Friday, October 12, 2012

Priceless

Only in the Bakken!
Yes, that's a Schlumberger truck.
The "big red" trucks are Halliburton's.

Quote of the Day (Nothing To Do With The Bakken)

In an LA Times story about the space shuttle Endeavor being moved down city streets to a final resting spot at the California Science Center in south Los Angeles, the Times reported (and I can't make this up):
Todd Tassler was one of those who waited on Manchester Boulevard. He watched his first shuttle splash into the ocean on television in 1966. 
I missed that space shuttle splashing into the ocean back in 1966 (no doubt piloted by "Sully" Sullenberger) but it must have been quite a sight.

(Of course, growing up in California, home of recreational drugs, I suppose it's possible he did see the space shuttle splash into the ocean.....)

Mama Told Me Not Come, Three Dog Night

I've seen so many things I ain't never seen before. 
I don't know what it is, somebody shut that door...

From wiki: "Mama Told Me (Not to Come)" is a song by Randy Newman written for Eric Burdon's first solo album in 1966. Three Dog Night's 1970 cover of the song topped the U.S. pop singles charts.

As noted above, I cannot make this stuff up.

Note to the Granddaughters

From wiki: Eric Victor Burdon (born 11 May 1941) is an English singer-songwriter best known as a member and vocalist of rock band The Animals, and the funk rock band War and for his aggressive stage performance. He was ranked 57th in Rolling Stone's list - The 100 Greatest Singers of All Time.

The Animals: simply one of the best groups ever. 
The House of the Rising Sun, The Animals, 1964

IEA: The US Is Turning The Global Oil Market On Its Head

Link to Wall Street Cheat Sheet.
In its October 2012 Oil Market Report, the International Energy Agency cut its projections for global oil demand to 87.9 million barrels per day for the year. OPEC also issued an October oil report, which pointed to a sluggish global economy placing uncertainty on the energy market.
As a result, Brent crude has dropped while the WTI Cushing Spot has risen slightly. No one seems certain what the future holds for oil. [And Bakken oil is selling at a premium to WTI.]
Rising production capacity in the United States, a world leader in oil consumption, is turning established market dynamics on their head.
British Petroleum recently received permission from the United States government to ship U.S. crude to Canada. Royal Dutch Shell has also applied for an export license.
Non-OPEC oil supply is expected to increase by 600,000 barrels per day in 2012, and increase to 900,000 barrels per day in 2013. As U.S. imports of oil are expected to decline while exports increase, markets will experience growing pains.
And this is all on-shore.

There was a moratorium on off-shore drilling in the Gulf back in 2010, and now the permitorium in the Gulf, in the Arctic, off Virginia, and off Alaska continues. This is all on-shore shale. It is incredible. Who wudda thought, that with all the regulations, all the obstacles, the US would be where it is? And CO2 emissions are at a 20-year low -- according to the NY Times.

There are so many story lines in this short story, but it's Friday night, NASCAR racing, so this will have to wait. [Link to NASCAR news; radio report; turn volume down.]

Haven't heard much about the Keystone XL 2.0 lately.

SCOOP

SCOOP/STACK:
STACK (Sooner Trend, Anadarko, Canadian, and Kingfisher) and SCOOP (South Central Oklahoma Oil Province) plays.
Updates

January 6, 2017: natural gas trends in the SCOOP

April 21, 2016: link at Oil & Gas Journal --
White Star Petroleum LLC, until recently known as American Energy-Woodford LLC, has entered a definitive agreement to buy Mississippi Lime and Woodford shale properties from Devon Energy Corp. for $200 million.
White Star is becoming a standalone company after operating as a unit of American Energy Partners LP. As part of that change, Elliot J. Chambers, chief financial officer, has been named to the additional role of chief executive officer, and Joseph D. Craig, formerly vice-president of operations, has been named chief operating officer.

The acquisition from Devon covers 210,000 largely contiguous acres offsetting acreage White Star holds in central-northern Oklahoma. Average net production from 555 operated and nonoperated wells in the acquisition was 12,800 boe/d in the first quarter, about 30% oil. Reserves at yearend 2015 totaled 11 million boe.
White Star said the acquisition doubles its production and acreage in north-central Oklahoma.
August 5, 2016: CLR sells non-core assets in SCOOP for about $10,000 / mineral acre

February 25, 2016: building out continues -- RBN Energy

February 19, 2016: still attracting new investors

November 19, 2015: Newfield, STACK, SCOOP and comparison with the Bakken, Zeits.

