Friday, April 12, 2013

Jonathan Winters Dies At Age 87

I never cared much for him, but he was someone with whom I grew up.

WPX Has a Big Well in the Niobrara

This was probably posted, linked, reported earlier; I can't remember, but it's a great update on the Niobrara. With regard to the WPX well:
In a special press release issued earlier this week, WPX Energy provided an update on what the company believes to be its "major discovery" in the Niobrara (Lower Mancos) Shale in the Piceance Basin. WPX announced that its first horizontal test well located in Garfield County produced over 1 Bcf of natural gas in just over 100 days of operation. The result is truly impressive and is similar to production rates observed in sweet spot locations of the Haynesville. Most importantly, the well is continuing to produce at a very strong rate after 100 days, which re-confirms significant recovery potential.
The discovery well, which was made public in January, initially produced 16 MMcf/d at a very high flowing pressure of 7,300 psi. Subsequently, the well was "choked back substantially" and registered an average production rate of 12 MMcf/d during its first 30 days, 10.6 MMcf/d during its first 60-days, and almost 10 MMcf/d during its first 90 days. The company commented last month that the well may have EUR in the 7-10 Bcf range. Given the continued strong flow rate, that preliminary estimate may be revised even higher.

Great Update On the Three Great On-Shore Oil Basins: Western Gulf Basin, Permian Basin, Williston Basin

The writer at SeekingAlpha suggests that readers will find it a surprise to learn that Texas oil production will surpass that of North Dakota. Regular readers won't find this to be a surprise at all.

Here are the 2012 EIA estimates of production:
  • Western Gulf Basin (Eagle Ford): 0.89 million bopd
  • Permian Basin: 1.18 million bopd
  • Williston Basin: 0.72 million bopd
Here are the 2014 EIA estimates of production:
  • Western Gulf Basin (Eagle Ford): 1.58 million bopd (78% increase)
  • Permian Basin: 1.37 million bopd
  • Williston Basin: 1.13 million bopd (57% increase)
There are a lot of story lines and a lot of surprises in that article, but North Dakota never taking the lead over Texas is not one of them.

The biggest surprise for me is the Permian Basin. This is an old, old field: the first commercial oil basin in the Permian Basin was completed in 1921. And, again, Midland is a boom town. Incredible.

It was recently reported that locals on the ground feel the Permian/Midland is about a year-and-a-half behind the Bakken. (I'm not going to look for the link but it was linked when posted.) I said at that time, that if the Permian was a year-and-a-half behind the Bakken, the Eagle Ford is probably even farther behind. All of this should move the peak oil curve to the right for those who subscribe to the peak oil theory.

OXY is the #1 producer in the Permian Basin. 

Ten (10) New Permits -- The Williston Basin, North Dakota, USA

Active rigs: 186 (steady)

Ten (10) new permits -- 
  • Operators: Whiting (6), BR (2), EOG, XTO,
  • Fields: Capa (Williams), Sanish (Mountrail), Alger (Mountrail), Croff (McKenzie), Zenith (Stark)
  • Comments: Another permit for XTO; Whiting true to form with permits in northern, southern ops
The one well that came off the confidential list was reported earlier; see sidebar at the right.

Four producing wells completed:
  • 22451, 1,504, MRO, Curtis Kerr 24-8H, Bailey, t3/13; cum --
  • 23661, 1,255, XTO, Lee 44-31NWH, Siverston, t3/13; cum --
  • 24128, 1,304, Whiting, Miller 34-8-1H, Harding, t3/13; cum --
  • 24558, 834, Whiting, Langwald 31-17-1H, Estes, t3/13; cum --
One well name change:
  • 25115, conf, MRO, Evelyn 34-32TFH, was Evelyn 34-32H, 

I had not seen these two videos before:


Pipeline, The Ventures


Wipeout, The Ventures

The song – both the Surfaris' version as well as cover versions – has been featured in over 20 films and television series since 1964, appearing at least once a decade. First heard in Kenneth Anger's short Scorpio Rising, its most recent appearance was in Dominic Sena's 2009 thriller, Whiteout. In Scorpio Rising, Wipeout is near the end of the film.

Exhibit A

From SeekingAlpha, The Myth of US Energy Independence, Alan Von Altendorf.

I saw this article when it first came out, but did not link it. I made the conscious decision not to link it.

Now I am making the conscious decision to post it.

