Sunday, March 11, 2012

Gasoline Futures

AAA: national average: >$3.80/gallon
Gasoline averages more than $4 a gallon in four states: Alaska, California, Hawaii and Illinois. At nearly $4.44 a gallon, Hawaii ranks as the nation's high. Prices are within a nickel of the $4 mark in Connecticut, the District of Columbia, Michigan, Oregon, New York and Washington, according to AAA.
As good a chart as any to see historical prices for gasoline futures contracts. The "front page" is free, but everything else requires a subscription.
Gasoline futures contracts rallied $53 (per 100 gallons) or 19.44 percent during the last 12 months. From 2005 until 2012 gasoline futures prices averaged $206.86 reaching an historical high of $357.10 in July, 2008, and a record low of $79.29 in December, 2008. Gasoline is the largest single volume refined product sold in the US and accounts for almost half of national oil consumption.
And, of course, Bloomberg's.

Another interesting site to explore.

For Newbies: It's Not All About the Bakken -- Some Monster Tyler Wells

Link here to some monster wells.

Here are a few monster Tyler wells:


  • 3700, 204, Cline, Dickinson-Heath-Sand Unit 20, Heath, Dickinson, s9/64, t11/64; cum 496K 11/11
  • 4326, 245, Cline, Dickinson-Heath-Sand Unit 10, Heath, Dickinson, s9/67, t10/67, cum 755K 11/11
  • 4345, 382, Cline, Dickinson-Heath-Sand Unit 17, Heath, Dickinson, s11/67, t12/67; cum 781K 11/11
  • 4353, 115, Conoco, D-H-S Unit 42, Heath, Dickinson, s10/67, t12/67; cum 1 million 11/11
  • 4437, 32, Cline, Dickinson-Heath-Sand Unit 18, Heath, Dickinson, s7/68, t9/68, 448K 11/11
  • 4653, 90, Cline, Dickinson-Heath-Sand Unit 13, Heath, Dickinson, s3/69; t6/69; cum 1.0 million 11/11
  • 4762, 205, Cline, Dickinson-Heath-Sand Unit 04, Heath, Dickinson, s8/69, t10/69; cum 877 K 11/11
  • 4770, 336, Cline, D-H-S Unit 38, Heath, Dickinson, s9/69, t10/69; cum 1.5 million 11/11
  • 4831, 663, Cline, Dickinson-heath-Sand Uit 06, Heath, Dickinson, s11/69, t1/70; cum 1.8 million 11/11
  • 4842, 48/PNA, Conoco, D-H-S Unit 12, Heath, Dickinson, s12/69, t2/70; cum 416K 11/11
  • 4905, 188, Cline, Dickinson-Heath-Sand Unit 02, Heath, Dickinson, s5/70, t6/70; cum 365K 11/11
  • 7995, 76, Encore, Beatrice Ridl 13-13, Tyler, Dickinson, s12/80, t5/81; cum 222K 11/11 
  • 9706, 571, New Millennium Resources (orig CENEX), Decker 1-32, Bell field, Tyler, 725K bbls as of 1/12; still producing 2,000 bbls/month; spudded 1982; 30 years of production
  • 9759, 779, Cline, Dickinson-Heath-Sand Unit 64, Heath, Dickinson, s11/82, t12/82; cum 795K 11/11

Random Update of a Couple of Unfracked Wells in the Cabernet/Fayette Oil Fields -- The Bakken, North Dakota, USA

Link here.

Now It's Russia That Won't Be Able To Keep Up -- Yes, The Bakken Is Mentioned

The Oil Drum has posted a series of posts today (Sunday, March 11, 2012) on the state of the oil patch worldwide.

