It's Not All Oil -- Check Out What's Going On In Fargo

Link over at CarpeDiem.com.

• Caterpillar
• Phoenix International, supplier to John Deere
• Monsanto
• Cargill
• Microsoft

And that's just a start .... and this is hard to believe:

...the oil industry is responsible for only 25% of the state's revenue collections.

I keep thinking back on the January 21, 2011, post comparing North Dakota and Minnesota.

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The Caterpillar data points

• August 1, 20111 press release from Caterpillar
• announced plans to "significantly expand its remanufacturing facility in West Fargo
• drive train components for large off-highway trucks and mining equipment
• final drives, transmissions, torque convertors, steering clutches
• $50 million investment; 225,000-square-foot addition
• construction to begin August, 2011; operations commencing in June, 2012
• will add ~250 new workers over three years; total workforce ~ 550 in West Fargo
• Caterpillar's two other remanufacturing facilities are in Singapore and Shrewsbury, UK

Monsanto expanded its West Fargo site in 2010

Cargill currently expanding

Reaffirming its commitment to the region, Cargill will rebuild and expand its oilseed processing plant in West Fargo. Completion of the engineering plans will determine the project's final costs, which are expected to total more than $50 million.

"The existing facility has served us well since we built it 30 years ago, and we are now looking at rebuilding it to meet the needs of our customers for the next 30 years," said Jaysen Schock, facility manager.

Construction is expected to start late fall 2011 with completion slated in time for the 2013 harvest. 

The stories go on and on and on.

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I find it interesting that so much of this is going on in North Dakota and around Fargo specifically.

Several things come to mind:

• location, location, location -- intersection of I-94 and I 29
• plenty of land

But one could say the same thing about locations right across the river in Minnesota.

I think it's the business-friendly state North Dakota advertises.

Week 19: May 6 -- May 12, 2012

Dickinson, Williston: permitting records 

Maximum production rate for the Bakken

Minot nixes major operations at new BHI complex 

Dickinson: largest man-camp proposed for the Bakken

Williston: Sand Creek Town Center groundbreaking May 10, 2012

Another pipeline in the Bakken: Tioga Natural Gas Liquids Pipeline (Hess)

EOG: First CBR Bakken Oil to Louisiana

Bakken companies Wylie Bice and RM acquired by Quality Distribution

Price points for oil.

Updating 2006 permits/wells -- results.

Updating 2007 permits/wells -- results.

Question regarding WAWS.

Back story of BEXP's "dry" Bakken well.

Six nice BEXP wells.

Some nice TF wells in southwest North Dakota

OXY adds to its string of wells with 2-digit IPs.

Target Logistics in North Dakota

Filloon's Update on EOG -- 1Q12 Earnings -- SeekingAlpha

Link here.

See other links regarding EOG's 1Q12 earnings at "Earnings Central."

China In Talks With North American Energy Companies For Oil, Gas

Link here.

China Petroleum and Chemical Corp., or Sinopec Corp., is continuously in talks with U.S. and Canadian companies to secure unconventional sources of oil and gas ....

Sinopec is speaking to companies besides Chesapeake Energy, Fu said. Rival China National Offshore Oil Corp. (CNOOC) recently bought stakes in Chesapeake's U.S. shale gas blocks.

Sinopec has been maintaining maximum output of refined oil products at its refineries to ensure domestic supply.

Although China cut the retail price of gasoline and diesel this week, Sinopec's refineries are still maintaining full levels of production ...

Six (6) New Permits, Another Nice BEXP Well -- The Williston Basin, North Dakota, USA

Daily activity report, May 11, 2012 --

Operators: CLR (3), EOG (2), OXY
Fields: Elk (McKenzie), Clear Water (Mountrail), Little Knife (Billings), Dollar Joe (Williams)

ERF renews permits for six wells in Dunn County:

• 20846, Axe, middle Bakken,
• 20847, Poblano, middle Bakken
• 20848, Vise, Three Forks
• 20849, Cayenne, Three Forks
• 20852, Anvil, Three Forks
• 20853, Habanero, Three Forks

Producing well now completed:

• 21325, 320, Denbury, Olson 34-19NWH, McKenzie

Whiting has seven more wells approved for confidential status, pretty much spread across the Bakken including the three Tiisto wells in Mountrail County.