This should start a lively discussion:
The fly in the ointment is energy. Global oil supply has plateaued and more demand will push up prices. Americans always think of themselves first, but we're not alone in consumption of energy. China, Japan, Korea, India, the EU, and exporters like Saudi Arabia and Russia are consumers, too. Last week Britain came within days of running out of natural gas until three LNG supertankers arrived from Qatar. Those cargoes were held, waiting to see who would pay the highest price. It was freezing cold in Britain, a pipeline from Belgium went down, and the Brits bid 30% above market for the LNG cargoes to stave off power blackouts, misery and death. Price was no object. They had to have emergency supplies and it's a seller's market.
That's the ugly truth about oil & gas, flat supply and high demand.
Oil inventories in particular are extremely tight. Spare production and market rigging are easily disproved. It's a competitive global market with thousands of brokers, shippers, production operators and service companies. OPEC quotas don't mean squat. Everyone is pumping as much as they can.
And then, this, about the Bakken:
Another one of Sean Hannity's brainless rants had listeners leaping for joy, because exponential fracking for oil in North Dakota, Montana, and the Texas Eagle Ford can produce an endless cornucopia of abundant, cheap U.S. gasoline, if we get those pesky environmentalists out of the way! America has so much shale oil that we could be the world's Number One oil producer and exporter! Never have to import another barrel of oil from the Middle East!
Okay. Reality check.
Go to the linked article for the explanation.

21st Williston Basin Petroleum Conference, April 30 - May 2, 2013, Regina, Saskatchewan,

Enjoy a Canadian theme. Home page.

The theme of the 2013 conference is New Energy Horizons.  With room for 300 exhibition booths, indoor and outdoor space for bigger equipment exhibitions, and high quality technical sessions, the conference will be an excellent opportunity for everyone to expand his/her knowledge about the Williston Basin, to discuss new technologies and to network with those who are making the Williston Basin one of the major driving forces in the oil industry today!



April 12, 2013: If a tax rate of 18% does not catch the attention of tax-paying Americans, I would be really, really surprised. Isn't 18% about the lowest rate there is? I think 15% capital gains are about as low as one goes on federal taxes. A millionaire president of the United States of America! 18%! Something doesn't ring true. I'll probably post this periodically just to remind folks what a great country we live in. If you manage your money right, define it correctly, and come up with the right deductions, and credits, millionaires can get their federal tax rate down to 18%. Of course, I suppose, some millionaires get it down even more. Wow, the president is lucky this is not France where the rate might be 75%.

Original Post

It looks like I pay more than the president in taxes, on a percentage basis. Oh, well.

And the Bidens? Charitable giving up to 2%. I don't think the Bidens have any objection to donating now that they are so much better off financially, but having not donated all these years, they just don't know how. It's also very, very possible they are like  most of us: we donate a lot but we don't feel compelled to do it for tax purposes. Simply being a public servant, Mr Biden is paying way more than his fair share.

That goes for Mr Obama, also. I wouldn't want that job even if the salary was tax-free.

You know: that seems to be the reward for being elected president and vice-president. Prior to being elected to the highest offices of the land, one really doesn't have to publicize one's taxes, and even if running for the highest offices of the land, one only has to provide sanitized versions. But once you win the presidency/vice-presidency, your prize seems to be the opportunity to lose complete control of your tax statements. Even one's golf score can be kept private.

What a great country.

The Wattenberg Field, Niobrara Shale, Denver Basin -- Bonanza Creek Energy, Investor Day Presentation

This is an incredible presentation. Unfortunately it is just the transcript at SeekingAlpha and not the slides. However, the transcript my follow the company's March, 2013, corporate presentation, a PDF file.

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. I am not even all that interested in the Niobrara, but this presentation helps me understand the Bakken better, and it definitely puts the Bakken into perspective.

The presentation:
  • slide 10, IRR's, particularly interesting; look how far to the right the dry gas plays are; among the tight oil plays the Bakken is also to the right; the Eagle Ford is far to the left; Mississippi Lime, interestingly enough is to the left also.
  • five pay zones in the Wattenberg; the Bakken will have three or four
  • EURs: 300K (short laterals?), 65% oil; the Bakken, around 600K, and closer to 90% oil, I believe
  • cost per well: $4 million; I believe these are short laterals (?); long laterals, over $8 million
Back to the SeekingAlpha article. This is a 27-page-internet article; way too long to summarize.

