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Thursday, April 26, 2012

Another Revenue Stream for Mineral Rights Owners

Back on September 28, 2011, I posted a story about a new liquid natural gas pipeline stretching between Tioga and Sherwood, North Dakota. At that time, my emphasis was on the need for additional housing for workers needed for all these projects in the Bakken. I wasn't even thinking about an additional revenue stream for mineral rights owners because I was not aware how "valuable" liquid natural gas was compared to dry natural gas.

Coincidentally, we now have a much better explanation of what this pipeline is all about.

RBN Energy has posted this story for Friday, April 27, 2012.

First, the key point from my September posting:
77-mile natural gas pipeline to be buried between Tioga and the Alliance mainline at Sherwood, North Dakota, on the Canadian border. Aux Sable Liquids Products has a natural gas liquids processing plant in the Sherwood area.
Now, from the RBN Energy article:
But there is another way of getting NGLs out of the Bakken.  It is an alternative with significant advantages, but does not seem to get the airplay of some of the other projects.  And that’s because it doesn’t fit neatly into one of the traditional hydrocarbons asset buckets.  It is not an NGL pipeline, but it moves 80,000 barrels of NGLs each day.  It takes wet gas with only superficial processing, but processing is an integral part of the integrated system.   It has one operational lateral already moving product out of Mountrail and Ward Counties, and has another lateral going into the Tioga plant next year.  Of course, this is the Alliance Pipeline - Aux Sable system.

In June 2011, Alliance Pipeline announced plans to build an 80 mile lateral pipeline and associated facilities connecting Hess’s Tioga, ND gas processing facility to the Alliance Pipeline near Sherwood, ND.  The line will have a capacity of 106 mcf/d and is expected to be in service by July 2013.
Dry natural gas: < $2.00/MMbtu.
Liquid natural gas: >$13/MMbtu.
I do not even recall this in the monthly Director's Cut.

For Investors Only: Another Look At CRR

In light of my earlier posts on Liberty Resources, one might be interested in re-visiting CARBO Ceramics (CRR).

Earnings report.

Transcript.

5-year chart.

52-week range: $85 - $185. Today's close: $87, down $2.00.

Another superficial Motley Fool article, but a viewpoint.

Human Interest Article From the WSJ -- Williston, North Dakota

Earlier today I posted a very small opinion piece from the Wall Street Journal. In that opinion piece, the editor notes that the Williston Chamber of Commerce is no longer answering its phone.

It turns out that a WSJ staff writer had written earlier that the Williston Chamber of Commerce was no longer taking phone calls. Here's the story. A subscription may be required to access the article but generally googling the headline will get you the article: "Oil Fuels Population Boom in North Dakota City."

There is nothing in the article that regular readers don't already know but it's fun to read the names of local people who were interviewed for the article, names Williston readers will recognize: Chuck Neff, Tim Conlin.

Highlights From the Newfield Earnings Transcript

Link here.

Regarding the Bakken:
In the Bakken play, our operations are gaining steam after our brief slowdown in late 2011. This slowdown allowed us to reduce the backlog of uncompleted wells and improve our execution in the field. From the beginning of the year, we have completed 8 new wells. The average initial production rate from these wells was more than 2,600 barrels of oil equivalent per day. With the exception of one well, these were all super extended lateral wells. The one 5,000 foot lateral was actually one of the higher IP rates at nearly 3,000 barrels of oil equivalent per day. We expect that our Bakken production will grow about 35% over our 2011 levels.

Our drilling team is transitioning our operations to pad-based drilling in 2012. About 2/3 of our planned wells in the Bakken will be from multi-well pads. Our most recent laterals, 11,000 feet in total length with up to 40 frac stages, have been drilled in as few as 24 days. This compares to an average of 35 days in 2011 and more than 40 days in 2010. We've also reduced the number of days between rig release and first production, from 62 days in 2011 to about 40 to 45 days year-to-date.
The very first question: how much is a Bakken well costing Newfield? So in general, I'd say we're sitting at about 640 acres, somewhere around $6.9 million or so completed on a 12 80; 10,000-, 11,000 foot lateral, somewhere around $11 million or so.

Data Points Regarding Liberty Resources: Linked Article Is A Must-Read

Liberty Resources: fracking expertise

I post a lot of stories every day, and don't always get a chance to read everything I link. I finally got back to this story. If you have time to read only one story today, this is the story (at the link below) that I would read. My notes are from the first part of the linked article; much more at the link.

