Friday, June 14, 2013

Global Demand For Oil Will Continue To Rise -- Statoil

Rigzone is reporting:
Statoil expects global demand for oil to grow to by 15 million barrels per day to around 100 million bopd by 2040, although this demand is expected to peak around 2030, according to the Norwegian major's latest "Energy Perspectives" report.
As with last year's report, Statoil continues to see gas as "a fuel of the future" with global gas demand expected to increase at an average of 1.6 percent through to 2040. Statoil noted that the supply potential of shale gas "continues to surprise" both in terms of volumes and marginal costs, while environmental policies are expected to help improve the competitiveness of gas – which is the cleanest fossil fuel in terms of carbon emissions.
Oil demand is forecast to grow at 0.5 percent per year, which is a slightly greater rate than last year's forecast, with income growth and an increase in private transport in emerging economies being the two most important drivers of oil demand.

I Might Be Wrong -- Musings On The Price Of Oil This Week


June 15, 2013: about that data point in my original post -- the "war by proxy"; I just love it when an article shows up later validating my hunches; Russia (Putin) outmaneuvers O'Bama over Syria -- the WSJ

June 15, 2013: worries that Syria conflict will wide drives oil prices up - WSJ; it looks like the Syrian premium is about $10; imagine the Saudi premium if it had significant rebel problems.

Later, 8:42 pm: I didn't see this until just now -- US Marines on the Syrian border to help move arms into Syria for the rebels. This DOES up the ante. One wonders ... 

Original Post

I noted earlier that the price of oil has surged a bit this week -- I said it was all due to the weakening dollar, but the tea leaves suggest I was wrong. Some data points:
  • Syrian government vs Syrian rebels becoming a proxy for Putin's Russia against Obama's US (makes one think of the Spanish Civil War which was also a proxy war)
  • Egypt Islamists rallying for Syrian jihad
  • Michelle and family partying overseas; VP Biden running the White House situation room
  • Saudi king cuts holiday short due to events in region
  • Assad prepares for offensive -- needs to eliminate the players before they get their US toys
  • Where's Kerry: stateside or overseas?
  • Nebraskan neophyte as SecDef
It's still hard for me to believe that civil war in Syria would cause oil to spike but with the Russians getting involved AND Saudi concerned, maybe, just maybe ....

How North Dakotans Deal With Mega Loads: Quietly And Efficiently; Another Incredible Story Coming Out of North Dakota

Remember all the hullabaloo over the "mega loads" in Montana? In the end, the faux environmentalists were able to slow things down but not stop progress.

Look at this North Dakota mega load (and look at the photo at the linked site; click on it to zoom in): I don't recall any stories about this mega load until now -- after all the permits worked out and issued. I am, again, very, very impressed with the no-nonsense North Dakotans. Working to get things done instead of setting up artificial obstacles.

KXNET is reporting:
Something two-thirds as tall as the capitol is on it's way to Beulah.
This tower is on the move from Minnesota. The huge piece of equipment is for the anhydrous ammonia facility at the Great Plains Synfuels Plant.
The tower "strips" the carbon dioxide from the solution.
The tower is 157 feet-three inches long and weighs 219-thousand pounds.
It was built by Arrow Tank & Engineering in Cambridge, Minnesota. It left there Tuesday at midnight and is arriving in Beulah today.
Total weight of truck, trailer, and cargo: almost 500,000-thousand pounds according to the story.

Considering the cargo weighs about 220-thousand pounds, one wonders if there is a typo in this, "cut and paste" from the article:
Combined with the truck and trailer--the overall weight going down the road is 443,000 thousand pounds. It's all held up by 110 tires.
The space shuttle (empty) weighs about 175,000 pounds. 


Here's a bit of background on the synfuels plant at Beulah:

Near Beulah, North Dakota, a coal gasification plant
Basin Elecric Power Cooperatiave (Basin Electric), through its for-profit subsidiary, Dakota Gasification Company (Dakota Gas), owns and operates the Great Plains Synfuels Plant (Synfuels Plant). The Synfuels Plant is the only commercial-scale coal gasification plant in the United States that manufactures natural gas. It is also the cleanest energy plant operating in the state of North Dakota, according to a comparison of emissions data available from the North Dakota Department of Health.
  • Average daily production of natural gas is about 153 million cubic feet, the majority of which is piped to Ventura, IA, for distribution in the eastern United States.
  • The Synfuels Plant supplies carbon dioxide to the world’s largest carbon capture and storage project in the world in Saskatchewan, Canada. Dakota Gas currently captures between 2.5 and 3 million metric tons of carbon dioxide per year.
  • The $2.1-billion plant began operating in 1984. Using Lurgi gasifiers, the Synfuels Plant gasifies lignite coal to produce valuable gases and liquids. Located five miles northwest of Beulah, ND, the Synfuels Plant has been owned and operated by Dakota Gas since 1988.
  • About $477 million has been invested in the Synfuels Plant since 1988 to achieve environmental compliance, improve efficiency, and invest in new byproduct development. 
Talk about another incredible story coming out of North Dakota.

