Random Data Point About the US Debt And Proposals To "Fix" It

If federal government stopped all crop subsidies, it would result in a savings of $6 billion/year.

The debt is $16 trillion. Or so I've heard.

$16 trillion / $6 billion --> 2,667 years. Assuming I did the division correctly. It's hard with all those zeroes.

Call me naive, but crop subsidies don't seem to be the problem.

The oil and gas manufacturing tax break at $17 billion is hardly any better. If that is also over ten years (the article is unclear), that would be $1.7 billion / year or $16 trillion / $1.7 billion --> 9,411 years.

Twenty-Four (24) Wells Coming Off Confidential List; Eight (8) BEXP Wells; Oasis With a Huge Well; Several Nice Wells; Zavanna With a Huge Well East of Williston

Wow, if this is accurate, this is quite amazing. I had missed it. A reader from Denmark led me to it:

• 19981, 1,003, Zavanna, Gust 2-11 1H, Long Creek oil field, t3/12; cum 107K 7/12; 35 stages; 3.6 million lbs proppant; already over 100,000 bbls of oil in less than six months. It was spud 5/11 - sure took a long time to get it completed, but the wait appeared to be worth it. 

Others in Long Creek:

• 19974, 740, CLR, Winston 1-12H, Long Creek, t6/11; cum 128K 7/12; 
• 20206, 954, CLR, Truman 1-23H, Long Creek, t11/11; cum 102K 7/12; 

This is a very small field, only 18 sections, east of Williston, north of the river, squeezed in between two other great fields, the Stockyard Creek oil field and the Truax oil field. For such a small field, it is very active. One other well there is on confidential list, and there are two rigs operating: both operated by CLR.

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Has anyone noticed? The price of natural gas has quietly melted above $3.38? I had not noticed; that is quite interesting. I assume it is mostly seasonal as we move into autumn and then winter.

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A reader sent this to me moments ago, recalling that when he arrived in Williston in early 2011, the sign advertised a starting wage of $11/hour -- a year later: $17/hour and higher to start.

The Heart of the Bakken, Williston Wal-Mart, September, 2012

Huge thank you to the reader for sending me this.

Twenty-four (24) wells come off the confidential list from the weekend and Monday:

• 22206, 878, Denbury Onshore, Lundin 11-4SH, Siverston, t7/12; cum 15K 7/12;
• 20823, DRL, BR, Arches 44-35TFH, Keene, cum 24K no IP yet 7/12;
• 21198, 1091, Liberty Resources/Newfield, Berger 156-100-7-6-1H, East Fork, t4/12; cum 84K 7/12;
• 21602, 732, Denbury Onshore, Amundson 44-22NWH, Siverston, t6/12; cum 16K 7/12;
• 22023, drl, BEXP, Bill 14-23 1H, Alexander,
• 22366, drl, Hess, HA-Swenson 152-95-1819H-3, Hawkeye,
• 22368, 1,697, BEXP, Ross-Alger 6-7 2TFH, Alger, t7/12; cum 7K 7/12;
• 22399, 3,330, Oasis, Left 5200 13-30H, Camp, t7/12; cum 44K 7/12;
• 22403, 2,093, BEXP, Esther Hynek 10-11 4TFH, Alger, t8/12; cum --
• 22404, 2,591, BEXP, Esther Hynek 10-11 3H, Alger, t8/12; cum --
• 22453, drl, BEXP, Marcia 3-10 2TFH, Last Chance,
• 22511, drl, BEXP, Bratcher 10-3 3TFH, Ragged Butte,
• 22599, 289, Sinclair, Martens 3-4TFH, Sanish, t6/12; cum 7K 7/12;
• 21648, 1,535, Denbury Onshore, Tobacco Garden 31-29NEH/Leiseth 31-29NEH, Tobacco Garden, t8/12; cum 9K 7/12;
• 21700, 1,719, KOG, Skunk Creek 13-18-17-16H3, Heart Butte, t6/12; cum 29K 7/12;
• 22002, 425, Whiting, Iver & Minnie 11-14PH, Zenith, t4/12; cum 19K 7/12;
• 22036, drl, Whiting, Strobeck 27-34 4H, Alger,
• 22152, 280, Petro-Hunt, L. Hoiby 159-94-19B-30-1H, North Tioga, t7/12; cum 12K 7/12;
• 22327, 184, CLR, Natalie 2-2H, St Demetrius, t7/12; cum 16K 7/12;
• 21486, drl, BR, Bartlett 21-16TFH, Murphy Creek,
• 22251, 1,150, Zenergy, Gary Russell 19-20H, Rosebud, t6/12; cum 22K 7/12;
• 22322, drl, BEXP, Chryl 17-20 2TFH, Banks,
• 22553, drl, Zavanna, Sabertooth 1-24H, Stony Creek, cum 5K no IP yet 7/12;
• 22598, 444, CLR, Randolph 1-2H, Westberg, t6/12; cum 40K 7/12;

*********************

RBN Energy: primer on reformulated gasoline.

*********************

I have to chuckle. I didn't see much football Sunday, but the little I did see suggests there were a few occasions in which some teams wished the substitute referees were still on the field. Some of the "non-calls" had a significant impact. But we probably won't hear much about that, after all the grief everyone gave the substitute refs.

For Investors Only: Warren Buffett Increases His Energy Holdings

If I ever run out of things to do, or if the Bakken is shut down for any reason, I think a blog devoted to Berkshire Hathaway would be very, very interesting.

Moments ago, Don sent me a link to a story in which, through a subsidiary, Berkshire Hathaway will be buying two California wind farms.

MidAmerican Energy has agreed to buy two wind projects under construction about 120 miles north of Los Angeles from the wind developer Terra-Gen Power. Terms of the sale were not disclosed. 

The two projects, totaling 300 megawatts of peak electric capacity, will be part of the larger Alta Wind Energy Center located in Tehachapi, Calif., much of which is already in operation. 

300 megawatts: about 80,000 homes.

For me, the only interesting thing about the article is the fact that it reminds me how much I forget about Warren Buffett and Berkshire Hathaway.

According to wiki, MidAmerican Energy Holdings Company is a holding company controlled by Berskshire Hathaway.

In turn, MidAmerican Energy "holds" the following companies:

• MidAmerican Energy Company
• PacifiCorp
• Northern Power Grid (UK)
• Integrated Utility Services (UK)
• CalEnergy Generation
• Kern River Gas Transmission Company, Kern River Pipeline
• Northern Natural Gas Company
• HomeServices of America

The Kern River Pipeline is a 1,679-mile natural gas pipeline that begins in southwestern Wyoming and ends near Bakersfield, CA, supplying customers along the way: Utah, Nevada, and California.

MidAmerican announced a new division, a "renewables" division in January, 2012 -- earlier this year:

MidAmerican Energy Holdings advised that its new division, MidAmerican Renewables, had been established to expand the company’s presence in the wind, geothermal, solar and hydro projects for the renewables market. The new division will be based in Des Moines, Iowa and will consist of MidAmerican Wind, MidAmerican Geothermal, MidAmerican Solar, MidAmerican Hydro and project development and commercial management.

There are multiple links to stories on the net of MidAmerican Renewables ramping up quickly in renewables.

For example: through MidAmerican, Warren Buffett is participating in building the world's largest solar  project, announced May 3, 2012, from offices in Des Moines:

This week, MidAmerican Solar and First Solar, Inc., marked the start of major construction at Topaz Solar Farms, located in San Luis Obispo County, Calif. The 550-megawatt photovoltaic project will employ approximately 400 workers during its three-year construction period; will generate nearly $417 million in local economic impact, the majority of which will be generated during construction; and will provide California with renewable electricity. 

I never paid much attention to Berkshire Hathaway until it bought Burlington Northern Railroad just before the Bakken took off and unit trains became the "talk of the Bakken."

