Thursday, October 4, 2012

Tax Sales by Major City in North Dakota

Fargo is the largest city in North Dakota. Sales tax receipts by quarter; first Fargo, then Williston, at each quarter (rounded to nearest million):

4Q10: $617 million vs $436 million
2Q11: $590 million vs $535 million
3Q11: $655 million vs $722 million (Williston passes Fargo for first time)
4Q11: $704 million vs $811 million
1Q12: $542 million vs $791 million
2Q12: $666 million vs $857 million

On Track For Nearly 2,450 Permits This Calendar Year, The Williston Basin, North Dakota, USA

I believe 1,851 permits for oil wells have been issued so far this year. This does not include permits for salt water disposal wells.

That would put the state on track for 2,439 permits for calendar year 2012.

Back on June 1, 2012, I posted these stats:
My database showed the following number of permits (may or may not include salt water disposal wells):
  • 2012: 2,093 (estimate) -- based on 866 permits issued as of May 31, 2012
  • 2011: 1,940
  • 2010: 1,684 
  • 2009: 629
  • 2008: 956
  • 2007: 497
  • 2006: 422
The pace of permitting has increased significantly since June 1, 2012.

California Gasoline Situation -- The "R" Word -- Rationing

The Drudge Report linked them first -- at least that's where I first saw them, but I see that Yahoo!Finance is now carrying the same stories.

Apparently price spikes and shortages.

First, the story on an 8-cent price spike:
A gallon of regular at the station was selling for $4.79, up from $4.59 the day before. Premium gasoline was $4.99. 
Throughout California, the average price of a gallon of regular gasoline jumped 8 cents overnight to $4.32 and was up 18 cents during the past week, according to the AAA's Daily Fuel Gauge. 
Analysts said it was poised to quickly soar past $4.37 a gallon — the high so far this year — after refinery outages and pipeline problems left the state short on supplies.
So, $5.00 gasoline in California -- just as we go into the final stretch of the election season. California voters seem content/satisfied. President Obama will carry the state easily. And pollsters thought folks would be swayed by high gasoline prices. Not!
Then the story on shortages and outright outages:
Valero Energy Corp. said Thursday it has stopped selling gasoline into the California spot market because of a product shortage resulting from a spate of refinery outages in the state.   
Valero, the largest refiner in the U.S., took the unusual step after accidents and maintenance have caused shutdowns at several California refineries, including Chevron Corp.'s 245,000 barrel-a-day refinery in Richmond and Exxon Mobil Corp.'s 149,500 barrel-a-day refinery in Torrance. 
California wholesale gasoline prices have climbed on the shortage resulting from these shutdowns, and reached an all-time high of $4.10 a gallon Thursday. 
Valero operates two refineries in California with a combined capacity of 213,000 barrels a day. These refineries have not suffered outages. California is already grappling with an average retail gasoline price of $4.31 for a gallon of regular, higher than any state except Hawaii, according to the AAA Fuel Gauge. 
Valero's withdrawal from the broader spot market will exert even more upward pressure on prices. "This is a serious problem," said Richard Hastings, macroeconomy strategist at Global Hunter Securities. "Five dollars a gallon is a plausible concept at this point, and it won't be $5 at the airport filling station—it will be all over the place."
But as an analyst noted back in August, as long as people only buy one gallon the price is not that big a problem; it's when they buy multiple gallons at a time.
"If you look at just buying one gallon of gas, it really doesn't hurt us at all, but the problem is a lot of US consumers are buying multiple gallons of gas every single day." -- analyst, August 30, 2012. 
And finally the Bloomberg story of service (gas) stations just closing their stations as oil companies start rationing supplies:
Low-P, a gasoline station in Calabasas, California, 30 miles west of Los Angeles, stopped selling unleaded gasoline Oct. 2 and ran out of high-octane and medium-octane fuel yesterday, John Ravi, the station’s owner, said by phone yesterday. 
Ravi said he posted an “Out of Gasoline” sign on each pump and took down the prices outside his shop. 
“I can get gas, but it’s going to cost me $4.90 a gallon, and I can’t sell it here for $5,” Ravi said. “If you come here right now, I’ve got some diesel left. That’s all. My market is open, but no gas.” 
“We’re going to start shutting pumps Friday,” Sam Krikorian, owner of Quality Auto Repair in North Hollywood, said by phone yesterday. “Gas is costing me almost $4.75 a gallon with taxes. There’s no sense in staying open. The profit margins are so low it’s not worth it.”
And that's the way it is, Walter Cronkite

Oasis With Several Great Wells; Hitting All Cylinders: Twenty-Two (22) New Permits -- The Williston Basin, North Dakota, USA

RBN Energy: NGL storage.

