Compiled by Darryl L. Flowers

New Locations – Horizontal Wells

Richland County is “Rockin’ the Bakken” again, with three new Horizontal wells approved. Whiting Oil and Gas Corporation was approved for the Kittleson Federal 14-9-1H. The well has a Surface Hole Location (SHL) at SW SW 9-26N-57E (50 FSL/965 FWL) and a Probable Bottom Hole Location (PBHL) of 20,499 feet at 4-26N-57E (240 FNL/660 FWL).

Continental Resources Inc. was greenlighted for two wells. The Gidley 1-18H has an SHL at SE SW 18-25N-52E (335 FSL/1980 FWL) and a PBHL of 13,221 feet at NE NW 18-25N-52E (200 FNL/1980 FWL). The Earl-Reimann 4 HSU has an SHL at SE SE 14-23N-55E (240 FSL/298 FEL) and a PBHL of 20,135 feet at SE SE 26-23N-55E (660 FSL/0 FEL).

Re-Issued Locations

In Fallon County, Fidelity Exploration & Production Co. was approved for three Re-Issued locations: the Fee-BR 2847, with an SHL at NE SE 29-5N-61E (2612 FSL/1293 FEL); the Fee-BR 2848, with an SHL at NW SW 29-5N-61E (2612 FSL/1227 FWL) and the Fee-BR 2849, with an SHL at SE SW 29-5N-61E (1273 FSL/2569 FWL). All three wells will target the Eagle Formation at a Proposed Depth of 2,000 feet. The wells are in the Cedar Creek Field.

In Glacier County, Anschutz Exploration Corporation was issued a permit for the South Fork 1-29H-34-12. The well has an SHL at SE SE 29-34N-12W (785 FSL/785 FEL) and a PBHL of 16,140 feet at SW NE 20-34N-12W (1601 FNL/1641 FEL). The South Fork will aim for the Cretaceous Undifferentiated.

In Powder River County, Denbury Onshore, LLC won approval of two permits, both in the Bell Creek Field. The Unit 3116R will have an SHL at SE SE 31-8S-54E (756 FSL/552 FEL) and a Proposed Depth of 4,772 feet; the BCUD 5614R will have an SHL at SE SW 6-9S-54E (738 FSL/1854 FWL) and a Proposed Depth of 4,800 feet. Both wells will target the Skull Creek Formation.

In Sheridan County, Marathon Oil Company was approved for two wells, both aiming for the Bakken Formation. The Bryon Hendrickson 21-18H has an SHL at NE NW 18-31N-59E (369 FNL/1770 FWL) and a PBHL of 19,391 feet at SE SW 19-31N-59E (250 FSL/1520 FWL) and the Haral Hoff 41-30H has an SHL at NE NE 30-31N-59E (297 FNL/671 FEL) and a PBHL of 19,691 feet at SW SE 31-31N-59E (250 FSL/1520 FEL).

In Toole County, Bill Barrett Corporation was greenlighted for the Simmes Ranch 41-11-36-3WH. The well has an SHL at NE NE 11-36N-3W (400 FNL/735 FEL) and a PBHL of 7,360 feet at SE SE 11-36N-3W (400 FSL/735 FEL), targeting the Exshaw Shale.

Permit Modifications / Corrections

A permit was issue to Slawson Exploration Company Inc. for the Scavenger 1-28H in Richland County. The well has an SHL at NE NE 28-24N-52E (280 FNL/350 FEL) and two laterals with PBHLs of 13,454 feet at SE SE 28-24N-52E (250 FSL/750 FEL) and of  13,604 feet at NW NW 28-24N-52E (750 FNL/250 FWL). Both laterals tap into the Bakken Formation.

Completions

In Richland County, Shadwell Resources Group, LLC reported the completion of the Velma SWD 1-10H, with an SHL at NW NW 10-23N-58E (350 FNL/750 FWL).

