Data points:
July building permits: $50 million (rounded)
To date, through July 31, 2012: $190 million (for all of 2011: $355 million)
In July: housing - $15 million; commercial - $30 million
Weatherford International: tops in July with three permits at one location -- $12 million, $3 million, and $1.3 million
Schlumberger: two permits, $5 million; The Herald says the location is 13959 Highway 2; Google maps show this near the Montana state line; if so, this is well west of their huge new location nearer Williston
Mercy Medical Center: $2.7 millionAnd this is why I noted that this is a huge story on so many levels:
Wyoming Casing Services: location yet to be determined
R&T Properties: two permits, $500,000 (separate/total?)
- Halliburton received the most residential permits for their new permanent housing project on Sleepy Ridge Ave: two permits on new apartments valued at $3,793,758 and 10 permits on new Duplexes, all valued at $332,425.
- Love’s Travel Stops had a permit approved for a $900,000 apartment complex.
As noted a long, long time ago, BEXP also built houses for its employees, buying a whole development and putting in its own sewer and utilities because the city would not be able to get to it right away -- I don't know how accurate that is; not confirmed; from reliable source.
The Weatherford expansion was a huge story in mid-2011; it is amazing how fast/slow everything is moving in Williston. Whether it is fast/slow; accelerating/decelerating seems to depend on the observer.
For reference, the Herald reported back in early 2012:
The hub of North Dakota's oil boom issued a record number of building permits in 2011. The city issued more than $355 million worth of permits. That is more than three times what Williston issued in 2009.At $190 million through July, 2012, the city is on pace to exceed the $355 million in permits last year.
Someone wrote to tell me yesterday the boom won't last forever. And that the oil will eventually run out. I think this boom is affecting the third generation of North Dakotans, and is the biggest boom to date. But yes, the boom won't last forever, and the oil will eventually run out.
As a reminder: CLR is stacking rigs; increasing CAPEX significantly; will increase wells drilled to 330 in 2012 (from 249 originally planned for 2012); and, had raised guidance on how much oil it expects to produce in the Bakken this year. One rig expense: $10 million/well/month. Stacking one rig: $120 million/year. Stacking five rigs: $600 million/year. Companies are stacking rigs and Schlumberger, Halliburton, and Weatherford increasing their footprint, and some are increasing their housing units for their employees. Investors take note.
Disclaimer: this is not an investment site. Don't make any investment decisions based on anything you read at this blog. It is for information and educational purposes only; see welcome and other disclaimers.
You cite well expense as rig expense. The rig is small change in that number.
ReplyDeleteFewer rigs, more wells ... More money.
The boom starting to level off.
And in Shreveport, motel rooms galore.
Anon 1
I agree completely.
DeleteI'm not talking about "a rig" per se. I am talking about all the costs associated with "a rig." Costs of personnel, I assume, are a significant cost in drilling a well (I might be wrong). Drilling goes on 24/7. If one has 1,000 employees in the field drilling and you stack enough rigs to require only 750 employees in the field, I would assume there are some cost savings in personnel costs. I am not an MBA, nor any expertise in the oil and gas industry, but just a consideration (again, I could be wrong).
Meanwhile, the pressure on oil service companies to cut costs (due to less rigs drilling), I would assume, result in some savings. Schlumberger has said several times they expect pricing pressure (bad news for fracking companies).
There will be less water to buy, less sand to buy, less ceramics to buy. Stacking a rig will result in immediate cost savings, not from the "rig" itself, but all costs associated with a rig.
I do not know if there are tax advantages when stacking a rig; I don't know how they depreciate rigs (nor do I want to). I assume they will sell the older rigs; if they don't own, they save on rental costs.
All I can see is this, as you noted: less rigs, less expense, and all things being equal, more profit.
But I don't see things being equal: I see rigs as more powerful; I see total depth being reached in 26 days, rather than 45 days; I see geologists with more experience; I see frack teams with better technology; I see transportation costs improving; I see less flaring -- thank you, ONEOK; I see land already acquired; I see price of oil trending up over time.
I have not been able to find a "number" that defines a boom.
