Monday, September 21, 2015

A $70 Billion Acquisition In The Oil And Gas Sector -- And I Doubt Most Even Know About It -- September 21, 2015

Update on Shell's pending purchase of BG Group:
A fresh drop in in oil prices and political instability in Brazil is making investors miss out on about $5.5 billion in Royal Dutch Shell Plc’s pending takeover of BG Group Plc.
BG closed on Monday at 990.4 pence, about 9.5 percent below Shell’s cash-and-stock offer. The difference in share prices in the deal -- the largest in the energy sector in at least a decade -- is wider than the average for other global acquisitions bigger than $10 billion.
The takeover has already won key regulatory approvals from the U.S., European Union and Brazil. Yet a plunge in oil prices and a deteriorating economy in Brazil, a key market for Shell, threaten to erode sentiment among shareholders who may be less inclined to support a merger that was announced when crude was higher. Even in such an environment, Shell will be motivated to close the deal in order to safeguard its dividend in the long run.
“The risk-reward on this transaction is too cheap,” said Kelly, chief executive officer at the London-based brokerage specializing in mergers. “From a regulatory perspective, there shouldn’t be much risk. And yet, it’s pricing in a one-in-four chance it breaks. What you need to break this transaction is a massive rebellion from shareholders.”
Kelly is referring to his model, which shows about a 75 percent chance the deal will be completed, higher than the 55 percent probability Bloomberg data indicate. Shell’s Chief Executive Officer Ben van Beurden said he is confident investors will support the transaction, and BG shares rose for four straight days after a Sept. 9 report mentioning that he said only “something cataclysmic” could derail the $70 billion acquisition.
Statoil to cut force 20 percent:
Norwegian oil and gas firm Statoil plans to have 20 percent fewer employees by end-2016 compared to 2013, its chief executive said on Monday. "Suppliers have to take their responsibility to cut costs. We are also taking our part in the restructuring. We have to simplify our work and make it smarter," Statoil's CEO Eldar Saetre told reporters on the sidelines of a conference. "At the end of 2016 we expect 20 percent fewer employees than in 2013," he said.
********************************************
Corporate Welfare?

Most interesting:
Despite turning a profit of more than $5 billion over the last year, Boeing plans to lay off up to 300 workers at its satellite assembly plant in El Segundo, CA -- and the company’s CEO Jim McNerney threatened to move many more jobs out of the United States.
The reason? Boeing officials are blaming the expired charter of the so-called Export-Import Bank.
President Obama has been urging Congress to reauthorize the bank, saying in July at the White House that, “This should be a no-brainer.”
The Ex-Im Bank offers low-interest loan guarantees when foreign companies order American goods. Boeing is by far the biggest beneficiary. In 2013, Boeing customers received credit of $8.3 billion, 40 percent of the Ex-Im Bank’s loan guarantees that year.
The U.S. Senate passed a bill reauthorizing the Ex-Im Bank, but it hasn’t come up for a vote in the House. The little known lender has become a political football within the Republican Party, pitting Tea Party conservatives against House Speaker John Boehner.
At the end of this post, GE was also "involved" with the Ex-Im Bank issue. GE says they decided not to move corporate headquarters to the Dallas area (Texas) because the Texas senators were "agin" the Ex-Im Bank.

************************************ 
Hillary's E-Mail Scandal? Old News; We've Moved On

Reading the tea leaves over at The Drudge Report today suggests Hillary's e-mail scandal is behind us. A lot of story lines.

New CBR Loading Facility Almost Ready To Start Shipping -- Palermo, ND -- September 21, 2015

On my most recent trip back to the Bakken -- just a week or so ago -- I was surprised at all the activity and all the projects still underway. Many of the projects were just breaking ground. I was surprised because the East Coast media has said the Bakken is dead. Maybe.

And RBN Energy regularly reports that CBR is a dying industry. Maybe.

But this is not a maybe. This is real. Another CBR loading facility is about ready to put out the sign: "Open For Business." KXNET is reporting:
A new rail loading facility is on track to start shipping Bakken crude to the coast this winter. The Phillips 66 terminal near Palermo will be moving by train about 150-thousand barrels of oil a week starting out. The facility was built with expansion in mind and at full operation, the terminal could load two 110-car trains every day.
Jennifer Kleen has more on the project in tonight's Eye on Energy. Linking into the Palermo BNSF mainline, the Phillips 66 rail loading facility will streamline the company's Bakken presence.
Color me confused. I thought the Bakken was dying. I thought CBR was dead.

