Friday, September 7, 2012

Daily Activity Report -- Friday -- And A Teaser


September 5, 2013: Chart Industries is now using this old wind turbine manufacturing plant to make LNG pressure tanks to sell to China. I can't make this stuff up.

November 7, 2012: North Dakota wind turbine manufacturer shut its door on election day, November 6 (yesterday). 
Wind tower manufacturer DMI Industries Inc. in North Dakota has shut down.
West Fargo's economic development director says the future of the DMI plant isn't known because officials with the Texas-based company that recently bought the plant aren't immediately revealing their plans.
Parent Otter Tail Corp. is selling DMI plants in West Fargo; Tulsa, Okla.; and Fort Erie, Ontario, Canada, to Dallas-based Trinity Industries for $20 million. There were 260 employees at the Fargo plant.
Later, September 7, 2012: See "teaser" in original post below. I was going to update that tomorrow, but I could see that it would irritate folks having to wait. So, here it is now, even if not quite ready for prime time. Trinity (TRN) is buying the wind-tower manufacturing division DMI from Otter Tail. When another reader saw TRN, he saw railcars and that was the initial thought regarding tank cars, tying in the fact that Enbridge now uses rail and Statoil recently announced "buying" 1,000+ tank cars. TRN wouldn't have to make the entire tank car; the tank could be made in Fargo, rolling chassis elsewhere, and assembled in Fargo. However, TRN also has one other divisions, including the energy equipment group, that could be in play for the facility. The energy equipment group makes storage tanks used in the oil and gas industry. But, for "anon 1," this division also makes wind towers. If the government extends incentives for wind energy (which is very, very likely), TRN might simply continue DMI wind towers. Regardless, there are other options if supporting the oil patch. A couple of photos are worth a thousand words.
Original Post

Wells coming off confidential list reported earlier today.

Eight (8) new permits:

  • Operators: Samson Resources (4), G3 Operating (2), BR, and CLR
  • Fields: Ambrose (Divide), Haystack Butte (McKenzie), Strandahl (Williams), and New Home (Williams)

Active drilling rigs: 191 (down)


I will throw this teaser out, mostly for the time-date stamp: what are the chances that some manufacturer will start manufacturing rail cars in North Dakota? This is not an original thought with me. I have to give the credit to someone else. More details later this weekend.


  1. Chances of rail car mfg in ND are slim to none and slim just left town. Unless the existing mfg capacity is near zero (possibiity, I don't know) what would be motivation to expand to other locations?

  2. Will the government pay them to do it?

    Anon 1

    1. That's an interesting question. Government incentives might be a player. Lots of possibilities. I'll update the post above now, to let you know what this is all about.

  3. Well, rail capacity is an interim solution until pipeline expasion catches up with production . But you just said the magic word: government . If government gets involved, then when it comes to common sense, sound business decisions, all bets are off.

    1. This whole rail phenomenon has been very, very interesting to follow. It seems to me there is more here than simply takeaway capacity....but I could be wrong.

      If it is simply about takeaway capacity, the numbers coming out of the Bakken will be staggering. BNSF says they have capacity for 1 million bopd. That far exceeds what the Bakken is producing now and there is already significant (albeit, not enough) pipeline capacity.

  4. The total "issue" is that it is far far less costly to add incremental rail capacity and the capacity can come on line almost immediately as compared to pipeline.
    As long as take away demand is increasing , rail will have a solid market. But rail can't compete on a cost basis , only on the basis that rail is the "carrier of last resort "

    1. Actually, that's probably inaccurate, that rail is the "carrier of last resort."

      And "far less costly" is probably inaccurate, but that would be in the "eye of the beholder," since that is subjective.

      1. "The first method that early oil producers used to transport their oil was the horse-drawn wagon..." I would argue that horse-drawn wagons in North Dakota would be closer to "last resort." Children hauling oil in a red Flyer would be closer to "last resort."

      2. In the modern age, and in North Dakota, it is said that 75% of all oil is moved by truck at some point; I would argue that trucking is even more expensive than rail.

      3. The "far less costly" is also an interesting phrase. According to corporate presentations, the delta between rail and pipeline is not all that wide, and the difference is narrowing as more and more unit trains come on line. Competition.

      4. All things being equal, one might argue that the flexibility rail provides might justify the higher price.

      5. Which leads to another point: price vs cost. The cost to bring up a bbl of Saudi oil is said to be a buck or two; the price to buy a bbl of Saudi is much, much more. And, of course, that relates to supply and demand, the same as for rail and pipe (today, but not necessarily in the future).

      6. It is said that oil companies would prefer to ship by pipeline rather than rail (based primarily I assume, but not exclusively, on cost); the crude-by-rail facilities have a huge carbon footprint (which I really don't worry about, but is the politically correct thing to say -- just as one cannot talk about HAL without mentioning Cheney); but sinking millions into at least 16 CBR facilities in North Dakota tells me one of two things: a) pipeline capacity will not meet demand for many, many years; and/or b) someone sees something in rail that others don't.

      In the context of your comment, I agree 100% with you, but I would change "far less costly" to "less costly" and reconsider the phrase "of last resort.'

      I think the rail issue will be very, very interesting to follow.

    2. With regard to rail as being the "carrier of last resort," there is a very interesting new development. Canada's oil sands need diluent.

      Rail carrying Canadian oil sands oil requires 30% less diluent, making rail an interesting option.

      Somehow diluent needs to get to Canada. Rail is one option: