Thursday, September 27, 2012

Marathon To Exit the Marcellus

Link to
Marathon Oil Corp. is putting its natural gas-rich acreage in the Marcellus Shale formation up for sale as it trims non-core assets, people familiar with the situation said.  
Marathon Oil is putting about 80,000 acres in West Virginia and Pennsylvania up for sale because the company doesn't consider them central to its growth plans, a person familiar with the company's plans said Wednesday. The company could realize up to $1,000 an acre, the person estimated, adding that a specific price hasn't been set yet.

Reminds me a bit of Lily Allen's It's Not Fair:
Do I Love You, Hillbilly Moon Explosion

Human Interest Story and Why The Bakken Looks Better and Better

A reader sent me a link to a human interest story. It's a story about Suzanne Browne, a woman working in a man's world in the oil industry. Fascinating story.

For reasons that do not need to be explained, her comment caught my attention:
“There were a couple of years when operators didn’t want to drill in the Gulf during hurricane season,” she said. Dealing with the regulatory changes imposed after the hurricanes has been another challenge, as well as finding prospects when reservoirs on the shelf continue to deplete. “I think the Gulf of Mexico shelf is really going to be a challenge from here on out,” she said, but added that demand appears to have picked up in this hurricane season compared with the last couple of years. “We’ve had plenty of demand especially for our smaller 250-ft jackups,” she pointed out.
Regulations and depleting reserves.

Regulations. Hold that thought.

Then, if you have the time, before leaving that page at the link, move to the sidebar at the link, and about halfway down: GOM doomed as E&P dead sea under "Americanization" proposals. Then go to that story.

Regulations killing activity in the Arctic. The President kills the Keystone XL. Now, folks want to kill the US oil industry in the Gulf of Mexico.

The Bakken just keeps looking better and better from a drilling analyst's point of view. Who knows, maybe Suzanne Browne will find herself working in the Bakken before it's all over.


In case the link to the second story breaks or a subscription is required later, here is the opening:
Congressional proposals to “Americanize” offshore vessels in the US Gulf of Mexico will inevitably grind OCS development and production to a halt and result in massive layoffs across the Gulf Coast and throughout the nation. A plethora of bills in the US House and Senate, among them HR 5619 and HR 3534 (the so-called CLEAR Act) call for US flagging and 75% US ownership of the entire GOM fleet of drilling rigs, pipelay vessels, and construction and specialty vessels.  
While this seems consistent with “Buy American” bumper sticker logic, these requirements present huge obstacles to stable offshore development. For example, of the worldwide drilling fleet capable of operating in 400 ft of water or deeper, only one is US flagged. That rig is currently on contract outside the US, according to a joint-industry White Paper warning of the severe implications of this train of legislation. 
The bottom line:
Building a US fleet of offshore vessels in any reasonable amount of time is essentially impossible. US shipyards would require several years to install the infrastructure necessary to fabricate the massive hulls required for deepwater facilities, drillships and semisubmersibles. (Many jackups, however, are constructed in the US.)
Well, if it's just "many years," that's how long the permitorium will last anyway. Get building.

Accidents Never Happen, Blondie

Random Note on Cost of Shipping By Pipeline

This is an interesting story on numerous levels.

Data points:
  • Mobil Pipeline, a unit of Exxon Mobil Corp reversed its Pegasus pipeline to carry crude - mostly Canadian - from Illinois to the U.S. Gulf
  • Mobil requested permission to set rates rather than letting market set rates
  • series of FERC reversals; bottom line -- FERC agrees with Mobil
  • Mobil raises rate (tariff) from $1.57 to $5.09/bbl
  • the case has implications for others, particularly Delta Airlines moving crude oil to northeast

Update on Williston's New $70 Million Recreation Center


June 7, 2013: A photograph of the recreation center under construction, at Vern Whitten Photography. When you get to the link, go to photo #13 of 31. 
Original Post

