Unemployment Rate Rose in 20 States -- December, 2010

The statistics:

• Unemployment rate rose in 20 states; fell in 15
• Employers in most states did not add any net new jobs in December
• The number of jobs fell in 35 states; only 15 states reported gains
• Layoffs have slowed; hiring has not begun
• States with biggest net job gains: Texas (added 20,000); South Carolina (added 9,000)
• Nevada: highest unemployment rate, 14.5 percent; up from 14.3 percent the previous month
• Nevada: highest unemployment on record dating from 1976
• California: second-highest rating, 12.5 percent
• Florida: third, 12 percent
• North Dakota: lowest, 3.8 percent; followed by Nebraska (4.4 percent) and South Dakota (4.6 percent)

It is interesting to note that neither Nebraska nor South Dakota has much of an oil industry so unemployment in North Dakota is not all due to one industry.

I assume Nevada's rate went up a bit as more folks re-entered the jobs market hearing stories about a better economy.

The article states:

Layoffs have slowed dramatically in the past year, but hiring has yet to pick up. 

I have opined in the past that the reason layoffs have "slowed dramatically" is because companies have pretty much cut to the bone; there is literally no more folks to cut without putting the company out of business.


16 Tons,  Eric Burdon

Ford F-150 Pickup Truck: Number One Vehicle Sold in the US in 2010 -- I Assume There Are a Few in the Bakken

Updates

February 6, 2011: Ford to raise US factory production 13 percent in the first quarter; Ford cites higher demand for Ford and Lincoln brand cars and trucks, and further increases are likely through the year. Meanwhile GM will ramp up production of the Chevy Volt (just joking)

Original Post

With all the talk and all the news about hybrids and coal-powered cars, I had thought that these automobiles would have had a good year. I was surprised to see the statistics.

Americans prefer pick-up trucks to hybrids.

Americans purchased 272,282 hybrid vehicles last year, off 6% from 2009. They bought more than 1.6 million trucks, a 16% increase, according to the Edmunds.com data.

Hybrid vehicle sales fell 6 percent. Wow.

Truck sales, mostly pickup trucks, rose 16 percent. Wow.

The number one vehicle sold in the US last year: the Ford F-150 pickup truck, a 38 percent increase from 2009. The Ford F-150 jumped from third spot to first spot.

The number two vehicle was the Toyota Camry (but still the bestselling car) which had held the top spot for nine consecutive years.  The Toyota Camry was the only vehicle in the top ten list that actually had a drop in sales from the previous year. The Camry struggled due to reports of its braking problems.

The second best-selling truck was Chevrolet's Silverado 1500.

A surprising story, especially in light of all the stories about hybrids. Very, very interesting. I really thought there would have been more coal-powered cars sold.
2010 Ford F-150 Raptor


2010 Toyota Camry

COP Replaces 138 Percent of Reserves in 2010

Link here.

In addition, COP is selling off its natural gas assets in the Marcellus, another sign that the majors are shifting their focus to oil.

SM Announces Preliminary Production Results and Plans to Raise $250 Million Through Senior Notes

SM Energy announces it will raise $250 million through issuing senior notes. This follows on the news that Oasis will be raising $300 million through issuing senior notes.

SM Energy also issued a press release its North Dakota Bakken/Three Forks quarterly production increased 40 percent over the previous quarter.

Shipping Through The Arctic Route Cuts Time in Half From Europe to China -- Not a Bakken Story

This is an interesting story that has nothing to do with the Bakken. Because of a significant decrease in ice in the Arctic, it is now feasible to ship iron ore from Norway to China via the "Arctic route" rather than through the Suez Canal.

Commercial ships follow a Russian nuclear-powered ice breaker in case of ice from the Atlantic to the Pacific via the northern route. The Russians charge $200,000 to accompany the commercial ship. The "Arctic route" is half the distance it would be through the Suez Canal, saving 17 days as well as the fuel.

It was noted that there are no Somali pirates in the Arctic.

There was no mention of marauding Vikings.

