Friday, September 7, 2012

Delta, Bakken, and a Refinery

Here's that story about Delta Airlines bringing Bakken oil to its "new" refinery. I had read that Delta was "thinking" about this, but I had not seen the story.

A reader sent me the story. Thank you.

Link here the mobile edition of the Philadelphia Inquirer. This is another incredible story on so many levels. Remember: the Trainer refinery had been slated for closure. A lot of things came together, including Bakken oil to save this refinery, and to save a few jobs.
Who knew that the economic solution for the region's beleaguered oil refineries would arrive on a slow train from North Dakota?  
Delta Air Lines, the new owner of the Trainer refinery that is scheduled to reopen later this month, on Thursday became the third fuel producer in the Philadelphia area to announce plans to bring in crude oil by rail from the Bakken oil field in the upper Midwest. Edward Bastian, the airline's president, told an investor conference in New York that Delta plans to replace some imported oil at Trainer with domestic crude brought in by rail.  
The cheaper North Dakota crude could enhance the airline's plans to produce its own jet fuel, Bastian said. "It's very early to draw any conclusions, but this could lead to even larger savings," the airline executive told the Deutsche Bank Aviation and Transportation Conference.  
Delta is counting on its subsidiary, Monroe Energy L.L.C., to generate at least $300 million a year in savings by refining 80 percent of the airline's domestic fuel needs. Delta joins a fast-growing queue of refiners who are building unloading facilities and securing rail cars to tie into the North Dakota shale-oil boom, where producers are employing the same hydraulic fracturing method used to extract natural gas from Pennsylvania's Marcellus Shale.
Go to the link for so much more.

US Marines Set Record: 22-Mile Shot -- Direct Hit on the Taliban

Link here.

I thought Bakken roughnecks were good hitting a 5-foot seam two miles below ground, but here's a story of the US Marines hitting a target 22-miles away, setting a new record.

If the link is broken, google: US Marines 22-mile shot

Random Update on the Matthew Schmidt Well

A reader requested an update on this well:

  • 18427, 876, OXY/Anschutz, Matthew Schmidt 1-35-2H-143-97, Cabernet, F, t5/10; cum 115K 7/12;

Earlier reports stated that this well was not stimulated (fracked). There is a sundry notice dated February 21, 2012, notifying NDIC that the operator had erected a 10,000 bbl tank for frac fresh water storage. That is the top sheet in the well file; there are no sundry sheets regarding stimulation. The NDIC documentation suggests there is no pump on this well yet (though others have said that information can sometimes be delayed/omitted/wrong).

So, note the erratic production of this well in a very, very good oil field, drilled by Anschutz before being acquired by OXY USA, with a question whether this well was fracked earlier this year. Over 30 days in June, 2012, it produced five (5) bbls of oil; in just nineteen (19) days in July, it produced almost 2,500 bbls of oil. Interesting well.

Cumulative Production Data
   Pool: BAKKEN     Cum Oil: 115522     Cum MCF Gas: 44768     Cum Water: 14408
Production Test Data
   IP Test Date: 5/22/2010     Pool: BAKKEN     IP Oil: 876     IP MCF: 115     IP Water: 0
Monthly Production Data
PoolDateDaysBBLS OilRunsBBLS WaterMCF ProdMCF SoldVent/Flare

Politics: White House Will Miss Deadline To Report on the Fiscal Cliff

Link here.

Two data points:

  • The White House on Friday said it will miss the legal deadline for delivering a report to Congress on the spending cuts from sequestration that are scheduled to take effect in 2013.
  • The Office of Management and Budget has repeatedly failed to make legal deadlines. It delivered its presidential budget proposals and mid-session updates late both this year and last year.
Dog-bites-man story.
Under the terms of the Sequestration Transparency Act signed in August, President Obama was to tell Congress by Friday how the administration plans to implement the $109 billion in automatic cuts mandated by the Budget Control Act (the "fiscal cliff").
I had forgotten all about this (in fact, I don't know if I was even aware of this requirement). It will be interesting to see how the White House plans to implement $109 billion in budget cuts. My hunch: smoke and mirror projections, mostly involving the military (close out two wars; postpone the Long-Range Strike Bomber program; close GITMO).  

