Monday, April 8, 2013

Another Solar Company Shuts Its Doors; Received Government Tax Credits

CNSNews is reporting:
A Pittsburgh, Pa. solar energy company has shut its doors four years after receiving nearly $10.2 million in tax credits from the Obama Administration as part of the American Reinvestment and Recovery Act.
Flabeg Solar U.S. Corp., a $30 million solar plant located near the Pittsburgh International Airport, opened its doors in 2009 and was said to provide 300 jobs. Now, just four years later, the plant has shut down and laid off more than 60 workers. In addition to this, 10 of its former employees have petitioned a federal judge for severance pay after they lost their jobs last month, according to PA Independent.
Robert Lampl, the attorney for Flabeg, said the company would probably seek Chapter 11 bankruptcy protection from the workers who are suing over their severance pay.
In addition to the $10 million received in stimulus funds, the state and Allegheny County added an additional $9 million in job creation grants, loans, and other financial aid to help launch the plant, bringing the total to $20 million in assistance to the company.
Add one more to the long list of failed solar companies provided taxpayer money. Money from failed solar companies would have paid for White House tours .... perhaps, indefinitely.

Wells Coming Off The Confidential List Tuesday;WPX, MRO, KOG Each With a Nice Well; Baytex Gets Better, It Seems; BR With A Gusher -- Another Mesa Verde Well;

Wells coming off the confidential list Tuesday:
  • 22118, 1,317, WPX/Dakota-3, Dora Smith 5-8HY, Van Hook, t2/13; cum 15K 2/13;
  • 22288, 1,466, MRO, Joanna Quale USA 21030H, Reunion Bay, t1/13; cum 38K 2/13;
  • 22781, 508, Baytex, Marjorie 6-7-161-97H 1XP, Whiteaker, t10/12; cum 41K 2/13;
  • 22782, 180, Baytex, Marjorie 31-30-162-97H 1PB, Whiteaker, t12/12; cum 14K 2/13;
  • 23142, 574, Baytex, Redfield 14-23 2H, Lone Tree Lake, t10/12; cum 43K 2/13;
  • 23294, 2,962, BR, Mesa Verde 34-22MBH, Clear Creek; 2-section spacing, t2/13; cum --
  • 23389, 1,630, KOG, P Bibler 155-99-15-31-7-16H, Stockyard Creek, t1/13; cum 27K 2/13;
  • 23719, 182, Samson Resources, Titan 3625-2TFH, Ambrose, t3/13; cum --
Did you notice anything unusual about this list today? Eight wells reported and none of them went to drill status. Pretty nice to see.

Abraxas Operational Update in the Williston Basin

Abraxas operational update for the Williston Basin. Press release linked here.

Williston Basin
Drilling continues on the Company’s Lillibridge East PAD with the laterals drilled and cased on the 3H and 4H.
The Company is currently spudding the lateral on the 2H, which will be followed by the 1H.
Abraxas owns a working interest of approximately 34% in the Lillibridge East PAD.
The Ravin 2H averaged 421 boepd (333 barrels of oil per day, 526 mcf of natural gas per day) on a 22/64” choke over its first 30 days of production. The Ravin 3H is currently shut in while the Company pulls the 4½” tie back string to install long term production equipment. Thirty day rates are expected shortly.
Before being shut in, the well was producing at rates significantly above the Company’s type curve. The completion of the Ravin 2H and 3H also had a positive impact on the previously drilled offsetting Ravin 1H, which averaged 630 boepd (534 barrels of oil per day, 577 mcf of natural gas per day) over its first seven days since returning to production. The Ravin 1H previously produced approximately 150 boepd before being shut in during the Ravin 2H and 3H completions. Abraxas owns a 49% working interest in the Ravin 1H, 2H and 3H.

Recycling Frack Water -- "Produced Water"