Oil Industry Impact on North Dakota: $3 Million for Each New Well -- North Dakota, USA

These are data points from the Bismarck Tribune regarding new report on the oil industry's impact on North Dakota (links to the report are further down) (most numbers rounded) (the link will be broken soon:

• The oil industry's impact on North Dakota more than tripled from $4 billion to almost $13 billion between 2005 and 2009.
• Direct impact: $1 billion in 2005; $5 billion in 2009
• Oil industry jobs in 2009: 18,328
• Active wells: 3,391 in 2005; 4,190 in 2009
• Each new wells adds an estimated $3 million impact on the state's economy

Two pdfs:

• The study
• Summary of the study

Another Refinery in the Works? -- Bakken, North Dakota, USA

From the Bismarck Tribune: North Dakota legislator wants North Dakota to provide $5 million matching funds and a Bank of North Dakota $50 million loan guarantee for a new refinery in western North Dakota. The link will be broken shortly since it links to a regional newspaper.

Those in the business doubt a small refinery could attract enough private interest, but would be a good investment for the state. The refinery could produce diesel fuel for trucks in North Dakota, and naphtha which is used by Canadian producers as a thinning agent to allow heavy crude oil to move through the pipelines.

Meanwhile, the federal government continues to delay action on Fort Berthold's permit for a refinery on the reservation.

I kind of like the idea of this new development. If the project goes forward, we will be able to see head-to-head "competition" between a state-approved refinery and a federally-approved refinery on the reservation. We can see which one moves along the fastest.

How Much Currently Recoverable Oil in the Bakken -- North Dakota, USA

This links you to the relevant discussion over at the Bakken Shale Discussion Group. I have linked it at another posting, but don't want the link to get lost.
Some data points from the opening salvo:

• 6,000 drilling / spacing units within the "mature area" of the Bakken pool in North Dakota (I don't know if this includes the TF pinch out in the southwest, which will be important)
• Spacing units will be 640-, 1280-, and 2560-acre units; most will be 1280-acre spacing units
• So far, about 50% of these spacing units have at least one well; and, thus held by production
• The author thinks that all spacing units will be held by production by the end of 2012 (I could be wrong, but there seems to be a lot of state land yet to be leased; I'm probably wrong)
• In general, operators talk of estimated ultimate recovery (EUR) of 350,000 bbls; I think it's higher
• Author agrees that re-fracking, more stimulation is the wild card. I agree.

Now for the math:

• 6,000 wells x 350,000 bbls = 2.1 billion bbls; two wells (one Bakken; one TFS) is 4.2 billion bbls, which he says is close to the USGS 2008 estimate
• At seven bbls per spacing unit: 15 billion barrels (same ballpark as Harold Hamm's 20 billion estimate; author notes that Harold Hamm includes Montana's ND Bakken in his estimate
• How many wells are we talking about?
• If four wells on average/unit, then nearly 25,000 wells targeting the Bakken/TFS. It could be higher. Regardless, the author says there are currently about 3,500 Bakken/TFS wells drilled.

Long term production:

• 25,000 wells at 40 bbls/day = 1,000,000 bbls per day. And that's at 40 bbls/day.

And we've haven't even begun talking about the Lodgepole, the Tyler, the Spearfish, or the legacy formations.

Investopedia: How Much Oil is There in the Bakken -- North Dakota, USA

 A lot of good information in this story by Eric Fox.

When you finish reading the notes below, you might be interested in a very good discussion going on over at the Bakken Shale Discussion Group regarding almost the very same question, but limiting the discussion to "currently recoverable Bakken/TFS oil. [By the way, I still prefer referring to the Three Forks as the TFS rather than TF, but, I do believe that Three Forks is becoming the accepted name.]

Eric Fox summarizes the current estimates of recoverable Bakken oil:

• CLR's CEO Harold Hamm: 20 billion barrels (in fact, he has said as high as 24 billion barrels); he includes both the Bakken and TFS in his estimates, as two separate non-communicating formations
• US Geological Survey: 3.65 billion bbls of oil; plus 1.85 trillion cubic feet of natural gas and 148 million bbls of natural gas liquids (2008 Survey); their 1995 report said the Bakken had only 151 million barrels
• North Dakota's assessment: 149 billion bbls of oil in place, of which 2.1 billion is recoverable (2008); two years later, ND assessed the TFS at 20 billion barrels in place, of which 1.9 billion is recoverable
• Dr Leigh Price: Saudi Arabian estimates; estimated the Bakken could generate between 271 billion and 503 billion bbls of oil with an average of 413 billion bbls; Price said his numbers are higher because he felt the Bakken oil was trapped in that formation and had not migrated to the Mission Canyon or Madison formation; Leigh put a recoverable estimate at 50 percent, suggesting that approximately 200 billion barrels of oil could be recovered

Fox provides an update of net acreage held by several Bakken players:

• CLR: nearly 900,000
• Whiting: 579,000
• Oasis: 300,000
• BEXP: 368,000
• KOG: 72,000
• Hess: 500,000
• GeoResources: 46,000
• Marathon: 385,000
• Occidental: 200,000
• SM Energy: 81,000

Although net acreage is important, just as in other real estate, in the Bakken it's all about location, location, location. So, without that information, be careful how you look at these numbers. I did not realize, or had forgotten that Whiting had that amount of acreage.