Who Wudda Thought? USA Today -- North Dakota Badlands Balances Oil and Tourism

Link here to the Travel Section of USA Today.
But on a ridge beyond the quivering cottonwoods and grasshoppers flitting through knee-high prairie grass, an oil well pierces the horizon. It's a symbol of the "carbon rush" that has earned North Dakota the country's lowest unemployment rate and ranked it second to Texas in oil production — and is rapidly transforming what the late CBS newsman and native son Eric Sevareid called the "rectangular blank spot in the nation's mind."  
This summer, citing threats from nearby development in the Bakken, a 13,000-square-mile, oil-rich geological formation that spans much of western North Dakota, the National Trust for Historic Preservation named Elkhorn Ranch one of the 11 most endangered historic places in America.  
North Dakota's still-accelerating energy boom is "one of the best things that's ever happened to this state," says Bismarck-based humanities scholar Clay S. Jenkinson, author of For the Love of North Dakota.
Fascinating story at the link.


Nothing to do with the post. I simply enjoy folk dancing.

Update on Economic Activity in Killdeer, North Dakota -- The Bakken, North Dakota, USA

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

Killdeer is about fifty-five miles from Watford City, the heart of the Bakken, and thirty-five miles from Dickinson, the center of southern ops in the Bakken.

Data points:

  • population: 800
  • in the process of five (5) annexations
  • 80 acres: new baseball diamond, park, commercial area, and apartments
  • Cobblestone Inn and Suites, 44 rooms, opened in July; largest hotel ever in Killdeer
  • city looking at whether Dunn County can support an airport
Killdeer is north of Dickinson, at the north end of the very active Murphy Creek oil field

Daily Activity Report -- Friday -- And A Teaser


September 5, 2013: Chart Industries is now using this old wind turbine manufacturing plant to make LNG pressure tanks to sell to China. I can't make this stuff up.

November 7, 2012: North Dakota wind turbine manufacturer shut its door on election day, November 6 (yesterday). 
Wind tower manufacturer DMI Industries Inc. in North Dakota has shut down.
West Fargo's economic development director says the future of the DMI plant isn't known because officials with the Texas-based company that recently bought the plant aren't immediately revealing their plans.
Parent Otter Tail Corp. is selling DMI plants in West Fargo; Tulsa, Okla.; and Fort Erie, Ontario, Canada, to Dallas-based Trinity Industries for $20 million. There were 260 employees at the Fargo plant.
Later, September 7, 2012: See "teaser" in original post below. I was going to update that tomorrow, but I could see that it would irritate folks having to wait. So, here it is now, even if not quite ready for prime time. Trinity (TRN) is buying the wind-tower manufacturing division DMI from Otter Tail. When another reader saw TRN, he saw railcars and that was the initial thought regarding tank cars, tying in the fact that Enbridge now uses rail and Statoil recently announced "buying" 1,000+ tank cars. TRN wouldn't have to make the entire tank car; the tank could be made in Fargo, rolling chassis elsewhere, and assembled in Fargo. However, TRN also has one other divisions, including the energy equipment group, that could be in play for the facility. The energy equipment group makes storage tanks used in the oil and gas industry. But, for "anon 1," this division also makes wind towers. If the government extends incentives for wind energy (which is very, very likely), TRN might simply continue DMI wind towers. Regardless, there are other options if supporting the oil patch. A couple of photos are worth a thousand words.
Original Post

Wells coming off confidential list reported earlier today.

Eight (8) new permits:

  • Operators: Samson Resources (4), G3 Operating (2), BR, and CLR
  • Fields: Ambrose (Divide), Haystack Butte (McKenzie), Strandahl (Williams), and New Home (Williams)

Active drilling rigs: 191 (down)


I will throw this teaser out, mostly for the time-date stamp: what are the chances that some manufacturer will start manufacturing rail cars in North Dakota? This is not an original thought with me. I have to give the credit to someone else. More details later this weekend.

Random Thought: I Hope the Fed Announces QE3....

... just to see if there is anything left in the quiver. And, oh, by the way, whatever happened to releasing oil from the SPR? The latter would be a windfall for the oil companies and a great opportunity for investors.

Disclaimer: this is not an investment site; this is just idle chatter waiting for Friday's daily activity report.


September 8, 2012: It looks like both could happen this next week: a) QE3; and, b) an announcement to release oil from the SPR.

If the Fed has one more "we're still looking at the data" non-decision, it will speak volumes that a) they know it won't work any way; and/or, b) there are no more meaningful arrows in the quiver. QE3 will do nothing for the "average" American before the election (but will push the market higher).

With regard to the SPR, that's a bit more iffy. There's no reason in the world to release oil from the SPR unless it's a purely political ploy or the Israeli strike on Iran is all but guaranteed. It will be interesting to see what oil speculators do when/if oil is released, knowing that it will be replaced at higher prices.

