Friday, June 7, 2013

For The Archives: Price Of Oil Holding Above $90 -- Surprising, Considering

Rigzone is reporting:
Crude-oil futures settled higher Friday as investors read into the better-than-expected May U.S. nonfarm payroll data as evidence of buoyant economic conditions.
Light, sweet crude for July delivery settled $1.27, or 1.34%, higher at $96.03 a barrel on the New York Mercantile Exchange.
Brent crude on the ICE Futures Europe was recently $1.02 higher at $104.63 a barrel.
The Labor Department said Friday that U.S. employers added 175,000 new jobs in May, slightly higher than the 169,000 jobs increase forecast by economists.
Personally, I have been quite surprised about how the price of oil has held above $90. I think it has more to do with the weakness of the dollar than with hints of an improving economy.

Increasing Interest In Using LNG In Canadian E&P Operations

A nice article with some applicability for the Bakken? Wow, it was a very, very long time when we last talked about using natural gas instead of diesel for fracking operations. This was posted about a year ago, but never seemed to be an issue.

Now today:

Rigzone is reporting:
Advances in hydraulic fracturing that unlocked potential shale gas resources in the United States are being successfully applied to Canadian shale gas resources. With seven shale plays in Alberta estimated to hold resources of 3,424 trillion cubic feet of natural gas – along with shale resources such as the Horn River Basin in British Columbia, Canada's shale gas potential has vaulted the country into a position as a potential LNG exporter. This shale gas play has also created opportunities for exploration and production (E&P) operators in Western Canada to switch from diesel to natural gas in their operations, a trend that is also occurring in the United States with operators such as Apache Corp., which has switched to using natural gas in its hydraulic fracturing operations.
Some data points from the article:
  • US oil and gas experience for both fracs and drilling rigs converting to natural gas are experiencing up to 55 to 60 percent substitution
  • Encana, Apache, EQT, and Noble are using natural gas to power drill rigs present day
  • All of the major diesel engine manufactures are introducing bi-fuel options, third-party bi-fuel systems continue to improve and be a viable option. Caterpillar and GE are also focused on improving their 100-percent Natural Gas engines that are very well suited to the Western Canadian drilling and fracking operations. 

Aerial Photograph Of The Pyramid Wells Northwest Of Williston -- Vern Whitten Photography

I believe these are Statoil's Pyramid wells northwest of Williston. At the link go to photograph #12 of 31. If correct, the clues:
a) 4-well pad
b) round-about in the upper left (northwest) corner


Video update of Williston, North Dakota, posted May 25, 2013:

Update, Williston, ND
Would you ever guess this town is the center of the biggest oil play in the United States?

Six (6) New Permits -- The Williston Basin, North Dakota, USA

Active rigs: 189 (steady)

Six (6) new permits --
  • Operators: Marathon (2), Whiting (2), CLR, EOG
  • Fields: Parshall (Mountrail), Dutch Henry Butte (Stark), Murphy Creek (Dunn), Upland (CLR)
    Comments: Relatively quiet day.
Wells coming off the confidential list were posted/tweeted early; see sidebar at the right.

Three Fort Berthold wells in Dunn County were transferred from Petro-Hunt to G3 Operating.

Wow, BRK-B Blew Through To Another 52-Week High

Link here (this is a dynamic link and will change; it was accurate when it was posted).

New 52-week high: $115.55. Closed at new high: $115.31.

Disclaimer: this is not an investment site. Do not make any investment decisions based on anything you read here or anything you thought you might have read here.

Random Update Of CLR Comments At Recent Denver Conference -- 32 Billion Recoverable Reserves In Bakken/Three Forks Through All Benches

Oil & Gas Investor is reporting:
Recalling an estimate made by Continental in 2010 that [the Bakken] has estimated ultimate recoverable reserves totaling 24 billion barrels of oil equivalent (boe) — excluding any reserves from the lower Three Forks benches (i.e. TF2, TF3 and TF4) — Stark said an update to include the lower benches would increase the estimate to 32 billion barrels. The revised estimate incorporates lower Three Forks core data and keeps unchanged the 3.5% recovery factor used with the previous estimate of reserves based on the Middle Bakken and upper Three Forks (TF1) formation.
“What is the true recovery factor? We still don’t know; we’re still estimating it,” said Stark. However, for perspective, every 1% in incremental recovery factor translates into an additional nine billion barrels of estimated ultimate recoverable reserves in the field, he added. “It’s a remarkably huge field.”
I believe this site requires a subscription but periodically it posts a free article. I could be wrong. A reader was nice enough to send a link to this article.