With all that natural gas being produced by North Dakota, I'm beginning to think North Dakota is supplying a lot more energy to the East Coast than folks realize.

Fifteen (15) New Permits -- The Williston Basin, North Dakota, USA

Active rigs: 185 (up one)

Fifteen (15) new permits --
  • Operators: KOG (4), XTO (4), CLR (2), G3 Operating (2), Slawson (2), American Eagle
    Fields: Leaf Mountain (Burke), McGregory Buttes (Dunn), Banks (McKenzie), Sand Creek (McKenzie), Colgan (Divide), Big Bend (Mountrail)
  • Comments: Busy.
Wells coming off the confidential list were posted earlier; see sidebar at the right.

One producing well was completed:
  • 23706, 560, G3 Operating, Miller 1-35-26H, t2/13; cum 11K 4/13;

I Cannot Make This Stuff Up

Best quote of the day: "Actually, about the only thing you can do to the condor in California is kill it using a wind turbine."

This was said in response to the California condor invasion of a small town in California.  Breitbart caught the irony and the humor in one pithy comment.

Detroit Defaults: Won't Pay Back $2.5 Billion; Holds Back $1.25 Billion For Safety, Neighborhood Blight Elimination; Has NOT Filed For Bankruptcy Protection

Follow Detroit's recent financial history here, as well as the financial history of cities which have defaulted and others which may default. Detroit has NOT filed for bankruptcy. They just won't pay $2.5 billion it owes for unsecured loans.

Breitbart is reporting, from the AP:
Emergency manager: Detroit won't pay $2.5B it owes.

Kevyn Orr said Friday that Detroit is asking creditors to take about 10 cents on the dollar of what they're owed. Underfunded pension claims will get less.

Orr spent about two hours Friday morning with dozens of people representing banks, insurers and companies holding Detroit debt. He told reporters earlier at an airport hotel in Romulus he wants to fix fiscal problems that have made the city insolvent.

He has instituted a moratorium on all of Detroit's payments on unsecured debt, seeking forgiveness of millions of dollars owed by the city.
But something seems a bit ingenuous. The manager will default on $2.5 billion, but he will set aside $1.25 billion over 10 years for public safety, lighting, and "neighborhood blight elimination."

CO2 Emissions And A Dose Of Reality -- Platts

Platts has an incredibly good essay on CO2 emissions. Too bad it won't be read by cultists or faux environmentalists who don't mind torturing tortoises and slicing and dicing whooping cranes.

The introduction:
Several years ago, Brice Lalonde, who at the time was France’s ambassador to successive rounds of climate change talks, explained to me what concerned him most about the role carbon dioxide emissions play in global warming.
He argued that CO2 emissions stay in the atmosphere for decades, don’t dissipate, but rather accumulate. Thus, only a huge annual reduction of CO2, starting now, has any chance of ultimately making any real difference. Small reductions hardly matter.
Frankly, Lalonde thought we were all doomed. My only counter at the time parroted that of Freeman Dyson, the theoretical physicist and mathematician who is retired and lives in Princeton, New Jersey, who reasoned, also a few years back, that we do not likely know and we cannot predict with any certainty how the chemistry in the atmosphere is going to behave over time.
The EIA and IEA data points:
The Paris-based IEA, which keeps tabs on CO2 emissions on a global basis, said that energy-related CO2 emissions increased 1.4% in 2012, and totaled 31.6 billion metric tons.
The Washington-based EIA, which is part of the US government and looks primarily at US stats, has reported that in 2012 US energy-related CO2 emissions totaled 5.29 billion mt, a very significant 12.1% decrease from the 2007 peak year of 6.023 billion mt, and below where CO2 emissions were in the year 1995.
Of the IEA and the EIA’s two 2012 totals, the most significant is the IEA’s global 31.6 billion mt number, since–as scientists like to tell us–it doesn’t really matter where the emissions occur. We all share the same atmosphere.
The reason for the decrease has been posted previously.