Total active rigs: 189, stable

New permits:
Operators: CLR (6), BEXP (5), MRO (3), Slawson (3), Hess (2), Whiting, Oasis, Armstrong Operating
  • Fields: Stony Creek (Williams), Alger (Mountrail), Dollar Joe (Mountrail), Last Chance (Williams), Briar Creek (McKenzie), Van Hook (Mountrail), Big Bend (Mountrail), Oliver (Williams), Elm Tree (McKenzie), Green River (Stark), Tyrone (Williams)
Comments: Armstrong has a permit for a wildcat in Bottineau County;

Two producing wells completed:
  • 22533, 1,631, Whiting, Roggenbuck 41-24XH, Sanish, t8/12; cum 6K 8/12; 
  • 20398, 1,313, Gadeco, Golden 25-36H, t6/12; cum 16K 8/12;
Coming off confidential list tomorrow:
19033, 356, CLR, 1-H Chloe 20-17, East Fork, t7/12; cum 28 8/12;
21345, 1,473, Oasis, Rowley 6093 43-23H, Gros Ventre, t5/12; cum 53K 8/12;
21354, 1,988, Oasis, Cornell 5501 13-1H, Cow Creek, t4/12; cum 59K 8/12;
21441, drl, Oasis, Orcas State 5601 13-16H, Tryone,
21745, 1,455, Oasis, Marsh 6092 11-33H, Cottonwood, t5/12; cum 42K 8/12;
21902, 4,059, Oasis, Wren Federal 5300 41-26H, Willow Creek, t5/12; cum 65K 8/12;
21903, 873, Oasis, Crane Federal 5300 41-26H, Willow Creek, t5/12; cum 63K 8/12;
21919, drl, Crescent Point Energy, CPEUSC DeFrance 12-1-158N-100W; wildcat; cum 12K 8/12;
22016, drl, MRO, Lucky One Monitor 3, Reunion Bay, Three Forks,
22179, 590, Oasis, Larry Swanson 6093 43-23H, Gros Ventre, t5/12; cum 23K 8/12;
22194, drl, Helis, Moberg 13-17/16H, Grail

Finally, It's Here! After 48 Years on The East Coast, NoDaks Now Have Opportunity/Access

Yes, it's the seldom-seen/much-talked-about Hess toy truck.
Hess Corporation today announced that the Hess Toy Truck, a holiday tradition for 48 years on the East Coast, will be available for purchase online this year for the first time. Details of the 2012 Hess Toy Truck will be announced Nov. 1 and will go on sale Nov. 9 at participating Hess and Hess Express retail stores and at Preordering is available online starting Nov. 1. 
"Generations of families and fans have made the Hess Toy Truck part of their holiday celebrations and have come to appreciate its history, quality and value," said Rick Lawlor, Vice President Retail Marketing at Hess. "We believe the time is right to introduce this tradition to families across the country, as the demand for and legacy of the Hess Toy Truck has grown well beyond our retail market of 16 East Coast states."
Order here.

From the Williston Wire. No links. Williston Wire is easy to subscribe to.

More stories from the Williston Wire later. For now, it's off to swimming.

For Investors Only: Al Gore Walks Away; Japanese Buy Green Energy

Al Gore has walked away from "green energy" -- review his portfolio; this is not rocket science --
Gore's company files a quarterly report with the SEC that tells a different story about the 30 stocks in its portfolio. 
His company's public investments in wind, solar, biomass and other alternative energy to combat climate change are practically non-existent. 
But his portfolio is top-heavy in high-tech, medical instruments, and even more pedestrian investments in companies such as Amazon, eBay, Colgate Palmolive, Nielsen, Strayer University, and Qualcomm. 
He is also big in China, with stakes in a big Chinese travel agency, CTrip, and China's largest medical equipment manufacturer, Mindray Medical. 
And if you want a piece of the natural gas pipeline game -- heavily dependent on the environmentally suspect fracking -- you can find that in Gore's portfolio as well with Quanta Services. 
Generation Investment even had a piece of Staples  at one point -- but that was before anyone realized that was Mitt Romney's love child. Not an Apple to be found, despite the fact that Gore sits on its board of directors. But Generation Investment at one time did have a piece of General Electric and Procter & Gamble and that global warming game-changer, PayChex.
On another note, Japanese giant Sumitomo has bought a 25% stake in First Solar.
Sumitomo Corp., of Tokyo, has bought a 25 percent stake in a First Solar Inc. power project being built in Southern California, Bloomberg News reported. Sumitomo acquired the stake in the 550-megawatt Desert Sunlight solar farm from General Electric Co. Desert Sunlight will generate enough energy for more than 165,000 homes.
Disclaimer: this is not an investment site. Do not make any investment decisions based on what you see here. Just for the record, I am an investor in First Solar. It's a long story. Don't get me started.

