Monday, March 25, 2013

How's That Wind Energy Working Out For You, Chaps?


March 26, 2013: the harsh realities of life in the US without shale gas and misguided reliance on green energy -- Carpe Diem. Several articles linked at Carpe Diem; previously linked here at MDW; a reminder:
With the worst snow conditions in the country since 1981, it’s worrying, to say the least, that gas supplies are running low. A month ago, The Sunday Telegraph warned in this column of the problems of an energy policy that puts expensive, inefficient green power before coal-fired and nuclear power. There have been a few signs that the Coalition is at last turning its attentions to the issue but, still, not nearly enough has been done. Now we are reaping the consequences.
Because of a misguided faith in green energy, we have left ourselves far too dependent on foreign gas supplies, largely provided by Russian and Middle Eastern producers. Only 45 per cent of our gas consumption comes from domestic sources. -- From The (London) Telegraph, March 23, 2013.
And the Brits used to have so much common sense. Britain was even touted as the center of the Industrial Revolution at one time. The good news: the largest wind farm in the world, the London Array, off the Thames River estuary, should start producing electricity this year. Will provide electricity for 750,000 homes.
Original Post
This article speaks volumes about the energy situation worldwide. Reuters is reporting:
Centrica on Monday signed its first liquefied natural gas (LNG) import deal with U.S. firm Cheniere Energy for 20-years' worth of shipments starting in late 2018 as prices at home surge due to scant supplies.
The deal, enough to fuel 1.8 million homes, is the first ever long-term LNG supply deal for Britain and a breakthrough for U.S. gas in Europe. 
Prime Minister David Cameron welcomed the deal for diversifying the UK's energy mix away from dependency on a small group of existing gas suppliers and for giving Britain its first taste of cheap U.S. shale gas. 
Britain currently depends on Qatar for much of its LNG but high prices in Asia have seen supplies earmarked for the domestic market diverted to Japan and South Korea, depleting strategic stockpiles and sending prices to record highs.
And deeper in the article:
Qatar and other established exporters refuse to commit long-term supply on anything but prices linked to relatively expensive crude oil, while Centrica has sought market prices.
It was forced to settle for a three-year LNG supply agreement with Qatar in 2011 after talks to secure a 20-year contract fell through. 
Despite the deal, Qatari volumes of LNG to Britain plunged by 68 percent in January from a year earlier, according to shipping consultancy Waterborne.
Gas prices in the UK are on average three times higher than in the United States at $10 per million British thermal units (mmBtu), although last week's UK price spikes saw that premium widen dramatically.

Wells Coming Off The Confidential List Tuesday Morning; Whiting Has a Very Nice Red River Well

Wells coming off the confidential list, Tuesday:
  • 22096, 935, Triangle USA, Larson 149-100-9-4-2H, Ellsworth, t10/12; cum 20K 1/13;
  • 22097, 472, Triangle USA, Larson 149-100-9-4-3H, Ellsworth, 31 stages; 4 million lbs; t10/12; cum 35K 1/13;
  • 22450, drl, MRO, Nicky Kerr 14-8H, Bailey,
  • 23221, drl, CLR, Rennerfeldt 2-30H, Brooklyn,
  • 23388, drl, BEXP, Beaux 18-19 3TFH, Banks,
  • 23449, 671, Hess, BB-Ole Anderson 151-95-3031H-2, Blue Buttes, Three Forks, 30 stages; 1.2 million lbs (very low amount of proppant); t2/13; cum --
  • 23533, 560, Whiting, Katherine 33-23, Camel Hump, Golden Valley County, a vertical well; Red River; 12 days to drill; 320-acre spacing; t12/12; cum 21K 1/3;
  • 23599, 511, Slawson, Pathfinder 3-9H, Sanish, 17 stages; 1.7 million lbs; t12/12; cum 14K 1/13;
  • 23723, 331, G3 Operating, H State 1-36-25H, Climax, 30 stages; 3.0 million lbs; t12/12; cum 4K 1/13;

A Note To The Granddaughters

A reader sent this.

