Thursday, May 31, 2012

China, Coal, and Absolutely Nothing About the Bakken

Don sent me this article. He said to look at the comments regarding electric usage. I did. That impressed me, but so did the picture. It appears the road leading to the bottom of the coal pit is more than a mile long. China burns 17 of these giant coal pits every year.

China's coal imports were up nearly 70% over last year for the first four months of the year.


[You know, this is getting awful close to 100% which means they would have doubled their imports year-over-year. So either they front-loaded their imports or their coal usage is increasing beyond imagination. I have to think some of the increase was due to front-loading the annual imports.]

But I digress. What does all that coal get you?

In China: 4.7 trillion KWH, slightly more than what the US used last year. That averages out to about 380 watts per Chinese, about equal to using a light bulb and a computer at the same time, let alone anything else.

Another interesting comment from the link:
China consumes nearly 4 billion tons of coal a year. In energy equivalence one ton of coal equals to 4 barrels of oil. To replace the coal demand China will need 44M extra barrels of oil a day, on top of the 12M barrels of oil a day China is already consuming. That total of 56M barrels of oil a day is way beyond what the world can supply, with 85M barrels a day global oil production and USA alone consumes 21M barrels a day. 

Great Story on Dakota Outerwear Catering to Bakken Oil Companies

Link to Minot Daily News here.
All the clothing is designed by the staff in Minot, and then manufactured in Minnesota. Roe said they have contacts with all the major oil companies operating in North Dakota and the response has been wonderful. They've set up a couple of dealers and continue to look for more people who might be interested.

Roe is counting on the same business practices that made them so successful with the Air Force working with the oil fields, as well. While the quality of the clothing is top-notch, it's the superior customer service Dakota Outerwear offers that Roe believes will bring in more and more customers from the Bakken.

Parsing Politicians' Pablum -- "All-The-Above-Energy" Solutions

I guess the "all-the-above-energy" solution talk was to be taken in a literal sense: "above ground" energy -- wind, solar, nuclear, and hydroelectric, but NOT fossil fuel ("below ground"):
The Obama administration’s stated all-of-the-above energy strategy favors alternative and renewable sources and discourages fossil fuels, a US House committee chairman charged.
“It’s actually simple: Any energy made above ground counts. Any made underground doesn’t,” Oversight and Government Reform Committee Chairman Darrell E. Issa (R-Calif.) said as the committee began a May 31 hearing on the administration’s energy strategy.

“An all-of-the-above energy strategy can’t succeed on its own,” he maintained. “We need to have an all-of-the-below strategy too.”
I can't make this stuff up. 

Fifteen (15) New Permits -- The Williston Basin, North Dakota, USA

2nd day in a row with 15 new permits -- daily activity report, May 31, 2012--
  • Operators: BEXP (4), Whiting (3), Petro-Hunt (3), OXY USA (2), Newfield, BR, Hunt
  • Fields: Westberg (McKenzie), Nameless (McKenzie), Parshall (Mountrail), Fayette (Dunn), Park (Billings), Haystack Butte (McKenzie), North Creek (Stark), East Fork (Williams)
I was not familiar with Nameless oil field: it's a six-section oil field two miles directly west of Alexander.

Whiting has permits for a 2-well pad in North Creek, Stark County. North Creek is an 8-section oil field between New Hradec and Bell fields, smack dab in the heart of Whiting's Pronghorn Prospect. For such a small field, it is a fairly active field and has a string of Whiting wells which I've talked about before (in more than one posting). The names of both permits has the "P" designation meaning they are targeting the Pronghorn Sand. The third Whiting permit in this daily active report is in Park field, also in the Pronghorn Prospect and also has the "P" designation.

BEXP's permits for a 4-well pad is in East Fork, a field at the 13-mile corner north of Williston; it is east of US Highway 2/85, on both sides of the highway where it turns east at the corner. By the way, someone commented there is a sign at the 13-mile corner suggesting another industrial park will be built here.

Several Oil-Related Articles From CarpeDiem -- No More Blogging Until This Evening

Gasoline drops to $3/gallon.

US oil production in March at highest level since 1998.

Oil prosperity update for Eagle Ford in Texas.

More later; I have granddaughter-related activities for the rest of the afternoon, early evening.

NBA playoffs continue tonight, I assume.

Just How Good Is the Bakken? The Alberta Basin Bakken, In This Case

Remember this post? Just How Good Is The Bakken?

TOC of typical source rock is 1% or less.

The Williston Basin Bakken has a TOC of 11%.

