DRILL HERE, DRILL NOW, DRILL BETTER [II]

The prize: Bakken crude in a clear dish.

How we get that prize: Night drilling in February--bring your sweater.

You're not a real American if stories like this don't make you happy, and excited. As you read this fascinating WSJ piece on the North Dakota oil boom, notice how:

**Aggressive oil exploration has brought prosperity to a lagging state--where unemployment is now 4.3%. "Booming Bakken oil production has helped North Dakota escape the worst of the economic downturn. The state's unemployment rate was 4.3% in December—more than five percentage points below the national level—and the state government projects a surplus for the current budget cycle."

**The REAL oil experts--those whose livelihood depends on PRODUCING OIL AT COMMERCIALLY VIABLE PRICES--sure as hell haven't given up on finding oil here on the good old North American landmass. "'It's a true game-changer,' said Jim Volker, chairman and CEO of Whiting Petroleum Corp. a Bakken oil producer. 'We still think there's a significant amount of oil reserves in the United States left to be discovered.'" And I LOVE this quote from Harold Hamm, chairman of Continental Resources: "Most people felt like they could kind of write off the oil industry in the U.S., and that's just a long way from the truth. The fact of the matter is that a lot of people quit looking for oil."

**Those bad old greedy oil companies have taken the time to build their own rail-line to transport the shale oil. Isn't this what we call the "multiplier effect" of private industry growth?

**Those bad old greedy oil companies have within a few short years developed new production techniques that have converted essentially worthless rocks to valuable engines of petro-industry growth...even as oil prices have slumped from $80/barrel to $50/barrel.

**At $78/barrel, North Dakota's oil production will be worth $6.24 billion, with a B, per year. Not bad for a state with less than 1 million people.

**Mark Papa, the chairman of EOG Resources, almost casually describes why his company decided to risk "$20 to $40 million" after a string of early failures: "The first three or four wells, it was not clear that there would be a viable economic solution. But we just felt like, well, it's worth investing $20 to $40 million in this because if it works there's a huge upside." IOW: the promise of POTENTIAL huge profits DOES encourage expensive investment, including LABOR.

**The sheer technological advances spun off from this aggressive oil exploration have made it profitable to extract Bakken oil when prices are above $50/barrel, when just a couple of years ago it required $80/barrel, and shortened the time to drill a well from 56 days to 24. Plus these same advances promise to increase production in other parts of the world. "Marathon Oil Corp. hopes to use what they learn in North Dakota to produce oil and gas overseas. 'It's been a great laboratory for us," said Dave Roberts, who heads exploration and production for Marathon.'"

So we can all agree that no real American wouldn't be thrilled by a story like this, especially in hard times when unemployment is bumping the 10% mark, right? Good news, right?

But can you imagine even one member of the Obama Cabinet being happy with this story? Just imagine how they would spin it against the bad old greedy oil companies, capitalists, exploiters, save the shales, Cheney, Haliburton, Bush, Blahblahblaaahhhhh...

Whatta gang of phonies they are. Claim to be focused on jobsjobsjobs, yet they do everything they can to crush energy production of oil (and coal) right here, huge and strategic industries that could expand by millions of high-paying jobs.

Well, they will ultimately, and epically, FAIL miserably. Because one Harold Hamm is worth a thousand Barack Haman Obamas.


FEBRUARY 26, 2010
Oil Industry Booms -- in North Dakota
State Is Riding High as Firms Develop Better Ways to Tap Huge Bakken Shale Deposit, Raising Hopes for U.S. Production
By BEN CASSELMAN

