Monday, April 27, 2015

Future Home For SM Energy In The Bakken -- April 27, 2015

Somewhere six to nine miles north of Williston (distance depends on where northern extent of the city of Williston lies), just to the east of "2 & 85."

Future Home of SM Energy

The orange "construction" sign has to do with highway construction, not construction of the SM Energy building. But the hometown for the highway construction company is interesting to note.

Never Give Up -- April 27, 2015

I can't wait to see how this one plays out.

Any reasonable person would say that TransCanada lost; the Keystone XL North is dead.

But you have to give TransCanada credit. They figure if President Obama won't let them ship Canadian oil into the US, maybe President "pro-job-growth" Obama will let the Canadians ship North Dakota oil into Canada. I believe the ban against US crude oil exports has a loophole that allows US crude oil to be shipped to Canada.

Reuters via Rigzone is reporting:
TransCanada Corp , whose controversial Keystone XL pipeline project has waited more than six years for U.S. approvals, is asking the Obama administration to approve another pipeline, one that would take American crude oil into Canada.
The company, Canada's No. 2 pipeline operator, said it applied on Wednesday for a presidential permit for its planned Upland pipeline, which will carry as much as 220,000 barrels of oil per day 240 miles from Williston, North Dakota, to meet the proposed Energy East pipeline in southern Saskatchewan near the border with Manitoba.
The $493 million Upland line, announced in February, will take crude from North Dakota's prolific Bakken field, where a shortage of pipeline space has forced producers to ship their crude by rail
Of course, this, too, will never be signed by President Obama -- it will never even reach his desk before he departs Washington, DC, with Loretta Lynch in tow. Twenty-one months.  If folks really were serious about the risks associated with CBR this would be a no-brainer, but the CBR risk is political theater.

1Q15 GDP Forecast Updated Last Friday -- April 27, 2015

For those who care (all three of us), this is really, really cool. This is GDPNow, updated as of April 24, 2015. One can't get much more current than that when it comes to a) government data; and, b) GDP forecasts.

From GDPNow:
The GDPNow model forecast for real GDP growth (seasonally adjusted annual rate) in the first quarter of 2015 was 0.1 percent on April 24, unchanged from April 16.
The real GDP growth nowcast ticked up to 0.2 percent on April 22 when that morning's existing home sales release from the National Association of Realtors boosted the model's nowcast of residential investment growth.
The GDP growth nowcast fell back to 0.1 percent this morning as the durable goods manufacturing report from the U.S. Census Bureau reduced the nowcasts of both equipment and inventory investment.
GDPNow absolutely needs to develop an app for the new Apple Watch so one can check on GDP forecast at the top of every hour, 24/7. LOL.

How Serious Is It For The Williston Post Office When It Comes To Finding Addresses? -- April 27, 2015

Going north on "2 & 85" out of Williston, one can turn right on 70th Street East, or one can travel a few more miles north and turn right on 56th Street Northwest (for newbies, streets generally number higher the farther one goes north of Williston, and in most places outside of the Bakken, "east" is to the right of "northwest" on maps with "north" pointing up):


The unlabeled oval is also 56th Street Northwest. And yes, the map is pointed north.

How Serious Is It For OPEC? -- April 27, 2015

We won't know for several years how the North American energy revolution plays out. There at least two major points of view, and they can be boiled down pretty simply: a) OPEC wins; b) OPEC loses.

I have my own thoughts but those thoughts and $2.11 will get you a small cup of light roast (or dark roast) at the Daily Addiction on Main Street in Williston. They now open at 6:00 a.m. During the boom, they opened at 7:00 a.m.

CNBC is reporting:
As benign as the politics of oil have become for the U.S., it has become an enormous source of social strain for OPEC countries, many of which are being deprived of the currency needed to maintain social stability. According to data from the International Monetary Fund, countries such as Iran need a price of around $122 per barrel of oil just to balance their budgets. Several others need a price of between $100 and $130 per barrel to come close to breaking even.
Meanwhile, energy watchers say the U.S. could be doing even more to loosen the constraints imposed by oil producers overseas. In theory, that could heap even more pressure on oil prices.
One can argue: a) OPEC wins; b) OPEC loses.

