Monday, June 18, 2012

BakerHuges Strike Called Off -- Absolutely Nothing To Do With The Bakken -- A Norwegian Story

I've been following this story for the past two weeks, but never posted it because it did not interest me enough to post it. Union workers were going to go on strike against Baker Hughes. The union said they were prepared to strike for years.

I guess it was hyperbole. The strike was called off before it was scheduled to begin. Link to Rigzone.

Poland: The Only Place In The World Where Shale Gas Has Not Been Found -- Now The Rest of the Story


June 19, 2012:  The rest of the story. It turns out that it was not necessarily an issue of shale gas not being there. The regulators drove the operators nuts.
Exxon Mobil Corp's decision to pull the plug on its efforts to explore for shale gas in Poland isn't what's dousing its local rivals' enthusiasm for the unconventional resources prospects in the central European country, it's the bureaucratic apathy, industry participants said Tuesday.

The industry's frustration with Poland's red tape is palpable as people accustomed to the friendly and expedient regulators of North America collide with government bodies which haven't completely shaken off the mentality of central planning.
Go to the link to read a most incredible story. I am left "speechless." Come this winter, if the Poles complain of "their" natural gas from Russia getting cut off, I won't have any sympathy.

Original Post
It seems that not a day goes by without a story of another natural gas discovery, conventional, unconventional, or otherwise. Here we have a story where they did not find natural gas/shale. XOM announces plans to leave Poland.

Speaking of Predictions: How We Get 100 Years of Natural Gas Supplies

Link here to CNBC News.
When President Barack Obama said in his State of the Union speech this year that the United States has a supply of natural gas that can last nearly 100 years, he was using a quick-and-dirty, back-of-the-envelope computation that is nonetheless rooted in recent geological research.
I was happy to see someone else uses "back-of-the-envelope calculations."

A few story lines there, I suppose, but need to move on. I am way behind on blogging.

Global Growth Now Expected to Rise to 4.1% From 4.0%; Yes, No Typos

I don't know why this popped up in my e-mail today; the article was previously published and dated May 21, 2012.

I don't know about you, but it seems I can find almost any prediction regarding future demand for oil. It seems I've read that predictions were for increased demand, then predictions that demand would fall, and now we are back to predictions that demand for oil will increase.

A lot of interesting data in this article for what it's worth:
After posting near-zero annual growth in the fourth quarter of 2011, global oil demand growth will gradually accelerate throughout 2012, culminating in an increase of 1.2 million b/d by this year's final quarter, the International Energy Agency said in its latest monthly oil market report.
Data points:
  • 2012 trend: global oil consumption to rise by 800,000 bopd to 90 million bopd by year's end
  • 2013: growth projections have been increased for year-end 2013; forecast growth to 3.5%, revised upward form 3.3% a few months ago, and up 4.1% next year, up from prior forecast of 4%
  • Yes, you read that correctly. It's a headline story: forecast that global growth will increase to 4.1% from an earlier forecast of 4%.
Two comments/questions:
Is an increase to 4.1% from 4.0% reproducible and/or statistically significant?
Okay, just one comment/question, but it feels like two.

The best thing about this article: we have a 3-second soundbite for global oil consumption -- 90 million bopd.

North Dakotans Snapping Up Arizona Property

It seems I've read this story somewhere before: North Dakota residents buying up Arizona property. Link is at Minot Daily News.

This is one of the better articles I've read on any subject in the regional newspapers.

For Investors Only -- Energy -- Go Short, Go Long, Punt

First, we get this: oil will go to $65. Raymond James downgrades 24 oil companies, oil to $65?

Then we get this: UBS recommends overweighting energy.

I haven't had the chance to read the stories; just the headlines.

I think if you watch CNBC "Fast Money" you can learn how to hedge on this by buying puts and calls, going long on 24 oil companies while simultaneously going short on the same 24 oil companies. Another option, go to obscure television channels after midnight, watch the info-commercials to learn how to flip real estate.