From the Williston Wire; no link; folks can subscribe to the Wire.
The Williston Park Board held a Special Meeting recently to approve the Guaranteed Maximum Price for the Williston Area Recreation Center.  
Groundbreaking for the new 224,000-square-foot Williston Area Recreation Center will be Monday, Oct. 8 at 4 p.m.  
JE Dunn & JLG Architects presented the base bid for the Construction, Soft and miscellaneous costs totaling $70,288,412. Some of the soft costs will be taken out of the project and paid through the operating fund of the park district in an effort to keep as much of the pool and other features.  
The Park Board approved adding the following alternates: the 50 meter pool at a cost of $1,920,070, the pool drain tile system for the instructional pool and leisure pools at a cost of $77,594.
Very, very exciting.

Eighteen (18) New Permits; Whiting With Three Nice Wells All In The Sanish;

Total active rigs: 189 (up slightly; holding steady)

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

In addition, four (4) producing wells were completed:
  • 20392, 1,110, Whiting, Knife River State Federal 12-32TFH, Sanish, t8/12; cum -- 
  • 22045, 278, Oasis, Acklins 6092 12-18H, Cottonwood, t4/12; cum 26K 7/12; 
  • 22671, 1,006, Whiting, Fladeland 13-27TFH, Sanish, t8/12; cum --
  • 22851, 1,437, Whiting, Estvold 41-26H, Sanish, t8/12; cum --
One permit was canceled:
  • 21753, PNC, Petro-Hunt, Gilbertson 157-101-13B-2-1, a Red River well, Williams
Eighteen (18) new permits:
  • Operators: Samson Resources (4), Newfield (3), OXY USA (2), Helis, Sequel, Liberty Resources, Fidelity, Hunt, Aeon Energy, XTO, EOG, Oasis
  • Fields: West Ambrose (Divide), Spotted Horn (McKenzie), Tree Top (Billings), South Tobacco Garden (McKenzie), Red Wing Creek (McKenzie), St Anthony (Dunn), Stanley (Mountrail), Parshall (Mountrail), North Maxbass (Bottineau), Heart Butte (Dunn), Squaw Creek (McKenzie), Cottonwood (Mountrail)

Comment: this is the first time I've heard of Aeon Energy. According to the NDIC site, Aeon has nine (9) permits going back to 1980 (a dry well); three other permits were cancelled; two have been permanently abandoned; one has been converted to a salt water disposal well; that leaves one active well from 2003 (#11743, a Madison well, unremarkable) and one confidential (#23932).

The following wells come off the confidential list tomorrow:

  • 21581, 336, Arsenal Energy, Wade Morris 10-3H, Stanley, t7/12; cum 19K 7/12;
  • 21758, A, Whiting, Oppeboen 21-5TFH, Sanish, no test date; cum 10K 7/12;
  • 21759, 368, Whiting, Oppeboen 21-5H, Sanish, t3/12; cum 50K 7/12; 
  • 22385, 839,  Crescent Point, CPEC Elgaard 32-31-164N-100W, t7/12; cum  --; 4 section spacing;

Random Note on Job Losses in California -- High Costs Cited

Two announcements out of California this week: Campbell Soup to close its Sacramento plant; Comcast to close three call centers. Campbell Soup and Comcast both cite high costs.

Campbell Soup: will cost 700 jobs in Sacramento; most of Sacramento’s production of soup, sauces and beverages will be shifted to Campbell’s three remaining thermal plants in North Carolina, Ohio and Texas.

Comcast: will cost 1,000 jobs at three call centers.
The announcement comes just two days after Comcast announced it will close all three of its call centers in Northern California, including one is Sacramento, because of the high cost of doing business in the Golden State.
I assume part of the high costs associated with the Campbell Soup facility had to do with an old, inefficient facility. Harder to make that same case for the call centers.

So many story lines. Very, very sad for the folks affected.


