Saturday, January 14, 2012

Asian Connections -- Why China Is Buying North American (And South American) Energy Assets

Peak Oil? Yes, In China

January 17, 2017: peak oil in all of Asia

Deals: Asian-North American

October 26, 2015: Chinese company pays $1.3 billion for shale in the Permian

February 17, 2014: Chinese jewelry company with gold mining interests buys an oil and gas company in Texas. Assets not mentioned; deal to cost $665 million with no more than 10 investors contributing the millions.

January 21, 2014: IBD provides an update of Chinese North American energy acquisitions in 2013

October 6, 2013Petronas completes $35 billion takeover of Canada's Progress Energy to become 2nd-largest stakeholder in the Montney. Huge, huge deal.

September 4, 2013: Chinese company buys small western Canadian operator -- Bloomberg.
Yanchang Petroleum International Ltd. agreed to buy Novus Energy Inc. for C$232 million ($220 million) cash, in China’s biggest purchase of a Canadian oil and gas company since Cnooc Ltd.’s takeover of Nexen Inc.
Yanchang will pay C$1.18 a share for Novus Energy, 42 percent more than its closing price yesterday, the Alberta-based company said in a statement. Yanchang said it will help fund the purchase by selling HK$1.6 billion ($206 million) in convertible bonds to its parent Shannxi Yanchang Petroleum Group Co., China’s fourth-largest producer.
June 5, 2013: PetroChina will outspend XOM this year

February 5, 2013: Chinese company to buy assets in Wolfcamp.

January 30, 2013:  Pioneer Natural Resources is selling 40 percent of its stake in the Texas Wolfcamp Shale play to a Chinese company in a $1.7 billion deal.
Pioneer said Wednesday that the Sinochem Group will pay $500 million in cash. The remaining $1.2 billion will be paid in the form of future drilling and facilities costs. Pioneer can draw those funds for six years, with an option to extend that period under certain circumstances.
September 13, 2012: China to build 400-MW power plant near Odessa, Texas

June, 2012: Malaysian State Oil Company: through purchase of its partner, Progress Energy Resources Corp (PRQ.TO), announced June, 2012, Malaysia acquires Progress' Montney Gas Play in northeast British Columbia. Where Progress operates, the formation is 300 meters thick and is a shale/silt formation well suited for horizontal drilling. The North Montney area is located adjacent to the Alaska Highway and has well developed transportation and infrastructure options to move natural gas to markets (source: PRQ website).


June 7, 2012: Chinese state-owned companies on a buying spree -- mostly energy and natural resources around the world. Surges to $20 billion in the first quarter, 2012.

January 23, 2012: I did not know that we could outsource bridge and highway infrastructure building and maintenance/repair to the Chinese. The Chinese can do it more quickly and less expensively.  One fo the state government spokesmen said there were not enough US welders. Wow, I just mentioned that in one of my postings: why Obama killed the Keystone XL -- not enough welders to construct it.

January 17, 2012: China is the big winner in the Iranian "crisis."
China could win big oil concessions from Iran as the Islamic Republic faces the loss of major oil revenue from the tightening Western sanctions over its controversial nuclear program. China currently buys one-third of Iran's oil exports,....Right now, Iran is already at risk of losing this major customer, despite their important political ties, as China comes under mounting pressures by the West to reduce its imports of Iranian oil -- as are other important Asian players such as India, Japan and South Korea. Ultimately, all cards could fall in China's favor. --- To counter the "bad press" China will get from the rest of the global community, it will extract huge price concessions from Iran.
January 15, 2012: When I posted the original story below I did realize how interesting it would turn out. There is now more being reported; the refinery is a very small piece in the overall China-Saudi Arabia story.

Data points:
  • International sanctions against Iran could have significant impact on China's energy supplies
  • Chinese are visiting Saudi Arabia now, hoping to ensure adequate supplies from Saudi pending any loss in access to Iranian oil
  • Saudi Arabia is already China's number 1 supplier
  • China imported 13 percent more oil from Saudi in 2011 compared to 2010
  • In exchange for guaranteed access for more oil, China willing to invest in more infrastructure in Saudi Arabia
From the story:
China cut oil imports from Iran in January and February in a commercial dispute over contract terms, and has been looking for alternative supplies.