KILLDEER, N.D.—A massive oil reserve buried two miles underground has put North Dakota at the center of a revolution in the U.S. oil industry, a shift that has radically altered the fortunes of this remote area.
The Bakken Shale deposit has been known and even tapped on occasion for decades. But technological improvements in the past two years have taken what was once a small, marginally profitable field and turned it into one of the fastest-growing oil-producing areas in the U.S.
The Bakken Shale had helped North Dakota oil production double in the past three years, surging to 80 million barrels in 2009—tiny relative to the more than seven billion barrels consumed by the U.S. every year, but enough to vault the state past Oklahoma and Louisiana to become the country's fourth-biggest oil producer, after Texas, Alaska and California. If current projections hold, North Dakota's oil production could pass Alaska's by the end of the decade.
"Most people felt like they could kind of write off the oil industry in the U.S., and that's just a long way from the truth," said Harold Hamm, chairman and chief executive of Continental Resources Inc., one of the biggest Bakken producers. "The fact of the matter is that a lot of people quit looking for oil." Continental reported Thursday that its North Dakota oil production doubled in 2009 and would continue to grow rapidly this year.
The Bakken Shale could contain up to 4.3 billion barrels of recoverable oil, according to the U.S. Geological Survey. That would make it the biggest oil field discovered in the contiguous U.S. in more than 40 years—and many in the industry believe the amount of recoverable oil could be even greater as new technology allows companies to tap more of it.

READ THE REST HERE.

And a lot of hilarious comments there, 71 so far.

DRILLING HERE, DRILLING NOW, DRILLING BETTER.

Bakersfield, beautiful Bakersfield.

I love stories like this about the oil industry for many, many reasons. A few big ones:

1) It is obvious that from the lowliest grunt in this project on up, every single person involved in it has done more real, productive work on this one aged oil field than Nobel laureate Barack Hussein Obama has done in his entire life. Come to think of it, more than his entire Cabinet, too.

2) Notice the scale of this oil-field: 2 billion [that's with a "B"] barrels of oil extracted from a single formation in BAKERSFIELD, CALIFORNIA! AND STILL 79,000 barrels a day! That's nearly 29 million barrels a year. Do we ever see anything about this in the lamestream media?

3) If we can sink 9,000 oil-wells (not including the observation wells) into relatively populated Bakersfield CA, why the heck can't we sink even one into the desolate ANWAR region of Alaska?

4) Private industry applying its brain-power to increase efficiency and save money. Notice that this single technology effort will save one company (Chevron) more than $300 million a year. Has any government agency EVER done anything like that?

5) It underlines the great obstacles to exploiting petroleum "resources," an industry which is based on a "finite, dwindling" substance that was considered a nuisance until about 160 years ago. And it shows how American brain-power and creativity has ALWAYS been the leading force in that industry.

No, Prez. Hussein, oil companies don't make billions of dollars in profits by running outside holding their aprons out and catching million dollar bills that fall from the sky. In fact, they don't make a SINGLE dollar that way. They have to explore and research and engineer and adapt in some of the most hostile and challenging climates on earth. And then they risk having all their assets seized by hostile governments, including their own.

BTW, how easy does Hussein think it is to drill 660 observation wells in a single "used up" field? Using YOUR OWN money?

OCTOBER 9, 2009, 12:48 P.M. ET
Chevron Engineers Squeeze New Oil From Old Wells
Steam Bath for Aging Field Adds Millions of Barrels of Crude Oil to Reservoir's Output
By BEN CASSELMAN

BAKERSFIELD, Calif.-- Chevron Corp. is employing new technologies in hopes of extending the life of one of the world's oldest and most prolific oil fields, a process that is being replicated elsewhere to help the energy industry squeeze more out of aging oil basins.

The Kern River field has produced more than 2 billion barrels of oil in its 110-year history, but Chevron estimates it still holds another 1.5 billion barrels.

Chevron is using the Kern River field as a real-world laboratory, testing enhanced recovery techniques and bringing in engineers from around the world to learn them. "The thing about being in this old oil field," said Chevron engineer Joe Fram, "you can try stuff."

To get as many of those barrels as possible out of the ground—and do so cheaply enough to turn a profit—Chevron is deploying high-tech temperature sensors to monitor its production, using three-dimensional computer models to plan its wells and filtering waste water from the fields through walnut shells so it can be re-used.

Chevron's renewed focus on Kern River shows both the opportunities and the challenges facing the oil industry as the giant discoveries of the last century, from Alaska's Prudhoe Bay to Mexico's Cantarell, begin to dry up. Prudhoe Bay, for example, has suffered production declines even though more than half its 25 billion barrels of oil remain in the ground.

To get the oil out of the Kern River field, Chevron injects steam into the ground, which heats the rock and thins out the gooey liquid so that it flows more easily to the surface. The process is far more expensive than conventional oil production, with thin profit margins that can disappear entirely when oil prices drop or costs rise.

