Saturday, April 21, 2012

Not the Bakken, But For Investors, Something To Look At: Filloon on Sandridge

Link here.

Week 16: April 15 -- April 21, 2012

Williston Wireline update: four new RV parks for Williston area; Crosby to annex 234 acres; $30 million housing/commercial development for Tioga

Update on construction permits for North Dakota, spring, 2012

Update of Verendrye Electric Cooperative, a small Minot-area electric utility

EIA update on takeaway capacity of the Bakken

Seaway Pipeline reversal two weeks ahead of schedule

Vern Whitten spring gallery of Bakken photos

New record for active drilling rigs in the Bakken: 213

Williston's new recreation center: even bigger

And California Wants High Speed Rail -- and Within Budget? Hello....

LA County's Blue Line from Long Beach to downtown LA (the county's oldest and most-used light-rail system) broke down (canceled or delayed) an average of 14 times a day in January and February, 2012.
"I've traveled many metro lines in the nation, and I've never experienced so many delays and breakdowns as I have on the Blue Line," said Robert Cheshier of Long Beach, who rides the train three days a week to his job in downtown Los Angeles. "Seriously, who is overseeing this poorly run transit system?"

The county's first commuter rail system built since the Pacific Electric Red Cars, the 22-year-old Blue Line has seen at least $239 million in maintenance put off over the last decade. The amount represents only part of a $1.3-billion maintenance backlog that hangs over the entire rail and bus network run by the L.A. County Metropolitan Transportation Authority.


Notes to the Granddaughters

The four of you are in Florida this week, so your Grammy and I have taken advantage of our own little vacation to spend a few days in Provincetown, Cape Cod, Massachusetts.

May says it is her favorite "town" in the whole world, and that's saying a lot. She has lived fourteen years as an adult in Europe and Asia. Her winter home is in southern California, and her official residency is in San Antonio, Texas. May was born in Japan and spent her first few years in Japan, Japanese being her first language, Spanish her second. She didn't learn English until she was seven years old and that was the old-fashioned way: immersion, none of the modern "English-as-a-second-language." But I digress. But it needs to be said to put in perspective when she says Cape Cod in general, and Provincetown, specifically, are her all-time favorite places in the world.

In general, I have found folks friendly wherever we've been. I doubt one could find a friendlier or more accommodating society than Turkey, but in the English-speaking world, I don't think anywhere outdoes Provincetown for genuine friendliness. 

Today it's overcast and looking out over the ocean reminds me of England. I never got to Land's End in Cornwall, England, but I imagine this is exactly what Land's End looks like. I am literally less than one hundred feet from the place where the Pilgrims first set foot in "America." They signed the Mayflower Compact in the harbor outside my window:
The Mayflower Compact was signed on November 11, 1620, by 41 of the ship's 101 passengers, while the Mayflower was anchored in what is now Provincetown Harbor within the hook at the northern tip of Cape Cod. -- wiki
Provincetown was not anything like I was expecting. After reading about the summer carnival in Provincetown, I expected a "New Jersey" Trump boardwalk with casinos and gaudy disco clubs, and franchise hotels, motels, and eateries. 

The closest I can describe it: it reminds me of a late 1950's San Francisco neighborhood -- just before the revolution.

I am not aware of any nationally-known restaurant or motel in town. No Holiday Inn. I don't think I've seen a McDonald's. Commercial street is a narrow street, one way, which allows parking on side, surprisingly enough, because even without parking it's almost impossible to drive down the street in an F-350 with side-view mirrors extended (we are driving a Honda Civic; side-view mirrors not retractable). Commercial Street is a 3-mile meandering thoroughfare running the length of the town from east to west.

A point of interest not to be missed is the newly renovated city library, just completed this past winter. It appears to have been built around a replica of the Rose Dorothea, the 1907 schooner that won the race that year. We've been to many libraries over the years but this may be one of the best we've ever visited. Maybe more on libraries later.

May greeted Haji in his native Turkish. Haji has been in Provincetown for two years, selling Turkish merchandise, and appears to "specialize" in a peculiar Turkish "cowboy" boot for women. Our five-year-old granddaughter would love a pair, but at $189/pair we will hold off for now. Which reminds me of a story. We were talking to Mary who serves drinks in the bar where we are staying. We got to talking about our grandchildren. Last year her five-year old grandson enjoyed Carnival immensely. How did he "do" with all the drag queens? He was mesmerized by their boots. He loved it. But back to Haji. It turns out that May and he stayed in the same hotel in Mersin, Turkey, some years ago. Not at the same time but they could share memories.

We told Mary that we could have come to Provincetown any time this week, but we came at the end of the week only because her work week does not start until Thursday. An hour or two with Mary brings us up to date on all that is going on in Provincetown.

So, we're staying at the Provincetown Inn at the end of the cape, and as noted, can watch the ghosts of the Mayflower sign the compact. We keep looking for the whales, but they are a bit farther out. May saw several yesterday and has the drawings to prove it. She drew what she saw and she showed me a pen-and-ink drawing with a tail flash.