Earlier I had come across a study of the California exodus but did not post it; it seemed too far afield of the Bakken, but after reading the above, a reader sent me the link. That story now seems very, very fitting and perfect for posting.

The link:

American Eagle Provides Update


September 29, 2012: I finally got back to this post and updated it with some data points. Two interesting comments: a) note that folks are talking about declining rig counts, and here's a company that will be adding a rig; and, b) a successful well has extended the proved productive edges of the field to to the north and the west

Original Post

Link here.

A huge "thank you" to a reader. I would have missed it.

If the link breaks, google:
American Eagle Energy Ramps Up Bakken Drilling Program

Some data points:

  • drilling and casing its first middle Bakken well, Silas 3-2N; Colgan oil field, Divide County; 
  • the drilling rig at that location, skidded and drilling the Haagensen 3-2 well, the first infill Three Forks; located between the Cody 15-11 and Coplan 1-3 producers
  • has contracted a second drilling rig for a minimum 4-well program designed to accelerate development of the Three Forks reserves
  • Megan 14-12, the first infill location in the Christianson 15-12 spacing unit, was spud
  • two rigs: company will be able to drill and complete six more wells by year end
  • should meet/exceed 2012 exit rate target of 1,000 bopd net
  • Anton 3-4 and Elizabeth 3-4N, drilled from common pad, completed in early September; both Three Forks; extended the proved productive edges of the field to the north and west

Fracking May Be Good For The Environment -- Document Next Monday, 5:00 PM Eastern; And Federal Judge Rules Against NY ATTNY GEN Trying To Shut Down Fracking

From a reader:
Folks may be interested in "Money" with Melissa Francis on Fox Business News caught my attention. At 5:00 pm Eastern they will be discussing how fracking is good for the environment. Sounds intriguing.
Put this on your calendar. It does sound intriguing.


And then this little item:
A federal judge in Brooklyn dismissed a lawsuit filed by New York Atty. Gen. Eric T. Schneiderman seeking a court-ordered comprehensive environmental analysis before the Delaware River Basin Commission ssues anticipated regulations that would cover hydraulic fracturing in the watershed. 
US District Judge Nicholas Garaufis, Eastern District of New York, ruled Sept. 24 in favor of the US Army Corps of Engineers and the US Environmental Protection Agency, both of which wanted the case dismissed. Garaufis cited procedural reasons for dismissing the lawsuit, filed last year.
Good, bad, or indifferent, it is what it is.

Ford Selling Cars To Themselves in Europe -- Obviously a Non-Bakken Story

Wow, this is interesting.

Auto sales are so challenging in Europe, Ford dealers are now buying Ford vehicles -- "self-registration," it's called, and then they turn around and sell them at a huge discount as used vehicles. Something like 30% of "new European vehicles sold" in Europe are apparently being "self-registered" and sold at huge discount as used cars.

I am not aware of this ("self-registration") in the US (except on a very small basis with "legitimate" sales to dealers) but it sounds like something of which I could take advantage if offered.

Another Wind Turbine Manufacturer In North Dakota Laying Off Employees


October 3, 2012: LM wind power is taking its ball and going to a new field. Data points:
  • the 300 jobs lost in North Dakota will be moved to Brazil, new factory
  • wind farms in South America will start getting turbine blades in about a year
  • the company says there is a strong growth in wind power in South America; just the opposite in North America
Original Post

Link here to The Bismarck Tribune. Data points:
  • LM Wind Power, Grand Forks, ND; company based in Denmark; a facility in GF since 1998
  • layoff will affect 200 full-time, 130 temporary
  • 270 people will still be employed; in 2007: 900 workers in the Grand Forks facility
  • LM Wind Power says demand for new wind power development in the US will likely drop 70% in 2013
Things could change overnight if federal tax credit, which expires at end of year, is extended.

Tectonic Changes in Power Consumption in America

As mentioned earlier, I no longer watch television except NASCAR on the weekends if I can catch it somewhere. And some football. Of course, there are exceptions.

