Tuesday, February 14, 2012

Wow, Wow, Wow -- Keystone XL Pushed Back to 2015 --

"to be approved eventually"

Link to Rigzone.com here.
TransCanada Corp.'s schedule for the controversial Keystone XL oil pipeline slipped further Tuesday, as the Calgary pipeline company said it now expects a start-up date in early 2015 rather than its previous expectation of 2014.

Earlier this year, the Obama Administration refused to grant the line a permit to cross the U.S. border, though the White House invited TransCanada to apply again. TransCanada executives say they still expect the line - envisioned to transport crude from Alberta to the U.S. Gulf Coast - to be approved eventually.
This tells me that TransCanada -- for all their "threats" -- really does not have a viable plan for pipelining that oil to the west coast. 

It also tells me that if they are willing to wait this long, this project is a company-defining project.

For Investors Only -- Just For The Fun Of It -- NOG vs AAPL

Periodically it's fun to look at the 5-year return of NOG vs AAPL. Tonight, the comparison again reveals that NOG beat AAPL over the past five years. NOG comes in about 500% and AAPL comes in about 490%.

Note the disclaimer at the sidebar at the right. This is not an investment site. I own shares in neither NOG nor AAPL and won't be buying shares in either for quite some time, if ever, certainly not in the next 12 months.

If We Start Seeing Signifiant Increases in Gas Prices -- The President -- Note To the Granddaughters on Theodore Roosevelt and Hunting

"...and if we start seeing significant increases in gas prices, losing that $40 could not come at a worse time,” Obama said.

Link here. Note: this site often rounds off numbers. The actual gasoline price rise under the Obama administration has been 83% according to some sources. For newbies, a 100% rise is a doubling in price. For all intents and purposes, an "83-percent" rise in price is a doubling in price.

The extension of the payroll tax cut will help offset this doubling in the price of gasoline, at least according to the president.
President Barack Obama listed rising gas prices as among the many reasons to extend the payroll tax cut Tuesday, flanked by individuals the White House promoted as being affected by $40 per paycheck the average American would lose if the tax cut is not extended at the end of February.

“And when gas prices are on the rise again – because as the economy strengthens, global demand for oil increases – and if we start seeing significant increases in gas prices, losing that $40 could not come at a worse time,” Obama said. “One local entrepreneur named Thierry – where’s Thierry? He’s right here.

“He told us that $40 would cover the gas that gets him to his day job, or, alternatively, the Internet service his small business depends on. So he’d have to start making a choice – do I fill up my gas tank to get to my work, or do I give up my entrepreneurial dream. ‘Forty dollars,’ he wrote, ‘means a heck of a lot,’” the president added.
The most important nugget in that link? The payroll tax cut? The doubling in price of gasoline? Nope, this one line:  "...and if we start seeing significant increases in gas prices, losing that $40 could not come at a worse time,” Obama said.

That, folks, is the first trial balloon of the administration in preparing Americans for an increase in the price of gasoline this spring. $4 gasoline? You betcha. $5 gasoline? Not a problem; the tax cut will cover it. That statement is about as clear a message that can be delivered that the government expects to see $4.00 gasoline this spring.

So, if the payroll tax cut is extended, no more whining about the price of gasoline; it is being offset by a tax cut.  

Oh, by the way, most in Congress now agree that adding $100 billion to the $15 trillion debt is no longer an issue. 

"...and if we start seeing significant increases in gas prices, losing that $40 could not come at a worse time,” Obama said. 

"Significant." That is not a good word to hear. 

Notes to My Granddaughters

I have almost completed reading (for the first time), Don Aakland's 2010, In Trace of TR: A Montana Hunter's Journey.

This may just be one of the finest books I've read on the subject(s) and it will be sad to have finished it. But I will probable re-read it. The subjects: Theodore Roosevelt; Montana outdoors; hunting; national parks; elk; bison; wolves.

Now that I am finishing it, I wish I had noted some of the best writing, but did not. That's why I will probably go back through it and capture some things to place here. It will be hard not to go overboard.

