Wednesday, September 17, 2014

News We Will Be Reading Thursday -- September 17, 2014; Natural Gas As Feeder Stock For Ethylene, Other Products; An Update On Buckeye Partners

Rigzone is reporting:
Houston-based logistic firm Buckeye Partners has spent more than $3.5 billion buying assets since 2010, transforming itself from a quiet regional pipeline utility into an emerging energy powerhouse.
But the acquisition that may best symbolize its evolution is one the company didn't tout to investors this summer: a Washington lobbyist.
After spending most of the past century pumping fuel from one place to another, the 128-year-old company has become a key player in the import and export of North American oil, with an unrivalled network of East Coast and Caribbean fuel depots and an expanding business loading crude oil from trains to tankers.
On Tuesday it closed an $860 million deal to buy a crude oil and condensate terminal in Corpus Christi, Texas, a big bet on the future expansion of crude exports from the Gulf Coast.
The spending spree has made Buckeye one of a handful of midstream energy companies whose operations touch nearly every major oil-policy issue being debated in Washington, from oil-by-rail transportation to the ban on U.S. crude exports and the Jones Act shipping law that requires use of costly U.S. oil tankers to carry American crude to domestic refiners.
Much more at the link.

Rigzone is reporting:
A California-based company claims that it has found a commercially viable technique to directly convert natural gas into liquid fuels or petrochemical building blocks.
"Natural gas is the next logical step for the energy and chemistry industry," said Rahul Iyer, vice president of corporate development with Siluria Technologies, which is partnering with world-class refining and petrochemical companies to roll out its catalytic processes for producing ethylene and liquid hydrocarbon fuels or fuel blend stocks.
Last month, Siluria announced that it raised nearly more than $30 million in a financing led by Saudi Aramco Energy Ventures (SAEV) – the venture investment arm of Saudi Arabia's national oil company – in its fourth stage of financing, also known as a Series D financing round.
In addition to SAEV, Siluria has partnered with Brazil-based petchem manufacturer Braskem and the German-headquartered gases and engineering firm The Linde Group to commercialize its oxidative coupling of methane (OCM) processes.
Neither the OCM concept nor the quest to make it commercially viable is new, but Siluria is confident that it has found the right ingredients – and the right partners – to achieve an outcome that has eluded others for decades.
"It’s an abundant, clean feedstock and economically viable supplies are expanding," Iyer said of natural gas. "The problem has been that we haven’t had the technology to take full advantage of it. It is mostly burned or consumed as a direct fuel. By using our proprietary catalytic processes, we can change the outlook for gas to benefit producers, fuel and chemical makers and consumers."
The Wall Street Journal

Now, back to "boots on the ground" -- yesterday

No, no authorization for a US ground war in fight against ISIL -- today

Record turnout expected for Scottish vote

Wow -- General Mills profit drops 25% -- profit plunges 25% on anemic demand for breakfast cereal and other traditional packaged foods

FedEx profit rises 24%

Dow closes at record

Diamond prices continue to fall

The Los Angeles Times

Texas executes woman after Supreme Court denies last-minute appeal

Man charged with several fatal shootings in San Fernando Valley smiles in court as victim's family watches; apparently not facing death sentence in California; free medical care for the rest of his life, possible; no wonder he's smiling

