Friday, April 27, 2012

Week 17: April 22 -- April 28, 2012

GeoReources to be bought out by Halcon Resources

Update on the awesome Alger field

Belfield to get new drilling fluids services company 

Feds give US Army Corps of Engineers $12 million to upgrade the Williston levee

Another revenue stream for mineral owners: liquid natural gas pipeline, Tioga to Sherwood

Posted on YouTube back in February, 2012; as recently as week of April 23, 2012, the administration said it couldn't say that gasoline won't reach $9/gallon -- the price some Europeans are paying according to CNBC

Article on Liberty Resources

Liberty Resources: eye on fracking; prior connection with CARBO Ceramics

For investors only: CARBO Ceramics

Whiting reports a record TFS well in the Sanish 

Largest refinery in US: joint venture with Saudi Aramco 

Sionix Mobile Water Treatment technology coming to the Bakken

A  17-mile pipeline; Stanley to oil rail loading station: $14 million project

Average wages in Williston: $71,000/year

EPA gives green light to frackers; until 2015

More Great News for the North Dakota to Texas Renaissance Zone

Back on March 25, 2011, I opined that we were starting to see the end of the love affair with Brazil's off-shore oil prospect.

Now, another data point:
Exxon Mobil Corp. said Friday it is abandoning its only exploration effort in the Santos Basin, epicenter of Brazil's offshore oil boom, an area where it has obtained mixed results amid tough drilling conditions.

The block is the Texas behemoth's sole exploration lease in Brazil, which forecasters say is destined to be one of the world's top petroleum producers by the end of the decade thanks to its vast trove of offshore oil and gas.
Not a good sign. 

But great news for Bakken investors.

Wow! One Township With Nine (9) Rigs -- Huge Wells -- Alger Field -- The Williston Basin, North Dakota, USA


One of the nine is right across the south line in the Sanish field, but it's still quite a sight on GIS map server. I can only imagine what it looks like on the ground there.
  • 21955, 2,972, Statoil/BEXP, Cvancara 20-17 3H, t9/12; cum 237K 10/16;
  • 22007, 2,700, Statoil/BEXP, Panzer 22-23 1H, t6/12; cum 209K 10/16;
  • 22037, 2,026, Statoil/BEXP, Strobeck 27-34 5TFH, t7/12; cum 176K 10/16;
  • 22063, 1,842, Statoil/BEXP, Anderson 28-33 4TFH, t6/12; cum 174K 10/16;
  • 22122, 632, Lime Rock Resources/Fidelity, Emil 14-13H-24, t6/12; cum 154K 10/16;
  • 22170, 551, Slawson, Athena 4-36TFH, t5/12; cum 114K 10/16;
  • 22317, 1,818, Statoil/BEXP, Arvid Anderson 14-11 4TFH, t6/12; cum 167K 10/16;
  • 22599, 289, Sinclair, Martens 3-4TFH, Sanish, t6/12; cum 57K 10/16;
Examples of other wells in the immediate area (these are huge wells):
  • 18654, 4,335, Statoil/BEXP, Sorenson 29-32 1-H, s2/10; t4/10; cum 458K 10/16;
  • 17355, 3,909, Statoil/BEXP, Cvancara 20-17 1-H, s10/10; t3/11; cum 303K 10/16;
  • 19513, 4,661, Statoil/BEXP, Sorenson 29-32-2-H, s10/10; t3/11; cum 394K 10/16;
  • 18628, 4,357, Statoil/BEXP, Jack Cvancara 19-18 1-H, s3/10; t5/10; cum427K 10/16;
  • 19057, 4,106, Statoil/BEXP, Domaskin 30-31 1-H, s7/10; t10/10; cum 416K 10/16;
Back in February, 2010, Irish Oil and Gas Company acquired 120 acres in the Alger Field for $7,300/acre which works out to $4.7 million/section. The 120 acres are in sections 11, 12 and 13, T155N-92W.

Follow-Up: Only One Number I Was Interested In This Week


April 28, 2012: I posted the original post Friday evening. It was a bit more interesting than I realized as noted by Bloomberg:
Oil rose to the highest level in more than three weeks in New York as the biggest gain in U.S. consumer spending in more than a year and better-than-projected earnings overshadowed lower-than-forecast economic growth.