I will start here:

"...which underscores the oneness of Man the hunter and Man the meat eater. It contains a quotation with which to tease vegetarian friends (if they have a sense of humor). We're told that, in the Blackfeet language, "the term for 'meat' is nita'pi waksin, which translates as 'real food.' All other food is called kistapi waksin, which translates as 'not real food.'" -- p. 234.

The vignette of TR reading Shakespeare's Hamlet to a Texas cowboy when both were stranded in a small hut during a North Dakota blizzard -- priceless. -- pp 250- 251. I particularly enjoyed that vignette (besides being completely surprised by it) because I very much enjoy reading Shakespeare's works to my older granddaughter. At 8 years of age, she knows the plot lines of at least two tragedies, Hamlet and Macbeth, as well as Romeo and Juliet, and a Midsummer Night's Dream, the latter I have never understood nor enjoyed. 

Update: Project to Begin; $12 - $14 Billion Project -- SERIOUS -- For Investors Only: Sasol Ltd -- Natural Gas -- Methanol


August 26, 2016: an update

December 4, 2012: Link to Oil & Gas Journal.
Sasol will proceed with front-end engineering and design for an integrated gas-to-liquids plant and ethane cracker with downstream derivatives at the company’s site near Lake Charles, LA.
The GTL plant will be the first of its kind in the US and produce 4 million tonnes/year (tpy; 96,000 b/d) of transportation fuel, including GTL diesel and other chemicals.
Sasol’s own feasibility study proposed the Louisiana plant produce GTL diesel, GTL naphtha, LPG, GTL base oils, paraffin, linear alkyl benzene, and medium and hard wax.
Sasol estimates current project costs for the plant at $11-14 billion. The project will be delivered in two phases, each consisting of 48,000 b/d. The first phase is to begin operations in 2018, the second in 2019.
Original Post
SSL was mentioned briefly by Jim Cramer today.

Sasol Announces Feasibility Study to Build the First U.S. Gas-to-Liquids Facility
JOHANNESBURG, Sept. 13, 2011 /PRNewswire via COMTEX/ -- South African energy and chemicals group Sasol today announced that it has chosen the southwestern region of the State of Louisiana as the site for a planned gas-to-liquids (GTL) facility. The project is slated to be the first plant in the U.S. to produce GTL transportation fuels and other products.

In a press conference today with Louisiana Governor Bobby Jindal, Sasol Managing Director: New Business Development Ernst Oberholster said, "We believe Sasol's proprietary GTL technology can help unlock the potential of Louisiana's clean and abundant natural gas resources and contribute to an affordable, reliable and high quality fuel supply for the United States."

"GTL fuels are an important part of the energy mix because they can advance energy independence in a way that is both cost-efficient and environmentally friendly," said Oberholster. In addition, unlike other proposed alternatives to conventional petroleum-based fuels, GTL fuel is used in existing vehicles and fuel delivery infrastructure without modifications.
Implications for the Bakken?

What is methanol? Wiki provides nice quick review.

"Charter" Air Service From Fargo to the Bakken Inaugurated -- The Bakken, North Dakota, USA

Link to the Bismarck Tribune here.
The shuttle goes to Williston, Minot and Dickinson, said Darren Hall, vice president of marketing. The service is different because travelers are now able to book a single seat on a flight instead of paying for the entire aircraft.

A one day round trip from Fargo to Minot costs $675 and to Dickinson costs $775. A trip to Williston from Fargo, Dickinson or Minot costs $875. A one-way trip costs $500.

People needing to travel can contact the jet service with the date they want to fly. The company will then coordinate with other passengers to get enough for a flight. Four to five people are needed for a flight to go out.

14 For the 14th -- Happy Valentine's Day -- Fourteen (14) New Permits -- The Bakken, North Dakota, USA

Daily activity report, February 14, 2012 --

Operators: Hess (7), Slawson (2), True Oil (2), Zenergy, Dakota-3, CLR

Fields: Ross, Forthun, Cow Creek, Hawkeye, Van Hook, and Corinth.

