Wednesday, September 26, 2012

Magnum Hunter Resources Shutting in 400 Wells In Kentucky

Link here to a story.
Magnum Hunter Resources has shut in 1.7 million cubic feet per day (MMcf/d) of production from 400 natural gas wells in Kentucky due in part to low natural gas prices. 
The company said Wednesday it shut in production at the beginning of this year's third quarter after determining production would be uneconomical due to low gas prices and the cost of blending stock to reduce ethane content for transportation purposes.
It's getting bad out there. And no decision by the US government on whether to export natural gas overseas where US natural gas selling at $2 can garner $16. I can't make this stuff up.

And it's gonna get worse -- Bloomberg.
Natural gas pipelines coming into service by year end may boost deliveries from the Marcellus shale deposit in the U.S. Northeast by 30 percent, extending a supply glut that helped send prices to decade lows.  
As much as 2 billion cubic feet of gas a day are set to flow from the lines in Pennsylvania, Ohio and West Virginia, bound for markets along the Eastern Seaboard, based on government and pipeline-company projections. About 1,000 Marcellus shale wells sit uncompleted, mainly because of a lack of pipeline infrastructure, according to the Energy Department.
Later, another article from a reader: rush to liquids backfires for natural gas producers.

Highway 61 Revisited, Bob Dylan cover, Million Dollar Bashers

GE, Hess, Natural Gas Turbines -- For The Archives

Link here to
General Electric (GE) said its power and water division secured contracts worth $1.2 billion for its new heavy-duty gas turbines on Wednesday. The shift to gas powered turbines comes as natural gas hits are near decade-lows amid a North America production boom and Japan's shift away from nuclear power. 
Of the 19 turbines order, six are for Chubu, a Japanese utility's 2,300-megawatt plant and eight are for a Saudi Electric Co. project in the capital of Riyadh. The rest of the turbines are for companies in the U.S. including the Cherokee project near Denver owned by a Xcel Energy subsidiary. Hess Corp. (HES) ordered two gas and one steam turbine.
This is being posted for archival purposes.

No comment tonight. I'm too tired out. But I'm posting it for archival purposes and bragging rights, if deserved later on. A big "thank you" to Don for sending me the link.

Will This Be The Smoking Gun to Regulate Fracking? Fracking, Benzene, the EPA, Wyoming, And All That Jazz


September 29, 2012: USGS report shows no evidence linking hydraulic fracturing to water -- Encana

Original Post

Benzene levels are almost nil in water sampling around fracking site in Wyoming -- the most recent data:
Benzene is a hydrocarbon commonly associated with oil and gas development. Last year's testing by the EPA showed benzene at almost 50 times the recommended EPA limit. The new data released Wednesday by the U.S. Geological Survey show benzene at 3 percent of the recommended EPA limit.
But no one is willing to "really" comment on the findings. Test after test, year after year, nothing to show that fracking is an issue, but this test -- benzene at 3 percent of the recommended EPA limit. If I'm reading that correctly, the study seems to suggest that if the EPA allows up to 100 units of benzene in a given sample, only three units are showing up.

The fact that neither side is willing to "really" comment on this suggests that the EPA will continue to test until they get the results they want.

I wonder how Dimock, Pennsylvania, is doing these days? But I digress.

But back to the benzene story. A cut and paste from the article:
Benzene is not among the chemicals the EPA pointed to last year in making the link to hydraulic fracturing, commonly known as fracking.
"...making the link." What link? Any college chemistry student is seeing where this is leading. Unlike hydrocarbons which have a "fingerprint" which rules in / rules out the source of a contaminant, benzene, a simple C6H6 molecule has no identifying "fingerprint." So, I guess another way to look at this is "guilt by association" but with 3% of EPA recommended limits, there's not even an association, must less a link.

And here the same story in the WSJ; EPA using results to say fracking is a problem. Encana dismisses EPA statement; says the results have not been vetted by outside source.


On another note, I have to chuckle. I get a lot of criticism when I post non-Bakken articles, but the vast majority of comments I get are to posts about non-Bakken issues. And that's one reason (but not the "real" reason) why I post them.  I don't post most of those comments that criticize the blog (the comments are generally poorly written, lots of misspellings, bad grammar, and language that I prefer not to see anywhere, much less on the blog). But riding around Boston this evening, I "mused" over the Rigzone article I posted earlier: Musings: Energy, Unemployment, and the Health of the US Economy.