It starts out with a short piece on Russia:
This series of posts has just completed a review of the different regions of Russian oil production, with the conclusion that while Russia may maintain current production levels of around 10.4 mbd for a short time, it faces rising domestic consumption levels because it is not replacing existing production at a fast enough rate to be able to sustain exports. Without more investment than is likely available, the rate of new field development (given the harsh and remote nature of the sites) means that there will be a slow decline in available oil to the market starting fairly soon. Given the large supplies of natural gas coming available, this series is going to focus a bit more on oil as we continue the review.
It's another great review, the kind expected at The Oil Drum.

My favorite couple of lines in that post:
In seeking to predict future production, the NEB [Canada National Energy Board] anticipated that the price of a barrel of oil would rise relatively modestly over the next 20 years. Even in their high estimate, they do not see the price rising to more than $160 a barrel by 2035 (who would bet that the estimate is exceeded this year or next?).
The "article" also questions Saudi's ability to step up to the plate, something I have blogged about often.

At the very end of the series of posts, there is a question/comment regarding the Bakken. 

More Evidence the Current Talk About Anthropogenic Global Warming is So Much Hot Air

... or proof that coal-powered Viking ships contributed to global warming in 1531

Link here to a most interesting article at Climate Realists.
The map was discovered in the Library of Congress, Washington DC, in 1960 by Charles Hapgood. It was drawn by well-known French cartographer, Oronteus Finaeus, in 1531. There is no serious question about the authenticity of the map. Finaeus was a well-known scholar and was an expert in cartography, astronomy, mathematics and military weaponry. The map is based on numerous source maps, some of them going back to the time of Alexander the Great (335 BC).

One section of the map pictures the globe from the perspective of the South Pole. Antarctica is clearly shown on this map and is pictured as being largely ice-free with flowing rivers and a clean coastline. Some of the mountain ranges pictured on the map have only been recently discovered. Photographs of the map can be found on numerous websites; one such photograph appears above.

The other half of the map, which is not shown, pictures the globe from the perspective of the North Pole. Continents and islands clearly pictured on the map above include Antarctica (center), South America (lower right), Africa (lower left), Madagascar (left of center) and Australia (upper left).

There are numerous sensational features of the map - one of them being the reality that it clearly pictures Antarctica long before it was "discovered" in 1820. Also significant is the fact that Antarctica is depicted as largely free of ice, at least in the coastal areas. This means that some of the source-maps were drawn before the mile-thick ice-cap covered the continent. This is not surprising because it is well-known that when the Vikings settled Greenland in 980 AD, it too was much warmer than today. The Vikings in Greenland numbered about 5,000 by 1200AD, but as the earth cooled, the settlers died off or moved away.
Regardless of your myth (what you believe about global warming), this is a fascinating article for many, many reasons. 

This is not the first time the Vikings have been blamed for global warming back in the 1500s due to their coal-powered ships. (I assume they had not figured out how to miniaturize nuclear reactors for their long voyages.) We do know they used cellular phones because no copper wirelines have been found in Norway or Iceland from that period.

For Investors Only: WSJ -- Investing in the Unconventional Oil Patch

Link here to a fairly superficial WSJ article.
...a new ETF, Market Vectors Unconventional Oil and Gas —with the fitting symbol of FRAK. It invests in a range of companies that use fracking drilling techniques and those with exposure to shale oil, shale gas and related areas. One of its largest holdings, EOG Resources, has shifted the bulk of its production to oil from natural gas and is benefiting as oil prices soar.
But also this:
... is steering clients to master limited partnerships like Kinder Morgan Energy Partners and Enterprise Products Partners. MLPs are companies that own and operate pipelines, primarily for natural gas and oil. They're partnerships and retain no earnings and pay no taxes; instead, they pay out all profits to partners ....
... it may be too late to make a big plunge into shale and fracking investments. He notes that these companies are seeing more scrutiny, due to the potential for environmental damage.
He recommends investing in certain energy-intensive industries that will benefit from low, long-term natural-gas prices, such as chemical companies.
I'm a fan of master limited partnerships.