I have no idea where Microsoft, Google, or Apple will be fifty years from now, but something tells me Berkshire Hathaway will be around, and may be one of the largest energy companies in the world.

Disclaimer: this is not an investment site; make no investment decisions based on what you read at this site.

Maugheri vs The Oil Drum: Cornucopians vs The Peak Oil Crowd

Updates

October 16, 2012: link to The Oil Drum.

This is part II of a guest post by Jean Laherrère, long term contributor to The Oil Drum. Jean worked 37 years for TOTAL on exploration and production of oil and gas, and since his retirement has worked tirelessly to analyze the world's oil & gas data and developments. 

A very, very detailed article. Critical of Maugheri's understanding of oil industry data.

Original Post 

I'm posting this mostly for my benefit to keep track of the argument.

I guess I'm somewhere between The Oil Drum peak oil and the Cornucopians: I agree that Saudi Arabia is unable to meet production expectations; I disagree with The Oil Drum: I think the Bakken will live up to its potential. But in the big scheme of things, the Bakken is not enough to make a difference globally.

First Maugheri:

Contrary to what most people believe, oil supply capacity is growing worldwide at such an unprecedented level that it might outpace consumption. This could lead to a glut of overproduction and a steep dip in oil prices.

And then, The Oil Drum:

The theme of these posts over the past eighteen months has been to look at the leading producer nations that provide crude oil to the world, and see whether it is realistic to anticipate significant increases in their production. Posts have now looked at North America, Russia, Saudi Arabia and China based on the original list of rankings produced by the EIA in 2009.

From a guest editorial at The Oil Drum following the Maugheri report.

Much as all the stakeholders in the energy industry would like to be optimistic, it isn't an oil glut by 2020 that is keeping oil prices as high as they are. It is the reality that the oil sector has been pushed to the limit of its capabilities and that this difficult challenge will dominate energy markets for the rest of the decade.

Saudi Arabia, from The Oil Drum:

At that last link, there was this comment posted:

In 2005 investment banker Mathew Simmons predicted that Saudi Arabia could not increase its oil production. Since then its output has risen from nine million barrels a day to 10 million. Meanwhile, a recent report by oil executive Leonardo Maugeri, which was published by Harvard University, provides compelling evidence that a new oil boom has begun. If, like me, you are confused I am not surprised. One thing seems clear: we are not likely to run short of oil any time soon and one piece of good news is that at least some of the soothsayers now appear willing to own up to their faults.  

In a significant statement, leading environmentalist George Monbiot admits: “The facts have changed, now we must change too.” Much to his credit he admits that he and his colleagues made either vague or specific predictions and in all cases were wrong. In a rather rueful admission he ends by saying: “The problem we face is not that there is too little oil but that there is too much.” 

EIA data for annual Saudi crude oil production (mbpd, crude + condensate):  

• 2002: 7.6 
• 2003: 8.8 
• 2004: 9.1 
• 2005: 9.6* 
• 2006: 9.2 
• 2007: 8.7 
• 2008: 9.3 
• 2009: 8.3 
• 2010: 8.9 
• 2011: 9.5 

BP data for annual Saudi net oil exports (mbpd, total petroleum liquids):

• 2002: 7.3 
• 2003: 8.3 
• 2004: 8.7 
• 2005: 9.1* 
• 2006: 8.7 
• 2007: 8.2 
• 2008: 8.4 (the delta is almost one million bopd)
• 2009: 7.3 (the delta is 1.0 million bopd)
• 2010: 7.2  (the delta is 1.7 million bopd)
• 2011: 8.3  (the delta is 1.2 million bopd)

 *Twilight in the Desert is published. Synopsis at this link.

I could be wrong, but based on a recent comment from a reader and looking at recent articles from The Oil Drum it looks like the latter has moved its position slightly. At one time, The Oil Drum was synonymous with "peak oil." Now, it appears to me that The Oil Drum has moved the production curve to the right -- that there is such a thing as "peak oil," but the graph has moved to the right, and the rate of production will slow down (or already is slowing down) on a global scale, notwithstanding what is happening in North America (Bakken, Eagle Ford, Canadian oil sands).

The Oil Drum notes that one part of the argument has evolved. From US production AND Canadian production, it is now NORTH AMERICAN production.

The perfect storm for investors: if The Oil Drum is correct, the re-election of President Obama will be better for investors in the oil and gas industry, than if Romney were to win. If Maugheri is correct, it is problematic for President Obama's renewable energy program and very problematic for oil and gas investors.

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The story behind this song is quite remarkable. It was a #1 UK hit in 1961. One can argue the cover by the Meteors is better.
Johnny, Remember Me, John Leyton

Random Look at Rigs Operating in North Dakota

Updates

September 30, 2012: a reader sent in the breakdown of active rigs by operator when the number of active rigs in North Dakota hit a record -- May 31, 2012. The CLR and the OXY USA numbers account for a huge percent of the recent decrease in active rigs. 

The smaller operators have almost no room to maneuver; with only one or two rigs, they can't cut much if they want to stay in the Bakken.

It is interesting that the low-cost driller has appeared to increase the number of active rigs.

BEXP and CLR, I believe, will be cutting one more rig each. With pad drilling, less rigs are needed. A random thought: CLR probably knows the Bakken as well as anyone, and may be moving into the "manufacturing" stage ahead of others, requiring significantly fewer rigs to meet internal targets. See long comment below dated September 30, 2012, -- some great thoughts.

Original Post

There's been a lot of talk this past year about drillers laying down rigs to save money/cut costs.

Here are some data points, taken from August 22, 2011, and September 28, 2012, one year later. On August 22, 2011, there were 195 active rigs in North Dakota, at a time when the number of rigs was still increasing and would eventually hit a high of 218 on May 29, 2012. Three months later, on August 7, 2012, it had dropped to 198. Dropping from 218 to 198 in less than three months seems precipitous but spread out over 20+ companies, it doesn't amount to much in the big scheme of things. Especially when one considers how much faster rigs are reaching total depth, pad drilling, and improved infrastructure (for "everything").

I wish I had a breakdown of wells when "we" were at a record (218) and it's possible I posted the distribution of rigs about that time, but I don't recall. For me, I just can't get too excited about the talk about "stacking" rigs. By the say, in its most recent update American Eagle said they had contracted for another rig (which might be reflected below) demonstrating that some companies will drop rigs, others will add rigs. And, oh by the way, there are new drillers in the Bakken.

Remember, these are snapshots in time, and on any given day, the number could change. Again, these are data points taken from August 22, 2011; May 31, 2012; and,  September 28, 2012, one year later. Remember: the record number of active rigs was at the end of May, 2012.

So, snapshot below: August 22, 2011 --> May 31, 2012 --> September 28, 2012 --> March 4, 2013

• BEXP: 16 --> 18 --> 15 --> 12 (in Sept 2012, expected to see another rig stacked)
• BR: 9 --> 8 --> 8 --> 9
• CLR: 14 --> 24 --> 15  --> 18 (in Sept 2012, change in philosophy)
  
• Enerplus: 2 --> 3 --> 3 --> 2
• EOG: 7 --> 7 --> 5 --> 5
• Fidelity: 4 --> 4 --> 5 --> 5
• G3 Operating: 2 --> 1 --> 3 --> 2
• Hess: 17 --> 19 --> 17 --> 16
• Hunt: 2 --> 4 --> 3 --> 2
• KOG: 8 --> 7 --> 8 --> 8
• MRO: 6 --> 7 --> 7 --> 5
• Newfield: 2 --> 2 --> 3 --> 3
• Oasis: 8 --> 8 --> 8 --> 11
• OXY USA: 6 --> 12 --> 6 --> 5
• Petro-Hunt: 12 --> 13 -->  10 --> 12
• Triangle: 2 --> 2 --> 3 --> 2
• Whiting: 17 --> 15 --> 18 --> 17
• WPX: 6 --> 6 --> 6 --> 4
• XTO: 7 --> 7--> 5 --> 9

There are yet to be rigs "retired," and again this is just a snapshot on two given days.