One interesting takeaway from the article:
Long reach laterals put a lot of eggs in one basket, okay and so if you have a failure in your long reach lateral wells instead of having the $4.2 million investment in our record horizontal well, go south where you say, now we've got a $7.5 million to $8 million investment to go south if you part [casing] and can't recover the well, something like that. 
So to recover that it’s significantly more cost to get that. The repeatability of being able to do the beauty of the Niobrara play and the beauty of these unconventional resource plays is repeatability, being able to drill and execute back to back to back counting on success, low risk chance of failure. 
Long reach laterals, we still have to get to the mechanical part of this so that we can execute this over and over again because when we frac these things along these lateral, you are talking 36 to 40 stages. Our regular laterals are 18. So that means we have to do that thing 40 stage. We have to do that perfect every time, over and over again. So there is some risk.
There was a long discussion on completion techniques: common is 30 stage sliding sleeve, and final 10 stages, plug and perf; the latter is not preferred. 

I said that when I first started the blog: there are "no" DRY wells in the Bakken (yes, rarely), but that's about the only way operators are willing to risk $8 million on a well; they know they will hit. And they will keep getting better.

And that's just at the beginning of the article. A huge amount of information which will help folks understand shale and will put the Bakken into perspective.

In the Niobrara, a short lateral: twelve days to drill and three days to complete. Compares favorably to what is going on in the Bakken.

North Dakota: Check The Forecast; Global Warming Advocates: Check the North Dakota Forecast

This is quite incredible. KFYR, Bismarck, ND, is predicting up to, accumulation of snow, through Monday, 3:00 a.m.:
  • Williston: 8 inches
  • Watford City: 12+ inches
  • Minot: 12+ inches
  • Dickinson: 8 inches
  • Stanley: 12 inches
Most of North Dakota, from Watford City to the Red River (boarding Minnesota) is predicted to have 12+ inches. It looks like west of Jamestown it may be even deeper. 

I can't speak for everyone in North Dakota, but I bet there are a few folks there who would appreciate a bit of "real" global warming about now.  That one-degree increase in global temperature rise over one century is just not cutting it.

I assume KFYR is now looking for past records to see if this new storm breaks any old records.

This is quite incredible. My hunch: the entire state is going to be shut down before the weekend is over.

By the way, most out-of-staters don't know but North Dakota traditionally does not get a lot of snow, particularly not in the west. If this much snow accumulates, this may be a record-setting winter for North Dakota, considering the depth and the breadth (the entire state). North Dakota's winters are cold and brutal, but not particularly snowy.

For out-of-states, quick: how thick is the ice on lakes in North Dakota and Minnesota? 29 inches. This picture was taken on a lake in Minnesota about a week ago so it will be a late spring in the eastern part of North and South Dakota this year.

Price Of Oil Dropping Today: Maria Bartiromo Has The Answer

The price of oil continues to drop. It will be interesting if it holds above $90.

A few minutes ago Maria Bartiromo on CNBC noted that oil was down today and related it to the fact that the US will be self-sufficient in oil in the near future, and implied that was the reason for the price of oil dropping. Actually she misspoke: the US won't be self-sufficient in oil, but North America will be.

I doubt the price of oil is down today for the reason Maria suggested. She may be correct; I just don't think so: I don't think the price of oil is down today for the reason she stated.

But if /when North America does become self sufficient, it will be interesting how OPEC adjusts. OPEC can cut back on production but it will only affect the price of oil in their markets (Europe, Asia). If the US does not allow oil to be exported, the price differential between OPEC and WTI should widen, to the US' advantage.

It is interesting that Canada may be making a mistake trying to sell their oil to the US when they might be able to do better selling oil to Asia.

Possibly the biggest loser: Venezuela. They will be competing directly with Saudi Arabia, Iraq, Kurdistan, and Iran. 

Time For A New Poll ...

But first, the results of the current poll, in which we asked, "Is it good news or bad news that Senator Heidi Heitkamp will look for federal policy change to help with the housing situation in the Bakken?
  • Good: 35%
  • Bad: 65%
That's what I thought. Mineral owners better watch their wallets. Smile. There's more than enough money in the "Bakken formation" to fund housing for everyone. At this post, do the math.


Now, for a new question. It's a bit complicated; it's hard to me to phrase it just right, but most folks who are following the Bakken, will understand the "intent" of the question.

Background: Some folks elsewhere appear to want the North Dakota legislature or the NDIC set deadlines for drilling additional wells on a spacing unit once the first producing well has been drilled and the commission has approved additional wells. The folks are concerned that operators will not drill additional wells on a spacing unit once the unit is held by production. It is important to note that a Bakken well tends to produce 20% of its EUR in the first year of production. The rest will be produced over the next 20 to 30 years. There are significant tax breaks and incentives for oil produced in the first year. At least that's my understanding.