Everybody says we need to take a whale viewing tour (which we've done out of Boston) but we will wait until we can take the granddaughters.

We haven't checked the room rates at the inns downtown -- all within walking distance -- but I don't think we could afford them, even if vacancies were available. One of the regional knitting clubs is hosting a "conference" here this weekend, "Adventures in Knitting." May jokes that we are staying at an inn where elderly gay males and those who like to knit hold their conferences. 

Later, I will write about my all-time favorite bookstore, the Yellow Umbrella Bookstore in Chatham, at the elbow of Cape Cod.

Vern Whitten Gallery: April 2012 Photographs of the Bakken -- Spectacular

A huge "thank you" to Dennis for sending me the link.

The photographs are simply outstanding. I would hope mineral owners, oil service companies, operators, and city leaders would have some of these pieces of art hanging on their walls at home or in their places of business.

EIA Update on Takeaway Capacity in the Williston Basin

"M4570D0N" provided this:
The EIA came out with a new report on Tues (4/17):
"Williston Basin Crude Oil Production and Takeaway Capacity Are Increasing"
At the link:
Crude oil production from the Williston Basin (primarily the Bakken formation) recently increased to more than 600 thousand barrels per day (bbl/d), according to Bentek Energy, LLC (Bentek), testing the ability of the transportation system—oil pipelines, truck deliveries, and rail—to move crude oil out of the area (see chart above). The current price gap between Bakken crude oil and West Texas Intermediate (WTI) shows the effects of this constraint. Bentek projects more transportation capacity coming online in 2012, potentially alleviating this constraint. 

Headlines From This Week's Edition of the Williston Wireline

Four new RV parks being planned near Williston; follows city's ban living in RV campers inside city limits.

New shoe store opens in Williston; in iconic Hedderich building on Main Street.

Alexander crew camp opens buffet to the public.

Crosby to annex 234 acres, $1.7 million (this link won't last long).

$30 million housing development breaks ground in Tioga: commercial cites; 20+ single family homes, 90 townhomes; 40+ single family homes and a commercial site (three phases).

Slow-Rolling The American Public

It's been my impression that the administration has been touting its pro-oil stance in light of $4.00 gasoline. My world view is quite the opposite. This is why:

Link to slower Gulf of Mexico permitting --> reduced production
Federal Offshore GOM field production averaged 1.3 million barrels per day (MMbopd) during calendar year 2011, a decline of 15 percent compared to 2010 levels. A reporting lag exists in providing federal production data. Thus, the most recent monthly data available is January 2012. In this most recent month, field production improved 1 percent to 1,326,000 barrels per day (bpd) versus 2011's average.

However, current production levels are well below recent peak levels of 1.7 million bpd set in February 2010.

Prior to the Macondo spill, the MMS was averaging 26 days to approve a "New Well" permit when drilling was conducted in shallow waters. For deepwater projects, the span was 16 days.

Today, BSEE takes 67 days to approve a shallow water well and 70 days for a deepwater well.

Thus, common sense would suggest that crude production in federal offshore waters is on a very slow trajectory toward returning to Pre-Macondo levels.
An interesting analogy flashes across my mind as I format the above. Consider the largest Mexican off-shore oil field. Link to the Economist, hardly a right-wing rag.
As recently as 2004 Cantarell, the country’s main offshore field, produced 2.1m barrels per day (b/d) of crude. Now its output is just 600,000 b/d. There are no obvious replacements: 23 of the 32 biggest fields are in decline. Barring big new finds, the world’s seventh-largest oil producer is forecast to become a net importer by 2017.

There is no mystery behind the decline. The constitution bans private investment in hydrocarbons. The Economist: blame the politicians.
Speaking of politicians, I see that a Democratic Senator from West Virginia will not campaign for, nor will vote for President Obama in the next election. He does not say it so clearly, but he has certainly telegraphed his intentions. And no wonder. The president has created the perfect storm for the coal industry. Three data points:
  • President Obama is on record (and on YouTube) committed to destroying the coal industry
  • coal shipments are down; EPA has regulatory power to not only stop coal mining, but coal transport
  • natural gas prices are at record lows
This is the irony. My hunch is that faux environmentalists never wanted to kill the coal industry. Their hope was to use the issue (cap and trade) to transfer huge amounts of wealth from the coal industry to government spending programs. The faux environmentalists never anticipated the free fall in the price of coal. The coal industry would be in a world of hurt without the president's commitment to destroy the industry and without the EPA's commitment to do the same, but with natural gas prices where they are, it's a given. So, all that "cap and trade" transfer of wealth has been taken off the table. Boohoo. 

For the moment, we've seen a leveling off in the decline of coal usage in the United States, but that's because the utilities that have been able to convert coal plants to natural gas plants have already done so. New natural gas plants will take time and money (and regulatory approval). But the writing is on the wall. There will be no coal-usage growth in the US while natural gas is priced at $2.00. Once the EPA is successful in banning coal transport, the president's goal to kill the industry will have been achieved.

When a Democratic senator from a coal state telegraphs he won't be supporting the president in the election, one knows that the folks in the trenches (or in the mines, as it were) are acutely aware of their future.