***************************

And then there's this:

Johnny, Are You Gay, Hillbilly Moon Explosion

Quote of the Day

"“I am unable to have a cellphone and I need one for emergencies,” said Aliesa Azbill of Dayton, who is in a work training program at Community Action Partnership. She said the 250 free minutes she gets per month through SafeLink isn’t enough to use it for much more than emergencies." -- owner of an ObamaPhone. 

Wow, 250 minutes/month for emergencies -- and that's not enough talk time. Wow. I would love to listen in to some of those emergency calls: the only emergencies I can think of that would last 250 minutes:

• hostage negotiation
• 9/11 suicide intervention
• coordinating emergency response to a Bakken blowout
• LA County freeway SUV chase following a bank robbery or drug deal gone bad
• calling a friend while part of a "rent-a-crowd" at an Obama speech

Faux-Environmentalists, Keystone XL, Bloomberg

Link to Bloomberg.

The story was posted September 25, 2012. I'm not sure why Bloomberg posted the story at this particular time; I'm not aware of anything new.

The president killed Keystone XL.

Keystone XL 2.0 S is tied up in Texas courts.

TransCanada has submitted a new application for Keystone XL 2.0 N, that portion running from the Canadian border (Montana) to Steele City, Nebraska, and from there one branch to Cushing, OK, and one branch to Patoka, IL.

But I digress.

This is the bigger story.

If the aim of opponents was to keep TransCanada from building the 1,600-mile Keystone line, then they have accomplished their mission.

But if the objective was to fight global carbon emissions by hindering the expansion of Alberta’s tar-sands production, then little has changed.

What’s more, a win for Nebraska’s farmers has now dramatically increased the risk to the pristine rainforests along the coast of British Columbia. [I didn't think it had anything to do with the farmers but ....]

Output from Canada’s tar sands, currently about 1.5 million barrels a day, is forecast to double by 2020. Until Keystone was tripped up by the Nebraska aquifer, the project looked like the best option for getting new production to world markets. In the long run, several new pipelines will be needed to handle the extra volume from the tar sands. But in the short term, the competition to build a new line looks like a horse race.

Keystone had the inside track, but the political delay has created an opening for a competitor, Enbridge Inc. (ENB)’s $5.5 billion Northern Gateway that could ship about 525,000 barrels of oil a day from Alberta to a terminus in Kitimat, British Columbia. Regardless of which pipeline gets the nod, once construction begins, the necessity for oil-sands producers to build the other line will be alleviated.

Right now, Canadian oil companies have a huge incentive to fast-track another pipeline out of Alberta. The bulk of the province’s tar-sands output currently ends up in refineries clustered throughout the U.S. Midwest. An increase in volume from the tar sands, combined with prolific production from so- called Bakken shales, a new oil play being exploited in North Dakota and Montana, has created a supply glut at those refineries. 

I can't make this stuff up.

Week 39: September 23, 2012 -- September 29, 2012

Economic Development
Fly into ND airports at your own risk -- FAA
Nitrogen production / storage facility to Dickinson
Journey Energy Services (Williston), Trinity Regional Eyecare (Williston), Oil Capital Laundromat (Tioga)
St Louis construction company opens shop in Killdeer
Update on activity at the 13-mile corner
Pilot Flying J Truck stop at 13-mile corner
Master-planned community north of Minot

General / Human Interest Stories
Northward Ho! -- National Oilwell Varco
North Dakota's "Legacy Fund" > $535 million
The Oil Drum dissing the Bakken
Encana: mobile LNG refueling stations

Bakken Operations
Permitting hits another record
Active rigs: location and operators
Cost of proppant
KOG acquires 80 acres in the heart of the Bakken; $7,000/acre
New Frontier Midstream: new pipeline from south Bakken to Fallon County, MT
Bentek study: Williston Basin -- 2.2 million bbls/day by 2025

Speaking of Wow! Today's WSJ "Review" Section Is Incredible

Print edition, of course.

I quit subscribing to print media some years ago. When I went cold turkey, I was subscribing to the Wall Street Journal, Forbes, The Atlantic (Monthly?), and The New Yorker, plus others I've long forgotten. I think I maxed out at seven periodicals. This does not include a multitude of professional journals and one investment news letter.

Forbes was one of the best for business writing. I think I lost interest when the founder died, his son took over, and ran for president. I no longer miss it, although I do miss some of the columnists.

For literature, The New Yorker was THE best. I still remember some articles that I read thirty years ago. One I remember vividly:

Calvin Tomkins, Profiles, “NEW PARADIGMS,” The New Yorker, January 5, 1976, p. 30. 

To see the article now, I need a subscription. Too bad. Wow, that was back in 1976 -- 36 years ago: about as long as some Williston Basin oil wells have been producing. (All Bakken All The Time.)

I always looked forward to articles by Woody Allen, but they generally seemed to come up short.

I don't what it was that caused me to lose interest in The Atlantic.

About four years ago, maybe longer, I tried the WSJ again, and have subscribed off and on since then. I look forward to it every day (except Sunday, of course). Occasionally there are days it lets me down -- nothing of interest -- but most days its excellent, and some days it is outstanding. Today was an "outstanding day."

The review section in today's WSJ is absolutely chock full of book reviews:

• a book on atheism, which appears to be a trend this year (noted by the WSJ, not me): Religion for Atheists: A Non-Believer's Guide to the Uses of Religion, Alain de Botton
• a book about the resurgence of Al Qaeda, all but defeated by 2008: The Endgame, Michael R. Gordon and Bernard E. Trainor
• a book about Willy Sutton: Sutton, JR Moehringer; with a huge photograph -- a very dapper bank robber
• a new biography of General US Grant: The Man Who Saved the Union, HW Brands; it is said that the greatest autobiography ever written -- all autobiographies, not just military men -- was Grant's; I've read it twice; it is outstanding
• a biography of Hetty Green: The Richest Woman in America, Janet Wallach
• a new novel by Michael Kimball, Big Ray -- "a story of a father so crude, cruel, perverse, tawdry and mean that he makes Pap Finn look like Atticus Finch"
• a couple of reviews on the nuclear family in meltdown; review by Sam Sacks and then this little jewel buried in one of reviews:
• "... is not abetted by suburban affluence but by a discriminatory justice system. In 1988, on an Ojibwe reservation in North Dakota -- the setting of most of Ms Erdrich's previous novels, including...."
• an autobiography, Waging Heavy Peace, Neil Young (of Crosby, Stills, Nash and Young)
• science of the body: The Spark of Life, Frances Ashcroft
• AIDS: The Scientists, Marco Roth
• five personal recommendations from John Kelly, author (more to follow)

More to follow. [Update: I never did get back to this. Sorry.]

The Wild, Wild, Wild West -- Fly Into North Dakota At Your Own RIsk -- FAA: And They Are

Oilmen don't get where they are by being timid.

And a warning from the FAA that "flying into North Dakota is at your own risk" is probably not going to deter them (I blogged about my personal experiences earlier).

So many story lines at this link:

At Killdeer’s airport — maintained by a retired farmer and mostly with his own money — planes ferrying oilmen, workers and supplies are taking off and landing in record numbers, despite pilots being told by the Federal Aviation Administration to do so at their own risk.

The $300 million that will be needed to upgrade the airports is a drop in the bucket compared to all the federal money flowing back to the states, and it is not enough to bump North Dakota from 7th to 6th, but it would be a start. Smile.