It appears that four of the Hess permits are for vertical "observation" wells in Hawkeye field, HA-Swenson Observation 18-1/2/3, and 4.

True Oil has permits for two wildcats in McKenzie County. Hess, also, has permits for two wildcats, also in McKenzie County.

Interestingly enough, a recently issued permit was cancelled by Denbury:
  • 22355, PNC, Denbury, Swenson 36-35SH, McKenzie County. 
Also, Whiting announced it was permanently abandoning:
  • 12992, PNA, Whiting, MOI Rough Rider 24-23H, Rough Rider oil field. This well was spud in 1990, and only produced for about five years before going to minimal production. Its total production was about 77,000 bbls.
Not unexpectedly, the True Oil permits are for wells in a section adjoining their Red Wing Creek oil field.

No completed wells were reported.

The "Lost 66,000 DNR Acres" -- The Bakken, North Dakota, USA

This is one of my favorite pages, the page on this blog with a "snapshot" of the players in the North Dakota Bakken. For example, this is a snapshot of Denbury. Quickly skim through the snapshot, and get to the narrative farther down.

Denbury = EOR

  • ~ 200,000 (February corporate presentation)
  • Back to 266,000 net acres (Enercom Conference, August 16, 2011); note -- previously planned to add 7th rig by January, 2012; now by end of 2011 (not much difference, but moved up) -- nope, back to six (6) rigs through 2012;
  • 275,000 net acres in the Bakken (January, 2011; agrees with corporate presentation)
  • 266,000 net acres (April, 2011; IPAA conference presentation)
  • Fields, SW of the river: Camp, Cherry, Lone Butte, Bear Creek, Charlson, and Murphy Creek
  • Field: NE Foothills in Burke (+/- value)
  • Field: Almond in Ward County (76,000 acres; almost no proven value yet)
  • Analyst's number: 300,000 net acres (December 31, 2010)
  • 5 rigs (1H11); increase to 7 by January, 2012
  • Production (from the Bakken): 9,976 (3Q11); 11,892 (4Q11); target: 14,750  in 2012
  • Production (from the Bakken): 8,826 boed (2Q11); target: 8,400 
The narrative:

In the snapshot above, note that as of last summer, 2011, Denbury had 266,000 net acres in the Williston Basin, but in their most recent presentation, just a few days ago, February, 2012, the CEO clearly stated (and the slides confirmed) the company had ~200,000 net acres.

I was curious where the "66,000" acres went but did not bring it up (for various reasons).

Now, thanks to a reader, we have the answer. Here's what happened to the 66,000 acres -- sent to me in a comment which I re-post here because it is an incredibly important note, with a great analysis. Here's the comment:
An interesting item in Denbury's presentation is what is not there. Denbury has dropped its "Almond" prospect when listing their various Bakken prospect areas. This reduced their Bakken net acres from about 260,000 to 200,000. Their Almond prospect, essentially located in Ward County, ND, was acreage Encore had blocked up back in 2007 and 2008. Subsequent drilling seems to show this is beyond the northeast edge of Bakken production.

This might be the first of many cases like this. At some point several of the other companies should clean their books and acknowledge not all their leased acres in North Dakota & eastern Montana are Bakken prospects. Continental Resources and Hess also have similar blocks of acres which appear to be too far east and likely out of producing areas. You can review the maps on their presentations and see which companies have these large blocks of outlying acreage.

I'm guessing none of the companies will want to admit that some of their net acres are out of the play. Yet Denbury bit the bullet to provide an accurate assessment of their Bakken prospects, they deserve credit for doing so.  
The Parshall oil field caught everyone's attention when the Bakken boom began back in 2007 in North Dakota, but a curious thing happened. It appeared that the western half of the field was "good," but the eastern half of the field was not living up to Bakken expectations.

For newbies, it turns out that DNR's Almond Prospect, located in Ward County, North Dakota, is even farther east. [Interestingly, I mentioned the Almond Prospect in a December 10, 2010, posting linking an Eric Fox article.]

