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Sunday, August 19, 2012

Lots and Lots of Stuff To Talk About: Minot (Again); "Band of Brothers"; Rigs In ND; Soybeans; 60 New Sand Mines in Wisconsin

Wow, I am energized this morning. Too much "stuff" to talk about. I'm not sure if I can get it all done in the two hours I've been allotted. And I'm not sure whether to do multiple posts or one long post. So, we'll see as we go along.

175 Rigs In North Dakota: Adequate

First, I'm getting a lot of comments about the number of active rigs in North Dakota. My hunch is that 175 active rigs in North Dakota will be more than enough to keep me busy posting, and that 175 active rigs will be more than enough for current operators to reach their production guidance.

Having said that, there is one key data point regarding active rigs that no one has yet mentioned (as far as I can tell). There are probably several additional important data points not mentioned, but the one I'm thinking of is very, very basic and has to do with recent rumors about well design. I will leave it there for now, date-stamp this entry for bragging rights, and then come back to this later.

United Pulse: On Lentils and Split Peas in Minot

Part of the reason I am so energized has to do with the United Pulse story I posted a few days ago.  I had forgotten that I had posted a story this past January about United Pulse expanding into Minot. From that post:
The planned United Pulse Trading facility will be located at Minot’s Value-Added Agricultural Complex, which features North Dakota Port Services Inc.  as an anchor tenant. NDPS provides, through Burlington Northern Santa Fe Logistics and BNSF’s Northern Tier Intermodal line, container services to the complex through its facility adjacent to BNSF’s main-line switch yard featuring daily service and four-lane highway access.
There is simply too much to keep up with. A reminder to newbies: although this blog site is "all bakken all the time," in fact, the name of the blog, "Million Dollar Way" has nothing to do with the Bakken per se. In fact, if you go back to my roots and to the general tone of the blog, particularly in the early days (and the first blog which was deleted), there are good reasons why stories about lentils are important to me.

Speaking of lentils, leads me to soybeans. Did  you see this story in the print edition of the LA Times? Neither did I. But fortunately the on-line edition links it: China worries about social fallout of soybean oil price jump. North Dakota is a large producer of soybeans. Like the rest of the nation, the drought will affect North Dakota's soybean crop, but perhaps not as much as feared.
There are some soybean fields that still looked pretty good in Minnesota and North Dakota ahead of August pod setting. As of July 16, Minnesota’s soybean crop was ranked 65 percent good to excellent, 26 percent fair and 9 percent poor to very poor.

North Dakota’s soybean crop was ranked 62 percent good to excellent, 32 percent fair and 6 percent poor.

Across the U.S., the soybean crop was rated 34 percent good to excellent, 36 percent fair, and 30 percent poor to very poor as of July 16.
Based on anecdotal reading of the regional newspapers, it appears the drought did not affect North Dakota as badly as the rest of the nation, but that is anecdotal, and I do not know.


CarpeDiem: Railroads Re-Energized Due to the Bakken


60 new sand mines in Wisconsin supporting the oil patch in North Dakota. Not too shabby.

The paragraph I enjoyed the most:
In two years, Union Pacific recorded a 265 percent increase in frac sand shipments. The railroad has rebuilt interchanges in Wisconsin, lengthened track at a Mankato rail yard and will lengthen another track this year. The company built a side track at Bricelyn, Minn., lengthened several tracks at a rail yard in Council Bluffs, Iowa, and is considering four more yard improvements in Wisconsin and Iowa.
After Warren Buffett bought Burlington Northern, one of my best investments ever, I started accumulating Union Pacific. For years, I had trouble deciding between BNI or Union Pacific, but Warren's purchase made it easier. I kept BRK-B and started accumulating Union Pacific. [Disclaimer: this is not an investment site; make no investment decisions based on what you read here. This is simply information, education, and entertainment.]

I never fail to waste my time reading the comments. Based on the comments, I am still amazed how uninformed some folks are.

Hotel/Motel Construction in Minot, North Dakota
Overbuilding? No

Interestingly, two different readers sent me comments about new motel/hotel construction in the oil patch.

One noted:
Minot is only running about 85% occupancy and they are adding 50% to inventory, so it tells me they will drop to the 60% range near term.
My reply, cleaned up a bit:

You know, the interesting thing is this: folks don't add "quality" to the mix.