2014 on track to be California's hottest year on record

Audi gets first permit to test self-driving cars on California roads

Another Look At The Recent Set Of Vern Whitten Photos -- September 17, 2014

Summertime Sights, 2014
Slide 21: "Industry On The Prairie" -- Spiritwood, about 10 miles east of Jamestown
  • a new ethanol plant under construction
  • a power plant
  • a grain elevator
  • location of the new $3 billion fertilizer plant
Slides 22 - 28: Devil's Lake flood
Slide 16: Big Iron Farm Show, West Fargo
Bakken Sights and Progress, August, 2014
  • Slides 1 - 2: Williston's new bypass; major construction
  • Slide 7: rail yard near Ross, ND
  • Slide 8: New Town, ND -- new bypass construction
  • Slide 13: rail terminal, New town
  • Slides 16 - 17: multiple pads along the Lake; stunning
  • Slide 18: 42 tanks; 5 donkeys; one small rig; one large rig -- all on one pad; the EN-Freda and EN-Leo wells in Alkali Creek; a Hess pad
  • Slide 24: Watford City, ND; bypass construction
Summetime Bakken
  • Slide 1: McQuade Slow Pitch Tournament; Bismarck-Mandan, said to be the largest annual softball charity tournament in the world; link here.
  • Slide 6: Dakota Prairie Refinery construction; Dickinson
  • Slide 8: a long line of pads
  • Slide 12: sandstorm
  • Slide 18: a pad with 3 pumpers; 27+ tanks
  • Slide 23: CLR's Atlanta pad in Baker oil field, SW of Williston; 14 donkeys
  • Slide 24: Tioga expanding; new Cash Wise
Cruising the Badlands
  • Every photograph is awesome!

Oasis Reports Three Huge Wells, All In Camp Oil Field -- September 17, 2014

Active rigs:

Active Rigs198180196199146

Wells coming off the confidential list today have been posted; see sidebar at the right.

Wells coming off the confidential list Thursday:
  • 26130, 3,396, Oasis, Hysted 5200 14-30 2B, Camp, t3/14; cum 74K 7/14;
  • 26180, drl, Oasis, Postel 5693 44-35B, Alger, no production data,
  • 26298, drl, Oasis, Oasis, Meiers 5692 44-18 3T, Alger, no production data,
  • 26320, 262, Oasis, State 5792 11-15 2T, Cottonwood, t7/14; cum 3K 7/14;
  • 26382, drl, Oasis, Mallard 5692 21-20 9T2, Alger, no production data,
  • 26585, 205, Oasis, Dale Van Berkom 5992 14-30 3B, Cottonwood, t4/14; cum 17K 7/14;
  • 26886, 3,489, Oasis, Brier 5200 44-22 7B, Camp, t6/14; cum 52K 7/14;
  • 26887, 2,979, Oasis, Brier 5200 44-22 4T2, Camp, t6/14; cum 17K 7/14;
  • 27216, 419, Oasis, Loren 5303 14-1 2T, Rosebud, t4/14; cum 17K 7/14;
  • 27227, drl, Hess, BW-Kraetsch-149-99-1423H-2, Cherry Creek, no production data,
  • 27248, 384, Petro-Hunt, L. Hoiby 159-94-30D-19-5H, North Tioga, t7/14; cum --
  • 27534, 81, Legacy, Legacy Et Al Bernstein 12-17H, Red Rock, a Spearfish well; t5/14; cum 7K 7/14;
  • 27604, conf, BR, Bullrush 24-10TFH, Elidah, no production data,
Nine (9) new permits --
  • Operators: WPX (6), American Eagle, MRO, Petro-Hunt
  • Fields: Van Hook (Mountrail), Spotted Horn (McKenzie), North Tioga (Burke), Bailey (Dunn), Colgan (Divide)
  • Comments:
Ten (10) producing wells completed:
  • 25670, 2,541, Statoil, Larsen 3-10 3TFH, Williston, t8/14; cum --
  • 25671, 3,081, Statoil, Larsen 3-10 4H, Williston, t8/14; cum --
  • 26525, n/d, CLR, Jerry 2-8H, Poe,
  • 26530, n/d, CLR, Jerry 5-8H, Poe,
  • 27138, 2,400, MRO, Lantz 24-32TFH, Reunion Bay, t8/14; cum --
  • 27555, 1,922, MRO, Keith 44-31TFH, Reunion Bay, t8/14; cum --
  • 27864, 960, KOG, P Wood 154-98-16-23-35-9H, Truax, t8/14; cum --
  • 27865, 1,652, P Wood 154-98-16-23-35-9H3, Truax, t8/14; cum --
  • 27866, 1,986, KOG, P Wood 154-98-16-23-35-15H, Truax, t8/14; cum --
  • 27867, 1,924, KOG, P Wood 154-98-16-23-15H3, Truax, t8/14; cum --
26886, see above, Oasis, Brier 5200 44-22 7B, Camp

DateOil RunsMCF Sold

Natural Gas Powered Rig

Link here.
WPX Energy has been honored with an award from the Colorado Oil and Gas Conservation Commission for Technological Advancement for a new natural gas drilling rig that was built by Aztec Well Companies.
"It's been an long process and it's been exceptional," said Jason Sandel, vice president of Aztec Well Companies.
The drilling rig runs completely on natural gas that is produced on the well site instead of diesel fuel.
This story was out of Colorado. There are reports that GE and Statoil are working on similar solutions in the Bakken. It will be interesting to see how this all plays out.