The article mentions the Hawkinson wells and the "Barney unit." I had forgotten about the Barney well. There are a number of "Barney" wells in the Bakken; I believe this particular one testing the lower Three Forks is in Truax oil field.

Let Me Get This Right...

...  Obama's administration is mining data from all telephone calls and all internet providers on fellow Americans, and he's upset with the Chinese doing the same thing? And, of course, whatever the NSA can do here in the US, they can do to foreigners. Something tells me the Chinese president's response "won't be lost in translation."


Lost In Translation, Do It With More Intensity, Bill Murray

Robb Siverson Photography -- Including Great Photos CLR's Atlanta 14-Well Pad Southwest Of Williston

When it rains, it pours!

Another incredible batch of photographs from around the Bakken. In addition to oil patch photos, there are plenty of photos of other North Dakota activity. It truly is impressive.

Robb was particularly impressed with CLR's 3 rigs in a row along with the Bakken Oil Express, with photos from the ground and in the air.

For newbies, if you haven't seen grain elevators, some of these photographs will water your eyes.

First, oil patch photos.

Second, non-oil patch photos, many agricultural photos.


And a huge thank you to Robb Siverson Photography.


I was going to post Audrey Hepburn, Breakfast At Tiffany's, "Moon River" -- for Robb's photos of the Atlanta 14-well pad along the Upper Missouri River southwest of Williston, but it was a bit too slow, too bittersweet for a Friday night, so, this instead, just for the fun of it:

Medley, Merle Haggard

The Green River Formation -- Another Bakken? In Three Western US Basins, Including The Uinta Basin

A reader alerted me to this story. Thank you.

In an earlier post, an oil and gas expert was asked "what the next Bakken would be." He did not have a good answer, although sugggesting the Three Forks would have been my answer also.

However, a reader suggests that the Green River Formation is likely to be the next Bakken. At wiki:
The Green River Formation contains the largest oil shale deposits in the world. It has been estimated that the oil shale reserves could be equal up to 3 trillion barrels of shale oil, up to half of which may be recoverable by shale oil extraction technologies ("cooking" kerogen).
However, the above quoted estimate of 'recoverable' oil is in doubt, and challenged, by many renowned geologists because the technology for converting rock into an oil from the Green River shale deposit has not been developed, and it has never been profitably implemented at any significant scale.
The Green River Formation is found in three separate basins around the Uinta Mountains of northeastern Utah:
  • an area in northwestern Colorado east of the Uintas
  • a larger area in the southwest corner of Wyoming just north of the Uintas known as Lake Gosiute
  • the largest area, in northeastern Utah and western Colorado south of the Uintas, known as Lake Uinta
An ABC News story from last year, with the headline, "An American Oil Find That Holds More Than All Of Opec":
A recent report by the U.S. Government Accountability Office estimated that if half of the oil bound up in the rock of the Green River Formation could be recovered it would be "equal to the entire world's proven oil reserves."
Both the GAO and private industry estimate the amount of oil recoverable to be 3 trillion barrels. 
It's a very, very long article, for an internet article with lots of information. My understanding is that much of the Green River Formation is under land controlled by the federal government (BLM):
An auditor told Congress last week that the Green River Formation in Wyoming, Utah, and Colorado contains about as much oil as the "entire world's proven reserves," making it the "world's largest deposits of oil shale."

The formation is largely — about 75 percent — on federal Bureau of Land Management lands in the states, making it possible for the government to extract funding from the shale formation almost as well as the companies that may extract the oil. 
A couple of points.

First, although the shale oil may be BLM-constrained, it is there if "push comes to shove."

Second, it is nice to see the "three trillion original oil in place." It gives "credibility" to reports that the Bakken could be a trillion-bbl-OOIP-reservoir.


