Wednesday, July 29, 2015

Oasis Proposes To Put Nine (9) Wells Inside City Limits, East Side Of Williston -- Juy 29, 2015

In the NDIC August, 2015, hearing dockets, Oasis proposes to place up to nine wells on the east side of Williston:




One of my dad's best friends lived in this area. He would have been quite excited to have seen this come to fruition. Wow, there were a lot of great men and women from the greatest generation in Williston when I was growing up.

Notice the wells that already exist inside the city limits. Williston will give Tioga a run for it's "Oil Capital of North Dakota" moniker.

Music video

How A Maze Of Pipelines Saved The Country's Largest Shale Play -- Bloomberg, July 29, 2015

Bloomberg is reporting:
(Bloomberg) -- To understand why U.S. oil production is so resilient, it helps to consider the maze of pipelines running out of Midland, Texas.
New lines have relieved a chokepoint in America’s biggest oil-producing area. A massive supply glut had forced producers to offer discounts of more than $20 a barrel below the U.S. benchmark last year. This month, prices have been at an average premium of 78 cents, the most in records going back to 1991.
Magellan Midstream Partners LP, Plains All American Pipeline LP and Sunoco Logistics Partners LP finished work in the past year that added more than 750,000 barrels a day of capacity, while output grew by only 400,000. With an outlet to Gulf Coast refineries, the Permian has been the only major U.S. shale region to keep growing as prices dropped by more than half to less than $50.
“Putting in those pipelines and connecting the Permian to the Gulf directly allowed that premium to develop,” John Auers, Dallas-based executive vice president at Turner Mason & Co., an energy consulting firm, said by phone on July 27. “When you talk about these price levels, $5 to $10 is the difference between putting rigs back to work or shutting down.
Much, much more at the link. Archived.

Crying "Uncle"? -- Saudi Arabia To Cut Production At End Of Summer -- Sources, WSJ -- July 29, 2015

This was just sent to me by a reader. I wouldn't have noticed this article until tomorrow morning. Huge "thank you" to the reader. The Wall Street Journal is reporting:
The world’s top crude-oil exporter, Saudi Arabia, is planning to pull back from record-high levels of production at the end of the summer when domestic energy demand subsides, according to people with knowledge of the matter.
The reduction could begin as soon as September and would amount to about 200,000 to 300,000 barrels a day, bringing production to about 10.3 million barrels a day, the people said. Saudi Arabia told the Organization of the Petroleum Exporting Countries that it produced 10.56 million barrels a day in June, a record high.
“It is purely based on the [domestic] demand situation,” one of the people said, adding that “production is likely to hover around” 10 million barrels until the end of the year.
It's not a huge cut (250,000 bopd) but a) the headline; and, b) remember, Saudi Arabia has two new refineries, requiring about 800,000 bopd (together). For my purposes, I round that to one million bopd.

Compare the statement: "... production is likely to hover around" 10 million bopd, with the graph at this link and then recall that the Saudis announced a $35-billion, 5-program back in 2012 to increase oil production, and all it got them in the most recent reporting period was a 1% increase month-over-month.

But most interesting is what was not said: "production is likely to hove around 10 million bbls until the end of the year" ... and then what?

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

If Saudi cuts back, who's gonna fill their shoes?

Who's Gonna Fill Their Shoes, George Jones

QEP Proposes Up To 24 Wells In Each Of Several Drilling Units In Deep Water Creek Bay -- July 29, 2015

Deep Water Creek Bay

This is a moderately sized field ("moderate" for the Bakken), about the size of two townships. Currently (July 30,2015) it is composed of 81 sections, about half of which are under the river or nearly under the river. It lies entirely within the Fort Berthold Indian Reservation.

It is bordered on the north by the very prolific Parshall ("owned" by EOG); by Van Hook and Heart Butte on the west; not much else to the immediate south or to the east of this field.

Interestingly enough, section 2-150-90 which should be in Deep Water Creek Bay is in the Parshall oil field.

It appears the western half of this oil field will be most productive; the eastern half appears to be a lot less promising.

**************************************
Permits

2015
31111,  conf, SHD,
31110,  conf, SHD,
31109, conf, SHD,

2014 (list is complete)
29570, conf, SHD,
29569, conf, SHD,
29568, SI/NC, SHD,
29567. drl, SHD,

2013 (list is complete)
None.