August 8, 2015: update, 2Q15 earnings/conference call

February 10, 2015: Wood Mackenzie update in Rigzone

May 7, 2014: Devon buys 50,000 acres for $250 million in the Cana-Woodford

January 18, 2014: a bit of hyperbole on the SCOOP, pehaps

December 22, 2013: Motley Fool update.

October 20, 2012: Z-Man on Chesapeake, Scoop at SeekingAlpha.com.
The rationale for the high per-acre valuation for the "sweet spot" acreage is best illustrated by the slides from a recent Continental Resources' (CLR) presentation which show a remarkably thick, premium quality Woodford Shale deposition underlying the area in which a significant part of Chesapeake's acreage is located (Continental refers to the southern extension of the Cana Woodford play as "SCOOP," which stands for South Central Oklahoma Oil Province).
Original Post

Link here to site where I first heard about SCOOP (a huge "thank you" to CarpeDiem.com; unfortunately the page at the link no longer exists).
Continental Resources Inc. says a shale-oil discovery in Oklahoma may add the equivalent of 1.8 billion barrels of crude to the company's reserves as it drills more than 2,000 wells in coming years.
The South Central Oklahoma Oil Province, or SCOOP, lies beneath oilfields that began producing crude as early as 1905, Oklahoma City-based Continental said in a slide presentation prepared for a meeting with analysts Tuesday.
The geology of the discovery is similar to the Bakken Shale region in North Dakota and Montana, where Continental is the largest holder of drilling rights, according to the presentation.

The company has been quietly amassing drilling leases in the SCOOP since at least 2010 and now holds 170,600 acres. The wells Continental has so far drilled in the SCOOP have cost about $9 million apiece.

Continental is exploring for crude in two other "stealth" prospects in the U.S., company President Rick Bott said during the presentation. He declined to identify the location or estimated size of the fields.

From Carpe Diem....

Continental Resources Inc. says a shale-oil discovery in Oklahoma may add the equivalent of 1.8 billion barrels of crude to the company’s reserves as it drills more than 2,000 wells in coming years.  Peak what?

Link to CarpeDiem.com

Twenty-Three (23) More Permits

Bakken Operations

Active rigs: 192, steady, down from yesterday, but up overall from recent low

Twenty-three (23) permits:
  • Operators: Whiting (4), XTO (4), Hess (3), BEXP (3), North Plains (2), Oasis (2), Petro-Hunt (2), BR, Strike Oil, Legacy Oil
  • Fields: Smoky Butte (Divide), Heart Butte (Dunn), Little Knife (Dunn), Blue Buttes (McKenzie), Gros Ventre (Burke), Park (Billings), Ragged Butte (McKenzie), Lost Bridge (Dunn), Willow Creek (Williams), Red Rock (Bottineau), McGregory Buttes (Dunn)
Comments: No OXY USA or Newfield permit; Strike Oil has a permit for a wildcat in Renville County; Whiting has a permit for a wildcat in McKenzie County;

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

Highlights From the Williston Wire

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

Williston city commission is preparing to remove crew camps from city limits. [Comment: this tells me that there is adequate housing in the area. The city and county commission work closely with thte oil industry.]

Fargo Forum editorial: new Williston rec center will be impressive.

J R. "Buck" Scheele posthumous recipient of first-ever API Outstanidng Achievement Award -- they must mean the "Williston Basin API chapter" but I could be wrong. He edged out Continental Resources (the company) and Kathleen Neset (a geologist who has worked for decades in North Dakota).

Illinois Home Builder, Bice Investments, relocates to Williston.

Building boom continues in Watford City. From January, 2011, to September, 2011, Watford City issued 54 building permits for projects that totalled over $26.5 million; for the same period in 2012, 247 permits, $86.8 million.

Four Bears Lodge celebrates grand opening of 122-room addition. Huge. Wow.

Dickinson leaders concerned about rapid development. [Am I surprised by this? No.]

Statoil delivers first crude shipment via rail to Saint John, New Brunswick. 
Statoil ASA has leased 1,000 railcars for use in the Bakken formation in North Dakota and plans to deliver by rail to refineries on both coasts.
The Oslo-based energy company recently delivered a rail shipment of Bakken crude to Irving Oil Corp.’s Saint John refinery in New Brunswick, Bill Maloney, Statoil’s executive vice president for development and production in North America, said in an interview in Houston.
The 298,800-barrel-a-day plant is Canada’s largest. Statoil produced about 26,000 barrels of oil equivalent a day in the Bakken in the first quarter. It expects to move 10 percent to 20 percent of the oil by rail, said Torstein Hole, Statoil’s senior vice president for U.S. onshore development and production. [My hunch: if the premium over WTI continues, the percent may increase.]
The Bakken benefits businesses nationwide: Big Dipper Housing out of Oklahoma is one such beneficiary.