GMX To "Alter" Completions; Attempt To Improve Bakken Results; $4 Million For a Long Lateral; Great Well in "New" Location?

From the Oil and Gas Journal.

Changes announced:
  • using oil base mud during the entire drilling operation
  • switching to plug and perf vs sliding sleeve
  • using more proppant
  • using ceramic proppant in the mix
  • will reduce pump downtime by installing more reliable diesel electric generators on the pumps where electric service is not available
  • reiterated: the company's target is the middle Bakken in McKenzie and Billings counties in North Dakota
  • mentioned: 22207, conf, Basaraba 34-35-1H, its first Bakken well in Billings County, may be its best well; IP of 1,673 bopd (48/64 choke); 39-stage plug and pert completion; used 25% more proppant (4 million pounds); 44% white sand; 56% ceramics
GMX used plug and perf for the first time at Basarabe. Other wells mentioned:
  • 21947, conf, Fairfield State 21-16-1H, Billings County, a Three Forks well; with good show in the middle Bakken;
  • 21545, 1,409, Akovenko 24-34-2H, McKenzie County; t5/12; cum 13K 8/12; long lateral in less than 30 days; $4 million
  • 23634, conf, Lange 44-31-2H, McKenzie County; 
Comment: if indeed the Basaraba is as good as GMX says it might be, this is a huge development. It's a middle Bakken well, but it is located where there has been almost no activity in the current boom. It's at the far north of Billings County, almost in McKenzie County, but far from any MB sweet spot of which I am aware. By the "rules of the game," I am surprised this was not considered a wildcat.

Comment: I believe this is a very opposite position that QEP is taking. In its conference call following its acquisition of Helis acreage and assets, QEP said it completes wells without using ceramics. At least that's what I recall. The jury is still out, but if QEP can prove its case, the implications are huge; I think most folks understand the issue

Comment: 4 million pounds of proppant (sand with/without ceramics) seems to be the norm for the better wells; BEXP has vast experience)

Comment: I know very, very little about plug and perf vs sliding sleeve, but my general impression is that I prefer to see plug and perf

Comment: If I read the "cost" of that well, the Akovenko, that's incredible: $4 million for a long lateral. Talk in the oil patch is that Whiting is a low-cost driller at $6 million / Sanish well (higher elsewhere) and most saying wells cost them $10 million or more. But again, I may be misreading/misinterpreting that "$4 million" figure. [See comments below: this $4 million figure probably refers to drilling only, not completion costs; that makes sense because they have not completed the well yet, though they should have budgeted the cost of completion. Some say drilling/completion comes close to 50/50 with high proppant/high ceramic completions, but it would be surprising if completion costs more than drilling. If the well (drilling/completion) comes in under $8 million, that's not bad.]

Wow, Can You Imagine Living In The Mideast Today?


October 12, 2012: FT - Turkey steps up military presence along Syrian border
Turkey has increased its military presence along its 900km border with Syria, scrambling jets and dispatching scores of tanks in the continuing face-off between Ankara and Damascus. 
Two fighter aircraft flew along a stretch of the border after a Syrian helicopter bombed the nearby Syrian village of Azmarin, while Turkish media reported that up to 250 tanks were in the border area.
October 12, 2012: WSJ, page A13, editorial -- Turkey's Dangerous Assad Dilemma;
The Sunni-Schiite schism stretches from Iran and Iraq to Syria and Hezbollah's reign in Beirut, versus a Sunni bloc from North Africa to the eastern Mediterranean, clustered around Turkey, Egypt, and Saudi Arabia.
Syria is the prize, and the epicenter, of this contest. Hard as Mr Erdogan (Turkey's prime minister) would try to keep the struggle for Syria within tolerable bounds, the cruelty of the civil war there would overwhelm his policy. He had pledged himself to the removal of Assad, but the dictator had not obliged. Nor had Washington -- particularly President Obama, obsessed with self-preservation -- been the ally Mr Erdogan had hoped for.
October 11, 2012: WSJ, page A10 concurs -- Syrian conflict grows on two fronts  -- Turkey forces Damascus-bound plane to land; American sends troops to Jordan

October 10, 2012: Nobel peace prize winner sends US troops to Jordan.
The revelation of U.S. military personnel so close to the 19-month-old Syrian conflict suggests an escalation in the U.S. military involvement in the conflict, even as Washington pushes back on any suggestion of a direct intervention in Syria.  
October 9, 2012: pipelines from Iran and Iraq to Turkey are blowing up. Mysteriously.