But the tea leaves suggest that Saudi Arabia needs $100-oil. They've been giving it away for $50 for several months now.  But at $50 oil:
  • social upheaval is all but guaranteed in several oil-producing countries
  • China, India, and the US become more addicted to oil (if it's possible to become "more" addicted to oil -- perhaps better said, more dependent on oil)
  • wind and solar become less and less attractive, requiring more and more government "green" mandates and tax credits
At the moment oil is up one percent, which of course makes no sense with the glut of oil, Saudi with no intent to cut back, and global demand falling (at least that's what we were told last week). It will be interesting to hear what the pundits have to say about this if the price of oil closes higher today. There are really only two explanations: a) speculators; and, b) Saudi is feeling the pressure.

Or maybe it's the Mideast War -- MW III -- the one that is not being reported by the mainstream media. 

Time Out -- April 27, 2015 -- Nothing To See Here -- Idle Rambling

Maybe it's the drizzle and overcast conditions. The weather has been dreary the entire three days I have been back in North Dakota. I started the day -- at about 5:00 a.m. in a great mood. Futures were up and then at 6:00 am. -- just before leaving the house, I heard an interesting comment on the market on CNBC.

I don't watch television as a rule but my dad has cable. My dad doesn't watch television either but he doesn't watch it for reasons other than why I don't watch.  But when I visit him, I find myself surfing the channels a bit.

I saw the last 46 laps of the NASCAR race yesterday, and perhaps five minutes total of the five or six NBA basketball games that must have been aired. I saw someone win the PGA tournament -- or at least I think he won -- they were running the credits and signing off even as the tournament continued. Sort of tells me how important the tournament was to begin with.

So, I'm not sure if I should blog today or not; the comments could be quite schizoid. On the one hand, I couldn't be in a better mood seeing what the market is doing, but yet my irritation with "something" -- I don't know what -- may affect my blogging.

My hunch is that with the cup of coffee and the opening of the market, I will gradually find myself in a better mood.

Yesterday, my dad and I visited Alexander -- just south of Williston. We always go to Alexander at least once when I visit, to have breakfast at the town's cafe. Without question, I can say that it's my favorite US cafe for breakfast. We came in from the north, but because I missed the turn ended up taking the brand new MDU/Knife River bypass around the west side of Alexander and then came into the town from the south. There was not one truck moving in Alexander. Last year, there would have been a hundred trucks going through downtown each hour. Now, with the Bakken slowdown and the bypass, not one moving truck in Alexander. There were two 18-wheelers parked in front of the cafe.

Alexander will return to its pre-boom days, I suppose, which in the big scheme of things, is good. The best thing: the old-timers will still know about the cafe in Alexander.

Alexander's Country Cafe

The semis were parked outside when we arrived; they had departed by the time we were finished with breakfast and filmed.

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Fishing

Last evening, I took my 93-year-old dad out "for a ride" north and east of town. One of the highlights of the evening was to stop and talk to the folks fishing the Little Muddy about six miles north of the city.

I met a 30ish-year-old man and his son Mark. Mark said he was in third grade; a most outgoing young boy. He was having the time of his life; they actually had caught one northern pike; others had also caught northern pike and they were were simply having a grand time. On an earlier occasion Mark lost his entire pole to a three-foot carp; his dad retrieved it through Russian ingenuity.

Mark spoke perfect English; there would be no reason to note that except his father had an accent I couldn't quite make out. It turns out he was from Russia. I did not explore that any farther except to note that he loved the Williston area. I told him North Dakota could be tough. He shrugged.

Mark is in third grade; reads at the 9th or 10th grade level; the school tested him. He says the school told him he read at the 9th or 10th grade level, but didn't know for sure what level. I would have loved to have spent more time talking with them but I didn't want to interfere with the father-son fishing experience.

Mark's dad said his wife is doing a great job with the boys reading. The other boy, at home, four years old, began reading at three years of age. The family checks out 45 to 50 books each week from the local library. Mark says his elementary school doesn't have any more books for him to read, and the Williston public library is pretty much out of books for him to read. My hunch is he needs to move into "adult" literature that is age appropriate, if that makes sense. Shakespeare, for example. One only runs out of books when one has read all of Shakespeare, all of Homer, all of Yahweh, all of Jane Austen, all of Harold Bloom, all of Daniel DeFoe, all of the Bront√ęs.