Wednesday, Continued -- September 17, 2014; Blackouts And Brownouts; Saudi Cuts Production, Will Have To Cut More

Last night my wife and I were watching the 17th or 18th episode of "House of Cards," the episode in which there is a power outage during a night game when the protagonist, Kevin Spacey (as vice president) is to throw out the opening ball at a professional baseball game. So when Don sent me this link, it seemed more than coincidental. PJMedia is reporting:
The US energy industry has been warning for years that the Obama EPA’s caps on carbon emissions will lead to several bad outcomes for Americans, including skyrocketing energy prices and even brownouts and blackouts.
The EPA’s Janet McCabe was testifying in the House today on the agency’s plan to cap carbon emissions. And then the power went out.

Two stories affecting the price of oil today:

Bloomberg is reporting that at least one oil field in Libya was shut down due to ... gunfire.

And Saudi is in trouble. Bloomberg is also reporting:
Saudi Arabia will need to keep cutting oil output to sustain prices above $100 a barrel, even after the kingdom’s largest reduction in two years.
The world’s biggest crude exporter told OPEC last week it pumped 408,000 barrels a day less last month, about as much as Australia produces. Output rose in Iran, Iraq and Nigeria, adding to supply that drove benchmark Brent crude futures below $100 this month for the first time since June 2013. Saudi Arabia probably will have to cut a similar amount again to stabilize prices, the banks said.
Global oil demand growth this year will be the weakest since 2011, just as the U.S. shale boom means oil production from countries outside OPEC rises by the most since the 1980s. The glut is prompting most of OPEC’s Middle Eastern members, including Saudi Arabia, to cut prices to customers.

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.

Federal Reserve vows to hold rates "low" for a "considerable time." The market is up about 40 50 80 points. [On my bike ride at dawn this morning, I said to myself: "if the Fed were to actually admit they planned to hold interest rates very low until at least 2016, that would be worth at least 200 points on the Dow."] [Later: the market finished up only 25 points but that was more than enough for the Dow to set another all-time record. Intra-day high of 17,221 also set all time record.]

Halliburton and Schlumberger are distancing themselves from Russian oil and gas companies. Earnings could suffer.


Remember that announcement by MDU that earnings will suffer because of difficulties in the Paradox? Don wrote me; from MDU's analysts' day:
SALT problems in Paradox. $12-14 million well cost in Powder River Basin ( down from $ 20 MM ) a yr ago. 
Watching/waiting for transcript.


This link sent to me some time ago; getting caught up with e-mail. Bloomberg is reporting Germany's economy is hurting due to sanctions:
MWL is one of many businesses in Germany’s Mittelstand, the thousands of small- and medium-sized companies that form the backbone of Europe’s largest economy, that are already getting pinched as Russian customers put off purchases. With the crisis now intensifying through deeper European Union and U.S. sanctions and retaliatory measures from Russia banning EU and U.S. food imports, they’re preparing for an even bigger hit. 
It will be interesting to see which tail is wagging which dog on this Ukrainian issue. Who blinks first?

I-98; The Series Continues, Season 1, Episode 4: The Bullet Train

I haven't seen the photograph, but a reader tells me "they" are building a huge new multi-lane, divided highway (Gateway Drive) from the city out to the Grand Forks, North Dakota, airport.

This is most likely the new I-98 featured in the eponymous television series.

For those unfamiliar with the I-98 series, here are the relevant links:
Although the series is set in the future (2040 - 2049), it is being written, and if Hollywood picks it up, filmed in the present.

The series was put on hold following an incident involving a high speed chase. I am happy to report that the series will be up and running but heavily censored, and could be pulled at any moment.