There is a Bakken that has a TOC of 17%.
Routine core analysis has been completed on four of the six wells to-date. Porosity up to 10.4% and non-fractured permeability up to 0.3mD (millidarcy) have been reported. Geochemical analyses have been completed on select samples with additional analysis in progress. Sample analyses indicate a thermally mature Bakken System source rock in the oil window, with some zones where TOC (total organic content) reaches up to 17%.
And where would that Bakken be, you ask?

The Southern Alberta Basin Bakken Fairway in NW Montana.

I posted this link some time ago, but had not paid attention to this particular story until Don sent it to me a few minutes ago. Thank you.

"Eco-Cars Not Worth The Money -- MSNBC

Link here to MSNBC.
Hoping to squeeze every last mile out of a gallon of gas?  Automakers have been launching a flood of new “eco” models designed to do just that.  But a new report warns that the minimal extra mileage isn’t worth the hefty price tag – which in some cases would require as much as 38 years of driving to recover in terms of lower fuel costs.
The new study by Consumer Reports raises questions about a variety of conventionally powered Eco models, such as Ford Focus SFE, Chevrolet Cruze Eco and Honda Civic HF. But it was also skeptical of the benefits promised by some hybrid models, such as the new Toyota Prius C which, it declares, “is fuel efficient, but not a deal.”
Wow, when MSNBC starts reporting these stories, you know it's all over. Especially when the price of oil continues to drop significantly. 
Even the Prius is of questionable value. Let me know if the article talks about resale value (the most costly piece of an electric vehicle as a relatively short life-span), and there is no standard charging station deployed, meaning that most folks with these coal-powered cars, need to charge their cars at home.

A huge "thank you" to a reader for sending me this article. I don't visit the MSNBC website.

A Bit of North Dakota Oil History Trivia

In an article on a proposed new MDU-South Heart refinery, it was noted that if completed, it would be the first refinery built in North Dakota in 60 years.

My understanding is that there is a refinery farther along in the process near Trenton, North Dakota, if that project is still moving along. I haven't heard much about that refinery in quite some time. It will also be a diesel refinery.

Now, some trivia. The linked article said this:
There hasn't been a new refinery in North Dakota since the Tesoro refinery came on line in 1954, just after oil was discovered in North Dakota.
Oil was discovered April 4, 1951.

There were three refineries built in 1954: the Amoco refinery in Mandan; the Westland refinery in Williston; and, the Queen City refinery in Dickinson. Source:  NDGS/DMR.

$1 Billion Per Year For Five Years Needed For Infrastructure in North Dakota's Oil Patch


Later, 11:30 p.m.:  (numbers rounded) the state has awarded nearly $17 million in impact money to three cities: Williston ($10 million); Dickinson ($6 million); Minot ($1.5 million). These cities previously awarded $21 million in Energy Impact Grants. The link takes you to the Bismarck Tribune.
Original Post
Wishful thinking.
The state should invest up to $5 billion in northwest North Dakota communities with the most oil activity, the president of the North Dakota Petroleum Council said Wednesday.
Ron Ness, while testifying to a group of legislators meeting in Williston, said communities need significant resources to do long-range planning, but the state’s grant program for those areas is only helping them react.
Ness called for a five-year plan with $800 million to $1 billion per year invested in schools, roads and infrastructure for communities in the core areas of the Bakken.
This has been said by numerous folks over the past couple of years. Won't happen. Funding may come in spurts, but not as part of any coordinated planning effort. Speaking of planning, I wonder whatever came of the story in which Minot denied BHI's request for starting some operations at BHI's new complex.

Sequel To Solyndra Released Just in Time for Summer

Splashed across the top of the fold on page B1 of the WSJ: Car battery start-ups fizzle, with this subtext: armed with $1.26 billion in US grants, firms opened nine factories; jobs and production lag goals.

This is the link.

$1.26 billion in US grants -- not tax credits, not tax incentives, but outright grants.
Since 2009, the Obama administration has awarded more than $1 billion to American companies to make advanced batteries for electric vehicles. Halfway to a six-year goal of producing one million electric and plug-in hybrid vehicles, auto makers are barely at 50,000 cars.
The Department of Energy, which oversees the administration's advanced battery grants, says it is too early to judge the effort, and believes it will bear fruit when electric cars become a regular sight on American highways.
Believe. Hope and change.

The Hatfield-McCoy Feud -- A Modern Day Morality Play


June 3, 2012: Here's an update in the Minneapolis-St Paul StarTribune.
June 1, 2012: this is quite a coincidence. Tonight, while reading the LA Times on-line, I came across this story: 'Hatfields and McCoys' is a History-Changing Success. When I wrote the "story" below, I had no idea that the History channel is currently showing a miniseries based on the feud. Purely coincidental that this post was written and posted at this time.

