Sunday, February 2, 2014

Wow, Will It Ever End? Congress "Restores" The Extra Fee On Home Heating Oil

The Washington Times is reporting:
Congress' mammoth farm bill restores the imposition of an extra fee on home heating oil, hitting consumers in cold-weather states just as utility costs are spiking.
The fee — two-tenths of a cent on every gallon sold — was tacked on to the end of the 959-page bill, which is winding its way through Capitol Hill. The fee would last for nearly 20 years and would siphon the money to develop equipment that is cheaper, more efficient and safer, and to encourage consumers to update their equipment.
It’s just one of dozens of provisions tucked into the farm bill, which cleared the House on a bipartisan 251-166 vote last week and faces a key filibuster test in the Senate on Monday. It is expected to survive and face final passage Tuesday before heading to President Obama’s desk.
Filibuster?

But I don't get it -- partisan vote in the House, but it's expected to pass in the Senate, controlled by the opposition.

All political theater. And in the end, increased heating bills for those living in New England.

But let's get real. 

Two-tenths of a cent for every gallon sold. Assume 750 gallons/calendar year x one cent = 750 cents, and then one-fifth of that, or 150 cents = $1.50/year. And that warrants a headline, and a post on this blog?

Call It A Wrap -- January, 2014, Is History

FOR THE MONTH OF JANUARY, 2014 (JUST THIS ONE MONTH)

Active rigs: Averaged about 190 active rigs, many of them drilling saltwater disposal wells.

Permits by operator (Hess has raised the bar; ramped up; XTO runner-up):
  • American Eagle: 6
  • BR: 11
  • CLR: 21
  • Emerald Oil: 8
  • EOG: 10
  • ERF: 5
  • Fidelity: 8
  • Hess: 24
  • HRC: 15
  • KOG: 16
  • MRO: 9
  • Murex: 2
  • Newfield: 9
  • Oasis: 14
  • OXY USA: 10
  • Petro-Hunt: 14
  • Slawson: 5
  • Statoil: 3
  • Triangle: 5
  • Whiting: 19
  • WPX: 7
  • XTO: 23
Permits by county (I knew McKenzie was going to be huge, but even so, surprising; I was surprised by the few new permits in Williams County):
  • Divide: 11
  • Dunn: 50
  • McKenzie: 101
  • Mountrail: 44
  • Williams: 15
Permits by field, selected:
  • Alger: 12
  • Banks: 8
  • Bear Den: 5
  • Big Bend: 5
  • Blue Buttes: 5
  • Chimney Butte: 13
  • Eagle Nest: 15
  • Elidah: 10
  • Grail: 0
  • Little Knife: 6
  • Parshall: 10
  • Poe: 6
  • Sanish: 2
  • Siverston: 6
Permits for wildcat wells: 3

Permits: 254 -- on track for 2,990 permits for calendar year, which would be a record.

Friday's Daily Activity Report -- Eighteen (18) New Permits -- Williston, North Dakota, USA

I was so busy with the February NDIC hearing dockets as well as various earnings reports, I completely forgot about Friday's daily activity report.

Active rigs:


2/2/201402/02/201302/02/201202/02/201102/02/2010
Active Rigs19218720116692

Eighteen (18) new permits --
  • Operators: BR (6), Oasis (5), Hess (4), Petro-Hunt (2), Mountain Divide
  • Fields: Elidah (McKenzie), Alger (Mountrail), Little Knife (Dunn),
  • Comments: Mountain Divide has a permit for a well in Divide County;
Wells coming off the confidential list were posted on Friday; see sidebar at the right.

Five (5) producing wells were completed:
  • 25721, 1,863, XTO, Strommen 44X-7D, Killdeer, t11/13; cum 24K 12/13;
  • 25720, 1,789, XTO, Strommen 44X-7H, Killdeer, t11/13; cum 22K 12/13;
  • 25904, 951, CLR, Jefferson 5-17H, Crazy Man Creek, t1/14; cum --
  • 25531, 775, SM Energy, Meadow Valley 3-1H,  West Ambrose, t12/13; cum 9K 12/13;
  • 24924, 168, CLR, Tangsrud 3-1H2, Hayland, Three Forks, t1/14; cum 3K 12/13;
Wells reporting Monday are posted here.