Season 1, Episode 4
"The Bullet Train" 

When we last left off, Thelma and Louise were on their way to eastern Montana, but ended up in Chicago. With the crashed Lamborghini they were up a canoe without a paddle, as the Muddy River Boys used to say. Meanwhile, Sam and Liam were still near Rugby, North Dakota, also without a car. [In the television series, there will be a Twin Peaks-like soundtrack, with a Don Pardo-voice over: "Previously, on I-98, ....]

The local authorities brought Sam and Liam up to date with the little information they had. And that was about all they had, little information: their yellow Lamborghini was stolen.

Liam said, "It could be worse." 

"So, what do we do now?" Sam asked Liam. The good news was that the derailed highly-volatile Bakken crude oil train had only obstructed one set of tracks; the explosion had caused relatively little damage to the other tracks. Some years earlier, under pressure from the USDA chief, Warren Buffett had agreed to put in "the quadruple track," or the "QT" as it was known, across the northern tier. There was one dedicated track each for crude oil, agricultural products, Amtrak, and "the bullet train." Yes, Amtrak was still running but was pretty much a train for tourists without a time schedule or appointments to keep. On the other hand, BNSF saw an opportunity when airlines continued to charge high fees to fly into the Bakken. The BNSF bullet train would be passing through Rugby later in the day. Liam suggested they take the bullet train to Williston, which, they estimated, would take about an hour.

Most of the excitement outside of Rugby had died down. The ECNALUBMA had departed the scene; the ice cream truck had sold out of everything but "Michelle's Veggies," a small snack pack that never really caught on in the Midwest. Or the South. Or the North. Or really anywhere except Huntington Beach, California, where the snack packs made great fish bait for tourists fishing off the pier.

[Warren liked the "quadruple track." He had gotten the idea from his own quadruple bypass about that time and said "why not?" Charlie Munger wrote a best-seller on building the BNSF bullet train and the QT, titled, "Why Not?" Both Warren and Charlie were now sharing a room in a long-term assisted nursing care unit in downtown Omaha owned by Malia and Natasha.]

To save time, the bullet train no longer stopped at Minot. It didn't stop at Rugby either. It was a non-stop from Minneapolis Mall of America to Northstar Center in downtown Williston.

[Williston had expanded north to the "old 13-mile corner," now a way station along the I-98. At the intersection of I-98 and US 85 going south towards Williston there was another toll station for Minnesotans. Cars with Minnesota tags were expected to stop and pay a toll for using I-98; non-Minnesota tagged vehicles were exempt. Like the I-98 toll bridge across the Red River, the government did not need the funds, but Minnesotans were so used to paying taxes and tolls there were concerns that traveling free, going "cold turkey" as it were, would be too much for Minnesotans. Especially the older ones.]

The bullet train did not stop at Rugby on its direct non-stop to Northstar Center, but Liam had connections. Yes, the BNSF dispatcher said, the train could stop in Rugby due to the unusual circumstances. Liam and Sam caught a ride with the two Rugby patrolwomen to the pre-planned location where the bullet train would stop, near the Geographical Center of North America and Sprint Cell Phone Tower Obelisk. The Obelisk used to be a tourist destination but the wind farm pretty much obscured the Obelisk. But the old folks still knew where the Obelisk was.

Sam and Liam got out, walked over to the little picnic table and sat down, waiting for the train. The wind was blowing too fast for the wind turbines which were now sitting frozen in time. That was serendipity for Sam and Liam: without the turbines turning, they could hear themselves talk, although with the wind they had to talk a little louder than usual, and had to hold onto their Minnesota Twins baseball caps.

"I wonder what happened to the Lamborghini?" Sam asked, really to no one in particular. Liam was texting a note on his iPhone which came with its own briefcase because it was really too large to fit anywhere else.

Sam spoke again,"Who are you texting?"

"Pat, Jr." was the reply.

"Oh, over at Northstar Center?"

"Yep, need to get a new car."

"What are you thinking?"

"No question. A Tesla."

