Friday, September 14, 2012

Presidential Election -- Politics

Ohio is a toss-up; leaning to Obama.

Fracking is a godsend for the state.
A 2011 study conducted for the Ohio Oil & Gas Energy Education Program projected that oil and gas producers will spend more than $34 billion on exploration and development, [fracking], midstream, royalties and leasing through 2015.  
The study also concludes the oil and gas industry will create nearly 205,000 jobs in the state during the period. In addition, it predicts that oil and gas industry wages in the state will exceed $12 billion in annual salaries and personal income by 2015.  
Such projections signify good news for Ohio's high school and college graduates, displaced workers and career changers who wish to find a good-paying job in the oil and gas industry and stay in the region. Such a prospect was often unimaginable in Eastern Ohio in recent decades before the development of the Utica Shale, but it is keeping folks on the frontlines of oil and gas workforce development very busy.

Japan Opts To "Draw Curtain" on Nuclear Energy -- Really?

Following in path of Germany, Japan will "draw curtain" on nuclear energy.

Link here to Bloomberg.

Not really.

Wages in North Dakota -- 2011

Average weekly wages across North Dakota for private and public workers went up in most counties for the 4th quarter in 2011.  
Only three North Dakota counties showed average lower wages from the 3rd to 4th quarters in 2011 – Mercer, Towner and Eddy counties. 
Not surprisingly, counties with top wages in the 4th quarter are counties where oil production is taking place. The counties with top five highest weekly wages in the 4th quarter of 2011 include McKenzie with $1,557 a week (up from $1,234 a week in the 3rd quarter); Williams with $1,486 a week (up from $1,365 a week); Slope with $1,331 a week (up from $1,303 a week); Burke $1,244 a week (up most dramatically from $878 a week in the 3rd quarter); and Dunn with $1,221 (up from $1,122).


If this doesn't put a smile on your face, ...
Poupée de cire, poupée de son, France Gall
Memo to self: enroll in an adult education French language course.

And if you want to hear more, consider this: see if you can figure out who covers this.

But back to France Gall:
Chick Habit, France Gall

White Topping in the Bakken -- A "Reverse Oreo"

Link to Oil Patch Dispatch.
WILLISTON, N.D. – A new technique being used in some North Dakota road repair projects aims to smooth out rough spots more quickly and with longer lasting results.  
The North Dakota Department of Transportation is placing a concrete overlay on top of existing asphalt to better handle heavy truck traffic in the Oil Patch and elsewhere.  
The technique, sometimes referred to as white topping, should eliminate the ruts that have been occurring on some northwest North Dakota highways, particularly at intersections, said Robert Seghetti, vice president for ACME Concrete Paving.  
ACME, of Spokane, Wash., is using this technique in a road rehabilitation projects on U.S. Highway 2 north of Williston. ACME also is doing work near New Town. “It should be a long-term solution to the rutting problem they have in North Dakota,” Seghetti said.  
In addition to improving load-carrying capacity and safety, the technique also is cheaper and can be completed more quickly than other resurfacing methods, said Clayton Schumaker, assistant materials and research engineering for the North Dakota Department of Transportation.
Interesting. Another experiment in the Bakken laboratory. Incredible. And I love that "Williston" byline.

I guess with white gravel - black asphalt - white topping, we have the equivalent of a "reverse Oreo" in the oil patch.

WLL Up For Sale?

Earlier this week a reader sent me a note suggesting, that based on public information regarding trading activity and WLL, that the latter might be up for sale.

I didn't have time to respond immediately, but when I did, it appeared the activity was consistent with all the general oil and gas activity this week, and I didn't think the trading activity suggested WLL was in play at this particular time. Both the correspondent and I agreed that WLL is often talked about as a possible takeover candidate.

But it appears I may be wrong, and there may be fire where there is smoke, as they say. From Wall Street Cheat Sheet:
Shares of Whiting Petroleum Corporation took off on chatter that the company will put itself up for sale, along with Thursday’s option action, in which almost 5,400 September $52.50 calls changed hands, which was well above open interest of fewer than 1,900 contracts. Whiting’s potential suitors are reportedly Apache Corporation, Chevron Corporation, Occidental Petroleum Corporation, and Royal Dutch Shell.
The MDW alluded to Shell as a possible new Bakken entrant in an earlier post. Hooah!