It has drilled 660 observation wells equipped with sensors to track the temperature of the reservoir so engineers can see where heat is most needed, and has developed its own equipment to direct the steam there.

Those techniques have allowed Chevron to use half as much steam to produce a barrel of oil—for an annual savings of about $300 million, according to the company.

"By turning the burner down, we save a lot of money," said Paul Harness, a senior staff geologist in the Kern River field.

Giants Exxon Mobil Corp. and Royal Dutch Shell PLC are showing increasedinterest in such projects. Occidental Petroleum Corp. has extended the lives of fields in Oman, Colombia, and West Texas by injecting carbon dioxide, steam and other substances into the oil reservoirs.

Occidental President Steve Chazen said that with fewer new fields being discovered, maintaining production at old fields is the only way the industry will be able to meet demand for oil.

"In the long term, it's not how many fields get discovered. It's keeping the base decline under control," Mr. Chazen said.

Chevron hasn't reversed the Kern River's decline, but it has managed to slow it. Production is falling at a rate of about 2% per year, compared to an average of 7% per year from 1998 to 2005—which will mean millions of extra barrels of oil this year.

The company hopes eventually to coax out as much as 80% of the field's oil compared with the 30% that is typical in many fields around the world. Kern River had 628 million barrels of estimated reserves at the end of 2007, according to state data, up 16% from 2004.

Its longevity is already remarkable. In 1899, a father-and-son team of oil prospectors, digging by hand, struck oil by the bank of the Kern River, 100 miles northwest of Los Angeles. Within four years, more than 400 different companies were pumping 45,000 barrels of oil a day there, more than anywhere else in the country at that time.

Today, the Kern River field is a sea of pipelines, storage tanks and about 9,000 slowly bobbing pumpjacks that still pull nearly 79,000 barrels of oil a day from the rock below down from 140,000 barrels a day at its peak in the 1980s.

If companies can squeeze more oil out of their old fields, they don't need to find as many new ones—lessening the risk of expensive failures.

"If you can find a way to find the oil where you already are, with technology, a lot of that risk is gone," said John McDonald, Chevron's chief technology officer.

Thinking the (Little) Unthinkable

As we are confronted by the literally diabolical violence and aggression that Islamofascism inflicts upon us every day and every night--bombings, beheadings, kidnappings, hijackings, assassinations, robberies, extortions, etc.-- it's so tempting to react with a maximum response. Particularly as we witness the incredible ravings of the Iranian president, and perhaps much more troubling, the pathetic "Free World" responses to him. There is no doubt that the bulk of the European countries believe it is MUCH more important to prove that George W. Bush is a misguided, failed cowboy than it is to stop Iran from launching the 2d Holocaust against the Jews in 65 years, not to mention seizing control of the Persian Gulf.

Bush is pursuing a difficult, risky, and slow strategy: build up a free Iraq, bristling with US bases and intelligence posts, and Iran will be forced to abandon its plans. Surrounded by Afghanistan and Iraq, Iran will be indefensible to about anything the US wants to do to it. But if the US can be chased out of Iraq, then Iran's position will be enormously strengthened, rather similar to Hitler's position once he seized the Sudetenland.

What if Bush's strategy is simply, maybe unavoidably, working too slowly to be completed before Americans choose some "cut-and-runner" as President? That is what a lot of intelligent people are sensing may be in the cards. In that case, don't we need to think the "unthinkable?" Given the plans and capabilities of our enemies, isn't some kind of multi-targeted Hiroshima/Nagasaki/Dresden thermo-nuclear attack on them called for?

That would certainly be the BIG Unthinkable. But perhaps we need to consider a much smaller Unthinkable. Rather than targeting the cities of Iran, or even its military installations, why not obliterate Iran's oil production? Simply pulverize all of its petroleum infrastructure with conventional, redundant strikes?

In one stroke, the Iranian government would lose approximately 1.5 billion dollars a week--currently a huge windfall for a third world theocracy governing 70 million people. That money would no longer be available for Iran's nuclear program, or for its little-noticed but highly important conventional military upgrade. As the weeks and months tick by and Iran's military degrades, it would likely panic and lash out in a hurried and ineffective way, making it easier for us to neutralize them, and thus push the regime faster into a political death spiral.