2012 (list is complete)
24421, 562, QEP, MHA 5-32-31H-150-90, t1/14; cum 93K 9/15;
24420, 792, QEP, MHA 2-32-31H-150-90, t2/13; cum 86K 9/15;
24419, 667, QEP, MHA 6-32-31H-150-9-, t1/14; cum 117K 9/15;
24078, PNC, MRO, Vorwerk USA 24-34H,
22785, 810, MRO, Thomas Miller USA 21-28H, t8/12; cum 91K 9/15;
22718, 963, QEP, MHA 5-29-30H-150-99, t8/12; cum 132K 9/15;
22557, PNC, MRO, Mink USA 11-15H,
22489, 1,181, MRO, Thomas Miller USA 11-28H, t7/12; cum 169K 9/15;

Prior to
21853, 294, 106K 9/15
21852, 1,526, 160K 9/15
21824, 814, 86K 9/15
21765, 182, 106K 9/15
21764, 673, 101K9/15
21286, 246, 81K 9/15
21211, 1,026, 227K 9/15
21116, 952, 112K 9/15
21093, 878, 153K 9/15
21092, 436, 90K 9/15
21091, 499, 98K  9/15
20658, conf,
20494, 197, 108K 9/15
20454, 1,005, 202K 9/15
20291, 777, 246K 9/15
20290, 553, 256K 9/15
20289, 702, 276K 9/15
20284, loc,
20274, 1,253, 247K 9/15
20271, 592, 150K 9/15
19957, 1,379, 201K 9/15
19683, 766, 167K 9/15
19630, 916, 213K 9/15
19467, 617, 128K 9/15
19296, 2,388, 211K 9/15
18991, 1,053, 192K 9/15
18956, loc,
18930, PNC
18886, 1,456, 198K 9/15
18885, 1,101, 224K 9/15
18316, 1,197, 228K 9/15
18158, 780, 135K 9/15
17940, 1,217, 261K 9/15
17929, 546, 89K 9/15
17434, 880, 171K 9/15


*******************************
News

July 29, 2015: In the NDIC August, 2015, hearing dockets, this case:
  • 24381, QEP, Deep Water Creek Bay-Bakken, establish 2 1280-acre units, 24 wells on each; establish a 1120-acre unit, 24 wells the unit; establish a 960-acre unit, 24 wells on the unit; establish a 1600-acre units, 24 wells on the unit; 24 additional wells on each of four 1920-acre units, Dunn, McLean.
Two of the proposed drilling units in this case, the 960-acre unit, and the 1600-acre unit:


The expectation of the NDIC that if the request is approved, the operator will begin work sooner than later. [The graphic is not perfect; the dividing line between the two drilling units should split section 6 exactly in half, an east half and a west half.]

48 wells across four sections

NDIC Hearing Dockets, August 26 - 27, 2015

Disclaimer: these summaries are for my personal use only; you are free to read them; don't quote me on them; there will be typographical and factual errors.  If this is important to you go to the source. Link here. Highlights here.

Past dockets are archived here.

Note: a change in today's summary. I am not listing the "continued" cases.

Wednesday, August 26, 2015
9 pages -- half the number of pages seen during the boom

24367, Murex, Alkabo-Stonewall, redefine the field, Divide
24368, Hess, Davis Buttes-Bakken, redefine the field, Stark
24369, CLR, Beaver Creek-Bakken, redefine, Billings, Golden Valley,
24370, HRC, McGregory Buttes-Bakken, complete a specific well, Dunn
24371, Whiting, Moccasin Creek-Bakken, establish a 640-acre unit, Dunn
24372, Whiting, Twin Buttes-Bakkekn, establish a 1920-acre unit, 8 wells, Dunn
24373, Whiting, Twin Buttes-Bakken, establish a 2560-acre unit; 8 wells, Dunn
24374, Whiting, Twin Buttes-Bakken, establish a 5120-acre unit, 16 wells, Dunn
24375, Whiting, Twin Buttes-Bakken, establish a 1280-acre unit, 4 wells, Dunn
24376, Whiting, Twin Buttes-Bakken, establish a 1280-acre units, 4 wells, Dunn
24377, QEP, Van Hook and Heart Butte-Bakken, establish 2 overlapping 1280-acre units; establish 2 overlapping 1920-acre units; 1+ wells in each; Mountrail, Dunn
24378, QEP, Heart Butte and Mandaree-Bakken, establish 3 overlapping 1280-acre units, 1+ wells each, Mountrail, Dunn
24379, QEP, Heart Butte-Bakken, establish 8 overlapping 1280-acre units, 1+ wells in each, Dunn
24380, QEP, Heart Butte, Twin Buttes, and Moccasin Creek-Bakken, establish 7 overlapping stand-up 1280-acre units; 1+ wells in each, Dunn
24381, QEP, Deep Water Creek Bay-Bakken, establish 2 1280-acre units, 24 wells on each; establish a 1120-acre unit, 24 wells the unit; establish a 960-acre unit, 24 wells on the unit; establish a 1600-acre units, 24 wells on the unit; 24 additional wells on each of four 1920-acre units, Dunn, McLean
24382, Oasis, Todd and Catwalk-Bakken, establish a 1280-acre unit, 9 wells; establish a 1280-acre units, 3 wells; to establish a 2560-acre unit, 12 wells; establish 2 overlapping 2560-acre units, 2 wells on each, McKenzie, Williams
24383, Petro-Hunt, Keene-Bakken/Three Forks, define stratigraphic definition, McKenzie
24384, Hess, pooling,
24385, Hess, pooling,
24386, Lime Rock Resources III-A, Stanley-Bakken, 3 wells on each of two 640-acre units; 6 wells on an overlapping 1280-acre unit; 7 wells on a 1280-acre unit; 6 wells on each of two 1280-acre units; 5 wells on each of two 2560-acre units; Mountrail
24387, BR, Sand Creek-Bakken, 16 wells on a 2560-acre unit, McKenzie
24388, BR, pooling,
24389, HRC, commingling
24390, HRC, commingling
24391, HRC, commingling
24392, HRC, commingling
24393, HRC, commingling
24394, HRC, commingling
24395, HRC, commingling
24396, HRC, commingling
24397, QEP, commingling
24398, Whiting, Twin Buttes-Bakken, 4 wells on a 1280-acre unit, Dunn
24399, pooling,
24400, Oasis, SWD
24401, Oasis, SWD
Thursday, August 27, 2015
11 pages

