Monday, July 7, 2014

Royal Dutch Shell To Saudi Arabia -- Sayonara -- July 7, 2014

Reuters is reporting:
Royal Dutch Shell is ending investments in a gas development project in Saudi Arabia, complicating the top oil exporter's efforts to exploit its huge gas reserves.
The search for gas has been a priority for Saudi Arabia as it struggles to keep pace with rapidly rising domestic demand. But the emergence of the shale gas industry has opened up more lucrative opportunities for energy companies elsewhere.
"Shell has decided to end further investment in the Kidan development," it said in an emailed statement. "This was a difficult decision but Shell remains committed to the Kingdom and we are keen to grow our investments, both in upstream and downstream."
Shell did not give a reason for the decision to shelve the joint venture in the Kidan area of the Empty Quarter, the sea of sand dunes that cover south-east Saudi Arabia.
And with ISIS/ISIL on its borders, Saudi Arabia is beginning to have its hands full.  Perhaps Russia will be happy to help.

Federal Lands Really Are Contributing Less To Total US Energy Picture -- Obama Administration

Yes, we've been saying that for quite some time now. Finally, the Obama administration admits as much. 

The EIA reports:
Despite strong total U.S. oil and gas production figures overall in FY2013, the sales volume of combined fossil fuels recovered on federal and Indian lands fell by 7 percent last year, compared with figures for FY 2012, the Energy Information Administration said in a recent report.
Crude oil volumes were actually up in FY2013 from year-earlier figures. However, the drop-off reflected a drop in other fossil fuels, including coal, natural gas and natural gas plant liquids (NGPLs), the July 7 report said.
The decline was the latest in a succession of declines on federal and Indian lands that have occurred since 2003. Combined offshore and onshore natural gas figures on federal lands in 2003 were about 35 percent of the total U.S. natural gas production, but by 2013, they were just over 15 percent of the total.
The drop in the total contribution of natural gas recovered from federal lands since 2003 came because the general increase in onshore natural gas production on federal lands during that time failed to offset a drop in recoveries offshore during the same time period. In 2007, rising gas production on federal lands in sales volumes overtook a general decline in offshore production, the EIA said.
And so it goes.

Five (5) New Permits -- The Williston Basin, North Dakota; BR, Halcon Each With One "High IP" Well; 3/3 Bakken Wells Go To "DRL" Status -- July 8, 2014

Wells coming off the confidential list Tuesday:
  • 26063, drl, MRO, Swift Eagle USA 31-15TFH, Moccasin Creek, no production data,
  • 26856, drl, Hess, EN-State D-154-93-2635H-6, Robinson Lake, no production data,
  • 27064, drl, Hess, EN-KMJ Uran-154-93-2734H-8, Robinson Lake, no production data,
  • 27211, 51, Legacy Oil, Legacy Et Al Berge 8-11 2H, Red Rock, a Spearfish well, t2/14; cum 4K 5/14
Active rigs:

Active Rigs189188213166132

Five (5) new permits --
  • Operators: Newfield (3), Whiting, Enduro
    Fields: Sand Creek (McKenzie), Stoneview (Divide), Green River (Stark)
  • Comments:
Wells coming off the confidential list over the long weekend were posted earlier; see sidebar at the right.

Six (6) producing wells completed:
  • 24372, 2,995, Statoil, Broderson 30-31 2H, Banks, t6/14; cum --
  • 25090, 1,352, Statoil, Edna 11-2 5TFH, Camp, t5/14; cum 2K 5/14;
  • 25898, 1,846, MRO, Azure USA 31-15H, Moccasin Creek, t5/14; cum 7K 5/14;
  • 26118, 2,023, HRC, Grev 157-100-30B-31-2H, Marmon, t5/14; cum 6K 5/14;
  • 26961, 1,204, KOG, P Moen 155-99-14-11-2-3H3, East Fork, t5/14; cum 7K 5/14;
  • 27017, 993, Whiting, Bartleson 44-1TFH, Sanish, t5/14; cum 4K 5/14;
Stabilizers To Remove Volatile Gases Before Shipping CBR
From SeekingAlpha

