Monday, January 21, 2013

Debt -- Nothing About the Bakken

I am reading Debt: The First 5,000 Years by David Graeber, c. 2011.

Early in the book, a little humor, which some days, along with music, is needed:
I was walking down the street with a friend the other day and a guy with a gun jumps out of an alley and says "stick 'em up."

As I pull out my wallet, I figure, "shouldn't be a total loss."

So I pull out some money, turn to my friend, and say, "Hey, Fred, here's the fifty bucks I owe you."

The robber was so offended he took out a thousand dollars of his own money, forced Fred to lend it to me at gunpoint, and then took it back again.

Buffalo Commons: Deja Vu All Over Again -- Expert Advice From Men's Journal -- Not About the Oil Patch

Fiscal cliff.

Debt ceiling.

80 hostages killed in Algeria.

$16 trillion in debt.

But what concerns Men's Journal? Buffalo. Not enough buffalo in Montana. It's Poppers and déjà vu all over again.

Seriously, with all that is on the President's plate, we have "expert advice" from Men's Journal suggesting that what is needed is more buffalo on the western plains.

A huge "thank you" to a reader for noting this, sending it in.

Actually, this was #6 of 9. Apparently Men's Journal listed 9 ideas for the environment. I did not look at the other eight environmental suggestions for the President. I didn't listen to his inauguration speech, but 10-to-1, he didn't mention buffalo. By the way, the writer is probably talking about bison. The article uses "buffalo" and "bison" interchangeably, as we all do.

I assume one of the other eight environmental suggestions is to put a moratorium on wind farms to save the bald eagle, golden eagle, other migratory birds including whooping cranes, ducks, bats, and monarch butterflies.

Fourteen (14) CLR Wells To Be Sited in Section 3-152-94, Antelope Oil Field, McKenzie County

Last week I posted that CLR would site ten (10) wells in this section. Today, NDIC reported four more CLR permits for this section.

Early on, in the blog, I highlighted when an Eco-Pad was announced; that didn't last long; it became commonplace. Likewise, I will probably soon stop posting less than fourteen wells in one section. And to think: once upon a time, in a land far away, we thought the maximum number of wells in one section would be .... one.

Double Down Huge for Zavanna; Burke County Producing Some Nice Wells; Liberty Resources With a Nice Well; Oasis Reporting Many Wells; Eleven (11) New Permits; Some Great Wells -- The Bakken, Williston Basin, North Dakota

Bakken Operations

Active rigs: 186 (nice)