It starts out:
Most people are aware of President Barack Obama's "all-of-the-above" energy strategy, which provides a number of popular talking points about him being open to all forms of energy while campaigning, but in reality means only a few energy sources will be favored. Those favored energy sources seem to be only "green" ones. 
On the other side of the issue is the Republican standard-bearer, Mitt Romney, who is advocating for increased development and use of domestic fossil fuel resources while mandating that very expensive green energy sources need to achieve commerciality on their own and without government mandates and subsidies. America's domestic oil and gas production is growing dramatically suggesting to some students of the energy business that the country is on track to eventually achieve self-sufficiency. 
The definition of self-sufficiency seems to mean different things to different people, but on balance it suggests the U.S. will be importing significantly less energy than in the recent past and may actually begin exporting meaningful energy volumes assuming government regulatory barriers are removed and no new ones erected. Just how much energy the country may wind up exporting is an open question, since it depends on the growth of our productive output, our increased consumption and legal barriers being lowered. The answer to the question of how much energy consumption may grow is tied to the economic outlook. 
A key ingredient for predicting the economy's growth rate lies in understanding how the health of our labor market will influence future activity. The traditional measure of the labor market's health is the unemployment rate, which, following the latest monthly employment report showed the U.S. economy with 12.5 million unemployed workers, or an 8.1 percent unemployment rate. Despite the high rate, the unemployment rate for August improved by two-tenths of one percentage point from what was reported in July. 
Compared to a year ago, the unemployment rate has declined by one full percentage point, but part of the improvement is a reflection of changes within the dynamics of the American labor force combined with some private sector employment growth. We will examine some of these labor force dynamics later in this article.
The conclusions may surprise you. Go  to the link and read the entire article.  But I love the opening paragraph: the president's "all-the-above" menu includes only those energy sources he favors.

Leave It To "Anon 1" To Provide the Best Story of the Day, Maybe the Week: File Under NIMBY

Link here to a most unusual story.

I did not know wind turbines could not be sited near helipads.

Huge "thank you" to readers for providing great links.

If the link breaks try googling:
There is a town in Michigan called Benzonia, near the middle of Benzie County. It was not, as I first assumed, named by Snoop Dogg after a 24-hour bender, but rather is how Americans mispronounced the French name of a nearby river. Americans are like that.
There can't be too many stories about wind turbines that start out like that.

Sixteen (16) New Permits; BEXP, Zenergy, Oasis, and CLR Have Very Nice Wells; OXY USA Reports Another OXY USA Well

A couple days ago, I posted the spectacular IPs for four QEP wells. I've now updated the multi-well-pads that QEP has in Heart Butte and Deep River.

Number of active rigs in North Dakota: 188 (holding steady)

RBN Energy: Natural Gas Futures, background, Henry Hub

Wells coming off the confidential list today:
  • 20801, 261, Samson Resources, Stingray 18-19-162-98H, Ambrose, t7/12; cum 7K 71/2;
  • 21508, drl, BEXP, Maston 34-27H, Banks, 
  • 22383, 265, CLR, Odessa 1-17H, St Demetrius, t7/12; cum 11K 7/12; 
In addition, two producing wells were completed:
  • 20400, 2,783, Oasis, Bering 5200 12-29H, Camp, t8/12; cum 1K 7/12; frack data not yet available; spud June 23; total depth July 25, 2012
  • 22852, 902, Whiting, Estvold 42-26TFH, Sanish, t8/12; cum --
Sixteen (16) new permits:
  • Operators: Fidelity (3), Newfield (3), Slawson (3), Petro-Hunt (2), Samson Resources (2),Whiting, Baytex, Oasis  
  • Fields: Eagle Nest (Dunn), Sanish (Mountrail), Alger (Mountrail), Siverston (McKenzie), Van Hook (Mountrail), Bluffton (Divide), Stanley (Mountrail), Gros Ventre (Burke), Ambrose (Divide), Big Bend (Mountrail)
Comments: Slawson has a permit for a wildcat in McKenzie County