Study Concludes: Fracking -- Small Risk of Causing An Earthquake

Link to Oil & Gas Journal
Hydraulic fracturing has a low risk for inducing earthquakes that can be felt by people but underground injection of wastewater produced by fracing and other energy technologies has a higher risk of causing earthquakes ....
Others may see some irony in this part of the report:
Carbon capture and storage may have the potential for inducing seismic events because significant volumes of fluids are injected underground over long periods of time ...

So, here's the irony: "greens" are against fracking and there seems to be minimal evidence that fracking is related to earthquake activity; "greens" are for carbon capture and there is some suggestion that carbon capture may be related to earthquakes. Personally, I'm not worried about either. There is some evidence that nano/micro-earthquakes might be beneficial in preventing major earthquakes. 

SeekingAlpha.Com Article on Sandridge

This is not a Bakken story, but there is so much interesting information in this article, it needs to be on the blog.

I'm way behind in blogging today, so I will provide the link, and come back to it, if I have time/remember.

A big "thanks" to Don for alerting me to the article.

Ok, I'm back.

The two most interesting points in the article:
I think that as fracking becomes more common in the mid-continent, small and mid-size players are going to need to think outside the box for water supply more frequently. Furthermore, I am betting that EOG Resources will be one of the first to try to corner its own water supply. After cornering its own frac sand and crude by rail transportation system, it seems like the next logical step. With its new lighter weight and a little extra cash on hand, SandRidge probably will not be far behind.
SandRidge is bullish on Kansas, estimating that formations in the state could hold 15 billion barrels of recoverable oil. SandRidge already holds the most horizontal drilling permits of any independent in the state, and is planning to continue drilling throughout 2012 and beyond, telling one local news outlet that it plans to continue drilling and hiring for at least the next ten years.
A conservative estimate ("A Basic Analysis of the Bakken") predicts drilling in the Bakken will continue through 2030 and that production will continue through 2100. 

Basin Electric Starts Construction on New Natural Gas Power Plant Near Williston -- Big Story -- Helps Takeaway Issue -- "Keeping" Natural Gas In-State

Link here to Bismarck Tribune.

Data points:
  • 15 miles northwest of Williston
  • said to be near a natural gas processing plant that is also under construction (ONEOK's Stateline II facility? -- maybe a reader knows?)
  • 45 megawatts
  • to be in service by early 2013

Eleven (11) New Permits -- Whiting Reports a Great Pronghorn Well; BEXP Has Several Nice New Wells -- An Incredible Report By Any Measure --The Williston Basin, North Dakota, USA

Still updating

Daily activity report, June 18, 2012
  • Operators: KOG (2), Hess (2), Enerplus, WPX, Hunt, OXY USA, Fidelity, Sinclair, and MRO
  • Fields: South Fork (Dunn), Blue Buttes (McKenzie), Heart Butte (Dunn), Bear Butte (MCKenzie), Heart River (Stark), Sanish (Mountrail), Mondak (McKenzie), Reunion Bay (Mountrail)
Fourteen wells released from "tight hole" status. One permit canceled. Eleven producing wells were completed. Some very nice wells today.
  • 19423, 691, OXY USA, Elroy Kadrmas 1-10-3H-143-96, Dunn,
  • 20504, 2,696, Whiting, Pronghorn Federal 21-13TFH, Billings,
  • 20635, 2,477, BR, Frio 24-34H, McKenzie
  • 21469, no data, Hess, SC-Foster 153-99-2932H-1, Williams,
  • 21498, 2,006, BEXP, Martin 32-31 1H, Williams,
  • 21617, no data, Crescent Point Energy, CPEUSC Lowe 18-19-158N-99W, Williams
  • 21621, no data, BEXP, Strobeck 27-34 6H, Mountrail
  • 21740, 2,389, BEXP, Blanche 27-22 1H, Williams,
  • 21764, 673, MRO, Driver USA 34-9H, McLean,
  • 21791, no data, BEXP, Jay 24-13 1H, McKenzie,
  • 21792, no data, BEXP, Sax 25-36 1H, McKenzie,
  • 21819, no data, Hess, BL-A Iverson-155-96-1213H-3, Williams
  • 21904, no data, QEP, MHA 4-06-07H-147-92, Dunn,
  • 22012, 334, Cornerstone, Cuplin 6-3-10H, Burke,
Note: 8/14 wells were not completed; more than half not completed. Fracking backlog?

