Monday, February 20, 2012

Marathon Expects Big Returns from the Bakken, Eagle Ford -- Rig Zone

Link here to
"Marathon Oil ended the year with 406,000 net acres in the Bakken Shale play in North Dakota. During December the Company achieved record average production of approximately 24,000 net boed, compared to 14,000 net boed in December 2010, more than a 70 percent increase," the company said.

"[Marathon's] Bakken production averages approximately 95 percent crude oil. As of Jan. 25, there were 19 gross operated wells awaiting completion. Marathon Oil has six drilling rigs, plus one rig dedicated to completions, and plans to add a seventh drilling rig in the second quarter of 2012."

ATT Press Release: $30 Million Invested in North Dakota 2009-2011

ATT invested more than $30 million in its North Dakota wireless and wireline networks from 2009 through 2011 with a focus on improving the company's mobile broadband coverage and overall performance of its networks.

During 2011, AT&T made more than 200 wireless network upgrades in four key categories in North Dakota. These enhancements include:
  • Activating 11 new cell sites or towers to improve network coverage.
  • Adding capacity or an extra layer of frequency to cell sites – like adding lanes to a highway – with the addition of 21 of these layers, or "carriers".
  • Upgrading 178 cell sites to provide fast mobile broadband speeds.
Same time period, dollar investments by state:
  • Texas: $6.3 billion
  • Florida: $2.8 billion
  • Massachusetts: $475 million
  • Maine: $60 million
  • Vermont: $50 million

Hofmeister's $5 Gasoline

It looks like $5 gasoline is in the can, as they say in the movie industry, in Los Angeles.

Link here.
CBS2’s Kara Finnstrom reports that a gallon of self-serve regular unleaded gasoline is $4.93 a gallon at a Shell station in the Miracle Mile district.

It’s not unusual to have price jumps in February, but AAA and the Oil Price Information Service say gas prices were already at record highs.
No comment.

Violent Crime Surges Forty (40) Percent

No, not in the Bakken, not where $2 billion/month is flooding into the oil patch.

But rather in the nation's capital, Washington, DC.
Violent crime so far this year in the District of Columbia has spiked sharply — a 40 percent increase that includes twice as many robberies at gunpoint than at this time last year.

The crime rate is increasing this year after a downward trend — the number of reported homicides last year dropped to the lowest level in a half-century.

Homicides were the only category of violent crime to decline in the first six weeks this year. As of Thursday, the city had recorded 10 homicides compared with 11 at a similar point last year.

Overall, though, incidents of violent crime — homicides, sexual assaults, robberies and assaults with deadly weapons — are rising at an alarming pace.
No comment.

Okay, one. I love this writing:
Homicides were the only category of violent crime to decline in the first six weeks this year. As of Thursday, the city had recorded 10 homicides compared with 11 at a similar point last year.
Ten vs eleven and the writer says this represents a decline. Technically that's correct, but it's a meaningless statement. One homicide today and the story will change. 

Five Oil & Gas E&P Companies -- SeekingAlpha

Link here to

Companies mentioned: Total, NOG, Whiting, CLR, and Oasis.

The article is extremely superficial. The company overviews are very, very superficial and have a sense of being very old news. One almost gets the feeling the writer has just "discovered" the Bakken.

I was surprised to see NOG mentioned among the group of five.

For me, the credibility of the writer was lost when I read the following:
Northern Oil and Gas also acquires crude oil and natural gas properties, in addition to smaller operators in this area. In my opinion, the company's assets have and will continue to grow in value as this 'hotspot' (Bakken Shale) in the industry continues to produce results. The U.S. Energy Department estimates that the area contains enough natural gas to meet the country's demands for the next century.
I am not aware that the Bakken Shale has enough natural gas to meet the country's needs for the next century: that means the Marcellus, Haynes, Eagle Ford, and the Utica are superfluous, I guess.

I have said many times the president said the US has enough natural gas to meet the needs of the US, but he was referring to the entire US, not one field; in addition, the reality is that the president was exaggerating.