I can't recall the last time I had to update the "CBR Page." It turns out this was announced about a year ago, that PSX was going to put in a new CBR facility -- and now it's almost reality.

Palermo, ND, is about 10 miles east of Stanley, ND, right on the BNSF rail and just a half-mile or so north of I-98

The Permian, An Update -- Michael Filloon -- Seeking Alpha -- September 21, 2015

This is another keeper: an update of the Permian by Michael Filloon. A word to the wise: it will be archived for Seeking Alpha subscribers in the not-too-distant future.

*************************************
One To Watch

Earlier today I was updating the blog with tags on posts that I had forgotten to tag with "Road to New England" with regard to the possibility of another nuclear plant being shut down in the northeast.

A reader sent me this very, very interesting article. For background, see this post on the Yankee nuclear power plant.

Okay, now that you've refreshed your memory on this one, see this article being reported by VTDigger:
VERNON – In a town hit hard by the shutdown of Vermont Yankee, officials say a natural-gas plant – with development costs estimated at $750 million – may be in the works.
The optimism in Vernon is carefully qualified, however. For one thing, the plant is far from a sure bet, and it’s not yet been disclosed which sites are under consideration. Also, there have been a few recent hints of opposition from the general public, though the town government has been generally supportive of the concept so far.
“We’ve probably got four or five sites under consideration,” said Don Campbell, a Winhall resident who has experience in utility finance and is guiding the gas-plant effort. “The one that we would go forward with is the one that has the most appeal to Vernon.”
A meeting to gauge the public’s support for a plant proposal may be imminent, and those who are backing the project say time is of the essence.
“We have an opportunity to cause this to happen now,” Campbell said. “We won’t have that opportunity in another year.”
Vernon, like all of Windham County, still is in the early phases of grappling with the economic blow of Vermont Yankee’s shutdown. The workforce has been cut roughly in half since the plant stopped producing power Dec. 29, and more job losses are scheduled for 2016.
It will be interesting to see if the Luddites Keystone this one also. I don't have a dog in this fight but it will be interesting to watch. 

Capa Oil Field

The Capa became busy during the slump in oil prices that began in October, 2014, and continued through 2015.

The Capa oil field is irregularly shaped -- it looks like it started out as a simple square but then (probably during the Bakken) it was extended irregularly. It now contains about 38 sections. It is located south of the Beaver Lodge oil field where oil was first discovered in North Dakota in 1951. It is well east of Stony Creek, that prolific oil field, east of Williston.


Permits

2015
32023, conf, Hess, CA-Stangeland-155-95-2128H-3,
32022, conf, Hess, CA-Stangeland-155-95-2128H-4,
32021, conf, Hess, CA-Stangeland-155-95-2128H-5,
32020, conf, Hess, CA-Stangeland-155-95-2128H-6,
32019, conf, Hess, CA-Stangeland-155-95-2128H-7,
31988, conf, Hess, CA-Stangeland-155-95-2128H-10,
31997, conf, Hess, CA-Stangeland-155-95-2128H-9,
31996, conf, Hess, CA-Stangeland-155-95-2128H-8,
31925, loc, Liberty Resources, Haustveit 155-95-12-13-2MBH,
31898, conf, XTO, JMB 14X-15B,
31897, conf, XTO, JMB 14X-15E,
31896, conf, XTO, JMB 14X-15A,
31895, conf, XTO, JMB 14X-15EXH,
31894, conf, XTO, JMB 14X-15AXD,
31545, conf, Hess, CA-Russell Smith-155-96-2425H-7,
31544, conf, Hess, CA-Russell Smith-155-96-2425H-6,
31543, conf, Hess, CA-Russell Smith-155-96-2425H-5,
31542, conf, Hess, CA-Russell Smith-155-96-2425H-4,
31541, conf, Hess, CA-Russell Smith-155-96-2425H-3,
31540, conf, Hess, CA-Russell Smith-155-96-2425H-2,
31539, conf, Hess, CA-Russell Smith-155-96-2425H-1,
30576, conf, Hess, CA-Ferguson Smith-LW-155-95-3031H-1,

2014
29363, conf, Hess, CA-Ferguson Smith-155-95-3031H-2,
29362, conf, Hess, CA-Ferguson Smith-155-95-3031H-3, producing,
29361, conf, Hess, CA-Ferguson Smith-155-95-3031H-4,