October 8, 2012: Israel launches airstrike over Gaza after rockets from Gaza hit Israel; supposedly hits a mosque; Israel says Iran 2 - 4 months from "path to nuclear weapon"; 

October 8, 2012: Turkey shells Syria for sixth day. Turkey president says worse case scenario playing out in Syria; Turkey will do what it takes to protect itself. 

October 6, 2012: In the original post, I mention the 3:00 a.m. phone call from Libya that "we" all slept through. The rank-and-file in the intel community is starting to rally behind their immediate leadership: the White House simply did not respond to the Libyan threat -- either a mistake or on purpose.

The Drudge Report says the White House is starting to point fingers; maybe/maybe not, but the administration is now trying to get its story straight. Maybe this is the story that should air two days before the election rather than the documentary on the Bin Laden mission. For which Michelle and Barack were given credit, not the intelligence community.

It will be interesting where this story ends: an opportunity for a Pulitzer Prize if any reporter is interested. It should not be too difficult to find off-the-record, anonymous sources from the intel community. Look for some "leaked" e-mails.

Original Post

A regular talking head says Iran is ready to implode; sanctions taking a toll. He says governments topple due to inflation, riots in the streets. He failed to mention that before a government fails, they often do very rash things.

Iran leadership has said Israel's days are numbered. The US official position on that (if the president represents official position): Iran's posturing is just "noise."

Then, in the last hour or so, we get news that Turkey has authorized military action INSIDE Syria. Maybe it's just me, but there's something scary about a NATO country authorizing military action inside a non-NATO country. Just saying.

With all the internal problems Syria has at the moment, it's hard to believe that Turkish military action could be the catalyst for regime change. It's hard for me to believe that Russia will idly stand by and let that happen.

In the grand scheme of things, I do believe Syria has a closer relationship with Russia than with the United States. In the grand scheme of things, I do believe Turkey has a closer relationship with the United States than with Russia.

This will be interesting to follow.

Of course, we all know what happened in Libya when the 3:00 a.m. call came in and we were sleeping. I think about that when I connect the stories above and haven't heard anything from Saudi Arabia. I doubt the princes are unaware of what's happening in their neighborhood.

And Egypt isn't exactly quiet. Wow, Israel has to be watching events in Syria very, very closely. And Egypt on its west. And Iran. This is not good.

This is simply idle chatter, just thinking what it must be like to be living in the Mideast these days. It has  to be very, very interesting.

Life Gets More Complicated Every Day

Remember the old days when you could just pull into a gas station, get your gas, and get on down the road?

After reading the WSJ article on E15 (15% ethanol-gasoline blend): my two cents worth -- dead on arrival.

All agree: E15 is not safe for automobiles with a model year of 2001 and later. The EPA and the ethanol industry says E15 is safe for newer cars .... but ... and it's a big "but":
Auto makers have said they don't recommend using E15 even in post 2001-models, although General Motors Co. and Ford Motor Co. say E15 is safe for their 2013 fleets
General Motors --> Government Motors --> EPA.

Even the EPA agrees that E15 may be more corrosive than other fuels AND emits a hotter exhaust, which could cause leaks or increased wear in vehicles that weren't designed to handle it.

You still want E15 in that $50,000 Volt?

Then this little bit of anxiety-causing trivia: if E15 and E10 are being dispensed from the same hose, the EPA requires anyone buying E10 to buy at least four gallons. The minimum of four gallons is to dilute out any E15 that will still be in the hose, the E15 that will damage your engine or exhaust system.

Then, this little nugget for the service station owner: many owners have underground storage tanks that aren't certified to hold fuel with more than 10% ethanol, meaning it would take an investment of tens of thousands of dollars to replace them with tanks that can store E15. My hunch: before this is all over, the EPA will retroactively certify E10 storage tanks for E15.  And then when the tanks corrode and leak, the EPA will sue the service station owner.

But this is the nub: it doesn't matter whether service station owners offer E15 or whether consumers buy it. The EPA has set federal mandates for blending increasing amounts of ethanol in gasoline. So, even if the E15 is not sold, it has to be produced (or a lot more folks have to buy E10 to soak up all that mandated ethanol). One way or another, increasing amounts of ethanol have to be blended:  it's mandated by the EPA.

But there is a solution: export more E15 to Europe and Asia.

The Jobs Report

Remember: the magic number is 400,000.

One of my favorite days of the week: reading the weekly the Reuters jobless claims report.

The Yahoo link: jobless claims rise less than expected. That's good news.