The Euro-cowards would suddenly lose their real motivation for coddling Tehran--the fear that its oil production would be lost (once that production truly is lost, then there is nothing left to fear). The Tehran-leaning politicians in Iraq, who lean that way either sincerely or from fear of assassination, will see the Eternal Persian Next Door suddenly bloodied, impoverished, and stunned. That can only improve their calculations as to whether to continue to cooperate with the US or not.

There is no doubt such an attack would be a shock to the world's oil and financial markets, but it pales next to the shock that would come from a nuclear attack (from either the US or Israel) on Iran, or from an Iranian anschluss with southern Iraq, or from a suicidal US withdrawal from a splitting Iraq. For that matter, it pales next to the shocks the markets have suffered since Iran's lunatic President came to power last year, or those from Hurrican Katrina. Yet somehow we all survived those shocks, the stock markets and job numbers are way up and inflation is low.

This table shows the current world oil production, country-by-country:



(Source: http://www.worldoil.com/INFOCENTER/STATISTICS_DETAIL.asp?Statfile=_worldoilproduction )


As we can see, the Islamofascist Republic of Iran produces 4.4% of the total, a significant amount, but hardly an amount that is essential for the world's economies to avoid grinding to a halt. If a US President carefully prepares for such a strike, he can ensure that the US Strategic Petroleum Reserve will be topped off appropriately, and then release it so as to lessen the shock.

Perhaps most appealing about this plan is it turns on its head the Islamofascist mythology that the US/West is willing to sacrifice the lives or freedom of untold millions of Muslims on a pyre of burning petroleum. (No-one has yet detailed the measurable oil benefits we received by rescuing Afghanistan, Kosovo, Bosnia, Somalia, or other Muslim states not called Kuwait). This plan explicitly minimizes any human casualties--indeed, there would appear to be the risk of a few hundred at most-- while accepting an economic cost for ourselves.

We hear a lot of talk from certain experts on the MidEast that many Gulf potentates are terrified: events have placed Iran and its Shi'a cousins in Iraq, Lebanon (Hezbollah), and Saudia's Eastern Province in a position to surround and intimidate, if not conquer, the Sunni regimes around the Arabian heartland of Islam. If this is true, then a smashing strike of Iran's oil facilities would have both the benefit of reassuring these frightened sheikhs that America has not lost its will to counter Islamofascist (and "Shi'a enemy") Iran, and a built-in insurance policy that these regimes would increase their own oil production so as to mitigate the economic and political cost to the US President who orders the strike.

If the "frightened Gulf Sunnis" theory is unfounded, then the strike will at least have the salutory effect of demonstrating that post 9/11, we are truly in a New Era. For decades, the policy of any major country towards the Persian Gulf has always been focused on oil. Recall that Iran and Iraq fought a full-scale war from 1980-88, but judicious diplomacy and the US Navy ensured that oil shipments were barely effected, and the real price of oil plummeted during the war. After the US liberated Iraq, many critics seized upon the fact that the US had made it a priority to secure and preserve Iraq's oilfields--a self-evident objective considering the long-term plan to rebuild Iraq-- to argue that the operation's real goal was precisely to seize those oil fields, as laid out in the Bush/Texas/Cheney/ Halliburton/Big Oil World Hegemony MasterPlan. This conpiracy theory was preposterous, but it has fed into a general perception that the US has NOT changed its focus from securing oil supplies: if the War on Terror conflicts with Secure Oil Supplies, then we'll just have to eat a little terror.

After 9/11, there has been an explicit societal and political demand that our concern for the oil flow must have a limit, that smashing and choking off terror must take top priority. So far we haven't really been forced to choose between oil (short term) and security, but that day is coming, without a doubt. What would we do if/when a Bin Ladenite faction seizes Saudia and its oil facilities? Business as usual?

By destroying Iran's petroleum potential today, we will send a message that we are serious about fighting Islamofascism, to the point of absorbing economic pain in order to inflict much greater and more effectual pain upon them. And we will both stun and surprise our enemies, who have always planned under the operational assumption that, because they have oil, and the West needs oil, they will always have plenty of money to underwrite their bloody mayhem. The sight of US bombers making repeated runs as they incinerate the refineries at Bandar Abbas will go a long way towards shaking this smug assumption.