2013
25383, 0 (no typo), XTO, Allie 31x-24H a Three Forks well, 27 stages; 3.1 million lbs, t9/13; cum 85K 7/15;
25206, 964, XTO, Allie 31X-24C, t8/13; cum 95K 7/15;
25197, 1,051, XTO, Allie 31X-24D, t9/13; cum 110K 7/15;

2012
23548, 838, XTO, Albert 24X-1E, t1/13; cum 158K 7/15;
22552, 765, XTO, Albert 24X-1F, t1/13; cum 153K 7/15;

Miscellaneous prior to 2012
21731, 744, Hess, CA-Stangeland-155-95-2128H-2, 34 stages; 2.7 million lbs, t5/12; cum 224K 7/15;
21730, 992, Hess, CA-Stangeland-155-95-2128H-1, t5/12; cum 230K 7/15;

Eight (8) New Permits; Newfield Reports Two Nice Bakken Wells -- North Dakota, September 21, 2015

Active rigs:


9/21/201509/21/201409/21/201309/21/201209/21/2011
Active Rigs68196185184194

Eight (8) new permits --
  • Operators: Hess (5), Oasis (3)
  • Fields: Capa (Williams), Siverston (McKenzie)
  • Comments: I haven't paid much attention to Capa; I might have to do a page on the Capa oil field; it's south of Beaver Lodge (the area where oil was first discovered in North Dakota back in 1951) and well east of Stockyard Creek, on the north side of the river.
Two (2) producing wells completed --
  • 28960, 1,289, Newfield, Skaar Federal 153-96-29-3H, Sand Creek, t5/15; cum 31K 7/15;
  • 28961, 807, Newfield, Skaar Federal 153-96-29-10H, Sand Creek, t5/15; cum 21K 7/15;
Whiting temporarily abandons a well in Golden Valley: a Wirtzfeld well, Camel Hump oil field. This Red River formation well was called an oil well but in the first month of production it produced 13 bbls of oil and 15,000 bbls of water. Temporarily abandoned? Stick a fork in it and call it done.

Four (4) wells coming off confidential list Tuesday --
  • 26122, 3,793, Whiting, Skunk Creek 1-8-17-16H, South Fork, background gas of 3,899 units with a high of 5,826; flare averaged 5; nothing else said; spud March 22; landed the curve on March 28; started the horizontal on March 30; TD on April 3; t8/15; cum --
  • 29509, SI/NC, Zavanna, Shepherd 3-11 3H, Stony Creek, no production data,
  • 30374, conf, Statoil, East Fork 32-29 8THF, East Fork, no production data,
  • 30859, drl/NC, XTO, Odegaard State 21X-16F, Midway, no production data,

Apple To Use VW Technology; VW Could Be Subject Of Criminal Probe -- September 21, 2015

Crude oil (the "crawler") is up 4% today.

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

Apple to "ship" its first electric car in 2019. Will use Volkswagen technology.
Apple has hired this year Megan McClain, a former Volkswagen engineer with expertise in automated driving, and Vinay Palakkode, a graduate researcher at Carnegie Mellon University, a hub of automated driving research.
Meanwhile, back at the ranch, as they say in the area, Bloomberg is reporting that Volkswagen may be the target of a criminal probe following allegations of messing with emissions systems in their diesel vehicles.

Both news items were posted on-line the same day. Timing is everything.

From Macos Rumors regarding the AppleCar:
Apple has already been aggressively hiring for its car project, poaching employees from companies like Ford, General Motors, Tesla, Volkswagen, and more. Many of its recent hires have expertise in connected and autonomous vehicle systems. 
I assume the prototype will be a bit wide so that the model that is actually shipped can be marketed as "thinner."

*************************
Transmitting Electricity

This comes in "response" to the article about Texas and wind power (posted yesterday):
According to the Department of Energy, California lost about 19.7 x 109 kWh of electrical energy through transmission/distribution in 2008. 
This amount of energy loss was equal to 6.8% of total amount of electricity used in the state throughout that year. At the 2008 average retail price of $0.1248/kWh, this amounts to a loss of about $2.4B worth of electricity in California, and a $24B loss nationally.
The reader who sent me that noted: 12 cents/kWh was in the "old days."

The reader also noted that the real energy loss is converting natural gas to electricity ... that's why it just kills me to see electricity used for cars. If you want to burn natural gas in your car, great. But don't convert it to electricity first; that's as dumb as using natural gas to grow and ferment corn for ethanol.