Until then, the ranchers will manage their own airfields, I guess. What a great country.

Northward Ho! -- Great Video of "Ideal" Bakken Rig -- Huge Overview of the Bakken, September, 2012

This story sent to me by a reader. It's an incredible story. It will be linked at the sidebar at the right.
Link here to a drillingcontractor.org article.

There is an incredible video at the very beginning -- the AC Ideal Rig -- a National Oilwell Varco (NOV) rig.  Coming into Williston from the west is the huge NOV complex. I always wondered what they did; now I know.

The video also explains why there are so many cranes in the Bakken and why Borsheim Crane Service has gotten so big in Williston.

BE SURE TO WATCH THE ANIMATION AT THE END of this video. Sons and daughters will want to grow up to be geologists, roughnecks, truck drivers, and LEGO modelers instead of policemen and firemen!

Some data points from the article:

• In 2011, 2,017 new wells were brought online in the Bakken, a number that will be eclipsed this year with the addition of 2,800 wells. “Brand-new wells are seeing initial production rates of 900 bbls/day,” ... 
• Often characterized as a “layer cake” with sometimes complicated geology and long, extended-reach laterals with measured well depths as long as 22,000 ft, the Bakken has served as a proving ground of sorts for rig designs and technology that take into account everything from the geology and well profiles to weather, manpower challenges and lack of infrastructure. 
• The company also has adopted a drilling wells on paper (DWOP) practice that breaks down the drilling operation into a series of processes, with rig crews focused on achieving the maximum technical limit for each stage. The program has resulted in a reduction of up to seven days in drilling time, ...
• But the play is just one of seven petroleum systems, or “pools,” that have been identified in the Williston Basin, suggesting “huge potential in upcoming years, much more than just the Bakken,” said Dr Steve Sonnenberg, professor of petroleum geology at the Colorado School of Mines and chair of the Bakken Research Consortium, a group of 35 companies researching the various aspects of the play. 
• Encompassing much of North Dakota, parts of South Dakota and Montana and extending into Saskatchewan and Manitoba, Canada, the Williston Basin was deposited in the late Devonian and early Mississippian periods. The basin also includes the shallower Tyler play, where the first horizontal test using Bakken drilling technology is planned for Q4 this year; the deeper Mission Canyon and Red River plays; Duperow; Winnipegosis and Winnipeg Group. 
• Operators also have conducted exploratory drilling in the Exshaw formation in northwestern Montana and Alberta, a region formed at the same time as the Williston Basin with very Bakken-like organic shale.

I will leave it at that, but the article is full of information about the Bakken boom. I'll find a place to link it on the sidebar at the right. It's that good.

When I read an article like this, it reminds me that the Bakken boom is not like any previous boom. The companies may be very, very competitive, and very, very secretive, but they are sharing "something" -- the Bakken Research Consortium and well as the UND geology folks (the geology school will soon have a new name, I think) are working behind the scenes to solve common problems. It really is very, very exciting. 

Google It And Follow The Money Trail

Updates

September 30, 2012: It may be more than just the UAE funding environmental groups in the US trying to stop tracking. Now there is a report that Russia might be proving funding for anti-fracking environmental groups in Europe The dots are starting to connect. This is very, very interesting. Link at CNBC. Same story at Yahoo/AP.

Pace's work for Gazprom has raised some eyebrows in Washington, and Hill noted that industry watchers in Europe already believe Russia is bankrolling environmental groups that are loudly opposing plans for fracking in Europe, which could cut down on Russia's natural gas market.

Original Post

This the advice I have given my daughters over the years:

• If you don't know the answer to something, google it.
• If something doesn't make sense to you, follow the money trail.

Those two pearls of advice came back to me today when I posted the following today (literally just a "cut and paste" of something I posted earlier). If it doesn't make sense as posted, go to the links:

From an earlier post, earlier today, September 28, 2011: 

Later, 7:07 pm: this is getting weirder by the moment. Now this story (sent to me by a reader, thank you), regarding the movie about fracking, Dimock, EPA, and starring Matt Damon.

While left-leaning Hollywood often targets supposed environmental evildoers, Promised Landwas also produced “in association with” Image Media Abu Dhabi, a subsidiary of Abu Dhabi Media, according to the preview’s list of credits. A studio spokesperson confirmed that AD Media is financing the film. The company is wholly owned by the government of the UAE. 

Original Post

Fracking, Dimock (Pennsylvania), EPA, Matt Damon, and all that jazz: perhaps the best link of the day, from a reader's comment. Thank you. See update above, dated "later, 7:07 pm." This is getting really, really weird. But at least we're starting to find out who is backing anti-fracking in this country. 

***********************

Bigger story: I wish I could post some other dots that connect, based on the above, but better part of valor tells me to leave that alone.

Twenty-Two (22) New Permits; Permitting Hits A New Record -- The Williston Basin, North Dakota, USA

Wells coming off the confidential list today were posted earlier; see at the top of the sidebar at the right.

One producing well was reported as completed:

• 19655, 283, Baytex, Jorgenson Federal 2-15H, West Ambrose, t8/12; cum 6K 7/12

And twenty-two (22) new permits were issued:

• Operators: KOG (6), XTO (6), BEXP (4), Hess (4), Zenergy, Whiting, 
• Fields: Hoot Owl (Golden Valley), Heart Butte (Dunn), Ragged Butte (McKenzie), Rosebud (Williams), Twin Buttes (McKenzie), Robinson Lake (Mountrail)

Comments: 

These are the two wells in the same section where XTO has six new permits:

• 19940, 1,196, XTO,  FBIR Yellowwolf 21X-10, Heart Butte, t1/12; cum 73K 7/12;
• 19948, 2,106, XTO, RBIR Ironwoman 21X-10, Heart Butte, t12/11; cum 65K 7/12;  

These are the two wells one mile east of the section where KOG has six new permits:

• 19925, 609, KOG, Charging Eagle 15-22-15-4H, Twin Buttes, t11/11; cum 94K 712; 
• 21069, 553, KOG, Charging Eagle 15-22-15-3H3, Twin Buttes, t11/11; cum 81K 7/12; 

MDW posted this September 25, 2012: 

Right now, the most interesting metric is the number of new permits each month. A record was set this most recent month (July, 2012) and I suspect we are going to see some more records. According to the Director's Cut, there were 266 new permits in July, 2012 (surpassing the old record of 245 set in 2010). My records show 261 new permits in August but I don't count SWD wells, so maybe a new record in August. For September (only 30 days) we are on track for 253 new permits; it won't be a record but it will beat the 2010 record. 

Update: The state issued 272 permits for oil wells in September, 2012. September was a short month (30 days); the last two days were weekend days, and there were no permits issued on the first three days. So, 272 permits, a record in itself, and in a very short month.

President Orders Chinese Firm To Divest Itself Of Wind Farms in Oregon

First time in 22 years that the president has blocked a legitimate business deal, "they" say. Basis for rejection of the business deal: national security. (It should be noted that Michelle is also on record that obesity is a national security issue which is unrelated but, for some, adds another dimension to the story.)

Citing national security risks, President Barack Obama on Friday blocked a Chinese company from owning four wind farm projects in northern Oregon near a Navy base where the U.S. military flies unmanned drones and electronic-warfare planes on training missions. 

This story has so many story lines, one does not know where to begin.

But this is one of the story lines:

In his decision, Obama ordered Ralls Corp., a company owned by Chinese nationals, to divest its interest in the wind farms it purchased earlier this year near the Naval Weapons Systems Training Facility in Boardman, OR.  Ralls asked for a restraining order and a preliminary injunction to allow construction at the wind farms to continue. 

The firm said it would lose the chance for a $25 million investment tax if the farms were not operable by Dec. 31.

Additional background here.