Open, watch at full screen:
Birds of Paradise

These are the guys whose photographs of all 39 birds of paradise are in a recent issue of National Geographic.

Random Update on EOG, ZaZa, and The Eaglebine; Connecting The Dots: Arizona, Napolitano, Ammo, Assault Vehicles


May 4, 2013: this has to do with the note below the break: the buying of ammunition by the Department of Homeland Security is starting to make sense. Today there is a story that even with all the ammunition that DHS has bought, the department is looking at buying another 2 million rounds

Original Post
From SeekingAlpha:
EOG Resources is the unnamed company teaming with ZaZa Energy  to develop assets in Texas' Eaglebine trend, an SEC filing says. For acreage 100% owned by ZaZa, EOG will be the operator and earn a 75% working interest, while ZaZa will retain 25%; for acreage currently owned 75% by ZaZa and 25% by Range Resources, EOG will earn 50% while ZaZa and RRC each will retain 25%.
Arizona, Napolitano, Ammo, Assault Vehicles
It's All Starting To Make Sense

On a completely different note, there have been several articles of the Department of Homeland Security buying excessive numbers of rounds of ammunition. It is being reported that DHS is not acknowledging the purchases, and is stonewalling Congress when asked about the purchases. I have posted the news items, noting them, but not really getting any feel for the story: whether there might be a reason or simply the government buying lots of ammunition for no particular reason.

Now, these photos, videos, and story from
Footage of hundreds of armored trucks, similar to ones reportedly purchased recently by the Department Of Homeland Security has appeared online, raising more questions over their intended use.
The video was uploaded to YouTube last week by a user who stated that it was shot in the middle of the desert between Hackberry and Peach Springs, Arizona.
It shows hundreds of military style trucks loaded on to a train, presumably in the process of being delivered domestically for law enforcement or military purposes.
I think the dots are starting to connect.
  • The director of Homeland Security is Janet Napolitano. She was the governor of Arizona from 2003 to 2009.
  • The US federal bureaucracy moves very, very slowly. The decision to buy large amounts of ammunition and large number of assault vehicles for domestic use would have taken a fair amount of time from considering the issue to executing the plan.
  • I don't know if folks remember what the big story in Arizona was between 2003 and 2009 that would relate to the subject at hand.
But here's a hint:
  • This article was posted in 2009. I personally don't care for this type of "scare" article. I did not read the entire article, and it is linked here solely for demonstration, to help folks connect the dots.
  • In the 2008 time period and into 2009, the US economy experienced a severe recession; the Mexican economy did not implode; and, there was no mass migration of Mexicans across the border. But I do recall the hysteria was pretty rampant, between 2003 and 2009, about the Mexican economy collapsing, and hordes of Mexicans streaming across the border. 
It wasn't until I saw the videos of the assault vehicles for domestic use that the dots started to connect.

The risk seems to have completely gone away; perhaps it has, perhaps it hasn't. But the bureaucracy moves slowly, and once the plan -- to buy weapons, ammunition, and assault vehicles -- was hatched some years ago, it would have taken a few years to execute.

It all fits very nicely. It doesn't bother me one way or the other. I don't think the arming of Immigration and Customs Enforcement is all that big a deal. I truly doubt arming the ICE is for the purpose of preventing armed revolt in the street by American citizens upset about losing their social security or having to pay for ObamaCare. The dots connect, and if arming the ICE is for the purpose suggested, it sounds more than appropriate. The whole plan seems a bit crazy, but I'm sure the government has done a lot crazier things over the years. But, wow, it sure makes sense. 

Janet Napolitano was governor of Arizona in 2003 - 2009, ground zero (time and place) for impending hordes of Mexicans flooding across the border. She probably lost sleep thinking about the very real possibility. If so, that fear never left her. Once in a job where she could do something about it, she acted with laser-like focus.

