Thursday, March 28, 2013

Flashback: Tight Oil Conference, One Year Ago

Sixteenth Annual Washington Energy Policy Conference
Center for Strategic and International Studies
April, 2012

At the link there are eleven (11) presentations to give you something to do over the weekend. Enjoy.

Again, note -- from one year ago.


... 'cause you're wanted by the police, and my wife thinks you're dead ....

My Wife Thinks You're Dead, Junior Brown

Probably the best audio of any version out there.

Oil And Gas Well Permit Statistical Update

March 28, 2013 (in 2012, there were 29 days in February):
  • Permits to date: 620
  • Projected for 2013: 2,601
  • Projected for 2012 same time one year ago: 1,989
  • Permits issued in 2012: 2,521 with 30 or so ultimately canceled.  
Permit stats are tracked here.

... I'm just doing my job, the hours are long, and my pay is low .... but I'll do my best to keep you driving slow ...

Highway Patrol, Junior Brown

Headlines From The Williston Wire

Headlines only; no links; it is easy to subscribe to the Williston Wire:
  • Bakken emerges as contender for US oil drilling crown (previously posted on MDW)
  • MDU breaks ground on a new office (5,000 square feet), new warehouse (20,000 sq ft) in Williston; located at 121 8th Avenue West; that looks like it's in the same area as their present location in Williston
  • Becoming a Bakken believer; Q&A with President, Oppidan Investment Company
  • Savage, the supply chain solutions company, receives award for terminal of the year award; Epping, ND, terminal hub
  • Menards breaks ground in Dickinson (Menards and MDU/Calumet break gground same week in Dickinson; gonna be a lot of dust)
  • Construction on new Minot airport terminal could begin in July (2013)
  • Wow: still a housing shortage in North Dakota -- not just the oil patch
  • And a lot of feel-good stories

I think there's a reason Portland's slogan is "Keep Portland weird."

Portland, Oregon, Loretta Lynn
The first time I heard this I thought the intro was too long; after I heard it a second time, the intro wasn't long enough. As my daughter would text, LOL.

But, from YouTube regarding the album from which this song came from:
Van Lear Rose is an award winning album by Loretta Lynn, released in 2004 and produced by Jack White of the rock band The White Stripes. The album was initially intended as a musical experiment, blending the styles of country singer-songwriter Lynn and producer White, who wrote one track, sings a duet with Lynn, and performs on the whole album as a musician. At the time of the album's release, Lynn was 70 and White was 28.

The title refers to Lynn's origins as the daughter of a miner working the Van Lear coal mines. The album peaked at number two on the Billboard Top Country Albums chart and at number 24 on the Billboard 200, the most successful crossover music album of Lynn's 45-year career.
The album was critically acclaimed by Rolling Stone.

Twenty-three (23) New Permits -- The Williston Basin, North Dakota; A New Operator in North Dakota

There is a lot of activity going on in the Williston Basin: rig count rising; huge number of new permits; operator transfer of wells involving six operators; nice IPs for producing wells. Huge stories everywhere.

Active rigs: 188 (very nice)

Twenty-three new permits --
  • Operators: Hess (8), XTO (4), Oasis (4), QEP (3), KOG (2), Welter Consulting, Sinclair
  • Fields: Twin Buttes (Dunn), Robinson Lake (Mountrail), Murphy Creek (Dunn), North Tobacco Garden (McKenzie), Little Knife (Dunn), Grail (McKenzie), Cottonwood (Mountrail),
  • Comments: Welter Consulting has a permit in Mountrail; this is the second permit for Welter Consulting in North Dakota; their first well #22690, Patterson 30-14, Greenbush field, 30-159-86 was dry; this second one, Estvold 33-16 (#25291) is in same general area, 33-152-89;the Greenbush field is about 30 miles northwest of Minot; there is one active well in Greenbush, a vertical Madison well that was spud in 1987, and has produced 201,402 bbls to date; producing about 300 bbls/ month now;
Wells coming off the confidential list were posted earlier; see sidebar at the right.

