Tuesday, August 13, 2013

Huge Educational Experience For Babe Ruth Baseball Players; Williston Hosts 13-Year-Old Babe Ruth Tournament

The Bismarck Tribune is reporting:
Out-of-state teams are coming from Niskayuna, N.Y., Lawrenceburg, Tenn., Weimar, Texas, Cambridge, Ohio, Coventry, R.I., El Segundo, Calif., and Beaverton, Ore. There are three teams from North Dakota. Williston qualified as the host team, Fargo qualified by winning its state tournament, and Grand Forks qualified by winning the regional.
And then this:
Pool play for the 10-team tournament is scheduled to open Saturday in the oil patch city that recently adopted the title of "Boomtown USA," after watching its population soar from 15,000 to 35,000 people in less than five years. That happened after experts figured out how to extract oil from the rich Bakken shale and Three Forks formations.

The rush has helped bump up the average annual salary in Williams County, home to Williston, to $78,364 in 2012, tops in the state and more than triple the average wage in the county a decade ago. The Williston area has increased its hotel space from 600 rooms four years ago to 1,700. The population explosion also has brought less desirable increases in traffic and crime.

Random Note On Genesee & Wyoming's Rail Traffic: Doubled Year-Over-Year

Genesee & Wyoming's traffic in July 2013 was 165,072 carloads, up 104.2% YoY, and up 8.8% compared to total July 2012 carloads pro forma for the RA acquisition : G&W's traffic in July 2013 was 165,072 carloads, an increase of 84,214 carloads, or 104.2%, compared to G&W's traffic in July 2012, and an increase of 13,400 carloads, or 8.8%, compared to total July 2012 carloads pro forma for the RA acquisition.

From Yahoo, this is what GWR hauls:
The company'’s railroads transport various commodities, including coal and coke; pulp and paper; metallic ores; metals commodities; minerals and stone commodities; lumber and forest products; farm and food products; chemicals and plastics; petroleum products; autos and auto parts; and municipal solid waste, construction and demolition debris, and haulage traffic.
Commodity change, 2Q13 v 2Q13 (company's corporate presentation):
  • petroleum products: up 60% (CBR)
  • metallic ores: up 28% (new mine in Australia)
  • auto and auto parts: up 25% (exports to Asia; North American demand)
  • coal and coke: up 11% (higher domestic steam coal)
  • everything else seven percent or less, or negative

Poll: Will North Dakota Set A New Crude Oil Production Record With The Release Of The Next Director's Cut?

For background to this new poll, re-read the post of June 21, 2013.

But first the results of a current poll in which we asked how many acres do you think Zenergy will sell in the Bakken (there was a press release some time ago that Zenergy was shopping its Bakken acreage but to date, there has been no update). But readers suggested:
  • 50,000 acres: 20%
  • 100,000 acres: 48%
  • 250,000 acres: 23%
  • 500,000 acres: 9%
So, we will see -- assuming a deal is ever announced.

Now the new poll. The Director's Cut should be out this week. Will North Dakota set a new crude oil production record?
  • No:
  • Yes, by < 2%:
  • Yes, by 2 - 3%:
  • Yes, by > 3%:

Seventeen (17) New Permits -- The Williston Basin, North Dakota, USA; Four Wells Coming Off Confidential List Wednesday

Active rigs: 183 (no change)

Seventeen (17) new permits --
  • Operators: BR (7), Hess (4), Oasis (3), Whiting (2), Corinthian Exploration
  • Fields: North Creek (Stark), Hawkeye (McKenzie), Banks (McKenzie), Blue Buttes, McKenzie), Alger (Mountrail), Northeast Landa (Bottineau)
  • Comments: the BR permits are for a 4-well pad and a 3-well pad
Wells that came off the confidential list were posted earlier; see sidebar at the right.

