Sunday, July 19, 2015

A Few Nice Wells To Be Reported Monday -- July 19, 2015

For more granularity on some of these wells, go to this link.

Monday, July 20, 2015
  • 29410, 45, Denbury, CHSU 11-36NH 15, Cedar Hills, South Red River B, t4/15; cum 1K 5/15;
  • 29530, drl, Enerplus, Raccoon 150-94-04B-09H, Spotted Horn, no production data,
  • 29874, SI/NC, BR, Morgan 41-28MBH, Pershing, no production data,
  • 30270, drl/NC, SM Energy, Stenehjem 14X-9HA, Poe, no production data,
Sunday, July 19, 2015
  • 25363, 2,247, Whiting, Smokey 4-15-22-13H, Pembroke, 30 stages, 3.5 million lbs, t5/15; cum 14K 5/15 -- after 8 days
  • 28818, 605, Triangle, Simpson 151-102-5-8-2H, Elk, 31 stages, 3.8 million lbs, t2/15; cum 50K 5/15;
  • 29529, drl, Enerplus, Badger 150-94-04B-09H, Spotted Horn, no production data,
  • 29871, drl/NC, XTO, Werre Trust Federal 44X-34D, Bear Creek, no production data,
  • 30456, SI/NC, Statoil, Panzer 22-23 8H,
Saturday, July 18, 2015
  • 26365, 1,461, QEP, MHA 4-28-29H-148-92, Heart Butte, 40 stages, 9.6 million lbs sand, t5/15; cum 3K 5/15;
  • 28497, 457, Whiting, P Thomas 154-98-16-33-28-1H3, Three Forks B130 stages, 4.0 million lbs, Truax, t2/15; cum 22K 5/15; 
  • 28499, 1,441, Whiting, P Thomas 154-98-16-33-28-1H, 39 stages, 5.3 million lbs sand and ceramic, Truax, t1/15, cum 68K 5/15; 
  • 28800, drl, CLR, Florida Federal 4-11H1, Camp, no production data,
  • 30142, SI/NC, Statoil, East Fork 32-29 XE 1H, East Fork, no production data,
  • 30215, drl/NC, XTO, Thompson 44X-20B, Blue Buttes, no production data,
  • 30271, drl/NC, SM Energy, Stenehjem 14-9H, Poe, no production data,
  • 30361, drl/NC, CLR, Patterson Federal 6-13H, Camp, no production data,

Memo To Self: The Bakken Never Fails To Amaze -- July 19, 2015

The Williston Herald is reporting:
Thursday night saw Williston’s first ever Rainbow Rendezvous, an event celebrating the LGBT (lesbian, gay, bisexual and transgender) community in Williston. Over 200 people packed into the Larkin Hart building at the UMV Fairgrounds to experience a live DJ, drinks and the company of fellow LGBT supporters.
“I didn’t know what to expect,” said Alex Johnson, the man responsible for the planning and hosting the event. Even LGBT members who’ve lived in Williston for many years said they never figured Williston would host an event like this, with sponsors that included J-Dubs Bar and Grill.
He said he didn’t know how big the Williston LGBT community was until he started presenting the event on Facebook. His suggestion invited a landslide of Facebook support from those identifying under many sexual orientations.
“I’m the straightest guy here,” said Brady Berndt, wearing short shorts, a purple boa and a shirt reading “Got Pride?” in glitter marker. “I’m here to support pride,” he said, just before kicking off on his scooter to coast around the bar.

Finally, NIMBY -- Rhode Island "Man's Up" -- Will Allow Off-Shore Wind Farm -- July 19, 2015

USA Today is reporting: nation's first (?) off-short wind farm is becoming a reality, and finally it's a wind farm not in my backyard or anybody's backyard for that matter, unless you are one of 17,000 homeowners on an island off Rhode Island who seem genuinely eager for this project.
Deepwater Wind expects delivery this week of foundations that will support five wind turbines off Block Island, a small tourist destination 12 miles from Rhode Island’s shore.
Data points:
  • $225 million project
  • turbines to be installed in late 2016
  • 30 MW
  • 17,000 homes
  • at 589 feet above sea level, the turbines will be among the tallest in the world
  • Block Island, which now relies on expensive diesel fuel to keep its lights on
Obviously, the island will still need back-up power when the wind is not blowing or not blowing at the right speed. 

$225 million / 30 MW = $7.5 million / MW and this will probably provide only about 40% of energy needs -- due to variability of the wind. The back-up energy, I assume, will still be "expensive diesel fuel."

I would think one could buy a lot of diesel fuel for $225 million. But then that's just me.