The headline at Reuters: jobless claims point to steady labor market.


Jobless claims climbed 4,000 to 367,000.

But, hey, that's good news. The economists expected a rise to 370,000.

And then the boiler plate: "The four-week moving average for new claims, a better measure of labor market trends, was unchanged at 375,000."

Steady as she goes.

Then the obligatory quote: "The trend is still looking fairly stable. The labor market is improving but it is not really gathering direction for better or worse, it is still just plodding along."

Okay, the labor market is "improving," but in the same breath, "it's not really gathering's just plodding along." I see "steady" (maybe) but I don't see "improving" in that quote.

So, there you have it. Steady.

Thursday Morning Links; Enbridge Talking About Need For a New High-Capacity Bakken Pipeline to Superior, Wisconsin

The Mideast

Turkey authorizes military operations inside Syria. Arab Spring --> war --> unintended consequences. WWI was started on less.

Turkey and Syria exchanging gunfire. Reported all over. No links necessary. Don't get Turkey upset; they play hard. Ask the Kurds. Before the US stepped in.


Disclaimer: this blog is not an investment blog. Do not make any investment decisions on anything you read at this blog. The purpose of the blog is entertainment and information about the Bakken, for the most part.
Bakken Operations

Wells coming off the confidential list have been posted; see sidebar at the right. The well file for the Fettig well makes for very interesting reading.

Enbridge talking about a new pipeline from the Bakken to Superior, Wisconsin.
"Fair to say it would be quite high capacity," he said. "If you look at the growth curve of the Bakken, there's no question that a conduit more 100,000 bbls a day, or 150,000 bbls a day, or 200,000 is probably needed."
RBN Energy: be sure to read the last paragraph of this very interesting article. I still think often of the comment that shipping oil by railroad is of "last resort."

Megaloads, Runways, Ethanol, and Manipulation

Google as Paris runway shows end, sneak peek at spring's loose shapes, surprising shoes; going see-through at the WSJ; I read the WSJ for the articles, not for the pictures; front page of section D;

For newbies: page 3 of every section of the Wall Street Journal (except perhaps page 3 in the last section) is always the best page. Today is no exception. Huge article on ethanol. Google standoff at pump over new fuel: ethanol lobby vs. station owners. Stand-alone post completed.

Speculators manipulating physical oil delivery? Nope. Google physical-oil oversight won't change, p. C3, WSJ;
A two-year investigation into whether the unregulated physical-oil market is vulnerable to manipulation and needs tighter supervision looks set to end this week with a report that effectively endorses the current system, according to documents seen by The Wall Street Journal.
So, there.

Wow, H-P is in trouble. Google H-P reels from tech-tonic slide; p. C14, WSJ.
With the prospect of profits declining for three years in a row, H-P risks turning into an unmanageable mess. Too bad that Ms Whitman already has reversed lans to spin off the PC business, meaning there isn't even the prospect of breakup speculation to get investors excited.
And then on page B1, google H-P is punished for grim outlook:
An end to Hewlett-Packard Co.'s long period in the wilderness won't come soon, executives of the Silicon Valley pioneer warned.
The question is whether Ms Whitman will still be there when the company emerges from the wilderness.

Speaking of H-P's problems: it's not much better over at Nokia. Google Nokia weighs sale of its headquarters. To raise cash. It would be ironic if Apple were to establish a brick-and-mortar presence in  Europe, via Finland. The NOKIA sign is exactly the same number of letters as APPLE, though I suppose they would just replace the NOKIA with the iconic black-and-white apple.


I did not watch the debates last night. But based on what I've read at the Drudge Report and the headlines in the New York Times, LA Times, and the Boston Globe, I understand why no one is talking about the debates here at the Starbucks outside Boston. Generally, every day, I have to put my headphones on and turn the Hillbilly Moon Explosion music up very, very loudly to drown out the political talk. Today: I'm not wearing headphones. No one is talking about the debate. Hmmm. But it's even worse: Yahoo News political analyst: after the debate debacle for Obama, we'll find out if we even  have a race.

I'm seeing more and more of this. Google small businesses are meeting an unlikely banker: Amazon.

Redbox, you know the ubiquitous red kiosks and $1-a- night DVD rentals? They may be getting into ticket sales: selling seats to live events with just a $1 fee tacked on. Watch out TicketMaster. Google Redbox dabbles in tickets. This is huge.

Incredible: one of my favorite songs now playing here at Starbucks -- Bob Dylan's Highway 61 Revisited. Dylan is good but the Million Dollar Bashers are much, much better. I've embedded it many times at my various blogs.

I see Berkshire Hathaway is hitting new 52-week highs.