A Knack For Designing Good Frac Jobs

This is a fun story. The Dickinson Press reports:
“I had a knack for being able to design good frac jobs,” said Besler, 56.
The name stuck, and it became Besler’s license plate and eventually his business name when he decided to become independent and start FRACN8R Consulting.

Common Sense Prevails: A Nuisance Suit; Common Sense - 1, Activist Environmentalists - 0

The Billings Gazette reports:
A judge in Casper has sided with the state of Wyoming and ruled against environmentalists who sought to obtain lists of the ingredients that go into hydraulic fracturing fluids.
Environmental groups had requested the ingredient lists from the Wyoming Oil and Gas Conservation Commission, arguing that the public needs to know what chemicals companies are putting underground.
They were denied on the grounds that the lists are trade secrets that may be withheld under Wyoming's open records law. Natrona County District Judge Catherine Wilking has upheld the denial, ruling that the state official who withheld the information acted reasonably.

Eight (8) New Permits -- Williston Basin, North Dakota, USA; QEP With Five Huge Wells On A Single Pad; Fan-Shaped Configuration, Under The River; Whiting With Two Huge Wells

Active rigs: 186 (steady)

Eight (8) new permits --
  • Operators: XTO (4), Whiting (2), CLR, Oasis
  • Fields: Bear Den (McKenzie), Hamlet (Divide), Cottonwood (Oasis), Estes (McKenzie)
  • Comments: XTO certainly seems active; that was predicted by MDW when XOM (deep pockets) bought XTO
Wells coming off the confidential list were posted earlier; see sidebar at the right.

Seven producing wells now completed:
  • 22831, 1,095, Whiting, Roggenbuck 34-24TFH, Sanish, 
  • 24242, 2,971, Whiting, Fladeland 14-33H, Sanish,
  • 23101, 17,777, QEP,  MHA 1-06-32H-150-92, Heart Butte, 1920-acre spacing if approve;
  • 23100, 1,922, QEP, MHA 3-06-32H-150-92, Heart Butte,
  • 23099, 1,994, QEP, MHA 2-06-32H-150-92, Heart Butte,
  • 23098, 1,632, QEP, MHA 4-06-32H-150-92, Heart Butte,
  • 23102, 1,966, QEP, MHA 4-06-31H-150-92, Heart Butte,
A number of comments regarding the producing wells above:
1. The IP of 17,777 is no doubt an error; probably 1,777.
2. The well file for #23101 did not include the completion or the IP.
3. The five QEP wells are on a single pad; the horizontals fan out in "fan-shaped" configuration; extend under the river; QEP has same configuration with five additional wells two miles to the east
4. I didn't check all five QEP well files, but I assume they will all be 1920-acre spacing if approved by the NDIC

ObamaCare Applications Allow Folks To Register To Vote; Would You Like Fries With That?


July 21, 2013: finally, others are talking about the same thing -- even the IRS data base is not as big as the HHS data base will be. EVERYONE has to file a report to document medical care. 

Original Post

To the best of my knowledge, this is not being reported in the mainstream media: ObamaCare requires everyone, whether they earn income or not, to file with the IRS. At least that's my understanding, and I've been blogging about it for quite some time.

Currently, people who do not have any income are not required to file with the IRS. However, under ObamaCare, everyone needs to report to the IRS their source for health care insurance. And if they don't have ihealth care insurance, they are subject to penalty.

And, now, with a huge new segment of the population required to file with the IRS for the first time, they are asked if they would like to register to vote. Regardless of whether they do or not, the government has a new data base with a long, long list of names that it can contact during presidential races.

A few others have noted the same thing:
Boustany, a Louisiana Republican, said the application raises two alarming issues: What does HHS plan to do with all the information it collects on each applicant and will pro-Obama groups like AARP and Families USA that might be tapped as "navigators" to sign people up to Obamacare, steer them to register as Democrats. Others have indicated that groups like Planned Parenthood and ACORN could also act as a navigator.

Slow-Rolling the American Public

With energy independence in sight, the President releases a plan to place 1.5 million acres of shale oil on federal lands in Wyoming, Colorada, and Utah off limits to drillingOil & Gas Journal reports. As long as it doesn't affect the Bakken, I really don't care much any more. In less than four years we can move on. Placing 1.5 million acres of shale oil off limits will have minimal effect on national oil production. And less competition for manpower, drilling rigs, and fracking sand for the Bakken.

Another Feel-Good Article on the Bakken

The Bakken isn't mentioned by name, but:
"That's making U.S. companies that used to be at a price disadvantage now uniquely positioned to win contracts they never won in the past -- or haven't for a while," he said. "Everyone talks about what's going on in North Dakota, but it's filtering down now to conventional factories throughout America." 
A big "thank you" to a reader for sending me the link to this CNBC story.
Smith's hiring was just one of thousands of openings created indirectly by a new boom in domestic oil and natural gas drilling – a bounty so rich that it has even caught energy industry insiders by surprise. In part 2 of our four-part "Power Shift" special report, we examine how the explosion in drilling in places like North Dakota and West Texas is spreading through the general economy – despite controversy over the potential environmental impact of the new industry practices. 
This was part 1; I can't remember if I posted it earlier:
As a result, U.S. oil and gas production is growing so rapidly - and demand dropping so quickly - that in just five years the U.S. may no longer need to import oil from any source but Canada, according to Citigroup. And the International Energy Agency projects the U.S. could leapfrog Saudi Arabia and Russia to become the world’s biggest oil producer by 2020. IEA sees the U.S. becoming a net oil exporter by 2030.
I doubt regular readers of the MDW will find anything particularly new.

Random Note on Brooklyn Oil Field Re: CLR and 2560-Acre Spacing

A reader asked whether CLR had drilled any 4-section wells in Brooklyn oil field.

The question arose from this NDIC case:
#17195: Application of Continental Resources, Inc. for an order amending the field rules for the Brooklyn-Bakken Pool to create two 2560-acre spacing unitscomprised of Sections 14, 23, 26 and 35; and Sections 18, 19, 30 and 31,T.155N., R.98W., ...
My reply:
1. My hunch is they are drilling them now, but I could be wrong.

2. The NDIC map suggests that CLR was successful in getting the two 2560-acre spacing units. There were already a pair of wells in 1280-acre spacing units in those sections.

3. There are now 2 wells in the western spacing units (18, 19, 30, 31) and four wells in the eastern spacing unit (14, 23, 26,35) on confidential status. One rig is on site (in the eastern spacing units, where there are four newly permitted wells). Because they are "confidential" I don't know if they are 2560-acre spaced wells, but the fact that they were permitted after the 2560-acre spacing case (at least it appears they were), it's very likely that these six wells could be 2560-acre spacing wells. Even so, they will be standard 9,000-foot long laterals (2 sections). That one rig will probably drill all six wells.

Market Opens; Short Week; Good Friday

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

So much for all that talk about the impending divorce leading to a plummeting CLR share price: CLR is up big today. Up about 2%. No link; dynamic pricing, of course.

Oil is up nicely.

SRE is up a bit, but will be hard-pressed to hit new highs after recent run-up; besides, all the good news is already out. SRE will go ex-dividend tomorrow.

Likewise, CVX is up. It hit a new high but has pulled back a bit, but still up for the day, although the day is "young."

OAS is up very nicely, but it has a way to go to get to its high. KOG, flat.

Louisiana light sweet: selling at a $17.75 premium to WTI at Cushing. The link is dynamic, but comments were accurate at time of posting. This would be a very good time for folks to read today's RBN Energy post.

I would assume with the news coming out of Cyprus, the Euro will strengthen. Oil is up almost a buck now.

AAPL is doing very, very well, the last couple of days. I own no shares in AAPL and never have.

The Obama administration kills another pipeline, the Enbridge Sandpiper pipeline that would have carried 225,000 bbls of oil out of the Bakken, to the east. Sandpiper competitors, particularly the rails, found fault with the proposal. The Obama administration agreed. A huge win for rail. ENB is up today in trading, hitting a new high. They will simply charge more for the oil they ship by pipeline, and without the cost of another pipeline. This is not rocket science; of course, Enbridge will come back with a new proposal, if they really want the pipeline, and they will get it approved the second time around. Bigger problems in Maine. [By the way, EEP is also up today.]

Monday Morning Links, Continued, Part II; Michigan Ranks Below Mississippi and Alabama For Per Student Public School Funding, 2010 - 2011

Government payrolls are facing new pressures. WSJ is reporting:
Governments bled hundreds of thousands of jobs after the U.S. economic recovery started. Now they're preparing to pass the knife around again as the federal budget comes under pressure.
The cuts in the public-sector workforce—at the federal, state and local levels—marked the deepest retrenchment in government employment of civilians since just after World War II. About 21.8 million civilians were directly employed by a government in the U.S. in February, accounting for roughly one out of every six nonfarm payroll jobs, according to the Labor Department. That is down by about 740,000 jobs since the recession ended in June 2009. At the same time, the private sector has added more than 5.2 million jobs over the course of the recovery. 
States build cash reserves, raising rainy-day debate. WSJ is reporting:
Now, with revenue rebounding along with housing values and employment, most states are breaking even or running small surpluses. Several state governors are moving to replenish or even boost their cash reserves, stirring debate about whether the money should be used instead to cut taxes or spent to save jobs and spur the economy.
But the dems always have an answer:
Michigan state Rep. Brandon Dillon, a Grand Rapids Democrat, said the money should instead be used to restore school funding, which was cut early in the governor's term, despite severe crowding in schools. His 10th-grade stepdaughter's English class has 46 students, he said. Nearly a fifth of the schools in his district are set to be closed this year to cut expenses, he said.
"We are not funding education at any level at an adequate level," Mr. Dillon said. "Before we start putting hundreds of millions of dollars in a rainy-day fund, we should first be meeting the basic commitments." And if we run out of money, we can just increase taxes on the rich. And if we really get ourselves into debt because we don't have a rainy-day fund, we can always count on a bailout.

By the way, here are the state rankings on public school funding (at the link, click on the PDF file near the top of the page). Michigan does rank near the bottom, in "revenue per student in average daily attendance, 2010 - 11, Michigan ranked #46 of the 57 states (President Obama's methodology), below Florida, Alabama, Mississippi, and Arizona, but ahead of Nevada, #51. [My daughter says Detroit, MI, probably brings down the averages, but still; below Alabama and Mississippi?]

Book review, A skeptical modern; Adam Ferguson in the Scottish Enlightenment, Iain McDaniel. Obviously I haven't read the book yet, but the book might make a nice companion to How The Scots Invented the World, by Arthur Herman, which I have read twice, and bits and pieces many times over. By the way, if the link to the McDaniel book is broken (it links to the WSJ), good luck. It was hard to find, googling. From the review:
What emerges is a reminder that, if Scotland and France were the pre-eminent sites of the Enlightenment, England was its abiding subject. For the philosophes, 18th-century Britain's rise to imperial pre-eminence exemplified the new political dynamics of the modern age.
The superstructure of British power was naval might and trading wealth, but its foundation was fiscal mastery. The Bank of England and London's stock exchange established Europe's first major secondary market in government bonds.
This market allowed Britain to float open-ended loans serviced with dedicated tax revenues. To the investors of Europe, a free parliament (itself made up of bondholders) was far more credit-worthy than an absolute and capricious king.
While the French monarchy frantically sold off assets and borrowed at ruinous rates, Britain created a perpetual, rolling national debt. Smaller than France, Britain mobilized its wealth with vastly greater efficiency. The "financial revolution" made fortunes at home and an empire abroad. Its consequences are with us still.

Monday Morning Links; Big Post on Utica in Ohio; MY HUNCH: Statoil Buys Hess

Active rigs: 187

Wells coming off the confidential list this weekend and today have been posted.

RBN Energy: narrowing of the WTI and Brent spread.

A reader alerted me to this article, thank you: Millions of gallons of Bakken oil riding the rails across Maine; activists concerned; the story does not mention that activists will try to stop new pipeline or reversal of a pipeline across Maine; previously reported at the MDW; the article also did not state that the spokesman for Maine's Sierra Club showed up for the interview in a late model gas-guzzling SUV; the link to the MDW post was one of my better posts; huge story on so many levels; just between you and me, I'm getting a little tired of environmental activists.

Yahoo!Breakout: three ways to play the quiet breakout in natural gas. The article did not interest me but others might appreciate it.

Disclaimer will go here eventually, if I remember. For now, just a reminder: this is not an investment site.


Gulfport, Utica, update: I am looking for another article on this story; it was posted earlier today, but can't find it. This was linked before. Will see if I can find that other story. Okay, here it is: make or break for Gulfport? We will know more in a few days. Many story lines in the article, including:
  • Utica more "gassy" than originally thought; not good news
  • Ohio state government gives "oil updates" once yearly, compared to monthly for North Dakota
  • only 500 permits issue in Ohio since 2011; and not all of them drilled
From the article:
On March 31 this year, data from between 50 and 60 wells drilled in 2012 will be given to the state. It will then be made available on the Ohio Department of Natural Resources' website in April, the department said. It did not give a specific date but last year the report came on the second of the month.
While around 500 drilling permits have been issued in the state since 2011, only those wells that have actually produced will be covered in the report. It will show output over the lifetime of every new well, its location, and its owner, providing some proof of which acreage, and which companies, are performing best.
 From the article:
Ohio publishes well data only once a year, making it one of the least transparent states in reporting energy output. Most states publish every quarter. [North Dakota posts a summary every month; and North Dakota updates data daily; North Dakota updates rig data throughout the day if it warrants. In addition, the NDIC website is incredibly user-friendly.] On April 2 last year, production was published from just five wells. That is the only official state record on the play two years after drilling began there.
Results from the five wells drilled by Chesapeake Energy in Carroll and Harrison counties showed lower than expected oil production, and stronger natural gas output, the state report said.
Since then, a long list of companies, including Britain's BP, Anadarko Petroleum and Hess Corp, have acquired acreage in Ohio. Most remain quiet about their progress for fear that it will push lease prices higher.
I was always led to believe, growing up in North Dakota, that the eastern states, like Massachusetts and Ohio, were "eons" ahead of North Dakota. I've learned a lot since blogging.


Okay, enough of that. Back to a Bakken company: Hess.  For Hess, Norway Interest? in the WSJ. Could Statoil buy Hess? Disclaimer goes here: this is not an investment site. Do not make any investment decisions based on the crazy things you read at this article. Teegue says it's all nonsense, anyway.

Three articles affecting XOM:
 Network TV losing viewers ... fast. Signals weak for TV-ad market. Change in average prime-time audience among viewers 18-49, season-to-date, through March 15:
  • CBS: down 3%
  • ABC: down 8%
  • NBC: down 7%
  • Fox: down a whopping 23%
Blame it on March madness. In this case, blame it on content, not accessibility. See earlier MDW post for ramblings on this subject.

Another Chinese oil deal: Sinopec will acquire $3 billion in oil and gas assets held by its state-owned parent in countries including Kazakhstan (a country the US protects); Colombia (I assume, in South America); and, Russia. 


Cyprus gets new bailout deal; no link; story is everywhere.