XTO Energy, Inc. reported the completion of two Richland County wells. The Beagle 12X-17, has an SHL at SW NW 17-23N-59E (2290 FNL/300 FWL) and a BHL of 19,884 feet at SE NE 16-23N-59E (2077 FNL/761 FEL). The Bakken Formation well reported an Initial Potential (IP) of 469 Barrels of Oil Per Day (BOPD); 105 Thousand Cubic Feet of Gas Per Day (MCFPD) and 610 Barrels of Water Per Day (BWPD). The Headington 43X-25B, also a Bakken Formation well, has an SHL at NE SE 25-26N-52E (2080 FSL/262 FEL) and a Bottom Hole Location (BHL) of 18,849 feet at NW SW 26-26N-52E (2083 FSL/248 FWL). The well reported an IP of 502 BOPD; 645 MCFPD and 755 BWPD.

In Roosevelt County, Samson Oil and Gas USA Montana, Inc. reported the completion of the Australia II 12 KA 6. The Bakken Formation well has an SHL at NW NW 29-28N-55E (193 FNL/804 FWL) and a BHL of 14,972 feet at SE SE 29-28N-55E (729 FSL/720 FEL). The Australia had an IP of 60 BOPD and 101 BWPD.

Oasis Petroleum North America LLC announced the completion of two wells in Roosevelt County. The Sam 2858 12-17H, with an SHL at NE NW 17-28N-58E (240 FNL/2200 FWL) and three laterals with BHLs of 15,077 feet at NE NW 20-28N-58E (312 FNL/2176 FWL); 16,079 feet at NE NW 20-28N-58E (1311 FNL/2202 FWL) and 16,767 feet at SE NW 20-28N-58E (1977 FNL/2218 FWL). All three laterals penetrate the Bakken Formation. The well turned in an IP of 851 BOPD; 579 MCFPD and 2,041 BWPD.

Oasis Petroleum North America LLC wrapped up the Paul Byron 2758 41-13H in Roosevelt County. The well has an SHL at SW SW 13-27N-58E (180 FSL/1000 FWL) and a BHL of 20,430 feet at NE NW 12-27N-59E (274 FNL/1916 FWL). The Bakken Formation well had an IP of 1,597 BOPD; 1,325 MCFPD and 7,022 BWPD.

Whiting Oil and Gas Corporation reported the completion of the Elvsaas 21-4TFH in Roosevelt County, with an SHL at NE NW 4-30N-57E (325 FNL/1980 FWL) and a BHL of 19,438 feet at SE SW 9-30N-57E (349 FSL/2044 FWL). The well, which targets the Three Forks Formation, had an IP of 91 BOPD; 54 MCFPD and 465 BWPD.

Samson Resources Company wrapped up two wells in Sheridan County. The Zuma 15-22-35-58H, with an SHL at NW NE 15-35N-58E (435 FNL/2443 FEL) and a BHL of 17,935 feet at SW SE 22-35M-59E (245 FSL/2411 FEL) turned in an IP of 67 BOPD; 21 MCFPD and 474 BWPD. The Riva Ridge 6-7-33-56H, with an SHL at NW NE 6-33N-56E (280 FNL/2356 FEL) and a BHL of 18,233 feet at SW SE 7-33N-56E (239 FSL/2316 FEL) had a reported IP of 149 BOPD; 122 MCFPD and 240 BWPD. Both wells target the Bakken Formation.

TAQA North USA, Inc. wrapped up the Hjelm 13-1H in Sheridan County. The well has an SHL at NE NE 13-37N-57E (480 FNL/290 FEL) and a BHL of 11,840 feet at NW NW 13-37N-57E (728 FNL/698 FWL). The Bakken well reported an IP of 28 BOPD and 527 BWPD.

In Toole County, Keesun Corporation completed the Leuck 6-13. The well has an SHL at SE NW 13-34N-3W (2420 FNL/1650 FWL) and reported an IP of 1 BOPD and 125 BWPD. The well is located in the Kevin-Sunburst Field.

Abandoned Wells

In Toole County, Mountain Pacific General Inc. was issued a Permit to Abandon the Tiber 30-2-18-1, with an SHL at C NE 18-30N-2E (1320 FNL/1320 FEL).

Converted to Injection

Three wells received permits to convert to injection.

In Powder River County, a permit went to the Unit 403, operated by Denbury Onshore, LLC. Situated in the Bell Creek Field, the well has an SHL at C NE NW 4-9S-54E (660 FNL/1980 FWL).