Liam had pretty much given up on electric cars. The Lamborgini turned out to be a real pain to re-charge, even with all the charging stations along I-98. Even McDonald's, who still did not allow folks to charge their computers INSIDE their restaurants, had charging stations OUTSIDE their restaurants. But with exploding batteries, poor range, and constant re-charging, Liam had finally decided that with the loss of the Lamborghini he had an opportunity to buy a Tesla.

Tesla started out building electric vehicles but switched back to conventional gasoline sports cars in the late 20's. 2027 or thereabouts. EVs never caught on but there was a small niche for EVs. It was called the "feel-good" niche. Liam had originally bought the Lamborghini EV to feel good, but he now felt as good as he thought he would ever feel, and decided a new feeling was what he needed. Like the feel of a muscle car. And with gasoline now costing 29 cents/gallon due to the flood of new oil found in the early 21st century, the price of gasoline was no longer a factor in deciding what kind of car to buy. It turned out CO2 was good for the environment, too, based on several studies financed by Exxon, BP, and Chevron.

Small talk ensued. But not for long. The bullet train would be arriving momentarily.

Meanwhile several hundred miles to the east, Thelma and Louise were still getting their bearings after being shaken up.

"Well, that sucks." Louise said to no one in particular. The Chicago police had arrived. It took awhile to sort things out, but the police took Louise and Thelma at their word: they were simply driving to the mall when they were cut off by some dude; taking evasive action resulted in a small fender bender. The fact that Louise was in a low-cut, highly-revealing blouse probably had nothing to do with how they were treated, but one wonders. They were given a "driving-while-blond" warning and taken to one of the local ObamaCare Small Unit Care Klinics (colloquially called OCSuCKS). Neither had ever enrolled in ObamaCare but that really didn't matter. Most Americans had never enrolled. Even the promise of an ObamaPhone with one's enrollment didn't seem to help. So, the government simply gave up. ObamaCare morphed into HillaryCare, the only real difference being that enrollment didn't matter any more.

Thelma spoke first, "So where do we go now?"

Louise  looked up at the large screen in the waiting room with weather, transportation, and breaking news. The BNSF bullet train she noted, coincidentally, was due to be departing shortly. "If we run, I think we can make it."

"Run where? Make what?" Thelma asked.

"Quit, put out your cigarette -- [Thelma had just lit up her ever-present e-cig] -- and follow me."

Louise bolted; Thelma in quick pursuit.

[Twin Peaks-like music, Don Pardo voice-over, "Will Louise and Thelma catch the bullet train? Will the bullet train make an unscheduled stop at Rugby? Does anyone care?"]

200 -- September 17, 2014

Here it is, and yes, some rigs may be double-counted, but it is what it is.

Active rigs in North Dakota:

Active Rigs200180196199146

See first comment below, part of which reads:
I check the active rig count every week so I checked this one. First of all there are only 199 rigs on the report, not the 200 in the header. This happens about once a month, don't really know why but it's not unusual. There is also one duplicate rig on the report (H&P 293); this also happens occasionally. I do know, though, that there are two rigs that are not on the report but are active and should be, so we really are at 200.
So, a couple of things.

First:  Yes, there may not really be 200 active rigs but this is the screen shot I've used since I started posting NDIC data. [See above.]

Second: Summer, if one uses the autumn equinox as the marker, does not officially end until September 23, or thereabouts. Therefore, "we" hit 200 before the end of summer, 2014.

Third: Whooopee!

Fourth: Note -- the table above -- the "200" beats the previous record of 199 for this date (September 17) back in 2011 at the height of the boom.

Fifth: the rigs currently being used in 2014 are bigger, more powerful than the rigs used in 2011.

Sixth: the roughnecks are more experienced in 2014 than they were in 2011.

Seventh: same for the petroleum engineers.

Eighth: Leonard DiCaprio's press agent has not confirmed that Leo will be taking a road trip to the Bakken following the UN Climate Change Conference in NYC next week.

Ninth: to quote Kudlow -- "drill, drill, drill."

Yeah, it's a big deal.

WTI is being priced about $94.50 today.

Note to the Granddaughters

Last night I sent an e-mail (I don't text; I don't have a smart phone) to our daughter about 9:10 asking her to have our older granddaughter call me if she was still up and it would not interfere with her homework.