The following wells will come off the confidential list tomorrow:
  • 21514, 1,058, CLR, Seaver 1-5H, East Fork, t6/12; cum 17K 7/12;
  • 22202, 2,104, Zenergy, Johnsrud 19-18H, Siverston, t5/12; cum 46K 7/12; 
  • 22258, drl, Hess, AV-A and S Trust 162-94-17H-1, Larson,
  • 22469, 540, G3 Operating, Hought 1-6-7H, Good Luck, t7/12; cum 6K 7/12; 
  • 19216, 3,442, BEXP, State 36-1 3H, Stony Creek, t6/12; cum 42K 7/12; 
  • 20572, 154, OXY USA, Brian Sadowsky 1-10-3h-142-97, Willmen, t3/12; cum 19K 7/12;

New Williston Businesses; New Laundromat in Tioga

The Minot Daily News reports new businesses in Williston.

I think I've posted most of them earlier, except for a couple.

Ones I might have missed:
Journey Energy Services at its new facility located at 5146-134th Ave. NW. Journey Energy Services is a pumping and crane service company. Over the past two years it has grown extensively. The company's new state-of-the art shop and training facility is located on the bluffs overlooking Williston. 
Trinity Regional Eyecare at 1321 W. Dakota Parkway. Trinity Regional Eyecare - Williston Basin is part of Trinity's comprehensive regional eye care network. Trinity Regional Eyecare's state-of-the-art clinics specialize in providing a variety of services, including general eye care, prescription optical and eye surgery.
And, in Tioga:
Oil Capital Laundromat, located just off N.D. Highway 40 and 2nd Street in Tioga, has been open for slightly more than a month, Valliere said.  
"This is a brand new spacious facility with 30 washers and 22 dryers," she said. She said they have single to quadruple load capacity washers for regular and oil-field clothing. "We have a big screen TV, free WiFi, snack and soda machines, and a great place to sit and relax," Valliere said. The laundromat is open seven days a week from 7:30 a.m. to 10:30 p.m.

North Dakota Population To Grow A Bit Between Now and 2025

From the North Dakota Housing Finance Agency via the Minot Daily News:
  • A new housing study predicts North Dakota's population will grow to 840,000 people by 2025
  • That's a 25 percent increase
  • Ten counties in North Dakota's oil country are forecast to grow by 50 percent in the next 13 years
  • The population of Williston and its three-county region is expected to double (Williams, Mountrail, and McKenzie Counties, I assume) 
  • The report says the statewide demand for housing is expected to increase 30 percent by 2025

Unintended Consequences: Definition of Full-Time Employee in US -- 30 Hours

I forget the story now, but it's my understanding that the development of the 401(k) was a bit of serendipity.

From wiki:
The section of the Internal Revenue Code that made 401(k) plans possible was enacted into law in 1978. It was intended to allow taxpayers a break on taxes on deferred income. In 1980, a benefits consultant named Ted Benna took note of the previously obscure provision and figured out that it could be used to create a simple, tax-advantaged way to save for retirement. Ironically, the client he was working for at the time chose not to create a 401(k) plan. 
My hunch is that the 906-page ObamaCare health care bill is filled with such nuggets. Maybe I will eventually have to add a "top ten" list of unintended consequences of the health care bill.

For now, this one may be most interesting.

Hold this thought: the official work week in France is defined as 35 hours. Any more hours than this and it is considered over time.

So, in the ObamaCare health care bill, how many hours define a full-time worker? 30 hours.

A couple of things.

To the best of my knowledge, there is no uniform US "rule" on what constitutes a full-time worker for pay or salary, and wiki seems to confirm that.  With ObamaCare, it appears the US now has a standard definition for full-time employee. It may not be spelled out in that law, but it will eventually be sorted out in court. The 30-hour worker will take the matter to court: that more than just ObamaCare is relevant.

The second thing: if this ends up being the new legal standard for full-time employment, the US has a shorter workweek than France.

What a great country.