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The Market

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

This is quite incredible. Every day I look at the list of companies increasing their dividends. For the past six months, the list has about three to six companies. Today, about 25 companies, perhaps a few less. It's an incredibly long list. And some of the names are quite surprising.

Of course, we all know that Apple will be increasing their dividend by 15% when it's announced, and they will also announce a new share buyback plan. Just a hunch, but trust me on this one. Again, this is not an investment site; don't make any investment or financial decisions based on what I post at the blog. This site is for entertainment purposes only. If interested in the truth visit the Huffington Post or MSNBC.

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Greece

Greece wasn't even a headline story today. I had to google Greece to see what was going on. Greece was supposed to default on April 9th, then that was moved to April 24th, and then to the end of the month (April 30th) and now it is said that the day of reckoning has been pushed another four to six weeks.

Now it turns out that the "day of reckoning" may not even be a day of reckoning any more. LOL. I'm starting to understand why the Greeks love the beach so much. Why worry.

Forbes has a very, very interesting take on this. First of all, a Greek default doesn't necessarily mean that Greece is kicked out of the Eurozone. Second, and this is most interesting, everyone says that it is impossible for Greece to ever repay its debt. In fact, not true. From the linked article:
By any normal measure this is simply too large and will never be repaid. 175% of GDP as the stock of debt to be repaid, well, it won’t be and that’s that.
However, that’s not quite the right way to look at it.
The actual weight of a debt load depends not purely upon the stock of it, but the terms of it. What’s the interest rate on it and what’s the term: when must the capital be repaid.
And looking at it this way it’s a lot lower than you might think.
The interest rates on almost all of it (except the short term Treasuries issued by the Greek government recently) are low, there’s payment waivers on much of it for up to a decade and the capital repayments stretch out as much as half a century. It’s entirely possible for Greece to repay this sum: if they actually want to. The immovable object meeting the irresistible force is that Syriza are insisting that the total be reduced and the Eurogroup is insisting that it not be. The Eurogroup would almost certainly go with some changes in the terms, lowering the real burden, but Syriza want that cut in the principal amount.
I love how that paragraph begins: "By any normal measure...." -- I think this is why guys like Warren Buffett don't seem to be worried about US debt. If we've been wrong about a basket case like Greece all this time, the US has nothing to worry about.

I'll bet Greek debt has been sliced and diced into so many small bits that not one creditor has much tied up in Greece. For many creditors, I wouldn't be surprised if the debt is less than a rounding error, and no one will be harmed if the creditor simply "forgives" the debt. 

If there's no one in the forest to hear it, does a falling tree make a sound? If Greece defaults and it's not reported in the media, will anyone know?

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Apple Page

Speaking of earnings, which we weren't, Apple reports today, after market close. Disclaimer: this is not an investment site. Do not make any investment or financial decisions based on anything you read here or think you may have read here.

Apple / Discover Card also announce that Discover Card will become part of the Apple Pay family

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ObamaCare

This is pretty cool. Radio announcement -- major hospital chain in Las Vegas, elsewhere -- emergency rooms are giving their "patients" pagers so folks can go back home, wait in the comfort of their home, while waiting to be seen in the emergency room. I can't make this stuff up.

For me, I've always advised folks to make an appointment with their physician even if they don't need the appointment. Then twenty-four hours before the appointment, if you don't need the appointment, call the clinic and reschedule for two weeks later; rinse, and repeat. You will always be guaranteed an appointment with your physician every two weeks. If that isn't often enough, after your next visit, before leaving the clinic, ask to have a follow-up in a week and do the same thing. In fact, some entrepreneur will probably come up with an Apple Watch app in which the wear taps the app to automatically cancel/reschedule clinic appointments.