What little I know about these wind farms is that they are built for tax advantages for larger corporations, and when the tax advantage has run its course, the wind farm is re-sold. Whether or not they eventually turn a profit or not without tax breaks, I do not know.

It will be interesting if anyone steps into buy the Chinese position, especially in light of fact that the tax incentives are not likely to be renewed by the end of the year.

Good, bad, indifferent. It is what it is.

Whiting Bills Itself As The Low-Cost Driller -- Now, a Report From Reuters

Updates

Later, 8:34 pm: a reader noted this -- my bad; I missed it. The linked story is over a year old, published by Reuters back in early 2011. I missed that. I apologize to readers. Interestingly, it seems "we" are talking about the same problems, and the costs of drilling seem to be in the same ball park.

Original Post

Link here to Reuters.

For several months now, at their corporate presentations (and perhaps in the earnings conference calls; I don't recall) Whiting advertises itself as the low-cost driller in the Bakken. And now there's a Reuters story that seems to confirm that.

This a great article, sent to me by a reader (thank you).

Just the other day I posted prices of sand, resin-coated sand, and ceramics (from another source which I cited).

When you read the article, focus on two things: cost of prop pants, and cost of trucking. MDW has blogged that EOG has its own sand mines out-of-state.

MDW also posted a link to a story regarding the continuing shortage of truck drivers.

Some data points from the article:

• costs of wells in the Bakken: due to sand -- KOG
• KOG: $9.5 million/well
• WLL: $6 million/well
• WLL: greater use of sand

In some cases, sand has been so difficult to "get," companies have been forced to switch to larger amounts of ceramics (just out of necessity):

As for the ceramics mix, Abraxas Petroleum Corp  CEO Robert Watson said he aimed to use an average of 40 percent ceramics on Bakken wells. But on a recent well, Abraxas was forced to inject 60 percent ceramics because flooding had prevented a shipment of sand from arriving in the region.

And for investors:

Whiting believes it is the largest customer for Halliburton's white sand in the region, since it has their crews committed to its wells, Whiting CEO James Volker told Reuters on the sidelines of the IPAA conference in San Francisco. At $6 million per well, and $80-per-barrel oil, he told investors that Whiting could expect at least a 3-to-1 return.

The Oil Drum folks might want to read this article.

No More Blogging Until Later This Evening

Brazil: One Might As Well Write It Off -- Another Lost Decade

Updates

January 10, 2014: note the remarks below -- in which I allude to the fact that I avoided investing in shares in Petrobras as soon as it occurred to me that the country wouldn't risk its sandy beaches. Now an update: Brazil's oil euphoria hit reality hard. The Washington Post is reporting:   

When fields said to hold billions of barrels of oil were discovered off the coast here, exuberant government officials said the deep-sea prize would turn Brazil into a major energy player.

More than six years later, the outlook for Brazil’s oil industry, much like the Brazilian economy itself, is more sobering. Oil production is stagnant, the state-controlled oil company, Petrobras, is hobbled by debt, and foreign oil companies are wary of investing here.

Original Post

 

On September 19, 2012, MDW linked a Forbes story and posted the following: Unless the federal government regulates fracking across the board, the Bakken continues to look very, very good. How good?

Read the article Don sent from Forbes magazine.

The Bakken is not mentioned but these plays are:

• the Arctic: the Dutch can't help but notice that Shell has given up drilling this year; the company has spent $5 billion (with a "b") so far "scratching the surface of the Burger A well; permits not in place to develop Beaufort wells (the "permitorium" problem); paid $2 billion (with a "b") back in 2008 for the rights to this debacle; 
• the Gulf of Mexico: "BP's terminal experience" -- 'nuf said 
• Canadian oil sands: "very tetchy local legislators" 
• off-shore Brazil: MDW wrote this play off long ago; country won't risk white sandy beaches; 
• Russia: "where the biggest unconventional challenge rests"; operators simply don't trust Russia -- Forbes 
• China: the state oil companies will resist foreign intrusion (except for the technology)

And now today this story: Brazil gives Chevron and Transocean 30 days to halt all drilling off-shore.

This  to a Motley Fool story and anyone who hasn't written off Brazil as a dependable country for developing its oil and gas resources is also a fool.

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The End of Love, Anna Abreu

North Dakota Rigs: Who Is Drilling And Where Are They Drilling

County:

• Billings, 2
• Bottineau: 1
• Burke: 6
• Divide: 11
• Dunn: 30
• Golden Valley: 2
• McKenzie: 70
• Mountrail: 29
• Stark: 7
• Williams: 32

I knew McKenzie was busy, but did not know it was this busy compared to Mountrail and Williams. As one can see, if the Canadians really get serious about drilling the Spearfish in Bottineau County, the daily active rig count could change dramatically.

When the going gets tough, the tough get going:

• Abraxas: 1
• American Eagle: 2
• Baytex: 2
• BEXP: 15
• BR: 8
• CLR: 15
• Cornerstone: 1
• Crescent Point Energy: 2
• Denbury Onshore: 4
• Enerplus: 3
• EOG: 5
• Fidelity: 5
• G3 Operating: 3
• GMXR: 1
• Helis: 2
• Hess: 17
• Hunt: 3
• KOG: 8
• Liberty Resources: 2
• MRO: 7
• Murex: 2
• Newfield: 3
• Oasis: 8
• OXY USA: 6
• Petro-Hunt: 10
• QEP: 3
• Samson Resources: 3
• Sequel: 1
• Sinclair: 1
• Slawson: 3
• SM Energy: 4
• Surge: 1
• Triangle: 3
• True Oil: 1
• Whiting: 18
• WPX: 6
• XTO: 5
• Zavanna: 1
• Zenergy: 4

Comments:

• May not add up to 190 because I did not include salt water drillers.
• This is a snapshot in time; it could change by this afternoon.
• At least one rig will be moving to Montana after it drills the current well: Oasis Nabors 177. 
• WPX's Nabors 486 will be stacked after the current well is drilled.
• BEXP's Nabors 254 will be stacked after the current well is drilled. 
• Destinations for most wells are listed as "undetermined." It is a very rare well that has its destination posted. 
• Data from NDIC website, September 28, 2012, 1:52 p.m.

Homeland Security: The New Conduit for Federal Funding for States

Chester gives the MDW a lot of grief for all the federal funding North Dakota receives. It turns out CNBC provided a list today of the states that receive the most federal funding, ranked per capita. North Dakota does NOT even make the top five! I was sure, based on all the comments sent to me by Chester, North Dakota would be number one. It's not. Doesn't even make the top 5. Smile.

Turns out North Dakota is #7.

Number 4 is the president's home state: Hawaii.

Number 5 is the home of major Pentagon contractors: Virginia.

Number 1 is home of a lot of northeast US snowbirds: Florida. It’s similar to second-place Louisiana in that one of the 10 prime awards it received went to the Health and Human Services, and the rest to Homeland Security. In case you missed that, nine of the ten prime awards went to Homeland Security.

Number 2 is Louisiana but Louisiana seems to be an out-lier. Remove Louisiana from the list and North Dakota will rise a notch. Louisiana is number 2 because ... Of the top 10 prime awards that it received, one went to the Health and Human Services and the rest to Homeland Security. But of note: not only was it number 2 based on per capita federal spending but it was number five in overall spending.

And number 3 is South Carolina. That's surprising. Why would that be? Let's look: As with Delaware and Hawaii, all of the top 10 prime awards went to Homeland Security. Back to Hawaii: In fiscal year 2011 all of the top 10 prime awards allocated to Hawaii went to Homeland Security. This federal agency received a total of $12.4 billion, more than half of the entire amount of federal dollars given to the state. Of the major agencies receiving prime awards, the Social Security Administration came in a very distant second place to DHS. Its award of $3.2 billion was just over a quarter of what DHS received.