If Brice Lalonde is right, then quibbling over this increase here versus that decrease there, is really all irrelevant.
But then, so too may be CO2 legislation in the US. In the summer of 2010, when the Waxman-Markey cap-and-trade climate change legislation failed to pass the Senate, the idea was to reduce US CO2 emissions by 17% from 2005 levels (5.999 billion mt) by the year 2020.
The legislation therefore envisioned a 1.018 billion mt reduction from the 2005 level over a 10-year period. What has come about without legislation is a 709 million mt reduction from the 2005 level in just three years.
Bottom line:
The conclusion to all this is that some headway is being made in reducing emissions in some key places such as the US, which has gone from being responsible for generating 20.7% of all the CO2 in 2007 to generating 16.7% in 2012.
Platts has it right:
Who knows if that will make any difference whatsoever.
But the president will take no chances. He will announce his global warming policies in July which will a) cost US taxpayers gazillions of dollars; and, b) will give aid and comfort to China. Google it.

Global warming stopped 15 years ago. But no one knows why.

A Note To The Granddaughters

Some financial advice: CNBC has a story today suggesting that "young people are ditching credit cards."

I wouldn't read too much into that story or the statistics. There appears to be an East Coast / elitist slant to the story.

At some point most people need a credit history (unless they plan to pay for their car, home, or some other big ticket item with cash). The easiest way to get a credit history is with a credit card. If one is worried about overspending, one can ask that the credit card have a $500 limit.  There are other ways to grow a credit history, but again, a credit card is the easiest. Paying one's bills on-line can be done without a credit card (debit cards, direct bank transfers) and can probably establish a credit history by paying utility bills on time.

But the majority of those without a history of paying off credit cards will be shocked when they find how difficult it is to get a loan for a used or new car, or for a home, or even "pass" an apartment rental credit check.

The article mentions that many of these folks without credit cards have high credit scores based on paying off their education loans. The key there: make sure the loans are in your name, even if your parents are paying off the loan.

Creditors need to see that borrowers have a) the wherewithal to pay back the loan; and, b) the discipline to make monthly payments over a period of time.

Director's Cut: June 14, 2013, For April, 2013


June 17, 2013: Rigzone report The new record was set despite:
North Dakota operators faced difficulties with weather this spring. April 2013 was the coldest month on record with over 80 percent of state highways blocked in mid-April by heavy snow, and May 2013 was the wettest on record, said NDIC Department of Mineral Resources Director Lynn Helms in a statement.
June 14, 2013: Bloomberg's report. Included in the report:
Bakken oil priced on the spot market in Clearbrook, Minnesota, weakened by 25 cents yesterday to $2.75 a barrel above West Texas Intermediate crude in Cushing, Oklahoma, according to data compiled by Bloomberg.
About 75 percent of Bakken oil left North Dakota on trains in April, up from 71 percent in March, the state Pipeline Authority said. About 17 percent was shipped out via pipeline, down from 20 percent in March.
Original Post

The new Director's Cut is out.

April production hit another all-time high: 793,249 bopd.

April producing wells also at an all-time high: 8,758 wells.

May permitting dropped a bit (211) from March (218) but up from April (202).

Price of crude oil remains in the high 80's. US dollars.

It was nice to see Mr Helms acknowledge the challenges for the men and women in the field:
Operators have not been able to catch a break. April 2013 was the coldest on record, on April 15th over 80% of state highways were ‘no travel advised’ due to the heavy snow fall, and more recently May 2013 is the wettest on record. Uncertainty surrounding federal policies on taxation and hydraulic fracturing regulation continue to make investors nervous. Pressure on the federal budget has led to a budget proposal that eliminates deductions for intangible drilling costs and the depletion allowance.

Comments To The Blog


Later, 11:46 am: yes, Yahoo!Mail changed the way they manage comments. They can be posted; it's a long story; I won't bore you with the details.

Original Post

It appears I can receive, but cannot automatically, post comments to the blog.

I am hoping this is just a glitch.

Yahoo!Mail has made another change with their mail application and it's possible the change has resulted in this new "glitch" if that's what it is.

I still get comments, so please keep sending them. If you prefer, send your comments directly to my e-mail address which can be found at the site. I never reveal names, addresses, etc., unless I have permission from the sender. And I don't do anything with the comments once I post them, except delete them.

If the Yahoo!Mail glitch continues, I will probably manage comments differently. I will still get them, but I will post them in a different manner.

Wow, what a pain. I may have to hire a web site developer to manage this website. Smile.

The "blogger" application is owned by Google. Yahoo!Mail is owned by Yahoo. And, of course, NSA owns both. But I digress. Maybe the NSA, IRS, CIA, FBI, CBO, POTUS, EIA, IEA, OPEC, NDIC, NRC, NDC, or Sarah Palin were upset with something I recently posted, and are messing with my site.