In Richland County, an Injection Permit was issued to Shadwell Resources Group, LLC for the Velma SWD 1-10H, located at NW NW 10-23N-58E (350 FNL/750 FWL).

In Sheridan County’s Flat Lake Field, a permit was issued for the Negaard 3 SWD, operated by TAQA North USA, Inc. The well has an SHL at NW NE 22-37N-57E (130 FNL/1833 FEL).

Darryl L. Flowers is the Publisher of the Sun Times in Fairfield, Montana, www.fairfieldsuntimes.com, and can be reached at publisher@fairfieldsuntimes.com

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Eighty-Eight Oil to Build First Major Multi-Grade Crude Oil Loading Unit Train Terminal near Guernsey, WY

CASPER, WY — Eighty-Eight Oil LLC announced today its plans to construct and operate a unit train facility on BNSF Railway’s mainline near the Guernsey crude oil pipeline hub. The facility will be directly connected to EEOLLC’s existing Guernsey crude oil terminal which has two million barrels of storage and currently receives crude oil from Butte Pipeline, Belle Fourche Pipeline, Platte Pipeline, and the Rocky Mountain Pipeline System. The Guernsey terminal also maintains truck unloading facilities. The facility will be the first rail transloading terminal capable of loading multiple crude types including those from the Williston Basin (e.g. Bakken), the Powder River Basin (e.g. Niobrara), Southwest Wyoming, Big Horn Basin and Canada. “Because this terminal is being designed to handle multiple crude types, we are confident of its long term viability,” says Jerry Herz, Superintendent of EEOLLC. “Further, by connecting our terminal to BNSF’s expansive railway system, we can provide producers of the Rocky Mountains and Canada further flexibility in adding value to their production and transporting it to markets throughout the United States.”

“We look forward to working with EEOLLC to build and serve this unique unit train rail facility,” said Dave Garin, BNSF group vice president, industrial products. “As demand continues to rise, rail has stepped up to provide a more flexible, long-term, and economical option to ship crude oil to destination markets throughout the East, West and Gulf coasts and along the Mississippi River.”

With completion expected later this year, the facility will initially include three rail loop tracks and required tankage for unit train loading operations. Each loop track will be capable of holding one unit train; in addition, the automated loading racks will be capable of loading two trains with different crude types simultaneously. Initial rail loading capacity will be approximately 80,000 barrels per day with expansion capability.

Eighty-Eight Oil LLC, established in 1963, is a privately held crude oil marketing and logistics company within True companies of Casper, WY. EEOLLC markets crude oil from the Rocky Mountain region throughout the United States.

The True companies are privately owned and operated companies with operations throughout the United States. True Oil LLC is listed as the operator on nine wells in Teton County. None of the wells are currently in production.

Abraxas Provides Updates

Eagle Ford Shale

In McMullen County, the Mustang 1H produced an average 1,152 boepd (1,025 barrels of oil per day; 500 mcf of gas per day; 44 barrels of NGL per day) on a restricted choke over its first 30 days of production. The well continues to flow to sales at a rate of 999 boepd (847 barrels of oil per day; 914 mcf of gas per day) plus NGLs on a 22/64 ‘ choke. Completion crews are currently rigging up on the Corvette C 1H to complete the well with a 20 stage fracture stimulation. Abraxas recently reached TD on the Gran Torino A 1H with a fracture stimulation date anticipated in February. Abraxas today spudded the Company’s sixth well at WyCross, the Mustang 3H. Abraxas owns a 25% working interest in the Corvette C 1H and an 18.75% working interest in the Mustang 1H, Gran Torino A 1H and Mustang 3H.

Williston Basin

Drilling continues on the Company’s Lillibridge East PAD with intermediate casing set on the 1H and 2H. Abraxas just reached TD on the curve of the Lillibridge 3H. After setting intermediate casing on the Lillibridge 3H, the rig will move to drill the curve of the Lillibridge 4H. Abraxas recently received final consents on the Lillibridge PAD and now holds an approximately 34.14% working interest across the four Lillibridge wells. The Ravin 2H and 3H are now anticipated to be completed mid-February. Abraxas owns a 49% working interest in both the Ravin 2H and 3H.