Worse, the Bakken is not known as a natural gas play; it's an oil basin.

It's nice to see these Bakken companies mentioned in a article, but this article misses the mark on many, many levels.

ONEOK Releases Earnings; Huge Quarter; Announces Stock Split

See "earnings central."

Earnings press release here. And here, see first comment.

Two-for-one split announced.

Blame It On the Sage Grouse -- Wind Farms in Wyoming: Many on Hold, but Not Abandoned


November 10, 2012: Link at LA Times.
The Pacific pocket mouse is one of 16 threatened or endangered species that share the base. Habitat restoration combined with environmental training and intense monitoring have resulted in strong comebacks for several.
The U.S. Marines at Camp Pendleton care most about two things: keeping America safe and saving a thumb-sized mouse from extinction.
Today, the largest known population of the mice inhabits a portion of the Crucible training grounds adjacent to a firing range and bivouacking area.
That is not necessarily bad for the mouse. Habitat restoration efforts combined with environmental training and intense monitoring by biologists have resulted in strong comebacks for several of the 16 threatened or endangered species that share the base. 
Certainly if these endangered species can make a comeback on a US Marine firing range and support area, certainly, the sage grouse can make it where there are transmission lines. The sage grouse is a McGuffin. 

Original Post 

Blame it on the sage grouse for the slow down in wind turbine construction in Wyoming.

Link here to the
No developer with state turbine permits in hand has abandoned a project, Parfitt said. But a number of wind farms are on hold, have yet to complete additional construction phases or are still dealing with a range of issues.

"Transmission is a key to a lot of this, having the new transmission capabilities," he said. "Obviously sage grouse core areas is a big part of this as well, as well as the tax structure, having some certainty there."

The tax structure is certainly unclear, or perhaps less friendly. In January, Wyoming began imposing a $1 per megawatt hour tax on wind energy production and a sales and use tax on equipment used in wind energy projects after state legislators nixed an alternate plan to continue a tax exemption for such projects and impose a 2 percent impact fee.

Gov. Matt Mead and some energy companies have said they fear the heavier tax burden will discourage wind energy projects in the state. Meanwhile, federal policymakers are now fighting over whether to extend a key federal tax credit.
Yup, blame it on the sage grouse.  The Netherlands has pulled the plug on off-shore wind energy, and Spain has suspended all renewable energy programs and to the best of my knowledge, there is no issue regarding sage grouse in those two countries.

For Investors Only: A New ETF -- Fracking Focus

Link here to
I should also mention that I don't think the environmentalists understand hydraulic fracturing. If there is water contamination near a well that has been "fracked", it isn't because of hydraulic fracturing. Rather, it is because of a poor cement and lining job of the well as it passes the underground water zone. This has nothing to do with the fracturing which occurs thousands of feet below impenetrable rock, and is just as likely to occur in a conventional oil or gas well.

What fracturing has done is open up previously useless oil and gas deposits which has brought the oil and gas business closer to populations which have no experience with it. This is a big contributor to the overreaction and confusion amongst the general public.
Interesting ETF.

Note my disclaimer at the sidebar at the right. This is not an investment site. I have not invested in the ETF noted above and have no plans to.

Pretty Good Science

"They" say the "average global temperature" will increase 0.6 degrees over the next 100 years due to anthropogenic global warming.

Now, they've been able to precisely, very precisely, predict how much global warming will be caused by the Keystone XL pipeline.....drum roll ...  one-twentieth of one degree will be caused by the Keystone XL. Link here.

Of course, the Keystone XL was never about global warming in the first place; it was about the aquifer, so I'm not sure what this short blurb in the Scientific American was all about in the first place. My hunch is the researchers were hoping for much more dramatic results, but hated to see all their work go to waste, so they published any way. One-twentieth of one degree: 0.05 degree.
A new analysis by scientists at the University of Victoria in British Columbia suggests burning all those proven reserves would release enough CO2 to warm the climate by only one 20th of a degree Celsius. Global warming to date is 15 times that.