Instead, I spend an inordinate amount of time on my iPad.

Big-screen television would cost about $50 / year in electricity costs.

So, how much to charge an iPhone for a year? 41 cents. Yup, 41 cents.

The iPad: about $1.36.

Interestingly, the Android Galaxy S III is a huge energy hog in comparison to the new iPhone: the Galaxy S III would cost almost 30% more than the iPhone for annual electricity. I wonder if the faux-environmentalists will recommend the iPhone over the Galaxy based on the amount of electricity that the Galaxy uses, compared to the iPhone?

The Only Known Photo of Karl Marx and Barack Obama Together

Link here.

Making the rounds.

Random Update On Today's Spot Price for Bakken Light Sweet Oil At Clearbrook, MN -- September 27, 2012


January 7, 2018: NDIC uses price data provided by Flint Resources for the monthly Director's Cut.

May 8, 2013: After Bloomberg removed Bakken pricing, I was unable to find any source for Bakken pricing without a very expensive subscription. One can occasionally find updates at Clearbrook News.
Original Post

A while ago one could get the spot price of Bakken light sweet at Clearbrook, Minnesota, and then that link was taken down by Bloomberg.

Until I find another or a better source, this is about the best I can do:
If I am reading the links correctly, this is what I get:
  • From the first link, Bakken is pricing at a $2.25 premium to WTI.
  • From the second link, WTI Cushing spot is $91.22. 
Note to the Granddaughters

I've talked about this book before; I'm still reading it: Simon Winchester's Atlantic. Have you ever wondered where the "sterling" in sterling silver came from? I never gave it a thought. But here's the answer.

In the 13th century, merchants in northern German organized their Atlantic oceanic business to protect their trade in salt fish. The merchants formed themselves into what they called a Hanse -- after the Latin term hansa for a military troop or company; the immediate precursor to the Hanseatic League was created in 1241. 

"Hansa" remains with us today: Lufthansa Airlines. 

According to Winchester, in Atlantic, pp. 277 - 278:
London was a western outpost of the League. The Britons who did business with the Hansa found them trustworthy and reliable. According to many lexical authorities, the word that Londoners used for traders from the Hanseatic eastern cities -- easterlings -- became shortened and incorporated into the English language as the word sterling, with its implied meaning of solid reliability.
So, there you have it. Something for tomorrow evening's cocktail party. 

Biggest Decrease in First-Time Unemployment Claims Since July -- Two Months Ago -- The Economy Has Turned The Corner -- Happy Days Are Here Again -- Bloomberg; UPDATE: not so fast! GDP Revised Downward!


Later, 10:25 am: despite the horrendous news that US GDP was revised downward, and the durable orders drop was the worse since the throes of depression, the stock market hangs in there. For example "T" flirts with its 52-week high, and pays almost 5% in dividends. For longer-term holders, the rate is even higher. As noted below, Americans in general are content/satisfied: they are upset about the refs in the NFL (but that's been settled) and polling suggests "we" are content with "four more years."What a great country.

Later, 10:08 am: oh, oh! Not good! OMG! Less than an hour or so after we get this wonderful news that  the job market has turned the corner and happy days are here again, we get the depressing news that:
But Americans are content/satisfied. Polling shows continued support for four more years. The middle class that invests is in a sweet spot. The middle class that saves is hurting. Don't save for college; invest for college. 

More good news: why men are failing in this new economy. In 12 of the 15 fastest-growing industries, there are more female employees than male employees. Why? Because women are better educated: for every two (2) men with a college degree, there are three (3) women with the same degree. The gender ratio balance has shifted partly because of the 6 million manufacturing jobs lost during the recession — an industry that was heavily employed by men.
"The manufacturing sector is never going to come back exactly the way it was," she notes. "We can safely assume that era is over. What the "man-cession revealed," she says, "was deeper trends in the economy. [Trends] that allow women to adapt themselves more easily to what's going on."
The link takes you to a pitch to buy a book. 

