Sunday, June 3, 2012

Monday Morning Ramblings -- Political Commentary -- If You Are Looking For The Bakken, Skip and Scroll

1. Wow, couple this story with the unemployment report of last Friday and things don't look too rosy:
New orders for U.S. factory goods fell in April for the third time in four months as demand slipped for everything from cars and machinery to computers, the latest worrisome sign for the economic recovery.

The Commerce Department said on Monday orders for manufactured goods dropped 0.6 percent during the month. The government also revised its estimate for new orders in March to show a steeper decline.

Economists had forecast orders rising 0.2 percent in April. 

The report showed broad weakness in a sector that has carried the economic recovery, adding to a growing body of soft economic data.
2. That win by Tiger was incredible.

3.  Another great article in the WSJ: with yet another spring, another slowdown, perhaps time to re-think some policies. Again, another well-written article. I am impressed how well "they" can analyze the situation, write a well-articulated argument, and then get it published (and delivered to my front door).
Well, this week makes it official. The weakest economic recovery since World War II has become weaker still, sinking into a spring slowdown for the third year in a row. Are we finally ready to debate a change in the policies that have led to this pass?

On Thursday the government reported that growth in the first quarter was 1.9%, even weaker than the 2.2% initial estimate. Then Friday delivered the third slower jobs report in a row, which qualifies as a depressing trend. Employers created only 69,000 net new jobs in May, and April's total was revised down to 77,000 jobs. Stocks were crushed in the backwash.
4.  We went to one of upscale malls in the Boston area yesterday, the Natick mall. I had not been to a mall in a long, long time. It was fairly busy for a Sunday. There might have been about three people, on average, in any given store in the mall, except for the ... drum roll ... the Apple store. It was again, pretty much shoulder-to-shoulder, but in all fairness, it's a pretty small Apple store. But wow, talk about busy. While in the mall we had sushi at Wasabi-Natick, probably one of the better sushi restaurants I've visited in a long time. It's a "conveyor-belt" sushi bar. Very nice. I obviously don't agree with the reviews.

Earlier in the day my son-in-law and I discussed the future of brick-and-mortar in an iPhone world. He had gone to Wal-Mart last weekend to buy two new bicycles for the granddaughters. A fair number of bikes, but not the ones they wanted. So, they got the measurements and then went home and ordered on-line (including one from Wal-Mart). Two immediate thoughts where brick-and-mortar have a disadvantage: a) in-store inventory; and, b) customer service. With regard to customer service: b-a-m staff cannot easily tell when a customer is serious about buying and when a customer is just looking. If a buyer is serious and customer service is lacking, today's generation will move on. And, of course, Wal-Mart is not known for customer service. Not much one can say about in-store inventory. That's a challenge for items that take up a lot of space. iPads, iPhones, MacAirs don't take up much space. An $80 bike vs an $800 iPad.

5. I love this digital world. I am always looking for classical music that I can enjoy. My wife and younger granddaughter (age 5) prefer classical music when driving. The older granddaughter doesn't mind much what is playing; I prefer almost anything to classical, but I am willing to listen to some classical and I do enjoy some classical music. Yesterday I was reading ancient history on the Mediterranean Sea, reading about Dido (Elissa) again, and wanted to check something out on wiki. To make a long, long story story, I found the following.

Dido and Aeneas, Henry Purcell
I enjoyed it so much, I order the CD from Amazon (along with other items in the cart, waiting for enough items to get "free shipping."

The entire opera can be found here.

6. I still think it will be a Spurs-Miami Heat NBA championship series, but I'm beginning to wonder if it might not be Spurs-Boston, or even possibly OKC-Boston. Right now, I would favor slight odds on an OKC-Miami Heat face-off.

7. Some years ago I opined, but never had a forum to post, that in the on-going push and pull of government and free market capitalism, I suggested that over time the government would become more and more irrelevant. Just moments ago 2:04 p.m., Monday) a CNBC talking head asked if the government was becoming irrelevant with regard to economic issues facing us. Irrelevant. Hmmm.

Ice Caves -- The Bakken, North Dakota, USA

For me, the Williston Basin never fails to surprise.

In the June, 2012, dockets, I saw the name of a field I had never seen before: Ice Caves.

Ice Caves is all of four sections, located at the far south of McKenzie County, right on the Billings County border.

There are four wells in this small field. This one is particularly interesting:
So, this well produced for about 12 years and came close to producing one million bbls.

Crazy Season: EPA Focusing on Recycling Beer Containers at NASCAR Events, Not Green Cars

Link here to Washington Examiner (warning: the link may re-direct you to a number of ads; it was a pain to get back to the story).
According to the Environmental Protection Agency, NASCAR will encourage fans to buy “sustainable concessions” at races, expand the use of “safer chemical products,” conserve water, reduce waste, promote recycling, push products approved by the EPA that have a small enviro footprint and encourage suppliers to get an “E3 tuneup” aimed at promoting sustainable manufacturing.