Maybe I'm misreading this, but I was quite surprised that Homeland Security is the new conduit for federal monies. Amazing. At $8 billion or so from the Federal government, North Dakota's share is paltry compared to the rest.

Another inconvenient truth. North Dakota residents can feel a bit less guilty about all the federal monies they receive.

***************

By the way, this is not idle chatter. Cottage industries have grown up around the country helping state governments tap into federal funding. At universities, an important skill set is knowing how to procure federal funding.

Did The Japanese Beat the Chinese to the Bakken?

I keep waiting for news that the Chinese state oil company, CNOOC, has come to the Bakken. But it looks like another Asian company may have gotten here first (yes, I know Chinese ceramics are all over the Bakken, but I am not aware of a Chinese company actually operating in the Bakken, but I could be wrong). But I digress.

Matheson Tri-Gas is in the process of establishing a facility just outside Dickinson's city limits to provide pure nitrogen for use during the casing aspect of the hydraulic fracturing process.

MTG is headquartered in New Jersey. It is a subsidiary of Taiyo Nippon Sanso, a large Japanese corporation.

See link at the Dickinson Press/InsideClimate News.

Matheson Tri-Gas has quite a history; very interesting; as is its parent company.

PBS Series on "Boomtown" Williston

In case some readers don't read the comments, this is a comment that was sent in earlier today:

For a great “up close and personal” look at day to day living in “Boomtown” Williston, N.D., your readers should check out PBS News Hour’s American Graduate’s series video on September 27, 2012. 

JUDY WOODRUFF: Now to our American Graduate series on the high school dropout problem.Tonight, we explore the pressures on a public school system in a city that's unexpectedly benefiting from economic good times. Ray Suarez has our story from North Dakota. 

RAY SUAREZ: There is no better economic view in the U.S. than the one seen from above Williston, North Dakota. A rapidly expanding oil boom has taken root below, bringing with it widespread prosperity and an unemployment rate that sits at just 1 percent. This city's fortunes are in stark contrast to most of the nation. Real estate is profitable. Blue-collar jobs are abundant. And much of the globe, including Asia, the Middle East and Europe, is investing in the local economy. But as opportunities and new residents pour in, it is clear that Williston, home to 12,000 people just a few years ago, is dramatically changing. 

See http://www.pbs.org/newshour/bb/education/july-dec12/northdakota_09-27.html 

Also See PBS REPORT - AIR DATE: Aug. 7, 2012 North Dakota Boomtown Suffers Growing Pains Trying to Keep Up with Demand 

SUMMARY - As domestic oil production increases, towns like Williston, ND, struggle to meet demand for workers, housing and improved infrastructure. For some communities experiencing the benefits of an energy boom, rapid expansion comes with serious trade-offs. 

Ray Suarez reports See http://www.pbs.org/newshour/bb/business/july-dec12/boomtown_08-07.html 

And – 

September 27, 2012 at 11:09 AM EDT - In Rural Williston, ND, Bus Drivers Act as School's Eyes and Ears. By April Brown.

I always enjoyed Ray Saurez. I knew I would be viewing a good segment when he came on.

Friday Morning Links -- Most Of It: Nothing To Do With The Bakken; If You Came Here For The Bakken, Scroll Up or Down But Avoid This Post

Updates

Later, 7:07 pm: this is getting weirder by the moment. Now this story (sent to me by a reader, thank you), regarding the movie about fracking, Dimock, EPA, and starring Matt Damon.

While left-leaning Hollywood often targets supposed environmental evildoers, Promised Landwas also produced “in association with” Image Media Abu Dhabi, a subsidiary of Abu Dhabi Media, according to the preview’s list of credits. A studio spokesperson confirmed that AD Media is financing the film. The company is wholly owned by the government of the UAE. 

Original Post

Fracking, Dimock (Pennsylvania), EPA, Matt Damon, and all that jazz: perhaps the best link of the day, from a reader's comment. Thank you. See update above, dated "later, 7:07 pm." This is getting really, really weird. But at least we're starting to find out who is backing anti-fracking in this country.

**************

IPs for wells coming off the confidential list today have been posted; see sidebar at the top.

**************

Google Chinese slowdown idles US coal mines. This article is about metallurgical coal. It is a very, very sobering story. Front page story in the WSJ.

While many have blamed the downturn in the US coal industry on cheap natural gas supplanting coal and tougher environmental regulations, the slide in metallurgical coal demand has been equally devastating.

But voters seem to be content/satisfied. Polling continues to show four more years.

***************

What are the odds? The other night I met a nice young couple from Sri Lanka here in Boston area; he was working in the local area; she was his sister visiting the US for the first time. I knew a little, but not much, about Sri Lanka. So, today, p. D6 of the WSJ, a full page story on "tropical modernism in Sri Lanka." Almost as good as opening to a full page on the Bakken. Sri Lanka is a tropical paradise, and for Bakken oil millionaires, one can get a brand-new, 8,000 square-foot architectural masterpiece for 40 million rupees ($300,000).

****************

Google Obama trumpets revised job data.

For the first time since President Barack Obama's inauguration, the number of jobs in the US economy is higher than it was when he took office.

And voters seem to be content/satisfied. Polling continues to show four more years.

*****************

Google ObamaCare's tax raid on medical devices. --> RECESSION

Data point: the new health care bill places a 2.3 percent tax on medical devices -- call it  the US medical devices VAT. The tax...

threatens thousands of American jobs and our global competitiveness. It will also stifle critical medical innovation in the industry that gave us defibrillators, pacemakers, artificial joints, stents, chemotherapy delivery systems and almost every device we depend on to save lives. 

The 2.3% tax well be charge to manufacturers on each sale and takes effect in January. 

Many US device companies, in response, have already announced layoffs, canceled plans for domestic expansion and slashed research-and-development budgets. This month, Welch Allyn --- a make of stethoscopes and blood-pressure cuffs -- announced that it will lay off 10% of its global workforce over the next three years, but all of the jobs being cut are in the US. [Welch Allyn produces 90% of the medical diagnostic equipment sold in the United States. -- wiki]

And that's the point. Remember all the hand-wringing over NAFTA which essentially sent US textile jobs overseas, and killed that domestic industry -- at least that's what I've heard. I don't know. I don't follow the industry.

But Evan Bayh, a US senator from Indiana, a member of the president's party, says that the medical device VAT will force another US industry overseas.

I'm pretty sure this industry was headed overseas before the VAT. A 2.3% VAT on medical devices seems pretty inconsequential. If a medical device company cuts margins that close ...

What's the production tax and extraction tax on Bakken oil? I believe its 6 to 7% on each -- 12% total. Again, I could be wrong (see "welcome" and "disclaimer" posts regarding this blog). Maybe a grand compromise: the senators from "oil states" will vote for repeal of the medical device VAT if senators from "high tech" states vote for keeping the EPA out of fracking on state land.

I wonder what high-tech medical device company is located in Indiana that got Mr Bayh's attention?

Regardless of how this turns out, it appears not to be a big issue for voters. Americans seem pretty content/satisfied; polling shows we are headed for four more years.