Having said that, this is exactly the right niche for wind and solar energy; for "islands" (anywhere on earth) that find it challenging to import or access fossil fuels.

Exactly Right -- July 19, 2015

This is an excellent article; reports something we've been saying for quite some time. The Houston Chronicle is reporting: oil statistics haven't kept pace with evolving industry.
Despite rig count's plunge, production of crude has surged.
Despite the rig count's dramatic fall, oil production surged to a 44-year high, helping push an early 2015 price rally into another slide. It's a perplexing outcome that highlights the challenge of analyzing and predicting rapid trends in the global oil market.
"We're talking about a very different industry," said R.T. Dukes, an analyst at energy consulting group Wood Mackenzie. "The technology is much different today that it was in the past."
That's because producers now use a single rig to drill multiple wells from a single site, allowing them to boost output with fewer machines. And since prices began plummeting, many oil companies have pulled out of less proven shale plays to refocus their attention on the sweet spots in the nation's biggest shale plays to better their chances of striking big bounties of crude.
"You're using your best rigs and your best crews on your best properties with the best technology," Sieminski said. "So it's easier to maintain production given the drop in the rig count."
Finally, a mainstream article mentioning the "human factor," the best crews.


******************************
Disclaimer

This is not an investment site; see disclaimer/welcome at the tab at the top.

******************************
COP And The Dividend Increase

24/7 Wall Street provides some details.

To cancel a deep-sea drilling rig was quite a decision. Note:
According to Ensco, Conoco is obligated to pay Ensco the operating day rate of the drillship monthly for two years. The day rate of Ensco’s DS-9 drillship is approximately $550,000 a day. That works out to $16.5 million a month, $198 million per year, or $396 million for the two-year period.
In other words, whether or not COP went ahead with drilling plans, they had a contract with Ensco to pays them about $400 million over two years. Obviously the companies are talking and COP is unlikely to take the full $400 charge (?). I don't know if underwriters/insurers share in the charge.

The article continues:
In the first quarter of this year, ConocoPhillips posted net income of $272 million, so a charge of $200 million to $400 million is not trivial.
However, this is where I find accounting on Wall Street interesting (nothing new; these are simply the accounting rules):
As a special, one-time item it will not affect net earnings or earnings per share, but it has already had an impact on Conoco’s dividend increase, and the impact on cash flow will be non-trivial as well.
The big question is whether "seed corn" for oil companies is similar to R&D for the pharmaceutical companies or the automobile manufacturers. Some say "yes," some say "no." I'm not sure.
********************
Jerked Around

It will be interesting to see if Americans show their frustration of being jerked around when November, 2016, comes around.

It's not that ObamaCare is so entirely awful on so many levels, the real problem is middle class folks and the "working class" getting jerked around. There is no longer any stability in their health care plans. There are at least four ways of being jerked around:
  • if employed by a "larger employer," you run the risk of your employer finding loopholes to get you knocked off the company plan, or slim down the program to just barely meet federal standards, which is mostly wellness and health promotion and birth control;
  • physicians, clinics, hospitals enter and exit a particular plan seemingly willy-nilly; one year your physician accepts ObamaCare, the next year she doesn't;
  • your health insurer has one name this year, and then a new name next year when there is a merger; and with the merger, one must start all over again, researching a healthcare plan; and, then,
  • at the federal level, exceptions are being considered and granted, again, willy-nilly.
By the way, I talked about this "unpredictability back in March, 2014, more than a year ago; as I've said, predicting the problems with ObamaCare does not require the likes of a rocket scientist or even Elon Musk.
So, now it's the Native Americans being jerked around. My hunch is that the rank-and-file Native American men and women are just like the rest of us when it comes to health insurance: keep it simple and if my employer will pay for it, great.

But apparently, ObamaCare is scalping the Native American leadership and they want it stopped. The Rapid City Journal is reporting a move underway to exempt Native Americans from employer-mandated ObamaCare rules:
Representatives of several Indian tribes say they support legislation introduced this week in Congress that would exempt tribes nationwide from being classified as a large employers under the federal Affordable Care Act.
Members of Montana's congressional delegation and others introduced legislation this week that would exempt tribal governments from the large employer mandate.
Tribal spokesmen say requiring tribes to provide insurance for tribal employees is more expensive than allowing employees to register for individual insurance coverage. People who register as individuals may qualify for tax credits that offset the cost of coverage.
Again, remember, there are three legs of the ObamaCare three-legged stool:
  • employer-mandated coverage (delayed, and now finally being implement)
  • individual mandate for those not employed by a "large" employer (delayed, but went into effect a year or so ago)
  • excise tax on medical devices (being whittled away by Congress due to heavy lobbying by the medical device lobbies)
I've added a new tag to capture this cost shifting: ObamaCareCostShifting. A reminder that the ObamaCareCosLeaving tag is still there and has been there for quite some time.