Financial Update

As previously announced, the approximately $22mm in asset sale proceeds in the fourth quarter were applied directly to paying down the Company’s revolver. At December 31, 2012 the company had $113 million drawn on its $150 million credit facility and approximately $575,000 in cash providing approximately $38 million in liquidity.

Bob Watson, President and CEO of Abraxas, commented, ‘We are quite pleased with the early performance of the Mustang 1H. This is our third well in the WyCross area, and materially outperformed our previous best well the Cobra 1H. In the Bakken, we elected to complete the Ravin 2H and 3H simultaneously in February opposed to individual completions a month apart, which should lead to reasonable cost savings. We look forward to updating the market post our upcoming Bakken and Eagle Ford completions.’

FrackNation Viewing Party A Success

Program will be rebroadcast on AXS TV

Phelim McAleer, co-director and producer of the documentary FrackNation, was in Helena for the film premier and free viewing event hosted by the Montana Petroleum Association on the 22nd.

“One of the most important aspects of our job is education,” said Dave Galt in a press release before the event. “We’ve got to present the public with the facts on the oil and gas industry, and the opportunities it creates right here in the Treasure State.”

Phelim McAleer described FrackNation as, “Pro-truth and pro-investigative journalism. It reveals the exaggerations and frauds that are at the heart of the anti-fracking movement and the length activists will go to reach their goal of banning fracking.”

MPA filled the house with over 150 people, including a huge turnout of legislators, a petroleum engineers with the DNRC in Montana, Attorney General Tim Fox, Tom Richmond with the Board of Oil & Gas, various MPA members, and many from the general public.

FrackNation will be re-broadcast on AXS TV Saturday, February 2 at 8:00 am Mountain Time and Wednesday, February 6 at 10 pm Mountain Time.

AXS TV is available on Dish Netowrk channels 362 and 9422; and on DirectTV channel 340.

– Montana Petroleum Association

Hess to Pursue Sale of Terminal Network, Exit Refining Business

NEW YORK — Hess Corporation announced this week that it will pursue the sale of its terminal network in the United States. Hess also announced that it will complete its exit from the refining business by closing its Port Reading, New Jersey refinery.

The terminal network is located along the U.S. East Coast and has a total of 28 million barrels of storage capacity in 19 terminals, 12 of which have deep water access. The terminals previously served as the primary outlet for Hess’ share of production from its HOVENSA joint venture refinery, most of which was used to supply Hess’ Retail and Energy Marketing businesses. With the closure of the HOVENSA refinery in 2012 as well as Hess’ ability to access refined products from third parties to supply these marketing businesses, the terminal system is no longer core to the company’s operations. The company’s St. Lucia oil storage terminal in the Caribbean with 10 million barrels of capacity will also be included in the package for divestiture. In addition to the proceeds from the sale of the terminal network, the transaction should also release approximately $1 billion of working capital for redeployment to fund Hess’ future growth opportunities.

Hess will continue its long term commitment to the Retail and Energy Marketing businesses and take all the necessary steps to ensure supply security, competitive prices and high quality service for its customers.

The Port Reading refinery, which will be closed by the end of February, is comprised solely of a Fluid Catalytic Cracking unit and it primarily manufactures gasoline and components used for blending heating oil. The refinery incurred losses in two of the past three years. The financial outlook for the facility is expected to remain challenged due to the requirement for future expenditures to comply with environmental regulations for low sulfur heating oil and the weak forecast for gasoline refining margins.

“By closing the Port Reading refinery and selling our terminal network, Hess will complete its transformation from an integrated oil and gas company to one that is predominantly an exploration and production company and be able to redeploy substantial additional capital to fund its future growth opportunities,” said John Hess, Chairman and CEO.

Hess has retained Goldman, Sachs & Company as its financial advisor for the divestiture of the terminal network.