  • Energy companies invested hundreds of millions of dollars when they started extracting oil from shale formations in south Texas a few years ago to make the volatile crude was safer to handle, but the failure to do so at the Bakken shale is coming back to haunt the oil industry as the U.S. government seeks to prevent fiery accidents of trains containing North Dakota oil.
  • Only one stabilizer, which can remove the most volatile gases before transport, has been built in North Dakota and it hasn't begun operation, according to a WSJ review; if the government mandates the use of stabilizers, companies would have to make big investments in equipment which could slow Bakken's development.
  • Oil producers are fighting the perception that the biggest risks come from Bakken crude, almost all of which is moved by rail, but safety officials and lawmakers say the dangers extend far beyond North Dakota.
Improving The Odds: Why Shale Oil Really Is Different
From Rigzone

Critically, the source rock, migration pathway, reservoir rock, and trap, must be found together and in the correct geological sequence. This combination of circumstances is extremely rare. 
But shale is both the source of the petroleum and the trap (because it is so impermeable). Rather than hunting for small pools of oil and gas trapped by faults or rock seals, shale producers can go straight to the source.

Sandrocks Oil Field Has Been Updated; Zeits On Sandridge

Sandrocks Oil Field in the Bakken has been updated; this is quite a nice field.


Over at SeekingAlpha, Richard Zeits has an update on SandRidge:
  • Based on a fresh batch of operating data, SandRidge has continued to post strong initial well results in the Mississippian play in Oklahoma during April and May
  • The percentage of under-performing wells has declined
  • I estimate the company’s Mid-Continent oil production to increase by at least 20% sequentially during Q2, assuming ~100 new well connections
  • SandRidge has also turned to sales three Chester wells in Woods County. Initial test rates were underwhelming
  • An Oswego test drilled in Alfalfa County disappointed 
The latest batch of initial production test data for SandRidge Energy's wells in Oklahoma shows continued strength in the average IP rates. Following a weak start in Q1, the company posted a turnaround in March. April and May results continued to impress. The 29 wells that were brought on production in April and May and for which data is now available, on average tested with ~500 barrels of oil and 1.6 MMcf of natural gas per day, which is a major improvement relative to the average performance during January and February of this year. Importantly, the percentage of poorly performing wells appears to have declined, even though well results remain highly "statistical" overall.

On the other hand, these wells disappointed, but look at the small amount of proppant used:
In May, SandRidge brought online three Chester test wells in Woods County:
  • The Hoffman R 2820 #2-31H had a short lateral (~2,300 feet) and tested with a somewhat disappointing IP rate of 88 barrels of oil and 0.1 million cubic feet of gas per day. The well had a perforated completion and was fracture stimulated with 450,000 pounds of proppant.
  • The Bliss Family 2820 #1-21H also had a short lateral (~1,500 feet) and tested with a similar IP rate of 75 barrels of oil and 0.25 MMcf of natural gas per day. The well was stimulated with 375,000 pounds of proppant.
  • < The Ragan 2820 #1-22H had a "normal" lateral length (~4,300 feet) and tested with a modest IP rate of 182 barrels of oil and 0.2 MMcf of natural gas per day. The well was treated with 750,000 pounds of proppant.
According to Zeits, on a lateral length-adjusted basis the three wells had consistent initial production test rates.

Foreign Investors Eyeing The Bakken -- Note The Byline -- July 7, 2014; Meadowlark Brewery Opening In Sidney

The AP is reporting:
WILLISTON, N.D. (AP) -- Foreign investors more familiar with projects in the emerging markets of Eastern Europe and tropical escapes of Southeast Asia are finding a new destination for their dollars and francs: Western North Dakota's oil patch that's home to booming towns, low unemployment rates and high incomes.
SelectUSA, a government foreign investment initiative, said the state has drawn at least 31 publicly announced foreign investment projects since 2003 worth a total of $1.04 billion.
Now two foreign companies are planning a pair of large oil patch developments worth $800 million.