Yet China is unlikely to dramatically boost crude imports from Saudi Arabia, even with the Iranian worries, said Meidan, the analyst with the Eurasia Group.

"In the likely event that Iran will offer discounted oil, Chinese traders will buy more Iranian barrels and could consequently reduce their Saudi imports," she said.

"Wen will therefore need to convey both commercial and diplomatic realities to Saudi Arabia, China's number one source of crude imports, and ensure that bilateral ties remain on steady footing."
The most intriguing data point:
In the first 11 months of 2011, top supplier Saudi Arabia shipped 45.5 million tons of crude to China, a rise of 12.9 percent over the same period in 2010, according to Chinese customs data. Angola and Iran were China's second and third biggest suppliers.
Thirteen percent is not a trivial number. All things being equal, I don't see how this wouldn't keep pressure on price of oil on the upside.

Original Post
Link here.

I couldn't decide whether to post/link this story, but it reminded me of a story I linked back in 2010, a story that I may have misinterpreted. Looking back, it was a story that certainly confused me. In that tory of 2010, China announced it was going to halt exports of diesel fuel to calm inflation in China.

In the Breitbart story linked above, it is announced that:
Saudi state oil giant Aramco inked a deal Saturday with China's Sinopec to build an oil refinery (Yasref) in the Red Sea city of Yanbu that will process 400,000 barrels per day ...

Saudi Aramco will hold a 62.5 percent stake with Sinopec holding the balance in the venture that highlights China's growing role as an infrastructure developer in the oil rich kingdom. 
"... highlights China's growing role as an infrastructure developer in the oil rich kingdom."

China has a lot of unemployed young men and a new refinery in China would be preferable in the eyes of some, but instead China has opted to build the refinery in Saudi Arabia.

The US is moving out of Iraq and trying to extricate itself from Afghanistan. China continues to invest heavily in US energy prospects ... the current administration is turning its back on Canadian oil ... it doesn't take a weatherman to know which way the wind is blowing...

The Midnight Run Wells -- The Bakken, North Dakota, USA


March 8, 2013: another permit for this section, 24537, Midnight Horse

December 6, 2012: all seven wells are now completed, reported.
June 10, 2012: this string of wells is updated (see below).  There is another well, #22675, that is being drilled; rig on site.

April 26, 2012: elsewhere this information was provided regarding BR's Midnight Run wells:
  • #20323 - 23,584 bbls for March, 23 days of production 
  • #20324 - 21,349 bbls for March, 23 days of production 
  • #20325 - 23,368 bbls for March, 23 days of production 
  • #20326 - 19,619 bbls for March, 23 days of production 
  • #20327 - 19,930 bbls for March, 23 days of production 
  • #17421 - 10,092 bbls for March, 31 days of production; this well has been producing since Oct 2008, 243K cum to date 

Original Post 
These is a string of Burlington Resources wells, running west to east (or east to west) in section 1-152-96, Union Center oil field. Union Center oil field is right in the bull's eye of the Bakken, just east of the Banks, Twin Valley, and Westberg oil fields.
  • 17421, 544, BR, Midnight Run 41-1H, Union Center, Bakken, 7/08; t11/08; cum 328K 1/13; 9-stage fracture; still producing 12,000 bbls/month
  • 20323, 3,325, BR, Midnight Run 11-1MBH, Union Center, Bakken, t12/11; cum 158K 1/13;
  • 20324, 1,963, BR, Midnight Run 21-1TFH, Union Center, Bakken, t12/11; F; cum 82K 1/13;
  • 20325, 2,846, BR, Midnight Run 21-1MBH, Union Center, Bkken, t12/11; F; cum 133K 1/13;
  • 20326, 2,083, BR, Midnight Run 31-1TFH, Union Center, t11/11; F; cum 116K 1/13;
  • 20327, 2,443, BR, Midnight Run 41-1TFH, Union Center, t12/11; F; cum 89K 10/12; this well is off-line a lot; no real production since October, 2012;
  • 22675, 2,640, BR, Midnight Run 11-1TFH, Union Center, t10/12; F; cum 40K 1/13;
  • 24537, conf, BR, Midnight Horse 11-1MBH-ULW, [added March 8, 2013]
The Banks oil field recently reported a great Statoil/BEXP well.