OXY USA has a wildcat in Stark County.

Eleven producing wells completed, including,
  • 21992, 2,579, KOG, Koala 15-31-30-3H, McKenzie,
  • 21740, 2,389, BEXP, Blanche 27-22 1H, Williams,
  • 21006, 3,001, BEXP, Orville 4-9 2H, Williams,
  • 21007, 2,788, BEXP, Orville 4-9 1H, Williams
  • 21005, 2,436, BEXP, Borsheim Trsut 33-28 1H, Williams,
  • 21562, 2,037, BEXP, Borsheim Trust 33-28 2H, Williams
  • 21154, 2,460, BEXP, Ron 28-33 1H, McKenzie
One permit canceled:
  • 21036, PNC, Petro-Hunt, Storhaug 157-100-2B-2-1, Williams;

WSJ Wrap-Up -- Monday Morning -- And a Bloomberg Story

Again, remember, googling subject exactly as it appears should bring you to full WSJ article.

Four sections, as usual, today. The back/last section front page story is all about "natural gas engines": "America, Start Your Natural Gas Engines."

An interesting little article on the military's challenge with proliferation of batteried-devices; and how it is researching solar power in the field: "Fighting Form: Military Takes on Battery Fatigue."

Perhaps some background to Japan's decision to go solar, blogged earlier: "First the iPhone. Now renewables: A Japanese telecommunications magnate has ambitious plans ot remake the country's energy production."

Wow, this is interesting. Plays directly into my earlier posts on the Saudi perspective: price of oil and "glut." Very, very interesting: "OPEC Hamstrung by Uncontrollable Events."  Maybe more on this later; stand-alone post or update of previous posts, same subject.

"Oxy Offers Moxie When Nerves Fail," p C8.

Great, great article with photo worth a thousand words: "App Developers Who Are Too Young To Drive."  The photo is of a "self-taught" 13-y/o working on his latest app....for Apple's iPhone and iPod Touch. Huge product placement of a huge MacBook Pro on his laps in front of his Lego set. Incredible. Wow, I wish I could open the blog to all, open access. So many story lines in this one article. The biggest story line: yes, Microsoft has lots to worry about. The next generation (aged 14 and under) is hooked/addicted to the new crack and it is not Android, Microsoft, Blackberry. It's Apple. As long as Apple sticks to its strategy, .... huge article. This alone is worth the price of the newspaper today. Again, this is not an investment site. This is not a recommendation to buy or sell shares in Apple. However, it is a recommendation to go "Apple" next time you are looking for a new computer.

I haven't looked at the market yet today; I can only assume the Greek vote will be helpful. Front page is all about Greece -- well, at least above the fold.

Page A4: "New calculations on immigration after Obama shift."

Page A7: "Biting the bullet at the ballot box: voters give grudging nod to austerity measures, 'I can't play around with the future." Priceless: a photo at leftist party's campaign headquarters in Athens.

Alongside that story was a small dispatch: "The euro zone's bailout funds are now insufficient to aid a large member of the currency area, ...." The euro zone has enough bailout funds for a small country like Cyprus, but not enough for a "larger" country, which I would assume means Greece or Spain. A new infusion is expected in November.

Based on the stories coming out of Egypt: Egypt will look a lot like Turkey with regard to governing. I learned a lot about Turkey while serving there for two years.