Eagle Ford predicted to produce for 16 more years. Remember: it will take 20 - 30 more years to put in the necessary wells to complete the Bakken, and the Bakken Pool will produce through 2100. [I assume the Eagle Ford will be producing for more than 16 more years; perhaps they mean 16 more years of drilling.]


Week 41: October 7, 2012 -- October 13, 2012

Fracking
Fracking deemed safe in California study

Records
North Dakota breaks another record: new monthly and new daily production record; North Dakota produced 63% more oil than Alaska

Bakken Operations
Is there more to rail transport of crude than we're aware?
640-acre spacing vs 1280-acre spacing in the Bakken
Random look at some nice wells on a Petro-Hunt 6- well pad
CLR looks to triple production; triple proved reserves; link to press release, same story

Investments (Disclaimer: this is not an investment site)
Bakken oil is being sold at a premium to WTI

Economic development
After nine years of effort, the US grants a permit for a North Dakota refinery; would be the first US refinery in decades
Aerial photos of new truck reliever route north of Williston

Is There More To Rail Transport of Crude Than We're Aware?

There are few exceptions for the export of crude oil from the United States. One exception is crude oil shipped to Canada by rail. Again, the Bakken may be curiously and interestingly sitting in the sweet spot.

Link to this Reuters article. -- October 11, 2012

Link here to Globe and Mail. -- September 17, 2012

Shipping oil to Canada via rail is a "drop in the bucket" compared to what could be shipped through pipelines, but until a) the pipelines are built; and, b) the licenses are granted, something tells me there is a niche for Bakken oil to be exported to Canada.

Perhaps more to follow.......

Weekend Edition(s) of the Wall Street Journal

A Note to the Granddaughters

The weekend begins with the Friday edition and ends with the Saturday edition of the Wall Street Journal.

The Friday edition has five sections, one more than the usual four. Section 4, the "D" section is called "Arena" today. Maybe it is every Friday; if so, I've missed that. But I digress.

I haven't got past the second page, but it appears the section is chock full of movie and book reviews. This caught my attention: iconic photos of four landmark films: Sunrise (1927), M (1931), Psycho (1960), and The Truman Show (1998).

The only one I have not seen is Sunrise. My younger daughter introduced me to M. It is startling how "modern" it is.

Of course, everyone has seen Psycho. Having not seen Sunrise, I can't comment on it being among only four films selected from the hundreds that must have contended. It was nice to see something other than Citizen Kane, for once. (One more reason I enjoy the WSJ -- some originality, so often lacking elsewhere).

And then, The Truman Show. Wow, what a selection. I will wager that for every ten folks who have seen Psycho, one has seen The Truman Show. Two things: The Truman Show continued where The Prisoner left off. And it pre-dated "reality TV." Hmmm. The Truman Show was about television, where it was headed, just as much as David Lynch's Mulholland Drive was about the movie industry, where the industry had been (and probably still is).

The front page of section D is over-filled with a look at the 16,000+ books now written on Abraham Lincoln, and asks the question, "Why are we so smitten with Abe?" The subheading suggests our fascination  has gone in to "overdrive" with a Steven Spielberg movie and 20 new books. The first really "grown-up" book I read was Carl Sandburg's biography of Lincoln. I may have read other "adult" books before that one, but it's the one I remember. Along with the biography of Albert Schweitzer.

Page D4: perhaps the best casting -- Helen Hunt in The Sessions, coming to theaters this summer. Wow.

And it looks like there's a new "television" network -- actually a huge family of channels -- just under the radar, but soon to go mainstream: Google.
YouTube, which is owned by Google, has been reorganized around ad-supported "channels" on everything from cooking to cars to women's drama series.
Best bet: Shut Up! Cartoons. [Not! These are not yet ready for prime-time.]

Google's reorganization around ad-supported "channels" suggests what separates Facebook from YouTube. Facebook gets more confusing to follow, and if it has any revenue strategy, it's gaming. We've seen how that has been working out. How much time do YOU spend on Facebook? How much time do YOU spend on YouTube? 'Nuf said.

And, wow, wow, wow -- live theater, $18, 3LD Art & Technology Center on Greenwich Street in New York City -- "back in New York after eight years on the road. It remains the scariest show in town, a shockingly compelling portrait of what happens in the cockpit of an airplane when everything starts to go wrong....Charlie Victor Romeo moves so fast that you'll feel as though you'd looked the wrong way and stepped into a mile-deep pothole....the seven members of the cast all give the uncanny impression of being real-life pilots, navigators and flight attendants." Live theater takes six midair crises and turns them into an evening of you-are-there playlets. Oh, that Charlie Victor Romeo title -- CVR -- cockpit voice recorder. Wow.