Among the latest projects is Swiss firm Stropiq's plan for a $500 million, 219-acre mixed-use development called Williston Crossing featuring 1 million square feet of retail, entertainment and hotel space along with offices and residential plots.
The oil patch is "an emerging market by most definitions, except it is in the continental U.S.," said Stropiq co-founder Terry Olin. "We have rule of law and property rights — things that in most emerging markets can be challenging."
Olin has North Dakota roots but spent the past two decades working on projects in Moscow and St. Petersburg, Russia.
Another foreign investment firm, Singapore's Barons Group of Companies, has proposed a $300 million project in Dickinson called Barons Vista that includes a mall, four-star hotel, spa, offices and condos.
Both projects have been previously posted at the blog, but sourced at regional / local newspapers. This is now a national news story.

A lot of those service industries will need a lot of young people. The "Dreamers" streaming across the border?

Other items of interest from the Williston Wire

Less than a year after breaking ground, the Badlands Town Center (BTC), located on the corner of 42nd St. W and 9th Ave W, is ready to open its doors.  Coyoacan Mexican Bistro has announced it will call BTC its home in Fall 2014. Ronica O'Dwyer of Triland Holdings, LLC said that the Town Center will be, "a pedestrian friendly mix of retail and dining. BTC's first tenant, the United States Postal Service, is opening its second Williston location July 1.

Four exciting new restaurants are making their way to Williston in Fall 2014!  Midwestern fast food staple, Culver's, is opening its fourth North Dakota location right here in Williston in November, 2014! They will be located southwest of Williston near the Sand Creek Town Centre.  Meanwhile, Qdoba Mexican Grill will join the Smiling Moose Deli at Plaza 26. The fast food Tex-Mex restaurant is recognized for its fresh, handcrafted meals prepared in front of it patrons. The Smiling Moose offers a fresh, built to order menu featuring hot sandwiches, soups, and salads, including vegetarian options, and are open 7 days a week for breakfast, lunch, and dinner. Smiling Moose is proud of their unique and laid-back dining experience. The fourth is the Coyoacan Mexican Bistro mentioned above.

Meadowlark Brewery, a pub, brewery, restaurant and coffee shop, has opened in Sidney.  Centrally located on South Central Avenue, Meadowlark is the first brewery in Sidney since Prohibition, which was repealed in Montana in 1926.  There are a variety of beers on tap, which rotate and have included Moose Drool, Jack's 90, Buffalo Bill Rye, Pump Jack, 312 Urban Wheat, Bent Nail IPA, Batch 19, Red Lodge Porter, Black Widow and Goose Island IPA.

Now that Beulah has voted in a new 1-cent sales tax for a wellness center, the heavy lifting is about to begin.  The June 10 vote wasn't overwhelming - just 38 "yes" votes swung the balance - but it starts the new tax rolling and helps fund construction of a 30,000-square-foot, multi-million-dollar facility adjacent to the community's fairly new outdoor swimming pool.  The community park board will meet July 1 to start naming a board to oversee project construction and operations along with an executive director.


Affirmative action, as defined by civil rights groups, is a mistaken notion that rewards someone who hasn’t been injured at the expense of someone who isn’t guilty to make up for someone hurt but not helped by someone who isn’t punished“… Carpe Diem (in the comments)

North Dakota Lease Sales, January, 2014 (OLD NEWS)

This is simply some "bookkeeping." While updating some older posts, I noted that I did not provide a short summary of the February, 2014, North Dakota lease sales. Here they are, belatedly:

In January, 2014, there was an on-line auction, but there were only two parcels in Billings County at $80 and $160/acre.

Here are the February, 2014, results:

Billings County
A couple of parcels from $120 to $140/acre.

Several parcels for $140/acre.

A few parcels, from $110 to $330/acre.