OXY USA Inc. Is Primary Petroleum JV Partner

The Watson Flats well is drilled against the backdrop of the Eastern Slope of the Rockies. Sun Times photo by Darryl L. Flowers

Insiders, Stockholder bullish on Canadian Exploration Firm

By Darryl L. Flowers

It has been one of the worst kept secrets in the Oil Patch, and has led to all types of speculation on the world wide web, in both blogs as well as online reports by “respected” analysts within the industry.

For the first time, The Sun Times is able to report that the “JV” or “Joint Venture” partner that now owns 32.5 percent of Primary Petroleum Company is OXY USA Inc.

The Sun Times uncovered details of the transaction two weeks ago when researching documents related to oil and gas exploration in Teton County. Since the deal took place last year, the rumor mills have been rampant. For the most part, the speculation was close, but not on target.

When the agreement was made last year, The Sun Times was advised by reliable sources that Occidental Petroleum Corporation, based in Los Angeles, California was the new partner. However, the California headquarters refused to confirm the deal when contacted, so it was decided not to go with the story.

The documents recently discovered show that the JV partner is in fact OXY USA Inc., headquartered in Houston, Texas. When contacted by the Sun Times, a spokesperson at the Houston headquarters confirmed that OXY USA Inc. is a “wholly owned subsidiary” of Occidental Petroleum Corporation.

The parent company is one of the world’s largest oil firms, with 40,000 employees and contractors worldwide. Occidental was founded in 1920.

OXY USA is listed as the operator on three Teton County wells, all classified as “dry holes.” The wells were drilled in 1974 and are listed by the Montana Board of Oil and Gas Conservation as the Bannatyne 1; the Bannatyne B-1 and the Bannatyne 1-A. The wells are located in Section 12, Township 24 North and Range 2 West.

The document detailing the agreement between Primary and OXY was recorded as a Deed of Conveyance and Assignment and Bill of Sale. According to the agreement, which was recorded on November 16, 2012, OXY was assigned 32.5 percent of “the leasehold interests under the oil and gas leases and oil, gas and mineral leases set forth…” Further, the document assigns 32.5 percent of “all rights and interests in any pooled area…”; “all equipment, facilities, pipelines, pipeline laterals, gathering systems, platforms, tank batteries, improvements, fixtures and buildings, and inventory…”

The details of the deal are coming out after a Friday night press release issued by Primary earlier this month that seems to have put the Canadian oil exploration company’s stock in a dive. The release came out just as OXY begins consideration of a second phase of investments into Primary.

Absent from the Primary statement are any details of the results of the first drilling program, launched just over one year ago.

In fact, the Sun Times has learned, through confidential sources with detailed knowledge of Primary’s operations in the Southern Alberta Bakken, that they have indeed “struck oil.”

According to the sources, the Spring Hill 1 well, which is one of three wells that was “fracked” last fall, will be able to produce “200 barrels per day of deliverable oil.” One of the Rockport Colony wells is expected to produce approximately 150 barrels of oil per day. The Spring Hill well has been “on pump” for some time.

Some Primary watchers have been frustrated with the production problems at the well. However, the source, as well as others with expertise in the oil field, have told the Sun Times that this is perfectly normal. “You don’t just pull out the drilling rig and stick a pump on,” said one geologist who works on rigs all over the Western U.S. “It takes time to get the trash worked out of the hole. It’s a perfectly normal process.”

The “oil cut”, or the percentage of oil in the fluid coming out of the Spring Hill well is the real surprise. “It’s 99 percent oil, only one percent water,” the source reported to the Sun Times.

While the news may come as a disappointment to those unfamiliar with a developing play, those with experience in the field see no reason for pessimism. “Primary has almost 400,000 acres of leases in the play, and have only drilled a handful of holes,” said one Primary stockholder contacted by the Sun Times. “I don’t think the talking heads who are ready to abandon the play know anything about the geology or history of the region.”

Bill Hansen, one of the leading Geologists on both the Bakken Formation as well as the Montana Overthrust Belt, operates Jireh Consulting in Great Falls. “The testing has only begun in this area of the play. Primary is the first to test the play, and in an area of unknowns, the first wells are not going to be the best.”