I did have the Uinta Basin linked at the sidebar at the right, but not the Green River Formation. I will add the Green River Formation to the "Other Formations" at the sidebar.

For newbies:
Just as the Bakken Formation is found in the Williston Basin, the Green Formation is found in the Uinta Basin (as well as two other basins in the Wyoming, Colorado, Utah area).

Vern Whitten's Bakken Photos

This has become one of the high points of my monthly blogging, receiving links to photographs by Vern Whitten.

Take a look at slides #4 and #5 of the Bakken Spring photos -- seven tracks of oil tank cars at a CBR terminal waiting to be filled. The first set contains photos of Williston, Minot, and points in between. And then look at slide 12 where one sees a pad with 36 tanks and four pumpers. Now, imagine a pad with six pumpers, or even ten pumpers.

Remember: EOG ships all Bakken oil by rail; CLR ships 80% by rail.

The following set of photos: Watford City.

And the third set: Dickinson, North Dakota.

Vern Whitten Photography would love to hear from you.

Enjoy the photos. I think they are phenomenal.


For those interested in location of some new construction coming to Dickinson, Don has provided some assistance.

Go to the Dickinson set of slides.

Go to slide #1. Note the site for the new MDU-Calumet refinery. Two miles to the immediate left of the "x" in the center of the picture, will be Exit 56 (when it it built) off I-94.

Go to slide  #4. This is Exit  59 off I-94. "X Next Slide" just happens to mark the location of the new Menard's facility.

In that same photo, slide 4, kitty corner from the new Menard's, along 30th Avenue West, where "all the dirt is being moved," is the location where the new hospital will be built.

In that same photo, slide 4, again Exit 59: this is where the bypass going north to ND Highway 22 should begin; going north about 3 to 4 miles and then heading east another three miles to ND Highway 22.

For Investors Only: Cost Of Producing Energy -- Forbes

Dangerous times as energy sources get costlier to extract -- Forbes. For archival purposes.

I'm not sure I learned anything new, except a bit more on EROI.


$5 Gasoline


The Chicago Tribune is reporting:
Average gas prices in Chicago are now higher than anywhere in the United States, driven higher by a combination of refinery issues and the annual transition to a more costly summer blend.
Drivers in the city are now paying an average of $4.55 a gallon, according to AAA, which is 20 cents higher than a week ago. On this day last year, drivers were paying $4.12 per gallon.
The city still hasn’t reached the record per-gallon price of $4.68 a gallon, a mark set on March 27 of last year.
The average price in the greater metro area is closer to a record. Drivers are paying $4.42 a gallon on average; the record hit last March was $4.51.
The reason for the increase in price will surprise you, especially considering all the gasoline the US exports. Cue up Connie Francis.

San Onofre Will Close

Operator will close San Onofre nuclear reactor in southern California. For the archives.

Lasted ~ 40 years.

Flashback, March 21, 2013:
California's electric grid agency warned on Wednesday that a second summer without output from the damaged San Onofre nuclear plant presents more challenges than last year and will force the agency to rely on voluntary conservation to avert rolling blackouts.
"This summer will be more difficult than last," Steven Berberich, president of the California Independent System Operator (ISO)...
The 2,150-megawatt San Onofre nuclear station, owned by Edison International and Sempra Energy, has been shut since January 2012 after the discovery of premature tube wear that damaged thousands of tightly packed tubes inside the large steam generators.
 So, we'll see.

CenterPoint Energy Bakken Crude Services Bear Den Project

The Dickinson Press is reporting:
The Bureau of Land Management North Dakota Field Office will accept public comments for the environmental assessment from now until July 6 regarding the proposed CenterPoint Energy Bakken Crude Services Bear Den Project.
CenterPoint Energy. 

Waste water and crude oil pipeline-gathering system in Dunn and McKenzie Counties to transfer facilities southwest of Watford City.

For archival purposes. CenterPoint Energy is headquartered in Houston.

New Jet Service To Dickinson

The Dickinson Press is reporting:
  • United Airlines
  • ERJ-145 jet, Embraer, a Brazilian company
  • 50-passenger jet
  • 2 round-trip daily flights between "Little D" and "Big D" (Denver, not Dallas)

The President Throws EV Promoter Under The Bus; California Really Is Building The Train To Nowhere

LA Times is reporting:
Paul Scott got an invitation to a DNC fundraiser in Santa Monica and hoped to tell the president about the merits of electric cars. But the invitation was rescinded and his large donation returned.
I can't make this stuff up. $32,000 for two minutes on a subject that is (supposedly) near and dear to the president's heart. 