Newfield recently reported a short lateral with an IP of 3,721.

Preferred Sands Update: Largest Frack Sands Company in Canada; Among Top Three in USA

Link here.
Preferred Sands has acquired substantially all the assets of Winn Bay Sand, including mining locations in Blair, Wisconsin and Hanson Lake, Saskatchewan, for an excess of $200 million. Preferred is now the largest frac sand producer in Canada and one of the top three in the U.S.

The acquisition will benefit Preferred Sands’ customers by allowing the company to increase its current capacity. Both the Blair and Hanson Lake locations are in close proximity to existing Preferred Sands operations. The access to rail in both locations will streamline and shorten the length of time for transport. 
Blair, WI, is 60 miles south of Chippewa Falls, WI. Chippewa Falls is 620 miles east of Williston, ND, the heart of the Bakken.

Hanson Lake, SASK, is 450 miles directly north of Williston.

As noted earlier, if the folks in Chippewa Falls don't appreciate their resource, the Williston Basin companies will simply look elsewhere (in this case, north to Canada). This is not rocket science (rail transportation is better east to west, but truck traffic north to south is just fine).

(I think Canada can ship sand across the border without State Department approval. Just saying.)

Carpe Diem: US Shale Oil Revolution Has Just Begun

Link here.
Perhaps you have heard of the Utica Shale in Ohio now, where Total has just splashed out more than $2 billion on a prospect that is still in its infancy — production is essentially nil today— but which promoters say could be the next Eagle Ford shale. But have you heard of Colorado’s Niobrara shale, California’s Monterey Shale, Oklahoma’s Mississippi Lime Shale, the Tuscaloosa Marine Shale in central Louisiana or the Lower Smackover Shale that stretches from Northern Louisiana into Arkansas?
Hey, Reuters, have you heard of the Bakken!

For Investors Only: Another List of Bakken Stocks to Consider -- Seeking Alpha -- "Usual Suspects"

Link here. Listed in order as they appear in the link:
  • NOG
  • Triangle
  • CLR
  • KOG
  • VOG
  • Oasis
  • USEG
Summarizing statement from the link:
USEG is the only company in the comparison undervalued in both its net oil and gas asset valuation and its oil sales valuation. KOG is the only company in the comparison overvalued in both its net oil and gas asset valuation and its oil sales valuation.

Why I Love To Blog: Reason # 3,401: Another Success Story -- The Bakken, North Dakota, USA

Link here.

Data points
  • Summit Energy Services
  • broad array of skill sets
  • construction and maintenance for oil companies
  • lays pipeline
  • five employees 19 months ago
  • 162 employees today
  • $100,000 to $3,000,000 revenue in "year-and-a-half" -- that's MONTHLY revenue -- $3,000,000/month
From the Dickinson Press:
“In any company, it’s your employees that bring in that expertise, not the owners,” he said. “No company can be successful without it’s employees.”

Tom Wall, the company’s director of business development, said he was a consultant for putting the company together when it started. He added Sweeny has a “servant approach” to business.

“Leaders are not entitled to be given things,” he said. “Leaders are accountable and responsible to ... provide the best possible environment to provide good work. It is very difficult to describe, but you can feel it walking in. People are just a lot more comfortable here.”

Wall also said he has never seen a business with one owner do so well.
Enjoy the article; it's seldom I find such a positive story in the Dickinson Press. Hopefully we see more of the same. 

Apple Computer -- Absolutely Nothing To Do With The Bakken


January 18, 2012: More Apples landing on corporate desks. I noticed the same thing in the military. Graphics shops, intel shops, and headquarters were the first to get Apples; the rest of us were stuck with WinTel.

Original Post
Link here.
According to IDC estimates, Apple shipped 2 million Macs in the U.S. during the quarter ending Dec. 31, an increase of 18 percent over the same quarter of 2010. Gartner’s number of 2.1 million was slightly higher, as was its 21 percent year-over-year gain by Apple.