I'll know you've read the linked article if you can tell me what the breakeven price for a Bakken well is ($/bbl). I think newbies will be surprised.

The "nut" of the problem/solution:
While we have great confidence in our ability to design fracture treatments for the Bakken, execution represents a potential problem. The rapid growth in demand for hydraulic fracturing services has led to three things: 1) constricted availability of supply to get wells fractured; 2) high prices for fracturing services; and 3) relatively low service quality. Based on our background in oilfield service and supply, we decided to form a company that could supply these services in a timely fashion with high quality and reliability. In March of this year, we formed Liberty Oilfield Services, which recently began fracturing operations in Williston. Liberty Oilfield Services will be the fracturing entity for the majority of our development. We have had great early success in building the team for this company, starting with hiring two individuals we knew well as our service leadership: our business manager for Liberty Oilfield Services has a PhD in hydraulic fracturing, and our operations manager has a distinguished career in operational excellence. 
Link to article.

I blogged about this the other day. I said I would get back to the article if I had time. Here are some data points from the first part of the article. Go to the link for a whole more.
  • Chris Wright wanted to start a new company: felt he could assemble a team with expertise in fracking
  • CEO feels that fracking will be the discriminator in the Bakken (cost and effectiveness)
  • Mark Pearson: former president and CEO of CARBO Ceramics, the world's largest manufacturer of proppants
  • Paul Vitek: was CFO for CARBO Ceramics for more than 20 years
  • Liberty Resources is a portfolio company of Riverstone Holdings: had the resources necessary for the Bakken -- moving too rapidly to rely only on funding from individual investors
  • first land acquisitions with Zavanna, LLC
  • improved Zavanna's well performance by a factor of 2 or 3 times
  • Liberty Resources now has nearly 44,000 net acres in the central basin of the Bakken -- all of this since founding the company in September, 2011
  • who is the operator of these wells? 2 Liberty Resources wells; 2 Zavanna wells; controls drilling and fracturing of all four wells; 20% of our development is non-operated


Data Points From WLL's Earnings Transcript -- 1Q12

Data points from WLL's earnings transcript, 1Q12 (some numbers rounded):
  • 1Q11 production at high end of guidance; nearly 15% increase sequentially
  • will raise full year guidance despite conveyance of 4,500 boepd for Whiting US Trust II (WHZ)
  • project 17 - 22% growth increase for 2012 over 2011 (vs forecast of 15 - 20%)
  • reducing long-term debt
  • production now up to 81,000 boepd  
  • the Bakken: >2,500 drilling locations; >10 years inventory at current pace
  • CAPEX: raised to $1.8 billion from $1.6 billion; represents high pace of activity in Williston Basin
  • the Bakken: 701,751 net acres; increased by 20,000 net acres y-o-y
Reservoirs:
  • Lewis & Clark/Pronghorn: Pronghorn Sand and upper Three Forks, with one (1) wellbore
  • Hidden Bench, Tarpon, Missouri Breaks, Starbuck: dual targets (MB and upper TF)
  • will test WLL's first lower Three Forks at Hidden Bench in May, 2012
  • EURs: 350,000 to 600,000
  • average cost of wells: $7 million
  • very upbeat on Pronghorn; preliminary results suggest similar to Sanish
WLL continues to lead all Bakken operators in cumulative production
  • 6-month production is 4,000 bbls BOE higher than 2nd-ranked operater
  • 6-month production is 27,000 bbls BOE better than average of the next 25 operators
Takeaway capacity for the Bakken area: > 1 million bbls by end of 2012; will expand by 412,000 bopd for 2012