So, the new question, for mineral owners only:
For mineral owners only: if the price of oil drops to $40/bbl, would you want your operator to drill a new well at that time, or when oil is back to $100/bbl?

I first started doing the polls because my 9-y/o nephew put a poll on his blog and I wanted to see if I could do it. It turned out to be quite simple. The polls are kind of a pain: thinking up a poll question and then doing the technical stuff to get it posted. Interestingly enough, after all these polls, it turns out that this one in this post has actually helped me think through some interesting issues with which the NDIC has to struggle.

As I've been repeating more often recently: I don't think most folks have really made the leap to tight oil. I know I understand less than 1% of the Bakken.

Drudge Headline: Nuclear War Unavoidable


April 14, 2013: And now SecState Lurch is willing to negotiate with the North Koreans. My hunch is North Korea is coming out of one of its worst winters ever, and has run out of food, and coming close to running out of fuel. If SecState Lurch agrees to trade real food and real fuel for fake promises, that's fine, and the right thing to do. We give a lot more to the Palestinians ($500 million when we close the White House to tours) than we give the people of North Korea. 

Original Post

One has to wonder what Japan did to deserve all this? First, the US drops not one, but two, nuclear bombs on Japan. Then, the nuclear power plant disaster following the earthquake/tsunami. Now, a very real nuclear threat across the strait. The (London) Express is reporting:
North Korea has warned Japan that Tokyo would be the first target in the event of a war on the Korean Peninsula, as it increased threats of an attack.
In a commentary carried by the Korean Central News Agency (KCNA), the communist country lashed out at Tokyo's standing orders to destroy any missile heading toward Japan, threatening such actions will result in a nuclear attack against the island nation.
If Japan executes its threat to shoot down any North Korean missile, such a “provocative” intervention would see Tokyo — an enormous conurbation of 30 million people — “consumed in nuclear flames”, KCNA warned.
“Japan is always in the cross-hairs of our revolutionary army and if Japan makes a slightest move, the spark of war will touch Japan first,” the report added. 
I don't think anyone knows whether the US missile defense will work, but one wonders what was going on in the senator's head when he worked so hard to defeat the president's goal for a credible missile defense system. It is simply mind-boggling. He must have been thinking about his ketchup empire. And now the former senator is in the Far East trying to calm things down.

I assume the plan is to keep the senator in South Korea or Japan until this thing blows over. The president probably thinks no country would be so crazy as to risk killing a US SecState. Ambassadors, yes, but not secretaries of state.

Bakken Oil Workers & Oil Service Expo; Minot, North Dakota, August 20 -22, 2013

The Bakken Oil Workers & Oil Service Expo will be at the State Fair Center in Minot, ND, August 20-22, 2013.

The event will gather together oil companies, oil products and service suppliers, and supporting business who are servicing the Bakken now, as well as companies and organizations planning to bring business to the region in the future.

For more information:

This will be linked at the sidebar at the right, under conferences.  

Norway Misses Oil Output Targets

Rigzone is reporting:
Norway's crude oil output fell 13% on the year in the first quarter and missed the official forecast, partly due to technical problems on fields operated by BP PLC and Statoil ASA, the Norwegian Petroleum Directorate said Thursday. 
First-quarter crude oil output was about 1.454 million barrels a day, or 2% below the directorate's forecast.
Look at that number again. Norway produces 1.5 million bbls/day. Remember how often Norway is in the news, folks talking about oil-rich Norway? Population: 5 million people. Oslo: 600,000. With a king. North Dakota: 750,000 bbls/day. Population: 700,000. Bismarck: 70,000. With a governor.

I honestly don't think folks understand how huge the Bakken is for North Dakota. And remember: the bulk of the Bakken is in four counties: Williams, Mountrail, McKenzie, and Dunn. And not many off-shore wells in North Dakota.

And at only 750,000 bbls/day, North Dakota accounts for about 12% of America's total crude oil production. 
Norway's oil output has been on a declining trend for more than a decade. Total oil and gas output rose slightly last year, as higher gas production offset a huge drop in oil output. The total output was still 15% below the country's 2004 peak.

Friday Morning Links: Governor Moonbeam, The Chinese, And Lindsey Lohan

Minnesota will buy more coal from Montana for electric utilities. Darn, that "free" wind energy is expensive.