Off the net for awhile. Walking.

Congratulations to the roughnecks for setting another Bakken daily production record.

ObamaCare Already Resulting In Cost-Shifting: Strikingly Is The Word Used By IBD

Investor's Business Daily is reporting:
Spending on health benefits in service occupations and among small firms exposed to ObamaCare mandates shrank over the past year, new Labor Department data show.
Although employers face penalties in 2014 if they fail to offer affordable coverage, this decline in spending on health benefits shows that they're finding ways to shift some of ObamaCare's looming costs back to the government.
Strikingly, Bureau of Labor Statistics data show that health benefit increases came to a standstill in service occupations after the first quarter of 2010 — when ObamaCare became law.
The linked article discusses cost-shifting to the government. For investors this is good news. The more cost-shifting, the better for corporations. Combine that with shell companies in Ireland, and some of these multi-nationals should do very well: tax avoidance and health-care cost shifting will be two nice arrows in the CPA quivers.

But there are other issues which we've been discussing this for quite some time now. Cost shifting is just one, and Illinois and Chicago will show "us" how it's done.

My hunch is that when all is said and done, health care benefits that are actually, legally required by ObamaCare are minimal, and "legal beagles" will sort out these minimum requirements. Premiums across the board will be based on "Cadillac" care though most plans will offer minimum benefits required by the act.

Some Bakken-Centric Companies Hitting New Highs Today, Including Oasis

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

At the moment, the price of oil has "popped" to almost $98, rising more than a dollar today. I'm sure it is almost all due to the weakening dollar. The market, overall, is slightly green, holding the gains it made yesterday.

For Investors Only: COP, Noble, Others, And The Niobrara -- The Motley Fool

Link here.

For archival purposes only.

I don't follow the Niobrara very closely.

From the link:
The results are being closely monitored by the investment community, but we must take the gestalt into consideration. ConocoPhillips has been an impressive player when it comes to unconventional methods. Barclays stated that ConocoPhillips will depend on its unmatched unconventional oil portfolio in North America in order to increase its returns on investments. With that in mind, Barclays also upgraded the company's shares to 'overweight' and increase the target price from $67 to $80. In a release note to investors, Barclays informed that along with ConocoPhillips, Suncor Energy and Husky Energy will offer the best value in the next year or so.
Noble, the other bigwig in the area, plans to drill more than 500 wells every year by 2017, in Niobara Shale. Noble expects its production to increase by 17% each year for the next five years. That hope comes from its investment in Niobara, according to a release note. With a net recoverable resource of 2.1 billion barrels of oil equivalent (boe), the figure is already a 60% increase from what the company thought it would get from Niobara. Noble described Niobara as a top-tier American oil play that will yield almost 175 million Boe by 2017.
Anadarko produced an average of 80,000 boe per day at its Niobara and Codell acreage a year ago. Anadarko also indicated that it will spend $1 billion a year in order to develop and extract from Niobara Shale. This makes Anadarko one of the biggest spenders in Niobara. The company’s interests are mostly located at the Wattenberg field where the estimated resources are between 500 million and 1.5 billion Boe.
Disclaimer: this is not an investment site. I post links to The Motley Fool to get a better perspective of the Bakken. Do not make any investment decisions based on what you read here or what you think you may have read here. 

The Bakken Is Here To Stay -- The Dickinson Press

A North Dakota Statue University Study.
  • estimate of wells to be drilled in the Williston Basin keeps going up (note: these are only Bakken/Three Forks estimates; the Spearfish and the Tyler will follow; posted earlier; the Helms update, January, 2013)
  • 10 wells/rig now; 12 wells/rig by 2032 (note the date: 2032)
  • 120 FTE/rig to 100 FTE/rig by 2016 (significant?)
  • still at 150 rigs as late as 2024
  • consensus projection: 40,000 wells; Helms differs significantly
  • growth in employment "slows" in 2016, but continues to grow, just at a slower pace; will continue to increase through 2020; slow leveling off through 2036
  • oil service employment surges from around 10,000 now to over 30,000 by 2026
  •  the historic employment for Williston results in a stunning slide: flat at 11,000 from 1990 to 2006; then straight up to over 30,000 by 2010, and still growing
  • NDSU divides the oil patch into three regions: Minot, Williston, and Dickinson
  • Williston, 2030: 60,000 and levels off, employment
  • Minot, 2030: 60,000 and continues to rise slowly, employment
  • Dickinson, 2030: 35,000 and slight rise thereafter
From that data, the study then anticipates housing needs. 