December 24, 2013: Rigzone is reporting (unfortunately, a long article that didn't say much) --
Water recycling represents a major opportunity for firms that provide equipment and services to the shale gas industry, according to Johan Pfeiffer, FMC Technologies Inc. vice president for Surface Technologies.
And the opportunity is greater outside of the United States in countries where the cost of water disposal is high due to geographical and regulatory pressures, Pfeiffer said in a presentation to Tudor, Pickering, Holt & Co.'s Global Shale Conference in London at the end of November.
Speaking about the shale gas industry from an oilfield services point of view, Pfeiffer noted: "The operators in North America are trying to get as much production as possible out of the well pad. In order to do this, they use increasing complexity in the well that provides an opportunity for service providers."
July 14, 2013: Halliburton's process for recycling frack water is called "H20Forward."
"If you really think about it," he continued, "as an industry we make more water than we make hydrocarbons. In fact, we make about 3-5 barrels of water per barrel of hydrocarbons." Some have told him that their primary job was to produce water, and oil was the byproduct.
In spite of a literal flood of produced water available, it historically has been injected, at certain cost, instead of being reused in the fracturing process because it was "too dirty." With unacceptable amounts of total dissolve solids (TDS) and total suspended solids (TSS) it would clog formations instead of placing proppants and opening formations to the flow of hydrocarbons.
Before Dale went to Halliburton he worked for a water treatment company that was asked by a client to develop a way to use city effluent in cooling towers. As Dale pondered the question, including costs to clean the water, then to dispose of those removed substances, it came to him: "When we looked at the economics, we realized that, what if we just change the chemistry that allows them to use that water so you don't have to take stuff out?" He referred to this as "impaired waters." The price point changed dramatically when those costs were figured.
Halliburton's product/service is called H2O Forward "that allows customers to take these waste streams and use them for the supply chain needs," Dale explained. He was quick to point out that this does include some water treatment, but due to changes in frac fluids, the water requires much less treatment than does water processed for use with conventional fluids.
Original Post 

I've posted once or twice about "produced water" -- recycled frack water. Don sent me the link to an article on the subject.

PrairieBizMagazine is reporting:
About 40 percent of the water used for fracking flows back to the well surface, but re-using that water is made difficult due to its high saline content, according to research conducted by the Energy & Environmental Research Center at the University of North Dakota. Therefore, water used for fracking is primarily fresh water, and flowback water is treated before being disposed of in deep injection wells.
There is more background at the link, but here is where it gets interesting:
In March, Halliburton announced that it has commercialized technology to recycle frack flowback water, which the company refers to as produced water, and that it has completed more than 60 wells and 280 fracturing stages in the Permian and Bakken formations using this approach. According to the company, the technology uses electricity to destabilize and coagulate contaminants in the water, which can then be removed, allowing for the remaining water to be re-used for fracking.
Walter Dale, Halliburton global strategic business manager – water management solutions, says the technology’s commercialization represents a “paradigm shift” in the need for fresh water for fracking operations. “This is no longer a technical issue; this is a function of logistics,” he said in a statement. “Customers can now use produced water on unconventional wells with no loss of well productivity at a net economic benefit while minimizing the overall environmental impact.”
Halliburton says its technology has been proven to save up to $400,000 per well in the Bakken.
I assume others will research the technology including Heckmann-->Nuveera Environmental Solutions.

But it looks like it is time for a new tag: produced_water.

By the way, the linked article at PrairieBiz referenced a Halliburton-electricity-based process. There is also a vortex-based process which will work nicely for cleaning oil from oil spills into flowing water, such as rivers.

Only Two (2) New Permits Today -- The Williston Basin, North Dakota

Active rigs: 185 (steady)

Only two (2) permits today --
  • Operators: XTO (2)
  • Fields: Garden
  • Comment:
Wells coming off confidential list over the weekend, and today, were reported earlier; see sidebar at the right.

Producing wells completed:
  • 21684, 548, Oasis, Mae 5603 43-19H, Bull Butte (Kalil Field), t2/13; cum --
  • 21248, 562, CLR, Tande 3-23h, Lindahl, t3/13; cum --
  • 21247, 345, CLR, Strid 2-26H, Lindahl, t3/13; cum --
  • 22735, 159, CLR, Glasoe 7-19H Dolphin, t3/13; cum --
Well name change:
  • 24904, conf, KOG, Smokey 3-17-20-14HA (was Smokey 3-17-20-13H3), this name change suggests a different sub-formation is being targeted; it could represent a decision based on geology and results of new wells, or it could be simply correcting an administrative error,

Open Bakken Acreage, Fort Berthold Reservation

Received by e-mail. I know nothing more than what was sent to me. Subsequent to posting this, Ms Harvey sent me an e-mail acknowledging that it had been posted.

Available: Open Bakken Acreage, Mandaree Area, Fort Berthold Reservation, Indian Allotted Lease
Location: T149N R93W, 5th PM, Section 28 S2NE4, Dunn County, ND, 80 acres
Term: 3 years
Lease Form: US DOI BIA Oil and Gas Mining Lease – Allotted Indian Lands Bonus
Royalty: Commensurate with oil production in area.
Producing Companies Only 
If interested, send email with term, bonus and royalty information to:

Roberta Harvey

The WTI/Bakken Premium Differential Plummets At Clearbrook, MN

Link here to Bloomberg.