Eleven (11) new permits:
  • Operators: CLR (8), Whiting (2), Hunt
  • Fields: Antelope (McKenzie), Bluffton (Divide), Oliver (Williams), Roosevelt (Billings), Park (Billings)
  • Comments: It's pretty impressive to open these daily activity reports and see a string of permits for a single operator.
Wells that came off the confidential list over the weekend and Monday:
  • 21440, 1,404, KOG, Smokey 14-21-33-14H3, Pembroke, t11/12; cum 10K; Three Forks, 28 stages; 4 million lbs;
  • 21442, 2,125, KOG, Smokey Kinden 14-21-16-3H,  Pembroke, t11/12; cum 14K 11/12; middle Bakken, 28 stages; 4 million lbs; 
  • 21973, 736, Oasis, Orion Federal 5792 42-20H, Cottonwood, t8/12; cum 23K 11/12;
  • 22087, 501, Oasis, Zdenek 6093 42-24H, Gros Ventre, t7/12; cum 29K 11/12;
  • 22225, 868, Oasis, A K Stangeland 5300 43-12T, Crazy Man Creek, t9/12; cum 7K 11/12;
  • 22293, 1,362, Oasis, Nathan 55-2 21-4B, Squires, t8/12; cum 27K 11/12; hooked up to NG pipeline;
  • 22294, 1,373, Oasis, Drew 5502 21-4B, Squires, t8/12; cum 22K 11/12; on NG line;
  • 22346, 1,526, Oasis, Jammer 5792 42-20H, Cottonwood, t8/12; cum 45K 11/12; on NG line;
  • 22400, 120, Oasis, Island Lake 6092 12-24H, Cottonwood, t11/12; cum 500 bbls; being flared;
  • 22495, 805, Liberty Resources, Borrud 156-101-1-12-1H, Tyrone, t8/12; cum 68K 11/12;
  • 22596, 700, Oasis, Isabella Federal 6093 42-24H, Gros Ventre, t8/12; cum 28K 11/12;
  • 22608, 1,694, Oasis, Tyler T 5601 41-24B, Tyrone, t7/12; cum 29K 11/12;
  • 22650, 247, WPX Energy Williston LLC, Charles Blackhawk 31-30HX, Heart Butte, t11/12; cum 5K 11/12;
  • 22688, 616, EOG, Cottonwood 10-2623H, Cottonwood, t9/12; cum 33K 11/12;
  • 22802, drl, Hess, LK-Dukart 145-97-0310H-3, Little Knife,
  • 22803, drl, Hess, LK-Obrigewitch 146-97-3427H-4, Little Knife,
  • 22910, 1,430, MRO, Pearl 41-13TFH, Big Bend, t10/12; cum 39K 11/12;
  • 23071, 1,224, Hess, HA-Mogen 152-95-0805H-3, t12/12; cum --
  • 23072, 1,089, Hess, HA-Dahl 152-95-0706H-3, Hawkeye, t12/12; cum 700 bbls 11/12;
  • 23102, drl, QEP, MHA 4-06-31H-15092, Heart Butte,
  • 23125, 603, Zavanna, Double Down 24-13 1H, East Fork, t11/12; cum 29K 11/12;
  • 23173, 675, Sinclair, Anderson 3-6TFH, Sanish, t9/12; cum 12K 11/12;
  • 23188, 457, CLR, Winston 2-12H, Long Creek, t11/12; cum 500 bbls 11/12;
Producing wells completed:
  • 19675, 84, Newfield, Drovdal 150-99-7-6-1H, Tobacco Garden, t5/11; cum 2K 11/12; see also this post;

Impressed With 14 Wells In An NDIC Hearing Docket Case? How About 4,250 Wells -- Wyoming Gas Project

4,250-well development on 265,000 acres in Fremont, Natrona, and Sweetwater counties, Wyoming. 
Works out to about 60-acre spacing for natural gas wells.
The US Bureau of Land Management is seeking comment on a proposed Wyoming natural gas development involving up to 4,250 wells on 265,000 acres in Fremont, Natrona, and Sweetwater counties. It also wants comments on possibly amending the 2007 Casper Resource Management Plan, which could be required for the project, it added, BLM’s Lander field office said on Jan. 17.

Link here to Oil & Gas Journal.

Now That Lisa Jackson's Leaving ...

 BLM pulls proposed fracking rules, will work on new version. Multiple sources. Here is a link to the Oil & Gas Journal:
The US Bureau of Land Management withdrew its proposed hydraulic fracturing regulations and announced that a new draft will be prepared during 2013’s first quarter. BLM is preparing a new version in response to the more than 170,000 comments it received to the original proposal, the US Department of the Interior said on Jan. 18.
It's also my understanding the Interior Secretary has tendered his resignation

Here is one from Ohio.
API President and CEO Jack Gerard welcomed the Bureau of Land Management decision to take proposed federal hydraulic fracturing regulations back to the drawing board.

“API asked the administration to reconsider the rules, and we welcome this move as a positive first step.” said Gerard. “However, the real test will be in the substance of the re-proposal. We hope the administration will recognize the strong oversight provided by existing state and federal regulations and take sufficient time to review the many thoughtful comments provided by the oil and natural gas industry and others. Effective regulation of hydraulic fracturing already exists in the states. Conflicting or duplicative federal requirements would delay development of abundant domestic oil and natural gas and threaten jobs and revenue to the federal treasury, without providing additional environmental protection.”