Indeed, the nature of a developing play is a high risk venture. “That’s why they’re known as ‘Poke and Hopes’,” said Joe Large, President of RPM Geologic in Denver. Large, who operates out of Simms, Montana, said the small exploration firms “poke a hole and hope for oil.”

With the lackluster news in the Primary release, some have wondered if OXY will jump in for a second round of investing, and if OXY does not step up to the plate, what will the future hold for Primary?

“Primary is really in a good position,” the source, who requested anonymity, explained to the Sun Times. “They are a tight operation, they do not waste money. They are lean and that is something the big firms can’t compete with.”

By watching their bottom line, Primary is able to bring in a well much cheaper than is typical for Bakken wells in Eastern Montana and Western North Dakota. “Primary can probably do a well for about $4 million in this region, compared to $10 million for a well in the Williston area. Part of the savings derive from the fact that the oil bearing formations are about half as deep as in Eastern Montana and Western North Dakota. But part of the efficiency comes from a well-planned and executed drilling program.

When it comes to the bottom line, a well that is cheaper to drill means it can turn a quick profit, even with lower production numbers.

Another consideration requires looking at the whole picture as to what is coming out of the borehole.

While many get their hopes up thinking, like the Williston Basin, this region will see 2,000 or 3,000 barrel of oil per day wells, that is not likely.  But, if you read the details of all the wells being completed out East, you begin to see that a lot of lower production wells are coming online. “It’s not unusual for wells in the Bakken area to have Initial Production, or IP, rates of 200, 300… up to 600 barrels of oil per day,” said Large.

Many of the high IP wells appear to be better sources of seawater than hydrocarbons. A large percentage of the Bakken area wells produce much more water that oil. Recently, the Sun Times reported on a Bakken Formation well that reported an IP of approximately 1,900 barrels of oil per day. But, as they say, the devil is in the details, and the details showed that the well was also producing over 6,000 barrels of water per day. That’s 264,000 gallons.

The seawater was trapped in the formations as the land was thrust inland millions of years ago. Adding to the cost of operation for the wells, the water must be disposed of. “That’s a huge cost to the operator,” said Large. “In the Bakken, if you find a well that is only 50 percent water, you’ve got a great well.”

At 99 percent oil, the Spring Hill well would not be costly for disposal of the saltwater.

The compact size of Primary would also mean that the exploration firm could, if needed, pivot their operation and also become a production company. “It’s a fairly easy transition,” said one experienced industry insider. “Primary has the know how on the ground to make it happen.”

Adding to the pessimism is the lack of science behind the reporting. Most of the media, or commentators, are far removed from the Eastern Slope of the Rockies. “Few if any of those guys have put their shiny Wall Street ‘pimp pumps’ on the ground out there,” commented the Primary stockholder who is based in the Mid South.

The shareholder, who took it upon himself to do his own research when he noticed the reporting on the Southern Alberta Bakken play offered no details, told the Sun Times that he was struck by the volumes of data available from independent sources, such as universities, U.S. Geological Survey, Montana Geological Society and the American Association of Petroleum Geologists. Commenting on his research, the investor said, “The same formations that have yielded successful fields found in Alberta are equivalently located in Montana; there are plenty areas of interest yet to be explored in Montana.  And Primary has a few hundred thousand potentially promising acres… the investment analysts following all of this activity don’t know jack about geology,” the investor added. “Reading the article in the Sun Times [Reading The Rocks In The Hunt For Hyrdocarbons, August 2, 2012 issue] motivated me to dig deeper and research the play.”

He went on to say that from what he has found in his research, that Primary’s “Watson Flats” well might be the “sleeper” of the wells drilled by the company so far.

Of the wells drilled in the first round, the Watson Flats well is the only one that lies in the region known as the “Overthrust Belt.” The area is long known by geologists to be a region of subsurface thrusts and faults. While the belt may offer challenges to drillers, the reward may be worth it. Recently, the Sun Times consulted with Joe Large, the RPM Geologic President, on another Overthrust Belt well, the Steinbach 1 near Augusta.

According to Large, who examined data from the well, the Steinbach showed the potential to be a “Williston” class producer.

The Watson Flats well was recently plugged and abandoned by Primary. While that may sound ominous, the fact is that when a well is not being worked over a lengthy period of time, the State requires, for safety reasons, that the borehole be sealed.