Original Post

Once upon a time there were two feuding families, let's call them the Hatfields and the McCoys.

The McCoys had a huge amount of oil on their side of the border. It was a thick, sludgy, dirty oil but they had lots of it. What they needed was a pipeline to get it where it could be refined into useful products.

Meanwhile the Hatfields had the refineries and the demand for these useful products. There was even a shovel-ready plan to lay an extra large pipeline through Hatfield's territory, where it would provide thousands of jobs for the Hatfields at a time when the Hatfields were desperate for jobs.

But for some reason the Hatfields did not want the McCoys thick, sludgy, dirty oil. The Hatfields told the McCoys to "pound dirt," i.e., the Hatfields said "no" to the McCoy extra large pipeline.

The Hatfields had their own light, sweet oil. They were producing so much of this wonderful oil they couldn't keep up with shipping it. They were shipping it any way they could: truck, pipeline, rail, barge, and the occasional mule. Finally, the Hatfields came up with an idea similar to the McCoys pipeline: the Hatfields would build an additional pipeline, called the Huge Pipeline, that would take all this wonderful oil to another terminal in their territory. How fortuitous: there was already an oil receiving terminal on their side of the border.

But, that terminal -- funny how things work out, and the reason for the story --  belonged to the McCoys. Yes, the very McCoys who had all that thick, sludgy, dirty oil, but no place to take it.

Now, the McCoys may not be the sharpest knives in the drawer, but they have a pretty good memory. And a pretty good memory was all that was needed. After all, it was just a few weeks earlier that the Hatfields refused to let the McCoys build a pipeline through Hatfields' territory.

The decision seemed petty to the McCoys.

The McCoys were understandably miffed when they were told they could not build their pipeline. So when the Hatfields asked to connect their proposed pipeline to the McCoys' terminal, what do you think they said?

Yup: no deal. That terminal, the McCoys said, is reserved for the thick, sludgy, dirty oil from the McCoys' own oil field. Which is kind of funny, because up until now, everyone thought that terminal was taking light, sweet, oil from the Hatfields.

The Hatfield-McCoy feud may be a myth, but apparently there is a true-life story which sounds vaguely familiar playing itself out in court.

Incredible! First Time Claims for Unemployment Benefits -- 5-Week High

Remember: the magic number is 400,000.

Link here to Yahoo/AP story.

Let's see how they spin this story. I haven't read it yet, but here goes:
Weekly applications for unemployment benefits rise to 383,000, a 5-week high.
That's the entire story.

I'm sure more will be written about this later, but I have to agree. What more needs to be said when we've thrown a trillion dollars into the economy, kill the Keystone XL, and slow-roll the industry that hires a boat-load of union workers.

What was not noted: this was not a trivial jump -- it was up 10,000 from the previous week. Worse, according to Bloomberg, the number was expected to decrease, not go up. In a Bloomberg News survey of economists, the number was expected to drop to 370,000.

Also, the AP article doesn't note what CNBC also noted: 1Q12 GDP was revised downward to 1.9% from 2.2%.

Here's Santelli's take (Santelli is about the only CNBC analyst I trust. I trust Jim Cramer, also, but for different reasons. Smile.)

Looking more and more like we will see QE3.

Thursday Morning Ramblings -- Looking for the Bakken? Skip This Post -- Scroll Down

Wow, wow, I apologize. Normally I hold this in draft for awhile before posting so that newbies coming to the site aren't surprised to find stories unrelated to the Bakken, but the first story is too good to delay posting. For those coming here on a Google search looking for the Bakken, skip this post, and scroll down.

1. The other day in my ramblings I commented on how much I enjoyed watching the San Antonio Spurs in the playoffs. I wasn't alone. The WSJ has a great story on exactly that topic in today's edition (and this is why I subscribe to the WSJ -- for the writing, not the business).
The best 10 minutes of the entire NBA Season? -- WSJ.
Midway through the third, four Spurs drove the length of the court on three Thunder players. Tony Parker, the Spurs' point guard, threw an underhanded pass to Manu Ginobili on the right wing. Ginobili could have taken the shot but with the Thunder's James Harden closing fast, he took one dribble to his left and drew Harden away. The result: Parker was alone in the far-right corner. After taking a behind-the-back pass from Ginobili, Parker sized up his three-point shot like a free throw -- he had that much timer. Swish, 78 - 58 Spurs, timeout Thunder.
The Spurs aren't revolutionizing basketball. They're just playing it better than anyone.
2. I was a great fan of Erin Burnett on CNBC -- a great fan. I will leave it at that. She left about a year ago to host her own show at CNN, which I have never seen. I think I may have caught a few minutes of it some months ago, but I honestly don't remember, and if I did catch it, I was not impressed. Her resume up to and including her morning CNBC co-anchor job was very impressive. I have no idea why she left unless she was using the CNN evening slot as a stepping stone.