Four (4) producing wells now completed:
  • 23623, 1,040, Abraxas, Lillibridge 20-17-2H, Pershing, t7/13;
  • 24330, 514, Crescent Point, CPEUSC Sylven 11-2-158N-100W, Wildcat, t8/13;
  • 24294, 324, CLR, Langved 1-35H, Beaver Lodge, t7/13; cum --
  • 24410, 56 (no typo), Hess, BB-Budahn A 150-95-0403H-5, Blue Buttes, t7/13; drilling rig started March 11, 2013; TD, March 27, 2013; gas peaked at 900 units; no evidence this well has been fracked yet;
Wells coming off the confidential list on Wednesday:
  • 23700, 790, Fidelity, Albert 14-23H, Dickinson, t3/13; cum 50K 6/13; 30 stages; 2.5 million lbs; Upper Three Forks; a trip gas of 2,655 units was noted. 
  • 24442, drl, Hess, EN-State B 155-93-1609H-4, Alger, no production data,
  • 24657, 344, CLR, Farver 2-29H4, Hamlet, Lower Three Forks, 30 stages; 3 million lbs; 
  • 24699, 551, Samson Resources, Baja 2215-2, Ambrose, middle Bakken; t6/13; cum 13K 6/13; 25 stages; 1.6 million lbs; all sand;
 

WPX Permits For A 9-Well Pad In Reunion Bay; The Alfred Old Dog Wells

Updates

March 29, 2019: update here; halo effect; jump in production. 

October 11, 2014: current screenshot -




Permits
  • 26154, 1,842, WPX, Alfred Old Dog 19-18HD, t9/14; cum 424K 1/19; off line late 2018;
  • 26153, 1,531, WPX, Alfred Old Dog 19-18HZ, t10/14; cum 272K 1/19;; only 4 days in January; off line late 2018; back on line as of 11/18;
  • 26152, 968, WPX, Alfred Old Dog 30-31HD, t8/14; cum 295K 1/19; off line late 2018;
  • 26151, 1,146, WPX, Alfred Old Dog 30-31HZ, t6/14; cum 314K 1/19; only 1 day in December; 20 days in January; off line late 2018; back on line as of 11/18;
  • 26149, 990, WPX, Alfred Old Dog 30-31HC, t7/14; cum 339K 1/19; only 1 day in December; only 16 days in January; off line late 2018; back on line as of 11/18;
  • 26148, 556, WPX, Alfred Old Dog 30-31 HY, t6/14; cum306K 1/19; 15 days in December; full 31 days in January, 2015; off line late 2018; back on line as of 11/18;
  • 26147, 1,681, WPX, Alfred Old Dog 19-18HC, t4/14; cum 398K 1/19; off line late 2018; back on line as of 11/18;
  • 26146, 1,223, WPX, Alfred Old Dog 19-18HY, 25 stages; 3.2 million lbs sand, t4/14; cum 295K 1/19; off line late 2018; back on line as of 11/18;
  • 26145, 1,163, WPX, Alfred Old Dog 19-18HB, pt4/14; cum 358K 1/19; 31 days in December, only 17 days in January, 2015; off line late 2018; back on line as of 11/18;
Original Post 

Yesterday, the NDIC reported twenty-three (23) new oil and gas permits. Nine of those were permits for WPX on one pad in Reunion Bay, the Alfred Old Dog wells.

The permits are sequential, inclusive, from #26145 through #26154, with the exception of #26150 which is a non-WPX permit.

A hand-drawn diagram helps me visualize how these wells will look.  These nine wells will be sited on one pad in the northeast quadrant of the northwest quadrant of section 30-150-93 (I just noticed an error on my diagram noting the township, but I may/may not fix it). Yesterday, the sites were not noted on the NDIC GIS map server but within the last couple of hours they have been placed on the map. My hand-drawn map is pretty close to what the NDIC has. I used data from the permit information as provided by the NDIC; it looks like on the GIS map server the wells will be sited pretty much on a line; if so, my map is a bit off. More importantly, I was correlating direction of the well with their siting and their legal designation (HC, HY, HZ, for example).

I assume they will target the middle Bakken and the upper Three Forks (remember the good old days, when there was just the "Three Forks." Now it's the "upper" three Forks, and the "lower" Three Forks.

They will all be long laterals.  Five will run north, and four will run south. Each well will sited about 50 feet from its neighbor which is typical, so far, of Bakken pad drilling.



Two other wells in the same spacing unit are instructive:
  • 19603, 332, WPX, Mandaree 30-31H, t5/11; middle Bakken, cum 356K 1/15; pump, 4/12;
  • 20035, 339, WPX, Maggie Old Dog 19-19HW, upper Three Forks; t4/12; cum 318K 1/15; 22 stages; 3 million lbs; trip gas nearly 10,000 units; 5' to 20' flares; pump 4/13;
Other errors may exist; but again, this is for me to help visualize how the Bakken is being developed. If anything looks wrong, it probably is; go to the source for accuracy.