Huge Story On LNG Exports -- April 27, 2015

The Telegraph is reporting:
The United States is poised to flood world markets with once-unthinkable quantities of liquefied natural gas as soon as this year, profoundly changing the geo-politics of global energy and posing a major threat to Russian gas dominance in Europe.
"We anticipate becoming big players, and I think we'll have a big impact," said the Ernest Moniz, the US Energy Secretary. "We're going to influence the whole global LNG market."
Mr Moniz said four LNG export terminals are under construction and the first wave of shipments may begin before the end of this year or in early 2016 at the latest.
“Certainly in this decade, there’s a good chance that we will be LNG exporters on the scale of Qatar, which is today’s largest LNG exporter,” he said, speaking on the margins of the IHS CERAWeek energy summit in Texas.
Qatar exports just over 100 billion cubic meters (BCM), though Australia is catching up fast as the offshore Gorgon field comes on stream. It may pull ahead of Qatar later this decade.
Mr Moniz said the surge in US output from shale fracking has already transformed the global market. "We would have been importing a lot of LNG by now. Those cargoes would have gone elsewhere and have in fact had a significant impact in the European market,” he said.
Gas frackers assembled at the world's "energy Davos" in Houston said exports could ultimately be much higher, potentially overtaking Russia as the world's biggest supplier of natural gas of all kinds.
"We're just fifteen years into a 150-year process," said Steve Mueller, head of Southwestern Energy, the fourth biggest producer of gas in the US.
The numbers are staggering:
The mile-deep Marcellus basin stretching from West Virginia through Pennsylvania to New York state is driving the explosive growth. Interlocking fractures in the rock make it possible for a single well with advanced technology to extract much more gas than thought possible just five years ago.
Once thought to be in decline, the Marcellus alone produces 113 BCM a year. This is roughly equivalent to Russia's exports to Europe through the Nord Stream, Yamal, and Brotherhood pipelines

More Chicken Little The Sky Is Falling Stories -- April 27, 2015

For archival purposes only. The Chicago Tribune is reporting:
As Aurora Mayor Tom Weisner watches mile-long trains of black tank cars full of crude oil from North Dakota roll through the heart of Illinois' second-biggest city, he wonders what would happen if they would derail, start to burn and even explode.
One train on the same line that runs through Aurora and Naperville, did that in a rural area near Galena in March. And one did it in Lac-Megantic, Quebec, in July 2013.
Another one did it in West Virginia last year, and one did in Virginia the year before that.
"Lac-Megantic was a little town of just 6,000 people. Yet there were 47 deaths and an estimated $2 billion in property damage," Weisner said. "I can only imagine what the numbers would be if something like that happened in downtown Aurora. There has never been an oil-train wreck in a metropolitan area. Yet."
I doubt if the article noted that not one person has been killed in the US due to a Bakken crude oil derailment. The operators would be thrilled to be able to ship oil by pipeline if given the opportunity. But it is what it is.

More of the article:
It's a concern shared by leaders throughout suburbs with rail lines, particularly those along the BNSF, which is part of what industry officials call a rolling pipeline delivering oil from fracking operations in the west.
"As rail traffic picks up, that makes these things more and more of a risk," said Naperville Mayor-Elect Steve Chirico. "And besides crude oil, many of the other chemicals carried on trains, like ammonia and ethanol, can be very difficult to deal with."
If the writer really wanted to, he/she could find even worse examples of train disasters than this one, but while we're at it, let's pile on the reasons to be worried:
Chirico notes that a prominent monument stands as a reminder of one of the worst railroad disasters in the area's history. On April 25, 1946, a high-speed train named the Exposition Flyer rounded a curve near the Naperville station and crashed into another passenger train that had stopped there. The crash killed 45 people, many of them veterans returning from World War II who thought their lives had been saved by the coming of peace. But Chirico knows that if an oil train would derail at that same spot and explode, the toll could be even worse.
Trains derail, planes crash, and space shuttles disintegrate. Two of five NASA space shuttles had one more launch than landing. Not a very impressive record when one looks at that meaningless statistic.

Whiting, Newfield To Report Nice Wells; BR Continues To Shut-In New Wells -- April 27, 2015