There are rumors that there will be a play this far east in the Williston Basin at some point, but there is no guarantee and it isn't going to happen any time soon. Regardless, the important point to be made is that we now know where the ""lost DNR acreage" was. Of course, we don't know who acquired it and for what price.

But most importantly, a reader sent this information in to be shared with all. A huge "thank you."

And yes, I agree: we should see lots of acreage change hands in 2012 as companies start to sort out what they have at the five-year mark of the boom.

Obama's Team of Five: $3.9 Billion to 21 Energy Companies -- Another Solar Company Files For Bankruptcy -- Energy Conversion Devices


November 16, 2012: A123 received almost $1 million (auto-pilot disbursement) on very day it filed for bankruptcy.
The Obama administration provided struggling battery maker A123 Systems Inc with nearly $1 million on the day it filed for bankruptcy, the company told lawmakers investigating its government grant.

The company, which makes lithium ion batteries for electric cars, filed for Chapter 11 bankruptcy protection last month after a rescue deal with Chinese auto parts supplier Wanxiang Group fell apart.
That same day, October 16, A123 received a $946,830 payment as part of its $249 million clean energy grant from the Energy Department, ...
I guess it's the principle of the thing. $1 million / $249 million  --> 0.4 percent. Also, one million dollars is about as much as it costs for the Obamas to go to Paris for the weekend. In other words: it is so inconsequential, it does not matter. Posted for archival purposes only.

October 16, 2012: A123 declares bankruptcy; automobile business assets bought by Johnson Controls.

August 9, 2012: A123's angel? China.
Early in 2012 President Barack Obama responded to critics of his multi-billion-dollar green technology initiative by saying he was "not going to cede the wind or the solar or the battery industry to China."

Six months later, he faces that very real possibility for the U.S. car battery industry, a once-high flying sector buttressed by generous federal grants, but struggling with a green car market that has fallen far short of expectations.

A123 Systems Inc on Wednesday became the second U.S. government-backed battery maker this year to go overseas for a lifeline - and it turned to China. Auto parts supplier Wanxiang Group will take a controlling interest and invest $450 million in the Massachusetts-based battery maker, which faced running out of cash by the year-end.

Earlier this year, Ener1 Inc, another battery maker that received a government green technology grant, emerged from Chapter 11 bankruptcy under the control of Russian investor Boris Zingarevich. New York-based Ener1 is also a joint-venture partner in China with a Wanxiang subsidiary.
June 17, 2012: CBS Nightly News had this story on A123
A123 has declined further interview requests. As for that battery breakthrough announced this week, many analysts seemed underwhelmed.

"These new technologies that are introduced have to be vetted over a number of years before they actually find their way into products," said Theodore O'Neill of Wunderlich Securities. "So the product itself is interesting, but doesn't do anything to solve the financial problems that A123 has."

A123 isn't giving up. It still has more than 100 million federal stimulus tax dollars left to spend. Recently the company said it will hire 400 people -- not to build batteries for electric cars, but for power grids.
February 24, 2012: another "green company" in financial trouble; $400 million in stimulus money; lays off 125; increases pay for top executives; this time it's A123 in Boston, a battery company, the company's primary customer, Fisker Automotive, is also struggling financially;

February 17, 2012: Democratic National Convention co-chair received $230 million in "green stimulus" money.

February 15, 2012: Venture capitalists on Obama's team explains the solar debacle
Sanjay Wagle was a venture capitalist and Barack Obama fundraiser in 2008, rallying support through a group he headed known as Clean Tech for Obama.

Shortly after Obama’s election, he left his California firm to join the Energy Department, just as the administration embarked on a massive program to stimulate the economy with federal investments in clean-technology firms.

Following an enduring Washington tradition, Wagle shifted from the private sector, where his firm hoped to profit from federal investments, to an insider’s seat in the administration’s $80 billion clean-energy investment program.