According to multiple conversations with our sources, the well is a candidate for further work, including fracking. “We’re going back there,” stated the insider. Other sources explained that Primary encountered a fault in the well and lost pressure on the drillbit. The bore was sealed and the well completed without further incident. The company has the option of re-entering the hole, or they could move a short distance away and drill a new hole. Sometimes drilling the new location is the most economical method.

Historically, the region near Primary’s leases has some significant discoveries.

In 1958, according to a paper published by J.W. Halverson, a Geologist with the Montana Board of Oil and Gas Conservation, natural gas was discovered in Blackleaf Canyon, near Bynum.

Low gas prices and the lack of access to a market delayed commercial production until 1982. The first producing well, known as the #1-A Blackleaf Federal, was completed in the Madison Group and reported an Initial Potential of 6,293,000 cubic feet of gas per day. In 1959, the second discovery well in the Blackleaf Field was drilled, and showed a potential flow of 969,000 cubic feet of gas per day. The well only produced 104 barrels of water with the gas.

Production from the field began with the completion, in 1980, of the Blackleaf Federal #1-8. The #1-8 had an Initial Potential of 5,100,000 cubic feet of gas per day. In 1981, the Blackleaf Unit #1-5 well was completed, and showed a potential flow of 9,000,000 cubic feet of gas per day. The Blackleaf Federal #1-19 was also drilled in 1981 and turned in an Initial Potential of 4,074,000 cubic feet of gas per day.

To put the production numbers in a perspective that is easy to understand, the average household, according to a 2009 report by the American Gas Association, consumes 70,500 cubic feet of gas per year.

The Blackleaf Field, during the period from 1984 to 1990, contributed over $1,800,000.00 to Teton County in taxes.

The well was shut down later when the operator at the time, Startech Energy, proposed plans to use a six acre surface area (only one percent of the field area of 600 acres) to drill new wells. Senator Conrad Burns, R-Montana, introduced legislation to remove the Federal minerals from production in the area. Montana’s other Senator, Democrat Max Baucus, took up the bill after Burns’ defeat. “That move cost Burns his re-election,” said Choteau Councilman and gun shop owner Jim Anderson. “Support for Burns collapsed in the region when we lost a major source of revenue for our schools and roads in Teton County.”

Environmentalists and the media championed a letter writing campaign of 49,000 letters sent in support of closing the well established, producing field. What was not as well reported was that less than 1,500 of the letters were from residents within the state of Montana. At the same time, according to media reports, Senator Baucus voted to shut off funding for an environmental study that was being conducted at the time to determine if the Blackleaf improvements would have a detrimental effect on the area.

“The research that was underway in conducting that impact study would have set the gold standard for that type of work,” said Bill Hansen. “It was a shame it was never completed, but the belief at the time was that the study might come down in favor of continued gas production.”

Hansen points out that while the Blackleaf field does not directly correlate with the wells drilled by Primary, it does indicate the presence of commercially producible hydrocarbons in the area.

Documents in possession of the Sun Times indicate “Undiscovered Estimates” of the natural gas potential of the broader region may be as high as 12.6 Trillion Cubic Feet (TCF) of gas. The same set of documents claim the field could have held as much as 2.6 TCF and would have produced for as long as forty years. According to a 2003 report from the Department of Energy, 1 TCF would meet the needs of 15,000,000 homes for one year or would supply the gas demands of the entire state of Montana for three decades.

A few miles to the North of Primary’s wells, Anschutz Exploration continues its drilling program. A privately owned company, Anschutz does not reveal any results of their program, however, the Denver based firm continues to permit new wells in Glacier County.

Just over the border, in Canada, three fields may give some insight as to how the Southern Alberta Bakken play will develop. The Waterton Field, the Pincher Creek Field, and the Lookout Butte Field are all long-term producers of natural gas.

The Canadian well that was most likely responsible for the discovery of Waterton Field may well have been the driving force behind the very first attempt to find commercial oil in Montana.

In 1901, at Cameron Creek, Northwest Territory (now Alberta), the first commercial oil well was drilled in what would become Waterton Park.