Futures climbed 0.4 percent after the Commerce Department said household purchases increased 2.9 percent, exceeding the most optimistic projection by economists surveyed by Bloomberg. Gross domestic product grew at a 2.2 percent annual rate, missing the 2.5 percent projection.
Oil rose to the highest level in more than three weeks. It rose to the highest level and a talking head on CNBC earlier in the week predicted that oil was likely to go below $100 by the end of the week.

Who are these clowns? Whoever they are, they weren't invited back on CNBC at the end of the week -- if they were, we weren't told.

Original Post

Earlier this week, Tuesday, I had a post with the subject: "The Only Number I'm Interested In This Week."

On Tuesday, all day long, on CNBC, the talking heads kept talking about some analyst who said oil would be under $100 by the end of the week. He offered no supporting data to bolster his argument, simply "it is what it will be."

I don't forecast oil prices any more; it's a fool's game. But oil below $100 this week did not fit my world view; I truly doubted we would see oil below $100 at the end of the week. So, where did oil finish, COB today? A tad above $104. Oil even gained about 25 cents today.

There was no mention on CNBC today the comments by Tuesday's prognosticator.

BEXP Has Another Nice Well in the Alger -- The Bakken, North Dakota, USA

21358, 3,863, BEXP, Clifford Bakke 26-35 2H, Mountrail, Alger; for those interested, I just posted the 38 permits issued for the Alger field so far into 2012;

Slow-Rolling the Industry; Anything To Kill the Oil and Gas Industry

Link here.
Philadelphia area refinery closures will be only the beginning of shutdowns nationwide if the federal government does not change several key regulations, two oil industry officials warned on Apr. 26. Ethanol mandates in the 2007 Energy Independence and Security Act pose a particular threat, they told the US Senate-House Joint Economic Committee.

“The recent refinery closures that have occurred or are currently pending are the tip of an iceberg,” said Thomas D. O’Malley, chairman of PBF Energy Co. LLC, which operates refineries in Delaware City, Del. (190,000 b/d), Paulsboro, NJ (180,000 b/d), and Toledo, Ohio (170,000 b/d).
Gasoline needs to get to $9/gallon (see Secretary of the Interior Salazar's comments on $9 gasoline) to make coal-powered cars, wind energy, and solar energy competitive. 

There are multiple ways to move toward $9 gasoline.

Average Pay in Williston: $71,000 -- The Bakken, North Dakota, USA

That's the average.

Link here (links to regional newspapers break early and break often).

Did The US Just Blink? -- Nothing To Do With The Bakken


April 29, 2012: The LA Times takes up the theme. "Now, more than ever, Israel has a go-it alone strategy." Now that the administration has thrown the country under the bus. See original link. Letting Iran develop its nuclear enrichment program is tantamount to President Kennedy telling the Cubans they could continue bringing in Russian missiles, but only at a measured pace.

April 28, 2012: I wrote the original post on April 27, 2012, but placed it on "draft" status, not sure whether I wanted to post it, or if I did, when.  It turns out that one day after the US blinks with regard to Iran, Saudi Arabia pulls their ambassador to Egypt. If Americans feel a bit uneasy about events in the Mideast, Saudi Arabia is downright scared. This is not a trivial gesture among Muslim allies.

Original Post

Did the US just blink?
In a major concession, Obama administration officials say they could support allowing Iran to continue a crucial element of its disputed nuclear program if the government in Tehran took other major steps to curb its ability to develop a nuclear bomb.
Did the US just blink?

I don't think so. The administration plays a great game of "rope a dope."  The administration played this well. They just threw Israel under the bus.

No, the US did not blink?

Just a wink.

Another Oil Services Company to Locate Near Belfield -- Drill Fluids -- The Williston Basin, North Dakota, USA

Link here.
Stark County Zoning commissioners gave a Texas-based company the green light to build a drilling fluids plant near Belfield on Thursday, but not before covering multiple bases.

Dwayne Lejeune represented AES Drilling Fluids LLC during Thursday’s meeting, which took place at the Stark County Courthouse in Dickinson. He said the company needs a conditional use permit to build three miles south of Belfield because it uses hazardous materials.