A few minutes later, Arianna called me. Earlier in the day she was telling me how to use atomic weights in determining the number of neutrons for a given element. I mentioned that more precisely it was "mass" and not weight.

Later, I remembered that yes, the periodic tables used by most middle schools still refer to "atomic weights." Knowing that T/F questions can sometimes be used to trick children on a test, I wanted to tell Arianna that, yes, she and her teacher are correct. "Atomic weight" is still used.

Wednesday -- September 17, 2014

Going through some old posts to correct typographical errors early this morning, I'm still amazed by this, which was posted yesterday:
It's pretty well agreed that not more than four or five million people actually signed up for ObamaCare after several months of intensive marketing and arm-twisting and laws requiring folks to sign up, and yet Apple sold more than 4 million iPhones in less than one 24-hour period. And their website did not falter - though in the first three hours, the website was oversubscribed/down simply because too many folks trying to access the site. But that resolved itself in less than six hours. Ellen DeGeneres was incredulous that as many as 5 million people might have signed up for ObamaCare, and yet many more than that will buy an iPhone 6/6+ in the first two weeks it is offered. 
But, back to the Bakken.

Active rigs (per the NDIC; the graphic is not always accurate):

Active Rigs199178193199145

RBN Energy: Hawaii's plans for utilities to shift from oil to LNG. I think I just heard Boone Pickens open a bottle of champagne.

Microsoft: the era of $99 Windows tablets is here. I say, give 'em away free, and Apple would still maintain market share.

Keystone: TransCanada sees itself in the rail business with/without the Keystone. Enbridge figured that out a long, long time ago.

For Investors Only

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.

UNP hits a new high. Surges more than a dollar. BRK-B, the other train company, is also trading at new highs.

EEP is trading near its all-time high.

On September 16, 2014, I wrote:
Talking heads, according to this site, provide two reasons why the market is up today. If I'm in the mood later today, I will comment on these reasons. But right now, too tired. 
Ready to comment. This is why the market went back up, and is up today. Two reasons. First, interest rates aren't going anywhere any time soon. For Janet Yellen, there's simply no way out. And certainly not during an election season (now upon us). 

The market was trending down a day earlier because of reports that the Chinese industrial numbers were falling. Regular readers know how I feel about that. China has a young-man problem. Billions of young, unmarried men with a questionable future, and absolutely no future if there are no jobs. China cannot afford to have billions of young, unmarried men, hanging around. That's how revolutions start. China simply cannot afford to let their economy stall. They have learned from the US how to stimulate the economy, and they have lots and lots and lots of US dollars sitting in their coffers to do exactly that.

One thing the Chinese can do, is put all these young men to work building supertankers in which to store inexpensive oil. And then lay rail and pipeline to remote areas where there might be shale oil and natural gas.

And traders know that if the President seems more concerned about Ebola than everything else going on in the world, things can't be too bad off economically-speaking.


I loved this article. Clearly the USDA chief is covering his ass.

Reuters is reporting
U.S. Agriculture Secretary Thomas Vilsack met with Warren Buffett last week to urge the billionaire investor to make sure his BNSF railroad is ready for an expected record corn and soy harvest this year.
Vilsack said on Tuesday that Buffett, who heads the sprawling conglomerate Berkshire Hathaway, recognized the challenge and indicated his company was taking steps.
"I said, 'Warren, you've got to make sure that your railroad understands what's going on here,'" Vilsack said he told Buffett during a 45-minute conversation. "There is pressure now, but as soon as this crop is harvested, there will be more pressure."
I have no sympathy for USDA or the Obama administration on this issue. The only reason we are in this bind -- not enough rail for agriculture -- is because the Obama administration has done everything in its power to shut down new pipelines. Farmers in Iowa and farmers in Minnesota are against new pipelines. 

From what I've read, BNSF has pretty much put pedal to the metal building new rail, buying more locomotives, adding more rail cars. These capital-intensive-manpower-intensive companies can only move so fast. Perhaps if the President signed some executive orders for rail and pipeline with Americans' interests at heart, much of this would be solved.