He was one of several players in venture capital, which was providing financial backing to start-up clean-tech companies, who moved into the Energy Department at a time when the agency was seeking outside expertise in the field. At the same time, their industry had a huge stake in decisions about which companies would receive government loans, grants and support.

During the next three years, the department provided $2.4 billion in public funding to clean-energy companies in which Wagle’s former firm, Vantage Point Venture Partners, had invested, a Washington Post analysis found. Overall, the Post found that $3.9 billion in federal grants and financing flowed to 21 companies backed by firms with connections to five Obama administration staffers and advisers.
Original Post
Link here to Reuters article.
Lightweight solar product maker Energy Conversion Devices Inc filed for bankruptcy protection on Tuesday, the latest in a string of solar companies that have collapsed in an industry shakeout.

The company, whose filing follows years of losses and months of public discussions with bondholders, said it would sell its United Solar Ovonic unit and other assets in bankruptcy.

Energy Conversion, whose solar laminate products are used for panels on rooftops and buildings, said it would continue to operate during the sale process.

Energy Conversion's failure is the fourth major bankruptcy in the industry in the past year. Evergreen Solar Inc, Solyndra and SpectraWatt have also sought Chapter 11 protection.
The dots are starting to connect. A long laundry list of solar energy companies were given loans, grants, tax breaks, etc., by the federal government all about the same time. They all had a similar business plan, and right on cue, they all foundered about the same time, about the time the taxpayer money ran out.

My hunch is that if the current president is re-elected, these companies will get a new lease on life, and the process will start anew.

It should be noted that bankruptcy does not occur overnight. Although the bankruptcies come when natural gas prices are in free fall, these solar companies couldn't even make it when natural gas prices were (a bit) higher and when these solar companies had the venture capital and tax breaks on their side.

Random Update on Whiting's Richardson Federal Well in the Sanish - The Bakken, North Dakota, USA

Random update on a Whiting well in the Sanish; note that it was spud in 2008, and still has no pump; nearing 700K cumulative after a bit more than 3 years.
  • 17158, Whiting, LL, Richardson Federal 11-9H, 4,148, s8/08; t10/08; F; cum 659K 12/1

Multi-Zone Gas and Oil Discovery in Poland's Eastern Baltic Basin -- And A Coincidental Link to the US Alberta Bakken


A few hours later: it is always amazing what dot connects to another dot. I had no idea there was a connection between Poland and the Bakken -- the Alberta Bakken, in this case.  See first comment ("thank you" to "anon 1." First: this link to FX Energy.
FX Energy, Inc., is an independent oil and gas company focused on Poland.  We believe Poland’s hydrocarbon producing areas are underexplored because the country was closed to competition from foreign exploration companies for many decades.  FX Energy has accumulated a large land position in known productive areas, assembled a sophisticated technical team, and generated a number of attractive gas prospects.
Then a link to their corporate presentation.  Slide 28/30 shows the company's link to the US Alberta Bakken.
  • FX has a joint venture with American Eagle Energy, Inc., and Big Sky Operating LLC to participate in a broader area of the southern Alberta Bakken play
  • The joint venture holds an acreage spread of approximately 75,000 net acres, including FX’s Cut Bank acreage below the Cut Bank horizon; each party holds a one-third interest
  • In 2011 the FX JV parties drilled 3 vertical wells and tested oil in the Lodgepole, Bakken and Three Forks; the parties also drilled and fracked a 3,600’ lateral (currently testing) on one of the three wells
  • Starting in March the parties plan to drill two more vertical wells and drill, frac and test a 4,000’ lateral on one of the vertical wells drilled in 2011
Original Post

I normally would not have posted this as a stand-alone post, but the timeliness of the article is too good to pass up.

I am an eternal optimist (one of the reasons why I am not a great investor -- smile) and don't have much tolerance for 24/7 pessimists. So this is too much "fun" to pass up.

Yesterday, I linked a story about the Polish shale gas story and how it might upset the Russian gas monopoly in eastern Europe. A realist reminded me that just 'cause there's shale there (in Poland) doesn't mean it can be productive, noting that XOM had drilled two dry holes.