That $2.00 premium for Bakken at Clearbrook, MN, did not last long.

Overnight it dropped 180%, down $2.25/bbl, now trading at a discount to WTI by a buck ($1.00).

Meanwhile the WTI/Brent spread is: $11. Is that correct? Did I do the arithmetic correctly? That's the lowest spread in some time.
  • Brent: $104
  • WTI: $93
For newbies, the premium/discount at Clearbrook, MN, is a relatively new metric for the MDW, but the delta seems to fluctuate above and below the zero line by about $2.00.

The Brent/WTI spread, historically, I understand has often been near parity, but in the past year or so, the delta between Brent and WTI has been quite significant due to the glut at Cushing (where WTI is priced). With efforts to reduce that glut, the delta has been decreasing. Today it is $11, half what it was just a few months ago.

February 15, 2013: 
At Bloomberg energy, Brent - $117; WTI - $95. Spread: $22.


A Note To The Granddaughters

I'll be leaving San Antonio tomorrow to return to the Boston area to see my granddaughters for a short period of time. 

I am really looking forward to the visit. Their dad bought them a great electronic circuit education set (Snap Circuits by Elenco are incredible; one can keep adding sets and more experiments; highly recommended as a gift from grandparents to grandchildren for as young as pre-schoolers). They love watching the fan spin and fly; the lights flicker; the alarms and music. We never seem to have enough time. By the way, those Snap Circuits: think Lego sets with electricity running between the bricks -- in fact, an interesting entrepreneurial idea might be to "electrify" Lego town. But I digress.

Oh, one more comment. The Snap Circuits taught me how to wire LEDs and why one needs a resistor between the power source and the LED. I never knew that. 

The reason I am excited is I am re-reading David Bodanis' E= MC2: A Briography of the World's Most Famous Equation (Kindle version available). I don't recall much of the book the first time I read it some years ago (c. 2000), when it received "A Library Journal Best Book of the Year" award.

I'm reading it much more slowly this time, and getting much more out of it.

I never thought about this years ago when I had the opportunity to fly with the USAF at Mach 1. The space shuttle, after full thrust, can surpass Mach 20. The asteroid that hit Mexico and killed off all the dinosaurs (poetic license) impacted at Mach 70 (the dinosaurs may have died out because after losing their hearing, they could not hear predators' footsteps).

The speed of light? Mach 900,000.

It will be fun to share some of the concepts with the almost-ten-year-old. The interesting thing is this: when I talk to the older granddaughter, the younger granddaughter (who will turn seven this summer) listens intently and asks relevant questions. She is an artist at heart -- her grandmother led her down that path -- and she, the young granddaughter -- loves drawing electric circuits, copying the circuits we make from the Elenco sets.

Electricity was never my strong suit in high school physics, and I avoided it in college, but with the help of her engineer dad who has a great ability to explain things even I can understand, we are learning, and for me, re-learning electricity. (Memo to self: work on run-on sentences.)

One of the most basic concept was why electric circuits are drawn with the arrow pointed in one direction and the electrons actually flowing in the opposite direction. At least I think I have that right. Yes, by convention, again wiki makes it simple:
A flow of positive charges gives the same electric current, and has the same effect in a circuit, as an equal flow of negative charges in the opposite direction. Since current can be the flow of either positive or negative charges, or both, a convention for the direction of current which is independent of the type of charge carriers is needed. The direction of conventional current is defined arbitrarily to be the direction of the flow of positive charges.
In metals, which make up the wires and other conductors in most electrical circuits, the positive charges are immobile, and the charge carriers are electrons. Because the electron carries negative charge, the electron motion in a metal conductor is in the direction opposite to that of conventional (or electric) current.
Anyway, enough of this.

The purpose of this note to the granddaughters is I am excited to see them tomorrow.

I will be taking public transportation from Logan to the suburb. The bus / subway / but will be significantly slower than Mach 1.

The Go-Go Days of Wind Energy Are So Over

Who was the biggest name in wind energy during the go-go days of renewable energy? If GE was not number one, I'm not sure who was (Siemens, overseas, was bigger, I believe; but in the US, it was GE).

Any news lately about GE and wind? Thought not.