Original Post

Remember: the magic number is 400,000

One thing Bloomberg and I have in common: eternal optimists!

Here's the lede in today's job report:
Fewer Americans than forecast filed first-time claims for unemployment insurance payments last week, a sign the labor market is getting back on track. 
Applications for jobless benefits decreased 26,000 to 359,000 in the week ended Sept. 22, the lowest since July, Labor Department figures showed today. Economists forecast 375,000 claims, according to the median estimate in a Bloomberg survey.
This is huge!  This is the lowest number since .... drum-roll ... July. Yes, July of this year. About two months ago. No wonder everyone is feeling upbeat about the economy.

Let's see what else is in the report.

Deep in the article:
A Labor Department official today said claims related to Tropical Storm Isaac were not enough to have a material influence on the data.
Hmmm...I seem to recall that "bad" jobs data a few weeks ago was blamed on Tropical Storm Isaac -- and wasn't it a hurricane (in fact, I was curious about that last week, and a google search was not helpful -- some sites referred to the tropical storm as a hurricane, others as a tropical storm -- yes, I know a hurricane is a tropical storm).

The four-week moving average for jobless claims dropped to 374,000 from 378,500.

So, there you have it. Outstanding news. Happy days are here again.

Notes to the Granddaughters 

One of the sights we enjoy when in southern California: the container ships in the ports of Los Angeles and Long Beach, in the San Pedro Harbor.

A few data points regarding intermodal shipping from Simon Winchester's Atlantic, pp. 350 - 352

  • "invented" American trucking executive Malcom McLean (obviously Scottish-Irish background)
  • mid-1950s; like Harold Hamm, MM started out as a truck driver
  • standard-sized containers; contents untouched by human hands at the port
  • truck-rail-ship
  • largest: the Danish MV Emma Maersk, 170,000 tons; 15,000 containers;
  • first ship, 1956, US Navy tanker, the Ideal-X, Newark to Houston, 58 containers
  • prior to intermodal shipping: $6/ton to load cargo
  • with intermodal shipping: sixteen cents (on the Ideal-X, on first day)
  • McLean's first company: Pan-Atlantic Steamships; later sold to a tobacco company, then to a railroad firm, and finally to Maersk
  • Maersk: fleet of seven of the biggest ships ever built;
  • McLean died in 2001 

News Links -- Thursday -- The Origin of The Term "IVY League"

Ivy League 1954: "Ivy League" an official designation for athletic conference that included Harvard, Yale, Princeton, Penn, Columbia, Brown, Dartmouth, and Cornell; eight of the oldest and most prestigious all-male academic institutions in America; 1930s" IV League (as in Roman numeral IV (Harvard, Yale, Princeton, Columbia), 1930s.  Google dress codes, WSJ.


The original MDW wrote about this when Apple introduced the iPad: airlines handing out iPads. Google airlines entertain table ideas, WSJ. Other iPad uses we will see (which MDW also blogged about several years ago) or examples of new uses already being seen:
  • iPads replace hard-copy menus
  • iPads replace entertainment/turn-by-turn map user interface on automobile dashboards
  • car salesmen use iPads on the lot; the iPad is given to the customer when she signs
  • real estate use iPads at open houses (in California, they already do)
  • is using iPads at checkout counters across the midwest and the eastern seaboard
  • iPads embedded in walls next to doors in hospitals, university rooms (names, scheduling, notices)
  • an iPad embedded into the cabinet door above the baking area in the kitchen
For those who have never visited an Apple store, there is an iPad next to each product being featured; in a typical Apple store there are probably 40 iPads for that purpose only. More stores will follow suit.


For investors only (disclaimer: this is not an investment site). Five stocks for the next five years -- The list includes two of my favorites and long term holdings: CVX and COP.