Lake Agassiz

I think every state requires students to study the history of their state somewhere in middle school or high school. For us, it was "eighth grade North Dakota," I believe. If my memory serves me, and if the spelling is correct, our eighth grade social studies teacher was Mr Hoaglund. He was probably my second or third favorite teacher in middle school. I only remember two or three middle school teachers. Interestingly enough, I do not remember middle school math or science. But I digress (as usual).

Through eighth grade social studies, I was introduced to Lake Agassiz. I don't think I understood it at the time, but I do remember being fascinated by the lake, named after a Swiss geologist who ultimately ended up at Harvard University. The boundaries of this lake changed many, many times, but probably formed in the Red River Valley, the easternmost boundary of North Dakota. The North Dakota Department of Mineral Resources has a great discussion of the lake.

I was reminded of Louis Agassiz while reading Dick Russell's Eye of the Whale. Whatever else the book is, it is also a biography of Charles Melville Scammon.

First Class Stamps To Increase One Penny -- 46 Cents

Link here.

The US Postal Service has announced that customers will see these new benefits in exchange for the modest rise in the price of stamps:
  • twice-a-day delivery
  • once-a-day delivery on Sundays and holidays
  • overnight, free Amazon deliveries in the lower 48 states; slightly longer in Alaska, Hawaii
  • friendly clerks in all post offices
  • opening of new offices in under-served areas of the country
  • no restrictions on interstate shipping of wine
  • eliminating all junk mail
  • a new, unique zip code for the Bakken
Just joking. Except for the part about an increase in the price of stamps (to pay for health benefits and pensions for postal employees).

Chesapeake to Sell Acres in Oklahoma; The Fiscal Cliff; Other Items

In the WSJ, page B2, Chesapeake to sell acres in Oklahoma oil fields.

Data points from the article:
  • cash-strapped natural-gas producer continues to trim acreage to raise money for drilling
  • selling drilling rights to more than 28,000 acres in western Oklahoma
  • area abuts its "Hogshooter" oil discovery which the company touted in June
  • includes some of the "Hogshooter" acreage
The article states that Chesapeake has more than 15 million acres across the US and is the second-biggest natural-gas producer after Exxon Mobil.

 The Fiscal Cliff

Lots of talk/ink about the "fiscal cliff" -- the media's phrase for "what happens" if "the" tax breaks expire at the end of the year. I believe these are also referred to as the "Bush tax breaks." So, if all bad things are blamed on Bush, but yet everyone says the end of the "Bush tax breaks" will send us over a fiscal cliff, ... well, let's just say, I'm confused. I guess it was bad to have passed them in the first place, now that the tax breaks have brought us to the edge of a cliff. My understanding of the constitution is that that Congress legislates, the President executes. But I digress.

The tax breaks won't be extended. First, it is way too contentious, and Congress will have too little time between the November election and the holiday break which begins sometime around Thanksgiving and ends sometime after the first of the year. If President Obama and his party win big in November, they won't extend the tax breaks -- ending the tax breaks for the 1% is one of their defining platform planks. If Mr Romney and his party win big in November, the losers (who control the White House and the Senate) are not going to hand a gift to Mr Romney. They will want  him to feel the pain.

So, we will go over the fiscal cliff sometime between December 15th and January 20th. The real question is whether there is a safety net after January 20th? And the answer to that question is a resounding yes. But it will be quite a ride between December 15, 2012, and April 15, 2013.

Disclaimer: this is not an investment site. Do not make any investment decisions based on what you read here.

The man most afraid of the fiscal cliff: the vice-president

The president has a lot to lose personally if the tax breaks are not extended, but ideologically that's not an issue for him. Pragmatically, he has seen how well Mr Clinton has done post-presidency. The president is not worried.

The same can be said for Paul Ryan -- at least the first part: ideology is his driving force, not personal accoutrements (at least not yet; that will come). And, of course, Mitt Romney will know how to finesse any change in tax law. No, of the four, Mr Joe Biden has the most to fear. So it is interesting that it appears to be Joe himself who is leading the charge to re-write the president's tax plan and save us all from the fiscal cliff.
Vice President Joseph R. Biden on Thursday seemed to open the door to adjusting President Obama’s tax increases to only apply to those making $1 million or more a year — a much higher threshold than the $250,000 level they had pushed previously.
That will fly.

That will be the post-November 15, 2012, compromise, two parts: a) "temporary" extension for six months; and, b) increasing the $250,000 threshold to one million dollars. North Dakota oil millionaires will still have to scramble.