All other computer makers in the top five shipped fewer machines in 2011 than they did the year before, IDC and Gartner said.
Again, to repeat: Apple shipped 20 percent more computers in 4Q11 than in 4Q10. All other computer makers shipped fewer. 

I doubt I would have posted that story, but it confirms what I see when I stop in the Starbucks coffee shop on Harvard Square, Cambridge. Yes, one sees a few non-Apple computers, but one is struck by the number of Apple computers in the coffee shop. It is truly amazing.

The most interesting thing: one can spot an Apple computer from across the room. One can identify non-Apple computers, but one cannot identify the brand. Non-Apple computers have been commoditized by WinTel. Apple remains a name-brand computer company.

Apple has become the "new" Gucci. Except "average" folks can afford Apple products and it is not considered too pretentious to use an Apple. It has become bourgeois, if that makes sense, but yet the elite use them. Jean Valjean would have carried an iPhone, if only to coordinate the flash mob at the barricades.

One buys Apple or one doesn't.

I remember articles a couple years ago that iPads would cannibalize iMac (Apple computers); in fact, I argued that first-time buyers of Apple products (via the iPads) would convert to Apple. With Apple one gets the entire community of devices: smart phones, tablets, light laptops, laptops, desktops. And TV to follow.


On a completely different note, for the past week, I've been enjoying coffee at the Starbucks overlooking Harvard Square, Cambridge, Massachusetts. The most incredible moment: when I turnright to go up the stairs, I feel as if I am back in Yorkshire. The stairs are wooden, worn, and the passageway is dark. One small difference: in Yorkshire the stairway would be only as third as wide. And if the thoroughfare below the Starbucks was much narrower and if the cars were driving on the "wrong" side of the road, I would think I was back in Harrogate. And I wouldn't be on the computer. Smile.

Diamonds and Rust, Joan Baez

Perhaps one of the most poignant love-songs ever written led me down a rabbit path to this little bit of trivia:
In 1958, her father accepted a faculty position at MIT, and moved his family to Belmont, a suburb of Boston, Massachusetts. At that time, it was within the center of the up-and-coming folk-music scene, and Baez began busking near home in Boston and nearby Cambridge. She also performed in clubs, and attended Boston University for about six weeks. In 1958, at the Club 47 in Cambridge, she gave her first concert. The audience consisted of her parents, her sister Mimi, and a small group of friends to a total of eight patrons. She was paid ten dollars. Baez was later asked back and began performing twice a week for $25 per show. -- Wiki
"Our" home when "in Boston," is in Belmont, a 20-minute ride on bus route 73 to Harvard Square, Cambridge. A subway stop or two on the Red Line and one is at MIT.

Love Is Just a Four-Letter Word, Joan Baez

A country-western song. I wonder if Norah Jones will cover this one?

The title, "Love Is Just a Four-Letter Word" comes from a line in the Tennessee Williams play, Camino Real (no wonder the country-western flavor) in which:
A main theme that the play deals with is coming to terms with the thought of growing older and possibly becoming irrelevant. -- Wiki

Idle rambling; for the archives; something to share with my granddaughter, Arianna, who at age 8 loves Greek mythology.

From The War That Killed Achilles, Caroline Alexander, c. 2009, remaindered.

The Iliad covers a 2-week period in the 10-year long Greek siege of Troy. The Greek commander, Agamemnon, is the son of one of the most, if not the most, powerful king in "Greece," and is the equivalent of the 5-star general leading the seige. One of his lieutenants, Achilles, is himself a son of a Greek king, but is at best equivalent to a brigadier general (one star); based on his argumentative personality is more like a colonel.