Favorite Super Bowl Commercial

Okay, without question, my favorite Super Bowl commercial, without question, the Bob Dylan-led "new Chrysler 200."

Later: upon reading this, a reader sent me this Variety link -- 
Bob Dylan has moved from “Positively 4th Street” to absolutely Madison Avenue.
By appearing in a longer-than-usual commercial for Fiat Chrysler Automobiles during the Super Bowl Sunday night – and allowing the use of his wordy 1966 single “I Want You” in a separate spot for Chobani yogurt – has cemented an idea that few would have ascribed to him when he first came to prominence in the 1960s: He’s for sale.
“You can’t import the heart and soul of every man and woman working on the line.” Dylan said Sunday night in the latest of a series of Chrysler Super Bowl ads meant to spark pride in America and the cars it makes. “Let Asia assemble your phone…We will build your car.”
He may be for sale, but he certainly knows how to pick his commercials. 

Somehow I didn't even see this as an ad. Just a really nice "commentary" -- though very short -- about the really good basic fiber of the American worker.

2014 Super Bowl Commercial, Bob Dylan

Great Example Of MSM Journalists Not Understanding Change In Oil And Gas Industry; Update On FlexRigs In The Bakken -- H&P; Twenty (20) More FlexRigs For Texas

Don picked up on this; three story lines.
  • first, the Permian is a very, very old field; most thought this field was "dead" a couple of years ago
  • second, some mainstream media reporters still don't "get it" -- new, better, stronger rigs
  • third, these more powerful rigs are being used more efficiently -- pad drilling
The Midland Reporter suggests the Texas boom could be slowing down. Why? "Because rig counts fell slightly" (I can't make this stuff up):
But rig counts in Texas fell slightly in the last three months of 2013, as did the number of jobs in oil field services. Drilling permits for 2013 also declined slightly from the previous year, Ingham noted.
We saw the same thing in the Bakken: rig counts came down slightly, and .... oil production went up anyway.

As Don noted, if the Texas boom shows signs of slowing down, why is H&P building 16 more FlexRigs for the Permian (and just 2 for the Bakken)? Twenty more FlexRigs for Texas; two for the Bakken. See the excerpt below from the H&P conference call.

From the conference call transcript:
As the U.S. land market improves, we are encouraged by increasing customer demand for new FlexRigs. We have announced 35 new AC drive FlexRigs since the beginning of our 2014 fiscal year, and 22 since our last earnings call in November.
The 35 new rigs were contracted with 9 exploration and production companies. Seven of the new rigs were delivered in the first fiscal quarter of 2014, 6 have been delivered in January and we expect the remaining 22 rigs to be delivered in fiscal 2014.
A few additional details on the 35 new builds: 23 are FlexRig3s, 11 Flex 5s and 1 Flex 4; 70% of the new FlexRigs have skid systems for pad drilling. The rigs are scheduled to work in the following basins: 16 in the Permian, 8 in Oklahoma, 4 in the Eagle Ford, 2 each in the Bakken and Utica, 1 each in the Haynesville, Niobrara and Woodbine.
Wow, there are so many story lines in this one post -- the three mentioned above plus several more if one thinks about it....

**************************************
Bureaucrats Don't Understand Human Nature, Either

This is a nice op-ed from The Wall Street Journal why Americans have not taken to ObamaCare.

************************
...and I don't understand this....

I do not understand this, a story in The Los Angeles Times. It is my understanding there is a loophole, or a clause, in this law that allows folks to NOT use gloves if they have specific training in food preparation ... 