*********************

Remember: An ISM reading above 50 -- expanding; an ISM reading below 50 -- contracting
See also: Business investment falls off a cliff -- November 19, 2012

The linked article has a lot of words and phrases we've come to expect from the mainstream media when reporting on current state of the economy; words like: "unexpectedly," unexpectedly contracted," "uncertainties surrounding domestic fiscal policy," "unemployment exceeding 8 percent for 43 consecutive months -- the longest stretch in the post-World War II era," etc. But here's the data points from the linked article:

• business activity in the US unexpectedly contracted in September for the first time in three years -- foreshadowing the Great Recession of 2013
• the ISM fell to 49.7; it was a whopping 53 in August -- just one month earlier
• expectations: median -- 52.8; range -- 50 to 54.54. No one predicted a contraction.
• this explains why the Fed acted -- QE3
• household purchases rose by 0.5 percent (GOOD); because prices increased 0.4 percent (BAD)
• the jump in prices was the biggest since March, 2011, (not March, 2012, but March, 2011) (BAD)
• unemployment exceeding 8 percent for 43 consecutive months; the longest stretch in the post-WWII era (REALLY BAD)
• household spending increased at a 1.5 percent annual rate in the second quarter, the lowest in a year (BAD)
• lingering concerns (Congressional dithering) about the January "fiscal cliff" are restricting business such as ATT and their long-term planning (BAD)
• taxes are going to go up and companies are looking at ways to cut costs

Bakken readers know that when oil companies look to cut costs, they lay down rigs (or at least that's the mantra).

But Americans are content/satisfied. Polling suggest we are headed for four more years.

The really good news: once these artificial chokeholds on American business are released, the pent-up demand for goods and services will be staggering. If the eight percent unemployed can just hang on for another four years.

********************

Speaking of VAT. There's been a lot of talk in Washington about a VAT. Won't happen. So, one way to get around a VAT: do it by industry. The medical device VAT is as good an industry as any to start.

********************

Marathon To Exit the Marcellus

Link to Rigzone.com.

Marathon Oil Corp. is putting its natural gas-rich acreage in the Marcellus Shale formation up for sale as it trims non-core assets, people familiar with the situation said.  

Marathon Oil is putting about 80,000 acres in West Virginia and Pennsylvania up for sale because the company doesn't consider them central to its growth plans, a person familiar with the company's plans said Wednesday. The company could realize up to $1,000 an acre, the person estimated, adding that a specific price hasn't been set yet.

Hmmm.

***********************

Reminds me a bit of Lily Allen's It's Not Fair:
Do I Love You, Hillbilly Moon Explosion

Human Interest Story and Why The Bakken Looks Better and Better

A reader sent me a link to a human interest story. It's a story about Suzanne Browne, a woman working in a man's world in the oil industry. Fascinating story.

For reasons that do not need to be explained, her comment caught my attention:

“There were a couple of years when operators didn’t want to drill in the Gulf during hurricane season,” she said. Dealing with the regulatory changes imposed after the hurricanes has been another challenge, as well as finding prospects when reservoirs on the shelf continue to deplete. “I think the Gulf of Mexico shelf is really going to be a challenge from here on out,” she said, but added that demand appears to have picked up in this hurricane season compared with the last couple of years. “We’ve had plenty of demand especially for our smaller 250-ft jackups,” she pointed out.

Regulations and depleting reserves.

Regulations. Hold that thought.

Then, if you have the time, before leaving that page at the link, move to the sidebar at the link, and about halfway down: GOM doomed as E&P dead sea under "Americanization" proposals. Then go to that story.

Regulations killing activity in the Arctic. The President kills the Keystone XL. Now, folks want to kill the US oil industry in the Gulf of Mexico.

The Bakken just keeps looking better and better from a drilling analyst's point of view. Who knows, maybe Suzanne Browne will find herself working in the Bakken before it's all over.

**********************

In case the link to the second story breaks or a subscription is required later, here is the opening:

Congressional proposals to “Americanize” offshore vessels in the US Gulf of Mexico will inevitably grind OCS development and production to a halt and result in massive layoffs across the Gulf Coast and throughout the nation. A plethora of bills in the US House and Senate, among them HR 5619 and HR 3534 (the so-called CLEAR Act) call for US flagging and 75% US ownership of the entire GOM fleet of drilling rigs, pipelay vessels, and construction and specialty vessels.  

While this seems consistent with “Buy American” bumper sticker logic, these requirements present huge obstacles to stable offshore development. For example, of the worldwide drilling fleet capable of operating in 400 ft of water or deeper, only one is US flagged. That rig is currently on contract outside the US, according to a joint-industry White Paper warning of the severe implications of this train of legislation. 

The bottom line:

Building a US fleet of offshore vessels in any reasonable amount of time is essentially impossible. US shipyards would require several years to install the infrastructure necessary to fabricate the massive hulls required for deepwater facilities, drillships and semisubmersibles. (Many jackups, however, are constructed in the US.)

Well, if it's just "many years," that's how long the permitorium will last anyway. Get building.

***********************

Accidents Never Happen, Blondie

Random Note on Cost of Shipping By Pipeline

This is an interesting story on numerous levels.

Data points:

• Mobil Pipeline, a unit of Exxon Mobil Corp reversed its Pegasus pipeline to carry crude - mostly Canadian - from Illinois to the U.S. Gulf
• Mobil requested permission to set rates rather than letting market set rates
• series of FERC reversals; bottom line -- FERC agrees with Mobil
• Mobil raises rate (tariff) from $1.57 to $5.09/bbl
• the case has implications for others, particularly Delta Airlines moving crude oil to northeast

Update on Williston's New $70 Million Recreation Center

Updates

June 7, 2013: A photograph of the recreation center under construction, at Vern Whitten Photography. When you get to the link, go to photo #13 of 31. 
 

Original Post

From the Williston Wire; no link; folks can subscribe to the Wire.

The Williston Park Board held a Special Meeting recently to approve the Guaranteed Maximum Price for the Williston Area Recreation Center.  

Groundbreaking for the new 224,000-square-foot Williston Area Recreation Center will be Monday, Oct. 8 at 4 p.m.  

JE Dunn & JLG Architects presented the base bid for the Construction, Soft and miscellaneous costs totaling $70,288,412. Some of the soft costs will be taken out of the project and paid through the operating fund of the park district in an effort to keep as much of the pool and other features.  

The Park Board approved adding the following alternates: the 50 meter pool at a cost of $1,920,070, the pool drain tile system for the instructional pool and leisure pools at a cost of $77,594.

Very, very exciting.

Eighteen (18) New Permits; Whiting With Three Nice Wells All In The Sanish;

Total active rigs: 189 (up slightly; holding steady)

Wells that came off the confidential list were reported earlier; see sidebar at the right.

In addition, four (4) producing wells were completed:

• 20392, 1,110, Whiting, Knife River State Federal 12-32TFH, Sanish, t8/12; cum -- 
• 22045, 278, Oasis, Acklins 6092 12-18H, Cottonwood, t4/12; cum 26K 7/12; 
• 22671, 1,006, Whiting, Fladeland 13-27TFH, Sanish, t8/12; cum --
• 22851, 1,437, Whiting, Estvold 41-26H, Sanish, t8/12; cum --

One permit was canceled:

• 21753, PNC, Petro-Hunt, Gilbertson 157-101-13B-2-1, a Red River well, Williams

Eighteen (18) new permits:

• Operators: Samson Resources (4), Newfield (3), OXY USA (2), Helis, Sequel, Liberty Resources, Fidelity, Hunt, Aeon Energy, XTO, EOG, Oasis
• Fields: West Ambrose (Divide), Spotted Horn (McKenzie), Tree Top (Billings), South Tobacco Garden (McKenzie), Red Wing Creek (McKenzie), St Anthony (Dunn), Stanley (Mountrail), Parshall (Mountrail), North Maxbass (Bottineau), Heart Butte (Dunn), Squaw Creek (McKenzie), Cottonwood (Mountrail)

Comment: this is the first time I've heard of Aeon Energy. According to the NDIC site, Aeon has nine (9) permits going back to 1980 (a dry well); three other permits were cancelled; two have been permanently abandoned; one has been converted to a salt water disposal well; that leaves one active well from 2003 (#11743, a Madison well, unremarkable) and one confidential (#23932).