My hunch: neither will happen.  Can't wait to be shown to be wrong.

ONEOK's Presentation at Barclays; SandRidge's Presentation at Barclays

Link here for ONEOK.
Several slides devoted to North Dakota and the Bakken. 
A nice consolidation of data for newbies who want nice overview of what ONEOK has done and is doing in the Bakken. 
Regular readers know how impressed I have been with ONEOK ever since I accidentally drove past Stateline I when ground was first being broken, and I had no idea what was going up. That was less than a year ago; it is amazing how far ONEOK has come in one year in the Bakken.
Link here for SandRidge.
When you get to the link, and you don't have time for the webcast, scroll down just a bit and you will see the link to the slide presentation. 
SandRidge is not in the Bakken, but I've referenced it enough times, that it needs to be shown (as an update); in addition, SandRidge makes reference to the Bakken (and to the Eagle Ford).
There's one similarity at all these presentations, whether Bakken, Eagle Ford, or Mississippi Lime: the bar graphs depicting production.

NOG: #7 -- Fortune's Top 100 Fastest Growing Companies; $70 Million Expansion At Sugar Factory; Lowest Unemployment Rates in the US: Bismarck, #1; Fargo, #2; Grand Forks, #7

NOG is #7 on Fortune's 100 fastest-growing companies. All companies. Incredible 
Whiting Petroleum is #70. 
Disclaimer: this is not an investment site. No recommendation. Simply sharing information. 
Thank you: to a reader who shall remain "anonymous." Smile. He knows who he is.
The following stories and more can be found at North Dakota Matters.

Meanwhile, unemployment across the US:
  • Bismarck: #1
  • Fargo: #2
  • Grand Forks: #7
Healthiest states to live:
North Dakota among the top five: he happiest and healthiest state to live in the future may be Utah, according to a new Gallup poll that finds the Beehive State leads the nation in more than a dozen forward-looking metrics, such as intellectual curiosity, a healthy work environment, and low smoking rates. Rounding out the top five best U.S. states for future living are Minnesota, Colorado, Nebraska and North Dakota.

Hawaii, ranked #1 in 2011, is in the top ten this year. This year (2012):
  • Utah
  • Minnesota
  • Colorado 
  • Nebraska
  • North Dakota
$70 million, major expansion at Minn-Dak's sugar beet factory; Wahpeton (North Dakota side of the border)
The board of Minn-Dak Farmers Cooperative of Wahpeton, N.D., voted Aug. 28 to go ahead with a $70.3 million plan to build a molasses desugarization plant as an add-on to its sugar beet factory.  
The desugarization and load-out facility will be a major expansion of the plant, says David Roche, the company’s president and chief executive. It will add 20 additional jobs. The two-year construction period will begin in September.

For Chester:

My Love for Evermore, The Hillbilly Moon Explosion

Do Taxes Make a Difference in Behavior? You Betcha -- Unprecedented Flow of Supertankers to South Korea

Link here. As I note below, this is a footnote in today's news, but I think it's a huge, huge story, and explains a lot.
A total of 18 supertankers have shipped North Sea crude to South Korea since December, according to vessel reports and ship-tracking data from IHS Inc. (IHS) The unprecedented export flow is taking place after South Korea and the European Union signed a free-trade agreement in July 2011. The accord exempted the nation’s refineries from a 3 percent tax on imports from the EU. More than half of the North Sea oil shipped to South Korea is Forties blend, a grade used to set Dated Brent, the benchmark for more than half of the world’s crude, according to the table of ships chartered.
These are huge stories, and yet in the day-to-day news, they seem to be less than a footnote. I don't watch CNBC any more (maybe more on that later), so I don't know if this supertanker story has been discussed on CNBC; I would be interested in feedback.

There are several story lines here. The one that caught my eye, of course, was what happens when taxes/tariffs are eliminated.

I find it interesting that the EU, with all its problems, and the high cost of gasoline in their own countries (no doubt, mostly due to taxes on gasoline at the pump) would be willing to enter into a free-trade agreement with South Korea. Very, very interesting.

This also affects companies like Nordic American Tankers.


With regard to television: I  have been on the road since early August (and at home in San Antonio I don't have television at all) and haven't seen much television. My wife doesn't have cable at her parents' home in Los Angeles.

I am finally back in Belmont (Boston) with my granddaughters where they do have cable's "116 channels and nothing on" television.

I watch NASCAR and the golf tournaments, and some football, but that's it.