Finance notes
  • some of the best cash margins "in the business": $49
  • for 2012, 45% hedged; $67 floors and $109 ceilings
  • 20% of well head natural gas in excess of $5.40/Mcf
Q&A
  • Joint Venture? that was the original plan, but results are so good, WLL may not want a partner
  • cost of a completed Niobrara well? drilling, $2 million; completion, $2 million; total: about $4.3 million
  • drilling inventory? in the Sanish, WLL has completed almost all of their middle Bakken wells; maybe 14 more middle Bakken wells in the Sanish to drill; the remainder will be TF wells
  • cost of a WLL well? $6 million Sanish; $7 million elsewhere
  • in the Pronghorn: fewer rigs will be needed, because all wells off of the pad; 2 or 3 wells/pad; save time on moving rigs
  • Pronghorn: could be 100,000 acres de-risked before it's all over
  • Missouri Breaks, the wells don't look so good? correct -- lower IPs, but smaller decline; EURs should be 300,000 to 340,000 boe range; well cost in Missouri Breaks? $7 million; hope to bring it down over time
  • rigs? 19 in Williston Basin
  • 7 rigs in the Sanish; will keep busy for 2, almost 2.5 years; 5 in the Pronghorn; 1 at Lewis & Clark; 2 at Hidden Bench; 2 at Missouri Breaks; and 1 in Starbuck. That totals 18.
  • Robinson Lake Gas Plant: netting $3 million/month (50% interest)
  • ability to acquire any more acreage in the Williston Basin? 60,000 to 80,000 net acres, maybe

Feds Back Off on New Child Labor Farm Rules

Link here.

Just yesterday I posted a note regarding this craziness.
Under heavy pressure from farm groups, the Obama administration is dropping an effort to prevent children from doing hazardous work on farms owned by anyone other than their parents.

The Labor Department says it is withdrawing proposed rules that would ban children younger than 16 from using most power-driven equipment. The rules also would prevent those younger than 18 from working in feed lots, grain bins and stockyards.
This is an incredible story on so many levels. 

Wow.

(A number of folks sent in comments that I did not post suggesting that I was making too much out of this story. Hmmm. The comments most likely came from technocrats working for the Department of Labor. The fact that the president himself got involved, suggested this is a bigger story than some realized.)

KOG: 2012 Sales Volumes; Updates Operations

Link here.

Data points (some numbers rounded):
  • averaging 10,578 boepd for 1Q12
  • represents nearly a 500% increase year-over-year; 50% increase sequentially
  • positive comments on reducing flaring
  • six rigs; a seventh by May, 2012
  • will add a second completion crew
  • Skunk Creek 9-2-3-5H, 1,939 bbls oil
  • Pankowski 4-6H, 1,312 bbls oil
  • Grizzly 149-104-15-12-1-2H, 901 bbls oil

Williston Tables Motion to Ban Living in RVs Inside City Limits

I guess I forgot to note this earlier. No link.

Williston had planned to ban living in RVs inside city limits. The city has tabled this motion while studying comments from city residents.

Three (3) New Permits -- The Williston Basin, North Dakota, USA

Daily activity report, April 26, 2012 -

Three new permits --

Operators: Petro-Hunt (2), Samson Resources

Fields: Lonesome (McKenzie), Fillmore (Divide)

Four wells released from "tight hole" status; none of them were completed:
  • 20546, DRL, CLR, Candee 3-9H, Dunn, Bakken
  • 21088, DRL, Hunt, Antelope 1-34-27H, McKenzie, Bakken
  • 21477, DRL, Hess, Johnson 1-3H, McKenzie, Bakken
  • 21579, DRL, Samson Resources, Nomad 6-7-163-99H, Divide, Bakken

Newfield Earnings

Link here.
Newfield Exploration Co. reported a first-quarter profit on Tuesday, reversing a year-ago loss as it increased production of oil and natural gas liquids by 35 percent.

The earnings beat analysts' expectations, and Newfield slightly raised its 2012 production forecast.

Net income was $116 million, or 86 cents per share, compared with a loss of $17 million, or 13 cents per share, a year earlier.

Without a loss on commodity derivatives, the company would have earned 91 cents per share.
Maybe some data points later.

Recent Statoil Presentation

Don suggests looking at slide 8 of the presentation to see the single mention of the Bakken in Statoil's presentation.

Starbucks? Absolutely Nothing To Do With The Bakken

Updates

Later, 9:00 pm: I see that after all that build-up on CNBC, Starbucks beat by one penny.  It looks like I will go out and celebrate tomorrow morning by having an old-fashioned doughnut and a small, black Tall Blonde at Starbucks on Harvard Square, Cambridge.

Original Post

I used to really dislike Starbucks. It's a long story; I won't go through that story again.

But having discovered the Starbucks at Harvard Square in Cambridge, I love it. I absolutely love Starbucks. At least this particular one. I have never thought about it much but, counterintuitively, the floor plans for Starbucks do not seem as uniform as one would expect in a franchise. When one walks into a McDonald's restaurant, it is, 9 times out of 10, exactly what one would expect. But that does not seem true of Starbucks.