The reader's recommendation:
  • coal for electricity
  • natural gas for transportation
  • refined crude for export
  • go all electric when nuclear fusion is perfected, deployed, and in operation
And for those interested in crude oil exports, a better solution is light oil swaps for heavy oil and refine here in the states.

President Obama To Go Skiing? Doubtful. But The Kennedys Need To Take Their Grandchildren -- It Could Be The Last Time They See Snow -- September 21, 2015

Seriously, this is incredible. I am thrilled. The ski industry might have a great year in Montana.

Over at IceAgeNow: sixteen (16) inches at Montana ski resort.
“The iconic shred zone located just south of Bozeman, Montana, is reporting over 16 inches (40 cm) of fresh snow at the top of Lone Peak and 12 inches (30 cm) of snow in the bowl, mid-mountain on Lone Mountain. The clouds have dissipated and the storm is moving along, but this is a great first start to the winter season for the resort. Big Sky is one of North America’s largest resorts with 34 lifts, 5,800 shredable acres, and 4,350’ vertical drop.”
**************************
For The Granddaughters
Whitefish Ski Resort, Montana

Not Bozeman. This is Whitefish Ski Resort up near Glacier National Park.

******************************
A Lesson For Warmists

From The Vital Question, page 269:
This black-and-white view of free radicals and antioxidants is still current in many glossy magazines and healthfood stores, even though most researchers in the field realized it was wrong long ago. A favorite quote of mine is from Barry Halliwell and John Gutteridge, authors of the classic textbook Free Radicals in Biology and Medicine.
"By the 1990's it was clear that antioxidants are not a panacea for aging and disease, and only fringe medicine still peddles this notion."
The free-radical theory of aging is one of those beautiful ideas killed by ugly facts (think global warming). And boy, are the facts ugly.
Not one tenet of the theory, as it was originally formulated, has withstood the scrutiny of experimental testing. There are no systematic measurements of an increase in free-radical leak from the mitochondria as we age. There is a small increase in the number of mitochondrial mutations, but with the exception of limited regions of tissue, they are typically found at surprisingly low levels, well below those known to cause mitochondrial diseases. Some tissues show evidence of accumulating damage, but nothing that resembles an error catastrophe, and the chain of causality is questionable (again, think anthropogenic global warming).

Antioxidants most certainly do not prolong life or prevent disease. Quite the contrary. The idea has been so pervasive that hundreds of thousands of patients have enrolled in clinical trials over the past few decades.The findings are clear. Taking high-dose antioxidant supplements carries a modest but consistent risk. You are more likely to die early if you take antioxidant supplements. Many long-lived animals have low levels of antioxidant enzymes in their tissues, while short-lived animals have much higher levels.

Bizarrely, pro-oxidants can actually extend the lifespan of animals. Taken together, it's not surprising that most of the field of gerontology has moved on. I discussed all this at length in my earlier books. I'd like to think I was prescient in dismissing the notion that antioxidants slow aging as long ago as 2002, in Oxygen, but frankly I wasn't. The writing was on the wall even then. The myth has been perpetrated by a combination of wishful thinking (think Algore), avarice (think Algore), and a lack of alternatives (think gullibility and group-think).
That in parentheses are my comments, not the author of The Vital Question

Halliburton Layoffs In Williston Confirmed -- September 21, 2015; If Massachusetts Nuclear Plant Shuts Down ....

Tweeting now:
Reports of layoffs at Halliburton’s Williston office were verified this morning by a company spokeswoman. 
Not unexpected as we go into the winter months along with everything else.

At The Williston Herald now.

Update, September 25, 2015, over at Rigzone:
Houston-based oilfield services provider Halliburton Company will be implementing additional workforce reductions in addition to the 16,000 job cuts already made, according to an emailed statement to Rigzone.
The majority of the cuts will take place in North America – the region hardest hit by market conditions. Additionally, the company plans to “flatten the North America business by eliminating multiple layers of management.”
On Sept. 21, Halliburton announced it would lay off employees in Williston, North Dakota. 
*****************************
Also Tweeting Now

Iraq's July, 2015, burning of 223,000 b/d of crude oil in power generation hits new record, up 43,000 b/d on month.

