Thursday, June 28, 2012

Eight (8) New Permits -- No Wells Reporting -- The Williston Basin, North Dakota, USA

Daily activity report, June 29, 2012
  • Operators: Whiting (5), Hunt, Samson Resources, Baytex
  • Fields: Sanish (Mountrail), West Ambrose (Divide), Heart River (Stark), and Whiteaker (Divide)
Hunt has a permit for a wildcat in Divide County.

The four Whiting permits in the Sanish are in two different sections; in section 4 Whiting already has two producing wells; this will be two more. In section 26, Whiting already has three producing wells; this will be two more. The Whiting permit in Stark County will target the Pronghorn Sand.
No wells came off the confidential list today, June 29, 2012. Six months ago it would have been New Year's Eve, or thereabouts. Nothing going on then.

Producing wells completed: None.

Another One Bites the Dust -- At Least We're Cutting Our Losses

Another government-backed solar company declares bankruptcy.
Abound Solar Inc., a U.S. solar manufacturer that was awarded a $400 million U.S. loan guarantee, will suspend operations and file for bankruptcy because its panels were too expensive to compete.

Abound borrowed about $70 million against the guarantee, the Loveland, Colorado-based company said today in a statement. It plans to file for bankruptcy protection in Wilmington, Delaware, next week.

The failure will follow that of Solyndra LLC, which shut down in August after receiving a $535 million loan guarantee from the same U.S. Energy Department program. Abound stopped production in February to focus on reducing costs after a global oversupply and increasing competition from China drove down the price of solar panels by half last year. 
I'm not exactly sure what it means to "stop production to focus on reducing costs."  Stopping production will certainly cut costs. Maybe I'm missing something. I think what they meant to say:
Abound stopped production in February to focus on how to tell the President it aint' gonna work and to start writing press releases to blame it on the Chinese.

Volt Sales Will Miss Target -- Absolutely Nothing To Do With the Bakken

Link to Bloomberg here.

On top of other worries, GM has cut sales forecast for the Chevrolet Volt.

The Volt is not on pace to meet GM's goal of 60,000 cars globally/45,000 in the US.

Through May, GM has sold about 7,000 Volts in the US (how many were bought by dealers "to keep" and how many were bought by consumers was not broken down). [May, five months --> 7,000/5 --> 1,400/month. On an annualized basis: 17,000 Volts to be sold in US this year.]

New estimate: 35,000 to 40,000 globally.

GM continues to say that "politics is partly to blame for disappointing sales. The falling price of oil/gasoline could perhaps possibly maybe be contributing to disappointing sales. And, of course, the cost and perceived "bang for the dollar."

And Ford, delaying decision to close a factory or factories in Europe is now worried about losses in Europe tripling in 2Q12. Tripling. Europe is in deep trouble. Europe used to be a strong base for Ford.

Population of Grand Forks Decreased Slightly Year-Over-Year

This link to KXNews will probably be broken soon.

Data points, for 2011:
  • Watford City: grew by about 9%
  • Williston: grew by about 9%
  • Fargo: growth less than 2%
  • Bismarck: growth less than 2%
  • Grand Forks: actually saw a slight decline (most likely due to some Grand Forks folks moving closer to the Bakken; military-related?)
  • Crew camps: estimate of 24,000 in crew camps may not be counted toward those growth figures

More Highway Permits Issued So Far in 2012 Than All of 2008

Link here to Bismarck Tribune.

Averaging 1,000 permits/day.

Weekly Jobs Report -- Revised Number Approaching The Dreaded 400,000 Mark

Remember: the magic number is 400,000

Last week: 386,000 (down 6,000).

Prior week: revised UP to 392,000 (that's very, very close to the magic number of 400,000
Initial claims for state unemployment benefits fell 6,000 to a seasonally adjusted 386,000, the Labor Department said. The prior week's figure was revised up to 392,000 from the previously reported 387,000.

Economists polled by Reuters had forecast claims easing to 385,000 last week. The four-week moving average for new claims, considered a better measure of labor market trends, slipped 750 to 386,750.
I don't know what "slipped" means in this context. Did the number (386,750) get worse or get better? Of course, it doesn't matter: "750" is a rounding error, neither reproducible nor significant.

Wow, that revised number, 392,000, is very, very close to 400,000, and all things being equal, unless we have a significantly better report next week, I assume the four-week average will move up yet again. We're probably past that point in the year when hiring was going to pick up.

Crude-By-Railroad From the Canadian Oil Sands --


June 28, 2012: See first comment. I've correct the errors in the original posting. 

Original Post

Maybe it's just me, but I think this is a huge story. A huge "thank you" to "bc" for sending me the link.

CN has signed an agreement with Southern Pacific Resource Group to ship Canadian oil to the US gulf coast.
CN expects to begin moving the bitumen from Fort McMurray to Natchez beginning in the fourth quarter. Volumes will ramp up to more than 12,000 carloads per year as production increases, CN officials said.