The floor plans always seem to be different, but the atmosphere, service, and experience always seem to be the same Starbucks experience.

Having said all that, that I really enjoy Starbucks, is it just me or does CNBC seem to be preoccupied with Starbucks? I had a few minutes between child care responsibilities this afternoon, so I turned into CNBC. And there again, a long segment on Starbucks. Yes, I know that Starbucks is reporting after the market closes, and there's a lot of interest, but it seems between Starbucks and RIMM, CNBC doesn't talk about much else.

The market is up nicely today, after a nice yesterday, and even oil is up, and yet one would hardly know that. But we certainly know all about Starbucks.

Except for rare mentions on Jim Cramer, mentions of  any Bakken company on CNBC is a very, very rare event. As mentioned in earlier posts, CNBC seems to be doing its viewers a disservice. Thank goodness for Al Gore and his invention, the internet. Al Gore was appropriately recognized for his achievements by recently being inducted into the Internet Hall of Fame.

Nice Article On Liberty Resources -- The Bakken, North Dakota, USA

Liberty Resources

April 19, 2014: Liberty Resources II, LLC -- re-enters the Bakken in 2014. 53,000 net acres. 

Updates

April 19, 2014: Liberty Resources II, LLC, re-enters the Bakken; that press release was back in January, 2014; then an update on March 19, 2014; and now two items from the NDIC hearing dockets scheduled for April 24, 2014.

June 24, 2013Mike Filloon's analysis of the Liberty Resources acquisition.

May 1, 2012: Two wells converted to water injection.

April 29, 2012: a closer look at some recent Liberty Resources wells

April 27, 2012: daily activity report -- Paul Rankin transfers operator status fo 35 wells to Liberty Resources, Inc; all wells in Glass Bluff oil field. 

Original Post

Link here to Oil and Gas Financial Journal. Link to data points from the article.
OGFJ's editor, Don Stowers, recently spoke with the management team at privately held Liberty Resources LLC about their company's operations and plans for the coming year. Chris Wright is CEO; Mark Pearson is company president; and Paul Vitek serves as CFO. All three executives have extensive experience in hydraulic fracturing and well completion technology. Denver-based Liberty is a Riverstone Holdings portfolio company.
The headline:

Fracturing and completion expertise boosts Liberty Resources in the Bakken

Data points to follow, if I don't forget. 

Liberty is followed here; I may have to give it its own page.

A snapshot of Liberty Resources:

More Great News for The North Dakota to Texas Renaissance Zone

Sierra Club will block any attempt to ship liquid natural gas from Maryland.

I can hear the cheers all along the pipelines from Alberta, to North Dakota, through Oklahoma to Texas and New Orleans.

Nebraskans may be upset.

Googling "The North Dakota to Texas Renaissance Zone" suggests this site is the first to use the term, though credit goes to Meredith Whitney for the idea. At the time of the post, googling resulted in exactly one hit -- this blog.

It looks like ENB hit a 52-week high today.

Oil Tourism in the Bakken

Link here to Fargo Forum
“We explained that you can’t just drive up to some of these rigs,” she said.
Wasn't it Ronald Reagan who said, "Once you've seen one Bakken well, you've seen 'em all"?

When we were in England, nocturnal ghost tours were all the rage. I wonder if flare-sighting at night might not be a big draw in western North Dakota?

Another tourism pastime is filming big rig choreography at corner service stations built with Ford pick-us in mind.

Another favorite is counting oil tanks on an Bakken multi-well pad.

Another favorite, but not seen yet possible in the Bakken: counting the number of turbines not spinning when visiting a wind farm.

SEC Investigating CHK/CEO Holdings In Company's Oil Wells

Updates

Later, 11:00 pm: CHK to terminate "Well Program Pact" early

Original Post
Link here.

Two disclaimers:
  • for investors only; this is not an investment site; I simply post articles of interest to me regarding the Bakken (and a few other subjects) and leave the blog open for others to access
  • I have "no dog in this fight" as they say regarding CHK, but I know a lot of folks, especially around Dickinson, are following the story closely
Now from the link:
Reuters reported on April 18 that McClendon, who founded the company, had borrowed as much as $1.1 billion against his 2.5 percent interest in wells that he received under the company's "Founder Well Participation Program."