The Iliad starts off with a quarrel between Achilles and Agamemnon, bordering on, if not outright, insubordination. Achilles is upset with Agamemnon's leadership style and war strategy and has told Agamemnon he has not come to the Troad to die:
I, for my part, did not come here to fight the Trojans for their sake, since they have done nothing to me.  Never yet have they driven away my cattle or my horses, nor spoil my harvest; for indeed there is much that lies between us, the shadowy mountains and the echoing sea.
And then Caroline does this, recalls Muhammed Ali's famous refusal to fight in Vietnam:
I ain't got no quarrel with the Viet Cong ... No Viet Cong ever called me nigger ... I am not going 10,000 miles to help murder, kill, and burn other people to help simply continue the domination of white slavemasters over dark people.
Some irony that I am reading that on the weekend of celebrating Martin Luther King's birthday and life. It is also interesting to see Ali's use of "dark people." When my five-year-old granddaughter tells me the story of Martin Luther King, she always refers to "dark people," not using other terms. Interesting.

Like WWI, I have never been able to understand the Iliad. Twenty pages in to Caroline's book and I have already had an epiphany. Wow.

Sprung Buildings in the Bakken Oil Patch -- The Bakken, North Dakota, USA

Link here.

The link is to a "television" site, so I doubt the link will stay long.
Oil field companies seem to pop up overnight. At least it looks that way on the landscape. Many of these companies are using Sprung Buildings - portable structures that can be built at an unbelievable speed.

A Sprung Building is a structure that uses kevlar-type fabric coated with vinyl and then is placed over an aluminum I-Beam ribbing structure. Because of how it`s made, companies can erect them quickly.

“We just got done doing a structure for Baker Hughes that was 11,000 square feet, and even with some bad weather, we got it done in less than three weeks" says Structure Solutions owner Steven Below.

And what makes these facilities so unique is that they can withstand the cold of the North Pole and the heat of the Middle East.

Press Release for the New Truck Stop / Industrial Park North of Williston -- The Bakken, North Dakota, USA

Link here.

The link is via "The Williston Wire." I do not know how long these links "last."

Note: Granite Peak Development is the developer. Granite Peak has become Williston's de facto city planner and leading developer. GPD is out of Casper and Cheyenne, Wyoming.

This is a press release, so generous "cut and paste":
Some 60 acres in the northwest corner of the Bakken Industrial Park will combine numerous truck related facilities to provide a home for the trucker in Williston including Love’s, a major truck plaza, a major truck wash, a large truck parking area, and a water truck depot that will diminish the need to go through Williston to get water for fracking.

The Love’s Travel Stop will cover nearly 10,000 square feet with a national fast food restaurant and a truck tire care center for professional truck drivers." There will be eight gas islands and eight diesel fuel dispensers as well as 100 truck parking spaces and a convenience store.

Adjacent to the Travel Stop will be a Shorepower Technology Truck Park with capability to park 400 trucks with direct to truck services such as electricity, wireless internet and cable tv.

On a five acre site will be situated a a four-bay automated truck wash facility. Each bay will wash 18 wheels in 18 minutes. The site is large enough to allow truck staging on the site for those waiting to get through the wash, without blocking the road.

In recent months the 650 acre Bakken Industrial Park has started to take shape with roads and city water and sewer. “This is a major development when you extend city sewer service 5 miles to a project like this,” says Mayor Koeser.

As the infrastructure is completed in the Bakken Industrial Park, the businesses that will occupy the park are starting to become known and in 2012 there will be substantial construction to follow”, says Metzler.

In addition to truck facilities, the park will include space for commercial, industrial and workforce housing to provide a blend in a mix-use development.

The 650 acre park is located immediately south of the Springbrook-Epping turnoff (County Road 6) on US Highway 2 & 85 north of Williston. 

Week 2: January 8, 2012 -- January 14, 2012

ND production hits 500,000 bopd 

Building permits, dollar value, Williston, triples previous year: $360 million for 2011

A Madison well with 1 million bbls cumulative

Four more motels in Williston going up

Luxury suites coming to downtown Williston?

Williston's Herman Oil sold to a Texas company

Huge backlog in railcars

Minot starting to see tangible effects of the boom

ONEOK's Garden Creek natural gas processing plant up and running; two more to go

Another refinery in the Bakken?

The Skunk Creek wells will be huge for KOG

The Stroh wells, an update

KEG: a "new" oil services company to watch

Headline story in USA Today:  fracking sand; unfortunately with typical negativity