Three wells were released from "tight hole" status:

• 19815, 126, Whiting, Mikes Creek 21-3TFH, Billings
• 20533, 554, Whiting, Leonard ones 11-8TFH, Mountrail
• 21431, 2,199, BEXP, Stallion 33-28 1H, McKenzie

Sunflowers -- ND #1; SD #2

Just after posting the winter wheat story, it is quite coincidental to post this story on sunflowers.

Data points, sunflower acreage:

• North Dakota: 760,000 acres
• South Dakota: 540,000 acres

Weather and flooding resulted in a loss of hundreds of thousands of sunflower acres last year in North Dakota, and it cost the state bragging rights to South Dakota.

The acreage in North Dakota this year represents a 30 percent increase over last year.

Coal Is Now Part of "All-The-Above" -- POTUS

Despite the claim by his vice president that "coal power is more dangerous than terrorism," the president (under duress?) has added coal to his "all-of-the-above" list of energy sources for the US.

The Obama campaign added a section on “clean coal” to its website this week after House Republicans alleged that the president’s “all-of-the-above” energy plan neglected the fossil fuel.

“President Obama has set a 10-year goal to develop and deploy cost-effective clean coal technology," according to the story at the link. I have not checked out the website so I cannot verify.

I think it's safe for him to add that to his website. Natural gas is now the real risk for the domestic coal industry.

EIA IEA EIA IEA EIEIO AND OIL

IEA:

After posting near-zero annual growth in the fourth quarter of 2011, global oil demand growth will gradually accelerate throughout 2012, culminating in an increase of 1.2 million b/d by this year’s final quarter, the International Energy Agency said in its latest monthly oil market report.

Global oil consumption is set to rise by 800,000 b/d this year to 90 million b/d, unchanged from the agency’s previous report, with gains in developing countries more than offsetting declining demand within countries of the Organization for Economic Cooperation and Development.

EIA:  The EIA suggests the price of oil to stay "high," despite plenty of supply. 

Tension between Iran and the West is likely to keep oil prices high despite a dramatic improvement in world supply and a big build in stocks, the International Energy Agency (IEA) said on Friday.

The agency said global oil supply rose 600,000 barrels per day (bpd) to 91 million bpd in April and was now 3.9 million bpd over year ago levels, with 90 percent of the increase coming from OPEC.

Saudi Arabia has said it pumped 10.1 million bpd last month, its highest for more than 30 years, in a bid to meet growing demand and curb oil prices, which hit a three-and-a-half-year high in March.

Personal Notes: Absolutely Nothing To Do With The Bakken

This  post will have nothing to do with the Bakken. Much of it will come from the Drudge Report. I find it incredible that Drudge seems to get it right nine out of ten times when taking the pulse of the nation. He has a very interesting mix of items. So these are items that are catching my interest today, some, not all, coming from the Drudge Report.

• The price of oil continues to fluctuate around $95. It's counterintuitive, but I think $90 oil is better for energy investors than $110. 

• This is a most incredible video: obviously this sea creature is fascinated by the drilling. The video starts off "slow" but stick with it; it's quite remarkable.

• I don't know if folks remember the Feds stomping on ATT's plan to buy T-Mobile. At the time I said it was a win-win for ATT. If ATT succeeded, they would get what they wanted. If they failed, T-Mobile would wither away and Verizon and ATT would share the spoils. T-Mobile says they are losing large numbers of their biggest customers. ATT is hitting new highs on a a day that the overall market is down. And ATT continues to pay almost 6% in dividends. 

• The first political polls are out since the Vice-President voiced his support for "gay marriage." There's only one way the president could make this worse for himself. 

• My favorite subject in middle school (we called it "junior high" at the time) was Latin with Mr Becker. I learned a lot of phrases, two that stick with me: "rose fingers of dawn," and "crossed the Rubicon." The latter phrase came to mind when thinking of "gay marriage" and the president. 

• I blogged earlier about North Dakota eighth graders being #1 in science in 2011. They did this in 2009, also, so this is not a one-off. (I first heard the word "one-off" in 2004. Since then, the word seems to pop up everywhere.)