The company also said on Thursday that it would end that program in 2015, when the shareholder approval of the program that started in 2005 expires.
Oh, one other disclaimer: I have no opinion of CHK, good, bad, or indifferent, but in general, I am fond of "Big Oil." Without "Big Oil" it is unlikely I would have been picked up by those who had access to gasoline when I was hitchhiking in my younger days. But I am digressing.

My 6,667 Stand-Alone Post

I see that the previous post was my 6,666th post on this blog (my original Bakken blog was deleted in toto some years ago and I started over).

For newbies, it should be noted that I try to post 5 - 10 new, stand-alone posts every day (when not traveling), so be sure to scroll down when visiting the blog.

I also update a dozen or so previous posts on any given day.

Seventy-two percent of my content is driven by readers who alert me to stories I would have have otherwise missed.

99% of my posts and updates are about the Bakken. One percent of my posts and updates have to do with politics; Apple, Inc; green energy; global warming; etc. Many of my "commentaries" are not Bakken-related. I generally do not post comments to my commentaries. I generally post comments to Bakken posts. Interestingly enough, most comments are in response to my commentaries. I receive minimal feedback to all the Bakken information I post; most of the feedback is to note errors in something I have posted -- which I really appreciate. I want to correct errors as soon as possible.

I post non-Bakken notes because it helps put the Bakken into perspective. 

"Dial Williston For Jobs" -- The Wall Street Journal

From the print edition, page A14, opinion page.



Under "Review & Outlook" where the WSJ editors post short opinion pieces there is a 2-column, 3-inch piece titled, "Dial Williston for Jobs," with a subtitle: "Would someone please answer if Governor Cuomo calls?"

The lede:
The North Dakota shale boom is by now well known -- so much so that the Chamber of Commerce in tiny Williston (population who knows?) in the heart of the Bakken Shale has had to automate its phone system because it can no longer respond to individual calls or emails.
Someone at the WSJ dialed 701-577-6000 on Wednesday .... to request an information package ... but got a recorded response.

The opinion pieced noted that New York "still bars hydraulic facturing in the Marcellus Shale lest they offend the Manhattan greens."

The opinion piece was a request for someone in Williston to send Governor Cuomo an information packet on the Bakken.

For all it's technology prowess, I'm surprised the folks simply didn't go to the web, or visit my site. Smile.

Anyway, I'll be cutting out the little opinion piece and posting it on the refrigerator. (By the way, I was quoted in the WSJ some years ago -- what a hoot.)

Gasoline Engines Vs Coal-Powered EVs -- The Wall Street Journal

From the print edition of the WSJ: engineers cast wary eye on role of electrics (no link; from the print edition, but googling will probably get you to it).

Data points:
  • from a recent technology meeting in Detroit
  • senior auto executives offered a sharply skeptical view of EVs -- suggesting they will play a marginal role in the US market
  • will most likely remain confined to less than 10% of the market through 2025
  • "By 2025, we wee battery electric vehicles still with too long a payback, and inadequate range," attributed to vice president for powertrain engineering at Ford Motor.
  • GM chartist: comparing the amount of energy delivered by a given volume or mas of fuel -- lithium-ion batteries -- used by the Chevy Volt -- were ranked close to zero compared with gasoline and diesel fuels, which delivered the most energy for the least amount of weight and cost to the consumer
Chrysler data points:
  • conventional, gasoline-fueled internal combustion engine and transmission: 10% of cost of a $30,000 car, or about $3,000
  • Ford said the battery for the electric Ford Focus  cost $12,000 to $15,000 for a car that is priced at about $40,000, about $15,000 more than a petroleum-fueled Focus
Honda data point:
  • by 2025, a customer buying a plug-in hybrid could wait 10 years to recover the added upfront costs compared to a 2025 conventional engine
Other data points:
  • automobile executive focused on meeting new CAFE standards (54.4 mpg by 2025)
Two comments:
  • they are still talking about lithium batteries; newer technology could change batteries
  • the niche for EVs will likely grow, albeit a small niche
Remember: the magic number is 200,000

Note: this story was posted/linked earlier. In that post, the emphasis was first-time unemployment benefits claims: higher than expected.

This post is from the same story, the same link, but a different emphasis: new jobs.
 Employers added 120,000 new jobs to their payrolls in March, the least since October, after averaging 246,000 jobs per month over the prior three months.