Any news where GE is headed?

Back on February 14, 2011, MDW had a huge story about GE diversifying into oil.

Now today it is being reported that GE will buy an oil service company, Lufkin, paying a $25 premium for this $60 company. There are two story lines here.

First, this tells me that the oil industry revolution is just beginning. A company doesn't pay this kind of premium without expecting a like return.

Don alerted me to the second story line which I completely missed: this is simply another sign that the go-go days of wind energy are over. It should be noted that the CEO of GE, Jeff Immelt, is Mr Obama's economic adviser.

If there are a dozen nails in a coffin, the Merkel/German/wind story yesterday was worth about seven (7) nails. The fact that GE no longer talks about wind but pays a $24 premium for a $60 oil service company is worth another two or nails in that wind coffin.

By the way, a bit of trivia. This is not an investment site, but I pride myself in posting a lot of ideas for investors. I mentioned Lufkin some months ago.  This reminds me of the folks who made money in gold country during the gold rush by selling jeans and shovels.


Wind tower collapse

I couldn't decide between a video of dancing at the Hollywood Whiskey A Go-Go or this wind tower video. Both seemed catastrophic so I went with this one. For a transcription/translation of the audio, see below.


I sent this e-mail to Don earlier. Some relevance to GE paying a $24 premium for a $60 oil-service stock.
GE paying this much of a premium for an oil services company tells me there is still a lot of upside in the oil sector. I was working on a post last night for today discussing Kaiser-Francis, American Eagle (Dick Findley), Harold Hamm, oil reserves in the Bakken, and oil reserves in Saudi's largest oil field, but I couldn't finish it/post it because I got well beyond my comfort zone.

The thesis is that day in / day out, the oil men (like Harold Hamm and Dick Findley) know how much oil is in the Bakken, but the average investor and the average North Dakotan cannot comprehend the magnitude of the Bakken and only when they look back ten years from now they will realize it was all obvious.

A transcription/translation of the Danish audio from the above video:
  • First engineer, supervisor, inside ops center: Okay, slow her down.
  • Second engineer, on site, very loud voice: Oh, my goodness. Not good.
  • Third engineer, inside ops center, monitoring oscilloscope: That did not sound good. Is it stopping?
  • Long pause.
  • Third engineer, repeating: Is it coming to a stop?
  • Second engineer: Yes.
  • First engineer, after a very, very long pause, almost inaudible: time for lunch.
Disclaimer: knowing no Danish, I cannot guarantee the accuracy of the translation.

Monday Morning Links: Energy Sports Drinkers -- Want Carnitine With That?

Short note: it is announced that Britain's Iron Lady, Margaret Thatcher, at age 87, died of a stroke this morning. There is no truth to the rumor that her last words were, "Jeeves, tell me again how much money we had in Cyprus." If anything, it was, "Jarvis, tell me again how much money we had in Cyprus." Seriously, rest in peace.


Up to a foot of snow in Denver

Rapid City, SD, weather forecast:
Snow will continue to pile up all day Tuesday.  Accumulations look to be above 12 inches by Tuesday afternoon, pushing 20 inches by Tuesday night.  The models were showing snowfall rates of 0.5-1.0" every hour.  By the time it's all done Wednesday morning, the models are showing almost 26 inches of snow.  Temps will rebound later in the week with more moisture expected in the form of rain.  We need all of the moisture we can get at this point.
Yes, it's spring.  And global warming is just another historical oddity, ready for the trash bin of history.

Wells coming off the confidential list over the weekend, and Monday have been posted.

Active rigs:  186 (steady)

RBN Energy: due to limited options for Western Canadian crude, it sells at a discount for as much as $38/bbl; that will change once the pipelines are built.
Last week  we reviewed limited market options for Western Canadian heavy bitumen crude producers. The US Gulf Coast is the only viable market with significant refinery capacity to process these crudes. At the moment there is limited transport infrastructure in place to get them there. As a result prices are being heavily discounted in the over supplied Midwest market. The Canadian benchmark Western Canadian Select (WCS) price traded this January at a discount of more than $38/Bbl to the US benchmark West Texas Intermediate (WTI). Today we examine how much prices are likely to improve once the pipelines are built.: due to limited options for Canadian crude, Western Canadian heavy crude sells at a heavy discount, as much as $38/bbl, but that will change once the pipelines are built.
 WSJ Links