• CNBC just reported U of Michigan "consumer sentiment." Huge number. Highest in four years.

• The rumors coming out of MacRumors for updated versions of the iPads and MacBook Air that might come out later this summer are very, very exciting. It is very possible Apple will surprise competitors more than one could possibly imagine.  We could see iPad technology and software significantly alter the iPod. The price point for the MacBook Air might make it irresistible.

• Isn't this interesting: extended unemployment benefits "expire" if unemployment rates fall. Unemployment rates have been falling but not because folks are finding jobs. Unemployment rates are falling before folks are exiting the work force (they have quit looking for jobs; they are still unemployed). This will catch folks by surprise. 
• France's Hollande: it's worse than we thought. Wow, where have we heard that before. He's blaming Sarkozy. LOL. Yes, I know I shouldn't be LOL; our own president continues to blame Bush for US economic problems. LOL. 

• Upscale mall in Dallas, Texas, will require "anyone 17 or younger to be accompanied by a parent or legal guardian while inside the mall after 6:00 p.m." Interesting.

• Israeli Prime Minister Benjamin Netanyahu now has his coalition. And a mandate?  

• Oh, speaking of Apple. I don't think folks understand what Apple is doing with regard to television. It has nothing to do with a "television." It's all about the "remote control." Five years from now there will be an Apple remote controller in "every" American home.  One remote control per television set. Not two, not three as is the standard now for digital, satellite, or cable television. And Siri will be her name.

• Yesterday, we visited the Peabody Essex Museum in Salem, Massachusetts. The monitors in the "children's section" are all Apple monitors. We visit the museum on a regular basis as members. Yesterday we went there specifically to see the bird exhibit in the "children's section" as part of our birding club. It is amazing how aesthetic the Apple monitors are. Quite incredible. Sony had the monopoly on aesthetics at one time but somehow Apple did 'em one better. Check out Sony's share price over past five years.

• The most recent Rasmussen poll does not reference overnight social issues:
  The Rasmussen Reports daily Presidential Tracking Poll for Friday shows Mitt Romney earning 50% of the vote and President Obama attracting 43% support. Four percent (4%) would vote for a third party candidate, while another three percent (3%) are undecided.
  This is the first time Romney has reached the 50% level of support and is his largest lead ever over the president. It comes a week after a disappointing jobs report that raised new questions about the state of the economy. 

• Obama Hollande blames Bush Sarkozy: things are worse than we were told.

• Global investors now favor Obama over Romney. I didn't read the story, but I assume by "global," they include the PFIIGS (pronounced "figs": Portugal, France, Italy, Ireland, Greece, and Spain). Thank goodness, for the most part, only American citizens will vote in the general election.
   

ND 8th Graders Top in Nation in Science

Link here.

North Dakota eighth-graders lead the nation in science, according to a national assessment released Thursday.

Students earned the top ranking based on the 2011 National Assessment of Educational Progress science scores.

North Dakota eighth-graders also had the top score in the nation on the 2009 National Assessment of Educational Progress science assessment.

ERF Reports Earnings

Link here.

Enerplus Corporation is pleased to announce the results for the first quarter of 2012. Highlights of the quarter were as follows:

• Production increased during the first quarter by 3% over the fourth quarter of 2011, averaging 79,190 BOE/day. We continued to see positive growth in our oil and liquids volumes which were up approximately 9% from the previous quarter primarily due to our successful drilling and completion activities in North Dakota. 
• we realized higher activity levels on our operated leases and more non-operated spending than anticipated in North Dakota. Approximately half of our spending was on our tight oil assets. We expect spending will moderate through the remainder of the year as the majority of our delineation activity is now complete and we have also reduced our rig count in North Dakota from four to three rigs.

• We also believe that inflation is stabilizing in the Fort Berthold region and costs appear to be in line with expectations across our other plays. Capital spending was higher than anticipated on both our operated leases and by our non-operated partners in the area. We expect this to moderate through the remainder of the year as we are dropping our rig count to three rigs from four as was originally planned.  We continue to work to reduce our well costs through changes in completion and frac design and we are also seeing evidence of costs beginning to stabilize in the region.

