World Energy Outlook 2010 -- International Energy Agency

International Energy Agency has released its World Energy Outlook 2010.

When you get to that site, click on two links, just below the icon:

• Key Graphs; and, 
• Fact Sheets.

Each will take you to a PDF.

Take a look at the pdf for "world oil production by type" -- the seventh (7th) slide. Development of known oil fields is critical starting this year. In addition, natural gas is the obvious bridge to alternative energy sources twenty years from now.

The pdf fact sheets are very, very interesting. Even if you just read the first page, you will see that it is oil, coal, and natural gas in our investing lifetimes, regardless of where you are on your investment time line.

North Dakota on Top Ten List: Worst States for Taxes on Retirees

I was incredibly surprised to see North Dakota on this list in a very credible magazine, the Kiplinger Magazine.

Again, with the economic prosperity in North Dakota, I find this most interesting.

China Has 16 Days Supply of Oil (The US Has 26 Days)

I posted this yesterday.

With reports today that US weekly supply number was also down, I thought it important to post again.

"Six months ago, China had enough fuel on hand to meet more than 36 days of demand. Today, inventories would only meet 16 days, and that number is falling fast."

Source: Wall Street Journal

Today's weekly oil summary can be found here. When you get there, click on the Weekly Petroleum Status Report.

U.S. commercial crude oil inventories (excluding those in the Strategic
Petroleum Reserve) decreased by 3.3 million barrels from the previous
week. At 364.9 million barrels, U.S. crude oil inventories are above
the upper limit of the average range for this time of year.

We're still swimming in crude oil and yet price of oil continues to rise, even as dollar strengthened. I still go back to the fact that China used to have 36 days of fuel on hand; now, inventories would meet only 16 days. Remember this article in The (London) Independent: China's Resources Grab, October 2, 2010.

(Strict rationing could significantly stretch out those inventories. Global recession? Think what strict rationing in China would lead to.)

By the way, the US has 26 days of crude oil supply, the most in past two years; when I followed this stat in the past, the number was generally 22 days +/- 2 days.

Ten (10) New Permits -- Bakken, ND, USA

Operators: CLR (3), Whiting (2), Samson Resources, Newfield, North Plains, Murex, Zenergy.

Fields: West Ambrose, Sadler, Bell, Jim Creek, Midway, Sanish, Squaw Creek, and two wildcats.

One of the Whiting permits was in the Sanish and one was in Stark County. The Stark County is either an extension of their Lewis and Clark prospect, or it is a new play where the TFS pinches out from the Bakken. The focus on the Stark County wells will be the TFS.

Only one well was reported, the Murex Ronald Den 17-20H, at 253 bopd.

On track for 1,625 new permits in 2010, North Dakota. 

Alberta (Canada) Bakken -- North and West of the North Dakota Bakken

 Here are some interesting links:

Rosetta Resources earnings 3Q10 profits rise 54%;
Rosetta shares pop: what Motley Fool says you need to know; and,
Investopedia: majors are interested in the Alberta Bakken.

I am told that the reason the Bakken in North Dakota was developed so quickly was because the stratigraphic profile of the state was so well known. North Dakota was unique in requiring core samples be sent to a "state library." In addition, North Dakota has the largest microseismic array. 

Now, read the Investopedia article and note that they are just starting to drill stratigraphic (vertical) wells to start to map the geologic formations. Something suggests to me that the Alberta Bakken will take awhile to develop.

These recent articles suggest the Alberta Bakken is an unconventional oil play requiring horizontal drilling and fracturing as we've seen in the North Dakota Bakken. However, there are other reports that Alberta Bakken is also a conventional oil play, not unconventional like the North Dakota Bakken. The "theory" is that oil is migrating from the North Dakota Bakken source rock to the Alberta Bakken where it settles out in "conventional" pools. There may be two stories in the Alberta Bakken; I have not sorted it out yet, and it's possible the oil companies are still sorting it out, also.  If interested, google: Alberta Bakken conventional. 

Active Rigs Back to Tying the Recent Record: 156 -- Bakken, ND, USA

That line says it all. This is all the more remarkable because a) rigs moving over to Montana; b) fracking crews at a premium; and, c) headed into winter.

This just quietly sneaked up on me -- back to 156.

For Investors Only: Another Opportunity -- This Time EEP

Prices of EEP shares dropped almost a couple of bucks today; quite a drop. One would have thought there were operational problems.

It appears the drop was due to the announcement that the company will issue 5 million shares.  The drop is not likely due to ex-div date which has already occurred (November 2, 2010).

Yes, more shares dilute earnings. But how many shares does EEP have outstanding?  120 million.

An additional 5 million shares is inconsequential against this 120 million shares already out there. Then add this to the fact that a) the money raised will help pay for recent acquisition; and, b) CPA's probably know the best way to manage this: more debt or more stock.  (For similar business model/decision, take a look at how Ford handled their problems compared to GM when the industry imploded.)

EEP pays almost 7% and is benefiting from huge presence in the Bakken.

When I see these pullbacks, it tells me it's a) nothing more than an excuse of Wall Street traders for taking profits; and, b) an opportunity for investors to accumulate more shares, once the low is established. After hours, I see the price is up a tiny bit.

The same thing happened in the past 72 hours for two other companies in the Bakken: WHX and EOG. EOG recently dropped all the way to $88 and has now rebounded nicely. WHX had an even greater drop before it recovered.

By the way, Whiting telegraphed that this quarter would be disappointing. Some weeks ago, Whiting said they would miss their production quotas because of limited capacity on Enbridge following two spills.

Primer on Oil and Gas Production

An outstanding primer for oil and gas production can be found by clicking here.

You don't have to bookmark this primer; I will leave the link at the sidebar on the right in the "Welcome" section.

If you don't know all the purposes of "well mudd" you need to read this primer. "Well mudd" may have played a critical role in the BP oil spill in the gulf.

Snapshot: Price of Oil and Strength of Dollar Diverge; Investopedia Highlighs BEXP, CLR, OAS

Snapshot, November 10, 2010:

• Dollar stronger.
• Gold down.
• Silver down.
• Oil up 50 - 60 cents, solidly over $87.

If the divergence of oil and the dollar continues, that will be a most interesting development. The. China. Story.

Natural gas is down a penny today, but it is still over $4.00.

For investors: Investopedia's Eric Fox highlights BEXP, Petrohawk, CLR, and OAS. I would have added WLL. Or even substituted BEXP for WLL.

Nine (9) Rigs on Site in the Sanish

Update on Sanish field, the field "owned" by Whiting:

• There are 26 wells in "DRL" status in the Sanish; all of them are Whiting wells, except one Fidelity well.
• According to the GIS map server, there are nine (9) rigs on site in the Sanish.

From an investor's point of view, CLR, OAS, and WLL (in alphabetical order) look among the best in the Bakken. All three have some of the best presentations and great conference calls when it comes to transparency. One can find 3Q10 conference calls, earnings reports, etc., at "Earnings Central" at the top of the sidebar on the right.