MRO To Report A Nice Well Monday

Monday, February 3, 2014
  • 24256, drl, HRC, Fort Berthold 152-93-7D-6-1H, Four Bears, no production data,
  • 24321, drl, CLR, Raymo 4-31H, Dolphin, no production data,
  • 25034, drl, Hess, LK-Thomas-145-97-3625H-4, Little Knife, producing,
  • 25257, 1,380, Whiting, Voll 14-32-1H, Estes, t8/13; cum 33K 12/13;
  • 25258, 1,316, Whiting, Kuykendall 34-31-1H, Estes, t8/13; cum 36K 12/13;
  • 25544, 1,468, MRO, Rudolph 44-10TFH, Reunion Bay, t10/13; cum 43K 12/13;
  • 25837, drl, XTO, Duke 34X-31E, Siverston, no production data
Sunday, February 2, 2014
  • 25400, 2,443, HRC, Fort Berthold 152-94-13A-24-3H, Antelope, t11/13; cum 13K 12/13;
  • 25507, drl, BR, CCU Powell 31-29MBH, Corral Creek, no production data
Saturday, February 1, 2014
  • 23851, 63, Whiting, Davidson 12-31, Delhi, Red River well, t10/13; cum 4K 12/13;
  • 24322, drl, CLR, Raymo 3-31H, Dolphin, no production data,
  • 24727, 220, Fidelity, Ronald 11-32H,  Stanley, t9/13; cum 29K 12/13;
  • 24841, drl, CLR, Dolezal 4-5H, Chimney Butte,
  • 25076, 726, OXY USA, Charles Tompkins 1-31-30H-144-97, Little Knife, t8/13; cum 24K 12/13;
  • 25836, drl, XTO, Duke 34X-31B, Siverston, no production data,
*****************************

25544, see above, MRO, Rudolph 44-10TFH, Reunion Bay, a very nice well,

DateOil RunsMCF Sold
12-20131285510445
11-20131600314938
10-20131370310735

Another Random Example Of Fracking Effects On An Existing Neighboring Well; The "Halo Effect" Of Fracking

The Wells

31800, loc, CLR, Mittlestadt 7-17H, Chimney Butte,
31799, loc, CLR, Mittlestadt 6-17H, Chimney Butte,
31798, loc, CLR, Mittlestadt 5-17H1, Chimney Butte,
23606, 787, CLR, Mittlestadt 4-17H1, Chimney Butte, Three Forks, 30 stages; 2.7 million lbs sand/ceramic; t8/13; cum 176K 4/17;
23605, 854, CLR, Mittlestadt 3-17H, Chimney Butte, t8/13; cum 210K 4/17;
21569, 723, CLR, Mittlestadt 2-20H, Chimney Butte, t7/12; cum 300K 4/17;
17201, 956, CLR, Mittlestadt 1-20H, Chimney Butte, t11/08, cum 249K 4/17;

Updates

September 8, 2014: possibly another example of the halo effect, #18632
 
Original Post

A big "thank you" to a reader who alerted me to this.

This well was completed and tested in November, 2008:
  • 17201, 956, CLR, Mittlestadt 1-20H, Chimney Butte, t11/08, cum 211K 12/13;
This is the production run during a few select months in 2012, after this well had been on-line for a couple of years:

BAKKEN10-201231485848691091356135610
BAKKEN9-201230591157941583435843580
BAKKEN8-201231699773412022547254720
BAKKEN7-20123112548126666000799979990
BAKKEN6-2012301771133411866716710
BAKKEN5-20122915481773498102410240
BAKKEN4-201230160516685138498490
BAKKEN3-20123115501405525108810880

Look at the spike in production in July, 2012. Most interesting, this well was not taken off-line at this time for reworking or re-fracking. Something else needs to explain the spike.

In July, 2012, this well, drilled 475 feet to the west of that well was completed/fracked, and tested:
  • 21569, 723, CLR, Mittlestadt 2-20H, Chimney Butte, t7/12; cum 151K 12/13:
BAKKEN1-2013291008010027333468396504335
BAKKEN12-201231869086913327664766470
BAKKEN11-201223879084683219572257220
BAKKEN10-201230712275373468556955690
BAKKEN9-201230998098544619799779970
BAKKEN8-2012311294413136683110982109820
BAKKEN7-20122818789183361206615885140721813
BAKKEN6-201251522134809130913

My hunch is that there will be more and more examples of the "halo effect" of fracking, as some call it. The operators are very aware of this. The average individual will only become aware of this if he/she has interest in adjacent wells that come on-line at least a year apart. I generally won't go looking for examples, but will post them as I come across them or if readers send me examples.

