More on ONEOK and Natural Gas Infrastructure in the Bakken

For some, this will be old news. I missed it earlier, mostly because I don't follow natural gas as closely as oil. For me, the Bakken means oil.

However, going forward, it appears natural gas is going to be every bit as big a story as Bakken oil before this saga plays itself out.

A couple days ago I posted an update about a natural gas pipeline that will connect the Bakken to the Overland Pass Pipeline. I would have missed the story but one of my readers sent it to me which I very much appreciated.

Well, it turns out, there is more to the story with regard to ONEOK. Again, to some extent, some folks will see this as a recommendation for investing. I am not posting it for that reason. I just find it extraordinarily interesting, how much money is being spent on projects in North Dakota.

So, with all that as background here are some data points from an April 21, 2010, press release from ONEOK:

ONEOK will construct a new 100 million cubic feet per day (MMcf/d) natural gas processing facility - the Garden Creek plant - in eastern McKenzie County, N.D. This plant and related expansions are estimated to cost between $150 million and $210 million and will double the partnership's natural gas processing capacity in the Williston Basin. Completion is expected in the fourth quarter of 2011.

In addition to the construction of a new natural gas processing plant, ONEOK Partners' natural gas gathering and processing segment will invest an additional $200 million to $205 million during 2010 and 2011 for new well connections, expansions and upgrades to its existing natural gas gathering system infrastructure in the Bakken Shale.

ONEOK Partners is the largest independent operator of natural gas gathering and processing facilities in the Bakken Shale region, with a gathering system of more than 3,500 miles. In March 2009, it completed a $46 million expansion of its Grasslands natural gas processing facility in North Dakota and since 2007 has invested more than $80 million in new well connections and related infrastructure upgrades to existing natural gas gathering systems in the region. 

This was the story that got me interested in ONEOK. (Same link as first link above, the one in the third paragraph.)

Again, this is not a recommendation one way or the other for investors. It is simply a story I find intriguing, and it helps me connect the dots with regard to the natural gas  and natural gas pipeline story in North Dakota.

I think folks who were less-than-impressed with the stories first coming out of the Bakken, missed the first, second, and third derivatives of those stories. Natural gas infrastructure is a second or third derivative to the whole Bakken story. Of course, the derivatives that follow include jobs and income for the state government.

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UPDATES

July 30, 2010: Bismarck Tribune reports on the story.

So, the Stimulus Money Has Run Out

As predicted, the stimulus money ($800 billion) that kept state governments has run out and now the states are demanding $75 billion from Washington to keep them afloat for another two years.

California, Illinois, Pennsylvania and New York top the list of those states needing help.

The good news: it's only another $75 billion.

The bad news: it's only another $75 billion.

UPDATE, July 27, 2010: The states say they will lay off 500,000 if they don't get the $75 billion.  You do the math: divide $75 billion by 500,000 and you get $150,000 per state salaried worker. That's pretty good pay. No state should be paying an average $150,000/state worker and in the fly-over states it would be a travesty if they paid over $90,000; and downright criminal if they paid more than $50,000 in the poorest states, most of them in the deep south. Who is kidding whom?

You Gotta Be Kidding: $GM's Volt > $GM's Cadillac

General Motors on Tuesday set a price of $41,000 for its electric Chevrolet Volt, $5,000 more than the top-selling sedan from its luxury Cadillac brand and $8,000 more than its nearest competitor, the Nissan Leaf.

With a price of $41,000, the Volt will cost as much as some luxury vehicles. The top-selling Cadillac CTS has a price starting at $35,165.

GM will limit production and will limit sales of the Volt to minimize financial loss.

The federal government and the California state government will both offer rebates totaling in excess of $8,000.

This is where we're headed folks with renewable energy. (By the way, most electricity used to charge the Volt will still come from coal-powered utility plants.)

How far can the Volt go on one charge? The promoters say 40 miles. After that a "small" gasoline engine kicks in. Someone wanna bet the promoters are exaggerating just a tad?

With each charge, the battery loses efficiency. By three years it will need to be replaced to continue to provide that 40-mile stretch. The battery is an integral part of the chassis and battery replacement is a major service component which I have not yet seen addressed.

No wonder this company needed a bailout.

I can't make this stuff up.

UPDATE, July 27, 2010: Washington Times story. 

Greg Lang sent me the following:

USA EPA plans to rate this at 100 miles per gallon for CAFE (Corporate Average Fuel Economy) calculations according to one claim I have heard. Other stories put the Volt at up to 250 MPG. To comprehend CAFE think of a lot of $20 or $30 USD restaurant tabs and then throw in a few "high roller" $100 to $250 tabs. The "average" goes way up. In the USA, the "big" vehicles tend to garner a premium price and even with all the "tricks" they use more fuel.

Basically on Volt might cover three to five big Caddy "crossover" type vehicles under CAFE. Thus the Volt will cause use of even more fuel!

There is a long history of use of electric vehicles and hybrids. They are usually lithium (like laptops and cellphones) and tend to last eight years. (Regular car batteries are designed around "Cold cranking Amps" not deep cycle. You can buy a "primo" car battery for $200 to $300 versus $50 to $100 for a three to five year car battery).