Democrats all around, from Montana to Minnesota, shook hands, congratulated each other, signed documents, and acted just like free market capitalists, agreeing to sell more Montana coal to Minnesota.
The new Crow Tract I lease, formalized during a ceremony on Thursday, will mean millions of dollars to the Crow Tribe and a longer life for the Absaroka coal mine.
The agreement involves an estimated 145 million more tons of Rosebud McKay coal, located adjacent to the Absaroka mine. The area covers an estimated 14,000 acres in Treasure and Big Horn counties.
It will be interesting to see if President Obama lets this one go through. It means $12.5 million to the Native Americans but it must be approved by an agency of the US government.  But as folks know, one of the president's stated objectives is to kill the domestic coal industry.

RBN Energy: a great article today. The history of trading natural gas, which only began in 1992.

The Chinese and global warming: it is hotter in China.
The study by Chinese and Canadian researchers found that just because of greenhouse gases, daytime highs rose 0.9 degree Celsius (1.7 degrees Fahrenheit) in the 46 years up to 2007. At night it was even worse: Because of greenhouse gases, the daily lows went up about 1.7 degrees Celsius (3 degrees Fahrenheit).
Fortunately the world quit warming sixteen years ago. But that's pretty impressive that this increase -- less than a degree over 46 years -- was even measurable. It's even more impressive that folks believe in anthropogenic global warming. By the way, the Chinese experienced the same warming during the age of the Vikings, referred to as the Medieval Warm Period. Unfortunately, the linked article does not refute any of the irrefutable facts regarding anthropogenic global warming.

Now the good news: we all know that more warming will lead to increased demand for air conditioners.

WSJ Links

Section M (Mansion): I don't read. My wife does. Sad face.

Section D (Arena): The Masters.

Section C (Money & Investing): Two major commodities-trading firms have pretty much cornered the copper market.

Section B (Marketplace)
  • JCP seeks to raise $1 billion. Calling Harold Hamm.
  • Lilly to lay off 30% of its sale reps. 
Section A:
  • Report raises North Korea nuclear fears. US intel report says NK has nukes small enough to fit on missiles. Elsewhere, SecState Kerry says US intel report is bogus. Kerry, to best of my knowledge, has not acknowledged Ronald Reagan saved "our" bacon with the missile defense system Kerry fought so hard to defeat. 
  • In Venezuela, almost-free gas comes at a high price. 
  •  Creature combined human, ape traits. Deepening the mystery of human origins, researchers offeredthe most complete view yet of a puzzling forerunner of humankind that was a collage of primitive and modern anatomy. Think: body-mind meld Michael Jordan and Al Franken.
  • Guest workers' flight irks sheep ranchers: some shepherds brought in from overseas are bolting to take other jobs. No, say it isn't true. One's first clue: when the "shepherds" show up in South Dakota with pocket protectors.

  • Op-ed: Terry  McAuliffe's Solyndra -- running for governor of Virginia, the Democrat's main business credential is fast turning into a crony-capitalist embarrassment. I have no dog in that fight. Let the Virginians sort this out for themselves.
  • Op-ed: Now President Obama is after your IRA. Not unexpected.
LA Times

Governor Moonbeam is hoping he can convince China to help pay for his bullet high-speed conventional train-to-nowhere.
Gov. Jerry Brown's trade mission to China this week is intersecting with one of the most controversial issues of his governorship: California's $68-billion bullet train.
The governor has staked part of his legacy on the rail network, a centerpiece of his vision for California. He is hoping that China, which is enjoying an economic boom and spent $77.6 billion on overseas investments last year, according to official figures, will pump some of its cash into the troubled project.
The Chinese interest in California's project is a welcome boost for Brown. Although state voters approved $10 billion in bonds for a high-speed railway in 2008, they have soured on it as cost estimates have ballooned by tens of billions of dollars. The governor, who has vowed repeatedly to see the train system built, needs at least an additional $55 billion to make it happen.
A couple of data points.

First, anyone who thinks any government funded project (in fact, any project, even private projects) will come in under budget are lacking real-world experience. And government-funded projects become disasters ... perhaps Californians should study Boston's experience with the "Big Dig."

Second, I did not realize that voters approved only $10 billion for a project that will cost significantly more than $70 billion. And then, to put the additional $60 billion that Governor Brown needs: China, during a period of economic boom, invested $80 billion OVERSEAS. Does anyone really think the Chinese will invest any meaningful amount in a California train-to-nowhere.

In fact, if the Chinese do invest in this pie-in-the-sky project, Californians better read the small print in the contract to see what the governor will give away to get that kind of dough. Californians may want to look at who will own a) the beaches; b) the Port of Los Angeles; c) the Port of Long Beach; d) Lindsey Lohan; and, e) the LA Lakers.

You know, if you throw in Lindsey Lohan, the deal might be worth it.