24402, North Plains, Alexandria-Bakken, 8 wells on a 1280-acre units; Divide
24403, CLR, Barta-Bakken, redefine the field, Dunn, Billings
24404, CLR, Ukraina-Bakken, redefine the field, Dunn, Billings
24405, XTO, revoke a BR permit, Mcransom 1-8-31UTH-ULW, McKenzie
24406, XTO, complete the Maddy wells, McKenzie
24407, Statoil, Spring Creek-Bakken, redefine the field, McKenzie
24408, XPX, Heart Butte-Bakken, establish an overlapping 2560-acreunit; 1 well, Dunn
24409, WPX, Spotted Horn-Bakken, establish an overlapping 1280-acre unit, 14 wells, McKenzie
24410, EOG, Alger-Bakken, establish a 1280-acre unit, multiple wells, Mountrail
24411, Sinclair, Lone Butte-Bakken, establish a 1280-acre unit, 7 wells, McKenzie
24412, SHD, Deep Water Creek Bay and HEart Butte-Bakken, establish an overlapping 1920-acre unit, multiple wells; Dunn, McLean
24413, SHD, Deep Water Creek Bay-Bakken, establish an overlapping 1920-acre unt; multiple wells, Dunn, McLean
24414, SHD, Van Hook, Deep Water Creek Bay and Heart Butte-Bakken, establish an overlapping 4160-acre unit, fifteen wells, Dunn, McLean
24415, Sinclair, pooling
24416, Sinclair, risk penalty legalese,
24417, Liberty Resources, pooling,
24418, Liberty Resources, pooling
24419, Liberty Resources, pooling,
24420, Liberty Resources, pooling,
24421, Liberty Resources, pooling,
24422, Liberty Resources, pooling,
24423, Liberty Resources, pooling,
24424, EOG, pooling,
24425, EOG, pooling,
24426, EOG, pooling,
24427, CLR, Elm Tree-Bakken, 20 wells on an existing overlapping 2560-acre unit, McKenzie
24428, CLR, Antelope-Sanish, 13 wells on an existing 1280-acre unit, McKenzie
24429, CLR, pooling,
24430, CLR, pooling,
24431, CLR, pooling,
24432, CLR, pooling,
24433, CLR, commingling
24434, CLR, commingling
24435, CLR, commingling
24436, WPX, pooling,
24437, WPX, flaring,
24438, Statoil, commingling
24439, Statoil, commingling
24440, Enduro, commingling
24441, XTO, commingling
24442, Hanna, SWD
24443, Hanna, SWD

Whiting To Go With Six Drilling Rigs In The Bakken -- July 29, 2015

Back on July 25, 2015, I counted nine (9) active rigs drilling Whiting-operated wells. Apparently Whiting plans to cut  the number of active rigs in the Bakken to six and in the Niobrara to two.

A couple of weeks ago, Whiting has raised its CAPEX for FY 2015 to 2.3 billion, but has revised it a bit, back to $2.15 billion.

I bet the change in the number of rigs will have no effect on production. Whiting's production in the Bakken will depend on any number of factors -- I bet I could come up with 12 factors if I had to -- and the number of rigs will be the least of their concerns. And think of all the money they save by having 6 rigs in the Bakken instead of 9. Smart operators.

6/8 * 2.15 billion = $1.6 billion CAPEX to be spent in North Dakota. By one company. I can live with that.

Record-Setting Stockpiles Of US Diesel -- July 29, 2015

Platts is reporting record-setting stockpiles of diesel:
US ultra-low-sulfur diesel stocks rose to a record high for the fourth straight week, as East Coast stocks also hit a record for the fifth straight week.
Total US stocks of ULSD rose about 2 million barrels in the week that ended Friday to 123.91 million barrels, the highest level since EIA began collecting the data in 2004.
US stocks have risen to a record each of the last four weeks, with most of the stock builds concentrated in the East Coast.
East Coast stocks of ULSD rose 2.32 million barrels to 41.02 million barrels, the highest ever. Stock builds in the East Coast also have set records in each of the last five weeks.
ULSD stocks typically build this time of year in the East Coast ahead of peak winter demand season, with stocks rising last year to a then-record 33.27 million barrels.