Producing wells completed:
  • 23135, 1,844, BR, CCU Powell 11-29MBH, Corral Creek, unitized spacing, t2/13; cum --
  • 23440, 2,030, XTO, Thompson 21-11SH, Charlson, t2/13; cum 11;
Operator transfers:
  • Thirteen wells from Petro-Hunt to G3 Operating
  • Five wells from Samson Resources to Bakken Hunter
  • Two wells from Helis Oil to QEP Energy

Rated X, Loretta Lynn

Lotta truth in this song.

North Dakota Per Capita Income: From 38th to 6th In Six Years

Carpe Diem is reporting:
Before the oil boom started in the Bakken region of western North Dakota, the Peace Garden State regularly ranked No. 38 for per capita income, placing it in the poorest one-third of America’s states. But then, as the Bakken oil boom energized the state’s economy with energy-related jobs, income, and prosperity starting in 2007, North Dakota has moved from No. 38 in 2006 for per-capita income to No. 6 last year according to data released today by the BEA. 
Thanks to the shale revolution, North Dakota has gone from the bottom one-third of states for per-capita income to just one place shy of ranking in the top 10% of America’s highest income states last year.
And because the top five highest states for per-capita income (Connecticut, Massachusetts, New Jersey, New York, and Maryland) are concentrated geographically in one part of the country, North Dakota now has the highest per capita personal income of any state in the country outside of the Northeast.
That really is quite amazing: the top five -- Connecticut, Massachusetts, New Jersey, New York, and Maryland (federal government) and then North Dakota.

Then throw in cost of living and taxes, and my hunch is North Dakota is #1 in per capita disposable income.

Note to the Granddaughters

I wonder if these three movies might not be the best "romantic" movies of all time: Casablanca, Doctor Zhivago, and Moulin Rouge.

The women in Doctor Zhivago are stunning, but Ingrid Bergman is even more so. And then there's Nicole Kidman. I never realized how beautiful Nicole was until I watched Moulin Rouge again. Nicole is absolutely incredible, and a most incredible actress.

I have not watched Doctor Zhivago with commentary, but have watched both Moulin Rouge and Casablanca with commentary, the latter too many times to count.

I think I've watched Doctor Zhivago only once, from start to finish, but I have watched it in bits and pieces several times. I am unable to watch Doctor Zhivago any more; it is simply too intense. I doubt I will even watch bits and pieces of it any more. It is just too intense for me.

On the other hand, I've watched Casablanca dozens of times and will watch it at least twice a year until I die, I suppose.

In between those extremes, I will probably watch Moulin Rouge once every three or four years.

Funny How Things Work Out -- March 28, 2013

President Bush was worried that the Saddam family dynasty would control the world's largest oil exporting economy. Iraq, #1. Russia, #2. Saudi Arabia, maybe #3 - the article doesn't say.

Not to worry. The Chinese will control it. The US is risk-averse, the writer says.

Funny how things work out.

And I see Dick Cheney is still around ... at least in the media stories:
It’s a different story, though, for the U.S. oil field services and engineering companies that have established dominant positions in Iraq. That includes Haliburton, the company that Iraq war booster Dick Cheney led before he became vice president.
I don't think mainstream media can write about fracking without using the word "controversial" and I don't think mainstream media can write about HAL without mentioning Dick Cheney. For me, it's hard for me to write about HEL without mentioning Barack Obama. But I digress.

Read more here:

Baytex Sets Production Records

Without a subscription, one cannot read more of this story at Petroleum News, but my hunch is one can fill in the details pretty easily:
  • Baytex announces record production.
  • After selling its non-operated North Dakota assets to Bakken Hunter, Baytex still managed to set a 2012 oil production record.
From the company's press release:
  • Produced record quarterly production of 55,046 boe/d (87% oil and natural gas liquids in 4Q12, an increase of 4% over 4Q11 and 1% over 3Q12, and record annual production of 53,986 boe/d (87% oil and NGL), an increase of 8% over 2011
  • "This year also saw the successful execution of several strategic objectives, including the acquisition of 46 sections of undeveloped oil sands leases and an approved SAGD project at Cold Lake, the expansion of the land base at Peace River and the disposition of non-operated assets in North Dakota at attractive metrics."

Wow! This Is Cool -- From Investor's Business Daily -- North Dakota Is #1 in "Freedom." New York Least Free "By Far," Followed by California. Roger Williams' Rhode Island Makes The Five Least Free List

Here's the study referenced in IBD.