Another operator in the Bakken that will decrease rig count. This seems to be a common theme. Note the reason given. 

Some Price Points for Oil

Updates

Later, 8:45 a.m.: The EIA suggests the price of oil to stay "high," despite plenty of supply. 

Tension between Iran and the West is likely to keep oil prices high despite a dramatic improvement in world supply and a big build in stocks, the International Energy Agency (IEA) said on Friday.

The agency said global oil supply rose 600,000 barrels per day (bpd) to 91 million bpd in April and was now 3.9 million bpd over year ago levels, with 90 percent of the increase coming from OPEC.

Saudi Arabia has said it pumped 10.1 million bpd last month, its highest for more than 30 years, in a bid to meet growing demand and curb oil prices, which hit a three-and-a-half-year high in March.

This is an important data point -- Saudi's ability to pump that much, something I had not expected. 

Original Post

Widely reported, so no links, for now: Saudi princes like "$100 oil." More than that, fear of global recession. The floor: $87/bbl to balance its budget.

Canadian oil sands: two or three years ago, I often heard producers there needed $60 oil to make money. Indeed, sometime in the last six months, one Canadian oil sands producer temporarily shut down when price of oil went below $100. I forget specifics. And the $100-figure could be off. But trust me -- I do recall a Canadian oil sands producer temporarily shutting down production. [Yes, here it is, back in February, 2012, when WTI was about $95. And a better source here. ]

Now from Russia:

Another problem bred by Mr Putin's rule is a deteriorating economy. Crude oil and gas account for 75% of Russia's exports. In order for him to win the presidency, Mr Putin's government authorized $161 billion in additional spending through 2018, increasing pensions and freezing gas prices. As a result, the government needs an oil price of $150 a barrel over the next few years to break even, while a sharp fall in price (for example to $80 a barrel) could lead to an immediate crisis. -- opinion, David Satter, WSJ, p. A13. 

I'm pretty sure you can find the op-ed on-line.

Front Page Story in WSJ on "Costly Liabilities" for Chesapeake

Updates

Later, 9:30 p.m.: Chesapeake gets $3 billion loan; relatively high interest rate at 8.5%

"I would imagine that this is a relatively expensive source of financing for Chesapeake to feel compelled to pursue," ...[spokesman]

Wall Street has long benefited from Chesapeake's financing moves. Prior to the new deal, the Oklahoma City-based company had paid nearly $1 billion in investment banking fees since 2000...

Earlier on Friday, Chesapeake said it could delay asset sales in order to preserve cash flow needed to comply with requirements of its existing $4 billion corporate credit facility.

Original Post

Link here.

Embattled Chesapeake Energy Corp. has saddled itself with about $1.4 billion of previously unreported liabilities over the next decade through off-balance-sheet financial deals.

Most of these costs will hit this year and next, at a time when the company needs to raise substantial cash to cover operating expenses and its move into the more lucrative oil business.

Chesapeake, the second-largest natural-gas producer in the U.S., has made a number of long-term commitments to Wall Street banks that require it to deliver specific amounts of oil and natural gas each month through 2022, in exchange for upfront cash. Those deals, known as volumetric production payments, or VPPs, are essentially debts, with payments made in fuel rather than cash.

Moving NGLs Out of the Eagle Ford -- RBN Energy

Link here.

One of the advantages that the Eagle Ford has over its cousin the Bakken is that there was already significant infrastructure in place.  Unfortunately the gathering and processing infrastructure was designed many years ago for 2-3 GPM gas.  Historically that’s not a bad BTU content for processors.  But compared to Eagle Ford shale it is piddly (East Texas word).  Eagle Ford production is 5 or 6 or 8 GPM.  That means that liquids drop out of the gas and accumulate in gathering systems, cold weather wreaks havoc with freeze offs, and processing plant deethanizer towers are vastly undersized. And that’s just the issues that were mentioned off the cuff.

The article talks a lot about DCP Midstream, a company I had not heard of until yesterday from a completely unrelated source. At that source it said DCP Midstream was involved in every unconventional shale play in the US except the Marcellus and the Bakken, and it planned to enter both those areas.