Eleven (11) New Permits, North Dakota -- July 29, 2015

Active rigs:


7/29/201507/29/201407/29/201307/29/201307/29/2013
Active Rigs73192179179179

Only one (1) well coming off the confidential list Thursday:
  • 29665, drl/NC, Newfield, Olson 152-96-30-31-11H, Westberg, producing,
Eleven (11) new permits:
  • Operators: CLR (6), Petro Harvester (3), Hess (2),
  • Fields: the six CLR permits for for Cedar Coulee wells; Petro Harvester permits are for wells in Portal oil field;
  • Comments:
Five (5) producing wells completed:
  • 27516, 647, XTO, Guy Federal 24X-35F, Grinnell, t6/15; cum --
  • 27514, 1,316, XTO, Guy Federal 24X-35E, Grinnell, t6/15; cum --
  • 27515, 2,178, XTO, Guy Federal 24-35A, Grinnell, t7/15; cum --
  • 27517, 2,832, XTO, Guy Federal 24X-35B, Grinnell, t7/15; cum --
  • 29393, 2,240, QEP, TAT 5-35-26BH, Grail, t7/15; cum -- 

August Dockets, August, 2015 -- A Quick Run-Through

Disclaimer: these summaries are for my personal use only; you are free to read them; don't quote me on them; there will be typographical and factual errors.  If this is important to you go to the source. Link here.

Past dockets are archived here.

Highlights. These are just the cases that caught my eye the first time through. This was done very, very quickly; it was not proofread. There will be factual and typographical errors. The full summary is here.

For newbies, these are "case numbers," not permit numbers. 

Wednesday, August 26, 2015
9 pages -- half the number of pages seen during the boom

24373, Whiting, Twin Buttes-Bakken, establish a 2560-acre unit; 8 wells, Dunn
24374, Whiting, Twin Buttes-Bakken, establish a 5120-acre unit, 16 wells, Dunn
24375, Whiting, Twin Buttes-Bakken, establish a 1280-acre unit, 4 wells, Dunn
24376, Whiting, Twin Buttes-Bakken, establish a 1280-acre units, 4 wells, Dunn
24377, QEP, Van Hook and Heart Butte-Bakken, establish 2 overlapping 1280-acre units; establish 2 overlapping 1920-acre units; Mountrail, Dunn
24378, QEP, Heart Butte and Mandaree-Bakken, establish 3 overlapping 1280-acre units, Mountrail, Dunn
24379, QEP, Heart Butte-Bakken, establish 8 overlapping 1280-acre units, Dunn
24380, QEP, Heart Butte, Twin Buttes, and Moccasin Creek-Bakken, establish 7 overlapping stand-up 1280-acre units; Dunn
24381, QEP, Deep Water Creek Bay-Bakken, establish 2 1280-acre units, 24 wells on each; establish a 1120-acre unit, 24 wells the unit; establish a 960-acre unit, 24 wells on the unit; establish a 1600-acre units, 24 wells on the unit; 24 additional wells on each of four 1920-acre units, Dunn, McLean
24382, Oasis, Todd and Catwalk-Bakken, establish a 1280-acre unit, 9 wells; establish a 1280-acre units, 3 wells; to establish a 2560-acre unit, 12 wells; establish 2 overlapping 2560-acre units, 2 wells on each, McKenzie, Williams
24386, Lime Rock Resources III-A, Stanley-Bakken, 3 wells on each of two 640-acre units; 6 wells on an overlapping 1280-acre unit; 7 wells on a 1280-acre unit; 6 wells on each of two 1280-acre units; 5 wells on each of two 2560-acre units; Mountrail
24387, BR, Sand Creek-Bakken, 16 wells on a 2560-acre unit, McKenzie

Thursday, August 27, 2015
11 pages

24402, North Plains, Alexandria-Bakken, 8 wells on a 1280-acre units; Divide
24409, WPX, Spotted Horn-Bakken, establish an overlapping 1280-acre unit, 14 wells, McKenzie
24411, Sinclair, Lone Butte-Bakken, establish a 1280-acre unit, 7 wells, McKenzie
24428, CLR, Antelope-Sanish, 13 wells on an existing 1280-acre unit, McKenzie

Commentary On $5 Gasoline In California -- July 29, 2015

I think everyone is aware that California has unique gasoline requirements and that refineries from outside California do not refine oil to meet California's gasoline specifications. Some Asian refineries will bring "California" gasoline to the state when it is cost-effective, which appears to be about $4.50 at today's exchange rate.

I think one could argue that, for the most part, California's gasoline supply comes from in-state refineries.

Hold that thought.

Based on newspaper reports coming out California over the past ten years or so, it appears that Californians are no more inclined to build new refineries or expand capacity any more than the rest of the country (North Dakota is somewhat of an anomaly with its new Dickinson refinery).