Monday, April 27, 2015:
  • 27660, drl, XTO, Star Federal 21X-14E, Grinnell, no production data,
  • 28332, drl, CLR, Salers Federal 4-27H1, Antelope, no production data,
  • 28794, drl, Abraxas, Jore Federal 2-11-5H, North Fork, no production data,
  • 29110, drl, Hess, EN-Uran A-154-93-2215H-7, Robinson Lake, no production data,
  • 29548, 1,990, Statoil, Field Trust 7-6 7H, Todd, t3/15; cum --
  • 29582, drl, XTO, Satter 21X-1C, Siverston, no production data,
Sunday, April 26, 2015
  • 25583, 2,029, Whiting, Moccasin Creed 14-33-28-2H3, Moccasin Creek, t1/15 cum 27K 2/15;
  • 27528, 766, Newfield, Sand Creek State 153-96-16-11H, Sand Creek, t1/15; cum 23K 2/15;
  • 29047, 1,800, Hess, BB-Belquist-150-95-1110H-12, Blue Buttes, t3/15; cum --
  • 29111, drl, Hess, EN-Uran A-154-93-2215H-8, Robinson Lake, no production data,
  • 29547, 127 (no typo), Statoil, Field Trust 7-6 2TFH, Todd, 30 stages; 5.5 million lbs sand/ceramic; reached KOP in 32 hours of drilling; took a long time to drill the lateral (36 days or so), several MWD failures; throughout lateral drilling various minor changes were made to their drilling targets, but opinion was that from a geologic point of view, drilling went smoothly with no issues; the majority of the lateral was said to show "poor to fair results"; no production data,
  • 29583, drl, XTO, Satter 21X-1F, Siverston, no production data,
Saturday, April 25, 2015
  • 24418, SI/IA, HRC, Fort Berthold 148-94-17C-08-3H, no test date,
  • 27527, 1,243, Newfield, Sand Creek State 153-96-16-4H, Sand Creek, t1/15; cum 26K 2/15;
  • 28788, drl, CLR, Melgaard 4-23H1, Sadler, t10/14; cum --
  • 29426, SI/IA, BR, Camel Butte, Teton 5-1-3TFSH, no test date;
  • 29641, drl, XTO, Brian 21X-15E, Tioga, t10/14; cum --
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27527, see above, Newfield, Sand Creek State 153-96-16-4H, Sand Creek:

DateOil RunsMCF Sold
2-2015104840
1-20151582723

27528, see above, Newfield, Sand Creek State 153-96-16-11H, Sand Creek:

DateOil RunsMCF Sold
2-20159105431
1-20151295037

25583, see below, Whiting, Moccasin Creed 14-33-28-2H3, Moccasin Creek:

DateOil RunsMCF Sold
2-2015199100
1-201566360
 

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Active rigs:


4/27/201504/27/201404/27/201304/27/201204/27/2011
Active Rigs84182187209174


RBN Energy: Competition Among The US Pipelines
The major re-plumbing of the U.S. crude pipeline distribution network to get 4 MMb/d of new domestic production as well as incremental Canadian barrels delivered to refineries is getting close to completion. The price crash and an expected slow down in production will almost certainly slow the pace of infrastructure development. The result is likely to be intensified competition between rival midstream companies and industry consolidation. Today we look at the larger implications of a small pipeline project in Houston.
A couple of weeks ago (April 14, 2015) Magellan Midstream Partners L.P. (MMP) and TransCanada Corporation announced a 50/50 joint venture project to build a 9 mile 24 inch diameter pipeline connecting TransCanada’s Houston tank terminal to MMP’s East Houston Terminal. The proposed pipeline would allow crude from TransCanada’s Houston Lateral pipeline to reach MMP’s East Houston terminal. The Houston Lateral is a 130 Mb/d pipeline currently under construction from Liberty, TX to Moore Road, Houston that branches off the main 700 Mb/d TransCanada Cushing Marketlink pipeline between Cushing, OK and Nederland, TX (see the map in Figure #1). Both the Cushing Marketlink and the Houston Lateral are part of the TransCanada Gulf Coast Project – aka the southern leg of the Keystone XL pipeline (the northern section of which is still waiting for Presidential approval). The Houston Lateral is expected to be online sometime early in the second half of 2015, delivering mostly Canadian heavy crude to Houston refineries.
The MMP/TransCanada joint venture pipeline linking the Houston Lateral to MMP’s East Houston terminal has greater significance than its short 9-mile length suggests. If built it would provide a critical link in the crowded Houston area crude pipeline distribution system where large Midstream companies are battling it out for a share of the fees and tariffs from 2.3 MMBbl of crude now passing through the region. 
This is not an investment site, but today's post from RBN Energy is very, very important to those interested in any of these big four midstream companies: EPD, Enbridge, TransCanada,and Magellan Midstream Partners.

The RBN Energy post will be archived at the source.