As noted just a moment ago on the blog, in 2011, building permits in Williston totaled $335 million (or something like that). Halfway through this year, building permits are at $190 million, which is on track to exceed 2011. If 2011 was a boom year (and maybe it wasn't; maybe the boom was already leveling off or maybe it was already over), and building permits in 2012 exceed 2011, in Williston, maybe it's ... well, I don't know what I would call it.
Taxable sales receipts for Williston continue to hit new records; receipts exceed that of Fargo, a city so much bigger than Williston in terms of population, etc., comparisons not worthy.
We are definitely moving into a manufacturing/mining stage, but again, I don't know the data point that defines a boom.
At http://www.thefreedictionary.com/boom, the definition of an economic boom:
To grow, develop, or progress rapidly; flourish
A time of economic prosperity
Wikipedia has a bit more: http://en.wikipedia.org/wiki/Oil_boom, and actually provides dates for various booms. Perhaps it will be Wiki that defines the Williston Basin Bakken boom.
Maybe more later; I have some thoughts on how I might change the language on my blog to mitigate the confusion caused by using the word "boom."
I don't know much about Shreveport. I cannot recall if I have visited the city. I have spent time in that area but cannot recall if I have actually visited the city itself.
DeleteAll I know about Shreveport is what I read. From Wiki:
Shreveport was once a major player in United States oil business and at one time could boast Standard Oil of Louisiana as a locally based company. The Louisiana branch was later absorbed by Standard Oil of New Jersey. In the 1980s, the oil and gas industry suffered a large economic downturn, and many companies cut back jobs or went out of business, including a large retail shopping mall, South Park Mall, which closed in the late 1990s and is now Summer Grove Baptist Church. Shreveport suffered severely from this recession, and many residents left the area.
Today the city has largely transitioned to a service economy. In particular, the area has seen a rapid growth in the gaming industry, hosting various riverboat gambling casinos, and was second only to New Orleans in Louisiana tourism before Hurricane Katrina. Nearby Bossier City is home to one of the three horse racetracks in the state, Harrah's Louisiana Downs. Casinos in Shreveport-Bossier include Sam's Town Casino, Eldorado Casino, Horseshoe Casino, Boomtown Casino, and Diamond Jacks Casino (formerly Isle of Capri). The Shreveport-Bossier Convention & Tourist Bureau is the official tourism information agency for the region.
[North Dakota experienced the same oil bust in the 1980's.]
30-second sound bite for Shreveport: a) once a major player in oil and gas industry; b) now, casinos.
Bruce, the Schlumberger permits are for the NEW facility in west Williston. Schlumberger bought another 40acres to the north of their current (new) facility. They have already leveled, and tiered the property on 2 levels and planted all kinds of large pine trees. I saw they were building structures on this new property as well. Because the "building permits" were permitted from the city of Williston, they would not be for anything "outside" the city limits. Anything outside the city limits would have to be permitted from the county of Williams, not the city of Williston. As far as the street name and locator, I noticed if you put in legit addresses, sometimes the google map does not recognize it unless it is an actual street name, and then it just zooms out and selects an area near where it thinks it should be. Harvest Hills in Williston is a good example. If you type in one of the new street names, the pin just points a few miles outside of Williston.
ReplyDeleteThank you for clearing that up, taking time to comment.
DeleteYes, I was quite confused. It didn't make sense what I said about permitting that far west.
That is very, very interesting about Schlumberger building even more. It was a fairly huge complex to begin with (though it did not appear to be nearly the size of the BHI complex). I wonder if Schlumberger planned this all along, or if they were conservative in their first building, and then saw the need for even more space.
Regardless, it all makes sense now (yes, your explanation of google maps also makes sense).
I have got to get back to Williston to see what's going on.
My nephew has just returned to Williston for a short visit; he says it is busier in Williston this year than it was last year.
The newest SLB property was planned all along. This will be their bulk plant and other secondary structures. They have been working out of their "old" facility with their bulk plant. Bruce you need a trip out here again to see all of this. Quite amazing what is continuing to happpen in and arond Williston.
ReplyDeleteThank you for clarifying that about Schlumberger. I still find it quite incredible. We are into the fifth year of the Bakken in North Dakota, and 12 years if you start with the Montana side, and folks are still building huge complexes to support the Bakken. One really does get the feeling that the Bakken is "for real."
DeleteAnd yes, I do need to get back.