It looks like her timing could not have been worse.
The news just went from bad to worse at CNN. After the cable news network delivered its lowest-rated month in total viewers in over a decade in April, May became CNN's worse month in primetime among total viewers over 20 years of age. 
At 7 p.m., Erin Burnett, another relative CNN newcomer, had the lowest 25 - 54 demo numbers in 20 years in the time slot for the network and the second lowest after June, 2001, in two decades in terms of total viewership.
I think my blog has better numbers. Certainly better "viewers." Smile.

3. I remember vividly the day/night the Berlin Wall came down. We were stationed at Bitburg AB, Germany, at the time. The plan was for the gates to be opened only for a short period of time to allow relatives on either side of the wall to freely visit each other. The excitement was palpable, and I remember saying to myself that once the gates were opened, there was no way they would be able to close them again. The rest is history. Pandemonium erupted and East German guards left their posts. Within 24 hours the Berlin Wall was down. It was incredible to watch history in the making.

I say all this because I get the distinct feeling we may be seeing history being made again, this time in the EU as it starts to implode. No one "wants" to see Greece leave the EU because of the symbolism it would represent, but Germany is not going to send "the laziest, most incompetent country" [The Atlantic] any more money. Euro bonds are still being talked about but will be just another opportunity to kick the can down the road. It's hard to believe Greece will exit the EU, but one gets the feeling that train has already left the station. Spain is on the ropes; we may see a run on the banks this week, next week. And then Italy. Even if bureaucrats come up with a way to "save" Greece and the EU, Spaniards and Italians are "voting" with their feet, with a visit to their banks.

This may all be hyperbole; the crisis may be resolved, but a lot of folks had the same feeling about the Berlin Wall. Until 24 hours later.

[June 1, 2012: this article expresses my feelings exactly. I have no opinion on what the options are, but I think there has already been a silent run on the banks in Greece, Italy, and Spain. The big question is: to what other countries has the bank run begun, and has it begun in Germany or France?]

4. Speaking of an implosion. This is incredible.
“On the specifics, I have regularly criticized an agenda that would punish businesses and job creators with more taxes just as they are trying to thrive again,” he said. “I have taken issue with an administration that has lapsed into a bloc by bloc appeal to group grievances when the country is already too fractured: frankly, the symbolism of Barack Obama winning has not given us the substance of a united country.”  -- The first member of congress outside of Illinois to endorse then-Senator Obama's 2008 presidential bid. And it was Davis who seconded the official nomination of Obama at the 2008 Democratic National Convention. 
I wonder what the straw was that "broke the camel's back"?

5. Without Drudge, would anyone see these nuggets buried by the mainstream media?
Despite Mr Obama's longtime disdain for corporate jets and corporate jet owners, the bill includes $1 billion in subsidies for corporate jet manufacturers, which have experienced a steep decline in demand for the jets [ever since the president stomped on Big Business for using corporate jets to get around the country].
The president enthusiastically signed this bill. It's very possible Michelle will need a private corporate jet after January 20, 2013.

But government subsidies for corporate jet manufacturers! I must be missing something.

6. The tea leaves suggest oil will not have to be released from the strategic petroleum reserve this summer. Bad news for the Iranians. Worse news for the president who was hoping for a deus ex machina ending to this Greek tragedy.

7. For North Dakota Bakken oil millionaires, here's the website for the President's "Runway to Win" high-end fashion design on-line catalogue. A re-usable grocery store bag goes for $85.

Sionix To Expand Multi-Year Project in the Williston Basin

Link here to PennEnergy.

Sionix will expand their multi-year project to treat drilling fluids in the Williston Basin. The expansion will result in an effluent significantly cleaner than required under the original treatment conditions, according to a spokesman. According to the press release, recovery and reuse constitutes a significant economic benefit to operators/drillers in the Williston Basin as well as in other drilling operations in all of the shale formations in the continental United States.

Seaway Reversal: No Impact on WTI-Brent Spread

Great article from RBN Energy.
So in the short term, despite the hoopla and trading strategies, the Seaway reversal is too small to make an impact. It certainly is dwarfed by the kind of macro-economic sentiments that moved crude prices yesterday.
Link to original post about the poll on this question.

Selected Links to Articles on Oil -- Independent Stock Analysis

Link here to Independent Stock Analysis.