Missing: any talk of greening races or race cars that consume about 450,000 gallons of gas a year and average five miles per gallon.

“Yes,the focus is on suppliers and programs, not green cars,” said an EPA spokesman. 
Thank goodness for that.

 I can't make this stuff up.

Crazy Season: Volt Demand Is Outstripping Supply

Link here to the widely-read

According to the linked story, Volt demand is outstripping supply (I did not read the entire story; I don't know if the story mentions that the Volt manufacturing line was shut down for awhile so that supply could catch up with demand; as noted at that latter link, I can't make this stuff up).
March 2012 still stands as the high-water mark for Chevrolet Volt sales. That month, GM sold 2,289 Volts, a number that dropped to 1,462 in April. The news today is that sales climbed back up to 1,680 in May. GM's Twitter account says that demand for the 703 Volt in California is temporarily outstripping supply. We wonder if there are dealers in other states who would be more than willing to send their unsold units westward.

When it comes to the Nissan Leaf, the May number – 510 sold – is better than the 370 Nissan sold in April. Of course, it's fewer than the 579 units sold in March and is also less than half of what Nissan sold in May 2011: 1,142. For the record, there were 26 selling days in May 2012 and 24 in May 2011. For another record, while the vehicles aren't really comparable, the Smart Fortwo outsold the Leaf at 703 units in May. Just so you know.

Why Bakken-WTI Spread Is Widening


June 4, 2012: TransCanada will restrict some Keystone oil flow and MRO will shut down Illinois refinery for maintenance; WTI-Bakken widens.

Original Post
I'm not sure how I missed this story, and I was surprised that no one else seems to  have seen it, but it helps explain the wide WTI-Bakken price spread. The link takes you to Bloomberg News.
Bakken oil weakened to the widest discount in more than six weeks versus U.S. benchmark West Texas Intermediate prior to a planned shutdown at Tesoro Corp.’s refinery in Mandan, North Dakota.

The 58,000-barrel-a-day refinery will halt the crude unit in early June for about two weeks of work, two people with knowledge of the situation said in December. A shutdown to tie in equipment that will boost the plant’s capacity by 10,000 barrels a day is scheduled for late in the second quarter, Chief Operating Officer Daniel Romasko said during a Feb. 2 conference call.

Crazy Season: Coal to Newcastle; Bakken Oil to Alaska

Link here to Petroleum News.
As completion of Tesoro's rail terminal to receive Bakken crude at its Washington refinery draws near, there's talk within the company of shipping the light, sweet oil to Tesoro's Alaska refinery where the company pays substantially more for both similar oil from the Cook Inlet basin and lower grade oil from the North Slope. If Cook Inlet basin oil explorer are successful, contract negotiations for their new oil could be tricky if Tesoro, the region's primary oil buyer, plays its Bakken card. 

Another PIpeline Across Northern North Dakota -- The Sandpiper Pipeline

Another proposed project that has not been widely discussed publicly, the Sandpiper pipeline across northern North Dakota, would add to the capacity,... --- The Minneapolis-St Paul StarTribune.

The Hatfield - McCoy Feud Update -- The Bakken, North Dakota, USA

Remember the Hatfield and McCoy feud story I posted the other day?

Here's an update in the Minneapolis-St Paul StarTribune.
A bottleneck at a large oil terminal in northwestern Minnesota is keeping North Dakota oil from being piped cheaply to market.

The problem has provoked a legal feud between two pipeline companies that serve the Bakken oil fields in western North Dakota.

High Prairie Pipeline, which operates about 250 miles of pipeline in the southwest part of North Dakota, has proposed building a $650 million pipeline 450 miles across that state to deliver oil from the Bakken region to a terminal at Clearbrook, Minn., 90 miles east of Grand Forks, N.D.

But the company says the project is stalled, and may be canceled, because Enbridge Energy, the Canadian company that owns the terminal and operates more than 8,000 miles of oil pipelines in Canada, North Dakota, Minnesota and other states, won't allow it to connect to the Clearbrook terminal.

Random Update on the Pankowski Well

I just received a nice e-mail note from a reader providing a detail about the Pankowski well:
  • 20857, 358 (1,312 according to the sundry form), KOG, Pankowski 4-6H, Truax, Three Forks; t2/12; cum 67K 10/12; 23 stages total; 1 million lbs proppant; ("ten stages this frac" on sundry form; I do not know what that meant); producing at 6,000 bbls/month 10/12; 
The reader told me that the Pankowski had problems in the Bakken formation; the decision was made to drill through the Bakken formation and into the Three Forks.

Reading the file report is very, very interesting and confirms the reader's comment.