WLL: market cap --  $6 billion; suitor needs to have $12 billion price tag in mind
Apache: $26 billion market cap; needs to increase oil exposure; only $360 million cash;
Chevron: $230 billion market cap; lots of cash; in best position to do this, but does it need to?
OXY: $75 billion market cap; only $4 billion in cash; operating cash similarly low
RDS: $227 billion market cap; similar cash position to CVX; Shell is ready and game

Fourteen (14) New Permits -- The Williston Basin, North Dakota, USA

Active drilling rigs: 193

Wells coming off confidential list were reported earlier; see sidebar at the right.

Three permits cancelled:
  • 21460, Petro-Hunt, Gunder T. 151-101-31C-30-1H, McKenzie
  • 19713, CLR, Meigen State 1-16H, McKenzie
  • 20705, BR, Merton 31-15TFH-3NH, McKenize
Fourteen (14) new permits:
  • Operators: CLR (5), KOG (4), XTO (2), Fidelity, MRO, and one SWD
  • Fields: Little Knife (Dunn), New Hradec (Stark), Banks (McKenzie), Pembroke (McKenzie), Frazier (Divide), Four Bears (McKenzie)

Farmers vs Artists -- This Will Be Interesting To Watch -- And Other Miscellaneous Non-Bakken Stories; Apple's Huge Solar Farms; For The Bakken, Scroll Down

I have no dog in this fight, but I do have opinions and thoughts which I will keep to myself.

Sean Lennon and Yoko Ono lead the artists' fight against fracking in upstate New York.

The upstate New York farmers, the MDW has posted before, look at the new tractors their Pennsylvania brethren are driving paid for with natural gas royalties.

From a Bakken perspective, I know the perfect answer but I've learned to keep certain thoughts to myself.

Solar Farms

Speaking of farmers, a picture is worth a thousand words; all this farmland taken out of use. (Unless it was virgin forest, then I guess it was okay.) (If the link is broken, it was an aerial photo of Apple's massive solar farm in North Carolina.) [Update, September 20, 2012: Apple announces a second solar farm in the same area.]

At War
I could be wrong, but it certainly looks like someone doesn't like us. (If the link breaks, it's a story about  US embassies under attack worldwide; US State Department "monitoring." Well, that makes me feel better.)

US Credit Rating Downgraded

Apparently this will be announced near the end or after the end of the trading day.



Later, 7:40: Apple did not steal Samsung patents -- patent trial judge. Oh, my. On top of everything else, this is just insane!

Later, 7:20 pm: this is just such an incredible story on so many levels. I don't have a smart phone so I shouldn't be talking, but regular readers know I can't resist. Regarding the comments at the link, three of my own comments:

  • First, I am amazed how bitter some folks sound. This is just a phone, for heaven's sake. But it is incredible technology and incredibly beautiful and yet there are folks who can't enjoy "beauty." Truly sad. 
  • Second, some folks say they will look at the new Nokias or the new Samsungs before committing to the iPhone. This is just a phone, for heaven's sake. Except with Apple you get the whole Apple-eco-niche. If you are comparing Apple to Nokia or Samsung or Droid you are completely missing the point. The aesthetic differences among the several offerings seem minimal; it's all about the Apple-eco-niche when talking about the iPhone. If you like Windows, you will love Droid, I guess. 
  • Third, shoot, I was enjoying my second Harpoon IPA and the Hillbilly Moon Explosion and I completely forgot that third point. The full Hillbilly Moon Explosion menu is available at iTunes, by the way. Oh, that's it. People are still talking about that old canard: dropped calls at ATT and customer service at ATT. One of my two iPads is serviced through ATT; I had several billing problems with that second  iPad (all my fault) and ATT was incredible in resolving them in my favor. I have a Samsung Sprint phone and it drops calls every so often. But dropped calls are becoming rarer and rarer across the US, but it's still a canard folks like to talk about. 
By the way, I am enjoying Hillbilly Moon Explosion on the new MacBook Pro. The laptop is truly incredible. 

Original Post
Link here.

CORRECTION: Apple is still taking orders (see comments). They simply slipped the available delivery date.

Two comments:
  • AAPL hits new high
  • many commentators following the iPhone introduction were underwhelmed; okay
I still remember all those folks who were concerned when Tim Cook took over from Steve.

In an unrelated story, Apple wins an injunction against Motorola in Germany. Oh, my.

Diluent Central


November 28, 2014: TransCanada to increase diluent capacity to northwest Canada.

June 3, 2013: EPD to move diluent from Texas to Chicago area

February 4, 2013: decision to reverse the Capline, the nation's largest continental pipeline.