At the same time, there was probably no need to think about new refineries in California because the Los Angeles Times has been reporting for the past decade that coal-powered vehicles would become the norm in California, and that the few Californians driving gasoline-powered cars would be downsizing to compact and sub-compact cars. It all made any argument for more California refineries moot.

But a funny thing happened on the way to the forum.

First of all, Californians are driving more than ever.

Second, the rush to EVs seems to have peaked, another passing fad.

Third, gas-guzzling SUVs and big Ford pick-up trucks are back in vogue.

Hold all those thoughts.

Everyone, by now is quite aware that California, especially southern California, is being hit with $5 gasoline and in a news report of July 17, 2015, it did not sound like things were going to turn around very quickly.

With a crude oil glut and oil prices down to $47; with gasoline across the rest of the nation as low as $2.59, folks in California are understandably wondering why their gasoline is priced at $4.59 for regular unleaded (premium will be a lot more expensive due to the alkylate "shortage").

One of the explanations for the "shortage" of gasoline in California is the explosion at the Exxon refinery in Torrance (south Los Angeles), which is operating at 20% capacity and will continue to do for quite some time (based on that July 17, 2015, story).

I was aware of a few other reasons in addition to the Exxon explosion, but it sure sounded like that was the main reason.

I'm not so sure any more. I did not notice this until this morning, in a graph I posted yesterday. I will explain what I'm talking about but see if you see the same thing I'm seeing:


Yes, gasoline stockpiles in California are at 10-year lows this year (red line), and the averages this year have been hugging the 10-year low. However, it was actually worse last year from week 15 through week 28 (or thereabouts). 

Maybe I'm reading too much into this, but if there are no new refineries being built in California, if Californians are driving more than ever, if EVs are a passing fad (at least not growing as fast as anticipated), if Ford is having record quarters with larger SUVs and larger F-150's --

If one looks at the wild swings in the 2014 stockpiles, one gets the feeling that the situation is somewhat chaotic. 

Again, maybe I'm over-reading this, but it certainly appears last year was worse than this year -- until the Exxon refinery explosion.  If that reading is accurate, one would assume that by 2018 the situation could be much, much worse. Certainly the $5-gasoline driving season will start earlier in the spring and last longer into the autumn all things continue to trend the way they are now.

One wonders if the new refineries in Saudi Arabia (about 1 million bbl daily capacity) will be optimized to produce "California-spec" gasoline.

Note: I often misread things. I often misread graphs. I could be completely way off on this. If this information is important to you, go to the source. Do not use this site to make any investment, financial, or transportation decisions.

Wednesday, July 29, 2015 -- Part VII -- Pending Home Sales "Tumble"

Link here. Home sales tumble but not because the economy is bad or because there aren't buyers. There aren't enough houses.
Signed contracts to buy US homes tumbled 1.8 pct. in June, as limited supplies weigh on market.
The National Association of Realtors said Wednesday that its seasonally adjusted pending home sales index declined 1.8 percent to 110.3 last month. Still, strong demand from would-be buyers has pushed the index up 8.2 percent during the past 12 months.
"We could see a bit of a slowing in the recent upward trend in existing home sales in the coming months," said Derek Lindsey, an analyst at the bank BNP Paribas.
Solid hiring and relatively low mortgage rates have fueled the previous five months of gains in the pending sales index. But buying options are increasingly limited because the market contains just five months' supply of homes, compared to the historical average of six months in a healthier market.
The regional home sales number are probably much more interesting.

Based on local reporting in Grapevine, TX, houses going on the market are snapped up in days or weeks. In some areas, it's difficult to move quickly enough to put in a bid before the "sold" sign is up.  It appears they are building as fast as they can in this area.