This a.m. was typical - or was it yesterday? I woke up at 6:30 a.m. and turned on channel 46, CNBC, preset from the night before. As soon as CNBC came on, there was Howard Dean. I immediately turned CNBC off. Folks complain about this site (the MillionDollarWay blog) because of the off-topic postings, but when I turn to CNBC I find it's just as bad, if not worse. CNBC is a "professional" medium, my blog is a blog.

This is what I remember from CNBC when I used to watch it:

  • the 6:00 to 8:00 a.m. show was the only one worth watching
  • the 6:00 to 8:00 a.m. show had a male talking head who, I think, does not own a car
  • Green Mountain Coffee is the most-followed company on CNBC, followed by ????
  • the biggest stock to come along, AAPL, is hardly covered at all
  • very little on energy, but lots on ????
  • too much fluff and too many commercials for a bit of information -- information that is/was better presented in WSJ and on the internet, anyway
  • Kudlow was a one-pony anchor when it came to energy: drill, baby, drill; even I got bored with that

The loss of Erin Burnett was a deal breaker.

Job Watch -- The Spin Today?

Remember: the magic number is 200,000

I am impressed. Very impressed. No spin. No spin at all.

This is the AP lead:
U.S. employers added 96,000 jobs last month, a weak figure that could slow any momentum President Barack Obama hoped to gain from his speech to the Democratic National Convention.  
The unemployment rate fell to 8.1 percent from 8.3 percent in July, the Labor Department said Friday. But that was only because more people gave up looking for work.
The report was weak throughout. 

And this:
All told, the proportion of the population that is either working or looking for work fell to 63.5 percent. That's the lowest level in 31 years for the labor force participation rate
More data points:

  • Average number of jobs added per month in 2012, so far: 139K
  • Average number of jobs added per month in 2011: 153K
  • 96,000 jobs added last month -- remember, anything below 200,000 is anemic, and less than 100K, well...
  • not only that, but the number of jobs added in July and June than first estimated

As has been widely reported, and now "viral" as they say, the best and the brightest -- those attending the convention -- said that corporate profits should be banned -- ok -- exactly how does that help job creation.

It was noted that the interviewer did not ask the question of those "on the street" in Los Angeles (Leno's "jay-walkers") but of the delegates -- the best and the brightest -- that attended the convention. And they say the Tea Party is radical.


Going through the Wall Street Journal this a.m., I see a completely different story.  The story I see is this: there is no reason why the US shouldn't be leading the world right now --

  • our energy is dirt cheap compared to Europe
  • Europe's austerity programs will wreak havoc on the PIIGS and will spill over
  • Hollande (France) will be a disaster; that will play out over the next few years
  • the unions in Europe: folks forget about this one; Lufthansa, today, canceled 2/3rds of its flights; cabin crews expected to go on strike for third time in less than two weeks (three strikes in two weeks?)
  • our telecommunications lags South Korea, but with free market emphasis rather than regulatory emphasis, our TC could be fixed, and maybe even rival South Korea's
  • China's growth is considerable (may be slowing) but they have headwinds that are worse than here in the US; their exploding youth population is perhaps their worrisome (for the government)
  • the Mideast? Russia? Venezuela? not even players outside of oil

Cheap energy, highly skilled and educated workforce, robust natural resources -- no reason why US shouldn't be doing better right now. No reason.

Here's another take on the "tragic" jobs picture at Yahoo!Breakout -- the blog.
Starting with the participation rate, Nesto notes that "almost 400,000 people dropped out, just gave up" looking for work in August. For each one-tenth of one percent improvement in the unemployment rate, 184,000 Americans had to become quitters. Quitting could mean going on disability, going into the grey market (read: getting paid cash for odd jobs), doing something illicit, or begging. 
Whatever they're doing instead of working or looking for legitimate jobs, 368,000 Americans gave up on participating in the economy in August alone. What would it take to make you just give up entirely? That's what hundreds of thousands of your fellow Americans went through last month. Think about that if anyone tries to tell you a drop in the headline rate is anything but more evidence of an ongoing national disgrace.

Flaring: Why It Won't "Stop" In the Bakken

Great, great article -- and validates what I've been posting for two years -- from RBN Energy.

Flaring is a red herring. As long as "they" continue to drill in the Bakken, there will be flaring.

An operator won't put in a natural gas pipeline to a given well until it is known whether the well will even produce any natural gas after the initial couple of months. And it is not known whether a given well will produce natural gas after the initial couple of months until the initial couple of months have been booked.