And if humanity figured out a way to burn all 1.8 trillion barrels of bitumen in the tar sands? That would warm things by 0.36 degrees Celsius.
0.36 degrees. Incredible.

By the way, 15 x 0.05 = 0.75 degrees. That is how much the average temperature has risen according to the global warming advocates. 

Not statistically significant. Not reproducible.

It would be interesting to know how much all the new coal plants in China will contribute to global warming, according to these scientists.

Closer to home, it would be interesting to know how much the average temperature will rise if trucks and trains are used to transport the oil rather than the pipeline, again, according to these scientists.

Potential Proppant Manufacturing in The Heart of the Bakken

Great story in The Dickinson Press.
The North Dakota Geological Survey in Bismarck has completed collecting kaolinite samples from 10 counties in the west, including Stark, Dunn and Morton counties, according to its news publication.

“We looked at the ceramic proppant that was being used in the Williston Basin and saw it was coming in from out of state,” state geologist Ed Murphy said, adding most of it comes from out of the country, including China and Russia.

Proppant is used to keep fractures open in hydraulic fracturing, or “fracking.” Kaolinite sometimes has high aluminum properties, which is one of the main ingredients for proppant, Murphy said.

Kaolinite can be dazzling white, gold, purple or gray in color and can range from claystone to sandstone. Deposits are usually 10 feet to 40 feet thick and can be seen in hillsides.
Have you ever notices how mainstream media will reference a source without giving enough details to easily find it, or in the 21st century, providing the URL? It's possible they did and I missed it.

Markets Are Closed But Futures Indicate Higher Oil Price

I got a kick out of "anonymous" who wrote (twice) to say that the Saudis would not lie, that their integrity is on the line when talking oil. "Anonymous" suggested Saudi had "a lot of lose" if they misled us on reserves, production, or pricing. 

I thought that interesting, that someone would think that the Saudis, unique among the Arab world, would not intentionally mislead the West.

I see today that oil, having already melting up to the $100 figure, then "popping" to $104 (as the AP, or some mainstream media outlet headlined), is now up almost another $2.00 in futures.

The Saudi prince, of course, if anyone needs to be reminded, said on CNBC two weeks ago that Saudi would not let oil go above $100.

And then, quietly, for unknown reasons, it appears Saudi has decreased production / exports this past month. Both stories have been linked several times; so I won't take time to link them again.

I just find it interesting.

The poll is still up on whether Iranian actions in the Mideast will affect the price of oil. I had almost decided to change the poll (but it's a pain to do so) and it looks like the poll remains relevant.

With regard to Saudi and oil: I still maintain that Saudi has pricing power on the upside (can decrease production) but has little or no pricing power on the downside (can no longer flood the petro-market with oil on a dime). And I do feel that the administration missed several opportunities to rein in the price of oil but ideology won the day. And, of course, $105 oil makes renewables look a lot cheaper -- despite the fact the many solar companies are in bankruptcy now and wind energy companies are facing huge challenges (Spain suspended wind energy projects; the Netherlands pulled the plug on offshore wind completely). My hunch is that as long as expensive oil does not result in his losing the election, the president likes to see higher oil prices. In addition to the effect oil prices will have on the renewable energy industry, at some point a windfall profits tax on "Big Oil" will provide additional transfer of wealth for the nation.

Update on the North Dakota Lodging Industry -- The Bakken, North Dakota, USA

Link here to the Minot Daily Press.
Hotels, like corn kernels, will pop up everywhere when the oil is hot.

Across the booming Bakken Field, the hotel industry is building from Williston to Minot.

Souris Valley Suites in Minot opened an 89-unit building in south Minot in July and broke ground for a 47-room expansion a month later. Manager Terry Alexander said the notion to expand came about halfway through the original construction when calls for reservations revealed the demand in the market. It's a demand that's not going away anytime soon, he said.

"This is all really still in the infancy stage," Alexander said of the oil activity. "As long as that continues, the need is going to be here."