If This Works, This Will Be A Game Changer -- Western Canadian Oil May Have Found A Northern Outlet

A reader sent me this link (thank you). The Winnipeg Free Press is reporting:
Canada could begin shipping crude oil through the northern Manitoba Port of Churchill as early as this fall, a senior company official said Monday.
Darcy Brede, president and chief operating officer for Omnitrax's Denver-based parent company, Omnitrax Inc., said negotiations are underway with about 25 Alberta oil companies that are interested in shipping oil through the port to refineries on either the east coast of Canada or in Europe.
But before prospective customers are willing to commit to anything long term, they want to conduct a trial run, Brede said. So if all goes well, a tanker carrying about 330,000 barrels of oil will leave the port on a test run in October.
Before that can happen, the port has to complete about $2 million in upgrades to its oil-handling system, Brede said. The upgrades, which should be completed by the end of next month, will boost the port's oil-pumping capacity to about 3,000 gallons per minute from the current 800 to 900 gallons per minute.
He said Omnitrax officials hope to know in "a month or two" if they have a deal that would allow the test run to proceed.
Brede said shipping oil through the port on a regular basis would help ensure the long-term viability of the port, which is used primarily to ship grain to export markets.
The Port of Churchill sits on the Hudson Bay which opens to the Northwest Passages out to the Atlantic Ocean.  [Go to Google maps; type in Port of Churchill Manitoba and then zoom way, way out.]

I would assume there is going to be more railroad track needed in Manitoba.

New CBR Capacity Coming On Line For Western Canadian Sands Oil

Updates

August 17, 2013: new $100 million CBR proposed for Kerrobert, Saskatchewan. Kerrobert is at the apex of an isosceles triangle equidistant from Calgary and Edmonton; it is almost due north of Harve, Montana. 

Original Post

From The Financial Post, sent to me by a reader (thank you):

 NEW RAIL TERMINAL OIL CAPACITY (2012-2015)
 
City, Province (Capacity)
Hardisty, AB (120,000 bpd)
Unity, SK (90,000 bpd)
Edmonton, AB (Bruderheim) (70,000 bpd)
Northgate, SK (70,000 bpd)
Lashburn, SK (60,000 bpd)
Cromer, MB (60,000 bpd)
Southall, SK (52,000 bpd)
Edmonton, AB (40,000 bpd)
South Cheecham, AB (32,000 bpd)
Lynton, Fort McMurray (25,000 bpd)
Lloydminster, SK (23,000 bpd)
Instow, SK (18,000 bpd)
Unity, SK (15,000 bpd)
Tilley, AB (9,000 bpd)
Whitecourt, AB (9,000 bpd)
Wainwright, AB (6,000 bpd)
Sexsmith, AB (6,000 bpd)
Lloydminster, SK (3,000 bpd)
TOTAL  708,000 bpd

The proposed Keystone XL: 850,00 bpd

Filloon Comments On Magnum Hunter

Link to SeekingAlpha:
Magnum reported a Q2 loss of 18 cents/share. This missed estimates by 7 cents/share. Total revenues increased 98% year over year. 48% of this production was liquids. Oil and gas production increased 23% year over year. From this standpoint the company did well, but costs were also a big problem.
Magnum saw its LOE increase per barrel of oil equivalent. This was attributed to high costs in the Bakken, bringing liquids production on line. Company production was negatively impacted due to Appalachian well shut ins as a result of pipeline and liquids handling issues with its midstream assets. Magnum also had permitting issues in West Virginia.

Age Of Inexpensive Oil Is Over -- SeekingAlpha; Natural Gas Will Be The Bridge To Coal

This article follows an earlier article in which we discussed Berkshire's Charlie Munger's thoughts on the price of oil.
We hear all the time from the talking heads on CNBC that China is slowing and oil prices may collapse. The key word though is slowing. It is still growing, and so is its demand for oil. In fact demand for oil is growing in almost all of the world's most heavily populated countries. The International Energy Agency's most recent growth projections for 2014 are for an increase in daily demand of 1.1 million barrels per day.
That rise in demand of about 1 million barrels per day year-on-year is likely what we can expect going forward as China, India and the billions of people in the emerging economies consume more oil. And at a high level, that does provide some context as to how significant the tight oil ramp up in the United States will be to global oil prices.
Every year, the world needs to raise its daily global oil production by 1 million barrels per day in order to keep up with demand. EOG's Mark Papa is forecasting that by 2015 tight oil production can increase by 2 million barrels per day. That is 3 years from now, which would mean that daily global oil demand will have increased by 3 million barrels per day and outpaced the growth in tight oil production.
******************************

A note I sent to Don regarding this article in reply to his thoughts on the article:
Munger's thoughts about the missed opportunity of buying cheap Saudi oil back in the 1950's/1960's -- hindsight is 20/20.