Wednesday, July 29, 2015, Part VI -- Hess Helped By Bakken

Whiting shares surge more than 6% -- earnings release, press release.
Whiting Petroleum beats by $0.02, misses on revs; guides Q3 production; 2015 capital budget revised to $2.15 bln for 6.5% production growth : Reports Q2 (Jun) earnings of $0.04 per share, ex-items, $0.02 better than the Capital IQ Consensus Estimate of $0.02; revenues fell 29.4% year/year to $590 mln vs the $677.6 mln consensus.
  • Production in the second quarter 2015 totaled 15.5 million barrels boe, 89% crude oil/natural gas liquids (NGLs).
  • Second quarter 2015 production averaged 170,245 boepd. This represents a 2% increase over the first quarter 2015 despite non-core property sales of 8,300 boepd
  • Co sees Q3 production guidance at 14.7- 15.1 million boe, sees 2015 guidance at 59.2-59.8 million boe
Bloomberg is reporting:
Hess Corp., which sold off fueling stations and refineries to focus on production, reported its second consecutive quarterly loss as higher oil output failed to compensate for lower prices.
The second-quarter loss was $567 million, or $1.99 a share, compared with net income of $931 million, or $2.96, a year earlier, New York-based Hess said in a statement Wednesday. Excluding one-time items, the loss was 52 cents a share, less than the 71 cent average of 21 analysts’ estimates compiled by Bloomberg.
The loss came as the company pumped more oil to make up for crude prices that fell 44 percent from a year earlier. Output rose 23 percent, led by North Dakota’s Bakken Shale where production was up a 49 percent to the equivalent of 119,000 barrels of oil a day.
Total production rose to 391,000 barrels a day, beating the highest analyst estimate of 361,600 barrels a day.
Hess also sold a half interest in operations that include a gas-processing plant, a crude rail terminal and rail cars to Global Infrastructure Partners for $3 billion in a deal that closed July 1.
Noble Corporation shares surge 6%; held throughout the day, and after hours -- earnings release, press release:
Noble Corp PLC beats by $0.11, reports revs in-line: Reports Q2 (Jun) earnings of $0.64 per share, $0.11 better than the Capital IQ Consensus Estimate of $0.53; revenues fell 1.0% year/year to $771.3 mln vs the $766.36 mln consensus.

Wednesday, July 29, 2015 -- Part V; $5 Gasoline In California Could Last Months


Updates


May 6, 2016: Torrance refinery to re-start.  
 
October 22, 2015: XOM sells Torrance, CA, refinery.  

Original Post
 
Tweeting now: US refinery throughput edged down -108,000 b/d last week but is still close to record and +211,000 b/d above prior year; imports down 2.8 million bbls compared to previous week; and, US crude oil stocks fell 4.2 million bbls. Refineries are struggling to keep up with demand.

Tweeting now: propane supplies continue to hit new record; surging. Comment: RBN Energy has covered this in depth. Some operators are paying to have their propane taken away.

Tweeting now: US gasoline consumption averaged 9.5 million b/d over the last four weeks, about +560,000 b/d above last year.

And this is why gasoline is still expensive in California:  West coast refineries continued to raise output but it remains 75,000 b/d below 10-yr average when demand is booming. Comment: one of the largest refineries in California, and perhaps the most important in southern California, the XOM refinery in Torrance remains at 20% capacity (as far as I know) due to recent explosion of its pollution control units. Yes, here it is, at The Los Angeles Times July 17, 2015:
The refinery that has historically produced about a fifth of Southern California's gasoline has been crippled since a February explosion — and may stay that way for months to come.
The trouble at Exxon Mobil's refinery in Torrance is a major factor pushing up regional gas prices, which have risen dramatically this month. Restoring the site to full capacity is among the best hopes for bringing prices back down.
The Torrance refinery currently operates at less than 20% of its capacity.
Exxon Mobil asked the management district for approval to use an old pollution control unit it replaced in 2008 to temporarily restore full operations of the Torrance refinery, but regulators said the equipment does not capture emissions well enough. Emissions from the older unit would violate state regulations and rules.
For those who still don't understand why gasoline in southern California can cost nearly $5 / gallon:


Having said that, did you notice something even more remarkable in the graph above? In fact, the gasoline stockpiles were actually running higher than last year from Week 13 to Week 26. The blast at the XOM refinery occurred on/about February 18, 2015, the 8th week of this year. In other words, the gasoline stockpiles were actually lower last year at this time, and I don't recall any explosion shutting down a major refinery in California at this time last year. In fact, California reached its historic low of gasoline stockpiles last year in Weeks 15, 23, and 26 or thereabouts (hard to tell from the graph).

I truly thought the XOM refinery explosion was the main culprit, but it appears that the explosion simply exacerbated something else already going on in California. Call me naive, but it certainly looks like the refineries in California have not been able to keep up with increased demand for gasoline over the past ten years in California. If this is accurate, $5 gasoline is going to be a recurring nightmare for Californians every summer (and that $5-gasoline driving season will arrive earlier each spring and last longer into each autumn). My hunch is that the Californians will catch on to what is happening sometime in 2018.  

Wednesday, July 29, 2015 -- Part IV; The Power Of ATT

SM surges 9%.  2Q15 highlights (company's press release):
  • produced 16.5 million barrels of equivalent, up 23% from the prior year period and exceeded plan
  • realized $337 million adjusted EBITDAX and $0.49 per diluted common share adjusted net income, driven by well performance and lower costs
  • encouraged by preliminary results from a 14-well Eagle Ford down-spacing test
  • demonstrated performance from 9 Bakken test wells in Divide County that are exceeding type curve
  • maintained 1.7 times debt to adjusted TTM EBITDAX 
Remember: the "heat map" of the Bakken includes the area where SM Energy is drilling in the Bakken.

I can't find my photo now, but SM Energy is building (has probably completed) its new operations center north of Williston. It's another huge building in the Williston area, and strikingly modern in appearance.