Breaking News: WTI Just Went Green

Research Center in Grand Forks --- Researching Alternative Liquid Fuels for US Military

The Energy & Environmental Research Center (EERC) in Grand Forks, N.D., is developing alternative liquid fuels for military and commercial applications.

Link here.
The Connecticut Center for Advanced Technology Inc. (CCAT) in East Hartford, Conn., awarded EERC a $906,000 contract to develop alternative liquid fuels. The EERC will demonstrate gasification-based technologies for converting nonpetroleum feedstocks, such as coal and biomass, into liquid fuels.

“The military has been good at developing products that private companies and consumers can benefit from,” he states. “This has the possibility for development of moderate-scale systems that allow distributed production of power and fuels, utilizing coal and regional sources of biomass.”
I have talked/bloggeda about EERC in the past. In fact, it is linked at the sidebar at the right. It has a huge role in advancing the oil and gas industry in North Dakota.

Random Look at Entrepreneurial Endeavor in the Williston Basin: Summit Energy Services

Link here.
He started Summit Energy Services in April 2010. The company now has an 11,000-square-foot shop on the west side of Williston on 8½ acres in the commercial park. Summit Energy operates more than 70 trucks, 60 pieces of equipment including cranes, skid steers and dozers.

In two years, the company has jumped from six to more than 100 employees and is still hiring. It has seen a 90,000 percent increase in billings since it was founded. Services include pipeline construction, roustabout services and site maintenance, storm water and erosion management, reclamation services, seasonal services and scoria and water hauling.
Note: this link is likely to be broken within a month or so. 

Gasoline To Jump 15+% in May -- SeekingAlpha

Link here to SeekingAlpha -- headline says it all; nothing else needs to be said; go to link if necessary.

A note to the granddaughters

On the way to school today, the 8-almost-9-year-old granddaughter continued her discussion from yesterday afternoon trying to think of a subject on which to write her "research paper." Yesterday it was going to be on "space" but someone else had selected that subject and now she was back to square one. I suggested perhaps a narrower subject than "space." She said that she already had narrowed it down: her first idea was to write on "the universe."

This morning she said she had finished reading her book on Pearl Harbor/WWII, and had decided that she would write her paper on "submarines." So, she's making progress on narrowing down her subject. She says she can't wait to read "20,000 Leagues Under the Sea."

Meanwhile, I'm continuing to read Richard Fortey's Horseshoe Crabs and Velvet Worms. I noted in passing a week or so ago that it had been reviewed in both the WSJ and the NYT. I've been spoiled by Stephen J. Gould and Richard Dawkins (despite his baiting). Leafing through Fortey's book, somehow it didn't seem to catch my interest. Because I found it at the Yellow Umbrella Bookstore in Chatham, Cape Cod, is probably the real reason I ended up buying it. I don't care for the rambling style of the author -- he digresses as much as I do -- but when he gets to the nut of his argument in each chapter, it is absolutely delightful. I've learned to skip a lot of his ramblings.

He introduced me to Rubisco. Rubisco is the most common protein on earth; it catalyzes the primary step of photosynthesis, and, coincidentally, is the rate-limiting step of the Calvin cycle. Years ago for one summer, I participated in a research project under Dr Larry Tieszen, Augustana College, on the efficiency of photosynthesis of Arctic plants. It was either the summer of 1970, 1971, or 1972, I forget. I could narrow it down, I suppose if I gave it a bit of thought or looked at my journals, but....

It appears researchers were close to identifying Rubisco in the late 1970's and it looks like the paper giving credit to its discoverers was published in 1985. It's hard to believe I was so fortunate (?) to have been part of that global research. At the time, for me, it was mostly drudgery. I had no idea where I fit in the bigger process.

From wiki:
Some enzymes can carry out thousands of chemical reactions each second. However, RuBisCO is slow, being able to fix only 3-10 carbon dioxide molecules each second per molecule of enzyme. The reaction catalyzed by RuBisCO is, thus, the primary rate-limiting factor of the Calvin cycle during the day.
Efforts to increase the efficiency of this cycle could be instrumental in fixing atmospheric CO2. Funny how paths cross in life. God has a sense of humor.

WSJ: Shell Making Money On Natural Gas; Exxon, Not

No link; from the print edition, April 27, 2012, p. C10.

Shell making money on natural gas -- location, location, location.