I thought natural gas would be the bridge to nuclear energy.... that was before the Japanese debacle.

Now it appears that some people think natural gas is the bridge to renewable energy (wind and solar). The numbers don't work out. There is not enough surface area on earth for wind or solar to supply all the energy needs, and there are fewer and fewer places where "wind" economics work.

I think some folks are going to rue the day 30 years from now, when they look back, and learned O'Bama and company invested in wind technology when they should have been investing in nuclear technology. It takes ten to twenty years to bring a nuclear power plant on-line.

So:
  • before the Japanese debacle: natural gas was going to be the bridge to nuclear energy acceptance
  • after the Japanese debacle: natural gas is the bridge to renewable energy (wind and solar)
  • reality in 30 years: natural gas will be the bridge to coal

Another Piece Of The Train Is Coming Off The Track

Watch the market today! The health insurers were just given a huge Christmas in July gift (yes, I know it's August, but it's early August, but I assume the insiders all knew in July this was going to be announced by the end of the summer). I've always maintained the insurers will do well during the transition. I assume they all raised their rates in anticipation of the costs associated with O'BamaCare. Now that those costs will come down significantly, my hunch is that the insurers will not be lowering their premiums.

Forbes is reporting:
First, there was the delay of Obamacare’s Medicare cuts until after the election. 
Then there was the delay of the law’s employer mandate.
Then there was the announcement, buried in the Federal Register, that the administration would delay enforcement of a number of key eligibility requirements for the law’s health insurance subsidies, relying on the “honor system” instead. 
Now comes word that another costly provision of the health law—its caps on out-of-pocket insurance costs—will be delayed for one more year
According to the Congressional Research Service, as of November 2011, the Obama administration had missed as many as one-third of the deadlines, specified by law, under the Affordable Care Act. 
Here are the details on the latest one. Obamacare contains a blizzard of mandates and regulations that will make health insurance more costly.
One of the most significant is its caps on out-of-pocket insurance costs, such as co-pays and deductibles. Section 2707(b) of the Public Health Service Act, as added by Obamacare, requires that “a group health plan and a health insurance issuer offering group or individual health insurance coverage may not establish lifetime limits on the dollar value of benefits for the any participant or beneficiary.”
Annual limits on cost-sharing are specified by Section 1302(c) of the Affordable Care Act; in addition, starting in 2014, deductibles are limited to $2,000 per year for individual plans, and $4,000 per year for family plans.
A catastrophic illness, the reason most folks buy health care insurance, will simply drive a family to bankruptcy. O'BamaCare would have lessened that risk. Folks will have to wait until at least 2015 for that safety net to be raised again. My hunch: it won't be.

Trainwreck. 

President O'Bama: Wall Street's gift that keeps on giving.

About the only mandate left is a mandate for main street: the individual mandate. It will be interesting to see if that mandate is delayed. If not, it will be the only significant piece of ObamaCare that will not be delayed or scrapped.

Necessity Is The Mother Of Invention; More Exciting Stories Coming Out Of The Bakken

There is a new transmission line being built from Center, ND, to Grand Forks, ND.

Center is about 50 miles northwest of Bismarck, well outside the Bakken oil patch. Center is about 200 miles west of Grand Forks as the crow flies; the transmission line will be about 250 miles long. The transmission line is apparently pretty much finished at the east end, but construction is now ready to begin out west.

The Milton R. Young power plant, a Minnkota Power Coop coal plant, is located at Center.

The Bismarck Tribune is reporting:
Target Logistics, best known for man camp housing in the oil patch, will move 16 mobile housing units into McClusky later this month.
The company is providing housing for up to 84 workers on the Minnkota Power Cooperative transmission line that will stretch from near Center to Grand Forks.
The line is mostly complete on the eastern end. The shift into McClusky signals startup of work on the western-Carrington-to-Center stretch, said Minnkota spokesman Kevin Fee.
The units, which are more mobile than the company's traditional modules in oil counties of Mountrail, Dunn and Williams, are currently located near McHenry in Foster County. Construction on the 345-kV line started in that region last summer.
Of passing interest, does Target Logistics not have any modules in McKenzie County?