Section R (Journal Report): might read later, doubt it

Section C (Money & Investing):
Section B (Marketplace):
Not long ago Chesapeake Energy Corp. touted its stake in hydraulic-fracturing company FTS International as a $2 billion plum. Chesapeake planned to sell the stake to help shore up its balance sheet amid slumping natural-gas prices.
Lately, however, FTS, carrying a heavy debt load, has seen its valuation plummet as gas drilling slowed, turning the company into a drag on the balance sheets of Chesapeake and FTS's other owners. Last year, they had to pony up $360 million to keep FTS from tripping conditions tied to debt that helped fund its 2011 buyout by a group of private-equity investors.
Now, after two years of telling investors it was looking to cash in its FTS investment, Chesapeake has no immediate plans to market the stake, according to a person familiar with the company's plans.
Chesapeake's acting chief executive, Steven Dixon, told investors last week the Oklahoma City company is seeking to reach its divestitures goal of up to $7 billion in asset sales by selling portions of oil fields that it doesn't have the time or money to explore. So far this year Chesapeake, the second-biggest U.S. natural-gas producer, has reached deals for assets worth $1.5 billion. The person familiar with the company's plans says the FTS investment has been profitable for Chesapeake.
Section A:
The unexpectedly large number of American workers who piled into the Social Security Administration's disability program during the recession and its aftermath threatens to cost the economy tens of billions a year in lost wages and diminished tax revenues.
Signs of the problem surfaced Friday, in a dismal jobs report that showed U.S. labor force participation rates falling last month to the lowest levels since 1979, the wrong direction for an economy that instead needs new legions of working men and women to drive growth and sustain a baby boomer generation headed to retirement.
Michael Feroli, chief U.S. economist for J.P. Morgan, estimates that since the recession, the worker flight to the Social Security Disability Insurance program accounts for as much as a quarter of the puzzling drop in participation rates, a labor exodus with far-reaching economic consequences.
I've talked about this before: "Have folks wondered why disability rolls (social security) are increasing? I have opined that it is for two reasons: a) chronically-unemployed realize they will never be employed again; that leads to stress-related illnesses --> disability; and, b) better educated chronically-unemployed; they've learned how to apply for benefits." -- original post here, back on December 10, 2012. 
Doctors have long assumed that saturated fat and cholesterol in red meat are what raise the risk of heart disease. But a study in the journal Nature Medicine fingers another culprit: carnitine, a compound abundant in red meat that also is sold as a dietary supplement and found in some energy drinks.
Carnitine typically helps the body transport fatty acids into cells to be used as energy. But researchers at the Cleveland Clinic found that in both humans and mice, certain bacteria in the digestive tract convert carnitine to another metabolite, called TMAO, that promotes atherosclerosis, or a thickening of the arteries.  
I always thought "the cholesterol and saturated fat" story was too simplistic. This explanation rings true:
Doctors have long assumed that saturated fat and cholesterol in red meat are what raise the risk of heart disease. But a study in the journal Nature Medicine fingers another culprit: carnitine, a compound abundant in red meat that also is sold as a dietary supplement and found in some energy drinks.
Carnitine typically helps the body transport fatty acids into cells to be used as energy. But researchers at the Cleveland Clinic found that in both humans and mice, certain bacteria in the digestive tract convert carnitine to another metabolite, called TMAO, that promotes atherosclerosis, or a thickening of the arteries. 
Because after that, it gets really complicated. Once the abbreviation, in this case TMAO, is longer than the most commonly used English words, you know it's going to be complicated. 
  • Why does this not surprise me: many in US illegally overstayed their visas. Those who entered legitimately account for 40% of the 11 million total, complicating attempts to craft new legislation. Sort of like Tim Geithner just forgetting to pay his taxes. It happens.
  • Chicago mayor's pension conundrum: this will be a big story before the year is up. Trust me.  The city's pension system will sink the city. Union members are already galvanizing. The outcome: a Cyrpus/GM settlement: unions maintain their pensions; unions own the city; bondholders lose their investments.
  • Oh, this is good. Portugal seeks new cuts to stay on course; court rules austerity measures were unconstitutional or illegal or not gonna happen or something. Folks watching CNBC this week will be subject to hours of talk about the PIIGS and their roving correspondent will be sent to Lisbon. Where she might meet up with Matt Lauer.
  • Op-ed: reflections of a medical ex-practitioner -- the glow of the personal relationship with patients is being extinguished. A non-issue under ObamaCare; folks will be working too hard just trying to get an appointment, much less worrying about a cozy relationship.