Rugby, North Dakota -- Front Section, Wall Street Journal -- Corn, Global Warming, Great News

As you read the following story, think about the two new fertilizer plants going up in Jamestown, and Grand Forks and the potential for these two plants to transform the economy of North Dakota.

The Wall Street Journal is reporting:
RUGBY, N.D.—Wheat has long dominated the windswept farm fields of the northern Great Plains. But increasingly, farmers here are switching to corn, reflecting how climate change, advancements in biotechnology and high corn prices are pushing the nation's Corn Belt northward.
Last year, corn narrowly eclipsed wheat as North Dakota's most valuable crop as farmers produced a record corn harvest. This year, as farmers across the Corn Belt are finishing up the planting season after an unusually wet spring, the U.S. Department of Agriculture has forecast that 4.1 million acres of North Dakota will be sown with corn, an all-time high and a nearly threefold increase over a decade ago.
The shift, which is occurring in northern Minnesota and Canada's Manitoba province as well, shows how warming temperatures and hardier seeds are enabling farmers to grow corn in areas once deemed inhospitable to the crop. As a result, North Dakota's farmers, who produced 4% of last year's U.S. corn crop and are benefitting from high prices for other crops, are invigorating the state's agricultural economy at the same time its energy sector is thriving.
Corn prices are about double historical norms, driven by food demand in China and other fast-growing countries, as well as the rise of U.S. ethanol production.
While politicians are wringing their hands over a 3-millimeter rise in sea levels over the next century, North Dakota farmers are taking advantage of warmer weather, and perhaps longer growing seasons. What's not to like?

By the way, this complements an earlier story posted by The WSJ talking about the expansion of "North Dakota" hard wheat west into Montana. 

See many, many other stories on North Dakota agriculture and corn by going to the "agriculture" and "corn" tags at the bottom of the blog.

Friday Morning News And Links -- WSJ Front Section With Big Story From Rugby, North Dakota --

Active rigs: 184 (steady, down)

RBN Energy: WTI/Brent discount/parity.

Reuters: Surge in CBR slows as WTI/Brent narrows.

Williston Basin 2012: projections of future employment and population (a PDF).

Good news, bad news: inflation continues to fall in the Eurozone. Why? Because employment continues to fall in the Eurozone.
The euro zone's malaise was visible in a 0.5 percent drop in employment first three months of the year from the previous quarter. The data from Eurostat reflected an unemployment rate that reached a record high in April, with 19.4 million people out of work.
The first quarter fall in employment was deeper than the 0.3 percent decline in the last three months of 2012, and meant the number of people in jobs was 1.0 percent lower than a year ago.
WSJ Links

Section M (Mansion):

Section D (Arena):
For the fifth week running, an order of monastic nuns in rural Missouri has the nation's top-selling album of traditional classical music. Most of these isolated singers don't know that they created a niche hit with their recordings of ancient chants and hymns, or that it's their second release to reach No. 1 on the Billboard chart.
Phil Robertson likes to spend his days untethered, catching crawfish or shooting ducks in the woods surrounding West Monroe, La. He doesn't own a cellphone, a computer or a watch, and can't even be bothered to trim his beard, which he cuts once a decade.
So he was skeptical when a publisher approached him to write a memoir. "I said, 'Listen, I don't have time to write a book,' " Mr. Robertson said.
he publisher, Howard Books, persisted, offering to pair him up with a co-author. He agreed, and the resulting book, "Happy, Happy, Happy," became a No. 1 best seller this spring, with 680,000 copies in print.
No one is more astonished by the book's success than Mr. Robertson, who dictated his life story to sports journalist Mark Schlabach, and confesses he hasn't actually read it. "I talked to him for about 10 hours. He left. The next thing I knew, somebody said the book was No. 1 on the best-seller list," he said.
Section C (Money & Investing):
Welcome to America's "industrial renaissance."
If it isn't much to look at, that is because there isn't that much to it. Friday's report on industrial production for May might provide a positive data point after a weak April: Economists polled by Dow Jones Newswires see growth of 0.1%, up from a drop of 0.5%. Even so, that would bring the year-over-year pace to just 1.8%, the slowest in more than three years.
Instead of a broad revival, American industry is seeing pockets of strength. The most striking is a result of the shale revolution in energy. Surging oil and natural-gas output are an industrial activity in their own right, but they also provide a boost to certain other sectors, particularly chemicals.
Section B (Marketplace):
An analysis by The Wall Street Journal shows that the extension of a big tax credit quietly boosted the profits of dozens of companies. Under accounting rules, the companies reported a year's worth of benefits from the research-and-development tax credit in their first-quarter results, lifting profits for many of them by more than 10%.
Section A: