Friday, October 28, 2011

From Tom McMahon -- Absolutely Nothing To Do With the Bakken

I generally don't do this but this is too good to let pass. From Tom McMahon's blog a few days ago:
Reuters reports that former Libyan leader Muammar Gaddafi has died, but the U.S. State Department has yet to confirm the spelling.

From Carpe Diem: 2,000 Job Openings Every Day -- The Bakken, North Dakota, USA

Link here.

2,000 job openings daily. This, in a town with a population of 10,000 or so before the boom. [And North Dakota still has a 3.5% unemployment rate. What's wrong with that picture?]

But do not come to the Bakken unprepared. If you don't have a reservation or a place to stay before you arrive, you won't find one when you get here. Period. Dot.

If you are an entrepreneur, have your financing arranged before you get here, and have a business plan that will pass the county and city permitting process.

And for entrepreneurs, know how you will staff your operation: as noted at the link above, there are 2,000 job openings every day in the Bakken, and far fewer than 2,000 people to fill them.

If you have a commercial driver's license (CDL) and plan to drive a truck, you have to have an absolutely clean driving record. Companies will not hire those who cannot be insured. Underwriters continuously monitor motor vehicle driving records.

Don't worry about bringing warm weather gear. You can find everything you need at Home of Economy on the Million Dollar Way.

You Have Got To Be Kidding ---

This is absolutely crazy.

Readers should know by now that I am no fan of wind or solar energy based on "the math."

But with regard to the off-shore wind project in Massachusetts I support it. The developer has played by the rules, has gone through every permitting exercise, passed every judicial test, and when I last heard about the project, it appeared ready to go.

Now, this. It's just being reported -- 20 minutes ago that the project has been put on judicial hold.

Link here.

I haven't read any more than the headline and the first paragraph, so I will post this and then we can read the story together.
A federal court today rejected an FAA ruling that the project’s turbines present ‘‘no hazard’’ to aviation, overturning a vital clearance for the offshore wind farm.
So, it's the federal government. It's the Obama administration that has turned this upside down. I wonder what Massachusetts billionaire got the ear of the federal judge? Absolutely incredible. And folks wonder why the US economy has stagnated.

Mark Rodgers had this to say:
“The FAA has reviewed Cape Wind for eight years and repeatedly determined that Cape Wind did not pose a hazard to air navigation. The essence of today’s court ruling is that the FAA needs to better explain its Determination of No Hazard. We are confident that after the FAA does this, that their decision will stand and we do not foresee any impact on the project’s schedule in moving forward.  Really, today’s court decision doesn’t change things very much because our existing Determination of No Hazard (the 3rd we have received since we started with this project) was set to expire in just 90 days and we were going to have to re-apply at that time anyway, this lets us begin that process sooner.”
What a gentleman. He has the patience of a saint.

So, the "existing document" expires in 90 days -- and it's the third such document -- and now they begin the process anew. This is absolute insanity. No wonder the US is suffering from Carter/Obama malaise (COM). Or "carterobamamalaise."

As far as I know, no whooping cranes will be hurt by the Massachusetts Cape Wind project. Maybe an occasional seagull.

Wow - Fourteen (14) New Permits -- The Bakken, North Dakota, USA

Daily activity report, October 28, 2011 --

Operators: Petro-Hunt (6), Samson Resources (2), MRO (2), Hess (2), BEXP, CLR

Fields: Four Bears, Alger, St Demetrius, Juno, Capa, Murphy Creek

Two wells released from "tight status" reported their IPs (2/2) --finally all wells coming off confidential list were completed/fracked.

CLR reported a nice IP for a producing well:
19535, 863, CLR, Omar 3-12H, Demores Federal 31-10TFH, Billings

Based on the number of permits, no evidence of slowdown in the field or in the NDIC office.

Idle Chatter On Up-Front Cost for Wells in the Bakken, North Dakota, USA

Random thought following two wells that reported IPs today:
  • 20552, 682, G3 Operating, Muller 1-21-16H, Climax, Bakken, long lateral, 38 stages, 4 million lbs non-sand proppant
  • 19528, 810, EOG, Van Hook 16-35H, Van Hook, Bakken, short lateral, 9 stages, 2 million lbs sand only
Again, IPs may or may not mean all that much. Note the one is a short lateral; the other is a long lateral. With the short lateral, you have EOG using sand only for the frac, which is about 1/5th the cost of ceramics (I could be way off on that; I  heard that in passing) and using only half as much total sand/proppant. Granted, the Van Hook oil field is a great field.The Climax is a new field, and pretty much on the edge of the good Bakken. It is located along the Montana border, northwest of Williston, up near Grenora. And maybe that's what it took -- a long lateral, 38 stages, and 4 million pounds of proppants to get an IP of 682.

Or I suppose one could simply say that this is how much better the "good part" of the Bakken is compared to outlying areas.

This is the first well in this Van Hook section. It certainly "cost" EOG a whole lot less to hold this section lease by production than the G3 well, based on length of horizontal, number of stages, and amount and type of proppant. 

Again, just idle chatter, but I'm starting to get a feel for fracking. (Numbers above rounded, in some cases.)

Random Note About Cheniere Energy -- LNG -- Implications for the Bakken, North Dakota, USA

Back on August 24, 2011, I posted Jim Cramer's top oil and gas picks.

On that date, Cheniere Energy (LNG) was selling for $7.12. From there Cheniere took a rather sudden fall to a low of $4.00 on October 3. Yes, one could have bought LNG at $4.00 earlier this month.

Following landmark news earlier this week that the US will be exporting liquid natural gas through the terminal owned by Cheniere, Cheniere's stock has turned around. Today, I see Cheniere selling for almost $11, up about 3.5 percent, on an otherwise flat day for the market.If you bought at $4 and it gets to $12, you've tripled your money in a month. (Disclaimer: this is not an investment site; it is for information, education, and entertainment. I hold no shares of LNG or ONEOK. Nor do any of my relatives as far as I know.)

ONEOK Partnerships is building three new cryo liquid natural gas processing facilities west of Williston.

By the way, when you go back to that link you will see a nice comment regarding these plants. This comment was particularly interesting: ".... while significant to the local economy, [the new ONEOK natural gas processing plants] have relatively small capacity."

The link to the US Energy Information Administration on natural gas processing plants in the US: 2010 update --

Some data points from that update:
  • There are 493 operational natural gas processing plants in the US
  • Plants are getting bigger: operating capacity nationwide increased 12 percent; the number of processing plants in the lower 48 decreased by 8 percent
  • Between 2004 and 2009, the average plant capacity increased from 114 million cubic feet to 139 million cubic feet (each ONEOK plant west of Williston will be rated 100 million cubic feet)
Two comments: "relatively small" might be a bit misleading. Based on the data points and the map at the link, one could argue that each plant is about average, and taken as a group, they would be well above average. Whatever.

More important is the comment that "while significant to the local economy..." -- wow, that is so true. I think one of the things that folks forget when talking about the Bakken, the vast amount of production is coming from six or seven counties in western North Dakota. The population of the entire state is not much more than 600,00 about half the population of my current home, San Antonio. And in these few counties, there are only two towns of any real size, Dickinson and Williston (Minot is just east of the activity for the moment), and they only have about 40,000 residents together.

[One of the nice things about the Bakken is that like Linde, who is building these plants, for the most part, the operators are second or third tier. It was the likes of Continental Resources, Whiting, Brigham, Northern Oil and Gas,  Kodiak Oil and Gas, and others that promoted the Bakken from the beginning, not XOM or CVX. The Bakken  has allowed some small players in oil and gas to move to a new level. Of course, the big oil service companies have always been here: SLB, HAL, BHI, Weatherford, etc.]

But, again, I digress.

I believe the construction costs of these three natural gas plants is about $150 million apiece. In 2010, Williston set a record with $100 million in building permits; in 2011, Williston will triple that record with $300 million in building permits.

Each of these three plants will have about the same capacity of the Hess facility at Tioga (110 million cubic feet) which is a fairly significant operation for this area. 

So, yes, these facilities during the construction phase, and then during operations, will have a huge impact on the local economy.

Oh, by the way, the natural gas you see flaring: the value of the natural gas compared to the total value of the Bakken production is four (4) percent.


Chevron beats by $0.50, beats on revs
Reports Q3 (Sep) earnings of $3.92 per share, $0.50 better than the Capital IQ Consensus Estimate of $3.42; sales and other operating rev rose 26.2% year/year to $61.26 bln vs the $58.79 bln consensus. Worldwide net oil-equivalent production was 2.60 million barrels per day in the third quarter 2011, down from 2.74 million barrels per day in the 2010 third quarter. Production increases from project ramp-ups in Canada, ....
The above link is dynamic and will change.

Earnings more than double year-over-year.
Chevron reported earnings of $7.8 billion ($3.92 per share – diluted) for the third quarter 2011, compared with $3.8 billion ($1.87 per share – diluted) in the 2010 third quarter.

Sales and other operating revenues in the third quarter 2011 were $61 billion, up from $48 billion in the year-ago period, mainly due to higher prices for crude oil and refined products.

Exporting $3 Natural Gas; Importing $100 Oil -- The American Way -- By The Way, How Many Bats Does It Take To Stop A Windmill?

Link here
BG Group will export liquefied natural gas from the United States under a landmark $8 billion deal with Cheniere Energy that will allow domestic producers to ship bountiful shale gas supplies to the world for the first time.
So, if I understand this correctly, the US is exporting $3 natural gas and importing $100 oil for our own energy needs. Okay.

I cannot take credit for that pithy comment and analysis. That was sent to me by Don via the MDU message board over on Yahoo!

This could have been added: in lieu of $3 natural gas, we're building whooping crane killers which are turned off at night anyway to protect the bats.

The note above is tongue-in-cheek, but the link with regard to the bat will take you to a really neat story. Whether you agree with the writer's perspective or not, it's fun to read, and has a great picture of a little bat.

"Frat" Houses in Williston -- The Bakken, North Dakota, USA

Back in the 1970s a lot of single family homes in Williston, two story-homes with a basement, were refurbished as 3-bedroom apartments and before the boom were renting out to low income folks for about $300 (often less)/month/apartment, resulting in <$1,000/month for the entire house.

Some of these houses in Williston are now going for $7,000/month for the entire house, for three oil workers. This would happen regardless of status of man camps. But with man-camp moratorium, oil field workers will look for options. Paying about $3,500 for a man-camp room/month, a $7,000/month for three is quite a savings. Of course the man-camp provides all meals and a few other amenities. I assume the same thing is going on in farmsteads around the county. While out and about in the Bakken, I am driving by more and more farm homes with more than seven or eight vehicles in the yard. And they aren't combines.

The rooms are continuously occupied; if the oil worker heads home for his/her two weeks off, his/her replacement moves in. Some workers are willing to pay for the rent even if they aren't there, just to hold it when they return.

Professionally-run man-camps are tightly regulated: alcohol, illegal arrangements, drugs, guns, altercations.  One of the things oil field workers gain by moving to "frat" houses in Williston neighborhoods is lack of this tight regulation.

Over time the man-camp management develops a close relationship with city leaders and law enforcement agencies. There is a single point of contact for social workers if necessary.

"Frat houses" would occur  no matter how many man-camps were in place, but with a moratorium in place on new professionally-managed man-camps a subliminal message is sent to folks that "frat" houses are among the few options left.

Just saying.

Maytag To Cut 5,000 -- Absolutely Nothing to Do With the Bakken

Link here.
Whirlpool Corp, the world's largest appliance maker, slashed its profit forecast for the year and said it would cut 5,000 jobs, citing a weak global economic environment.
This is 2.5 times more than what Lowe's plans to cut, announced earlier this month. 

Both of these cuts pale in comparison to Bank of America's plan to slash 40,000 jobs nationwide and 120,000 at the US Postal Service announced earlier this year.

Folks in western North Dakota are very, very fortunate.