Catering to oil, construction and other long-term stay guests, Souris Valley Suites' management company plans to break ground in Williston on a hotel soon.

Statewide, the number of rooms increased from 15,207 in 2009 to 15,539 in 2010, and again to 16,221 in 2011. By the end of 2012, those numbers will have increased significantly again, said Wendy Howe, director of the Minot Convention & Visitors Bureau. Minot currently has about 1,900 rooms, having added about 300 rooms in the last couple of years, she said. The average occupancy rate of 86 percent runs well ahead of the 60 percent nationally.
These figures do not include temporary housing, I assume. 

Annabelle Homes -- The Back Story -- The Oil Patch -- The Bakken, North Dakota, USA -- February 20, 2012

Another great human interest story coming out of the Bakken.

I was probably the first to blog about Annabelle homes -- I have it tagged/labeled which means this story impressed me from the beginning. 

But it's a great story about a unique developer -- an "urban architect" and Harvard graduate, based in Minneapolis, changing the landscape of Stanley, North Dakota, in the heart of the Bakken.
City leaders here knew right away that Dean Dovolis was different than the 417 developers who came before him.

For one thing, he wasn’t a developer. Not yet anyway.

Dovolis was a Minneapolis architect who heard about North Dakota’s oil boom at a time when the economy elsewhere was struggling.

He also had a Harvard degree in urban design, financial backing from investors and a vision for creating communities.

“I could tell in the first few minutes that he had a spark of brilliance,” said Stanley City Council member Dennis Lindahl.

Today, Dovolis’ company, Annabelle Homes, has three housing developments under construction and plans to expand to numerous other communities affected by the oil boom. 
The rest of the story is at The Dickinson Press.

Corvettes Sellling in The Oil Patch -- The Bakken, North Dakota, USA

I was gone the entire weekend and I am now playing catch up. I'm glad it's a holiday, otherwise it would be almost impossible to catch up.

Readers send me a lot of links over the weekend.

This may be the best human interest story: selling Corvettes in Williston, link to the Bismarck Tribune.

It takes awhile to get to the "meat" of the article, but when you get there, it's a great story.
He won't say — maybe he can't or truly doesn't know — if he's selling more Corvettes than any dealership in the upper Midwest, but he agrees he's likely the No. 1 dealer in a four-state area.
He also won't say how many he sells in a year — it's a trade-secret, he says — but says it's "dozens."

With the boom, he's selling maybe one-third more than he would otherwise. "They tell me I'm selling a lot," he said.
But Murphy said he sold a lot of Corvettes even before new oil wealth started pouring in, to customers who might live in North Dakota, but as easily live in states from Florida to Washington.

He loves the car himself and trades up for a new one every year.

"I have a high degree of product knowledge and if someone comes in and they're buying that $100,000 car, we're going to talk. They're going to get a first-class product demonstration," he said.

He sold two 2012, ZR1s, with 638 horsepower, the fastest Corvette ever made, sticker priced at $126,000 - one in January and one this month. The package includes training at affiliated race tracks in Las Vegas and Phoenix.

"It's hard to believe, but I've sold two of the most expensive models so far this year and it's only February," he said.

Two things about the first sale: "It was not related to the boom, at all, and no one would expect to sell a ZR1 in January," he said. The second sale was to a guy who's working in the oil field service industry.
The Z06 is a beauty outside, but Murphy says where it's really pretty is under the hood, where the gleaming engine powers a performance from 0-75 mph "that's completely unique."

The odometer (sic) tops out at 220 mph.

This is not an impulse buy, this decision to own America's sports car, which is as fast, if not faster at half or even a one-fourth the price of a Ferrari, Lamborghini or a Mercedes, he said.
Kewl. As fast or faster than a Lamborghini, one-fourth the price, made in America, and serviced in Williston. Hard to get your Lamborghini serviced there, I suppose. What a deal.

Unless things have changes, my hunch is that the number one Corvette dealership is in Colorado or California.