I am seeing more and more written about chemical companies taking advantage of low natural gas prices. I also think manufacturers with large energy needs will benefit from low natural gas prices. I assume some utilities using coal will get discounts from coal supplies with threat of moving to natural gas. Bottom line: manufacturers might report some nice numbers 2Q11 as their energy costs go down.

This is not an investment site. See disclaimer. I post investment stories affecting the Bakken for the interest of the reader. I won't be trading shares any time soon in any of the companies mentioned in this post.

The Price of Gasoline for The Average American Is Higher Than the Average Price of Gasoline

Link here to CarpeDiem.
A gallon of regular was only $3.33 in Colorado, for example, and in Wyoming it was $3.28, the lowest in the nation. Along the Gulf of Mexico, the price was a bit higher: $3.59 in Texas, $3.60 in Alabama and $3.62 in Louisiana.

For nastier numbers, turn to the Northeast and the West Coast: $3.99 in New York and Connecticut and a whopping $4.35 in California.
More folks live where gasoline is higher than the "national average."

For folks paying the national average ($3.79), their perception is they are paying $4.00/gallon.

For Californians, they are anticipating $5.00 gasoline for Memorial Day.

Grand Forks AFB Downsizing -- Eastern North Dakota -- Nothing To Do With the Bakken

Grand Forks AFB continues to downsize.

Privatizing the housing is not new; the Air Force has been doing this for years.

What is surprising to me is how small the base is getting in terms of personnel (compared to when I was assigned there, 1980 - 1983).

Data points:
  • The base will demolish 286 existing housing units; units remaining: 547 single-family homes
  • Since 2006, active duty has declined from 2,450 to 1,200
  • Since 2006, civilian workforce has declined from 3,000 to 1,000
I can only assume the economic effect on Grand Forks has been significant, but gradual over time.

Grand Forks AFB is transitioning from a military tanker mission to an unmanned aircraft systems mission.

Best Link of the Day -- The Volt -- Nothing To Do With the Bakken

The photo alone -- at the link -- is worth a look
The Volt is dying. What took it so long?
By the way, how long was the Edsel in production? 1958, 1959, and 1960 model years

Link here to Dateline: March 9, 2012.
In August we noted that the Chevy Volt was dying. As we asked then, what took so long? The New York Times now reports that Government Motors will, for the third time since the car debuted in December 2010, pause production of the strikingly undemanded car for at least a month because “dealers had more than they needed.”​

The shutdown will lay off 1,300 workers at the Volt’s Detroit plant. Not even President Obama’s pledge to purchase a Volt when he leaves office could sway people possessed of common sense to buy one of the lemons.

GM officials were hoping to sell 45,000 Volts in the United States for the year during 2012, but that’s been abandoned as unrealistic – 1,023 Volts were sold in February, 603 in January. For comparison purposes, Toyota sold 154,000 Camrys in February. Seeing as how there are 3,600 unsold Volts on lots around the U.S., that means in less than one day Toyota moves more Camrys than the sum total of unsold Volt inventory.
Every unsold Volt saves the American taxpayer: $7,500.

A huge thank you to Don for sending this link. I definitely would have missed it.

I hate to pile on, but ... whatever ...

Link to Bloomberg:
Pity the Chevy Volt. Ever since it became known that the plug-in hybrid car’s batteries had burst into flames after government crash tests, the Volt has become the whipping boy of Republican politicians.
Conservatives have equated General Motors Co. (GM)’s Volt with everything from government bailouts to radical left-wing environmentalism. 
Don suggests a nice little sticker for those who leave the voting booth in November who vote for the incumbent: "I voted for the Dolt."

Again, because these posts always result in lots of nasty mail: I have nothing against coal-powered vehicles. I am against the government subsidizing to the tune of $10,000 or more for cars at twice-the-price for cars with half-the-value. And yes, it's well beyond $10,000/car: the GM bailout includes forward-carrying-losses so that GM does not pay any federal taxes for ten years, according to CNBC. Of course, Ford continues to pay federal taxes.

