Sugar Beets and Fracking

I'm going to leave the posting below as I originally wrote it, but after thinking about this issue, I'm not so sure that this story is as simple as it seems or as simply as I made it out to be. Perhaps these genetically-modified beets are not the right way to go. I only have access to what I read in the newspapers and on-line so I don't have the full story.

Original Blog

Anyone who lives in western North Dakota and eastern Montana, as well as along the Red River Valley, the eastern border of North Dakota, knows how big a deal the sugar beet industry is, so the news that the sugar beet industry could be severely impacted by a judge's ruling has eerie foreshadowing to what might happen if EPA is allowed to develop rules for fracking. Just saying.

It is generally accepted that if the EPA is allowed to write the rules for fracking, it will stop almost all new drilling in the Bakken for at least two years. 

Is it just me, or does it seem that the whole US government is against the working man and woman? No wonder the mid-October unemployment rate is now at 10 percent.

But for investors, an opportunity. A big opportunity. Seeds. Fertilizer. Sugar. Ya gotta love it.

It is an interesting story, if I have my facts straight: the beets were genetically modified to be resistant to a herbicide, Monsanto's Roundup. The genetically-modified beet seeds are produced by ... drum roll ... yes, Monsanto. There are claims that this has resulted in more resistant weeds requiring ever increasing amounts of insecticide.

Trivia: Minnesota is the leading producer of sugar beets in the US; North Dakota is second. I would assume the Red River Valley accounts for the vast majority of those sugar beets.

UPDATES

February 26, 2011: Court sides with Monsanto and USDA -- genetically-modified sugar beet seeds can be sown.

October 19, 2010: Good news. This might not be such a big story after all. There was no mention of it in today's Fargo Forum. The only story was this:

American Crystal Sugar Co. on Friday told growers they could harvest all their beets, said Dan Bernhardson, agricultural director for the Moorhead-based cooperative.

Déjà Vu All Over Again

After reading the Calgary, Alberta, article that I posted below, I was curious to look at state oil production numbers again. It was this statement by the author of that Calgary article that piqued my interest.

What’s really provocative is that only 2,400 wells in the Bakken have taken the play’s production from near zero [from the Bakken Pool] to 250,000 barrels a day in six years, with the bulk of the volume growth in the past 18 months.

Some statistics of monthly oil production for top five states:

• Louisiana (includes off-shore but not outer continental shelf): 4 million barrels/month
• Oklahoma: 5.5 million barrels/month
• North Dakota (click on "Director's Cut): 10 million barrels/month; definitely increasing
• California: 17 million barrels/month with potential to increase, albeit slowly
• Alaska: 19 million barrels/month and probably decreasing
• Texas: 34 million barrels/month and with the Eagle Ford discovery, should increase significantly

EIA Crude Oil Production website is obviously the best site, but I did link other sites just for a different perspective.

That Calgary, Alberta, article is very, very interesting. Peak oil theory, anyone?

Ten (10) New Permits Today in the Bakken (ND, USA)

Eight companies represented including one I had never heard of before: Anschutz (2); Whiting (2); and, one each for Zenergy, Berenergy, BEXP, CLR, Sequel, and EOG. Berenergy was the one I had not heard of before.

Several different fields represented: Manning, Willmen, Sanish, Glass Bluff, Glenburn, Alger, Bull Moose, and Temple. Most of these fields are seldom seen on the permit list.

IPs for six wells released; nothing remarkable; results will be at the "new wells reporting" page. Except perhaps the XTO well, Emma 31X-30, in Alkali Field, with an IP of 993. Also a North Plains Energy well, Eide 5-13H, in Truax field, with an IP of 746.

Wow, Wow, Wow -- Report Out of Calgary, Alberta (Bakken, Canada)

I'm at school now -- substitute teacher for high school chorus and band, so I don't have time to comment on this link and read the entire story right now, but what I have gleaned from it, it is very, very exciting.

Enjoy.

Not the Bakken: France Running Out of Gasoline Due to Work Stoppages

Due to civil unrest, all twelve French refineries have been shut down, according to this report. In addtion, France is asking airlines to decrease fights into and out of the country by 50 percent.

Here's One Shovel-Ready Project

No shovel-ready projects, according to President Obama.

This massive project with huge support from the unions is shovel-ready. The pipe is already staged and the crews are already hired. And most of the crews are union. But the government has put the project on hold.

Nancy Pelosi will shut it down.

As noted, I hold shares in ENB and EEP and this can only be great news for Enbridge; both ENB and EEP are up nicely today.  ENB/EEP pipelines "carry the lion's share of Canadian crude exports to the United States." 

Takeaway capacity exceeds production in the Bakken right now (including 10% shipped by rail, and 10% trucked to Canada), so delay will have minimal effect on oil costs in the Bakken. However, pipelines generate a fair amount of income for surface owners and the counties.

UPDATES

Update, October 21, 2010: Many big projects won't happen because no national leadership. No strategic vision. No sense of greatness. I have driven the "Big Dig" in Boston. It was worth it. A $15 billion project and complaints because of one death.

For Investors Only: COP Trading at Levels Not Seen Since 2008

As reported on CNBC. Interesting. COP is another huge natural gas company.

Voyager Reports Two More Nice BEXP Wells; One in the Williston Area

Sometimes press releases by small companies provide nice updates on completions of recent wells. The press release by Voyager is an example.

It reports the following three ND Bakken wells:

• 18407, 2,369, Slawson, Ripper 1-22H, previously reported
• 18784, 3,070, BEXP, Ross-Alger 6-7 1H, reported by Voyager, Alger field
  
• 18891, 3,090, BEXP, Larsen 3-10 1H, reported by Voyager, Williston field, about 3 miles NE of Williston

Again, as a reminder, I no longer care about IPs, but that's about the only information we get in the initial press releases or corporate presentations. I'm perfectly happy with whatever IP is being reported as long as the drillers keep drilling regardless of the reported IP. This suggests that the wells are economical despite lower IPs. 


The Voyager press release also mentioned twelve other wells in the process of being completed, drilled, or preparing to be drilled.

Halliburton's Earnings More Than Double

Halliburton's 3Q earnings more than double, 60 cents/share vs 29 cents/share on strength of natural gas drilling.

Who would  have thunk?

By the way, for newbies, Halliburton has a huge presence in the Williston Basin. In 2009 (or was it 2008), Halliburton announced plans to expand facilities in Williston with a $20 million expansion. Shortly after that Halliburton announced that it was going to 24-hour fracking operations to deal with the fracking backlog.

Halliburton is huge in the Bakken. I don't hold any shares in HAL.

Huge Pipeline Project Delayed

More on this later, but for now, suffice it to link to huge pipeline project delayed. For investors in ENB and EEP this can only be good news. Bismarck Tribune, and reported in several other newspapers including Billings Gazette.

Fool's game if one thinks the moratorium in the gulf has been lifted. Dickinson Press. By the way, I don't care for the front page of the Dickinson Press, but it's tabs at the top are among the best of the regional newspapers.

Update: click here for more commentary on same subject. News is unchanged. October 18, 2010.