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Of all the tech companies right now, the one that is most interesting to me right now is ATT. It appears the deal to buy DirecTV will go through, and now ATT announces that it will activate the FM chip in all android phones next year. Link here:
Smartphones have a lot of radios inside to provide all of the services we expect. Most of them have a radio that is turned off by the handset maker, likely for business and cost reasons. The FM radio for getting local music, news, and emergency information is not activated.
That will change next year for AT&T customers as the carrier will make active FM radio chips a specification for all Android smartphones it sells.
That will put the pressure on Android handset makers to turn the FM radios on if they want to sell on AT&T.
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.

ATT shares trade near their 52-week high, have been trading in a range for quite some time, and the shares continue to pay 5.5%. 

Wednesday, July 29, 2015 -- Part III

North Dakota wind turbines displacing my favorite song bird, the meadowlark.  Small price to pay for intermittent, redundant, expensive electricity. Meanwhile, wildlife flocks to the warm oil pipelines during the winter months.

Random photo from the Bakken, sent to me by a reader, a couple of weeks ago:


In addition, if folks want to see some photographs of an 18-well super,pad, look at the photos of the Hess EN-Jeffrey pad on the Jeffrey Ranch.

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Big Oil, Big Wind, Big Wells

Tweeting now: Jack Kemp says California gasoline sales were +3.7% higher in April compared with same month a year earlier (state tax records). Comment: that was in April. I'm still looking for a record to be set in August, 2015, for US gasoline demand.

Tweeting now: survey suggests crude oil stocks down 700,000 bbls in US.

Winds hit speeds equal to class I hurricane this past week in North Dakota; no fracking during high winds and wind turbines, living up to their role as intermittent energy providers, were "off."

The interesting thing about the graph posted yesterday, this was not a comparison between wells drilled at the start of the boom and the most recent wells. This was a graph of wells drilled last year and those being drilled this year. I find the graph, in those terms, staggering.

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Big Mistake

How sad. Dentist from Minnesota kills beautiful lion in Africa.

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Big Health

Fiscal Times is reporting:
The growth rate of U.S. health care spending over the next decade is likely climb faster than it has since the Great Recession, according new government projections published Tuesday. And as the growth rate creeps higher, by 2024 nearly 20 percent of spending in the U.S. economy — one dollar in every five — will be related to health care, up from 17.4 percent in 2013.
As it is, health care spending reached an estimated $3.1 trillion last year, or nearly $9,700 per person. That represents an increase of 5.5 percent, the first time since 2007 that spending growth has topped 5 percent.

Pardon The Interruption -- July 29, 2015 -- Part II

Tweeting now:  Brent crude oil loadings halved to 85,919 b/d for Jul 22-28, according to Shetland Islands Council.

Tweeting now:  independent producer Lekoil delays first oil field from Nigerian field to end Q3 2015 due to safety concerns on drilling rig.

Tweeting now: total Iraqi oile xports in June up 42,000 b/d to 3.187 mil b/d from May's 3.145 mil b/d, highest since 1979.

Tweeting now: France's Total expect oil and gas production to increase 8% in 2015; Q2 production up 12%.

Tweeting now: Japan's crude oil stocks rose 8.4% week-over-week; Japanese refiners increase production by 4.2% week-over-week.

Bomb attack on Iraq - Turkey pipeline halts crude oil supplies -- for a few hours:
Crude exports from northern Iraq to Turkey through the Kirkuk-Ceyhan pipeline have been halted after the pipeline was blown up in a sabotage attack in the district of Cizre in Turkey, Turkey's energy ministry said Wednesday.

Iraqi and Kurdish sources told Platts that the line -- one of two parallel lines that make up the export link -- would be repaired and was expected to resume operations later Wednesday.
Exports through the pipeline, according to government officials, had been minimal at the time of the attack.
EIA update on methanol and fertilizer plants in the US, and yes, North Dakota, has two. Great graphic; great article. 

End Of The Line For Bakken CBR -- RBN Energy -- July 29, 2015 -- Part I

Active rigs:


7/29/201507/29/201407/29/201307/29/201307/29/2013
Active Rigs73192179179179

RBN Energy: the end of the line for CBR in the Bakken? (archived)
Bakken crude-by-rail (CBR) volumes are down this year and pipeline shipments are increasing as production levels off in the wake of last year’s price crash. The trend is encouraged by lower price differentials between domestic and international crude as well as new pipelines coming online. Since 2012 a combination of rail and pipeline has given Bakken producers ample crude takeaway capacity but pipelines alone have not had sufficient capacity on their own. However, with production slowing down, pipeline capacity is catching up and by 2017 there should be enough pipelines to carry all North Dakota’s crude to market. Today we start a two part series asking whether pipelines can replace CBR from North Dakota.

Don't Bet Against Buffett -- July 29, 2015

Updates

April 18, 2016: because of the SRE natural gas leak this past year in southern California, and the removal of much of California's supply of natural gas, there is talk of blackouts in California this summer. This guy thinks the "big story" this summer will be solar energy and battery storage.
The problem with his analysis: once the blackouts start, rooftop solar can't ramp up fast enough.And for the 1% of Californians that have rooftop, it's all residents; not industrial parks. So, the 1% with electricity will get to stay home to enjoy their appliances because they will be laid off because their assembly line has shut down.  