I'm hoping CLR hits an even million acres just for the bragging rights. [CLR has close to 900,000 net acres in the Bakken and the Three Forks. Note: earlier I have posted about the risk of double-counting acres in the Williston Basin. To the best of my knowledge, oil companies are not doing that but watch out for it in presentations.]

Seven (7)) New Permits -- North Dakota, USA

Producers: Anschutz (2), Peak North Dakota, Whiting, BEXP, Slawson, and Newfield.

Fields: Mandaree, Bicentennial, Banks, Van Hook, South Tobacco Garden, St Anthony, and Willmen.

In today's daily activity report, two nice wells were reported:

• 18834, 1,140, CLR, Jerol 1-27H, Lindahl oil field, Bakken, 25K in less than one month
• 19054, 1,008, Abraxas, Ravin 26-35-1H, North Fork oil field, Bakken, 3K in 10 days

Effects of the "Permitorium" "Alarming" -- Not a Bakken Story

From Rigzone:

Long-term Gulf of Mexico deepwater development could be seriously jeopardized if the US Department of the Interior increases the time spent reviewing and approving drilling permit applications, a Wood Mackenzie study commissioned by the American Petroleum Institute concluded. Nearly one third of domestic deepwater production could become uneconomic, resulting in less energy production, less investment, and less revenue to government, it warned.

“The potential harm is alarming,” said Kyle Isakower, API’s vice-president of economic and regulatory policy. “We are talking about a transformation of the future relevance of deepwater gulf development to US domestic energy production—and a major threat to gulf region jobs and to the nation’s energy security.” He said based on the development impacts outlined by WoodMac, API believes that as many as 125,000 jobs could be lost in 2015. 

Yup.

Interestingly, this study did not include the current "permitorium" situation.

The study found, among other things, the delay in issuing permits would:

•  A field start-up would be delayed by one (1) year
• Delay drilling time by 10 percent
• A 2-year delay with a 20 percent drilling time delay

These delays compare with a base case with no delays for 25 identified, but undeveloped, deep water gulf targets.

that postpone a field’s startup by 1 year and delay drilling times by 10% and by 2 years with a 20% drilling time delay, compared with a base case with no delays for 25 identified, but undeveloped, deepwater gulf targets.
Expected development scenarios and full-field development economics were calculated using WoodMac’s global economic model to determine what impacts potential delays would have on financial returns in the gulf. Production, investment, and government revenue at risk due to permit delays were calculated using assumed financial hurdles of 15% nominal internal rate of return (IRR) and 8% nominal IRR for the deeper Lower Tertiary targets.
The study assumed no cost increases due to permit delays, but expected 1-2 years of total logistical delays for field

Early Morning Links -- Bakken, North Dakota, USA -- January 25, 2011

Again, I was called in to teach today, so just a couple of links and I will fill this out later today.


Oil's Economic Impact on North Dakota, two pdf files:

• Full Report
• Summary
• From the Bakken Shale Discussion Group, linked at the sidebar on the right

SM press releases:

• 4Q10: preliminary production and proved reserves estimates; Bakken/TF increases 40% in 4Q10
• SM to raise $250 million by issuing senior notes

How much oil is in the Bakken? Eric Fox on SeekingAlpha. Just released.

BHI: profits triple. I think we're going to see similar news across the energy sector this earnings season (not hard to predict, now that we've seen SLB, HAL, and BHI)
Voyager Oil and Gas plans to drill 50 wells in the Bakken and 22 wells in the Niobrara in 2011.

Some pundits on CNBC suggesting a "double dip" (as in recession) for the United Kingdom (England); it was not clear how solid this reporting was; based on most recent GDP data point for that country.

I did update all of the links posted yesterday morning, so you may want to scroll down and see if you missed anything.

Of all the stories yesterday, the Spearfish formation story has me the most perplexed. 

So, with that, more later.