Denver Firm Taps Into ND Potash Reserves

A Denver-based company will drill a 9,000-foot well in North Dakota’s Burke County later this year with the help of $225,000 state grant to determine the potash reserves . However, it will be “several years” before a processing plant is established, said ND State Geologist Ed Murphy.

Potash is in demand as a fertilizer.

The ND Dept. of Mineral Resources this month issued the drilling permit to Dakota Salts LLC to drill the well in Sec. 31, t163N-R91W, about a mile and half northeast of Lignite.

The parent company of Dakota Salts, Sirius Exploration PLC in London, said it has leased 6,000 acres in the area.

The first drilling will focus on obtaining core samples from the potash zone, which Murphy estimates is about 30 feet thick.

While traditional potash mining 150 miles north in Saskatchewan has focused on underground excavation, new techniques would use water forced into horizontal wells under high pressure and the recovered solution was be evaporated and dried.

Murphy estimated North Dakota potash reserves at about 50 billion tons.

ND Funds Trial Gas Control System; Flaring Cuts Promised

Research funds in North Dakota totaling $873,000 have been approved to find new technologies to capture and transport natural gas and NGLs (natural gas liquids) from oil wells.

“There is a high value in funding this project,” said Brent Brannan, director of the ND oil and gas research program. “There stands to be a significant reduction in the amount of flaring to take place in field wide operations and an increase in profitability and reserves for future Bakken/Three Forks wells.”

Bakken Express LLC of Kingwood, TX, whose key principal, Tim Maloney, is a former Bakken field manager for the Hess Corp., must provide the matching funds for the project, which has a total cost of $2,108,200. The other principal is Jim Paul, who was president and CEO of The Coastal Corp.

The ND Oil and Gas Research Council approved the Bakken Express project earlier this month, and the ND Industrial Commission is expected to endorse it Aug. 24.

One anonymous reviewer said the proposal, which will involve five wells and run 12 months, said it was an “innovative approach to preserving the environment promoting new jobs and adding cost-savings to gas gatherers and gas plants from a commodity current going to waste.

Bakken Express has proposed using a combination of a CNG compressor and CNG tube trailer to funnel the gas and NGLs through a BX Gas skid compression and dehydration unit. The immediate goal is to reduce flaring from new Bakken and Three Forks wells.

The company estimates it will cost about $1 million a well for compressor skids, tube trailers, a discharge facility and expenses for operators, maintenance, yard operations and trucking.

“The compressor skid boosts the pressure from 15 psig to 3,500 psig, which enables the tube trailer to carry 210 mcf per load,” the proposal states. “A well making 500 mcf a day would have about three loads a day. The gas will be dehydrated to under 0.5 lb/mmcf water content before being transported by CNG tube trailers.

In the next phase, a truck brings an empty tube trailer and hooks it up to the manifold. The full tube trailer is disconnected and driven to a discharge facility, and the gas is sold. The company estimated that on a well with an IP of 1,050 BOPD and 600 Mcf a day, the service company and producer would net about $525,000 in the first year.

Denbury President Keynotes MPA Meeting

Tracy Evans, president and chief operation officer for Denbury Resources, Inc. of Dallas, will be the luncheon keynote speaker Sept. 1 in Billings at the annual meeting of the Montana Petroleum Assn.

“CO2-EOR: Sound Energy and Environmental Policy for America” is the topic of Evans’ speech at the Crowne Plaza Hotel. Denbury earlier this year bought Encore Acquisition, which has oil and gas holdings in Wyoming and Montana.

During the conference, members will also hear from former US Senator from Montana, Conrad Burns. Ward Polzin with Tudor Pickering Holt & Co. will give a presentation on, “Today’s US Shale Themes: Broadening Plays, Increasing Prices, Expanding JV’s”.

A state revenue forecast for 2011 will be given by Terry Johnson, an analyst for the state legislative fiscal division, and Sen. Jeff Essman, chairman of the Senate Taxation Committee, will discuss proposed legislation.

MPA members will also get an update on pipeline projects from Kevin Hatfield, general manager of gathering systems for Enbridge Pipelines, Tad True, vice president for Bridger and Belle Fourche Pipeline and Paul Miller, vice president of TransCanada Pipelines.

Denbury Increases Bakken Reserve Estimates

Denbury Resources, Inc. of Dallas said new estimates of recoverable reserves on its 300,000 net acres in the Williston Basin are 350 million barrels.

Proved reserves now total 129 MMBOE, the company said. The new analysis is based on estimated production of between 200,000 BOE and 675,000 BOE per well and drilling three horizontal wells per section with laterals ranging from 5,000 to 10,000 feet.

In the second quarter, Denbury said production from Bakken holdings averaged 4,518 barrels a day, a 27% increase over the first quarter.

With all of its holdings, Denbury estimates that daily production by the end of the year will range between 27,750 barrels to 28,000 barrels, a 15% increase over 2009.

Denbury said its second quarter net income was $135.4 million based on a cash flow of $240.9 million, compared to a net loss of $87.2 million for the second quarter of 2009.