Actually, it takes relatively little power to propel a medium sized car at say 65MPH. You could drive the Volt Coast to Coast but it might need a few short "rest breaks". with the engine running toi charge up the batteries when going up mountains on the interstates at y65MPH. No big deal.

The grand scheme of the Volt is that you plug it in at night at your home/garage charging station (easy if you have the dedicated parking spot) and "go battery" when you start out. If you do a lot of short trips under ideal conditions this is great. In a perfect world scenario you would drive exactly 40 miles every day, plug it in and then it could recharge at night when electrical demand is low. Workplaces might have charge plugs but electrical demand is highest during "business hours".

As they say with EPA rating, "your mileage will vary and probably be lower". Extreme cold reduces battery output by half (same with your cell in the glove compartment) and you will need to run the engine to provide radiator heat and heated seats. Figure 20 mile battery range and that is on longer trips with hot coolant storage. When it's hot you will like AC, which sucks up a lot of power. Figure 20 mile range here.

Let's do the math here. If you figure you will just make it home 365 days a year and live in and even climate place like Hawaii (ain't many of them) you will get 365x40=14600 miles per year driving without engine fuel. At the 20 mile range scenarios you will get 7300 miles per year. Theoretically, you could do this but this is not driving patterns.

If you discharge the battery and then turn on the small engine this is not efficient. Those home backup generators can cost fifty cents per kilowatt hour to run. Worth it if you have a freezer full of meat and a power outage but pricey. Battery charging is at best 50% efficient, meaning two kilowatt hours in for every kilowatt hours out. It can work when you plug into the grid but pricey with the small on board engine.

Basically, the Volt would be ideal for a person like myself. I live in urban Minneapolis. When I worked nights downtown it was 3.6 miles to work. My (now deceased) parents lived 14 miles away from me. Most other stuff I did in the cities. I could potentially go days or weeks at a time without starting the engine or using fuel, especially if it has a built in 100 volt charger to "top off" when I was at my parents house.

Here is the quandary: When gas wasn't much more than a dollar a gallon (cheap) and I was visiting my parents and commuting to work I drove 6000 miles to work. The Volt looks like a compact to mid-size so I will compare it to the 1986 Toyota 2x4 "stick" four cylinder I was driving then which got 20 to 25 MPG like my current Ford Ranger 4x2 four cylinder "stick". These or a conventional Volt equivalent will use 250 to 300 gallons of gas per year.

Do the math. These are not consuming the fuel.

I will cross post this on my fourfiftygas.com.

Bottom line:  The Chevy Volt is a "halo" car as GM describes it. It is designed to bring people into the showroom. It will have no effect on the energy story in the US, and GM will limit its production because it will take a loss on each sale. But it will make for great advertising, marketing and public relations. Sort of like oil companies buying a wind farm.

Brigham Reports a "Brigham Gusher" in Camp Oil Field

18601, 3,301, BEXP,  Abelmann State 21-16 1-H, Camp

All of a sudden Camp Oil Field is getting interesting. There have been some 640-acre spaced wells, short laterals in this relatively small field east of Williston, and south of the river.  There was a fair amount of activity in the past (vertical wells) but not much until now.

But now we have the BEXP well noted above and, looking at the GIS map server at the NDIC website, there are two rigs on site in Camp field right now (July 27, 2010): #18957, SM (St Mary), Lee 13-8H; and, #18868, BEXP, Abelmann 23-14 1-H.

XTO Reports a Nice Well in Grinnell Oil Field

16838, 1,097, XTO, Thomas 44X-18, Grinnell, Bakken. Location: SESE 18-154-95.

Based on its file number, this permit was granted back in 2007, October time-frame. According to my database the initial permit was granted to Headington; the permit was listed as expired as of 2008. XTO bought Headington (a privately held company) and Hunt Petroleum in 2008. [Note: XOM and XTO are in the process of merging, though XTO will retain its identity and keeps its head office in Ft Worth, Texas.]

The well is situated between two producing wells, #16612 and #16613. Both of those wells are long horizontals, and both are completely under the river (unless the river has changed its channel). The Grinnell oil field has only about 30 sections and is almost completely under the lake. It is directly west of a pretty good field, the Charlson, and directly north of the Sand Creek which is getting some attention now: Newfield has recently reported a couple of good wells in Sand Creek.

Is the Bakken Over-Hyped?

Two or three years ago there were many, many websites that argued that the Bakken was over-hyped. I often left comments on those blogs. One blog-master got so tired for my positive comments about the Bakken, she banned me from her site. Smile.

No, the Bakken won't solve the world's problems, and it won't make the US energy independent, but it certainly has been a boon to North Dakota. It's been a very interesting story. I've learned much about the oil industry, and maybe even more about the politics of oil. But I digress, as I usually do.

Today, again, another story, this time in Reuters with a story that reminds us of the impact that the Bakken has had on North Dakota.

The Reuters story: North Dakota and Alaska lead job creation. Original link from the Drudge Report. 

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July 30, 2010: Bakken counties lead North Dakota in wages.