By the way: note the variability in natural gas production/flaring.

**********************************

On a completely different note, look at the production of the newer Mittlestadt wells in the same section:
  • 23605, 854, CLR, Mittlestadt 3-17H, Chimney Butte, t8/13; cum 57K 12/13:
PoolDateDaysBBLS OilRunsBBLS WaterMCF ProdMCF SoldVent/Flare
BAKKEN12-201331109921100749008448843810
BAKKEN11-201330133771345662391047990291450
BAKKEN10-20133120106199041056417618164901128
BAKKEN9-2013121122810982502810064100640
BAKKEN8-201351212108620146201462

  • 23606, 787, CLR, Mittlestadt 4-17H1, Chimney Butte, Three Forks, 30 stages; 2.7 million lbs sand/ceramic; t8/13; cum 46K 11/13:

PoolDateDaysBBLS OilRunsBBLS WaterMCF ProdMCF SoldVent/Flare
BAKKEN12-20132364486174372552024612590
BAKKEN11-20133011027113436008853474541080
BAKKEN10-2013311661116581106851240811610798
BAKKEN9-2013121010397694855884288420
BAKKEN8-2013419201723233370803708

For CLR, these are very, very good wells. 

I-98

For background to this post, please see a recent post: rumors of an I-98 to be built across North Dakota.

From wiki:
Route 66 is an American TV series in which two young men traveled across America in a Chevrolet Corvette sports car. It ran weekly on Fridays on CBS from October 7, 1960, to March 20, 1964. It was shot on location, and though it derived its title from a famous American highway, very few episodes involved that highway. 
The program starred Martin Milner as Tod Stiles and, for the first two and a half seasons, George Maharis as Buz Murdock.

Route 66 was a hybrid between episodic television drama, which has continuing characters and situations, and the anthology format (e.g., The Twilight Zone), in which each week's show has a completely different cast and story. Route 66 had just three continuing characters, no more than two of whom appeared in the same episode.
Long-time readers will remember the Keystone XL series "As The World Turns" on the Million Dollar Way blog. The last episode was aired almost exactly one year ago. [At the link, you will have to scroll down to the video.]

If all goes according to plan, a new series for the Million Dollar Way, "I-98," will begin airing sometime next week on the blog. It will be a shameful copy of Route 66 with some changes. For one thing, I-98 does not exist yet, so in some sense the series will be a foreshadowing of events yet to occur in the Bakken. In addition, the Bakken characters will be seen driving not less than four vehicles during the two North Dakota seasons: August and winter.

During August, the two protagonists will be driving a yellow Lamborghini bought at the Dallas Lamborghini dealership in Plano, Texas. During the winter, at least one of the vehicles will be the Porsche Cayenne. The other two vehicles will be "product placement" vehicles and will be selected based on terms of the royalty contract the blog receives for featuring those two cars. I'm hoping the Tesla Model S will compete. [Don has already sent one suggestion for a "product placement" vehicle for the spring flood months in the Bakken.]

As in the original series, there will be three main characters, but only two will be featured at any one time.

Samuel "Oilman" Goshwin will be a billionaire oil operator in the Bakken.

Liam Nikolai Gjorkstad ("LNG") will be a Norwegian natural gas promoter who after giving up on a huge wind-generated electric transmission line in Minnesota comes to North Dakota to promote a natural-gas-long-haul trucking corridor on the new I-98.

Because of Goshwin's competing interests outside the Bakken, a third character, Archie McCool, a North Dakota lignite tycoon will often be seen.

Generally, only a synopsis will be provided of each episode.

This May Be The Best Real Estate Post For The Year -- Coming Out Of The Bakken

The Dickinson Press, with photo, is reporting that an old schoolhouse is becoming a home as Williston business owners move into restored 100-year-old schoolhouse, now looking to restore an abandoned church. The story and the photograph are at the link.

Long-time readers will remember I posted the original "fixer-upper" story coming out of the Bakken.

The following was posted on October 18, 2011.

I am re-posting that post, as it originally appeared. [Folks might want to remember my I-98 story that I posted yesterday when reading the post below.]