So, it was great to receive this link about a multi-zone gas and oil discovery in Poland's eastern Baltic basin.
Talisman Energy Inc. has set production casing at an indicated multizone discovery in Poland’s eastern Baltic basin.

Partner San Leon Energy PLC said the Rogity-1 well on the Braniewo S concession went to 2,788 m and encountered continuous gas shows over more than 500 m of the Lower Silurian, Ordovician, and Middle Cambrian sections. The rich gas shows consisted of heavy hydrocarbons, including C1-nC8, San Leon said.

The richness of the gas shows is consistent with a wet gas system, confirming the company’s regional model of the eastern side of the basin being in the oil window, San Leon said. The strongest gas shows, along with indications of oil, were encountered in the Lower Silurian interval, estimated to be more than 100 m thick. Oil shows were also found in Ordovician limestones and shales and in Middle Cambrian sandstone.

Congress Has Given Up -- Just Extend The Payroll Tax Cut -- ObamaNation 2012

What is another $100 billion on a $15 trillion debt?

Dublin Oil Field With Some Minor Updates -- The Williston Basin, North Dakota, USA

Elsewhere, some folks were inquiring about an area north of Williston, in and/or near the Dublin oil field.

This gave me an opportunity to update a bit of information (not much) regarding this area.

Obama Wants $1 Trillion for Arab Spring -- ObamaNation 2012 -- Absolutely Nothing To Do With The Bakken

There are two links.

The first link has to do with the Obama budget request to send $1 trillion to the Mideast to help expenses incurred in "Arab Spring." (This site often rounds numbers.) The actual number is closer to $775 billion but government figures tend to be a bit understated, especially in highly politicized venues. For me, the Obama number for "Arab Spring" is $1 trillion.

The second link is to the group who will manage that money, the Muslim Brotherhood.

Meanwhile the slaying of women and children continues in Syria, with very little reporting/photographic coverage coming out. Arab Spring continues, I guess. It's nice to see that the US won't go into Syria to stop this horror unless the Syrian government invites us in. Something tells me Assad won't be sending us a petit bleu. It's not often the US waits for an "invite."

Just saying.

Okay, three links. I had just planned on two links, but then got to rambling. Somehow they're all connected.

$5 Gasoline -- Others Now Saying the Same Thing


February 15, 2012: add president Obama to those who foresee $5 gasoline

Original Post

I caught a bit of flack for posting thoughts about $5 gasoline, but I see others are now suggesting the same thing. From Lehigh Valley, Pennsylvania:
American motorists have seen the national average for a gallon of regular gasoline rise above $3.50 a gallon on just three occasions, but it has never happened this early in the year. Analysts say it's likely a sign that pain at the pump will rise to some of the highest levels ever seen later this year.

In 2008, average gasoline prices had hit inflation-adjusted records nationally by the summer, but they didn't climb above $3.50 a gallon across the U.S. that year until April 21, according to the AAA Fuel Gauge Report. It happened again last year, but not until March 6.

But $3.50 a gallon gasoline is already here in 2012, weeks before refineries typically shut down for springtime maintenance, and weeks before the states switch from their less expensive winter blends of gasoline to more complicated and pricier summer blends.
The "more complicated blends" are mandated by the federal government and various states, and thus the "pricier" tag.

By the way, that $3.50 is not out of line. The gas station across the street here in a Boston suburb has least expensive gasoline at $3.69.

Luxury Suites in Williston -- Update -- The Bakken, North Dakota, USA

For those who may not read the comments, I got the following comment:
Winterton Suites will be building a new building, with construction scheduled to start as soon as the frost is out of the ground. For more info, please call Randy Crozier @ 701-540-1660. 
At this posting: luxury suites coming to Williston?

Note the Williston area code! Wonderful to see.

For Investors Only -- High Dividend Stocks -- SeekingAlpha

Link here to SeekingAlpha.com.

The list includes EEP, EPD, KMP, LINE, OKS, and PAA, which one would expect. Many serving the Bakken.