From the introduction of the well evaluation provided by North Plains Energy, LLC:
The ... Pankowski ... will be the second Three Forks horizontal double-section well designed to develop oil production in this [Truax] field, following the Hess Corp Scanlan 17-1TH. ... Original plans called for a curve to be built at ... landing in the Middle Bakken Member for a Bakken well. Build rates for a Bakken well were not acquired and the curve was then planned to land in the upper portion of the Three Forks Formation.
Later in the geo-steering portion of the report:
The build rates to land the curve at the desired target were not acquired and the well bore was landed at TVD of 11,209', right above the Lower Bakken Shale. The were plans were then changed to drill a Three Forks well rather than a Bakken well and the curve build was continued. The edited well plan called for a landing of 14' into the Three Forks Formation, in the upper 2' - 3' of the preferred target interval, at a projected TVD of 11,250' and an inclination of ... The actual landing was estimated at 11,249' TVD, putting the well bore ~ 1' - 2' below the 12' target interval due to the approximate down dip at the start of the lateral. The top of the 10' target came in at 11,248' TVD and the bottom of the preferred 6' target came in at 11,254' TVD.
Spud: October 31, 2011; TD: November 24, 2011. The request to change from a Bakken well to a Three Forks well was received by the NDIC on November 14, 2011.

A trivial point but I was thrilled when I saw it: the geologist was a woman. Maybe not so trivial.  I look forward to my granddaughters going into engineering. [One wants to be a marine biologist; the other appears a budding artist.]

I am absolutely amazed that "they" hit a 10' target within a foot almost two miles down. This speaks volumes about the geologist and the tool pushers (and all the rest I know nothing about).

A huge "thank you" to a reader sharing a story, giving me an opportunity to read the file report and see how this played out.

By the way, the Truax field is near the heart of the Bakken and will eventually have six wells per spacing unit.

Little Missouri River Crossing in Southwestern North Dakota Being Considered; Gravel Pit Near South Unit Of Theodore Roosevelt National Park


November 8, 2015: forest service says owners can start process for mining gravel near the south unit of the park but a lot of stuff must be accomplished first. 

January 7, 2015: plans to mine gravel from the Elkhorn Ranch near the Theodore Roosevelt National Park will move forward.

September 14, 2013: Feds unable to find 25 acres out of their million acres of North Dakota land to swap; Roger Lothspeich will go forward with plans to develop his North Dakota gravel mine.

November 1, 2012: that land swap isn't working out too well

June 24, 2012: update here. If link broken, google Obrigewitch Jay Day Short Ranch five possible locations. There are no less than seven "Obrigewitch" wells in the current boom.

June 5, 2012: this seemed to have happened awful quickly so maybe I'm missing something, but this sounds like the end of the story
A plan to build a Little Missouri River bridge and road near Theodore Roosevelt’s historic Elkhorn Ranch vaulted the property to being named one of America's most endangered historic places.
Tuesday, the National Trust for Historic Preservation named the ranch site — a remote part of Theodore Roosevelt National Park at Medora — among 11 most endangered sites for 2012.

The trust has named more than 230 sites in its 25-year history and only a few have been lost since then, it says.
In the big scheme of things, I think this is the right decision. In the big scheme of things, this is not even a speed bump for the development of the Bakken.

June 4, 2012: from the Bismarck Tribune -- great-grandson of TR asking President Obama to declare the potential "gravel pit" a monument --
Roosevelt said he's offended by Montana businessman Roger Lothspeich's declaration that he’ll either take $2 million to go away, or open up gravel pits on the ranchlands. (Eberts Ranch)
Original Post
Link here to the Dickinson Press.

Data points:
  • bridge needed to connect ND State Highway 16 with US Highway 85 in the heart of North Dakota's southwestern oil patch
  • $15 million estimate
  • Billings County wants the bridge; environmental impact/others require complete search from Medora (interstate) north toward Watford City (McKenzie County) to determine best spot
  • I haven't looked at the maps, but I think where the Billings County folks want the bridge is in the Whiting Lewis & Clark prospect 
A new bridge may or may not require much gravel, but the new roads in the area certainly will, as pointed out by Don (thank you).

This story may surface again: link to the Bismarck Tribune regarding the Eberts Ranch /  Theodore Roosevelt National Park. Data points:
  • the family ranch was bought by the government for the park, 5,200 acres, 2006; $5.5 million
  • the government did not buy the mineral rights
  • is now called the "Elkhorn Ranchlands"
  • significant amount of gravel available for mining
  • possibility that one of the larger mineral rights owners could sell his/her mineral rights to government or conservation group to prevent mining
Hmmm....20 years of legal wrangling and environmental impact statements and permits .... or ...

Another Great Analysis Over At Carpe Diem Regarding Energy; ND vs Columbia, Nigeria

And, no, nothing about the Bakken, but I may post comments about this link later.

But this link is about the Bakken -- North Dakota vs Columbia and Nigeria.