******************************
Spinning

It will be interesting to see how The New Yorker spins the Chattanooga execution of four US Marines and a US Navy sailor. The editors did a great job spinning the terrorism story in Charleston

Spiritwood, Jamestown, North Dakota Update; Ethanol Plant, Power Plant Up And Running -- July 19, 2015

Updates

November 1, 2015: MDU cancels 96-mile pipeline that would have provided natural gas for the fertilizer plant. 

August 12, 2015: cooperative cancels plans for fertilizer plant.

July 25, 2015: a reader alerted me to two links regarding the Spiritwood:
This may explain another huge manufacturing facility in western North Dakota; more on that later if I remember.

July 25, 2015: finally, the definitive answer to what's going on in Jamestown, the link to this story sent by a reader:
Midwest AgEnergy Group started operations on the company’s new 65 million-gallon-per-year biorefinery located next to Great River Energy’s Spiritwood Station near Jamestown, North Dakota.
The Dakota Spirit AgEnergy biorefinery uses steam from the combined heat and power plant and corn from local farmers to produce ethanol, distillers grains and fuel-grade corn oil. The plant will produce 65 million gallons per year of ethanol, 198,000 tons of distillers grains for livestock feed and 6,900 tons of fuel-grade corn oil for products like biodiesel.
The ethanol produced at Dakota Spirit AgEnergy amounts to about 20 percent of North Dakota’s annual fuel demand. The biorefinery will purchase 23 million bushels of corn annually from farmers and employs 38 people.
The cost of the project was $155 million.
As an incentive, the state provided nearly $40 million in grants and loans for the renewable fuel project, including funding for feasibility studies, construction and jobs training. The state’s investment includes loans from the Bank of North Dakota and the North Dakota Department of Commerce’s Development Fund, along with grants from the North Dakota Industrial Commission and the NDDOC’s Agricultural Products Utilization Commission and Community Development Block Grant programs. Funding for new jobs training was provided by Job Service North Dakota. 
You know, this really is a big story, regardless of how one feels about ethanol. I think of the decades Mark Rodgers spent trying to cobble together that huge off-shore wind farm that came to naught. Here in the midwest, with similar tenacity, the developers never gave up, and came up with $155 million cobbled together from numerous sources. Whether this project thrives, survives, or dives, it must be quite a feeling of exhilaration right now for the folks who hung in there.

Original Post
 
Just a few days ago I posted that much of the activity planned for the Spiritwood site in Jamestown, North Dakota had not come to fruition.

Moments ago, a reader from Fargo wrote to tell me:
I am thrilled to hear this.

I mentioned to the reader that he/she probably knows my feelings about government-mandated ethanol. However, if the government is going to mandate ethanol, I am thrilled that folks in North Dakota are taking advantage of the opportunity.

This is wonderful for all the folks who invested time, money, human resources, to see these projects up and running.

More information:

The Jamestown Sun has more information on the ethanol plant:
Another factor in the local corn market is Dakota Spirit AgEnergy at Spiritwood. The ethanol plant will begin buying corn in April and start testing equipment and operations in May. Plans call for the plant to be fully operational this summer.
Dakota Spirit will accept corn under contract on a controlled basis this month, Brown said. As the plant staff gain experience and some of the testing is complete, the plant will begin buying corn on a cash basis.
“When we become more comfortable we’ll open things up,” Brown said. “We aim to support the local producers by offering another market for their corn.”
Once in full production, the plant will use about 2 million bushels of corn per month. This exceeds the 2014 Stutsman County corn production of 18.6 million bushels.
I missed the power plant story when it opened; it began operations back in November, 2014, according to The Bismarck Tribune:
Great River Energy's Spiritwood Station, North Dakota’s newest coal-fired power plant, started operations this week.
The plant, located near Jamestown, produces between 35 and 40 megawatts. At full capacity, it can pump 99 megawatts of power into the grid, said GRE spokesman Lyndon Anderson.
The plant employs 24 people and cost $425 million to build.
In addition to supplying electricity, the plant will also use steam energy to power an adjacent malting company and a 65 million gallon-per-year ethanol plant.