And as long as we're reading the LA Times, the bullet-train-to-nowhere now has a destination: $1 billion for 29 miles of rail into Fresno. California.  29 miles: think Williston, ND, to Alexander, ND.
The California bullet train agency on Thursday defended its bidding criteria for selecting the winner for its first construction contract, saying that the process held down prices and was handled properly. The California High-Speed Rail Authority has come under fire from critics who assert changes to the bidding criteria could jeopardize the quality of the project. The authority tentatively chose a team led by Sylmar-based Tutor Perini to build a 29-mile segment of track through Fresno even though it had the lowest technical score.
The state chose the lowest bidder. And one with a lot of baggage.

Fresno. They really weren't joking when they said this was the train to nowhere. LOL.

Jobs Report: Good News -- More Americans Looking For Jobs -- AP

Better news would have been if they actually found jobs they were looking for.

Country adds 175,000 jobs: above consensus of 165,000.

Below the anemic average last fall.

Unemployment rate edges up to 7.6%.

Data points:
  • 12,000 fewer jobs in March and April (the article doesn't say if that was a revision, but it appears to be so)
  • 175,000? The average between November, 2012, and February, 2013: 235,000
  • unemployment rate rose because more Americans looking for job
Remember: the magic number is 200,000. That used to be the number of added jobs to suggest economy doing well. Over time the media has gradually lowered that number, now about 150,000.

From Bloomberg
Retailers, the hospitality industry and temporary-help agencies accounted for 96,300, or 55 percent, of 175,000 jobs added in May, figures from the Labor Department showed today in Washington. [In other words: low-paying, temporary jobs, with little potential for job advancement or wage increases.]
Reuters headline:  "hiring points to resilience in economy." Yahoo's headline for the same story: "Fed's help still needed." That was the original headline: "Fed's help still needed," but it was changed to "hiring points to resilience in economy." By all accounts, the number was not good; maybe not horrendous, but certainly not good. Reuters has lost a lot of credibility under this administration.

Futures surge. Anemic job growth; unemployment edges up. There is no way the Fed will "taper" this year. Bernanke says he won't "taper" until economy/job growth is sustainable. We're back to square 1. "Sustainable" is off the table; we're back to "recovery?" What recovery?

Broad market up; oil up. What's not to like. Oil is up, I assume, because traders feel the dollar will weaken. Certainly there is no shortage of oil. Russia outproducing Saudi; Saudi imports to US up significantly in most recent data (March, 2013); record US shale production.

Friday Morning News And Links

Active rigs: 189 (steady)

RBN Energy: NGL storage, the series continues.

WSJ Links

Section M (Mansion): seldom read.

Section D (Arena): Later

Section C (Money & Investing):

Section B (Marketplace):
Section A:
  • Obama-NSA spied on all Americans -- well, at least anyone who connected to the Internet; providers had no clue; blame it on Bush Patriot Act; no links; story everywhere; as noted earlier, a new scandal would knock the other bucket of scandals off the front page [Later, Obama press conference, in which he said: "All in Congress knew of NSA intelligence gathering; no one is listening to your phone calls." If that is accurate -- everyone in Congress knew -- it speaks volumes about Schumer, Rangel, Markey, others.]
  • Household wealth at pre-recession levels; Obama won't note it because his 47% are not participating
  • The president's civil-liberties record questioned: spied on all Americans -- well, any who used the Internet; and all this time folks were concerned about Google tracking ISPs. Cue up Connie Francie
  • FISA: the government's secret court
  • When NSA calls, ATT, Verizon, Sprint, others answer
  • TrainWreck: analysts expect "glitches" in health-care exchanges
  • Op-Ed: IRS political timeline -- and the president's speeches; mainstream media fell for it, hook, line, and sinker

"Don't get so excited. Everyone in Congress knew this was going on." -- Harry Reid

Everybody Knows, Leonard Cohen