Whatever. There are so many story lines in that little article one knows not where to start. So, we will move on.

Japan's Debt As A Percentage Of Its GDP

Time for a new poll to see if people are paying attention. I posted the answer to the upcoming poll just a few minutes ago in another stand-alone post.

First, the results of one of the current polls in which we asked, which do you prefer for fracking:
  • all sand: 23%
  • all ceramics: 25%
  • a mixture: 52%
Now the new poll -- which has absolutely nothing to do with the Bakken. The US debt has been coming down recently; last week Bloomberg said that US debt was less than 6% of the GDP of the US.

Japan, which has a booming economy compared to the US, also has a bit of debt. According to the Wall Street Journal, how does the Japanese debt compare with their GDP?
  • 5%
  • 7.5%
  • 10%
  • 12.5%
  • 250%

Tuesday Morning Links, News, And Views

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.

Market futures: Dow up nicely; oil up slightly. Libyan ports closed again. 

Active rigs in North Dakota: 183 (flat)

RBN Energy: update on the glut of Alberta, Canada, natural gas.
Alberta’s gas reserves are enormous: an estimated 33 Tcf of conventional gas, up to 500 Tcf of coal-bed methane gas, and up to 1,291 Tcf of shale gas, though it remains to be seen how much of that unconventional gas can be economically produced. Alberta accounts for more than 70% of Canada’s gas production, and more than 90% of Alberta’s gas comes from vertical wells. That is expected to change as the major shale plays in the province shift from exploration to production, but decisions on investing billions of dollars in unconventional gas production, new pipelines and the like will hinge on finding markets for that gas.
...  All seemed to be going reasonably well for Alberta gas producers until the shale-gas revolution. Over the past five years, however, more and more gas buyers in the traditional markets for Alberta gas have switched to U.S. shale gas supplies--from the Marcellus and Utica plays in particular--and several new pipelines now under development will give U.S. producers enhanced access to those consumers....
the changing dynamics of the North American gas market—and changes in TransCanada gas-transportation pricing—have made Alberta gas the odd man out. Another way to put it is, even at the relatively low spot prices for Alberta gas, it makes more sense to store gas in-province than it does to flow it through the Mainline.
Of course, something would have to give if, as seems possible for the first time in decades, Alberta’s gas-storage facilities—estimated to have the capacity to store as much as 400 Bcf--are filled to the brim in the next few weeks. That storage max-out probably won’t happen, but even the thought of it has gas producers tracking the market very closely.
If there is literally no more in-province storage capacity left, Alberta gas prices would need to plummet to move gas to the east and/or producers hedged the least and exposed the most to fluctuating spot prices would need to consider “shutting in”—that is, suspending gas production at some wells to ratchet Alberta’s gas grid back into balance.
So, will we be seeing stories of natural gas storage maxing out in Alberta by the end of the summer? Stay tuned.

WSJ Links

There was almost nothing in today's edition that is worth posting, linking, or talking about. Even the opinion page was pretty barren.

There was a primer for Caroline Kennedy, the president's choice for US ambassador to Japan. Does anyone really care? By the time she gets settled in, it will be 2014 and by 2016 she will be packing her bags. She won't be the first inept celebrity ambassador and she won't be the last. She will be a novelty at Japanese cocktail parties. This is simply resume-building for Ms Kennedy, after her dismal showing running for public office.

On another note, I don't know if I read this correctly, but a news article said with the recent improvement in the US economy, the US debt is back near 4% of the nation's GDP (last week Bloomberg said under 6%).  According to the Wall Street Journal, Japan's debt is nearly 240% of GDP (no typo). Here's the link:
Supporters of the higher tax, though, will point to the details of the latest GDP data, especially the 3.1% annualized growth in private consumption. Some of Mr. Abe's closest advisers, including Japan's finance minister and central bank governor, say raising the consumption tax is essential to shore up public finances as Japan's total public debt nears 240% of GDP. The central bank has signaled that fiscal tightening is a prerequisite for even looser monetary policy.
The real question: is Japan too big to fail? Would Japan meet the criteria necessary to join the EU?