From Investor's Business Daily:
The "Freedom in the 50 States" study measured economic and personal freedom using a wide range of criteria, including tax rates, government spending and debt, regulatory burdens, and state laws covering land use, union organizing, gun control, education choice and more.
The freest state overall was North Dakota, followed by South Dakota, Tennessee, New Hampshire and Oklahoma. The least free state by far was New York, followed by California, New Jersey, Hawaii and Rhode Island.
Best news: North Dakota beat out Montana, which didn't even get into the top five. I think it has to do with Montana's strict speed limit after dark. A freeway speed limit of 85 for Texas did not help push that state into the top five, however.

But look at the other criteria: gun control and education choice.

The most interesting two words in the story? "By far."

And more:
The data also show that blue states have generally become less free over the past decade, while red states have tended to gain additional levels of freedom.
The states with the biggest declines in freedom were Wyoming, Illinois, New Jersey, New York and Kansas.
Those with the biggest gains were Oklahoma, North Dakota, Idaho, Utah and New Mexico.
And contrary to conventional wisdom, the researchers found that conservative states are just as likely as liberal ones to score well on measures of personal freedom, which looked at laws covering marijuana use, gambling, marriage rights, alcohol and tobacco use, gun control, victimless crimes and the like.
"Personal freedom does not relate straightforwardly to the left-right spectrum at all," the study noted.
Wyoming? Who wudda thought?

They Have Got To Be Kidding: Here It Comes Again: Initial Claims Increase and More Spin; Last Week's Figures Revised Upward An Astonishing 5,000. Economy Not Taking a Step Backward -- Reuters

This is the headline: jobless claims rise; economy continues to heal. Oh, really? GDP growth at 0.4% and ObamaCare, which will knock off at least half a percent of GDP growth if not more, has not even kicked in yet.

Let's see how they spin this story this time:
The number of Americans filing new claims for unemployment benefits rose more than expected last week, but probably not enough to suggest the labor market recovery was taking a step back.
Initial claims for state unemployment benefits increased 16,000 to a seasonally adjusted 357,000, the Labor Department said on Thursday. Still, they remained in the middle of their range for this year.
The prior week's claims figure was revised to show 5,000 more applications than previously reported. Economists polled by Reuters had expected first-time applications last week to rise to 340,000.
 Okay, the data points without the spin:
  • Reuters expected the number to rise to 340,000.
  • The number actually rose to 357,000.
  • Initial claims rose 16,000.
  • Prior week's claims revised upward by 5,000. 
And just last week I got a nice note from a reader who loved the blog, but disliked my politics. I'm waiting for him/her to say that the job numbers "could be worse." Yes, they could. My least favorite politician, Colin Powell wears a button that says "it could be worse." In a cartoon.

For those who have not seen it, this is a must read: Mortimer Zuckerman: Those Jobless Numbers Are Even Worse Than They Look. Mr. Zuckerman is chairman and editor in chief of U.S. News & World Report.
The alarming numbers proliferate the deeper you look: 40.7% of the people counted as unemployed have been out of work for 27 weeks or more—that's 5.2 million "long-term" unemployed. Fewer Americans are at work today than in April 2000, even though the population since then has grown by 31 million.
We are still almost five million payrolls shy of where we were at the end of 2007, when the recession began. Think about that when you hear the Obama administration's talk of an economic recovery.
I think the Obama presidency will go down in history as the worse presidency since 1951 with regard to the economy. Not so much due to the fact how bad it's been, but due more to the fact that the president is unable to acknowledge it, and take steps to correct it.

Even Germany's unemployment rate, at 7.3%, is now better than that of the US; and Europe is in a recession, or at least that's what I've been told.

But this is great news for investors: there is no way the Fed will ease. Ben knew that when he testified last week or whenever it was. The gap between the "haves" and the "have-nots" will keep increasing. Something from which Ms Pelosi and Mr Reid benefit on many, many levels.

Disclaimer: this is not an investment site. Do not make any investment decisions based on what you read here, or what you think you read here. Not only is it not an investment site, the webmaster has no professional background nor formal training in investing (although he did take the Forbes course on investing back in 1978 when he was stationed at Grand Forks AFB where the winters are long, and the winters are cold).

GDP Growth: 0.4%. Mainstream Media Manages To Get "Faster" in The Lede


At least the economy didn't contract.

This is not good news: the economy expands at 0.4 percent. Is that even reproducible? When is a recession not a recession? A recession is defined as two successive quarters of contraction. The previous quarter: 0.1 percent. This quarter, 0.4 percent. [And if folks recall, the previous quarter's figure was actually "negative"; only with revision did it get to 0.1 percent.]

Okay. So how will the mainstream media spin this story? I suppose they might say the economy grew four times faster than the last reading (of 0.1 percent). So let's check:
The U.S. economy grew at a slightly faster but still anemic rate at the end of last year. However, there is hope that growth accelerated in early 2013 despite higher taxes and cuts in government spending.
The economy grew at an annual rate of 0.4 percent in the October-December quarter, the Commerce Department said Thursday. That was slightly better than the previous estimate of 0.1 percent growth. The revision reflected stronger business investment and export sales.
Analysts think the economy is growing at a rate of around 2.5 percent in the current January-March quarter, which ends this week.
Incredible. The AP was able to get "faster" into the very first sentence, as in "the economy grew faster." Wow.  I guess even the AP knew that saying the economy picked up steam, growing four times faster than the previous quarter would have been a headline too far.

And when one reads the entire article, one doesn't know if this is an editorial piece written by the White House or if it's supposed to be a news story. It certainly is not a news story in the strict sense. It's an editorial. Period. Dot.

No wonder the president went on vacation.

Update on Denbury Acquisition in the Williston Basin; Acquired From COP

Note: this deal and other North Dakota details are archived at the sidebar at the right.

Don alerted me to this press release, an update of a previously announced deal:
Denbury Resources Inc. today announced the closing of its acquisition of producing property interests in the Cedar Creek Anticline of Montana and North Dakota from a wholly-owned subsidiary of ConocoPhillips (BR?) for cash consideration of $1.05 billion before purchase price adjustments. 
The acquired assets include additional interests in certain of Denbury's existing operated fields in CCA along with operating interests in other CCA fields. The company estimates the final adjusted purchase price will be closer to $1.0 billion after adjustment for the net cash flows from the assets between the January 1, 2013 effective date and the closing date.
The purchase was part of a like-kind exchange transaction that was funded with a portion of the cash received from the Company's Bakken sale and asset exchange with ExxonMobil completed in December 2012.
As previously announced, Denbury estimates the acquired properties will contribute approximately 7,700 barrels of oil equivalent per day ("BOE/d") to its full-year 2013 average daily production, which reflects estimated average daily production of about 10,200 BOE/d for the remainder of the year.

Thursday Morning Links

RBN Energy: crude by rail.
Today we complete our survey of crude loading terminals.
The first episode in this series provides an introduction and overview of the “Year of the Tank Car” (see Crude Loves Rocking Rail). We describe the rapid growth in US crude oil production that put pressure on pipeline logistics and made rail a viable alternative for moving crude to market. The second installment (see Crude Loves Rocking Rail – The Bakken Terminals) began our survey of rail loading terminals with a map and a complete list of facilities in North Dakota.  The follow up episodes covered EOG, Hess and Inergy, Plains, Enbridge and Global, Bakken Oil Express, Dakota Plains, BakkenLink and Savage and Bakken terminals north of the Canadian border in A Plethora of Terminals in the Williston Basin. Last but not least we discussed the development of rail terminals loading heavy oil sands bitumen crude in Western Canada in two episodes Heat It! (Bitumen Economics Part 1) and Part 2.
WSJ Links

I assume one needs a paid subscription for this story; it's Ben Winkley's "morning jolt of news." Today its headline: Energy Journal: Shaking All Over. I had not seen this "blog" before because I never read the on-line edition. Now that I am traveling, I am doing what I never do, reading the on-line edition. And it's quite good, I must say.  This much I will "cut and paste":
Thousands of Dutch residents have filed property-damage claims against the country’s largest natural-gas producer, after government studies linked a string of recent earthquakes to production. 
It is important to note at this stage that – unlike a spate of tremors in England – these Dutch quakes aren’t being linked to fracking, the often-controversial method of extracting shale gas. Although fracking has its own problems, battling accusations of water pollution, the affected Dutch region is home to one of the world’s largest conventional gas fields, which has been pumping for nearly 50 years. Now the porous reservoir has begun to deflate, building tension along a fault zone.
The only way to stop the quakes would be to shut down production. Not a chance in an era of economic struggles, the government says.
Section D (Personal Journal):
Section C (Money & Investing):
  • The other day I sent a one-line note to an investor friend: what if the current run-up in the market is due almost entirely to migration of money in bond funds to equity funds? The WSJ addresses that issue today: funds reshape investment mold. I didn't read. But I can think of several story lines, one of which I doubt the linked story mentions.
A combination of better fuel efficiency and switching consumption from oil to natural gas is taking hold in the U.S. and globally, according to analysts at Citigroup. If they are right, the mainstream belief that oil demand will rise inexorably as emerging markets like China continue developing could be misplaced. In fact, oil-demand growth could plateau by the end of this decade under this scenario, potentially reducing oil prices and hitting major producing nations and companies.
Mr. Bush is partly responsible. Legislation he signed in 2007 to reduce gasoline consumption in vehicles has taken effect, and the European Union, Japan and Canada all have similar measures in place. If oil demand grew at 1.2% a year to 2020—in line with its rate over the past decade—demand would reach 97.9 million barrels a day from 89 million in 2012. But that 2020 projection could instead be 94.8 million, thanks to such fuel-efficiency measures, Citi estimates.
Meanwhile, the U.S. shale revolution is encouraging major oil-consuming industries, from trucking to shipping to petrochemicals, to switch to much-cheaper gas. Even in countries where the price gap between oil and gas isn't so wide, gas is being promoting to help cut carbon emissions. The net effect could reduce oil demand by another 3.6 million barrels a day, bringing Citi's 2020 estimate to 91.2 million barrels by 2020.
Section B (Marketplace):
Suncor Energy Inc., Canada's largest oil-sands producer, said it and partner Total won't proceed with a plan to build a multibillion-dollar facility designed to refine heavy bitumen into a light, low-sulfur synthetic crude.
Suncor has warned for months that it was reviewing the project amid a glut of low-sulfur crude in the U.S. New drilling and extraction techniques there—in particular, in North Dakota—have enabled producers to extract large volumes of light crude across the U.S. That is competing with the synthetic crude that Suncor and other Canadian producers have been processing and selling to U.S. refineries.
Amid the U.S. oil boom, Suncor executives said it may not make sense to spend money on a new upgrading facility, which was to be located in Alberta. Instead, Suncor said it could be more economical to simply send unprocessed heavy bitumen to refiners equipped to handle it.
  • Glad to see. US Supreme Court sides with Comcast: high court rules in favor of Comcast. I don't care about the specific case; the specific complaint may have merit. What I don't like are class action suits: a law firms reaps millions (billions) and the plaintiffs get a $1.00 coupon off next purchase from company that was successfully sued.
Mitsubishi Motors Corp.  reported two accidents involving batteries manufactured by its venture with GS Yuasa Corp., the maker of lithium-ion batteries for use in Boeing Co.'s grounded 787 Dreamliner.
The Japanese auto maker said Wednesday that a lithium-ion battery pack caught fire while charging during a test inspection at the company's plant in Okayama Prefecture in western Japan last week. The battery pack is used in Mitsubishi's  i-MiEV model, the world's first mass-produced electric car.
  • Can the tablet please take your order. When the iPad came out I suggested the uses would be endless;. a lot of people wrote to tell me that was nonsense. I think folks will be amazed where the iPad shows up.
Carla Hesseltine is considering buying a few tablet devices for her bakery so customers can place orders for her signature M&M cupcakes on their own, straight from the counter.
The reason: She fears the $7.25 an hour that she currently pays her 10 customer-service employees, mostly college students, could rise, perhaps to $9 an hour under a pledge by President Barack Obama earlier this month.
In order for her Just Cupcakes LLC to remain profitable in the face of higher expected labor costs, Ms. Hesseltine believes the customer-ordering process "would have to be more automated" at the Virginia Beach, Va., chain, which has two strip-mall locations as well as a food van. Thus, she could eliminate the 10 workers who currently ask customers what they would like to eat. 
I'm waiting for McDonald's to do the same. I don't know if folks have ever looked at a McDonald's cash register, but if an 8th grade graduate from a foreign country who does not speak English can operate a cash register, I assume the average American can do the same, using an iPad.
Section A (Front Section):
As energy companies have turned to trains to move crude from booming North American oil fields not adequately served by pipelines, such railroad-related incidents have risen sharply in the past few years, according to federal data analyzed by The Wall Street Journal.
From 2010 to 2012, 112 oil spills were reported from U.S. rail tanker cars, up from just 10 in the previous three years, according to the Pipeline and Hazardous Materials Safety Administration, a part of the Department of Transportation that tracks most releases of hazardous materials. But the amount of crude leaked in spills has declined since 2008, when a big accident in Oklahoma released more than 1,900 barrels. On August 22, 2008, a BNSF Railway Co. train carrying crude derailed northeast of Oklahoma City; five tanker cars leaked oil that caught fire, leading to an evacuation of nearby residents.
Questions about the safest way to transport crude are bubbling up as President Barack Obama considers whether to approve an expansion of the Keystone pipeline, which would move crude from the oil sands of Alberta, Canada, to the U.S. Gulf Coast. Pipelines carry much more crude than trains and have fewer leaks per mile, though failures can be serious. In 2010, for example, an Exxon Mobil Corp. pipeline spilled 1,500 barrels of oil into Montana's Yellowstone River in an hour. The possibility of oil spills from derailments is only beginning to be on the public's radar.
Most of the recent rail spills occurred at refineries or other places where the oil is transferred to storage tanks or pipelines, and involved just fractions of barrels that were noticed by inspectors who look for leaks. But at almost 300 barrels, the 2010-2012 total of crude spilled is almost eight times higher than the amount that leaked in 2002-2007. Energy companies typically foot the cleanup bills.
The railroad industry says the amount of oil spilled is tiny compared to the volume of oil transported by the U.S. rail system, which has surged from 9,500 carloads in 2008, the year widely seen as the beginning of the current oil boom, to 233,811 carloads in 2012, according to the Association of American Railroads. 
In the big scheme of things, I'm not worried about railroad mishaps. Nor am I worried about pipeline spills. 
  • Here it comes: huge cost overruns repairing the San Francisco Bay Bridge. Dog-bites-man story. No link.
A policy change that expanded bison hunting in Montana has led to a surge in the number of animals killed, while fueling anger over how authorities are attempting to control the size of the country's largest bison herd.
Hunters—mainly American Indians—have killed some 250 bison since a group of federal and state agencies and tribal officials in October implemented a policy that enlarged the hunting and grazing area outside the animals' main habitat in Yellowstone National Park. That compares to 29 bison killed by hunters in the 2011 season, and a previous high in recent decades of 194 in 2010.
Some tribal hunting of the Yellowstone bison herd ends Sunday, while the state-sanctioned hunt ended in February.
Conservation efforts that began in 2005 had enabled the Yellowstone herd to grow to about 4,000 bison from roughly 2,600 two decades earlier.
The giant animals had increasingly eaten up vegetation in the park, occasionally feasting on the lawns of local residents and even the local football field in Gardiner, Mont., a town inside Yellowstone. Park officials had been trying to keep the size of the herd in check by occasionally culling diseased animals, but that had angered Indians, who wanted to hunt them.
Among the 10 fastest-growing metro areas last year were Raleigh, Austin, Las Vegas, Orlando, Charlotte, Phoenix, Houston, San Antonio and Dallas. All of these are in low-tax, business-friendly red states. Blue-state areas such as Cleveland, Detroit, Buffalo, Providence and Rochester were among the biggest population losers.
This migration isn't accidental. Workers and business owners are responding to clear economic incentives. Red states in the Southeast and Sunbelt are following the Reagan model by reducing tax rates and easing regulations.
They also offer right-to-work laws as an enticement for businesses to come and set up shop. Meanwhile, the blue states of the Northeast, joined by California, Minnesota and Illinois, are implementing the Obama model of raising taxes on businesses and the wealthy to fund government "investments" and union power.