"We seem to be chasing our tail with the labor market now with seemingly reported declines in weekly numbers coming from persistently higher levels week-after-week," said Andrew Wilkinson, chief economist strategist at Miller Tabak in New York. "Today’s reading also gives the uncomfortable drift upwards in initial claims the feel of a trend rather than aberration."
Trend?

Regardless, adding 120,000 new jobs after averaging 246,000/month for the past three months is a dismal data point. 

.... And Speaking of The Dismal Jobs Report Today ...

Not just bullish, but wildly bullish

Most investors have probably heard of Meredith Whitney, perhaps best described as Debbie Downer of Wall Street.

CNBC talking head noted "an area where she's wildly bullish":
"I am wildly bullish on the U.S. in particular markets...I think the U.S. market looks terrific (though) as a collective the U.S. market is not going to grow all together," she said during a "Closing Bell" interview.

"There's opportunity from Texas all the way up to North Dakota, and you can play every industry on that basis," she added. "It's the agriculture-commodity belt — also the Right to Work states. That's where businesses are moving because it's easier to operate and create jobs. So you see a massive demographic shift to those areas."
Those are her words, not mine.

A huge "thank you" to Don for sending me this little nugget. 

Her comments sound a lot like the post of January 21, 2011 (more than a year ago) when "we" compared North Dakota and Minnesota. If you go to the link, scroll down to the "original post."

The nut of that post:
For one thing, a very well-respected company and, should we say, an icon of Minnesota has recently expanded, building three new plants on the North Dakota side of the border. Warroad-based Marvin Windows and Doors has opened North Dakota plants in Fargo, West Fargo and Grafton.
  • Marvin’s John Kirchner explained why the firm expanded to North Dakota in the last several years: “The regulatory and tax climate in North Dakota ... tend to be more friendly toward the business." 
Also, Kirchner said, it takes too long to get state permits, delaying expansion plans. While pledging that “we are not going to walk away from Minnesota” and saying Warroad will remain Marvin’s home and biggest factory, North Dakota is a good location for company manufacturing plants, he said.
 I'm not going to take the time to link it, but the biggest news coming out of Minnesota in the last week or so, is a Minnesota senator joking about the state capitol at Bismarck -- the building, not the politics. I guess that's about all some have to offer.

First Time Unemployment Claim -- Unchanged -- Still Near 3-Month High -- Four-Week Average Rises At Highest in Three Months

Remember: the magic number is 400,000

Link here.

The lede:
The number of people seeking U.S. unemployment benefits remained stuck near a three-month high last week, a sign that hiring has likely slowed since winter
Data points:
  • weekly applications down 1,000, to 388,000; little changed from last week; last week's number --> highest since January 7, 2012 -- almost four months ago
  • four-week average: rose to 381,750
And then lots of yada, yada, yada.

XOM Earnings: Revenues Increase; Income/Share Drops

Link here.
Net income fell to $9.45 billion ($2 per share) vs. $10.65 billion ($2.14 per share) a year earlier. This is a decline of 11.3% year-over-year.

Revenue rose 8.8% to $124.05 billion year-over-year.

Exxon Mobil Corporation fell short of the mean analyst estimate of $2.09 per share. Analysts were expecting revenue of $124.76 billion.

RBN Energy: Looking at Natural Gas Production

RBN Energy link.

Remember all that talk about cutting back on natural gas production a couple weeks ago? I haven't hearad much since, and RBN Energy is suggesting the cutback was shortlived.
Check out those year-to-date numbers.  Dry production up 4.6 Bcf/d, or 7.7% versus last year.  That has kicked Canadian and LNG imports in the teeth, down -15% and -48%, respectively. 

Power burn (gas used for power generation ) is up year-to-date by an incredible 4.9 Bcf/d or 29%.  That is the only thing that is keeping this market afloat.  Because industrial demand is down slightly (by -1%) and residential/commercial demand is lower by -18%.  The obvious implication is that there is a lot more gas going into storage, and that is why the gas market is on pins and needles trying to figure out if enough storage capacity exists to hold all the inventory that will need to be stored by the time this injection season is over – and that’s sometime in November.

“But wait”, you say.  “What happened to all of those announcements from producers that were going to be cutting back supplies because of low prices?
There is a nice analysis of this at the link.