Cost of Proppant

I cannot vouch for the veracity of the following but it was taken from a comment at The Oil Drum regarding the cost of various proppants:

Types of proppant and their crush strength (I assume psi)
  • Pure silica sand --> 5,000 to 8,000 psi
  • Resin coated silica sand ---> regular sand and multiply by 1.5x to 2x crush strength
  • Ceramic proppant ---> 8,000 to 16,000 psi
  • Resin coated ceramic proppant ---> Takes regular Ceramic and multiply by 1.5x to 2x crush strength
Prices for these sands range as follows (note spelling of "tone"; not sure if US dollar or other):
  • Pure silica sand --- $50/tonne at mine (add in another $50 for transport)
  • Resin coated silica sand --- $400 - $500 / tonne at plant (add in another $50 for transport)
  • Ceramic proppant --- $500 - $800+ / tonne at ceramic factory. (add in another $50 for transport)
  • Resin coated ceramic proppant --- Not entirely sure. Guessing $1,000 + / tonne

On another note, I only looked at one of the well files of the four QEP MHA wells reporting IPs yesterday (the 2,000-bbl IPs in Heart Butte). The sundry form for that one well regarding completing/fracking the well was not yet scanned in. I didn't check the others; if I remember, I will check them later.

The reason this is important: if I call recall correctly, QEP stated at the time they bought Helis acreage: QEP does not use ceramic proppant; they use all sand whereas Helis uses a lot of ceramic proppant. If I recall correctly, QEP stated that there was no difference in initial production whether one used sand or ceramic. Long-term differences are not yet known, of course.

Wednesday Energy Links (and, Some Non-Energy Links) --- and Wow, A Lot of Them Today

First, of course, RBN Energy. Today, another in the series of bringing Permian (East Texas) oil to the Gulf refineries, and taking the pressure off Cushing. Bottom line: it won't be long before Cushing will be able to handle all of Bakken's oil. Or will it?

Then, google cellphones are eating the family budget. I've thought about this often -- started thinking about it two or three or more years ago; never remembered to post a story, but now the WSJ has. One wonders how much tectonic cultural changes have aggravated the jobs market.

Speaking of unemployment, Rigzone has a long article on US energy, jobs, and the health of the US economy. Even before reading it, readers can probably guess what the article has to say.

Several articles on electric cars in the WSJ today. I may or may not link them. I think I've linked the pertinent ones earlier. More models will soon be available including the new Toyota model which will ship ... drum roll ... 100 (one hundred, no zeroes missing) in 2013. Another story on Tesla -- not good news for investors; but good news for workers ... and management. Google its cars delayed, Tesla raises cash.

We talked about this yesterday: the demise of big box stores. Now a huge article in the WSJ today, page B10, google new web victim: office-supply store. "Staples will reduce retail space to focus online; big box category criticized for moving slowly."

As you know, Toys 'R Us, is taking a slightly different business tack: increasing personnel to manage a system in which folks order on-line, have item shipped to store (not to their home), and then the customers go to the Toys 'R Us store to pick up their item. It defies common sense. The purpose is to get foot traffic into the story; the CEO has admitted as much. The young, wired generation sees through this. I could be wrong, but I see it as a recipe for disaster. [Note: to store, shipping is free; to home, orders > $49 are free; so it may not seem as bad as it might. I also assume I was wrong yesterday when I suggested ordering on-line, TRU would ship the item to the store; I assume they would do that only if the item was not already available there. Now it sounds more like one-day layaway. Maybe it will work but adding staff to make it work seems problematic. Bottom line: I'm probably wrong. Maybe TRU should market it as "same-day layaway" or "one-day layaway."]

Back to Staples. The iPad and other tablets are paring demand for personal computers, printers, and other office accessories.
"The number 1 reason for softness in this [office supply] business is the iPad. Look at how much less we print today."
I print almost nothing these days. I also save almost no paper statements; I scan "everything." I started scanning out of necessity; I'm seldom where my "stuff" is.

For Toys 'R Us, it's not the iPad, but Amazon with free shipping to your home, that is the competitor.

It is quite remarkable to see all the stories -- even in the WSJ -- devoted to the NFL and the high school referees. By the way, I happened to catch a short conservation on ESPN while out and about yesterday.  Two talking heads, one a past player, one a past coach (apparently; I didn't recognize either) were talking about "the play." The coach had it exactly right: a) Green Bay should not have gotten into this position, where one play could determine the outcome (although it happens so often in pro football); and, b) the Green Bay defender should have batted the ball out of the end zone instead of trying to intercept it. This was the last play of the game. Everyone knew it would be a "hail, Mary" pass.