Original Post
 
When you get to the Tesla article below, note this: oilfield brines: deposits of lithium are contained in oil field brines in Alberta, North Dakota, Wyoming, Oklahoma, east Texas and Arkansas where brines grading up to 700 ppm are known to exist. Other oilfield brine lithium deposits exist, most notably in the Paradox Basin, Utah; however, global reviews for deposit size, potential yield and production cost estimates are not available.

The list of "Big Stories" that I follow is getting a bit long, but nevertheless I've added batteries/storage to the list of "Big Stories."

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Predicted from the day ObamaCare passed; insurers will be the big winners. Anthem beats estimates by 33 cents with adjusted quarterly profit of $3.10 per share, with revenue also above estimates. The company-which recently announced a deal to buy Cigna - also increased its projected full year enrollment growth for medical insurance.

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This is not an investment site. Yada, yada, yada.

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Tesla 

Tesla recovers, surges. But this is the big story, from OilPrice, a hedge fund source -- Warren Buffett and Elon Musk to spark a lithium boom.
The age of electrification across the transportation sector, the solar panel revolution, and Tesla’s battery gigafactory are igniting a battle for the cheapest battery. That will transform lithium into a boom-time mineral and the hottest commodity on the energy investor’s radar.
It has been easy to take lithium for granted. This wonder mineral is the backbone of our everyday lives, popping up in everything from the glass in our windows to our mountains of electronics.

And while investors have long appreciated the steady rise in demand for this preferred mineral, the number of new applications continues to multiply. Smart phones, tablets, laptops, and other consumer electronics demand more lithium. But the largest driver for future lithium use will be in electric vehicles and home batteries for solar panels. That has lithium on the verge a boom for which supply can no longer be taken for granted.

Not since the shale boom have we seen a market transformation of such significance. Lithium has long been used for a variety of mundane purposes, and while the variety is spectacular—with applications in everything from glass, ceramics and greases to a line-up of industrial process—it has flown under the radar for most investors.
Players?
Tesla’s biggest rival will likely be Build Your Dreams (BYD), the Chinese automaker backed by Warren Buffet. Already, BYD is building electric buses on American soil and has global gigafactory ambitions. By the end of the year, according to Reuters, BYD should have 10 GWh of battery production capacity, which it expects to increase to 34 GWh by 2020 with a new factory in Brazil—about the same capacity as Tesla’s.
Other Tesla rivals rushing to the battery production scene will be iPhone manufacturer Foxconn and LG Chem, which is already one of the top three battery makers. Samsung is also hot on the trail, having just acquired Magna’s battery production division.
Types of lithium?
Not all lithium is equal. It’s sold in different types for different prices. For instance, lithium carbonate sells for around $6,000 per ton and is used to make some of the materials for new battery technology.
However, many of the new battery technologies—particularly those used by Tesla—use lithium hydroxide as the starting material, which trades at around $2,000 more per ton than lithium carbonate. lithium found in salty water, or brines, is by far the most cost effective.
Brine is the best way to produce lithium because it’s so cheap, as nature has done all the hard work in rendering the lithium into a form that is easy to extract from the ground. All you have to do is drill a few wells and pump the liquid brine.”
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Buffett Is Now #1 In Solar Also

The Motley Fool is reporting:
The largest solar project in the world, Solar Star, is now operational in California and demonstrates Berkshire Hathaway's commitment to developing renewable energy assets.
Warren Buffett is famous for a number of bright ideas on investing, but this may be the brightest.
Just how bright?
About 579 megawatts' worth of solar-generated power from a single facility. Financed by BHE Renewables, a wholly owned subsidiary of Berkshire Hathaway, Solar Star is the world's largest solar project to date, and it began contributing power to the California grid on June 19.
Consisting of about 1.7 million SunPower solar panels, the facility will produce enough power to annually supply approximately 255,000 homes with electricity. BHE Renewables will sell the electricity to Southern California Edison under a long-term power purchase agreement.
BHE Renewables has wind, geothermal, hydro, and natural gas assets in its 3,470 MW portfolio, but solar, at 1,271 MW, represents the largest portion.
When it became operational, the Solar Star projects, two separate farms located in Kern and Los Angeles counties, supplanted another BHE Renewables-owned project as the largest in the world. Located in San Obispo County, CA, Topaz Solar Farms is a 550 MW facility consisting of over 8 million First Solar photovoltaic modules. Pacific Gas and Electric, a subsidiary of PG&E Corp, will purchase the electricity under a 25-year power purchase agreement.
Rounding out its solar projects is Agua Caliente, a 290 MW facility -- also supplied with First Solar PV modules -- in which BHE Renewables has a 49% interest. The facility is located in Yuma County, AZ.