When I was in Williston last summer, I went out to visit a "motel." It had been there since the 1950's. It appeared some years ago to have been either shuttered or condemned. How it was brought up to code for the boom, I do not know. But the "in-the-right-place-at-the-right-time owner" opened it back up, and immediately reached 120% occupancy. 

That "motel" with 120% occupancy raises the average, but as soon as a "nice" motel is built next door, and occupancy across Williston is 95%, the aforementioned "motel" will close. 

There are too many variables to simply look at occupancy rates to determine if things are being overbuilt. 

When I see the new construction stories coming out of Minot, I don't see "overbuilt." I look to see what the developers are seeing: what do they see coming into Minot three to four years from now. I guess the United Pulse story, the Port of North Dakota story, and the BNSF yard upgrade, etc., got me really energized about Minot.
One of the variables has to do with measuring occupancy rates. Is the "85%" occupancy rate the annual average; or, is it a snapshot in time? Are rates raised during periods of 100%+ occupancy such as during the Hostfest? Could more affordable hotels result in more men living in crew camps moving to the city? What hotels/motels currently operating are scheduled for closure, or would have closed had there not been a boom or a flood? These are all rhetorical; I don't plan to turn the blog into "All Minot, All The Time."

For a list of new hotels and hotels under construction in Minot, click here.

Hotel/Motel Construction in Minot, North Dakota
Developers: Speechless

So, I'm writing/thinking about Minot hotels and motels, and then this story pops up, sent to me by Don: 
The building of hotels in Minot has been so extensive over the last several months that the a total of new rooms available, or about to become available, changes almost daily. Minot's hotel growth is nothing short of astonishing, and not just for North Dakota.

"I can tell you everybody we talk to in the CVB world, the hotel developers and long-term planners, are just speechless. They are not seeing this anywhere else in the country. This is so rare. Nothing is growing as rapidly as this," said Wendy Howe, Minot Convention and Visitor's Bureau.
Go to the link for the full story and the numbers. Regional links break early and break often. I may do a separate post on this story; the "fact box" at the site ... well, it leaves me speechless.

"...are just speechless. They are not seeing this anywhere else in the country." Wow, we've been blogging about this and talking about this for three, four, or five years. I guess if the mainstream media only reads the NY Times, a few things get missed.  [Despite the admonishment: if you have a business, you didn't build it.]
Band of Brothers

Don also sent me a nice human interest story about the "band of brothers," called roughnecks.  Cowboys and roughnecks: North Dakota, Montana, Wyoming, Utah, and a few other places.


CO2 Emissions At Lowest Level in 20 Years
NY Times Spin: Okay, Now It's Methane We Should Be Worried About

The NY Times "Green" section noted that CO2 emissions are at their lowest peak in 20 years. That was noted some days ago; it took awhile for the NY Times to figure out how to respond. So, what do they do? They shift the discussion: back to methane. That, too, is an overworked story. I post it here only for archival purposes. But, and this is the huge story: the NY Times did NOT disagree that CO2 emissions are at their lowest peak in 20 years, and they explicitly or implicitly or directly or indirectly said it was all due to the wonderful oil and gas industry for forging ahead, despite governmental obstacles, permitoriums and demagoguery, to press on with fracking to provide natural gas so cheap, the aforementioned wonderful oil and gas industry is stacking natural gas rigs (see next blurb). Wow. So many story lines. But the NY Times now "sees" methane as the next threat. Ronald Reagan (RIP) talked about cows and methane a long, long time ago. There are rumors that President Obama will appoint a "Methane Czar" to monitor methane emissions.

What Was That Saying? Swords Into Plowshares?

Speaking of the president: someone told me that the Obama administration is buying these stacked natural gas rigs and converting them into slicers and dicers.

That's All, Folks

Okay, I'm going to stop here. Re-group. Start a new post: Enbridge, Saudi oil, Mexican oil, Montana rigs, etc., all stories / links that Don has sent me. It's going to be a long, long day. This post has not been proof-read; I assume there are typographical errors and broken links. I will sort them out later. 

2 comments:

  1. Replies
    1. Lots. And there are few industries that have more rumors than the oil and gas industry.

      Delete

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