Two parcels for $85 and $95/acre.

Three parcels: $60, $200, and $210/acre.

Six parcels ranging from $850/acre to $3,150/acre.

Eight parcels from $30/acre to $210/acre.

One parcel for $110/acre.

Monday, July 7, 2014 -- Active Rigs Back Up To 192

Active rigs:

Active Rigs192188213166132

RBN Energy: the glut of light oil in the Rockies providing great margins for the refiners.

The Wall Street Journal

It is not going well for Ukraine rebels; preparing for "last stand" against pro-Russian forces.

Hillary starting to distance herself from President Obama.

As food prices rise, Fed keeps watchful eyes. An increase in food prices should help Michelle's war on obesity.

Iraq insurgents (ISIS/ISIL) have seized "advanced arms."

This is interesting: Norah Jones will release an album on July 15 -- she with a trio called Puss N Boots. Ms Jones has done several duets in the past. I do believe she has learned from Willie Nelson. Seriously.
The Los Angeles Times

Huge earthquake measuring 7.1 off Guatemalan coast. To the best of my knowledge there is no fracking in Guatemala, and, to the best of my knowledge, George W. Bush is not visiting Central America today.


Obama "Presidential Library" float wins award in local "Fourth of July" parade, Norfolk, Nebraska, -- "most popular float in the parade."

For Investors Only: Exelon

I've had a number of posts on Exelon with regard to its changing energy mix. Based on those stories I never thought I would see this. Morningstar is reporting:
After missing out on nearly all of the stock market’s rally since March 2009, Exelon has been on a tear this year. The stock is up 29% year to date while the S&P 500 is up just 8%, both including dividends. The rally leaves Exelon trading at the smallest discount to our fair value estimate since July 2008.
But we still think the upside outweighs the downside, making Exelon one of the most attractive utilities we cover. For bulls, we still see 18% upside if power markets continue climbing toward our midcycle assumptions. For bears, we question management’s capital allocation and suggest that the market could be overvaluing Exelon’s regulated utilities. Here we present both sides of the story for investors wondering what to do with this embattled but high-quality company.
It's a very, very good article, well worth the read. It reminds folks that it is very, very difficult to make sense of the market.


In early-morning trading, the market is off about 60 points. This may be due to the report on Germany's surprise slump in industrial production and/or Goldman Sachs coming out with news that the Fed may be ready to raise interest rates. Or it may simply be some profit taking. From GS:
Goldman Sachs now believes the first hike in the U.S. federal funds rate will come in the third quarter of 2015, rather than in the first quarter of 2016.
That's a long way off, but the market uses any excuse to take a profit.

Warning! This is not an investment site. Do not make any investment decisions based on anything you read here or think you may have read here. 

That Didn't Take Long -- Germany's Industrial Output Slumps Unexpectedly In May, 2014

Yesterday I posted that Germany has decided to "severely and intentionally cripple its economy."

Today we get the BBC news that Germany's industrial production sees surprise drop in May. BBC is reporting:
Industrial production fell 1.8% in May from April.
The fall was a surprise, with the majority of economists expecting industrial output to be unchanged. 
Germany's statistics agency blamed the timing of May bank holidays and weakness in the construction sector for the fall, but said "geopolitical factors" may also have had an effect.
German think tank Ifo said it thought both the Ukraine crisis and the impact on oil prices by the insurgency in Iraq were factors concerning German businesses.
Dekabank economist Andreas Scheuerle said May's fall was a "massive disappointment." [You think?]
"Even if some of this is down to missing days at work... and might be recovered later, there was simply not the momentum in the second quarter," he added. 
The BBC also noted that April's industrial production figure was also "slightly" cut to -0.3%. [Which I guess they couldn't blame on bank holidays.]

The only thing more surprising is that the BBC did not print the quote from the anonymous source who added: "It's not surprising at all based on the cost of energy in Germany. Going forward Germany's industrial production will move up and down on a monthly basis, but the overall trend will be down."