Only 5 percent of Shell's natural gas output is from the US; fourteen percent of natural gas produced by Exxon comes from the US.

From the story:
"In the global gas game, location is critical. With US gas prices moribund, Exxon's big bet on the fuel vie 2010's purchase of XTO Energy still drags on profits. Gas sol in Europe and Asia fetches much higher prices."

The XTO deal is hurting XOM's return on capital, and that's why it had to significantly increase its dividend to hold investors.

Again, a disclaimer. This is simply a data point that caught my eye because of the XTO connection; it is not a buy, sell, hold recommendation.


In another section in the print edition, is a longer article, same subject. One can find it on-line by googling "Exxon Struggles While Shell Thrives." 

At the very end, there's a bit on the "North Dakota to Texas Renaissance Zone."

Oil Buzz in South Dakota: A Random Update

"Tygar45"sent me this link, thank you.

Three Forks formation being eyed in northwestern South Dakota.

This is the kind of link that will break early. It probably won't be here a month from now. The video at the link includes a map of the area under discussion.

Senate Democrats Close Ranks To Stop Approval of Keystone XL

Link here.
President Barack Obama, who has put northern portions of Keystone on hold due to environmental concerns, has threatened to veto any bill containing the pipeline if it included an immediate approval of the entire project.

Most Senate Democrats are opposed to including the Canada-to-Texas pipeline in the bill, but it would only take two of the Democratic negotiators to join Republicans to move the project another step closer to congressional approval. It now appears as if none will.
I'm not sure what the writer means by saying the president "has put northern portions of Keystone on hold." The president killed Keystone XL 1.0, the entire pipeline. The company has only recently proposed a new route for Keystone XL 2.0N to Nebraskan legislators (the president has not weighed in on this new proposal to the best of my knowledge). TransCanada is going ahead with XL 2.0S.

The more accurate way to report this:

President Barack Obama, who killed the original Keystone XL, has threatened to veto any bill calling for an immediate approval of the entire project.
Regardless, it's all idle chatter. Come November 8, 2012: the Keystone XL will be approved.  All politics. Folks are getting used to $4 gasoline going into the driving season. At least that's what the tea leaves are telling me.

For Investors Only: Chevron Reports Today; Ford Sales Slump

Chevron, TransCanada, Ford, GDP

 Chevron: profits rise 4 percent on higher priced oil in first quarter; expects $3.27 vs $3.09 y-o-y; earnings came in at $3.27

TransCanada (Keystone pipeline) reports today, also. 

Ford 1Q12 data points:
  • net income fell by 45 percent
  • earned 35 pennies vs 61 pennies y-o-y
  • half the decrease due to higher tax rate; now paying a 32% tax rate vs 8 % a year earlier
  • Ford moved tax credits and assets taken in 2006 when not earning a profit, back unto the book
  • European sales plummeted; the company paid higher taxes
  • will offer lump sum payments to 90,000 retirees/former employees to cut pension costs; largest such offer in US history; does not know how much plan will cost; depends on number who accept
How is the market taking this? Shares are trading higher in pre-market trading. Really? Really.

On another note, GDP plunges! Down to 2.2 percent. Get ready for QE3/Ben. It's not so bad that GDP is down, or that it "plunged" as written in one headline: this is the real story: analysts had forecast a 2.5 percent GDP. Analysts missed estimates on the "wrong" side.

Wheat: More Than Just Oil in North Dakota, Montana

For folks interesting in the Asia - Wheat story, the Billings Gazette has a great article.
The United Grain elevator is big, fast — and Japanese. It holds roughly 1 million bushels of wheat, can load 110 railcar shuttles in 10 hours and represents a growing trend in the globalization of the farm economy. Asian countries with rapidly growing middle classes are buying commodities like never before. And to meet that demand, global corporations are doing whatever it takes, including acquiring elevators in Montana farm country.

"The game changer is obviously China," said John McEnroe, executive vice president of country operations for CHS, America's largest grain marketing cooperative. "When it's growing at 6 to 9 percent (gross domestic product) each year, and they have a growing middle class, that causes exporters to expand their supply chain. What you see being built is mostly by multinational companies."
The article provides a nice summary of the wheat elevator-railroad loading facilities in Montana, with frequent mentions of North Dakota.