According to the National Park Service, as the search was underway for oil in Cameron Creek, the fever caught on in Flathead County and in 1902 the Kintla 1 was drilled at Section 12, Township 36 North and Range 22 West. A year later, the Kintla 2 was completed. The wells never went into production; they were plagued with water intrusion and a fire that destroyed the drilling gear.

“The production at Cameron Creek within the boundaries of Waterton Park and probably partly responsible for the exploration that led to the discovery of Waterton Gas Field in the 1950s, just north of Waterton Park,” Bill Hansen told the Sun Times.

The field is a prolific producer of natural gas. A large “sweetening” plant was constructed in 1960 to remove hydrogen sulfide from the gas.

Back in Teton County, other companies have confidence there is oil and gas to be found in commercial quantities. In 2011, the Sun Times visited a rig drilling an exploratory well at the Theodore Roosevelt Memorial Ranch near Dupuyer. The newspaper was there as Honors Students from Fairfield School began a project with Fairways Exploration and Production to monitor the environment near the well site.

The well was completed, and in the fall of 2012, Fairways returned to do a Three Dimensional Seismic Survey of their leases. The Sun Times was on the ground as the seismic trucks profiled the formations deep below the ground near the site of their exploratory well. While Fairways is tightlipped about their plans, it is believed that the Texas Company is looking over the data from the seismic and developing plans for the future.

In the meantime, other companies picked up leases in Teton County in 2012. In addition to Primary and Fairways, Texas Wildcatter Jim Bass and his Lonesome Dove Resources picked up significant leases in the county, from just to the northwest of Choteau all the way to the southwest of Fairfield. Energy West picked up some leases, as did Mountain View Energy and Wexco.

Another player to enter the area in 2012 is Antares Exploration Fund, LP.

Miller Energy Resources Has Positive Test Of Tennessee Well

CPP-H-1 is first successfully drilled & completed horizontal into Fort Payne Formation…

Published: Tuesday, January 15, 2013 1:03 PM CST

Miller Energy Resources announced in a Tuesday press release that, on Saturday, January 12, it had tested water free oil production from the company’s CPP-H-1 well. The CPP-H-1 well is the first successful horizontal well drilled and completed in the Mississippian Age Fort Payne formation in North America.

The well tested at a restricted rate of 487 BOE per day on a ¾’ choke. The rate was restricted in order to conserve as much reservoir energy as possible. A breakdown of the initial production test consists of 365 BOPD, 730 MCFGPD, and 0 BWPD. The company plans to begin producing the well as soon as Miller Energy Receives EPA permission to begin reinjecting the produced gas in order to maintain reservoir pressure. The Fort Payne reservoirs are solution gas drive reservoirs, and management feels that it is critical to maintain reservoir pressure in order to maximize oil production.

Based on the initial flow tests, the company expects this will be a very strong and commercially successful well. Although this well represents an unprecedented achievement, based on what is known about the formation, the geology and the initial reservoir pressure, Miller expects that the well will produce in the range of 200 to 225 BOEPD once reinjection has started and full production has begun. The company plans to provide regular updates to the public as more results come in on this well.

Miller has also recently spudded its second Fort Payne well, and expects similar results from that new well, once complete. Two additional horizontal well sites in Tennessee have been designated for development in the near term. At present, the company has identified 25 sites on which similar horizontal wells may be developed on approximately 40,000 acres held by Miller under lease or by production in the state. The company has previously recovered approximately 9% of the oil believed to exist on its acreage and expects that future horizontal wells will significantly increase this recovery factor.

‘The successful development of CPP-H-1 is a game changer for oil production in the State of Tennessee and the whole Appalachian Basin,’ said Scott M. Boruff, Miller’s CEO. ‘We have been very excited for a very long time about the prospects for our Tennessee assets, and we are thrilled that we can finally share that excitement with the world at large. I have to thank David Wright, our EVP of Tennessee operations, along with our geologists, Dr. Gary Bible and John Miller, who worked out the details of our horizontal drilling strategy in Tennessee. Their hard work and insight have given us a new avenue of growth, one which our company is uniquely positioned to take advantage of.”