Acknowledging the states' existing authority of shale energy development, EPA Administrator Lisa Jackson has said “you can't start to talk about a federal role without acknowledging the very strong state role.”

This Will Certainly Help the Economy of the President's Home State

Tesoro to stop refining oil in Hawaii.

Meanwhile, flashback: price of gasoline then. Price of gasoline now. Click on "5 years" when you get to the link.

Midway through his second inaugural address, President Obama vowed to address the challenge of climate change — a key liberal priority.
"We will respond to the threat of climate change, knowing that the failure to do so would betray our children and future generations," Obama said.
Of course, the $16 trillion debt we leave our children is another story. 

And, climate change now means global cooling. Ah, the irony of it all.

Meanwhile in the EU, they can't give carbon credits away. That's a bit of hyperbole, but read for yourself: carbon credits are worthless through ("at least") 2045. So much for Al Gore's urgency:
Allowances in the emissions trading system, the world’s largest, are “worthless” without a change in the rules to tighten supply and curb a record glut, according to UBS AG. Low bids from utilities, factories and banks forced Germany on Jan. 18 to cancel a sale of permits for the first time. Today’s sale of prompt allowances by EU nations had a settlement price of 4.70 euros a ton.
“With current rules, the emissions trading system won’t work until 2045, thus carbon is worthless,” Per Lekander, a Paris-based analyst at UBS, said today in a research note. 
You and I would go to jail promoting this scam.

Off The Net For Awhile

Remember: The Earth Stopped Warming Sixteen Years Ago; It's Beginning to Feel A Lot Like .... a Mini-Ice Age

Link here to a great quote from the (London) Telegraph.

Again, the Brits write so well:
As a species, we human beings have become so blind with conceit and self-love that we genuinely believe that the fate of the planet is in our hands — when the reality is that everything, or almost everything, depends on the behaviour and caprice of the gigantic thermonuclear fireball around which we revolve. [That would be the sun, our nearest star.]
I say all this because I am sitting here staring through the window at the flowerpot and the bashed-up barbecue, and I am starting to think this series of winters is not a coincidence. The snow on the flowerpot, since I have been staring, has got about an inch thicker. The barbecue is all but invisible. By my calculations, this is now the fifth year in a row that we have had an unusual amount of snow; and by unusual I mean snow of a kind that I don’t remember from my childhood: snow that comes one day, and then sticks around for a couple of days, followed by more.
I remember snow that used to come and settle for just long enough for a single decent snowball fight before turning to slush; I don’t remember winters like this. Two days ago I was cycling through Trafalgar Square and saw icicles on the traffic lights; and though I am sure plenty of readers will say I am just unobservant, I don’t think I have seen that before. I am all for theories about climate change, and would not for a moment dispute the wisdom or good intentions of the vast majority of scientists
The global warming activists can even rationalize colder global temperatures on global warming (see Alice in Wonderland for more on this):
But I am also an empiricist; and I observe that something appears to be up with our winter weather, and to call it “warming” is obviously to strain the language. I see from the BBC website that there are scientists who say that “global warming” is indeed the cause of the cold and snowy winters we seem to be having. A team of Americans and Chinese experts have postulated that the melting of the Arctic ice means that the whole North Atlantic is being chilled as the floes start to break off — like a Martini refrigerated by ice cubes. 
And this dire comment:
There is every indication that we are at the beginning of a mini ice age,” he says. “The general decline in solar activity is lower than NASA’s lowest prediction of five years ago. That could be very bad news for our climate. We are in for a prolonged cold period. Indeed, we could have 30 years of general cooling.” 
Comments can be sent to the editor, (London) Telegraph.