Op-ed by Ron Williams, former chairman and CEO of Aetna: "Why I no longer support the health insurance mandate." He says, "should ObamaCare be overturned by the Supreme Court, insurers have solutions to go." I don't know about you, but it seems his mea culpa is a bit late. "I was for it before I was against it. My comment: If the court rejects any piece of ObamaCare the entire house of cards falls, and we will get to relive the nightmare for four more years if Obama is re-elected. We will spend four years debating one industry -- the health industry -- while other industries simply stagnate. Or worse.

The Bloomberg story: the JPM loss pales in comparison to what California lost, is losing, and will lose for decades to come.  This is an incredibly good story, and provides a great warning to every other state, including North Dakota.

Williston Alumni Memories: Central School --> Low-Income Housing

Link to InsideClimate News/Dickinson Press.

Central School will be converted to low-income housing.

I have a lot of memories from this school. A lot.

#1: the "aroma" emanating from the dining hall. It was my first experience with school lunch programs, and it was not a good experience. (No offense to all the wonderful workers.) My mother was so wonderful to pack a lunch that I liked: an apple and a Velveeta processed yellow slide of cheese between two pieces of white, enriched bread in a little brown bag. I do not recall what I had to drink but I assume it was water in a reusable container. My closest friend and I would walk about four blocks to a park and eat our lunch together, even on the coldest winter days.

#2: Mr Thue

#3: Mr Privratsky (spelling). I do believe there are some Privratsky wells in the Bakken.

#4: The wonderful teacher, whom I never recall meeting but who was still actively teaching at the time, who drove that old black Model A or T Ford; I believe she was the inspiration for Miss Geraldine Grundy. By the way, I now understand a bit more about "Ms Grundy" in literature. I never made the connection before; and I don't know if the Archie creators were aware.

#5: the news of President Kennedy's assassination

#6: losing opportunity to edit the school newspaper to a most wonderful fellow student, Katie Hagan

Coal Use in Power Plants Falling Fast -- 50, 40, --> 30 Percent

I do believe that President Obama's rhetoric to destroy the coal industry was, to some extent, just that: rhetoric. How much his administration had in destroying America's coal industry is hard to say, but when the history books are written, the destruction of America's coal industry will be linked back to this president, the first president to be so vocal on this issue.

I do not know if market forces (natural gas prices plummeting) could have done this on its own, but there are two important data points:
  • coal can compete with very low natural gas prices, except for the mandated EPA regulations on coal
  • regulatory efforts by various groups to prevent coal from being exported to Asia; Australia took advantage of their coal resources (though lately, my understanding is that even Australian coal industry might be facing some challenges due to global slowdown; I forget the specifics
The point is that the coal industry in this country could remain a vibrant industry if "we" wanted it to be. I have no dog in this fight. I do not invest in coal (except, I suppose, indirectly, through shares in railroad companies, which I had almost forgotten about).

I, for one, never expected power plants in this country to switch from coal to natural gas so quickly. See linked story

American Oil Independence

This is a very short little article, doesn't say much, but certainly alludes to a couple of interesting data points, particularly about a) trade agreements; and, b) China's asset growth overseas.  The story is essentially an advertisement for an e-mail subscription, it appears.

Govenor New York Considering Fracking

I've linked a similar story earlier, but it might have been buried.

Regardless, here it is again, this time, linked at PennEnergy.

I've read nothing more than the headline, but I can only imagine the governor looking over at Ohio and Pennsylvania and seeing how much revenue those states derive from the oil and gas industry. I can only assume whatever oil and gas industry upstate New York had, it was mostly natural gas, and rigs are being pulled out of the state pretty quickly.

For those interesting in New York politics on this issue (I'm not), some other links:

RBN Energy Has Added "Part V" To Its Series on NGL and Cracking

The entire series is linked here.

This will take you directly to Part V