****************************************

Yesterday (October 17, 2011) I had the opportunity to explore the Bakken outback. I had heard stories of possible gouging on rents and property values so I wanted to check out some of this on my own.

It was an incredibly beautiful day. I had a nice chat with some property owners, real estate agents, landlords, and I came away quite impressed. There is incredible potential in the Bakken; the surface has literally barely been scratched.

I wasn't able to meet with any new tenants regarding some of their new property. The property in some cases was still being renovated.

The following is a very nice four-room pied-a-terre converted prairie school house for someone looking for a cozy little home on the prairie. For summer living, it is ready for immediate occupancy, but a few upgrades may be necessary for a North Dakota winter.




This is a steal at $150,000.

For those with a slightly larger home in mind, this one is also ready for immediate occupancy:




This is a rental. Recently rent had been about $350/month, but due to improvements this past year, the landlord will be raising the rent to $2,000/month.

And, then, finally, this fixer-upper:

Price negotiable.

*************************************
A Note to the Granddaughters

I doubt anyone has read this far down into this very, very long post, so this posting will be moved to a new post some time later this week.

I received a note from a reader in California this past week. He says it is a parable. Which means it is not true, but it may have a lesson or a moral.

The reader told me he had become fabulously rich off the Bakken. The operators had, over the years, been very upfront with this particular reader: coming through with the lease money as promised and paying royalties on time. From what he had heard from his relatives back home, the operators seemed to be "pretty good neighbors" in North Dakota.

This reader took his millions and re-invested in California real estate where he now lives, and continues to receive unimaginable royalties from new wells which seem to pop up every other week on his property. He was a small mineral rights owner to begin with, having only ten acres in some areas but with 1280-acre spacing, and now 2560-acre spacing, pad drilling, and emphasis on reduced flaring, his monthly payments just seem to keep increasing. He's paying a lot in California AND North Dakota taxes, but he always felt that Obama-based wealth transference was the Christian thing to do. So he's happy.

He recently decided to move from his 20,000-square-foot McMansion in west Los Angeles, somewhere in the Hollywood Hills, to build a really magnificent 55,000-square-foot-Algore-villa overlooking Portuguese Point.

He was going to work within a budget, which he called his CAPEX, to finance this 55,000-square-foot home. It would be built with the latest technology and materials and incorporate state-of-the-art features. He has had a very long working relationship with the builder. The builder built this reader's first 15,000-square-foot home on Mulholland Drive, and then the 20,000-square-foot McMansion that he living in now. They were both wonderful homes, built to spec, and came in under budget. The builder even threw in some freebies.

But now my California reader is ready to build that 55,000-square-foot-Algore-villa and he doesn't know if he can trust the builder. He doesn't say why, just a gut feeling.

So, the California reader is going to build the Algore villa the same way as before, in sections. He is going to get a separate building permit for each room of the house, and build it as "it comes along." The builder says he can get a much nicer villa for the same amount of money if the Bakken millionaire simply permits the entire structure at one time. The building process will be much smoother, and the "pieces" of the villa will fit together a whole lot better.

As one example, if the builder is forced to get permits for each room of the house, the builder will end up having some extra wide hallways that serve no purpose and will simply be wasted space. Right now it appears with separate permits, the garage may have to be a detached garage when the builder would like the garage attached to the house for easier access.

So, the builder and my Bakken friend are still negotiating, trying to figure out the best way to go.

At the end of the day, the builder says the owner will have a bigger home, and a nicer home, and a more environmentally-friendly home if the house is designed "in full" from the start, and obtaining one building permit from the city with a full architectural design completed at the time of the permit request. The total cost for the house will come in at about 75% of what it would otherwise cost. The builder says he can use the additional 25% for more improvements, or even for an additional mother-in-law's home on the "south 40." 

But right now, the owner is thinking of going slow, one room at a time, getting a new building permit each time, and hoping everything works out. The builder is aware that because of the gorgeous view over Portuguese Point, he might get the building permit for the first phase, the kitchen/living room, but the city could impose the "extraordinary site" clause and refuse a building permit where the guest bedrooms (all three of them) would be.