By the way, re: "30 years of general cooling." The "basic analysis of the Bakken" suggests it will take 30 years of drilling to exhaust the Bakken. The Bakken will continue to produce oil through 2100, based on earlier studies, all of which were based on old data, including this gem:
In 2007, it was expected that a section of the good Bakken would produce a total sum of about 700,000 bbls of oil. 
For newbies, at a minimum, there will be four wells on each section of "good" Bakken and each well is expected to produce at least 500,000 bbls in primary production, and could produce as much as one million bbls. That's primary production based on current technology.

Dangerous Arctic Blast to Hit the Midwest

Meanwhile, back here in the United States, a lot of natural gas is going to be used this next week: a cold blast hitting the United States this week. From Minneapolis, "while here in Minneapolis, the streak will likely end of days where we don't get to zero. We've gone four years, fourteen hundred sixty six (1,466) days without a sub-zero high. That was back in January 15, 2009 -- the last subzero high. Today's high forecast at three degrees below zero and that's 25 degrees below the average of 22 degrees. Take a look at the Midwest now, the cold air coming in ...."

I can't make this stuff up.

Folks may want to read about statistics and the warmest year of the decade, 2012.

Perhaps The Best Natural Gas Post For The Week

I've brought this comment forward as a stand-alone post to make it easier to go to the links.

This is one of those comments/posts that one needs to read through very slowly and think about the implications (and investing opportunities).

The first time I read through this, three opportunities jumped out at me:
  • domestic natural gas industry (duh, obvious)
  • specifically, SRE (see connection with Mexico about halfway down; SRE, a "stodgy" California utility, is trading at all-time highs)
  • ocean-going transport ships (or whatever you call them) -- huge
I'm sure others can find a dozen more interesting bits of trivia. I have not confirmed all links work. 


I have to come back to this one later; too much information, but the premise is very, very interesting.

Long comment from a reader:
99% off topic.

100% interesting.

How does the US buy off Pakistan to keep them from getting natural gas from Iran? (Pakistan uses natural gas for vehicles, but has sometimes closed stations because of shortages. They are in a perpetual crisis.)

The Bakken gas, of course. (Maybe a stretch.)

This is why the US will export LNG. Obama likes Paq e stan.
"With Pakistan negotiating liquefied natural gas (LNG) purchases from the United States, the Economic Coordination Committee (ECC) of the cabinet is expected to clear on Tuesday about $900 million rolling guarantees for the LNG import and dedicate its supplies mostly to the power sector without increasing gas tariff for other sectors. [The operative word is "rolling" as in "without end."]

"Dr Asim Hussain, prime minister’s adviser on petroleum and natural resources, told Dawn on Monday that negotiations were currently in progress with two international firms to purchase LNG from its sources in the United States at the Henry Hub prices that are currently much lower than the Middle East and European markets because of LNG glut in North American region."
"Sui Southern Gas Company (SSGC) and United Energy of USA signed a memorandum of understanding (MOU) pertaining to supply of liquified natural gas (LNG) in Houston. According to the MOU, the US will supply 4 million metric tons of liquefied natural gas (LNG) per year.

"As per MOU, Pakistan will also own share in liquefaction facilities in Gulf of Mexico together with United LNG of USA. 
"In order to ensure firm and continuous supplies of LNG, dedicated ships will be inducted for transportation of LNG to Pakistan."
"It is expected that the landed cost of LNG with an inbuilt cap, including transportation and re-gasification cost, the price of gas will be less than the price of Iran-Pakistan Gas Pipeline Project and Turkmenistan – Afghanistan – Pakistan – India (TAPI) Gas Pipeline Project."
"The United States is working with Pakistan to help it deal with the consequences if it agrees to abandon the Iran pipeline project, says the US State Department."
McMoran Exploration and United LNG.

Using an offshore platform left over from the days of sulphur mining and the underlying salt dome that can store 1TCF of natural gas.
And using FNLG. See this.

This is as big as Cheniere's LA LNG exports.
Together, they will export about 5BCFD.

More drilling will be required, but there is plenty of gas to produce.

Great for drilling, fracking, sand, etc. etc.

The futures price does not seem to reflect this.

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