The following wells come off the confidential list tomorrow:

• 21581, 336, Arsenal Energy, Wade Morris 10-3H, Stanley, t7/12; cum 19K 7/12;
• 21758, A, Whiting, Oppeboen 21-5TFH, Sanish, no test date; cum 10K 7/12;
• 21759, 368, Whiting, Oppeboen 21-5H, Sanish, t3/12; cum 50K 7/12; 
• 22385, 839,  Crescent Point, CPEC Elgaard 32-31-164N-100W, t7/12; cum  --; 4 section spacing;

Random Note on Job Losses in California -- High Costs Cited

Two announcements out of California this week: Campbell Soup to close its Sacramento plant; Comcast to close three call centers. Campbell Soup and Comcast both cite high costs.

Campbell Soup: will cost 700 jobs in Sacramento; most of Sacramento’s production of soup, sauces and beverages will be shifted to Campbell’s three remaining thermal plants in North Carolina, Ohio and Texas.

Comcast: will cost 1,000 jobs at three call centers.

The announcement comes just two days after Comcast announced it will close all three of its call centers in Northern California, including one is Sacramento, because of the high cost of doing business in the Golden State.

I assume part of the high costs associated with the Campbell Soup facility had to do with an old, inefficient facility. Harder to make that same case for the call centers.

So many story lines. Very, very sad for the folks affected.

**********************

Earlier I had come across a study of the California exodus but did not post it; it seemed too far afield of the Bakken, but after reading the above, a reader sent me the link. That story now seems very, very fitting and perfect for posting.

The link: http://www.manhattan-institute.org/html/cr_71.htm#.UGUErLT3D-Z

American Eagle Provides Update

Updates

September 29, 2012: I finally got back to this post and updated it with some data points. Two interesting comments: a) note that folks are talking about declining rig counts, and here's a company that will be adding a rig; and, b) a successful well has extended the proved productive edges of the field to to the north and the west

Original Post

Link here.

A huge "thank you" to a reader. I would have missed it.

If the link breaks, google:
American Eagle Energy Ramps Up Bakken Drilling Program

Some data points:

• drilling and casing its first middle Bakken well, Silas 3-2N; Colgan oil field, Divide County; 
• the drilling rig at that location, skidded and drilling the Haagensen 3-2 well, the first infill Three Forks; located between the Cody 15-11 and Coplan 1-3 producers
• has contracted a second drilling rig for a minimum 4-well program designed to accelerate development of the Three Forks reserves
• Megan 14-12, the first infill location in the Christianson 15-12 spacing unit, was spud
• two rigs: company will be able to drill and complete six more wells by year end
• should meet/exceed 2012 exit rate target of 1,000 bopd net
• Anton 3-4 and Elizabeth 3-4N, drilled from common pad, completed in early September; both Three Forks; extended the proved productive edges of the field to the north and west

Fracking May Be Good For The Environment -- Document Next Monday, 5:00 PM Eastern; And Federal Judge Rules Against NY ATTNY GEN Trying To Shut Down Fracking

From a reader:

Folks may be interested in "Money" with Melissa Francis on Fox Business News caught my attention. At 5:00 pm Eastern they will be discussing how fracking is good for the environment. Sounds intriguing.

Put this on your calendar. It does sound intriguing.

******************

And then this little item:

A federal judge in Brooklyn dismissed a lawsuit filed by New York Atty. Gen. Eric T. Schneiderman seeking a court-ordered comprehensive environmental analysis before the Delaware River Basin Commission ssues anticipated regulations that would cover hydraulic fracturing in the watershed. 

US District Judge Nicholas Garaufis, Eastern District of New York, ruled Sept. 24 in favor of the US Army Corps of Engineers and the US Environmental Protection Agency, both of which wanted the case dismissed. Garaufis cited procedural reasons for dismissing the lawsuit, filed last year.

Good, bad, or indifferent, it is what it is.

Ford Selling Cars To Themselves in Europe -- Obviously a Non-Bakken Story

Wow, this is interesting.

Auto sales are so challenging in Europe, Ford dealers are now buying Ford vehicles -- "self-registration," it's called, and then they turn around and sell them at a huge discount as used vehicles. Something like 30% of "new European vehicles sold" in Europe are apparently being "self-registered" and sold at huge discount as used cars.

I am not aware of this ("self-registration") in the US (except on a very small basis with "legitimate" sales to dealers) but it sounds like something of which I could take advantage if offered.

Another Wind Turbine Manufacturer In North Dakota Laying Off Employees

Updates

October 3, 2012: LM wind power is taking its ball and going to a new field. Data points:

• the 300 jobs lost in North Dakota will be moved to Brazil, new factory
• wind farms in South America will start getting turbine blades in about a year
• the company says there is a strong growth in wind power in South America; just the opposite in North America

Original Post
Link here to The Bismarck Tribune. Data points:

• LM Wind Power, Grand Forks, ND; company based in Denmark; a facility in GF since 1998
• layoff will affect 200 full-time, 130 temporary
• 270 people will still be employed; in 2007: 900 workers in the Grand Forks facility
• LM Wind Power says demand for new wind power development in the US will likely drop 70% in 2013

Things could change overnight if federal tax credit, which expires at end of year, is extended.

Tectonic Changes in Power Consumption in America

As mentioned earlier, I no longer watch television except NASCAR on the weekends if I can catch it somewhere. And some football. Of course, there are exceptions.

Instead, I spend an inordinate amount of time on my iPad.

Big-screen television would cost about $50 / year in electricity costs.

So, how much to charge an iPhone for a year? 41 cents. Yup, 41 cents.

The iPad: about $1.36.

Interestingly, the Android Galaxy S III is a huge energy hog in comparison to the new iPhone: the Galaxy S III would cost almost 30% more than the iPhone for annual electricity. I wonder if the faux-environmentalists will recommend the iPhone over the Galaxy based on the amount of electricity that the Galaxy uses, compared to the iPhone?

The Only Known Photo of Karl Marx and Barack Obama Together

Link here.

Making the rounds.

Random Update On Today's Spot Price for Bakken Light Sweet Oil At Clearbrook, MN -- September 27, 2012

Updates

January 7, 2018: NDIC uses price data provided by Flint Resources for the monthly Director's Cut.


May 8, 2013: After Bloomberg removed Bakken pricing, I was unable to find any source for Bakken pricing without a very expensive subscription. One can occasionally find updates at Clearbrook News.

Original Post

Pricing.

A while ago one could get the spot price of Bakken light sweet at Clearbrook, Minnesota, and then that link was taken down by Bloomberg.

Until I find another or a better source, this is about the best I can do:

• Bloomberg Clearbrook, MN, chart for Bakken differential
• Bloomberg WTI, Cushing (if you combine the previous link with this link, you should be able to get Bakken price at Clearbrook, MN)

If I am reading the links correctly, this is what I get:

• From the first link, Bakken is pricing at a $2.25 premium to WTI.
• From the second link, WTI Cushing spot is $91.22. 

**********************

Note to the Granddaughters

I've talked about this book before; I'm still reading it: Simon Winchester's Atlantic. Have you ever wondered where the "sterling" in sterling silver came from? I never gave it a thought. But here's the answer.

In the 13th century, merchants in northern German organized their Atlantic oceanic business to protect their trade in salt fish. The merchants formed themselves into what they called a Hanse -- after the Latin term hansa for a military troop or company; the immediate precursor to the Hanseatic League was created in 1241. 

"Hansa" remains with us today: Lufthansa Airlines. 

According to Winchester, in Atlantic, pp. 277 - 278:

London was a western outpost of the League. The Britons who did business with the Hansa found them trustworthy and reliable. According to many lexical authorities, the word that Londoners used for traders from the Hanseatic eastern cities -- easterlings -- became shortened and incorporated into the English language as the word sterling, with its implied meaning of solid reliability.

So, there you have it. Something for tomorrow evening's cocktail party.