Original Post

The diluent story, start with the Reuters article posted March 29, 2012, previously posted and linked.
Two of the country's biggest pipelines, both now underutilized, are competing to pump a special type of ultralight oil from the Gulf Coast to the Midwest, betting on growing demand from Canadian producers for the "diluent" necessary to their heavy oil sands bitumen flowing to refiners.
Whether heavy oil sands bitumen is shipped by rail or through pipelines, diluent is required to thin it down for movement. One source said that rail used a third (33 percent) less diluent than pipeline.

Data points:
  • oil sands demand for diluent last year (2011): 275,000 bpd
  • by 2025, estimate: 1 million bpd diluent needed by Canadian oil sands
  • Canadian condensate slipped to 130,000 bpd; was 165,000 in 2000
  • US exports of one type of diluent: Pentanes Plus -- surged to 86,000 bpd, up from 11,000 bpd in the first seven months of this year (2012)
  • last year estimate for total US exports of all diluents: 125,000 bpd
  • US share of that million bpd diluent could be 385,000 bpd (3x today)
Because of low prices of natural gas, producers in Canada are cutting back on natural gas production, and imports of natural gas from the US to Canada are surging. This is also happening in Mexico, where US is exporting increased amounts of natural gas to Mexico because its producers there are also cutting back (the MDW posted/linked that story earlier).

Now, Canada needs that natural gas and/or diluent to ship its heavy oil.

Two pipelines: Capline and Explorer [Later: see map of these pipelines provided by RBN Energy.]

  • tracks the Mississippi River from Louisiana to Patoka, IL
  • largest continental US pipeline
  • at 1/6th capacity; only pumping every other day due to glut from north
  • 1.2 million bbls/day; currently operated by Shell; will be operated by MRO starting September, 2013; MRO owns 32.6% of the pipeline
  • if Utica shale pans out; under-utilization even worse
  • shipping diluent back to Canada from as far away as the Eagle Ford
  • Eagle Ford --> St James --> Capline --> Southern Lights (Enbridge)--> Alberta (Rusty Braziel, RBN Energy)
  • considering increasing the flow of diluent to fill its empty pipes
  • Capline had planned to reverse its north-south pipeline to south-north, BUT a reversal less likely now that Enbridge/EPD said they would double capacity of the competing Seaway Pipeline
  • Houston to Chicago
  • 850,000 bpd capacity at Houston; narrows to 380,000 at Chicago
  • no longer needed for original function: to carry gasoline/diesel from Gulf Coast to the Midwest
  • landlocked refiners expanding to tak in more Canadian crude
  • some believe Explorer is already taking diluent north (company declined comment)
  • this issue is not covered in the Reuters article linked at the top
  • starting to be reported in trade journals
  • apparently BNSF is bringing diluent back in its otherwise empty rail cars; currently not charging to transport back north (previously posted; need to confirm; I could have misread that)
Some great links for further reading:

Friday Morning Potpourri -- Some Bakken May Be Interspersed With Non-Bakken Stories

A random note on the iPhone 5. Apparently one can surf the 'net while talking on the iPhone on some carriers, such as ATT, but not on others, such as Verizon. It's a carrier-specific issue. Technologically, it doesn't make sense, according to at least one source. Buyer beware. [Full disclosure: I have huge investments with ATT; none with Verizon. "Huge" in this case may be less than the value of a used car, but then I'm a small retail investor. Bear with me. I also don't have an iPhone and won't be getting one. I have a Samsung non-smart clam-shell phone with almost no battery life with Sprint; I've been with Sprint for ten years or longer and no plans to switch.]


A reader sent me the following link to a Reuters article this morning. I am embarrassed that I missed this when it first came out. I haven't had chance to read full article:
Even as big U.S. oil pipelines invest billions of dollars to ship booming oil production south from Canada and North Dakota, a new race is underway in the opposite direction.  
Two of the country's biggest pipelines, both now underutilized, are competing to pump a special type of ultralight oil from the Gulf Coast to the Midwest, betting on growing demand from Canadian producers for the "diluent" necessary to get their heavy oil sands bitumen flowing to refiners.  
The race between the Capline and Explorer lines, which may play out over years rather than months, is the latest example of how fast-growing inland oil production has roiled the U.S. market, forcing key parts of the nation's oil infrastructure to adapt -- or face obsolescence. It is fueled by forecasts that demand for diluent from Canadian oil producers will quadruple in just over a decade.
More to follow, I'm sure.