According to GRE, most conventional coal-fueled plants are 30 to 35 percent efficient. Spiritwood’s combined heat and power plant will be 60 percent efficient.
The plant will do so by using GRE's patented DryFining technology, which uses waste heat from GRE's Coal Creek Station near Underwood to dry lignite coal. The dry coal produces more energy with less raw material. It will be transported to Spiritwood via covered railcar.
$425 million / 99 MW = $4 million / MW. Either I did the math wrong or I am misreading something or comparing apples and oranges, but $4 million/MW for a coal-powered plant seems expensive. Or maybe that's what it costs now for a "clean coal power plant." But if that's accurate, ....

********************************
Additional Background To Spiritwood

On another note, this article at Prairie Biz Magazine may help explain the "confusion." The plant was completed in 2011 but then sat idle until recently.
The 99-megawatt coal-fired electric generating plant was completed in August 2011. The plant went through a testing and commissioning process and then was shut down because of lack of demand for electricity in Minnesota. The plant has sat idle since.
Construction on the Spiritwood Station generating plant, which is being built near Spiritwood, N.D., began in 2006. The plant cost about $350 million to construct and was intended to produce steam for use at the Cargill Malt plant and electricity for the Minnesota markets.
Likewise, The Bismarck Tribune did quote an official who stated that plans for the ethanol plant had been "scrapped" but that was a long, long time ago (2009):
A Jamestown business leader says plans for a nearby ethanol plant have been scrapped and the city-county development corporation is getting its money back.
Connie Ova, the chief executive officer of the Jamestown-Stutsman Development Corp. She says developer Harold Newman was given a deadline of June 1 to start construction on the 100 million gallon ethanol plant in the Spiritwood Energy Park. The project has been on the drawing board since 2006.
Ova said changes in the ethanol industry hurt its chances.
The Jamestown-Stutsman Development Corp. committed $6 million to the project. Ova said the corporation will get its money back with interest. She said it has purchased the land from the Newman Group.
Biomass Magazine provides the rest of the story, 2011:
A new industrial park under development by GRE near Jamestown, N.D., features a combined heat and power (CHP) plant designed specifically to supply process steam to adjacent industrial processors. The project, known as Spiritwood Station, was originally intended to host a 100 MMgy corn ethanol plant. Plans have since changed, and a new 20 MMgy cellulosic biorefinery is expected to be built in its place.
“Back in the 2007-‘08 timeframe, when we were just breaking ground on the [CHP] plant, the conventional ethanol plant was cancelled,” says GRE’s Manager of Business Development Sandra Broekema. “That left us with a big hole of 350,000 pounds-per-hour of steam that we were planning to produce for sale that we now need to find a home for.”
Broekema says there are several reasons why a cellulosic biorefinery is a well-suited addition to Spiritwood Station. In addition to the plant’s high-steam usage requirements, the facility will also produce purified lignin pellets as a coproduct. “Our CHP is a fluidized bed combustion system which has some inherent fuel flexibility,” he continues. “By cofiring 10 percent lignin with DryFine (a refined North Dakota lignite), we would be able to reduce our carbon footprint even further.”
As a result GRE has stepped into the lead development role of the cellulosic ethanol plant. “The primary motivation for GRE’s involvement is to secure additional steam partners for the industrial park in order to achieve our original design efficiencies and economies for our cooperative membership,” Broekema says. “Because we are taking a ‘cooperative approach’ involving as many of the key stakeholders as we can, we have laid out a somewhat conservative five-year development plan beginning in 2010 through 2014 startup, if all goes according to plan.”
And then from this source:
Dakota Spirit AgEnergy Corn Ethanol Plant receives EPA Certification (Ind. Report).
Great River Energy, Dakota Spirit AgEnergy. Date: 2013-02-15.
Great River Energy, which operates a coal-fired plant near Underwood, has received federal renewable fuel certification for a 65 million gpy corn ethanol plant in the Spiritwood Park project near Jamestown.
Great River's Bismark-based subsidiary Dakota Spirit AgEnergy plans to build a plant that will utilize 23 million bushels of corn per year. The subsidiary hopes to complete financing this spring and break ground this summer (2013).
The facility will be co-located with Great River's coal-fired electric generating Spiritwood Station and will use the plants excess steam for ethanol production. The Jamestown plant will also produce corn oil, distiller's grains (DDGs), and meet the EPA's revised Renewable Fuel Standard, which requires cornstarch-based ethanol plants built after 2007 to have lifecycle carbon emissions 20 percent lower than conventional motor fuels.
So, hopefully this clarifies things.

Wow, I learn a lot from my readers. Again, a huge thank you to the reader who sent the information that the power plant and the ethanol plant were up and running.

It never ceases to amaze me how much activity is going on in a state with such a small population. Very, very impressive.