The pact represents an important milestone in the Class I's growing business of shipping crude oil by rail, said James Cairns, CN’s vice president-petroleum and chemicals. The year, the railroad expects to move about 25,000 carloads of crude oil, up significantly from about 5,000 loads last year.
A unit train is 100 - 120 tank cars, so 12,000/100 --> 120 unit trains, or about one unit train every third day. But look at how huge that ramp up has been: from 5,000 loadings last year to around 25,000 loadings this year.

Canadian National (CN) route map is here.

The Keystone XL looks less and less critical.

Three (3) New Permits -- Newfield Has a Gusher in the Bear Den

Daily activity report, June 28, 2012 --
Operators: Oasis, Baytex, and Marathon
Fields: Baker (McKenzie), Skabo (Divide), Werner (Dunn)
Coming off confidential list today:
  • 20170, 2,939, Newfield, Moberg Federal 149-95-29-32-2H, Bear Den, t5/12; cum
  • 21660, drl, BEXP, Wing 4-33 1H, Painted Woods, s12/11; cum 8K 4/12;
  • 21905, drl, QEP, MHA 2-06-07H-147-92, Heart Butte, s12/11;
  • 21940, 458, G3 Operating, Pasternak 1-5-8H, Strandahl, t3/12; cum 10K 4/12
I used to think that wells not completed was due to lack of frack spreads (crews); in some cases, weight restrictions affect the schedule.
Producing wells completed: none.

Mike Filloon on KOG

Link here to

Mike remarks on KOG's Koala and Polar prospects. 
One well result to watch is Whiting's Tarpon Federal 21-4H. This well has been by far the best in the Bakken with respect to its 24-hour IP rate. It produced 4,815 barrels of oil and 13,163 Mcf on the first day. This well was approximately 17 miles northeast from Kodiak's best wells in the Koala Prospect.
Other posts regarding the Tarpon Federal:

No WSJ Wrap-Up: I am Traveling and Don't Get the Print Edition Delivered When Traveling

Energy Links at Independent Stock Analysis


August 25, 2012: a former vice president of Saudi Aramco disputes Lenoardo Maugeri's paper (see original post):
Leonardo Maugeri’s recent paper Oil: The Next Revolution on the presumed future abundance of oil supplies rejects the pessimistic outlook of limited increases in oil capacity over the next decade. It suggests global oil capacity will exceed 110 million barrels per day by the end of the decade, putting an immediate end to concerns regarding constrained long-term oil supplies. This conclusion is based on an assessment of new projects with a reported capacity of 49 million b/d before a downward adjustment to 29 million b/d to allow for completion risks and reserves depletion. Maugeri holds two PhDs, one in Political Science and one in Economics, and has extensive executive experience with ENI in strategies and developments and in petrochemicals.

In putting forth this optimistic thesis, Maugeri apparently sets aside a variety of technical realities, including the difference between natural gas liquids (NGLs) and conventional oil, reserves depletion versus capacity declines, and proven reserves as opposed to speculative resources.
Sada al-Huseini's bottom line:
Not surprisingly, many oil executives have stated publicly that incremental oil supplies are now in a precarious balance with capacity declines and will remain so for years to come.

Much as all the stakeholders in the energy industry would like to be optimistic, it isn’t an oil glut by 2020 that is keeping oil prices as high as they are. It is the reality that the oil sector has been pushed to the limit of its capabilities and that this difficult challenge will dominate energy markets for the rest of the decade.
Original Post
Link to ISA here. Again, excellent links.

When you get there, you may want to download the first link, PDF file.
Yesterday a report by Leonardo Maugeri created big buzz in the oil and gas community.  The Oil and Gas Journal actually used the ridiculous 17 million number in a headline.  The executive summary forgets about price.  The WSJ and economist Mark Perry tease the peak oil idea in their headlines.
For me, the Bakken was important for two reasons:
a) the production
b) the lessons learned and development of horizontal fracking
The second reason was the most important. I started the blog simply to help me understand what was going on in the Bakken. I was surprised by all the naysayers out there, suggesting the Bakken was not that important. I responded by saying that perhaps for the global economy, the Bakken was not a big deal, but for a small region in North Dakota it was huge. It appears I was wrong by giving in, saying that perhaps for the global economy the Bakken was not a big a big deal. As an industrial laboratory, it has had a significant impact on how the oil and gas industry developed.

RBN Energy With Great Discussion of US Gasoline Consumption

I don't think I've seen this discussion / explanation elsewhere, but again RBN Energy has a great graphic and an excellent discussion.
Consumers are using less gasoline this year just as they have done since 2005. When we last looked at the data from 2005 to 2011, we noted that the decline was primarily caused by Environmental Protection Act (EPA) and Energy Independence and Security Act (EISA, 2007) regulations. These regulations require the substitution of increasing quantities of renewable fuels into gasoline and they continue to be the cause of declining gasoline demand. Most of that renewable fuel is ethanol. The effects of the EPA and EISA regulations are still working their way through the market and each November the EPA publishes new rules to increase the percentage of renewable fuel required in gasoline up to a total of 36 Billion gallons by 2022. As of 2011 the required percentage was 8 percent. Renewables substitution will therefore continue to chip away at gasoline demand for the next decade.
Go to the link for the graphic, as well as for links to previous presentations that support the argument.