To complete the triad of stories Don sent me, old news, but just a reminder for those who might have missed, or like me, forgot: Chevy Volt voted European car of the year.

Another Great Story on the Bakken Impact

Link to the Rapid City Journal.
The 63-year-old hauls cement five or six times a week to Williston, N.D., the epicenter of the Bakken oil shale formation that is fueling record economic growth for that state.

Now the growth is spilling south over the state line, bringing a new and growing market for businesses in the Black Hills that provide raw materials for oil extraction, equipment repair, housing components, and other needed goods and services.

“You don’t have to study very hard to figure out that it’s a multi-billion dollar market, four hours from our back door,” said Duff Kruse, president of Adams-ISC, a Rapid City manufacturing company benefitting from the boom. Adams-ISC makes and repairs the type of pressure pipe and vessel systems used to transport oil and natural gas, as well as hydraulic systems on trucks.
As a reminder, a few months ago, it was being reported that $1.5 billion to $2.0 billion is being poured into the Bakken EACH MONTH. The Bakken comprises more than just western North Dakota -- it extends into Canada and Montana, there are hints that some non-Bakken payzones extend into South Dakota -- but for all intents and purposes, right now, "the Bakken" is centered in four counties in the north (Willams, Mountrail, McKenzie, and Dunn) and one county in the south (Stark). Of course, one can divide McKenzie and Dunn in half and place half of each of those two counties in the "north" and half in the "south."  Regardless how you split it up, upwards of $2 billion is being poured into only a portion of North Dakota. 

Are the numbers inflated? 200 rigs drilling a well/month at $10 million/well. 

Note for newbies: not all rigs are drilling oil wells; some are drilling salt water disposal wells. But the "200 x 10 million" does not include all the pipeline being laid for the oil, the fracking water, or the natural gas pipeline for gathering, nor the new facilities for processing natural gas. The numbers are simply staggering.

Great Story on Minnesota's Source of Fracking Sand for the Bakken, Elsewhere

Kent sent the link. Thank you.

This is a great update.
Today, that confluence of river, railroad and Texas entrepreneurial spirit has made Winona the epicenter of a new Midwestern gold rush: frac sand mining.

Nearly 50 mining operations have opened nearby in the past few years, producing enough sand to send 54,000 semitrailer trucks rumbling down Winona's main street in a year.

But as the boom spreads, from western Wisconsin to Mankato to Shakopee, it is igniting a debate over sand mining and the larger industry it serves -- the controversial oil and gas drilling practice called hydro-fracking.

Just last month, dozens of Winona residents took to the street near the heart of downtown, waving protest signs in front of a 50,000-ton pile of sand they derisively call Mount Frac. "Short-term profit, long-term problems,'' read one placard.

But many in the industry say sand mining is here to stay, as long as oil and gas companies continue to ramp up domestic production to address the nation's energy demands.

"When gas prices get to $7 per gallon, maybe they will say that fracking isn't so bad," said Smith, the head of Sierra Frac Sand, a small Texas player in the national industry.
Agree. And I think it will happen well before $7/gallon. My hunch is that at $5.00 folks are gonna start demanding some action. Windfall profits tax will be in the mix, but another tax won't drop the price.

At $6.00/gallon, ....

Hey, by the way, that "drill, drill, drill," and we can't drill our way out of this problem, I keep coming back to the story that we've drilled ourselves down to $2.50 natural gas when Asia is paying $16 for natural gas, and if I recall correctly, someone said Europe is paying as much as $14 for natural gas. And, of course, the French have banned fracking.

Oakdale Field Updated -- The Bakken, North Dakota, USA

Data for Oakdale oil field has been updated. This field includes CLR's outstanding Carson Peak/Morris Eco-Pad.  One well has produced more than 200,000 bbls in the first seven months.