Massachusetts nuclear power plant could be shut down. Story at Boston Herald:
The owners of the Pilgrim nuclear power plant in Massachusetts say they may shut it down if multimillion-dollar safety improvements and other reforms required by federal regulators are too expensive.
David Noyes, the plant's director of regulatory and performance improvement, tells The Boston Globe that "no business decision has been made" and the costs of upgrades are being analyzed.
The Nuclear Regulatory Commission downgraded the plant's safety rating earlier this month, and ramped up oversight after the plant shut down automatically during a January blizzard when an electric connection to the grid was interrupted.
The 43-year-old plant in Plymouth is owned by Entergy Corp. It was relicensed in 2012.
The plant could also be shut down by the NRC.
**************************
Hillary Has Moved On ... And So Has The Media

It looks like Hillary's e-mail scandal is behind here. If not indicted, she got past "another one." Biden continues to delay, waiting to see if legal action will be brought against Hillary.

***************************
Papo-Critical

The Pope rails against air conditioning as #1 example of wasteful consumerism and unchecked human activity causing global warming .... he wrote the encyclical in his air-conditioned study.

Wells Added To The List Of Monster Wells -- September 21, 2015

Wells added to the list of "monster wells":
  • 17841, 602, Murex, Clifford Gene 1-12H, 2 sec, Sanish (144K bbls/first 7 months) (don't confuse this with the Gene 1-22H which is operated by Samson - #18009; t5/09; cum 579K 7/15; (taken off-line in summer, 2012; back on line in 2013)
  • 19946, 1,474, Oasis, Spratley 5494 34-13H, Alkali Creek, Bakken, t11/11; cum 408K 7/15;
  • 20591, 2,656, QEP/Helis, Jones 4-15/22H, Blue Buttes, Bakken, t4/12; cum 416K 7/15;
  • 18711, 4,126, WLL, Fladeland 12-10H, Sanish, Bakken, t7/10; cum 422K 7/15; 
There is no strict definition of "monster wells." For now, any well that is above 400K bbls and on its way to 500K is what I look for.

I will probably need to start a second page with wells that hit 750K and a page for wells that hit the one-million-bbl milestone.

Random Update On Two CLR Mildred Wells In Brooklyn Field -- High Proppant -- September 21, 2015

A Three Forks 1st bench well, note the high proppant:
  • 28625, 728, CLR, Mildred 5-19H1, Brooklyn, 40 stages; 8 million lbs, t12/14; cum 60K 7/15;
Similarly:
  • 28624, 876, CLR, Mildred 4-19H, Brooklyn, 40 stages, 6 million lbs, t12/14; cum 90K 7/15;
These are extremely good wells for this part of the Bakken.

Monday, September 21, 2015; Keystoned; Propane Inventories Hit Record High

Active rigs:


9/21/201509/21/201409/21/201309/21/201209/21/2011
Active Rigs67196185184194

RBN Energy: update on the Rocky Mountrain region -- conference.
It had to happen eventually.  There is only so much magic dust that U.S. producers can sprinkle on shale basins to counteract the impact of sustained low prices.    
After falling steadily from $100/Bbl plus last June to just over $40/Bbl in January 2015 and recovering to $60/Bbl between March and June of this year, U.S. benchmark West Texas Intermediate (WTI) crude prices have languished in the mid $40’s/Bbl this month (September 2015) and there seems to be nothing on the horizon that would make you think that even a return to the $60s is in the offing anytime soon. 
Low prices have prompted a dramatic pullback in drilling rig deployment and despite remarkable resilience in crude production, we have certainly witnessed a convincing end to the 1 MMb/d year growth experienced between 2012 and 2014.
Monthly Energy Information Administration (EIA) crude production data shows declines in May and June).  It is reasonable to assume that downward trend will be with us for a while. Even the robust math of wells being completed out of inventory (wells drilled months ago, only now being brought online) and very high “sweet spot” initial production rates that have been mostly responsible for sustaining production until now can’t offset the natural declines in shale wells forever, at least not at today’s rig count. 
*******************************
I'm Waiting For The Obama Speech On This One

EIA "energy cookie":
U.S. inventories of propane and propylene reached 97.7 million barrels as of September 11, the highest level in the 22 years that EIA has collected weekly propane inventory statistics. In the first six months of 2015, U.S. propane and propylene inventories were 24.3 million barrels higher on average compared to the same period in 2014. In the past year, nearly all of the increase in inventories occurred in the Gulf Coast region (PADD3) --- EIA
******************************** 
Keystoned

Three days ago I used "Keystoned" for the first time. I'm sure others have used it, but I had not seen it used before. Now, this morning, I see this twitter:
Could US export policy be Keystoned?
We'll do a google search for keystoned later.